KELLY v. KOSUGA

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Argument of Joseph W. Louisell

Chief Justice Earl Warren: Number 267, Jack H. Kelly, Petitioner, versus Vincent W. Kosuga.

Mr. Joseph W. Louisell: Mr. Chief Justice --

Chief Justice Earl Warren: Mr. Louisell.

Mr. Joseph W. Louisell: -- may it please the Court.

This matter is before the Court on a writ of certiorari issues to review the decision of the Seventh Circuit.

The action started as a simple suit to recover the purchase price for the quantity of onions claimed to have been sold by the respondent in these proceedings here -- to the petitioner in these proceedings here.

It was a brief complaint in which it was simply alleged that there was a sale of a quantity of onions by Kosuga to Kelly for a stipulated price.

The complaint alleged that in breach of the contract, Kelly had refused to accept delivery of a portion of this quantity of onions and that there remained due and owing to Kosuga a substantial sum of money on account of that -- that transaction.

The answer filed by the defendant below, Mr. Kelly, denied that this was a simple transaction alleged by the plaintiff in his complaint.

The defendant alleged in -- as an affirmative allegation in his answer and further as an affirmative defense that the cause of acton alleged by the plaintiff was but an integral part of a much broader understanding and agreement between the parties.

The defendant alleged that the crew undertaking between the parties encompass an agreement whereby Mr. Kosuga, together with his associate, a Mr. Siegel and along with Kelly and a group of persons similarly situated with Kelly, entered into an agreement, a combination and a conspiracy to affect, regulate, modify and influence, manipulate the price of onions on both the cash and the futures markets.

And the defendant below, Mr. Kelly, further alleged in his affirmative defense to the action, that the incidental purchase by him of 50 carloads of onions from Kosuga was but an integral part of an overall agreement by which those similarly situated with Kelly were to purchase altogether the sum of 287 carloads of onions for the avowed and express purpose of removing not only that quantity of onions but a still larger quantity of onions owned by Kosuga and his associate from the market in Chicago.

And that it was by this device that it was contemplated that they would effect a manipulation of the market price of onions.

Kelly specifically further alleged that in consideration of the entire understanding between all of these parties, none of them, whether the buyers or the sellers would deliver any portion of the onions concerning which the entire contract related on either the cash or the futures market.

Now, upon filing that affirmative defense, the plaintiff below moved to strike it from the grounds that it did not constitute an answer to the allegations of the complaint.

And this, notwithstanding, it was spelled out in the answer that it was the claim of the defendant Kelly below that in consequence of this entire undertaking, the entire agreement as to a port of -- a portion of which, the plaintiff would rely in bringing this suit was illegal as being contrary to the Sherman Antitrust Act in that it was patently but a device by which to fix prices.

Justice John M. Harlan: As alleged.

Mr. Joseph W. Louisell: As alleged.

And --

Chief Justice Earl Warren: Did petitioner -- did petitioner claim any actual damage by reason of the agreement?

Mr. Joseph W. Louisell: The plaintiff below sued to recover the balance of the purchase price --

Chief Justice Earl Warren: Yes.

Mr. Joseph W. Louisell: -- of the quantity of onions.

The petitioner here has refused to pay the balance of the purchase --

Chief Justice Earl Warren: Yes.

Mr. Joseph W. Louisell: -- price now setting forth and as he set forth in his answer below, that the entire understanding and the entire agreement between him and the plaintiff was an illegal agreement.

That it was an agreement contrary to public policy.

Chief Justice Earl Warren: That I understand, but what I'm asking is does he allege that that resulted in any actual damage to him?

Mr. Joseph W. Louisell: In this posture of the case, no, Your Honor.

Now, the District Court held on that motion to strike the affirmative defense that the remedies supported by the Sherman Act were its --

Justice William J. Brennan: How much had Kelly paid him for --

Mr. Joseph W. Louisell: Kelly had paid down something like $15,000.

Justice William J. Brennan: And what was the total?

Mr. Joseph W. Louisell: And he had ordered his portion of the 287 carload order, it was 50 carloads.

And the product of the mollification of the number of the cars by the stipulated price was something like $50,000 or close to $50,000 so that ultimately, the plaintiff's security judgment in the sum of $37,000 or approximately $37,000 as representing the balance of the sum claimed to be due and owing under the contract.

Justice William J. Brennan: Have the onions been disposed of?

Mr. Joseph W. Louisell: The onions were disposed of ultimately by the -- the plaintiff below, the respondent here, after he had notified Kelly as he had notified all of the others who entered into this arrangement with him that he was going to dispose of the onions because they were deteriorating.

Chief Justice Earl Warren: Because what?

Mr. Joseph W. Louisell: They were deteriorating --

Chief Justice Earl Warren: All right.

Mr. Joseph W. Louisell: -- and hadn't been picked up by either Kelly or by all of these others who entered into simultaneously the same arrangement and undertaking with Mr. Siegel and Mr. Kosuga.

And the amount that was ultimately arrived at in entering the judgment represented the balance owing less what was salvaged by Kosuga on a -- a sale of those that remained in -- remained on hand.

Justice Charles E. Whittaker: Was there any question about the price owing under or over in the market?

Mr. Joseph W. Louisell: None, Your Honor.

Justice Charles E. Whittaker: It was at a market price.

Mr. Joseph W. Louisell: It was at a market price, at the then existing market price at the time of the contract --

Chief Justice Earl Warren: Do the others --

Mr. Joseph W. Louisell: -- of the undertaking.

Chief Justice Earl Warren: -- who joined in the purchase of these 267 carloads also repudiate their contract?

Mr. Joseph W. Louisell: They did, Your Honor.

And this is the only suit that has thus far been commenced against any of those similarly situated as was Kelly.

Now, the District Court held that the remedy afforded by this -- the remedies afforded by the Sherman Act were exclusive of non-collectability of the purchase price of the contract and predicated it's decisions upon that ground.

The District Court seemingly concluded that the rule of this Court in the Connolly-Sewer Pipe case had either been abrogated -- or strike that, that the rule of the Connolly-Sewer Pipe case was the true rule and that the rule of this Court in the Continental Wall Paper Company case had either been abrogated or modified by the decisions of this Court in the so-called Wilder case and in the so-called Bruce's Juices case.

Following the action of the District Court in that respect in striking the affirmative answers, a summary judgment was entered.

On appeal to the Seventh Circuit, that Court, relying upon the same authorities as the District Courts principally, the Connolly-Sewer Pipe case, the Wilder case and Bruce's Juices case, they seemingly concluded that the rule of the Continental Wall Paper case which they recognized was contrary in its result from that reached in the Connolly case was a rule that could be applied only where the members of an antitrust combination were particularly vicious.

And that unless the combination relied upon by the defendant in seeking avoidance of the obligation was a particularly vicious combination that the rule of the Continental Wall Paper case wouldn't apply.

And it is in substance with this finding and disposition of the cause by the Seventh Circuit with which petitioner here takes exception.

This Court granted certiorari on the petitioner's application and representation that the decision of the Seventh Circuit erroneously construed the decisions of this Court in holding that a contract, illegal because of the Sherman Act, could not be defended against by a party thereto upon those grounds.

It is agreed in this proceeding by the brief filed by the respondent herein that the virtue of the issue is not to be tested by the technicalities or the niceties of the pleading.

But that squarely presented is the fundamental and the germane issue as to whether or not it is the rule of this Court that in a suit to recover the purchase price of a commodity involved in interstate commerce where the defendant alleges that the very contract upon which the suit is brought to recover that purchase price is violative of the Sherman Act whether such a defense is or is not a good defense or is a defense that can be interposed.

Justice Potter Stewart: Mr. Louisell, in addition to the affirmative defense, there was a -- took hold, there was a counterclaim, was there?

Mr. Joseph W. Louisell: That has been dismissed on motion in the District Court.

The disposition of that motion was affirmed by the Court of Appeals and no reliance upon that matter is placed by the petitioner herein at this stage.

Justice Potter Stewart: That's -- that's not --

Mr. Joseph W. Louisell: That is the damage.

Justice Potter Stewart: -- before us at all.

Mr. Joseph W. Louisell: That's the damage.

Justice Potter Stewart: Thank you.

Mr. Joseph W. Louisell: The courts below as does the respondent in the brief filed herein placed a great weight upon the so-called non-delivery aspect of the agreement.

Your Honors will note that one of the integral and essential aspects of the agreement as alleged by the defendant was that neither they as purchasers of these 287 carloads nor the -- the plaintiff, Kosuga and his associate Siegel would deliver any of the onions aggregating in total about 1000 car loads of onions for the balance of the trading season.

Now, the court below without deciding whether or not that non-delivery feature of the contract was or was not illegal, without squarely so deciding as seemingly emphasized that as justifying a disposition to segregate the non-delivery aspect of the entire undertaking from what was in truth and in fact the real undertaking of the parties, namely, an undertaking to affect prices, to fix prices.

That was the purpose of the agreement.

In the brief which the respondent here has filed with this Court, i.e., is undertaken to state the position of the petitioner here to be that the contract was violative of Section 1 by reason of the non --

Chief Justice Earl Warren: We'll -- we'll recess now, Mr. --

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Argument of Joseph W. Louisell

Mr. Joseph W. Louisell: The (Inaudible) and the District Court and the respondent would have us test the legality or the illegality of this underlying agreement by reference solely to the non-delivery aspect in this -- as it related to this particular undertaking between Kosuga and Kelly.

It is our feeling and we respectfully urge that that is unwarrantably narrow and restricted and incomplete view of the entire undertaking because it is the petitioner's position that the entire undertaking had, as its essential and inherent ingredient, an illegal purpose, namely, the manipulation of prices.

And just like the purchase by Kelly of the 50 carloads and the purchase by any of the others similarly situated with Kelly of a portion of these 287 carloads and just as the withholding from the market of each and every one of those was but one of the overt acts agreed upon by these parties as alleged by the defendant below and the petitioner here to affect and manipulate the price of onions on the cash and the futures market.

Chief Justice Earl Warren: Is there any issue in the case as to -- as to who was responsible for withholding these other cars from the market or is that uncontested?

Mr. Joseph W. Louisell: No.

It is agreed that both parties -- both sides of the transaction agreed with themselves and with all of the others concerned that none of them would deliver any portion of these 1000 cars of onions on either of the cash or the futures market.

That was -- that's agreed that they would all withhold of the 1000.

These people associated or similarly situated with Kelly agreed to purchase 287 and to withhold those.

Chief Justice Earl Warren: Yes.(Voice Overlap) --

Mr. Joseph W. Louisell: And on the other hand, the other parties to this agreement who held then the balance of 1000 agreed that they, in consideration of this entire undertaking, would withhold all of theirs from both the cash and the futures market.

Chief Justice Earl Warren: Were there no question about it having been forced on one or other of the parties?

Mr. Joseph W. Louisell: No, Your Honor.

Chief Justice Earl Warren: It was done by agreement.

Mr. Joseph W. Louisell: That's by agreement, Mr. Chief Justice.

And that is one of the aspects which the desired position was but one of the overt acts which these people agreed they would employ for the accomplishment of their legal objective, namely, manipulating and controlling the price of onions.

Justice Potter Stewart: Your -- you allege in these briefs then, do you, that you were a voluntary coconspirator?

Mr. Joseph W. Louisell: We were a voluntary coconspirator in pari delicto and each of them was similarly so situated.

Now, that brings us, we believe, squarely to the proposition as to whether or not it is the -- the rule of law as pronounced by this Court that one who is a voluntary participant in pari delicto with others can repudiate a contract and successfully defend against a suit for the purchase price of the article where the very contract or the undertaking which is sought to be enforced is simultaneously the undertaking which had, for its subjective, the accomplishment of an illegal purpose, namely, the fixing of prices.

We have not labored in the brief, submitted except by reference in a footnote to a number of the decisions of this Court, the proposition that price fixing agreements are per se illegal.

Very recently, Mr. Chief Justice Warren, in speaking for the Court in United States against McKesson & Robbins, very clearly spelled out that the illegality of any price fixing arrangement does not depend upon whether the arrangement was unreasonable or reasonable.

It does not depend on the motive of the parties whether good or evil.

It doesn't depend on whether the price fixed is accomplished by contract or as in this instance, by some more subtle device, namely, the withholding of this large quantity of onions from the market or whether the participants possess market control or the extent of control effected by the price fixing arrangement or whether the agreement is effective or not.

I think it too well settled and too late in the day for anyone seriously to challenge the proposition announced by this Court on enumerable occasions that price fixing agreements are illegal per se.

And that any undertaking calculated to affect a price fix is per se illegal.

And that stems from the inherent policy underlying Sections 1 to 7 of the Sherman Act.

Now --

Justice John M. Harlan: Was this issue decided in the context to the motion for summary judgment?

Mr. Joseph W. Louisell: It was decided on the motion to strike this affirmative answer that this contract was per se an illegal contract because it constituted an entire undertaking by the parties to attempt to fix and manipulate prices.

Justice John M. Harlan: Do your opponents admit it was an illegal contract?

Mr. Joseph W. Louisell: No, they do not.

And that that we respectfully submit brought into focus an issue of fact which should properly have been tried because the opponents did file an answer in addition to the motion to strike.

But we never got to the answer because the motion to strike was granted.

Now, it is our belief that we are not here concerned primarily with the character of the litigants whether the litigants are good, bad or indifferent.

Now, we respectfully submit, it's beside the point.

What we are concerned with here is whether or not the character of the contract -- of the entire contract, not just the portion taken out of context by the plaintiff but whether or not the character of the entire contract which the defendant by his pleading offered to show was or was not illegal.

And perhaps, our consideration with that -- of that proposition begins with a reference first to the Connolly-Sewer Pipe case decided in 1902 by this Court.

The Connolly case was an action in one instance commenced on promissory notes given by the purchaser of Sewer Pipe as consideration for that purchase.

And in the consolidated action, a second suit brought by the pipe manufacturer against a man by the name of Dee in Illinois.

It was on an open account for pipe sold to Mr. Dee.

And there, Connolly and Dee defended or sought to defend the suit on the claim that the seller itself was engaged in a conspiracy in restraint of trade in violation of the Sherman Act.

The summon substance of the decision of this Court was that in as much as there was no claim that the contract of purchase between Connolly and the Sewer Pipe Company and between Dee and the Sewer Pipe Company was a contract in restraint of trade that the defense of violation of the Sherman Act was not available to them.

The Court very carefully pointing out that there was no claim, that there was anything in the contract of sale between the Sewer Pipe Company and its two customers that was in anyway suggestive of a violation of the Sherman Act, that what those defendants there relied upon was the antecedent claimed illegality of the manufacturer of the sewer pipe entering into a combination with other manufacturers but in no way related to these customers.

And the Court said that under those circumstances because the illegality alleged by the customers was not inherent in the contract upon which suit was bought, the defense could not be sustained.

Two months later, this Court in 1902, in May of 1902, decided the Beeman case.

Now, without making any reference to its decision in the Connolly case, in the Beeman case, this Court, speaking through Mr. Justice Peckham, I believe, said, “We are of the opinion that anyone sued upon a contract may set up a defense that it is in violation of the Sherman Act,” and it found to be so that fact will constitute a good defense to the action.

And further in the opinion, the Court's in but that that does not prevent a private individual when sued upon a contract which is void as in violation of the Act from setting it up as a defense.

And we think when proved, it is a valid defense to any claim made under a contract thus denounced as illegal.

Some seven years later, in 1909, this Court met with and dealt with the question, but for the first time in 1909, it was presented on a proposition that the contract sued upon in and of itself was illegal in that that contract, and I refer to the Continental Wall Paper case decided in 1909, in that contract itself, between the seller and the buyer, there were restrictive conditions, which on their face, constituted a violation of the Sherman Act.

That too, as in this instant case, was a suit for the recovery of the purchase price of wall paper sold to the defendant.

And the defendant there defended upon the proposition that the contract upon which the suit was brought on its face was violative of the Sherman Act and hence, this Court reasoned, since -- in maintaining the suit, the plaintiff had to bring into issue and had to rely upon a contract which was illegal.

The plaintiff could not maintain its action and the defense asserted that their contract was illegal, was a good, adequate and sufficient defense.

Now, just as the respondent here relies a great length upon the rule of the Connolly case, the petitioner here relies a great length upon the rule, as initially stated in the Beeman case and then as approved in Continental Wall Paper case where the exact same result for which the petitioner here contends was achieved by virtue of the decision in the Continental Wall Paper case.

But the Seventh Circuit in the District Court were of the opinion that the DM Wilder case decided in 1915 either abrogated or modified the rule in the Continental Wall Paper case.

In analysis of the Wilder case, however, discloses that thereto as in the Connolly case, the customer, the purchaser who sought to avoid the obligation to pay by reliance upon the Sherman Act was not himself a party to an agreement that was inherently illegal.

He was a stranger to any illegality.

And it was frankly conceded apparently at the oral argument because a careful reading of the case discloses that it is pointed out that the customer in that situation made no claim that the contract upon which the suit was brought was in itself illegal except when viewed through the eyes of the seller whom it was claimed, was together with other manufacturers of glucose associated in a combination of restraint of trade.

But there, as in the Connolly case, the illegality of the -- of the plaintiff was no part of the illegality of the contract upon which the suit was brought.

Chief Justice Earl Warren: But would the fact that in the Continental case, the complaint alleged that he was compelled to buy at these high fixed prices that they were excessive but if he hadn't -- hadn't paid this price, he wouldn't have received any wall paper at all, is that -- on the fact that those elements are not here, is that any reason to distinguish the two cases?

Mr. Joseph W. Louisell: I don't think that that is the true rationale or the basis of the decision in the Continental case.

I think that the true basis while that is referred to and that was a factor there present in the Continental case, it appears to us that the true rationale of the Continental case is really but a restatement of the old proposition that the courts will not enforce a contract as to which the parties are in pari delicto and the contract is illegal.

And that the Court will leave the parties where they found them and will not enforce it.

I think that that is the true rationale of the Continental case.

And I -- I think that we find support for that proposition by reference to the next pronouncement of this Court in 1925 in the Small against Lamborn decision where the Court there expressly approved the tryst proposition stated in the -- restating the Connolly case that the courts will not enforce a contract that is illegal as violative of the Sherman Act where the suit is brought upon that contract but held in the -- in Small against Lamborn that the -- the rule of the Continental case was inapplicable for the reason that there again, as in Wilder and as in Connolly, the illegality did not inhere in the contract upon which the suit was brought but was antecedent to and wholly unrelated to the contract of purchase upon which the suit was brought.

And in 1942, this Court again had occasion to review the question, and that was in Sola Electric against Jefferson.

That case, like this one, arose from the Seventh Circuit.

And Mr. Chief Justice Stone speaking for the unanimous court ruled in this situation that the defense of illegality inherent in the contract by virtue of it being violative of the Sherman Act was a perfectly proper defense.

And it arose in this way, the petitioner in the Sola Electric Company case there asserted that by reason of the price control provisions of its licensing arrangement with the Jefferson Manufacturing Company, that the Jefferson Manufacturing Company was not entitled to royalties.

It being there, the Sola Electric Company's further claim that this arrangement, this contract was without the immunity from the Sherman Act supported -- available otherwise by a valid patent.

In other words, had there been a valid patent, the immunity from the application of the Sherman Act would have been enforced and this question could not have arisen.

But the Sola Electric Company took the position that the patent was not a valid patent and hence a price fixing arrangement contained in the licensing contract was illegal as violative of the Sherman Act and that they should have been allowed to show as they asked by their affirmative pleadings in the suit to -- in the suit to recover royalties that the contract upon which the suit was brought was as to that aspect of it, violative of the Sherman Act.

And in reversing the Seventh Circuit and speaking for the unanimous court, Mr. Chief Justice Stone said, “Similarly, this Court has declared that anyone sued upon a contract may set up as a defense that it is in violation of the Sherman Act.

And it has proceeded on the assumption that whether the parties to an agreement in violation of the Act are in pari delicto as a question of federal not state law.”

It decided the Continental Wall Paper Company -- it decided in Continental Wall Paper Company that a vendee of goods purchased from an illegal combination in pursuance of an illegal agreement both in violation of the Sherman Act can cleave the illegality in defense to a suit for the recovery of the purchase price.

This decision went much farther than is necessary to go here to conclude that petitioner may assert the illegality of the price fixing agreement and may offer any competent evidence to establish its illegality including proof of the invalidity of the patent.

Now, that was in 1942.

Chief Justice Earl Warren: But, Mr. Louisell, is it --

Mr. Joseph W. Louisell: Yes, sir.

Chief Justice Earl Warren: -- is it conceded by both sides here that this is a price fixing agreement or is that contested?

Mr. Joseph W. Louisell: That is not conceded.

Chief Justice Earl Warren: It is not conceded.

Mr. Joseph W. Louisell: It is not conceded but, of course, there's been no trial on the merit side.

Chief Justice Earl Warren: Yes, I -- I (Voice Overlap) --

Mr. Joseph W. Louisell: There's no trial on the merit side.

And it is our position that in striking this affirmative defense, we were effectively precluded from showing what the entire contract was and that the contract was in truth and in fact as we alleged.

It was entered into by all of these persons for the express in the avowed purpose of manipulating prices.

Now --

Justice Potter Stewart: In other words, on that -- on the subject of what the Chief Justice just asked you, you rely, as quite properly, upon the proposition that for present purposes, these affirmative -- the allegations of these affirmative defenses must be taken as true.

Mr. Joseph W. Louisell: That's correct.

Justice Potter Stewart: But your opponent points out that good many of these allegations upon which you rely are -- are conclusory that they're not factual and that to that extent that they need not be taken nor should not be taken as --

Mr. Joseph W. Louisell: Well, on that --

Justice Potter Stewart: (Voice Overlap) --

Mr. Joseph W. Louisell: -- score, I respectfully direct your -- your attention to the allegations in the answer contained on page 11 and then again under the caption “affirmative defense” on pages 13, 14 and 15 and perhaps most specifically, I would respectfully direct your attention, Mr. Justice Stewart, to paragraph 5 of page 15 where after reciting now what had transpired between these parties, we allege that the avowed in the express object of the agreement was to manipulate the market prices of onions and to stabilize said prices and if possible increase that prices.

Now, it is true that the Seventh Circuit considered that in -- a conclusory allegation but that taken in connection with that which we -- which precedes where we spell out the agreement in what was done without pleading the facts and pleading the conversations between the parties, we respectfully submit, is an allegation of fact which we had a right to prove.

In 1942 or perhaps it was a few years later than that, 1947 it must have been, there was another case before this Court and another case upon which the Seventh Circuit in the District Court as well as the respondent extensively rely and that's the Bruce's Juices case.

And I must say a word about that case.

There, a suit was brought by the manufacturer of cans sold to Bruce's Juices, a -- an organization engaged in the -- apparently, the canning of the fruit juices of some kind.

The suit was actually upon notes given by Bruce's Juices which represented the balances owing upon an open account to the manufacturer of the cans.

And the -- the customer, the purchaser there sought to avoid liability on those notes by asserting that the sales to it had been made in violation of the Robinson-Patman Act in that there had been price discriminations by the vendor denounced by the Robinson-Patman Act.

Justice Potter Stewart: Discriminations in favor of the defendant?

Mr. Joseph W. Louisell: Discrimination against the defendant.

Justice Potter Stewart: Against.

Mr. Joseph W. Louisell: Against the defendant that the discounts that had been made available to competitors of the defendant's had exceeded those which had been made available to the defendant, Bruce's Juices.

By 5-to-4 decision, this Court held, speaking through Mr. Justice Jackson, that you would not read into the Robinson-Patman Act the non-collectibility right of a defendant's sued for the purchase price of a commodity sold even though it were sold in violation of the Robinson-Patman Act.

But Mr. Justice Jackson was very careful to point out in that decision that the rule with respect to the right of a purchaser to defend in an action to recover the purchase price is wholly different under the Robinson-Patman Act than it is under the Sherman Act.

And Mr. Justice Jackson very carefully pointed that out.

Four of the then Justices of the Court wanted to read into the Robinson-Patman Act the non-collectibility as an aspect of the -- implied by the Robinson-Patman Act.

But the majority of the Court decided otherwise.

But in any event, it was there clearly distinguished that Bruce's Juices stood strictly on a question of interpretation of the Robinson-Patman Act and not upon a construction or an interpretation of Sections 1 to 7 of the Sherman Act.

Justice Potter Stewart: It also -- it also, as you explained it, had a -- had this difference which cuts against you, didn't it, that there, the defendant was a victim of the illegality as contrasted with this case where the defendant allegedly is a participant in the --

Mr. Joseph W. Louisell: That's right.

Justice Potter Stewart: -- willing and voluntary participant in the --

Mr. Joseph W. Louisell: That's right.

Justice Potter Stewart: -- illegality.

Mr. Joseph W. Louisell: But whether they were a victim in the Bruce's Juices case, I don't know if it was entirely clear from that -- from the opinion of the Court in any event that they did buy them.

There were other factors in the situation.

The Court, I recall, pointed out that it would be extremely difficult if not mechanically impossible to associate with which sales there had been a price differential and that the mechanics of it were such that it would work a very great difficulty in effecting and understanding.

And in any event, they also pointed out as Your Honor will recall that there were remedies available that the -- that the Congress had enacted remedies available to Bruce's Juices under the Robinson-Patman Act whereby they could recover whatever loss they might have sustained by virtue of their having done business with the vendor.

And by that, of course, is not an analogous situation here because here, all of these parties were in pari delicto.

One of the aspects of the case that has been argued extensively in the briefs and relied upon by the Seventh Circuit and by the District Court is the so-called “severability” of the obligation here alleged by the plaintiff for the defendant to pay for these onions.

That obligation being severable from the entire undertaking and understanding between the parties and I think that we can -- we can go back to the pronouncement of this Court in McMullen against Hoffman for a very early and exhaustive discussion of what is severable and what is not severable in a contract of this kind.

Reading the McMullen against Hoffman case stands for two propositions.

It stands for the -- the common law proposition now applicable in a situation of this kind, we feel, by virtue of the enactment of the Sherman Act that the courts will not enforce as between wrongdoers and we frankly stand before you and say we were wrongdoers, all of them were wrongdoers.

They were trying to fix prices.

Justice William O. Douglas: You're not seeking here to maintain that you can cover onto your counterclaim.

Mr. Joseph W. Louisell: No, Your Honor.

That -- Mr. Justice Stewart asked me a question --

Justice William O. Douglas: I'm sorry I didn't hear.

Mr. Joseph W. Louisell: And I answered no, that has been abandoned.

But of course, that was alleged in the alternative to them, Mr. Justice Douglas.

The McMullen case, I think, stands further for the proposition that that which is -- the bet is not collateral which is any facet of the underlying integrated agreement.

And as was stated in that -- in that case, a plaintiff can't pick and choose the portions of the contract upon which you will die in seeking to recover where the defendant has it within his power and he alleges what the entire overall transaction was then the right of the plaintiff to recover is to be determined what all of the contract was and not by some facet, some integral but nonetheless a facet of the overall undertaking.

With the Court's permission, I would reserve the balance of my time for rebuttal.

Chief Justice Earl Warren: You may.

Argument of Lee A Freeman

Mr. Lee A Freeman: I think at the outset, it is important --

Chief Justice Earl Warren: Mr. Freeman.

Mr. Lee A Freeman: -- what certain factual matters clearly in the Court's mind.

Counsel -- at first I thought by inadvertence but after repeated reference finds -- I find (Inaudible) favor of this record.

One of the important points here is that a sale of onions was made, 50 cars, to this particular defendant and a condition was imposed of non-delivery but counsel recites that condition as an agreement by both sides not to deliver those onions on the futures market or on the cash market.

He seeks to create the impression here that these onions, all of them, were to be completely withheld from the market.

Actually, if I were to be spared a -- what does he -- what has to do with them?

Should the onions rot or should we eat them?

But actually that isn't, that isn't the issue as he has presented it in his answer.

Justice Potter Stewart: Is the -- the contracts in the record here somewhere, isn't it?

Mr. Lee A Freeman: Yes, the contract --

Justice Potter Stewart: Where is -- where is this?

Mr. Lee A Freeman: -- the record of the contract contains no reference to this non-delivery condition but in his affirmative defense and in his answer.

And I read for any -- there is no doubt about it that the only condition that was imposed.

And he says so on page 11 that the plaintiff and his associate, and I read from the third paragraph, bottom of it, would not make any deliveries on the futures market for the balance of the trading season.

And so he goes on page 14 on the bottom of the page, the last two lines that the plaintiff would not deliver any onions on the futures market for the balance of the trading season.

Let me see if I can give some enlightenment to that particular condition.

The futures market is distinct from the cash onion market.

This transaction, in our opinion, was entirely a transaction for the purchase and sale of cash onions.

People trade on the futures market in Chicago and elsewhere and they buy and sell futures contracts which contain the requirement on the part of the purchaser to accept delivery if its made to them in the futures market and on the part of the seller to make delivery on the contract month.

Actually, deliveries are very rare.

The transactions wring themselves out.

And we had cited a study made by the Commodities Exchange Authority that over the last 10 years, there was a very small percentage of the total contracts that were settled by delivery.

That's the only condition that we concede existed as a part of this sale -- purchased and sale transaction.

Secondly, this was not a price fixing agreement and there is no basis upon which counsel can so say.

The allegations in his -- in his affirmative answer -- as -- answer an affirmative defense conflict with the fact that a price fixing agreement was here.

There is no per se violation here.

The motion to strike that was heard by the District Court was heard on the basis of the facts conceded as they were alleged.

And the District Court held not only that this defense was not available in a -- in a suit on a contract but also that the claim of illegality was erroneous, that the condition of non-delivery was a reasonable restraint imposed by a purchaser of goods in order to protect his purchasers.

And there are many examples that we can cite.

You buy a business and agreed not to compete for five years.

Of course, it's a restraint.

But it's considered a reasonable part of doing business.

And this is what the District Court held.

And mind you, while I am now arguing the question of whether or not this condition was illegal, I intended to say to this Court that I would not argue it that it isn't before the Court that counsel asks you to assume that it's illegal.

And on that basis, determine that the defense was available.

But the District Court has already said that it was not illegal.

The Court of Appeals infers, they say, “We will not pass upon it but we have our doubts,” the Court of Appeals infers that it was not illegal and counsel has not briefed or argued that point in this Court.

Let me make another correction of the record.

You were -- one of the Justices asked counsel whether or not all the buyers were notified and all of them repudiated.

This is not in the record but it's not important that it is not.

Actually, many of the buyers did fulfill their contract.

And possibly, this is beyond counsel's knowledge because all of the people who repudiated this contract were counsel's clients.

And the repudiation came on March 9th as the pleadings established.

And Mr. Kelly's partner and co-owner of a business filed an affidavit in this proceeding which was considered by the District Court in support of the motions that were presented.

And in that affidavit, Mr. Kelly's partner says in March 1956, the time of the repudiation, in March 1956, the prices for cash onions stored in Chicago dropped substantially and difficulties were encountered in the merchandising of such onions due to the arrival in Chicago of fresh Texas onions.

This is a market phenomenon.

And if you will read counsel's answer, you will find that on March 9th when they repudiated the contract, they, for the first time, raised the question not only a violation of the antitrust laws but violation of a multitude of other statutes which they have now abandoned.

Some reference was made by Justice Stewart to the counterclaim, and I think that Justice Douglas took it up, on the misconception that the counterclaim was in effect, damages arising out of this illegal condition that it was in the nature of a travel damage counterclaim, not so.

The counterclaim was based on the allegation that we've reached this non-delivery condition that the plaintiff's had agreed not to deliver in the futures market during the futures trading season and that we've reached this agreement and therefore, they suffered damages.

This counterclaim was not doubt by the District Court and sustained by the Court of Appeals, and they have abandoned it here.

But they have never asked for damages on a travel damage basis or by reason of having been violated of -- injured because of a violation of the antitrust laws.

They can't show any such damages, and they haven't.

Justice Potter Stewart: A way that's -- their theory here is that they were coconspirators, the conspiracy was to injure the buying public.

Mr. Lee A Freeman: Yes.

They claim here -- come here on a rather unusual posture.

They come here not only proclaiming that they were guilty but even gilding a lily.

They have proclaimed that they were part of a price fixing agreement when it wasn't so.

They claimed that they were part of the withholding of onions from the cash market when it isn't so.

Incidentally, and I should have mentioned this and emphasized it, this record shows that the parties agreed that they would merchandise their onions all of them purchased, sold or held in normal and regulatory channels.

Chicago market was to be -- was to be used as well as other markets for the -- for the disposition of these onions.

This is here in this record.

The District Court commented upon it and so did the Court of Appeals.

There is no withholding from the market as such of any commodity.

Let me say that in our opinion, the Court's decision --

Chief Justice Earl Warren: Before you get to that point, may I ask a question please?

In other -- in other words, your -- your position is that this man had a several thousand carloads of onions that might or might not have come all of them to the Chicago market, that he sold 267 carloads to these people to be disposed of in the regular manner leaving himself to -- to dispose of the remaining carloads in any market that he chose agreeing only not to deal in futures in the Chicago market.

Mr. Lee A Freeman: With one correction.

Chief Justice Earl Warren: Yes.

Mr. Lee A Freeman: Not to deliver any onions in the futures market.

He could --

Chief Justice Earl Warren: Yes, yes, yes.

Mr. Lee A Freeman: -- deal in the futures market if he wanted to on contract but not to deliver.

Chief Justice Earl Warren: Not to deliver.

Mr. Lee A Freeman: This man and all of these people are onion growers and they have onions in storage which is called “country storage” but it's out on the fields in Wisconsin and Michigan and New York.

In addition, they had these onions in storage as distinguished if I'm out in the field in storage in Chicago.

And it was only these storage onions that were the subject of disagreement.

And the only restraint, and the only restriction, none -- no other exists, was that we will sell you these onions at the market price and we will agree that we will not deliver the -- the remainder of our onions in the futures market and you will agree not to deliver these in the futures market but -- but merchandise them in normal trade channels.

Chief Justice Earl Warren: Yes.

Justice Tom C. Clark: Is that what you mean by cash market?

Mr. Lee A Freeman: The cash market of the actual earners.

Justice Tom C. Clark: The merchandising.

The merchandising.

Mr. Lee A Freeman: Yes, the merchandising.

The cash market is the actual.

Justice William J. Brennan: (Inaudible)

Mr. Lee A Freeman: Excuse me?

Justice William J. Brennan: Actual onion.

Mr. Lee A Freeman: That's right.

The things we eat sometimes.

Justice Charles E. Whittaker: (Inaudible)

Mr. Lee A Freeman: All of the market accepted it.

Chief Justice Earl Warren: May -- may I ask just one more -- more question?

Was the entire thousand carloads in storage in Chicago --

Mr. Lee A Freeman: No.

Chief Justice Earl Warren: -- or just these 267?

Mr. Lee A Freeman: No, just -- there were approximate --

Chief Justice Earl Warren: (Inaudible)

Mr. Lee A Freeman: -- according to the pleadings, approximately 600.

We didn't --

Chief Justice Earl Warren: Yes.

Mr. Lee A Freeman: -- own the 600.

Chief Justice Earl Warren: Yes.

Mr. Lee A Freeman: We owned --

Chief Justice Earl Warren: Yes.

Mr. Lee A Freeman: -- possibly 300 or 400.

Chief Justice Earl Warren: Yes.

Mr. Lee A Freeman: But 600 were in storage in Chicago.

There may have been, and I go outside the record --

Chief Justice Earl Warren: Tell me --

Mr. Lee A Freeman: -- 5000 -- 10,000 cars of onions throughout the country.

Chief Justice Earl Warren: Yes.

Justice Potter Stewart: I wondered if you could -- excuse me.

(Inaudible) I am asking this question out of simple ignorance.

My conception of the futures market is -- is not in dealing with a -- that -- that market doesn't deal with commodities.

It deals with commodities at a future time on what's actually passed back and forth.

There are pieces of paper promises to deliver wheat next May, and how can you -- in that kind of a market, how do you -- how does the commodity itself get delivered now?

Mr. Lee A Freeman: In order to avoid the -- the attack that a futures co-transaction is a gambling transaction, the -- the fable in most instances is indulged that every -- every person who sells in the futures market intends to make delivery on the -- at the contract month and every person who buys and tends to take deliveries and --

Justice Potter Stewart: But in the future.

Mr. Lee A Freeman: But on -- in the future month, yes.

And in onions, for example, they trade in November, December, January, February and March contracts --

Justice Potter Stewart: All right.

Mr. Lee A Freeman: -- other -- other commodities in other monthly contracts but the transaction is you buy in November, for example, a March contract, if you buy it, you may have to take delivery in March of those actual onions.

A car is 600 bags.

Justice Potter Stewart: But next -- but next March?

Mr. Lee A Freeman: Next March.

That's right.

Justice Potter Stewart: Onions never get into the picture --

Mr. Lee A Freeman: Not until the contract month.

Justice Potter Stewart: -- now.

Not until the contract month.

Mr. Lee A Freeman: Not until the contract month.

Unknown Speaker: Well --

Justice Felix Frankfurter: And -- and then they don't really as you say kept --

Unknown Speaker: (Voice Overlap) --

Justice Felix Frankfurter: -- in physically they rarely get into --

Mr. Lee A Freeman: Physically rarely.

Justice Felix Frankfurter: This is really a form of merchandising insurance to a large extent against changes in price levels.

Mr. Lee A Freeman: That's right.

It's a merchandising insurance and it's used extensively for hedging purposes.

Justice William J. Brennan: Well, now, when it set one promise is not to deliver these onions in being in storage in warehouse on the futures market.

I'm still lost.

What does that mean?

Mr. Lee A Freeman: That means that they will not -- that these individuals will not sell a futures contract and satisfy that futures contract --

Justice William J. Brennan: Out of the --

Mr. Lee A Freeman: -- by making delivery.

And it has --

Justice William J. Brennan: If it is satisfied, it would be satisfied out of other onions.

It's not out of those (Inaudible)

Mr. Lee A Freeman: That's right.

Justice Charles E. Whittaker: In other words, that is --

Mr. Lee A Freeman: Yes.

Justice Charles E. Whittaker: (Inaudible)

Mr. Lee A Freeman: If they sell them -- yes.

The expression that seems to apply here is that they will sell them in regular and normal trade channel that they were merchandise.

Justice Charles E. Whittaker: (Inaudible)

Mr. Lee A Freeman: That's correct.

And incidentally, the futures delivery is always at the option of the seller.

The seller has the entire month to determine whether he wants to make delivery or not so therefore, if he decides to sell in the futures market and still not make delivery, he just buy back the futures contract and offsets it.

Justice Hugo L. Black: Suppose a group of people agree (Inaudible) sell not to make any deliveries --

Mr. Lee A Freeman: Yes.

Justice Hugo L. Black: -- is it your contention that that was not violating the Antitrust Act?

Mr. Lee A Freeman: Under certain circumstances, it might, Justice Black.

But I say in this particular instance where it's part of a business transaction which involves the sale of cash onions, no.

And besides, that issue was not here.

The question of whether or not this is illegal is not here.

We assume for the purpose of this argument that it is illegal and then might be proceed and -- and tell you why I think the District Court and the Court of Appeals was correct.

Justice Potter Stewart: Well, up until now, you've been spending really your time in telling us that it's not illegal.

Mr. Lee A Freeman: Unfortunately so.

I told that to the District Court and the District Court believed me.

They decided that it was not illegal.

Justice William O. Douglas: (Voice Overlap) --

Mr. Lee A Freeman: The Court of Appeals agreed but he didn't bring this issue here.

Justice William O. Douglas: I don't read the District Court's rule as holding this (Inaudible)

Mr. Lee A Freeman: May I refer you to page --

Justice William O. Douglas: Do you think that this is an enforceable contract?

Mr. Lee A Freeman: No.

Page -- page 24.

The condition imposed -- 25, excuse me.

The condition imposed by defendant and agreed to by plaintiff was a reasonable restriction to assure defendant the enjoyment of the legitimate fruits of his contract of purchase and to protect it from a possible derogation in the value of the property bought.

This condition does not constitute an illegal restraint of trade prescribed in the federal -- Illinois Antitrust Acts which were then been involved and they cite two or three cases.

Justice William O. Douglas: Well, I thought they have been talking about purely Illinois law and not federal law.

Mr. Lee A Freeman: No.

He was talking about the federal law.

The Court of Appeal's decision, Justice Douglas, said that they won't pass upon whether or not it's illegal.

Although they doubt of it but they did go -- but the Court did go on to pass upon the fact that it did not violate the Illinois law which they thought was involved.

And he has abandoned that particular point.

Justice Hugo L. Black: But the people -- the people agreed to make agreement in this filed of the so-called trade which sometimes is unstable but is accepted evidently as a trading business.

Why would the contract made to restrain the execution of contracts that that deal the end of the lesser violation of the Sherman Act than any other such contracts?

Mr. Lee A Freeman: If there was --

Justice Hugo L. Black: I'm not talking about the facts in your case (Inaudible)

Mr. Lee A Freeman: I understand.

It -- it could be under certain circumstances.

There could be a violation merely on the basis of what was done in the futures market but this is not that case.

As a matter of fact, he did -- I mean counsel -- excuse me, had alleged that this was also a violation of the Commodities Exchange Act which deals with the futures market but he is abandoned.

But surely, people can reach agreements to manipulate futures market as well as the cash market.

But in this instance, we have a business transaction, a sale of cash onions and coupled with it a condition that we will not deliver in the futures market and there is a reason, and I must frankly say that when there is a substantial delivery in the futures market, it might have temporarily -- it might temporarily disrupt prices and so the sellers were seeking to protect against the disruption of such prices during their normal merchandise.

Justice William O. Douglas: This -- this price stabilization (Inaudible)

Mr. Lee A Freeman: Yes.

It was an attempt to provide a base while they were -- while they were selling.

In other words, if someone came along with -- with a great volume of onions and delivered it into the futures market, you might disrupt the entire market and disrupt the entire onion market cash as well as futures.

And so they avoided that particular possibility.

Justice Hugo L. Black: My question that I asked because I -- I didn't quite understand how the Sherman Act which prohibits all these contracts in restraint of trade could possibly limit the contracts of the delivery date.

Mr. Lee A Freeman: No, I -- I don't say limited.

I don't say limited.

But assuming that this is illegal --

Justice Felix Frankfurter: This -- this Court once said before direct prosecution or rather an equity suit by -- against combination in restraint of trade --

Mr. Lee A Freeman: And it --

Justice Felix Frankfurter: -- in regard to constant future --

Mr. Lee A Freeman: (Voice Overlap) versus United States.

Justice Felix Frankfurter: (Inaudible)

Mr. Lee A Freeman: Yes.

That's right, many, many years ago.

Assuming that this condition is illegal and we respectfully submitted to the Court in our first point the -- the fact that possibly, this case isn't properly here because there is an abstract and hypothetical question involved.

But assuming that it is illegal, we contend that the -- this type of defense is not available in a contract action.

And we say first, and I think I would like to emphasize this that here, there is no doubt that the attempt that is being made by the petitioners is an attempt at unjust enrichment.

They got the goods and they don't want to pay for it to the extent of $37,000.

There is no case, no case that this Court has decided where unjust enrichment resulted from either the grant or a denial of an antitrust violation in the contract action where the Court has denied the defense in Connelly, Wilder, Small versus Lamborn and Bruce's Juices, of course, there was no unjust enrichment to the defendant.

Where the Court has granted the defense such as they did in Continental Wall Paper, still no unjust enrichment because the Court itself points out that the allegations in the complaint were and weren't -- and they were admitted that the amount sued for, the amount sued for exceeded the value -- exceeded -- well, it's the -- that the amount for which suit was bought was greatly an excess of the excess in value over market value.

I haven't made that clear.

But in Connelly, the amount involved in that suit was excessive over the fair market value.

And so in -- in -- I mean in Continental, so that by granting the defense and denying a remedy, there was still no unjust enrichment because the defendant had already paid more than the fair value of the goods that he had bought in for.

In this instance, it is admitted that the price was the fair market price.

Justice Hugo L. Black: But, may I ask you this, that -- that puzzled me a little.

And that's probably because I don't understand.

Mr. Lee A Freeman: Let me just read it because I didn't state it well.

Justice Hugo L. Black: Well, I -- may I just ask you this question.

Suppose you (Voice Overlap) --

Mr. Lee A Freeman: Yes.

Justice Hugo L. Black: Suppose they did get it at the then market value but suppose the then market value had been affected by the unlawful agreement --

Mr. Lee A Freeman: Then it wouldn't be --

Justice Hugo L. Black: -- that --

Mr. Lee A Freeman: -- then it wouldn't be a --

Justice Hugo L. Black: -- that would be reserved.

Mr. Lee A Freeman: -- then it wouldn't be a fair market value and in this instance, it was a fair market value.

There was no -- there's no claim of price effect prior to the December 17, 1955 date when this agreement was entered into.

But the statement that the Court makes in Continental, which I think the Court said a lot better than I did, and it's -- it's put in italics by Mr. Justice Hollander.

Justice Hugo L. Black: What page is that?

Mr. Lee A Freeman: Oh, this is 1912.

Justice Hugo L. Black: (Voice Overlap) the Continental case.

I have the case before me.

Mr. Lee A Freeman: It's 1912, I believe, and it's the only case -- 1909, and it's the only case that counsel can rely upon.

He says --

Justice Hugo L. Black: What page?

Chief Justice Earl Warren: What page?

Justice Hugo L. Black: I wonder (Voice Overlap) --

Mr. Lee A Freeman: On page 250 --

Justice Hugo L. Black: -- what you are reading.

Mr. Lee A Freeman: 253.

Justice Hugo L. Black: 253.

Mr. Lee A Freeman: The price is fixed by such combination -- combination and the price is therein sought to be recovered for said merchandise are unreasonable, excessive and above the fair market price of such merchandise by more than the amounts so sought to be recovered.

Let me proceed on with my statement that in no instance was unjust enrichment granted.

In the Bruce's Juices cases, this Court was divided 5-to-4.

The majority held that the defense of antitrust violation, Robinson-Patman in that instance, was not available.

The statute didn't provide for it.

There were reasons of equity and policy for not permitting it.

And so, there was no unjust enrichment.

The minority, however, a minority of four agreed that if the defense of illegality were to be permitted, still, the plaintiff should be entitled to a recover on a quantum meruit or quantum valebant for the value of the goods that was sold.

And so we find in Bruce's Juices, which is the latest case that this Court has decided in this field, that all nine justices agreed that there should be no unjust enrichment and that the plaintiff should recover the fair value of his goods.

And here, it is conceded that the price at which we sold these onions was the fair value of those onions at the time of the sale.

We suggest that this doctrine of distinguishing the cases on the ground that in -- that an innocent participant or a guilty -- an innocent stranger or a guilty participant is involved is not a valid distinction.

As a matter of fact, it -- it sounds peculiar.

How can you say that if a man is a guilty participant and certainly Mr. Louisell has tried to bring himself in as strongly as possible, he should be relieved from paying the balance, but if he was an innocent stranger, oh, then we've got to make him pay.

This is -- apparently some courts have indicated that this is the distinction between Connelly versus Continental, and it doesn't sit right.

Neither can we say that -- saying that a contract is inherently invalid or has a collateral invalidity answers anything.

It's still a label.

And if you'll look at all of the cases that the Court has decided in this field, I think you are impressed with the fact that the true standard and the one that we ask that this Court announced in this instance is that if the judgment of the Court will aid or further the illegal purpose, if the judgment of the Court will assist the plaintiff in accomplishing an unlawful end, then the defense should be made available, then the remedy should be denied.

In this --

Justice Charles E. Whittaker: (Inaudible)

Mr. Lee A Freeman: Excuse me.

Justice Charles E. Whittaker: (Inaudible)

Mr. Lee A Freeman: Excuse me for not having mentioned that -- that the majority in Bruce's Juices felt that quantum meruit was not to be had, the minority did.

But the majority agreed that the defense of illegality did not lie and therefore, the remedy was permitted for the full amount of the contract.

And mind you, in Bruce's Juices, the claim was made that the amount sued for, represented the discriminatory component.

In other words, represented the excess over what was reasonable for these cans, represented an amount that was excessive and therefore to the extent to which the Court granted a judgment there or permitted the remedy, it really furthered the conspiracy or the illegality to that extent.

Justice Charles E. Whittaker: (Inaudible)

Mr. Lee A Freeman: According to the majority footnote, according to the majority footnote, yes.

But of course, we accept the majority ruling in Bruce's Juices because the result of it is that the defense is not made available.

That we -- we may have our remedy on the contract and the claim of illegality under the Antitrust Act does not lie.

And this Court has reiterated that in recent -- in -- in last year that the sanctions provided under the antitrust laws are exclusive, and if Congress wanted to add to the sanctions, the right of a defendant to claim illegality in a contract action, Congress could do so.

Congress had that opportunity over the years, bills were introduced and we set forth some of this legislative history indicating that Congress did not conceive that it was appropriate to the enforcement of the antitrust laws that on a simple contract or debt action, the defendant should be permitted to complicate the action or to raise the problem of an antitrust violation.

If he has an antitrust violation, let him bring an action and show his damages.

Justice Felix Frankfurter: Do you --

Justice Hugo L. Black: I thought -- excuse me --

Justice Felix Frankfurter: I beg your pardon.

Go on.

Justice Hugo L. Black: I -- I was interested in your discussion of Bruce's Juices.

I've just read it again.

Mr. Lee A Freeman: Yes, sir.

Justice Hugo L. Black: And I thought that the Court expressly refused to say that the rule applied in that case in spite the Sherman Act violation.

Mr. Lee A Freeman: Yes, the Court did so say, and we respectfully would take issue of that.

We do have -- mind you, the Court has unanimously held in the Wilder case which was decided in -- in the 1920s.

In the Wilder case, the Court held that in a Sherman Act case, the defense was not available.

That -- the sanctions provided by Congress and at that time --

Justice William O. Douglas: That was the case before they found that there was no violation of the Sherman Act, isn't it?

Mr. Lee A Freeman: Well, that was the -- that was the --

Justice William O. Douglas: Wilder.

Mr. Lee A Freeman: The Wilder case involved a glucose monopoly where a contract was entered into in which the purchase --

Justice William O. Douglas: You mean the violation between the parties, between the litigation.

Mr. Lee A Freeman: I think the opinion is ambiguous in that respect.

I -- I believe -- I mean, at least it's my interpretation of that opinion that the two conditions that were included in that contract of purchase of glucose which the Court commented on, one was that the purchaser must exclusively buy all of his glucose from these people in order to receive a rebate and the other that he -- that he could not resell such commodities, such glucose.

I -- I believe that the Court was in effect saying that these two conditions would not suffer a defeat of the remedy rather than to hold that it was not an illegality.

Justice Felix Frankfurter: You suggested a minute ago that the test is -- whether it furthers an illegal scheme, is that right?

Mr. Lee A Freeman: Yes, sir.

Justice Felix Frankfurter: I suggest that the analysis has to be a little sharper as to what is meant by furthering.

You may remotely further, certainly if anybody can buy from a -- from a steel trust or (Inaudible) trust in the old days on the culmination of a decree and it - they sell all their goods and nobody needs to pay for it.

It would certainly hamper the economic enterprise of those trusts.

But the question is and here if elsewhere, how remotely may you pursue what's further and what doesn't further?

Mr. Lee A Freeman: I would agree and I would add some -- limiting -- limiting the adjectives or adverbs or --

Justice William O. Douglas: Can the price stabilize his right?

(Inaudible) by definition is removed.

Mr. Lee A Freeman: Well, this was not a price -- it was a price stabilizing device only to the extent that it was a condition imposed to assist the sellers and the purchasers in -- in disposing of their commodities in normal trade channels.

Justice Felix Frankfurter: It may be a part of a price stabilizing but if the contract in and of itself is not price fixing.

Mr. Lee A Freeman: It wasn't in and of itself price fixing.

And in answer to Mr. Justice Frankfurter, the example would be that if we sought, by action, to enforce the non-delivery condition and we have assumed for the purpose of this argument that it is illegal and is price fixing and so on that if we had a -- if we sought by action to enforce the non-delivery condition, then a judgment of the Court enforcing that non-delivery condition would be directly aiding the illegal purpose.

But here, we aren't.

Here, our one guide in determining whether or not we are proceeding on the basis of legal right with an illegal practice is -- is our pleadings.

Maybe it's not an exact guide but we have made a simple -- we -- we presented a simple complaint for goods and services rendered, for prices that are agreed upon.

There's no problem about all of the terms and conditions of that purchase and sale.

And as they said in -- in Wilder, the -- the sale of the goods was matched by consideration to pay for the goods.

These outside conditions were supplementary to it.

There was also the -- the condition that both sides said they would not --

Justice Felix Frankfurter: I don't think it's a question of what you pleaded but a question of what the contract on its face.

Mr. Lee A Freeman: The contract and on its face also has no illegal (Voice Overlap) --

Justice Felix Frankfurter: But this contract on its face has terms which in -- as a contract that particular contract of purchase includes provisions which as -- as to that very concept, not the relation of that contract to outside activity.

The Corn Products case was, of course, a flagrant case of a trust, of a --

Mr. Lee A Freeman: It seemed to me.

Justice Felix Frankfurter: -- a flagrant combination.

Mr. Lee A Freeman: Well, even on the contracts or the pleadings, this Court has, from time to time, mentioned the fact that a look at the pleadings was -- a significant value but we're willing to concede --

Justice Felix Frankfurter: Yes.

But the contract may negative your pleading.

Mr. Lee A Freeman: Or look at the contract.

I'm willing to concede this much that even though our complaint is not referred to the illegal factors as the defense properly raises these -- these illegal factors and the Court's judgment would necessarily and directly advance the purpose, the defense is available.

I would also say, and possibly I shouldn't go this far, but I would also say if the written instrument does not contain the illegal agreement but there was some oral understanding that could be properly established, then that too might be available but we don't have that yet.

We say that only -- I would like to make some reference to the patent cases and I mean, I'm -- I'm rather disturbed by the fact that counsel has cited three or four cases that he regards as principal in his advocacy that are not cited in the brief and we have not had an opportunity to reason but actually there, the old cases of Beeman and McMullen.

But he also cites the Sola Electric case which is a patent case and this I would like to comment upon and not only in connection with the Sola case but with the Court's permission with the Keplinger case which followed that in which I think is an even stronger authority for him if we were to cite it.

In these patent cases, these patent cases, we contend, have no relevancy here.

They're not in the briefs, and they shouldn't be in the briefs, and they should not been mentioned in the argument.

The patent cases -- the patent cases involved the field of estoppel of patentees.

Actually, the question was the validity of the patent and by raising the validity of the patent, you actually were -- were determining whether or not there was a failure of consideration.

The illegality of the price fixing agreement which might have accompanied the patent agreement was a secondary consideration by this Court.

Furthermore, in all of those patent cases, there is no unjust enrichment.

And we contend strongly that this Court should give voice to an important public policy of fairness and honesty in dealings that defendants shouldn't have the opportunity of welching and receiving unjust enrichment.

In the patent cases, we contend that there could be no unjust enrichment because the royalties that were denied in the Kiplinger case, not in the Sola, but the royalties that were denied in the Kiplinger case were denied because the patent was invalid.

There was no consideration for which to pay royalties.

There was an absence of privilege that was being realized by the licensing agreement.

Also, I might add that in the patent cases, it was recognized by this Court that there was great difficulty in securing determination of the validity of patents.

And we were dealing here in -- in an area where the public policy surrounding the restraints of trade that the Antitrust Act sought to eliminate had to be given voice to and -- and as Justice Black said in -- in the Kiplinger case, “We are seeking by allowing this estoppel to be brushed aside when an antitrust violation is urged upon us.

We are seeking to free our economy from the destructive restraints that are sometimes practiced by narrow and invalid patents.”

But we don't have that here.

Thank you very much.

Justice Hugo L. Black: May I ask you just --

Mr. Lee A Freeman: Yes.

Justice Hugo L. Black: I -- I don't yet quite understand this contract you had.

Mr. Lee A Freeman: The contract --

Justice Hugo L. Black: When was the contract made?

Mr. Lee A Freeman: The contract was made December 17th 1955.

Justice Hugo L. Black: Where were the onions then?

Mr. Lee A Freeman: They were in Chicago.

Justice Hugo L. Black: They were already grown in Chicago.

Mr. Lee A Freeman: They were grown and shipped into Chicago.

Justice Hugo L. Black: And they shipped --

Mr. Lee A Freeman: They're grown in August.

Justice Hugo L. Black: -- all in car.

Mr. Lee A Freeman: They were in storage, mostly storage.

Justice Hugo L. Black: (Voice Overlap) --

Mr. Lee A Freeman: Yes, some in cars.

Justice Hugo L. Black: And were the -- was the contract made to take them at a future time?

Mr. Lee A Freeman: No, the contract was made to take them at any time.

As a matter of fact, we have a -- we sent a telegram which is an exhibit in our complaint.

We sent a telegram to Mr. Kelly on February 16th and said, “You haven't taken enough of your onions out of storage and we think you ought to because they're deteriorating.”

On February 20th, he wrote back and says, “Sure, we have an agreement but I don't have to take them out at any time.”

Justice Hugo L. Black: (Inaudible) them on credit?

Mr. Lee A Freeman: We -- an installment contract, yes.

Justice Hugo L. Black: An installment contract.

Mr. Lee A Freeman: $300 down, $200 on January 10th and the balance when they took it out of storage.

Justice Hugo L. Black: And when was it that you notified of that --

Mr. Lee A Freeman: On February 16th, we said that the onions are deteriorating and it is admitted that onions do deteriorate if we need that admission.

“That the onions were deteriorating and it is important for you take them out of storage.”

On February 20th, they said, “No, we will not take them out of storage.”

Justice Hugo L. Black: Had onions gone down there?

Mr. Lee A Freeman: Yes.

They had gone down progressively since December 17th.

Justice Hugo L. Black: How much?

Mr. Lee A Freeman: Oh, I don't know but onions went down possibly as much as 50 cents by then, a bag.

And of course, then we do have this affidavit that in March 1956, which is shortly thereafter, this exchange of communication between Mr. Kelly and Mr. Kosuga in which the agreement is acknowledged, in March 1956, the onion market collapsed very substantially because Texas onions were being brought in and they were a fresh crop and they were an excessive crop and they had difficulties merchandising.

So on March 9th, Mr. Louisell sent a letter to my client in which he said, “I represent these people and we're repudiating our contract because it's a violation of the antitrust law.”

Justice Hugo L. Black: Thank you.

Chief Justice Earl Warren: Thank you, Mr. Freeman.

Mr. Louisell.

Mr. Lee A Freeman: Oh, may I -- may I say one --

Chief Justice Earl Warren: Certainly.

Mr. Lee A Freeman: -- other thing which I think possibly bears.

The only excuse that can be or the only reason that can be stated for allowing this type of a defense to be raised in a contract action is that it would give effectiveness to the antitrust laws.

We respectfully feel that it would not, that all it would do would be to discourage credit.

It would be an unreasonable and discriminatory type of relief because the -- the penalty imposed here would be completely out of line with -- with the -- whatever offense was involved.

And for several of the reasons that are set forth in Bruce's Juices in which we seek to analyze in our complaint, we feel, in our brief, we feel that no advantage could be realized as far as effectuating the purpose of the Act and as a matter of fact, it would not deter violations.

Indeed, the buyers on credit would encourage transactions which might shade legality in order to lay or to be able to repudiate.

There is no sure way of knowing where you don't have a per se violation, whether you're in violation of the antitrust laws.

And in this particular instance, the facts prove themselves, they didn't even know about it until March 1956 that there might be a violation of the antitrust laws and then I think they only knew because the price failed them.

Justice Potter Stewart: Well, Mr. Freeman, if as alleged in the affirmative defense, the purpose of this very agreement was to fix prices, why would it not encourage a violation of the Antitrust Acts by enforcing this very agreement?

Mr. Lee A Freeman: Well, number one, I can't agree that the purpose was to fix prices.

Justice Potter Stewart: I understand that.

Mr. Lee A Freeman: You would -- you would ask Mr. Louisell about the pleadings and I -- I would have something to say about that.

Actually, the pleadings can't be read as he does.

You can either read that expression he avowed the expressed purpose as meaning that there was an agreement to fix -- to a non-delivery agreement which had a purpose.

Now, that would be a conclusion.

All you can read it to mean that there was an agreement and they also agreed that they would fix prices.

But if that was the case, he could have pleaded a lot better.

It was a conclusion in the Court so held.

But assuming that this was a price fixing agreement, you do not effectuate the purpose of the antitrust laws by denying remedies which are discriminatory and irrational.

You effectuate it by -- Congress has by broadening the enforcement machinery, the troubled damage action which is -- which was made available, as a matter of fact, subsequent to some of the decisions of this Court, subsequent to the Wilder case.

Private trouble damage actions were made available.

This then has a relationship -- I mean, the troubled damage actions has a relationship to the injury, it has a reason.

It doesn't merely discourage credit but it discourages the transaction.

Justice Potter Stewart: Well, if I may interrupt a minute --

Mr. Lee A Freeman: Yes.

Justice Potter Stewart: -- of course the troubled damage action is available to somebody who's been victimized by an antitrust violation, somebody who has been damaged by the violation of the antitrust laws.

Here, the theory is quite different.

The plaintiff and the defendant here are coconspirators, conspiring together to damage the public by fixing prices.

Now, why would not a court called upon to enforce that very agreement be encouraging a violation, directly encouraging a violation of the antitrust laws?

Mr. Lee A Freeman: If the Court were being called upon to directly enforce an agreement which had -- which furthered in a legal purpose, I would agree.

But all the Court is being asked here is to affirm a judgment for goods delivered.

We -- this judgment would have no relationship.

It does not do anything toward furthering the -- the non-delivery condition.

In the Bruce's Juices case, for example, the Court permitted a judgment to stand which it was conceded, contained a discriminatory amount, an excessive amount over and above a fair value.

So that to that extent, there was a furthering of the illegal purposes but it was considered too remote.

Mr. Justice Frankfurter was right.

I think the -- the -- before this defense is permitted, and this is a shocking thing in -- in commercial channels, I mean, this could be very disruptive of business because every business transaction, it would seem to me, has some terms and conditions which might be distorted and later resurrected to say, “Oh, this is a restraint of trade.”

You've got to have something more positive, more definite, more direct than you have here.

Justice Felix Frankfurter: Well, you got to -- have not merely -- it can't be distorted unless -- on theory of petitioner --

Mr. Lee A Freeman: That's right.

Justice Felix Frankfurter: -- unless -- unless the welching, if I may use (Inaudible) expression, the welching fire had knowledge of the -- of the ingredient of the specific contracts to the larger antitrust -- antitrust violation.

Mr. Lee A Freeman: He has to be a very guilty participant --

Justice Felix Frankfurter: HE has to be (Voice Overlap) --

Mr. Lee A Freeman: -- before the Court will protect him.

Justice Felix Frankfurter: Before interview, the fellow is out (Voice Overlap) --

Mr. Lee A Freeman: He is out.

Thank you.

Justice Felix Frankfurter: Why do you say discriminatory in a sense that -- that the fellow who don't want to welch pay and only the welch get the benefit?

Mr. Lee A Freeman: The penalty has no relationship to the damage that's incurred.

The -- the small buyer, the small buyer who needs credit in order to live will be discriminated against.

He will not be able to realize this credit if this is true because if there is somebody -- some seller who wants to perpetrate a restraint, some -- some form of business that restrictive, he will do it on a cash basis.

So it discriminates to that extent.

It discriminates from the standpoint of not making credit available to those who really need it and it discriminates because the penalty itself is far out of reason in some instances and could be nothing.

If --

Justice Felix Frankfurter: (Inaudible)

Mr. Lee A Freeman: -- if -- some of these purchases, you see, have paid the full amount of what they owe.

They didn't repudiate, they just paid.

Justice Felix Frankfurter: But for that extent discrimination.

He's a fellow who says, “I've got the goods, I'm going to pay for it,” and that's that.

(Inaudible) business.

But it isn't really the little fellow, am I wrong that in the Continental, Voight wasn't a small buyer?

Mr. Lee A Freeman: Oh, no.

Justice Felix Frankfurter: Voight was a considerable buyer.

Mr. Lee A Freeman: Voight was a big man and Bruce's Juices --

Justice Felix Frankfurter: Yes.

Mr. Lee A Freeman: -- was pretty good sized operation.

Justice Felix Frankfurter: So that you sometimes find, it depends to utilize not merely by small supply.

In fact, they -- they (Inaudible)

Mr. Lee A Freeman: But it seemed to me that if you allow the defense, you -- you inhibit credit rather than inhibit antitrust violation.

Justice Hugo L. Black: You made a statement to that (Inaudible) I didn't quite understand.

You said, after the goods were delivered.

I thought parts of the goods were not delivered.

Mr. Lee A Freeman: The onion -- the cash onions?

Justice Hugo L. Black: (Inaudible)

Mr. Lee A Freeman: The --

Justice Hugo L. Black: You said that they refused to pay for the onions that had already been delivered.

Mr. Lee A Freeman: The -- the onions, all of these 50 cars of onions became the property --

Justice Hugo L. Black: Oh, I'm -- I -- I understand that.

Mr. Lee A Freeman: They weren't delivered physically.

You're right, Your Honor.

But they became the property and title passed to them on December 17th when the agreement was made under our state statute.

Justice Hugo L. Black: Do you mean they made the contract (Inaudible)

What onions -- did they pay for the all the onions they got or --

Mr. Lee A Freeman: No.

Justice Hugo L. Black: -- does this involve refusal to pay for some onions they've got or refusal to pay for the onions that they said they wouldn't pay?

Mr. Lee A Freeman: It -- it includes both.

They were required to pay $300 or $15,000 cash.

They were required to pay another $10,000 by January 10th which is $25,000.

They paid a total of $12,500.

Now, in addition, out of the 50 cars of onions, they themselves withdrew and sold 13 cars.

Justice Hugo L. Black: 13, what would that amount?

Mr. Lee A Freeman: Possibly $12,000.

Justice Hugo L. Black: They paid for about what they got to you?

Mr. Lee A Freeman: No, they didn't, Your Honor.

They didn't -- they withdrew the 13 cars of onions sometime in the future.

Justice Hugo L. Black: What about the ones they withdrew, did they pay for all they withdrew or did they not?

Mr. Lee A Freeman: No, they did not.

Justice Hugo L. Black: I look -- I was looking at the record on page 5 and I couldn't tell.

Mr. Lee A Freeman: Well, if you'll look at our brief, we try to make that mathematical calculation on page 23, Your Honor.

Justice Hugo L. Black: What page?

Mr. Lee A Freeman: 23.

Because in addition to the price of the onions, there was approximately $5000 of storage charge -- storage charges involved.

Justice Hugo L. Black: Now --

Unknown Speaker: (Inaudible)

Justice Hugo L. Black: I just want to ask one other question.

You say that what they allege in conclusion (Inaudible)

Mr. Lee A Freeman: Yes.

Justice Hugo L. Black: Suppose you were wrong (Inaudible) and that was the avowed expression (Inaudible) to stabilize, it'll be liability.

That has not yet been tested as to whether they could establish (Inaudible)

Mr. Lee A Freeman: No, it has not been tested and we would -- we would say that for this Court to remand for the purpose of that test would be unreasonable and unfair because counsel did have adequate opportunity to brief that point if he sought to, he did not and he hasn't even filed a reply brief after we raised the point specifically in our brief.

Justice Charles E. Whittaker: Do you --

Mr. Lee A Freeman: Yes.

Justice Felix Frankfurter: What confirmation (Inaudible)

Mr. Lee A Freeman: No, the warehouse receipts were held until the last payment was made.

But our statute specifically provides that the type of passes at the time of the transaction even though the warehouse receipts are later delivered and we do cite some authority to that effect.

Thank you.

Chief Justice Earl Warren: Mr. Louisell.

Rebuttal of Joseph W. Louisell

Mr. Joseph W. Louisell: Mr. Chief Justice, may it please the Court.

There has been certain answers to certain questions put by the Court and by various members of the Court that I feel suggest a necessity for some further explanatory answer.

First of all, there was no written contract here.

This was an oral undertaking.

And we start with that premise.

Secondly, whether the --

Justice Felix Frankfurter: May I -- is there --

Mr. Joseph W. Louisell: I beg your pardon?

Justice Felix Frankfurter: -- is there agreement or controversy as to the term of the oral agreement?

Mr. Joseph W. Louisell: Oh, yes, surely, Mr. Justice Frankfurter.

It is our understanding and it is our allegation that the terms of the agreement were that these onions would be purchased and withheld from the market for the avowed and expressed purpose of affecting, manipulating the price of onions on both the cash and the futures market as we have alleged and I'll respectfully refer you to page 14 of the record.

I'm asked for, they say “No”.

They say that the --

Justice Felix Frankfurter: What was the implied -- what --

Mr. Joseph W. Louisell: I'm sorry.

Justice Felix Frankfurter: -- what is your relation to this alleged illegal transaction?

You were just a buyer of -- of -- what were your -- what were your --

Mr. Joseph W. Louisell: What were they, Your Honor?

Justice Felix Frankfurter: What --

Mr. Joseph W. Louisell: Here were a group of growers of onions who were also speculators on the futures market.

And that included Mr. Siegel, Mr. Kosuga, Mr. Kelly and all of the persons who were a party to this December 17 oral undertaking.

They were speculators as well as farmers and growers.

That's what they were.

Justice Felix Frankfurter: What was the suit for?

Mr. Joseph W. Louisell: And this suit was for the recovery of the purchased price of one portion of the 287 cars which Kelly agreed himself along with all of the others would be his allocated portion of the greater number of 287 which he would have to buy if the others were going to buy some and if the plaintiff, Kosuga and his associate, Mr. Siegel, were to do what they promise to do, namely, to avoid depression of the market by delivering a thousand carloads of onions on the futures market.

Justice Felix Frankfurter: The suit was for physical onion, was it?

Mr. Joseph W. Louisell: No, it was -- well, it was for the recovery of the purchased price of 50 carloads of physical onions.

Unknown Speaker: (Voice Overlap) --

Mr. Joseph W. Louisell: Yes, Your Honor.

That's right.

But may I say this.

In that connection, and I think that that comes very close to the nexus of the proposition, the futures market and incidentally, there is no treaty on the futures market in onions anymore.

Since this litigation arose, the Congress has abolished it.

So there is no futures trading in the onions market anymore.

And the fact of the matter is that the futures onion market largely, as a matter of economics, controls the cash market price of onions.

And hence, a disposition to withdraw and an agreement when a combination in a conspiracy to withdraw and not to deliver a thousand carloads on the futures market would have, as is alleged by the defendant, a ruinous and catastrophic effect on the cash market.

And that was alleged by the defendant as shown on the record in page 14.

Justice Charles E. Whittaker: (Inaudible)

Mr. Joseph W. Louisell: That's correct, Your Honor.

And as a matter of economics, it necessarily follows that such is a fact that -- that to take 100 carloads or not a hundred, a thousand -- a hundred would even do it, but to take a thousand carloads of onions and deliver those on the futures market in satisfaction of outstanding contracts at that time would immediately reverberate into the cash market instantaneously.

And the price of onions on both the futures and on the cash market would, of course, go down that trajectory.

Justice Hugo L. Black: I have a question.

I have (Voice Overlap) --

Mr. Joseph W. Louisell: Yes, sir.

Justice Hugo L. Black: -- curiosity.

Mr. Joseph W. Louisell: Yes, Justice Black.

Justice Hugo L. Black: Maybe it has no relevance whatever.

How many onions did you client take that he hasn't paid for?

Mr. Joseph W. Louisell: I think that --

Justice Hugo L. Black: I'm not talking about the contract.

Mr. Joseph W. Louisell: I think Mr. Kelly did not pick up 37 carloads of onions or approximately 37 carloads.

Justice Hugo L. Black: Does the figure shows that --

Mr. Joseph W. Louisell: He did pick up approximately 13 and he did not pick up some approximate 37.

Justice Hugo L. Black: What were they worth?

Mr. Joseph W. Louisell: Where were those onions?

Justice Hugo L. Black: What worth per carload?

Mr. Joseph W. Louisell: They were $960 per car plus storage charges.

Justice Hugo L. Black: And I think you showed them that you paid approximately for those you actually got.

Mr. Joseph W. Louisell: Approximately, without reference to the storage charges, my brother is correct when he says that a -- that figurative --

Justice Hugo L. Black: (Inaudible) where include you for (Inaudible)

Mr. Joseph W. Louisell: That's right.

Justice Hugo L. Black: (Inaudible)

Mr. Joseph W. Louisell: That's right because on --

Justice Hugo L. Black: (Voice Overlap) --

Mr. Joseph W. Louisell: -- under the arrangement, the storage charges that it accumulated on the onions already received had to be paid at the time they were taken out of storage because the warehouse receipt wouldn't be delivered until all of the charges have been paid.

Justice Potter Stewart: Do you differ from Mr. Freeman, Mr. Louisell, in -- in his statement that as a matter of state law, the onions became your property at the -- in December at the time of the sale?

Mr. Joseph W. Louisell: I -- I'm not certain, Your Honor.

I don't think that -- in my opinion, that isn't material to the issue here at all wether they became the property of -- of Kelly at that time or became the property of these other purchasers at that time or not.

I don't think that that is germane to the issue as to whether or not this overall undertaking by all of these parties was an illegal undertaking denounced by the Sherman Act.

I think that's the real issue and then the necessary corollary as to whether or not assuming that it was an illegal undertaking whether or not that defense cannot successfully be asserted by the purchaser of the onions.

Justice Potter Stewart: Mr. -- I thought I had -- probably I'm not so sure now, as to your theory of -- of what this contract was, it -- it was to withhold --

Mr. Joseph W. Louisell: No.

Justice Potter Stewart: -- these onions from delivery on the futures market, is that right?

Mr. Joseph W. Louisell: The theory was --

Justice Potter Stewart: The agreement.

Mr. Joseph W. Louisell: The agreement was that they would do what was necessary to manipulate, stabilize the price of onions on the cash and futures market.

One of the instruments, the instrumentalities by which they sought, they chose and agreed upon to exercise to accomplish that illegal purpose was to withhold from the futures market the delivery of some 1000 carloads of onions.

Justice Potter Stewart: Or in depth of trade that they would never deliver (Voice Overlap) --

Mr. Joseph W. Louisell: They would never during that trading season.

I should perhaps explain that --

Justice Charles E. Whittaker: (Inaudible) free to sell them (Inaudible)

Mr. Joseph W. Louisell: Free to -- free to sell them in the normal routine outlet such as to the Atlantic and Pacific Tea Company or to whomsoever would buy them.

Justice Felix Frankfurter: Would be delivered.

Mr. Joseph W. Louisell: To be delivered.

I think that we would be mislead if we didn't appreciate that it is not at all uncommon for physical onions to be -- to have been delivered in the days when they trade it in the futures at the Chicago Commodity Exchange.

I think that we would be mislead if we were of the impression that it was uncommon for physical onions or evidence of ownership of physical onions to be delivered in satisfaction of future -- futures contracts on the exchange.

Justice Felix Frankfurter: You mean ever or in appreciable quantity?

Mr. Joseph W. Louisell: In very substantial quantities, Mr. Justice Frankfurter.

Justice Felix Frankfurter: All right.

That would be (Inaudible) that would be --

Mr. Joseph W. Louisell: It would be common.

Justice Felix Frankfurter: (Inaudible) I said it would be -- would be different in -- in onions in almost any other commodities.

Mr. Joseph W. Louisell: Well, onions are one of the very few commodities upon which futures trading was permitted.

And now, since the initiation of this -- of this litigation, the Congress has legislated against it and its bandit, so there is no longer any futures trading of onions.

Justice Felix Frankfurter: Well, your real -- the real controversy in this case (Inaudible) is the correctness of error (Inaudible)

Mr. Joseph W. Louisell: In the District Court.

Justice Felix Frankfurter: (Inaudible) the contract of purchase was complete in itself and contain the typical considerations in -- in the party, the contention of non-delivery is asserted as a violation of the antitrust law in part of the (Inaudible) inherent part in the same which it appears sought to be enforced a judgment if rendered for the plaintiff would not afford judicial aid to the enforcement of the allegedly illegal condition.

Mr. Joseph W. Louisell: Well --

Justice Felix Frankfurter: That's what you -- that's why you come to Grips-Wood.

Mr. Joseph W. Louisell: We come to Grips -- the security with that, and may I say this in answer to a question which has been post here.

Would you be (Inaudible), were you to reverse this and send it back where the issue would be tried on its merits as to whether this contract was, as the petitioner here claims it was, an illegal combination in restraint of trade?

Would you, by so doing, be enhancing or approving or adapting the policy which is always been the policy of the courts not to enforce an illegal contract?

And I answer that by referring to the language in the Continental Wall Paper Company case wherein it is there pointed out that if the plaintiff had been allowed to recover in the Continental Wall Paper case, the Court would have been giving a judgment for a sum which was made up in execution of the agreement out of which came the illegal combination.

And if this judgment stands, the same result follows.

This Court then would be allowing a judgment to stand for a sum of money which is made up in execution of the agreement out of which came the allegedly illegal combination.

Now, the nexus of the entire problem, I think as it -- it was briefed and as it was intended to be presented to this Court is simply this, whether or not the purchaser of a commodity may rely upon the illegality of the contract, illegal because of the Sherman Act as the defense.

And for that proposition, we say this Court has never deviated from the rule that such is permissible as stated in the Continental Wall Paper Company case that that is the rule and that it should have been applied here and that the Seventh Circuit and the District Court were in error when they said that this Court had washed down, if I may use that expression, or weakened the policy as stated by this Court in the Continental case.

We respectfully submit that that is not the fact.