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SCHNORENBERG v. UNITED STATES (two cases.)

WENINGER v. SAME.

Circuit Court of Appeals, Seventh Circuit. December 15, 1927.

Nos. 3973-3975.

1. Searches and seizures 7(10)-Search of private dwelling without warrant is unreasonable (Const. U. S. Amend. 4).

Search of private dwelling without warrant is in itself unreasonable and abhorrent to law,

under Const. U. S. Amend. 4.

2. Intoxicating liquors 249-Searches and seizures 7(10)-Officers held authorized to search without warrant chicken coop near highway, where there was odor of whisky mash; "maliciously;" "reasonable cause" (18 USCA § 53; Const. U. S. Amend. 4).

Search without warrant of chicken coop near highway held not unlawful under section 6 of the act supplemental to the National Prohibition Act (18 USCA § 53) and Fourth Amendment to the United States Constitution, where odor of whisky mash came from coop, since such search was not made "maliciously," which means without legal justification, and of

ficers had reasonable cause to believe liquor

was being manufactured; requirement of "reasonable cause" being fulfilled if they had reasonably trustworthy information sufficient to warrant man of reasonable caution in believing liquor was being manufactured.

[Ed. Note. For other definitions, see Words and Phrases, First and Second Series, Maliciously; Reasonable Cause.]

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ANDERSON, Circuit Judge. These cases were heard together and will be disposed of in one opinion.

The plaintiffs in error Herman Schnorenberg and Tony Weninger were indicted together for maintaining a nuisance on the farm of Herman Schnorenberg, in that they there manufactured and kept intoxicating liquor in violation of law; and plaintiff in error Jacob Schnorenberg was indicted separately for maintaining a nuisance upon his farm, in that he kept such liquor there. All were convicted. The defendants introduced be noticed hereafter. The evidence introno evidence, except a single item, which will duced by the government was not contradicted, and showed substantially the following facts:

Herman and Jacob Schnorenberg were brothers owning and occupying adjoining farms in Washington county, Wisconsin. On March 8, 1927, two experienced prohibition agents, having received information that intoxicating liquor was being manufactured upon the farm of Herman and stored upon the farm of Jacob, went to the neighborhood of the farms to investigate. From the road they saw, on Herman's farm, a chicken coop with a chimney, and smoke and waves of heat coming therefrom. The chicken coop was about 15 feet from the public highway, and from the road they smelled the to them familiar odor of whisky mash. At the same time they observed a man coming toward them from the coop. This man proved to be Herman, and upon his clothes they detected the odor of whisky mash. They then went to the coop and found Weninger there. In the coop they also found one 125-gallon still in operation; one 75-gallon still not in operation; 49 50-gallon barrels, some of them full of mash and some of them almost empty; and one 72 horse power upright boiler which had fire in it, the steam being connected with the still, as well as with two barrels which contained mash. They also discovered on Herman's premises, in a new barrel, 30 gallons of distilled spirits, moonshine whisky.

They seized these things and put Herman Schnorenberg and Weninger under arrest. Then one of the prohibition agents proceeded to the farm of Jacob Schnorenberg. He went up to Jacob's house, knocked on the door, and got no answer. He then walked around the house calling for Jacob. Getting no answer, he noticed tracks (there being ice and snow upon the ground), and followed these tracks, still calling for Jacob. While

Before ALSCHULER, EVANS, and thus engaged he passed Jacob's barn. The ANDERSON, Circuit Judges. door was open, and looking in he saw a wag

23 F.(2d) 38

on with its front toward the door, the wagon warrant is unreasonable and unlawful. This having evidently been backed into the barn, is true of a search of a private dwelling. and on the wagon two new whisky barrels. "The search of a private dwelling without a He stepped in through the already open warrant is in itself unreasonable and abhordoor, tapped on the barrels, and, finding one rent to our laws." Agnello v. United States, empty and the other full, removed the bung 269 U. S. 20, 32, 46 S. Ct. 4, 6 (70 L. Ed. from the full one, stuck his fingers in, and 145). But it is not true that the search of ascertained that it was full of moonshine "any other building or property" can only whisky. He then searched the barn further, be made under a search warrant. The courts and found 13 50-gallon barrels of moonshine have repeatedly held that such searches, whisky-altogether 700 gallons of whisky. without warrant, are valid, if made upon reasonable or probable cause. The books are full of such cases. The Supreme Court in Hester v. United States, 265 U. S. 57 on page 59, 44 S. Ct. 445, 446 (68 L. Ed. 898), said: "The special protection accorded by the Fourth Amendment to the people in their 'persons, houses, papers, and effects,' is not extended to the open fields. The distinction between the latter and the house is as old as the common law."

As stated before, the defendants introduced no evidence, except one item. In each case, when one of the prohibition agents was upon the witness stand, he was asked by counsel for the plaintiffs in error if he did not have in his possession a plat showing the location of the buildings and the surroundings of the Schnorenberg farms. He answered that he had. Counsel for plaintiffs in error demanded that he produce it, which he did, whereupon counsel introduced it in evidence as Defendants' Exhibit No. 1, and proved by the witness that he had this plat before he started to make the investigation. This plat, thus introduced into evidence by plaintiffs in error, shows the location of the buildings, including the chicken coop, on Herman's farm, and has an arrow pointing to the square marked "chicken coop," with the word "Still" at the end of the arrow; and has on Jacob's farm a square mark (which indicates a building) like that on which, on Herman's farm, is marked "barn." This square has a cross-mark before it, and below, opposite the same sort of cross-mark, is written, "Keeps M P at Jake Schnorenberg, a brother." There is no evidence as to what "M P" means, but the surrounding circumstances would suggest that it may have meant "manufactured product."

The whisky was not brought into court, nor any sample of it, nor was any offered in evidence. The plaintiffs in error, however, objected to the testimony of the prohibition agents as to facts ascertained in their search and seizure, upon the ground that the search and seizure were made without a search warrant, and were therefore unlawful. At the close of the evidence they moved to strike this testimony out, and also moved the court to direct a verdict of not guilty. These motions were all overruled, and excepted to. In each case it is insisted that the search and seizure were unlawful, because made without a search warrant and without reasonable cause, and, being such, it was error to receive evidence thereby obtained.

[1,2] Counsel for plaintiffs in error contends that any search or seizure without a

In Dulek v. United States, 16 F.(2d) 275, the Circuit Court of Appeals of the Sixth Circuit decided that a cabin containing a still and its appurtenances, concealed in a wooded swamp on accused's 40-acre farm, 230 feet from his dwelling, was not part of the curtilage, and that it was not within the protection of the constitutional restriction against search and seizure, citing Hester v. United' States, supra. See, also, Guaresimo v. United States (C. C. A.) 13 F. (2d) 848. That such a distinction exists between a man's dwelling house and his other buildings and property was recognized by Congress in its prohibition legislation.

Section 6 of the act supplemental to the National Prohibition Act (18 USCA § 53) makes it a misdemeanor for any officer of the government to search a private dwelling without a warrant, but makes the search of "any other building or property" a misdemeanor only when the search is made maliciously and without reasonable cause. In Carroll v. United States, 267 U. S. 132, 147, 45 S. Ct. 280, 283 (69 L. Ed. 543, 39 A. L. R. 790), the Supreme Court said, after quoting these provisions of section 6: "It left the way open for searching an automobile, or vehicle of transportation, without a warrant, if the search was not malicious or without probable cause."

The chicken coop on the farm of Herman and the barn on that of Jacob were buildings other than their private dwellings, and the statute left the way open for searching each of these places without a warrant, if the search was made without malice and upon probable cause. The word "maliciously" means without legal justification-in this

case, without reasonable or probable cause. Reasonable and probable cause mean the same thing. Stacey v. Emery, 97 U. S. 642, 646, 24 L. Ed. 1035. The question then comes to this: Did the officers, when they made the searches and seizures complained of, have reasonable cause to believe that intoxicating liquor was being manufactured in the chicken coop on Herman's farm and was being kept in the barn on Jacob's farm? In Carroll v. United States, supra, at page 162 (45 S. Ct. 288), after citing cases defining what reasonable cause is, the court said: "In the light of these authorities, and what is shown by this record, it is clear the officers here had justification for the search and seizure. This is to say that the facts and circumstances within their knowledge and of which they had reasonably trustworthy in formation (italics ours) were sufficient in themselves to warrant a man of reasonable caution in the belief that intoxicating liquor was being transported in the automobile which they stopped and searched."

Tested by this, there can be no question of the lawfulness of the search and seizure of the still and other apparatus and the moonshine whisky on Herman's farm. Before entering upon his farm the officers discovered, by the senses of sight and smell, that moonshine whisky was being manufactured in the chicken coop. The acquisition by the officers, through their senses, of knowledge of facts which in reasonable men would induce the belief that a crime is being committed, plainly justified the search and seizure upon the farm of Herman. In McBride v. United States (C. C. A.) 284 F. 416, the officers went on the premises without a search warrant and seized a still. The entry and seizure were justified on the ground that they entered the premises after smelling fumes of whisky then being made in violation of law, and the court held that, when an officer is apprised by any of his senses that a crime is being committed, it is being committed in his presence, and that the search and seizure in that case were lawful. [3] The search and seizure on Jacob's farm require further consideration. As stated by the Supreme Court in Carroll v. United States, supra, if the facts and circumstances within the officer's knowledge, and of which he had reasonably trustworthy information, were sufficient to warrant a man of reasonable caution in believing that the barn contained intoxicating liquor, the search was reasonable and lawful. The evidence drawn

out by plaintiff in error in reference to the plat shows that it was in the possession of the prohibition agent before he made either search. The plat so fitted the situation as to indicate that it was drawn by a person having knowledge of the facts. There is no evidence as to how this knowledge was obtained, but that the officers had it is sufficiently shown by the plat. With the knowledge of facts just discovered, and with the information indicated by the plat, the officer proceeded to the farm of Jacob, and, while searching for Jacob (we may infer for the purpose of inquiring as to the storing of liquor upon his farm, or of getting his consent to search for such liquor), he saw the whisky barrels on the wagon in the barn indicated upon the plat.

The question is: Were the facts then in possession of the prohibition officer, together with the information indicated, such as would suggest to a reasonably cautious man, under all the circumstances, that intoxicating liquor was being unlawfully kept upon the premises of Jacob? The officer then knew that intoxicating liquor was manufactured on Herman's farm, and had information from the plat, which up to that time had proved to be reliable and trustworthy, that it was stored upon Jacob's farm. His investigation upon Herman's farm had just established the accuracy of the information as to the manufacture there. Only a small amount of manufactured liquor was found upon this farm. The capacity of the stills discovered would indicate a large product, and the officer might reasonably infer that this product was stored somewhere. He immediately proceeded to the farm and barn of Jacob, and there saw through the open door of the barn new whisky barrels, such as the barrel, full of moonshine whisky, which he had already discovered on Herman's farm.

We think the knowledge and information possessed by the prohibition officer, at the time he entered the barn to investigate as to the contents of the barrels upon the wagons, was sufficient to justify a reasonably cautious man in believing that the crime of unlawfully keeping liquor in the barn was being then committed and committed in his presence.

There is no ground for insisting that plaintiff in error Weninger was entitled to the constitutional protection asserted. The officers did not search his coop or his barn. They arrested him in the very act of violating the law.

The judgments are affirmed.

23 F.(2d) 41

J. W. KOBI CO. v. FEDERAL TRADE COM

MISSION.

Circuit Court of Appeals, Second Circuit. December 12, 1927.

No. 40.

1. Trade-marks and trade-names and unfair competition 801⁄2-Combination of conspir acy to maintain resale prices may be implied from course, of dealing or other circumstances (Clayton Act [38 Stat. 730]).

Essential agreement or combination or conspiracy to maintain resale prices of products, constituting a violation of the Clayton Act (38 Stat. 730), may be implied from a course of dealing or other circumstances.

2. Monopolies 17(1)-Plan to maintain resale prices and elminate price cutters comes within prohibition of "unfair method of competition" (Federal Trade Commission Act [15 USCA §§ 41-51]).

Plan to maintain resale prices and eliminate price cutters, indicating a dangerous tendency unduly to hinder competition and to create a monopoly, comes within the prohibition of an "unfair method of competition" in commerce, forbidden by Federal Trade Commission Act (15 USCA §§ 41-51).

[Ed. Note. For other definitions, see Words and Phrases, First and Second Series, Unfair Competition.]

3. Monopolies 17 (2)-Agreements for maintaining resale prices, together with method of securing reports on price cutters, held to warrant cease and desist order of Federal Trade Commission (Clayton Act [38 Stat. 730]).

Agreements with customers, either directly or indirectly, assuring resale prices would be observed, together with method for securing reports on price cutters, with threat to refuse sales to dealers so reported, held offensive to the Clayton Act (38 Stat. 730), and to warrant order of Federal Trade Commission to cease and desist from carrying or attempting to carry into effect such policy.

4. Trade-marks and trade-names and unfair competition 802-Commissioner, taking evidence and making report without recom

mendation, was not disqualified from partici

pating in decision rendered by commission (Federal Trade Commission Act, §§ 3, 9 [15 USCA § 43, 49]).

The fact that commissioner, under Federal Trade Commission Act, §§ 3, 9 (15 USCA §§ 43, 49), took evidence and made a report without recommendation, does not disqualify him from participating in decision rendered by the commission.

5. Trade-marks and trade-names and unfair

competition 802-Federal Trade Commission exercises only administrative function (Federal Trade Commission Act [15 USCA §§ 41-51]).

Federal Trade Commission exercises only

the administrative function delegated by Federal Trade Commission Act (15 USCA 88 41-51), and has no judicial powers.

6. Trade-marks and trade-names and unfair competition 802-Cease and desist order of Federal Trade Commission held not too indefinite for purposes of obedience to its command.

Order of Federal Trade Commission, directing seller to cease and desist from carrying into effect or attempting to carry into effect its policy of securing maintenance of resale prices for its products by co-operative methods, held not too indefinite for purposes of obedience to its command.

Petition to Review Order of Federal Trade Commission.

Original application by J. W. Kobi Company to review an order of the Federal Trade Commission. Petition denied.

Joseph A. Burdeau, of New York City (Daniel N. Dougherty, of San Francisco, Cal., George F. Scull, of New York City, and Chadwick, McMicken, Ramsey & Rupp, of Seattle, Wash., of counsel), for petitioner.

Bayard T. Hainer, Chief Counsel, Adrien F. Busick, Asst. Chief Counsel, and James T. Clark, all of Washington, D. C., for respondent.

Before MANTON, L. HAND, and AUGUSTUS N. HAND, Circuit Judges.

MANTON, Circuit Judge. The order entered by the Federal Trade Commission directs the petitioner to cease and desist from carrying into effect or attempting to carry into effect its policy of securing the maintenance of resale prices for its products by cooperative methods, in which it and its distributors, customers, and agents undertook to prevent sales of its products for less than such prices by (a) seeking or securing or entering into contracts, agreements, or understandings with customers or prospective customers that they will maintain the resale prices designated by it; (b) by soliciting customers to report the names of other customers who failed to observe such resale prices; and (c) by utilizing any equivalent cooperative means of accomplishing the maintenance of such resale prices. The order rests on agreements or understandings and co-operative methods of price fixing. The agreement, or understanding, or co-operative methods, might be implied from the course of dealing or other circumstances. Federal Trade Commission v. Beech-Nut Packing Co., 257 U. S. 441, 42 S. Ct. 150, 66 L. Ed. 307, 19 A. L. R. 882; Frey & Son v. Cudahy Packing Co., 256 U. S. 208, 41 S. Ct. 451, 65 L. Ed. 892.

[1] This record consists of correspondence of the petitioner with its customers relating to resale price fixing. No customers were called

as witnesses, but the petitioner's officers were called, and admitted that in some instances they had inquired from the trade as to price cutting by competitors, and stated that it was their policy not to sell to price cutters when so informed. They also admitted that in some specific instances they had entered into agreements with customers to observe resale prices, and that, when price cutting had been called to their attention, they asked customers to call further instances of price cutting of the kind to their attention. The correspondence between the petitioner and its customers and others brings this case well within the rule that the essential agreement or combination or conspiracy which is a violation of the Clayton Act (38 Stat. 730) might be implied from a course of dealing or other circumstances. United States v. Schrader's Sons, Inc., 252 U. S. 85, 40 S. Ct. 251, 64 L. Ed. 471; Federal Trade Com. v. Beech-Nut Packing Co., supra. The petitioner undoubtedly was endeavoring to control its resale prices, so as to prevent reduced prices. That was its definite purpose. It represented that it did not sell to price cutters, and before it accepted customers it made it plain that its resale prices would have to be observed. In some instances it obtained a tacit agreement to maintain resale prices, and in others it received a promise so to do, and thereupon served the cus tomer his requirements. There are many instances in which it wrote to price-cutting customers a letter of which the one to George Kay is a sample, wherein it said:

"In the few instances where it has been necessary to urge the price maintenance proposition with other customers, we have received voluntary assurance that our prices would not be cut by the distributor unless we were first notified. This arrangement seems very fair to us, and although we do not suggest that take such action, we think posyou sibly that you may wish to do so. We shall hope to hear from you again."

And another to the Royal Drug Company: "We will greatly appreciate your immediate assurance that you agree with our contentions and that you will comply with our request not to list Golden Glint or Golden Glint shampoo at a lower quotation than $2 net."

And, receiving no reply, they again wrote: "We are therefore returning your order and regret that we will be unable to fill it, until such time as you are prepared to furnish reliable assurance that you agree with our policies. A letter indorsing our suggestions and stating in detail what steps you have taken or are taking to carry them out will be carefully considered. Telegraphic advice of this kind will not be accepted."

Thereafter, when they received an order with assurances that the prices would be maintained, they replied:

"We have your letter of April 7 and thank you for the assurance that you will not cut the resale price of Golden Glint shampoo below $2."

This character of correspondence was repeated to a number of their customers, and warnings were delivered that, if the prices were not maintained, future sales would be withheld. Its insistence that its terms and conditions be met before it accepted customers, and its reference to other customers who were following its policy or requirements, was sufficient to justify the finding of the commission that there were agreements to maintain resale prices. There was sufficient to require the action of the Trade Commission which would forbid the continuance and extension of these practices, which constituted a method to make the petitioner's policy of fixing resale prices that of its customers.

Another objectionable practice consisted of obtaining reports of price cutters from competitors. A letter written by petitioner's sales manager to its president makes reference to a complaint (a) from wholesalers against retail druggists' associations; (b) from hair goods jobbers against each other; and (c) from Brown against anybody and everybody who trespassed on his territory. And in a letter dated January 11, 1923, addressed to one of its customers, it wrote:

"Our salesmen are reporting all deviations from the suggested resale price schedule that come to their attention. A number of jobbers have consented to co-operate in the same way. We would like very much to have your assurance that you will support us in our effort to do the fair thing by everybody. How about it?"

And to another customer they wrote on May 15, 1923:

"We note that you previously cut the prices in order to meet competition. In case a similar necessity should arise again, we will be very appreciative if you will send us the name of your price-cutting competitor. We feel that we can safely guarantee you against this sort of competition and will appreciate your co-operation as requested." [2] Letters of like character, showing a wellsettled and determined plan to maintain resale prices and eliminate price cutters, is found in this extensive correspondence offered in evidence. It indicates clearly a dangerous tendency unduly to hinder competition, and to attempt to create a monopoly in its products, and it is a practice which it was the desire of the Clayton Act to pre

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