Dueber Watch Case Manuf'g Co. v. E. Howard Watch & Clock Co.

COXE, District Judge, (after stating the facts as above.) An examination of the complaint, in the light of the provisions of the act of July 2, 1890, and the decisions construing that act, leads to the conclusion that the complaint, in its present form at least, cannot be sustained. The statute makes it. illegal to enter into [853] a contract or conspiracy in restraint of interstate trade and also to monopolize, or attempt to monopolize, or combine or conspire with others to monopolize, such trade. There is no allegation in the complaint that the plaintiff is engaged, or has at any time, since the passage of the act, been engaged in interstate trade and commerce. There is an allegation that the plaintiff is engaged in the business of manufacturing watch cases throughout all the states of the United States and in foreign countries. This allegation is probably a mistake of the pleader, but if it were true it would not be a compliance with the requisites of the law. A corporation may have an operating manufactory in every state of 'the Union and yet not be engaged in interstate commerce. There is no allegation that the defendants are, or that any of them is, or was. engaged in interstate trade, or that the articles made by them are used in such trade, or that the rights of the general publie have been invaded, or interstate commerce injuriously affected by any of the acts of the defendants as described in the complaint. There is no allegation that the defendants absorbed or intended to absorb the entire trade in watch cases, or that they controlled the market, or any considerable part thereof, or that they were even a majority of the watch manufacturers of the United States, or that the prices fixed by them were more than the goods were worth or in any respect unfair. There is no statement that the goods made by the defendants were made by them exclusively, or that such goods were indispensable to plaintiffs customers: non constat, such goods could have been furnished by the plain tiff or dealers other than the defendants. What, then, is the accusation? When analyzed it will be found that the illegal acts charged against the defendants are, first, that they agreed to maintain am arbitrary fixed price for their goods; secoiid, that they agreed not to sell their goods to plaintiffs customers: ami, third, that they notified, plaintiff’s customers of their determination. It is only necessary to examine (he first and second of these allegations, for it is manifest that if the agreements made by the defendants were lawful it could not be unlawful to notify the world of their existence. Both of the alleged agreements were made before July 2, 1890, the result being’ that the plaintiff, before the passage of that act, lost its customers. The only acts of the defendants which by any possibility can be construed as a- violation of the statute were the ratification and renewal of these agreements after its passage. The complaint alleges that but for such renewal the plaintiff would have regained all its old customers. The first question then is, does it constitute a violation, of the statute for two or more dealers to fix an arbitrary price for their goods? No authority has gone to the extent of holding that such a transaction, in the absence of other facts, is illegal. The second question is: Is it an illegal act, within the provisions of the law in question, for two or more traders to agree among themselves that they will not deal with those who prefei [854] to purchase the goods of another designated trader in the same business? Many perfectly legitimate reasons might be suggested for such an agreement. It is not a combination to monopolize; at least there is no statement of facts tending to show that it produced a monopoly , in the present case. Indeed, it would seem that it must have had a contrary effect. There was surely nothing to prevent' the plaintiff from supplying its customers with those things which the defendants declined to sell them, and thus enlarge its trade and stimulate competition. The plaintiff was perfectly free to engage in every branch of the watchmaking business. So were all others. The plaintiff’s customers were free to purchase of the plaintiff, of the defendants, or of any other manufacturer. The contract of 1887 was not one in restraint of trade within any of the definitions or authorities which have been examined, and it is thought that the defendants’ acts are not reached by any section of the law in question. The construction contended for by the plaintiff would render each of the defendants liable to an indictment not only, hut would make unlawful almost every combination by which, trade and commerce seek to extend their influence and enlarge their profits. It would extend to every agreement where A. and B. agree that they will not sell goods to those who buy of 0. It would strike at all agreements by which honest enterprise attempts to protect itself against ruinous and dishonest competition. It is thought that these views are in conformity with the decisions of the courts construing the act of 1890. In re Greene, 52 Fed. Rep. 104; U. S. v. Nelson, Id. 646; U. S. v. Trans-Missouri Freight Ass’n, 53 Fed. Rep. 440; In re Corning, 51 Fed. Rep. 205; In re Terrell, Id. 213. The demurrer is sustained.