Nos. 7929, 7930.United States Court of Appeals, District of Columbia Circuit.
Decided June 15, 1942. As Amended September 21, 1942. Writ of Certiorari Granted in Part October 12, 1942. See ___ U.S. ___, 63 S.Ct. 44, 87 L.Ed. ___.
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Appeal from the District Court of the United States for the District of Columbia.
The American Medical Association, a corporation, and the Medical Society of the District of Columbia, a corporation, were convicted of a conspiracy to restrain trade in the District of Columbia in violation of the Sherman Anti-Trust Act, and they separately appealed, which appeals were consolidated for hearing.
Affirmed.
Messrs. Seth W. Richardson and William E. Leahy, both of Washington, D.C., with whom Messrs. Edward M. Burke, of Chicago, Ill., and Charles S. Baker, and Warren E. Magee, both of Washington, D.C., were on the brief, for appellant in each case.
Messrs. John Henry Lewin and Grant W. Kelleher, Special Assistants to the Attorney General, with whom Thurman W. Arnold, Assistant Attorney General, and Messrs. E. Compton Timberlake and Walton S. Allen, both of Washington, D.C., were on the brief, for appellee in each case.
Mr. Edward M. Curran, United States Attorney, of Washington, D.C., also entered an appearance for appellee in each case.
Before MILLER, RUTLEDGE and MARTIN, Associate Justices.
MILLER, Associate Justice.
In United States v. American Medical Association,[1] we held that the term “in restraint of trade” as used in Section 3 of the Sherman Act, 15 U.S.C.A. § 3, had its genesis in the common law; that the practice of medicine was recognized by the English cases as constituting trade; that a restraint imposed upon the practice of medicine may constitute a restraint of trade; that restraints imposed upon the operation of hospitals and upon Group Health Association, designed to prevent it from making available to and financing medical services on behalf of its members may constitute restraint of trade; that the indictment under which appellants were charged stated a case under Section 3 of the Sherman Act. Accordingly, we held that the indictment was sufficient as against a demurrer; we reversed a judgment of the District Court, which had sustained a demurrer, and remanded the case for trial. Upon the trial which followed and at the close of the Government’s case the court directed verdicts of acquittal for two unincorporated associations and two individual defendants. Thereafter the jury convicted the appellants and acquitted all other defendants. Appeals from the judgment of the District Court, based upon these convictions, were consolidated for hearing in this court.
On this appeal it is suggested that the Supreme Court, in Apex Hosiery Co. v. Leader,[2] repudiated the doctrine stated in our earlier decision; hence that we should reconsider and abandon the position which we there took. But we see no reason to adopt the suggestion which, apparently, grew out of appellants’ failure to distinguish between trade and restraint of trade. Appellants’ confusion is evidenced by the following statement from their brief: “The Apex case held in substance and effect that no activity could be in `trade’ unless it was a commercial activity and exercised and used in such a way as to affect the market either by fixing prices or suppressing competition in the market to the injury of the public.” Of course the Court did not so hold, nor has any court ever so held. Most activities which are in trade serve, rather than injure, the public.
In the Apex case,[3] no question was involved as to whether the petitioner was engaged in trade or commerce. The opening sentence of the opinion states, as an undisputed fact: “Petitioner, a Pennsylvania corporation, is engaged in the manufacture, at its factory in Philadelphia, of hosiery, a substantial part of which is shipped in interstate commerce.” Neither was the Court in doubt as to whether trade or commerce was affected by the actions complained of.[4] The question which was presented for its
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decision was whether the conduct of the labor union and its members constituted restraint of trade, within the meaning of Section 1 of the Sherman Act, 15 U.S.C.A. § 1.[5]
In answering this question the Court, first, restated the familiar common law doctrines relating to contracts and combinations in restraint of trade and the equally familiar history of the taking over, by the Sherman Act, of the common law concept of illegal restraints.[6] It then concluded that (1) the Sherman Act does not condemn all combinations and conspiracies which interrupt interstate transportation;[7] (2) labor unions are to some extent and in some circumstances subject to the Act;[8] but (3) it does not apply to all labor union activities affecting interstate commerce;[9] (4) the evil at which the Sherman Act was aimed was the control of the market “by suppression of competition in the marketing of goods and services * * *”;[10] (5) the end sought was the prevention of “restraints to free competition in business and commercial transactions which tended to restrict production, raise prices or otherwise control the market to the detriment of purchasers or consumers of goods and services * * *”;[11] and, finally (6) “Restraints on competition or on the course of trade in the merchandising of articles moving in interstate commerce is not enough, unless the restraint is shown to have or is intended to have an effect upon prices in the market or otherwise to deprive purchasers or consumers of the advantages which they derive from free competition.”[12]
The trade or commerce which was involved in the present case was of three kinds: (1) The making available and financing of medical and hospital services; (2) medical service itself, i.e., service rendered by medical doctors; (3) hospital service, i.e., service rendered by hospital staffs and the use of hospital facilities. As we indicated in our earlier opinion the common law recognized the practice of medicine as being trade[13] and there is nothing in the Apex case to suggest the contrary. It may be regrettable that Congress chose to take over in the Sherman Act the common law concept of trade, at least to the extent of including therein the practice of medicine. Developments which have taken place during recent decades in the building up of standards of professional education and licensure, together with self-imposed standards of discipline and professional ethics, have, in the belief of many persons, resulted in substantial differences between professional practices and the generally accepted methods of trade and business. As we pointed out in our earlier decision,[14] the American Medical Association and other local medical associations have undoubtedly made a profound
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contribution to this development. However, our task is not to legislate or declare policy in such matters but, rather, to interpret and apply standards and policies which have been declared by the legislature. That Congress did use the common law test there is no doubt. That Congress was not otherwise advised was perhaps because of the failure of the professional groups to insist upon the distinction and to secure its legislative recognition. In any event, there is no doubt that Group Health Association was engaged in trade or commerce, within the meaning of the applicable section of the statute.[15] It is not necessary, in order to constitute trade or business, that it shall be carried on for profit.[16] Appellants protest that the District Court has said in Group Health Association v. Moor:[17] “The actions of the plaintiff [G.H.A.] in no way tend to commercialize the practice of medicine.” They argue from this that the activities of Group Health Association were not commercial activities and hence not in trade within the meaning of the Sherman Act. But this argument misses the point. The activities of Group Health Association are commercial, but because the lay executives of Group Health Association do not in any way interfere with the professional work of the medical doctors, their commercial activities do not tend to commercialize the practice of medicine. Medical doctors have long conceded the propriety of medical services furnished by large industrial organizations, to their employees, by doctors also in their employ.[18] There is no greater
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incongruity in the making available of medical services by a cooperative association or a nonprofit mutual benefit association, in similar manner; nor any more reason for suggesting that such industrial organizations are not engaged in commercial activities. In each case the service is rendered in accordance with the standards of the profession and to that extent uncontrolled by the corporate employer.[19] But, at the same time, the salaries of such professional employees may undoubtedly be paid by the corporation and charged as an ordinary and necessary expense of business.[20] Although there is authority for the proposition that for some purposes charitable hospitals are not engaged in trade, business or industry,[21]
we have no doubt that the hospitals described in the indictment were engaged in trade and commerce within the meaning of the common law and of the Sherman Act.[22]
So far as Group Health and the hospitals are concerned, therefore, their activities are properly described as business and commercial in character. There is also no question that commercial and business competition was not only the possible but the probable result of Group Health’s activities. Consequently — entirely apart from any direct restraint upon the practice of medicine itself — if a conspiracy was shown, the purpose of which was to restrain competition, raise prices, or otherwise control the market to the detriment of purchasers or consumers of medical or hospital services, by destroying or injuring Group Health Association, it was sufficient to sustain the conviction.
The fact of commercial and business competition is the predominant note in the controversy which preceded the initiation of criminal prosecutions in these cases.[23] One of the major purposes of Group Health
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Association was to provide low-cost medical service, on a prepayment basis.[24] Appellants, in fact, recognize the existence of a controversy concerning this question.
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They requested an instruction in which they asserted their right to disapprove the attitude of Group Health Association with respect to low-cost medicine plans.[25] That appellants’ attack on Group Health Association was designed to restrain competition is revealed by the following statement in their Reply Brief: “Appellants insist that the origin of GHA is traceable directly to the Twentieth Century Fund, its subsidiary corporations, and others whose purpose was to destroy the private practice of medicine in the District * * * and to establish corporate practice of medicine.” If, as appellants thus contend, they believed that the purpose of the Twentieth Century Fund and the purpose of GHA was to destroy the private practice of medicine in the District, by establishing corporate practice of medicine, obviously, the bitterest kind of competition in making available medical and hospital service was under way. If the purpose of appellants was to prevent such competition by the destruction of GHA, obviously that purpose was to restrain trade.[26]
The important question is, therefore, whether the methods used constituted improper restraints of competition, within the meaning of the statute in the trade or commerce of financing and making available all or any of the three several services to which reference has been made. And, as the prosecution in the present case is under Section 3 of the Act no question of the interstate character of that trade or commerce is involved. Appellants urge a number of contentions to negate unlawful restraint. The first of these is that the controversy here involved is a labor dispute; hence that appellants are excluded from the operation of the Sherman Act, by virtue of provisions of the Clayton Act, 38 Stat. 730, and of the Norris-LaGuardia Act, 29 U.S.C.A. § 101 et seq.
Presumably appellants’ contention casts medical doctors in the role of laborers; Group Health in the role of employer; and themselves in the role of labor organizations, or perhaps in a role comparable to that of the New Negro Alliance;[27] all
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this on the assumption that medical practice, the furnishing of medical services and the furnishing of hospital services, come within the common law definition of trade; with the consequence, they argue, that a controversy arising between these three groups, or any two of them, concerns “terms or conditions of employment, or * * * the association or representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or conditions of employment, * * *.”[28] That medical doctors, lawyers, teachers and other professional people can be and are employed there is no doubt. Some professional or pseudo-professional groups have organized themselves into unions. Medical societies and bar associations are sometimes referred to by laboring people as “doctors’ unions” and “lawyers’ unions.” But after all it is a labor dispute which is the subject of definition and application in these Acts. Although, in the broader sense, all forms of mental and physical exertion may be called labor, even including attendance at a symphony concert or the labor of childbirth; and, although a dispute concerning any form of such labor might perhaps be called a labor dispute, the purpose of Congress seems to have been to describe a more limited range of activity.[29]
The Committee Reports on the Clayton and Norris-LaGuardia Acts indicate that the legislation was enacted in contemplation of disputes between workingmen,[30] or wage earners,[31] or laborers,[32] on the one hand, and aggregated capital, commonly in corporate form, on the other. A physician is not a workman[33] or a laborer,[34] as those words are known to the law, and his compensation is not wages.[35]
The matrix of the controversy must be the employer-employee relationship,[36] although the disputants need not stand in the proximate relation of employer and employee.[37] If physicians employed on the contract basis in industrial medicine should form associations for collective bargaining they might, perhaps, fairly be said to come within the operation of the Norris-LaGuardia and Clayton Acts.[38] Or if the
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laity were so dominantly organized into consumer cooperatives that it might properly be said of the physician, as of the individual unorganized worker, that he is “commonly helpless * * * to obtain acceptable terms and conditions of employment, * * *” or protection “from the interference, restraint, or coercion of employers of labor, * * *”[39] then possibly the two Acts would be applicable.[40] But, under the actual facts of the present case, even the contracting physicians occupy no such position. For a fixed sum they assumed to render services when needed.[41] In the rendering of those services, when needed, they are not subject to supervision by the Association.[42]
Originally independent contractors, they do not lose that status by contracting to perform unsupervised services.[43]
In our opinion, therefore, neither the Clayton Act nor the Norris-LaGuardia Act was intended to cover such a controversy as existed in the present case. The carefully chosen language of the Hutcheson case[44] seems particularly significant in this respect: “The Norris-LaGuardia Act reasserted the original purpose of the Clayton Act by infusing into it the immunized trade union activities as redefined by the later Act. In this light § 20 removes all such allowable conduct from the taint of being `violation of any law of the United States,’ including the Sherman Law. * * * It was precisely in order to minimize the difficulties to which the general language of the Sherman Law in its application to workers had given rise, that Congress cut through all the tangled verbalisms and enumerated concretely the types of activities which had become familiar incidents of union procedure.”[45] [Italics supplied.] In the Hutcheson case the Court expressly distinguished the situation in which a union acts, not in its own self-interest, but in combination for other purposes, with non-labor groups.[46] It cited as an example United States v. Brims.[47] In the latter case it was held that a conspiracy of manufacturers of millwork, building contractors and union carpenters, to check competition from nonunion made millwork was a violation of the Sherman Act; the conspiracy agreement being that the manufacturers and contractors would employ only union carpenters, who in turn would refuse to install the nonunion millwork. And, in contrast, the Court, in the Hutcheson case, also said: “Clearly, then, the facts here charged constitute lawful conduct under the Clayton Act unless the defendants cannot invoke that Act because outsiders to the immediate dispute also shared in the conduct.”[48] [Italics supplied] This, it would seem, was also the situation in the New Negro Alliance case.[49] Assuming
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a bona fide labor dispute, the participation of a non-labor organization therein should not, without more, deprive it of its character as a labor dispute; give it the character of criminal conduct; or authorize judicial restraint except in compliance with the limitations of the Norris-LaGuardia Act.
But, under the circumstances of the present case, appellants cannot escape the proscriptions of the Sherman Act even if we assume that the controversy was a labor dispute. As we have already noticed, the Supreme Court plainly indicated in the Apex case[50] that some phases of labor disputes may come under the condemnation of the Sherman Act; if, for example, they involve a combination or conspiracy which has as its purpose restraint upon competition, or if the labor organization is used by combinations of those engaged in an industry as the means or instrument for suppressing competition or fixing prices.[51] In the Apex case the Sherman Act was held to be inapplicable because it did not appear that the strikers’ acts were intended to restrain competition or that they had any effect on market prices of goods or services.[52] But that was not the situation of the present case.
Appellants reassert — in support of their contention that their conduct was not in restraint of trade — a proposition urged on the earlier appeal, that their conduct was no more than a reasonable regulation of the practice of medicine; and they rely upon the language of our earlier opinion: “If there is any justification for the restraint, so as to make it reasonable as a regulation of professional practice, it must be shown in evidence as a defense * * *.”[53] But in that same opinion — after recognizing the large and beneficent part which appellants have played in raising the standards of medical practice, and in contributing to the relief of the unfortunate and destitute — we also said: “Notwithstanding these important considerations, it cannot be admitted that the medical profession may through its great medical societies, either by rule or disciplinary proceedings, legally effectuate restraints as far reaching as those now charged.”[54] And we did not, by any means, declare the law to be — as appellants now assert — that a conspiracy “entered into with the object of properly and fairly regulating the practice of medicine, * * *” was not a violation of the Sherman Act. The prayer for instruction which appellants requested upon this point was contradictory on its face and was properly refused.[54a] Under no circumstances could the commission of crime be justified as a reasonable regulation of professional practice.[55]
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The wide scope of appellants’ contention concerning their power to effect a reasonable regulation of the practice of medicine is revealed by proposed instructions and by their arguments on brief which seem to assume for them powers of a state legislature to enact and enforce laws to require improvement of standards of professional practice. Thus they rely upon such cases as Semler v. Oregon State Board of Dental Examiners[56] and Graves v. State of Minnesota,[57] which involved the constitutionality of state statutes and in each of which the statute was upheld on the ground that it constituted a reasonable exercise of the police power of the state. Needless to say, appellants have no such power.
The situation which confronts appellants, and which they have sought to control, is not confined to the medical profession alone. Profound changes in social and economic conditions have forced members of all professional groups to make readjustments. The fact that these changes may result even in depriving professional people of opportunities formerly open to them does not justify or excuse their use of criminal methods to prevent changes or to destroy new institutions. Lawyers, too, have seen, during recent decades, large scale changes in their professional work.[58] There was a time when lawyers worked entirely on fee or retainer in particular cases and controversies; now many of them are salaried employees on the staffs of large corporate industrial and financial organizations. Many of the simpler functions of business which once required the assistance of lawyers are now the routine work of better educated and more highly skilled business men; some of them law school graduates. Recent legislation has had the effect of removing from the field of judicial controversy and determination, a large percentage of cases which at an earlier time constituted the mainstay of lawyers’ practice.[59] A good example is found in connection with accidents occurring in industrial employment. In some of this new legislation representation by lawyers is expressly discouraged.[60] In some of it, formal rules of pleading, practice and evidence — the lawyers’ tools — are dispensed with.[61] There are some who regret and some who resent these changes. Over the years, as individuals and as members of professional associations,
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they have labored to prevent or minimize them. But they would not suggest that criminal conduct, as individuals or as associations, would be proper for such a purpose.
Professions exist because the people believe they will be better served by licensing especially prepared experts to minister to their needs.[62] The licensed monopolies which professions enjoy constitute, in themselves, severe restraints upon competition. But they are restraints which depend upon capacity and training, not special privilege. Neither do they justify concerted criminal action to prevent the people from developing new methods of serving their needs. There is sufficient historical evidence of professional inadequacy to justify occasional popular protests.[63] The better educated laity of today questions the adequacy of present-day medicine.[64] Their challenge finds support, as indicated in the margin, from substantial portions of the medical profession itself.[65] The people give the privilege of professional monopoly and the people may take it away.
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A highly regimented military profession under strict governmental control; a ministerial or religious profession, without uniform standards or licensure; a large group of highly trained persons who serve the people as experts in news collection and dissemination but who have never had professional standing, licensure or monopoly;[66] these are all examples of alternative methods which the people have used to develop and control their professional groups.
In some instances professional groups have been charged by legislative fiat with powers and duties concerning professional education, licensure, discipline, removal of licensees from practice, and other related subjects.[67] In such cases they act as agencies of government. Although some similar delegations of power have been made to the organized medical profession,[68] there is no evidence of delegation of power to appellants, sufficient to authorize the conduct for which they have been convicted. In the absence thereof professional groups must abide by the general laws just as scrupulously as any private citizen or
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private corporation. It is in this setting that appellants were permitted to organize, to establish standards of professional conduct, to effect agreements for self-discipline and control. There is a very real difference between the use of such self-disciplines and an effort upon the part of such associations to destroy competing professional or business groups or organizations. Again, to use the analogy of the legal profession, the activities of the American Medical Association in the present case more nearly resemble the situation which would exist if the American Bar Association or one of the state associations should undertake to destroy, by methods of criminal conspiracy, business organizations which employ lawyers, such as automobile associations, collection agencies, bankers’ associations and title and trust companies. It is true that they have attempted, by means of actions to forbid unlawful practice of the law and by efforts to secure legislation, thus to prevent activities which they regarded as encroachments upon the practice of law. Such actions at law and such efforts to secure enactment of legislation are equally available to appellants. But there is a clearly defined line of demarcation here which must be observed if the penalties of the Sherman Act are to be avoided. As we suggested in our earlier opinion, appellants have open to them always the safer and more kindly weapons of legitimate persuasion and reasoned argument,[69] as a means of preserving professional esprit de corps, winning public sentiment to their point of view or securing legislation.[70] But they have no license to commit crime. When they go so far as to impose unreasonable restraints, they become subject to the prohibition of the Sherman Act.[71] This, then, represents a limit to professional group activities. If it is desired to extend them beyond this point, legislation is required for that purpose. It may be desirable that this professional group shall be given such enlarged powers, but if so it will be necessary for the legislature to speak upon the subject rather than for the courts to recognize a privilege based upon preemption or usurpation.
The same general misconception seems to underlie appellants’ effort to show absence of restraint by contending that Group Health Association is an illegal organization or that it is engaged in illegal activities. It is elementary that a person is not privileged to kill another simply because the latter is a bad man.[72] Neither can justification for the commission of a crime be found in the fact that its commission benefited the community; and evidence offered for such a purpose is properly excluded.[73] Nor is the fact that a crime was committed with the intent to accomplish some ultimate good, an excuse for its commission;[74] even if it was for the purpose of enforcing the law.[75]
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The same rule applies in conspiracy cases as in criminal cases generally. Thus it was no defense to a charge of conspiracy to dynamite a man’s house that the house was a disreputable resort, a place where moonshine whisky was sold and where lewd women congregated for unlawful purposes.[76] And the same rule applies in cases of conspiracy under the Sherman Act.[77]
Neither the fact that the conspiracy may be intended to promote the public welfare,[78] or that of the industry,[79] nor the fact that it is designed to eliminate unfair, fraudulent and unlawful practices,[80] is sufficient to avoid the penalties of the Sherman Act.
Appellants are not law enforcement agencies; they are charged with no duties of investigating or prosecuting, to say nothing of convicting and punishing. They have been given no power to require their members, or Group Health Association, to reveal the intimate details of their affairs, as was attempted in the present case.[81] Except for their size, their prestige and their otherwise commendable activities, their conduct in the present case differs not at all from that of any other extra-governmental agency which assumes power to challenge alleged wrongdoing by taking the law into its own hands.[82]
Although extreme situations may seem sometimes to have required vigilante action where effective law enforcement by duly constituted officers had broken down or never been established;[83] and although persons who reason superficially concerning such matters may find justification for extra-legal action to secure what seems to them desirable ends; this is not the American way of life.[84] If Group Health
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Association is illegal, or is engaged in illegal activities, there is a method provided by law to determine the facts and to secure appropriate action.[85] If further controls are needed in addition to those now available, the legislative method is the appropriate one to secure the desired end.
The Government offered evidence that in various instances, over a period of years preceding the indictment, the American Medical Association induced various hospitals to exclude physicians from their staffs because of the physicians’ connection with various low-cost, risk-sharing or prepayment plans for medical services. Appellants contend that this evidence was not the type of background evidence approved by our decision in United States v. American Medical Association.[86] Specifically, they object that the Government did not present in detail the nature of the various plans which the Association thus allegedly sought to thwart and that the action of the Association is equivocal, hence as consistent with the enforcement of legitimate ethical standards as with a policy of discouragement of low-cost or risk-sharing or prepayment plans. It is true that in each instance the nature of the plan was not greatly detailed, though the Government’s first witness gave a description of prepayment plans in general and described several then in operation, including at least two which were objects of opposition by the Association. We think it was sufficiently shown that these various plans all involved the common element of low cost, and that the attitude of the Association toward each was hostile.[87] This evidence was admissible as bearing on the intent of
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the Association in respect of the actions which are the subject matter of the indictment.[88] Even assuming that this evidence may have been relevant only in respect of the American Medical Association and that it was introduced for that purpose by the Government, nevertheless, as appellants sought only to exclude it entirely, rather than merely to limit its probative force, there was, consequently, no error in admitting it,[89] in any event.
Appellants contend further, in this connection, that: “A misdemeanor such as described in Section 3 of the Sherman Act is not a violation of the law in Texas, Wisconsin, or any other state of the United States. A restraint of intrastate trade in Texas or Wisconsin is not a violation of any law of the United States, and so far as this record discloses, of any state law. Every man has a right to do it, and no finger of scorn is to be pointed at him for doing it. To permit the Government to prove in a case pending in the District of Columbia lawful acts that were performed by the defendant AMA in Texas and Wisconsin is error.” But as applied to the present case the premise is incorrect and the conclusion does not follow. In the first place, it is elementary that if the object of a conspiracy is criminal, then evidence of conduct — otherwise lawful — but which is intended to achieve that criminal objective may properly be received to prove the conspiracy.[90] In the second place, whether the particular conduct was criminal at the time and place where it occurred is beside the point. Evidence has been admitted to prove background, even though it concerned conduct which occurred prior to adoption of the act under which the indictment was found;[91] as well as concerning conduct which occurred before the date
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in the indictment when it was alleged that the accused persons conspired.[92] The disputed evidence in the present case was not offered to prove the commission of crimes in Texas, Wisconsin, or other states, but to prove the commission of a crime in the District of Columbia, by proving the background of appellant’s conduct in the District of Columbia. What it did in the District was part of a larger plan. Evidence of conduct in other states — which may have been perfectly lawful according to the laws in force in those states — was nevertheless proof of appellant’s intent and purpose in acting as it did in the District.[93] The cases relied upon by appellants require no other conclusion. One of them is not in point and in both of the others all the acts complained of were committed outside the United States.[94] In Eastern States Petroleum Co., Inc., v. Asiatic Petroleum Corp., Judge Chase, speaking for the Second Circuit Court of Appeals, put the case in a nutshell when he said: “Likewise, what was done wholly abroad unaided by acts in this country must be counted out.”[95] [Italics supplied.]
Appellants contend that the verdict of the jury acquitting all the defendants except the American Medical Association and the Medical Society of the District of Columbia, and convicting the two latter associations, constitutes such inconsistency as to require that the verdicts of guilty be set aside. It has been held many times that inconsistency in verdicts does not require the result contended for by appellants.[96] And this is true even though the inconsistency can be explained by no rational considerations.[97] The question for us is whether the convictions are consistent with the evidence.[98] Complete identity of participation in the conspiracy was not necessary upon the part of the participants, either in fact or in law. While such complete identity is not necessary in order to sustain a verdict when several persons jointly tried are convicted,[99]
lack of it may be enough to explain away a supposed inconsistency when some are acquitted and others convicted. Thus in American Socialist Soc. v. United States, the court said: “The last objection is that the judgment should be reversed, because, if the author of the pamphlet was not guilty, the publishers could not be guilty. It is said that Nearing must have been acquitted on one of two grounds, viz. either that the pamphlet itself was innocuous or that he had no intent to obstruct the recruiting and enlistment service of the United States. If the acquittal of Nearing was on the first ground, the society ought also to have been acquitted. We are therefore justified in finding that the acquittal was on the second ground. The statute, in defining the offense, imposes the additional condition that the act
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shall be done with the specific intent of obstructing the recruiting and enlistment service of the United States. The jury might believe that Nearing did not write these harmful views with the intent of obstructing the recruiting and enlistment service of the United States, and at the same time believe that the Society did print and distribute them with that intent. Such findings would not be inconsistent. This is a matter of fact, of which the jury are the sole judges, and with it we have no concern.”[100]
Appellants’ contention confuses the concepts of corporate and individual criminal liability. When a corporation is guilty of crime it is because of a corporate act, a corporate intent; in short, corporate commission of crime.[101] The fact that a corporation can act only by human agents is immaterial.[102]
How separate is the identity of the corporate person and the individual person, where criminal liability is concerned, is shown by the fact that a corporation may be found guilty of a crime, the essential element of which is a specific criminal intent.[103] This has been often held in conspiracy cases.[104] In at least one state it has been held that the corporation and its agents may be separately counted in order to find the two or more persons necessary for the commission of a conspiracy.[105] In the present case a large number of individuals were named as defendants; some of whom were agents of appellants, others who were not. Moreover, as the two corporations were convicted, the requirement of two persons is satisfied in any event. Consequently, for both reasons, the conviction of appellants does not depend upon the guilt or conviction of their agents.
We have carefully examined appellants’ other contentions and find them to be without merit. As we read the record the case was tried carefully and fairly; the jury was properly instructed; and the evidence was adequate to support the verdicts.
Affirmed.
Profit-Sharing Pension Fund v. Commissioner of Internal Revenue, 7 Cir., 45 F.2d 506, 509. For purposes of qualifying to do business under the corporation laws of a foreign state: Ku Klux Klan v. Commonwealth ex rel. State Corporation Commission, 138 Va. 500, 509, 122 S.E. 122, 125; State ex rel. Griffith v. Knights of Ku Klux Klan, 117 Kan. 564, 572, 573, 232 P. 254, 258, 37 A.L.R. 1267; 17 Fletcher Cyc. Corp. (Perm.Ed.) § 8467. For purposes of compliance with legislation regulating corrupt political practices: La Belle v. Hennepin County Bar Ass’n, 206 Minn. 290, 294, 288 N.W. 788, 790, 125 A.L.R. 1023. For purposes of service of process on agents: Pacific Typesetting Co. v. International Typographical Union, 125 Wn. 273, 277, 216 P. 358, 360, 32 A.L.R. 767. Cf. Roman Catholic Archbishop v. Industrial Accident Commission, 194 Cal. 660, 670, 671, 230 P. 1, 5 (religious corporation sole held sufficiently engaged “in trade or business” to warrant application of Workmen’s Compensation Law); Gardner v. Trustees of Main Street M.E. Church, 217 Iowa 1390, 1395, 250 N.W. 740, 745, 746, superseding opinion in 244 N.W. 667, 668; Note, 18 Iowa L. Rev. 557.
Similar questions have arisen in connection with other professions. For a general discussion see Note, 44 Harv.L. Rev. 1114. As applied to practice of law see Merrick v. American Security Trust Co., 71 App.D.C. 72, 77, 107 F.2d 271, 276, certiorari denied 308 U.S. 625, 60 S.Ct. 380, 84 L.Ed. 521; 6 Fletcher Cyc. Corp. (Perm.Ed.) § 2524; 5 Law and Contemp. Prob. No. 1 (pp. 1-174).
Chapter III, Article VI of the Principles of Medical Ethics reads in part as follows:
“Conditions of Medical Practice. Section 2. It is unprofessional for a physician to dispose of his services under conditions that make it impossible to render adequate service to his patient or which interfere with reasonable competition among the physicians of a community. * * *
“Contract Practice. Section 3. * * * Contract practice per se is not unethical. However, certain features or conditions if present make a contract unethical, among which are: * * * 2. When there is underbidding to secure the contract. 3. When the compensation is inadequate to assure good medical service. 4. When there is interference with reasonable competition in a community.”
Chapter IX, Article III, Section 1 of the Constitution reads as follows: “It is unprofessional for a physician to dispose of his services under conditions that make it impossible to render adequate service to his patient or which interfere with reasonable competition among the physicians of a community.”
[Italics supplied]
These provisions were utilized for purposes of disciplinary action against members of the District Medical Society employed by Group Health. Thus, the expulsion of Dr. Scandiffio, a member of the Group Health staff, from the District Medical Society followed a finding of the Compensation, Contract and Industrial Medicine Committee that he was guilty of violating Sections 1 and 2, Article III, and Section 5, Article IV, all of Chapter IX of the Constitution of the Society. That this disciplinary action against members of the Society was intended to affect Group Health Association is shown by the letter of December 10, 1937, sent by the Chairman of the Compensation, Contract and Industrial Medicine Committee of the Society to its Executive Committee which reads as follows: “On November 22d 1937, our committee addressed a communication to you advising you of our investigation concerning Drs. Allan E. Lee and M. Scandiffio, and recommended that they be expelled as members of the Society because of their violation of Section 1, Article III, Chapter 9, and Section 5, Article IV, Chapter 9, of the Constitution of the Medical Society of the District of Columbia. Our committee is today in receipt of a letter from Dr. Allan E. Lee, advising us that he has resigned from the staff of Group Health Association. Inasmuch as our recommendation respecting Dr. Lee was based upon the fact that he had entered into a contract with Group Health Association and that contract has now been terminated by him, we feel that no further action should be taken with respect to Dr. Lee. We therefore, respectfully request that the charges and recommendations against Dr. Lee, embodied in our communication of November 22, 1937, be withdrawn and that appropriate action be taken by your committee thereon.”
It is shown, also, by the letter of the same Chairman to Dr. Lee under date of December 21, 1937: “In acknowledgment of your letter of December 10, in which you enclose a copy of your resignation as a member of the medical staff of Group Health Association, Inc., may I say that upon receipt of same the Compensation, Contract and Industrial Medicine Committee appeared before the Executive Committee and requested a withdrawal of its charges against you, which request was granted. Such action places your status as that of a member now in good standing.”
The concern of the defendants Association and Society with the effect of Group Health on the economic status of the medical profession, and upon competition in financing and making available medical and hospital services, is abundantly illustrated by articles and statements of officers and members thereof. An article, appearing in the Journal of the American Medical Association for October 2, 1937, reads in part as follows: “Out of a total population of 486,869 in the District of Columbia, 115,912 are civil employees of the United States government, and, of these, 2,517 are employees of the Federal Home Loan Bank Board and its affiliated agencies. If to these persons, all of whom are eligible for membership in Group Health Association, their dependents are added, allowing an average of two dependents for each employee, a total of 347,736 persons is reached, out of a total population of 486,869 that the promoters of Group Health Association, according to their certificate of incorporation, seek to withdraw from the ordinary practice of medicine and to cover into a group health insurance contract practice system and treat through physicians hired for that purpose. The effect of the withdrawal from private practice of even one-half that number of persons, all of whom are able to pay for medical services, will materially disturb medical practice in the District of Columbia and react against public interest. * * * The scheme is so planned that the richer and more liberally paid employees are to obtain medical service at rates based on the incomes of the poorest employees. The courts have repeatedly held that the value of medical services rendered to a patient may be properly appraised in relation to his wealth, just as the value of legal services are commonly appraised in relation to the value of the interests that the lawyer is called on to protect, whether interests involving the life of his client or his client’s property. Under the present scheme, fees that are charged for medical services to the richer and more liberally paid employees are to be identical with those charged employees of the lowest grade, doing part-time work.”
The author of this article, who was one of the individual defendants, was Director of the Bureau of Legal Medicine and Legislation of the American Medical Association from 1922 to 1939, when he retired. He holds degrees both of law and of medicine. He was called as a witness by appellants and developed the theme of the article further as follows:
“If GHA expanded its activities to a point where it took over a substantial part of the people of the District of Columbia — rich and poor alike, — the United States Government subsidizing its services — it is quite obvious that the various doctors in the District of Columbia, with their plants, with their experience, and everything else, would not be able to compete on a fair, honest basis; and that is when medical practice would be broken down by the subsidized practice, tending to destroy the medical profession.”
The record reveals other similar statements of which the following are examples: “I think it would be exceedingly unfortunate to stabilize the income of the medical profession, because there is just as much difference in the qualifications of doctors as there is in the qualifications of stenographers. Some of them can do it and some of them are rotten. * * * It would be unfortunate to stabilize the pay of doctors.”
“* * * let us * * * consider what would happen in the District of Columbia provided you were able to obtain the maximum of enrollment in this corporation. * * * you see what it would do here as an economic thing. * * * It would simply result in the necessary exodus of a large part of the medical profession of the District of Columbia, * * *.”
“* * * Quite naturally, however, the organized profession is insisting upon not being forced by misguided or unfair competition to give up any of its rightful prerogatives.”
“The question has many implications. * * * About all the outside doctor would have to do would be to take care of the indigent and the riff-raff and the members who had been dropped by the club.”
“Dr. McGovern said that he looked upon this Group Health Association movement as an organization coming in an interfering with his business. He added that he expected to be in practice for some 20 years and he did not propose, if it could be avoided at all, to have an organization such as was proposed to interfere with his work and income. `Just what are you fellows going to do about it?’ He cited the instance of the musicians who had succeeded in preventing the Marine Band from cutting in on their business in playing before assemblies without cost to the sponsors. * * * The lawyers as a group had prevented inroads in their business. `It just doesn’t seem that we are active in preventing the National Government from entering the practice of medicine and interfering with our business. It should be demanded from the American Medical Association that they send a man down here now and see just what could be done.'” [Italics supplied]
“* * * corporation practice of medicine * * * in the District of Columbia threatens to have a far reaching and deleterious effect on the private practice of medicine.”
“* * * one is compelled to wonder what will become of the private practice of medicine in those centers if the government is to subsidize cut-rate medical schemes. * * *”
Maintenance of “free and fair competition” was the theme of defendants’ request for instruction No. 31, refused by the trial court which read in part: “* * * the defendants were entitled, both collectively and individually, to adopt and carry out reasonable regulations in professional practice for the purpose of maintaining free and fair competition in the District of Columbia and * * * any restraints caused thereby upon Group Health Association, Inc., its doctors, members or operations, without more, would not violate the Sherman Act.”
for the purpose of destroying the private practice of medicine and to set up in its place or stead a theory of the distribution of medical services advocated by such Fund; that HOLC was diverting Government moneys to subsidize GHA and thereby enabling it to sell medical services at less than cost; * * *.” [Italics supplied]
[15 U.S.C.A. § 1], is the question. * * * The Norris-LaGuardia Act removed the fetters upon trade union activities, which according to judicial construction § 20 of the Clayton Act [29 U.S.C.A. § 52] had left untouched, by still further narrowing the circumstances under which the federal courts could grant injunctions in labor disputes. More especially, the Act explicitly formulated the `public policy of the United States’ in regard to the industrial conflict, and by its light established that the allowable area o union activity was not to be restricted, as it had been in the Duplex case, to an immediate employer-employee relation. Therefore, whether trade union conduct constitutes a violation of the Sherman Law is to be determined only by reading the Sherman Law and § 20 of the Clayton Act and the Norris-LaGuardia Act as a harmonizing text of outlawry of labor conduct.” [Italics supplied]
“The jury is instructed as a matter of law that not all combinations and agreements affecting trade in the District of Columbia are condemned by the Sherman Act.
Where a combination or conspiracy was entered into with the object of properly and fairly regulating the practice of medicine in which the defendants are engaged or interested, such combinations or conspiracies are not a violation of Section 3 of the Sherman Act. If the jury finds from the evidence that the alleged combination or conspiracy was a reasonable regulation of the practice of medicine and further finds that the effect of its formation and enforcement on trade in the District of Columbia is but indirect and not its purpose or object, then a verdict of `Not Guilty’ must be returned as to all of the defendants.”
The legislation establishing a Small Claims and Conciliation Branch in the Municipal Court of the District of Columbia provides in part that “The clerk of said branch shall, at the request of any individual, prepare the statement of claim and other papers required to be filed in an action in this branch. * * *” 52 Stat. 103, § 5(a), D.C. Code (1940) § 11 — 805(a).
See Eagle Indemnity Co. v. Industrial Accident Commission, 217 Cal. 244, 248, 18 P.2d 341, 343; Note, 22 Calif.L. Rev. 121; Robinson, Appearances by Laymen in a Representative Capacity before Administrative Bodies, 5 Law and Contemp. Prob. 89.
In proceedings in the Small Claims and Conciliation Branch of the Municipal Court, “The judge shall conduct the trial in such manner as to do substantial justice between the parties according to the rules of substantive law, and shall not be bound by the statutory provisions or rules of practice, procedure, pleading, or evidence, except such provisions relating to privileged communications.” 52 Stat. 105, § 8(b), D.C. Code (1940) § 11-808(b).
The American Medical Association, it is true, disagrees with the conclusions of these eminent professionals. Shryock, id. at 401: “Taking quite another view of the situation, the Bureau of Economics of the American Medical Association conducted an investigation which `* * * revealed the fact that there are few, if any, people in the United States really suffering from lack of medical care. * * *'”
“Section 13. Violation of Rules May Be Punished. The by-laws, rules and regulations, when adopted by the Bar Board and when approved by the Supreme Court, shall be binding upon all members of the State Bar, and the wilful violation of any such rules and regulations by any member of the State Bar may be punished by suspension from the practice of law, for such period as may be determined by the Supreme Court under the same procedure as now provided by law for suspension of the right of attorneys to practice law in this state.”
The State Bar Act of California provides in part (California Statutes 1927, c. 34, p. 38, §§ 23, 24, 26): “Sec. 23. The board shall have power to aid in the advance of the science of jurisprudence and in the improvement of the administration of justice.”
“Sec. 24. With the approval of the supreme court, and subject to the provisions of this act, the board shall have power to fix and determine the qualifications for admission to practice law in this state. * * *”
“Sec. 26. The board of governors shall have power, after a hearing for any of the causes set forth in the laws of the State of California warranting disbarment or suspension, to disbar members or to discipline them by reproval, public or private, or by suspension from practice, and the board shall have power to pass upon all petitions for reinstatement. * * *”
See Sayre, Proposed Integration of the Bar in Iowa, 17 Iowa L.Rev. 50, 53, n. 5. For general discussion see Report of the Special Committee on Incorporation of the Bar, 11 Mich.State Bar Journal 50*.
The educational standards established by the American Medical Association for medical schools are sometimes given legislative recognition in statutes providing for the granting of certificates to practice to graduates of foreign schools which maintain such standards. Va. Code (1936) c. 68, § 1615(d).
The high standards adopted by the medical profession have also been recognized by state laws permitting the admission to practice of licentiates of the National Board of Medical Examiners. Md. Code (1939) art. 43, § 121; Ga. Code (1933) § 84-914. See 119 A.M.A.J. 178 (May 9, 1942).
The opinion of the Judicial Council also stated that: “The Judicial Council is distinctly of the opinion that practice under the terms and conditions to which these appellants have agreed with the employees of the International Harvester Company constitutes a violation of Chapter III, Art. VI, (Revised) Sec. 3, of the Principles of Medical Ethics (contract practice contrary to sound public policy).”
In the meantime and following the action of the State Society, Dr. Cutter, Secretary of the Association, had written the Superintendent of Mount Sinai Hospital, Milwaukee, Wisconsin, in the following language: “It has come to our attention, through correspondence with the Medical Society of Milwaukee County, that certain physicians have been expelled from that society through participation in an organization known as `Milwaukee Medical Center.’ It is also reported that certain of these same individuals continue as members of your attending staff with hospital privileges. May we call your attention to the recent resolution passed by the House of Delegates of the American Medical Association, as follows: `Resolved, That it is the opinion of the House of Delegates of the American Medical Association that physicians on the staffs of hospitals approved for intern training by the Council on Medical Education and Hospitals should be limited to members in good standing of their local county medical societies and that the House of Delegates requests the Council on Medical Education and Hospitals to take this under advisement.’ What possibility, if any, exists for observance of the principle laid down in this resolution?”
After a series of temporizing correspondence, Dr. Cutter again addressed the Superintendent of Mount Sinai Hospital as follows: “In view of the fact that we have received no reply to our letter of May 5 and no notification of any action taken with respect to the employment of physicians expelled from the county medical society, we wish to inform you that we are recommending to the Council that Mount Sinai Hospital be removed from the approved intern list and also from the Register of the American Medical Association.”
One week later the Superintendent of Mount Sinai Hospital wrote Dr. Cutter that the objectionable physicians had been denied further staff and courtesy privileges at Mount Sinai Hospital by vote of the Executive Committee.
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