III. TYING CONTRACTS AND EXCLUSIVE DEALING

ARRANGEMENTS

Stat. Ann. (Burns, 1933)
Cooperatives

Section 15-1615 provides that any agricultural or horticultural cooperative association and its members may make and execute marketing contracts, requiring the members to sell, for any period of time, not over ten (10) years, all or any specified part of their agricultural products, or specified commodities, exclusively to or through the association or any facilities to be created by the association.

Stat. Ann. (Burns, Supp. 1939)

Section 15-1627 provides that any association shall be deemed not to be a conspiracy nor a combination in restraint of trade, nor an illegal monopoly; nor an attempt to lessen competition or to fix prices arbitrarily or to create a combination or pool in violation of any law of this State; and the marketing contracts shall be considered not to be illegal nor in restraint of trade nor contrary to the provisions of any statute enacted against pooling or combinations. See Exceptions to General Antitrust Laws, supra. See also Cooperatives in projected study.

Judicial Decisions

Exclusive Dealing Arrangements.

In General.

A covenant between A and B, in lease of premises, that A will sell beer purchased only from the C Brewing Co., on the leased premises was upheld and injunction granted. Ferris v. American Brewing Co., 155 Ind. 539, 58 N. E. 701 (1900).

An agreement by 16 persons to purchase from named persons all building materials used by them in a specified county for 5 years was held valid and not in restraint of trade. Trentman et al. v. Wahrenburg et al., 30 Ind. App. 304, 65 N. E. 1057 (1903).

A contract granting to automobile dealers exclusive territories and providing penalties for sales by one dealer in another's territory was upheld. Johnston et al. v. Franklin Kirk Co. et al., 83 Ind. App. 519, 148 N. E. 177 (1925).

Cooperatives.

Mutual contracts between tobacco growers and an association of growers that all tobacco grown be sold through the association as agents were in restraint of trade, but not illegal. Burley Tobacco Society v. Gillaspy, 51 Ind. App. 583, 100 N. E. 89 (1912).

An exclusive dealing arrangement made with a Kentucky Association is not in restraint of trade in view of the legislative policy expressed in sec. 15-1627 (in force before the 1935 amendment). Dark Tobacco Growers' Cooperative Association v. Robertson, 84 Ind. App. 51; 150 N. E. 106 (1926); Burley Tobacco Growers' Cooperative Association v. Rogers, 88 Ind. App. 469, 150 N. E. 384 (1926).

The rule of reason must be applied in determining whether or not a contract is in restraint of trade; such contracts are not illegal except when unreasonable in character. Thus, contracts which are incident. or ancillary to some lawful purpose and not unreasonable in their scope and operation are not illegal. Burley Tobacco Growers' Cooperative Association v. Rogers, supra.

A borrowed money from B to build a gasoline station. In consideration A agreed to buy from B all oil and gas to be sold in the filling station for 5 years. The contract was held valid. Abshire v. Smith et al., 86 Ind. App. 354, 156 N. E. 408 (1927.)

A railroad company's grant of an exclusive privilege to a taxi company to stand hacks upon its grounds and to solicit business was held to be illegal as tending to restrict competition. Indianapolis Union Rwy. Co. v. Dohn, 153 Ind. 10, 53 N. E. 937 (1899). See also Western Union Telegraph Co. et al. v. Baltimore & Ohio Telegraph Co., 23 Fed. 12 (1885) (for exclusive telegraph privileges).

IOWA

I. TRUSTS, COMBINATIONS, AND MONOPOLIES

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A. GENERAL ANTITRUST LAWS

CONSTITUTIONAL PROVISIONS

Const. (1857) art. VIII, sec. 12. Amendment or repeal of lawsExclusive privileges.-Subject to the provisions of this article, the General Assembly shall have power to amend or repeal all laws for the granting of special or exclusive privileges or immunities, by a vote of two-thirds of each branch of the General Assembly; and no exclusive privileges, except as in this article provided, shall ever be granted.

STATUTORY PROVISIONS
Code (1939)

Sec. 9906. Pools and trusts.-Any corporation organized under the laws of this or any other state or country for transacting or conducting any kind of business in this state, or any partnership, association, or individual, creating, entering into, or becoming a member of, or a party to, any pool, trust, agreement, contract, combination, confederation, or understanding with any other corporation, partnership, association, or individual, to regulate or fix the price of any article of merchandise or commodity, or to fix or limit the amount or quantity of any article, commodity, or merchandise to be manufactured, mined, produced, or sold in this state, shall be guilty of a conspiracy. (C97, sec. 5060; C24, 27, 31, sec. 9906.)

Sec. 9907. Corporation not to enter.-No corporation shall issue or own trust certificates, and no corporation, nor any agent, officer, employee, director, or stockholder of any corporation, shall enter into any combination, contract, or agreement with any person or corporation, or with any stockholder or director thereof, for the purpose of

NOTE. Art. VIII, secs. 1-11 and the remainder of sec. 12, empower the legislature to enact the general corporation act, limit the state's possible interest in private corporations, specify certain aspects of state banking law.

placing the management or control of such combination or combinations, or the manufactured product thereof, in the hands of any trustee or trustees, with intent to limit or fix the price or lessen the production or sale of any article of commerce, use, or consumption, or to prevent, restrict, or diminish the manufacture or output of any such article. (C97, sec. 5061; C24, 27, 31, sec. 9907.)

Sec. 9908. Penalty.-Any corporation, company, firm, or association violating any of the provisions of sections 9906 and 9907 shall be fined not less than five hundred nor more than five thousand dollars, and any president, manager, director, officer, agent, or receiver of any corporation, company, firm, or association, or any member of any corporation, company, firm, or association, or any individual, found guilty of a violation thereof, shall be fined not less than five hundred nor more than five thousand dollars, or be imprisoned in the county jail not to exceed one year, or both. (C97, sec. 5062; S13, sec. 5062; C24, 27, 31, sec. 9908.)

Sec. 9909. Contracts void.-All contracts or agreements in violation of any provisions of sections 9906 to 9908, inclusive, shall be void. (C97, sec. 5063; C24, 27, 31, sec. 9909.)

Sec. 9910. Defense.-Any purchaser of any article or commodity from any individual, company, or corporation transacting business contrary to any provisions of sections 9906 to 9909, inclusive, shall not be liable for the price or payment thereof, and may plead such provisions as a defense to any action for such price or payment. (C97, sec. 5064; C24, 27, 31, sec. 9910.)

Sec. 9911. Forfeiture of charter.-Any corporation created or organized by or under the law of this state, which shall violate any provision of sections 9906 to 9910, inclusive, shall thereby forfeit its corporate right and franchise, as provided in section 9912. (C97, sec. 5065; C24, 27, 31, sec. 9911.)

Sec. 9912. Notice by secretary of State.-The secretary of state, upon satisfactory evidence that any company, or association of persons incorporated under the laws of this state has entered into any trust, combination, or association in violation of the provisions of sections 9906 to 9911, inclusive, shall give notice to such corporation that, unless it withdraws from and severs all business connection with said trust, combination, or association, its articles of incorporation will be revoked at the expiration of thirty days from date of such notice. (C97, sec. 5066; C24, 27, 31, sec. 9912.)

Sec. 9913. Enforcement-Inquiry by grand jury.-County attorneys, in their counties, and the attorney general shall enforce the provisions of a public nature in sections 9906 to 9912, inclusive, and