UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK
May 17, 1967
Tenna Corp., Plaintiff
Rego Radio & Electronics Corp., Defendant and Automatic Radio Manufacturing Co., Inc., Defendant on counterclaim
The opinion of the court was delivered by: BRUCHHAUSEN
The defendant, Rego Radio & Electronics Corporation, moves to add Automatic Radio Manufacturing Company, Inc., as an additional defendant on its counterclaim. Violation of the anti-trust laws is alleged in the counter-claim.
The plaintiff sues to recover for goods sold and delivered. The answer interposed a general denial, affirmative defenses and counterclaims. The second defense contains allegations that the named defendant was involved in the price fixing conspiracy at the direction of the plaintiff and the additional defendant. The defenses then proceed to allege that this conspiracy caused severe monetary damages to the movant.
Rule 13(h) of the Federal Rules of Civil Procedure was rewritten in 1966 as follows:
"Joinder of Additional Parties. Persons other than those made parties to the original action may be made parties to a counterclaim or cross-claim in accordance with the provisions of Rules 19 and 20."
It is well settled that procedural rules should be and are liberally construed.
However, the Supreme Court of the United States, in actions for goods sold and delivered, has refused to permit the purchaser to escape his obligations by asserting a defense of illegality under Federal anti-trust laws. Connolly v. Union Sewer Pipe Co., 184 U.S. 540, 46 L. Ed. 679, 22 S. Ct. 431; Cincinnati, P.B.S. and P. Packet Co. v. Bay, 200 U.S. 179, 50 L. Ed. 428, 26 S. Ct. 208; D. R. Wilder Mfg. Co. v. Corn Products Refining Co., 236 U.S. 165, 59 L. Ed. 520, 35 S. Ct. 398; A. B. Small Co. v. Lamborn & Co., 267 U.S. 248, 69 L. Ed. 597, 45 S. Ct. 300.
The Court in Continental Wall Paper Co. v. Louis Voight & Sons, 212 U.S. 227, 53 L. Ed. 486, 29 S. Ct. 280, reached a different result. It concluded that the defendant purchased merchandise which was the instrument whereby the scheme of the manufacturers to monopolize trade and enhance the price of the merchandise was furthered.
In Refrigeration Sales Co., Inc. v. York Corporation, 32 Misc. 2d 231, 223 N.Y.S.2d 116, the Court held in part at page 118:
"In appraising the foregoing cases, the United States Circuit Court of Appeals (2d Circuit) said in Lyons v. Westinghouse Electric Corporation (222 F.2d 184, 187): 'The upshot of these decisions, if we apprehend them right, is that, if a conspiracy inheres in the contract in suit by a conspirator against a nonconspirator, the conspiracy is a defence, but not otherwise. It is impossible to import any exact boundaries into that word; and we shall not attempt to do so; but, whatever may be the limits, it appears to us that, when a conspirator seeks to enforce a contract between himself and one of his 'agents,' whom he has employed to carry out the purposes of the illegal enterprise, the conspiracy must 'inhere' in the contract. The 'agent' is a co-operator with him in his illegal venture, unlike the buyer of the goods monopolized who has not joined in the understanding and therefore is not an abettor. The fact that the agent's cooperation is unwilling is irrelevant; although a victim of the wrong, he becomes an active promoter of it."
In Kelly v. Kosuga, 358 U.S. 516, 3 L. Ed. 2d 475, 79 S. Ct. 429, the Court discussed these leading cases and held at page 520, "The character of the parties is not in itself determinative."
The Court concludes after considering the procedural rule with the applicable case law, that the motion must be denied. The movant has his remedy under the anti-trust statutes.
The plaintiff also informally moved to strike the second defense in that it fails to state a cause of action. The plaintiff should make such motion pursuant to the regular motion rules and, therefore, it is denied, without prejudice.
Settle order on two (2) days' notice.
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