U.S. Supreme Court
Nelson v. United States, 201 U.S. 92 (1906)
Nelson v. United States
Argued January 5, 8, 1906
Decided March 12, 1906
201 U.S. 92
In a suit in the circuit court of the United States brought by the United States against corporations for violations of the Anti-Trust Law of July 2, 1890, a witness refused to answer questions or submit book to inspection before an examiner appointed by the court on the ground of immateriality, also pleading the Fifth Amendment; after the court had overruled the objections and directed him to answer he again refused, and judgment in contempt was entered against him. On appeal to this Court, held that:
Questions under the Constitution of the United States were involved, and this Court has jurisdiction of an appeal direct from the circuit court.
In such an action, the books of the various defendants both before and after the alleged combination, and the contracts between them, as well as other papers referred to in the opinion, are all matters of material proof, but, whether material or not, the testimony must be taken, and exceptions can be noted by the examiner and the materiality of the evidence passed on by the court.
Witnesses cannot take objections to materiality of evidence in order to be relieved from testifying. The tendency or effect of the testimony on the issues between the parties is no concern of theirs.
Documentary evidence in the shape of books and papers of corporations are in the possession of the officer thereof, who cannot refuse to produce them on the ground that they are not in their possession or under their control.
Hale v. Henkel, ante, p. 201 U. S. 43, followed to the effect that officers and employees of corporations cannot, under the Fourth and Fifth Amendments, refuse to testify or produce books of corporations in suits against the corporations for violations of the Anti-Trust Law of July 2, 1890, in view of the immunity given by the Act of February 25, 1903.
These writs of error submit for review a judgment in contempt entered in the case of the United States v. General Paper Co., described in Alexander v. United States, post, p. 201 U. S. 117. The judgment was based upon the disobedience by the plaintiffs in error to orders of the court requiring them to answer certain chanroblesvirtualawlibrary
questions and to produce certain books, documents, and papers in their examination before the special examiner in pursuance to a subpoena duces tecum duly issued and served. The orders requiring the plaintiffs in error to answer were made upon petition of the United States, which exhibited the issues in the suit of United States v. General Paper Co., stated the questions asked plaintiffs in error, and the books, documents, and papers required of them.
Plaintiffs in error refused to obey the orders, and the examiner reported their disobedience to the court "for such action as the court might take for the further enforcement of its orders." In defense, plaintiffs in error filed separate answers, which respectively alleged that Nelson was the president and manager of the Hennepin Paper Company; Bossard, manager and treasurer of the Itasca Company, and McNair, a director and general manager of the Northwest Paper Company. In other particulars, the answers are identical except so far as the relations of plaintiffs in error to their respective corporations made a difference. Plaintiffs in error are also directors of the General Paper Company. We insert the answer of Nelson in the margin. [Footnote 1] chanroblesvirtualawlibrary
The court required the questions to be answered and the books and documents to be produced, and, being of opinion that the order did not constitute a final decision, refused to allow an appeal on the part of either of the plaintiffs in error or either of chanroblesvirtualawlibrary
the defendants in the suit, or on the part of all of them jointly.
Plaintiffs in error refused to obey the order of the court, and upon the report of the examiner, the judgment under review was chanroblesvirtualawlibrary
entered fining plaintiffs in error severally $100 "for their said disobedience of the said order, said fines to be paid to the clerk of this Court for the use of the United States, as punishment for such contempt," and sentencing them to be imprisoned until chanroblesvirtualawlibrary
the order of the court requiring them to testify should be complied with.
The questions on the merits in these cases are the same as those on the merits in 381 et seq., just chanroblesvirtualawlibrary
decided. In those cases, however, this Court had no jurisdiction, and the appeals were dismissed. In the present cases, we have jurisdiction, Bessette v. W. B. Conkey Co., 194 U. S. 324, and directly from the circuit court, as questions under the Constitution of the United States are involved. chanroblesvirtualawlibrary
In the pleadings in the original suit brought in the circuit court of the United States for the District of Minnesota, it is respectively alleged and denied that the defendant corporations, of which plaintiffs in error are officers, had entered into an agreement, combination, and conspiracy to control, regulate, and monopolize not only the manufacture of news prints and other papers, but the distribution and shipment thereof through the middle, southern, and western states, in violation of the antitrust Act of July 2, 1890. The United States sought to establish by plaintiffs in error the truth of the charge, and the subpoena served upon them was explicit as to what was required of them.
The subpoenas required plaintiffs in error to produce the account books, including the journals, ledgers, and other books kept by or under the control of the companies respectively, of which plaintiffs in error were respectively officers, (a) showing the amounts, kinds, and grades of paper manufactured by the respective companies and sold by or through the General Paper Company, and which were shipped since the fifth of July, 1900; (b) the prices, amounts, or credits received for such paper from the paper company between the which were shipped since the fifth of July, 1900; (b) the prices, amounts, or credits received for such paper from the paper company between the which were shipped since the fifth of July, 1900; (b) the prices, amounts, or credits received for such paper from the paper company between the fifth of July and the present time, including entries showing the manner in which the prices and amounts received by the respective companies for any and all chanroblesvirtualawlibrary
of its products so sold have been equalized with the prices and amounts received or realized of any and all of the other defendant companies for which the paper company is or has been the exclusive agent; (c) the amounts and proportions of earnings or profits of the paper company, received by the respective companies from and through the paper company, either in the form of rebates, credits or otherwise.
Second. All contracts, agreements, writings, and account books, including journals, ledgers, and other books, kept by or under the control of the respective companies, showing the agreement, arrangement, or understanding under and pursuant to each, and the manner in which the prices and amounts realized by the respective companies upon the various kinds and grades of paper manufactured by it and sold by and through the paper company, are and have been, since July 5, 1900, equalized, or the profits arising from the sale of such paper distributed or apportioned, as between the respective companies and other defendants manufacturing and selling through the paper company similar kinds or grades of paper or among all of the defendants manufacturing similar kinds or grades of paper, and then and there to testify and the truth to say, in a certain matter in controversy in said court, between the United States as complainant against the General Paper Company, et al., defendants, on the part of the complainant.
There is no uncertainty therefore either in the issue or the means of proof. In other words, the United States charges a conspiracy upon the part of the defendant corporations for the cessation of competition between the manufacturing defendants by creating a general selling and distributing agent, the General Paper Company, which restricts the output of the mills, fixes the prices of their products, determines to whom, and the terms and conditions upon which, such products shall be sold, into what states and places they shall be shipped, and what publishers and customers each mill shall supply. The means of proof of the charge are obviously the conditions of the companies before and after the formation of the paper company, chanroblesvirtualawlibrary
its organization and the purpose of its organization, the means of its operation, how and by what means it equalizes the output and price of products, and the distribution of the proceeds of their sale, and the relations the accounts between it and the other defendant companies, and their books, accounts, and minutes of proceedings.
The questions were directed to these ends. They were directed to ascertain whether the prices received for the various paper materials were equalized, and whether, during the time the General Paper Company was the selling agent of the materials, there was in existence an arrangement whereby the prices received through the paper company were equalized between the other defendant companies. The questions were put in various ways to show such equalization and the arrangements to equalize, and to show the allowances to each mill, the fixing of definite prices, and the distribution of the balances received among the companies on the basis of their average daily output of the grade of paper inquired about. And there were also questions asked as to whether the board of directors or the executive committee of the paper company fixed the prices of paper to be paid to each of the mills by or through the paper company, and the compensation to be paid to the mills making butchers' fibre paper, because it was less profitable, and other questions as to conversations between gentlemen representing the different mills in regard to the organization of a corporation to act as general selling agent in order to eliminate competition. There were also questions as to whether the books showed the things expressed in the other questions. The objection made to each of the questions before the examiner was that the testimony sought was irrelevant, incompetent, and immaterial, and counsel advised the witnesses not to answer. As to the books and papers, the following is a sample of the proceedings:
"Q. Do the books, journals, or ledgers of the Hennepin Paper Company show any agreement or arrangement or understanding under and pursuant to which and the manner in which the prices and amounts realized by the Hennepin Paper Company
upon various grades of paper manufactured by it and sold by or through the defendant the General Paper Company are and have been, since the 5th day of July, 1900, equalized, or the profits arising from the sale of such paper distributed or apportioned, as between the defendants?"
"Mr. Flanders: All objections renewed, and I give the witness the same advice."
"Q. Do you refuse, Mr. Nelson, to produce the books?"
"Mr. Flanders: As I said before, you may assume for the purposes of these questions that the books and all the papers called for are present in court; but, on behalf of the Hennepin Paper Company and the witness and the General Paper Company, I decline to submit those to the inspection of the government counsel."
"Mr. Kellogg: Or to allow them or any part of them to be put in evidence, Mr. Flanders?"
"Mr. Flanders: Yes."
"Other facts will appear in the opinion. "