Cunningham v. A. S. Abell Co.

⁶⁵¹ Hammond, C. J., delivered the opinion of the Court. Matthew S. Cunningham, appellant, formerly a Baltimore Sun newspaper home delivery carrier, sued The A. S. Abell Company, appellee, publisher of the Sunpapers, in the Circuit Court for Baltimore County for actual and punitive damages for breach of the contract between him and Abell, for malicious interference with the contract relationship between him and some 900 subscribers on his route, and for conversion by Abell of Cunningham’s paper route. At the close of Cunningham’s case, Judge Menchine granted Abell’s motion for a directed verdict on the breach of contract count and on the conversion counts. At the close of the entire case, Cunningham elected to go to the jury on count three, which charged malicious and illegal interference with the contractual relations between Cunningham and his customers.

Abell moved for a directed verdict. The court reserved. The jury found for Cunningham in the amount of $87,500 compensatory damage, allowing no punitive damages. Thereafter, Judge Menchine granted Abell’s motion for a judgment n.o.v. and entered judgment against Cunningham for costs.

The appeal is from that judgment and the questions presented by Cunningham are whether the contractual arrangements between Cunningham and Abell entered into in 1961 were in violation of the Sherman Anti-Trust Act, whether a State court could award damages for breach of a contract that violated the Sherman Act, and whether the court’s determination in granting the judgment n.o.v. on the ground that there was no evidence to support the jury’s verdict on malicious interference with contracts was right or wrong. In early 1968 Cunningham was one of some 120 route owners who delivered Sunpapers to home delivery subscribers, and a member of the Sun Route Owners’ Association. Each route owner had signed an identical contract approved in 1922 by the Association and presented to Abell by the Carriers’ Council, a small group of owners elected by the members of the Association “to represent the best interest of the carriers in negotiations and ⁶⁵² discussions with the Sunpaper management.” The Carriers’ Council under the contract acquired the right to discuss with Abell all matters which affected the welfare of the Sun route owners and to recommend the wholesale and retail prices of papers and the enforcement of the territorial monopolies of the carriers. Other provisions of the contract put a floor under the gross profit or margin of each carrier in relation to the retail price of the papers, thus fixing a maximum wholesale price in relation to the retail price, and Abell was required to recognize and give protection to the monopoly which each carrier had in his territory by virtue of horizontal agreement among them.

Cunningham first became a Sun carrier in 1961 when he bought a portion of a route in the Govans area of Baltimore. In 1966 he sold the Govans route to his father and he bought the Ruxton part of the Riderwood-Ruxton route owned and serviced by William P. Gill. The decision to subdivide the route was made by Gill and he set the territory in which Cunningham could serve papers. He also set the price, $4,000, and received all of it.

The transfer was accomplished by assignment from Gill to Cunningham of “the privilege of serving the Sun, Morning, Evening and Sunday,” in a specifically described geographical area. Abell noted its approval of the transfer on the assignment. The standard contract between Cunningham and Abell, signed in 1961, remained in effect. On March 4, 1968 the Supreme Court decided the case of Albrecht v. The Herald Co., 390 U. S. 145 , 19 L.Ed.2d 998 , in which it held that in the context of an arrangement somewhat similar to that here involved, there was a combination to fix maximum prices for the resale of the St. Louis Globe-Democrat that constituted, per se, an illegal restraint of trade under Section 1 of the Sherman Act.

In the light of Albrecht (and prior decisions) Abell caused its relations with its carriers to be reviewed by counsel and was advised, and concluded, that the provisions for the fixing of wholesale prices in relation to retail prices, the requirements for bargaining between ⁶⁵³ Abell and the carriers as a group for the fixing of wholesale and retail prices and terms, and the agreement of Abell to support and protect the carriers’ horizontal division of territories were so interwoven and interdependent as to make the existing contractual arrangements invalid. By letter of March 29, 1968 Abell notified each carrier of this conclusion and declared his contract terminated. In the same letter Abell said: “We believe that we can legally no longer deal concertedly with all Route Owners together, through the Carriers’ Council as their joint representative, or otherwise, but that we must deal with each Route owner independently. “Pending preparation and execution of a new contract between us, we expect to continue to sell you our newspapers in accordance with a schedule of prices, discounts and allowances which will be the same as that in the arrangement between us hereby terminated. We will expect you, during this period, to provide proper service, make prompt payment of your paper bills and provide the necessary ABC reports.” On April 19, 1968 Abell sent to Cunningham a form it proposed as a new contract.

Cunningham ignored the communication. In May 1968 Abell increased the wholesale price of its papers, abolished the combination credit set by the old contract and reduced the spread between the wholesale price and the suggested retail price below that of the old contract. Cunningham paid the bills rendered him on the new basis by Abell, without comment or remonstrance. The events which led to the present case include these: In early June, Cunningham had mailed F. Lee Goodwin, a Sunpaper subscriber for twenty-eight years, his bill for Morning, Evening and Sunday papers delivered in May and June.

A check came back with a deduction (some ⁶⁵⁴ sixty-five cents) for wet and unreadable papers. Cunningham ignored the deduction. In August he mailed Mr. Goodwin a bill for July and August for $9.50, and again the return check reflected a deduction of thirty cents for wet and unreadable papers. Cunningham thereupon discontinued service to the Goodwin home, writing: “Since my service is not to your liking, please pick your papers up over at the store from now on. “You pay only six cents for the paper what more do you want.

M L Cunningham” Mr. Goodwin forwarded this declaration of independence to Abell’s circulation manager. Several days later Cunningham received from Charles Owens payment for his bill for July and August with a deduction of twenty-five cents for wet and missing papers. Owens had previously complained at least twice. Again irked, Cunningham wrote Owens: “Since you cannot receive the newspapers when I deliver them please pick them up over \at the store from now on.” Enter now two other actors, Mr. and Mrs. Helmig.

They deducted thirty-five cents from Cunningham’s July and August bill for wet and missing papers. Cunningham cancelled the Helmigs’ service with a curt note similar to the first two. Although Cunningham testified that his obligation was to supply subscribers with dry, readable papers at reasonable hours, his regular practice was to make deliveries from the seat of his motor vehicle as he drove it along one side of the street, using an ambidextrous free-throwing swing out of the appropriate window, apparently without, regard to weather conditions. As a result of the complaints of Goodwin, Owens (an automobile dealer who for years had placed substantial ⁶⁵⁵ advertising in the Sunpapers and who threatened to cease doing so), and Helmig, the circulation manager of Abell caused a subordinate, Lingg, to attempt to resolve the trouble.

Lingg talked to Cunningham at least twice and reported to his supervisor that Cunningham persisted in refusing to serve the three complainants; that his refusal was because of their repeated complaints; that he intended to treat any other complainers in the same way, and that if his right to do so was questioned, his “legal” reason would be that they owed him money. Cunningham’s attitude and actions were deemed very serious (among other things, advertising rates and revenues of a newspaper depend on the number of certified subscribers). Becker, Abell’s business manager, and Knapp, its home delivery manager, were consulted. About the middle of September Knapp met Cunningham and impressed upon him that his refusal to serve customers was an extremely serious matter and urged him to work the matter out.

Cunningham promised to give consideration to the request. Several days later, without having approached the customers in any way, Cunningham called Knapp and said he would not resume the service. Thereupon, Becker instructed the circulation department to deliver papers to Goodwin, Owens and Helmig, and this was done by an Abell employee, one Bandelin. The service began on October 1.

A few days later a check showed that the service was satisfactory. On the early morning of October 9 (about 5:00 a.m.) just after Bandelin had delivered the Morning Sun to Goodwin’s home, Cunningham