Chrysler Corporation v. United States

*557 Me. Justice Byrnes

delivered the opinion of the Court.

On May 27, 1938, an indictment was returned against appellants (referred to hereafter as Chrysler) and Commercial Credit Company and certain subsidiaries of the latter in the District Court for the Northern District of Indiana. Two similar indictments were returned on the same day, one against Ford Motor Company and certain finance companies affiliated with it, and the other against General Motors Corporation and General Motors Acceptance Corporation, its subsidiary. The gist of each of these indictments was that the automobile manufacturer had combined and conspired with its affiliated finance company or companies to restrain trade and commerce in the wholesale and retail sale and financing of its automobiles, in violation of the Sherman Act.1

During the ensuing months, Chrysler and Ford reached an agreement with the Government that the indictments against them would be quashed and consent decrees entered. Consequently, on November 7,1938, bills of equity were filed against Chrysler and Ford, praying for injunctions against the acts complained of. Answers were filed,2 and on November 15,1938, the consent decrees were entered.

The lengthy decree against Chrysler need not be described in detail.3 Paragraph 6 imposed numerous specific restraints upon discriminatory practices by Chrysler in favor of Commercial Credit Company. Paragraph 7 imposed correlative restraints upon Commercial Credit Company in its dealings with Chrysler. Paragraph 12A *558 contained alternative provisions depending upon the outcome of the then still pending criminal proceedings against General Motors. It provided: (1) that if those proceedings should not result in conviction, every provision of this consent decree against Chrysler should be suspended until such time as a substantially identical decree should be obtained against General Motors; or (2) that upon conviction of General Motors in the criminal proceedings, or upon the entry of a decree in a civil action against General Motors, or upon January 1,1940—which-ever should occur first—Chrysler should be free of all restraints imposed by paragraph 6, to the extent that substantially identical restraints had not been imposed upon General Motors by the verdict of guilty, or by the civil decree, and until such restraints were imposed.

The question before us concerns paragraph 12, which is separate and distinct from paragraph 12A. Paragraph 12 forbade Chrysler to “make any loan to or purchase the securities of” Commercial Credit Company or any other credit company. It then provided:

“It is an express condition of this decree that notwithstanding the provisions of the preceding paragraph of this paragraph 12 and of any other provisions of this decree, if an effective final order or decree not subject to further review shall not have been entered on or before January 1, 1941, requiring General Motors Corporation permanently to divest itself of all ownership and control of General Motors Acceptance Corporation and of all interest therein, then and in that event, nothing in this decree shall preclude the manufacturer [Chrysler] from acquiring and retaining ownership of and/or control over or interest in any finance company, or from dealing with such finance company and with the dealers in the manner provided in this decree or in any order or modification or suspension thereof entered pursuant to paragraph 12a . . .” Italics added. *559 Affiliation between Chrysler and Commercial Credit Company, or another finance company, was thus singled out for special treatment in paragraph 12. The various restraints imposed by paragraphs 6 and 7 were subject to termination upon the contingencies described in paragraph 12A, but the prohibition against affiliation was subject to expiration upon the distinct and different contingency described in paragraph 12, viz., the entry of “an effective final order or decree not subject to further review ... on or before January 1, 1941, requiring General Motors Corporation permanently to divest itself of all ownership and control of General Motors Acceptance Corporation and of all interest therein . . .”

Jurisdiction of the cause was retained by the District Court, in paragraph 14, for the purpose of enabling the parties to apply at any time “for such further orders and directions as may be necessary or appropriate in relation to the construction of or carrying out of this decree” or “for the modification thereof.”

The criminal proceedings against General Motors resulted in conviction of the corporation on November 17, 1939. General Motors appealed to the Circuit Court of Appeals for the Seventh Circuit. On May 1, 1941, that Court affirmed the conviction and on July 2, 1941, denied rehearing. 121 F. 2d 376. A petition for certiorari was denied on October 13, 1941, 314 U. S. 618. A petition for rehearing was denied on November 10, 1941, 314 U. S. 710.

Meantime, a civil suit for an injunction had been instituted by the Government against General Motors on October 4, 1940 in the District Court for the Northern District of Illinois. On October 26, 1940, the Government agreed to an extension of time to answer to January 20, 1941. This extension of time rendered it impossible for the Government to obtain “an effective final order or decree” against General Motors before January 1, 1941, as *560 required by paragraph 12 of the consent decree against Chrysler. Accordingly, on December 17, 1940, the Government filed a motion in the District Court in Indiana asking that paragraph 12 of the consent decree against Chrysler be modified by substituting “January 1, 1942” for “January 1, 1941.” Chrysler opposed this motion, but on December 21, 1940 an order was entered changing the date as requested. Chrysler appealed to this Court from the order of modification, but the appeal was dismissed on December 8, 1941 for want of a quorum of Justices qualified to sit, 314 U. S. 583, and on January 5, 1942 rehearing was denied, 314 U. S. 716.

Pursuant to additional stipulations between the Government and General Motors, the time to answer the Government’s complaint in the civil suit in the Illinois District Court was successively extended to January 27, 1941, to May 1, 1941, to June 15, 1941, and to June 21, 1941. On the latter date, the Government filed an amended complaint. By agreement, the time in which to answer this amended complaint was extended to July 15, 1941. General Motors then sought a further extension of time to answer the amended complaint, urging that the civil suit should be postponed pending a final determination of the criminal case and that it was about to petition for a writ of certiorari in the criminal case. The Government refused to agree to an extension, stating that any further delay might prejudice the Government in connection with its consent decree against Chrysler. The District Court nevertheless entered an order for an indefinite extension of the time in which General Motors might answer the amended complaint. On December 1, 1941, the Government moved the District Court to set a day certain by which General Motors would be required, to answer and otherwise plead. In the motion and in an accompanying affidavit, the Government explained the connection be *561 tween the consent decree against Chrysler and the civil suit against General Motors. After a hearing on the motion, the District Court set January 15,1942, as the date by which General Motors would be required to answer.

The date fixed by the last mentioned order of the District Court in Illinois in the suit against General Motors created further difficulty with respect to the consent decree in the Chrysler case in the District Court of Indiana. It had now become impossible for the Government to obtain “an effective final order or decree” against General Motors, within the meaning of paragraph 12 of the Chrysler consent decree, prior to January 1,1942. On December 22, 1941, therefore, the Government moved the District Court in Indiana for a second modification of paragraph 12 of the Chrysler consent decree by substituting “January 1,1943” for “January 1,1942.” In its answer Chrysler opposed the modification. The Government offered in evidence á transcript of the proceedings in the civil suit against General Motors. Hearing on the motion was continued to February 16, 1942. On that date no additional evidence was introduced, but argument of counsel was heard.

The District Court thereupon made the following findings of fact: (a) that the District Court had specifically retained jurisdiction to modify the consent decree; (b) that paragraph 12 was “framed upon the basis that the ultimate rights of the parties thereunder should be determined by the Government’s civil antitrust proceedings against General Motors Corporation and affiliated companies”; (c) that “time was not of the essence with respect to lapse of the bar against affiliation [between Chrysler and Commercial Credit Company or any other finance company] ”; (d) “that to safeguard defendants against undue delay in such proceedings the decree provided for suspension of certain of its prohibitions in the event con *562 victions were not obtained in the criminal case against General Motors Corporation by January 1, 1940”; (e) “that the decree provided for a termination of the bar against affiliation, if the civil proceedings against General Motors Corporation were not successfully concluded by a court of last resort by January 1, 1941”; (f) that a conviction had been obtained in the criminal proceedings against General Motors on November 17, 1939; (g) “that the Government has proceeded diligently and expeditiously in its suit to divorce General Motors Acceptance Corporation from General Motors Corporation”; and (h) “that further extension of the bar against affiliation will not impose a serious burden upon defendants.” It then concluded as a matter of law “that the purpose and intent of the decree will be carried out if Chrysler is given the opportunity at any future time to propose a plan for the acquisition of a finance company, and to make a showing that such plan is necessary to prevent Chrysler Corporation from being put at a competitive disadvantage during the pendency of complainant’s civil litigation against General Motors Corporation, et al.”

Upon the basis of these findings and conclusions, the District Court entered an order modifying paragraph 12 by changing the date to January 1, 1943, in compliance with the Government’s motion. The case is before us on direct appeal from this order. 15 U. S. C. § 29, 28 U. S. C. §345.

It is clear that under paragraph 14 of the original decree the District Court had jurisdiction to modify it. The question is whether the change in date in paragraph 12 amounted to an abuse of this power to modify. We think that the test to be applied in answering this question is whether the change served to effectuate or to thwart the basic purpose of the original consent decree. United States v. Swift & Co., 286 U. S. 106.

*563 The text of the decree itself plainly reveals the nature of that purpose. It was, as stated in the District Court’s findings, “that the ultimate rights of the parties thereunder should be determined by the Government’s civil antitrust proceedings against General Motors Corporation and affiliated companies.” The time limitation was inserted to protect Chrysler from being placed at a competitive disadvantage in the event that the Government unduly delayed the initiation and prosecution of the General Motors injunctive proceedings. The District Court found “that the Government has proceeded diligently and expeditiously in its suit to divorce General Motors Acceptance Corporation from General Motors Corporation.” There is room for argument that this statement is markedly generous to the Government, inasmuch as the civil suit against General Motors was not instituted until almost two years after the entry of the consent decree and only three months prior to the limiting date in paragraph 12. But the finding is supported by several circumstances: the extended course of the appeals in the criminal proceedings against General Motors, for which the Government was not responsible; the obvious bearing of the results in that litigation upon the method of handling the civil litigation with General Motors; and the ruling of the District Court in Illinois in July, 1941, in the General Motors civil action, indefinitely extending the time to answer despite the Government’s objection, presumably to await the final disposition of the criminal case. In view of these considerations, the finding of the court below was not unreasonable, and we do not think that the Government lost its right to seek a modification of the decree.

The controlling factor thus becomes whether the extension of the ban on affiliation contained in paragraph 12 places Chrysler at a competitive disadvantage. Chrysler made no showing to that effect in the District Court. The *564 order of December 21, 1941 set the hearing for February 16,1942, with the explanation that Chrysler had “requested a continuance in order to produce further evidence.” But on February 16 no evidence was forthcoming. The record therefore reveals that Chrysler terminated its affiliation with Commercial Credit in 1938 before the consent decree was entered, and does not reveal that it has since asserted any desire or intention to affiliate with Commercial Credit or with any other finance company. Moreover, we cannot be blind to the fact that the complete cessation of the manufacture of new automobiles and light trucks has drastically minimized the significance of the competitive factor.4 Consequently there is no warrant for disturbing the finding of the court below “that further extension of the bar against affiliation will not impose a serious burden upon defendants.” If Chrysler desires to affiliate with a finance company and feels that its inability to do so places it at a disadvantage with its competitors, it should make such a showing to the District Court. That court expressly declared that Chrysler was free at any time to propose a plan for affiliation and to demonstrate that such a plan is necessary to avoid unfairness.

Affirmed.

Mr. Justice Roberts, Mr. Justice Murphy and Mr. Justice Jackson took no part in the consideration or decision of this case.

26 Stat. 209,15 U. S. C. § 1.

Chrysler’s answer included an allegation that it had completely terminated its affiliation with Commercial Credit Company by February, 1938.

The consent decree against Ford is substantially the same.

See the order of January 21,1942, of the Director of Priorities of the Office of Production Management. F. R. Docs. 41-636, 42-637, 7 F. R. 473.