Hammond Packing Co. v. State

100 S.W. 407, 81 Ark. 519, 1907 Ark. LEXIS 453

• Court: Supreme Court of Arkansas
• Decided: January 14, 1907
• Status: Published

Opinions

Hiel, C. J.

This is an action brought by the State of Arkansas on the relation of the Attorney General against the Hammond Packing Company, alleging that it was doing business in the State contrary to the Anti-trust Act of 1905. After answer a commission was issued to a commissioner in Chicago to take testimony. Upon a refusal to comply with the order of court requiring production of witnesses and documents, after notice, the answer was stricken out, and judgment rendered against the appellant as by default, and it appealed.

1. The nature of the “conspiracy to defraud” denounced by section one of the act of January 23, 1905, the “Anti-trust Act,” is the first subject requiring attention. Appellant contends that the complaint, framed in the language of that section, does not constitute a cause of action because the acts therein complained of constitute a crime, and under art. 2, § 8, of the Constitution of Arkansas, “no person shall be held to answer a criminal B charge unless on presentment or indictment of a grand jury”B (with certain exceptions not pertinent to this issue).’ |

The same contention was made in regard to the offense described -in the ist section of the Anti-trust Act of 1899. Acts 1899, p. 50. The difference between section 1 of the act of 1899 and section 1 of this act is immaterial on this issue. The court, in construing the act of 1899 in State v. Lancashire Fire Ins. Co. 66. Ark. 466, ruled this point, it is true, sub silentio, against the contention of the appellant. That an attempted monopoly, an agreement to restrain the freedom of trade, was a criminal conspiracy at common law is undoubtedly true. This subject is fully discussed, and also the applicability of the law of criminal conspiracy to modern combinations in restraint of trade, in Eddy on Combinations, § § 335-336, and Beach on Monopolies, § § 77~7&\

When the ingredients constituting the criminal conspiracy at common law and the ingredients constituting the “conspiracy to defraud” under anti-trust acts are examined, it is apparent that the offenses are not identical. The latter is doing business while a member of an illegal combination, while the former is a conspiracy to do an unlawful act or a conspiracy to do a lawful act in an unlawful manner. The remedies against the common-law conspiracy were indictment for the criminal conspiracy and an action on the case for damages by an aggrieved party or quo warranto by the State against an offending corporation. Eddy on Combinations, § § 338, 371. This action is entirely different, and is purely a statutory action to recover the penalties of the statute for doing business in the State contrary to its terms. These penalties are two-fold: one a money judgment for each day the offense continues, and the other as to corporations a forfeiture of charter if a domestic corporation and forfeiture of right in the State if a foreign corporation. Anti-trust Act, 1905, § § 2 and 3,

Railway Company v. State, 56 Ark. 166, is applicable here.

It was therein demonstrated that a statutory penalty for a matter not a crime at common law and not made a crime by the statute was recoverable in a civil action, and was not a “criminal charge,” within the meaning of sec. 8, art. 2, of the Constitution. The fact that there is a further penalty in case the offender is a corporation — that penalty being the civil death of the corporation if it is created by this State and its exile if created by another State— can not change the effect of the money penalty. It is just an added penalty where the offender is an artificial person, and falls equally, to the extent of the State’s power, on foreign and domestic corporations.

It is sought to distinguish the Hartford case (Hartford Fire Insurance Co. v. State, 76 Ark. 303), from this one on the ground that in the Hartford case only the ouster of a foreign insurance corporation was considered, while this case presents an appeal from a money judgment only. The matter of money judgment in the Hartford case was covered by an agreement of parties (see page 305), and the decision was limited to the facts presented, but it was expressly held that the corporation had subjected itself to the penalty of the act. That this judgment is not of ouster as well as for the money penalty is not a cause of complaint by. appellant, for it is liable to that penalty likewise if liable for the money penalty. Therefore the court treats the action as purely a statutory one for the recovery of a penalty named in the statute.

2. It is contended that sections 8 and 9 of the anti-trust act of 1905 subject defendants proceeded against under them to unreasonable search and seizure of papers, books and documents, contrary to .the 4th amendment of the Constitution of the United States,' and contrary to a similar provision in section 15, art. 2, Constitution of Arkansas.

The first ten amendments of the Constitution of the United States operate on the Federal Government only, and can not be invoked against State legislation. Jack v. Kansas, 199 U. S. 372; Brown v. New Jersey, 175 U. S. 172. Where, however, the provisions of a State constitution are identical with provisions in these amendments, the courts of the State should, and do, regard as controlling decisions of the Supreme Court of the United States upon them.

Appellant relies upon Boyd v. United States, 116 U. S. 616, as establishing the principles that the “search and seizure” clause reaches to an order of court under a statute providing for a production of books and papers under penalty that the complaint be confessed in an action to recover a penalty; and if such order effects an unreasonable search, it is contrary to such provision; and actions seeking penalties should in this respect be treated as criminal cases.

The scope of Boyd v. United States is narrowed when applied to corporations by the recent decision in Hale v. Henkel, 201 U. S. 43, and the case at bar must be determined in these respects by the last enunciation of -that court on this subject. It is established in Hale v. Henkel that the interdiction of the 5th amendment to the Federal Constitution that “no person * * * shall be compelled in any criminal case to be a witness against himself” does not apply to corporations but to natural persons. The exact language above quoted is also found in section 8, art. 2, Constitution of Arkansas. It is further settled by Hale v. Henkel that a corporation is entitled to immunity by reason of the 4th Amendment from unreasonable search.

As to whether the order in question was an unreasonable search of appellant’s books is not properly before the court under the facts. The order for the production of the books was coupled with an order to produce named witnesses for oral examination, and J. Ogden Armour, one of those named in the order, was the first witness called for oral examination. Instead of producing him or showing inability to do so, the appellant declined in foto to obey the order.

If appellant bad obeyed so much of the order as required the production of witnesses for oral examination, or showed its inability to do so, and showed an attempt to comply with the order to that extent, and had refused to obey the order as to the production of books and papers, then the question would be squarely for determination whether the order in question amounted to an unreasonable search of books and papers. It is pointed out in Hale v. Henkel that a subpoena duces tecum which practically called for all the books, papers and documents of a large business to be brought into court under a sweeping clause was unreasonable and void, but the fact that it was .void as to the production of the books and papers did not justify its disobedience as to appearing to testify. In this case the order is very broad, but its harshness is somewhat ameliorated by a proviso that at the examination the witnesses and books should not be required to be produced at any one time in such numbers as to interfere with the ■ business of the defendant. But, as indicated, it would be obiter dictum to determine the reasonableness of the order in question in so far as production of books and papers is concerned. Sufficient to say that the statute is valid under the decision in Hale v. Henkel, in so far as it authorizes a reasonable order for the production of books, papers and documents of a corporation over which the State has control, and what may be a reasonable order must be determined in each case as it arises.

Foreign corporations doing business in this State under laws permitting them to do -so would in this respect be subject to like State control as domestic corporations. Woodson v. State, 69 Ark. 521; Railway Company v. Gill, 54 Ark. 101; St. Louis & San Francisco Railway Company v. Gill, 156 U. S. 649. The control of the Government over State corporations engaged in interstate commerce surely can not be as far reaching as the control of a State over a foreign corporation within its borders by its permission and corporations created by it; and as Hale v. Henkel sustains the right of the Government to require a production of books, papers and documents in order for the Government to ascertain in a- proper action whether a corporation engaged in interstate commerce is proceeding in its business along legal lines, provided such order is reasonable in its terms, it follows, a fortiori, that -a State may do so over foreign and domestic corporations doing business under authority of its laws.

The question narrows to whether the statute, in so far as it authorizes the order to produce witnesses, is constitutional. The provisions of sections 8 and 9 are attacked as unreasonable, in derogation of natural rights and various clauses of the State and Federal constitutions. These sections, with a few differences immaterial to this issue, are copied from the Missouri anti-trust act, and the clauses under fire here were recently sustained as constitutional by the Supreme Court of Missouri in State v. Standard Oil Co., 91 S. W. Rep. 1062.

It is insisted here, as it was in Missouri, that this statute lays a duty on a corporation to produce its officers and employees, or be defaulted for a failure to do so.

If these' provisions mean that the corporation must be a policeman, and bring into court on demand its president, bookkeeper or doorkeeper vi et armis, certainly it would be an unreasonable imposition. An analysis of the provisions, however, will not justify such construction. These sections evidently mean this, and nothing more: that the corporation shall on demand request any given officer, agent or employee to be present at the time named for examination as a witness (and in case of production of books and papers that the given officer or agent produce the given books or papers), and on a failure to comply with these requirements that it be defaulted. Of course, this necessarily contemplates an honest effort to produce the testimony called for. When that is made, then the statute is complied with; when it is not, as in this case -where the defendant corporation refused to obey any part of the order, then the statute is not complied with, and that brings up the gravest question of .the case.

3. Is section 9 authorizing the answer to be stricken out and default judgment rendered when the defendant refuses to obey the order made pursuant to section 8 due process of law? The case most strongly pressed upon the court to sustain the contention that such action is not due process is Hovey v. Elliott, 167 U. S. 409.

The Supreme Court of the District of Columbia, sitting as a chancery court, made an order on defendants to pay over certain funds which had been paid them by a receiver of the court. This order was disobeyed, and, after citation to show cause against it, the answer of defendants was stricken from the files, and thereafter the bill was taken pro confesso, and judgment rendered accordingly. Subsequently suit was brought on the judgment in New York, and the case reached the Supreme Court of the United States on the question whether this was due process of law. Mr. Justice White for the court learnedly and exhaustively reviewed the authorities as to the power of a chancery court to punish for contempt by striking out the answer and proceeding on the bill as confessed, and demonstrated that such power did not exist. He says that in England no single case is found sustaining it, and in America only two, Walker v. Walker, 82 N. Y. 260, and Pickett v. Ferguson, 45 Ark. 177. These two cases are condemned as unsound. It is interesting to note that the court in Pickett v. Ferguson simply followed the New York case of Walker v. Walker, but Mr. Justice Eakin filed a dissenting opinion, and reviewed the authorities on the subject, and stated the law as it was done subsequently by Mr. Justice White in this case. The court, after reaching the conclusion that the chancery court did not possess the power to disregard an answer which was in all respects sufficient and had been regularly filed, and ignore the proof taken in support of it, then passed to the question whether a judgment thus rendered contrary to law was void for want of jurisdiction and subject to collateral attack. It was determined that the judgment was one substantially without hearing, and analogous to a judgment determined upon issues not raised in the pleadings and in the absence of the party. The decision was •expressly rested “on the want of power in the courts of the District of Columbia to suppress an answer of parties defendant, and after so doing to render a decree pro confesso as in case of default for the want of an answer.” In the case at bar the court did not lack power to strike out the answer and proceed as in case of default if it was competent for the State to confer that power on the court. Hence the question here is, not the power or want of power in the court, but the power or want of power in the State to enact the statute under review. If the court in Hovey v. Elliott had held, as did this court in Pickett v. Ferguson, that the power to strike out the answer and proceed as in case of default was an inherent power of the court, and still a judgment rendered under it was taking property without due process of law, then Hovey v. Elliott would be conclusive of this issue. But the decision was predicated upon the premise that the power exercised was contrary to the law of the land, and the sequence followed that property was taken without due process.

In the first judiciary act passed by Congress, in 1789, a statute was enacted giving United States courts in the trial of actions at law the power to require the parties to produce books and writings in their possession or control which contain evidence pertinent to the issue, in. cases and under circumstances where the same might be compelled in chancery, and this was the penalty named for a violation of such order:

“If a plaintiff fails to comply with such order, the court may, on motion, give the like judgment for the defendant as in cases of nonsuit; and if a defendant fails to comply with such order, the court may, on motion, give judgment against him by default.” Rev. Stat. § 724.

An examination of the 3 Federal Statutes Annotated, pp. 2-5, show this statute has been constantly applied by many of the ablest' jurists who have adorned the Federal bench for the past 118 years, and in none of the many decisions applying it and defining its scope has it been held contrary to due process of law.

The Revised Statutes of Arkansas, adopted in 1837, gave the ' power to any court of record to compel a party to a suit pending therein to produce any books, papers and documents in his possession or under his control relating to the merits of such suit or to any defense therein. It was provided, as a penalty for failure to obey such order, that the court may nonsuit him, or strike out any pleas or notice of setoff or debar him from any particular defense in relation to such books, papers and documents. Rev. Stat., ch. 116, § 88-92, now found in Kirby’s Digest, § § 3074-3078. There were similar provisions enacted for courts of chancery to proceed as on confession against a party failing to obey an order to produce books, papers and documents. Kirby’s Digest, § § 3079, 3080.

These statutes have been constantly invoked in the courts of this State almost since its admission into the Union, and their enforcement not opposed as depriving the recalcitrant party of his property without due process. The section under inquiry does not differ in principle or much in detail from section 724 of the Federal statutes nor these statutes so long upon the statute book of this State, in so far as striking out the answer is concerned.

The industry of counsel for appellee develops the fact that such statutes are common in other States. They may be found referred to in the brief. These considerations are important only as indicating that such statutes have long been accepted by bench and bar, State and Federal, as being part of the law of the land. This question was before the Supreme Court of Mississippi under a statute authorizing a default for a failure to answer interrogations; and the statute was attacked as unconstitutional on the strength of the opinion in Hovey v. Elliott. The court said: “It was a declaration of the Magna Charta that no one should be deprived of a right without being heard in his defense; and this principle is embodied in section 14 of our State Constitution, which provides that 'no person shall be deprived of life, liberty or property, except by due process of law.’ However wholesome this doctrine is when applied to courts and to persons exercising judicial or quasi-judicial functions, it has never been supposed that it deprived the Legislature of the power of changing the rules. of evidence, or of modifying or abrogating altogether the presumptions indulged by the principles of the common law. If the Legislature may provide for a discovery of evidence in the hands of the adversary, it must be competent for it to impose upon such party the conditions of a failure to make such discovery; for when the Legislature requires the discovery to be made, and imposed the conditions of a refusal, such conditions must become the law of the land, and to pursue the statute is due process of law. (Bagg’s case, cited in Hovey v. Elliott, 167 U. S. 416.)” Illinois Cent. Railroad v. Standford, 75 Miss. 862.

This case is criticised as reasoning in a circle, but the criticism is not just if the statute is valid. Of course, an invalid statute gives no force, and is not the law of the land, and proceedings under it are not pursuant to due process; but where the statute is valid, then its provisions become as much the law of the land as any common law inherited from England. The question then passes to whether the State has power to enact a statute, visiting the penalty of a default judgment upon a party required to produce evidence in court who fails and refuses to do so. The power of the State in such matters is thus stated by Mr. Justice Brewer, speaking for the Federal Supreme Court: “The State has full control over the procedure in its courts, both in civil and criminal cases, subject only to the qualification that such procedure must not make a denial of fundamental rights or conflict with specific and applicable provisions of the Federal Constitution. * * * The State is not tied down by any provision of the Federal Constitution to the practice and procedure which existed at common law. Subject to the limitations heretofore named, it may avail itself of the wisdom gathered by the experience of the century to make such changes as may be necessary.” Brown v. New Jersey, 175 U. S. 172. See, also, Wilson v. N. C., 169 U. S. 586: Hurtado v. California, 110 U. S. 516.

In Louisville & Nashville Ry. Co. v. Schmidt, 177 U. S. 230, Mr. Justice White for the court said, at page 236: “It is no longer open to contention that the due process clause of the 14th Amendment to the Constitution of the United States does not control mere forms of procedure in the State courts or regulate practice therein. All its requirements are complied with, in the proceedings which are claimed not to have been due process of law, provided the person condemned has had sufficient notice and an adequate opportunity afforded him to defend.” See also Simon v. Craft, 182 U. S. 436.

Applying these principles, it can not be doubted that the statute in question, like section 724 of the Rev. Stat. of the United States and sections 3079, 3080 of Kirby’s Digest, is a matter of procedure and practice in procuring testimony in trials and enforcing orders for production of material and relevant evidence, and -in the proceeding leading up to its enforcement it requires sufficient notice and an adequate opportunity to defend, first against the order, secondly it provides for an opportunity, after notice, to obey it, before any default can be taken; and these provisions meet the requirements of the 14th Amendment.

4. Appellant presents -arguments against the construction placed on section one of this act in Hartford Ins. Co. v. State, 76 Ark. 303, but the rule of stare decisis forbids a re-examination of these questions.

Other matters have been presented and considered, but the views expressed heretofore are fatal to appellant’s contentions.

Judgment affirmed.

Battue, J., dissents.