Summary
In United States v. Greater New York Live Poultry Cham. of Com. (44 F.2d 393, 394, supra) it was held: "As to the defendants in this suit who were found guilty of the crime charged, the conviction is conclusive of the fact that they were engaged in a conspiracy to restrain trade and did every act which was essential to establish the same."
Summary of this case from People v. MinuseOpinion
August 9, 1930.
Walter L. Rice, of Washington, D.C., for the United States.
Samuel H. Kaufman, of New York City, for defendants.
The government moved to strike out as sham all allegations and denials of defendants' answer relative to participation in the criminal conspiracy prior to the filing of the indictment, on the ground of res adjudicata. After argument and filing of briefs, Judge BONDY denied the motion in part, filing the following opinion.
In Equity. Suit by the United States against the Greater New York Live Poultry Chamber of Commerce and others. On plaintiff's motion to strike out as sham certain allegations and denials of defendants' answer.
Order in accordance with opinion.
See, also, 34 F.2d 967.
Statement of Facts.
The government's petition, filed April 16, 1930, alleged a conspiracy in restraint of interstate commerce in the distribution of live and freshly slaughtered poultry in Greater New York. The petition set out the means and methods of carrying out the conspiracy, and alleged a series of overt acts in pursuance thereof. Defendants' answer denied the conspiracy and each of the allegations as to the means and methods and the several overt acts.
The government thereupon moved to strike out all portions of defendants' answer, excepting that denying the threat of continuing the conspiracy, on the ground that all of these matters had been adjudicated against the defendants in an earlier criminal proceeding in which the jury had rendered a verdict of guilty against sixty-eight defendants on November 21, 1929. The petition in the subsequent equity proceeding described the same conspiracy as that described by the indictment in the criminal proceeding. The first twenty-three paragraphs of both pleadings were substantially identical. The denials in defendants' answer which the government sought to strike out relate entirely to the allegations in those twenty-three paragraphs.
Argument in Government's Brief.
The government maintained that the defendants' denials were sham, in that they purported to raise an issue which had already been adjudicated against the defendants by the verdict in the criminal case. The purpose of pleading is to narrow and define the issues before the trial, and, if defendants are permitted to raise issues of fact in the pleadings which cannot properly be presented as issues at the trial, then the purpose of pleading has failed. As the degree of proof required to sustain a verdict of guilty in a criminal case is higher than that required in an equity case, a criminal conviction conclusively binds the parties in any subsequent litigation. Farley, State Commissioner of Excise, v. Patterson, 166 App. Div. 358, 152 N.Y.S. 59 (1915); In re Gottesfeld, 245 Pa. 314, 91 A. 494 (1914). Allegations contrary to the facts of which judicial notice is taken may be treated a nullity, or stricken out. French v. Senate of California, 146 Cal. 604, 80 P. 1031, 69 L.R.A. 556, 2 Ann. Cas. 756; Hubbard v. Lowe, Internal Revenue Collector, 226 F. 135, 139 (D.C.S.D.N.Y., 1915); Martin v. Kennecott Copper Company, 252 F. 207 (D.C.W.D. Washington, 1918). Court records are public documents of which the federal courts take judicial notice. United States v. California Co-op. Canneries, 279 U.S. 553, 555, 49 S. Ct. 423, 73 L. Ed. 838. A motion to strike out a denial of adjudicated matter as sham is the appropriate remedy. Buller v. Sidell, 43 F. 116 (C.C.S.D.N.Y., 1890). Defendants' participation in the conspiracy had been adjudicated against them; therefore a denial of such participation or existence of such conspiracy was sham. Since defendants could not deny that they had conspired to restrain trade, it was futile for them to deny overt acts, because they could not properly raise an issue as to specific overt acts.
Argument in Defendants' Brief.
Defendants' counsel argued that the motion was too broad, in that it included several defendants who were not convicted in the criminal case; and that as to the other defendants they could not be deprived of their right to deny the commission of acts which have never been adjudicated against them. The government could have established the guilt of defendants in the criminal case by proof of any one of the several overt acts alleged; therefore, the verdict did not necessarily adjudicate the commission of any specific overt acts on the part of the defendants. The issues in a criminal case are different from those in an equity proceeding, where the petitioner is seeking an injunction to restrain the defendants from a particular course of conduct; hence the principle of res adjudicata should not apply in this situation.
There is no principle of law or justice known to the court whereby parties who have not been found guilty of a crime proved against others can be deprived of the right to deny allegations in a complaint simply because the same facts were alleged in the indictment against the others who were found guilty. The motion to strike out the denials by the defendants who were not named in the indictment, or who were acquitted, or as to whom the indictment was dismissed, must be denied.
As to the defendants in this suit who were found guilty of the crime charged, the conviction is conclusive of the fact that they were engaged in a conspiracy to restrain trade and did every act which was essential to establish the same.
These defendants accordingly cannot deny and it is sham for them to deny the allegations in paragraph 16 of the amended petition that they entered into and engaged in a conspiracy in restraint of trade and commerce among the several states of the United States.
The petition alleges innumerable acts on the part of the defendants. Though some of the denials may be false, the falsity of any particular denial does not follow from the fact that there has been a conviction on the charge of conspiracy.
The motion to strike out the other denials on the ground of the conviction therefore must be denied without prejudice to a motion to strike out as sham any denial of any specific fact shown to have been essential to conviction or which petitioners otherwise can prove to be sham.