(40 Sup.Ct.) took $6,829.26; in March, $10,833.73; in can be held. This fraud was a novelty in June, his previous stealings amounting to $83,390.94, he took $5,152.06; in July, $18,050; in August, $6,250; in September, $17,350; in October, $47,277.08; in November, $51,847; in December, $46,956.44; in January, 1910, $27,395.53; in February, $6,473.97; making a total of $310,143.02, when the bank closed on February 21, 1910. As a result of this the amount of the monthly deposits seemed to decline noticeably and the directors considered the matter in September, but concluded that the falling off was due in part to the springing up of rivals, whose deposits were increasing, but was parallel to a similar decrease in New York. An examination by a bank examiner in December, 1909, disclosed nothing wrong to him. amined the deposit *ledger with any care he would have found out what was going on. The scrutiny of anyone accustomed to such details would have discovered the false additions and other indicia of fraud that were on the face of the book. But it may be doubted whether anything less than a continuous pursuit of the figures through pages would have done so except by a lucky chance. [1] The question of the liability of the directors in this case is the question whether they neglected their duty by accepting the cashier's statement of liabilities and failing to inspect the depositors' ledger. The statements of assets always were correct. A bylaw that had been allowed to become obsolete or nearly so is invoked as establishing their own standard of conduct. By that a committee was to be appointed every six months "to examine into the affairs of the bank, to count its cash, and compare its assets and the way of swindling a bank so far as the knowledge of any experience had reached Cambridge before 1910. We are not prepared to reverse the finding of the master and the Circuit Court of Appeals that the directors should not be held answerable for taking the cashier's statement of liabilities to be *530 as correct as the *statement of assets always was. If he had not been negligent without their knowledge it would have been. Their confidence seemed warranted by the semiannual examinations by the Government examiner and they were encouraged in their belief that all was well by the president, whose responsibility, as executive officer; interest, as large stockholder and depositor; and knowledge, from long daily presence in the bank, were greater than theirs. They were not bound by virtue of the office gratu itously assumed by them to call in the pass books and compare them with the ledger, and until the event showed the possibility they hardly could have seen that their failure to look at the ledger opened a way to fraud. See Briggs v. Spaulding, 141 U. S. 132, 11 Sup. Ct. 924, 35 L. Ed. 662; Warner v. Penoyer, 91 Fed. 587, 33 C. C. A. 222, 44 L. R. A. 761. We are not laying down general principles, however, but confine our decision to the circumstances of the particular case. [2] The position of the president is different. Practically he was the master of the situation. He was daily at the bank for hours, he had the deposit ledger in his hands at times and might have had it at any time. He had had hints and warnings in addition to those that we have mentioned, warnings that should not be magnified unduly, but still that taken with the auditor's report of 1903, the unexplained shortages, the suggestion of the teller, Cutting, in 1905, and the final seeming rapid decline in deposits, would have induced scrutiny but for an invincible repose upon the status quo. In 1908 one Fillmore learned that a package containing $150 left with the bank for safe keeping was not to be found, told Dresser of the loss, wrote to him that he could but conclude that the package had been destroyed or removed liabilities with the balances on the general by someone connected with the bank, and in ledger, for the purpose of ascertaining whether or not the books are correctly kept, and the condition of the bank in a sound and solvent condition." Of course liabilities as well as assets must be known to know the condition and, as this case shows, peculations may be concealed as well by a false understatement of liabilities as by a false show of assets. But the former is not the direction in which fraud would have been looked for, especially on the part of one who at the time of his principal abstractions was not in contact with the funds. A debtor hardly expects to have his liability understated. Some ani later conversation said that it was evident that there was a thief in the bank. He added that he would advise the president to look after Coleman, that he believed he was living #531 at a pretty fast pace, and that he *had pretty good authority for thinking that he was supporting a woman. In the same year or the year before, Coleman, whose pay was never more than twelve dollars a week, set up an automobile, as was known to Dresser and commented on unfavorably, to him. There was also some evidence of notice to Dresser that Coleman was dealing in copper mals must have given at least one exhibition stocks. In 1909 came the great and inadeof dangerous propensities before the owner quately explained seeming shrinkage in the deposits. No doubt plausible explanations | of his conduct came from Coleman and the notice as to speculations may have been slight, but taking the whole story of the relations of the parties, we are not ready to say that the two courts below erred in finding that Dresser had been put upon his guard. However little the warnings may have pointed to the specific facts, had they been accepted they would have led to an examination of the depositors' ledger, a discovery of past and a prevention of future thefts. [3, 4] We do not perceive any ground for applying to this case the limitations of liability ex contractu adverted to in Globe Refining Co. v. Landa Cotton Oil Co., 190 U. S. 540, 23 Sup. Ct. 754, 47 L. Ed. 1171. In accepting the presidency Dresser must 1. CONSTITUTIONAL LAW A provision of a charter making water charges a lien on the property to which the water is furnished, though the meters were installed at the request of a tenant, does not deprive the property owner of property without due process of law in violation of Const. U. S. Amend. 14, § 1. 2. COURTS90(6) - RIGHTS CANNOT BE BAS ED ON ERRONEOUS DECISIONS. No constitutional rights can be based on be taken to have contemplated responsibility the error of prior decisions. In Error to the Supreme Court of the State for losses to the bank, whatever they were, he had warnings that should have led to *532 1052; De La Rama *v. De La Rama, 241 U. S. 154, 159, 36 Sup. Ct. 518, 60 L. Ed. 932, Ann. Cas. 1917C, 411, it seems to us just upon all the circumstances that it should run until the receiver interposed a delay by his appeal to this Court. The Scotland, 118 U. S. 507, 520, 6 Sup. Ct. 1174, 30 L. Ed. 153. Upon this as upon the other points our decision is confined to the specific facts. Decree modified by charging the estate of Dresser with interest from February 1, 1916, to June 1, 1918, upon the sum found to be due, and affirmed. Mr. Justice MCKENNA and Mr. Justice PITNEY dissent, upon the ground that not only the adininistrator of the president of the bank but the other directors ought to be held liable to the extent to which they were held by the District Court. 229 Fed. 772. Mr. Justice VAN DEVANTER and Mr. Justice BRANDEIS took no part in the decision. Action by Cornelia A. Dunbar against the City of New York. A judgment for defendant was affirmed by the New York Appellate Division (177 App. Div. 647, 164 N. Y. Supp. 519) and Court of Appeals (223 N. Y. 597, 119 N. E. 1039), and defendant brings error. Affirmed. Messrs. Harold G. Aron and Henry M. Wise, both of New York City, for plaintiff in error. Mr. William Herbert King, of New York City, for defendant in error. Mr. Justice MCKENNA delivered the opinion of the Court. Plaintiff in error, to whom we shall refer as plaintiff, is the owner of certain real prop 517 erty and a building thereon in the city of New York which she leased to William Hills and William Hills, Jr., copartners doing business under the style of William Hills, Jr. The lessee covenanted to pay the charges for water which should be assessed against or imposed upon the building during the lease, and if not so paid it should be added to the rent then due or to become due. The copartnership was subsequently adjudged bankrupt and at the time of the petition was indebted to the city in the sum of $379.89 for water supplied as measured by two meters which had been installed in the property. The city proved no claim in bankruptcy and a motion by plaintiff for an order directing the trustee to pay the water charges as a tax entitled to preference under the Bankruptcy Act (Comp. St. §§ 9585-9656) was denied on the ground that they were not a tax. The plaintiff then brought this action to cancel the charge as a lien upon the property For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes (40 Sup.Ct.) and prayed an injunction against its enforce ment. [1] The contention against the charge of the city and the lien it asserts is that they are in violation of section 1 of the Fourteenth Amendment of the Constitution of the United States and because they deprive plaintiff of property without due process of law. which the lien is claimed, that the statute meant what the earlier case had suggested, the lien became unconstitutional," and plaintiff cannot be charged with an "implication of assent" to it. Without attempting an es 519 timate of the contention it is enough to say that the decision in this case and other cases are opposed to the contention, and that be sides no constitutional rights can be based on the error of prior decisions. Plaintiff's argument is somewhat difficult to state briefly. It commences by declaring that the question presented was left open in Provident Institution v. Jersey City, 113 U. S. 506, 5 Sup. Ct. 612, 28 L. Ed. 1102, which sustained the postponement of mortgages to the lien of water rents because it was said in that case that the complainant in the case knew what the law was when the mortgages were taken, and therefore "its own voluntary (Argued Jan. 22 and 23, 1920. Decided March act, its own consent," was "an element in the transaction." UNITED STATES v. A. 1, 1920.) (252 U. S. 85) SCHRADER'S Counsel assumes that the case presented an instance of an express consent. In that MONOPOLIES 17(1)-MANUFACTURER, BINDcounsel is mistaken. The consent was im 518 plied from the fact that the law imposing *the water rents preceded the mortgages. And so in the water charge in controversy it was imposed and made a lien on plaintiff's property by the charter of the city, and therefore the Supreme Court at the first instance and afterwards in Appellate Division, and we may assume by the Court of Appeals, decided that the consent of plaintiff could be implied, and any other conclusion would have been impossible. A city without water would be a desolate place and if plaintiff's property was in such situation it would partake of the desolation. And as a supply of water is necessary it is only an ordinary and legal exertion of government to provide means for its compulsory compensation. It is of no consequence, therefore, at whose request the meters were installed in the property. The meters, as observed by the Appellate Division, were "not the instrumentalities for furnishing the water"; they only registered its consumption. And, besides, the lease made by plaintiff contemplated the use of water by the lessees and provided, as far as the lessor (plaintiff) could, for the payment of the charges for it. That her tenants defaulted in their obligation by reason of their bankruptcy was her misfortune, but it did not relieve the property, which we may say, would be unfit for human habitance if it could not get water. [2] Counsel appear to rely on prior decisions of the court for relief of plaintiff; one in the Supreme Court, in which, it is said, a doubt was intimated whether a statute making a lessor liable for the personal debt of a lessee for water would be constitutional; and one in the Court of Appeals, which, to quote counsel, "having decided in 1910, three years prior to the inception of the charges for ING CUSTOMERS TO OBSERVE RESALE PRICES While a manufacturer may indicate his wishes concerning resale prices, and decline further dealings with those who fail to observe them, he may not, under Act July 2, 1890, § 1,1 enter into agreements, whether express or implied from a course of dealing or other circumstances, with all customers in different states, binding them to observe fixed resale prices, thereby taking away dealers' control of their own affairs and destroying competition. Mr. Justice Holmes and Mr. Justice Brandeis dissenting. In Error to the District Court of the United States for the Northern District of Ohio. Criminal prosecution by the United States against A. Schrader's Son, Incorporated. A demurrer to the indictment was sustained (264 Fed. 175), and the government brings error. Reversed and remanded. Messrs. Henry S. Mitchell, of Washington, D. C., and Solicitor General Alex. C. King, of Atlanta, Ga., for the United States. Mr. Frank M. Avery, of New York City, for defendant in error. *94 Mr. Justice McREYNOLDS delivered the opinion of the Court. Defendant in error, a New York corporation, manufactured at Brooklyn, under letters patent, valves, gauges and other accessories for use in connection with automobile tires, and regularly sold and shipped large quantities of these to manufacturers and jobbers throughout the United States. It was indicted in the District Court, Northern District of Ohio, for engaging in a combination rendered criminal by section 1 of the Sherman Act of July 2, 1890 (26 Stat. 209, c. 6471), which declares illegal "every con For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes . tract, combination in the form of trust or oth- |ther understanding or agreement that in mak erwise, or conspiracy, in restraint of trade or commerce, among the several states, or with foreign nations." After interpreting the indictment as indicated by quotations from its opinion which follow, the District Court sustained a demurrer thereto, basing the judgment upon construction of that act (264 Fed. 175): "The substantive allegations of this indictment are that defendant is engaged in manufac turing valves, valve parts, pneumatic pressure gauges, and various other accessories; that it sells and ships large quantites of such articles to tire manufacturers and jobbers in the Northern district of Ohio and throughout the United States; that these tire manufacturers and jobbers resell and reship large quantities of these products to (a) jobbers and vehicle manufacturers, (b) retail dealers, and (c) to the public, both within and without the respective states into which the products are shipped; that these acts have been committed within three years next preceding the presentation of this indictment and within this district; that the defend *95 ant executed, and *caused all the said tire manufacturers and jobbers to whom it sold its said products to execute with it, uniform contracts concerning resales of such products; that every manufacturer and jobber was informed by the defendant and well knew when executing such contracts that identical contracts were being executed and adhered to by the other manufacturers and jobbers; that these contracts thus executed purported to contain a grant of a license from the defendant to resell its said products at prices fixed by it to (a) jobbers and vehicle manufacturers similarly licensed, (b) retail dealers, and (c) the consuming public; that all these contracts provided (that the) [concerning] products thus sold to tire manufacturers and jobbers (provided) that they should not resell such products at prices other than those fixed by the defendant. Copies of these contracts are identified by exhibit numbers and attached to the indictment. It is further charged that the defendant furnished to the tire manufacturers and jobbers who entered into such contracts lists of uniform prices, such as are shown in said exhibits, which the defendant fixed for the resale of its said products to (a) jobbers and vehicle manufacturers, (b) retail dealers, and (c) the consuming public, respectively; and that the defendant uniformly refused to sell and ship its products to tire manufacturers and jobbers who did not enter into such contracts and adhere to the uniform resale prices fixed and listed by the defendant. Further, that tire manufacturers and jobbers in the Northern district of Ohio and throughout the United States uniformly resold defendant's products at uniform prices fixed by the defend ant and uniformly refused to resell such products at lower prices, whereby competition was suppressed and the prices of such products to retail dealers and the consuming public were maintained and enhanced. * * * ing resales thereof they will sell only at certain fixed prices. It will be further observed that the retailers, to whom the jobbers in ordinary course of trade would naturally sell rather than to the consuming public, and who in turn sell and distribute these articles to and among the ultimate consumers, are not included within the alleged combination or conspir "The so-called license agreements, exhibited with the indictment, are in my opinion, both in substance and effect, only selling agreements. The title to the valves, valve parts, pneumatic pressure gauges, and other automobile accessories passed to the so-called licensees and licensed jobbers." The Court further said: "Defendant urges that there is a manifest inconsistency between the reasoning, if not between the holdings, of these two cases [Dr. Miles Medical Co. v. Park & Sons Co., 220 U. S. 373, 31 Sup. Ct. 376, 55 L. Ed. 502, and United States v. Colgate Co., 250 U. S. 300, 39 Sup. Ct. 465, 63 L. Ed. 992]; that if the basic principles announced in the latter case are to be taken in the ordinary sense imported by the language the present case falls within the Colgate Case, and that, properly construed, neither section 1 nor 2 of the Sherman Anti-Trust Law makes the defendant's conduct a crime. The Dr. Miles Medical Company Case, standing alone, would seem to require that this demurrer be overruled, and a holding that the Sherman Anti-Trust Law is violated and a crime committed, merely upon a showing of the making by defendant and two or more jobbers of the agreements set up in the indictment, certainly *97 * if the jobbers were competitors in the same territory. That case has been frequently cited as establishing this proposition. The retailers are not in the present case included. They may compete freely with one another and may even give away the articles purchased by them. No restriction is imposed which prevents them from selling to the consumer at any price, even though it be at a ruinous sacrifice and less than the price made to them by the jobber. Personally, and with all due respect, permit me to say that I can see no real difference upon the facts between the Dr. Miles Medical Com-pany Case and the Colgate Company Case. The only difference is that in the former the arrangement for marketing its product was put in writing, whereas in the latter the wholesale and retail dealers observed the prices fixed by the vendor. This is a distinction without a difference. The tacit acquiescence of the wholesalers and retailers in the prices thus fixed is the equivalent for all practical purposes of an express agreement. *** "Granting the fundamental proposition stated in the Colgate Case, that the manufacturer has an undoubted right to specify resale prices and refuse to deal with any one who fails to maintain the same, or, as further stated, the act does not restrict the long-recognized right of a trader or manufacturer engaged in an entirely private business freely to exercise his own independent discretion as to the parties with whom he will deal, and that he, of course, may announce in advance the circumstances under which he will refuse to sell, it seems to me that it is a distinction without a difference to say (40 Sup.Ct.) that he may do so by the subterfuges and devices set forth in the opinion and not violate the Sherman Anti-Trust Act; yet if he had done the same thing in the form of a written agreement, adequate only to effectuate the same purpose, he would be guilty of a violation of the law. Manifestly, therefore, the decision in the Dr. Miles Medical Case must rest upon some other ground than the mere fact that there Our opinion in United States v. Colgate Co. declared quite plainly: That upon a writ of error under the Criminal Appeals Act (34 Stat. 1246, c. 2564 [Comp. St. §1704]) "we have no authority to revise the mere interpretation of an indictment and are confined to ascertaining whether the court in a case under review erroneously construed the statute." "We must accept that court's interpretation of the indictments and confine our review to the question of the construction of the statute involved in its decision." That we were confronted by an uncertain interpretation of an indictment itself couched in rather vague and general language, the meaning of the opinion below being the subject of serious controversy. The "defendant maintains that, looking at the to create or maintain a monopoly, the act does not restrict the long-recognized right of trader or manufacturer engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal. And, of course, he may announce in advance the circumstances under which he will refuse to sell." The court below misapprehended the meaning and effect of the opinion and judgment in that cause. We had no intention to over- 7 rule or modify the doctrine of Dr. Miles Medical Co. v. Park & Sons Co., where the effort was to destroy the dealers' independent discretion through restrictive agreements. Under the interpretation adopted by the trial court and necessarily accepted by us, the indictment failed to charge that Colgate Company made agreements, either express or implied, which undertook to obligate vendees to observe specified resale prices, and it was treated "as alleging only recognition If the manufacturer's undoubted right to specify resale prices and refuse to deal with any one who fails to maintain the same." It seems unnecessary to dwell upon the obvious difference between the situation presented when a manufacturer merely indicates his wishes concerning prices and declines further dealings with all who fail to observe them, and one where he enters into agreements-whether express or implied from a N course of dealing or other circumstanceswith all customers throughout the different states which undertake to bind them to observe fixed resale prices. In the first, the any limitation on the purchaser. In the *100 whole opinion, it plainly construes the indict- manufacturer but exercises his independent ment as alleging only recognition of the manu-discretion concerning his customers and there facturer's undoubted right to specify resale is no contract or combination which imposes prices and refuse to deal with any one who failed to maintain the same." "The position of the defendant is more nearly in accord with the whole opinion and must be accepted; and as counsel for the government were careful to state on the argument that this conclusion would require affirmation of the judgment below, an extended discussion of the principles involved is unnecessary." second, the parties are combined through agreements designed to take away dealers' control of their own affairs and thereby destroy competition and restrain the free and natural flow of trade amongst the states. The principles approved in Dr. Miles Medical Co. v. Park & Sons Co., should have been applied. The judgment below must be reversed and the cause remanded for further proceedings in conformity with this opinion. Reversed and remanded. Mr. Justice CLARKE concurs in the result. Mr. Justice HOLMES and Mr. Justice BRANDEIS dissent. |