AMERICAN
BISCUIT &;
MANUF'GCO.
V.
KLOTZ.
721
the decision just referred to would be very strongly in point. Here the question is simply whether the clerk is entitled to commissions upon moneys which he has not actually received, kept, and paid out in pursuance of any statute or order of the court, because, as he claims, the money was paid into court, and should have been deposited with the treasurer or some. designated depositary. The adjudged cases laying down the bebier rule in this matter are Upton v. Tl'iblecock, 4 Dill. 232, note; Inre Goodrich, ld. 230i Leechv. Kay, 4 Fed. Rep. 72; and Ex parte Plitt, 2 Wall. Jr. 453,-where it is held that the commission allowed to the clerk under section 828, .Rev. St., "for receiving, keeping, and paying outin pursuance of any statute or order of court," cannot be claimed unless the money passes through his hands. The intervention should be dismissed,and it is so ordered.
AMERICAN BISCUIl' de MANUF'a Co. v. KLOTZ et 01. (CitrcuA.t
court, E. D. Lou1.siana. January 8,1891.)
RBOEIVlllUl-COMBINATtONS TO RESTRAIN TRADE·.
Defendant and his partner sold their bakery business to complainant oorporation receiving payment in its stock, and defendant leased to it the premises where .the business was conducted,and oontracted to carry it on as the purchaser's a¥ent, for a salary. After operating under this arrangement for a time, he repudiated the sale, resumed possession undei' the old firm name, and refused to account to complainant. The, bill was brought to enjoin him from asserting a hostile claim, for an accounting, and a receiver.. Defendant, and his partner as intervenor, filed a cross-bill for resci8sion of the sale for fraudulent representations, and tendered hac.k the stock. .COI:nPlainant was practically a "trust, "organized to monopolize the business, and had already secured control of 85 leading l:1akeries in 12 different iltates. Held that, while a case was made for a receiver, pendinlir litigation between ordinary partlell, the prayer would be denied, ss equity WOuld not encourage a combination in restraint of trade, and probably illegal, under Act Congo July "to protect trade and oommerce against unlawful restraints and monopolies, " and Act La. JUly 5, 1890, for the ssme purpose.
In Equity. T. J. Semmea and Bayne, Denegre Bayne; for complainant. W. S. Benedict and Rouse Grant, for defendants. Before PARDEE and BILLINGS, JJ. rER CuRIAM. This cause is submitted upon an application for a receiver. Some time in May last, the defendant Klotz, and Fitzpatrick, hi3 partner, composing the fl:rm of B. Klotz & Co., sold to the complainant their biscuit and confectionery manufactory for the price of $259,000, and an assumption of the debts of B. Klotz & Co., amounting to $42,000, which it was understood and agreed should be paid out of the iQcome from the. future business. The visible property was estimated to be of the value of .$101,000, and the good-will of the business to be of the value of $200,000. The price was paid in stock of the complainant's corporation, .estimated to be of value at pari that is, to be worth v.44F.no.10-46
722
J'EDERAL REPORTER,
vol; 44.
'100 cents on the face. value. .The purchase 'was completed, price paid, property delivered, the factory and good-will transferred by Klotz & Co. to the complainant. Klotz leased his bakery premises to complainant 'for the term of years, and contracted in writing to become, and did be'come,the agent of the complainant, ata salary of $ - - - per year. Klotz continued to carryon the business as agent for the complainant down lo some time in November, when he repudiated the sale and the lease, erased the name of complainant from the bakery, as agent, trans'ferred the policies of insurance from the complainant to himself, .liS an -individual, then to B. Klotz & Co., and, for and in the name of the late firrn, resumed the possessionofalltheproperty he had sold to 1Jlainant, and the conduct of the business of the bakery and the confectioneryestablishment. He did this without resort to any legal proceed!. ings. He thereafter held possession adversely to the complainant, and excluded it from the bakery. In this state of things, the complainant filed its bill for an injunction, arid for 'an account and for a receiver, 'against Klotz and W. A. Schall, who was alleged to be co-operating with him in the,pQssessiQB: adverse tothecompll;linant·. Klotz has filed an answer, arid he, 'together with his former partner, Fitzpatrick, who incross-bill asking a retervened by scission of the entire transaction, i. the sale and the lease, and tendering the"stock wqich had beenreooived by,them as thecongidemtiori anil,'affidavits 4ave been adduc¢d by .each party upon this hearing. The recital thus given shows that,ia an ,from .what would be expected, we have befor:e Us 'acll.use inwbich a party who has sold and delivered a business toanothel';and his agent, and, as such agent, was in"possesSion of the up a possession adverse tG bisprincipal, asks for a caneellathe sale, a.ndthe purchaser and.prinqipal asks that the agent shall acoount, shall be ,enjoined from asserting any daim hostile to his'prindpnl,+-inn:word"for a confirmation of its rights under the purchase. The immediate question before· us is, whatdispositionshaU be made of the res, the business of the bakery and manufactory, pending this contest? The vendor and agent asks that he be allowed to remain in adverse possession. 'The purchaser and principal asks fOr a receiver. It is clear that, as to this provisional 8isposition of the res, the defendant Klotz cannot be allowed to gain anything by his ouster of his vendee and principal. He must stand with those equities, and none other, ·whinhlexisted before the ouster. The case as to the appointment of a r.eceivet'must be reviewed and determined as if he (Klotz) had filed his bill averring possession as agent, which he asked to have changed by Ii. decree into a possession as owner, through the cancellation of the sale and the lease; that is, he must aver a legal title in the American Biscuit & Manufacturing Company, which he seeks to- have avoided and mIlled.' 'If, as in this case, he seeks todd a11 tbis by 'reason of fraud, and he establishes the fraud, a court of equity wiHnotrefuse to hear -hinJ.:He would 'not be estopped, for fraud vitiates' and set'll aside even estoppela. Herm.> Eatop. par. 22, p. 244jPendleton, ,'Y'.'Richey, 32 Pa;
e.,
St. 58; the sale and the lease by realjon of his agency and his obligations as trpstee, he comea into courtassailil1g and seeking to cancel a legal title; fOf until that is done his possession is that of the compla·il1ant. Under these circumstances, untilthe,hearing, thepraclice in the ,courts of ohaneery is not;to disturb the possession under the legal title prior to the case of.tnonstrous wrong is established. StilweU v. Wilkirl8, Jac. 280, reported .in full in Edwards on Receivers, p. 28, Lord ,Er,npN, when a similar, question was. presented, observed: "The pQintJbat struck me was whether, on a bill to imptlach a sale for ,fraud, tb.e lloUr,t interposes so strongly before the !hearing as to take away the possession from persons holding it puder the effect of deeds. not yet seli aside by decree."· ..., ' he holds that "it wftanptthe general habit ofthe court." There the case was"so monstrous, and the proof was so strong, that "it was hardly poSsible that'thetransaction could stand," and the legal title was interfered; with. ' This is 110 leading case,and gives what we find is the rule. The possession under the title is not disturbed unless the proof of fraud is so strong as to lead the court to the clear conviction that it will, on the final hearing, be established. The fraud set npandrelied upon by the defendan,tand intervenor ia false and fraudulent representations by the complainanHn tMs: that they represented that thesto<:k 'W'as fuHy .paid-upstock, whereas, in truth and fact, it was none of it paid: up in memey, and only :pahl up in part" and; to the extent of that part, of plants or bakeries and manufactories at an estimated value Qscapital. The stock delivered to the defendant and intervenor was not paid up .until it was issued to them, and was paid for by a transfer of the bakery and good-will; and then it became paid up, and they were dillcharged from all liability to bernade to contribute as shareholdel'll,,-th'eref'or. The testimony as to what 'was· represented ,by complainant's agents about the stock being paid up is conflicting; hut, when viewed.inc1:bilDectionwith the,circumstances under which the stock was received, fails to satisfy us, upon &bis preliminary hearing; that any falserepreaentations are proved to have been'made. The case oUhe defenda:nt. aQd intel'venor, setup'in their crOl!ls-bill,whereby they oppose of a receiver, is Jhat of parties Who seekto,'res()ind a deed on tbeground of fraud,. which upon this they faUto establish. ' , . So far wehavetlonsid'Cred the question of appointing a receiver of the property iii 'controversy interphrtea, and mainly fr<:lm the seuted by the:defendant'1:!showing,.and tbereonsuchappointment seems propel', and, we should accord it,but for an aspect <tithe case originally Iluggested' by the defendant, when the case was pending in the 'state oouTtI,:'apparently abandoned here,: but sufti'ciently brought to our notice by "the exhibits of 'both parties, We are' not' satiafied that the cornplainaot'8 business is legitimate? While the 'nominal purpose of the cOmplainant's corporationtRfiI atuted in its charter j is 'the manufacture and
. But,.whi!e. he is not estopped from 'proceeding to set aside
AMERIC4N:. :at/lCUIT & MANUF'G, 00·. tI. KLOTZ.
723
724
FEDERAL REPORTER,
voL 44.
sale of biscuit and confectionery, its real scope and purpose seems to be to combine and pool the large competing bakeries throughout the country into practically what is known and called a "trust," the effect of which is to partially, if not wholly, prevent competition, and enhance prices of necessary articles of food, and secure, if not a monopoly, a large control, of ;he supply and prices in leading articles of breadstuffs. The case shows that an insignificant number of shares of complainant's stock was unconditionally subscribed for, apparently enough to qualify directors; but the great mass was taken and held by irresponsible parties, to be used in parceling out as full-paid stock to such:leading and successful bakeries throughout theconntry as could be induced to come in on an agreed value of the property and a large estimate of good-will. Each bakery when secured to be carried on by its former managers, subject, however, as to contnl of funds, territory, prices, and competition, to the central management; all profits pooled, and ofcourse division thereof to be made on the basis of the stock assigned to each bakery. Under this arrangement complainant has already secured the control, and pooled the business, of 35 of the leading bakeries in 12 different states of the west and south, and is evidently seeking more constituents. The act of qongress approved July 2, 1890, entitled" An act to protect trade and commerce against unlawful restraints and monopolies," expressly prohibits, under severe penalties, "every contract, combination, in the form oitrust or otherwise,' or conspiracy, in restraint of trade or commerce among the several states," and declares punishable "every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons to monopolize, any part of the common trade or commerce among the se,'eral states." The enforcement of this act is, by the statute, devolved upon the circuit courts of the United States. The first and third sections of an act of the legislature of Louisiana, approved July 5, 1890, entitled" An act to trade and commerce against unlawful restraints and monopolies, and to provide penalties for the violation of this act," declare: "Section 1. That every contract, 'combination in the form of trust, or conspiracy in restraint of trade or commerce. or to fix or limit the amount or quantity of any article, commodity, or merchandise tobe manufactured, mined, produced, or sold in this statl!' is hereby declared illegal." . "Sec. 3. 1'hat ever/ person who sball monopolize, or attempt to monopolize, or combine or conspire with any other person or pel:soDs to monopolize, any part of the trade or commerce within the limits of this state, shall be deemed gUilty of a misdflmeanor. and, on conviction thereof, shall be punished by a fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court." In construing the federal and state statutes, we exclude from consideration all monopolies which exist by legislative grant; for we think the word "monopolize" cannot be intended to be used with reference to the acquisition of exclusive rights under government concession, but that the law-maker has used the word to mean "to aggregate" or "concentrate" in the hands of few, practically, and, as a matter of fact, and according to the known results of human action, to the exdusionof oth-
AMERICAN BISCUIT &: MANUF'G CO. 11. KLOTZ.
725
ers; to accomplish this end by what, in popular language, is expressed in the word "pooling," which maybe defined to be an aggregation of property or capital belonging to different persons, with a view to common liabilities and profits. The expression in each law "combination in the form of trust" would seem to point to just what, in popular language, is meant by pooling. Now it is to be observed that these statutes outline an offense, but re-. quire for its complete commission no ulterior motive, sllch as to defraud, etc. j and, further, that the language is altogether silent as to what means must be used to constitute the offense. The' offense is defined to "combine in the form of trust, or otherwise, in restraint of trade or commerce," and "to monopolize, or attempt to monopolize, any of the trade or commerce." To compass either of these things, with no other motive than to compass them, and by any means, constitutes the offense. One just and decisive meaniJ;lg of the expression "to monopolize" is obtained by getting at the evil which the law-maker has endeavored to abolish and restrict. ,The statutes show that the evil was the hindrance and oppression in trade and commerce wrought by its ab;sorption in the hands of the few, so that the prices would be in danger of being arbitrarily and exorbitantly fixed, because all competition would be swallowed up, so that the man of stuall means would find himself excluded from the restrained or mODopoHzed trad.e or commerce as absolutely as if kept out by law or force. If this is. the meaning ofthe defining words, does not this corporation, thus glutted with the 35 industries of 12 states, disclose 8n "attempt to monopolize?" So far, therefore, as the complainant's business is a com.bination in restraint oftrade, or is an "attempt to monopolize, or combine,in the form of a trust, or {)therwise, any part of trade or commerce," as these words are properly defined, the law stamps it as unlawful, and the courts should not en-courage it. Aside from this, the complainant's business, even if lawful, being of the kind shown above, is not of that meritorious kind that it should Le encouraged by a court of equity. The appointment of a receiver by a court of equity is not a matter of strict right, but of judicial discretion. Fosdick v. f:3chall, 99 U. S. 235. It falls within that class of interlocutory remedies which courts must grant or withhold, according to a discretion conscientiously exercised, upon a consideration of all the facts which a cause presents, involving the rights of the parties and the interests of the public. The attempt to accumulate in the hand,S of .a single organization the business of supplying bread itself to so large a portion of the poor, as well as the rich, people of the United States should not be favored by a court of equity. It carries with it too much of danger of excluding healthy competition, thereby increasing the difficulty to the general public of participating in a most useful business, as well as adding to the possibility of multitudes of citizens being temporarily, .a.t comrelledto pay an arbitrary and high price for daily food. Whatever may feel compelled to do, on the final hearing of this .-cause, towardu;ecognizil1g theoomplainant's legalrights, and compelling ;a faithless trtistee to account, w.e are clear that at this preliminary stage,
72.6'
FEDERAL. REPORTER ,vol.
44.
w.ith our pr,esllntimpressionaof the character and general scope of com-, plllililant's bjlsiness"the court ought not, by the appointrnent ofa receiv-er,to aid complainant to perfect, and perhaps to: erilarge,his com.. bination or ,trust; and the refusal to appoint a receiver can result in no serious andJasting injury to complainant, because the shares of stock of complainant company, forming the entire consideration of complainant's pur<:hase, have. been .tendered in court, and may be impounded"to be held as security for any damages susceptible of p"oof resulting from defend.a,nt's mismanagement of the property pending the suit. The motion Jor a receiver is denied.
Mtm:OOcx tI.CI'l'YOll'
CINCINNATI
et al,
(CWctltt Court, S. D. 011.1.0. W. D. January 7. 1891.)
L
:
notoply to, pay his own assessments, but also to answer for anyueficlency lnthecolleetlbilityof tbe assesSments against otber abutting owners, waives. bis ',':right'to'notice or an"opportUnity to'be heard before the assessmentB'are levied;) "I\d' city authorities, wbo levied the assessmeJj.t:intbe exel"'. clse, of t,iie power conferred on thein bylaw, and in complianc!l the. petitioq, clI:n-, D,ot.a,fterWar,ds be'im,pe,sched by/luch abutting owner, as beIng WIthOut due process of law:. for the lsck of such or lin opportunity to be heard. ' " ," " The institution of annction in a state court by the city against the abUtting owner (or.'th,e CQll. 0,tth,e,assess,ment atl'ords him the. opportunity of p,re,sentin,g eV,e, ry e,ither ,Under the constlWtion of tbe United States or under theconsti!'P' tian aUd, 1,8W8 of .thes,tate, going to the validity of the 8ssessmen1ii and the juqg, ment: reJidel'lld insuob action wID constitute due process of law. · , " 8. BAMlil. -FEllERAL QUEaTJON. ,
O!!'AqTIQN
IN
SUTECOURT.
"
.',
i
, W,netbtlr:or not is personally liable for an assessment m.alIe for the improvemen t ot a sti'eetbefore he. became the owner of propert,yabutting thereon is, nQt federal " ' .. 1 '
. "
'
In
P{l.eo.,l101'strna'!h ,for detendants. : The complainant seeks to enjoin the city ofCincinnati, its agents and: 'officers, from collecting or enforcing against him or his propertycertaill foot-front assessments, leviI'd and imposed to meet and; defray theJlexpenses incurred in improving Grand, Hawthorn, andPhHlips llvenUe!'!, city, on which complainant'slot or parcel ofgr6tlll.'d' bouuded, and 81bllltted. It is not denied that laws the city of Cincinnati confer ,upon its :authorities full power to make a.ssessments to defray the costs anclexpensesof improving streets Hnd' aVl"nues therein' by the fo()HrQnt .oHhep.roper.ty bounding and abutting u\>on suchi.mprovements. LiByaections 2263, 2264, Rev. St. Ohio, the city dOll'ncil are' llut,hQnz.ect w!a&ses!lthe costs and expenses of acquiring and ofliMptoving
p. JQne8,
