Full opinion text
SHERIDAN, Chief Judge. I. INTRODUCTION This is a private antitrust action which arises under Section 2 of the Sherman Act, Act of July 2, 1890, c. 647, 26 Stat. 209, as amended, 15 U.S.C.A. § 2, and under Section 4 of the Clayton Act, Act of October 15, 1914, c. 323, 38 Stat. 731, 15 U.S.C.A. § 15, to recover treble damages for defendant’s alleged monopolization of the shoe machinery industry, and, particularly, its alleged monopolistic practices with respect to substantially all shoe machinery required and used by plaintiff, The Hanover Shoe, Inc. (Hanover). The complaint, as amended, alleges in paragraph 14 that “Prior to and continuously from the year 1912 the defendant, United Shoe Machinery Corporation [United], has been violating the antitrust laws of the United States by: (a) monopolizing interstate trade and commerce in the shoe machinery industry of the United States; (b) monopolizing interstate trade and commerce of the United States in “substantially all shoe machinery required and used by Hanover in the manufacture of men’s and boys’ shoes.” In paragraph 15 it is alleged that “Monopolization by United as aforesaid and the exercise by it of its monopoly powers has enabled United to dominate and control the market in shoe machinery, to restrict actual competition and to exclude potential competition in said market.” The complaint then sets forth allegations with respect to the principal means used by United to accomplish the violation of law. It is alleged that “At all times prior to May 17, 1954, the date of the decision of the United States Supreme Court affirming a judgment that United violated Section 2 of the Sherman Act by monopolizing the shoe machinery trade and commerce among the several States, United declined to sell most of its shoe machines and made such machines available to shoe manufacturers only upon leases * * * ” and that United “offered on lease only all of the major, important machines used by Hanover” in the shoe manufacturing operations described in other paragraphs of the complaint. It is alleged that United’s leases for most of its machines, including all such leases with Hanover, provided flat rental charges or unit rental charges based on the number of shoes produced or on the number of operations performed by the machines, and on the rest of its machines, including those on lease to Hanover, provided for payment of both rental and unit charges. It is alleged that in these leases, the 10 year term, full capacity, minimum charge, and machine return clauses, alone or in combination with one or more of the other clauses, deter and prevent shoe manufacturing lessees, including Hanover, from replacing with a competitive machine each of the machines leased from United. Other means used by United to deter competition are alleged to be the establishment of a “right of deduction fund” whereby a percentage of rentals was set aside by United to be applied by United, if desired by the lessee, to machine return charges or minimum rental charges; the requirement that lessees pay transportation and parts replacement costs, and a sum equaling either 25 or 50 percent of the remaining rental for the term if a lessee, including Hanover, desired to replace a United machine with that of a United competitor; and United’s voluntary assumption of machine repair with no separate charge to the lessee, thereby deterring the establishment and growth of competitive repair service organizations. The complaint alleges that as a further means of preventing competition, United, when faced with competition, reduced its own rates on machinery types threatened by competition; introduced new models at lower rates than those rates for comparable old models; maintained rates on a particular machine type despite a policy of increasing rates on other machine types to meet increased costs of manufacture; and introduced new models so designed and priced as to reach only that area of the shoe manufacturing industry in which a competitor was attempting to market a machine. Hanover alleges that these practices affected it in the following ways: (a) United collected from Hanover excessive, arbitrary and non-competitive rental, unit and other charges for its products and services; (b) Hanover was prevented from acquiring shoe machinery, new or used, as owner either from United or elsewhere; (c) United extracted from Hanover for the use of its shoe machinery, large sums of money in excess of the reasonable value of such machinery and of the service rendered by United on such machinery. Hanover claims damages of $2,000,000, and pursuant to the treble damage provisions of the Clayton Act, requests judgment of $6,000,000. In its answer United denied many of the significant allegations of the complaint and set up as affirmative defenses the statute of limitations, laches, estop-pel, waiver and acquiescence on the part of Hanover. United also contends that its pre-eminence in the shoe machinery industry is due to its initiative and enterprise and its business methods, which were adopted to promote success of manufacturers generally, and has been accompanied by an increase of opportunity for Hanover. The action was tried to the court without a jury. II. FINDINGS OF FACT, CONCLUSIONS OF LAW A. Background: Plaintiff, The Hanover Shoe, Inc., is a corporation organized and existing under the laws of the State of Pennsylvania, with its principal office and place of business in Hanover, Pennsylvania. Defendant, United Shoe Machinery Corporation, is a corporation organized and existing under the laws of the State of New Jersey, with its principal office and place of business in Boston, Massachusetts, and also with offices and a place of business in Harrisburg, Pennsylvania, within this district. Since 1899 Hanover has engaged in the manufacture of men’s shoes by the Goodyear welt process, and until the early 1950’s also engaged in the manufacture of boys’ shoes by the same process. Except for large quantities of military shoes manufactured during World War II, and for shoes sold to Montgomery Ward and J. C. Penney since World War II, Hanover has sold the shoes it manufactured directly through retail men’s shoe stores operated by its wholly owned subsidiary, Sheppard & Myers, Inc. There are currently about 110 retail stores. Hanover’s manufacture of shoes during the period from 1939, the beginning of the complaint period of this action, to 1955, the year in which the action was instituted, ranged in volume from a low of 1,006,768 pairs in 1939 to a high of 1,939,289 pairs in 1944. In 1955 Hanover was one of the 35 largest of approximately 1,000 shoe manufacturers in the United States. Until 1956 all of the capital stock of Hanover was owned by or for the benefit of H. D. Sheppard or C. N. Myers, the original shareholders, or members of their families, except for small blocks of stock sold to key employees, beginning in 1940. In 1956 approximately 25 percent of the then outstanding capital stock was sold to the public. United is the successor of a combination of shoe machinery companies which consolidated in 1899. Since that time United has engaged in the manufacture and distribution of shoe machinery. Most of the machinery was manufactured at its factory in Beverly, Massachusetts, and was distributed in interestate commerce to shoe manufacturers, which included machinery supplied to Hanover at its principal plant in Hanover, Pennsylvania, and at its other factories in East Berlin, Pennsylvania, and Middletown and Emmitsburg, Maryland. Most of the important operations in Hanover’s manufacture of shoes are done by machine, and Hanover could not engage competitively in quantity production without the use of shoe machinery. During the complaint period United made available its more complicated machines to shoe manufacturers, including Hanover, on leases only. The more complicated machines are those which have greater importance in the manufacture of shoes. These machines produced the largest revenue for United. In 1951 United had 178 machine types on a lease-only basis. The complaint in this action relates to United’s practices with respect to 58 such machine types which Hanover had on lease during the complaint period. The rental for these machines was either a stated amount, a stated amount plus royalties, or royalties only, payable monthly. Of the 58 machine types, 20 accounted for more than 80 percent of the rentals and royalties paid United by Hanover during the complaint period, and 18 of the 20 types were on a royalty or royalty plus rental basis. United also marketed machines less complicated than the major machines, on an alternate lease or sale basis, at the customer’s option. In 1951 United had 122 of these machine types, hereafter referred to as optional machines. The rental for these machines was on a flat rate basis, payable monthly. In 1951 United had 42 machine types available for purchase only. All new leases to shoe manufacturers, including Hanover, of machinery involved in this action were for 10 year terms. Renewal leases were for 5 years. From 1922 to May 17,1954, all of United’s leases were substantially uniform. They are known as “Form A” leases. Three clauses important to this action are the full capacity, term, and return charge. ******A fourth clause, Clause 2, provided, among other things, that the lessee shall at all times and at his own expense keep the machinery in good and efficient working order, and in the event that the lessee shall fail to do so, United may cause the machinery to be put in such order at the expense of the lessee. In 1947 the United States instituted a civil action against United in the United States District Court for the District of Massachusetts, Civil Action No. 7198, alleging violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C.A. §§ 1 and 2. On February 18, 1953, Judge Wyzanski handed down findings of fact, conclusions of law, opinions, and a decree which found that United violated Section 2 of the Sherman Act. United States v. United Shoe Machinery Corporation, D.Mass. 1953,110 F.Supp. 295. On May 17,1954, the Supreme Court of the United States affirmed per curiam the judgment of the District Court. 347 U.S. 521, 74 S.Ct. 699, 98 L.Ed. 910. This action will hereinafter be referred to as the Government case. B. United’s Market Position: As of about May, 1947, United’s share of the market of 56 of the 58 lease-only machine types leased by Hanover — there being no data in evidence as to the remaining two--was as follows: 100 % — 10 types 99% — 14 types 98% — 7 types 97% — .4 types 96% — 5 types 90-95% — 9 types 85-89% — 1 type 80-84% — 3 types 55-69% ■ — ■ 3 types 56 Of the 20 major machine types included in the 56, the rentals and royalties of which accounted for more than 80 percent of the charges Hanover paid United, United’s market share was: 100% — 4 types 99% — 6 types 98% — 4 types 97% ■— 3 types 89-93% —- 3 types 20 There is no evidence that United suffered any appreciable limitation in its share of the market with respect to these machine types prior to the filing of the complaint. With respect to domestic machines, there is no evidence of any change whatever. As to foreign machines, a tabulation for 23 machine types, 15 of which are comparable in function with United’s machines leased by Hanover, shows that 538 machines were installed in factories since January 1, 1947, and 403 of these were outstanding on August 1, 1955. On May 1, 1947, United had 115,787 machines outstanding. Since January 1, 1947, there have been 323 installations of the 15 types Hanover leased from United, of which 104 were clickers. On August 1, 1955, 233 were outstanding, of which 86 were clickers. The influence that these machines had on the dominance of United’s position is inconsequential. Until 1955 United enjoyed an overwhelming share of the shoe machinery market which it controlled. C. The Antitrust Violation: 1. The Findings and Decree in the Government case. Hanover relies primarily on the decree, findings, conclusions, and opinions in the Government case, as proof of United’s illegal monopolization of the shoe machinery industry in the United States, pursuant to Section 5 of the Clayton Act, 15 U.S.C.A. § 16, which provides: “(a) A final judgment or decree heretofore or hereafter rendered in any civil or criminal proceeding brought by or on behalf of the United States under the antitrust laws to the effect that a defendant has violated said laws shall be prima facie evidence against such defendant in any action or proceeding brought by any other party against such defendant under said laws or by the United States under section 15a of this title, as to all matters respecting which said judgment or decree would be an estoppel as between the parties thereto: * * * ” United urges that even with the aid of the decree in the Government case, Hanover has not proved a monopolization; that the four clauses in the Form A lease, the ten year term, the full capacity, the deferred payment or return charge, and the repair clause, were the only factors relied on by Judge Wyzanski as the basis of his decree; that these clauses were not in their actual operation restrictive or monopolizing practices, and had no effect on Hanover; and that all other charges were dismissed with prejudice. The findings, conclusions and decree in the Government case show that the four clauses of the Form A lease, and also the lease-only system were in their operation restrictive or monopolizing practices. The court spoke of the lease-only system, and its “features” which have a “special deterrent effect” ; the lease-only system and the “complex of obligations and rights”, accruing thereunder which “in operation” deter a shoe manufacturer from disposing of United’s and acquiring a competitor’s machine; the distribution of machines only on leases which “assure closer and more frequent contacts” with customers than if United were a seller, and “beyond this general quality” the four clauses which are “so drawn and applied” as to “exclude competitors” were the business policies with a deterrent effect ; the business policies which erected “barriers” to competition and were traceable to the “lease-only system”, and its “partnership aspects” and “exclusionary features”. The court found that United intended to engage in leasing practices and pricing policies which maintained its market power and in so doing monopolized. The conclusion is buttressed by the part of the opinion dealing with remedy. In discussing the remedies and their effects, the court clearly indicated that the lease-only system, restrictive clauses and related practices were the policies to be banned. The decree effectuated the court’s intent as expressed in the opinion. After holding that United monopolized the shoe machinery trade and commerce among the several states, in violation of § 2 of the Sherman Act, the court enjoined United from using the lease-only system and purged the leases of the restrictive effects of the four clauses. If the lease-only system was not a monopolistic practice by the aid of which United maintained its monopolistic position, it would have been unnecessary for the court to order its cessation since it is a practice which could exist independent of the other lease provisions and practices. The complaint in the Government case, the court’s summarization of the charges in the complaint, the findings and opinions, and the decree show that the charges which were dismissed with prejudice related to certain charges of monopolizing and attempting to monopolize in certain areas other than shoe machinery. United advances several reasons why the four “Form A” clauses had no effect on Hanover. Full Capacity. One argument is that Judge Wyzanski held this clause to be a “deterrent” to competition on the basis of certain testimony by United’s president in which the witness merely adopted that word as used by the court, and to which the court gave unwarranted weight. United offered previous testimony by the same witness in the Government case to show that the witness may have thought that the court was using “deterrent” as applicable to past general practice, particularly since the testimony in the instant case shows that the full capacity clause was never enforced since the early 1940’s. Judge Wyzanski, after reviewing instances when the full capacity clause was invoked, found that this clause and other clauses were invoked in accepting returns of machines before the lease terminated, or in billing lessees for machine use, if the lessee desired to use a non-United machine in place of the United machine, whereas these clauses were not invoked if the lessee had some other reason for returning a United machine or for non-use of the United machine. Judge Wyzanski concluded that this “discrimination is designed to operate, and does operate as, a method of excluding from the shoe factories shoe machinery competitive with United.” Having so concluded, the court added: “If this were otherwise doubtful, this finding is confirmed by the statement in court of United’s president 'that the full capacity clause operates as a deterrent to a factory taking on a competitor’s machine.’ ” Thus, the court reached its conclusion after a review of evidence other than the president’s testimony. Moreover, United’s president was advised by counsel that his answers were to apply to the past as well as the present: “And if I ask you questions in the present tense, I also mean them to apply to the general practice in the past tense as long as you have been familiar with the matter, Mr. Brown.” United also argues that the president’s adoption of “deterrent” is negatived by a previous question and his answer: “Has it ever been the practice of your company to invoke this full capacity clause to deter or prevent any of your lessees from replacing a machine which you have leased to him with a competitive machine. A. Never.” United’s president was then asked to explain why the “clause does not have that operation.” He answered that a lessee may at any time install a non-United machine if the lessee uses the United machine to full capacity. This explanation is no more than a description of the lessee’s rights under the lease. Sanctions under the full capacity clause could not be imposed, no matter what machinery was being used, if the United machine was being used to full capacity. Thus, any adoption of “deterrent” was not negatived by previous testimony. United points to the testimony of Messrs. Sheppard of Hanover, Mills of Endicott Johnson Corporation, Erb of Melville Shoe Company, and Jones of Commonwealth Shoe Company that the full capacity clause was never enforced against these companies, and in the case of Mr. Erb, that the existence of the clause did not prevent his company from installing a competitive machine. The relevance of this testimony, for the most part, is not apparent. Judge Wyzanski found that the full capacity clause was not considered by United to have been violated unless the lessee failed to use the machine on work for which the machine was capable of being used, and instead performed such work by using a competitor’s machine. Judge Wyzanski said: “In other words, it is not treated as a violation if the lessee fails to use United’s machines because he performs the work by hand, or because he discontinues the type of operation for which the machine is capable of being used.” The evidence of non-enforcement and that in certain instances shoe manufacturers were not prevented from installing non-United machines would be meaningful if there was also evidence that use of a competitor’s machine caused the United machine to be operated at less than full capacity. There was no such evidence. Finally, United argues that the uncon-troverted testimony is that the full capacity clause has not been enforced since the early 1940’s. This testimony was given by one of United’s employees, who stated that since 1942 no attempt was made to enforce the clause because of the administrative difficulties involved. It is not clear as to whether this was intended to be a “company wide” or “location” abandonment of enforcement of the clause. But assuming it was a company wide policy, the full capacity clause was not deleted from the leases, and the company’s intention to abandon enforcement was not otherwise communicated to the lessees. In the absence of such communication, the lessee would expect enforcement of the clause. Return Charge. United relies on testimony by Messrs. Sheppard, Erb, Jones and Mills that the return charge in no way prevented them from returning a United machine, either for replacement by a competitive machine or for any other reason. Mr. Sheppard’s testimony dealt with the return of United machines because they were surplus, or in exchange for other or new United machines, and was not concerned with the return of United machines to be replaced by non-United machines. The other three witnesses testified the return charge did not prevent the return of United machines for replacement by non-United machines because they had accumulated substantial credit under United’s “Right of Deduction Fund”, which would offset machine return charges. This testimony does not overcome Judge Wyzanski’s finding that this clause was a deterrent or monopolizing practice. Judge Wyzanski found that the right of deduction fund was an informal policy which United had not expressly committed itself to continue, and that discriminatorily higher charges were assessed if a machine was returned, before the end of the term, to be replaced by a non-United machine, as compared with the lower charges assessed if the machine were returned for another reason. It should be noted also that Judge Wyzanski ordered United to discontinue the right of deduction fund and not substitute anything similar in any plan or lease. Non-Segregated Repair Service Charges. The lease provided that the lessee was to make all repairs at its expense. Instead, United made the repairs at no additional cost. United argues that while Judge Wyzanski found this practice tended to prevent the entry and existence of large-scale independent repair companies and hence put a stumbling block in the way of competing machinery manufacturers, it was a boon for the lessees. United states that Hanover realized it was getting repair service without additional expense, and insisted on efficient service at all times. Judge Wyzanski found United’s practice of rendering repair service without separate charge “has brought about a situation” in which there are almost no large-scale independent repair companies. It was not a boon because Hanover paid for it. Judge Wy-zanski found that United set monthly and unit charges high enough to pay for the services rendered. Judge Wyzanski pointed out this practice was an advantage to some shoe manufacturers, not because United performed the service when it was not obligated to do so, but because the manner of recovering costs therefor, through inclusion of a factor in machine rentals, worked to the advantage of those manufacturers that had high service requirements to the disadvantage of those that had low service requirements. The repair service clause plus United’s conduct was a deterrent. Hanover paid for the service. To have non-United service meant double payment. Thus, independent service companies did not develop and Hanover was at the mercy of United. Ten Year Term. United argues that by 1939 its machines had been under lease for more than 27 years, and those prior to 1929 were all on 5 year renewal terms; that the only exception after 1939 would be for new machines installed after that date. The answer is there were a substantial number either on 10 year terms for new machines, or on terms in excess of 5 years for those whose original term had not expired. Neither the individual clauses nor the lease-only system can be viewed separately. The evil is the result of their collective use. As Judge Wyzanski said, “ * * some of them alone are important impediments [but] they must be appraised collectively to appreciate the full deterrent effect.” Judge Wyzanski found that if shoe machinery were available upon a sale basis, some shoe manufacturers would have been able to provide service at less cost than that charged by United. They would not be subject to the unilateral decision of United whether or not to continue or modify the informal policies by whieh it administered its leases, thereby releasing shoe manufacturers from some of the phychological and economic power United exercised over them. In Futuro Argument. United submits that the decree in the Government case was intended to operate prospectively only, citing “may” in listing the effects of the full capacity clause. Judge Wyzanski did not use “may” in describing the effects on the other clauses. He characterized the four clauses as features which “have” a special deterrent effect, and spoke of the deterrent effects of United’s policies on the shoe machinery industry.* It is clear that he had in mind the effects that the clauses and practices did have, and not merely the effects they might have. This is confirmed by the conclusion that United’s practices operated as a method of excluding competitive shoe machinery from the shoe factories, based on findings of such practices in the 90 instances United invoked the full capacity, return, or like provisions of the standard lease during 1927-1948. In its brief United states, “We are relying upon a unique record of res judicata, and upon the fact that, as Judge Wyzanski acknowledged, the practices now attacked were in prior cases not only ‘uncondemned’ but also ‘were in part endorsed’.” It maintains that its preponderant position, as measured by percentages of machines in shoe factories, is not enough to sustain Hanover’s burden of proof of monopoly; that this position is due to its original constitution, which Judge Wyzanski regarded as protected by res judicata, and the superiority of its products; that Judge Wyzanski found the leasing system honestly industrial; and that even the full capacity clause had been approved in a prior case. The prior Government cases do not bar the holding of monopolization. Judge Wyzanski was aware of them when he framed his findings, opinion and decree. He indicated that but for the prior cases he would have held United in violation of Section 1, as well as Section 2 of the Sherman Act. There is no support for the statement that United’s preponderant position is due to its original constitution and product superiority. Judge Wyzan-ski pointed to these two factors and the leasing system and its aspects as the principal sources of United’s power. In connection with product development, which is closely related to product superiority, Judge Wyzanski found that the rate at which United improved old machine types did not create a formidable record, and United’s research in the shoe machinery and in allied developments was neither the basic cause of its success nor far beyond what could be achieved in a monopoly free market. The leasing system and its aspects were the barriers to competition, and were the basis for the decree of monopolization. It is immaterial that Judge Wyzanski said the original con-situation was protected by res judicata, and that he did not criticize the other sources of United’s power. And while he did say that the leasing system and practices were honestly industrial, he also said that they represent policies which are unnatural barriers to competition, unnecessarily excluding actual and potential competition and restricting a free market. There is also the contention that Judge Wyzanski’s judgment gave effect to what he recognized to be a change in the law beginning with United States v. Aluminum Co. of America, 2 Cir. 1945, 148 F.2d 416; that while courts can overrule their own decisions and change the law retroactively, they also can limit a precedent reversing decision to prospective application; and that retroactive application of an overruling decision is inequitable and is not invoked when persons have acted in reliance on the prior decision. Assuming that the decision in the Aluminum Co. case represented a change in the law, effective in 1945, Judge Wyzanski did not attempt to limit his decree to the future. Therefore, there is no merit to this argument. See American Amusement Co. v. Ludwig, D. Minn.1949, 82 F.Supp. 265, 267; United States v. Calamaro, E.D.Pa.1956, 137 F. Supp. 816, 820, rev’d on other grounds, 3 Cir. 1956, 236 F.2d 182, aff’d 1957, 354 U.S. 351, 77 S.Ct. 1138, 1 L.Ed.2d 1394. Some of the relief looks to the future, but this does not mean that the court did not find a monopolization, or did not intend its decree to be retroactive. The decree operated both ways. The court required United to cease certain practices and also to terminate outstanding leases. In summary, the findings, conclusions and decree in the Government case established that United’s preponderant position coupled with its lease-only system, the four clauses and its practices with respect thereto constituted a violation of Section 2 of the Sherman Act, and that such policies and practices were restrictive or monopolistic during the complaint period in this action, and had a restrictive effect on Hanover and other shoe manufacturers. With the aid of the decree Hanover has proved a monopolization. 2. The Estoppel Aspects and. Relevance of the Government Decree. The estoppel aspects and relevance of the Government decree have been termed by some courts the “target area.” These courts have held that if the decree, fairly construed, does not embrace the plaintiff as a target of the antitrust violation, there can be no recovery. The injury and the damage must not be remote from the violation. A plaintiff “must show that his claimed injury stemmed directly and proximately from the same type of practice condemned in the prior Government action.” International Shoe Machine Corp. v. United Shoe Machinery Corp., 1 Cir. 1963, 315 F.2d 449, cert. denied 1963, 375 U.S. 820, 84 S.Ct. 56, 11 L.Ed.2d 54. The difficulty does not lie in the principle, but in its application. “It is not possible to formulate any general rule by which to determine what injuries are too remote to bring a plaintiff within the scope of the Act * * *. Each case must be dealt with on its own facts.” Harrison v. Paramount Pictures, Inc., E.D.Pa. 1953, 115 F.Supp. 312, aff’d per curiam, 3 Cir. 1954, 211 F.2d 405. Prior to the trial, there was a trial on a separate issue in accordance with Fed.R.Civ.P. 42(b), 28 U.S.C.A. The issue was to determine whether excessive shoe machinery costs constituted an injury in that all such costs were passed on by Hanover to its customers. The late Judge Goodrich of the Court of Appeals, sitting as a district judge, found for Hanover. Hanover Shoe, Inc. v. United Shoe Machinery Corp., M.D.Pa. 1960, 185 F.Supp. 826. The Court of Appeals affirmed, 3 Cir., 281 F.2d 481. The order for the separate trial assumed that (1) the violation of law as alleged existed, and (2) the excessive cost of shoe machinery as alleged existed. Judge Goodrich held that “The causal relation between defendant’s wrong and plaintiff’s harm is obvious.” In La Chapelle v. United Shoe Machinery Corp., D.Mass.1950, 90 F. Supp. 721, the complaint charged that an inventor was forced to sell his product to United at less than its value because of United’s monopoly. The court refused to dismiss the complaint. “The more frequent complaint against a monopoly is by one who seeks to buy and complains that since the monopolist controls the market he must therefore buy from the monopolistic seller at the latter’s price, or not at all. But the injury is equally great to one who wishes to sell his product in a market subject to monopolistic control and must sell to the monopolist as the only available buyer, again on the monopolist’s terms, or not at all. Here the injury is the direct result of the monopolistic condition which has been created, and the injured seller may recover under § 15.” (90 F. Supp. at p. 723) After an answer was filed, the court granted defendant’s motion for summary judgment because the plaintiff had previously filed a complaint against the defendant alleging the same cause of action, which had been dismissed with prejudice. The reason for the dismissal does not appear. No appeal was prosecuted. Consequently, La Chapelle is still authority for the proposition- that the target area is not limited to a monopolist’s competitors. See Congress Building Corp. v. Loew’s, Inc., 7 Cir. 1957, 246 F.2d 587; Vines v. General Outdoor Advertising Co., 2 Cir. 1948, 171 F.2d 487. In Chattanooga Foundry & Pipe Works v. City of Atlanta, 1906, 203 U.S. 390, 27 S.Ct. 65, 51 L.Ed. 241, plaintiff purchased pipe at an excessive price due to an illegal arrangement between defendant and others. The court held the plaintiff “ * * * was injured in its property, at least, if not in its business of furnishing water, by being led to pay more than the worth of the pipe.” United attempts to distinguish this case because the excessive price of the pipe represented property diminished by the payment of money wrongfully induced by a conspiracy; whereas, here there is no wrongful inducement because the rentals were paid in accordance with valid leases. In Chattanooga the sale was lawful, but the motives and inducements to make it constituted a wrong, that is, a combination of members of a trust who arranged for the sale at an excessive price after simulated competition which induced the buyer to buy. The court said: “ * * * Finally, the fact that the sale was not so connected in its terms with the unlawful combination as to be unlawful (Connolly v. Union Sewer Pipe Co., 184 U.S. 540 [22 S.Ct. 431, 46 L.Ed. 679] ), in no way contradicts the proposition that the motives and inducements to make it were so affected by the combination as to constitute a wrong. * * *» United confuses the validity of the leases with the motives and inducements behind them. Hanover was induced to enter into the leases by the absence of suppliers brought about by the monopolistic practices, including the lease-only policy. The motives and inducements were so intertwined with the monopolization practices as to constitute a wrong. Both Atlanta and Hanover were buyers from an antitrust violator. The damages sought in both cases are the higher business costs caused by the wrongdoers. The cases cannot be distinguished. The cases relied on by United are distinguishable. In Eagle Lion Studios, Inc. v. Loew’s, Inc., 2 Cir. 1957, 248 F.2d 438, aff’d by an equally divided court, 1958, 358 U.S. 100, 79 S.Ct. 218, 3 L.Ed. 2d 147, the court interpreted the decree in the Government case as deciding that defendants monopolized only with respect to a segment of the market. They had restricted the films of the major distributors, but not those of the plaintiff and other independent producers. The practices of United were directed at the shoe machinery trade and commerce, and, therefore, at Hanover, a substantial and captive customer. In Conference of Studio Unions v. Loew’s, Inc., 9 Cir. 1951, 193 F.2d 51, cert. denied, 1952, 342 U.S. 919, 72 S.Ct. 367, 96 L.Ed. 687, the court held that the injury to plaintiffs, a union and its members, did not flow from the injury to the competitive situation of the motion picture industry caused by the restriction of activities of independent producers by defendants, a rival union and major film producers. The plaintiffs were not in the business of making or exhibiting motion pictures, did not compete with defendants, did not buy from them, and were not even employees of the companies which the defendants intended to destroy. The remoteness of plaintiff’s injury was apparent. In Karseal Corp. v. Richfield Oil Corp., 9 Cir. 1955, 221 F.2d 358, Karseal and Richfield were manufacturers of wax. Richfield applied restraints to capture the independent gas station market. The court held Karseal was in the target area. The fact that Karseal marketed its product through middlemen, while Richfield dealt directly with retailers, was immaterial. The fact pattern for a direct injury was strong in Karseal. The court said: “Assuming Karseal was ‘hit’ by the effect of the Richfield antitrust violations, was Karseal ‘aimed at’ with enough precision to entitle it to maintain a treble damage suit *' * *?” Since Karseal was directly in Richfield’s aim, the case sheds little light on the standard by which “enough precision” can be measured. While Eagle Lion Studios, Conference of Studio Unions and Karseal are distinguishable on the facts, under the target area tests suggested by these cases Hanover’s injury flows proximately from the monopolization. The complaint in the Government case listed the effects of the monopolistic practices on the shoe manufacturers, as well as on United’s competitors. One of the effects on the lessees was United’s extraction of large sums of money in excess of the reasonable value of machinery and of the service rendered by United. A similar charge is included in Hanover’s complaint. Judge Wyzanski found that United’s policies have “ * * * not necessarily promoted in the shoe manufacturing field the goals of a competitive economy and an open society.” He pointed out that if United shoe machinery were available on a sale basis, United’s psychological and economic control over shoe manufacturers would be released, which in turn would cause some shoe manufacturers, for financial and psychological reasons, to be more willing to dispose of United’s machines and take on either competitors’ machines or United machinery available in a secondhand market. It is obvious that the financial considerations were that some manufacturers would find it less costly to own than to lease machinery. Thus, a charge and finding of detriment to a particular class of persons, as seemingly required by Eagle Lion Studios, is present. The facts satisfy the test of the Conference of Studio Unions case. Shoe machinery is not absorbed by the general public; it is meant for use solely by shoe manufacturers. They consume all of it, and its cost is a factor in the pricing of shoes. Shoe manufacturers are directly interested in the development of better machinery, and in the quality of existing machinery. It is clear that a shoe manufacturer is “ * * * within that area of the economy which is endangered by a breakdown of competitive conditions * * * ” in the shoe machinery industry. The stifling of the business of competing shoe machinery manufacturers was a direct object of United’s actions, but it was not the only object. It permitted United to deal with shoe manufacturers on United’s terms, and the terms in turn permitted United to stifle the competition. The monopolistic terms, such as the lease-only system and the related clauses and practices, caused both the injury claimed by Hanover and the injury to United’s competitors. There is nothing strange about an actor having more than one immediate object of his acts. The aim was wide enough to accomplish both. Hanover was “aimed” at and “hit,” the test of Karseal. United accuses Hanover of an attempt to bring itself within the target area “ * * * by saying it was obliged to ‘obtain its machinery from defendant at a cost in excess of what it would have to pay absent the monopolization’ (PI. br. 9). It tries to use. its claim of excessive price to show injury as a result of antitrust violation. So far as the decree is concerned, it is enough here to point out that that claim was dismissed by Judge Wyzanski. Decree par. 2 dismisses with prejudice all other charges of violation than those there enumerated. Among those charges was the charge of excessiveness contained in par. 97 of the Government complaint as follows:”. This argument confuses Hanover’s primary and alternate damage claims. Ex-cessiveness relates principally to the alternate damage flowing from the difference between the rent and royalty charges United exacted from lessees when' faced with competition and the higher charges exacted when it was not so faced. Hanover’s primary claim is measured by the difference between the higher cost of leasing machines and the cost of owning them. The primary claim does not necessarily imply excessive returns to United. The complaint in the Government case included an allegation that United collected excessive, arbitrary and noncompetitive charges for its products and services and thereby made excessive and unreasonable profits. Judge Wyzanski noted' that while United generally followed a policy of setting prices so its shoe machinery business returned income to cover costs plus a profit, there were instances in which the rates were adjusted to meet or defeat competition, and to retain and expand United’s share of the market. He found no evidence that United secured a monopoly profit on its entire or machinery branch operations. He did not make a finding that profits were excessive or unreasonable. While he found that the discriminatory pricing policy was evidence of United’s monopoly power, a buttress to it and a cause of its perpetuation, he stated his decree would not deal with the price discrimination aspects of United’s policy because some not too rigid price discrimination is inevitable, some is justified as resting on patent monopolies, some is desirable in promoting a competitive market, and an order to eradicate such discrimination could not be enforced. The doctrine of collateral estoppel by judgment extends only as to those matters in issue or points controverted, upon the determination of which the finding or verdict was rendered. Partmar Corp. v. Paramount Pictures Theatres Corp., 1954, 347 U.S. 89, 74 S.Ct. 414, 98 L.Ed. 532; Emich Motors Corp. v. General Motors Corp., 1951, 340 U.S. 558, 71 S.Ct. 408, 95 L.Ed. 534. The findings and conclusions on the price discrimination aspects of the pricing policy cannot be considered matters upon the determination of which the finding or verdict was rendered in view of the specific language that the decree would not attempt to deal with these matters. Thus, there cannot be an estoppel. Hanover also relies for its alternate damage on certain documents in evidence in this case. One is a summary of 19 instances in which United reduced rents and royalties on certain machines because of competition. These 19 instances were taken from more than 50 instances in evidence before Judge Wyzanski, and from which he drew 9 for detail analysis in arriving at his findings. Hanover asks this court to infer from the summary and from the evidence of overwhelming market control that, if competition existed, Hanover would have had the benefit of reductions similar to those listed on the summary. Admittedly, few, if any, of the machines on this summary were used by Hanover, and most of the reductions took place prior to the complaint period in this case. The summary is irrelevant. The inference urged by Hanover cannot be drawn. International Shoe Machine Corp. v. United Shoe Machinery Corp., 315 F.2d 449, supra. The decree created no estoppel with respect to the findings based on the evidence of 50 instances of reduced rentals, so that the only evidence before this court is the summary of the 19 instances. Hanover also introduced in evidence a schedule of the percentage of revenues to machine or bulletin costs. The machine or bulletin cost is not the only item considered before a machine rental is set. The development expenses, installation costs, 10 year service costs, and interest on the last two items, are also considered. The rental would include all these plus a profit, so that the percentage derived from the comparison does not demonstrate a “high rate of return.” Moreover, while Hanover points to high percentages it considers “startling,” the schedule contains percentages which are extremely low. The schedule also invites other comparisons such as the comparison of revenues with Hanover’s computed sales price, also on the schedule, which would reduce the percentages considerably. There is no evidence of the normal rate of return if the omitted cost factors were included. In short, the schedule and related evidence are not sufficiently probative of the alleged high rates of return to United. Hanover has failed to prove its alternate damage claim. This does not affect its primary claim measured by the difference between the cost to operate its business with lease-only machinery and the cost to own the machinery. The rental returns may not have been excessive, but there is a difference between non-excessive returns and machinery costs in excess of those which would have been incurred had the machinery been purchasable. As stated by Judge Wyzanski, “Some truth lurks in the cynical remark that not high profits but a quiet life is the chief reward of monopoly power.” Machine rentals which return costs plus a reasonable profit to United may be substantially in excess of the machine costs to a shoe manufacturer dealing in an unrestricted market. A supplier’s costs may be inflated due to inefficiency, excess personnel, or other reasons. Such conditions might not exist in a competitive market. There is no necessary inconsistency between a reasonable rate of return and proof that the rentals were substantially in excess of the cost of ownership. If the “quiet life” brought about by the monopolistic practice of United’s lease-only system produced some excess costs to Hanover, it need not rely on excess returns to United to show damage. Hanover’s claimed primary injury is injury flowing from United’s lease-only policy and practices, provided Hanover was at all times ready, willing and able to buy machinery. Judge Wyzanski did find there was virtually no expressed dissatisfaction from consumers respecting the leasing system, and that all shoe manufacturers who testified on the point expressed a preference for the leasing system. This was not a finding that shoe manufacturers were not hurt by the leasing system. Judge Wyzanski pointed out that “It cannot be said whether this absence of expressed dissatisfaction is due to lack of actual dissatisfaction, to practical men’s preference for what they regard as a fair system, even if it should be monopolistic, or to fear, inertia, or reluctance to testify.” He then pointed out the system’s adverse effects on the goals of a competitive economy and on open society as related to the shoe manufacturing field. 3. Choice of Marketing Methods. United urges that the language of Judge Wyzanski negates a duty to sell: “ ‘The Court also agrees with the Government that if United chooses to continue to lease any machine type, it must offer that type of machine also for sale. The principal merit of this proposal does not lie in its primary impact, that is, in its effect in widening the choices open to owners of shoe factories. For present purposes it may be assumed that the anti-trust laws are not designed, chiefly, if at all, to give a customer choice as to the selling methods by which his supplier offers that supplier’s own products. The merit of the Government’s proposal is in its secondary impact [i. e. creation of a secondhand market]. (Emphasis supplied)’ ” 110 F. Supp., at 349, 350. Judge Wyzanski found that the lease-only system and lease clauses enabled United to monopolize the shoe machinery market, and to end this monopoly it would be necessary not only to place limitations on United’s leases, but also to require United to offer the machines for sale. Thus, United had a duty to refrain from illegal trade practices. See Congress Building Corp. v. Loew’s, Inc., 246 F.2d 587, 594, 596, 597, supra. If one of the practices by which it monopolized the market was its lease-only policy, it had a duty to abandon that policy. The only effective way was by an alternative sales system. The antitrust laws were designed to prevent monopolistic practices. They are not to be thwarted because an incidental effect of the decree may give a customer a choice of the supplier’s marketing methods. While ordinarily a supplier may determine his own business practices, they will be condemned as illegal if they are used to achieve a monopoly. “A refusal to sell, while it may be lawful per se, cannot be used in order to achieve an illegal result.” United States v. Klearflax Linen Looms, Inc., D.Minn.1945, 63 F. Supp. 32, 39. It is only another step to say a refusal to sell coupled with a willingness to lease may be lawful, but Judge Wyzanski found these achieved an illegal result: “It has used its leases to monopolize the shoe machinery market. And if leasing continues without an alternative sales system, United will still be able to monopolize that market. To root out monopolization and to bring United, in the future, in the same class as its competitors, it is necessary not merely to place limitations upon United’s leases, but also to require United to offer for sale any machine type which it leases.” 110 F.Supp., at 350. 4. The Legality of the Leases. United relies on the legality of the leases as a complete defense. It cites Bruce’s Juices, Inc. v. American Can Co., 1947, 330 U.S. 743, 755, 67 S.Ct. 1015, 91 L.Ed. 1219; Kelly v. Kosuga, 1959, 358 U.S. 516, 518, 520, 79 S.Ct. 429, 3 L.Ed.2d 475; Turner Glass Corp. v. Hartford-Empire Co., 7 Cir. 1949, 173 F.2d 49, 52, for the proposition that since the Form A leases are enforceable as contracts the courts will not sanction a belated antitrust action to avoid legal obligations now completely performed. Whether the leases are legal is not important in this lawsuit because Hanover is not suing on them. United apparently contends that it would be unjust for Hanover to recover monies which would in effect offset rentals and royalties paid under a valid contract. It would also be unjust to allow a monopolist to escape liability for injury and damage inflicted on another even though the contractual dealings between them were legal. United’s products and services may have been efficient, the prices not excessive, and the leases lawful, but it runs the risk that its monopolistic acts may cause actionable injury. In Chattanoogo Foundry & Pipe Works v. City of Atlanta, 208 U.S. 390, at page 397, 27 S.Ct. 65, at page 66, 51 L.Ed. 541, supra, the court said: “ * * * In most cases where the result complained of as springing from a tort is a contract, the contract is lawful, and the tort goes only to the motives which led to its being made, as when it is induced by duress or fraud.” The eases cited by United do not support its theory. In Turner Glass Corp. v. Hartford-Empire Co., supra, plaintiff offered no evidence to prove a pecuniary damage by reason of defendant’s membership in a conspiracy to monopolize, but contended that the payment of license fees to defendant was evidence of pecuniary damage. Plaintiff admitted that if the license agreements were not inherently illegal, it could not prevail. The court held for defendant because they were not inherently illegal. Similarly, in Bruce’s Juices, Inc. v. American Can Co., supra, in an action for the purchase price of goods, the court refused to allow the defense of illegality of prices, but told the defendant it could prove the illegality in the triple damage action, which was pending. “ * * * Moreover, if Bruce can in this suit prove that the prices respondent charged were illegal, as it must in order to win, it can do the same in a triple damage suit. * * ” Page 752 of 330 U.S., 67 S.Ct. at page 1019. The court simply refused to add another sanction to the antitrust laws. “The Act prescribes sanctions, and it does not make uncollectibility of the purchase price one of them. Violation of the Act is made criminal and upon conviction a violator may be fined or imprisoned. 49 Stat. 1528, 15 U.S.C. § 13a. Any person who is injured in his business or property by reason of anything forbidden therein may sue and recover threefold the damages- by him sustained and the costs of suit, including a reasonable attorney’s fee. 38 Stat. 731, 15 U.S.C. § 15. This triple damage provision to redress private injury and the criminal proceedings to vindicate the public interest are the only sanctions provided by Congress. “It is contended that we should act judicially to add a sanction not provided by Congress by declaring the purchase price of goods uncol-lectible where the vendor has violated the Act. * * * ” Page 750, 67 S.Ct. page 1018. Then, after suggesting that the argument for the additional sanction might be a persuasive one for Congress, the court said: “ * * * It is clear Congress intended to use private self-interest as a means of enforcement and to arm injured persons with private means to retribution when it gave to any injured party a private cause of action in which his damages are to be made good threefold, with costs of suit and reasonable attorney's fee.” Page 751, 67 S.Ct. page - — . In Kelly v. Kosuga, supra, it is clear that the court decided that the avoidance of private contracts is not to be added to the sanctions provided by the Sherman Act. Implicit in these cases is that the sanctions of the Sherman Act remain undisturbed. A legal and enforceable contract does not insulate a monopolist from liability to contracting parties. D. The Injury. 1. Demonstration of Injury. Hanover relies on Judge Goodrich’s opinion in the separate trial of the “passing on” issue to prove injury. United answers that this is erroneous because Judge Goodrich went beyond the two assumptions on which the issue was tried, and made the causal connection himself in order to decide the issue. Judge Goodrich clearly ruled that on the basis of the assumptions Hanover suffered actual injury. He did not supply assumptions. His ruling shows that if the stipulated assumptions are proved, the other elements, the injury and the causal connection, are present as a matter of law. United misconstrues Judge Goodrich’s statement “ * * * If there are affirmative defenses or other complicating legal issues, they are not before the Court at this time.” The fact of injury is not an affirmative defense, but an essential element of the cause of action, and the “other” issues refer to issues of which he was not aware. He was aware of the need to establish injury. The hypothesis in the'proceeding before Judge Goodrich was broad enough to cover Hanover’s primary claim of damages. Judge Goodrich analogized this tort to negligence: “ * * * there is (1) a legal duty on defendant’s part (to obey the antitrust laws), (2) a violation of that duty, * * Similarly, there is a right in Hanover to conduct its business in a market free from the restraints of a monopolist. United’s monopolistic practices violated that right. United’s violation of that right caused an injury. If Hanover proves the amount of damage, as Judge Goodrich stated, the causal relation between United’s wrong and Hanover’s harm is obvious. This court fully agrees with Judge Goodrich, and finds that Hanover sustained redressable injury by United’s acts. Thus, while United’s characterization of the trial of the “passing on” issue as a “mere motion to dismiss” makes no difference with respect to whether this court can and should follow such decision as the law of the case. 1A Moore, Federal Practice, Para. 0.404(4) at page 4213, Para. 0.404(10) (2d ed.); United States v. Wheeler, 3 Cir. 1958, 256 F.2d 745, 747, in view of this court’s finding, United’s argument with respect to the law of the case need not be fully discussed. 2. The Impact of Monopolization on Hanover. As a final and complete defense to the antitrust violation United contends Hanover has not shown actual impact of monopolization on it. Some of the reasons advanced are: There was no written purchase policy or expression by the Board of Directors; Hanover bought machines only when it was advantageous to do so; Hanover leased 136 optional machines; Hanover never protested its inability to purchase lease-only machines ; the 1955-1956 purchases disprove a purchase policy because important machines were retained on lease, some were replaced by non-United machines, 39 were returned, and in buying Hanover used its credits in the Right of Deduction Fund as part of the purchase price; both foreign and non-United domestic machines were available; Hanover’s attitude toward United’s leasing policy is the result of a quarrel between its president and certain United officials; Hanover and its competitors enjoyed equality of treatment since the lease terms were uniform, and, thus, there could not be an injury; and Judge Wyzanski found virtually no shoe manufacturer was dissatisfied with the leasing system. There was testimony that since the 1920’s Hanover was actively engaged in a search to buy non-United Goodyear welt shoe machinery. Mr. Sheppard, president of Hanover, described clicking machines which were purchased to replace United’s machines. He told of visits in the 1920’s and 1930’s to various other welt shoe factories in a search for machines. In the early 1940’s Hanover purchased some sole leather dieing out machines to replace their United counterpart. The search for machines was dormant shortly before and during World War II. Whenever shoe makers gathered, there was talk about the purchase of foreign machines after the war ended. Hanover and other shoe factories tested many foreign machines when they became available in 1948 and 1949. The various shoe manufacturers exchanged the test information. The tests and other evidence showed that between 1939 and 1955 only a few non-United machine types, comparable to United lease-only machines, could be used satisfactorily in the Goodyear welt process. Only three such machine types were found and in each case Hanover purchased them. In 1949 the National Shoe Manufacturers Association (N.S.M.A.), of which Mr. Sheppard was president from 1946 through 1949, and representing 85 to 95 percent of the shoe manufacturing industry, formed a committee, with Mr. Sheppard as a member, to study numerous problems concerning shoe machinery costs, to search for and disseminate information on modern non-United shoe machinery, to assist members in the evaluation of machinery, and to persuade United to offer more of its machinery for sale. The absence of a written declaration of a policy to buy machinery, the lack of such an expression in its minutes, and the testimony of Mr. Sheppard that Hanover’s policy was to buy machinery only “ * * * as far as we could do it advantageously and worth while” are not significant. Hanover was a closely held family corporation. The most important machines were not for sale. Mr. Ray Purtell, employed by Hanover as an assistant superintendent from 1949 to 1956, testified that during his employment the policy of Hanover was to purchase machines, both United and non-United. The policy to purchase only when it was advantageous is merely sound business practice. Hanover need not show that in any and all cases it would have purchased, but that it likely would have purchased the machines. Hanover’s purchase of substantially all of United machinery in place at Hanover in 1955-1956 is some indication Hanover would have considered it advantageous to purchase during the lease-only period. Hanover never asked United if it could buy the lease-only machines. Neither did it protest its inability to buy. Mr. Sheppard testified that any such request would have been a “foolish question.” This explanation does not seem unreasonable in view of the findings in the Government case and the evidence in this case. Not only Mr. Sheppard, but representatives of the whole shoe machinery industry apparently thought that they were captive customers of United. In a proposed statement by the technical committee o