FRANKFORT DISTILLERIES, Inc., v. UNITED STATES, and nine other cases, 144 F.2d 824

BRATTON, Circuit Judge. These are three criminal prosecutions for combining and conspiring, in some counts to restrain interstate trade and commerce, and in others to monopolize such trade and commerce, in violation of the Sherman Act, as amended, 26 Stat. 209, 50 Stat. 693, 15 U.S.C.A. §§ 1, 2. The cases were submitted on rehearing to the full court. The opinions previously announced, for the unanimous court in one instance and for the majority in the other, are withdrawn and the following is substituted in lieu of them.

The indictment in Numbers 2792 to 2799, inclusive, containing two counts, was returned in the United States Court for Colorado against twenty-nine corporations and fifty-four individuals.

Nineteen of the corporations are engaged in the production of alcoholic beverages outside of Colorado; eight are wholesalers engaged in the business in Colorado of purchasing alcoholic beverages for resale to retailers; one is a wholesale association, the members of which are wholesalers doing business in the state, hereinafter referred to as Wholesale Association; and one is a retail association, the members of which are retailers engaged in business in the state, hereinafter called Package Association.

Some of the individuals are or were officers or employees of the defendant producers; some are or were officers or employees of the defendant wholesalers; and some are engaged in the sale and distribution at retail of alcoholic beverages in Colorado. The first count was dismissed. The second count charges a conspiracy to raise, fix, and maintain the retail prices of alcoholic beverages shipped into Colorado. It defines certain terms and delineates the facts with respect to the several defendants as to being producer, wholesaler, retailer, officer, or employee, respectively.

It contains a description of the nature of the trade and commerce involved.

Under this head, it sets out that alcoholic beverages are marketed in Colorado by means of a continuous flow of shipments from producers located outside the state through wholesalers and retailers to the consuming public; that beverages shipped and sold in bottles by producers can be sold to retailers there only by wholesalers licensed under the laws of that state; that wholesalers and retailers are conduits through which beverages are shipped into the state and sold and distributed to the consuming public; that more than ninety-eight per cent of the spirituous liquor, more than eighty per cent of the wine, and substantial amounts of beer, consumed in Colorado are produced elsewhere and shipped into the state for sale and distribution; that alcoholic beverages are distributed to more than 700 retailers in the state by approximately twenty-eight wholesalers; that more "than seventy-five per cent of the spirituous liquor and wine, and substantial quantities of beer, are sold and distributed by the defendant wholesalers; and that all of the liquor and wine, and substantial quantities of beer, sold and distributed by the bottle or case to the consuming public, are sold by retailers, including the defendant retailers and other members of the defendant Package Association.

It is then charged that beginning about January, 1936, and continuing to the time of the presentation of the indictment, the defendants combined and conspired to raise, fix, and maintain the retail prices of alcoholic beverages shipped into Colorado from producers located outside the state, by raising, fixing, and stabilizing retail mark-ups and margins of profit; that it was a part of the combination and conspiracy that the defendants from time to time discuss, agree upon, and adopt high, arbitrary, and non-competitive retail prices, mark-ups, and margins of profit; that the defendants Wholesale Association and Package Association, wholesalers, and retailers agree upon and undertake to persuade, induce, and compel producers, including the defendant producers, and wholesalers, to enter into fair trade contracts affecting every type and brand of alcoholic beverage shipped into Colorado and to establish in and by such contracts high, arbitrary, and artificial, retail prices embodying the high, arbitrary, and non-competitive margins of profit agreed upon; that the defendant Package Association prepare and adopt forms of fair trade contracts acceptable to the defendant retailers and to the other members of the association; that the defendant Package Association agree with producers and wholesalers on the forms of fair trade contracts to be used by such producers and wholesalers, and prepare and circulate among its members bulletins and notices announcing the adoption of fair trade contracts and giving the names of producers and wholesalers entering into them and also the names of those not doing so; that the defendant retailers, through the defendant Package Association, agree to and do patronize only those producers and wholesalers who enter into fair trade contracts embodying such retail prices, mark-ups, and margins of profit, and who require and compel observance of the minimum retail prices established in that manner, agree to and do withhold their patronage from producers and wholesalers who fail or refuse to enter into such fair trade contracts, and agree from time to time with producers and wholesalers respecting revisions in the retail prices established in and by such fair trade contracts so as to preserve and maintain the retail mark-ups and margins of profit.

It is further charged that the defendants, acting in part through the defendants Wholesale Association and Package Association agree to and do police the high, arbitrary, and non-competitive retail prices, mark-ups, and margins of profit, and require and secure observance of them; that they agree to and do employ paid executives and investigators to spy upon and embarrass retailers who fail or refuse to observe such retail prices, mark-ups and margins of profit, and threaten to and do institute and cause to be instituted legal proceedings against such retailers who fail or refuse to observe such prices, mark-ups, and margins of profit.

It is also charged that the defendant retailers agree among themselves and with the defendant producers and the defendant wholesalers that retailers selling at prices lower than those established in the fair trade contracts be deprived of the opportunity to purchase beverages from the defendant producers and the defendant wholesalers; that the defendant retailers threaten to and do boycott producers and wholesalers who supply their products to retailers failing or refusing to observe the retail prices, mark-ups, and margins of profit; that in order to reduce price competition among retailers, defendant retailers, acting in part through defendant Package Association, agree and attempt to persuade and induce the authorized officials of Colorado, and of the City and County of Denver, to reject applications for retail liquor licenses; and that for the purpose of financing such activities, defendants agree upon and provide for the collection of an extra charge added to the wholesale price, the proceeds to be paid to the Wholesale Association and that it then pay a portion of such proceeds to the Package Association.

And it is charged that the effect of the combination and conspiracy has been to raise, fix, stabilize, and maintain the retail prices of alcoholic beverages shipped in interstate commerce into Colorado and sold and distributed in that state at levels acceptable to the defendants, to eliminate price competition among the defendant retailers, to eliminate price competition among the members of the Package Association, and to restrain and suppress interstate trade and commerce in alcoholic beverages not covered by fair trade contracts.

After their demurrers and motions to quash the indictment had been denied, the defendants Frankfort Distilleries, Inc., National Distillers Products Corporation, Brown Forman Distillers Corporation, Hiram Walker, Incorporated, Schenley Distillers Corporation, Seagram-Distillers Corporation, McKesson & Robbins, Incorporated, and J. E. Speegle each entered a plea; of nolo contendere and prayed that the-court impose sentence in all things as. though a plea of guilty had been interposed-Fines were imposed, and separate appeals-were perfected.

The indictment in Number 2807, containing two counts was returned in the United States Court for Kansas against Safeway Stores, Inc., incorporated in Maryland,. Safeway Stores, Inc., incorporated in California, Safeway Stores, Inc., incorporated’, in Nevada, Safeway Stores, Inc., incorporated in Texas, Arizona Grocery Company, Sanitary Grocery Company, Dwight Edwards Company, the Lucerne Creams and Butter Company, Sutter Packing Company, and certain individuals being officers, of such corporations, respectively.

The first count sets out that the defendant Safeway Stores, Inc., incorporated ins Maryland, is a holding company and owns, and controls all of the authorized and issued stock of the other corporate defendants, the time and manner of the acquisition being detailed; that in 1926 the Safeway group owned and operated in the United States 673 food stores, of which 120" were equipped with meat markets, and had sales of $50,536,514; that in 1932, the-group owned and operated in the United.

States and Canada 3411 stores in which, were located 2066 markets, and their sales-amounted to $229,173,468; that in 1939,. they owned and operated in the United'.

States and Canada 2967 stores in which; 2643 markets were located, and their sales were $385,882,083; that at the end of 1941,. they owned and operated in the United: States about 2850 stores of which about 2500 had markets; that their sales for that year totaled $423,787,700.21; that they had. fifty-two principal warehouses, nineteen, bakeries, seven creameries, and seven coffee roasting plants; that the wholesale-warehouses and retail stores were divided into fourteen geographical divisions and the divisions subdivided into fifty-eight districts, the names of the divisions and districts, the number of warehouses, groceries, and bakeries in each being stated in detail;, that the members of the group together constitute the second largest manufacturers, processors, wholesalers, and retail distributors of food and food products in the United States; and that in addition to manufacturing, processing, canning, and packing food and food products for sale in their retail stores, the group obtains fresh fruits and vegetables from jobbers in various markets where they are located and ships them in interstate commerce to'their warehouses which in turn distribute them to their retail stores for sale to consumers.

It is further set out that by virtue of the horizontal and vertical integration of the functions and business of the group, and the centralization of the control thereof, the defendants have exercised the power to dominate and control the production, prices, and distribution of a substantial part of the food and food products produced, marketed, sold, and consumed in the United States.

It is then charged that for many years prior to the return of the indictment, and continuously up to its presentment, the defendants and others to the grand jury unknown entered into a combination and conspiracy to restrain interstate trade and commerce in food and food products, produced, distributed, and sold in many states.

It is further charged that such combination and conspiracy consists of a continuing agreement and concert of action in acquiring by merger and otherwise the business of independent retail grocers and local chains; selecting local areas in which defendants use their dominant advantage to injure and destroy the competition of independent grocers, meat dealers, and small local food stores, by selling at retail in those areas sufficiently lower than elsewhere until control or the desired percentage of total retail business is obtained, using income from other areas and from operations other than retail to offset the losses or reductions in profits incident to such price cutting; combining with other national food chains operating in such selected areas to fix, maintain, and follow the prices established by the defendants; systematically preventing competition in selected trade areas, by combining with independent grocers and local and national food chains operating in such selected areas to fix retail prices and terms of sale of food, and by combining with manufacturers of food and food products and others to fix and maintain the resale prices and policies in such selected areas and to aid and assist such manufacturers and others in enforcing the prices fixed and established; obtaining and maintaining for themselves a systematic discriminatory buying preference over competitors by coercing suppliers to sell to other wholesalers and retailers on terms and conditions dictated by defendants, coercing suppliers— through threats of withdrawal of their patronage and otherwise — secretly to maintain two price structures on their products, the lower of which would be charged to defendants and the higher to their competitors, requiring suppliers to give defendants secret preferential discounts and secret protection against price increases and declines, coercing suppliers to discontinue selling direct to their competitors while secretly continuing to sell direct to defendants at lower prices, inducing suppliers to divert a large portion of their plants and facilities to filling orders of defendants and then threatening to withdraw their patronage unless secretly given lower prices and large discounts, bidding in fresh fruits and produce at public auction on the secret understanding with the owner that settlement would be made at a lower price than that bid, coercing suppliers to grant preferential rebates by various pretexts unrelated to any actual saving or service to the supplier ; systematically exacting from suppliers arbitrarily fixed rebates called “advertising” and “promotional” allowances for pretended services, demanding discounts and allowances for so-called “floor space rentals,” “Store Sales Service,” “feature payments,” “label and container allowances,” “Sign space rentals,” and “mass displays” for mere pretended service; and fostering false comparisons of their prices with the prices charged by competitors and false reports calculated to conceal their activities and perpetuate their dominance and control of the distribution of food and food products; inspiring and publishing statements calculated and intended to foster such false comparisons, organizing, financing, and preparing publicity and propaganda for false front farmer, consumer, and housewife organizations and using the statements of such organizations in support of such false comparisons, and the systematic practice of secretly enhancing their actual prices .above the advertised prices through short-changing, short-weighing, and marking up prices on store tags and purchases.

And it is charged that the effect of such combination and conspiracy has been unreasonably to restrain a large part of the interstate trade and commerce in food and food products.

With minor exceptions which do not have any material bearing here, the second count charges the same facts as a conspiracy to monopolize trade and commerce, injure food manufacturers, processors, canners, wholesalers, and retail dealers, depress prices paid growers of fruits, vegetables, and other farm products, vest in defendants dominance and control of the distribution of food and food products in many of the largest trade areas in the United States, and make it impossible for any one not similarly intergrated to enter or remain in competition with defendants.

The trial court sustained in part a demurrer to the indictment, treated the infirmities as fatal, and dismissed the indictment as to the demurring defendants. The United States appealed. The indictment in Number 2808, containing two counts, was also returned in the United States Court for Kansas. It was against The Kroger Grocery & Baking Company, Wesco Foods Company, The Colter Company, Pay’n Takit, Inc., and certain individuals being officers of the corporations, respectively.

It sets out that The Kroger Grocery & Baking Company owns the stock in the other corporate defendants, and in addition has acquired through merger and otherwise the business of forty-nine independents and local chains, the names, locations, dates of acquisition, and number of stores aggregating 2317, being detailed; and that the members of the group together constitute the third largest manufacturers, processors, wholesalers, and retail distributors of food and food products in the United States.

It further sets forth the number and location of the processing plants and stores operated, and the location and volume of business transacted. The first count charges a conspiracy to restrain interstate trade and commerce in food and food products, produced, distributed and sold in many states, and the second count charges a like conspiracy to monopolize such trade and commerce. The indictments in the two cases in Kansas are sub^ stantially alike in their material features.

In this case, the trial court similarly sustained in part a demurrer to the indictment, regarded the defects as fatal, and dismissed the indictment as to the demurring defendants. From the order of dismissal, the United Stales appealed. One ground of demurrer in each case, denied by the court in Colorado, and sustained by the court in Kansas, was that the indictment was bad for vagueness, indefiniteness, and uncertainty.

It is too well settled for doubt that an indictment is not objectionably vague, indefinite, and uncertain if it charges all of the essential elements of the offense with sufficient fullness, clarity, and particularity to advise the accused of the nature of the accusation against him, to enable him to prepare his defense, and to enable him to plead the judgment and.record of acquittal or conviction in bar to a subsequent prosecution for the same offense. Evans v. United States, 153 U.S. 584, 14 S.Ct. 934, 38 L.Ed. 830; Cochran and Sayre v. United States, 157 U.S. 286, 15 S.Ct. 628, 39 L.Ed. 704; Rosen v.

United States, 161 U.S. 29, 16 S.Ct. 434, 480, 40 L.Ed. 606; Bartell v. United States, 227 U.S. 427, 33 S.Ct. 383, 57 L.Ed. 583; United States v. Behrman, 258 U.S. 280, 42 S.Ct. 303, 66 L.Ed. 619; Wong Tai v. United States, 273 U.S. 77, 47 S.Ct. 300, 71 L.Ed. 545; Hagner v. United States, 285 U.S. 427, 52 S.Ct. 417, 76 L.Ed, 861; Weber v. United States, 10 Cir., 80 F.2d 687; Crapo v. United States, 10 Cir., 100 F.2d 996; Graham v. United States, 10 Cir., 120 F.2d 543; Rose v. United States, 10 Cir., 128 F.2d 622; United States v. Armour & Co., 10 Cir., 137 F.2d 269.

Ordinarily it is not sufficient to charge the offense in the words of the statute -creating the offense, unless the words themselves fully, directly, and expressly, without uncertainty or ambiguity, set forth all the essential elements necessary to constitute the crime intended to be punished. United States v. Carll, 105 U.S. 611, 26 L.Ed. 1135; United States v. Britton, 107 U.S. 655, 2 S.Ct. 512, 27 L.Ed. 520.

Where the statute is general in terms and fails fully, directly, and expressly to set forth with certainty and without ambiguity all of the essential elements necessary to constitute offense, the indictment must descend to particulars and charge every constituent ingredier of which the crime is composed. United States v. Cruikshank et al., 92 U.S. 542, 23 L.Ed. 588; United States v. Hess, 124 U.S. 483, 8 S.Ct. 571, 31 L.Ed. 516; Evans v. United States, supra; Moore v. United States, 160 U.S. 268, 16 S.Ct. 294, 40 L.Ed. 422; Manley v. Georgia, 279 U.S. 1, 49 S.Ct. 215, 73 L.Ed. 575.

The Sherman Act is couched in general language, it speaks in generic terms, and it fails to enter into details. It “has a generality and adaptability comparable to that found to be desirable in constitutional provisions.” Appalachian Coals, Inc., v. United States, 288 U.S. 344, 53 S.Ct. 471, 474, 77 L.Ed. 825. It therefore is necessary that an indictment charging an offense under its provisions descend to particulars and allege the constituent ingredients of which the crime is composed. United States v. Armour & Co., supra.

But these indictments charge in the language of the Act that the defendants formed and entered into the combination and conspiracy; and, obedient to the necessity of doing so, they descend to particulars and undertake to charge the essential elements of which the offense is composed. In short, the agreement to restrict or monopolize interstate commerce, as the case may be, is alleged in conformity with the Act, and the plans of the conspirators are set out in detail.

An indictment must be considered as a whole in determining whether it charges all of the essential elements of the offense sufficiently to inform the accused of the nature of the accusation, to enable him to prepare his defense, and to enable him to plead the judgment and record of acquittal or conviction in bar to a later prosecution for the same offense. All pertinent parts of it must be brought into view and considered in their totality. United States v. Armour & Co., supra.

In respect of time, the indictment in the case in Colorado charges in general terms that each of the allegations contained therein shall be deemed to refer to the period beginning on or about January, 1936, the exact date being unknown to the grand jurors, and continuing thereafter up to and including the date of the presentation of the indictment.

And it contains a specific charge that beginning on or about January, 1936, the exact date being unknown to the grand jurors, and continuously thereafter up to and including the daté of the presentation of the indictment, the defendants entered into and engaged in the combination and conspiracy.

The indictments in the cases in Kansas, in each count, after describing the defendants and the nature and extent of the business, charge that for many years prior to the return of the indictment, and continuously up to and including the day of the presentation of the indictment, the defendants, and others to the grand jurors unknown, formed and carried out the combination and conspiracy. The gist of the offense under the Sherman Act is the agreement or confederation to restrain or monopolize interstate commerce, as the case may be. Nash v. United States, 229 U.S. 373, 33 S.Ct. 780, 57 L.Ed. 1232; United States v.

Socony-Vacuum Oil Co., 310 U.S. 150, 252, 60 S.Ct. 811, 84 L.Ed. 1129. It is not exclusively a thing or entity of the very instant the minds of the parties come to a complete understanding, and no more. The purpose of the agreement is an essential element, and in its very essence it may contemplate that the operation shall extend over a period of time. If so, while the agreement continues, and while the parties are engaged in the operation of the design, they continue to transgress the statute. United States v. Kissel, 218 U.S. 601, 31 S.Ct. 124, 54 L.Ed. 1168; United States v.

New York Great Atlantic & Pacific Tea Co., 5 Cir, 137 F.2d 459, certiorari denied 320 U.S. 783, 64 S.Ct. 191. These indictments each charge a continuing conspiracy. One fixes the beginning by a specific date; the other two fix it as many years prior to the presentation of the indictment; and all charge that it continued down to and including the date of the presentation of the indictment. That was sufficient in respect of time. United States v. Kissel, supra; United States v.

American Medical Association, 72 App.D.C. 12, 110 F.2d 703, certiorari denied 308 U.S. 599, 60 S.Ct. 131, 84 L.Ed. 502; American Medical Ass’n v. United States, 310 U.S. 644, 60 S.Ct. 1096, 84 L.Ed 1411. In respect of the place at which the combination or conspiracy was formed, the indictment in the case in Colorado charges that it was entered into and carried out in

part in the District of Colorado, and that during the period of the conspiracy and within three years next preceding the presentation of the indictment, the defendants performed within such district many of the acts and things set forth in the indictment; and in each case in Kansas, the indictment charges that the combination and conspiracy was entered into and carried out in

part in the District of Kansas, and within the First Division thereof, that a named defendant (Safeway Stores, Inc., a Nevada corporation, in one instance, and The Kroger Grocery & Baking Company, in the other) has retail food stores, offices, and agents and transacts business there, and that during the period of the combination and conspiracy, and within three years next preceding the presentation of the indictment, the defendants performed within such district and division many of the acts set forth in the indictment.

More often than otherwise, a combination or conspiracy of the kind charged in these indictments is not formed or entered into by formal contract or other writing. It sometimes is not entered into wholly and completely at one time or place. It may be, and frequently is, pieced together and effected by contacts, conferences, verbal understandings, and arrangements, had and entered into at different times and places.

The allegation that the conspiracy was entered into’ and carried out in part within the district in which the indictment was returned was sufficient in respect of place, as against an attack by motion or demurrer on the ground of complete infirmity of the indictment. The indictment in the case in Colorado charges that the defendants conspired to raise, fix, and maintain the retail prices of alcoholic beverages shipped into the state, without specifying or describing the particular kind or kinds of beverages.

It also charges that it was a part of the combination and conspiracy to persuade, induce, and compel producers and wholesalers to enter into fair trade contracts, without giving the names of such producers and wholesalers ; and that the defendants employ paid executives and investigators to spy upon and harass retailers who fail or refuse to observe the retail prices, mark-ups, and margins of profit agreed upon, without naming the executives, investigators, or retailers. And it contains other charges comparable in point of generality.

The indictment in each case in Kansas charges in the first count that the defendants conspired to restrain interstate trade and commerce in food and food products, and in the second count to monopolize such trade and commerce, without specifying or describing the kind or kinds of food and food products.

They further charge that it was a part of the combination and conspiracy that the defendants acquire by merger and otherwise the business of independent retail grocers and local chains throughout the United States, without naming or giving the location of the grocers and chains; and that they select local areas throughout the United States in which they use their dominant advantage to injure and destroy competition of independent grocers, meat dealers, and small local food chains, without specifying the areas or naming the grocers, .meat dealers, or food chains.

And they contain other comparable charges not necessary to detail, with similar omissions. But these indictments each charge in general terms a conspiracy to restrain interstate trade and commerce, or to monopolize such trade and commerce, as the case may be, substantially in the language of the Act. And if the allegations in respect to the manner and means of effecting the object of the combination and conspiracy are not set forth in sufficient detail, the remedy is to apply for a bill of particulars. Glasser v. United States, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680.

Little need be said concerning the sufficiency of the indictments in respect to charging venue. In cases of this kind, jurisdiction is in the court of the district where the conspiracy was formed, or where some act pursuant to it took place. As already pointed out, the indictment in the case in Colorado charges that the combination and conspiracy was entered into and carried out in part within the district, and that the defendants performed there many of the acts and things set forth in the indictment. And the indictment in each case in Kansas contains like charges.

These allegations— admittéd by the demurrers — were enough to lay venue. Hyde v. United States, 225 U.S. 347, 32 S.Ct. 793, 56 L.Ed. 1114, Ann.Cas.1914A, 614; Brown v. Elliott, 225 U.S. 392, 32 S.Ct. 812, 56 L.Ed. 1136; United States v. Trenton Potteries Co., 273 U.S. 392, 47 S.Ct. 377, 71 L.Ed. 700, 50 A.L.R. 989; United States v. Socony-Vacuum Oil Co., supra; United States v. New York Great Atlantic & Pacific Tea Co., supra. An additional ground of demurrer sustained in the cases in Kansas was that each count in the indictment was duplicitous, in that it attempted to charge more than one offense.

The several counts each charge only a single crime — the conspiracy. The conspiracy as laid includes several acts and means of making it effective, but the crime is the entering into the combination. That is the unit, however varied the means and procedure of effectuating it. The several acts and means of making the conspiracy effective are related acts which enter into the crime, but still the single crime is that of combining and conspiring together to restrain interstate trade and commerce, or to monopolize such trade and commerce.

Duplicity in an indictment means the charging of two or more separate and distinct offenses in one count, not the charging of a single offense into which several related acts enter as ways and means of accomplishing the purpose. Braverman v. United States, 317 U.S. 49, 63 S.Ct. 99, 87 L.Ed. 23; United States v. New York Great Atlantic & Pacific Tea Co., supra. Two additional questions remain for consideration concerning the indictment in the case in Colorado which are not present in the cases in Kansas.

They are whether the Sherman Act any longer applies to interstate commerce in intoxicating liquor, and whether the indictment charges a combination and conspiracy to restrict interstate trade and commerce or merely affects intrastate activities. The Twenty-first Amendment does not strip the national government of all authority to legislate in respect of interstate commerce in intoxicating liquor. Hayes v. United States, 10 Cir., 112 F.2d 417; Washington Brewers Institute v. United States, 9 Cir., 137 F.2d 964.

But it does sanction the right of a state to legislate concerning the importation of such liquor from other states, unfettered by the Commerce Clause. Ziffrin, Inc., v. Reeves, 308 U.S. 132, 60 S.Ct. 163, 84 L.Ed. 128; Cf. Carter v. Virginia, 321 U.S. 131, 64 S.Ct. 464. Aside from the diminution pro tanto which may be found in the Twenty-first Amendment in respect of the transportation of intoxicating liquor, a question unnecessary to determine here, Congress has plenary power under the Commerce Clause to regulate commerce among the states.

And that power is not confined in all cases to the regulation of interstate commerce. It extends in sweep to intrastate activities which affect interstate trade, or the exercise of the power of Congress over it, in such manner as to make the regulation of such intrastate activities necessary and appropriate for the protection of the free flow of interstate commerce. United States v. Darby, 312 U.S. 100, 657, 61 S.Ct. 451, 85 L.Ed. 609, 132 A.L.R. 1430.

A combination or agreement for price maintenance or which operates directly on prices or price structures of commodities moving in interstate commerce constitutes an unreasonable restraint within the Sherman Act, without regard to whether the prices or price structures agreed upon are reasonable or otherwise, United States v. Trenton Potteries Co., supra; Ethyl Gasoline Corp. v. United States, 309 U.S. 436, 60 S.Ct. 618, 84 L.Ed. 852; United States v. Socony-Vacuum Oil Co., supra; United States v.

Masonite Corp., 316 U.S. 265, 62 S.Ct. 1070, 86 L.Ed. 1461; one not fixing prices but intended unreasonably to restrict or restrain interstate commerce, or which by its operation necessarily impedes the due course of such commerce, comes within the Act, Coronado Coal Co. v. United Mine Workers, 268 U.S. 295, 45 S.Ct. 551, 69 L.Ed. 963; one which contemplates restraint of interstate trade but to be effectuated by acts constituting intrastate activities is met with the condemnation of the Act, Bedford Cut Stone Co. v.

Journeymen Stone Cutters’ Ass’n, 274 U.S. 37, 47 S.Ct. 522, 71 L.Ed. 916, 54 A.L.R. 791; Local 167, International Brotherhood of Teamsters v. United States, 291 U.S. 293, 54 S.Ct. 396, 78 L.Ed. 804; and one primarily local likewise finds itself .within the ambit of the Act if the means adopted to effectuate it operate to lay a direct and undue burden on interstate commerce. Industrial Ass’n v. United States, 268 U.S. 64, 45 S.Ct 403, 69 L.Ed. 849.

But a combination or concert limited in its objectives to intrastate activities, with no intent or purpose to affect intrastate commerce, is without the reach of the Act, even though there may be an indirect and insubstantial effect on interstate commerce. United Mine Workers v. Coronado Coal Co., 259 U.S. 344, 42 S.Ct. 570, 66 L.Ed. 975, 27 A.L.R. 762; United Leather Workers’ International Union v. Herkert & Meisel Trunk Co., 265 U.S. 457, 44 S.Ct. 623, 68 L.Ed. 1104, 33 A.L.R. 566; Industrial Ass’n v. United States, supra; Levering & Garrigues Co. v. Morrin, 289 U.S. 103, 53 S.Ct. 549, 77 L.Ed. 1062.

Colorado has a Fair Trade Act,

chapter 146, Laws of 1937; an Unfair Practices Act,

chapter 261, Laws of 1937; and a Liquor Code, sections 15-47,

chapter 89, Colorado Statutes Annotated 1935. Under

section 1 of the Fair Trade Act a contract relating to the sale or resale of a. commodity bearing the trade-mark, brand, or name of the producer or distributor, and which commodity is in free and open competition, shall not be deemed in violation of any law of the state by reason of providing that the buyer will not resell such commodity at less than the minimum price stipulated by the seller or that the buyer will require of any dealer to whom he may resell such commodity an agreement that he will not resell at less than the minimum prices stipulated by the seller.

Section 3 of the Unfair Practices Act provides that it shall be unlawful for any one engaged in business in the state to sell, offer for sale, or advertise for sale, any

article or product for less than the cost thereof to the vendor, or give, offer to give, or advertise the intent to give away any

article or product for the purpose of injuring competitors and destroying competition.

Section 17 of the Liquor Code, as amended by

chapter 160, Laws of 1941, makes it unlawful wilfully and knowingly to advertise, offer for sale, or sell vinous liquors, spirituous liquors and alcoholic beverages at less than the price stipulated in any contract entered into pursuant to the provisions of the Fair Trade Act;

section 29 provides for a manufacturers’ license, a wholesaler’s license, and a retail liquor store license; and

section 20, as amended by Laws 1941, c. 159, authorizes the licensing authority, created by the preceding section, to make rules and regulations pursuant to the licensing provisions.

Regulation 1(3) promulgated under the Liquor Code provides that all spirituous liquor sold or transferred within the state must be affixed with the proper stamps before sale or transfer, and that wholesalers shall affix the proper stamps upon all liquor sold by them within the state to retailers or consumers prior to delivery; and regulation 12 C provides that all alcoholic liquor shall be the sole and exclusive property of and subject to the unrestricted power of disposal of a duly licensed Colorado wholesale dealer, as defined in the Liquor Code, at the time such liquor crosses the state line coming into the state for the purpose of being sold, offered for sale, or used there.

These statutes and regulations are emphasized as constituting legal warrant for the fair trade agreements referred to in the indictment. And, justifying his appearance in the case by reference to the observation of the court in Washington Brewers Institute v.

United States, supra, that the failure of any state to appear as a friend of the court to protest the enforcement of the Sherman Act, was significant, the attorney general of Colorado filed in this cause a brief as amicus curiae, calling attention to these statutes and regulations and contending that the fair trade contracts described in the indictment were entered into under the Fair Trade Act and the Liquor Code, that they are removed from the regulation and control of the United States, and that they are subject exclusively to the control and operation of the law of Colorado.

The agreement as pleaded in the indictment in this case was essentially one to fix and maintain prices at which alcoholic beverages shall be sold at retail in Colorado. Under regulation 12 C, supra, it is impossible for a retailer in that state to buy liquor from a producer. He can purchase it only from a wholesaler licensed under the laws of the state. Before liquor produced in other states can be acquired from the wholesaler title vests in the wholesaler at the time it crosses the state line coming into t'he state, and the required stamps must be affixed by the wholesaler.

When it comes to rest in the ownership and custody of the wholesaler, is placed in the warehouse of the wholesaler for local disposition to the retailer, and is commingled with other merchandise, it ceases to be an integral part of interstate commerce. Industrial Ass’n v. United States, supra; Walling v. Jacksonville Paper Co., 317 U.S. 564, 63 S.Ct. 332, 87 L.Ed. 460; Higgins v. Carr Bros. Co., 317 U.S. 572, 63 S.Ct. 337, 87 L.Ed. 468; Jewel Tea Co. v. Williams, 10 Cir., 118 F.2d 202; Jax Beer Co. v. Redfern, 5 Cir., 124 F.2d 172; Walling v. Goldblatt Bros., 7 Cir., 128 F.2d 778; Allesandro v. C. F.

Smith Co., 6 Cir., 136 F.2d 75, 149 A.L.R. 382. And sales subsequently made by the wholesaler to retailers and in turn by retailers to the consuming public are wholly intrastate transactions. Jewel Tea Co. v. Williams, supra. The control of the handling, the sales, and the prices at the point of origin before movement in interstate commerce begins, or in the state where it ends, may in some circumstances directly and unduly burden interstate commerce. Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373, 31 S.Ct. 376, 55 L.Ed. 502; Local 167, International Brotherhood of Teamsters v.

United States, supra. But here it is not charged that the parties agreed and conspired to fix and maintain prices at which producers or others outside Colorado should sell their products to wholesalers within the state. Neither is it charged that it was a part of the agreement that producers should establish uniform prices from all producers and distillers to all wholesalers in Colorado of certain types, ages, or qualities of liquor moving in interstate commerce. No charge of that kind direct or by fair inferences is to be found in the indictment.

True, 'it is charged that it was part of the agreement that the retailers patronize only those producers and wholesalers who enter into fair trade contracts and withhold their patronage from those who fail to do so; that the retailers agree with the producers and wholesalers that retailers selling at prices lower than those established in the fair trade contracts be deprived of the opportunity to purchase from the defendant producers and wholesalers; and that .the defendant retailers threaten to boycott and do boycott producers and wholesalers who supply their products to retailers failing or refusing to observe such retail prices, mark-ups, and margins of profits.

But the words “patronize” and “patronage” as used clearly refer to the purchase of beverages from producers and wholesalers. And it is perfectly obvious that these allegations are completely innocuous and ineffective in charging an offense under the Sherman Act for the reason that retailers in Colorado cannot purchase from producers, and sales from wholesalers to retailers in that state are exclusively int-rastate transactions.

The second count is completely barren of any allegations of fact effectively charging that the combination and agreement was one directly and substantially to restrict or burden the free and untrammeled flow of interstate commerce. The combination as pleaded was one necessarily intended to affect only intrastate activities. Its sole objective was control of domestic enterprise within the state, and it spent its direct and substantial force upon intrastate activities. Its effect, if any, on interstate commerce was indirect, insubstantial, and incidental.

A combination of that kind lies beyond the reach of the Sherman Act. The judgments in Numbers 2792 to 2799, inclusive, are severally reversed and the causes remanded with directions to dismiss the indictment as to these appellants; and the judgments in Numbers 2807 and 2808 are severally reversed and the causes remanded with directions to overrule the demurrers. Hill v. United States, 4 Cir., 42 F.2d 812, 814; Center v. United States, 4 Cir., 96 F.2d 127, 129; Hewitt v. United States, 8 Cir., 110 F.2d 1, 6.