Reed-Harlin Grocer Co

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IN THE MATTER OF REED-HARLIN GROCER COMPANY AND JOHN R. REED AND ORR M. REED, TRADING AS WEST PLAINS BROK- ERAGE COMPANY, ET AL.

COMPLAINT, FINDI~GS, AND ORDER IN REGARD TO THE ALLEGED VIOLATION OF SUDSEC. (c) OF SEC. 2 OF AN ACT OF CONGRESS APPROVED OCT. 15, 1914, AS AMENDED BY AN ACT OF COXGRESS APPROVED JUNE 10, 19~6 Docket 4186. Complaint, Apr. 9, 1941-Decision, Aug. U, 191,1 \Vhere some six corporate or partnership concerns, engaged in selling foodstuffs, groceries, and allied prcducts to numerous buyers, including a corporate grccery business operating warehouses in l\Iissourl and Arkansas, which placed orders for a substantial portion of Its requirements through a brokerage firm owned by two inllividuals, one of whom was the president and active manager of said corporate grocery business, owning 86 percent of Its outstanding stock, the other being director, secretary, salaried employee, and stockholder therein- ( a) Transmitted and paid to said two indi\'iduals, engaged under a separate trade name in said bt·okerage business, so-called brokerage fees and commissions in substantial amounts, which were a certain percentage of the quoted sale prices agreed upon between each of said sellers and said individuals:

Held, That said concerns violated the provisions of subse<"tion (c) of section Z of the Clayton Act, as amended, by so granting and paying fees and commissions as brokerage to said corporate grocer and said two Individuals; and Where said corporate grocery concern and said individuals, acting In fact on behalf of said corporate grocery business- ( b) Accepted from sellers aforesaid so-called brokerage fees and commi,..siun~<: Held, That said corporate grocery business and individuals violated· the provisions of subsection (c) of section 2 of said statute by receiving and accepting fees and commissions as brokerage upon purchases from sellet·s. Mr. John T. Haslett for the Commission.

Mr. A. lV. Landis, of ,"West Plains, Mo., for Reed-Harlin Grocer Co., John R. Reed and Orr M. Reed.

Mr. W. D. Wright, Jr., of Denver, Colo., for Ady & Milburn, Inc., 'Villiam D. Wright and Frank E. Hockensmith. Rose, Loughborough, Dobyn.s & Ilou.se, of Little Rock, Ark., for Arkansas State Rice Mill Co.

Farrar & },fartin, of Denver, Colo., for Great 'Vestern Sugar Co. ColiiPLAINT The Federal Trade Commission, having reason to believe that the parties respondent named in the caption hereof and hereinafter more particularly designated and described since 'June 19, 1936, have violated and are now violating the provisions of subsection (c) REED-HARLIN GROCER CO., ET AL. 1115 1114 Complaint of section 2 of the Clayton Act (U. S.C. title 15, sec. 13) as amended by the Robinson-Patman Act, approved June 19, 1936, hereby issues its complaint, stating its charges with respect thereto as follows: PARAGRAPH 1. Uespondent, Reed-Harlin Grocer Co., is a corporation, organized and existing under and by virtue of the laws of the State of Missouri, 'with its principal office and place of business located at 200 'Vashington Avenue, 'Vest Plains, Mo. Uespondent operates and maintains branch warehouses in various towns and cities in the States of Missouri and Arkansas. PAR. 2. Respondent, John R. Reed, an individual residing in the rity of ·west Plains, Mo., is now and has been since June 19, 1936, president, director, and majority stockholder in Reed-Harlin Grocer Co. Said respondent, John R Reed, owns and controls approximately 56 percent of the outstanding capital stock and actively manages and conducts the business of Reed-Harlin Grocer Co. Respondent, Orr M. Heed, an individual residing in the city of West Plains, Mo., is now and since June 19, 1936, has been director, secretary, a salaried employee of, and a stockholder in respondent Reed-Harlin Grocer Co.

Respondents, John R. Reed and Orr 11. Reed, are in active charge of the management of the business of respondent 'Vest Plains Drokerage Co.

PAR. 3. Respondent, Ady and Milburn, Inc., is a corporation organized and existing under and by virtue of the laws of the State of Colorado with its principal office and place of business located at 1900 15th Street, Denver, Cold.

Respondent, Arkansas State Rice Mill Co., is a corporation organized and existing under and by virtue of the laws of the State of Arkansas with its principal office and place of business at A.bbeyville, La.

The individual respondents, William D. 'Vright and Frank E. liockensmith, are engaged in the business of jobbing a variety of dried beans under the firm name and style of Midwest Dean Co., and have their principal office and lace of business at 2030 Blake Str~et, Denver, Colo.

Respondent, The Great ·western Sugar Co., is a corporation or. g;a.nized and existing under and by virtue of the laws of the State of N"ew Jersey, with its principal office and place of business located at 1530 Sixteenth Street, Denver, Colo.

. Respondent, Inness Bros., Inc.~ is a corporation organized and exlsting under and by virtue of the laws of the State of Missouri Complaint 33F. T. C.

with its principal office and place of business located at 106 East Fifth Street, Kansas City, Mo. . The individual respondents, Louis S. Taube, Theodore Taube, and Lloyd D. Holden, are engaged in the business of jobbing potatoes, watermelons, and allied products under the firm name and style of L. S. Taube & Co., and have their principal office and place of business located at 113-115 East Third Street, Kansas City, Mo. The respondents named in this paragraph will hereinafter be refererd to as "seller respondents." Each of the seller respondents named in this paragraph is engaged in the business of selling commodities, particularly foodstuffs, groceries, and allied products, to numerous buyers, including the respondent Reed-Harlin Grocer Co. The sales made by such seller respondents to respondent Reed-Harlin Grocer Co. are effectuated through the brokerage firm conducted by respondents John R. Reed and Orr :M. Reed under the firm name and style of West Plains Brokerage Co.

PAR. 4. Respondent, Re~cl-Harlin Grocer Co. places orders for a substantial portion of the goods, wares, and merchandise, particularly foodstuffs, required in the ordinary conduct of its business, with sellers who are located in States of the United States other than the State in which the said Reecl-Harlin Grocer Co. is located, among whom are the seller respondents herein named, through the brokerage firm of John R. Reed and Orr M; Reed, trading as 'Vest Plains Brokerage Co. As a result of the transmission and execution of said orders as aforesaid, goods, wares, and merchandise particularly foodstuffs, are sold, transported, and delivered by such sellers to the various places of business of the respondent Reed-Harlin Grocer Co. from the sellers' places of business in other States. PAR. 5. In the course and conduct of the buying and selling transactions in interstate commerce hereinabove referred to, since June 19, 1936, said seller respondents have transmitted, paid, and delivered and do transmit, pay, and deliver to said individual respondents ,John R. Reed and Orr l\1. Reed, trad.ing as 'Vest Plains Brokerage Co.~ so-called brokerage fees and commissions in substantial amounts, the same being a certain percentage of the quoted sales prices agreed upon between each of said sellers and individual respondents John R. Reed an·d Orr l\1. Reed trading ns West Plains Brokerage Co., and the same have been received by ,John R. Reed, Orr l\1. Reed, and Reed-Harlin Grocer Co. throtigh the 'Vest Plains Brokerage Co. · PAR. 6. In all of the transactions of purchase and sales hereinabove referred to, since June 19, 1936, the respondents John R. Reed and Orr]\[. Reed have acted in fact for and on behalf of the Reed-Harlin Grocer Co.

REED-HARLIN GROCER CO., ET AL. 1117 1114 Findings PAR. 7. The transmission and payment of said brokerage fees or commissions by the seller respondents and the receipt and acceptance of said brokerage fees or commissions by said respondents John R. Reed and Orr M. Reed, trading as 'Vest Plains Brokerage Co., upon the purchases of the Reed-Harlin Grocer Co., and the receipt and acceptance of brokerage fees or commissions by said respondent Reed-Harlin Grocer Co. upon its own purchases in the manner and form hereinabove set forth is in violation of the provisions of subsection (c) of section 2 of the act described in the preamble hereof. Report, FINDINGS AS ro THE FAors, AND ORDER Pursuant to the provisions of the act of Congress entitled "An act to supplement existing laws against unlawful restraints and monopolies, and for other purposes," approved October 15, 1914 (the Clayton Act) as amended by section 1 of an act entitled "An act to amend section 2 of the act entitled 'An act to supplement existing laws against unlawful restraints and monopolies and for other purposes,' approved October 15, 1914, as amended (U. S. C. title 15, sec. 13), and for other purposes," approved June 19, 1936 (the Robinson-Patman Act), the Federal Trade Commission, on April 9, 1941, issued and thereafter served its complaint in this proceeding Upon the respondents named in the caption hereof, charging them With violating the provisions of paragraph (c) of section 2 of the said act as amended.

After the issuance and service of said complaint, answers admitting all the material allegations of the complaint were filed on behalf of respondents Reed-Harlin Grocer Co.; John R. Reed and Orr M. Reed, individuals trading under the firm name and style of West Plains Brokerage Co.; Inness Bros., Inc.; and Louis S. Taube, Theodore Taube, and Lloyd B. Holden, individuals trading under the firm name and style of L. S. Taube & Co. Answers admitting and denying various material facts alleged in the complaint were filed on behalf of all other respondents. Thereafter, the Commission, by order entered herein, granted respondents Ady & Milburn, Inc., a corporation; Arkansas State Rice Milling Co., a corporation; William D. "Wright and Frank E. Hockensmith, individuals trading Under the firm name and style of Midwest Bean Co., and The Great Western Sugar Co., a corporation, upon motion, permission to withdraw their said answers, and to substitute therefor answers admitting all the material allegations of fact set forth in the complaint and waiving all intervening procedure and further hearings as to said facts, and expressly waiving the filing of briefs and oral argu· 4311:126"'-42-vol. 83--71 Findings 33F. T. C.

ments. Said substitute answers were duly filed in the office of the Commission. The respondents Arkansas State Rice Milling Co. and The Great '\Vestern Sugar Co., in their answers, stated they had no knowledge that the '\Vest Plains Brokerage Co. was not independent of the Reed-Harlin Grocer Co., or that the brokerage was used for the benefit of respondent Reed-Harlin Grocer Co. Thereafter, this proceeding regularly came on for final hearing before the Commission on said complaint, the answers of the respondents Reed-Harlin Grocer Co., a corporatim1, and John R. Reed and Orr M. Reed, individuals trading under the firm name and style of '\Vest Plains Brokerage Co., and the substitute answers of all other respondents, and the Commission having duly considered the matter and being now fully advised in the premises, finds that this proceeding is in the interest of the public and makes this its findings as to the facts and its conclusions drawn therefrom: FINDINGS AS TO THE FACTS PARAGRAPH 1. Respondent, Reed-Harlin Grocer Co., is a corporation, organized and existing under and by virtue of the laws of the State of Missouri, with its principal office and place of business located at 200 Washington A venue, '\Vest Plains, Mo. Respondent operates and maintains branch warehouses in various towns and cities in the States of Missouri and Arkansas.

PAR. 2. Respondent, John R. Reed, an individual residing in the city of '\Vest Plains, 1\lo., is now and has been since June 19, 1936, president and director of respondent Reed-Harlin Grocer Co., he owns and controls approximately 56 percent of the oustanding capital stock of said corporation and actively manages and conducts its business.

· Respondent Orr l\1. Reed, an individual residing in the city of '\Vest Plains, 1\fo., is now and since June 19, 1936, has been director, secretary, a salaried employee of, and a stockholder in respondent Reed-Harlin Grocer Co.

Respondents, John R. Reed and Orr M. Reed, are in active charge of the management of the business of respondent '\Vest Plains Brokerage Co.

PAR. 3. Respondent, Ady and Milburn, Inc., is a corporation organized and existing under and by virtue of the laws of the State of Colorado with its principal office and place of business located at 1900 Fifteenth Street, Denver, Colo, Respondent, Arkansas State Rice Milling Co. (named in the complaint as Arkansas State Rice Mill Co.), is a corporation organized REED-HARLIN GROCER CO., ET AL. 1119 1114 Findings and existing under and by virtue of the laws of the State of Arkansas with its principle office and place of business at Abbeyville, La. Respondents, William D. Wright and Frank E. Hockensmith, under the firm name and style of Midwest Bean Co. are engaged in the business of jobbing a variety of dried beans. Their principal office and place of business is located at 2030 Blake Street in Denver, Colo. Respondent, The Great ·western Sugar Co., is a corporation organized and existing under and by virtue of the laws of the. State of New Jersey, with its principal office and place of business locat~d at 1530 Sixteenth Street, Denver, Colo.

Respondent, Inness Bros., Inc., is a corporation organized and existing under and by virtue of the laws of the State of Missouri, with its principal office and place of business located at 106 East Fifth Street, Kansas City, Mo.

Respondents, Louis S. Taube, Theodore Taube, and Lloyd B. Holden, under the firm name and style of L. S. Taube. & Co. are .engaged in the business of jobbing potatoes, watermelons, and allied products. Their principal office and place of business is located at 113-115 East Third Street, Kansag City, l\fo. The respondents named in this paragraph will hereinafter be referred to as "seller respondents." Each of the seller respondents named in this paragraph is engaged in the business of selling comll1odities, particularly :foodstuffs, groceries, and allied products, to numerous buyers, including the respondent Reed-Harlin Grocer Co. The sales made by such seller respondents to respondent Reed-Harlin Grocer Co. are effectuated through the brokerage firm conducted by respondents John R. Reed and Orr M. Reed under the firm name and style of 'Vest Plains Brokerage Co.

PAR. 4. Respondent, Reed-Harlin Grocer Co., places orders for a substantial portion of the goods, wares, and merchandise, particularly foodstuffs, required in the ordinary conduct of its business, through the brokerage firm of respondents J olm R. Reed and Orr M. Reed trading as 'Vest Plains Brokerage Co., with sellers who are located in States of the United States other than the State in which the said Reed-Harlin Gro~e.r Co. is located, among whom are the seller respondents herein named. As a result of the transmission and execution of said orders as aforesaid, goods, 'wares, and merchandise, particularly foodstuffs, are sold, transported, and delivered by such sellers to the various places of business of the respondent Reed-Harlin Grocer Co. from the sellers' places of business in other States. PAR. 5. In the course and conduct of the buying and selling transactions in interstate commerce hereinabove referred to, since June 19, 1120 FEDERAL TRADE CO.IHMISSION DECISIONS Order 33 F. T. C.

1936, said seller respondents have transmitted, paid, and delivered and do transmit, pay, and deliver to respondents John R. Reed and Orr :M. Reed, trading as West Plains Brokerage Co., so-called broker· :age fees and commissions in substantial amounts, the same being a -certain percentage of the quoted sales prices agreed upon between each of said sellers and respondents John R. Reed and Orr M. Reed trading as West Plains Brokerage Co., and the same have been re· ceived by John R. Reed, Orr M. Reed, and Reed-Harlin Grocer Co. through the West Plains Brokerage Co.

PAR. 6. In all of the transactions of purchase and sales hereinabove referred to, since June 19, 1936, the respondents John R. Reed and .Orr M. Reed have acted in fact for and on behalf of the Reed-Harlin Grocer Co.

, CONCLUSIONS Under the ~acts and circumstances set forth in the foregoing :find· ings of fact, the Commission concludes that Ady and Milburn, Inc., a corporation; Arkansas State Rice Milling Co., a corporation; Wil· · liam D. Wright and Frank E. Hockensmith, individuals trading under the firm name and style of Midwest Bean Co.; The Great Western Sugar Co., a corporation; Inness Bros., Inc., a corporation; and Louis S. Taube, Theodore Taube, and. Lloyd B. Holden, indi· viduals trading under the firm name and style of L. S. Taube & Co., have violated and are now violating the provisions of subsection (c) of section 2 of the Clayton Act as amended, by granting and paying fees and commissions as brokerage to the respondents Reed· Harlin Grocer Co., a corporation, and John R. Reed and Orr M. Reed, individuals trading under the firm name and style of West Plains Brokerage Co., upon the purchases of the Reed-Harlin Grocer Co. The Commission further concludes that the respondents John Jt. Reed and Orr M. Reed, individuals trading under the firm name and style of West Plains Brokerage Co., and the Reed-Harlin Grocer Co., a corporation, have violated, and are now violating the provisions of subsection (c) of section 2 of said statute by receiving and acce.pting fees and commissions as brokerage upon purchases from the seller respondents and other sellers.

ORDER TO CEASE AND DESIST This proceeding having been heard by the Federal Trade Commis· sion upon the complaint of the Commission, the answers filed herein by respondents Reed-Harlin Grocer Co., a corporation; John R. Reed and Orr M. Reed, individuals trading under the firm name and style REED-HARLIN GROCER CO., ET AL. 1121 1114 Order of West Plains Brokerage Company; Inness Bros., Inc.; and Louis S. Taube, Theodore Taube, and Lloyd B. Holden, individuals trading under the firm name and style of L. S. Taube & Co.; and the f:Ubstitute answers of all the other respondents, admitting all the allegations of the complaint to be true: And the Commission having made its findings as to the facts and its conclusion that respondents have violated the provisions of an act of Congress entitled, "An act to supplement existing laws against unlawful restraints and monopolies, and for other purposes," approved October 15, 1914, as amended hy the Robinson-Patman Act approved June 19, 1936 (U. S. C. title 15, sec. 13).

It is ordered, That respondents Ady and Milburn, Inc., a corporation; Arkansas State Rice Milling Co., a corporation; 'William 1}. Wright and Frank E. Hockensmith, individuals trading under the firm name and style of Midwest Bean Co.; The Great Western Sugar Co., a corporation; Inness Bros., Inc., a corporation; and Louis S. Taube, The9dore Taube, and Lloyd B. Holden, individuals trading under the firm name and style of L. S. Taube & Co., their officers, representatives, agents, and employees, jointly or severally, directly or through any corporate or other device, in connection with the sale nnd distribution of commodities in commerce, as "commerce" is defined in said act, do forthwith cease and desist from: (a) Paying or granting, directly or indirectly, to respondents Reed.-Harlin Grocer Co., a corporation, and John R. Reed and Orr M. Reed, individuals trading under the firm name and style of 'Vest Plains Brokerage Co., or under any, other name, any brokerage and any allowances and discounts in lieu of commissions, brokerage or other compensation, upon the purchases made by respondents Reed- Harlin Grocer Co. and John R. Reed and Orr M. Reed, individuals trading under the firm name and style of 'Vest Plains Brokerage Co. (b) Paying or granting to any buyer or to any agent, representatile, or other intermediary therein, wherein such intermediary is in fact acting for or in behalf of, or is subject to the direc.t or indirect control of such buyer in any manner or form whatever, directly or indirectly, anything of value as a commission, brokerage or other compensation, or any allowance, or discount in lieu thereof, upon purchase of commodities made for such buyer's own account. It is further ordered, That in purchasing commodities in commerce, as "commerce" is defined in said act, for their own account, the re.: spondents Reed-Harlin Grocer Co., a corporation, and John R. Reed and Orr M. Reed, individuals trading under the firm name and style Order 33F.T.C.

of 'Vest Plains Brokerage Co., their representatives, agents, and employees, do forthwith cease and desist from: (a) Accepting from sellers, directly or indirectly, any brokerage, .and any allowances and discounts in lieu ·of brokerage, in whatever manner or form such allowances and discounts may be offered, allowed, granted, paid, or transmitted.

(b) Accepting from sellers, in any manner or form whatever, directly or indirectly, anything of value as a commission, brokerage, or other compensation, or any allowance or discount in lieu thereof, upon purchases o£ commodities made for respondents' own account. It is furtlwr ordered, That the parties respondent shall, within 60 days after service upon them of this order, file with the Commission a report in writing, setting forth in detail, the manner and form in which they have complied with this order.

ROCKDALE MONUMENT CO. 1123 Complaint