would be confronted with a different situation. But it is quite apparent that the Congress, in enacting the Clayton Act, covered not only the existence of such organizations but also their activities and operations and exempted both from the antitrust laws.
The same result is reached by an examination of the Capper-Volstead Act, which authorizes persons engaged in the production of agricultural commodities to join together in associations and authorizes such associations and their members to make necessary contracts and agreements to effect their purposes. Obviously, the Capper-Volstead Act is not limited to granting immunity to such associations in respect solely to their existence but extends likewise to their activities.
Support for this conclusion is derived from the reports of Congressional committees in respect to the legislation involved in this case. Chairman Clayton of the House Committee on the Judiciary, in a report dated May 6, 1914, House Report No. 627, 63d Congress, 2d Session, states, on page 36:
'The object of Section 7 is to make clear certain questions about which doubt has arisen as to whether or not fraternal, labor, consumers, agricultural, or horticultural organizations, orders, or associations, organized for mutual help, not having capital stock or conducted for profit, come within the scope and purview of the Sherman antitrust law.'
At page 38 he says that Section 7 of the bill will:
'Recognize as legal the existence and operations of fraternal, labor, consumers, agricultural, or horticultural organizations, orders, or associations, organized for purposes of mutual help, and not having capital stock or conducted for profit.'
And then he adds:
'It also guarantees to individual members of such organizations, orders, or associations, the right to pursue without molestation or legal restraint the legitimate objects of such association.'
The report of the Senate Judiciary Committee, filed by Senator Culberson on July 22, 1914, Senate Report 698, 63rd Congress, 2d Session, contains the following statement:
'The other important and general purposes of the bill are to exempt labor, agricultural, horticultural, and other organizations from the operation of the antitrust acts.'
The Government argues that the exemption and immunity from antitrust laws conferred upon agricultural cooperatives should be deemed to extend to certain types of restraints but not to others. To say that it should extend only to reasonable restraints would be fallacious because no legislation was necessary to permit reasonable restraints of trade. They are not banned under the antitrust acts. Consequently, if any restraints are immune from the antitrust acts as a result of the legislation we are considering, they must be unreasonable restraints of trade. The Government argues, however, apparently, that some unreasonable restraints, possibly mild in character, should be permitted, whereas those that are more reprehensible and perhaps predatory should not be deemed exempt or immune under either the Clayton Act or the Capper-Volstead Act. There is no basis in the statutes, however, for separating unreasonable restraints that would otherwise come within the provisions of the antitrust acts into two categories and concluding that some come within the exemption and others do not. To reach any such result would be for this Court to legislate by amending an act of Congress. This the Court cannot do because the Congress itself has not done it.
There are indeed well-recognized limitations on the immunities and exemptions granted by the legislation. The exemptions are accorded and immunities are conferred on agricultural cooperatives and their activities. When they step outside of their field and conspire with persons who are not producers of agricultural commodities, they are beyond the scope of the exemptions. This was held by the Supreme Court in United States v. Borden Company, 308 U.S. 188, 204, 60 S. Ct. 182, 84 L. Ed. 181, which was followed by the Court of Appeals for this Circuit in United States v. Maryland & Virginia Milk Producers Association, 85 U.S.App.D.C. 180, 182, 179 F.2d 426, where it was pointed out that a combination of producers and distributors, the latter not being within the terms of the statutes, is not privileged.
This distinction was formulated by this Court in United States v. Maryland Cooperative Milk Producers, Inc., 145 F.Supp. 151, 153-154, where the Court stated:
'The obvious purpose of the Clayton Act was to liberate combinations of farmers and their cooperative organizations from the prohibitions of the antitrust laws as long as they do not combine with others who are outside of this category.'
The Government relies on the cases of Local 36 of International Fishermen & Allied Workers v. United States, 9 Cir., 177 F.2d 320, 332, and Gulf Coast Shrimpers and Oystermans Association v. United States, 5 Cir., 236 F.2d 658, 664-665. Each of these decision, however, is distinguishable. The former involved a combination of fishermen and dealers and, therefore, a combination within the ban of the Borden case. The latter presented a situation in which the association did not act as an agency for its members but in which sales were made directly by members to dealers.
It must be mentioned in passing that, of course, the exemptions and immunities extend only to provisions of the antitrust acts. They do not confer any right to violate any other statute, criminal or civil. Also, it must be borne in mind that the exemptions and immunities relate solely to activities in connection with agricultural products. If an organization such as the defendant should step outside of that field and carry on business in products of a different nature, then the provisions of the Clayton and Capper-Volstead Acts would not apply.
Subject to these exceptions, the Court is of the opinion that an agricultural cooperative is entirely exempt from the provisions of the antitrust laws, both as to its very existence as well as to all of its activities, provided it does not enter into conspiracies or combinations with persons who are not producers of agricultural commodities. The public does have another remedy against what would otherwise constitute violations of the antitrust laws. Section 2 of the Capper-Volstead Act prescribes a procedure whereby the Secretary of Agriculture may institute administrative proceedings and seek enforcement of his orders in the courts if he finds that such an association monopolizes or restrains trade in interstate or foreign commerce to such an extent that the price of any agricultural product is unduly enhanced. Obviously, this remedy is applicable in only a limited group of cases and the public is not sufficiently protected against restraints of other kinds. Moreover, an agricultural cooperative is apparently not subject to suit by a private person, as is the case with others whose activities come in conflict with the antitrust laws. Thus, it would seem that under the law as it now stands, an agricultural cooperative may monopolize articles of food and unreasonably restrain commerce in such commodities and the public receives no protection from the antitrust laws except in a very limited way.
The Court is not unmindful of the fact that there may be serious dangers lurking to the public weal in this situation if a cooperative becomes too large or grows too powerful. This possibility was pointed out on the floor of the Senate by the opponents of the Capper-Volstead bill, but without avail. Monopolies and restraints of trade are abhorrent to the genius of Anglo-Saxon jurisprudence and its institutions. Monopolies and unreasonable restraints of trade in the necessities of life such as food are particularly obnoxious.
This subject is obviously within the jurisdiction of the Congress alone. For this Court to construe this Act in any other way than that in which it has been framed by the Congress would be to amend the statute. Courts, however, may not legislate. Sometimes, indeed, there is a strong temptation for a court to do so and there have been occasions in which the temptation has not been overcome, but it must be resisted at all hazards. By bringing this suit the Government may have conferred a benefit on the public in that it has definitely pointed out a problem for the Congress to solve.
The Court, therefore, reaches the conclusion that the Government has no valid claim for relief under Section 2 of the Sherman Act and, therefore, the first cause of action alleged in the complaint will be dismissed on the merits. This brings us to the second and third causes of action, which relate to the acquisition of the assets of Embassy Dairy as well as the stock of the Richfield Dairy Corporation and of Simpson Brothers, Incorporated. The second cause of action alleges a violation of Sections 1 and 3 of the Sherman Act. It charges a conspiracy with certain persons who are not engaged in agricultural pursuits as defined in the statutes. These allegations are clearly within the exception of the Borden case and, therefore, a cause of action is stated in respect to these activities.
The third cause of action relates to the acquisition of the assets of Embassy Dairy and capital stock of Richfield Dairy Corporation and Simpson Brothers, Incorporated, and charges violations of Section 7 of the Clayton Act, 15 U.S.C.A. § 18, the pertinent portions of which have already been quoted. In brief, the statutory provision here involved prohibits any corporation engaged in interstate commerce to acquire the whole or any part of the capital stock of any other corporation likewise engaged in interstate or foreign commerce, and further prohibits any corporation subject to the jurisdiction of the Federal Trade Commission to acquire the whole or any part of the assets of another corporation engaged in interstate or foreign commerce if the effect of such acquisition may be substantially to lessen competition or to tend to create a monopoly.
The defendant claims that this provision is not applicable to it because the Capper-Volstead Act empowers it to make necessary contracts and agreements to effect it purposes. The Court does not agree with this contention. It is a well-known principle of law that repeals by implication are not favored, and unless there is a clear repugnancy between an earlier and a later statute, the two statutes must be so construed as to give effect to each.
It is the opinion of the Court that the provisions of Section 7 of the Clayton Act, 15 U.S.C.A. § 18, constitute a limitation on the authority of an agricultural cooperative to make contracts as authorized by the Capper-Volstead Act.
The Court has no doubt that the defendant corporation is subject to the jurisdiction of the Federal Trade Commission, 15 U.S.C.A. § 45, and, consequently, within the terms of Section 7 of the Clayton Act.
The Court, therefore, reaches the conclusion that the second and third causes of action averred in the complaint are valid.
In conclusion, the first cause of action will be dismissed on the merits and the trial will proceed only as to the second and third causes of action.
A transcript of this oral decision will constitute the findings of fact and conclusions of law on the aspects of the case that were tried at this hearing.
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