Klingel's Pharmacy v. Sharp & Dohme

McSherry, C. J., delivered the opinion of the Court. The question now before us is merely one of pleading and involves only the sufficiency of the averments of the declaration. To the declaration the defendants demurred and the Superior Court of Baltimore City sustained the demurrer and entered judgment for the defendants for costs, and from that judgment this appeal was taken. In order to determine whether the ruling of the Superior Court was correct it will be necessary to set forth with some fullness the allegations of the declaration; and the objections which have been urged against its legal sufficiency will then be stated and considered.

The declaration avers that Klingel’s Pharmacy of Baltimore City, the plaintiff, is a duly licensed incorporated retail vendor of drugs and druggists’ supplies; that it was and still is able, ready and willing to pay cash for all kinds of drugs and druggists’ supplies needed by it and suitable for the proper conducting of its said business. That the defendants, the Calvert Drug Company, and Sharp & Dohme are corporations which have been for some time and still are engaged in the business of selling drugs and druggist’s supplies. That the other defendant, the Baltimore Retail Drug Association, is a corporation formed and organized for the purpose, amongst other things, of unlawfully maintaining amongst dealers in drugs and druggists’ supplies, the maximum rate schedule of prices and of preventing, in restraint of trade, all vendors of drugs and druggists’ supplies, who are unwilling to acquiesce in and submit to the prices so fixed by it, from buying at any price the drugs and druggists’ supplies needed and desired by them in their business, by the unlawful coercion of threats that any and all vendors of drugs and druggists’ supplies who shall sell for less than the schedule prices shall be themselves blacklisted and all sales of drugs and druggists’ supplies be refused them; and that all the members of said Retail Drug Association are bound by an agreement not to sell such supplies to any per ²²⁸ son or corporation who will not agree to maintain its maximum schedule of prices. That the plaintiff has steadily refused to become a member of said Baltimore Retail Drug Association, or to unite with it and with its members and with the other named defendants in said combination and conspiracy to coerce the dealers in drugs and druggists’ supplies to maintain said established prices by refusing to sell to them and by threats that unless they shall so maintain the same they shall be boycotted ' and placed on the blacklist and be disabled from buying any drugs and druggists’ supplies whatever.

That though the plaintiff has repeatedly applied to the Calvert Drug Company and to Sharp & Dohme and to sundry other druggists to sell to it drugs and druggists’supplies tendering itself ready, able and willing to pay cash, yet the said defendants and said other druggists have refused to sell it drugs or druggists’ supplies at any price whatsoever, because of said unlawful conspiracy and combination, coupled with the threat that for any violation of such unlawful combination and conspiracy the parties violating it should themselves be blacklisted and all sales be refused to them. That the avowed object of the conspiracy was and is to maintain in restraint of trade a maximum price of drugs and druggists’ supplies and to compel the plaintiff to become a member of said combination and to agree to charge all its customers such maximum price or to be driven out of business. That the Retail Drug Association is wholly composed in its membership of such vendors, and that the entire power of the association and of its members is unlawfully exerted to coerce, by blacklisting and by potent and effective threats of boycotting, the illegal purposes and acts aforesaid. That the wrongful refusal of the Calvert Drug Company and of Sharp & Dohme and of other parties to sell to the plaintiff was and is the direct result exclusively of said unlawful combination and conspiracy and of the wrongful actings and doings of said Retail Drug Association in carrying out the unlawful object and purpose of said conspiracy.

That the action of the defendants is not an action taken by them in the bona fide exercise of their supposed right to sell or to refuse to sell to whomso ²²⁹ ever they please, nor in the bona fide exercise of their supposd right to advise other vendors as to selling or not selling their drugs and druggists’ supplies; but on the contrary that by thesaid combination and conspiracy the defendants did wrongfully and maliciously intend to injure and destroy the plaintiff’s business; which they have succeeded in doing, and that such injury to the business of the plaintiff is the direct result of said illegal, malicous and wrongful conspiracy and of the acts done in furtherance thereof. Here, then, it is distinctly charged that there is an unlawful j conspiracy to exact and to maintain a maximum schedule off prices for drugs and druggist’s supplies in restraint of trade; || and it is with equal directness alleged that because the plaintiff will not enter into that combination and conspiracy no drugs or supplies have been or will be sold to it by the defendants; and that no other dealer in those articles is or will be allowed to sell to it without incurring the penalty of being blacklisted and boycotted as threatened by the defendants, which action of the defendants was not taken in the bona fide exercise of their right to sell or to refuse to sell to whom they pleased, but was taken with a malicious intent to injure and destroy the business of the plaintiff, whereby the plaintiff has been wholly deprived of the ability to purchase supplies and has as a result been prevented from pursuing its lawful avocation. By sustaining the demurrer the Superior Court held that these facts, if true, did not constitute a valid cause of action. We are not apprised by the record as to the ground upon which the trial Judge based his decision; but the reasons assigned in the brief of the appellees to sustain that ruling are, first, because {a) an agreement or conspiracy not to sell to the plaintiff is not actionable; and, because (b) no facts are alleged that amount to unlawful coercion by the defendants to the damage of the plaintiff.

Secondly, because the declaration is bad for misjoinder. These grounds are not tenable, as we shall see in a moment. They have been assumed obviously in consequence of a misinterpretation of the averments of the narr. ²³⁰ In the last analysis it will be seen that there are three salient facts averred in the declaration. First: A combination to exact and maintain a maximum schedule of prices for drugs and druggists’ supplies is asserted to exist between the defendants and others in restraint of trade.

That combination if it does exist, and we are bound to assume that it does when dealing with the issue raised by the demurrer, is a criminal conspiracy at the common law and is punishable by fine and imprisonment after indictment and conviction. It is the offence of forestalling the market, and is defined to be every practice or device by act, conspiracy, words or news to enhance the price of victuals or other merchandise. Roscoe Ev., 437; 3 Inst., 196; 3 Bac. Ab., 261; 1 Russ., 169.

As it creates a monopoly it was held to be unlawful at the common law as being in restraint of trade and against public policy. Mitchel v. Reynolds, 1 P. Wms. 181. The English statutes on this subject which were merely declaratory of the common law were repealed by 7 & 8 Vict., ch. 24. In the United States, whilst we hear little now about forestalling, engrossing or regrating, we hear much of “corners” and “trusts” which are, in many instances, the old offences under new names, since they are frequently attempts by a combination or conspiracy of persons to monopolize an article of trade or commerce and so to enhance its price.

Where the direct and immediate effects of a contract or combination among particular dealers in a commodity is to destroy competition between them and others, so that the parties to the contract or combination may obtain increased prices for themselves, such contract or combination amounts to a restraint of trade in the commodity, even though contracts to buy such commodity at the enhanced price are constantly being made. Total suppression of the trade in the commodity is not necessary in order to render the combination one in restraint of trade. Addyston Pipe & Steel Co. v. U. S., 175 U. S. 244 . Though this was said by the Supreme Court in a case which arose under the anti-trust Act of Congress of July 2nd, 1890, it equally applies to combinations and conspiracies of the character described in the declaration set forth in ²³¹ the record now before us.

A combination is a conspiracy in law whenever the act to be done has a necessary tendency to prejudice the public, or oppress individuals, by unjustly subjecting them to the power of the confederates, and giving effect to the purposes of the latter, whether of extortion or mischief; and the same proposition in one form of expression or another, is laid down in all the criminal law. Bish. Cr. L., sec. 172; Desty Cr.

L., sec. 2; 3 Chitty Cr. L., sec. 1138; Arch. Cr. Pr., 1830.

A “corner" when accomplished by confederation, to raise or depress prices and operate on the market, is a conspiracy, if the means be unlawful. Morris Run Coal Co. v. Barclay Coal Co., 68 Pa. 173 ; People v. Melvil, 2 Wheeler Cr. C. 262; People v. North River Sugar Refining Co., 2 L. R. A. 33 and notes. In Van Horn v. Van Horn, 52 N. J. L. 284, it was ruled that an action will lie for a combination or conspiracy by fraudulent and malicious acts, to drive a trader out of business, resulting in damage.

A. C., 10 L. R. A. 184. The cases of Kimball v. Harman and Burch, 34 Md. 407 , and Robinson v. Park et al., 76 Md. 118 , decide nothing at variance with the principles just stated. They hold that an act which does not constitute a cause of action when done by one person does not become actionable merely because it has been done by conspirators; that an unlawful combination’ to do an act, which, if done, would injure another, does not of itself and without more, furnish a ground for a civil suit; and finally, as a corollaray to the previous proposition, that though a con- ■ spiracy to do an injury exists a plaintiff can not recover against the conspirators unless some act has been done in furtherance of the conspiracy which has resulted in damage to him. “The quality of the act and the nature of the injury inflicted by it, must determine the question whether the action will lie.” Kimball v. Harman, supra. Havjng described a combination which at the common law is a criminal conspiracy, the declaration proceeds to set forth the acts done in execution of the unlawful conspiracy, and to aver that they were maliciously done and then to allege the injury resulting there-, from. ²³² The second salient fact averred in the narr. consists of a statement of the acts done in furtherance of the conspiracy.

Those acts are two-fold. First, a refusal by the defendants to sell to the plaintiff—an act they would have the legal right to do, if when done it were, not done in the execution of and to carry into effect a criminal conspiracy in restraint of trade. And secondly, coercion and intimidation practiced by the defendants upon other vendors of like commodities, by means of threats to blacklist and to boycott such vendors, if they sold to the plaintiff any drugs or druggists’ supplies, whereby they were deterred from selling those articles to the plaintiff, unless it joined the association. “It is a part of every man’s legal rights, said Judge Cooley, “that he be left at liberty to refuse business relations with any person whomsoever, whether the refusal rests upon reason, or is the result of whim, caprice, prejudice or malice.” Cooley, Torts, 278. Again: “The exercise by one man of his legal right cannot be a legal wrong to another. * * * Whatever one has a legal right to do another can have no right to complain of.” Ib. 688.

It was upon this principle that the decision in Bohn Manf. Co. v. N. W. Lumbermen Assn., 54 Minn. 223 , s. c., 21 L. R. A. 337, wás placed. In that case a large number of retail lumber dealers formed a