Summary
recognizing that the "law permits great latitude in the admission of circumstantial evidence to establish a conspiracy, and to connect those advising, encouraging, aiding, abetting and ratifying the overt acts committed for the purpose of carrying into effect the objects of the conspiracy"
Summary of this case from In re B.C. Rogers Poultry, Inc.Opinion
No. 37441.
April 10, 1950.
1. Trial — motion for directed verdict — when not sustainable.
In considering a motion for a directed verdict, whether at the close of plaintiff's testimony or at the end of all the testimony, the evidence must be treated as proving every fact favorable to plaintiff's case which it either proves or tends to prove.
2. Trusts and combines — inimical to public welfare — specific acts.
When an anti-trust statute prohibits a specific thing as "inimical to the public welfare" the use of the quoted words is not as an added element of definition but the offense is complete on proof of the specific acts without having to go further and prove that the acts were in actual effect inimical to the public welfare.
3. Trusts and combines — acting individually and acting in concert with others — police power — constitutional law.
The right to act individually is radically different from that to act in combination with others and an act harmless when done by one may become a public wrong when done by many acting in concert and when such action becomes the object of a conspiracy and operates in restraint of trade the police power of the state may prohibit it without impairing the liberty of contract protected by the Fourteenth Amendment, and this regardless of the motive or necessity inducing it.
4. Trusts and combines — complete monopoly, not necessary — tendency of combination.
In cases involving illegal combinations it is not necessary in order to vitiate a contract or combination that there should be a complete monopoly, it being sufficient if the monopoly tends to that end and to deprive the public of the advantages which flow from free competition.
5. Trusts and combines — reduction of prices when lawful — when unlawful.
The reduction of prices is the absolute right of the owner of a business and is lawful of itself, but under the guise of exercising that right it is not lawful indirectly to interfere with the business of a third person with the object of injuring that person rather than primarily to benefit the person exercising the right.
6. Trusts and combines — peremptory instructions erroneously granted, case in point.
In an action by a bakery partnership under the anti-trust statute when it is shown that soon after plaintiff partnership had resumed business in a named city and had become moderately successful, the competing bakeries, defendants in the suit, began, apparently by concerted action, a series of simultaneous cuts in the prices of bread finally reaching a price far below costs, the cut applying only to the territory where plaintiff operated, it was error to grant a peremptory charge for the defendants.
7. Witnesses — officers of corporation as adverse witnesses.
In an action under the anti-trust statutes it was error to refuse to permit plaintiff to introduce and cross-examine as adverse witnesses the presidents of defendant corporations, and the error is not rendered harmless as to one of the witnesses by the fact that he was later introduced by the defendants and cross-examined by plaintiffs, the full facts being that in the meantime he had been all the while in the courtroom and had become thoroughly informed by what had preceded.
8. Trusts and combines — evidence — conversation with sales manager of one of defendants.
In an action under the anti-trust statutes it was error to refuse to permit the testimony of a witness as to a conversation with the sales manager of one of defendant corporations the conversation being with reference to the difference in the defendants' prices, lower within plaintiff's territory and higher beyond that territory.
9. Evidence — telephone conversation — presumption as to character of person answering call.
In an action under the anti-trust statutes it was error to refuse to allow witnesses to repeat telephone conversations with the managers and authoritative employees of the defendants when called by the witness as such and who answered in that character, their answers to the calls as stated having raised a rebuttable presumption that they were what they represented themselves to be.
10. Trusts and combines — members of combination competent witnesses against each other.
In an action under the anti-trust statutes it was error to sustain objections to questions propounded to certain officers and employees of the several defendants on the ground that each could speak only for himself and his company, a ground not applicable to a case involving a combination or conspiracy, the rule in such a case being that one conspirator although uncorroborated is a competent witness against a co-conspirator.
11. Trusts and combines — circumstantial evidence — great latitude in admitting.
Great latitude is permitted in the admission of circumstantial evidence tending to establish a conspiracy and the jury should have before them every fact which has a bearing on and a tendency to prove the ultimate fact in issue.
Headnotes as approved by Smith, J. Roberds, J. dissenting.
APPEAL from the circuit court of Hinds County; H.B. GILLESPIE, Judge.
Creekmore Creekmore, for appellants.
I. The issues should have been submitted to the jury and the directed verdict for the defendants was error.
We would like to summarize briefly certain facts presented to the jury. It was proved: (a) That plaintiffs resumed the manufacture of 13 inch bread after an absence of more than 5 years from the City of Jackson, but that during all that time Jitney Jungle Stores were manufacturing and selling throughout the city a 13 inch loaf of sandwich bread;
(b) That before plaintiffs started operations the president of Hardin's Bakery Corporation came to see them and tried to find out what size loaf of bread they were going to make and offered them the use of 11 inch pans;
(c) That shortly after plaintiffs first started making the 13 inch bread, Colonial Baking Company and Hardin's Bakery Corporation also produced 13 inch loaf of bread in competition with plaintiffs;
(d) That shortly after plaintiffs commenced operation Mr. Jenkins of Golden Krust Bakery tried to persuade them to manufacture 11 inch bread, and finally prevailed upon them to try it, and all three of the defendant bakeries furnished the pans for plaintiffs use;
(e) That as soon as plaintiffs discontinued the 13 inch loaf and made 11 inch loaf, on a trial basis, Colonial Baking Company and Hardin's Bakery discontinued their 13 inch bread;
(f) That after plaintiffs resumed manufacture of the 13 inch bread in July the defendants, Hardin's Bakery and Colonial Baking Company, again started making the 13 inch bread, to some extent at least. Colonial Baking Company sold practically all their 13 inch bread to restaurants and took it out of the stores. Hardin's Bakery, according to Mr. Brown, the manager, stopped the manufacture of 13 inch bread on October 15, or two days after the first 2c price reduction.
(g) All three price reductions were put into effect by the three defendants simultaneously without notice to plaintiffs;
(h) Defendants attempted to control and did control the retail price of the bread during the time the two price reductions were in force in October. This was done by use of price labels;
(i) The defendant, Jenkins, and the two corporate defendants acted in concert or unison in banding their bread with retail prices;
(j) The defendant, Jenkins, ordered several different priced bands at the same time and before Mr. Berbette notified him of his intention to cut prices. Jenkins ordered retail price bands showing 12c, 10c and 15c about the same time;
(k) All the defendants acted in concert or unison establishing zones about the City of Jackson, which the evidence shows coincided with the territory served by plaintiffs;
(l) All the defendants maintained different prices inside the City of Jackson zone and outside the zone with the difference being as much as 5c on the retail price of bread;
(m) All the defendants reduced the price of bread below its cost;
(n) All the defendants about the time the law suit was filed raised the price of their bread on the same day.
The above facts were the facts before the jury, and from these facts the jury might well infer that the defendants were acting in unison in attempting to control or monopolize the sale of bread in the City of Jackson. The jury would also be justified in finding that they not only attempted to but had actually fixed the retail price of bread in the city. The jury could also find that the defendants set up an arbitrary zone in which bread would be sold 5c cheaper than outside the zone, and that this was done at a time when all the defendants were very much interested in the plaintiffs' business, and after they had endeavored to get plaintiffs to discontinue the 13 inch loaf of bread. The proof is undisputed that these defendants had never in their entire operations made any price differentials dependent upon the place of delivery until the time they started their price reductions simultaneously with the zoning of the City of Jackson area.
It would seem evident from the facts in this case that the jury could well find that the defendants violated the anti-trust statutes and attempted to and did restrain the freedom of trade and attempted to monopolize the production, control and sale of bread in and about the City of Jackson. Subsection (d) of Section 1089 prohibits any attempt to destroy competition by selling at a lower price at one place in the state than another. The evidence is undisputed that the defendants violated this provision of the law, and certainly the jury should have been permitted to say whether the result would be injurious to the public welfare.
We have never been able to understand the theory upon which the trial judge directed verdicts for the defendants. Apparently he thought that everything that was done by the defendants was for legitimate purposes. That, of course, is the only theory upon which he could have given the directed verdicts. But that theory is bound to be erroneous because the trial judge necessarily decided the motives, purposes and intentions of the defendants, which was a jury question pure and simple.
In 54 Am. Jur., Sec. 212, Trials, it is said: "It is peculiarly the province of the jury to determine questions of motives and intention, belief, good faith, malice and other facts involving mental purposes." See also 53 Am. Jur., Secs. 218, 224 and 225.
In the case of Yazoo Mississippi Valley Railroad Co. v. Searles, 85 Miss. 525, our Supreme Court said: "It denounces every form of combination or contract which has for its purpose, directly or indirectly, the restraint of production, or trade in any way or manner or the control of the price of any article of consumption by the people. It was not the purpose of the convention or the legislature to limit either the term used in the constitution or in the statute by any narrow definition, but to leave it to the courts to look beneath the surfaces, and, from the method employed in the conduct of the business, to determine whether the association or combination in question, no matter what its particular form should chance to be or what might be its constituent elements, is taking advantage of the public in an unlawful way. In each case, therefore, under these provisions, the nature of the arrangement or combination is a question of fact to be determined by the court from the evidence before it or from the vice which inheres in the contract itself."
The case of Cumberland Telephone Co. v. State, 100 Miss. 102, 54 So. 670, states the same rule. The Court at pages 114-115 said: "As to what does or does not constitute a monopoly within the meaning of the statute is not always easy to decide. The courts must be left to determine these questions when they arise. The question is one of mixed law and fact of necessity. To illustrate, suppose there are only two grocery stores in a town. Suppose the business of the town is so small as that a continuance of the two means a ruination of both. May not the one sell out to the other for the protection of both? This same illustration might be used in a countless number of instances. It is plain to be seen that it will not do to so construe the statutes as that one person may not sell to another when the very business life of the seller depends upon it. Yet there may be a character of business where these same acts would be held to be unlawful."
The above case well illustrates the reason why such questions must be determined by the jury. Some combines or contracts are susceptible to two constructions, one lawful and one unlawful, and where the motives and purposes of the parties are the determining factor then only the jury may decide the question.
The case of Harvey v. State, 149 Miss. 874, 116 So. 98, should be conclusive upon this question. In that case it appeared that an ice manufacturer was selling ice for 60c per hundred at the platform and 70c per hundred delivered, and another person who desired to enter the ice business in the same town was prevented from doing so by the defendant reducing and putting the price of ice from 70c down to 35c, and then to 30c which was one-half of the reasonable price for the ice at said time. It was charged that the defendant also gave away ice to prevent competition. An injunction suit was brought by the Attorney General and the Supreme Court upheld the finding of the chancellor, and held that the facts were sufficient to show a violation of the anti-trust statutes in Mississippi. We earnestly say that the Harvey case cannot be distinguished from the case at bar except the facts in the case before the Court are much stronger than those in the Harvey case.
Now, as to the violation of the statute itself we would like to point out that the evidence shows without contradictions, that the defendants did the very things condemned by the statute. They reduced the price of bread and to such a price that it was below cost. They attempted to and did restrain trade and reduce the output of bread. They attempted to restrain the freedom of trade, and attempted to destroy competition by selling bread at a lower price in Jackson than in other places. Since the defendants themselves admit doing the very acts condemned by the statute the only thing that is left is to determine what result would be naturally expected to follow from such acts. These matters as to the probable result of defendants' actions, and their motives and purposes cannot be decided by a judge until he assumes the prerogatives of a jury.
It is well settled that statutes prohibiting a seller of commodities from fixing prices in other localities higher or lower than in another are valid and will be upheld by the courts. See Fairmont Creamery Co. v. State of Minn., 274 U.S. 1, 71 L.Ed. 893, 52 A.L.R. 163.
The Minnesota case while recognizing the general rule, held the Minnesota statute invalid because it was to apply irrespective of motive. Of course, our statute meets this constitutional requirement. The Minnesota statute was not limited to acts of discrimination for the purpose of creating a monopoly, restraining trade, or destroying the business of a competitor but applied regardless of motive. The cases cited in the annotation to the A.L.R. clearly show that a state may constitutionally prohibit a dealer in commodities from discriminating in price between different localities for the purpose of driving a competitor out of business or of preventing a prospective competitor from entering the field. If this were not true, a large company might temporarily reduce selling prices or increase purchasing prices in one locality and reimburse itself for any loss out of profits from unjust prices in another locality, until it had driven out its local or smaller competitors and had a monopoly on the business.
In the case of Barataria Canning Co. v. Joulian, 80 Miss. 555, our Court held that a contract by which the defendant agreed to sell to the plaintiff all oysters which he should pack during certain months except three car loads per month and stipulated that such three car loads should not be sold to the trade at a lower price than that offered to the trade by the plaintiff is void, as an agreement "to limit the price of a commodity". Chief Justice Whitfield said: "The agreement is plainly one `to limit the price of a commodity'. The seller agrees that, as to the three carloads per month — half the output — he will be bound absolutely by the price fixed by the purchaser of the other half. The price could thus be arbitrarily fixed without any reference to the state of the market, and each party is to sell at the same price, no matter what the supply or demand may be. As well said in Oil Co. v. Addoue (1892), 83 Tex. 650 ( 19 S.W. 274; 15 L.R.A. 498; 29 Am. St. Rep., 690): `it would seem that the agreement may be illegal if the natural or necessary consequences of its operation are to prevent competition and cause fictitious prices, independently of the law of supply and demand, and to such an extent as to injuriously affect the interest of the public, or the interest of any particular class of citizen who may be especially interested, either as producers or consumers, in the articles or staples which are the subjects of the restrictions imposed by the contract. Likewise the agreement may, in some instances, be void, because of the unreasonable or oppressive restrictions imposed upon even one of the parties to it.' See 1 Eddy on Combinations, ch. 15, particularly see 592. The contract in this case is a plain combination and agreement between competing manufacturers not to sell anywhere, to anybody, the commodity (oysters) for a less price by either than that at which the other sells. The appellee cannot sell except at prices fixed by the appellant, and these prices may be fixed arbitrarily, without regard to the market in any way, the appellant nowhere agreeing that it should be controlled by the demand and supply."
In the case of Standard Oil Co. v. State, 107 Miss. 377, 65 So. 468, the Court held that the defendants were guilty of violation of the anti-trust laws where it appeared that several oil companies formed a combination to destroy competition by assigning certain territory to subsidiary companies, which companies offered petroleum for sale on the same day in different localities of the state at different prices.
Another Mississippi case of importance is Retail Lumber Dealers Association v. State, 95 Miss. 337, 48 So. 1021, wherein the Supreme Court held that the statute making a combination to hinder competition illegal it was immaterial that the means adopted were peaceable and otherwise lawful if the intent be to accomplish the unlawful object. The Court said: "It is further urged that this combination is not inimical to public welfare, and, therefore, not unlawful. In the case of Barataria Canning Co. v. Joulian, 80 Miss. 555, 31 So. 961, it was distinctly held that the words `inimical to the public welfare', are not an added element of definition attached to each of the definitions already given in the separate sections of this statute, but that the offense is complete when shown to come within the terms of any section of the statute, as thereby the Legislature, in whom the discretion is vested, by its very declarations determines said Act to be inimical to the public welfare."
The argument thus far has been in regard to Count I of the declaration but the cases apply equally to Count II of the declaration. The second count avers unfair competition causing the plaintiffs damage.
36 Am. Jur. 660, Sec. 204, Damages for Injuries: "A person who has been injured in his trade or business by the activities of an unlawful monopoly, combination or restraint is generally held to be entitled to recover damages in an action at law for the loss suffered, recovery being sustainable both at common law and under antitrust statutes. On the other hand, lawful competition on the part of one or several persons acting in concert that may injure the business of another, even though successfully directed to driving that other out of business, is not actionable."
52 Am. Jur. 664, Sec. 175. Discrimination; etc. "Discrimination between persons or localities in regard to the price of commodities is sometimes prohibited or regulated by statute. Where regulatory statute prohibits price discrimination made with the intent substantially to lessen competition or to destroy the business of a competitor, constitutional inhibitions are not infringed. It is well established that the state may constitutionally prohibit a dealer in commodities from discriminating in prices between different localities for the purpose of driving a competitor out of business, or of preventing a prospective competitor from entering the field."
The leading case and one that should be conclusive so far as the second count is concerned is Memphis Laundry Cleaners v. Lindsey, 102 Miss. 224, 5 So.2d 227. In this case the Court said that malice does not necessarily signify illwill toward a particular individual but denotes that condition of mind which is manifested by the doing of an intentional wrongful act without just cause. It further held that the reduction of prices is lawful in itself, but one person may not reduce prices for the purpose of putting another out of business. Furthermore, the Court upheld the principle that in cases involving unfair competition no combination or conspiracy was necessary, and that the action could be brought against one or more persons.
The facts in the Lindsey case are very similar to the facts in the present case. It appears that the Memphis Laundry and Cleaners reduced their prices for cleaning from 85c to 40c, which later price was not sufficient to afford a legitimate profit. The Court said: "The objection to the appellant's position is that it sought to enlarge a legal right into a legal wrong; instead of enlarging or dignifying its privilege to cut prices for the purpose of promoting its own business, it degraded the same into a wilful wrong when employing it as a weapon for the ignoble purpose of inflicting upon the plaintiff a wanton injury."
Other cases in point are Globe Rutgers Fire Insurance Co. v. Firemen's Fund Insurance Co., et al., 97 Miss. 148, 52 So. 454, and Wesley v. Native Lumber Co., et al. 97 Miss. 814, 53 So. 346. In the later case the Court said: "This court has set at rest in this state the question whether an act, legal in itself, may become illegal, and a ground of action, when accompanied with the malicious purpose to injure the business of another, resulting in such injury — holding the affirmative. . . . The act and the accompanying motive together constitute the unlawful act."
In the present case we certainly have acts, which if done with wrongful motives are sufficient to constitute a cause of action. The only way the motive can be determined is by considering the acts done in connection with the intention of the parties, and this is solely a matter for the jury. As to general statements of law relating to particular questions of intention see 53 Am. Jur., Trials, Sections 219 to 225. These sections lay down the rule that the intent or motives of parties are questions of facts for the jury, particularly with reference to matters of good faith and malice. 30 Am. Jur. Section 37 Interference, lays down the general rule whereby a cause of action arises by reason of interference with the person's trade or business. Among the cases cited is Globe Rutgers Fire Insurance Company v. Firemen's Fund Insurance Co., et al., supra.
II. Plaintiffs should have been permitted to call Mr. Murphy and Mr. Hardin as adverse witnesses.
This case is the first case in our practice where the trial judge refused to allow the president and general manager of a corporation to be called as an adverse witness. A clearer case could not be imagined for Mr. Hardin not only was the president of the corporation but actually owned every share of the stock. Mr. Murphy was president and general manager of his corporation, and owned 25% of the stock.
Section 1710 of the Code of 1942, provides that: "Either party may have his adversary summoned. — A party to a suit desiring to examine any opposite party in open court, may, without first taking his deposition have such party subpoenaed as a witness and examine him in the presence of the court during the progress of the trial and shall be at liberty to contradict the testimony of such party as he might do with an adverse witness; but such party shall be entitled to fees as a witness for the party by whom he was subpoenaed to be paid and taxes as in case of other witnesses."
This section clearly gives the right to examine an opposite party and the only way a corporation may be examined is through its officers. Therefore, under that statute we say that we had the right to call the highest officers of the company as adverse witnesses. It will also be noted that the statute recognizes the right to call an adverse witness not a party, for it says that the adverse party may be examined and his testimony contradicted the same "as might be done in the case of an adverse witness". If the rule contended for by the defendants is correct there would be discrimination in favor of corporations and against individuals for it would deny the right of a litigant to call a corporation or its officials as adverse witnesses. We know that the legislature did not intend to create any special privilege or immunity in favor of corporations. It seems to us that the answer is apparent when the question is stated. In the case of I.C.R.R. Co. v. Sanford, 75 Miss. 862, interrogatories were propounded to a nonresident corporation under Section 1761 of the Code, and the Court held that such interrogatories even though addressed to a corporation must be answered by the proper officer or agent of the corporation. The section under consideration provided: "If the testimony of a party to a suit who resides out of the state be desired by the adverse party interrogatories to him may be filed in the clerk's office," etc. So it will be seen that the statute referred to the testimony of a party, and it was held that this included the officers of the corporation, and the Court said: "We are of the opinion that Sec. 1761 applies to and includes corporations. It seems natural and reasonable to suppose that that section should apply in favor of all litigants and against all parties to a suit, whether such parties be natural or artificial persons. It is obvious that a corporation cannot deliver testimony in person, and may not, therefore, literally comply with the statute, yet the business of corporations is conducted by the agency of officers, entrusted with duties assigned them as president, manager, or heads of department, etc., and these officers or heads of department may well speak for the corporation in the matters confided to their management."
It may be argued that the action of the court below, while erroneous, was not prejudicial, but we maintain that the refusal of the court to permit cross-examination of the very persons charged with conspiracy and the doing of the alleged unlawful acts are most prejudicial to the plaintiffs. This is true, especially where the motives and intentions of these parties acting for their corporations were pertinent to the issues in the case. It is true that these officers were put on the witness stand by the defendants for direct examination, and we were then given the privilege of cross-examination but the damage had already been done. These officers were permitted to remain in the courtroom as the representatives of the defendants and were permitted to hear all the testimony. The court held that "the rule" did not apply to these officers, although he said they could not be treated as adverse witnesses. The harm that can arise from such a situation is well pointed out by the Court in the case of Reed v. Charping, 41 So.2d 11, decided on June 13, 1949, wherein the court said: "While appellee made a gesture at denial of his representations, he contradicted himself on numerous points in his testimony, there being a substantial variance between what he said when unexpectedly called as an adverse witness for cross-examination and what he later said on direct examination as a witness in his own behalf."
It appears to us that the law is so well settled on this proposition that further argument would be unnecessary. It is, however, said in 70 C.J., Sec. 778, at page 604: "In some jurisdictions statutes permit a party to call an adverse party or witness for examination as on cross-examination. The purpose of such statute has been said to enable a litigant to call his adversary without making him his own witness and elicit from him, if possible, material facts within his knowledge."
The point of law is so well settled it has always been taken for granted by the bar in Mississippi. But our Supreme Court in the Sanford case held that the word "party" in the section relating to interrogatories include corporations and all parties to a suit, whether corporations or natural persons, and that when a corporation was the party, the interrogatories must be furnished by an officer or agent of the company. The same principles apply insofar as Section 1710 is concerned. Irrespective of the statute we still have the rule giving the right to call adverse witnesses for cross-examination and the evidence clearly shows that Mr. Murphy and Mr. Hardin were adverse witnesses. This is by reason of their position as officers of the corporation and the financial interest due to their large ownership of the stock of their respective corporations.
III. Conversations between witnesses and the general managers and/or sales managers of the defendant corporations should have been admitted.
The testimony shows that some of the plaintiffs' witnesses testified that they telephoned the plants of the defendant corporation or partnership and asked to speak to the manager and that they talked with someone who represented himself to be the manager. The Court ruled that these conversations were inadmissible, apparently upon the theory that the witness did not know to whom he was talking. The law seems to be that where a person telephones and asks to speak to a certain person and he does talk to a person who represents himself to be the one called, then the evidence is admissible. We realize that the Court would not reverse the case on this ground alone. However, we believe that the case will be reversed and we anticipate this matter will come up on a retrial. On this point see 20 Am. Jur. Sec. 367: "According to the weight of authority evidence is admissible as to a conversation over the phone where the witness calls for a designated person at his place of business and the person answering the call claims to be the person called for or to represent him or it, and the conversation carried on is one regarding the business transacted by such person for firm."
Numerous cases are cited by American Jurisprudence including several A.L.R. decisions. There seem to be no Mississippi cases directly in point. American Jurisprudence goes on to say that the telephone conversation is admissible without further evidence to identify the particular person with whom it was had. This rule is based upon the apparent necessity in view of the constant use of telephones.
T.J. Tubb, and Flowers, Brown Burns, for appellee, Golden Krust Bakery.
Under the Mississippi statutes on trusts and combines it has long ago been settled that the test of a trust and the essential of its existence is that the contract or combination be, on account of its actual results, obnoxious to public policy, or be in itself and its necessary effect inimical to the public welfare. We call attention to Sections 1088, 1089 and 1092, Code 1942, and the annotations thereunder.
It has long since been settled in this state that the rule of reason is applied to suits brought under said statutes, and that a contract in reasonable restraint of trade, or a contract or the actions of a person or corporation are valid unless inimical to the public welfare. The cases clearly recognize that an individual or a corporation has full power to contract, to buy, to sell, and to fix prices on its own products for the purpose of promoting its own business or for the purpose of protecting its own business from the competition of others. So long as the motive is the promotion or protection of the business of the person or corporation involved and the public interest is not jeopardized, there can be no violation of the anti-trust laws. To hold otherwise or to construe these statutes otherwise would result in the violation of the fundamental law of the land. These rights of protecting one's business against competition and of promoting one's business in competition are guaranteed by the Federal Constitution in paragraph 1 of Section 10 of Article I where it is provided that no state shall pass any law impairing the obligation of contracts and by Section 1 of the Fourteenth Amendment to that constitution providing that no state shall make or enforce any law that shall abridge the privileges or the immunities of the citizens of the United States or shall deprive any person of life, liberty or property without due process of law, nor deny to any person the equal protection of the law.
Sections 14 and 16 of our own constitution provided that no person shall be deprived of life, liberty or property except by due process of law, and prohibits the passing of any laws impairing the obligations of contracts. Therefore, to hold in this case, under the undisputed facts in this record, that the partners in Golden Krust did not have the privilege of making the reductions in prices at the times and for the reasons shown would be a denial to them of their constitutional rights, both under the state constitution and under the federal constitution.
The appellants in their brief do not refer to the leading Mississippi case of Brown v. Staple Cotton Cooperative Assn., 132 Miss. 859, 96 So. 849. In that case the Court said the question is whether our anti-trust statutes should be construed according to their liberal terms, regardless of the results, or whether they are to be construed in the light of reason and with the view of promoting the public welfare.
This record shows without question that the defendants below were guilty of no unfair competition towards plaintiffs in making the reductions in prices reflected in this record.
Appellants assert that Mr. Jenkins of Golden Krust tried to persuade the plaintiffs below to make and sell only an 11 inch loaf of bread. This statement is not supported by the record. It is true that Mrs. Wagley sent her own agent over to see Mr. Jenkins with a request that he come to see her about the matter of making and selling the smaller loaf.
Another thing asserted by appellants in their brief is that the three price reductions were put into effect by the three defendant bakeries simultaneously. Now, the record does not bear out this assertion. The record is perfectly clear and undisputed that the first reduction in June, 1948, was first made by Golden Krust and followed by the others. It is also perfectly clear that the two reductions in October, 1948, were first made by the Acme Baking Company, not a party to this suit, and that the other defendants herein followed the Acme in putting the reductions into effect.
These appellees would like to state the undisputed facts in this record very briefly upon which the lower court directed a peremptory instruction in their behalf.
(1) The larger 13 inch loaf of bread held a definite competitive advantage over smaller 11 inch loaf of bread when sold in the same market at the same wholesale price.
(2) A wholesale price differential between the 13 inch loaf and the 11 inch loaf is and was justified, and it definitely appears that the reasonable amount of such price differential would be about 2 cents per loaf.
(3) When appellants came into the Jackson Market with their larger 13 inch loaf, there was then being sold in the market only the smaller 11 inch loaf, and appellants offered and sold their larger loaf at the same wholesale price that the other bakers were receiving for their smaller loaf, thereby having a distinct competitive advantage over these defendants.
(4) Golden Krust reduced the price on June 16, 1948, on their 11 inch loaf from 13c to 12c and made the same applicable throughout the six counties served by them. Golden Krust acted independently in making the reduction, which was promptly followed by all the bakers, including the plaintiffs.
(5) It is uncontradicted that the two reductions on the wholesale price of the 11 inch loaf of bread in October were initiated independently by the Acme Baking Company, the oldest bakery in the city, and that the reductions were followed by the above bakers to meet the competitive situation, except that on the last reduction the plaintiffs below did not follow on their 13 inch loaf of bread.
(6) Appellees, partners in Golden Krust Bakery, and the partners in the Acme Baking Company, were the only bakers throughout the entire period involved in this case who did not make, sell or offer the larger 13 inch loaf of bread.
(7) It is clear from this record that during every period of time that the plaintiffs below had the competitive advantage given them by selling the larger loaf at the same wholesale price at which the smaller loaf was being sold, their business increased, while the business of the Golden Krust during these periods declined. It is also clear from this record that whenever there was a reasonable price differential between the larger and smaller loaves or whenever both plaintiffs and defendants were selling the same size loaf at the same price, the plaintiffs became dissatisfied with their volume of business and the other bakers were able to retain their positions in the market.
(8) When all of the factors and facts are considered it appears undisputed that no two bakers here involved acted in concert or in unison or from any understanding or agreement, one with the other, in reference to these prices. There was no conspiracy shown. Each acted in his own behalf.
(9) In the case of every reduction made by the appellees, partners in Golden Krust, they acted alone and independently in order to meet the competition of the appellants or others, and in order to protect and promote their own business.
(10) At the very time of this trial, during the first of March, 1949, there was in effect in the City of Jackson, and had been in effect for a period of more than three months, a differential in the wholesale price of the larger 13 inch loaf of bread and the smaller 11 inch loaf of bread of 2c per loaf. The Acme Baking Company for over three months had been selling its 11 inch loaf of bread for 10c per loaf wholesale, and during all such time Acme was putting the retail price of 12c on their smaller loaf.
(11) It is uncontradicted in this record from the testimony of Mr. Jenkins, Mr. Murphy, Mr. Brown, on behalf of Hardin's bakery, and Mr. Wagley and Mrs. Wagley, on behalf of the plaintiffs, that each and everything done by each of the bakers, both plaintiffs and defendants, was done either to promote the interest of the particular bakery or to protect the business of that particular bakery. The Wagleys admitted and testified themselves that there was no malice involved, and that they did not blame the Golden Krust Bakery or any one else for meeting competition and protecting their own business and promoting the same. In fact, Mrs. Wagley testified that she did not blame the Golden Krust Bakery for doing exactly what it did do as shown in this record.
Jackson, Young, Daniel Mitchell, for appellee, Hardin's Bakeries Corporation.
The following summaries of the testimony are entirely justified from the record in this case:
(1) All price reductions were initiated by persons other than Hardin's, and Hardin's did not participate in any planning, scheming, or devising of any such price reductions.
(2) Since all price reductions were made by persons and corporations other than Hardin's, it unquestionably had the right to reduce its prices to compare with like products of other producers, and thereby meet the competition, as appellants have done.
(3) The appellants themselves were the instigators of all price reductions which were made by those producing the 11 inch loaf, by reason of the competitive advantage held by appellants with their loaf of bread which was 2 inches longer than those produced by the appellees, including Hardin's, which were selling at the same price.
(4) Housewives buy bread largely on the length of the loaf, whereby the appellants had a strong, competitive advantage; certainly the purchasers would prefer to buy a 13 inch loaf of bread over an 11 inch loaf of bread, when the two sell for the same price. (The rapid growth of appellants' business bears sufficient testimony thereto.)
(5) Hardin's 13 inch loaf of bread has never sold for a price less than the 13 inch loaf of appellants.
(6) Hardin's 11 inch loaf of bread has never sold for more than 2c less than appellants' 13 inch loaf of bread, an amount obviously reasonable.
(7) Appellants were the first bakers to reduce the price of the 13 inch loaf in each instance complained of.
(8) There is no testimony that Hardin's acted in concert with the other appellees in making reductions in price complained of — indeed, the testimony is conclusive that in each instance Hardin's acted after a competitor had reduced the price of a like product, that the appellants themselves likewise followed each reduction except the last one, for the purpose of retaining a competitive advantage held by them because of the extra two inches in each loaf of bread offered by them, and that appellants were still equal, competitively, although they did not follow the last price reduction.
(9) Each price reduction made by Hardin's was for the purpose of meeting and eliminating a competitive advantage, not of obtaining one.
(10) The appellants intended to retain the competitive advantage held by them in offering a 13 inch loaf on the market at the same price as the 11 inch loaf offered by the other bakeries.
(11) The appellants sought to force the appellees to produce a 13 inch loaf as a means of eliminating the competitive advantage of appellants.
(12) Hardin's and its employees were good friends of the appellants at all times (see the testimony of both appellants quoted above).
(13) Hardin's did not reduce the price of its 13 inch loaf below 12c. When the appellants went down to 10c, Hardin's 13 inch loaf was taken off the market.
The trial court was correct in granting a peremptory instruction for the appellees. Barataria Canning Co. v. Joulian, 80 Miss. 555, 31 So. 961; Cumberland Telephone Co. v. State, 100 Miss. 102, 54 So. 670; Fairmont Creamery Co. v. Minnesota, 274 U.S. 1, 71 L.Ed. 893, 52 A.L.R. 163; Harvey v. State, 149 Miss. 874, 116 So. 98; Huck v. Wright, 77 Miss. 483, 27 So. 617; Jakup v. Lewis Grocer Co., et al., 190 Miss. 444, 200 So. 597; Memphis Steam Laundry v. Lindsey, 192 Miss. 224, 5 So.2d 227; Retail Lumber Dealers Association v. State, 95 Miss. 337, 48 So. 1021; Standard Oil Co. v. State, 107 Miss. 337, 65 So. 468; Thomas v. Williamson, 185 Miss. 83, 187 So. 220; Trucker Exchange Bank v. Conroy, 190 Miss. 242, 199 So. 301; Yazoo M.V.R. Co. v. Searles, 85 Miss. 525, 37 So. 939.
The trial court did not err in refusing to allow the cross-examination of P.B. Hardin by appellants. Illinois Central Railroad Company v. Sanford, 75 Miss. 862, 23 So. 355; Martin v. Gill, et al., 182 Miss. 810, 181 So. 849; Reed v. Mattapan Deposit Trust Co., 198 Mass. 306, 84 N.E. 469; Rule 11 of the Revised Rules of the Supreme Court of Mississippi, 1944; Sec. 1710, Code 1942.
The trial court did not err in refusing to admit as evidence telephone conversations with appellants' witnesses. Martin v. Gill, et al., 182 Miss. 810, 181 So. 849.
Lotterhos Dunn, for appellee, Colonial Baking Company.
As to point I of appellants' argument, we stand upon the basic and fundamental proposition that Colonial Baking Company had the absolute right to meet competition in the bread market and to use its own independent judgment to protect and promote its own individual business. This is exactly what was done by Colonial Baking Company. Counsel for appellants have not pointed to a single item of evidence to show or justify any permissible inference to the contrary and this being so, the action of the trial court in granting the peremptory instruction was correct.
Counsel for appellants have failed to cite a single case which bears even a remote resemblance to the undisputed facts which appear in this record, and so long as we live in a system of free enterprise, there can be no judicial authority by which liability could be imposed upon this defendant under the facts as shown by this record.
If the statutes on which appellants rely were construed to prohibit the variation in price in different localities to meet local competition, they would violate the constitution. Fairmount Creamery Co. v. State of Minn., 274 U.S. 1, 71 L.Ed. 893, 52 A.L.R. 163, and note, 169.
Under point II appellants contend that the trial court erred in declining to permit counsel to call W.H. Murphy of Colonial Baking Company and Mr. Hardin of Hardin's Bakeries as adverse witnesses.
In this brief we are concerned only with the action of the court in reference to Mr. Murphy. Mr. Murphy was shown to be an official of Colonial Baking Company and the owner of 25% of its common stock.
The Mississippi statute on which counsel relies refers only to any "opposite party". Under the statute, a party may examine any "opposite party in open court" and shall be at liberty "to contradict the testimony of such party".
While Mr. Murphy was an official of Colonial Baking Company, he was not in any sense a party to the suit and, of course, no judgment could have been rendered against him.
In Mississippi Utilities Company v. Smith, 166 Miss. 105, 145 So. 896, a similar question was raised on appeal to this Court. It held that the error, if any, of the trial court in permitting an official of a corporate defendant to be called and examined as an adverse witness was harmless and no decision was rendered on the point.
In Bove v. State, 185 Miss. 547, 188 So. 557, it was held that the state could not examine the father-in-law of the accused as an adverse witness unless taken by suprise, or unless the witness proved to be hostile.
Had appellants seen fit to place Mr. Murphy on the stand as a witness, they might have requested and obtained permission to cross-examine if they had been taken by surprise or if the witness had proved to be hostile, as to which see: Bove v. State, supra; Bacot v. Hazlehurst Lumber Company, 75 Miss. 870, 23 So. 481.
However, this was not done. Instead, counsel sought an advance ruling that Murphy was "adverse" and declined to offer him as a witness except on condition of a favorable advance ruling from the Court. The Court declined to so rule and appellants then undertook to state unto the record what Murphy would testify. In so doing, counsel practically read appellants' declaration unto the record and this statement certainly did not indicate hostility on the part of the proposed witness.
Moreover, Murphy was offered generally as a witness for Colonial Baking Company and appellants were afforded the opportunity of cross-examination and Mr. Murphy was fully cross-examined. Therefore, if error was committed in the first instance, it was certainly of no substantial prejudice. It is settled that harmless error is not ground for reversal. Miss. Utilities Co. v. Smith, supra; Gulf, Mobile and N.R. Co. v. Willis, 171 Miss. 732, 158 So. 551; Goins v. State, 155 Miss. 662, 124 So. 785.
However, there was no error, harmless or otherwise. The statute on which counsel relies is in derogation of the common law rule. If this were not so, there would have been no occasion for the statute.
At common law, an "opposite party" may not be called by his adversary and cross-examined or impeached merely because the witness is a party. Of course, the same thing applies with added force to non-party officials of a corporate party. Such officials are, of course, only ordinary witnesses.
The rule is stated in 70 C.J. 604, Section 778.
The text is fully supported by many authorities cited thereto. The rule was the same in the Federal courts before adoption of the new Federal rules. Dravo v. Fabel, 132 U.S. 487, 33 L.Ed. 421.
The only relaxation of the rule in the absence of statutes which we have been able to find is represented by the Connecticut case of Fox v. Schaeffer, 131 Conn. 439, 41 A.2d 46, 157 A.L.R. 132. Here, the matter of examining — not calling — a party to the suit — not an official of a corporate party — as an adverse witness is left to the discretion of the trial judge.
Counsel attempts to emphasize the phrase "adverse witness" which appears in the statute. The text of the statute is that opposite party may "contradict the testimony of such party as he might do with an adverse witness". An adverse witness is one offered by the opposite party, or one who becomes hostile to the party offering him. While cross-examination may be permitted where a witness becomes adverse or hostile in his testimony, we know of no rule whereby a witness may be ruled an "adverse witness" before he takes the witness stand except, of course, as permitted by statute in the case of an "opposite party".
Under this point III appellants argue that the trial court improperly excluded certain alleged telephone conversations. However, counsel frankly concede that if the trial court erred in this connection, the error would not be reversible. In addition, there was no statement into the record as to what the testimony, if permitted, would have been and it follows that there is nothing presented for review.
Appellants are a co-partnership, doing business as Dixie Land Baking Company. Appellees, Colonial Baking Company and Hardin's Bakery Corporations, are corporations, while appellee, Golden Krust Bakery is a co-partnership. All, in May, 1948, were engaged in the bakery business in the City of Jackson. There was another so engaged at the same time, the Acme Bakery Company, not a party to the suit.
Appellants filed their declaration against appellees comprising two counts. The first count charged, in effect, three violations of Sections 1088 and 1089 of the Code of 1942, and demanded an award of $500 penalty for each violation. The violations allegedly consisted of concerted and simultaneous reduction of the wholesale price of white bread on June 15, 1948, from thirteen cents to twelve cents; on October 13, 1948, from twelve cents to ten cents; and on October 23, 1948, from ten cents to eight cents, all such reductions applying only within the City of Jackson, or close by, and only in the territory served by appellants. It was further charged that these reductions were the result of a combination and agreement among the appellees to reduce the price of such bread to a degree inimical to the public welfare, and for the purpose of stifling competition and monopolizing the production, control and sale thereof in the said City of Jackson and a limited zone outside of it.
Section 1088, Code 1942, defines a trust or combine as being a combination, contract, understanding or agreement, expressed or implied, between two or more persons, corporations, or firms or associations of persons or between any one or more of either with one or more of the others, within the purview of criminal jurisprudence, when inimical to public welfare and producing certain listed effects therein. Persons violating the statute are made subject to punishment and injunction against the further continuation thereof.
Section 1089, Code 1942, provides that "any corporation, domestic or foreign, or individual, partnership, or association of persons whatsoever, who, with intent to accomplish the results herein prohibited or without such intent, shall accomplish the results to a degree inimical to public welfare, and shall thus: (a) Restrain or attempt to restrain the freedom of trade or production; (b) Or shall monopolize or attempt to monopolize the production, control or sale of any commodity, or the prosecution, management or control of any kind, class or description of business; . . . (d) Or shall destroy or attempt to destroy competition in the manufacture or sale of a commodity, by selling or offering the same for sale at a lower price at one place in the state than another"; such parties "shall be deemed and held a trust and combine within the meaning and purpose of this section, and shall be liable to the pains, penalties, fines, forfeitures, judgments, and recoveries denounced against trusts and combines and shall be proceeded against in manner and form therein provided, as in case of other trusts and combines."
Section 1092, Code 1942, authorizes any person, natural or artifical, injured or damaged by a trust and combine as defined, or by its effects directly or indirectly, to recover all damages of every kind sustained by him or it and in addition a penalty of five hundred dollars, by suit in any court of competent jurisdiction. It is also permitted by the statute for suit to be brought against one or more of the parties to the trust and combine and one or more of the officers and representatives of any corporation a party to the same, or one or more of either. Such penalty may be recovered in each instance of injury, and all recoveries provided for may be sued for in one suit.
Count II of the declaration charges that the price reductions, described in Count I, allegedly made by the defendants, were not for any legitimate purpose, but in furtherance of a joint and common scheme maliciously and wrongfully to interfere with appellants' business, destroying it and driving them into bankruptcy. It was further charged that the aforesaid price reductions were not intended to benefit the public but to ruin appellants' business and coerce them into discontinuing their thirteen-inch loaf of bread. It is further asserted that when appellees had accomplished the purpose of their conspiracy they proposed to increase the price of bread back to its original cost to the public. Actual and punitive damages were demanded under Count II.
The appellees, each represented by different counsel, filed separate answers. It was denied, in detail, that there was any violation of the anti-trust statutes of this State, and that no common law rights of appellants had been by them transgressed. Price cuts were admitted, but, justified in appellees' pleadings, as having been made only for the purpose of meeting a competitive advantage obtained by appellants as a result of appellants' initiatory action, and to meet competition of the other baker in the City of Jackson. Denial was likewise made of any collusion, agreement or conspiracy by and between appellees, which interfered with or deprived appellants of any of their rights. The alleged "competitive advantage" to which allusion was made seems to be based on the premise that appellants gained it from their production and sale of a thirteen-inch loaf of bread in the City of Jackson for the same price charged by all three appellees for their eleven-inch loaf of bread in the same market.
At the end of appellants' testimony, appellees moved the court to exclude it and grant them a directed verdict, which was overruled. However, the court sustained appellees' motion, at the end of all of the evidence, for a peremptory instruction to find for the appellees, and such verdict was returned accordingly. Motion for new trial was made, overruled, and the plaintiffs below became appellants here, and the case is now before us for review.
Errors assigned, which we deem worthy of note are: 1. The granting of the peremptory instruction; 2. refusal of the trial court to permit appellants to introduce the Presidents of Hardin's Bakery Corporation and of Colonial Baking Company, defendants below, as adverse witnesses; 3. refusal to permit testimony of Mrs. Pucket, a witness for plaintiff below, recounting conversations with the sales manager of defendant, Hardin's Bakery Corporation; 4. refusal to allow plaintiff's witness, Wagster, to testify to a conversation with the general manager of Hardin's Bakery Corporation; 5. and refusal to allow various witnesses on behalf of plaintiff below, appellant here, to testify as to their telephone conversation with persons claiming to be the general manager or sales manager of defendant appellees; the court erred in refusing to allow various witnesses to testify "of their telephone conversations with various persons claiming to be the general manager or sales manager of defendants."
The record here is voluminous, consisting of two volumes, with the combined total of five hundred and forty-nine pages. Appellant has filed a lengthy brief, as have each of the attorneys representing the three several appellees; and the evidence is complicated and contradictory.
It is to be borne in mind that at the end of appellant-plaintiffs' evidence, the trial court overruled a motion by appellee-defendants to exclude it, and direct a verdict for them. But that at the end of all of the testimony, a motion for a peremptory instruction to the jury to find a verdict for the latter was sustained. This should not have been done unless the evidence of the movant overwhelmed by its weight, the proof of the opposite party. (Hn 1) In considering this issue, there must be constantly borne in mind the rule that, on such a motion, "the evidence must be treated as proving every fact favorable to appellant's case which it either proves or tends to prove." Miller v. Bank of Holly Springs, 131 Miss. 55, 95 So. 129, 31 A.L.R. 698; and numerous others.
Both the basic statutes involved here, dealing with and defining trusts and combines, use the phraseology "inimical to public welfare." It becomes, therefore, necessary, in limine, to determine what is meant by that phrase, and what proof if any, must be produced to establish that a purpose or result is inimical to public welfare. It is laid down as a general rule that (Hn 2) "Where an anti-trust statute prohibits a specific thing, that fact, of course, furnishes a sufficient reason for condemning the particular combination and, as the state statutes generally go more into detail than the Federal statute, the state decisions are less controlled by general considerations. If a combination is within the express prohibition of the act, it constitutes no defense that the combination is not `inimical to the public welfare,' although the statute uses this language, in describing the combinations thereby denounced. In such case, the words `inimical to the public welfare' are not an added element of definition attached to each of the definitions already given in the separate sections of the statute, but the offense is complete when shown to come within the terms of any section, as thereby the legislature, in whom the discretion is vested, by its very declaration, determines the act to be inimical to the public welfare." 36 Am. Jur., Monopolies, Combinations, Etc., Section 133, Page 606. In Barataria Canning Company v. Joulian, 80 Miss. 555, 31 So. 961, this Court adopted the above language in its opinion.
Cited under that section is the Mississippi case of Retail Lumber Dealers' Association v. State, 95 Miss. 337, 48 So. 1021, 1023, 35 L.R.A., N.S., 1054, affirmed in Grenada Lumber Company et al. v. State of Mississippi, 217 U.S. 433, 30 S.Ct. 535, 54 L.Ed. 826. This Court said in its opinion: (differentiating between the rights of individuals to act as individuals, and their combined action in unison to accomplish a common purpose) (Hn 3) "The individual right is radically different from the combined action. The combination has hurtful powers and influences not possessed by the individual. It threatens and impairs rivalry in trade, covets control in prices, and seeks and obtains its own advancement at the expense and in the oppression of the public. . . . Any one of several companies had the right to sell the whole or only a part of its output to only such persons, in only such territory, and at only such prices as it pleased; yet it was inimical to the interest of the public and unlawful for them to combine and agree that those matters should be determined and controlled by an agency jointly created for that purpose." It is true that the method allegedly adopted to effectuate the charged combination differs from the one described in the case quoted, the same principle applies in each instance. In the Lumber Company case, cited, this Court quoted with approval this same language from American Jurisprudence and the Barataria case, supra.
In affirming the Mississippi Court, the Supreme Court of the United States held: that an act, harmless when done by one, may become a public wrong when done by many acting in concert, and when it becomes the object of a conspiracy and operates in restraint of trade the police power of the state may prohibit it without impairing the liberty of contract protected by the Fourteenth Amendment; and that, while an individual may not be interfered with in regard to a fixed trade rule not to purchase from competitors, a state may prohibit more than one from entering into an agreement not to make such purchases. The Court further declared that a combination that is actually in restraint of trade under a statute which is constitutional, is illegal whatever may be the motive or necessity inducing it.
Quoting further from the aforesaid section of American Jurisprudence, it is there declared: "The authorities are generally agreed that if the necessary effect of the contract or combination is to stifle or directly or necessarily to restrict free competition or lessen it to an unreasonable extent, such contract or combination is under the ban of the law, whatever may have been the intention of the parties." Reference is made to Section 134, 36 Am. Jur., Monopolies, etc., page 607.
In a case involving Section 3 of the Anti-trust Act (Laws 1900, page 126, chap. 88) the Supreme Court of Mississippi, quoting from Yazoo M.V.R. Co. v. Searles, 85 Miss. 520, 37 So. 939, 942, 68 L.R.A. 715, said "that the phrase `inimical to the public welfare' was a legislative declaration that all the contracts condemned by this anti-trust statute were so `inimical, were unlawful, and were a criminal conspiracy'". The Court further declared that "it is not left to the courts to say that such contracts are inimical to the public welfare, but the Legislature itself has characterized such contracts as being inimical to the public welfare by this legislative declaration." Kosciusko Oil Mill Fertilizer Company v. Wilson Cotton Oil Company, 90 Miss. 551, 43 So. 435, 437, 8 L.R.A., N.S., 1053.
In the case of United States v. E.C. Knight Company et al., 156 U.S. 16, 15 S.Ct. 249, 39 L.Ed. 325, that Court held: Again all the authorities agree that (Hn 4) in order to vitiate a contract or combination, it is not required that its result should be a complete monopoly. It is sufficient if it really tends to that end and to deprive the public of the advantages that flow from free competition. See also Yazoo Mississippi Valley Railroad Company v. Searles, 85 Miss. 520, 525, 37 So. 939, 68 L.R.A. 715; Harvey v. State ex rel. Knox, Atty. General, 149 Miss. 874, 116 So. 98; Standard Oil Company of Kentucky v. State, ex rel., Atty. General, 107 Miss. 377, 65 So. 468.
(Hn 2) So, it is to be deduced from the foregoing authorities that the Legislature has declared the forbidden things, listed in the statute, to be inimical to the public welfare, and, therefore, if proof be sufficiently made of a transgression of the statutory prohibitions, such act is intrinsically inimical to the public welfare without further or special proof of a result beyond the definitions of the statutes, or deduction by the courts that proven violations are or are not inimical to public welfare. The Legislature has pre-empted the question.
As to proof of conspiracy, with which the second count of the declaration deals, the rule as to the nature and character of the evidence to be adduced as proof of an unlawful combine or conspiracy, the general rule is set forth in 15 Corpus Juris Secundum, Conspiracy, Section 29; and 5 R.C.L., Conspiracy, Sections 37, 39.
In dealing with alleged violation of the Sherman Anti-Trust Laws, the Supreme Court of the United States said: "But it is said that in order to show a combination or conspiracy within the Sherman act some agreement must be shown under which concerted action is taken. It is elementary, however, that conspiracies are seldom capable of proof by direct testimony, and may be inferred from the things actually done; and when, in this case, by concerted action the names of wholesalers who were reported as having made sales to consumers were periodically reported to the other members of the associations, the conspiracy to accomplish that which was the natural consequence of such action may be readily inferred." Eastern States Retail Lumber Dealers' Association, et al. v. United States, 234 U.S. 600, 34 S.Ct. 951, 954, 58 L.Ed. 1490, L.R.A. 1915A, 788.
We think the case of Memphis Steam Laundry-Cleaners, Inc., v. Lindsey, 192 Miss. 224, 5 So.2d 227, is very much in point here. It is, however, the only case we can find where proof was made by evidence of express threats. Yet, the principle itself is applicable here, even if express threats against appellants be not proven, if the circumstantial evidence be sufficient to establish a like purpose. In that case we held that (Hn 5) the reduction of prices is an absolute right of the owner of a business and is lawful of itself, but under the guise of exercising an absolute right, it is not lawful indirectly to interfere with the business, employment, or occupation of a third person, where the exercise of the right was with the object of injuring the third person rather than primarily of benefitting the person exercising the right. The Lindsey case, it is true, was a common law action for unfair competition, while the second count of the case at bar is a common law action for conspiracy, but they are analogous enough to draw from similar principles.
Without deciding the issue of fact ourselves, we are of the opinion also that the trial judge should not have decided it, but should have left it to the jury. To set out all of the evidence in this voluminous record would require a book. We will merely suggest some of the principal factual issues: (1) whether or not the defendants conspired unlawfully to stifle trade, interfere with, or drive appellants out of their trade territory in the City of Jackson, or whether their action was merely in lawful competition with Acme Bakery; (2) were the three reductions in prices of bread in the City of Jackson made simultaneously, or approximately so, and part of a conspiracy against appellants, or in violation of the anti-trust statutes, or if the incidence of closely timed reductions was a mere coincidence? (3) whether the visit of North and his manager, on the occasion of the resumption of the baking business in Jackson by appellants, was part of a general design to interfere unlawfully with their doing so, and a part of a common scheme of all three defendants; (4) whether the contributions of eleven-inch pans by all defendants synchronously, at the time appellants were making a thirteen-inch loaf, and never had made any other, and all appellants were making an eleven-inch loaf, was a part of a concerted plot under the statute, against appellants; (5) whether, when appellants went back to the thirteen-inch loaf, all three appellees twice and simultaneously put sealettes on their loaves, fixing the retail price of the same, this was a furtherance of a united purpose against appellants, as alleged in their declaration; (6) whether the fact that the two corporate defendants put out a thirteen-inch loaf and all three still retained their eleven-inch loaf at cut prices, was an element in a combined purpose to contravene the statute, to the unlawful hurt and injury of appellants; (7) whether or not, the reduction of the bread price of the three appellees only in the City of Jackson, and only where appellants operated, and not outside, where appellants did not operate, was a fact under the statute; (8) whether, the successive reductions of their bread in the City of Jackson alone by all three appellees from thirteen cents to twelve cents, from twelve cents to ten cents, and from ten cents to eight cents, the latter being below the cost of production, was a fact and brought the defendants within the condemnation of the statute, or whether it was aimed at Acme alone; (9) whether or not the three appellees conferred with each other as to the consecutive steps suggested from the evidence, in the foregoing, and refrained from conferring with appellants, was such conduct as resulted in doing the thing prohibited by the statute; whether all of the three appellees raised the price of their bread back to its original cost to the consumer on the same day, upon the filing of this action against them, and why; (10) whether appellees were only trying lawfully to meet the competition of Acme, or seeking to destroy appellants' business, or illegally interfere with free trade, reduce the price or production of bread, as against the statutes; (11) or as a matter of fact violated any of the charged statutory provisions; and (12) whether or not an allegedly unlawful conspiracy was entered into against appellants, as charged in the declaration. We are not precluding any other issues inadvertently omitted from the foregoing. (Hn 6) Appellants had just resumed their business in Jackson when these appellees began the series of events culminating in this suit. Their production had reached about one thousand loaves per day, but Mr. Wagley was apparently conducting a vigorous advertising campaign, and the business was growing with their thirteen-inch loaf on the market, the only sort they had ever made or for which they had the pans. Thereupon, the activities of appellees sprang into being, or at least we think the jury should be permitted to say whether they did, or were precipitated by a course of dealing by Acme. Frankly, from the record, Acme's competition seems rather negligible, and the jury should have the right to consider its small production against the very large production of the three defendants, in reaching a verdict in this case.
It seems improbable that it was against Acme, but more probable that it was in concert with Acme, whose manager testified that never before in all the long history of that bakery had it cut prices of bread, and yet, here the three defendants, at approximately the same time, ultimately cut the price of bread to eight cents, admittedly below the cost of production, and admittedly leading to bankruptcy if long followed. Or the jury would be justified in so finding. Appellants did not and could not meet this cut. They had eight hundred and forty loaves returned to them by the retailers in a single day, and their sales suffered a heavy decrease throughout the period. It is not disputed in the record, as we see it, that appellees, all three of them, at a time when all three were operating both in and out of Jackson, wherein only appellants were operating, all fixed the price of bread in Jackson at a price lower than their price for the same bread outside the city limits. With this, Subsection (d), Section 1089, Code 1942, specifically deals, as follows: "Or shall destroy or attempt to destroy competition in the manufacture or sale of a commodity, by selling or offering the same for sale at a lower price at one place in the state than another . . .". Or, at least, a jury could so find.
We are of the opinion, as stated supra, that the lower court committed reversible error in granting appellees the peremptory instruction, and remand it for a new trial.
Complaint is also made of other actions of the trial court to the alleged prejudice of appellants.
(Hn 7) Appellants offered the Presidents of defendant corporations, Hardin and Colonial, as adverse witnesses, but the court would not permit them to be cross-examined as adverse witnesses, at the objection of appellees. Appellants then asked to examine them in the absence of the jury, so as to make a record, which was also denied. Later, but not before the jury, appellants were permitted to state in the record what they expected to prove by three executives, to which appellees fling the charge that it was merely a repetition of the declaration in the case. The court, during the trial, permitted these same two presidents of defendant corporations to remain in the courtroom as advisers to the attorneys for the defendant-appellees.
Appellees seek to justify this denial of such cross-examination under the statute, Section 1710, Code 1942, which reads in part: "A party to a suit desiring to examine any opposite party in open court, may, without first taking his deposition, have such party subpoenaed as a witness and examine him in the presence of the court . . . and shall be at liberty to contradict the testimony of such party . . .". It is contended that the presidents of the corporate defendants were not opposite parties in this case, although their corporations were parties, and hence appellees contend that the trial court was correct in this ruling. They cite a Massachusetts case which seems to lend them encouragement. Reed v. Mattapan Deposit Trust Company, 198 Mass. 306, 84 N.E. 469. However, the witness was an actuary, and not a president, although an officer of the company. We think this was error. We believe that a justified parity of reasoning brings the point within the conclusion of this Court in the case of Illinois Central Railroad Company v. Sanford, 75 Miss. 862, 23 So. 355, 942, dealing with interrogatories addressed to non-resident defendants, wherein we said: "If the testimony of a party to a suit who resides out of the state, . . ." etc. In that case, it was declared: "We are of the opinion that Section 1761 (Code 1892) applies to and includes corporations. It seems natural and reasonable to suppose that that section should apply in favor of all litigants, and against all parties to a suit, whether such parties be natural or artificial persons. It is obvious that a corporation cannot deliver testimony in person, and may not therefore literally comply with the statute, yet the business of corporations is conducted by the agency of officers intrusted with duties assigned them, as president, manager, or heads of department, etc., and these officers or heads of department may well speak for the corporation in matters confined to their management." We think the same reasoning applies here to charge the trial court with error in refusing to permit appellants to introduce the presidents of the two defendant corporations as adverse witnesses.
It was also contended by appellees that even if this were error, it was harmless at least as to one of such presidents, whom appellees introduced, and he was cross-examined by appellants' counsel. We do not think this is a successful answer. He had sat in the courtroom, and by that time, had become a thoroughly informed witness, and the harm had already been done to appellants.
It is interesting in this connection to ponder what was said in Reed et al. v. Charping, Miss., 41 So.2d 11, 13: "While appellee made a gesture at denial of his representations, he contradicted himself on numerous points in his testimony, there being a substantial variance between what he said when unexpectedly called as an adverse witness for cross-examination and what he later said on direct examination as a witness in his own behalf." In other words, appellants had lost this advantage of surprise, when this witness was later introduced by appellees.
We do not think the authorities cited by appellees justified the trial court in this regard. Illinois Central R. Co. v. Sanford, supra. Section 1711, Code 1942, uses the language, "a party or other interested witness." Under Section 1712, dealing with depositions of non-resident parties, where interrogatories are addressed to a defendant corporation, such interrogatories would have to be answered by an officer of the corporation. Compare Cumberland Tel. Tel. Co. v. State, 98 Miss. 159, 53 So. 489. In the Memphis Steam Laundry-Cleaners case, supra, we held that the motives or malice of the officers of defendant corporation, while they are engaged in carrying out their policy of trying to destroy plaintiff's business, were the motives or malice of the corporation itself since it could only act through them in determining upon and carrying out such a policy. We have concluded the trial court committed prejudicial error here, for which the case must be reversed and remanded.
(Hn 8) One of the assignments of error is that Mrs. Pucket was refused permission to testify, as a witness for appellants, to her conversation with the sales manager of defendant, Hardin's Bakery. She was a dealer in bread outside of Jackson, who was not getting the benefit of price reductions in the City of Jackson, and when she protested, Hardin's manager came to see her, but the court, at the instance of appellees, refused to let her relate what he said. We think this was error.
(Hn 9) We are also of the opinion that the court erred in refusing to let certain witnesses of appellees repeat telephone conversations allegedly had with managers and authoritative employees of appellees, when the parties were so called by the witnesses, and purportedly answered in the characters in which they were called. This created a rebuttable presumption that they were what they represented themselves to be, and this evidence in our judgment was admissible, and the court erred in not admitting it. 20 Am. Jur., Evidence, Section 367, page 335.
(Hn 10) It was likewise error to sustain objections to certain questions propounded to certain officers and employees of the various defendants, on the ground that they could speak only for themselves and their companies, and not for their co-defendants, by their testimony. They were all charged with the joint violation of the anti-trust statutes and with seeking a common end, and with conspiracy. The court below by overruling the motion to exclude and grant appellees a directed verdict, as stated supra, had thereby certified appellants had made out a prima facie case. Their testimony was relevant to the issue, and should have been admitted, we think as against all, for the reason that it necessarily involved all of the defendants, and its purpose was to tie all defendants together. This, too, we think was reversible error. "One conspirator, although uncorroborated, is a competent witness against a co-conspirator." 15 C.J.S., Conspiracy, Section 29, p. 1043. This section further says: (Hn 11) "The law permits great latitude in the admission of circumstantial evidence tending to establish a conspiracy, and to connect those advising, encouraging, aiding, abetting, and ratifying the overt acts committed for the purpose of carrying into effect the objects of the conspiracy, as the jury should have before them and are entitled to consider every fact which has a bearing on and a tendency to prove the ultimate fact in issue and which will enable them to come to a satisfactory conclusion."
By the rulings of the court in connection with the last four assignments of error, the trial court prevented appellants from fully and adequately developing their case, which they should not be prevented from so doing on a retrial thereof before a jury. We have meticulously considered the entire record and case, and have devoted most careful attention to all of the excellent briefs, on both sides. We have reached our conclusion only after so doing.
The case will be, and is, reversed and remanded for a new trial before a jury.
Reversed and remanded.
This, in my view, in the last analysis, is nothing but a price-war between private enterprises selling the same commodity — one type of war, at least, of benefit to the public, and one permitted to private institutions under our supposedly competitive form of free government. And appellants started the war. It is not the first time in history that the aggressor has been the loser in the end. In any event, it is not to me a case calling for and justifying the use of the power and processes of the courts in the punishment of competitors who were defending themselves, and engaged in the reduction of prices to the public, a result certainly not undesirable at the present time.