Nelson v. United States
These writs of error submit for review a judgment in contempt entered in the case of the United States v. General Paper Co. described in No. 381 et seq. [See 201 U.S. 117, 50 L. ed. --, 26 Sup. Ct. Rep. 356.] The judgment was based upon the disobedience by the plaintiffs in error to orders of the court requiring them to answer certain questions and to produce certain books, documents, and papers in their examination before the special examiner, in pursuance to a subpoena duces tecum duly issued and served. The orders requiring the plaintiffs in error to answer were made upon petition of the United States, which exhibited the issues in the suit of United States v. General Paper Co., stated the questions asked plaintiffs in error, and the books, documents, and papers required of them.

Plaintiffs in error refused to obey the orders, and the examiner reported their disobedience to the court 'for such action as the court might take for the further enforcement of its orders.' In defense plaintiffs in error filed separate answers, which respectively alleged that Nelson was the president and manager of the Hennepin Paper Company; Bossard, manager and treasurer of the Itasca Company, and McNair, a director and general manager of the Northwest Paper Company. In other particulars the answers are identical except so far as the relations of plaintiffs in error to their respective corporations made a difference. Plaintiffs in error are also directors of the General Paper Company. We insert the answer of Nelson in the margin.  The court required the questions to be answered and the books and documents to be produced, and, being of opinion that the order did not constitute a final decision, refused to allow an appeal on the part of either of the plaintiffs in error or either of the defendants in the suit, or on the part of all of them jointly.

Plaintiffs in error refused to obey the order of the court, and upon the report of the examiner the judgment under review was entered fining plaintiffs in error severally $100 'for their said disobedience of the said order, said fines to be paid to the clerk of this court for the use of the United States, as punishment for such contempt,' and sentencing them to be imprisoned until the order of the court requiring them to testify should be complied with.

The questions on the merits in these cases are the same as those on the merits in 381 et seq., just decided. In those cases, however, this court had no jurisdiction and the appeals were dismissed. In the present cases we have jurisdiction (Bessette v. W. B. Conkey Co. 194 U.S. 324, 48 L. ed. 997, 24 Sup.Ct.Rep. 665), and directly from the circuit court, as questions under the Constitution of the United States are involved.

In the pleadings in the original suit brought in the circuit court of the United States for the district of Minnesota it is respectively alleged and denied that the defendant corporations, of which plaintiffs in error are officers, had entered into an agreement, combination, and conspiracy to control, regulate, and monopolize not only the manufacture of news prints and other papers, but the distribution and shipment thereof through the middle, southern, and western states, in violation of the antitrust act of July 2, 1890. [26 Stat. at L. 209, chap. 647, U.S.C.omp. Stat. 1901, p. 3200.] The United States sought to establish by plaintiffs in error the truth of the charge, and the subpoena served upon them was explicit as to what was required of them.

The subpoenas required plaintiffs in error to produce the account books, including the journals, ledgers, and other books kept by or under the control of the companies respectively, of which plaintiffs in error were respectively officers, (a) showing the amounts, kinds, and grades of paper manufactured by the respective companies and sold by or through the General Paper Company, and which were shipped since the 5th of July, 1900; (b) the prices, amounts, or credits received for such paper from the paper company between the 5th of July and the present time, including entries showing the manner in which the prices and amounts received by the respective companies for any and all of its products so sold have been equalized with the prices and amounts received or realized of any and all of the other defendant companies for which the paper company is or has been the exclusive agent; (c) the amounts and proportions of earnings or profits of the paper company, received by the respective companies from and through the paper company, either in the form of rebates, credits, or otherwise.

Second. All contracts, agreements, writings, and account books, including journals, ledgers, and other books, kept by or under the control of the respective companies, showing the agreement, arrangement, or understanding under and pursuant to each, and the manner in which the prices and amounts realized by the respective companies upon the various kinds and grades of paper manufactured by it and sold by and through the paper company, are and have been, since July 5, 1900, equalized, or the profits arising from the sale of such paper distributed or apportioned, as between the respective companies and other defendants manufacturing and selling through the paper company similar kinds or grades of paper or among all of the defendants manufacturing similar kinds or grades of paper, and then and there to testify and the truth to say, in a certain matter in controversy in said court, between the United States as complainant against the General Paper Company, et al., defendants, on the part of the complainant.

There is no uncertainty, therefore, either in the issue or the means of proof. In other words, the United States charges a conspiracy upon the part of the defendant corporations for the cessation of competition between the manufacturing defendants by creating a general selling and distributing agent, the General Paper Company, which restricts the output of the mills, fixes the prices of their products, determines to whom, and the terms and conditions upon which, such products shall be sold, into what states and places they shall be shipped, and what publishers and customers each mill shall supply. The means of proof of the charge are obviously the conditions of the companies before and after the formation of the paper company, its organization and the purpose of its organization, the means of its operation, how and by what means it equalizes the output and price of products, and the distribution of the proceeds of their sale, and the relations the accounts between it and the other defendant companies, and their books, accounts, and minutes of proceedings.

The questions were directed to these ends. They were directed to ascertain whether the prices received for the various paper materials were equalized, and whether, during the time the General Paper Company was the selling agent of the materials, there was in existence an arrangement whereby the prices received through the paper company were equalized between the other defendant companies. The questions were put in various ways to show such equalization and the arrangements to equalize, and to show the allowances to each mill, the fixing of definite prices, and the distribution of the balances received among the companies on the basis of their average daily output of the grade of paper inquired about. And there were also questions asked as to whether the board of directors or the executive committee of the paper company fixed the prices of paper to be paid to each of the mills by or through the paper company, and the compensation to be paid to the mills making butchers' fibre paper, because it was less profitable, and other questions as to conversations between gentlemen representing the different mills in regard to the organization of a corporation to act as general selling agent in order to eliminate competition. There were also questions as to whether the books showed the things expressed in the other questions. The objection made to each of the questions before the examiner was that the testimony sought was irrelevant, incompetent, and immaterial, and counsel advised the witnesses not to answer. As to the books and papers, the following is a sample of the proceedings:

Q. Do the books, journals, or ledgers of the Hennepin Paper Company show any agreement or arrangement or understanding under and pursuant to which and the manner in which the prices and amounts realized by the Hennepin Paper Company upon various grades of paper manufactured by it and sold by or through the defendant the General Paper Company are and have been, since the 5th day of July, 1900, equalized, or the profits arising from the sale of such paper distributed or apportioned, as between the defendants?

Mr. Flanders: All objections renewed, and I give the witness the same advice.

(No answer.)

Q. Do you refuse, Mr. Nelson, to produce the books?

Mr. Flanders: As I said before, you may assume for the purposes of these questions that the books and all the papers called for are present in court; but, on behalf of the Hennepin Paper Company and the witness and the General Paper Company, I decline to submit those to the inspection of the government counsel.

Mr. Kellogg: Or to allow them or any part of them to be put in evidence, Mr. Flanders?

Mr. Flanders: Yes.

Other facts will appear in the opinion.

Messrs. James G. Flanders, Charles F. Fawsett, and William Brace for plaintiffs in error.

[Argument of Counsel from pages 102-108 intentionally omitted]

Messrs. Frank B. Kellogg, James M. Back, and Attorney General Moody for defendant in error.

[Argument of Counsel from pages 108-111 intentionally omitted]

Mr. Justice McKenna, after stating the case as above, delivered the opinion of the court: 

Notes

That this respondent is a director and the president of Hennepin Paper Company, one of the defendants in the above-entitled matter, and is also the owner and holder of stock in said company of the par value of forty-nine thousand ($49,000.00) dollars and that the books and papers referred to in said order to show cause and in the petition and schedules thereto attached, upon which said order to show cause was made, are the books and papers of said Hennipen Paper Company, and not of this respondent, and are subject to the control of said Hennepin Paper Company, and not of this respondent; that this respondent is also a director of General Paper Company, another of the defendants in the above-entitled matter, and the owner and holder of stock in said General Paper Company of the par value of $2,250; that said Hennepin Paper Company and said General Paper Company have objected and do object, and this respondent has objected and does object, to the production of said books and papers for inspection by counsel for said complainant for the purpose of being offered in evidence in said cause. Said objections are based upon the following reasons:

1. That the materiality of said books and papers in the case mentioned in said order to show cause now pending in said court has not been established so as to authorize a court of equity of order their inspection, production, and introduction in evidence, and that the same are not material, relevant, or competent evidence in said cause; that said books and papers contain mattters of importance relating to the business of said Hennepin Paper Company and said General Paper Company in no way bearing upon or touching the issues in said cause, which it would be highly injurious to the business interests of both of said companies to make public, and this respondent submits that he ought not to be required to disclose any portions of said books or papers except on a proper showing that the same are material to said cause to establish some issue therein, and a showing that the same are not privileged for the protection of the defendants above named.

2. That one of the purposes of said complainant in instituting said cause and in making the requests mentioned in said order to show cause for the inspection, production, and introduction as evidence of said books and papers, is to establish and to compel said Hennepin Paper Company and said General Paper Company, and this respondent as such director or officer of each of said defendants, to furnish to said complainant evidence tending to establish that said Hennepin Paper Company and said General Paper Company have been guilty of certain violations of the act of Congress entitled 'An Act to Protect Trade and Commerce against Unlawful Restraints and Monopolies,' approved July 2, 1890 [26 Stat. at L. 209, chap. 647, U.S.C.omp. Stat. 1901, p. 3200], and the acts amendatory thereof or supplemental thereto, and to subject said Hennepin Paper Company and said General Paper Company to the penalties for such violations imposed by said act, and that to compel the production by said Hennepin Paper Company or said General Paper Company, through their officers or otherwise, of said books and papers for inspection and introduction as evidence in said cause, would be contrary to the provisions of the 5th Amendment to the Constitution of the United States, which provides that no person shall be compelled in any criminal case to be a witness against himself, and also contrary to the provisions of the 4th Amendment to the Constitution of the United States, which provides that the right of the people to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures shall not be violated.

3. That the alleged acts of said Hennepin Paper Company complained of by said complainant in its said original petition or bill of complaint in said cause, and which said complainant is endeavoring to establish in said cause, would, if committed by said Hennepin Paper Company, be violations of the laws of the state of Minnesota, and would subject said Hennepin Paper Company to forfeiture of its charter and other penalties under said laws; that to compel said Hennepin Paper Company, through this respondent as one of its officers or otherwise, to produce said books and papers for inspection and introduction as evidence in said cause would be to compel it to furnish evidence tending to establish that it has been guilty of such acts, and subject it to the forfeiture of its charter and other penalties aforesaid, contrary to the provisions hereinbefore mentioned of the 4th and 5th Amendments to the Constitution of the United States.

4. That in addition to the matters above set forth, the purpose of the complainant in instituting said cause and in making the requests mentioned in said order to show cause is to obtain from said court a decree enjoining said General Paper Company from carrying on the business for which it was incorporated, and to enjoin the carrying out of, and operation under, certain agency contracts and agreements existing between it and said Hennepin Paper Company, on the alleged ground that said contracts and agreements were made and are in violation of the provisions of said act of Congress; that said contracts and agreements are of great value, not only to said General Paper Company, whose entire business practically rests upon them, but are also of great value to, and constitute valuable property rights in, each of the defendants respectively parties thereto, including the said Hennepin Paper Company, and that such injunction from carrying out said contracts and agreements, and their virtual annulment thereby occasioned, would result in great injury, damage, or loss, not only to said General Paper Company, but also to said Hennepin Paper Company and to this respondent as a stockholder in each of said companies; and that to compel the production by said Hennepin Paper Company or said General Paper Company, or either of them, though this respondent as such director or officer or otherwise, of said books and papers for inspection and introduction as evidence in said cause for the purpose aforesaid, would be contrary not only to the provisions of said 4th and 5th Amendments to the Constitution of the United States, but also contrary to the well-established rule of the common law, as well as of equity jurisprudence, that no person will be compelled to discover any fact, either by producing documents or answering questions, which may subject him, either directly or eventually, to prosecution for a crime, or to a forfeiture or penalty, or anything in the nature of a forfeiture or penalty.

Further answering, this respondent alleges and shows unto this court that all the matters concerning which the questions referred to in said petition and schedules thereto annexed were asked, and which this respondent refused to answer, as stated in said petition, came to this respondent's knowledge exclusively as president and a director of said Hennepin Paper Company, or as a director of said General Paper Company, in the conduct of matters intrusted to him as such director or president, and which said companies, from the nature of the case, were compelled to intrust to this respondent as such director or officer, and that said Hennepin Paper Company and said General Paper Company have objected and do object, and this respondent has objected and does object, to said questions and to his being required to answer the same, for reasons similar to those already set forth in respect to the production inspection, and introduction in evidence of the books and papers above mentioned, that is to say:

1. That the materiality of said questions in the cause above mentioned has not been established so as to authorize a court of equity to order them to be answered, and that the same are not material, relevant, or competent evidence in said cause.

2. That the purpose of said complainant in instituting said cause and in asking said questions is to establish and to compel said Hennepin Paper Company and said General Paper Company, through this respondent as such director or officer, to furnish to said complainant evidence tending to establish that said Hennepin Paper Company and said General Paper Company have been guilty of certain violations of the acts of Congress above referred to, and to subject them to the penalties for such violations imposed by said acts, and that to compel said defendants hereinbefore named, or either of them, through this respondent, to answer said questions, would be contrary to the provisions hereinbefore referred to of said 4th and 5th Amendments to the Constitution of the United States.

3. That the alleged acts of said Hennepin Paper Company complained of by said complainant in its original petition or bill or complaint in said cause, and which said complainant is endeavoring to establish in said cause, would, if committed by it, be violations of the laws of the state of Minnesota, and would subject it to forfeiture of its charter and other penalties under said laws; that to compel it through this respondent to answer the questions aforesaid would be to compel it to furnish evidence tending to establish that it has been guilty of such acts, and subject it to the forfeiture of its charter and other penalties aforesaid, contrary to the provisions hereinbefore refered to of said 4th and 5th Amendments to the Constitution of the United States.

4. That in addition to the matters above set forth, the purpose of the complainant in instituting said cause, and in asking the questions mentioned in said order to show cause, is to obtain a decree enjoining said General Paper Company from carrying on the business for which it was incorporated, and to enjoin the carrying out of and operation under certain agency contracts and agreements existing between it and said Hennepin Paper Company, on the alleged ground that said contracts and agreements were made and are in violation of the provisions of said acts of Congress: that said contracts and agreements are of great value, not only to said General Paper Company, whose entire business practically rests upon them, but are also of great value to, and constitute valuable property rights in, each of the defendants respectively parties thereto, including The Hennepin Paper Company, and that such injunction from carrying out said contracts and agreements, and their virtual annulment thereby occasioned, would result in great injury, damage, and loss, not only to said Hennepin Paper Company or said General Paper Company, and that to compel said Hennepin Paper Company or said General Paper Company, through this respondent, to answer the questions aforesaid in aid of the purposes aforesaid would be contrary, not only to the provisions hereinbefore referred to of said 4th and 5th Amendments to the Constitution of the United States, but also contrary to the well-established rule of the common law as well as of equity jurisprudence, that no person will be compelled to discover any fact, either by producing documents or answering questions, which may subject him, either directly or indirectly, to prosecution for a crime or to a forfeiture or penalty, or anything in the nature of a forfeiture or penalty.

Further answering, this respondent alleges that he ought not to be required to answer the questions or comply with the requests, or produce for inspection by counsel for the complainant, or for the purpose of being offered in evidence in the cause above referred to, the books and papers referred to in said order to show cause and in the petition and schedules thereto annexed, upon which said order to show cause was made, not only for the reasons hereinabove set forth, but also for the following reasons, that is to say:

1. That one of the purpose of said complainant in instituting said cause and in seeking to require this respondent to answer the questions and comply with the requests and produce for inspection by counsel for the complainant, and for the purpose of being offered in evidence in said cause, the books and papers aforesaid, is to establish and to compel this respondent to furnish to said complainant evidence tending to establish that he has been guilty of certain violations of the acts of Congress hereinbefore mentioned and referred to, and to subject him to the penalties for such violations imposed by said acts, and that to compel him to answer said questions or comply with said requests, or to produce for inspection or for the purpose of being offered in evidence in said cause, the said books and papers, would be contrary to the provisions hereinbefore referred to of said 4th and 5th Amendments to the Constitution of the United states.

2. That the alleged acts of said Hennepin Paper Company and of said General Paper Company complained of by the complainant in its said original petition or bill of complaint in said cause, and which said complainant is endeavoring to establish in said cause, would, if committed by said defendant companies, involve certain violations of the laws of the state of Minnesota by this respondent, and would subject him to penalties and forfeiture under said laws, and that to compel him to answer the questions or comply with the requirements aforesaid, or to produce for inspection, or for the purpose of being offered in evidence in said cause, the said books and papers, would be to compel him to furnish evidence tending to establish that he has been guilty of such violations of the laws of the state of Minnesota, and to subject him to the penalties and forfeitures aforesaid, contrary to the provisions hereinbefore referred to of said 4th and 5th Amendments to the Constitution of the United States.

3. That one of the purposes of said complainant in instituting said cause and in seeking to require this respondent to answer the questions and comply with the requests, and produce for inspection by counsel for the complainant and for the purpose of being offered in evidence in said cause, the books and papers above referred to, is to establish and compel this respondent to furnish to said complainant evidence tending to establish the allegations of the original petition or bill of complaint in said cause, which, if established, will result in subjecting this respondent to loss or detriment in the nature of a penalty or forfeiture, in that the said Hennepin Paper Company, of which this respondent is a stockholder as aforesaid, will be subjected, under the laws of the state of Minnesota, to the forfeiture of its charter, resulting in the virtual forfeiture of the stock of this respondent in said defendant company, and in the loss and forfeiture to a large extent of the value of the interest of this respondent in said corporation, and in that the contracts made through said General Paper Company as its sales agent by said Hennepin Paper Company under and pursuant to the agency contracts herein referred to between said Hennepin Paper Company and said General Paper Company will be virtually annulled and the property rights of said Hennepin Paper Company in said contracts destroyed; that there are a large number of such contracts outstanding under which large sums of money are due to said Hennepin Paper Company, all of which, as this respondent is advised and believes, will be or may be forfeited and lost to said defendant and to this respondent as a stockholder therein in case the illegal combination alleged in said original petition or bill of complaint is established by the decree or judgment in said cause; and this respondent alleges that to compel him to answer the questions and comply with the requests and product for inspection and for purpose of being offered in evidence the books and papers referred to in said order to show cause and the petition and schedules aforesaid, and which he has declined to answer and comply with or produce, if material to said cause, would be contrary to the provisions of said 4th and 5th Amendments to the Constitution of the United States. and also contrary to the well-established rule of the common law and of equity jurisprudence, that no person will be compelled to discover any fact or matter which may subject him to forfeiture or penalty or anything in the nature of a forfeiture or penalty.
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