Brief for the Respondents in Opposition — Northwestern Oil Co. v. Socony-Vacuum Oil Co.

ih PRLS RENE 8 a

ene . > we: i

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IN THE

Supreme Court of the United States

Octoser Term, A. D. 1943.

No. 725

NORTHWESTERN OIL COMPANY, a corporation,

Petitioner,

vs.

SOCONY-VACUUM OIL COMPANY, INC., er at.,

Respondents.

BRIEF OF RESPONDENTS, SOCONY-VACUUM OIL COMPANY,

INC., CONTINENTAL OIL COMPANY, THE PURE OIL com-

PANY, SHELL OIL COMPANY, INC., SINCLAIR REFINING

COMPANY, MID-CONTINENT PETROLEUM CORPORATION AND

PHILLIPS PETROLEUM COMPANY, IN OPPOSITION TO THE

PETITION FOR WRIT OF CERTIORARI.

DAVID T. SEARLS,

VINSON, ELKINS, WEEMS & FRANCIS,

Esperson Building,

Houston, Texas,

LEON E. ISAKSEN,

H. H. THOMAS,

THOMAS, ORR & ISAKSEN,

122 West Washington Avenue,

Madison, Wisconsin,

WILLIAM H. DOUGHERTY,

STANLEY M. RYAN,

NOLAN, DOUGHERTY, GRUBB & RYAN,

401 Jackman Building,

Janesville, Wisconsin,

J. H. MARSHUTZ,

FISH, MARSHUTZ & HOFFMAN,

1115 Wells Building,

Milwaukee, Wisconsin,

STURTEVANT HINMAN,

135 South La Salle Street,

Chicago, Illinois,

Attornens for Respondents,

Socony-Vacuum Oil Company, Inc.,

Continental Oil Company,

The Pure Oil Company,

Shell Oil Company, Inc.,

Sinclair Refining Company,

Mid-Continent Petroleum Corporation,

Phillips Petroleum Compeny.

eee eee re ae ere Super

INDEX.

PAGE

Reference to Opinion of Lower Court................ 1

ANU GE PURI ss cs vas hoc KS added kee ens 1

SOMONE GE SI i sie ss ik a ae cP Ae oe 2-10

ONES GE OI 5 ns dae ov ky we oe ca vk 11-13

eee haere re pir GAR repre apes Eanes 14-29

I. This Court Should Not Grant the Petition for

Writ of Certiorari Because It Would Be Neces-

sary, in Any Event, to Affirm the Judgment of

the Lower Court as the Petitioner Has Failed to

Bring Forward One of the Two Grounds Upon

Which the Cirenit Court of Appeals Based Tts

PD bye ev ue tana eles wih eevee. s

. The Cireuit Court of Appeals Was Correct in

Affirming the Judgment of the Trial Court Be-

cause a Person Cannot Recover Damages Under

the Clayton Act Unless He Has Shown Pecuniary

Loss in Business or Property as the Proximate

Result of a Violation of the Antitrust Laws....

A. Personal Pecuniary Damage in Business or

Property Is the Gist of an Action Under the

| RG aeeeenelae: Mok CoC uatrLN MUL RL NCTE ae

B. The Decision of the Seventh Cireuit Court of

Appeals in the Present Case Is in Accord

With Decisions in Other Jobber Treble Dam-

age Cases Arising Out of the Madison Oil

RM tisk geek 0h 0k REET YS EO eM eR

(. There Is No Conflict Between the Cases Cited

by Petitioner and the Decision of the Cireuit

Court of Appeals in the Present Case.......

14

16

III.

Le

il

Petitioner’s Evidence Failed to Establish Any

Injury in Its Business or Property............

A. Petitioner Did Not Bring Forward the Evi-

dence in Its Possession Which Would Have

Established Definitely Whether or Not the

Increase in Its Purchase Price Was Passed

Sn ase kd wee cad ROeN eee ee ee ares

B. The Oniy Reasonable Inference Which Can

Be Drawn from the Evidence Is That Peti-

tioner Sustained No Injury................

The Claim of Petitioner That Respondents Fixed

and Limited Its Margin, and Fixed, Reduced

and Limited the Retail Price Is Raised for the

First Time in the Supreme Court and Is With-

out Support in the Pleadings or Evidence.....

. Petitioner Cannot Maintain This Action Against

Respondents, Because Both Petitioner and Re-

spondents Were Participants in a Broad Stabili-

zation Program to Raise Prices in Petroleum

Markets, and Sueh Stabilization Program Was

Found to Be [legal in United States v. Socony-

Vaecunm Oil Co., Ine., et al., 310 U.S. 150 (1940)

24

26

28

a

CREA OAS allie VRE LE ELT PBI I, aly VBE ERE GEE POEM

ili

TabLe or Cases Crrep.

Bluefields S. 8. Co., Limited v. United Fruit Co., 243

F. 1, 13-14, 18-19 (C. C. A. 3rd, catg PETE Tee 29

Chattanooga Foundry and Pipe Works y. City of At-

lanta, 203 U.S. 390, 399, 27S. Ct. 69, 51 L. Ed. 241

“in ip OT OTTO ae On eae aes 18, 23

Davis v. Portland Seed Company, 264 U. S. 403, 44 S.

Ct. 380, 68 L. Ed. 762 (1924)...................... 20

Douglity-MceDonald Grocery Company, et al. vy. Atehi-

son, Topeka & Santa Fe Railway Company, et al.,

WIE Re Se sO MMR Raid ae 19

Eastman Kodak Co. v. Blackmore, 277 F. 694 (C. C. A.

My NOME eck ey cbs Edeain laa ghana, 29

Farmers Co-op. Oil Co. y. Socony-Vacuum Oil Co., Ine.,

et al., 183 F. (2d) 101, 103 (C. C. A. 8th, 1942)...... 17

Federal Trade Commission y. Pacifie States Paper

Trade Association, 273 U. S. 52, 66, 47 S. Ct. 255. 71

FoF Me BON doin deen os loony ie ui 15

Foster & Kleiser Co. y. Special Site Sien Co., 85 F. (2d)

742, 750 (C. C. A. 9th, 1936), certiorari denied 299

WAM MO wiSene elses taenpiceledsage oc oe 16

Fox Film Corp. v. Muller, 296 U.S. 207, 209, 210, 56

S. Ct. 183, 80 L. Ed. 158 cen CT eR OE RET 15

| Galloway, Joseph, by Freda Galloway, his Guardian,

Petitioner v. The United States of America, 319 U. 8,

372, 87 L. Fd. 1042, 1051 ee EEE ee era

General Talking Pictures Corp. v. Western Electric Co.,

et al., 304 U.S. 175, 177-178, 58S. Ct. 849, 82 L. Ed.

saa via dees ee Core RE 14

Glenn Coal Co. v. Dickinson Fuel Co., et al., 72 F. (2d)

885, 887 (C. C. A. ta ign, Re SE aE Ree 16

bo

wl

iv

Gunning v. Cooley, 281 U.S. 90, 98, 50S. Ct. 251, 74

igs: is Ie Se ie 55 ak OR a Ok eS eR bore 14

Harriman v. Northern Securities Company, 197 U.S.

944, 298, 25 S. Ct. 493, 49 L. Ed. 739 (1905)......... 29

Helvering, Commissioner of Internal Revenue v. Tay-

lor, 293 U. S. 507, 511, 55 S. Ct. 287, 79 L. Ed. 623

CERN eco oa Sie aces 8 he Be ek a ne ele 14

Interstate Circuit, Ine., et al. v. United States, 306

U. S. 208, 226, 59 S. Ct. 467, 83 L. Ed. 610 (1939)..... 25

Jack v. Armour & Co., et al., 291 F. 741, 745 (C. C. A.

>| eee Ree gree et ore Meta ase re ae ee et 16

Keogh v. Chicago & Northwestern Railway Company,

et al, 271. 444, 447 (0. ©, Aah, TORR)... wee tes 16

Keogh v. Chicago & Northwestern Railway Company,

et al., 260 U.S. 156, 164-165, 48 S. Ct. 47, 67 L. Ed.

Se Se cai ees rd eaeha etn awheee aren 12, 17, 21

Leonard v. Socony-Vacuum Oil Co., Ine., et al, 42 F.

Supp. 369, 370 (D. C., W. D. Wis., 1942)............ 17

Locker, et al. v. American Tobacco Co., et al., 218 F.

57 SAG 0 KB Be Bn ees) eee ag ees 16

Louisville & Nashville Railroad Co. v. Sloss-Sheffield

Steel & Tron Company, 269 U. S. 217, 235, 46S. Ct.

Tay Oe Mh Wome Ne (TOR avs vtec vas tect reseute 19

Lynch, et al. v. New York ex rel Pierson, 293 U.S. 52,

64, 55, 55'S. Ct. 16, 79 L. Hid. 191 (1964)... . 2... .055 11, 15

Maltz v. Sax, et al., 134 F. (2d) 2,5 (C. C. A. 7th, 1943) 29

Miller, H. E.. Oil Co. v. Socony-Vaeuum Oil Co., Inc.,

et al. 37 F. Supp. 831 (D. C., E. D. Mo., FE. D. 1941) 17

Mills v. Green, 159 U.S. 651, 653, 16S. Ct. 132, 40 L. Ed.

et. | rr en minr rr sors aay rem 8 15

Missouri Portland Cement Company v. Director Gen-

eral, as Agent, 88 T, C. C@. 492, 495, 496 (1924) ....... eal

ny

eS

New York, N. H. & H.R. Co., et al. v. Ballou & Wright,

242 F. 862, 867 (C. C. A. 9th, gk gl SRUaR Aap Nueces ti 19

Nicola, Stone & Myers Company y. Louisville & Nash-

ville Railroad Company, et al., 14 1 (. C. 199, 209

GE Sas Soa senate vee pete catia sk ee 20

Palmer, et al. v. Connecticut Railway & Lighting Co.,

811 U.S. o44, 561, 61S. Ct. 379, 85 L. Ed. 336 (1941) 25

Pennsylvania Railroad Company vy. International Coal

Mining Company, 230 U. S. 184, 202-203, 204-205,

206, 33'S. Ct. 893, 57 L. Ed. 1446 CRWEMEy betkescheuk 20

Prudence Co., Ine., The vy. Fidelity & Deposit Company

of Marvland, et al., 297 U.S. 198, 208, 56 S. Ct. 387,

eile Maine Bit A sctane’ ELT ER RET ee 11, 15

Richardson v. MeChesney, Secretary of State of the

Commonwealth of Kentucky, 218 U. S. 487, 492, 31

S. Ct. 48, 54 L. Ed. 1121 RIPOET Sivas cn Ge eee eens 11,15

Shuell, et al. v. London Amusement Co., 123 F. (2d)

WZ, WG (CoC. A. Cth, 1089)... ieee cc. 25

Southern Pacifie Company, et al. y. Darnell-Taenzer

Lumber Company, et al., 245 U. S. 531, 534, 38 S. Ct.

186, 62 L. Ed. 45% (1918)................5....... 19, 21

State of Oklahoma v. State of Texas, 256 U. S. 70, 88,

41'S. Ct. 420, 65 L. Ed. 881 (1921).................. 6

Story Parchment Company y. Paterson Parchment

Paper Company, et al., 282 U.S. 555. 962, 51 8. Ct.

248, 76 L. Bed. GAG (1981) oe cove cece. 25

Straus, et al. v. Victor Talking Mach. Co., et al., 297 F.

FOR LO; SS, Be AOA oes bows jas eR 12, 22

Tennessee y. Condon, 189 U. §. 64, 70, 71, 23 S. Ct. 579,

OF ho, Set ARON Cos Ohrcc uke Sok gee eee lacn 15

Twin Ports Oil Co. v. Pure Oi] Co., 119 F. (2d) 747, 750,

791 (C. C. A. Sth. 1941), certiorari denied 314 1. S.

644, 86 L. Ed. 77, motion for rehearing denied 314

W. 8. 790, O02, Ol ME... eS 11, 16, 21, 22

vi

United States v. Pink, 315 U. S. 203, 62 S. Ct. 552, 86

Rae eT Re Ch ekg yoy bcs de seh eae e kone de

United States v. Socony-Vacuum Oil Co., Ine., et al.,

310 U.S. 150, 190-192, 198-200, 60 S. Ct. 811, 84 L.

i RMI cen uae Syne cover a 2, 6, 18, 26, 28

Victor Talking Mach. Co. v. Kemeny, 271 F. 810, 816

ee a a ON ee ere ere 29

SratutTEs CITED.

Clayton Act, October 15, 1914, See. 4, 38 Stat. 750; Title

15 U.S.C. A. See. 15..... 1, 3, 15, 16, 17, 18, 19, 20, 22, 28

Interstate Commerce Act, Act of February 4, 1887,

Sees. 1, 2, 4, Title 49 U.S. C. A. Sees. 1, 2 and 4... .19, 20 F

Sherman Act, Act of July 2, 1890, 26 Stat. 209; Title 15 4

Bren cas SC cs AU ee Rae ee ddd Pa pis dad owe 15

Rvuwes Cirep.

Rule 38, Supreme Court Rules................... 11, 14, 28 :

ad Reataa c

ee Oe OR ee ee ee eRe ne eo ye eee ae ee eee

IN THE

Supreme Court of the United States

Ocroser Term, A. D, 1943.

No. 725

ee eee

NORTHWESTERN OIL COMPANY, a CORPORATION,

Petitioner,

VS.

SOCONY-VACUUM OIL COMPANY, INC., er an.

Respondents,

BRIEF OF RESPONDENTS, SOCONY-VACUUM OIL

COMPANY, INC., CONTINENTAL OIL COMPANY,

THE PURE OIL COMPANY, SHELL OIL COMPANY,

INC., SINCLAIR REFINING COMPANY, MID-CONTI.

NENT PETROLEUM CORPORATION AND PHILLIPS

PETROLEUM COMPANY, IN OPPOSITION TO THE

PETITION FOR WRIT OF CERTIORARI.

The opinion of the Cireuit Court of Appeals appears on

pages 1353 to 1358 of the record and is reported in 138 F.

(2d) 967 (Dee. 7, 1943),

JURISDICTION,

Petitioner asserts that the jurisdiction of this Court is

- invoked on the ground that the case is based upon an

» alleged violation of the Sherman and Clayton Antitrust

b Acts. Act of July 2, 1890, 26 Stat. 209,15 U.S.C. A. $1;

_ Act of October 15, 1914, 38 Stat. 730, 15 U.S. C. A. § 15.

| (Petition for Writ of Certiorari, p. 2.)

STATEMENT OF THE CASE.

1. The Proceedings in the Trial Court and the Circuit

Court of Appeals.

This action was brought by petitioner, Northwestern Oil

Company, to recover treble the damages alleged to have

been sustained by it as a result of the conspiracy for which

the respondents were convicted in United States v. Socony-

Vacuum Oil Co.. Inc., et al., 310 U.S. 150 (1940) (Madison

Oil Case).

Petitioner alleges in its complaint that if is a jobber

engaged in the business of purchasing and selling gasoline

(R. 5-6). Petitioner further alleges that as a result of

the conspiracy charged in the Madison Oil Case, there was

an increase in the tank ear price of gasoline resulting in pe

titioner paying a higher price for vasoline purchased by it,

and that it did not pass on the amount of this increase to

its customers (R. 6-9, 28-29).

Respondents denied that petitioner sustained any dam-

age, and alleged as a special defense that petitioner was

in pari delicto with them and had knowingly combined with

them and others to raise retail prices in certain parts of

the Middle West, which was the purpose of the conspiracy

charged in the Madison Oil Case (R. 39-41).

During the trial of the case, petitioner dismissed any

claim for damages on gasoline consumed and not resold by

it, and sought to maintain this action for damages solely

on gasoline bought and resold (R. 1313). |

At the conclusion of petitioner’s case in the trial court,

respondents moved for a directed verdict on two rounds:

(1) there was no evidence that petitioner had been injured

3

in its business or property; and (2) the undisputed evi-

dence established that petitioner participated in the eon-

spiracy and was in pari delicto with respondents (R. 1313-

1315). The trial court sustained respondents’ motion upon

the first ground and found it unnecessary to pass upon the

second ground (R. 987).

The Cireuit Court of Appeals affirmed the judgment of

the trial court upon both grounds (R. 1357-1358). The

Cireuit Court of Appeals made the following findings of

fact:

(1) Plaintiff wholly failed to prove any loss to its

property or business, and as the increases in plaintiff’s

buying price were followed by corresponding increases

in its selling price, the only reasonable inference from

the record is that plaintiff sustained no loss (R. 1354,

1357).

(2) The proof discloses that in the meetings and

conferences, as a result of which stabilization of prices

came about, plaintiff’s officers participated and co-

operated and were well advised that the program was

intended to establish an inereased tank car quotation

in order to maintain retail prices in plaintiff’s terri-

tory; and that the letters and testimony of plaintiff’s

officers clearly established that plaintiff was an active

agency in working out with defendants and others the

scheme of which it now complains and in raising and

maintaining prices (R. 1355). ;

The Court anounced two propositions of law:

(1) ‘**The Clayton Act does not permit recovery by

plaintiff in causes such as this for unlawful prices as

such but authorizes recovery only of pecuniary loss to

property or business.’’ (R. 1357.)

(2) ‘*Where parties stand in pari delicto, the law

leaves them where it finds them.’’ (R. 1358.)

The finding of fact and holding of the Cireuit Court of

Appeals on pari delicto are not brought forward by any

question in the Petition for Writ of Certiorari.

2. The Facts.

(a) The Facts Relating to Petitioner's Claim of Injury.

Petitioner is a jobber, buying gasoline and reselling it

to other jobbers, retail dealers and consumers (R. 223,

369). Petitioner did not buy any gasoline from respond-

ents, but purchased from.a large jobber, W. H. Barber

Company, who in turn bought from the refiner, Tide Water

Oil Company (R. 400-4053).

The facts establish that petitioner’s buying price and

likewise its selling price to other jobbers, dealers and con.

sumers were all based upon the tank car spot market.

The W. H. Barber Company bought from Tide Water at

te per gallon below the published tank car market (Ex. 16,

R. 243, 559: Ex. 146, R. 508, 510), and resold to petitioner

at the low of this market with certain credits (R. 400-403,

993. Ex. 15, R. 243,559). Petitioner was assured a margin

by Barber of 546 and subsequently 526 per gatlon between

the tank car price plus freight and the service station price |

established from time to time by Standard Oil Company

of Indiana (Ex. 15, R. 243, 560, 563-564). Petitioner re-

sold gasoline in tank cars to other jobbers at the average

of the hieh and low quotations of the same tank car spot

market upon which it purchased (R. 369; Ex. 13, R. 242,

1051). It resold to dealers at tank wagon prices, which

until Anenst 1936 were determined by deducting a fixed

discount from established service station prices (R. 250-

951, 303-204). It resold to consumers at service station

prices or at the consumers’ tank wagon price (R. 250).

Petitioner’s selling price did not vary with each sale as a

result of bargaining between seller and buyer. The price

at which petitioner sold to consumers and dealers was de-

termined at all times hy the posted prices of the market

leader, Standard Oi] Company of Indiana, as it was eus-

tomary for petitioner and other jobbers to follow the posted

prices of this market leader (R. 252-253, 571). In 1935 and

1936 Standard’s service station and tank wagon prices fol-

lowed the increases and decreases in the tank car market

as they were based on that market. Commencing on Sep-

tember 11, 1934 and continuing during 1935 and 1936,

Standard’s formula for determining its retail price was:

tank car price, plus freight, plus taxes, and plus 5}¢ per

gallon (R. 160-161, 203-204, 214). This formula was

adopted by the Department of Agriculture and Markets of

Wisconsin in Order 23C, which fixed the minimum service

station price in Wisconsin during the period between Feb-

ruary and June 1935 (Ex. 61, R. 380, 382-384).

The facts sustain the finding of the Cireuit Court of

Appeals that petitioner sustained no pecuniary loss in busi-

ness or property. The increases in the tank car market

complained of by petitioner, commenced early in 1935, and

by June 1935 the tank car market had increased 1.25¢.

During this period, petitioner’s sales price to dealers and

consumers had inereased 1.3¢. There were no further

changes in either petitioner’s buying or selling prices in

the remainder of 1935. In January 1936, petitioner’s buy-

ing price increased .5é and its selling price inereased .5¢.

There were decreases in petitioner’s buying price in 1936

of .625¢ and there were decreases in its selling price of

e. In October and November 1936, petitioner’s buying

price increased .25¢€, and in December its selling price in-

creased .3¢. Since the tank car market moves in eighths

and the service station and tank wagon markets move in

tenths, there were times when the buying or selling price of

petitioner had increased slightly more than the other, but

on December 31, 1936, the net increase in the selling price

was .059¢ more than the net increase in the buyine price

(R. 329-826; Fixes. 155, 156, R. 667, 1270-1273: Ex. 25, R.

376, 1070)... .

6

The fact that an increase in the tank car market would

result directly in an increase in the retail market was the

basic principle of the Madison Oil Case.’ .

In the present case petitioner offered in evidence a

computation purporting to show the amount it paid for

gasoline in 1935 and 1936, as compared with the amount

it would have paid at the tank car price in effect on Feb-

ruary 19, 1935 (Ex. 165, R. 913, 1501). Petitioner did not

offer any computation of its increased income resulting

from increases in its selling price during those years, nor

did petitioner prove the amount of gasoline sold by it

during those vears or during any price period.

1. The indictment in the Madison Oil Case charged that an in-

crease in tank car prices will result directly in an increase in

retail prices of gasoline and that defendants intentionally increased

the tank car price of gasoline and in turn intentionally raised the

general level of retail prices prevailing in the Midwestern area

‘including the Western District of Wisconsin) (Ex. 1, R. 110.

1000-1001). The trial court, in its charge to the jury in that case,

instructed them to return a verdiet of ‘‘not guilty’’ unless they

found that the defendants had intentionally raised the tank ear

price of gasoline ‘‘and in turn have intentionally raised the gen-

eral level of retail prices prevailing in said Mid-Western area,

ineluding the Western District of Wisconsin’? (Ex. 1-A, R. 834,

1028).

See opening statements and closing arguments of Government

counsel in Madison Oil Case (R. 103, 105-106, 2309 in United States

v. Socony-Vacuum Oil Co., Tne., et al., Nos. 346 and 347, 310 U.S.

150 (1940)). and opinion of the Supreme Court in United States

v. Socony-Vaenum Oil Co., Ine., et al. 310 U.S. 150. 190-192, 195-

200 (1940).

For the purpose of determining the extent of the judgment in

the Madison Oil Case as prima facie evidence in this case, the

court may examine the proceedings in that case, State of Ohlahoma

v. State of Texas, 256 U. 8..70, 88 (1921); and a court may take

judicial notice of its records, United States v. Pink, 315 U.S, 208

(1942).

“NI

(b) Price Stabilization Activities of Petitioner and Respondents.

In 1934 all prices in the petroleum industry were de-

moralized as a result of the economic depression and the

unlawful production of crude oil from the largest field in

the world, the Kast Texas Oil Field (R. 122-129). The

sale of both hot and distress gasoline was bringing about

price wars in the tank car market, and many retailers

were buying this cheap gasoline and were cutting the

retail market, which was resulting in price wars in that

market (R. 123, 128-129). In order to solve these prob-

lems, Harold L. Ickes, the Petroleum Administrator, wrote

a letter to C. HK. Arnott (the principal individual defend-

ant in the Madison Oil Case) directing him to take action

to restore markets to normal conditions (Ex. 4, R. 162,

165). Pursuant to this letter, Arnott appointed a General

Stabilization Committee, which in turn brought about the

appointment of various state and county price stabiliza-

tion committees in the Middle West. All of the different

units in the marketing branch of the industry were repre-

sented on these committees, namely, major oil companies,

jobbers, dealers and others (R. 134). In December, 1934,

there was a meeting of the General Stabilization Commit-

tee in Chicago, which was attended by representatives of

the major oil companies, jobbers, dealers and other mar-

keters. At this meeting, it was agreed to raise many

subnormal markets to normal in the Middle West, and this

agreement was made effective by state price stabilization

committees, state jobbers’ associations and other (R. 137-

139). At a subsequent meeting in Chicago in January,

1935, of this same General Stabilization Committee, Arnott

stated that there could not be stabilization in the retail

market without having a firm tank ear market, and he

appointed a subcommittee, known as the Tank Car Stabili-

zation Committee, to study the problem of the tank car

»

market and to work out a plan that would enable the inde.

pendent refiner to make a profit and that would support a

normal retail price structure (R. 140-143). This Tank Car

Committee developed the buying program complained of by

petitioner in the present case (R. 144-149); and this Com-

mittee made reports of its activities from time to time

to the parent committee, the General Stabilization Com-

mittee (R. 154-155). The Tank Car Committee met

monthly until February, 1936, and at this last meeting it

was discontinued (R. 148, 150).

Petitioner was an active participant in the stabilization

plan of the General Stabilization Committee and knew of

the existence of the buying programs of 1935. Petitioner

knew that it was essential to stabilize the tank car market

in order to maintain normal retail prices in its territory

(R. 408-409, 442-444, 446). Its Vice President and Gen-

eral Manager, A. F. Podvin, complained to the Petroleum

Administrative Board in Washington of the tank car

market bringing about a demoralized condition in the

retail market (Ex. 83, R. 438, 445). Margold of the Petro-

leum Administrative Board replied to Podvin and stated

that they realized that it was essential to eliminate the

distress gasoline in order to achieve any degree of stabili-

zation (Ex. 84, R. 438, 446). After the appointment of the

various stabilization committees by Arnott in the summer

of 1934, Podvin requested petitioner’s employees to co-

operate with these committees (Ex. 68, R. 414, 415). He

knew of the Chicago meeting of the General Stabilization

Committee in December, 1934; he knew that Arnott had

recommended the restoration of subnormal prices in peti-

tioner’s marketing territory in Minnesota; and he worked

and combined with respondents and others to carry out

the agreement reached at this Chicago meeting (R. 452-

464). Podvin testified that he and other representatives

of petitioner attended stabilization meetings in 1934, 1935

i eae iG EL We ON Hin lp BE ae PED RDA Ne Aue i EMER SAS CALL NEE PR: OD

9

and 1936; that agreements were made at some of. these

mectings to restore subnormal prices to normal; and that

there were representatives of the major oil companies,

jobbers and others at these meetings (R. 463, 488-490).

Podvin testified that he knew that the Minnesota and

Wisconsin stabilization committees, with which he was

working, were functioning under the General Stabilization

Committee headed by Mr. Arnott (R. 457). Petitioner’s

President, H. M. MeKenzi«, testified that he learned of the

buying programs shortly after March, 1935, and that he

talked with other officers of the petitioner about these

programs (R. 492-493). The letters written by Podvin,

as well as his testimony, establish that petitioner, with

full knowledge of the seope of the stabilization program,

was active in working with respondents and others in

raising prices both before and after the NRA was invali-

dated by the Supreme Court (R. 472-489).

\

3. Factual Errors in Petitioner’s Brief.

There are many purported statements of fact in Peti-

tioner’s Brief without supporting record references; many

of these are misstatements. We call attention to the fol-

lowing: :

(1) On Page 21 petitioner states that ‘‘The Dis-

trict Court * * * did intimate that there was no proof

of pari delicto. * * *’? On the contrary the District

Court said: ‘‘While there may be evidence to sustain

a finding that the plaintiffs were active participants

in the stabilization plan, I don’t think that it is neces-

sary for the Court to pass upon that portion of the

motion at this time, * * *’’ (R. 987).

(2) Petitioner makes several references to the

fact that it consumed about 2% of the gasoline pur-

chased by it (Pet’s. Brief, pp. 7,13). Petitioner fails

to call attention to the fact that during the trial it

dismissed any claim for damages on gasoline con-

sumed or not resold by it (R. 1313).

10

(3) Petitioner sets out a schedule of margins in

the appendix to its brief and refers to them as if they

were the margins of petitioner. The exhibit showing

these margins for 1934 was excluded by the trial

court (R. 669), and the exhibits showing these mar-

gins for 1935 and 1936 were ordered corrected so that

the jury would not be confused into believing that they

were petitioner’s margins (R. 496-497, 667-672).

Petitioner received larger margins (R. 337-339).

(4) On Page 22 petitioner states:

‘‘Podvin’s- activities with reference to restoring

prices in areas where price wars existed, were dis-

continued upon becoming suspicious that Respond.

ents were rigging the market. * * *

“Tf it be said that Podvin took part in the con-

spiracy which raised prices, he did so innocently.

ee @ @))

Podvin testified that he took an active part in stabili-

zation activities in 1934, 1935 and 1936 (R. 463, 48%

489). With reference to his innocence, he concluded

a letter in August, 1935 in regard to raising prices

with this statement:

“‘Sinee the cancellation of the N. R. A. we are

not supposed to talk prices or come to any agree

ment between one another on prices, therefore, |

am not making a copy of this letter and will asi

you to kindly destroy same after reading it so it wil

not get into vour files’? (Ex. 103, R. 474, 478).

Since this is an appeal from a judgment sustaining re

spondents’ motion for a directed verdict at the conclusiot

of petitioner’s case, respondents must accept the facts

shown by the record for the purposes of this appeal.

1}

SUMMARY OF ARGUMENT.

I.

The Petition for Writ of Certiorari does not bring for-

ward any question relating to the holding of the Cireuit

Court of Appeals that petitioner was in pari delicto with

respondents. The Court held that this was a sufficient

vround to support the directed verdict for respondents.

As this question is not brought forward, it is not before this

Court (Rule 38, Supreme Court Rwes) and this Court, in

any event, would have to affirm the judgment of the Cir-

enit Court of Appeals. The Supreme Court will not take

jurisdiction to decide moot questions, or when it appears

that the decision of the lower court will have to be af-

firmed regardless of how this Court resolves the questions

raised by the petition. The Prudence Co., Inc. vy. Fidelity

& Deposit Company of Maryland, et al., 297 U.S. 198, 208

(1936) ; Lynch, et al. v. New York ex rel. Pierson, 293 U.S.

52, 54, 55 (1934): Richardson v. McChesney, Secretary of

State of the Commonwealth of Kentucky, 218 U. 8. 487, 492

(1910).

The Cireuit Court of Appeals properly affirmed the judg-

ment of the trial court because no one is entitled to recover

damages under the antitrust laws unless he has sustained

a pecuniary loss in business or property. This is a well

settled rule.

The decision in the present case that a jobber is not

entitled to recover the amount of an increased price as such

is in accord with decisions of the Eighth Cireuit Court of

Appeals, Twin Ports Oil Co. v. Pure Oil Co., 119 F. (2d)

boned ae

12

747, 750, 751 (C. C. A. 8th, 1941), certiorari denied 314

U.S. 644, rehearing denied 314 U.S. 711, and various Dis-

trict Courts in jobber cases arising out of the Madison Oil

Case. This is the rule adopted by the Supreme Court.

Keogh v. Chicago & Northwestern Railway Company, et al.,

260 U.S. 156, 164-165 (1922).

Where, as here, and as charged in the Madison Oil Case,

the conspiracy has raised the whole market structure, the

jobber or middleman has not sustained any loss. Under

petitioner’s claim that any person who has paid an in-

creased price may recover, the Barber Company, the peti-

tioner, the subjobber, the dealer and the consumer, each

would be entitled to recover three times the amount of the

original increase upon the same gallon of gasoline.

The freight rate overcharge cases, relied upon by peti-

tioner, are not applicable because such cases hold that under

the Interstate Commerce Act there can be a recovery of an

overcharge without proof of pecuniary loss and the only

one who can recover is the one in privity with the carrier.

This Court has held that such cases are not applicable to an

action for damages under the antitrust laws. Keogh vy.

Chicago & Northwestern Railway Company, et al., 260 U.S.

156, 164-165 (1922). The decision in Straus, et al. v Victor

Talking Mach. Co., et al., 297 F. 791 (C. C. A. 2d, 1924)

does not conflict with the decision in the present case,

because in that case Strayg sustained a pecuniary loss

which was measured exactly by the increase in the purchase

price to him. Moreover, here the conspiracy has raised

both the buying and selling prices of petitioner. Since

petitioner has based its ease upon the Madison Oil Case, it

must accept the conspiracy and its total effect as charged

in that case and found to exist here, which was the raising

of both the tank car and retail prices of gasoline.

111.

>

Petitioner failed to prove any loss in business or prop-

erty and the only reasonable inference from the evidence,

which establishes that there were corresponding increases

in petitioner’s buying and selling prices as a result of the

couspiracy, is that petitioner sustained no loss.

LV.

The claim of petitioner that there was a conspiracy to

limit the jobber’s margins and to reduce or limit the retail

price is raised for the first time in the Supreme Court and

is without support in the pleadings or evidence.

%.

The undisputed evidence establishes that petitioner is in

pari delicto with respondents and as the finding of fact

of the Cireuit Court of Appeals on this point has not been

brought forward by any question in the petition for writ of

certiorari, such finding is binding on this Court. Where

parties are in pari delicto, the law leaves them where it

finds them.

EL eS ee eo SOS eRe a ee ee

14

ARGUMENT.

I.

This Court Should Not Grant the Petition for Writ of

Certiorari Because It Would Be Necessary, in Any Event,

to Affirm the Judgment of the Lower Court as the Pefi.

tioner Has Failed to Bring Forward One of the Two

Grounds Upon Which the Circuit Court of Appeals

Based Its Decision.

Respondents urged to the Cireuit Court of Appeals that

the directed verdict should be sustained upon the pari

delicto ground as well as upon the ground that the peti-

tioner had proved no damage in its business or property.

The Cireuit Court of Appeals found as a fact that the

petitioner had been a participant in the conspiracy and

held that:

‘Having participated in this illegal undertaking,

plaintiff may not recover; where parties stand in part

delicto. the law leaves them where it finds them * * *.”

(R. 1358.)

The Court held that this was a sufficient ground to support

the judgment for respondents.

The Petition for Writ of Certiorari does not question

the correctness of, and in fact does not even mention, the

decision of the Cireuit Court of Appeals that a verdict was

properly directed for the respondents on the ground that

the petitioner was in pari delicto. Not having brought this

question forward, it is not before this Court. Rule 38, Sw

preme Court Rules; Gunning v. Cooley, 281 U.S. 90, Qs

(1930): Helrering, Commissioner of Internal Revenue v.

Taylor, 293 U.S. 507, 511 (1955) ; General Talking Pictures

Corp. v. Western Electric Co., et al., 304 U.S. 175, 177-178

(1938). Therefore, this holding of the Cireuit Court of

s Li Want WING VM STORER MEAN ELS LL OI RES aE POLES ORME TEN GE TOE IAL TORIES ID

15

Appeals must be assumed to be correct, and the judgment

in this case, in any event, would have to be affirmed. The

Prudence Co., Ine. vy, Fidelity & Deposit Company of Mary-

land, et al., 297 U.S. 198, 208 (1936); Federal Trade Com-

mission V. Pacific States Paper Trade Association, 273 VU.

S. 52, 66 (1927).

This Court will not take jurisdiction when it appears,

as it does here, that the decision would have to be affirmed

regardless of how this Court resolves the point raised by

petitioner. Lynch, et al. v. New York ex rel. Pierson, 298

U.S. 02, 04, 55 (1954) and Fox Film Corp. v. Muller, 296

U.S. 207, 209, 210 (1935). It is the policy of this Court

to decide only actual controversies by a judgment that ean

be carried into effect, and not to give opinions upon moot

questions or abstract propositions, or to declare principles

or rules of law which cannot affect the rights of the parties

in the case before it. Richardson vy, MeChesney, Secretary

of State of the Commonwealth of Kentucky, 218 U. S. 487,

492 (1910); Mills v. Green, 159 U.S. 651, 653 (1895); T'en-

nessee V. Condon, 189 U.S. 64, 70, 71 (1903).

I].

The Circuit Court of Appeals Was Correct in Affirming

the Judgment of the Trial Court Because a Person Can-

not Recover Damages Under the Clayton Act Unless He

Has Shown Pecuniary Loss in Business or Property as

the Proximate Result of a Violation of the Antitrust

Laws.

A. Personal Pecuniary Damage in Business or Property Is the Gist

of an Action Under the Clayton Act.

Section 4 of the Clayton Act (15 U.S. C. A. $ 15), upon

Which this action is based, provides:

‘*Any person who shall be injured in his business

or property by reason of anything forbidden in the

16

antitrust laws may sue therefor * * * and shall recover

threefold the damages by him sustained, and the cost

of suit, including a reasonable attorney’s fee * * *.”

No one is entitled to recover under this section unless

he has suffered a pecuniary loss in his business or property

as a result of a violation of the antitrust law. The mere

fact that respondents have been convicted in a criminal

prosecution does not give petitioner a cause of action.

Pecuniary loss is the gist of the action. Meogh v. Chicago

& Northwestern Railway Company, ct al., 271 F. 444, 447

(C. C. A. 7th, 1921) affirmed 260 U. S. 156; Foster

Nleiser Co. v. Special Site Sign Co., 85 FF. (2d) 742, 750

(C. CL A. 9th, 1936), certiorari denied 299 U.S. 613; Glenn

Coal Co. v. Dickinson Fuel Co., et al., 72 F. (2d) 885, 887

(C. C. A. 4th, 1934); Jack vo Armour & Co., et al., 291 F.

741, 745 (C. C. A. 8th, 1928); Locker, et al. v. American To-

bacco Co., et al, 218 F. 447, 448 (C. C. A. 2d, 1914).

B. The Decision of the Seventh Circuit Court of Appeals in the Pres-

ent Case Is in Accord With Decisions in Other Jobber Treble Dan-

age Cases Arising Out of the Madison Oil Case.

The decision in the present case by the Seventh Cireuit

(‘ourt of Appeals is in aecord with decisions by the Eighth

Cireuit Court of Appeals and with decisions of various

District Courts in jobber cases arising out of the Madison

Oil Case. These courts have recognized that the eases

relied upon by petitioner here are not applicable to a

jobber action.

The first treble damage case brought against respond-

ents, as a result of the Madison Oil Case, was a suit by a

Jobber reported in Twin Ports Oil Co. vy. Pure Oil Co., 119

I. (2d) 747, 750 (C. C. A. 8th, 1941), certiorari denied 314

U.S. 644, rehearing denied 314 U. 8. 711. The Court held

that the Clayton Act does not authorize the recovery of an

17

unlawfully increased price but only the recovery of dam-

ages resulting therefrom. ‘The same cases relied upon by

petitioner here were urged upon the Supreme Court in the

petition for certiorari in that case.

Other jobber treble damage cases to the same effect are:

Leonard v. Socony-Vacuum Oil Co., Inc., et al., 42 ¥. Supp.

369, 370 (D. C., W. D. Wis., 1942); H. E. Miller Oil Co. v.

Socony-Vacuum Oil Co., Inc., et al., 37 F. Supp. 831 (D. C.,

EK. D. Mo., E. D., 1941) ; Farmers Co-op. Oil Co. v. Socony-

Vacuum Oil Co., Inc., et al., 133 F. (2d) 101, 103 (C. C. A.

Sth, 1942).

These decisions are in accord with the rule adopted by

the Supreme Court. This Court in Keogh v. Chicago

Northwestern Railway Company, et al., 260 U.S. 156, 164-

169 (1922) held that the exaction of a higher freight rate

as the result of a conspiracy did not in and of itself estab-

lish any damage under the antitrust laws to the shipper.

The contention of petitioner that the Clayton Act au-

thorizes the recovery of the amount of an increased pay-

ment as such, irrespective of pecuniary damage, is not only

contrary to the express wording of the Clayton Act and the

decisions construing it, but would lead to most inequitable

and absurd results.

Witness the course of a gallon of gasoline from producer

to consumer under the facts of this case where the peti-

tioner is the second jobber in the chain from producer to

consumer,

The Tide Water Company, the producer, sold to the

Barber Company, a jobber, at }¢ under the low quotation

of the tank car price as published in the Chicago Journal

of Commerce (Ex. 15, R. 243, 909); the Barber Company

then sold the same gasoline to petitioner at an invoiced

price equal to the low of the tank car price as published

in the Chicago Journal of Commerce (R. 223, 254); the

18

petitioner then sold the same gasoline to its subjobbers

at the average of the high and low quotations of the tank

car prices as published in the Chicago Journal of Commerce

(R. 369; Ex. 13, R. 242, 1051); or it sold such gasoline to

dealers or consumers at the dealer tank wagon or service

station price posted by Standard Oil Company which was

based upon the tank ear price as published in the Chicago

Journal of Commerce (R. 160-161, 252, 387, 571). In other

words, the buying price of Barber, petitioner, subjobber,

dealer and consumer were all based upon the spot tank

ear price as published in the Chicago Journal of Com-

merece, As stated by the Supreme Court in United States

v. Socony-Vacuum Oil Co., Inc., et al., 310 U.S. 150 (1940);

“* * * the spot market was a ‘peg to hang the

price structure on’.”’ (p. 192)

Thus, upon any unlawful rise in the tank car price,

both petitioner’s buying and selling prices were increased.

The same was true as to the buying and selling prices of

Barber, and of petitioner’s subjobber and of petitioner’s

dealer. Only the consumer, who is not a reseller, found

himself bearing the increase in price. Where the consumer

has paid the amount of an unlawful increase, he, and he

alone, is the person who has sustained pecuniary loss

within the meaning of the Clayton Act. He is the one in-

jured, because his property has been diminished. In con-

struing the similar section of the Sherman Act, Mr. Jus-

tice Holmes, in Chattanooga Foundry and Pipe Works vy.

City of Atlanta, 203 U. S. 390 (1906), said:

s«* * * A man is injured in his property when his

property is diminished. * * *’? (p. 399)

Where, as here, the conspiracy has raised the whole mar-

ket structure, the jobber’s or middleman’s property has not

heen diminished.

Under petitioner’s claim that any person who has paid

an increased price may recover three times the amount of

eee. eee

19

that increase without proof of pecuniary loss, the Bar-

ber Company, the petitioner, the subjobber, the dealer and

the consumer, each, would be entitled to recover three times

the amount of the original increase upon the same gallon

of gasoline. This would create a total liability upon the

respondents of fifteen times the amount of the increase,

However, petitioner suggests that the consumer cannot

recover because he was not in privity with respondents

(Pet’s. Brief, p. 14). Neither was petitioner in privity

with respondents as it did not purchase gasoline from

them. But, of course, privity is not essential to a recovery

under the anti-trust laws and petitioner cannot deny the

consumer a right of recovery on this ground.

C. There Is No Conflict Between the Cases Cited by Petitioner and the

Decision of the Circuit Court of Appeals in the Present Case.

In support of its contention that it can recover the

amount of the increased price as such, petitioner relies

on certain freight rate cases. These freight rate cases

are not applicable. The recovery of a tariff overcharge

under the Interstate Commerce Act (49 U. S. C. A. $1)

differs from a recovery under the Clayton Act, in the fol-

lowing respects:

(1) A tariff overcharge is recoverable as a matter

of law, without showing a pecuniary loss. Louisville

& Nashville Railroad Co. vy. Sloss-Sheficld Steel &

Tron Company, 269 U. 8. 217, 235 (1925); New York,

N. HW. & H. R. Co., et al. v. Ballou d& Wright, 242 F.

862, 867 (C. C. A. 9th, 1917); Doughty-McDonald Gro-

cery Company, et al. y. Atchison, Topeka & Santa Fe

Railway Company, et al., 155 1. C. C. 47 (1929).

(2) As the recovery is of the tariff overcharge as

such, only persons in privity with the carrier are en-

titled to recover—thus, suit must be brought by the

one who paid the overcharge and against the carrier

which collected the overcharge. Southern Pacific Com-

20

pany, et al. v. Darnell-Tacnzer Lumber Company, et al.

245 U.S. 531, 534 (1918); Missourt Portland Cement

Company v. Director General, as Agent, 88 I. C. C. 492,

495, 496 (1924); Nicola, Stone & Myers Company Vv.

Louisville & Nashville Railroad Company, et al., 14

I. C. C. 199, 209 (1908).

(3) An action under the Clayton Act is a tort ae-

tion. Such action is not for recovery ofan overcharge

as such, but is ‘‘for threefold the damages by him sus-

tained.’? Recovery is not limited to persons in privity

with the wrongdoer but extends to all persons who

have suffered pecuniary loss as a natural and _ prob-

able result of the illegal act. The amount of damages

may be more or less than the amount of any increase in

price.

Thus, the Interstate Commerce Act authorizes the re-

covery of a tariff overcharge by the one who pays it in the

first instance; the Clayton Act authorizes the recovery of

damages sustained.

The distinctive character of the railroad rate overcharge

cases, which do not require proof of pecuniary loss, is

emphasized by the fact that in suits by persons under the

Interstate Commerce Act for a violation of Section 2 (un-

jus! liserimination provision) or for a violation of Section

4 (the long-and-short-haul provision), pecuniary loss must

be established. Pennsylvania Railroad Company v. lr

ternational Coal Mining Company, 230 U. S. 184, 202-208,

206 (1912); Davis v. Portland Seed Company, 264 U.S, 408

(1924).

The Clayton Act is subject to the same rules of proof

as announced in the Jnternational Coal Case, and the so-

ealled rate reparation cases construing Section 1 of the

Interstate Commerce Act are wholly inapplicable. The

Supreme Court has held that the rule requiring pecuniary

loss, as announced in the International Coal Case, is con-

j

3

E

&

:

trolling in a treble damage action under the anti-trust laws,

21

and that the rule of Southern Pacific Company, et al. v.

Darnell-Taenzer Lumber Company, ct al., 245 U. S. 531

(1918), which is relied upon by petitioner, is not applica-

ble. In Keogh v. Chicago & North Western Railway Com-

pany, ct al., 260 U.S. 156 (1922), the Supreme Court said:

co’ * Under $7 of the Anti-Trust Act, as under

$8 of the Act to Regulate Commerce, Pennsylvania

R. R. Co. v. International Coal Mining Co., 230 U.S.

184, recovery cannot be had unless it is shown, that, as

a result of defendants’ acts, damages in some amount

susceptible of expression in figures resulted. These

damages must be proved by facts from which their

existence is logically and legally inferable. They can-

not be supplied by conjecture. To make proof of such

facts would be impossible in the case before us. It is

not like those cases where a shipper recovers from

the carrier the amount by which its exaction exceeded

the legal rate. Southern Pacific Co. v. Darnell-Taenzer

Co., 245 U. 8. 531. * * © (pp. 164-165)

Thus the Seventh Circuit Court of Appeals in the pres-

ent case and the Eighth Cireuit Court of Appeals in Twin

Ports Oil Co, v. Pure Oil Co., 119 F. (2d) 747, 750, 751 (C.

C. A. Sth, 1941), certiorari denied 314 U. S. 644, rehearing

denied 314 U. S. 711, followed the rule announced by the

Supreme Court in holding that the principle of the rate

overcharge cases was not applicable in a suit for damages

under the anti-trust laws.

Even if the rate reparation eases were applicable, peti-

tioner cannot recover under the very rule for which it con-

tends. Under those cases, the only one who can recover is

the one who paid the increased price in the first instance,

and the suit must be against the one who received the in-

creased price in the first instance. This petitioner is hot

the party who first paid the alleged increase and the re-

spondents are not the parties to whom the alleged increase

was paid. The alleged illegal increase in the tank ear price

22

was first paid by the W. H. Barber Company, who pur-

chased from Tide Water.

In addition to the rate reparation cases, petitioner re-

lies upon certain treble damage cases. A brief analysis

of these cases shows that they are not in conflict with the

decision in the present ease and that they do not in the

least depart from the long line of cases requiring pecu-

niary loss under the Clayton Act.

The plaintiff in Straus, et al. v. Victor Talking Mach.

Co.. et al., 297 F. 791 (C. C. A. 2d, 1924), was a retailer

who had been accustomed to buying Vietor products at

wholesale prices. Beeause plaintiff refused to abide by

certain trade practices imposed by the Victor Company,

that company refused to permit Straus to continue to buy

at wholesale. His competitors continued to receive the

benefit of the wholesale prices. In order to supply his

customers, Straus was foreed to buy Victor products on

the retail market.

This ease is neither applicable nor controlling here, be-

cause:

(1) Straus was forced from a wholesale to a retail

market. In other words, Straus was foreed to buy and

sell on the retail market. He thus suffered an actual

pecuniary loss which was measured exactly by the in.

crease inthe price to him.

(2) Only the price to Straus was raised and he

was the only one injured as a result of the conspiracy.

ITis selling price was not raised. Tn the present case

the whole market structure has been raised as a result

of the conspiracy and the consumer has borne the in-

erease in price.

(3) The Straus Case was urged upon the Circuit

Court of Appeals in Twin Ports Oil Co. v. Pure Oil Co.,

119 F. (2d) 747 (C. C. A. 8th, 1941). It was cited or

quoted from in the plaintiff's brief no less than a

dozen times. It was urged upon the Supreme Court in

the petition for writ of certiorari and the petition

OEE ONAN ARORA ED LINEN. SD The a CANORA 4 CONROE tS: tN a OE

23

was denied (314 U.S. 644). In view of the many anti-

trust decisions holding that pecuniary loss is essen-

tial to recovery under the anti-trust laws, statements

in the Straus Case must be considered in the light of

the facts of that case which established that a pecu-

niary loss had been sustained in the amount of the

increase in price which was the difference between the

wholesale price and the price paid by Straus.

It has already been pointed out that in Chattanooga

Foundry and Pipe Works v. City of Atlanta, 203 U.S. 390,

399 (1906), the plaintiff was injured because its property

was diminished. The City of Atlanta had purchased pipe

for its own use in its own city water system and the pipe

was not purchased for resale. Thus, the City was a con-

sumer and it bore the illegally increased price. The City

of Atlanta, therefore, actually sustained a pecuniary loss

which was measured by the amount of the illegally in-

creased price of the pipe.

The cases cited by petitioner are not controlling for a

still further reason:

In the Madison Oil Case, upon which petitioner bases

this case, the respondents were charged with and convicted

of raising the tank car and in turn the retail price of gaso-

line. Thus, under the theory of that case, both petitioner’s

buying and selling prices were raised as a result of this

conspiracy. As petitioner has based its case upon the eon-

spiracy established in the Madison Oil Case, it cannot at

its convenience take a part of this conspi~aecy and reject

the rest. It must accept the conspiracy and its total effect,

as charged in that case, which was the raising of both the

tank car and retail prices of gasoline. This fact in and of

itself is sufficient to distinguish this ease from the cases “

cited by petitioner.

24

III.

Petitioner’s Evidence Failed to Establish Any Injury in

Its Business or Property.

A. Petitioner Did Not Bring Forward the Evidence in Its Posses-

sion Which Would Have Established Definitely Whether or Not

the Increase in Its Purchase Price Was Passed On.

Petitioner did not sustain the burden of proof placed

upon it by the statute which requires proof of injury in

business or property. Although petitioner stood before

the Court strictly and solely as a reseller, seeking to re-

cover damages on only gasoline bought and resold as a

jobber, it did not attempt to establish that its cost of gaso-

line was increased more than the increase of income re-

sulting from the increase in the whole market structure.

Petitioner offered a tabulation of its increased cost (Ex.

165, R. 913, 1301), but failed to produce any computation

of increased income.

Petitioner has now set out a schedule of margins on

sales to dealers in the appendix to its brief and has re-

ferred to certain average margins on Pages 20 and 21 as

‘the jobber’s margin.’? These margins do not show any

damage to petitioner and, furthermore, they are not peti-

tioner’s margins (R. 496-497 ; 667-672). Reference is made

by petitioner to the fact that there was a higher average

margin for the vear 1934 than for the vears 1935 and 1936.

But, as shown by petitioner’s own schedule, the reduction

in margins occurred on September 11, 1934 as the result

of Standard’s action in reducing the service station price

994. This was several months prior to the commencement

of the conspiraey for which respondents were charged with

raising prices—not reducing them (Ex. 1, R. 110, 1001;

R.&). Even if petitioner had shown the margins received

by it at all of its bulk plants, it, also, wonld have been

necessary to prove the gallonage sold to jobbers, dealers

and consumers.

It would have been a simple matter for petitioner to have

ascertained its increased income. It had, as a part of its

records, price schedules showing the prices charged on

sales from its bulk plants (see Exs. 24, 25, 26, 27 & 28 [R.

376, 1069-1073] offered by respondents); and petitioner

also had sales analyses showing the gallonage sold to job-

bers, dealers and consumers (R. 920). It failed to produce

these price schedules or the sales analyses.

The burden was upon petitioner to prove the fact and

cause of injury with certainty. Story Parchment Company

v. Paterson Parchment Paper Company, et al., 282 U. 8.

599, 562 (1931); Palmer, et al. v. Connecticut Railway &

Lighting Co. 311 U. S. 544, 561 (1941); and its failure to

produce the evidence in its possession raises a presump-

tion that such evidence would have been adverse to it.

Joseph Galloway by Freda Galloway, his Guardian, Peti-

tioner v. The United States of America, 319 U. 8. 372

(1943); Interstate Circuit, Inc., et al. v. United States,

306 U. S. 208, 226 (1939); Shuell, et al. v. London Amuse-

ment Co., 123 F. (2d) 302, 306 (C. C. A. 6th, 1941).

B. The Only Reasonable Inference Which Can Be Drawn from the

Evidence Is That Petitioner Sustained No Injury.

We have set out in this brief the different increases in

the tank ear and retail markets during 1935 and 1936

(Brief, p. 5), and it appears that the increases in the

tank car market were followed by corresponding increases

in the retail market. Furthermore, the Barber Company

guaranteed petitioner a gross margin of profit of 53¢ and

subsequently 5i¢ per gallon, between the tank car price

plus freight and the normal service station price as posted

by the Standard Oil Company of Indiana less taxes (Ex.

15, R. 243, 560, 563-564).

OEP RO IO RAN ACR™ > PTE at =

RIE SW Ae RW Geib san aT

26

If petitioner paid an increased amount of $156,000.00

for gasoline as stated by it, it is clear that it received at

least this additional amount as the result of the increase

in the whole market structure, and undoubtedly it received

more as a result of buying and selling on a rising market.

Therefore, the only reasonable inference which can be

drawn from this evidence is that petitioner did not sus-

tain any injury in its business or property.

IV.

The Claim of Petitioner That Respondents Fixed and Lim-

ited Its Margin, and Fixed, Reduced and Limited the

Retail Price Is Raised for the First Time in the Supreme

Court and Is Without Support in the Pleadings or Evi-

dence.

Petitioner asserts that the contention of respondents

and the statements by the Supreme Court in United States

v. Socony-Vacuum Oil Co., Ine., et al., 310 U.S. 150 (1940),

that the buying and selling prices of the jobber were in-

creased, prove the fact of damage to it. The fact is that

just the contrary is established. Comparable increases in

both the buying and selling prices of the jobber estab-

lish that he received no injury.

Petitioner refers to the margin schedule in the appendix

to its brief (which does wot represent its margins) to show

that the jobber’s sails were reduced and did not ex-

ceed approximately 2¢ per gallon in 1935 and 1936. Peti-

tioner points out that Standard reduced the retail price on

9 (Commencing on September 11, 1934 and continuing through

1985 and 1936 Standard’s retail price was determined by com-

puting the tank car market and adding freight, taxes and 5\%e.

This 51%4e was the equivalent of a 2c jobber margin and a 3%

service station margin (R. 160-161, 203-204, 214). United States

vy. Socany-Vaeuum Oil Co., Inc., et al., 310 U.S. 150, 192.

>

-s

September 11, 1934, 2.2¢ ‘‘cutting the jobber’s margin from

03773¢ to .01573¢ per gallon’ (Pet’s. Brief, p. 19). Peti-

tioner suggests that this was the result of a conspiracy be-

tween Standard and respondents, and concludes that. re-

spondents have limited the jobber’s margin by fixing both

the buying and selling prices of the jobber. This point is

made for the first time in the Supreme Court and is without

support in the pleadings or evidence in the trial court or

in the statement points in the Circuit Court of Appeals.

The Government charged in the Madison Oil Case and pe-

titioner alleged in this case that respondents entered into

a conspiracy to raise prices (not to reduce them), and

that such conspiracy began in February 1935 (not on Sep-

tember 11, 1934) (Ex. 1, R. 110, 1001; R. 6).

Petitioner recognizes that this was not an issue in the

trial court by the following statement in its brief:

‘Respondents cannot complain that this theory is

not now more specifically set out in the pleadings nor

insisted upon in the trial.’’ (Pet’s. Brief, p. 21)

Not only was it not set out in the pleadings or insisted upon

in the trial, but it was expressly disclaimed by petitioner

as being an issue in the case. In a colloquy between coun-

sel reference was made to the action of Standard on

September 11, 1934 in reducing retail prices as not being

an issue in this lawsuit, and Mr. Crawford, counsel for

petitioner, stated:

“es * * We are not claiming here any damage on

account of what the Standard Oil Company did in

1934. [am sure counsel understands that.’’ (R. 256)

28

¥.

Petitioner Cannot Maintain This Action Against Respond-

ents, Because Both Petitioner and Respondents Were

Participants in a Broad Stabilization Program to Raise

Prices in Petroleum Markets, and Such’ Stabilization

Program Was Found to Be Illegal in United States v.

Socony-Vacuum Oil Co., Inc., et al., 310 U. 8. 150 (1940).

There was no issue of fact for the jury on this question

because it was established in the trial court by undis-

puted evidence. The necessary and controlling facts to

establish this defense appear in the record from the follow-

ing three sources:

(a) Letters written by A. F. Podvin, Vice President

and General Manager of petitioner ;

(b) Testimony of officers of the petitioner ; and

(ce) The judgment in the Madison Oil Case which

was offered by the petitioner as prima facie evidence

under Section 5 of the Clayton Act.

We have heretofore set out briefly the evidence of pe-

titioner’s activities in participating in this stabilization

program (Brief, pp. 7-9). The record is replete with

letters and testimony of petitioner’s officers which estab-

lish that it was an active agency in working with respond-

ents and others to carry out the stabilization program

and to maintain prices during 1934, 1935 and 1936 (R. 463,

488-489, 433-434, 445-446, 457-458; EXxs. 67-106, R. 413, 414,

418, 419, 421, 427, 438, 448, 458, 466, 474, 412-481; Exs.

The Cireuit Court of Appeals has found as a fact that

petitioner participated in the illegal conspiracy and was

in pari delicto with respondents (R. 1355, 1358). As this

finding has not.been brought forward by any question in

the petition for writ of certiorari, this Court, of course,

29

must assume such finding to be correct, Rule 38, Supreme

Court Rules.

It is firmly established that a court will not aid a party

to recover on a cause of action that is founded on a wrong

in which the party took part. Harriman v. Northern Se-

curities Company, 197 U. S. 244, 298 (1905). This is a

well settled rule in treble damage actions under the anti-

trust laws. Hastman Kodak Co. v. Blackmore, 277 F. 694

(C. C. A, 2d, 1921); Vietor Talking Mach. Co. v. Kemeny,

271 F. 810, 816 (C. C. A. 3rd, 1921); Bluefields 8S. S. Co.,

Limited v. United Fruit Co., 248 F. 1, 13-14, 18-19 (C. (,

A. 3rd, 1917); Maltz v. Sax, cet al., 134 F. (aa) 2,6 (C.-C.

A. 7th, 1943).

Wuererore, the petition for writ of certiorari should be

denied.

DAVID T. SEARLS,

VINSON, ELKINS, WEEMS & FRANCIS.

Esperson Building,

Houston, Texas,

LEON E. ISAKSEN,

H. H. THOMAS,

THOMAS. ORR & ISAKSEN,

122 West Washington Avenue,

Madison, Wisconsin,

WILLIAM H. DOUGHERTY.

STANLEY M RYAN,

NOLAN, DOUGHERTY, GRUBB & RYAN.

401 Jackman Building. :

Janesville, Wisconsin,

J. H. MARSHUTZ,

FISH, MARSHUTZ & HOFFMAN.

1115 Wells Building,

Milwaukee, Wisconsin,

STURTEVANT HINMAN,

135 South La Salle Street,

Chicago, Mlinois,

Attorneys for Respondents,

Socony-Vacuum Oil Company, Inc.,

Continental Oil Company,

The Pure Oil Company,

Shell Oil Company, Inc..

Sinclair Refining Company,

Mid-Continent Petroleum Corporation,

Phillips Petroleum Company.