Petition for Writ of Certiorari — Moore v. Standard Oil Co. of California

Supreme Court brief1958

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SUPREME

COURT. U, s. MAY 5 1868

No. 974 ! J som. Fey, coor

tt the Supreme Court of the

Rnited States

OCTOBER TERM, 1957

GEORGE F’. Moore, Petitioner

STANDARD Or COMPANY OF CALIFORNIA, a Corporation; SHELL

Om CoMPANY, a Corporation; THE Texas CoMPANY, a Cor-

poration; RicHFim.pD Om. CORPORATION, a Corporation;

GENERAL PETROLEUM CORPORATION, a Corporation; TIDE

WATER ASSOCIATED Ort CoMPANY, a Corporation; and UNION

Or. COMPANY OF CALIFORNIA, a Corporation, Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

DONALD McL. DAVIDSON

W. H. FERGUSON

C. S. BURDELL

Attorneys for Petitioner

1012 Northern Life Tower

Seattle 1, Washington

rravn <>

No.

in the Supreme Court of the

Rnited States

OCTOBER TERM, 1957

GEORGE F’. MOORE, Petitioner

STANDARD OIL COMPANY OF CALIFORNIA, a Corporation; SHELL

Or CoMPANY, a Corporation; THE TEXAS COMPANY, a Cor-

poration; RICHFIELD OIL CORPORATION, a Corporation;

GENERAL PETROLEUM CORPORA”™ION, a Corporation; TIDE

WATER ASSOCIATED OIL COMPANY, a Corporation; and UNION

Or. COMPANY OF CALIFORNIA, a Corporation, Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

DONALD McL. DAVIDSON

W.H. FERGUSON

C. S. BURDELL

Attorneys for Petitioner

1012 Northern Life Tower

Seattle 1, Washington

FRAYN cp

INDEX

Page

TRI WT AIMED an nn scccccccccnnscccccececocesescens ern ‘nineeateneone iv, Vv

SSE ete ene See ee Tete nT vi

Ga senor dcikehadcebsinndtebssansacaaniauideuanciensnut, eRe On: vi

o will 0 i £0, Sere aeiS ee eee ae

JURISDICTION ........ ligiceaaaalanchasdaaaaapeamueei argues 1

QUESTION PRESENTED FOR REVIEW...................... Zz

IMD occ sido co csen sccnenecncacaseadansacecssuenacsunnes 4

WE ia cvatisncleacacacecscscbiccascans Sp RE Rate ee Pe Reta 4

oa cscakcndiswiecnncersabnewetonsen —

eid cay rans cash abdea badaneantaeel eae 6

RIT RENE A ERR SERA OES Sete Nara 8

FSA ee ere tale OER any ane te RS nr 10

I he cos 1 Sd dae Wa ueaaanenees 10

I. Palmer v. Hoffman does not compel exclusion of

defendants’ business records when offered against

RUE EN ON Ne 7 en Cee ae Ue CT Ree Ee Eines 12

II. Ruchislonaty EET aes en ee ae core 15

1. Writings giving reasons for actions of others.. 15

2. Writings attributing information to others... 16

3. Stamping, initialing and filing as authorized

practice but not required........................0.00....... . 19

4. Casual and informal contents..............0....0.......... 20

5. Adherence to contemporaneous recording........ 20

III. Acts, Declarations and Admissions.......................... 21

PR RE a ee rk eR 23

eee a cee ert ope AERC I eR oa ae . 26

APPENDIX A.—OPINIONS BELOW

1. Standard Oil Company of California, et al. v.

George Moore........ SA AGIDDiL Reade tan eee icieas ecekcneete See aS 1A

2. Generali Petroleum Corporation, et al. v. District

SIGE oa arc sen asens uactoeientadeincens theasenriied oecneek ereae keen 61A

APPENDIX B.—EXHIBIT 6-B

Re eee OS eS eraaneteeaeeee ae TOA

Bx: eI = Soden wectvacscoliccastoneeueeiteeaceetestas aac ar cess T1A

Il.

. Authenticating Testimony and Evidence

VI.

INDEX (Continued)

Other Exhibits on Form 405-A.....

a. On Form 405-A

b. Use of similar forms

Other Exhibits Bearing File No. 13] D..........._..

a. Relating to “Form 405-A’’... Bee hana

b. Subject matter: “Competitive Info”. abana.

i, — i a nn cn ccna

Specific Authentication of Exhibit 6-B....................

Pre-Trial Proceedings ....... adele ais oa cnacvicepcas Monti

a. Meaning and understanding of Order................

OTT, aE

ili

Page

72A

TABLE OF AUTHORITIES

CASES

American Tobacco Co. v. United States, 147 F.2d 93

(CCA 6th 1944), aff’d 328 U.S. 781..... .......20000..... 22

American Tobacco Co. v. United States, 328 U.S. 781

Re re rh 2 a a oe ed Co EN oem 11, 12

— = erative Serum Ass'n. v. Anchor Serum Co.,

d 907 (CCA 7th 1946), cert. denied, 329

vu + 721 in OTE ICSE OR Stes hel OEE Rc woth es ES ny a

Connelly v. United States, 249 F.2d 576 (CCA 8th 1957) ..

Clainos v. United States, 163 F.2d 593 (App. D.C. 1947) 13, 7

Cub Fork Coal Co. v. Fairmont Glass Co., fo F.2d 273

Bg SMR 65ST STEAL Sa 12

DeYoung v. Campbell, 151 Wash. Dec. 1, 315 P.2d 629

IID cdi sonat sii Kaee essa rapes cininsaeieligis ita teeaBncnetas Cinna ene 12

Duff v. Page, 249 F.2d 187 (CCA 9th 1957)............-000.-..... 12

Ethyl Gasoline Corporation v. United States, 309 U.S.

| TERRI BRERA Art AIR oA Se cer ot 11

Fanchon & Marco v. Paramount Pictures, 100 F. Supp.

84, (S.D. Cal. 1951); aff?d, 215 F.2d 167; cert.

I Cs en connie 6a, Wie 25

Funk v. United States, 290 U.S. 371 (1933) .............0..0000...... 12

Gencarella v. Fyfe, 171 F.2d 419 (CCA 1st 1948)... 17

General Petroleum Corp. v. District Court, 213 F.2d 689

(CCA Oth 1954).

,\_~we we noe Rae we won ee on hee Oe ee eee See Sete see eeeecessweeeesesecesess 1

Greater New York Live Poultry C. of C. v. United

States, 47 F.2d 156 (CCA 2d 1931), cert. denied

2 4 | Soe 16

Hartford-Empire Co. v. United States, 323 U.S. 386

EEE: SIN eee tore Rn ala eR LD PNT 11,

Johnson v. Dahlquist, 130 Wash. 29, 225 Pac. 817 (1924) ...

Johnson v. J. H. Yost Lumber Co., 117 F.2d 53 (CCA

RO UE coh RON AOR OWA TIE Ue Eon CIO 12

Karseal Corporation v. Richfield Oil Corporation, 221

F.2d 358 NR I ste a eens teee ovkayerciences 25

Lauderdale County v. Kittel, 229 Fed. 593 (CCA 5th

MR, sce ial ae ire a a aa alae ccs cae awevacneeecnkend ons 16

Lawlor v. Loewe, 235 U.S. 522 (1914) ....0.0... eee. 16

Massachusetts Bonding & Ins. Co. v. Norwich Pharma-

- cal Co., 18 F.2d 934 (CCA 2d 1927)....................00000000.... 12

Michelson v. United States, 335 U.S. 469 (1948) .......0000..... 12

Moore v. United States, #16864 (CCA 5th 1958) un-

reported ............ cilefun ba decndt sn cackabeginchcatercawecasncahauataniciara mets .. 24

National Surety Corporation v. Bellah, 245 F.2d 936

Ts Titer Rea ito Oe Re ey me SCS 12

Overfield v. Pennroad Corporation, 42 F. Supp. 586

Sere MT essences cco eee eee tata 22

TABLE OF AUTHORITIES (continued)

age

Palmer v. Hoffman, 318 U.S. 109 (1943) -............... 2, 10, 12, 30

Patterson v. United States, 222 Fed. 599 (CCA 6th

1915), cert. denied 238 U.S. 635...................0000000...... 12, aa

Pekelis v. Transcontinental & Western Air, 187 F.2d

122 (CCA 2d 1951), cert. denied, 341 U.S. 951......... 13, 22

Pollack v. Metropolitan Life Insurance Co., 138 F.2d 123

ad aa chadsahdecanssivnacnsunshiocenen 14, 17

Schine Chain Theatres v. United States, 334 U.S. 110

al le EASE ne ae ll R/O 11, 22

Selber v. Springbrook Trout Farm, 19 Wash. 49, 52 Pac.

tae aks ca taneuasaxtacentiniasncanstes .. 22

Skibsaktieselskapet Bestum III v. Duke, 131 Wash. 467,

sc Connanangaxantinnsnsintbatnnviconsapsaieavaverss 22

Slifka v. Johnson, 161 F.2d 467 (CCA 2d 1947), cert de-

I ce cchatnny shwncxnenescsrastveasesse 13,17, 22

Smith v. Bear, 237 F.2d 79 (CCA 2d 1956) ........-.-.----.--...... 20

Standard Oil Co. v. George Moore, 251 F.2d 188 (CCA

aaa can saccynsickuanesvensancdnanneiiesiapaanncecess 1

Tevis v. Ryan, Ee EY eee 16

Tretheway v. Green River Gorge, Inc., 17 W.2d 697, 136

os anesnnncnalbbsnnundanncneeresssaaniveks 23

Ulm v. Moore-McCormack Line, 117 F.2d 222 (CCA 2d

1941), cert denied, 313 U.S. 567.......................0000... a

United States v. Apuzzo, 245 F.2d 416 (CCA 2nd 1957),

rt noon cncpesansessnncsnceasctenctcnscess 25

United States v. Corn Products Refining Co., 234 Fed.

964 (D.C. N.Y. 1916), appeal dismissed 249 U.S. 621.. 13

United States v. Costello, 221 F.2d 668 (CCA 2d 1955),

i nL, ls sa sheharch acetate shnenshiascacranedarctssacsn sess 17

United States v. General Electric Co., 82 F. Supp. 753

I 8d ciiiackscanshausniguasatnnteneioantitvtnaeniselnan<e<s« 22

United States v. General Motors Corp., 121 F.2d 376

(CCA 7th 1941), cert. denied, 314 U.S. 618........ 12,14, 17

The United States v. Gooding, 12 Wheat 461 (1827) .......... 22

United States v. Grayson, 166 F.2d 863 (CCA 2nd 1948)... 17

United States v. Ha tford-Empire Co., 46 F. Supp. 541

I eccawnd neabapbuduadunensa li, 133

United States v. National Lead Co., 332 U.S. 319 (1947)... 25

United States v. Schine Chain Theatres, 63 F. Supp. 229

a ad cdc ccatenmassneeswsnrnacssencncaneaconoas 11, 22

United States v. Socony-Vacuum Oil Co., 310 U.S. 150

aaa acelice dinlic tanh Abiesigerstndex pais esiscvordncavins 11, 25

United States v. United Shoe Machinery Corporation,

89 F. Supp. 349 (D.C. Mass. 1950).......................... 12, 14

United States. . United States Gypsum Co., 333 US.

i aan ckchtjacicnaaptnnyasesee 11

Unitea States v. Univis Lens Co., 316 U.S. 241 (1942)... ii

Wheeler v. United States, 211 F. 2d 19 (App. D.C. 1954),

cert. denied, 347 RRR 17

TEXTS

Page

A.L.I. Model Code of Evidence (1942) .............00.0-0 0. 23

Report of Jury Service, Oct. 22, 1953, Administration

Office of the United States Courts.................. Ex eee te

Wigmore, 3rd Ed. § 1073(2), (Vol. III, p. $0) -......... 0... . Za

STATUTES

United States Statutes

Page

Public Laws

15 USC § 15 (38 Stat. 731)...... Peace Pere AN sien iec! 2

y ee ee wes = 6 oF | eee eeey renee 2

> Be fk een ae 2

S$ 1294(1) (62 Stat. 930) ............ Ce Learene e eee 2

ee on a 2

ee I I oe crete se At PIR a 4

ee Bs RRR TRE iia NR Le Ree one tn 20

}

No.

in the Supreme Court of the

United States

OCTOBER TERM, 1957

GEORGE F. Moore, Petitioner

Vv.

STANDARD OIL COMPANY OF CALIFORNIA, a Corporation; SHELL

Or, CoMPANY, a Corporation; THE TEXAS COMPANY, a Cor-

poration; RICHFIELD OIL CORPORATION, a Corporation;

GENERAL PETROLEUM CORPORATION, a Corporation; TIDE

WATER ASSOCIATED OIL COMPANY, a Corporation; and UNION

Or, COMPANY OF CALIFORNIA, a Corporation, Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

OPINIONS BELOW

The opinion of the Court of Appeals in Standard

Oil Company of California, et al. v. Geerge F.

Moore, No. 14927, (App. Infra, p. 1-A) is reported

at 251 F. 2d 188. A collateral opinion in General

Petroleum Corp. v. District Court, No. 14319 (App.,

Infra, p. 61 A) denying respondents’ petition for a

writ of prohibition against discovery proceedings, is

reported at 213 F. 2d 689. ©

JURISDICTION

rer ot

Petitioner, a gas

Washington, scnaune

cr oan

under the Sherman Anti-Trust Act in the District

Court for the Western District of Washington, pu1-

suant to 28 USC § 1337 and 15 USC § 15 (62 Stat.

928 and 38 Stat. 731) for the destruction of his busi-

ness. Judgment upon a jury verdict for petitioner of

$280,000.00 was entered. Respondents appealed to

the United States Court of Appeals for the Ninth

Circuit, pursuant to 28 USC § 1291 and § 1294 (1)

(62 Stat. 929, 930).

The judgment of the United States Court of Ap-

peals for the Ninth Circuit reversing the judgment

and remanding the action for a new trial was en-

tered on November 6, 1957. A timely Petition for

Rehearing was filed on December 5, 1957, and was

denied on February 10, 1958, without opinion.

The jurisdiction of this court is invoked under 28

USC § 1254 (62 Stat. 928).

QUESTIONS PRESENTED FOR REVIEW

I. Does Palmer v. Hoffman, 318 U.S. 109 (1943)

require reversal of a trial court’s findings admitting

into evidence in an anti-trust action documents pro-

duced from files of a defendant oil company against

that company, where each document was conceded-

ly “made in keeping with systematic and rou-

tine procedures, and concerns a matter of import-

ance to the business” on the ground that the docu-

ment deals “with the pricing and marketing poli-

cies” of a co-defendant oil company or its service

station customers. (Opinion, infra, p. 40 A).

Il. Are business records of an oil company inad-

missible against it as a matter of law under the

Business Records Act (28 USC § 1732) not with-

standing testimony and other proof that each writ-

ing was made and kept in the regular course of

business because:

1. Such writings include reasons why a co-

Le FS 2 we arr

defendant oil company or one of its customers

altered prices, changed marketing methods or

took other action relating to competition; or

2. Some of the information recorded in such

writing came from a service station operator or

other person not then under an affirmative

legal duty to supply such information to the de-

fendant who made and kept the writing; or

3. The writings were prepared in the course

of the writer’s duties and thereafter stamped,

transmitted, initialled and filed by others in ac-

cordance with “regular practice,” as distin-

guished from being specifically “required” by

internal company procedure; or

4. The contents of the document are casual

and informal in nature.

III. Are inter-office letters and reports dealing

with the pricing and marketing , olicies of an oil

company and its competing co-defendants, custom-

ers and prospective customers prepared in the usual

course of the writer’s duties inadmissible in an anti-

trust action as acts, declarations or admissions of

the company unless it is shown that its sharehold-

ers, directors or authorized management officials

have adopted the particular letter or report pre-

pared by and offered in evidence against that com-

pany.

IV. Should this court exercise its power of super-

vision to reverse the decision of the court below up-

on the grounds that it deprived petitioner and all

others similarly situated of any effective means of

enforcing rights granted under the anti-trust laws?

STATUTES INVOLVED

28 USC § 1732 (62 Stat. 945) :

‘In any court of the United States and in any

court established by Act of Congress, any writ-

ing or record, whether in the form of an entry

in a book or otherwise, made as a memorandum

or record of any act, transaction, occurrence, or

event, shall be admissible as evidence of such

act, transaction, occurrence, or event, if made in

regular course of any business, and if it was the

regular course of such business to make such

memorandum or record at the time of such act,

transaction, occurrence, or event or within a

reasonable time thereafter.

“All other circumstances of the making of

such writing or record, including lack of per-

sonal knowledge by the entrant or maker, may

be shown to affect its weight, but such cir-

cumstances shall not affect its admissibility.

“The term ‘business,’ as used in this section,

includes business profession, occupation, and

calling of every kind.”

THE FACTS

George Moore, a former Seattle gasoline service

station owner and operator, instituted this action

against the seven major oil companies operating in

the Pacific Nerthwest for injunctive relief and

treble damages resulting from their concerted re-

fusal to deal with him because of his refusal to abide

by their pricing and marketing policies. After a

thirteen week trial, the jury returned a verdict for,

the petitioner. Injunctive relief was denied by the

trial court upon the ground petitioner was no longer

in business. Upon respondent’s appeal, the court be-

low held that there was sufficient evidence before

the jury to sustain the verdict (Opinion, infra, p.

37 A), but that all of the documentary evidence ob-

tained from the defendant’s business records had

been erroneously admitted by the trial! court as a

matter of law. It found that such evidence was not

only relevant and material, but essential, and re-

versed because without such documents “the evi-

dence would have been insufficient.” (Opinion,

infra, p.46 A).

Pre-Trial Proceedings

Prior to the trial, petitioner obtained an order

under Rule 34 for the production of variously de-

scribed categories of business documents from the

files of the defendants.’

Immediately prior to the trial, petitioner filed

identical requests under Rule 36 for admission that

the documents it had k~ then obtained and listed as

intended for use at the trial were made and kept in

the regular course of business. Standard Oil Com-

pany admitted each request with exceptions not now

material (R. 164-70) and never contended that its

documents were not admissible against it through-

out the trial.* The other respondents denied virtu-

ally every request, even that the documents were

produced pursuant to the order it had sought to set

aside upon the mandamus proceedings. (Union, an-

swer 1, R. 153).°

‘The record in the District Court was printed for a mandamus proceeding

against the trial judge and is included as part of this record. In their petition and

during argument seeking to limit the order in both the trial and appellate courts,

petitioners repeatedly referred to the documents as business records, see infra p.

S4A,

* These answers admitted, among other things, that the documents were

“genuine” and from its “regular files” and that any document purportedly made

by an agent “was made in the regular course of business of said company by or

under the authority of said agent.” Standard qualified one of its answers. stating:

“Since that time [of production] many thousands of documents have been added

to and taken from the hundreds of files in which said documents were maintained.

and many of said files have been combined with others, reorganized, retired or de-

stroyed by this defendant, all in the regular course of its business.” (Answer XI.

R. 168).

3 This presaged the course of the trial. When asked by the trial court if a

particular document came from the business files and records of Texas. its counsel

refused to so state (R. 4796). Thereupon the witness on the stand agreed that

“there is no question” that the document was from the “business files” or “regular

files.” CR. 4800).

The Trial

The trial lasted over three months,‘ a great part

of which was consumed exclusively in the authen-

tication of documents. Petitioner first offered the

documents as the acts, declarations and admissions

of the respondent that made them. Upon respond-

ents’ objection, petitioner was required to furnish

the additional authenticating proof required by the

Business Records Act. That was accomplished by

questioning adverse witnesses to establish the facts

that respondents had denied during discovery pro-

cedures.’ Except for Standard Oil Company, one or

more of the respondents objected to every docu-

ment, whether or not it was offered against it, and

often objected to documentary evidence offered by

another respondent on its own behalf. (R. 4517-18;

9822-24) .°

In the few instances when requests were made to

admit only a portion of an exhibit or otherwise

limit the writing, the trial court granted the re-

quest. (R. 3800; 4476). Whenever requested, the

court instructed the jury that no particular docu-

ment or testimony should be considered against any

other respondent, except in accordance with the

usual rules applicable in conspiracy cases. (R. 924;

1427; 1737; 2821). Respondents’ rights to individual

consideration were emphasized again in instruc-

tions given at the close of all the evidence. (Instr.

17 and 20, R. 7500, 7501).

‘ The trial was one of the longest on record and is comparable to major anti-

trust litigation instituted by the Government. (Opinion, infra, p. 22 A, note 16).

Jury fees alone cost the United States at least $10,000.00. See Report of Jury

Service, Oct. 22, 1953, Administration Office of the United States Courts.

5 Almost 2,000 pages of the printed records are devoted exclusively to such testi-

mony (R. 2177-2451; 2467-2536; 2599-4193).

®‘ One respondent even achieved the absurdity of objecting to another's obiec-

tion. Thus, when Union objected to a particular sentence in Ex. 313 (R. 3969)

petitioner offered to “expunge that sentence,” whereupon General Petroleum’s

attorney said: “I object to the expunging.” (R. 3970).

Petitioner and respondents introduced 1088 ex-

hibits, most of which were from respondents’ busi-

ness files and most of which dealt with ‘‘competi-

tive conditions.” The trial court required proof of

each document individually, including proof of the

form of the writing, identifying marks, identities

and duties of the maker and recipient, subject mat-

ter and regular business procedure.” He considered

“the test of admissibility . . . the standpoint of the

defendant whose records are in question.’” (R.

3261).

No witness for respondents ever asserted that

any particular exhibit was not a usual and ordinary

business document in form or subject matter. Aside

from counsels’ objections no one disputed the au-

thenticating proof even when the sender or recipient

of a writing was a witness. Respondents themselves

offered in evidence many documents similar in form

and subject matter as business records upon less

authenticating proof then was required of peti-

tioner.

At the conclusion of the trial, the trial court said

(R. 4484):

“The Court has tried to be careful with these

exhibits, and the Court has knowingly in some

instances required more proof than it felt at

6& The trial court refused to admit the documents merely because they were

concededly kept in respondents’ regular files and had been produced pursuant

to the order. Other courts have held that production of records under an equiva-

lent subpoena is a proper “indicia of authenticity” under the Business Records

Tere v. Moore-McCormack Lines, 117 F. 2d 222 (CCA 2d 1941), cert. denied

313 U.S. 567.

™The maker of the record ofici conceded the particular document was a

business record. Thus, when the 294 series of documents from Tidewater's files

were first offered, counsel for Tidewater said: “I will not object to any of them.”

(R. 2600). Counsel for The Texas Company told the trial court that its surveys of

competitors’ prices as shown in the 45 series of documents were “made in the

ordinary course of business” (R. 2817) and objected only on the grounds of

relevancy (R. 2650) Union’s attorney objected to the introduction of “confidential

business records,” because it “will disclose to the competitors the very thing which

plaintiff is accusing us of, and that is inter-knowledge of competitive practices

between the companies.” (R. 2201). :

the time was necessary in order to make doubly

sure that there would be a legal authentication.

“All of the authenticating witnesses called to

identify offered exhibits were company officers

or employees called as adverse witnesses, which

some of them proved to be in fact.

“If, as the trial judge presiding at this trial, I

should take the view that any of those authen-

ticating witnesses did not in fact understand

the factual meaning of the phrase, ‘Regular

course of the company’s business,’ I would be

disregarding the reality of his understanding to

the contrary.

‘‘Nobody could have heard these witnesses

testify about these documents without knowing

that every one of them understood what the

question meant when he was asked whether or

not that was a record made or kept in the

ordinary or regular course of his company’s

business .. .”

Decision Below

Upon appeal to the court below, respondents

argued that the evidence was insufficient to sup-

port the verdict, together with many other asserted

errors. The court below found that there was:

“an agreement, combination, or conspiracy to

control price cutting and curb-sign advertising

by refusing gasoline to dealers whose severe

price cutting and persistent curb-sign advertis-

ing bring them into controversy with their

present suppliers.

“There is substantial evidence that Moore

was in this class of dealers.” (Opinion, infra,

23-A )

This finding upon the merits rested upon testi-

mony and writings showing concurrent and uni-

form practices adopted by the respondents in: (1)

discontinuing “split-pump” accounts and requiring

exclusive supply contracts; (2) public posting of

tank wagon prices resulting in a tendency toward

uniform prices, (3) minimizing price competition

by concealing price decreases as secret and unpub-

lished rebates and discounts from tank wagon

prices to selected dealers; (4) exchanges of gaso-

line; and (5) “clearances” required from an exist-

ing supplier before dealing with a service station

operator. (Opinion, infra, p. 32-A)

The evidence, the court said, showed “consciously

parailel business behavior in matters touching

prices and competition” and was “admissible cir-

cumstantial evidence of an underlying agreement,

combination, or conspiracy concerning such mat-

ters.” (Opinion, infra, p. 34-A)

Having found there was substantial competent

evidence to support the verdict, the court below

then held as a matter of law that virtually all of the

writings were erroneously admitted into evidence,

requiring reversal for a new trial, without regard

to any or all of the authenticating facts upon which

the trial court relied in admitting the documents in

evidence.

The court below did not refer to a single exhibit

in the substantive section of its opinion and quoted

only one in the evidentiary section. A portion of

Exhibit 6-B is set forth in a footnote to the Opinion

(infra, p. 42-A, n. 33). The court’s description of

that exhibit and designation of its form, method of

preparation, internal indicia of authenticity, routine

transmittal and filing is so inadequate that peti-

tioner has reproduced it in full, together with some

of the evidence upon which the trial court properly

relied in admitting it. (Appendix B, infra, 68-A).°

In the face of overwhelming foundation evidence,

the trial court’s findings, lack of request for limit-

ing instructions and careful observance of the co-

conspirator rule at the trial, the court below was

limited by the record to reviewing the evidence en

masse and reversing upon sweeping legal rules of

exclusion applicable to the Business Records Act

and to “acts and admissions” made in the course

and furtherance of a conspiracy.

ARGUMENT

Introduction

This case squarely presents the issue of whether

or not Palmer v. Hoffman is authority for excluding

from the scope and application of the Business Rec-

ords Act as a matter of law, documents of a par-

ticular class or nature despite the Act’s application

to “any writings or record.” It also squarely pre-

sents the issue of whether or not the general exclu-

sionary rules of evidence adopted by the court below

effectively foreclose any litigant from seeking,

proving or sustaining upon appeal any redress un-

der the anti-trust laws, upon hitherto well-estab-

lished principles of law.

The evidence here excluded as a matter of law is

of the same type and nature repeatedly admitted

anc considered by this and all other courts in all

% Thus, the salesman signed his full name, not merely “Art.” Although the last

name is illegible on the photo copy introduced at the trial, Respondents knew his

last name and set it forth in their specifications of error to the court below. It was

dated and refers to a conversation “today.” It bears a regular file number and the

stamps or names of three company officials, including the Seattle District and

Western States Sales Managers. It is on a printed memo form 405-A, supplied by

the company to its salesmen to be used for company business. It is one of a large

number of similar exhibits introduced in evidence by both sides. (Infra. p. 68-A).

anti-trust cases, i.e., “memoranda, letters, and tele-

grams * * * interoffice communications * * * [deal-

ing] with such matters as the marketing and pric-

ing policies and activities of the company, of other

[defendant] oil companies, or of customer or com-

peting service station operators.” (Opinion, infra,

p. 38-A)

Such documents are usually the best and often the

only relevant evidence in an anti-trust case.° The

decision below holds that the recorded course of

conduct of large corporations is inadmissible as a

matter of evidentiary law when that course of con-

duct must be proved to show a violation of substan-

tive law. The very means by which the illegal enter-

prise is accomplished are thus shielded from in-

quiry. Such a result is not required by any known

principles of law and cannot be countenanced upon

basic principles of justice as applicable to the law

of evidence as any other branch of the law.

® United States v. Sucony-Vacuum Co., 310 U.S. 150 (1940), notes 24 and 32 at

pp. 183, 190.)

Ethyl Gasoline Corporation v. United States, 309 U.S. 436 (1940)

(policing of jobber gasoline prices by a party who neither manufactured nor

sold gasoline to jobbers) :

United States v. Univis Lens Co.. 316 U.S. 241, 245 (1942) (instructions

to field representatives not to sell to price cutters, and inquiry concerning

price cutting activities) ;

American Tobacco Co. v. United States, 328 U.S. 781 (1946) (“wide-

spread and effective conduct on the part of petitioners in relation to their

existing or potential competitors” (p. 789), including inter-office communi-

cations reporting “upon the progress of this battle” with 10-cent brands and

prophesying the results. (p. 806-07) Such evidence was specifically held

admissible in American Tobacco Co. v. United States. 147 F. 2d 93, 118

(CCA 6th 1944), aff'd. 328 U.S. 781.

United States v. United States Gypsum Co., 333 U.S. 364, 386 (1947)

(“Complaints * * * by licensees as to their competitors’ failure to maintain

prevailing prices.” )

Hartford-Empire Co. v. United States, 323 U.S. 386, 401 (1945) affirm-

ing United States v. Hartford-Empire Co., 46 F. Supp. 541, 553 (D.C. Ohio,

1942). (“It is hard to imagine a case in which a court would have more

first-hand information of what the parties did and intended.” )

Schine Chain Theatres v United States, 334 U.S. 110, 116-17 (1948).

See particularly Appendix B to the Government’s Brief and District Court

decision admitting over objection inter-department communications made in

the “ordinary and usual capacity” of the duties of Branch and District

Managers of non-party distributors, 63 F. Supp. at p. 242.

“The fundamental basis upon which all rules

of evidence must rest--if they are to rest upon

reason—is their adaptation to the successful

development of the truth.” Funk v. United

States, 290 U.S. 371, 381 (1933).

Documents of the nature here excluded as a mat-

ter of law have thus been admitted in anti-trust

suits under the common law rule admitting entries

made in the regular course of business,'’ as acts,

declarations and admissions,"’ and under the Busi-

ness Records Act.” The only way the court below

could reverse the judgment was to ignore all such

factually relevant precedents and “formulate rigid

rules for the exclusion of evidence’’’* contrary to

Rules 43 and 61 of the Federal Rules of Civil Pro-

cedure and well-recognized principles governing ap-

pellate review.”

I. PALMER V. HOFFMAN DOES NOT COMPEL EX-

CLUSION OF A DEFENDANT’S BUSINESS RECORDS

WHEN OFFERED AGAINST IT, BECAUSE SUCH REC-

ORDS DEAL WITH THE ACTIVITIES OF CO-DE-

FENDANT COMPETITORS.

The court below held that “writings dealing with

the pricing and marketing policies” of a defendant

10 Paterson v. United States, 222 Fed. 599, 640-41 (CCA 6th 1915), cert. denied,

238 U.S. 635; Massachusetts Bonding & Ins. Co. v. Norwich Pharmacal Co.. 18 F.

2d 934 (CCA 2d 1927): Cub Fork Coal Co. v. Fairmont Glass Co., 19 F. 2d 273

(CCA 7th 1927).

11 American T_bacce Co. v. United States, 147 F. 2d 93, 118 (CCA 6th 1944):

Johnson v. J. H. Yost Lumber Co., 117 F. 2d 53, 59 (CCA 8th 1941).

12 United States v. General Motors Corp., 121 F. 2d 376, 409 (CCA 7th 1941),

cert. denied, 312 U.S. 618; United States v. United Shoe Machinery Corporation.

89 F. Supp. 349, 354, (D. C. Mass. 1950).

13 Michelson v. United States, 335 U.S. 469, 487 (1948), Mr. Justice Frank-

furter concurring.

14 DeYoung v. Campbell. 151 Wash. Dec. 1, 7: 315 P. 2d 629, 633 (1957). (“In

this state, the ruling of the trial judge in admitting or excluding such records

[under the uniform business records as evidence act] is given much weight and

will not be reversed unless there has been a manifest abuse of discretion.” )

National Surety Corporation v. Bellah, 245 F. 2d 936, 941 (CCA 5th 1957):

(“presiding as we do, to administer justice, we should hesitate long either in es-

tablishing, or in acquiescing in any new rule which bars the receipt of credible,

relevant, probative evidence bearing directly on the truth of a significant issue.” )

Duff v. Page, 249 F. 2d 137, 139-40 (CCA 9th 1957) (“Courts of review have

a higher function than to be ‘impregnable citadels of technicality.’ ”)

other than the one that made them “are not busi-

ness records,” because they relate “to some inci-

dent, circumstance, or activity outside that business

. notwithstanding it may have been made in

keeping with systematic and routine procedures,

and concerns a matter of importance to the busi-

ness.” (Opinion, infra, p. 40-A). The direct and

only relevant authority for its holding is language

of Palmer v. Hoffman.” The court below recognized

that the fundamental ruling of the case was that

business records are admissible because of the fac-

tual probability of trustworthiness arising out of all

of the circumstances of the purpose and manner of

making the record. It totally ignored the fact that

Palmer v. Hoffman held a self-serving statement

was properly excluded by the trial court.

“In [Palmer v. Hoffman], an employee’s

statement, offered in evidence on behalf of (not

against) his employer, was held inadmissible

under the similarly worded federal staute, be-

cause the alleged ‘course of business’ was such

as obviously to make for (not against) untrust-

worthiness.’

In this case, the employee’s written statements

were offered against (not for) respondents and

were prepared for use in respondents’ business."

15 The court also cited Clainos v. United States, 163 F. 2d 593 (App. D.C.

1947). The court there held it error but not prejudicial error to have admitted a

police record of convictions in a criminal action, because: (1) a special statute

governed proof of convictions; (2) the police record was not properly authenti-

cated as a business record, and (3) the police record did not possess intrinsic

reliability because convictions are the business of the courts and not the police.

16 Slifka v. Johnson. 161 F. 2d 467, 469 (CCA 2d 1947), cert. denied, 332 U.S.

758. Frank, Circuit Judge, concurring. His comment is specially pertinent, since

he wrote the Circuit Court decision in Palmer v. Hoffman, which was affirmed by

this court. Pek lis v. Trans-continental & Western Air, 187 F. 2d 122, 130 (CCA

2d 1951), cert. denied, 341 U.S. 951, points out that introductien of documents

against the maker is a proper circumstantial fact to be taken into account, since

it “tends to show that they were not contrived by the entrant for litigation.”

17 The type of communication that has “the highest validity” as evidence,

United States v. Corn Products Refining Co., 234 Fed. 964, 978. (D.C. N.Y. 1916).

“It is hard to imagine” better “first-hand information of what the parties did and

intended” United States v. Hartford-Empire Co. 46 F. Supp. 541, 553 (D.C. Ohio

1942).

They were not self-serving statements made for

use in litigation.

As a factual matter, the court’s ruling below flies

in the face of economic reality and the testimony of

all of the witnesses of the actual operation of the

petroleum business.

It was undisputed that each of the respondents

—as a vital, necessary and regular part of its own

business—regularly investigated the pricing and

marketing policies of the other respondents.

“T think it is imperative that we all keep up

with competition. Vie have to know what compe-

tition is doing. Certainly, I don’t think we would

stay in business long if we didn’t.” (R. 4512)

“I was working for Richfield, and as such I

tried to be aware, as much as possible of com-

petitive stations.” (R. 5570)

“Competitive conditions in an area have a

direct effect on a station’s gallonage.” (R. 6026)

‘“‘We were supposed to be aware of the com-

petitive conditions at all times in our territory.”’

(R. 5562)

““Do you sell oil in the regular course of

business?’ ‘Yes.’ ‘Well, do you take your surveys

or do you ask for these reports in the regular

course of business?’ ‘Yes, from time to time we

do.’”’ (R. 3872).

The decision below is as contrary to legal princi-

ples as it is contrary to actual practice in the mar-

ketplace. In the identical context of an anti-trust

case, the Seventh Circuit held that such reports

were business records under the predecessor of the

present statute. United States v. General Motors,

121 F. 2d 376, 409 (CCA 7th 1941), cert. denied,

314 v. 8S. 618. In the same anti-trust context, United

States v. United Shoe Machinery Corporation, 89 F.

Supp. 349 (D.C. Mass. 1950) held that the Business

Records Act was broad enough to encompass what

business practice made a business record. As

a purely legal proposition, Pollack v. Metropolitan

Life Insurance Co., 138 F. 2d 123 (CCA 3rd 1943),

held a child’s birth certificate admissible under the

Act to show the parent’s age, even though there was

no requirement that his age be set forth or indeed

had any connection with the birth of the child. The

reasoning of the court below would exclude all medi-

cal, hospital, accountant, advertising agency or sim-

ilar records, for surely such records relate primarily

to the business of the patient, client or customer and

not to the business of the record-maker.

II. EXCLUSIONARY RULES OF EVIDENCE LIMITING

THE TYPE AND NATURE OF DOCUMENTS ADMISSI-

BLE UNDER THE BUSINESS RECORDS ACT.

By excluding all evidence which connected the

practice of one company with another and the

knowledge of each of the practices and policies of

the other, it is obvious that no evidence directly

relevant to the issue of a conspiracy could be ad-

missible. The court below might well have concluded

its opinion. The court, however, stated a number of

other exclusionary rules that would cover any docu-

ments it might not have included within the first

class.

1. Inadmissibility of writings giving reasons for ac-

tions of others.

The court below held that reasons given for eco-

nomic actions of others were not proper subjects

for expert opinion, and hence any document stating

why another company or non-customer bought or

sold, fixed a price or refused to buy or sell could not

be a business record as a matter of law.

Once again, the court below cited no relevet

authority for its ruling’* and ignored the fact that

the very inquiry of the trial was to show the eco-

nomic effect of, reason for and knowledge of each

respondent of various marketing and pricing poli-

cies. The expression of opinion—the reason—was it-

self the operative fact to be proved and was the pur-

pose of offering the document. This and all other

courts have always held that the reason for or prob-

able consequences of economic action in the market-

place is admissible in an anti-trust action.”

It is not rational or logical to say that economic

reasons for action in the marketplace reported by

employees of a participant in the market are in-

herently untrustworthy because such reasons “do

not call for professional or scientific knowledge or

skill” (Opinion, infra, 41-A), and hence inadmis-

sible against the person making and keeping such

repor's.

2. Writings attributing information to others not

under a legal duty to furnish such information.

The court below held that writings reporting in-

formation obtained by a field representative from

'S Tt cited many cases holding expert opinion admissible under the Act.

'* Lawlor v. Loewe, 235 U.S. 522 (1914) (reasons given by customers of the

plaintiffs dealers for refusals to deal).

Anchor Cooperative Serum Ass'n. v. Anchor Serum Co. 153 F. 2d 907, 912

(CCA 7th 1946), cert. denied, 329 U.S. 721, (reasons plaintiff's druggists gave

why they couldn’t sell plaintiff's serum).

Greater New York Live Poultry C. of C. v. United States. 47 F. 2d 156, 159

(CCA 2d 1931), cert. denied, 283 U.S. 837, (reasons “given by receivers for their

refusal to sell to recalcitrant marketmen.” )

In that case, as in this, the defendants sought to exclude all evidence entirely

rather than a limiting instruction. The Second Cirenit, unlike the court below.

would not elevate a deliberate or inadvertent failure to utilize proper procedures

into reversible error of the trial court. Evidence so admitted may be considered for

its probative weight by judges or juries. The trial court cannot be put in error for

not restricting the effect of evidence absent a request to do so. Lauderdale County

t. Kittel, 229 Fed. 593, 602 (CCA 5th 1916); Tevis v. Ryan, 233 U.S. 273 (1914).

Service station operators being supplied by another

company were inadmissible because the

“information comes to the entrant or maker

from unauthorized persons, * * * not because

it contains hearsay.” (Opinion, infra, p. 42-A).

The court below cited three cases nominally sup-

porting this conclusion, recognizing that two cir-

cuits held squarely to the contrary.” United States

v. Grayson, 166 F.2d 863 (CCA 2nd 1948), a crim-

inal case," however, is the only case supporting the

court’s ruling.” United States v. General Motors

Corp., 121 F. 2d 376, 409 (CCA 7th 1941), cert. de-

nied, 314 U.S. 618, an anti-trust case, held admission

of such evidence “was not improper,” “treated either

in isolation or in its entirety.”

The ruling is, moreover, plainly in conflict with

the second paragraph of § 1732, which provides that

“lack of personal knowledge” by the maker “shall

not affect its admissibility,” but merely go to the

weight of the evidence.”

The ruling below that “hearsay” shall henceforth

go under the alias of “unauthorized persons” is

either pointless or destructive of orderly trial pro-

cedure. The ruling must require the offering party

to show personal knowledge of the party making

2° Opinion, infra. p. 42-A, n. 32).

*! Admission of such evidence at the behest of the prosecution might raise

grave constitutional questions. See Frank, Circuit Judge, concurring, in Slifka v.

Johnson, 161 F. 2d 467, 470, note 4 (CCA 2d 1947), cert. denied, 332 U.S. 758.

22 In Clainos v. U. S.. 163 F. 2d 593 (App. D.C. 1947), another criminal case,

the language relied upon was, at best, dicta. In Gencarella v. Fyfe, 171 F. 2d 419

(CCA Ist 1948), the document offered was conceded not to be a business record.

Pollack v. Metropolitan Life Ins. Co., 138 F. 2d 123 (CCA 3d 1943) expressly

held to the contrary in deciding that a father’s age could be proved by his child's

birth certificate, even in the absence of any duty whatsoever to enter his age upon

the certificate and no apparent showing of who furnished such information.

*3 Wheeler v. United States, 211 F. 2d 19, 23 (App. D.C. 1954), cert. denied.

347 U.S. 1019.

United States v. Costello, 221 F. 2d 668, 678 (CCA 2d 1955), aff'd. 350 US.

359. (“We conduct our most serious affairs on the strength of [hearsay]. It would

be impossible to carry on a day’s business without it.”)

the record or permit the inquiring party to examine

on voir dire to show that the source of information

might have been an unxuthorized person. The

statute declaring that lack of personal knowledge

shall not affect admissibility thus becomes the ve-

hicle for interminable courtroom inquiry into that

which the statute declares irrelevant insofar as ad-

missibility is concerned.

The court ignored the fact that the salesmen were

authorized and directed to obtain and report just

such information, or at least to obtain information

that could only come from a competing company or

non-customer service station. How, for example,

could one company determine upon an allowance to

be made unisss it inquired of a non-customer the

price that it had to meet? The respondents them-

selves introduced numerous exhibits attesting to

the fact that such information was vital “if we are

“o retain our business,” necessary to determine

dealer assistance,” taken into account when new

outlets were under consideration,” and in efforts to

solicit new business, including petitioner himself.”

In all of these situations and many more the infor-

mation employees were authorized and directed to

gather and upon which the company necessarily re-

lied could come only from what the court below

held were “unauthorized persons.” Respondents

made not the slightest effort to prove that any in-

formation reported was unauthorized or to prove

24 Richfield, Ex. A-185, a price and price sign survey with a direction to

meet “competition from other majors.”

25 Texas, Ex. A-62, a statement of policy of when and how dealer assistance

was to be given-——requiring investigation of competitive conditions before allow-

ance is made and withdrawal as soon as competitive conditions permit.

6 Standard, Ex. A-77, A-83, A-119 and A-123. reporting upon gallonage and

contractual arrangements of nearby dealers and solicitation by other defendants.

27 Union, Ex. A-239, stating the discount Moore then had with Associated and

the allowance offered by Standard. That information came either from petitioner or

a Union salesman. (R. 6301-02).

any such exhibit was erroneous. Respondents never

asked that any such documents attributing infor-

mation to “unauthorized persons” be limited to the

fact that the statement was made and reported.

Failure to request an instruction limiting the docu-

ment to the purpose for which it was offered can-

not make a business record inadmissible.

Surely, a document showing the source of mar-

ket information is at least as reliable and trust-

worthy as one similarly prepared containing the

Same information acquired from totally unknown

sources.

3. Stamping, initialing and filing must be required,

as distinguished from authorized, practice.

The court below recognized that some, if not all,

of the exhibits were established as having “been

prepared in the course of the writer’s duties as an

employee of the company” and that “a good many”

have stamps or initials showing receipt and cir-

culation among company officials. Even these docu-

ments were held inadmissible unless it was also es-

tablished “that the internal procedures of the com-

pany required” each document to be so transmitted,

stamped and filed “as a matter of routine.” (Opin-

ion, infra, p. 43-A)* The distinction here made is

so finespun as to be almost unintelligible. It holds

that documents proved to be made, transmitted and

stamped in accordance with the regular practice of

the company must be further supported by a show-

ing that each step in the process was also “re-

28 The routine nature of stamping documents, circulating and filing them was

established generally during the course of authenticating the first few of a series of

documents bearing such stamps. This testimony was not usually repeated for other

subsequent documents bearing the same or like stamps and showing the same or

like initialing.

quired,” as distinguished from merely “author-

ized.”

4. Casual and informal matters are *‘self-evidently”’

not required routine.

Not satisfied, perhaps, with the merits of exclud-

ing the documents on such a ritualistic basis, the

court below ignored the evidence and held it “self-

evident” that the routine described by the witnesses

was non-existent, because they “were casual and in-

formal in nature” and were “seeking or providing

information of a kind which could be, and no doubt

often was, communicated by telephone” or in con-

ference.” (Opinion, infra, p. 43-A) The informal

nature of the writing was recognized by the court

as being no bar to admissibility." Hence, its holding

is that writings disclosing the casual and informal

day to day conduct of a business are inherently un-

trustworthy—directly contrary to the genesis of

the Business Records Act, and Palmer v. Hoffman.”

». Adherence to a regularly established business pro-

cedure for contemporaneous recording.

Most documents offered in evidence showed on

their face that they were reporting an act, trans-

°° Petitioner did establish the: “when documents are sent through some sort

of chain of command or some sort of series of people for their notice and stamp”

it was “just as a part of our regular business.” (R. 3915)

*® Stenographic transcriptions of telephone conversations regularly made as a

matter of practice—not duty—in a Government office are admissible as Govern-

ment records under 28 USC § 1733 (a). Connelly v. United States. 249 F. 2d 576.

587-88 (CCA 8th 1957).

*1 Opinion, note 35, infra, p. 44-A, citing Smith v. Bear, 237 F. 2d 79 (CCA

2d 1956).

82 The court itself started from the premise that “the probability of trust-

worthiness * * * lies in the fact that they are routine reflections of the day-to-day

operations of the business in whose files the memoranda and reports are found.”

Petitioners cannot explain—nor perceive any rational explanation—of how the

fundamental basis for admission of business records becomes a rule of exclusion,

The court below did not purport to reconcile the patent inconsistency between its

statement of the rule and its application.

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action, occurrence or event contemporaneous with

their date or an existing policy or practice bearing

upon a matter being reported. Few objections were

made by respondents on that point.” As the court

below subsequently pointed out, it is not error to

admit a writing in evidence where some entries were

made several months and others an unknown time

after the event in the absence of “evidence to show

that this lag introduced inaccuracies or uncertain-

ties as to * * *reliability.” (Opinion, infra, p.

09-A). As in all other cases respondents failed to

offer any factual attack upon the authenticity or

accuracy of any document upon this basis, despite

ample opportunity to do so.

Ill. ACTS, DECLARATIONS ANI» ADMISSIONS

The court below held all inter-office communica-

tions were inadmissible, because: (1) absent dis-

closure, there is “no room for application of the rule

that the statement is the principal’s if the agent or

employee was authorized to make it to a third per-

son” (Opinion, infra, 49-A),** and (2) hence the

Statement could only become the principal’s by

adoption by “its shareholders, board of directors or

authorized management officials” ( Opinion, infra,

00-A).

The court cited no authority whatsoever for

either of its rulings. It erroneously assumed that

the governing rule was that relating to admissions

against interest rather than the rule admitting acts,

“In their Specification of Error (pp. 37-113) respondents list no such pointed

objection under the heading “Grounds of Error” for any of the exhibits they discuss

in detail.

*# This erroneous premise was necessary in view of the overwhelming direct,

circumstantial and internal evidence that each such report or letter was made in

the usual and ordinary course of the writer's business as a part of his normal duties

and hence at least impliedly authorized.

declarations and admissions made in the course and

furtherance of a conspiracy.

For “admissions against interest” disclosure is

required, since one can’t admit something against

his own interest to himself. For an act, declaration

or admission, however, “It is immaterial that the ad-

mission, when made in writing, is found in a paper

*“ * * not communicated to anyone else.” (Wig-

more, 3rd Ed. § 1073(2), Vol. III, p. 90)*

Other courts, entirely aside from the rule of dis-

closure, hold that an agent’s authority to make a

binding admission is co-extensive with his authority

to bind his principal to substantive liability.”

In the substantive section of its opinion, the court

below correctly considered statements made by

salesmen and other representatives of the respond-

35 Schine Chain Theatres v. United States. 334 US. 110, 116 (1948) (inter-

office memos and letters found in the files of non-party distributors were admi: ible

“as declarations” and admissible against defendant, as well, because the distributors

were conspirators, even though not parties }

American Tobacco Co. v. United States, 147 F. 2d 93, 118 (CCA 6th 1944)

(correspondence from field representatives).

United States v. General Electric Co.. 82 F. Supp. 753, 902-03 (D.C.N.]J.

1949); Patterson v. United States, 222 Fed. 599, 636-637 (CCA 6th 1915), cert.

denied, 238 U.S. 635, (reports of salesmen and sales agents to their superiors).

Pekelis v. Transcontinencal & Western Ais, 187 F. 2d 122, 128 (CCA 2nd

1951), cert. denied, 341 U.S. 951, (admissibility depends on whether the

writing is “inconsistent with the position taken by the defendant during the trial.” }

See also Selber v. Springbrook Trout Farm. 19 Wash. 49, 52 Pac. 238 (1899)

a statement by the defendant's foreman first produced at the trial was the de-

fendant’s admission; Skibsaktieselskapet Bestum II] v. Duke. 131 Wash. 467, 479-

81, 230 Pac. 650. 655 (1924) where it was stipulated that documents were sent and

received and that copies were deemed originals (as was here stipulated and

proved) the documents were admissible, including a resume sent by the principal

to the agent of all correspondence between them.

36 Johnson v. J. H. Yost Lumber Co., 117 F. 2d 53 (CCA 8th 1941), (“ordinary

incidents” of the job of local yard managers): United States v. Schine Chain

Theatres. 63 F. Supp. 229, 238-39 (W.D.N.Y. 1945), (representations by branch

and district managers “within the scope of their duties * * * as a natural incident

of the office.”): Overfield v. Pennroad Corpvration, 42 F. Supp. 586, 628 (D.C. Pa.

1941).

Long before the Business Records Act, this court held that one might prove an

agent's authority to do an act or make a declaration “either by the course of the

business, or by express authorization.” The United States v. Gooding, 12 Wheat

461, 469 (1827).

Slifka v. Johnson, 161 F. 2d 467 (CCA 2d 1947), cert. denied, 322 U.S. 758.

ents proved by testimony of persons who heard the

statement as “acts and extra-judicial declarations”

(Opinion, infra, 34-A), and, of course, did not sus-

tain respondents’ arguments that such evidence was

improperly admitted.” It is inconceivable that evi-

dence of acts, declarations and admission of sales-

men may properly be proved by the recollection of

witnesses who heard the employee’s statement, but

not by a writing prepared by the employee himself.

IV. SUBSTANTIAL JUSTICE

The Court below reversed solely upon legal

grounds barring admission of any of the docu-

mentary evidence.* It carefully refrained from dis-

cussing authentication, in fact, of any single docu-

ment as a Business Record or an admission. Peti-

tioner knows of no case where greater care was

taken by the trial court or more time devoted by the

court, jury and litigants in meticulous authentica-

tion of each writing.

No case could better illustiate denial of substan-

tial justice cont2~; io the purpose of Rules 43 (a)

-_———__...

*t For example, a service station operator testified:

“I asked Mr. Carter [an employee of Standard]. if we took our signs

down, when the rest of them would be down. * * * He said they would be

down as soon as possible.” (R. 1906). The opinion below itself quotes this

testimony, infra. p. 31-A. It was specified as error at p. 30, p. #15 of

Respondeats’ Specifications of Error.

*$ The few other errors discussed were inconsequential and related only to

minor matters to be avoided upon re-trial:

A hypothetical question should “be framed to omit this irrelevant factor.”

(Opinion, infra, p. 53-A)

“Certain events” should not be considered by the expert witness in giving

his opinion of value. (Opinion, p. 53-A)

Moore's tax returns should not have been admitted insofar as his business

income was concerned, because there is no authority for admission of such rec-

ords as annual summaries of ledger accounts. But see A.L.I. Mocel Code of Evi-

dence (1942) p. 237, (tax returns are against interest and relevant and admissible

to show income at least to the extent that it requires payment of tax) and Trethe.

way v. Green River Gorge, Inc., 17 Wn. 2d 697, 730, 136 P. 2d 999, 1013 (1943)

(tax returns were not an acknowledgement of a barred debt, but were relevant

to show a continuing contract).

and 61.” Petitioner, a service station operator

whose valuable business was destroyed in 1952 by

respondents, is saddled with $23,729.03 in costs and

relegated to a re-trial six years later with all of the

documentary evidence inadmissible and witnesses

possibly dead or out of reach’ before retrial can be

had.

Petitioner has been penalized by respondents’ ob-

jections to documents as admissions and compliance

with the trial court’s requirement of the extra proof

necessary under the Business Records Act “to make

doubly sure that there would be a legal authentica-

tion.” (infra p. 7).

If the lower court’s legal obstacles to the admis-

sibility of evidence stand unreversed, then no anti-

trust case“ can be tried within the confines of the

Ninth Circuit. If these legal obstacles to the admis-

sion of evidence are correct, none of the substantial

anti-trust cases reaching this court should have

been decided adversely to the defendant.

*8“When these rules are applied by a court or jury with average power to

judge creditability better results are apt to be obtained than by the use of

many technical and refined rules that * * * (b) are so difficult in application,

that their method of application can be drawn in question by an appellant with

a fair chance of securing a reversal that has no relation to the merits involved.”

Moore's Federal Practice © 42.02 (3).

4° Under Washington law respondents may execute, levy and buy up _peti-

tioners cause of action unless he is willing and able—after destruction of his

husiness—to pay respondents all of the costs engendered by respondents sterile

hermaneutics on the law of evidence. Johnson v. Dahlquist. 130 Wash. 29, 225

Pac. 817 (1924). Any appellate review that adopts such technicalities or re-

wards such trial procedure must be justified by compelling fundamental reasons

of justice and fair play.

41 Or similar mail fraud or tax fraud cases involving masses of documentary

evidence can be tried or if tried be free of error. Mvore vr. United States No. 16804

(CCA Sth) decided March 18, 1958, unreported to date. Summary copy of tax

return prepared by agent from pencilled return shown by taxpayer and an un-

signed “return accountant testified appeared to be the copy he had prepared—

both authenticated in part by a “routine serial number” stamp.

*? Thus, in Hartford-Empire Co. v. United States. 323 U.S. 386, 401 (1945)

the court affirmed the judgment against the Lynch Corporation over its conten-

It would border on malpractice for defendants’ at-

torneys to ever stipulate to the admission of any

documentary evidence, all of which is inadmissible

under the lower court’s decision.*® No private plain-

tiff*—probably not even the Government—could af-

ford the time and money required to surmount the

exclusionary rules adopted below if that should be

possible at all. Few judges could survive the moun-

tains of minutiae that would result if anyone at-

tempted to do so.*

tion that the only evidence against it were memos exchanged by officers of other

defendant corporations. (App. Brief. No. 7. p. 3)

United States v. National Lead Co.. 332 U.S. 319, 327 (1947) affirmed the

judgment against duPont, its principal basis of appeal being that the only evi-

dence connecting it to the conspiracy was one or two incompetent communica-

tions between or within branches of other defendants. The nature of these letters

and inferences drawn from them are set out by the District Court (63 F. Supp.

at pages 520-531). This court merely referred to these pages in stating “we find

in those facts the support necessary for the conclusion reached.” )

Use and reliance upon such evidence in the de novo hearing of these equity

cases necessarily falls within the “rules of evidence heretofore applied in the

courts of the United States on the hearing of suits in equity” referred to in Rule

43(a) F.R.C.P. By the express terms of Rule 43(a) like evidence is made admissi-

ble in all other cases.

In United States v. Socony-Vacuum Oil Co.. 310 US. 150, 254 (1940) this

court affirmed conviction of R. H. McElroy, J:.. over his contention that several

memos and an inter-office letter were not sustantial competent evidence against

him.

*8In a cryptic aside, the court below indicated that all of the evidence

offered might be admissible without any foundation evidence at. all. (Opinion,

infra, p. 49-A, note 39). Petitioner cannot conceive that a court of appeals would

callously play such an ironic jest upon petitioner as to reverse the judgment

because respondents required him to unnecessarily prove a foundation for the

documentary evidence as business records and as acts, declarations and admissions.

44“The treble damage action is a sanction allowed to a private litigant be-

cause of the public interest.” Karseal Corporation v. Richfield Oil Corporation.

221 F. 2d 358, 365 (CCA 9th 1955). “The treble damage was intended * * *

to aid in achieving the broad social object of the statute.” Fanchon & Marco v-.

Paramount Pictures, 100 F., Supp. 84, 85 (S. D. Cal. 1951) aff'd. 215 F. 2d 167,

cert. denied, 348 U. S. 912.

*Tt is possible that the court below deemed its ruling to be an expedient

way to dispose of the big case as discussed in the Prettyman Report. If so, its

ruling is contrary to the conclusions of that report. A trial judge must have

more, not less, power in deciding what is relevant, material. admissible or

excludible. See United States v. Apuzzo, 245 F. 2d 416, 420-21 (CCA 2d 1957).

cert. denied, 355 U.S. 831.

CONCLUSION

If the Business Record Act is to have any utility,

trial judges’ effective control of their courtroom

and cases, or the anti-trust laws any enforcement,

this court should grant certiorari and reverse the

decision below.

Dated at Seattle, Washington, May 2, 1958.

DONALD MCL. DAVIDSON, Esq.

WILLIAM H. FERGUSON,

CHARLES S. BURDELL,

Attorneys for Petitioner

1012 Northern Life Tower,

Seattle Washington

No. 14,927

IN THE

UNITED STATES

COURT OF APPEALS

For the Ninth Circuit

STANDARD OIL COMPANY OF CALIFORNIA, a

corporation; SHELL O1L CoMPANY, a cor-

poration; THE TEXAS COMPANY, a corpora-

tion; RICHFIELD OIL CORPORATION, a cor-

poration; TIDE WATER ASSOCIATED OIL

CoMPANY, a corporation; and UNION OIL No. 14,927

CoMPANY OF CALIFORNIA, a corporation, Nov. 6, 1957

Appellants,

vs.

GEORGE F. MOORE,

Appellee.

Appeal from the United States District Court, West-

ern District of Washington, Northern Division.

Before: Stephens, Chief Judge, and Pope and Ham-

ley, Circuit Judges.

HAMLEY, Circuit Judge:

This is a treble-damage antitrust suit, brought by

George F. Moore, a former Seattle gasoline service

station owner and operator, against seven major

oil companies.’ Charging defendants with the de-

‘Standard Oil Company of California (Standard), Shell Oil Company, Incor-

porated, a Virginia corporation, The Texas Company (Texas), Richfield Oil Cor-

poration (Richfield), General Petroleum Corporation (General). Tide Water

Associated Oil Company (Tide Water), and Union Oil Company (Union). Prior

to trial, Shell Oil Company (Shell), a Delaware corporation, which, on September

30, 1949, succeeded Shell Oil Company, Incorporated, was made an additional party

defendant. At the close of the trial, the court granted a motion for a directed

verdict as to Shell Oil Company, Incorporated, and a judgment of dismissal as to

this defendant was entered.

struction of his business, plaintiff sought treble

damages in the amount of $285,000. He also asked

for a decree requiring defendants to divest them-

selves of all interest in, or control of, retail service

stations in the competitive area. Attorneys’ fees in

the sum of $40,000 were requested.

After a trial which lasted more than three

months, the jury returned a verdict of $80,000 tre-

bled, or a total of $240,000. Judgment in this sum,

and for attorneys’ fees in the amount of $40,000,

was entered on June 24, 1955. The prayer for equita-

ble relief was denied.

Defendants appeal. Under five general specifica-

tions of error, they question the sufficiency of the

evidence to support the verdict, the manner in which

the coconspirator rule was applied, the admissibility

of some of the evidence, the failure to give certain

instructions, the giving of other instructions, and

the failure to set aside the verdict because of as-

serted extraneous influences upon the jury.

BACKGROUND OF THE CASE

Each of the appellants is engaged in the business

of producing and refining oil, and in transporting

and marketing gasoline, oil and other petroleum

products, in Washington and other states. The pro-

duction and (at the times here in question) refining

operations take place in California. Transportation

to the state of Washington is generally by ship

tanker. The gasoline is received by appellants at

their respective marine storage terminals, and from

there it is distributed to bulk storage plants located

at convenient marketing centers.

Distribution from these terminals and plants falls

generally into four categories: Sales to independent

service station dealers; retail sales at company-

operated stations; sales to secondary wholesale dis-

tributors or jobbers; and sales to large commercial,

agricultural, and industrial consumers. Except for

appellants, only one company transports gasoline

into the Puget Sound area of Washington, and then

only in relatively small amounts. During the period

in question, there was no well production of petro-

leum products in the state of Washington.

In 1939, Moore opened a retail gasoline service

station and truck service station at 1961 Fourth Av-

enue South, in Seattle. Except for eight months in

1944, when he served in the army, Moore oper-

ated this station continuously until August, 1952.

Throughout this period, Moore obtained his gaso-

line and other petroleum products from Tide Water.

Moore was an extremely competitive dealer.

While Tide Water required him to post retail gaso-

line prices on his pumps, it was his practice to give

discounts which resulted in a net gasoline price

lower than the posted price. Generally speaking,

this discount, which he gave to all customers, was

three cents a gallon.

Moore’s business was successful from the begin-

ning. This was due to his pricing policy, the ex-

cellence of his location, the efficiency of his opera-

tion, his ability as a salesman, and perhaps other

factors. His business grew steadily, year by year,

until he became the largest Tide Water dealer in

the state of Washington. Eight employees were re-

quired to operate the station. By 1951, his annual

gasoline sales exceeded 1,600,000 gallons.

Commencing in 1950, however, disagreements de-

veloped between Moore and Tide Water. The nature

of these disagreements will be discussed at a later

point in this opinion. Late in 1951, Moore began

looking around for another source of supply. He

had conversations with representatives of Standard

and General. At that time, however, both of these

appellants declined to deal with Moore. Negotia-

tions between Moore and representatives of Union,

begun in October or November, 1951, were still in

progress in May, 1952.

On May 2, 1952, Moore received a written notice

from Tide Water, canceling its contract with him,

effective July 30, 1952.’ He continued his negotia-

tions with representatives of Union during the pe-

riod from May 2 to July 30, 1952. In June or July,

1952, Moore also had several conversations with

representatives of Richfield. Before the end of July,

however, Richfield indicated its refusal to deal with

Moore on the basis which he proposed.

Tide Water supplied no gasoline or oil to Moore

after July 30, 1952. By utilizing the large capacity

of his storage tanks and obtaining relatively small

quantities of gasoline from independent sources,

Moore was able to operate his service station for a

few days after that date. During this period, nego-

tiations continued with Union, and were reopened

with General. Moore also made a “last-minute’”’ ef-

fort to obtain gasoline from each of the other ap-

pellants.

As events turned out, Moore did not obtain a con-

tinuing supply of gasoline and diesel oil from Union,

General, or any other source, following termination

of the Tide Water supply on July 30, 1952. When

Moore’s stored supply became exhausted about the

middle of August, 1952, he closed his service sta-

2We use the term “contract” to include the entire contractual arrangement

between Tide Water and Moore concerning the supply of petroleum products.

Actuaily, there were five written instruments, including two leases, a petroleum

products sales agreement, a merchandise agreement, and a delivery allowance

letter, all of which were referred to and canceled in Tide Water's notice to Moore.

tion. The complaint in this action was filed on Oc-

tober 4, 1952.

The theory of the action is that Moore was re-

fused a supply of gasoline pursuant to, and in fur-

therance of, an agreement, combination, or con-

spiracy in restraint of, or to monopolize, interstate

trade and commerce, entered into by two or more of

the appellants.’ Jurisdiction to entertain the action

and grant the requested relief is asserted under sev-

eral sections of the Sherman, Clayton, and Robin-

son-Patman Acts (15 U.S.C.A. §§ 1, 2, 13, 13a, 14,

15, 18, and 26).

In Moore’s first amended complaint, the alleged

unlawful agreement, combination, or conspiracy is

pictured as one to accomplish a dual purpose

through multiple lines of action. It is asserted that

the general objectives were to control, fix, and regu-

late gasoline prices, and to monopolize, control, and

channelize the distribution of gasoline.‘ The plans

and programs adopted in furtherance of these ob-

jectives, Moore alleges, relate both to the refining

and to the distribution of gasoline.

Concerning the refining of gasoline, these plans

and programs, according to the complaint, called

for self-imposed controls and restrictions upon ap-

* The term “conspiracy” is not used in the complaint. The facts therein alleged,

however, are comprehensive enough to encompass conspiracy as well as unlawful

agreement or combination. A conspiracy is a joint undertaking having an unlawful

purpose, arising out of agreement, and usually extending over a period of time.

U. S. v. Kissel, 218 U. S. 601: Duplex Printing Press Co. v. Deering, 254 U. S.

443, 465. See, also, Piquett v. United States (7 Cir.), 81 F. (2d) 75, 80. The

briefs of all parties deal with the question of “conspiracy” as an issue in the case.

Likewise, the trial court instructed fully, and without any obpection being inter-

posed, on the meaning of the term “conspiracy,” and the application of the law

vf conspiracy to the facts of this case.

*In the complaint, “gasoline” is defined to include diesel fuel.

pellants’ own activities.* With respect to the distri-

bution of gasoline, it is alleged that these plans and

programs included not only self-imposed controls

and restrictions, but also the imposition of various

forms of economic pressure and coercion upon

wholesale distributors and retail dealers.‘

As compared tu the sweep of these allegations,

the averments concerning the way in which the as-

serted unlawful agreement, combination, or monop-

oly injured Moore raise a relatively narrow issue. It

is not alleged that during the time he was engaged

in business Moore’s profits or costs were affected

in any manner by reason of the production, refining,

transportation, storage, marketing, or pricing poli-

cies referred to above. The way in which Moore was

damaged, according to the complaint, was in being

driven out of business at a time when the business

was prospering. This was accomplished, it is al-

leged, by the practice of one of the forms of eco-

* Self-imposed controls and restrictions pertaining to the refining of gasoline

included, according to the compiaint, the use of private committees to determine

and impose quotas of crude oil to be produced; the purchase of gasoline pro-

duced by independent refineries and producers; the use of price-posting systems

to fix and maintain uniform and noncompetitive prices to be paid for crude oil

purchased from independent companies; the exchanging of crude oil among them-

selves; and the pooling of transportation facilities.

® Self-imposed controls and restrictions pertaining to the distribution of gaso-

line included, according to the complaint, the use of price leadership and price-

posting systems for the purpose of manipulating and stabilizing prices; the ex-

change of gasoline supplies among appellants; and the sale to retail dealers, for

resale under their respective brand names, gasoline actually produced and refined

by other appellants. The forms of economic pressure and coercion imposed upon

wholesale distributors and retail dealers included, it is alleged, the control and

limitation of gasoline supplies, or the cutting off of supplies, of independent whole-

sale distributors and retail dealers who do not conform to appellants’ joint price

policies; refusal to permit such distributors and dealers to advertise the type or

brand of gasoline sold; utilization of contract forms and other devices which per-

mit appellants to control, adjust, and change retail prices; refusal to sell gasoline

to wholesale distributors and retail dealers who will not conform to the joint price

policies, or who desire to resell under low cost and cheaper methods of distribu-

tion, such as self-service gasoline stations; the artificial decreasing or depressing

of gasoline prices, and the creation of so-called “price wars”; at times the pro-

hibition of the use of “price signs” by retail dealers, and at other times the in-

sistence that such signs be displayed; the refusal to sell gasoline to dealers who

purchase gasoline from any other appellant; the acquisition, operation, and con-

trol of retail service stations; and the practice of discriminating between pur-

chaser as to the price of gasoline.

a i

{

nomic pressure contemplated by the asserted un-

lawful agreement, combination, or conspiracy—

namely, concerted refusal to deal.’

Appellants filed separate answers in which they

denied the allegations of the complaint concerning

the alleged - greement, combination, or conspiracy,

concerted refusal to deal, and monetary loss. The

cause came to trial on the issues raised by these

pleadings. As before noted, the jury verdict was

for Moore, and the judgment conforms to the ver-

dict.

SUFFICIENCY OF THE EVIDENCE—IN

GENERAL

Before reaching any question as to the amount

of damages sustained by Moore, the jury had to find

in his favor on two other questions of fact. One of

these is whether Moore was unable to obtain a sup-

ply of petroleum products which would permit him

to remain in business.* The other is whether the

inability to obtain such a supply, if this was the

case, resulted from an agreement, combination, or

conspiracy of the kind alleged.

The verdict represents a jury finding for Moore

on both of these questions. Appellants’ first speci-

fication of error challenges the legal sufficiency of

the evidence to support either of these findings.

The evidence is legaily sufficient to support a

7 Specifically, it is alleged that appellants concertedly refused to deal with

Moore because he would not adhere to appellants’ “artificial price fixing and

price maintenance programs.” Another reason attributed to appellants for their

asserted concerted refusal to deal was appellants’ desire to prefer and favor service

station outlets wmch they individually owned or controlled.

8 This was the only damage asserted to have resulted from the alleged agree-

ment, combination, or conspiracy. If Moore did not prove such resulting damage,

he would not be entitled to judgment, even assuming the existence of an unlawful

agreement, combination, or conspiracy Letween two or more of the appellants.

:< v. National Lead Co. (9 Cir.), 225 F. (2d) 427, 432-433, cert. den., 350

. 8. 915.

jury finding on any question of fact, if it is of such

substance and character that reasonable men might

reach that conclusion. In determining whether the

evidence meets this test, all reasonable inferences

therefrom, favorable to the verdict, are to be drawn.

Likewise, all conflicts between evidence submitted

by the prevailing party and the evidence submitted

by the losing parties are to be resolved in favor of

the verdict. Where testimony submitted by the los-

ing party, although not directly contradicted, is in-

consistent with verdict, it is to be assumed that the

jury disbelieved such testimony, as it had the right

to do.

In determining the sufficiency of the evidence to

support the verdict, there is authority for appellate

court disregard of the evidence held to have been

improperly admitted. See Oras v. United States (9

Cir.), 67 F. (2d) 463, 465. Here, however, the as-

serted inadmissibility of evidence is based upon

claimed lack of foundation testimony—which might

be supplied on a new trial. It will therefore be as-

sumed, in discussing the sufficiency of the evi-

dence, that all evidence favorable to the verdict was

properly admitted.

THE FINDING THAT MOORE WAS UNABLE

TO OBTAIN GASOLINE

We turn first to the question of whether the evi-

dence was legally sufficient to support a jury find-

ing that Moore was unable to obtain a supply of

gasoline which would permit him to remain in busi-

ness. He sought to prove this by showing that no

source of supply was available to him after Tide

Water ceased deliveries on July 30, 1952.

There is no dispute between the parties as to the

nature of the proof necessary to warrant a finding

that any particular source of supply was not

available to Moore. As stated in the trial court’s in-

struction No. 35, to which no objection was taken,

it could not be found that a particular source of

supply was unavailable to Moore unless it were

shown that he offered, on a bona fide basis, to pur-

chase gasoline and diesel fuel oil from such source,

and that he was ready, willing, and able to pay the

current market price of such source applicable to

retail gasoline dealers of Moore’s classification and

category, and that such source refused to sell to him

at its current niarket price applicable to dealers of

that classification and category.

Appellants do not question the sufficiency of the

evidence to support a jury finding that Moore could

not then obtain a supply from appellants Standard,

Texas, Richfield, Shell, or Tide Water, or from any

source other than appellants. They do, however,

question the sufficiency of the evidence to support

the finding, inherent in the verdict, that Moore

could not then obtain a supply from Union or Gen-

eral.

Union’s Asserted Refusal to Deal. Viewing the

record in the light most favorable to the verdict, we

have examined the evidence bearing upon Union’s

asserted refusal to deal with Moore.

There were extensive negotiations between Moore

and Union, beginning in the fall of 1951 and con-

tinuing to about August 20, 1952. Early in these

negotiations, Moore indicated that he would like

the same price arrangement on gasoline as he then

had with Tide Water. This was a discount of 61,

cents off the posted retail price of regular gasoline,

and 7 cents off the posted retail price of ethyl or

premium gasoline. He was told that these ciscounts

10A

were a half cent more than the discounts Union

then gave to Fleet Service Station No. 1. The latter

was a truck service station two blacks away, which

did somewhat less business than Moore.

During the initial meetings, however, the Union

representatives did not offer to sell to Moore at the

Fleet Service figure. Nor did they state that the fig-

ure suggested by Moore was out of the question.

Quite to the contrary, on three different occasions

late in 1951, W. I. Martin, Union’s district sales

manager in Seattle, informed Moore that he be-

lieved he could get the 614 and 7-cent price for

Moore. The price of diesel oil, Moore was told, would

be 10 cents a gallon, as compared to the Tide Water

price of 9.2 cents. On each occasion, Moore stated

that he would enter into a contract with Union on

the 614 and 7-cent discount basis for gasoline, and

10 cents a gallon for diesel. The third time this price

plan was discussed, it was left that Martin would

take the matter up with Union’s California office.

Late in December, 1951, the Los Angeles office

advised Martin that the request to take the account

on the suggested basis was denied, but that it was

agreeable to take the account “at policy discount.”

This counteroffer, however, was never communi-

cated to Moore, and he heard nothing more from

Union until February, 1952. A company representa-

tive, David E. Gray, then went to the station and

told Moore that the company was not “taking any

accounts like ours right then.” There followed some

discussion concerning a possible lease of Moore’s

station to Union. He was later provided with a form

of agreement to effectuate such an arrangement.

In the middle of March, however, Gray informed

11A

Moore that Union was not then leasing any more

stations."

Union reopened negotiations with Moore in the

late spring of 1952. Martin again told Moore that

he believed that a discount of 614 and 7 cents could

be obtained for Moore. At a later meeting, T. G.

Wise, Union’s territory manager, informed Moore

that he had authority from a vice president to take

the account on that basis. Moore again agreed to

contract on this basis, and Wise had a painting con-

tractor measure the station for painting. Two weeks

later, however, Martin told Moore that a Union vice

president had ruled that it was not in the company’s

policy to take the account.

During all of the period referred to above, Moore

was being supplied by Tide Water. Hence, Moore’s

inability to obtain gasoline from Union during that

period bears only indirectly upon the factual ques-

tion under consideration. As before indicated, that

question is whether Moore was unable to obtain a

supply after Tide Water terminated deliveries on

July 30, 1952. But, as will be seen, Moore’s inability

to make headway with Union in these earlier nego-

tiations may well have influenced the jury’s inter-

pretation of later words and events.

The next contact between Moore and representa-

tives of Union came on the morning of Friday, Aug-

ust 8, 1952, when Martin went to Moore’s station.

By then, Moore was receiving no gasoline from Tide

Water or any other source. Moore’s version of this

conversation is quoted in the margin."

"Gray testified that he then told Moore that the reason Union could not then

take on his account was because the company was then in a condition of “tight

' Oe

supply.

'0“A Mr. Martin came into the service station and said that he would—wanted

to talk business about selling me gasoline and I said I was willing to buy gasoline.

Hf» said that—he said that they could take the station with 6 cents off of the posted

price on the regular grade of gasoline, and 6% cents off of the posted price of

12A

This, according to Moore, is the first occasion on

which a representative of Union proposed to sell

gasoline to Moore at its regular truck station dis-

count of 6 and 61% cents. This is also the first occa-

sion on which a representative of Union had sug-

gested nine cents a gallon as the price for diesel. In

all prior negotiations, beginning in the fall of 1951,

the price quoted was 10 cents a gallon, the same as

it was charging Fleet Service.

The conversation between Moore and Martin just

described took place in the morning. About noon of

that same day, Martin telephoned Moore. Repeating

his previously expressed preference for the 6 and

61-cent discount proposal involving the “sixty-day

paper,’’ Moore asked what Martin was going to do.

On_direct examination, Moore gave this testimony

concerning the conversation which followed:

“A... . He said, ‘Well, the sixty-day paper,

1 find out the company doesn’t want any ac-

counts like that. They want a five-year account

like that.’ ‘Well,’ I said, ‘under those circum-

stances, I will take the other deal that you out-

lined this morning for the 51% cents off of the

posted retail price and 9 cents for diesel and no

paper at all.’ And he said, ‘I am sorry we can’t

take that kind of a deal, either.’ ”’

It was thus demonstrated that Martin had been

unable to gain company approval of either of the

proposals he had advanced earlier in the day. Moore

and Martin, continuing with their telephone con-

ethyl gasoline, and nine cents on diesel, and that was a sixty-day contract. Then

he said, ‘We have another plan. He said, ‘We will give you 544 cents off of the

posted price of retail, posted price on regular gasoline, and 6 cents off of the

regular posted price on ethyl gasoline, and nine cents on diesel and no paper at

alle

“So | told him that T would take the one with the 6 cents off and the sixty-day

paper and wanted that deal, and I said, ‘Let me know right away, because I am

vetting low on gas.’ I didn’t have any deliveries of gas. So he said he would let

me know.”

13A

versation, then explored other possibilities. Con-

tinuing with Moore’s testimony:

“So I said, ‘Well, what can you do for me? I

need gasoline.’ And he said, ‘Well,’ he says, ‘we

can give you a five-year contract, and give you

61 cents a gallon off of the posted price of the

regular gasoline and 61% cents a gallon off of

the posted price, retail posted price, that is, on

ethyl gasoline, and 9 cents for the diesel deliv-

ered with a five-year contract.’ Q. Would you

stop there a moment, Mr. Moore? A. Yes. Q.

You said 614 on both regular and ethyl on this

transaction; did you mean that? A. No, I meant

6 cents on the regular and 61% cents on ethyl. Q.

All right. A. And that was to be a five-year

contract. I told Mr. Martin I would take the

deal, and Mr. Martin said, ‘Well,’ he said, ‘I am

sorry, but the price of diesel now is 10 cents’;

and I said to Mr. Martin, I says, ‘What are you

doing, trying to find out how much I can pay for

the gasoline and still operate?’ I said, ‘When

you know what you want to sell me the gas and

diesel for, come down to the station and iet me

know, because I want to buy it, but quit horsing

around like this, because I am desperate for

gasoline.’ ”

As things then stood, Union had rejected Moore’s

offer to buy gasoline on a basis of a 61% and 7-cent

discount, with a 10-cent price for diesel. In view of

Moore’s frustrating experience during the long ne-

gotiations, the jury could also well “ind that Mar-

tin’s concluding price quotation was not an author-

ized, firm counter-offer, and that Moore was there-

fore justified in disregarding it. Assuming such a

finding, it was then definitely Union’s next move

if it was to escape the charge of refusing to deal.

Whether Union would have initiated further ne-

gotiations with Moore can not be known. Before it

had much of an opportunity to do so, Moore had his

14A

attorney prepare a letter to Union, dated August 11,

1952, and mailed the next day, offering to purchase

from that company all of his supply of gasoline, ap-

proximating a specified gallonage a month. He ex-

pressed a willingness to purchase at Union’s regular

prices for similar truck stations in the area. This

letter was identical with letters which Moore, on

that day, sent to all appellants.

Moore might have established his position more

positively by ordering a tank wagon of gasoline at

Union’s prevailing price. The jury, however, was en-

titled to find that this letter constituted an offer to

buy, the disregarding of which would constitute a

refusal to deal. But Union did not disregard Moore’s

letter. In a reply, dated August 15, 1952, and re-

ceived by Moore on August 18 or 19, Union said:

“We acknowledge and thank you for your letter of

August 11, 1952, and advise that our representative

will call to see you at an early date.”’

Since this letter failed to indicate acceptance of

Moore’s offer, or to present a counteroffer, it was

not itself sufficient to avoid the thrust of Moore’s

offer. But, within the next day or so, Martin went

to Moore’s station. According to Mrs. Moore, only

she and a Frank Wilburn were there at the time.

She testified that Martin told her he wanted to talk

to her husband about a letter he had received. Mrs.

Moore told Martin that her husband had gone out

for a moment, and that Martin was welcome to wait.

She then excused herself and went out to talk to

some former customers. Martin waited not over ten

minutes, and then departed, not having seen Moore.

Shortly thereafter, Moore returned to the station.

Mrs. Moore told him that Martin had been there.

Moore asked her if Martin had said anything about

selling gasoline. The testimony does not reveal what

15A

reply Mrs. Moore made to this inquiry. Moore then

asked his wife whether Martin was going to call

back. Mrs. Moore replied that Martin did not say.

Moore then observed to his wife, “I guess if he

wants to get in touch with me, he will call me.”

However, neither Martin nor any other representa-

tive of Union thereafter made an effort to contact

Moore.

Moore testified that his wife had told him that

Martin had been to the station and had asked to

see Moore. Moore made no effort thereafter to con-

tact Martin or any other representative of Union.

When asked why he had not called Martin upon

learning of the latter’s visit to his station, Moore

testified:

“A. All right. The reason I didn’t call Mr.

Martin was that if he had been willing to sell

me gasoline and get a good account like that, he

would have been down there waiting for me and

I would have been ready to buy. I was ready to

buy.”

Arnold Johnson, a laborer who was in the em-

ploy of Moore from December, 1947, to August,

1952, testified concerning a conversation with Mar-

tin at the station shortly before the 20th or 21st of

August, 1952. At that time, according to Johnson,

the station was not in operation, and United Truck

Lines was using some of the pumps for its own

purposes. On this occasion, United Truck Lines, ac-

cording to Johnson, was unloading a tanker of gaso-

line. Johnson asked Martin, no one else being pres-

ent, if he had come down “to sell us gasoline.” It is

Johnson’s testimony that Martin replied: ‘No, I

come [sic] down to see if United Truck Lines was

using this fuel for their own purpose.”

This testimony was at variance with Johnson’s

16A

testimony, in a deposition, that he had not talked

to Martin, other than to Say “good morning.” It

is also in conflict with Mrs. Moore’s testimony that

no person other than Frank Wilburn was present

when Martin called.

If Johnson’s testimony is to be given full cre-

dence, Martin’s last call at the station had nothing

to do with the sale of petroleum products. Since

Union made no other contract with Moore, the find-

ing would justifiably follow that Union had failed

to act affirmatively upon Moore’s offer to buy at

Union’s going prices for such a station. This would

spell out refusal to deal.

But, in view of the disparity between Johnson’s

testimony at the trial, on the one hand, and his

deposition and Mrs. Moore’s testimony, on the other,

perhaps the jury could not reasonably have found

that Martin’s last visit was unconnected with

Moore’s letter. Proceeding on this assumption, and

bearing in mind that it was Union’s next move, the

question then presented is whether Martin made a

reasonable effort tc contact Moore. If Martin, on

this occasion, did all that was reasonably required

of Union to find Moore, for the purpose of consum-

mating a sale of gasoline, there was no refusal to

deal.

In our view, the jury could properly find that

something more was required of Union at this date

than Martin’s ten-minute and somewhat enigmatic

call at a time when Moore was not at his station. A

little ionger wait at the service station, a telephone

call, or a letter stating the basis on which Union

would sell gasoline, would have been sufficient.

Without anything of this kind, the jury was free to

infer that, if Martin really went to the station to

discuss the letter, it was to say “no.” Union finelly

17A

said “no,” the jury could thus conclude, by discon-

tinuing contact while in possession of Moore’s writ-

ten offer.

It is therefore our conclusion that the evidence

was legaily sufficient to support the jury finding

that Moore was unable to obtain a supply of gaso-

line from Union.

General’s Asserted Refusal to Deal. Again view-

ing the record in the light most favorable to the ver-

dict, we turn to an examination of the evidence

bearing upon General’s asserted refusal to deal with

Moore.

Arguing that the evidence is legally insufficient

in this respect, appellants contend that it is uncon-

troverted that (1) after Tide Water ceased supply-

ing Moore, General offered to supply him with gaso-

line at General’s current tank wagon price; (2)

this price was the current market price at which

General was then selling or offering to sell gasoline

to other service stations of like size and character;

and (3) General’s offer was refused by Moore.

Before considering what transpired between

Moore and General after Tide Water ceased deliv-

eries, it will be well to review the evidence favorable

to Moore concerning their prior negotiations. In

September or October, 1951, Moore telephoned to a

Mr. Elmore, who was a branch manager for Gen-

eral. Elmore went to Moore’s station the next day.

Moore advised Elmore that the Tide Water contract

could be terminated. Elmore indicated great inter-

est in taking the account, stating that General

needed representation in that area. ‘““This is a chance

that comes to a branch manager once in a lifetime,”

he told Moore. Elmore told Moore, however, that it

was not in General’s policy or program to take the

account at that time.

18A

In October, November, or December, 1951, a Mr.

Falkner, representing General, went to Moore’s sta-

tion. Falkner tried to interest Moore in leasing a

station from General on Boren Avenue, ir Seattle.

LAA | 1 e ;

Moore looked over the Boren Avenue station and

then told Falkner he would take it if he could get a

supply of gasoline for his Fourth Avenue South sta-

tion. A week later, Falkner told Moore that General

would not supply his Fourth Avenue South station.

This concluded Moore’s negotiations with General

at that time.

Moore’s supply contract with Tide Water termi-

nated at the end of July, 1952. On the afternoon of

August 11, 1952, Moore, in company with one of his

employees, called at the Seattle offices of several

of the appellants, including General. At General’s

office, he talked with Mr. Elmore. Moore stated that

he was running out of gasoline, and offered to buy

gasoline for cash. He said nothing about prices on

that occasion, and did not ask for a supply contract

or a commitment for a permanent supply. Elmore

told Moore on this occasion that General was short

of gasoline and could not sell any to Moore.

Later the same day, Moore sent a letter to Gen-

eral, similar to the letter sent on that day to Union

and other appellants, offering to purchase all of his

gasoline from General at the latter’s “regular”

price. General made no written response. Within

two or three days, however, Elmore telephoned to

Moore. According to Moore, Elmore asked if

Moore would pay “tank wagon price” for gasoline.”

Moore’s response was that a station like his could

11 Moore gave this version of how the telephone conversation began:

“. .. He asked me if I was completely out of gasoline. And I told him

I was. He asked me if I had gone to all the companies to try to get gasoline,

and I told him that I had, and he said that he didn’t like that; that it was

a black eye to the industry. . . .”

19A

not operate on tank wagon prices, but that he was

willing to pay the price which a station similar to

his would pay. According to Moore’s testimony, El-

more then said that he would see what he could do

for Moore about getting gasoline. Moore heard noth-

ing more from Elmore or any other representative

of General.

Albert E. Horn, Jr., General’s division manager

for Washington, testified that, on August 11, 1952,

he authorized the supplying of Moore on a tempor-

ary basis at tank wagon prices. He further testified

that he instructed Elmore to tell Moore that Gen-

eral would sell him gasoline for his service station

on a day-to-day basis at General’s posted tank

wagon price until Moore could arrange for a supply

elsewhere. According to Horn, Elmore later re-

ported that these instructions had been carried out.

Elmore did not testify.

The jury was entitled to believe Moore’s version

of what Elmore told him, and to reject the inference

arising from Horn’s testimony, that Elmore told

him something else. If the jury accepted Moore’s

testimony in this regard, it could have found that

General did not accept Moore’s offer to buy gaso-

line, and did not make a counteroffer to sell gasoline

to Moore. A seller’s inquiry of a prospective buyer

as to whether the latter would buy at an indicated

price is not necessarily an offer to sell at that price.

Ordinarily, failure to accept, within a reasonable

time, an offer to buy, or to make a counteroffer to

Sell, indicates refusal to deal. This is not always

true, however, as the surrounding circumstances

may cast such failure in a different light. Thus, if

a buyer indicates to the seller in advance that he

would not buy at the seller’s current prices for simi-

20A

lar sales, the seller’s failure to offer goods at that

price does not evidence a refusal to deal.

Appellants argue, in effect, that the uncontro-

verted evidence shows that this is what happened

here. Thus produced testimony to the effect that

General was in short supply, and was therefore, at

the time in question, operating under a sales policy

which precluded the taking on of new accounts at

less than tank wagon prices.” Moore testified that

he told Elmore that he could not operate on that

price.

Moore testified further, however, that when he

told this to Elmore, the latter stated that he would

see what he could do. The jury could infer from this

that General’s price policy was not as inflexible as

appellants’ testimony would tend to indicate. If

Such prices were not inflexible, then Moore, with

his high-gallonage station in a location which EI-

more had said was favorable, would be entitled to a

discount such as General had previously given other

stations, or so the jury could have found.

The jury could also have found that Moore was

led to believe, by Elmore’s closing remarks during

their telephone conversation, that there would be

further price negotiations. The jury was warranted

in reasoning that, if Moore had been advised that

General would, in no event, offer better than tank

wagon prices, he might have accepted gasoline on

such a basis for purposes of a temporary supply.

But there were no further price negotiations; and

12 Moore, of course, strenuously disputes General’s position concerning its 1952

shortages and resulting restviction upon the taking of new accounts. The sufficiency

of the evidence to support a jury finding in Moore’s favor on this point is not

relevant to our present inquiry, which concerns refusal to deal regardless of rea-

sons. The reasons for refusal, however, do become relevant on the question of the

sufficiency of the evidence to support the jury finding of unlawful agreement, com-

bination, or conspiracy. To avoid the necessity of again discussing this factual sit-

uation when we come to a discussion of the latter point, we state now that, in our

opinion, the matter of General’s 1952 gasoline shortages was sufficiently in dispute

to present a jury question.

21A

Moore was never told that General would not offer

a lower price. Viewed in this light, the jury was

warranted in finding that Moore’s offer to buy had,

in effect, been rejected, and that no bona fide coun-

teroffer had been made. This is enough to support

the ultimate finding that General refused to dea]

with Moore.

We therefore conclude that the evidence was

legally sufficient to support the jury finding that

Moore was unable to obtain a supply of petroleum

products which would permit him to remain in busi-

ness.

PROOF OF AGREEMENT, COMBINATION,

OR CONSPIRACY

This brings us to the question of whether the evi-

dence was legally sufficient to support a jury find-

ing that Moore’s inability to obtain gasoline re-

sulted from an agreement, combination, or con-

Spiracy among the appellants in restraint of, or to

monopolize, interstate trade or commerce.

Appellants do not question the sufficiency of the

evidence as to the interstate character of the trade

or commerce in question.** They do, however, con-

tend that the evidence is not legally sufficient to

Support a jury finding that Moore was refused a

Supply pursuant to, or in furtherance of, an unlaw-

ful agreement, combination, or conspiracy of the

kind indicated.

As foreshadowed by the pleadings, the agree-

ment, combination, or conspiracy which Moore

13 Tn any eveat, the evidence was sufficient to support a jury finding that inter-

state trade axd commerce was involved. See Standard Oil Co. v. Federal Trade

Commission, 340 U. S. 23}.

22A

sought to prove was broad in scope. Its total objec-

tive, according to Moore, was no less than effective

control and regulation of gasoline prices, and the

monopoliation, domination, and channelization of

gasoline distribution in the Seattle area.

In proof of an arrangement between appellants

having this breadth of purpose and complexity of

design, evidence was submitted concerning a wide

variety of asserted supply, marketing, and pricing

practices. Included among these were practices re-

lating to the discontinuance of split-pump ac-

counts," public posting of wholesale, or so-called

“tank wagon” prices, granting of discounts from

posted prices, withdrawal of discounts and allow-

ances, exchange of price information, exchange of

petroleum products between appellants, resale price

directive, consignment sales, the so-called “clear-

ance” program,” suppression of curb signs, and re-

fusal to sell to price cutters.

An examination of the volurninous record of tes-

timony and exhibits” brings us to the view that the

evidence does not provide substantial support for a

jury finding that all or any of the appellants en-

tered into and carried out an agreement, combina-

tion, or conspiracy having the magnitude and ram-

ifications pictured in the complaint.

‘$A “split-pump” account is one in which the service station operator is per-

mitted to sell the gasoline of two or more oil companies.

15 Where a service station operator desired to change from one oil company to

the other, the latter company’s inquiry of the former as to whether the operator

was contractually free to deal with the new company was called a request for

“clearance.”

‘© The trial lasted over three months. There were 72 witnesses, whose testimony

required 20 volumes of printed record comprising 7,701 pages. There are 1,088

exhibits. According to the clerk of the district court. the record is the longest in

any civil “ase ever appealed to this court from the Western District of Washington.

It required more trial days than four of the five big antitrust cases brought by the

United States in 1949 (13 F.R.D. 64). Including exhibits, the record compares in

size with the government's famous Standard Oil case in 1911, which involved every

phase of virtually the entire petroleum industry of the United States. Standard Oil

Co. v. United States, 221 U. S. 1. One and a half days were allotted for oral argu-

ment before this court.

23A

Were this view concerning the sufficiency of the

evidence dispositive of the appeal, it would be

necessary to here set forth, at least in summary

form, a resume of the evidence and our analysis of

its deficiencies.

Failure to establish, prima facie, the broadly-

alleged agreement, combination, or conspiracy does

not, however, compel the conclusion that Moore did

not make out a case. Concerted refusal to deal is

the particular act or practice which is claimed to

have damaged Moore. If there is substantial evi-

dence to support a finding that for any reason

touching the matter of prices or competition appel-

lants agreed, combined, or conspired to deny gaso-

line to Moore, or to a class of dealers of which he

was a member, and that Moore was damaged by a

resulting act or practice of that kind, the verdict

withstands appellants’ factual challenge.

The trend of the evidence favorable to Moore sug-

gests the nature of the limited agreement, combina-

tion, or conspiracy of this kind which the jury may

have found to exist. It would be an agreement, com-

bination, or conspiracy to control price cutting and

curb-sign advertising by refusing gasoline to deal-

ers whose severe price cutting and persistent curb-

sign advertising bring them into controversy with

their present suppliers.

There is substantial evidence that Moore was in

this class of dealers. He was not content to hold his

price-cutting practices within the limits generally

adhered to by other price cutters. During a so-called

“price war” in the spring of 1951, the other dealers

dropped their prices from 27 cents a gallon for reg-

ular gasoline to 24.9 cents. Moore, however, first

lowered his price to 24 cents, and later to 22.9 cents,

both times over the strenuous objections of his sup-

24A

plier, Tide Water. Nor did he, for a considerable

time, heed Tide Water’s insistent request that his

curb price signs, advertising this low price, be re-

moved.

Moore finally agreed to remove the curb signs,

and did so in August, 1951, in consideration of Tide

Water agreement to release him from his contract

so that he could obtain a supply elsewhere. Moore

did not sign the termination papers which were

later submitted, however, since Tide Water prom-

ised him only a ten-day supply of gasoline. Business

relations between Moore and Tide Water deter-

iorated rapidly from this time on. A half cent of his

214 cent a gallon discount on gasoline was taken

away, and restored only after Moore’s attorney ne-

gotiated with Tide Water. Moore was put on a

C. O. D. basis, and later his Tide Water distributor-

ship on batteries and tires was taken away. In No-

vember and December, 1951, according to Moore,

Tide Water began delivering poor ethyl gasoline,

and continued this for four months.

In resisting Tide Water’s asserted pressure on

him, Moore stopped payment on certain checks

(paying them shortly afterwards), and, on occa-

sion, paid for gasoline with small change. On two

occasions, he ordered Tide Water employees off his

premises.’ Finally, on May 2, 1952, Tide Water

served upon Moore a notice that his contract wes

being canceled effective June 30, 1952. As before

stated, Tide Water’s supply to Moore ended on the

latter date.

There is also substantial evidence that the other

appellants refused to deal with Moore after his con-

17 After 1947, Moore had refused to give Tide Water a financial statement.

Moore testified that he refused to give Tide Water such statements because it

would jeopardize his bargaining position when it came time to renew his contract

if Tide Water knew how well he had been doing.

259A

troversy arose between him and Tide Water. This

point has been fully discussed in a preceding sec-

tion of this opinion.

The crucial inquiry, then, is whether there is sub-

stantial evidence to support a finding that these

other appellants denied service to Moore pursuant

to an agreement, combination, or conspiracy of the

kind alleged, rather than as a result of a legitimate

business decision, independently arrived at, unas-

sociated with any such mutual arrangement or de-

liberate concert of action.

Each such appellant (except Union and General,

which deny that they refused to deal) asserts that

its individual refusal to deal with Moore, following

the developmei.: of his controversy with Tide

Water, was the result of a legitimate, independent

business decision. The principal reasons advanced

by individual appellants as to why they were unable

to do business with Moore are that the company had

a limited supply, which made it impracticable to

take on new accounts, or that the company already

had a retail outlet very close to Moore’s station.

On the other hand, evidence favorable to Moore,

and reasonable inferences which could be drawn

therefrom, present a somewhat different picture.

Standard refused to do business with Moore in

August, 1952, asserting that its supply position was

critical. Considering the record as a whole, however,

the jury was not required to accept this explana-

tion. Moreover, there is evidence to indicate that in

the previous year, after Moore’s controversy with

Tide Water arose, and at a time when Standard had

no supply preblem, it refused to deal with Moore

because “it isn’t our policy to take you.” This de-

cision was made after a period of negotiation, dur-

ing which the parties seemed to reach agreement on

26A

prices. During the early part of these negotiations,

the Standard representative had appeared anxious

to take on Moore’s account.

Union did not claim lack of gasoline or presence

of an adjacent Union station as a reason for not

dealing with Moore. Indeed, the position of that

appellant is that it was willing to deal. Yet, the evi-

dence reviewed in a preceding section of this opinion

indicates that Union several times rejected Moore’s

offer, and never quite got around to making a firm

counteroffer. This in spite of the fact that repre-

sentatives of Union who called upon Moore seemed

to want his account.

General, like Union, claims that it was willing to

deal with Moore after Tide Water discontinued,

and asserts that Moore rejected its offer to sell at

its prevailing market price. In a preceding section

of this opinion, however, we have referred to evi-

dence from which the jury could have concluded

that Moore’s written offer to buy at General’s regu-

lar prices, communicated to General on August 12

or 13, 1952, was not acted upon. On August 11,

1952, General had orally refused to deal, asserting,

as a reason, short supply of gasoline. Yet, as in the

case of Standard, the evidence was such that the

jury was not required to credit this assertion.

In the previous September or October, after

Moore’s controversy with Tide Water arose, his at-

tempt then to obtain gasoline from General was

likewise futile. The company representative who

then negotiated with Moore had appeared elated to

have the opportunity of taking his account, but

wound up by telling Moore it was not in General’s

policy or program to do so. General’s policy or pro-

gram appeared not to stand in the way of leasing a

Boren Avenue station to Moore, but only to deliv-

27A

ering gasoline to the Fourth Avenue Station where

he had had difficulty with Tide Water.

In June or July, 1952, a Richfield representative,

answering Moore’s request to open negotiations,

gave several reasons why it would be to Moore’s ad-

vantage to deal with Richfield. He was told that,

while Moore’s contract with Tide Water was a

“longer deal” than Richfield was accustomed to, it

was believed the Tide Water price could be matched.

Moore was also told that it would make no differ-

ence that Richfield then had a station across the

street. Richfield’s Los Angeles office, however, re-

jected Moore’s business for the asserted reasons

that he was a price cutter and his discount prac-

tices would be “upsetting” to other Richfield ac-

counts. Moore was not given this reason, but was

told only that the deal was off."

Moore made no attempt to purchase gasoline from

Shell until 2:30 p.m., on August 11, 1952. This was

twelve days after his Tide Water source had been

terminated. On this occasion, Moore was told that

Shell would not sell gasoline to him because there

was a service station across the street. The repre-

sentative who told this to Moore, however, stated

that Shell would have solicited Moore’s business had

not Tide Water told Shell that Tide Water owned

the 10,000-gallon tank on Moore’s premises. This

'* Richfield, Union, and, to some extent, Tide Water had fair trade clauses in

their respective contracts with retail dealers. Under the 1937 Miller-Tydings

amendment of the Sherman Act (15 U.S.C.A. § 1). and under chapter 19.88 of

the Revised Code of Washington, a manufacturer may fix the minimum resale price

of a trade-inarked article. The practice is called “fair trading.” Except for the

period between the decision in Schv.egmann Bros. y. Calvert Distilleries Corp., 341

U. S. 384, on May 21, 1951, and the enactment of the McGuire Act on July 14,

1952 (66 Stat. 631, 632; 15 U.S.C.A. § 45), this minimum price is and was bind-

ing on dealers whether or not they signed an agreement to observe it. There may

he circumstances, however, under which such agreements are illegal because of the

existence of competition between the supplier and the retail dealer it supplies, for

the business of certain ultimate consumers, (see Esso Standard Oil Co., v. Seca-

tore’s Inc. (1 Cir.) 246 FL (2d) 12, cert. den., 78 U.S. 54, October 14.

1957) or for other reasons. See Report of the Attorney General's National Com-

mittee to Study the Antitrust Laws, March 31, 1955, 152-153.

28A

tank actually belonged to Moore. Replying to

Moore’s letter of August 11, 1952, offering to buy

all of his gasoline from Shell, the company gave two

reasons for refusing his business. One of these was

that it would be a violation of antitrust laws to en-

ter into an exclusive dealership arrangement. The

second reason was that Shell products were then

being marketed at the nearby Flajole Bros. Shell

station.

Moore made no effort to purchase gasoline from

Texas until August 11, 1952. On the afternoon of

that day, he went to the Texas office in Seattle and

offered to buy gasoline for cash. He was denied a

supply, on the ground that Texas had a company-

owned station two blocks down the street. The com-

pany representative told Moore: “The Texas Com-

pany has lots of gasoline and is actively soliciting

business but you are too close to us and we won’t

sell you.” The same position was taken in that com-

pany’s reply to Moore’s letter of August 11, 1952.

The refusal of all of these appellants to deal with

Moore, after the disagreement arose between him

and Tide Water, was prophetic fulfillment of state-

ments made to him by Tide Water representatives.

While they were trying to bring him into line on

prices and use of curb signs, officials of that com-

pany told him, “We can break a service station op-

erator like you if you don’t do what you are told on

these price signs’; “If you don’t take the price sign

down, when I get through with you no company in

town will sell you gas”; “You are being foolish to

get the companies mad at you like this for not tak-

ing the price sign down.” This sort of threat could

well lead the jury to infer that Tide Water felt as-

sured that its pressure on Moore would find support

from the other appellants.

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29A

Moore was not alone in finding that severe price-

cutting practices seemed to close the gates to all

sources of supply.” Extensive evidence was pre-

sented concerning the difficulties experienced by

seven aggressive price cutters in obtaining a supply

of gasoline. The two instances of this kind most

favorable to Moore involved a ‘“‘Gasoteria” opera-

tion by one John Brady, and a General dealer named

Victor W. Markov.

All appellants except Shell (but including Shell’s

predecessor) either rejected in writing Brady’s of-

fer to buy gasoline, or failed to respond to his offer.

In making this solicitation, Brady had advised each

of these companies that he operated a self-service

“Gasoteria” station, and that it was his policy to

sell gasoline at a discount of three or four cents a

gallon off the general retail price. When this solici-

tation was made, his current source of supply, Clip-

per Oil Company (which then obtained its gasoline

from Texas), had been cut off, due to a controversy

which had nothing to do with prices. This quarrel

with Clipper was soon settled, and Brady resumed

operations. Between 1949 and 1952, Brady endeav-

ored to obtain his gasoline from Texas, General, and

Standard, but without success. In 1952, however, he

did obtain a substantial amount of gasoline from

Signal Oil Company. Signal was then an operating

division of Standard.

Markov got into difficulties with his then sup-

plier, General, during the 1951 “price war,” when

he dropped his prices and thereby substantially in-

creased his sales. General tried to get Markov to

19 The evidence favorable to Moore would not support a finding that it was

the general practice of appellants to deny petroleum products to all price-cutting

service stations. In the Seattle area, there have always been price-cutting service

stations supplied by appellants. Moore, who was himself a price cutter for thirteen

years, was supplied by Tide Water until July 30, 1952. Tide Water at all times

knew of Moore’s price-cutting activities.

30A

raise his prices, but he refused. General then dis-

continued sales to Markov, but leased his station

and continued to deliver gasoline on a consignment

basis. This required Markov to sell at prices fixed

by General. When Markov demanded permission to

lower his prices, General canceled his consignment

contract. It then raised his wholesale price to the

tank wagon level. Sales continued on this basis to

the time of the trial.

In September, 1952, Markov, who then had a repu-

tation as a price cutter, attempted to obtain gaso-

line from each of the other appellants except Tide

Water. Standard turned him down on the ground

that it was experiencing a shortage of supply. Shell

and Union advised Markov that they were not in-

terested because they were selling to other service

stations in the vicinity.” Texas told Markov that

it was not interested in taking on new business.

Richfield declined to sell to Markov because of its

“fair trading” policy.

There is in the record other evidence tending to

indicate concert of action among appellants in sup-

pressing curb price signs. In the case of General,

there was testimony that the action of Markov in

displaying price signs was reported by Union, Rich-

field, and General employees to their respective Los

Angeles offices.

A former Richfield employee testified that he was

under instructions to report to his office when signs

were displayed at the service stations of other deal-

ers. When he reported the presence of such signs

displayed by competitive dealers, “the signs usually

came down.”

Moore, who was a Tide Water dealer, testified

20 When Markov first commenced business in November, 1949, however, Shell

attempted to obtain his account despite the existence of its adjacent station.

31A

that a salesman for Texas, in urging Moore to take

down his price sign, stated: “It is in the program

to get the price signs down on the Avenue and clean

up the Avenue.” Moore also testified that, during a

1950 “price war,” a representative of his supplier,

Tide Water, told him that the compan; would not

sell Moore any more gasoline until he took his price

sign down. A Shell station across the street was also

displaying such a sign at that time. The Tide Water

representative told Moore, “I will have that sign

down in five minutes from the time yours is down.”

Moore took his sign down. The Tide Water man then

went to a telephone and made some calls. The Shell

sign came down within five minutes.

A retail dealer of Chevron (Standard) products

was told by a Standard salesman that if he took his

sign down, the signs of other dealers ‘would be

down as soon as possible.” This dealer testified that

stations in his area representing three or four major

oil companies took their signs down about the same

time that he did. Some of the exhibits show that

Seattle representatives of Tide Water made surveys

of the price sign situation in Seattle, determining

the name, address, and oil company represented,

for use by its San Francisco office.

The foregoing resume deals with what we regard

as the most significant evidence favorable to Moore

bearing directly upon appellants’ apparent unanim-

ity of action and possible contact with each other

concerning severe price cutters and persistent dis-

players of curb price signs. There is a great deal of

additional evidence, however, tending to show

parallel action by appellants, or actual contacts and

communications between them, concerning other

supply, storage, marketing, and pricing practices.

The significance of evidence of this kind lies in its

32A

tendency ‘to picture a business setting and relation-

ship which invites inferences favorable to Moore’s

position.

Among the matters dealt with in the evidence of

this character are (1) the apparently concurrent

and uniform act of all appellants, in 1936 (exclud-

ing Shell but including its predecessor) in discon-

tinuing “split-pump” accounts in the Seattle area,

and requiring each retail dealer to obtain his supply

exclusively from one oil company;*' (2) the prac-

tice of all appellants in posting their respective tank

wagon prices in conspicuous public places, with the

resulting tendency towards uniformity as to the

wholesale prices of all appellants;” (3) the uniform

practice of all appellants in allowing unpublished

discounts from the posted prices to selected dealers;

(4) the practice of all appellants in exchanging pe-

troleum products with each other to meet special

supply or storage problems as they developed; and

(5) the uniform practice of all appellants whereby

they would not undertake to serve a retail dealer

already in business without contacting his present

supplier and obtaining “clearance.”

The summary of the evidence, as set out in this

section of the opinion, is necessarily fragmentary,

as compared to the bulk of the entire record. Moore

will be able to point to items of evidence in his favor

which have not been mentioned. Appellants will be

*1Jn attempting to prove the existence of a combination or conspiracy during

a particular span of years, it is permissible to show the relationship existing and

practices followed during earlier years. American Tobacco Co. v. United States,

328 U. S. 781, 790.

22In achieving this uniformity, an appellant whose prices were high would

frequently lower its prices to accord with the posted price schedule of other ap-

pellants. But with respect to at least one appellant (Texas), “meeting competi-

tion” meant not only lowering prices to parallel a lower price posted by others,

but also the raising of prices to produce such uniformity. In the case of Richfield,

Texas, and Union, supervising officers sometimes requested local representatives

to check the posted price schedule of competition. As to each such company, local

representatives were also occasionally advised of information gained by the super-

vising office as a result of its own check of posted price schedules.

33A

able to show that a more complete review of the evi-

dence here adverted to would suggest weaknesses

in Moore’s case not apparent from a reading of this

opinion. Our purpose has been only to indicate, in a

general way, the lines of evidence which have a

tendency to lead in the direction of the jury verdict.

This evidence, of course, is largely circumstantial.

The fact that the evidence is circumstantial, how-

ever, does not necessarily affect its sufficiency to

support a finding of agreement, combination, or

conspiracy. Such arrangements, as the Supreme

Court has said, ‘are seldom capable of proof by di-

rect testimony, and may be inferred from the things

actually done. . . .” Eastern States Retail Lumber

Dealers’ Ass’n v. United States, 234 U.S. 611, 612.”

That the evidence tending to prove a fact is

wholly circumstantial is not ground for setting

aside a finding of such fact unless, as a matter of

law, reasonable minds, as triers of fact, must be in

agreement that some reasonable hypothesis other

than the existence of such fact could be drawn from

the evidence. Elwert v. United States (9 Cir.), 231

F. (2d) 928, 935. In applying this test, the evidence

is to be viewed as a whole and not link by link. C-O-

Two Fire Equipment Co. v. United States (9 Cir.),

197 F. (2d) 489, 494, cert. den., 344 U.S. 892.

Where the circumstantial evidence favorable to

the verdict meets this test, an appellate court will

not “search the record for conflicting circumstan-

tial evidence in order to take the case away from the

jury on a theory that the proof gives equal support

to inconsistent and uncertain inferences.” Tennant

v. Peoria & P. U. Ry. Co., 321 U.S. 29, 35. }

A considerable part of the evidence reviewed

23 See, also, Interstate Circuit v. United States, 306 U. S. 208, 221; Flintkote

Co. v. Lysfjord (9 Cir.), 246 F. (2d) 368, cert. den. ........U. S. ........, October

14, 1957.

34A

above concerned the acts of individual appellants

and of their agents or employees, and the extra-

judicial declarations of such agents or employees.

In evaluating evidence of this kind, it must be kept

in mind that evidence of such acts and extrajudicial

declarations are not to be considered as against

other alleged members, unless there is independent

evidence establishing, prima facie, that such others

were members of the conspiracy. Glasser v. United

States, 315 U.S. 60, 74-75.”

Part of the evidence, as previously noted, con-

cerned asserted instar.ces of parallel action know-

ingly taken, rather than actual contacts and com-

munications between appellants. Consciously par-

allel business behavior in matters touching prices

and competition does not itself constitute a Sher-

man Act offense. It is, however, admissible circum-

stantial evidence of an underlying agreement, com-

bination, or conspiracy concerning such matters.

The probative value of such evidence is to be de-

termined by the trier of the facts. Theatre Enter-

prises, Inc. v. Paramount Film Distributing Corp.,

346 U.S. 537, 540-541.”

A merchant is ordinarily entitled to develop busi-

ness relationships with whom he pleases. United

States v. Colgate Co., 250 U.S. 300. Accordingly, the

act of an individual person or company in refusing

to deal with another usually does not, standing

alone, have antitrust significance. There are some

exceptions to what has just been said, as noted in

the Report of the Attorney General’s National Com-

24 This rule does not deal with the testimony of members of such an arrange-

ment, or of their agents and employees, but only with independent evidence of

facts and extrajudicial declarations. Where such a member, agent, or employee

does testify, independent evidence of acts and extrajudicial declarations is ad-

missible for purposes of contradiction. See 2 Restatement, Agency, 642, § 285, com-

ment a.

‘ 25 See, also, Report of the Attorney General’s National Committee, supra, 36-

40,

SN RR? OA IE OSES

Bote - ye

aS DOR MET I FF ABTS

I 5 FSI SOG SRM FED IS CPN SEI el at BTS + SS TO

30A

mittee, supra, 134-136. We need not determine

whether the record contains a factual basis for ap-

plying any of these exceptions against Tide Water

or any other appellant. This is true, because the the-

ory of this action, as set out in the pleadings and

unchallenged instructions, and as argued to the

jury, does not admit of a verdict based upon in-

dividual refusal to deal. The only injury for which

Moore sought damages was that said to have re-

sulted from an unlawful agreement, combination, or

conspiracy.”

Where an act or practice of refusing to deal is

shown to be pursuant to, or in furtherance of, an

agreement, combination, or conspiracy, Sherman

Act liability is encountered. It is now well estab-

lished, and is not here questioned, that an agree-

ment, combination, or conspiracy between two or

more persons engaged in interstate commerce, to

withdraw or withhold custom from another, or with

a class of others, is violative of the antitrust laws.”’

Concerted restraint of this kind is illegal, even if

intended to meet or overcome an admittedly invidi-

ous trade practice.” )

Evidence tending to show that there was a legiti-

mate business reason for the act of an individual

merchant in refusing to deal is always admissible

in contradiction of a case built upon circumstantial

evidence. But, if there is sufficient evidence to sup-

port a finding that a merchant entered into such an

26 For the same reasons, the verdict is not sustainable as against Tide Water

on the theory (which may or may not have factual support in the record) that Tide

Water participated in an agreement, combination, or conspiracy with other service

station operators who were in competition with Moore.

27 Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, Inc., 340 U. S. 211; Asso-

ciated Press v. United States, 326 U. S. 1: United States v. Frankfort Distilleries,

Inc.. 324 U. S. 293; Millinery Creators’ Guild, Inc. v. Federal Trade Commission,

se U. S. 469: Fashion Originators’ Guild v. Federal Trade Commission, 312

1. S, 467.

28 Fashion Originators’ Guild v. Federal Trade Commission, supra; Report of

the Attorney General’s National Committee, supra, 133.

36A

agreement, combination, or conspiracy, the fact

that his individual refusal to deal may be explain-

able as a reasonable business decision is not excusa-

tory of liability. He will be deemed to have set in

motion an illegal undertaking, and will be held ac-

countable for damage caused by the overt act of

any member, pursuant to or in furtherance of the

plan.

This is but an application of the general law of

conspiracy. See Marron v. United States (9 Cir.),

8 F. (2d) 251, 258. It is based upon the principle

that a conspiracy creates an agency relationship,

and that therefore each member is authorized by

the other members to perform acts in furtherance

of the common objectives. Las Vegas Merchant

Plumbers’ Ass’n v. United States (9 Cir.), 210 F.

(2d) 732, cert. denied, 348 U.S. 817.

No express agreement, of course, is necessary to

constitute an unlawful combination or conspiracy.

American Tobacco Co. v United States, 238 U.S. 781,

809. It is sufficient if persons, with knowledge that

concerted action was contemplated and invited,

“give adherence to and then participate in a

scheme.” Federal Trade Commission v. Cement In-

stitute, 333 U.S. 683, 716.

Viewing this evidence, as we are required to, in

the light most favorable to Moore, and having in

mind the applicable rules and principles to which

reference has been made, we hold that the jury find-

ing of agreement, combination, or conspiracy, and

resulting overt act, is supportable as against all ap-

pellants.

As to all appellants, the evidence is sufficient to

support a jury finding of agreement, combination,

or conspiracy to control price cutting and curb-sign

advertising by refusing gasoline to dealers whose

37A

severe price cutting and persistent curb-sign adver-

tising bring them into controversy with their pres-

ent suppliers. The evidence is sufficient to support a

jury finding that, in 1951 and 1952, Moore became

such a dealer, and that, pursuant to and in further-

ance of the agreement, combination, or conspiracy,

the appellants withheld their custom.

-V

ADMISSIBILITY OF EXHIBITS RECEIVED IN

PROOF OF AGREEMENT, COMBINATION,

OR CONSPIRACY

Hundreds of exhibits were offered and received

in evidence in proof of the alleged unlawful agree-

ment, combination, or conspiracy. Most of these

consist of photostatic copies of documents found in

the Seattle and California files and records of appel-

lants. These documents had been made available in

response to orders to produce. They consist largely

of the originals or copies of letters, telegrams,

memoranda, and reports. Some were hand-written,

some were typewritten, and others were mimeo-

graphed or printed.

It is not questioned on this appeal that the photo-

static copies are accurate reproductions of the doc-

uments in question, or that the documents came

from appellants’ files and records. Appellants ob-

jected to the introduction of most of these exhibits,

however, on the ground, among others, that they

constitute hearsay, and that no foundation had

been laid for their admission under any exception to

the hearsay rule.

In nearly every instance where such an objection

was made, it was overruled and the exhibit was ad-

mitted in evidence. The trial court held that ex-

hibits of this kind which were received in evidence

38A

were admissible under the exception to the hearsay

rule which ajsplies to business records.” Iii the fed-

eral courts, this exception is sanctioned by statute.”

Appellants argue that the admission of these ex-

hibits on this ground and over appellants’ objection

constituted prejudicial error. While several hundred

exhibits of this kind are said to have been improper-

ly admitted, our attention is specifically directed to

119 such exhibits. In their specifications of error,

appellants provide detailed references and argu-

ments as to 46 of these exhibits, contending that

they exemplified both the impropriety of what was

done and the prejudice which resulted. Six exhibits

or series of exhibits, selected for illustrative pur-

poses, are dealt with at length in the briefs. 7

Most of the memoranda, letters, and telegrams

introduced in evidence in this fashion consisted of

interoffice communications between officials of the

Same company. Many of these communications dealt

with such matters as the marketing and pricing

policies and activities of the company, of other oil

companies, or of customer or competing service sta-

tion operators. Others dealt with problems of sup-

ply, plant and service station facilities, or competi-

tion. Some of the communications provided factual

29 As apparently recognized by all concerned, most of these exhibits constituted

hearsay, since substantially all of them were offered to prove the truth of the

contents, and were not subject to the test of cross-examination. See Palmer v.

Hoffman, 318 U. S. 109, 112: 5 Wigmore, Evidence (3d ed., 1940) 3, 376, §$ 1367,

1530.

89 28 U.S.C.A. § 1732, subd. (a) of which reads as follows:

“(a) In any court of the United States and in any court established by

Act of Congress, any writing or record, whether in the form of an entry in

a book or otherwise, made as a memorandum or record of any act, trans:

action, occurrence, or event, shall be admissible as evidence of such act.

transaction, occurrence, or event if made in regular course of any business,

and if it was the regular course of such business to make such memorandum

or record at the time of such act, transaction, occurrence, or event or within

a reasonable time thereafter.

“All other circumstances of the making of such writing or record, in-

cluding lack of personal knowledge by the entrant or maker, may be shown

to affect its weight, but such circumstances shall not affect its admissibility.

“The term ‘business,’ as used in this section, includes business, profes-

sion, occupation, and calling of every kind.”

Pes ie

39A

information. Others contained expressions of opin-

ion, suggestions, instructions, or requests for infor-

mation.

In addition to these interoffice communications,

there were many memoranda from salesmen or

other field representatives to their superiors. These

memoranda were largely used to report the observa-

tions of the writer, or information supplied by oth-

ers, concerning the marketing and pricing policies

and practices of other oil companies and of cus-

tomer or competing service station operators. These

field memoranda were sometimes handwritten on

printed memo forms supplied for the purpose.

A number of the exhibits were reproductions of

weekly reports or surveys of highest, lowest, and

average prices posted at retail outlets in specified

areas.

Admissibility as Business Records. To be admissi-

ble under 28 U.S.C.A. § 1732, the writing must have

been made “as a memorandum or record” or some

“act, transaction, occurrence, or event.”’ The memo-

randum or record must have been made in the “reg-

ular course” of the business. It must also have been

in the regular course of such business to make the

memorandum or record ‘at the time of such act,

transaction, occurrence, or event, or within a rea-

sonable time thereafter.”

The probability of trustworthiness of memoranda

and-records made and maintained as provided in

§ 1732 lies in the fact that they are routine reflec-

tions of the day-to-day operations of the business

in whose files the memoranda and reports are found.

Palmer v. Hoffman, supra, pages 113-114. The mat-

ters which reflect the day-to-day operations of a

commercial enterprise are those in which it is di-

rectly concerned as a participant. Illustrative of

40A

these are such matters as bids, offers, purchases,

sales, deliveries, price quotations, credit extensions,

loans, rentals, salary and wage payments and deduc-

tions, inventory changes, and bank deposits.

It follows that a writing which does not pertain

to a matter in which the business was a direct par-

ticipant, but to some incident, circumstance, or ac-

tivity outside that business, is not a memorandum

or record of an “act, transaction, occurrence, or

event” within the: ~ing of the statute. In this

event, the writing 1s not admissible under § 1732,

notwithstanding it may have been made in keeping

with systematic and routine procedures, and con-

cerns a matter of importance to the business. See

Palmer v. Hoffman, supra; Clainos v. United States

(D.C.Cir), 163 F. (2d) 593.

A great many of the exhibits in question consist

of memoranda, letters, and reports dealing with the

pricing and marketing policies of oil companies

other than the one in whose files the writing was

found. Other such exhibits deal with the like policies

and practices of service station operators who were

not customers of the company in whose files the

writing was found. For the reasons just stated, such

writings are not business records, and should not

have been admitted under § 1732.

The considerations discussed above and the con-

text of § 1732, read as a whole, also indicate that

a writing cannot ordinarily be considered a “memo-

randum or record” or an “act, transaction, occur-

rence, or event,” unless the recitals in such writing

are factual in nature. There are special cireum-

stances under which writings containing expres-

Sions of opinion or conclusions, as distinguished

from factual statements, may be admissible under

the statute. This may be dore, however, only where

RET Oe OER E-OPAPURINETERE SOIIIS EE “7 oe pees -

ln ast sealed

41A

the subject matter is such that the expression of an

opinion or conclusion calls for professional or sci-

entific knowledge or skill, and where the opinion

or conclusion is expressed by one having the re-

quired special competence and authorized to do so

by the person or company maintaining the memo-

randum or record.”

A good many of the exhibits in question contain

expressions of opinion, or conclusions, concerning

the reason why another oil company or a noncusto-

mer service station operator took, or failed to take,

certain action, or concerning the probable course

such companies or persons would follow in the fu-

ture. Expressions of opinions or conclusions on

such matters do not call for professional or scien-

tific knowledge or skill. It follows that exhibits con-

taining such recitals were not admissible und vr

§ 1732.

A memorandum or record cannot be considered

as having been made in the “regular course” of busi-

ness, within the meaning of § 1732, unless it was

made by an authorized person, to record informa-

tion known to him or supplied by another author-

ized person. The second paragraph of § 1732(a)

expressly provides that the entrant or maker need

not have personal knowledge of the matters recited

in the memorandum or record. Wheeler v. United

States (D.C.Cir.), 211 F. (2d) 19, 23, cert. denied

347 U.S. 1019. But where the entrant or maker re-

cords information supplied by others, it must ap-

pear that “it was part of their regular course of

31 See, for example. Medina v. Erickson (9 Cir.), 226 F. (2d) 475, 482, cert.

denied 351 U. S. 912 (doctors’ consultation reports, made in accordance with hos-

pital regulations); Morgan v. Pittsburgh-Des Moines Steel Co. (3 Cir.), 183 F.

(2d) 467, 473 (report of U. S. Bureau of Mines concerning explosion); Pekelis

\. Transcontinental & Western Air (2 Cir.), 187 F. (2d) 122, cert. denied, 341

U. S. 951 (report of company accident investigation board). But see Chapman v.

United States (5 Cir.), 194 F. (2d) 974, 978. cert. denied, 344 U. S. 821, criticiz-

ing the Pekelis and Moran decisions.

42A

business to report to him what the declarants them-

selves knew, as it was part of his business to record

w..at they said.” United States v. Grayson (2 Cir.),

166 F. (2d) 863, 869.** Where the information comes

to the entrant or maker from unauthorized persons,

the memorandum or record is therefore inadmissi-

ble, not because it contains hearsay, but because it

wes not made in the regular course of business.

With regard to some, but not all, of these exhibits,

there was evidence to indicate that the writing had

been prepared in the course of the writer’s duties as

an employee of the company maintaining the record.

In many of these exhibits, however, there is infor-

mation which the writer attributed to others. This

is particularly true with respect to memoranda

from the field. In few, if any, of these instances was

any showing made that the person supplying such

information to the writer had the duty to do so. In

most cases, the lack of such authority is self-evident,

for the information was attributed to a service sta-

tion operator or other person having no relationship

with the company which could give rise to such a

duty.” Exhibits falling in this category were not

admissible under § 1732.

A memorandum or record cannot be considered

as having been made in the “regular course” of busi-

8° See, also, Gencarella v. Fyfe (1 Cir.), 171 F. (2d) 419: Clanios v. United

States (D.C. Cir.), 163 F. (2d) 593. Contra: Pollack v. Metropolitan Life Ins.

Co. (3 Cir.), 138 F. (2d) 123, 129; United States v. General Motors Corp. (7

Cir.), 121 F. (2d) 376, 409, cert. denied, 314 U.S. 618.

°8 Perhaps the most extreme example of this kind is plaintiff's exhibit 6-B. It

is a report by an unidentified salesman named “Art” to Union’s local manager,

about a Tide Water dealer. Received as a business record of Union, it reads in

part:

“Mr. Chris Pieren, Associated dealer at 7120 East Marginal Way told

ne today that Associated has removed off policy discounts from their self-

serve dealers and has discontinued selling to them unless they raise their

posted price to the regular retail level.

“Bill Scholdt, operator of Bill’s Gas Well at 19300 East Marginal Way,

said the Harris Petroleum had been approached by two Associated Self-

Serve dealers formerly supplied by them for their further supply since

Associaied was going to take away their discount. . . .”

43A

ness, within the meaning of § 1732, unless it was

made pursuant to established company procedures

for the systematic or routine and timely making

and preserving of company records."

As before noted, it was established with regard

to some, but not all, of these exhibits that the writ-

ing had been prepared in the course of the write’’s

duties as an employee of the company. On a good

many of the papers, there were initials or other

marks to indicate that the communication, after

being transmitted, had come to the notice of one or

more of the company’s officials. In most instances,

however, it was not established that the internal

procedures of the company required that such writ-

ings be prepared, transmitted, and filed system-

atically, or as a matter of routine.

Concerning almost all of the items comprising the

grist of interoffice memoranda and letters which

were introduced, the nonexistence of any such com-

pany procedure seems almost self-evident. They

were patently intended as communications between

employees, and not as records of company activity.

Many of them were casual and informal in nature,

seeking or providing information of a kind which

could be, and no doubt often was, communicated by

telephone or in conference. Most of them were ap-

parently written as a result of the exercise of indi-

vidual judgment and discretion.

If there was any systematic or routine procedure

“4 The existence of a document or its presence in the file of a corporation

does not, without more, render it admissible under $ 1732. National Labor Rela-

tions Bd. v. Sharples Chemicals, Inc. (6 Cir.), 209 F. (2d) 645. That the com-

pany procedures must provide for systematic or routine entry of such records, see

Palmer v. Hoffman, supra; New York Life Ins. Co. v. Taylor (D.C. Cir.), 147 F.

(2d) 297, 303: Massachusetts Bonding & Ins. Co. v. Norwich Pharmacal Co. (2

Cir.). 18 F. (2d) 934: 5 Wigmore, Evidence (3d ed. 1940) 373, § 1525. The

requirement that the procedure call for timely entry of such records is expressly

spelled out in § 1732(a) in these words: “. . . and if it was the regular course of

such business to make such memorandum or record at the time of such act, trans-

action, occurrence, or event or within a reasonable time thereafter.”

44A

being followed in the preparation and filing of such

writings, the burden was upon appeilee to prove it.

He failed to do so, at least with regard to most such

exhibits. Where this foundation was lacking, the

exhibit was not admissible under § 1732.”

With regard to few, if any, of these exhibits was

there testimony indicating that it was a regularly

established business procedure to make such memo-

randa or records at the time of the act, transaction,

occurrence, or event therein described, or within a

reasonable time thereafter. In numerous instances,

the writings themselves reveal that they had not

been prepared with any particular or general time

limit in mind. Some of the documents contain refer-

ences to acts which occurred or policies which were

established a considerable time before the writing

was prepared. Others do not refer to past acts and

events at all, but contain predictions as to what

would or should occur in the future. Exhibits un-

supported by foundation evidence showing adher-

ence to company procedures calling for prompt

preparation of the writing were not admissible

under § 1732.

In reaching the conclusions stated above, concern-

ing the lack of adequate foundation to warrant the

admission of these exhibits under § 1732, we have

not overlooked the decisions relied upon by appellee.

For the reasons stated below, we believe that they

do not support appellee’s position.

Southard v. United States (9 Cir.), 218 F. (2d)

943, involves § 1733, not § 1732. In Sheehan v. Mu-

55 ]t is not suggested that the writings were inadmissible because they were in

the form of memoranda or letters. It is expressly provided in § 1732 that writing

which meet the requirements of that statute are admissible “whether in the form

of an entry in a book or otherwise.” Thus, informal memoranda, prepared for the

purpose of recording company acts, transactions, cccurrences, or events, dictated as

a regular company practice within a reascnable time afterwards, would be ad-

missible as records made in the regular order of business. See Smith v. Bear (2

Cir.), 237 F. (2d) 79.

45A

nicipal Light & Power Co. (2 Cir.), 151 F. (2d) 65,

it was held that copies of certain letters were ad-

missible under the predecessor statute (28 U.S.C.A.

§ 695). These copies, however, did not constitute

hearsay. They were not admitted to prove the truth

of the contents, but only to show that notice of cer-

tain action had been given. In Waters v. Kings

County Trust Co. (2 Cir.), 144 F. (2d) 680, cert. de-

nied, 323 U.S. 769, the question was whether the ad-

ministration of a trust is a “business,” within the

meaning of the business records act. It was not

questioned that the writings, consisting of a bank’s

history sheet or diary of events, were otherwise

admissible under the act.

Landay v. United States (6 Cir.), 108 F. (2d) 698,

704, cert. denied, 309 U.S. 681, concerned the ad-

missibility of corporate books to prove certain stock

transactions between corporations. They were iden-

tified by the one who superintended the making of

the records, and the entries were, the court said,

“prepared in the ordinary routine, which warrants

their reliability.” In Stillman v. United States

(9 Cir.), 177 F. (2d) 607, it was held only that a>

proper foundation had been laid for the introduc-

tion of certain business records, where a partner

had admitted that they were “the books” of the

partnership.

United States v. General Motors Corporation

(7 Cir.), 121 F. (2d) 376, 409, cert. denied, 314 U.S.

618, comes the closest to supporting appellee’s po-

Sition. It is stated in that opinion that intracompany

reports are admissible, under the predecessor busi-

ness records act, “as recorded acts or transactions

made in the regular course of business.’’ The court

went on to say however, that most of the errors as-

signed in connection with this class of evidence were

46A

not argued, and that the appellants admitted that

none of such evidence was prejudicial in and of it-

self, though its cumulative weight might influence

the jury. The court expressly stated that the ap-

pellants “could not possibly have been prejudiced

or injured” by the reception of such evidence, either

in isolation or in its entirety.

In discussing the admissibility, under § 1732, of

the exhibits introduced in the case before us, it has

not been practical to deal individually with the hun-

dreds of items which were offered and received. It

has been our purpose, however, to outline the fac-

tors to be considered in ruling upon these or other

like exhibits offered on a different record at a new

trial.

In our view, there was an inadequate foundation

for the admission, as business records, of most of

these exhibits.

The objections which appellants voiced to the in-

troduction, under § 1732, of the exhibits in question

were sufficient to present all of the considerations

which have been discussed above.

That the introduction of these exhibits was preju-

dicial to appellants is not denied. All of the 46 ex-

hibits mentioned in the specifications of error were

referred to, and many were quoted, in the argument

to the jury made on behalf of appellee. A great

many additional exhibits of this kind are referred

to in appellee’s brief as providing evidence of an un-

lawful agreement, combination, or conspiracy.

If none of these inadmissible exhibits had been

received, the evidence would have been insufficient

to support the jury finding that there was such an

unlawful agreement, combination, or conspiracy. If

we were able tc say that this evidence would not

be admissible on any record which could be made,

47A

and is irreplaceable, we would be warranted in di-

recting dismissal of the action.

On a new trial, however, a proper foundation may

be supplied for the admission of some of these docu-

ments, and other admissible evidence may be found

in substitution of evidence here found to be inad-

missible.” The attainment of substantial justice

therefore requires that the action be not dismissed,

but that it be remanded for a new trial. See 28

U.S.C.A., § 2106; Rule 61, Federal Rules of Civil

Procedure, 28 U.S.C.A.

Admissibility as Extrajudicial Admissions of a

Party-Opponent. Appellee, however, argues that, if

these exhibits were inadmissible under § 1732, they

were, in any event, properly received as extrajudi-

cial admissions of a party-opponent (herein re-

ferred to as admissions). To this contention, ap-

pellants reply that (1) the course of the trial

precludes sustaining the introduction of the docu-

ments as admissions; and (2) there was no founda-

tion for introduction of the documents as admis-

sions.

Turning to the first of these points, it is appel-

lants’ position that the challenged exhibits were

offered and received only on the ground that they

were business records admissible under § 1732. The

possible admissibility of these exhibits as admis-

sions having assertedly not been raised and inquired

into at the trial, they should not now, appellants

argue, be held admissible on the latter ground.

Examination of the record indicates that appel-

°6 Some of these exhibits which were admitted to establish the truth of the

recitals therein contained (and so were hearsay) may also be admissible on a new

trial for limited and nonhearsay purposes, such as to show the orders of a superior,

pattern of business conduct, contemporary explanations of ambiguous conduct,

notice, or motive. In this event, it would not be necessary to qualify them as busi-

ness records, extrajudicial admissions, or under any other exception to the hearsay

rule,

48A

lants are correct in stating that these exhibits were

admitted as business records, and not as admis-

sions. Counsel for Moore, on two or three occasions,

sought to admit documents of this kind as admis-

sions. Each time, the trial court rejected this con-

tention, and made it clear that the writings were

receivable, if at all, only as records made in the

regular course of business. Conforming to this rul-

ing, the foundation evidence was directed only to

the requirements of § 1732 as a ground for ad-

mission.*’

All of the discussion and argument of counsel

concerning the admissibility of individual exhibits,

with the possible exception noted in the last foot-

note, were directed to that inquiry. Likewise, the

comments of the court regarding the ground of ad-

missibility concerned only that line of inquiry. As

a result, the challenged exhibits were received only

on the basis that they constituted memoranda or

records made in the regular course of business.

In view of what has been said, it would be mani-

festly unfair for us to now hold ‘hese exhibits ad-

missible on a different ground, assuming that the

evidence in the record would support such a ruling.

Appellants have had no trial court opportunity to

inquire into the factual basis for admission of the

exhibits on any ground other than that they were

business records.“

Upon a new trial of this action, Moore may seek

“tT There is one possible exception to what has just been said. This concerns

Plaintiff's Exhibits 28-A, 28-C, 29-E, and 32-A. The witness who gave the addi-

tional testimony concerning these exhibits testified that they had been prepared in

\ssociated’s San Francisco office, and that he had no knowledge of the procedure

tollowed. Coneeding that, as to these exhibits, a foundation for their admission as

luesiness records had not been established, counsel for appellee reoffered them only

us against Associated, and on the theory that they were admissions. We have failed

to find, in this voluminous record, where this reoffer of these exhibits was acted

pon,

‘S See Shepard v. United States, 290 U. S, 96, 103; 1 Wigmore, Evidence (3d

ed. 1940), 320, note 14.

49A

introduction of some or all of these documents as

admissions. We therefore consider it appropriate to

state the principles to be applied in the event this

effort is made. We speak here noi of the foundation

which must be laid to establish the authenticity and

genuineness of such writings.* Our purpose is to

indicate what showing Moore must make to war-

rant a determination that a properly autiienticated

document may be received, as an admission, to

prove the truth of the statements therein made.

Extrajudicial admissions of a part-opponent are

receivable as exceptions to the hearsay rule.*’ In

our case, the documents consist of the writing of

employees and agents of the companies against

which, at a new trial, they would be produced. To

obtain their reception as admissions, it must there-

fore be made to appear that the statements in ques-

tion were made or acted upon under circumstances

which require appellant corporations to accept re-

sponsibility for them as admissions.

The writings here in question were, for the most

part, prepared and transmitted by employees and

agents of the appellant company in whose files the

documents were found. However, they were not, with

a few exceptions, communications to persons out-

side such company. They were interoffice memo-

randa, letters, telegrams, reports, and the like. It

follows that there is here no room for application

of the rule *’ that the statement is the principal’s if

the agent or empl

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