
    Guyton v. The Eastern Electric Co.
    
      Unlawful combinations — Action under Section 6391, General Code —Counterclaim or set-off by defendant — Under Section 6397, General Code — Valentine anti-trust law.
    
    In an action on-an account by a member of an unlawful combination under Section 6391, General Code, for goods sold the price of which is advanced as a result of the unlawful combination, a defendant injured in his business by reason of the advance in price of the goods purchased by him from such member, may set up by way of counterclaim or set-off the damages allowed by Section 6397, General Code.
    (No. 13916 —
    Decided November 24, 1914.)
    Error to the Circuit Court of Montgomery county.
    Defendant in error filed a petition in the court of common pleas of Montgomery county asking judgment against the plaintiff in error in the sum of $189.99 on an account for lamps furnished plaintiff in error by defendant in error.
    In the first defense in the amended answer and cross-petition of plaintiff in error, by way of cross-petition, it was alleged that defendant in error, during the time covered by the items in the account attached to the petition and for a long time prior thereto, was a member of a combination of manufacturers of electric lamps operated under the name and style of The National Electric Lamp Association, and that the association as constituted by defendant in error and others was a combination formed for the purpose of fixing at an enhanced figure the price of electric lamps as manufactured by the members of said combination among themselves by which dealers and consumers of said lamps should be compelled to purchase the same at such enhanced price and to destroy as between the members of said association all competition in price; that said association, since its formation by defendant in error and others, has so far advanced and maintained the price of lamps and has effected and perfected a monopoly of the sale and distribution of the same; that as a result of such combination the price of lamps to plaintiff in error and other consumers thereof was advanced to the extent of twenty-five per cent., and for a term of four years prior to the filing of said amended answer and cross-petition plaintiff in error had been compelled to purchase of the defendant in error lamps for his trade at such advanced figure, entailing upon plaintiff in error a heavy loss in trade and profit on account thereof; and that during said period plaintiff in error had purchased of defendant in error lamps at a cost aggregating approximately $541.98, of which one-fifth, $108.39 in cost, was due to the illegal combination and which was a damage to plaintiff in error.
    It was further alleged that, in accordance with the act of the general assembly of the state of Ohio of April 19, 1898, recorded in volume 93, Ohio Laws, at page 146 (Section 6397, General Code), he was entitled to twofold the amount of damage sustained by him by reason of the premises.
    
      Plaintiff in error further averred that there was nothing due to defendant in error on the claim sued on and that he was entitled to recover from defendant in error damages in the sum of $17.78.
    In the third defense of the answer, by way of cross-petition, plaintiff in error adopted all the allegations of the first defense and averred further that the account sued upon in the petition was for a portion of the lamps purchased by plaintiff of the defendant subsequently to the advance in price due to said illegal combination. There was a prayer for judgment against the defendant in error in the sum of $17.78.
    To these two defenses, as well as to a second defense, a demurrer was filed by defendant in error upon the ground that facts sufficient to constitute a defense were not stated therein. This demurrer was sustained to each of the three defenses and cross-petition, and plaintiff in error not desiring to amend or plead further judgment was rendered against him in the sum of $203.08, with interest from May 28, 1912, together with costs.
    Error was prosecuted to the circuit court and the • judgment of the court of common pleas affirmed.
    Plaintiff in error makes no objection to the sustaining of the demurrer to the second defense, but asks for a reversal of the judgment of the circuit court upon the ground that that court erred in sustaining the demurrer to the first and third defenses and cross-petition.
    
      
      Mr. Lee Warren James, for plaintiff in error.
    
      Messrs. VanDeman, Burkhart & Smith, for defendant in error.
   Newman, J.

It appears from the allegations of the amended answer and cross-petition that defendant in error was a member of an unlawful combination, as defined by Section 6391 et seq., General Code, known as the Valentine anti-trust law. No claim is made here that plaintiff in error can avoid payment of the account sued on upon the ground that defendant in error was a member of this unlawful combination, although this point was made in the lower courts. It is insisted, however, that plaintiff in error may set up by way of counterclaim the damages he sustained in the purchase of the lamps mentioned in the account sued on by reason of this unlawful combination and, by way of set-off, the damages he sustained during the four years in which he dealt with defendant in error.

Under the Valentine anti-trust law damages are allowed to a person injured in his business or property by reason of an unlawful combination, Section 6397 providing: “In addition to the civil and criminal penalties provided in this chapter, the person injured in his business or property by another person, or by a corporation, association or partnership, by reason of anything forbidden or declared to be unlawful in this chapter, may sue therefor in any court having jurisdiction thereof in the county where the defendant or his agent resides or is found, or where service may be obtained, without respect to the amount in controversy, and recover twofold the damages sustained by him and his costs of suit. When it appears to the court, before which a proceeding under this chapter is pending, that the ends of justice require other parties to be brought before such court, the court may cause them to be made parties defendant and summoned whether they reside in the county where such action is pending, or not.”

The contention of counsel for defendant in error is that the action which this statute authorizes must be a direct one.

It appears from the answer and cross-petition that plaintiff in error was compelled to purchase from defendant in error, a member of the unlawful combination, lamps for his trade at an advanced figure, entailing upon him a heavy loss in trade and profit on account thereof, and that the account sued on is for a portion of the lamps so purchased by him, and a claim is made for damages under the provisions of the Valentine anti-trust, law.

' The question presented, then, is whether such a claim for damages is a counterclaim under Section 11317, General Code, where it is defined to be “a cause of action existing in favor of a defendant against a plaintiff or another defendant, or both, between whom a several judgment might be had in the action, and arising out of the contract or transaction set forth in the petition as the foundation of the plaintiff’s claim, or connected with the subject pf the action.”

The account sued on was for lamps purchased at the advanced price fixed by the unlawful combination. The sale of these lamps at this price gave rise to a cause of action in favor of plaintiff in error and was referable to the transaction had between the parties when the sale was made, and, in the language used in Section 11317, it was “connected with the subject of the action.” As we view it, the claim of plaintiff in error answers the statutory requirement of a counterclaim and it was error to sustain the demurrer to the third defense.

As to the first defense, in which plaintiff in error alleges the existence of the unlawful combination — • that by reason thereof the price of lamps to him was advanced and for a term of four years prior to the bringing of the action he was compelled to purchase of defendant in error lamps for his trade at such advanced figure, entailing upon him a heavy loss in trade and profit on account thereof, and that under the provisions of the Valentine antitrust law he is entitled to twofold damages — the court of common pleas took the view that this claim for damages was upon a liability created by statute and therefore could not be pleaded as a set-off under Section 11319, General Code, which is as follows: “A set-off is a cause of action existing in favor of a defendant against a plaintiff between whom a several judgment might be had in the action, and arising on contract or ascertained by the decision of a court. It can be pleaded only in an action founded on contract.”

The action of defendant in error, being one on a book account, was founded on contract. It is true that the liability of defendant in error to pay damages is fixed by Section 6397, supra, but the cause of action in favor of plaintiff in error grows out of his contract of purchase. Had there been no contractual relation between these parties no cause of action would have arisen in favor of defendant in error. This being true, plaintiff in error had the right to plead this cause of action as a set-off to the claim of defendant in error.

In the cases of Connolly v. Union Sewer Pipe Co., 184 U. S., 540, and Continental Wall Paper Co. v. Voight, 212 U. S., 228, to which our attention is called, the question we are considering in the present case was not decided. The Ohio statutes relating to counterclaims and set-offs were not before the court in the two federal cases, and the part of the opinion of the court in-the Connolly case quoted and relied on by counsel for defendant in error is, therefore, not in point.

Judgment reversed.

Nichols, C. J., Shauck, Johnson, Donahue, Wanamaker and Wilkin, JJ., concur.  