CLINE v. FRINK DAIRY CO.(1927)
[274 U.S. 445, 446] Messrs. Jean S. Breitenstein, of Boulder, Colo., and Joseph P. O'Connell, Paul M. Segal, and Wm. L. Boatright, all of Denver, Colo., for appellant.
[274 U.S. 445, 447] Messrs. Hudson Moore and Ernest B. Fowler, both of Denver, Colo., for appellees.
Mr. Chief Justice TAFT delivered the opinion of the Court.
This is a direct appeal under section 238 of the Judicial Code, as amended by the Act of February 13, 1925, c. 229, 43 Stat. 936 (Comp. St. 1215), from a final decree of the United States District Court of Colorado, three judges sitting, granting a permanent injunction against the enforcement by a state officer of a state law on the ground of its unconstitutionality. The bill was brought by the Frink Dairy Company, the Windsor Farm Dairy Company, and the Climax Dairy Company, corporations of Colorado, and H. Brown Cannon, Clarence Frink, A. T. McClintock, and Morris Robinson, citizens and residents of the same state, against Foster Cline, the district attorney for the city and county of Denver, Colo.
The bill alleges that the suit involves for decision the question of the validity under the Constitution of the United States of what is known as the Colorado Anti-Trust Act, being chapter 161 of the Session Laws of the State of Colorado for 1913, approved April 7th of that [274 U.S. 445, 450] year. It avers that the three dairy companies have been separately conducting for years, in Danver, Colo., and its vicinity, the sale and distribution of milk, butter, and all manner of dairy products; that each has invested in its business more than $100,000; that they are also engaged in interstate commerce, buying and selling from without the limits of the state; that the individual plaintiffs, Connon, Frink, and Morrison, are respectively officers and stockholders of the three plaintiff companies; that McClintock, the other individual plaintiff, is an officer and stockholder of the Beatrice Creamery Company, a corporation of Delaware, also in the dairy business in Denver; that the individual plaintiffs, experienced dairymen, by painstaking effort, fair dealing, and careful management, have gained thousands of customers and a well- established trade; and that their companies, in addition to their tangible property and assets, have good wills of great value. The bill sets out in full the Colorado anti-trust law, which punishes as a crime combinations of persons and corporations to restrain trade or commerce, with certain exceptions, and makes it the duty of the defendant, the district attorney, to prosecute alleged violations thereof, and to institute actions for forfeiture of charters of associations engaged therein. All contracts violating the act are avoided; violation of the act is made a good defense to a suit for merchandise that was sold in pursuance of a combination under it; and a right of action for damages against the combiners is given to any one injured by the combination. One charge of the bill, among others, is that the act violates the Fourteenth Amendment of the Constitution, in that it deprives the plaintiffs of their liberty without due process of law, because it is indefinite and uncertain, and fails to fix any informing standard of criminality.
The bill alleges that Foster Cline, the defendant, in his capacity as district attorney of Denver city and [274 U.S. 445, 451] county, has been, and still is, claiming that the plaintiffs and their competitors have been and now are acting in violation of the anti-trust law; that he has caused an information to be filed in the criminal division of the district court of the city and county of Denver, in which the plaintiffs and the beatrice Creamery Company, a Delaware corporation, are charged with conspiracy to violate the Anti-Trust Act; that he expects to press the case to trial; that since the case was instituted the grand jury has been in session, and many witnesses summoned and questioned about the plaintiffs' milk business; that the defendant Cline has threatened to, and unless restrained by the court will, institute further prosecutions, file further informations, and attempt to procure indictments of the plaintiffs by the grand jury; and that Cline by this multiplicity of criminal suits and prosecutions, as well as by the civil suits for forfeiture of the corporate plaintiffs' charters he has threatened to bring, has already inflicted serious loss to the businesses and properties of the plaintiffs, and that they will be irreparably and immeasureably damaged thereby unless he is restrained.
A motion to dismiss was made by the defendant, on the ground that the bill presented no case for equitable relief. On the hearing before the three judges, a preliminary injunction was issued, and the motion to dismiss was denied. The defendant standing upon his motion to dismiss and declining to plead further, a decree for a permanent injunction was entered, and this is an appeal from that decree.
The first question is whether the practice and precedents in equity justified the granting of relief by injunction, where one criminal prosecution had been begun, and where many others, together with suits for forfeiture of corporate franchises, were threatened. The general rule is that a court of equity is without jurisdiction to restrain criminal proceedings to try the same right that is in issue [274 U.S. 445, 452] before it; but an exception to this rule exists when the prevention of such prosecutions under alleged unconstitutional enactments is essential to the safeguarding of rights of property, and when the circumstances are exceptional and the danger of irreparable loss is both great and immediate. Fenner v. Boykin, 271 U.S. 240, 243 , 46 S. Ct. 492; Packard v. Banton, 264 U.S. 140 , 44 S. Ct. 257; Hygrade Provision Co. v. Sherman, 266 U.S. 497, 502 , 45 S. Ct. 141; Terrace v. Thompson, 263 U.S. 197, 214 , 44 S. Ct. 15; Ex parte Young, 209 U.S. 123 , 28 S. Ct. 441, 13 L. R. A. (N. S.) 932, 14 Ann. Cas. 764; Davis & Farnum Mfg. Co. v. Los Angeles, 189 U.S. 207, 218 , 23 S. Ct. 498; Dobbins v. Los Angeles, 195 U.S. 223, 236 , 241 S., 25 S. Ct. 18; In re Sawyer, 124 U.S. 200, 209 , 211 S., 8 S. Ct. 482.
The affidavits in support of the bill were very full in their showing that the district attorney by his action and threats had already greatly injured their properties and their businesses. They present a case in which the question of the validity of the act under which, if invalid, great injuries to properties and businesses are being unjustly inflicted should be promptly settled. We think the basis for equitable jurisdiction is made sufficiently clear.
It is objected, however, that the injunction cannot be supported under the authorities, in so far as it is directed against actual proceedings pending in the criminal court. One of the District Judges below dissented from this part of the decree. Of course, the injunction is not only against actual prosecution, but is also against a multiplicity of future suits and the threatened proceedings for forfeiture, by which the Attorney General proposes to end the businesses of all the plaintiffs, and the objection would only lead to a narrowing of the decree. The majority in the District Court were influenced by a remark of this court in Davis & Farnum Co. v. Los Angeles, supra, in speaking of a bill to restrain invasion of rights of property by the enforcement of an unconstitutional law, in which the court said:
[274 U.S. 445, 453] 'It would seem that, if there were jurisdiction in a court of equity to enjoin the invasion of property rights through the instrumentality of an unconstitutional law, that jurisdiction would not be ousted by the fact that the state had chosen to assert its power to enforce such law by indictment or other criminal proceeding.'
This semble does not seem to have received the approval of the court in Ex parte Young, 209 U.S. 123 , 28 S. Ct. 441, 13 L. R. A . (N. S.) 932, 14 Ann. Cas. 764, where it was said:
We therefore agree with the view of the dissenting judge that the injunction is too broad, in so far as it restrains proceedings actually pending, and that it must be accordingly modified.
This brings us to the consideration of the constitutionality of the Anti-Trust Act. We think that the act is so vague and uncertain in its description of what shall constitute its criminal violations that it is invalid under the Fourteenth Amendment. It is this respect violates due process and cannot be distinguished from the case [274 U.S. 445, 454] of United States v. Cohen Grocery Co., 255 U.S. 81 , 41 S. Ct. 298, 14 A. L. R. 1045. The law there under consideration was the fourth section of the Lever Act re-enacted in 1919. Act of October 22, 1919, c. 80, 2, 41 Stat. 297 (Comp. St. 3115 1/8 ff). It provided as follows:
This court said:
The opinion cites in support of its conclusion, United States v. Reese, 92 U.S. 214, 219 , 220 S.; United States v. Brewer, 139 U.S. 278, 288 , 11 S. Ct. 538, 35 L .ed. 190; Todd v. United States, 158 U.S. 278, 282 , 15 S. Ct. 889; United States v. Sharp, 27 Fed. Cas. 1041, 1043, No. 16,264; Chicago & Northwestern Ry. Co. v. Dey (C. C.) 35 F. 866, 876; Tozer v. United States (C. C.) 52 F. 917, 919, 920; United States v. Capital Traction Co., 34 App. D. C. 592; United States v. Pennsylvania R. R. Co., 242 U.S. 208, 237 , 238 S., 37 S. Ct. 95; also International Harvester Co. v. Kentucky, 234 U.S. 216, 221 , 34 S. Ct. 853; Collins v. Kentucky, 234 U.S. 635, 637 , 34 S. Ct. 924; American Seeding Machine Co. v. Kentucky, 236 U.S. 660, 662 , 35 S. Ct. 456.
The Colorado anti-trust law denounces conspiracies and combinations of persons and corporation, first, to create and carry out restrictions in trade or commerce preventing the full and free pursuit of any lawful business in the state; second, to increase or reduce the price of merchandise, products or commodities; third, to prevent competition in the making, transportation, sale or purchase of commodities or merchandise; fourth, to fix any standard of figures whereby the price shall be controlled or established; fifth, to make or execute any contract or agreement to bind the participants not to sell below a common standard, or to keep the price of the article at a fixed or graded figure, or establish or settle the price between themselves so as to preclude a free and unrestricted competition among themselves, or to pool, combine, or untie any interest they may have in such business of making, selling or transporting that the price of the article may be affected. The foregoing language sufficiently describes [274 U.S. 445, 456] for purposes of a criminal statute the acts which it intends to punish, but the Colorado law does not stop with that. It is accompanied by two provisos which materially affect its purport and effect. They are as follows:
The effect of the first proviso is that combinations, with the purposes defined in the first, second, third, fourth, and fifth paragraphs of section 1, and declared thereby to be unlawful and void, are not to be regarded as unlawful if their purpose shall be to obtain only a reasonable profit in such products or merchandise as can not yield a reasonable profit except by marketing them under the combinations previously condemned. The second is like the first in declaring that it shall not be unlawful or within the condemnatory provisions of the act for persons engaged in the business of selling or manufacturing commodities of a class that can only be dealt with at a reasonable profit by such previously condemned trust methods, to employ or own interests in an association having as its object the transportation, marketing, or delivering of such commodities at a reasonable profit. These provisos make the line [274 U.S. 445, 457] between lawfulness and criminality to depend upon, first, what commodities need to be handled according to the trust methods condemned in the first part of the act to enable those engaged in dealing in them to secure a reasonable profit therefrom; second, to determine what generally would be a reasonable profit for such a business; and, third, what would be a reasonable profit for the defendant under the circumstances of his particular business. It would, therefore, be a complete defense for the defendant to prove in this case that it is impossible to sell milk or milk products, except by trust methods and make a reasonable profit, if he also showed that by such methods he had in fact only made a reasonable profit.
We have examined the opinions of the Supreme Court of Colorado in reference to the construction and operation of these provisos in the Colorado anti-trust law (Campbell v. People, 72 Colo. 213, 210 P. 841; Johnson v. People, 72 Colo. 218, 210 P. 843; People v. Apostolos, 73 Colo. 71; 213 P. 331), and we find nothing there which is in conflict with our construction of them. Such an exception in the statute leaves the whole statute without a fixed standard of guilt in an adjudication affecting the liberty of the one accused. An attempt to enforce the section will be to penalize and punish all combinations in restraint of trade in a commodity when in the judgment of the court and jury they are not necessary to enable those engaged in it to make it reasonably profitable, but not otherwise. Such a basis for judgment of a crime would be more impracticable and complicated than the much simpler question in the Cohen Grocery Case, whether a price charged was unreasonable or excessive. The real issue which the proviso would submit to the jury would be legislative, not judicial. To compel defendants to guess on the peril of an indictment whether one or more of the restrictions of the statute will destroy all profit or [274 U.S. 445, 458] reduce it below what would be reasonable, would tax the human ingenuity in much the same way as that which this court refused to allow as a proper standard of criminality in International Harvester Co. v. Kentucky, 234 U.S. 216, 222 , 223 S., 34 S. Ct. 853
The Cohen Case was a violation of a federal law and involved the Fifth and Sixth Amendments, the first providing that no person shall be deprived of life, liberty, or property without due process of law, and the second that in all criminal prosecutions the accused shall enjoy the right to be informed of the nature and cause of the accusation. We are now considering a case of state legislation and threatened prosecutions in a state court where only the Fourteenth Amendment applies, but that requires that there should be due process of law and this certainly imposes upon a state an obligation to frame its criminal statutes so that those to whom they are addressed may know what standard of conduct is intended to be required. And such is the effect of our cases. Connally v. General Construction Co., 269 U.S. 385 , 46 S. Ct. 126; International Harvester Co. v. Kentucky, 234 U.S. 216 , 34 S. Ct. 853; Collins v. Kentucky, 234 U.S. 364 , 34 S. Ct. 924; American Seeding Machine Co. v. Kentucky, 236 U.S. 660 , 35 S. Ct. 456; Waters-Pierce Oil Co. v. Texas, 212 U.S. 86 , 29 S. Ct. 220; Fox v. Washington, 236 U.S. 273 , 35 S. Ct. 383; Omaechevarria v. Idaho, 246 U.S. 343 , 38 S. Ct. 323; Miller v. Strahl, 239 U.S. 426 , 36 S. Ct. 147; Tedrow v. Lewis & Son Co., 255 U.S. 98 , 41 S. Ct. 303; Weeds, Inc ., v. United States, 255 U.S. 109 , 41 S. Ct. 306, and Kinnane v. Detroit Creamery Co., 255 U.S. 102 , 41 S. Ct. 304.
In the latest of the foregoing cases, Connally v. General Construction Co., 269 U.S. 385, 291 , 46 S. Ct. 126, the validity of a statute of Oklahoma providing that not more than the current rate of per diem wages in the locality where the work was performed should be paid to laborers, workmen, mechanics, prison guards, janitors in public institutions, or other persons so employed by and on behalf [274 U.S. 445, 459] of the state, was before us. We held that the provision contained no ascertainable standard of guilt; that it could not be determined with any degree of certainty what sum constituted a current wage in such locality, because the term 'locality' under the circumstances of that case was fatally vague and uncertain. We said (page 391 (46 S. Ct. 127)):
The chief authority upon which counsel for the appellant rely is the case of Nash v. United States, 229 U.S. 373, 376 , 33 S. Ct. 780. That case involved the question whether the Sherman Anti-Trust Law ( Comp. St. 8820 et seq.), in making criminal every contract and all monopolies in restraint of interstate trade or commerce, fixed a permissible and ascertainable standard of guilt. It was held that it did. Because this Colorado act is an anti-trust law, punishing with even more detail of description all combinations in restraint of trade in Colorado, with the excepting provisos, it is supposed that the Nash Case has direct application and supports the claim of validity for the act. It is first to be noted that the court in its consideration of the Cohen Case had before it the Nash Case, and found nothing in that case inconsistent with its Cohen Case ruling.
In the Nash Case we held that the commonlaw precedents as to what constituted an undue restraint of trade were quite specific enough to advise one engaged in interstate trade and commerce what he could and could not do under the statute. In commenting on and affirming the Nash Case, this court said in International Harvester Co. v. Kentucky, 234 U.S. 216, 223 , 34 S. Ct. 853, 855 (58 L. Ed. 1284):
The common-law precedents as to forbidden and permissible restraints of trade were reviewed at great length by the Circuit Court of Appeals of the Sixth Circuit in a case under the federal Anti-Trust Act in United States v. Addyston Pipe Co. (C. C. A.) 85 F. 271, 46 L. R. A. 122. It subsequently came to this court, and is reported in 175 U.S. 211 , 20 S. Ct. 96. The federal Anti-Trust Act declares every contract, combination in the form of trust or other [274 U.S. 445, 461] wise, or conspiracy in restraint of interstate trade to be illegal and every one taking part in it to be guilty of a misdemeanor. In United States v. Trans-Missouri Freight Association, 166 U.S. 290 , 17 S. Ct. 540, and United States v. Joint Traffic Association, 171 U.S. 505 , 19 S. Ct. 25, the opinions of the court left the impression among many that every contract in restraint of trade, no matter whether lawful and reasonable or void and unenforceable at common law, was within the penalty of the statute. Such a conclusion was not necessary to the decision, and it was quite evident, when the opinions were analyzed, that it was recognized in their text that there were incidental restraints of trade that the statute was not intended to cover. This was made clear by the later decision in Cincinnati Packet Co. v. Bay, 200 U.S. 179 , 26 S. Ct. 208. The view was fully confirmed in United States v. Standard Oil Co., 221 U.S. 1 , 31 S. Ct. 502, 34 L. R. A. ( N. S.) 834, Ann. Cas. 1912D, 734, and United States v. American Tobacco Co ., 221 U.S. 106 , 31 S. Ct. 632, where the language of the federal statute was read in the light of the common law, and in accordance with its reason, and was construed not to penalize such partial restraints of trade as at common law were not only permitted, but were promoted in the interest of the freedom of trade itself.
The review of the many common-law precedents as to due and undue restraints of trade shows that in only one or two cases, and those not well considered, was there left to the court or jury as a criterion of the validity of a restraint of trade the reasonableness of the prices fixed or the profit realized under it.
The Addyston Case, supra, which involved a scheme for fixing prices, this court quoted with approval the following passage from the lower court's opinion (85 F. 271, 293):
In the same case the Circuit Court of Appeals, referring to cases in restraint of trade, said (pages 283 and 284):
This same view, when directed to the question of judging restraints of trade by reference to reasonableness of prices effected by the restraint is confirmed by the latest decision of this court on the subject in United States v. Trenton Potteries Co., 273 U.S. 392 , 47 S. Ct. 377 (February 21, 1927), where it was said:
This review showing what was the standard of criminality in the federal anti-trust law, indicates clearly that the decision in the Cohen Grocery Case was not inconsistent with the Nash Case, because the latter did not relate to the reasonableness or excessiveness of prices charged for necessaries without more as a basis for criminality, while the former plainly did. The same reasons show that there is nothing inconsistent between the Cohen Case and that of Waters-Pierce Oil Co. v. Texas, 212 U.S. 86 , 29 S. Ct. 220.
The principle of due process of law requiring reasonable certainty of description in fixing a standard for exacting obedience from a person in advance has application as well in civil as in criminal legislation (Small Co. v. American Sugar Refining Co., 267 U.S. 233, 238 , 45 S. Ct. 295 et seq.), but the fact that it is often necessary to investi- [274 U.S. 445, 464] gate and decide certain questions in civil cases is not controlling or persuasive as to whether persons may be held to civil or criminal liability for not deciding them rightly in advance. On questions of confiscatory rates for public utilities, for instance, courts must examine in great detail the circumstances and reach a conclusion as to a reasonable profit. But this does not justify in such a case holding the average member of society in advance to a rule of conduct measured by his judgment and action in respect to what is a reasonable price or a reasonable profit. It is true that on an issue like negligence-i, e., a rule of conduct for the average man in the avoiding injury to his neighbors-every one may be held to observe it either on the civil or criminal side of the court. It is a standard of human conduct which all are reasonably charged with knowing and which must be enforced against every one in order that society can safely exist. We said in the Nash Case ( page 377, 33 S. Ct. 781):
Following the authority in the Nash Case, we sustained in Miller v. Oregon, per curiam, January 17, 1927, 273 U.S. 657 , 47 S. Ct. 344, 71 L. Ed. -, a conviction of manslaughter under a statute of Oregon, which made the following rule of conduct a standard of criminality:
[274 U.S. 445, 465] 'Every person operating a motor vehicle on the public highways of this state shall drive the same in a careful and prudent manner, not to exceed thirty miles per hour, and within the limit of incorporated cities and towns not to exceed twenty miles per hour, and at intersections and school houses not to exceed twelve miles per hour, and in no case at a rate of speed that will endanger the property of another, or the life and limb of any person.' Chapter 371, General Laws of Oregon 1921, 2, subd. 16.
The indictment was framed under the last clause of this statute. Such standard for the driver of an automobile on a highway is one to which it is neither harsh nor arbitrary to hold those criminally who operate such a possibly dangerous instrument of locomotion, and who are or ought to be aware of what degree of care is necessary to avoid injury to others under the conditions that prevail on a highway. See Hess v. Pawloski, 274 U.S. 352 , 47 S. Ct. 632, decided May 16, 1927.
But it will not do to hold an average man to the peril of an indictment for the unwise exercise of his economic or business knowledge, involving so many factors of varying effect that neither the person to decide in advance nor the jury to try him after the fact can safely and certainly judge the result. When to a decision whether a certain amount of profit in a complicated business is reasonable is added that of determining whether detailed restriction of particular anti-trust legislation will prevent a reasonable profit in the case of a given commodity, we have an utterly impracticable standard for a jury's decision. A Legislature must fix the standard more simply and more definitely before a person must conform or a jury can act.
We conclude that the anti-trust statute of Colorado is void, in that those who are prosecuted and convicted under it will be denied due process of law. [274 U.S. 445, 466] The decree of District Court to enjoin proceedings which the defendant threatens to bring under the act against the plaintiffs should be affirmed, but the decree below is modified and reversed, so far as it purports to enjoin the defendant from proceeding further in prosecuting the information under that act against the plaintiffs now pending in the state criminal court.
The decree is in part reversed and in part affirmed.