Federal Trade Commission v. Beech-Nut Packing Company/Dissent McReynolds

by James Clark McReynolds

United States Supreme Court

257 U.S. 441

Federal Trade Commission  v.  Beech-Nut Packing Company

 Argued: Nov. 10-14, 1921. --- Decided: Jan 3, 1922

Mr. Justice McREYNOLDS dissenting.

With regret, I dissent from the opinion and judgment of the Court.

This matter was submitted to the Commission upon an agreed statement of facts, the twelfth clause of which-the last but one declares:

'12. That the merchandising conduct of respondent heretofore defined and as herein involved does not constitute a contract or contracts whereby resale prices are fixed, maintained and enforced.'

Of course, the Packing Company entered into this stipulation relying upon the quoted clause, and I am not at liberty either to disregard it or to minimize the plain import of its words. It is not a mere conclusion of the Commission but a definite and essential admission of record upon which the company rested and without which I must conclude a different case might have been presented.

There is no question of monopoly. Acting alone, respondent certainly had the clear right freely to select its customers-to refuse to deal when and as it saw fit-and to announce that future sales would be limited to those whose conduct met with its approval. United States v. Colgate & Co., 250 U.S. 300, 39 Sup. Ct. 465, 63 L. Ed. 992, 7 A. L. R. 443; United States v. Schrader's Son, Inc., 252 U.S. 85, 40 Sup. Ct. 251, 64 L. Ed. 471; Frey & Son v. Cudahy Packing Co. (decided April 18, 1921) 256 U.S. 208, 41 Sup. Ct. 451, 65 L. Ed. 892.

If the solemn stipulation did not expressly negative the existence of contracts amongst the parties to maintain prices, I should think the detailed facts sufficient to support a finding that there were such agreements. But starting with that plain negation I can find no adequate ground for condemning the respondent.

The very order which the court below is now directed to enter conflicts with the stipulation between the parties by presupposing 'methods of co-operation between respondent and the distributors of its products, especially the co-operative methods by which the respondent and the distributors of its products undertake to prevent others from obtaining such products at less than the prices fixed by respondent, (by) the co-operation of customers in reporting the names of dealers who do not observe such resale prices with the view to prevent their obtaining the products of the Beech-nut Company thereafter.' How can there be methods of co-operation, co-operative methods, an nudertaking to prevent others, or the co-operation of customers with a view to prevent others, when the existence of the essential contracts is definitely excluded?

Having the undoubted right to sell to whom it will why should respondent be enjoined from writing down the names of dealers regarded as undesirable customers? Nor does there appear to be any wrong in maintaining special salesmen who turn over orders to selected wholesalers and who honestly investigate and report to their principal the treatment accorded its products by dealers. Finally, as respondent may freely select customers, how can injury result from marks on packages which enable it to trace their movements? The privilege to sell or not to sell at will surely involves the right by open and honest means to ascertain what selected customers do with goods voluntarily sold to them.

Under the circumstances disclosed, constraint upon the freedom of merchants can only result from withholding trade relations or threatening so to do. These, when acting alone, respondent may assume or decline at pleasure, there being neither monopoly nor attempt to monopolize. And the exercise of this right does not become an unfair method of competition merely because some dealers cannot obtain goods which they desire, and others may be deterred from selling at reduced prices. If a manufacturer should limit his customers to consumers he would thereby destroy competition among dealers, but neither they nor the public could complain.

Notes