Opinion
May 5, 1950 —
June 6, 1950.
APPEAL from an order of the circuit court for Milwaukee county: OTTO H. BREIDENBACH, Circuit Judge. Affirmed.
For the appellants there were briefs by Bender, Trump McIntyre and Walter H. Bender, all of Milwaukee; Lowry Hunter and Richard N. Hunter, all of Waukesha, for the Golden Guernsey Dairy Co-operative; Sidley, Austin, Burgess Harper and Howard Neitzert and John R. Taylor, all of Chicago, Illinois; Miller, Mack Fairchild and Steven E. Keane, all of Milwaukee, for the Borden Company; Snyder, Chadwell Fagerburg and John T. Chadwell and Victor P. Kayser, all of Chicago, Illinois; Zimmers, Randall Zimmers and Clifford A. Randall, all of Milwaukee, for the Luick Dairy Company; Edwin J. Gross of Milwaukee, for the Dairy Distributors, Inc.; Kleczka Steinhilber and Clarence D. Steinhilber, all of Milwaukee, for the Blochowiak Dairy Company; Delbert H. Schmahl of Milwaukee, for the Clover Lane Dairy Co-operative; Elmer A. Kletzien of Menomonee Falls, for the Gehl Guernsey Farms, Inc.; Raymond J. Moore of Milwaukee, for the Layton Park Dairy Company; John H. Regan of Milwaukee, for the Wilke Dairy Company; and T. Fred Baker of Milwaukee, for the Emmer Bros. Dairy; and oral argument by John T. Chadwell, John R. Taylor, and Steven E. Keane.
For the respondent there were briefs by the Attorney General, Leonard Bessman, assistant attorney general, and William J. McCauley, district attorney of Milwaukee county, and oral argument by Mr. Stewart G. Honeck, deputy attorney general, and Mr. Bessman.
The defendants and appellants are seven domestic corporations, two foreign corporations, and two individuals, copartners. Together they sell and distribute ninety-four per cent of the fluid milk used in Milwaukee county. There is only one other distributor of this commodity in the county. On July 30, 1948, the state began an action against all the defendants for violations of sec. 133.01, Stats. 1947. They moved to have the complaint made more definite and certain, it was so ordered and the state served an amended complaint May 6, 1949, to which the defendants severally demurred. On December 13, 1949, the trial court overruled the demurrers and the defendants have appealed. All the demurrers specified as grounds of objection that it appears upon the face of the complaint that it does not state facts sufficient to constitute a cause of action and that several causes of action have been improperly united. All the demurrers except those of Blochowiak Dairy Company and Dairy Distributors, Inc., Co-operative also specified that the statutes under which the action is brought or relief demanded violate the state or federal constitutions, or both, in that they deprive the demurring defendant of property without due process of law, deny it the equal protection of the laws, impose upon it unusual and excessive punishment and impose an unreasonable burden upon interstate commerce.
Sec. 133.01, Stats. 1947, is as follows:
" Unlawful contracts; conspiracies. (1) Every contract or combination in the nature of a trust or conspiracy in restraint of trade or commerce is hereby declared illegal. Every combination, conspiracy, trust, pool, agreement, or contract intended to restrain or prevent competition in the supply or price of any article or commodity in general use in this state, to be produced or sold therein or constituting a subject of trade or commerce therein, or which combination, conspiracy, trust, pool, agreement, or contract shall in any manner control the price of any such article or commodity, fix the price thereof, limit or fix the amount or quantity thereof to be manufactured, mined, produced, or sold in this state, or fix any standard or figure in which its price to the public shall be in any manner controlled or established, is hereby declared an illegal restraint of trade. Every person, corporation, copartnership, trustee, or association who shall either as principal or agent become a party to any contract, combination, conspiracy, trust, pool, or agreement herein declared unlawful or declared to be in restraint of trade, or who shall combine or conspire with any other person, corporation, copartnership, association, or trustee to monopolize or attempt to monopolize any part of the trade or commerce in this state shall forfeit for each such offense not less than $100 nor more than $5,000. Any such person, corporation, copartnership, trustee, or association shall also be liable to any person transacting or doing business in this state for all damages he may sustain by reason of the doing of anything forbidden by this section. As used in this section, the words `article or commodity in general use in this state' shall include newspapers magazines, periodicals, and advertising, including radio advertising. Nothing in this section or section 133.21 shall be construed as abridging the liberty of speech or of the press guaranteed by article I, section 3, of the constitution.
"(2) It shall be the duty of the attorney general to enforce the provisions of this section and to bring an action for the recovery of the forfeiture herein provided for, whenever complaint shall be made to him and evidence produced which shall satisfy him that there has been any violation thereof. The several district attorneys shall, upon the advice of the attorney general, who may appear as counsel in any such case, institute such actions or proceedings as he shall deem necessary to recover any forfeiture incurred on account of the violation of any of the provisions of this chapter."
The portions of the complaint material upon this appeal are as follows:
"XII. (a) That between the first day of January, 1947, the exact date being unknown to the plaintiff, and continuing thereafter to the date of the filing of this complaint, in the city of Milwaukee, Milwaukee county, Wisconsin, the defendants above named entered into and ever since have engaged in a continuing and unlawful combination and conspiracy intended to restrain competition in the retail and wholesale price of fluid milk sold and distributed by them in Milwaukee county, Wisconsin; that said combination and conspiracy did control and fix the prices of said commodity and did illegally restrain commerce and trade within Milwaukee county, Wisconsin, in violation of the provisions of section 133.01 of the statutes of the state of Wisconsin for the year 1947;"
(b) (The defendant corporations and their representatives named and identified.)
"XIII. That the aforesaid combination and conspiracy was entered into orally and has consisted solely of a continuing oral agreement and concert of action, the substantial terms of which have been:
"(a) That the defendants would charge uniform and noncompetitive retail and wholesale prices for the fluid milk sold by them in Milwaukee county, Wisconsin;
"(b) That before changing the prices charged by them for said fluid milk, the defendants would orally notify one another of the amount and date of any intended price change with the purpose of preventing price competition among them and of fixing and maintaining uniform prices for the fluid milk sold by them in Milwaukee county, Wisconsin;
"(c) That said combination, conspiracy, and agreement is to be implied wholly from the conduct of the defendants in Milwaukee county, Wisconsin, in that, before changing the prices charged for the sale of fluid milk sold and delivered by them in Milwaukee county, Wisconsin, as more particularly alleged in paragraph XIV of this complaint, they held and attended meetings where they discussed, so far as is known to the plaintiff, the material, bottling, and distribution costs of such fluid milk; in that, soon after such meetings, the defendants orally notified one another of their intention, and at the same time ascertained the intention of such others, to increase the resale price of such fluid milk, specifying the amount and effective date of such intended price increase; and in that, the defendants did in fact put into effect such uniform price increases in the amount and on or about the date intended by them.
"XIV. That said defendants, combining and conspiring among themselves, did restrain commerce and competition and did control and fix the price of fluid milk sold and distributed by them in Milwaukee county, Wisconsin, from the period beginning on or about November 1, 1947, and continuing up to the date of the filing of this complaint by doing only the following acts resulting in the following agreements only, so far as is known to the plaintiff:"
(To charge and actually charging noncompetitive prices in the sale of fluid milk.)
The complaint to which the defendants have severally demurred and which is now here for review alleged that the defendants in violation of the provisions of sec. 133.01, Stats. 1947, illegally combined and conspired with intent to restrain competition in the retail and wholesale price of fluid milk in Milwaukee county, and by such combination and conspiracy actually did restrain competition and fixed and controlled the price of such milk. It further alleged that the combination and conspiracy consisted of an oral agreement among the defendants, entered into at a date unknown and continuing to the present, to charge noncompetitive prices and to notify one another of the amount and date of any prospective change in price in order to prevent competition and to fix and maintain uniform prices. It further alleged that such combination, conspiracy, and agreement is to be implied wholly from the conduct of the defendants in that during October, 1947, their representatives held a meeting at which they discussed the costs of providing fluid milk to the consumer; that shortly thereafter oral conversations took place between the several defendants wherein each assured the others and was assured by them of the intention of each to raise the price of its milk to a certain figure on a certain date; and that on November 1, 2, and 3, 1947, all the defendants offered their milk for sale at an identical increased price; and on December 30, 1947, a like meeting was held, followed by like conversations, followed in turn on January 1, 1948, by a simultaneous increase of one cent per quart for the milk of each defendant. The complaint further charged that the defendants threatened to and would continue such illegal practices unless restrained and it demanded: (1) That each defendant, except for one copartner who had attained immunity, be adjudged liable to the plaintiff for $5,000, which is the maximum forfeiture provided for violation of sec. 133.01, Stats.; (2) that each defendant be enjoined from further violation in the respects complained of; (3) that the corporate charters of those defendants which are Wisconsin corporations be canceled and annulled, and (4) that the licenses permitting those defendants which are foreign corporations to do business in Wisconsin be canceled and annulled.
Defendants submit that the complaint does not allege that either in the meetings or in the subsequent individual exchanges of information did they agree upon prices to be charged or agree to adhere to such prices as were announced; that the things which the complaint says the defendants did were lawful things which do not constitute a sufficient basis for inferring that an unlawful agreement existed; and unless an unlawful agreement exists there can be no unlawful conspiracy. The defendants concede that an unlawful agreement, which they say is the essence of conspiracy or unlawful combination, may be established by implication from the acts and conduct of the parties but they urge that the unlawful agreement which the complaint alleges is a conclusion without force or effect because it may not legitimately be inferred from the so-called lawful events which are pleaded; hence, the conclusion of agreement being invalid, no allegation of agreement remains and the complaint has failed to state a cause of action.
It is true that the complaint does not specifically allege that the defendants agreed upon the fixing or the maintenance of prices at either the meetings of the group or in the individual discussions. It does not say precisely when the agreement was made but it says there was and continues to be one whose existence is to be implied from the facts that the defendants first conferred and then unanimously and simultaneously performed identical acts, and this sequence occurred not only once but twice. While it is possible that the uniform behavior of the defendants may be attributed to some other stimulus, we think that reasonable men observing the repeated phenomenon of ostensible competitors, so diverse in size and organization, suddenly reacting in an identical manner would, until the reaction was otherwise explained, conclude that the uniformity was the result of agreement; in other words, that under such circumstances the concerted action implied an agreement so to act. Defendants cite authority that competitors may lawfully exchange information on the expense of doing business and may lawfully inform each other of projected price changes, and they argue that the existence of an unlawful agreement may not be implied from lawful acts. There is, of course, present here the further factor of the concerted price action. If fixing prices was not illegal we do not think that the defendants, themselves, would have any difficulty in seeing that an agreement to fix them was quite clearly and fairly to be implied from the sequence of consultation and price action which the complaint alleges. That implication is not changed at all by the view which the law takes of the legality of the agreement.
We conclude that the allegations of the complaint set forth facts sufficient to constitute a cause of action.
The defendants further demur on the ground that the complaint improperly unites several causes of action which are variously legal and equitable, based on different statutes to be enforced in different manners and which do not affect all the defendants alike. As an original proposition this objection had merit, as shown by the dissenting opinions of two learned justices in the case of State v. P. Lorillard Co. (1923), 181 Wis. 347, 193 N.W. 613, but the decision of this court was to the contrary. That authority has been consistently followed and applied ever since by this court in antitrust actions and we think it is controlling here. The defendants in the Lorillard Case were domestic and foreign corporations and the relief demanded by the complaint was injunction of future violations, cancellation of the charters of the Wisconsin corporations, ouster of the foreign corporations, and money forfeitures by all, which are exactly the demands of the present complaint, except that it recognizes the immunity of one partner to the demand for money forfeiture. Although in the Lorillard Case we were aware that it was necessary to rely upon different statutes to obtain the different forms of relief demanded by the complaint, we then held (181 Wis. p. 366):
"The delict of the defendants is the conspiracy alleged and their acts in its execution. The primary right and duty of the state and the wrong of the defendants constitute the cause of action, and we regard it as one cause of action, although as incidental to it there may be different forms of relief as against the different defendants.
"Hence it is our conclusion that there is no misjoinder of causes of action."
Counsel have attempted to distinguish the Lorillard Case from the one now before us but we do not consider that they have succeeded in any material respect and upon its authority the present complaint is likewise sustained against their objection of misjoinder of causes of action.
All of the defendants but two demurred on the ground that the complaint failed to state a cause of action because, as they say, the statutes upon which liability is predicated or penalties provided are unconstitutional. First, they submit, secs. 133.01, 133.21, and 226.07, Stats., so vaguely describe the offenses that to enforce them would deprive the defendants of their property without due process of law. Sec. 133.01 has been set out above. Sec. 133.21 provides that when it has been proved that a domestic corporation has entered into a combination or agreement intended to restrain or prevent competition, etc., it shall have its charter annulled. Sec. 226.07 requires the annulment of the license to do business in this state of any foreign corporation so offending. In the Lorillard Case we held that sec. 133.01, then known as sec. 1747 e, was sufficiently definite in its prohibitions to satisfy the requirements of constitutionality, and as it is the same conduct which is proscribed by secs. 133.21 and 226.07 the same rule must apply to them. The demurrers were properly overruled in this respect.
The same defendants also contend that the penalties provided by secs. 133.21, 133.23, 226.07, and 226.09, Stats., are unconstitutional because they fail to provide sufficient means for their execution. These are the statutes requiring the revocation of charters and licenses and directing the attorney general to bring actions for that purpose. The learned trial court did not think it necessary to consider these sections upon demurrer and, indeed, before judgment has been obtained, it may be somewhat premature to speculate upon the constitutionality of the means which the trial court may adopt to implement its judgment if the plaintiff should prevail. However, in view of the defendants' argument that the sections are unconstitutional because not sufficiently precise in directing the methods to be used by the court after judgment it is not inappropriate to say that, because the legislature has not prescribed the various steps to be taken in making a judgment of revocation or ouster effective, in our view the statutes commanding such penalties are not automatically unconstitutional and void. Courts are accustomed to deal with situations where, after stating the policy, defining the offense, and prescribing the penalty the legislature has left matters of procedure to the court, and in such cases courts usually find their inherent and traditional powers are adequate to work out the details of effective judgments without infringing constitutional rights. We anticipate that it may be accomplished here should the case come to trial on the merits and the contentions of the plaintiff prevail. Accordingly, we consider that this objection to the constitutionality of the statutes is not well taken.
These defendants also contend that the statutes requiring revocation of corporate charters and licenses are unconstitutional and void as depriving the offending corporations of their property without due process of law, denying them the equal protection of the laws, and unduly burdening interstate commerce, and such penalties constitute cruel, unusual, and excessive punishment. The brief and oral argument on this phase was devoted almost entirely to the situation of the defendant Borden Company which considered itself particularly aggrieved. It was submitted that the loss which Borden would sustain by ouster far surpasses that imposed on the domestic corporations by dissolution because of Borden's great size and business interests. We are unable to follow the argument that when the law prescribes the same penalty for the same offense upon all offenders a discrimination has actually been practiced because the penalty hurts some worse than others. Nor can we concede that the revocation of corporate charters and licenses to do business is unusual punishment for the abuse of such charters and licenses by bodies who are creatures of statute and who exist or come into the state only by the state's permission. This remedy for unlawful conduct by corporations is of long standing and has been frequently invoked.
"Corporations are recognized as creatures of the law and they owe obedience thereto, and, when they fail to perform duties which they were created to discharge and in which the public has an interest, or where they do unauthorized or forbidden acts, the state has the right to wrest its franchise from the offending corporation. . . ." 19 C.J.S., Corporations, p. 1424, sec. 1651.
We cannot say that the penalty is unusual nor do we say it is excessive or disproportionate to the offense of controlling the price of food through a conspiracy. As for cruelty, there can be none to a corporation which is an artificial, not a natural body.
"There is no `personal' death or loss of liberty in the annulment of a corporate franchise or in a judgment for damages against it. When, therefore, it undertakes to do that which the law forbids and which injures the public, it has no claim for mercy that needs be recognized." Nekoosa-Edwards P. Co. v. News Publishing Co. (1921), 174 Wis. 107, 116, 182 N.W. 919.
The final argument is that if a corporation reaches such a size and does so much business that its dissolution or ouster would unduly burden interstate commerce, then the state must suffer its presence notwithstanding its lawless conduct and may impose only such mild penalties as do not interfere with its operations. The application of the principle would absolve the corporation from effective punishment for noncompliance with any state law. This presents a challenge to its sovereignty which the state must meet. If it is sound law that the magnitude of the corporation constitutes it the ward of the commerce clause of the federal constitution and makes it invulnerable to control by the state which has created or admitted it, the state in its own defense must oust or dissolve it, if possible, before such size is attained. If the principle is not sound law but is only resounding arrogance, and this is our view, the penalties are not unconstitutional because of any supposed effect on interstate commerce. And so thought the supreme court of the United States, as we read its opinion in Standard Oil Co. v. Missouri (1912), 224 U.S. 270, 32 Sup. Ct. 406, 56 L.Ed. 760, in which it affirmed the decision of the supreme court of Missouri, reported in 218 Mo. 1, 16 S.W. 902, which upheld the penalty of fine and ouster imposed on the corporation for violation of the state's antitrust laws.
The plaintiff has given considerable time and space to attacking the order of the trial court requiring its original complaint to be made more definite and certain, contending that the order was an abuse of discretion. If it was so, an appeal from it would lie ( Crowley v. Hicks (1898), 98 Wis. 566, 74 N.W. 348), but no appeal was taken. On the appeal from the order overruling the demurrers the respondent can, without notice, have a review of such alleged errors, the correction of which would support the order appealed from. We are unable to see how any correction of error, if error there be, respecting the sufficiency of the original complaint tends to support the order overruling the demurrers to the amended complaint. This part of plaintiff's argument is not within the scope of the appeal nor of our consideration.
By the Court. — Order overruling defendants' demurrers affirmed and record remanded for further proceedings. The respondent shall have no costs for that part of its brief and appendix which deals with the order to make the first complaint more definite and certain.
MARTIN and BROADFOOT, JJ., took no part.