Park Sons Co. v. . Nat. Druggists' Assn.

I am unable to concur in the opinion of the learned Appellate Division or in the conclusion reached by a majority of this court. The demurrers to the amended complaint were sustained, both at the Special Term and in the Appellate Division, upon the ground that the complaint did not state facts sufficient to constitute a cause of action, although apparently for different reasons. Several of the defendants stated, as additional grounds of demurrer, that the court had no jurisdiction over them, and that it had no jurisdiction of the subject of the action. The latter grounds were not considered or passed upon by either court, and obviously cannot be sustained.

The amended complaint was served in September, 1898. The defendants demurred, and the issue arising upon such demurrers was decided by the Special Term in May, 1900, and subsequently the final judgment was entered. The complaint is exceedingly lengthy, containing about one hundred and fifty pages and about six hundred folios. The labor necessary to a careful analysis of the multifarious allegations in this lengthy complaint is well nigh appalling, and would naturally provoke a desire to avoid it if possible. But as the case is important, affecting not only the parties to this particular litigation, but involving a principle which affects the general public, its dealings in a large class of merchandise, the legality of monopolies organized to prevent competition in articles in common use, and the right to employ as a means to secure that end the boycotting or intimidation of persons engaged in the same general business, our duty demands the performance of that labor, however burdensome. Therefore, although it is impossible within the limits of this opinion to state all the material allegations of the complaint, yet a brief statement of the general and most material, including a general outline or history of the transactions upon which it is based, is quite essential to an understanding of the case.

The plaintiff is a Kentucky corporation, and its principal place of business is in Cincinnati. Its business consists of the manufacture of proprietary articles or patent medicines, the purchase of the same class of articles from other manufacturers, and in selling such goods to retail dealers. Before the acts complained of its trade was large and profitable. The defendant association was organized in 1876 under the name of the Western Wholesale Drug Association. Its name was changed in 1882, and it is an unincorporated association. It consists of active and associate members. The former are wholesale and jobbing druggists, and druggists who also own and manufacture certain proprietary goods, who alone comprise the active members of the association. Proprietors of proprietary articles who only manufacture and sell their own goods, and manufacturers of chemical or pharmaceutical preparations not interested in proprietary goods, constitute the associate members, but have no control or voice in the business or affairs of the association. The active membership includes at least two-thirds of the wholesale dealers in the United States, who control more than ninety per cent of the wholesale and jobbing trade. Formerly patent medicines and proprietary articles were sold by the manufacturers through agents who received a commission for their compensation. The trade, however, is now almost exclusively carried on through wholesale dealers and jobbers. The rebate or discount allowed to the wholesale dealers constitutes their profit. Before the acts complained of the discounts or commission allowed by manufacturers were not fixed or uniform, nor was the custom as to delivery and charges allowed, in all instances, the same, and there was then an active competition between the various wholesale dealers. With this situation and method of transacting the business the manufacturers were content, but the wholesale dealers and jobbers were dissatisfied. In March, 1876, the association adopted a schedule of prices at which proprietary goods should be sold by each wholesale and jobbing druggist, and they were to be sold at the prices thus established without competition. Afterwards, and in 1882, the association adopted a plan under which the manufacturers were to be required to sell their goods. By it there was to be a contract between the manufacturer and buyer, in accordance with which the latter was to maintain certain prices, fixed by the proprietor, the articles to be charged and invoiced at the full jobbing prices, the difference between the proprietor's price and the jobber's to be allowed to the buyer provided he entered into a contract to maintain prices, the rebate to be not less than ten per cent, and wherever sent the manufacturers to pay freight on all the goods sold.

In October, 1883, the association, by its active members, declared its purpose to pursue a continued and untiring opposition to the sale, by its members, of articles of such manufacturers as should not adopt its plan, or, having adopted it, should withdraw therefrom. Thereupon many of the manufacturers, at the solicitation of the officers, active members and agents of the association, adopted its plan, until nearly all the manufacturers in the United States were induced by the association to do so. This was procured entirely by the representation of the association as to the benefit which would accrue to the majority of their distributing agents or vendees who were unable to handle the goods as cheaply as the few who could command large capital, and the manufacturers were compelled to adopt it to protect themselves against the association and its active members who constituted a great majority of their customers. All the active members of the association agreed and bound themselves to buy goods only of manufacturers who adopted the rebate plan, and not to cut or vary prices, save by the discounts and terms of credit mentioned in the contract. The manufacturers who adopted this plan have adopted substantially the form of contract required by the association, except in states having anti-trust laws, where written contracts are not required, but the purchaser is required to make a verbal agreement to the same effect or to send letters agreeing thereto. The manufacturers who adopted that plan were compelled to do so to protect themselves with the wholesale dealers. The latter have bound themselves to give to retailers who are their customers only the terms of credit and discounts fixed by the contract, and not to pay freight or to deliver the goods. The active members of the association are combining and conspiring to obtain an exclusive control of the wholesale and jobbing trade, as between the manufacturer and the retailer, in all classes of patent medicines or proprietary goods; to regulate and control the methods upon which such trade shall be carried on; to control the prices, discounts, allowances for freight and terms of credit upon which such goods shall be sold to the various retail druggists throughout the United States; and also to destroy and prevent competition between the wholesale and jobbing druggists in the sale of such medicines or goods, and to limit and restrict the business of each of the wholesale dealers, or such of them as are in one locality, to certain exclusive territory, tributary or proximate to each.

Prior to the matters set forth many of the wholesale dealers were purchasers of goods of the plaintiff, and but for the action of the association would now be. Before its action the plaintiff was a large purchaser, as a wholesale dealer, of nearly all the manufacturers of such goods, especially of those who have adopted the plan of the association, and would have continued but for the matters stated in the complaint. The plaintiff, so far as able, always has been an active competitor in the wholesale and jobbing drug trade, and has refused to combine and conspire with the defendants for the control of the trade and the destruction of competition therein, or to restrict its business to a limited territory. It has sold the goods of all the manufacturers at such prices and upon such terms as to credits, discounts, allowances for boxing, cartage and for freight as it deemed advisable. The active members of the association now claim that the manufacturers are bound not to sell to any wholesale dealer except upon the terms and conditions imposed by the association, nor unless he signs such contract. They also claim that any person who purchases of a rebate manufacturer, unless he complies with the terms of the contract, is not to be trusted or allowed to handle the goods of such manufacturer.

In 1885 a committee of the association was authorized to and called upon rebate manufacturers to decline all the plaintiff's orders until it was reinstated by that committee. Thereupon many of them, to protect themselves against the action of the association, declined to sell goods to the plaintiff. In September, 1886, the association resolved that no agreement, unaccompanied by the rebate contract, should be considered on the rebate plan, and that where a firm had, by the committee, been found guilty of violating it, the manufacturers should withhold supplies. Thereafter the committee, charging the plaintiff with a violation of the plan, sent circulars to that effect to the manufacturers urging them to carry out the wishes of the association, and sent various letters to the same effect to rebate manufacturers and to others who had not adopted the plan, and the association, by resolution, also declared that any member who should sell to a dealer whose orders had been declined at the request of the committee, should be expelled, and thereupon every effort was made to induce all the members of the association and all the manufacturers to refuse to sell goods to the plaintiff or to any person who would sell it goods. In 1887 it sent out another circular to the effect that any member who supplied goods to a dealer whose orders had been declined at the request of the committee, was guilty of violating the spirit of his contract and should be expelled, and advised the manufacturers to scrutinize orders coming from unusual quarters, and predicted that the firm now in warfare against the rebate plan could not long continue its methods. After receiving these various notices and resolutions, many of the defendants, both wholesale dealers and manufacturers, refused to sell to the plaintiff, or to any person who had supplied it with goods, and many of them demanded from each customer a contract by which he agreed not to sell to the plaintiff until it should be reinstated.

In 1888 a sub-committee of three was appointed by the association with power to order all supplies withheld from any firm or individual whom it found guilty of violating its contracts, until the committee should become satisfied that such practices would be discontinued, and to request manufacturers to refuse supplies to any person thus found guilty. The association also authorized the omission from future official lists of rebate articles, the goods of such proprietors as should continue selling to violators of the agreement, and gave a committee power to employ persons to investigate charges against any dealer. Such committee ordered all supplies of rebate goods to be withheld from the plaintiff, sent a circular to each manufacturer calling upon him to comply with such order, and many of such manufacturers thereafter refused to sell to the plaintiff, being compelled thereto to protect themselves against the wholesale dealers' association and its active members. The committee also made efforts to ascertain from whom the plaintiff purchased supplies, and employed detectives for that purpose, who spied upon the plaintiff's business and reported to the committee the names and places of business of persons shipping it goods. It thereupon sent and is about to continue sending circulars to manufacturers and wholesale dealers, known as "cut-off lists," containing the names of persons reported as selling to the plaintiff, and it thereupon made efforts and is about to continue its efforts to induce manufacturers not to sell to persons on such cut-off lists, and by reason thereof many manufacturers have refused to sell to persons thereon.

In 1893 the association adopted the Detroit plan, by which it required the manufacturers to compel the purchasers of their goods to accept a contract to become selling agents, to take the goods in fixed quantities, and in consideration of their maintaining fixed selling prices and complying with all the regulations of the association they were to receive a fixed per cent for selling and a fixed discount for cash, the manufacturer to pay the freight, the prices not to be cut, and, if cut, the agency to be withdrawn and all other agents notified not to sell them, and the manufacturers to sell only through selling agents. It then provided for the organization of a similar association in each town, which was to be given a list of all rebate goods. Thereafter the manufacturers were in effect required to submit full lists of all their customers to the association.

In December, 1893, the committee sent a circular to manufacturers and wholesale dealers, asking the former to furnish it a list of all their customers, and with this circular was a list of all persons who were entitled to purchase rebate goods, which did not include the plaintiff or persons selling to it. Thereupon many rebate proprietors, at the instance of the committee, agreed to confine their sales to the persons named on the lists, refused to allow to others any rebate, allowances or discounts, and furnished the committee with full lists of their customers not named on the list, from whom they received orders for any of their goods. The committee is making every effort to ascertain what manufacturers are still selling to the plaintiff, and is employing detectives for that purpose, who watch and spy upon shipments made to the plaintiff and report the names of rebate manufacturers who are selling it goods. Similar action on the part of the committee was continued through 1894 which directly pointed to the business of the plaintiff, and the committee was authorized to continue its aggressive work against those who should not comply with the rules of the association, and funds were provided for that purpose.

In October of that year circulars were sent by the association to all manufacturers and wholesale dealers, whether members of the association or not, embodying the substance of its resolutions, which in effect were a reaffirmance of its intention to uphold its plan; that its committee should notify its members of the action of manufacturers who, having had their attention called to the matter, continued shipping their goods to the "Cincinnati cutter" (meaning the plaintiff), or to those who supply him, and notify such manufacturers that their articles would be taken from the rebate list, and in publishing the official list of rebate articles issued by it such names would be omitted therefrom; that the committee on proprietary goods be authorized to continue the aggressive work against cutters inaugurated during last year, and to enable them to do this most effectually, means fully adequate to provide assistance be placed at their disposal. With such circulars, letters were sent for those receiving them to sign, by which they should agree not to ship goods to violators of the contract until they received assurances that such violations were discontinued, and, further, to furnish the committee with lists of their quantity buyers. Nearly all the wholesale dealers and manufacturers signed and returned such letters to the committee, being compelled to do this in order to protect their own business. Nearly all the wholesale and jobbing druggists are making and will continue to make every effort to induce manufacturers to confine the sale of their goods to the persons named in the list containing the names of persons claimed to be entitled to rebate goods, and all or nearly all the rebate manufacturers have refused to sell goods to the plaintiff, some of them stating that they would like to fill its orders, but that their relations with the association prevented, and that it would not pay them to antagonize the trade by selling to the plaintiff. The correspondence alleged in or annexed to the complaint shows clearly that many of the manufacturers who formerly sold to the plaintiff were compelled by the association to forego their own desires and disposition in that respect, and to refuse the plaintiff's orders by reason of the pressure to which they were subjected by the association and its active members.

The various resolutions, contracts and agreements adopted by such association to prevent the plaintiff from conducting a wholesale and jobbing business in proprietary goods tended to injure and destroy its business, and the plaintiff's business is being injured and destroyed by the unlawful acts of the defendants. Nearly all the rebate manufacturers who have been willing to sell to the plaintiff or to persons who would supply it, are refusing to do so, and will refuse unless the acts of the association and its active members are restrained, and that their acts are such as to irreparably damage the plaintiff's business, and it cannot obtain adequate relief at law without a multiplicity of suits.

With other relief demanded, the plaintiff seeks by this action to restrain the association, its active members, committees and agents, from making and continuing its and their efforts to prevent the plaintiff from purchasing, and the manufacturers from selling their goods to the plaintiff, by threats, intimidation or other improper means, from continuing a monopoly of such business, and from performing any act or acts that will impair or destroy competition in the sale thereof.

While this is a meager and brief synopsis of the complaint, and falls far short of containing all the material allegations therein, yet, as it gives a general outline thereof, it is perhaps ample to enable us to consider the question of its sufficiency. As all the allegations of the amended complaint, as well as all that can by reasonable and fair intendment be implied therefrom, are admitted by the defendant's demurrer, we are presented with the question whether they constitute a cause of action entitling the plaintiff to any relief whatever. (Marie v. Garrison, 83 N.Y. 14; Sanders v. Soutter, 126 N.Y. 193;Coatsworth v. Lehigh Valley R.R. Co., 156 N.Y. 451; StandardFashion Co. v. Siegel-Cooper Co., 157 N.Y. 60; Ahrens v.Jones, 169 N.Y. 555, 559.) Under the recent authorities, pleadings are not to be strictly construed against the pleader, but averments which sufficiently point out the nature of the plaintiff's claim are sufficient if, under them, he would be entitled to give the necessary evidence to establish a cause of action. (Rochester Ry. Co. v. Robinson, 133 N Y 242, 246; Coatsworth v. Lehigh Valley R.R. Co., 156 N.Y. 451,457.)

In determining that question, we must assume that the association was organized and continued for the purpose of monopolizing and controlling the business of wholesale druggists and jobbers in the sale of proprietary articles or patent medicines in the entire United States, to prevent competition therein, and to compel the payment of greater and uniform commissions for the sale thereof. This was accomplished by forming a combination of two-thirds in number of all the wholesale druggists and jobbers in the United States, transacting more than ninety per cent of all that business, and then by requiring them to refrain from selling such goods for a less commission or a lower compensation than was established by the association, and to decline to purchase goods of any manufacturer who should refuse to comply with its demands or who refused to transact his own business in accordance with such rules and regulations as the association had, or from time to time might adopt. Thus, as is usual in the creation of such trusts or monopolies, the purpose of the association was to be accomplished by a combination to ruin and destroy the business of any manufacturer or wholesale dealer who should refuse to be controlled by the association in the transaction of his own business.

It is a plain perversion of the complaint to say that it states a claim or cause of action involving merely the right of a manufacturer to sell his goods to whom he will. The question presented by the complaint is whether individuals, firms or corporations have a right to enter into a combination or conspiracy to prevent manufacturers of patent medicines from maintaining competition with others in the sale of their goods or from selling them in such manner and upon such terms as they shall desire or agree upon with their customers, and in case they do, whether the members of the combination have a right to boycott such articles and the manufacturer as well. That such was the purpose of the association and that it and its active members have carried that purpose into effect, is plainly alleged and not denied. It is also alleged that any person engaged in the manufacture of such commodities, who does not agree to enter into the arrangement required by that combination, or does not fulfill such agreement, is to be blacklisted by them and they are to make every effort in their power to destroy his business.

Moreover, the association maintains a committee to spy out the business transactions of manufacturers, to ascertain if they sell to the plaintiff or to persons not members of the association or to persons who sell to others not such members, and if it decides such to be the case to send to practically all the wholesale dealers in the United States a notice in effect requiring them to refuse to deal with such manufacturers, and the penalty to such dealers for refusal is that all the members of the association will decline to purchase any of their goods.

It is to be observed that the claim of the plaintiff is not that the manufacturers have voluntarily committed any wrongful acts of which it complains, as it is plainly alleged that they desire to sell it goods, and would do so but for the wrongful acts of the association and its active members. Its claim is that the National Wholesale Druggists Association and such members have committed the wrong from which it has suffered by unlawfully combining together for the purpose, and by requiring manufacturers to refuse to sell goods to the plaintiff, and by enforcing that requirement by requiring a refusal by all its members to deal in such manufacturers' goods, to procure others to refuse to deal in them, and to publicly advertise such manufacturers as unworthy dealers, and thus injure or destroy their business. It is alleged and admitted that many, if not most, of the manufacturers, have been compelled against their will or inclination to refuse to sell their goods to the plaintiff by threats, intimidation, blacklisting and other unlawful acts of the association and its active members. From the outset the action of the association and of its active members has been aggressive, persistent and continuous to ruin or exclude from business any manufacturer or dealer who should sell any of this class of goods to the plaintiff or others similarly situated. This scheme was planned, originated and forced upon the manufacturers by the association and its active members. The manufacturers did not seek or inaugurate this plan, and adopted it only because they were compelled to do so to protect their business against the acts and threats of such active members, who alone desired its adoption and enforcement to obtain increased compensation, and to maintain prices without regard to the expense of conducting business. Under it the business of the manufacturers was to be and has been controlled by a combination of their customers. It is true that there was reserved to the manufacturers the right to establish a single price at which their goods might be sold, but it must be uniform and fixed without regard to the expense of delivery or the amount of the sale. The right to establish the amount of commissions to be paid and to determine to whom their goods should be sold were withdrawn, and no right was left them to make any agreement on the subject of their own property, or to make any agreement in regard to selling it with any person other than those that were selected by the combination. In other words, the manufacturers were compelled by their customers to surrender to the latter practically all authority as to the manner of the sale of their own property and the selection of their customers, and unless they did their business was to be destroyed.

The foregoing facts are in substance alleged and admitted, and, hence, the question arises whether the association and its officers, agents, employees and active members by thus interfering with the plaintiff's business, have pursued a course of action that constitutes and invasion of or trespass upon its rights which renders them liable therefor. If this combination was formed to accomplish an unlawful purpose, or if its purpose has been accomplished by unlawful means, the plaintiff who has alleged special damage can maintain an action to recover by reason thereof.

Therefore, in the further discussion of this case we are led to consider, first, whether the purpose for which the combination was formed was lawful; and, second, whether it was to be accomplished by lawful means. As to the purpose it is obvious from the facts alleged that the conspiracy or combination was formed to restrain trade or commerce, to monopolize the sale of goods in common use and to prevent competition therein. Such being its plain purpose it is equally clear that it was unlawful. From a very early day it has been the policy of this state and most other jurisdictions that free and unrestricted competition in all business pursuits must be maintained, and the business maxim that `competition is the life of trade' has been established and sustained by their courts and legislation. While this principle has not been thus firmly and universally settled without discussion as to whether it does not work a greater hardship than advantage by crushing out weaker competitors and causing disaster to others by reduction of prices, yet, notwithstanding these arguments, the consideration which the question has received has led to the conclusion that public policy requires the continuance and enforcement of the rule of competition as a principle controlling business affairs in the various commonwealths. This principle of political economy is not based alone upon the theory that combinations to prevent competition will, of necessity, enhance the price, as there are notable instances where such combinations have, even permanently, reduced the price of articles thus traded in or manufactured, but it is founded upon the theory that such combinations may, as they usually will, enhance the price and also drive small and worthy dealers out of business. In People v. Sheldon (139 N.Y. 251,263), ANDREWS, Ch. J., said: "The question is, was the agreement, in view of what might have been done under it and the fact that it was an agreement the effect of which was to prevent competition * * * one upon which the law affixes the brand of condemnation. It has hitherto been an accepted maxim in political economy that `competition is the life of trade.' The courts have acted upon and adopted this maxim in passing upon the validity of agreements, the design of which was to prevent competition in trade, and have held such agreements to be invalid. * * * The gravamen of the offense of conspiracy is the combination. Agreements to prevent competition in trade are in contemplation of law injurious to trade, because they are liable to be injuriously used." The right of the plaintiff to recover in this action does not rest upon the common law alone, as the Revised Statutes provided, "If two or more persons shall conspire to commit any act injurious * * * to trade or commerce, * * * they shall be deemed guilty of a misdemeanor" (4 R.S. pt. 4, ch. 1, tit. 6, § S, subdiv. 6), and this was re-enacted in subdivision 6 of section 168 of the Penal Code; while subdivision 5 provided "If two or more persons conspire * * * to prevent another from exercising a lawful trade or calling, or doing any other lawful act, by force, threats (or) intimidation * * * each of them is guilty of a misdemeanor." In 1897 the legislature passed an act which provided: "Every contract, agreement, arrangement or combination whereby a monopoly in the manufacture, production or sale in this state of any article or commodity of common use is or may be created, established or maintained, or whereby competition in this state in the supply or price of any such article or commodity is or may be restrained or prevented, or whereby for the purpose of creating, establishing or maintaining a monopoly within this state of the manufacture, production or sale of any such article or commodity, the free pursuit in this state of any lawful business, trade or occupation is or may be restrained or prevented, is hereby declared to be against public policy, illegal and void." (L. 1897, ch. 383, § 1.) That the acts alleged to have been committed by the defendants were injurious to trade and commerce, created a combination to monopolize the sale of articles in common use, restrained competition in the supply of articles or commodities, and established and maintained a monopoly restricting or preventing trade, is manifest, and, therefore, the combination or conspiracy of the defendants was for an illegal purpose and the acts performed by them under it were also illegal. (Hooker v. Vandewater, 4 Denio, 349;Clancey v. Onondaga Fine Salt Mfg. Co., 62 Barb. 395; Stanton v.Allen, 5 Denio, 434; Leonard v. Poole, 114 N.Y. 371;People v. Fisher, 14 Wend. 9, 14; People v. Sheldon,139 N.Y. 251, 261; Arnot v. Pittston and Elmira Coal Co., 68 N.Y. 558;Curran v. Galen, 152 N.Y. 33, 37; People v. MilkExchange, 145 N.Y. 267; Pittsburg Carbon Co. v. McMillin,119 N.Y. 46; Judd v. Harrington, 139 N.Y. 105; Cummings v.Union Blue Stone Co., 164 N.Y. 401; Cohen v. Berlin JonesEnvelope Co., 166 N.Y. 292; Matter of Davies, 168 N.Y. 89,101; United States v. Freight Assn., 166 U.S. 290, 322;United States v. Joint Traffic Assn., 171 U.S. 505; AddystonPipe and Steel Co. v. United States, 175 U.S. 211; Beach on Modern Contracts, § 1582; Richardson v. Buhl, 77 Mich. 632,658; State v. Nebraska Distilling Co., 29 Neb. 700, 715;Craft v. McConoughy, 79 Ill. 346, 350; People ex rel.Peabody v. Chicago Gas Trust Co., 130 Ill. 268, 298;Hawarden v. Y. L.C. Co., 111 Wis. 545; U.S. v. J.M.C. C. Co., 46 Fed. Repr. 432.) In People ex rel. Tyroler v.Warden, etc. (157 N.Y. 116, 132) PARKER, Ch. J., very properly said: "In this one (jurisdiction) it is well established that the public welfare is best subserved by the encouragement of competition."

It was held in the Arnot case that a contract by one producer with another to withhold his supply from the market was against public policy and void; in the Curran case that contracts or arrangements with employers, to coerce other men to join an organization, under the penalty of the loss of their positions, were against public policy, unlawful and in conflict with the principle of public policy which prohibits monopolies and exclusive privileges; and in the Milk Exchange case that a corporation to fix the price of milk justified a finding that the corporation was a combination, the purpose of which was inimical to trade, and, therefore, unlawful. In the McMillin case a combination was entered into for the management and control of the business of manufacturing carbon, by which several corporations combined, the proceeds to be divided in accordance with the contract, and it was held illegal and void. In the Judd case an agreement was made for the purpose of suppressing competition in the sale of sheep and lambs, and it was held contrary to public policy and void, and also that the fact that it was entered into for the purpose of protecting those interested from loss by unreasonable competition, made no difference; that the agreement being intended to control the markets, it was invalid, as the public might be prejudiced thereby, and whether they were in fact was immaterial. The Blue Stone case involved a contract by which nearly all that kind of stone was to be sold at prices to be fixed and uniform, the sales to be apportioned between the producers, and it was held that it was void in that it threatened a monopoly whereby trade in a useful article might be restrained and its price unreasonably enhanced. In the Cohen case there was an agreement between the manufacturers of eighty-five per cent of the envelopes manufactured in the country and an outside manufacturer, which provided that the selling price of all envelopes manufactured by them should be fixed by a corporate agent, and it was held that the combination threatened a monopoly whereby trade in a useful article might be restrained and, hence, it was invalid. In the Freight Association case there was a contract between common carriers which resulted in increasing fare or freight beyond that which would exist if competition was free, and it was held invalid. In Beach on Modern Contracts it is said: "Combinations among persons or corporations for the purpose of raising or controlling the prices of merchandise, or any of the necessaries of life, are monopolies, and intolerable, and ought to receive the condemnation of the courts. Monopoly in trade or in any kind of business in this country is odious to our form of government. It is sometimes permitted to aid the government in carrying on a great public enterprise or public work under governmental control, in the interest of the public. But its tendency is destructive of free institutions and repugnant to the instincts of a free people, and contrary to the whole scope and spirit of the Federal constitution." Thus we see that agreements and acts injurious to trade or commerce, combinations to restrain competition in articles or commodities in common use, and monopolies restraining or preventing trade, have, by a long line of authorities, been held to be illegal.

This brings us to consider whether the means the association and its active members employed to accomplish their purpose were lawful. It will be remembered that the means adopted by them were that if any dealer or manufacturer sold goods to the plaintiff or any other person not conforming to the requirements of the association, all its active members were required to and refused to sell the goods of such manufacturer, procured others to refuse to deal in his goods, publicly advertised him as an unworthy dealer, and thus sought to injure and ruin his business. Thus it was that the members of the association accomplished their purpose of preventing other manufacturers from selling goods to the plaintiff. Such means were clearly unlawful. (Temperton v.Russell, L.R. [1 Q.B.D. 1893] 715; Rourke v. Elk Drug Co.,75 App. Div. 145; People v. Fisher, 14 Wend. 9, 14; People v. N.R.S.R. Co., 54 Hun, 354; affirmed, 121 N.Y. 582; O.D.Steamship Co. v. McKenna, 30 Fed. Repr. 48; Casey v.Cincinnati Typographical Union, 45 Fed. Repr. 135, 146;Boutwell v. Marr, 71 Vt. 1, 7; Doremus v. Hennessy,176 Ill. 608, 614; Brown v. Jacobs Pharmacy Co., 57 L.R.A. 547.)

In Temperton v. Russell a firm of builders refused to obey certain rules of the trade unions with regard to building operations, and the unions sought to compel them to do so by preventing the supply to them of building materials, In furtherance of this purpose they requested the plaintiff, who supplied building materials to the firm, to cease supplying them, which he refused to do. Thereupon, with the object of injuring the plaintiff in his business, in order to compel him to comply with such request, the defendants induced persons who had entered into contracts with him for the supply of materials to break their contracts, and not to enter into further contracts with the plaintiff, by threatening that the workmen would be withdrawn from their employ. The plaintiff sustained damage by reason thereof, and the court held that an action was maintainable by the plaintiff against the defendants for maliciously procuring such breaches of contract, and for maliciously conspiring together to injure him by preventing persons from entering into contracts with him. In theFisher case SAVAGE, Ch. J., in effect said that the owner of an article was not required to sell it for any particular price, or for less than a stated price, but he had no right to state the price at which others should sell their goods, and that all combinations to effect such a purpose were illegal. In theMcKenna and Casey cases it was held that all associations designed to interfere with the management and control of lawful business, or in dictating the particular terms upon which its owners should conduct it, by means of threats of injury or loss, by interfering with their property or traffic, or with their lawful employment of other persons, are pro tanto illegal combinations or associations. The same principle was involved in the case of Curran v. Galen (supra).

In the Boutwell case it was said: "Without undertaking to designate with precision the lawful limit of organized effort, it may safely be affirmed that when the will of the majority of an organized body, in matters involving the rights of outside parties, is enforced upon its members by means of fines and penalties, the situation is essentially the same as when unity of action is secured among unorganized individuals by threats or intimidation. The withdrawal of patronage by concerted action, if legal in itself, becomes illegal when the concert of action is procured by coercion."

In Doremus v. Hennessy it was said: "No persons, individually or by combination, have the right to directly or indirectly interfere or disturb another in his lawful business or occupation, or to threaten to do so, for the sake of compelling him to do some act which, in his judgment, his own interest does not require. Losses willfully caused by another, from motives of malice, to one who seeks to exercise and enjoy the fruits and advantages of his own enterprise, industry, skill and credit, will sustain an action. * * * Malice, as here used, does not merely mean an intent to harm, but means an intent to do a wrongful harm and injury. An intent to do a wrongful harm and injury is unlawful, and if a wrongful act is done to the detriment of the right of another it is malicious, and an act maliciously done, with the intent and purpose of injuring another, is not lawful competition."

In Brown v. Jacobs Pharmacy Co. it was said: "Suppose that a number of merchants should agree to fix the price of certain goods, and not to sell below that price; if there were no statute on the subject, and the case rested on the common law, the agreement would simply be non-enforceable; but if they went further, and agreed that, if any other merchant sold at a less price, they would force him to their terms, or drive away those dealing with him, by violence, threats or boycotting, it would cease to be a mere non-enforceable contract, and if, in its execution, damages proximately resulted to such other merchant, he would have a right of action.

Before concluding this discussion, there is another aspect of the situation which seems worthy of consideration, or of mention, at least. If the decision of the court below shall be affirmed, it obviously results in an unfair and unjust discrimination by this court in favor of capital or business and against labor, by enforcing the law as to one and refusing as to the other. As we have already seen, this court, in Curran v. Galen, unanimously held that a combination or association of workingmen whose purpose was to hamper or restrict the freedom of the citizen in pursuing his lawful trade or calling, through contracts or arrangements with employers to coerce workingmen to become members of the organization and to come under its rules and conditions under penalty of loss of their positions and of deprivation of employment, was against public policy and unlawful; while in this case it is held that a combination or association of wholesale dealers in useful articles whose purpose is to hamper and destroy the freedom of the plaintiff and others to pursue their lawful business, by contracts or arrangements with manufacturers to coerce them to become members of their organization and to come under its rules and conditions under penalty of the destruction of their business, was not against public policy nor unlawful. As these decisions could not be harmonized, they would result in a discrimination in favor of capital or business which could not be sustained upon any just or legal principle known to or established by statute or common law. With the existing conflict between capital and labor, such a distinction would not only be unjust, but extremely unfortunate, especially as it can be justified upon no principle of ethics, law or equity.

Thus far we have discussed the illegality of contracts involving the creation of monopolies, agreements that prevent competition, and the right of individuals or corporations, by threats, intimidation, or interfering with the business or traffic of others, to enforce or compel parties to enter into contracts in restraint of trade, under the general principles of the common law and the statutes and upon the broad ground that they apply to all lawful contracts or business, subject to very slight limitations. We have regarded the principle of the cases cited and the provisions of the statute as sufficiently broad to apply to all transactions relating to trade and commerce, to the free pursuit of any lawful business, trade or occupation, and to the sale of any article or commodity in common use. The learned court at Special Term, however, seems to have emphasized and placed great reliance upon the fact that the articles to which this controversy relates were not the prime necessaries of life, or articles which were necessary to the existence of man, and also upon the ground that as they were patent medicines each owner possessed a greater right as to their disposition than he otherwise would, including their sale free from competition among dealers to whom they were sold, while the learned Appellate Division seems to have based its decision upon the ground that patent medicines are not necessaries of life as to which public policy might restrain a combination to fix an exorbitant price.

Obviously the provisions of the statutes and the principles of the decisions to which we have referred are not limited in their application to the necessaries of life, but, as we have already seen, they have a much broader application and include all articles and commodities in common use or that are the subject of lawful trade or commerce. In determining whether there has been a conspiracy in restraint of trade, the character of the trade sought to be monopolized is immaterial so long as it is a lawful one. (People v. Duke, 19 Misc. Rep. 292, 296; 78 N.Y.S.R. 336.) Nor is the operation of the rule forbidding contracts restraining competition limited to trade in necessaries of life, but extends equally and alike to all commodities of commerce. (Wire Cloth Case, 19 N.Y. Supp. 413, note.) It is apparent from the character of this litigation that the articles and commodities to which it relates are both articles of trade and commerce and such as are in common use. This is obvious when we consider the fact that they amount annually to about sixty million dollars and constitute more than two-thirds of all the drugs and medicines sold in the United States. Therefore, the fact that they may not be necessaries of life in the strictest sense, is not controlling, and the decision of the courts below cannot be sustained upon that ground.

Moreover, the fact that the medicines may have been patented or copyrighted, so as to give the owners the exclusive right of sale, can make no difference. It must be constantly borne in mind that the purpose of this action is not to compel the manufacturers, against their will or disposition, to sell their goods to the plaintiff, but its purpose is to enjoin the association, its active members, committees and agents, from compelling manufacturers or dealers, against their will, to refuse to sell their property to the plaintiff by a system of intimidation and boycotting. It is not and cannot be properly claimed that the plaintiff can compel the manufacturers to sell it their merchandise without their consent or against their will, and the fact that it consists of proprietary articles or patent medicines can make no difference whatever. With few exceptions, which have no application here, courts can compel no owner of property to sell or part with his title to it without his consent, or to sell or deliver it to any particular person. So that the rule is the same where a party is the exclusive owner of the property, whether it is patented or not, at least so far as the question here involved is concerned, Besides, there are authorities which hold that patentees or owners of patents cannot legally enter into a combination in restraint of trade, or for the creation of monopolies in the sale of their goods, and that such contracts are unlawful. It is said: "Patents confer a monopoly as respects the property covered by them, but they confer no right upon the owners of several distinct patents to combine for the purpose of restraining competition and trade. Patented property does not differ in this respect from any other." (National Harrow Co. v. Hench, 83 Fed. Repr. 36, 38; 76 Fed. Repr. 667; Parke Co. v. Druggists' Assn., 84 N YS.R. 1064; Vulcan Powder Co. v. Hercules Powder Co.,96 Cal. 510, 515; National Harrow Co. v. Bement Sons, 21 App. Div. 290; Beach on Monopolies and Industrial Trusts, § 175; Tiedeman on State and Federal Control of Persons and Property, vol. 1, 412.)

If, however, it were conceded that the possession of their patents authorized the manufacturers to enter into combinations which otherwise would be illegal, still, that principle would have no application whatever to this case. Here it is not the manufacturers or the patentees who have organized the combination complained of, or who have sought to create a monopoly and prevent competition. The patentees have not forced, or attempted to force, the wholesale druggists to transact their business in any particular manner. But it is the wholesale druggists' association, organized and controlled by the druggists, who have no special property or interest under the manufacturers' patents, who seek to and have enthralled the patentees themselves and such of their customers as will not bow in subjection to a method of transacting their own business, inaugurated and enforced by the association. In other words, the plaintiff desires relief, not from the voluntary act of the patentees or from any combination into which they have voluntarily entered or which they control, but asks to be relieved from a combination of their customers who have by threats and intimidation compelled them, notwithstanding their desire to do so, to refrain from selling their property to the plaintiff or other customers without the consent of the association.

Hence, by the allegations of the complaint, it is made apparent, not only that the defendants entered into and formed an illegal combination or conspiracy to interfere with the plaintiff's trade by preventing the various manufacturers of these goods from selling them to it and thereby seriously interfered with and injured its business, but it is equally clear that the means employed by them to accomplish that purpose, by threats, intimidation, boycotting and continued and persistent efforts to injure any manufacturer who should continue to deal with it, were also illegal. Therefore, the defendants were not only guilty of an illegal act in combining to injure the plaintiff's business, but were likewise guilty of an illegal combination to accomplish the plaintiff's ruin by illegal and improper means. The purpose being also illegal and the means by which it was accomplished being also illegal, it follows that the action of the defendants was illegal and, as against the plaintiff, should be restrained. These considerations lead to the conclusion that the facts alleged in the amended complaint and admitted by the demurrer were sufficient to constitute a cause of action, and that the courts below erred in holding to the contrary and in dismissing the complaint.

It follows that the final and interlocutory judgments herein and the order dissolving the preliminary injunction should be reversed, the demurrer to the complaint overruled, with costs in all the courts, but with leave to the defendants, upon the payment of one bill of costs, within twenty days, to file and serve an answer to the amended complaint herein.