John Bene & Sons, Inc. v. Federal Trade Commission

299 F. 468, 1924 U.S. App. LEXIS 3073
CourtCourt of Appeals for the Second Circuit
DecidedMay 8, 1924
StatusPublished
Cited by9 cases

This text of 299 F. 468 (John Bene & Sons, Inc. v. Federal Trade Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
John Bene & Sons, Inc. v. Federal Trade Commission, 299 F. 468, 1924 U.S. App. LEXIS 3073 (2d Cir. 1924).

Opinion

HOUGH, Circuit Judge

(after stating the facts as above). Under the Curtis Publishing Co. Case, 260 U. S. 568, 43 Sup. Ct. 210, 67 L. Ed. 408, we “must inquire whether the Commission’s findings of fact are supported by evidence,” and this inquiry includes an ascertainment of what kind of evidence, or evidence so called, the fact-findings rest ujpon. If by evidence is meant testimonial matter legally competent, relevant, pertinent, and material, this record contains very little ,of that kind.

It was plainly desirable, as Bene manufactured hydrogen peroxide, to compare Daxol with the other preparation, and on this point one Irene Kuhlman replied, in answer to the question “What are Daxol and peroxide used for? ” thus, “Well, not a serious wound of any kind; it is very injurious to a serious wound; for cuts, very small cuts, or [470]*470bruises, or sore throat, it was very helpful, the same as could be considered as to peroxide.” How competent this witness was to answer this question over due objection is perhaps suggested by the fact that her usual and regular occupation was that of running a “beauty parlor.”

It also seemed appropriate to show that the business of' the proprietors of Daxol had been injured by what Bene had done, and how such injury had arisen, and Miss Kuhlman testified fully on this point. Her qualifications for giving such testimony were that on the 6th of January, 1920, she became connected with the corporation that succeeded Proper in the manufacture of Daxol. At this time she became a stockholder to the extent of one share, and a director, and she also, in her own language “operated the books of the company.” After thus qualifying, she testified at length concerning events that had occurred long before her connection with the concern. The scheme of her evidence may be judged from this question and answer:

“Q. Do you remember when this trouble arose about this analysis? A. I was not connected with the company, but at the time they incorporated the whole ease was explained, and I have all the papers concerning the case.”

She was permitted to testify, not only as to correspondence antedating her connection with Proper’s successor, but as to the contents of books which were never produced. This evidence related to sales made by Proper, individually, prior to the time when (again in the witness’s language) he “sold out as an individual and changed it to a corporation.”

It was further necessary, under the issue as framed, to prove the inaccuracy or falsity of the analyses made at Bene’s request, and this was sought to be done by introducing the investigations of other chemists. Accordingly there was offered in evidence a report on Daxol, made in February, 1919, by the chemist of the dairy and food department of the state of Ohio, one made by the Bureau of Chemistry of the United States Department of Agriculture in November, 1919, and one made in September, 1921, by Pitkin, Inc., of New York City.

Apparently no effort was made to identify or ascertain the origin of the substance submitted for analysis, further than that it was contained in a bottle labeled Daxol. The inference is necessarily that the Commission regarded the content of any bottle labeled Daxol as material to this issue, and it must also have been assumed that everything in a bottle labeled Daxol came from Proper. But there was no identification of what was analyzed as being Proper’s product. On the assumptions made, and without any evidence as to the age of the preparation as analyzed, the inferences are irresistible either that the preparation known as Daxol was not stable, or that its. composition varied.

The taking of opinion evidence extends over a field hitherto, we think, unknown in legal investigation. One of the chemists who had analyzed the contents of a Daxol bottle at the request of Bene had said that its use “on the human body would be' attended with great danger.” Whereupon another chemist was asked by the Commission’s attorney whether he thought Daxol would be injurious when applied to the human body. Over objection he was permitted to testify on the ground that, “Well, it was a chemist that made that statement; that’s [471]*471the reason I think that he (the witness) is qualified.” And examples of similar procedure might be multiplied.

The questions suggested by the foregoing references are whether the Commission, in its investigations, is restricted to the taking of legally competent and relevant testimony. We incline to think that it is not by the statute, and, having regard to .the exigencies of administrative law, that it should not be so restricted.

We are of opinion that evidence or testimony, even though legally incompetent, if of the kind that usually affects fair-minded men in the conduct of their daily and more important affairs, should be received and considered; but it should be fairly done. The Trade Commission, like many other modern administrative legal experiments, is called upon simultaneously to enact the roles of complainant, jury, judge, and counsel. This multiple impersonation is difficult, and the maintenance of fairness perhaps not easy; but we regard the methods pursued in showing Proper’s diminution in sales as lacking in every evidential or testimonial element of value, and opposed to that sense of fairness which is almost instinctive.

We note that no finding of fact was made by the Commission to the effect that Proper’s sales of Daxol in the aggregate diminished; but a finding was mademt supra that four chain store systems excluded Daxol from their counters. As to this finding the record contains no evidence whatever justifying any reference to the Woolworth Company. The agent of Kresge testified ^plainly that Daxol did not sell, and that that was the reason “we discontinued carrying it.” The buyer for Mc-Crary declared that the chemical analysis would have had no effect on him, if there had been a large trade in Daxol, and averred that the reason why he did not continue buying it was because the demand slackened. The witness produced from the Kress Company was the only support of the Commission’s substantial averment, namely, that these particular four chain stores dropped Daxol as a result of Bene’s activities.

We cannot think that such testimony as this affords a foundation, either legal or reasonable, for the finding first above summarized. Having pointed out the infirmity of what was introduced as evidence, we shall not pause to inquire as to whether the order could be justified on all that is left of any probative value, to wit, the statement on behalf of the Kress Company, the various analyses, the admissions of the petitioner herein; for there is a much more important question presented by this record.

This proceeding has nothing to do with the various anti-trust acts. The only statute invoked is section 5 of the act creating the Commission. 38 Stat. 717-724 (Comp. St. § 8836e). Under this statute there are two points that must be made to appear before'any complaint can issue: (1) That the person complained of '“is using any unfair method of competition in commerce”; and (2) that a proceeding by the Commission in respect thereof would be “to the interest of the public.”1

It would seem elementary that whatever is necessary to justify a [472]*472proceeding by the Commission must be proved in that proceeding by said Commission.

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299 F. 468, 1924 U.S. App. LEXIS 3073, Counsel Stack Legal Research, https://law.counselstack.com/opinion/john-bene-sons-inc-v-federal-trade-commission-ca2-1924.