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CONTINENTAL WALL PAPER CO. V. VOIGHT & SONS CO., 212 U. S. 227 (1909)

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U.S. Supreme Court

Continental Wall Paper Co. v. Voight & Sons Co., 212 U.S. 227 (1909)

Continental Wall Paper Company v.

Voight and Sons Company

No. 15

Argued April 24, 27, 1908

Decided February 1, 1909

212 U.S. 227

Syllabus

Where a number of manufacturers situated in different states engaged in manufacturing an article sold in different states, organize a selling company through which their entire output is sold, in accordance with an agreement between themselves, to such persons only as enter into a purchasing agreement by which their sales are restricted, the effect chanroblesvirtualawlibrary

Page 212 U. S. 228

is to restrain and monopolize interstate and foreign trade and commerce, and is illegal under the Anti-Trust Act of July 2, 1890, c. 647, 26 Stat. 209, and so held in regard to a combination of wallpaper manufacturers.

While a voluntary purchaser of goods at stipulated prices under a collateral, independent contract cannot avoid payment merely on the ground that the vendor was an illegal combination, Connolly v. Union Sewer Pipe Co., 184 U. S. 54, a vendee of goods purchased from an illegal combination in pursuance of an illegal agreement can plead such illegality as a defense.

The Court cannot lend its aid in any way to a party seeking to realize the fruit of an illegal contract, and, while this may at times result in relieving a purchaser from paying for what he has had, public policy demands that the court deny its aid to carry out illegal contracts without regard to individual interests, or knowledge of the parties.

The refusal of judicial aid to enforce illegal contract tends to reduce such transactions.

In determining whether a contract amounts to a combination in restraint of interstate trade in violation of the Act of July 2, 1890, all the facts and circumstances will be considered. Addyston Pipe Co. v. United States, 175 U. S. 211, 175 U. S. 247.

148 F.9d 9 affirmed.

The facts appear in the statement of MR. JUSTICE HARLAN. chanroblesvirtualawlibrary

Page 212 U. S. 233

The Continental Wall Paper Company, a corporation of New York, brought this action against the Lewis Voight & Sons Company, a corporation of Ohio, to recover the sum of $56,762.10 as the alleged balance on an account for merchandise sold and delivered to the defendant.

The petition and answer were both amended. The amended answer contained six separate defenses, the last three of which were made counterclaims and cross-petitions. The plaintiff demurred to the second, third, fourth, and fifth defenses upon the ground that neither of them stated facts sufficient to constitute a defense, and it demurred to the first and second counterclaims and cross-petitions upon the ground that they did not state facts sufficient to constitute a cause of action against the plaintiff. It also replied to the sixth defense and to the third counterclaim.

The cause was submitted in the circuit court on the demurrers, and the court sustained the demurrer to the second, fourth, and fifth defenses and to the first and second counterclaims chanroblesvirtualawlibrary

Page 212 U. S. 234

and cross-petitions, but overruled the demurrer to the third defense. The parties not desiring to plead further, it was adjudged that, upon the allegations of the third defense, the defendant was entitled to judgment (and judgment was entered) dismissing the petition and amended petition, and was likewise entitled to judgment (and judgment was entered) dismissing the first and second counterclaims and cross-petitions. The case was carried by the Continental Wall Paper Company to the circuit court of appeals, where it was assigned for error that the circuit court erred in overruling the demurrer to the third defense, and in dismissing the suit. The circuit court of appeals affirmed the judgment, thereby sustaining the sufficiency of that defense. The case is fully reported in 148 F.9d 9.

If the facts stated in the third defense -- taking them to be true, as upon demurrer we must do -- are sufficient to prevent any recovery whatever by the plaintiff, it is not necessary to go further and consider any other questions. In view of the peculiar character of the case, it is deemed just to the parties, however much it may lengthen or burden this opinion to do so, to set out that defense fully and in the words of the answer.

The third defense -- the facts stated therein being admitted by the demurrer -- gives the names of numerous companies and firms (more than thirty in number) which formed a combination by the name of the Continental Wall Paper Company, and also sets out the various agreements under which, it was alleged, the combination was organized to restrain and monopolize interstate commerce. The defendant corporation alleged that, on the first day of July, 1898, the National Wall Paper Company was the owner of factories for the manufacture of wallpaper in certain cities in New York, Pennsylvania, New Jersey, and Massachusetts, and that there were like factories owned by persons and corporations in other states; that

"all of said companies and firms were engaged in the manufacture of wallpaper and in selling their product in the states where their said manufactories were situated, and in all the

Page 212 U. S. 235

other states and territories of the United States and in foreign countries, and were each and all engaged in commerce between the states and territories and with foreign nations, and they produced and sold upwards of ninety-eight (98) percent of all the wallpaper manufactured and sold in the several states and territories of the United States. Contriving and intending and conspiring with each other to form a combination and trust by which to limit the production of wallpaper in the United States, and also to enhance the price thereof to the jobbers, the wholesalers, the retailers, and the consumers of wallpaper, which is an article of commodity of general necessity and use among the United States and foreign countries, and, as such, was and is used and sold everywhere for the preservation, protection, and decoration of buildings and dwelling houses; and, contriving and intending and conspiring with each other to unlawfully control and restrain trade and commerce between the several states and territories of the United States, and with foreign countries, the firms and corporations hereinbefore mentioned agreed with each other that, while said corporations and persons retain the ownership of their several plants and business, and preserve and continue their separate identities, and operate said several manufactories and business as before, the control of said several businesses, and all matters relating to and affecting the production of said establishments, and the prices and sale of wallpaper manufactured thereby should be placed under the control of a committee to be appointed by said several corporations and firms, each to have a voice in such appointment, in proportion to the capacity of the several factories owned by them respectively; that said committee should adopt rules and regulations governing the manner of conducting the business of all said persons, firms, and corporations, the hours said factories, owned by them, should be operated, the patterns of wallpaper to be manufactured by them, the times when samples of the goods to be manufactured for the ensuing season should be submitted to a pricing committee, appointed by said committee, to enable it to classify and

Page 212 U. S. 236

fix the list prices thereof; to fix and determine list prices, discounts, terms of sale, equalization of freight rates, and all other matters affecting the production and regulation of prices, and the classification of the dealers in wallpaper in the United States, and the prices at which wallpaper should be sold to and by such several classes, and the division of the profits thence arising among said corporations and firms not in proportion to their production and sales, but in proportion to their capacity; and, further, that, to secure the faithful performance by each of said persons and corporations of the provisions of said trust agreement, they should each pay a sum into a common pool, in proportion to the capacity of their respective manufactories, which said sum should be forfeited by any of said manufacturers who should break said agreement, compete with the other parties to said agreement, or sell at other or different prices than those to be fixed by said committee."

"* * * *"

"The National Wall Paper Company, for itself and the members of said combination, hereinbefore alleged to be represented by it, should select three (3) so-called directors of said the Continental Wall Paper Company, and said other firms and corporations should select three (3) other so-called directors of said company, which six (6) so-called directors should select a seventh (7th), who should decide all disputed matters; that said corporation and firms, calling itself, or themselves, respectively, the vendor, should sign a printed contract or agreement with said the Continental Wall Paper Company, calling itself the company, a copy of which contract or agreement is attached hereto marked 'Exhibit 1' [which is given in the margin [Footnote 1]], the said agreement being printed with blanks for

Page 212 U. S. 237

the necessary signatures as well as numbers of shares allotted, the sum to be paid therefor, and the name of the so-called vendor. "

Page 212 U. S. 238

"For the purposes and with the intentions aforesaid, it was further agreed that said the Continental Wall Paper Company should, in some form so as to disguise the real nature of the transaction, compel all dealers in wallpaper, whether

Page 212 U. S. 239

jobbers or wholesalers, to sign an agreement obligating the jobbers or wholesalers to buy from no one but said members of said combination and trust, and at the prices fixed in schedule B, attached to said 'Exhibit 1,' and likewise an agreement