from the making thereof; for, even though that might have been an erroneous instruction, it did no harm to the plaintiff, because he could not recover in any event. Deery v. Cray, 5 Wall. 795, 807 [18 L. Ed. 653]; The Schools v. Risley, 10 Wall. 91, 115 [19 L. Ed. 850]; Deery v. Cray, 10 Wall. 263, 272 [19 L. Ed. 887]; Brobst v. Brock, 10 Wall. 519, 528 [19 L. Ed. 1002]; Barth v. Clise, 12 Wall. 400, 403 [20 L. Ed. 393]; Tweed's Case, 16 Wall. 504, 517 [21 L. Ed. 389]; Walbrun v. Babbitt, 16 Wall. 577, 580, 581 [21 L. Ed. 489]; Decatur Bank v. St. Louis Bank, 21 Wall. 294, 301 [22 L. Ed. 560]; McLemore v. Louisiana State Bank, 91 U. S. 27, 28 [23 L. Ed. 196]; Mobile & Montgomery Ry. Co. v. Jurey, 111 U. S. 584, 593 [4 S. Ct. 566, 28 L. Ed. 527]; Lancaster v. Collins, 115 U. S. 222, 227, [6 S. Ct. 33, 29 L. Ed. 373], and cases there cited; Evans v. Pike, 118 U. S. 241, 250 [6 S. Ct. 1090, 30 L. Ed. 234]."

See, also, Hinds v. Keith, 57 F. 10, 15, 6 C. C. A. 231; Creary v. Wefel, 135 F. 304, 67 C. C. A. 661; Alwart Bros. Coal Co. v. Royal Colliery Co., 211 F. 313, 317, 127 C. C. A. 599; N. K. Fairbank Co. v. CanalCommercial T. & S. Co. (C. C. A.) 286 F. 648, 653; General Cigar Co. v. First Nat. Bank (C. C. A.) 290 F. 143, 146. The judgment will be affirmed.

CREAM OF WHEAT CO. v. FEDERAL
TRADE COMMISSION.

(Circuit Court of Appeals, Eighth Circuit. July 26, 1926.)

No. 284.

1. Trade-marks and trade-names and unfair competition 802, New, vol. 8A Key-No. Series.

Federal Trade Commission findings on conflicting evidence being conclusive, under section 5 of Act Sept. 26, 1914, creating Commission, only question before court is whether order of Commission on findings was authorized by statute (Comp. St. § 8836e).

2. Trade-marks and trade-names and unfair

Series.

3. Trade-marks and trade-names and unfair competition 802, New, vol. 8A Key-No. Series-Order of Trade Commission, requiring manufacturer to desist from "soliciting and securing" from customers information and reports concerning price maintenance, held not in excess of Commission's authority.

quiring manufacturer to desist from "soliciting

Order of Federal Trade Commission, re

and securing" from customers themselves information as to whether such customers had maintained suggested retail prices, and from "soliciting and securing" reports from customers and verifying such reports by others from other customers, held not in excess of Commission's authority.

4. Trade-marks and trade-names and unfair

competition 802, New, vol. 8A Key-No. Series-Order of Commission prohibiting employment of sales agents "to assist" in price maintenance plan by reporting dealers held not in excess of Commission's authority.

Order of Federal Trade Commission requir

ing manufacturer to desist from employing sales agents "to assist" in price maintenance plan by reporting price cutting dealers, when construed with other paragraphs of order, held to to furnish them information, and not in excess only prohibit agents from soliciting customers of Commission's authority.

Petition for Review of Order of Federal Trade Commission.

Petition by the Cream of Wheat Company for review of order of Federal Trade Commission requiring it to desist from carrying into effect its price maintenance policy by cooperative methods. Order of Commission amended, and, as amended, affirmed.

George W. Morgan, of St. Paul, Minn. (Rome G. Brown, of Minneapolis, Minn., Davis, Severance & Morgan, of St. Paul, Minn., and Brown & Guesmer, of Minneapolis, Minn., on the brief), for petitioner.

James T. Clark, of Washington, D. C. competition 802, New, vol. 8A Key-No. (Bayard T. Hainer and Adrien F. Busick, both of Washington, D. C., on the brief), for respondent.

Findings of Federal Trade Commission as to price maintenance methods held to show respondent in proceeding before Commission guilty of unfair methods of competition, in violation of Act Sept. 26, 1914, to create commission (Comp. St. §§ 8836a-8836k).

Before LEWIS, Circuit Judge, and TRIEBER and KENNAMER, District Judges.

14 F. (2d) 40

TRIEBER, District Judge. [1] The evi- ing to other customers of the same class, e. g., dence before the Federal Trade Commission wholesalers; and respondent refuses to sell was quite voluminous and conflicting. Sec- to a purchaser in carload lots and at carload tion 5 of the act creating the Commission (38 prices, who buys for the purpose of dividing Stat. 719 [Comp. St. § 8836e]) made the such shipments with other customers, or for findings of the Commission on conflicting evi- the purpose of having 'drop' shipments—that dence conclusive. There being substantial is, a part of a carload delivered at one point evidence to warrant the findings made, we and another part of the same carload at anare only concerned with the question whether other point. Respondent does not sell to mail the order of the Commission on the findings order houses. These practices described in is authorized by the statute. this paragraph have been in force for the

The findings of facts, so far as material past 20 years." to the issues, are:

"(4) Respondent employs no traveling salesmen. Respondent has, at certain localities in the United States, soliciting sales agents, through whom it receives orders for Cream of Wheat, which orders are taken subject to acceptance by respondent, and, if accepted, are filled by respondent, or under its direction, either from its stock of Cream of Wheat in Minneapolis, or from the stock in one of its warehouses.

"(5) The sales and distributing of Cream of Wheat by respondent, in its business as above described, extend to all the states of the United States and all territory within its jurisdiction, and to. some extent to foreign countries. Respondent has sold, and now sells, principally to wholesalers or jobbers. The number of customers to whom it sells is approximately 4,500, which include nearly the entire number of wholesalers of cereal products and groceries in the United States. Cream of Wheat is sold at retail-that is, to the ultimate consumer-by nearly all retailers of groceries and cereal products in the United States, estimated by respondent to number over 300,000. The wholesalers or jobbers, to whom respondent sells, resell, in turn, to retailers within the radius of their respective trades. Sales and deliveries are made by respondent at a uniform delivered price to such purchasers f. o. b. cars at the place of purchaser's business.

"(6) Respondent has sold, and now sells, direct to certain large retailers, whose business enables them to buy in wholesale or carload lots, at the prices and upon the terms required by respondent from wholesalers. Among such retailers are certain so-called 'chain store organizations.' A 'chain store organization,' as here intended, is an individual, corporation, or partnership owning or operating a group of retail stores.

"(7) Respondent refuses to sell to 'collective purchasers,' or buying pools of independent stores, as distinguished from 'chain stores.' Respondent refuses to sell to any customer who buys for the purpose of resell

"(12) Cream of Wheat, as sold by respondent, has acquired with the public a wide and favorable reputation, and the consumption has steadily increased in this country and foreign countries. It is used, after cooking, by the individual consumer as breakfast food, and in other ways."

"(15) Respondent sells, it is roughly estimated, about 40 per cent. of the package cereal foods prepared from purified wheat middlings and sold in the United States by concerns who advertise nationally. Such firms which advertise nationally sell the great bulk of package cereal foods prepared from purified wheat middlings.

"(16) Sales and deliveries of Cream of Wheat are made by respondent at a uniform delivered price at any given time, or at a price which makes the cost of Cream of Wheat to all purchasers the same f. o. b. cars their places of business, no matter at what points within the United States the places of business of such purchasers may be located. From September, 1916, to May, 1919, however, respondent charged higher delivered prices for Cream of Wheat delivered at points in the Pacific Northwest than for that delivered at points east of the Rocky Mountains."

"(19) The term 'resale price,' as used in these findings, means the resale price named by respondent, and 'price cutting' and 'price cutter' mean, respectively, selling below and sellers below such resale prices."

"(21) Soon after its organization in 1897, respondent adopted and has since maintained a policy of fixing and enforcing minimum resale prices at which Cream of Wheat should be sold by its vendees, and, among the means adopted by it to that end, it has advised its agents and customers and prospective customers from time to time of its resale prices, and requested of its customers and prospective customers that they observe such resale prices in all their sales, declaring its purpose to refuse to accept or fill any further orders from those who should sell at prices below said minimum, or from those who supplied dealers who so cut its resale prices.

terest named above, and that it will exercise such right so far as it may lawfully. It disclaims any purpose to create any restraint of trade or monopoly, but to protect the consumer from them from others."

"Respondent has informed itself as to cut- infringement it deems prejudicial to the inting of its resale prices through advertisements and lists of prices put out by customers, which have come to its attention, and has solicited and been furnished in response with reports or information of cutting of its resale prices by customers (a) from other customers; (b) from other dealers or associations of dealers; and (c) from respondent's sales agents. Where it learned by such means that customers were cutting its resale prices, or selling to others who were, it has been its policy to refuse further sales, where it deemed such action necessary to prevent further cutting of its resale prices. Respondent, prior to 1913, entered into agreements and contracts with customers, by which in terms they bound themselves to maintain its resale prices, and since it has at times sought and received from customers and prospective customers assurances of the observance of its resale prices amounting in substance to agreements or understandings to that end.

"(22) Under date of January 25, 1913, respondent issued to the trade a letter, stating its purpose to be 'to obviate any misunderstanding' as to its position 'with regard to the question of maintenance of prices on our product,' and to place before all its customers 'a statement of our position which shall control as to all future dealings.' It proceeds to 'notify all our customers' that it 'hereby withdraws and rescinds all orders, rules, directions, and requests, and (while denying the existence of any agreement, express or implied) we also withdraw and rescind, in so far as any such exist, all agreements, express or implied, actual or constructive, now or heretofore existing between this company and its customers with reference to the maintenance of prices by such customers,' and that sales of Cream of Wheat shall not be affected by previous communications on that subject. It states that in the future the respondent shall not sell to consumers, to retailers, or to chain or department stores, but exclusively to wholesalers; that it shall not require of them any agreement to 'maintain any price which we may establish, or observe any rules which we may see fit to make. We do, however, request that they shall maintain, in their sales to their retail customers, such prices as we deem to be to the best interest of the consumer and to our own business and to the general trade,' and that they would observe such rules as to sales as respondent may announce. Respondent warns that by this it does not intend to waive its right to refuse sales to any customer who fails to comply with any rules or request made by it, whose

"(24) Early in 1921, the National Chain Store Grocers' Association opened negotiations with the Cream of Wheat Company looking to sales of Cream of Wheat direct to its members, conducting retail stores. Paragraph 20 of the stipulation (Commission's Exhibit 1) covers the history of these negotiations, including correspondence. The letter of respondent's president to the association's secretary, dated February 28, 1921, in reviewing respondent's past dealings particularly with chain stores, contains references to 'personal' agreements, 'explicit understanding,' 'express understanding,' 'promises' by customers, past and existing, subsequent to 1913, to observe respondent's resale prices, on the keeping of which continuance of sales to them by respondent depends. In the letter of February 25, 1921, President Mapes makes the respondent's policy as outlined by him apply to wholesalers as well: 'In other words, we have continued to sell the American Stores Company and the National Grocery Company because they have kept their promises with regard to the resale price. We have refused to sell the Great Atlantic & Pacific Tea Company because they did not keep their promises. The same thing applies to wholesale grocers who are in no way connected with the retail trade, either directly or indirectly. We have not sold Reid, Murdock & Co. of Chicago a case of goods for five or six years, for the reason that they refused to comply with our wishes with regard to resale prices to their retail customers, and we are frequently obliged to refuse sales to exclusive wholesalers for the same reason.' Respondent's president states, in the same letter: "There is no reason, as far as the writer can see, why we might not be willing to sell concerns such as, for example, are represented by the officers whom you show on your letterhead, if we could be assured that, notwithstanding the fact that, on account of their buying in carload quantities, they were not taking advantage of this to resell in their retail stores at a price lower than the ordinary retailer, not connected with any chain store proposition, can afford to sell. Unfortunately, however, as was evidenced particularly in the case of the Great Atlantic & Pacific Tea Company, we cannot always trust to their promises. They are by no manner of means the only sinners in this respect.'

14 F. (2d) 40

"In his letter of March 26, 1921, President Mapes states that the only reason he saw why respondent might not sell to the chain stores was 'the question as to whether or not we could depend on these chain stores to maintain what we would consider an adequate retail price on our goods, which at present we would say would be 30 cents a package.' Distinguishing between chain stores constituting 'an organization owned and controlled by one company' having a large number of retail stores 'absolutely under their control,' and loose associations of retail stores to enable its members to buy at wholesale prices, President Mapes states: "The second class I cannot see that it would be desirable for us to sell under any circumstances. The first class, such as you represent, we might be willing to place on our list of customers, always providing that we could be satisfied that they would absolutely maintain our retail price in all of their stores. The difficulty, however, with this would lie in the fact as to whether or no the National Chain Stores Grocers' Association could control their members. As you say, we are selling some of your members, and this is for the reason that, in as far as we know, they live up to their agreements. We do not sell, for example, the Great Atlantic & Pacific Tea Company, because they did not live up to their agreements, and we have no reason to suppose that their word is worth anything more now than it was several years ago.' He then states: 'Should we sell to members of your association, it would have to be on identically the same basis as we now sell. to the wholesale grocery trade namely, we do not exact any contract or make any agreements of any kind or nature whatsoever, with the wholesale grocer to whom we sell our goods, and after buying any quantity of our goods we do not question his right to resell it at any price which he may see fit. We do, however, suggest that, in the general interest of the trade, we consider it advisable that he should maintain a resale price,' etc., stating terms of sale, etc. He then states the policy of the company to refuse further sales to dealers who cut respondent's resale prices, also to advise other customers of such refusal and cut off any customer who thereafter sells to such resale price cutters.

"In the event a wholesale customer does not see fit to comply with our request as to the price at which he shall resell Cream of Wheat to his retail trade, we exercise the right which we legally have, and refuse to sell him any further quantity of our product. In the case of your company, selling direct as it does to the consumer, were we to put you on

our list of customers for the direct sale of Cream of Wheat, it would be with the request that you resell to your consumer trade at a price which at present would be not less than 30 cents per package.

""This would apply, without exception, to each and every one of your branch stores. If any of these branch stores, for any reason whatever, sold Cream of Wheat for less than our requested price, we would certainly refuse to sell that branch, and all the other stores of your company, any further quantity of Cream of Wheat. And, in the event we did so refuse to sell your company Cream of Wheat, we would undoubtedly so advise all the other companies in your association, as well as the wholesalers in your territory, and in advising them of our refusal to sell you, we would request them not to resell Cream of Wheat to you. In the event they did sell you Cream of Wheat, contrary to our request, we would refuse to sell them further quantities of our product. In selling you Cream of Wheat it would be on the understanding that your purchases were for the sole use and sale from your own branch stores, and not to be resold or divided with your competitors, under any conditions.'

"In a letter written to Albrecht & Co., respondent stated: 'Please understand that we do not want any agreement with you, or anything like an agreement, as to how you shall resell our product. We simply reserve the right to refuse to sell you any more of our product in the event you did not see fit to comply with any request which we make of you, in connection with the sale of our product.'"

Similar letters to other dealers are set out in this finding.

"(25) The consideration referred to in respondent's letters, that members of chain stores 'cannot resist the temptation to cut the resale price below a figure which the retailer not connected with a chain store, but buying at the retail price directly from the wholesaler, can afford to sell it,' emphasizes the need which respondent felt of being assured in advance that the chain stores would not cut its resale prices, and the importance to it of securing some binding agreement or assurance in order to keep them in line. That those resale prices requested of retailers involved an inordinate profit to chain stores which paid no wholesalers' profits emphasizes also the suppression of competition involved by respondent's making their observance a condition of doing business with these chain stores."

"(28)

On March 2, 1921, re

Similar letters were written to a number and prospective customers that they would of other chain stores.