Kelly v. Kosuga

PETITIONER: Kelly
RESPONDENT: Kosuga
LOCATION: Fargo, North Dakota

DOCKET NO.: 267
DECIDED BY: Warren Court (1958-1962)
LOWER COURT: United States Court of Appeals for the Seventh Circuit

CITATION: 358 US 516 (1959)
ARGUED: Jan 22, 1959
DECIDED: Feb 24, 1959

Facts of the case

Question

Media for Kelly v. Kosuga

Audio Transcription for Oral Argument - January 22, 1959 (Part 2) in Kelly v. Kosuga

Audio Transcription for Oral Argument - January 22, 1959 (Part 1) in Kelly v. Kosuga

Earl Warren:

Number 267, Jack H. Kelly, Petitioner, versus Vincent W. Kosuga.

Joseph W. Louisell:

Mr. Chief Justice --

Earl Warren:

Mr. Louisell.

Joseph W. Louisell:

-- may it please the Court.

This matter is before the Court on a writ of certiorari issues to review the decision of the Seventh Circuit.

The action started as a simple suit to recover the purchase price for the quantity of onions claimed to have been sold by the respondent in these proceedings here -- to the petitioner in these proceedings here.

It was a brief complaint in which it was simply alleged that there was a sale of a quantity of onions by Kosuga to Kelly for a stipulated price.

The complaint alleged that in breach of the contract, Kelly had refused to accept delivery of a portion of this quantity of onions and that there remained due and owing to Kosuga a substantial sum of money on account of that -- that transaction.

The answer filed by the defendant below, Mr. Kelly, denied that this was a simple transaction alleged by the plaintiff in his complaint.

The defendant alleged in -- as an affirmative allegation in his answer and further as an affirmative defense that the cause of acton alleged by the plaintiff was but an integral part of a much broader understanding and agreement between the parties.

The defendant alleged that the crew undertaking between the parties encompass an agreement whereby Mr. Kosuga, together with his associate, a Mr. Siegel and along with Kelly and a group of persons similarly situated with Kelly, entered into an agreement, a combination and a conspiracy to affect, regulate, modify and influence, manipulate the price of onions on both the cash and the futures markets.

And the defendant below, Mr. Kelly, further alleged in his affirmative defense to the action, that the incidental purchase by him of 50 carloads of onions from Kosuga was but an integral part of an overall agreement by which those similarly situated with Kelly were to purchase altogether the sum of 287 carloads of onions for the avowed and express purpose of removing not only that quantity of onions but a still larger quantity of onions owned by Kosuga and his associate from the market in Chicago.

And that it was by this device that it was contemplated that they would effect a manipulation of the market price of onions.

Kelly specifically further alleged that in consideration of the entire understanding between all of these parties, none of them, whether the buyers or the sellers would deliver any portion of the onions concerning which the entire contract related on either the cash or the futures market.

Now, upon filing that affirmative defense, the plaintiff below moved to strike it from the grounds that it did not constitute an answer to the allegations of the complaint.

And this, notwithstanding, it was spelled out in the answer that it was the claim of the defendant Kelly below that in consequence of this entire undertaking, the entire agreement as to a port of -- a portion of which, the plaintiff would rely in bringing this suit was illegal as being contrary to the Sherman Antitrust Act in that it was patently but a device by which to fix prices.

As alleged.

Joseph W. Louisell:

As alleged.

And --

Earl Warren:

Did petitioner -- did petitioner claim any actual damage by reason of the agreement?

Joseph W. Louisell:

The plaintiff below sued to recover the balance of the purchase price --

Earl Warren:

Yes.

Joseph W. Louisell:

-- of the quantity of onions.

The petitioner here has refused to pay the balance of the purchase --

Earl Warren:

Yes.

Joseph W. Louisell:

-- price now setting forth and as he set forth in his answer below, that the entire understanding and the entire agreement between him and the plaintiff was an illegal agreement.

That it was an agreement contrary to public policy.

Earl Warren:

That I understand, but what I'm asking is does he allege that that resulted in any actual damage to him?

Joseph W. Louisell:

In this posture of the case, no, Your Honor.

Now, the District Court held on that motion to strike the affirmative defense that the remedies supported by the Sherman Act were its --