State v. Miles Laboratories, Inc.

282 S.W.2d 564, 365 Mo. 350, 1955 Mo. LEXIS 588
CourtSupreme Court of Missouri
DecidedOctober 10, 1955
Docket42152
StatusPublished
Cited by48 cases

This text of 282 S.W.2d 564 (State v. Miles Laboratories, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State v. Miles Laboratories, Inc., 282 S.W.2d 564, 365 Mo. 350, 1955 Mo. LEXIS 588 (Mo. 1955).

Opinion

*355 STONE, Special Judge.

[566] This original proceeding in quo warranto was instituted by the filing on June 29, 1950, of an information charging seven corporate respondents with violations of the Missouri anti-trust statutes. Sections 416.010 to 416.040, incl. (All statutory references herein are to RSMo 1949, Y.A.M.S.) After the *356 filing of separate answers by respondents, an order was entered on [567] November 13, 1950, appointing Lyman Field, Esq., as special commissioner to take evidence upon the issues joined and to report the evidence thus taken, together with his findings of fact and conclusions of law. Following extended hearings, our commissioner filed his report on September 8, 1953, in which he concluded that none of the respondents had violated the Missouri anti-trust statutes as* charged in the information. The Attorney-General (hereinafter referred to as relator) excepts to the commissioner’s findings and conclusions only as to Miles Laboratories, Inc. (hereinafter referred to as Miles).

Miles is an Indiana corporation duly registered and qualified to do business in Missouri, which manufactures and sells throughout the United States several brand-name proprietary medicines. However, the evidence was confined, almost entirely, to distribution and sale of a single product, Alka-Seltzer, which, during the period under consideration, i.e., three years prior to June 29, 1950, 1 was distributed by Miles in Missouri in three ways, to-wit, (1) by sales to retailers through nine drug wholesalers (including the other six respondents in this case, hereinafter referred to as the other respondents), who were appointed by Miles as del credere factors, (2) by direct sales to approximately one hundred thirty other wholesalers in Missouri, and (3) by direct sales to approximately seventy-five large retailers, including Katz Drug Company, operating a chain of drug stores in Kansas City and elsewhere, and (prior to May, 1949) Mil-gram Food Stores, Inc., operating a chain of grocery supermarkets in Kansas City. With each of the nine drug wholesalers in Missouri (as well as drug wholesalers throughout the nation) who were appointed as del credere factors, Miles entered into a written consignment agreement providing', among other things, that Miles would furnish a consigned stock of its products to the factor, that Miles reserved the right to designate the purchasers from whom the factor should or should not solicit orders for the consigned Miles products and reserved absolute title to such products until delivery to the purchasers thereof, that the factor would fill orders only at stated prices and discounts and would remit promptly to Miles the proceeds of sales of Miles products less the factor’s commission, and that the factor would “not enter into any contract under the fair trade laws or otherwise suggest the prices at which any purchaser of said products shall resell the same.” Noting that relator had conceded his inability to find any Missouri case indicating that such consignment agreements violate our anti-trust statutes, and pointing out that the *357 relationship between Miles and its factors was that of principal and agent [State ex rel. Parker v. Thompson, 120 Mo. 12, 20, 25 S.W. 346, 348] and that the factors’ guaranty of payment for Miles products sold through them did not affect that relationship [Suman v. Inman, 6 Mo. App. 384], our commissioner properly concluded that the evidence as to the other respondents, limited as it was to proof of execution of the consignment agreements and dealings in strict accordance therewith, was wholly insufficient to justify a finding against those respondents.

We turn to the issue as to Miles. The information closely follows the language of Sections 416.010 to 416.040, inch, 2 and [568] in general terms charges violations of each of those statutes. However, the gravamen of relator’s charge is that Miles was guilty of so-called vertical price-fixing, i.e., the fixing and maintenance of resale prices; and, the determinative questions here are (1) whether Miles entered into any arrangement, agreement or understanding to fix or maintain the resale price of Alka-Seltzer or to lessen full and free competition in the sale thereof and (2) if so, whether such action violated the Missouri anti-trust statutes. Having found that “no price-fixing agreements were shown or proved by the evidence,” our commissioner deemed it unnecessary to rule the second question. Although a commissioner’s findings may be persuasive [State ex inf. Barker v. Armour Packing Co., 265 Mo. 121, 144, 176 S.W. 382, 387], “ (t)he case is here for our weighing upon the law, and for our examination upon the evidence, as we may find it to be from the record” [State ex *358 inf. Attorney General v. Arkansas Lumber Co., 260 Mo. 212, 274-275, 169 S.W. 145, 164-165] and the ultimate responsibility for determination of both issues of fact and questions of law rests upon us.

As readily acknowledged by its President, Mr. Walter R. Beardsley, Miles has “strongly advocated” and supported fair trade legislation throughout the nation and has been a leader in procuring enactment of such legislation in forty-five states, Missouri being one of only three states which does not have a fair trade act. (The other two are Texas and Vermont.) Since 1934, Miles has followed consistently the policy of refusing to sell Alka-Seltzer to those who do not maintain the suggested minimum retail prices of 49c for the “60c size” and 24e for the “30c size.” Lists showing Miles’ suggested minimum retail prices for all of its products have been published and distributed to both wholesalers and retailers, and its salesmen, such as Jacob Raca, Jr., who traveled the northern half of Missouri (including Kansas City) during the period under consideration here, have been instructed to check advertised and “shelf” prices on Miles products and to report any “price violations” to their superiors promptly. It is apparent from the record that Miles’ price maintenance policy has become well known in the drug industry. As stated by Mr. Morris R. Shlensky, Executive Vice-President and General Manager of Katz, Miles is one of the “very few” drug suppliers “who are sincere about * * adherence to suggested minimum prices” and “are really severe in their policing of their (price) policy.”

Shortly after Milgram began to handle drug items about 1940, a sales representative of Miles, Stair by name, called on John W.

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Bluebook (online)
282 S.W.2d 564, 365 Mo. 350, 1955 Mo. LEXIS 588, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-v-miles-laboratories-inc-mo-1955.