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Qoruell Law School Library
 
A TREATISE ON

The Sherman
Anti-Trust
Act

pM BY p
i pps
W. W. THORNTON
Author of The Federal Employers’ Liability and Safety
Appliance Acts and Pure Food and Drugs

THE W. H. ANDERSON CO.
CINCINNATI
1913
{3315S

Copyrighted, 1913,
THE W. H. ANDERSON CO.
CINCINNATI.
  

PREFACE.

The Sherman Anti-Trust Act is the most important statute
that has been enacted since the War of the Rebellion closed,
and the most important one enacted prior to that period.
The decision in the Standard Oil case, decided May 15, 1911,
in wide extended notoriety, was only excelled by that in the
Dred Scott case, a political decision; and within just two
weeks the Supreme Court deemed it advisable to explain it
and justify its decision therein. It was the belief of the legal
profession and of the general public that it was revolutionary
in its character. The friends of the Sherman Act looked
upon it as dealing a death blow to that Act, while its enemies
were jubilant over a great victory they thought they had
achieved. By many the rule of interpretation of the Sher-
man Act announced in the opinion in that case was held to
be a mere obiter dictum, for they said that, inasmuch as the
court found the facts developed showed there was an ‘‘un-
reasonable restraint of interstate commerce,’’ all else said
concerning what degree of restraint Congress had forbidden
in the enactment of the statute was unnecessary, and hence,
aside to reach a correct result in the case. But the Supreme
Court made it clear in the American Tobacco case that it did
not consider that part of the decision relating to the inter-
pretation of the word ‘‘restraint’’ was an obiter dictum, and
that interpretation stands to-day, accepted as a matter of
course by all the courts, and necessarily acquiesced in by
the legal fraternity. And it is noticeable that many of the
predictions made concerning a failure of the Act have come
to naught, for no person or corporation has escaped by reason
of the interpretation given the Act in the Standard Oil case;
but, on the contrary, its provisions have been more effectively
enforced, by far, than ever before. Scarcely a case that has
PREFACE

reached the Supreme Court has been reversed in full, and
nearly all the defendants in the cases appealed to that trib-
unal have practically found in it ‘‘the end of the rope,’’ for
new trials were not granted, and only in a few instances
have modifications of the decree below been made.

Owing to the amount of litigation that has arisen under
the Sherman Act, of the vast importance each case usually
is, and the great amounts usually involved, it is believed
by the author that there is a field for a work devoted solely
to that Act; and that one would be welcome to those having
litigation under that statute. The author has conscientiously
endeavored to present an accurate result of each decision
on the statute so full that little or no resort to the original
report of the decision will be necessary. Some case in a
state court may have been overlooked, but it is his belief
there is none. Assuredly none has been overlooked which
has been rendered by a federal court and which has been
reported at the date of going to press.

Some discussion of undue restraint of trade at common
law has been indulged in, under the belief that it was neces-
sary as a setting or background for a discussion of the
federal statute.

The author has brought to a discussion of the Act his best
endeavors, and it has received his most careful consideration
in his effort to lay before the practitioner every point relating
to it developed by the courts.

W. W. Tuorxton.

Indianapolis, Ind., October 1, 1913.
TABLE OF CONTENTS

Table: of Casesic os xacaisa is ais 4 wale c:acs aunacee pews vate eden ae a xxili

CILAPTER I.

CONGRESSIONAL Hustory.

SECTION PAGE
1. Early Senate Anti-Trust proposed legislation............ 1
2. Early House Anti-Trust proposed legislation............ 2
3. Sherman bill re-introduced—republican platform of 1888 3
4. The Sherman bill as introduced.................00ee0ee 4
5. Sherman Anti-Trust substituted Dbill.................00. 5
6. Senator Reagan’s substitute............ cece eee cece eee 7
7. Debate in the Senate—Object of the Dbill................ 9
8. Bill interfering with lawful trade................ cee sees 10
9s VBeuste: cesses sae arenes naees 64 Re eee cera naeN 12
10. Combination reducing prices—Competition open to all.... 15
ll. Propriety of the government protecting its citizens from

oppressive combinationg........... 0.00 cece eee een e eens 16

12. Power under interstate commerce clause—What commerce

is-—Power under bills piece sac ints soe oie Tece paceman deans’ 17

13. Senator Reagan’s addition to Senator Sherman’s Bill..... 21
14. Senator Vest’s, Hiscock’s, Reagan’s, Allison’s and Teller’s.. 23
15. Purpose of bill—Difficulty of defining offence............ 23
16. Labor organizations—Farmers’ associations............... 25
17. Bill referred to Judiciary Committee—Senator Edmunds

CHALE tase, si ccgostotse nus isisereon aA Apacer tingle inieetnt on Gk me ensctle wwe sosat 29

18. Action on the bill in the House of Representatives........ 29

19. Subsequently proposed legislation................. ccs eee 30

CHAPTER II.

MOoNOPOLIES AND CONTRACTS IN RESTRAINT or TRADE AT ComMMON Law.

20.
21.
22)
23.
24,
25,
26.
27.
28.

29.
30.

Edict of Emperor Zens ss pes vss sie’ os sawnes pee eee eA 382
Edict: of) Louis: XViwus ss cawscasew ceseewy vse ewes eseeyen 33
Monopolies in time of Queen Elizabeth.................. 34
Legality of monopolies—Darcy v. Allen............0..40. 36
Statute of James: Vwi ii cunt cscea ioe teen cgiiwees saee os 38
Illegal monopolies as enumerated by Hawkins............ 41
Definitions of a monopoly.........cee cece cece eect eee eee 42
Modern idea of monopoly........ ccc eee eee cee e eee eee 45
Contracts in restraint of trade, to suppress competition
and to control the market defined..................4. 46
Reasons why contracts in restraint of trade are void...... 47
Contract in restraint of trade is ancillary to principal
contract—Sale of good-will.... 6... cece cece cece eens 50
vi

TABLE OF CONTENTS.

SECTION PAGE
31. Historical review of English law—Extent of restraint as

to time and territory........ 0... cc eee ee ee eee 51
32. Unreasonableness of contract—Extent of territory covered

—Nordenfeldt’s case...... 0... cece cece eee ee tenes 60
33. Reasonable and unreasonable restraint—Test............ 72
34. American law follows the English law...............+++ 77
35. Undue restraint tending to monopoly..............-++++ 80
36. Covenants in partial restraint of trade valid.............- 81
37. Contracts in restraint of trade not criminal............ 87
88. Contracts restraining usefulness of quasi public corpora-

POMS. 5.5: shad cis dopiend. A didvnodeld S Bue se SE ORG Gas Lalvialas 89

CHAPTER III.
TRUSTS AND COMBINATIONS AT Common Law.

39: Trusts: Cenned.. 9 2.4 push an dues nad deeaiicnd a Sota hee FESS 93
40. “Pooling defined. 5 asuccccs eat ama ree a weeds bee ee ees 95
413. Combination - i... sim ec site ieeunce Hasler Sadik Sao eters 96
42. ‘COnsplraty: sue secceeieny syees4 See Piao ee Be ne MRS eewistO 97
ABs: MIZE> MOL: » DUS IMCS icp 5 Sasi seuss & 58 8 ee 5A dopiara sere arte Seen epdea Bes EAE RE ENS 99
44, Monopoly incomplete.......... 0.0. cece eee eee eee eeee 101
45. Agreement tending to create a monopoly.................- 105
46. Reasonable restraint of trade not invalid................. 109
47. Public not injured by the illegal combination—Monopoly

NOE. COMPLETE. 5. carne sey sare ¢ acoee he ANS ANG a OA ROE Re 110
48. Corporation organized to monopolize business of other

COLpPOrations 2... seek sarhas es ascee wee cee eed ee BEY ve See « 112
49. Combination under guise of organizing a corporation...... 116
50. One corporation purchasing a majority of the stock in

another COPpOTAatiON s 14.6 6e secs es cee eee nee oe dele eee 119
51. Combination between steamship companies—The Mogul case. 125
52. Combination to fix prices and amount of production....... 131
53. Combination to suppress competition.................... 134
54. Common law rule against restraint of trade not relaxed—

Only purpose: to restrainacs sis cas enna Wan gy sed oe tele te 141
55. Combinations not amounting to a monopoly.............. 154
56. Restraint of trade involving illegalitv.................... 155

CHAPTER IV.
CoMMERCE AND TRADE.

Oa:  MStAEOCE: 7 os. ansitel did detente anacaton vidosce quale Baht acne ere tteee aces oee 158
57. Definition Of COMMETCO 64.0. scscuees die ce sed eee cbuecnngs 158
58. Commerce broader than trade—Use in Federal Statutes... 162
59. Commerce as transportation—lInterstate transportation... 163
GOs PTE a idciis baess og AMR RDA iase oka MUA aia mE Qoapee ‘ay dex ieee ae 166
TABLE OF CONTENTS. vil

SECTION PAGE

61. Traffic 2.0... cece eee PEN es Wee aes ae seceeee 167

62. Manufacture not commerce—Intent to put in commerce—
Interstate Commerce. ......... 0... e cece eee eee eens 168

63.
64.
65.
66.
67.
68.
69.

70.
71.
72.

73.
74.

75.
76.

77.

77a.

78.
79.
80.
81.
82.
83.
84.
85.
86.

87.
88.
89.
90.
91.
92.

CHAPTER V.

INTERSTATE AND ForEIGN ComMMERCE.

Anti-Trust statute based on interstate commerce clause... 172
Definition of interstate commerce....... A dis gg papeecl ace eedlgas 173
Taxation of articles shipped.............0.eeeeeeeceeees 176
Foreign commerce defined...........ceccccecececeeeees 177
What interstate commerce comprehends or embraces....... 178
Sales and exchanges of commodities................0-005 179
Initiatory and intervening acts instrumentalities and
GealINGS: | ech vide cae ey ae eee aie clei aes eon sees yes SORE 181

Local facilities and incidents—Effect on interstate commerce. 182
Services rendered by agents in handling interstate products. 183
Combination to fix amount and prices of articles shipped to

and from other states........... cece cece eee eee eens 186
Shipping products to another state to agents.............. 188
Sale by sample—Title passing when delivery made to trans-

portation company............ cece ee eee ee eee eee ee eens 189
Manufacture is not interstate commerce.................. 191
Manufacturing in one state and storing in another where

sales are Madey. i cnesto ves ceauwedenwiinee savers css nwes 194
Transportation from one port to another in same state or

river forming state boundary.............ccceeeneeees 194
Interstate commerce a practical conception............... 195

CHAPTER VI.

CoNSTITUTIONALITY.

Interstate commerce clause .......... cee cece cece eee e eens 196°.
Power of Congress under interstate commerce clause...... 197
Fourteenth amendment......... cc. ccc eee cece eee eee 199
Liberty of contract... 1... 0. cc cee cee cece cece et eeneneees 199
Indirect. restraint nae sas viata ena nee <srma sina aonieud..6 wale Wea awe 205
Private contracts—Liberty of contract—State control...... 206
Combination of transportation companies................ 214
Combination among stockholders................eeeeeeeee 222
State creating a corporation—Immunity of congressional

CONEIOL is gyccs bce stated sa FEM FE aig Kaw ead aye Mio wa Get ee ixea 224
State corporation acquiring property in another state..... 226
Court cannot restrict the will of Congress............... .. 226
Uncertainty siacccaruod reaps. a haaecaeu tera aee: BG. Ssfanare oer an 227
Congressional control of intrastate commerce........... . 229
State control of interstate commerce..............e..eeee 231

Rules for governing commerce—Monopoly...............6. 233
vill

TABLE OF CONTENTS.

CHAPTER VII.

INTERPRETATION OR CONSTRUCTION OF ACT.

SECTION PAGE
93. Purpose or object of statute—Competition.............+- 235
94. Policy of the act....... ccc cece eee nent eeee 238
5. Title includes restraints and monopolies named in act.... 239
96. Competition in place of combination...............--++ 239
97. Reasonable construction—Indirect restraint.............+- 242
98. History of times—Debates in Congress.........-.+--+++5- 246
99. Construed so as to be constitutional..............-.+-055 247
100. Expediency or non-expediency of statute..............-.-- 247
101. A criminal statute—Quaere....... cece cee eee eens 248
102. A new crime created by act............ re Pere re 248
103. Indirect restraint........ 0... ccc cee ence e ences 249
104. Every contract and combination—Early construction of act. 259

105. Understanding of the bench and bar as to whether restraint
must be reasonable or unreasonable..........-...-+++-5 272
_106. Restraint must be unreasonable—‘Rule of Reason’”...... 273

107. Monopoly—Second section subject to construction given
ATSE. ONO ssi sce Sage rs eee a elt Ese RRO ES aE OL eee 277
108. Question not decided by previous decisions.............. 279
109. Freight and Joint Traffic Association cases explained.... 284

110. Standard Oil Case explained and defended—Did not overrule
PREVIOUS! -CABCS: vidi seeds oe Gord sag eGies dip RS Geo peepee Ha 285

lll. The “Rule of Reason” used in Standard Oil case not an
ODF CICEUM. occ eect tee wena eee eeene 289

112. Importance of decision in Standard Oil case—Storm of
GLIVICISIL, “nae eigaacg ssa ges Ganga ouns oe atawaanoEG eecy ae 291
113. Uncertainty of Anti-Trust Act...................004. Secs 292
114. Result of decision in Standard Oil case.................. 299
115. To what instances statute held to apply.................. 302

116. Prohibitions in act cover every conceivable act within the
purpose of condemnation............ 0.0... 303
117. Proposed amendment......... 0... ccc cece cee cee ce cee nee 304

CHAPTER VIII.
ANALYSIS OF ACT.

118. First section of statute......... 0.0... ccc ccc eee eee ee 307
119. Analysis of section one... ...... ccc ccc cee cence aee 307
120. Scope of first section............. 0.0. ccc cece eee 308
121. Second section of act....... cee cee cece eens 310
122. Seope of second section............ 0.0... 0.0 eee 310
123. Sections one and two in juxtaposition...................0. 311
124. Section three of the act........ 0... cece cece ee eee eee 316
125. Analysis of section three......... 00... cece cece ceca 316
TABLE OF CONTENTS. ix

SECTION PAGE
126. Jurisdiction of circuit courts—Suits, how instituted
—Restraining: (Order se esneae neaane eedeeeaeniew ta os 317
127. Summons—Subpoenas ......... cece cece ene ence eeen ones 318
128, Seizure and forfeiture of property illegally held........... 318
129, Damages receivable by private person...........eeeseeeeee 319
130. Definition of “person’.......... cece eee eee eee eeeeee 319
131. Restraint of import trade........ ccc cece eee eee ee eee ee 319
132. Jurisdiction of circuit courts—Suits, institution........... 320
133. Summons—Subpoenas .........ccececeseeeeeeneneeneeees 4 Bat
134. Seizure and forfeiture of property............ auditnhinvg amet 321
135. Damages, suits by parties injured............ cece eee eee 322

CHAPTER 1X.

CoNTRACT AND COMBINATION IN RESTRAINT OF TRADE OB COMMERCE.

136.
137.
138.
139.
140.
141.
142.

143.
144.
145.

146.
147.

148.
149.
150.
151.
152.

153.
154.
155.
156.
157.

158.
159.

160.

Section one analyzed .. 1... ccc cece e eee ence eee eeee 324
Restraint defined—A pivoted word—Competition.,......... 325
Trade defined 0: sic s gepawr eesats eeene cade dees PaOEA eee 327
Traffic. defined navcnaacecanaddansae tiaras seem tewesacing swe 327
Trade and commerce not SynOnyMOUS.........0+eee eee eeee 328
Combination defined... ...... 0. ccc cece eee cence ee eeneee 329
Distinction between contract and combination or conspiracy

——Duplicity augisk eg weds s eealese saucer ee sae ale eetey 330
Every contract and combination.............ccecee eee eees 331
Amount of interstate trade restrained...............0000- 332
Two or more persons necessary to commit an offense under

BHECLION: “ONG: is seer sisra-a sessyeigpa cae siding Rensiee Gveredasweignetigneraee arasy 333
Competition defined... .... ccc cece cece teen eee cree eneee 333
Restraint of trade and restraint of competition not inter-

changeable eXpressionS.........ceecee scene ee eeneeeeees 333
Trust Cefined? curse ae asircing vrecarsiaie- onions b ervawa wasn misavesersnatane 335
“Trust or Otherwise’—Conspiracy....... cana a Matec 336
Test of illegality—Direct and indirect restraint........... 338
Form of combination immaterial............. eee eee e ees 340
Object of combination need not be to violate the statute—

Tn tenth where acasied ware ata cte cise ssiehinn eiceai ie ion aad aN ema R oAN 340
Intent in doubtful cases when a determining factor....... 342
Lessening or preventing competition.................+6- 342
Combination to fix priceS......... 6. cee e cece cece e eens 343
Restraining free flow of commerce..............seeeeeee 345
Contract to be illegal need not refer to interstate commerce

—Citizens of same state........ cece ee eee ene enee 346.
Legality of separate acts of combination................. 347
Parts of combination or scheme legal—Transaction con-

sidered as @ Whole........ cece ee eee e ee eter eneeanes 348
No intent to restrain......... cece cece eee e ete e ence en nees 349
x

TABLE OF CONTENTS.

SECTION PAGE
1G61.. “Total. westraint siosioi gs Rediasishis wadau caw F4a ee emi sneer 350
162. Restricting production ............ cee e eee eee eee ee eens 351
163. Reduction of prices 1.0... .. ccc cece cece cette eee 352
164. Restricting sales........ 0... cece cere ee eee eee nee 352
165. Depressing and artificially stimulating trade.............- 353
166. Uniform action of defendants resulting in accidental

restraint or trade... 2.0.2... cece eee eet e eee trees 353
167. Soliciting orders in other states........... 0. ce eee eee e eee 354
168. Agent in control combining with his own corporation...... 354
169. Combination to divide interstate trade among the parties

tO: Abie Xs dedi s esse isa sae pe eas ERAS BE AE See ASE 355
170. Compelling strangers to combine, not to engage in business

except upon certain conditions...................+05-- 357
171. Combination of manufacturers of unpatented articles by use

of patented machine or tool......... 2... ee cee eee ee eee 357
172. Pooling stock by formation of a third corporation—Trust... 358
173. Intrastate trade or commerce............ 0.00 e ee eee ee eee 359
174. Contract or combination restraining both intrastate and

interstate trade or commerce.......... 0. eee ee eee eee 360
175. State corporations restricting trade.................. 00s 361
176. Combination formed prior to enactment of statute and con-

tinued thereaitetiecc csccas cwiwinas aves oe cine ee tie iiee wien 362
177. Purchase and delivery within state part of plan to dominate

interstate Commerce: «occ. ..cesieekwe ss edge ed eedetaud< 362
178. Contracts and combinations only affecting those parties to

HED cov. nienst satiated dolore aia Wa alee a Sve Wied gee he geal Sine BLA 363

CHAPTER X.
Monopoty.

279: “Second - ‘sections: succes Gahgeceetes ewe etre ee sewekeayweds< 366
180; AMlonopoly defined <2..4 5400044 se ses ew iets ead eau aes 367
181. Excluding others—Exclusiveness..... ied cugiele @ alg Salah Sana oe 373
182. Combination and monopoly different under statute......... 374
183. Second section broader than first............... 0... 00005 375
184. Attempt to monopolize—First section.................... 370
185. Reasonableness of a monopoly—Second section complement

Ol NTS ONE sg cori cates i Gamay oaee oaaae vocewee cs aee eka 378
186. A status  prohibited—Overt act—Intent—Combination

resulting in unintentional monopoly.................... 382
187. “Any part of trade or commerce.” Complete monopolization

not necessary to create offense..................000 cae 385
188. Size alone does not constitute monopoly.................. 387
189. Size—Great aggregation of power.................000000 391
190. Size as a factor in the evidence of monopoly.............. 394
191. Size giving power to monopolize—Menace................. 396
192. Unification of interests—Meyers—Partnership So aa tole wed 399
TABLE OF CONTENTS. xi

SECTION PAGE
193, Combination without creating a partnership............-++ 402
104,

196.

197.

198.
199,
200,
201,
202.
fa,
204,
205.

206.
207.
208.
200,
210.

211.

212.
213.
214,
215.
216.
217.
218.
219,
220.
22).

Forming a corporation to absorb other corporations—Con-
solidation of corporations—Purchase of stock—Presump-

COR omy come avolnahan eee teers iet eave Daisy Date RCE EE 404
Difference between an outright purchase and combination

without change of ownership..... 0.0... e ccc e seen eens 408
Forming corporation to conduct business in restraint of

trade—Holding company........... 0... cece nee ee eeee 409
Monopoly an accomplished conspiracy—Monopoly continuing

after conspiracy has ceased...... 0... cece eee eee eens 412
Acts intentionally done to create a monopoly...........+4+ 413
Good motives—No intent to violate the law.............. 416
Tends to monopolize—Attempt to monopolize—“Tend”.... 417
SSO TEATA Ge TUPI COR 5 ecco its hte rth sacha tai one Sr aor tveiy ds oom ovens 422
Monopoly by one person only—Single corporation........ 424
Statute not limited to any given commodity...... iba 425
Monopoly in order to establish competition......... LEER OY 426
Duration in time of a monopoly permitted............... 427

CHAPTER XI.
CONSPIRACY.

PEBEUES oie sera anced ius aideaisnd te, Sane aM RE penne eae tee 428
Definition of Conspiracy... 6. cece cece teen eee teen nee 429
Conspiracy more than a contract... 0... cece eee cence 430

Two or more persons necessary to commission of offense.... 430

Section 5440 of Revised Statutes on conspiracy—Overt act
SSDNA CEGHE: voi nce cotus sais g ieee eitcrte. oie: CBee wan tien GARR Ee 431

Yacit understanding—Assemblance of conspirators not
necessary—All equally guilty—Act of one act of all—

Declaration of conspiratord.... ccc eee cece etree ene eee 432
Criminal, ANCA. ne: wise aur REPRE Aw PR eee ae Gey 8 436
Separate lawful acts combined in a conspiracy............ 437
Corporation entering into a conspiracy........-..eeee eae 438
Conspiracy to restrain or monopolize interstate trade...... 439
A continuing offense—Statute of limitations.............. 439
Joining conspiracy after its formation................6+- 443
Corporation may be guilty of a conspiracy............... 445
Combination to control shingle trade... ........ cece eee eee 446
Combination arresting operation of railroads.............. 446
Corner, conspiracy to TUN... 6. eee eee ete ee eee ene 449

CITAPTER XII.

CoNnTRACTS AND COMBINATIONS PRoHtBI: ED,

Arr, J. To control prices or productions.
Art. Jl. To eliminate competition.
Arr. IJ. Stockholding companies or corporations.
xii

TABLE OF CONTENTS.

Art. I. To Contro~t Prices or PRODUCTIONS.

SECTION PAGE
223. Coal mining and coal dealers fixing price of coal.......... 451
224, Coal dealers regulating price of coal.........-.++seseerees 453
225. Coal and coke dealers agreeing not to sell any other coal
OP COKE isco sce denis ace asd oF QA EEG Raw Ha ee ee ae Eee A 456
226. Shingle dealers controlling production and prices of lumber
bought in other states... .. 0... cece eee teen eee 459
227. Tile case—Controlling output and regulating prices...... 461
228. Contract with combine not to engage in manufacture of
wooden dishes—Holding company..........0sceeeereees 463
229. Combination to prevent competition in fixing price of beer.. 465
230. Selling company—Fixing purchaser’s selling price and terms
Of Salésig cscs a name casa. s Hed ss ee ea eee ae pines eee 466
231. Restricting output—Regulating price—Limiting territory—
Window glass Case... .... 2 ccc ee cece ee eee eee ce neenes 467
232. Agreement for no competition—Arbitrary prices—Division
of trade—Licorice paste for tobacco—Monopoly......... 470
233. Combination to control prices and output—Absorption of
other companies—Combination before enactment of Anti-
Trust att—Monopolysicwsis seis decane cwwins wadtrcein 472
234. Lease or purchase of plant—Contract not to engage in same
business within fifty miles and to discourage unreasonable
COMPOCLGLON 2 a se sce iat awa need Sara chao chis, Sante ablecere adn apes be 473
235. Tobacco monopoly—Consolidation of companics—Stock
CONTIG) Sa enone nou arial Melanie ea ewa en ae wes ies RS 475
236. Standard Oil case—Consolidation of companies—Stock
control—Presumption—Monopoly ......... 0... ceeeeeeee 477
237. Freight rates—Rebates......... cece cece e eee eee eee nee 478
238. Telephone combination......... 0.00. cc cece cnet ence eeeee 480
239.: ‘Corner’ a tiie seg wien ca oust ox dated os PHiGes Hee Key BASS seeee 481
Arr. 1J. To ELiminate Comperition.
240. Division of territory—Fake bids—Addyston Pipe case.... 481
241. Interstate commerce—Addyston Pipe case—Restricting
COMPCtILION. sei ssawseesvew Vee eweteuam ade aust eae 2 483
242. Agreement to refrain from bidding against each other in the
markets in order to control prices—Rebates by railroads. 487
243. Restraint of cattle and meat market..................... 488
244. Dismantling corporation plant and ceasing work—Shoe
Fantene ts Case: sau-u-au tings caveat coe. ¢ wave Gisele patandle, yaaa oe 490
Art. II. StockHorpInG COMPANIES oR CORPORATIONS.
245. Standard Oil case............ aces wale Sowers Geen 491
TABLE OF CONTENTS. xiii

CHAPTER XIII.
CONTRACTS AND COMBINATIONS NOT PROHIBITED, °%

Art. I, Agreements and combinations incidentally affecting inter-
state commerce.

Art. II. Agreements not to engage in business.

Ast. III. Manufacturer’s right to regulate prices and restrict sales.

Art. IV. Live stock associations and commission merchants.

ART. V. Stock exchange—Distribution of quotations.

Art. VI. Combinations operating within state.

ArT. VII. Municipal contracts—State monopolies.

Art. I, AGREEMENTS AND COMBINATIONS INCIDENTALLY AFFECTING

ReeTIOn INTERSTATE COMMERCE. Baan

246. Agreement to raise price of lumber not stifling competition. 495
247. Restriction of sales of goods—Refusing to sell to certain
dealers—Monopoly ......... ccc ce ecee eee e eee ceeeeeenes 496
248. Controlling rival company by purchase of its stock........ 499
249, Three corporations purchasing two insolvent corporations... 500
250. Jobbers organizing a brokerage company to _ purchase

TET CHANGISE 5. ssessissusiista iorssue iasaynr anes syaunraiisens'e stanbianer tad Seacanace laud sede 500
251. Rebates to induce purchases of goods—Purchaser to resell

ati fixed: “prices -.isxc caagads ayaa Genie peacdgenss ated net 503
252. Sale of entire product by manufacturer.................. 503
253. ‘Contract for rebates: :.0ccecrs cies soasar seated oh ie ets 504

ArT. II, AGREEMENTS Not TO ENGAGE IN BUSINESS,

254. Sale of good-will—A. Booth and Company case.......... 505
255. Sale of brick plant—Agreement not to make brick within
fifty milesuc5scsses vedo scveversoaee ssecew i sameedees 506
256. Agreement to remain out of business................0005. 507
257. Sale of steamboat line........... cece cece ce ee eens 508

ArT. III. MANUFACTURER’S RIGHT TO REGULATE PRICES AND
Restrict SALES.

258. Proprietary medicines............. ccs eer cece ee eee e ees 509
259. Restricting sales by purchaser to his state................ 510

Art. IV. Live Stock ASSOCIATION AND EXCHANGES.

260. One stockyard in two states—Consignments of cattle to
commission men to sell—Rules governing sales—Hopkins
CASE: cesnseais esaieied eaubase Nun Gaba y oe tiawEs wade eo NEN A 511

261. One stockyard in two states—Agreement not to recognize
any yard trader except a member, nor supply anyone
except a yard member, nor pay commission—Anderson
CARE! 6 s.siee veces ewes eee seis opis Yard hiatal ihyasteahalss rete «.. 516
xiv TABLE OF CONTENTS.

Art. V. Stock ExcHANGE.—DISTRIBUTION OF QUOTATIONS,

SECTION PAGE
262. Market quotations—Distributing under contract........... 519

Art. VI. CoMBINATIONS OPERATING WITHIN STATE.

263. Some interference with interstate commerce.............-- 521
264. Manufacturers—Knight case....... cece cece ee eee e eens 522
265. KE. C. Knight Company case in supreme court.............- 527

266. E. C. Knight Company case distinguished—Not overruled.. 528
267. Contract of sale to inhabitant of another state to be per-
formed within vendor’s state......... 00. cece eee eee ee 534

Art. VII. Municipan ConTrRAcTS—STATE MONOPOLIES.

268. Contract for street improvement limited to certain kinds
OT -naber al sai5.34 eb vse weg, cae dane OB Seah each een BO a gs 536
269. State monopolizing traflic in intoxicating liquors........... 537

CHAPTER XIV.
TRANSPOR: ATION AGENCIES,

270. Anti-Trust Act applies to illegal combinations of common

CAETICTS «455016 Nieto dee anne he haan ad Weenie eee aso 540
271. Anti-Trust Act applies to railways—History of the times—
Thepislative intent.ces ca-asx eas ak ee eeu s EGA OS ee Ras 543

272. Anti-Trust Act applies to railways—Uncertainty of act—
Difficulty of determining what is ‘Commerce”’—Trusts.. 549

273. Commerce Act consistent with Sherman Anti-Trust Act... 551

274. Yrans-Missouri Freight Association case—No intention to

Testrain: COMMETCE prs o 25 Gea Les wee Oey ded wea cas om ede 552
275. Combination necessary to prevent ruinous rates—Promotion

OL CEA C co serene once a a.euevar a m opnme'e ta unate we saleRae od sable ie ae 557
276. Unrestricted competition working a restraint of trade...... 559

277. Unreasonable restraint—Trans-Missouri Freight Ass’n case 560
278. Charging reasonable rates different from combining to fix

CHE PACES? sev cued aid dad erie Sanh ape Geguln aarbas Gasemmcasaeae > aoe 563
279. Observations on the Trans-Missouri Freight and Joint Traffic

CASES! grigce agtiiiamibnee Ras emanagm ee ps Mie Bh iaseacels 24 tatiyalScte aie 564
280. Holding company—Northern Securities case............... 566
281. Northern Securities Company as mere custodian—Ownership

OT SLOCIEY Fp.cos deal sea ausnd tne tare Ma enaree la enaihte S tmrana sana. alte, 570

282. Observations on Northern Securities case................, 573
283. Purchase of stock of a competing railway company by

another railway company ............ 00... c eee ceeeeeee 578
284, One person purchasing controlling interest in two competing
railway companies......... 06... cee ccc cece cece ec eeee 579
TABLE OF CONTENTS. xv

SECTION PAGE
286. Inherent conditions resulting in illegal monopoly where other-
wise it would not be—St. Louis terminals............ 581
287. Terminal Railroad Association for all railroads not invalid
UNION © MEP Ots soe seuss vied Sleiecere insane aus eialle Rhee trea RADAR 586
288. Purchase of one railroad’s stock by another competing rail-
road—Union Pacific case... ..... ieee eee cece eee 587
289. Advantage of competition between competing railroads.... 592
290. Combination of railroad companies competing with coal
mining companies to defeat construction of independent
railroads. Reading Co. case—Sixty-five per cent. con-
TACs hs ocd seed aulals tesenae dea oRaunes HERG Bee cee oy 594
291. Southeastern Freight Association................. Raviemad 597
292. Contracts to carry through treight—Refusing to make with
BNOUDEF .CATTICT. cacric wince adver Gas aeatns ana ad dctaew eae 598
293. Pooling earnings and dividing on percentage basis........ 599
294. Combination formed in foreign country...............+4- . 599
295. Pooling receipts from foreign shipping trade.............. 600
296. Combination formed before enactment of statute—Intent... 601
297. Shipping contract—Special privileges..............-000 00> 602
298. Intrastate traffic on Ohio River—Doubt as to whether it is
interstate ‘traffities es suis oa aes cs emasey EOS Ke ewSe esa oe 603
299. Lease and sale of railroad stand on same basis............ 604
300. Lease of boat line and agreement not to compete for a term
OE VATS sai cowse amcdveigayedenaia: + eminala Srseaes av OSA Ra oleate Mata Scene 604
301. Right to withdraw from combination—Effect on withdrawing
PAARL. caso ceiade eee a Can ae ee eee es YRS 605
302. Combinations indirectly and not necessarily affecting trans-
PORtAtiONe Jen hia ae Stasi eeene sae? Sata dalideeal ae Aner 608
303. Intrastate commerce restraining........... ccc eee eee eens 609
304. Prepayment of charges, exacting of one carrier and not
ANGOL BOE: “60-2. elaieeiocns auprondva eos dudcanvend ai Subsea waa ANNE Moi Rae SARE 610
305. To control a railroad company not necessary to own a
majority of its stock.......... cee cece eee eee eee eee 611
306. Federal court’s power to restrain corporation exercising its
powers under state laws........... ses eee e eee eee eens 611
CHAPTER XV.
PATENTS.
307. Patent as a monopoly........ cece cece ee rete eee ence enes 616
308. Failure to use patent—Patentee reserving exclusive use to _
Himself 2 yawiagces peewee GF Geers bine eet Ree 617
309. Distinction between right to exclude others and his right to
sell a patented article...........se cece eee ee eee +... 619
310. Patentee subject to Anti-Trust Act.............. eee pene 621
311. Combination of independent patents............. weegeee ce 625
312. Patentee requiring his vendee to sell patented articles at

& fixed. “prite,.c.1.wecsiestsoeees genase oneee seen eees 626
XVi TABLE OF CONTENTS.
SECTION PAGE
313. Patentee selling patented article fixing price for the sale of

EO 2 (0) cc car) 629
314. Patentee requiring licensees to form pool to control prices.. 633
315. Good faith of patentee—Void patents...........seeeeeeeee 634
316. Contract extending life of patent beyond statutory Vinattapion: 636
317. Requiring license to purchase unpatented articles for use on

patented machine........... cee cee eee ee eee tenes 636
318. Unlawful combination as to the unpatented article to be used

on a patented machine............ cee cee erect eens 637
319. Contract to keep up the monopoly given by the contract..... 639
320. Patentee agreeing not to license any other person than his

first licensee to manufacture and sell patented articles—

Wi CO: VET BBs sic avsoia ad wastole sara auwiel a os, deacon e! axhuele. ew arebn dee Ae OS 640
321. Agreement not to use invention.............. Habdipinnceie enna 643
322. Combination of patentees and jobbers—Agreement unneces-

‘ sary to protect patentee’s rights...........-.-..ee sees 644
323. Combination formed in order to avoid infringement suits... 646
324. Combinations of corporations, each manufacturing non-com-

peting patented machines............ 0s eee eee ee cease 646
325. Agreement to defend infringement suits.................. 647
326. Contracts conveying several patents in return for licenses

tinder All Of GOW. is ye eeie yee de ea dies “snd e Disle. 60.e ais 648
327. Infringers setting up illegality of combination as a defense. 649
328. Specific performance of contract relating to patents........ 650
329. Public deceived by inferior goods, combination to prevent.. 651
330. Patents—Tied leases........... 00. cece ee cee ee eee e teens 651
330a. Contract to assign future inventions made after termination

Of -BELVICES inca vielguaate ain ee a cele ade eed alee eee eee 652

CHAPTER XVI.
PATENT MEDICINE.
331. Combination to fix prices of patent medicines............. 653
332. Secret formula for medicine unpatented.................. 655
333. Prevention of demoralization of prices.................... 661
334. Trade name—Secret formula.............. 0... cee ceca 663
CHAPTER XVII.
CoPYRIGHTED Books.

335. Combination of book publishers and sellers to control prices. 668
336. Owner suppressing his own copyright................... 670
337. Fixing price—Sale in violation of agreement—Infringement

OL SCOPYTIGHS, 2 s.cnse sede ciade ae wads 4 bata oa ae een 670
338. Fixing price—Copyright holder retaining title to book

licensing retailer to sell.............. 00... cece cee eae 672
339. Unlawful contract, enforcing......... 0.0... ccc cee cee cence 673
TABLE OF CONTENTS. xvii

CHAPTER XVIII 2

Lazor COMBINATIONS.

SECTION PAGE
340. Statute applies to combinations of workmen which restrain
interstate COMMErCe......... cc cece eee eee eee eee 677
341. Boycotting manufacturer’s goods—Danbury Hat case...... 680
342. A strike of railway employees to injure interstate commerce
—Right of laborers to combine............ 0... cece eee 681
343. Rule of union in violation of Anti-Trust Act............... 685
344, Inciting employes of railroads to leave their service—
Sympathetic ‘strikes csacaes cages veceaes vemeaenew aes s 686
345. Incorporation of national trade union..............e eee eee 687
CHAPTER XIX.
Suit in Equity.
346. Statute authorizing government to bring suit in equity to
prevent violations of act........ 0... cece eee cee ee eee 688
347. Process—Summoning other parties—Subpoenas........... 689
848. District court has superseded circuit court............. ».. 689
349. Validity of section 4........ 0.0 cece cee en eee cnv eens vee. 680
350. Equity restraining commission of a crime—Non-pecuniary
interest of government......... 0... e cece cece eee eens 690
351. Suit by private person or state......... cece cece e eee eee 694
oo2; Necessary “partiesins casas seseapes duaiiane es oars omens nea 696
353. Where suit may be brought.......... 0... cece eee eee eee 696
354. Process for nonresident of district—Constitutional........ 697
355. How bill or demurrer to be construed generally............ 700
356. Interstate or foreign commerce......... 00. cce cee e ence cane 700
S576) sTatent) cc cudad beta camane won mates oat Galen omeaees coe) 701
358. Multifariousness waived............ cc cece eee eee eee eee 701
359. General charge of conspiracy...........6 cece cece ee ee ee eee 701
360. Pendency of criminal case........... eee ce cee tee eae 702
S6L< InjUnchlon: cccowes vreau yor peed cies + arom henson woMiss 708
362. Injunction—Bond 22 .sccee scenes edrne bese ees seaweeds snens 703
363. Restraining order without notice............... eee ee ee eee 703
364. Injunction—Temporary restraining order...............004. 704
865. Injunction against person not named in bill............... 706
366. Injunction—Strike ended...... 0.2... . cece escent eee eens 707
367. Injunction—Combination completed before suit brought.... 708
368. Injunction inadequate relief—Injury to general public—
TPORACCO CAGE? seiissdesscaiaa a iavo since is wasn temctar dad 78 deejintaw oy ahertrincacs 709
369. Northern Securities Company’s distribution of stock....... 713
370. Injunction—Enjoining the voting of stock—Northern Securi-
HUB (CRBG) 5.5555 cdd asa cceines eiana eum ser REERE HERR Maae ts lhe ae EG echelons 715
371. Injunction not adequate relief—Standard Oil case....... + 117
xviii TABLE OF CONTENTS.

SECTION PAGE
372. Injunction—Dissolution of illegal combination............ 719
373. Decree reorganizing illegal combination...........++.++++- 720
3874. Expedition Act....... 0... ccc cece ee ee ent neta n nee 722

CHAPTER XX.

FoRFEITURE OF PROPERTY.

BTSs Blatute csiccaniwae swe a vigsiany sie sae oe Rite a ginece Ee aeens ow GES 724

376. Not limited to cases of contract or combination or conspiracy
—Not limited by other sections.........-.-+++ eee eee eee 724

377. Procedure—Jury trial... .. 0... cece ce ne eee aes 724

CHAPTER XXI.

INDICTMENTS.

318s sINtROdUChiOn * e535, aes sana ube este nae aaa Gaga bE AS Seed ES RS 727
379. First and second sectionS............ cece eee e cere ec eees 727
880. Constitutionality of penal provisions................0005 727
381. Section 73 of the Wilson Tariff Act.............e eee ee eeee 728
382. Common law offenses against United States—Sherman Law

creates new Offense... ...... ccc cee cette eee eee eees 728
383. Sufficiency of charge....csccsa neces de wee eases nas see eeee 730
384. Charging offense in language of statute—Monopoly......... 731
385. Averments as to interstate commerce—Hxtent of monopoliza-

TOM S's stsrea canaries etic acetate tanpin7diiesh spcetela-dne. usssl ysiee lonely. evauehinn. 2.8 734
386. Allegations as to trade or commerce restrained or monop-

NIZED: adavisy Sieve ek Oe hee eels a eee ep mA ah SEG EM 735
387, Duplicity saces nek seen we tne eae se towels sme debt ee AMES 735
O88; JOINder Of COUTIB ss cis sagecs ee ena oes Sere ok eee ond 738
889. Surplusage—Demurrer ........ 0c. cece eee cence eee 739

390. Alleging intent without setting out facts—No averment not
to engage in business or to sell at less than list price.. 739

+1, Acts charged in harmony with a lawful purpose.......... 742
GOD! CONSPIRACY sites sananh hate ada och eas afore acento Ate dae Anvataelgm anion 743
393. Setting out precise time when purpose was formed and first
MOVAB Cy eu site is ates yD oleae ere ahiade grag agin 3 ax teed Yee cn dao 743
394. Intent to monopolize—Acts of violence and intimidation.... 745
395. Use of the word “group” to designate different collection of
OLCHO AB US: 2 suivaicee-d Gee hed duis Sheed owe Dan's eee Bee 745
396. Monopolizing and attempting to monopolize distinct offenses
——Duplicity’ 2201 epee s deny ey Mess Go % aa wie dun ae de ee 746

397. Corporation officers as defendants designated by groups—
Corporation officers liable

398. Purpose to engross trade in hands of one of the defendants—
Interest of defendants in beneficiary of conspiracy....... 747

399. Ownership of patents—Lawful commerce................. 748
TABLE OF CONTENTS. xix

SECTION PAGE
400. All concerned may be charged as principals—Corporation
and officers—Separate actS...... cece cece eee eee eens 748
401. Indicting part of persons to the illegal combination........ 750
402. Indictment of stockholders for acts of corporation......... 750
403. Violation of statute must cause damages...........0000006 758
404. Sufficiency of evidence to find indictment.................. 751
405. Plea in abatement—Grand JUry......... ce cece eee eee eee 752
406. Review of grand jury evidence on motion to quash......... 752
407. Grand jury giving offense charged a wrong designation..... 752
408. Special assistant attorney appearing before grand jury..... 752
409. Summons issued to another district for corporation........ 753
410. Removal of defendant from one district to another......... 753
CHAPTER XXII.
ACTION FOR DAMAGES.
AM ss US LAUT CE <p sarc tose sacsiariangn SAG a Raich in Rue Rea BIN Sree NERD eee ENS 757
412. CONStIUHOTAL consi accesses oe die aces ea wie alee aie neee nuacalie Bin ae stint 757
413. Violation of statute must cause damageS............eeeeee 758
414. Jurisdiction—Removal of suit.......... cc cece ee erences 758
415; Where ‘suit: brought:s.20.<ec%acses yea sees ese seae ea tsaee 759
416. Action by way of set-off. ..... 0. cc cece eee ee eee eee 761
417. Pleading—Action at law—State practice followed......... 761
418. Conspiracy, pleading—Duplicity ............ cece eee cena 766
419) Exhibits: sncccvaeearadncciensine wale anda waddires ewes 768
420. Motion to strike out parts of complaint................... 768
421. A civil and not a penal action............ 000. e cece ee 769
422. Plaintiffs—-Municipality 20.0.0... 6000s sec eect enenetecwees 770
423. Parties defendant—Association—Corporation............... 770
424, Every member of combination liable...................5. 7172
ADS, DUPY Pen sccaabei e ssreoes elosunernaeaeda toes ee Se eueewblds dean ere 772
AQG> Burdens cise iceeiattecerasieasieh nion Wibde sad wentars Maeda N Ra eee OSES 773
427. Injunction to prevent injury........ see cece eee cece 773
428. Pendency of suit in state court...........- ee cere ee eaeee 773
429. Intrastate trade involved. ......... 0c cece cece cece eens 773
430. Injury wholly within a state............ceee sees ee eens 7175
431. Conspiracy formed abroad...........ceeeeee eee eee eas 175
432. Accord and satisfaction—Settlement of suit in state court
bar to suit in Federal court—Attorney fees............ 775
433. Statute of limitations 1.1.0.0... cc cece eee eee eee eae 776
434. Continuing combination—Preventing plaintiff entering into
BUSINCSS! 44 beivorediaiyesiennesestoe arena toconcnen Ma See Aacttaaeue) Saokenars 776
435. Damages recoverable—Loss of profits ..............eeeeee 776
436. Treble damages—Attorney fees—Practice................4. 779
437. Damages—Effect of combination to enhance price—Plaintiff
not engaged in interstate business................ dace 780
438. Right to rebates......... cece eee e eee cece eee eee eee eees 782
xx TABLE OF CONTENTS.
SECTION PAGE
439. Injury by boycott—Effort of combiners to better their con-
dition—Evidence ...... 0... c cee cee ere eee tenet eeees 783
440. Conspiracy to control competing corporation—Interstate
commerce—Directors action......... AMG Ree Ree 784
441. Excessive railroad rates........ ccc cece tee eee ees 786
442. Freight rates unreasonable—Conspiracy—Action of inter-
state commerce COMMISSION......-... 60s eee eee eee eens 787
443, Preventing embarking on new enterprise..........+-.++++- 789
444, Preventing pursuance of business—Intention and prepared-
ness to engage in business ........-.+- see ee reece eece 789
445. Stockholder’s action to prevent violation of Sherman Act... 791
446. Stockholder’s right to sue for damages to his corporation—
QREGItOR”. cand cagesdsane rawness pues Re SOS 791
447. Conspiracy to do unlawful act in foreign country.......... 793
448. Enforcing illegal ordinance.............e. eee eee e er eeneees 794
CHAPTER XXIII.
Action Upon ILLEGAL CONTRACT.
449, Action upon illegal contract......... 0.6 ccc cece eens 796
450. Collateral agreement to agreement in restraint of interstate
COMMERCE: - 5.5.28 dvds tebe wha Dagan titans eA aM PAE See eS HERES 799
451. Contract of transportation of interstate commerce........ 799
452. Member of combinations suing to restrain infringement of
Patents ¥ cine iasd-one nes wow te suede ds wulsia diem sey uh ede 800
453. Infringement of patent............ cece cece cee ete eens 800
CHAPTER XXIV.
EVIDENCE.
454. Acts of one party—Conspiracy................. 0. eee eee 802
455. Books and papers of corporations...................-000- 803
456. Subpeona duces tecum.... ccc cece cece eee cece eee e eens 804
457. Statements of customers—Hearsay..............-..00000e 806
458. Payment of dues to labor organization after suit brought—
Ratification asiureww savaee so 09-4 o4 se Nar esad dees cane 807
459. Purpose, former acts to show—Acts performed before Sher-
man: law enacted... .acsacwnacdswersy seadde page ea we@eecat 807
460. Overt acts—Intent and purpose....................000 eee 808
461. Report of interstate commerce commission containing
EVIDENCE «2 crenteagiie oes ae titiaeey oe ani ta ds eae eee 809
462. Admission of incompetent evidence—New trial............ 809
463. Sufficiency question for jury—Liability................... 809
464. Directing verdict—Circumstantial evidence, sufficiency..... 810
465. Evidence before grand jury..................cc cece cence 810
466. Examination before a master or examiner................. 810
467. Examiner taking evidence in another district.............. 811
TABLE OF CONTENTS. xxi

CHAPTER XXV.

IMMUNITY.

SECTION PAGE
468. Fifth amendment to Constitution—Construction.......... 812
469. Statute granting immunity—Appropriation............... 817
470. Other immunity statutes......... 0.0... cece cee eens 818
471. Immunity and pardon, difference............. eee eee eee 822
472. Corporations, fifth amendment—Books and papers......... 823
473. Unreasonable search—Fourth amendment...............65% 824
474, Answer in equity furnishing immunity in criminal prosecu-

PION, | cusses shisha eaceaiate a wie wigs eaten 3.4 age Se ciaeaieen cates 825
475. Witnesses not called by government............0.se000 825
476. Monopoly continued after right to immunity due.......... 826
477. What is the giving of evidence under compulsion of law.... 827
478. Immunity a question for judge......... 0. cece cee eee eee 829
479, Contempt—Appeal aie vies pie sae eae seen aie aie bee trea eee a aie 830
480. Release on habeas Corpus...... 0. ec cece ence eee e ences 820

APPENDIX A.
Sherman Act in full.................... is ies iace ra hl eater deta 833

APPENDIX B.
Wilsoi “Gar itt ACG. ss cece ese ae yee ad oo olan Sie ate ielSidaie a apes Sere ibaes . 836

APPENDIX C.
National. Trade Unto wsse sos go's gugenne ois aieses aie sree Ea Rape ee Wee 839

APPENDIX D.

Report of senate committee on Sherman Act..............-005- 842
TABLE OF CASES

[References are to pages.]

A.

A. B. Dick Co. v. Henry (C. C.),
(149 Fed. 424), 638.

Adair v. U. S. (208 U. S. 161;
28 Sup. Ct. 277; 52 L. Ed.
436), 201.

Adams v. Burke (17 Wall. 453),
632.

Adams Express Co. v. Ky. (214
U. S. 218; 29 Sup. Ct. 633;
53 L. Ed. 972), 233.

Adee v. J. L. Mott Iron Works
(46 Fed. 39), 804.

Addyston Pipe & Steel Co. v.
United States (175 U. S. 211;
20 Sup. Ct. 96; 44 L. Ed. 136,
affirming 85 Fed. 171; 29 C.
C. A. 141; 46 L. R. A. 122; 54
U. S. App. 723, which reversed
78 Fed. 712), 105, 163, 179,
194, 204, 205, 214, 223, 231,
250, 251, 255, 302, 338, 339,
341, 342, 344, 348, 350, 351,
352, 356, 360, 361, 386, 407,
420, 424, 481, 507, 515, 519,
521, 533, 535, 578, 640, 763,
781.

Aeolian Co. v. Harry
Co. (155 Fed. 199;
A. 205), 638.

Aetna Ins. Co. v. Commonwealth
(106 Ky. 864; 51 S. W. 624;
45 L. R. A. 355), 88.

Aikens v. Wisconsin (195 U. 8S.
194, 206; 25 Sup. Ct. 3; 49
L. Ed. 154; affirming 113 Wis.
419: 89 N. W. 1135), 348, 385.

H. Juelg
86 C. C.

 

Albers Commission Co. v. Spen-
cer (205 Mo. 105; 103 S. W.
523; 11 L. R. A. (N.S.) 1008),
535.

Albright v. Teas (106 U. S. 613;
1 Sup. Ct. 550; 27 L. Ed. 295;
affirming 13 Fed. 406), 620.

Alderman v. People (4 Mich. 414;
69 Am. Dee. 321), 99.

Alexander v. United States (201
U. 8. 117; 26 Sup. Ct. 356; 50
L. Ed. 686), 830, 831.

Alger v. Tacher (19 Pick. (36
Mass.) 51; 31 Am. Dec. 119),
49, 110.

Alldridge v. Williams (3 How. 9,
24; 11 L. Ed. 489), 548.

Allen v. Pullman Co. (191 U. S.
171, 179, 180; 24 Sup. Ct. 39;
48 L. Ed. 134), 187.

Allen v. Riley (203 U. 8S. 347;
27 Sup. Ct. 95; 51 L. Ed. 216;
affirming 71 Kan. 378; 80 Pac.
952; 114 Am. Ct. 481), 619.

Allgeyer v. Louisiana (165 U. S.
578, 589; 17 Sup. Ct. 427; 41
L. Ed. 832; reversing 48 A.
Ann. 104; 18 So. 904), 201,
221, 251, 499.

Allsopp v. Wheatcroft (L. R. 15
Eq. 59), 59.

American Banana Co. v. United
Fruit Co. (160 Fed. 184, af-
firmed 166 Fed. 261; 92 C. C.
A. 325; affirmed 213 U. S. 347;
29 Sup. Ct. 511; 53 L. Ed.
826), 789.

Xxili
XXxiv

TABLE OF CASES.

{References are to pages.]

American Banana Co. v. United
Fruit Co. (213 U. 8S. 347; 29
Sup. Ct. 511; 53 L. Ed. 826;
affirming 166 Fed. 261; 92 C.
C. A. 325), 794.

American Biscuit Co. v. Klotz,
44 Fed. 721, 724), 96, 115, 124,
153, 236, 352, 371, 398, 460,
798.

American Brake Beam Co. v.
Pungs (141 Fed. 923; 73 C.
C. A. 157), 508.

American Livestock Com. Co. v.
Livestock Exchange (143 ‘Tll.
210; 32 N. E. 274), 88.

American Strawboard Co. v. Hal-

deman Paper Co. (83 Fed.
619), 82.
American Union Coal Co. v.

Pennsylvania R. Co. (159 Fed.
278), 787.

Ames y. American Telephone Co.
(166 Fed. 820, 824) 534, 793.

Anders v. Gardner (151 N. C.
604), 109.

Anderson v. Jett (89 Ky. 375; 12
S. W. 670; 6 L. R. A. 390),
146, 150, 424.

Anderson v. Louisville & N. R.
Co. (62 Fed. 46), 165.

Anderson v. Shawnee Compress
Co. (17 Okl. 231; 87 Pac. 315;
15 L. R. A. (N.S.) 846; af-
firmed 209 U. S. 423; 28 Sup.
Ct. 572; 52 L. Ed. 865), 111,
343, 474.

Anderson v. United States (171
U. S. 604, 616; 19 Sup. Ct. 50;
43 L. Ed. 300), 186, 244, 251,
255, 338, 339, 462, 515, 519,
736.

Andrews v. Kingsbury (212 Tl.
97; 72 N. E. 11, affirming 112
Till. App. 518), 109.

Anheuser-Busch Brewing Assn. v.
Houck (27 S. W. 692), (Tex.
Civ. App.), 419.

 

Appleton v. Ecaubert (45 Fed.
281), 804.
Archer v. Marsh (1837), (6 A.

& E. 959), 56, 57.

Arkansas Brokerage Co. v. Dunn
(173 Fed. 899; 97 C. C. A.
454; 35 L. R. A. (N.S.) 464),
259, 503, 516.

Arkansas Stove Co. v. State (93
Ark. 27; 125 S. W. 1001), 202.

Armour Packing Co. v. United
States (209 U. S. 56; 28 Sup.
Ct. 428; 52 L. Ed. 681), 342,
730.

Arnold v. Jones Cotton Co. (152
Ala. 501; 44 So. 662; 12 L. R.
A. (N.S.) 150), 418.

Arnot v. Pittston & Elmira Coal
Co. (68 N. Y. 558; 23 Am. Rep.
190), 132, 153, 214, 251, 456.

Arthur v. Oakes (65 Fed. 310;
11 ¢C. C. A. 209; 25 L. R. A.
414), 679.

Askell v. Kansas (209 U. S. 251;
28 Sup. Ct. 485; 52 L. E. 778),
233.

Asbestos Felting Co. v. United
States and F. Salamander Felt-
ing Co. (13 Blatchf. 453), 801.

Asher v. Texas (128 U. S. 129;
9 Sup. Ct. 1; 32 L. Ed. 368;
reversing 23 Tex. App. 662; 50
Am. Rep. 783; 5 8S. W. 91), 190.

Association v. Kock (14 La. Ann.
168), 152. :

Atkins v. Kinnier
782), 85.

Atlanta v. Chattanooga Foundry
& Pipe Works (127 Fed. 23;
61 C. C. A. 387; reversing 101
Fed. 900; affirmed, 203 U. 8S.
390; 27 Sup. Ct. 65; 51 L. Ed.
241), 764, 769, 772, 775, 776,
781.

(4 Ex. 776,
TABLE OF CASES.

[References are to pages.]

Atlantic Coast Line R. Co. v.
Riverside Mills Co. (219 U.S.
186; 31 Sup. Ct. 164; 55 L. E.
167; 31 L. R. A. (N.S.) 73
affirming 168 Fed. 987, 990),
202.

Att’y General v. A. Booth & Co.
(143 Mich, 89; 106 N. W. 868),
125.

Austin v. Poiner (1 Sim. 348),
814.

Austin v. Tennessee (179 U. S.
343; 21 Sup. Ct. 132; 45 L.
Ed. 224; affirming 101 Tenn.
563; 48 S. W. 305; 50 L. R. A.
478; 70 Am. St. 703), 184.

Automatie Pencil Sharpener Co.
v. Goldsmith (190 Fed. 205),
622.

B.

Badische Anilin und Soda Fabrik
vy. Schott & Segner (1892),
(61 L. J. R. Ch. 698), 75.

Bagg v. Wilmington, Columbia &
Augusta R. Co. (109 N. C. 279,
280, 281; 14 S. E. 79, 80; 14
L. R. A. 596; 26 Am. St. Rep.
569), 166.

Bailey v. Phillips (159 Fed. 535),
110.

Bailey v. Slumbers Assn. (103
Tenn. 99; 52 S. W. 853; 46 L.
R. A. 561), 686.

Ballantine v. Cummings (220 Pa.
St. 621; 70 Atl. 546), 97.

Bancroft v. Embossing Co. (72
N. H. 402; 57 Atl. 97; 64 L.
R. A. 298), 109.

Barbee v. Plank Road Co. (6 Fla.
262, 268), 44.

Barber Asphalt Paving Co. v.
Hunt (100 Missouri, 22; 13 8.
W. 98), 537.

Barr v. Craven (89 L. T. 574; 20
T. L. R. 51), 110.

 

Bartholomew v. Austin (85 Fed.
359, 364, 29 C. C. A. 568; 573),
43, 45.

Bauer v. State, 3 Okla. Cr. 529;
107 Pac. 525), 98.

Bauer & Cie v. O’Donnell (229 U.
S. 1; 33 Sup. Ct. 616; 57 L.
Ed.), 467, 616, 617, 627, 632,
637, 640.

Beal v. Chase (31 Mich. 490),
82.

Beard v. Dennis (6 Ind. 200; 63
Am. Dee. 380), 110.

Beetham v. Grazer (21 T. L. R.),
111.

Beine, In re (42 Fed. 545), 183.
Belt Ry. Co. v. W. 8. (168 Fed.
542; 93 C. C. A. 666), 173.
Bement & Sons v. National Har-
row Co. (186 U. S. 70, 92; 22
Sup. Ct. 747; 46 L. E. 1058;
affirming 163 N. Y. 505; 57 N.
E. 764, which reversed 21 N. Y.
App. Div. 290; 47 N. Y¥. Supp.
462), 282, 531, 616, 618, 629,
632, 639, 643, 648, 649, 655, 661,

665, 666, 799.

Berlin Machine Works v. Perry
(71 Wis. 495; 38 N. W. 82; 5
Am. St. Rep. 236), 111.

Bigelow v. Calumet (155 Fed.
869), 384, 405, 408, 417, 534,
694, 773, 791.

Bigelow v. Calumet & Hecla Min-
ing (167 Fed. 704; 155 Fed.
869), 196, 197, 206, 258, 267,
405, 491, 515, 534, 791.

Bigelow v. Calumet & Hecla Min-
ing Co. (167 Fed. 721; 94 C.
C. A. 18; affirming 167 Fed.
704), 196, 197, 205, 270, 349,
405, 407, 500, 515, 519, 529,
531.

Bigelow v. Calumet (167 Fed.
739), 575.

Binn v. Guy (1803), (4 East,
190), 55.
XXvi

TABLE OF CASES.

[References are to pages.]

Bishoffsheim v. Brown (29 Fed.
341), 805.

Bishop v. Amer. Preserves (105
Fed. 845), 531, 774, 791, 798.

Bishop v. American Preservers’
Co. (157 Ill. 284; 41 N. E.
765; 48 Am. St. Rep. 317), 116,
121, 125, 151.

Bishop v. Pulmer (146, 469; 16
N. E. 299), 110.

Black, ex parte
Fed. 832), 440.

Blanchard v. Spague
288), 620.

Blauner v. Williams Co. (69 N.
Y. Supp. 165; 36 Misc. 173),
113.

Blease v. Garlington (92 U. S.
1; 23 L. Ed. 521), 804.

Bleistein’ v. Donaldson  Litho-
graphing Co. (188 U. 8. 239,
249, 250), 520.

Blindell v. Hogan (54 Fed. 40;
affirmed, 56 Fed. 696; C. C. A.
86; 13 U. S. App. 354), 694.

Bloom v. Home Ins. Agency (91
Ark. 367; 121 S. W. 293), 109.

Bloomer v. McQuewan (14 How.
539, 549; 14 L. Ed. 532), 616,
618, 632.

Blount Mfg. Co. v. Yale & Towne
(166 Fed. 555, 559), 618, 622,
623, 625, 643.

Board of Trade v. C. B. Thomson
Commission Co. (103 Fed. 902),
520.

Board of Trade v. Christie (198
U. S. 236; 25 Sup. Ct. 637; 49
L. Ed. 1031; affirming 121 Fed.
608, which affirmed 116 Fed.
944; reversing 125 Fed. 161;
also affirming 130 Fed. 507,
which reversed 125 Fed. 72),
521, 629, 656, 661.

Board of Trade v. Hadden-Krull
Co. (109 Fed. 705), 520.

(D. C.), (147

(1 Cliff.

 

Bobbs-Merrill Co. v. Snellenburg
(131 Fed. 530), 669, 670.
Bobbs-Merrill Co. v. Straus (139
Fed. 155, 192; affirmed 147
Fed. 15; 77 C. C. A. 607; 15
L. R. A. (N.S.) 766), 418, 669,

670, 672, 676.

Bobbs-Merrill Co. v. Straus (142
Fed. 1010; reversed 149 Fed.
21), 345.

Bobbs-Merrill Co. v. Straus (210
U. S. 339; 28 Sup. Ct. 722; 52
L. Ed. 1086; affirming 147 Fed.
15; 77 C. C. A. 607; 15 L. R.
A. (N. S.) 766), 617, 630, 633,
659, 666.

Bohn Mfg. Co. v. Hollie (54
Minn. 223; 55 N. W. 1119; 21
L. R. A. 337; 40 Am. St. 319),
401.

Boogher v. Life Association of
Amer. (75 Mo. 319), 123.

Booth & Co. v. Davis (127 Fed.
875, 879), 534.

Booth v. People (184 U. 8. 425;
22 Sup. Ct. 425; 46 L. Ed. 623;
affirming 186 Ill. 43; 57 N. E.
798; 50 L. R. A. 762.

Bosworth v. Hearne (Andr. 91),
85.

Bowman v. Chicago & N. W. R.
Co. (125 U. S. 465; 8 Sup. Ct.
689, 1062; 31 L. Ed. 700), 159,
164, 184.

Boyd v. United States (116 U.
8. 616; 6 Sup. Ct. 524; 29 L.
Ed. 746), 824, 828.

Brady v. Daly (175 U. S. 148, 20
Sup. Ct. 62; 44 L. Ed. 109;
affirming 83 Fed. 1007; 28 C.
C. A. 253; 51 U. S. App. 621),
770.

Bram v. United States (168 U.S.
532; 18 Sup. Ct. 183; 42 L.
Ed. 568), 828.
TABLE OF CASES.

XXVli

[References are to pages.]

Brennan v. Titusville (153 U. S.
289; 14 Sup. Ct. 829; 38 L.
Ed. 719; reversing 143 Pa. St.
672; 22 Atl. 893; 14 L. R. A.
100; 24 Am. St. 580; 3 Inters.
Com. Rep. 735), 160, 181, 190.

Brett v. Ebel (29 N. Y. App. Div.
256; 51 N. Y. Supp. 573), 508.

Brewer v. Blougher (14 Pet. 17s,
198; 10 L. Ed. 408), 543.

Brimmer v. Hebman (138 U. S.
78; 11 Sup. Ct. 862; 34 L. Ed.
862, affirming 41 Fed. 867; 3
Inters. Com. Rep. 126), 159.

Broad v. Jolfe (1620), (Cro. Jac.
596), 51, 55.

Brossnan, In re
619.

Brown, ex parte (72 Mo. 83; 37
Am, 426), 805, 806.

Brown v. Houston (114 U. S.
622; 5 Sup. Ct. 1091; 29 L. E.
257; affirming 33 La, Ann. 843;
39 Am. Rep. 284), 159, 233.

Brown v. Jacobs Pharmacy Co.
(115 Ga. 429, 435, 436; 41 S.
E. 553, 555, 556; 57 L. R. A.
547, 551; 90 Am. St. 126), 88,
251, 424.

Brown v. Maryland (12 Wheat
419, 446; 6 L. Ed. 678), 158,
183, 198, 207, 602.

Brown v. Rounsavell
589), 251, 499.

Brown v. Shannon (20 How. 55;
15 L. Ed. 826), 620.

Brown v. Walker (161 U. S. 591,
597; 16 Sup. Ct. 644; 40 L.
Ed. 819; 5 Inters. Com. Rep.
369, affirming 70 Fed. 46), 813,
815, 819, 822.

Brown v. Worster (113 Fed. 20),
804.

Brownsville Glass Co. v. Appert
Glass Co. (136 Fed. 240), 329,
412.

(18 Fed. 62),

(78 Til.

 

Buck’s Stove & Range Co. v.
American Federation of Labor
(219 U. S. 581; 31 Sup. Ct.
472; 55 L. Ed. 345), 681.

Buckeye Powder Co. v. EK. C. Du-
Pont, etc., Powder Co. (196
Fed. 514), 333, 335, 761, 766,
768, 769, 770.

Buell, in re (3 Dill. 116), 753.

Buffalo Oil Co. v. Standard Oil
Co. (106 N. Y. 699; 12 N. E.
825), 123.

Bullock v. Johnson (110 Ga.
486; 35 S. E. 703), 109.

Bunn v. Guy (4 East, 190), 87.

Burr v. Gregory (2 Paine 426),
620.

Burrows v. Interborough Metro-
politan Co. (156 Fed. 389),
371.

Butchers’ Union, etc. Co. v. Cres-
cent City, ete. Co. (111 U.S.
746, 755; 4 Sup. Ct. 652; 28
L. Ed. 585, reversing 9 Fed.
743; 4 Woods 96), 42, 102, 251.

Butchers’ & Drovers’ Stock-
Yards Co. v. Louisville & N. R.
Co. (31 U. S. App. 252; 14 C.
Cc. A. 290, and 67 Fed. 35),
148.

Cc.

Caldwell v. North Carolina (187
U. 8. 622, 632; 23 Sup. Ct. 229,
233; 47 L. E. 336; reversing
127 N. C. 521; 37 S. E. 138),
189, 191.

Calhoun v. Thompson
166), 814.

California Steam Navigation Co.
v. Wright (6 Cal. 258; 65 Am.
Dee. 511), 251.

Cameron Town Mut. Fire, Light
& Windstorm Ins. Co., In re (96
Fed. 756), 167, 328.

(66 Ala.
XXVill

TABLE OF CASES.

[References ara to pages.]

Cameron v. New York & Mt. Ver-
non Water Co. (62 Hun 269;
16 N. Y. Supp. 757), 401, 405.

Campbell v. Chicago, Milwaukee
& St. P. Ry. Co. (86 Iowa 587,
589; 53 N. W. 351; 17 L. R.
‘A, 443), 159, 165.

Camors McConnell Co. v. McCon-
nell (140 Fed. 412; 72 C. C.
A. 681; affirmed, 140 Fed. 987),
254, 256, 515, 534.

Carbon Co. v. McMillin (119 N.
Y. 46: 23 N. E. 530), 153.

Carew v. Rutherford (106 Mass.
1), 448.

Carroll v. Greenwich (199 U. S.
401; 26 Sup. Ct. 66; 50 L. Ed.
246; reversing 125 Fed. 121),
199.

Carson River Lumbering Co. v.
Patterson (33 Cal. 334, 339),
165.

Carter v. Alling (43 Fed. 208),
109.

Carter-Crume Co. vy. Peurrung
(86 Fed. 439; 30 C. C. A. 174),
o0-4.

Casey v. Typographical Union
(45 Fed. 185), 448.

Ceballos v. Munson 8. 8. Line (87
N. Y. §. 811; 93 App. Div.
593), 480.

Celluloid Mfg. Co. v. Goodyear
Dental Vuleanite Co. (13
Blatchf. 384), 801.

Central N. Y. Tel. & Tel. Co. v.
Averill (129 N. Y. App. Div.
752; 114 N. Y. Supp. 99; modi-
fied on appeal, 199 N. Y. 128;
92 N. E. 206), 92, 202.

Certiorari, Writ of (195 U. S.
636; 25 Sup. Ct. 793; 49 L. Ed.
355), 206.

Central Coal & Coke Co. v. Hert-
na (111 Fed. 96; 49 C. C. A.
244), 778.

 

Central Ohio Salt Co. y. Guthrie
(35 Ohio St. 666), 132, 145,
150, 214, 424, 456.

Central Shade Roller Co. v. Cush-
man (143 Mass. 353; 9 N. E.
629 (1887), 112, 134, 137, 147,
661.

Central R. Co. v. Collins (40 Ga.
582), 1d4.

Chadwick v. Covell (151 Mass.
190: 23 N. E. 1068; 21 Am. St.
442: 6 L. R. A. $39), 656, 665.

Chain Belt Co. v. Von Spreckel-
sen (117 Wis. 106), 665.

Chamberlain v. Willson (12 Ver-
mont 491), 814.

Champion v. Ames (188 U. 8.
321; 23 Sup. Ct. 321; 47 L. E.
492), 199.

Chapin v. Brown (83 Ia. 156;
48 N. W. 1074; 12 L. R. A.
428; 32 Am. Rep. 297), 133,

150, 662.

Chappell v. Brockway (21 Wend.
157, 158), 86, 88, 111.

Charles River Bridge v. Warren
River Bridge (11 Pet. 420, 607;
9 L. Ed. 773; affirming 7 Beck.
344), 42. 46.

Charleston Gas Co. v. Kanawha
Gas Co. (458 W. Va. 22: 50 8.
E. 876; 112 Am. St. 936), 373.

Chattanooga Foundry & Pipe Co.
v. Atlanta (203 U. S. 390; 27
Sup. Ct. 65; 51 L. Ed. 241, af-
firming 127 Fed. 23; 61 C. C.
A. 387: 64 L. R. A. 721, which
reversed 101 Fed. 900), 302,
797, 770. 779.

Chemical Works v. Hecker (11
Blatenf. 552), 801.

Chesapeake, ete. Tel. Co. v. Bal

timore Tel. Co. (66 Md. 399;
7 Atl. 809), 620.
TABLE OF CASES.

xxix

(References are to pages.]

Chesapeake & Ohio Fuel Co. v.
United States, 115 Fed. 610,
623; 53 C. C. 256; affirming
105 Fed, 93), 238, 241, 242, 251,
255, 266, 326, 346, 347, 350,
383, 386, 398, 403, 407, 415,
417, 418, 426, 531.

Chesman v, Nainby (1 Bro. P.C.
234. 8S. C., Ld. Raym. 1456),
52, 55,

Chicago, Burlington & Quincy R.
Co. v. McGuire (219 U. S. 549;
31 Sup. Ct. 259; 55 L. Ed. 328;
affirming 131 Towa 340; 108 N.
W. 902), 201.

Chieago Gaslight & Coke Co.
(121 Til. 531; 183 N. E. 169;
2 Am. St. 124), 14, 92.

Chicago, Indianapolis & L. R
Co. v. United States (219 U.
486; 31 Sup Ct. 272; 55
Ed. 611), 232.

Chicago, M. & St. P. Ry. Co.
Voelker (129 Fed. 522; 65
C. A. 226), 173.

Chicago, R. I. & P. Ry. Co. v.
Arkansas (219 U. S. 453; 31
Sup. Ct. 275; 55 L. Ed. 290;
affirming 86 Ark. 412; 111 S.
W. 121), 232.

Chicago, St. L. & N. O. R. Co.
v. Pullman Southern Car Co.
139 U. S. 79; 11 Sup. Ct. 490;
35 L. Ed. 97), 148.

Chicago Wall Paper Mills v. Gen-
eral Paper Mills Co. (147 Fed.
491, 494, 78 C. C. A. 607), 515,
519, 799.

Chicago, Wilmington, ete. Coal
Co. v. People (214 Tl. 421, 452;
73 N. E. 770, 780; affirming 114
Ill, App. 75), 418, 738.

Chicago, . Wilmington, etc. Coal
Co. v. People (114 Ill. App. 75,
112; affirmed 214 Ill, 421; 73
N. E. 770), 95, 424.

a

rm

Qs

 

Cilley v. United Shoe Machinery
Co. (202 Fed. 598), 491, 762,
765.

Cincinnati, etc. Packet Co. v. Bay
(200 U. S. 179; 26 Sup. Ct.
208; 50 L. Hd. 428), 194, 282,
360, 404, 509, 522, 556, 604.

Cincinnati, ete. R. Co. v. Inter-
state Commerce Commission,
(162 U. S. 184; 16 Sup. Ct.
700; 40 L. Ed. 935), 175, 690.

Cincinnati Siemens-Lungren Gas
Illum. Co. v. Western Sie-
mens-Lungren Gas Co. (152 U.
S. 200, 205; 14 Sup. Ct. 523;
38 L. Ed. 411), 777.

Citizens Wholesale Supply Co. v.
Snyder (201 Fed. 907), 795.
Civil Rights Cases (109 U. 8. 3;
27 L. Ed, 835; 3 Sup. Ct. 18),

199.

Clabaugh v. Southern Wholesale
Grocers Assn. (181 Fed. 706),
772, 776, 780.

Clark v. Needham (125 Mich. 84;
83 N. W. 1027; 51 L. R. A.
785; 84 Am. St. 559), 418.

Clarke v. Central R. & Banking
Co. of Ga. (50 Fed. 338), 359,
542, 508.

Clause v. Bullock Printing Press
Co. (118 Ill. 612, 617), 761.
Clement v. Louisville & Nashville
R. Co. (153 Fed. 979), 787.
Clemons v. Meadows (123 Ky.
178; 94 8. W. 13; 29 Ky. L.
Rep. 619; 6 L. R. A. (N.S.)

847), 110.

Clerke v. Comer (1734), (Cas. t.
Hardwicke, 53), 52, 55.

Cleveland, C. C. & T. R. Co. v.
Closser (126 Ind. 348; 26 N. E.
159; 9 L. R. A. 754; 45 Am.
& Eng. R. Cas. 275; 9 Ry. &
Corp. L. J. 165; 45 Abb. L. Jr.
209; 3 Interstate Com. Rep.
387), 92.
TABLE OF CASES.

[hererences are to pages. ]

Clifford v. State (29 Wis. 327),
328.

Close v. Olney (1 Denio 319). 814.

Cloth Co. v. Lorsont (R. A. 9 Eq.
345), 142.

Coburn v. O’Dell
H.) 540), 814.

Coca-Cola Co. v. Dacon Brown
Bottling Co. (200 Fed. 105),
467, 801.

Coca-Cola Co. v. Gay-Ola Co. (200
Fed. 720), 799.

Coe vy. Errol (116 U. S. 517; 6
Sup. Ct. 475; 29 L. Ed. 715;
affirming 62 N. H. 303), 18,
168. 173.

Cohen v. Berlin & Jones Envelope
Co. (166 N. Y. 292, 304; 59
N. E. 906, 910; reversing 38 N.
Y. App. Div. 499; 56 N. Y.
Supp. 588), 424.

Cohen v. Virginia (6 Wheat 264,
413; 5 L. Ed. 257), 198.

Cole Transportation Co. v. White
Star Co. (186 Fed. 63, 65), 259,
491.

Colegate v. Bachelor (Cro. Eliz.
872), 54.

Collins v. Locke (L. R. 4 App.
Cas. 674), 83, 84, 136, 142, 143.

Columbian Wire Co. v. Freeman
Wire Co. (71 Fed. 306), 801.

Commonwealth v. Eclipse Hay
Press Co. (31 Ky. L. Rep. 824;
104 S. W. 224), 165.

(10 Fost. (N.

Commonwealth v. Gloucester
Ferry Co. (98 Pa. 105, 120),
159, 166.

Commonwealth v. Grinstead (Ky.)
( 63 S. W. 427; 111 Ky. 203;
56 L. R. A. 709), 251, 499.

Commonwealth v. Housatonic R.
Co. (143 Mass. 264; 9 N. E.
547), 165.

 

Commonwealth v. Hunt (4 Met.
111; 38 Am. Dec. 346), 99, 401,
447, 762, 767.

Commonwealth v. Judd (2 Mass.
329; 3 Am. Dec. 54), 98.

Commonwealth v. Morgan
Mass. 199), 814.

Commonwealth v.
Mass. 545), 814.

Commonwealth v. Peaslee (177
Mass. 267, 272; 59 N. E. 55),
480, 701.

(107

Mullen (97

Commonwealth v. Pratt (126
Mass. 462), 814.
Commonwealth v. Roberts

(Brightly 109), 814.

Commonwealth v. Tack (Brewst.
511), 99.

Connolly v. Union Sewer Pipe Co.

(184 U. S. 540; 22 Sup. Ct. 431;
46 L. Ed. 679, affirming 99 Fed.
354), 255, 760, 761, 781, 798,
799.

Connors v. People (50 N. Y. 240),
814.

Connors v. United States (158 U.
S. 408; 15 Sup. Ct. 951; 39 L.
Ed. 1033), 736.

Consumers’ Oil Co. v. Nummaker
(142 Ind. 560; N. E. 51 Am. St.
193), 110.

Continental Paper Bag Co. v.
Eastern Paper Bag (210 U. S.
405, 425; 28 Sup. Ct. 748; 52
L. Ed. 1122; affirming 150 Fed.
741; 80 C. C. A. 407, which
affirmed 142 Fed. 479), 616, 618,
647.

Continental Securities Co. v. In-
terborough Rapid Transit Co.
165 Fed. 945, 956), 45, 303, 373,

Continental Wall Paper Co. v.
Voight (148 Fed. 939; 78 ©. C.
A. 567; affirmed, 212 U. S. 227;
29 Sup. Ct. 280; 53 L. Ed. 486),
256, 267, 270, 302, 408, 466.
TABLE OF CASES.

XXxi

[References are to pages.]

Continental Wall Paper Co. v.
Voight & Sons Co. (212 U. S.
227; 29 Sup. Ct. 280; 53 L. Ed.
486; affirming 148 Fed. 939; 78
C. C. A. 567), 343, 797, 749.

Corning, In re (51 Fed. Rep. 205),
369, 375, 739, 740, 754.

Cortelyou v. Johnson (145 Fed.
933), 638.

Cottington v. Swan (128, 288; 59
Atl. 1088, 1119; 105 Am. Wis.
321; 107 N. W. 336), 110.

Council Bluffs, City of, v. Kansas

City, St. Joseph & Council
Bluffs R. Co. (45 Iowa 338,
349; 24 Am. Rep. 773), 159,

165.

Counselman v. Hitcheock (142 U.
8. 547; 12 Sup. Ct. 195; 35 L.
Ed. 1110; reversing 44 Fed.
268), 812, 813, 819.

Covington & Cincinnati Bridge
Co. v. Kentucky (154 U. S.
204; 38 L. E. 962; 14 Sup. Ct.
1087; reversing 22 S. W. 851;
15 Ky. L. Rep. 320), 233.

Cowan v. Fairbrother (118 N. C.
406; 24 8. E. 212), 109.

Craft v. McConoughy (79 Ill. 346,
22 Am. Rep. 171), 14, 132, 133,
151, 214, 456, 662.

Craft v. McConoughy (3 Monthly
West Jur. 233), 103.

Crain v. United States (162 U.
S. 625; 16 Sup. Ct. 952; 40 L.
Ed. 1097), 738.

Crandall, ex parte (1 Nev. 294,
302), 166.

Crandall v. Nevada (6 Wall. 35;
18 L. Ed. 745; reversing 1 Nev.
294), 232.

Cravens v. Carter-Crume Co. (34
Cc. C. A. 479; 92 Fed. 479).
352, 400, 464.

Crocker-Wheeler Co. v. Bullock
134 Fed. 241), 805.

 

Crowley v. Christensen (137 U.S.
89; 11 Sup. Ct. 13; 34 L. E.
620, reversing 43 Fed. 243),
201.

Crown Cork & Seal Co. v. Brook-
lyn Bottle Stopper Co. (C. C.),
(172 Fed. 225), 638.

Crown Cork & Seal Co. v. ‘Stand-
ard Brewing Co. (C. C.), (174
Fed. 252), 638.

Crutcher v. Kentucky (141 U. S.
47, 59; 11 Sup. Ct. 851; 35 L.
Ed. 649; 89 Ky. 6; 12 S. W.
141), 187.

Cumberland Tel. & Tel. Co. v.
State (99 Miss. 1; 54 So. 670;
39 L. R. A. (N.S.) 277), 480.

Cummings v. Union Blue Stone
Co. (164 N. Y. 401; 58 N. E.
525; 52 L. R. A. 262; 79 Am.
St. 655, affirming 15 N. Y. App.
Div. 602; 44 N. Y. Supp. 787),
88.

Cummings v. Union Bluestone Co.
(15 N. Y. App. Div. 602; 44
N. Y. Supp. 787; affirmed 164
N. S. 401; 58 N. E. 525; 52
L. R. A. 262; 79 Am. St. 655),
426.

Cundell v. Pratt, Moody & Mal-
kin, 108.

Curlten v. Atkinson (54 N. C.
133), 167, 328.

Curtis v. Gokey (69 N. Y. 300).
111.

D.

Dale Tile Mfg. Co. v. Hyott (125
U. S. 46; 8 Sup. Ct. 756; 31
L. Ed. 683; affirming 106 N. Y.
651; 12 N. E. 705), 620.

Dalph v. Troy Laundry Machinery
Co. (28 Fed. 553), 134, 140.

Daniel Ball, The (10 Wall. 567;
19 L. E. 999, reversing Brown
Adams Cas. 193; Fed. Cas. No.
3564), 175.
XXxli

TABLE OF CASES.

(References are to pages.]

Daniel v. Goodyear Show Mach.
Co. (128 Fed. 753, 770), 805.
Darcantel v. Slaughter House, etc.
Co. (44 La. Ann. 632, 642; 11

So. 239), 43.

Darcy v. Allen (11 Coke 84; Noy.
173; Moore 673; 8 Coke 125),
36.

Darius Cole Transp. Co. v. White
Star Line (186 Fed. 63; 108
C. C. A. 165), 604, 605.

Davenport v. Kleinschmidt (6
Mont. 502; 13 Pac. 249, citing
2 Rap. and L., Law Dict. 834),
43, 44.

Davies v. Davies (L. R. 36, Ch. D.
359), 59.

Davis v. Barney (2 Gill. and J.
(Md.) 382), 110.

Davis v. Booth (131 Fed. 31, 37;
65 C. C. A. 269; modifying and
affirming 127 Fed. 875), 403,
408, 500, 505, 206, 256.

Davis v. Marson (1793), (5 T. R.
118), 55, 71, 87.

Davis v. Reid (5 Sim 443), 814.

Debs, In re (158 U. S. 564; 15
Sup. Ct. 900; 39 L. Ed. 1092,
affirming 64 Fed. 724), 198, 231.

Delaware, ete. R. Co. v. Frank
(110 Fed. 689), 556, 599.

Dennelry v. McNulta (86 Fed.
825), 798.

Denver & Rio Grande R. Co. v.
United States (124 Fed. 156,
161; 59 C. C. A. 579, 584), 706.

DeWitt Wire-Cloth Co. v. N. J.
Wire-Cloth Co. (Com. Pl.), (14
N. Y. Supp. 277), 150.

Diamond Match Co. v. Roeber
(106 N. Y. 473; 13 N. E. 419;
60 Am. Rep. 464), 82, 88, 142,
145.

Dickerson v. Tinling (84 Fed.
192; 28 C. C. A. 139), 629, 666.

‘Dickinson v. Board of Trade (114
Ill. App. 295), 88.

 

Dillon v. Erie R. Co. (438 N. Y.
Supp. 320, 325; 19 Misc. 116),
159, 166.

Distilling & Cattle Feeding Co. v.
People (156 Ill. 448, 449; 41
N. E. 188; 47 Am. St. 200),
109. 118, 121, 124, 125, 153,
3038, 411, 456.

Dittman v. Distilling Co. (64 N.
J. Eq. 587, 541, 544; 54 Atl.
570, 571), 401, 404.

Dixon v. Vale, 1 C. & P. 278), 813.

Dolph v. Troy Laundry Machinery
Co. (28 Fed. R. 553), 134, 140.

Dr. Miles Medical Co. v. Gold-
thwaite (133 Fed. 794), 509,
529, 661, 664.

Dr. Miles Medical Co. v. Jaynes
Drug Co. (149 Fed. 838), 617,
665.

Dr. Miles Medical Co. v. John D.
Park & Sons Co. (220 U. S.
373; 31 Sup. Ct. 376; 55 L. Ed.
902; affirming 164 Fed. 803;
90 C. C. A. 579), 3438, 344, 509,
617, 655, 659, 660, 662, 664, 666.

Dr. Miles Medical Co. v. Platt
(142 Fed. 606), 509. 661, 665.

Dubowski v. Goldstein [1896], (1
Q. B. 478), 82.

Dubuque, ete. R. R. Co. v. Rich-
mond (19 Wall. 584, 589; 22
L. Ed. 173), 207.

Dudley v. Briggs (141 Mass. 582),
789.

Dueber Watch Case Mfg. Co. v.
E. Howard Watch & Clock Co.
(66 Fed. 637, 643; 14 C. GC. A.
14; affirming 55 Fed. 851), 262,
326, 534, 599, 759, 764.

Dunbar v. Amer. Tel. & Tel. Co.
(224 Ill. 9; 79 N. E. 423; 87
N. E. 521; 115 Am. St. 132),
110, 124, 119, 303. 408. |

Dunlop v. Gregory (10 N. Y. 241),
82.
TABLE OF CASES.

Xxxill

[References are to pages.]

Dushane v. Benedict (120 U. S.
630, 648; 7 Sup. Ct. 696; 30
L. Ed. 810), 761.

E.

East v. Chapman (2 C. & P. 570;
8S. C. M. & M. 46), 814.

East India Co. v. Sandys (Skinner
165, 169), 274.

East India Co. v. Sandys (10
Howell State Trials, 386), 45,
46.

Edgar Lumber Co. v. Cornie Stove
Co. (95 Ark. 499; 130 8S. W.
452), 109.

Edison Phonograph Co. v. Kauf-
man (105 Fed. 960), (1901),
629, 666.

Edison Phonograph Co. v. Pike
(116 Fed. 863), (1902), 629,
666.

Edison Elect. Lt. Co. v. U. 8.
Elec. Ltg. Co. (45 Fed. 55, 59),
804.

Edison Light Co. v. Sawyer-Mann
Electric Light Co. (53 Fed. 598;
3 C0. C. A. 605), 650.

Egerton v. Earl Brownlow (4 H.
L. Cas. 1), 58.

Ellis v. Inman (131 Fed. 182; 65
C. C. A. 488; reversing 124 Fed.
956), 254, 256, 267, 341, 343,
346, 387, 417, 519, 534.

Ellis v. United States (206 U. 8S.
246; 27 Sup. Ct. 600; 51 L.
Ed. 1047; 11 Am. Cas. 589), 727.

Emery v. Candle Co. (47 Ohio St.
320; 24 N. E. 660; 21 Am. St.
819), 150.

Engler v. Morgenstern (85 Neb.
51; 122 N. W. 688), 109.

Equitable Life Ins. Society v. Com-
monwealth (113 Ky. 126; 67 8.
W. 388; 23 Ky. L. Rep. 2359),
202.

 

Espenson v. Koepke (93 Minn.
278; 101 Mo. 168), 109.

Evans v. American Strawboard Co.
(114 Ill. App. 450), 412.

Evans y. Hughey, 76 Ill. 115, 120),
761.

Excelsior Wooden Pipe Co. v. Pa-
cific Bridge Co. (185 U. 8. 282;
22 Sup. Ct. 681; 46 L. Hd. 910),
621.

Exchange Telegraph Co. v. Gregory
& Co. (1896), (1 Q. B. D. 147),
520.

Express Cases (117 U.S. 1; 6 Sup.
Ct. 542, 628; 29 L. Ed. 791; re-
versing 3 McCrery 147; 10 Fed.
210), 148.

F.

Fair v. Dover Mfg. Co. (166 Fed.
117), 622.

Fairbank v. Leary (40 Wis. 637),
103, 400.

Farrar v. Close (4 Q. B. 153), 88.

Farrer v. Close (L. R. 4 Q. B.
Div. 602), 249.

Farris v. Henderson (1 Okl. 284;
33 Pac. 380), 159, 166.

Farmers’ Loan & Trust Co. v. New
York & Northern Ry. Co. (150
N. Y. 410, 425; 44 N. E. 1043;
34 L. R. A. 76), 410.

Farmers Loan & Trust Co. v.
Northern Pacific R. Co. (60 Fed.
903), 687.

Fayerweather v. Ritch
529), 804.

Fechteler v. Palm Bros. & Co.
(133 Fed. 462; 66 C. C. A. 336),
116.

Field v. Barber Asphalt Paving Co.
(194 U. S. 618; 24 Sup. Ct.
764; 48 L. Ed. 1142; revers-
ing 117 Fed. 925), 206, 254, 515,
522, 536.

Field v. Barber Asphalt Paving
Co. (117 Fed. 925), 536.

(89 Fed.
XXXIV

TABLE OF CASES.

[References are to pages.]

Finck v. Schneider Granite Co. (18
Mo. 244; 86 S. W. 713; 106 Am.
St. 452), 124, 362, 411.

First National Bank v. Missouri
Glass Co. (— Mo. App. —; 152
S. W. 378), 690, 759.

Fishers Co. v. Leman
217), 109.

Fletcher v. Palm (133 Fed. 462,
471; 66 C. C. A. 336, 345), 400.

Flower v. Smith Lumber Co. (157
Ala. 505; 47 So. 1022), 418.

Floyd v. State (7 Tex. 215), 814.

Fonotipia, Limited v. Bradley (171
Fed. 951), 416.

Foot v. Buchanan (113 Fed. 156),
816, 822, 829, 830.

Ford v. Milk Shippers’ Assn. (155
Tll. 166; 39 N. E. 651; 27 L.
R. A. 298), 124, 125, 151, 362.

Fort Worth & Denver City Ry. Co.
v. Whitehead (6 Tex. Civ. App.
595; 26 S. W. 172), 328.

Ft. Smith L. & T. Co. v. Kelley
(94 Ark. 461; 127 S. W. 975),
109.

Fowle v. Park (131 U. S. 88; 9
Sup. Ct. 658; 33 L. Ed. 67),
82, 142, 656, 661.

Franklin Union v. People (220 Ill.
355; 77 N. E. 176), 97.

Fraser v. Duffey (196 Fed. 900),
650.

Fredenthal v. Espery (45 Colo.
488; 102 Pac. 280), 109.

Freemantle v. Silk Throwsters Co.
(1 Lev. 229), 85.

Frisbie v. United States (157 U.
S. 160; 15 Sup. Ct. 586; 39 L.
Ed. 657; affirming 28 Fed. 808),
222.

Fry v. State (63 Ind. 552, 562;
30 Am. Rep. 238), 165.

Fuller v. Chicago & N. W. R. Co.
(31 Iowa 187, 207), 165.

(116 Fed.

 

F. W. Dodge & Co. v. Construction
Information Co. (183 Mass. 62;
66 N. E. 204), 520.

G.

Gamewell Fire Alarm Telegraph
Co. v. Crane (160 Mass. 50; 35
N. E. 98), 147.

Garland’s Case (18 Wall. 333; 18
L. Ed. 366), 822.

Garst v. Hall & L. Co. (179 Mass.
588; 61 N. E. 219; 55 L. R. A.
631), 659, 666, 672.

Garst v. Harriss (177 Mass. 72,
74; 58 N. E. 174), 661.

Gates v. Hooper (90 Tex. 563; 33
8S. W. 1079, reversing 39 S. W.
186), 97, 330.

Geise v. Pennsylvania Fire Ins. Co.
(Tex. Civ. App.), (107 S. W.
555), 327.

General Electric Co. v. Wise (119
Fed. 922), 650, 800.

Getz Bros. & Co. v. Federal Salt
Co. (81 P. 416; 147 Cal. 115;
109 Am. St. 114), 110, 465.

Gibbons v. Ogden (9 Wheat. 1;
6 L. Ed. 23; reversing 17 Johns
488), 161, 168, 167, 176, 198,
199, 207, 232, 602.

Gibbs v. Baltimore Gas Co. (130
U. S. 396; 9 Sup. Ct. 553; 32
L. Ed. 979), 47, 92, 152.

Gibbs v. MeNeeley (102 Fed. 594;
107 Fed. 210; reversed 118 Fed.
120; 55 C. C. A. 70), 446, 534,
765, 782.

Gibbs v. MceNeeley
210), 446, 507, 522.

Gibbs v. McNeeley (118 Fed. 120;
55 C. C. A. 70; 60 L. R. A. 152;
reversing 107 Fed. 210), 251,
254, 266, 347, 352, 446, 460,
531.

(107 Fed.
TABLE OF CASES.

XXXV

[Iteferences are to pages.)

Gilman v. Philadelphia (38 Wall.
713; 18 L. decdk. 96), 232.

Gloucester erry Co, v. Pennsyl-
vania (114 U.S. 1963; 5 Sup.
Ct. 826; 20 T. Idd. 1585 revers-
ing US Pa. 105), 161, 177, 179,
a

Glouecster Txinglass & Glue Co. v.
Kussin Cement Co. (154 Mass.
2; 27 N. BW. 1005), 147.

Goimpers v. Buck Stove & Range
Co. (22b UL S. 418; 31 Sup. Ct.
42; 55 be id. 797; 384 L. R.
A. (N.S.)) 8745) reversing 33
App. D.C. 516), 681.

Good v, Daland @)21
24 Ni. 15), 661.

Goodimen Vv.
567), 110.

Goodyear vy. Union, ete. Co. (4
Blatehf, 63), 620.

Goshen Rubber Works v. Single
Tube, ete. Co. (166 Fed. 431),
623,

Crahun ov. Macon, cte. R. Co.
(120 Gu. 757; 495 i. 75), 400.

Grand Jury, /n re (62 Fed. 840),
236, 260, 448, 678, 687, 752.

Grand Jury, Charge to, Jn re (151
Fed, 834, 839, 840), 165, 179,
182, 196, 207, 515, 534,

Grant ve Raymond (6 Pet. 218,
241; 8 LL. id. 376, 384, 385),
617, 649, 655, 665,
trassvilli v. Lowden (11 Ohio St.
340), 111,
iray v. Minneapolis & St. Louis
Rh. Co. (110 Minn, 527; 124 N.
W. 1100), 165.

Great Southern Fire Proof Ifotel
Co. v. Jones (193 U.S. 5382; 24
Sup. Ct. 576; 48 TL. Md. 778;
affirming 116 Fed. 798; 54 C,
CG. A. 165), 202,
irvon v. Bonnett (Tex. Civ. App.),
(110 8S. W. 108), 98.

N. Y. 1;

Henderson (58 Ga.

 

Green v. Stoller (77 Fed. 1), 248.

Green, In re (52 Fed. 104), 43,
v2, 248, 249, 261, B11, 325,
460, 374, 389, 390, 417, 499,
503, 729, 732, 740, 742, 750,
754,

Green vy, Williams (45 I1L 206),
778.

Greer y. Payne (4 Kan. App. 153;
46 Pac. 190), 416.

Career, Mills & Co. v. Stoller (77
Fed. 1), 318, 689, 694, 760,
771, 798.

Grenada Lumber Co. v. Mississippi
(217 U.S. 433; 30 Sup. Ct. 535;
54 Ta. Md. 826; affirming (Miss.)
48 So. 1021), 202.

Grice, In re (C. C.), (79 Fed. 627,
644), 499.

Griffin v. Colver (16 N. Y. 489,
491; 69 Am. Dee. 718), 777.
Crogan v. Chaffie (156 Cal. 611;

105 Pac. 745). 104.

Grundy v. Edwards (7 J. J. March
368; 23 Am. Dec, 409), 109.
Guerand v. Dacelet (32 Md. 561),

10.

Gulf C. & 8. Ry. Co. v. Miami S.
S. Co. (86 Ved. 407; 30 C. C.
A, 142), 542, 599, 610. 694, 761.

Cinlf, ete. R. Co. v. Texas (204
U.S. 403; 24 Sup. 360; 51 L.
id. 540; affirming 97 Tex. 274;
7H 8. W. 495), 175.

Gunmakers Co. v. Fell
384, 388), 53, 71.

suthrie Daily Leader v. Cameron
(3 Okla. 677; 41 Pac. 635), 44.

Guy v. Commissioners (122 N. Y.
471; 29 8. E. 771), 538,

(Willes

H.

Hackett v. A. L. & J. J. Reynolds
Co. (30 N. Y. Mise. 733; 62
N. Y. Supp. 1076), 109,
XXXvi

TABLE OF CASES.

(References are to pages.]

Hadley Dean Plate Glass Co. v.
Highland Glass Co. (143 Fed.
242; 74 0. C. A. 462), 799.

Hair v. Barnes (26 Ill. App. 580),
778.

Hale, In re (139 Fed. 496; af-
firmed 201 U. S. 43; 26 Sup.
Ct. 370; 50 L. Ed. 652), 822,
830.

Hale v. Hatch
772.

Hale v. Henkel (201 U. S. 43;
26 Sup. Ct. 370; 50 L. Ed. 652;
affirming 139 Fed. 496), 225,
792, 805, 815, 816, 817, 818, 823,
824.

Hale v. O’Connor Coal & Supply
Co. (181 Fed. 267), 763.

Hammond Packing Co. v. Arkan-
sas (212 U. 8. 322; 29 Sup. Ct.
370; affirming 81 Ark. 519; 100
S. W. 407, 1199), 200, 202.

Hampton v. Caldwell (95 Ark.
387; 129 S. W. 816), 109.

Handy v. Cleveland, ete. R. Co.
(81 Fed. 689), 14.

Hannibal & St. Joe R. Co. v. Hasen
(95 U. 8. 465; 24 L. Ed. 527;
reversing 60 Mo. 226), 159.

Harbison-Walker Co. v. Stanton
(227 Pa. 55; 75 Atl. 988), 254.

Harding v. American Glucose Co.
(182 Ill. 615; 55 N. E. 577; 64
L. R. A. 738; 74 Am. St. 189),
104, 120, 125, 303, 398, 411, 418.

Hardwick Farmers’ Elevator Co.
v. Chicago, Rock Island & Pacific
Ry. Co. (110 Minn. 25; 124 N.
W. 819), 165.

Hardy v. Atchison, Topeka & Santa
Fe R. Co. (32 Kan. 698; 5 Pac.
6, 10), 165.

Harrer v. Close (lL. R. 4; Q. B.
602). 156.

Harriman v. Northern Securities
(132 Fed. 464), 705, 706.

(204 Fed. 433),

 

Harriman +. Northern Securities
Co. (197 U. 8. 244; 25 Sup. Ct.
493; 49 L. Ed. 739; affirming
134 Fed. 331; 67 C. C. A. 245,
which reversed 132 Fed. 464),
5717, 715.

Harris v. Parsons (32 L. J. Ch.
247), 56.

Harrison v. Godman (1 Burr. 12),
85.

Harrison v. Maynard (61 Fed.
689; 10 C. C. A. 17), 672, 673.

Hartell v. Tilghwen (99 U. 8. 547;
26 L. Ed. 357; reversing 11
Phila. 500; Fed. Cas. No.
14039), 620.

Hartman y. John D. Park & Sons
Co. (145 Fed. 358), 283.

Hawks v. Lands (3 Gilm. 227,

232), 761.

Haywood v. Young (2 Chitty’s R.
407), 87.

Hazlehurst v. Railroad Co. (43
Ga.13), 154.

Head Money Cases (112 U. 8.
580; 28 L. Ed. 798; 5 Sup.

Ct. 247; affirming 28 Blatchf.
460; 18 Fed. 135), 232.

Heaton-Peninsular Button Fast-
ener Co. v. Eureka Specialty
Co. (77 Fed. 288; 25 ©. G. A.
267; 35 L. R. A. 728), 618,
629, 638, 661, 666.

Heike v. United States (227 U.S.

131; 33 Sup. Ct. 226; 457 L. Ed.
—; affirming 192 Fed. 83; 112
C. C. A. 615), 817, 818, 823,
829.

Heine Brewing Co. v. Belinder
(97 Mo. App. 64, 68; 71 8S. W.
691, 692), 333, 424,

Henderson vy. Mayor (92 U. 8.
259; 23 L. Ed. 543), 159, 198,
232.

Henderson v. Wickham (92 U. 8.
259; 23 L. Ed. 543), 159, 198,
232.
TABLE OF CASES.

Xxxvii

[References are to pages.]

Henry Bill Publishing Co. v.
Smythe (27 Fed. 914, 925),
672, 673.

Henry v. Diek Co. (224 U. &.
1; 32 Sup. Ct. 364; 56 L. Ed.
645), 332 616, 618, 620, 627,
628, 632, 636, 646, 669.

llirreshoff v. Bautineau (17 R. I.
1; 19 Atl. 712; 8 LL R. A. 469;
33 Am. St. 850), 47, 82, 111.

Herriman v. Menzies (115 Cal.
16; 46 Pac, 730; 35 L. R. A.
318; 56 Am. St. 81), 44, 104,
134, 140, 373, 398.

Hill v. Gudgell (9 Ky. L. Rep.
436), 109.

Hilton v. Eckersley (6 El. & BI.
47; L. J. Q. B. 353; in error 6
ik. & B. 66; 25 L. J. Q. B. 199),
88, 132, 138, 152, 156, 249, 577,

578,

Hinde v. Gray (1840), (1 Man.
& G. 195), 71.
Hinde v. Gray (1 Seott, N. R.

123), 53, 57, 59.

Hitchock vy. Anthony (Id. 779),
82.
Hitchock v. Coker (6 A. & E.

438), 55. 57, 58, 82, 141.

Tlitchman v. Coal & Coke Co.
(202 Fed. 512), 686.

Hodge v. Sloan (107 N. Y. 244;
17 N. E. 335), 82, 88.

Hoe v. Knapp (17 Fed. 204), 618.

Hoff v. Lenerrmann (143 TIL. App.
170), 109.

Hoffman v. Brooks
Law Bul, 258), 150.

Hoffman v. Brooks (23 Am. Law
Reg. N. 8. 648), (Sup. Ct. Cin.
1884), 132, 424.

Holmes vy. Martin (10 Ga. 503),
110.

Home Tel. Co. v. North Manches-
ter Co. (47 Ind. App. 411; 92
N. E. 558; 93 N. Y. 234), 92.

(11. Wkly.

 

Ilome Tel. Co. v. Sarcoxie L. &

T. Co. (236 Mo. 114; 139 &.
W. 108; 36 L. R. A. (N.S.)
124), 480.

Homer v. Ashford (1825), (3
Bing. 322, 326, 328), 52, 55,
60, 82.

Hood & (419; 80
L. T. (N.S.) 569), 110.

Hooker v. Vandewater (4 Denio
434; 49 Am. Dee. 282), 154.
Hopkins v. Oxley Stove Co. (83

Fed. 912), 519.

Hopkins v. United States (171
U. S. 578, 600; 19 Sup. Ct. 40;
43 L. Ed. 290; reversing 82
Fed. 529), 178, 188, 186, 244,
245, 251, 252, 282, 338, 339,
421, 462, 531, 534, 847.

Hornby v. Close (42 B. 153), 88.

Hornby v. Close (L. R. 2 Q. B.
153), 249.

Horner v. Graves (7 Bing. 735),
71, 72, 80, 82, 87, 109.

Horner v. United States (143 U.
8S. 207; 12 Sup. Ct. 407; 36 L.
Hd. 126), 754.

Hauck v. Anheuser-Busch Brew-
ing Assn. (88 Tex. 184; 30 S.
W. 869), 419.

Howard vy. Stillwell & B. Mfg. Co.
(139 U. 8. 199, 206; 11 Sup.
Ct. 500; 35 L. Ed. 147), 777.

Hlowardin v. Coal Co. (111 Wis.
545; 87 N. W. 472), 88.

Hubbard v. Miller, 27 Mich. 15),
82, 109.

Hubbard v. Rogers (64 Ill. 434,
437), 761.

TIume v. United States (118 Fed.
689; 55 C. C. A. 407), 730.
Hunlocke v. Blacklowe (2 Wms.
Saund. (6th Ed.) 156 b), 52.
Hunt v. Riverside Co-operative
Club (140 Mich. 538; 104 N.
W. 40: 112 Am. St. 420), 112,

115. 417, 424.
XXXVili

TABLE OF CASES.

[References are to pages.]

Huntington v. Attrill (146 U. 8S.
657; 13 Sup. Ct. 224; 36 L. Ed.
1123, reversing 70 Md. 191; 2
L. R. A. 779; 14 Am. St. 364;
16 Atl. 351), 770.

Huse v. Glover (119 U. S. 543; 7
Sup. Ct. 313; 33 L. Ed. 487;
affirming 15 Fed. 292), 253.

i.

Illinois Commission Co. v. Cleve-
land Tel. Co. (119 Fed. 301),
520.

Imperial Curtain Co. v. Jacobs
(163 Mich. 72; 17 Det. Leg. N.
751; 127 N. W. 772), 165.

Independent Baking Powder Co.
v. Boorman (130 Fed. 726),
650, 799.

India Bagging Assn. v. Kock (14
La. Ann. 168), 132.

Indiana Mfg. Co. v. J. I. Case
Threshing Machine Co. (154
Fed. 365; 83 C. C. A. 343; re-
versing 148 Fed. 21), 633, 651.

Indiana Mfg. Co. v. J. I. Case
Threshing Machine Co. (158
Fed. 21-25), 644, 648, 650.

International Harvester Co. v.
Oliver (192 Fed. 59), 799.

International Text Book Co. v.
Lynch (81 Vt. 101; 69 Atl.
641; case reversed in 218 U. 8.
664; 54 L. E. 1201; 31 Sup.
Ct. 225), 166.

Interstate Commerce Commission
v. Baird (194 U. S. 25; 24
Sup. Ct. 563; 48 L. Ed. 860;
reversing 123 Fed. 969), 364,
824,

Interstate Commerce Commission
v. Brimson (154 U. 8. 447, 479;
155 U. S. 3; 14 Sup. Ct. 1125;
15 Sup. Ct. 19; 38 L. EH. 1047;
39 L. Ed. 49), 220, 824.

 

Interstate Com. Commission v.
Detroit, etc. R. Co. (167 U. 8.
633; 17 Sup. Ct. 686; 42 L. Ed.
306; affirming 74 Fed. Rep.
833; 21 C. C. A. 103; 43 U.S.
App. 308; reversing 57 Fed.
Rep. 1005), 176.

Interview Injunction, (L. R. 15 Q.
B. Div. 476; 54 L. J. Q. B.
540; L. T. 268; 15 Cox C.
C. 740; 49 J. P. 646; 5 Asp. M.
467; 47 L. R. 783), 249.

Ipswich Tailors’ Case (11 Coke’s
Tep. 53a), 60.

Irvine, Ex parte (74 Fed. 954),
819, 829.

J.

Jacobs v. Cohen (183 N. Y. 207;
76 N. E. 5; 2 LL. R. A. (NS.)
292), 109.

Jacobson v. Massachusetts (197
U. S. 11; 25 Sup. Ct. 358; 49
L. Ed. 643; affirming 183 Mass.
242; 66 N. E. 719; 67 L. R. A.
935), 201.

Jacoby v. Johnson (120 Fed. 487;
56 C. C. A. 637), 809.

Jayne v. Loder (149 Fed. 21; 78
C. C. A. 653; 7 L. R. A. (NS.)
984; 9 A. & HE. Am. Cas. 294),
510, 654, 664, 771, 809.

Jenkins v. Templars (39 Ga. 655;
90 Am. Dee. 452), 109.

Jervey, Bx parte (66 Fed. 957),
165.

John D. Park & Sons Co. v. Hart-
man (153 Fed. 24, 45; 82 C. C.
A. 158, 179; 12 L. R. A. (N.S.)
1385, 150), 408, 424, 509, 617,
629, 659, 660, 664, 665, 666.

John D. Park v. National Drug-
gist’s Assn. (175 N. Y. 1; 67
N. E. 136; 62 L. R. A. 632;
96 Am. St. 578; affirming 54
N. Y. App. Div. 223; 66 N. Y.
Supp. 615), 510, 654, 661, 665.
TABLE OF CASES.

XXXxix

[References are to pages.]

Johnson Steel Street Rail Co. v.
North Branch Steel Co. (48 Fed.
196), 804.

Jolly v. Brady (127 N. E. 142;
37 S. E, 586), 109.

Jones v. Parker (45 Tex. Civ.
App. 450; 101 S. W. 514), 372.

Jones v. Lees (1 H. & N. 189),
59, 84.

Jones v. North (L. R. 19 Eq. 426).
483.

Jones Cold Store Door Co. v.
Jones, (108 Md. 489; 70 Atl.
88), 110.

Jordon v. Overseers of Dayton (4
Ohio 294), 619.

Judd v. Harrington (139 N. Y.
105; 34 N. E. 790), 150, 662.
Judson, In re (3 Blatchf. 116;

Fed. Cas. No. 7563), 805.

Jury, Charge to (106 Fed. 38),

361.

K.

Kansas v. Colorado (185 U. S.
125; 22 Sup. Ct. 552; 46 L. Ed.
838), 739.

Karger Furniture Co. v. Amalga-
mated Wood Workers (165 Ind.
421; 75 N. 877; 21 L. R. A.
(N.S.) 788), 98.

Keeler vy. Taylor (53 Pa. St. 467),
82.

Keith v. Herschberg Optical Co.
48 Ark. 146; 2 8S. A. 777), 109.

Kelley v. Manufacturing Co. (44
Fed. 19), 801.

Kellogg v. Larkin (3 Pin. 123),
142, 145.

Kenny v. Collier (79 Ga. 743; 8
8. E. 58), 778.

Kidd v. Pearson (128 U. S. 1; 9
Sup. Ct. 6; 32 L. E. 346; af-
firming 72 Iowa 348; 34 N. W.
1), 164, 170, 179, 205, 207, 480,
537, 550, 602.

 

King v. Fountain (126 N. C. 196;
35 S. E, 427), 109.

Kinsley, City of v. Dyerly (79
Kan. 1; 98 Pac. 228), 165.

Kittle, In re (180 Fed. 946, 803),
810, $16, $18, 822, 831.

Kramer v. Old (119 N. C. 1;
25 S. E. 813), 109.

L.

La Moine Lumber & T. Co. v. Kes-
terson (171 Fed. 980), 165.
Lang v. Werk (2 Ohio St. 520),

82.

Lanzit v. J. W. Sefton Mfg. Co.
(784 Ill. 326; 56 N. E. 393; 75
Am. St. 171, reversing 83 Ill.
App. 168), 109.

Lawlor v. Loewe (187 Fed. 522,
527; 109 C. C. A. 288), 357,
679, 681, 779, 784, 806, 807, 809.

Leather Cloth Co. v. Lorsont
(1869), (39 L. J. Rep. Ch; 86
Law Rep. 9 Eq. 345), 57, 61,
71, 82.

Leeper v. State (103 Tenn. 500-
514; 53 8S. W. 692; 48 L. R. A.
167), 45.

Lehigh & Wilkesbarre Coal Co.
v. Carrigan (39 N. J. L. 35,
37), 166.

Leibengood v. Missouri, Kansas &
Topeka Ry. Co. (83 Kan. 25;
109 Pac. 988), 165.

Leighton v. Wales (1838), (3
Mees. and W. 545), 56, 57.

Leisy v. Hardin (135 U. S. 100;
10 Sup. Ct. 681; 34 L. Ed. 128;
reversing 78 Iowa 286; 43 N.
W. 188), 159, 183.
xl TABLE OF CASES.

[References are to pages.]

Leloup v. Port of Mobile (127 U.
S. 640, 647; 8 Sup. Ct. 1383;
32 L. Ed. 311; reversing 72 Ala.
461), 187.

Leonard v. Abner-Drury Brewing
Co. (25 App. D. C. 161), 316,
343, 466, 696, 772.

Leonard v. Poole (114 N. Y. 371;
21 N. E. 707; 4 L. R. A. 728;
11 Am. St. 667), 150.

Leslie v. Lorillard (110 N. Y.
519; 18 N. E. 363; 1 L. R. A.
456), 88, 1380, 142, 145.

Levine v. Klein (65 N. Y. Mise.
458; 12 N. Y. Supp. 196), 98.

License Tax Cases (5 Wall. 462;
18 L. Ed. 497), 232.

License Cases (5 How. 504; 2 L.
Ed. 256; affirming 24 Pick. 374;
1 R. I. 193; 138 N. H. 536), 159,
eam,

Lincoln v. Claflin (7 Wall. 132;
19 L. Ed. 106), 445.

Lindsay Co. v. Montana Federa-
tion (37 Mont. 264; 96 Pac.
127), 98.

Lindsay v. Mullen (176 U. 8. 126;
20 Sup. Ct. 325; 44 L. Ed. 400),
164.

List v. Commonwealth (118 Pa
St. 322; 12 Atl. 277, 279), 166.

Little Rock & M. R. Co. v. St.
Louis, I. M. & S. Ry. Co. (41
Fed. 559), 611.

Little Rock & M. R. Co. v. St.
Louis 8. W. Ry. Co. (11 C. C.
«A. 417; 63 Fed. 775), 611.

Lloyd v. Pennie (50 Fed. 4), 804.

Lochner v. New York (198 U. S.
45; 25 Sup. Ct. 539; 49 L. Ed.
93; reversing 177 N. Y. 145;
69 N. E. 373; 107 Am. St. 773),
201.

Locker v. Amer. Tobacco Co. (121
N. Y. App. Div. 443; 106 N. Y.
Supp. 115), 412.

 

Locker v. American Tobacco Co.
(194 Fed. 232), 758.

Locker v. American Tobacco Co.
(197 Fed. 495), 758.

Lockett v. State (63 Alabama 5),
814.

Loder v. Jayne (142 Fed. 1010;
reversed 149 Fed. 21; 78 C. C.
A. 653; 7 L. R. A. (N.S.) 984;
9 A. & E. Am. Cas. 94), 664,
779, 803.

Loeb v. Eastman Kodak Co. (183
Fed. 704; 106 C. C. A. 142),
792.

Loewe v. Lawlor (130 Fed. 633;
142 Fed. 216), 679, 681, 759,
773.

Loewe v. Lawlor (208 U. S. 274;
28 Sup. Ct. 301; 52 L. Ed. 488;
13 Am. Cas. 815; reversing 148
Fed. 924), 29, 195, 246, 256,
259, 267, 303, 329, 345, 348, 357,
360, 361, 363, 364, 407, 491, 515,
519, 534, 678, 679, 681, 763, 784.

Lohman v. People (1 N. Y. 379),
814.

Lohse Patent Door Co. v. Fuelle
(215 Mo. 421; 114 8. W. 997),
98.

Long v. Towl (42 Mo. 545: 97
Am. Dec. 355), 110, 136.

Lorenz v. United States (24 App.
D. C. 337), 442, 443.

Lottery Case (Champion _ v.
Ames), (188 U. S. 321, 351; 23
Sup. Ct. 321, 325; 47 L. Ed.
492), 163, 164, 198.

Lottawanna, The (21 Wall. 558;
22 L. Ed. 654), 232.

Lough v. Outenbridge (143 N. Y.
271; 38 N. E. 292; 25 L. R. A.
674; 42 Am. St. 712), 104, 398.

Louisville & Nashville R. Co. v.
Ky. (161 U. 8. 677, 702; 16 Sup.
Ct. 714; 40 L. Ed. 849; affirm-
ing 97 Ky. 675; 31S. W. 476),
614,
TABLE OF CASES. xli

[References ara to pages.]

Louisville & Nashville R. Co. v.
Mottley (219 U. S. 467; 31 Sup.
Ct. 265; 55 L. Ed. 297; 34 L.
R. A. (N.S.) 671; reversing 133
Ky. 652; 118 8. W. 982), 204.

Louisville, ete. R. Co. v. Vandever
(23 Ky. L. Rep. 479; 63 5. W.
22), 195.

Louisville, ete. R. Co. v. Walker
(23 Ky. L. Rep. 453; 63 8. W.
20), 195.

Loverin & Browne Co. v. Travis
(135 Wis. 322; 115 N. W. 829),
166.

Low v. Mitchell (18 Maine 372),
814.

Lowenstein v. Evans (69 Fed. 908,
910), 534, 538, 771.

Lowry v. Tile, Mantel & Grate
Assn. (C. C.), (106 Fed. 40,
45), 250.

Lowry v. Tile, Mantel & Grate
Assn. (98 Ted. 817; affirmed
115 Fed. 27; 52 C. C. A. 621;
63 L. R. A. 58), 343, 519.

Lytle v. Galveston, H & 8. A. Ry.
Co. (99 Tex. S. W. 396), 131.

M.

McAllister v. Henkel (201 U. 8.
90; 26 Sup Ct. 385; 50 L. Hd.
671), 815, 818.

McCall v. California (136 U. S.
104; 10 Sup. Ct. 881; 34 L. Ed.
391), 163.

McConnell v. Camors-McConnell
(162 Fed. 321), 799.

McCulloch v. Maryland (4 Wheat.
316, 405; 4 L. Ed. 579), 198.

McGrew v. Missouri Pac. Ry Co.
(230 Mo. 416; 1382 S. W. 1076),
202.

McGruther v. Pitcher (1904), (2
Ch. D. 306), 666.

 

McKee v. United States (164 U.
S, 287; 17 Sup. Ct. 92; 41 L.
Kd. 437), 548.

McLean v. Denver & Rio Grande
Ry. Co. (203 U. 8. 38; 51 L.
Kd. 78; 27 Sup. Ct. 1), 233.

McMullen v. Hoffman (174 U. 8S.
639, 654; 19 Sup. Ct. 839; 43
L. Ed. 1117; affirming 83 Fed.
372; 28 C. C. A. 178; 48 U. S.
App. 596; 45 L. R. A. 410), 650.

McNaughton Co. v. McGirl (20
Mont. 124; 49 Pac. 651; 38 L.
R. A. 367; 638 Am. St. 610), 162,
165.

MeNeill v. Southern Ry. Co. (202
U. 8. 543; 26 Sup. Ct. Rep.
722; 50 L. Ed. 1142; modifying
134 Fed. 82), 175.

Macaulay v. Tierney
225; 33 Atl. 1), 401.

Mac Ginnis v. Boston, ete., Co. (29
Mont. 428, 454; 75 Pac. 89, 95).
94,

Mac William v. Conn. Web. Co.
(119 Rep. 509), 804.

Machine Co. v. Smith
383), 801.

Mahanke v. Cleveland (76 Iowa
401; 41 N. W. 53), 814.

Maine & L. R. R. Co. v. Concord
R. R. Co. (66 N. H. 100; 20
Atl. R. 383; 9 L. R. A. 689; 47
Am. & Eng. R. R. Cas. 359),
140.

Mallan v. May (1843), (11 Mees.
& W. 653), 56, 58.

Mallinckrodt Chemical Works v.
Nemmich (83 Mo. App. 6), 109.

Maloney v. Dows (2 Hilt. 247),
814.

Manchester & N. R. v. Concord R.
Co. 66 N. H. 100; 20 Atl. 383;
9 L. R. A. 689; 8 Ry. & Corp.
L. J. 443; 3 Inters. Com. Rep.
319), 92.

(19 R. IT.

(70 Fed.
xlii

TABLE OF CASES.

[References are to pages.]

Manchester v. Mass. (139 U. 8S.
240; 35 L. E. 159; 11 Sup. Ct.
559; affirming 152 Mass. 230;
25 N. E. 113; 9 L. R. A. 236;
23 Am. St. 820), 233.

Mandenville v. Harman (42 N. J.
Eq. 185; 7 Atl. 27), 111.

Mannington v. Hocking Valley Ry.
Co. 183 Fed. 133), 759.

Marshall Bruce Co. v. Nashville
(109 Tenn. 495, 508; 71 S. W.
815), 43.

Master Granite & Blue Stone Cut-
ter’s Assn. (23 Pa. Co. R. 517,
520), 160, 166.

Master Stevedore’s Assn. v. Walsh
(2 Daily 1), 137.

Match Co. v. Roeber, 106 N. Y.
473; 13 N. E. 419), 82.

Matthews v. Associated Press
(1386 N. Y. 333, 340; 32 N. E.
981; 32 Am. St. 741), 82, 88.

Maxim-Nordenfeldt Guns & Am.
Co. Ltd. v. Colt’s Patent Fire-
arms Mfg. Co. (103 Fed. 39),
804.

Maxim-Nordenfeldt Co. v. Norden-
feldt [1893]; (1 Ch. 630; 67
L. T. 469; 94 L. T. J. 177, af-
firmed [1894], A. C. 535; 63 L.
J. Ch. 908; 11 R. I. 1; 71 L. Tr.
489), 59, 86.

May v. Sloan (101 U. S. 231; 25
L. Ed. 797), 166, 327.

Meeker v. Lehigh Valley R. Co.
162 Fed. 354; affirmed 183 Fed.
548; 106 C. C. A. 94), 758, 759,
761, 772, 788.

Memphis v. Memphis Water Co.
(5 Heisk. 495, 528) 45.

Merchants Nat. Bank v. Wehr-
mann (202 U. 8. 299; 26 Sup.
Ct. 613; 50 L. E. 1040; revers-
ing 69 Ohio St. 160; 68 N. E.
1004), 195, 604.

 

Meredith v. New Jersey Zine &
Iron Co. 41 Atl. 116; affirming
55 N. J. Eq. 211; 37 Atl. 539),
416.

Merriman v. Coner (104 Va. 428;
51 S. E. 817), 110.

Merserole v. Union Co. 6 Blatchf.

356), 620.
Merz Capsule Co. v. United States
Capsule Co. (C.C.), (67 Fed.

414, affirmed in 71 Fed. 787; 19
Cc. C. A. 108; 31 L. R. A. 415),
124, 408, 505.

Metcalf v. Amer. School Furniture
Co. (122 Fed. 115, 125), 404,
694,

Metcalf v. American School Fur-
niture Co. (108 Fed. 909), 773,
791.

Milwaukee Assn. v. Niezerowski
(95 Wis. 129; 70 N. W. 166;
37 L. R. A. 127; 60 Am. St. 97),
151.

Mines v. Scribner (147 Fed. 927),
669, 672.

Minnesota v. Barber (136 U. S.
313; 10 Sup. Ct. 213; 35 L. Ed.
455; affirming 39 Fed. 641), 159.

Minnesota v. Northern Securities
Co. 194 U. 8. 48, 66; 24 Sup.
Ct. 588; 48 L. E. 870; reversing
123 Fed. 692), 267, 542, 691,
695.

Minnesota v. Northern Securities
Co. (123 Fed. 692; reversed 194
U. S. 48; 24 Sup. Ct. 598; 48
L. Ed. 870), 515, 534, 551, 609.

Minnesota Iron Co. v. Kline (199
U. S. 593; 26 Sup. Ct. 159; 50
L. Ed. 322; affirming 93 Minn.
63; 100 N. W. 681), 202.

Mires v. St. Louis & San Fran-
cisco R. Co. (134 Mo. App. 379;
114 8. W. 1052), 165.
TABLE OF CASES.

xhii

[References are to pages.]

Missouri, K. & T. Ry. Co. v. Haber
(169 U. 8. 613, 626; 18 Sup.
Ct. 488; 42 L. Ed. 878; affirm-
ing 56 Ky. 694; 44 Pac. 632),
198.

Missouri Pacific Ry. Co. v. Larabee
Flour Mills Co. (211 U. 8. 612,
620, 622; 29 Sup. Ct. 214; 53
L. Ed. 352; affirming 74 Kas,
808; 88 Pac. 72), 233.

Mitchell v. Great Works M. & M.
Co. (2 Story 648), 543.

Mitchell v. Hawley (16 Wall. 544;
21 L. Ed. 322; affirming Holmes
42: Fed. Cas. No. 6250), 628,
(ids

Mitchell v. Reynolds (1 P. Wms.
181, 190; 12 Geo. III Ch. 71),
48, 51, 55, 58, 60, 71, 78, 82,
83, 87, 141, 274.

Mobile County v. Kimball (102 U.
S. 691; 26 L. Ed. 238; affirm-
ing 3 Woods 555; Fed. Cas. No.
7774), 159, 161, 163, 177, 198,
199, 207, 232, 602.

Mogul Steamship Co. v. McCreiger
(23 9. B. Div. 598; 59 L. T.
514; 58 L. J. Q. B. 465; 5 T. LL.
R. 655; affirmed (1892), 1 A.
C. 25; 61 L. J. Q. B. 295; 66
L. T. 1; 40 W. R. 337; 56 J. P.
101; 7 Asp. M. 120; 8 T. L. R.
182), 88, 100, 146, 154.

Mogul Steamship Co. v. MeGregor
(L. R. 15 Q. B. Div. 476; 54 L.
J. Q. B. 540; 53 L. T. 268; 15
Cox C. C. 740; 49 J. P. 646;
5 Asp. M. 467; 4 T. L. R. 783;
affirmed L, R. 21 Q. B. Div. 544;
5 T. L. R. 658; 57 L. J. 54), 125.

Mogul Steamship v. McGregor (L.
R. 15, Q. B. 476, ete., affirmed
[1892] A. C. 25; 61 L. J. Q. B.
295; 66 L. T. 1; 40 W. R. 337;
56 J. P. 101; 7 Asp. M. 120;
8 T. L. R. 182), 126.

 

Mogul Steamship v. MeGregor (L.
R. 15 Q. B. 476, again affirmed
L. R. 23 Q. B. Div. 598; 59 L.
T. 514; 58 L. J. Q. B. 465; 5
T. L. R. 658), 126.

Mogul Steamship Co. v. McCreiger
(L. R. 21 Q. B. Div. 544; 5 T.
L. R. 658; 57 L. J. 541), 88.

Mogul Steamship Co. v. McGregor
[1892], (App. ©. 25; 61 L. J. Q.
B. 295; 66 L. T. 1; 40 W. R.
337; 56 J. P. 101; 7 Asp. M.
120; 8 T. L. R. 182; affirming
L. R. 23 Q. B. Div. 598; 59 L.
T. 514; 58 L. J. Q. B. 465; 5
T. L. R. 658; which affirmed
L. BR. 21 Q. B. Div. 544; 5 T.
L. R. 658; 57 L. J. Q. B. 541),
249, 274.

Monarch ‘Tobacco Works v. Amer.
Tobacco (165 Fed. 774, 779,
781), 249, 351, 377, 534, 703,
758, 762, 765, 770, 782, 808.

Monongahela River Consolidated
Coal & Coke Co. v. Jutte (210
Pa. 288; 59 Atl. 1088; 119; 105
Am. St. 812) 109, 423, 456, 556.

Monongahela Navigation Co. v.
United States (148 U. 8. 312,
336; 13 Sup. Ct. 622; 37 L. Ed.
463), 220.

Monopolies, Case of (6 Coke’s Re-
ports p. 159), 102.

Montague & Co. v. Lowry (115
Fed. 27; affirming 106 Fed. 38;
52 C. C. A. 621; 63 L. R. A. 58;
98 Fed. 817 and affirmed 193
U. S. 38; 24 Sup. Ct. 307; 48
L. Ed. 608), 265, 302, 519, 534.

Montague & Co. v. Lowry (198 U.
S. 38; 24 Sup. Ct. 307; 48 L.
Ed. 608, affirming 115 Fed. 27;
52 C. C. A. 621; 63 L. R. A. 58;
which affirmed 106 Fed. 398),
188, 214, 332, 341, 348, 361,
407, 462, 515, 519, 534, 646,
661, 662, 764, 774, 779, 780, 782.
xliv

TABLE OF CASES.

{References are to pages.]

Moore v. United States (85 Fed.
465; 29 C. C. A. 269; 56 U. 8.
App. 471) 316.

More v. Bonnett (40 Cal. 251; 6
Am. Rep. 621), 110.

More v. Bennett (140 Ill. 69; 29
N. E. 888; 15 L. R. A. 361; 33
Am. St. Rep. 216), 125, 144,
151, 418.

Mores v. Bricklayer’s Union (23
Wkly. Cin. Law Bull. 48), 448.
Morey vy. Light Co. 38 N. Y. Sup.

Ct. 185), 778.

Morgan’s Steamboat Co. v. Louisi-
ana Board of Health (118 U. S.
455; 30 L. Ed. 237; 6 Sup. Ct.
1114; affirming 36 La. Ann.
666), 233.

Moroney Hardware Co. v. Goodwin
Pottery Co. (Tex. Civ. App),
(120 S. W. 1088), 464.

Morris Run Coal Co. v. Barclay
Coal Co. 68 Pa. St. 173; 8 Am.
Rep. 159), 103, 132, 150, 214,
251, 395, 456, 737.

Motion Picture Patents Co. v.
Ullman (186 Fed. 174), 650, 799.

Motion Picture Patents Co. v.
Laemmle (178 Fed. 104), 650,
799.

Mumford v. Gething (1859), (7
C. B. (N.S.) 305, 319), 56.

Murray v. McGarigle (69 Wis.
483; 34 N. W. 522). 762. 767.

Mussell-Slough Case (5 Fed. R.
680), 99.

N.

National Ben. Co. v. Union Hos-
pital Co. (45 Minn. 272; 47 N.
W. 806; 11 L. R. A. 437), 82.

National Cotton Oil Co. v. Texas
(197 U.S. 115: 25 Sup. Ct. 379;
49 L, Ed. 689: affirming (Tex.
Civ App.) 72 S. W. 615), 45,
46, 115, 199, 202, 242, 274, 370,
873, 374, 398, 402, 404.

 

National Enameling & Stamping
Co. v. Haberman (120 Fed.
415), 109.

National Feed Co. v. Grote Paint
Store Co. (80 Mo. App. 247),
411.

National Fireproofing Co. v. Mason
Builders Assn. (169 Fed. 259;
94 C. C. A. 535), 98, 372.

National Folding Box & Paper Co.
v. Robertson (99 Fed. 985), 650,
796, 801.

National Harrow Co. v. Hench (76
Fed. 667, affirmed 83 Fed. 36;
27 C. C. A. 349), 115, 623, 796.

National Harrow Co. v. Hench (83
Fed. 36; 27 C. C. A. 349; 39 L.
R. A. 299), 153, 456, 460, 646.

National Harrow Co. v. Hench (84
Fed. 226), 115, 623, 796.

National Harrow Co. v. Quick (67
Fed. 130), 115, 124, 650.

National Lead Co. v. Grote Paint
Store Co. (80 Mo. App. 247).
119, 124. 556.

National Tel. News Co. v. Western
Union Tel. Co. 119 Fed. 294),
520.

Nelson v. W. S. (201 U. S. 32;
26 Sup. Ct. 358; 50 L. Ed. 673),
803, 810, 815, 818, 830, 831.

Nester v. Brewing Co. (161 Pa. St.
473; 29 Atl. 102; 24 L. R. A.
247; 41 Am. St. 894), 150, 455.

New Jersey Patent Co. v. Schafer
(144 Fed. 437), 622.

N. Y. Bank Note E. & P. Co. (180
N. Y. 280; 73 N. E. 48), 109.
N. Y. & Chicago Grain & Stock
Exchange v. Board of Trade
(127 Il. 153; 19 N. E. 855),

520.

New York, ex rel., Penn. Ry. Co. v.
Knight (192 U. S. 21; 24 Sup.
Ct. 202; 48 L. Ed. 325; affirm-
ing 171 N. Y. 354; 98 Am. St.
610; 64 N. E. 152), 175.
TABLE OF CASES.

xlv

[References ara to pages.]

N. Y., Lake Erie & West R. R. v.
Penn. (158 U. 8. 4381, 439; 15
Sup. Ct. 896; 39 L. Ed. 1043;
affirming 145 Pa. 38; 22 Atl.
212), 253.

New York, New Haven & Hart-
ford Rd. Co. v. Interstate Com.
Commission (200 U. S. 361; 26
Sup. Ct. 272; 50 L. Ed. 596;
modifying 128 Fed. 59), 233.

Nickodemus, In re. (18 Fed. Cas.
222), 159.

Noble v. Bates (7 Cow. 307), 87.

Nordenfeldt v. Maxim Nordenfeldt
Gun & Ammunition Co. [1894]
A, C, 5385; 638 L. J. Ch. 908; 11
R. 1; 71 L. T. 489, affirming
[1893] 1 Ch. 630; 67 L. T. 469;
94 L. T. J. 177), 48, 71, 78, 82,
42.

Nordenfeldt v. Maxin Nordenfeldt
Gun & Ammunition Co. [1893]
(1 Ch. 630; 67 L. T. 469; 94 L.
T. J. 177; affirmed [1894] A. C.
535; 63 L. J. Ch. 908; 11 R. 1;
71 L. T. 489), 51, 77.

Norfolk v. Gaylord (28 Connecti-
cut 309), 814.

Northern Securities Co. v. United
States (193 U. 8. 197, 329, 332,
371, 380, 405, 410; 24 Sup. Ct.
436, 454; 48 L. Ed. 679 affirm-
ing 120 Fed. 721), 125, 198, 200,
205, 215, 222, 223, 225, 227, 231,
232, 233, 241, 242, 245, 248, 255,
257, 273, 279, 284, 303, 306, 330,
331, 337, 340, 343, 350, 351, 359,
362, 389, 396, 398, 408, 409, 418,
420, 430, 515, 519, 534, 542, 566
569, 572, 576, 577, 578, 580, 587,
609, 614, 689, 709, 717, 737, 847.

Northwestern Consolidated Milling
Co. v. William Callan & Son
(177 Fed. 786), 416, 500.

Norwich Gas Light Co. v. Nor-
wich City Gas Co. (25 Conn. 19,
38), 43.

 

oO.

Oakdale Mfg. Co. v. Garst (18 R.
I, 484; 28 Atl. 973; 23 L. R. A.
484, 639; 49 Am. St. 784), 125,
155, 401.

Oakes v. C. W. Co. (143 N. Y. 430;
38 N. E. R. 461; 26 L. R. A.
544), 141.

Ochs v. People (124 Ill. 399; 16
N. E. 662), 442, 443.

Oil Co. v. Adone (83 Tex. 650),
132.

Oklahoma v. Kansas Natural Gas
Co. (221 U. 8S. 229; 31 Sup. Ct.
564; 55 L. Ed. 716; affirming
172 Fed. 545), 232.

Oliver v. Gilmore (52 Fed. 562),
228.

Olsen v. Smith (195 U. 8S. 332;
25 Sup. Ct. 52; 49 L. Ed. 224;
affirming (Tex. Civ. App.) 68 S.
W. 320), 538.

O’Neil v. Vermont (144 U. S. 223;
22 Sup. Ct. 693; 36 L. Ed. 450;
affirming 58 Vt. 140; 2 Atl. 586;
56 Am. Rep. 557), 164.

Ontario Salt Co. v. Merchants’ Salt
Co. (18 Grant (U.C.) 540, 542),
137, 139, 142, 144, 400.

Opinion of Justices, In re (204
Mass. 607, 613; 91 N. E. 405;
27 L. R. A. (N.S.) 483), 165.

Oregon Short Line & U.N. Ry. Co.
v. Northern Pac. R. Co. (9 C. C.
A, 409; 61 Fed. 158; 51 Fed.
465), 611.

Oregon Steam Navigation Co. v.
Winsor (20 Wall. 64; 22 L. Ed.
315, reversing 1 Wash. Terr.
283; 34 Am. Rep. 803), 82, 83,
228.

Otis Elevator Co. v. Geiger (107
Fed. 131), 649, 801.

Ouachita Packet Co. v. Aiken (121
U.S. 444; 7 Sup. Ct. 907; 30 L.
Ed. 976; affirming 4 Woods
208; 16 Fed. 890), 253.
xvi

TABLE OF CASES.

[References are to pages.]

Overland Cotton Mill v. People,
ete. (82 Colo. 263; 75 Pac. 924;
105 Am. St. Rep. 74), 749.

P.

Pacific Coast Ry. Co. v. United
States (173 Fed. 448; 98 C. C.
A. 31), 173.

Pacific Factor Co. v. Adler (90
Cal. 110; 27 Pac. 36; 25 Am.
St. 102), 187, 153.

Paddleford, Fay & Co. v. Mayor,
ete., of Savannah (14 Ga. 438,
514), 165

Pallisser, In re (136 U. S. 257;
10 Sup. Ct. 1034; 34 L. Ed.
514; affirming 40 Fed. 575), 754.

Parisian Comb Co. v. Eschwege
(92 Fed. 721), 804.

Parkersburg ‘Transportation Co.
v. Parkersburg (107 U. 8S. 691;
2 Sup. Ct. 732; 27 L. Ed. 584),
253.

Parkhurst v. Lowten (1 Merivale
391, 400), 814.

Passenger Cases (7 How. 283; 12
L. Ed. 702; reversing 4 Met.
282), 232.

Patterson v. Ky. (11 Bush. 311;
21 Amer. 220), 619.

Patterson v. Ky. (97 U. 8. 501;
24 L. Ed. 1115; affirming 11
Bush. 311; 21 Am. Rep. 220),
619, 620.

Patterson v. Missouri Pac. Ry.
Co. 77 Kan. 236; 94 Pac. 138),
165.

Patterson v. Wollman (5 N. D.
608, 615, 616; 67 N. W. 1040;
33 L. R. A. 536), 45, 46.

Peabody v. Norfolk (8
452), 665.

Pearsall v. Great Northern Ry.
Co. (161 U. 8. 646; 16 Sup. Ct.
705; 40 L. Ed. 838), 410, 570,
593.

Mass.

 

Peels v. Saalfeld [1892] (2 Ch.
149), 82.

Peltz vy. Eichele (62 Mo. 171),
110.

Pemberton v. Vaughan (L. B. 10
Q. B. 87, 89), 85.

Pennsylvania v. Wheeling & Bel-
mont Bridge Co. (18 How. 421;
12 L. Ed. 435), 232.

Pennsylvania Sugar Refin. Co. v.

Amer. Sugar Refin. Co. (160
Fed. 144, 145; reversed 166
Fed. 254; 92 C. C. A. 318),
491, 534.

Pennsylvania Sugar Refining Co.
v. Amer. Sugar Refining Co.
(166 Fed. 254; 92 C. C. A. 318,
reversing 160 Fed. 144), 115,
242, 257, 785, 789.

Pennsylvania R. Co. v. Common-
wealth (Pa,), (7 Atl. 368,
371), 410.

Pennsylvania R. Co. v. Hughes
(191 U. 8. 477; 24 Sup. Ct.
132; 48 L. Ed. 268; affirming
202 Pa. 222; 51 Atl. 990; 63
L. R. A. 513: 97 Am. St. 713),
205, 537. ,

People v. American Tobacco Co.
(2 Chicago L. J. Weekly, 249;
Cook Co. Cir. Ct. 1897), 95.

People v. Amer. Ice Co. (135 N,.
Y. App. Div. 180; 120 N. Y.
Supp. 41), 44.

People v. Casey (72 N. ¥. 393),
S14.

People v. Chicago Gas Trust Co.
(130 Til. 268; 22 N. E. 79s,
802; 8 L. R. A. 738, 497: 74
Am. St. 189; 17 Am. St. Rep.
319), 118, 125, 214, 410, 412,
419,

People vy. Detroit White Lead
Works (82 Mich. 471; 46 N. W.
735; 9 L. R. A. 722), 749.
TABLE OF CASES.

xlvii

{References are to pages.]

People v. Dickerson (164 Mich.
148; 129 N. W. 199; 17 Det.
LL. N. 1044), 202.

People v. Freshour (55 ‘Cal. 375),
814.

People vy. Gillson (109 N. Y. 389,
398; 17 N. E. 343; 4 Am. St.
Rep. 465), 251.

People v. Kelley (24 N. Y. 74),
813.

People v. Klaw, 106 N. Y. Supp.
341; 55 Mise. 12), 166.

People v. Mather (4 Wend. 229,
252, 255), 814.

People v. Melvin (2 Wheel. Cr.
Cas. 262; Yeates Sel. Cas. 111),
99.

People v. Milk Exchange (145 N.
J. 267, 274; 39 N. E. 1062,
1064; 27 L. R. A. 437, 441; 45
Am. St. 609), 125, 153, 424,
460, 662.

People v. Mother (4 Wend. 230),
445,

People v. North River Sugar Re-
fining Co. (54 Hun. 377; 3 N.
Y. Supp. 401; 2 L. R. A. 33),
104.

People v. North River Sugar Re-
fining Co. (2 Abb. N. C. 164;
54 Hun. 355; 3 N. Y. Supp.
401; 2 L. R. A. 33; affirmed,
121 N. Y. 582; 24 N. HE. 834;
9 L. R. A. 33; 18 Am. St. 843),
14, 108, 112, 121, 140, 153, 368,
398.

People v. People’s Gas Light &
Coke Co. (205 Jl. 482; 68 N.
Ki. 950; 98 Am. St. 244), 405.

People v. Raymond (34 Cal. 492,
497), 165.

People v. Sheldon (139 N. Y.
251; 34 N. E. 785; 23 L. R. A.
221: 36 Am. St. 690), 149, 294,
424, 662.

 

People v. Trequer (I Wheeler Cr.
Cas. 142), 99.

People’s Gas Light & C. Co. v.
Chicago Gas Light & C. Co. (20
Ill, App. 492), 124, 136, 137.

People’s Tobacco Co. v. American
Tob. Co. (170 Fed. 396, 408;
95 C. C. A. 566), 760, 763, 764,
787.

Perkins v. Lyman (9 Mass. 522),
87.

Petri v. Commercial Bank of
Chicago (142 U. S. 644, 650;
12 Sup. Ct. 325; 35 L. Ed.
1144), 543.

Pettibone v. United States (148
U. S. 197, 203; 13 Sup. Ct.
542; 37 L. Ed. 419), 97, 99,
429, 432, 447, 767.

Phelps v. Prothero (2 De Gex &
Smale 274, 290), 806.

Phila. & Southern Steamship Co.
v. Penn. (122 U. 8. 326; 7 Sup.
Ct. 118; 30 L. Ed. 1200; re-
versing 104 Pa. 109), 233.

Phillips v. Iola Portland Cement
Co. (125 Fed. 593, 594; 61 C.
C. A. 19, 20), 246, 254, 255,
339, 510, 515, 519.

Pickard v. Pullman Southern Car
Co. (117 U. S. 34; 6 Sup. Ct.
635; 29 L. Id. 785), 233.

Piddock v. Harrington (64 Fed.
821), 694, 761.

Pierce v. Fuller (8 Mass. 223; 5
Am. Dec. 102), 82, 87.

Pilkington v. Scott (15 M. & W.
657), 84.

Pinkney, Matter of (47 Kan. 89;
27 Pac. 179), 166, 327.

Pittsburg Carbon Co. v. McMillan
(119 N. Y. 46; 23 N. E. 530;
7 LL. R. A. 46), 456. ,
xlviii

TABLE OF CASES.

[References are to pages.]

Pittsburg & Southern Coal Co. v.
Louisiana (156 U. 8. 590, 597;
15 Sup. Ct. 459; 39 L. Ed. 544;
41 La. Anno. 465; 6 So. 220),
253.

Pocahontas Coke Co. v. Powhat-
tan C. & C. Co. (60 W. Va. 508,
520; 56 S. E. 264; 10 L. R. A.
(N.S.) 269; 116 Am. St. 901),
45, 94, 104, 111, 335, 337, 373,
398, 418.

Pointer v. United States (151 U.
S. 396; 14 Sup. Ct. 410; 38 L.
Ed. 208), 738.

Pooler v. United States (127 Fed.
509; 62 C. C. A. 307), 733.
Pope Mfg. Co. v. Gormully (144
U.S. 224; 12 Sup. Ct. 632; 36
L. Ed. 414; affirming 34 Fed.

877), 620.

Porter Needle Co. v. National
Needle Co. (17 Fed. 536), 628.

Post v. Buck Stove Co. (200 Fed.
918), 681.

Postal Telegraph, ete. Co. v. Mo-
bile (179 Fed. 955), 164.

Postal Teleg. Cable Co. v. State
(110 Md. 608, 618; 73 Atl.
679), 165.

Pramer v. Farrell (166 Fed. 702;
92 ©. C. A. 374), 109.

Pratt v. Paris Gaslight & Coke
Co. (168 U. S. 255, 259; 18
Sup. Ct. 62; 42 L. Ed. 458;
affirming 155 Ill. 531; 40 N. E.
1082), 621.

Presbury v. Fisher (18 Mo. 59),
136. :

Prescott & A. C. R. Co. v. Atchi-
son T. & S. F. R. Co. (73 Fed.
438; dismissed 84 Fed. 213),
542, 599.

Printing & N. Registering Co. v.

Sampson (L. R. 19 Eq. 465),
135.
Proctor v. Sargent (1840), (2

Scott, N. R. 289), 56, 57, 123.

 

Proctor v. Sargent (1840), (2
Man. & G., 33), 53.

Pullman Car Co. v. Missouri Pa-
cific Co. (115 U. 8S. 587, 596;
6 Sup. Ct. 194; 29 L. Ed. 499;
affirming 11 Fed. 634; 3 Mce-

Crary, 645), 410.

Q.

Queen v. Boyes (1 B. & S. 311,
321), 815.

Queen v. Hartford College (3 Q.
B. Div. 693, 707), 543.

Queen Ins. Co. v. State (86 Tex.
253, 266; 24 S. W. 397; 22 L.
R. A. 483; reversing 22 S. W.
1048), 88, 95, 110, 166, 167,
335, 337.

R.

Rafferty v. Buffalo Gas. Co. (37
N. Y. App. Div. 618; 56 N. Y.
Supp. 288), 155.

Rahrer, In re (140 U. S. 545; 11
Sup. Ct. 865; 35 L. Ed. 572;
reversing 43 Fed. 556; 10 L. R.
A. 444), 159, 164, 198.

Railroad Co. v. Husen (95 U. 8.
465, 472; 24 L. E. 527; revers-
ing 60 Mo. 226), 198.

Railroad Co. v. Maryland (21
Wall. 456; 22 L. Ed. 678; af-
firming 34 Md. 344), 614.

Railroad Co. v. Richmond (19
Wall. 584; 22 L. Ed. 173; af-
firming 33 Iowa, 422), 213, 602.

Railway Co. v. Day (35 Rep. 866,
876), 294.

Rakestrau v. Lanier (104 Ga.
188; 30 S. E. 735), 110.

Raleigh v. Cook (60 Tex. 438),
442,

Rannie v. Irvine (1844), (7 Man.
& G. 969), 56, 84.
TABLE OF CASES.

xlix

{References are to pages.]

Reading Co. v. United States
(227 U. 8. ; 33 Sup. Ct.
90; 55 L. Ed. —), 416.

Rearick v. Pennsylvania (203 U.
S. 507; 27 Sup. Ct. 159; 51 L.
Ed. 295; reversing 26 Pa. Sup.
Ct. 384), 191.

Red v. City Council (25 Ga. 386),
778.

Registering Co. v. Sampson, L. R.
(19 Eq. 462), 92.

Reid v. Southern Ry. Co. (153 N.
C. 490; 69 S. E. 618), 166.

Respublica v. Gibbs (3 Yeates,
515), 814.

Rex v. Earl of Shaftsbury (8
How. St. Tr. 817), 815.

Rex v. Harrison (3 Burr. 1323,
1328), 85.

Rex v. Reading (7 How. St. Tr.
259, 296), 815.

Reynolds Tobacco v. Allen Bros.
Tobacco (151 Fed. 819), 799.
Rhodes v. Iowa (170 U. S. 412;
18 Sup. Ct. 664; 52 L. Ed.
1088; reversing 90 Iowa 496;
58 N. W. 887; 24 L. R. A. 245),

175, 184.

Rice v. Standard Oil Co.
Fed. 464), 331, 430, 763.

Richards v. Seating Co. (87 Wis.
503; 58 N. W. 787), 82.

Richardson v. Alger, 14.

Richardson v. Buhl (77 Mich.
632; 43 N. W. 1102; 6 L. R. A.
457), 14, 104, 111, 115,, 125,
153, 214, 303, 398, 412, 424, 460.

Richardson v. Mellish (2 Bing.
252), 139..

Riverside Mills v. Atlantic Coast
Line (168 Fed. 987), 165.
Robbins v. Shelby County (120
U. S. 489; 7 Sup. Ct. 592; 30
L. Ed. 694; reversing 13 Lea.

303), 159, 190, 253.

 

(134

 

Robt. H. Ingersoll & Bro. v. Me-
Coll (204 Fed. 147), 466, 467,
622, 633.

Roberts v. Allat (Moody & Mal-
kin 192), 815.

Roberts v. Lemont (73 Neb. 365;
102 N. W. 770), 110.

Robinson v. Hibbs (48 Ill. 408,
409, 410), 761.

Robinson v. Suburban Brick Co.
(127 Fed. 804; 62 C. C. A.
484), 360, 507, 519, 521, 534,
773.

Rogers v. Parry (11 Jac. 1; 8.C.
Bulstrode 136), 51, 54.

Ross v. Dadgbeer (21 Wend. 166),
88.

Roush v. Gesman (126 Iowa 498;
102 N. W. 495), 109.

Rousillon v. Rousillon (1880),
(49 Law J. Rep. Ch. 338), 71.

Rousillon v. Rousillon (L. R. 14
Ch. D. 351), 57, 82, 142.

Rowe, ex parte (7 Calif.
814,

Royal v. Virginia (116 U. 8. Rep.
572; 6 Sup. Ct. 510; 29 L. E.
735), 230.

Rubber Tire Co. v. Milwaukee Co.
(154 Fed. 358 363; 83 0. C. A.
336), 491, 623, 625, 634, 647.

Rubber Tire Wheel Co. v. Mil-
waukee R. W. Co. (142 Fed.
531), 627, 629, 635, 647.

Rupp v. Elliott (131 Fed. 730;
65 C. C. A. 544), 629.

Rupp, Wittenfeld Co. v. Elliott
(131 Fed. 730; 65 GC. GC. A.
544), 629, 638.

Russell v. Amalgamated Society
of Corporations [1910] (1 Q. B.
506; 79 L. J. C. Ch. 507; 102
L. T. 119; 54 8. J. 213; 26 T.
L. R. 228), 157.

184),
1 TABLE OF CASES.

[References are to pages.]

Ss.

Santa Clara Valley Lumber Co.
v. Hayes (76 Cal. 387, 393; 18
Pac. 391; 9 Am. St. 211), 137,
153, 456.

Sawin v. Guild
628.

Schmidt v. People (18 Cole 78; 31
Pac. 498), 159.

Schollenberger v. Pennsylvania
(171 U. S. 1; 18 Sup. Ct. 757;
43 L. Ed. 49; reversing 170 Pa.
284; 33 Atl 82; 30 L. R. A.
396; 5 Inter. Comp. Rep. 506),
184.

(1 Gall. 485),

Schwalm v. Holmes (49 Cal.
665), 251.
Seattle v. Dencker (58 Wash.

501; 108 Pac. 1086), 44.

Shawnee Compress Co. v. And:r-
son (209 U. S. 433; 28 Sup. Ct.
572; 52 L. E. 865, affirming 17
Okl. 231; 87 Pae. 515; 15 L.
R. A. (N.S.) 1846), 115, 256,
267, 274.

Sherlock v. Alling (93 U. S. 99,
103; 23 L. Ed. 819; affirming
44 Ind. 184), 232, 253.

Schrainka v. Schaeringhausen (8
Mo. App. 522), 134, 136, 137.

Shute v. Heath (131 N. C. 281;
42S, E. 704), 110.

Simmer v. City of St. Paul (23
Minn. 408, 410), 777.

Simon v. American Tobacco Co.
(192 Fed. 662), 817, 823, 825.
Sinnot v. Davenport (22 How.
227, 238; 6 L. E. 243), 198.
Slaughter v. ‘hacker Coal & Coke
Co. (55 W. Va. 642; 104 Am.
St. Rep. 1013; 65 L. R. A.

1013), 111, 418.

Slaughter House Cases (16 Wall.
36, 102; 21 L. Ed. 394; affirm-
ing 22 La. Ann. 545), 42, 43.

 

Smalley v. Greene (52 Iowa 241;
3 N. W. 78; 35 Am. Rep. 267),
251.

Smiley v. Kansas (196 U. S. 447;
25 Sup. Ct. 276; 49 L. E. 546;
affirming 65 Kan. 240; 69 Pace.
199, 206; 67 L. R. A. 903),
199, 403.

Smith’s Appeal (113 Pa. St. 579;
6 Atl. 251), 111.

Smith v. People (25 Ill. (15
Peck), 17; 76 Am. Dec. 780),
99,

Smith v. United States (157 Fed.
721; 87 C. CG. A. 353), 481,
734.

Snead v. Central of Georgia Ry.
Co. (151 Fed. 608), 165.

Snow v. Mart (62 Fed. 623; La.
Bourgogne, 104 Fed. 823), $19.

Soda Fountain Co. v. Green (69
Fed. 333), 650.

Southern Fire Brick & Clay Co.
v. Garden City Sand Co. (223
Ill. 616; 79 N. E. 313), 109.

Southern Indiana Express Co. v.
U. 8. Express Co. (88 Fed. 459;
affirmed 92 Fed. 1022; 35 C. C.
A. 172), 542, 610, 694, 761.

Southern Ry. Co. v. King (217
U. S. 524; 30 Sup. Ct. 594: 54
L. Ed. 2; affirming 160 Fed.
332; 87 C. C. A. 284), 232,

Spies v. People (122 Ill. 212; 3
Am. St. 320; 12 N. E. 865), 98,
99, 445.

St. Louis 8. F. Co. v. Delk (158
Fed. 931; 86 C. C. A. 95), 173.

St. Louis & Erie R. Co. v. Postal
Tel. Co. (173 Ill. 508; 51 N. E.
382), 92.

St. Louis & San Francisco R. Co.
v. State (87 Ark. 562; 113 S.
W. 203), 165.
TABLE OF CASES. li

[References are to pages.]

St. Louis v. Western Union Tel.
Co. (148 U. 8. 92; 13 Sup. Ct.
485; 37 L. Ed. 380; reversing
39 Fed. 59), 253.

Standard Fireproofing Co. v. St.
Louis Co. (177 Mo. 559; 76 8.
W. 1008), 661.

Standard Oil v. State (117 Tenn.
618; 100 8. 8. 705; 10 L. R. A.
(N.S.) 1015), 430.

Standard Oil Co. v. United States
(221 U. S. 1, 65; 31 Sup. Ct.
502; 55 L. Ed. 619; 34 L. R.
A. (N.S.) 834, modifying 173
Fed. 177), 42, 43, 79, 81, 204,
227, 246, 248, 254, 255, 260,
274, 278, 283, 285, 288, 299,
303, 306, 315, 325, 338, 340,
345, 379, 380, 385, 438, 477,
516, 534, 718, 808, 847.

Standard Sanitary Mfg. Co. v.
United States (226 U. S. 20;
33 Sup. Ct. 9; 57 L. Ed. affirm-
ing 191 Fed. 172), 188, 189,
194, 332, 333, 340, 341, 381,
416, 617, 623, 625, 640, 651,
811.

State v. Adams Lumber Co. (81
Neb. 392; 116 N. W. 302), 400.

State v. Amelker (73 8. C. 330;
53 8. E. 484), 98.

State v. Armour Packing Co. (173
Mo. 356; 73 S. W. 645; 61 L.
R. A. 464; 96 Am. St. 515),
333, 556.

State v. Bailey (50 Ohio St. 636;
36 N. E. 233), 739.

State v. Baltimore & Ohio R. R.
(15 W. Va. 362; 36 Am. Rep.
803), 446.

State v. Bell Telephone Co. (23
Fed. 529), 620.
State v. Brenstock

(73 Atl. 530), 98.

(N. J. L.),

 

State v. Central Lumber Co. (24
S. Dak. 1386; 123 N. W. 504),
97, 202, 330.

State v. Chicago, St. Paul, Minne-
apolis & Omaha Ry. Co. (40
Minn. 267, 268; 41 N. W. 1047;
12 Am. Rep. 730; 3 L. R. A.
238), 165.

State v. Continental Tobacco Co.
(177 Mo. 1; 75 S. W. 787),
405.

State v. Creamery Package Co.
(110 Minn. 415; 126 N. W. 126,
623), 626.

State v. Dickworth (5 Idaho 642;
51 Pac. 456, 457), 159, 165.
State v. Delaware & Atl. Tel. &
Tel. Co. (47 Fed. 633; 10 Ry.

& Corp. L. Jr. 123), 92, 620.

State v. Delaware, Lackawanna &
Western R. Co. (30 N. J. L.
473, 487), 166.

State v. Duluth Board (107 Minn.
506, 527; 121 N. W. 395; 23 L.
R. A. (N.S.) 1260), 43, 104,
110, 372.

State v. Eastern Coal Co. (29 R.
J. 254; 70 Atl. 1), 44, 98, 155.

State v. Eckenrode (148 Iowa
(1910) 1738; 127 N. W. 56),
165.

State v. Effler
411), 98.
State v. Fireman’s Fund Ins. Co.
(152 Mo. 1; 43 S. W. 595, 607;

45 L. R. A. 363, 376), 93.

State Freight Tax Case (15 Wall.
232; 21 L. Ed. 146; reversing 62
Pa, 286; 1 Am. Rep. 399), 159,
207, 541, 602.

State v. Glidden (55 Conn. 46; 8
Atl. 890), 448.

State v. Goodwill (33 W. Va.
179; 10 S. E. 285, 286; 6 L. R.
A. 621; 25 Am. St. Rep. 863),
251.

(Del.), (78 Atl.
li TABLE OF CASES.

[References are to pages.]

State v. Gray’s Harbor & Puget
Sound Ry. Co. (54 Wash. 530;
103 Pac. 809), 166.

State v. Haworth (122 Ind. 462,
498; 23 N. E. 946; 7 L. R. A.
240), 43.

State v. Huegin (110 Wis. 189;
85 N. W. 1046; 62 L. R. A.
700), 88.

State v. Ill. Cent. R. Co. (246 Ill.
188, 210; 92 N. E. 814, per
Carter J., Ind. & Ill. Southern
Rd. Co., 183 Ind. 69, 83; 32
N. E. 817; 18 L. R. A. 502),
165.

State v. Indiana, etc., Co.
Ind. 69; 32 N. E. 817;
R. A. 502), 161.

State v. Jackson (95 Miss. 6; 48
So. 300), 97.

State v. Kemp (87 N. C. 538),
442,

State v. K—— (4 N. H. 562),
814.

State v. Mayberry (48 Me. 218),
99.

State v. Messner (43 Wash. 206;
86 Pac. 836), 98.

State v. Missouri Pac. Ry. Co.
(81 Neb. 15; 115 N. W. 614),
166.

State v. Morgan (2 S. Dak. 32,
50; 48 N. W. 314, 320), 160.

State v. Nebraska Distilling Co.
(29 Neb. 700; 46 N. W. 155),
108, 118, 153.

State v. Ober (52 N. H. 492),
814.

State v. Parker (43 N. H. 85),
767.

State v. Phipps (50 Kan. 609; 31
Pac. 1097; 18 L. R. A. 657; 34
Am. Rep. 152), 165, 166, 327.

(133
18 L.

 

State v. Portland Natural Gas &
Oil Co. (153 Ind. 483; 53 N.
BE. 1089; 58 L. R. A. 413; 74
Am. St. 314), 418.

State v. Racine Sattley Co. (Tex.
Civ. App.), (134 8. W. 400),
98.

State v. Rowley (12 Conn. 101),
99.

State v. Schlitz Brewing Co. (104
Tenn. 715, 744; 59 S. W. 1033,
1039; 78 Am. St. Rep. 941),
158, 166, 202.

State v. Small (82 S. C. 93; 63
S. E. 4), 167, 328.

State v. Snell (2 Ohio N. P. 55),
99,

State v. Standard Oil Co. (49
Ohio St. 137, 185; 30 N. E.
279, 290; 15 L. R. A. 145, 159;
34 Am. St. Rep. 541, 553), 95,
108, 112, 118, 121, 123, 153, 241,
336, 420, 460.

State v. Standard Oil Co. (Mo.),
(116 S. W. 902), 202, 372.

State v. Stewart (59 Vt. 273; 9
Atl. 559), 448.

State v. Terminal R. Assn. (182
Mo. 284; 81S. W. 395), 585.
State v. U. 8S. Express Co. (63 W.
Va. 299; 60 S. E. 144), 166.

State v. Wentworth (65 Maine
234), 814.

State v. Whitham (72 Maine
531), 814.

Steamship Co. v. McGregor (21
Q. B. Div. 544), 798.

Steamship Co. v. McKenna (30
Fed. 48), 448.

Stears v. United States (192
Fed. 1; 112 C. C. A. 423), 179,
254, 390, 436, 491, 700, 734,
744, 802, 803.

Steele v. United States (190 Fed.
631, 634), 491. 600.
TABLE OF CASES.

liti

[References are to pages.]

Stewart v. Hvok (118 Ga. 445),
665.

Stockton v. Central R. R. Co. of
N. J. (50 N. J. Eq. 52, 84; 24
Atl. 964, 976; 17 L. R. A. 97,
110), 112, 158, 419.

Stock Yards Co. yv. Kieth (139 U.
S. 128; 11 Sup. Ct. 451; 35 L.
Ed. 73), 148.

Strait v. National Harrow (51
Fed. 819), 650, 801.

Strait v. National Harrow Co.
(18 N. Y. Supp. 224), 112, 115,
124, 424, 636.

Straus v. American Publishing
Assn. (177 N. Y. 473; 69 N. E.
1107; 64 L. R. A. 701; 101 Am.
St. 819), 665, 669, 670.

Strout v. United Shee Co. (195
Fed. 313), 491, 759, 761, 763,
765, 768, 770, 779.

Strout v. United Shoe Machinery
Co. (203 Fed. 855), 491.

Strout v. United Shoe (202 Fed.
602), 765.

Sunset T. & T. Co. v. Eureka (172
Fed. 755), 164.

Sutton v. Head (86 Ky. 156; 9
Ky. L. Rep. 410: 5 S. W. 410;
9 Am. St. Rep. 274), 109, 110.

Swift & Co. v. United States (196
U. S. 375, 396, 398; 25 Sup. Ct.
276, 279, 376; 49 L. Ed. 518;
affirming 122 Fed. 529), 177,
186, 187, 194, 195, 302, 329,
342, 343, 349, 350, 360, 363,
384, 385, 398, 407, 414, 417,
419, 420, 441, 479, 515, 519,
534, 593, 647, 700, 701, 702,
703, 717, 734, 744, 767.

Swigert v. Howard (121 Iowa
650; 97 N. W. 82; 63 L. R. A.
608), 109..

Swigert v. Tilden (121 Iowa 650;
97 N. W. 82; 63 L. R. A. 108;
100 Am. St. 374), 48.

 

T.

Tabler v. Austin (22 Tex. Civ.
App. 99; 53 8. W. 706), 110.
Tabor v. Hoffman (118 N. Y. 36;
16 Am. St. 740; 23 N. E. 12),

656, 665.

Tallis v. Tallis (1853), (1 E. &
B. 391), 54, 56, 58, 82.

Taylor v. Blanchard (13 Allen
370), 82.

Telegram Newspaper Co. v. Com-
monwealth (172 Mass. 294; 52
N. E. 445; 44 L. R. A. 159;
70 Am. St. 280), 446.

Temperton vy. Russell (1 Q. B.
715), 448.

Temple v. Commonwealth (75 Va.
892), 829.

Terrell, In re (U.S. v. Greenhut),
(51 Fed. 213), 369, 375, 391,
754, 755.

Territory v. Farnsworth (5 Mont.
303; 5 Pac. 869, 874), 165.

Territory v. Leslie (15 N. M. 240;
106 Pac. 378), 97.

Terry v. U. 8. (120 Fed. 483; 56
Cc. C. A. 633), 739.

Texas & Pacific R. Co. v. Abilene
Co. & D. Co. (204 U. 8. 426),
787.

Texas & Pacific Ry. Co. v. Inter-
state Commerce Com. (162 U.
S. 197; 16 Sup. Ct. 666; 40
L. Ed. 940; reversing 4 Interst.
Com. Rep. 408; 6 C. C. A. 653;
20 U. S. App. 1; 57 Fed. 948),
690.

Texas & N. O. R. Co. v. Sabine
Trans. Co. (227 U. S. 111; 33
Sup. Ct. 229; 57 L. Ed.; re-
versing (Tex. Civ. App.) 121
S. W. 256), 178.

Texas Standard Oil Co. v. Andone
(83 Tex. 650; 19 S. W. 274;
15 L. R. A. 598; 29 Am. St.
690), 152.
liv

TABLE OF CAS&S.

[References are to pages.]

Thomas vy. Cincinnati, N. O. & T.
P. Ry. Co. (62 Fed. 803, 818),
29, 429, 448, 678, 682, 686.

Thomas v. Miles (3 Ohio St. 274),
lll.

Thomsen-Houston Elec. Co. v.
Jeffrey Mfg. Co. (83 Fed. Rep.
614), 804.

Thompson v. Union Castle Mail
S. 8. Co. (166 Fed. 251; 92 C.
C. A. 315; reversing 149 Fed.
933), 177, 178, 270, 343, 362,
491, 600, 601, 775, 776, 783,
788, 789.

Thomsen v. Union Castle 8. 8S.
Co. (149 Fed. 933; reversed,
166 Fed. 251; 92 C. C. A. 315),
504, 789.

Thrift v. Elizabeth City (122 N.
C. 31, 37; 20 S. E. 349; 44 L.
R. A. 427), 45.

Tice v. Standard Oil Co. (C. C.),
(1384 Fed. 6464), 737.

Tiit v. Southern Ry. Co. (138
Fed. 753), 542, 556, 605.
Tift v. Southern Ry. Co. (123

Fed. 789), 597.

Toddy & Co. v. Sterious & Co.
[1904] (1 Ch. 354; MeGuther
& Pitcher [1904], 2 Ch. 306),
659, 666.

Tede v. Gross (127 N. Y. 480; 28
N. E. 469; 13 L. R. A. 652),
82.

Toledo A. B. & N. M. Ry. Co. v.
Pennsylvania Co. (54 Fed. 730,
738, 746; 19 L. R. A. 387, 395),
98, 448, 685.

Tozer v. United States (52 Fed.
917), 294. -

Trentman v. Workenberg (30 Ind.
App. 304; 65 N. E. 1057), 109.

 

‘trenton Potteries Co. v. Oliphant
(56 N. J. Eq. 680; 39 Atl. 923,
modified 58 N. J. Eq. 507; 43
Atl. 723; 78 Am. St. 612; 46
L. R. A. 255), 109.

Trenton Potteries Co. v. Oliphant
(58 N. J. Eq. 507; 43 Atl. 723;
46 L. R. A. 255; 78 Am. St.
612, modifying 56 N. J. Eq. 680;
39 Atl. 923), 125, 153, 401, 419,
424,

Tribolet v. United States (11
Ariz. 436; 95 Pac. 85, 87; 16
L. R. A. (N.S.) 223), 351, 491,
730, 733, 736, 743, 747.

Trivili v. Colley (52 W. R. 632;
20 T. L. R. 437), 110.

Troy Laundry Machinery Co. v.
Dolph (138 U. 8. 617: 11 Sup.
Ct. 412; 34 L. Ed. 1083), $2.

Trust Co. v. Clark (92 Fed. 293,
296, 298; 34 C. C. A. 354, 357,
359), 777.

Tucker v. United States (151 U.
S. 164; 14 Sup. Ct. 299; 38
L. Ed. 112), 819.

Turner v. Johnson (7 Dana 435),
109.

Turner v. Wiliams (194 U. S. 279,
295; 48 L. Ed. 979; 24 Sup. Ct.
719), 197.

‘Luttle v. Matthews (28 Fed. 98),
801.

Uv.
Unckles v. Colgate (148 N. Y.
529; 43 N. E. 59), 119, 121.
Underwood & Son vy. Barker

({1899] 1 Ch. Div. 300; 68
L. J. Ch. 201; 80 L. T. 306; 47
W. R. 347), 48, 76, 110, 111,
lat.

Union Castle Mail v. Thomsen
(190 Fed. 536; 111 CG. CG. A.
674), 291, 600.
TABLE OF CASES. lv

[References are to pages.]

Union Pacifie Coal Co. v. United
States (173 Fed. 737, 739; 97
Cc. CG. A. 578), 254, 259, 333,
355, 399, 516, 519, 810.

United Shoe Machinery v. Brunet
[1909] (A. C. 3380; 78 L. J.
Pac. 101; 100 L. T. 579; 53 S.
J. 396; 25 L. T. 442), 652.

United Shoe Machinery Co. v. La
Chapelle (212 Mass. 467; 99 N.
EE. 289, 292), 627, 638, 652.

United States v. Addyston Pipe
& Steel Co. (29 C. C. A. 141;
d+ U. S. App. 723; 46 L, R. A.
122; 85 Fed. 271, reversing 78
Fed. 712; affirmed, 175 U. S.
211; 20 Sup. Ct. 96; 44 L. Ed.
136), 50, 80, 87, 89, 104, 111,
112, 154, 171, 246, 247, 248,
249, 250, 354, 483, 486, 531,
534, 662, 697, 725.

United States v. Alger (62 Fed.
824), 693, 703, 704, 706.
United States v. Amer. Naval
Stores (172 Fed. 455, 460; 186
Fed. 592, 594), 44, 97, 258, 259,
270, 326, 332, 351, 370, 373, 377,
390, 429, 480, 4385, 436, 437,
438, 4389, 491, 534, 727, 730,

746, 810.

United States v. Amer. Tobacco
Co. (16 Fed. 701; affirmed 221
U. S. 106; 31 Sup. Ct. 632;
455 L. Ed. 694), 163, 181, 268,
398, 471, 476, 534.

United States v. American To-
baeco Co. (221 U.S. 106, 183;
31 Sup. Ct. 648; 55 L. Ed. 694,
reversing 164 Fed. 700), 104,
165, 179, 190, 191, 238, 242,
245, 254, 255, 257, 269, 288,
308, 306, 325, 340, 343, 361,
362, 873, 379, 380, 381, 391,
405, 491, 712, 847.

United States v. Armour & Co.
(142 Fed. 808), 816, 821, 823,
828.

 

United States v. Armour
Fed. 1002), 822.

United States v. Atchison, T. &
8S. F. Ry. Co. (142 Fed. 176),
552.

United States v. Babeock (3 Dill.
566; Fed. Cas. No. 14487), 433,
434, 445, 806.

United States v. Bell
830), 819.

United States v. Biggs (D. C.),
(157 Fed. 264), 440.

United States v. Biggs (211 U.S.
507, 518; 29 Sup. Ct. 181; 53
L. Ed. 305; affirming 157 Fed.
264), 751.

United States v. Bitty (208 U.S.
393, 399; 28 Sup. Ct. 396; 52
L. Ed. 545; reversing 15 Fed.
938), 751.

United States v. Black (160 Fed.
431; 87 C. C. A. 383), 441.
United States v. Brace (D.C.),

(149 Fed. 874), 440.

United States v. Bradford (C.C.),
(148 Tred. 413), 440, 442.

United States v. Browner (7 Fed.
86), 754.

United States v. Britton (108 U.
8. 199, 205; 2 Sup. Ct. 531; 27
L. Ed. 701), 436, 729, 730, 734,

United States v. Brown (1 Sawy.
531; 24 Fed. Cas. No. 14671),
819.

United States v. Cadwallader (59
Fed. 677), 330.

United States v. Carll (105 U.S.
611; 26 L. Ed. 1135), 730.
United States v. Cassidy (67 Fed.
698, 907, 702, 704), 97, 163,
179, 236, 329, 429, 432, 434,

445, 678, 682, 802.

United States v. Central of Geor-

gia (157 Fed. 893), 173.

(186

(81 Fed.
lvi TABLE OF CASES.

[References are to pages.]

United States v. Chesapeake &
Ohio Fuel Co. (105 Fed. 93;
affirmed 115 Fed. 610; 53 C. C.
A. 256), 345, 350, 398, 458.

United States v. Chicago Great
Western Ry. Co. (162 Fed. 775),
173.

United States v. Chicago & N.W.
Ry. Co. (157 Fed. 616), 165.
United States v. Coal Dealers (85
Fed. 252, 265), 132, 163, 164,

251, 265, 343, 455, 704.

United States v. Colorado & N.
W. R. Co. (157 Fed. 321; 85
C. C. A. 27), 165, 173.

United States v. Coolidge (1
Wheat. 415; 4 L. Ed. 124; re-
versing 1 Gall. 488; Fed. Cas.
No. 14857), 729.

United States v. Crosthwaite
(168 U. 8. 375; 18 Sup. Ct.
107; 42 L. Ed. 507; reversing 30
Ct. Cl. 300), 753.

United States v. Cruikshank (92
U. S. 542; 23 L. Ed. 588; 1
Woods 308; Fed. Cas. No.
14897), 730, 732, 734, 740.

United States v. Debs (64 Fed.
724, 746, 749, 754), 29, 97, 162,
167, 246, 261, 325, 327, 328,
338, 429, 448, 678, 679, 684,
690, 691, 703, 725.

United States v. Debs (158 U. S&S.
564; 15 Sup. Ct. 900; 39 L. Ed.
1092), 448, 679, 684.

United States v. E. I. DuPont de
Nemours (188 Fed. 127; 118
Fed. 127; 188 Fed. 155), 325,
329, 334, 335, 340, 343, 473,
696, 703, 719, 771.

United States v. Eastern States
Lumber Co. (201 Fed. 581),
244, 461, 466.

 

United States v. E. C. Knight Co.
(156 U. S. 1; 15 Sup. Ct. 249;
39 L. Ed. 325, affirming 60 Fed.
934; 9 C. C. A. 297; 24 L. R.
A. 428: 17 U. S. App. 466,
which affirmed 60 Fed. 306), 30,
42, 104, 159, 164, 168, 187, 191,
194, 231, 234, 236, 253, 261,
306, 260, 286, 398, 417, 420,
426, 462, 480, 485, 500, 507,
524, 526, 527, 528, 531, 533,
549, 847.

United States v. Elliott (62 Fed.
801), 447, 679, 682, 691, 703.

United States v. Elliott (64 Fed.
27, 30), 261, 679, 690, 691, 707.

United States v. Erie R. Co. (166
Fed. 352), 165.

United States v. Fowkes (49 Fed.
50), 754.

United States v.
Fed. 343), 442.

United States v. Greenhut (50
Fed. 469), 369, 375, 391, 735.
United States v. Grumberg (131

Fed. 137), 733.

United States v. Hamburg Amer-
ikanische Packet Fahrt-Actien-
Gesellschaft (192 Fed.; 200
Fed. 806), 178, 205, 343, 600.

United States v. Heinze (218 U.
S. 532, 540; 31 Sup. Ct. 98;
54 L. Ed. 1139, 1143; 21 Am.
Cas. 884), 751.

United States v. Hess (124 U. S.
483; 8 Sup. Ct. Rep. 571; 31
L. Ed. 516), 732, 733, 734.

United States v. Holliday (3
Wall. 407; 18 L. Ed. 182), 159.

United States v. Hopkins (82 Fed.
529; reversed 171 U. S. 578; 19

Sup. Ct. 40; 43 L. Ed. 290),
236, 265, 534,

Greene (115
TABLE OF CASES.

lvii

[References are to pages.]

United States v. Hopkins (171 U.
8. 578; 19 Sup. Ct. 40; 43 L.
Kd. 290, reversing 82 Fed. 529),
OLLI, B15,

United States v. Hudson (7
Cranch. 32; 3 L. Ed. 259), 729.

U.S. v. Hughes (12 Blatchf. 553;
26 Fed. Cas. No. 15417; revers-
ing Wl. Int. Rev. Ree. 76; 26
Fed. Cas. No. 15419), 819.

United States v. Hunter (15 Fed.
712), 805.

United States v. Jellico Mt. Coal
& Coke Co. (C. C.), (46 Fed.
432; 12 L. R. A. 753), 250,
352, 452, 703, 704.

United States v. John Reardon &
Sons Co. (191 Fed. 454), 733.

United States v. Johnson (26 Fed.
682, 684), 445.

United States v. Joint Traffic
Assn. (171 U. S. 505, 567, 568;
19 Sup. Ct. 25; 43 L. Ed. 259;
reversing 89 Fed. 1020; 32 C.
C. A. 491; 45 U. S. App. 762,
which affirmed 76 Fed. 895),
121, 222, 244, 245, 250, 251,
254, 256, 273, 280, 282, 283,
286, 302, 306, 334, 338, 339,
349, 351, 402, 421, 515, 542,
548, 551, 556, 559, 564, 566,
572, 574, 580, 590, 593, 604,
608, 639, 847.

United States v. Kane (23
748), 687.

United States v. Keitel (157 Fed.
396), 97.

United States v. Keitel (211 U.
8. 370, 398; 29 Sup. Ct. 123;
53 L. Ed. 230, 244; reversing
157 Fed. 396), 751.

United States v. Kimball
Fed. 156), 819.

United States v. Kissel (173 Fed.
823, reversed 218 U. 8. 601; 31
Sup. Ct. 124; 54 L. Ed. 1168),
436.

Fed.

(117

 

United States v. Kissel (218 U.
S. 601; 31 Sup. Ct. 124; 54 L.
Ed. 1168; reversing 173 Fed.
823), 430, 431, 440, 751.

United States v. Lake Shore &
M. 8S. Ry. Co. (203 Fed. 295),
436, 445, 597.

United States v. Lee (106 U. S.
196, 220; 1 Sup. Ct. 240; 27
L. Ed. 171; affirming 3 Hughes
139; Fed. Cas. No. 8192), 225.

United States v. McAndrews &
Forbes Co. (149 Fed. 823, 831,
833, 835, 836; dismissed in Sup.
Ct. 212 U. S. 585; 29 Sup. Ct.
681; 53 L. Ed. 585), 96, 256,
329, 339, 345, 350, 351, 355,
356, 375, 384, 422, 425, 441,
446, 471, 534, 736, 743, 744,
745, 746, 748, 808.

United States v. Mason (213 U.
S. 115, 122; 29 Sup. Ct. 480;
53 L. Ed. 725, 727), 751. ;

United States v. McCarthy (21
Blatchf. 469), 819.

United States v. McCarthy (18
Fed. 87), 819.

United States v. McCord (D. C.),
(72 Fed. 159), 440.

United States v. Meseal (215 U.
S. 26, 31; 30 Sup. Ct. 19; 54
L. Ed. 77, 79; reversing 164 Fed.
580), 751.

United States v. Miller (223 U.
S. 509, 602; 32 Sup. Ct. 323;
56 L. Ed. 568, 569; reversing
187 Fed. 375), 751.

United States v. Moore (173 Fed.
122), 98.

United States v. Myers (1 Hughes
533), 819.

United States v. Nelson (52 Fed.
567), 391.
lili

TABLE OF CASES.

[References are to pages.]

United States v. Nelson (52 Fed.
646), 496, 732, 739.

United States v. New Departure
Mig. Co. (204 Fed. 107), 431,
438, 445, 622, 625, 727, 731,
732, 739, 742, 748, 748.

United States v. N. Y. C. & H. R.
R. (146 Fed. 298), 749.

United States v. N. Y., N. H. &
H. R. Co. (165 Fed. 742, 748),
491.

United States v. N. Y¥., N. H. &
H. R. Co. (169 Fed. 742), 199.

United States v. Northern Securi-
ties (120 Fed. 721; affirmed
193 U.S. 197; 24 Sup. Ct. 436;
48 L. Ed. 679), 95, 199, 204,
266, 416, 515, 531, 570, 709.

United States v. Northern Securi-
ties (123 Fed. 692, 700), 519,
609.

United States v. Northern Securi-
ties (197 U. 8S. 197, 291; 49 L.
Ed. 739, 761; 25 Sup. Ct. 493;
affirming 120 Fed. 721), 596.

United States v. Owen (D. C.),
(32 Fed. 534), 440.

United States v. Pacific (229 U.
S.; 33 Sup. Ct. 447; 57 L. Ed.
—); 609, 614.

United States v. Patten (187 Fed.
664; reversed 226 U. S. 525;
33 Sup. Ct. 141; 57 L. Ed. —),
432, 738, 743.

United States v. Patten (226 U.
S. 525; 33 Sup. Ct. 141; 57 L.
Ed. —), 327, 335, 340, 343,
345, 347, 350, 352, 353, 361, 372,
449, 481, 751.

United States v. Patterson (55
Fed. 605, 640), 236, 367, 369,
392, 431, 679, 686, 727, 732,
743, 745.

United States v. Patterson (59
Fed. 280), 679, 700, 733, 734,
739, 748, 750.

 

United States v. Patterson (201
Fed. 697, 722), 381, 386, 413,
428, 431, 439, 442, 446, 702,
727, 731, 734, 738, 750.

United States v. Reading Co. (228
U. S. 158; 33 Sup. Ct. 90, 509;
57 L, Ed., affirming and revers-
ing 183 Fed. 427), 195, 225,
342, 348, 363, 385, 543, 551,
571, 581, 595.

United States v. Reading Co. (183
Fed. 427, 460; affirmed in part,
226 U. S. 324; 33 Sup. Ct. 90,
509; 57 L. Ed. —), 241, 242,
259, 359, 374, 389, 430, 491,
534, 542, 701, 809.

United States v. Reichart (32
Fed. 142, 145), 432.

United States v. Rogers (23 Fed.
658), 754.

United States v. Sacia (2 Fed. R.
754), 99.

United States v. Sanges (144 U.
8. 310; 12 Sup. Ct. Rep. 609;
36 L. Ed. 445; affirming 48 Fed.
78), 755.

United States v. Santa Rita Store
Co. (113 Pac. 620), 430.

United States v. Simmons (96 U.
S. 360; 24 L. E. 819), 730, 732.

United States v. Smith (4 Day
121), 814.

United States v.
501), $19.

United States v. Standard Mfg.
Co. (191 Fed. 172; affirmed
226 U. S. 20; 33 Sup. Ct. 9; 57
L. E. —), 702, 771.

United: States v. Standard Oil
(152 Fed. 290), 696, 697, 698,
699.

United States v. Standard Oil
(154 Fed. 728), 753.

United States v. Standard Oil Co.
(155 Fed. 305), 165.

Smith (Fed.
TABLE OF CASES. lix

[References are to pages.]

United States v. Standard Oil Co.
(173 Fed.; 177 C. C. A..; af-
firmed 221 U. 8. 1; 31 Sup. Ct.
502; 55 L. Kd. 619; 34 L. R.
A. (N.S.) 834), 236, 246, 259,
271, 303, 359, 373, 389, 393,
416, 491, 493, 516, 718, 808.

United States v. Standard Sani-
tary (187 Fed. 232, 229), 811,
822, 825.

United States v. Standard Sani-
tary Mfg. Co. (191 Fed. 172;
affirmed 226 U. 5. 20; 33 Sup.
Ct. 9; 57 L. Ed.; 55 L. Ed. —),
179, 194, 248, 248, 358, 416, 618,
621, 626, 638, 639, 644, 645,
696.

United States v. Stevenson (215
U.S. 190, 195; 30 Sup. Ct. 35;
54 L. Ed. 153), 751.

United States v. Swift & Co, (122
Fed. 529; modified 196 U. 8.
375; 25 Sup. Ct. 276; 49 L. E.
518), 160, 164, 176, 179, 182,
183, 189, 352, 353, 357, 416,
423, 424, 488, 515.

United States v. Swift (186 Fed.
1002, 1014), 385, 442, 491, 752,
822, 826.

United States v. Swift (188 Fed.
92, 97), 354, 490, 491, 519, 730,
736, 745, 747, 752.

United States v. Terminal Assn.
(148 Fed. 486), 806, 823, 825,

United States v. Terminal R. Assn.
154 Fed. 268; reversing 148
Fed. 486), 805, 823.

United States v. Terminal Assn.
(224 U. S. 383, 394; 33 Sup.
Ct. 383; 55 L. Ed. 810; reversing
34 Utah, 458; 98 Pac. 549), 342,
417, 585, 586, 587.

United States v. Terminal Assn.
(227 U.S. 683; 32 Sup. Ct. 507;
57 L. Ed. —), 722.

 

United States v. Terminal Assn.
197 Fed. 446), 723.

United States v. Thompson (12
Sawy. 155; 31 Fed. 331), 434.

United States v. Tilden (10 Ben.
566; Fed. Cas. No. 16522), 805.

. United States v. Trans-Missouri

Freight Assn. (58 Fed. 58, 84;
19 U. S. App. 36; 7 0. C. A.
15; 4 Interstate Com. Rep. 443,
reversed 166 U. S. 290; 17 Sup.
Ct. 540; 41 L. Ed. 1007), 89,
91, 248, 264, 266, 274, 555, 599.

United States v. Trans-Missouri
Freight Assn. (53 Fed. 440,
452; affirmed 58 Fed. 58, 92;
19 U. S. App. 36; 7 C. C. A.
15; 24 L. R. A. 73, reversed 166
U. S. 290; 41 L. Ed. 1007; 17
Sup. Ct. 540), 43, 260, 374,
392, 555.

United States v. Trans-Missouri
Freight Assn. (166 U. 8. 290;
17 Sup. Ct. 540; 41 L. Ed.
1007; reversing 58 Fed. 58; 7
c. C. A. 15; 19 U. 8. App. 36;
54 L. R. A. 73; 4 Interstate
Com. Rep. 443, which reversed
53 Fed. 440), 79, 92, 119, 121,
236, 239, 246, 247, 250, 262,
273, 280, 286, 302, 325, 341,
349, 379, 383, 444, 531, 533,
542, 543, 548, 551, 552, 556,
559, 563, 564, 574. 580, 602,
604, 608, 639, 690, 691.

United States v. Trumbrill (46
Fed. 755), 730.

United States v. Pacific Ry Co.
(1 Otto. 72; 23 L. Ed. 224;
affirming 10 Ct. Cl. 548), 543.

United States v. Union Pac. R.
Co. (183 Fed. 102; reversed
(U. 8.) 33 Sup. Ct. 162; 57 L.
Ed. —), 254, 491, 519.
lx TABLE OF CASES.

[References are to pages.]

United States v. Union Pacific Ry.
Co. (226 U. S. 61, 470; 33 Sup.
Ct. 53; 57 L. E. —; reversing
188 Fed. 116), 241, 359, 542,
548, 549, 566, 579, 580, 591,
592, 593, 598, 611, 847.

United States v. Virginia-Caro-
lina Chemical Co. (163 Fed.
66), 730, 753.

United States v. Winslow (195
Fed. 578; affirmed 227 U. 8.
202; 33 Sup. Ct. 253; 57 L. Ed.

228, 275, 294, 432, 616,
647, 702, 727, 730, 731, 733,
734, 735, 738, 739, 740, 744,
747, 750.

United States v. Wooten (67 Fed.
R. 698), 99.

United States v. Workingmen’s
Amalgam. (54 Fed. 994; af-
firmed 57 Fed. 85; 6 C. C. A.
258; 26 L. R. A. 158), 28, 447,
678, 684, 703, 708.

United States v. Workingmen’s
Amalgam. (57 Fed. 85; 6 C. C.
A. 258; 26 L. R. A. 158), 704.

United States Chemical Co. v.
Provident Chemical Co. (64
Fed. 946, 950, citing Green, 52
Fed. 104), 45, 95, 251, 336, 337.

United States Consolidated 8. R.
Co. v. Griffin & Skelly Co. (126
Fed. 364; 61 C. C. A. 334), 629,
648.

United States Fidelity & Guar-
anty Co. v. Commonwealth (139
Ky. 27; 129 8. W. 314), 165.

United States Fire Ext. etc., Co. v.
Joseph Halsted Co. (195 Fed.
295), 650.

United States Gypsum Co. v.
Gleason (135 Wis. 539; 116 N.
W. 238), 166.

—),

 

United States Telephone Uo. v.
Central Union Telephoone Co.
(202 Fed. 66; (C. C. A.) af-
firming 171 Fed. 130), 374,
385, 423, 424, 426, 427, 480.

United States Vinegar Co. v.
Fochrenbach (148 N. Y. 58; 42
N. E. 403), 140, 155, 401, 412.

Up River Ice Co. v. Danler (114
Mich. 296; 72 N. W. 157; 4
Det. L. N. 502), 109.

Urmston v. Whitelegg (63 L. T.
(N.S.) 455), 152.

Vv.

Vanninini v. Paine (1 Harr.
(Del.) 65), 619.

Veazie v. Moore (14 How. 568,
574; 14 L. E. 545, affirming 32
Me. 343; 52 Am. Dec. 655), 170.

Venning vy. Atlantic Coast Line
R. Co. (78 8. C. 42; 12 L. R.
A, (N.S.) 1217; 58 S. E. 983),
166.

Verdin v. St. Louis (131 Missouri
26; 33.8. W. 480; 36S. W. 52),
537.

Victor Talking Machine Co. v. The
Fair (123 Fed. 424: 61 C. C.
A. 58), 629, 661, 666.

Virtue Creamery Packing Co.
179 Fed. 115), 799.

Virtue v. Creamery Packages Mfg.
Co. (227 U. 8. 8: 33 Sup. Ct.
202; 57 L. Ed. —, affirming 179
Fed. 115; 102 C. C. A. 413),
617, 629, 646, 647, 648, 650.

Vought v. Wright (141 U. S. 62;
11 Sup. Ct. 855; 35 L. Ed.
638), 159.

Vulean Detinning Co. v. American
Can Co. (67 N. J. Eq. 243),
665.
TABLE OF CASES. lxi

[References are to pages.]

Vulean Powder Co. v. Hercules
Powder Co. (96 Cal. 510; 31
Pac. 581; 31 Am. Rep. 242),
132, 137, 242, 626.

w.

Wabash Ry. Co. v. U. 8. (168 Fed.
1), 173.

Wabash, St. Louis & P. Ry. Co.
v. Illinois (118 U. 8. 557; 30
L. Ed. 214; 7 Sup. Ct. 4; re-
versing 105 Ill. 236), 233.

Wallis v. Day (1837), (2 Mees.
& W. 273), 56, 57, 84.

Walsh v. Dwight (40 N. Y. App.
D. 513; 58 N. Y. Supp. 91, 93),
25, 499.

Ward v. Byrne (1839), (5 Mees.
& W. 548, 559, 547), 52, 53, 56,
57, 59, 71, 77, 82.

Ware v. United States (154 Fed.
577; 84 C. C. A. 5038; 12 L. R.
A. (N.S.) 1053), 440.

Ware v. Mobile Co. (209 U. S.
405; 28 Sup. Ct. 526; 52 L. E.
855; affirming 146 Ala. 163; 41
So. 153), 164.

Ware-Kramer Tobacco Co. v.
American Tobacco Co. (180 Fed.
160; 178 Fed. 117, 122), 43,
491, 758, 760, 762, 763, 764,
767, 768, 769.

Warfield v. Booth
110.

Warren v. Paving Co. (115 Mis-
souri 572; 22 S. W. 490), 537.

Waterhouse v. Comer (55 Fed.
149; 19 L. P. A. 408), 448, 679,
685.

Waters-Pierce Oil Co. v. State
(Tex. Civ. App.), (44 S. W.
936), 202.

Waters-Pierce Co. v. Texas (177
U. S. 28; 20 Sup. Ct. 518; 44
L. E. 657; affirming 19 Tex. Civ.
App. 1; 44 S. W. 936), 362.

(33 Md. 63),

 

Waters-Pierce Oil Co. v. Texas
(212 U. 8. 86; 29 Sup. Ct. 220;
43 L. Ed.; affirming (Tex. Civ.
App.) 106 8. W. 918), 200, 202,
420, 444, 445.

Watson v. Harley & N. Y. Navi-
gation Co. (52 How. Pr. 348),
329,

Watt v. Watt (L. R. App. Cas.
(1905), 115), 809.

Webb v. Dunn (18 Fla. 721, 724),
165.

Webber y. Virginia (103 U. 8.
344; 26 L. Ed. 565; reversing
33 Gratt. 898), 619.

Weisert Bros. Tobacco Co. v. Amer.
Tobacco Co. (163 Fed. 712; af-
firmed but decree modified, 221
U. S. 106; 31 Sup. Ct. 632; 55
L. Ed.), 180.

Welch v. Phelps & Bigelow Wind-
mill Co. (Tex. Sup.), (36 S. W.
71), 251.

Weldon v. Burch (12 Ill. 374),
814.

Wells & Richardson Co. v. Abra-
ham (C. C.), (146 Fed. 190)
661, 665.

Welsh v. Phelps & Bigelow Wind-
mill Co. (Tex.), (26 S. W. 71),
483.

Welton v. Missiouri (91 U. 8S.
275; 23 L. Ed. 347; reversing
55 Mo. 288), 159, 162, 207, 602.

Wenster v. Williams (62 Ark.
101; 34 8. W. 587), 109.

Western Union Tel. Co. v. Amer.
Union Tel. Co. (65 Ga. 160;
38 Am. Rep. 781), 92.

Western Union Teleg. Co. v. At-
lantic & Pacific States Teleg.
Co. (5 Nev. 102, 108, 109), 166.

Western Union Tel. Co. v. Chi-
cago & P. R. Co. (86 Ill. 246),
92.
lxii

TABLE OF CASES.

[References are to pages.]

Western Union Teleg. Co. v. Texas
(105 U. 8. 460, 464; 26 L. Ed.
1067; reversing 55 Tex. 314),
541.

Westervelt v. Nat. Paper Supply
Co. (154 Ind. 673), 665.

West Virginia Transp. Co. v. Ohio
River Pipe Line Co. (22 W. Va.
600; 46 Am. Rep. 527), 92, 153.

Western Wooden Ware Assn. v.
Starkey (84 Mich. 76, 85; 47
N. W. 604; 11 L. R. A. 503; 22
Am. St. Rep. 686), 110.

Wheaton & Donaldson v. Peters &
Grigg (8 Pet. 591; 8 L. Ed.
1055; reversing 8 Pet. 725; 8
L. Ed. 1106), 665.

W. H. Hill Co. v. Gray & Wor-
cester (163 Mich. 12; 30 L. R.
A. (N.S.) 327; 127 N. W. 803),
662.

Wheeler Stenzel Co. v. Amer. Win-
dow Glass Co. (202 Mass. 471;
89 N. E. 28), 470.

Wheeler Stenzel Co. v. National
Window Glass Jobbers Assn.
(152 Fed. 864; 81 C. C. A. 658;
10. L. R. A. (N.S.) 972), 196,
267, 343, 469.

Whitaker v. Kilby (55 N. Y. Misc.
337; 106 N. Y. Supp. 511), 92.

White v. Rankin, 144 U. S. 628;
12 Sup. Ct. 768; 36 L. Ed. 569),
621.

White v. White (132 Wis. 121;
111 N. W. 1116), 98.
White v. Wilson (23 T. L. R.

469), 110.

Whitehead & Hoage Co. v. O’Cal-
lahan (139 Fed. 243), 804.
White Star Line v. Star Line of

Steamers (141 Mich. 604; 105
N. W. 135; 113 Am. St. 551),
605.
Whitney v.
224), 82.

Slayton (40 Me.

 

Whittaker v. Howe (3 Beav. 383),
57, 59, 71, 82, 142.

Whitwell v. Continental Tobacco
Co. (125 Fed. 454; 60 C. C. A.
290, 298; 64 L. R. A. 689), 236,
244, 246, 250, 254, 257, 267,
339, 372, 378, 421, 499, 510, 515,
519, 782.

Wickens v. Evans (3 Younge & J.
318), 142.
Wilder v. Kent

628.

Wiley v. Baumgardner (97 Ind.
16; 49 Am. Rep. 427), 88, 109,
110.

Williams v. Farrington (11 Cox.
Ch. P, 202), 814.

Williams v. Fears (179 U.S. 270;
21 Sup. Ct. 128; 45 L. Ed. 186;
affirming 110 Ga. 584; 35 S. E.
699; 50 L. R. A. 685), 163.

Williams v. Fears (110 Ga. 584,
589; 35S. E. 699, 701; 50 L. R.
A. 685), 165, 167, 328.

Wilson v. Rousseau & Easton (4
How. 646; 11 L. Ed. 1141), 665.

Wilson v. Sandford (10 How. 99;
13 L. Ed. 344), 620.

Wilson v. United States (221 U.
S. 361, 382, 388; 31 Sup. Ct.
538; 55 L. Ed. 771), 817, 823.

Wisewall, The Charles E. (74 Fed.
802; affirmed 86 Fed. 671; 30
C. C. A. 339), 245, 799, 800.

Wisewall, The Charles E. (86 Fed.
671; 30 C. C. A. 339), 360, 609.

Wolfe v. Goulard (15 Abb. Pr.
336), 814.

Wonnel v. Chamberlain of London
(1 Str. 675), 85.

Wood v. Glenwood Hardware Co.
(75 S. C. 383; 55 S. E. 973; 9
L. R. A. (N.S.) 501), 104, 398.

(15 Fed. 217),
TABLE OF CASES. lxiii

{References are to pages.]

Wood v. Whitehead Bros. (165 N.
Y. 545, 550; 59 N. E. 357), 201.

Woodruff v. Hughes (2 Ga. App.
361; 58 S. W. 551), 98.

Woods v. Carl (203 U. S. 358; 27
Sup. Ct. 99; 51 L. Ed. 219; 75
Ark. 328; 87 S. W. 621), 619.

Wooten v. Harris (153 N. C. 43;
68 S. E. 898), 109.

Wright v. Ryder (36 Cal. 342; 95
Am. Dec. 186), 83, 110.

Wright v. State (88 Md. 436, 443;
41 Atl. 795), 43.

 

Wychoff v. Wagner Typewriter Co.
(99 Fed. 158), 819.
y.
Young v. Timmins (1831), (1
Tyrw. 226, 236), 55, 84.
Zz.

Zikos v. Oregon R. & Nav. Co.
(179 Fed. 893), 164.
The Sherman Anti-Trust Act

CHAPTER I.
CONGRESSIONAL HISTORY.

SECTION. SECTION.

1. Early Senate anti-trust pro- 12. Power under Interstate Com-
posed legislation. merce clause—What com-

2. Early House anti-trust pro- merce is—Power under bill.
posed legislation. 13. Senator Reagan’s addition to

3. Sherman Bill re-introduced— Senator Sherman’s Bill.

Republican platform of 14. Senator Vest’s, Hiscock’s

1888. , ison’,
4. The Sherman Bill as intro- on ey eltibonis <andy Tel
er’s debate,
duced. Fi 3
5. Sherman anti-trust substi- > Purpose of Bill—Difficulty of
tuted Bill. defining offense.
. Senator Reagan’s substitute. 16. Labor organizations—Farm-
7. Debate in the Senate—Ob- ers’ associations.
ject of the Bill. 17. Bill referred to Judiciary
8. Bill interfering with lawful ‘Committee—Senator Ed-
trade. munds, Chairman.
9. Trusts. 18. Action on the Bill in the
10. Combination reducing prices House of Representatives.

—Competition open to all. jg
ll. Propriety of the Government

protecting its citizens from

oppressive competition.

Subsequently proposed legis-
lation,

§1. Early Senate Anti-Trust Proposed Legislation.—As
early as May 10, 1888, Senator Teller introduced in the Senate
of the United States a bill to prevent the combination of pat-
entees in order to maintain any undue or unjust charges or
prices for patented articles. Nothing seems to have been
done with this bill.t This bill was based upon the power of
Congress to legislate concerning patents. On August 14,

1 Bills and Debates on Trusts bills introduced and debates on
3. A volume issued by Con- the subject of Trusts, up to that
gress in 1903, containing all the date.
2 THE SHERMAN ANTI-TRUST ACT.

1888, Senator Reagan introduced a bill in the Senate concern-
ing combinations of capital or skill by two or more persons
to ereate or carry out restrictions of trade; to limit, reduce
or increase the production of prices of merchandise or com-
modities; to prevent competition in the manufacture, making,
sale or purchase of merchandise or commodities; or to create
a monopoly, where foreign or interstate commerce was con-
cerned. Little or nothing was done with this bill. On the
same day Senator Sherman introduced his first anti-trust
bill,? which on the 11th of the following September, as chair-
man of the Finance committee, to which it had been referred,
he reported it back to the Senate, with a motion to strike
out all after the enacting clause and insert the part printed
in italics. This was known as Senate bill 3445. This bill
came up for debate January 23, 1889,* and two days later,°®
and on February 4th.° On August 22, 1888, Senator Reagan
reintroduced his bill, with a section added to it; 7 and Senator
Cullom introduced a new bill September 4, 1888.8

§2. Early House Anti-Trust Proposed Legislation —Mr.
Stone, of Kentucky, introduced a very short bill in the House
of Representatives January 30, 1888, which only a casual
glance at it shows was unconstitutional.? Mr. Raynor, Jan-
uary 30, 1888, introduced a bill ‘‘to prevent the creation of
trusts.’’??° On March 5, 1888, Mr. Breckenridge, of Kentucky,
introduced in the House of Representatives a bill to admit
certain imports free of duty, to prevent combinations con-
trolling the sale of imported goods.» Mr. McDonald, April

2 Bills and Debates on Trusts 5. 7 Bills and Debates on Trusts

3 Bills and Debates on Trusts 7. 33.

4Bills and Debates on ‘Trusts 8 Bills and Debates on Trusts
9; 20 Cong. Rec., pp. 1120, 1121. 35.

5 Bills and Debates on Trusts ® Bills and Debates on Trusts
13; 20 Cong. Ree., 1167. 39.

6 Bills and Debates on Trusts 10 Bills and Debates on Trusts
20; 20 Cong. Rec. 1457. The 41.
bill met with considerable opposi- 11 Bills and Debates on Trusts

tion from Senator Jones of Ar- 465.
kansas and Senator George.
CONGRESSIONAL EIISTORY. 3

16, 1888, introduced a bill declaring interstate limits, pools
or combinations limiting or otherwise regulating or controlling
the production, manufacture, sale or price of any article of
trade entering into interstate commerce to be unlawful.? May
21, 1888, Mr. Springer introduced a bill to place on the free
list articles of merchandise, the production of which may be
controlled hy trusts or combinations.’? July 23, 1888, Mr.
Springer introduced a bill ‘‘to tax the products of trusts.’’ 14
August 20 and 27, 1888, and September 3, Mr. Anderson, of
Towa, introduced three bills to define trusts.1> On September
3, 1888, Mr. Newton introduced a bill for the punishment of
persons connected with trusts..° September 10, 1888, Mr.
Henderson, of North Carolina, introduced a short bill ‘‘to
check and nullify the baleful operations of pernicious com-
binations commonly called trusts.’’?7 Mr. Culberson, Sep-
tember 10, 1888, introduced a bill ‘‘for the prevention of
trusts,’’ 18 and Mr. Abbott, on October 1, 1888, a bill having
the same title.’*

§3. Sherman Bill Reintroduced—Republican Platform of
1888.—When Congress met for its fifty-first session, on De-
cember 4, 1889, Senator Sherman reintroduced his Anti-Trust
bill. At its National Convention the year before for the nom-
ination of President, the Republican Convention had adopted
in its platform a plank on the subject of trusts, which no
doubt prompted the Senator, as it had no doubt previously
done, to introduce this bill. The resolution of the Republican
Party was as follows:

‘“‘We declare our opposition to all combinations of capital,
organized in trusts or otherwise, to control arbitrarily the

12 Bills and Debates on Trusts
49.

13 Bills and Debates on Trusts
51.

14 Bills and Debates on Trusts
53.

15 Bills and Debates on Trusts
55, 57, 61.

16 Bills and Debates on Trusts
59.

17 Bills and Debates on Trusts
63.

18 Bills and Debates on Trusts
65.

19 Bills and Debates on Trusts
67.
4 THE SHERMAN ANTI-TRUST ACT.

condition of trade among our citizens, and we recommend to
Congress and to State Legislatures, in their respective juris-
dictions, such legislation as will prevent the execution of all
schemes to oppress the people by undue rates for the trans-
portation of their products to market.’’ In line with this
command of his party, President Harrison, December 3, 1889,
in his first message to Congress, said: ‘‘Earnest attention
should be given by Congress to a consideration of the ques-
tion how far the restraint of those combinations of capital
commonly called ‘trusts’ is matter of federal jurisdiction.
When organized, as they often are, to crush out all healthy
competition and to monopolize the production or sale of an
article of commerce and general necessity, they are dangerous
conspiracies against the public good, and should be made the
subject of prohibitory and even penal legislation.’’

§ 4, The Sherman Bill as Introduced.—Senator Sherman's
Anti-Trust bill was the first one introduced, December 4,
1889, in the Senate for the fifty-first session of Congress, and,
consequently, it was designated as ‘‘Senate Bill No. 1.’’ It
was as follows:

A BILL

To declare unlawful trusts and combinations in restraint of
trade and production.

1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assem-
3 bled, That all arrangements, contracts, agreements, trusts,
4 or combinations between persons or corporations made
5 with a view, or which tend to prevent full and free com-
6 petition in the importation, transportation or sale of ar-
7 ticles imported into the United States, or in the produc-
8 tion, manufacture or sale of articles of domestic growth
9 or production, or domestic raw material that competes

20 Messages and Papers of the Presidents 9, Vol. 43.
cu

CONGRESSIONAL HISTORY.

10 with any similar article upon which a duty is levied by
11 the United States, or which shall be transported from
12 one State or Territory to another, and all arrangements,
13 contracts, agreements, trusts or combinations between per-
14 sons or corporations designed, or which tend, to advance
15 the cost to the consumer of any such articles, are hereby
16 declared to be against public policy, unlawful and void.

1 Sec. 2. That any person or corporation injured or
2 damnified by such arrangement, contract, agreement,
3 trust or combination may sue for and recover, in any court
of the United States of competent jurisdiction of any per-
son or corporation a party to a combination described in
the first section of this Act, the full consideration or sum
paid by him for any goods, wares and merchandise included
in or advanced in price by said combination.

ao oO

Sec. 3. That all persons entering into any such arrange-
ment, contract, agreement, trust or combination described
in section one of this act, either on his own account or as
agent or attorney for another, or as an officer, agent or
stockholder of any corporation, or as a trustee, committee,
or in any capacity whatever, shall be guilty of a high
misdemeanor, and on conviction thereof in any district or
circuit court of the United States, shall be subject to a
fine of not more than ten thousand dollars or to imprison-
10 ment in the penitentiary for a term of not more than five
11 years, or to both such fine and imprisonment, in the dis-
12 cretion of the court. And it shall be the duty of the
18 district attorney of the United States of the district in
14 which such persons reside to institute the proper proceed-
15 ings to enforce the provisions of this Act.??

Coaonronwruond rH Cw

§5. Sherman Anti-Trust Substituted Bill—tThe bill as in-
troduced by Senator Sherman and amended in a few particu-

21 Bills and Debates on Trusts back by Senator Sherman with
69. The bill was referred to the certain amendments which need
Finance Committee, and on Jan- not here be noted. Bills and De-
uary 14, 1889, it was reported bates on Trusts 71.
THE SHERMAN ANTI-TRUST ACT.

lars met with strong opposition from Senator George, of Mis-
sissippi, who in a lengthy speech denounced its scope and pur-
pose and declared it unconstitutional.?? Possibly as ‘the
result of this debate, Senator Sherman, from the Committee
on Finance, reported March 18, 1890, a substitute, by striking
out all after the enacting clause and inserting the following:

AMENDMENT.

Reported by Mr. Suerman from the Committee on Finance,

CMOARNB w

10
11
12
13
14
15
16
17
18
19
20
21

and intended to be proposed to the bill (S. 1) to
declare unlawful trusts and combinations in restraint
of trade and production, viz.: Strike out all after the
enacting clause and insert the following:

That all arrangements, contracts, agreements, trusts, or
combinations between two or more citizens or corporations,
or both, of different States, or between two or more citi-
zens or corporations, or both, of the United States and
foreign states, or citizens or corporations thereof, made
with a view or which tend to prevent full and free com-
petition in the importation, transportation, or sale of ar-
ticles imported into the United States, or with a view or
which tend to prevent full and free competition in articles
of growth, production, or manufacture of any State or
Territory of the United States, with similar articles of the
growth, production or manufacture of any other State or
Territory, or in the transportation or sale of like articles,
the production of any State or Territory of the United
States into or within any other State or Territory of the
United States; and all arrangements, trusts, or combina-
tions between such citizens or corporations, made with a
view or which tend to advance the cost to the consumer
of any such articles, are hereby declared to be against

22 Bills and Debates on Trusts
72-88; 21 Cong. Rec. 1765 to 1772,
Debate of February 27, 1890.
CONGRESSIONAL HISTORY. 7

22 public policy, unlawful and void. And the circuit court
23 of the United States shall have original jurisdiction of all
24 suits of a civil nature at common law or in equity arising
25 under this section, and to issue all remedial process, orders,
26 or writs proper and necessary to enforce its provisions.
27 And the Attorney-General and the several district attor-
28 neys are hereby directed, in the name of the United States,
29 to commence and prosecute all such cases to final judg-
30 ment and execution.

1 Sec. 2. That any person or corporation injured or
2 damnified by such arrangement, contract, agreement, trust
3 or combination defined in the first section of this Act may
4 sue for and recover, in any court of the United States of
5 competent jurisdiction, without respect to the amount in-
6 volved, of any person or corporation a party to a combina-
7 tion described in the first section of this Act, twice the
8 amount of damages sustained and the costs of the suit,
9 together with a reasonable attorney’s fee.?8

This action was adopted because Senator George’s speech
probably convinced some of the Senators that the bill as then
drafted was unconstitutional.

§6. Senator Reagan’s Substitute—On March 21, 1890,
Senator Reagan offered the following substitute for Senator
Sherman’s bill:

‘‘That all persons engaged in the creation of any trust, or
as owner or part owner, agent or manager of any trust, em-
ployed in any business carried on with any foreign country,
or between the States or between any State and the District
of Columbia, or between any State and any Territory of the
United States, or any owner or part owner, agent or manager
of any corporation using its powers for either of the purposes
specified in the second section of this act, shall be deemed

23 Bills and Debates on Trusts 89.
8 THE SHERMAN ANTI-TRUST ACT.

guilty of a high misdemeanor, and on conviction thereof, shall
be fined in a sum not exceeding $10,000, or imprisonment at
hard labor in the penitentiary not exceeding five years, or by
both of said penalties, in the discretion of the court trying
the same.

‘Sec. 2. That a trust is a combination of capital, skill or
acts by two or more persons, firms, corporations or associa-
tions of persons, or of any two or more of them for either,
any or all of the following purposes:

‘‘First. To create or carry out any restrictions in trade.

‘Second. To limit or reduce the production or to increase
or reduce the price of merchandise or commodities.

“‘Third. To prevent competition in the manufacture,
making, purchase, sale or transportation of merchandise,
produce or commodities.

“Fourth. To fix a standard or figure whereby the price to
the public shall be in any manner controlled or established
of any article, commodity, merchandise, produce or commerce
intended for sale, use or consumption.

‘‘Fifth. To create a monopoly in the making, manufacture,
purchase, sale or transportation of any merchandise, article,
produce or commodity.

‘Sixth. To make or enter into or execute or carry out any
contract, obligation or agreement of any kind or desciiption
by which they shall bind or shall have bound themselves not
to manufacture, sell, dispose of or transport any article or
commodity or article of trade, use, merchandise or consump-
tion below a common standard figure, or by which they shall
agree, in any manner, to keep the price of such article, com-
modity or transportation at a fixed or graduated figure, or
by which they shall, in any manner, establish or settle the
price of any article, commodity or transportation between
themselves and others so as to preclude free and unrestricted
competition among themselves and others in the sale and
transportation of any such article or commodity, or by which
they shall agree to pool, combine or unite in any interest
CONGRESSIONAL HISTORY. 9

they may have in connection with the same or transportation
of any such article or commodity that its price may, in any
manner, be so affected.

“Sec. 3. That each day any of the persons, associations
or corporations aforesaid shall be engaged in violating the
provisions of this act shall be held to be a separate offense.’’ **

§7. Debate in the Senate—Object of the Bill_—The sub-
stituted bill was debated at length on March 21, 24, 25, 26
and 27, 1890.2" During this debate many amendments were
proposed. Senator Sherman stated the object of the bill as
follows:

“‘The object of this bill, as shown by the title, is ‘To
declare unlawful trusts and combinations in restraint of trade
and production.’ It declares that certain contracts are against
public policy, null and void. It does not announce a new
principle of law, but applies old and well-recognized prin-
ciples of the common law to the complicated jurisdiction of
our State and Federal Government. Similar contracts in
any State in the Union are now, by common or statute law,
null and void. Hach state can and does prevent and control
combinations within the limit of the State. This we do
not propose to interfere with. The power of the State
courts has been repeatedly exercised to set aside such com-
binations, as I shall hereafter show, but these courts are
limited in their jurisdiction to the State, and, in our com-
plex system of government, are admitted to be unable to
deal with the great evil that now threatens us.

‘Unlawful combinations, unlawful at common law, now
extend to all the States and interfere with our foreign and
domestic commerce and with the importation and sale of
goods, subject to duty under the laws of the United States,
against which only the General Government can secure relief.

24 Bills and Debates on Trusts 2477; 21 Cong. Rec. 2556 to 2477;
91; 21 Cong. Rec. 2455. 21 Cong. Ree. 2597 to 2616; 21

25 Bills and Debates on Trusts Cong. Rec. 2639 to 2732; 21 Cong.
90 to 301; 21 Cong. Rec 2455 to Ree.
10 THE SHERMAN ANTI-TRUST ACT.

They not only affect our commerce with foreign nations,
but trade and transportation among the several States. The
purpose of this bill is to enable the courts of the United
States to apply the same remedies against combinations
which injuriously affect the interests of the United States
that have been applied in the several States to protect
local interests.?¢

‘‘This bill, as I would have it, has for its single object
to invoke the aid of the courts of the United States to deal
with the combinations described in the first section when
they affect injuriously our foreign and interstate commerce
and our revenue laws, and in this way to supplement the
enforcement of the established rules of the common and
statute law by the courts of the several States in dealing
with combinations that affect injuriously the industrial
liberty of the citizens of these States. It is to arm the
federal courts within the limits of their constitutional
power that they may co-operate with the State courts in
checking, curbing, and controlling the most dangerous com-
binations that now threaten the business, property and
trade of the people of the United States. And for one I
do not intend to be turned from this course by fine-spun
constitutional quibbles or by the plausible pretexts of
associated or corporate wealth and power.’’ 2?

§8. Bill Interfering with Lawful Trade.—In discussing
the question whether the proposed law would interfere with
lawful trade and combinations, Senator Sherman said:

“Tt is said that this bill will interfere with lawful trade,
with the customary business of life. I deny it. It aims
only at unlawful combinations. It does not in the least
affect combinations in aid of production where there is
free and fair competition. It is the right of every man to
work, labor and produce in any lawful vocation and to

26 Bills and Debates on Trusts 27 Bills and Debates on Trusts
91; 21 Cong. Rec. 2456. 93; 21 Cong. Rec. 2457.
CONGRESSIONAL HISTORY. 11

transport his production on equal terms and conditions and
under like circumstances. This is industrial liberty and lies
at the foundation of the equality of all rights and privileges.

‘“‘The right to combine the capital and labor of two or
more persons in a given pursuit with a community of profit
and loss under the name of a partnership is open to all and
is not an infringement of industrial liberty, but is an aid
to production. The law of partnership clearly defines what
is a lawful and what is an unlawful partnership. The same
business is open to every other partnership, and, while it is
a combination, it does not in the slightest degree prevent
competition.

‘“‘The combination of labor and capital in the form of a
corporation to carry on a lawful business is a proper and
useful expedient, especially for great enterprises of a quasi-
public character, and ought to be encouraged and protected
as tending to cheapen the cost of production, but these
corporate rights should be open to all upon the same terms
and conditions. Such corporations, being mere creatures
of law, can only exercise the powers specially granted and
defined. Experience has shown that they are the most
useful agencies of modern civilization. They have enabled
individuals to unite to undertake great enterprises only
attempted in former times by powerful governments. The
good results of corporate power are shown in the vast devel-
opment of our railroads and the enormous increase of
business and production of all kinds.

‘“When corporations unite merely to extend their business,
as connecting lines of railway without interfering with com-
peting lines, they are proper and lawful. Corporations tend
to cheapen transportation, lessen the cost of production, and
bring within the reach of millions comforts and luxuries
formerly enjoyed by thousands. Formerly corporations were
special grants to favored companies, but now the principle
is generally adopted that no private corporation shall be
created with exclusive rights or privileges. The corporate
12 THE SHERMAN ANTI-TRUST ACT.

rights granted to one are open to all. In this way more than
three thousand national banks have been formed with the
same rights and privileges, and the business is open to ail
competitors. In most of the States general railroad laws
provide the terms on which all railroads may be built, with
like rights and privileges. Corporate rights are open to
all, are not in any sense a monopoly, but tend to promote
free competition of all on the same conditions. They are
mere creatures of the law, to exercise only well-defined
powers, and are not in any way interfered with by this bill.

‘‘This bill does not seek to cripple combinations of capital
and labor, the formation of partnerships or of corporations,
but only to prevent and control combinations made with a
view to prevent competition, or for the restraint of trade,
or to increase the profits of the producer at the cost of the
consumer. It is the unlawful combination, tested by the
rules of common law and human experience, that is aimed
at by this bill, and not the lawful and useful combination.
Unlawful combinations made by individuals are declared by
the several States to be against public policy and void, and
in proper cases they may be punished as criminals. If
their business is lawful, they can combine in any way and
enjoy the advantage of their united skill and capital,
provided they do not combine to prevent competition.
A limited monopoly secured by a patent right is an admitted
exception, for this is the only way by which an inventor
can be paid for his invention.’’ *®

§9. Trusts.—Senator Sherman thus described trusts of
his day and their evil effects:

‘‘But associated enterprise and capital are not satisfied
with partnerships and corporations competing with each
other, and have invented a new form of combination, com-
monly called ‘trusts,’ that seeks to avoid competition by

28 Bills and Debates on Trusts
93; 21 Cong. Ree. 2457.
CONGRESSIONAL HISTORY. 13

combining the controlling corporations, partnerships and
individuals engaged in the same business and placing the
power and property of the combination under the govern-
ment of a few individuals, and often under the control of a
single man called a ‘trustee,’ a ‘chairman,’ or a ‘president.’

‘‘The sole object of such a combination is to make com-
petition impossible. It can control the market, raise or
lower prices, as will best promote its selfish interests, reduce
prices in a particular locality and break down competition
and advance prices at will where competition does not exist.
Its governing motive is to increase the profits of the parties
composing it. The law of selfishness, uncontrolled by com-
petition, compels it to disregard the interest of the con-
sumer. It dictates terms to transportation companies, it
commands the price of labor without fear of strikes, for
in its field it allows no competitors. Such a combination is
far more dangerous than any heretofore invented, and, when
it embraces the great body of all the corporations engaged
in a particular industry in all of the States of the Union,
it tends to advance the price to the consumer of any
article produced, it is a substantial monopoly injurious to
the public, and, by the rule of both the common and the
civil law, is null and void and the just subject of restraint
by the courts, of forfeiture of corporate rights and privi-
leges, and in some cases should be denounced as a crime,
and the individuals engaged in it should be punished as
criminals. It is this kind of a combination we have to deal
with now.

‘‘Tf the concentered powers of this combination are in-
trusted to a single man, it is a kingly prerogative, incon-
sistent with our form of government, and should be subject
to the strong resistance of the State and National authorities.
If anything is wrong, this is wrong. If we will not endure
a king as a political power, we should not endure a king
over the production, transportation and sale of any of the
necessaries of life. If we would not submit to an emperor,
14 THE SHERMAN ANTI-TRUST ACT.

we should not submit to an autocrat of trade, with power
to prevent competition and to fix the price of any com-
modity. If the combination is confined to a State, the State
should apply the remedy; if it is interstate and controls any
production in many States, Congress must apply the remedy.
If the combination is aided by our tariff laws, they should
be promptly changed, and, if necessary, equal competition
with all the world should be invited in the monopolized
article. If the combination affects interstate transportation
or is aided in any way by a transportation company, it falls
clearly within the power of Congress, and the remedy should
be aimed at the corporations embraced in it, and should be
swift and sure.’’ ?

29 Bills and Debates on Trusts
95; 21 Cong. Rec. 2457. He
quoted at length from the opin-
ions of the courts in the follow-
ing cases: Handy v. Cleveland,
ete. R. Co., 31 Fed. 689; Richard-
son v. Alger, being the case of
Richardson v. Buhl, 77 Mich. 632;
43 N. W. 1102; 6 L. R. A. 457;
Craft v. McConoughy, 79 IIl.;
22 Am. Rep. 171; Chicago Gas-
light & Coke Co. 121 Il.
531; 18 N. E. 169; 2 Am. St.
124; People v. North River Sugar
Retining Co., 2 Abb. N.C. 164; 54
Hun. 355; 3 N. Y. Supp. 401; 2

by it and to be distributed among
the several corporations in propor-
tion to the amounts of stock held
by them. The profits of the busi-
ness were to be divided among
the holders of certificates for
shares issued by the board. No
limit for the duration of the asso-
ciation was fixed, and its capital
stock was fixed at $50,000,000. A
suit was brought by the attorney-
general in the name of the people
of New York against one of the
associate corporations to vacate
and annul its charter for ‘abuse
of its powers,” and for exercising

L. R. A. 33; affirmed 121 N. Y.
682; 24 N. E. 834; 9 L. R. A. 33;
18 Am. St. 843.

“This is a statement of the case
together with the decision of Mr.
Justice Daniels in rendering judg-
ment: ‘The case was that seven-
teen corporations, in at least six
different states, all engaged in the
sugar-refining business, arranged
to transfer their stock to a board
of eleven members and were to re-
ceive in return from the associa-
tion shares of stock to be issued

‘privileges or franchises not con-
ferred upon it by the law,’ by par-
ticipating ‘in a combination with
certain sugar refineries.’ Upon
both grounds the court found
against the defendant. Daniels,
Justice, in rendering his judg-
ment, said: ‘The defendant has
disabled itself from exercising its
functions and employing its fran-
chises as it was intended it should
by the act under which it was in-
corporated, and had by the action
which was taken placed itself in
CONGRESSIONAL HISTORY. 15

§10. Combinations Reducing Prices—Competition Open
to All—‘‘It is sometimes said of these combinations that
they reduce prices to the consumer by better methods of
production, but all experience shows that this saving of cost
goes to the pockets of the producer. The price to the con-
sumer depends upon the supply, which can be reduced at
pleasure by the combination. It will vary in time and place
by the extent of competition, and, when that ceases, it will
depend upon the urgency of the demand for the article.
The aim is always for the highest price that will not check
the demand, and, for the most of the necessaries of life,
that is perennial and perpetual.

‘‘But, they say, competition is open to all; if you do not
like our prices, establish another combination or trust. As
was said by the Supreme Court of New York, when the
combination already includes all or nearly all the producers,
what room is there for another? And if another is formed
and is legal, what is to prevent another combination? Sir,
now the people of the United States, as well as of other

these combinations. To use the
language of that judge: ‘Any

complete subordination to another
and different organization, to be

used for an unlawful purpose det-
rimental and injurious to the pub-
lic * * * This was a subversion
of the object for which the com-
pany was created, and it author-
ized the attorney-general to main-
tain and prosecute this action to
vacate and annul its charter.’ ”
“This case may be said to be a
leading case and was thoroughly
discussed and considered. The
opinion of the court at the general
term pronounced by Mr. Justice
Barret covers the whole ground
upon which the great body of the
trusts in the United States rests.
The suit presented the distinct
question raised by many of the
contracts which are the basis of

combination the tendency of which
is to prevent competition in its
broad and general sense, and to
control and thus at will enhance
prices to the detriment of the
public, is a legal nature or sus-
ceptible of indefinite production.
The difficulty of effecting the un-
lawful purpose may be greater in
the one case than in the other, but
it is never impossible. Nor need
it be permanent or complete. It
is enough that it may be even
temporarily and partially success-
ful. The question in the end is:
Does it inevitably tend to public
injury?” Bills and Debates on
Trusts 99; 21 Cong. Rec. 2459.
16 THE SHERMAN ANTI-TRUST ACT.

countries, are feeling the power and grasp of these com-
binations, and are demanding of every legislature and of
Congress a remedy for this evil, only grown into huge
proportions in recent times. They had monopolies and
mortmains of old, but never before such giants as in our
day. You must heed their appeal or be ready for the
socialist, the communist and the nihilist. Society is now
disturbed by forces never felt before.

‘“‘The popular mind is agitated with problems that may
disturb social order, and among them all none is more
threatening than the inequality of condition, of wealth, and
opportunity that has grown within a single generation out
of the concentration of capital into vast combinations to
control production and trade and to break down competition.
These combinations already defy or control powerful trans-
portation corporation and reach State authorities. They
reach out their Briarean arms to every part of our country.
They are imported from abroad. Congress alone can deal
with them, and if we are unwilling or unable, there will
soon be a trust for every production and a master to fix the
price for every necessity of life.’’ °°

§11. Propriety of the Government Protecting its Citi-
zens from Oppressive Combinations.—‘‘Nor is it necessary
to limit the jurisdiction of the courts of the United States
to suits between citizens of different States. It extends also
to suits by the United States when authorized by law. It
is eminently proper that when a combination of persons
or corporations of different States tends to affect injuriously
the interests or powers of the United States, as well as of
citizens of the United States, the proceedings should be in
the courts of the United States in the name of the United
States. The legal process of quo warranto or mandamus

30 Senator Sherman. Bills and
Debates on Trusts 101; 21 Cong.
Ree. 2460.
CONGRESSIONAL HISTORY. 17

ought, in such cases, to be issued at the suit of the United
States. A citizen would appear in such a suit at every dis-
advantage, and even the United States is scarcely the equal
of a powerful corporation in a suit where a single officer with
insufficient pay is required to compete with the ablest
lawyers encouraged with compensation far beyond the limits
allowed to the highest government officer. It is in such
proceedings that the battle with these great combinations is
to be fought.’’ *4

§12. Power Under Interstate Commerce Clause—What
Commerce is—Power Under Bill.—Speaking of the power
conferred by the Interstate Commerce clause, Senator Sher-
man said:

‘“‘The want of this power was one of the leading defects
of the Confederation, and probably as much as any one
cause conduced to the establishment of a Constitution. It
is a power vital to the prosperity of the Union, and without
it the Government could scarcely deserve the name of a
National Government and would soon sink into discredit and
imbecility. It would stand as a mere shadow of sovereignty
to mock our hopes and involve us in a common ruin. What
is the extent of this power? What is the meaning of the
word ‘commerce’? It means the exchange of all commodities
between different places or communities. It includes all
trade and traffic, all modes of transportation by land or by
sea, all kinds of navigation, every species of ship or sail,
every mode of transit, from the dogeart to the Pullman
car; every kind of motive power, from the mule or horse to
the most recent application of steam or electricity applied
on every road, from the trail over the mountain or the
plain to the perfected railway or the steel bridges over
great rivers or arms of the sea. The power of Congress

81 Senator Sherman. Bills and
Debates on Trusts 103; 21 Cong.
Rec. 2461.
18 THE SHERMAN ANTI-TRUST ACT.

extends to all this commerce, except only that limited within
the bounds of a State.

‘‘Under this power no bridge can be built over a navigable
stream except by the consent of Congress. All the network
of railroads crossing from State to State, from ocean to
ocean, from east to west, and from north to south are now
curbed, regulated and controlled by the power of Congress
over commerce. Most of the combinations aimed at by this
bill are directly engaged in this commerce. They command
and control in many cases and even own some of the agen-
cies of this commerce. They have invented or own new
modes of transportation, such as pipe lines for petroleum
or gas, reaching from State to State, crossing farms and
highways and public property.

‘Can it be that with this vast power Congress can not
protect the people from combinations in restraint of trade
that are unlawful by every code of civil law adopted by
civilized nations? It may ‘regulate commerce’; can it not
protect commerce, nullify contracts that restrain commerce,
turn it from its natural courses, increase the price of ar-
ticles, and therefore diminish the amount of commerce?

“It is said that commerce does not commence until pro-
duction ends and the voyage commences. This may be true
as far as the actual ownership or sale of articles within a
State is subject to State authorities. I do not question the
decision of the Supreme Court in the case of Coe v. Errol,®2
quoted by the Senator from Mississippi, that property within
a State is subject to taxation, though intended to be trans-
ported into another State. This bill does not propose to
deal with property within a State or with combinations
within the State, but only when the combination extends to
two or more States or engages in either State or foreign
commerce. It is said that these combinations can and will

32116 U. S. 517; 6 Sup. Ct.
475; 29 L. Ed. 715; affirming 62
N. H. 303.
CONGRESSIONAL HISTORY. 19

evade this bill. I have no doubt they will do so in many
cases, but they can do so only by ceasing to interfere with
foreign and interstate commerce.

‘‘Their power for mischief will be greatly crippled by this
bill. Their present plan or organization was adopted only
to evade the jurisdiction of State courts. They still maintain
their workshops, their mode of production, by means of
partnerships or corporations in a State. If their produc-
tions competed with those of similar partnerships or cor-
porations in other States, it would be all right; but to
prevent such competitions they unite the interests of all
those partnerships and corporations into a combination
sometimes called a trust, sometimes a new corporation located
in a city remote from the places of production, and then
regulate and control the sale and transportation of all the
products of many States, discontinuing one at their will,
some running at half time, others pressed at their full
capacity, fixing the price at pleasure in every mart of the
United States, dictating terms to transportation companies,
controlling your commerce; and yet it is said that Congress,
armed with full power to regulate commerce, is helpless
and unable to deal with this monster.**

“‘Suppose one of these combinations should unite all, or
nearly all, the domestic producers of an article of prime
necessity with a view to prevent competition and to keep
the price up to the foreign cost and duty added, would not
this be in restraint of trade and commerce and affect
injuriously the operation of our revenue laws? Can Con-
gress prescribe no remedy except to repeal its taxes? Surely
it may authorize its executive authorities to appeal to the
courts of the United States for such a remedy as courts
habitually apply in the States for the forfeiture of charters
thus abused and the punishment of officers who practice such

83 Senator Sherman. Bills and
Debates on Trusts 105; 21 Cong.
Rec. 2461.
20 THE SHERMAN ANTI-TRUST ACT.

wrongs to the public. It may also give to our citizens the
right to sue for such damages as they have suffered.

‘In no respect does the work of our fathers, in framing
the Constitution of the United States, appear more like the
work of the Almighty Ruler of the universe rather than the
conception of human minds than by the gradual development
and application of the powers conferred by it upon different
branches of the Federal Government. Many of these powers
have remained dormant, unused, but plainly there, awaiting
the growth and progress of our country, and when the time
comes and the occasion demands we find in that instrument,
provided for thirteen States, a thread along the Atlantic
and containing four millions of people, without manufac-
turers, without commerce, bankrupt with debt, without
credit or wealth, all the powers necessary to govern a con-
tinental empire of forty-two States, with sixty-five millions
of people, the largest in manufactures, the second in wealth
and the happiest in its institutions of all the nations of the
world. ‘

‘*While we should not stretch the powers granted to Con-
gress by strained construction, we can not surrender any
of them; they are not ours to surrender, but whenever occa-
sion calls, we should exercise them for the benefit and
protection of the people of the United States. And, sir,
while I have no doubt that every word of this bill is within
the powers granted to Congress, I feel that its defects are in
its moderation, and that its best effect will be a warning
that all trade and commerce, all agreements and arrange-
ments, all struggles for money or property, must be gov-
erned by the universal law that the public good must be
the test of all.’’ *+

84Senator Sherman. Bills and amount to a violation of the pub-

Debates on Trusts 106; 21 Cong.
Rec. 2462.

“Can any Senator doubt that
the recitals of the first section of
the bill are true, and that they

lic policy of the United States,
and, if so, that Congress can de-
clare such transactions to be un-
lawful and void for that reason?
What publie policy of the United
CONGRESSIONAL HISTORY. 21

§13. Senator Reagan’s Addition to Senator Sherman’s
Bill—March 24, 1890, Senator Reagan offered the following
as an addition to Senator Sherman’s bill:

“See. 3. That all persons engaged in the creation of any
trust, or as owner or part owner, agent, or manager of any
trust, employed in any business carried on with any foreign
country, or between the States, or between any State and
the District of Columbia, or between any State and any
Territory of the United States, or any owner or part owner,
agent or manager of any corporation using its powers for
either of the purposes specified in the second section of this
act, shall be deemed guilty of a high misdemeanor, and, on
conviction thereof, shall be fined in a sum not exceeding
$10,000 or imprisonment at hard labor in the penitentiary
not exceeding five years, or both of said penalties, in the
discretion of the court trying the same.

“Sec. 4. That a trust is a combination of capital, skill
or acts by two or more of them, for either, any or all of the
following purposes:

States is violated by the acts re-
cited in the bill? Manifestly the
public policy is founded on and to
be encouraged and promoted by
the freedom and fairness of our
commerce with foreign nations
and among the States and the un-
restricted interchange of their
productions. Has (Congress no
power to protect the public po!-
icy? If no such power exist in
Congress, then our public policy
is at the mercy of conspirators
against it, and, although clothed
with an express grant of power to
regulate commerce, no power ex-
ists by implication which Cong-
ress decides to be ‘necessary and
proper’ to execute the express
grant.

“But it may be conceded that
Congress has the power under the

commerce clause of the Constitu-
tion to define what acts are detri-
mental to our commercial policy
and to prohibit them. What is
the value of such a power if it is
limited to mere declaration and
prohibition? If the acts de-
nounced in the bill are unlawful or
become so by declaration and
prohibition by Congress because
they have the effect or tend to
violate our commercial policy,
why should Congress be power-
less to enact penalties and pro-
vide remedies? I have heard no
answer to this inquiry except that
the Federal courts have no juris-
diction to enforce any remedies
for the evils recited in the bill.”
Senator Turpie, Bills and Debates
on Trusts 139; 21 Cong. Rec. 2558.
22 THE SHERMAN ANTI-TRUST ACT.

‘‘First. To ereate or carry out any restrictions in trade.

‘Second. To limit or reduce the production or to increase
or reduce the price of merchandise or commodities.

‘‘Third. To prevent competition in the manufacture,
making, purchase, sale or transportation of merchandise,
produce or commodities.

‘‘Fourth. To fix a standard or figure whereby the price
to the public shall be in any manner controlled or estab-
lished of any article, commodity, merchandise, produce or
commerce intended for sale, use or consumption.

‘Fifth. To create a monopoly in the making, manufac-
ture, purchase, sale or transportation of any merchandise,
article, produce or commodity.

‘*Sixth. To make, or enter into, or execute, or carry out
any contract, obligation or agreement of any kind or de-
scription by which they shall bind, or shall have bound,
themselves not to manufacture, sell, dispose of or transport
any article or commodity or article of trade, use, merchan-
dise or consumption below a common standard figure, or by
which they shall agree in any manner to keep the price of
such article, commodity or transportation at a fixed or
graduated figure, or by which they shall in any manner
establish or settle the price of any article, commodity or
transportation between themselves, or between themselves
and others, so as to preclude free and unrestricted com-
petition among themselves and others in the sale and trans-
portation of any such article or commodity, or by which they
shall agree to pool, combine or unite in any interest they
may have in connection with the sale or transportation of
any such article or commodity that its price may in any
manner be so affected.

“See. 5. That each day any of the persons, associations
or corporations aforesaid shall be engaged in violating the
provisions of this act shall be held to be a separate
offense.’’ *

85 Bills and Debates on Trusts 143; 21 Cong. Rec. 2560.
CONGRESSIONAL HISTORY. 23

§14. Senator Vest’s, Hiscock’s, Reagan’s, Allison’s and
Teller’s Debate——Senator Vest, on March 21, 1890, followed
Senator Sherman, taking the ground that both the original
bill and the substitute were unconstitutional; **.and he was
followed by Senator Hiscock, who took the ground that the
bill as drafted was not adapted to meet the evils sought to
be suppressed.*? Senator Reagan then addressed the Senate
on his own substitute chiefly,?* followed by Senator Allison *°
and Senator Teller.‘

§15. Purpose of Bill—Difficulty of Defining Offense.—

On March 24, 1890, Senator Turpie, of Indiana, spoke of
the purpose of the bill:

“‘The purpose of the bill of the Senator from Ohio is to
nullify civilly the agreements and obligations of the trusts
of these fraudulent combinations; I favor it. There is an-
other purpose: To give to parties injured a civil remedy in
damages for injury inflicted; I am in favor of that.

“Those are the two principal measures embraced in that
bill. I am willing to go much further, and I think the
Senators generally will also. There is a bill introduced by
the Senator from Texas [Mr. Reagan]. It is a most care-
fully and elaborately prepared bill as far as the penal
section is concerned. It has been introduced into the Senate,
but I am sorry that the Senator himself speaks of it as a
substitute for the bill of the Senator from Ohio. It is in no
sense a substitute. Allow me to suggest that it be made an
additional section in the one bill which is to receive our
sanction.

“There can be no objection to the proposition to nullify
civilly trust contracts, the contracts of fraudulent trusts

36 Bills and Debates on Trusts 39 (Bills and Debates on Trusts

109; 21 Cong. Rec, 2463. 122; 21 Cong. Rec. 2469.
37 Bills and Debates on Trusts 40 Bills and Debates 126; 21
21 Cong. Ree. 2467. Cong, Ree. 2471.

38 Bills and Debates on Trusts
122; 21 Cong. Rec. 2469.
24 THE SHERMAN ANTI-TRUST ACT.

described here. There can be no objection to giving a civil
remedy for those injured thereby. And there ought to be
still less objection to punishing penally those who are guilty
of these fraudulent combinations. This much will be accomp-
lished by a bill embracing such section as either as a sub-
stitute, but all as additional, incidental and closely connected
with the main object and purpose of the whole body of legis-
lation upon the matter about which and over which we are
about to assume jurisdiction.’’

Subsequently he referred to the difficulty of defining the
offense created by the proposed statute.

‘‘There may be some difficulty in defining this offense. To
describe it is impossible. It is like the penal offense of
fraud. The courts have never attempted to define it. In
the statute the definition of it is very brief, ‘A conveyance
with intent to hinder or delay creditors.’ Notwithstanding,
the definition has been made practical; it has been made
useful and it has become a measure of the first importance
in the conduct of the business of the country; and, not-
withstanding this definition may be imperfect, and there
may be no description and can be none altogether applicable
to fraudulent commercial trusts, they vary so much and are
so multiform in their character, yet the definition here
attempted will, if it do nothing else, lead us to a better form
and a more explicit definition or description of the offense
here meant to be denounced.

‘Notwithstanding the difficulty which courts and juries
have had in punishing men, or investigating cases brought
upon complaints of fraudulent conveyance or of procuring
goods upon false pretenses, yet this jurisdiction has been of
extreme worth and is still of great utility. We know that
in the revenue acts there are very great difficulties accom-
panying sometimes the conviction of a smuggler, at other
times of parties who are charged with making false invoices
and false inventories, and there are many of the definitions
or attempted descriptions of offenses in the customs acts
CONGRESSIONAL TISTORY. 25

which are even now, after years of adjudication, more vague
and indefinite than anything contained in the bill of the
Senator from Mississippi and the Senator from Ohio, or the
Senator from Texas upon this subject; and yet they have
not practically failed to prevent those frauds and to punish
offenders.

‘*We need not conceive, and I do not think any of us have,
that Congress takes upon itself the entire charge of the
administration of justice in the country. We have only one
branch of it. We make the laws which are to be civilly and
penally administered. The moment we denounce these trusts
penally, the moment we declare these fraudulent trust com-
binations to be conspiracies, to be felonies or misdemeanors,
that moment, under their own maxim, the courts are bound
to carry out the intention and purpose of the legislation,
and even to favor that purpose and intention, that the will
of the people may prevail and not perish. This is one of
the fundamental maxims. I have no doubt that when this
law goes into practical operation it will receive a construc-
tion and a definition very useful to us; it will be aided by
courts and juries; it will be aided by advocates upon both
sides in stating different views of construction, and, above
all, it will be supported and upheld by a public opinion
expressed in a denunciation of those evils which this kind of
legislation would avert and avoid.’’*

§16. Labor Organizations—Farmers’ Associations—An
amendment to the bill was offered to the effect that it should
not be construed to apply to any agreements or combina-
tions among laboring men made with a view to lessening
the hours of their labor or of increasing their wages, nor to

41 Bills and Debates on Trusts
138; 21 Cong. Rec, 2558. Senator
Pugh followed Senator Turpie
(Bills and Debates 138; 21 Cong.
Rec. 2558); and he was followed
by Senator Stewart (Bills and De-

bates on Trusts 153; 21 (Cong. Ree.
2564). Senator Hoar indulged in
some criticism of the bill. (Bills
and Debates on Trusts 159-167;
21 Cong. Rec. 2567-2570.)
26 THE SHERMAN ANTI-TRUST ACT.

agreements or combinations of persons engaged in horticul-
ture or agriculture made with a view of enhancing the prices
of their own products. Senator Edmunds expressed himself
as heartily in favor of the bill, but he was opposed to the
amendment. After pointing out the tyranny of a printer’s
union in a particular instance, and discussing the power of
organized labor by its demands for increased wages to
increase the price of the manufactured product into which
their labor enters, he said:

‘“‘The fact is that this matter of capital, as it is called,
of business and of labor is an equation, and you can not
disturb one side of the equation without disturbing the
other. If it cost for labor 50 per cent. more to produce a
ton of iron, that 50 per cent. more goes into what that iron
must sell for, or some part of it. I take it everybody will
agree to that.

‘‘Very well. Now, if you say to one side of that equation,
‘You may make the value or the price of the iron by your
combination for wages in the whole republic or on the con-
tinent, but the men for whom you have made the iron shall
not arrange with his neighbors as to the price they will
sell it for, so as not to destroy each other,’ the whole business
will certainly break, because the connection between the
plant, as I will call it for short, and the labor that works
that plant is one that no legislation and no force in the
world—and there is only one outside of the world that can
do it—can possibly separate. They can not be divorced.
Neither speeches nor laws nor judgments of courts, nor any-
thing else can change it; and therefore I say that to provide
on one side of that equation that there may be combination
and on the other side that there shall not, is contrary to the
very inherent principle upon which such business must
depend. If we are to have equality, as we ought to have,
if the combination on the one side is to be prohibited, the
combination on the other side must be prohibited or there
will be certain destruction in the end.
CONGRESSIONAL HISTORY. 27

‘‘Mr. President, as I said before—and I am not going to
take up the time of the Senate—I shall be glad, within the
constitutional limits, which are narrow but clear, in the
regulation of commerce to go just as far as Congress has
the power to go in breaking up these great monopolies that
exist to the detriment and the injury of mankind in this
country and in every other. They are in every other
country as well as in this. They exist in free-trade countries
and in tariff countries and under all social conditions, and
have come up mainly within the last twenty or thirty
years. But I can not go any further. I do not wish to
hold out a false hope to the people of the United States,
be they farmers or mere workingmen, as they are sometimes
called, although everybody in the United States who is fit
to be a citizen and is well enough to be generally is a work-
ingman in the best sense of the term; whether he drives a
cart or whether he devotes himself to the business of the
country in the Senate of the United States, he is equally,
in my judgment, a workingman.”’ *”

After some further discussion, he refers to the laborer
as follows:

‘‘He deals, therefore, on the other side with a human
being, and he wishes to earn the highest wage he can. If
he gets that wage paid to him, the thing that he has done
must be worth the money that is paid to him for doing it,
or his employer will fail, and then he will have nothing to
do and the whole business will stop. That sort of thing has
happened a thousand times, and it is happening every day
in every State of the Union where an enterprise in which
five men, ten men, one hundred men and women are engaged
in helping carry on by the work of their hands, for wages,
goes down into the bottomless pit of bankruptcy because
the amount of wages paid and the other expenses of the
establishment do not bring out money enough to carry it on

42 Bills and Debates on Trusts
290; 21 Cong. Rec. 2727.
28 THE SHERMAN ANTI-TRUST ACT.

on that scale. There is no getting away from that, and
therefore if the wage-earner is to command the operation
of the statute and the wage-payer can not go to the com-
munity and to his brother manufacturers in the same town
and say, ‘Let us agree to put up the wages of our laborers
in all our establishments, as they wish a dollar a day more,
and let us put the price on our commodity that goes out a
dollar a ton more, or whatever it may be, to make that good,
so that we can all live and get on,’ the two sides of the
equation are not on an equal footing.

“On the one side you say that is a crime and on the
other side you say it is a valuable and proper undertaking.
That will not do, Mr. President. You can not get on in that
way. It is impossible to separate them and the principle of
it, therefore, is that if one side, no matter which it is, is
authorized to combine, the other side must be authorized to
combine, or the thing will break and there will be universal
bankruptcy. That is what it will come to, and then the
laborer, whose interest and welfare we are all so really
desirous to promote, will turn around and justly say to the
Senate of the United States, ‘Why did you go to such legis-
lation as that? Why did you attempt to stimulate and
almost require us to combine against our employers, and
thus break down the whole industry of the country and
leave us all beggars? When you allowed us to combine and
to regulate our wages, why did you not allow the products
that our hands produced to be raised in price by an arrange-
ment, so that everybody that bought them might pay the
increased price, and everybody that was making them all
around for whom we were working could live also?’ I do
not think, as a practical thing, Mr. President, that anybody
will thank us for making a distinction of that kind.’’ #3

The amendment was not adopted.**

43 Bills and Debates on Trusts 54 Fed. 994,—an injunction in-
294; 21 Cong. Rec. 2729, volving « strike,—the debates in
44 Jn the United States v. Work- Congress were referred to show
ingmen’s Amalgamated Council, “that the statute had its origin in
CONGRESSIONAL HISTORY. 29

§17. Bill Referred to Judiciary Committee—Senator
Edmunds, Chairman.—On March 27th the bill, with its pro-
posed amendments, was referred to the Judiciary Com-
mittee, of which Senator Edmunds was Chairman, with
instruction to report within twenty days; ** and on April
22d that committee, through Senator Edmunds, reported back
the bill amended by striking out all matter after the enacting
clause and inserting the amendments.** The bill as thus
reported back was adopted without the change of a word,
and is to-day the Sherman Anti-Trust Act. The bill was
discussed at some length on April 8th. The title was amended
so as to read: ‘‘A bill to protect trade and commerce against
unlawful restraints and monopolies.’’*7 Senator Hoar was
the author of the bill as it came from the Judiciary Com-
mittee.** It was passed by the Senate April 8, 1890, with one
dissenting vote.*®

§18. Action on the Bill in the House of Representatives.
—On May 1, 1890, the bill was called up in the House of
Representatives for consideration. The Judiciary Com-
mittee, on April 25th, had reported the bill without amend-
ment, and recommending its passage. In the report the
committee said: ‘‘It may be proper to state that, while this

the evils of massed capital. They
made the interdiction include com-
binations of labor, as well as of
capital; in fact, all combinations
in restraint of commerce without
reference to the character of the
persons who entertained them.”
See Thomas v. Cincinnati N D. &
T. P. Ry. Co., 62 Fed. 803, 821,
and in re Grand Jury 62 Fed. 834.
Judge Woods in United States v.
Debs, 64 Fed. 724, 746, discusses at
‘some length the effect of the in-
terpretation of the Act by the re-
fusal to adopt the proposed ex-

ception above referred to; and a
like reference was made in Loewe
v. Lawlor, 208 U. S. 274; 28 Sup.
Ct. 301, 52 L. Ed. 488; reversing
148 Fed. 924.

45 Bills and Debates on Trusts
306; 21 Cong. Rec. 2731.

46 Bills and Debates on Trusts
306; 21 Cong. Rec. 2901.

47 Bills and Debates on Trusts
308-324; 21 Cong. Rec. 3145-3153.

48 Autobiography of Sen. Hoar,
vol. 2, p. 364.

49 Bills and Debates on Trusts
324; 21 Cong. Rec. 3153.
30 THE SHERMAN ANTI-TRUST ACT.

measure is not precisely what any member of the committee
would have proposed upon his own motion, there was a gen-
eral acquiescence in the recommendation of its passage
as perhaps the only legislation possible under existing cir-
cumstances by this Congress.’’°° The bill was discussed at
length on May 1st, amended and passed.** The amendment
was discussed in the Senate May 2d, and referred to the
Judiciary Committee.*? On May 12th it was discussed
briefly in the Senate,®* and the next day it was recommitted
to the Judiciary Committee,*4 which committee reported it
back the 16th,*> when it was sent to a Conference Committee.
June 11th the House Conference Committee reported a rec-
ommendation that the House recede from its amendment,
whereupon a lengthy debate followed,** a brief one on the
next day,°*’ a like one on the 16th, and on the 20th the report
of the Conference Committee was adopted.*®

§19. Subsequent Proposed Legislation.—Within thirteen
years after the passage of the Sherman Anti-Trust Act
twenty bills and joint resolutions on the subject of trusts
were introduced in the Senate, and one hundred and three
in the House, some of which were to amend that act. The
decision in the case of the United States against E. C.
Knight Company®’ was disappointing to the opponents of
combinations or trusts, and a number of these bills proposed
to so amend the Sherman Act as to remedy the disappointing

50 Bills and Debates on Trusts
326.

51 Bills and Debates on Trusts
322-362; 21 Cong. Rec. 4088-4104.

52 Bills and Debates on Trusts
367; 21 (Cong. Ree. 4123.

58 Bills and Debates on Trusts
368; 21 Cong. Rec. 4559.

54 Bills and Debates on Trusts
370; 21 Cong. Rec. 4598.

55 Bills and Debates on Trusts
371; 21 Cong. Ree. 4735.

56 Bills and Debates on Trusts
371-398; 21 Cong. Rec. 5950-5961.

57 Bills and Debates on Trusts
402; 21 Cong. Rec. 6116.

58 Bills and Debates on Trusts
405-409; 21 Cong. Rec. 6312-6314.

It is said that Senator Sherman
was the author of this fourth sec-
tion, but Senator George put it
into its present form.

59156 U. S. 1; 15 Sup. Ct. 249;
39 L, Ed. 325, affirming 9 C. C. A.
297; 17 U. S. App. 466; 60 Fed.
934; 24 L. R. A. 428.
CONGRESSIONAL HISTORY. 31

effect of that decision. One of the favorite methods pro-
posed to reach the trusts was to remove the tariff protection
from all articles manufactured by them. These bills were
discussed at great length in the Ilouse, and many of the
speeches are able, abounding in profound discussions, with
citations of many decisions and authorities. None of them
became a law except Sections 73 to 74 of the tariff law of
1894, known as the Morgan amendment." These sections
were expressly preserved in the Dingley Act of 1897.%

60 For the discussion on this on Trusts 530-538; 26 ‘Cong. Rec.
amendment, see Bills and Debates 7117-7120.
61 30 State at Large 213.
CHAPTER II.

MONOPOLIES AND CONTRACTS IN RESTRAINT OF
TRADE AT COMMON LAW.

SECTION. SECTION.
20. Edict of Emperor Zeno. 31. Historical review of English
21. Edict of Louis XVI. law—Extent of restraint as
22. Monopolies in time of Queen to time and territory.
Elizabeth. 32. Unreasonableness of contract
23. Legality of monopolies— —Extent of territory cov-
Darcy v. Allen. ered—Nordenfeldt’s case.
24. Statute of James I. 33. Reasonable and unreasonable
25. Illegal monopolies as Enu- restraint—Test.
merated by Hawkins. 34. American law follows the
26. Definitions of 4 monopoly. English law.
27. ‘Modern idea of monopoly. 35. Undue restraint tending to
28. Contracts in restraint of monopoly.
trade, to suppress compe- 36. Covenants in partial restraint
tition and control the mar- of trade valid.
ket defined. 37. Contracts in restraint of
29. Reasons why contracts in re- trade not criminal.
straint of trade are void. 38. Contracts restraining useful-
30. Contract in restraint of trade ness of quasi public corpo-
is ancillary to principal rations.

contract—Sale of good will.

§20. Edict of Emperor Zeno.—In A. D. 483 the Em-
peror Zeno issued to the Praetorian Prefect of Constanti-
nople the following edict: ‘‘We command that no one may
presume to exercise a monopoly of any kind of clothing, or
of fish, or of any other thing serving for food, or for any
other use, whatever its nature may be, either of his own
authority or under a rescript of an emperor already pro-
cured, or that may hereafter be procured, or under an
imperial decree, or under a rescript signed by Our Majesty;
nor may any persons combine or agree in unlawful meetings,
that different kinds of merchandise may not be sold at a less
MONOPOLIES AND CONTRACTS IN RESTRAINT. 33

price than they may have agreed upon among themselves.
Workmen and contractors for buildings, and all who prac-
tice other professions, and contractors for baths, are entirely
prohibited from agreeing together that no one may complete
a work contracted for by another, or that a person may
prevent one who has contracted for a work from finishing
it; full liberty is given to any one to finish a work begun
and abandoned by another with apprehension of loss, and
to denounce all acts of this kind without fear and without
costs, and if any one shall presume to practice 4 monopoly,
let his property be forfeited and himself condemned to per-
petual exile. And in regard to the principals of other
professions, if they shall venture in the future to fix a
price upon their merchandise and to bind themselves by
agreements not to sell at a lower price, let them be con-
demned to pay 40 pounds of gold. Your court shall be
condemned to pay 50 pounds of gold if it shall happen,
through avarice, negligence or any other misconduct, the
provisions of this salutary constitution for the prohibition
of monopolies and agreements among the different bodies of
merchants, shall not be carried into effect.’’?

§ 21. Edict of Louis XVI.—Louis XVI, of France, in
1776 issued an edict giving freedom to trades and profes-
sions, which was prepared by Turgot, his minister, in which
he cites the contributions that had been made by the guilds
and said: ‘‘It was the allurement of these fiscal advantages,
undoubtedly, that prolonged the illusion and concealed the
immense injury they did to industry and their infraction
of natural right. This illusion had extended so far that
some persons asserted that the right to work was a royal
privilege which the king might sell, and that his subjects
were bound to purchase from him. We hasten to correct.
this error and to repeal the conclusion. God, in giving man

1Code JV, 59. Translation of ian Law Times 299; and in 23
A. H. Marsh, Q. (., in 8 Canad- Am. Law Rev. 261.
34 THE SHERMAN ANTI-TRUST ACT.

wants and desires rendering labor necessary for their satis-
faction, conferred the right to labor upon all men, and this
property is the first, most sacred and imprescriptible of all.’’
He therefore regards it ‘‘as the first duty of his justice, and
the worthiest act of benevolence, to free his subjects from
any restriction upon this inalienable right of humanity.’’?

§ 22. Monopolies in Time of Queen Elizabeth—Queen
Elizabeth of England granted many monopolies, and Hume
has thus described the condition of affairs during her reign:
“The active reign of Elizabeth had enabled many persons to
distinguish themselves in civil and military employments;
and the queen, who was not able from her revenue to give
them any rewards proportioned to their services, had made
use of an expedient which had been employed by her
predecessors, but which had never been carried to such an
extreme as under her administration. She granted her serv-
ants and courtiers patents for monopolies; and these patents
they sold to others, who were thereby enabled to raise
commodities to what price they pleased, and who put invin-
cible restraints upon all commerce, industry and emulation
of arts. It is astonishing to consider the number and impor-
tance of those commodities which were thus assigned over to
patentees. Currants, salt, iron, powder, cards, calfskins,
fells, pouldavies, ox shin-bones, train oil, list of cloth, pot-
ashes, anise-seeds, vinegar, seacoals, steel, aquavitae, brushes,
pots, bottles, saltpetre, lead, accidences, oil, calamine stone,
oil of blubber, glasses, paper, starch, tin, sulphur, new
drapery, dried pilchards, transportation of iron ordnance,
of beer, of horn, of leather, importation of Spanish wool,
of Irish yarn; these are but a part of the commodities which
had been appropriated to monopolists. When this list was
read in the House, a member cried, ‘Is not bread in the
number?’ ‘Bread,’ said every one in astonishment. ‘Yes,

2See note to Slaughter House

Cases, 16 Wall. 36, 110; 21 La,
Ed. 394, affirming 22 La. Ann. 545.
MONOPOLIES AND CONTRACTS IN RESTRAINT, 35

I assure you,’ replied he, ‘if affairs go on at this rate, we
shall have bread reduced to a monopoly before next par-
lament.’ These monopolists were so exorbitant in their
demands that in some places they raised the price of salt
from sixteen pence a bushel to fourteen or fifteen shillings.
Such high profits naturally begat intruders upon their com-
merce; and, in order to secure themselves against encroach-
ments, the patentees were armed with high and arbitrary
powers from the council, by which they were enabled to
oppress the people at pleasure, and to exact money from
such as they thought proper to accuse of interfering with
their patent. The patentees of saltpetre, having the power
of entering into every house and of committing what havoc
they pleased in stables, cellars or wherever they suspected
saltpetre might be gathered, commonly extorted money from
those who desired to free themselves from this damage or
trouble. And while all domestic intercourse was thus re-
strained, lest any scope should remain for industry, almost
every species of foreign commerce was confined to exclusive
companies, who bought and sold at any price that they
themselves thought proper to offer or exact.’’ ?

34 Vol. (Harper’s Edition) 335.
Macauley says (History of

They therefore, as usual, en-
croached on the province which

England, vol. 1, p. 58): “It was
in the parliament of 1601 that
the opposition which had, during
forty years, been silently gather-
ing and  husbanding strength,
fought its first great battle and
won its first victory. The ground
was well chosen. The English
sovercigns had always been in-
trusted with the supreme direc-
tion of commercial police. It was
their undoubted prerogative to
regulate coins, weights, measures,
and to appoint fairs, markets and
ports. The line which bounded
their authority over trade had, as
usual, been but loosely drawn.

rightfully belonged to the legisla-
ture. The encroachment was as
usual, patiently borne till it be-
came serious. But at length the
queen took upon herself to grant
patents of monopoly by scores.
‘There was scarcely a family in the
realm that did not feel itself
aggrieved by the oppression and
extortion which the abuse natu-
rally caused. Iron, oil, vinegar,
coal, lead, starch, yarn, leather,
glass, could be bought only at ex-
orbitant prices. The House of
Commons met in an angry and de-
termined mood. It was in vain
that a courtly minority blamed the
36 THE SHERMAN ANTI-TRUST ACT.

§ 23. Legality of Monopolies—Darcy v. Allen.—In 1602
arose the question of the legality of monopolies. It is re-
ported by Lord Coke as ‘‘The Case of the Monopolies,’’ and
it is otherwise reported as Darcy v. Allen. The plaintiff
had received a patent whereby he was granted the privilege
for twenty-one years to manufacture playing cards; and
the defendant, having infringed his patent, he brought suit
The defendant insisted that the patent was
illegal, and it was declared void for these reasons: ‘‘All
trades, as well mechanical as others, which prevent idleness
{the bane of the commonwealth], and exercise men and youth
in labor, for the maintenance of themselves and their fami-
lies, and for the increase of their substance, to serve the
queen when occasion shall require, are profitable for the
commonwealth; and therefore the grant to the plaintiff to
have the sole making of them is against the common law
and the benefit and liberty of the subject.

**(2) The sole trade of any mechanical artifice, or any
other monopoly, is not only a damage and prejudice to
those who exercise the same trade, but also to all other
subjects; for the end of all these monopolies is for the
private gain of the patentees.

for damages.

‘*(3) The queen was deceived in her grant; for the queen,
as by the preamble appears, intended it to be for the weal
public, and it will be employed for the private gain of the
patentee, and for the prejudice of the weal public.

**(4) This grant is primae impressionis, for no such was
ever seen to pass by letters patents under the great seal
before these days, and therefore it is a dangerous innova-
tion, as well without any precedent or example as without

speaker for suffering the acts of dignant populace, who cursed

the queen’s highness to be called
in question. The language of the
discontented party was high and
menacing, and was echoed by the
voice of the whole nation. The
coach of the chief minister of the
crown was surrounded by an in-

monopolies and claimed that the
prerogative should not be allowed
to touch the old liberties of En-
gland.”

411 Coke 84; Noy, 173; Moore

673; 8 Coke 125.
MONOPOLIES AND CONTRACTS IN RESTRAINT. 37

authority of law or reason.’’ In this case it was also said
that monopolies inseparably had the following incidents:

‘“(a) That the price of the same commodity will be raised ;
for he who has the sole selling of any commodity may and
will make the price as he pleases.

‘‘(b) That after the monopoly granted, the commodity is
not so good and merchantable as it was-before, for the pat-
entee, having the sole trade, regards only his private benefit,
and not the commonwealth.

““(e) It tends to the impoverishment of divers artifices
and others, who before, by the labor of their hands in their
art or trade, had maintained themselves and their families,
who now will of necessity be constrained to live in idleness

and beggary.’’®

‘See 7 Harvard Law Review
342. he following is the state-
ment of the case as it apears in
the quaint language of the ancient
reports, to-wit: “Edward Darcy,
Esquire, a groom of the privy
chamber to Queen Elizabeth,
brought an action on the case
against T. Allein, haberdasher of
London, and declared that Queen
Elizabeth, 13 Junii Anno, 30 Eliz.,
intending that her subjects being
wble men to exercise husbandry,
should apply themselves there-
unto, and that they should not
employ themselves in making
playing cards, which had not been
any ancient manual occupation
within this realm, and that by
making such a multitude of
cards, card playing was become
more frequent, and especially
among servants and apprentices,
and poor artificers; and to the
end her subjects might employ
themselves to more lawful and
necessary trades, by her letters
patent under the great seal of the

same date granted to Ralph
Bowles, Esquire, full power, li-
cense and authority, by himself,
his servants, factors and deputies,
to provide and buy in any parts
beyond the seas, all such playing
ecards as he thought good to im-
port them into this realm, and to
sell and utter them within the
same, and that he, his servants,
factors, and deputies should have
and enjoy the whole trade, traffic
and merchandise of all playing
ecards; and by the same letters
patent further granted, that the
said Ralph Bowles, his servants,
factors and deputies, and none
other, should have the making of
playing cards within this realm,
to have and to hold for twelve
years; and by the same letters
patent the Queen charged and
commanded, that no person or
persons besides the said Ralph
Bowles, etc., should bring any
cards within the realm during
those twelve years, nor should
they buy, sell or offer to be sold
38 THE SHERMAN ANTI-TRUST ACT.

§ 24. State of James I—This position of the court was
subsequently confirmed by statute. In 1623 Parliament
passed a statute abrogating the practice of granting monopo-
lies except for the sole working of any manner of new
manufacturers and except concerning printing and the
manufacture of saltpetre, gunpowder, ordnance and shot and
the mining of alum. The preamble and first section of this
statute is as follows: ‘‘Forasmuch as your most excellent
Majesty, in your royal judgment, and of your blessed dis-
position to the weal and quiet of your subjects, did in the
year of our Lord God one thousand six hundred and ten,
publish in print to the whole realm, and to all posterity,
That all grants and monopolies, and of the benefit of any
penal laws, or of power to dispense with the law, or to
compound for the forfeiture, are contrary to your Majesty’s
laws, which your Majesty’s declaration is truely consonant

within the said realm, within the
said term, any playing cards, nor
should make or cause to be made
any playing cards within the said
realm, upon pain of the queen’s
highest displeasure, and of such
fine and punishment as offenders,
in the case of voluntary contempt,
deserve. And afterwards the said
queen, 11 Aug. Anno, 40 Eliz., by
her letters patent reciting the
former grants made to Ralph
Bowles, granted the plaintiff, his
executors and administrators, and
their deputies, ete. the same
privileges, authorities and other,
the said premises, for twenty-one
vears after the end of the former
term, rendering to the queen 100
marks per annum; and_ further
granted to him a seal to mark the
eards. And further declared that
after the end of the said term of
twelve vears, f. 30 Junii Anno, 42
Eliz., the plaintiff caused to be

made 400 grosses of cards for the
necessary uses of the subjects, to
be sold within this realm, and had
expended in making them £5,000,
and that the defendants, knowing
of the said grant and prohibition
of the plaintiff’s letters patent,
and other, the premises, 15 Martii,
Anno 44 Eliz., without the queen’s
license, or the plaintiff’s ete., at
Westminster, caused to be made 80
grosses of playing cards, and as
well those, as 100 other grosses of
playing cards, none of which were
made within the realm, or im-
ported within the realm by the
plaintiff or his servants, factors
or deputies, etc., nor marked with
his seal, he had imported within
the realm, and then had sold and
uttered to sundry persons un-
known, and showed some in cer-
tain, wherefore the plaintiff could
not utter his playing cards, ete.
Contra fornam  proedict literar
MONOPOLIES AND CONTRACTS IN RESTRAINT. 39

and agreeable to the ancient and fundamental laws of this
your realm; (2) And whereas your Majesty was further
graciously pleased, expressly to command, that no suiter
should presume to move your Majesty for matters of that
nature; (3) yet nevertheless upon misinformations, and
untrue pretences of public good, many of such grants have
been unduly obtained, and unlawfully put in execution, to
the great grievance and inconvenience of your Majesty’s
subjects, contrary to the laws of this your realm, and con-
trary to your Majesty’s most royal and blessed intention
so published as aforesaid; (4) For avoiding whereof, and
preventing of the like in time to come, may it please your
excellent Majesty, at the humble suit of the Lords spiritual
and temporal, and the commons, in this present parliament
assembled, That it may be declared and enacted: (5) and be
it declared and enacted by authority of this present parlia-

patentium, and in contemptum
dictoe dominoe reginae, whereby
the plaintiff was disabled to pay
his farm, to the plaintiff’s dam-
ages. The defendant, except to
one-half gross, pleaded not guilty,
and as to that pleaded that the
city of London is an ancient city,
and that within the same time
whereof, etc., there has been a so-
ciety of haberdashers, and that
within the said city there was a
custom, quod quaelibet persona de
societate illa, usus fuit and con-
suevit emere, rendere and libere
merchandizare omnem rem and
omnes res merchandizabiles infra
hoe regnun angliae de quocunque,
vel quibus conque personis ete..
and pleaded that he was ciris and
liber homo de civetate and socie-
tate illa, and sold the said half
gross of playing cards, being made
within the realm, etc., as he law-
fully might and upon which the

plaintiff demurred in law.” The
demurrer was not sustained. The
report of the case concludes with
these words of the reporter: “And
nota reader, and well observe the
glorious preamble and pretense of
this odious monopoly. And it is
true, quod privilegia quae re vera
sunt in prejudicium reipublicae,
magis tamen speciosa habent
frontispicia and boni publici pre-
tectum, quaum bonae and legales
concessiones, sed pretewu, liciti non
debet admitti illicitum. And our
Lord, the King that now is, in +
book which he, in zeal to the law
and justice, commanded to be
printed Anno 1610, entitled, ‘A
Declaration of his Majesty’s
Pleasure, ete.’ p. 13, has pub-
lished, that monopolies are things
against the laws of this realm;
and therefore expressly commands
that no suitor presume to move
him to grant any of them.”
40 THE SHERMAN ANTI-TRUST ACT.

ment, That all monopolies, and all commissions, grants,
license, charters and letters patents heretofore made or
granted, or hereafter to be made or granted, to any person
or persons, bodies politik or corporate whatsoever, of or for
the sole buying, selling, making or using of anything within
this realm, or the dominion of Wales; (6) or of any other
monopolies, or of power, liberty or faculty, to dispense with
any others, or to give license or toleration to do, use or
exercise any thing against the tenor or purport of any law
or statute; (7) or to give or make any warrant for any such
dispensation, licence or toleration to be had or made; or to
agree or compound with any others for any penalty or
forfeiture limited by any statutes; or of any grant or
promise of the benefit, profit or commodity or any for-
feiture, penalty or sum of money, that is or shall be due
by any statute, before judgment thereupon had; (8) and
all proclamations, inhibitions, restraints, warrants of assist-
ance, and all other matters and things whatsoever, any way
tending to the instituting, erecting, strengthening, further-
ing or countenancing of the same or any of them; (9) are
altogether contrary to the laws of this realm, and so are
and shall be utterly void and of none effect and in no wise
to be put in use or execution.”’ ®

6 Referring to this statute the
learned author of 'Coke’s Institutes
says (vol. III., ch. 85):

“It appeareth by the preamble
of this act (as judgment in par-
liament) that all grants of mo-
nopolies are against the ancient
and fundamen‘al laws of this
kingdom, and therefore it is
necessary to define what a monop-
olyis * * *

“That monopolies are against
the ancient and fundamental laws
of the realm (as it is declared by
this act), and that the monopo-

list was in times past, and is sucL
more now, punishable for obtain-
ing and procuring of them, we
will demonstrate it by reason and
prove it by authority.

“Whatsoever offense is contrary
to the ancient and fundamental
laws of the realm is punishable by
law; but the use of a monopoly
is contrary to the ancient and
fundamental laws of the realm,
therefore the use of a monopoly is
punishable by law.

“That offense which is contrary
to the ancient and fundamental
MONOPOLIES AND CONTRACTS IN RESTRAINT. 41

§ 25. Illegal Monopolies as Enumerated by Hawkins.—

In enumerating monopolies that were illegal under the
law of England, Hawkins says:

“Tt is said that all grants of this kind relating to any
known trade are made void by the common law, as being
against the freedom of trade and discouraging labor and
industry, and restraining persons from getting an honest
livelihood by a lawful employment, and putting it in the
power of particular persons to set what prices they please
on a commodity, all of which are manifest inconveniences
to the public.

‘‘The king, and none but the king, by his charter, may
constitute fraternities for the management of foreign and
domestic trade, who make by-laws in restraint, if they be
for the regulation of trade.

‘‘And upon this ground it hath been (a) resolved that
the king’s grant to any particular corporation of the sole
importation of any merchandise is void, whether such mer-
chandise be prohibited by statute or not.

‘‘Hence also it seems that the king’s charter, empowering
particular persons to trade to and from such a place, if
void, so far as it gives such persons an exclusive right of
trading and debarring all others; and it seems now agreed
that nothing can exclude a subject from trade but an act
of parliament.

‘‘And for the like reasons it hath been resolved that the
grant of the sole (b) engrossing of wills and inventories in
a spiritual court, or of the sole (c) making of bills, pleas
and writs in a court of law, to any particular person, is void.

‘* Also it hath been adjudged that the king’s grant of the
sole making, importing and selling of (d) playing cards is
void, notwithstanding the pretense that the playing with

laws is malum in se The Minor is “The liberty that the subject
proved by this declaration in par- hath to go to any clerk in the
liament. king’s court cannot be restrained,

but by parliament.”
42 THE SHERMAN ANTI-TRUST ACT.

them is a matter merely of pleasure and recreation, and
often much abused, and therefore proper to be restrained ;
for since the playing with them is in itself lawful and inno-
cent, and the making of them an honest and laborious trade,
there is no more reason why any subject should be hindered
from getting his livelihood by this than by any other
employment.

‘* Also it is holden that the procuring or making use of an
unlawful monopoly is further restrained by the common
law, by subjecting those who are guilty thereof to a fine
and imprisonment for the offense, as being malum in se,
and contrary to the ancient and fundamental laws of the
kingdom. And it is said that there are precedents of
prosecutions of this kind in former days; but I can not
find any modern instances thereof.’’ *

§26. Definitions of a Monopoly.—Lord Coke was contem-
poraneous with the rise of the practice of granting monopolies
by royal edict; and very naturally his definition of a ‘‘mo-
nopoly’’ was drawn from the practice then prevalent. ‘‘A
monopoly is an institution,’’ says he, ‘‘or allowance by the
king by his grant, commission, or otherwise to any person
or persons, bodies politic or corporate, of or for the sole
buying, selling, making, working or using of anything
whereby any person or persons, bodies politic or corporate,
are sought to be restrained of any freedom or liberty that
they had before, or hindered in their lawful trade.’’ ®

71 Hawkin’s Pleas of the Crown
624.

(Ct. 249; 39 L. Ed. 525, affirming
60 Fed. 934; 9 C. C. A. 297; 17

8 3 Coke’s Inst. 181, c. 85. This
definition has been quoted or given
substantially many times by the
courts: Standard Oil Co. v. United
States, 221 U. S. 1, 51; 31 Sup.
Ct. 502; 55 L. Ed. 619; 34 L. R.
A. (N. 8.) 834, affirming 173 Fed.
177; United States v. E. C.
Knight Co., 156 U. S. 19; 15 Sup.

U. S. App. 466; 24 L. R. A. 428;
Butchers’ Union, ete., Co. v. iCres-
cent City, ete., Co., 111 U. S. 746,
755; 4 Sup. Ct. 652; 28 L. Ed.
585, reversing 9 Fed. 743; 4
Woods 96; Slaughter House (Cases
16 Wall. 36; 102; 21 L. Ed. 394;
affirming 22 La. Ann. 545; Charles
River Bridge v. Warren Bridge,
MONOPOLIES AND CONTRACTS IN RESTRAINT. 43

Hawkins, copying Lord Coke, has given us this definition:
‘‘Monopoly is an allowance by the king to a particular
person or persons of the sole buying, selling, making, work-
ing or using of anything whereby the subject in general is
restrained from the freedom of manufacturing or trading

which he had before.’’ ®

‘*A monopoly,’’ says an old Amer-

ican authority, ‘‘is when the sale of any merchandise or
commodity is restrained to one, or a certain number; and

11 Pet. 420, 607; 9 L. Ed.
773; affirming 7 Pick 344; Ware-
Kramer Tobacco Co. v. American
Tobacco Co., 180 Fed. 160, 170;
see 178 Fed. 117; Bartholomew v.
Austin, 85 Fed. 359, 364; 29 C. C.
A. 568; 573; United States v.
Trans-Missouri Freight Asso., 53
Fed. 440, 452; 58 Fed. 58, 92; 19
U.S. App. 36; 7 C. C. A. 15; 24
L. R. A. 73; which reversed 53
Fed. 440; reversed 166 U. S. 290;

41 L. Ed. 1007; 17 Sup. Ct.
540; 4 Interst. Com. Rep., 440;
in re Greene, 52 Fed. 104;

116; Norwich Gas Light Co. v.
Norwich City Gas Co., 25 Conn.
19, 38; State v. Haworth, 122 Ind.
462, 498; 23 N. E. 946; 7 L. R.
A. 240; Darcantel v. Slaughter
House, ete., Co., 44 La. Am. 632;
642; 11 So. 239; Wright v. State,
88 Md. 436, 443; 41 Atl. 795;
State v. Duluth Board, 107 Minn.
506, 527; 121 N. W. 395; 23 L. R.
A. (N. 8.) 1260; Davenport v.
Kleinschmidt 6 Mont. 502, 529;
13 Pac 249; Marshall & Bruce Co.
v. Nashville, 109 Tenn. 495, 508;
71 8. W. 815.

Justice Field in the Slaughter
House Cases, 16 Wall. 36; 21 L.
Ed. 394, affirming 22 La. Am. 545,
quotes [Coke’s definition and says:
“All such grants relating to any
known trade or manufacture have

been held by all the judges of En-
gland, whenever they have come
up for consideration, to be void
at common law, as destroying the
freedom of trade, discouraging
labor and industry, restraining
persons from getting an honest
livelihood, and putting it into the
power of the grantees to enhance
the price of commodities. The
definition embraces, it will be ob-
served, not merely the sole privil-
ege of buying and selling particu-
lar articles, or of engaging in their
manufacture, but also the sole
privilege of using anything by
which others may be restrained of
the freedom or liberty they pre-
viously had in any lawful trade,
or hindered in such trade.”

“To constitute a monopoly,”
said the Supreme Court of Mary-
land, “within the meaning of this
definition, there must be an al-
lowance or grant by the state to
one or several of a sole right—
that is a right to the exclusion of
all others than the grantee or
grantees.” Wright v. State, 88 Md.
436, 443; 41 Atl. 795.

9Hawk, P. C., bk 1, @& 29,
quoted in Standard Oil Co. y.
United States, 221 U. S. 1, 51;
31 Sup. Ct. 502; 55 L. Ed. 619;
34 L. R. A. (N. 8.) 834, affirming
173 Fed. 177.
44 THE SHERMAN ANTI-TRUST ACT.

has, says Coke,’ three inseparable consequences: The in-
crease of the price, the badness of the wares, the impover-
ishment of others.’’11_ These are the old definitions. The
following are some of the more recent ones, or descriptions
of a monopoly as approved or stated by the courts: ‘‘A
monopoly exists where all, or so nearly all, of an article of
trade or commerce within a community or district is brought
within the hands of one man or set of men, as to practically
bring the handling or production of the commodity or thing
within such single control to the exclusion of competition
or free traffic therein. Anything less than this is not a
monopoly.’’ ? ‘Various definitions of ‘monopoly’ have been
given: ‘The abuse of free commerce, by which one or more
individuals have procured the advantage of selling alone all
of one particular kind of merchandise, to the detriment of
the public; any combination among merchants to raise the
price of any particular merchandise to the detriment of the
public.’ The popular meaning of ‘monopoly’ at the present
day seems to be the sole power [or power largely in excess
of that possessed by others] of dealing in some particular
commodity, or at some particular market or place, or of
carrying on some particular business. Anything less than
this is not a monopoly.’’ ™*

1011 Coke 84-89; 8 Coke 125.

117 Dane’s Abridg. 38. chap.
205, art. 5.

12 Herriman v. Menzies, 115 Cal.
16; 46 Pac. 730; 35 L. R. A. 318;
56 Am, St. 82: People v. Ameri-
can Ice Co., 135 N. Y. App. Div.
180; 120 N. Y. Supp. 41; Seattle
vy. Dencker, 58 Wash. 501; 108
Pac. 1086: Barbee v. Plank Roal
Co., 6 Fla. 262, 268.

12 United States v. American
Naval Stores, 172 Fed. 455;
Davenport v. Kleinschmidt, 6
Mont. 502; 13 Pac. 249, citing 2
Rap. & L.. Law Dict. 834. “It is

said to be a monopoly when one
person alone buys up the whole of
one kind of a commodity fixing a
price at his own pleasure.” State
vy. Eastern Coal Co., 29 R. I. 254;
70 Atl. 1, quoting from Black’s
Law Dictionary.

It is a special privilege not en-
joyed by others. Guthrie Daily
Leader v. Cameron, 3 Okl. 677; 41
Pac. 635.

“Monopoly is “an exclusive
privilege to carry on a traffic.”
“The possession or the assump-
tion of any thing to the exclusion
of other possessions; thus a man
MONOPOLIES AND CONTRACTS IN RESTRAINT. 45

§ 27. Modern Idea of Monopoly.—The idea of a monop-
oly has changed in recent times. ‘‘It is not enough to say
that the idea of monopoly is not now confined to a grant of
privilege. It is understood to include a ‘condition produced
by the acts of mere individuals.’ Its dominant thought now
is, to quote another, ‘the notion of exclusiveness or unity ;’
in other words, the suppression of competition by the uni-
fication of interest or management, or it may be through
agreement and consent of action. And the purpose is so
definitely the control of prices that monopoly has been

defined to be ‘unified tactics with regard to prices.’

is popularly said to have a mon-
opoly of any business of which he
has acquired complete control.”
Century Dictionary, as quoted in
‘Continental Securities ‘Co. v. Inter-
borough Rapid Transit Co., 165
Fed. 945, 956.

It is an exclusive grant to a few
of something which was before of
common right. Leeper v. State,
103 Tenn. 500-514, 53 S. W. 692;
48 L. R. A. 167.

“Monopoly implies an exclusive
right, from which all others are
dcebarred, and to which they are
subservient.” United States Chem-
ical Co, v. Provident ‘Chemical Co.,
64 Fed. 946, 950, citing In re
treen, 52 Fed. 104; Memphis v.
Memphis Water Co., 5 Heisk 495,
528; Pocahontas Coke Co. v. Pow-
haten C. & C. Co., 60 W. Va. 508,
520; 56 8. E. 264; 10 L. R. A.
(N.S.), 268; 116 Am, St 901;
Thrift v. Elizabeth City, 122 N.
C. 31, 37; 30 8. E. 349; 44 L. Rh.
A. 427; Patterson v. Wollman, 5
N. Dak. 608, 615, 616, 67 N. W.
1040; 33 L, R. A. 536; Bartholo-
mew v. Austin, 85 Fed. 359, 364;
29 ©. '1C. A. 568, 573.

It is
It is the power to control
prices. National ‘Cotton Oil (Co. v.

Texas, 197 U. S. 115, 129; 25 Sup.
Ct. 379; 49 L. Ed. 689, affirming
(Civ. App.) 72 S. W. 615.

“But what is w monopoly, as
understood in law? ‘It is an ex-
elusive right granted to a few of
something which was before a
common right. Thus a privilege
granted by the king for the sole
buying, selling, making, working,
or using a thing, whereby the
subject, in general, is restrained
from that liberty of manufactur-
ing or trading, which before he
had is a monopoly; 4 Black Com.
159; Bae. Abridg. Prerogative, J.
4; My Lord Coke, in his Pleas of
the (Crown, 3 Inst. 181, has given
this very definition of a monopoly ,
and that definition was approved
by Holt & Treby (afterwards chief
justice of the king’s bench, ar-
guendo, as counsel, in the great
ease of the East India Company v.
Sandy’s, 10 Howell State Trials,
386. His words are that a monop-
oly is ‘an institution by the king,
by his grant, commission or other-
wise, to any person or corpora-
46 THE SHERMAN ANTI-TRUST ACT.

the power to control prices which makes the inducement
of combinations and their profit.’’ 14

§ 28. Contracts in Restraint of Trade, to Suppress Com-
petition and to Control the Market Defined.—Contracts in
restraint of trade have for their scope all agreements
wherein one of the contracting parties is restrained from

following a particular occupation, industry or trade.

tions, of or for the sole buying,
selling, making, working, or using
of everything, whereby any per-
sons or corporations are sought
to be restrained of any freedom or
liberty they had before, or hin-
dered in their lawful trade.’ So,
that it is not the case of a monop-
oly, if the subjects had not the
common right or liberty before to
do the act, or possess and enjoy
the privilege or franchise granted,
as a common right. 10 Howell’s
State Trials, 425. And it deserves
an especial remark, that this doc-
trine was an admitted concession,
pervading the entire arguments of
the counsel who opposed, as well
as of those who maintained the
grant of the exclusive trade in the
ease of the East India Company v.
Sandy’s, 10 How. St. Tr. 386, a
ease which constitutes, in a great
measure, the basis of this branch
of the law.” Charles River Bridge
vy. Warren Bridge, 11 Pet. (36 U.
8.) 420, 607, 9 L. Ed. 773, per Mr.
Justice Story, dissenting opinion,
quoted in Patterson v. Wollman, 5
N. Dak. 608, 615, 616, 67 N. W
1040, 33 L. R.. A. 536, per
Corlissm, J.

14 Justice McKenna, in National
Cotton Oil Co. v. Texas, 197 U. S.
115, 129; 25 Sup. Ct. 382; 45 L.
Ed. 689, affirming (Tex. Civ.

One

App.) 72 8. W. 615; see 20 Har-
vard Law Review, 183.

In the debate on the Sherman
Anti/Trust Law (Bills and De-
bates 324) Senator Edmonds said
in reference to monopoly “that we
studied it with whatever little
ability we had, and the best an-
swer I can make is to read from
Webster’s Dictionary the defini-
tion of the verb ‘to monopolize’:
‘1. To purchase or obtain posses-
sion of the whole of, as a commod-
ity or goods in market, with the
view to appropriate or control the
exclusive sale of; as to monopolize
sugar or tea.’ Like the Sugar
Trust. One man, if he had eapi-
tal enough, could do it just as
well as two. ‘2. To engross or ob-
tain by any means the exclusive
right of, especially the right of
trading to any place, or within
any country or district: as to
monopolize the India or Levant
trade.’ The old definition * * *
We thought we had done the right
thing in providing, in the very
phrase we did, that if one person
instead of two, by a combination,
if one person alone, as we have
heard about the wheat market in
Chicago, for instance, did it, it
was just as offensive and injuri-
ous to the public interests as if
two had combined to do it.”
MONOPOLIES AND CONTRACTS IN RESTRAINT. 47

to suppress competition covers all agreements the object
of which is either to remove competition or lessen it. One
to control the market embraces all transactions and agree-
ments having in view to the securing in some business,
occupation or trade the control of the market. A contract
to control the market necessarily embraces a contract to
suppress competition; for there can be no control of the
market without suppression of competition. The former
is broader than the latter. Thus, if a strong corporation
should buy up all the other competing plants in its in-
dustry, it would thereby be enabled to control the market,
although incidentally it would suppress competition; but
if it were to buy out a single competitor, it would simply
lessen competition without any power, and with no in-
tention to control the market. It is a common practice to
buy out a competitor, with an agreement on his part that
he will not continue his business in that vicinity, or will
not continue it there until a specified number of years shall
elapse. A contract in restraint of trade is usually construed
broadly and liberally, with a view to protect the legitimate
interests of the parties to the contracts; a contract to
suppress competition is construed with great strictness an]
will be held void if contrary to public policy. If a party
buys out a competitor with the sole purpose to suppress
competition, it will in all likelihood be enforced, for that is
the usual course.?®

§ 29. Reason Why Contracts in Restraint of Trade are
Void.—Two reasons exist why contracts in restraint of trade
are void: (1) The injury to the public by being deprived
of the restricted party’s industry; and (2) The injury to
the party himself by being precluded from following his
occupation, thus tending to make him a public charge.’*

15 These three classes of con- 16 Gibbs v. Consolidated Gas
tracts are fundamentally quite Co. 130 U. S. 396; 9 Sup. Ct.
distinct, but, as we shall see, there 553; 32 L. Ed. 979; Herreshoff v.
is hopeless confusion in the deci- Bautineau, 17 R. I. 3; 19 Atl. 712;
sions with respect to them. 8 L. R. A. 469; 33 Am. St. 850;
48 THE SHERMAN ANTI-TRUST ACT.

“The true view at the present time, I think, is this:
The public have an interest in every person carrying on
his trade freely; so has the individual. All interference
with individual liberty of action in trading, and all re-
straints of trade of themselves, if there is nothing more,
are contrary to public policy, and, therefore, void. That
is the general rule. But there are exceptions: Restraints
of trade and interference with individual liberty of action
may be justified by the particular circumstances of a par-
ticular case. It is sufficient justification, and indeed the
only justification, if the restriction is reasonable—reason-
able, that is, in reference to the interests of the public, so
framed and so guarded as to afford adequate protection to
the party in whose favor it is imposed, while at the same
time it is no way injurious to the public.’’ 7

It was said by Judge Taft in a federal case that: ‘‘From
early times it was the policy of Englishmen to encourage
trade in England, and to discourage those voluntary re-
straints which tradesmen were often induced to impose upon
themselves by contract. Courts recognize this public policy
by refusing to enforce stipulations of this character. The
objection to such restraints were mainly two: One was that
by such contracts a man disabled himself from earning a
livelihood with the risk of becoming a public charge, and
deprived the community of the benefit of his labor. The
others was that such restraints tended to give the covenantee,
the beneficiary of such restraints, a monopoly of the trade,
from which he had thus excluded one compctitor, and by
the same means might exclude others.

“Chief Justice Parker, in 1711, in the leading case of
Mitchel v. Reynolds,* stated that these objections as
follows :

Swigert v. Tilden, 121 Towa, 650; in Underwood & Son v. Barker,

97 N. W. 82; 63 L. R. A. 108; 100 LL. R. [1899] 1 Ch. Div. 300; 68

Am. St. 374. L. J. Ch. 201; 80 L. T. 306; 47
17 Nordenfelt v. Maxin Norden- W. R. 347.

felt Guns & Amunition Co., L. R. 18] P. Wms., 181, 190.

[1894] App. Cas. 535, 565, quoted
MONOPOLIES AND CONTRACTS IN RESTRAINT. 49

‘<<First. The mischief which may arise from them (1)
to the party by the loss of his livelihood and the subsistence
of his family; (2) to the public by depriving it of an useful
member. Another reason is the great abuses these volun-
tary restraints are liable to; as, for instance, from corpora-
tions who are perpetually laboring for exclusive advantages
in trade, and to reduce it into a few hands as possible.’

“‘The reasons were stated somewhat more at length in
Alger v. Thachey,’® in which the Supreme Judicial Court
of Massachusetts said:

‘<The unreascnableness of contracts in restraint of trade
and business is very apparent from several obvious con-
siderations: (1) Such contracts injure the parties making
them, because they diminish their means of procuring live-
lihoods and a competency for their families. They tempt
improvident persons for the sake of present gain, to deprive
themselves of the power to make future acquisitions; and
they expose such persons to imposition and oppression.
(2) They tend to deprive the public of the services of men
in the employments and capacities in which they may be
most useful to the community as well as themselves. (3)
They discourage industry and enterprise and diminish the
products of ingenuity and skill. (4) They prevent compe-
tition and enhance prices. (5) They expose the public to
all the evils of monopoly; and this especially is applicable
to wealthy companies and large corporations, who have the
means, unless restrained by law, to exclude rivalry, monopo-
lize business, and engross the market. Against evils like
these, wise laws protect individuals and the publie by
declaring all such contracts void.’

‘‘The changed conditions under which men ceased to be
so entirely dependent for a livelihood on pursuing one
trade have rendered the first and second considerations
stated above less important to the community than they
were in the seventeenth and eighteenth centuries, but the

1919 Pick 51, 54; 31 Am. Dec. 119.
50 THE SHERMAN ANTI-TRUST ACT.

disposition to use every means to reduce competition and
create monopolies has grown so much of late that the
fourth and fifth considerations mentioned in Alger v.
Thacher have certainly lost nothing in weight in the present
day, if we may judge from the statute [the Sherman Act]
here under consideration and similar legislation by the
states.’ 2°

The inhibition against restraints of trade at common law
seems at first to have no exception.”*

§30. Contract in Restraint of Trade is Ancillary to
Principal Contract—Sale of Good Will—Almost invariably
a contract in restraint of trade is ancillary or subsidiary 1o
another contract which is the principal one; and if it were
not for such principal contract, the ancillary or subsidiary
contract would never be entered into. Thus where a mer-
chant sells his store and the business that goes with it, and
also engages not again to open another store and enter into
a business of a similar character, the sale of the store and
business is the principal contract and the contract not to
open another store or enter into a business of a similar
character is the ancillary or subsidiary contract. So where
a physician builds up a practice in a community and sells
it to another and also enters into a contract not to engage
in the practice in that vicinity, or within a designated
district covering the territory wherein his business is estab-
lished, the sale is the principal contract and the contract
not to engage in such business within the designated ter-
ritory the subsidiary or ancillary one.

20 United States v. Addyston
Pipe & Steel Co., 85 Fed. 271; 54

to follow his trade for six months
in the same town with the plain-

N. 723; 46 L. R. A. 122, reversing
78 Fed. 512 and affirmed in part
175 U. 8. 211; 20 S. Ct. 96; 44 L.
Ed. 136.

21JIn the reign of Henry V an
action was brought on a bond
wherein a dyer bound himself not

tiff. In passing upon the invalid-
ity of the bond, Justice Hull ex-
claimed with emphasis: “Per dieu,
if the plaintiff were here, he would
go to prison till he paid a fine to
the king.” (1) Year Book Henry
V., folio 5, pl. 26, p. 1415.
MONOPOLIES AND CONTRACTS IN RESTRAINT. 51

§31. Historical Review of English Law—Extent of
Restraint as to Time and Territory.—Lord Justice Bowen,
in one of the great leading cases”? of England, has given
an extended review of the development of the English law,
which we here quote, because of its instructiveness upon the
subject in hand:

‘‘There was an early period in English history when the
courts set their face apparently against all restrictions upon
trade alike, whether limited or unlimited. This period has
long since passed away, but it has been, in my opinion, the
doctrine of the courts of common law ever since the reign
of Queen Elizabeth that contracts in general restraint of
trade are void as being contrary to public policy. Contracts
in general restraint of trade may be defined as those by
which a person restrains himself from all exercise of his
trade in any part of England. A mere limit in time has
never been held to convert a covenant in general restraint
of trade into a covenant of particular or partial restraint of
trade. It is necessary to insist on this distinction, which is
imbedded in the reports and text-books of the last three
centuries; since it is through not preserving the exact
meaning of the term ‘in general restraint of trade’ that
some confusion has apparently, at times, arisen. The
common law is as precise as it can be on the point; con-
tracts, unlimited in area, although they may be limited in
time, are, as a rule, held bad on the ground of public policy.
The broad principle is to be found as far back as the year
1614, in Rogers v. Parrey,?* and in Broad v. Jollyfe.** It is
reaffirmed explicitly by Chief Justice Parker in the leading
case of Mitchell v. Reynolds,?> where ‘general restraint of

22 Nordenfeldt v. Maxin Norden-
felt Gun & Ammunition Co. [1893]
1 Ch. 630; 67 L. T. 469; 94 L. T.
J. 177; affirmed [1894] A. C. 535;
63 L. J. Ch. 908; 11 R. 1; 71 L.
T. 489.

2311 Jac. 1; 8. ¢, Bulstrode,
136.

24 (1620), Cro. Jac. 596.

25 (1711), 1 P. Wms. 18].
“In all restraints of trade, where
nothing more appears, the law
presumes them bad; but if the cir-
cumstances are set forth, that
presumption is excluded, and the
court is to judge of those cireum-
52 THE SHERMAN ANTI-TRUST ACT.

trade’ is explained and defined. The doctrine is assumed to
be unquestioned in Chesman v. Nainby,?° and in Clerke v.
Comer.?’. ‘Any deed,’ says Chief Justice Best, in Homer
vy. Ashford,** ‘by which a person binds himself not to
employ his talents, his industry or his capital, in any useful
undertaking in the kingdom would be void.’ <A note to
Hunlocke v. Blacklowe,”® sufficiently states the reason why
a covenant does not cease to be in general restraint of trade
merely because the time is limited. ‘The principle,’ says
the learned editor, ‘on which restraints of trade, partial in
point of space, have been supported, has not been applied
to restraints general in point of space, but partial in point
of time; for that which the law does not allow is not to be
tolerated because it is to last for a short time only.’ A
similar explanation is given by Mr. Baron Parke, in Ward
v. Byrne,®° where a covenant, indefinite as to the area of

stances, and determine accord-
ingly, and if, upon them, it ap-
pears to be a just and honest
contract, it ought to be main-
tained.” Ibid., 197.

26 (1726), 2 Ld. Raym., 1456
(4th Ed.), by Bayley; 1 Bro. P.
C. 234.

27 (1734),
53.

28 (1825), 3 Bing. 322, 326.
“But it may often happen (and
the present is a strong case of it)
that individual interest and gene-
ral convenience render engage-
ments not to carry on trade or to
act in a profession in a particular
place proper. Manufacturers or
dealings cannot be carried on, to
any great extent, without the as-
sistance of agents and servants.
These must soon acquire a knowl-
edge of the manufactures or deal-
ings of their employers. A mer-
chant or manufacturer would soon

Cas. t. Hardwicke,

find a rival in every one of his
servants, if he could not prevent
them from using, to his prejudice,
the knowledge acquired in his em-
ploy. Engagements of this sort
between masters and servants are
not injurious restraints of trade
but securities necessary for those
who are engaged in it. The effect
of such contracts is to encourage
rather than cramp the employment
of capital in trade and the pro-
motion of industry. For partial
restraints, however, there must be
some consideration, otherwise they
are impolitic and _ oppressive.”
Ibid.

292 Wms.
156b.

305 Mees. & W., 548, 562. “The
general policy of the law is
against these restrictions, and it
is only in deference to the conven-
jence of the trading part of the
community that certain excep-

Saund. (6th Ed.)
MONOPOLIES AND CONTRAC1'S IN RESTRAINT. 53

restraint, but limited to nine months after the end of the
covenantor’s employment, was held void in law. ‘When,’
he says, ‘a general restriction, limited only as to time, is
imposed, the public are altogether losers, for that time, of
the services of the individual, and do not derive any benefit
whatever in return,’ and looking at the authorities cited
upon this subject, it does not’ appear that there is one clear
authority in favor of a total restriction on trade limited
only as to time.’ An ambiguous expression as to the limits
in respect of time in the case of the Gunmakers Company v.
Fell,3* is explained by Baron Parke, and is due probably
to an oversight. Baron Rolfe’s judgment is on the same
lines as that of Baron Parke. ‘Partial restrictions,’ he says,
‘have always left things in this state, that, when allowed,
a portion of the public is not injured at all; that portion
of the public to which the restriction does not extend
remains exactly as it did before the restriction took place.
But in this case,’ viz.. on a case of general restraint for a
time certain, ‘the whole of the public is restrained during
the period in question.’ Ward v. Byrne *? was followed in
1840 by Hinde v. Gray.** Chief Justice Tindal repeats the
proposition in Proctor v. Sargent.** ‘Where we once hold
a restriction to be unreasonable in point of space, the short-
ness of the time for which it is imposed will not make it
good.’ The truth is, that the classification which seems to
distinguish restraints which are limited in point of space

tions to the general rule have been only for a short time; that is to

allowed. These exceptions have al-
ways left things in this state;
that, when allowed, a, portion of
the public is not injured at all;
that portion of the public to
which the restriction does not
extend remains exactly as it did
before the restriction took place.
But in this case the whole of the
public is restrained during the
period in question, and the only
argument is, that this is to endure

say, that what the law does not
allow is to be tolerated because it
is of short duration. I see no
principle in favor of such a con-
clusion; I do not think that is the
law ”

31 Willes, 384, 388.

325 Mees. & W. 548; 3 Jur.
1175.

33 1 Scott, N. R. 123.

a4 (2 Scott. N. R. 289, 1840),
2 Man. & G. 33.
54 THE SHERMAN ANTI-TRUST ACT.

from restraints which are limited in respect of time is a
cross division. The antithesis between time and space looks
so plausible that some text-books and more than one judge
in the last few years have lapsed into the mistake of sup-
posing that it corresponds in some way to the line of cleavage
upon which general restraints and partial restraints are
divided. ‘In respect of space,’ said Lord Campbell, in Tallis
v. Tallis,3* ‘there must be some limit.’ Since the reign of
Queen Elizabeth the common law authorities are really—all
of them—one way. Scores of cases have proceeded on this
basis; and those who dispute the rule can only do so, as it
seems to me, by disregarding the judgments and opinions of
an uncounted number of unanimous common law judges.
In the history of the application to partial restraints of
this test, the courts of common law, from time to time,
have been driven by good sense and by altered social cireum-
stances to make gradual advances in the direction of toler-
ation and indulgence. Judges as far back, possibly, as the
reign of Henry V., and certainly during the reign of
Queen Elizabeth, appear, as has been already stated, to have
considered that even partial restraints of trade were uni-
formly bad in law. But as trade progressed it was neces-
sarily discovered that a doctrine so rigid must be injurious
to the state itself. In the same way and at about the same
date, by laws which were in mere regulation of trade, came
to be distinguished by the courts from those which were in un-
limited restraint of it. Nevertheless, as late as the year 1601,
in Colegate v. Bacheler,** the court held that it was against
the law to prohibit or restrain ‘any to use a lawful trade
at any time or at any place.’ This severe view is recorded
in a dictum of Justice Croke (1613) in Rogers v. Perry,?
though it was repudiated by Chief Justice Coke and the
remainder of the court. One reason for the adoption of a
more elastic doctrine appears from a judgment delivered in

35] Ell. & B., 391, 411. 3711 Jac. 1; Rot. 223; s. e,
36 Cro. Eliz., 872. Bulstrode 136.
MONOPOLIES AND CONTRACTS IN RESTRAINT. 55

Broad v. Jollyffe.** In London and other large towns it had
become usual already for traders to let their shops and
wares to their servants when they were out of their appren-
ticeship, and for the servants to covenant that they would
not use that trade in such a shop or in such a street. The
courts, yielding to the progress of industry and commerce,
finally decided that a man might restrain himself voluntarily
and upon valuable consideration, from using his trade in a
particular place. The onus, however, at this time still lay
on the covenantee to show that the covenant on which he was
insisting had been made for a good consideration, and that it
was reasonable. The law is so expounded in Mitchell v.
Reynolds.*® ‘A particular restraint is not good without just
reason and consideration. In 1726, Chesman v. Nainby,*°
the House of Lords affirmed the doctrine and the qualifica-
tion, and their decision was followed in Clerke v. Comer,*!
Davis v. Mason,*? and Binn v. Guy.*® The reason for favor-
ing such partial restraints is enforced also in Homer v.
Ashford.** ‘It may often happen,’ says Chief Justice Best,
‘that individual interest and general convenience render
engagements not to carry on trade or to act in a profession
in a particular place proper.’ Down to as recent a period
as Young v. Timmins,** it was still, however, considered to
be for the person propounding a contract in partial restraint
of trade to satisfy the court of the adequacy of the con-
sideration. It was only in 1837, in Hitcheock v. Coker,**
that a fresh step forward was taken in reference to partial
restraints of trade. The exchequer chamber there for the
first time decided that, in cases of partial restraint, the
examination of the adequacy of the consideration was not
properly for the court, but for the parties, although the
burden remained as before upon the covenantee to show that

88.Cro. Jac. 596. 42 (1798), 5 T. R. 118,

39 (1711), 1 P. Wms. 181. 48 (1803), 4 East, 190.

401 Bro. P. C. 234; s. ¢, Ld. 44 (1825), 3 Bing. 322, 326,
Raym. 1456. 45 (1831), 1 Tyrw. 226.

41 (1734), cas. t. Hardw. 53. 466 A. & E., 438,
56 THE SHERMAN ANTI-TRUST ACT.

there was some good and valuable consideration. The cases
of Wallis v. Day,*7 Leighton v. Wales,*® and Archer v.
Marsh,*® were determined on the amended principles. By
this date the idea was fully recognized that all partial
restraints of trade which satisfied the conditions of the law
as to reasonableness and good considerations were not an
injury, but a benefit to the public. Ward v. Byrne,*® Proe-
ter v. Sargent,>! Rannie v. Irvine,®? Mallon v. May.*? A
further progress in the views with which the law regarded
partial restraints was made in Tallis v. Tallis.°* It was there
at last resolved that the onus lay upon the person who at-
tacked a covenant in partial restraint of trade to displace
the consideration—a change in the position of the parties
which is illustrated by the language of Chief Justice Earke,
in Mumford v. Gething,®> contracts in partial restraint of
trade are beneficial to the public as well as to the immediate

parties.

47 (1837), 2 Mees. & W. 273.
48 (1838), 3 Mees. & W. 545.
49 (1837), 6 A. & E. 959.

50 (1839), 5 Mees. & W. 548,
559.

51 (1840), 2 Scott, N. R. 289;
2 Seott, N. R. 289.

52 (1844), 7 Man. & G. 969.

53 (1843), 11 Mees. & W. 653;
7 Jur. 536; 12 L. J. Exch. 376.
“The covenant is ‘that the defend-
ant should not, without the plain-
tiff’s consent, carry on the profes-
sion of a surgeon, dentist, ete., in
London, or any of the towns or
places in England or Scotland,
where the plaintiffs or the defend-
ant, on their account, might have
been practicing before the expira-
tion of said service.’ According
to the terms of this covenant, the
defendant is prohibited from car-
rying on his business, not merely

Such is a resume of the history of the common
law doctrine as to restraint of trade.

The first cloud upon

at such place or places as the
plaintiffs might be practicing at
the time of the expiration of the
service, but any place where they
might have been practicing before,
though for even so short a time.
This covenant goes under [and] be-
yond what the protection of any in-
terests of the plaintiffs would rea-
sonably require, and it puts into
their hands the power of prevent-
ing the defendant from practicing
anywhere. We are, therefore, of the
opinion that it is an unreasonable
restriction, and that the defend-
ant is entitled to our judgment on
the demurrer to the second breach
for the insufficiency of the decla-
ration in that respect.” Ibid. 668.

54 (1853), 1 E. & B. 391.

55 (1859), 7 C. B. (N.S.) 305,
319; 6 Jur. (N.S.) 428; see also
Harris v. Parsons, 32 L. J. Ch.
247.
MONOPOLIES AND CONTRACTS IN RESTRAINT. 57

the clear sky of the common law narrative comes in the
equity decision of Lord Langdale, in Whittaker v. Howe,°®
a decision all the more inexplicable since it was given within
three or four years of Hitchcock v. Coker,®’ Wallis v. Day,**
Leighton v. Wales,®® Archer v. Marsh,® Ward v. Byrne,**
Hinde v. Gray,®? and Proctor v. Sargent,** from a careful
study of which cases alone the broad doctrine of the law
as I have above described it may be gathered with perfect
ease. In 1869 the case of the Leather Cloth Co. v. Lorsont *
occurred before Vice-Chancellor James. To the soundness
of the actual decision in that case of the illustrious equity
lawyer who tried it, I have no objection to urge, but his
language seems calculated, in several passages, to confuse
and not to throw light upon our conceptions of the estab-
lished common law doctrine. The Vice-Chancellor’s expres-
sions are at times colored by the same kind of misappre-
hension of the common law as that which pervades the judg-
ment of Lord Langdale, in Whittaker v. Howe.* Some
years later, in Rousillon v. Roussillon,** Lord Justice (then
Mr. Justice) Fry, in one of the many striking and brilliant
judgments for which the profession will long admire him,
proclaimed his disbelief in the existence of the rule of the
common law, and laid down the proposition that there is no
absolute doctrine that a covenant in restraint of trade is void
merely because it is unlimited in regard to space. The ques-
tion in each case he held was whether the restraint extended
further than was necessary for the reasonable protection of
the covenantee, and, if it did not do so, the performance of
the covenant would be enforced, even though the restriction
was unlimited as to space. This broad negation of the rule

56 (1841), 3 Beav. 383. 632 Scott, N. R. 289; 2 Man. &
576 A. & E. 438. G. 20,

582 Mees. & W. 273. 64L. R. 9 Eq. 345; 39 L. J. Ch.
593 Mees. & W. 546. 82; 21 L. T. 661; 18 W. R. 572.
606 A. & E. 959. 653 Beav. 383.

615 Mees. & W. 548. 66 L. R. 14 Ch. D. 351; 49 L. J.

621 Scott, N. R. 123; 3 Jur. Rep. Ch. 339,
1175.
58 THE SHERMAN ANTI-TRUST ACT.

appears to me to destroy the distinction (illustrated at length
in Mitchell v. Reynolds) ,°’ which always has subsisted be-
tween general and partial restraints of trade. In destroy-
ing it, Lord Justice Fry appears to me to overlook the im-
portance of the principle which underlies the entire doctrine
of the unlawfulness of general restraints of trade—that the
interests of the contracting parties are not necessarily the
same as the interests of the commonwealth. Rules which rest
upon the foundation of public policy, not being rules which
belong to the fixed or customary law, are capable, on proper
occasion, of expansion or modification. Circumstances may
change and make a commercial practice expedient which for-
merly was mischievous to commerce. But it is one thing to
say that an occasion has arisen upon which to adhere to the
letter of the rule would be to neglect its spirit, and another
to deny that the rule still exists. The dicta which Lord Jus-
tice Fry cites from Hitchcock v. Coker,®* from Tallis v.
Tallis,*® and from Mallon v. May,” are all dicta cases of par-
tial restraint, where the reasonableness of the particular
contract necessarily came under consideration. The neces-
sary protection of the individual may, in such cases, be the
proper measure of the reasonableness of the bargain. When
Lord Justice Fry passes on to examine the question of the
existence of the common law rule, he assumes, as it appears
to me, without sufficient justification, that complete protection
of the individual is the only reason which ought to lie at the
root of the doctrine. But the reasonableness of the legal
principle which forbids general restraint, altogether, is not
the same thing as the reasonableness [as between the par-
ties] of the bargain in any particular case, with regard to
the argument that the rule, if it existed, would be an
artificial one, and would therefore admit of no exceptions,
the judgments of the judges and of the House of Lords in
the case of Egerton v. Earl Brownlow,” illustrate, I submit

67] P. Wms. 181. 7011 Mees. & W. 653; 7 Jur.
686 A. & E. 348, 536; 12 L. J. Exch. 376.
69] E. & B. 391. 714 H. L. Cas. 1.
MONOPOLIES AND CONTRACTS IN RESTRAINT. a9

the distinction between a fixed rule of customary law and a
rule based on reason and policy. The latter may admit of
exceptions, although the former may not. Nor does the
Lord Justice, to my mind, sufficiently allow for the weight
of a multitude of decided cases when he states that there
are ‘undoubtedly cases in which it has been said that the
restraint must not be universal,’ and illustrates this by ref-
erence to Ward v. Byrne,’? Hinde v. Gray,”* and Allsopp v.
Wheatceroft.* The entire history of the subject of restraint
of trade proceeds surely on the basis of the existence of the
rule in question. With Whittaker v. Howe 7 I have already
dealt. Jones v. Lees 7 was, as I have pointed out, a case of
partial restraint in respect to the mode of manufacture. ‘I
consider,’ says Lord Justice Fry, in conclusion, ‘that the
cases in which an unlimited prohibition has been spoken of
as void, relate only to circumstances in which such a pro-
hibition has been unreasonable.’ Is it not a truer view that
the courts have never, as a rule, even entered on the con-
sideration of the circumstances of any particular case where
the prohibition has been unlimited as to area? In Davies
v. Davies 7 opposite opinions on the subject of the common
law rule were expressed by Lord Justice Cotton and by
Lord Justice Fry; but the matter did not call for deci-
sion.’’ 78

725 Mees. & W. 548; 3 Jur. is on the face of it void. * * *

1175. And the rule, if not obviously
73] Scott N. R. 123. just, is at any rate simple and
m4. R, 15 Eq. 59. “The ques- very convenient.” Ibid. 64.

753 Beav. 383.

761 H. & N. 189; 2 Jur. (N.S.)
645; 26 L. J. Exch. 9.

i7L. R. 36 Ch. D, 359; 35 W.

tion in this case is purely legal,
viz.: as to the validity of the
covenant in restraint of trade.
There has been w natural inclina-

tion of the courts to bring within
reasonable limits the doctrine as
to these covenants laid down in
the earlier cases, but it has been
generally considered in the later
as well as the earlier cases, that
a covenant not to carry on a law-
ful trade, unlimited as to space,

R. 697.

78 Maxim-Nordenfeldt v. Nord-
enfelt, L. R. [1893] 1 Ch. 630
651; 67 L. T. 469; 94 L. T. 177;
affirmed [1894] A. C. 535; 63 L.
J. 908; 11 R. L; 71 L. T. 489.

On appeal Lord Watson said:
“When the series of cases from the
60 THE SHERMAN ANTI-TRUST ACT.

§ 32, Unreasonableness of Contract—Extent of Territory
Covered—Nordenfeldt’s Case.—In 1894 a contract which
was claimed to be in restraint of trade came before the

English courts.

The contract involved was world-wide and

practically unlimited in time to the effect ‘‘not to engage

earliest to the present time are
carefully considered, I think they
will be found to record the his-
tory of a protracted struggle be-
tween the principle of common
honesty in private transactions on
the one hand, and the stern rule
which forbade all restraints of
trade on the other. In my opin-
ion it does not admit of dispute
that the ancient rule has had the
worst of the encounter, and has
been gradually losing ground in
all the courts. JI do not think
that, between the courts of com-
mon law and equity, there has
been much, if any, real difference
of opinion. But I am bound to
say that the language used by
equity judges is on the whole
more in consonance with the
commercial policy of the country
than some of the favorite dicta
of the common law courts. I pur-
posely say some of the dicta, be-
cause I find in the opinions of
many common law judges of the
highest eminence a clear and libe-
ral recognition of the wider views
of policy which have influenced
your Lordships in the decision of
this appeal.”

For a discussion of the develop-
ment of the law of England, see
article in 22 Irish Law Times,
282. Regarding the general pol-
icy of the law, the writer in this
article says: “But if the spirit
rather than the letter of the au-
thorities is to be regarded, much

may be said in favor of the valid-
ity of a general restraint, where
it is reasonably required for the
protection of the plaintiff. It is
generally admitted that the
ground on which the decisions are
founded is public policy, and in
early times the meaning of that
was explained to be that the na-
tion ought not to be deprived ot
the services of w useful member;
and accordingly nobody was al-
lowed to bind himself not to em-
ploy his talents, his industry or
his capital in any useful under-
taking in the kingdom. Ipswich
Tailors’ Case, 11 ‘Coke’s Rep. 53a;
Mitchell v. Reynolds, 1 P. Wms.
181; Homer v. Ashford, 3 Bing
328. No doubt Lord Macclesfield
expressed his opinion that a total
restraint could not under any cir-
cumstances be reasonably required
for the protection of the parties,
but that was merely a subordinate
ground of decision, and the no-
tion of reasonableness as the sole
test of the validity of a contract
in restraint of trade has only
come into prominence in modern
times. On the other hand, public
policy is a variable quantity, and
it would be a strange thing—as
was pointed out by Lord Justice
Fry—if a contract which might
now be for the public benefit were
held to be void because in the
reign of Henry V., or in the reign
of Elizabeth, that contract was
contrary to public policy; and
MONOPOLIES AND CONTRACTS IN RESTRAINT. 61

except on behalf of’’ the plaintiff ‘‘either directly or indi-
rectly, in the trade or business of a manufacturer of guns
or ammunition, or in any business competing or liable to
compete in any way with that carried on by’’ the plaintiff.”
It was claimed that, as the contract was unlimited in area,

it was unreasonable and void.

according to modern conceptions,
a contract which is reasonable is
prima facie not opposed to public
policy. It is obvious that a rule
which might be eminently bene-
ficial in a comparatively primitive
state of society might be ill
adapted to the highly complex
condition of modern commercial
intercourse. Certain it is that no
trade is likely to starve for want
of apprentices at the present day.
Hence it happens that public pol-
icy may require that the cove-
antees should be protected no less
than the covenantor; and_ this
view of public policy was strongly
insisted upon by Lord Justice
James, in re Leather Cloth Co.
yv. Larsont. Mr. Justice Kekewich
put the case in a nutshell when
he said that freedom of contracts
and freedom of trade were equally
favorites of public policy. Upon
the question upon what the law
ought to be these arguments are
hard to meet, but in the face of
the formidable array of decisions
by which an artificial rule has
been established that a general re-
straint is void, they would ap-
pear to have less cogency upon
the question what is the actual
state of the law. In conclusion,
we respectfully concur in the opin-
ion expressed by Lord Justice
Bowen, that the rule of the com-
mon law is too much ingrained in
our history to be changed at this

Lord Hirschel, in the course

moment—at all events, except by
the highest court in the country.”

79The facts are recited some-
what at length in the opinion of
Lord Hirschel: “The appellant
had, prior to March, 1886, ob-
tained patents for improvements in
quick-firing guns, and carried on,
amongst other things, the business
of the manufacture of such guns
and of ammunition. In that month
he procured the registration of a
limited liability company, which
was to take over his business as-
sets and liabilities. On the 5th
of March, 1886, an agreement was
made between the appellant and
the Nordenfeldt Gun \Company, by
which the company was to pur-
chase the good will of the appel-
lant’s business, and all the stock,
plant, patents connected there-
with, he covenanting to act as
managing director for « period
of five years, and, so long as the
Nordenfelt Company should con-
tinue to carry on business, ‘not to
engage, except on behalf of such
company, either directly or indi-
rectly, in the trade or business of
a manufacturer of guns or am-
munition, or in any business com-
peting or liable to compete in any
way with that carried on by such
company.’ The agreement for pur-
chase was duly carried into effect,
and the price paid to the appel-
lant, namely, £237,000 in cash and
£50,000 in paid-up shares of the
62 THE SHERMAN ANTI-TRUST ACT.

of his opinion, said: ‘‘In early times all agreements in
restraint of trade, whether general or restricted to a par-
ticular area, would probably have been held bad; but a
distinction came to be taken between covenants in general
restraint of trade and those where the restraint was only
partial.’’ And a little further on he says: ‘‘As I read
the authorities, until the cases to which I shall call attention
presently, the distinction between general and particular
restraints was always maintained, and the latter alone were
regarded as exceptions from the general rule that agree-
ments in restraint of trade were bad.’’

Lord Hirschel said regarding the geographical limitations
to the restraint: ‘‘I do not intend to throw doubt on what
was decided in these cases, for reasons which will appear
hereafter, but I respectively differ from the view which
appears to be indicated that there was not at any time a
rule of the common law distinguishing particular from

company. In July, 1888, nego-
tiations were entered into for the
amalgamation of the Nordenfeldt
Company and the Maxim Gun
Company, and for the transfer ol
their business and assets to a new
company, to be called the Maxim-
Nordenfeldt Guns and Ammuni-
tion Company. By an agreement
for the amalgamation of the two
companies, dated the 3rd of July,
1888, and made between the Maxim
Company the Nordenfeldt Com-
pany and P. Thane, on behalf of
the new company, the Nordenfeldt
Company agreed that they would
procure the appellant to enter in-
to the agreement which was after-
wards embodied in the instrument
of the 12th of September, 1888.
The respondents were incorporated
on the 17th of July, 1888, and on
the 8th of August the agreement
of the 3rd of July was adopted by

the company. It is to be noted
that at the time when this agree-
ment was entered into, to which
the Nordenfeldt Company was a
party, the appellant was manag-
ing director of that company, and
that, in the memorandum of asso-
ciation of the amalgamated com-
pany which was signed by the ap-
pellant, the objects of the com-
pany were stated to be, inter alia,
not only the adoption of the
agreement of the 3rd of July, but
also ‘to acquire, undertake and
earry on as_ successors to the
Maxim Gun Company and the
Nordenfeldt Gun and Ammuni-
tion Company, the godd will of
the trade and business heretofore
carried on by such companies and
each of them, and the property
and rights belonging to or held in
connection therewith respective-

ly. ”
MONOPOLIES AND CONTRACTS IN RESTRAINT. 63

general restraints, and treating the former only as excep-
tions from the general principle that contracts in restraint
of trade are invalid.

‘‘The discussion on which I have been engaged is, it must
be admitted, somewhat academic. For, in considering the
application of the rule, and the limitations, if any, to be
placed on it, I think that regard must be had to the
changed conditions of commerce and of the means of com-
munication which have been developed in recent years. To
disregard these would be to miss the substance of the rule
in a blind adherence to its letter. Newcastle-upon-Tyne is,
for all practical purposes, as near to London to-day as
towns which are now regarded as suburbs of the metropolis
were a century ago. An order can be sent to Newcastle more
quickly than it could then have been transmitted from one
end of London to the other, and goods conveyed between the
two cities in a few hours and at comparatively small cost.
Competition has assumed altogether different proportions in
these altered circumstances, and that which would have been
once merely a burden on the covenantor may now be essential
if there is to be reasonable protection to the covenantee.’’

And a little further on he continued: ‘‘There is no doubt
that, with regard to some professions and commercial occu-
pations, it is as true to-day as it was formerly that it is
hardly conceivable that it should be necessary, in order to
secure reasonable protection to a covenantee, that the
covenantor should preclude himself from carrying on such
profession or occupation anywhere in England. But it can
not be doubted that in other cases the altered circumstances
to which I have alluded have rendered it essential, if the
requisite protection is to be obtained, that the same terri-
torial limitations should not be insisted upon which would in
former days have been only reasonable. I think, then, that
the same reasons which led to the adoption of the rule
require that it should be frankly recognized that it can not
be rigidly adhered to in all cases.
64 THE SHERMAN ANTI-TRUST ACT.

‘‘Tt appears to me that a study of Lord Macclesfield’s judg-
ment will show that if the conditions which prevail at the
present day had existed in his time, he would not have laid
down a hard-and-fast distinction between general and par-
ticular restraints, for the reasons by which he justified that
distinction would have been unfounded in point of fact.

‘‘Whether a case in which a general covenant can now be
supported are to be regarded as exceptions from the rule
which I think was long recognized as established, or whether
the rule is itself to be treated as inapplicable to the altered
conditions which now prevail, is probably a matter of words
rather than of substance. The latter is perhaps the sounder
view. When once it is admitted that, whether the covenant
be general or particular, the question of its validity is alike
determined by the consideration whether it exceeds what is
necessary for the protection of the covenantee, the distinction
between general and particular restraints ceases to be a
distinction in point of law.

‘‘T think a covenant entered into in connection with the
sale of the good-will of a business must be valid where the
full benefit of the purchase can not be otherwise secured to
the purchaser. It has been recognized in more than one
case that it is to the advantage of the public that there should
be free scope for the sale of the good-will of a business or
calling. These were cases of partial restraint. But it
seems to me that if there be occupations where a sale of the
good-will would be greatly impeded, if not prevented, unless
a general covenant could be obtained by the purchaser, there
are no grounds of public policy which countervail the dis-
advantage which would arise if the good-will were in such
cases rendered unsalable.

“‘T would adopt in these cases the test which in a case of
partial restraint was applied by the court of common pleas
in Horner v. Graves,*® in considering whether the agreement
was reasonable. Lord Chief Justice Tindal said: ‘He could
not see how a better test could be applied to the question,

80 (1831) 7 Bing. 735; 5 Moores & P. 768.
MONOPOLIES AND CONTRACTS IN RESTRAINT. 65

whether reasonable or not, than by considering whether the
restraint is such only as to afford a fair protection to the
interests of the party in favor of whom it is given, and not
so large as to interfere with the interests of the public.
Whatever restraint is larger that the necessary protection of
the party can be of no benefit to either; it can only be
oppressive, and, if oppressive, it is, in the eyes the law,
unreasonable.’ The tendency in later cases has certainly
been to allow a restriction in point of space which formerly
would have been thought unreasonable, manifestly because
of the improved means of communication. A radius of
a hundred and fifty or even two hundred miles has not been
held too much in some cases. For the same reason, I think
a restriction applying to the entire kingdom may in other
cases be requisite and justifiable.

“‘T must, however, guard myself as being supposed to lay
down that if this can be shown, the covenant will in all
cases be held to be valid. It may be, as pointed out by Lord
Bowen, that in particular circumstances the covenant might,
nevertheless be held void on the ground that it was injurious
to the public interest.’’

Applying the law to the Nordenfeldt case, Lord Hirschel
said: ‘‘It seems to be impossible to doubt that it is shown
that the covenant is not wider than is necessary for the
protection of the respondents. The facts speak for them-
selves. If the covenant embraced anything less than the
whole of the United Kingdom, it is obvious that it would be
nugatory. The only customers of the respondents must be
found amongst the governments of this and other countries,
and it would not practically be material to them whether
the business were carried on in one part of the United
Kingdom or another.

**So far I have dealt only with the covenant in relation to
the United Kingdom. The appellant appeared willing to
concede that it might be good if limited to the United King-
dom; but he contended that it ought not to be world-wide
66 THE SHERMAN ANTI-TRUST ACT.

in its operation. I think that, in laying down the rule that
a covenant in restraint of trade unlimited in regard to space
was bad, the courts had reference only to this country. They
would, in my opinion, in the days when the rule was adopted,
have scouted the notion that if for the protection of the
vendees of a business in this country it were necessary to
obtain a restrictive covenant embracing foreign countries,
that covenant would be bad. They certainly would not have
regarded it as against public policy to prevent the person
whose business had been purchased and was being carried
on here from setting up or assisting rival business in other
countries; and for my own part I see nothing injurious to
the public interests of this country in upholding such a
covenant.

‘‘When the nature of the business and the limited number
of customers is considered, I do not think the covenant can
be held to exceed what is necessary for the protection of the
covenantees.’’

Lord Watson in his opinion devoted his attention to the
question of area covered by the contract: ‘‘The main ques-
tion discussed in the courts below, and the only question
which, in my opinion, it is necessary for your lordships to
decide, is raised by the appellant’s contention that the per-
sonal restraint to which he has agreed to submit, being
unlimited in space, is contrary to the recognized policy of
English law, and is therefore incapable of being enforced
by an English court.”’

Continuing, Lord Watson said: ‘‘It does not seem to admit
of doubt that the general policy of the law is opposed to all
restraints upon liberty of individual action which are
injurious to the interests of the state or community. Nor is
it doubtful that courts will rightly refuse to enforce any
compact by which an individual binds himself not to use
his time and talents in prosecuting a particular profession
or trade when its enforcement would obviously or probably
be attended with these injurious consequences. But it must
MONOPOLIES AND CONTRACTS IN RESTRAINT. 67

not be forgotten that the community has a material interest
in maintaining the rules of fair dealing between man and
man. It suffers far greater injury from the infraction of
these rules than from contracts in restraint of trade. I think
it is now generally conceded that it is to the advantage of
the public to allow a trader who has established a lucrative
business to dispose of it to a successor by whom it may be
efficiently carried on. That object could not be accomplished
if, upon the score of public policy, the law reserved to the
seller an absolute and indefeasible right to start a rival
concern the day after he sold. Accordingly, it has been
determined judicially that in cases where the purchaser, for
his own protection, obtains an obligation restraining the
seller from competing with him within bounds which, having
regard to the nature of the business, are reasonable and are
limited in respect of space, the obligation is not obnoxious
to public policy, and is therefore capable of being enforced.
Whether, when the circumstances of the case are such that
a restraint unlimited in space becomes reasonably necessary
in order to protect the purchaser against any attempt by the
seller to resume the business which he sold, a covenant impos-
ing that restraint must be invalidated by the principle of
public policy is the substance of the question which your
lordships have to consider in this appeal. The earlier deci-
sions which were chiefly, if not exclusively, by the courts of
common law, contain abundant dicta, which, if literally
followed, would sustain the plea upon which the appellant
relies. These dicta broadly state the rule to be that a
general restraint of trade, or, in other words, a restraint
unlimited as to space, is void, because it is contrary to the
commercial policy of England. The proposition is fre-
quently to be found in the later common law cases. To me
it seems very natural that the law should have been laid
down in these broad terms. The rule of policy, as originally
understood and administered, struck at all restraints,
whether partial or general. It was relaxed by these decisions
68 THE SHERMAN ANTI-TRUST ACT.

in the case of partial restrictions, which were held to be
reasonable. I feel that had I occupied the seat of the learned
judges who pronounced them, I should probably have used
the same language which they employed with reference to
unlimited restraints. They never imagined that any busi-
ness should attain such wide dimensions that it could not
be reasonably protected from the invasion of the seller
except by subjecting him to a restraint unlimited in space.
I am under the impression that, had they conceived the
possibility of such a case occurring, the rule might have
been expressed in somewhat different terms. I think that,
as stated, it was meant to involve the assumption that there
could be no such case. A series of decisions based upon
grounds of public policy. however eminent the judges by
whom they were delivered, can not possess the same binding
authority as decisions which deal with and formulate prin-
ciples which are purely legal. The course of policy pursued
by any country in relation to and for promoting the in-
terests of its commerce must, as time advances and as its
commerce thrives, undergo change and development from
various causes which are altogether independent of the
action of its courts. In England, at least, it is beyond the
jurisdiction of her tribunals to mold and stereotype national
policy. Their function, when a case like the present one is
brought before them, is, in my opinion, not necessarily to
accept what was held to have been the rule of policy a
hundred or a hundred and fifty years ago, but to ascertain,
with as near an approach to accuracy as circumstances
permit, what is the rule of policy for the then present time.
When that rule has been ascertained, it becomes their duty
to refuse to give effect to a private contract which violates
the rule, and would, if judicially enforced, prove injurious
to the community.’’ §

81 Regarding the ancient rule, the present time, are carefully
Lord Watson said: “When the se- considered. I think they will be
ries of cases, from the earliest to found to record the history of a
MONOPOLIES AND CONTRACTS IN RESTRAINT. 69

Lord Ashbourne pressed the argument somewhat farther:
“‘T do not know that there is a single reported case whose
facts are clearly known where a covenant in general re-
straint of trade, clearly reasonable in itself and only
affording a fair protection to the parties, has been held
to be void. One can readily see that such covenants might
be extravagant and unnecessary, quite unreasonable, and
not at all required for fair protection, and then the fact
that they were general and not partial would be a distine-
tion entitled to great weight. Thus I can well understand
the existence of the distinction being kept alive and noted
in so many cases, though this would not at all imply or
require that the reasonableness of a covenant and the fact
that it only afforded fair protection should ever be put
aside or ignored. In former days the arguments used
showed how different were the circumstances of those times.
Discussions are to be found as to ten-mile limits, and fifty
miles, and as to the distances of one English town from
another—then considerable topics, but now often trivial,
having regard to present means of locomotion. The cases
show a great variety of cireumstances—different professions
and trades—cases of apprenticeship and sales of good-will.
Each case has had to be considered on its own facts. It is
practically impossible to divide all cases into the two
categories of covenants in general and partial restraint of
trade requiring distinct treatment and needing different
policies. However it is accomplished, the law must work in
harmony with the requirements of the times, and must
advance and develop with the growth of our national life

protracted struggle between the
principle of common honesty in
private transactions, on the one
hand, and the stern rule which
forbade all restraints of trade on
the other. In my opinion it does
not admit of dispute that the an-
cient rule has had the worst of

the encounter, and has been gradu-
ally losing ground in all the
courts. I do not think that be-
tween the courts of common law
and equity that there has been
much, if any real, difference of
opinion.”
70 THE SHERMAN ANTI-TRUST ACT.

and institutions. Whether there ever was an effective and
acknowledged rule, requiring all covenants in restraint of
trade to be divided into two broad categories of general
or partial restraint, with the test of reasonableness openly
and expressly applied to partial restraints, though in reality
applied under the guise of an exception whenever the exi-
gencies of life and business required it; or whether, assuming
the rule to have been once known and recognized, it can now
be accepted as applicable to the conditions of our present
time, or whether all restraints upon trade have been always
really governed by one test, what is a fair protection and
what is reasonable—are inquiries of interest on which legal
minds may differ.’’

Regarding the interests of the public in contracts in
restraint of trade, Lord McNaughten said: ‘‘When the ques-
tion is how far interference with the liberty of an individual
in a particular trade offends against the interest of the
public, there is not much difficulty in measuring the offense
and coming to a judgment on the question. The difficulty
is much greater when the question of public policy is con-
sidered at large and without direct reference to the
interests of the individual under restraint. It is a principle
of law and of public policy that trading should be encour-
aged and that trade should be free; but a fetter is placed
on trade and trading is discouraged if a man who has built
up a valuable business is not to be permitted to dispose of
the fruits of his labors to the best advantage. It has been
said that, if the restraint be general, ‘the whole of the public
is restrained’—a phrase not, I think, particularly accurate,
or perhaps particularly intelligible. It has been said that
when a person is debarred from carrying on his trade
within a certain limit of space, he will carry it on else-
where, and thus the public outside of the area of restriction
will gain an advantage which may be set off, as it were,
against the disadvantage resulting to the public within the
limited area. That is, perhaps, a just observation in the
ease of apprenticeship and cases of that sort; but it is, I
MONOPOLIES AND CONTRACTS IN RESTRAINT. 71

think, rather a fanciful way of looking at the matter in the
case of a sale of good-will. Applied to that sort of case, it
seems to me to be just one of those unrealities which tend
to confuse this question. What has the public to hope in
the way of future service from a man who sells his business,
meaning to trade no more? Is it likely that he will begin
the struggle of life again, working at his old trade or
profession in some remote place where he has no interest
and no connections? Is the possibility that he may do so
a factor to be taken into consideration? Now, when all
trades and business are open to everybody alike, it is not
very easy to appreciate the injury to the public resulting
from the withdrawal of one individual.’’ °*

The several opinions delivered in this case rest upon the
facts involved. The case was decided that under the circum-
stances the restraint imposed was no more than was essential
to enable Nordenfelt to secure adequate compensation for the
rights he had parted with and the company entering into
the contract with him adequate protection to the rights
purchased; and in that view it was reasonable. ‘‘It was
hardly disputed,’’ said Lord McNaughten, ‘‘that the re-
straint was reasonable, having regard to the interests of the
parties at the time when the transaction was entered into.
It enabled Mr. Nordenfeldt to obtain the full value of what
he had to sell; without it the purchasers could not have
been protected in the possession of what ‘they wished to
buy.’’

82 Nordenfeldt v. Maxim Nord-
enfeldt Gun & Ammunition Co.,

(1840), 1 Man. & G. 195; Ward
v. Byrne (1839) 5 Mees. & W.

[1894] A. C. 535; 63 L. J. Ch.
908; 11 R. 1; 71 L. T. 489, affirm-
ing [1893] 1 Ch. 630; 67 L. T.
469; 94 L. T. J. 177. The cases
reviewed were the following:
Mitchell v. Reynolds (1711) 1 P.
Wws. 181; Gunmakers Co. v. Fell
(1742) Willes, 384; Horner v.
Graves (1831) 7 Bing. 735; 5
Moores & P. 768; Hinde v. Gray

547; 3 Jur. 1175; Whittaker v.
Howe (1841) 3 Beav. 383; Davis
v. Mason (1794) 5 Term Rep.
118; Leather Cloth Co. v. Lorsont
(1869) 39 L. J. Rep. Ch. 86 L.
R. 9 Eg. 345; 21 L. T. 661; 18
W. R. 572; Rousillon v. Rousillon
(1880), 49 Law J. Rep. Ch. 338;
L. R. 14 Ch. Div. 351.
72 THE SHERMAN ANTI-TRUST ACT.

§ 33. Reasonable and Unreasonable Restraint—Test.—
If the restraint imposed by a contract is greater than 1s
necessary to the protection of the purchaser, then it is un-
reasonable; but if it is necessary to secure his full rights
under the contract, it is not, according to the English
decisions. Chief Justice Tindal gave a test to determine
whether the restraint is reasonable or unreasonable, which
has been referred to with approval by a number of Amer-
ican and English cases. ‘‘We do not see how a better test
can be applied to the question,’’ said he, ‘‘ whether this is or
is not a reasonable restraint of trade than by considering
whether the restraint is such only as to afford a fair pro-
tection to the interests of the party in favor of whom it is
given, and not so large as to interfere with the interests
of the public. Whatever restraint is larger than the neces-
sary protection of the party [requires] can be of no benefit
to either; it can only be offensive, and if offensive, it is in
the eye of the law unreasonable. Whatever is injurious
to the interests of the public is void on the grounds of
public policy.’’

Thus a German company carried on a business that ex-
tended over the entire globe. It made a contract with
certain agents in England who were thereby to have ex-
clusive agency for certain articles and to be paid over a
large sum per annum during the life of the agreement.
These agents, in consideration of the execution of the
contract, agreed that for three years after the contract
had ended that they would not enter into any similar
business nor give any information whatever about their
principal’s business. The contract contained no limitations
as to space, yet it was held valid, not being unreasonable
under the circumstances involved.

After reviewing the authorities, the Lord Chancellor said:
“‘The result of the authorities down to the present time on
this question of a covenant in restraint of trade appears

83 Horner v. Graves, 7 Bing. 743; 5 Moores & P. 768.
MONOPOLIES AND CONTRACTS IN RESTRAINT. 73

to be as follows: Where the restraint is general—that is,
without qualification—the covenant is bad as being unrea-
sonable and contrary to public policy. Where the restraint
is partial—that is, subject to some qualification either as to
time or space—then the question is whether the covenant
is reasonable; and if reasonable, it is good in law. In
considering this question of reasonableness, the points to
which the attention of the court is specially directed are
the limits of time and space, and the protection required
for the trade of the covenantee, this latter point involving
the examination of the nature and extent of the trade. The
reasonableness depends on all the circumstances, and these
must be duly weighed in each case. If the restraint is
greater than the protection that the business of the cove-
nantee can possibly require, the covenant is unreasonable
and void.’’

That the nature of the business or interests for the pro-
tection of which the contract is made is the question of first
importance is clearly indicated by Chitty, J.: ‘‘The cir-
cumstances which may be legitimately inquired into on
this question of reasonableness appear to me to include the
general circumstances under which trade is carried on at
the time when the covenant is entered into. The improve-
ments in ‘the means of communication which have taken
place in recent times by reason of railways, steamships,
postal facilities, the telegraph, and the telephone, are, I
think, within the scope of the inquiry and bear particularly
on the question of space; they are relevant more or less in
proportion to the greater or lesser area within which the
trade sought to be protected is carried on, and to the
varying nature of the trade itself. Such matters would
have little or no relevancy if the question related to the
protection of the local business, such as that of a village
baker or cobbler, and the restraint sought to be imposed on
a journeyman baker or journeyman cobbler, though limited
as to time, extended to the whole of England. Such a
14 THE SHERMAN ANTI-TRUST ACT.

restraint would be unreasonable and vexatious. But they
would be relevant in reference to the large trade of a
merchant and to a widely extended news-collecting agency,
or to any other trade covering a great portion of the globe.
What might in a former age have been considered an unrea-
sonable restriction would not necessarily be so held in the
altered circumstances of the present time. I proceed to
apply these general observations to the facts of the case
before me. In the range of articles with which it is con-
cerned the plaintiff’s trade is limited; it applies not to all
chemical products, but to a special class. In the range of
the area to which it is applied it is extensive—it is prac-
tically unlimited in space. The plaintiffs are, I think,
justified in saying, as they do by their affidavits, that their
trade is world-wide. There is no evidence to the contrary.
It was within the contemplation of the parties to the agree-
ment that the defendants, placed as they were in a position
of high trust and confidence, would acquire a knowledge
of the methods by which the plaintiffs carried on their
business—a knowledge of their customers and their require-
ment and of the prices charged to them, and generally of
those details which would make the defendants dangerous
competitors when the connection was severed. The de-
fendants, with their eyes open and after their previous
experience during many years of the nature of the agency,
deliberately entered into the agreement and consented to be
bound by the restraining stipulation. Although not con-
elusive on the subject, the opinion of mercantile men,
manifested by their acts, is not to be disregarded on the
question of reasonableness. In my opinion, the claim is
not unreasonable for the protection of the plaintiffs’ trade.
It amounts to this. The defendant says: ‘For the limited
period of three years you [the plaintiffs] shall have a
breathing time during which we will abstain from using
the knowledge we have acquired in your employ against
you by setting up a rival trade.’ This is far remote from
MONOPOLIES AND CONTRACTS IN RESTRAINT. 15

the case of an attempt to deter during a limited term a
handicraftsman from plying his craft anywhere throughout
the world; it is, in effect, a sale by the defendants of their
interest in the good-will of a large business, built up by the
capital, skill and industry of the contracting parties. The
defendants have received a large remuneration, and, what is
nore, that which they themselves considered to be an
adequate price for the contract on their part. To hold the
stipulation void would tend to deprive persons in the
position of the defendants of the advantage of making
their own bargains for their remuneration, and would, in
my opinion, unnecessarily interfere with their power of con-
tract to their detriment, and to an extent not required by
law.’’ 8#

Where the contract was by an agent that he would not,
within a year after leaving his employer’s service carry on
the same business or enter into the service of or act as the
agent for any person in the United Kingdom of Great
Britain and Ireland, or in France, Belgium, Holland or
Canada; nor would he within five years after leaving his
employment, either directly or indirectly engage in a similar
business in France, it was held valid, the Master of
Rolls saying: ‘‘Time was when all agreements in restraimt
of trade or liberty to work were regarded as against public
policy and invalid. But this view of the law was found
to be mischievous and intolerable, and it was gradually
disclaimed and modified. The modern doctrine, as I under-
stand it, is that, if an agreement restraining a person from
carrying on business is injurious to the public interests of
this country, such agreement is invalid to the extent to
which it is injurious, but not further, if it is so framed as
to permit of division into two portions, one of which is
good and the other bad.’’ And continuing: ‘‘Further it is

84From opinion in Badische & Segner (1892), 61 L J. R. Ch.
Anilin und Soda Fabrik v. Schott 698; L. R. 3 Ch. 447,
76 THE SHERMAN ANTI-TRUST ACT.

now settled that, unless there are circumstances showing
some reasonable ground for imposing a restriction oz a
person’s liberty to do what he can for his own support,
such restriction will be held not binding upon him. Ac-
cording to this doctrine, an agreement in restraint of trade
which is wider than is reasonably necessary for the pro-
tection of the person seeking to enforce it is invalid so far
as it is wider than is so necessary, and this may invalidate
the whole restraint sought to be imposed if the clause of
imposing it is so framed as not to be severable.”?’ * * *
“Tf there is one thing more than another which is essen-
tial to the trade and commerce of this country, it is the
inviolability of contracts deliberately entered into. To allow
a person of mature age, and not imposed upon, to enter into
a contract, to obtain the benefit of it, and then to repudiate
it and the obligations which he has undertaken, is prima
facie at all events, contrary to the interests of any and
every country. Of course, I am not speaking of contracts
induced by fraud, duress or undue influence, or impeachable
on any other recognized ground of invalidity. Omitting
all such cases, the public policy which allows a person who
obtains employment on certain terms understood and
agreed to by him to repudiate his contract conflicts with
and must, to avail the defendant, for some sufficient
reason, prevail over the manifest public policy which, as a
rule, holds. him to his bargain. I do not say that no such
case can arise, even where the terms impose a restriction on
his liberty no wider than mentioned above, but at this
moment no example of such a case short of some pernicious
monopoly occurs to me.’’

85 Underwood & Son v. Barker,

68 L. J. Ch. 201; L. R. 1 Ch.
Div. 300; 80 L. T. 306; 47
W. R. 347. “Referring to the

particular facts in the case be-
fore him, Lindley. M. R.. said:
‘The restriction is limited to a
vear, and, as I read the agree-

ment, to the places specified in it.
It is to be taken as proved that it
is important to the plaintiffs that
their rivals should not know
either to whom the plaintiffs sold
their hay or where they got it
from. The defendant was engaged
as their clerk and foreman, and
MONOPOLIES AND CONTRACTS IN RESTRAINT. Ti

§ 34. American Law Follows the English Law.—The
American law on restraint of trade is a development of the
English law. Chief Justice White, in a dissenting opinion,
has thus traced its development: ‘‘The rudiments of the
doctrine of contracts in restraint of trade are found in the
common law at a very early date. The first case on the
subject, reported in 6 Year Book 5, 2 Hen. V., is known
as Dyer’s case. That was an action of damages upon a
bond conditioned that the defendant should not practice
his trade as a dyer at a particular place during a limited
period, and it was held that the contract was illegal. The
principle upon which this case was decided was not de-
scribed as one forbidding contracts in restraint of trade,

would, whilst acting as such, ob-
tain information on these matters,
and such information would, if
imparted to a rival in trade,
greatly benefit him and _ propor-
tionately injure the plaintiffs.
These circumstances appear to me
to distinguish this case from
Ward v. Byrne (1839), 5 M. & W.
547; 3 Jur. 1175; which is nearer
the present case than any other.
There the plaintiffs were coal mer-
chants and the defendant was their
town traveler and collecting clerk,
and he agreed not to follow or be
engaged in the business of a coal
merchant for nine months after
he should leave the plaintiffs’ em-
ploy. This agreement was held
invalid on the ground that it was
unlimited in point of space. This
case was much discussed in Nord-
enfeldt v. Maxim-Nordenfeldt Co.
(1894), 62 L. J. Ch. 273; 63 Jd.
908, 1 Ch. 630; [1894] A. C 535.
Jt does not follow that all agree-
ments not to carry on or be em-
ployed in a particular business any-
where in this country are necessar-

ily against public policy and there-
fore invalid. The question in each
case is whether such a restriction
is reasonable or not in the sense
already explained. If it is rea-
sonable in this sense it will be
valid, unless on some other ground
than its application to the whole
of the United Kingdom, it can be
held to be against public policy.
In the face of the evidence ad-
duced by the plaintiffs, and in the
absence of all evidence to contra-
dict or modify it, I do not feel
compelled by Ward v. Byrne
(1839), 5 M. & W. 547; 3 Jur.
1175, to hold the restraint in the
present case unreasonable so far
as this country is concerned, which
is the material question, for the
defendant has entered the service
of a rival of the plaintiffs in this
country. If the restraint is un-
reasonable as to the foreign coun-
tries named, which I do not think
it is, still the agreements as to
them is clearly severable from that
part of it which relates to this
country.”
18 THE SHERMAN ANTI-TRUST ACT.

but was stated to be one by which contracts restricting the
liberty of the subject were forbidden. The doctrine de-
clared in that case was applied in subsequent cases in
England prior to the case of Mitchel v. Reynolds.** There
the distinction between general restraints and partial
restraints was first definitely formulated, and it was held
that a contract creating a partial restraint was valid, and
one creating a general restraint was not. The theory of
partial and general restraints established by that case was
followed in many decided cases in England, not, however,
without the correctness of the difference between the two
being in some instances denied and in others questioned,
until the matter was set finally at rest by the House of
Lords, in Nordenfeldt v. Maxim-Nordenfeldt Guns and Am-
munition Co.8* In that case it was held that the distinction
between partial and general restraint was an incorrect cri-
terion, but that whether a contract was invalid because in
restraint of trade must depend upon whether, on consider-
ing all the circumstances, the contract was found to be
reasonable or unreasonable. If reasonable, it was not a
contract in restraint of trade, and if unreasonable, it was.
The decisions of the American courts substantially conform
to both the development and ultimate results of the English
cases. Whilst the rule of partial and general restraint has
been either expressly or impliedly admitted, the exact scope
of the distinction between the two has been the subject of
discussion and varying adjudication. And, although it is
accurate to say that in the cases expressions may be found
speaking of contracts as being in form in restraint of
trade and yet invalid, it results from an analysis of all
the American cases, as it does from the English, that these
expressions in no way imply that contracts which were
valid because they only partially restrained trade were
yet considered as embraced within the definition on con-
tracts in restraint of trade. On the contrary, the reason

861 P. Wms. 181. 87 [1894] App. Cas. 535.
MONOPOLIES AND CONTRACTS IN RESTRAINT. 719

of the cases, where contracts partially restraining trade
were excepted and hence held to be valid, was because they
were not contracts in restraint of trade in the legal meaning
of those words.’’ §

“Tt is also true that while the principles concerning
contracts in restraint of trade, that is, voluntary restraint
put by a person on his right to pursue his calling, hence
only operating subjectively, came generally to be recog-
nized in accordance with the English rule, it came, more-
over, to pass that contracts or acts which it was considered
had a monopolistic tendency, especially those which were
thought to unduly diminish competition, and hence to
enhance prices—in other words, to monopolize—came also in
a generic sense to be spoken of and treated as they had
been in England, as restricting the due course of trade, and
therefore as being in restraint of trade. The dread of
monopoly as an emanation of governmental power, while it
passed at an early date out of mind in this country, as a
result of the structure of our government, did not serve
to assuage the fear as to the evil consequences which might
arise from the acts of individuals producing or tending to
produce the consequences of monopoly. It resulted that
treating such acts as we have said as amounting to monopoly,
sometimes constitutional restrictions, again legislative enact-
ments or judicial decisions, served to enforce and illustrate
the purpose to prevent the occurrence of the evils recognized
in the mother country as consequent upon monopoly, by
providing against contracts or acts of individuals or com-
binations of individuals or corporations deemed to be con-
ducive to such results.’’ ®°

88 United States v. Trans-Mis- 89 Standard Oil Co. v. United
souri Freight Ass’n, 166 U. S. States, 221 U. S. 1; 31 Sup. Ct.
290; 17 Sup. Ct. 540; 41 L. Ed. 502; 55 L. Ed. 619; 34 L. R. A.
1007, reversing 58 Fed. 58; 19 (IN. 8.) 834, modifying 173 Fed.
U.S. App. 36; 7 C. 10. A. 15; 24 = 177.

L. R. A. 73; 4 Inter. St. Com. Rep.
443, which affirmed 53 Fed. 440.
80 THE SHERMAN ANTI-TRUST ACT.

§ 35. Undue Restraint Tending to Monopoly.—tIf the
restraint of trade is an undue one, it tends toward monopoly,
and the contract imposing it is void. After quoting Chief
Justice Tindall,’ wherein he stated the test of the legality
of a contract in restraint of trade to be ‘‘whether the re-
straint is such only as to afford a fair protection to the
interests of the party in favor of whom it is given, and
not so large as to interfere with the interest of the public,’’
and adds that whatever ‘‘is larger than the necessary pro-
tection of the party requires can be of no benefit to either; it
can only be oppressive; it is, in the eye of the law, unrea-
sonable; whatever is injurious to the interests of the public
is void on the ground of public policy.’’ Judge Taft in a
celebrated case says: ‘‘It would be stating it too strongly
to say that these five classes of covenants in restraint of
trade {which he had enumerated] * include all of those
upheld as valid at the common law; but it would certainly
seem to follow from the tests laid down for determining the
validity of such an agreement that no coventional of trade
can be enforced unless the covenant embodying it is merely
ancillary to the main purpose of a lawful contract, and
necessary to protect the covenantee in the enjoyment of the
legitimate fruits of the contract, or to protect him from
the dangers of an unjust use of those fruits by the other
party.’’ *”

Chief Justice White has thus summarized the law with
respect to what is considered unreasonable restraint of trade:
‘Without going into detail and but very briefly surveying
the whole field, it may be with accuracy said that the dread
of enhancement of prices and of other wrongs which it
was thought would flow from the undue limitation on com-
petitive conditions caused by contracts or other acts of

80 Horner v. Graves, 7 Bing. 54 U. S. App. 723; 46 L. R. A.
735; 5 Moores & P. 768. 122; 85 Fed. 271 (reversing 78
91 See next section. Fed. 712) ; affirmed 175 U. S. 211;
*2United States v. Addyston 20 Sup. Ct. 96; 44 L. Ed. 136.

Pipe & Steel Co., 29 C, C. A. 141;
MONOPOLIES AND CONTRACTS IN RESTRAINT. 81

individuals or corporations, led, as a matter of public policy,
to the prohibition or treating as illegal all contracts or acts
which were unreasonably restrictive of competitive condi-
tions, either from the nature or character of the contract
or act, or where the surrounding circumstances were such
as to justify the conclusion that they had not been entered
into or performed with the legitimate purpose of reasonably
forwarding personal interest and developing trade, but, on
the contrary, were of such a character as to give rise to the
inference or preswmnption that they had been entered into
or done with the intent to do wrong to the general public
and to limit the right of individuals, thus restraining the
free flow of commerce and tending to bring about the evils,
such as enhancement of prices, which were considered to be
against public policy.’’ *

§ 36. Covenants in Partial Restraint of Trade Valid.—
‘*Covenants in partial restraint of trade are venerally upheld
as valid when they are agreements (1) by the seller of prop-
erty or business not to compete with the buyer in such a
way as to derogate from the value of the property or busi-
ness sold; (2) by a retiring partner not to compete with
the firm; (3) by a partner pending the partnership not to
do anything to interfere, by competition or otherwise, with
the business of the firm; (4) by the buyer of property not
to use the same in competition with the business retained by
the seller; and (5) by an assistant, servant or agent not to
compete with his master or employer after the expiration
of his time of service. Before such agreements were upheld,
however, the court must find that the restraints attempted
thereby are reasonably necessary (1, 2 and 3) to the enjoy-
ment by the buyer of the property, good will or interest in
the partnership bought, or (4) to the legitimate ends of the
existing partnership; or (5) to the prevention of possible

93 Standard Oil Co. vs. United (N. 8.) 834, modifying 173 Fed.
States, 221 U. S. 1; 31 Sup. Ct. 177.
502; 55 L. Ed. 619; 34 L. R. A.
82 THE SHERMAN ANTI-TRUST ACT.

injury to the business of the seller from use by the buyer
of the thing sold; or (6) to protection from the danger of
loss to the employer’s business caused by the unjust use
on the part of the employee of the confidential knowledge
acquired in such business.’’ **

“Tt would be stating it too strongly to say that these five
classes of covenants in restraint of trade include all of
those upheld as valid at common law; but it would certainly
seem to follow from the tests laid down for determining of
the validity of such an agreement that no coventional re-
straint of trade can be enforced unless the covenant em-
bodying it is merely ancillary to the main purpose of a
lawful contract, and necessary to protect the covenantee in
the enjoyment of the legitimate fruits of the contract, or to

94“Under the first class come
the cases of Mitchel v. Reynolds,
1 P. Wms. 181; Fowle v. Park,
131 U. 8S. 88; 9 Sup. Ct. 658;
33 L. Ed. 67; Nordenfeldt v.
Maxim-Nordenfeldt Co. [1894]
App. Cas. 534; Rousillon v. Rou-
sillon, 14 Ch. Div. 351; Leather
Cloth Co. v. Lorsont, L. R. 9 Eq.
345; 39 L. J. Ch. 82; 21 L. T.
661; 18 W. R. 572; Whittaker
v. Howe, 3 Beav. 383; Diamond
Match Co. v. Roeber, 106 N.
Y. 4738; 13 N. E. 419; Tode
v. Gross, 127 N. Y. 480; 28 N. E.
469; 13 L. R. A. 652; Beal v.
Chase, 31 Mich. 490; Hubbard v.
Miller, 27 Mich. 15; National
Ben. Co. v. Union Hospital Co., 45
Minn. 272, 47 N. W. 806; 11 L. R.
A. 437; Whitney v. Slayton, 40
Me. 224; Pierce v. Fuller, 8 Mass.
223; Richards v. Seating Co., 87
Wis. 503, 58 N. W. 787. In the
second class are Tallis v. Tallis, 1
El. & Bl. 391, and Lang v. Werk,
2 Ohio St. 520. In the third class
are Troy Laundry Machinery Co.
y. Dolph, 138 U. S. 617; 11 Sup.

Ct. 412; 34 L. Ed. 1083, and Mat-
thews v. Associated Press, 136 N.
Y. 333, 32 N. E. 981. In the fourth
elass are American Strawboard
Co. v. Haldeman Paper Co., 83
Fed. 619, and Hitchcock y. An-
thony, Id. 779, both decisions of
this court; Oregon Steam Naviga-
tion Co. v. Winsor, 20 Wall 64;
22 L. Ed. 315, reversing 1 Wash.
Ter. 283; 34 Am. Rep. 803; Dun-
lap v. Gregory, 10 N. Y. 241; 61
Am. Dec. 746; Hodge v. Sloan,
107 N. Y. 244; 17 N. E. 885.
While in the fifth class are the
cases of Homer y. Ashford, 3 Bing.
322; Horner v. Graves, 7 Bing.
735; 5 Moores & P. 768; Hitch-
cock v. Coker, 6 Adol. & E. 438;
Ward v. Byrne, 5 Mees. & W.
547; 3 Jur. 1175; Dubowski
v. Goldstein [1896] 1 Q. B. 478;
65 L. J. Q. B. 397; Peels v. Saal-
feld [1892] 2 Ch. 149; Taylor v.
Blanchard, 13 Allen, 370; 90 Am.
Dec. 203; Keeler v. Taylor, 53
Pa. St. 467; Herreshoff v. Bou-
tineau, 17 R. I. 3; 19 Atl. 712; 8
L, R. A. 469.”
MONOPOLIES AND CONTRACTS IN RESTRAINT. 83

protect him from the dangers of an unjust use of those
fruits by the other party.’’

The distinction between general and partial restraint of
trade has thus been discussed by Mr. Justice Bowen:
‘Distinguished from these general restraints which the
English law discountenances, are partial or limited restraints,
or, as they are sometimes termed, particular restraints,
which, upon certain conditions, the English law permits and
enforces. An agreement in ‘particular’ or ‘partial’ restraint
of trade may be defined as one in which the area of restric-
tion is not absolute, but in which the covenantor retains for
himself the right still to carry on his trade, either in some
place or for the benefit of some persons, or in some limited
or prescribed manner. Particular restraints, according to
the language employed in Mitchell v. Reynolds,** are those
in which there is one limitation in respect of places or
persons short of an absolute and total restriction. But
there is also a third kind of limitation which the law will
sanction under reasonable conditions, namely, a limitation in
respect of the mode or manner in which a trade is to be
carried on. The above are the three kinds of partial re-
straint recognized by the law. The English rule, which
strikes indifferently at all general restraints in trade, makes
the validity of a partial restraint depend on the circum-
stances of each case. A partial restraint will be binding in
law if made on good consideration and if it is reasonable.’ %**

“Cases where the contract still leaves to the covenantor
a right to trade with particular persons fall, as has been
pointed out, under the same head as those where the re-
straint is partial in respect to space. In both instances
alike, the restriction upon the trade is not general, but

95 United States v. Addyston
Pipe & Steel Co., 85 Fed. 271 (re-
versing 78 Fed. 712); affirmed 175
U. S. 211; 20 Sup. Ct. 96; 4 L.
Ed. 136, modifying 29 C. C. A.
141; 54 U. S. App. 723; 85 Fed.
271; 46 L. R. A. 122; Oregon
Steam Navigation Co. v. Winsor,

20 Wall. 64; 22 L. Ed. 315; re-
versing 1 Wash. Ter. 283; 34 Am.
Rep. 803; Wright v. Ryder, 36
Cal. 342.

961 P. Wms. 181.

96* Collins v. Locke, L. R. 4
App. Cas. 674, 686.
84 THE SHERMAN ANTI-TRUST ACT.

limited in area, and such contracts, if reasonable and for
good consideration, will be supported by the law. The
trader, it is true, is prohibited in such cases from serving
a portion of the public, but trade in another quarter is still
left open to him. ‘Where one part,’ says Lord Lyndhurst,
in Young v. Timmins,” ‘agrees to employ another in the
way of his trade, and the other undertakes to work exclu-
sively for him, that is a particular restraint of trade which
may be supported by proof of adequate consideration.’ The
covenant in Wallis v. Day * was of this description, and
was pronounced good by the court, although its validity
was not in fact a necessary condition to the plaintiff's
success in that description of action. ‘It can not be said,’
according to Lord Abinger,®® ‘to be a contract in absolute
restraint of trade, when he [the contractor] contracts to
serve another for his life in the same trade.’ Instances
where one trader covenants not to supply the customers of
another, such as in Rannie v. Irvine,?® fall within this
category. ‘It is to be observed,’ says Chief Justice Tindal,?*
‘that this is not a general restraint of trade, but only re-
stricts the defendant from trading with a very limited
numer of persons.’ So also Pilkington v. Scott.?°? Lastly, a
covenant ceases to be referable to the class of general re-
straints of trade when it only regulates or confines the
manner in which the trade is to be worked. Such contracts
are contracts in partial restraint of trade only, and are
recognized accordingly as valid if reasonable and for good
consideration.1°? Jones v. Lees? is an illustration of this
branch of partial restraints. The plaintiff, who was the
owner of a patent, has sold to the defendant a license to use
a patented invention, the defendant covenanting in turn
that he would not make any machines in future without

97] Tyrw. 226, 236. 103 Collins v. Locke. L. R. 4
982M. & W. 273. App. Cas. 674; 48 L. J. C. P. 68;
99 Tbid. 976. 41 L. T. 292; 28 W. R. 189.

1007 Man. & G. 676, 969. 108] H. & N. 189; 2 Jur.
101 Tbid. 976. (N.S.) 645; 26 L. J. Exch. 9.

12215 M. & W. 657; 15 L. J.
Exch. 329.
MONOPOLIES AND CONTRACTS IN RESTRAINT. 85

applying the invention to what he so made. If the defendant
covenanted, on the one hand, not to sell the machine with-
out the patented invention, he obtained the privilege, on the
other hand, of selling the same machine with that improve-
ment to all England. This, as pointed out in Wms. Saun-
ders,’”® is a restraint which affects the mode of exercising the
trade, and which, therefore, is partial. The only real ques-
tion that remained on such a view of that particular bar-
gain, was whether it was a reasonable one, as to which point
the remark that the privilege was commensurate with the
restraint appears conclusive. The case is similar to those in
which rules regulating trade have been distinguished from
rules made in restraint of it.2°° The inquiry is to the rea-
sonableness of the restraint in any particular instance is,
however, one that appertains only to the case of partial
restraints. It is no objection necessarily to such partial
restraints that they are sometimes to continue during the life
of the covenantor, who may possibly survive the covenantee,
for such an arrangement enables the good will of the busi-
ness to become the object of purchase and sale.‘ The
result seems to me to be as follows: General restraints, or,
in other words, restraints wholly unlimited in area, are not,
as a rule, permitted by the law, although the rule admits of
exceptions. Partial restraints, or, in other words, restraints
which involve only a limit of places at which, of persons
with whom, or of modes in which the trade is to be carried
on, are valid when made for a good consideration, and where
they do not extend further than is necessary for the reason-
able protection of the covenantee. A limit in time does not,
by itself, convert a general restraint into a partial one.
‘That which the law does not allow is not to be tolerated
because it is to last for a short time only.’ In considering,
however, the reasonableness of a partial restraint, the time

106 2 Wms. Saunders, 156a, n.

106 Freemantle v. Silk Throw-
sters Co., 1 Lev. 229; Wonnel v.
1 Str.
675; Bosworth v. Hearne, Andr.
91: Harrison v, Godman, 1 Burr.

Chamberlain of London,

12; Rex v. Harrison, 3 Burr. 1323,
1328.

107 Atkyns v. Kinnier, 4 Ex.
776, 782; 19 L. J. Exch, 132;
Pemberton v. Vaughan, L. B. 10
Q. B. 87, 89.
86 THE SHERMAN ANTI-TRUST ACT.

for which it is to be imposed may be a material element to

consider. ’’ 1°8

108 Maxim-Nordenfeldt Co. v.
Nordenfeldt [1893] 1 Ch. 630, 67
L. T. 469; 94 L. T. J. 177, af-
firmed [1894] A. C. 535; 63 L. J.
Ch. 908; 11 R. I. 1; 71 L. T. 489.
“The common law will not permit
individuals to oblige themselves
by a contract where the thing to
be done or omitted is injurious
to the public. ‘Contracts in re-
straint of trade are for the most
part contrary to sound policy, and
are, consequently, held void. This
is the general rule. There may be
cases where the contract is neither
injurious to the public nor to the
obligor, and there the law makes
an exception, and declares the
agreement valid. The general
presumption is against all con-
tracts in restraint of trade, and,
consequently, it is upon him who
seeks to enforce such an obliga-
tion to show that it is free from
objection. Contracts which go to
the total restraint of trade, as
that a man will not pursue his oc-
ecupation or carry on_ business
anywhere in the State, are void
upon whatever consideration they
may be made. They must be in-
jurious to the public, and no good
reason can be shown why one in-
dividual should thus better him-
self or another individual should
contract for the restraint. The
obligation is injurious to one
party without being beneficial to
the other. But there may be good
reasons for allowing parties to
contract for a limited restraint
as that a man will not exercise
his trade or carry on business in
a particular place, and where such
reasons are shown the contract

will be upheld and enforced. The
common law on this subject un-
doubtedly had its origin at a time
when there were comparatively
very few mechanics and _ trades-
men, and when there was much
more reason for guarding against
restraints of this kind, than there
can be at present. Still, I am
unable to say that the reason of
the rule has so entirely ceased
that the rule itself is at an end.
It must be admitted, however, that
courts at the present day look
upon contracts of this description
with much less jealousy than
they did at a former period. At
one time the contract, however
free from objection in other re-
spects, would have been held void
if made in the form of a penal
obligation. But there is no longer
any doubt that the party may
bind himself to the performance
of such a contract under a pen-
alty, as well as by the covenant
or promise. The modern decisions
have also allowed a larger re-
straint than would formerly have
been sanctioned, and one or two
of the recent cases have gone near-
ly, if not quite far enough to give
up the principle upon which the
courts originally acted, though
without professing to do so.”
Chappell v. Brockway, 21 Wend.
157, 158. “But it is said that a
restraint from Rochester to Buf-
falo, a distance of about 100 miles,
is too large—that it is not con-
fined to wu particular place. The
objection seems to take it for
granted that a valid restraint
cannot extend beyond a particular
town or city. That is not the rule.
MONOPOLIES AND CONTRACTS IN RESTRAINT. 87

§ 37. Contracts in Restraint of Trade Not Criminal.—
At common law contracts restraining trade or limiting com-

A man cannot, for money alone,
where he has no other interest in
the matter, purchase a valid con-
tract in restraint of trade, how-
ever limited may be the circle of
its operation. But when a good
reason appears for allowing the
parties to contract, the restraint
may extend far enough to afford
a fair protection to the obligee.
How far this will be, must de-
pend in a great degree upon the
nature of the trade or business
to which the contract relates. In
Davis v. Mason, 5 Durn. & East,
118, the defendant agreed not to
exercise the business of a surgeon
apothecary and man midwife
within ten miles of Thetford, and
judgment was given for the plain-
tiff on a breach of the agreement.
Lord Kenyon said, he did not see
that the limits were necessarily
unreasonable. He added what is
equally applicable in the case at
bar: ‘Neither are the public like-
ly to be injured by an agreement
of this kind, since every other per-
son is at liberty to practice as a
surgeon in this town.’ In Noble
v. Bates, 7 'Cow. 307, the restraint
extended over a circle of forty
miles diameter, and was held
good; and in Haywood v. Young,
2 Chitty’s R., 407, a restraint of
the like extent was upheld. In
Pierce v. Fuller, 8 Mass. 223, 5
Am. Dec. 102, an agreement not
to run a stage between Boston and
Providence, and in Perkins v. Ly-
man, 9 Mass. 522, a contract not
to trade from Boston to the north-
west coast of America for the pe-
riod of seven years, were several-
ly held unobjectionable. In Bunn

v. Guy, 4 East, 190, a practicing
attorney agreed to relinquish his
business and recommend his
clients to two other attorneys, and
that he would not practice within
a circle of 300 miles diameter,
having London for its center. This,
though it certainly was a very
large restraint, including a good
deal of sea as well as land, was,
nevertheless, held valid. In Hor-
ner v. Graves, 7 Bing. 735; 5
Moores & P. 768; the defendant
agreed not to practice as a sur-
geon dentist within 100 miles of
the city of New York, where
the plaintiff carried on that busi-
ness; and this was held an un-
reasonable restraint, because it
was larger than was necessary to
afford a fair protection to the
plaintiff in the enjoyment of his
trade. The last case to which 1
have referred gives the true rule
on this subject, and is decisive of
the question under consideration.
‘The defendant sold his business
of running packet boats between
Rochester and Buffalo; and that
cannot be an unreasonable re-
straint which is only co-extensive
with the business which the de-
fendant agreed to relinquish and
the purchaser expected to acquire.

‘Ibid. 162.” “In the celebrated case

of Mitchell v. Reynolds, 1 P. Wms,
181, Chief Justice Parker con-
cludes his elaborate arguments in
these words: ‘In all restraints of
trade, where nothing more ap-
pears, the law presumes them bad.
but if the circumstances are set
forth, that presumption is ex-
cluded, and the court is to judge
of those circumstances, and de-
88 THE SHERMAN ANTI-TRUST ACT.

petition were not criminal. They were simply unenforceable

in the courts.1°°

termine accordingly, and if upon
them it appears to be a just and
honest contract, it ought to he
maintained.’ In this I fully con-
eur. The law starts with the pre-
sumption that the contract is
void; and it is only by showing
that there was an adequate con-
sideration or good reason for en-
tering into it, that the presump-
tion can be destroyed. The rule is,
not that a limited restraint is
good, but that it may be good. It
is valid when the restraint is rea-
sonable; and the restraint is rea-
sonable when it imposes no shack-
les upon one party which is not
beneficial to the other. The facts
which prove the restraint reason-
able must in some way be made to
appear; and as the presumption
is against the party setting up
the contract, it lies on him to re-
move the difficulty.” Ross. v.
Sdadgbeer, 21 Wend. 116. But see
Diamond Match Co. v. Roeber, 106
N. Y. 473; 13 N. E. 419; 60 Am.
Rep. 464. “The latest decisions of
courts in this country and in
England show a strong tendency
to very greatly cireumscribe and
narrow the doctrine of avoiding
contracts in restraint of trade.
The courts do not go to the length
of saying that contracts which
they now would say are in re-
straint of trade are, nevertheless,
valid contracts and to be enforced;
they do, however, now hold many
contracts not open to the objec-
tion that they are in restraint of
trade which a few years back
would have been avoided on the
sole ground both here and in Eng-
land. The cases in this court
which are the latest manifesta-

tions of the turn in the tide are
cited in the opinion in this case
at general term, and are Diamond
Match Co. v. Roeber, 106 N. Y.
473; 13 N. E. 419; 60 Am. Rep.
464; Hodge v. Sloan, 107 N. Y.
244; 17 N. E. 335; Leslie v. Lor-
illard, 107 N. Y. 519; 18 N. E.
363; 1 L. R. A. 456.” Peck-
ham, J., in Matthews v. As-
sociated Press, 136 N. Y. 333,
340; 32 N. E. 981; 32 Am. St.
741; see Chappell v. Brockway, 21
Wend. 157; Wiley v. Baumgard-
ner, 97 Ind. 66; 49 Am. Rep. 427.

109 Hilton v. Eckersley, 6 E. &
B. 47; Mogul Steamship Co. v.
McCregor, L. R. 23 Q. B. Div.
598; 59 L. T. 514; 58 L. J. Q. B.
465; 5 T. L. R. 655, affirmed
[1892] 1 A. C. 25; 61 L. J. Q. B.
295; 66 L. T. 1; 40 W. R. 337;
56 J. P. 101; 7 Asp. M.
120; 8 T. L. R. 182; same
case L. R. 21 Q. B. Div. 544;
5 T. L. R. 658; 57 L. J. 541; Far-
rer v. Close, 4 Q. B. 602; Hornby
v. Close, 2 Q. B. 153; Aetna Ins.
Co. v. Commonwealth, 106 Ky.
864; 51 S. W. 624; 45 L. R. A.
355; State v. Huegin, 110 Wis.
189; 85 N. W. 1046; 62 L. R. A.
700; Queen Ins. Co. v. State, 86
Tex. 250; 24 N. W. 397; 22 L. R.
A. 483; Hawardin v. Coal Co., 111

Wis. 545; 87 N. W. 472: 55
L. R.A. 828; Brown v. Ja-
cob’s Pharmacy Co., 115 Ga.

429; 41S. E. 553; 57 L. R. A.547;
90 Am. St. 126; American Live-
stock Com. Co. v. Livestock Exch.,
143 Ill. 210; 32 N. E. 274; Cum-
mings v. Union Blue Stone Co.,
164 N. Y. 401; 58 N. E. 525; 52
L. R. A. 262; 79 Am. St. 655, af-
firming 15 N. Y. App. Div. 607;
MONOPOLIES AND CONTRACTS IN RESTRAINT. 89

§ 38. Contracts Restraining Usefulness of Quasi Public
Corporations——The common law recognized a difference
between a contract which only affected an individual, or
dealt with matters of private interest, and those which
directly affected the community at large. Combinations or
contracts tending to create a monopoly in commodities form-
ing the necessaries of life ‘‘were condemned as contrary to
public policy, when like contracts affecting other kinds of
property were held to be valid. This same principle holds
good at the present time. Another distinction which is now
firmly established and enforced grows out of the nature of
the business contracted about, and the relation the con-
tracting parties bear thereto. An individual or a private
corporation engaged in a purely private enterprise may
lawfully enter into contracts or combinations in regard
thereto which would be invalid and illegal if the business
was of a public nature, and the corporation was created for
the purpose of engaging therein.’’**° It is of vital impor-
tance to keep in mind the distinction that exists, in exam-
ination of contracts or combinations claimed to be in re-
straint of trade, between private individuals or corporations
engaged in ordinary business vocations and public corpora-
tions engaged in the performance of a public or govern-
mental duty.

‘*Parties engaged in the manufacture or sale of lumber, dry
goods, or other like articles primarily owe no duty to the
public in connection therewith. They may limit or enlarge,
continue or discontinue the business, as they please, and may

44 N. Y. Supp. 787; Dickinson v.
Board of Trade, 114 Ill. App. 295.
“Contracts that were in unrea-
sonable restraint of trade at com-
mon law were not unlawful in the
sense of being criminal, or giving
rise to a civil action for damages
in favor of one prejudicially af-
fected thereby, but were simply
void, and were not enforced.”
United States v. Addyston Pipe
& Steeb Co., 85 Fed. 271; 29 C. C.

A. 121; 54 U. S. App. 723; 46 L.
R. A. 122 (reversing 78 Fed. 712),
affirmed 175 U. S. 211; 20 Sup.
\Ct. 96; 44 L. Ed. 136.

110 Justice Shiras in dissenting
opinion in United States v. Trans-
Missouri Freight Ass’n, 58 Fed.
58, 84; 19 U. S. App. 36; 7 ©. C.
A. 15; 4 Inter. St. Com. Rep. 443,
reversed 166 U. S. 290; 17 Sup.
Ct. 540; 41 L. Ed. 1007.
90 THE SHERMAN ANTI-TRUST ACT.

charge exorbitant prices or the contrary. In these particu-
lars they owe no special duty to the public, for they are not
exercising any sovereign or public powers in carrying on
such private enterprise, nor are they charged with the
performance of a public duty. Hence they are at liberty to
enter into contracts with other private parties engaged in
like pursuits which may tend to regulate or restrict the
business carried on by them, subject, however, to the rule
that restrictions unreasonably affecting the freedom of trade
and commerce can not be sustained because thereby the
public interests are affected. Touching contracts between
private parties in regard to pursuits essentially private in
their nature, the test of validity we thus find to be the
actual effect thereof on the public welfare. In regard to
such private enterprises the public has no voice in the man-
agement thereof, nor any right of dictating what shall or
shall not be done by the owners thereof, nor have the latter
become bound to carry on the business in the interest or for
the benefit of the public primarily. The contrary is true
with regard to publie corporations, clothed with the power
to fulfill public duties, and engaged in enterprises the pur-
pose of which is to discharge a governmental duty, and
which require in their performance the exercise of the
sovereign right of eminent domain.

“‘Such publie corporations owe primarily a duty to the
community, and the relations existing between them and the
public are in many particulars radically different from those
pertaining to private cerporations. Neither extended argu-
ment nor the citation of authorities is needed to show that
the business of railway transportation is one of a public
character, which reaches and affects the business interests
of the entire community. When a highway in the form of
a railroad is constructed and put in operation, all parties
living in the regions adjacent thereto are dependent upon
the railroad for the carrying on of all business which in-
volves the transportation of persons or property in connec-
tion therewith. The farmer is compelled to use the railway
MONOPOLIES AND CONTRACTS IN RESTRAINT. 91

for the transportation of the products of his farm to market.
The merchant must use the same agency in bringing to his
place of business the merchandise in which he deals. Prac-
tically the business of the community, whether in connection
with articles which are produced or dealt in by the people
at large, becomes of necessity wholly dependent upon the
facilities for transportation furnished by the given railway.
As to the majority of the community living along its line,
each railway company has a monopoly of the business de-
manding transportation as one of its elements. By reason
of this fact, the action of the corporation in establishing the
rates to be charged largely influences the net profit coming
to the farmer, the manufacturer and the merchant from
the sale of the products of the farm, the workshop and
manufactory, and of the merchandise purchased and resold,
and also largely influences the price to be paid by every
one who consumes any of the property transported over
the line of railway. There is no other line of business car-
ried on in our midst which is so intimately connected with
the public as that conducted by the railways of the
country.’’ 111

The rule in this respect has been very well stated by the
Supreme Court of West Virginia in a leading case:

“If there be any sort of business which from its peculiar
character can be restrained to no extent whatever without
prejudice to the public interest, then the courts would be
compelled to hold void any contract imposing any restraint,
however partial on this peculiar business, provided, of course,
it be shown clearly that the peculiar business thus attempted

111 Justice Shiras in United is not a business like that of an

States v. Trans-Missouri Freight
Ass’n, supra, filed a dissenting
opinion, from which the above
extract is taken; and on ap-
peal the case was_ reversed.
“The supplying of illuminating
gas is a business of a public na-
ture to meet a public necessity. It

ordinary corporation engaged in
the manufacture of articles that
may be furnished by individual
effort. * * * Hence, while it
is justly urged that those rules
which say that a given contract
is against public policy should not
be arbitrarily extended so as to
92 THE SHERMAN ANTI-TRUST ACT.

to be restrained is of such a character that any restraint
upon it, however partial, must be regarded by the court as
prejudicial to the public interest.’’ 11°

interfere with the freedom of con-
tract (Registering Co. v. Samp-
son, L. R. 19 Eq. 462), yet in the
instance of business of such char-
acter that it presumably cannot
be restrained to any extent with-
out prejudice to the public inter-
est, courts decline to enforce or
sustain contracts imposing such
restraint, however partial, because
in contravention of public policy.
This subject is much considered,
and the authorities cited, in West
Virginia Transp. Co. v. Ohio River
Pipe Line Co., 22 W. Va. 600; 46
Am. Rep. 527; ‘Chicago Gaslight
& Coke Co. v. People’s Gaslight &
Coke Co., 121 Tl. 530; 13 N. E.
Rep. 169; 2 Am. St. 124; West-
ern Union Tel. Co. v. American
Union Tel. Co., 65 Ga., 160; 38
Am. Rep. 781 * * * Jnnumer-
able cases, however, might be cited
to sustain the proposition that
combinations among those engaged
in business impressed with a pub-
lie or quasi public character which
are manifestly prejudicial to the
public interest, cannot be upheld.”
Gibbs v. Baltimore Gas Co., 130
U. S. 396; 9 Sup. Ct. 553; 32 L.
Ed. 979.

112 West Virginia Transporta-
tion Co. v. Ohio River Pipe Line
(Co., 22 W. Va. 600; 46 Am. Rep.
527. “The ordinary rule that con-
tracts in partial restraint of trade
are not invalid does not apply to
corporations like appellant and ap-
pellee, because they were engaged
in a public business, and in fur-
nishing that which was a matter
of public concern to all the in-

habitants of the city.” Chicago
Gas Light & Coke Co. v. People’s
Gas Light & Coke Co., 121 Il
130; 13 N. E. 109; 2 Am. St. 124;
Western Union Tel. Co. v. Ameri-
can Union Tel. Co., 65 Ga. 160; 38
Am. Rep. 781; Cleveland, C. C. &
I. R. Co. v. Closser, 126 Ind. 348;
26 N. E. 159; 9 L. R. A. 754; 45
Am. & Eng. R. Cas. 275; 9 Ry. &
Corp. L. J., 165; 45 Abb. L, Jr.,
209; 3 Inter State Commerce Re-
port 387; Central N. Y. Tel. & Tel.
Co. v. Averill, 190 N. Y. 128; 92
N. E. 206, modifying 129 N. Y.
Div. 752; 114 N. Y. Supp. 99,
which reversed 58 N. Y. Mise. 59;
110 N. Y. Supp. 273; St. Louis &
Erie R. Co. v. Postal Tel. Co.,
173 Til. 508; 51 N. E. 382; West-
ern Union Tel. Co. v. Chicago &
P. R. Co., 86 Ill. 246; 29 Am.
Rep. 28; State v. Delaware & Atl.
Tel. & Tel. Co., 47 Fed. 633; 10
Ry. and Corp. L. Jr. 123; Whit-
aker v. Kilby, 55 N. Y. Mise. 337;
106 N. Y. Supp. 511; affirmed 122
App. D. 895; 106 N. Y. Supp.
1149; Home Tel. Co. v. North Man-
chester Co., 47 Ind. App. 411; 92
N. E. 558; 93 N. Y. 234; Man-
chester & N. R. v. Concord R. Co,
66 N. H. 100; 20 Atl. 383; 9 L.
R. A. 689; 8 Ry. & Corp. L. J.
443; 3 Inter St. Com. Rep. 319;
United States v. Trans-Missouri
Freight Ass’n, 166 U. S. 290; 17
Sup. Ct. 540; 41 L. Ed. 1007, re-
versing 58 Fed. 58; 7 C. C. A. 15;
19 U.S. App. 36; 24 L. R. A. 73;
4 Inter State Commerce Report
443, which reversed 53 Fed. 440.
CHAPTER III.

TRUSTS AND COMBINATIONS AT COMMON

SECTION.

39. Trusts defined.

40. Pooling defined.

41. Combination,

42. Conspiracy.

43. Size of business.

44. Monopoly incomplete.

45. Agreement tending to create
a monopoly.

46. Reasonable restraint of trade
not invalid.

47. Public not injured by the il-
legal combination—Monop-
oly not complete.

48. Corporation organized to
monopolize business of
other corporations,

49. Combination under guise of
organizing a corporation.

LAW.

SECTION.

50. One corporation purchasing
a majority of the stock in
another corporation.

51. Combination between steam-
ship companies—The Mogul
case.

52. Combination to fix prices
and amount of production.

53. Combination to suppress
competition.

54. ‘Common law rule against re-
straint of trade not relaxed
—Only purpose to restrain.

55. ‘Combinations not amountiing
to a monopoly.

56. Restraint of trade involving
illegality.

§ 39 Trusts Defined.—A trust, in the sense it is used in this
work, is a ‘‘contract, combination, confederation or under-
taking, express or implied, between two or more persons,
to control the price of a commodity or service for the benefit
of the parties thereto, and to the injury of the public, and

which tends to create a monopoly.

1 State v. Fireman’s Fund Ins.
Co., 152 Mo. 1; 43 S. W. 595, 607;
45 L, R. A. 363, 376. In this case
it was said: “The practice of the
members of the social club had
the effect of maintaining the Fet-
ter rates, and hence it constituted
it a trust, no matter whether the
members intended it to have that
effect or not (and we have no
doubt they did so intend it), and

294

no matter whether they also in-
tended to be ‘social’ in the man-
ner hereinbefore indicated or not.
In the olden times such practices
were called ‘contracts in restraint
of trade.” Nowadays they are
ealled ‘trusts.’ There is no differ-
ence in the principle. There is a
difference in the extent and meth-
ods. Those the courts condemned
long ago were as mere saplings
94 THE SHERMAN ANTI-TRUST ACT.

The Supreme Court of Montana has defined it as ‘‘any
form of combination between corporations, or corporations
and natural persons, for the purpose of regulating production
and repressing competition by means of the power thus
centralized.’’ ?

A standard author has thus described trusts:
original signification the term ‘trust’ simply involves the
idea of one person holding property, not for his own benefit,
but for that of another, called the beneficiary. But the
special application of such term, now to be considered, is
based on what was for a time a practice of parties to an
agreement in restriction upon competition (commonly, but
not necessarily, corporations or stockholders therein) surren-
dering the direct control of the management of the business
covered by the agreement, to a central board of ‘trustees,’
the interest of such parties being commonly represented by
‘trust certificates’ received in lieu of stock in the corpora-
tions. Trusts in this form, however, have come to be
mainly of historic interest merely, for the legal difficulties
experienced in their organization and conduct have led to
their disuse, and combined action to restrict competition is
now commonly through the medium of corporate organiza-
tion. But the term ‘trust’ continues in common use, being
applied without much discrimination to any business on a
large scale, particularly if conducted by a corporation.’’®

“In its

compared to the mammoth oaks
when considered alongside of those
today. When the evils to the
public interest that flow from
these trust combinations are at-
tempted to be described, words be-
come mere weaklings in their
power of expression, and one
stands appalled at the helplessness
of the people outside of judicial
aid. This case strikingly illus-
trates the condition, and calls
aloud for the enforcement of the
statute. The facts establish the

case laid against the detendants,
and the statutory results must
follow, if the statute is valid.”

2 MacGinnis vy. Boston, ete., Co.,
29 Mont. 428, 454; 75 Pac. 89, 95;
Pocahontas Coke Co. v. Powhaten
Coal & Coke Co., 60 W. Va. 508,
520; 56S. E. 264, 269; 10 L. R.
A. (N. 8.) 268, 280; 116 Am. St.
901.

3 Cooke on Combinations (2nd)
§ 136. Mr. Cook appends this note
to this section (we only quote
the note in part). “See Cooke
TRUSTS AND COMBINATIONS AT COMMON LAW. 95

§40. Pooling Defined.—Webster defines pooling as ‘‘a
combination among persons or companions normally com-

on Stock, Stockholders, ete., No.
503a, quoted and applied in State
y. Standard O11 Co., 49 Ohio St.
137, 185; 30 N. E. 279, 290; 15 1.
R. A. 145, 159; 34 Am. St. Rep.
541, 553 (1892); also articles jn
3 Pol. Sci. Quart. 592, 611 (1888)
by T. W. Dwight, with a discus-
sion of the “Sugar Trust” deed;
27 Am. Law. Rev. 708 (1893) by
U. M. Rose; 7 Harv. Law Rev.
157 (1893) by 8. C. T. Dodd; 16
Id. 79 (1902-3) by R. L. Ray-
mond; 3 Va. Law Reg. 163, 164
(1897-8) by W. L. Royall. In 1
Harv. Law Rev. 133 (1887), F. J.
Stimson defines a trust as ‘a com-
bination of property, real or per-
sonal, with powers of management
or absolute disposal, or of stock
in corporations, in the hands of «
few persons,’ and says that ‘the
origin of the word “trust” seems
to have been the well known
Standard Oil monopoly.’ The so-
called ‘trust’ agreements were all
essentially similar in form.”
“What is commonly termed a
‘trust? was a species of combina-
tion organized by individuals or
corporations for the purpose of
monopolizing the manufacture or
traffic in various articles and
commodities, which was well
known and fully understood when
the anti-trust act was approved.”
United States v. Northern Securi-
ties, 120 Fed. 721; affirmed 193
U. 8. 197; 24 Sup. Ct. 436; 48
L. Ed. 679.

Mr. Cooke says further: “There
may be a tendency to limit the
application of the term to so-

called ‘industrial,’ as distinguished
from railroad or other corpora-
tions of a public character, re-
strictions resulting from agree-
ments among corporations of the
latter class being designated as
pools. This distinction is not,
however, very rigidly applied.”
Cook on Combinations (2nd) § 136.
In People ex rel., v. American
Tobaceo Co., 2 Chicago L. J.
Weekly, 249 (Cook Co. Cir. Ct.,
18977), a “commercial trust” was
defined as a “combination of per-
sons, co-partnerships or corpora-
tions engaged in similar indus-
tries, for the purpose of uniting
their respective interests under
one governing body, invested with
the power to limit the production,
dictate the sales, and regulate the
prices of the articles produced by
its agents and members, thereby
tending to destroy competition.”
See also Chicago, Wilmington, ete.,
Coal Co. v. People, 114 Il. App.
75, 112; affirmed 214 Il. 421; 73
N. E. 770.

“Combinations in the nature of
modern trusts * * * are those
which aim at a union of energy,
capital and interest to stifle com-
petition, and enhance the price of
articles of prime necessity and
staples of commerce. In such cases
there ig absent the element of ex-
change of one valuable right for
another.” United States Chemi-
cal Co, v. Provident Chemical Co.,
64 Fed. 946, 950. See also Queen
Ins. Co. v. State, 86 Tex. 250, 266;
24 8. W. 397; 22 L. R. A. 483.
96 THE SHERMAN ANTI-TRUST ACT.

petitive, as among transportation or shipping interests,
whereby a uniform rate is set and maintained, the profits
being shared on a percentage basis.’’ 4

§ 41. Combination—-The word ‘‘combination’’ is not
possessed of an accurate legal meaning, though generally
it means no more than ‘‘co-operation—a union of effort.’’®
Joyce has defined a combination as ‘‘the union or association
of two or more persons or parties for the attainment of

some common end.’’ é

+See also American Biscuit Co.
v. Klotz, 44 Fed. 721, 724. In this
case it was said: “We are not sat-
isfied that the complainant’s busi-
ness is legitimate. While the
nominal purpose of the complain-
ant’s corporation, as stated in its
charter, is the manufacture and
sale of biscuit and confectionery,
its real scope and purpose seems
to be to combine and pool the large
competing bakeries throughout
the country into practically what
is known and called a ‘trust,’ the
effect of which is to partially, if
not wholly, prevent competition,
and enhance prices of necessary
articles of food, and secure, if not
a monopoly, a large control, of the
supply and prices in leading arti-
eles of breadstuffs. The case
shows that an insignificant num-
ber of shares of complainant’s
stock was unconditionally sub-
scribed for, apparently enough to
qualify directors; but the great
mass was taken and held by ir-
responsible parties, to be used in
parceling out as full-paid stock to
such leading and successful bak-
eries throughout the country as
could be induced to come in on an
agreed value of the property and

a large estimate of good-will. Each
bakery when secured to be carried
on by its former managers, sub-
ject, however, as to control of
funds, territory, prices and com-
petition, to the central manage-
ment; all profits pooled, and of
course division thereof to be made
on the basis of the stock assigned
to each bakery. Under this ar-
rangement complainant has al-
ready secured the control, and
pooled the business, of 35 of the
leading bakeries in 12 different
states of the west and south, and
is evidently seeking more con-
stituents.”

“Pooling, which may be defined
to be an aggregation of property
or capital belonging to different
persons, with a view to common
liabilities and profits.” Ibid .

5 United States v. MacAndrew
& Forbes Co., 149 Fed. 823.

6 Joyce on Monopolies, § 1, citing
Brownsville Glass Co. v. Appert,
136 Fed. 245, where the Century
Dictionary is quoted.

A Texas statute forbade any
“combination of capital, skill or
acts by two or more,” and it was
held that the word “combination
meant union or association,” and
TRUSTS AND COMBINATIONS AT COMMON LAW. 97

It is quite evident that all ‘‘pools’’ and all ‘‘trusts’’ are
combinations. Pools and trusts are consolidation of interests
for mutual benefit, and so fall within the meaning of com-
bination. If the intent and effect of a combination agree-
ment are a direct restraint of trade and hinder competition
in the sale or purchase of a commodity, it is void at common
law, because contrary to public policy.”

§ 42. Conspiracy.—A conspiracy is a combination of two
or more persons, by concerted action, to accomplish a crim-
inal or unlawful purpose, or some purpose not in itself
unlawful or criminal, by criminal or unlawful means.2 ‘‘A
conspiracy in restraint of trade is nothing but a contract or
agreement between two or more persons in restraint of
trade.’?® A conspiracy under the common law has been
defined ‘‘as an agreement or combination formed between
two or more persons to do an unlawful act or to do a

lawful act by unlawful means.’’ ?°

in the absence of a union or asso-
ciation between two or more of
their “capital, skill or acts” there
could be no combination.

“When we consider the purposes
for which the ‘combination’ must
be formed to come within the stat-
ute, the essentiai meaning ot the
word ‘combination,’ and the fact
‘that a punishment is presented
for each day that the trust con-
tinues in existence, we are led to
the conclusion that the union or
association of ‘capital, skill or
acts’ denounced is where the par-
ties in the particular case de-
signed the united co-operation of
such agencies, which might have
been otherwise independent and
competing, for the accomplish-
ment of one or more of such pur-
poses.” Gates v. Hooper, 90 Tex.
563; 33 S. W. 1079, reversing 39
S. W. 186.

7 State v. Jackson, 95 Miss. 6;
48 So. 300. Combination is but
one or many means by which a
monopoly is acquired. Monopoly
is the end sought, and combina-
tion means thereto. State v. Cen-
tral Lumber Co., 24 8S. Dak. 136;
123 N. W. 504.

8 Pettibone v. United States, 148
U. S. 197, 203; 13 Sup. Ct. 542;
37 L. Ed. 419; United States v.
Cassidy, 67 Fed. 698, 702; United
States v. Debs, 64 Fed. 724.

® United States v. Kissell, 173
Fed. 823, reversed 218 U. S. 601;
31 Sup. Ct. 124; 54 L. Ed.

10 Franklin Union v. People, 220
Til. 355; 77 N. E. 176; Territory
v. Leslie, 15 N. M. 240; 106 Pac.
378; Ballatine v. Cummings, 220
Pa. St. 621; 70 Atl. 546; United
States v. American Naval Stores
Co., 172 Fed. 455, 460; United
States v. Keitel. 157 Fed. 396,
98 THE SHERMAN ANTI-TRUST ACT.

‘‘Without attempting to review or reconcile all the cases,
we are of the opinion that as a general description, though
perhaps not a precise or accurate definition, a conspiracy
must be a combination of two or more persons, by some
concerted action, to accomplish some criminal or unlawful
purpose, or to accomplish some purpose not itself criminal
or unlawful, by criminal or unlawful means. We use the
term ‘criminal or unlawful’ because it is manifest that many
acts are unlawful which are not punishable by indictment
or other public prosecution, and yet there is no doubt, we
think, that a combination by numbers to do them would be

United States v. Moore, 173 Fed.
122; Toledo A. B. & N. M. Ry. Co.
v. Pennsylvania Co., 54 Fed. 730;
State v. Effler (Del.) ; 78 Atl. 411;
State v. ‘Brenstock (N. J. L.) 73
Atl. 530; State v. Amelker, 73 8.
C. 330; 53 8S. E. 484; State v.
Racine Sattley Co. (Tex. Civ.
App.) 134.8. W. 400; Karges Fur-
niture Co. v. Amalgamated Wood-
workers, 165 Ind. 421; 75 N. 877;
2L. R. A. (N.S.) 788; Lindsay
Co. v. Montana Federation, 37
Mont. 264; 96 Pac. 127; Spies v
People, 122 Jl]. 212; 3 Am. St.
320; 12 N. E. 865; Green v. Ben-
nett (Tex. Civ. App.) 110 8. W.
108; State v. Messner, 43 Wash.
206; 86 Pac. 836; Baucr v. State,
3 Okla. Cr. 529; 107 Pae. 525.
“A conspiracy may be broadly de-
fined as a combination to effect
an illegal object as an end or
means.” National Fireproofing
‘Co. v. Mason Builder’s Asso., 169
Fed. 259; 94 (. C. A. 535; State
y. Eastern Coal Co., 29 Rel. 254;
70 Atl. 1; Woodruff v. Hughes, 2
Ga. App. 361; 58 8. W. 551.
The word “conspiracy” is
synonymous with collusion or con-
nivanee. Levine v. Klein, 65 N. Y.
Mise. 458; 12 N. Y. Supp. 196.

Actionable Conspiracy. White
v. White, 132 Wis. 121; 111 N.
\W. 1116;° Lohse Patent Door Co.
v. Fuelle, 215 Mo. 421; 114 8. W.
997.

Chief Justice Parsons, in Com-
monwealth v. Judd, 2 Mass 328,
3 Am. Dee. 54, said: “The gist of
conspiracy is the unlawful con-
federacy to do an unlawful act,
or even a lawful act for unlaw-
ful purposes; that the offense is
complete when the confederacy is
made; and any act done in pursu-
ance of it is no constituent part
of the offense, but merely an ag-
gravation of it. This rule of the
common law is to prevent unlaw-
ful combinations. A solitary of-
fender may be easily detected and
punished ; but combinations
against law are always dangerous
to the public peace and to private
securily. To guard against the
union of nuinbers to effeet an un-
lawful design is not easy, and to
detect and punish them is often
difficult. The unlawful  confed-
eracy is therefore punished to pre-
vent the doing of any act in exe-
eution of it.”
TRUSTS AND COMBINATIONS AT COMMON LAW. 99

an unlawful conspiracy and punishable by indictment;”’
and he adds, ‘‘but yet it is clear that it is not every com-
bination to do unlawful acts to the prejudice of another
which is punishable as conspiracy.’’ ™

§ 43. Size of Business——The mere size of a man’s busi-
ness, or that of any number of men who have entered into
a partnership, does not alone constitute a monopoly or re-
straint of trade. ‘‘The attainment of a dominant position in
a business acquired as the result of honest enterprise and
normal methods of business development is not a violation
of law.’’?? It is recognized in the economic world that the
size of the enterprise is a very determinate factor in compe-
tition. A great factory usually can manufacture a product
cheaper than a small one; and, consequently, is able to
undersell the small factory and drive it out of business.
So the wholesaler who buys great quantities of goods is
usually able to buy them cheaper, and consequently sell at
a lower rate, than his small competitor; and so in time may
drive him out of business. And yet the law does not de-
nounce him or his methods when nothing more is involved.
If two or three or four or five or six manufacturers or
merchants see fit to combine their capital in a single enter-
prise, either as partners or by means of a corporation, so
as to manufacture or purchase at a lower cost or price, and
thereby undersell their competitors, the law does not con-

11 Commonwealth v. Hunt, 4
Met. 111; 38 Am. Dec. 346. This
definition has been approved in
Pettibone v. United States (1893)
148 U. S. 197; 13 Sup. Ct. 542; 37
L. Ed. 419; the Mussel-Slough
Case, 5 Fed. R. 680; United
States v. Sacia, 2 Fed. R. 754;
United States v. Wooten, 67 Fed.
R. 698; State v. Rowley, 12 Conn.

v. Mayberry, 48 Me. 218; Alder-
man v. People, 4 Mich. 414; 51
Am. Dec. 75; People v. Melvin, 2
Wheeler Cr. Cas. 262; Yeates
Sel. Cas. 111; People v. Trequier,
1 Wheeler Cr. Cas. 142; State v.
Snell, 2 Ohio N. P. 55; Common-
wealth v. Tack, Brewst 511.

1210 Mich. Law Rev. 1, 24,
George W. Wickersham. This was

101; Smith v. People, 25 Ill. (15
Peck), 17; 76 Am. Dec. 780;
Spies v. People, 122 Ill. 1; 12 N.
E. R. 865; 3 Am. St, 320; State

said of the Sherman Anti-Trust
Act, but is equally true of the
common law. 1 Eddy on Combina-
tions, No. 621.
100

THE SHERMAN ANTI-TRUST ACT.

demn them or place the brand of illegality on their enter-

prise or efforts.??

13 ‘Increased size is of itself a
weapon of competition which is
the more appreciated as competi-
tion becomes keener and the mar-
gin of profit narrower.” 2 Har-
vard Law Review, p. 181, by
Herbert Pope. “A _ corporation,
whether it represents a combina-
tion or not may increase its
business to any extent, even up to
the point of acquiring the whole
of a given trade, if it does so by
not interfering with the right of
others to compete, but by means
of proper methods. Proper meth-
ods can be completely defined only
after some decision which shall
hold a great combination legal.
The following are obviously proper
methods: excellence of product,
lowness of selling price, efficiency
of management, skill in marketing
of product, and ability to attract
the custom of the public by rea-
son of the above methods and by
advertising. To meet increased
trade acquired by proper methods,
a corporation, whether it repre-
sents a combination or not, may
increase its capital to any amount,
extend its plant to any size, and
may purchase che plants of any
persons or corporations who are
genuinely willing to sell.” Robert
L. Raymond in 25 Harvard Law
Review 52.

After reviewing the English
legislation on the subject of com-
binations, Lord Fry, in Mogul
Steamship Co. v. McGregor Steam-
ship Co., L. R. 23, Q. B. Div. 624;
59 L. T. 514; 58 L. J. Q. B. 465;
5 T. L. R. 658, said: “Thus the
stream of modern legislation runs

strongly in favor of allowing the
great combinations of persons in-
terested in trade and intended to
govern or regulate the proceed-
ings of large bodies of men, and
thus, necessarily, to interfere
with what would have been the
course of trade if unaffected by
such combinations.”

“Tt is unnecessary in this case
to discuss the question of whether
mere size of a corporation, mere
aggregation of wealth, acquired in
the usual, ordinary growth of a
business enterprise, is sufficient to
constitute « monopoly, for we be-
lieve that it may be safely stated
that a monopoly exists where a
great aggregation of capital like
the Standard Oil, is coupled with
oppressive use of the power such
wealth gives in driving out com-
petitors or controling the market,
by means which may or may not
be unlawful or criminal in them-
selves. To illustrate: The pur-
chase or the acquisition in any
manner of a dominating control
of plants engaged in a manu-
facturing business in many parts
of the country, and the exercise
of this power by unfair and op-
pressive dealing, controlling the
avenues of transporation or ob-
taining unreasonable rebates and
discriminations from the common
carriers, necessarily used in the
operation of the business, would
be evidence of monopoly, as in the
Swift case, where it was held that
rebates and discriminatory rates,
unfair methods of dealiing by bid-
ding up the prices of cattle at
certain markets, thereby causing
TRUSTS AND COMBINATIONS AT COMMON*

"101

§ 44. Monopoly Incomplete.—In order to vitiate a con-
tract or combination it is not essential that its result should

an influx so as to glut the mar-
ket, and then putting prices down,
and other means of a similar kind,
were evidences of monopoly.

In such cases the size of the
corporation, the wide extent of
its business under the circum-
stances in which the business is
done, gives the power of control.
This, as said in the Northern Se-
eurities case, is monopoly. To il-
lustrate the point we are now dis-
cussing, take the condition of the
Standard Oil Company today. It
has substantially 85 per cent. of
the business of purchasing crude
oil in the fields (in many fields it
has an absolute monopoly) ; fullv
the same proportion in transport-
ing the oil to the refineries and
manufacturing the same into the
various products of commerce; it
has 97% per cent. of the railroad
lubricating business; it has about
90 per cent. of the domestic
marketing and export business,
and so on. It appears that the
marketing of refined oil and gas-
oline is done by transportation in
bulk tank cars to hundreds of sta-
tions in each state and from these
distributed to the retailer and
consumer by tank wagons.

Now, all the balance of the
business, to-wit: 10 per cent., if
concentrated in the hands of one
company, would not justify the
expenditure necessary to erect sta-
tions and furnish facilities for the
distribution of oil in every state,
county and city in the United
States; ten per cent. of the busi-
ness would not support such mar-
keting facilities. Therefore each

independent company must select
a limited territory in which it
will market its product.

Suppose the Standard Oil Com-
pany, being enabled so to do by
reason of its enormous aggre-
gated capital and its advantages
by the contro] of pipe lines and
the combined plants scattered all
over the country, reduces the price
in those districts or territories
where competitors are selling re-
fined oil and gasoline by these
marketing methods, and raises the
price in other territories where
there is no competition. It could
thereby crush out the competition
without materially affecting its
combined earnings. This is exact-
ly what the testimony shows the
Standard Oil Company has done
in districts where the competitors
have secured a considerable per-
centage of business. The Standard
has reduced the price until it has
sold its product at a loss. This
combination, therefore, has the
power to control prices just as ef-
fectually as could be done by con-
tracts between competing concerns.
In fact, it is more injurious to the
public than such contracts. It de-
stroys the independent manufac-
turer; it prevents the consumer
from purchasing at a reasonable
price, except in districts where the
competition exists and during the
life of the independent, which is
usually short. The evils of monop-
oly thus accomplished and_ the
perils to the industrial inde-
pendence of the people are as
great as if the monopolies were ob-
tained by governmental grant, and
102

THE SHERMAN ANTI-TRUST ACT.

be a complete ionopoly; it is sufficient if it really tends
to that end, to deprive the public of the advantages which

when Congress declared that no
person (including a corporation)
should monopolize or attempt to
monopolize commerce, without
specifying the means, it was in-
tended as a broad and sweeping
prohibition that applied to indi-
viduals or corporations monopoliz-
ing or attempting to monopolize
the commerce by any means
whatever. At common law a grant
of monopoly made to a single per-
son or corporation was void be-
cause it destroyed the freedom of
trade, discouraged labor and in-
dustry, which should be free to all
the subjects of the realm. (Case
of Monopolies, 6 Coke’s Reports,
p. 159; Butchers’ Union v. Cres-
cent ‘City Company, 111 U. &.
754; 4 Sup. Ct. 652; 28 L. Ed.
585). In the latter case Mr. Jus-
tice Field, in writing the opinion
of the court, held that it was not
within the power of the legisla-
ture of Louisiana to grant an ir-
revocable right to the exclusive
pursuit of a lawful calling. He
said: ‘All grants of this kind are
void at common law, because they
destroy the freedom of trade, dis-
courage labor and industry, re-
strain persons from getting an
honest livelihood and put it in the
power of the grantee to enhance
the price of commodities. They
are void because thev interfere
with the liberty of the individual
to pursue a lawful trade or em-
ployment.’

It was the evil resulting from
the control of commerce tending
to monopoly against which Con-
gress was legislating, and not any

particular means by which the
same might be accomplished. Did
not Congress have in mind in pass-
ing this act the manner in which
a few individuals had attempted
to monopolize the commerce of the
country? We are not invoking a
new principle against an old de-
vice, but an old principle against
a new device. Principles are ever-
lasting; devices change.” Govern-
ment’s Brief in Standard Oil case,
p. 349.

“By the terms of the instrument
a co-partnership between the par--
ties to transact a lawful business
in an apparently lawful manner,
was formed. Of course it does not
require argument or citation of
authority to show that five or any
other number of men may law-
fully form a co-partnership to buy
the produce of the country and sell
merchandise at Waupun or any
other place.

But it does not necessarily fol-
low that the agreement under con-
sideration is «a valid one. Al-
though not expressed therein, if
that agreement was in fact made
for the purpose of preventing com-
petition in the markets in which
the firm might operate, and with
the intention of keeping secret
from the publie the existence of
the agreement, and if its existence
was thus kept a secret and an ap-
pearance of competition main-
tained by them towards the public,
such executed intention of secrecy
and deception tainted the agree-
ment itself, and rendered it il-
legal and void. In that case no
rights can be enforced under such
TRUSTS AND COMBINATIONS AT COMMON LAW.

illegal agreement by any party
against another party thereto.
The law does not and did not
require that these parties should
compete in the purchase of pro-
duce. Individually each had an
undoubted right to bid therefor as
low as he pleased. Collectively
they had the same right, unless
deception was practiced on the
public. But if they held them-
selves out as competing purchas-
ers and knew that the people who
sold in the markets where they
operated relied upon such compe-
tition (as well as they might) as
«a guaranty that they were ob-
taining the full market value of
the produce, while at the same
time the purchasers were not in
competition, but in secret league
to depress the market, the agree-
ment under which the latter ope-
rated is illegal and void, and no
court will lend its aid to enforce
any of its stipulations. The cases
which hold that secret agreements
between persons attending auction
sales not to bid against each other,
and to divide the property bid off
by one of them, are illegal, go upon
the same principle. These views
are fully sustained by the au-
thorities cited by counsel for the
defendant, to which we add Mor-
ris Run Coal ('o. v. Barclay Coal
Co., 68 Pa. St. 173. The case of
Craft v. MeConoughy recently de-
cided by the Supreme Court of
Mlinois and reported in 3 Monthly
West Jur. 233, is an instructive
case, and very similar in its facts
to the case under consideration.
It only remains to determine
whether the complaint shows on
its face that the agreement was
entered into with the unlawful in-

103

tention above mentioned. The
only averment thereof which it is
claimed shows such intention is
the following: Each of the said
firms operating independent of
each other or any member of said
co-partnership, and in the same
manner as they had theretofore
done, and as though the said co-
partnership did not exist.” But we
think the agreement cannot fairly
be so interpreted. It may be true,
and yet there may have been no
intention of secreey—no conspir-
acy, so to speak; the true rela-
tions between the parties may
have been notorious, and all per-
sons selling produce in the mar-
kets where the firm was a pur-
chaser may have known that the
members of it were not in com-
petition.

“If the agreement between the
parties is valid and binding upon
them, the complaint states a
cause of action against the de-
fendant. Finding nothing in the
complaint which shows such an
agreement to be illegal, we must
hold that the demurrer thereto was
properly overruled.” Fairbank v.
Leary, 40 Wis. 637.

“T conceive that it (‘monopoly’
under the Sherman Law) is not
sufficiently defined by saying that
it is the combination of a large
part of the plants in the country
engaged in the manufacture of a
particular product in one corpora-
tion. There must be something
more than the mere union of capi-
tal and plants before the law is
violated. There must be some
use by the company of the com-
paratively great size of its capital
and plant and extent of its out-
put, either to coerce persons to
104 THE SHERMAN ANTI-TRUST ACT.

flow from free competition. All the authorities agree upon
this. If the monopoly is the result of efforts to that end
so that previously competing business is so concentrated in
the hands of a single person or corporation, or of few persons
or several corporations acting together, that he or they have
practically power to fix the prices of commodities and thus
suppress competition, there is a violation of law.’* Wherever
the control is such that those in charge have the power to fix
prices or restrain production, then there is a monopoly.’®
Thus, if nearly all of an article of trade within a district is
brought within the hands of one man or set of men, to the
practical exclusion of competition or free traffic, there is a

monopoly.2”

buy of it, rather than of a competi-
tor, or to coerce those who would
compete with it to give up their
business. There must, in other
words, be an element of duress in
the conduct of its business to-
wards the customers in the trade
and its competitors before a mere
aggregation of plants becomes an
unlawful monopoly.” United
States v. Addyston Pipe & Steel
Co., 85 Fed. 271; 29 €. C. A. 141;
46 L. R. A. 122; 78 Fed., affirmed
175 U. 8. 211; 20 Sup. Ct. 96; 44
L. Ed. 136.

14United States v. E. C.
Knight 'Co., 156 U. 8S. 1; 15 Sun.
Ct. 249; 39 L. Ed. 325, affirming
60 Fed. 934; 9 C. C. A. 297; 17 U.
S. App. 466; 24 L. R. A. 428,
which affirmed 60 Fed. 306.

15 United States v. American
Tobacco Co., 164 Fed. 700; modi-
fied 221 U.S. 106; 31 Sup. Ct. 632;
55 L. Ed. —; Herriman v. Men-
zies, 115 Cal. 16; 44 Pac. 660; 46
Pac. 730; 35 L. R. A. 318; 56 Am.
St. 81; Harding v. American Glu-
cose Co., 182 Ill, 551; 55 N. E.

577; 64 L. R. A. 738; 74 Am. St.
189; Richardson v. Buhl, 77 Mich.
632; 43 N. W. 1102; 6 L. R. A.
457; Lough v. Otenbridge, 143 N.
Y. 271; 398 'N. E. 392; 25 L. R.
A. 674; 42 Am. St. 712; People v.
North River Sugar Refining Co.,
54 Hun 377; note 3 N. Y. Supp.
401; 2 L. R. A. 33; Wood v.
Glenwood Hardware Co., 75 8. C.
383; 55 S. E. 973; 9 L. R. A. (N.
8.) 501; Pocahontas Coke Co. v.
Powhatan Coal, ete., Company, 60
W. Va. 508; 56 S. E. 264; 20 L.
R. A. (N. S.) 268; 116 Am. St.
901.

16 State v. Duluth Board of
Trade, 107 Minn. 506; 121 N. W.
395.

17 Grogan v. Chaffee, 156 Cal.
611; 105 Pae. 745. “We have no
doubt that where the direct and
immediate effect of a contract or
combination among _ particular
dealers in a commodity is to de-
stroy competition between them
and others, so that the parties to
the contract or combination may
obtain increased prices for them-
TRUSTS AND COMBINATIONS AT COMMON LAW. 105

§ 45. Agreement Tending to Create a Monopoly.—Any
agreement, understanding or combination that tends to
create a monopoly is void. Such an agreement, of course,
need not create a complete monopoly. The state of New
York brought an action to oust the North River Sugar Re-
fining Company, on the ground that it had abused its cor-
porate powers by becoming a party to a trust agreement.
The case is so important upon the question that the agree-
ment tended to create a monopoly and was therefore void
as in restraint of trade, that we make an extended extract
from the opinion of the court: ‘‘The principles established
by these cases [those cited] seem to cover and fully meet
the main position taken in support of the present agreement.
There are, however, one or two minor considerations which
should be noticed. The first is, that this agreement
seems to avoid the pitfall of many of the cases by carefully
omitting any specific authority to fix prices. Such author-
ity, however, is plainly covered by the enormous general
power conferred upon the trust board. The greater includes
the less, and any specification on this head would have been
superfluous. Even Mr. Carter finally yielded this point.
‘I agree,’ he says, ‘in the broadest manner, that the power
exists there to fix a price; eventually it is for the interests
of the parties to fix the price.’ The truth is that, under this
agreement, the trust board can direct the business movements
of these 17 or 18 corporations as absolutely as the general
of a great army can direct the movements of its various

selves, such contract or combina-
tion amounts to a restraint of
trade in .the commodity, even
though contracts to buy such
commodity at the enhanced price
are continually being made. Total
suppression of the trade in the
commodity is not necessary in or-
der to render the combination one
in restraint of trade. It is the ef-
fect of the combination in limit-

ing and restricting the right of
each of the members to transact
business in the ordinary way, as
well as its effect upon the volume
or extent of the dealing in the
commodity, that is regarded.” Ad-
dyston Pipe & Steel Co. v. United
States, 175 U. S. 211; 20 Sup. Ct.
97; 44 L. Ed. 136, modifying 85
Fed. 271; 29 C. C. A. 141; 54 U.
S. App. 723; 46 L. R. A. 123.
106 THE SHERMAN ANTI-TRUST ACT.

corps d’armee. But a director may rebel, says the learned
counsel. Well, even in war there is a possibility that a corps
commander may disobey the order of his chief, but discipline
and change of military agency speedily follow. There is
still likelihood of mutiny in boards of directors who practi-
cally take office under the trust board [and subject to the
provisions of the trust deed], who are appointed by the
trust chiefs, and removed by a mere retransfer of stock
‘upon request’ at any time, and, above all, who are spurred
to active and zealous obedience by the hope, nay, by the
substantial certainty, of gain; for there is nothing whatever
to prevent the trustees from filling these corporate boards
with their own members or with other holders of their own
trust certificates. The trust board is, indeed, clothed with
the power far in excess of the ordinary stockholders of a cor-
poration. It is, in substance, both stockholders and diree-
tors, and this union of force embraces every share of stock
and every director in every corporation. What need, then,
for specific detail in the general delegation of power? The
board, under this executed deed, can close every refinery at
will, close some and open others, limit the purchase of raw
material [thus jeopardizing in a considerable degree con-
trolling its production], artificially limit the production of
refined sugar, enhance the price to enrich themselv’s and
their associates at the public expense, and depress the price
when necessary to crush out and impoverish a foolhardy
rival; in brief, can come as near to creating an absolute
monopoly as is possible under the social, political and eco-
nomic conditions of to-day. We are told that this can not
be accomplished with regard to an article like sugar, which
can be indefinitely produced by the application of capital
and labor, and that monopoly is possible only where the
supply of the article is restricted by nature. This positioa
has been maintained in an argument of exceeding brilliancy,
which I confess to have enjoyed as one always enjoys a
persuasive manner of presentation. But while the argument
was most ingenious, it was neither sound, nor—I say it with
TRUSTS AND COMBINATIONS AT COMMON LAW. 107

respect—plausible. Of course, a monopoly, in the strict,
technical and absolute sense, can not be thus created, but a
monopoly in a legal sense can. The monopoly with which
the law deals is not limited to the strict equivalent of royal
grants of people’s patents. Any combination the tendency
of which is to prevent competition in its broad and general
sense, and to control and thus at will enhance prices to
the detriment of the public, is a legal monopoly; and this
rule is applicable to every monopoly, whether the supply be
restricted by nature or susceptible of indefinite production.
The difficulty of effecting the unlawful purpose may be
greater in the one case than in the other, but it is never
impossible. Nor need it be permanent or complete. It is
enough that it may be even temporarily and partially suc-
cessful. The question in the end is, Does it inevitably tend
to public injury?

‘“Why, then, does not this trust board combine all of
these unlawful purposes with ample power of accomplish-
ment? Theoretically, it can not prevent other capitalists
from coming forward and utilizing their means in com-
bination with labor, but practically it can. The struggle
would be an unequal, and, except under powerful, unusual
and extraordinary conditions, impossible. A vast harvest
could be reaped at the expense of the public before the
foundation of the competitive edifice could be thoroughly
laid. Nor could the power of the combination be defeated
by outside forces. The undue enhancing of prices might
draw to the locality the attention of the foreign commercial
world. But the argument here overlooks the laws of the
United States and the duties imposed by those laws upon
imports. It overlooks, too, the expense of transportation and
handling and the delays incident thereto. The harvest could
again be reaped at the public expense before the advent of
competition, and that harvest could then be utilized by the
sudden lowering of prices, to the repression of the foreign
competitor. Such, at least, is the tendency of the combina-
tion, and such its practical power. The defendant’s whole
108 THE SHERMAN ANTI-TRUST ACT.

argument on this head is based upon the theory rather than
fact, just as its earlier argument, with regard to the corpo-
rations, is based upon legal form rather than substance. The
doctrines of political economy which have been pressed upon
are based upon normal conditions, and have no bearing
whatever upon the combinations organized for the express
purpose of surmounting and subverting those conditions.

‘‘Lastly, this appeal to the law is criticized as an inter-
ference with a natural state of things. The unnatural thing
is said to be the law when it attempts to check the natural
order. Unfortunately for this argument, it is the combina-
tion which has resorted to what it calls the unnatural thing.
It was not content with natural partnerships or associations
of individuals, but resorted to the device of corporate arti-
ficiality to effect its ends. Having asked and accepted the
favor of the law, it can not complain that it is taken to
task for grossly offending its letter and spirit. Fortunately,
the law is able to protect itself against abuses of the privi-
leges which it grants; and, while further legislation, both
preventive and disciplinary, may be suitable to check and
punish exceptional wrongs, yet there is existing, to use the
phrase of a distinguished English judge in a noted case,
‘plain law and plain sense’ enough to deal with corporate
abuses like the present abuses which, if allowed to thrive and
become general, must inevitably lead to the oppression of the
people, and ultimately to the subversion of their political
rights. Again, the legal results justly follow forfeiture and
dissolution. Let me say, in conclusion, that it would quite
unnecessarily belittle the discussion of this momentous ques-
tion to consider the minor charges presented by the people.
The judgment should rest upon the broad and main issue.
There it rests with a sense of fitting proportion, and there
it should be left. For these reasons the defendant’s motion
must be denied and the plaintiff’s granted.’’ 18

18 People v. North River Refin- 49 Ohio St. 137; 30 N. E.
ing Co., 54 Hun. 354; 3 N. Y. Co., 49 Ohio St. 137; 20 N. E.
Supp. 401; 2 L. R. A. 33; 179; 15 L. R. A. 145; 34 Am. St.
State v. Standard Oil Co., 541; State v. Nebraska Distilling
TRUSTS AND COMBINATIONS AT COMMON LAW.

§ 46,

109

Reasonable Restraint of Trade Not Invalid.—At

common law a reasonable restraint of trade is not invalid;

it is only an unreasonable one that is such.?®

If the com-

bination creates only a partial restraint of trade, yet to
be valid the restraint must be a reasonable one.”°

Co., 29 Neb. 700; 46 N. W. 155;
Distilling & Cattle Feeding Co. v.
People, 156 MH). 449; 41 N. EL 188;
417 Am. St. 200.

19 Horner v. Graves, 7 Bing 735;
od Moore & 'P. 768; Hubbard v.
Miller, 27 Mich. 15; Wiley v.
Baumgardner, 97 Ind. 66; 49 Am.
Rep. 427.

20Pramer vy. Farrell, 166 Fed.
702; 92 C. C. A. 374; National
Enameling & Stamping Co. v.
Haberman, 120 Fed. 415; Fishers
Co. v. Lennen, 116 Fed. 217; Car-
ter y. Alling, 43 Fed. 208; Hamp-
ton v. Caldwell, 95 Ark. 387; 129
S. W. 816; Edgar Lumber Co. v.
Cornie Stove Co., 95 Ark. 499; 130
S. W. 452; Ft. Smith L. & T. Co.
vy. Kelley, 94 Ark. 461; 127 S. W.
975; Wenster v. Williams, 62
Ark. 101; 34 8S. W. 537; Keith v.
Herschberg Optical Co., 48 Ark.
138; 2 8. A. 777; Bloom v. Home
Ins. Agency, 91 Ark. 367; 121 S.
W. 293; Fredenthal v. Espery, 45
Colo. 488; 102 Pac. 280; Bullock
v. Johnson, 110 Ga. 486; 35 S. E.
703; Jenkins v. Temples, 39 Ga.
655; 90 Am. Dee. 452; Southern
Fire Brick & ‘Clay Co. v. Garden
City Sand Co., 223 Tl. 616; 79 N.
E. 313; Andrews y. Kingsbury, 212
Nl. 97; 72 N. EB. 11, affirming 112
Til. App. 518; Lanzit v. J. W.
Lafton Mfe. Co., 184 Tl. 326; 56
N. E. 393; 75 Am. St. 171, revers-
ing 83 Ill. App. 168; Hoff v. Len-
errmann, 143 Ill. App. 170; Trent-
man v. Workenberg, 30 Ind. App.

304; 65 N. E. 1057; Roush v. Ges-
man, 126 Iowa 498; 102 N. W.
495; Swigert v. Tilden, 121
Towa 650; 97 N. W. 82; 63 L. R.
A. 608; Sutton v. Head, 86 Ky.
156; 9 Ky. L. Rep. 453; 9 Am. St.
274; 5 S. W. 410; Turner v. John-
son, 7 Dana 435; Grundy v. Ed-
wards, 7 Je J. March 368; 23 Am.
Dec. 409; Hill v. Gudgell, 9 Ky.
L. Rep. 436; Up River Ice Co. v.
Danler, 114 Mich. 296; 72 N. W.
157; 4 Det. L. N. 502; Hubbard
v. Miller, 27 Mich. 15; Espenson
v. Koepke, 93 Minn. 278; 101 N. W.
168; Mallinckrodt Chemical Works
v. Nemmich, 83 Mo. App. 6; Eng-
les v. Morginstern, 85 Neb. 51; 122
N. W. 688; Bancroft v. Emboss-
ing Co., 72 N. H. 402; 57 Atl. 97;
64 L. R. A. 298; Trenton Potteries
‘Co. v. Oliphant, 56 N. J. Eq. 680;
39 Atl. 923, modified 58 N. J. Eq.
507; 43 Atl. 723; 78 Am. St. 612;
46 L. R. A. 255; Jacobs v. ‘Cohen,
183 N. J. 207; 76 N. EF. 5; 2 L. R.
A. (N. 8.) 292; New York Bank
Note E. & P. Co., 180 N. Y. 280;
73 N. E. 48; Hackett v. A. L. &
J. J. Reynolds Co., 30 N. Y. Mise.
733; 62 N. Y. Supp. 1076; Wooten
v. Harris, 153 N. C. 43; 68 S. E.
898; Anders v. Gardner, 151 N.
C. 604; 66 S. E. 665; Jolly
v. Brady, 127 N. C. 142; 387
S. E. 586; King v. Fountain,
126 N. ©. 196; 35 S. EL. 427;
Kramer v. Old, 119 N. C. 1; 25 8.
E. 813; Cowan v. Fairbrother, 118
N.C. 406; 24S. E. 212; Mononga-
110 THE SHERMAN ANTI-TRUST ACT.
A contract in restraint of trade which is unreasonable is
unlawful and can not be enforced.?!

§ 47. Public Not Injured by the Illegal Combination—
Moncpoly Not Complete.—Efforts have been made to sustain
an illegal combination by showing that no injury was ac-
tually inflicted upon the public by the course of conduct of
those who controlled it; as, for instance, that the price of
the article it manufactured had not been advanced nor the
quality restricted. But these efforts have failed. The courts
look at the power of the combination to control prices and
the output, rather than to what it had actually done in this
respect. Such power is an overhanging menace, its exercise

hela River, ete., Co. v. Tutte, 210 Pa.
St. 288; 59 Atl. 1088; 105 Am.
St. 812; Tabler v. Austin, 22 Tex.
Civ. App. 99; 53 8. W. 706; Mer-
riman v. Cover, 104 Vt. 428; 51
8. E. 817; Cottington v. Swan, 128
Wis. 321; 107 N. W. 336; Hood v.
Jones, 81 L. T. (N.S.) 169; Under-
wood v. Barker [1899] 1 Ch. 300;
68 L. J. Ch. 201; 80 L. T. (N.S.)
306; 47 W. R. 347; White v. Wil-
son, 23 T. L. R. 469; Barr y.
Craven, 89 L. T. 574; 20 T. L. R.
51; Tivoli v. Colley, 52 W. R.
632; 20 T. L. R. 4387.

21 Queen Ins. Co. v. State, 86
Tex. 250; 24 S. W. 397; 22 L. R.
A. 483; Bailey v. Phillips, 159
Fed. 585; State v. Duluth Board
of Trade, 107 Minn. 506; 121 N.
W. 395; Gitz Bros. & Co. v. Fed-
eral Salt Co., 147 Cal. 115; 87
Pac. 416; More v. Bonnett, 40 Cal.
251; 6 Am. Rep. 621; Wright v.
Ryder, 36 Cal. 342; 95 Am. Dec.
186; Rakestrau v. Lanier, 104 Ga.
188; 30 S. E. 785; Goodmen vy.
Henderson, 58 Ga. 567; Holmes v.
Martin, 10 Ga. 503; Dunbar v.

American T. & T. Co., 238 Ill. 456;
87 N. E. 521; Consumer’s Oil Co.
vy. Nummaker, 142 Ind. 560; N. E.
51 Am. St. 193; Wiley v. Baum-
gardner, 97 Ind. 66; 49 Am. Rep.
427; Beard v. Dennis, 6 Ind. 200;
63 Am. Dec. 380; Clemons v.
‘Meadows, 123 Ky. 178; 94 8. W.
13; 29 Ky. L. Rep. 619; 6 L. R. A.
(N.S.) 847; 124 Am. St. 339;
Sutton v. Head, 86 Ky. 156;
9 Ky. L. Rep. 410 5 S. W.
410; 9 Am. St. Rep. 274; Jones
Cold Store Door Co. v. Jones, 108
Md. 439; 70 Atl. 88; Warfield v.
Booth, 33 Md. 63; Guerand v.
Dandelet, 32 Md. 561; Davis v.
Barney, 2 Gill & J. (Md) 382;
Bishop v. Palmer, 146 Mass. 469;
16 N. E. 299; Alger v. Tacher, 19
Pick. (36 Mass.) 51; 31 Am. Dec.
119; Western Wooden-Ware Asso.
v. Starkey, 84 Mich. 76, 85; 47 N.
W. 604; 11 L. R. A. 503; 22 Am.
St. Rep. 686; Peltz v. Hichele, 62
Mo. 171; Long v. Towl, 42 Mo.
545; 97 Am. Dee. 355; Roberts v.
Lemont. 73 Neb. 365; 102 N. W.
770; Shute v. Heath, 181 N. C.
TRUSTS AND COMBINATIONS AT COMMON LAW. 111
for evil depending upon those who control, and who may put
it in motion to satisfy their cupidity and avarice.”?

‘Tt is no defense to the illegality of a contract or combina-
tion,’’ said the Supreme Court of West Virginia, ‘‘* * * *
is in unreasonable restraint of trade to show that in the
particular case a monopoly has not been formed, or that no
control of prices have been exercised, or that prices have
been lowered and not raised. If a contract or combination
in unreasonable restraint of trade could not be attacked until
a complete monopoly had been formed, then the law against
monopolies would be unavailing. In this country it would
be almost impossible to combine all the interests in any line

of industry into a single and complete monopoly.”’ 73

281; 42 S. E. 704; Mandenville v.
Harman, 42 N. J. Eq. 185; 7 Atl.
27; \Curtis v. Gokey, 69 N. Y. 300;
‘Chappel v. Brockaway, 21 Wend.
(N. Y.) 157; Blauner v. Williams
Co., 69 N. ¥. Supp. 165; 36 Mise.
173; Grassvilli v. Lowden, 11 Ohio
St. 349; Thomas v. Miles, 3 Ohio St.
274; Anderson v. Shawnee Com-
press Co., 17 Okl. 231; 87 Pac. 315;
Smith’s Appeal, 113 Pa. St. 579; 6
Atl. 251; Herreschoff v. Bounti-
neau, 17 R. I.; 319 Atl. 712;
Pocahontas Coke Co. v. Powhatan
Coal & Coke Co., 60 W. Va. 508;
56 S. E. 264; 116 Am. St. Rep.
901; 10 L. R. A. (N.S.) 268;
Berlin Machine Works v. Perry,
71 Wis. 495; 38 N. W. 82; 5 Am.
St. Rep. 236; Underwood & Son,
Ltd., v. Barker Law Rep., 1 Ch. D.
300; 68 L. J. Ch. 201; 80 L. T.
306; 47 W. R. 347, per Vaughan
Williams, L. J.; Beetham v.
Frazer, 21 T. L. R. 8.

22 Richardson v. Buhl, 77 Mich.
658; 48 N. W. 1102; 6 L. R. A.
457.

23 Pocahontas Coke Co. v. Pow-
hatan Coal & Coke Co., 60 W. Va.
508; 56 S. E. 264; 10 LR. A.
(N. 8.) 268; 116 Am. St. 901.
“It has been earnestly pressed
upon us that the prices at which
the cast-iron pipe was sold in pay
territory “were reasonable. A
great many affidavits of purchas-
ers of pipe in pay territory, all
drawn by the same hand or from
the same model, are produced, in
which the affiants say that, in
their opinion, the prices at which
pipe has been sold by defendants
have been reasonable. We do not
think the issue an important one,
because, as already stated, we do
not think that at common law
there is any question of reason-
ableness open to the courts with
reference to such a contract. Its
tendency was certainly to give
defendants the power to charge
unreasonable prices, had _ they
chosen to do go.” United States
v. Addyston Pipe & Steel Co., 85
Fed. 271; 29 C. C. A. 141; 54 U.
112

THE SHERMAN ANTI-TRUST ACT.

§ 48. Corporation Organized to Monopolize Business of
Other Corporations.—If a corporation be organized to take
over the plants and monopolize the business of other corpo-

S. App. 723; 46 L. R. A. 122, re-
versing 78 Fed. 712, affirmed 175
U. S. 211; 20 Sup. Ct. 96; 44 L.
Ed. 136; Richardson v. Buhl, 77
Mich. 658; 43 N. W. 1102; 6 L. R.
A. 457.

“We have no doubt that where
the direct and immediate effect
of a contract or combination
among particular dealers in a
commodity is to destroy compe-
tition between them and others, so
that the parties to the contract
or combination may obtain in-
creased prices for themselves, such
contract or combination amounts
to a restraint of trade in the
commodity, even though contracts
to buy such commodity at the en-
hanced price are continually be-
ing made. Total suppression of
the trade in the commodity is not
necessary in order to render the
combination one in restraint of
trade. It is the effect of the com-
bination in limiting and restrict-
ing the right of each of the mem-
bers to transact business in the
ordinary way, as well as its ef-
fect upon the volume or extent of
the dealing in the commodity, that
is regarded.” United States v. Ad-
dyston Pipe & Steel Co.. supra;
Hunt v. Riverside Co-operative
Club, 140 Mich. 538; 104 N. W.
40; 112 Am. St. 420; Strait v.
National Harrow Co., 18 N. Y.
Supp. 224.

“Thus it was said in Stockton
v. Central R. R. Co. of N. J., 50
N. J. Eq. 52, 84; 24 Atl. 964, 976;
17 L. R. A. 97, 110: ‘It is possi-

ble that such a monopoly may be
used as the defendants suggest, to
introduce economics and cheapen
coal, but it does violence to our
knowledge of human nature to ex-
pect such a result.’ So in People
v. North River Sugar Refining Co.,
54 Hun. 354, 497; 7 N. Y. Suppl.
406, 411; 5 L. R. A. 386, 389
(1889), ‘Where the effect of the
arrangement is to permanently
secure the control, or the substan-
tial control, of this product and of
its sale, as that has been done, it
is more than just to infer that the
control is to be used to avoid
competition and enhance prices,
and in that manner, as it is the
ordinary expedient for that end,
promote the interests and add to
the profits of the associates.’ See
also State ex rel. v. Standard Oil
Co., infra. But a different view
was taken in Central Shade Roller
‘Co. v. Cushman, 143 Mass. 353; 9
N. E. 629 (1887), sustaining a
combination among the principal
dealers in a commodity, who sub-
stantially supplied the market
The court said: ‘We cannot as-
sume that the purpose and effect
of the combination are to unduly
raise the price of the commodity.
A natural purpose and a natural
effect are to maintain a fair and
uniform price and to prevent the
injurious effect, both to producers
and customers, of fluctuating
prices caused by undue competi-
tion. When it appears that the
combination is used to the public
detriment, a different question will
TRUSTS AND COMBINATIONS AT COMMON LAW. 118

rations, its purpose and business will be illegal, even though
the public may not suffer from the raise of the prices of its
manufactured product. Thus a corporation was organized
under the law of Connecticut for the purpose of securing the
ownership of all of the match factories in the United States.
Thirty-one concerns went into this combination, and out of
these all except thirteen were closed and ceased to manufac-
ture matches. This was not a case of combination of stock
interests, but by the purchase of the principal match fac-
tories in the country. Many of the factories were paid for
by the issuance of stock. ‘he agreement for the acquisition
of certain properties were held void. Chief Justice Camp-
bell very lucidly stated why the organization of the company
was illegal, as follows:

“‘T think no one can read the contract in question and fail
to discover that considerations of public policy are largely
involved. The intention of the agreement is to aid in
securing the objects sought to be attained in the formation
and organization of the Diamond Match Company. This
object was openly and boldly avowed. Not only does this
appear in its organization, and in business it proposes to
conduct, and in the modes and manner of carrying it on, but
the testimony of General Alger himself avers it and settles
its character beyond question. The organization is a manu-
facturing company. The business in which it is engaged is
making friction matches. Its articles provide for the aggre-
gation of an enormous amount of capital, sufficient to buy up
and absorb all of that kind of business done in the United
States and Canada, to prevent any other person or corpo-
ration from engaging in or carrying on the same, thereby
preventing all competition in the sale of the article manu-
factured. This is the mode of conducting the business and

be presented from that now before know of no authority or reason
us. The contract is apparently for holding it to be invalid, as iu
beneficial to the parties to the restraint of trade or against pub-
combination, and not necessarily lic policy.?” Cook on Combina-
injurious to the public, and we _ tions, p. 237, note.
114 THE SHERMAN ANTI-TRUST ACT.

the manner of carrying it on. The sole object of the cor-
poration is to make money by having it in its power to raise
the price of the article, or diminish the quantity to be made
and used, at its pleasure. Thus both the supply of the
article and the price thereof are made to depend upon the
action of a half dozen individuals, more or less, to satisfy
their cupidity and avarice who may happen to have the
controlling interest in this corporation, an artificial person,
governed by a single motive or purpose, which is to accu-
mulate money regardless of the wants or necessities of over
sixty millions of people. The article thus completely under
their control for the last fifty years has come to be regarded
as one of necessity not only in every household in the land,
but one of daily use by almost every individual in the country.
It is difficult to conceive of a monopoly which can affect a
greater number of people, or one more extensive in its effect
on the country than that of the Diamond Match Company.
It was to aid that company in its purpose and in carrying
out its object that the contract in this case was made between
these parties and which we are now asked to aid in enforcing.
Monopoly in trade or in any kind of business in this
country is odious to our form of government. It is sometimes
permitted to aid the government in carrying on a great
public enterprise, or public work under governmental con-
trol, in the interest of the public. Its tendency is, however,
destructive of free institutions, and repugnant to the in-
stincts of a free people, and contrary to the whole scope
and spirit of the Federal Constitution, and is not allowed
to exist under express provisions in several of our state
constitutions. Indeed, it is doubtful if free government can
long exist in a country where such enormous amounts of
money are allowed to be accumulated in the vaults of cor-
porations, to be used at discretion in controlling the prop-
erty and business of the country against the interest of the
public and that of the people, for the personal gain and
aggrandizement of a few individuals. It is always destruc-
tive of individual rights, and of that free competition which
TRUSTS AND COMBINATIONS AT COMMON LAW 115
is the life of business, and it revives and perpetuates one of
the great evils which it was the object of the framers of
our form of government to eradicate and prevent. It is alike
destructive to both individual enterprise and individual pros-
perity, whether conferred upon corporations or individuals,
and therefore public policy is, and ought to be, as well as
public sentiment, against it. All combinations among per-
sons or corporations for the purpose of raising or controlling
the prices of merchandise, or any of the necessaries of life,
are monopolies and intolerable, and ought to receive the
condemnation of all courts. In my judgment not only is
the enterprise in which the Diamond Match Company is
engaged an unlawful one, but the contract in question in
this case, being made to further its objects and purposes, is

void upon the ground that it is against public policy.’’ *

24 Richardson v. Buhl, 77 Mich.
632; 43 N. W. 1102; 6 L. R. A.
457. An arrangement between the
wholesale dealers and the plumb-
ers of Detroit whereby such plumb-
ers were to purchase their sup-
plies at a fixed price was held yoid,
because it tended to monopoly and
was against public policy. Hunt
v. Riverside Co-operative Club,
140 Mich. 538; 104 N. W. 40; 112
Am, St. 420; see also American
Biscuit & Mfg. Co. v. Klotz, 44
Fed. 721; Pennsylvania Sugar Re-
fining Co. v. American Sugar Re-
fining Co., 166 Fed. 254; 92 C. C.
A. 318, reversing 160 Fed. 144.

A corporation organized for the
purpose of receiving assignments
of various patents under which
manufacturers were engaged in
making harrows, and of granting
licenses to the manufacturers al-
lowing them to continue making
the same kind of harrows they had
previously made, and for the pur-
pose of fixing the price at which

the harrow should be sold, is il-
legal. Strait v. National Harrow
Co., 18 N. Y. Supp. 224; National
Harrow Co. v. Hench, 76 Fed.
667; affirmed 83 Fed. 36; 27 C. C.
A. 349; 39 L. R. A. 299; National
Harrow Co. v. Hench, 84 Fed. 226;
National Harrow Co. v. Quick, 67
Fed. 130; Shawnee Compress Co. v.
Anderson, 209 U. S. 423; 28 Sup.
Ct. 572; 52 L. Ed. 865, affirming
17 Okl. 231; 87 Pac. 515; 15 L. R.
A. (N.S.) 846; National Cotton
Oil Co. v. Texas, 197 U. S. 115;
25 Sup. Ct. 379; 46 L. Ed. 689, af-
firming (Tex. Civ. App.) 72 S. W.
615.

An agreement to form a trust in
the business of manufacturing and
selling preserves, by having trus-
tees hold the stock in certain ex-
isting corporations, and in others
to be formed, and having such:
corporations wholly controlled by
such trustees, is void as contrary
to public policy, in creating a mo-
nopoly, and in providing for a
116 THE SHERMAN ANTI-TRUST ACT.

§49. Combination Under Guise of Organizing a Corpo-
ration—Efforts have repeatedly been made to evade the
law against illegal combination by organizing a corporation
and taking over the assets of the combination. It has been
thought that in this way the fact of combination could be
legalized, and thus evade the law against monopoly. But
the courts have not hesitated to declare such a transaction
illegal. The turning point in these decisions is that the
original combination was illegal. This question has been
carefully discussed by the Supreme Court of Illinois in the
following words: ‘‘But the defendant contends that, while
this may all be so, the change in organization from an unin-
corporated association to a corporation, and the change in
the mode of holding the distillery properties of the various
corporations formerly maintained, and having the properties
themselves transferred and conveyed directly to the defend-
ant corporation, have purged the combination of its ille-
gality. It must be admitted that these changes, so far as
they have any effect upon the rights or interests of the
former stockholders in those corporations or of the public,
are formal rather than substantial. The same interests are
controlled in substantially the same way and by the same
agencies as before. The nine trustees of the trust, who as
the holders of all capital stock of the corporations and as
a majority of the directors of each, controlled such corporate
property, became the subscribers for all the stock of the
new corporation and its board of directors. The conveyance
and transfer of the properties of the constituent companies
to the new corporation was merely a transfer by the trustees
to themselves, though in a slightly different capacity, and
the former stockholders in the constituent companies simply

partnership between corporations.
Bishop v. American Preservers Co.,
41 N. E. 765; 157 Ill. 284; 48 Am.
St. 317.

A contract between two mer-
cantile houses engaged in the
same line of business, by which

each acquires an interest in the
gross profits made by the other, is
not on its face illegal as tending
to create a monopoly. Fechteler v.
Palm Bros. & Co., 133 Fed., 462;
66C. C. A. 336.
TRUSTS AND COMBINATIONS AT COMMON LAW. 117

exchanged their trust certificates, share for share, for stock
in the new corporation. That corporation thus succeeds to
the trust, and its operations are to be carried on in the same
way, for the same purposes, and by the same agencies as
before. The trust, then, being repugnant to the public
policy and illegal, it is impossible to see why the same is not
true of the corporation which succeeds to it and takes its
place. The control exercised over the distillery business of
the country—over production and prices—and the virtual
monopoly formerly held by the trust are in no degree
changed or relaxed, but the methods and purposes of the
trust are perpetuated and carried out with the same per-
sistence and vigor as before the organization of the cor-
poration. There is no magic in a corporate organization
which can purge the trust scheme of its illegality, and it
remains as essentially opposed to the principles of sound
public policy as when the trust was in existence. It was
illegal before and is illegal still, and for the same reasons.

‘‘But it is urged that the defendant, by its charter, is
authorized to purchase and own distillery property, and that
there is no limit placed upon the amount of property which
it may thus acquire. By its certificate or organization it is
authorized to engage in a general distillery business in
Iinois and elsewhere, and to own the property necessary for
that purpose. It should be remembered that grants of
powers in corporate charters are to be construed strictly,
and that what is not clearly given is, by implication, denied.
The defendant is authorized to own such property as is
necessary for carrying on its distillery business, and no
more. Its power to acquire and hold property is limited to
that purpose, and it has no power, by its charter to enter
upon a scheme of getting into its hands and under its control
all, or substantially all, the distillery plants and the dis-
tillery business of the country for the purpose of controlling
production prices, of crushing out competition, and of estab-
lishing a virtual monopoly in that business. Such purposes
_ are foreign to the powers granted by the charter. Acquisi-
118 THE SHERMAN ANTI-TRUST ACT.

tions of property to such extent and for such purpose do
not come within the authority to own the property neces-
sary for the purpose of carrying on a genera) distillery
business. In acquiring distillery properties in the manner
and for the purposes shown by the information, the defend-
ant has not only misused and abused the powers granted by
its charter, but has usurped and exercised powers not con-
ferred by, but which are wholly foreign to, that instrument.
It has thus rendered itself liable to prosecution by the state
by quo warranto, and we are of the opinion that, upon the
facts shown by the information, the judgment of ouster is

clearly warranted.’’ 7

25 Distilling & Cattle Feeding
Co. v. People, 156 Til. 448; 41 N.
FE. 188; 47 Am. St. 200. In this
same case the court used these
words: “There can be no doubt,
we think, that the Distillers and
Sattle Feeders’ Trust, which pre-
ceded the incorporation of the de-
fendant, was an _ organization
which contravened well-established
principles of public policy, and
that it was therefore illegal. No
one who intelligently considers the
scheme of this trust, as detailed
in the information, can for a mo-
ment doubt that it was designed
to be and was in fact a combina-
tion in restraint of trade, and that
it was organized for the purpose
of getting control of the manufac-
ture and sale of al] distillery pro-
ducts, so as to stifle competition,
and to be able to dictate the
amount to be manufactured, and
the prices at which the same
should be sold, and thus create, or
tend to create, a virtual monopoly
in the manufacture and sale of
products of that character. No
other business principle can be
suggested upon which the develop-

ment of such an elaborate and far-
reaching scheme can be accounted
for. No rational purpose for such
organization can be shown con-
sistent, with an intention to allow
business to run in its normal chan-
nels, to give competition to its le-
gitimate operation, and to allow
both production and prices to be
controlled by the natural influence
of supply and demand, and the re-
sults, as shown by the informa-
tion, were such as might be an-
ticipated. The trust obtained
possession of nearly all of the dis-
tilleries and of nearly the entire
distillery product, of the United
States, thus enabling it to dictate
prices and the amount of produc-
tion, and to thus draw to itself
the substantial control of the
distillery business of the coun-
try.”

A like ruling as that stated in
the text has been made in Ne-
braska. State v. Nebraska Distill-
ing Co,, 29 Neb. 700; 46 N. W.
155; in State v. Standard Oil Co.,
49 Ohio St. 137; 30 'N. E. 279; 15
L. R. A. 145; 34 Am. St. 541. In
Wlinois, People v. Chicago Gas
TRUSTS AND COMBINATIONS AT COMMON LAW.

§ 50.

119

One Corporation Purchasing a Majority of the

Stock in Another Corporation—If one corporation pur-

Trust Co., 130 Ill. 268; 22 N. E.
798; 8 L. R. A. 497; 17 Am. St.
319; Dunbar v. American Tel. &
Tel. ‘Co., 224 Ill. 9; 79 N. E. 423;
87 N. E. 521; 115 Am. St. 132;
National Lead Co. v. Grote Paint
Store Co. 80 Mo. App. 247;
Unckles v. ‘Colgate, 148 N. Y. 529,
43 N. E. 59.

“A trust has usually appeared
in the form of an agreement be-
tween stockholders in many corpo-
rations to place all their stock in
the hands of trustees, and to re-
ceive trust certificates therefor
from the trustees. But the ques-
tion in the present case is whether
a trust is created where a major-
ity of stockholders consolidate
their interests by conveying all
their property to a corporation or-
ganized for the purpose of con-
trolling prices or limiting produc-
tion, or suppressing competition,
is contrary to public policy, an
is void (2 Cook, Corp. [4th Ed.|
503a). It makes no_ difference
whether the combination is effect-
ed through the instrumentality of
trustees and trust certificates, or
whether it is effected by creating
a new corporation and conveying
to it all the property of the com-
peting corporations. The test is
whether the necessary consequence
of the combination is the controll-
ing of prices, or limiting of pro-
duction or suppressing of compe-
tition, in such a way as thereby to
create a monopoly.

* * * * *

The public policy of a state is
to be found in its statutes, and
when they have not directly

spoken, then in the decision of the
courts, and in the constant prac-
tice of government officials. When
the legislature speaks upon a sub-
ject upon which it has the consti-
tutional power to legislate, public
policy is what the statute passed
by it indicates (United States v.
Trans-Missouri Freight Assn., 166
U. S. 290; 17 Sup. Ct. 240; 41 L.
Ed. 1007, reversing 58 Fed. 588; 7
C.C. A. 15; 19 U. S. App. 38; 24
L. R. A. 73; 4 Inter. Com.
Rep. 443). The public policy of
the State of Illinois has always
been against trusts and combina-
tions organized for the purpose of
suppressing competition and creat-
ing monopoly.
* * * * *

The contention of counsel for
the Glucose Sugar Refining Com-
pany that the American Glucose
‘Company had a right to make a
sale of its plant to the new corpo-
ration, and that this transaction
must be regarded by the court
merely as a valid sale, is not sup-
ported by the allegations of the
pleadings nor by the proofs here-
in. The transfer of its property
made by the American Glucose
Company was a transfer to a cor-
poration created for the express
purpose of taking its property
and the property of other corpora-
tions, so as to use them in the
suppression of competition, and in
the creation of a monopoly in the
manufacture of glucose and grape
sugar and their products and by-
products. The whole scheme, as
devised and consummated, was a
fraud, not only on the public, but
120

THE SHERMAN ANTI-TRUST ACT.

chases a majority of the stock of another corporation in
order to get hold of its business and for the purpose of

upon the dissenting stockholder fil
ing this bill. We are therefore of
the opinion that the bill was not
demurrable because brought by a
stockholder, and that the court
below erred in sustaining the de-
murrer, if it was sustained upon
that ground alone.” Harding v.
American Glucose Co. 182 Tl. 551;
55 N. E. 577; 64 L. R. A. 738; 74
Am. State 189.

In Missouri a corporation was
adjudged to be illegal upon these
facts: The substance of this plan
involved the creation of a new cor-
poration to take over the property
and assets of the constituent mem-
bers of the trust. The transfer
of properties to the new corpora-
tion was accomplished as follows:
The corporations whose stocks
have been turned over to the Na-
tional Lead Trust conveyed their
plants and assets to the plaintiff
corporation through the medium of
a conveyance to the secretary of
the reorganization committee and
a conveyance by him to the new
corporation. The properties trans-
ferred were paid for by the stock
of the new corporation, which was
delivered to the reorganization
committee to be handed by the
committee to the parties entitled
to the certificates issued by the
trust which had been deposited
with the committee. In this way
the new corporation became the
owner of the assets and stock of
all the corporations in Missouri
engaged in the lead business. The
case arose in this way: A suit
for a sum of money upon the ac-
count stated was brought by the

National Lead Company against
the purchasers of goods, and the
principal defense was that the
plaintiff was the corporate suc-
cessor of the illegal combination
formed by the stockholders of 12
corporations to establish a trust
designed to limit the price and
production of goods of the kind
sued for, and that the corporation
was organized to effectuate that
end. The defense was authorized
by the statute of Missouri. The
trial court overruled the defense
interposed, and on appeal this de-
cision was reversed and the case
remanded with instructions to
proceed in accordance with the
opinion. The case was decided by
the Court of Appeals of Missouri,
and, while not the highest court
of the State, the opinion is an able
exposition of the law on this sub-
ject. The principal point in the
case is discussed in the follow-
ing extracts from the court’s
opinion (p. 266 et seq.): “The
crucial question in this case is
whether the plaintiff corporation,
either in its organization or busi-
ness operations in this State, has
offended any of the provisions of
its laws? That the predecessor of
the plaintiff, the ‘National Lead
Trust,’ was an unlawful combina-
tion, both in purpose and fact, is
sufficiently established by the na-
ture of the agreement under which
it was created and the methods
and practices resorted to in fur-
therance of that agreement. The
agreement in question can only be
construed as a contract to sup-
press competition, fix the prices
TRUSTS AND COMBINATIONS AT COMMON LAW.

of commodities and limit their
production, and to restrain trade.
Unless some one or all of these
purposes had been entertained by
the signers of the trust agreement,
it would have not contained pro-
visions looking to the acquisition
by the trustees of the entire lead
business of the country, nor would
it have united in the accomplish-
ment of that end a majority of
the stockholders of the largest
corporations dealing in that pro-
duct. That it had these objects
in view and practically accom-
plished them is evident from the
fact that it started with a con-
cert of eight corporations and
terminated after having issued
ninety million of trust certificates
and after it formed a combination
of thirty corporations, constituting
a large majority of the lead deal-
ers of the country, who united
themselves together in the effort to
realize dividends upon the afore-
said capitalization out of assets
of less than one-fourth in value of
the amount for which trust cer-
tificates had been issued. While
the conclusion of the illegal pur-
pose of the trust agreement is ir-
resistible upon a consideration of
its several provisions and _ the
manner in which they were carried
out, it will appear from an exami-
nation of the cases that this re-
sult has been declared by every
court called upon to review that
agreement, or others substantially
like it. (State v. Standard Oil Co.,
49 Ohio St., 137; 30 N. E. 279;
15 L. R. A. 145; 34 Am. St. 541;
Distilling, etce., Co. v. People, 156
Tl, 448; 41 N. E, 188; 47 Am.
St. 200; Bishop v, A. Preserving
Co., 157 Ill. 284; 41 N. E. 765; 48

121

Am. St. 317; People v. N. R. S.R.
Co. 121 N. Y. 582; 24 N. E. 834;
9 L. R, A. 33; 18 Am. St. 843; af-
firming 54 Hun, 355; 3 N.Y. Supp.
401; 2 L. R. A. 33; 54 Hun 359;
7 N.Y. Supp. 406; 5 L. R. A. 386;
Uncles v. Dolgate, 148 N. Y. 529;
43 N. E. 59; United States v.
Freight Ass’n, 166 U. S. 290; 19
Sup. Ct. 25; 43 L. Ed. 259; re-
versing 89 Fed. 1020; 32 C. C. A.
419; 45 U. S. App. 762; United
States v. Joint Traffic Ass’n, 176
U. S. 505; 19 Sup. Ct. 25; 43 L.
Ed. 259). But the illegality of the
organization and operation of the
National Lead Trust does not in-
volve the conclusion that the pur-
chaser of its assets, whether a nat-
ural or artificial person, succeeded
also to the status of that illegal
combination under the law enacted
in this state for the punishment of
pools, trusts and conspiracies. For
the mere purchase by one of the
assets which another has employed
for an illegal purpose does not
of itself imply that they will be
used by the purchaser for the
purpose of effectuating the objects
to which they had been devoted by
the seller. Such an intent on the
part of the purchaser, if inferable,
must be gathered from proof of
all the circumstances characteriz-
ing the transaction, as well as
his subsequent conduct. As to the
sources of proof, the record in the
case under review shows that the
beneficial owners of the property
were the subscribers to the Na-
tional Lead Trust and holders of
its certificates, and that these
same persons remained the benc-
ficial owners of the same property
after it was converted into the
capital of the plaintiff corporation,
122

the only difference being that each
holder of a trust certificate re-
ceived in lieu thereof shares of
stock in the new corporations at
an agreed rate of exchange, and
the further fact that the legal
title to the property was put into
a corporate entity of a body of
nine trustees appointed under the
trust agreement. The sale itself
was titular, rather than real. The
corporation was professedly cre-
ated to acquire the assets of the
preceding trust. It was formed by
the express authorization of the
members of the trust and required
to have ‘such purposes’ and ‘such
powers’ as should be approved by
the agents of the trust. In all
other respects the fullest details
of the organization of the future
corporation were exactly defined
and strictly prescribed in the for-
mal resolution, adopted by the
members of the National Lead
Trust, directing certain agents
(reorganizing trustees), to secure
the specified charter of incorpora-
tion.

By the terms of this resolution
the projected corporation was not
permitted to be formed independ-
ently of the capital furnished by
the Lead Trust, nor was it per-
mitted to be endowed with any
‘purposes’ or ‘powers’ which were
not approved by the reorganizing
trustees directed to obtain its
charters. Moreover, in point of
fact, it was actually created and
organized in the strictest conform-
itv with the requirements of sail
resolution and under a charter em-
powering it to carry on the busi-
ness of manufacturing lead and its
kindred products without restric-
tion, and which expressly author-
ized it ‘to purchase * * * all

THE SHERMAN ANTI-TRUST ACT.

such stocks, bonds, securities and
obligations of other companies cr
corporations as might be conven-
ient in the prosecution of its busi-
ness. By the obtention of the lat-
ter and other grants of power (in
its charter) the plaintiff corpora-
tion secured for itself every fac-
ulty possessed by its predecessor
(the National Lead Trust) for en-
grossing the entire business of the
country in the commodities in
which it was authorized to deal.
For it can not be maintained that
the trust had any power to ac-
quire the stocks and bonds of
other corporations engaged in the
same business—and thus stifle
competition—which was not ex-
pressly granted to the plaintiff in
the amplest measure by the above-
quoted clause in its charter em-
powering it, in effect, to do the
same thing. If, therefore, the
preceding trust was an unlawful
combination under the laws of this
State, as declared in the acts of
1891 (then in force), it must fol-
low that the plaintiff corporation
is equally amenable to said acts,
if, as the record shows the fact to
be, it actually engaged through
the same methods and for identi-
cal objects, in a similar business
to that of the former trust, unless
there is something in the mere
fact of the plaintiff’s corporate
character which exempts it from
the application of the law  pro-
hibiting combinations to fix the
price or quantity of products, or
to restrain trade. The learned
counsel for respondent seems to
claim such an exception for the
plaintiff. In discussing the ques-
tion thus presented we will con-
cede for argument only that a
private business or manufacturing
TRUSTS AND COMBINATIONS AT COMMON LAW.

corporation, which has no implied
power as such to purchase shares
of stock in rival corporations,
may acquire such a right under
the laws of New Jersey if provided
for in the articles of incorpora-
tion, The first section of the act
of 1891, supra, provides that any
corporation, wherever created,
which is ‘organized to do business
in this State, or any * * * in-
dividual or other association of
persons whatsoever who shall cre-
ate, enter into, become a member
of or a party to any pool, trust
agreement, combination, confede-
ration, or understanding with anv
other corporation * * * in-
dividual or any person or associa-
tion of persons to regulate or fix
the price of any article of mer-
chandise or commodity,’ or in the
same manner ‘to fix or limit the
amount or quantity of any article,
commodity, or merchandise to be
manufactured, mined, produced or
sold in this state shall be deemed
and adjudged guilty of conspiracy
to defraud, and be subjected to
penalties as provided in this act.’
Can it be rationally held that the
legislature had in view the com-
mission of the criminal offense
created in the foregoing section by
a corporation as such, separate and
apart from the individuals com-
posing it? There is no legal
ground upon which such a view
can be entertained. A  corpora-
tion can only act through its
members or their agents.

The corporate’ entity with
which the law clothes itself for
special purposes is not self-acting,
hence there was no thought of its
action only in the mind of the
framers of the statute. The evi-
dent purpose of the legislature

123

was to specify certain acts, which
if done by its stockholders or gov-
erning bodies, should constitute a
crime on the part of the corpora-
tion. It did not contemplate the
commission of an offense by an
impalpable abstraction, which
eould neither think nor act; but
it intended to bind this corporate
entity by the imputed actions of
its human agencies. In _ other
words, the legislature referred to
the corporation in its true essence
as an association of persons with-
out which it could not exist, and
through whom alone it must per-
form all its functions as a cor-
porate being. (Morawitz on Cor-
porations, Sec. 227; Taylor on
Corporations, Sec. 51; State v.
Standard Oil Company, 49 Ohio
St., 187; 30 N. E. 279; 15 L. R.
A. 145; 34 Am. St. 541; Buffalo
Oil Company v. Standard Oil
Company, 106 N. Y. 699; 12 N. E.
$25; Boogher v. Life Association
of America, 75 Mo. 319.) Hence
it must follow that if the stock-
holders and governing officers of
the plaintiff corporations com-
bined with each other to violate
any of the provisions of the sec-
tion under review through the in-
strumentality of their corporate
entity, then the corporation com-
posed by them was a party to such
illeval combination within both
the letter and the spirit of the
ahove section of the act of 1891.
Or concretely stated, that a com-
bination which is illegal under the
anti-trust law can not be operated
under the cloak of a corporation
by its constituent members of
governing bodies. This conclusion
is believed to be irresistible in rea-
son and has received the unwaver-
ing support of the courts and the
124

THE SHERMAN ANTI-TRUST ACT.

monopolizing it, the purchase is illegal and may be avoided
by the minority stockholders in a suit brought for that

purpose.”®

text writers. (Ford v. Milk Ship-
pers’ Assn., 155 Ill, 166; 39 N. E.
651; 27 L. R. A. 298; People v.
Gas Co., 180 Ill, 275; 22 N. E.
798; 8 L. R. A. 497; 17 Am. St.
319; Distilling Co. v. People, 156
Ill. 448; 41 N. E. 188; 47 Am. St.
205; Strait v. National Harrow
Co., 18 N. Y. Supp. 224; Beach on
Monopolies, Sec. 159; Hirsch on
Com. Corp. p. 86; American Bis-
cuit & Mfg. Co. v. Klotz, 44 Fed.
Rep. 723; National Harrow Co. v.
Quick, 67 Fed. Rep. 130; Merz
Capsule Co. v. United States Cap-
sule Co., 67 Fed. Rep. 414.) In
the case of Ford v. Milk Shippers’
Ass’n, supra, the members of a
milk trust subsequently incorpo-
rated brought action against «a
purchaser of the commodity sold
by the corporation, who defended
on the ground that it was formed
in furtherance of a trust scheme
and transacting business in con-
travention of an anti-trust act sub-
stantially the same as_ that
pleaded in defendant’s answer in
the present action. It was in-
sisted for the plaintiff that, being
a corporation, it could not violate
the statute, to which defense the
Supreme Court of Illinois an-
swered as follows: ‘The corpora-
tion as an entity may not be able
to create a trust or combination
with itself, but its individual
shareholders, may,, in controlling
it, together with it, create such
trust or combination that will con-
stitute it, with them, alike guilty.
The point in judgment in that case
is identical with the issue pre-

sented in the one before us. The
conclusion reached by the Illinois
court is logical, fully sustained by
the above and other authorities,
and in exact accord with the views
heretofore expresed in this opin-
ion.” National Lead Co. v. Grote
Paint Store Co., 80 Mo. App. 247
This case was cited with approval
in Fink v. Schneider Granite Co.,
187 Mo. 244; 86 8. W. 713; 106
Am. St. 452.

26 Dunbar v. American Tel. &
Tel. Co., 224 Ill. 9; 79 N. E. 423;
87 N. E. 521; 115 Am. St. 132.
In this Illinois case the court
said: “We think, however, that
it sufficiently shows, against a
general demurrer, that the Am-
erican Company, through de-
fendant Barton and others, be-
came the purchaser of the shares
of stock with the unlawful pur-
pose and intention of putting the
Kellogg Company out of business,
or so using and controlling it
as to prevent rivalry in business
and creating a monopoly, and it
called for an answer from defend-
ants. If such was the purpose
and object of the purchase, the
decisions of this court are full to
the effect that the law will not
lend its aid to accomplish the ob-
ject. That is to say, if tha
American ‘Company had purchase
a majority of the capital stock of
the Kellogg Company in its own
name for the purpose of controil-
ing the latter and thereby pre-
venting competition between itself
and the latter corporation, the
transaction would have been one
TRUSTS AND COMBINATIONS AT COMMON LAW.

§ 51.

125

Combinations between Steamship Companies—The

Mogul Case.—In 1884 arose the famous case of Mogul
Steamship Company v. MeGregor,?" and it continued in the

which the courts of this State
would not uphold. People v. Chi-
cago Gas Trust Co., 130 Ill. 288,
22 N. E. 798; 8 L. R. A. 497; 17
Am. St. Rep. 319; Distilling Co. v.
People, 156 Ill 448; 41 N. E.
188; 47 Am. St. Rep. 205; Bishop
y. American Preservers’ Co., 157
Ill., 284; 41 N. E. 765; 48 Am. St.
Rep. 317; Harding v. American
Glucose Co., 182 Ill., 551; 55 N.
E. 577; 64 L. R. A. 738; 74 Am.
St. Rep. 189. ‘Nor can it be se-
riously contended that a purchase
by the company in the name of
others, as agents or trustees, will
relieve the transaction of its il-
legality. To hold otherwise would
be to sustain a transaction illegal
in its character, accomplished by
indirection, when it could not be
done if the methods were direct.
(Northern Securities Co. v. United
States, 193 U. S., 197; 24 Sup. Ct.
436; 48 L. Ed. 679, affirming the
decision of the Circuit Court in
the same case in 120 Fed., 721.)
The American Company and_ its
sub-company, the Western Electric
Company, must be considered as
one in determining whether the
tendency of the purchase alleged
in the bill would be to suppress
the competition existing between
the Kellogg Company and _ the
Western Electric ‘(Company in the
manufacture and sale of telephone
appliances, etc. Neither is it ma-
terial that the Kellogg and West-
ern Electric companies were not
the only parties engaged in mann-
facturing such appliances, for the

reason that, if such was the case,
while a complete monopoly or 1
complete restraint of competition
would not necessarily result, the
tendency would be in that direc-
tion, which is sufficient to con-
demn the transaction as unlawful.
(People v. Chicago Gas Trust Co.,
supra; More v. Bennett, 140 Ill.
69; 29 N. E. 888; 15 L. R. A.
361; 33 Am. St. Rep. 216.)” Dis-
tilling & Cattle Feeding Co. v.
People, 156 Ill. 448; 41 N. E. 188;
47 Am. St. 200; Ford v. Chicago
Milk Shippers’ Asso., 155 Ill. 166;
39 'N. E. 651; 27 L. R. A, 298; At-
torney General v. A. Booth & Co.,
143 Mich. 89; 106 N. W. 868;
Richardson v. Buhl, 77 Mich. 632:
43 N. W. 1102; 6 L. R. A. 457;
Trenton Potteries Co. v. Oliphant,
58 N. J. Eq. 507; 43 Atl. 723; 46
L. R. A, 255; 78 Am. St. 612, re-
versing 56 N. J. Eq. 680; 39 Atl.
923; People v. Milk Exchange, 145
N. J. 267; 39 N. E. 1062; 27 L.
R. A. 437; 45 Am. St. 609; Oak-
dale ‘Mfg. Co. v. Harst, 18 R. I.
484; 28 Atl. 973; 23 L. R. A. 639;
49 Am. St. 784.

27 It first made its appearance
in Mogul Steamship Co. v. Me-
Gregor, L. R. 15, Q. B. Div. 476;
54 L. J. Q. B. 540; 53 L. T. 268;
15 Cox C. C. 740; 49 J. P. 646;
5 Asp. M. 467; 4 T. L. R. 783, for
a temporary injunction which was
refused. This decision was affirmed
L. R. 21 Q. B. Div. 544; 5 T. L.
R. 658; 57 L. J. 54; and on a fur-
ther appeal it was again affirmed
L. R. 23 Q. B. Div. 598; 59 L. T.
126 THE SHERMAN ANTI-TRUST ACT.

courts of England for eight years. The facts involved are
stated by Lord Watson in his opinion:

‘‘The respondents are firms and companies owning steam
vessels which ply regularly, during the whole year, some of
them on the great river of China between Hankow and
Shanghai, and others between Shanghai and European ports.
During the tea seasons, which begins in May and lasts about
six weeks, most shippers prefer to have their tea sent direct
from Hankow to Europe; but it suits the respondents’ trade
better to have the tea which they carry brought down to
Shanghai by their ordinary river service, and then tran-
shipped for Europe. Accordingly they do not send their
ocean steamers up the river, except when they find it neces-
sary in order to intercept cargoes which might otherwise
have been shipped from Hankow in other than their vessels.
The appellants are also a ship-owning company. They do
not maintain a regular service either on the great river or
between Europe and Hankow; but they send vessels to Han-
kow during the tea season, with the legitimate object of
sharing in the profits of the tea-carrying trade, which ap-
pear in ordinary circumstances, to have been considerable.
The respondents entered into an agreement, the avowed pur-
pose of which was to secure for themselves as much of the
tea shipped from Hankow as their vessels could conven-
iently carry, which was practically the whole of it, and to
prevent the appellants and other outsiders from obtaining
a share of the trade. The consequence of their acting upon
the agreement was that the appellants, having sent their
ships to Hankow, were unable to obtain cargoes at remunera-
tive rates and they claim as damages due to them by the
respondents the difference between their actual annual earn-
ings and the freights which their vessels might have earned

514; 58 L. J. Q. B. 465; 5T.L.R. Q. B. 295; 66 L. T. 1, 40 W. R.
658. Finally on appeal to the 337; 56 J. P. 101; 7 Asp. M. 120:
House of Lords it was again af- 8 T. L. R. 182.

firmed (1892) A. C. 25; 61 L. J.
TRUSTS AND COMBINATIONS AT COMMON LAW.

127

had it not been for the combined action of the respond-

ents.’’?8

The plaintiff claimed damages and prayed an injunction
to restrain the defendants from continuing their wrongful
acts as above stated. The plaintiffs charged that the de-
fendants conspired together, and with other unknown per-
sons, to prevent them from obtaining cargoes for steamers,
the gist of the charge being a conspiracy in which the de-
fendants ‘‘bribed, coerced and induced’’ shippers to forbear
shipping cargoes by steamships owned by the plaintiffs.?°

28 [1892] A. C. 41.

29 In passing upon the applica-
tion for an injunction, Lord Cole-
ridge said: “It was an application
on behalf of the plaintiffs for an
injunction to restrain the defend-
ants from doing that which was
called throughout the case,—and
which 1 really sce no reason for
hesitatiing to call also,—boycott-
ing the plaintiffs. It seems that
a large number of important and
rich ship-owners joined together
and they issued two circulars or
documents (which may be treated
substantially as one) to the dif-
ferent traders and their agents
with whom they had been in the
habit of dealing in the tea trade
and other trades in ‘China—espe-
cially the former—to the effect
that if the persons whom that cir-
cular reached, and was meant to
affect, should deal with the plain-
tiffs or the plaintiffs ships, they,
the defendants, would deny them
all the benefits, or at least a very
large and substantial benefit,
which hitherto had accrued to
them in their dealings with the
defendants. The defendants, as
they call themselves, and I prefer
to use the name they call them-

selves, being a ‘conference’ of ship-
owners, agreed that, if the persons
to whom they addressed the cir-
cular would deal exclusively with
them, they should have certain
advantages at their hands; and
that, if they did not deal exclu-
sively with them, but should even
to the extent of a very small por-
tion of cargo, deal with any other
ship-owners, they should lose all
the advantages which otherwise
they would derive from dealing
with the defendants. That is, un-
doubtedly, what the defendants
have done; and the plaintiffs al-
lege that the result as far as it
concerns them has been and will
be to drive them out of the China
market, and render it impossible
for them to run their line of
steamers at remunerative rates. In
short, the plaintiffs contend that
this is 4 combination or conspiracy
on the part of the conference to
exclude from the China market the
ships of the plaintiffs; and that it
is done for the purpose of injur-
ing them; and that it is against
public policy, inasmuch as it is
an undue interference with trade
—even though it should work no
injury to the plaintiffs. I do not
128 THE SHERMAN ANTI-TRUST ACT.

In the House of Lords, Lord Morris said in his opinion:
‘“The facts of this case demonstrate that the defendants had
no other or further object than to appropriate the trade of
the plaintiffs. The means used were, first, a rebate to those
who dealt exclusively with them; secondly, the sending of
ships to compete with the plaintiffs’ ships; thirdly, the low-
ering of the freights; fourthly, the indemnifying other ves-
sels that would compete with the plaintiffs; fifthly, the dis-
missal of agents who were acting for them and the plain-
tiffs.

‘*The object was a lawful one. It is not illegal for a trader
to aim at driving a competitor out of trade, provided the
motive be his own gain by appropriation of the trade, and
the means he used be lawful weapons. On the first four of
the means used by the defendant the rebate to customers
and the lowering of the freight are the same in principle,
being a bonus by the defendants to customers to come and
deal exclusively with them. The sending of ships to com-
pete, and the indemnifying other ships, was ‘the competi-
tion’ entered in by the defendants with the plaintiffs. The
fifth means used—namely, the dismissal of agents—might be
questionable according to the circumstances; but in the pres-
ent case the agents filled an irrevocable position in being
agents for the two rivals, the plaintiffs and the defendants.
Dismissal under such circumstances, became perhaps a neces-
sary incident of the warfare in trade.

‘All the acts done and the means used by the defendants
were acts of competition for the trade. There was nothing
in the defendants’ acts to disturb any existing contract of
the plaintiffs, or to induce any one to break such. Their

at this moment attempt to deal
with the counter-statement of the
case on the part of the defendants.
I do not forget it; and I do not
at all suggest that it is not
weighty and important; for the

moment I pass it by, and I aa-
sume for the purpose of this deci-
sion that the plaintiffs could es-
tablish substantially what I have
stated, and that there is no case
that could prevail against it.”
TRUSTS AND COMBINATIONS AT COMMON LAW. 129

action was aimed at making it unlikely that any one would
enter into contracts with the plaintiffs, the defendants of-
fering such competitive inducements as would probably
prevent them. The use of rhetorical phrases in the cor-
respondence can not affect the real substance and meaning
of it.

‘* Again, what one trader may do in respect of competition
a body or set of traders can lawfully do; otherwise a large
capitalist could do what a number of small capitalists com-
bining together could not do, and thus a blow would be
struck at the very principle of co-operation and joint-stock
enterprise. I entertain no doubt that a body of traders,
whose motive object is to promote their own trade, can com-
bine to acquire, and thereby in so far to injure, the trade
of competitors, provided they do no more than is incident
to such motive object, and use no unlawful means. And
the defendants’ case clearly comes within the principle I
have stated.

‘‘Now, as to the contention that the combination was in
restraint of trade and therefore illegal. In the first place,
was it in restraint of trade? It was a voluntary combina-
tion. It was not to continue for any fixed period, nor was
there any penalty attached to a breach of the engagement.
The operation of attempting to exclude others from the trade
might be, and was in fact, beneficial to freighters. Whenever
a monopoly is likely to arise, with a consequent rise of rates,
competition would naturally arise.

“‘T can not see why judges should be considered specially
gifted with the prescience of what may hamper or what may
increase trade, or of what is to be the test of adequate
remuneration. In these days of instant communication with
almost all parts of the world, competition is the life of
trade, and I am not aware of any stage of competition
called ‘fair,’ intermediate between lawful and unlawful.
The question of ‘fairness’ would be relegated to the idiosyn-
erasies of individual judges. I can see no limit to competi.
130

THE SHERMAN ANTI-TRUST ACT.

tion, except that you shall not invade the rights of an.

other.’’®°

So where a steamboat company entered into a contract to
pay a certain sum each month to the owner of a competing
line of boats in consideration of its discontinuing its line
of competing boats over the same route and agreeing not
to sell nor charter its boats for use on that route, nor to be-
come directly or indirectly, interested in a competing line
of boats, the contract was upheld.*

30 In the Court of Appeals Lord
Bowen said: “The question of
‘fairness’ would be relegated to the
idiosyncrasies of individual judges.
I can see no limit to competition,
except that you shall not invade
the right of another. But sup-
pose the combination in this case
was such as might be held to be
in restraint of trade, what fol-
lows? It could not be enforced.
None of the parties to it could sue
each other. It might be held void,
because its tendency might be held
to be against the public interests.
Does that make per se that com-
bination illegal? What a fallacy
would it be that what is void and
not enforceable becomes a crime;
and cases abound of agreements
which the law would not enforce,
but which are not illegal; which
you may enter into if you like,
but which you will not get any
assistance to enforce.” Lord Han-
nen, at page 60, savs: “In con-
sidering the question, however, of
what was the motive of the com-
bination, whether it was for the
purpose of injuring others, or
merely to benefit those combining,
the fact of several agreeing to a
common course of action may be
important.”

31 Leslie v. Lorillard, 110 N. Y.
519; 18 N. E. 363; 1 L. R. A. 456.
As regards the right of a stock-
holder to bring suit in such cases
the court said: “The contracts of
corporations are said to be ultra
vires when they involve some ad-
venture or undertaking not within
the scope of their charter, which
is their rule of corporate action.
In the granting of charters the
legislature is presumed to have
had in view the public interest;
and public policy is (as the inter-
est of stockholders ought to be)
concerned in the restriction of cor-
porations within chartered limits,
and a departure therefrom is only
deemed excusable when it cannot
result in prejudice to the public
or to the stockholders. As arti-
ficial creations, they have no pow-
ers or faculties except those with
which they were endowed when
created; and when, as is frequently
the case, they act in excess of
their powers, the question will be:
Is the act prohibited as prejudicial
to some public interest, or is it an
act not lawful in that sense, but
prejudicial to the stockholders?
The rule, however, is well settled
that the plea of ultra vires should
not prevail when it would not ad-
TRUSTS AND COMBINATIONS AT COMMON LAW.

131

§ 52. Combination to Fix Prices and Amount of Produc-
tion—A combination to fix prices is in restraint of trade

and unlawful.

Thus eighteen cotton spinners in Lancashire

bound themselves by bond to severally carry on their busi-
ness with respect to the wages they would pay, hours of
labor and other matters, according to the regulations of

vance justice, but, on the contrary,
would accomplish legal wrong.

In suits between the corporation
and strangers dealing with it the
question is whether the act is one
the corporation is authorized to
perform under any circumstances,
or one that it may perform for
some purposes or under certain
conditions. In the first case it iz
ultra vires and there can be no re-
covery, because the party dealing
with the corporation is bound to
know, from the law of its exist-
ence, that it has no power to per-
form it. In the second case the
issue will turn upon whether the
party dealing with it is aware of
the intention to perform the act
for some unauthorized purpose, or
whether the attendant circum-
stances justify its performance. Jn
actions by stockholders which as-
sail the acts of their directors or
trustees, courts will not interfere
unless the powers have been il-
legally or unconscientiously exe-
cuted, or unless it be made to ap-
pear that the acts were fraudulent
or collusive and destructive of the
rights of the stockholders. Mere
errors of judgment are not suffi-
cient as grounds for equity inter-
ference, for the powers of those in-
trusted with corporate manage-
ment are largely discretionary.
* *# * We do not question the
right of stockholders to complain
of any diversion of capital and as-

sets to purposes not authorized by
the charter and to arrest by suit
an unauthorized course of dealing
which results in such diversion.
The powers of a court of equity
may be put in motion at the in-
stance of a single stockholder, if
he can show that the corporation
is employing its statutory powers
for the accomplishment of pur-
poses not within the scope of its
institution. Angell & Ames on
Corporations, 393. But this is not
such a case. The contracts were
within the power of the corpora-
tion to make, and if they were free
from the taint of fraud and were
not procured to be made by some
collusion or conspiracy, then they
are binding upon the company ani
constitute an obligation which the
officers must discharge.”

An agreement between carriers
and associations and citizens of a
city, binding the carriers to make
special low rates to and from the
city for certain occasions and sell
nontransferable excursion tickets
therefor, does not contravene the
state or federal anti-trust laws, the
purpose of the carriers in making
the tickets nontransferable not
being illegal, but to maintain the
legal rate as to persons not pur-
chasing excursion tickets. Lytle v.
Galveston, H. & S. A. Ry. Co., 99
S. W. 396; 100 S. W. 199; 100
Tex. 292; 10 L. R. A. (N.S.) 487.
182 THE SHERMAN ANTI-TRUST ACT.
the majority. In an action on the bond, it was held void,
the court saying: ‘‘The question is whether this is a2 bond
in restraint of trade; and we think it is so. Prima facte it is
the privilege of a trader in a free country in all matters
not contrary to law to regulate his own mode of carrying
it on according to his own discretion and choice. If the
law has in any manner regulated or restrained his mode of
doing this the law must be obeyed. But no power short
of the general law ought to restrain his free discretion.
Now here the obligors to this bond have clearly put them-
selves into a situation of restraint. ,lst: Hach of them is
prevented from paying any amount of wages except such
as the majority may fix, whatever may be the circumstances
of the work to be done and his own opinion thereon. Sec-
ondly, they can only employ persons for such times and
periods as the majority may deem it for their own interest
to do otherwise. The hours of work, the suspending of
work partially or altogether, the discipline and management
of their establishments is to be regulated by others forming
a majority and taken from every individual member. And
all this for a fixed period of twelve months. All these ure
surely regulations restraining each man’s power of carry-
ing on his trade according to his discretion for his own
best advantage and, therefore, are restraints on trade not
capable of being legally enforced.’’??

What is here said concerning the fixing of prices is alse
true of a contract fixing the amount of production or limit-
ing it.

32 Hilton v. Eckersley, 6 El. &
Bl. 47; Hoffman v. Brooks, 23 Am.
L. Reg. 648; United States v. Coal
Dealers’ Asso., 85 Fed. 252.

33 The numerous common law
cases frequently cited in this con-
nection are all illustrations of this
principle. A few of them are Mor-
ris Run Coal Co. v. Barclay Coal
Co. (68 Pa. St. 173; 8 Am. Rep.

159); Central Ohio Salt Co. v.
Guthrie (35 Ohio St. 666); Arnot
v. Pittson and Elmire Coal Co. (68
N. Y. 558; 23 Am. Rep. 190);
Craft v. MeConoughy (79 Ill. 346,
22 Am. Rep. 171); India Bagging
Association v. Kock (14 La. Ann.
168) ; Vulean Powder Co. v. Her-
cules Powder Co. (96 Cal. 510; 31
Pac. 581; 31 Am. Rep. 242; Oil
TRUSTS AND COMBINATIONS AT COMMON LAW.

133

Thus a contract among independent and unecunected
manufacturers looking to the control of prices of their mami-
facture by limitation of production, by restrictions on distri-

butions was held void.*+

Co. v. Adoue (83 Tex. 650) and
Chapin v. Brown (83 Ia. 156); 48
N. W. 1074; 12 L. R. A. 428;
32 Am. St. 297. In all of
these cases there was a com-
bination of independent manu-
facturers or dealers in the form of
an executory agreement regulating
prices, production or the conduct
of the business of each in other
particulars. They were combina-
tions in restraint of trade because
the freedom of each to conduct his
own business with respect only to
his own interests and judgment
was restrained and restricted. As
in the case of pure contracts in
restraint of trade, the same con-
siderations were assigned as the
reason for the rule condemning
them, viz.: that the tendency of
such restrictions upon the  free-
dom of traders was to prevent com-
petition and favor monopoly.

84 Trenton Potteries Co. v. Oli-
phant, 58 N. Y. Eq. 507; 43 Atl.
723; 46 L. R. A. 255; 78 Am. St.
612, reversing 56 N. Y. Eq. 680; 39
Atl. 923.

Where the general purpose ol
the contract was to prevent or
regulate competition between the
parties to it in the sale of the par-
ticular commodity they manufac-
tured, the contract was upheld, the
court saying: “This is a lawful
purpose; but it is argued that the
means employed to carry it out,
the creation of the plaintiff cor-
poration, and the terms of the con-
tract with it, are against public
policy, and are invalid.

The fact that the parties to the
combination formed themselves in-
to a corporation, of which they
were the stockholders, that they
might contract with it instead of
with each other, and carry out
their scheme through its agency,
instead of that pre-existing person,
is obviously immaterial; and the
only ground upon which it can be
argued that the contract is valid, is
restraint it puts upon the parties
to it. Does the contract impose
a restraint as to the manufacture
or sale of balance shade rollers
which is void as against public pol-
icy? The contract certainly puts
no restraint upon the production
of the commodities to which it re-
lates. It puts no obligation upon
and offers no inducement to, any
person to produce less than the
full extent of his capacity. On the
contrary, its apparent purpose is,
by making prices more uniform
and regular, to stimulate and in-
crease production.

The contract does not restrict
the sale of the commodity. It
does not look toward withholding
a supply from the market in order
to enhance the price, as in ‘Craft v.
McConoughy, 79 Tl. 346; 22 Am.
Rep. 171, and other cases cited by
the defendant. On the contrary,
the contract intends that the par-
ties shall make sales, and gives
them full power to do so, the only
restriction being that sales not at
retail or for export shall be in the
name of the plaintiff, and reported
to it, and the accounts of them
134

THE SHERMAN ANTI-TRUST ACT.

§ 53. Combination to Suppress Competition Competition
is often the death of trade. We see it every day. The pub-

kept by it; and the provision that
when any party shall establish an
agency in any city or town for the
sale of a roller made exclusively
for that purpose, no other party
shall take orders for the same
roller in the same place. To these
restrictions, clearly valid, is added
the one which affords an argument
for the invalidity of the contract—
the restriction as to price. The re-
striction is, in substance, that the
prices for rollers of the same prade
made by the different parties shall
be the same, and shall be accord-
ing to a schedule contained in the
contract, subject to changes which
may be made by the plaintiff upon
recommendation of three-fourths
of its stockholders. In effect, it is
an agreement between three mak-
ers of a commodity that for three
years they will sell it at a uniform
price fixed at the outset, and to
be changed only by consent of 9
majority of them. The agreement
does not refer to an article of
prime necessity; nor to a staple of
commerce; nor to merchandise 10
be bought and sold in the market;
but to a particular curtain fix-
tures of the parties’ own manu-
facture, It does not look to affect-
ing competition from outside—the
parties have a monopoly by their
patents—but only to restrict com-
petition in price between them-
selves. Even if such an agreement
tends to raise the price of the
commodity, it is one which the
parties have a right to make; to
hold otherwise would be to impair
the right of persons to make con-
tracts, and to put a price on the

products of their own industry.

But we cannot assume that the
purpose and effect of the combina-
tion are to unduly raise the price
of the commodity. A natural pur-
pose and a natural effect are to
maintain a fair and uniform price,
and to prevent the injurious effects
both to producers and customers
of fluctuating prices caused by un-
due competition. When it appears
that the combination is used to the
public detriment, a different ques-
tion will be presented from that
now before us. The contract is ap-
parently beneficial to the parties
to the combination, and not neces-
sarily injurious to the public, and
we know of no authority or reason
for holding it to be invalid as in
restraint of trade or against pub-
lie policy.

We have not overlooked other
provisions of the contract which
were adverted to in the argument,
but we do not find anything which
renders it invalid, or call for spe-
cial consideration.” Central Shade
Roller Co. y. Cushing, 143 Mass.
353; 9 N. E. 629. See also
Shrainka v. Scharringhausen, 8
Mo. App. 522; Dalph v. Troy
Laundry Machinery Co., 28 Fed.
553. In Herriman v. Menzies, 115
Cal. 16; 35 L. R. A. 318; 56 Am.
St. 82, the court said: “It is con-
tended that the contract contem-
plates an illegal scheme and com-
bination to stifle competition in
the stevedoring business, and is in
restraint of trade, and that its ef-
fect is to create a monopoly; and
that in these respects it contra-
venes public policy, and is opposed
TRUSTS AND COMBINATIONS AT COMMON LAW.

135

lic, legally or otherwise, has no right to insist that owners
of private property continue to do business with cach other

to good morals, and so constitutes
no proper basis for an action
either at law or in equity. We are
unable to coincide in this construc-
tion of the contract, or to per-
ceive anything herein which ren-
ders it invalid upon the ground
stated. The objection that its ef-
fect is to create a monopoly in and
unduly restricting the business of
stevedoring does not find support
in its terms. A monopoly exists
where all or so nearly all of an
article of trade or commerce within
w community or district is brought
within the hands of one man or
set of men as to practically bring
the handling or production of the
commodity or thing within such
single control, to the exclusion of
competition or free traflic therein.
Anything less than this is not mo-
nopoly. Webster defines it as ‘the
sole power of dealing in any spe-
cies of goods,’ and Bouvier as ‘the
abuse of free commerce by which
one or more individuals have pro-
cured the advantage of selling all
of a particular kind of merchan-
dise.’ And these definitions accord
with that given by latter writers.
Spelling, Trusts, 133. An agree-
ment the purpose or effect of which
is to create monopoly, is unlawful
if it relate to some staple commod-
ity, or thing of general require-
ment and use or of necessity, and
not something of mere luxury or
convenience. Assuming that the
business of stevedoring is a thing
which is the proper subject of a
monopoly within this definition,
there is nothing in this agreement
to render it obnoxious to that ob-

jection, nor anything to show that
it will operate to unlawfully re-
strain trade. It nowhere appears
therefrom that the parties to this
contract, by the combination ot
their business interests provided
for, are in control or anything like
the control, of that business in
San Francisco, to an extent to en-
able them to exclude competition
therein, or control the price of
such labor or business. There is
absolutely nothing to show that
they comprise more than the most
insignificant part or fraction,
either in number or volume of busi-
ness, of those engaged in that
trade in this community. We are
not at liberty to indulge in ref-
erences which would restrict the
parties in their right to combine
their interests. Parties are to be
given the widest latitude to make
contracts with reference to their
private interests (Printing & N.
Registering Co. v. Sampson, L. R.
19 Eq. 462), and the invalidity of
such contracts is never to be in-
ferred, but must be clearly made
to appear. Appellant says that the
purpose of this contract is ex-
pressly declared as that of ‘con-
trolling the business of stevedor-
ing, and that this implies an im-
proper restriction of that business
and a monopoly. But the language
of the contract is ‘to govern and
control the business of master
stevedores, to be carried on by its
members.’ This is a very differ-
ent thing from a combination to
control the entire business of
stevedoring. Combinations  be-
tween individuals or firms for the
136

in competition.

THE SHERMAN ANTI-TRUST ACT.

‘‘Excessive competition may sometimes re-

sult in actual injury to the public, and competitive contracts,

regulation of prices, and of compe-
tition in business, are not monopo-
lies, and are not unlawful as in
restraint of trade, so long as they
are reasonable and do not include
all of a commodity or trade, or
create such restrictions as to ma-
terially affect the freedom of com-
merce. The Supreme Court of
Tllinois says in People’s Gas Light
& C. Co. v. Chicago Gas Light &
€. Co. 20 Ill. App. 492: ‘The
tendency of the courts is to regard
contracts in partial restraint of
competition with less disfavor than
formerly, and the strictness of the
ancient rule has been greatly mod-
ified by the modern cases.’ Maule,
J., in Proctor v. Sargent, 2 Scott
IN. R. 289, remarked that ‘many
persons who are well informed
upon the subject entertain an
opinion that the public would be
better served if, by permitting re-
strictions of this sort, encourage-
ment were held out to individuals
to embark large capital in trade,
and that it would be expedient to
allow parties to enter into any de-
scription of contract for that pur-
pose that they might find conven-
jent.’ Greenhood Pub. Pol. 689,
and cases cited. And in Skrainka
v. Scharringhausen, 8 Mo. App.
522, it is said: ‘The old doctrine
of the common law that contracts
in restraint of trade are void is
no longer to be rigorously insisted
upon precisely as it was insisted
upon in the earlier cases in which
it was announced. It has been
modified by the more recent de-
cisions as the laws of trade have
become better understood during

the development of our commercial
system, and the changes which
have been introduced in the social
system. Presbury v. Fisher, 18
Mo. 59; Long v. Tow], 42 Mo. 545,
97 Am. Dec. 355. It is not that
contracts in restraint of trade are
any more legal and enforceable
now than they were at any former
period, but that the court look
differently at the question as to
what is a restraint of trade.’

We find nothing in the terms of
the present agreement which would
necessarily work an unreasonable
restriction in the manner of con-
ducting the business in question,
or which would necessarily inter-
fere with the freedom or right of
others not parties to the contract
to engage in and carry on such
business. The parties themselves,
it is true, have combined their
business as severally carried on
by them, and have agreed to be
bound by a schedule or rate of
charges to be fixed by the asso-
ciation; but this in itselt is not
an unlawful restraint of trade so
long as it does not appear that
the rates to be charged are unrea-
sonable, or the restrictions such
as to preclude a fair competition
with others engaged in the busi-
ness. In Collins v. Locke, L. R. 4
App. Cas. 674, it is held that
where the object of an agreement
was to parcel out the stevedoring
business of the port of Melbourne
among the parties to it, and so
prevent competition, at least
among themselves, and reason-
ably keep up the price, it was
not invalid, though its effect
TRUSTS AND COMBINATIONS AT COMMON LAW.

to avert personal ruin, may be perfectly reasonable.

137

It is

only when such contracts are publicly oppressive that they

might be to create a partial re-
straint upon the power of the
parties to exercise their trade.
In Master Stevedores’ Ass’n v.
Walsh, 2 Daily, 1, where an
agreement not materially unlike
the present was entered into be-
tween master stevedores, fixing a
rate of prices to be charged by the
members in their business, and
making a penalty for any member
doing work for less, and an action
was brought to enforce such
penalty for a default by one of
the members, it was held that
such an association was not an
unlawful combination, as inju-
rious to trade or commerce, nor
the restrictions unlawful, as be-
ing in restraint of trade.’

‘An agreement between a num-
ber of persons to act concertedly
in fixing prices at which they will
sell a particular product in a
particular city is not illegal, as
being in restraint of trade, unless
it appears that they have a mo-
nopoly of that product.’ Ray,
Contractual Limitations, p. 223,
and cases there cited. See also
People’s Gas Light & ©. Co. v.
Chicago Gas Light & C. Co., and

Skrainka vy. Scharringhausen,
supra; Ontario Salt Co. v. Mer-
chants’ Salt Co. 18 Grant

(U. C.) 540; Central Shade Roller
‘Co. v. Cushman, 143 Mass. 353,
9 N. E. 629. In Ontario Salt Co.
v. Merchants’ Salt Co.,
speaking of an agreement of
similar import between salt man-
ufacturers to keep up the price
of that commodity, it is said:
‘I know of no rule of law ever
having existed which prohibited

supra,

a certain number (not all) of
the producers of a staple com-
modity agreeing not to sell below
a certain price—and nothing more
than this has been agreed to
by the parties here. We find
nothing necessarily inconsistent
with the doctrines of these cases
in the cases cited by appellants.
In the case of Pacific Factor Co.
v. Adler, 90 Cal. 117, 27 Pac. 36;
25 Am. St. 102; the language
relied upon has express reference
to contracts ‘entered into with
the object in view of controlling
and if necessary suppressing the
supply, and thereby enhancing the
price of articles of actual neces-
sity.” In Santa Clara Valley
Lumber Co. v. Hayes, 76 Cal.
387, 393; 18 Pac. 391; 9 Am. St.
211, in the language of the court:
‘The very essence and mainspring
of the agreement—the illegal
object—was to form a combination
among all the manufacturers of
lumber at or near Felton, for the
sole purpose of increasing the
price of lumber, limiting the
amount thereof to be manufac-
tured, and give plaintiff control
of all lumber manufactured.’ In
Vulean Powder ‘Co. v. Hercules
Powder Co., 96 (Cal. 510, 31 Pace.
581, 31 Am. Rep. 242, the con-
tract precluded the parties abso-
lutely from shipping to or selling
the commodity within a large
part of the territory of the United
States, and restricted the output
of the powder within the territory
wherein the parties were at
liberty to sell; and it was held
that the contract was void, as in
restraint of trade. The cases from
138

other states relied upon are as
clearly distinguishable from the
present as are the foregoing.
After a careful review of all the
authorities, we are unable to say
from the terms of the present con-
tract that it, to any extent,
trenches upon the rule of public
policy invoked, or that there is
anything within its provisions
which should preclude the parties
thereto from enforcing it. This
conclusion renders the motion to
dismiss the appeal of no conse-
quence.”

Where certain corporations and
individuals manufactured salt
and its sale, and entered into an
agreement for the purpose of con-
trolling and advancing the salt
industry, wherein it was agreed
that all the parties to it should
sell all their salt through the
trustees of the association who
were to fix the selling price, the
contract was upheld, the court
saying: “I think a distinction
would be found in the considera-
tion that here the article the
price of which was to be regulated
was not to be purchased in the
market, but was actually to be
produced by the parties them-
selves, and this product they could
not be compelled to part with
except on their own terms. Then
the object of the agreement was
not unduly to enhance the price,
but, as it is expressly alleged in
the bill, to enable the parties by
concerted action to combat an
attempt on the part of foreign
producers and manufacturers un-
duly to depreciate it. I know of
no rule of law ever having existed
which prohibited a certain number
(not all) of the producers of a

THE SHERMAN ANTI-TRUST ACT.

staple commodity agreeing not to
sell below a certain price—and
nothing more than this has been
agreed to by the parties here.
“The question then here is
whether or not this agreement
does do hurt to the public interest?
The authority principally relied
on by Mr. Crooks was the case of
Hilton v. Eckersley, 6 EF. & B. 47.
There a bond entered into by the
mill-owner of a certain district
in Lancashire, conditioned to
carry their work in regard to
wages, and the engaging of laborers
and time of work, according to the
resolutions of a majority, for a
period of twelve months, was held
void as being in undue restraint
of trade, and so contrary to public
policy. It is to be observed that
in Hilton v. Eckersley each mill-
owner completely surrendered his
right of carrying on trade without
restraint to the majority of the
associates, who could at any
moment they thought fit close the
mills altogether. Before, however,
pointing out how far short of the
restraint imposed in Hilton v.
Ickersley the present agreement
falls, I will refer to some
genera] observations of judges of
high authority which show how
carefully courts of justice ought to
proceed in determining what is
and what is not against public
policy. In this same case of Hilton
v. Eckersley we find Lord Campbell
using this language: ‘I enter
upon such considerations with
much reluctance and with great
apprehension when I think how
different generations of judges
and different judges of the same
generation have differed in opin-
ion upon questions of political
TRUSTS AND COMBINATIONS AT COMMON LAW.

139

become unreasonable, and are claimed as against public

policy.’’5#

economy and other topics con-
nected with the adjudication of
such cases, and I cannot help
thinking that where there is no
illegality in bonds and _ other
instruments at common law, it
would have been better that our
courts of justice had been required
to give effect to them, unless
where they are avoided by act of
parliament.’

“When one finds that Lord
Campbell, notwithstanding these
striking observations, decided that
the obligors were not bound by
their bond, it is impossible not to
feel the foree of the somewhat
quaint illustration of Burrough, J.,
in Richardson v. Mellish, 2 Bing.
at p. 252, where he says: ‘Public
policy is an unruly horse, and
when once you get astride it you
never know where it will carry
you.’

“Again, commenting on Hilton
v. Eckersley, the editors of Smith’s
Leading Cases, Mr. Justice Willes
and Mr. Justice Keating, say
(4th ed., vol. 1, p. 286): ‘The
law upon this subject is, it must
be confessed, in an unsatisfactory
state, and there seems but too
much ground to fear that, unless
checked by a firm determination
to uphold men’s acts when not in
violation of some known rule of
law, and to treat decided cases
having a contrary tendency as
exceptional, it may degenerate
into the mere private discretion
of the majority of the court as
to a subject of all others most
open to difference of opinion and
most liable to be affected by
changing circumstances.’ And in

Richard vy. Mellish, already cited,
Bestm C. J., says: ‘I am not
much disposed to yield to argu-
ments of public policy. I think
the courts of Westminister Hall
have gone much further than they
were warranted in doing on
questions of policy. They have
taken on themselves some times
to decide doubtful questions of
policy, and they are always in
danger in so doing, because courts
of law look only at the particular
case, and have not the means of
bringing before them all those
considerations which enter into
the judgment of those who decide
on questions of policy. I admit
that if it can be clearly put upon
the contravention of public policy,
the plaintiff can not succeed; but
it must be unquestionable—there
must be doubt.’

“T do not follow Mr. Crooks in
his argument that the number
of persons associated in this
arrangement made a difference.
It appears on the face of the bill
that they are not all the salt pro-
ducers in the province, and it
also appears that salt, other than
the produce of the wells of the
plaintiffs and defendants, can be
and is supplied to the publis.
This being so, I think it makes
no difference that this agreement
was entered into by twenty per-
sons engaged in the trade instead
of only two.” Ontario Salt Co. v.
Merchants’ Salt Co., 18 Grant Ch.
540.

84 People v. North River Sugar
Refining Co., 54 Hun. 354; 7 N.
Y. Supp. 406; 5 L. R. A. 386,
affirmed 121 N. Y. 582; 24 N, E.
140 THE SHERMAN ANTI-TRUST ACT.

Again: ‘‘But not all combinations are condemned, and
self-preservation may justify prevention of undue and ruin-
ous competition when the prevention is so sought by fair and
legal methods.’’ *®

They are not monopolies nor unlawful as in restraint of
trade, ‘‘so long as they are reasonable and do not include
all of a commodity or trade, or create such restrictions as
to materially affect freedom of commerce.’’ *° 7

‘‘While, without doubt, contracts which have a direct ten-
dency to prevent a healthy competition are detrimental to
the public, and consequently against public policy, it is
equally free from doubt that when such contracts prevent
an unhealthy competition and yet furnish the public with
adequate facilities at fixed and reasonable rates, they are
beneficial and in accord with sound principles of public policy.
For the lessons of experience, as well as the deductions of
reason, amply demonstrate that public interest is not sub-
served by competition which reduces the rate of transporta-
tion below the standard of fair compensation.’’ 3”

‘*Tt is not obnoxious to good morals or to the rights of the
public that two rival traders agree to consolidate their con-
cerns, and that one shall discontinue business and become
a partner with the other for a specified term. It may hap-
pen as the result of such an arrangement that the public
have to pay more for the commodities in which the parties
deal; but the public are not obliged to buy of them. Cer-
tainly the public have no right to complain so long as the
transaction falls short of conspiracy between the parties to
control prices by creating a monopoly.’’ *8
834; 9 L. R. A. 33; 18 Am. St. 37 Maine & L. R. R. Co. v. Con-
843. (See same case 54 Hun. 355; cord R. R. Co., 66 N. H. 100;
3.N. Y. Supp. 401, 2 L. R. A. 33). 20 Atl R. 383; 9 L. R. A. 689;

°5 United States Vinegar Co. v. 47 Am. & Eng. R. R. Cas. 359.
Fochrenbach, 148 N. Y. 58; 42 N. 38 Dolph v. Troy Laundry Ma-
E, 403. chinery Co., 28 Fed. R. 553.

36 Herriman v. Mengies, 115

Cal. 16; 46 Pac. 730; 35 L. R. A.
318: 56 Am. St. 82.
TRUSTS AND COMBINATIONS AT COMMON LAW. 141

‘““If the business of a private individual or corporation
is threatened with competition, a contract with the competitor
that he shall abandon his enterprise and take employment at
an agreed compensation with such corporation or individuai
is not against public policy. Such an agreement fairly entered
into is legitimate business.’’ °°

§54. Common Law Rule Against Restraint of Trade
Not Relaxed—Only Purpose to Restrain.—It is often said
that as conditions of civilization and public policy have
changed, the law now recognizes that competition may be
so ruinous as to injure the public, and therefore, that con-
tracts made with a view to check such ruinous competition
and to regulate prices, though in restraint of trade, will be
upheld, even though made for no other purpose. This claim
has been carefully examined by Judge Taft and pronounced
unfounded. We quote at length from his opinion: ‘‘We
think this conclusion is unwarranted by the authorities when
all of them are considered. It is true that certain rules for
determining whether a covenant in restraint of trade ancil-
lary to the main purpose of a contract was reasonably
adapted and limited to the necessary protection of a party
in the carrying out of such purpose have been somewhat
modified by modern authorities. In Mitchell v. Reynolds*®
the leading early case on the subject, in which the main
object of the contract was the sale of a bake house, and
there was a covenant to protect the purchaser against com-
petition by the seller in the bakery business, Chief Justice
Parker laid down the rule that it must appear before such
a covenant could be enforced that the restraint was not
general, but particular or partial, as to places or persons,
and was upon a good and adequate consideration, so as to make
it a proper and useful contract. Subsequently, it was decided
in Hitchcock v. Coker,*! that the adequacy of the consideration
was not to be inquired into by the court if it was a legal one,

89.Oakes v. C. W. Co., 143 N. 40] P. Wms. 181.

Y. 480; 38 N. E. R. 461; 26 L. 416 Adol & E. 454.
R. A. 544.
142 THE SHERMAN ANTI-TRUST ACT.

and that the operation of the covenant need not be limited in
time. More recently the limitation that the restraint could not
be general or unlimited as to space had been modified in some
cases by holding that, if the protection necessary to the
covenantee reasonably requires a covenant unrestricted as to
space, it will be upheld as valid.*? But these cases all involved
contracts in which the covenant in restraint of trade was
ancillary to the main and lawful purpose of the contract, and
was necessary to the protection of the covenantee in the carry-
ing out of that main purpose. They do not manifest any
general disposition on the part of the courts to be more liberal
in supporting contracts having for their sole object the re-
straint of trade than did the courts of an earlier time. It is
true that there are some cases in which the courts, mistaking,
as we conceive, the proper limits of the relaxation of the rules
for determining the unreasonableness of restraints of trade,
have set sail on a sea of doubt, and have assumed the power to
say, in respect to contracts which have no other purpose and
no other consideration on either side than the mutual restraint
of the parties, how much restraint of competition is in the
public interest, and how much is not.

To manifest danger in the administration of justice ac-
cording to so shifting, vague, and indeterminate a standard
would seem to be a strong reason against adopting it. The
cases assuming such a power in the courts are Wickens v.
Evans,*? Collins v. Locke,** Ontario Salt Co. v. Merchants’
Salt Co.,4° Kellogg v. Larkin,*® Leslie v. Lorillard.*7

In Wickens v. Evans, three trunk manufacturers of Eng-
land, who had competed with each other throughout the

42 Whitacker v. Howe, 3 Beav. Ed. 67; Diamond Match Co. v.

383; Leather Cloth Co. v. Lorsont, Roeber, 106 N. Y. 473; 13 N. E.
L. R. 9 Eq. 345; 39 L. J. Ch. 82; 419; 60 Am. Rep. 464.

21 L. T. 661; 18 W. R. 572; 423 Younge & J. 318;
Rousillon v. Rousillon, 14 Ch. 444 App. Cas. 674;

Div. 351; Nordenfeldt v. Maxim 4518 Grant (U. C.) 540;
Nordenfeldt Co. [1893] App. Cas. 463 Pin. 123; 56 Am. Dec. 164.

535. See also, Fowle v. Park, 131 47110 N.Y. 519; 18 N. E, 363;
U. S. 88; 9 Sup. Ct. 658; 33 L. 1L. R. A. 456.
TRUSTS AND COMBINATIONS AT COMMON LAW. 148

realm to their loss, agreed to divide England into three dis-
tricts, each party to have one district exclusively for his
trade, and if, any stranger should invade the district of
either as a competitor, they agreed ‘to meet to devise means
to promote their own views.’ The restraint was held par-
tial and reasonable, because it left the trade open to any
third party in either district. In answer to the suggestion
that such an agreement to divide up the beer business of
London among the London brewers would lead to the abuses
of monopoly, it was replied that outside competition would
soon cure such abuses,—an answer that would validate the
most complete local monopoly of the present day. It may
be, as suggested by the court, that local monopolies can not
endure long, because their very existence tempts outside
capital into competition; but the public policy embodied in
the common law requires the discouragement of monopolies,
however temporary their existence may be. The public in-
terest may suffer severely while new competition is slowly
developing. The case can hardly be reconciled with later
cases, hereafter to be referred to, in England and America.
It is true that there was in this case no direct evidence of
a desire by the parties to regulate prices, and it has been
sometimes explained on the theory that the agreement was
solely to reduce the expenses incident to a business covering
the realm by restricting its territorial extent; but it is dif-
ficult to escape the conclusion that the restraint upon each
two of the three parties was imposed to secure to the other
a monopoly and power to control prices in the territory
assigned to him, because the final clause in the contract im-
plies that, when it was executed, there were no other com-
petitors except the parties in the territory divided.

Collins v. Locke was a case in the privy council. The ac-
tion was brought to enforce certain articles of agreement by
and between four of the leading master stevedore contract-
ing firms in Melbourne, Australia, who did practically all
the business of that port. The court (composed of Sir
Barnes Peacock, Sir Montague E. Smith, and Sir Robert P.
144 THE SHERMAN ANTI-TRUST ACT.

Collier) describes the scope and purposes of the agreement
and the view of the court as follows:

‘The objects which this agreement has in view are to parcel
out the stevedoring business of the port among the parties
to it, and so to prevent competition, at least among them-
selves, and also, it may be, to keep up the price to be paid
for the work. Their lordships are not prepared to say that
an agreement having these objects is invalid if carried into
effect by proper means,—that is, by provisions reasonably
necessary for the purpose,—though the effect of them
might be to create a partial restraint upon the power of
the parties to exercise their trade.’

No attempt is made to justify the view thus comprehen-
sively stated, or to support it by authority or to reconcile it
with the general doctrine of the common law that contracts
restraining competition, raising prices, and tending to a
monopoly, as this is conceded by the court to have been, are
void. The court ignores the public interest that prices shall
be regulated by competition, and assumes the power in the
court to uphold and enforce a contract securing a monopoly
if it affect only one port, so as to be but a partial restraint
of trade. The case is directly at variance with the decision
of the supreme court of Illinois in More v. Bennett,*® hereafter
discussed and can not be reconciled in principle with many
of the other cases cited.

The Canadian case of Ontario Salt Co. v. Merchants’ Salt
Co. is another one upon which counsel for the defendants
rely. That was the decision of a vice chancellor. Six salt
companies, in order to maintain prices, combined, and put
their business under the control of a committee, and agreed
not to sell except through the committee. It was held that
because it appeared that there were other salt companies
in the province and because the combiners denied that they
intended to raise prices, but only to maintain them, the con-
tract of union was not in lawful restraint of trade. The

48140 Tll. 69; 29 N. E. 888; 15 L. R. A. 361; 33 Am. St. 216.
TRUSTS AND COMBINATIONS AT COMMON LAW. 145

conclusion and argument of the court in Central Ohio Salt
Co. v. Guthrie,*® hereafter stated, would seem to be a sufficient
answer to this case.

Kellogg v. Larkin *° was an early case in Wisconsin, in
which the action was on the covenant of a warehouseman in a
lease of his warehouse, by which he agreed to devote his services
to the lessee at certain compensation, and not to purchase or
store wheat in the Milwaukee market. The covenant was held
valid. Had nothing else appeared in the case, the conclusion
would have been clearly right, because such a covenant might
well have been reasonably necessary to the protection of the
lessee in his enjoyment of the warehouse and the good will of
the lessor. But it further appeared that this lease, with the
covenant, was only one of many such executed by the ware-
houseman of Milwaukee to the united grain dealers of that
city, to enable the latter to obtain absolute control of the
wheat market in Milwaukee. The court held the latter com-
bination valid also. The decision cannot be upheld, in view
of the more modern authorities hereafter referred to.

The case of Leslie v. Lorillard,®* would seem to be an
authority against our view. In that case a stockholder sought
to restrain the payment of an annual payment about to be
made by the Old Dominion Steamship Company under a con-
tract by which it bought off the Lorillard Steamship Company
from continuing in competition with it in carrying passengers
and freight between New York and Norfolk. The contract
was held valid, although it had no purpose except the restrain-
ing of competition, and, so far as appears, the obtaining of
the complete control of the business. The ease is rested
on Diamond Match Co. v. Roeber,®? which was a case of the
purchase of property and good will. It proceeds on the gen-
eral proposition ‘‘that competition is not invariably a public
benefaction ; for it may be carried on to such a degree as to

49 35 Ohio St. 666. 52106 N. Y. 473; 13 N. E. 419;
503 Pin. 123; 56 Am. Dec. 164. 60 Am. Rep. 464.
51110 N. Y. 519; 18 N. E. 363;

1L. RB. A. 456.
146 THE SHERMAN ANTI-TRUST ACT.

become a general evil,’’ and thus leaves it to the discretion of
the court to say how much competition is desirable, and how
much is mischievous, and accordingly to determine whether a
contract is bad or not. The case is directly opposed to Ander-
son v. Jett,®* hereafter cited. It should be said that nothing
appears in the report of the case to show directly that the
purpose of the contract was to reserve the entire business to
the Dominion Company, or to secure to it the power of regu-
lating prices, but this natural inference from the terms of the
contract is not negatived.

The case of Mogul Steamship Co. v. McGregor, Gow & Co.,54
has been cited to sustain the position of the defendants. It
does not do so. It was a suit for damages, brought by a
company engaged in the tea-carrying trade at Hankow,
China, against six other companies engaged in the same trade,
for loss inflicted by an alleged unlawful conspiracy entered
into by them to drive the plaintiff out of the trade, and to
obtain control of the trade themselves. It appeared that the
defendants agreed to conform to a plan of association, by
which they should constantly underbid the plaintiff, and take
away his trade by offering exceptional and very favorable
terms to customers dealing exclusively with the members of
the association, and that they did this to control the busi-
ness the next season after he had been thus driven out of
competition. It was held by the House of Lords that this
was not an unlawful and indictable, conspiracy, giving rise
to a cause of action by the person injured thereby; but it
was not held that the contract of association entered into by
the defendants was not void and unenforceable at common
law. On the contrary, Lord Bramwell, in his judgment (at
page 46) and Lord Hannen in his (at page 58), distinctly
say that the contract of association was void as in restraint
of trade; but all the law lords were of the opinion that con-
tracts void as in restraint of trade were not unlawful in a

5389 Ky. 375; 12 8. W. 670; 54 [1892] App. Cas. 25.
6 L. R. A. 390.
TRUSTS AND COMBINATIONS AT COMMON LAW. 147

criminal sense, and gave no right of action for damages to
one injured thereby. The statute we are considering ex-
pressly gives such contracts a criminal and unlawful char-
acter. It is manifest, therefore, that whatever of relevancy
the Mogul Steamship Company case has in this discussion
makes for, rather than against, our conclusion.

Two other cases deserve mention here. They are Central
Shade Roller Co. v. Cushman,** and Gloucester Isinglass &
Glue Co. v. Russia Cement Co.°* In these cases it was held
that contracts in restraint of trade are not valid if they affect
trade in articles which, though useful and convenient, are not
articles of prime or public necessity, and therefore, contracts
between dealers made to secure complete control of the manu-
facture and sale of such articles were supported. In the first
case the article involved was a fastening of a certain shade
roller, and in the other was glue made from fish skins. We
think the cases hereafter cited show that the common law rule
against restraint of trade extends to all articles of merchan-
dise, and that the introduction of such a distinction only fur-
nishes another opportunity for courts to give effect to the
varying economical opinions of its individual members. It
might be difficult to say why it was any more important to
prevent restraints of trade in beer, mineral water, leather,
cloth, and wire cloth than of trade in certain shades of glue.
However this may be, the cases do not touch the case at bar
because the same court, in Gamewell Fire Alarm Telegraph
Co. v. Crane,*” held that fire alarm telegraph instruments were
articles of sufficient public necessity to render unreasonable
restraints of trade in them void, and certainly such articles are
not more necessary for public use than water, gas, and sewer
pipe.

There are other cases upon which counsel of defendants
rely, which, in our judgment, have no bearing on the issue,
or, if they have, are clearly within the rules we have already

55143 Mass, 353; 9 N. E. 629. 12 1. R. A. 563; 26 Am. St. 214,
56154 Mass. 92; 27 N. E. 1005; 57160 Mass. 50; 35 N. EB. 98.
148 THE SHERMAN ANTI-TRUST ACT.

stated. One is a case in which a railroad company made a
contract with a sleeping-car company by which the latter
agreed to do the sleeping-car business of the railway com-
pany on a number of conditions, one of which was that no
other company should be allowed to engage in the sleeping-
car business on the same line.** The main purpose of such a
contract is to furnish sleeping-car facilities to the public. The
railroad company may discharge this duty to the public, and
allow no one else to do it, or it may hire some one to do it, and,
to secure the necessary investment of capital in the discharge
of the duty, may secure to the sleeping-car company the same
freedom from competition that it would have itself in dis-
charging the duty. The restraint upon itself is properly
proportioned to, and is only ancillary to, the main purpose
of the contract, which is to secure proper facilities to the
public. Exactly the same principle applies to similarly ex-
clusive contracts with express companies, and stock-yard
delivery companies.°® The fact is that it is quite difficult to
conceive how competition would be possible upon the same line
of railway between sleeping-car companies or express compa-
nies. Such contracts involve the hauling of sleeping cars or
express cars on each express train, the assignment of offices in
each station, and various running arrangements, which it
would be an intolerable burden upon the railroad company to
make and execute for two companies at the same time.
And the same is true of contracts with a stock delivery com-
pany. The railway company could not ordinarily be ex-
pected to have more than one general station for the de-
livery of cattle in any one town. It would only be required
by the nature of its employment to furnish such facilities as

58 Chicago, St. L. & N.O. R. Co. Fed. 210; Stock Yards Co. v.
v. Pullman Southern Car Co., 139 Kieth, 139 U. S. 128; 11 Sup. Ct.
U. S. 79; 11 Sup. Ct. 490; 35 L. 451; Butchers & Drovers’ Stock
Ed. 97. Yards Co. v. Louisville & N. R.

50 Express Cases; 117 U. 8.1; 6 Co., 31 U. S. App. 252; 14 C. C
Sup. Ct. 542, 628; 29 L. Ed. 791; =A. 290, and 67 Fed. 35.
reversing 3 McCrary, 147; 10
TRUSTS AND COMBINATIONS AT COMMON LAW. 149

were reasonably sufficient for the business at that place.
There is hardly more objection on the ground of public pol-
icy to such a restriction upon a railway company in cases like
these than there would be to a restriction upon a lessor not to
allow the subject-matter of the lease to be enjoyed by any one
but the lessee during the lease. The privilege, when granted, is
hardly capable of other than exclusive enjoyment. The pub-
lic interest is satisfactorily secured by the requirement,
which may be enforced by any member of the public, to-
wit, that the charges allowed shall not be unreasonable, and
the business is of such a public character that it is entirely
subject to legislative regulation in the same interest.’’
Judge Taft then reviews a number of cases controverting
the proposition that contracts having no purpose but to
restrain competition and maintain prices, if reasonable, will
be upheld, (which we quote in the subjoined note), and con-

cludes © as follows:

60 “Having considered the cases
upon which the counsel for the
defendants have relied to main-
tain the proposition that con-
tracts having no purpose but to
restrain competition and main-
tain prices, if reasonable, will be
held valid, we must now pass in
rapid review the cases that make
for an opposite view. In People v.
Sheldon, 189 N. Y. 251; 34 N. E.
785; 23 L. R. A. 221; 36 Am. St.
‘690, all the coal dealers in the
city of Lockport, N. Y., entered
into a contract of association,
forming a coal exchange to pre-
vent competition by constituting
the exchange the sole authority
to fix the price to be charged by
members for coal sold by them,
and the price was thus fixed. The
court approved a charge to the
jury that even if this was merely
« combination between indepen-

dent coal dealers to prevent com-
petition between themselves for
the due protection of the parties
to it against ruinous rivalry, and
although no attempt was made
to charge unreasonable or exces-
sive prices, it was inimical to
trade and commerce, whatever
might be done under it and was
within the state statute making
a conspiracy injurious to trade
indictable. Said Andrews ©. J.
(page 264, 139 N. Y. and p. 789,
34 N. E.) ‘If agreements and
combinations. to prevent competi-
tion in prices are or may be hurt-
ful to trade, the only sure remedy
is to prohibit all agreements of
that character. If the validity of
such an agreement was made to
depend upon actual proof of pub-
lic prejudice or injury, it would
be very difficult in any case to
establish the invalidity, although
150

THE SHERMAN ANTI-TRUST ACT.

“‘Upon this review of the law and the authorities, we can
have no doubt that the association of the defendants, how-

the moral evidence might be very
convincing.” See, to the same
effect, Judd v. Harrington, 139
N. Y. 105; 34 N. E. 790; Leonard
v. Poole, 114 N. Y. 371; 21 N. E.
707; 4 L. R. A. 728; 11 Am. St.
667; DeWitt Wire-Cloth Co. vy.
New Jersey Wire-Cloth Co. (16
Daly 529; 14 N. Y. Supp. 277. In
Morris Run Coal Co. v. Barclay
Coal Co., 68 Pa. St. 173; 8 Am.
Rep. 159, five coal companies con-
trolling the bituminous coal trade
in Northern Pennsylvania agreed
to allow a committee to fix prices
and rates of freight, and to fix
the proportion of sales by each.
Competition was not destroyed,
because the anthracite coal and
Cumberland bituminous coal were
sold in competition with this coal.
The association was, nevertheless,
held void, as in illegal restraint
of trade and competition, and
tending to injure the public. In
Nester v. Brewing Co., 161 Pa.
St. 473; 29 Atl. 102; 24 L. R. A.
247; 41 Am. St. 894, forty-five
brewers in Philadelphia made an
agreement to sell beer in Philadel-
phia and Camden at a certain
price to be fixed by a committee
of their number. Though beer
could be hardly be said to be an
article of price necessity like coal,
yet, as it was an article of mer-
chandise, the contract was held
void, as in restraint of trade, and
tending to a monopoly. In Cen-
tral Ohio Salt ‘Co. v. Guthrie, 35
Ohio St. 666, the salt manufac-
turers of a salt producing terri-
tory in Ohio, with some excep-

tions, combined to regulate the
price of salt by preventing ruin-
ous competition between them-
selves, and agreed to sell only at
prices fixed by a committee of
their number. The supreme court
of Ohio held the contract void.
Judge McIlvaine, who delivered
the opinion of the court, said:
‘The clear tendency of such an
agreement is to establish a monop-
oly, and to destroy competition
in trade, and for that reason, on
the ground of public policy, courts
will not aid in its enforcement.
It is no answer to say that com-
petition in the salt trade was not
in fact destroyed, or that the
price of the commodity was not
unreasonably advanced. Courts
will not stop to inquire as to the
degree of injury inflicted upon
the public. It is enough to know
that the inevitable tendency of
such contracts is injurious to the
public.’ Other Ohio cases which
presented similar facts, and in
which the same rule was en-
forced, are Emery v. Candle Co.,
47 Ohio St. 320; 24 N. E. 660;
21 Am. St. 819, and  Hoff-
man v. Brooks, 11 Wkly. Law
Bul. 258. In Anderson y. Jett, 89
Ky. 375; 12 8. W. 670; 6 L. R.
A. 390, two owners of stearnhoats
running on the Kentucky river
made an agreement to keep up
rates, and divide net protits, to
prevent ruinous competition and
reduced rates. The contract was
held void. In Chapin v. Brown, 83
Jowa, 156; 48 N. W. 1074; 12
L. R. A. 428; 32 Am. Rep. 297,
TRUSTS AND COMBINATIONS AT COMMON LAW.

151

ever reasonable the prices they fixed, however great the ne-
cessity for curbing themselves by joint agreement from com-

the grocery men in a town, in
order to avoid a trade in butter
which was burdensome, agreed
not to buy any butter or to take
it in trade except for use in their
own families, so as to throw the
business into the hands of one
man who dealt in butter exclus-
ively. The agreement was held in-
valid, because in restraint of
trade, and tending to create a
monopoly. In Craft v. MeCon-
oughy, 79 Ill. 346; 22 Am. Rep.
171, five grain dealers in Ro-
chelle, Ill., agreed to conduct their
business as if independent of each
other, but secretly to fix prices at
which they would sell grain, and
to divide profits in a certain pro-
portion. This was held void, as
in restraint of trade, and tending
to create a monopoly. In More v.
Bennett, 140 Ill. 69; 29 N. E.
888; 15 L. R. A. 361; 33 Am. St.
216, articles of association en-
tered into by only a part of the
stenographers of Chicago to fix a
schedule of prices, and prevent
competition among their mem-
bers and a consequent reduction
of prices, was held void. The
court said: ‘A combination among
a number of persons engaged in
a particular business to stifle or
prevent competition, and thereby
to enhance or diminish prices to
a point above or below what they
would be if left to the influence
of unrestricted competition, is
contrary to public policy. ‘Con-
tracts in partial restraint of
trade which the law sustains are
those entered into by a vendor of

a business and its good will with
its vendee, by which the vendor
agrees not to engage in the same
business within a limited terri-
tory; and the restraint, to be
valid must be no more extensive
than is reasonably necessary for
the protection of the vendee in
the enjoyment of the business
purchased.’ As already said, this
case is in direct conflict with
Collins v. Locke, 4 App. Cas. 674,
discussed above. To the same
effect as More v. Bennett are
Ford v. Chicago Milk Shippers
Association, 155 Ill. 166; 39 N. E.
651; 27 L. R. A. 298, and Bishop
v. Preserves Co., 157 Ill. 284; 41
N. E. 765; 48 Am. St. 317. In
Milwaukee Association v. Niezer-
owski, 95 Wis. 129; 70 N. W.
166; 37 L. R. A. 127; 60 Am. St.
97, the suit was on a note given
in pursuance of the secret rules
of an association of sixty out of
the seventy-five master masons in
Milwaukee, by which all bids for
work about to be let were first
made to the association, and the
lowest bidder was then required
to add 6 per cent. to his bid, and,
if the bid was more than 8 per
cent. below the next lowest bidder,
more than 6 per cent. might be
added. Each member was re-
quired to pay to the association
6 per cent. of his estimates when
due, for subsequent distribution.
In declaring the contract void,
the court said: ‘The combina-
tion in question is contrary to
public policy, and strikes at the
interests of those of the public
152

THE SHERMAN ANTI-TRUST ACT.

mitting financial suicide by ill-advised competition, was void
at common law, because in restraint of trade, and tending

desiring to build, and between
whom and the association or the
members thereof there exist no
contract relations.” In Vulcan
Powder Co. v. Hercules Powder
‘Co., 96 Cal. 510; 31 Pac. 581;
31 Am. St. 242, four powder
companies of California agreed
that each should sell at a price
to be fixed by a committee of
their representatives, and should
pay over to the others the profits
on any excess of sales over a fixed
proportion of the total sales. The
contract was held void. In Texas
Standard Oil Co. v. Andoue, 83
Tex. 650; 19 S. W. 274; 15 L.
R. A. 598; 29 Am. St. 690, five
owners of cotton-seed oil mills in
‘lexas made an agreement not to
sell at less than certain prices.
One guaranteed profits to the
four others, and suit was brought
on the guaranty. It was held

void, as restraining trade, and
tending to a monopoly, even
though the evidence failed to

establish that it effected a monop-
oly. In Association v. Kock, 14
La. Ann. 168, eight commercial
firms in New Orleans holding a
large quantity of cotton bagging
entered into an agreement by
which they stipulated that for
three months no member should
sell a bale except by a vote of
the majority. It was held that
the contract was ‘palpably and
unequivocally « combination in
restraint of trade, and to enhance
the price in the market of an
article of primary necessity to
cotton planters. Such combina-

tions are contrary to public order,
and cannot be enforced in a court
of justice’ In Hilton v. Eckers-
ley, 6 El. & Bl. 47, it was held
than an agreement between eight-
een cotton manufacturers to sub-
mit to the control of a committee
of their number for twelve
months the question as to prices
to be paid for labor and the terms
of employment, in order to resist
the aggressions of an association
of workingmen, was void, and un-
enforceable, because in restraint
of trade. In Urmston v. White-
legg, 63 L. T. (N. S.) 455, a case
in the queen’s bench division, be-
fore Day and Lawrence, JJ., the
action was brought to enforce a
penalty under the rules of the
Bolton Mineral Water Manufac-
turers’ Association, which recited
that the object of the association
was to maintain the price of min-
eral water, and bound the mem-
bers for ten years not to sell at
less than 9d. a dozen bottles, or
at not less than any higher price
fixed by the committee, on penalty
of £10 for each violation. Day
J., said: ‘If a contract for raising
prices against the public interest
is a contract in restraint of trade,
this is undoubtedly such a con-
tract. During the last hundred
years great changes have taken
place in the views of the public,
of the legislature, and therefore
of the judges, on the matter, and
many old fashioned offenses dis-
appeared; but the rule still ob-
tains that combination for the
mere purpose of raising prices is
TRUSTS AND COMBINATIONS AT COMMON LAW.

153

to a monopoly. But the facts of the case do not require
us to go so far as this, for they show that the attempted

not enforceable in a court of law.
This contract is illegal in the
sense of not being enforceable. It
is necessary that it should be such
as to form the ground of crimi-
nal proceedings.’ In the foregoing
cases the only consideration of the
agreement restraining the trade
of one party was the agreement of
the other to the same effect, and
there was no relation of partner-
ship, or of vendor and vendee, or
of employer and employee. Where
such relation exists between the
parties, as already stated, re-
straints are usually enforceable
if commensurate only with the
reasonable protection of the cov-
enantee in respect to the main
transactions affected by the con-
tract. But, in recent years, even
the fact that the contract is one
for the sale of property or of
business and good will, or for the
making of a partnership or a cor-
poration, has not saved it from
invalidity if it could be shown
that it was only part of a plan
to acquire all the property used
in a business by one management
with a view to establishing a mon-
opoly. Such cases go u step fur-
ther than those already con-
sidered. In them the actual in-
tent to monopolize must appear.
It is not deemed enough that the
mere tendency of the provisions
of the contract should be to re-
strain competition. In such cases
the restraint of competition ceases
to be ancillary, and becomes the
main purpose of the contract, and
the transfer of property and good
will, or the partnership agree-

ment, is merely ancillary and sub-
ordinate to that purpose. The
principal cases of this class are
Richardson v. Buhl, 77 Mich. 632;
43 N. W. 1102; 6 L. R. A. 457;
Arnot v. Coal Co., 68 N. Y. 558;
23 Am. Rep. 190; People v. Milk
Exchange, 145 N. Y. 267; 39 N.
E. 1062; 27 L. R. A. 437; 45 Am.
St. 609; People v. Refining Co.,
54 Hun 354; 7 N. Y. Supp.
406; 5 L. R. A. 386; State
v. Nebraska Distilling Co. 29
Neb. 700; 46 N. W. 155; State
v. Standard Oil Co., 49 Ohio St.
137; 30 N. E. 279; 15 L. R. A.
145; 34 Am. St. 541; American
Biscuit Manufacturing Co. v.
Klotz, 44 Fed. 721; Distilling &
Cattle Feeding Co. v. People, 156
Til. 448; 41 N. E. 188; 47 Am. Sv.
200; ‘Carbon Co. v. MeMillin, 119
N. Y. 46; 23 N. E. 530; National
Harrow Co. v. Hench, 83 Fed.
36; 27 C. C. A. 349; 39 L. R. A.
299; Pacific Factor Co. v. Adler,
90 Cal. 110; 27 Pac. 36; 25 Am.

St. 102; Santa Clara Lumber
Co. v. Hayes, 76 Cal. 387;
18 Pac. 391; 9 L. R. A. 211.

In addition to the cases cited,
there are others which sustain
the general principle, but in them
there exists the additional reason
for holding the contracts invalid
that the parties were engaged in
a quasi public employment. They
are Gibbs v. Consolidated Gas Co.,
130 U. S. 396; 9 Supp. Ct. 553;
32 L. Ed. 979; People v. Chicago
Gas Trust Co., 130 Il. 268; 22
N. E. 798; 8 L. R. A. 497; 17
Am. St. 319; Stockton v. Central
Railroad Co., 50 N. J. Eq. 62;
164

THE SHERMAN ANTI-TRUST ACT.

justification of this association on the grounds stated is with-

out foundation.’’*

§ 5B.

Combinations Not Amounting to a Monopoly.—

Combinations that do not amount to a monopoly are valid.
The Supreme Court of Rhode Island on this subject has

said:

‘‘Undoubtedly there may be combinations so destructive
of the right of the people to buy and to sell and to pursue
their business freely that they must be declared to be void

24 Atl. 964; 17 L. R. A. 97; West
Va. Transp. Co. v. Ohio River
Pipe Line Co., 22 W. Va. 600;
Hooker v. Vandewater, 4 Denio,
349; Stanton v. Allen, 5 Denio,
434; 49 Am. Dec. 282; Central R.
Co. v. Collins, 40 Ga. 582; Hazle-
hurst v. Railroad Co., 43 Ga. 13.”

61 United States v. Addyston
Pipe & Steel Co., 85 Fed. 271;
29 C. C.A. 141; 54 U.S. App. 723;
46 L. R. A. 122; reversing 78 Fed.
712, affirmed 175 U. 8. 211; 20
Sup. Ct. 96; 44 L. Ed. 136. “What
then are those means of exclusion?
Certainly not competition because
competition is the course of con-
duct above all most favored. But
competition is a state of conflict
which necessarily involves a cer-
tain amount of extermination. One
man may push it to the extreme
limits whilst another may draw
the boundary line clear inside of
them. Price cutting and rebating,
collecting information of the
trade of competitors, the oper-
ation of companies under other
names to obviate prejudice or
secure an advantage or for what-
ever reason, are all legal methods
of competition whatever moral
criticism they may justify. (Pol-
lock on Torts, 8th Ed., p. 152).

There is no rule of fairness or
reasonableness which regulates
competition. The claim that there
is assumes, as Bowen, L. J., said in
the Mogul case (L. R. 23 Q. B. D.
615), ‘that apart from fraud, in-
timidation, molestation or  ob-
struction or some other personal
tight in rem or in personam,
there is some natural standard of
“fairness” or “reasonableness” (to
be determined by the internal con-
sciousness of judges and juries)
beyond which competition ought
not in law to go;’ to which he
adds that ‘there seems to be no
authority and I think with sub-
mission that there is no sufficient
reason for such proposition? Lord
‘Morris said in the same case that
he could see no limit to compe-
tition except the invasion of the
legal right of another. [1892]
App. Cas. 51. Yet competition is
one of the principal means where-
by one man gets the better of his
fellows in the struggle for trade
and appropriates to himself an
ever increasing share of it, even
it may be extending to such a
dominating share for the time be-
ing as to constitute what is in-
definitely called control.”
TRUSTS AND COMBINATIONS AT COMMON LAW. 155
upon the ground of public policy. In such cases the injury
to the public is the controlling consideration. But it does
not follow that every combination in trade, even though such
combination may have the effect to diminish the number of
competitors in business, is therefore illegal. Such a rule
would produce greater public injury than that which it
would seek to cure. It would be impracticable. It would
forbid partnerships and sales by those engaged in a com-
mon business. It would cut off consolidations to secure the
advantages of united capital and economy of administration.
It would prevent all restrictions and exclusive privileges, and
hamper the familiar conduct of commerce in many ways.
There may be many such arrangements which will be bene-
ficial to the parties and not injurious to the public. Monop-
olies are liable to be-oppressive, and hence are deemed to be
hostile to the public good. But combinations for a mutual
advantage which do not amount to a monopoly, but leave
the field of competition open to others, are neither within
the reason nor the operation of the rule.’’®

§56. Restraint of Trade Involving Illegality.—With re-
gard to the question what amounts to a restraint of trade
involving illegality at common law Justice Hannen of the
Queen’s bench used this language in consideration of a
strike case: ‘‘I am, however, of opinion that strikes are not
necessarily illegal. A strike is properly defined as ‘simu-
laneous cessation of work on the part of the workmen,’ and
its legality or illegality must depend on the means by which
it is enforced, and on its objects. It may be criminal, as

62 Oakdale Mfg. Co. v. Garst, 18
R. I. 484; 28 Atl. 973; 23 L. R. A.
639; 49 Am. St. 784. “Not all
combinations are condemned and
self preservation may justify pre-
vention of undue and ruinous
competition, when the prevention
is sought by fair and _ legal

methods.” United States Vinegar
Co. v. Fochrenbach, 148 N. Y. 58;
42 N. E. 403; Rafferty v. Buffalo
Gas Co., 37 N. Y., App. Div. 618;
56 N. Y. Supp. 288; State v.
Eastern Coal Co., 29 R. I. 254;
70 Atl. 1.
156 THE SHERMAN ANTI-TRUST ACT.

if it be part of a combination for the purpose of injuring or
molesting either masters or men; or it may be simply il-
legal, if it be the result of an agreement depriving those
engaged in it of their liberty of action, similar to that by
which the employers bound themselves in the case of Hilton
v. Eckersley ; ** or it may be perfectly innocent, as if it be the
result of a voluntary combination of the men for the purpose
only of benefitting themselves by raising their wages, or for
the purpose of compelling the fulfillment of an engagement
entered into between employers and employed, or any other
legal purpose.’ He then refers to a memorandum by Sir W.
Earl,** in which he says: ‘As to combination, each person has
a right to choose whether he will labor or not, and also to
choose the terms on which he will consent to labor, if labor
be his choice. The power of choice in respect to labor and
terms, which one person may exercise and declare singly,
may after consultation may exercise jointly, and they may
make a simultaneous declaration of their choice, and may
lawfully act thereon for the immediate purpose of obtaining
the required terms; but they cannot create any mutual ob-
ligation having the legal effect of binding each other not to
work, or not to employ, unless upon terms allowed by the
combination.’** Perhaps the only qualification of this language
that may be made is that a mutual obligation must not extend
beyond the limits of what under the circumstances is a reason-
able restraint. Consequently it was held where the rules of a
society combined provisions for the militant purposes of a
trade union and provisions for the provident purposes of a
friendly society, and it was provided by one of the rules of
the society that members of the society might be expelled,
with the result that they would forfeit all future benefit
from the funds of the society, for non-compliance with the
decisions of committees directing the militant operations of

686 E. & B. 47; L. J. Q. B. 64 Law Relating to Trade Unions.
353; in error 6 E. & B. 66; 25 L. 65 Harrer v. Close, L. R. 4; Q
J. Q. B. 199. B. 602.
TRUSTS AND COMBINATIONS AT COMMON LAW.

157

the society or for violating the recognized trade rules of the
district, that the main object of the society was illegal at
common law, as being in restraint of trade.’’**

66 Russell v. Amalgamated So-
ciety of Corporations [1910] 1 Q.
B. 506; 79 L. J. C. Ch. 507; 102
L. T. 119; 54 8. J. 213; 26 Y. L.
R. 228. “It was settled that, un-
less there are circumstances show-
ing some reasonable ground for
imposing a restriction on a per-
son’s liberty to do what he can fo-
his own support, that restriction
will be held not binding upon him.
According to this doctrine an
agreement in restraint of trade

which is wider than is reasonably
necessary for the protection of the
person seeking to enforce it is
invalid so far as it is wider than
is so necessary, and this may in-
validate the whole restraint
sought to be imposed, if the
clause imposing it is so framed
as not to be severable.” Under-
wood v. Barker [1899] 1 Ch. 300;

68 L. J. Ch. 201; 80 L. T. 306;

47 W. R. 347.
CHAPTER IV.

COMMERCE AND TRADE.

SECTION. SECTION.

56. Statute. 60. Trade.

57. Definition of commerce. 61. Traffic.

58. Commerce broader than trade 62. Manufacture not commerce—
—Use in Federal Statute. Intent to put in commerce

59. Commerce as _ transporta- —Interstate commerce.
tion—Interstate transpor-
tation.

§ 56. Statute—The Sherman Anti-Trust Act in its first
section declares that ‘‘Every contract, combination in the
form of a trust or otherwise, or conspiracy in restraint of
trade or commerce among the several states or with foreign
nations, is hereby declared illegal.’’ The second section pro-
vides punishment for ‘‘Every person who shall monopolize
or attempt to monopolize, or combine or conspire with any
other person or persons, to monopolize any part of the trade
or commerce among the several states, or with foreign na-
tions.’’ It therefore becomes important to know what is and
what is not commerce; for the word ‘‘
both domestic and interstate commerce.

commerce’’ covers

§ 57. Definition of Commerce—Interstate Commerce.—
The word ‘‘commerce’’ as used in the Federal Constitu-
tion and in the Anti-Trust Statutes is not defined; and re-
sort must be had to the definitions given by the courts.
Unfortunately many loosely constructed and not clearly
definite definitions have been given this word. ‘‘Commerce
is intercourse. One of its most ordinary ingredients is
traffic.’’?

1State v. Schlitz Brewing Co., 2 Brown v. Maryland, 12 Wheat
104 Tenn. 715, 744; 59 S. W. 419, 446; 6 L. Ed. 678.
1033; 78 Am. St. 941.

158
COMMERCE AND TRADE. 159

The Supreme Court of Iowa says: ‘‘Commerce is the
interchange or mutual change of goods, productions, or prop-
erty of any kind, between nations or individuals.’’? This
definition is rather restricted; for it seems to ignore sales for
cash. A Federal Court has given a better definition by way
of deseription: ‘‘Commerce proceeds from trade, and is the
exchange of one kind of property for another, whether it be
by barter, or by purchase and sale.’’* ‘‘Commerce’’ means
not only traffic, but also intercourse. When applied to states

it means commercial intercourse as between them.*

3 Council Bluffs v. Kansas City
St. J. & C. B, R. Co., 45 Iowa 338;
24 Am. Rep. 773.

4In Re Nickodemus
Cas. 222.

5 Henderson v. Wickham, 92 U.
S. 259; 23 L. Ed. 543; Welton v.
Missouri, 91 U. S. 275; 23 L. Ed.
347; reversing 55 Mo. 288; Hanni-
bal & St. Joe R. Co. v. Husen, 95
U. 8. 465; 24 L. Ed. 527, revers-
ing 60 Mo. 226; Brown v. Hous-
ton, 114 U. S. 622; 5 Sup. Ct.
1091; 29 L, Ed. 257; affirming 33
La. Ann. 843; 39 Am. Rep. 284;
Minnesota v. Barber, 136 U. 8S.
313; 10 Sup. Ct. 213; 35 L. Ed.
455; affirming 39 Fed.641; Brim-
mer v. Hebman, 138 U. S. 78; 11
Sup. Ct. 862; 34 L. Ed. 862,
affirming 41 Fed. 867; 3 Inters.
Com. Rep. 126; Vought v. Wright,
141 U. 8. 62; 11 Sup. Ct. 855; 35
L. Ed. 638; State Freight Tax
Case, 15 Wall. 232; 21 L. Ed.
146; reversing 62 Pa. 286; 1 Am.
Rep. 399; Robbins v. Shelby
‘County, 120 U. 8. 489; 7 Sup. Ct.
592; 30 L. Ed. 694; reversing 13
L. Ed. 303; The License Cases, 5
How. 504; 2 L. Ed, 256; affirming
24 Pick 374; 1 R. I. 193; 13 N.
H. 536; Mobile County v. Kim-

18 Fed.

ball, 102 U. 8. 691; 26 L. Ed. 238;
affirming 3 Woods 555; Fed. Cas.
‘No. 7774; Bowman v. Chicago &
N. W. R. Co. 125 U. S. 465; 8
Sup. Ct. 689; 31 L. Ed. 700; Leisy
v. Hardin, 135 U. S. 100; 10 Sup.
Ct. 681; 34 L. Ed. 128; reversing
78 Iowa 286; 43 N. W. 188. In
Re Rahrer, 140 U. 8S. 545; 11 Sup.
Ct. 865; 35 L. Ed. 572; reversing
43 Fed. 556; 10 L. R. A. 444;
United States v. E. C. Knight Cow
156 U. 8. 1; 15 Sup. Ct. 249; 39
L. Ed. 708; affirming 60 Fed. 934;
9C..C. A. 297; 17 U.S. App. 466;
24 L. R. A. 428; United States v.
Holliday, 3 Wall. 407; 18 L. Ed.
182; Campbell v. Chicago M. & St.
P. Ry. Co., 86 Iowa 587; 53 N.
W. 351; Commonwealth v. Gloa-
cester Ferry Co., 98 Pa. 105, 120;
State v. Dickworth, 5 Idaho 642;
51 Pac. 457; Farris v. Henderson,
1 Okl. 284; 33 Pac. 380; Dillon v.
Erie Ry. Co., 19 N. Y. Mise. 116;
43 N. Y. Supp. 320; Schmidt v.
People, 18 Colo. 78; 31 Pac. 498.
“Commerce is defined as the in-
terchange of goods, merchandise,
or property of any kind; trade,
traffic; used more especially of
trade or a large scale carried by
transportation of merchandise be-
160 THE SHERMAN ANTI-TRUST ACT.

‘‘Commerce,’”’ said Judge Grosscup, ‘‘broadly stated, is the
sale or exchange of commodities. But that which the law
looks upon as the body of commerce is not restricted to
specific acts of sale or exchange. It includes that inter-
course—all the initiatory and intervening acts, instrumentali-
ties and dealings—that directly bring about the sale or ex-
change.’’ And he adds this illustration: ‘‘Thus, though
sale or exchange is a commercial act, so also is the solicita-
tion of the drummer, whose occupation it is to bring about
the sale or exchange. The whole transaction from initiation
to culmination is commerce.’’”

‘In this connection we may well inquire, what is com-
merce? We are answered in the lucid phraseology of Chief
Justice Marshall:

‘Commerce, undoubtedly, is traffic, but it is something
more: it is intercourse. It does not embrace the completely
interior traffic of the respective states—that ‘‘which is car-
ried on between man and man in a state, or between dif-
ferent parts of the same state, and which does not extend
to or affect other states’’—but it does embrace ‘‘every
species of commercial intercourse” between the United
States and foreign nations and among the states, and there-
fore it concludes such traffic or trade, buying, selling, and
interchange of commodities as directly affect or necessarily
involves the interests of the people of the United States.
“**Commerce’’ as the word is used in the Constitution, is
a unit,’’? and ‘‘can not stop at the external boundary line
of each state, but may be introduced into the interior.’’ The

tween different countries, or be-
tween different parts of the same
country, distinguished as foreign
commerce and internal commerce.”
Master Granite & Blue Stone
Cutters’ Asso. 23 Pa. Co. Ct. Rep.
517.

6 Citing Brennan v. Titusville,
153 U. S. 289; 14 Sup. Ct. 829;

38 L. Ed. 719; reversing 143 Pa.
St. 672; 22 Atl. 893; 14 L. R. A.
100; 24 Am. St. 580; 3 Inters.

‘Com. Rep. 735.

7 United States v. Swift & Co.,
122 Fed. 529; modified 196 U. 8.

375; 25 Sup. Ct. 278, 49 L. Ed.

518.
COMMERCE AND TRADE. 161

genius and character of the whole government seems to be
that its action is to be applied to all the external concerns
of the nation, and to those internal concerns which affect
the states generally.’

This was the language of the great Chief Justice in the
famous case of Gibbons v. Ogden.® It is further defined in the
County of Mobile v. Kimball.® ‘Commerce with foreign coun-
tries and among the states, strictly considered, consists in
intercourse and traffic, including, in these terms, navigation
and the transportation and transit of persons and property,
as well as the purchase, sale, and exchange of commodities.’

This expression was adopted anew in Gloucester Ferry
Company v. Pennsylvania.*° It follows that interstate com-
merce does not, therefore, exist in transportation merely. ‘It
includes the purchase and sale of articles that are intended to
be transported from one state to another—every species of
commercial intercourse among the states and with foreign
nations.’

A more recent definition is that of Judge Hough of the
Southern District of New York in the very recent case of the
United States of America against The McAndrews & Forbes
Company, known as the ‘Licorice Paste Case.’ ‘‘ ‘Com-
merce’, in its simplest signification means the exchange of
goods, but with the advancing complexity of civilization it
is now certainly significant, not only of change, but of the
buying and selling of commodities, and especially of the ex-
change of merchandise on a large scale. It may be said to be
trade, traffic, or exchange between different places and com-
munities.’ Citing Webster’s Dictionary, quoted in State v.
Indiana, etc., Co. So that nowadays, and in the sense in
which the word is used in the statement of the law which I

89 Wheat 1; 6 L. Ed. 23; re- 10114 U.S. 196, 5 Sup. Ct. 826;
versing 17 Johns 488. 29 L. Ed. 158; reversing 98 Pa.
9102 U. 8. 691; 26 L. Ed. 238; 105.
affirming 3 Woods 555; Fed. Cas. 11133 Ind. 69; 32 N. E. 817; 18

No. 7774. L. R. A. 502
162 THE SHERMAN ANTI-TRUST ACT.
shall presently read you, its import or meaning comprehends
intercourse for the purposes of trade in all its forms.’’ *

§58. Commerce Broader than Trade—Use in Federal
States.—‘‘Commerce”’ is broader than ‘‘trade;’’ it is inter-
course. It comprehends intercourse for the purpose of
trade in any and all its forms.’*

Speaking of the word ‘‘commerce’’ as used in the Anti-
Trust Act, after discussing the word ‘‘conspiracy’’ as
therein used, Judge Woods said: ‘‘I am unable to regard
the word ‘commerce’ in this statute, as synonymous with
‘trade,’ as used in the common-law phrase ‘restraint of
trade.’ In its general sense, trade comprehends every
species of exchange or dealing, but its chief use is ‘to denote
the barter or purchase and sale of goods, wares, and mer-
chandise, whether by wholesale or retail,’ and so it is used
in the phrase mentioned. But ‘commerce’ is a broader term.

“Tt is the word in that clause of the constitution by which
power is conferred on congress ‘to regulate commerce with
foreign nations, and among the several states, and with the
Indian tribes.’ In a broader and more distinct exercise of
that power than ever before asserted, Congress passed the
enactments of 1887 and 1888 known as the ‘Interstate Com-
merce Law.’ The present statute is another exercise of that
constitutional power, and the word ‘commerce,’ as used in
this statute, as it seems to me, need not and should not be
given a meaning more restricted than it has in the consti-
tution. That meaning has often been defined by the Su-
preme Court.’’!*

12Jn re Charge to Grand Jury
151 Fed. 834. See Welton v.
Missouri, 91 U. 8S. 275; 23 L. Ed.
347; reversing 55 Mo. 288.

13 McNaughton Co. v. McGirl,
20 Mont. 124; 49 Pac. 651; 38 L.
R. A. 367; 63 Am. St. 610.

14 United States v. Debs, 64
Fed. 724, 749. “‘Trade’ has been

defined as ‘the exchange of com-
modities or for money; the business
of buying and selling; dealing by
the way of sale or exchange.’ The
word ‘commerce,’ as used in the
statute and under the terms of the
constitution, has, however, a
broader meaning than the word
‘trade? Commerce among the
COMMERCE AND TRADE. 163

§ 59. Commerce as Transportation.—Interstate Transpor-
tation.—It will be noticed from the foregoing section that
the word ‘‘commerce’’ in its primary meaning relates to
transactions between individuals, such as sales, purchases
and exchange. But as used in the Anti-Trust Act and in
the Commerce Clause of the Federal Constitution it has a
broader meaning. ‘‘Commerce with foreign nations,’’ said
the Supreme Court of the United States, ‘‘and among the
states, strictly considered, consists in intercourse and traf-
fic, including in these terms navigation and the transporta-
tion and transit of persons and property, as well as the

purchase, sale and exchange of commodities.’’

states consists of intercourse and
traffic between their citizens, and
includes the transportation of per-
sons and property, and the navi-
gation of public waters for that
purpose, as well as the purchase,
sale, and exchange of commodi-
ties.” United States v. Cassidy,
67 Fed. 698, 704; United States
v. Coal Dealers, 85 Fed. 252, 265.
The Supreme Court of the United
States has used this language in
what is a leading case: “Com-
merce consists of intercourse and
traffic between the citizens or in-
habitants of different states, and
includes not only the transporta-
tion of persons and property, and
the navigation of public waters
for that purpose, but also the pur-
chase, sale and exchange of com-
modities.” Addyston Pipe & Steel
Co. v. United States, 175 U. 8S.
211; 20 Sup. Ct. 96; 44 L. Ed.
136; affirming 85 Fed. 271; 29 C.
C. A. 141; 54 U. S. App. 723; 46
L. R. A. 122, which reversed 78
Fed. 712. “Commerce undoubtedly
is traffic, but it is something more,
it is intercourse. It describes the

commercial intercourse between
nations in all its branches, and is
regulated by prescribing rules for
carrying on that intercourse.”
Gibbons v. Ogden, 9 Wheat 1; 6
L. Ed. 23, reversing 17 Johns 488.

15 Mobile v. Kimball, 102 U. 8S.
691, 702; 26 L. Ed. 238; affirming
3 Woods 555; Fed. Cas. No. 7774.
This was approvingly quoted in
McCall v. ‘California, 136 U. S.
104; 10 Sup. Ct. 881; 34 L. Ed. 391;
Williams v. Fears, 179 U. S. 270;
21 Sup. 128; 45 L. Ed. 186; affirm-
ing 110 Ga. 584; 35 S. E, 699; 50
L. R. A. 685; Lottery Case
(Champion v. Ames), 188 U. S.
321, 351; 23 Sup. 321, 325; 47 L.
Ed. 492. To like effect, Addyston
Pipe & Steel Co. v. U. 8., 175 U.
S. 211, 241; 20 Sup. 96, 107; 44
L. Ed. 136; affirming 85 Fed. 271;
29 C, C. A. 141; 54 U. S. App.
723; 46 L. R. A. 122; United
States v. American Tobacco Co.,
164 Fed. 700, 712. Mr. Cooke in
his work on Combinations No. 184
gives the following definition:
“Commerce consists in transpor-
tation (not necessarily all trans-
164 THE SHERMAN ANTI-TRUST ACT.

‘‘Commerce among the states,’’ said one Federal Court,
“consists of intercourse and traffic between their citizens,
and includes the transportation of persons and property,
and the navigation of public waters for that purpose, as
well as the purchase, sale and exchange of commodities.’’

‘“‘When commerce * * * is between parties dealing
from different states—to be effected so far as the immediate
act of exchange goes by transportation from state to state
—it is commerce between the states, within the meaning of
the Constitution, and the statute known as the Sherman
Act. But it is not the transportation that constitutes
the transaction interstate commerce. That is, an adjunct
only, essential to commerce, but not the sole test. The un-
derlying test is that the transaction, as an entirety, includ-
ing each part calculated to bring about the result, reaches
into two or more states; and that the parties dealing with
reference thereto deal from different states. An interstate
commercial transaction is, in this sense, an affair rising from
different states, and centering in the act of exchange, each
essential part of the affair being as much commerce as in

the center.’’ 1”

portation, but certainly), includ-
ing transportation of persons,
tangible property, and (at least
under certain conditions) of in-
telligence.” See also Cooke on the
Commerce Clause, section 4.

16 United States v. ‘Coal Dealers’
Asso., 85 Fed. 252.

17 United States v. Swift & Co.,
122 Fed. 529, 531; modified 196
U.S. 375; 25 Sup. Ct. 276; 49 L.
Ed. 518; Ware v. Mobile County,
209 U. 8. 405; 28 Sup. Ct. 526:
52 L. Ed. 855; affirming 146 Ala.
163; 41 So. 153; Lottery Case, 188
U. 8. 321; 23 Sup. Ct. 321; 47 L.
Ed. 492; Lindsay yv. Mullen, 176
U. 8. 126; 20 Sup. Ct. 325; 44 L.
Ed. 4005 United States v. E. C.

In its broadest meaning the word ‘‘trade’’

Knight Co., 156 U. S. 1; 15 Sup.
(Ct. 249; 39 L. Ed. 325; 60 Fed.
934; 9C.C. A. 297; 17 U.S. App.
466; 24 L. R. A. 428; O’Neil v.
Vermont, 144 U. 8. 223; 22 Sup.
Ct. 693; 36 L. Ed. 450; affirming
58 Vt. 140; 2 Atl. 586; 56 Am.
Rep. 557. In Re Rahrer, 140 U.
8. 545; 11 Sup. Ct. 865; 35 L. Ed.
572; reversing 43 Fed. 556; 10
L. R. A. 444; Kidd v. Pearson, 128
U.S. 1; 9 Sup. Ct. 6; 32 L. Ed.
346; affirming 72 Iowa 348; 34 N.
W. 1; Bowman v. Chicago & N.
W. R. Co., 125 U. S. 465; 8 Sup.
‘Ct. 689; 31 L. Ed. 700; Postal
Telegraph, ete. ‘Co. v. Mobile, 179
Fed. 955; Zikos v. Oregon R. &
Nay. Co. 179 Fed. 893; Sunset T.
COMMERCE AND TRADE.

& T. Co. v. Eureka, 172 Fed. 755;
Riverside Mills v. Atlantic Coast
Line, 168 Fed. 987; LaMoine
Lumber & T. Co. v. Kesterson, 171
Fed. 980; United States v. Erie R.
Co., 166 Fed. 352; United States
v. American Tobacco Co., 164 Fed.
700; modified 221 U. S. 106; 31
Sup. Ct. 632; 55 L. Ed.; United
States v. Chicago & N. W. Ry. Co.,
157 Fed. 616; United States v.
Standard Oil Co., 155 Fed. 305;
United States v. Colorado & N. W.
R. Co., 157 Fed. 321; 85 C0. C. A.
27; In Re Charge to Grand Jury
151 Fed. 834; Snead v. Central of
Georgia Ry. Co., 151 Fed. 608; Ex-
parte Jervey, 66 Fed. 957; Ander-
son vy. Louisville & N. R. Co.. 62
Fed. 46; in re Greene, 52 Fed.
104. A number of state decisions
are to the same effect. St. Louis
& San Francisco R. Co. v. State,
87 Ark. 562; 113 S. W. 203;
People v. Raymond, 34 Cal. 492,
497; Carson River Lumbering Co.
v. Patterson, 33 Cal. 334, 339;
Webb v. Dunn, 18 Fla. 721, 724;
Williams v. Fears, 110 Ga. 584,
589; 35 S. E. 699, 701; 50 L. R.
A. 685 (per Cobb J., from 114 U.
S. 1966) ; 102 U. S. 691; 17 Wall.
(84 U. 8.) 568; 12 Wheat. (25
U. §.) 419; Paddleford, Fay
& Co. v. Mayor, ete. of Sa-
vannah, 14 Ga. 438, 514; State
v. Duckworth, 5 Idaho, 642; 51
Pac. 456; State v. Illinois Cent.
R. Co. 246 Ill. 188, 210; 92 N. E.
814, per Carter J., Indiana &
Illinois Southern Rd Co., 133 Ind.
69, 83; 32 N. E. 817; 18 L. R. A.
502; Fry v. State, 63 Ind. 552,
562; 30 Am. Rep. 238; State v.
Eckenrode, 148 Iowa [1910] 173;
127 N. W. 56; Campbell v. Chi-
cago, Milwaukee & St. P. Ry. Co,

165

86 Iowa, 587, 589; 53 N. W. 351;
17 L. R. A. 443; Council Bluffs,
City of v. Kansas City, St. Josepn
& Council Bluffs R. Co., 45 Iowa
338, 349; 24 Am. Rep. 773; Fuller
v. Chicago & N. W. R. Co, 31
Iowa, 187, 207; Leibengood v.
Missouri, Kansas & Topeka Ry.
Co., 88 Kan. 25; 109 Pac. 988;
Kinsley, City of, v. Dyerly, 79
Kan. 1; 98 Pac. 228; Patterson v.
Missouri Pac. Ry. Co., 77 Kan.
236; 94 Pac. 188; State v. Phipps,
50 Kan. 609; 31 Pac. 1097; 18 L.
R. A. 657; 34 Am. Rep. 152;
Hardy v. Atchison, Topeka & San-
ta Fe R. Co., 32 Kan. 698; 5 Pac.
6, 10; United States Fidelity &
Guaranty Co. v. Commonwealth,
139 Ky. 27; 129 8. W. 314; Com-
monwealth v. Eclipse Hay Press
‘Co., 31 Ky. L. Rep. 824, 104 S.
W. 224; Postal Teleg. ‘Cable Co. v.
State, 110 Md. 608, 618; 73 Atl.
679. Opinion of Justices, in re
204 Mass. 607, 613; 91 N. E. 405;
27 L. R. A. (N. 8.) 483; Com-
monwealth v. Housatonic R. Co.,
143 Mass. 264, 9 N. E. 547; Im-
perial Curtain Co. v. Jacobs, 163
Mich. 72; 17 Det. Leg. N. 751; 127
N. W. 772; Gray v. Minneapolis
& St. Louis R. Co., 110 Minn. 527;
124 N. W. 1100; Hardwick
Farmers’ Elevator Co. v. Chicago,
Rock Island & Pacific Ry. ‘Co. 110
Minn. 25; 124 N. W. 819; State
v. Chicago, St. Paul, Minneapolis
& Omaha Ry. Co., 40 Minn. 267,
268; 41 N. W. 1047; 12 Am. St.
Rep. 730; 3 L. R. A. 238; Mires
v. St. Louis & San Francisco R.
Co., 134 Mo. App. 379; 114 8. W.
1052; McNaughton Co. v. McGirl,
20 Mont. 124; 49 Pac. 631, 653;
38 L. R. A. 367; 63 Am. St. Rep.
610; Territory v. Farnsworth, 5
166 THE SHERMAN ANTI-TRUST ACT.

includes the business of exchanging commodities by barter, as
well as the business of buying and selling them for money.**
As used in the Anti-Trust Act there is one meaning of the
word ‘‘trade’’ that is not applicable to it, viz.: ‘‘The craft
or business which a person has learned and which he car-
ries on as a means of a livelihood or for profit; occupation ;
particularly mechanical or mercantile employment; a handi-
craft as distinguished from one of the liberal acts or of the
learned profession and from agriculture.’’?® With respect to
such craft or business Congress has no power to legislate.

§60. Trade—The Sherman Anti-Trust Act in its first
section provides that: ‘‘Every contract, combination in the

Mont. 303; 5 Pac. 869, 874; State
vy. Missouri Pac. Ry. Co., 81 Neb.
15; 115 N. W. 614; Western
Union Teleg. Co. v. Atlantic &
Pacific States Teleg. Co., 5 Nev.
102, 108, 109; Crandall ex parte,
1 Nev. 294, 302; Lehigh & Wilkes-
Barre Coal Co. v. Carrigan, 39 N.
J. L. 35, 37; State v. Delaware,
Lackawanna & Western R. Co., 30
N. J. L. 473, 487; People v. Klaw,
106 N. Y. Supp. 341; 55 Mise.
12; Dillon v. Erie R. Co., 43 N.
Y. Supp. 320, 325; 19 Mise. 116;
Reid v. Southern Ry. Co., 153 N.
C. 490; 69 S. E. 618; Bagg v.
Wilmington, Columbia & Augusta
R. Co., 109 N. C. 279, 280, 281; 14
S. E. 79, 80; 14 L. R. A. 596; 26
Am. St. Rep. 569; Farris v. Hen-
derson, 1 Okla. 384, 393; 33 Pac.
380, 383; List v. Commonwealth,
118 Pa. St. 322; 12 Atl. 277,
279; Commonwealth v. Gloucester
Ferry Co., 98 Pa. St. 105, 120;
Master Granite & Blue Stone
Cutters’ Asso., 23 Pa. Co. R. 517,
520; Venning v. Atlantic Coast
Line R. Co., 78 S. C. 42; 12 L. R.
A. (N. 8.) 1217; 58 8S. E. 983;
State v. Schlitz Brewing Co., 104

Tenn. 715; 59 S. W. 1033, 1039;
78 Am. St. Rep. 941; State v
Morgan, 2 8. Dak. 32, 50; 48 N.
W. 314, 320; Queen Ins. Co. v.
State, 86 Tex. 250; 24 S. W. 397,
401; 22 L. R. A. 483; Interna-
tional Text Book ‘Co. v. Lynch, 81
Vt. 101; 69 Atl. 641, case reversed
in 218 U. S. 664, 54 L. Ed. 1201;
31 Sup. Ct. 225; State v. Grays
Harbor & Puget Sound Ry. Co.,
54 Wash. 530; 103 Pac. 809;
State v. United States Express
Co., 63 W. Va. 299; 60S. E. 144;
Loverin & Browne Co. v. Travis,
135 Wis. 322; 115 N. W. 829;
United States Gypsum Co. v.
Gleason, 185 Wis. 539; 116 N. W.
238.” The title of the Anti-Trust
Act of 1889 was held to include
the business of insurance. Matter
of Pinkney, 47 Kan. 89; 27 Pace.
179; State v. Phipps, 50 Kan.
609; 31 Pac. 1097; 18 L. R. A.
657; 34 Am. St. 152.

18 May v. Sloan, 101 U. 8. 231;
25 L. Ed. 797; State v. Phipps, 50
Kan. 609; 31 Pac. 1097; 43 Am.
St. 153; 18 L. R. A. 657. In Re
Pinkney, 47 Kan. 89; 27 Pac. 179.

19 Century Dictionary.
COMMERCE AND TRADE. 167
form of trust or otherwise, in restraint of trade or com-
merce among the states, or with foreign nations’’ shall be
illegal. The second section forbids the monopolization, or
an attempt to monopolize, ‘‘or combine or conspire with
any other person or persons, to monopolize any part of the
trade or commerce among the several states, or with foreign
nations.’’ No doubt the word ‘‘trade’’ was here used in
abundance of caution; for it is covered by the word ‘‘com-
merce.’’ It is broad enough to cover every kind of ex-
change or dealing, but it is here used to denote the pur-
chase or barter and sale of goods, wares and merchandise,
either at wholesale or retail.?°

§ 61. Traffic—While the word ‘‘traffic’’ is not used in the
Anti-Trust Act it is just as well to take some note of the
word. It means commerce, trade, sale or exchange of
merchandise, bills, money, and the like. It is the passage of
goods or commodities, of whatever kind, from one person to
another for money or an equivalent in goods or commodities.”*
In discussing the meaning of the word ‘‘commerce,’’ Chief
Justice Marshall said: ‘‘Counsel for the appellee would
limit it to traffic, to buying and selling, or the exchange of
commodities, and do not admit that it comprehends navi-
gation. This would restrict a general term, applicable to
many objects, to one of its significations. Commerce un-
doubtedly is traffic, but is something more, it is inter-
course.’’??

20 United States v. Debs, 64 Fed. 21 Williams v. Fears, 110 Ga.

724. Under the Texas Anti-Trust
Statute the word “trade” was held
to be synonymous with “traffic”
but not to include the business of in-
surance. Queen Ins. Co. v. State,
86 Tex. 250; 24 S. W. 397; 22 L.
R. A, 483, reversing 22 8. W. 1048,
a contract of insurance, being de-
clared not to be an “article of
commerce” or a “commodity”
under the act.

584; 35 S. E. 609; 50 L. R. A.
685; State v. Small, 82 8. C. 93;
63 S. E. 4; Curten v. Atkinson,
54 N. C. 133. In Re Cameron Town
Mut. Fire Light & Windstorm Ins.
Co., 96 Fed. 756.

22 Gibbons v. Ogden, 9 Wheat. 1,
189; 6 L. Ed. 23; reversing 17
Johns 488.
168 THE SHERMAN ANTI-TRUST ACT.

§62. Manufacture Not Commerce—lIntent to Put in
Commerce.—Interstate Commerce.—Manufacture is not com-
merce, even though only the necessaries of life be considered.
‘‘Doubtless the power to control the manufacture of a given
thing involves in a certain sense the control of its disposi-
tion, but this is secondary and not the primary sense and
although the exercise of that power may result in bringing
the operation into play, it does not control it, and affects
it only incidentally and indirectly. Commerce succeeds to
manufacture, and is not a part of it.’’ ‘‘The fact that an
article is manufactured for export to another state does not
itself make it an article of interstate commerce, and the in-
tent of the manufacturer does not determine the time when
the article or product passes from the control of the state
and belongs to commerce.’’?*

Thus the owner of logs in New Hampshire hauled them
to a river town for the purpose of transporting them into
the state of Maine, and because of his intent to take them
out of the state of New Hampshire he sought to avoid
their taxation in that state; but his claim was denied. The
court said: ‘‘Does the owner’s state of mind in relation to
the goods, that is, his intent to export them, and his partial
preparation to do so, exempt them from taxation? This is
the precise question for solution. * * * There must be
a point of time when they cease to be governed exclusively
by the domestic law and begin to be governed and pro-
tected by the national law of commercial regulation, and
that moment seems to us to be a legitimate one for this
purpose, in which they commence their final movement from
the state of their origin to that of their destination.’’?*

23 United States v. E. C. Knight,
15 U. S. 1; 15 Sup. Ct. 249; 39
L. Ed. 325; affirming 60 Fed. 934;
9 °C. C. A. 297; 17 U. S. App.
466; 24 L. R. A. 428, which
affirmed 60 Fed. 306. “Manufac-
turer and commerce are two dis-
tinct and very different things.

The latter does not include the
former. Buying and selling are
elements of commerce, but some-
thing more is required to consti-
tute commerce.” United States v.
KE. C. Knight.

24Coe v. Errol, 116 U. S. 517,
525; 6 Sup. Ct. 475; 29 L. Ed.
COMMERCE AND TRADE.

715; affirming 62 N. H. 303. “No
distinction is more popular to the
common mind, or more clearly ex-
pressed in economic and political
literature, than that between
manufacturer and commerce.
‘Manufacture is transformation—
the fashioning of raw materials in-
tv a change of form for use. The
functions of commerce are differ-
ent. The buying and selling and
the transportation incidental there-
to constitute commerce; and the
regulation of commerce in the
constitutional sense embraces the
regulation at least of such trans-
portation. * * * If it be held
that the term includes the regu-
lation of all such manufactures us
are intended to be the subject of
commercial transactions in the
future, it is impossible to deny
that it would also include all pro-
ductive industries that contem-
plate the same thing. The result
would be that Congress would be
invested, to the exclusion of the
States, with the power to regulate,
not only manufacturers, but also
agriculture, horticulture, stock
raising, domestic fisheries, mining
—in short every branch of human
industry. For is there one of them
that docs not contemplate, more
or less clearly, an interstate or
foreign market? Does not the
wheat grower of the Northwest or
the cotton planter of the South,
plant, cultivate and harvest his
crop with an eye on the prices at
Liverpool, New York, and Chi-
cago? The power being vested in
Congress and denied to the
States, it would follow as an in-
evitable result that the duty would
devolve on ‘Congress to regulate all
of these delicate, multiform ani

169

vital interests—interests which in
their nature are and must be local
in all details of their successful
management. * * * ‘The de-
mands of such a supervision would
require, not uniform legislation
generally applicable throughout
the United States, but a swarm of
statutes only locally applicable and
utterly inconsistent. Any move-
ment toward the establishment of
rule of production in this vast
country, with its many different
climates and opportunities, could
only be at the sacrifice of the
peculiar advantage of a large part
of the localities in it, if not ot
every one of them. On the other
hand, any movement toward the
local, detailed and incongruous
legislation required by such inter-
pretation would be about the wid-
est possible departure from the de-
clared object of the clause in ques-
tion. Nor this alone. Even in the
exercise of the power contended
for, Congress would be confined to
the regulation, not of certain
branches of industry, however
numerous, but to those instances
in each and every branch where
the producer contemplated an in-
terstate market. These instances
would be almost infinite, as we
have seen; but still there would
always remain the possibility, and
often it would be the case, that
the producer contemplated a do-
mestic market. In that case the
supervisory power must be exe-
cuted by the State; and the inter-
minable trouble would be pre-
sented, that whether the one
power or the other should exercise
the authority in question would
be determined, not by any general
or intelligible rule, but by the
170

secret and changeable intention of
the producer in each and every act
of production. A situation more
paralyzing to the state govern-
ments, and more provocative of
conflicts between the general gov-
ernment and the States, and less
likely to have been what the
framers of the Constitution in-
tended, it would be difficult to im-
agine.” Kid v. Pearsons, 128 U. S.
1, 20; 9 Sup. Ct. 6; 32 L. Ed. 346,
affirming 72 Iowa 348; 34 N. W.
l. See Veazie v. Moore, 14 How.
568,574; 14 L. Ed. 545; affirming
32 Me. 343; 52 Am. Dec. 655.
Justice Taft reviewed at length
the Knight case (cited above) and
thus commented upon it distin-
guishing it from the one before
him: “We have thus considered and
quoted from the decision in the
Knight case at length, because it
was made the principal ground for
the action of the court below, and
is made the chief basis of the argu-
ment on behalf of the defendant
here. It seems to us clear that,
from the beginning to the end of
the opinion the chief justice draws
the distinction between a _ re-
straint upon the business of manu-
facturing and a restraint upon the
trade or commerce between the
States in the articles after manu-
facture with the manifest purpose
of showing that the regulating
power of Congress under the con-
stitution could affect only the
latter, while the former was not
under federal control, and rested
wholly with the states. Among the
subjects of commercial regulation
by Congress, he expressly mentions
‘contracts to buy, sell or exchange
goods to be transported among the
several states,’ and leaves it to be

THE SHERMAN ANTI-TRUST ACT.

plainly inferred that the statute
does embrace combinations and
conspiracies which have for their
object to restrain, and which
necessarily operate in restraint of,
the freedom of such contracts. The
citation of the case of Coe v. Errol
was apt to show that merchandise,
before its shipment across state
lines, was not within the regulat-
ing power of Congress, and, a for-
tiori, that its manufacture was
not; while Kidd v. Pearson clearly
made the distinction between the
absence of power in ‘Congress to
control manufacturing merely be-
cause the manufacturer intends to
add to interstate commerce with
the product, and the power which
Congress has to prevent obstruc-
tions to interstate transportation
in the product when made. But
neither of these cases controls the
one now under consideration. The
subject-matter of the restraint here
was not article of merchandise or
their manufacture, but contracts
for sale of such articles to be
delivered across state lines, and the
negotiations and bids preliminary
to the making of such contract, all
of which, as we have seen, do not
merely affect interstate commerce,
but are interstate commerce. It
can hardly be said that a combina-
tion in restraint of what is inter-
state commerce does not directly
affect and burden that commerce.
The error into which the circuit
court fell, it seems to us, was in
not observing the difference be-
tween the regulating power of Con-
gress over contracts and negoti-
ations for sales of goods to be de-
livered across state lines, and that
over the merchandise, the subject
of such sales and negotiations. The
COMMERCE AND TRADE.

goods are not within the control
of Congress until they are in actual
transit from one state to another.
But the negotiations and making
of sales which necessarily involve
in their execution the delivery of
merchandise across state lines are
interstate commerce, and so within
the regulating power of Congress
even before the transit of the goods
in performance of the contract has
begun.” United States v. Addyston
Pipe & Steel Co. 85 Fed. 271; 29
C.-C, A. 141; 54 U. S. App. 723;
46 L. R. A. 122; (reversing 78
Fed, 712), affirmed 175 U. S. 211;
20 Sup. Ct. 96; 44 L. Ed. 136. In
affirming the same case Justice
Peckham thus commented on the
Knight case: “The direct purpose
of the combination in the Knight
case was the control of the manu-
facture of sugar. There was no
combination or agreement, in
terms, regarding the future dispo-
sition of the manufactured article;
nothing looking to a transaction
in the nature of interstate com-

171

merce. The probable intention on
the part of the manufacturer of the
sugar to thereafter dispose of it by
sending it to some market in an-
other state, was held to be im-
material and not to alter the char-
acter of the combination. The var-
ious cases which have been decided
in this court relating to the sub-
ject of interstate commerce, and to
the difference between that and the
manufacture of commodities, and
also the police power of the states
as affected by the commerce clause
of the Constitution, were adverted
to, and the case was decided upon
the principle that a combination
simply to control manufacture was
not a violation of the act of
Congress, because such a contract
or combination did not directly
control or affect interstate com-
merce, but that contracts for the
sale and transportation to other
states of specific articles were
proper subjects for regulation be-
cause they did form part of such
commerce.”
CHAPTER V.

INTERSTATE AND FOREIGN COMMERCE.

63. Anti-Trust statute based on 72. Combination to fix amount

interstate commerce clause. and prices of articles
64. Definition of interstate com- shipped to and from other
merce. states.
65. Taxation of articles shipped. 73. Shipping products to another
66. Foreign commerce defined. state to agents.
67. What interstate commerce 74. Sale by sample—Title passing
comprehends or embraces. when delivery made to
68. Sales and exchanges of com- transportation company.
modities. 75. Manufacture is not interstate
69. Initiatory and _ intervening commerce.
acts, instrumentalities and 76. Manufacturing in one state
dealings. and storing in another
70. Local facilities and incidents where sales are made.
—Effect on interstate com- 77. Transportation from one port
merce. to another in same state on
71. Services rendered by agents river forming state bound-
in handling interstate prod- ary.
ucts. 77a. Interstate commerce a prac-

tical conception.

§ 63. Anti-Trust Statute Based on Interstate Commerce
Clause.—The Sherman Anti-Trust statute has for its foun-
dation the Interstate Commerce Clause of the Constitution.
It is by the power there conferred that Congress was enabled
to adopt the statute. The provisions of the Constitution are
as broad as the statute; but in the adoption of that statute
Congress has exercised all the power given it by that clause.
In the application of the statute to specific transactions we
must not lose sight of the right of a state to control its intra-
state commerce; for just as a state legislature has no power
to encroach upon the domain of Congress and hamper or
regulate interstate commerce, just so Congress may not legis-
late directly concerning nor directly control (though it may
incidentally) intrastate commerce. The one is just as im-
perious as the other. Congress has no power in any way

172
INTERSTATE AND FOREIGN COMMERCE. 173
to control or regulate intrastate commerce, and it has not
attempted to do so in this statute, except in so far as that
commerce is intermingled and bound up with interstate com-
merce.

§ 64. Definition of Interstate Commerce.—lInterstate com-
merce is commerce betwen two states or between a state
and a territory. It is traffic that is moved from one state
or territory into or through some other state or territory.’

‘Interstate commerce, in its broadest sense, is commercial
intercourse between the states; the obverse of which would
seem to be that commercial intercourse that is wholly within
the state is not interstate commerce.’”

More than fifty years ago the Supreme Court decided a
ease which so clearly discusses what is and what is not in-
terstate commerce, that we give the following extract from it:

‘‘In this case it is admitted that the steamer was en-
gaged in shipping and transporting down Grand River goods
destined and marked for other states than Michigan, and in
receiving and transporting up the river goods brought
within the state from without its limits but inasmuch as
her agency in the transportation was entirely within the
limits of the state, and she did not run in connection with,
or in continuation of, any line of vessels porting goods
destined for other states, or goods brought, was engaged en-

1 United States v. Chicago Great
Western Ry. Co., 162 Fed. 775;
Wabash Ry. Co. v. United States,
168 Fed. 1.

2Wabash Ry. Co. v. United
States, 168 Fed. 1, 8. When an ar-
ticle destined for another state is
put on board a car and that car
begins to move, interstate com-
merce has begun. Coe v. Errol, 116
U. S. 517; 6 Sup. Ct. 475; 29 L.
Ed. 715; affirming 62 N. H. 303;
Belt Ry. Co. v. United States, 163

Fed. 542; 93 'C. C. A. 666; United
States v. Colorado & N. W. Ry.
Co., 157 Fed. 321; United States v.
Central of Georgia, 157 Fed. 893,
and it continues until it reaches
its destination. St. Louis 8S. F, Co.
v. Delk, 158 Fed. 931; 86 C. GC. A.
95; Chicago, M. & St. P. Ry. Co. v.
Voelker, 129 Fed. 522; 65 C.C. A.
226; Pacific Coast Ry. Co. v.
United States, 173 Fed. 448; 98
Cc. Cc. A. 31,
174 THE SHERMAN ANTI-TRUST ACT.

tirely in domestic commerce. But this conclusion does not
follow. So far as she was employed in transporting goods
destined for other states, or goods brought from without
the limits of Michigan and destined to places within that
state she was engaged in commerce between the states, and
however limited that commerce may have been, she was, so
far as it went, subject to the legislation of Congress. She
was employed as an instrument of that commerce, for when-
ever a commodity has begun to move as an article of trade
from one state to another, commerce in that commodity be-
tween the states has commenced. The facts that several
different and independent agencies are employed in trans-
porting the commodity, some acting entirely in one state,
and some acting through two or more states, does in no
respect affect the character of the transaction. To the
extent in which each agency acts in that transportation, it
is subject to the regulation of Congress. It is said that if
the position here asserted be sustained, there is no such thing
as the domestic trade of a state; that Congress may take
the entire control cf the commerce of the country, and ex-
tend its regulations to the railroads within a state on which
grain or fruit is transported to a distant market. We
answer that the present case relates to transportation on the
navigable waters of the United States, and we are not
called upon to express an opinion upon the power of Con-
gress over interstate commerce when carried on by land
transportation. And we answer further, that we are unable
to draw any clear and distinct line between the authority
of Congress to regulate an agency employed in commerce
between the states, when that agency extends through two
or more states, than when it is confined in its action en-
tirely within the limits of a single state. If its authority
does not extend to an agency in such commerce when that
agency is confined within the limits of a state, its entire
authority over interstate commerce may be defeated. Sev-
eral agencies combining, each taking up the commodity
INTERSTATE AND FOREIGN COMMERCE.

175

transported at the boundary line at one end of a state, and
leaving it at the boundary line at the other end, the
Federal jurisdiction would be entirely ousted, and the con-
stitutional provisions would become a dead letter.’’ 2*

2* The Daniel Ball,
567; 19 L. Ed. 999;  revers-
ing Brown Adams Cas. 193;
Fed. Cas. No. 3564; Cincin-
nati, ete. R. Co. v. Interstate
Commerce Commission, 162 U. 8.
184; 16 Sup. Ct. 700; 40 L. Ed.
935; Gulf, ete. R. Co. v. Texas,
204 U. S. 403; 24 Sup. 360;
51 L. Ed. 540; affirming 97 Tex.
274; 78 S. W. 495. An em-
ployee engaged in taking goods,
shipped from another state, from
the car, in which they were trans-
ported, across the station platform
to the freight depot, is engaged in
interstate commerce transporta-
tion. Rhodes v. Iowa, 170 U. S.
412; 18 Sup. Ct. 664; 42 L. Ed.
1088; reversing 90 Iowa 496; 58
N. W. 887; 24 L. R. A. 245. Coal
brought from beyond the state does
not cease to be interstate transpor-
tation until actually delivered to
the consignee. MeNeill v. South-
ern Ry. Co., 202 U. 8. 543; 26
Sup. Ct. Rep. 722; 50 L. Ed. 1142,
modifying 134 Fed. 82. But a cab
owned by a railroad and used to
carry passengers from a ferry to
its hotel is not used in interstate
commerce. New York ex rel Penn-
sylvania Ry. Co. v. Knight, 192 U.
S. 21; 24 Sup. Ct. 202; 48 L. Ed.
325; affirming 171 N. Y. 354; 98
Am. St. 610; 64 N. E. 152, the
court saying: “If a cab which
carries passengers from the hotel
to the ferry landing is engaged in
interstate transportation, why is
not the porter who carries the

10 Wall.

traveler’s trunk from his room to
the carriage also engaged? If the
cab service is interstate transpor-
tation, are the drivers of the cabs
and the dealers who supply hay
and grain for the horses, also en-
gaged in interstate commerce, and
where will the limit be placed?
We are of the opinion that the
cab service is an independent local
service, preliminary or subsequent
to any interstate transportation.”
Perhaps the gathering of freight
from the place of business of
shippers and distributing freight
to such places of business by ve-
hicles employed by a railroad com-
pany does not make the carriage
between such place of business and
the freight station of the carrier
a part of an interstate journey.
Interstate Commerce ‘Commission
v. Detroit, etc. R. Co., 167 U. S.
633; 17 Sup. Ct. 686; 42 L. Ed.
306; affirming 74 Fed. Rep. 833:
21 C. C. A. 103; 43 U. S. App.
308; reversing 57 Fed. Rep. 1005.
“Commerce, as the word is used in
the Constitution, is a unit” and
“cannot stop at the external
boundary line of each state, but
may be introduced into the inter-
ior.” “The genius and character
of the whole government seem to
be, that its action is to be ap-
plied to all the external concerns
of the nation, and to those inter-
nal concerns which affect the states
generally.” Gibbons v. Ogden, 9
Wheat 1; 6 L. Ed. 23; reversing
17 Johns 488.
176 THE SHERMAN ANTI-TRUST ACT.
§ 65. Taxation of Articles Shipped.—The right to tax the
article when it has arrived at its destination does not
necessarily determine that it has ceased to be an article of
interstate commerce. Thus where meats were sent to agents
in another state, to be there retailed by them, they were
considered as articles of interstate commerce although they
might have been subject to taxation and the police power.

‘‘Coming now, to the other branch of the transaction—
the sales by the defendants—a like result follows. Un-
questionably it is interstate commerce when purchasers from
other states buy directly from the defendants, and have the
meats shipped to them by the vendors. The situs of such a
transaction, both as to initiatory intercourse, and as to
transportation in furtherance of the exchange includes a
state other than the one from which defendants deal.

‘‘T think the same is true of meat sent to agents, and sold
from their stores. The transaction in such case, in reality,
is between the purchaser and the agents’ principal. The
agents represent the principal at the place where the ex-
change takes place; but the transaction, as a commercial
entity, includes the principal, and includes him as dealing
from his place of business. Indeed such privity exists be-
tween the principal and the transaction, that he could, at the
instant, as a citizen of another state, sue upon the transac-
tion in the federal courts; nor have I any question that if
the conditions of this case were reversed, so that defendants
were invoking the shelter, instead of seeking to escape, the
obligations of the commerce clause, federal law would be
found equal to the protection asked.’”

2 United States v. Swift & Co.,
122 Fed. 529. “When cattle are
sent for sale from a place in one
state, with the expectation that
they will end their transit, after
purchase, in another, and when in
effect they do so, with only the
interruption necessary to find a
purchaser at the stock yards, and

when this is a typical, constantly
recurring course, the current thus
existing is a current of commerce
among the states, and the purchase
of the cattle is a part and incident
of such commerce. What we say
is true at least of such a purchaser
by residents in another state from
that of the seller and of the
INTERSTATE AND FOREIGN COMMERCE. 177

§66. Foreign Commerce Defined.—Commerce with for-
eign countries, strictly considered, consists in intercourse
and traffic, including in those terms navigation and the
transportation and transit of persons and property, as well
as the purchase, sale, and exchange of commodities.*
And where citizens of a foreign country there entered into
a combination to divide the steerage passenger traffic be-
tween this country and Europe into percentages and pool
the receipts derived therefrom, and as a result of which,
and because of unfair practices and the charging of arbi-
trary and excessive rates, the parties thereto obtained a
virtual monopoly of that part of foreign commerce of the
United States included within the scope of the agreement,
it was held to be a contract, combination and conspiracy
in violation of the Federal Anti-Trust Act. It was also
held that the transportation of passengers between this coun-
try and Europe forms a part of the commerce of the
United States with foreign nations, and Congress has power
to prohibit all contracts, combinations and conspiracies in
restraint of such part of such commerce.

“The prohibitions of the Anti-Trust statute apply broadly
to contracts in restraint of trade or commerce with for-
eign nations. This contract directly and materially affects
such commerce and if it unlawfully restrain it, it comes
within the statute. We see nothing to warrant the con-
tention that the act would be narrowly interpreted as pro-
hibiting only contracts which are to be performed wholly
within the territorial jurisdiction of the United States, nor
—if it were for us to consider—any reason for concluding
that a broader construction would lead to international com-
plications.

cattle.” Swift & Co. v. United 7774; Gloucester Ferry Co. v.

States, 196 U. S. 375; 25 Sup. Ct.
276; 49 L. Ed. 518; modifying
122 Fed. 529.

4 Mobile County v. Kimball, 102
U.S. 691; 26 L. Ed. 238; affirm-
ing 3 Woods 555; Fed. Cas. No.

Pennsylvania, 114 U. 8S. 196; 5
Sup. Ct. 826; 29 L. Ed. 158; re-
versing 98 Pa. 105; Thomson v.
Union Castle Mail 8. S. Co., 166
Fed. 251; 92 C. C. A. 315; re-
versing 149 Fed. 933.
178 THE SHERMAN ANTI-TRUST ACT.

‘As the contract directly and materially affects the for-
eign commerce of this country by being put into effect here,
it is immaterial where it was entered into or by what ves-
sels it was to be, or has been performed. Citizens of for-
eign countries are not free to restrain or monopolize the
foreign commerce of this country by entering into com-
binations abroad nor by employing foreign vessels to effect
their purpose. Such combinations are to be tested by the
same standard as similar combinations entered into here by
citizens of this country. The vital question in all cases is
the same: Is the combination to so operate in this country
as to directly and materially affect our foreign com-
merce ?’’5

§ 67. What Interstate Commerce Comprehends or Em-
braces.—As to what interstate commerce comprehends or
embraces, only a general statement can here be made, leav-
ing to other parts of this work illustrations. In a charge
to the grand jury Judge Spear told them that ‘‘Inter-
state commerce comprehends intercourse for the purposes
of trade in any and all of its forms, including transporta-
tion, purchase, sale, and exchange of commodities between
the citizens of different states.6 Therefore, if any commercial
transaction reaches an entirety in two or more states, and if
the parties dealing with reference to that transaction deal

5 United States v.
Amerikanische Packet Fahrt-
Actien-Gesellschaft, 192 Fed.;
Thomson v. Union Castle Mail S.

Hamburg ships, by which it was carried to
foreign ports—such shipment not
being an isolated one, but typical

of many others, constitutes foreign

8. Co., 166 Fed. 251; 92 C. C. A.
315; reversing 149 Fed. 933. A
shipment of lumber destined by the
purchaser for export, made by the

seller under a local bill of lading.

for an interior point in Texas to
a Gulf point, at which the lumber
was unloaded without delay by the
purchaser’s order into ships, and
was then loaded into chartered

commerce. Texas & N. O. R. Co. v.
Sabine Trans. Co., 227 U. 8. 111;
33 Sup. Ct. 229; 57 L. Ed. —; re-
versing (Texas Civ. App.) 121 S.
W. 256.

@Citing Hopkins v. United
States, 171 U. S. 578; 19 Sup. Ct.
40; 43 L. Ed. 290; reversing 82
Fed. 529.
INTERSTATE AND FOREIGN COMMERCE. 179
from different states, then the whole transaction is a part of
the interstate commerce of the United States.’’ 7

§68. Sales and Exchanges of Commodities.—Not only
does interstate commerce or traffic between citizens or in-
habitants of different states include transportation of per-
sons and property and the navigation of public waters for
that purpose, but it also includes the purchase, sale and ex-
change of commodities.®

“Tf, therefore, an agreement or combination directly re-
strains not alone the manufacture, but the purchase, sale or
exchange of the manufactured commodity among the sev-
eral states, it is brought within the provisions of the statute.
The power to regulate such commerce, that is, the power to
prescribe the rules by which it shall be governed, is vested
in Congress, and when Congress has enacted a statute such
as the one in question, any agreement or combination which
directly operates, not alone upon the manufacture, but upon
the sale, transportation and delivery of an article of inter-
state commerce, by preventing or restricting its sale, etc.,
thereby regulates interstate commerce to that extent and to
the same extent trenches upon the power of the national
legislature and violates the statute.’”®

7In Re Charge to Grand Jury,
151 Fed. 834, citing United States
v. Swift, 122 Fed. 529; United
States v. Cassidy, 67 Fed. 698;
Kidd v. Pearson, 128 U. S. 1, 20;
9 Sup. Ct. 6; 32 L. Ed. 346;
affirming 72 Iowa 384; 34 N. W. 1;
Gloucester Ferry Co. v. Pennsyl-
vania, 114 U. 8. 196; 5 Sup. Ct.
826; 29 L. Ed. 158; reversing 98
Pa. 105; Addyston Pipe & Steel
Co. v. United States, 175 U. S.
211; 20 Sup. Ct. 96; 44 L. Ed. 136;
affirming 85 Fed. 271; 29 C. C. A.
141; 54 U. S. App. 723; 46 L. R.
A. 122, which reversed 78 Fed. 712.
A single shipment from one state
to another is interstate commerce.
Stears v. United States, 192 Fed.

1. See also United States v. Amer-
ican Tobacco Co. 164 U. S. 785; 17
Sup. Ct. 169; 41 L. Ed. 1081;
affirming 32 Ct. Cl. 207; United
States v. Standard Sanitary Co.,
191 Fed. 193.

8 Kidd v. Pearson, 128 U. S. 1,
203; 9 Sup. Ct. 6; 32 L. Ed. 346;
affirming 72 Iowa, 348; 34 N. W.
1; Gloucester Ferry Co. v. Penn-
sylvania, 114 U. S. 190, 203; 5
Sup. Ct. 829; 29 L. Ed. 158; re-
versing 98 Pa. 105.

9 Addyston Pipe & Steel Co. v.
United States, 175 U. S. 211; 17
Sup. Ct. 169; 44 L. Ed. 136;
affirming 85 Fed. 271; 29 °C. C. A.
141; 54 App. U. 8. 723; 46 L. R.
A. 122, which reversed 78 Fed. 712.
180 THE SHERMAN ANTI-TRUST ACT.

In this case a number of manufacturing companies in
different states formed a combination dividing the territory,
covering the greater part of the United States, in which
they operated, into ‘‘reserved’’ cities and ‘‘pay’’ territory;
and these cities were allotted to particular members of the
combination in which the other members were not to sell
their products, though provisions were made for fake bids
by the latter at prices previously arranged; and in the
“‘pay’’ territory all offers to purchase pipe was submitted
to a committee for the purpose of determining the price,
and this committee then awarded the contract to that mem-
ber of the combination which agreed to pay the largest

“‘ponus,’’ to be divided among the others.

It was held that

this was an unlawful combination in restraint of interstate
commerce, both under the statute and at common law.’°

10 See also Weisert Bros. Tobac-
co Co. v. American Tobacco Co. 163
Fed. 712; affirmed but decree modi-
fied, 221 U. S. 106; 31 Sup. Ct.
632; 55 L. Ed. “But here the com-
plaint is made not against the in-
dividual conspirators separately
but against the combination as a
whole. Has it monopolized or re-
strained any part of interstate or
foreign commerce? If so, it would
seem that it is liable under the
new act. To illustrate, A is a
manufacturer of tobacco in New
York, B is a buyer of raw material
in Kentucky, C is a jobber in Penn-
sylvania and D is a retailer in
Boston. B sends the leaf tobacco
from Louisville to New York, A
manufactures it into smoking and
chewing tobacco and sends it to C
at Philadelphia, who in turn ships
it to D at Boston, who sells it to
the public. Should A, B, C and D
enter into co-partnership to do as
a firm what they had hitherto done
as individuals, can there be +

doubt that the firm would be en-
gaged in interstate commerce? The
defendants, with the exception of
the Imperial Company, the Cigar
Stores Company and the Richard-
son ‘Company, admit as follows:
‘We admit that all the vendors
and corporation defendants men-
tioned in the petition as en-
gaged in the manufacture and
sale of tobacco products, ex-
cept Imperial Tobacco Co., Ltd.,
purchased or now purchases some
or all of the requisite raw material
in states or countries other than
those in which the factories were
or are located and had or has it
transported thence through the
medium of common carriers to
said factories, and employed or
employ traveling salesmen who
solicited or solicit in states or
countries other than those in
which the factory was or is lo-
cated, orders for the tobacco prod-
ucts which by them were or are
transmitted to said factory or
INTERSTATE AND FOREIGN COMMERCE. 181

§69. Initiatory and Intervening Acts—Instrumentalities
and Dealings—Test.—‘‘Commerce, briefly stated, is the sale
or exchange of commodities. But that which the law looks
upon as the body of commerce is not restricted to specific
acts of sale or exchange. It includes the intercourse—all
the initiatory and intervening acts, instrumentalities and
dealings—that directly bring about the sale or exchange.
Thus, though sale or exchange is a commercial act, so also
is the solicitation of the drummer, whose occupation it is
to bring about the sale or exchange. The whole transaction
from initiation to culmination is commerce.

‘“When commerce, thus broadly defined, is between parties
dealing from different states—to be effected so far as the
immediate act of exchange goes by transportation from state

other chief office of the manu-
facturer, and, if approved, they
are filled by the delivery of the
goods to a common carrier where
the factory was or is located, duly
consigned to the purchaser, title
passing to said purchaser on said
delivery to the common carrier.’
Tf the contention of the defen-
dants, that this does not consti-
tute interstate commerce be cor-
rect, then it would seem to follow
that no one can be engaged in
such ecommerce unless he be a
carrier, common or private, be-
tween the states. In the illus-
tration just given it seems to be
conceded, if one of the partners
had been a common carrier own-
ing a ferry, for instance, by which
the goods were carried across the
Ohio river, and this business had
been taken over with the rest,
that the firm would be engaged
in interstate commerce. If, how-
ever, it employs others to carry
its goods from state to state it
is argued that it is not so engaged.

In other words, although the so-
called ‘Tobacco Trust’ is  buy-
ing raw material and_ selling
its completed products in the
markets of the world, it is not
engaged in ‘trade or commerce
among the several states or with
foreign nations’ because carriers
are employed to convey the goods
from state to state and to foreign
countries. I can not but think that
this is too narrow a construction.
Should it obtain, the statute will
be evicerated. No matter how
odious or complete the monopoly,
it will be immune from punish-
ment if it can show that others
have been employed to distribute
its goods.” Judge Coxe in United
States v. American Tobacco Co.,
154 Fed. 700, 705.

11 Brennan v. Titusville, 153 U.
S. 289; 14 Sup. Ct. 829; 38 L. Ed.
719; reversing 143 Pa. St. 642;

22 Atl. 893; 14 L. R. A. 100;
24 Am. St. 580; 3 Inters. Com.
Rep. 735.
182 THE SHERMAN ANTI-TRUST ACT.

to state—it is ‘commerce between the states,’ within the
meaning of the constitution, and the statue known as the
Sherman Act. But it is not the transportation that con-
stitutes the transaction interstate commerce. That is an ad-
junct only, essential to commerce, but not the sole test. The
underlying test is that the transaction, as an entirety, in-
cluding each part calculated to bring ahout the result,
reaches into two or more states; and that the parties deal-
ing with reference thereto deal from different states.

‘‘An interstate commercial transaction is, in this sense, an
affair rising from different states, and centering in that act
of exchange, each essential part of the affair being as much
commerce as is the center.’’

§ 70. Local Facilities and Incidents—Effect on Inter-
state Commerce.—‘‘It is none the less interstate commerce
merely because the local incidents or facilities for such pur-
chase are to be regarded as outside the interstate character

12 United States v. Swift, 122
Fed. 529; modified and affirmed
196 U. S. 375; 25 Sup. Ct. 276; 49
L. Ed. 518. In the circuit court
the facts involved were thus
stated by Judge Grossup: “The
defendants controlling sixty per
cent. of the trade and commerce
in fresh meats in the United
States, buy, in the course of their
business, live stock shipped from
points throughout the United
States which, having been con-
verted into fresh meats, is sold
again by them at the places where
prepared, to dealers and con-
sumers in other states, or is sold
through their agents, located in
other states, to dealers and con-
sumers in the states where the
agents are located. The shipment
in the first class of sales is made
directly from the places where

the meat is prepared to the dealers
and consumers in other states, and
in the latter class to the agents
in the other states who, upon sale,
deliver directly to the dealer and
consumer. What may be called
the body of these transactions is
twofold. It reaches backward to
the purchase of cattle that come
to defendants from states other
than those in which defendants
manufacture; and it reaches for-
ward to the sale of the meats,
after conversion to parties dealing
with respect thereto from states
other than the state of the de-
fendants; followed by shipments
into the other states. Each of
these transactions constitute, in
my judgment, interstate com-
merce.” See also in re Charge
to Grand Jury, 151 Fed. 834.
INTERSTATE AND FOREIGN COMMERCE. 183
of the transaction. Thus the local commission broker, or
the men who drive the cattle from the pens to the slaughter
house, need not, in any survey of the transaction, be held to
be within the interstate status of the transaction. With
them, it is essentially the same whether the cattle come from
the state in which the purchase is made, or from other
states. They are aids or facilities only, and as such are
merely local incidents. But the purchase of live stock thus
brought habitually from other states, relates, in its larger
bearings, to a transaction that had its beginning in other
states. The original shipments are influenced, and to a
large extent brought about, by the character of the pur-
chase.

‘‘The purchase, the shipments, and the transportation, are
commercially interdependent; and in any survey of the
transaction as an entirety, none could be omitted. They
each go to make the transaction, and covering different
states, they stamp the transaction—not all its incidents, but
its essential body—as a transaction in interstate com-
merce.’’28

§71. Services Rendered by Agents in Handling Inter-
state Products.—It is a firmly established principle of the
law relating to interstate commerce that the owner of
property shipped from one state to another has the right to
dispose of it in the original unbroken package, and no state
can prevent him doing so."*

13 United States v. Swift, 122
Fed. 529; modified and affirmed
196 U. S. 375; 25 Sup. Ct. 276;
49 L. Ed. 518. “The purchase of
cattle shipped habitually from
other states to the markets where
defendants purchase, in the ex-
pectation that the purchase will
be made by the slaughter com-
panies, is an act of interstate
commerce.” United States v.

Swift, 122 Fed. 529; citing Hop-
kins v. United States, 171 U. S.
578, 590; 19 Sup. Ct. 40; 43 L.
Ed. 290; reversing 82 Fed. 529.
14Brown v. Maryland, 12
Wheat. 419; 6 L. Ed. 678; Leisy
v. Hardin, 135 U. S. 100; 10 Sup.
Ct. 681; 34 L. Ed. 128; reversing
78 Iowa 286; 43 N. W. 188; in
re Beine 42 Fed. 545; Schollen-
berger v. Pennsylvania, 171 U. 8.
184 THE SHERMAN ANTI-TRUST ACT.

The aegis of the interstate commerce clause extends over
such a transaction. But if the shipper of original pack-
ages, or any other property, employ as his agent a person at
the point of destination to dispose of the original packages
or property thus shipped him, such employment does not
fall within the interstate commerce clause,—it is not inter-
state commerce, although the act of such agent in making a
sale of such original packages or property is such com-
merce. Therefore, where a stockyards association located
at Kansas City adopted bylaws having within them rules
and regulations which were in restraint of trade or created
an illegal combination at common law, it was held that
such rules and regulations or combination did not con-
stitute interstate commerce, even though the association sent
agents into other states soliciting the shipment of cattle,
hogs and sheep to it for disposal on the market, and mil-
lions of such animals were shipped to it from other states,
and such rules and regulations were injurious and detri-
mental to the owners of such animals thus shipping them.

The relation between the shippers and the association was
merely one of principal and agent after the interstate pro-
ducts had been received and had no connection with inter-
state commerce. In passing on the case the court said:

“‘The selling of an article at its destination, which has
been sent from another state, while it may be regarded as
an interstate sale and one which the importer was entitled
to make, yet the services of the individual employed at the
place where the article is sold are not so connected with
the subject sold as to make them a portion of interstate

1; 18 Sup. Ct. 757; 43 L. Ed. 49; 1008; reversing 90 Iowa 496; 58
reversing 170 Pa. 284; 33 Atl N. W. 887; 24 L. R. A. 245;
82; 30 L. R. A. 396; 5 Inter. Austin v. Tennessee, 179 U. S.
Comp. Rep. 506; Bowman v. Chi- 343; 21 Sup. Ct. 132; 45 L. Ed.
cago, ete. Ry. Co., 125 U. S. 465; 224; affirming 101 Tenn. 563; 48
8 Sup. Ct. 689, 1062; 31 L. Ed. 8. W. 305; 50 L. R. A. 478; 70
700; Rhodes v. Iowa, 170 U. 8. Am. St. 703.

412; 18 Sup. Ct. 664; 42 L. Ed.
INTERSTATE AND FOREIGN COMMERCE. 185

commerce, and a combination in regard to the amount to
be charged for such service is not, therefore, a combination
in restraint of that trade or commerce. Granting that the
cattle themselves, because coming from another state, are
articles of interstate commerce, yet it does not therefore
follow that before their sale all persons performing services
in any way connected with them are themselves engaged
in that commerce, or that their agreements among each
other relative to the compensation to be charged for their
services are void as agreements made in restraint of inter-
state trade. The commission agent in selling the cattle for
their owner simply aids him in finding a market; but the
facilities thus afforded the owner by the agent are not of
such a nature as to thereby make that agent an individual
engaged in interstate commerce, nor is his agreement with
others engaged in the same business, as to the terms upon
which they would provide these facilities, rendered void as
a contract in restraint of that commerce. Even all agreements
among buyers of cattle from other states are not neces-
sarily a violation of the act, although such agreements may
undoubtedly affect that commerce.

The charges of the agent on account of his services are
nothing more than charges for aids or facilities furnished
the owner whereby his object may be the more easily and
readily accomplished. Charges for the transportation of
cattle between different states are charges for doing some-
thing which is one of the forms of and which itself con-
stitutes interstate trade or commerce, while charges for doing
something which is one of the forms of and which itself
constitutes interstate trade or commerce, while charges or
commissions based upon services performed for the owner in
effecting the sale of the cattle are not directly connected
with, as forming part of, interstate commerce, although the
cattle may have come from another state. Charges for ser-
vices of this nature do not immediately touch or act upon
nor do they directly affect the subject of the transporta-
tion. Indirectly and as an incident, they may enhance the
186 THE SHERMAN ANTI-TRUST ACT.

cost to the owner of the cattle in finding a market, or they
may add to the price paid by a purchaser, but they are
not charges which are directly laid upon the article in the
course of transportation, and which are charges upon the
commerce itself; they are charges for the facilities given
or provided the owner in the course of the movement from
the home situs of the article to the place and point where
it is sold.’’25

§ 72. Combination to Fix Amount and Prices of Articles
Shipped to and from Other States—A case arose out of
the Chicago meat market which had a close analogy to the
Kansas City Stock Yards case noted in the preceding sec-

tion, but which, unlike that,

a restraint upon interstate

15 Hopkins v. United States, 171
U. S. 578; 19 Sup. Ct. 40; 43 L.
Ed. 290; reversing 82 Fed. 529.
See also Anderson v. United
States, 171 U. S. 604; 19 Sup.
Ct. 50; 43 L. Ed. 300; certified
to the Supreme Court for instruc-
tions; 82 Fed. 998. In a subse-
quent case the Hopkins and An-
derson cases is thus explained:
“So, again, the line is distinct
between this case and Hopkins v.
United States, 171 U. S. 578; 19
Sup. Ct. 40; 43 L. Ed. 290. All
that was decided there was that
the local business of commission
merchants was not commerce
among the states, even if what
the brokers were employed to sell
was an object of such commerce.
The brokers were not like the
defendants before us, themselves
the buyers and sellers. They only
furnished certain facilities for the
sales. Therefore, there again the
effect of the combination of

was held to involve and was
commerce.

In that case a

brokers upon the commerce was
only indirect and not within the
act. Whether the case would have
been different if the combination
had resulted in exorbitant charges
was left open. In Anderson v.
United States, 171 U. 8. 604, the
defendants were buyers and
sellers at the stock yards, but
their agreement was merely not
to employ brokers, or to recog-
nize yard traders, who were not
members of their association. Any
yard trader could become a mem-
ber of the association on comply-
ing with the conditions, and there
was said to be no feature of
monopoly in the case. It was held
that the combination did not di-
rectly regulate commerce between
the states, and, being formed with
a different intent, was not within
the act.” Swift v. United
States, 196 U. S. 375; 25 Sup.
Ct. 276; 49 L. Ed. 578; modifying
122 Fed. 529.
INTERSTATE AND FOREIGN COMMERCE. 187
dominant proportion of the dealers in fresh meat throughout
the United States—a proportion sufficiently strong and con-
trolling to be able to fix the market price of meats ®—
entered into an agreement not to bid against, or only in
conjunction with, each other so that they could regulate
prices and induce shipments of stock to markets in other
states. It was also a part of the scheme or agreement in
combination to restrict shipments, establish uniform rules
of credit, make uniform and improper rules of cartage, and
to get less than lawful rates from railway companies, to
the exclusion of competitors. It was their intention to
monopolize commerce among the states. It was held that
their acts were a combination in restraint of interstate com-
merce. ‘‘The subject matter is sales and the very point of
the combination is to restrain and monopolize commerce

among the states in respect of such sales.’’!”

1éIt must be constantly borne
in mind that a very large dealer
in product (not a natural product
as coal in the mine, but a prod-
uct which has gone through a
process of manufacture) mav be
able to control the market of the
entire country by raising or low-
ering his prices, though he may
own less than one-half of the
entire amount of such product.

17 Swift & Co. v. United States,
196 U. 8. 375; 25 Sup. Ct. 276;
49 L. Ed. 518; modifying and
affirming 122 Fed. 529. The court
thus distinguishes the case in
hand from the E. ©. Knight ‘Com-
pany case: “One further obser-
vation should be made. Although
the combination alleged embraces
restraint and monopoly of trade
within a single state, its effect
upon commerce among the states
is not accidental, secondary, re-
mote or merely probable. On the

allegations of the bill the latter
commerce no less, perhaps even
more, than commerce within a
single state is an object of attack.
See Leloup v. Port of Mobile, 127
U. S. 640, 647; 8 Sup. Ct. 1383;
32 L. Ed. 311; reversing 72 Ala.
461; Crutcher v. Kentucky, 141
U. S. 47, 59; 11 Sup. Ct. 851;
35 L. Ed. 649; 89 Ky. 6; 12 S.
W. 141; Allen v. Pullman Co.,
191 U. S. 171, 179, 180; 24 Sup.
Ct. 39; 48 L. Ed. 134. More-
over it is a direct object, it is
that for the sake of which the
several specific acts and courses
of conduct are done and
adopted. Therefore the case is not
like United States v. E. C. Knight
Co., 156 U. S. 1, where the sub-
ject matter of the combination
was manufacture and the direct
object of monopoly of manufac-
ture within a state. However
likely monopoly of commerce
188 THE SHERMAN ANTI-TRUST ACT.

In this case the scheme involved the shipping of cattle
from a place in one state, with the expectation that they
would end their transit, after purchase, in another state, and
when in effect they did so. The only interruption was one
necessary to find a purchaser at the stockyards; and this
was a constantly recurring course. It was held that it con-
stituted interstate commerce and the purchase of the cattle
was an incident of such commerce. Justice Holmes did not
hesitate to hold that the transaction was one of interstate
commerce.

‘When cattle are sent for sale from a place in one state,
with the expectation that they will end their transit, after
purchase, in another, and when in effect they do so, with
only the interruption necessary to find a purchaser at the
stock yards, and when this is a typical, constantly recurring
course, the current thus existing is a current of commerce
among the states, and the purchase of the cattle is a part
and incident of such commerce. What we say is true at
least of such a purchase by residents in another state from
that of the seller and of the cattle.’’*

§73. Shipping Products to Another State to Agents.—
Where certain meat dealers entered into a scheme to
control the price of the meats in the markets, and for that

among the states in the articles
manufactured was to follow from
the agreement it was not neces-
sary consequence nor a primary
end. Here the subject matter is
sales and the very point of the
combination is to restrain and
monopolize commerce among the
states in respect of such sales.
The two cases are near to each
other, as sooner or later always
must happen where lines are to
be drawn, but the line between
them is distinct. Montague & Co.
v. Lowry, 193 U. S. 38; 24 Sup.
Ct. 307; 48 L. Ed. 608; affirming

115 Fed. 27; £2 C. C. A. 621;
63 L. R. A. 58.”

18 A corporation manufacturing
its product in New Jersey and
buying from other manufacturers
as well as from jobbers, which
ships from there to its ware-
houses in Massachusetts and New
York, from which sales are made
in those states and in Connecti-
cut is engaged in interstate com-
merce. Standard Sanitary Mfg.
Co. v. United States, 226 U. S. 20;
33 Sup. Ct. 9; 57 L. Ed., affirming
191 Fed. 172.
INTERSTATE AND FOREIGN COMMERCE. 189
purpose shipped their fresh meats to their agents at prices
fixed by their principals, the sales thus made were consid-
ered as sales in interstate commerce. The court used the
following language in coming to this conclusion:

“‘Coming, now, to the other branch of the transaction—
the sales by the defendants—a like result follows. Un-
questionably it is interstate commerce when purchasers from
other states buy directly from the defendants, and have
the meats shipped to them by the vendors. The situs of
to transportation in furtherance of the exchange, includes a
state other than the one from which defendants deal.

‘‘T think the same is true of meat sent to agents, and sold
from their stores. The transaction in such case, in reality,
is between the purchaser and the agents’ principal. The
agents represent the principal at the place where the ex-
change takes place; but the transaction, as a commercial
entity, includes the principal, and includes him as dealing
from his place of business. Indeed such privity exists be-
tween the principal and the transaction that he could, at
the instant, as a citizen of another state, sue upon the
transaction in the federal courts; nor have I any question
that if the conditions of this case were reversed, so that
defendants were invoking the shelter, instead of seeking to
escape, the obligation of the commerce clause, federal law
would be found equal to the protection asked.’’!®

§74. Sale by Sample—Title Passing When Delivery
Made to Transportation Company.— Where sales were made

19 United States v. Swift & Co.,
122 Fed. 529. This case was
affirmed (196 U. S. 375; 25 Sup.
Ct. 276; 49 L. Ed. 518) but this
particular point does not seem to
have been given serious consid-
eration. “Transactions between
manufacturing companies in one
state, through agents with citi-

zens of another, constitute a large
part of interstate commerce.”
Caldwell v. North Carolina, 187
U. S. 622, 632; 23 Sup. Ct 229,
233; 47 L. Ed. 336. See also
Standard Sanitary Mfg. Co. vy.
United States, 226 U. S. 20; 33
Sup. Ct. 9; 57 L. Ed. —; affirm-
ing 191 Fed. 172.
190 THE SHERMAN ANTI-TRUST ACT.
by sample in other states by the traveling salesman of the
manufacturer, it was claimed that the manufacturers were
not engaged in interstate commerce, ‘‘because the title to
the goods sold passed to the consignee when delivery was
made to the common carrier in the place of manufacture.”’
The court declared that the contention was not well founded,
saying that the manufacturers ‘‘engaged in interstate com-
merce when they sent their salesman into different states
and accepted and filled the orders obtained.’’*®

“‘The sale of goods, by sample or otherwise, in one state
by a traveling salesman employed by a manufacturer lo-
cated in another state, and their subsequent shipment from
the latter to the former state, constitute commerce among
the states, with which Congress alone has power to deal.
The Supreme Court of the United States has repeatedly
held that state laws taxing or imposing conditions upon
such sales are unconstitutional, as trenching upon the powers
of Congress.’’?+

20“The negotiation of sales of
goods which are in another state,
for the purpose of introducing
them into the state in which the
negotiation is made, is interstate
commerce.” Robbins v. Shelby
Taxing District, 120 U. S. 489,
497; 7 Sup. Ct. 592, 596; 30 L.
Ed. 694.

21 United States v. American
Tobacco Co., 164 Fed. 700, 714;
affirmed 221 U. S. 106; 31 Sup.
Ct. 632; 56 L. Ed. “If the selling

of goods by sample and the em- '

ployment of drummers for that
purpose injuriously affect the
local interest of the state, Con-
gress, if applied to, will un-
doubtedly make such reasonable
regulations as the case may de-
mand. And Congress alone can
do it; for it is obvious that such
regulations should be based on a

uniform system applicable to the
whole country, and not left to the
varied discordant, or retaliatory
enactments of forty different
states. The confusion into which
the commerce of the country
would be thrown by being subject
to state legislation on this sub-
ject would be but a repetition of
the disorder which prevailed un-
der the Articles of Confederation.”
Robbins v. Shelby Taxing District,
120 U. 8. 489: 7 Sup. Ct. 592;
30 L. Ed. 694; reversing 13 L. Ed.
303. See also, Brennan v. Titus-
ville, 153 U. S. 289; 14 Sup. Ct.
829; 38 L. Ed. 719; reversing 143
Pa. St. 642; 14 L. R. A. 100;
24 Am. St. 580; 22 Atl. 893;
3 Inters. Com. Rep. 735;
Asher v. Texas, 128 U. S. 129;
9 Sup. Ct. 1; 32 L. Ed. 368;
reversing 23 Tex. App. 662; 50
INTERSTATE AND FOREIGN COMMERCE. 191

§75. Manufacture is Not Interstate Commerce.—Mere
manufacture is not interstate commerce; even though the
article be manufactured with an intent to ship it to mar-
kets in other states. Thus the American Sugar Refining
Company of New Jersey being in control of a large ma-
jority of the manufactories of refined sugar in the United
States, through purchase of the stock of four Philadelphia
refineries, acquired such disposition over those manufacturers
throughout the United States as gave it a practical monop-
oly of the business. It was held that, although the result of
the transaction was the creation of a monopoly in the
manufacture of a necessary of life, yet it could not be
reached under the Anti-Trust Act, because the acquisition of
the Philadelphia refineries by the New Jersey corporation,
and the business of refining in Pennsylvania, bore no direct
relation to commerce between the states or with foreign
countries.2? In the court in which this case just cited had its

Am. Rep. 783; 5 8S. W. 91; Cald-
well v. North Carolina, 187 U.
S. 622; 23 Sup. Ct. 229; 47 L.
Ed. 336; reversing 127 N. C. 521;
37 S. E. 138; Rearick v. Pennsyl-
vania, 203 U. 8S. 507; 27 Sup. Ct.
159; 51 L, Ed. 295; reversing
26 Pa, Sup. Ct. 384. ‘Where
the title to the goods sold by the
salesman technically passes can-
not, therefore, be regarded as im-
portant, ‘commerce among the
states is uw practical conception,
not drawn from the ‘witty di-

versities” (Yelv. 33) of the law
of sales.’” (Rearick v. Pennsyl-
vania, supra). United States v.

American Tobacco Co., supra.

22 United States v. E. C. Knight
Co., 156 U. 8. 1; 15 Sup. Ct.
249; 39 L. Ed. 325; affirming 60
Fed. 934; 9 C. C. A. 297; 17 U.
S. App. 466; 24 L. R. A. 428,
which affirmed 60 Fed. 306. In

the 60 Fed. 934, the court said:
“There is no evidence whatever
that the defendants have directly
monopolized, or have attempted,
combined, or conspired to directly
monopolize, any part of the trade
or commerce among the several
states or with foreign nations;
or that they have contracted, com-
bined, or conspired in direct re-
straint of such trade or commerce.
The utmost that can be said—and
this, for the present purpose, may
be assumed—is that thev have
acquired control of the business of
refining and selling sugar in the
United States. But does this in-
volve monopoly, or restraint of,
foreign or interstate commerce?
We are clearly of the opini». that
it does not. The particular
language of the act which is now
under consideration was manifest-
ly derived from the clause of the
192 THE SHERMAN ANTI-TRUST ACT.
origin, Judge Butler said in dismissing the Government’s bill:
‘“‘The contracts and acts of the defendants relate ex-
clusively to the acquisition of sugar refineries and the busi-
ness of sugar refining, in Pennsylvania. They have no refer-
ence and bear no relation to commerce between the states
or with foreign nations. Granting therefore that a monopoly
exists in the ownership of such refineries and business, (with
which the laws and courts of the state may deal), it does
not constitute a restriction or monopoly of interstate or in-
ternational commerce. The latter is untouched, unre-
strained and open to all who choose to engage in it. The
plaintiff contends, however, that such monopoly in refineries
and refining incidentally secures a monopoly of commerce
among the states. This position however, is unsound; the
deduction is unwarranted. The alleged control of refining
does not of itself secure such commercial monopoly; and at
present none exists. The most that can be said is that it
tends to such a result; that it might possibly enable the
defendants to secure it, should they desire to do so.
Whether it would or not depends on their ability with
this advantage to control such commerce. They have not
tested this ability by attempting to control it, nor shown
a disposition to do so. They sell their product, and pur-
chasers may use it in such commerce, or otherwise as they

constitution by which Congress is
empowered to ‘regulate commerce
with foreign nations and among
the several states;’ and the au-
thorities are distinctly to the
effect that this grant of power
does not include the regulation of
manufactures or productive indus-
tries of any sort, even where their
product is made, or is intended
or contemplated to be made, the
subject of commerce beyond the
territory of the state where the
manufactory or other producing
industry is situated or operated.

Manufacture and commerce are
two distinct and very different
things. The latter does not in-
clude the former. Buying and sell-
ing are elements of commerce, but
something more is required to
constitute commerce which, ‘strict-
ly considered, consists in inter-
course and traffic, including in
these terms navigation and the
transportation and transit of per-
sons and property, as well as the
purchase, sale, and exchange of
commodities.’ ”
INTERSTATE AND FOREIGN COMMERCE. 193

choose. At present the defendants neither have, nor have
attempted to secure, such commercial monopoly. As before
stated, if they have a monopoly it is in refineries and refin-
ing, alone—over which the plaintiff has no jurisdiction. If
they should retire from business, close their refineries or de-
vote them to other purposes, the plaintiff could not object.
This might and doubtless would indirectly produce some
disturbance of or interference with such commerce, but it
would not bring the defendants or their property within
the jurisdiction of Congress. Numerous instances might
be cited, where contracts, business arrangements and com-
binations indirectly affect interstate and international com-
merce without bringing the parties to them or their property
within this jurisdiction. It is the stream of commerce flow-
ing across the states, and between them and foreign na-
tions, that Congress is authorized to regulate. To prevent
direct interferences with or disturbance of this flow alone,
was the power granted to the federal government. Con-
gress has therefore no authority over articles of merchandise
or their owners, or contracts or combinations respecting
them, which have not entered into this stream, or having
entered, have passed out. It may prohibit and punish all
acts which are intended and directed to restrain or other-
wise interfere with or disturb such commerce, but it can
go no further. To extend its authority to business transac-
tions which have no direct relation to this commerce, but
which may incidentally affect it, and to ownership and
rights in property not involved in such commerce, because
it may possibly become so involved, would be unwarranted
by the terms of the constitutional provision, or the statute,—
would draw within the jurisdiction of congress most of the
business transactions and property of individuals within
the states, and would oust the jurisdiction of the states ac-
cordingly. A large proportion of the contracts which men
enter into, and of the changes which they make in their
business and business relations, may and probably do affect
such commerce. The diminution or increase of production
194 THE SHERMAN ANTI-TRUST ACT.

in agriculture or manufactures changes from one branch of
business or trade to another, all incidentally tend to this re-
sult. State legislation prohibiting or restraining the manu-
facture or sale of certain articles of merchandise, or increas-
ing their cost by exacting license fees, have the same in-
direct’ tendency. Such legislative restraint of the manu-
facture or sale of poisons and alcoholic liquors, and even the
increase in the cost or price of property by taxation, could
only be sustained by favor of the federal government, in a
different view of its power.’’**

§ 76. Manufacturing in One State and Storing in An-
other Where Sales Are Made.—Where, however, having in
mind the decision in the preceding section, a product is
manufactured in one state by a manufacturer of that state,
and then stored in another state where it is sold, the trade
extending through several states, such manufacturer is en-
gaged in interstate commerce.™*

§77. Transportation from One Port to Another in Same
State or River Forming State Boundary.—Transportation of
a product from one port on a river to another port on
the same river within the state, where such river forms the
boundary line of the state, is not interstate commerce. Such
was held to be the case of a boat running on the Ohio River
between Cincinnati in the State of Ohio to Portsmouth in
the same state.”

23 United States v. E. C. Knight Fed. 529; Addyston Pipe &

Co., 60 Fed. 306; 9 C. C. A. 297;
17 U. S. App. 466; 24 L. R. A.
428; affirmed 60 Fed. 934; which
was likewise affirmed 156 U. S.
1; 15 Sup. Ct. 249; 39 L. Ed. 325.

24United States v. Standard
Sanitary Mfg. Co., 191 Fed. 172;
affirmed 226 U. 8. 20; 33 Sup. Ct.
9; 57 L. Ed.; Swift & Co. v. United
States, 196 U. 8. 375; 25 Sup. Ct.
276; 49 L. Ed. 518; decree of court
below modified and affirmed 122

Steel Co. v. United States, 175
U. S. 211; 20 Sup. Ct. 96; 44
L. Ed. 136; modifying aid affirm-
ing 85 Fed. 271; 29 C. C. A. 141;
54 U. S. App. 723; 46 L. R. A.
122; which reversed 78 Fed. 712;
Standard Sanitary Mfg. Co. v.
United States, 226 U. S. 20; 33
Sup. Ct. 9; 57 L. Ed. —; affirm-
ing 191 Fed. 172.

25 Cincinnati, ete., Packet Co. v.
Bay, 200 U. S. 179; 26 Sup. Ct.
INTERSTATE AND FOREIGN COMMERCE,

§ 77a.

198

Interstate Commerce a Practical Conception.—It

has been said that ‘‘Commerce among the states is not a
technical legal conception, but a practical one, drawn from

the course of business.’ 7°

208; 50 TL. Kd. 428. Approved
Merchants Nat. Bank v. Wehr-
mann, 202 U.S, 290; 26 Sup. Ct.
613; 50 L. Md. 1040; reversing 69
Ohio St. 160; 68 N. FE. 1004. It
has been held that coal mined in
Kentucky and there loaded and
then billed and shipped to another
place in the same state, is not
turned into interstate commerce
by the fact that in its route it
passed through a part of another
state,—in this instance through a

section of Tennessee. Louisville,

etc. R. Co. v. Vandever, 23 Ky.
LL. Rep. 479; 63 8. W. 22; Louis:
ville, etc. R. Co. v. Walker, 23
Ky. 1. Rep. 453; 63 8. W. 20.

26 Swift & Co. v. United States,
196 U. S. 396, 398; 25 Sup. Ct.
276; 49 L. Ed. 524; modifying
and «wirming 122 Fed. 529; United
States v. Reading Co., 228 U. 8.
—; 33 Sup. Ct. 90; 57 L. Ed. —;
affirming and reversing in part
183 Fed. 427; Loewe v. Lawlor,
208 U. S. 274; 28 Sup. Ct. 301;
52 L. Ed. 488; 13 Am. Cas. 815.
CHAPTER VI.

CONSTITUTIONALITY.

SECTION.

78. Interstate commerce clause.

79. Power of Congress under in-
terstate commerce clause.

80. Fourteenth amendment.

81. Liberty of contract.

SECTION.

86. State creating a corporation
—Immunity of congression-
al control.

87. State corporation acquiring
property in another state.

 

82. Indirect restraint. 88. Court cannot restrict the will
83. Private contracts—Liberty of of Congress.
contract—State control. 89. Uncertainty.

Congressional control of in-
terstate commerce.

84. Combination of transporta- 90.
tion companies.

85. Combination among stock- 91. State control of interstate
holders. commerce.
92. Rules for governing com-
merce—Monopoly.
§ 78. Interstate Commerce Clause.—By the eighth sec-

tion of the first article of the Constitution of the United
States Congress is given the power ‘‘To regulate commerce
with foreign nations, and among the several states, and
with the Indian tribes.’’ It is from this provision of that
instrument that, except as to territory exclusively under
jurisdiction of the United States, Congress derived its
power to enact what is popularly known as the Sherman
Anti-Trust Act of July 2, 1890; and upon that provision
the validity of that act is maintained! What is and what
is not interstate commerce or commerce with foreign coun-
tries need not be discussed in this connection; but is dis-

cussed.

1Bigelow v. Calumet & Hecla
Mining Co., 167 Fed. 721; 94 C.
Cc. A. 13; affirming 167 Fed. 704;
Wheeler Stenzel Co. v. National

196

in the next previous

chapter. The scope of

Window Glass Jobbers’ Asso., 152
Fed. 864: 81 C. C. A. 658; 10
L. R. A. (N.S.) 972; in re Charge
to Grand Jury, 151 Fed. 834.
CONSTITUTION ALITY. 197

that statute is limited by the very first sentence
in its first section, wherein it is declared that ‘‘Every con-
tract, combination in the form of a trust or otherwise, or
conspiracy, in restraint of trade or commerce among the sev-
eral states, or with foreign nations, is hereby declared il-
legal.’? But the power to enact this statute so far as a
territory of the United States or the District of Columbia
is concerned falls under the general power of the United
States as a government; for in such a territory or such
district Congress possesses all the power to regulate the
internal affairs and concerns, and to enact laws for its in-
habitants, that any state possess with reference to her own
affairs, concerns or inhabitants. With reference to such
territory or such district Congress is all powerful, with
the exception of such restraints as the Federal Constitu-
tion has placed upon it.?

§ 79. Power of Congress Under the Interstate Commerce
Clause.—It may be well to call attention to a few of the
decisions which touch upon the power of Congress when
enacting laws concerning interstate or international com-
merce, aside from what is or what is not such commerce.

The power of Congress to regulate commerce among the
states and with foreign nations is the power ‘‘to prescribe
the rule by which commerce is to be governed.’’ ‘‘It is
complete in itself, may be exercised to its utmost extent,
and acknowledges no limitations other than are prescribed
by the Constitution.’’ ‘‘If, as has always been understood.
the sovereignty of Congress, though limited to specific ob-
jects, is plenary as to those objects, the power over com-

2Turner v. Williams, 194 U.S. Trust Act is to be so construed,
279, 295; 48 L. Ed. 979; 24 Sup. and applies to contracts or com-
Ct. 719. “The power of Congress  binations which directly, immedi-
to legislate on the subject of con- ately, and necessarily affect com-
tracts and combinations in re- merce among the states or with
straint of trade is deprived from foreign nations.” Bigelow v. Calu-
its constitutional power to regu- met & Hecla Mining Co., 167 Fed.
late interstate and foreign com- 721; 94 C. GC. A. 18; affirming
merce, and the Sherman Anti- 167 Fed. 704.
198 THE SHERMAN ANTI-TRUST ACT.
merce with foreign nations and among the several states,
is vested in Congress as absolutely as it would be in a
single government having in its constitution the same re-
strictions on the exercise of the power as are found in the
Constitution of the United States.’’ A sound construction
of the Constitution allows to Congress a large discretion,
‘‘with respect to the means by which the powers it confers
are to be carried into execution, which enable that body to
perform the high duties assigned to it, in the manner most
beneficial to the people.’’ If the end to be accomplished be
within the scope of the constitution, ‘‘all means which are
appropriate, which are plainly adapted to that end, and
which are not prohibited, are constitutional.’’* ‘‘In some
circumstances regulations may properly take the form and
have the effect of prohibition.’’* In an early case the Su-
preme Court said that the United States were for many
important purposes ‘‘a single nation,’’ and that ‘‘in all com-
mercial regulations we are one and the same people’’®
“‘And it has since frequently declared that. commerce
among the several states was a unit, and subject to na-
tional control.’’¢

3 Gibbons v. Ogden, 9 Wheat. 1,
196, 197; 6 L. Ed. 23; Brown

4Northern Securities Co. v.
United States, 193 U. S. 197, 335;

vy. Maryland, 12 Wheat. 419; 6
L, Ed. 678; Sinnot v. Davenport,
22 How. 227, 238; 16 L. Ed. 243;
Henderson v. Mayor, 92 U. 8. 259;
23 L. Ed. 543; Railroad Company
v. Husen, 95 U. S. 465, 472; 24
L. Ed. 527; reversing 60 Mo.
226; Mobile County v. Kimball,
102 U. S. 691; 26 L. Ed. 238,
affirming 3 Woods 555; Fed. Cas.
No. 7774; Missouri, K. & T. Ry.
Co. v. Haber, 169 U. S. 613, 626;
18 Sup. Ct. 488; 42 L. Ed. 878;
affirming 56 Ky. 694; 44 Pac.
632; Lottery Case 188 U. 8. 321,
348; 23 Sup. Ct. 321; 47 L. Ed
492.

24 Sup. Ct. 436; 48 L. Ed. 679;
affirming 120 Fed. 721. Citing in
re Raher 140 U. S. 545; 11 Sup.
Ct. 865; 35 L. Ed. 572; reversing
43 Fed. 556; 10 L. R. A. 444;
Lottery Case 188 U. S. 321, 355;
23 Sup. Ct. 321; 47 L, Ed. 492.

5 Cohen v. Virginia, 6 Wheat.
264, 413; 5 L. Ed. 257.

6 Northern Securities Co. v.
United States, supra; M’Culloch v.
Maryland, 4 Wheat. 316, 405; 4
L. Ed. 579. “As late as the case
in re Debs, 158 U. S. 564, 582;
15 Sup. Ct. 900; 39 L. Ed. 1092,
this court, every member of it
concurring, said: ‘The entire
CONSTITUTION ALITY. 199

§ 80. Fourteenth Amendment.—The prohibitions in the
Fourteenth Amendment to the Federal Constitution do not
apply to the United States and its Congress. They apply
wholly to the states, and no farther notice need here be
given them.’

§81. Liberty of Contract.—The fifth amendment pro-
vides that no person shall ‘‘be deprived of life, liberty, or
property, without due process of law;’’ and this is con-
strued to guarantee and preserve the liberty of contract.
Notwithstanding this clause a state may enact restrictions
upon competition, when not inimical to the general welfare of

the public.’

strength of the Nation may be
used to enforce in any part of
the land the full and free exer-
cise of all National powers and
the security of all rights en-
trusted by the Constitution to its
care. The strong arm of the Na-
tional Government may be put
forth to brush away all obstruc-
tions to the freedom of interstate
commerce or the transportation of
the mails. If the emergency arises,
the army of the Nation, and all
its militia, are at the service of
the Nation to compel obedience
to its laws.’ The power of Con-
gress over interstate commerce is
supreme, far-reaching, and  ac-
knowledges no limitations other
than such as are_ prescribed
in the Constitution itself.
Gibbons v. Ogden, 9 Wheat. 1,
197; 6 L. Ed. 23; Mobile County
v. Kimball, 102 U. 8S. 691, 696,
697; 26 L. Ed. 238; affirming 3
Woods 555; Fed. Cas. No. 7774;
Champion v. Ames, 188 U. S.
321; 23 Sup. Ct. 321; 47 L. Ed.
492. No legislation on the part

of a state can curtail or inter-
fere with its exercise; and, in
view of repeated decisions, no one
can deny that it is a legitimate
exercise of the power in question
for Congress to say that neither
natural nor artificial persons shall
combine or conspire in any form
whatever to place restraints on
interstate trade or commerce.”
United States v. Northern Securi-
ties Co. 120 Fed. 721, 727;
affirmed 193 U. 8S. 197; 24 Sup.
Ct. 436; 48 L. Ed. 679.

7 Civil Rights Cases, 109 U. S.
3; 27 L. Ed. 835; 3 Sup. Ct. 18.
As to distinction between the Fifth
and Fourteenth Amendment, see
United States v. New York, N. H.
& H. R. Co., 169 Fed. 742.

8 Smiley v. Kansas, 196 U. S.
447; 25 Sup. Ct. 276; 49 L. Ed.
546; affirming 65 Kan. 240; 69
Pac. 206; 67 L. R. A. 903; Na-
tional Cotton Oil Co. v. State,
197 U. 8. 115; 25 Sup. Ct. 379;
49 L. Ed. 689; affirming (Tex.
Civ. App.) 72 8. W. 615; Carroll
v. Greenwich, 199 U. S. 401; 26
200

THE SHERMAN ANTI-TRUST ACT.

And the same is true of Congress where interstate com-
merce or commerce with a foreign country or in one of its
own territories is concerned. There is no absolute freedom
of contract,—to do as one wills or to contract as one

chooses.

“‘The guaranty of liberty does not withdraw

from legislative supervision over the wide department of
activity which consists of the making of contracts, or deny
to government the power to provide restrictive safeguards.
Liberty implies the absence of arbitrary restraint, not im-

Sup. Ct. 66; 50 L. Ed. 246; re-
versing 125 Fed. 121; Waters-
Pierce Oil Co. v. Texas, 212 U. S.
86; 29 Sup. Ct. 220; 43 L. Ea—;
affirming (Tex. Civ. App.) 106
S. W. 918; Hammond Packing Co.
v. Arkansas, 212 U. S. 344; 29
Sup. Ct. 370; L. Ed. “But even
if the court shared the gloomy
forebodings in which the defen-
dants indulge, it could not refuse
to respect the action of the legis-
lative branch of the Government
if what it has done is within the
limits of its constitutional power.
The suggestions of disaster to
business have, we apprehend, their
origin in the zeal of the parties
who are opposed to the policy un-
derlying the act of Congress or
are interested in the result of this
particular case; at any rate, the
suggestions imply that the court
may and ought to refuse the en-
forcement of the provisions of the
act if, in its judgment Congress
was not wise in prescribing as
a rule by which the conduct of
interstate and international com-
merce is to be governed, that
every combination, whatever its
form, in restraint of such com-
merce and the monopolizing or
attempting to monopolize such

commerce shall be illegal. These
plainly, are questions as to the
policy of legislation which belong
to another department, and this
court has no function to super-
vise such legislation from the
standpoint of wisdom or policy.
We need only say that Congress
has authority to declare, and by
the language of its act, as in-
terpreted in prior cases, has, in
effect. declared, that the freedom
of interstate and international
commerce shall not be obstructed
or disturbed by any combination,
conspiracy or monopoly that will
restrain such commerce, by pre-
venting the free operation of com-
petition among interstate carriers
engaged in the transportation of
passengers and freight. This court
cannot disregard that declaration
unless Congress in passing the
statute in question, be held to
have transgressed the limits pre-
scribed for its action by the Con-
stitution. But, as already indi-
cated, it cannot be so held con-
sistently with the provisions of
that instrument.” Northern Se-
eurities Co. 193 U. S. 197, 381;
24 Sup. Ct. 486; 48 L. Ed. 679;
affirming 120 Fed. 312.
CONSTITUTIONALITY. 201

munity from reasonable regulations and prohibitions imposed
in the interests of the community.” The right to make con-
tracts is subject to the exercise of the powers granted to
Congress for the suitable conduct of matters of national con-
cern, as, for example, the regulation of commerce with
foreign nations and among the several states. The principle
involved in these decisions is that the legislative action is
arbitrary and has no reasonable relation to an object
within the governmental authority, the exercise of the legis-
lative discretion not being subject to judicial review.’’!°

“That man may not contract, as he will,’”’ said the Ap-
pellate Court of New York, ‘‘with respect to himself or to
his property rights, demands the intervening authoritative
reason found in considerations of public policy. The de-
nial of the right can only be reasonable, when to permit
its exercise is seen to be fraught with consequences in-
jurious to the interests of society. The state has a right
to limit individual rights when their exercise touches the
public interests and, if unrestrained, would be prejudicial to
order or to progress.’’!?

9 Citing Crowley v. Christensen,
137 U. S. 89; 11 Sup. Ct. 13; 34
L. Ed. 620; Jacobson v. Massa-
chusetts, 197 U. S. 11; 25 Sup.
C't. 358; 49 L. Ed. 643.

10 Chicago, Burlington & Quincy
R. Co. v. MeGuire, 219 U. 8. 549;
31 Sup. Ct. 259; 55 L. Ed. —;
affirming 131 Towa 340; 108 N.
W. 902. “The liberty to contract
in that amendment [the fifth]
means not only the right of the
citizen to be free from the mere
physical restraint of his person, as
by incarceration, but the term is
deemed to embrace the right of
the citizen to be free in the en-
joyment of all his faculties; to
be free to use them in all lawful
ways; to live and work where he

will; to earn his livelihood by
any lawful calling; to pursue any
livelihood or avocation, and for
that purpose to enter into all con-
tracts which may be _ proper,
necessary and essential to his
carrying out to a successful con-
clusion the purpose above men-
tioned.” Allgeyer v. Louisiana,
165 U. S. 578; 17 Sup. Ct. 427;
41 LL. Ed. 832; reversing 48 La.
Anno. 104; 18 So. 904; Lochner
v. New York, 198 U. S. 45; 25
Sup. Ct. 539; 49 L. Ed. 93; re-
versing 177 N. Y. 145; 69 N. E,
373; 107 Am. St. 773; Adair v.
United States, 208 U. S. 161; 28
Sup. Ct. 277; 52 L. Ed. 436.

11 Wood v. Whitehead Bros., 165
N. Y. 545, 550; 59 N. E. 357. See
202 THE SHERMAN ANTI-TRUST ACT.

In a Federal case it was said: ‘‘There are some things
which counsel easily demonstrate. They easily demonstrate
that some combination of. ‘capital, skill, or acts,’ is neces-
sary to any business development, and that the result must
inevitably be an association of competition. But this does
not prove that all combinations are inviolable or that no re-
striction upon competition can be forbidden. To contend
for these extremes is to overlook the difference in the effect
of actions, and to limit too much the function and power
of government. By arguing from extremes almost every
exercise of government can be shown to be a deprivation of
individual liberty.’’”

In considering the power of Congress to limit the free-
dom of contract, the power of that body to enact laws un-

also Central N. Y. Tel. & Tel. Co.
v. Averill, 129 N. Y. App. Div.
752; 114 N. Y. Supp. 99; modified
on appeal 199 N. Y. 128; 92 N.
E. 206.

12 National Cotton Oil Co. v.
Texas, 197 U. 8. 115, 128; 25 Sup.
Ct. 379; 49 L. Ed. 689; affirming
(Tex. Civ. App.) 72 8S. W. 615.
See also Atlantic Coast Line R.
Co. v. Riverside Mills Co., 219 U.
S. 186; 31 Sup. Ct. 164; 55 L.
Ed. 167; 31 L. R. A. (N.S.)
7; affirming 168 Fcd. 987, 990;
Minnesota Jron Co. v. Kline,
199 U. S. 593; 26 Sup. ('t. 159;
50 L, Ed. 322; affirming 93 Minn.
63; 100 N. W. 681; State v.
Schlitz Brewing Co., 104 Tenn.
715; 59 S. W. 1033; 78 Am. St.
941; State v. Central Lumber (Co.,
24 8. D. 136; 123 N. W. 504;
McGrew v. Missouri Pac. Ry. Co.,
230 Mo. 416; 132 S. W. 1076;
People v. Dickerson, 164 Mich.
148; 129 N. W. 199; 17 Det. L.
N. 1044; Equitable Life Ins. So-

ciety v. Commonwealth, 113 Ky.
126; 67 S. W. 388; 23 Ky. L.
Rep. 2359; Arkansas Stove Co. v.
State, 93 Ark. 27; 125 S. W.
1001; Booth v. People, 184 U. S.
425; 22 Sup. Ct. 425; 46 L. Ed.
623; affirming 186 Ill. 43; 57 N.
E. 798; 50 L. R. A. 762; State
v. Standard Oil Co. (Mo.) 116 8.
W. 902; Hammond Packing Co.
v. Arkansas, 212 U. 8S. 222; 29
Sup. Ct. 370; affirming 81 Ark.
519; 100 8. W. 407, 1199; Waters-
Pierce Oil Co. v. Texas, 212 U. 8.
86; 29 Sup. Ct. 220; 53 L. Ed.
417; affirming (Tex. Civ. App.)
106 S. W. 918; Granada Lumber
Co. v. Mississippi, 217 U. 8. 433;
30 Sup. Ct. 535; 56 L. Ed. 717;
affirming (Miss) 48 So. 1021;
Great Southern Fire Proof Hotel
Co. v. Jones, 193 U. S. 532; 24
Sup. Ct. 576; 48 L. Ed. 778;
affirming 116 Fed. 793; 54 C. C.
A. 165; Waters-Pierce Oil Co. v.
State (Tex. Civ. App.) 44 8. W.
936.
CONSTITUTIONALITY. 208

der the interstate commerce clause must be considered. As
was said by the Supreme Court in one case:

‘‘Under this grant of power to Congress [the power to
regulate commerce between the several states and with
foreign nations], that body, in our judgment, may enact
such legislation as shall declare void and prohibit the per-
formance of any contract between individuals or corporations
where the natural and direct effect of such a contract will
be, when carried out, to directly, and not as a mere incident
to other and innocent purposes, regulate, to any substan-
tial extent, interstate commerce. * * * We do not as-
sent to the correctness of the proposition that the constitu-
tional guaranty of liberty to the individual to enter into
private contracts, limits the power of Congress and prevents
it from legislating on the subject of contracts of the class
mentioned. * * * It has been held that the word
‘liberty,’ as used in the Constitution, was not to be con-
fmed to the mere liberty of persons, but included among
others, a right to enter into certain classes of contracts for
the purpose of enabling the citizen to carry on his business.
* * * But it has never been, and in our opinion ought
not to be held, that the word included the right of an in-
dividual to enter into private contracts upon all subjects,
no matter what their nature, and wholly irrespective among
‘other things, of the fact that they would, if performed,
result in the regulation of interstate commerce, and in
violation of an Act of Congress upon that subject. The
provision of the Constitution does not, as we believe, ex-
elude Congress from legislating with regard to contracts of
the above nature while in the exercise of its constitutional
right to regulate commerce among the states. On the con-
trary, we think the provision regarding the liberty of the
citizen is to some extent limited by the commerce clause of
the Constitution and that the power of Congress to regu-
late interstate commerce comprises the right to enact a law
prohibiting the citizen from entering into those private con-
tracts which directly and substantially, and not merely in-
204

THE SHERMAN ANTI-TRUST ACT.

directly, remotely, incidentally, and collaterally, regulate to

a greater or less degree commerce among the states.

We

cannot so enlarge the scope of the language of the Consti-
tution regarding the liberty of the citizen as to hold that it
includes, or that it was intended to include, a right to make
a contract which in fact restrained and regulated inter-
state commerce, notwithstanding Congress, proceeding under
the constitutional provision giving to it the power to regu-
late that commerce, had prohibited such contracts.’’™

13 Addyston Pipe & Steel Co. v.
United States, 175 U. S. 211; 20
Sup. Ct. 96; 44 L. Ed. 136; affirm-
ing 85 Fed. 271; 29 €C. C. A,
141; 54 U. S. App. 723; 46 L.
R. A. 122; quoted in United
States v. Northern Securities
Co., 121 Fed. 721, which was
affirmed 193 U. 8S. 197; 24 Sup.
Ct. 486; 48 L. Ed. 679. In the
opinion in the 193 U. S. p. 332
it is said that this proposition has
been established by the cases,
“That the constitutional guarantee
of liberty of contract does not pre-
vent Congress from prescribing the
rule of free competition for those
engaged in interstate and interna-
tional commerce.” Contracts are
made subject to the possibility
that even if valid when made,
Congress may by the exercise of
its powers render them invalid.
Louisville & Nashville R. Co. v.
Mottley, 219 U. 8. 467; 31 Sup.
265; 55 L. Ed. 297; 34 L. R.
A. (N.S.) 671; reversing 133
Ky. 652; 118 S. W. 982; wherein
the court said: “After the com-
merce act came into effect no con-
tract that was inconsistent with
the regulations established by the
act of Congress could be enforced
in any court. The rule upon this
subject is thoroughly established.”
“And it is worthy of observation,

as we have previously remarked
concerning the common law, that
although the statute [The Sher-
man Anti-Trust Act] by the com-
prehensiveness of the enumerations
embodied in both the first and
second sections makes it certain
that its purpose was to prevent
undue restraints of every kind or
nature, nevertheless by the omis-
sion of direct prohibition against
monopoly in the concrete it indi-
cates a consciousness that the
freedom of the individual right to
contract, when not unduly or im-
properly exercised was the most
sufficient means for the prevention
of monopoly, since the operation of
the centrifugal and centripetal
forces resulting from the right to
freely contract was the means by
which monopoly would be in-
evitably prevented if no extraneous
or sovereign power imposed it and
no right to make unlawful con-
tracts having a monopolistic ten-
dency were permitted. In other
words, that freedom of contract
was the essence of freedom from
undue restraint or right to con-
tract.” Standard Oil Co. v. United
States, 221 U. S. 1; 31 Sup. Ct.
302; 55 L. Ed. 619; 34 L. R. A.
(N.S.) 834; affirming 173 Fed.
177.
CONSTITUTION ALITY. 205

§ 82. Indirect Restraint.—The constitutionality of the
statute has not been exactly decided as applied to an in-
direct restraint of trade or commerce. In passing upon the
validity of the statute the courts have limited their de-
cisions to instances of the natural and direct effect of such
a contract, and not as a mere incident to other and inno-
cent purposes.**

It is only such acts as directly interfere with the freedom
of interstate commerce that are prohibited to the state.
State legislation ‘‘may in a great variety of ways affect com-
merce and persons engaged in it, without constituting a
regulation of it within the meaning of the Constitution.’’”
Such being the case, then Congress has no power to legislate
with reference that which falls within the domain of a state.
In a case with respect to the selection of street paving ma-
terial, where the paving ordinance, under a statute author-
izing it, was so drawn as to exclude all competition and so
only one kind of material in the control of the successful

14 Addyston Pipe & Steel Co. v.
United States, 175 U. 8. 211; 20
Sup. Ct. 96; 44 L. Ed. 136; 29 C.
Cc. A. 141; 54 U. S. App. 7238;
46 L. R. A. 122; affirming 85 Fed.
271; (which reversed 78 Fed.
712). The court says: “Under the
grant of power to Congress, that
body, in our judgment, may enact
such legislation as shall declare
void and prohibit the performance
of any contract between individ-
uals or corporations, where the
natural and direct effect of such
a contract will be, when carried
out, to directly, and not as a mere
incident to other and innocent pur-
poses, regulate to any substantial
extent interstate commerce.” (The
italics are the author’s.) Justice
Harlan limits the Act to “all di-
rect restraints imposed by any
combination, conspiracy or mon-

opoly upon such trade or com-
merce.” Northern Securities Co.
v. United States, 193 U. S. 197,
331; 24 Sup. Ct. 436; 48 L. Ed.
679; affirming 121 Fed. 721. (See
the decision in the lower courts
for discussion of the validity of
this act.) Bigelow v. Calumet &
Hecla Mining Co., 167 Fed. 721;
94 C. C. A. 13; affirming 167 Fed.
704. Such is the rule with regard
to foreign commerce. United
States v. Hamburg American Ken-
ische Packetfahrt-Astrian Gesell-
schoft, 192 Fed. 1.

15 Kidd v. Pearson, 128 U.S. 1;
9 Sup. Ct. 6; 32 L. Ed. 346; affirm-
ing 72 Iowa 348; 34.N. W. 1; Penn-
sylvania R. Co. v. Hughes, 191 U.
S. 477; 24 Sup. Ct. 132; 48 L.
Ed. 268; affirming 202 Pa. 229,
51 Atl. 990; 63 L. R. A. 513; 97
Am. St. 713.
206 THE SHERMAN ANTI-TRUST ACT.

bidder for the work could be used, the court declared that as
there was only an indirect effect upon interstate commerce,
the transaction, so far as interstate ‘commerce was con-
cerned, was valid, saying: ‘‘The right of a state in the
exercise of the police power to make regulations which in-
directly affect interstate commerce has been frequently sus-
tained. In the present case it may be that the use of this
kind of asphalt, under municipal authority conferred by
the state, will in a limited degree affect interstate com-
merce, but it certainly is not one of those direct inter-
ferences with the power over and express control of the
subject given by the Constitution to Congress. In this day
of multiplied means of intercourse between the states there
is scarcely any contract which cannot in a limited or re-
mote degree be said to affect interstate commerce. But it is
only direct interferences with the freedom of such com-
merce that bring the case within the exclusive domain of
Federal legislation.’’!*

§ 83. Private Contracts—Liberty of Contract—State Con-
trol_It has been contended that the power of Congress to
regulate interstate commerce is limited to its protection
from acts of interference by state legislation or by means
of regulations made under the authority of the state by
some political subdivision thereof, including also Congres-
sional power over common carriers, elevator, gas and water
companies, for reasons peculiar to such carriers and com-
panies, but that it does not include the general power to
interfere with or prohibit private contracts between citizens,
even though they have interstate commerce for their object,
and result in a direct and substantial obstruction to or regu-

16 Field v. Barber Asphalt Pav- Write of Certiorari denied 195 U.
ing Co., 194 U. S. 618; 24 Sup. 8S. 636; 25 Sup. Ct. 793; 49 L.
Ct. 764; 48 L. Ed. 1142; reversing Ed. 355; Bigelow v. Calumet &
117 Fed. 925. See Davis v. Booth, Hecla Mining Co., 167 Fed. 704;
131 Fed. 31 (see 127 Fed. 875 affirmed 167 Fed. 721; 94 C. C.
where an injunction was granted). <A. 13.
CONSTITUTION ALITY. 207
lation of such commerce. In a leading case it was said that
the argument to support this contention was ‘‘founded upon
the assertion that the reason for vesting in Congress the
power to regulate commerce was to insure uniformity of
regulation against conflicting, discriminating state legislation ;
and the further assertion that the Constitution guarantees
liberty of private contract to the citizen at least upon com-
mercial subjects, and to that extent the guaranty operates
as a limitation on the power of Congress to regulate com-
merce.’ 17

The court then proceeds to argue the question as follows:
““The reason which may have caused the framers of the
Constitution to repose the power to regulate interstate
commerce in Congress do not, however, affect or limit the
extent of the power itself.

“‘In Gibbons v. Ogden, the power was declared to be com-
plete in itself, and to acknowledge no limitations other than
prescribed by the Constitution.

17“Some remarks are quoted
from the opinions of ‘Chief Justice

interstate commerce was to insure
uniformity of regulation against

Marshall, in Gibbons v. Ogden, 9 conflicting and discriminating
Wheat. 1; 6 L. Ed. 23; and _ state legislation. The further re-
Brown v. Maryland, 12 Wheat. mark is quoted from Railroad
419; 6 LL. Ed. 678, and Company v. Richmond, supra, that

from the opinions of other jus-
tices of this court in the cases of
The State Freight -Tax, 15 Wall.
232, 275; 21 L. Ed. 146; reversing
62 Pa. 286; 1 Am. Rep. 699;
Dubuque, ete. Railroad Company
vy. Richmond, 19 Wall. 584, 589;
22 L. Ed. 173; Welton v. Missouri,
91 U.S. 275, 280; 23 L. Ed. 347;
Mobile County v. Kimball, 102 U.
S. 691, 697; 26 L. Ed. 238, affirm-
ing 3 Woods 555; Fed. Cas. No.
7774; and Kidd v. Parsons, 128 U.
8. 1, 21; 9 Sup. Ct. 6; 32 L. Ed.
346; affirming 72 Iowa 384; 34N.
W. 1; all of which are to the
effect that the object of vesting in
‘Congress, the power to regulate

the power of Congress to regulate
commerce was never intended to
be exercised so as to inter-
fere with private contracts not
designed at the time they
were made to create impedi-
ments to such commerce. It
is added that the proof herein
shows that the contract in this
case was not so designed. It is
undoubtedly true that among the
reasons, if not the strongest rea-
son, for placing the power in Con-
gress to regulate interstate com-
merce, was that which is stated in
the extracts from the opinions of
the court in the cases above cited.”
208 THE SHERMAN ANTI-TRUST ACT.

‘‘Under this grant of power to Congress, that body, in our
judgment, may enact such legislation as shall declare void
and prohibit the performance of any contract between indi-
viduals or corporations where the natural and direct effect
of such a contract will be, when carried out, to directly,
and not as a mere incident to other and innocent purposes,
regulate to any substantial extent interstate commerce.
(And when we speak of interstate we also include in our
meaning foreign commerce.) We do not assent to the
correctness of the proposition that the constitutional guar-
anty of liberty to the individual to enter into private con-
tracts limits the power of Congress and prevents it from
legislating upon the subject of contracts of the class men-
tioned.

“‘The power to regulate interstate commerce is, as stated
by Chief Justice Marshall, full and complete in Congress,
and there is no limitation in the grant of the power which
excludes private contracts of the nature in question from
the jurisdiction of that body. Nor is any such limitation
contained in that other clause of the Constitution which
provides that no person shall be deprived of life, liberty or
property without due process of law. It has been held that
the word ‘liberty,’ as used in the Constitution, was not to
be confined to the mere liberty of person, but included,
among others, a right to enter into certain classes of contracts
for the purpose of enabling the citizen to carry on his
business. But it has never been, and in our opinion ought
not to be, held that the word included the right of an indi-
vidual to enter into private contracts upon all subjects, no
matter what their nature and wholly irrespective [among
other things] of the fact that they would, if performed,
result in the regulation of interstate commerce and in the
violation of an act of Congress upon that subject. The pro-
vision in the Constitution does not, as we believe, exclude
Congress from legislating with regard to contracts of the
above nature while in the exercise of its constitutional right
to regulate commerce among the states. On the contrary,
CONSTITUTIONALITY. 209

we think the provision regarding the liberty of the citizen,
is to some extent limited by the commerce clause of the
Constitution, and that the power of Congress to regulate
interstate commerce comprises the right to enact a law
prohibiting the citizen from entering into those private con-
tracts which directly and substantially, and not merely
indirectly, remotely, incidentally and collaterally, regulate
to a greater or less degree commerce among the states.

‘“We can not so enlarge the scope of the language of the
Constitution regarding the liberty of the citizen as to hold
that it included or that it was intended to include a right
to make a contract which in fact restrained and regulated
interstate commerce, notwithstanding Congress, proceeding
under the constitutional provision giving to it the power to
regulate that commerce, had prohibited such contracts.

‘‘While unfriendly or discriminating legislation of the
several states may have been the chief cause for granting
to Congress the sole power to regulate interstate commerce,
yet we fail to find in the language of the grant any such
limitation of that power as would exclude Congress from
legislating on the subject and prohibiting those private
contracts which would directly and substantially, and not
as a mere incident, regulate interstate commerce.

“Tf certain kinds of private contracts do directly, as
already stated, limit or restrain, and hence regulate inter-
state commerce, why should not the power of Congress reach
those contracts just the same as if the legislation of some
state had enacted the provision contained in them? The
private contracts may in truth be as far reaching in their
effect upon interstate commerce as would the legislation of
a single state of the same character.

‘‘What sound reason can be given why Congress should
have the power to interfere in the case of the state, and yet
have more in the case of the individual? Commerce is the
important subject of consideration, and anything which
directly obstructs and thus regulates that commerce which
is carried on among the states, whether it is state legislation
210 THE SHERMAN ANTI-TRUST ACT.

or private contracts between individuals or corporations,
should be subject to the power of Congress in the regulation
of that commerce.

‘“‘The power of Congress over this subject seems to us
much more important and necessary than the liberty of the
citizen to enter into contracts of the nature above men-
tioned, free from the control of Congress, because the direct
results of such contracts might be in the regulation of
commerce among the states, possibly quite as effectually
as if the state had passed a statute or like tenor as the
contract.

‘‘The liberty of contract in such case would be nothing
more than the liberty of doing that which would result in
the regulation, to some extent, of a subject which from its
general and great importance has been granted to Congress
as thé proper representative of the nation at large. Regu-
lation, to any substantial extent, of such a subject by any
other power than that of Congress, after Congress has itself
acted thereon, even though such regulation is effected by
means of private contracts between individuals or corpora-
tions, is illegal, and we are unaware of any reason why it
is not as objectionable when attempted by individuals as
by the state itself.

“It is, indeed, urged that to include private contracts
of this description within the grant of this power to Con-
gress is to take from the state their power over the subject,
and to interfere with the liberty of the individual in a
manner and to an extent never contemplated by the framers
of the Constitution, and not fairly justified by any language
used in that instrument. If Congress has not the power to
legislate upon the subject of contracts of the kind men-
tioned, because the constitutional provision as to the liberty
of the citizen limits, to that extent, its power to regulate
interstate commerce, then it would seem to follow that the
several states have that power, although such contracts
relate to interstate commerce, and, more or less, regulate it.
If neither Congress nor the state legislatures have such
CONSTITUTION ALITY. 211

power, then we are brought to the somewhat extraordinary
position that there is no authority, state or national, which
can legislate upon the subject of or prohibit such contracts.
This can not be the case.

“‘Tf it should be held that Congress has no power and the
state legislatures have full and complete authority to thus
far regulate interstate commerce by means of their control
over private contracts between individuals or corporations,
then the legislation of the different states might and prob-
ably would differ in regard to the matter, according to
what each state might regard as its own particular interest.
One state might condemn all kinds of contracts of the class
described, while another might permit the making of all of
them, while still another might permit some and prohibit
others, and thus great confusion would ensue, and it would
be difficult in many cases to know just what law was
applicable to any particular contract regarding and regu-
lating interstate commerce. At the same time contracts
might be made between individuals or corporations of such
extent and magnitude as to seriously affect commerce among
the states. These consequences would seemingly necessarily
follow if it were decided that the state legislatures had
control over the subject to the extent mentioned.

“‘Tt is true, so far as we are informed, that no state legis-
lature has heretofore authorized by affirmative legislation
the making of contracts upon the matter of interstate com-
merce of the nature now under discussion. Nor has it, in
terms, condemned them. The reason why no state legisla-
tion upon the subject has been enacted has probably been
because it was supposed to be a subject over which state
legislatures had no jurisdiction. If it should be decided
that they have, then the course of legislation of the different
states on this subject would probably be as varied as we
have already indicated.

‘*On the other hand, if it be true that in no event could
a state legislature enact a law affirmatively authorizing such
contracts [even if Congress had no jurisdiction over the
212 THE SHERMAN ANTI-TRUST ACT.

subject], because in so doing it would to a greater or less
extent itself thereby, though indirectly, regulate interstate
commerce, then the question whether such contracts were
legal without legislative sanction would depend upon the
decisions of the various state courts having jurisdiction in
the cases, and in that event, as the same question might
arise in different states, there would be a great probability
of inconsistent and contradictory decisions among the
courts of the different states, and that, too, upon questions
of contracts amounting to the regulation of interstate com-
merce. It is true that under our system of government
there are numerous subjects over which the states have
exclusive jurisdiction, resulting in the enactment of different
laws upon the same subject in various states, and also in
varying and inconsistent judicial judgments in the different
states upon the same subject. That condition has never
been regarded as an end in itself desirable. It undoubtedly
results in some confusion as to the law applicable to the
particular case, and in many instances thereby increases the
cost and renders doubtful the result of the litigation arising
under such circumstances. They are results and the neces-
sary accompaniment of the division of sovereignty between
the states on the one hand and the Federal Government on
the other, and yet the enormous and inestimable benefits
arising from the existence of separate, independent and sov-
ereign states have completely submerged the comparatively
minor evils of inconsistent judgments and different laws
upon many of the subjects over which the states have exclu-
sive jurisdiction. But upon the matter of interstate and
foreign commerce and the proper regulation thereof, the
subject being not alone national but international in its
character, the great importance of having but one source
for the law which regulates that commerce throughout the
length and breadth of the land, can not, in our opinion,
be overestimated. Each state in that event would have
complete jurisdiction over the commerce which is wholly
within its own borders, while the jurisdiction of Congress,
CONSTITUTIONALITY.

213

under the provisions of the Constitution, over interstate com-
merce would be paramount, and would include therein juris-
diction over contracts of the nature we have been discuss-

ing.’’ 18

‘““We conclude that the plain language of the grant to
Congress of power to regulate commerce among the several
states includes power to legislate upon the subject of those
contracts in respect to interstate or foreign commerce which
directly affect and regulate that commerce, and we find no
reasonable ground for asserting that the constitutional pro-

is“The remark in Railroad
Company .. Richmond, supra,
that it was never intended that
the power of Congress should be
exercised so as to interfere with
private contracts not designed at
the time they were made to create
impediments to interstate com-
merce, when read in connection
with the fact stated in the report,
is entirely sound. It therein ap-
pears that a contract had been
made between the parties, as to
the erection of an elevator and the
business to be done by it, which
contract was valid when made.
Subsequently Congress passed acts
relating to the construction of
bridges over rivers and streams
and authorizing railroads to carry
passengers on their way from one
state to another. The railroad
company becoming tired of its con-
tract with the elevator company,
desired to take advantage of this
legislation and contended that un-
der it the contract which it had
theretofore made with the eleva-
tor company became void as an
obstacle to or a regulation of com-
merce. The court held that con-
tracts which were valid when made
continue valid and capable of en-

forcement, so long, at least, as
peace lasts between the govern-
ments of the contracting parties,
notwithstanding a change in the
condition of business which origi-
nally led to their creating. It was
then added that it never was in-
tended that the power of Congress
should be exercised so as to inter-
fere with private contracts not de-
signed at the time they were made
to create impediments to inter-
state commerce. There is no in-
timation in this remark that Con-
gress has no power to legislate on
interstate commerce. The infer-
ence is quite the reverse, and it
is plain that the case assumes if
private contracts when entered in-
to directly interfere with and
regulate interstate commerce, Con-
gress had power to condemn
them. If the necessary, direct and
immediate effect, of the contract
be to violate an act of Congress
and also to restrain and regulate
interstate commerce, it is mani-
festly immaterial whether the de-
sign to so regulate was or was not
in existence when the contract
was entered into. In such case
the design does not constitute the
material thing. The fact of a di-
214

THE SHERMAN ANTI-TRUST ACT.

visions as to the liberty of the individual limits the extent
of that power as claimed by the appellants.’’ 7°

§ 84. Combination of Transportation Companies.—Under
the interstate clause Congress has the power to prohibit,
as in restraint of interstate commerce, a combination or
contract between competing railroad companies to establish
and maintain interstate rates and fares for the carriage of
freight and passengers on any of the railway companies

rect and substantial regulation is
the important part of the con-
tract, and that regulation existing,
it is unimportant that it was
not designed. Where the contracts
affect interstate only incidentally
and not directly, the fact that it
was not designed or intended to
affect such commerce is simply an
additional reason for holding the
contract valid and not touched by
the act of Congress. Otherwise the
design prompting the execution of
a contract pertaining to and di-
rectly affecting, and more or less
regulating, interstate commerce is
of no importance.”

19 Addyston Pipe & Steel Co. v.
United States, 175 U. S. 211; 20
Sup. Ct. 96; 44 L. Ed. 136; 29
C. 10. A. 141; 54 U. S. App. 723;
46 L. R. A. 122; affirming 85 Fed.
271 (which reversed 78 Fed. 712).
After quoting a number of State
decisions (Morris Run Coal Co. v.
Barclay Coal Co., 68 Pa. St. 173;
8 Am. Rep. 159; Arnot v. Pittston
& Elmira Coal Co., 68 N. Y. 558;
23 Am. Rep. 190; Central Ohio
Salt Co. v. Guthrie, 35 Ohio St.
666; Craft v. MeConoughy, 79 Ill.
346; 22 Am. Rep. 171; People v.
Chicago Gas Trust Co., 130 Tl. 268;
22 N. E. 798; 8 L. R. A. 497; 17

Am. St. 319; Richardson v. Buhl,
77 Mich. 632; 43 N. W. 1102; 6
L. R. A. 457), the Supreme Court
of the United States said: “Now,
the court is asked to adjudge that,
if held to embrace the case before
us, the Anti-Trust Act is repug-
nant to the Constitution of the
United States. In this view we are
unable to concur. The contention
of the defendants could not be
sustained without, in effect, over-
ruling the prior decision of this
court as to the scope and validity
of the Anti-Trust Act. If, as the
court has held, Congress can strike
down a combination between pri-
vate persons or private corpora-
tions that restrains trade among
the states in iron pipe (as in Ad-
dyston Pipe & Steel Co. v. United
States), or in tiles, grates and
mantels (as in Montague v.
Lowry), surely it ought not to be
doubted that Congress has power
to declare illegal «a combination
that restrains commerce among
the states, and with foreign na-
tions, as carried on over the lines
of competing railroad companies
exercising public franchises, and
engaged in such commerce. We
cannot agree that Congress may
strike down combinations among
CONSTITUTION ALITY. 215
parties to the combination or contract, even though such
rates and fares thus established are reasonable. It has the
power to say that no contract or combination shall be legal
which shall restrain trade and commerce, by shutting out
the operation of the general law of competition. The right
of freedom of contracts as to the use and management or
property does not include the right of railway companies to
combine as one consolidated and powerful association in
order to stifle competition among themselves, and thereby
keeping their rates and fares higher than they might other-
wise be under the laws of competition, however reasonabl2
their rates and fares might be. This phase of the validity
of the statute has been considered at length by the Supreme
Court of the United States in the Joint Traffic case; and
from the opinion in that case we make an extended quo-
tation:

‘‘Upon the constitutionality of the act it is now earnestly
contended that contracts in restraint of trade are not neces-

the manufacturers and dealers in
iron pipe, tiles, grates and mantels
that restrain commerce among the
states in such articles, but may
not strike down combinations
among stockholders of competing
railroad carriers, which restrain
commerce as involved in the trans-
portation of passengers and prop-
erty among the several states. If
private parties may not, by com-
bination among themselves, re-
strain interstate and international
commerce in violation of an act
of Congress much less can such
restraint be tolerated when im-
posed upon commerce as carried
on over public highways. Indeed,
if the contentions of the defen-
dants are sound why may not all
the railway companies in the
United States, that are engaged
under state charters, in interstate

and international commerce, enter
into a combination such as the one
here in question, and by the device
of a holding corporation obtain the
absolute control throughout the
entire country of rates for passen-
gers and freight, beyond the
power of Congress to protect the
public against their exactions? The
argument in behalf of the defen-
dants necessarily leads to such re-
sults, and places Congress, al-
though invested by the people of
the United States with full au-
thority to regulate interstate and
international commerce, in a con-
dition of utter helplessness, so far
as the protection of the public
against such combinations is con-
cerned.” Northern Securities Co.
v. United States, 193 U. S. 197;
24 Sup. Ct. 436; 48 L. Ed. 679;
affirming 120 Fed. 712.
216 THE SHERMAN ANTI-TRUST ACT.

sarily prejudicial to the security or welfare of society, and
that Congress is without power to prohibit generally all
contracts in restraint of trade, and the effort to do this
invalidates the act in question. It is urged that it is for the
court to decide whether the mere fact that a contract or
arrangement, whatever its purpose or character, may re-
strain trade in some degree, renders it injurious or prejudi-
cial to the welfare or security of society, and if the court
be of opinion that such welfare or security is not prejudiced
by a contract of that kind, then Congress has no power to
prohibit it, and the act must be declared unconstitutional.
It is claimed that the act can be supported only as an
exercise of the police power, and the constitutional guar-
antees furnished by the Fifth Amendment secure to all
persons freedom in the pursuit of their vocations and the
use of their property, and in making such contracts or ar-
rangements as may be necessary therefor. In dwelling
upon the far-reaching nature of the language used in the
act as construed in the case mentioned, counsel contend that
the extent to which it limits the freedom and destroys the
property of the individual can scarcely be exaggerated,
and that ordinary contracts and combinations, which are
at the same time most indispensable, have the effect of
somewhat restraining trade and commerce, although 10 a
very slight extent, but yet, under the construction adopted,
they are illegal.

‘As examples of the kinds of contracts which are ren-
dered illegal by this construction of the act, the learned
counsel suggest all organizations of mechanics engaged in
the same business for the purpose of limiting the number
of persons employed in the business, or of maintaining
wages; the formation of a corporation to carry on any par-
ticular line of business by those already engaged therein;
a contract of partnership or of employment between persons
previously engaged in the same line of business; the appoint-
ment by two producers of the same person to sell their goods
on commission; the purchase by one wholesale merchant of
CONSTITUTIONALITY. 217

the product of two producers; the lease or purchase by a
farmer, manufacturer or merchant of an additional farm,
manufactory or shop; the withdrawal from business of any
farmer, merchant or manufacturer; a sale of the good will
of a business with an agreement not to destroy its value
by engaging in similar business; and a covenant in a deed
restricting the use of real estate. It is added that the effect
of most business contracts or combinations is to restrain
trade in some degree.

‘‘This makes quite a formidable list. It will be observed,
however, that no contract of the nature above described is
now before the court, and there is some embarrassment in
assuming to decide herein just how far the act goes in the
direction claimed. It might also be difficult to show that
the apportionment by two or more producers of the same
person to sell their goods on commission was a matter in any
degree in restraint of trade.

‘“‘We are not aware that it has ever been claimed that a
lease or purchase by a farmer, manufacturer or merchant
of an additional farm, manufactory or shop, or the with-
drawal from business of any farmer, merchant or manufac-
turer, restrained commerce or trade within any legal defi-
nition of that term; and the sale of a good will of a business
with an accompanying agreement not to engage in a similar
business was instanced in the Trans-Missouri case as a con-
tract not within the meaning of the act; and it was said
that such a contract was collateral to the main contract of
sale and was entered into for the purpose of enhancing the
price at which the vendor sells his business. The instances
cited by counsel have in our judgment little or no bearing
upon the question under consideration.

“‘The question really before us is whether Congress, in the
exercise of its right to regulate commerce among the several
states, or otherwise, has the power to prohibit, as in restraint
of interstate commerce, a contract or combination between
competing railroad corporations entered into and formed for
the purpose of establishing and maintaining interstate rates
218 THE SHERMAN ANTI-TRUST ACT

and fares for the transportation of freight and passengers
on any of the railroads parties to the contract or combina-
tion, even though the rates and fares thus established are
reasonable. Such an agreement directly affects and of course
is intended to affect the cost of transportation of commod-
ities, and commerce consists, among other things, of the
transportation of commodities, and if such transportation be
between states, it is interstate commerce. The agreement
affects interstate commerce by destroying competition and
by maintaining rates above what competition might produce.

“‘Tf it did not do that, its existence would be useless, and
it would soon be rescinded or abandoned. Its acknowledged
purpose is to maintain rates, and, if executed, it does so.
It must be remembered, however, that the act does not pro-
hibit any railroad company from charging reasonable rates.
If in the absence of any contract or combination among the
railroad companies, the rates and fares would be less than
they are under such contract or combination, that is not
by reason of any provision of the act which itself lowers
rates, but only because the railroad companies would, as it
is urged voluntarily and at once inaugurate a war of com-
petition among themselves, and thereby themselves reduce
their rates and fares.

‘“‘Has not Congress, with regard to interstate commerce
and in the course of regulating it, in the case of railroad
corporations, the power to say that no contract or combina-
tion shall be legal which shall restrain trade and commerce
by shutting out the operation of the general law of com-
petition? We think it has.

“As counsel for the Traffic Association has truly said,
the ordinary highways on land have generally been estab-
lished and maintained by the public. When the matter of
the building of railroads as highways arose, a question was
presented whether the state should itself build them or
permit others to do it. The state did not build them, and as:
their building required, among other things, the appropria-
CONSTITUTIONALITY. 219

tion of land, private individuals could not enforce such
appropriation without a grant from the state.

‘‘The building and operation of a railroad thus required
a public franchise. The state would have had no power to
grant the right of appropriation unless the use to which
the land was to be put was a public one. Taking land for
railroad purposes is a taking for a public purpose, and the
fact that it is taken for a public purpose is the sole justi-
fication for taking it at all. The business of a railroad
carrier is of a public nature, and in performing it the
carrier is also performing to a certain extent a function of
government which, as counsel observed, requires them to
perform the service upon equal terms to all. This public
service, that of transportation of passengers and freight, is
a part of trade and commerce, and when transported be-
tween states, such commerce becomes what is described as
interstate, and comes, to a certain extent, under the juris-
diction of Congress by virtue of its power to regulate
commerce among the several states.

‘‘Where the grantees of this public franchise are compet-
ing railroad companies for interstate commerce, we think
Congress is competent to forbid any agreement or combina-
tion among them by means of which competition is to be
smothered.

‘‘Although the franchise when granted by the state be-
comes by the grant the property of the grantee, yet there
are some regulations respecting the exercise of such grants
which Congress may make under its power to regulate com-
merce among the several states. This will be conceded by
all, the only question being as to the extent of the power.

‘We think it extends at least to the prohibition of con-
tracts relating to interstate commerce, which would extin-
guish all competition between otherwise competing railroad
corporations, and which would in that way restrain inter-
state trade or commerce. We do not think, when the
grantees of this public franchise are competing railroads
seeking the business of transportation of men and goods
-220 THE SHERMAN ANTI-TRUST ACT.

from one state to another that ordinary freedom of contract
in the use and management of their property requires the
right to combine as one consolidated and powerful associa-
tion for the purpose of stifling competition among them-
selves, and of thus keeping their rates and charges higher
than they might otherwise be under the laws of competition.
And this is so, even though the rates provided for in the
agreement may for the time be not more than are reason-
able. They may easily and at any time be increased. It
is the combination of these large and powerful corporations,
covering vast sections of territory and influencing trade
throughout the whole extent thereof, and acting as one body
in all the matters over which the combination extends, that
constitutes the alleged evil, and in regard to which, so far
as the combination operates upon and restrains interstate
commerce, Congress has power to legislate and to prohibit.

‘<The prohibition of such contracts may in the judgment
of Congress be one of the reasonable necessities for the
proper regulation of commerce, and Congress is the judge
of such necessity and propriety, unless, in case of a possible
gross perversion of the principle, the courts might be ap-
plied to for relief.

‘““The cases cited by the respondents’ counsel in regard
to the general constitutional right of the citizen to make
contracts relating to his lawful business are not inconsistent
with the existence of the power of Congress to prohibit con-
tracts of the nature involved in this case. The power to
regulate commerce has no limitation other than those pre-
scribed in the Constitution. The power, however, does not
carry with it the right to destroy or impair those limita-
tions and guarantees which are also placed in the Consti-
tution or in any of the amendments to that instrument.”°

20 Monongahela Navigation Co.v. _v. Brimson, 154 U. S. 447-479; 155
United States, 148 U.S. 312-336; U.S. 3; 14 Sup. Ct. 1125; 15 Sup.
13 Sup. Ct. 622; 37 L. Ed. 463; Ct. 19; 38 L. Ed. 1047; 39 L. Ed.
Interstate Commerce Commission 49,
CONSTITUTIONALITY. 221

‘‘Among these limitations and guarantees counsel refer
to those which provide that no person shall be deprived of
life, liberty or property without due process of law, and
that private property shall not be taken for public use
without just compensation. The latter limitation is, we
think, plainly irrelevant.

“‘As to the former, it is claimed that the citizen is de-
prived of his liberty without due process of law when, by
a general statute, he is arbitrarily deprived of the right
to make a contract of the nature herein involved.

‘The case of Allgeyer v. Louisiana”! is cited as authority
for the statement concerning the right to contract. In
speaking of the meaning of the word ‘liberty’ as used in
the Fourteenth Amendment to the Constitution, it was said
in that case to include, among other things, the liberty of
the citizen to pursue any livelihood or vocation, and for
that purpose to enter into all contracts which might be
proper, necessary and essential to his carrying out those
objects to a successful conclusion.

‘““We do not impugn the correctness of that statement.
The citizen may have the right to make a proper [that is,
lawful] contract, one which is also essential and necessary
for the carrying out his lawful purposes. The question
which arises here is, whether the contract is a proper or
lawful one, and we have not advanced a step towards its
solution by saying that the citizen is protected by the
Fifth or any other amendment, in his right to make proper
contracts to enable him to carry out his lawful purposes.
We presume it will not be contended that the court meant
in stating the right of the citizen ‘to pursue any livelihood,’
whether it was lawful or otherwise. Precisely how far a
legislature can go in declaring a certain means of obtaining
a livelihood unlawful, it is unnecessary here to speak of.
It will be conceded it has power to make some kinds of

21165 U. 8S. 578; 17 Sup. Ct.
427; 41 L. Ed. 832; reversing 48
La. Ann. 104; 18 So. 904.
222 THE SHERMAN ANTI-TRUST ACT.
vocations and some methods of obtaining a livelihood un-
lawful, and in regard to those the citizen would have no
right to contract to carry them on.

‘‘Congress may restrain individuals from making con-
tracts under certain circumstances and upon certain sub-
jects.??

‘Notwithstanding the general liberty of contract which
is possessed by the citizen under the Constitution, we find
that there are many kinds of contracts which, while not in
themselves immoral or mala in se, may yet be prohibited
by the legislation of the states or, in certain cases, by Con-
gress. The question comes back whether the statute under
review is a legitimate exercise of the power of Congress
over interstate commerce and a valid regulation thereof.
The question is, for us, one of power only, and not of policy.
We think the power exists in Congress, and that the statute
is therefore valid.’’ **

§ 85. Combinations Among Stockholders.—In the North-
ern Securities Company case it was claimed that Congress
had no power to forbid a combination among stockhold-
ers, even though the result was restraint or monopoly of
interstate commerce, but the Supreme Court held other-
wise, saying :

‘‘Now, the court is asked to adjudge that, if held to
embrace the case before us, the Anti-Trust Act is repugnant
to the Constitution of the United States. In this view we
are unable to concur. The contention of the defendants
could not be sustained without in effect overruling the prior
decisions of this court as to the scope and validity of the
Anti-Trust Act. If, as the court has held, Congress can
strike down a combination between private persons or private

22 Frisbie v. United States, 157
U.S. 160; 15 Sup. Ct. 586; 39 L.
Ed. 657; affirming 28 Fed. 808.

23 United States v. Joint Traffic
Asso., 171 U. 8. 505; 19 Sup. Ct.
25: 43 L. Ed. 259; reversing 89
Fed. 1020; 32 C. C. A. 491; 45

U. S. App. 762; which affirmed
76 Fed. 895. This question was
discussed at length in Northern
Securities Co. v. United States, 193
U. 8. 197; 24 Sup. Ct. 436; 48 L.
Ed. 679; affirming 120 Fed. 721.
CONSTITUTIONALITY. 223

corporations that restrains trade among the states in iron
pipe [as in Addyston Pipe & Steel Co. v. United States]
or in tiles, grates and mantels [as in Montague v. Lowry],
surely it ought not to be doubted that Congress has power to
declare illegal a combination that restrains commerce among
the States, and with foreign nations, as carried on over the
lines of competing railroad companies exercising public fran-
chises, and engaged in such commerce. We cannot agree
that Congress may strike down combinations among manu-
facturers and dealers in iron pipe, tiles, grates and mantels
that restrain commerce among the States in such articles,
but may not strike down combinations among stockholders
of competing railroad carriers, which restrain commerce as
involved in the transportation of passengers and property
among the several States. If private parties may not, by
combination among themselves, restrain interstate and in-
ternational commerce in violation of an act of Congress,
much less can such restraint be tolerated when imposed
or attempted to be imposed upon commerce as carried on
over the public highways. Indeed, if the contentions of
the defendants are sound why may not all the railway com-
panies in the United States, that are engaged, under state
charters, in interstate and international commerce, enter
into a combination such as the one here in question, and
by the device of a holding corporation obtain the absolute
control throughout the entire country of rates for passen-
gers and freight, beyond the power of Congress to protect
the public against their exactions? The argument in behalf
of the defendants necessarily leads to such results, and
places Congress, although invested by the people of the
United States with full authority to regulate interstate
and international commerce, in a condition of utter help-
lessness, so far as the protection of the public against such
combinations is concerned.’’**

24Northern Securities Co. v. Sup. Ct. 436; 48 L. Ed. 679;
United States, 193 U. S. 197; 24 affirming 120 Fed. 712.
224 THE SHERMAN ANTI-TRUST ACT.

§86. State Creating a Corporation—Immunity of Con-
gressional ControltIn the great case of the Northern
Securities arose the question whether the act of Congress
could reach an instance where a state company had been
incorporated seemingly lawfully, but with the intention to
hold the stock of two competing railroads and thereby
suppress competition. It was claimed that Congress did
not intend ‘‘to limit the power of the several states to
create corporations, define their purposes, fix the amount
of their capital, and determine who may buy, own and
sell stock.’? The Court answered this claim in this wise,
and in doing so discussed the relation of the General Gov-
ernment with the states:

“‘So far as the Constitution of the United States is
concerned, a state may, indeed, create a corporation, define
its powers, prescribe the amount of its stock and the mode
in which it may be transferred. It may even authorize
one of its corporations to engage in commerce of every
kind; domestic, interstate and international. The regula-
tion or control of purely domestic commerce of a state is,
of course, with the state, and Congress has no direct power
over it so long as what is done by the state does not in-
terfere with the operations of the general government, or
any legal enactment of Congress. A state, if it chooses so
to do, may even submit to the existence of combinations
within its limits that restrain its internal trade. But
neither a state corporation nor its stockholders can, by reason
of the non-action of the state or by means of any com-
bination among such stockholders, interfere with the com-
plete enforcement of any rule lawfully devised by Congress
for the conduct of commerce among the states or with
foreign nations; for, as we have seen, interstate and in-
ternational commerce is by the Constitution under the
control of Congress, and it belongs to the legislative de-
partment of the government to prescribe rules for the
conduct of that commerce. If it were otherwise, the dec-
laration in the Constitution of its supremacy, and of the
CONSTITUTIONALITY. 225
supremacy as well of the laws made in pursuance of its
provisions, was a waste of words. Whilst every instru-
mentality of domestic commerce is subject to state control,
every instrumentality of interstate commerce may be
reached and controlled by national authority, so far as to
compel it to respect the rules for such commerce law-
fully established by Congress. No corporate person can
excuse a departure from or violation of that rule under
the plea that that which it has done or omitted to do is
permitted or not forbidden by the state under whose au-
thority it came into existence. We repeat that no state
can endow any of its corporations, or any combination
of its citizens, with authority to restrain interstate or in-
ternational commerce, or to disobey the national will as
manifested in legal enactments of Congress. So long as
Congress keeps within the limits of its authority as de-
fined by the Constitution, infringing rights recognized or
secured by that instrument, its regulations of interstate
and international commerce, whether founded in wisdom
or not must be submitted to by all. Harm and only harm
ean come from the failure of the courts to recognize this
fundamental principle of constitutional construction. To
depart from it because of the circumstances of special
cases, or because the rule, in its operation, may possibly
affect the interests of business, is to endanger the safety
and integrity of our institutions and make the Constitu-
tion mean not what it says but what interested parties
wish it to mean at a particular time and under particular
circumstances. The supremacy of the law is the founda-
tion rock upon which our institutions rest.’’?5

25 Northern Securities Co. v.
United States, 193 U. S. 197; 24

Sup. Ct. 436; 48 L. Ed. 679:
affirming 120 Fed. 712. The court

United States v. Reading Co., 226
U. S. 324; 33 Supp. 509; 57 L.
Ed.; affirming and reversing in
part 183 Fed. 427; Hale v. Hen-

cited United States v. Lee, 106 U.
S. 196, 220; 1 Sup. Ct. 240; 27
L. Ed. 171; affirming 3 Hughes
139; Fed. Cas. No. 8192. See also

kel, 201 U. S. 43; 20 Sup. Ct.
370; 50 L. Ed. 652; affirming 139
Fed. 496.
226 THE SHERMAN ANTI-TRUST ACT.

§ 87. State Corporation Acquiring Property in Another
State——‘‘Under the commerce clause or any other provision
of the constitution, Congress has no power to limit the
right of a corporation created by one state in the acquisi-
tion, control, or disposition of property in the several
states; and it is immaterial that such property or its
products may become the subject of interstate commerce.’’**

§ 88. Court Cannot Restrict the Will of Congress.—If
Congress has the power to enact a law restricting com-
binations or monopolies of interstate commerce, then the
courts cannot interfere or adjudge a statute enacted for
that purpose to be void simply because they do not ap-
prove of the means adopted. Thus the Supreme Court has
said:

‘“‘The means employed in respect of the combinations
forbidden by the Anti-Trust Act, and which Congress
deemed germane to the end to be accomplished, was to
prescribe as a rule for interstate and international com-
merce, (not for domestic commerce,) that it should not
be vexed by combinations, conspiracies or monopolies which
restrain commerce by destroying or restricting competition.
We say that Congress has prescribed such a rule, because
in all the prior cases in this court the Anti-Trust Act has
been construed as forbidding any combination which by
its necessary operation destroys or restricts free competi-
tion among those engaged in interstate commerce; in other
words, that to destroy or restrict free competition in in-
terstate commerce was to restrain such commerce. Now,
can this court say that such a rule is prohibited by the
Constitution or is not one that Congress could appro-
priately prescribe when exerting its power under the com-
merce clause of the constitution? Whether the free opera-
tion of the normal laws of competition is a wise and
wholesale rule for trade and commerce is an economic ques-

26In re Greene, 52 Fed. 104.
CONSTITUTIONALITY. 227
tion which this court need not consider or determine. Un-
doubtedly, there are those who think that the general busi-
ness interests and prosperity of the country will be best
promoted if the rule of competition is not applied. But
there are others who believe that such a rule is more neces-
sary in these days of enormous wealth than it ever was in
any former period of our history. Be all this as it may,
Congress has, in effect, recognized the rule of free com-
petition by declaring illegal every combination or con-
spiracy in restraint of interstate and international com-
merce. As in the judgment of Congress the public con-
venience and the general welfare will be best subserved
when the natural laws of competition are left undisturbed
by those engaged in interstate commerce, and as Congress
has embodied that rule in a statute, that must be, for all,
the end of the matter, if this is to remain a government
of laws, and not of men.’’?”

§ 89. Uncertainty.—After the decision in the case. of the
Standard Oil Company against the United States’* was ren-
dered, introducing what is considered by many to be a new
construction of the Sherman Anti-Trust Act, and the adop-
tion of the ‘‘Rule of Reason,’’ it was claimed by many

27Northern Securities Co. v. in trade and commerce. Liberty of

United States, 193 U. 8. 197; 24
Sup. Ct. 436; 48 L. Ed. 659; af-
firming 120 Fed. 721. In this same
case the Supreme Court said: “In
this, as in former cases, they seek
shelter behind the reserved rights
of the states and even behind the
constitutional guarantee of liberty
of contract. But this court has
heretofore adjudged that the act
of Congress did not touch the
rights of the states, and that lib-
erty of contract did not involve
a right to deprive the public of
the advantages of free competition

contract does not imply liberty in
a corporation or individuals to
defy the national will, when legally
expressed. Nor does the enforce-
ment of a legal enactment of Con-
gress infringe, in any proper sense,
the general inherent right of every
one to acquire and hold property.
That right, like all other rights,
must be exercised in subordina-
tion to the law.”

28221 U. 8. 1; 31 Sup. Ct. 502;
55 L. Ed, 619; 34 L. R. A. (N.S.)
834; affirming 173 Fed. 177.
228 THE SHERMAN ANTI-TRUST ACT.

who were defendants in criminal cases, brought against
them for violations of that act, that the effect of that de-
cision was to render the act too uncertain upon which to
base a criminal prosecution, and therefore it was uncon-
stitutional. The Supreme Court has said that a criminal
statute to be valid must be certain in its terms; and citing
this as an authority®® they claimed that no criminal prose-
cution could be based upon the statute’s provisions. But
it was held that the claim was not well founded. The
court said that it knew ‘‘of no case where statutes have
been so general or loose as to have been held to violate
the constitutional provision on which the respondents here
rely. Moreover, the facts are supposed to be known to
the respondents. They are chargeable also, according to
the usual assumption of law, with knowledge of the law.
Therefore, the facts being alleged in detail in the indict-
ment, the respondents are supposed to be advised fully of
what is intended to be charged against them. Certainly it
is not so plain that the statute so violates the Constitution
as to justify us in holding it unconstitutional in the absence

of any adjudication by the Supreme Court.’’*°

29 Oregon Steam Navigation Co.
y. Winsor, 20 Wall. 64; 22 L. Ed.
315; reversing 1 Wash. Rep. 283;
34 Am. Rep. 803. See also Oliver
vy. Gilmore, 52 Fed. 562.

30 United States v. Winslow, 195
Fed. 578; affirmed 227 U. S. 202;
33 Sup. Ct. 253. Chief Justice
White concedes that if the act “ex-
cluded resort to the only means by
which the acts to which it relates
could be ascertained—the light of
reason” (as, previously expressed,
“the standard of reason which had
been applied at the common law
and in this country”), the court
would be required to hold that “the
enforcement of the statute was im-
possible because of its uncertain-

ty.” “The certainty and uncer-
tainty of the Sherman Act must
therefore depend upon the certain-
ty or uncertainty of ‘the common
law and the law of this country’
upon the subject embraced in the
act. That was true at the time
the act was passed, and is true
still. The United States Supreme
Court is not, of course, bound by
previous decisions either of the
state courts in this country or
of the English courts, and if free
to decide for itself the true prin-
ciples of the common Jaw as well
as the true meaning of the Sher-
man Act; but until the Supreme
Court has itself expressly applied
the standard of reason in partic-

Bie a,
CONSTITUTIONALITY.

§ 90.

ular cases the sole source of light
must be the decisions of the Eng-
lish and American courts which
have already applied the standard
of reason in such eases. If the de-
cisions of the courts in the var-
ious English and American jur-
isdictions, in their application of
this standard of reason, were, at
the time of the passage of the
Sherman act, and still are, con-
flicting and irreconcilable on fun-
damental questions, then the stan-
dard of reason as thus applied
cannot be a certain ‘measure for
the purpose of determining the
meaning of the statute.’ That this
was in fact the situation of ‘the
common law and the law of this
country’ at the time the act was
passed, and that cases decided
since that time have emphasized
this inconsistency upon fundamen-
tal points, is clear the moment any
serious attempt is made to review
the decisions. Chief Justice
White’s brief review of ‘the ele-
mentary and indisputable concep-
tions of both the English and
American Law on the subject prior
to the passage of the Anti-Trust
Act,’ passes over the fundamental
difficulties of the subject, and does
not notice or help to reconcile the
inconsistencies in the cases.” Al-
bert Pope of Chicago Bar in 7
Illinois Law Review, 201, 202.
“One of the most surprising things
connected with this whole subject
is the fact that when the Sherman
law has been before the Supreme
‘Court of the United States, it has
not been taken literally and its

229

Congressional Control of Intrastate Commerce.—
Congress has no control over intrastate commerce.

While

constitutionality thus understood
contested. It is amazing that in-
stead of trying to get the word
‘unreasonable’ read into the act,
counsel have not boldly taken the
law by the throat and said to the
court that when Congress under-
takes to forbid ‘every’ contract in
restraint of trade, it undertakes to
do what no American legislature
is clothed with authority to do,
and its action is unconstitutional
and void. Yet such is the case.
When the Trans-Missouri case was
argued and decided, not one word
was said against the constitution-
ality of the act. When six months
afterwards the Joint Traffic case
was argued, a perfunctory attack
was made upon its constitution-
ality by a man who stole his
thoughts from another and then
failed to present them so that the
court could understand and appre-
ciate them. A full account of this
can be seen in the fourth chapter
of a volume, published in the
spring of 1909, by the Neale Pub-
lishing Co., of New York, entitled,
‘Some reminiscences by William L.
Royall.’ In the two elaborate ar-
guments that were made of the
Standard Oil and American Tobac-
co cases no argument was made
against the constitutionality of the
act, so that its constitutionality
as passed by Congress and as con-
demning ‘every’ contract in re-
straint of trade, remains to this
day an open question. That the
reactionaries of the country, are
going to force this issue sooner
or later, if they can, goes without
230

saying. It was involved in ‘free
silver,’ and in ‘government by in-
junction.’ It is involved in the
initiative, referendum and recall,
in the undiscriminating clamor
against monopoly, in Wm. J.
Bryan’s rejoicing at Justice Har-
lan’s dissenting opinion. Sooner or

later that conflict which inheres in

the condemning of ‘every’ combi-
nation in restraint of trade and
the Fifth Amendment which for-
bids Congress to deprive men of
life, liberty or property, must be
fought out, if the reactionaries
force the issue, and the result will
tell whether we are to have social-
ism or a constitutional govern-
ment. Foreseeing the tremendous
consequences that would necessar-
ily flow from the Standard Oil
and American Tobacco cases if the
court adhered to the interpretation
of the Sherman law made in the
Trans-Missouri and Joint Traffic
cases and continued to say that
the Sherman law forbade ‘every’
agreement in restraint of trade, I
published in this journal of Octo-
ber 1, 1909, an article in which I
undertook to show that that inter-
pretation made the Sherman law
unconstitutional and void. I think
it timely to state here some of the
considerations that lead to this
conclusion, as they may have in-
fluence in deterring Congress from
changing the Sherman law so as
to undo what the court has done
in the Standard Oil Case. Sher-
man Act Literally Construed Un-
constitutional.—The citizen has a
natural and inherent right to do
any act whatever that is intended
bona fide to be for his own ad-
vantage and does not aim at doing
a wanton injury to someone else.

THE SHERMAN ANTI-TRUST ACT.

Some two hundred years ago a
case was decided in England that
puts this proposition in a very
clear light. A man had a water
front where he shot ducks at a
decoy for a living. Another man
who halted the former had the ad-
joining water front. This latter
walked up and down his water
front firing his gun off for the
purpose of driving the ducks
away from his neighbor’s front.
The latter sued him and recovered
damages. Lord Chief Justice Holt,
who tried the case, said ‘Suppose,
for instance, the defendant had
shot in his own ground. if he had
occasion to shoot it would have
been one thing, but to shoot on
purpose to damage the plaintiff is
another thing, and a wrong. If
the defendant using the same em-
ployment as the plaintiff, had set
up another decoy so near as to
spoil the plaintiff’s custom, no
action would lie because the de-
fendant had as much liberty to
make use of a decoy as the plain-
tiff.” Now this contains the germ
of the whole law of competition.
You may do what you will to ad-
vance your own interests but you
must inflict no wanton injury upon
your neighbor. The Fifth Amend-
ment to the Constitution of the
United States forbids Congress to
deprive any person of life, liberty
or property without due process
of law. The right to do what you
will to advance your own interest
is a ‘liberty’ which the Fifth
Amendment protects. This includes
the right to compete with your
neighbor to the point of destroying
him, if you compete fairly. The
principle is involved in the case of
Royal v. Virginia, 116 U. S. Rep.
CONSTITUTIONALITY. 231
its control over interstate commerce is full and complete ;**
yet it has no control over intrastate commerce, although it
may reach and control an instrumentality of intrastate
commerce so far as to compel it to respect the rules of
such commerce, such as it may lawfully establish.®?

Congress has no power over contracts and agreements
which wholly relate to restraint of intrastate commerce.
Thus it has no power over the mere manufacture of an
article which may later enter into interstate commerce; for
commerce succeeds manufacture :**

§91. State Control of Interstate Commerce.—In pre-
scribing rules and regulations to govern interstate com-

572; 6 Sup. Ct. 510; 29 L. Ed. 735.
But a most important point rela-
tive to intentions must be noted
here. You have no right to fire off
your gun for the purpose and with
the intention of driving the ducks
away. You have no right to in-
flict wanton injuries upon your
neighbor. But you have a perfect
right to destroy him by fair com-
petition, in order that you may get
the whole business for yourself
even though it is your purpose and
intention to destroy him. This is
evolution. This is Mr. Darwin’s
survival of the fittest. This is a
distinction that must be borne in
mind all the time. The right to
make the ordinary contracts in-
volved in competition is nothing
but the right to make the ordinary
every day contracts of business and
it is a liberty which is protected
by the Fifth Amendment. The
Sherman law forbids ‘every’ con-
tract that puts a restraint upon
trade. These ordinary contracts, in
great affairs as well as small, in-
evitably put restraints upon trade,
as in the wheat and cattle case

cited above. The Sherman law puts
an embargo on these and is there-
fore void.” William L. Royal of
Richmond, Va., in 73 Central Law
Journal (July 28, 1911), 57, 59.

31 Northern Securities Co. v.
United States, 193 U. S. 197; 24
Sup. Ct. 436, 454; 48 L. Ed. 679,
698; affirming 132 Fed. 466;
Addyston Pipe & Steel Co. v.
United States, 175 U. 8. 211; 20
Sup. 'Ct. 96; 44 L. Ed. 136; affirm-
ing 85 Fed. 171; 29 C. C. A. 141;
54 U. S. App. 723; 46 L. R. A.
122; which reversed 78 Fed. 712.

32In re Debs, 158 U. 8. 564;
15 Sup. Ct. 900; 39 L. Ed. 1092;
Northern Securities Co. v. United
States, supra.

33 United States v. E. C. Knight
Co., 156 U. S. 1; 15 Sup. Ct. 249;
39 L. Ed. 325; affirming 9 C. C. A.
297; 17'U. S. App. 466; 60 Fed.
934; 24 L. R. A. 428; Addyston
Pipe & Steel Co. v. United States,
125 U. 8. 211; 20 Sup. Ct. 96;
44 L. Ed. 136; affirming 85 Fed.
297; 29 C. C. A. 141; 54 UL. S.
App. 723; 46 L. R. A. 122; which
reversed 78 Fed. 712.
232 THE SHERMAN ANTI-TRUST ACT.

merce, Congress is supreme; and no state may in any wise
control it. At one time the rule was applied that where
Congress had not exercised its power to control or regulate
a particular subject, state legislation on that subject
would be valid until Congress saw fit to legislate thereon;
but this rule of interpretation of the power of Congress
over interstate commerce no longer prevails; and under
the modern rule no state may in any way enact legislation
which in any wise controls, regulates or infringes on inter-
state commerce.** But by this statement is not meant that
in the absence of federal legislation a state may not, under
its police powers, prescribe proper police regulations in
regard to matters which may properly come within the
power of Congress without violating the commerce clause;
yet such regulations must not be arbitrary and must re-
late to the rights and duties of all, and when that is the
.case they control.2° And a state may enact laws under
its police powers which do not interfere directly with the

operations of interstate commerce.**

34 Southern Ry. Co. v. King, 217
U. S. 524; 30 Sup. Ct. 594; 54
L, Ed. 2; affirming 160 Fed. 332;
87 C. C. A. 284; Oklahoma v.
Kansas Natural Gas Co., 221 U.S.
229; 31 Sup. Ct. 564; 55 L. Ed.
716; affirming 172 Fed. 545; Chi-
cago, Indianapolis & L. Ry. Co. v.
United States, 219 U. S. 486; 31
Sup. Ct.. 272; 55 L. Ed. 611;
Northern Securities Co. v. United
States, 193 U. S. 197; 24 Sup. Ct.
436; 48 L. Ed. 679; affirming 120
Fed. 721.

35 Chicago, R. I. & P. Ry. Co. y.
Arkansas, 219 U. S. 453; 31 Sup.
Ct. 275; 55 L. Ed. 290; affirming
86 Ark. 412; 111 S. W. 121.

36 Southern Railway Co. v. King,
217 U. 8. 524; 54 L. Ed. 868; 30
Sup. Ct. 594; case affirms 160 Fed.
332; Gibbons v. Ogden, 9 Wheat.

1; 6 L. Ed.. 23; Passenger Cases,
7 How. 283; 12 L. Ed. 702; revers-
ing 4 Met. 282; License Cases, 5
How. 504, 573; 127 L. Ed. 256;
affirming 24 Pick. 34; 1 R. I.
193; 13 N. H. 536; Pennsylvania
v. Wheeling & Belmont Bridge Co.,
18 How. 421; 12 L. Ed. 435; Gil-
man v. Philadelphia, 3 Wall. 713;
18 L. Ed. 96; License Tax Cases, 5
Wall. 462; 18 L. Ed. 497; Crandall
v. Nevada, 6 Wall. 35; 18 L. Ed.
745; reversing 1 Nev. 294; The
Lottowanna, 21 Wall. 558; 22 L.
Ed. 654; Henderson v. New York,
92 U.S. 259; 23 L. Ed. 543; Sher-
lock v. Alling, 93 U. S. 99; 23 L.
Ed. 819; affirming 44 Ind. 184;
Mobile County v. Kimball, 102 U.
S. 691; 26 L. Ed. 238; affirming 3
Woods, 555; Fed. Cas. No. 7774;
Head Money Cases, 112 U. S. 580;
CONSTITUTIONALITY.

§ 92.

233

Rules for Governing Commerce—Monopoly.—The

power to regulate interstate commerce is the power to pre-
scribe the rule by which such commerce shall be governed,

28 L. Ed. 798; 5 Sup. Ct. 247;
affirming 28 Blatchf. 460; 18 Fed.
135; Gloucester Ferry ‘Co. v. Penn-
sylvania, 114 U. 8. 196; 29 L. Ed.
158; 5 Sup. Ct. 826; reversing 98
Pa. 105; Brown v. Houston, 114 U.
8. 622; 29 L. Ed. 257; 5 Sup. Ct.
1091; affirming 33 La. Ann. 843;
39 Am. Rep. 284; Pickard v. Pull-
man Southern Car Co., 117 U.S.
34; 6 Sup. Ct. 635; 29 L. Ed.
785; Morgan’s Steamship Co. v.
Louisiana Board of Health, 118 U.
8. 455; 30 L. Ed. 237; 6 Sup. Ct.
1114; affirming 36 La. Ann. 666;
Wabash, St. Louis & P. Ry. Co.
y. Illinois, 118 U. 8. 557; 30 L.
Ed. 214; 7 Sup. Ct. 4; reversing
105 Ill. 236; Robbins v. Shelby Co.
Tax Dist., 120 U. 8. 480; 30 L.
Ed. 694; 7 Sup. Ct. 592; revers-
ing 13 Lea 303; Philadelphia &

Southern Steamship Co. v.
Pennsylvania, 122 U. 8S. 326;
7 Sup. Ct. 118; 30 L. Kd.
1200; reversing 104 Pa. 109;

Manchester v. Massachusetts, 139
U. S. 240; 35 L. Ed. 159; 11
Sup. Ct. 559; affirming 152 Mass.
230; 25 N. FE. 113; 9 L. R. A. 236;
23 Am. St. 820; Covington & Cin-
cinnati Bridge Co. v. Kentucky,
154 U. S. 204; 38 L. Ed. 962;
14 Sup. Ct. 1087; reversing 22 8.
W. 851; 15 Ky. L. Rep. 320;
Northern Securities Co. v. United
States, 193 U. 8. 197; 48 L. Ed.
679; 24 Sup. Ct. 436; affirming
120 Fed. 721; New York, New
Haven & Hartford Rd. Co. v. Inter-
state Commerce Commission, 200
U. S. 361; 26 Sup. Ct. 272; 50

L. Ed. 596; modifying 128 Fed. 59;
McLean v. Denver & Rio Grande
Ry. Co., 203 U. S. 38; 51 L. Ed.
78; 27 Sup. Ct. 1; Asbell v. Kan-
sas, 209 U. S. 251; 28 Sup. Ct.
485; 52 L. Ed. 778; Missouri
Pacific Ry. Co. v. Larabee Flour
Mills Co., 211 U.S, 612, 620, 622;
29 Sup, Ct. 214; 53 L. Ed. 352;
Adams Express Co. v. Kentucky,
214 U. S. 218; 29 Sup. Ct. 633;
53 L. Ed. 972.” “Tt cannot be
‘denied that the power of a state to
protect the lives, health, and
property of its citizens, and to
preserve good order and the pub-
lic morals, ‘the power to govern
men and things within the limits
of its dominion,’ is a power
originally and always belonging
to the states, not surrendered by
them to the general government,
nor directly restrained by the
Constitution of the United
States, and essentially exclusive.
The relief of the citizens of each
state from the burden of monop-
oly and the evils resulting from
the restraint of trade among
such citizens was left with the
state to deal with, and _ this
court has recognized their pos-
session of that power even to
the extent of holding that an
employment or business carried
on by private individuals, when
it becomes a matter of such pub-
lic interest and importance as to
create a common charge or bur-
den upon the citizen; in other
words, when it becomes a practi-
cal monopoly, to which the citi-
234

THE SHERMAN ANTI-TRUST ACT.

and is a power independent of the power to suppress
monopoly. But it may operate in repression of monopoly
whenever that comes within the rules by which commerce
is governed or whenever the transaction is itself a monopoly

of commerce.*?

zen is compelled to resort and by
means of which a tribute can be
exacted from the community, is
subject to regulation by state
legislative power. On the other
hand, the power of Congress to
regulate commerce among the sev-
eral states is also exclusive. The
Constitution does not provide
that interstate commerce shall be
free, but, by the grant of this
exclusive power to regulate it,
it was left free except as Con-
gress might impose restraints.
Therefore it has been determined
that the failure of Congress to
exercise this exclusive power in
any case is an expression of its
will that the subject shall be free
from restrictions or impositions
upon it by the several states, and
if a law passed by a state in the
exercise of its acknowledged
powers comes into conflict with
that will the Congress and state
cannot occupy the position of
equal opposing sovereignties, be-
cause the Constitution declares
its supremacy and that of the
laws passed in pursuance there-
of; and that which is not su-
preme must yield to that which
is supreme. ‘Commerce,  un-
doubtedly, is traffic,’ said Chief
Justice Marshall, ‘but it is some-
thing more; it is intercourse. It
describes the commercial inter-
course between nations and parts

of nations‘in all branches, and is
regulated by prescribing rules for
carrying on that intercourse.’
That which belongs to commerce
is within the jurisdiction of the
United States, but that which
does not belong to commerce is
within the jurisdiction of the
police power of the state.”
United States v. E. C. Knight &
Co, 156 U. S. 1; 15 Sup. Ct.
249; 39 L. Ed. 325; affirming 60
Fed. 934; 9 C. C. A. 297; 17 U.
S. App. 466; 24 L. R. A. 428;
which affirmed 60 Fed. 306.

37 United States v. E. C,
Knight Co., 156 U. 8. 1; 15 Sup.
Ct. 249; 39 L. Ed. 325; affirm-
ing 60 Fed. 934; 9 C. C. A. 297;
17 U. 8. App. 466; 24 L. R. A.
428; which affirmed 60 Fed. 306.
In this case Chief Justice Fuller
said: “The regulation «f com-
merce applies to the subjects of
commerce and not to matters of
internal police. Contracts to buy,
sell, or exchange goods to be
transported among the _ several
states, the transportation and its
instrumentalities, and articles
bought, sold, or exchanged for
the purpose of such _ transit
among the states, or put in the
way of transit, may be regulated,
but this is because they form
part of interstate trade or com-
merce.”
CHAPTER VII.

INTERPRETATION OR CONSTRUCTION OF ACT.

SECTION.

93.

97.

98.

99.

100.
101.
102.

103.
104.

105.

106.

Purpose or object of statute
—Competition.

Policy of Congress.

Title includes restraints and
monopolies named in act.
Competition in place of com-

bination.

Reasonable construction—In-
direct restraints.

History of times—Debates in
Congress.

Construed so as to be con-
stitutional.
Expediency or
ency of statute.
A criminal statute—Quaere.
A new crime created by act.
Indirect restraint.

Every contract and combi-
nation—Early construction
of act.

Understanding of the bench
and bar as to whether re-
straint must be reasonable
or unreasonable.

Restraint must be unreason-
able—‘Rule of Reason.”

non-expedi-

SECTION.
107. Monopoly—Second _ section
subject to construction

108.

109.

110.

111.

112.

113.

114.

117.

given first one.

Question not decided by
previous decisions.

Freight and Joint Traffic
Association Cases explained.

Standard Oil Case explained
and defended—Did not
overrule previous case.

The “Rule of Reason” used
in Standard Oil Case not
an obiter dictum.

Importance of decision in
Standard Oil Case—Storm
of criticism.

Uncertainty of Anti-Trust
Act.

Result of decision in Stan-
dard Oil Case.

To what instances statute
held to apply.

Prohibitions in statute cover
every conceivable act with-
in the purpose of condem-
nation.

Proposed amendment.

§93. Purpose or Object of Statute—Competition—The
purpose and object of the Sherman Anti-Trust Act is to
remedy the injurious effect of restraints upon and monop-.
olies of trade and commerce so far as Congress had the
power so to do; that is to say, so far as they were directed
against interstate or foreign commerce.

235
236

THE SHERMAN ANTI-TRUST ACT.

“‘The primary object of the statute,’’ said Judge Morrow,
‘‘was undoubtedly to prevent the destruction of legitimate
and healthy competition in interstate commerce by indi-
viduals, corporations, and trusts, grasping, engrossing and
monopolizing the markets for commodities.’’

The thing inhibited is the restraint of interstate trade
and commerce, the thing to be accomplished is the main-
tenance of the freedom of that trade and commerce.”

“It is evidently the purpose of the law to permit com-
merce between the states to flow in its natural channels,
unrestricted by any combinations, contracts, or conspiracies,

or monopolies whatsoever.’’®

1In re Charge to Grand Jury
62 Fed. 840.

2See American Biscuit & Mfg.
Co. v. Klotz, 44 Fed. 721.

3 United States v. Hopkins, 82
Fed. 529; reversed 171 U. 8S. 578;
19 Sup. Ct. 40; 43 L. Ed. 290;
United States v. Trans-Missouri
Freight Ass’n, 166 U. 8. 290; 17
Sup. Ct. 540; 41 L. Ed. 1007; re-
versing 58 Fed. 58; 19 U. S. App.
36; 24 L. R. A. 73; 4 Inters.
Com. Rep. 443; 7 C. C. A. 15;
United States v. E. C. Knight Co.,
156 U. S. 1; 15 Sup. Ct. 249;
39 L,. Ed. 325; affirming 9 C. C.
A. 297; 17 U. S. App. 466; 24
L. R. A. 428; 60 Fed. 934;
affirming 60 Fed. 306. ‘The pur-
pose of the act of July 2. 1890,
however, to prevent the
stifling of competition, not de-
stroy it or foster monopoly, and
uny construction of any of its pro-
visions which would give it such
effect is unreasonable and incon-
sistent with the object and spirit
of the law. It is an interpretation
which fosters the mischief it was
passed to remedy, and destroys the

was,

remedy provided to abate the
evil, while a sound construction
would tend to abate the mischief
and to promote the remedy.”
Whitewell v. Continental Tobacco
Co., 125 Fed. 454; 50 C. C. A.
250. “The primary object of the
statute was, undoubtedly, to pre-
vent the destruction of legitimate
and healthy competition in inter-
state commerce by individuals,
corporations, and trusts, grasping,
engrossing, and monopolizing the
markets for commodities.” United
States v. Cassidy, 67 Fed. 698,
704; citing United States v. Pat-
terson, 55 Fed. 605. “It is evi-
dently the purpose of the law to
permit commerce between the
states to flow in its natural chan-
nels, unrestrained by any combi-
nations, or conspiracies, or mon-
opolies whatsoever.” United States
v. Hopkins, 82 Fed. 529, 537; re-
versed 171 U. S. 578; 19 Sup. Ct.
40; 43 L. Ed. 290. “The purpose
of the Act of July 2, 1890, was to
prevent the stifling and the sub-
stantial restriction of competition
in interstate and international
commerce.” United States v.
INTERPRETATION OR CONSTRUCTION OF ACT. 237

‘‘Another topic in which our people rightfully take a
deep interest may be here briefly considered. I refer to
the existence of trusts and other huge aggregations of capi-
tal the object of which is to secure the monopoly of some
particular branch of trade, industry, or commerce and to
stifle wholesome competition. When these are defended, it
is usually on the ground that though they increase profits
they also reduce prices, and thus may benefit the public.
It must be remembered, however, that a reduction of prices
to the people is not one of the real objects of these organ-
izations, nor is their tendency necessarily in that direction.
If it occurs in a particular case it is only because it ac-
cords with the purposes or interests of those managing the
scheme. Such occasional results fall far short of compen-
sating the palpable evils charged to the account of trusts
and monopolies. Their tendency is to crush out individual
independence and to hinder or prevent the free use of
human faculties and full development of human character.
Though the farmer, the artisan and the small trader is in
danger of dislodgement from the proud position of being
his own master, watchful of all that touches his country’s
property, in which he is a factor, to be relegated to the
level of a mere appurtenance to a great machine, with
little free will, with little hope or opportunity of rising
in the scale of responsible and helpful citizenship. To the
instructive belief that such is the inevitable trend of trusts
and monopolies is due the wide-spread and deep-seated
popular aversion in which they are held and the not un-
reasonable insistence that, whatever, may be their incidental
economic advantages, their general effect upon personal
character, prospects, and usefulness cannot be otherwise
than injurious.’’

Standard Oil Co., 173 Fed. 177, 4 President Cleveland, December
C. C. A.; affirmed 221 U. S. 1; 7, 1896. Messages and Papers of
31 Sup. Ct. 502; 55 L. Ed. 619; Presidents. 9 Vol. 744.

34 L. R. A. (N.S.) 834.
238 THE SHERMAN ANTI-TRUST ACT.

§94. Policy of Congress—Judge Day has thus spoken of
the policy of Congress, and declared that the courts had
nothing to do with it:

‘‘The question is, in each case, does the contract or com-
bination have the necessary effect to restrain interstate
commerce? A contract or combination which interferes
with the freedom of interstate commerce and hinders or
prevents its free enjoyment to the extent that it does so,
restrains that commerce, and is illegal. It was the policy
of the common law to discourage monopolies, and to re-
fuse to enforce contracts which had the effect to suppress
competition. It was believed and declared by those who
built up that system of jurisprudence that the public in-
terests were best subserved when commerce and trade were
left unfettered by combinations and agreements which had
the effect to destroy competition in whole or in part. It
was in the same spirit, and with the same end in view, that
Congress passed the act under consideration, which is aimed
to maintain interstate commerce upon the basis of free
competition, and contracts which have the necessary ten-
dency to restrain that freedom are within the condemnation
of the law. The courts are not concerned with the policy
of such a law. It is not for them to inquire whether it
be true, as is often alleged, that this is a mistaken public
policy, and combinations, in the reduction of the cost of
production, cheapened transportation, and lowered cost to
the consumer, have been productive of more good than evil
to the public. The constitution has delegated to Congress
the right to control and regulate commerce between the
states. In the exercise of this right, it has declared for that
policy which shall keep competition free, and leave inter-
state commerce open to all, without the right to any to
better it by contracts or combinations, which shall put it

under restraint.’’s

5 Chesapeake & Ohio Fuel Co. v. 93. See also United States v.
United States, 115 Fed. 610; 53 American Tobacco Co., 164 Fed.
C. C. A. 256; affirming 105 Fed. 700; affirmed but decree modified
INTERPRETATION OR CONSTRUCTION OF ACT. 239

§ 95. Title Includes Restraints and Monopolies Named
in Act.—It is a well known practice of courts to resort to
the title of a statute in a case of doubt, to determine its
meaning. This has been done with the Anti-Trust Act.
Thus Justice Peckham has said of its title:

‘‘We are asked to regard the title of this act as indi-
cative of its purpose to include only those contracts which
were unlawful at common law, but which require the sanc-
tion of a federal statute in order to be dealt with in a
federal court. It is said that when terms which are known
to the common law are used in a federal statute those
terms are to be given the same meaning that they re-
ceived at common law, and that when the language of
the title is ‘to protect trade and commerce against unlawful
restraints and monopolies,’ it means those restraints and
monopolies which the common law regarded as unlawful,
and which were to be prohibited by the federal statute.
We are of opinion that the language used in the title refers
to and includes and was intended to include those re-
straints and monopolies which are made unlawful in the
body of the statute. It is to the statute itself that resort
must be had to learn the meaning thereof, though a resort
to the title here creates no doubt about the meaning of
and does not alter the plain language contained in its
text.’’® It is worthy of remark, however, that the title
refers to ‘‘trade and commerce’’ in the conjunctive while
in the body of Act these words are referred to in the dis-
junctive—‘‘trade or commerce.’’

§96. Competition in Place of Combination.—It has been
claimed that in the increase in the volume of trade, the

221 U. S. 106; 31 Sup. Ct. 632; reversing 58 Fed. 58; 7 C. C. A.

55 L. Ed.. 15; 19 U. S. App. 36; 24 L. R.A.
6 United States v. Trans-Miss- 73; 4 Inters. Com. Rep. 43; which

ouri Freight Ass’n, 166 U. S. 290; affirmed 53 Fed. 440.

17 Supt. Ct. 540; 41 L. Ed. 1007;
240 THE SHERMAN ANTI-TRUST ACT.

competition in a large field of operations, the better con-
ditions of the product, and the maintenance of reasonable
prices, resulting from combinations or contracts calling for
concerted action, benefit the public, and justify the partial
restraint of trade. ‘‘But the policy of the law books to
competition, as the best and safest method of securing
these benefits, and not to combinations which restrain trade.
It is opposed to the methods of combinations and will not
suffer competition to be destroyed under the pretense that
the public will be better served by combination. In the
exercise of the power of regulation conferred upon it by
the constitution, Congress has chosen competition, in prefer-
ence to combination, as the best factor for the maintenance
of the life and the promotion of the ends of interstate
commerce, and has prohibited ‘every contract or combina-
tion in the form of trust or otherwise, or conspiracy in
restraint of trade or commerce among the several states or
with foreign nations,’ and has declared that ‘every person
who shall monopolize or attempt to monopolize or combine
or conspire with any other person or persons to monopolize
any part of the trade or commerce among the several states
or with foreign nations, shall be deemed guilty of a mis-
demeanor.’’’ Speaking of the case before it, the Court
said:

“‘Under these provisions the extent of the production of
the mines, the shipment and sale of the product, and the
making and regulation of the prices thereof, are subject to
the control of the executive committee of the association.
All competition among the members of the association in
the production, shipment, and sale of their product is elim-
inated, and the combination enters the western markets
clothed with powers which enable it to exercise a large in-
fluence in those markets in regulating the supply and the
prices of coal and coke. These provisions are in restraint
of trade, and tend to monopoly, within the meaning of the
INTERPRETATION OR CONSTRUCTION OF ACT.

241

act of Congress, and render the contract illegal, in so far
as it relates to interstate commerce.’’’

7United States v. Northern
Securities Co, 1038 U. 8S. 337;
24 Sup. Ct. 457; 48 L. Kd.

679; allirming 120 Fed. 721. “To
preserve from undue restraint the
action of competition in interstate
commerce was the purpose which
controlled Congress in enacting
this statute, and the courts should
construe the law with a view to
effecting the object of its enact-
ment.” United States v. Union
Pacifie Ry. Co., 226 U. 8. 61; 33
Sup. Ct. 538; 57 L. Ed. —;
Northern Securities Co. v. United
States, 193 U. 8. 337; 24 Sup. Ct.
457; 48 L. Kd. 679; affirming 120
Fed. 721. ‘“ ‘Restraint’ is a com-
prehensive word and covers the
several individual kinds thereof
described in—check, hinder, re-
press, curb, restrict. By the use of
this broad phrase, ‘in restraint of
trade or commerce,’ it would seem
that one of the objects Congress
had in view was the maintenance
of that natural, free flow of com-
merce incident to its commercial
competitive character. We are
therefore justified in holding that,
although the word ‘competition’
is not used therein, this Act, as
said in Chesapeake & Ohio Fuel
Co. v. United States, 115 Fed. 610,
620; 53°C. C. A, 256, 266; affirm-
ing 105 Fed. 93 (a case in which
two of the present justices of the
Supreme ‘Court sat), was ‘aimed
to maintain interstate commerce
on the basis of free competition.’
Such being the case, and the Su-
preme Court has likewise held, we
have an aid both to its construc-
tion and enforcement, namely the

object for which the law was
enacted.” Judge Buffington in dis-
senting opinion in United States v.
Reading Co., 183 Fed. 427, 460.
See State v. Standard Oil Co., 49
Ohio St. 137; 30 N. E. 279; 34
Am, St. 541; 15 L. R. A. 145. “As
in the judgment of Congress the
public convenience and the gen-
eral welfare will be best subserved
when the natural laws of com-
petition are left undisturbed by
those engaged in interstate com-
merce, and as Congress has em-
bodied that rule in a statute, that
must be, for all, the end of the
matter, if this is to remain a
government of laws and not of
men.” The suggestions of dis-
aster to business have, we appre-
hend, their origin in the zeal of
parties who are opposed to the
policy underlying the act of Con-
gress or are interested in the re-
sult of this particular case: at
any rate, the suggestions imply
that the court may and ought to
refuse the enforcement of the pro-
visions of the act if, in its judg-
ment, Congress was not wise in
prescribing as a rule by which the
conduct of interstate and interna-
tional commerce is to be governed
that every combination whatever
its form, in restraint of such com-
merce and the monopolizing or at-
tempting to monopolize such com-
merce shall be illegal. These,
plainly, are questions as to the
policy of legislation which belong
to another department, and this
court has no function to supervise
such legislation from the stand-
point of wisdom or policy. We
242

THE SHERMAN ANTI-TRUST ACT.

§ 97. Reasonable Construction—Indirect Restraint.—The
Anti-Trust Act must have a reasonable construction. It
must not be so elastically construed as to embrace the many

need only say that Congress has
authority to declare, and by the
language of its act, as interpreted
in prior cases, has, in effect, de-
clared that the freedom of inter-
state and international commerce
shall not be obstructed or dis-
turbed by-any combination, con-
spiracy, or monopoly that will re-
strain such commerce by prevent-
ing the free operation of competi-
tion among interstate carriers en-
gaged in the transportation of
passengers and freight. This court
can not disregard that declaration
unless Congress, in passing the
statute in question, be held to
have transgressed the limits pre-
scribed for its action by the Con-
stitution. But, as already indi-
cated, it can not be so held con-
sistently with the provisions of
that instrument.” Northern Secur-
ities Co. v. United States, supra.
“And it is argued that the main
purpose of this agreement to in-
crease the trade of the parties, to
enhance competition in a larger
field, and improve the character of
the product, these objects are bene-
ficial to the public, as well as to
the private parties, lawful in their
scope and purpose, and justifving
the indirect and partial restraint
of trade involved in the execution
of the agreement. The argument
here advanced would be available
to nearly every combination of
this kind. Wider markets and
more trade may be the induce-
ments to such agreements, but
they are purposes which the act of

Congress does not permit to inter-
fere with the freedom of interstate
traffic.” Judge Day in Chesa-
peake & Ohio Fuel Co. v. United
States, 115 Fed. 610; 58 C. C. A.
256; affirming 105 Fed. 93; United
States v. American Tobacco Co.,
164 Fed. 700; affirmed but decree
modified 221 U. 8. 106; 31 Sup.
Ct. 632; 55 L. Ed. 663. “According
to them (state and federal stat-
utes), competition, not combina-
tion should be the law of trade.
If there is evil in this, it should
be accepted as less than that which
may result from the unification of
interest, and the power such uni-
fication gives.” National Cotton
Oil Co. v. Texas, 197 U. 8. 115,
129; 25 Sup. Ct. 379, 382; 49 L.
Ed. 689; affirming (Tex. Civ.
App.) 72 5S. W. 615. “An agree-
ment or combination for the elimi-
nation of competition, from an
economic point of view, may not
operate in restraint of trade. It
may actually develop and increase
trade. Such an agreement, how-
ever, from a legal viewpoint, is
necessarily in restraint of trade.
The law regards competition as
the life of trade, and so that which
restricts competition restrains
trade.” Pennsylvania Sugar Re-
fining Co. v. American Sugar Re-
fining Co., 166 Fed. 254; 92 C.
C. A. 318; reversing 160 Fed. 144;
United States v. Reading Co., 183
Fed. 427, 455; affirmed 226 U. S.
324; 33 Sup. Ct. 509; 57 L. Ed. —.
“The defendants argue that not ev-
ery agreement to fix and maintain
INTERPRETATION OR CONSTRUCTION OF ACT.

prices in interstate commerce vio-
late the Sherman Act. They say
that eyes illumined by the light
of reason will see that what the
defendants did was from the stand-
point of the public interests good,
and not evil. They contend that
the jobbers were making little
profit on the ware. It was trouble-
some and costly to handle. ‘Sec-
onds’ were on the market. The
ware was getting a bad reputation.
If the defendants had not done
what they did, there would soon
have been no trade either to re-
strain or to monopolize. There is
little in the record to support this
contention. Such an apprehension
is vaguely expressed by some wit-
nesses. If there had been marked
falling off in the sale of the ware,
the defendants know it. They
could have shown it by definite
and precise figures. They made no
attempt to do so. If there was
any such danger, it was very
remote, far too remote to justify
the defendants in doing anything
which except for it would have
been unlawful. That there was any
real danger at all is not shown.
According to the defendants, the
public gained by what was done
even upon the assumption that,
if it had been left undone, the
trade would have continued in un-
diminished volume. The ultimate
purchaser of the ware seldom
knows whether he gets a well-made
article. To his eyes it may look
well. He may think that it will
for years be useful, sightly, and
sanitary. In a few months he may
find that it is wearing badly,
and has become unsightly. He
may have reason to fear that to
some slight extent it has become

243

dangerous to the health of him-
self and his family. He suffers
from the greed of the maker, the
jobber, or the plumber, or of two
or all of them. He will be in
no danger from that greed when
no one of them can any longer
make any money by selling him a
bad article for the price of a good.
Human nature being what it is,
no other effective protection can
be given him. If the so-called ‘sec-
onds’ and ‘Bs’ are put upon the
market at all, most of them will
in the end be _ bought by
people who do not know what
they are buying. It is useless,
according to this argument,
to call the makers together
and ask them to stop selling such
goods. Resolutions pledging all
the manufacturers to stop making
and selling them, it is true, may
be easily passed. They will be
adopted with enthusiasm or with
solemnity according to the mood
of the moment, but always with
absolute unanimity. Like so many
other gentlemen’s agreements, they
will be  straightway broken.”
United States v. Standard Sani-
tary Mfg. Co., 191 Fed. 172;
affirmed 226 U. S. 20; 33 Sup. Ct.
9; 57 L. Ed. — Mr. Victor
Morawetz in his argument before
the Senate Committee of Inter-
state Commerce, January 9, 1912,
said concerning the fact that the
Sherman Act did not restrain
competition: “There was another
principle underlying some of the
cases involving so-called ‘restraints
of trade.’ This principle was that
to monopolize the trade in any
article was contrary to public pol-
icy and unlawful because injurious
to the community at large. It was
244

THE SHERMAN ANTI-TRUST ACT.

transactions in commercial life which may remotely affect
interstate commerce, or even possibly remotely restrain it.’
It must not be given such a construction as to bring cases
within its provisions that are not clearly embraced by it,
nor a narrow, technical or forced one of its words so as

to carry out this public policy
recognized at common law that the
first section of the Anti-Trust Act
was passed. It was to protect the
community against monopolizing,
not to protect the freedom of the
individual. At common law there
was no principle and no rule ren-
dering it unlawful merely to di-
minish competition. A diminution
or destruction of competition was
unlawful at common law only
when it went so far as to put an
end to reasonably competitive con-
ditions in trade at some place
and to constitute what is common-
ly understood as monopolizing. In
my judgment, the purpose of the
first section of the act was merely
to prohibit a destruction of com-
petition when it went so far as
to constitute a restraint of trade
within the meaning of the com-
mon law. In other words, when
it went so far as to constitute
monopolizing or an attempt to
monopolize. I am confirmed in this
view by the fact, first, that the
word ‘competition’ does not ap-
pear anywhere in the Anti-Trust
Act. If Congress had intended to
prohibit a diminution of competi-
tion, short of monopolizing, I
think Congress would have said
so. The very fact that by the
second section of the Act Congress
expressly prohibited monopolizing
or, in other words, the destruction
of competition, to such a degree
as to put an end to reasonably

competitive conditions, makes it
clear to my mind that Congress
did not intend by the first section
of the Act to prohibit the destruc-
tion of competition to a minor de-
gree. Certainly, in view of the
express prohibition against mon-
opolizing, the prohibition against
‘restraints of commerce’ in the
first section should not be extended
by implication so as to prohibit
restrictions of competition which
at common law were not deemed
in restraint of commerce.” Hear-
ing before Interstate Commerce
Committee, 62nd Congress, pursu-
ant to Senate Resolution 98, p.
1578. Also see his article in 10
Columbia Law Review 687 (Dec.
1910), reprinted in the above Con-
gressional document at page 1629.
The words “restraint of trade”
are to be construed as including
“restraint of competition.” United
States v. Eastern States Lumber
Co., 201 Fed. 581.

8 Hopkins v. United States, 171
U. 8. 578; 19 Sup. Ct. 45; 43 L.
Ed. 290; reversing 82 Fed. 529;
Anderson v. United States, 171
U. S. 616; 19 Sup. Ct. 54; 43 L.
Ed. 300; Whitwell v. Continental
Tobaeco Co., 125 Fed. 454; 60 C.
C. A. 290; United States v. Joint
Traffic Ass’n, 171 U. 8. 505; 19
Sup. Ct. 25; 43 L. Ed. 259; re-
versing 89 Fed. 1020; 32 C. C. A.
491; 45 U. S. App. 762; which
affirmed 76 Fed. 895.
INTERPRETATION OR CONSTRUCTION OF ACT. 245
to exclude cases from it that are obviously within its pro-
visions. ‘‘What must be sought for always is the intention
of the legislature; and the duty of the court is to give
effect to that intention as disclosed by the words used.’”

“The act of Congress must have a reasonable construc-
tion, or else there would scarcely be an agreement or con-
tract among business men that could not be said to have
directly or remotely, some bearing upon interstate com-
merce, and possibly to restrain it.’’?°

In the application of an instance of monopoly, Judge
Sanborn has well stated the construction that should be ap-
plied to the act, in these words:

“‘Undoubtedly every person engaged in interstate com-
merce necessarily attempts to draw to himself, to the ex-
clusion of others, and thereby to monopolize, a part of that
trade. Every sale and every transportation of an article
which is the subject of interstate commerce evidences a suc-
cessful attempt to monopolize that trade or commerce which
concerns that sale or transportation. If the second section
of the act prohibits every attempt to monopolize any part
of interstate commerce, it forbids all competition therein,
and defeats the only purpose of the law; for there can be
no competition, unless each competitor is permitted to at-
tempt to draw to himself, and thereby to monopolize, some
part of the commerce. This is not, it cannot be, the proper
interpretation of this section. It must be so construed as

9Northern Securities Co. v.
United States, 193 U. 8. 197, 358;

L. Ed. 290; reversing 82 Fed. 529;
United States v. Joint Traffic

24 Sup. Ct. 436; 48 L. Ed. 679;
affirming 120 Fed. 712. “The
courts have found it very difficult
to apply the indefinite generalities
of this Act to the facts of any
given case.” The ‘Charles E. Wise-
wall, 74 Fed. 802; affirmed 86 Fed.
671; 30 °C. C. A. 339.

10 Hopkins v. United States, 171
U. §S. 578; 19 Sup. Ct. 40; 43

Ass'n, 171 U. 8. 505, 568; 19 Sup.
Ct. 25; 43 L. Ed. 259; reversing
89 Fed. 1020; 32 C. C. A. 491;
45 U. 8. App. 762; which affirmed
76 Fed. 895. “The law should not
be defeated by a mere fiction.”
United States v. American Tobac-
co Co., 164 Fed. 700; affirmed 22]
U. S. 106; 31 Sup. Ct. 632; 56
L, Ed.
246 THE SHERMAN ANTI-TRUST ACT.

to abate the mischief it was passed to destroy and to pro-
mote the remedy it provided. It was enacted, not to stifle,
but to foster, competition, and its true construction is that,
while unlawful means to monopolize and to continue an un-
lawful monopoly of interstate and international commerce
are misdemeanors and enjoinable under it, monopolies of
part of interstate and international commerce by legitimate
competition, however successful, are not denounced by the
law, and may not be forbidden by the courts.’”?

§98. History of Times—Debates in Congress.—In the
construction of a statute the history of the times when it
was enacted should be considered, in order to determine
what evils or changes in the conditions then existing the
legislature sought to remedy or meet. And in order to
ascertain what were the conditions or evils then existing,
resort may be made to the debates in the legislature, not for
the purpose of interpreting the statute, but to ascertain the
conditions under which it was enacted.”

11 United States v. Standard Oil
Co., 174 Fed. 177; affirmed 221
U. S. 1; 31 Sup. Ct. 602; 55 L.
Ed. 619; 34 L. R. A. (NS)
834; citing Whitwell v. Continen-
tal Tobacco Co., 125 Fed. 454, 462;
60 C. C. A. 290, 298; 64 L. R.
A. 689; Phillips v. Iola Portland
Cement Co., 125 Fed. 593, 594;
61 C..C. AL 19, 20.

12 Standard Oil Co. v. United
States, 221 U. 8. 1; 31 Sup. Ct.
502; 55 L. Ed. 619; 34 L. R. A,
(N.S.) 834; affirming 173 Fed.
177; United States v. Debs, 64
Fed. 724, 746; United States
v. Addyston Pipe & Steel Co.,
78 Fed. 712, 716; reversed 85
Fed. 271; 29 C. C. A. 141; 54
U.S. App. 723; 46 L. R. A. 122;
175 U. S. 211; 20 Sup. Ct. 96;
44 L. Ed. 136; United States v.

Chief Justice White said:

Trans-Missouri Freight Ass’n, 166
U. S. 299; 17 Sup. Ct. 540; 41
L. Ed. 1007; reversing 58 Fed.
58; 7:0. C. A. 15; 24 L. R. A.
73; 19 U. S. App. 76; 4 Inters.
Com. Rep. 443; which affirmed
53 Fed. 440; Loewe v. Lawlor, 208
U. 8. 274, 301; 28 Sup. Ct. 301;
52 L. Ed. 488; reversing 148 Fed.
924. In the Standard Oil case
“The
debates show that doubt as to
whether there was a common law
of the United States which
governed the subject in the ab-
sence of legislation was among the
influences leading to the passage
of the act. They conclusively show,
however, that the main cause
which led to the legislation was
the thought that it was required
by the economic condition of the
INTERPRETATION OR CONSTRUCTION OF ACT. 247

§99. Construed so as to be Constitutional.—tIt is one of
the cardinal principles of construction of a statute that the
court will construe it to be constitutional and not unconstitu-
tional, unless the terms of the statute force the court to
adopt the latter construction.

That is the case with the Sherman Anti-Trust Act. And
the court will not apply it to a transaction which Congress
had no power to control, for as to such a transaction the
statute is unconstitutional, and that construction of the
statute will not be adopted.?8

§100. Expediency or Non-expediency of Statute——The
contract, combination, conspiracy or monopoly cannot be
taken out of the category of the unlawful by general rea-
soning as to its expediency or non-expediency or the wisdom
or want of wisdom of the statute which prohibits its being
made or entered into. ‘‘When the nature and character
of the contracts create a conclusive presumption bringing
them within the statute, such a result is not to be disre-
garded by the courts by a substitution of a judicial ap-

times; that is, the vast accumula-
tion of wealth in the hands of
corporations and individuals, the
enormous development of corporate
organization, the facility for com-
bination which such organization
afforded, the fact that the facility
was being used, and that combina-
tions known as trusts were being
multiplied, and the widespread im-
pression that their power had been
and would be exerted to oppress
individuals and injure the public
generally. Although debates may
not be used as a means for inter-
preting a statute (United States
v. Trans-Missouri Freight Asso.,
166 U. 8. 318; 41 L. Ed. 1019;
17 Sup. Ct. Rep. 548; reversing

58 Fed. 58; 19 U. S. App. 36;
24 L. R. A. 73; 4 Inters. Com.
Rep. 443, and cases cited), that
rule, in the nature of things, is
not violated by resorting to de-
bates as a means of ascertaining
the environment at the time of the
enactment of a particular law;
that is, the history of the period
when it was adopted.”

18 United States v. Addyston
Pipe & Steel Co., 78 Fed. 712; re-
versed, but not on this general
proposition, 85 Fed. 271; 29 C.
Cc. A. 141; 54 U. S. App. 723;
46 L. R. A. 122; which was
affirmed 175 Fed. 211; 20 Sup. Ct.
96; 44 L, Ed. 136.
248 THE SHERMAN ANTI-TRUST ACT.
preciation of what the law ought to be for the plain ju-
dicial duty of enforcing the law as it is.’’!*

§ 101. A Criminal Statute, Quaere.—In an early case that
was reversed it was said that ‘‘The Anti-Trust Act is a
criminal statute, and it should not be so construed as to
subject persons to the penalties thereby imposed unless the
contract complained of is one that is clearly within the
provision of the statute.’’* And this was the view of Jus-
tice Holmes expressed in a dissenting opinion,’® and in the
prevailing opinion in that same case the court seems to
have regarded it as a criminal statute, but says of the rule
requiring such a statute to be strictly construed that ‘‘It
means only that we must not bring cases within the pro-
visions of such a statute that are not clearly embraced by
it, nor by narrow, technical, nor forced construction of
words, exclude cases from it that are obviously within its
provisions. What must be sought for always is the intention
of the legislature, and the duty of the court is to give
effect to that decision as disclosed by the words used.’’!’

§102. A New Crime Created by Act.—To enter into a
contract in restraint of trade was not a crime at common

law. Whenever such a contract came before the courts

14 United States v. Standard 16 Northern Securities Co. v.

Sanitary Mfg. Co., 191 Fed. 172;
affirmed 226 U. S. 20; 33 Sup. Ct.
9; 57 L. Ed. —; Standard Oil
Co. v. United States, 221 U. 8.
65; 31 Sup. Ct. 502; 55 L. Ed.
619; 34 L. R. A. (N.S.) 834;
affirming 173 Fed. 177.

15 United States v. Trans-Miss-
ouri Freight Ass’n, 58 Fed. 58;
7C. 0. A. 15; 24 L. R. A. 73;
4 Inters. Com. Rep. 443; 19
U. 8S. App. 73; affirming 53 Fed.
440; reversed 166 U. S. 290; 17
Sup. Ct. 548; 41 L. Ed. 1019. And
this was the view of Judge Jack-
son. In Re Greene 52 Fed. 104.

United States, 193 U. S. 197, 401;
24 Sup. Ct. 436; 48 L. Ed. 679;
affirming 120 Fed. 721.

17 See also Green v. Stoller, 77
Fed. 1. “The statute we are now
considering expressly gives such
contracts a criminal and unlawful
character.” Judge Taft in United
States v. Addyston Pipe & Steel
Co., 85 Fed. 271; 29 C. C. A.; 54
U. S. App. 723; 46 L. R. A. 122;
reversing 78 Fed. 712, and
affirmed 175 U. S. 211; 20 Sup.
Ct. 96; 44 L. Ed. 136.
INTERPRETATION OR CONSTRUCTION OF ACT. 249
they simply refused to enforce its provisions. No right
of action could grow out of such a contract. But Congress
by the enactment of the Anti-Trust Act created a new
criminal offense against the United States; and in doing so
it went a step beyond the common law. ‘‘It adopts the
common law in making combinations and conspiracies in
restraint of the designated trade or commerce criminal of-
fenses, and creates a new crime, in making contracts in re-
straint of trade misdemeanors, and indictable as such.’’!®
Judge Taft has considered this phase of the statute, saying:
‘*Contracts that were in unreasonable restraint of trade at
common law were not unlawful in the sense of being crim-
inal, or giving rise to a civil action for damages in favor
of one prejudicially affected thereby, but were simply void,
and were not enforced by the courts.*® The effect of the
act of 1890 is to render such contracts unlawful in an
affirmative or positive sense and punishable as a misde-
meanor, and to create a right of civil action for damages
in favor of those injured thereby, and a civil remedy by
injunction in favor of both private persons and the public
against the execution of such contracts and the maintenance
of such trade restraints.’’?°

§103. Indirect Restraint. There are many contracts or
combinations that only affect interstate trade or commerce
indirectly. Are these condemned by the act? If they are,

18In re Greene, 52 Fed. 104.

19 Citing Mogul Steamship Co.
v. McGregor (1892) App. Case 25;
61 L. J. Q. B. 295; 66 L. T. 1; 40
W. R. 337; 56 J. P. 101; 7 Asp.
M. 120; 8 T. L. R. 182; affirming
L. R. 23 Q. B. Div. 598; 59 L.
T. 514; 58 L. J. Q. B. 465; 5 T.
L. R. 658; which affirmed L. R.
21 Q. B. Div. 544; 5 T. L. R.
658; 57 L. J. Q. B. 541; Interview
Injunction, L. R. 15 Q. B. Div.
476; 64 L. J. Q. B. 540; 53 L. T.

268; 15 Cox C. C. 740; 49 J. P.
646; 5 Asp. M. 467; 4 T. L. R.
783; Hornby v. Close, L. R. 2 Q.
B. 153; Hilton v. Eckersley, 6 El.
& Bl. 47, 66; and Farrer v. Close,
L. R. 4 Q. B. Div. 602.

20 United States v. Addyston
Pipe & Steel Co., 85 Fed. 271; 29
©. 'C. A. 141; 54 U. S. App. 7238;
46 L. R. A. 122; Monarch Tobacco
Works v. American Tobacco Co.,
165 Fed. 774.
250 THE SHERMAN ANTI-TRUST ACT.

then as to such contracts or restraints the act is unconsti-
tutional. Every contract or combination in restraint of
intrastate trade or commerce has some restraint upon inter-
state trade or commerce. The affairs of the commercial
world are so interlaced and woven together that a single
one disturbed disturbs, though imperceptible, all others.
There is no absolute liberty in the world so long as more
than one individual inhabits it. Scientists tell us that even
a slight disturbance of the atmosphere at one place spreads
a disturbance of all the atmosphere to the remotest boundary
of the earth. But these speculations are more for the
theorists than the practical man of every day affairs.
Somewhere this side of these theoretical points the busi-
ness world halts and says that the action beyond those
points is of no concern to it. The world looks at the
question in a practical way. So in the construction of
this Anti-Trust Act it will not be applied to an indirect
restraint of interstate trade or commerce; but only to those
instances of direct restraint. Judge Sanborn, in speaking
of the purposes of the act?! said: ‘‘That purpose was to
prevent the stifling or substantial restriction of competition,
and the test of the legality of a combination under the act
which was inspired by this purpose is its direct and neces-
sary effect upon competition in commerce among the states.
If its necessary effect is to stifle or to directly and substan-
tially restrict free competition, it is a contract, combination,
or conspiracy in restraint of trade, and it falls under the
ban of the law.’’??

21In Whitwell v. Continental
Tobacco Co., 125 Fed. 454; 60 C.
Cc. A. 290.

22 United States v. Trans-Miss-
ouri Freight Association, 166 U.
S. 290, 339, 340, 342; 17 Sup. Ct.
540; 41 L. Ed. 1007; Addyston
Pipe & Steel Company v. United
States, 175 U. S. 211; 20 Sup.
Ct. 96; 44 L. Ed. 136; United

States v. Joint Traffic Ass’n, 171
U. S. 505, 576, 577; 19 Sup. Ct.
25; 43 L. Ed. 259; United States
v. Jellico Mountain Coal & Coke
Co., (C. 'C.) 46 Fed. 432; 12 L.
R. A. 753; Lowry v. Tile, Mantel
& Grate Ass’n., (C. C.) 817, 826,
Id. (C. C.) 106 Fed. 40, 45;
United States v. Addyston Pipe
& Steel Co., 85 Fed. 271, 294; 29
. INTERPRETATION OR CONSTRUCTION OF ACT. 251

If, on the other hand, it promotes or but incidentally or
indirectly restricts competition, while its main purpose and
chief effect are to foster the trade and to increase the busi-
ness of those who make and operate it, then it is not a
contract, combination, or conspiracy in restraint of trade,
within the true interpretation of this act, and it is not
subject to its denunciation.’’3

So the Supreme Court of the United States has said:

‘“‘The contract condemned by the statute is ‘one whose
direct and immediate effect is a restraint upon that kind
of trade or commerce which is interstate. * * * To treat
as condemned by the act all agreements under which, as
a result, the cost of conducting an interstate commercial
business may be increased, would enlarge the application of
the act far beyond the fair meaning of the language used.

Cc. C. A. 141, 163; 46 L. R. A.
122; United States v. Coal Dealers’
Ass’n., (C. C.) 85 Fed. 252; Ches-
apeake & O. Fuel Co. v. United
States, 115 Fed. 610, 619; 53 C.
C. A. 256, 265; Gibbs v. MeNeeley,
118 Fed. 120; 55 C. C. a. 70; 60
L. R. A. 152; Brown v. Jacobs
Pharmacy Co., 115 Ga. 429; 41
S. E. 553; 57 L. KR. A. 547; 90
Am. St. 126; Arnot v. Coal Co.,
68 N. Y. 558; 23 Am. Rep. 190;
Morris Run Coal Co. v. Barclay
Coal Co., 68 Pa. 173; 8 Am. Rep.
159,

23 Hopkins v. United States, 171
U. S. 578, 592; 19 Sup. Ct. 40;
43 L. Ed. 290; Anderson v. United
States, 171 U. S. 604, 616; 19 Sup.
Ct. 50; 43 L. Ed. 300; United
States v. Joint Traffic Ass’n, 171
U. S. 505, 568; 19 Sup. Ct. 25;
43 L. Ed. 259; Addyston Pipe &
Steel Co. v. United States, 175 U.
S. 211, 245; 20 Sup. Ct. 96; 44
L. Ed. 136; U. 8. Chemical Co. v.

Provident Chemical Co. (C. C.)
64 Fed. 946; California Steam
Navigation Co. v. Wright, 6 ‘Cal.
258; 65 Am. Dec. 511; Smalley
v. Greene, 52 Iowa 241; 3 N. W.
78; 35 Am. Rep. 267; Schwalm v.
Holmes, 49 Cal. 665; In re Greene
(C. C.) 52 Fed. 104; Allgeyer v.
Louisiana, 165 U. 8S. 578, 589; 7
Sup. Ct. 427; 41 L. Ed. 832; State
v. Goodwill, 33 W. Va. 179; 10
S. E. 285, 286; 6 L. R. A. 621;
25 Am. St. Rep. 863; People v.
Gillson, 109 N. Y. 389, 398; 17 N.
E. 343; 4 Am. St. Rep. 465; Butch-
ers’ Union Co. v. Crescent City,
ete. Co., 111 U. 8. 746, 755; 4
Sup. Ct. 652; 28 L. Ed. 585;
Welch v. Phelps & Bigelow Wind-
mill Co. (Tex. Sup.) 36 S. W.
71; Commonwealth v. Grinstead,
(Ky.) 63 8. W. 427; Walsh v.
Dwight, (Sup.) 58 N. Y. Supp.
91, 93; Brown v. Rounsavell, 78
Ill. 589; Noyes on Intercorporate
Relations, No. 388, p. 563.
252

THE SHERMAN ANTI-TRUST ACT.

There must be some direct and immediate effect upon inter-
state commerce in order to come within the act.

“The act of Congress must have a reasonable construc-
tion, or else there would scarcely be an agreement or con-
tract among business men that could not be said to have,
indirectly or remotely, some bearing upon interstate com-

merce, and possibly to restrain it.

We have no idea that

the act covers or was intended to cover such kinds of agree-

ments.’’?4

24 Hopkins v. United States, 171
U. 8. 578, 592; 19 Sup. 2; 43
L. Ed. 290. “Many agreements sug-
gest themselves which relate only
to facilities furnished commerce or
else touch it only in an indirect
way, while possibly enhancing the
cost of transacting the business,
and which at the same time we
would not think of as agreements
in restraint of interstate trade or
commerce. They are agreements
which in their effect operate in
furtherance and in aid of commerce
by providing for it facilities, con-
veniences, privileges or services,
but which do not directly relate
to charges for its transportation,
nor to any other form of inter-
state commerce. To hold all such
agreements void would in our
judgment improperly extend the
act to matters which are not of
an interstate commercial nature.
It is not difficult to imagine agree-
ments of the character above in-
dicated. For example, cattle, when
transported long distances by rail
require rest, food and water. To
give them these accommodations it
is necessary to take them from
the car and put them in pens or
other places for their safe recep-
tion. Would an agreement among

the land owners along the line
not to lease their lands for less
than a certain sum be a contract
within the statute as being in re-
straint of interstate trade or com-
merce? Would it be such a con-
tract even if the lands, or some of
them, were necessary for use in
furnishing the cattle with suitable
accommodations? Would an agree-
ment between the dealers in corn
at some station along the line of
the road not to sell it below a
certain price be covered by the
act, because the cattle must have
corn for food? Or would an agree-
ment among the men not to per-
form the service of watering the
cattle for less than a certain com-
pensation come within the restric-
tion of the statute? Suppose the
railroad company which transports
the cattle itself furnishes the fa-
cilities, and that its charges for
transportation are enhanced be-
cause of an agreement among the
land owners along the line not to
lease their lands to the company
for such purposes for less than
i named sum, could it be success-
fully contended that the agree-
ment of the land owners among
themselves would be a violation
of the act as being in restraint
INTERPRETATION OR CONSTRUCTION OF ACT.

253

It necessarily follows that if the restraint is only inci-
dental or collateral to the contract or combination the act

of interstate trade or commerce?
Would an agreement between
builders of cattle cars not to build
them under a certain price be void
because the effect might be to in-
crease the price of transportation
of cattle between the states? Would
an agreement among dealers in
horse blankets not to sell them for
less than a certain price be open
to the charge of a violation of
the act because horse blankets are
necessary to put on horses to be
sent long journeys by rail, and by
reason of the agreement the ex-
pense of sending the horses from
one state to another for 4 market
might be thereby enhanced. Would
an agreement among cattle drivers
not to drive the cattle after their
arrival at the railroad depot at
their place of destination to the
cattle yards where sold, for less
than a minimum sum, come with-
in the statute? Would an agree-
ment among themselves by loco-
motive engineers, firemen, or
trainmen engaged in the service
of an interstate railroad not to
work for less than a certain named
compensation be illegal because the

cost of transporting interstate
freight would be thereby en-
hanced? Agreements similar to

these might be indefinitely sug-
gested. In our opinion all these
queries should be answered in the
negative. The indirect effect of the
agreements mentioned might be to
enhance the cost of marketing the
cattle, but the agreements them-
selves would not necessarily for
that reason be in restraint of in-
terstate trade or commeroe. As

their effect is either indirect or
else they relate to charges for the
use of facilities furnished, the
agreements instanced would be
valid provided the charges agreed
upon were reasonable. The effect
upon the commerce spoken of must
be direct and proximate. New
York, Lake Erie & Western Rail-
road v. Pennsylvania, 158 U. 8.
431, 439; 15 Sup. Ct. 896; 39 L.
Ed. 1048; affirming 145 Pa. 38;
22 Atl. 212. An agreement may
in a variety of ways affect inter-
state commerce, just as state leg-
islation may, and yet, like it, be
entirely valid, because the inter-
ference produced by the agreement
or by the legislation is not direct.
Sherlock v. Alling, 93 U. S.
99-103; 23 L. Ed. 819; affirming
44 Ind. 184; United States v. E.
C. Knight Company, 156 U. S. 1,
16; 15 Sup. Ct. 249; 39 L. Ed.
325; Pittsburg & Southern Coal
Co. v. Louisiana, 156 U. S. 590,
597; 15 Sup. Ct. 459; 39 L. Ed.
544; 41 La. Ann. 465; 6 So.
220; Parkersburg Transportation
Company v. Parkersburg, 107 U.
S. 691; 2 Sup. Ct. 732; 27 L. Ed.
584; Huse v. Glover, 119 U. 8S.
543; 7 Sup. Ct. 313; 33 L. Ed.
487; affirming 15 Fed. 292; Oua-
chita Packet Company v. Aiken,
121 U. S. 444; 7 Sup. Ct. 907;
30 L. Ed. 976; affirming 4 Woods
208; St. Louis v. Western Union
Telegraph Company, 148 U. 8. 92;
13 Sup. Ct. 485; 37 L. Ed. 380;
reversing 39 Fed. 59. An agree-
ment among the owners of such
facilities, to charge not less than
a minimum rate for their use, can-
254

THE SHERMAN ANTI-TRUST ACT.

does not condemn it, especially if the main purpose of those
combining is to promote their business.?*

not be condemned as illegal under
the act of Congress. The fact that
the above cited cases relate to
tangible property, the use of which
was charged for, does not alter the
reasoning upon which the decis-
ions were placed. The charges were
held valid because they related to
facilities furnished in aid of the
commerce and which did not consti-
tute a regulation thereof. Facili-
ties may consist in privileges or
conveniences provided and made
use of or in services rendered in
aid of commerce as well as in the
use of tangible property and so
long as they are facilities and
the charges not unreasonable an
agreement relating to their amount
is to the services of the commission
agent to aid him in the sale of
his cattle and the agent has the
right to say upon what terms he
will render them, and he has the
equal right, so far as the act of
Congress is concerned, to agree
with others in his business not to
render those services unless for a
certain charge. The services are
no part of the commerce in the
cattle.’ See also Union Pacific
Coal Co. v. United States, 173
Fed. 737; Steers v. United States,
192 Fed. 1; 112 ©. C. A. 423;
United States v. American Tobac-
eo Co., 221 U. S. 106; 31 Sup. Ct.
632; 55 L. Ed. 694; reversing 164
Fed. 700; Standard Oil Co. v.
United States, 221 U. 8S. 1; 31
Sup. Ct. 502; 55 L. Ed. 619; 34
L. R. A. (N.S.) 834; affirming
173 Fed. 177; United States v.
Union Pac. R. Co., 188 Fed. 102;
reversed (U. S.) 33 Sup. Ct. 162;

57 L. Ed.; Gibbs v. McNeeley,
llg Fed. 120; 55 C. C. A. 70;
60 L. R. A. 152; reversing 148
Fed. 924; Ellis v. Inman, 131 Fed.
182; 65 C. C. A. 488; reversing
124 Fed. 956.

25 Harbison-Walker Co. v. Stan-
ton, 227 Pa. 55; 75 Atl. 988;
Field v. Barber Asphalt Co., 194
U. S. 618; 24 Sup. Ct. 784; 48
L. Ed. 1142; modifying 117 Fed.
925; Phillips v. Iola Portland Ce-
ment Co., 125 Fed. 593; 61 C. C.
A. 19; Whitwell v. Continental To-
bacco Co., 125 Fed. 454; 60 C.
Cc. <A. 290; Camors McConnell
Co. v. McConnell, 140 Fed. 412;
72 C. C. A. 681; affirmed 140
Fed. 987; United States v. Joint
Traffic Ass’n, 171 U. S. 505; 19
Sup. Ct. 25; 48 L. Ed. 259; re-
versing 89 Fed. 1020; 32 C. C. A.
491; 45 U. S. App. 762. “Where
the subject matter of the agree-
ment does not directly relate to
and act upon and embrace inter-
state commerce, and where the un-
disputed facts clearly show that
the purpose of the agreement was
not to regulate, obstruct or re-
strain that commerce, but that it
was entered into with the object
of properly and fairly regulating
the transaction of the business in
which the parties to the agree-
ment were engaged, such agree-
ment will be upheld as not with-
in the statute, where it can be
seen that the character and terms
of the agreement are well calcu-
lated to attain the purpose for
which it was formed, and where
the effect of its formation and en-
forcement upon interstate trade or
INTERPRETATION OR CONSTRUCTION OF ACT. 209

This has been well put by Judge Sanborn:

‘‘The test of the validity of a contract, combination, or
conspiracy challenged under the Anti-Trust Law is the direct
effect of such a contract or combination upon competition
in commerce among the states. If its necessary effect
is to stifle competition, or to directly and substantially re-
. strict it, it is void. But if it promotes, or only inciden-
tally or indirectly restricts, competition in commerce among
the states, while its main purpose and chief effect are to
foster the trade and enhance the business of those who
make it, it does not constitute a restraint of interstate
commerce within the meaning of that law, and is not ob.
noxious to its provisions. This act of Congress must have
a reasonable construction. It was not its purpose to pro-
hibit or to render illegal the ordinary contracts or com-
binations of manufacturers, merchants, and traders, or the
usual devices to which they resort to promote the success
of their business, to enhance their trade, and to make their
occupations gainful, so long as those combinations and de-
vices do not necessarily have a direct and substantial effect
to restrict competition in commerce among the states.’’¢
Speaking of a specific contract, Judge Toulmin has said:

commerce is in any event but in-
direct and incidental, and not its

versed 78 Fed. 712; Connolly v.
Union Sewer Pipe Co., 99 Fed.

purpose or object.” Anderson v.
United States, 171 U. 8. 604; 19
Sup. Ct. 50; 43 L. Ed. 300; re-
versing 82 Fed. 998. See also
United States v. American Tobac-
co Co., 221 U. S. 106; 31 Sup. Ct.
632; 56 L. Ed. —; reversing 164
Fed. 106; Standard Oil Co. v.
United States, 221 U.S.1; 31 Sup.
Ct. 502; 55 L. Ed. 619; 34L. R.A.
(N.S.) 839; Addyston Pipe &
Steel Co. v. United States, 175 U.
S. 211, 234; 20 Sup. Ct. 96; 44
L, Ed. 136; affirming 85 Fed. 271;
29 C. C. A. 141; 54 U. S. App.
723; 46 L, R. A. 122; which re-

354; affirmed 184 U. S. 540; 22
Sup. Ct. 431; 46 L. Ed. 679. “Not
that every case of incidental re-
straint makes a contract void, but
the question is, is it the effect of
the contract to directly restrain
interstate commerce?” Judge Day
in Chesapeake & Ohio Fuel Co.
v. United States, 115 Fed. 610; 53
C. C. A. 256; affirming 105 Fed.
93.

26 Phillips v. Iola Portland Ce-
ment Co., 125 Fed. 593; 61 C0. ©
A. 19. See also Northern Securi-
ties Co. v. United States, 193 U. S.
197; 24 Sup. Ct. 436; 48 L. Ed.
256 THE SHERMAN ANTI-TRUST ACT.

‘‘A contract may, in a variety of ways, affect interstate
commerce, and yet be entirely valid, because the interfer-
ence produced by the contract is not direct. The fact that
trade and commerce might be indirectly affected is not suf-
ficient. The effect must be direct and proximate. The in-
direct effect of the contract under consideration might be
to enhance the price of tropical fruit, but the contract
itself would not directly or necessarily for that reason be
in restraint of interstate trade or commerce. While it
might tend to restrain such trade, the restraint would be an
indirect result. In the sale of a going business or concern,
with the good will attached, where, as ancillary and in-
cident thereto, the seller enters into a covenant with the
buyer that he would not compete with him in any way as
to diminish the value of the property or business sold, al-
though such covenant may be in partial restraint of trade,

it should be upheld and enforced.’’?”

675; affirming 120 Fed. 721, where
the words, in speaking of a re-
straint prohibited within the Act.
“Which directly or necessarily
operates in restraint of trade or
commerce among the states or
other foreign countries.” See
Davis v. Booth & Co., 131 Fed.
31; 65 C. C. A. 269; modifying
and reversing 127 Fed. 875; Ellis
vy. Inman, 131 Fed. 182; 65 C. C.
A. 488.

27 Camors-McConnell Co. v. Me-
‘Connell, 140 Fed. 412; affirmed 140
Fed. 987; 72 C. C. A. 681. See
also Continental Wall Paper Co.
v. Voight, 148 Fed. 939; 78 C. C.
A. 567; affirmed 212 U. S. 227;
29 Sup. Ct. 280; 53 L. Ed. 486;
United States v. MacAndrews &
Forbes Co., 149 Fed. 823, 833.
Speaking of its conclusion that a
particular combination of working-
men was illegal within the statute,

the Supreme Court said: “And
that conclusion rests on many
judgments of this court, to the
effect that the act prohibits any
combination whatever to secure
action which essentially obstructs
the free flow of commerce between
the states, or restricts, in that re-
gard, the liberty of a trader to
engage in business.” Loewe v.
Lawlor, 208 U. S. 274; 28 Sup.
Ct. 301; 52 L. Ed. 488; reversing
148 Fed. 924. “It has been de-
cided that not only reasonable but
all direct restraints are prohibited,
the law being thereby distin-
guished from the common law.”
Shawnee Compress Co. v. Ander-
son, 209 U. S. 423; 28 Sup. Ct.
572; 52 L. Ed. 865; affirming 17
Okl. 231; 87 Pac. 315. “This
language is to be construed as pro-
hibiting the free play of competi-
tion and thus tends to deprive the
INTERPRETATION OR CONSTRUCTION OF ACT. 207

‘But a contract in restraint of trade may or may not be
in restraint of interstate trade. If it directly affect only
production within the limits of a state, it is in restraint
of intrastate trade and is subject only to state laws. Any
remote or incidental effect upon interstate trade is insuf-
ficient to bring it within the federal enactment. If, how-
ever, the contract go further and, for example, control the
disposition of the manufactured article across state lines,
it directly affects interstate commerce, and thus may con-
travene both state and national laws. On the other hand, a
conspiracy to prevent a manufacturer who procures his
supplies and disposes of his products by means of inter-
state commerce from engaging in business at all necessarily
places restraints upon such commerce. Its flow is restricted
and interrupted. The importation and exportation of ar-
ticles of commerce are directly prevented, and none the less
so because the conspiracy may be of so wide a scope as to

interfere with interstate commerce also.’’?®

has said of the act:

country of the services of any num-
ber of independent dealers how-
ever small.” United States v.
American Tobacco Co., 164 Fed.
700, affirmed 221 U. 8. 106; 31
Sup. Ct. 632; 694 L. Ed. 55.

28 Pennsylvania Sugar Refining
Co, vy. American Sugar Refining
('o., 166 Fed. 254; 92 ©. C. A.
318: reversing 160 Fed. 144.
Again it was said in this case:
“Any construction which was cre-
ated by legal construction was in-
direct and remote.” “It is settled
that a combination does not vio-
late the federal statute merely be-
cause it may indirectly, incident-
ally, or remotely restrain trade or
tend toward monopoly. If its
necessary effect is to stifle or to
directly and substantially restrict
interstate commerce, it falls under

Justice Sanborn

the ban of the law. On the other
hand, if it only incidentally or in-
directly restricts competition, while
its main purpose and chief effect
are to promote the business and
increase the trade of the con-
sumers, it is not denounced or
voided by that law.” “It is well
settled that a monopoly, in order
to be unlawful, need not be com-
plete, and that it may exist al-
though limited to a narrow terri-
tory. A combination must, how-
ever, in order to violate the law
against monopolies, directly, neces-
sarily, «and substantially tend
toward monopoly. See Whitwell v.
Continental Tobacco Company, 60
Cc. C. A. 290; 125 Fed. 454, 462;
64 L. R. A. 689, where the federal
cases on the subject are dis-
cussed.” Bigelow v. Calumet &
258 THE SHERMAN ANTI-TRUST ACT.

‘‘Repeated discussion and consideration of the purpose
and meaning of this act have established, by controlling
authority, beyond debate in this tribunal, these pertinent
rules for its interpretation and application to the facts of
this case. The test of the legality of a contract or com-
bination under this act is its direct and necessary effect
upon competition in interstate or international commerce.
If the necessary effect of a contract, combination, or con-
spiracy is to stifle, or directly and substantially to restrict,
free competition in commerce among the states or with
foreign nations, it is a contract, combination, or conspiracy
in restraint of that trade, and it violates this law. The
parties to it are presumed to intend the inevitable result
of their acts, and neither their actual intent nor the rea-
sonableness of the restraint imposed may withdraw it from
the denunciation of the statute.

‘‘The test under that act of the legality of a combination
or conspiracy is its direct and necessary effect upon such
competition. If its necessary effect is but incidentally or
indirectly to restrict competition, while its chief result is
to foster the trade and increase the business of those who
make and operate it, it is not a violative of this law. But
if its necessary effect is to stifle, or directly and substan-
tially to restrict, free competition in commerce among the

combination or contract in re-
straint of trade, interstate or for-
eign, is to be determined by the
terms of the statute which for-

Hecla Mining Co., 167 Fed. 704,
712; 94 C. C. A. 138. “We shall
assume at the outset that the au-
thoritative decisions of the Su-

preme ‘Court have so construed
this Anti-Trust Act as to give it
a broader application than the
prohibition of contracts and agree-
ments in restraint of trade at the
common law. It is not essential
that the restraint shall be un-
reasonable within the well-under-
stood definition of an unlawful
restraint before the statute. Under
this act the validity of an alleged

bids any such contract or com-
bination without respect to its
nature or beneficial results. We
need only cite the latest utterance
of that court upon the subject.”
Bigelow v. Calumet & Hecla Min-
ing Co., 167 Fed. 721; 94 C. C. A.
13. For opinion below, see 167
Fed. 704. United States v. Amer-
ican Naval Stores Co., 172 Fed.
455. See also 186 Fed. 592.
INTERPRETATION OR CONSTRUCTION OF ACT.

209

states or with foreign nations, it is a combination or con-
spiracy in restraint of that trade, and it falls under the

ban of the act.’’?®

§ 104,

Every Contract and Combination—Early Con-

struction of Act.—The first sentence in the first section of

29 United States v. Standard Oil
Co, 173) Fed. 177; CG. C. A;
allirmed 221 U. 8. 1; 97 Sup. Ct.
502; 55 L. Ed. 619; 34 L. R. A.
(N.S.) 934. “It does not denounce
every combination which rest:ains
that commerce, but those combi-
nations only the necessary effect
of which is to stifle, or directly
and substantially to restrict, free
competition in that commerce. If
the necessary effect of a combina-
tion to engage in or conduct inter-
state or international commerce is
but incidentally and indirectly to
restrict competition therein, while
the chief result is to foster the
trade and to increase the business
of those who make and operate it,
it does not fall under the ban of
this law.” Union Pacific Coal Co.
v. United States, 173 Fed. 737.
“We fully agree with certain prop-
ositions of law urged by plain-
tiff’s learned counsel in support of
their contentions in this case,
namely: (1) That the Anti-Trust
Act denounces as illegal any con-
tract, combination, or conspiracy
of whatever form or nature which
directly or necessarily operates to
restrain or obstruct the free flow
of commerce between the states,
and that this denunciation in-
eludes contracts, combinations, or
conspiracies to restrain the liberty
of a trader in such commerce to
engage or continue therein. Loewe
v. Lawlor, 208 U. 8. 274; 28 Sup.

Ct. 301; 52 L. Ed. 488 and cases
cited. (2) That any such contract,
combination, or conspiracy which
directly restrains the purchase,
sale, or exchange of manufactured
commodities among the several
states is illegal.” Arkansas
Brokerage Co. v. Dunn & Powell,
173 Fed. 899; 97 C. C. A. 454. See
also United States v. Reading Co.,
183 Fed. 427, 476; affirmed 228
U. S. —; 33 Sup. Ct. 90, 509;
57 L. Ed. “On the other
hand, it is equally well settled that
the federal Anti-Trust Law forbids
every contract, combination, or
conspiracy which directly or neces-
sarily operates in restraint of
trade between the states without
regard to the form which the
transaction takes.” Cole Transpor-
tation Co. v. White Star Co., 186
Fed. 63, 65; United States v.
American Naval Stores, 186 Fed.
592. “The Supreme Court in sev-
eral of its decisions have declined
to read into the statute the word
‘unreasonable’ before ‘restraint of
trade,’ on the ground that the
statute applies to all restraints
and does not intend to leave to
the court the discretion to de-
termine what is a reasonable re-
straint of trade.” President Taft
in Message to Congress, January
7, 1910. Presidential Address and
State Papers by William H. Taft,
528,
260 THE SHERMAN ANTI-TRUST ACT.
the act denounces ‘‘Every contract, combination in the form
of trust or otherwise, or conspiracy, in restraint of trade
or commerce among the several states, or with foreign
nations.’’ In the first cases, or rather until the decision
in the Standard Oil Case*® the word ‘‘every’’ was accepted
in its literal and usually understood meaning. As early as
November, 1892, in a case which was afterwards reversed,
but not on this point, it was declared that the act ‘‘in-
eludes every contract or combination in the form of a
trust or otherwise, or conspiracy in restraint of trade.’’*
The question then under discussion was whether the par-
ticular combination before the court fell within the pro-

visions of the act; and it was held that it did not.®

20 Standard Oil Co. v. United
States, 221 U. 8. 1; 31 Sup. Ct.
502; 55 L. Ed. 619; 34 L. R. A.
(N.S.) 834; affirming 173 Fed.
177.

31 United States v. Trans-Miss-
ouri Freight Ass’n, 53 Fed. 440;
affirmed 58 Fed. 58; 19 U. S. App.
36; 24 L. R. A. 48; Inters.
Com. Rep. 443; 7 €. C. A. 15;
but reversed by the Supreme
Court; 166 U. 8S. 290; 17 Sup. Ct.
540; 41 L. Ed. 1007.

32In his dissenting opinion on
appeal of this case, Judge Shiras
says: “The statute declares that
restraint of interstate commerce,
all restraints, every restraint of
such trade and commerce, brought
about by contracts, combinations
in the form of trusts or otherwise,
or by conspiracy, are illegal. The
statutory declaration in effect is
that interstate trade and commerce
are to remain free from restric-
tion.” 58 Fed. 96. “This law de-
termines that any combination or
conspiracy on the part of any class
of men who by violence or intimi-

dation prevent the passage of rail-
road trains in transporting the
interstate commerce of the country
is a violation of the Act of July
2, 1890.” In re Grand Jury, 62
Fed. 824, 842. “It may be con-
ceded that the controlling, ob-
jective point, in the mind of Con-
gress, in enacting this statute was
to suppress what are known as
‘trusts’ and ‘monopolies.’ But, like
a great many other enactments,
the statute is made so compre-
hensive and far-reaching in its
express terms as to extend to like
incidents and acts clearly within
the expression and spirit of the
law. It declares that every act,
combination in the form of a trust
or otherwise, or conspiracy, in
restraint of trade or commerce
among the states, or with foreign
nations, is forbidden. Therefore,
any combination or confederation
among two or more persons, in re-
straint of trade or commerce, comes
within the express letter of the
statute. The term ‘restraint of
conimeyce’ was used in its ordinary,
INTERPRETATION OR CONSTRUCTION OF ACT. 261

In the Debs case Judge Woods said:

“It is therefore the privilege and duty of the court, un-
controlled by considerations drawn from other sources, to
find the meaning of the statute in the terms of its pro-
visions, interpreted by the settled rules of construction.
That the original design to suppress trusts and monopolies
created by contract or combination in the form of trust,
which of course would be of a ‘contractual character,’ was
adhered to, is clear; but is equally clear that a further
and more comprehensive purpose came to be entertained,
and was embodied in the final form of the enactment.
Combinations are condemned, not only when they take the
form of trusts, but in whatever form found, if they be in
restraint of trade. That is the effect of the words ‘or
otherwise.’ It may be that those words should be deemed
to include only forms of like character,—that is to say,
some form of contract as distinguished from tort; but, if
that be so, it only emphasizes and makes imperative the
inference, which otherwise it seems to me would sufficiently
clear, that the word ‘conspiracy’ should be interpreted in-
dependently of the preceding words. It is hardly to be be-
lieved that the words ‘or otherwise’ were used simply for
the purpose of giving fuller scope to the antecedent words
‘contract’ and ‘combination,’ and then ‘conspiracy’ added
merely for the same purpose.’’*

business understanding and ac-
ceptation.” United States v. El-
liott, 64 Fed. 27, 30.

33 United States v. Debs, 64 Fed.
724, 747. In his dissenting
opinion in the Knight case Justice
Harlan said: “It would seem to
be indisputable that no combina-
tion of corporations or individuals
can, of right, impose unlawful
restraints upon interstate trade,
whether upon transportation or
upon such interstate intercourse
and traffic as precede transporta-

tion, any more than it can, of
right, impose unreasonable re-
straints upon the completely in-
ternal traffic of a state. The sup-
position cannot be indulged that
this general proposition will be dis-
puted.” United States v. E. C.
Knight Co., 156 U. S. 123; 15
Sup. Ct. 249; 39 L. Ed. 325;
affirming 60 Fed. 934; 9 C. C. A.
297; 17 U. S. App. 466; 24 L. R.
A. 428; which affirmed 60 Fed.
306.
262 THE SHERMAN ANTI-TRUST ACT.

“‘restraint of

Judge Lacombe thus discussed the words
trade’’:

‘‘The phrase used in the act of 1890, viz., ‘restraint of
trade,’ is no new one. It had heretofore been used by
courts applying the doctrines of the common law in deter-
mining the validity of contracts. It is to be presumed that
the lawmakers, when they chose this phrase, intended that
it should have, when used in the statute, no other or dif-
ferent meaning from that which has always been given to
it in judicial decisions and in the common understanding.
The title indicates that the phrase is so used, for the act
is described as one ‘to protect trade and commerce against
unlawful restraints and monopolies’; and, though the title
to an act cannot control its words, it may furnish some aid
in showing what was in the mind of the legislator. The
‘restraint of trade’ which is obnoxious to the provisions of
the first section must be of such kind as was, before
the passage of the act, recognized as unlawful.’’**

In the second case on the Anti-Trust Act which reached
the Supreme Court of the United States, Justice Peckham
used this language, and emphasized his language by italiciz-
ing the word ‘‘every’’.

“The language of the act includes every contract, com-
bination in the form of trust or otherwise, or conspiracy,
in restraint of trade or commerce among the several states
or with foreign nations. So far as the very terms of the
statute go, they apply to any contract of the nature de-
seribed. A contract therefore that is in restraint of trade
or commerce is by the strict language of the act pro-
hibited.’’*> Subsequently in this case in answer to the

34 Dueber Watch Case Mfg. Co. Ed. 1007; 19 U. S. App. 36; 24
vy. E. Howard Watch & Clock Co, LL. R. A. 48; 4 Inters. Com.
66 Fed. 637, 643. Rep. 443; reversing 58 Fed. 58;

35 United States v. Trans-Miss- 7 C. C. A. 15; which affirmed 53
ouri Freight Association, 166 U. Fed. 440.

S. 290; 17 Sup. Ct. 540; 41 L.
INTERPRETATION OR CONSTRUCTION OF ACT. 263
contention that the contract declared to be illegal must be
in unreasonable restraint of trade, Justice Peckham said:

‘We are asked to regard the title of this act as indic-
ative of its purpose to include only those contracts which
were unlawful at common law, but which require the sanc-
tion of a federal statute in order to be dealt with in a
federal court. It is said that when terms which are known
to the common are used in a federal statute those terms
are to be given the same meaning that they received at
common law, and that when the language of the title is
‘to protect trade and commerce against unlawful restraints
and monopolies,’ it means those restraints and monopolies
which the common law regarded as unlawful, and which
were to be prohibited by the federal statute. We are of
the opinion that the language used in the title refers to
and includes and was intended to include those restraints
and monopolies which are made unlawful in the body of
the statute. It is to the statute itself that resort must be
had to learn the meaning thereof, though a resort to the
title here creates no doubt about the meaning of and does
not alter the plain language contained in its text.’’**

36 Justice Peckham further said:
“Proceeding, however, upon the

granted to the vendor of property
in agreeing, as part consideration

theory that the statute did not
mean what its plain language im-
ported, and that it intended in its
prohibition to denounce as illegal
only those contracts which were in
reasonable restraint of trade, the
courts below have made an ex-
haustive investigation as to the
general rules which guide courts
in declaring contracts to be void
as being in restraint of trade, and
therefore against the public policy
of the country. In the course of
their discussion of that subject
they have shown that there has
been a gradual though great alter-
ation in the extent of the liberty

for his sale, not to enter into the
same kind of business for a cer-
tain time or within a certain
territory. So long as the sale
was the bona fide consideration
for the promise and was not
made a mere excuse for an
evasion of the rule itself, the
later authorities, both in Eng-
land and in this country, exhibit
uw strong tendency towards enab-
ling the parties to make such a
contract in relation to the sale
of property, including an agree-
ment not to enter into the same
kind of business, as they may
think proper and this with the
264 THE SHERMAN ANTI-TRUST ACT.

Farther on in this same case Justice Peckham again said:

“‘The arguments which have been addressed to us against
the inclusion of all contracts in restraint of trade, as
provided for by the language of the act, have been based
upon the alleged presumption that Congress, notwithstand-
ing the language of the act, could not have intended to
embrace all contracts, but only such contracts as were in
unreasonable restraint of trade. Under these circumstances
we are, therefore, asked to hold that the act of Congress
excepts contracts which are not in unreasonable restraint
of trade, and which only keep rates up to a reasonable
price, notwithstanding the language of the act makes no
such exception. In other words, we are asked to read into
the act by way of judicial legislation an exception that is
not placed there by the lawmaking branch of the govern-
ment, and this is to be done upon the theory that the im-
policy of such legislation is so clear that it cannot be sup-
posed Congress intended the natural import of the language
it used. This we cannot and ought not to do. That im-

view to granting to vendor the
freest opportunity to obtain the
largest consideration for the sale
of that which is his own. A con-
tract which is the mere accom-

used, and reason is shown for
believing that such alteration
would make the statute more in
accord with the intent of the
law making body that enacted

paniment of the sale of property,
and thus entered into for the
purpose of enhancing the price
at which the vendor sells it,
which in effect is collateral to
such sale, and where the main
purpose of the whole contract is
accomplished by such sale, might
not be included, within the
letter or spirit of the statute in
question. But we cannot see how
the statute can be limited, as it
has been by the courts below,
without reading into its text an
exception which alters the nat-
ural meaning of the language

it.” In his dissenting opinions
in the Circuit Court of Appeals,
Judge Shiras said: “The statute
declares that restraint of inter-
state commerce, all restraints,
every restraint of such trade and
commerce brought about by the
contracts, combinations in the
form of trusts or otherwise, or
by conspiracy, are illegal. The
statutory declaration in effect is
that interstate commerce and
trade are to remain free from
restriction.” United States v.
Trans-Missouri Freight Ass’n, 58
Fed. 96.
INTERPRETATION OR CONSTRUCTION OF ACT. 265

policy is not so clear, nor are the reasons for the exception
so potent as to permit us to interpolate an exception into
the language of the act, and to thus materially alter its
meaning and effect. It may be that the policy evidenced
by the passage of the act itself will, if carried out, result
in disaster to the roads and in a failure to secure the
advantages sought from such legislation. Whether that
will be the result or not we do not know and cannot
predict. These considerations are, however, not for us.
If the act ought to read as contended for by defendants,
Congress is the body to amend it and not this court, by a
process of judicial legislation wholly unjustifiable. Large
numbers do not agree that the view taken by defendants
is sound or true in substance, and Congress may and very
probably did share in that belief in passing the act.’’
In the Joint Traffic Association Case the Supreme Court
at considerable length pointed out that in the Trans-Mis-
souri Freight Association Case it expressly held that the
restraint to be illegal need not be ‘‘unreasonable.’’*®

lation of state laws.” United
States v. Coal Dealers Ass’u, 85
Fed. 252.

38 United States v. Joint Traf-

37 1t should be noted that Jus-
tice White wrote a dissenting
opinion, in which Justices Field,
Gray and _ Shiras_ concurred,

claiming that the restraint is il-
legal only when it is unreason-
able. “This act of Congress is
aimed against all restrictions of
interstate commerce, and we need
not discuss the reasonableness of
such restrictions.” United States
v. Hopkins, 82 Fed. 529, 537; re-
versed, but not on this point;
171 U. 8. 578; 19 Sup. Ct. 40;
43 L. Ed. 290. Speaking of the
title to the Act, Judge Morrow
said: “It is not limited to con-
tracts and agreements that were
unlawful at common law, nor to
restraints and monopolies in vio-

fie Ass’n, 171 U. S. 505; 19 Sup.
Ct. 25; 43 L. Ed. 259; reversing
89 Fed. 1020; 32 C. C. A. 491;
45 U. 8. .App. 726; which
affirmed 76 Fed. 895. “Every
agreement which has the ten-
dency to restrain the purchase,
sale, and exchange of commodi-
ties is brought within the pro-
hibition of the statute.” Mon-
tague & ‘Co. v. Lowry, 115 Fed.
27; affirming 106 Fed. 38; 52
Cc. C. A. 621; 68 L. R. A. 58;
98 Fed. 817 and affirmed 193 U.
8S. 38; 24 Sup. Ct. 307; 48 L.
Ed. 608.
266

THE SHERMAN ANTI-TRUST ACT.

“In the exercise of this right (to legislate on interstate
commerce), Congress has seen fit to prohibit all contracts

in restraint of trade.

It has not left to the courts the

considerations of the question whether such restraint is rea-
sonable or unreasonable, or whether the contract would

have been illegal at the common law or not.

The act leaves

for consideration by judicial authority no questions of this
character, but all contracts and combinations are declared
illegal if in restraint of trade or commerce among the

2239

states.

38 Chesapeake & Ohio Fuel Co.
v. United States, 115 Fed. 610;
53 °C. C, A. 256; affirming 105
Fed. 93. Farther on Judge Day
says: “If the unreasonable re-
straint, as at the common law,
was the test of the validity of
such contracts, we might inquire
whether ‘this agreement did not
contain certain restrictions en-
tirely unnecessary to the protec-
tion of the fuel company in
acquiring the coal from the asso-
ciation, which restrictions are
inimical to the public interest.
But it is to be remembered that
the test of the common law as
to the reasonableness of the re-
straint of commerce is not the
test of the validity of such agree-
ments, within the provision of
the statute. This proposition was
decided by the Supreme Court in
the Trans-Missouri Case, supra,
and affirmed in later cases.”
“The Anti-Trust Act goes as far,
if not farther, than the common
law and declares unlawful all
combinations in restraint of inter-
state trade.” Gibbs v. McNeeley,
118 Fed. 120; 55 C. C. A. 70.
“It indicates, we think, that
Congress being unable to foresee

and describe all the plans that
might be formed and all the ex-
pedients that might be resorted
to, to place restraints of inter-
state trade or commerce, deliber-
ately employed words of such
general import as, in its opinion,
would comprehend every scheme
that might be devised to accom-
plish that end. What is com-
monly termed a ‘trust? was a
species of combination organized
by individuals or corporations
for the purpose of monopolizing
the manufacture of or traffic in
various articles and commodities,
which was well known and fully
understood when the Anti-Trust
Act was approved. Combinations
in that form were accordingly
prohibited; but Congress evident-
ly anticipating that a combina-
tion might be otherwise formed,
was careful to declare that a
combination in any other form,
if in restraint of interstate trade
or commerce—that is, if it direct-
ly occasioned or effected such
restraint—should likewise be
deemed illegal.” United States v.
Northern Securities Co., 120 Fed.
721; affirmed 193 U. S. 197; 24
Sup. Ct. 476; 48 L. Ed. 679.
INTERPRETATION OR CONSTRUCTION OF ACT.

267

In the Northern Securities Case Justice Harlan in enum-
erating what had been settled by the decisions of the court,
stated, among other things, ‘‘that the act is not limited to
restraints of interstate and international trade or com-
merce that are unreasonable in their nature, but embraces
all direct restraints imposed by any combination, conspiracy

or monopoly upon such trade or commerce.”’

He adds that

no one, he presumes, will deny this proposition.‘

“Under this Act, every contract,
combination, and conspiracy in
restraint of trade among the
states is illegal.” Whitwell  v.
Continental Tobacco Co., 125 Fed.
454; 60 C. C. A. 290.

40 Northern Securities Co. v.
United States, 193 U. S. 197,
331; 24 Sup. Ct. 436; 48 L. Ed.
679; affirming 120 Fed. 721. The
italics are Justice Harlan’s.
Minnesota v. Northern Securities
Co., 194 U. S. 48, 66; 24 Sup.
Ct. 588; 48 L. Ed. 870; reversing
123 Fed. 692; Ellis v. Inman, 131
Fed. 182; 65 C. C. A. 488. In
Continental Wall Paper Co. v.
Voight, 148 Fed. 939; 78 C. C.
A. 567; affirmed 212 U. S. 227;
29 Sup. Ct. 280; 53 L. Ed. 486;
the court said the combination
came “within the prohibition of
the act of Congress, whether that
act be aimed only at unreasonable
restraints or not.” In Re Charge
to Grand Jury, 151 Fed. 834,
840; Wheeler-Stenzel Co. v. Na-
tional Window Glass Jar <Asso-
ciation, 152 Fed. 321; 81 C. C.
A. 658; reversing 140 Fed. 412.
(In this case the statement that
“in the early cases the purpose of
the act was held to be applicable
only to those contracts which
were unlawful at common law,”

we believe is erroneous). Biye-
low v. Calumet & Hecla Mining
Co., 155 Fed. 869. See opinion on
appeal 167 Fed. 721; 94 C. C.
A. 13. In Loewe v. Lawlor, 208
U. S. 274; 28 Sup. Ct. 301; 52
L. Ed. 488 (reversing 148 Fed.
924) the Supreme Court said
“that the act prohibits any
combination whatever to secure
action which essentially obstructs
the flow of commerce between the
states, or restricts in that regard,
the liberty of a trader to engage
in business.” “Nor can the act
in question be held inapplicable
because defendants were not
themselves engaged in interstate
commerce. The Act made no dis-
tinction between classes. It pro-
vided that ‘every’ contract, com-
bination or conspiracy in re-
straint of trade was illegal.” In
Shawnee Compress Co. v. Ander-
son, 209 U. S. 423; 28 Sup. Ct.
572; 52 L. Ed. 865; affirming 17
Okl. 231; 87 Pac. 315, the
court says: “And it has been de-
cided that not only unreasonable
but all direct restraints of trade
are prohibited, the law being
thereby distinguished from the
common law.” “If so, did it [the
contract in question] act or
operate, when carried out in
268 THE SHERMAN ANTI-TRUST ACT.

In speaking of the first section of the act, and its con-
struction Judge Lacombe thus discussed it:

“That declaration, ambiguous when enacted, is, as the
writer conceives, no longer open to construction in the in-
ferior courts. Disregarding various dicta and following the
several propositions which have been approved by successive
majorities of the Supreme Court, this language is to be con-
strued as prohibiting any contract or combination whose
direct effect is to prevent the free play of competition, and
thus tend to deprive the country of the services of any
number of independent dealers however small. As thus
construed the statute is revolutionary. By this it is not
intended to imply that the construction is incorrect. When
we remember the circumstances under which the act was
passed, the popular prejudice against large aggregations
of capital, and the loud outcry against combinations which
might in one way or another interfere to suppress or
check the full, free, and wholly unrestrained competition
which was assumed, rightly or wrongly, to be the very
‘life of trade,’ it would not be surprising to find that
Congress had responded to what seemed to be the wishes
of a large part, if not the majority, of the community, and
that it intended to secure such competition against the opera-
tion of natural laws. The act may be termed revolutionary
because, before its passage, the courts had recognized a
‘restraint of trade’ which was held not to be unfair, but
permissible, although it operated in some measure to re-
strict competition. By insensible degrees, under the op-
eration of many causes, business, manufacturing and trad-
ing alike has more and more developed a tendency toward
larger and larger aggregations of capital and more ex-
tensive combinations of individual enterprise. It is con-
tended that, under existing conditions, that way only can

whole or in part, to restrain or Co... American Tobacco Co., 166
interfere with interstate com- Fed. 701.
merece?” United States Tobacco
INTERPRETATION OR CONSTRUCTION OF ACT. 269
production be increased and cheapened, new markets opened
and developed, stability in reasonable prices secured, and
industrial progress assured. But every aggregation of in-
dividuals or corporations, formerly independent, immediately
upon its formation terminates an existing competition,
whether or not some other competition may subsequently
arise. The act as above construed prohibits every contract
or combination in restraint of competition. Size is not
made the test: Two individuals who have been driving
rival express wagons between villages in two contiguous
states, who enter into a combination to join forces and
operate a single line, restrain an existing competition; and
it would seem to make little difference whether they make
such combination more effective by forming a partnership
or not.’ In the same case Judge Coxe said:

“The Anti-Trust Act embraces and declares to be il-
legal every contract, combination or conspiracy, in whatever
form, of whatever nature and whoever may be the parties
to it, which directly or necessarily operates in restraint of
interstate or international trade or commerce. The act is
not limited to unreasonable restraints but embraces all direct
restraints.’’??

41 United States v. American
Tobaeco Co., 1638 Fed. 712;
affirmed but decree modified 221

has nothing to do with wisdom,
justice, or expediency of the
statute. Equally true is it that

U. S. 106; 31 Sup. Ct. 632; 55
L. Ed. 663.

42 Judge Noyes in this
used this language: “It may be
that the present anti-trust statute
should be amended and made ap-
plicable only to those combina-
tions which unreasonably restrain
trade-—that it should draw a line
between those combinations which
work for yood and those which
work for evil. But these are all
legislative, and not judicial, ques-
tions. It cannot be too clearly
borne in mind that this court

case

this court in applying the statute,
must follow the decisions of the
Supreme Court.” Again Judge
Noyes said: ‘this construction
of the statute confines the duty
of this court in applying it with-
in very narrow limits. We have
only to inquire whether the evi-
dence shows «a combination re-
straining competition. There is no
necessity for going further. Other
inquiries are immaterial. The
combination may not reduce the
prices paid to the growers of raw
materials. may not increase the
270

THE SHERMAN ANTI-TRUST ACT.

When the Standard Oil Case was in the Circuit Court,
Judge Sanborn said that ‘‘Repeated discussion and consid-
eration of the purpose and meaning of this act has estab-
lished by controlling authority beyond debate in this tri-
bunal’’ that the parties to a contract, combination or con-
spiracy ‘‘are presumed to intend the inevitable result of
their acts, and neither their actual intent nor the reason-

prices charged to consumers, may
not seek to exclude all others
from the field, may be free from
coercion or oppression, and yet if
it restrict competition, if it re-
strain trade, reasonably or un-
reasonably, it falls within the
statute. The statute declares
unlawful every combination in
restraint of trade. It contains
no words of limitation or
qualification, and the Supreme
Court of the United States has
decided that the courts have no
right to attach them to it.” See
also Continental Wall Paper Co.
v. Voight, 212 U. S. 227; 29 Sup.
Ct. 280; 53 L. Ed. 486, affirming
148 Fed. 939; 78 C. C. A. 567.
“Section 1 makes every contract,
combination in the form of trust
or otherwise, or conspiracy, in
restraint of trade or commerce
among the several states, illegal.”
Monarch Tobacco Works v. Amer-
ican Tobacco Co., 165 Fed. 774.
“Whether the restraint of trade
imposed by the combination was
reasonable or unreasonable is, un-
der repeated decisions of the Su-
preme Court, immaterial.” Thom-
sen y. Union Castle Mail 8S. S. Co..
166 Fed. 251: 92 C. C. A. 315;
reversing 149 Fed. 933. ‘We
shall assume at the outset that

the authoritive decisions of the
Supreme Court have so construed
this Anti-Trust Act as to give it
a broader application than the
prohibition of contracts and
agreements in restraint of trade
at common law. It is not essential
that the restraint shall be un-
reasonable within the  well-un-
derstood definition of an unlaw-
ful restraint before the statute.
Under this act the validity of an
alleged combination or contract in
restraint of trade, interstate or
foreign, is to be determined by
the terms of the statute which
forbids any such contract or com-
bination without respect to its
nature or beneficial results. We
need only cite the latest utter-
ance of that court upon the sub-
ject.” Bigelow v. Calumet & Hecla
Mining Co., 167 Fed. 721; 94 C.
C. A. 13; for opinion below see
167 Fed. 704. “As to what con-
stitutes a restraint of trade un-
der the statute, the act prohibits
ny combination which obstructs
the free flow of commerce between
the states, or restricts, in that
regard, the liberty of a trader en-
gaged in business.” United States
vy. American Naval Stores Co.,
172 Fed. 455. See also 186 Fed.
592.
INTERPRETATION OR CONSTRUCTION OF ACT. 271
ableness of the restraint imposed may withdraw it from
the denunciation of the statute.’’4

Judge Hook, in the Standard Oil Case, when in the Cir-
cuit Court, used this language:

“The true test to apply to a case under the first sec-
tion is not whether the restraint upon competition imposed
by the contract or combination in question should be re-
garded as reasonable or as unreasonable, but whether it is
direct and appreciable. Conceptions of the reasonable and
unreasonable are much too diverse to afford a stable, uniform
rule for construing a law which contains no mention of
those terms. So much depends upon the point of view,
that it frequently happens that what appears to one to be
wholly unreasonable is thought entirely reasonable by an-
other. But if the restraint is direct and appreciable, and
not merely incidental to some contract having a lawful pur-
pose, it falls clearly within the prohibition of the statute,
and there is no room for further construction. There are
many contracts which, in the days when the common law
was forming, would have been adjudged contrary to public
welfare, as being in restraint of the narrow trade of those
times, but which in a commercial age like the present have

43 United States v. Standard
Oi -Co., 173 Fed. 177; affirmed

sary effect of a contract, combi-
nation or conspiracy is to stifle,

221) U. S. 1; 31 Sup. Ct. 502;
55 L. Ed. 619; 34 L. R. A. (N.S.)
834. “Repeated discussion and
consideration of the purpose and
meaning of this Act have estab-
lished, by controlling authority
beyond debate in this tribunal,
these pertinent rules for its in-
terpretation and application to
the facts of this case. The test
of the legality of a contract or
combination under this Act is its
direct and necessary effect upon
competition in interstate or in-
ternational commerce. If the neces-

or directly and substantially to
restrict, free competition in com-
merce among the states or with
foreign nations, it is a contract,
combination, or conspiracy in re-
straint of that trade, and it vio-
lates this law. The parties to it
are presumed to intend the in-
evitable result of their acts, and
neither their actual intent nor
the reasonableness of the re-
straint imposed may withdraw it
from the denunciation of the
statute.”
272 THE SHERMAN ANTI-TRUST ACT. Z

such a negligible effect in that’ direction as to be no longer
evil within the meaning of the law. Their effect is so in-
direct and inappreciable that it is properly referable to the
class de minimis, and it is not to be supposed Congress had
them in view when it legislated to preserve freedom of com-
petition in the broad field of interstate and foreign com-
merce. Vital principles, however, have not changed; the
change is merely in the conditions upon which they operate.’’

§105. Understanding of the Bench and Bar as to
Whether Restraint Must be Reasonable or Unreasonable—
‘We have been at much pains to collect in the next preced-
ing section and notes thereto the expressions of the Su-
preme, Circuit and District Courts concerning what were
their understanding whether the contract or combination
in restraint of trade must be an unreasonable restraint of
trade,—must be an unreasonable restraint or not. It is
fair to say that in all the cases wherein there has been a
judgment for the plaintiff or government, it has been held
that the particular restraint was an unreasonable restric-
tion upon trade or interstate commerce. If the courts
found that there was only a reasonable restriction then
we believe that the cases will show that the contract or
combination in restraint of trade or commerce was held not
illegal. It can be said therefore, according to some strict
constructionists, that all the courts said concerning that it
was not necessary for them to find a contract or combina-
tion should be unreasonable before it could be condemned
as an illegal restraint of trade or commerce, was unneces-
sary to a decision of the case, and was, accordingly, an
obiter dictum. But we cannot accept such a close and re-
stricted view of the scope of an obiter dictum ag applied
to the majority of these cases; we cannot and do not be-
lieve that the Supreme Court of the United States re-
garded their utterances on that question as obiter dicta.
Before that great court the question was discussed by
INTERPRETATION OR CONSTRUCTION OF ACT. 273
counsel, was considered by the court and was so declared
in the course of reasoning which the court deemed essen-
tial to a decision in the case. Such declarations are not
obiter dicta; and none of the lower courts, ‘with two or
three possible exceptions, so regarded them.

§106. Restraint Must Be Unreasonable—‘‘Rule of Rea-
son.’’—We think it was undoubtedly the view of the courts
until May 15, 1911, when the Standard Oil Case was de-
cided by the Supreme Court of the United States, that it
was not necessary to find a restraint of trade or com-
merce was ‘‘unreasonable’’ before it could be condemned
as within the prohibitory provisions of the Sherman Anti-
Trust Act. In that case was brought up the question of
whether the restraint must be unreasonable before the act
condemned it. Justice White had rendered a dissenting
opinion, in which three of his associates joined, in the
Trans-Missouri Freight Association Case,** on the ground
that the statute only condemned those contracts as illegal
which were in unreasonable restraint of trade or com-
merce.*®

When the Standard Oil Case was reached he found
himself with the majority; and was therefore in a posi-
tion to enforce his views as to the degree of restraint he
considered necessary for a transaction to fall within the
condemnation of the statute. His opinion is based upon

44 United States v. Trans-Miss- 89 Fed. 1020; 32 C. C. A. 491;

ouri Freight Association, 166 U.
S. 200; 17 Sup. Ct. 540; 41 L.
Ed. 1007; reversing 58 Fed. 58;
70. C, A. 15; 19 U. 8S. App. 36;
24 L. R. A. 73; 4 Inters. Com.
Rep. 443. He and Justices Shiras
and Gray dissented in the Joint
Traffic Association Case, but the
ground of dissent is not stated.
United States v. Joint ‘Traffic
Ass’n, 171 U. S. 505; 19 Sup.
Ct. 25; 48 L. Ed. 259; reversing

45 U. 8. App. 762; which affirmed
76 Fed. 895.

45 Justices White, Fuller, Peck-
ham and Holmes dissented in the
Northern Securities Case on the
ground that the transaction in-
volved was not interstate com-
merce. Northern Securities Co. v.
United States, 193 U. S. 97; 24
Sup. Ct. 436; 48 L. Ed. 679;
affirming 120 Fed. 721.
274

THE SHERMAN ANTI-TRUST ACT.

what he says were ‘‘the elementary and indisputable con-
ceptions of both the English and American law on the
subject [of restraints of trade] prior to the passage of the

Anti-Trust <Act.’’

He reviews somewhat at length the

English law on the subject of the legality or illegality of
contracts in restraint of trade, on the subject of engrossing

and monopoly.*®

He then briefly discussed the law of America on the

subject of restraint of trade.*”

46 He cites these English au-
thorities: 3 Coke Inst. 181 ch. 85,
and Hawk P. C. pk. 1. ch. 29 on
Monopolies; 5 and 6 Edw. VI.
ch. 14 on Engrossing; East India
Company v. Sandys, Skinner, 165,
169 on Monopoly and Engrossing;
Mitchell v. Reynolds, 1 P. Wms.
181 on Contracts in Restraint of
Trade; 12 Geo. III. ch. 71, and
7 and 8 Vict. ch. 24 on Engrossing
and Forestalling; and Mogul
Steamship Co. v. McGregor,
[1892] A. C. 25 on Monopoly.

47 He cites Massachusetts Law
of 1778-1779, chap. 31 on Monop-
oly; National Cotton Oil Co. v.
Texas, 197 U. S. 115; 25 Sup. Ct.
379; 49 L. Ed. 689; and Shawnee
‘Compress Co. v. Anderson, 209 U.
S. 423; 28 Sup. Ct. 572; 52 L. Ed.
865; affirming 17 Okl. 231; 87
Pac. 315; 15 L. R. A. (N.S.)
846. Also on monopoly, besides 2
Pardy’s Beach on Corp. 1403,
Cooke on Trade & Labor Combi-
nation, App. II p. 194; and arti-
cle on “Monopolies and Trusts”
in Am. & Eng. Law Ency. (2nd) ;
Standard Oil Co. v. United
States, 221 U. 8. 1; 31 Sup. Ct.

502; 55 L. Ed. 619; 34 L. R.
A. (NS.) 619; 34 L. R. AL
(N.S.) 834; affirming 173 Fed.

177. In United States v. Trans-
Missouri Freight Ass’n, 58 Fed.
58; 7 C. C. A. 15; 18 U. S.

App. 36; 24 L. R. A. 73;
4 Inters. Com. Rep. 443;
(affirming 53 Fed. 440) which

was afterwards reversed (166 U.
S. 290; 17 Sup. Ct. 540; 41 L.
Ed. 1007) it was held that the
restraint must be an illegal one
to be invalid. The test of the
validity of a contract there given
was not the existence of restric-
tion upon competition thereby im-
posed, but the reasonableness of
that restriction under the facts
and circumstances of each partic-
ular case. It was said that public
welfare must be first considered,
and, if the contract appeared to
have been made for a just and
honest purpose, and the restraint
upon the trade was not specially
injurious to the public, and was
not greater than the protection of
the legitimate interests of the
party in whose favor the restraint
was imposed reasonably requires,
the contract was not illegal. It
was said this was the common law
rule, and that it was applicable
to the statute. It remains to be
seen if the Supreme Court will
accept this test in its fullest ex-
INTERPRETATION OR CONSTRUCTION OF ACT. 275

As a result of this examination of the cases and au-
thorities he says of the law with reference to restraint of
trade:

‘‘Without going into detail, and but very briefly sur-
veying the whole field, it may be with accuracy said that
the dread of enhancement of prices and of other wrongs
which it was thought would flow from the undue limita-
tion on competitive conditions caused by contracts or other
acts of individuals or corporations led, as a matter of
public policy, to the prohibition or treating as illegal all
contracts or acts which were unreasonably restrictive of
competitive conditions, either from the nature or char-
acter of the contract or act, or where the surrounding
circumstances were such as to justify the conclusion that
they had not been entered into or performed with the
legitimate purpose of reasonably forwarding personal in-
terest and developing trade, but, on the contrary, were of
such a character as to give rise to the inference or pre-
sumption that they had been entered into or done with
the intent to do wrong to the general public and to limit
the right of individuals, thus restraining the free flow of
commerce and tending to bring about the evils, such as
enhancement of prices, which were considered to be against
public policy.’’

After quoting the first sentence of the first section of
the Sherman Act, he proceeds to lay down rules for its
construction as follows:

““As there is no room for dispute that the statute was
intended to formulate a rule for the regulation of inter-

tent. The Sherman Act is sub- mon law had affirmed as reason-

ject to the rule that statutes are
not to be interpreted to change
the common law except so far
as a purpose to do so is neces-
sarily implied; and therefore the
act is not intended to prohibit
those mere contracts in partial
restraint of trade which the com-

able, but was to be construed in
accordance with the common law,
developed along reasonable lines
in accordance with modern com-
mercial advance. United States v.
Winslow, 195 Fed. 578. (Reviews
the Standard Oil Case at length.)
276 THE SHERMAN ANTI-TRUST ACT.

state and foreign commerce, the question is, What was the
rule which it adopted?

“In view of the common law and the law in this country
as to restraint of trade, which we have reviewed, and the
illuminating effect which that history must have under
the rule to which we have referred, we think it results:

‘a, That the context manifests that the statute was drawn
in the light of the existing practical conception of the law
of restraint of trade, because it groups as within that
class, not only contracts which were in restraint of trade
in the subjective sense, but all contracts or acts which
theoretically were attempts to monopolize, yet which in prac-
tice had come to be considered as in restraint of trade in
a broad sense.

‘*b. That in view of the many new forms of contracts and
combinations which were being evolved from existing eco-
nomic conditions, it was deemed essential by an all-em-
bracing enumeration to make sure that no form of con-
tract or combination by which an undue restraint of inter-
state or foreign commerce was brought about could save
such restraint from condemnation. The statute under this
view evidenced the intent not to restrain the right to make
and enforce contracts, whether resulting from combinations
or otherwise, which did not unduly restrain interstate or
foreign commerce, but to protect that commerce from being
restrained by methods, whether old or new, which would
constitute an interference,—that is, an undue restraint.

‘fe. And as the contracts or acts embraced in the pro-
vision were not expressly defined, since the enumeration ad-
dressed itself simply to classes of acts, those classes being
broad enough to embrace every conceivable contract or com-
bination which could be made concerning trade or com-
merce or the subjects of such commerce, and thus caused
any act done by any of the enumerated methods any-
where in the whole field of human activity to be illegal if
in restraint of trade, it inevitably follows that the pro-
vision necessarily called for the exercise of judgment which
INTERPRETATION OR CONSTRUCTION OF ACT. 277

required that some standard should be resorted to for the
purpose of determining whether the prohibition contained
in the statute had or had not in any given case been vio-
lated. Thus not specifying, but indubitably contemplating
and requiring a standard, it follows that it was intended
that the standard of reason which had been applied at
the common law and in this country in dealing with
subjects of the character embraced by the statute was in-
tended to be the measure used for the purpose of deter-
mining whether, in a given case, a particular act had or
had not brought about the wrong against which the statute
provided, ""'™*

§107. Monopoly—Second Section Subject to Construction
Given First One.—Having disposed of the first section of the
act, Justice White then takes up the second section, and after
saying that the ‘‘commerce referred to by the words ‘any
part,’ construed in the light of the manifest purpose of
the statute has a geographical and _ distributive signif-
icance, that is it includes any portion of the United States
and any one of the classes of things forming a part of
interstate or foreign commerce, he proceeds to make these
observations upon it:

‘‘Undoubtedly, the words ‘to monopolize’ and ‘monopo-
lize,’ as used in the section, reach every act bringing about
the prohibited results. The ambiguity, if any, is involved
in determining what is intended by monopolize. But this
ambiguity is readily dispelled in the light of the previous
history of the law of restraint of trade to which we have
referred and the indication which it gives of the practical
evolution by which monopoly and the acts which produce
the same result as monopoly, that is, an undue restraint of
the course of trade, all came to be spoken of as, and to
be indeed synonymous with, restraint of trade. In other
words having by the first section forbidden all means of

47™ Standard Oil Co. v. United (N.S.) 834; affirming 173 Fed.

States, 221 U. S. 1; 31 Sup. Ct. 177.
502; 65 1. Hd. 619; 34 L. R. A.
278 THE SHERMAN ANTI-TRUST ACT.

monopolizing trade, that is unduly restraining it by means
of every contract, combination, etc., the second section seeks,
if possible, to make the prohibitions of the act all the more
complete and perfect by embracing all attempts to reach
the end prohibited by the first section, that is, restraints
of trade, by any attempt to monopolize, or monopolization
thereof, even although the acts by which such results are
attempted to be brought about or are brought about be
not embraced within the general enumeration of the first
section. And, of course, when the second section is thus har-
monized with and made as it was intended to be the com-
plement of the first, it becomes obvious that the criteria to
be resorted to in any given case for the purpose of ascer-
taining whether violations of the section have been com-
mitted is the rule of reason guided by the established law
and by the plain duty to enforce the prohibitions of the
act, and thus the public policy which its restrictions were
obviously enacted to subserve. And it is worthy of ob-
servation, as we have previously remarked concerning the
common law, that although the statute, by the compre-
hensiveness of the enumerations embodied in both the first
and second sections, makes it certain that its purpose was to
prevent undue restraints of every kind or nature, never-
theless by the omission of any direct prohibition against
monopoly in the concrete, it indicates a consciousness that
the freedom of the individual right to contract, when not
unduly or improperly exercised, was the most efficient means
for the prevention of monopoly, since the operation of the
centrifugal and centripetal forces resulting from the right
to freely contract was the means by which monopoly would
be inevitably prevented if no extraneous or sovereign power
imposed it and no right to make unlawful contracts having
a monopolistic tendency were permitted. In other words,
that freedom to contract was the essence of freedom from
undue restraint on the right to contract.’’#®

48 Standard Oil Co. v. United 502; 55 L. Ed. 619; 34 L. R. A.
States, 221 U. 8. 1; 31 Sup. Ct. (N.S.) 84, 34; affirming 173 Fed.
INTERPRETATION OR CONSTRUCTION OF ACT. 279

§ 108. Questions Not Decided by Previous Decisions.—
Chief Justice White in the next step in the Standard Oil
Case takes up the contention that a different construction had
previously been given the act, and thus disposes of it:

‘In substance, the propositions urged by the govern-
ment are reducible to this: That the language of the
statute embraces every contract, combination, etc., in re-
straint of trade, and hence its text leaves no room for the
exercise of judgment, but simply imposes the plain duty
of applying its prohibitions to every case within its literal
language. The error involved lies in assuming the matter
to be decided. This is true, because, as the acts which may
come under the classes stated in the first section and the

restraint of trade to which that section applies are not
specifically enumerated or defined, it is obvious that judg-
ment must in every case be called into play in order to
determine whether a particular act is embraced within the
statutory classes, and whether, if the act is within such
classes, its nature or effect causes it to be a restraint of
trade within the intendment of the act. To hold to the
contrary would require the conclusion either that every
contract, act, or combination of any kind or nature, whether
it operated a restraint on trade or not, was within the
statute, and thus the statute would be destructive of all right
to contract or combine in any respect whatever as to sub-
jects embraced in interstate trade or commerce, or, if this
conclusion were not reached, then the contention would
require it to be held that, as the statute did not define
the things to which it related, and excluded resort to the
only means by which the acts to which it relates could be
ascertained,—the light of reason,—the enforcement of the
statute was impossible because of its uncertainty. The
merely generic enumeration which the statute makes of the
acts to which it refers, and the absence of any definition of

177. It may be observed that United States, 193 U. S. 107, 384;
Justice White had previously used 24 Sup. Ct. 436; 48 L. Ed. 679;
the phrase “by the light of rea- affirming 120 Fed. 721.

son” in Northern Securities Co. v.
280 THE SHERMAN ANTI-TRUS! ACT.

restraint of trade as used in the statute, leaves room for
but one conclusion, which is, that it was expressly de-
signed not to unduly limit the application of the act by
precise definition, but, while clearly fixing a standard, that
is, by defining the ulterior boundaries which could not be
transgressed with impunity, to leave it to be determined
by the light of reason, guided by the principles of law and
the duty to apply and enforce the public policy embodied
in the statute, in every given case whether any particular
act or contract was within the contemplation of the statute.

‘‘But, it is said, persuasive as these views may be, they
may not be here applied, because the previous decisions of
this court have given to the statute a meaning which ex-
pressly excludes the construction which must result from
the reasoning stated. The cases are United States v. Trans-
Missouri Freight Asso.,“8* and United States v. Joint
Traffic Asso.**t Both the cases involved the legal-
ity of combinations or associations of railroads  en-
gaged in interstate commerce for the purpose of
controlling the conduct of the parties to the association or
combination in many particulars. The association or com-
bination was assailed in each case as being in violation of
the statute. It was held that they were. It is undoubted
that, in the opinion in each case, general language was
made use of, which, when separated from its context, would
justify the conclusion that it was decided that reason could
not be resorted to for the purpose of determining whether
the acts complained of were within the statute. It is, how-
ever, also true that the nature and character of the con-
tract or agreement in each case was fully referred to, and
suggestions as to their unreasonableness pointed out in order
to indicate that they were within the prohibitions of the
statute. As the cases cannot, by any possible conception,
be treated as authoritative without the certitude that reason
was resorted to for the purpose of deciding them, it follows

48* 166 U. S. 290; 17 Sup. Ct. 48 171 U. S. 505; 19 Sup. Ct.
540; 41 L. Ed. 1007. 25; 43 L. Ed. 259.
INTERPRETATION OR CONSTRUCTION OF ACT. 281

as a matter of course that it must have been held by the
light of reason, since the conclusion could not have been
otherwise reached, that the assailed contracts or agreements
were within the general enumeration of that statute, and
that their operation and effect brought about the restraint
of trade which the statute prohibited. This being in-
evitable, the deduction can in reason only be this: That in
the cases relied upon, it having been found that the acts
complained of were within the statute, and operated to
produce the injuries which the statute forbade, that resort
to reason was not permissible in order to allow that to be
done which the statute prohibited. This being true, the
rulings in the case relied upon, when rightly appreciated,
were therefore this, and nothing more: That as consider
ing the contracts and agreements, their necessary effect, and
the character of the parties by whom they were made, they
were clearly restraints of trade within the purview of the
statute, they could not be taken out of that category by
indulging in general reasoning as to the expediency or non-
expediency of having made the contracts, or the wisdom
or want of wisdom of the statute which prohibited their
being made. That is to say, the cases but decided that the
nature and character of the contracts, creating, as they
did, a conclusive presumption which brought them within
the statute, such result was not to be disregarded by the
substitution of a judicial appreciation of what the law
ought to be for the plain judicial duty of enforcing the
law as it was made.

‘‘But aside from reasoning it is true to say that the cases
relied upon do not, when rightly construed, sustain the
doctrine contended for, is established by all of the numer-
ous decisions of this court which have applied and enforced
the Anti-Trust Act, since they all, in the very nature of
things, rest upon the premise that reason was the guide by
which the provisions of the act were in every case inter-
preted. Indeed, intermediate the decision of the two cases,
that is, after the decision in the Freight Association Case,
282 THE SHERMAN ANTI-TRUST ACT.

and before the decision in the Joint Traffic Case, the case
of Hopkins v. United States ,*8* was decided, the opinion be-
ing delivered by Mr. Justice Peckham, who wrote both the
opinions in the Freight Association and in the Joint Traffic
Cases. And, referring in the Hopkins case to the broad claim
made as to the rule of interpretation announced in the Freight
Association Case, it was said: ‘To treat as condemned by the
act all agreements under which, as a result, the cost of
conducting an interstate commercial business may be in-
ereased would enlarge the application of the act far be-
yond the fair meaning of the language used. There must
be some direct and immediate effect upon interstate com-
merce in order to come within the act.’ And in the Joint
Traffic Case this statement was expressly reiterated and
approved and illustrated by example. Like limitation on the
general language used in Freight Association and Joint
Traffic Cases is also the clear result of E. Bement & Sons
v. National Harrow Co.,**+ and especially of Cincinnati, P. B.
S. & P. Packet Co. v. Bay.**t.

“Tf the criterion by which it is to be determined in all
cases whether every contract, combination, etc., is a restraint
of trade within the intendment of the law, is the direct or
indirect effect of the acts involved, then of course the rule
of reason becomes the guide, and the construction which we
have given the statute, instead of being refuted by the
cases relied upon, is by those cases demonstrated to be cor-
rect. This is true, because the construction which we have
deduced from the history of the act and the analysis of
its text is simply that in every case where it is claimed
that an act or acts are in violation of the statute, the rule
ot reason, in the light of the principles of law and the pub-
lic policy which the act embodies, must be applied. From
this it follows, since that rule and the result of the test

48" 177 U. S. 578; 19 Sup. Ct. 48t 200 U. S. 179; 26 Sup. Ct.
40; 43 L. Ed. 290. 208; 50 L. Ed. 428.

487 186 U. S. 70, 92; 22 Sup.
Ct. 747; 46 L. Bd. 1058.
INTERPRETATION OR CONSTRUCTION OF ACT.

283

as to direct or indirect, in their ultimate aspect, come to
one and the same thing, that the difference between the two
is therefore only that which obtains between things which

do not differ at all.’’4

49 Standard Oil Co. v. United
States, 221 U. S. 1; 31 Sup Ct.
502; 55 L. Ed. 619; 34 L. R. A.
(N.S.) 834; affirming 173 Fed.
177. Judge Cochran before this
case was decided used this
language in a case: “In view,
then, of this difference between
these two classes of cases as to
the validity of the contracts be-
longing to them, in the one class,
the contract being valid if the re-
straint is reasonable; in the other
class, the contract probably being
invalid without any reference to
the question of reasonableness, it
is important to determine to
which class the system of con-
tracts involved herein belongs. If
it belongs to the second class, then
probably we have nothing more to
do than to locate it. If it belongs
to the first class then, if the re-
straint is reasonable, the system
of contracts is certainly valid. In
any event, it will add to clearness
of thought to locate it.” Hartman
y. John D. Park & Sons Co., 145
Fed, 358. In a dissenting opinion
Justice White gave this expla-
nation of a number of previous
cases: ‘The same confusion and
contradiction arises from separat-
ing from their context and citing
as applicable to this case passages
from the opinions in the Freight
Association and Joint Traffic
cases. Those cases, as I have pre-
viously stated, related exclusively
to a contract admittedly involving
interstate commerce, and it was
decided that any restraint of such

commerce was forbidden by the
Anti-Trust Act. Now in the Hop-
kins case, decided subsequent to
the Freight Association and Joint
Traffic cases, the contract con-
sidered unquestionably involved a
restraint, but, as such restraint
did not concern interstate com-

merce, it was held not to
come within the power of
Congress. It would follow then,

if the sentence quoted from the
opinions in the Freight Associa-
tion and Joint Traffic cases, which
cases concerned only that which
was completely interstate com-
merce, applied to that which was
not such commerce, that the Hop-
kins case overruled both these
cases, although the opinions in all
of the cases were delivered by the
same Justice, and no intimation
was suggested of such overruling.
It would also result that, after
having overruled those cases in
the Hopkins case, the court, in
expressing its opinion through the
same Justice, proceeded in the
Addyston Pipe case, which related
only to interstate commerce, to
overrule the Hopkins case and re-
affirm the prior cases. Of course
in my opinion, there is no ground
for holding that the decided cases
embody such extreme contradic-
tions or produce such utter confu-
sion. The cases are all consistent,
if only the elementary distinction
upon which they proceeded be not
obscured, that is, the difference
which arises from the power of
Congress to regulate interstate
284 THE SHERMAN ANTI-TRUST ACT.

§109. Freight and Joint Traffic Association Cases Ex-
plained.—Chief Justice White then proceeds to explain or
distinguish two cases referred to in the preceding section, as
follows:

“‘Tf it be true that there is this identity of result be-
tween the rule intended to be applied in the Freight As-
sociation Case, that is, the rule of direct and indirect, and
the rule of reason which, under the statute as we construe
it, should be here applied, it may be asked how was it that,
in the opinion in the Freight Association Case, much con-
sideration was given to the subject of whether the agree-
ment or combination which was involved in that case could
be taken out of the prohibitions of the statute upon the
theory of its reasonableness. The question is pertinent and
must be fully and frankly met; for if it be now deemed
that the Freight Association Case was mistakenly decided
or too broadly stated, the doctrine which it announced
should be either expressly overruled or limited.

‘‘The confusion which gives rise to the question results
from failing to distinguish between the want of power to
take a case which, by its terms or the circumstances which
surrounded it, considering among such circumstances the
character of the parties, is plainly within the statute, out
of the operation of the statute by resort to reason in effect
to establish that the contract ought not to be treated as
within the statute, and the duty in every case where it
becomes necessary from the nature and character of the
parties to decide whether it was within the statute, to pass
upon that question by the light of reason. This distinction,
we think, serves to point out what, in its ultimate concep-
tion, was the thought underlying the reference to the rule
of reason made in the Freight Association Case,—especially
commerce on the one hand, and its is the error permeating all the
want of authority on the other, contentions for the government.”
to regulate that which is not in- Northern Securities Co. v. United
terstate commerce. Indeed, the States, 193 U. S. 197, 391; 24 Sup.

confounding and treating as one, Ct. 436; 48 L. Ed. 679; affirming
things which are wholly different, 120 Fed. 721.
INTERPRETATION OR CONSTRUCTION OF ACT. 285

when such reference is interpreted by the context of the
opinion and in the light of the subsequent opinion in the
Hopkins Case and in Cincinnati, P. B. S. & P. Packet Co.
v. Bay.

‘‘And in order not in the slightest degree to be wanting
in frankness, we say that in so far, however, as by separ-
ating the general language used in the opinions in the
Freight Association and Joint Traffic Cases from the con-
text and the subject and parties with which the cases were
concerned, it may be conceived that the language referred
to conflicts with the construction which we give the statute,
they are necessarily now limited and qualified. We see no
possible escape from this conclusion if we are to adhere to
the many cases decided in this court in which the Anti-Trust
law has been applied and enforced, and if the duty to
apply and enforce that law in the future is to continue to
exist. The first is true, because the construction which we
now give the statute does not in the slightest degree con-
flict with a single previous case decided concerning the Anti-
Trust law, aside from the contention as to the Freight Asso-
ciation and Joint Traffic cases, and because every one of
those cases applied the rule of reason for the purpose of
determining whether the subject before the court was within
the statute. The second is also true, since, as we have al-
ready pointed out, unaided by the light of reason it is im-
possible to understand how the statute may in the future
be enforced and the public policy which it establishes be
made efficacious.’’5°

§ 110. Standard Oil Case Explained and Defended—Did
Not Overrule Previous Cases.—Fourteen days after the ren-
dition of the opinion in the Standard Oil Case, the Su-
preme Court rendered a decision in the American Tobacco
Case wherein it explained and defended the former case,
juriously restrained trade, that the words as used in the

50 Standard Oil Co. v. United A. (N.S.) 834; affirming 173 Fed.

States, 221 U. S. 1; 31 Sup. Ct. 177.
502; 35 L. Ed. 619; 34 L. R.
286 THE SHERMAN ANTI-TRUST ACT.

declared that it did not overrule any former case, and that
the interpretation therein given the statute had rendered it
far more easily applicable, not only to trade conditions, but
to contracts and combinations in restraint of trade. Chief
Justice White was the mouthpiece of the court:

‘‘The obscurity and resulting uncertainty, however, is now
but an abstraction, because it has been removed by the con-
sideration which we have given quite recently to the con-
struction of the Anti-Trust Act in the Standard Oil case. In
that case it was held, without departing from any previous
decision of the court, that as the statute had not defined the
words ‘restraint of trade,’ it became necessary to construe
those words, a duty which could only be discharged by a
resort to reason. We say the doctrine thus stated was in
accord with all the previous decisions of this court, despite
the fact that the contrary view was sometimes erroneously
attributed to some of the expressions used in two prior de-
cisions.°°* That such view was a mistaken one was fully
pointed out in the Standard Oil case and is additionally
shown by a passage in the opinion in the Joint Traffic case,
as follows: ‘The act of Congress must have a reasonable
construction or else there would scarcely be an agreement
or contract among business men that could not be said to
have, indirectly or remotely, some bearing on interstate
commerce, and possibly to restrain it.” Applying the rule
of reason to the construction of the statute, it was held in
the Standard Oil case that as the words ‘restraint of
trade’ at common law and in the law of this country at
the time of the adoption of the Anti-Trust Act only em-
braced acts or contracts or agreements or combinations which
operated to the prejudice of the public interests by unduly
restricting competition or unduly obstructing the due course
of trade or which, either because of their inherent nature or
effect or because of the evident purpose of the acts, etc., in-

50* United States v. Trans-Mis- 1007; United States v. Joint Traf-
souri Freight Asso., 166 U. S. fic Asso., 171 U. S. 505; 19 Sup.
290; 17 Sup. Ct. 540; 41 L. Ed. Ct. 25; 43 L. Ed. 259.
INTERPRETATION OR CONSTRUCTION OF ACT. 287

statute were designed to have and did have but a like sig-
nificance. It was therefore pointed out that the statute
did not forbid or restrain the power to make normal and
usual contracts to further trade by resorting to all normal
methods, whether by agreement or otherwise, to accomplish
such purpose.

‘In other words, it was held not that acts which the statute
prohibited could be removed from the control of its pro-
hibitions by a finding that they were reasonable, but that
the duty to interpret which inevitably arose from the gen-
eral character of the term ‘restraint of trade’ required that
the words ‘restraint of trade’ should be given a meaning
which would not destroy the individual right to contract
and render difficult if not impossible any movement of
trade in the channels of interstate commerce—the free
movement of which it was the purpose of the statute to
protect. The soundness of the rule that the statute should
receive a reasonable construction, after further mature de-
liberation, we see no reason to doubt. Indeed, the necessity
for not departing in this case from the standard of the
rule of reason which is universal in its application is so
plainly required in order to give effect to the remedial pur-
poses which the act under consideration contemplates, and
to prevent that act from destroying all liberty of contract
and all substantial right to trade, and thus causing the act
to be at war with itself by annihilating the fundamental
right of freedom to trade which, on the very face of the
act, it was enacted to preserve, is illustrated by the record
before us. In truth, the plain demonstration which this
record gives of the injury which would arise from and the
promotion of the wrongs which the statute was intended to
guard against which would result from giving to the statute
a narrow, unreasoning, and unheard of construction, as il-
lustrated by the record before us, if possible serves to
strengthen our conviction as to the correctness of the rule
of construction, the rule of reason. which was applied in
288 THE SHERMAN ANTI-TRUST ACT.
the Standard Oil case, the applicaticn of which rule to the
statute we now, in the most unequivocal terms, re-express
and re-affirm.

‘‘Coming then to apply to the case before us the act as
interpreted in the Standard Oil and previous cases, all the
difficulties suggested by the mere form in which the as-
sailed transactions are clothed become of no moment. This
follows because, although it was held in the Standard Oil
case that, giving to the statute a reasonable construction,
the words ‘restraint of trade’ did not embrace all those
normal and usual contracts essential to individual freedom
and the right to make which were necessary in order that
the course of trade might be free, yet, as a result of the
reasonable construction which was affixed to the statute,
it was pointed out that the generic designation of the first
and second sections of the law, when taken together, em-
braced every conceivable act which could possibly come
within the spirit or purpose of the prohibitions of the law,
without regard to the garb in which such acts were clothed.
That is to say, it was held that in view of the general
language of the statute and the public policy which it mani-
fested, there was no possibility of frustrating that policy
by resorting to any disguise or subterfuge of form, since
resort to reason rendered it impossible to escape by any in-
direction the prohibitions of the statute.’’

51 United States v. American
Tobacco Co., 221 U. S. 106; 31
Sup. Ct. 632; 56 L. Ed. 663. See
opinion below 164 Fed. 700. “The
decision of the court is so revo-

the decision of the majority of
the court stands as the decision
of the court—even when that.
majority rests upon the opinion of
one Justice; and to make it

lutionary that it not only reverses
a decision that has stood for fifteen
years, but it amends a law, en-
acted by ‘Congress, which the
court. refused to amend in the
Trans-Missouri Freight case. It
is true that Chief Justice White,
then an associate justice, dis-
sented, but according to our law

stronger still, even when the opin-
ion of that justice has changed
between two arguments of the case,
as did the opinion of one of the
Justices in the Income Tax case.”
William J. Bryan in 194 North
American Review, 15 (July,
1911). “An interesting contro-
versy in which the court itself has
INTERPRETATION OR CONSTRUCTION OF ACT.

§ 111.

289

The ‘‘Rule of Reason’’ used in Standard Oil

Case Not an Obiter Dictum.—It has been repeatedly charged
that the ‘‘Rule of Reason’? announced in the Standard Oil
Case for the interpretation of the Sherman Anti-Trust Act

is an obiter dictum.

It has been said that the argument

there used was not clothed with the sanctity of a judicial

decision.

One writer has even gone so far, not only to

declare that it was an obiter dictum, but that, if a judge

taken sides has arisen as to
whether the court, in this case,
read the word ‘unreasonable’ into
the statute. The court says, in
the Tobacco case, it did not. With
great deference the writer insists
that in effect it did. The court
says that it did not decide that
only unreasonable restraints of
trade were illegal, but that it gave
to the words ‘restraint of trade’ a
reasonable meaning; or construed
them ‘in the light of reason;’ or
adopted the ‘rule of reason.’ In
this case, however, in giving them
a reasonable meaning, the court
gave to the words ‘restraint of
trade’ the same meaning that they
had at common law, and the com-
mon Jaw reads the word “unreason-
able’ before the words ‘restraint
of trade’ wherever they occur, It
is submitted that this particular
meaning of those words is what
the phrase ‘the rule of reason’ was
intended to cover. Of course the
court might Juve meant something
else by the ‘rule of reason,’ and in
certain parts of the opinion, as
mentioned later in this article, the
court speaks as though it had
meant something else. It might
have meant the use of judicial in-
telligence in construing a doubtful
statute, as distinguished from the

use of mere perception in deciding
whether a perfectly definite thing
had been done. Of course it is
entirely possible to give the words
‘restraint of trade’ a reasonable
meaning which is not equivalent
to reading ‘unreasonable’ into the
statute. Previous cases gave the
words a perfectly reasonable mean-
ing in holding that they meant
the lessening of competition to a
substantial extent by combination
or agreement. If this is what the
court meant by its ‘rule of reason,’
it meant no more than that it
acted as courts have acted’ from
time immemorial, and as they al-
ways must act in construing a
statute whose meaning is not pre-
cise. In such case, the emphasis
on the ‘rule of reason’ as a prin-
ciple of law now applied to the
Anti-Trust Act was entirely super-
fluous. It was not worth mention-
ing. It certainly did not require
an elaborate discussion of the com-
mon-law meaning of the words ‘re-
straint of trade’ on which to base
its adoption. This discussion, on
the other hand, was appropriate
to justify reading the word ‘un-
reasonable’ into the statute.” Rob-
ert IL. Raymond in 25 Harvard
Law Review 41 (Nov., 1911).
290 THE SHERMAN ANTI-TRUST ACT.

of a lower court trying a trust case did not consider it was
a correct interpretation of the act, he violated his oath as
a judge if he followed the rule thus declared in the inter-
pretation on this part of the statute.*? There are probably
very few lawyers ready to assent to this view. It is a
very extreme and impractical one. It savors more of burn-
ing midnight oil than the practical course of business in
the office and court room. Such niceties or discrimination
retard rather than promote the administration of justice.
It has been said to be a dictum because the court found
that there was an unreasonable restraint of trade, and
therefore it was unnecessary to discuss whether the statute
required an unreasonable or only a reasonable restraint of
trade to constitute a violation of its provisions. But if this
line of reasoning is followed, then a similar line of reasoning
will lead to the inevitable result that all the courts had
said that the restraint need not be unreasonable or only a
reasonable restraint of trade to constitute a violation of the
statute was also obiter dicta, because, as we have previously
said, in each case wherein this statement was made the court
found that the particular restraint was ‘‘unreasonable,’’ and
therefore all that was said to the effect that an unreason-
able restraint was not necessary under it was unnecessary.
Thus on this line of reasoning we have two obiter dicta
which have given the commercial world and the would-be
rascals an immense amount of trouble when no attention
ought to have been paid to either one of them. Elsewhere
we have attempted to show that the rule announced in the
early cases was not obiter dicta, and that that view of the
rule was taken, not only by the Circuit and District Courts,
but also by the Supreme Court. The ‘‘Rule of Reason’’
interpretation or construction of the Sherman Act has uni-
versally been accepted by the District and Circuit Court
of Appeals, but has also been reiterated and applied by
the Supreme Court. Evidently, according to the view of
these lower courts, and beyond doubt according to the view

52 American Law Review, 718.
INTERPRETATION OR CONSTRUCTION OF ACT. 291
of the Supreme Court, the rule as announced in the Standard
Oil case is not an obiter dictum.

§112. Importance of Decision in Standard Oil Case—
Storm of Criticism—The importance of the decisions in the
Standard Oil and Tobacco cases was quickly recognized and
raised a storm of criticism, but also a few commendations.
In a clearly written article Judge Grosscup has said this of
the importance of the decision:

‘‘The interest of the public in the interpretation just
given to the Sherman Act by the Supreme Court is be-
cause it is a decisive event—as the Dred Scott case fifty
years before was a decisive event—in the line of events
along which the political and economic life of the nation
travels. Like the Dred Scott case, the significance of the
decision is not in what was done with the particular matter
before the court, but what was laid down as the law govern-
ing such matters in general. As in the Dred Scott case,
the court here traveled away from the particular case in
hand, that the decision might settle once and for all what
is now, as what was then, the most prominent question in
the public mind. And, as in the Dred Scott case, when
the smoke has cleared away it will be found that nothing
permanent has been settled—that issues as deep as the

specting the reasonableness or un-
reasonableness of restraint of

53 Where counsel in the trial
of a case and the court in its

charge to the jury proceeded on
an erroneous construction of the
statute, not having adopted the
construction given it afterwards
by the Supreme Court, the Cir-
cuit Court of Appeals refused to
determine the case on the record,
but remanded it for a new trial.
Union Castle Mail S$. S. Co. v.
Thomsen, 190 Fed. 536. “Unlike
the Dred Scott case, what the
court in this case has laid down
as the law is not mere dicta—
what the court laid down re-

trade to bring it within the pro-
hibition of the act was essential
to arriving at a definition or
standard by which the particular
case might be measured; and, un-
like the Dred Scott decision also,
this Standard Oil decision, instead
of cumbering the ground, com-
pletely clears it for the beginning
of what I believe will be the pub-
lie’s final way of settling existing
problems.” Judge Grosscup in 194
North American Review, 2 (July
1911).
292 THE SHERMAN ANTI-TRUST ACT.

cause that now underlies the public unrest are not finally
settled by any pronouncement that does not proceed from
the public mind, made up in its own way and after its
own processes of arriving at conclusions. But here the re-
semblance ends.’’** In a well considered article it has been
said of the result of the two decisions:

‘‘A substantial change in the law has been made. Ju-
dicial legislation could hardly accomplish more than it has
done in these cases. It remains true that judicial legisla-
tion cannot do everything. A great step has been made
towards the solution of the trust problem. It consists in
the fact that attack is at last concentrated, not on com-
bination on a large scale, but on the evils and wrongdoing
which accompany combination. It remains to clear up
the considerable remaining obscurity of the situation by
embodying the principles of these great decisions in a
statute which shall lay down clear and definite rules of
conduct, and which shall not supplant but supplement the
Anti-Trust Act as now construed.’’°

§113. Uncertainty of Anti-Trust Act.—In 1909, Senator
Nelson on behalf of the Judiciary Committee, in reference

54 Judge Grosscup in 194 North
American Review, 1 (July, 1911).
In this same article it was also
said, page 3 and also page 8: “The
interpretation put upon the act
fourteen years ago was hailed at
that time as the people’s salva-
tion from impending conditions.
The repeal of that interpretation
in the opinion now filed is hailed
against as a rescue of the people
from impending conditions.” “This
latest interpretation of the Sher-
man Act, in determining that the
restraint of trade must be un-
reasonable to be within the pro-
hibitions of the act, restores the
question of punishment to the
courts, for hereafter the reason-

ableness or unreasonableness or
the restraint will be a judicial
question to be determined by the
courts. This latest decision is the
counter revolution.”

55 Robert L. Raymond in 25
Harvard Law Review, p. 58 (Nov.
1911): “That the Sherman Act
has changed the common law as
it existed in 1890 cannot be
doubted, for the common law had
confused true contracts in re-
straint of trade with contracts and
combinations to restrict competi-
tion, and the courts have after
fallen into the error of applying
the test of reasonableness to re-
strictions upon competition. It is
submitted, however, that the Sher-
INTERPRETATION OR CONSTRUCTION OF ACT. 293
to a certain bill offered in the Senate and which proposed
to amend the Trust Act in certain particulars said that
‘to inject into the act the question of whether an agree-
ment or combination is reasonable or unreasonable would
render the act as a criminal or penal statute indefinite and
uncertain, and hence, to that extent, utterly nugatory and
void, and would practically amount to a repeal of that part
of the act.

“The Anti-Trust Act makes it a criminal offense to vio-
late the law, and provides a punishment both by fine and
imprisonment. To inject into the act the question of
whether an agreement or combination is reasonable or un-
reasonable would render the act as a criminal or penal
statute indefinite and uncertain, and hence, to that extent,
utterly nugatory and void, and would practically amount
to a repeal of that part of the act. * * * And while
the same technical objection does not apply to civil prosecu-
tions, the injection of the rule of reasonableness or unrea-
sonableness would lead to the greatest variableness and un-
certainty in the enforcement of the law. The defense of
reasonable restraint would be made in every case, and there
would be as many different rules of reasonableness as cases,
courts, and juries. What one court or jury might deem
unreasonable another court or jury might deem reasonable.
A court or jury in Ohio might find a given agreement or
combination reasonable, while a court and jury in Wis-
consin might find the same agreement and combination

man Act is interpreted by the
Supreme Court, instead of being
revolutionary, as so many people
have claimed, has, in reality mere-
ly corrected an error into which
the courts had fallen—the error
of confusing restraints of trade
with restrictions upon competi-
tion. When the court has said
that the Act applies to reasonable
as well as to unreasonable re-
straints of trade, it has, in re-

ality, merely emphasized the fact
that the test of reasonableness is
not’ the proper one by which to
judge restrictions upon competi-
tion. When true restraints of
trade have come before it, the
court has not hesitated to judge
them by the standard of reason-
ableness.” Harold Evans of Phil-
adelphia in 59 American Law
Register, 72.
294 THE SHERMAN ANTI-TRUST ACT.

unreasonable. In the case of the People v. Sheldon,**
Chief Justice Andrews remarks: ‘If agreements and com-
binations to prevent competition in prices are or may be
hurtful to trade, the only sure remedy is to prohibit all
agreements of that character. If the validity of such an
agreement was made to depend upon actual proof of public
prejudice or injury, it would be very difficult in any case
to establish the invalidity, although the moral evidence
might be very convincing.” * * * To amend the Anti-
Trust Act, as suggested by this bill, would be to entirely
emasculate it, and for all practical purposes render it nug-
atory as a remedial statute. Criminal prosecutions would
not lie, and civil remedies would labor under the greatest
doubt and uncertainty. The act as it exists is clear, com-
prehensive, certain and highly remedial. It practically
covers the field of federal jurisdiction, and is in every
respect a model law. To destroy or undermine it at the
present juncture, when combinations are on the increase,
and appear to be as oblivious as ever of the rights of the
public, would be a calamity.’’

And it has been said that ‘‘in order to constitute a
crime, the act must be one which the party is able to
know in advance whether it is criminal or not. The crim-
inality of an act can not depend upon whether a jury may
think it reasonable or unreasonable. There must be some
definiteness and certainty.’’ *”

And Mr. Wm. J. Bryan has said of the statute in its
recent interpretation :

“A rule that will divide crimes into reasonable crimes and
unreasonable ones is not a ‘rule of reason,’ no matter how
many judges may concur in its enunciation. The Anti-

56139 N. Y. 264; 23 L. R. A. what he may and may not do.” He

221; 36 Am. St. 690; 34 N. E. 785.

57 Justice Brewer in Tozer \v.
United States, 52 Fed. 917. He
adds ‘“‘no penal law can be sus-
tained unless its mandates are so
clearly expressed that any ordinary
person can determine in advance

cites Railway Co. v. Day, 35 Rep.
866, 876.

Judge Putnam has held that the
Sherman Act is not unconstitu-
tional because of indefiniteness.
United States v. Winslow, 195
Fed. 578 (affirmed).
INTERPRETATION OR CONSTRUCTION OF ACT. 295
Trust law as recently construed by the court is no longer
a criminal law, and as a civil statute it is badly crippled.
No wonder the corporations that are now being prosecuted
under the law have immediately enlarged their defense so
as to deny the reasonableness of the restraint of trade
which they are attempting. The court has multiplied the
difficulties under which the government prosecutors will
labor, even when they commence civil prosecutions, but can
the government hope to convict trust magnates of crime
under the law as now constructed? In crime the intent is
everything, and the accused is entitled to the benefit of
every reasonable doubt. What trust magnate could be
convicted of criminal intent [with every reasonable doubt
resolved in his favor] to unreasonably restrain trade when
there is no legal definition of unreasonable restraint?’’ °

Many other criticisms of a similar character could be
added.*® But there is a wide range in opinions on this
question. Under the common law a restraint of trade to be
illegal must be ‘‘unreasonable.’’ This rule left it to the
court to determine in every instance whether the restraint
imposed by a contract was unreasonable. In the process of
time a number of decisions determined in as many in-

58194 North American Review
21 (July, 1911). Mr. Bryan
further says: “In the light of this
decision, who is likely to be con-
victed of a criminal violation of
the Anti-Trust law? We may as
well recognize that we now have
no criminal law against the trusts.
Whatever is left of the Anti-Trust
law—the only protection against
monopolies for twenty-one years—
must be enforced as a civil statute,
and of what value is that when it
requires four and a half years to
reach a decision which, when
reached, is of but little value when
applied to another case? Accord-
ing to the decisions of the court,
each case must now be decided

upon the facts which it presents,
the reasonableness of the restraint
being a mere matter of opinion,
and as the value of testimony de-
pends as much upon the manner of
the witness as upon what he says,
the court deciding upon a printed
record may reach a very different
conclusion from that reached by
a court or jury having living wit-
nesses before it.”

59 Frederic D. Coudert, a di.-
tinguished member of the New
York Bar, in 194 North American
Review 32 (July No., 1911), says:
“The emphasis placed upon the
words ‘reasonable’ and ‘the light
of reason’ by the court in the
Standard Oil case was perhaps un-
296

THE SHERMAN ANTI-TRUST ACT.

stances that the restraint was valid or invalid; and these
decisions served as precedents, but only in exactly similar
cases, for no one could tell what conclusion a judge would
arrive at if the facts involved in the case before him were

fortunate. It is quite probable that
for the words ‘reasonable’ and ‘un-
reasonable’ with regard to re-
straints of trade, the words ‘di-
rect’ and ‘indirect’ restraints could
be advantageously substituted.
This would put the test of validity
in a clearer, less subjective and
metaphysical light and _ distin-
guish between combinations which
have for their primary purpose re-
straint of trade and those con-
tracts which may incidentally re-
strain trade, but whose main ob-
ject is the sale of a business.

“The identity between the test of
reason and that of directness is
recognized by the Chief Justice in
the Standard Oil case, for he says,
referring to the rule of reason:
‘From this it follows, since that
rule and the result of the test as
to direct or indirect, in their ulti-
mate aspect, come to one and the
same thing, that the difference be-
tween the two is therefore only
that which obtains between things
which do not differ at all.’

“It may be regrettable that the
Chief Justice uses the terms ‘un-
reasonable,’ ‘undue,’ ‘the light of
reason,’ and ‘direct’ and ‘indirect’
as meaning one and the same
thing, thus seeming to create a
somewhat vague standard, but the
Chief Justice certainly does not
mean the ‘reason’ of each individ-
ual court or judge nor any philo-
sophic conception of ‘light of rea-
son’.”

“The Sherman law, if construed
absolutely and literally, according

to the most approved Chinese
method, would result in complete
economic stagnation. Interpreted
rationally in the sense intended
by its originator, as declaratory
of well-settled rules of common
law, it will not annihilate busi-
ness nor even perhaps very seri-
ously impair its development. It
is, however, calculated to leave the
whole question of ‘monopoly’ and
‘combinations in restraint of trade’
in an uncertain condition neces-
sarily resulting in suits and prose-
cutions in which courts and jury
must determine in every case
whether there was restraint of
trade or attempt to monopolize,
and all this with results of very
doubtful value to the community.
The real difficulty lies in the fact
that the nation has not as yet
thought out any intelligent legis-
lative programme which will ade-
quately deal with new and largely
untried economic conditions.” Of
the decision James M. Beck, once
Assistant Attorney-General of the
United States, in 194 North Amer-
ican Review 65, said: “The Su-
preme Court in its wisdom has de-
cided otherwise. It has assumed
a crushing burden. The Federal
Courts in applying the rule of rea-
sonableness must now determine
the limits of combination, the law-
ful and unlawful forms thereof,
the economic necessities of a peo-
ple, the degree to which commer-
cial methods, the invalidity of dif-
ferent forms of competition, the
degree to which the telegraph, the
INTERPRETATION OR CONSTRUCTION OF ACT. 297
not exactly similar in their effect to those involved in some
reported case. But the progression in commercial life and
transactions forced the courts in both England and Amer-
ica, but especially in the former country, to relax the effect
of the rigid decisions formerly made, for it was seen to
adhere to or unreasoningly follow them would lead to a
paralyzation of trade without in many instances any bene-
ficial results. Notwithstanding this uncertainty, contracts
were, without hesitation, adjudged valid or invalid, accord-
ing to the views of the particular judge hearing the case;
and the commercial world was still involved in doubt
whether its contracts were valid or invalid, as reasonable
or unreasonable restraints of trade. It is true no crimi-
nality was attached to a contract which was an unreason-
able restraint of trade. Now transactions claimed to be in
violation of the Sherman Anti-Trust Act, according to the
recent decisions, are given a like interpretation as if they
were being judged by the alleged rule of standard set up
by the common law. As so interpreted it is no more un-
certain than the common law if applied to the same trans-
action. But there is a difference. As we said, the act of
restraint of trade was not a criminal offense under the
common law, but it is under the Anti-Trust Act. It is at
this point that the greatest criticism has been directed, that
the Act as now interpreted is so uncertain that no
defendant will be convicted. Yet the actual trial of those
charged with the violation of the Act shows this to be
untrue. More criminal convictions have been had since the
decision in the Standard Oil case than before that time;

railroad, and the steamship may
be utilized in consolidating differ-
ent and competing units into a
more efficient and non-competing
unit, the proportion of a given
trade or industry that a given in-
dividual may enjoy, how far prices
may be regulated to prevent loss
and how far production can be
restricted to prevent waste. In

other words, they must now be the
arbiters of conflicting schools of
philosophy and economic ideals.
Which was right, Jefferson and
Adam Smith, or Hamilton and
Karl Marx, the individualism of
Herbert Spencer or the socialism
of John Ruskin? I can not envy
them their self-imposed burden.”
298 THE SHERMAN ANTI-TRUST ACT.

and great combinations have been held illegal in a number
of instances by the Supreme Court and dissolved.®

Samuel Untermeyer has discussed ably this question:

‘It was inevitable that the courts would be forced to take
some such construction as has now been announced. To
have held that every combination that had the effect of
restricting competition, however remote and indirect, was
within its condemnation, would have reduced the law to
an economic absurdity, and have made it applicable to
such a variety of proper and necessary business arrange-
ments as to have rendered its enforcement destructive to
legitimate business, and to have placed a most dangerous
power of discrimination in the hands of the government.

‘‘Every agreement or combination between business men
for their protection, the purpose of which is possibly to
save the parties to it from business destruction, would have
been brought within the prohibition of the Act. Such a
construction would have led to the most grotesque results,
some of which have already been realized as above stated
in the few criminal prosecutions against temporary pools
and trade agreements that have been ‘successfully’ con-
cluded.

‘‘There is no force in the contention that is being made
in some quarters that the law as now construed is too
indefinite to be applied as a criminal statute. The argu-
ment advanced is, that what is or is not a reasonable re-
straint of trade now depends upon such a variety of con-

60 President Taft’s prophecy put into the hands of the court a
seems to have been realized. In a power impossible to exercise on
message to Congress he said: “It any consistent principle which
has been proposed, however, that will insure the uniformity of de-
the word ‘reasonable’ should be cision essential to best judgment.
made a part of the statute, and It is to thrust upon the courts a
then that it should be le‘l to the burden they have no precedents to
court to say what is reasonable re- enable them to carry, and to give
straint of trade, what is reason- them a power approaching the ar-
able suppression of competition, bitrary, the abuse of which might
what is a reasonable monopoly. I involve our whole judicial system
venture to think that this is to in disaster.”
INTERPRETATION OR CONSTRUCTION OF ACT. 299
ditions and is so uncertain in its definition that no criminal
offense can be predicated of its violation. It is said in this
connection that intent to commit a crime which forms so
essentially a part of a criminal offense will be predicated
of an act when the party charged with its commjssion can
not know whether he had a criminal intent until so in-
formed by a jury as a result of his trial for the crime.

‘“‘The manifest answer is that we are all conclusively pre-
sumed to know the law and that convictions would only be
asked in cases in which the jury could readily be satisfied
that the main purpose of the combination, and that which it
accomplished, was a substantial control of the particular
industry so as to be able to regulate both prices and
output.’’ %

§114. Result of Decision in Standard Oil Case.—‘‘It
would be as easy to ask the sea to be still as to ask the
energy and property behind the business of the country to
accept in peace a reiteration of the doctrine enunciated in
the Trans-Missouri case.

‘“‘The inexorable logic of the decision in the Trans-Mis-
souri Freight case was recognized by the business interests
of the country and appreciated until they believed it might
also apply to them. They knew so far as they were con-
cerned that they were not injuring the public, although they
believed that some other but greater combination might.

“‘This same common-sense conclusion had also been
reached by a former Chief Executive of the country who

61194 North American Review and Tobacco cases), instead of

77 (July, 1911). Tle adds: “The
criminal section has been rendered
more und not less easy of enforce-
ment by the same construction
placed upon the statute.”

Harold Evans, in 60 Pennsylva-
nia Law Review (American Law
Register) 323, February No.,
1912) says: “And, finally, it is
submitted that the two decisions
under discussion (in Standard Oil

emasculating the Sherman Anti-
Trust Act, as so many have con-
tended, have on the contrary ex-
tended its application and given it
that elasticity which will allow it
to meet changing economic con-
ditions.”

See article of Herbert Pope in
7 Ilinois Law Review 201 (Nov.,
1912) on Uncertainty of the Sher-
man Act.
300 THE SHERMAN ANTI-TRUST ACT.

differentiated trusts or combinations as being good or bad,
as beneficial or baleful, and selected for attack such as he
believed to be in the latter class.

‘‘Constrained by public opinion and by the ultimate de-
struction of business generally if the doctrine in the freight
cases were adhered to, the Supreme Court modified the
construction formerly placed upon the Act and declared
that the ‘rule of reason’ should be applied to it, which is
the same as saying that the rule of common sense should
apply. As a result, the law becomes general in its applica-
tion and applies to every business enterprise engaged in
interstate commerce the test whether such enterprise is good
or bad from the standpoint of the public good.:

“This coustructicn, appealing to every one as just and
fair and far-reaching, should satisfy all.

“It should satisfy the great corporation or trust because
it should be prepared at all times to stand or fall upon
the question whether or not its activities are beneficial or
hostile to the public welfare.

“Tt should satisfy the smaller combination because its
business, comparatively negligible, may not be the subject
of attack by an overzealous public prosecutor.

‘‘Tt should satisfy every citizen because the object of the
Act has been attained. Danger to the country comes only
with corporations of giant size whose power and wealth,
when combined with others, make them no mean rival to
the power of the country. To restrain such power and keep
it within bounds was the real purpose of the Anti-Trust Act.

‘<The phraseology of the Act was but a means to this end
and this end has now been brought to pass.’’6*

Quite a different view was taken by Mr. Herbert Pope in
an address February 19, 1912, before the Legal Club of
Chicago, in these words:

““The reason why the Sherman Act continues to be an
uncertain statute, even after the decisions in the Standard

61* John Larkin, of New York, in 194 North American Review 31
(July, 1911).
INTERPRETATION OR CONSTRUCTION OF ACT. 301

Oil and Tobacco cases, is obvious. The Supreme Court in
those cases appreciated the necessity, if the statute was to
be held certain enough for enforcement, of basing its
interpretation of the Act upon some existing source of
law to which lawyers and their clients could look as a
reasonably certain guide for the ordering of conduct. It
found that guide in the ‘standard of reason which had been
applied at the common law and in this country’ in the
determination of the legality of acts such as were embraced
in the Sherman Act. The cases already decided in these
various jurisdictions were no doubt a source of law to
which the court must resort in giving an interpretation to
the Act. But if the Act was to be made certain by inter-
preting it according to the standard of reason which had
been applied in England and in this country, it was essen-
tial that the standard of reason should have been applied
clearly and consistently in all of these various jurisdictions.
From the review we have made of the authorities, it is
obvious that if the Act were to be interpreted first by the
common law decisions of England, and then by the decisions
of each one of the separate states, the statute would have
one meaning in one jurisdiction and quite a different mean-
ing in another. In other words, to read into the statute at
one and the same time all of the decisions of these many
jurisdictions on the subjects embraced in it, must neces-
sarily create a statute of many and inconsistent meanings.
It might have been possible to interpret the statute clearly
and consistently by the law of England alone, or by the
law of some single jurisdiction in this country, but to
require the statute to be interpreted by the conflicting law
of all of these jurisdictions, was to make the Act hopelessly
uncertain, until the Supreme Court, by its own decisions,
should settle this conflict in the authorities so far as the
meaning of the Act is concerned.

“‘The ‘standard of reason which had been applied at the
common law and in this country’ must therefore be rejected.
The Supreme Court has in fact rejected many of its appli-
302 THE SHERMAN ANTI-TRUST ACT.

cations. We have seen already that in specific instances it
has, in deciding cases, disagreed with the standard of reason
as it has been applied in England and in some of the states
in this country. What the Sherman Act really means must
therefore depend, not upon how the standard of reason
has been applied ‘at the common law and in this country,’
but upon how the Supreme Court thinks it ought to have
been applied. The meaning of the common law itself must
first be settled by the Supreme Court before it can become
a certain guide for the interpretation of the Sherman
Act.’’

§115. To what Instances Statute Held to Apply.—
Judge Sanborn has thus tersely stated the instances and
cited the cases in which it has been held that the statute
applies: ‘‘The formation or maintenance by competing cor-
porations of an association to determine their rates of trans-
poration; “? agreements of competitive manufacturers and
traders not to compete in the purchase or sale of articles
in interstate commerce, or to buy or to sell them at prices
fixed by a mutual agent or association; * the conveyance

of the stock or property of

627 Tllinois Law Review, 201
(Nov., 1912). The majority re-
port of the Senate Committee on
Interstate Commerce, made on Sen-
ate Resolution 98, being Senate Re-
port 1326 of the 62d Congress,
third session, ordered printed
February 26, 1913, contains a
clean, clear-cut analysis of the
Anti-Trust decisions in the Su-
preme Court, and points out the
possible results of the Standard
Oil decisions leading to dangerous
conditions in the administration of
justice.

63 United States v. Trans-Mis-
souri Freight Association, 166 U.
S. 290; 17 Sup. Ct. 540; 41 L. Ed.
1007; United States v. Joint Traf-

competitors to a trustee or

fie Association, 171 U. S. 505; 19
Sup. Ct. 25; 43 L. Ed. 259.

84 Continental Wall Paper Co. v.
Voight & Sons Company, 212 U. 8.
227; 29 Sup. Ct. 280; 53 L. Ed.
486; Addyston Pipe & Steel Co. v.
United States, 175 U. 8. 211, 217;
20 Sup. Ct. 96; 44 L. Ed. 136 Id.;
85 Fed. 271, 285-294; 29 C. C. A.
141, 155-164; 46 L. R. A. 122;
Swift & Company v. United States,
196 U. S. 375, 395; 25 Sup. Ct.
276; 49 L. Ed. 518; Chattanooga
Foundry & Pipe Works v. City of
Atlanta, 203 U. S. 390, 396; 27
Sup. Ct. 65; 51 L. Ed. 241; Mon-
tague & Company v. Lowry, 193
U.S. 38. 41; 24 Sup. Ct. 307; 48
L. Ed. 608.

 
INTERPRETATION OR CONSTRUCTION OF ACT. 303
trustees to hold and operate as a single interest;* the
exchange of the stocks or the property of competitive cor-
porations for the stock or for interests in a single corpora-
tion, which thereby acquires the power to control the rates
of transportation or the prices of articles in interstate com-
merce in which the corporations were dealing,®* are alike
declared to be illegal by this law. In the construction and
enforcement of this statute, corporations are persons, they
are legal entities distinct from their stockholders, and the
combination of two or more of them in restraint of trade
is as unlawful as the combination of individuals.’’ ®*

To this enumeration, however, should be added cases con-
cerning labor orgainzations.®

§116. Prohibitions in Act Cover Every Conceivable In-
stance Within the Purpose of Condemnation.—The Act covers
every phase of restraint of interstate trade or commerce
that is direct and unreasonable.®

§117. Proposed Amendment.—Shortly after the deci-
sions in the Standard Oil and Tobacco cases, yielding to

66 Northern Securities Company
v. United States, 193 U. 8. 197; 24
Sup. Ct. 436; 48 L. Ed. 679;
United States v. American Tobacco
Company (C. C.) 164 Fed. 700,
710; Continental Securities Com-
pany v. Interborough Rapid Tran-
sit Company (C. C.), 165 Fed.
945, 953; Richardson v. Buhl, 77
Mich. 632, 636; 43 N. W. 1102,
1103; 6 L. R. A. 457; Harding v.
American Glucose Company, 182
Tl. 551, 615; 55 N. E. 577, 598;
64 L. R. A. 738; 74 Am. St. Rep.
189; Dunbar v. American Tele-
phone & Telegraph Co., 224 Ill. 9,
23,24; 79 N. HE. 423, 427; 15 Am.
St. Rep. 132.

67 United States v. Standard Oil
Co., 173 Fed. 177; C. C. A. affirmed
221 U. 8. 1; 31 Sup. Ct. 502; 65
L. Ed.; 34 L. R. A. (N.S.) 834.

68 Loewe v. Lawlor, 208 U. S.
274; Sup. Ct.; L. Ed.; affirming
148 Fed. 924. See also 187 Fed.
522.

69 Standard Oil Co. v. United
States, 221 U. S. 1; 31 Sup. Ct.
502, 55 L. Ed. 619, 34 L. R. A.
(N.S.) 834, affirming 173 Fed.
177; United States v. American
Tobacco Co., 221 U. 8. 106, 31 Sup.
Ct.; 55 L. Ed.

65 Distilling & Cattle Feeding
Co. v. People, 156 Ill. 448, 488; 41
N. E. 188, 291; 47 Am. St. Rep.
200.
304 THE SHERMAN ANTI-TRUST ACT.

the widespread criticism of those decisions, bills for the
amendment of the Anti-Trust Act were introduced in Con-
gress, none of which have become laws. On January 7, 1910,
President Taft sent a message to Congress on Interstate
Commerce and Anti-Trust Laws and Federal Incorporation,
in which he took the ground that an amendment of that
Act was unnecessary. In this message he said:

“The Supreme Court in several of its decisions has de-
clined to read into the statute the word ‘unreasonable’
before ‘restraint of trade,’ on the ground that the statute
applies to all restraints and does not intend to leave to the
court the discretion to determine what is a reasonable re-
straint of trade. The expression ‘restraint of trade’ comes
from the common law, and at common law there were
certain covenants incidental to the carrying out of a main
or principal contract which were said to be covenants in
partial restraint of trade, and were held to be enforceable
because ‘reasonably’ adapted to the performance of the
main or principal contract. And under the general language
used by the Supreme Court in several cases, it would seem
that even such incidental covenants in restraint of inter-
state trade were within the inhibition of the statute and
must be condemned. In order to avoid such a result, I
have thought and said that it might be well to amend the
statute so as to exclude such covenants from its condemna-
tion. A close examination of the later decisions of the
court, however, shows quite clearly in cases presenting the
exact question, that such incidental restraints of trade are
held not to be within the law and are excluded by the gen-
eral statement that, to be within the statute, the effect
upon the trade of the restraint must be direct and not merely
incidental or indirect. The necessity, therefore, for an
amendment of the statute so as to exclude these incidental
and beneficial covenants in restraint of trade held at com-
mon law to be reasonable does not exist.

‘*In some of the opinions of the federal circuit judges
there have been intimations, having the effect, if sound, to
INTERPRETATION OR CONSTRUCTION OF ACT.

305

weaken the force of the statute by including within it
absurdly unimportant combinations and arrangements, and
suggesting therefore the wisdom of changing its language
by limiting its application to serious combinations with in-

tent to restrain competition or control prices.

A reading

of the opinions of the Supreme Court, however, makes the
change unnecessary, for they exclude from the operation
of the Act contracts affecting interstate trade in but a
small and incidental way, and apply the statute only to the
real evil aimed at by Congress.’’ ”

70 Presidential
State Papers, 528.

For the convenience of the
reader we cite a number of articles
wherein this case is discussed.

Addresses and

Judge Peter S. Grosseup, William,

J. Bryan, Jolin Larkin, Frederic R.
Coudert, James 'M. Beck and Sam-
ucl Untermeyer, in article entitled
“Supreme Court Decisions,” 194
North American Review 1 (July,
1911). Albert H. Walker in 45 Am-
erican Law Review 718 (Septem-
ber-October, 1911) ; Judge Peter S.
Grosscup in article entitled “Is
there ‘Common Ground on which
Thoughtful Men Can Meet on the
Trust Question?” 195 North Amer-
ican Review 293 (March, 1912).
Harold Evans, in Pennsylvania
Law Review 311 (February,
1912), “Recent Interpretation of
the Sherman Act.” George W.
Wickersham, Attorney-General, 10)
Mich. Law Review (An address be-
livered before the Michigan State
Bar Association, July 6, 1911).
“The Mule of Reason,’ H. UL.
Wilgus, in 9 ‘Mich. Law Review
643 (June, 1911); Robert L. Ray-
mond in 25 Jlarvard Law Review,

31 (Nov., 1911). “The Reason
for the Uncertainty of the
Sherman Act,” Herbert Pope in 7
Illinois Law Review 201 (Nov.,
1912), a paper read before the
Legal Club of Chicago, February
19, 1912). William L. Royall, of
Richmond, Va. “The Trust De-
cisions,” 73 Central Law Journal
57 (July 28, 1911). “Is the
United States Judiciary Power-
less to Hurt the Business of
Trust?” 73 Central Law Journal
297 (Nov. 3, 1911), and answer 73
Central Law Journal 333 (Nov. 10,
1911). “The Doctrine that the Anti-
Trust Act Refers only to Unreason-
able Restraints of Trade.” Edi-
torial in 72 Central Law Journal
375 (May 26, 1911). “The Tobac-
co Trust Decision.” Editorial in
72 Central Law Journal 411 (June
9, 1911). “Has the Rule of Reason
taken the Lockstep out of the Sher-
man Act.” Editorial in 73 Central
Law Journal 1 (July 7, 1911).
We here add citations to a few
of the many articles on the Sher-
man law which do not and some do

refer to the Standard Oil case.
306

“Patents and the Sherman Law,”
Edwin H. Abbot, Jr., 12 Columbia
Law Review 709 (Dec., 1912) ;
“Federal Anti-Trust Act and Mi-
nority Holdings of the Shares of
Railroads by Competing Com-
panies,” G. Carroll Todd in 22 Har-
vard Law Review 114 (Dec.,
1908); “The Federal Anti-Trust
Act,” Robert L. Raymond, in 23
Harvard Law Review 353 (March,
1910); “The Standard Oil and To-
bacco 'Cases,” 25 Harvard Law Re-
view 31 (Nov., 1911); “The Mer-
ger ‘Case,’ Prof. F. C. Gray, 17
Harvard Law Review 474 (May,
1904); “The Legal Aspect of Mo-
nopoly,” Herbert Pope, in 20 Har-
vard Law Review 167 (January,
1907); ‘The Law of Public Call-
ings as a Solution of the Trust
- Problem Article,” Bruce Wyman,
17 Harvard Law Review 217
(February, 1904, discusses the
Standard Oil Company) ; “Recent
Trust Decisions,” H. R. Seager, 26
Political Science Quarterly 614
(Dee., 1911); Editorial 19 Jour-
nal Political Economy 591 (Nov.,
1911); “Federal Power over
Trusts,” 29 Nat. Corps. Rep. 311,
312; “Legal Monopoly,” 19 Politi-
cal Science Quarterly 173; “Trusts
and Trade Unions,” 19 Political
Science Quarterly 193; “Reason-
able Restraint,” Charles E. Little-
field, 28 Green Bag 587; “Modern
Legislation on Monopolies,” W. B.
Hornblower, New Hampshire Bar
Association Report, 1908, 493;
“Sherman Anti-Trust Act,” H. No-
ble, 44 Amer. L. Review 177; same
article Maryland Bar Association
Report, 1909, 116; “Are Contracts
Invalid,’ Victor Morawetz, in 10
Columbia Law Review 687 (Dec.

THE SHERMAN ANTI-TRUST ACT.

10, 1910); “Defects in the Anti-
Trust Act,” 55 Ohio L. Bull., No.
13, March 28, 1910; see also 42
Chicago Leg. Jr. 223 (February
19, 1910), and 19 Yale Law Jour-
nal 88 (Dec. 1909); “Pooling
Agreements among Stockholders,”
by W. P. Rogers, 19 Yale Law
Journal 345 (March, 1910);
“Scope of the Federal Anti-Trust
Act,” Senator George Edmunds in
North American Review, December,
1911 (quoted from in 42 Annals
Amer. Acad. 941); see also in 20
Journal Political Economy 588,
599; 42 Annals Amer. Acad. 219,
289, 296, 340, and 1 Yale Review
(N.S.) 274; “The Recent Trust De-
cisions,” by Henry R. Seager, 26
Pol. Sei. Quart. 404 (Dec., 1911);
President Taft’s message on the
amendment of the Act, 45 Cong.
Rec. Pt. 61st Sess. Cong., 2d
Sess. 381; ‘“Extra-Territorial Ef-
fect of the Sherman Act,” by War-
ren B, Hunting, of Baltimore, 6
Illinois Law Review 34; see also
11 Columbia Law Review, No. 8,
“The Knights Case, Is It Over-
ruled?” by Stuart Chevalier, of
Louisville, 44 Amer. Law Rev.
858 (Nov. & Dec. 1910); “The
Standard Oil and Tobacco Cases,”
60 Penn. Law Review and Ameri-
can Law Register, No. 5; “Uncon-
stitutionality of Sherman Act as
Interpreted by the Trans-Missouri
and Joint Traffic Cases,” by Will-
iam D. Guthrie, in 11 Harvard
Law Review 80 (May, 1897) ; “In-
tent to Monopolize,” by Frederic
J. Stimson, 45 American Law Re-
view 1 (January-February, No.
1911); same article Indiana Bar
Association Reports for 1910, 129.
CHAPTER VIII.

ANALYSIS OF ACT.

SECTION. SECTION.
118. First section of statute. 129. Damages receivable by pri-
119. Analysis of section 1. vate person—Statute.
120. Scope of first section. 130. Definition of “person’—
121. Second section of statute. Statute.
si Senpe of, Secon Sechion: 131. Restraint of import trade—
123. Sections 1 and 2 in juxta- Statute.

position. at ko awe.
124. Section 3 of the statute. 192. Jurisdiction Z oe sireuit
125. Analysis of section 3. courts — Suits, institution
126. Jurisdiction of circuit —Btatute.

courts—Suits, how insti- 183. Summons — Subpoenas —

tuted—Restraining order Statute.

—Statute. 134. Seizure and forfeiture of
127. Summons — Subpoenas — property—Statute,

Statute. 135. Damages, suits by parties
128. Seizure and forfeiture of injured—Statute.

property illegally held—

Statute.

§118. First Section of Statute—tThe first section of the
Anti-Trust Act is as follows: ‘‘Every contract, combination
in the form of trust or otherwise, or conspiracy, in re-
straint of trade or commerce among the several states, or
with foreign nations, is hereby declared to be illegal. Every
person who shall make any such contract or engage in any
such combination or conspiracy, shall be deemed guilty of
a misdemeanor, and, on conviction thereof, shall be punished
by fine not exceeding five thousand dollars, or by imprison-
ment not exceeding one year, or by both said punishments, in
the discretion of the court.’’?

§119. Analysis of Section One.—Bearing in mind that
this statute only applies to interstate or foreign trade or

126 Stat. at Large 209; U 8S. Comp. Stat. 3200.
307
308 THE SHERMAN ANTI-TRUST ACT.

commerce, section one applies in its literalness to these in-
stances:

(a) Every contract in the form of a trust or otherwise
in restraint of trade.

(b) Every contract in the form of a trust or otherwise
in restraint of commerce.

(c) Every combination in the form of a trust or other-
wise in restraint of trade.

(d) Every combination in the form of a trust or other-
wise in restraint of commerce.

(e) Every conspiracy in restraint of trade.

(f{) Every conspiracy in restraint of commerce.

§120. Scope of First SectionThis section deals with
contracts and combinations which by executory agreements
or understandings restrict the freedom of contractors in the
carrying on their trade or commerce in their own way, and
with combinations and conspiracies to restrict the freedom
of others in the conduct of their trade or commerce, and
which are therefore contracts, combinations and conspiracies
in restraint of trade or commerce. It declares illegal every
such contract, combination and conspiracy and sweeps within
its condemnation not only such contracts, combinations and
conspiracies, but every industrial trust composed of sepa-
rately owned and independent concerns, and every trade
agreement between competitive concerns. In so far as it
forbids contracts, combinations and conspiracies in restraint
of trade, it forbids any sort of an arrangement whether it be
by actual covenant or other combination or device (not con-
sisting of, or reasonably ancillary to, an actual change of
ownership of property), whereby traders directly agree to
limit their activity in interstate or foreign commerce or
trading, or where the result of the arrangement is to take
away the incentive to such activity and trade. In forbidding
the entering into a conspiracy in restraint of trade and
commerce, it protects the trader against outside interfer-
ence. This section says nothing about competition, monop-
ANALYSIS OF ACT. 309.
oly, tendency to monopoly, monopolization, intent to monop-
olize, control of the market or of prices. It deals with
specific kind of acts, transactions and relations, and declares
them to be illegal. They are acts, transactions and relations
in restraint of trade or commerce that are denounced as
illegal. It is in restraint of trade or commerce if it has a
direct operation (not an indirect operation), and the vital
question always is whether it has that operation. The
classification in this section is far from being co-extensive
with the business transactions of men which effect com-
petition in one way or another.
human conduct in the domain of trade and commerce which
even the entire Act does not touch. In the enactment of
this section Congress was dealing only with certain kinds
or classes of transactions and putting the ban of the law
upon them. All other acts, transactions and relations are
outside of its pale, however they may affect competition,

There is a wide area of

trade or commerce.”

2‘‘The first clause of the act as-
sumes the legality of trusts and
combinations, thev are not declared
to be unlawful, nor were they pro-
hibited from engaging in interstate
commerce. Nor does this clause of
the act say anything about com-
petition or directly or indirectly
forbid contracts in restraint of
competition; the words used are
‘contracts in ‘restraint of trade.’
There is nothing in the act to pre-
vent contracts not to compete or
enter into competition for trade
and commerce.” John Larkin, in
194 North American Review 26
(July, 1911).

“But any contract, combination
or association the direct object and
effect of which is to control prices,
restrict output, divide territory, re-
frain from competition or exclude
or prevent others from competing

in any particular field of enter-
prise, imposes an undue restraint
upon trade and commerce and is in
violation of the first section of the
act. This principle applies to all
associations of competitors of the
character usually known as pools,
to agreements with so-called whole-
sale or retail agents whereby the
manufacturer of an article, even
though made according to some se-
eret process or formula seeks to
control the price at which it may
be sold by purchasers directly or
indirectly from the manufacturer.
It applies also to attempts to con-
trol competition between independ-
ent concerns by means of a stock-
holding trust, whether individual
or corporation holder.” George W.
Wickersham, Attorney - General
United States, in 10 Mich. Law
Review 23.
310 THE SHERMAN ANTI-TRUST ACT.

§121. Second Section of Statute—The second section of
the Act is as follows:

‘“Every person who shall monopolize, or attempt to
monopolize, or combine or conspire with any other person
or persons, to monopolize any part of the trade or commerce
among the several states, or with foreign nations, shall be
deemed guilty of a misdemeanor, and, on conviction thereof,
shall be punished by fine not exceeding five thousand dollars,
or by imprisonment not exceeding one year, or by both
said punishments, in the discretion of the court.’’?

§122. Scope of Second Section.—Bearing in mind that
the transactions condemned in the second section are those
pertaining to interstate or foreign trade or commerce, we
find the statute relates to the following persons:

(a) Every person who monopolizes trade.

(b) Every person who monopolizes commerce.

(ec) Every person who attempts to monopolize commerce.

(d) Every person who attempts to monopolize trade.

(e) Every person who combines with any other person
or persons to monopolize any part of trade.

(f) Every person who combines with any other person
or persons to monopolize any part of commerce.

(g) Every person who conspires with any other person
or persons to monopolize any part of trade.

(h) Every person who conspires with any person or per-
sons to monopolize any part of commerce.

This section deals with monopolizing trade among the
several states, or with foreign nations.*

326 Stat. at Large, 209; U. S. It is very certain that Congress
Comp. Stat. 3200. could not, and did not, by this en-

4“Tt is not clear what Congress
meant by the second section of the
act of July 2, 1890, in declaring it
a misdemeanor to ‘monopolize’ or
‘attempt to monopolize’ any part
of the trade or commerce among
the States or with foreign nations.

actment attempt to prescribe lim-
its to the acquisition either by the
private citizen or State corpora-
tion, of property which might be-
come the subject of interstate com-
merce, or declare that when the ac-
cumulation or control of property

Ge! aa an
ANALYSIS OF ACT. 311

§ 123. Sections One and Two in Juxtaposition.—It has
been contended by some that section two is of a tautological
character when compared with section one, and therefore
unnecessary. But this is clearly erroneous.

The first section relates to a ‘‘restraint of trade or com-
merce’’—of interstate or foreign commerce—by ‘‘contract,
combination in the form of a trust or otherwise, or con-
spiracy,’’ while section two relates to the monopolizing ‘‘or
attempt to monopolize, or combine or conspire with any
other person or persons to monopolize any part’’ of inter-
state or foreign commerce. The first section has no appli-
cation unless there is a contract, combination or conspiracy
in restraint of trade. It is conceivable that there may be a
contract, combination or conspiracy in restraint of trade,
without monopolizing or an attempt to monopolize. Monopo-
lization is quite different from a contract, combination or
conspiracy in restraint of trade, though they may be
employed as agencies of monopolizing. But the second
section inhibits monopoly accomplished or attempted by
some other means other than the particular restraint named
in the first section. If it did not, it would be practically
meaningless, and that is clearly seen from the fact that

by legitimate means and lawful
methods reached such magnitude
or proportions as enabled the
owner or owners to control the
traffic therein, or any part thereof,
among the states, a criminal of-
fense was committed by such
owner or owners. All persons in-
dividually or in corporate organi-
zations, carrying on business avo-
cations (vocations) and_ enter-
prises involving the purchase, sale
or exchange of articles, or the pro-
duction and manufacture of com-
modities, which form the subjects
of commerce, will, in a popular
sense, monopolize both. state and

interstate traffic in such articles or
commodities, just in proportion as
the owner’s business is increased,
enlarged and developed. Bunt the
magnitude of a party’s business,
production or manufacture with
the incidental and indirect powers
thereby acquired, and with the pur-
pose of regulating prices and con-
trolling interstate traffic in the ar-
ticles or commodities forming the
subject of such business, produc-
tion or manufacture, is not the mo-
nopoly, or attempt to monopolize
which the statute condemns.” In
re Greene, 52 Fed. 115.
312 THE SHERMAN ANTI-TRUST ACT.

every contract or combination or conspiracy to restrain
trade is inhibited only when it is in restraint of trade and
commerce, while by the second section these means are
prohibited, without actual restraint of trade or commerce,
when any one of them is even an attempt to monopolize
‘‘any part’’ of such trade or commerce. A number of men,
by concert of action, purposely taken, may monopolize trade
or commerce among the states or with a foreign country,
and thereby greatly increase the trade or commerce there-
tofore existing among such states or with such foreign
country, and yet violate the provisions of section two,
though not restraining that pre-existing trade or commerce.®
Therefore, if a monopoly be accomplished by any means
other than by contracts and combinations or conspiracies in
restraint of trade not prohibited by section two, that sec-
tion performs no office whatever in the Anti-Trust Act.*

5 This statement, however, is
somewhat weakened in view of the
fact that such a concert of action
may put a rival out of business,
and to that extent work a re-
straint of his trade; but it does
not seem to us that that is a phase
of trade or commerce covered by
section one, for it is simply a rival-
ization (if we may coin a word)
of business.

6“An amendment was offered by
Senator Gray, of Delaware, to
strike out the words ‘monopolize,
or attempt to monopolize, or,’ leav-
ing the section to read, ‘Every
person who shall combine or con-
spire with any other person or
persons to monopolize any part of
the trade,’ etc. The amendment
was rejected. Senator Edmunds,
in explaining the meaning of sec-
tion 2, said: ‘I have only to say.
in regard to the amendment sug-
gested by my friend from Dela-
ware and the suggestions of the

Senator from West Virginia, that
this subject was not lightly con-
sidered in the committee, and that
we studied it with whatever little
ability we had, and the best answer
I can make to both my friends is
to read in Webster’s Dictionary
the definition of the verb ‘to mo-
nopolize’- ‘1. To purchase or ob-
tain possession of the whole of, as
a commodity or goods in market,
with the view to appropriate or
control the exclusive sale of; as,
to monopolize sugar or tea.’ Like
the sugar trust, one man, if he
had capital enough, could do it
just as well as two. ‘2. To en-
gross or obtain by any means the
exclusive right of, especially the
right of trading to any place or
with any country or district; as, to
monopolize the India or Levant
trade.’ The old definition. So I
assure my friends that although we
may be mistaken (we do not pre-
tend to know all the law) we were
ANALYSIS OF ACT.

313

It may also be remarked that there can be no contract,
combination or conspiracy, under section one, to restrain
trade or commerce or which produces that result, unless there
be at least two persons concerned in the transaction, while
there may be a monopolizing of, or conduct which tends to
monopolize such trade or commerce, or some part of it,
by a single person or corporation, under section two."

not blind to the very suggestions
which have been made, and we
thought we had done the right
thing in providing in the very
phrase we did, that if one person
instead of two, by a combination
—if one person alone, as we have
heard about the wheat market in
Chicago, for instance—did it, it
was just as offensive and injurious
to the public interest as if two had
combined to do it.” Cong. Rec-
ord, Vol. 21, part 4, 3151-3152,
Bills and Debates on Trusts, 323.

7See the suggestion of Senator
Edmunds. Bills and Debates on
Trusts, 324, 21 Cong. Ree. 3152.

“Reading the two sections to-
gether one marked difference
stands out. The first section deals
with entities—a contract, a combi-
nation, a conspiracy—and the en-
tities themselves are expressly de-
clared to be illegal, and may be an-
nulled or destroyed. The second
section deals with «a course of
conduct, and whoever pursues
that course of conduct, wheth-
er alone or in conjunction with
others, is declared to be guilty
of a crime. It does not de-
clare any particular entity to be
illegal. There is no noun used
such as ‘monopoly’ or ‘combina-
tion,’ to make the section opera-
tive upon a specific entity. It reads
that if a person shall do so and
so he shall be guilty of a crime.

It is doing what is made a crime
that constitutes a violation of the
law. Thou shalt not monopolize,
or attempt to monoplize, or com-
bine with others to monopolize;
that is the~ statutory command.
Therefore, to determine whether it
has been violated, the one, and
only, inquiry is whether the for-
bidden acts have been done.” Brief
for appellants in Standard Oil
Company case in Supreme Court,
86.

“The second section provides
that every person ‘who shall mo-
nopolize or attempt to monopolize,’
or ‘combine or conspire with any
other person or persons to monopo-
lize, any part of the trade or com-
merce among the several states or
with foreign nations, shall be
deemed guilty of « misdemeanor.’
Thus we are comforted by the first
section, which declares any con-
tract limiting trade is illegal, and
by the second, which makes an un-
due increase of trade a misde-
meanor. This juxtaposition of the
sections does not make the mean-
ing of the act any clearer.” John
Larkin, in North American Re-
view, Vol. 194, 26.

“By section 1 the contract, com-
bination or conspiracy in restraint
of interstate or foreign trade terri-
tory is recognized as a status and
that status is declared illegal. By
section 3 the contract, combination
314 THE SHERMAN ANTI-TRUST ACT.

The Supreme Court of the United States has thus con-
trasted the first and second sections:

“‘Undoubtedly, the words ‘to monopolize’ and ‘monopo-
lize,’ as used in the section reach every act bringing about
the prohibited results. The ambiguity, if any, is involved
in determining what is intended by monopolize. But this
ambiguity is readily dispelled in the light of the previous
history of the law of restraint of trade to which we have
referred and the indication which it gives of the practical
evolution by which monopoly and the acts which produce
the same result as monopoly, that is, an undue restraint
of the course of trade, all came to be spoken of as, and to
be indeed synonymous with, restraint of trade. In other
words, having by the first section forbidden all means of
monopolizing trade, that is, unduly restraining it by means
of every contract, combination, etc., the second section
seeks, if possible, to make the prohibitions of the act all the
more complete and perfect by embracing al! attempts to
reach the end prohibited by the first section, that is, re-
straints of trade, by any attempt to monopolize, or monopo-
lization thereof, even although the acts by which such
results are attempted to be brought about or are brought
about be not embraced within the general enumeration of
the first section. And, of course, when the second section
is thus harmonized with and made as it was intended to be,
the complement of the first, it becomes obvious that the
criteria to be resorted to in any given case for the purpose
of ascertaining whether violations of the section have been
committed, is the rule of reason guided by the established
law and by the plain duty to enforce the prohibitions of
the act and thus the public policy which its restrictions
were obviously enacted to subserve. And it is worthy of
observation, as we have previously remarked concerning the

or conspiracy in restraint of trade illegal.” Brief of appellants in To-
in any territory is recognized as a bacco case in Supreme Court, 227.
status, and that status is declared

ws
ANALYSIS OF ACT. 315
common law, that although the statute by the comprehen-
siveness of the enumerations embodied in both the first and
second sections makes it certain that its purpose was to
prevent undue restraints of every kind or nature, neverthe-
less, by the omission of any direct prohibition against
monopoly in the concrete, it indicates a consciousness that
the freedom of the individual right to contract, when not
unduly or improperly exercised, was the most efficient
means for the prevention of monopoly, since the operation
of the centrifugal and centripetal forces resulting from the
right to freely contract was the means by which monopoly
would be inevitably prevented if no extraneous or sovereign
power imposed it and no right to make unlawful contracts
having a monopolistic tendency were permitted. In other
words, that freedom of contract was the essence of freedom

from undue restraint on the right to contract.’’ ®

8 Standard Oil Co. v. United
States, 221 U. S. 1; 31 Sup. Ct.
502; 55 L. Ed. 619; 34 L. R. A.
(N.S.), 834, modifying and affirm-
ing 173 Fed. 177. “The general des-
ignation of the first and second sec-
tions of the law, when taken togeth-
er, embrace every conceivable act
which could [can] possibly come
within the purpose of the prohibi-
tions of the law, without regard to
the garbs in which such acts were
[are] clothed.” United States v.
American Tobacco Co., 221 U. S.
106, 181; 31 Sup. Ct. 632; 55 L.
Ed. 663, reversing 164 Fed. 700.

“JT think it is useful to analyze
the statute. Separating it into
parts, we have, first, contract in re-
straint of trade; second, combina-
tion in restraint of trade. There
can be nu question that the second
and third parts, as thus put, re-
ceive color from the first. More-
over, it is important to note the

rule that this whole statute must
be taken together. The second sec-
tion is limited by its terms to mo-
nopolies, and evidently has as its
basis the engrossing or control-
ling of the market. The first sec-
tion is undoubtedly in part ma-
teria, and so has as its basis the
engrossing or controlling of the
market, or of lines of trade.”
United States v. Patterson, 55
Fed. 605, 640. Manifestly this sec-
tion is quite distinct from the first,
and was not intended to cover pre-
cisely the same ground. To say
otherwise would be to impute to
Congress the doing of the unneces-
sary and useless. Though the nat-
ural tendency of a combination in
restraint of trade declared illegal
by section 1 may be and generally
is toward monopoly denounced by
section 2, and may even accomplish
it, yet the scope of the latter sec-
tion is far broader and was de-
316 THE SHERMAN ANTI-TRUST ACT.

§124. Section Three of the Statute—‘‘Every contract,
combination in the form of trust or otherwise, or con-
spiracy in restraint of trade or commerce in any territory
of the United States or of the District of Columbia, or in
restraint of trade or commerce between any such territory
or territories and any state or states or the District of
Columbia, or with foreign nations, or between the District
of Columbia and any state or states or foreign nations, is
hereby declared illegal. Every person who shall make any
such contract or engage in any such combination or con-
spiracy, shall be deemed guilty of a misdemeanor, and, on
conviction thereof, shall be punished by fine not exceeding
five thousand dollars, or by imprisonment not exceeding one
year, ot by both said punishments, in the discretion of
the court.’’®

§ 125. Analysis of Section Three.—Section three applies
to contracts, combinations and conspiracies in restraint of
trade or commerce in any territory, in the District of
Columbia, between any territory and another, between ter-
ritory or territories and any state or states or the District

signed to extend also to monopo- District of Columbia. It was sep-

lies secured by other means than
by contracts, combinations and
conspiracies in restraint of trade,
which, as those terms necessarily
imply, require concert between
two or more persons or corpora-
tions. One person or corporation
may offend against the second sec-
tion by monopolizing, but the first
section contemplates conduct of
two or more. A cursory reading
of the act shows this.

926 Stat. at Large 209; U. S.
Comp. Stat. 3200. This section
does not rest upon the interstate
commerce clause, but upon the
power of Congress to legislate for
and govern the territories and the

arated from sections 1 and 2, be-
cause they had a different consti-
tutional basis—the power of Con-
gress to legislate for the regula-
tion of interstate and foreign com-
merce. Probably only one case has
ever been brought under its pro-
vision and that was in Utah; and
as that territory became a state
before the suit was concluded, it
was dismissed, because the court
had no jurisdiction of the offense.
Moore v. United States, 85 Fed.
465; 29 C. C. A. 269; 56 U. 8.
App. 471. But see Leonard v. Ab-
ner Drury Brewing Co., 25 App. D.
C. 161.
ANALYSIS OF ACT. 317

of Columbia, or between the District of Columbia and any
State, or with foreign nations; and it may be analyzed thus:

(a) Any contract in restraint of trade in any territory.

(b) Any contract in restraint of commerce in any ter-
ritory.

(¢) Any contract in restraint of trade in the District
of Columbia.

(d) Any contract in restraint of commerce in the Dis-
trict of Columbia.

(e) Any contract in restraint of trade between any
territory and another.

(f) Any contract in restraint of trade between any
territory or territories and any state or states.

(g) Any contract in restraint of trade between any
territory or territories and the District of Columbia.

(h) Any contract in restraint of trade with foreign
nations.

(i) Any contract in restraint of trade between the Dis-
trict of Columbia and any state or states.

(j) Any contract in restraint of trade between the Dis-
trict of Columbia and foreign nations.

By the substitution of the word ‘‘combination’’ in the
form of trust or otherwise for ‘‘contract,’’ a like number
of instances can be enumerated; and so the substitution of
the word ‘‘conspiracy’’ for ‘‘contract’’ another like number
of instances can be enumerated. So by the substitution of
the word ‘‘commerce’’ for ‘‘trade’’ the same number of
enumerations can be made. So that there are existing sixty
different conditions in which there may be a violation of this
section.

§126. Jurisdiction of Circuit Courts—Suits, How Insti-
tuted—Restraining Order—Statute—Section four confers
power upon the circuit court to entertain suits to prevent
and restrain violations of the Act; but inasmuch as these
courts have been abolished, the district courts possess and
exercise its jurisdiction. The section is as follows:
318 THE SHERMAN ANTI-TRUST ACT.

‘“‘The several circuit courts of the United States are
hereby invested with jurisdiction to prevent and restrain
violations of this Act; and it shall be the duty of the
several district attorneys of the United States, in their
respective districts, under the direction of the attorney
general, to institute proceedings in equity to prevent and
restrain such violations. Such proceedings may be by way
of petition setting forth the case and prayimg that such
violation shall be enjoined or otherwise prohibited. When
the parties complained of shall have been duly notified
of such petition, the court shall proceed, as soon as may
be, to the hearing and determination of the case; and,
pending such petition and before final decree, the court
may at any time make such temporary restraining order
or prohibition as shall be deemed just in the premises.’’ ?°

§127. Summons—Subpoenas—Statute.—Section five is as
follows :

‘“Whenever it shall appear to the court before which any
proceeding under section four of the act may be pending,
that the ends of justice require that other parties should
be brought before the court, the court may cause them to
be summoned, whether they reside in the district in which
the court is held or not; and subprenas to that end may be
served in any district by the marshal thereof.’’

§ 128. Seizure and Forfeiture of Property Illegally Held
—Statute—Section six of the Act is as follows:

‘““Any property owned under any contract or by any
combination, or pursuant to any conspiracy (and being the

1026 Stat. at Large 209; U. S.
Comp. Stat. 3200. “The district
court shall have original jurisdic-
tion as follows: * * * 22. Of all
suits and proceedings arising un-
der any law to protect trade and
commerce against restrictions and

monopolies.” 36 Stat. at L. 1091;
1 Fed. Stat. Ann. Supp. 1912, 171.

1126 Stat. at Large 209: U. S.
Comp. Stat. 3200. It should be
noted that this section does not ap-
ply to an action to recover dam-
ages. Greer, Mills & Co. v. Stol-
ler, 77 Fed. 1.
ANALYSIS OF ACT. 319

subject thereof) mentioned in section one of this act, and
being in the course of transportation from one state to
another, or to a foreign country, shall be forfeited to the
United States, and may be seized and condemned by like
proceedings as those provided by law for the forfeiture,
seizure and condemnation of property imported into the
United States contrary to law.’’ ”

§ 129. Damages Receivable by Private Person—Statute.—
Section seven is as follows:

‘“‘Any person who shall be injured in his business or
property by any other person or corporation by reason of
anything forbidden or declared to be unlawful by this act
may sue therefor in any circuit court of the United States
in the district in which the defendant resides or is found,
without respect to the amount in controversy, and shall
recover threefold the damages by him sustained, and the
costs of suit, including a reasonable attorney’s fee.’’ *

§130. Definition of ‘‘Person’’—Statute.—Section eight
is as follows:

‘“‘The word ‘person,’ or ‘persons,’ wherever used in
this act shall be deemed to include corporations and asso-
ciations existing under or authorized by the laws of either
the United States or the laws of any of the territories, the
laws of any state or the laws of any foreign country.’’ 14

§131. Restraint of Import Trade—Statute—tThe next
five sections are taken from what is usually termed the
Wilson Tariff Act, enacted August 4, 1894. These sections
were continued by the Dingley Tariff Act of 1897.15

1226 Stat. at Large 209; U. S. 1826 Stat. at Large 209; U. S.
Comp. Stat. 3200. The statute Comp. Stat. 3200. This section
does not apply to property trans- was first drafted by Senator Sher-
ported from a state to a terri- man, and then redrafted by Sena-
tory, at least without passing tor Hoar.
through another state; nor from 1426 Stat. at Large 209; U. 8.
the District of Columbia to Vir- Comp. Stat. 3200.
ginia or Maryland. Nor does it 15 30 Stat. at Large 213; U. 8.
when being transported from a Comp. St. 1901, 1702.
te.ritory to a -foreign country.

Section 134 covers this omission.
320 THE SHERMAN ANTI-TRUST ACT.

Sec. 73. Every combination, conspiracy, trust, agree-
ment or contract is hereby declared to be contrary to
public policy, illegal and void, when the same is made by
or between two or more persons or corporations either of
whom is engaged in importing any article from any foreign
country into the United States, and when such combination,
conspiracy, trust, agreement or contract is intended to
operate in restraint of lawful trade, or free competition in
lawful trade or commerce, or to increase the market price
in any part of the United States of any article or articles
imported or intended to be imported into the United States,
or of any manufacture into which such imported article
enters or is intended to enter. Every person who is or
shall hereafter be engaged in the importation of goods or
any commodity from any foreign country in violation of
this section of this act, or who shall combine or conspire
with another to violate the same, is guilty of a misdemeanor,
and, on conviction thereof, in any court of the United
States, such person shall be fined in a sum not less than
one hundred dollars and not exceeding five thousand dollars,
and shall be further punished by imprisonment, in the
discretion of the court, for a term not less than three months
nor exceeding twelve months.’’ 7*

§ 132. Jurisdiction of Circuit Courts—Suits, Institution
—Statute—Sec. 74. The several circuit courts of the
United States are hereby invested with jurisdiction to
prevent and restrain violations of section seventy-three of
this act; and it shall be the duty of the several district
attorneys of the United States, in their respective districts,
under the direction of the Attorney General, to institute
proceedings in equity to prevent and restrain such viola-
tions. Such proceedings may be by way of petitions, set-
ting forth the case and praying that such violations shall
be enjoined or otherwise prohibited. When the parties
complained of shall have been duly notified of such petition,

1628 Stat. at Large 570; U. S. Comp. St. 1901, 3202.
ANALYSIS OF ACT. 321
the court shall proceed, as soon as may be, to the hearing
and determination of the case; and pending such petition
and before final decree, the court may at any time make
such temporary restraining order or prohibition as shall be
deemed just in the premises.’’ 17

§133. Summons—Subpoenas—Statute.—Sec. 75. When-
ever it shall appear to the court before which any pro-
ceeding under the seventy-fourth section of this act may be
pending that the ends of justice require that other parties
should be brought before the court, the court may cause
them to be summoned, whether they reside in the district in
which the court is held or not, and subpenas to that end
may be served in any district by the marshal thereof.’’ 18

§ 134. Seizure and Forfeiture of Property—Statute—
Sec. 76. Any property owner under any contract or
by any combination or pursuant to any conspiracy (and
being the subject thereof) mentioned in section seventy-
three of this act, and being in the course of transportation
from one state to another, or to or from a territory or the
District of Columbia, shall be forfeited to the United States,
and may be seized and condemned by like proceedings as
those provided by law for the forfeiture, seizure and con-
demnation of property imported into the United States
contrary to law.’’?®

1728 Stat. at Large 570; U. 8. 1928 Stat. at Large 570; U. S.

Comp. Stat. 1901, 3200. The cir- Comp., 1901, 3202. This is
cuit courts have been abolished by not identical with section 6
the Judicial Code, and their juris- of the Sherman Act. Section
diction conferred on the district 6 of the Sherman Act re-

courts. 36 Stat. at L. 1091; 1
Fed. Stat. Ann, Supp., 1912, 171.
See note 10 to Section 126. This

lates only to property in the
course of transportation from one
state\to another, or to a foreign

section is identical with section
4 of the Sherman Act.

18 28 Stat. at Large 570; U. S.
Comp. Stat. 1901, 3202. This sec-
tion, with two slight verbal
changes is identical with section 5
of the Sherman Act.

country; while the section above
quoted relates to property “in the
course of transportation from one
state to another, or to or from a
territory, or the District of Colum-
bia.” Otherwise they are identical,
save in the section number referred
to. See note 12 to Section 128.
322 THE SHERMAN ANTI-TRUST ACT.

§135. Damages, Suits by Parties Injured—Statute.—
Sec. 77. Any person who shall be injured in his
business or property by any other person or corporation
by reason of anything forbidden or declared to be unlawful
by this act, may sue therefor in any circuit court of the
United States in the district in which the defendant resides
or is found, without respect to the amount in controversy,
and shall recover threefold the damages by him sustained,
and the costs of suit, including a reasonable attorney’s
fee.’’ 2

2028 Stat. at Large 570; U. 8. been abolished, have jurisdiction of
Comp. Stat. 1901, 3202. The above actions under this section. 36 Stat.
section is identical with section 7 at L., 1091; 1 Fed. Stat. Ann.
of the Sherman Act. District Supp., 1912, 171. Sec. 126, note
courts, since circuit courts have 10.
CHAPTER IX.

CONTRACT AND COMBINATION IN RESTRAINT OF
TRADE OR COMMERCE.

SECTION.

136. Section 1 analyzed.

137. Restraint defined—A pivotal
word—Competition.

138. Trade defined.

139. Traftic defined.

140. Trade and commerce not
synonymous.

141. Combination defined.

142. Distinction between contract
and combination or con-
spiracy—Duplicity.

143. Every contract and combina-
tion.

144. Amount of interstate trade
restrained.

145. Two or more persons neces-
sary to commit an offense
under section 1.

146. Competition defined.

147. Restraint of trade and re-
straint of competition not
interchangeable ex pres-
sions.

148. Trust defined.

149. “Trust or otherwise’—Con-
spiracy.

150. Test of illegality — Direct
and indirect restraint.

151. Form of combination imma-
terial.

152. Object of combination need
not be to violate the stat-
ute—Intent.

153. Intent in doubtful cases

when a determining factor.

SECTION.

154. Lessening or preventing com-
petition.

155. ‘Combination to fix prices.

156. Restraining free flow of com-
merce.

157. Contract to be illegal need
not refer to interstate com-
merce—Citizens of same
state.

158. Legality of separate acts of
combination.

159. Parts of combination or
scheme legal—Transaction
considered as a whole.

160. No intent to restrain.

161. Total restraint.

162. Restricting production.

163. Reduction of prices.

164. Restricting sales.

165. Depressing and artificially

stimulating trade.

166. Uniform action of defendants

167.

168.

169.

170.

resulting in accidental re-
straint of trade.

Soliciting orders
states.

Agent in control combining
with his own corporation.

Combination to divide inter-
state trade among the par-
ties to it.

Compelling strangers to com-
bine, not to engage in busi-
ness except upon certain
conditions.

in other

323
324 THE SHERMAN

SEOTION.

171. Combination of manufactu-
rers of unpatented articles
by use of a patented ma-
chine or tool.

172. Pooling stock by formation
of a third corporation—
Trust.

173. Intrastate
merce.

174. Contract or combination re-
straining both intrastate
and interstate trade or

Trade or Com-

ANTI-TRUST ACT.

SECTION.

175. State corporations restrict-
ing trade.

176. Combination formed prior to
enactment of statute and
continued thereafter.

177. Purchase and delivery with-
in state part of plan to
dominate interstate com-
merce.

178. Contracts and combinations
only affecting those parties
to them.

commerce,

§ 136. Section One Analyzed.——The first sentence of sec-
tion one reads as follows: ‘‘Every contract, combination
in the torm of trust or otherwise, or conspiracy in restraint
ef trade or commerce among the several states, or with
foreign nations, is hereby declared to be illegal.’’ In an-
other chapter we have discussed what is Interstate and For-
eign Commerce, so that a specific discussion of that subject
need not be here again discussed, it being sufficient to use
as illustrations such instances as have been brought
before the court in anti-trust decisions under this statute.
Under this section, as our analysis shows, it may be violated
(1) by a contract in restraint of trade or commerce; (2)
by a combination in restraint of trade or commerce, and (3)
by a conspiracy in restraint of trade or commerce. In a
way, and to a considerable extent, these three phrases of
the statute are so interlaced that it is practically, in many
instances, impossible to place the particular thing condemned
under any one of them; for a ‘‘contract’’ in a way is a
‘‘eombination’’ and may involve a conspiracy; while a
‘‘combination’’ may be created without embracing the ele-
ments of a ‘‘contract’’ but may embrace the elements
of a ‘‘conspiracy.’’ Under the decisions of the Su-
preme Court, as we have seen, the ‘‘restraint’’ must be an
‘‘unreasonable’’ one to fall within the condemnation of the
statute. The first section only deals with the subject of re-
CONTRACT AND COMBINATION IN RESTRAINT. 329
straint of trade as therein contemplated, and the second with
the subject of monopolization or attempting to monopolize.’

§ 137. Restraint Defined—A Pivotal Word—Competition.
—The two pivotal words in the statute are ‘‘restraint’’ and
‘‘monopolize.’’ It is therefore necessary to define the word
“‘restraint,’? and we prefer that definition which has been
given by the courts. The words ‘‘restraint of trade’’ were
known at common law; and when Congress adopted them,
it adopted the meaning and definition of those words, there
being an absence of a clear definition in the act itself? At
common law, and in the law of this country at the time of
the adoption of the Anti-Trust Act, the words ‘‘restraint
o: trade’? embraced only acts, contracts, agreements or
combinations which operated to the prejudice of the public
interests, by unduly restricting competition or by unduly
obstructing due course of trade, and Congress intended that
these words, as used in the Act, should have a like sig-
nificance? As used in the Anti-Trust Act, the word ‘‘re-

1Standard Oil Co. v. United
States, 221 U. 8. 1, 50; 31 Sup.
Ct. 502; 55 L. Ed. 619; 34 L. R.

mours Co., 188 Fed. 127, 151.
The construction of the statute is
not affected by the use of the phrase

A. (N.S.) 834, affirming 173 Fed.
177.

2In re Greene, 52 Fed. 104;
United States v. Trans-Missouri
Freight Assn., 58 Fed. 58; 7 C. C.
A. 15; 19 U.S. App. 36; 4 Inters.
Com. Rep. 443; 24 L. R. A. 443
(affirming 53 Fed. 440); reversed
166 U. S. 290; 17 8. C. 540; 41
L. Ed. 1007; Standard Oil Co. v.
United States, 221 U.S. 1; 31 Sup.
Ct. 502; 55 L. Ed. 619; 34 L. R.
A. (N.S.) 834; affirming 173 Fed.
177.

3 United States v. American To-
baeco, 221 U. S. 106, 179; 31 Sup.

Ct. 632; 55 L. Ed. 663, af-
firming 164 Fed. 700; United
States v. Du Pont de Ne-

“in restraint of trade,” rather than
one of the phrase “to injure trade”
or “to restrain trade.” United
States v. Debs, 64 Fed. 724. In
this case it was said: “It is a
word whose meaning is quite as
well established in the law as the
meaning of the phrase ‘in restraint
of trade,’ when used—as commonly,
if not universally that phrase has
been used—in reference to con-
tracts. A conspiracy, to be sure,
consists in an agreement to do
something; but in the sense of the
law, and therefore in the sense of
this statute, it must be an agree-
ment between two or more to do,
cy concerted action, something
criminal or unlawful, or, it may
326 THE SHERMAN ANTI-TRUST ACT.
straint’’ is a comprehensive word, and covers the several
individual kinds thereof described in check, hinder, repress,
curb, restrict. By use of this broad phrase, ‘‘in restraint
of trade or commerce,’’ it would seem that one of the objects
of Congress had in view was the maintenance of that
natural, free flow of commerce incident to its commercial
competitive character. We are therefore justified in holding
that, although the word ‘‘competition’’ is not used therein,
this act was aimed to maintain interstate commerce on the

basis of free competition.*

be, to do something lawful or crim-
inal, by unlawful means. A con-
spiracy, therefore, is in itself un-
lawful, and, in so far as this stat-
ute is directed against conspiracies
in restraint of trade among the
several states, it is not necessary
to look for the illegality of the of-
fense in the kind of restraint pro-
posed; and, since it would be nec-
essary, it would be illogical, to
conclude that only conspiracies
which are founded upon, or are
intended to be accomplished by
means of, contracts or combina-
tions in restraint of trade, are
within the purview of the act. It
would be to make tautologous
words which have distinctly differ-
ent meanings, and to deprive the
statute, in a large measure, of its
just and needful scope. Any pro-
posed restraint of trade, though
it be in itself innocent, if it is to
be accomplished by conspiracy, is
unlawful.” See also Dueber Watch
Case Mfg. Co. v. Howard Watch &
Clock Co., 66 Fed. 637; 14 C. C.
A. 14, affirming 55 Fed. 851.
+United States v. Reading, 183
Fed. 427, quoting from Chesapeake
& Ohio Fuel Co. v. United States,
115 Fed. 610; 53 C. C. A. 266.

It may be observed that the stat-
ute does not undertake to regulate
interstate commerce, only to pre-
vent its being restrained or monop-
olized. “As to what constitutes a
restraint of trade under the stat-
ute, the act prohibits any combina-
tion which obstructs the free flow
of commerce between the states, or
restricts in that regard, the lib-
erty of a trader engaged in busi-
ness. This includes restraints of
trade aimed at compelling third
parties and strangers involuntarily
not to engage in the course of in-
terstate trade or commerce, except
on conditions that the combination
imposes. But as to the coercion
which is charged in the indictment,
in coercing factors to enter into
contracts, such means alone, if you
find that any coercion was exer-
cised, would not be sufficient to
make a restraint of commerce, un-
less you find the parties stated
made the contracts with the de-
fendants, because the defendants
actually possessed such power over
the products to be traded in that
the parties honestly and truly felt
and believed that if they did not
make the contract they would suf-
fer some serious and appreciable
CONTRACT AND COMBINATION IN RESTRAINT. 327

§138. Trade Defined.—In the general sense, trade com-
prchends every species of exchange or dealing, but its chief
use is ‘‘to denote barter or purchase and sale of goods,
wares and merchandise, either by wholesale or retail,’’ and
so it is used in the phrase ‘‘maintained”’ in the Anti-Trust
Act.© In its broadest signification it includes the business
of buying and selling commodities for money and also the
business of exchanging them, or commerce and traffic gen-
erally.®

§139. Traffic Defined—The word ‘‘traffic’’ is not used
in the statute; but it is frequently used in opinions of the
courts. Like the word ‘‘trade,’’ it comprehends every
species of dealings in the exchange or passing of goods,

financial loss.” United States v. cause such conduct is not restrain-

Naval Stores Co., 172 Fed. 455, 463;
United States v. Patten, 226 U. S.
525; 33 Sup. Ct. 141; 57 L. Ed.,
reversing 187 Fed. 664. The words
“restraint of trade” are to be con-
strued as including “restraint of
competition.” United States v.
Eastern States Lumber Dealers,
201 Fed. 581. Senator Edmunds,
in commenting on the Standard
Oil decision, said: “The judiciary
committee believed that the well-
known principles guiding the
courts in the application and con-
struction of statutes would lead
them to give the words of the act
a beneficial and remedial, rather
than an injurious and technical
tone hurtful to any honest trade.
The fear of some literal construc-
tion of the words ‘restraint of
trade’ might lead to sacrifice of
some just, fair and wholesome bus-
iness arrangements may be safely
dismissed for, if the principle and
the purpose of the Constitution and
Act have any foundation at all
there can be no such restraint, be-

ing but is promotive of and bene-
ficial to the public interest.” In a
subsequent interview he added the
declaration that “a statute that
should undertake to define its own
terms would at once necessarily in-
volve a definition of its own defi-
nitions, and so on. It needs no
lawyer to tell intelligent men how
absurd and impractical such legis-
lation would be.” As quoted by
Alexander D. Noyes in 42 Annals
of American Academy 247.

5 United States v. Debs, 64 Fed.
724, 749.

6 May v. Sloan, 101 U. 8. 231;
25 L. Ed. 797; Geise v. Pennsylva-
nia Fire Ins. Co. (Tex. Civ. App.),
107 S. W. 555. In the broad sense
“trade” is any occupation or busi-
ness carried on for subsistence or
profit; State v. Phipps, 50 Kan.
609; 31 Pac. 1097; 34 Am. St.
152: 18 L. R. A. 657; In re Pink-
ney, 47 Kan. 89; 25 Pac. 369, but
this is not the sense in which it
is used in this Federal Act.
328 THE SHERMAN ANTI-TRUST ACT.

wares or merchandise from hand to hand for an equivalent.’
It is commerce, sale or exchange of merchandise, and even
of bills of exchange, money and the like. It is the passing
of goods or wares to another for an equivalent in goods
or money.®

§ 140. Trade and Commerce Not Synonymous.—The
words ‘‘trade’’ and ‘‘commerce’’ are not synonymous as
used in the common law phrase ‘‘restraint of trade.’’ ‘‘In
its general sense, trade comprehends every species of ex-
change or dealing, but its chief use is ‘to denote the parties
or purchaser and sale of goods, wares, and merchandise,
either by wholesale or retail,’ and so it is used in the
phrase mentioned. But commerce is a broader term. It is
the word in that clause of the constitution by which power
is conferred on Congress ‘to regulate commerce with foreign
nations, and among the several states, and with the Indian
tribes.” In a broader and more distinct exercise of that
constitutional power, the word ‘commerce’ as used in this
statute, as it seems to me, need not and should not be given
a meaning more restricted than it has in the constitution.’’®

‘* ‘Trade’ has been defined as ‘the exchange of commodi-
ties for other commodities or for money; the business of
buying and selling; dealing by way of sale or exchange.’
The word ‘commerce’ as used in the statute and under the
terms of the constitution, has, however, a broader meaning
than the word ‘trade.? Commerce among the states consists
of intercourse and traffic between their citizens, and includes

7 State v. Small, 82 S. C. 93; 685. See where “deal” and “traf-
63 S. E. 4; Curten v. Atkinson, 54 fic” were held synonymous in a
N. C. 133. It is the buying of liquor case. Clifford v. State, 29
something from another or the Wis. 327. There is both interstate
selling of something to another and intrastate traffic. Fort Worth
which is allied to trade. In re & Denver City Ry. Co. v. White-
Cameron Town Mutual Fire L. & head, 6 Tex. Cir. App. 595; 26 S.
W. Ins. Co., 96 Fed. 756. W. 172,

8 Williams vy. Fears, 110 Ga. ® United States v. Debs, 64 Fed.
584; 35 S. E. 699; 50 L. R. A. 724, 749.
CONTRACT AND COMBINATION IN RESTRAINT. 329
the transportation of persons and property and the navi-
gation of public waters for that purpose, as well as the
purchase, sale and exchange of commodities.’’ !°

§141. Combination Defined.—By a combination is meant
the association or union of two or more persons or cer-
porations for the attainment of a common end.™

As the word has been used in the Anti-Trust Act, how-
ever, it has been said that it is ‘‘a word not yet possessed
of an accurate legal meaning;’’ and that its place in
criminal law is no older than that Act, and that ‘‘it means
no more than ‘co-operation’—a union of effort.’’1? ‘‘To be
illegal, the combination must rest upon an understanding
or agreement between actual competitors who, by removing
competition between their established independent enter-
prises, are able at the time to control the market or industry
in which they are engaged.’’ 18

10 United States v. Cassidy, 67
led. 698, 704. In re Debs, 158 U.
S. 564; 15 Sup. Ct. 900; 39 L. Ed.
1092; United States v. Swift, 122
Fed. 529; affirmed 196 U. 8. 375;
25 Sup. Ct. 276; 49 L. Ed. 518.
“We might say that the formation
of corporations for business or
manufacturing purposes has never,
to our knowledge been regarded in
the nature of a contract in re-
straint of trade or commerce. The
same may be said of the contract
of partnership. It might also be
difficult to show that the appoint-
ment by two or more producers of
the same person to sell their goods
on commission was « matter in
any degree in restraint of trade.
We are not aware that it has ever
been claimed that a lease or pur-
chase by a farmer, a manufacturer,
or merchant of an additional farm,
manufactory, or shop, or the with-

drawal from business of any far-
mer, merchant, or manufacturer
restrained commerce or trade with-
in the legal definition of that
term.” United States v. Du Pont
de Nemours Co., 188 Fed. 127, 151.
“Commerce is something more
than mere transportation. It also
consists in traffic and in that even
larger field of interstate communi-
cation to which Marshall gave the
all-embracing term of commercial
intercourse.” Loewe v. Lawlor, 208
U.S. 274, 277; 28 Sup. Ct. 301;
52 L. Ed, 488, reversing 148 Fed.
924.

11 Brownsville Glass ‘Co. v. Ap-
pert Glass Co., 136 Fed. 240; Wat-
son v. Harlem & N. Y. Navigation
Co., 52 How. Pr. 348.

12 United States v. MacAndrews
& Forbes Co., 149 Fed. 823.

13 Herbert Pope in 20 Harvard
Law Review 187,
330 THE SHERMAN ANTI-TRUST ACT.

‘When we consider the purposes for which the ‘combina-
tion’ must be formed to come within the statute, the essential
meaning of the word ‘combination’ and the fact that a
punishment is prescribed for each day that the trust con-
tinues in existence, we are led to the conclusion that the
union or association of ‘capital, skill or acts’ denounced is
where the parties in the particular case designed the united
co-operation of such agencies, which might have been other-
wise independent and competing, for the accomplishment of
one or more of such purposes.’ There is a distinction
between combination and monopoly, as used in the Act, and
it is this: the latter is the end sought; the former, the
means to attain that end.1®

§142. Distinction Between Contract and Combination
or Conspiracy—Duplicity.—The first section makes a dif-
ference between a ‘‘contract’? and a ‘‘combination’’ or
‘‘conspiracy’’ in restraint of trade. Said Justice Holmes:
‘“‘The words hit two classes of cases, and only two—contracts
in restraint of trade and combinations or conspiracies in
restraint of trade.’’1*¢ ‘‘Hach of these things the law
condemns as an unlawful thing. They are not confused in
the act, but are mentioned as distinct offenses. Good
pleading, whether it be in an indictment in a criminal pro-
ceeding or in a declaration in a civil suit, requires the same
distinction to be observed. If in a single count in an in-
dictment the charge should be that the defendant entered
into a contract, combination and conspiracy in restraint of
trade or commerce among the several states, it would be
bad for duplicity.” So, in a declaration in a civil suit the
confusion of the two condemned things in one count must

14 Gates v. Hooper, 90 Tex. 563; 16 Northern Securities Co. vy.
39 S. W. 1079; reversing 39 S. W. United States, 193 U. S. 197; 24
186. Sup. .Ct. 436, 469; 48 L. Ed. 679,

15 State v. Central Lumber Co., affirming 120 Fed. 721.

24 8. Dak. 136; 123 N. W. 504. 17 United States v. ‘Cadwallader,

59 Fed. 677.
CONTRACT AND COMBINATION IN RESTRAINT. 331

likewise be irregular and defective for duplicity. In one
count there may be a charge of an unlawful contract, and
in another charge of an unlawful combination or conspiracy,
but the two unlawful things can not be declared upon as
synonymous terms and charged in a single count.’’ ®

§143. Every Contract and Combination—Within the
degree of unreasonable restraint the Act prohibits every
contract, combination and conspiracy which unreasonably
restricts interstate or foreign commerce. Such was the pur-
pose of Congress when it used the words ‘‘every contract,
combination or conspiracy in restraint of trade or com-
merce among the several states or with foreign nations.’’
“It indicates, we think, that Congress, being unable to
foresee and describe all the plans that might be formed and
all the expedients that might be resorted to to place re-
straints on interstate trade or commerce, deliberately em-
ployed words of such general import as, in its opinion,
would comprehend every scheme that might be devised to
accomplish that end.

‘““What is commonly termed a ‘trust’ was a species of
combination organized by individuals or corporations for
the purpose of monopolizing the manufacture of or traffic
in various articles and commodities, which was well known
and fully understood when the Anti-Trust Act was approved.
Combinations in that form were accordingly prohibited; but
Congress, evidently anticipating that a combination might
be otherwise formed, was careful to declare that a combina-
tion in any other form, if in restraint of interstate com-
merce—that is, if it directly occasioned or effected such
restraint—should likewise be deemed illegal.’’?® In view of
the decision in the Standard Oil Case, the words quoted can
not be said to give a strictly accurate interpretation of the

18 Rice v. Standard Oil Co., 134 19 United States v. Northern Se-
Fed. 464. curities Co., 120 Fed. 721; affirmed
193 U. S. 197; 24 Sup. Ct. 436;

48 L. Ed. 679.
332

THE SHERMAN ANTI-TRUST ACT.

Act, for, according to that case, to constitute a violation of

the statute, there must be an

unreasonable’’ restraint.”°

§144. Amount of Interstate Trade Restrained.—If there
be an unreasonable restraint of interstate trade or com-
merce, then the amount of such trade or commerce re-
strained is immaterial so far as a violation of the statute is
concerned, though, of course, it would be material as bearing
upon the amount of damages recoverable.”4

20The Charge to the Jury in
United States v. American Naval
Stores Co., 172 Fed. 455, cannot
be followed on this point. “The
court has had occasion in a num-
ber of cases to declare this prin-
ciple. Two of those cases we have
cited. (Henry v. A. B. Dick Co.,
224 U. S. 1; 32 Sup. Ct. 364; 56
L. Ed. 645 and Montague & Co. v.
Lowry, 193 U. S. 38; 24 Sup.
Ct. 307; 48 L. Ed. 608). The
others it is not necessary to re-
view or to quote from except to
say that, in the very latest of
them, the comprehensive and
thorough character of the law is
demonstrated and its sufficiency
to prevent evasions of its policy
‘by resort to any disguise or sub-
terfuge of form,’ or the escape of
its prohibitions ‘by any indirec-
tion.”” Standard Sanitary Mfg.
Co. v. United States, 226 U. S.
20; 33 Sup. Ct. 9; 57 L. Ed.,
citing United States v. American
Tobacco Co., 221 U. 8. 106, 181;
31 Sup. Ct. 632; 55 L. Ed. 663.
The culpability of a party to a
combination of manufacturers and
jobbers is not removed because it
wags restricted in less degree than
the other jobbers, enjoying  cer-
tain freedom of competition to
meet local conditions. Standard

Sanitary Mfg. Co. v. United
States, 226 U. 8. 20; 33 Sup. Ct.
9; 57 L. Ed.; affirming 191 Fed.
172.

21 Montague & Co. v. Lowry,
193 U. S. 38; 24 Sup. Ct. 207;
48 L. Ed. 608; affirming 115 Fed.
27; 52 °C. C. A. 621; 63 L. R.
A. 58. In this case it was said:
“Tt is urged that the sale of un-
set tiles, provided for in the sev-
enth section of the by-laws, is a
transaction wholly within the
state of California and is not in
any event a violation of the Act
of Congress which applies only to
commerce between the states. The
provision as to this sale is but
a part of the agreement, and it
is so united with the rest as to
be incapable of separation without
at the same time altering the
general purpose of the agreement.
The whole agreement is to be con-
strued as one piece—in which
the manufacturers are parties as
well as the San Francisco dealers,
and the refusal to sell on the part
of the manufacturers is con-
nected with and a part of the
scheme which includes the en-
hancement of the price of the un-
set tiles by the San Francisco
dealers.. The whole thing is so
bound together that when looked

 
CONTRACT AND COMBINATION IN RESTRAINT. 333

§ 145. Two or More Persons Necessary to Commit an
Offense Under Section One.—One person can not enter into
a contract or combination or conspiracy in restraint of trade
or commerce. Thus two or more persons acting in concert
are necessary in order to violate the provisions of section one
of the statute. Consequently, it follows that so long as an
officer or agent of a corporation acts for and on behalf of
his corporation, and no one else is a party thereto, neither
he nor his corporation can be guilty of having entered into
a contract, combination or conspiracy with each other in re-
straint of trade or commerce.”?

§ 146.
the word
maintain or secure competition.

Competition Defined.—The statute does not use
‘‘competition,’’ and yet it was its purpose to
The dictionary definition is
‘The act or proceeding of striving for something that is
sought by another at the same time; or contention of two or
more for the same object or for superiority, rivalry, as
between aspirants for honors or for advantage in busi-
ness.’’*8 When applied to trade we have for a definition
‘“‘The act or proceeding of striving for trade that is sought
by another at the same time.’’ So that whatever restrains
trade in a particular line restrains competition in that line.?4

§ 147. Restraint of Trade and Restraint of Competition
Not Interchangeable Expressions.—Restraint of interstate
trade and restraint of competition in interstate trade are not
interchangeable expressions. Under the Act there may be a

at as a whole the sale of unset
tiles ceases to be a mere trans-
action in the state of California,
and becomes part of a purpose
which, when carried out, amounts
to and is a contract or combina-
tion in restraint of interstate
trade or commerce.” See also
Standard Sanitary Mfg. Co. v.
United States, 226 U. 8. 20: 33
Sup. Ct. 9; 57 L. Ed., affirm-
ing 191 Fed. 172. Buckeye Powder

Co. v. E. I. Du Pont de Nemours
Powder Co., 196 Fed. 514.

22Union Pacifie Coal Co. v.
United States, 173 Fed. 737, 743;
97 C. C. A. 578. See Sec. 168.

23 Standard Dictionary.

24 Heim Brewing Co. v. Belinder,
97 Mo. App. 64; 71 S. W. 691;
State v. Armour Packing Co., 173
Mo. 356; 73 8. W. 645; 61 L. R.
A. 464; 96 Am. St. 515.
334 THE SHERMAN ANTI-TRUST ACT.
restraint of competition that does not amount to restraint
of interstate trade, just as before the enactment of the
statute there might have been restraint of competition that
did not amount to a common law restraint of trade.”*
“There is a distinction between restraints of competition
and restraints of trade. The latter expression had, when
the Anti-Trust Act was passed, a definite legal signification.
Not every combination in restraint of competition was, in
a legal sense, in restraint of trade. Two men in the same
town engaged in the same business as competitors may
unite in a co-partnership, and thereafter, as between them-
selves, substitute co-operation for competition. Their com-
bination restrains competition, and if their town is located
near the line between two states, and each has been trading
in both states, their combination restrains competition in
interstate trade. But it does not necessarily follow that such
restraint of competition is a restraint of interstate trade
and commerce. The determination of whether it be so must
depend upon the facts and circumstances of each individual
case. It is undoubtedly the policy of the statute that com-
petitive conditions in interstate trade should be maintained
wherever their abolition would tend to suppress or diminish
such trade. But this being true does not read into the

25 United States v. E. I. DuPont
de Nemours & 'Co., 188 Fed. 127.
The court says “this fact is
plainly recognized in United States
v. Joint Traffic Ass’n, 171 U. S.
505, 567; 19 Sup. Ct. 25, 31;
43 L. Ed. 259,” and makes this
quotation from that case: “We
might say that the formation of
corporations for business or manu-
facturing purposes has never, to
our knowledge, been regarded in
the nature of a contract in re-
straint of trade or commerce. The
same may be said of the contract
of partnership. It might also be

difficult to show that the appoint-
ment by two or more producers
of the same persons to sell their
goods on commission was a matter
in any degree in restraint of trade.
We are not aware that it has
ever been claimed that a lease or
purchase by a farmer, a manu-
facturer, or merchant of an ad-
ditional farm, manufactory, or
shop, or the withdrawal from busi-
ness of any farmer, merchant, or
manufacturer, restrained com-
merce or trade within the legal
definition of that term.”
CONTRACT AND COMBINATION IN RESTRAINT. 3835

statute a denunciation of all agreements that may restrain
competition without regard to their purpose or direct effect
to restrain ‘trade or commerce among the several states.’
To what extent the Anti-Trust Act condemns combinations
that restrain full and free competition in interstate trade is
a question that has been much debated. For a dozen years,
at least, it has been settled that it does not condemn com-
binations which only indirectly, remotely or incidentally
restrain interstate trade.’’ °¢

§148. Trust Defined.—It is noticeable that the statute
speaks of a ‘‘combination in the form of trust,’’ not a
combination in the form of a trust. Whether the letter
‘a’? was purposely omitted it is difficult to say with cer-
tainty of the truth; but it would seem that it was. A trust
may be founded on a contract, or it may be a combination,
confederation or understanding, either express or implied.
Of course there must be at least two persons or corporations,
or a person and a corporation, to it; and as used in the
Act, the object of the contract, combination, confederation or
understanding must be to control the price of a commodity
(or service) for the benefit of those parties to it, and to the
injury of the public; and it must also tend to create a
monopoly.?”7. Recent commercial usage, however, has ex-
tended the technical meaning of the word so as to compre-
hend combinations having for their purpose the controlling
of the price of articles of prime necessity or even the charges
of transportation.?® Of trusts it has been said: ‘‘Combina-
tions in the nature of modern trusts * * * are those
which aim at union of energy, capital and interest to stifle

26 United States v. E. I. DuPont 27 Pocahontas Coke ‘Co. v. Pow-
de Nemours & Co., 188 Fed. 127, hatan ‘Coal & Coke Co., 60 W. Va.
150; Buckeye Powder Co. v. E. 508; 56 S. E. 264; 10 L. R. A.
J. DuPont de Nemours Powder’ (N.S.) 268; 116 Am. St. 901.
Co., 196 Fed. 514; United States 28 Queen Ins. Co. v. State, 86
v. Patten, 226 U. S. 525; 33 Sup. Tex. 250; 24 S. W. 397; 22 L. R.
Ct. 141; 57 L. Ed., reversing A. 483.

187 Fed. 664.
336 THE SHERMAN ANTI-TRUST ACT.
competition, and enhance the price of articles of prime
necessity and staples of commerce. In such cases there is
absent the element of exchange of our valuable right for
another.’’ ?°

§149. ‘‘Trust or Otherwise’’—Conspiracy.—The statute
forbids contracts or combinations ‘‘in the form of trust or
otherwise,’’ in restraint of trade. Of a trust it has been
said: ‘‘What is commonly termed a ‘trust’ was a species
of combination organized by individuals or corporations for
the purpose of monopolizing the manufacture of or traffic in
various articles and commodities, which was well known and
fully understood when the Anti-Trust Act was approved.
Combinations in that form were accordingly prohibited; but
Congress, evidently anticipating that a combination might
be otherwise formed, was careful to declare that a com-
bination in any other form, if in restraint of interstate trade
or commerce—that is, if it directly occasioned or effected

29 United States Chemical Co. v. trol prices, prevent competition,

Provident Chemical Co., 64 Fed.
946. “The word ‘trust,’” says
Mr. Cook, ‘was first use? to
mean an agreement between many
stockholders in many corporations
to place all their stock in the
hands of trustees and to receive
therefor trust certificates [from
the trustees. The stockholders
thereby consolidated their inter-
ests and became trust-certificate
holders. The trustees own the
stock, vote it, elect the officers of
the various corporations, control
the business, receive all the divi-
dends on the stock, and use all
these dividends to pay dividends
on the trust certificates. The trus-
tees are periodically elected by
the trust-certificate holders. The
purpose of the ‘trust’ is to con-

and cheapen the cost of produc-
tion. The Standard Oil Trust, the
American Cotton Seed Oil Trust,
and the Sugar Trust are examples
of this method of combination.”
‘Cook on Stockholders, Sec. 503a
quoted in State v. Standard Oil Co.,
49 Ohio St. 137; 30 N. E. 279;
15 L. R. A. 145; 34 Am. St, 541.
“The term ‘trust’ a
embraces every act, agreement,
or combination of persons or
capital believed to be done,
made or formed with the
intent, effect, power, or tendency
to monopolize business, to restrain
or interfere with competition,
trade, or to fix, influence, or in-
crease the prices of commodities.”
8. C. Y. Dodd in 7 Harvard Law
Review 158.
CONTRACT AND COMBINATION IN RESTRAINT. 337

such restraint, should likewise be deemed illegal.’’®? ‘‘Com-
binations in the nature of modern trusts are those which
aim at a union of energy, capital and interest to stifle
competition, and enhance the price of articles of prime
necessity and staples of commerce. In such case there is
absent the element of exchange of one valuable right for
another.’’* By recent commercial usage the word ‘‘trusts’’
has been so extended as to now comprehend combinations of
capitalists or corporations in order to control the price of
articles of prime necessity or the charge of transportation
for the public.*? In Debs case, after quoting from the
Judiciary Committee’s report on the Anti-Trust Act as
follows: ‘‘Now, just what contracts, what combinations in
the form of trusts, or what conspiracies will be in restraint
of trade and commerce, mentioned in the bill, will not be
known until the courts have construed and interpreted this
provision,’’ Judge Woods said:

‘*It is therefore the privilege and duty of the court, un-
controlled by considerations drawn from other sources, to
find the meaning of the statute in the terms of its provi-
sions, interpreted by the settled rules of construction. That
the original design to suppress trusts and monopolies created
by contract or combination in the form of trust, which of
course would be of a ‘contractual character,’ was adhered
to, is clear; but it is equally clear that a further and more
comprehensive purpose came to be entertained, and was em-
bodied in the final form of the enactment. Combinations
are condemned, not only when they take the form of trusts,
but whatever form found, if they be in restraint of trade.
That is the effect of the words ‘or otherwise.’ It may be
that those words should be deemed to include only forms

80 United States v. Northern Se- 82 Queen Ins. Co. v. State, 86
curities Co., 120 Fed. 721; Tex. 250; 24 S. W. 397; 22 L.
affirmed 193 U. 8. 197; 24 Sup. R.A. 483; Pocahontas Coke Cu. v.
Ct. 436; 48 L. Ed. 679. Powhatan Coal & Coke Co., 60 W.

31 United States Chemical Co. v. Va. 508; 56 S. E. 264; 10 L. R.
Provident Chemical Co., 64 Fed. A. (N.S.) 268; 116 Am. St. 901.
946.
838 THE SHERMAN ANTI-TRUST ACT.

of like character—that is to say, some form of contract as
distinguished from tort, but, if that be so, it only empha-
sizes and makes imperative the inference, which otherwise it
seems to me would be sufficiently clear, that the word
‘conspiracy’ should be interpreted independently of the
preceding words. It is hardly to be believed that the words
‘or otherwise’ were used simply for the purpose of giving
fuller scope to the antecedent words ‘contract’ and ‘com-
bination,’ and then ‘conspiracy’ added merely for the same
purpose. ’’*3

§150. Test of Dlegality—Direct and Indirect Restraint.
—Judge Sanborn has thus tersely stated the test to deter-
mine what conspiracy or combination.is condemned by the
Act:

‘‘The test under that Act of the legality of a combinaticn
or conspiracy is its direct and necessary effect upon such
competition. If its necessary effect is but incidentally or
indirectly to restrict competition, while its chief result is
to foster the trade and increase the business of those who
make and operate it, it is not a violation of this law. But
if its necessary effect is to stifle, or indirectly and substan-
tially to restrict, free competition in commerce among the
states or with foreign nations, it is a combination or ¢on-
spiracy in restraint of that trade, and it falls under the
ban of the Act.’’ *

“If the necessary effect of a combination to engage in or
conduct interstate or international commerce is but inci-

23 United States v. Debs, 64 Fed. United States v. Joint Traffic

724, 747.

34 United States v. Standard Oil
Co., 173 Fed. 177; affirmed 221 U.
S. 1; 31 Sup. Ct. 502; 55 L. Ed.
619; 34 L. R. A. (N.S.) 834;
citing Hopkins v. United States,
171 U. S. 578, 592; 19 Sup. Ct.

Ass’n., 171 U. S. 505, 568; 19 Sup.
Ct. 25; 48 L. Ed. 259; Addyston
Pipe & Steel Co. v. United States,
175 U. S. 211, 245; 20 Sup. Ct.
96; 44 L. Ed. 136. Judge Sanborn
adds: “And the power to restrict
competition in interstate and in-

40; 43 L. Ed. 290; Anderson v. } ternational commerce, vested in a
United States, 171 U. 8. 604,606; person or an association of persons
19 Sup. Ct. 50; 43 L. Ed. 300; by a contract or combination, is
CONTRACT AND COMBINATION IN RESTRAINT. 339
dentally and indirectly to restrict trade and to increase the
business of those who make and operate it, it does not fall
under the ban of this law.’’*> In another case Judge
Sanborn has so clearly stated the test that his words are
worthy of quotation:

‘‘The test of the validity of a contract, combination or
conspiracy challenged under the Anti-Trust law is the direct
effect of such a contract or combination upon competition
in commerce among the states. If its necessary effect is to
stifle competition, or to directly and substantially restrict
it, it is void. But if it promotes, or only incidentally or
indirectly restricts, competition in commerce among the
states, while its main purpose and chief effect are to foster
the trade and enhance the business of those who make it,
it does not constitute a restraint of interstate commerce
within the meaning of that law, and is not obnoxious to its
provisions. This act of Congress must have a reasonable
construction. It was not its purpose to prohibit or to render
illegal the ordinary contracts or combinations of manufac-
turers, merchants and traders, or the usual devices to which
they resort to promote the success of their business, to
enhance their trade and to make their occupations gainful;
so long as those combinations and devices do not necessarily
have a direct and substantial effect to restrict competition
in commerce among the states.’’ *¢

indicative of its character; for it
is to the interest of the
parties that such a power should

U. S. 505, 568; 19 Sup. Ct. 25;
43 L. Ed. 259; Addyston Pipe &
Steel Co. v. United States, 175 U.

be exercised and the presumption
is that it will be.”

35 Union Pacifie Coal Co. vy.
United States, 173 Fed. 737; citing
Hopkins v. United States, 171 U.
S. 573, 592; 19 Sup. Ct. 40; 43
L. Ed. 230; Anderson v. United
States, 171 U. 8S. 604, 616; 19
Sup. Ct. 50; 43 L. Ed. 300; United
States v. Joint Traffic Ass’n., 171

S. 211, 245; 20 Sup. Ct. 96; 44
L. Ed. 136; Whitwell v. Conti-
nental Tobacco Co., 125 Fed. 454,
458; 60 C. C. A. 290, 294; 64 L.
R. A. 689.

36 Phillips v. Iola Portland Ce-
ment Co., 125 Fed. 593; 61 C. C.
A. 19; United States v. Mac-
Andrews & Forbes Co., 149 Fed.
823.
340 THE SHERMAN ANTI-TRUST ACT.

§ 151. Form of Combination Immaterial. ‘The form the
combination assumes or the dress it wears is immaterial.’’
“Tt matters not whether the combination be ‘in the form of
a trust or otherwise,’ whether it be in the form of a trade
association or a corporation, if it arbitrarily uses its power
to force weaker competitors out of business, or to coerce
them into a sale to or union with the combination, it puts
a restraint upon interstate commerce and monopolizes, or
attempts to monopolize, a part of that commerce, in a sense
that violates the Anti-Trust Act.’’ °”

§152. Object of Combination Need Not be to Violate
the Statute—Intent.—It is immaterial that the ultimate
object of the contract or combination was not to restrain
interstate or foreign commerce, if it in fact unreasonably

37 United States v. E. I. DuPont
de Nemours & Co., 188 Fed. 127.
The court says that this is settled
by the case of Standard Oil Co.
v. United States, 221 U. S. 1;
Sup. Ct. 501; 55 L. Ed. 619; 34
L. R. A. (N.S.) 834; and Amer-
ican Tobacco Co. v. United States,
221 U. S. 106; 31 Sup. Ct. 632;
55 L. Ed. 663; Northern Securities
Co. v. United States, 193 U. S.
197; 24 Sup. Ct. 436; 48 L. Ed.
679; affirming 120 Fed. 721. The
statute is sufficient to prevent
evasions of its policy by resort
to any disguise or subterfuge of
form, or the escape of its pro-
hibitions by indirection. Standard
Sanitary Mfg. Co. v. United
States, 226 U. S. 20; 33 Sup. Ct.
1; 57 L. Ed. affirming 191
Fed. 172, and citing the Standard
Oil ease. United States v. Patten,
926 U. S. 525; 33 Sup. Ct. 141;
57 L. Ed., reversing 187 Fed.
664. “The Standard Oil decision
does not hold the mere combina-

tion of companies, naturally com-
petitive, contravenes the law.
There must be added to the com-
bination its effect, and wherever
that effect is such a command the
volume of interstate business in
any commodity that the power
exists to control interstate trade in
the commodity in question (in
this case by the unlawful steps
which the court finds were taken)
necessarily, directly and substan-
tially, then such a combination, no
matter by what instrumentalities
effected, is unlawful. But if such
power does not exist, and if the
trade in that commodity is not
directly, necessarily and substan-
tially thereby restrained, so that
the combination does not prevent
others from freely competing in
the same field, there is nothing
in the Standard Oil decision which
hold such a combination unlaw-
ful.” Herbert Noble in 44 Ameri-
can Law Review 9 (January-Feb-
ruary, 1910).
CONTRACT AND COMBINATION IN RESTRAINT. 341
did so, to fall within the condemnation of the Act. It is
immaterial to ascertain what proportion the resulting re-
straint to commerce bears to other results. If the contract
or combination tends and does directly or appreciably to
restrain such commerce, it is illegal, although such effect
may not be so considerable as its other effects.°®  ‘‘It is
useless,’? said the Supreme Court in one case, ‘‘for the
defendants to say they did not intend to regulate or affect
interstate commerce. They intend to make the very com-
bination and agreement which they in fact did make, and
they must be held to have intended (if in such case inten-
tion is of the least importance) the necessary and direct
result of their agreement.’’ **

28 Ellis v. Inman, 131 Fed. 182;
65 C. C. A. 488. In this case it
was said: “In determining whether
or not the restraint of trade is
the direct and necessary result of
the combination, no assistance is
to be found by pursuing the in-
quiry further and ascertaining
whether its main purpose and
chief effect are to foster the trade
and increase the business of those
engaged in it. It may be con-
ceded that the main purpose of all
such combinations is to foster the
trade and increase the profits of
those who are engaged in them,
that the restraint of interstate
trade as such is not their ultimate
object and that the effect of the
combination on interstate trade is
to the members of the combination
an immaterial matter. Nor is it
material, we think, to inquire what
is the chief effect of the combina-
tion? The true inquiry, is, does
it tend directly to appreciably re-
strain interstate commerce? It is
not material to ascertain just what
proportion the resulting restraint

of interstate commerce bears to
other effects or results of the com-
bination. Nor is the court called
upon to weigh the effects, or
to determine that, if the effect in
restraining interstate trade is not
so considerable as other effects, the
combination is not forbidden.”
Citing Montague v. Lowry, 193 U.
S. 38; 24 Sup. Ct. 307; 48 L. Ea.
608; affirming 115 Fed. 27; 52
C. C. A. 621; 63 L. R. A. 58;
United States v. Patten, 226 U.S.
525; 33 Sup. Ct. 141; 57 L. Ed.,
reversing 187 Fed. 664.

39 Addyston Pipe & Steel Co. v.
United States, 175 U. 8. 211; 20
Sup. Ct. 96; 44 L. Ed. 136; affirm-
ing 85 Fed. 271; 29 C. C. A. 141;
54 U. S. App. 723; 46 L. R. A.
122; which reversed 78 Fed. 712.
The statute cannot “be evaded by
good motives. The law is its own
measure of right and wrong, of
what it permits or forbids, and the
judgment of the courts cannot be
set up against it in a supposed
accommodation of its policy with
the good intention of parties, and,
342 THE SHERMAN ANTI-TRUST ACT.

§ 153. Intent in Doubtful Cases a Determining Factor.—
If the necessary result of a combination is to materially
restrain interstate or foreign commerce, then the intent
with which the act was done is of no consequence.
‘‘But when there is only a probability, the intent to produce
the consequence may become important.’’ So that ‘‘ whether
a particular act, contract or method in furtherance of trade
and commerce is illegal may, in doubtful cases, turn upon
the intent to be inferred from the extent of the control
thereby secured over the commerce, as well as by the
method which was used.’’ *°

§154. Lessening or Preventing Competition.—A contract
or combination which has the effect to lessen or prevent com-
petition among those parties to it in interstate trade or
commerce is violative of the provisions of the first section of
the statute. It is a restraint upon trade or commerce.
Thus a contract to the effect that those parties to it will
not compete with each other in certain districts in other
states, or in certain other states, is illegal, for it lessens

competition.**

it may be of some good results.”
Standard Sanitary Mfg. Co. v.
United States, 226 U. S. 20; 33
Sup. Ct. 9; 57 L. Ed., affirm-
ing 191 Fed. 172; citing United
States v. Trans-Missouri Freight
Ass’n., 166 U. 8. 290; 17 Sup. Ct.
548; 41 L. Ed. 1007, and Armour
Packing Co. v. United States, 209
U. S. 56; 28 Sup. Ct. 428; 52 L.
Ed. 681.

40 United States v. Reading Co.,
226 U. S. 324; 33 Sup. Ct. 90; 57
L. Ed., reversing and affirming
in parts 183 Fed. 427; United
States vy. Terminal R. Ass’n., 224
U. S. 383, 394; 32 Sup. Ct. 3507;
56 L. Ed. 813; Swift & Co. v.
United States, 196 U. 8. 375; 25
Sup. Ct. 276; 49 L. Ed. 518; modi-

fying and affirming 122 Fed. 529.
In the first case cited it was said:
“In the instant case the extent of
the control over the limited sup-
ply of anthracite coal by means
of the great proportion theretofore
owned or controlled by the defen-
dant companies, and the extent of
the control acquired over the in-
dependent output which consti-
tuted the only competing supply,
affords evidence of an intent to
suppress that competition, and of
a purpose to unduly restrain the
freedom of production, transpor-
tation, and sale of the article at
tide-water markets.”

41 Addyston Pipe & Steel Co. v.
United States, 175 U. S. 211; 20
Sup. Ct. 96; 44 L. Ed. 136; affirm-
CONTRACT AND COMBINATION IN RESTRAINT.

343

§ 155. Combination to Fix Prices.—If the effect of a con-
tract or combination is to secure for those entering into

it an increase of the prices or to even fix the prices of their

products, by the destruction of competition, then such con-

tract or combination is illegal, even though contracts to buy

ing 85 Fed. 271; 29 C. C. A. 141;
54 U. S. App. 723; 46 L. R. A.
122; which reversed 78 Fed. 712.
In this case the Supreme Court
said: “Total suppression of the
trade in the commodity is: not
necessary in order to render the
combination one in restraint of
trade. It is the effect of the com-
bination in limiting and restricting
the right of each of the members
to transact business in the ordi-
nary way, as well as its effect up-
on the volume or extent of the
dealing in the commodity, that is
regarded.” See also Dr. Miles Med-
ical Co. v. John D. Park & Sons
Co., 220 U. S. 373; 31 Sup. Ct.
376; 55 L. Ed. 502; reversing 164
Fed. 803; 90 C. C. A. 579; United
States v. Coal Dealer’s Ass’n. 85
Fed. 252; Leonard v. Abner-Dru-
ry Brewing Ags‘n., 25 App. D. C.
161; Continental Wall Paper Co.
v. Voight, 148 Fed. 939, 946; 78
C. C. A. 567; affirmed 212 U. S.
227; 29 Sup. Ct. 280; 53 L. Ed.
486; Wheeler Stenzel Co. v. Na-
tional Window Glass Jobbers
Ass’n., 152 Ferd. 864, 871; 81 C.
C. A. 658; United States v. Amer-
ican Tobacco Co., 163 Fed. 700;
modified and affirmed 221 U.
S. 1; 31 Sup. Ct. 632;
55 L. Ed. 663; United States v.
Du Pont, ete., Co. 188 Fed. 127;
Anderson v. Shawnee Compress
Co., 17 Okl. 231; 87 Pac. 315;

15 L. R. A. (N.S.) 846; affirmed
209 U. S. 428; 28 Sup. Ct. 572;
52 L. Ed. 865; Thomsen v. Union
Castle Mail S. S. Co., 166 Fed.
251, 253; 92 C. C. A. 315. See
149 Fed. 933; United States v.
Hamburg American Line, 192
Fed. 1; Northern Securities Co. v.
United States, 193 U. S. 197; 24
Sup. Ct. 486; 48 L. Ed. 679;
affirming 120 Fed. 721; Unitede~
States v. Patten, 226 U. S. 525;
33 Sup. Ct. 11; 57 L. Ed., revers-
ing 187 Fed. 664; Ellis v. Inman,
131 Fed. 182; 65 C. C. A. 488;
reversing 124 Fed, 936; Gibbs v.
McNeeley, 118 Fed. 210; 55 ©.
C. A. 70; reversing 107 Fed. 210.
See 102 Fed. 594; Lowry v. Tile
Mantel & Grate Ass’n., 98 Fed.
817; affirmed 115 Fed. 27; 52 C.
C. A. 621; 63 L. R. A. 58; Mon-
tague v. Lowry, 115 Fed. 27; 52
Cc. C. A. 621; 63 L. R. A. 58;
affirming 106 Fed. 38; affirmed 193
U. S. 38; 24 Sup. Ct. 307; 48
L. Ed. 608; Leonard v. Abner-
Drury Brewing Co., 25 App. D. C.
161; Wheeler Stenzel v. National
Window Glass Jobbers  Ass’n.,
152 Fed. 864, 871; 816 C. C. A.
658; 10 L. R. A. (N.S.) 972;
United States v. DuPont, etc., Co.,
188 Fed. 127; United States v.
Swift & Co., 122 Fed. 529; af-
firmed 196 U. S. 375; 25 Sup. Ct.
276; 49 L. Ed. 518.
344. THE SHERMAN ANTI-TRUST ACT.

such commodity at the enhanced or fixed prices are con-
tinually being made.

“Tf iron pipe cost one hundred dollars a ton instead
of the prices which the record shows were paid for it, no
one, we think, would contend that the trade in it would
amount to as much as if the lower price prevailed. The
higher price would operate as a direct restraint upon the
trade, and therefore any contract or combination which en-
hanced the price might in some degree restrain the trade in
the article. It is not material that the combination did not
prevent the letting of any particular contract. Such was
not its purpose. On the contrary, the more contracts to
be let the better for the combination. It was formed not
for the object of preventing the letting of contracts, but to
restrain the parties to it from competing for contracts, and
thereby to enhance the prices to be obtained for the pipe
dealt in by those parties. And when by reason of the
combination a particular contract may have been obtained
for one of the parties thereto, but at a higher price than
would otherwise have been paid, the charge that the com-
bination was one in restraint of trade is not answered by
the statement that the particular contract was in truth
obtained and not prevented. The parties to such a com-
bination might realize more profit by the higher prices they
would secure than they could earn by doing more work at
a much less price. The question is as to the effect of such
combination upon the trade in the article, and if that effect
be to destroy competition and thus advance the price, the
combination is one in restraint of trade.’’4?

‘“‘They are not saved by the advantages which the par-
ticipants expect to derive from the enhanced price to the
consumer.’’#%

42 Addyston Pipe & Steel Co. v. 46 L. R. A. 122; 54 U. S. App.
United States, 175 U. S. 211; 20 723; which reversed 78 Fed. 712.
Sup. Ct. 96; 44 L. Ed. 136; affirm- 43 Dr. Miles Medizal Co. v. John
ing 85 Fed. 271; 29 C. C. A. 141; YD. Park & Sons Co., 220 U. S.
CONTRACT AND COMBINATION IN RESTRAINT. 345

Yet where a corporation does some things and its agents
other things which are utterly different, and all these things
dovetail together and produce an unlawful combination,
such agents may be convicted of having unlawfully com-
bined with their own corporation.*

§ 156. Restraining Free Flow of Commerce.—Before the
decision in the Standard Oil case*® it was said that any
contract or combination which essentially obstructed the
free flow of interstate or foreign commerce, or restricted the
liberty of the trader to engage in such commerce was for-

bidden.**

But is this the test since that decision ?
which obstructs the free flow of such commerce illegal ?

373; 31 Sup. Ct. 376; 55 L. Ed.
502; reversing 164 Fed. 803; 90 C.
C. A. 579; United States v. Chesa-
peake & Ohio Fuel Co., 105 Fed.
93; affirmed 115 Fed. 610; 53 C.
C. A. 256; Bobbs-Merrill Co. v.
Straus, 139 Fed. 155; Loder v.
Payne, 142 Fed. 1010; reversed
149 Fed. 21 but not on this point.

44 United States v. MacAndrews
& Forbes Co., 149 Fed. 823. The
syllabus of this case, as it appears
in the Federal Reporter, is as
follows: “A secret arrangement
between two corporations, which
together produced about 85 per
cent of all the licorice paste con-
sumed in the United States and
sold to consumers throughout the
country, by which they ceased
competition, fixed from time to
time the prices, at which each
should sell, and apportioned the
customers between them, and also
by concerted action secured con-
tracts with their chief, if not only
competitors, which enabled them
to control either the output of
such competitors or the prices at

Is any restraint
We

which and the persons to whom
they should sell, and in pursuance
of which scheme they were en-
abled to and did advance the price
of the article to all purchasers
nearly 50 per cent within a few
months, was one directly affecting
interstate commerce, and consti-
tutes « combination and conspiracy
in restraint of such commerce, and
an attempt to monopolize a por-
tion of the same, within the pro-
hibition of the Anti-Trust Law of
July 2, 1890.” See also United©
States v. Patten, 226 U.S. 525; 33
Sup. Ct. 141; 57 L. Ed. 6; re-
versing 187 Fed. 664.

45 Standard Oil Co. v. United
States, 221 U. S. 1; 31 Sup. Ct.
502; 55 L. Ed. 1007; 34 L. R. A.
(N.S.) 834; affirming 173 Fed.
177.

46 Loewe v. Lawlor, 208 U. S.
274; 28 Sup. Ct. 301; 52 L. Ed.
488; reversing 148 Fed. 924.
See United States v. Patten, 226
U. 8. 525; 33 Sup. Ct. 141; 57
L. Ed., reversing 187 Fed. 664.
346 THE SHERMAN ANTI-TRUST ACT.
recognize the fact that it must be a direct and not an in-
direct restraint to be illegal; but are we to say every re-
straint that directly obstructs the free flow of commerce is
illegal, and not require the restraint to be an ‘‘unreason-
able’? one? We believe the true interpretation of the stat-
ute is that every direct restraint which prevents the free
flow of commerce among the states or with a foreign nation
is, an.“ ‘unreasonable’’ restraint.*”

x

§ 157. Contract to be Illegal Need Not Refer to Inter-
state Commerce—Citizens of Same State.—In an instance
where citizens of the same state combined to control the
lumber trade, though no reference was made to inter-
state commerce, the court held that the contract of com-
bination was illegal at common law, and then added:

‘We do not think that the act contemplates that the com-
bination therein made unlawful must be one which shall by
its terms refer to interstate commerce. It is enough if
its purpose and effect are necessarily to restrain interstate

47 Before the Standard Oil Case of the defendants in error. By

was decided, Judge Day, recogniz-
ing the fact that the restraint need
not be unreasonable to be illegal,
as the decisions then stood, said:
“A contract or combination which
interferes with the freedom of in-
terstate commerce, and hinders and
prevents its free enjoymeiit, to the
extent that it does so, restrains
that commerce, and is illegal.”
Chesapeake & Ohio Fuel Co. v.
United States, 115 Fed. 610, 620;
53 C. C. A. 256; Ellis v. Inman,
131 Fed. 182; 65 C. C. A. 488.
“Taking together all the allega-
tions of the complaint, it appears
that an active trade in lumber be-
tween the Vancouver mills and
the Portland consumers of lum-
ber has been restrained py the acts

combining as they did they wielded
a power that no individual action
could possess. They possessed the
power to ruin the business of any
Portland contractor who imported
lumber from the adjoining state,
and they exercised that power.
Restraint of the trade resulted
therefrom, and the restraint was
the direct and necessary result of
a combination made to carry out
that specific purpose. If the alle-
gations of the complaint be true,
the defendants in error have vio-
lated the prohibition of the act,
and are answerable to the plaintiff
in error in damages.” Ellis v. In-
man, 131 Fed. 182; 65 ©. C. A.
488.
CONTRACT AND COMBINATION IN RESTRAINT. 347

trade. If it were otherwise, all combinations in restraint of
interstate trade might be so expressed in words as to avoid
the statute. The true test would seem to be, not what it
agreement professes, but what it, accomplishes. This com-
bination must be dealt with in view of the known facts
which surround it when it was formed, and which still at-
tend it. It is impossible that the parties to it had in view
only domestic trade. They must have had in contempla-
tion the market which they had theretofore had, and which
they would continue to have, and which, as they well knew,
was principally without the limits of their own state. It is
immaterial that all the parties to the agreement were resi-
dents of the same state. It is not the place where the
parties reside that distinguishes the combination, and lends
to it the features of a combination in restraint of inter-
state trade.’’*®

§158. Legality of Separate Acts of Combination——The
acts constituting the combination, viewed separately, may be
legal; but if combined they constitute an unnecessary re-
straint of interstate or foreign trade or commerce, then the
combine is illegal. ‘‘The several acts which contribute to
the final result must be judged not in isolation, but in
combination. ’’

‘‘Singly and uncombined these six defendant railroads
may continue their lawful operations with that natural, un-
trammeled competition incident to individual rivalry; for, as
we have seen above, ‘when competition is left free, indi-
vidual error or folly will generally find a correction in the
conduct of others.’ But it is when and because they unite
—for the words ‘contract,’ ‘combination,’ ‘conspiracy,’ imply
a coupling with others—and when that coupling is ‘in re-

48 Gibbs v. McNeeley, 118 Fed. 115 Fed. 610; 53 C. ©. A. 256;
120; 55 ©. C. A. 70, reversing 107 United States v. Patten, 226 U. S.
Fed. 210; citing Chesapeake & 525; 33 Sup. Ct. 141; 57 L. Ed.,
Ohio Fuel Co. v. United States, reversing 187 Fed. 664.
348 THE SHERMAN ANTI-TRUST ACT.
straint of trade or commerce among the several states,’
then the federal statute becomes applicable.’’*®

§159. Parts of Combination or Scheme Legal—Trans-
action Considered as a Whole.—The fact that parts of a
scheme are legal will not save it from the condemnation of
the Anti-Trust Act, if the remaining parts are a violation
of its provisions. So if the scheme involve the combina-
tion of separate and distinct contracts, which, considered
separately, are perfectly legal and not in restraint of trade,
the combination is condemned by the statute. ‘‘It is not
essential that these contracts, considered singly, be unlaw-
ful as in restraint of trade. Even acts absolutely Jawful
may be steps in a criminal plot. But a series of such con-
tracts,°° if the result of a concerted plan or plot between
the defendants to thereby secure control of the sale’’ of
independent products, ‘‘in the markets of other states, and
thereby suppress competition in prices between their own
output and that of the independent operators would come
plainly within the terms of the statute, and, as parts of
the scheme or plot, would be unlawful.’’”

49 United States v. Reading Co.,
183 Fed. 427; modified and
affirmed 226 U. 8. 324; 33 Sup. Ct.
90; 57 L. Ed. Jn the lower
court it was also said: “It is
manifest, therefore, that while in
corporate forms there are sales,
corporate holdings, ete., which in
isolation may be intrastate the fact
is equally clear that when com-
bined the transaction as a whole
falls within the domain of inter-
state commerce.” The court cites
Loewe v. Lawlor, 208 U. S. 301;
28 Sup. ('t. 301; 52 L. Ed. 488;
reversing 148 Fed. 924; and Addy-
ston Pipe & Steel Co. v. United
States, 175 U. 8. 211; 20 Sup. Ct.
96; 44 L. Ed. 136: affirming 85

Ved. 17], 96; 54 U. S. App. 723;
29 C. C. A. 141; 46 L. R. A. 122:
which reversed 78 Fed. 712.

50 Aikens v. Wisconsin, 195 U. S.
206; 25 Sup. Ct. 3; 49 L. Ed.
154; affirming 113 Wis. 419; 85
N. W. 1135.

51 United States v. Reading Co.,
226 U. S. 324; 33 Sup. Ct. 90; 57
L. Ed., affirming in part and
reversing in part 183 Fed. 427.
“The general objection is urged
that the bill does not set forth
sufficient definite or specific facts.
This objection is serious, but it
seems to us inherent in the nature
of the case. The scheme alleged
is so vast that it presents a new
problem in pleading. If, as we
CONTRACT AND COMBINATION IN RESTRAINT. 349

§ 160. No Intent to Restrain.—If the contract or acts of
the parties pursuant to the combination actually result in
the restraint of interstate or foreign commerce, then the
statute is violated, although the parties thereto had no in-
tention to create such a restriction; and it is not necessary
to show, at least in a civil action, a specific intent to re-
strain such commerce.*? Yet as has been said by Justice
Holmes:

‘“‘Where acts are not sufficient in themselves to produce
a result which the law seeks to prevent—for instance, a
monopoly—but require further acts in addition to the mere
forces of nature in order to bring that result to pass, an
intent to bring it to pass is necessary in order to produce
a dangerous probability that it will happen;’’®? and as said
by Justice Peckham: ‘‘An unlawful intent in entering
into an agreement was held immaterial (in the Trans-Mis-
souri case), but only for the fact that the agreement did in

fact and by its terms restrain trade.’’®4

must assume, the scheme is enter-
tained, it is, of course, contrary
to the very words of the statute.
Its size makes the violation of the
law more conspicuous, and yet the
same thing makes it impossible to
fasten the principal fact to a cer-
tain time and place. The elements
too, are so numerous and shift-
ing, even the constituent parts al-
leged are and from their nature
must be so extensive in time and
space, that something of the same
impossibility applies to them. The
law has been upheld, and therefore
we are bound to enforce it not-
withstanding these difficulties. On
the other hand, we equally are
bound by the first principles of
justice not to sanction a decree
so vague as to put the whole con-
duct of the defendants’ business
at the peril of a summons for

contempt. We cannot issue a gen-
eral injunction against all possible
breaches of the law. We must steer
between these opposite difficulties
as best we can.” Swift & Co. v.
United States, 196 U. 8. 375; 25
Sup. Ct. 276; 49 L. Ed. 518; modi-
fying and affirming 122 Fed. 529.

52 Bigelow v. Calumet & Hecla
Mining Co., 167 Fed. 704, 709; on
appeal, 167 Fed. 721.

53 Swift & Co. v. United States,
196 U. S. 396; 25 Sup Ct. 279;
49 L. Ed. 518; modifying and
affirming 122 Fed. 52%.

54 United States v. Joint Trafic
Ass’n., 171 U. 8S. 505; 19 Sup.
Ct. 25; 43 L. Ed. 259; reversing
32 C. C. A. 491; 45 U. S. App.
762; United States v. Trans-Migs-
ouri Freight Ass’n., 166 U. S. 290;
17 Sup. Ct. 540; 41 L. Ed. 1007;
reversing 58 Fed. 58; 7 C. C. A.
350

THE SHERMAN ANTI-TRUST ACT.

§161. Total Restraint.—To be an offense under the act
the contract or combination need not restrain all of the in-
terstate trade or commerce for a district or territory; re-
straint of a part of it is sufficient to create the offense.

15; 24 L. R. A. 73; affirming 53
Fed. 440; 4 Inters. Com. Rep. 443;
in re Charge to Grand Jury, 151
Fed. 834. In United States v.
Trans-Missouri Freight Ass’n.,
supra, the court said that “the
government is not obliged to show
that the agreement in question was
entered into for the purpose of
restraining trade or commerce, if
such restaint is its necessary ef-
fect.” “It is pressed upon us that
there was no intention on the part
of the defendants in this case to
restrain interstate commerce, and
in several affidavits the managing
officers of the defendants make
oath that they did not know what
interstate commerce was, and,
therefore, that they could not have
combined to restrain it. Of course,
the defendants, like other persons
subject to the law, cannot plead
ignorance of it as an excuse for
its violation. They knew that the
combination they were making con-
templated the fixing of prices for
the sale of pipe in thirty-six differ-
ent states, and that the pipe sold
would have to be delivered in
_ those states from the states in
which defendants’ foundries were
situated. They knew that freight
rates and transportation were a
most important element in making
the price for the pipe so to be de-
livered. They charged the success-
ful bidder with a bonus to be paid
upon the shipment of the pipe from
his state to the state of the sale.
Under their first agreement, the

bonus to be paid by the success-
ful bidder was varied according to
the state in which the sale and
delivery were to be made. It seems
to us clear that the contract of
association was on its face an ex-
tensive scheme to control the whole
commerce among thirty-six states
in cast-iron pipe, and that the de-
fendants were fully aware of the
fact whether they appreciated the
application to it of the Anti-Trust
Law or not.” United States v.
Addyston Pipe & Steel Co., 85 Fed.
271; 29 C. C. A. 141; 54 U.S.
App. 723; 46 L. R. A. 122; revers-
ing 78 Fed. 712; affirmed 175 U.
S. 211; 20 Sup. Ct. 96; 44 L, Ed.
136; United States v. Patten, 226
U. S. 525; 33 Sup. Ct. 33; 57 L.
Ed., reversing 187 Fed. 664.

55 United States v. MacAndrews
& Forbes Co., 149 Fed. 823, 833.
The court cites United States v.
Chesapeake & Ohio Fuel Co., 105
Fed. at page 93; Swift v. United
States, 196 U. S. at page 375; 25
Sup. Ct. 281; 49 L. Ed. 518;
modifying 122 Fed. 529; Northern
Securities Co. v. United States, 193
U. SS. 382; 24 Sup. Ct. 436;
48 L. Ed. 679; = affirming
120 Fed. 721; and Addystou Pipe
& Steel Co. v. United States, 175
U. S. 211; 20 Sup. Ct. 96; 44
L. Ed. 136; affirming 85 Fed. 271;
29 €. C. A. 141; 54 U. S. App.
58; 46 L. R. A. 122; reversing
78 Fed. 712. “The act does not
appear to require that the re-
straint of interstate trade and
CONTRACT AND COMBINATION IN RESTRAINT.

351

Nor need the contract or combination be so wide as to
enable those entering into it to engross or control the
entire trade of a commerce of a particular territory or dis-

trict.

‘‘Total suppression of the trade in the commodity

is not necessary in order to render the combination one in

restraint of trade.’’**

§ 162.

Restricting Production—A combination for the

purpose of restricting production of certain articles through-

commerce shall be so complete as
to amount to total destruction.
Nor, indeed, would that be essen-
tial, as injury to the business or
property of the plaintiff might re-
sult although the objects of the
illegal combination were only par-
tially accomplished.” Monarch To-
bacco Works v. American Tobacco
Co., 165 Fed. 774, 781; United
States v. Joint Traffic Ass’n, 171
U. S. 505; 19 Sup. Ct. 25; 43
L. Ed. 259; reversing 89 Fed.
1020; 32 C. C. A. 491; 45 U.S.
App. 762; which affirmed 76 Fed.
895; United States v. American
‘Naval Stores Co., 172 Fed. 455.
Speaking of a restraint in a ter-
ritory, it was said: “It is next
urged by the appellant that the
indictment does not charge any
violation of the law, for the rea-
son that it charges an engaging
in «a combination and conspiracy
in restraint of trade and com-
merce in the city of Phoenix, and
not in or throughout the terri-
tory; that the Act prohibits ouly
those combinations and conspira-
cies which affect substantially the
trade or commerce of the entire
territory, and not those in re-
straint of the trade or commerce
of a particular community. We
think the construction contended
for entirely too narrow. It might

as justly be claimed that the
language of the first section mak-
ing illegal such combinations or
conspiracies ‘in restraint of trade
among the several states or with
foreign nations’ applies only to
those combinations which direct-
ly affect trade and commerce
among all the states, or with
all the foreign nations.” Tribo-
let v. United States, 11 Ariz. 436;
95 Pac. 85.

56 Addyston Pipe & Steel Co. v.
United States, 175 U. S. 211; 20
Sup. Ct. 96; 44 L. Ed. 136;
affirming 85 Fed. 271; 29°C. C. A.
141; 54 U. 8. App. 7238; 46 L.
R. A. 122; which reversed 78 Fed.
712. “The criterion as to whether
any given business scheme falls
within the prohibition of the
statute is its effect upon inter-
state commerce, which need not
be a total suppression of trade
nor «a complete monopoly; it is
enough if its necessary operation
tends to restrain interstate com-
merce, and to deprive the public
of the advantages flowing from
free competition.” United States
v. MacAndrews & Forbes Co., 149
Fed. 823, 833; Northern Securi-
ties Co. v. United States, 193 U.
S. 197; 24 Sup. Ct. 436; 48 L.
Ed. 679; affirming 120 Fed. 721.
352 THE SHERMAN ANTI-TRUST ACT.
out two or more states and thereby to keep up prices is
illegal and within the provision of the Anti-Trust Act. And
a contract by a manufacturer to close his factory, in order
to enable those contracting with him to restrict the produc-
tion and increase the price, conditioned that he shall re-
ceive an annual guaranteed sum of money for keeping it
closed, is void and cannot be enforced.**

§ 163. Reduction of Prices.—A contract or combination
cannot escape condemnation on the ground that it has re-
sulted in a lowering of the price of the article concerning
which the contract or combination was entered into. A
combination that tends directly to lower prices to the con-
sumer may, even as against the consumer, be a restraint of
trade; and a combination that leads directly to higher
prices, may also be as against the producer a restraint of
trade. The statute has no concern with prices, but looks
solely to competition, and to the giving of competition full
play, by making illegal any effort at restriction upon com-
petition.®®

§164. Restricting Sales—Any contract or combination
which directly operates upon the sale, transportation, and
delivery of an article of interstate commerce, by preventing
or restricting its sale, thereby regulates interstate commerce
to that extent, and thus trenches on the power of Con-
gress. If the prevention or restriction is unreasonable, it
is void.®

57 Cravens v. Carter-Crume Co.,
92 Fed. 479; 34 CG G A.
479. See also American Bis-
cuit & Mfg. Co., 44 Fed. 721;
United States v. Jellico Martin
Coal & Coke Co., 46 Fed. 432, 12
L. R. A. 753; Gibbs v. MeNeeley,
118 Fed. 120; 55 C. C. A. 70.

58 United States v. Swift & Co.,
122 Fed. 529; affirmed 196 U. S.

375; 25 Sup. Ct. 276; 49 L. Ed.
518; United States v. Patten, 226
U. 8. 525; 33 Sup. Ct. 141; 57 L.
Ed., reversing 187 Fed. 664.

59 Addyston Pipe & Steel Co. v.
United States, 175 U. S. 211; 20
Sup. Ct. 96; 44 L. Ed. 136;
affirming 85 Fed. 271; 29 C. C.
A. 141; 54 U. S. App. 723; 46
L. R. A. 122; which reversed 78
CONTRACT AND CUMBINATION IN RESTRAINT. 303

§165. Depressing and Artificially Stimulating Trade—
An agreement of dealers in cattle of large amounts to
refrain from bidding against each other in the purchase of
such cattle is illegal and violative of the statute when the
slaughtered animal enters into interstate commerce; and so
is their agreement to bid up prices of cattle in order to
stimulate shipments, intending to cease from bidding when
the shipments have arrived; and the same result follows
from their agreement to fix prices upon and restrict the
quantities of meat shipped to their agents or customers.

§ 166. Uniform Action of Defendants Resulting in Acci-
dental Restraint of Trade.—To the claim that great con-
cerns operating side by side, conducted by men of great
business skill, might arrive at the same system of doing
business (the tendency to introduce efficient methods into
our industries might indicate such a possibility) ; and that
all the indictment charged was that the defendants adopted
a uniform system of business, the court said: ‘‘It need not
be disputed that given the same ability, facilities and capital
invested these three groups of individuals might arrive at
very nearly the same method of determining the sale prices
of their articles, and that they would endeavor, so far as
possible, to obtain such price. The adoption by the defend-
ants of such a system might be accidental or a mere coin-
cidence, but the difficulty with the argument is that the
offense charged is not the accidental adoption of a uniform
system of doing business, resulting in the fixing of prices,
but a system which is the result of concerted action—the
result of a combination, conspiracy, or a positive agreement,
The law says there may be no contract, combination, or
conspiracy in restraint of trade. It is not aimed against

Fed. 712; United States v. 518; modifying 122 Fed. 529;

Patten. j United States v. Patten, 226 U. S.
60 United States v. Swift & Co. 525; 33 Sup. Ct. 141; 57 L. Ed,

122 Fed. 529; affirmed 196 U. S. reversing 187 Fed. 664.

375; 25 Sup. Ct. 276; 49 L. Ed.
354 THE SHERMAN ANTI-TRUST ACT.

accidental restraints of trade. The defendants could not be
held for a moment had each group, acting in its own in-
terest, arrived at the identical system of doing business, un-
der which, it is charged, they were operating. It is the
maintaining of that system by agreement or combination
which constitutes the offense defined by the Sherman Act,
provided it results in a restraint of trade, and such a re-
sult in this case is direct and inevitable. The aim of the
parties is the same, although reached by different means, as
that in the Addyston Pipe case, where the agreement was
that the low bid would be made by one concern, and that
the other concerns would make a somewhat higher bid, and
that ultimately all would share in the profit.’’*

§ 167. Soliciting Orders in Other States.—The solicitation
of orders by a dealer in one state through his agents sent
into other states is interstate commerce; and any unrea-
sonable restraint placed upon such solicitation is illegal.
‘“We do not announce any new doctrine,’’ said Judge Taft,
‘“‘m holding either the contracts and negotiations for the
sale of merchandise to be delivered across state lines are in-
terstate commerce, or that burdens or restraints upon such
commerce Congress may pass appropriate legislation to pre-
vent, and courts of the United States may in proper pro-
ceedings enjoin. If this is extending federal jurisdiction
into fields not before occupied by the general government,
it is not because such jurisdiction is not within the limits
allowed by the Constitution of the United States.’’®?

§168. Agent in Control Combining With His Own Cor-
poration.—An agent of a corporation cannot alone form an
unlawful combination between himself and his corporation

81 United States v. Swift, 188 82 United States v. Addyston
Fed. 92; United States v. Patten, Pipe & Steel Co., 85 Fed. 271; 54
226 U. S. 525; 33 Sup. Ct. 141; U.S. App. 723; 29 C. CG. A. 141;
57 L. Ed., reversing 187 Fed. 46 L. R.A. 122 (reversing 78 Fed.
664. 712); affirmed 175 U.S. 211; 20

Sup, Ct. 96; 44 L. Ed. 136.
CONTRACT AND COMBINATION IN RESTRAINT. 305
by his thoughts and acts within the scope of his agency,
without the knowledge or participation of any other agent
or officer of the corporation. ‘‘If he may, the combination
between the commission of an offense and a combination to
commit it by a corporation vanishes into thin air; for a
corporation can act only by an agent, and every time an
agent commits an offense within the scope of his authority
under this theory the corporation necessarily combines with
him to commit it. This cannot be, and is not, the law.
The union of two or more persons, the conscious participa-
tion in the scheme of two or more minds, is indispensable
to an unlawful combination, and it cannot be created by
the action of one man alone.’’®

§169. Combination to Divide Interstate Trade Among
the Parties to it—An agreement among dealers in a par-
ticular article dividing among themselves the several states
or parts of states for their trade purposes, conditioned that
no one of their number would trade or sell their products
except in that state or district allotted to him, is’ a con-
tract or combination in restraint of trade or commerce, and
illegal. Thus where several large dealers in iron pipe en-
tered into a secret agreement dividing a large part of the
United States into districts and alloting to each dealer a
particular district, conditioned that no one should have the
trade in that district except the one to whom it was al-
lotted; and in order to make a show of competition, it was

63 Union Pacific Coal Co. v. knowledge of it, or gave any

United States, 173 Fed. 737, 745;
97 C. C. A. 578. The court con-
tinued: “The plan and the act
of refusing to sell coal to Sharp
unless he would withdraw his ad-
vertisement were the scheme and
the act of Moore as the agent of
the coal company, and of Moore
alone. No other agent or officer
of the coal company had any

assent to it, and consequently the
scheme and the act failed to evi-
dence an unlawful combination be-
tween the corporation and Moore,
and the motion to instruct the
jury to return a verdict in their
favor should have been granted
also.” See United States v. Mac-
Andrews & Forbes Co., 149 Fed.
823. Sec Sec. 145.
356 THE SHERMAN ANTI-TRUST ACT.
agreed that competitive bids should be put in by all of them
for the supplying of pipe to municipalities desiring it, but
secretly these bids should be so arranged that the dealer for
the district wherein the municipality was located should be
the lowest bidder, it was held that the contract or com-
bination was illegal. In passing on the contract the court
said:

‘Tt is also urged that but one contract would be awarded
for the work proposed at any place, and therefore only one
person would secure it by virtue of being the lowest bidder,
the selection by defendants of one of their number to make
the lowest bid as among themselves could not operate as
any restraint of trade; that the combination or agreement
operated only to make a selection of that one who should
have the contract by being the lowest bidder, and it did not
in the most remote degree itself limit the number or extent
of contracts, and therefore could not operate to restrain
interstate trade. This takes no heed of the purpose and
effect of the combination to restrain the action of the parties
to it so that there shall be no competition among them to
obtain the contract for themselves.

‘“We have no doubt that where the direct and immediate
effect of a contract or combination among particular dealers
in a commodity is to destroy competition between them and
others, so that the parties to the contract or combination
may obtain increased prices for themselves, such contract
or combination amounts to a restraint of trade in the com-
modity, even though contracts to buy such commodity at
the enhanced price are continually being made.’’

64 Addyston Pipe & Steel Co. \.
United States, 175 U. 8. 211; 20
Sup. Ct. 96; 44 L. Ed. 136;
affirming 85 Fed. 271; 29 C. C.
A. 141; 54 U. & App. 723; 46
L. R. A. 122: which reversed 78
Fed. 712. “The criterion as to
whether any given scheme falls
within the prohibition of the

statute is its effect upon inter-
state commerce, which need not
be total suppression of trade nor
a complete monoply; it is enough
if its necessary operation tends
to restrain interstate commerce,
and to deprive the public of the
advant»ves flowing from free
competition.” United States v.
CONTRACT AND COMBINATION IN RESTRAINT. 357

§ 170. Compelling Strangers to Combine Not to Engage
in Business Except Upon Certain Conditions.—A combina-
tion of persons which seeks to compel strangers to it not
to engage in a certain line of business except upon condi-
tions it imposes, when such business is interstate trade or
commerce, is forbidden by the statute. Such was held to
be the case where striking workingmen combined to de-
stroy the business of a hat manufacturer because he would
not submit to demands or conditions in the employment of
workingmen they sought to impose. An action was brought
against them to recover damages. The court said:

‘‘And that conclusion rests on many judgments of this
court, to the effect that the act prohibits any combination
whatever to secure action which essentially obstructs the
free flow of commerce between the states, or restricts, in
that regard, the liberty of a trader to engage in business.’’ ©

§171. Combination of Manufacturers of Unpatented Ar-
ticles by Use of a Patented Machine or Tool.—In the chap-
ter relating to patents we have discussed what effect the

MaecAndrews & Forbes Co., 149
Fed. 823, 833; United States v.
Swift & Co., 122 Fed. 529; modified

mers in other states from buy-
ing them, is a combination in
restraint of interstate trade as

and affirmed 196 U. 8S. 375; 25
Sup. Ct. 276; 49 L. Ed. 518.

63 Loewe vy. Lawlor, 208 U. S.
274; 28 Sup. Ct. 201; 52 L. Ed.
488; reversing 148 Fed. 924. The
Supreme Court said: “Congress
has power to declare and has de-
elared, that all interstate trade
shall be absolutely free from all
direct restriction through combi-
nations, and every such combina-
tion stands condemned in the ex-
press terms of the statute. A
combination to restrain and pre-
vent the plaintiffs from selling
and disposing of their product to
customers in other states and to
restrain and prevent such custo-

much as a combination to pre-
vent by physical violence their
transportation from state to
state. It does not matter that it
also embraces trade wholly with-
in a state. Indeed, if the destruc-
tion of trade within a state is the
means resorted to, to prevent the
customers in that state from buy-
ing from the manufacturer or
dealer in another state, it is pro-
hibited by the Sherman Anti-
Trust Law.” On trial after re-
versal the jury brought in a ver-
dict for $74,000.00 which the
court trebled, to which it added
costs, amounting to $232,240.12.
Lawlor v. Loewe, 187 Fed. 522.
358 THE SHERMAN ANTI-TRUST ACT.

Anti-Trust Act has upon the right of patentees to enter
into a contract or combination in restraint of trade or com-
merce. They cannot, as we there showed, enter into any
contract or combination that unreasonably restrains inter-
state trade or commerce outside of the exclusive rights given
them by the patent law; and what right is necessary to
protect their patents is left untouched by the Sherman Law.
Consequently they may limit the number of articles their
vendors can sell within a given period of time or territory.
This is a right the patent law gives them when the govern-
ment grants them the exclusive privilege to manufacture and
sell the patented article. Yet any unreasonable restraint
outside of this patented privilege, even though it pertains
to the article patented, is illegal. But the rule relating to
patents cannot be extended to an unpatented article manu-
factured by use of a patented machine or process. An
agreement to fix the price of such unpatented articles is
void, even though the machine or tool used in one or all
the steps of making them was patented. The patent gives
neither its owner nor his licensees the right to restrain in-
terstate trade or commerce in such articles. ‘‘The owner-
ship of a patent for a tool by which old, well known, and
unpatented articles of general use can be more cheaply made
gives no right to combine the makers and dealers in the
unpatented articles in an agreement to make the public pay
more for it.’’*

§172. Pooling Stock by Formation of a Third Corpora-
tion—Trust.—The formation of a corporation by the stock-
holders of two or more corporations in order to hold the
stock of such corporation, or a majority of it, in order to
control and restrict its interstate commerce is an illegal
combination under the Sherman Act; and it cannot be saved
from condemnation by reason of the fact that a state law

66 United States v. Standard affirmed 226 U. S. 20; 33 Sup. Ct.
Sanitary Mfg. Co., 191 Fed. 172; 9; 57 L. Ed.
CONTRACT AND COMBINATION IN RESTRAINT. 309
authorized the formation of the third corporation with power
to purchase the stock of other corporations. ‘‘ Whilst every
instrumentality of domestic commerce is subject to state
control, every instrumentality of interstate commerce may
be reached and controlled by national authority, so far as
to compel it to respect the rules for such commerce law-
fully established by Congress. No corporation can excuse
a departure from or violation of that rule under the plea
that that which it had done or omitted to do is permitted
or not forbidden by the state under whose authority it
came into existence. We repeat that no state can endow any
of its corporations, or any combinations of its citizens, with
authority to restrain interstate or international commerce,
or to disobey the national will as manifested in legal enact-
ments of Congress. So long as Congress keeps within the
limits of its authority as defined by the Constitution, its
regulations of interstate and international commerce, whether
founded in wisdom or not, must be submitted to by all.’’67

§173. Intrastate Trade or Commerce.—tThe statute has
no application to a restraint of intrastate commerce, nor
to a conspiracy in relation thereto.** It does not apply to

67 Northern Securities Co. v. Trust Act, or at least that the

United States, 193 U. 8. 197, 350;
24 Sup. Ct. 436; 48 L. Ed. 679;
affirming 120 Fed. 721. The nisi
prius court had said: “But aside
from this view of the subject, if
the state of New Jersey had un-
dertaken to invest the incorpor-
ators of the Securities Company
with the power to do acts in the
corporate name which would op-
erate to restrain interstate com-
merce, and for that reason could
not be done by them acting as
an association of individuals,
then we have no doubt that such
« grant would have been void
under the provisions of the Anti-

charter could not be permitted to
stand in the way of the enforce-
ment of that act.” See also Clarke
v. Central R. & B. Co., 50 Fed.
338; United States v. Standard
Oil Co., 173 Fed. 177; affirmed
221 U. S. 1; 31 Sup. Ct. 502;
55 L. Ed. 619; 34 L. R. A. (N.S.)
834; United States v. Reading
Co., 183 Fed. 427; modified and
affirmed 226 U. 8S. 324; 57 L.
Ed.; United States v. Union
Pacific R. Co., 226 U. 8. 61; 33
Sup. Ct. 53; 57 L. Ed., reversing
188 Fed. 116.

68 Cincinnati, etc., Packet Co. v.
Bay, 200 U. 8. 179; 26 Sup. Ct.
360 THE SHERMAN ANTI-TRUST ACT.

a contract or combination relating to the business of manu-
facturing within a state.*° So a combination to restrain
competition in proposals for contracts for the sale of certain
articles, to be delivered in the state in which some of the
parties in the combination reside and carry on business is
not, so far as those members are concerned, in violation of
the Anti-Trust Act, although the contract may be awarded
to some party outside the state as the lowest bidder.”

§174. Contract or Combination Restraining both Intra-
state and Interstate Trade or Commerce.—Congress has no
power over intrastate commerce; and any attempt on its
part to legislate on that subject must fail. For this reason
it has been illogically claimed that because a contract or
combination was in restraint of intrastate trade or com-
merce the Anti-Trust Act could not be applied to such
restraint or combination, notwithstanding the restraint or
combination also restrained interstate commerce. But this
interpretation of the act was held unsound. Speaking of a
specific instance the Supreme Court said: ‘‘ Although the
combination alleged embraces restraint and monopoly of
trade within a single state, its effect upon commerce among
the states is not accidental, secondary, remote or merely
probable. On the allegations of the bill the latter commerce
no less, perhaps even more, than commerce within a single
state is an object of attack.’’

208; 50 L. Ed. 428; The Charles
E. Wiswall, 86 Fed. 671; 30 C.
C. A. 339.

69 Robinson v. Suburban Brick
Co, 127 Fed. 804; United
States v. E. C. Knight Co., 156
U. S. 1; 15 Sup. Ct. 249; 39
L. Ed. 325; affirming 60 Fed.
934; 9 C. C. A. 297; 17 U.S.
App. 466; 24 L. R. A. 428; which
affirmed 60 Fed. 306.

70 Addyston Pipe & Steel Co.,
175 U. S. 211; 20 Sup. Ct.

96; 44 L. Ed. 136; affirming 85
Fed. 271; 29 C. C. A. 141; 54
U.S. App. 723; 46 L. R. A. 122;
which reversed 78 Fed. 712;
United States v. Patten, 226 U.
S. 525; 33 Sup. Ct. 141; 57 L.
Ed., reversing 187 Fed. 664.

71 Swift & Co. v. United States,
196 U. 8. 375; 25 Sup. Ct. 276;
49 L. Ed. 518. See below 122
Fed. 529; Loewe v. Lawlor, 208
U. S. 301; 28 Sup. Ct. 301; 52
L. Ed. 488; reversing 148 Fed.
CONTRACT AND COMBINATION IN RESTRAINT.

361

$175. State Corporations Restricting Trade.—The statute
reaches two or more state corporations entering into a con-

924; Addyston Pipe & Steel Co.,
175 U. S. 211; 20 Sup. Ct. 96;
44 L. Ed. 136; 85 Fed. 271; 29
C. C. A. 141; 54 U. S. App. 7238;
46 L. R. A. 122; which reversed
78 Fed. 712; United States v.
American Tobacco Co., 221 U. 8.
183. “The averments here are that
there was an existing interstate
traffic between plaintiffs and citi-
zens of other states, and that for
the direct purpose of destroying
such interstate traffic defendants
combined not merely to prevent
plaintiffs from manufacturing ar-
ticles then and there intended for
transportation beyond the states,
but also to prevent the vendees
from reselling the hats which
they had imported from Connecti-
cut, or from further negotiating
with plaintiffs for the purchase
and intertransportation of such
hats from Connecticut to the
various places of destination. So
that, although some of the means
whereby the interstate traffic was
to be destroyed were acts within
a state, and some of them were
in themselves as a part of their
obvious purpose and effect beyond
the scope of Federal authority,
still, as we have seen, the acts
must be considered as a whole,
and the plan is open to condem-
nation, notwithstanding « negli-
gible amount of intrastate busi-
ness might be affected in carry-
ing it out. If the purposes of the
combination were, as alleged, to
prevent any interstate transpor-
tation at all, the fact that the
means operated at one end be-
fore physical transportation com-

menced and at the other end after
the physical transportation ended
was immaterial. Loewe v. Lawlor,
supra. “It is urged that the sale
of unset tiles, provided for in
the seventh section of the by-
laws, is a transaction wholly with-
in the state of California and is
not in any event a violation of
the act of Congress which applies
only to commerce between the
states. The provision as to this
sale is but a part of the agree-
ment and it is so united with the
rest as to be incapable of sep-
aration without at the same time
altering the general purpose of
the agreement. The whole agree-
ment is to be construed as one
piece, in which the manufacturers
are parties as well as the San
Francisco dealers, and the refusal
to sell on the part of the manu-
facturers is connected with and a
part of the scheme which includes
the enhancement of the price of
the unset tiles by the San Fran-
cisco dealers. The whole thing is
so bound together that when
looked at as a whole the sale of
the unset tiles ceases to be a
mere transaction in the state of
California, and becomes part of
a purpose which, when carried out,
amounts to and is a contract or
combination in restraint of in-
terstate trade or commerce.”
Montague v. Lowry, 193 U. S&S.
38; 24 Sup. Ct. 307; 48 L. Ed.
608; affirming 115 Fed. 27. See
Charge to Jury, 106 Fed. 38;
United States v. Patten, 226 U.
S. 525; 33 Sup. Ct. 141; 57 L.
Kd., reversing 187 Fed. 664.
362 THE SHERMAN ANTI-TRUST ACT.

tract to restrain interstate or foreign commerce; and the
fact that the organizations of the corporations were legal
under the laws of the state wherein they were organized
cannot save their conduct from condemnation when such

conduct comes in contact with the prohibitory clauses of the
Anti-Trust Act.”

§176. Combination Formed Prior to Enactment of Stat-
ute and Continued Thereafter—If a combination had been
formed prior to the enactment of the Anti-Trust Act, but
it is continued after such enactment, it falls within the
prohibition of the statute; and those engaged in it are liable
under the provisions of the act.” '

§177. Purchase and Delivery Within State Part of
Plan to Dominate Interstate Commerce.—The mere fact that
the sales and deliveries take place wholly within a state
is not controlling when the expectation is that the products

72 Northern Securities Co. v.
United States, 193 U. 8. 197; 24
Sup. Ct. 426; 48 L. Ed. 679;
affirming 120 Fed. 721.

73 Waters-Pierce Co. vy. Texas,
177 _‘U. 8. 28; 20 Sup. Ct. 518;
44 L. Ed. 657; affirming 19 Tex.
Civ. App. 1; 44 S. W. 936. In
this case it was said: “It was
said that to grant the injunction
prayed for in this case is to give
the statute a retroactive effect.
That the contract at the time it
was entered into was not prohib-
ited or declared illegal by the
statute, as it had not then been
passed; and to now enjoin the do-
ing of an act which was legal
at the time it was done would
be improper. We give to the law
no retroactive effect. The agree-
ment in question is a continuing
one. The parties to it adopi. cer-
tain machinery, and agree to cer-

tain methods for the purpose of
establishing and maintaining in
the future reasonable rates for the
transportation. Assuming such
action to have been legal at the
time the agreement was first en-
tered into, the continuation of the
agreement, after it had ween de-
clared to be illegal, becomes a vio-
lation of the act. The statute pro-
hibits the continuing or entering
into such an agreement for the
future, and if the agreement be
continued it then becomes a vio-
lation of the act.” Thomsen v.
Union Castle S. S. Co., 166 Fed.
251; 92 °C. C. A. 315; United
States v. American Tobacco Co.,
164 Fed. 700; Finck v. Schneider
Granite Co., 187 Mo. 244; 86 S.
W. 213; 106 Am. St. 452; Ford
v. Chicago Milk Ass’n, 155 II.
166; 39 N. E. 651; 27 L. BR. A.
298.
CONTRACT AND COMBINATION IN RESTRAINT.

363

sold and delivered would, for the most part at least, fall
into and become a part of the well-known current of com-
merce between the place of origin and the general consum-

ing markets in other states.

If the purchase and delivery

within the state is but one step in a plan and purpose to
control and dominate trade and commerce in the other
states, the transaction falls within the condemnation of the

Anti-Trust Act.74

74 United States v. Reading Co.,
226 U. S. 324; 33 Sup. Ct. 90; 57
L. Ed., affirming and _revers-
ing in part 183 Fed. 427. The Su-
preme Court said: “The coal con-
tracts acquired when this pro-
ceeding was begun aggregated
nearly one half the tonnage of
the independent operators. Much
of the coal so bought was sold in
Pennsylvania, and all of the con-
tracts were made in that state,
and the coal was also there de-
livered to the buying defendants.
That the defendants were free to
sell again within Pennsylvania or
transport and sell beyond the
state, is true. That some of the
coal was intended for local con-
sumption may also be true. But
the general market contemplated
was the market at tide water, and
the sales were made upon the
basis of the average price at tide-
water. The mere fact that the
sales and deliveries took place in
Pennsylvania is not controlling
when, as here, the expectation was
that the coal would, for the most
part, fall into and become a part
of the well-known current of com-
merce between the mines and the
general consuming markets of
other states. ‘Commerce among
the states is not a technical legal
conception, but a practical one,

drawn from the course of business.’
Swift & Co. v. United States, 196
U. S. 396, 398; 49 L. Ed. 524,
525; 25 Sup. Ct. Rep. 276; Joewe
v. Lawlor, 208 U. 8. 52; L. Ed.
488; 28 Sup. Ct. Rep. 301; 13
Ann. Cas. 815. The purchase and
delivery within the state was but
one step in a plan and purpose
to contro] and dominate trade and
commerce in other states for an
illegal purpose. As was said by
the Chief Justice, in Loewe v.
Lawlor, cited above; ‘Although
some of the means whereby the
interstate traffic was to be de-
stroyed were acts within a state,
and some of them were in them-
selves as a part of their obvious
purpose and effect, beyond the
scope of Federal authority, still
as we have seen, the acts must
be considered as » whole, and the
plan is open to condemnation, not-
withstanding a negligible amount
of intrastate business might be
affected in carrying it out. If
the purposes of the combi-
nation were, as alleged, to
prevent any interstate transpor-
tation at all, the fact that the
means operated at one end before
physical transportation com-
menced, and at the other end
after the physical transportation
ended, was immaterial.’ The gen-
364 THE SHERMAN ANTI-TRUST ACT.

§ 178. Contracts and Combinations Only Affecting Those
Parties to Them.—The first section of the Act does not pro-
hibit contracts and combinations which simply prevent or
diminish competition among those who are parties to them.
Such contracts and combinations are unlawful only when
they are in violation of the second section which denounces
monopolies, or attempts to monopolize and combinations to
monopolize any part of interstate trade or commerce. Thus
contracts or combinaticns that merely diminish or prevent
competition among those who are parties to them, without re-
straining the trade or commerce of others and without consti-
tuting a monopoly, or an attempt to monopolize, are not un-
lawful at common law, except that an individual’s contract
not to exercise his trade or craft be unreasonable and void.
If such contract is for the purpose of carrying out some unlaw-
ful transaction, like the sale of the business or good will of the
contracting party itis valid. The act does not attempt to pro-
hibit contracts or combinations that merely restrict the lib-
erty of an individual to exercise his trade or craft. The object
of the act is to protect the public against unlawful re-
straints of trade and commerce, not to protect individuals
from the consequences of their own acts or contracts. The
power of Congress to pass a law merely for the protection
of the personal liberty of individuals by preventing them
from entering into contracts or combinations limiting their
right to engage in interstate commerce in competition with
others rests upon very doubtful ground, indeed we may say

eral view which this court took
of the effect of these contracts up-

sale and price of the coal in other
states. The prime object in en-

on interstate traffic in the coal of
this region is indicated in Inter-
state Commerce Commission v.
Baird, 194 U. S. 25, 42; 48 L. Ed.
860, 868; 24 Sup. Ct. Rep. 563.
The concerted plan concerns the
relations of these railroads to their
interstate commerce, and directly
affected the transportation and

gaging in this scheme was not
so much the control and sale of
coal in Pennsylvania, but the con-
trol of sales at New York har-
bor.’” Loewe v. Lawlor, 208 U.
S. 274; 28 Sup. Ct. 301; 52 L.
Ed. 488; 13 Am. Cas. 815; re-
versing 148 Fed. 216.
CONTRACT AND COMBINATION IN RESTRAINT. 365

it has no ground upon which to stand. Such a law would
not be a regulation of interstate commerce. Section one of
the Act cannot be so construed as to prohibit all contracts
or combinations that merely diminish competition among
those parties thereto. The phrase ‘‘in restraint of trade or
commerce’’ in the first section if construed to prohibit such
contracts or combinations would render the second section
unnecessary ; for if the former prohibited all contracts and
combinations diminishing competition, it would include con-
tracts and combinations to monopolize, and there would be
no need of a second section to prohibit monopolies, attempts
to monopolize, and combinations to monopolize. There are
many contracts and combinations which only restrict com-
petition among the parties to them, without involving mo-
nopolies or attempts to monopolize; and these are necessary
to the successful conduct of trade and commerce, being con-
sidered reasonable and proper both in this country and in
Great Britain and her colonies.
CHAPTER X.

MONOPOLY.

SECTION. SECTION.
179. Second section, 194. Forming a corporation to
180. Monopoly defined. absorb other corporations—
181. Excluding others—Exclus- Consolidation of corpora-

iveness. tions—Purchase of stock—
182. Combination and monopoly Presumption.

different under statute. 195. Difference between an out-
183. Second section broader than right purchase and ccmbi-

first. nation without change of
184. Attempt to monoplize—First ownership.

section. 196. Forming corporation to con-
185. Reasonableness of a mo- duct business in restraint

nopoly—Section section of trade—Holding company.

complement of first one. 197. Monopoly an accomplished
186. <A status prohibited—Overt conspiracy—Monopoly con-

act — Intent — Combina- tinuing after conspiracy has

tion resulting in uninten- ceased.

tional monopoly. 198. Acts intentionally done to
187. “Any part of trade or com- create a monopoly.

merce’—Complete monopo- 199. Good motives—No intent to

lization not necessary to violate the law.

create offense. 200. Tends to monopolize—At-
188. Size alone does not con- tempt to monopolize—

stitute monopoly. “Tend.”
189. Size—Great aggregation of 201. Lowering prices.

power. 202. Monopoly by one person only
190. Size as a factor in thy evi- —Single corporation.

dence of monopoly. 203. Statute not limited to any
191. Size giving power to mo- given commodity.

nopolize—Menace. 204. Monopoly in order to es-
192. Unification of interests— tablish competition.

Mergers—Partnership. 205. Duration in time of a mo-
193. Combination without creat- nopoly permitted.

ing a partnership.

§179. Second Section—The second section of the Anti-
Trust Act is as follows:

See. 2.

‘*Every person who shall monopolize, or attempt

to monopolize, or combine or conspire with any other person

366
MONOPOLY. 367
or persons, to monopolize any part of the trade or commerce
among the several states, or with foreign nations, shall be
deemed guilty of a misdemeanor and, on conviction thereof,
shall be punished by fine not exceeding five thousand dol-
lars, or by imprisonment not exceeding one year, or by
both said punishments, in the discretion of the court.’’

§180. Monopoly Defined.—The word ‘‘monopoly’’ is not
used in the second section. The language is ‘‘monopolize,
or attempt to monopolize, or combine or conspire with any
other person or persons, to monopolize.’’ There has been
no authorative definition of monopolizing by the Supreme
Court. It has been prominent in public discussion in re-
cent years, but perhaps without any standard legal defini-
tion. It is not uncommon to hear size or aggregated capital
in and of itself treated as monopoly. According to that
view there is a point at which growth and expansion, how-
ever legitimate, become monopolizing. However convenient
that use of the term may be for popular purposes it is not

126 U.S. Stat. at Large 209; U.
S. Comp. 3200. It is observable

ditional meaning if possible.
Where the statute transcends or

that section three, which relates
to the District of Columbia and
the Territories, has no clause
corresponding to that in the sec-
ond section on monopolies. The
statute does not declare it unlaw-
ful to monopolize or attempt to
monopolize trade in that District
or in the Territories. That the
second section is in pari materia
with the first, see United States
v. Patterson, 55 Fed. 605, 640.
“It is apparent in the argument
before the Supreme Court in the
Standard Oil Case that hoth
bench and bar had some diffivuity
in seeing what new thing section
two added to section one, and yet
they were bound to find such ad-

contradicts the common law is well
shown in section one where ‘every
contract, combination or conspir-
acy in restraint of trade’ is de-
nounced. But a combination in re-
straint of trade is by the defi-
nition of the common law a con-
spiracy, so this is tautologous,
while the words ‘every contract?
in section one, with the words
‘any part’ in section two, have
forced our courts to denounce con-
tracts in restraint of trade, or
combinations, which at the com-
mon law would have been reason-
able growth and not monopoly.”
Frederic J. Stimson in 45 Amer-
ican Law Review 21 (January—
February No. 1911).
368 THE SHERMAN ANTI-TRUST ACT.

its legal meaning or signification. At common law it was a
“license or privilege allowed by the King for the sale, buy-
ing and selling, making, working or using of anything
whatsoever whereby the subject in general is restrained from
that liberty or trading which he had before.’’? This defini-
tion, however, is not broad enough now to cover what is
known as a monopoly under modern legislation and judicial
usage. ‘‘The monopoly with which the law deals is not
limited to the strict equivalent of royal grants or people’s
patents. Any combination the tendency of which is to
prevent competition in its broad and general sense, and to
control and thus at will enhance prices to the detriment of
the public, is a legal monopoly; and this rule is applicable
to every monopoly, whether the supply be restricted by

nature or susceptible of indefinite production.’ As used

24 Blackstone 160.

3 People v. North River Sugar
Refining Co., 54 Hun. 355; 3 N.
Y. Supp. 401; 2 L. R. A. 33.
Speaking of a state statute, Judge
Holt said in one case: “The de-
fendants’ counsel asserts that by
the acts alleged in the bill there
was no creation of a monopoly,
because the essential quality of
monopoly is the power to exclude
all others from the field monop-
olized. This is, of course, the
strict legal meaning of the term.
A patent or copyright in this
country, or such exclusive privi-
leges as Elizabeth and James I
were accustomed to confer upon
individuals, which gave rise to the
great historic controversy in Eng-
land over monopolies, resulting in
the decisions of the courts that
they were void at common law,
and the act of Parliament declar-
ing that the King had no power
to grant them, are monopolies in
their strict legal sense. But the

word has a different, but a com-
moner and equally well understood
meaning. When a person or per-
sons have, in fact, obtained a sub-
stantially complete control of a
particular business or article of
trade, they are said to have a
monopoly, although they have no
legal power to prevent others
from competing or attempting to
compete with them. I think there
can be no doubt that the monopoly
prohibited in section seven of the
stock corporations by combining
with any other corporation or
person, create that kind of mo-
nopoly by which they can legally
exclude any one else from at-
tempting at least to enter into
the same business. Nothing but
sovereign power can do that. The
monopoly contemplated by section
seven of the stock corporations
law is one created merely by con-
tract, and is therefore, not, in
its legal essence, exclusive.” “I
zonceive that it [‘monopoly’ un-
MONOPOLY.

369

in the statute the verb ‘‘to monopolize’? means to destroy
reasonably competitive conditions in a branch of trade.

der the Sherman Law] is not
sufficiently defined by saying that
it is the combination of a large
part of the plants in the country
engaged in the manufacture of
a particular product in one cor-
poration. ‘there must be some-
thing more than the mere union
of capital and plants before the
law is violated. There must be
some use by the company of the
comparatively great size of its
capital and plant and extent of
its output, either to coerce per-
sons to buy of it, rather than of
a competitor, or to coerce those
who would compete with it to give
up their business. There must in
other words be an element of
duress in the conduct of its busi-
ness towards the customers in the
trade and its competitors before
a mere aggregation of plants be-
comes an unlawful monopoly.”
Speech of President Taft at Co-
lumbus, Ohio, August 19, 1907.
“The word ‘monopolize,’ and its
noun, ‘monopoly,’ have in the law,
and had at the time of the pass-
age of the act, a technical mean-
ing. In so far as they implied
any exclusive privilege not rest-
ing upon a government franchise,
or upon individual ownership of
property, they involve the idea of
contract. 4 Bl. Comm, 159; Ray,
Contract Lim. 210-245; Freenh.
Pub. Pol. 670, et seg.; Ricks, J.,
in Re Corning, 51 Fed. Rep. 205.
It is not, in the legal sense, ‘mo-
nopolizing,’ to raise upon one’s
own ground all the corn or wheat
for the subsistence of a commu-
nity. Like the terms ‘restraint of

trade,’ and ‘contract in restraint of
trade,’ ‘monopoly’ has, in the com-
mon law, a broader and favorable
sense, including just and rightful
monopolies, such as patents or
copyrights, and a narrower and ob-
noxious sense, embracing only mo-
nopolies counter to law or public
policy. ‘Monopoly’ is limited, in
its broader or favorable sense to
public franchise, private owner-
ship or contract. In its narrower
and obnoxious sense, it is limited
to unlawful contractual means. It
is not monopolizing for a band of
desperadoes to invade an isolated
community, and rob it of its win-
ter’s store. He only monopolizes,
in the invidious legal sense of the
word, who with wrongful intent
buys up, or attempts to buy up,
the whole, or substantially the
whole of a given commodity in a
given locality, or at least contracts
or attempts to contract, for the
contro] of it. Cases cited above.
Section 2 of the statute, therefore,
undertakes to punish nothing but
the making of a particular form
of contract—usually a contract of
purchase—and conspiracies, and
attempts to make, or to promote
the making of, or perhaps to en-
force, such contracts. This effect
of these technical words in the
statute has been repeatedly recog-
nized, United States v. Greenhut,
50 Rep. 469; in Re Corning, cited
above; United States v. Greenhut,
51 Fed. Rep. 205; in re Greene, 52
Fed. Rep. 104; in Re Terrell
(United States v. Greenhut), 51
Fed. Rep. 213.” Brief of defend-
ant in United States v. Patterson,
370

THE SHERMAN ANTI-TRUST ACT.

The prohibitive act of monopolizing cannot be brought about
until there are competitive conditions in trade, and the for-
bidden act must be such as to destroy competition to a de-
gree that puts an end to reasonably competitive conditions.‘

55 Fed. 605, 625. See also United
States v. American Naval Stores
Co., 172 Fed. 455. In their brief,
199, counsel for the defendants in
the Tobacco case said of the term
“monopoly”: ‘The term ‘monopoly’
has been in popular phraseology
the husband, or wife, of the term
‘trust,’ so that the words ‘trusts’
and ‘monopolies’ have usually gone
hand in hand through newspapers
and magazines; they have even
walked thus together through some
opinions of courts, without any
clear distinctions as to where in
the given case the ‘trust,’ supposed
to exist in violation of the first
section of the Sherman Anti-Trust
Law began, and the ‘monopoly’ sup-
posed to exist in violation of the
second section of the Sherman
Anti-Trust Law ended.” ‘“Accord-
ing to common usage in modern
times the phrase ‘to monopolize
commerce’ means, by the elimina-
tion of competition to secure to
some individual or group of indi-
viduals control of all or of a large-
ly preponderating part of the com-
merce in some article. The phrase
would not apply to a simple lessen-
ing of competition leaving in exist-
ence reasonably competitive condi-
tions, but it would apply to the act
of concentrating control of the
commerce in any article to such a
degree as to destroy reasonably
competitive conditions, though
competition be not wholly de-
stroyed. Victor Morawetz, Colum-
bia Law Review, December, 1910,
290.

+ Referring to Lord Coke’s defi-
nition of monopoly, Mr. Morawetz
says: “It is evident that in giving
this definition Lord Coke referred
only to a particular class of mo-
nopolies, namely, those created by
royal grant. However, although
in those early days the word ‘mo-
nopoly’ may have been used in
England to designate only an ex-
elusive right of privilege conferred
by law or by royal grant, and al-
though in those days the word
‘monopolize’ may not have been
used by lawmakers or by the
courts, many acts destructive of
competition, which at the present
day would be described as ‘monop-
olizing,’ were unlawful at common
law or were prohibited by statute.
In modern times the words ‘monop-
oly’ and ‘monopolize’ often have
been used in their ordinary or
popular sense in judicial decisions
and in statutes, as well as in gen-
eral literature.” Columbia Law Re-
view, December, 1910, 290. He cites
National Cotton Oil Co. v. Texas,
197 U.S. 115; 25 Sup. Ct. 379; 49
L. Ed. 689, affirming (Tex. Civ.
App.) 72 8S. W. 615. Again he says:
“It seems clear that, in the Anti-
Trust Act, Congress intended to
use the word ‘monopolize,’ not in
some disused or technical sense,
but in the sense in which it was
commonly understood at the time
of enactment of the statute. Ac-
cordingly in a number of cases the
Supreme Court has decided that
the Anti-Trust Act renders unlaw-
MONOPOLY.

371

‘‘The idea of monopoly,’’ said the Supreme Court of the
United States, ‘‘is not now confined to a grant of privilege.
It is understood to include a ‘condition produced by the

ful contracts or other combina-
tions, by the destruction of com-
petition, to seeure for the benefit
of certain individuals or groups
of individuals control of interstate
trade or commerce in any article
which is the subject matter of
trade or commerce, In construing
the federal and state statutes, we
exclude from consideration all mo-
nopolies which exist by legislative
grant; for we think the word ‘mo-
nopolize’ cannot be intended to be
used with reference to the acquisi-
tion of exclusive rights under goy-
ernment concession, but that the
law-maker has used the word to
mean ‘to aggregate’ or - ‘concen-
trate’ in the hands of few, practi-
cally, and, as a matter of fact,
und aceording to the known re-
sults of human action, to the ex-
clusion of others; to accomplish
this end by what, in popular lan-
guage, is meant by pooling. One
just and decisive test of the mean-
ing of the expression ‘to monopo-
lize’ is obtained by getting at the
evil which the law-maker has en-
deavored to abolish and restrict.
The statutes show that the evil
was the hindrance and oppression
in trade and commerce wrought by
its absorption in the hands of the
few, so that the prices would be
in danger of being arbitrarily and
exorbitanlly fixed, because all com-
petition would be swallowed up,
so that the man of small means
would find himself excluded from
the restrained or monopolized
trade or commerce as absolutely

as if kept out by law or force. If
this is the meaning of the de-
fining words, does not this corpo-
ration, thus glutted with the 35
industries of 12 states, disclose an
‘attempt to monopolize.’ So far,
therefore, as the complainant’s
business is a combination in re-
straint of trade, or is an ‘attempt
to monopolize, or combine, in the
form of a trust, or otherwise, any
part of trade or commerce,’ as
these words are properly defined,
the law stamps it as unlawful, and
the courts should not encourage
it.” American Biscuit & Mfg. Co.
v. Klotz, 44 Fed. 721. In stat-
utes prohibiting contracts or com-
binations creating monopolies, the
word “monopoly” is not used in a
strict legal sense, as including
power to legally exclude all oth-
ers from the field monopolized,
since such a monopoly cannot be
created by a contract or combina-
tion, but only by sovereign power;
but it is used in a different, but
equally well understood, sense as
meaning the obtaining of a sub-
stantially complete control for a
particular business or article of
trade. Burrows v. Interborough
Metropolitan Co., 156 Fed 389.
Monopoly not only includes an ex-
clusive grant by the state to a
few, of something which was be-
fore of common right, but em-
braces any combination or con-
tract, the tendency of which is to
prevent competition in its broad
and general sense and _ control
prices to the detriment of the pub-
372

acts of mere individuals.’

THE SHERMAN ANTI-TRUST ACT.

Its dominant thought now is,

‘the motive of exclusiveness or unity,’ in other words, the
suppression of competition by the unification of interest or

lic, regardless of the form as-
sumed. Jones v. Carter, 45 Tex.
Civ. App. 450; 101 8S. W. 514. A
monopoly is the exclusive power,
privilege of selling a
commodity or dealing in the same
article or trading
market; sole command in traffic in
anything, however obtained. State
v. Duluth Board of Trade, 107
Minn. 506; 121 N. W. 395. A
“monopoly” is the concentration
of business in the hands of a few.
National Fire Proof Co. v. Mason
Builders’ Ass’n, 169 Fed. 259; 94
C. C. A. 535. Under the Missouri
statute a monopoly is created
when, as a result of a contract or
combination, previously competing
business are so concentrated into
the hands of a single corporation,
or of a few individuals or corpo-
rations acting in concert, that
they thereby have the power to
practically control the prices of
commodities and suppress compe-
tition. State v. Standard Oil Co.
(Mo.), 116 S. W. 902. Trade and
commerce are monopolized when
persons acting together obtain
power to control prices of a com-
modity moving in interstate com-
merce. United States v. Patten,
137 Fed. 664; reversed 226 U.
S. 525; 33 Sup. Ct. 141; 57
L. Ed. In United States v.
Patterson, 55 Fed. 605, it is
held that the use of the terms
“trade and commerce” in the first
section does not enlarge the mean-
ing of the statute beyond that em-
ployed in the common law expres-

right, or

in the same

sion “contract in restraint of
trade,” as they are analogous to
the word ‘‘monopolize” used in the
second section, and that this word
is the basis and limitation of the
statute, and hence an indictment
must show a conspiracy in re-
straint by engrossing or monopo-
lizing or grasping the market. It
is not sufficient to allege a pur-
pose 1o drive certain competitors
out of the field by violence, an-
noyance, intimidation, or other-
wise. “The purpose of the second
section is the same as that of the
first to prevent the restriction of
competition, and the two sections
ought to receive similar interpre-
tations.” Whitwell v. Continen-
tal Tobacco, 125 Fed. 454; 60 C.
C. A. 290. “To constitute the of-
fense of monopolizing or attempt-
ing to monopolize under the act
of Congress, it is necessary to ac-
quire, or attempt to acquire, an ex-
clusive right in such commerce by
means which will prevent others
from engaging therein. Various
definitions of ‘monopoly’ have
been given: ‘The abuse of free
commerce by which one or more
individuals have procured the ad-
vantage of selling alone all of one
particular kind of merchandise, to
the detriment of the public; any
combination among merchants to
raise the price of any particular
merchandise, to the detriment of
the public.’ The popular meaning
of ‘monopoly’ at the present day
seems to be the sole power (or a
power largely in excess of that
MONOPOLY.

373

management, or it may be through agreement and concert

of action.’

§ 181.

Excluding Others—Exclusiveness.—The

words

‘‘monopoly’’ and ‘‘monopolize’’ carry with them the idea

of exclusion or restraint.

possessed by others) of dealing in
some particular commodity or at
some particular market or place,
or of carrying on some particular
business. Anything less than this
is not monopoly.” United States
vy. American Naval Stores Com-
pany, 172 Fed. 455. “A monopoly,
in the modern sense, is created
when as a result of efforts to that
end, previously competing busi-
ness are so contracted in the
hands of a single person or corpo-
ration, or a few persons or corpo-
rations acting together, that they
have power to practically control
the prices of commodities and
thus to practically suppress com-
petition.” United States v. Amer-
ican Tobacco Co., 164 Fed. 700,
721. “A monopoly exists where
all or so nearly all of an article
of trade or commerce within a
community or district is brought
within the hands of one man or a
set of men, as to practically bring
the handling or production of the
commodity or thing within such
single control, to the exclusion of
competition or free traffic there-
in.” Herriman v. Menzies, 115
Cal. 16, 20; 46 Pac. 730, 731; 35
L. R. A. 318, 319; 56 Am. St. 82;
Continental Securities Co. v. In-
terborough Rapid Transit Co., 165
Fed. 945, 958.

5 National Cotton Oil Co. v.
Texas, 197 U. S. 115; 25 Sup. Ct.
379; 49 L. Ed. 689; affirming
(Tex. Civ. App.) 72 8S. W. 615.

“Exclusive unity in business is

See Charleston Gas Co. v. Kanaw-
ha Gas Co., 58 W. Va. 22; 50 S.
E. 876; 112 Am. St. 936. Poca-
hontas Coke Co. v. Powhatan Coal
& Coke Co., 60 W. Va. 508; 56

S. E. 264; 10 L. R. A. (N.S.)
268; 116 Am. St. 901. In the
Standard Oil case appellant’s

counsel gave this definition uf mo-
nopoly: ‘Hence we submit that
monopolizing within the Act is the
appropriation of a trade which is
the natural effect and result of
such contracts, combinations or
conspiracies or other unlawful or
tortious acts, because thereby ‘the
subject in general is restrained
from that liberty of manufactur-
ing or trading which he had be-
fore. It is the presence of such
means or agencies of exclusion
that constitutes monopolizing;
and in their absence size, aggre-
gated capital, power, and volume
of business are not monopolizing
in a legal sense. It is not there-
fore a test of monopolizing what
properties and plants a concern
owns, or how extensive their
product is, or how great the vol-
ume of its business is in relation
to the whole of the business or the
business of any body else, or what
power is in the course of trade in-
herent in that volume of business.
The essential thing is are there
illegal means used to restrain and
exclude others.” Appellants’ brief
in Standard Oil case, 92.
874

THE SHERMAN ANTI-TRUST ACT.

unified and others are kept out of it, except those who

act with the combination, it is a combination.’”°

This ex-

clusiveness exists by virtue of a restraint of the liberty of

others.”

§ 182. Combination and Monopoly Different Under Stat-
ute.—Under the Anti-Trust Act the crime of combining to
restrain interstate commerce is different from a monopolizing
of that same commerce; and in a criminal prosecution there
may be one count for combination and another for monopoly.
A combination is proven when it is shown to exist with
intent to bring about restraint on commerce, the overt acts

6 Monopolies and Trusts by Rich-
ard A. Ely, 21; in re Greene, 52
Fed. 116.

7“A monopoly of trade em-
braces two essential elements: (1)
The acquisition of an exclusive
right to, or the exclusive control
of, that trade; and (2) the ex-
clusion of all others from that
right of control.” United States
vy. Trans-Missouri Freight Ass’n,
58 Fed. 58; 7 C. C. A. 15; 19
U. 8S. App. 36; 24 L. R. A. 73;
affirming 53 Fed. 440; reversed
166 U. S. 290; 17 Sup. Ct. 540;
41 L. Ed. 1007. “The word is
hard to define, and no attempt at
exhaustive definition need be
made. It will suffice to say that
the mere extent of acquisition of
business or property achieved by
fair or lawful means cannot be the
criterion of monopoly. In addi-
tion to acquisition and acquire-
ment, there must be an intent by
unlawful means to exclude others
from the same traffie or business,
or from acquiring by the same
means property and material
things.” United States v. Read-
ing, 183 Fed. 427, 457; modified

and affirmed 226 U. S. 324;
33 Sup. Ct. 90; 57 L. Ed.
—:; National Oil Co. v. Texas,
194 UL S. 115, 129; 25
Sup. Ct. 379; 49 L. Ed. 689; af-
firming (44 Civ. App.) 72 8. W.
615. “It would seem to these de-
fendants that there cannot be a
monopolizing of the trade in a
given commodity, except in one of
the four following ways, to-wit:
Ist, by preventing others from
getting their fair requirement of
the raw material for the manu-
facture of commodities; 2nd, by
preventing others from obtaining
their fair requirements of machin-
ery or other facilities needed to
produce the given commodity; 3rd,
by preventing others from the use
of transportation facilities for the
distribution of their manufactured
product; 4th, by preventing others
from using the machinery of dis-
tribution—in the tobacco business,
jobbers and retailers.” Brief of
defendants in Tobacco cases, 205.
See also United States Telephone
Co. v. Central Union Telephone
Co., 202 Fed. 66: affirming 171
Fed. 130.
MONOPOLY. 375
being merely cumulative evidence from which the intent,

purpose and continuance of the combination may be in-
ferred.®

§183. Second Section Broader than First.—The second
section is broader than the first; for it inhibits monopoly ac-
complished by some other means than the particular re-
straint named in the first section. Every contract or com-
bination or conspiracy to restrain interstate trade is inhibited
by the first section, without invoking the second section at
all. Consequently, if a monopoly be accomplished by any
means other than by contracts or combinations or conspir-
acies in restraint of trade be not prohibited by the second
section then that section performs no office whatever in the

Sherman Law.’

8 United States v. MacAndrews
& Forbes & Co., 149 Fed. 836, dis-
missed in the Supreme Court by
counsel, 212 U. S. 585; 29 Sup.
Ct. 681; 53 L. Ed. 585. The court
said in this case: “In this case
the crimes of monopoly and com-
bination are legally distinct. The
offense under the first count was
complete when the combination
was actually formed with intent
to bring about restraint of inter-
state commerce. The additional
overt acts were but cumulative
evidence from which the true in-
tent, purpose, and continuance of
the combination might be inferred.
But they were themselves the
proof of the monopoly, and the
monopoly consisted of their aggre-
gate effect. That the prosecution
in overwhelmingly proving the ex-
istence, and intent, and continu-
ance of the combination proved
the monopoly does not in my opin-
jon render the offenses identical,
merely because all the evidence of-

fered was in a sense applicable to
both counts.” See also United
States v. Greenhut, 50 Fed. 469;
in re Corning, 51 Fed. 205; in re
Terrell, 51 Fed. 213.

° In its brief the Government in
the Standard Oil case, on page
348, made this claim: “That every
contract or combination between
separate and competing concerns
having for its purpose or di-
rectly and necessarily affecting the
control of prices, or of production,
or the exclusion of competitors, in
addition to being void under the
first section of the act, is prohib-
ited by the second section, if it
tends to a monopoly of trade or
commerce among the several states
or with foreign nations. That ev-
ery contract, combination, or con-
spiracy, in whatever form, where-
by competing corporations or in-
dividuals are amalgamated into
one concern and brought under a
single control, either by purchase
of properties or of stock of cor-
376

THE SHERMAN ANTI-TRUST ACT.

§ 184, Attempt to Monopolize—First Section.—The sec-
ond section makes it an offense to ‘‘attempt to monopolize.’’
Upon such a charge it is not necessary to show that there
had been an actual monopolization; the offense is created

porations, if it results in giving to
such controlling agency the power
to fix prices, determine the amount
of production, and suppress com-
petition and thus effect a monop-
oly or control of interstate trade
and commerce, is also prohibited by
the second section of the act as
well as by the first. While not essen-
tial to the decision of this case, it
may be further stated, as was said
by Senator Hoar in the debate
over the Sherman Act, that the
word ‘monopoly’ in its technical
and legal signification means the
sole engrossing to a man’s self by
means which prevent other men
from engaging in fair competition
with him; and therefore that a
single corporation or individual
may, by such means, without com-
bining or conspiring with anyone
else, monopolize or attempt to mo-
nopolize trade and commerce
among the states, and thus fall
within the inhibition of the sec-
ond section of the act.” In the
brief, 203, of the defendants in
the Tobacco cases this language
was used: “This idea carried into
the construction of the second sec-
tion of the Sherman Anti-Trust
law renders it understandable and
a fitting supplement to the first
section. The first section forbids
conspiracies in restraint of trade
—conspiracies as defined by Mr.
Justice Holmes in the Northern
Securities case, which have for
their purpose the exclusion of
strangers to the conspiracy from
interstate trade. Conspiracy, by
the very force of the word, in-

volves the concurrent action of two
or more. The second section sup-
plements the first section, and pro-
vides in effect that the individual
or corporation may not singly or
in combination and conspiracy
with others, attempt to monopo-
lize interstate trade or commerce;
that is, may not attempt to ex-
clude or restrain others from that
liberty of interstate trading which
those had before. This construc-
tion which makes the exclusicn of
others from the trade the gist of
monopolizing or attempting to mo-
nopolize has the additional advan-
tage over any other construction
that it makes the whole of the
second section of the Act effective.”
Mr. Victor Morawetz, before the
Senate Interstate Committee, said:
“T think section 2, which prohibits
monopolizing, is practically cov-
ered by section 1, because I be-
lieve that the term ‘restraint of
trade,’ at the time of the passage
of that act, included ‘monopoliz-
ing.’ Section 2, however, goes per-
haps a little further in this re-
gard: It prohibits the act of mo-
nopolizing, whether by a combina-
tion or conspiracy or by a single
person or an individual. Further-
more, it prohibits attempts to mo-
nopolize. Whereas section 1 prob-
ably would not apply, unless the
contract or the combination or the
conspiracy actually effected the
monopoly.” Hearings before Sen-
ate Interstate Commerce Commit-
tee, January 10, 1912, on Senate
Resolution 98, page 1619.
MONOPOLY. 3T1

although the attempt fails to create a monopoly. It is to
be observed that where the statute forbids any one to
‘‘eombine or conspire with any other person or persons to
monopolize any part of trade or commerce among the states,
or with foreign nations,’’ there need not be created an actual
monopoly for the act to bear offense; but the combining or
conspiring to monopolize is not an ‘‘attempt to
monopolize.’’ The creation of a monopoly is not
necessary to the creation of an offense or violation of
is not necessary to the creation of an offense or violation of
the statute. The first section does not pretend to deal with
attempts to restrain trade. The contract or combination or
conspiracy must be ‘‘in restraint of trade or commerce ;”’
and if the attempt to restrain it does not amount to a con-
tract or combination or conspiracy which is in actual re-
straint of trade or commerce no offense is committed. A
violation of the first section may exist where no attempt
has been made to exclude third persons from competition,
but it may exist as a result of agreements or combinations

between the persons to them not to compete.’°

10 “Tt should be observed that the
second section of the act does not
in terms prohibit ‘monopolies’ or
declare monopolies to be unlawful.
It only declares it to be unlawful
to monopolize, or attempt, combine,
or conspire to monopolize. The
word ‘to monopolize’ implies ac-
tion taken to eliminate competi-
tion so as to create a monopoly.
If a person or corporation should
acquire a monopoly in a branch
of trade or commerce without tak-
ing any action to destroy or to
prevent competition, this would not
constitute monopolizing or at-
tempting to monopolize. Thus, if
a person or corporation should de-
velop an entirely new industry or
branch of trade, this would not
be monopolizing though there be
no competitors. So also if a per-

son or corporation should obtain
a monopoly of an existing branch
of trade or commerce by economy
of production or successful trad-
ing, and not by combining with
competitors, or buying them up
or, by practices indicating a pur-
pose through the destruction of
competitors to create a monopoly,
this would not be monopolizing
within the meaning of the act.”
Victor Morawetz, in Columbia Law
Review for December, 1910, 290.
Monopolizing and attempting to
monopolize are distinct offenses
and cannot be included in one
count of an indictment. United
States v. American Naval Stores
Co., 186 Fed. 592. Monarch To-
bacco Works v. American Tobacco
Co., 165 Fed. 774. Every attempt
to monopolize a part of interstate
378 THE SHERMAN ANTI-TRUST ACT.

§ 185. Reasonableness of a Monopoly—Second Section
Complement of First One.—Chief Justice White construes
section two to require an unreasonable monopolizing of
trade to constitute a violation of the statute. In doing this
he says:

‘Undoubtedly, the words ‘to monopolize’ and ‘monopo-
lize’ as used in the section reach every act bringing about
the prohibited results. The ambiguity, if any, is involved in
determining what is intended by monopolize. But this am-
biguity of the law of restraint of trade to which we have
referred and the indication which it gives of the practical
evolution by which monopoly and the acts which produce
the same result as monopoly, that is, an undue restraint of
the course of trade, all came to be spoken of as, and to be
indeed synonymous with, restraint of trade. In other words,
having by the first section forbidden all means of monopoliz-
ing trade, that is, unduly restraining it by means of every
contract, combination, ete., the second section seeks, if pos-
sible, to make the prohibitions of the act all the more com-
plete and perfect by embracing all attempts to reach the
end prohibited by the first section, that is, restraints of
trade, by any attempt to monopolize or monopolization
thereof, even although the acts by which such results are
attempted to be brought about or are brought about be not
embraced within the general enumeration of the first sec-
tion. And, of course, when the second section is thus har-
monized with and made as it was intended to be the com-
plement of the first, it becomes obvious that the criteria to
be resorted to in any given case for the purpose of ascer-
taining whether violations of the section have been com-
mitted, is the rule of reason guided by the established
law and by the plain duty to enforce the prohibitions of
the act and thus the public policy which its restrictions

commerce, the effect of which is to the Sherman law. Whitwell v.
restrict competition in commerce Continental Tobacco Oo., 125 Fed.
among the states is a violation of 454; 60 C. C. A. 290.
MONOPOLY. 379
were obviously enacted to subserve. And it is worthy of
observation, as we have previously remarked concerning the
common law, that although the statute by the comprehen-
siveness of the enumerations embodied in both the first and
second sections makes it certain that its purpose was to
prevent undue restraints of every kind or nature, neverthe-
less by the omission of any direct prohibition against mo-
nopoly in the concrete it indicates a consciousness. that the
freedom of the individual right to contract when not un-
duly or improperly exercised was the most efficient means
for the prevention of monopoly, since the operation of the
centrifugal and centripetal forces resulting from the right to
freely contract was the means by which monopoly would be
jnevitably prevented if no extraneous or sovereign power
imposed it and no right to make unlawful contracts having
i monopolistic tendency were permitted. In other words
that freedom to contract was the essence of freedom from

undue restraint on the right to coatract.’’*?

11 Standard Oil Co. v. United
States, 221 U. 8. 1; 31 Sup. Ct.
502; 55 L. Ed. 619; 34 L. R. A.
(N.S.) 834; affirming 173 Fed.
177. This construction was again
emphasized by him in United
States v. American Tobacco Co.,
221 U. 8. 106; 31 Sup. Ct. 632;
55 L. Ed. 663. See 164 Fed. 700.
Mr. Albert H. Walker, in u review
of the opinions on Standard Oil
and Tobacco cases, printed for the
Senate Judiciary Committee, takes
the view that according to the
“obiter dicta” of Chief Justice
White, as he calls it, the monopoly
must be unreasonable to meet with
the condemnation of the statute.
He says: “The Standard Oil cbiter
dicta of the Chief Justice does
not in any one place expressly
state that the word ‘unreasonable’
should be implied as a limitation

upon the phrase ‘restraint of
trade’ in section 1 of the Sherman
law, or as a limitation upon the
word ‘monopolize’ in section 2 of
that statute. But the idea of the
word ‘unreasonable’ as such a limi-
tation is conveyed in seven places
in the Standard Oil obiter dicta
by the word ‘undue’ or by the
word ‘unduly.’ And the fact that
the Chief Justice used the words
‘undue’ and ‘unreasonable’ as sy-
nonymous is shown in his dissent-
ing opinion in the Trans-Missouri
case (166 U. S. 343), for in that
ease he used the word ‘unreason-
able,’ or its adverbial form ‘un-
reasonably,’ eight times to convey
the same idea which he conveyed
in his Standard Oil obiter dicta in
seven places by the use of the
word ‘undue’ for the word ‘un-
duly.’ The foregoing review of the
380

Standard Oil obiter dicta of Chief
Justice White has shown that what
the Chief Justice undertook there-
in to accomplish was to insert the
idea conveyed by the word ‘unrea-
sonable’ or ‘undue’ before the word
‘restraint’ in section 1 of the Sher-
man law, and also before the word
‘monopolize’ in section 2 of that
statute; and that that undertaking
was entirely based upon his at-
tempt to show that the phrase ‘re-
straint of trade’ and the word ‘mo-
nopolize’ were well known at com-
mon law, and in the law of this
country in 1890 to be limited by
that idea; and, finally, that review
has shown that that attempt was
~ necessary failure, because it was
entirely unsupported by evidence.”
He then gives what he considers
to be the effect of the Tubacco
obiter dicta. “The Tobacco obiter
dicta of Chief Justice White con-
sists in construing his Standard
Oil obiter dicta. That construc-
tion is composed of a number of
statements which materially
change the meaning of the Stand-
ard Oil obiter’ dicta in the follow-
ing respects: First. Though the
Chief Justice, in the Standard Oil
obiter dicta, repeatedly states that
section 1 of the Sherman law is
limited to acts which ‘unduly’ re-
strain interstate or foreign com-
merce and fairly implies that ses-
tion 2 of that statute is limited
to acts which ‘unduly’ monopolize
such commerce, he states in the
Tobacco obiter dicta that in the
Standard Oil obiter dicta it was
not held that acts which the stat-
ute prohibited could be removed
from the control of its prohibitions
by finding that they were ‘reason-
able. Second. Though in the

THE SHERMAN ANTI-TRUST ACT.

Standard Oil obiter dicta he re-
peatedly uses the word ‘undue’ or
‘unduly’ to limit the statutory
phrase ‘restraint of trade’ and the
statutory word ‘monopolize,’ and
does not use the word ‘injurious’
or the word ‘injuriously’ for any
such purpose, in the Tobacco obiter
dicta he states that it was held
in the Standard Oil case that the
words ‘restraint of trade’ at com-
mon law and in the law of this
country at the time of the adop-
tion of the Anti-Trust Act did em-
brace acts or contracts or agree-
ments or combinations which ‘in-
juriously restrained trade,’ and
that the words ‘restraint of trade’
as used in the Sherman law did
have that significance. These two
differences between the Standard
Oil obiter dicta and the Tobacco
obiter dicta of Chief Justice White
are significant, because they
amount to a withdrawal in the To-
baeco obiter dicta of the words
‘undue’ and ‘unduly’ and ‘unrea-
sonable’ and ‘unreasonably’ a3 lim-
itations upon the phrase ‘restraint
of trade’ and upon the word ‘mo-
nopolize’ in the Sherman law, and
the adoption of the substantially
different words ‘injurious’ and ‘in-
juriously’ as proper words to ex-
press how the Chief Justice now
thinks that statutory language
ought to be limited. The Tobacco
obiter dicta ends with the state-
ment that ‘the rule of reason’
which was applied in the Standard
Oil case to the construction of the
Sherman law is, in the most un-
equivocal terms, re-expressed and
re-affirmed. But this statement is
plainly erroneous, for the limita-
tions placed upon the pivotal
words of the Sherman law in the
MONOPOLY.

381

A monopolization, however, in part of a single article
entering into interstate commerce is an offense.'?

Tobaceo obiter dicta are substan-
tially different from the limita-
tions placed upon the same statu-
tory words in the Standard Oil
obiter dicta. The statement in the
Tobacco obiter dicta that acts
which the statute prohibits cannot
be removed from its prohibitions
by finding that they were ‘reason-
able’ is not a reaffirmance of the
statement in the Standard Oil
obiter dicta that such acts are
outside of the statute if they are
not ‘undue.’ And the statement
in the Tobacco obiter dicta that
‘injurious’ restraint of trade is
prohibited by the statute is not a
reaflirmance of the doctrine of the
Standard Oil obiter dicta that no
restraint of trade is prohibited by
the statute unless it is ‘undue’ or
‘unreasonable.’ The difference be-
tween the word ‘unreasonable’ and
the word ‘injurious’ in this behalf
resides in the fact that whether a
particular transaction is ‘unrea-
sonable’ is a question of opinion,
whereas the question whether a
particular transaction is ‘injuri-
ous’ is a question of fact. The
word ‘undue’ is also like the word
‘unreasonable,’ in being represen-
tative of an opinion and not repre-
sentative of a fact which can be
proved or disproved by evidence.”
But Mr. Morawetz differed from
Mr. Walker. In a hearing before
the Senate Interstate Commerce
Committee, January 8, 1912, he
said: “Of course the question of
reasonableness or unreasonableness
cannot arise under the second sec-
tion of the Act. There cannot be

such a thing as reasonable mcnop-
olizing or reasonable attempt to
monopolize. If the diminution of
competition does not amount to
monopolizing or an attempt to mo-
nopolize it is not within the pro-
hibition. If it does amount to mo-
nopolizing or an attempt to mo-
nopolize it is within the prohibi-
tion, whether it be reasonable or
not.” Hearings before Interstate
‘Commerce Committee, 62nd Con-
gress on Senate Resolution 98,
part xix, 1578. The culpability of
a party to a combination of manu-
facturers and jobbers which accom-
plishes a restraint of trade is not
removed because it was restricted
in less degree than the other job-
bers, enjoying a certain freedom
of competition to meet local con-
ditions. Standard Sanitary Mfg.
Co. v. United States, 226 U. S. 20;
33 Sup. Ct. 9; 57 L. Ed., af-
firming 191 Fed. 172.

12 United States v. Patterson,
201 Fed. 697. “It can at least be
said that all the decided cases
unite in holding a principle which
may be conversely stated thus:
that whenever a combination is
formed, designed, or the chief re-
sult of which is, to foster the
trade of the parties to it, which
combination does not possess or ex-
ercise the power directly, necessar-
ily and substantially to restrain
the interstate commerce in a com-
modity, but leaves open the oppor-
tunity for free competition therein,
it is lawful; and that a monopoly
which is brought about through
such a combination and which
382 THE SHERMAN ANTI-TRUST ACT.

§186. A Status Prohibited—Overt Act—Intent—Com-
bination Resulting in Unintentional Monopoly.—It has been
claimed that the Sherman law is aimed at conduct and not
at a status; and that it cannot be violated by a mere
status without an overt act in pursuance of that act. This
involves the theory that a violation of that law is not neces-
sarily continuous, that only so long as the forbidden conduct
continues does the violation continue; and the establishment
of a status resulting from conduct expires with the stoppage
of the conduct. On this line of reasoning the status is not
prohibited, but the conduct which establishes the status.%
But this view has been denied as a correct interpretation of
that statute. Those who deny that interpretation of the
statute say that a combination or conspiracy is a continuing
act; and this illustration has been used:

‘‘There is such a thing as a contract to enter into a co-
partnership; there is also such a thing as a contract of co-
partnership. The latter is a continuing contract. Now, to
make a contract in restraint of commerce or to monopolize
commerce is prohibited by the Sherman Act, and a com-
bination or conspiracy is also prohibited. A partnership to
restrain trade or to monopolize trade would be prohibited.
A trust in restraint of trade would be prohibited. An un-
incorporated joint-stock company or a technical corporation

grows and develops by business
methods in themselves lawful, is
not prohibited by the Act.” Her-
bert Noble, in 44 American Law
Review 11 (January-February,
1910).

13 Mr. Albert H. Walker, before
the Senate Interstate Commerce
Committee, took this view of the
question, and gave this explana-
tion: “In the Northern Securities
case that subject was much de-
bated, between the judges at least,
though I think not much between
counsel, although to some extent

between the counsel. Mr. Watson,
afterwards an attorney for certain
combinations, was an attorney for
the government in that case, and
he took the ground in that case
that the acquirement of power to
violate the Sherman Act consti-
tuted a violation of that Act, and
that the establishment of that
status was itself a violation.”
Hearings before Senate Interstate
Commerce Committee of 62nd
Congress on Senate Resolution 98,
page 156, January 8, 1912.
MONOPOLY. 383
also, in my opinion, would be a combination within the pro-
hibition of the act.’* Judge Lurton considered the question
at some length in a case of combining corporations or one
corporation purchasing stock in another. He said:

‘‘We quite agree that purpose or motive is of no moment,
provided the contract or agreement directly provided for
the suppression of competition, or when such a result, as a
But when the
agreement or combination in question does not in its terms
provide for the suppression of competition or the creation
of a monopoly, nor bring about such a result as a necessary
legal consequence, but requires further acts or conduct to
bring about such an unlawful result, some evidence of an
unlawful intent becomes essential, that the court may see
that, if not stopped, a prohibited restraint is likely to be
created.

“‘The power of the stock control which the Calumet Com-
pany has acquired may be exercised only in a legitimate and
lawful way in the interest of an economical management of
both companies. In that case, it has done nothing di-
rectly affecting commerce among the states.

‘On the other hand, that power may be a mere preparation
for doing of acts which will directly and necessarily inter-
fere with the freedom of that kind of commerce which it is
the purpose of Congress to protect. When this unlawful
use of the power shall result in an unlawful restraint, or
further steps shall point to results, directly affecting such

matter of law, must necessarily occur.1®

14Mr. Victor Morawetz, page is prohibited by the express terms

1616, in Hearings before Senate
Committee. To the question:
“Would not a conspiracy or a
combination which was the result
of a contract or agreement and
continuing in force year after
year constitute a status,” he
said: “If you choose to call it so,
yes. It would be a continuing
combination or conspiracy, which

of the Act.”

15 United States v. Trans-Mis-
souri Freight Ass’n, 166 U. 8. 91;
17 Sup. Ct. 540; 41 L. Ed. 1007;
reversing 58 Fed. 58; 7 C. C. A.
15; 19 U. S. App. 36; 24 L. R.
A. 73; 3 Interst. Com. Rep. 443;
Chesapeake & Ohio Fuel Co. v.
United States, 115 Fed. 610, 623;
53°C. C. 256.
384 THE SHERMAN ANTI-TRUST ACT.

commerce, there may be interferences by the courts.’’*
This phase of the question has been discussed by Mr. Justice
Holmes:

‘‘The statute gives this proceeding against combinations
in restraint of commerce among the states, and against at-
tempts to monopolize the same. Intent is almost essential to
such a combination, and is essential to such an attempt.
Where acts are not sufficient in themselves to produce a re-
sult which the law seeks to prevent—for instance, the
monopoly—but require further acts in addition to the mere
forces of nature to bring that result to pass, an intent to
bring it to pass is necessary in order to produce a danger-
ous probability that it will happen. But when the intent
and the consequent dangerous probability exist, this statute,
like many others and like the common law in some cases,
directs itself against the dangerous probability as well as
against the complete result.’’!”

16 Bigelow v. Calumet & Hecla
Mining Co., 167 Fed. 721; 94 C.
C. A. 13; affirming 167 Fed. 704.

17 Swift & Co. v. United States,
196 U. 8. 375; 25 Sup. Ct. 276;
49 L. Ed. 518; modified and af-
firmed 122 Fed. 529. “But if the
presumption be, in respect to a
question of restraint or monopoly,
under the act of Congress, that
the power to determine the man-
agement of a competing corpora-
tion through ownership of a ma-
jority of shares constitute a sup-
pression of competition, we used
the inquiry as to whether such
presumption is one of fact or law.
If one of fact, as it evidently is,
it is rebutable.” Bigelow v. Cal-
umet & Hecla Mining Co., 167
Fed. 721; 94 C. C. A. 13; affirm-
ing 167 Fed. 704. Judge Hough
has reasoned along this line as fol-
lows in United States v. MacAn-

drews, 149 Fed. 823: “It is true
that the gist of the alleged offense
in the combination or the attempt
at monopoly, but it is not true
that the offenses are complete
when the combination is mentally
formed or the mental intention
to monopolize arises. The statu-
tory offense, and the one charged
herein, does not depend upon ‘a
single agreement, but (on) a
course of conduct intended to be
continued ;’ yet, nevertheless, the
thing done and intended to be
done is perfectly definite.’ Swift
v. United States, 196 U. S. 400
(25 Sup. Ct. 276; 49 L. Ed. 518;
modifying 122 Fed. 525). That
case arose on the civil side of the
court, but it is to be remembered
that the same facts and acts
which expose violators of this
statute to civil suits also render
them subject to indictment. In
MONOPOLY.

§ 187.

385

‘‘Any Part of Trade or Commerce’’—Complete

Monopolization Not Necessary to Create Offense.—The stat-
ute forbids the monopolization or attempt ‘‘to monopolize
any part of the trade or commerce among the several states,

or with foreign nations.’’

The commerce referred to by the

words ‘‘any part’’ has both a geographical and a dis-

tributive significance.

It includes any portion of the United

States and any one of the classes of things forming a part

of interstate or foreign commerce.?®

this case, while the time is indefi-
nite the thing done is definite,
and that is all that the statute
requires. To show that an exact
time may be, and therefore must
be, assigned for the commission
of the offense of combination, the
defendants argue upon the mean-
ing of the word ‘engage’ as used
in the statute, and strenuously
argue that, since the offense pro-
hibited is that of ‘engaging in’
a combination, it must be com-
plete as soon as the accused em-
ploys his attention or effort in
or about the same, that such em-
ployment of attention or effort
is capable of precise assignment
in point of time, and they chall-
enge the prosecution to name
the day. The statute is not
directed against such an abstrac-
tion as this. It does not require
on the part of the prosecution
clairvoyance to discover or locate
‘the offense. Its prohibition is not
directed against a state of mind,
but against a state of facts. The
facts do not simultaneously oc-
cur; the events are not contem-
poraneous. It may, and naturally
would, require time for the work-
ing parts of the combination to
become co-operative, or for the
monopoly to become more than a

If the commerce mo-

hope; and what is forbidden and
renders the actors obnoxious to
the criminal law is not an un-
discoverable thought or hope, but
a perfectly obvious result or con-

dition. The condition of state of »

facts against which the statute is
directed is a continuing condition,
and therefore the offense of creat-
ing and maintaining that condi-
tion is necessarily a continuing
offense, and does not, from its
very nature, require greater par-
ticularity in assignment than is
used in this indictment.” Quoted
with approval in United States v.
Swift, 186 Fed. 1002. A combi-
nation of acts may produce a
monopoly, and yet each act con-
sidered singly be perfectly lawful.
United Telephone Co. v. Central
Union Telephone Co., 202 Fed. 66;
(C. C. A.); affirming 171 Fed.
130; United States v. Reading
Co., 226 U. S. 324; 33 Sup. Ct.
509; 57 L. Ed.; Aikens v. Wis-
consin, 195 U. 8. 194, 206; 25
Sup. Ct. 3; 49 L. Ed. 154; affirm-
ing 113 Wis. 419; 89 N. W. 1135;
Swift & Co. v. United States, 196
U. S. 375, 396; 25 Sup. Ct. 276;
49 L. Ed. 518; modifying 122 Fed.
529.

18 Standard Oil Co. v. United
States, 221 U. S. 1; 31 Sup. Ct.
386 THE SHERMAN ANTI-TRUST ACT.
nopolized is confined wholly to a state, then the statute is
not violated; because that commerce is not interstate com-
merce; but if the commerce monopolized or attempted to be
monopolized extends into several states and there is a mo-
nopolization of that part of it extending into one of those
states then the statute is violated to that extent. In the
latter instance if only a part of the commerce extending
into that state is monopolized the statute nevertheless is
violated, and it is not necessary to create the offense that
all the commerce of which that is part should be monopo-
lized. The words ‘‘any part’’ as used in the statute clearly
mean any part of any branch of commerce in any part of
the United States. But this clause does not make every act
tending as is sometimes said, to create a monopoly unlaw-
ful; and it cannot be said that every contract or combina-
iton in any degree diminishing competition in interstate or
foreign commerce is unlawful.

“‘The law reaches combinations which may fall short of
complete control of a trade or business, and does not wait
the consolidation of many small combinations into the huge
‘trust’ which shall control the production and sale of a
commodity.’’!?

In the last cited case it is said:
“Again all the authorities agree
that, in order to vitiate a con-
tract or combination, it is not

502; 55 L. Ed. 619; 34 L. R. A.
(N.S.) 834; affirming 173 Fed.
177; United States v. Patterson,
201 Fed. 697.

19 Chesapeake & Ohio Fuel Co.
v. United States, 115 Fed. 610,
624; 53 C. C. A. 256; United
States v. E. C. Knight Co., 156
U. S. 1; 15 Sup. Ct. 249; 39 L.
Ed. 325; affirming 60 Fed. 258;
9 C. C. A. 297; 17 U. S. App.
466; 24 L. R. A. 428; which
affirmed 60 Fed. 306; cited with
approval in Addyston Pipe & Steel
Co., 175 U. 8. 237; 20 Sup. Ct.
96; 44 L. Ed. 149; modifying 85
Fed. 271; 29 C. C. A. 141; 54
U.S. App. 723; 46 L. R. A. 122.

essential that its result be a com-
plete monopoly. It is sufficient if
it really tends to that end, and
to deprive the public of the advan-
tages which flow from a free com-
petition.” Quoted with approval
in the Addyston case, supra. “It
is not material to ascertain just
what proportion the resulting re-
straints of interstate commerce
bears to other effects or results
of the combination. Nor is the
court called upon to weign the
effects, or to determine that if
MONOPOLY.

387

§ 188. Size Alone Does Not Constitute Monopoly.—Size
alone does not constitute monopoly. Nor does the attain-
ment of a dominant position gained as the result of honest
enterprise and normal methods of business development.

‘‘But unfair methods of trade, by destroying and ex-
cluding competitors by means of intercorporate stockhold-
ings, or by means of agreements between actual or potential
competitors, whereby the control of commerce among the
states or with foreign countries in any particular line of
industry is secured or threatened, expose those who are con-
cerned in such efforts to the penalties prescribed in the
second section of the act, because they are engaged in mo-
nopolizing or attempting to monopolize such commerce.’’?°

the effect in restraining interstate
trade is not so considerable as
other effects, the combination is
not forbidden.” Ellis v. Inman,
Poulsen & Co., 131 Ved. 182, 185;
65 C. C. A. 488. “The amount of
the trade in the commodity is not
very material.” Montague & Co.
vy. Lowry, 193 U. 8. 38; 24 Sup.
Ct. 307; 48 L. Ed. 608; affirming
115 Fed. 27; 52 C. C. A. 621;
which affirmed 106 Fed. 38; and
98 Fed. 817. “It is not necessary
under either the federal or state
statute that a complete monopoly
be effected.” Bigelow v. Calumet
& Hecla Mining Co., 155 Fed. 869
875. A ninety-nine year telephone
contract was held to be such a
monopoly as to be void. United
States Telephone Co. vy. Central
Union Telephone Co., 202 Fed.
66; affirming 171 Fed. 130.
The culpability of a party
to a  combniation of manu-
facturers and jobbers which ac-
complishes a restraint of trade is
not removed because it was re-
stricted in a less degree than other

jobbers, enjoying a certain free-
dom of combination to meet local
conditions. Standard Sanitary
Mfg. Co. v. United States, 226
U.S. 20; 33 Sup. Ct. 9; 57 L. Ed.,
affirming 191 Fed. 172.

20 George W. Wickersham, At-
torney General, 10 Michigan Law
Review 1, 24. “A combination
founded or maintained on the basis
of monopoly control, that is,
power to deal arbitrarily with the
situation, rests on a_ structure
economically rotten and insecure
in fact. If given a fair chance,
competition will destroy it. There-
fore, it is true to say that such
a combination owes its very life
to interfering with the rights of
outsiders, which means, to the use
of unfair methods. Monopoly con-
trol cannot exist except by an in-
terference with the right of others
to trade. A combination which
does not interfere with outsiders,
that is, which does not use im-
proper methods, does not have
monopoly control, no matter what
its size or the extent of its busi-
388 THE SHERMAN ANTI-TRUST ACT.

A firm, corporation or an individual may by legitimate
growth and expansion acquire such a preponderance of a
particular trade as to be a dominating factor in that trade,
but it cannot be said to be a monopoly in a legal sense.
By the extent of its transactions it may ‘‘control the mar-
ket’’ or the prices in the market to be determined by the
prices at which it holds or sells its products, or the prices
which it offers or buys products it needs. And yet if it
does nothing more there is no violation of the statute.
Such acts are only competitive ones in the economic transac-
tions of the world of trade. The power to fix prices is a
power which inheres in every producer to the extent of his
trade, limited only by economic considerations. Unification
of interests or management is not necessarily illegal; for
that may result from entirely legitimate transactions.
There must be some element or condition or conduct asso-
ciated with these things which imparts to them the quality

ness. It is true that a combination viting competition, and if given a

formed for a proper purpose,
which by proper methods has ac-
quired practically all of a given
trade, has « potentiality of evil.
Its power is great, and the temp-
tation to use its power arbitrar-
ily for its own benefit is corres-
pondingly great. Assuming that
a sufficient degree of publicity of
its operations and affairs is re-
quired, however, it will theoreti-
cally at least, be unable to mis-
use its power if it continues to
rely only on proper methods. As
long as its methods are fair, as
long as it does not interfere with
the rights of outsiders, outsiders
in the form either of actual or
potential competitors will keep it
in order. Even in the extreme
case where there is no actually
existing competition the combina-
tion cannot raise prices or act in
an arbitrary manner without in-

fair chance will reduce prices to
the proper level. If competition
is not given a fair chance, that
is, if it is fought by unfair
methods, the combination becomes
an actual economic evil and, un-
der the interpretation adopted, be-
comes subject to injunction under
the Act. Conversely, a corporate
combination founded and for a
time maintained on the basis of
monopoly control, that is, on the
use of improper methods, if it
relinquishes such methods ceases
to be an economic evil, because
it then becomes fairly subject to
competition, and logically should
not be subject to dissolution under
the Act. The whole question,
therefore, comes down to the ques-
tion of interference with outsiders,
that is, to one of methods.” Rob-
ert L. Raymond in 25 Harvard
Law Review p. 56.
MONOPOLY. 389

of monopolizing in a legal sense, the securing or acquiring
the exclusive right in the particular trade or commerce
‘‘by means which prevent or restrain others from engaging
therein.’ In the Reading Company case Judge Gray said:
‘“‘The mere extent of acquisition of business or property
achieved by fair and lawful means cannot be the criterion
of monopoly. In addition to acquisition and acquirement,
there must be an intent by unlawful means to exclude others
from the same traffic or business, or from acquiring by the
same means property and material things.’’??

‘‘We do not find in the Standard Oil and Tobacco cases
any holding that a direct restraint of trade must affect an
unreasonably great amount of commerce in order to be
within the prohibition. As we read these opinions the mat-
ter under consideration, from the standpoint of reason, was
not the amount of merchandise or traffic affected by the re-
striction, but the character and extent of the restriction
itself; and it was thought that if such restriction reason-
ably pertained to lawful results, it was not, of itself, neces-
sarily forbidden. These opinions contain no justification for
the idea that a direct and absolute restraint, bearing no
reasonable relation to lawful means of accomplishing lawful
ends, can be permitted only because the volume of traffic
affected is not very great.

“It is true that the theory of injury to the public lies at
the bottom of the statute, and that it is directed against
things which tend ‘to deprive the public of the advantages
which flow from free competition,’ ** but a single, private in-
jury may well tend to this public result.

‘We can not doubt that there may be a conspiracy under
the Act with reference to a single shipment only, and that

21 In re Greene 52 Fed. 104,116. States v. Standard Oil Co., 173
22 United States v. Reading Co., Fed. 177.
183 Fed. 427, 457; affirmed 226 23 Northern Securities case, 193
U. S. 324;.33 Sup. Ct. 90; 57 L. U. 8. 197, 332; 24 Sup. Ct. 436,
Ed. (A monopoly of 65 per 454; 48 L. Ed. 679; affirming 120
cent of the coal business). United Fed. 721.
390

THE SHERMAN ANTI-TRUST ACT.

in so far as the rule of insignificance may exist, it does not

apply to circumstances like these.

This shipment was the

entire crop of these three farmers for the year; it was, to
them, of large relative value; it can not be overlooked as

unimportant; and its shipment to Ohio did constitute

‘jn-

terstate trade and commerce.’®*

24 Steers v. United States, 192
Fed. 1; 112 C. C. A, 423. “The
magnitude of the party’s busi-
ness, production or manufacture,
with the incidental and indirect
powers thereby acquired, and with
the purpose of regulating prices
and controlling interstate traffic
in the articles or commodities
forming the subject of such busi-
ness, production, or manufacture,
is not the monopoly, or attempt
to monopolize, which the statute
condemns.” In re Greene, 52 Fed.
104, 115. Judge Sheppard in part
charged a jury as follows: “The
results in business or trading
combinations may even tempo-
rarily, or perhaps permanently,
reduce the article traded in or
manufactured, by reducing the ex-
pense inseparable from the run-
ning of many different companies
for the same purpose. Trade or
commerce under those circum-
stances may nevertheless be badly
and unfortunately restrained by
driving out of business the smal]
dealers and worthy men whose
lives have becn spent therein, and
who might be unable to readjust
themselves to their altered sur-
roundings. Mere reductions in the
price of «a commodity dealt in
might he dearly paid for by the
ruin of such a class and the ab-
sorption of control over one com-
modity by an all-powerful com-

bination of capital, whose purpose
in combining is to control the
product or manufacture of any
article on the market, and by such
control dictate the price at which
the article shall be sold; the
effect being to drive out of busi-
ness all the small dealers in the
commodity and to render the pub-
lic subject to the decision of the
combination as to what price shal]
be paid for the article.” United
States v. American Naval Stores
Company, 172 Fed. 455, 458. “It
is unquestionably true that wealth
gives power, but it is respectfully
submitted that the possession of
such power as wealth always gives
cannot be used to exclude the
wealthy individual or corporation
from a given line of business. If
so, a moderately wealthy man
could engage in a business the
aggregate volume of which was
small, and the very wealthy could
not engage in any business at all.
If the defendants refrained from
competing on a particular crop of
tobacco of which they are nor-
mally large purchasers the price
would fall, but the same thing
is true to a less extent of the
same action on the part of the
small purchaser of a given type.
If the defendants see fit to advance
the price of their manufactured
product consumers will for a
while pay such advanced price un-
MONOPOLY.

391

§ 189. Size—Great Aggregation of Power.—In the early
history of this country there were few great enterprises,—
none as compared with those of to-day. The monopolistic

til they are driven to a competing
brand. ‘The existence of this
power, though, is incident in a
greater or less degree to all busi-
ness, and it is a power which if
exercised contrary to the ordinary
laws of supply and demand will
bring upon him who exercises it
the greatest punishment.” Brief
of defendants in Tobacco Case, p.
212: Where the indictment
charged that the defendants had
purchased seventy distilleries and
manufactured seventy-five per cent.
of the distillery products of the
United States, and that thereby the
company was able to control and
fix the quality and price of such
products, and to prevent free
competition therein, and that they
attempted to monopolize the trade
by means of rebates to consumers,
Judge Ricks said: “If these acts
are illegal and in restraint of
trade, and they constitute a mo-
nopoly under this Act, it may well
be denominated an Act to restrain
legitimate enterprise, and limit
and qualify the ownership in prop-
erty.” “Congress,” he continued
“did not intend to limit the
amount of capital a citizen should
invest in any line of business, or
restrain his energy or enterprise
in any line of business, or restrain
his energy or enterprise in acquir-
ing for himself all the trade pos-
sible in such business, provided in
so doing he did not by illegal con-
tracts or devices restrain others
from pursuing the same business,
or deprive the public from enjoy-

ing the advantages of the free use
of capital, skill, and experience of
competitors.” United States v.
Greenhut, 51 Fed. 205. Judge La-
combe in re Terrell, 51 Fed. 213,
concurred in these views; and so
did Judge Jackson in re Greene,
52 Fed. 104, saying: “It is very
certain that Congress could not,
and did not, by this enactment,
attempt to prescribe limits to the
acquisition either by private citi-
zens or state corporations, of
property which might become the
subject of interstate commerce, or
declare that when the accumula-
tion or control of property by
legitimate means and lawful
methods reached such magnitude
or proportions as enabled the
owners to control the traffic there-
in, or any part thereof, among the
states, or criminal offense was
committed by such owners.” “An
agreement between a number of
dealers and manufacturers to
raise prices, unless they practi-
cally controlled the entire com-
modity, cannot operate «a re-
straint upon trade, nor does it
tend to injuriously affect the pub-
lic. Unless the agreement involves
an absorption of the entire traffic
in lumber, and is entered into for
the purpose of obtaining the en-
tire control of it, it is not objec-
tionable to the statute, in my
opinion. Competition is not stifled
by such an agreement.” Judge
Nelson in United States v. Nelson,
52 Fed. 567. “When contracts go
to the extent only of preventing
392 THE SHERMAN ANTI-TRUST ACT.

tendency of great aggregations of wealth controlled by a
single dominating mind, or by dominating minds acting in
concert, was unknown. But in modern times, especially
within the last quarter of a century, many individuals have
been able to accumulate great fortunes and have entered
into the business affairs of the day. Corporations have been
formed with millions of stock and have engaged in business.
They buy products in large quantities, and thereby are able
to buy cheaper than smaller concerns; and consequently can
sell cheaper, and thereby gain an advantage in the markets
over their competitors, to the latter’s disadvantage and a
lessening of their profits, and even to their loss. Can we
say that the persons thus putting great amounts of capital
into a business or great corporations engaging in business
and entering into competition in the business field with
smaller concerns, to the latter’s disadvantage or loss,
create monopolies? Suppose a man with one hundred
millions of dollars should engage in the retail grocery busi-
ness in a city of a million inhabitants. That would give
him a capital of one hundred dollars per capita. By buying
in great quantities he could get staples, and very often per-
ishable goods, at lower prices than other retail dealers; and
would be able to undersell them. He probably would be
satisfied with, or at least would readily maintain himself on,
smaller profits than his competitors would be satisfied with
or could maintain themselves upon. The result would be
that in time he would do practically, perhaps all, the grocery
business in that city. Would he have monopolized the gro-
cery business in that city within the meaning of a statute for-
bidding the monopolization of trade? Suppose a person with

contract,

unhealthy competition, and yet
at the same time furnish the pub-
lie with adequate facilities at fixed
and reasonable prices, and are
made only for the purpose of
averting personal ruin, the con-
tract is lawful.” Judge Risner in
United States v. Trans-Missouri
Freight Ass’n, 53 Fed. 440. “A

combination, or con-
spiracy in restraint of trade may
be not only not illegal, but praise-
worthy; as where parties attempt
to engross the market by furnish-
ing the best goods or the cheap-
est.”” United States v. Patterson,
55 ved. 605.
MONOPOLY. 393

that amount of capital should engage in a business running
through three states, and by reason of the great amount
of his capital he was able to absorb, because of like condi-
tions, substantially all such business in those three states,
would he have violated the Federal Anti-Trust Act? If he
did nothing more than what we have indicated, we do not
think he would legally be a monopolist of the grocery busi-
ness in such city, nor legally a monopolist of such interstate
business. The Standard Oil Company or the Tobacco Trust,
if it had done nothing more than merely absorb the oil or
tobacco business by the great. amount of capital it put into
its respective businesses and also by superior and expert
business management, would neither of them probably have
been held to have violated the law. Such conduct is only
that of rivalists in business; it is only competition in trade,
the very thing the law and also the Anti-Trust Act aims to

maintain and encourage. To denounce them because
of that fact and hold their conduct illegal would
have been to suppress competition. There must be
something more in the conduct of such an _ indi-

vidual or such corporations to make his or their acts il-
legal. ‘‘Magnitude of business does not, alone, constitute
a monopoly, nor effort at magnitude an attempt to mo-
nopolize. To offend the act the monopoly must have been
secured by methods contrary to the public policy as ex-
pressed in the statutes or in the common law. The wrong-
ful element in a monopoly under the act is not neces-
sarily the violation of some statute, but may consist of other
acts or conduct which the law condemns and the benefit of
which, if sought in a civil court of justice, could be ob-
tained.’’25

25 United States v. Standard Oil
Co., 173 Fed. 177, 195; affirmed
221 U. S. 1; 31 Sup. Ct. 502;
55 L. Ed. 619; 34 L. R. A. (N.S.).
Mr. F. J. Stimson, before the In-
diana State Bar Association, July
7, 1910, discussed this feature of
monopoly. He said: “The next

thing therefore to consider is what
other tests of the unlawful com-
bination, either of labor or trade
may be imagined; and whether
such other tests would on the
whole work better than the test
of intention. So far as I am able
to find but two others have been
394

THE SHERMAN ANTI-TRUST ACT.

§ 190. Size as a Factor in the Evidence of Monopoly.—
The size or magnitude of the business transactions, the ex-
tent of the business operations, are always to be considered
in determining whether or not it is harmful to the public
and therefore a monopoly. The temptation of those who
control great aggregations of capital and the consequent
power that goes with it, to monopolize the trade in which

suggested: One is the familiar
one of the effect or the result,
that is to say, if the result be
unlawful or against public inter-
est, it may render unlawful the
combination bringing it about.
Now this precise question was
recently asked by one of the Jus-
tices of the Supreme Court of
the United States to one of the
counsel arguing for the govern-
ment the case against the Stan-
dard Oil Company. Mr. Justice
White, if I remember correctly,
asked Mr. Kellogg whether, if the
Standard Oil Company had in fact
acquired every oi] refinery in the
state of Pennsylvania, that fact
would have made it an unlawful
combination there. Mr. Kellogg
for the moment did not give a
definite answer, but the Attorney
General in his close took up the
question, taking the ground for
which [I contend that it was one
of intention and not of result.
The old New York anti-trust stat-
ute was based upon the latter
notion, and consequently was
never effectual; it provided in
substance (for, being a criminal
statute, it had to be construed
strictly) that when any combi-
nation brought about a monopoly,
that is to say, an actual or com-
plete monopoly of a trade in the
state of New York, it should be

an unlawful trust under the New
York statute. As it was obvious
that no trade, in fact, ever did
succeed, not even the Standard
Oil, nor the sugar nor any other
trust, in actually getting a hun-
dred per cent. monopoly, that test
proved failure, and no one was
ever convicted. I believe that the
question of complete monopoly or
the ultimate effect has nothing
whatever to do with it except in
so far as it may be evidence of
the probable intention of the con-
spirators at the inception of the
combination. It is to me perfectly
clear that I may obtain, with one
or more associates, an actual
complete, impregnable one hun-
dred per cent. monopoly, and yet
be perfectly within the law; on
the other hand I may combine
with two or three or more with
the intention of restraining trade,
of getting a monopoly, of destroy-
ing competitors, and ours will be
a eriminal combination though
we fail in our purpose as rapidly
and completely as did some of
the earlier trusts, for instance
the cordage trust, which only
lastel «a year or two before it
went down in utter smash. If I
happen to own, let us say, the
only cordage works at Plymouth,
in the state of Massachusetts, ex-
cept a small concern, let us say,
MONOPOLY.

A95

they are engaged is a temptation that few will resist, it
is a situation dangerous usually to the interest of the public

when in control.

“There is a potency in numbers when

combined, which the law cannot overlook, where injury is

the consequence.’’?®

at Newburyport, in the same state,
I have a perfect right to buy out
my competitor, there being no un-
fair act committed. I am _ in-
clined to think even that I and
my competitor may form a con-
solidated cordage company and,
failing evidence to show that
we intend then or ever to get
« monopoly by fair means or foul,
we are within our right; that
is to say if our motive is merely
that of making a bigger concern
or securing a profitable bargain.
That motive being perfectly law-
ful will make our combination
lawful. In other words it grows
out of the natural relation that

I have to my neighbor, whose
property I purchased.” Indiana
Bar Ass’n Report for 1910,

141. It has been repeatedly said
that «w department store is in the
nature of a monopoly; and yet
no one thinks of charging it with
being an illegal combination of
interest. In a small town or city
it may seriously affect the trade
of its competitors in its many de-
partments; and yet it be an en-
tirely legal concern.

26 Morris Run Coal Co, v. Bar-
clay Coal Co., 68 Pa. St. 173. In
this case the court said: “When
competition is left free, individual
error or folly will generally find
a correction in the conduct of
others. But here is « combination
of all the companies operating in
the Blossberg and Barclay mining

regions, and controlling their pro-
ductions. They have combined to-
gether to govern the supply and
the price of coal in all the markets
from the Hudson to the Mississip-
pi rivers, and from Pennsylvania
to the Lakes. This combination
has a power in its confederated
form which no individual action
can confer. The public interest
must succumb to it, for it has
left no competition free to cerrect
its baleful influence. When the
supply of coal is suspended the
demand for it becomes impor-
tunate, and prices must rise. Or
if the supply goes forward, the
prices fixed by the confederates
must accompany it. The domestic
hearth, the furnaces of the iron
master and the fires of the manu-
facturer all feel the restraint,
while many dependent hands are
paralyzed and hungry mouths are
stinted. The influence of a lack
of supply or a rise in the price
of an article of such prime neces-
sity cannot be measured. It per-
meates the entire mass of the
community, and leaves few of its
members untouched by its wither-
ing blight. Such a combination
is more than a contract; it is an
offense. * * * In all such
combinations where the purpose
is injurious or unlawful, the gist
of the offense is the conspiracy.
Men can often do by the combina-
tion of many what severally no
one could accomplish, and even
396 THE SHERMAN ANTI-TRUST ACT.

§191. Size Giving Power to Monopolize—Menace.—Not-
withstanding what we have said that mere size is not a
monopoly, yet there are those who do not accept this view
of the law. Judge Noyes of the Federal Circuit Court in
the Tobacco case argued that a monopoly exists when there
exists the power to control the prices of commodities, and
he contended that in view of that fact that the Tobacco
Company purchased more than half of certain types of to-
bacco, they had the power to fix prices to be paid for the
tobacco crops, and that because it manufactured more than
half of certain types of tobacco or its product, it might fix
the price which the consumer paid for such products. He
thus discussed the specific instance before him.

‘‘In examining the second section of the act the de-
fendants in their brief say:

‘« <The sole question is: Do the defendants so engross the
market that they can prevent others from engaging therein
freely, and thus at pleasure fix the prices either of the raw
materials or of the manufactured article?’

‘“‘The record shows that, to establish and popularize a
brand of tobacco, the expenditure of much time and money
is necessary. Whether a person of moderate capital would
successfully engage in the manufacture of tobacco would
depend entirely upon the position taken by the defendants.
They might suffer him to succeed. On the other hand, they
might deem it expedient to crush him, and, if they exer-
cised the power which they possess, there could be but one
result. Considering the enormous inherent and collateral
power of the defendants, the record is remarkably free from
acts of oppression or coercion. But still there is enough to
show how a competitor can be brought to terms if oc-
casion demands. The letters between the defendants’ of-

what when done by one would be quence.” Quoted with approval in
innocent. * * * There is a Northern Securities vy. United
potency in numbers when com- States, 193 U. S. 197; 24 Sup.
bined which the law cannot over- Ct. 436; 48 L. Ed. 679; affirming
look, where injury is the conse- 120 Fed. 721.
MONOPOLY. 397

ficials point out most effective means for entering ‘upon a
vigorous campaign, to be kept up until the desired end is
accomplished.’

‘‘Under these conditions, I am of the opinion—in answer
to the first phase of the defendants’ question—that the de-
fendants do so engross the tobacco market that they have
power to ‘prevent others from engaging therein freely.’
The extent to which they have exercised their power is im-
material. The question presented by the defendants’ inquiry
is one of the existence of power, not its exercise.

‘Subject to the economic limit that prices cannot be fixed
so low as to deprive the grower of inducement to raise
future crops, the extent of the defendants’ purchases of
tobacco leaf necessarily gives them large power to fix the
prices to be paid for the types which they require. Prices
may be regulated—as the defendants assert—by the law of
supply and demand; but the difficulty here is that the
demand for many types comes, practically, from only one
source. To whom, for example, can the growers of burley
of Virginia sun-cured tobacco sell their crop, if they refuse
the prices offered by the defendants? Similarly, the pro-
duction by the defendants of by far the greater part of the
tobacco used in this country gives the power to control
the prices of the manufactured article, subject to the eco-
nomic limit that, if placed too high, the consumer will give
up the use of tobacco. It is not a question of going to an-
other producer. No other producer could supply the amount
required. Where will the users of snuff obtain it, if they
are unwilling to pay the prices charged by the defendants?

““Moreover, the defendants possess an even greater power
over the prices of raw material and finished products than
the statistics which we have noticed indicate. It is apparent
from the record that they are the dominating factors in the
tobacco industry. Other producers are scattered and do
not act together. They are not in a position to initiate
price making.
398

THE SHERMAN ANTI-TRUST ACT.

‘“‘They must follow the action of the defendants. Upon
these facts, I am of the opinion that the second phase
of the defendants’ inquiry must, like the first, be answered
in the affirmative—that the defendants do have power to
determine the prices of raw materials and of the manufac-

tured article.

“Thus applying to the defendants’ position the test of
their own inquiry, it follows that they constitute a mo-

2927

nopoly.

27 United States Tobacco Co. vy.
American Tobacco Co., 163 Fed.
701. He then proceeds to discuss
the question, possibly showing
some waivering in his mind on
the question, as follows: “Still
another test brings us to the same
conclusion. The authorities war-
rant the statement that a monop-
oly, in the modern sense, is created
when, as a result of efforts to
that end, previously competing
businesses are so concentrated in
the hands of a single person or
corporation, or a few persons or
corporations acting together, that
they have power to practically
suppress competition. National
Cotton Oil Co. v. Texas, 197 U.
S. 115; 25 Sup. Ct. 379; 49 L.
Ed. 689; affirming (Tex. Civ.
App.) 72 8S. W. 615; United
States v. E. C. Knight Co., 156
U. S. 1; 15 Sup. Ct. 249; 39 L.
Ed. 325; affirming 60 Fed. 934;
9 CC. C. A. 297; 17 U. 8. App.
466; 24 L. R. A. 423; Northern
Securities case, 193 U. S. 197; 24
Sup. Ct. 436; 48 L. Ed. 679,
affirming 120 Fed. 721; Swift &
Co. v. United States, 196 U. &.
375; 25 Sup. Ct. 276; 49 L. Ed.
518: modifying 122 Fed. 529;
American Biscuit, ete. Co. v.

Klotz, 44 Fed. 724; United
States v. Chesapeake, ete.. Fuel
Co., 105 Fed. 104; Chesapeake &
O. Fuel Co. v. United States,
115 Fed. 610; 53 C. C. A. 256;
People y. North River Sugar Re-
fining Co., 54 Hun. 355; note 3
N. Y. Supp. 401; 2 L. R. A. 33:
Pocahontas Coke Co. v. Powhatan
Coal, ete., Co., 60 W. Va. 508;
56 8. E. 264; 10 L. R. A. (N.S)
268; 116 Am. St. Rep. 901;
Richardson v. Buhl, 77 Mich. 632;
43 N. W. 1102; 6 L. R. A. 457,
Harding v. American Glucose So,
182 Tll. 551; 55 N. E. 577; 64
L. R. A. 738; 74 Am. St. Rep.
189; Herriman v. Menzies, 115
Cal. 16; 44 Pac. 660; 46 Pac.
730; 35 L. R. A. 318; 56 Am.
St. Rep. 82; Lough v. Outen-
bridge, 143 N. Y. 271: 38 N. E.
292; 25 L. R. A. 674; 42 Am.
St. Rep. 712; Wood v. Greenwood
Hardware Co., 75 S. C. 383; 55
S. E. 973; 9 L. R. A. (N.S.) 501.
And the examination of facts al-
ready made show this concentra-
tion of power in the hands of the
defendants. It must be noted that
the authorities hold that the
material consideration, in  de-
termining whether a monopoly
exists, is not that prices are 1aised
MONOPOLY.

399

§ 192. Unification of Interests—Mergers—Partnership.—
The Federal Anti-Trust Act does not prevent a unification

and that competition is excluded,
but that power exists to raise
prices or to exclude competition
when it is desired to do so. The
validity of an organization, ac-
cording to the authorities ‘is not
to be tested by what has been
done under it, but by what may
be done under it; not by its per-
formance, but by its power of
performance when fully exercised.’
Pocahontas Coke Co. v. Powhatan
Coal, etc., Co., supra. Following
the authorities, the necessary re-
sult is that the defendants, in
possessing the power of control
over the tobacco market, monopo-
lize interstate trade and commerce
within the meaning and in vio-
lation of the second section of the
statute. And yet, in view of the
possible results from this interpre-
tation of the statute, I could only
with  hestitation unqualifiedly
adopt it. An aggregation of capi-
tal or property, with power to
control] the market for a product,
might be brought about by lawful
means without the element of com-
bination, and might carry on its
operations without the element of
oppression. If the mere possession
of power is the test of legal-
ity, then the inquiry in that case,
as in any other case, would merely
relate to the present status of the
aggregation: What has it power
to do—without regard to its past
history or its present methods.
Thus a result might be declared
unlawful, which was obtained by
lawful means; an aggregation of
capital criminal, which actually
operated to the public benefit The

law that illegality depends wholly
upon the power of performance
may be settled; but it was not
settled when the tendency towards
the unification of interests was so
marked as at the present time.
It may be that now, in applying
the second section of the statute,
performance, as well as power of
performance, should be considered
that the elements of oppression
and coercion should be shown to
exist, to establish an unlawful
monopoly. And, if these elements
are to be considered, they are not
sufficiently presented upon this
record. It is not shown that the
defendants have reduced prices to
growers, nor that they have raised
prices to consumers. The in-
stances of coercion which are
shown appear rather as incidental
to the development of a great busi-
ness than as indicative of a policy
of oppression. But a judicial
opinion upon the important ques-
tion whether the conclusion which
the authorities lead to should be
adopted without qualification in
construing and applying the sec-
ond section should only be ex-
pressed when necessary to the
rendition of a decision. There is
no such necessity in this case.
In view of the opinions of the
other members of the court, the
decree must run against the de-
fendants under the first, and not
under the second section of the
statute. Therefore, while I have
felt it my duty to examine the
situation under the second sec-
tion, its consideration need not be
carried further.”
400 THE SHERMAN ANTI-TRUST ACT.

of interests, if it be made with no intent to create a mo-
nopoly. ‘‘It does not require argument or citation of au-
thority to show that five or any number of men may law-
fully form a co-partnership to buy the produce of the coun-
try. * * * The law does not and did not require that
these parties should compete in the purchase of produce.’

The existence of the element of combination by no means
necessarily involves the existence of an illegal restriction
upon competition. If it did, every partnership, or corpora-
tion under any form, would be illegal.?? Thus where manu-
facturers of salt entered into an agreement for sale of their
salt through a common agency, and it was claimed that
this tended or did create a monopoly, the court said: ‘‘If
the effect was to constitute a partnership, there can be
nothing objectionable in the stipulation that all the salt
produced—which is to form the partnership stock—should be
sold through the agency of trustees.’’*° If two or more
men may put their funds together and enter into a part-
nership to conduct a business by buying and selling prod-
ucts, there is no reason why two or more men engaged in
business may not put their goods together and enter into
a partnership to conduct their respective business as a
partnership concern. This would be a merger of their
respective businesses in a single adventure. So one man
engaged in business may buy out another engaged in the
same business, even though he would thereby remain the
sole representative of that business in his town or vicinity.
The mere fact of the purchase or combination would not
be a violation of the statute; nor would there be a viola-
tion of the statute if half a dozen men engaged in the
same business, constituting all the persons in their town

28 Fairbanks v. Leary, 40 Wis. 30 Ontario Salt Co. v. Mer-
637. chants’ Salt Co., 18 Ont. 540, 544.
29 Fletcher v. Palm, 133 Fed. See State v. Adams Lumber Co.,
462, 471; 66 C. C. A. 336, 345; 81 Neb. 392; 116 N. W. 302.
Graham v. Macon, ete, R. Co.,
120 Ga. 757; 49 S. E. 75.
MONOPOLY. 401
or vicinity, should consolidate all their store under a part-
nership agreement. What a private person may do, so a
corporation may do, if the act is not ultra vires. Thus in
a New Jersey case the court said:

‘‘Such corporations are empowered to purchase, hold and
use property appropriate to their business. They may also
purchase and hold the stock of other corporations. Under
such powers it is obvious that a corporation may purchase
the plant and business of competing individuals and con-
cerns.

“Tt follows that a corporation empowered to carry on a
particular business may lawfully purchase the plant and
business of competitiors, although such purchases may
diminish or, for a time at least, uestroy competition. Con-
tracts for such purchases cannot be refused by enforce-
ment.’’* There are many cases to support this statement.*?
Thus it was said by Justice Peckham:

‘“* * * we might say that the formation of corpora-
tions for business or manufacturing purposes has never, to
our knowledge, been regarded in the nature of a contract in
restraint of trade or commerce. The same may be said of
the contract of partnership. It might also be difficult to
show that the appointment by two or more producers of
the same person to sell their goods on commission was a
matter in any degree in restraint of trade.

“‘We are not aware that it has ever been claimed that a
lease or purchase by a farmer, manufacturer or merchant
of an additional farm, manufactory or shop, or the with-
drawal from business of any farmer, merchant or manufac-

31 Trenton Potteries Co. v. Oli-

phant, 58 N. J. Eq. 507; 43 Atl.
723; 46 L. R. A. 255; 78 Am. St.

64 N. J. Eq., 537, 544; 54 Atl.
570; Commonwealth v. Hunt, 4
Mete. 111; 38 Am. Dec. 346; Oak-

612; reversing 56 N. J. Eq. 680;
39 Atl. 923.

32 Cameron v. Water Co., 62
Hun. 269; 16 N. Y. Supp. 757;
United States Vinegar Co. v. Foeh-
-renback, 148 N. Y. 58; 42 N. E.
403; Dittman v. Distilling Co.,

dale Mfg. Co. v. Garst, 18 R. I.
484; 28 Atl. 973; 23 L. R. A. 639;
49 Am. St. 784; Macauley v Tier-
ney, 19 R. I. 225; 33 Atl. 1; Bohn
Mfg. Co. v. Hollis, 54 Minn. 223;
55 N. W. 1119; 21 L. R. A. 337;
40 Am. St. 319.
402 THE SHERMAN ANTI-TRUST ACT.

turer, restrained commerce or trade within any legal defini-
tion of that term, and the sale of a good will of a business
with an accompanying agreement not to engage in a similar
business was instanced in the Trans-Missouri case as a con-
tract not within the meaning of the act, and it was said
that such a contract was collateral to the main contract of
sale and was entered into for the purpose of enhancing the
price at which the vendor sells his business.’’®*

§193. Combination Without Creating a Partnership.—
A combination which does not amount to a partnership for
the purpose of controlling prices is illegal; and if it is
able to control a substantial part of the trade in its vicinity
it is a monopoly; although it might have formed an actual

*3 United States v. Joint Traflic
Ass’n, 171 U 8. 505, 507; 19
Sup. Ct. 25; 43 L. Ed. 259; re-
versing 89 Fed. 1020; 32 C. C.
A. 491; 45 U. 8S. App. 762; which
alfirmed 76 Fed. 895. “From the
examination already made of con-
tracts limiting competition, and
the circumstances under which
they are made, it is clear that if
illegal mergers of competing in-
terests be limited to those cases
where the object of the merger is
to accomplish a result which could
have been attained by means of a
contract limiting competition be-
tween the parties, then it will not
be necessary to hold all partner-
ships and corporations illegal.
Partnerships and corporations
may be formed by parties who
could not successfully maintain a
contract limiting competition, and
who could therefore not have had
in view the control of any market
as the sole or main reason for
forming their organization. They

may be the result of entirely new
enterprise, and not accomplish the
merger of any business previously
established. The step which is
taken, therefore, in holding such
mergers illegal as accomplish the
same result between the parties as
could have been, or was already
accomplished by a contract limit-
ing competition between them,
does not involve holding all mer-
bers of even existing competing
interests in an otherwise author-
ized form of organization illegal.
And it is clear that the Supreme
Court does not consider that its
decision in the Northern Securi-
ties case involves holding all part-
nerships and corporations illegal
combinations.” Herbert Pope in 20
Harvard Law Review p. 183. He
quotes from National Cotton Oil
Co. v. Texas, 197 U. S. 115,
129; 25 Sup. Ct. 379; 49 L. Ed.
689; affirming (Tex. Civ. App.) ;
72.8. W. 615.
MONOPOLY. 403
partnership with no intent to control the prices which
would have had the same effect and been legal. ‘‘There
is a clear distinction,’’ said Judge Severens, ‘‘which seems
to be lost sight of in argument here, between the aggrega-
tion of properties by purchase when the seller no longer
retains an interest in the property, and a combination of
owners and properties under one management, where each
owner’s interests is continued in the combination.’** In
a specific instance Judge Day said: ‘‘Looking then to the
contract in question we find fourteen of the coal producers
of this district entering into an agreement which, without
making a partnership, undertakes to control the entire out-
put of the several mines for shipment west by a leading
route.’’> These quotations bear out the inference that the
courts intended to hold out the idea that the Sherman law
does not prevent the consolidation of property rights, al-
though such consolidation or transfer is effective to diminish
or eliminate competition; but when competition is eliminated
by a combination which does not amount to a transfer of
property rights or consolidation of property, then the statute
is violated if it interferes with interstate trade or commerce.*®

34 Davis v. Booth, 131 Fed. 31,
37; 65 C. C. A. 269.

35 Chesapeake & Ohio Co. v.
United States, 115 Fed. 610, 620;
53 C. C. A. 256.

36 The following quotations bear
out this inference. “Undoubtedly
there is a certain freedom of con-
tract which can not be destioyed
by legislative enactment. In pur-
suance of that freedom parties
may seek to further their busi-
ness interests, and it may not be
always easy to draw the line be-
tween those contracts which are
beyond the reach of the police
power and those which are sub-
ject to prohibition or restraint.
But a secret arrangement, by

which, under penalties, an appar-
ently existing competition among
all the dealers in a community in
one of the necessaries of life is sub
stantially destroyed without any
merging of interests through part-
nership or incorporation, is one
to which the police power ex-
tends.” Smiley v. Kansas, 196 U.
8. 447; 25 Sup. Ct. 276; 49 L Ed.
546; affirming 65 Kan. 240; 69
Pac. 199; 67 L. R. A. 903. “To
support the argument the usages
and necessity of business are ad-
duced, and partnerships and their
effect are brought forward as il-
lustrations. There are some things
which counsel easily demonstrate.
They easily demonstrate that
404 THE SHERMAN ANTI-TRUST ACT.

§ 194. Forming a Corporation to Absorb Other Corpora-
tions—Consolidation of Corporations—Purchase of Stock—
Presumption.—Two or more corporations may consolidate
and merge their respective interests in the consolidated
combine without offending the Sherman Act. Of course
there must be some state law authorizing the combination.
Such a consolidation is not open to objection on the ground
of public policy.*7 So if a statute permit it, one company
may purchase stock in another company, and thereby control
it, if the stock is purchased for a legitimate purpose and as
a means of the investment of its funds.** The distinction
between a combination and consolidation of corporations
has been thus stated:

‘““The consolidation of corporations engaged in the same
general line of business is not against public policy. The
legislature has permitted it for years and still permits it.
There is a great difference between the consolidation of two
corporations into one new corporation, and the combination
between two existing corporations for the prevention of com-
petition. The former is permitted and the latter is con-

some combination of ‘capital, skill
or acts’ is necessary to any busi-
ness development, and that the
result must inevitably be a cess-
ation of competition.” National
Cotton Oil Co. v. Texas, 197 U.S.
115; 25 Sup. Ct. 379; 49 L. Ed.
689; affirming (Tex. Civ. App.) ;
72 8. W. 615. “Presumably all
that there was to sell, beside cer-
tain instruments of competition,
was the competition itself, and the
purchasers did not want the ven-
dors’ name. This being our view
of the covenant in question, what-
ever differences of opinion there
may have been with regard to
the scope of the act of July 2,
1890, there has been no intimation
from any one, we believe, that

such a contract, made as part of
the sale of a business and not
as a mere device to control
commerce, would fall within the
act. On the contrary, it has
been suggested repeatedly that
such a contract is not within the
letter or spirit of the statute.”
Cincinnati, etce., Packet Co. v. Bay,
200 U. S. 179; 26 Sup. Ct. 208;
50 L. Ed. 428.

37 We leave out of consideration
here interstate transportation
companies.

38 Dittman v. Distilling Co.,
64 N. J. Eq. 537, 541; 54 Atl.
570, 571; Metcalf v. American
School Furniture Co., 122 Fed.
115, 125.
MONOPOLY. 405

demned. It is not necessary to point out the distinction so
far as the public or private good is concerned. It is enough
that the legislature has drawn the distinction.’*® But
if two corporations are merged, or one purchases the stock
of another, for the purpose and with the intention to sup-
press competition in their business and to monopolize the
trade in their lines in their vicinity; and if such trade
enters into interstate commerce, then the merger or pur-
chase of stock is condemned by the Sherman <Act.*? Where
one copper mining company through stock purchases and
proxies obtained from other stockholders secured control
over a competing corporation owning and operating ad-
jacent mines, it was held that this action did not necessarily
create a monopoly in violation of the Sherman Act, al-
though it was the intention to place the two corporations
to a large extent under a common directorate and general
control. It was said that such a purchase was not illegal
because of such facts where its primary purpose was to
secure through friendly co-operation and the joint facilities
a more economical operation of the mines, especially where
the controlled operation was one of a group previously under
a common control and management, and their products were
sold through a common agency. It was also said that the
fact that the purchase would result in the transfer of this
agency as to its product to that of the purchasing company
did not tend to unlawfully restrain competition.* Speak-
ing of an instance where a corporation did not own any-
thing like a majority of the stock of another company, but

39 Cameron v. New York & Mt. 40 Bigelow v. Calumet & Hecla
Vernon Water Co., 62 Hun. 269; Mining Co., 155 Fed. 869.
16 N. Y. Supp. 757. See People 41 Bigelow v. Calumet & Hecla
v. People’s Gas Light & Coke Co., Mining Co., 167 Fed. 704; Bigelow
205 Ill. 482; 68 N. E. 950; 98 v. Calumet & Hecla Mining Co.,
Am. St. 244; and United States 167 Fed. 721; 94 C0. C. A. 13;
vy. American Tobacco Co., 164 Fed. Bigelow v. Calumet & Hecla Min-
710; State v. Continental Tobacco ing Co., 155 Fed. 869.
Co., 177 Mo. 1; 75 S. W. 737.
406 THE SHERMAN ANTI-TRUST ACT.

it was alleged that it controlled such other company, the
court said:

‘‘How, then, does the exercise of the power of stock con-
trol by one mining or manufacturing corporation over an-
other in the same state directly and immediately or neces-
sarily operate as a restraint of commerce among the states?
Confessedly the products of these two companies are in
competition in the markets, and confessedly the greater part
of the product of each will, sooner or later, enter into the
stream of interstate commerce, for the chief demand for the
product is outside the state of production. But that is not
enough. There was all this and more in the Knight Case.
If, indeed, such stock control results in a monopoly, it is
only a monopoly in manufacture in the same state, and
we have again the conceded situation in the Knight Case.
Unless that monopoly of manufacture in a single state of
a product which goes into interstate commerce directly and
immediately or necessarily interferes with or restrains that
commerce, the monopoly does not come under the act of
Congress. But we are unable to conclude upon this record
that mere stock control of such a company by another in
the same state either directly or necessarily destroys com-
petition there, or, if it did, that it results in any such
monopoly as to directly or necessarily and immediately affect
commerce among the states.

‘“‘The power of stock control which the Calumet Company
has acquired may be exercised only in a legitimate and law-
ful way in the interest of an economical management of both
companies. In that case, it has done nothing directly af-
fecting commerce among the states.

‘‘On the other hand, that power may be a mere prepara-
tion for the doing of acts which will directly and neces-
sarily interfere with the freedom of that kind of ecommerce
which it is the purpose of Congress to protect. When this
unlawful use of the power shall result in an unlawful re-
straint, or further steps shall point to results directly af-
MONOPOLY.

fecting such commerce, there
eourts.’’*?

42 Bigelow v. Calumet & Hecla
Mining Co., 167 Fed. 721; 94 ©.
C. A. 13. Touching the question
whether the particular instance
effected interstate commerce the
court said: “When all is said
which the facts justify, the acqui-
sition of the voting power of a
majority of the capital shares of
the Oceola ‘Consolidated Mining
Company and its proposed exer-
cise by the selection of a board,
a majority of which to be com-
posed of the members of the board
of the Calumet & Hecla Company,
is the main fact upon which the
complainant must invoke the pro-
hibition of the act of Congress.
That fact is not enough. That
the two companies are in w sense
competitors ,and that the product
of their mines will ultimately
go into interstate commerce, is
far from making out a case of
direct or necessary and immediate
interference with that kind of
commerce. They do not show that
even a monopoly of the product
will ever probably ensue, to say,
nothing of the utter absence of
any material evidence indicating
that such a monooply in the
product of two contiguous min-
ing companies would directly or
necessarily affect commerce among
the states. No express agreement
is shown by which anything is to
be done or left undone from which
an unlawful restraint, must, or will,
probably happen. The case differs
from all of the cases appealed to
by the learned counsel for appell-
ants in this important particular.
In the Addystone Pipe Case, the

407

may be interference by the

agreement specifically provided a
scheme for the suppression of
competition between the parties in
the matter of sales of iron pipe
in a large number of states
through a division of territory
and sham bids, the parties agree-
ing to divide among each other a
share in the profits made by the
mill to which, by their concerted
effort, the particular sale was di-
rected. In Montague v. Lowry,
193 U. S. 38; 24 Sup. Ct. 307;
48 L. Ed. 608, was involved an
express agreement between manu-
facturers of tiles and dealers with-
in a given territory by which the
plaintiffs were unable, not being
members of the combination, to
procure tiles without paying a
great advance over those who were
members of the combination. In
the case of Swift & Company v.
United States, 196 U. S. 375; 25
Sup. Ct. 276; 49 L. Ed. 518; the
agreement involved a combination
between packers and dealers in
fresh meat throughout the United
States for the express purpose of
regulating prices, freights, and
shipments and sales of live stock.
Loewe v. Lawlor, 208 U. 8S. 274;
28 Sup. Ct. 301; 52 L. Ed. 488;
involved a widespread combination
among the union labor organiza-
tions to prevent the sale of hats
anywhere within the United
States made by a hat maker at
Derby, Conn., until he should
unionize his shops. In Chesapeake
& Ohio Fuel Co. v. United States,
115 Fed. 610; 53 C. C. A. 256;
there was an express agreement
among fourteen coal mining
408 THE SHERMAN ANTI-TRUST ACT.

§195. Difference Between an Outright Purchase and
Combination Without Change of Ownership.—There is a
clear distinction ‘‘between the aggregation of properties by
purchase when the seller no longer retains an interest in
the property, and a combination of owners and properties
under one management, where each owner’s interest is con-
tinued in the combination.’’ #8

This distinction must be borne in mind when considering
the purchase of stock of one corporation by another one.
It seems ‘‘to place a combination by way of stock purchase
and stock proxies within the prohibition of the statute.’’ #*

companies engaged in interstate
commerce for the purpose of fix-
ing prices and regulating produc-
tion and shipments. The cases of
Continental Wall Paper Co. v.
Voight, 148 Fed. 939; 78 C. C.
A. 567 and John D, Park & Sons

Co. v. Hartman, 153 Fed. 24;
82 C. C. A. 158; 12 L. R. A.
(N.S.) 135; both being decided

by this court, were cases which
involved systems of contract be-
tween producers, wholesale and re-
tail, carrying on business in every
state of the Union, for the express
purpose of maintaining prices and

stifling competition, and were
obviously cases which directly
affected freedom of commerce

among the states. In the absence
of any such express terms of the
agreement providing for acts
directly affecting interstate com-
merce, complainants must by facts
and circumstances show that the
direct and necessary result of
what has been done and threatened
is to restrain interstate commerce.
The burden of showing acts and
circumstances which establish the
fact that an unlawful result is
contemplated and will ensue, un-
less checked, is upon those assert-

ing the illegality of the contract
assailed.”

43 Davis v. A. Booth & Co., 131
Fed. 31; modified and affirming
127 Fed. 875; Merz Capsule Co.
vy. United States, 67 Fed. 414;
affirmed 71 Fed. 787; 19 C. C. A.
108; 31 L. R. A. 415; Northern
Securities Co. v. United States,
193 U. 8. 197, 331; 24 Sup. Ct.
436, 454; 48 L. Ed. 679; affirming
120 Fed. 721.

44 Bigelow v. Calumet & Hecla
Mining Co., 155 Fed. 869, 875;
Dunbar v. American Tel. & Tel.
Co., 224 Ill. 9; 79 N. E. 427; 87
N. E. 521; 115 Am. St. 132. In
the Bigelow case it was said:
“Nor can the fact that the al-
leged monopoly is proposed to be
effected in part by the holding of
proxies relieve an otherwise un-
lawful transaction of its unlawful
character. If the object of obtain-
ing the proxies was, as alleged,
to create a monopoly, it is within
the manifest prohibition of the
law. The identity of the two cor-
porations is maintained, and the
combination is as effective as if
a lease of the corporate property
had been given.”
MONOPOLY. 409

§ 196. Forming Corporation to Conduct Business in Re-
straint of Trade—Holding Company.—A corporation formed
with the intent to acquire control of other companies en-
gaged in competitive interstate commerce is illegal and will
be enjoined in its control so obtained; and such stock as
it may have acquired of other companies may be returned
to the owners from which it obtained it. This was held in
the case of the Great Northern and the Northern Pacific
Railway Companies where a corporation was formed for the
purpose of ‘‘holding’’ their, or a majority of, their stock
whereby those controlling the holding corporation would
control the two railway companies and eliminate competition
in interstate commerce. And the fact that the corporation
was formed under a state law authorizing its formation

did not prevent its being enjoined in its operations.**

#5 Northern Securities Co. v.
United States, 193 U. S. 197; 24
Sup. Ct. 436; 48 L. Ed. 679;
affirming 120 Fed. 721. This case
has been treated at length in the
chapter on Transportation. In the
Circuit court after stating certain
propositions, it was said: “Taking
the foregoing propositions for
granted, because they have been
decided by a court whose authority
is controlling, it is almost too
plain for argument that the de-
fendants would have violated the
Anti-Trust Act if they had done,
through the agency of natural per-
sons, what they have acomplished
through an artificial person of
their own creation. That is to say,
if the same individuals who pro-
moted the Securities Company, in
pursuance of a previous under-
standing or agreement so to do,
had transferred their stock in the
two railroad companies to a third
party or parties, and had agreed
to induce other shareholders to do

likewise, until «a majority of the
stock of both companies had been
vested in a single individual or
association of individuals, and had
empowered the holder or holders
to vote the stock as their own,
receive all the dividends thereon,
and prorate or divide them among
the shareholders of tne two com-
panies who had transferred their
stock—the result would have been
a combination in direct restraint
of interstate commerce, because it
would have placed in the hands
of a small coterie of men the
power to suppress competition be-
tween two competing interstate
carriers, whose lines are practi-
cally parallel. It will not do to
say that, so long as each rail-
road company has its own board
of directors, they operate inde-
pendently and are not controlled
by the owner of the majority of
their stock. It is the common ex-
perience of mankind that the acts
of corporations are dictated and
410

THE SHERMAN ANTI-TRUST ACT.

Thus was held illegal ‘‘the organization of a new cor-
poration and the conveyance thereto of all the property
owned by six competing corporations and the execution of

that their policy is controlled by
the owner of the majority of their
stock. Indeed, one of the favorite
methods in these days, and about
the only method, of obtaining con-
trol of a corporation is to purchase
the greater part of its stock. It
was the method pursued by the
Northern Pacific and Great
Northern Companies to obtain
control of the Chicago, Burlington
& Quincey Railroad, and, so long
as directors are chosen by stock-
holders, the latter will necessarily
dominate the former, and in a
real sense determine all important
corporate acts. The fact that the
ownership of a majority of the
capital stock of a corporation
gives one the mastery and control
of the corporation was distinctly
recognized and declared in Pear-
sall v. Great Northern Railway,
161 U.S 646,671; 16 Sup. Ct. 705,
710; 40 L. Ed. 838. The same fact
has been recognized and declared
by other courts. Pennsylvania R.
Co. v. Commonwealth (Pa.),7 Atl.
368, 371; Farmers’ Loan & Trust
Co. v. New York & Northern Rail-
way Co., 150 N. Y. 410, 425; 44
N. E. 1043; 34 L. R. A. 76; Peo-
ple v. Chicago Gas Trust Co., 130
Til. 268; 22 N. E. 798, 802; 8§
L. R. A. 497; 17 Am. St. Rep.
319. In opposition to this view
counsel cite Pullman Car Co. v.
Missouri Pacific Co., 115 U. S.
587, 596; 6 Sup. Ct. 194; 29 L.
Ed. 499; but in that case the
meaning of the word ‘controlled’
as used in a private contract, was

the point under consideration and
what was said on the subject can-
not be held applicable to cases
arising under the Anti-Trust Act,
when the point involved is whether
the ownership of all of the stock
of two competing and parallel
railroads vests the owner thereof
with the power to suppress com-
petition between such roads. We
entertain no doubt that it does.
Indeed, we regard the suppression
of competition, and to that extent
a restraint of commerce, as the
natural and inevitable result of
such ownership. What has been
done through the organization of
the Securities Company accom-
plishes the object which Congress
has denounced as illegal more
effectually, perhaps, than such a
combination as is last supposed.
That is to say, by what has been
done the power has been acquired
(and provision made for maintain-
ing it) to suppress competition
between two interstate carriers
who own and operate competing
and parallel lines of railroad.
Competition, we think, would not
be more effectually restrained than
it now is under and by force of
the existing arrangement of the
two railroad companies were con-
solidated under a single charter.
The same interests are controlled
in substantially the same way and
by the same agencies as before.
The nine trustees of the trust,
who, as the holders of the capital
stock of the corporations, and as
a majority of the directors of
MONOPOLY.

411

agreements by the corporations thus parting with their
property, not any longer to engage in the manufacture of
the industrial products in which they had been previously

engaged.’’ *°

each, controlled such corporate
property, became the subsc.bers
for all the stock of the new cor-
poration and its board of direc-
tors. The conveyance and transfer
of the properties of the constituent
companies to the new corporation,
was merely a transfer by the
trustees to themselves, though in
a slightly different capacity; and
the former stockholders in the
constituent companies simply ex-
changed their trust certificates,
share for share for stock in the
new corporation. That corporation
thus succeeds to the trust, and
its operations are to be carried
on in the same way, for the game
purposes, and by the same ayen-
cies as before. The trust then be-
ing repugnant to public policy,
and illegal, it is impossible to see
why the same is not true of the
corporation which succeeds to it
and takes its place. The control
exercised over the distillery busi-
ness of the country, over produc-
tion and prices and the virtual
monopoly formerly held by the
trust, are in no degree changed
or relaxed, but the methods and
purposes of the trust are perpetu-
ated and carried out with the same
persistence and vigor as_ before
the organization of the corpor-
ation.” Distilling & Cattle Veed-
ing Co. v. People, 156 Ill. 448; 41
N. E. 188; 47 Am. St. 200. See
also National Feea Co. v. Grote
Paint Store Co., 80 Mo. App. 247
and Finck v. Schneider Granite

Co., 187 Mo. 244; 86 8. W. 213;
106 Am. St. 452.

46 Harding v. American Glucose
Co., 182 Ill. 615; 55 N. E. 577;
64 L. R. A. 738; 74 Am. St. 189.
In this case those controlling the
new corporation were for the most
part the same persons who were
interested in and controlled one
or more of the conveying corpo-
rations, and many of the stock-
holders in the old corporations
were stockholders in the new.
Where the object of a corporation
was to absorb the match (The
Diamond Match Company) busi-
ness it was held illegal, the court
saying: “The business in which
it is engaged in was making fric-
tion matches. Its articles provide
for the aggregation of an enor-
mous amount of capital, sufficient
to buy up and absorb all of that
kind of business done in the United
States and Canada, to prevent any
other person or corporation from
engaging in or carrying on the
same, thereby preventing all
competition in the sale of the
article manufactured. This is the
mode of conducting the business,
and the manner of carrying it on.
The sole object of the corporation
is to make money, by having it
in its power to raise the price
of the article, or diminish the
quantity to be made and used, at
its pleasure. Thus, both the sup-
ply of the article and the price
thereof are made to depend upon
the action of a half dozen individ-
412

THE SHERMAN ANTI-TRUST ACT.

§197. Monopoly an Accomplished Conspiracy—Monop-
oly Continuing After Conspiracy has Ceased.—‘‘ A conspir-
acy to monopolize trade is one thing, and it is very like a

uals, more or less, to satisfy their
cupidity and avarice, who may
happen to have the controlling in-
terest in this corporation, an
artificial person, governed by a
single motive or purpose, which
is to accumulate money regard-
less of the wants or necessities of
over 60,000,000 of people.” Rich-
ardson v. Buhl, 77 Mich. 632; 43
N. W. 1102; 6 L. R. A,
457. See also Evans v. American
Strawboard Co., 114 Ill. App. 450;
Brownsville Glass Co. v. Appert
Glass Co., 136 Fed. 240; People v.
Chicago Gas Trust Co., 130 Tl.
268; 22 N. E. 798; 8 L. R. A. 497;
17 Am. St. 319. It will not be
presumed that a corporation was
formed to restrain trade. United
States Vinegar Co v. Foehren-
back, 148 N. Y. 58; 42 N. E. 403;
Locker v. American Tobacco Co.,,
121 N. Y. App. Div. 443; 106 N.
Y. Supp. 115. On the general sub-
ject, see article in 13 Harvard Law
Review by E. Q. Keasby. “A
combination may be made of any
number of corporations in a given
trade, and maintained by means of
a holding company or through
ownership of plants, provided it
appears that, tested by actual
facts, the combination represents
a purpose not to acquire monop-
oly control, but some proper pur-
pose, such as to secure greater in-
dustrial efficiency; to turn out a
better product at « lower selling
price; in a word, to share with
the public the economic advantages
lying in the fact of combination.

Nevertheless, as the mere forma-
tion of a great combination sug-
gests an inference that there is
an intent to control the situation,
the burden of proving facts show-
ing a rightful purpose is put on
the combination.” Robert L. Ray-
mond in 25 Harvard Law Review
52 (November, 1911). In discuss-
ing the Standard Oil and Tobacco
decisions in this same article, Mr.
Raymond says: “It remains to
consider where these decisions
leaves the trust problem, or put
it more broadly, the general busi-
ness situation. Here again it is
necessary to call attention to the
distinction between combinations
by agreement and combinations by
fusion, namely corporate combi-
nations. It is unfortunate that
there has been only one statute
to apply to both. This has resulted
in an effort to treat them on the
same basis, and this effort has
done much to obscure the econom-
ic situation and to defer a clear
understanding of the trust prob-
lem. The course of decision may
be briefly indicated as follows:
In the first instance it appeared
that loose combinations were clear-
ly forbidden by the Act, and their
evil results were recognized by the
court. The first effect of the Anti-
Trust Act was to drive combina-
tions into the corporate form. Then
it was seen that similar evil re-
sults were due to corporate com-
binations and the Act was ap-
plied to them on the same terms
in which it had been applied to
MONOPOLY. 413
conspiracy in restraint of trade; but the monopoly is the
result of the conspiracy. It is the accomplished thing.’’
Therefore if a monopoly be acquired through a conspiracy,
its continuance after the conspiracy has ceased to exist is
in itself an offense; and the conspirators are criminally
liable therefore, although the business is conducted by a
corporation which is controlled by them.**

§ 198. Acts Intentionally Done to Create a Monopoly.—
Any men or combination of men who set out to prevent
others engaging in a given product by acquisition of its
total available supply, or by the acquisition of all the raw
material out of which that product can be made, violates the
Sherman Act if it directly affects interstate commerce or

trade.

loose combinations. Still later it
was perceived that to destroy all
corporate combinations was flying
in the face of sound economic
laws. Therefore, in the recent de-
cisions it was declared that only
those representing an economic
evil, namely, monopoly control,
were subject to the Act. At the
same time it was felt necessary
to permit loose combinations also
if they did not unduly restrain
trade. That the recent decisions,
nevertheless, make a distinction,
though apparently unconsciously,
in applying a test of illegality,
between combinations by agree-
ment and corporate combinations,
is shown: by the fact that the
complete cessation of competition
among the members of a corporate
combination is held to be not
necessarily illegal. The distinction
was one which must be made.
Tt is a pity that it was not clearly
and definitely made, especially

This is so, not because the combination does all the

with reference to the question of
remedy. Because it produces many
of the same veil results is not
sufficient reason for treating the
corporate combination on the same
basis as the combination by agree-
ment. In the case of combinations
by agreement the persons con-
tracting are strangers to one
another’s business; the duration
of the combination is temporary,
and the bonds that unite it are
weak; no sacrifice of individual
identity is involved; the object
is merely to restrict competition
among independent business units;
none of the real economic benefits
of combination are secured; the
operations of the combination by
agreement can be definitely
handled only by dissolution. None
of these things is true as to the
corporate combinations.”

47 United States v. Patterson,
201 Fed. 697.
414 THE SHERMAN ANTI-TRUST ACT.

trade in the product at a given time, but because there has
arisen the accomplished or attempted exclusion of others
which is the gist of monopolizing. The evil done by men
or combination of men, whether that combination be a cor-
poration or not, which attempts to exclude all competition
by the acquisition of the total supply of a commodity, or
the total supply of the raw material out of which that
commodity is made, is exactly within the policy of the Sher-
man Act. Outside of competition there may be other means
of exclusion, such as contracts in restraint of trade in the
true or common law sense restricting individuals and capital
on such a comprehensive scale with respect to a particular
business as to be an effective means of exclusion. There may
be combinations or conspiracies to exclusively appropriate
a trade within the express prohibition of the second sec-
tion.48 The illegal element lies in the acts being done by
the combination for that purpose rather than in the acts
themselves. There, may be fraud, intimidation and other
tortuous acts, of a systematic rather than a sporadic char-
acter and operation, and therefore effective as a means of
exclusion. Contracts and acts when couched in their cir-
cumstances and entered into and performed for the purpose
of injuring others are for these reasons condemned by the
statute. What are these circumstances from which the in-
tent to injure others will be presumed are questions of
fact and not of law? They have thus been stated:

(1) The union of many corporations resulting in domin-
ion over the trade in question; (2) a preceding trade war
among the combining parties; (8) trade conflicts with com-
petitors resulting in combinations, ete., with them; (4) a
consciousness of wrongdoing as exhibited by constantly
changing the form of substantially the same transactions:
(5) the absorption of control over the elements essential

48 Swift & Co. v. United States,
196 U.S. 375; 25 Sup. Ct. 276; 49
L. Ed. 518; affirming 122 Fed. 529.
MONOPOLY. 415
to the trade and placing them in the hands of apparently
independent companies; (6) purchasing competing plants
only to close them; and (7) constantly recurring contracts
by which others bind themselves not to compete with the
combination.
other circumstances and combinations of circumstances which
in a given case may be sufficient evidence of the wrongful
intent, and how many of those enumerated would be neces-
sary to raise the presumption of such intent must, in the
very nature of things, depend on the facts of cach case as

There are, of course, an unending number of

it arises.’’ #°

49 Harold Evans in 60 Univers-
ity of Pennsylvania Law Review
319, Mr. Evans thus concludes his
article. “By emphasizing the ex-
tent of the restriction of competi-
tive conditions as the test in this
class, the court has substantiated
the theory previously advanced
that the real result of the decisions
under the Sherman Act has been
to get back to the proper common
law test of the validity of mo-
nopolies and combinations to re-
strict competition. It is  sub-
mitted, however, that in two par-
ticulars the court has extended
the Act so as to render illegal
contracts and acts which both at
common law and under the prior
decisions would have been valid,
—i. «., in holding that contracts
and combinations which, apart
from their surrounding cireum-
stances, do not restrict competition
or obstruct trade to such an ex-
tent as to fall within the Act,
may come within its prohibitions
if done with an intent not rea-
sonably to further one’s own in-
terests but to injure others, and
that the statute applies to mere
acquisitions of property and other

acts when done with a wrongful
intent though no combination or
contract is involved. And finally,
it is submitted that the two de-
cisions under discussion, instead
of emasculating the Sherman Anti-
Trust Act, as so many have con-
tended, have on the contrary ex-
tended its application and given
it that elasticity which will al-
low it to meet changing economic
conditions.” In Chesapeake &
Ohio Fuel Co. v. United States,
115 Fed. 610; 53 C. C. A. 256,
it was held that it was no de-
fense, in a suit to dissolve the
combination, that it was not pro-
ductive of injury to the public,
or even that it was beneficial, by
enabling the combination to com-
pete for business in a wider field.
Though the purpose of the Kansas
City Live Stock Exchange was de-
elared in its articles to be to pro-
mulgate and enforce among the
members correct and high moral
principles in the transaction of
business, yet the court declared
it was a combination rather to
prevent competition along certain
lines among those engaged in the
live stock commission business,
416

THE SHERMAN ANTI-TRUST ACT.

§ 199. Good Motives—No Intent to Violate the Law.—
The prohibitions of the statute cannot be evaded by good

motives.

‘‘The law is its own measure of right and wrong,

of what it prevents or forbids, and the judgments of the
court cannot be set up against it in a supposed accomoda-
tion of its policy with the good intention of parties, and,
it may be, of some good results.’’ *°

and to maintain uniform minimum
prices for their services, and con-
sequently was illegal under Kan-
sas Laws, 188 ch. 257; Greer v.
Payne, 4 Kan. App. 153; 46 Pac.
190. The court cannot consider
whether the combination may be
of greater benefit to the public
than competition would be. United
States v. Northern Securities Co.,
120 Fed. 721; affirmed 193 U. 8.
197; 24 Sup. Ct. 436; 48 L. Ed.
679; United States v. Swift & Co.,
122 Fed. 529; modified 196 U.
S. 375; 25 Sup. Ct. 276; 49 L.
Ed. 518; Northwestern Consoli-
dated Milling Co. v. William
Callan & Son, 177 Fed. 786;
United States v. Standard Sani-
tary Mfg. Co. 191 Fed. 172;
affirming 226 U. S. 20; 33 Sup.
Ct. 9; 55 L. Ed. —; United
States v. Standard Oil Co, 173
Fed. 177; modified and affirmed
221 U. S. 1; 31 Sup. Ct. 502;
55 L. Ed. 619; 34 L. R. A. (N.S.)
834; Fonotipia, Limited v. Brad-
ley, 171 Fed. 951. Where litiga-
tion between rival corporations
interested in the same mineral
deposit is incapable of satisfactory
judicial determination, a contract
entered into between them in good
faith, for the purpose of termi-
nating the litigation, whereby
their rival interests are to be con-
solidated, and involving the pur-

chase of other mines and plants
in different parts of the country,
is not illegal, as tending to create
a monopoly, the corporations ex-
ercising no public franchise, but
being simply the owners of a
species of property which in its
natural state is of no use to man-
kind, and their output comprising
but a small portion of the product
of the country. Meredith v. New
Jersey Zinc & Iron Co., 56 N. J.
Eq. 454; 41 Atl. 116; affirming 55
N. J. Eq. 211; 37 Atl. 539.

50 Standard Sanitary Mfg. Co.
v. United States, 226 U. S. 20;
33 Sup. Ct. 9; 57 L. Ed. —;
affirming 191 Fed. 172; Reading
Co. v. United States, 226 U. S.
324; 33 Sup. Ct. 90; 57 L. Ed. —.
In this case it was said: “whether
a particular act, contract or agree-
ment was a reasonable and normal
method in furtherance of trade and
commerce may, in doubtful cases,
turn upon the intent to be in-
ferred from the extent of the con-
trol thereby, secured over the com-
merce affected, as well as by the
method which was used. Of course,
if the necessary result is material-
ly to restrain trade between the
states, the intent with which the
thing was done is of no conse-
quence.. But when there is only
a probability, the intent to pro-
duce the consequences may be-
MONOPOLY. 417

§200. Tends to Monopolize—Attempt to Monopolize—
“Tend.’’—Every person who shall attempt to monopolize
any part of interstate trade or commerce violates the stat-
ute. But it does not render an act criminal which is an
‘‘attempt’’ to combine or an ‘‘attempt’’ to conspire with
any other person to monopolize any part of such interstate
trade or commerce. In the latter instances the combination
or conspiracy must be a completed act; and anything that
falls short of that is not a crime. The courts use the
word ‘‘tend’’ or have a ‘‘tendency’’ in speaking of an at-
tempt to monopolize trade. Thus in one case it is said
that ‘‘It is not required, in order to violate this statute,
that a monopoly be created. It 1s sufficient if that be the
necessary tendency of the agreement.’’+

“Though the restriction may be not illegal, if considered
apart from the tendency presently to be considered, yet it
may well be illegal in the light of such tendency. Thus the
circumstances attending its existence may be such as to in-
dicate a speedy increase to a control of 90 or 95 per cent.
That under these conditions the restriction would be re-
garded as illegal seems to accord with the generally ac-

come important.” Citing United
States v. Terminal Ass’n., 224 U.
S. 383, 394; 33 Sup. Ct. 383; 55
L. Ed. 810, and Swift & Co. v.
United States, 196 U. 8. 375; 25
Sup. Ct. 276; 49 L. Ed. 518; af-
firming 122 Fed. 529.

51 The italics are ours. Chesa-
peake & Ohio Fuel Co. v. United
States, 115 Fed. 610, 623; 53 C.
Cc. A. 256; Ellis v. Inman, Poul-
sen & Co., 131 Fed. 182; 65 C. C.
A. 488. In re Greene, 52 Fed. 104.
“It is not necessary under either
the federal or state statutes that
a complete monopoly be effected.
It is sufficient if it tends to that
end, and to deprive the public of
the advantages which flow from
free competition. United States v.

E. C. Knight Co., 156 U. S. 1;
15 Sup. Ct. 249; 39 L. Ed. 325;
affirming 60 Fed. 934; 9 C. ©.
A. 297; 17 U. S. App. 466; 24
L. R. A. 428; Northern Securities
Co. v. United States, 193 U. 8S.
197; 24 Sup. Ct. 436; 48 L. Ed.
679; affirming 120 Fed. 721; Hunt
vy. Riverside Co-operative Club,
140 Mich. 538; 104 N. W. 40;
112 Am. St. Rep. 420. The above-
quoted language of both the fed-
eral and state statutes is in terms
broad enough to cover any means
purposely adopted for, and mani-
festly adapted to, the accomplish-
ment of the unlawful purposes.”
Bigelow v. Calumet & Hecla Min-
ing Co., 155 Fed. 869, 875.
418

THE SHERMAN ANTI-TRUST ACT.

cepted doctrine that a restriction will be pronounced illegal
at any stage, though at the time harmless, if it appear that
in the natural course of events it will develop into a re-
striction harmful, considered by itself, in other words, if

its tendency is to become actually harmful.’’ °?

52 Cooke on Combination (2nd.)
p- 235. To this statement he ap-
pends the following note: “North-
ern Securities Co. v. United
States, 193 U. S. 197, 332; 24
Supp. 436, 454; 48 L. Ed. 679;
affirming 120 Fed. 721; Chesa-
peake & O. Fuel Co. v. United
States, 115 Fed. 610, 623; 53 C.
C. A. 256, 269; Bobbs-Merrill Co.
v. Straus, 139 Fed. 155, 192;
affirmed 147 Fed. 15; 77 C. C.
A. 607; 15 L. R. A. (N.S.) 766;
Arnold v. Jones Cotton Co., 152
Ala. 501; 44 So. 662; 12 L. R. A.
(N.S.) 150; Flower v. Smith Lum-
ber Co., 157 Ala. 505; 47 So.
1022; State v. Portland Natural
Gas & Oil Co., 153 Ind. 483; 53
N. E. 1089; 53 L. R. A. 413; 74
Am. St. Rep. 314. See Clark v.
Needham, 125 Mich, 84; 83 N.
W. 1027; 51 L. R. A. 785; 84
Am. St. Rep. 559. In Harding v.
American Glucose Co., 182 Til.
551, 615; 55 N. E. 577, 598; 64
L. R. A. 738, 763; 74 Am. St. Rep.
189, it was stated that as the test
whether the ‘necessary  conse-
quence’ ‘is the controlling of
prices, or limiting of production,
or suppressing of competition, in
such a way as thereby to create a
monopoly.’ The doctrine stated in
the text seems to be the true
ground of the decision in More v.
Bennett, 140 Ill. 69, 80; 29 N. E.
888, 891; 15 L. R. A. 361, 364;
33 Am. St. Rep. 216, 220, where
an association of stenographers in

But every

Chicago was held illegal as hav-
ing for its object the prevention
of competition, notwithstanding
that but a small portion of the
law stenographers in the city be-
longed to the association. The
court said ‘True, the restraint is
not so far-reaching as it would
have been if all the stenographers
in the city had joined the asso-
ciation, but so far as it goes, it
is precisely of the same charac-
ter, produces the same results, and
is subject to the same legal ob-
jection. See also Chicago, Wil-
mington, etc., Coal Co. v. People,
214 Ill. 421, 452; 73 N. E. 770,
780; affirming 114 Ill. App 75.
So in Slaughter v. Thacker Coal &
Coke Co., 55 W. Va. 642; 104 Am.
St. Rep. 1013; 65 L. R. A. 1013;
of an agreement among coal com-
panies operating in the same vein
by which they appointed a common
agent to sell at uniform prices.
They were referred to in the cpin-
ion as being only ‘three small com-
panies out of the vast number of
coal-producing companies in the
‘state, and the quantity of coal
pvt upon the market by them was
said to be ‘an utterly insignificant
portion of the vast quan-
tities

thrown upon the mar-
ket by the numerous com-
peting producers.’ Pocahontas

Coke Co. v. Powhatan Coal & Coke
Co. 60 W. Va. 508, 531; 56 S.
E. 264, 273; 10 L. R. A. (N.S.)
268, 285; 116 Am. St. Rep. 901,
MONOPOLY.

419

attempt to monopolize any part of interstate commerce is

not made unlawful by the statute.

“Tf so, no interstate

commerce has ever been lawfully conducted since that act

seems to go very far in applying
this doctrine. There was held es-
tablished the existence of an ille-
gal combination among corpora-
tions, producers of coke, against
the objection thus stated, it being
regarded as a_ sufficient answer
that ‘it is not essential that the
monopoly be complete before it is
illegal.’ ‘It does not appear what
part or per cent. of the total pro-
duction of the P. coal field is pro-
duced by the 20 corporations. It
is said that together they may
produce only one per cent. of the
total production of the field. In
Stockton v. Central R. R. Co. of
N. J., 50 N. J. Eq. 52, 81; 24
Atl. 964, 975; 17 L. R. A. 97,
109, where a lease between rail-
road companies was held unlaw-
ful as part of a scheme to secure
a monopoly of the Pennsylvania
anthracite coal traffic, it was said:
‘It is true, co-operation of the re-
maining coal roads, which is nec-
essary to complete monopoly, has
not yet been secured. By this lease
only one competitor is silenced,
and only a little more than one-
half of the entire coal region is
controlled. It is only the second
step in the direction of monopoly,
the first being the lease of the
L. V. Railroad. It is to be re-
membered, however, that the at-
torney-general may have his in-
junction when the ultra vires act
tends, or is of a nature, to pro-
duce public injury. He is not re-
quired to wait until all the mo-
nopoly possible is created, or un-
til all the injury possible is in

process of infliction.’ See, how-
ever, Trenton Potteries Co. v. Oli-
phant, 58 N. J. Eq. 507; 43 Atl.
723; 46 L. R. A. 255; 78 Am. St.
Rep. 612; reversing 56 N. J. Eq.
680; 39 Atl. 923. In Anheuser-
Busch Brewing Ass’n. v. Houck, 27
S. W. 692 (Tex. Civ. App.),
affirmed as Houck v. An-
heuser-Busch Brewing Ass’n., 88
Tex. 184; 30 8. W. 869, a
combination to control’ the sup-
ply of beer was held to be illegal,
notwithstanding testimony that its
only object and effect were to re-
duce expenses. So, in People ex
rel. v. Chicago Gas Trust Co, 130
Ill. 268, 291; 22 N. E. 798, 802;
8 L. R. A. 497, 504; 17 Am. St.
Rep. 319, 331, where holding of
stock by one corporation in others,
was held illegal as enabling it to
control them and establish « mo-
nopoly, the court said: ‘The ques-
tion is not whether it has at-
tempted to exercise such control,
the law looks to the general ten-
dency of the power conferred.’ The
doctrine stated in the text is fre-
quently sought to be declared by
statute; as witness, in the Anti-
Trust acts, the use, with reference
to restrictions upon competition,
of such expressions as ‘with a
view,’ ‘intended,’ ‘tend,’ ‘with in-
tent,’ ‘designed,’ ‘intended to have
the effect,’ ‘having for its objects,’
‘attempt,’ ‘reasonably calculated to
produce.” In Swift v. U. S., 196
U. 8. 375, 396; 25 Supm. 276,
279; 49 L. Ed. 518, in holding
a scheme as a whole unlawful un-
der the federal Anti-Trust against
420

THE SHERMAN ANTI-TRUST ACT.

became a law, because every sale and every transportation
of an article which is the subject of interstate commerce is
a successful attempt to monopolize that part of this com-

merce which concerns that sale or transportation.

An at-

tempt by each competitor to monopolize a part of inter-
state commerce is the very root of all competition therein.

Eradicate it, and

competition necessarily ceases—dies.

Every person engaged in interstate commerce necessarily

the objection that the several acts
charged were lawful and that the
intent could make no difference, it
was said: ‘Intent is almost essen-
tial to such a combination (i. e., in
restraint of commerce). Where
acts are not sufficient in them-
selves to produce a result which
the law seeks to prevent—for in-
stance, the monopoly—but require
further acts in addition to the
mere forces of nature to bring that
result ‘to pass, an intent to bring
it to pass is necessary in order to
produce a dangerous probability
that it will happen. But when
that intent and the consequent
dangerous probability exist, this
statute, like many others, and like
the common Jaw, in some cases,
directs itself against that danger-
ous probability as well as against
the completed result.’ To like ef-
fect, Waters-Pierce Oil Co. v.
Texas, 212 U.S. 86, 109; 29 Supm.
220, 226, which see as to constitu-
tional objections to prohibitions
against acts ‘reasonably  calcu-
lated’ or ‘tending’ to produce re-
strictions upon competition.” In
Waters-Pierce Co. v. Texas (212
U. S. 86); 29 Sup. Ct. 220; 53
L. Ed. —; the court was consider-
ing a statute of Texas which de-
nounced acts that ‘tend to,’ or are

‘reasonably calculated to bring
about,’ monopoly, and held that
the statute of Texas in this re-
spect was no different from the
provisions of the Sherman Act,
quoting from the Knight case, the
Addyston Pipe case, the Northern
Securities case, and the Swift case.
The court said (110,111): “As to
the phrase, ‘reasonably calculated,’
what does it include less than acts
which, when fairly considered, tend
to accomplish the prohibited thing,
or which make it highly probable
that the given result will be ac-
complished? * * * We are not
prepared to say that there was a
deprivation of due process of law
because the statute permitted and
the court charged that there might
be a conviction not only for acts
which accomplished the prohibited
result, but also for those which
tend or are reasonably calculated
to bring about the things forbid-
den’.” See also Swift & Co. v.
United States, 196 U. S. 375; 25
Sup. Ct. 276; 49 L. Ed. 518, af-
firming 122 Fed. 529. Northern
Securities Co. v. United States,
193 U. S. 197; 24 Sup. Ct. 436:
48 L. Ed. 659; affirming 120 Fed.
721. State v. Standard Oil Co.,
49 Ohio St. 137; 30 N. E. 279;
15 L. R. A. 145; 34 Am. St. 541.
MONOPOLY. 421
attempts to draw to himself, and to exclude others from, a
part of that trade; and, if he may not do this, he may not
compete with his rivals, all other persons and corporations
must cease to secure for themselves any part of the com-
merce among the states, and some single corporation or per-
son must be permitted to receive and control it all in one
huge monopoly.”’

‘‘An attempt to monopolize a part of interstate com-
merce, the necessary effect of which is to stifle or to directly
and substantially restrict competition in commerce among
the states, violates the second section of this act. But an
attempt to monopolize a part of interstate commerce which
promotes, or but indirectly or incidentally restricts, com-
petition therein, while its main purpose and chief effect are
to increase the trade and foster the business of those who
make it, was not intended to be made, and was not made,
illegal by the second section of the act under consideration,
because such attempts are indispensable to the existence of
any competition in commerce among the states.’’ °°

53 Whitwell v. Continental To- illegal. The act must, as the Su-

baceo Co., 125 Fed. 454; 60 C. C.
A. 290; 64 L. R. A. 689.
The court said: ‘The pur-
pose of the act of July 2, 1890,
was, however, to prevent the sti-
fling of competition, not to destroy
it or to foster monopoly, and any
construction of any of its provi-
sions which would give it such an
effect is unreasonable and inconsis-
tent with the object and spirit of
the law. It is an interpretation
which fosters the mischief it was
passed to remedy, and destroys the
remedy provided to abate the evil,
while a sound construction would
tend to abate the mischief and to
promote the remedy. It cannot,
therefore, be the true meaning of
the second section of this law that
every attempt to monopolize any
part of interstate commerce is

preme Court has twice declared
Hopkins v. U. 8., 171 U. S. 578,
600; 19 Sup. Ct. 40; 43 L. Ed.
290; reversing 82 Fed. 529; United
States v. Joint Traffic Ass’n, 171
U. S. 505, 568; 19 Sup. Ct. 25;
43 L. Ed. 259; reversing 89 Fed.
1020; 32 C. C. A. 491; 45 U.S.
App. 762, which affirmed 76
Fed. 895, have a reasonable con-
struction. The purpose of the sec-
ond section is the same as that of
the first—to prevent the restric-
tion of competition—and the two
sections ought to receive similar
interpretations. The Supreme Court
has declared that the true con-
struction of the first section is
that no contract, combination, or
conspiracy is denounced by it un-
less its necessary effect is to di-
rectly and substantially restrict
i

422

§ 201.

THE SHERMAN ANTI-TRUST ACT.

Lowering Prices.—The fact that the monopolists

were able and did lower the price to the public of the

product it had monopolized is no defense.

competition in commerce among the
states. By a parity of reasoning,
the correct interpretation of the
second section must be that no at-
attempt to monopolize a part of
the commerce among the states is
made illegal or punishable by the
provisions of that section unless
the necessary effect of that at-
tempt is to directly and substan-
tially restrict commerce among the
states. The acts of the defend-
ants had no such effect. They evi-
denced nothing but the legitimate
efforts of traders to secure for
themselves as large a part of in-
terstate trade as possible, while
they left their competitors free to
do the same. It was not—it could
not have been—the purpose or the
effect. of the second section of this
law to prohibit or to punish the
customary and universal attempts
of all manufacturers, merchants,
and traders engaged in interstate
commerce to monopolize a fair
share of it in the necessary con-
duct and desired enlargement of
their trade, while their attempts
leave their competitors free to
make successful endeavors of the
same kind. The acts of the de-
fendants were of this nature, and
they did not violate the second sec-
tion of the law.” See also United
States v. MacAndrews & Forbes
Co., 149 Fed. 823, 835. “It has
been argued that as the statute
makes it illegal to monopolize any
part of interstate or international
commerce every act tending to cre-
ate a monopoly likewise is made

The Act ‘‘has

unlawful; and, therefore, that ev-
ery contract or combination in any
degree diminishing competition in
interstate or international com-
merce is unlawful, though taken
alone, such diminution of compe
tition would not create a monop-
oly or constitute monopolizing. This
argument indicates loose reasoning
or a confusion of ideas. The mean-
ing of the words ‘tending to cre-
ate w monopoly’ is not clear; but
if these words mean something dif-
ferent from the words of the stat-
ute, the courts can not read them
into the statute. Although a re-
striction of competition between
competitors in a branch of trade
may not of itself constitute mo-
nopolizing, it may be part of an
attempt, combination, or conspir-
acy to monopolize, and therefore
in violation of the statute. But
if a restriction of competition of
itself does not constitute monopo-
lizing and is not part of an at-
tempt, combination, or conspiracy
to monopolize, it cannot by any
correct use of language be called
‘tending to create a monopoly,’ and
it cannot be declared unlawful on
the ground that a subsequent addi-
tional restriction of competition by
the same parties or by others may
constitute monopolizing in viola-
tion of Jaw. An act which is not
prohibited by law cannot be de-
clared by the courts to be unlaw-
ful because subsequent independent
acts of a similar character may be
unlawful.” Vietor Morawetz in
Columbia Law Review for Decem-
MONOPOLY.

423

no concern with prices, but looks solely to competition, and
to the giving of competition full play, by making illegal

any effort at restriction upon competition.

Whatever com-

bination has the direct and necessary effect of restricting
competition, is, within the meaning of the Sherman Act as
now interpreted, restraint of trade.’’ *4

ber, 1910, 290. “It is a dangerous
doctrine to condemn a combination
on account of its supposed tenden-
cies. A tendency is more a matter
of opinion than a matter of fact.
tiven certain facts, the question
whether these tend toward a result
is a question that will be an-
swered differently by different
minds. Whether any particular
association or combination does
stifle competition is a question of
fact, to be determined from evi-
dence and not from impressions.
Whether or not a given combina-
tion possesses a monopoly of any
particular trade, industry or occu-
pation is a matter of fact to be as-
certained from evidence. To say
that a combination tends to create
a monopoly, or tends to restrain
trade, or tends to stifle competi-
tion, is equivalent to saying that
the combination as a matter of fact
does not do or accomplish any one
of these objects, but at the very
most and worst it contains the
possibility of accomplishing the
several ends, and therefore it is
illegal; not because it is actually
guilty of anything either unlawful
or contrary to public policy, but
because its situation is such as to
render it possible for the combina-
tion to do that which is unlawful
or contrary to public policy. It
will hardly do to condemn a com-
bination as unlawful upon such
reasoning as this. There is the pos-

sibility that every law-abiding citi-
zen may become a criminal; there
is the possibility that every indi-
vidual possessing great wealti may
use that wealth to the disadvan-
tage of other parties or to the det-
riment of the public. The larger
a partnership and the more power-
ful a corporation becomes, the
greater the possibility of doing
that which is injurious or oppres-
sive, but individuals, partnerships
and corporations are not con-
demned on account of any of their
supposed tendencies. The law
views actual conditions and
results rather than possibilities,
whether near or remote. There are
few lines of decisions more perni-
cious than those which arbitrarily
dispose of valuable property rights
on account of alleged tendencies.”
Eddy on Combinations, 553. See
also Monongahela River Consoli-
dated Coal & Coke Co. v. Jutte,
210 Pa. 288; 59 Atl. 1088, 1119;
105 Am. St. 812. United States
Telephone Co. v. Central Union
Telephone Co., 202 Fed. 66; (C.
C. A.); affirming 171 Fed. 130.
54 United States v. Swift & Co.,
122 Fed. 529; modified and af-
firmed 196 U. S. 375; 25 Sup. Ct.
276; 49 L. Ed. 518. In the Cir-
cuit Court it was said: “Thus de-
fined, there can be no doubt that
the agreement of the defendants to
refrain from bidding against each
other in the purchase of cattle, is
424

THE SHERMAN ANTI-TRUST ACT.

§ 202. Monopoly by One Person Only—Single Corpora-
tion.—It is possible for a single individual to so monopolize

a combination in restraint of
trade; so also their agreement to
bid up prices to stimulate ship-
ments, intending to cease from bid-
ding when the shipments have ar-
rived. The same result follows
when we turn to the combination
of defendants to fix prices upon,
and restrict the quantities of meat
shipped to their agents or their
customers. Such agreements can
be nothing less than restrictions
upon competition, and, therefore,
combinations in restraint of
trade, and thus viewed, the peti-
tion, as an entirety, makes out a
ease under the Sherman Act. Thus,
restrictions were condemned not-
withstanding that they had re-
sulted in lowering prices, in Rich-
ardson vy. Buhl, 77 Mich. 632, 660;
43 N. W. 1102, 1111; 6 L. R. A.
457, 466; Hunt v. Riverside Co-
operative Club, 140 Michigan 538;
104 N. W. 40; 112 Am. St. Rep.
420; Strait v. National Harrow
Co., 18 N. Y. Suppl. 224 (Supm.
Ct., Sp. T., 1891). See Chicago,
Wilmington, ete., Coal Co. v. Peo-
ple, 114 Ill. App. 75, 106; affirmed
21£ Til 421; 73 N. E. 770; Rich-
ardson vy. Buhl was approvingly
cited on this point in Trenton Pot-
teries Co. v. Oliphant, 56 N. J.
Eq. 680, 736; 39 Atl. 923, 944.
reversed 58 N. J. Eq. 507; 43 Atl.
723; 46 L. R. A. 255; 78 Am. St.
612. Compare U. 8S. v. Swift, 122
Fed. 529, 534. So, in the absence
of proof that unreasonable prices
resulted. Anderson v Jett, 89 Ky.
375; 12 8. W. 670; 6 L. R. A. 390;
Central Ohio Salt Co. v. Guthrie,
35 Ohio St. 665; Hoffman v.

Brooks, 23 Am. Law Reg. (N.S.)
648 (Super. Ct. Cin., 1884) ; Peo-
ple v. Sheldon, 139 N. Y. 251; 34
N. E. 785; 23 L. R. A. 221; 36
Am. St. Rep. 690; Cohen v. Ber-
lin & Jones Envelope Co., 166 N.
Y. 292, 304; 59 N. E. 906, 910;
reversing 38 N. Y. App. Div. 499;
56 N. Y. Supp. 588. See
also Addyston Pipe & Steel Co.
vy. U. S, 175 U. S. 211, 238;
20 Supm, 96, 106; 44 L. Ed. 136;
John D. Park & Sons Co. v. Hart-
man, 153 Fed. 24, 45; 82 C. C. A.
158, 179; 12 L. R. A. (N.S.) 135,
150; Brown v. Jacobs Pharmacy
Co., 115 Ga. 429, 435, 436; 41 S.
E, 553, 555, 556; 57 L. R. A.
547, 551; 90 Am. St. Rep. 126;
Heim Brewing Co. v. Belinder, 97
Mo. App. 64, 68; 71 S. W. 691,
692. So, in People v. Milk Ex-
change, 145 N. Y. 267, 274; 39 N.
E. 1062, 1064; 27 L. R. A. 487,
441; 45 Am. St. Rep. 609, where a
combination to control the price
and supply of milk was held ille-
gal, it was said: ‘It may be
claimed that the purpose of the
combination was to reduce the
price of milk, and that, it being
an article of food, such reduction
was not against public policy. But
the price was fixed for the bene-
fit of the dealers, and not the con-
sumers, and the logical effect upon
the trade of so fixing the price
by the combination, was to para-
lyze the production and limit the
supply, and thus leave the dealers
in a position to control the mar-
ket, and at their option to en-
hance the price to be paid by the
consumers.’” See also United
MONOPOLY. 425
interstate trade in an article as to violate the statute and
be punished for either a monopoly or attempt to monopolize;
but such a person cannot himself ‘‘combine’’ nor can he
alone conspire. Therefore while he alone may violate the
statute by creating or attempting to create a monopoly;
he can in no other way, singly and alone, violate the second
section.”"> So likewise may a single corporation create a
monopoly. The Standard Oil case is an example of this
kind. A single corporation may as effectually create a mon-
opoly as half a dozen corporations combining; it may not
as easily do it, but it may as effectually.°°

§ 203. Statute not Limited to Any Given Commodity.—
The statute is not limited to contracts or combinations which

States Telephone Co. v. Central ably needed in the future—are

Union Telephone Co., 202 Fed. 66;
(C. C, A.), affirming 171 Fed. 130.

55 United States v. MacAndrews
& Forbes (o., 149 Fed. 828, 836.

56“A corporation, whether it
represents a combination or not,
may not attempt to acquire mo-
nopoly control. It may not in-
crease its trade by interfering
with the right of others to trade,
that is, by killing off or prevent-
ing the competition of outsiders
by means of unfair methods. Un-
fair methods are many, and no
yeneral description can cover them
all. Broadly speaking, they con-
sist principally in acts which,
standing alone, are not for the
benefit of the corporation but for
the purpose of injuring others.
For example, to give three spe-
cific instances, to sell goods at less
than cost, to pay a large sum for
the plant of a competitor and then
abandon the plant, to expend
money in acquiring sources of sup-
ply to an extent very much greater
than is needed or can be reason-

acts which, standing alone, do not
benefit a corporation but injure
it. ‘Conceivably each of these acts
might be proper to meet some spe-
cial exigency. Probably, however,
they are done respectively to kill
off, to buy off, and to keep off
competition. All clearly represent
a purpose to acquire monopoly
control. Other acts suggested by
these cases which tend in varying
degree to show an improper pur-
pose are: securing rebates from
railways, spying: on competitors,
selling low in one place to meet
local competition, uniformly or
generally making contracts with
persons whose business is bought
that such persons shall not com-
pete for long periods in the fu-
ture, and the operation of bogus
independent companies. In the
same class fall naturally discrim-
inations, such as refusing to deal
with competitors, or persons who
deal with competitors.” Mr. Rob-
ert L. Raymond, in 25 Harvard
Law Review 53.
426 THE SHERMAN ANTI-TRUST ACT.

monopolize interstate commerce in any given commodity,
but seeks to reach those which directly restrain or impair
the freedom of interstate commerce or trade regardless of
what the thing is that has entered into such commerce or
trade.*”

§ 204. Monopoly in Order to Establish Competition —
Where a local and long distance telephone company en-
tered into a 99 year contract with respect to the sending
and receiving messages, the local company thereby being
prevented from entering into a contract with any other long
distance telephone company concerning the transmission of
messages, it was urged that the contract should be approved
in spite of its restrictive and monopolistic tendencies, its
net result tending in the contrary direction, so that it
really promoted instead of restraining competition. The
court said that this agreement amounted to saying that the
restraint and monopoly found in the contract was not its
main and characterizing purpose and effect, but was the
direct and necessary incident of contracts which operated
primarily for promoting competition, and therefore they
could not be condemned. ‘‘It may be well,’’ said the court,
‘that if a system of monopoly is found so entrenched that
competition cannot get a start, except by providing itself in
advance with a system of exclusive contracts, then, in such
case and in so far as this is necessary to get competition,
the exclusive contracts may become a mere incident of the
generally lawful enterprise.’ The court did not con-
sider a 99 year contract justifiable.®®

57 Chesapeake & Ohio Fuel Co.
v. United States, 115 Fed. 610,
624; 53 C. C. A. 256; United
States v. E. C. Knight Co., 156
U. 8.1; 15 Sup. Ct. 249; 39 L.
Ed. 325; affirming 60 Fed. 934;
9 C. C. A. 297; 17 U. S. App.
466; 24 L. R. A. 428, which af-
firmed 60 Fed. 306; Cummings v.

Union Bluestone Co., 15 N. Y.
App. Div. 602; 44 N. Y. Supp.
787; affirmed 164 N. Y. 401; 58
N. E. 525; 52 L. R. A. 262; 79
Am. St. 655.

58 United States Telephone Co. v.
Central Union Tel. Co., 202 Fed.
66; (C. C. A.), affirming 171 Fed.
130.
MONOPOLY. 427

§205. Duration in Time of a Monopoly Permitted.—
In the case of the monopoly of 99 years created by con-
tracts, as described in the next preceding section, in answer
to the claim made on argument that the contract resulted in
a benefit to the public, the court said that 99 year contracts
were practically perpetual contracts, and refused to suggest
the term of exclusive contracts which would be reasonable,
so as to permit the use of such means for getting a rival
company into the field, but added: ‘‘The term of a patent
may furnish some analogy. Different circumstances may
justify different terms. The term might be such as to make
it very difficult to decide upon which side of the line it lay.
We need not speculate about these things, because we are
clear that the 99 year restriction found in these contracts
goes far beyond any inherent necessity for the purpose
suggested, and so cannot be justified as properly incidental
to a lawful purpose.’’ *®

59 United States Telephone Co. 202 Fed. 66; (C. C. A.), affirming
v. Central Union Telephone Co. 171 Fed. 130.
CHAPTER XI.

CONSPIRACY.

SECTION. SECTION.

206. Statute. 213. Separate lawful acts com-

207. Definition of conspiracy. bined in a conspiracy.

208. Conspiracy more than a 214. Corporation entering into a
contract. conspiracy.

209. Two or more persons neces- 215. Conspiracy to restrain or
sary to commission of of- monopolize interstate
fense. trade.

210. Section 5440 of Revised 216. A continuing offense—Stat-
Statutes on conspiracy— ute of limitations.

Overt act—Indictment. 217. Joining conspiracy after its

211. Tacit understanding — As- formation.
semblance of conspirators 218. Corporation may be guilty
not necessary—All equally of a conspiracy.
guilty—Act of one act of 219. Combination to control shin-
all—Declaration of con- gle trade.
spirators. 220. Combination arresting opera-

212. Criminal intent. tion of railroads.

221. Corner, conspiracy to run.

§ 206. Statute—The first section of the statute makes
‘‘every contract, combination in the form of a trust or
otherwise, or conspiracy, in restraint of trade or commerce
among the several states, or with foreign nations illegal.’’
The word ‘‘conspiracy,’’ in the same connection, occurs in
the third section. In the second section it is made an of-
fense to ‘‘combine or conspire with any other person or
persons, to monopolize any part’’ of such trade or com-
merce.*

§ 207. Definition of Conspiracy.—‘‘A conspiracy has been
described as a combination of two or more persons, by con-

126 State at Large 209; U. 8. gardless of the degree of restraint
Comp. Stat. 3200. A conspiracy effected thereby. United States v.
to control trade is an offense re- Patterson, 201 Fed. 697.

428
CONSPIRACY. 429

certed action, to accomplish a criminal or unlawful purpose,
or some purpose not in itself unlawful or criminal, by crim-
inal or unlawful means.’”

§ 208. Conspiracy More Than a Contract.—‘‘A conspir-
acy in restraint of trade is different from and more than
a contract in restraint of trade. A conspiracy is consti-
tuted by an agreement, it is true, but it is the result of the
agreement, rather than the agreement itself, just as a part-
nership, although constituted by a contract, is not the con-
tract but is a result of it. The contract is instantaneous,
the partnership may endure as one and the same partner-
ship for years. A conspiracy is a partnership in criminal

2United States v. Cassidy, 67
Fed. 698, 702, citing Pettibone v.
United States, 148 U. S. 197; 13
Sup. Ct. 542; 37 L. Ed. 419. “It
is therefore the privilege and duty
of the court, uncontrolled by con-
siderations drawn from _ other
sources, to find the meaning of
the statute in the terms of its
provisions, interpreted by the set-
tled rules of construction. That
the original design to suppress
trusts and monopolies created by
eontract or combination in the
form of trust, which of course
would be of a ‘contractual charac-
ter,’ was adhered to, is clear; but
it is equally clear that a further
and more comprehensive purpose
came to be entertained, and was
embodied in the final form of the
enactment. Combinations are con-
demned, not only when they take
the form of trusts, but in whatever
form found, if they be in restraint
of trade. That is the effect of the
words ‘or otherwise.’ It may be
that those words should be deemed
to include only forms of like char-
acter—that is to say, some form of

contract as distinguished from
tort; but, if that be so, it only
emphasizes and makes imperative
the inference which otherwise it
seems to me would be sufficiently
clear, that the word ‘conspiracy’
should be interpreted independ-
ently of the preceding words. It
is hardly to be believed that the
words ‘or otherwise’ were used sim-
ply for the purpose of giving fuller
scope to the antecedent words ‘con-
tract’ and ‘combination,’ and then
‘conspiracy’ added merely for the
same purpose.” United States v.
Debs, 64 Fed. 724, 748; Thomas
v. Cincinnati N. O. & T. P. Ry.
Co., 62 Fed. 803, 818. “The con-
spiracy to which the statute refers
here may also be defined as the
agreement, confederation, combina-
tion, design, scheme, plan, or pur-
pose of two or more parties to ac-
complish by their concerted action
or co-operation an unlawful result
by either lawful or unlawful
means.” United States v. Ameri-
can Naval Stores Co., 172 Fed.
455, 460. See 186 Fed. 592.
430

purposes.

THE SHERMAN ANTI-TRUST ACT.

That as such it may have continuation in time is

shown by the rule that an overt act of one partner may be
the act of all without any new agreement specifically di-

rected to that act.’

§209. Two or More Persons Necessary to Commission
of Offense.—The gist of an offense in a conspiracy is the

unlawful agreement.
one person alone.

A conspiracy cannot be committed by
There must be two wills acting together.

A single defendant, under a charge of conspiracy, cannot be

convicted alone.*

3 United States v. Kissel, 218 U.
S. 601; 31 Sup. Ct. 124; 54 L. Ed.,
reversing 173 Fed. 823. The stat-
ute makes a distinction between a
contract and a combination or con-
spiracy in restraint of trade, and
a declaration in a suit based on
section 7 of the Sherman Act to
recover damages resulting to the
plaintiff from a violation of such
provision, which alleges in a sin-
gle count that the defendant en-
tered into a “contract, combination
and conspiracy” in restraint of
trade is bad for duplicity. Rice v.
Standard Oil Co., 134 Fed. 464.
Relying on this language in North-
ern Securities Co. v. United
States, 193 U. 8. 197; 24 Sup. Ct.
436; 48 L. Ed, 679; affirming 120
Fed. 721. “The words hit two
classes of cases, and only two—
contracts in restraint of trade, and
combinations or conspiracies in re-
straint of trade.”

4 United States v. American Na-
val Stores Co., 172 Fed. 455, 460.
See 186 Fed. 592. The court said:
“Since both counts of the indict-
ment charge that certain of the

defendants conspired among them-
selves, I charge you that on either
count you must find that at least
two of the defendants conspired to
commit the acts charged, although
divers other persons to the grand
jurors aforesaid unknown may or
may not have been concerned. On
either count a verdict of guilty
could not be found against a sin-
gle defendant. The gist of the
conspiracy is that two or more
shall form a plan for concerted ac-
tion. You must, under the rules
I have stated and will state, find
at least two to be guilty under one
or the other count before you
would be authorized to convict un-
der either count.” See also United
States v. Reading Co., 183 Fed.
427. United States v. Santa Rita
Store Co., 113 Pac. 620. In this
last case it was held that a con-
spiracy between two corporations
cannot be formed by the act and
thoughts of one person acting as
agent of both corporations. See
also Standard Oil Co. v. State, 117
Tenn. 618; 100 S. 8S. 705; 10 L.
R. A. (N.S.) 1015.
CONSPIRACY. 431

§ 210. Section 5440 of Revised Statutes on Conspiracy—
Overt Act—Indictment.—Section 5440 of the Revised Stat-
utes provides that ‘‘If two or more persons conspire either
to commit any offense against the United States or to de-
fraud the United States in any manner or for any purpose,
and one or more of such parties do any act to effect the
object of the conspiracy all the parties to such conspiracy
shall be liable to a penalty of not more than ten thousand
dollars, or to imprisonment for not more than two years or
to both fine and imprisonment, in the discretion of the
court.’’ It has been claimed that this section must be
considered in connection with a charge of conspiracy under
the Sherman Act, and therefore an ‘‘overt act’’ must be
alleged and proven. But such is not the case. ‘‘Under this
statute a mere conspiracy is an offense; but, in addition to
the conspiracy, one or more of the parties to it must do
some act to effect its object before a criminal prosecution
can be maintained: This indictment is necessarily brought
under these provisions of the Sherman Act. No indictment
ean be brought in the United States courts for the of-
fense of conspiracy at common law, because it has not been
made an offense by any United States Statute. Nor could
this indictment have been brought under Section 5440 of
the United States Revised Statutes, because there is no law
of the United States making a conspiracy in restraint of
trade or to monopolize trade or offense against the United
States except the Sherman Act, and there cannot be a con-
spiracy to engage in a conspiracy. Under the Sherman Act
no overt act is necessary to the commission of the offense.
That provides that every person who engages in a con-
spiracy in restraint of trade or commerce, or to monopolize
trade, is guilty of the offense.’’®

5 United States v. Kissel, 173 722; United States v. New Depar-
Fed. 823; reversed but not on this ture Mfg. Co., 204 Fed. 107;
point; 218 U. 8. 601; 31 Sup. United States v. Patterson, 55
Ct. 124; 54 L. Ed. 1168; United Fed. 605; Smith v. United States,
States v. Patterson, 201 Fed. 697, 157 Fed. 721; 87 ©. C. A. 353
432 THE SHERMAN ANTI-TRUST ACT.

§211. Tacit Understanding—Assemblance of Conspir-
rators Not Necessary—All Equally Guilty—Act of One
Act of All—Declaration of Conspirators.—Speaking of the
statute quoted in the preceding section, it was said:

‘‘To make this statute as clear to you as possible, I will
call your attention to its three essential provisions. The
first element is that the act of two or more persons con-
spiring together; the second is to commit any offense
against the United States, and the third is what is termed
the ‘overt act,’ or the element of one or more of such
parties doing any act to effect the object of the conspiracy.
With respect to the first element, we find that a conspiracy
has been described as a combination of two or more persons,
by concerted action, to accomplish a criminal or unlawful
purpose, or some purpose not in itself unlawful or criminal,
by criminal or unlawful means. The common design is the
essence of the charge, and while it is necessary, in order to
establish a conspiracy. to prove a combination of two or
more persons, by concerted action, to accomplish the criminal

(But see United States v. Reichart,
32 Fed. 142, 145.) United States
v. Patten, 187 Fed. 664; reversed
226 U. S. 525; 33 Sup Ct. 141; 57
L. Ed. —, but not on this point.
In this last case Judge Noyes
said: “In the first and second sec-
tions of the federal Anti-Trust stat-
ute Congress employed, without
words of limitation, the terms
‘conspiracy’ and ‘conspire’ in cre-
ating offenses affecting interstate
commerce. It did not provide, as
in the general conspiracy statute,
that overt acts should be neces-
sary to complete the offenses. It
used without qualification terms
having well-known and determin-
ate meanings, and qualifications
cannot be added by construction.
The Anti-Trust Act is independent
of the earlier conspiracy enact-

ment, and the latter does not pur-
port to be a statute of definition.
While the offenses which it is di-
rected against require overt acts,
there is no warrant for reading its
limitations into this separate dis-
tinct and complete enactment.
Consequently I reach the conclu-
sion that the counts containing no
averments of overt acts are not
for that reason insufficient, and
cannot but regard such conclusion
as supported by the weight of au-
thority.” But see United States v.
Cassidy, 67 Fed. 698, 705; United
States v. Winslow, 195 Fed. 578;
227 U. 8. 202; 33 Sup. Ct. —; 57
L. Ed. —.

8 Pettibone v. United States, 148
U. 8. 197; 13 Sup. Ct. 542; 37 L.
Ed. 419.
CONSPIRACY. 433

or unlawful purpose, it is not necessary to constitute a
conspiracy that two or more persons should meet together,
and enter into an explicit or formal agreement for an un-
lawful scheme, or that they they should directly, by words
or in writing, state what the unlawful scheme was to be,
and the details of the plan or means by which the unlawful
combination was to be made effective. It is sufficient if two
or more persons, in any manner, or through any contrivance,
positively or tacitly come to a mutual understanding to ac-
complish a common and unlawful design. In other words,
where an unlawful end is sought to be effected, and two or
more persons, actuated by the common purpose of accom-
plishing that end work together, in any way, in further-
ance of the unlawful scheme, every one of said persons be-
comes a member of the conspiracy, although the part he was
to take therein was subordinate one, or was to be executed
at a remote distance from the other conspirators. A com-
bination formed by two or more persons, to effect an un-
lawful end, is a conspiracy, said persons acting under a
common purpose to accomplish the end designed. Any one
who, after a conspiracy is formed, and who knows of its
existence, joins therein, becomes as much a party thereto,
from that time, as if he had originally conspired.” Further-
more, where several persons are proved to have combined
together for the same illegal purpose, any act done by one of
the parties in pursuance of the original concerted plan, and
with reference to the common object, is, in the contempla-
tion of the law, the act of the whole party, and therefore
the proof of such act will be evidence against any of the
others who were engaged in the same conspiracy. It is also
true that any declaration made by one of the parties during
the pendency of the illegal enterprise is not only evidence
against himself, but is evidence against the other parties,
who, when the combination is proved, are as much respons-

7United States v. Babcock, 3 Dill. 566, Fed. Cas. No. 14487.
434 THE SHERMAN ANTI-TRUST ACT.

ible for such declarations and the acts to which they relate
as if made and committed by themselves. This rule, you
will understand, applies to the declaration of a co-con-
spirator, although he may not be under prosecution, his
declaration being equally admissible with those of one under
indictment and prosecution.

The confederacy to commit an offense is the gist of the
criminality under the law. The law regards the act of un-
lawful combination and confederacy as dangerous to the
peace of society and declares that such combination and
confederacy of two or more persons, to commit crime, re-
quires an additional restraint to those provided for the
commission of the crime, and makes criminal the conspiracy,
with penalties and punishments distinctive from those pre-
seribed for the crime which may be the object of the con-
spiracy. You will readily understand why this is true. A
conspiracy becomes powerful and effective in the accom-
plishment of its illegal purpose in proportion to the number,
power, and strength of the combination to effect it. It is
also true that, as it involves a number in a lawless enter-
prise, it is proportionately demoralizing to the well-being
and character of the men engaged in it, and, as a conse-
quence, to the safety of the community to which they
belong.’’®

8 United States v. Cassidy, 67
Fed. 698; United States v. Debs,
64 Fed. 724; United States v.
Babcock, 3 Dill. 566; Fed. Cas.
14487; United States v. Thompson,
12 Sawy. 155; 31 Fed. 331. “The
concerted action or co-operation
may arise from definite, express,
and well understood agreement or
combination, or it may arise as
well from a tacit silent under-
standing. It has been said that
to establish a conspiracy it is not
necessary that there should be an
explicit or formal agreement for

an unlawful act between parties,
nor is it essential that direct and
positive proof be made of an ex-
press agreement to do the act for-
bidden by law. In conspiracy cases,
it may be often impossible to pro-
duce such proof, because conspira-
cies are not usually meditated and
planned in the presence of wit-
nesses not parties thereto, nor in
terms of express language. Hence
a conspiracy may be proven by cir-
cumstances. The understanding,
combination, or agreement be-
tween the parties in a given case
CONSPIRACY.

to effect the unlawful purpose
charges must be proved beyond a
reasonable doubt, because without
corrupt understanding there is no
conspiracy; but circumstantial evi-
dence may be resorted to to show
such agreement or conspiracy. Con-
spiracies may be entered into in a
very informal way; generally, in
fact, in an informal way. The par-
ties may not come together at all.
They may be in different parts of
the country. But if, by any means,
by telegraph, or letter, or by any
means whatever, they have come to
a mutual understanding for com-
mitting any offense against the
government, that is a conspiracy.
The rule in regard to conspiracy,
as in regard to all offenses, is that
you shall be satisfied in your own
mind, beyond a reasonable doubt,
of the guilt of the defendants, or
any two of them. There must be
criminal intent on the part of
those who form a conspiracy but,
to constitute a criminal intent, it
may be necessary to show an in-
tent to violate the law. The ques-
tion is: Did the accused enter into
a conspiracy to do the things with
which they are charged, and were
such things violations of the stat-
ute?” United States v. American
Naval Stores Co., 172 Fed. 455;
see 186 Fed. 592. “It is not nec-
essary for the government to prove
that all of the means charged were
in fact a part of a single pur-
pose and conspiracy by two or
more of the defendants, or that all
of the means charged were in fact
carried out by two or more of the
defendants. It is sufficient if it
be reasonably shown beyond a rea-
sonable doubt that some of those
means charged were a part of the

435

common scheme or design or un-
derstanding by two or more of the
defendants, and that those same
means were of themselves sufficient
to cause an essential obstruction
of the free and untrammeled flow
of trade and commerce between the
states and with foreign nations.
Both of these ingredients, I charge
you, it is necessary for the govern-
ment to show beyond a reasonable
doubt before you would be author-
ized to convict two or more of the
defendants: (1) The common de-
sign scheme, or understanding;
and (2) the restraint or burden
upon free flow of commerce be-
tween the states and with foreign
nations. Before these inferences
may be made from the operation
of any one or more of the means
charged, the fact that these means
were employed, and the fact that
they were employed as the pur-
pose of the conspiracy of two or
more of the defendants, must be
proved beyond a reasonable doubt.
You may consider all the evidence
of the relationship, if any, of the
defendants toward each other, and
their connection, if any, with any
of the acts charged. You may con-
sider the acts and declarations of
persons not named in the indict-
ment, if you find that they were
done and said in the presence of
any of the defendants, and if they
were made in carrying a conspir-
acy or common scheme into effect.
The indictment charges that the
defendants conspired with divers
other persons to the grand ju-
rors unknown. If you find that
any two or more of the defendants
conspired with any person not
named in the indictment to com-
mit the offenses charged, you
436

THE SHERMAN ANTI-TRUST ACT.

§ 212. Criminal Intent.—To constitute the offense of con-
spiracy there must be a criminal intent on the part of those
entering into it; but to constitute a criminal intent, it may
not be necessary to show an intent to violate the law.°®

would be authorized under the
rules laid down to find any two
or more of the defendants guilty
under either or both counts. If,
on the other hand, any of the
elements of the offenses are lack-
ing, and no two or more of the
defendants did so conspire, it would
be your duty to acquit them.”
United States v. American Naval
Stores Co., 172 Fed. 455, 462; 186
Fed. 592; United States v. Lake
Shore & M. S. Ry. Co. 203 Fed.
295. Judge Holt, in United States
v. Kissel, 173 Fed. 823, (reversed
218 U. S. 601; 31 Sup. Ct. 124;
54 L. Ed. 1168); held that section
5440 of the Revised Statutes did
not apply to the Sherman Act;
and therefore an overt act was
not necessary to constitute an of-
fense under that Act. But the case
was reversed, though perhaps not
on this point. United States v.
Kissel, 218 U. S. 601; 31 Sup. Ct.
124; 54 L. Ed. 1168. But it would
seem that at page 610 the court
regarded overt acts necessary to
constitute the offense. In Steers
v. United States, 102 Fed. 1; 112
C. C. A. 428, while no reference is
made to section 5440 of the Re-
vised Statutes, yet overt acts were
depended upon.” The indictment
then proceeded under the heading
‘overt acts,’ to describe the things
which were done by defendants, be-
ing the same things which it had
already recited as planned. It is
said that the description of overt
acts cannot be carried over into

the accusatory portion of an in-
dictment nor make it good when
that accusatory portion fails from
the lack of stated facts and this
seems to be the applicable rule in
pleading (United States v. Brit-
ton, 108 U. 8S. 199, 205; 2 Sup.
Ct. 531; 27 L. Ed. 698.) Here,
however, the specific statement of
the several means which are deter-
mined upon as a part of the plan,
should be treated as in the accusa-
tory portion, and when so treated,
the indictment is not open to the
objection that it states conclu-
sions only.” ;

9 United States v. American Na-
val Stores, 172 Fed. 455; see 186
Fed. 592. ‘Lhe court charged the
jury in this case: “In your delib-
erations, you will not lose sight
of the main fact that the specific
offenses with which the defend-
ants are charged are (1) a con-
spiracy to restrain interstate trade
and (2) a conspiracy to monopolize
interstate trade. All that is
charged as the means to effect
such conspiracy may be proved as
alleged, yet if you are not satis-
fied that such things tended to re-
strain interstate trade or com-
merce, or tended to the monopoly
of such trade or commerce, and,
further, that such things were
done were the result of some pre-
vious tacit or express understand-
ing between two or more of the
defendants, they could not be con-
victed of the conspiracy charged.
If, on the other hand, you believe
CONSPIRACY. 437

§ 213. Separate Lawful Acts Combined in a Conspiracy.
—Separate acts each one, each in itself, perfectly lawful may
be bound together by a common intent as part of an unlaw-
ful scheme to monopolize or to restrain interstate or foreign
trade or commerce, and by the plan form a conspiracy.
‘“‘Tt is the illegal result, viz., the monopoly or the restraint
of commerce, which makes a conspiracy criminal within the
purview of the Anti-Trust Act. If there was a conspiracy,
and that tended necessarily to impose the restraints pro-
hibited, the constituent elements, whether legal or not, are
enough to give the scheme a body. A series of acts, each
or any of which may be innocent in itself, may be wrongful,
if the direct object, purpose, or result thereof be to carry
into effect a previous agreement, or conspiracy, whereby the
free flow of trade or commerce between the states and with
foreign nations, or the liberty of the trader to carry on such

business, be obstructed.’’!°

from all the evidence that the
things charged in the indictment
as means adopted and effecting the
restraint of trade were done by
the defendants, and that said
means naturally or necessarily
tended to such restraint, and, fur-
ther, that such means adopted were
the result directly of a previous
express or tacit understanding be-
tween two or more of the defend-
ants, such ones as you believe to
have been so connected in such
agreement or understanding you
should find guilty. If you have a
reasonable doubt of such an agree-
ment or understanding, you should
give them the benefit of the doubt
and acquit them.”

10 United States v. American Na-
val Stores Co., 172 Fed. 455, 463;
see 186 Fed. 592. This extract is
from a charge to the jury in which
the court further said: “I charge

you, further, that the prohibitory
provisions of the act under consid-
eration apply to all monopolies,
combinations, or conspiracies in
restraint of interstate or foreign
trade or commerce without excep-
tion or limitation, and are not
confined to those in which the re-
straint is unreasonable. The govy-
ernment need not show that a con-
spiracy is entered into for the di-
rect purpose of restraining trade
or commerce, if such restraint is
its necessary effect, and if this,
with the other elements stated, be
shown beyond a reasonable doubt.
All the means and all the illegal
acts which the indictment charges
must have been done within three
years prior to the finding of the
indictment. Any acts beyond this
period you should not consider.”
That portion of this note in which
it is said that the restraint need
438 THE SHERMAN ANTI-TRUST ACT.

§214. Corporation Entering Into a Conspiracy.—In
charging a jury Judge Sheppard said:

‘‘A corporation, although an artificial being, existing only
in contemplation of law, is held to the same measure of
liability as an individual, and is entitled to the same rights
of protection as an individual. <A corporation acts through
its officers, directors, and agents. While a corporation may
not conspire with its own officers, directors, or agents, it may
conspire with another corporation. Corporations may con-
spire with individuals. As individuals may conspire with
one another, they may conspire with another corporation.
But you must bear always in mind that a corporation is only
responsible for the acts of its agents while acting within the
scope of their employment, or for such acts only as may
have been authorized.’’ And he added:

‘‘A private corporation or an indivdual is liable for the
wrongful acts of its agents, when those agents are acting in
the general line of their duties, or if such corporation ratifies
those acts in some active way, other than merely passive ac-

quiescence. ’’1?

not be an unreasonable one is now
not the law under the Standard
Oil Co. v. United States, 221 U.
S. 1; 31 Sup. Ct. 502; 55 L. Ed.
619; 34 L. R. A. (N.S.) 834; af-
firming 173 Fed. 177; see also
United States v. New Departure
Mfg. Co., 204 Fed. 107.

11 United States v. American Na-
val Stores Co., 172 Fed. 455, 464;
see 186 Fed. 592. The court fur-
ther said on this subject: “Tf you
find that the acts alleged were by
certain employees of the New
York corporations, and that these
corporations were separate and
distinct from the two defendant
corporations, charged with two or
more of the defendants, then you
should not consider any of the

So the officers of a corporation who control

acts which are charged to have
oceurred on the properties of these
New York corporations, or the
acts of employees or agents there-
of. But if, on the other hand, the
evidence satisfies you beyond a rea-
sonable doubt that one or both of
the New York corporations was
in fact so owned, controlled and
dominated, and operated by one or
both of the defendant corporations,
that had the same officers, and it
was in fact, in its business trans-
actions, for all practical purposes
identical with one or both of the
defendant corporations, the New
York corporation which you find
so connected you may consider in
connection with the defendants. If
you further find that two or more
CONSPIRACY. 439
the action of the corporation may be held equally guilty
with the corporation of a violation of the statute.!”

§ 215. Conspiracy to Restrain or Monopolize Interstate
Trade.—Under the statute the conspiracy must restrain or
monopolize interstate trade or commerce. If the acts per-
formed constituting the conspiracy did not restrain or tend to
restrain such trade or commerce, or monopolize or tend to
monopolize it, there is no offense committed.1* If the purpose
of a conspiracy is to restrain interstate trade, the degree of
restraint effected by it must be unreasonable to constitute the
offense. A monopolization of a part of the trade in a single
article is a violation of the statute.1*

§ 216. A Continuing Offense—Statute of Limitations.—
When the plot contemplates bringing to pass a continuous
result that will not continue without the continuous co-
operation of the conspirators to keep it up, and there is such
a continuous co-operation, such continuous co-operation is not
a series of distinct conspiracies (a cinematographic series),

of the defendants conspired as
charged with one or both of the
New York corporations to monop-
olize or restrain interstate com-
merce you would be authorized to
find « conviction as to such de-
fendants; or if you find that the
employees or agents of such New
York corporations were in fact, as
I have stated, employees or agents
of one or both of the defendant
corporations, such corporations, if
you find them so identical, would
be responsible for the acts of such
employee or employees, if they au-
thorized them, or if they clearly
ratified their wrongful acts subse-
quently. But you must consider
this evidence in connection with all
the other evidence in the case;

that is, whether there was any
conspiracy between any two of the
defendants with either or both of
the New York corporations or
their agents, or whether said New
York corporations, or their agents
or employees, were dominated, di-
rected or controlled by any two or
more of the defendants, and that
such acts or means alleged to have
been committed at the Brooklyn
yards were authorized or ratified
by any two of the defendants.”

12 United States v. Patterson,
201 Fed. 697.

13 United States v. American Na-
val Stores Co., 172 Fed. 455; see
186 Fed. 592.

14 United States v. Patterson,
201 Fed. 697.
440 THE SHERMAN ANTI-TRUST ACT.

but a single one. ‘‘A conspiracy to restrain or monopolize
trade by improperly excluding a competitor from business
contemplates that the conspirators will remain in business
and will continue their combined efforts to drive the com-
petitor out until they succeed. If they do continue such ef-
forts in pursuance of the plan the conspiracy continues up
to the time of abandonment or success.’’ Therefore, a
special plea of the statute of limitations was held not good
as against an indictment charging a conspiracy to restrain
or monopolize trade, by improperly excluding a competitor
from business, although the conspiracy was alleged to have
been formed on a specified date, which was more than three
years before the finding of the indictment, where such in-
dictments, consistently with the other facts, alleged that the

conspiracy continued to the date of its presentment.?®

15 United States v. Kissel, 218
U.S. 601; 31 Sup. Ct. 124; 54 L.
Ed. 1168; reversing 173 Fed. 823
on this point. The Supreme Court
then summed up: “To sum up and
repeat. The indictment charges a
continuing conspiracy. Whether it
does so with technical sufficiency is
not before us. All that we decide
is that a conspiracy may have
continuance in time, and _ that
where, as here, the indictment, con-
sistently with the other facts, al-
leges that it did so continue to the
date of filing, that allegation must
be denied under the general issue
and not by special plea. Under
the general issue all defenses, in-
eluding the defense that the con-
spiracy was ended by _ success,
abandonment, or otherwise more
than three years before July 1,
1906, will be open and unaffected
by what we now decide.” The Cir-
cuit Court had stated the case this
way: “Some authorities hold that

the statute of limitations begins
to run in such prosecutions as
soon as one overt act has been
committed, and that, if more acts
in furtherance of the conspiracy
are performed, that does not stop
the running of the statute. United
States v. Owen (D. C.), 32 Fed.
534; United States v. McCord (D.
C.), 72 Fed. 159; ex parte Black
(D. C.) 147 Fed. 832; United
States v. Biggs, (D. C.) 157 Fed.
264. Other cases hold, in substance,
that each additional overt act
starts the statute running anew.
United States v. Bradford, (©. C.)
148 Fed. 413; Ware v. United
States, 154 Fed. 577; 84 C. C. A.
503; 12 L. R. A. (N.S.) 1053;
United States v. Brace, (D. C.) 149
Fed. 874. In Ware v. United
States, 154 Fed. 577; 84 C. C. A.
503; 12 L. R. A. (N.S.) 1053; it
is held that there cannot be a con-
viction upon the original conspir-
acy and overt acts which have
CONSPIRACY.

taken place more than three years
before the finding of the indict-
ment; that there must be proved
«a conspiracy within the three
years, as well as an overt act;
and that, although the original
conspiracy is competent evidence
upon the question whether a new
or continuing conspiracy has been
entered into within the three
years, it alone is insufficient to
prove such new conspiracy. See,
also, United States v. Black, 160
Fed. 431; 87 C. C. A. 383. These
decisions were all made in other
districts. With entire respect for
the judges making them, it is
impossible to harmonize them. In
my opinion, the cases which hold
that statute begins to run after
the first overt acts in pursuance of
the same conspiracy take the cor-
rect view.” In United States v.
MacAndrews & Forbes Co., 149
Fed. 823, Judge Carpenter reasoned
somewhat along this line as fol-
lows: “It is true that the gist
of the alleged offenses is the com-
bination or the attempt at monop-
oly, but it is not true that the
offenses are complete when the
combination is mentally formed or
the mental intention to monopolize
arises, The statutory offense, and
the one charged herein, does not
depend upon ‘a single agreement,
but (on) a course of conduct in-
tended to be continued,’ yet,
nevertheless, ‘the thing done and
intended to be done is perfectly
definite.’ Swift v. United States,
196 U. S. at page 400; 25 Sup.
Ct. 281; 49 L. Ed. 518; modify-
ing 122 Fed. 529. That case arose
on the civil side of the court, but
it is to be remembered that the
same facts and acts which expose

441

violators of this statute to civil
suit also render them subject to
indictment. In this case, while the
time is indefinite, the thing done
is definite, and that is all that
the statute requires. To show that
an exact time may be, and there-
fore must be, assigned for the
commission of the offense of com-
bination, the defendants argue up-
on the meaning of the word ‘en-
gage’ as used in the statute, and
strenuously urge that since the
offense prohibited is that of ‘en-
gaging in’ a combination, it must
be complete as soon as the ac-
cused employs his attention or
effort in or about the same, that
such employment of attention or
effort is capable of precise assign-
ment in point of time, and they
challenge the prosecution to name
the day. The statute is not di-
rected against such an abstrac-
tion as this. It does not require
on the part of the prosecution
clairvoyance to discover or locate
the offense. Its prohibition is not
directed against a state of mind,
but against u state of facts. The
facts do not simultaneously occur ;
the events are not contemporan-
eous. It may, and naturally would,
require time for the working parts
of the combination to become co-
operative, or for the monopoly to
become more than a hope; and
what is forbidden and renders the
actors obnoxious to the criminal
law is not an _ undiscoverable
thought or hope, but a perfectly
obvious result or condition. ‘lhe
condition or state of facts against
which the statute is directed is a
continuing condition, and there-
fore the offense of creating and
maintaining that condition is
442

necessarily a continuing offense,
and does not, from its very nature,
require greater particularity in
assignment than is used in this
indictment. The books say some-
times that each overt act ‘renews’
the conspiracy. This can be true
only in the sense that the overt
act constitutes renewed or further
evidence of the continued existence
of the conspiracy. A conspiracy
is always required to support the
overt act. A conspiracy agree-
ment commonly continues in ac-
tual existence until after the ob-
ject of the conspiracy has been
accomplished. Its actual contin-
uance always is a question of fact,
and the indictment in this case
charges a continued actual exis-
tence of the conspiracy from its in-
ception in 1904, up to the time
of the return of the indictment.
Is the original confederation or
unlawful agreement the only vio-
lation of the statute, or is 2 con-
tinuation or carrying out of that
agreement, evidenced by a con-
scious participation therein by the
parties, equally a violation of the
law? The fact that conspiracies
generally may be, and usually are,
continuing agreements or under-
standings emphatically is true of
conspiracies to restrain or to mo-
nopolize commerce. In such cases,
not only may the conspiracy en-
dure, as in the case of conspiracies
generally, until a single complete
result is effected, but the result
intended by the conspirators is
itself, quite inevitably, a contin-
uing condition of things. Restraint
or monopolization of commerce for
a moment or a day is not the
object of a conspiracy to restrain
or monopolize it. The conspirators

THE SHERMAN ANTI-TRUST ACT.

seek continuous restraint and mo-
nopolization. The argument of the
defendants is that the crime of
conspiracy is non-continuing, be-
cause the essential element of the
offense is the act of confederating
or plotting, which in itself is in-
herently a non-continuing act. The
authorities which have just been
cited are to the contrary. The
question of the continuous or non-
continuous nature of a conspiracy
depends entirely upon the agree-
ment of the parties and the object
to be effected. It is always possi-
ble that the conspiracy or confed-
eration itself may contemplate a
continuous course of action on the
part of those engaged in it. An
agreement to pursue an _ illegal
course for ten or fifteen years, by
its very nature, would be an
agreement which was continuous.
Take a concrete case. Assume that
the defendants in 1904 entered in-
to a written agreement to stifle
competition, or to control prices,
in the fresh meat industry through
the medium of the National Pack-
ing Company. Would indictment
and conviction in 1905 have given
them an everlasting license to con-
tinue their unlawful acts, exempt
and immune from prosecution?”
United States v. Swift, 186 Fed.
1002. See also United States v.
Greene, 115 Fed. 343; United
States v. Bradford, 148 Fed. 413;
Lorenz v. United States, 24 App.
D. C. 337; Raleigh v. Cook, 60
Tex. 438; State v. Kemp, 87 N.
C. 538; United States v. Patterson,
201 Fed. 697. “The case of Ochs
v. People, 124 Ill. 399; 16 N. E.,
662, was an indictment in the Cook
County Cireuit Court against Ochs
and several other county com-
CONSPIRACY.

443

§ 217. Joining Conspiracy After Its Formation.—A per-
son or corporation joining a conspiracy after it is formed,

missioners, charging the defen-
dants with the crime of conspiracy
to obtain money from Cook County
by means of false pretenses. The
court, Mr. Justice Sheldon deliver-
ing the opinion, said: ‘The first
instruction, as to all the defen-
dants, was faulty and misleading,
in telling the jury that the crime
of conspiracy was complete and
the offense was then committed
when the agreement or confeder-
acy was entered into, and that
the period of limitation would
commence to run from the time
of committing the offense. The in-
struction was calculated to lead
the jury erroneously to think that
the period of limitation would
commence to run from the time
a defendant first became a mem-
ber of the conspiracy, instead of
from the time of the commission
of the last overt act in further-
ance of the object of the conspir-
acy.’ In speaking of the questions
of limitations, the learned judge,
in the same case, also said: ‘As
respects Ochs and Wasserman,
especially, the question is raised
whether the statute of limitations
was not a shield as to them, aris-
ing from the fact that their terms
of office as.county commissioners
expired December 6, 1885, and per-
haps most of the transactions in
evidence occurred subsequent to
that time, and after they had
ceased to be members of the
board. The period of limitation
here was eighteen months. The in-
dictment was found April 2, 1887,
so that the bar of the statute

would apply to all acts com-
mitted prior to October 3, 1885.
The existence of the conspiracy
prior to October 3, 1885, having
been satisfactorily established, as
we think it was, it is necessary
for the avoidance of the bar of
the statute to inquire whether
there were any overt acts in fur-
therance of the conspiracy com-
mitted by the defendants subse-
quent to that time. We think the
proof of the commission, by all the
defendants, of such overt acts sub-
sequent to October 3, 1885, is
abundant. The evidence shows,
satisfactorily, that Ochs and Was-
serman were members of the con-
spiracy previous to October 3,
1885, and that they adhered to
it afterwards, during the whole
interval of time to December 6,
1885, by their co-operation as
members of the board, with their
fellow conspirators, in the pass-
ing of these false and fraudulent
bills.” Brief of Government in
Standard Oil Case p. 296; Lorenz
vy. United States, 24 App. D. C.
337. “The contention on behalf of
the appellants is that, if the con-
spiracy was in fact formed, and
a single act in aid of its object
committed, more than three years
before the finding of the indict-
ment, then the offense was barred
by the statute of limitations, and
that no other like act or acts
committed within three years
would amount to a renewal or con-
tinuance of the conspiracy so as
to remove the bar. We can not
agree with this contention. Un-
444

THE SHERMAN ANTI-TRUST ACT.

and thereafter aiding in its execution, becomes from the time
of joining as much a conspirator as if he originally designed

doubtedly, as argued, the con-
spiracy is the gist of the offense
defined in section 5440, Revised
Statutes (U. S. Comp. Stat.,
1901, p. 3676), though it is not
indictable until some act shall
have been done by one or more
of the conspirators to effect the
object of the corrupt agreement.
The offense is then complete as to
that act, and the statute at once
begins to run; but it does not
follow that all similar acts there-
after may be committed with im-
punity. Through the repetition of
such acts—overt acts, as they are
commonly called—the conspiracy is
made a continuing offense. By each
subsequent act it is repeated and
entered into anew.” Brief of Gov-
erment in Standard Oil Case p.
401. “In Waters Pierce Oil Co. v.
Texas, 212 U. S. 86, 107, 108;
29 Sup. Ct. 220; 58 L. Ed. 417;
it was contended that the acts
of the legislature of Texas for the
violation of which proceedings
were brought against the oi] com-
pany to recover penalties and for-
feit its permit to do business in
the state of Texas, were given a
retroactive effect in violation of
article 1, section 10, of the Fed-
eral Constitution. Mr. Justice Day
said: ‘This argument is pre-
dicted largely upon the contention
that the conviction in this case
was because of the old agreement
* * * made long before the
passage of the present statute, at
a time when it was legal. and
before the creation of the defen-
dant company. But in view of the

facts found in the state court,
~ * * there was ground for
conviction, not because of the »nak-
ing of the old agreement for the
division of the territory and the
suppression of competition while
the old company was in existence,
but because the new company ivas
in existence, but because the new
company was found to have
carried out the old agreement anc
made itself a party thereto and
by continuing the old arrangement
after the passage of the law had
brought itself within its terms. Of
a similar contention this couct
said in Trans-Missouri Traffic
Association case, 166 U. 8S. 290;
17 Sup. Ct. 540; 41 L. Ed. 1007;
reversing 58 Fed. 58; 7 C. C. A.
15; 19 U. S. App. 96; 24 L. R.
A. 73; 4 Inters. Com. Rep. 443°
It is said that to grant the
injunction prayed for in this case
is to give the statute a retroaztive
effect. ‘hat the contract at the
time it was entered into was “ot
prohibited or declared illegal lv
the statute, as it had not then
been passed; and to now enjoin
the doing of an act which was
legal at the time it was done
would be improper. We give to
the law no retroactive effect. The
agreement in question is a con-
taining one. The parties to it
adopt certain machinery and agree
to certain methods for the purpose
of establishing and maintaining in
the future reasonable rates for
transportation. Assuming such
action to have been legal at the
time the agreement was first en-
CONSPIRACY. 445
and put it into operation.’® The phrase in the first section of
the Act, ‘‘engaged in such combination or conspiracy,’’ was
used in a broad sense and included not only such persons
as initiated the conspiracy, but also all those who afterwards
engaged therein; so that an indictment charging that the
defendants were engaged in a conspiracy among themselves
to control and monopolize interstate commerce in the manu-
facture of a certain article among the several states, fol-
lowed by an allegation of overt acts tending to effect the
the conspiracy, was held not defective for a failure to charge
directly the formation and existence of the conspiracy, the
words ‘‘engaged in,’’ as so used, signifying to embark in,
to take part in or enlist in, meaning substantially the same
thing as to conspire.”

§218. Corporation May be Guilty of a Conspiracy.—A
corporation may be indicted and convicted of having en-
tered into a conspiracy to restrain, or monopolize or attempt
to monopolize interstate commerce. Upon this question it
was said in a case brought under the Sherman Act:

‘*It seems to me as easy and logical to ascribe to a cor-
poration an evil mind as it is to impute to it a sense of
contractual obligation. There is an obvious physical dif-
ficulty in rendering a corporation amenable to corporal pun-

tered into, the continuation of the 16 Lincoln v. Claflin, 7 Wall. 132;

agreement, after it had been de-
clared to be illegal, becomes a vio-
lation of the act. The statute pro-
hibits the continuing or entering
into such an agreement for the
future, and if the agreement be
continued it then becomes a vio-
lation of the act.’” Brief of Gov-
ernment in Standard Oil Case p.
402. See Waters-Pierce Oil Co.
v. Texas, 212 U. 8. 86, 107; 29
Sup. Ct. 220; 53 L. Ed. 417; and
United States v. New Departure
Co., 204 Fed. 107.

19 L. Ed. 106; United States v. Bab-
eock, 3 Dill. 566; Fed. Cas. No.
14487; United States v. Cassidy,
67 Fed. 698, 702; Spies v. People,
122 Ill. 1; 12 N. E. 865; 17 N. E.
898; United States v. Johnson, 26
Fed. 682, 684; People v. Mother,
4 Wend. 230; United States v.
Lake Shore & M. 8. Ry. Co., 203
Fed. 295.

17 United States v. New Depar-
ture Mfg. Co.. 204 Fed. 107,
446 THE SHERMAN ANTI-TRUST ACT.

ishment, but there is no more intellectual difficulty in con-
sidering it capable of homicide or larceny than in thinking
of it as devising a plan to obtain usurious interest. The
limitation of power does not depend upon the difficulty of
imputing evil intent, but upon the impossibility of visiting
upon corporations the punishments usually prescribed for
greater crimes. The same law that creates the corporation
may create the crime, and to assert that the legislature
cannot punish its own creature because it cannot make a
creature capable of violating the law does not, in my opinion,
bear discussion.’ So the officers who control it may be
guilty of the same conspiracy.’®

§ 219. Combination to Control Shingle Trade.—Where an
association of manufacturers of shingles adopted a resolution
denouncing a dealer in the product they manufactured, who
bought and shipped such product to customers in other
states and foreign countries, and printed such resolution in
circulars and mailed them to other manufacturers and cus-
tomers of the dealer, whereby his business was injured, it
was held to constitute an illegal combination or conspiracy
in restraint of interstate and foreign commerce, and gave
the person injured a right of action to recover the damages
he had sustained by reason of the act of the conspirators.”

§ 220. Combination to Arrest Operation of Railroads.—
‘“*A combination whose professed object is to arrest the
operation of railroads whose lines extend from a great city

18 United States v. MacAndzews 19 United States v. Patterson,
& Forbes Co., 149 Fed. 823, 836; 201 Fed. 697.
Citing Telegram Newspaper Co. v. 20 Gibbs v. McNeeley, 102 Fed.
Commonwealth, 172 Mass, 294; 52 594. Verdict for defendants di-
N. E. 445; 44 L. R. A. 159; 70 rected by court. Gibbs v. MeNeel-
Am. St. 280 (a case of contempt) ey, 107 Fed. 210. Reversed Gibbs
and State v. Baltimore & Ohio R. v. McNeeley, 118 Fed. 120; 55
R., 15 W. Va. 362; 36 Am. Rep. C. C. A. 70; 60 L. R. A. 157.
803 (also a case of contempt).
CONSPIKACY. 447

into adjoining states, until such roads accede to certain de-
mands made upon them, whether such demands are in them-
selves reasonable or unreasonable, just or unjust, is cer-
tainly an unlawful conspiracy in restraint of commerce
among the states. Under the laws of the United States,
as well as at common law, men may not conspire to accom-
plish a lawful purpose by unlawful means.’’* So a com-
bination to inflict pecuniary injury on the owner of cars,
operated by railway companies under contracts with him,
by compelling them to give up using his cars, in violation of
his contracts, and, on their refusal, to inflict pecuniary in-
jury on them by inciting their employees to quit their ser-
vice, and thus paralyze their business, the conspirators know-
ing of such contracts, is a conspiracy. A combination by
railway employees to injure such owner by compelling the
railway companies to cease using his cars by threats of
quitting their service, thereby inflicting on them great. in-
jury, is also an unlawful conspiracy at common law, where
the relation between him and the companies is mutually
profitable, and has no effect whatever on the character or
reward of the services of the employees so combining. So
a combination to incite employees of all the railways in the
country to suddenly quit their service, without any dissatis-
faction with the terms of their employment, thus paralyzing
all railway traffic, in order to starve the railway companies
and the public into compelling the owner of such cars
used in operating the roads to pay his employees more
wages, they having no lawful right so to compel him, is

21 United States v. Elliott, 62
Fed. 801; Pettibone v. United
States, 148 U. S. 197; 13 Sup. Ct.
542; 51 L. Ed. 148; Common-
wealth v. Hunt, 4 Met. 111; 38
Am. Dec. 346. In the Elliott
case it was also said: “The con-
struction thus given to the act of
July 2, 1890, is not a new con-

struction. It has already received
the same interpretation in other
circuits after full consideration,—
particularly by the circuit court
in United States v. Working-
men’s Amalgamated Council of
New Orleans, 54 Fed. 994; 6 C.
C. A. 258.”
448

THE SHERMAN ANTI-TRUST ACT.

also an unlawful conspiracy by reason of its purpose,
whether such purpose is effected by means usually lawful

or otherwise.”

22 Thomas v. Cincinnati N. O.
& T. P. Ry. Co., 62 Fed. 803.
“But the combination was unlaw-
ful without respect to the contract
feature. It was a boycott. The
employees of the railway com-
panies had no grievance against
their employers. Handling and
hauling Pullman ears did not ren-
der their services any more bur-
densome. They had no complaint
against the use of Pullman cars
as cars. They came into no natur-
al relation with Pullman in hand-
ling the cars. He paid them no
wages. He did not regulate their
hours, or in any way determine
their services. Simply to injure
him in his business, they were
incited and encouraged to compel
the railway companies to with-
draw custom from him by threats
of quitting their service, and ac-
tually quitting their service. This
inflicted an injury on the com-
panies that was very great, and
it was unlawful, beeause it was
without lawful excuse. All the
employes had the right to quit
their employment, but they had
no right to combine to quit in
order thereby to compel their em-
ployer to withdraw from a mu-
tually profitable relation with a
third person for the purpose of
injuring that third person, when
the relation thus sought to be
broken had no effect whatever on
the character or reward of their
service. It is the motive for
quitting, and the end sought there-

by, that make the injury inflicted
unlawful, and the combination by
which it is effected, an unlawful
conspiracy. The distinction be-
tween an ordinary lawful and
peaceable strikers’ employment and
a boycott is not a fanciful one,
or one which needs the power of
fine distinction to determine which
is which. Every laboring man
recognizes the one or the other
as quickly as the lawyer or thie
judge. The combination under dis-
cussion, was a boycott. It was
so termed by Debs, Phelan, and
all engaged in it. Boycotts,
though unaccompanied by violence
or intimidation, have been pro-
nounced unlawful in every state
of the United States where the
question has arisen, unless it be
in Minnesota; and they are held
to be unlawful in England.”
Judge Taft cites Moores v. Brick-
layer’s Union, 23 Wkly. Cin. Law
Bull. 48; Temperton v. Russell, 1
Q. B. 715; Carew v. Rutherford,
106 Mass. 1; State v. Glidden, 55
Conn. 46; 8 Atl. 890; State v.
Stewart, 59 Vt. 273; 9 Atl. 559;
Steamship Co. v. McKenna, 30 Fed.
48; Casey v. Typographical Union,
45 Fed. 135; Toledo A. A. & M.
Ry. Co. v. Pennsylvania Co., 54
Fed. 730. 738; United States v.
Debs, 64 Fed. 724. See this Debs
transaction involved in habeas cor-
pus proceedings: 158 U. 8S. 564;
15 Sup. Ct. 900; 39 L. Ed. 1092.
In re Grand Jury, 62 Fed. 840;
Waterhouse v. Comer, 55 Fed. 149.
CONSLIRACY. 449

§ 221. Corner, Conspiracy to Run.—A conspiracy to run
a corner in the available supply of a staple commodity, such
as cotton, normally a subject of trade and commerce among
the states, and thereby to enhance artificially its price
throughout the country, all to compel those who have occasion
to obtain it to pay the enhanced price or else to have their
needs unsatisfied, is an offense under section one of the
Sherman Act. ‘‘It well may be that running a corner,’’ said
the court, ‘‘tends for a time to stimulate competition; but
this does not prevent it from being a forbidden restraint,
for it also operates to thwart the usual operation of the
laws of supply and demand, to withdraw the commodity
from the normal current of trade, to enhance the price arti-
ficially, to hamper users and consumers in satisfying their
needs, and to produce practically the same evils as does
the suppression of competition.’’ 2%

23 United States v. Patten, 226
U.S. 525; 33 Sup. Ct. 141; 57 L.

control of the available supply
and to enhance the price to all

Ed.; reversing 187 Fed. 664. “It
was « conspiracy to run a corner
in the market. The commodity to
be cornered wag cotton,—a product
of the Southern States, largely
used and consumed in the North-
ern States. 1t was a subject of
interstate trade and commerce,
and through that channel it was
obtained from time to time by
the many manufacturers of cotton
fabrics in the Northern States. The
corner was to be conducted on
the Cotton Exchange in New York
city, but by means which would
enable the conspirators to obtain

buyers in every market of the
country. This control and the en-
hancement of the price were fea-
tures of the conspiracy upon the
attainment of which it is con-
ceded its success depended. Upon
the corner becoming effective,
there could be no trading in the
commodity save at the will of the
conspirators and at such prices as
thier interests might prompt them
to exact. And so, the conspiracy
was to reach and to bring with-
in its dominating influence the
entire cotton trade of the country.”
CHAPTER XII.
CONTRACTS AND COMBINATIONS PROHIBITED.

ARTICLE I.—TO CONTROL PRICES OR PRODUCTION.
ARTICLE II.—_TO ELIMINATE COMPETITION.
ACTICLE IIJ—STOCKHOLDING COMPANIES OR CORPORA-

TIONS.

§ 222. Introduction.—In chapters respectively assigned to
them, we have discussed questions arising out of patents,
copyrights, labor organizations and transportation or rail-
road companies. What was there said, will not be repeated
in this chapter. The object sought in this chapter is to
give, under convenient heads, illustrations of contracts and
combinations held to be illegal restraints of interstate trade
or commerce. Nor will the question of interstate trade or
commerce or foreign commerce be discussed, except inci-
dentally.

ARTICLE I.—TO CONTROL PRICES OR PRODUCTION

SECTION. SECTION.

223. Coal mining and coal dealers purchaser’s selling price and
fixing price of coal. terms of sale.

224. Coal dealers regulating price 231. Restricting output—Regulat-
of coal. ing price—Limiting  terri-

225. Coal and Coke dealers agree- tory—Window glass case.
ing not to sell any other 232. Agreement for no compe-
coal or coke. tition—Arbitrary prices—

226. Shingle dealers controlling Division of trade—Licorice
production and prices of paste for tobacco—Monop-
lumber bought in other oly.
states. 233. Combination to control

227. Tile case—Controlling out- prices and output—Absorp-
put and regulating prices. tion of other ecompanies—

228. Contract with combine not Combination before enact-
to engage in manufacture of ment of Anti-Trust Act—
wooden dishes—H olding Monopoly.
company. 234. Lease or purchase of plant—

229. Combination to prevent com- Contract not to engage in
petition in fixing price of same business within fifty
beer. miles and to discourage un-

230. Selling company—Fixing reasonable competition.

450
CONTRACTS AND COMBINATIONS PROHIBITED. 451

235. Tobacco monopoly—Consoli- control—Presumption— Mo-
dation of companies—Stock nopoly.
control. 237. Freight rates—Rebates.

236. Standard Oil Case—Consoli- 238. Telephone combination.
dation of companies—Stock 239. Corner.

§ 223. Coal Mining and Coal Dealers Fixing Price of
Coal— Certain coal mining companies operating chiefly in
one state entered into an agreement with certain dealers
in coal in a city in another state, creating a coal exchange.
The object of the exchange was ‘‘To do all in its power to
advance the interests of the coal business at Nashville, to
treat all parties to this agreement in a fair and equitable
manner, and to establish prices on coal at Nashville, Tenn.,
and to change same from time to time as occasion may
require.’’

The condition of the contract of combination is stated as
follows by the court:

‘*Prices to consumers at Nashville are to be established
so as to sell coal at a fair and reasonable price, so as to
allow all parties a fair profit for their product. Every
person, firm, or corporation owning or operating mines who
ship coal to Nashville shall be eligible to membership in
this exchange, and all coal dealers in the city of Nashville
are also eligible to membership. None others are eligible to
membership. Any member of the exchange who may with-
draw from it, and continue in the coal trade in Nashville,
or ship any coal to Nashville shall forfeit and relinquish
all interest of any and every kind, however obtained or ac-
erued. The exchange will from time to time establish prices
at which coal shall be sold in Nashville. Coal classed as
No. 1 shall be valued at the mines at 414 cents minimum
price for bushel of 80 pounds lump, and freight being 4
cents, the dealer’s margin to be 414 cents,, making the price
of lump coal 13 cents per bushel; No. 2 to be valued at 5
cents at the mine; No. 3 at 6 cents; and when the above
prices are advanced in excess of the advance in freights
then one-half of the advance shall go to the mine owners
and one-half to the dealers. Every member found guilty
452 THE SHERMAN ANTI-TRUST ACT.
of selling coal at a less price than the price fixed by the
exchange, either directly or indirectly, shall be fined 2 cents
a bushel and $10 for the first offense, and 4 cents per bushel
and $20 for the second offense. A majority of all the mem-
bers shall constitute a quorum for the transaction of business.
Owners or operators of mines shall not sell or ship coal to
any person, firm, or corporation in Nashville, or West Nash-
ville, or East Nashville, who are not members of the ex-
change, and dealers shall not buy coal from any one not
members of the exchange. All coal used for manufacturing
and steamboat purposes shall be exempt from prices made
by the exchange until all mines tributary to this market
shall become members of the exchange, or until the ex-
change can control prices to govern coal used by manufac-
turers. No coal shall be sold in any month to be delivered
in any following month except at prices fixed for the par-
ticular month in which coal so sold is to be delivered. Fines
and penalties are declared, so as to enforce the stipulations
embodied in the constitution and by-laws of the exchange.’’
The court held that the commerce involved was inter-
state and the contract of combination illegal; and the par-
ties thereto engaged in such interstate commerce were en-
joined.*

1 United States v. Jellico Moun-
tain Coal & Coke Co., 46 Fed.
432; 12 L. R. A. 753. The court
said in disposing of the case:
“These provisions, so far as this
combination could do so, fixed the
lowest price of coal to consumers
in and near Nashville at thirteen
cents per bushel, and prevented
coal being sold there at a cheaper
rate, no matter how much less
it might cost in an open and un-
obstructed market. Nor is that
all. The exchange ordains that
‘owners or operators of mines shall
not sell or ship coal to any firm,
person, or corporation in Nashville

or West Nashville or Hast Nash-
ville who are not members of this
exchange, and dealers shall not
buy coal from any one who is
not a member of the exchange.’
The coal trade is confined, so far
as the market supply is con-
cerned, to transactions between the
miner and dealer, the prices are
fixed by them, and the miner and
dealer only are eligible to member-
ship. The miners of the concern
cannot sell to any dealer in or
near Nashville who is not a party
to the agreement who is not a
member of the body. The opera-
tions of both are confined within
CONTRACTS AND COMBINATIONS PROHIBITED. 453

§ 224. Coal Dealers Regulating Price of Coal.—Coal was
brought to San Francisco from states other than California,
and also from British Columbia, by wholesale dealers lo-
cated in that city, who controlled all the coal in California,
and who had agencies for the coal in such other states as
well as in British Columbia. These wholesale dealers and
the retail dealers of San Francisco formed an association
(unincorporated), and adopted rules for fixing the prices
of coal thus brought to that city. The substance of the
rules is thus stated by the court:

“‘The constitution of the Coal Dealer’s Association pro-
vides among other things, that its object is to furnish in-
formation to its members as to sales of coal made by whole-
sale dealers to the retail dealers, and by retail dealers to
consumers, and also the names of any dealers who have been
guilty of violating any of the rates or rules made from time

the membership. So far as Nash-
ville is concerned, they cannot go
to cheaper or more favorable mar-
kets, or deal with those who would
give more favorable terms. The re-
straint is positive and undeniable.
Moreover, the first section of the
by-laws of the exchange it is
asserted that ‘all coal used for
manufacturing and steam-boat pur-
poses shall be exempt from prices
made by this exchange until all
mines tributary to this market
shall become members of the ex-
change, or until the exchange can
control prices to govern coal used
by manufacturers.’ This clearly in-
dicates the purpose of the associa-
tion to be to control the price of
coal in the Nashville market used
in manufacturing and in steam-
boats whenever it could; that the
mines of coal tributary to Nash-
ville were all expected to become
members of the exchange, where-
upon the prices of coal could be

fixed absolutely and the necessary
inference from this declaration and
the entire organic structure of the
body is that it felt strong enough
already to regulate and establish
the prices of domestic coal in that
market, to a large extent, at least,
and that this exchange might now
monopolize the business of dealing
in domestic coal in the Nashville
market, and in the future mo-
nopolize by and confine to its
membership the entire trade in
coal at that point. It seems to
me that the purposes and inten-
tions of the association could
hardly have been more success-
fully framed to fall within the pro-
visions of the act of July 2, 1890,
had the object been to organize a
combination, the business of which
should subject it to the penalties
of that statute, and that there is
no need of auhorities to sustain
such view of the case.”
454 THE SHERMAN ANTI-TRUST ACT.

to time by the organization. A retail dealer is defined as
any person who engages in the sale of coal as regular busi-
ness, buying to sell again, who shall own and operate a
yard, keeping an office, and displaying a sign. All miners
and shippers shall be eligible to membership in the associa-
tion, provided such miner and shipper shall not make a
practice of selling coal at retail at less prices than the re-
tail dealers. The admittance fee for membership is $500, but
the association assumes the jurisdiction over dealers who are
not members, and imposes fines upon those found guilty of
selling coal in violation of card rates or rules. The fine is
not to be less than $10 nor more than $100 for the first
offense; and, if the non-member shall neglect or refuse to
pay any fine within the time limit fixed by the grievance
committee, the secretary, at the expiration of the time, shall
notify the wholesale coal dealers to charge the person so
defaulting consumers’ prices for coal, and the wholesale
dealers agree to comply with the notice. The board of
directors of the association may employ detectives to pur-
chase coal at retail through any citizen. The purpose of
this provision apears to be to discover those dealers who
sell coal at other than card rates. A grievance committee is
provided to assemble whenever requested to do so by the
secretary, to receive and investigate all charges of violation
of card rules or rates preferred against any coal dealer or
agent in the city and county of San Francisco. It will be
observed that the jurisdiction of this committee is not lim-
ited to the investigation of charges against members of the
association, but includes all dealers. Dealers in advertising
coal are not permitted to state prices without adding the
name of the coal to be had for the prices named. Both
names and prices to correspond exactly with those on the
rate ecard. Any circulars, posters, dodgers, cards, or signs
conflicting with the card rates or rules displayed, found on
the streets, or circulated in any manner whatsoever, sub-
jects the dealer or agent who caused their distribution to the
CONTRACTS AND COMBINATIONS PROHIBITED. 455

penalties for selling coal in violation of card rates or rules.
No dealer in coal is permitted to give more or less than cer-
tain weights in selling coal in specified quantities from sacks
to tons. A charge is fixed for handling coal at customer’s
place, and no premiums or presents are allowed to be of-
fered as inducements for purchasers to buy coal. The agree-
ment with the wholesale dealers is made part of the by-
laws of the association. The wholesale dealers agree not to
sell at trade rates to any one not having an established
yard, and not to sell coal at less than card rates to con-
sumers, except in such cases as may be provided for by
agreement among the wholesale dealers themselves. They
agree to charge two dollars per ton additional over cur-
rent trade rates to retail dealers who are not members of
the Coal Dealers’ Association, and consumers’ rates to deal-
ers who violate any of the rules of the association. <A
schedule of rates is adopted for the different qualities and
classes of coal sold in San Francisco.’’

The association was held to be illegal, because its conduct

was in restraint of trade.”

2 United States v. Coal Dealers’
Ass’n, 85 Fed. 252. The court
said of this association: “It is
clalmed on the part of the defen-
dants that the Coal Dealers’ Asso-
ciation is a beneficial organization ;
that it protects the coal con-
sumers from the dishonest methods
of some of the coal dealers in giv-
ing short weights and in substi-
tuting lower grades of coal for
better grades; and that it also
protects the wholesale dealers in
enabling them to collect their bills
from the retail dealers. All this
may be true, but it is clear that
the power of the association ex-
tends much further, and that it
has another purpose. It estab-
lishes arbitrary rates for coal,
from which the dealer is not per-

mitted to deviate in any particu-
lar. It stifles all competition be-
tween retail dealers, restricts
trade within prescribed limits and
establishes a monopoly of the most
odious character in an article of
daily consumption and _ prime
necessity. In Nester v. Brewing
Oo., 161 Pa. St. 472; 29 Atl. 102;
24 L. R. A. 247; 41 Am. St. 894,
the supreme court affirmed the
judgment of the court of common
pleas of Philadelphia, holding that
a combination among a number of
brewers of that city to control
the price of beer within the city
was illegal, being in restraint of
trade. The agreement under which
that combination was formed is
of the same character as the one
now under consideration, and this
456

THE SHERMAN ANTI-TRUST ACT.

§ 225. Coal and Coke Dealers Agreeing Not to Sell Any
Other Coal or Coke.—By a contract between a fuel com-
pany and an association of fourteen persons, firms and cor-
porations, engaged in producing coal and coke in and ship-
ping them from West Virginia into other states, the com-

is what the trial court had to say
about it: ‘Where a price is fixed
arbitrarily for which « manufac-
tured article may be sold, it
necessarily limits the production
of an article to the amount that
can be sold for that price. An
increased price put upon an article
restricts its sale, and the restricted
sale necessarily reduces the pro-
duction. It is no answer to say:
‘We do not restrict your produc-
tion. You may produce any
amount you like. We only restrain
your sale of it.’ Is this not prac-
tically a limit to production?
Where a pool or combination re-
serves the right to regulate prices,
they can, by the manipulation of
prices, drive their competitors out
of business, create a monopoly, and
enhance at their pleasure the
prices to consumers.’ This is pre-
cisely the attitude of the Coal
Dealers’ Association, and it is no
answer to the charge of arbitrary
power, which it can and does
exercise under its organization,
that it has not increased the price
of coal in San Francisco, or wholly
monopolized the source of supply.
The terms of the organization and
the agreement between the asso-
ciation and the wholesale dealers
clearly constitute a restraint of
trade, which is injurious to the
public interests, against public
policy, and therefore unlawful.
Arnot v. Coal Co., 68 N. Y. 538;
23 Am. Rep. 190; Central Ohio

Salt Co. v. Guthrie, 35 Ohio St.
666; Pittsburg Carbon Co. v. Me-
Millin, 119 N. Y. 46; 23 N. E.
530; 7 L. R. A. 46; Morris Run
Coal Co. v. Barclay Coal Co, 68
Pa. 173; 8 Am. Rep. 159; Craft
v. McConoughy, 79 Ill. 346; 22
Am. Rep. 171; Santa Clara, ete.
Lumber Co. v. Hayes, 76 Cal. 387;
18 Pac. 391; Distilling & Cattle
Feeding Co. v. People, 156 Ill.
448; 41 N. E. 188; 47 Am. St.
200; National Harrow Co. v.
Hench, 83 Fed. 36.” A contract
by which the owner of coal lands
sold the same with an agreement
not to engage in mining or ship-
ping coal in the territory traversed
by the “Monongahela, Ohio, and
Mississippi rivers and their tribu-
taries” for ten years, in so far as
it affects business carried on in
the territory adjacent to the Ohio
and Mississippi rivers outside of
Pennsylvania, is a violation of Act
Cong. July 2, 1890, c. 647, 26 Stat.
209 (U. S. Comp. St. 1901, p.
3200), known as the “Anti-Trust
Act”; but, being divisible and valid
in so far as it relates to mining
in Pennsylvania, the seller may be
enjoined from engaging in the
business of mining or shipping coal
on the Monongahela river within
the state for ten years. Mononga-
hela River Consol. Coal & Coke
Co. v. Jutte, 59 Atl. 1088; 210
Pa. 288; 105 Am. St. 812; Id., 59
Atl. 1119; 210 Pa. 310.
CONTRACTS AND COMBINATIONS PROHIBITED. 457

pany was to handle for a term of years the entire output
of the mines for certain western states, and it bound itself
not to sell the product of any competing mines. The court
thus stated the substance of the agreement:

‘‘And it is further provided that the minimum price shall
be fixed by the executive committee of the association for
‘all the various grades of coal and coke sold and shipped
west by the members of said association,’ and that the Fuel
Company ‘will make no contract for the sale of any coal or
coke of any members of said association at a price lower
than such minimum price to be fixed by such committee.’
And it is further provided ‘that the Fuel Company shall
make a monthly report showing the tonnage of the various
kinds and grades of coal and coke shipped by members of
said Coal Association and weighed during the month, or
weighed during such month though shipped during a pre-
ceding month, together with an average price for each grade
or kind of coal or coke so shipped and weighed, which aver-
age price shall be computed upon the basis of the actual
price, less gross profits, if any, received for all coal or
coke sold, and the minimum price, fixed as hereinafter pro-
vided, for such month, for coal or coke not sold in such
month; said report to be made not later than the 10th day
of each month for all coal and coke weighed, or weighed
during the previous calendar month. The coal and coke
shipped and weighed or weighed during such month shall be
paid for by said Fuel Company to the members of said
Coal Association according to the average prices determined
as aforesaid.’ And it is further provided that the executive
committee of the Coal Association ‘shall, not later than the
twentieth day of each month, designate the percentage of
the total product of each class and grade of coal and coke
which they deem best to be shipped by each member of
said association by rail as aforesaid during the succeeding
month.’
458 THE SHERMAN ANTI-TRUST ACT.

After this statement the court thus comments on the
contract :

“‘Under these provisions the extent of the production of
the mines, the shipment and sale of the product, and the
making and regulation of the prices thereof, are subject to
the control of the executive committee of the association.
All competition among the members of the association in the
production, shipment, and sale of their product is elimin-
ated, and the combination enters the western markets
clothed with powers which enable it to exercise a large in-
fluence in those markets in regulating the supply and the
prices of coal and coke. These provisions are in restraint
of trade, and tend to monopoly, within the meaning of the
Act of Congress, and render the contract illegal, in so far
as it relates to interstate commerce.

“‘The contract in question here, and the combination of
the defendants thereunder, are in restraint of trade and
commerce among the several states, and such trade has in
fact been restrained in the performance of the contract; and
the defendants, and each of them, therefore, will be enjoined
from selling or shipping under this contract coal or coke
into any state other than the state in which they reside,
and the contract, in so far as it affects interstate trade
and commerce, is declared to be void and illegal, and the
combination of the defendants thereunder will be dissolved.’”®

3 United States v. Chesapeake &
Ohio Fuel Co., 105 Fed. 93;
affirmed 115 Fed. 610; 53 C. C.
A. 256. On appeal Judge Day
said: “A consideration of these
provisions, assuming that the con-
tract relates to interstate com-
merce, would seem to make plain
the violation of the statute of
1890. Here are fourteen dealers
who have neither formed a corpo-
ration nor a partnership, but have
limited to the terms of this agree-
ment their rights for five years

in the mining and shipping of coal
upon one of their main outlets to
the market. They have restricted
their right to produce coal for
such shipment to the amount des-
ignated by the committee. They
have restricted sales to this pur-
chaser to a price to be fixed by
the committee. They have elimi-
nated competition in the market
among themselves. They have re-
stricted the purchaser so that he
may not buy from others in com-
petition with themselves. If we
CONTRACTS AND COMBINATIONS PROHIBITED. 459

§ 226. Shingle Dealers Controlling Production and Price
of Lumber Brought From Other States—Red cedar shingle
manufacturers and dealers in Washington formed an asso-
ciation, adopting by-laws, to fix, from time to time, the
price of shingles which all members of it agreed to conform
with; to establish a system of prices at which shingles must
be sold to retail dealers, to order down the closing of mills,
and to take other necessary steps to curtail the output of
red cedar shingles in Washington, when in their judgment
the supply should exceed the demand. The court thus in
part describes the association:

“The combination which is described in the complaint con-
sists of a combination of manufacturers and wholesale dealers
in Washington red cedar shingles, who reside and carry on
their business within the state of Washington, and sell and
deliver goods to residents of other states. It is not charged
that the defendants in error, or any of them, have entered
into any combination or contract with residents of other
states. The alleged right of the plaintiff in error to recover
is based substantially upon the fact that the combination
comprises all the manufacturers and wholesale dealers within
the state of Washington, and that they have combined and
conspired together to fix arbitrary price to wholesale and
retail dealers for an article of merchandise used in inter-
state commerce, below which no one is permitted to buy or
to sell, and that the price so fixed marks a distinct increase
of the market price as it had stood theretofore, and that
the association has assumed and exercised, and will continue
to exercise, the power to shut down all mills within the
state at will, and for so long a time as it may deem neces-
sary.’

The court held that the combination was illegal, saying:

correctly interpret the decisions of | purpose of this statute to main-
the supreme court, these provisions tain unfettered by such contracts
clearly restrain the freedom of in- and combinations.”

terstate commerce, which it is the
460 THE SHERMAN ANTI-TRUST ACT.

“‘There can be no doubt that at common law it is an un-
lawful combination in restraint of trade. It has the effect
to diminish production, abolish competition, and enhance
prices. Its illegality is not relieved by the fact that it was
induced by the keen competition and the unprofitable condi-
tion of the shingle manufacturing business which existed be-
fore it was entered into, or by the fact that the prices fixed
by the combination may have been reasonable.*

‘The Anti-Trust Act goes as far, if not farther, than the
common law, and declares unlawful all combinations in re-
straint of interstate trade. In order, therefore, to bring the
combination which is under consideration within the inter-
diction of the Act, it must appear that it is more than a
mere combination in restraint of trade; it must involve the
restraint of interstate or international commerce. It is urged
by the defendants in error that merchandise is not subject
to the power of Congress to regulate commerce until it is
in actual transit from one state to another, and that mat-
ters occurring prior to the commencement of this final move-
ment are not matters of interstate commerce, but are within
the authority of the state, and are wholly unaffected by
other authority.’”

The court concluded as follows after examining several
cases :

‘“‘The combination in the case before the court is more
than a combination to regulate prices; it is a combination to
control the production of a manufactured article more than
four-fifths of which is made for interstate trade, and to
diminish competition in its production, as well as to advance

4Citing American Biscuit & A. 437; 45 Am. St. Rep. 609;

Manufacturing Co. v. Klotz (C. National Harrow Co. v. Hench, 27
C.); 44 Fed. 721; Richardson v. C. C. A. 349; 83 Fed. 36; 39 L.
Buhl, 77 Mich. 682; 43 N. W. R. A. 299; Cravens v. Carter-
1102; 6 L. R. A. 457; State Crume Co., 34 C. C. A. 479; 92
vy. Standard Oil Co., 49 Ohio Fed. 479; 34 C. C. A. 479.
St. 137; 30 N. E. 279; 15 L. R. 3 Gibbs v. McNeeley, 118 Fed.
A. 145; 34 Am. St. Rep. 541; 120; 55 C. C. A. 70; 60 L. R. A.
People v. Milk Exchange, 145 N. 157; reversing 107 Fed. 210; rul-
Y. 267; 39 N. E. 1062; 27 L. R. ing on demurrer 102 Fed. 594.
CONTRACTS AND COMBINATIONS PROHIBITED. 461
its price. These features we think, determine its object, and
bring it under the condemnation of the law. The plaintiff
in error is in the business of buying the manufactured ar-
ticle in the state where it is manufactured, and selling it to
purchasers in other states. The acts charged against the de-
fendants in error interfere with his ‘contracts to buy, sell,
or exchange goods to be transported among the several
states;’ contracts which are made and negotiated between
the plaintiff in error and his customers in various states,—
and the acts of the defendants are in restraint of the inter-
state commerce in which he is engaged. We think the com-
plaint states a cause of action.’’

§ 227. Tile Case—Controlling Output and Regulating
Prices.—Certain persons engaged in San Francisco in the
tile, grate and mantel business, entered into an association
thus described by the court:

“Tt was formed to unite all acceptable dealers engaged
in the tile, grate and mantel business in San Francisco, and
within a radius of 200 miles therefrom, and all American
manufacturers of tiles wherever situate in the United States,
and upon the other the six firms of local dealers who joined
the association at its formation, together with those who
might be permitted thereafter to become members. The de-
fendants in error were not invited to enter into the com-
bination. The rules prescribed that others in the same line
of business, who had an established business and carried
stock of the value of $3,000, and who were ‘acceptable,’
might upon the proposition of one who was already a mem-
ber, and upon the vote of the association, be permitted to
join the combination. The evidence shows that the defendants

6 Associations of retail lumber for the purpose and with the effect
dealers which issue and distribute of influencing members, telling

among their members “official re-
ports,” containing lists of whole-
sale dealers doing an interstate
business, who have made sales di-
rect to consumers, and soliciting
information as to other such sales,

them to cease buying from such
wholesalers, are combinations in
restraint of interstate commerce
and trade, and unlawful. United
States v. Eastern States Retail
Lumber Dealers, 201 Fed. 581.
462

THE SHERMAN ANTI-TRUST ACT.

in error after the formation of the association made efforts
to purchase tile from manufacturers in Indiana with whom
they had before been doing business, and that their orders
were declined, and they were notified that they could not
purchase goods from the manufacturers unless they became
members of the association. They could not obtain tile from
the local dealers in San Francisco unless they paid the
‘list’? price, which was more than double the price which
members of the association were required to pay.’”’

7On this statement the Circuit
Court of Appeals said: “We think
that, in the light of these facts,
the association clearly comes with-
in the prohibition of the act of
It has direct tendency
to restrain trade Ietween the
different states and to create a
monopoly. In principle it would
be the same if it were an associa-
tion between all the manufacturers
of the United States in that line
of goods and a single dealer in
California, whereby all other resi-
dent dealers were shut out and all
competition between local dealers
extinguished.” “Montague & Co. v.
Lowry, 115 Fed. 27; 52 (. C. A.
621; 63 L. R. A. 58; affirming 106
Fed. 38. (Charge to the jury.)
The court distinguished United

Conuress.

States v. FE. C. Knight Co.,
156 U. 8S. 1; 15 Sup. Ct.
249; 39 JL. Ed. 325;  aftirm-
ing 60 Fed. 934; 9 C. C. A.

297; 17 U. S. App. 466; 24 L. R.
A. 428; Hopkins v. United
States, 171 U. 8. 578; 19 Sup. Ct.
40; 43 L. Ed. 290; reversing 82
Fed. 529; and Anderson v. United
States, 171 U. S. 604; 19 Sup. Ct.
50; 43 L. Ed. 300. On appeal to
the Supreme Court the case was
affirmed, with a lengthy analysis
of the contract. Montague & Co.

v. Lowry, 193 U. 8. 38; 24 Sup.
Ct. 307; 48 L. Ed. 608; affirming
115 Fed. 27; 52 C. C. A. 621; 63
L. R. A. 58; the court saying:
“The result of the agreement when
carried out was to prevent thie
dealer in tiles in San Francisco,
who was not a member of the
association, from purchasing or
procuring the same upon any terms
from any of the manufacturers
who were such members, and all
of those manufacturers who had
accustomed to sell to the
plaintiffs were members. The non-
member dealer was also prevented
by the agreement from buying tiles
of a dealer in San Francisco who
was a member excepting at a
greatly enhanced price over what
he would have paid to the manu-
facturers or to any San Francisco
dealer who was a member, if he,
the purchaser, were also a member
of the association. The agreement,
therefore, restrained trade, for it
narrowed the market for the sale
of tiles in California from the
manufacturers and dealers therein
in other states so that they could
only be sold to the members of
the association, and it enhanced
prices to the non-members as al-
ready stated. The plaintiffs en-
deavored in vain to procure tile

been
CONTRACTS AND COMBINATIONS PROHIBITED.

463

§ 228. Contract With Combine Not to Engage in Manu-
facture of Wooden Dishes—Holding Companies.—Manufac-
turers of 80 per cent of the production of the country com-
bined for the purpose of restricting the production of wooden
dishes throughout the country and keep up their price. It
was the intention of those who thus combined to bring
all the factories of the country under the control of a cen-

for the purposes of their business
from these tile manufacturers, but
the latter refused to deal with
them because plaintiffs were not
members of the association. It is
not the simple case of manufac-
turers of an article of commerce
between the several states refus-
ing to sell to certain other per-
sons. The agreement is between
manufacturers and dealers belong-
ing to an association in which the
dealers agree not to purchase from
manufacturers not members of the
association, and not to sell un-
set tiles to any one not a member
of the association, for less than
list prices, which are more than
fifty per cent higher than the
prices would be to those who were
members, while the manufacturers
who became members agreed not
to sell to any one not a member,
and in case of violation of the
agreement they were subject to
forfeiting their membership. By
reason of this .greement, therefore,
the market for tiles is, as we have
said, nut only narrowed but the
prices charged by the San Fran-
cisco dealers for the unset tiles
to those not members of the asso-
ciation are more than doubled.
“It is also contended that, as the
expressed object of the association
was to unite therein all the

dealers in San Francisco and vi-
cinity, the plaintiffs had nothing
more to do than join the associa-
tion, pay their fees and dues and
become like one of the other mem-
bers. It was not, however, a
matter of course to permit any
dealer to join. The constitution
only provided for ‘all acceptable
dealers’ joining the association. As
plaintiffs were not invited to be
among its founders, it would look
as if they were not regarded as
acceptable. However, that may be,
they never subsequently to its for-
mation applied for admission. It
is plain that the question of their
admission, if they had so applied,
was one to be arbitrarily deter-
mined by the association. The con-
stitution provided for the appoint-
ment of an executive committee,
whose duty it was to examine all
applications for membership in
and to report on the same to the
association, after which it was to
decide whether the applicants
should be admitted or not. If they
were not acceptable the applicants
would not be admitted, and
whether they were or not, was a
matter for the arbitrary decision
of the association. Its decision
that they were not acceptable was
sufficient to bar their entrance.
Again, it apears that plaintiffs
464

tral organization, which was to regulate prices.

THE SHERMAN ANTI-TRUST ACT.

A manu-

facturer was guaranteed a certain sum as dividends on his
stock in the central company on his agreeing to close his

factory for a year.

He brought suit to recover the amount

of these dividends, and it was held that inasmuch as the
contract was in restraint of interstate commerce and !illegal,

he could not recover.’

were not eligible under the con-
stitution, because they did not al-
ways carry stock worth $3,000,
which by section 1 of article 1,
was made a condition of eligi-
bility to membership. True, it was
stated in evidence that this pro-
vision had not been enforced, but
there was no averment or proof
that it had been repealed, and
there was nothing to prevent its
enforcement at any time that ap-
plication was made by any one who
would not come up to the con-
dition. The case stands therefore,
that the plaintiffs had not been
asked to join the association at
its formation; that they did not
fill the condition provided for in
its constitution as to eligibility,
and that if they had applied their
application was subject to arbi-
trary rejection.” A corporation
engaged in the manufacture and
sale of pottery in a sister state
and a member of a trust contracted
to sell and deliver pottery to a
domestic corporation. The prices
to be paid were regulated by the
trust. The contract required the
buyer, before being entitled to
stipulated premiums, to confine its
purchases of such goods for a per-
iod of one year to the seller, but
there was no agreement whereby
it forfeited any right on its failure
to do so. It was held that the

contract was not in restraint of
trade, and was not in violation
of the Sherman Anti-Trust Act
(Act July 2, 1890, c. 647, 26 Stat.
209 [U. S. Comp. St. 1901, p.
3200]). Moroney Hardware Co. v.
Goodwin Pottery Co., (Tex. Civ.
App.) 120 8. W. 1088.

8 Cravens y. Carter-Crume Co.,
92 Fed. 479; 34 C. C. A. 479.
The court said: “The plaintiffs
contracts were part of the means
employed for effecting the com-
mon object, and he secured the
means of sharing in the profits
expected to be gained through the
combination. To this end all the
factories were expected to be
brought under the control of the
National Mercantile Company,
which was to regulate the prices.
The plaintiff testified that it was
the purpose to close his factory,
and not run it at all. He further
testified that it was the purpose
‘to get all the factories in line,’
in order ‘to maintain prices.’ He
was guaranteed $9,000 for closing
his factory for a year, and the con-
tract included all the dish ma-
chines that might come into his
possession or control, thus disab-
ling himself from manufacturing,
and he obligated himself not to
sell any wood dishes to any other
person, directly or indrectly, dur-
ing the continuance of the con-
CONTRACTS AND COMBINATIONS PROHIBITED. 465

§ 229. Combination to Prevent Competition in and Fixing
Price of Beer.—Several brewing companies in the District of
Columbia entered into an agreement to prevent competition
in the manufacture and sale of their beer, to fix its selling
price, and control its disposition to retail dealers. They
agreed not to sell beer at prices fixed by themselves below
prices fixed by the association, and they allotted the business
of it among themselves, and prohibited any one of their
number selling to customers allotted to another. It was held
that this was a violation of the third section of the Anti-
Trust Act; and that a party to the contract was entitled

tract. It is manifest that it was
the expectation, and that the par-
ties intended, to get a sufficiently
large number of manufacturers in-
to the combination to practically
accomplish their purpose. We can-
not doubt that such a combination,
for such purposes, was opposed to
public policy, and therefore un-
lawful. It is the settled doctrine
that one cannot maintain a suit
in «a court of justice upon a con-
tract entered into for the purpose
of promoting such objects.”

A written contract contained
w recitation that plaintiff sold
salt on board ship to defend-
ant, who agreed to pay the
original cost price of the salt, in-
cluding freight, insurance, ete.,
and in addition $10,000 in cash,
the receipt of which was acknowl-
edged; plaintiffs agreeing to as-
sign to defendant all their rights
to purchase salt, and all the op-
tions they had or might within the
ensuing two years secure, and to
sell to defendant at 10 per cent. be-
low actual cost any salt purchased
by them from any one but defend-
ant. By a contemporaneous agree-
ment, plaintiffs, for a consideration

of $10,000 guaranteed that they,
and all persons or firms with or in
which they might be interested,
would purchase their entire de-
mands for salt from the defendant
exclusively for a period of two
years; that they would not import
or bring any salt to the Pacific
coast other than such as_ they
might purchase from defendant;
and that they would discourage
any such shipments or importa-
tions of salt by any other parties.
Plaintiffs brought suit on two
checks, each for $5,000, payable to
them, drawn by defendant on the
same day and date with the con-
tracts. It was held that the con-
tracts violated Civ. Code, Section
1673, forbidding contracts in re-
straint of trade (with certain ex-
ceptions), and the Sherman Anti-
Trust Act, Section 1 (Act July 2,
1890, c. 647, 26 Stat. 209 [U. 8.
Comp. St. 1901, p. 3200]); and
the terms of the contracts not be-
ing serverable, no recovery could
be had in an action on the checks.
Getz Bros. & Co. v. Federal Salt
Co., 81 P. 416: 147 Cal. 115; 109
Am. St. 114.
466 THE SHERMAN ANTI-TRUST ACT.
to an injunction to restrain the remainder of his associates
enforcing its provisions.®

§ 230. Selling Company—Fixing Purchaser’s Selling
Price and Terms of Sale—A number of manufacturers of
wall paper, located in different states and there engaged in
manufacturing such paper, organized a selling company
through which to sell their entire output, in accordance
with an agreement among themselves, to such jobbers only
as would enter into a purchasing agreement by which their
sales were restricted. The effect of this purchasing agree-
ment was that a jobber bound himself to buy from the
selling company all the wall paper he needed in his business
at certain fixed prices, and not to sell at lower prices or
upon better terms than those at which the selling company
itself sold to dealers other than jobbers. It was held that
there was a violation of the statute; and that the selling
company could not recover the price of paper it sold to a

jobber.?°

9 Leonard v. Abner-Drury Brew-
ing Co., 25 App. D. C. 161; United
States v. Eastern States Lumber
Dealers, 201 Fed. 581; Robert H.
Ingersoll & Bro. v. McColl, 204
Fed. 147.

10 Continental Wall Paper Co. v.
Lewis Voight & Sons Co., 148 Fed.
939; 78 C. C. A. 567; affirmed 212
U. 8. 227; 29 Sup. Ct. 280; 53
L. Ed. 486. In affirming the ysudg-
ment the Circuit Court of Appeals
said: “To insure a monopoly of
the business to themselves, and
keep strangers out of it, it is al-
leged, and not denied. that the
only two manufacturers of wall
paper machinery in the United
States became parties to the com-
bination by agreement to sell no
machinery to strangers, and to

confine their sales to the combine.
To add to the protective force of
the tariff duties tending to keep
out foreign products, it is also
averred that an agreement was
made with Canadian paper makers
to protect each other against cut-
ting of prices. To insure against
kicking out of the agreement or
violations in any way, each member
is required to indorse its shares
in the Continental Wall Paper
Company to that corporation,
which is to hold and apply the
same as liquidated damages in
case of any breach. But that there
should be no inducement to fly
the contract, the scheme contem-
plated that every wholesale buyer
should engage himself to buy his
entire supply from the combine;
CONTRACTS AND COMBINATIONS PROHIBITED.

§ 231.

467

Restricting Output—Regulating Price—Limiting

Territory—Window Glass Case.—A plaintiff in one case was
a dealer and jobber in window glass in Boston and having
a trade in that product among several states of the Union.

and to secure the engagement of
each such jobber or wholesaler to
the scheme, no paper was to be
sold to such as did not sign. This
made the contract practically un-
breakable, for if a factory should
weary of the monopoly, it could
find no jobbers or wholesalers free
to buy its product, and it would
be driven to rely upon such orders
as it could get from the retailers
or consumers. That this union of
former competitors—a union em-

bracing substantially all of
the wall paper mills in the
land (for the 2 per cent

left out may be ignored as an
active competition), should result
in an unreasonable enhancement of
prices is precisely what we might
anticipate. Wall paper is a prod-
uct of universal necessity, and the
consumers are found in every
household. Every principle of eco-
nomic law instructs us that under
such conditions there will be an
enhancement of price, limited only
by the unknown boundary of hu-
man greed and corporate avarice.
It is therefore not to be doubted
that the averment confessed by the
pleading, that prices have been ad-
vanced 50 per cent, is substantially
true. The conspiring mills were
situated in many states. The con-
sumers embraced the whole citi-
zenship of the United States. The
jobbers and wholesalers who were
to be coerced into contracts to buy
their entire demands from the Con-
tinental Wall Paper Company, or

be driven out of business were in
every state. Before the combina-
tion, each of the combining com-
panies was engaged in both state
and interstate commerce. The free-
dom of each, with respect to prices
and terms, was restrained by the
agreement and interstate com-
merce directly affected thereby, as
well as by the enhancement of
prices which resulted. A more
complete monopoly in an article of
universal use has probably never
been brought about. It may be
that the wit of man may yet de-
vise a more complete scheme to
accomplish the stifling of competi-
tion; but none of the shifts re-
sorted to for suppressing freedom
of commerce and securing undue
prices, shown by the reported
cases, is half so complete in its
details. None of the schemes with
which this may be compared is
more certain in results, more wide-
spread in its operation, and more
evil in its purposes. It must fall
within the definition of a ‘restraint
of trade,’ whether we confine our-
selves to the common law interpre-
tation of that term, or apply that
given to the term as used in the
Federal Act by the cases we have
cited above.” See Coca-Cola Co. v.
Dacon Brown Bottling Co., 200
Fed. 105. The vendor cannot fix the
vendee’s selling price, even of «a
patent. Bauer & Cie v. O’Donnell,
229 U. 8. 1; 33 Sup. Ct. —; 57
L. Ed. —; Robert H. Ingersoll &
Bro. v. McColl, 204 Fed. 147.
468 THE SHERMAN ANTI-TRUST ACT.

The defendant was a corporation engaged in purchasing
window glass and obtaining contracts for the purchase of
window glass for manufacturers, jobbers and wholesalers in
several states. These wholesale dealers owned a large ma-
jority of the stock and controlled the defendant corporation.
The American Window Glass Company, up to the time of
the combination complained of, owned and operated factories
in several states, and sold and delivered its product to
wholesale dealers in each of them; and plaintiff had large
dealings with this company and brought its products to
Boston and sold them in the New England states, where
window glass was not manufactured. These wholesale deal-
ers constituted more than 75 per cent of the jobbers and
wholesale dealers in window glass in the United States, and
had more than 75 per cent of the wholesale business. Prior
to the acts complained of, the wholesale dealers were un-
combined, and were buying window glass in competition
with each other and with the other wholesale dealers, and
selling such glass in open competition to retail dealers in
the several states. The defendant corporation entered into a
combination with the American Window Glass Company and
these wholesale dealers to restrict the sale of all the glass
manufactured by the American Window Glass Company to
such wholesalers, except at prices higher than the prices
charged to those wholesalers in the combine by arbitrarily
fixing excessive prices to be charged by the dealers not in
the combine to their retail customers throughout the United
States. The agreement forming the combination restricted
and limited the quantity of window glass to be purchased by
each of the wholesale dealers parties to it, to be arbitrarily
determined by the defendant corporation and the American
Window Glass Company. The wholesale dealers agreed not
to purchase any window glass from any other manufacturer
than the American Window Glass Company _ except
at prices five per cent. lower than charged by it,
which price was less than the cost of manufactur-
ing the glass. The defendant corporation established
CONTRACTS AND COMBINATIONS PROHIBITED. 469
rules and regulations forbidding the wholesalers in
the combine selling window glass to other wholesale dealers
at prices lower than the price fixed under penalty of pe-
cuniary fines. The wholesalers in the combine agreed to
not purchase any window glass at any price from any manu-
facturer who did not close his factory and restrict the out-
put of window glass produced by him at such times and in
such manner as such restriction of output should be imposed
by the American Window Glass Company. The territory
within which each of the wholesalers could sell was fixed so
that none of them could sell to any retail dealer in other
territory except under restrictions imposed by the defendant

corporation. The combination was held illegal."

11 Wheeler Stenzel Co. v. Na-
tional Window Glass Jobbers
Ass’n., 152 Fed. 864; 81 C. C. A.
658; 10 L. R. A. (N.S.) 972. The
court said: “It was obviously de-
signed to destroy or minimize
competition between certain whole-
salers and jobbers in window glass,
alleged to be 75 per cent. of the
whole number so engaged in the
United States, and, in the language
of the Supreme Court, ‘to destroy
or restrict free competition in in-
terstate commerce is to restrain
such commerce.’ It is argued with
much foree and ingenuity by the
defendant in error, that the combi-
nation set out in the declaration,
was only an agreement by which
a certain number of wholesalers
were to trade excusively with a
certain manufacturer, with the re-
ciprocal understanding that the
manufacturer was to sell to no one
else, except at a price higher than
that paid by the parties to the
contract; that this was, in effect,
nothing more than an agreement
to sell to one person or to several

at w price advantageously lower
than the general price, on condition
that such person or persons would
buy exclusively from the manufac-
turer so agreeing. In other words,
the American Window Glass Com-
pany had the right to select its
customers and charge one price to
one and another price to another.
It had the right to offer certain
inducements to certain customers
in exchange for their exclusive
trade. And it had the right to
do all or any of these things. But
it is always to be borne in mind,
in considering arguments of this
kind, that the Act of Congress has
made, and was intended to make,
illegal, many sorts of contracts and
agreements that prior thereto were
not only legal, but were regarded
as meritorious and beneficial, and
has materially restricted the area
within which freedom of contract
may be exercised. There is some-
thing more, however, set forth in
the declaration affecting the char-
acter and operation of this con-
tract. Prices to retail dealers were
470 THE SHERMAN ANTI-TRUST ACT.

§ 232. Agreement For No Competition—Arbitrary Prices
—Division of Trade—Licorice Paste for Tobacco—Monop-
oly.—Manufacturers of licorice paste used in the manufac-
ture of tobacco agreed that there should be no competition
in the prices among them, and from time to time they agreed
and maintained arbitrary and non-competitive prices for
paste at which prices it was actually sold in interstate trade.
They agreed with and induced certain competitors in the
paste business to establish and maintain arbitrary and non-
competitive prices in excess of the normal and reasonable
prices that would have otherwise been prescribed. They
also apportioned the interstate trade and commerce in licorice
paste and of the customers of two of the manufacturers, arbi-
trarily fixing the amount of business they should do; and so
merged and agreed with another that the latter should only
sell 1,000,000 pounds of paste during the year 1904, and
not more than 50,000 pounds additional during each year for
five years from December 1, 1903, and if he sold more he
should pay to another of the manufacturers’ companies cer-

to be arbitrarily fixed by those
wholesale dealers, to which prices

such an agreement would have been
valid at common law, or if in-

they were all required to conform.
The quantity of glass to be pur-
chased by each of said whclesale
dealers was to be arbitrarily de-
termined by the American Window
Glass Company, and they were to
be prohibited from purchasing
from any manufacturer who should
not close his factories and restrict
the output of glass when and as
required so to do by the American
Window Glass Company. These
stipulations clearly tended toward
the creation of a monopoly, and if
adhered to and carried out, mani-
festly restricted the scope of com-
petition in the commodity referred
to. It may be quite true, that

valid as to the parties, would not
have been illegal, but the act of
Congress has affected it with il-
legality, so far as the trade or
commerce restrained by it is inter-
state in its character. We con-
clude, therefore, that the contract
or combination set out in the
declaration is one in violation of
the first section of the Anti-Trust
Act, and that an action properly
accrues under the seventh section
to any one who has been injured
in his business or property by
reason thereof.” See also Wheeler
Stenzel Co. v. American Window
Glass Co., 202 Mass. 471; 89 N. E.
28.
CONTRACTS AND COMBINATIONS PROHIBITED.

471

tain amounts approximately equal to the profits of the excess.
This was held to be a monopoly and an unlawful combina-

tion.??

12 United States Tobacco Co. v.
American Tobacco Co., 163 Fed.
701; affirmed 221 U. S. 106; 31
Sup. Ct. 632; 55 L. Ed. 694. The
court thus analyzed the contract:
“An analysis of the agreement or
combination shows as follows: (1)
It was agreed by the defendants
that there should be no competi-
tion in price for said licorice
paste. (2) The defendants agreed
from time to time upon and main-
tained arbitrary and non-competi-
tive prices for such paste. (3) They
actually sold at such prices. (4)
They agreed with and induced cer-
tain competitors in the business
of making and selling such paste
to establish and maintain arbi-
trary and non-competitive prices.
(5) Such prices were in excess of
the normal prices that would have
prevailed and in excess of reason-
able and normal prices. (6) A di-
vision and apportionment of such
interstate trade and commerce in
licorice paste and of the customers
of said MacAndrews & Forbes
Company and said J. 8. Young
Company were made by them, by
the terms of which division and
apportionment the customers with
whom each of said defendant cor-
porations the MacAndrews &
Forbes Company and the J. S.
Young Company should deal and
to whom the said two corporations
should sell such licorice paste at
such prices, and the amount of
profits which the Young Company
should be allowed from the total

business carried on by the Mac-
Andrews & Young Companies was
arbitrarily fixed by the Continen-
tal Company and the defendants.
(7) The defendants so managed
and agreed that John D. Lewis con-
tracted with Young Company that
he would only sell 1,000,000
pounds during the year 1904, nor
more than 50,000 pounds addi-
tional during each year for five
years from December 31, 1903, and
so that his total sales should not
be more than 1,200,000 pounds
during the year 1908, but that if
he sold more than the amounts
specified then he was to pay the
Young Company certain sums of
money. There is no allegation of
any agreement to cut down the
production of licorice paste or the
aggregate sales by all together or
to interfere with or restrict ship-
ments to any point. Sales by cer-
tain parties were confined to cer-
tain customers in certain localities
of course. It is not difficult for
me to see how all this, if done,
would interfere with or restrain,
and to an extent at least regulate,
interstate commerce. All custo-
mers were to be supplied, all or-
ders filled, all shipments called for
made, we will assume; but this
contract or these contracts, these
agreements, this combination was
to increase prices beyond what was
reasonable, and it related, not to
this merely, but to sales and
necessarily to the transportation
of the merchandise.”
472 THE SHERMAN ANTI-TRUST ACT.

§ 233. Combination to Control Prices and Output—Ab-
sorption of Other Companies—Combination Before Enact-
ment of Anti-Trust Act—Monopoly.—In 1872 seven large
powder companies adopted articles of association providing
that the association should be composed of all manufacturers
of gun powder in the United States who were then or
might thereafter be admitted to it. These articles of asso-
ciation provided that the association should meet quarterly
to fix prices, if necessary, and hear and decide appeals, and
determine all questions relative to the trade that might be
submitted to it. The council, composed of five persons of
the association, met weekly for the consideration of infrac-
tions of the agreements and questions of discrepancy and
deviations from prices in the different home markets. Mini-
mum prices were fixed by the association; and assessments
were made to raise funds to carry out. the association agree-
ments. The association apportioned territory among its
members, authorized the cutting of prices in particular lo-
calities for the purpose of driving out competitors or force
them to come into the association. If there were losses
by this cutting of prices, they were apportioned among
the members. After the formation of the association, other
companies were taken into it until there were 17 members.
This association, with some changes, was continued until
1902. At that time the most influential member of the as-
sociation passed under new management and was reorgan-
ized, and its controlling stockholders and officers began the
policy of acquiring the assets of other like companies and
vesting ownership of their plants and the control of their
business in their own company. Within five years this com-
pany had acquired the stock of and caused to be dissolved
64 corporations engaged in the manufacture of powder and
explosives, and controlled from 64 to 100 per cent of the
trade of the United States, in the different kinds of ex-
plosives sold. Through subsidiary corporations or directly, as
stockholders they controlled all of the other members of
CONTRACTS AND COMBINATIONS PROHIBITED. 473

the association which was then dissolved. It was held that
the combination created a monopoly and was illegal, and
that the formation of such a corporation and its subsidiaries
and the adoption of the new policy was merely the continu-
ance in a new form of the illegal association.’®

§ 234. Lease or Purchase of Plant—Contract Not To En-
gage in Same Business Within Fifty Miles and to Discour-
age Unreasonable Competition—The Gulf Compress Com-
pany was organized under the laws of Oklahoma to conduct
a general storage and compress business. At first its stock
was $25,000, but it was increased to $1,000,000, of which
$600,000 still remained in its treasury. The secret purpose
of those organizing and controlling it was to gain control of
the compress business in the cotton producing area, by means
of purchase and lease, exacting from the vendor or lessor in
each instance a contract that he or it would not for five
years engage in a like business ‘‘within fifty miles of any
compress operated by the’’ lessee or vendee, and that the
lessor or vendor or its members, ‘‘individually and_ col-

- lectively’’ would render every assistance ‘‘in discouraging
unreasonable and unnecessary competition.’? The Shawnee
Compress Company, organized for the local compression of
cotton, undertook, because of the exigencies of its financial
situation, to lease its entire property to the Gulf Compress
Company under the terms stated above. It was held that
the conduct of the latter company was unlawful and
against public policy, its operation tending to the unreason-
able restraint of trade, the prevention of competition, and
the establishment of a monopoly; and that the execution of
the lease by the Shawnee Compress Company would be per-
petually enjoined, or if executed, the contract would be de-
clared an unreasonable restraint of trade and void. It does
not appear, however, whether the Supreme Court of the

18 United States v. E. I. DuPont de Nemours & Co., 188 Fed, 127.
474

THE SHERMAN ANTI-TRUST ACT.

state based its judgment upon the common law, the Sherman
Act or the Statutes of Oklahoma.'*

14 Anderson v. Shawnee Com-
press Co., 17 Okl. 231; 87 Pace.
315; 15 L. R. A. (N.S.) 846;
affirmed 209 U. S. 423; 28 Sup.
Ct. 572; 52 L. Ed. 865. The
Supreme Court of Oklahoma said
of this contract: “No one can read
the contract in the case at bar,
and fail to discover that consider-
ations of public policy are largely
involved. The intention of the
agreement is to aid in securing
the objects sought to be attained
in the formation and organization
of the Gulf Compression Com-
pany and its allied corporation,
the Atlanta Compress Company;
and that this object is to prevent
competition in the compression of
cotton throughout the cotton pro-
ducing states cannot reasonably
be doubted. Circumstances so
strong that it is impossible not
to give this interpretation to them
point unerringly to this conclusion.
It crops out time and again both
in the language used during the
negotiations for the lease of the
Shawnee Compress Company’s
plant and in the contract itself,
and in the testimony introduced
on the trial below. True, the Jan-
guage is guarded, the parties are
circumspect; it is only sought to
‘discourage unnecessary and un-
reasonable competition,’ but such
language is to be taken and con-
strued in the light of the actions
of the parties and in view of the
attendant circumstances. The Gulf
Compress Company is in the busi-
ness of compressing cotton for hire.
Its field of operation is as broad

as language can make it. Its cap-
ital is $1,000,000, of which six-
tenths or $600,000 remains in the
treasury in the shape of treasury
stock, the form most convenient,
most immediately available for in-
stant application. Its capital has
within the past eighteen months
been increased from $25,000 to an
amount sufficient to buy or other-
wise absorb almost all, if not the
entire business of cotton compres-
sion conducted in the United
States. It, with the Atlanta Com-
pany, now controls the operation
of fifty-two compresses, out of
which it owns but six, holding the
remainder by lease contracts, as
testified to by the president of
both companies, similar to that
under consideration here. The
officers of neither of these com-
panies have seen fit to declare a
single dividend since their incor-
poration, but the surplus earnings
of both companies are held in the
corporation vaults, for the very
purpose, as we may well infer
from the surrounding circum-
stances, of increasing its holdings
of such properties under like con-
tracts, in furtherance of a general
policy to absorb the entire business
of compression of this commodity.
The real, the veritable purpose
actuating the officers of the Gulf
Compress Company, as disclosed by
its plan of organization and mode
of operation, and as manifested by
the circumstances surounding the
conduct of its business and the
results of its management by them,
is, beyond reasonable question, to
CONTRACTS AND COMBINATIONS PROHIBITED. 475

§ 235. Tobacco Monopoly—Consolidation of Companies—
Stock Control_—The acquisition of dominion and control
over the tobacco trade in the United States by principle and
accessory or subsidiary corporations as the result of purchas-
ing numerous competitors, in many instances closing out the
business when acquired, and of obtaining stock control of
other competitors, as well as of concerns manufacturing the
elements necessary to the successful manufacture of tobacco
products, brought about in many instances after a ruinous
trade war, the persons interested uniformly covenanting not
to engage in the tobacco business, and the former business
after continuing ostensibly as an independent concern, being
closed, was held to be a monopoly, whether looked at from
the standpoint of the principal and accessory or subsidiary
corporations, viewed independently, including certain for-

place within their power the con-
trol of the compress industry, by
purchasing or leasing those plants
which are advantageously located
in each of the hauling districts
or territories established by the
carriers in their cotton tariffs.
Within certain boundaries, the haul
must be one certain way, and
when the Gulf Company seizes the
strategic point, under its leases,
competition within that district is
annihilated. If it be true, as de-
elared upon the witness stand by
its president, that such is not the
purpose of this organization, then
the intention of its officers, as
evinced in the declarations which
fall from their lips, is at wide vari-
ance from the purposes evidenced
by the results they have brought
about. Nowhere by the terms
of the contract we are construing
is the Gulf Express Company ob-
ligated to continue the Shawnee
plant in operation as an active

factor in the cotton compress busi-
ness. Its machinery might lie idle,
its industry cease, for all the con-
tract. obligates them to the con-
trary. The territory within which
the restriction on the Shawnee
Company is to operate is prac-
tically unlimited. True, the agree-
ment is that it ‘shall not directly
or indirectly engage in the eom-
pression of cotton within fifty
miles of any plant operated by
the tenant,’ but, under this clause,
the Gulf Company may establish
a compress at any competitive
point it pleases, and thereby whol-
ly estinguish competition through
those companies bound by its
leases; and if with a few, why not
with all, until the logical outcome
is the establishment of a monopoly
of that business throughout the
cotton producing area, the closing
of every avenue to competition, un-
der leases identical with that un-
der consideration here.”
476

THE SHERMAN ANTI-TRUST ACT.

eign corporations in so far as, by contracts made by them,
they became co-operators in the combination.®

15 United States v. American To-
bacco Co., 221 U. S. 106; 31 Sup.
Ct. 632; 55 L. Ed. 663; modified
and affirmed 164 Fed. 700. The
court said that the dominion and
control over the tobacco trade,
which actually existed, and the
wrongful purpose and illegal com-
bination was overwhelmingly cs-
tablished by the following consid-
erations: “(a) By the fact that
the very first organization was
impelled by a previously existing
fierce trade war, evidently inspired
by one or more of the minds which
brought about and became parties
to that combination. (b) Because,
immediately after that combination
and the increase of capital which
followed, the acts which ensued
justify the inference that the in-
tention existed to use the power
of the combination as a vantage
ground to further monopolize the
trade in tobacco by means of trade
conflicts designed to injure others,
either by driving competitors out
of the business or compelling them
to become parties to a combination
—a purpose whose execution was
ilustrated by the plug war which
ensued and its results, by the
snuff war which followed and its
results, and by the conflict which
immediately followed the entry of
the combination in England and
the division of the world’s business
by the two foreign contracts which
ensued. (c) By the ever-present
manifestation which is exhibited
of a conscious wrongdoing by the
firm in which the various trans-
actions were embodied from the

beginning, ever changing but ever
in substance the same. Now the
organization of a new company,
now the control exerted by the tak-
ing of stock in one or another or
in several, so as to obscure the
result, actually attained, neverthe-
less uniform, in their manifesta-
tions of the purpose to restrain
others and to monopolize and re-
tain power in the hands of the
few who, it would seem, from the
beginning contemplated the mas-
tery of the trade which practically
followed. (d) By the gradual ab-
sorption of control over all the
elements essential to the success-
ful manufacture of tobacco prod-
ucts, and placing such control in
the hands of seemingly indepen-
dent corporations serving as per-
petual barriers to the entry of
others in the tobacco trade. (e)
By persistent expenditure of mill-
ions upon millions of dollars in
buying out plants, not for the pur-
pose of utilizing them, but in or-
der to close them up and render
them useless for the purpose of
trade (f) By the constantly re-
curring stipulations, whose legal-
ity, isolatedly viewed, we are not
considering, by which numbers of
persons, whether manufacturers,
stockholders or employees, were re-
quired to bind themselves, gener-
ally for long periods, not to com-
pete in the future. Indeed when
the results of the undisputed proof
which we have stated are fully
apprehended, and the wrongful acts
which they exhibit are considered,
there comes inevitably to the mind
CONTRACTS AND COMBINATIONS PROHIBITED. 477

§ 236. Standard Oil Case—Consolidation of Companies—
Stock Control—Presumption—Monopoly.—The combination
of the stocks of the various corporations trading in petroleum
and its products in the hands of a holding company, with in-
tent to exclude others from the trade, and thus centralize in
the combination the perpetual control over the movement of
those commodities in the channels of interstate and foreign
commerce, was held to constitute not only a restraint of trade
but a monopoly. It was also held that the unification of
power and control over the oil industry which resulted from
the combination in the hands of a holding company of the
capital stock of the various corporations trading in pe-
troleum and its products raised a presumption of an intent

to exclude others from the trade.'*

the conviction that it was the dan-
ger which it was deemed would
arise to individual liberty and the
public well-being from acts like
those which this record exhibits,
which led the legislative mind to
conceive and to enact the Anti-
Trust Act, considerations which
also serve to clearly demonstrate
that the combination here as-
sailed is within the law as to
leave no doubt that it is our plain
duty to apply its prohibitions.”
16 Standard Oil Co. v. United
States, 221 U. 8. 1; 31 Sup. Ct.
502; 55 L. Ed. 619; 34 L. R. A.
(N.S.) 834. Modifying and affirm-
ing 173 Fed. 177. In this case the
record consisted of twenty-three
volumes of printed matter, aggre-
gating about 12,000 pages. The
bill and exhibits covered 170 pages
of the printed record. The court
thus sums up the facts involved
and the result they produced: “We
see no cause to doubt the cor-
rectness of these conclusions, con-
sidering the subject from every

aspect, that is, both in view of
the facts established by the record
and the necessary operation and
effect of the law as we have con-
strued it upon the inferences de-
ducible from the facts, for the fol-
lowing reasons: (a) Because the
unification of power and control
over petroleum and its products
which was the inevitable result of
the combining in the New Jersey
corporation by the increase of its
stock and the transfer to it of
the stocks of so many other cor-
porations, aggregating so vast a
capital, gives rise, in and of itself,
in the absence of countervailing
circumstances, to say the least, to
the prima facie presumption of in-
tent and purpose to maintain the
dominancy over the oil industry,
not as a result of normal methods
of industrial development, but by
means of combination which were
resorted to in order that greater
power might be added than would
otherwise have arisen had normal
methods been followed, the whole
478

THE SHERMAN ANTI-TRUST ACT.

§ 237. Freight Rates—Rebates.—A combination to secure
less than lawful freight rates, entered into by independent

with the purpose of excluding
others trom the trade and thus
centralizing in the combination a
perpetual control of the movements
of petroleum and its products in
the channels of interstate com-
merce. (b) Because the prima
facie presumption of intent to re-
strain trade, to monopolize and to
bring about monopolization result-
ing from the act of expanding the
stock of the New Jersey corpora-
tion and vesting it with such vast
control of the oil industry, is made
conclusive by considering (1) the
conduct of the persons or corpo-
rations who were mainly instru-
mental in bringing about the ex-
tension of power in the New Jer-
sey corporation before the consum-
mation of that result and prior
to the formation of the trust
agreements of 1879 and 1882. (2)
by considering the proof as to
what was done under those agree-
ments and the acts which im nedi-
ately preceded the vesting of power
in the New Jersey corporation as
well as by weighing the modes in
which the power vested in that
corporation has been exerted and
the results which have arisen from
it. Reeurring to the acts done by
the individuals or corporations
who were mainly instrumental] in
bringing about the expansion of
the New Jersey corporation dur-
ing the period prior to the forma-
tion of the trust agreements of
1879 and 1882, including those
agreements, not for the purpose
of weighing the substantial merit
of the numerous charges of wrong-

doing made during such period,
but solely as an aid for discover-
ing intent and purpose, we think
no disinterested mind can survey
the period in question without be-
ing irresistibly driven to the con-
clusion that the very genius for
commercial development and or-
ganization which it would seem
was manifested from the beginning
soon begot an intent and purpose
to exclude others which was fre-
quently manifested by acts and
dealings wholly inconsistent with
the theory that they were made
with the single conception of ad-
vancing the development of busi-
ness power by usual methods,
but which on _ the _ contrary
necessarily involved the  in-
tent to drive others from the field
and to exclude them from their
right to trade and thus accomplish
the mastery which was the end in
view. And, considering the period
from the date of the trust agree-
ments of 1879 and 1882, up to the
time of the expansion of the New
Jersey corporation, the gradual ex-
tension of the power over the com-
merce in oil which ensued, the de-
cision of the Supreme Court of
Ohio, the tardiness or reluctance
in conforming to the commands of
that decision the method first
adopted and that which finally cul-
minated in the plan of the New
Jersey corporation, all addition-
ally serve to make manifest the
continued existence of the intent
which we have previously indi-
eated and which among other
things impelled the expansion of
CONTRACTS AND COMBINATIONS PROHIBITED.

479

dealers in products with the intent to monopolize com-
merce in such products among the several states, is for-
bidden by the Sherman Anti-Trust Act.?7

the New Jersey corporation. The
exercise of the power which re-
sulted from that organization for-
tifies the foregoing conclusions,
since the development which came,
and acquisition here and there
which ensued of every efficient
means by which competition could
have been asserted, the slow but
resistless methods which followed
by which means of transportation
were absorbed and brought under
control, the system of marketing
which was adopted by which the
country was divided into districts
and the trade in each district in
oil was turned over to a designated
corporation within the combination
and all others were excluded, all
lead the mind up to a conviction
of a purpose and intent which we
think it so certain as practically
to cause the subject not to be with-
in the domain of reasonable con-
tention. The inference that no at-
tempt to monopolize could have
been intended, and that no mo-
nopolization resulted from the acts
complained of, since it is estab-
lished that a very small percentage
of the crude oil produced was con-
trolled by the combination, is un-
warranted. As substantial power
over the crude product was the
inevitable result of the absolute
control which existed over the re-
fined product, the monopolization
of the one carried with it the pow-
er to control the other, and if the
inference which this situation sug-
gests were developed, which we
deem it unnecessary to do, they

might well serve to add additional
cogency to the presumption of in-
tent to monopolize which we have
found arises from the unquestioned
proof on other subjects.”

17 Swift & Co. v. United States,
196 U.8.375; 25 Sup. Ct. 276; 49
L. Ed. 518; affirming 122 Fed. 529.
“The acts charged in the tenth
section, apart from the combina-
tion and the intent, may, perhaps,
not necessarily be unlawful, ex-
cept for the adjective which pro-
claims them so. At least we may
assume, for the purposes of de-
cision, that they are not unlawful.
The defendants, severally, lawfully
may obtain less than the regular
rates for transportation if the cir-
cumstances are not substantially
familiar to those for which the
regular rates are fixed. Act of
Feb. 4, 1887, c. 104, section 2, 24
Stat. 379. It may be that the
regular rates are fixed for carriage
in cars furnished by the raiload
companies, and that the defen-
dants furnish their own cars and
other necessities for transportation.
We see nothing to hinder them
from combining to that end. We
agree, as we have already said,
that such a combination may be
unlawful as part of the general
scheme set forth in the bill, and
that this scheme as a whole might
be enjoined, as it is, apart from
its connection with the other ele-
ments, if entered into with the
intent to monopolize, alleged, is
a more delicate question. The
question is how it would stand if
480

THE SHERMAN ANTI-TRUST ACT.

§ 238. Telephone Combinations.—A contract between a
local telephone company and a long distance company for
a connection between their lines and the use of the local
lines for the sending and receiving of long-distance mes-
sages, whereby the local company agrees not to permit any
similar connection with its line by any other long-distance
company for a term of 99 years is invalid, because it tends
to create a monopoly. The local company thus disables
itself from giving its subscribers the benefit of competition
in long-distance services and from extending its own service
as authorized by its charter when it is necessary.'§

the tenth section were the whole
bill. Not every act that may be
done with intent to produce an
unlawful result is unlawful, or
constitutes an attempt. It is a
question of proximity and degree.
The distinction between mere prep-
aration and attempt is well known
in the criminal law. Common-
wealth v. Peaslee, 177 Massachu-
setts, 267, 272; 59 N. E. 55. The
same distinction is recognized in
eases like the present. United
States v. E. C. Knight Co., 156
U. S. 1, 13; 39 L. Ed. 325; 15
Sup. Ct. 249; Kidd v. Pearson,
128 U. S. 1, 23, 24; 9 Sup. Ct.
6; 32 L. Ed. 346. We are
of the opinion, however, that
such a combination is within
the meaning of the statute. It is
obvious that no more powerful in-
strument of monopoly could be
used than an advantage in the cost
of transportation. An even if the
advantage is one which the act
of 1887 permits, which is denied,
perhaps inadequately, by the ad-
jective ‘unlawful,’ still a combina-
tion to use it for the purpose pro-
hibited by the act of 1890 justi-
fies the adjective and takes the
permission away.”

A contract whereby each party
agreed to pay to the other certain
percentages on all freights earned
by him as long as either should
zarry any cattle to Cuba, no
provision being made as_ to
maintaining rates or prevent-
ing competition, no prices be-
ing fixed, and dealings not being
confined to any combination of per-
3ons, is not in violation of Act
July 2, 1890, ¢. 647, 26 Stat. 209
[U. 8S. Comp. St. 1901 p. 3200],
prohibiting contracts in restraint
of trade. Judgment (1903) $85
N. Y. S. 530; 42 Mise. Rep 22,
reversed. Ceballos v. Munson §&. 8.
Line, 87 N. Y. S. 811; 93 App.
Div. 593.

18 United States Telephone Co. v.
Central Union Tel. Co., 202 Fed.
66; (C. C. A.); affirming 171
Fed. 130. As to other telephone
contracts not under this statute,
see Cumberland Tel. & Tel. Co. v.
State, 99 Miss. 1; 54 So. 670;
39 L. R. A. (N.S.) 277; Home
Tel. Co. v. Sarcoxie L. & T. Co.,
236 Mo. 114; 139 S. W. 108; 36
L. R. A. (N.S.) 124.
CONTRACTS AND COMBINATIONS PROHIBITED. 481
§ 239. Corner.—To corner the cotton trade is a violation

of the Act. It raises prices and prevents the natural flow
of the trade.’

ARTICLE II—TO ELIMINATE COMPETITION.

240. Division of territory—Fake 243. Restraint of cattle and meat

bids—Addyston Pipe case. market.

241. Interstate commerce—Addy- 244. Dismanteling corporation
ston Pipe case—Restrict- plant and ceasing work—
ing competition. Shoe fastener case.

242. Agreement to refrain from
bidding against each other
in the markets in order to
control prices—Rebates by
railroads.

§ 240. Division of Territory—Fake Bids—Addyston Pipe
Case—Five corporations and partnerships situated in dif-
ferent states were in the manufacture, sale and transporta-
tion of iron pipe. They entered into a contract or combina-
tion to divide the territory in which they operated (compos-
ing a large part of the United States) into ‘‘reserved’’
cities and ‘‘pay’’ territory. The cities were allotted to cer-
tain members of the combination free of competition from
the others, but provision was made for a show of competi-
tion by the latter putting in pretended bids at prices
previously arranged for. In the ‘‘pay’’ territory all offers
for the purchase of pipe were submitted to a committee
which determined the price and then awarded the contract
to that member of the combination which agreed to pay the
largest ‘‘bonus.’’ This bonus was to be divided among the
other members of the association. It was held that this was
an unlawful combination both at common law and under

19 United States v. Patten, 226 Hd. —; reversing 187 Fed. 664.
U. 8. 525; 33 Sup. Ct. 141; 57 L. See section 221.
482 THE SHERMAN ANTI-TRUST ACT.

the Anti-Trust Act. Judge Taft thus stated the facts per-
tinent to the issue and made the following comment upon
them :

“‘Upon this review of the law and the authorities, we can
have no doubt that the association of the defendants, how-
ever reasonable the prices they fixed, however great the com-
petition they had to encounter, and however great the ne-
cessity for curbing themselves by joint agreement from com-
mitting financial suicide by ill-advised competition, was void
at common law, because in restraint of trade, and tending to
a monopoly. But the facts of the case do not require us to
go so far as this, for they show that the attempted justifica-
tion of this association on the grounds stated is without
foundation.’’

Judge Taft then takes up the question of conspiracy, and
says:

‘‘Another aspect of this contract of association brings it
within the term used in the statute, ‘a conspiracy in re-
straint of trade.’ A conspiracy is a combination of two or
more persons to accomplish an unlawful end by lawful means
or a lawful end by unlawful means. In the answer of the
defendants, it is averred that the chief way in which cast-
iron pipe is sold is by contracts let after competitive bid-
ding invited by the intending purchaser. It would have
interfered with the smooth working of defendants’ associa-
tion had its existence and purpose become known to the
public. A part of the plan was a deliberate attempt to
create in the minds of the members of the publie inviting
bids the belief that competition existed between the defend-
ants. Several of the defendants were required to bid at every
letting, and to make their bids at such prices that the one
already selected to obtain the contract should have the low-
est bid. It is well settled that an agreement between in-
tending bidders at a public auction or a public letting not
to bid against each other, and thus prevent competition, is
a fraud upon the intending vendor or contractor, and the
CONTRACTS AND COMBINATIONS PROHIBITED. 483

ensuing sale or contract will be set aside. The case of Jones
v. North,” to the contrary, cannot be supported. The largest
purchasers of pipe are municipal corporations, and they are
by law required to solicit bids for the sale of pipe in order
that the public may get the benefit of competition. One
of the means adopted by the defendants in their plan of
combination was this illegal and fraudulent effort to evade
such laws, and to deceive intending purchasers. No matter
what the excuse for the combination by defendants in re-
straint of trade, the illegality of the means stamps it as a
conspiracy, and so brings it within that term of the Federal
statute.’ ’2+

§241. Interstate Commerce—Addyston Pipe Case—Re-
stricting Competition—Upon the facts stated in the preced-
ing section it was earnestly contended that while there might
be a restraint of commerce it was not a restraint of inter-
state commerce, and the Knight case was pressed vigorously
in the contention. Judge Taft held that there was a re-
straint of interstate commerce, saying:

‘‘The mills of the defendants were situated, two in Ala-
bama, two in Tennessee, one in Kentucky, and one in Ohio.
The invariable custom in sales of pipe required the seller to
deliver the pipe at the place where it was to be used by

20L, R. 19 Eq. 426. until sold by the consignees, then

21 United States v. Addyston to be paid for at a fixed price, is
Pipe & Steel Co., 85 Fed. 271; 29 one of agency, and does not cre-
Cc. C. A. 141; 54 U. S. App. 723; ate a trust or conspiracy against
46 L. R. A. 122, reversing 78 Fed. trade, as defined and prohibited
712; affirmed 175 U. 8. 211; 20 by Texas Act of March 30, 1889,
Sup. Ct. 96; 44 L. Ed. 136. The 141, though it fixed the prices at
defendants were enjoined at the which windmills were to be sold
suit of the government. A con- and bound the consignees to han-
tract by which a manufacturer of dle no other kind—the statute
windmills granted exclusive terri- having no application to contracts
tory for their sale to a firm, the between principal and agent.
windmills, after shipment to re- Welsh v. Phelps & Bigelow Wind-
main the property of the maker mill Co. (Tex.), 26 S. W. 71.
484 THE SHERMAN ANTI-TRUST ACT.

the buyer, and to include in the price the cost of delivery.
The contracts, as the answer of the defendants avers, were
invariably made after public letting at the home, and in the
state, of the buyer. The pay territory, sales in which it was
the professed object of the defendants to regulate by their
contract of association, included 36 states. The cities which
were especially reserved for the benefit of the defendants
were Atlanta and Anniston, reserved to the Anniston mill,
Alabama; New Orleans and Chattanooga, reserved to the
Chattanooga mill, in Tennessee; St. Louis and Birmingham
reserved to the Bessemer mill, in Alabama; Omaha, reserved
to the South Pittsburg mill, in Tennessee; Louisville, New
Albany, and Jeffersonville, reserved to Dennis Long & Co.,
of Louisville; and Cincinnati, Newport, and Covington, re-
served to the Addystcn mill, in Ohio. Under the agree-
ment, every request for bids from any place, except the re-
served cities, sent to any one of the defendants, was sub-
mitted to the central committee, who fixed a price, and the
contract was awarded to that member who would agree to
pay for the benefit of the other members of the association
the largest ‘bonus.’ In the case of the reserved cities, the
successful bidder having been already fixed, the association
determined the price and bonus to be paid. The contract
of association restrained every defendant except the one
selected to receive the contract from soliciting (in good
faith) or making a contract for pipe with the intending
purchaser at all, and restrained the defendant so selected
from making the contract except at the price fixed by the
committee. In cases of pipe to be purchased in any state
of the 36 in pay territory, except four, each one of the
defendants, by his contract of association, restrained his free-
dom of trade in respect to making a contract in that state
for the sale of pipe to be delivered across state lines; five
of them agreeing not to make the contract below a fixed
price. With respect to sales in Ohio, Kentucky, Tennessee,
and Alabama, the effect of the contract of association was
CONTRACTS AND COMBINATIONS PROHIBITED. 485

to bind at least three, sometimes four, and sometimes five,
of the defendants not to make a contract at all in those
states for the sale and delivery of pipe from another state;
and if the job were assigned as it might be, to one living
in a different state from the place of the contract and de-
livery, its effect would be to bind him not to sell and deliver
pipe across state lines at less than a certain price. It thus
appears that no sale or proposed sale can be suggested
within the scope of the contract of association with respect
to which that contract did not restrain at least three, often
four, more often five, and usually all, of the defendants in
the exercise of the freedom, which but for the contract would
have been theirs, of selling in one state pipe to be delivered
from another state at any price they might see fit to fix.
Can there be any doubt that this was a restraint of inter-
state trade and commerce?

‘‘That the defendants in the present case combined and
contracted with each other for the purpose of restraining
trade and commerce among the states covered by their
agreement, in the articles manufactured by them, is too clear
to admit of dispute. In the E. C. Knight Co. case there
was, the Supreme Court said, ‘nothing in the proofs to in-
dicate any intention to put a restraint upon trade or com-
merce.’ In the present case the proofs show that no one
of the companies in this pipe-trust combination was al-
lowed to send its goods out of the state in which they were
manufactured except upon the terms established by the
agreement. Can it be doubted that this was a direct re-
straint upon interstate commerce in those goods? To give
the language of the opinion in the Knight case the con-
struction contended for by defendants would be to assume
that the court, after having in the clearest way distinguished
the case it was deciding from a case like the one at bar,
for the very purpose of not deciding any case but the one
before it, then proceeded to confuse the cases by using
486

THE SHERMAN ANTI-TRUST ACT.

language which decided both. We cannot concur in such
an interpretation of the opinion.’’??

22United States v. Addyston
Pipe & Steel Co., 85 Fed. 271; 29
C. C. A. 141; 54 U. S. App. 723;
46 L. R. A. 122; reversing 78
Fed. 712; affirmed 175 U. 8S. 211;
20 Sup. Ct. 96; 44 L. Ed. 136.
We make the following extracts
from the opinion of the Supreme
Court: “While no particular con-
tract regarding the furnishing of
pipe and the price for which it
should be furnished was in the con-
templation of the parties to the
combination at the time of its
formation, yet it was their inten-
tion, as it was the purpose of the
combination, to directly and by
means of such combination in-
crease the price for which all con-
tracts for the delivery of pipe
within the territory above de-
scribed should be made, and the
latter result was to be achieved
by abolishing all competition be-
tween the parties to the combina-
tion. The direct and immediate
result of the combination was
therefore necessarily a_ restraint
upon interstate commerce in re-
spect of articles manufactured by
any of the parties to it to be
transported beyond the state in
which they were made. The de-
fendants by reason of this com-
bination and agreement could only
send their goods out of the state
in which they were manufactured
for sale and delivery in another
state, upon the terms and pursu-
ant to the provisions of such com-
bination. As pertinently asked by
the court below, was not this a di-
rect restraint upon interstate

commerce in those goods? If deal-
ers in any commodity agreed
among themselves that any par-
ticular territory bounded by state
lines should be furnished with
such commodity by certain mem-
bers only of the combination, and
the others would abstain from
business in that territory, would
not such agreement be regarded
as one in restraint of interstate
trade? If the price of the com-
modity were thereby enhanced (as
it naturally would be), the char-
acter of the agreement would be
still more clearly one in restraint
of trade. Is there any substantial
difference where, by agreement
among themselves, the parties
choose one of their number to
make a bid for the supply of the
pipe for delivery in another state,
and agree that all the other bids
shall be for a larger sum, thus
practically restricting all but the
member agreed upon from any at-
tempt to supply the demand for
the pipe or to enter into competi-
tion for the business? Does not
an agreement or combination of
that kind restrain interstate trade,
and when Congress has acted by
the passage of a statute like the
one under consideration, does not
such a contract clearly violate that
statute? If, therefore, an agree-
ment or combination directly re-
strains not alone the manufacture,
but the purchase, sale or exchange
of the manufactured commodity
among the several states, it is
brought within the provisions of
the statute. The power to regu-
CONTRACTS AND COMBINATIONS PROHIBITED.

487

§ 242. Agreement to Refrain from Bidding Against Each
Other in the Markets in Order to Control Prices—Rebates
by Railroads.—A number of the large meat dealers or
butchers of Chicago entered into an agreement or had a
plan to control prices in the sales of meats by not bidding
against each other whereby they were enabled temporarily
to lower or advance the price of cattle shipped to Chicago
as well as cattle in a large scope of the United States.
There were seven corporations, one co-partnership, and
twenty-three persons in the combine; and they represented

late such commerce, that is, the
power to prescribe the rules by
which it shall be governed is vested
in Congress, and when Congress
has enacted a statute such as the
one in question, any agreement or
combination which directly ope-
rates, not alone upon the manu-
facture, but upon the sale, trans-
portation and delivery of an ar-
ticle of interstate commerce, by
preventing or restricting its sale,
etc., thereby regulates interstate
commerce to that extent and to
the same extent trenches upon the
power of the national legislature
and violates the statute. It is
also urged that as but one con-
tract would be awarded for the
work proposed at any place, and
therefore only one person would
secure it by virtue of being the
lowest bidder, the selection by de-
fendants of one of their number to
make the lowest bid as among
themselves could not operate as
any restraint of trade; that the
combination or agreement operated
only to make a selection of that
one who should have the contract
by being the lowest bidder, and it
did not in the most remote de-
gree itself limit the number or ex-

tent of contracts, and therefore
could not operate to restrain
trade. This takes no heed of the
purpose and effect of the combina~
tion to restrain the action of the
parties to it so that there shall
be no competition among them to
obtain the contract for themse!ves.
We have no doubt that where the
direct and immediate effect of a
contract or combination among
particular dealers in a commodity
is to destroy competition between
them and others, so that the par-
ties to the contract or combination
may obtain increased prices for
themselves, such contract or com-
bination amounts to a restraint of
trade in the commodity, even
though contracts to buy such
commodity at the enhanced price
are continually being made. Total
suppression of the trade in the
commodity is not necessary in or-
der to render the combination one
in restraint of trade. It is the
effect of the combination in limit-
ing and restricting the right of
each of the members to transact
business in the ordinary way, as
well as its effect upon the volume
or extent of the dealing in the
commodity, that is regarded.”
488 THE SHERMAN ANTI-TRUST ACT.

many millions of dollars. The averments of the govern-
ment’s petition for the dissolution of the combine was thus
summarized by the Circuit Court: ‘‘That the defendants
are engaged in an unlawful combination and conspiracy
under the Sherman Act in (a) directing and requiring their
purchasing agents at the markets where the live stock was
customarily purchased, to refrain from bidding against each
other when making such purchases; (b) in bidding up
through their agents, the prices of live stock for a few days
at a time to induce large shipments, and then ceasing from
bids, to obtain live stock thus shipped at prices much less
than it would bring in the regular way; (c) in agreeing at
meetings between them upon prices to be adopted by all,
and restriction upon the quantities of meat shipped; (d) in
directing and requiring their agents throughout the United
States to impose uniform charges for cartage for delivery,
thereby increasing to dealers and consumers the charges for
such meats; and (e) in making agreements with the trans-
portation companies for rebates and other discriminative
rates.’’

The court said that this was an illegal combination even
though the prices were lowered; that the statute forbade
a combination to control prices either by raising or lower-
ing them.”*

§ 243. Restraint of Cattle and Meat Market.—Another
court thus discusses in a subsequent case the facts involved
in the case cited in the previous section:

‘‘The indictment in Case No. 4,509 charges in substance
that there has been carried on from Chicago (and other
named cities in different states) an extensive industry in-
volving (1) the purchase of live stock; (2) the slaughter of
such stock; and (38) the furnishing of fresh meats to the

28 United States v. Swift & Co., 375; 25 Sup. Ct. 276; 49 L. Ed.
122 Fed. 529; affirmed Swift & 518. The defendants were enjoined
Co. v. United States, 196 U. 8. at the suit of the government.
CONTRACTS AND COMBINATIONS PROHIBITED. 489

people in certain named states; that 85 per cent of all fresh
meats consumed in the named states has been slaughtered in
those cities in designated proportions; that 70 per cent of
this 85 per cent ‘has been carried on, directed and con-
trolled’ by the defendants; that the Armour group had
branch houses in 317 different towns and cities in different
states; the Swift group 280; and the Morris group 82; that
the defendants, divided into three groups representing cer-
tain corporations or interests, managed, controlled, and di-
rected by them, entered into an agreement: First, that they
would not compete in the purchase of live stock, and would
make uniform bids for animals of like grade. Second, that
the three groups adopted a uniform system of determining
the sale price of dressed beef by adding to the cost of the
animal on the hoof certain fixed and excessive charges to
cover operating expenses, and by deducting certain inade-
quate allowances for by-products. Third, that each group
would direct its sales agents to sell at the prices figured ac-
cording to the agreement, or, if not at that price, at a
certain other price also agreed upon. That by agreeing
on the amounts to be paid for the live stock, and upon the
amounts to be added for operating charges, and the amounts
to be deducted for by-products, and in reaching a uniform
sale price they have eliminated all competition in the fresh
meat industry between the three groups of defendants. That
they were large operators in interstate commerce, and by
a combination among themselves they have agreed upon a
system which restricted the business of each individual
group. The medium through which all groups collected in-
formation and operated was the National Packing Company,
organized, owned, and directed by the groups collectively.
Its office furnished a common meeting ground, and there the
total business done by all the defendants, by agreement,
would be equalized from time to time, each being permitted
to share according to its financial interest, and prices were
kept up by increasing or decreasing shipments to particular
490 THE SHERMAN ANTI-TRUST ACT.

territories according to market conditions. The whole plan,
from its inception, appears plainly to be one to eliminate
competition as a factor in fixing prices among the three
groups of defendants, beginning with the agreement not to
bid against each other, and in fact to bid exactly the same
amounts for like grades of live stock, determining a uni-
form selling price, and ending with fixing a uniform sale
price and an apportionment among themselves of the total
business done.

‘“‘T am of the opinion that the facts stated in the indict-
ments show clearly a plan or scheme organized and put in
operation by the defendants, the ultimate purpose of which
was to control the production sale, and distribution of fresh
meat throughout a large section of this country; and, as
incidental to that control, to lower prices to the producer of
the raw material, and raise prices to the consumer of the
finished product. While the facts do not disclose an abso-
lute monopoly, yet the large percentage of the business
which they control indicates that they intended to acquire
at least a commercial monopoly.’’*!

§ 244, Dismanteling Corporation Plant and Ceasing
Work—Shoe Fastener Case.—A metal shoe fastening com-
pany owning patents on shoe machinery, which it was in-
corporated to manufacture and sell to the trade, went into
bankruptcy, and its trustees brought suit against another
shoe company alleging that it was organized and was then in
existence to maintain a monopoly of the shoe machinery
business, that it had acquired such monopoly, and, having
obtained a majority of the stock of the plaintiff’s corpora-
tion, refused to permit it to do business in order to prevent
competition with other machines controlled by it, permitted
the corporation’s property to remain idle and hecome wasted
until the patents were about to expire and had become prac-
tically worthless, and the corporation had heen greatly

24 United States v. Swift, 188 Fed. 92.
CONTRACTS AND COMBINATIONS PROHIBITED. 491
injured in its business by reason of this conduct of the de-
fendant. It was held that the complaint stated a cause
of action.”

ARTICLE III.—STOCKHOLDING COMPANIES OR
CORPORATIONS,

245. Standard Oil Company case.

§ 245. Standard Oil Company Case.—The stockholders of
the Standard Oil Company, a New Jersey corporation in
1899 owned a majority of the stock in nineteen other com-
panies in the same proportion they owned stock in the
Standard Oil Company, and these twenty corporations con-

25 Strout v. United Shoe Ma-
chinery Co., 203 Fed. 855; Strout
v. United Shoe Machinery Co., 195
Fed. 313; Cilley v. United Shoe
Machinery Co., 202 Fed. 598. Rub-
ber Tire Wheel Co. v. Milwaukee
Rubber Works Co., 154 Fed. 358,
362; 83 C. C. A. 336; Tribolet v.
United States, 11] Ariz. 436; 95
Pac. 85, 87; 16 L. R. A. (N.S.)
223; Loewe 1. Lawlor, 208 U.
S. 274, 297; 28 Sup. Ct. 301;
52 L. Ed. 488; reversing 148 Fed.
924; Pennsylvania Sugar Refining
Co. vy. American Sugar Refining
Co., 160 Fed. 144, 145; reversed
166 Fed. 254; 92 C. C. A. 318;
United States v. American Tobacco
Co., 164 Fed. 700, 707; affirmed
221 U. S. 106; 32 Sup. Ct. 632;
55 L. Ed. 694; United States v.
N.Y. N. H. & H. R. Co., 165 Fed.
742, 748; Thomsen v. Union Cas-
tle Mail S. 8. Co., 166 Fed. 251,
253; 92 C. C. A. 315; reversing
149 Fed, 933; Bigelow v. Calumet

& Heela Mining Co., 167 Fed. 704,
714, 725; 94 Fed. 13; affirming
167 Fed. 704; Ware-Kramer To-
baeeco Co. v. American Tob:cen
Co., 178 Fed. 117, 124; 180 Ted.
160; United States v. Reading Co..
183 Fed. 427, 455; affirmed in part
226 U. 8. 158; 33 Sup. Ct. —; 57
L. Ed. —; United States v. Stand-
ard Oil Co., 173 Fed. 177, 180;
affirmed 22] U. 8. 1; 31 Sup. Ct.
502; 55 L. Ed. 619; 34 L. R A.
(N.S.) 834; United States v. Am-
erican Naval Stores Co., 186 Fed
592, 594; United States v. Swift,
186 Fed. 1002, 1014; United
States v. Swift, 188 Fed. 92; Steele
v. United States, 190 Fed. 631, 634;
Steers v. United States, 192 Fed.
1; 112 C. C. A. 423; United
States v. Union Pacific R. Co, 188
Fed. 102, 110; reversed — U. 8.
—; 83 Sup. Ct. —; 57 L. Ed.
—; Cole Transportation Co. v.
White Star Line, 186 Fed. 63, 65.
492 THE SHERMAN ANTI-TRUST ACT.

trolled by the ownership of the majority of their stock or
otherwise, many other corporations. Every one of these cor-
porations were engaged in some part of the business of pro-
ducing, refining, buying, transporting and selling petroleum
and its products. They were handling about thirty per cent
of the production of the crude oil and more than seventy-
five per cent of the business of purchasing, refining, trans-
porting and selling petroleum and its products in the United
States. During the period of ten years prior to 1879 seven
persons (parties to the suit) had acquired control of many
competing corporations, partnerships and refineries and
placed the majority of the stock of such corporations and
the interests in property and business thus obtained in
various trustees, to be held and operated by them for the
stockholders of the Standard Oil Company of Ohio, one of
the nineteen companies in which these persons were the
principal stockholders, and they had thereby suppressed all
competition among these corporations and partnerships. In
1879 those seven persons and their associates caused all the
trustees to convey their interests in stock, property and
business of all these corporations to given trustees, to be
by them held, operated and distributed for the stockholders
of the Standard Oil Company of Ohio. During the period
extending from 1879 to 1892 they prevented these corpora-
tions and others engaged in this business, of which they
secured control, from competing in the oil business, by
causing the control of their operations, and usually of a ma-
jority of their stocks, to be held in trust for the stock-
holders of the Ohio company; and during the period from
1892 to 1899 they succeeded in accomplishing the same result
by a similar stockholding device and also by the joint
equitable ownership of the majority of the stocks of the
corporation. In 1899 these same persons and their associates
caused the majority of the stock of the nineteen corporations
to be transferred to the New Jersey oil company in ex-
change for its stock whereby it acquired the legal title to
CONTRACTS AND COMBINATIONS PROHIBITED. 493
a majority of the stock of each of such nineteen companies
as well as their control and of all the companies which they
controlled with the power to fix the rates of transportation
as well as the purchase and selling prices of petroleum and
its products, which all these corporations should pay and
receive in the conduct of their business in commerce among
the states and with foreign nations. After that exchange
of stock these seven persons were stockholders and officers
in the Standard Oil Company of New Jersey which exer-
cised that power, and by its use prevented competition in
interstate and foreign commerce in petroleum and its prod-
ucts among these corporations. It was held that the transac-
tion constituted both a combination and conspiracy in re-
straint of and to monopolize commerce among states and with
foreign nations. The government obtained an injunction
against the continuance and operations of the combination.?¢

26 United States v. Standard Oil
Co., 173 Fed. 177; affirmed 221
U. S. 1; 31 Sup. Ct. 502; 55 L.
Ed. 619; 34 L. R. A. (N.S.) 834.
Judge Sanborn in the Circuit
Court said: “Counsel argue with
persuasive force the transfer of
the stock of the 19 corporations
to the principal company wrought
no substantial restriction of com-
petition, because the owners of
that stock had exercised the same
power of restraint before that
transfer that was vested in the
Standard Oil Company of New
Jersey thereafter. But the power
of the principal company after the
transfer of 1899 to fix the prices
at which the 30 corporations
should buy and sell the articles in
which they dealt, the terms of
their purchases and sales, their
rates for the transportation of oil
and its products, and all the in-
finite details of their vast opera-

tions in which they might compete,
and thereby to prevent their com-
petition, was greater, more easily
and quickly exercised and hence
more effective, than it could have
been in the hands of 3,000 scat-
tered stockholders. The trust deed
of 1879, the trust agreement of
1882, the withholding of the sapa-
rate certificates of shares of stock
in each corporation from the hold-
ers of the trust certificates in the
dissolution of that trust until they
took their shares in all of the cor-
porations, bear convincing testi-
mony to the soundness of this
proposition. The combination
formed by that transfer and its
power to restrict competition were
less liable to be destroyed, more
reliable and permanent, than those
springing from the joint ownership
by 3,000 stockholders of each cor-
poration. There is much more
probability that corporations po-
494

tentially competitive will separate
and compete, when each of their
stockholders has a separate certifi-
cate of his shares of stock in each
corporation, which he is free to
sell, than when a majority of the
stock of each of the corporations
is held by a single corporation,
which has the power to vote the
stock and to operate them, And
although the group of stockhold-
ers led by Mr. Hill and Mr. Mor-
gan had the same power to pre-
vent competition between the two
railway companies that the stock-
holders of these corporations had
to prevent competition between
them, the Supreme Court held in
the case of the Northern Securi-
ties Company that their transfer
of their stock to the holding com-
pany granted to that corporation
a power so much greater and more
effective than that held by the
stockholders of the railway com-
panies that the necessary effect of
it was a restriction of competition
so direct and substantial that it
made it an illegal combination in
restraint of interstate commerce.
Because the power to restrict com-

THE SHERMAN ANTI-TRUST ACT.

petition in interstate commerce
granted to the Standard Oil Com-
pany of New Jersey by the trans-
fer to it of stock of the 19 com-
panies and of the authority to
manage and operate them and the
other corporations which they con-
trolled was the absolute power to
prevent competition among any of
these corporations, because this
power was greater, more easily ex-
ercised, more effective, and more
durable than that which the 3,000
stockholders of these corporations
previously had, because many of
these corporations were potentially
competitive and were engaged in
interstate commerce, and the nec-
essary effect of the transfer of the
stock of the 19 companies to the
holding company was, under the
decision in the case of the North-
ern Securities Company, a direct
and substantial restriction of that
commerce, that transfer and the
operation of the companies under
it constituted a combination or
conspiracy in restraint of inter-
state and international commerce
in violation of the Anti-Trust Act
of July 2, 1890.”
CHAPTER XIII.

CONTRACTS AND COMBINATIONS NOT PROHIBITED.

ARTICLE 1—AGREEMENTS AND COMBINATIONS INCIDEN-
TALLY AFFECTING INTERSTATE COMMERCE.

ARTICLE II.—AGREEMENTS NOT TO ENGAGE IN BUSINESS.

ARTICLE III.—MANUFACTURER’S RIGHT TO REGULATE PRICES
AND RESTRICT SALES. '

ARTICLE IV.—LIVE STOCK ASSOCIATIONS AND COMMISSION
MERCHANTS. {

ARTICLE V.—STOCK EXCHANGE—DISTRIBUTION OF QUOTA-
TIONS.

ARTICLE VI.—COMBINATIONS OPERATING WITHIN STATE.

ARTICLE VII—MUNICIPAL CONTRACTS — STATE MONOPO-
LIES.

ARTICLE I—AGREEMENTS AND COMBINATIONS
INCIDENTALLY AFFECTING INTER.
STATE COMMERCE.

246. Agreement to raise the price 250. Jobbers organizing a broker-

of lumber not stifling com- age company to purchase
petition. merchandise.

247. Restriction of sales of goods 251. Rebates to induce purchases
—Refusing to sell to cer- of goods—Purchaser to re-
tain dealers—Monopoly. sell at fixed prices.

248. Controlling rival company 252. Sale of entire product by
by purchase of its stock. manufacturer.

249. Three corporations purchas- 253. Contract for rebates.
ing two insolvent corpora-
tions.

§ 246. Agreement to Raise Price of Lumber Not Stifling
Competition.—‘‘ An agreement between a number of dealers
and manufacturers to raise prices, unless they practically
controlled the entire commodity, cannot operate as a re-
straint upon trade, nor does it tend to injuriously affect the
public. Unless the agreement involves an absorption of the
entire traffic in lumber, and is entered into for the purpose

of obtaining the entire control of it with the object of ex-
495
496 THE SHERMAN ANTI-TRUST ACT.

tortion, it is not objectionable to the statute, in my opinion.
Competition is not stifled by such an agreement, and other
dealers would soon force the parties to the agreement to
sell at the market price, or at a reasonable price, at least.’”

§ 247. Restriction of Sales of Goods—Refusing to Sell
to Certain Dealers—Monopoly.—‘‘The plaintiff is a jobber
of tobacco, and of the products of tobacco, at St. Paul, Minn.
The tobacco company is a manufacturer and merchant, and
McHie is its agent and employee. The tobacco company
owns and controls most of the valuable and leading brands
of plug and chewing tobacco in the United States, and fixes
the market prices thereof. The company and its agent,
McHie, had long been, and on May 1, 1902, still were in
the practice of selling its goods to jobbers in this way: They
allotted to an intending purchaser an amount of its goods
which he was required to buy during each succeeding period
of four months. This allotment was much in excess of the
amount which he would be able to sell during that time.
They fixed the prices of the goods comprising the allotment
so high that, if the purchaser paid the prices thus fixed, he
could not make any profit by buying and selling the com-
modities. They required each purchaser to refrain from
dealing in plug chewing tobaccos made by independent and
competing manufacturers. If the purchaser complied with
this requirement, they invariably reduced his allotment to
the amount he was able to sell, and paid back to him such
a percentage of the aggregate price of the goods he bought
that the handling of these commodities was by reason of this
repayment alone made profitable to him. If the purchaser
refused to comply with this requirement, they refused to
reduce the amount of his allotment or the prices of his
goods, so that the business was unprofitable to him. The
plaintiff had long participated in this method of transacting
business, had been handling the products of the tobacco
company in accordance with it, and had an established busi-
ness in the purchase of tobacco and its products, and in

1United States v. Nelson, 52 Fed. 646.
CONTRACTS AND COMBINATIONS NOT PROHIBITED, 497

the sale of them throughout the states of Minnesota, North
Dakota, and South Dakota, when on May 1, 1902, the de-
fendants made an allotment to him for the succeeding four
months, and offered to furnish their commodities to him in
accordance with their established practice. He, however, re-
fused to refrain from handling the goods of independent
manufacturers who were competing with the defendants.
Thereupon the latter refused to reduce the allotment which
they had made to him, or the prices thereof, so that the
handling of the goods of the tobacco company would be
profitable to the plaintiff, and he did not purchase, or agree
to purchase, their goods. He was unable to procure them
elsewhere, and sustained damages in the sum of $280.’’

Upon these facts the court held that there was no viola-
tion of the Anti-Trust Act. In doing so Judge Sanborn
said:

‘The tobacco company and its employee fixed the prices
of its commodities so high that the plaintiff could not profit-
ably buy them. This was no restriction upon free compcti-
tion, because it left the rivals of the company free to sell
their competing commodities at any price which they elected
to charge for them. It would have been no violation of
the law under consideration if the tobacco company and its
employee had combined to refuse to sell any of its com-
modities at any price, and to retire from the business in
which they were engaged entirely. Much less could it be
a violation of this Act for them to fix their prices too
high for profitable investment by the plaintiff.

The tobacco company and its employee sold its products
to customers who refrained from dealing in the goods of
its competitors at prices which rendered their purchases
profitable. But there was no restriction upon competition
here, because this act left the rivals of the tobacco company
free to sell their competing commodities to all other pur-
chasers than those who bought of the defendants, and free
to compete for sales to customers of the tobacco company
by offering to them goods at lower prices or on better terms
498 THE SHERMAN ANTI-TRUST ACT.

than they secured from that company. The tobacco com-
pany and its employee were not required, like competitors
engaged in public or quasi public service, to sell to all
applicants who sought to buy, or to sell to whomsoever they
chose, and to fix different prices for sales of the same com-
modities to different persons. In the exercise of this right
they selected those persons who would refrain from handling
the goods of their competitors as their customers, by selling
their products to them at lower prices than they offered
them to others. There was nothing in this selection, or in
the means employed to effect it, that was either illegal or
immoral. It had no necessary effect to directly and sub-
stantially restrict free competition in any of the products
of tobacco, and it did not unlawfully restrain interstate
commerce, because it in no way restricted the exercise of
the rights of the competitors of the tobacco company to fix
the prices of their goods and the terms of their sales of
similar products according to the dictates of their re-
spective wills.’’
Judge Sanborn then proceeds as follows:

‘‘There is another reason why the complaint in this action
fails to state facts sufficient to constitute a cause of action:
The sole cause of the damages claimed in it is shown to be
the refusal of the defendants to sell their goods to the
plaintiff at prices which would enable him to resell them
with a profit. Now, no act or omission of a party is action-
able, no act or omission of a person causes legal injury to
another, unless it is either a breach of a contract with, or
of a duty to, him. The damages from other acts or omis-
sions form a part of the damnum absque injuria for which
no action can be maintained or recovery had in the courts.
The defendants had not agreed to sell their goods to the
plaintiff at prices which would make their purchase profit-
able to him, so that the damages he suffered did not result
from any breach of any legal duty to the plaintiff, for the
defendants owed him no duty to sell their products to him
at any price—much less, at prices so low that he could real-
CONTRACTS AND COMBINATIONS NOT PROHIBITED. 499
ize a profit by selling them again to others. The complaint
therefore fails to show that any legal injury or actionable
damages were inflicted upon the plaintiff by the acts of the
defendants and the judgment below is affirmed.’’

The court also held that the facts stated did not show a
monopoly.”

§ 248. Controlling Rival Company by Purchase of its
Stock—A Michigan corporation was engaged in mining and
refining copper wholly within that state. By purchases of
stock and obtaining proxies from other stockholders, it se-
cured the voting control of a majority of the stock of an-
other similar mining corporation that was operating adjoin-
ing mines; and it purposed to use that control to place in
its directory a majority from its own board of officers. It
had the right to do this under the laws of Michigan. It
was held that such action did not directly nor necessarily
affect either interstate or foreign trade or commerce; and
such control was not of itself a combination in restraint of
such trade or commerce. The court said: ‘‘How, then,
does the exercise of the power of stock control by one mining
or manufacturing corporation over another in the same state
directly and immediately or necessarily operate in a re-

2 Whitwel) v. Continental To-
bacco Co., 125 Fed. 454; 60 C. C.
A. 290. Judge Sanborn used this

which it would dispose of them,
and the terms upon which it would
contract to sell them. Each of

language which can not be ac-
cepted as a correct interpretation
of the Anti-Trust Act if he meant
thereby to limit the statute to
“articles of prime necessity.”
“The tobacco company and _ its
competitors were not dealing in
articles of prime necessity, like
corn and coal, nor were they ren-
dering public or quasi-public ser-
vice, like railroad and gas corpo-
rations. Each of them, therefore,
had the right to refuse to sell
its commodities at any price. Each
had the right to fix the prices at

them had the right to determine
with what persons it would make
its contracts of sale. In re Greene
(C. C.), 52 Fed. 104, 115; In re
Grice (C. C.), 79 Fed. 627, 644;
Walsh v. Dwight, 40 N. Y. App.
Div. 513; 58 N. Y. Supp. 91,
93; Brown v. Rounsavell, 78
Til. 589; Commonwealth v. Grin-
stead, 111 Ky. 203; 63 S. W.
427; 56 L. R. A. 709; Allgeyer
v. Louisiana, 165 U. 8. 578, 589;
17 Sup Ct. 427; 41 L. Ed. 832;
reversing 48 La. Ann. 104; 18
So. 904.” ,
i

500 THE SHERMAN ANTI-TRUST ACT.

straint of commerce among the states? Confessedly the
products of these two companies are in competition in the
markets, and confessedly the greater part of the product
of each will, sooner or later, enter into the stream of inter-
state commerce, for the chief demand for the product is
outside the state of production. But that is not enough.
There was all this and more in the Knight case. If, indeed,
such stock control results in a monopoly, it is only a mon-
opoly in manufacture in the same state, and we have again
the conceded situation in the Knight case. Unless that mon-
opoly of manufacture in a single state of a product which
goes into interstate commerce directly and immediately or
necessarily interferes with or restrains that commerce, the
monopoly does not come under the Act of Congress. But
we are unable to conclude upon this record that mere stock
control of such a company by another in the same state
either directly or necessarily destroys competition there, or,
if it did that it results in any such monopoly as to directly
or necessarily and immediately affect commerce among the
states.’’8

§ 249. Three Corporations Purchasing Two Insolvent
Corporations.— Where three corporations purchased two in-
solvent corporations it was held that there was nothing in
the Sherman Act to condemn the purchase; nor nothing in
it to condemn the conduct of their business thereafter by the
three purchasers.*

§ 250. Jobbers Organizing a Brokerage Company to Pur-
chase Merchandise—A number of mercantile jobbers if

8 Bigelow v. Calumet & Hecla
Mining Co., 167 Fed. 721; 94 C.
C. A. 13; affirming 167 Fed. 704.
The court also held that neither
“Lake Copper” nor that part
classed as “Best Lake” was so far
a distinct commercial commodity
as to justify the exclusion of
western or electrotype copper as a
factor in determining whether a

combination of two corporations
together producing less than one-
half of the “Lake Copper” and
about one-ninth of the production
of the United States, constituted
a monopoly.

4 Northwestern Consolidated
Mining Co. v. Collom, 177 Fed.
786, citing Davis v. A. Booth Co.,
131 Fed. 31; 65 C. C. A. 269.
CONTRACTS AND COMBINATIONS NOT PROHIBITED. 501

a city organized a brokerage company, of which they owned
the stock, and through it purchased merchandise from manu-
facturers and other jobbers in other states needed by them
in their business, instead of buying through other brokers
they had previously patronized, although there was no agree-
ment binding them to do so. They used their influence to
extend the influence of the brokerage company. It was held
that this was neither a combination nor a conspiracy in
restraint of interstate trade or commerce, nor a monopoliza-
tion of such trade or commerce. The evident purpose of
the organization of the brokerage company was to save
brokerage charges, which they had before been required to
pay, by negotiating their purchases through their own
agency, and at the same time inaugurate and conduct an-
other branch of business. The court said: ‘‘By reason of
their advantageous situation as jobbers who furnished a
large part of the brokerage business of Pine Bluff, and by
dint of business sagacity and industry, their new brokerage
company was able to outstrip most of its competitors, in-
eluding the plaintiff, and as a result the latter soon aban-
doned its branch office in Pine Bluff and ceased doing busi-
ness there. There is little, if any, competent evidence of
unfair competition by the brokerage company, unless it be
in the fact that-it secured the trade of its own stockholders
and availed itself of their valuable influence for the extension
and success of its business. To pronounce such action un-
fair and unlawful would disrupt many existing business
corporations and effectually prevent the organization of any
more. It would contravene one if not the chief, reason for
their creation or existence.

“‘The contention of the plaintiff is therefore reduced to
this: That the defendant jobbers wronged the plaintiff by
arranging to do for themselves what they had formerly
employed it to do for them, and that the brokerage company
wronged the plaintiff by availing itself of all its opportuni-
ties and favorable conditions for successful competition in
a branch of business legitimately open to all comers.
502 THE SHERMAN ANTI-TRUST ACT.

“‘The organization of the brokerage company as a com-
petitor in business open to all had no natural tendency to
directly or necessarily restrain commerce between the states,
and the proof fails to show that it actually did restrain,
lessen, or in any way stifle its free flow. The volume of
that commerce, after as well as before the organization of the
brokerage company, was determined by the fixed economic
laws of demand and supply. The whole field was open to
competition, and while the plaintiff, whose chief place of
business was elsewhere, and one other broker in Pine Bluff
soon abandoned it, others operating there and.in that vicin-
ity remained in active competition, and without doubt all
together were able and zealously disposed to keep the wheels
of commerce as active as the demand for foreign merchandise
required. Any one who had been in the business before
could remain in it, and any one who wished to enter it
afterwards could freely do so; but they had necessarily to
compete with others, including the brokerage company, with
whatever advantages they possessed for conducting a pros-
perous business. The fortuitous circumstances that the brok-
erage company had five important jobbers in the city so
situated as to give it a preference arose from strictly legiti-
mate relations. No one ean deny that the jobbers had a
right to organize a corporation to do their own brokerage
business, as well as that of others. The law gave them that
right, and they availed themselves of its provisions for that
purpose. It cannot be doubted that the five jobbers could
have given their brokerage business to any broker on terms
1o be agreed upon, and it seems equally clear that by par-
ticipating in the organization and ownership of the brokerage
company they did no more than this, if indeed as much, for
there was no obligation, express or implied, requiring them to
deal with the brokerage company, except and so far only as
their best interests from time to time dictated.

““The mere fact that the broker, while engaged in nego-
tiating sales of merchandise between an owner in one state
CONTRACTS AND COMBINATIONS NOT PROHIBITED. 503

and a jobber or consumer in another, is engaged in a species
of interstate commerce, is quite unimportant, provided the
business be done in a lawful manner. It becomes only when
it is so done as to directly and substantially restrain that
commerce or stifle its free flow. The proof, in our opinion,
affords no warrant for a finding that any such consequences
actually flowed, or had a natural tendency to flow, from the
organization complained of in this case.’”*

§ 251. Rebates to Induce Purchases of Goods—Purchaser
to Resell at Fixed Prices.—Under disguise a distilling and
cattle feeding company of certain persons sold to certain
other persons in Boston a quantity of alcohol, then in IIli-
nois. This company controlled the manufacture and 75
per cent of all distillery products in the United States;
and it fixed the price at which purchasers should and did
sell such alcohol and they were not at a lower price. The com-
pany promised persons who purchased from its distributory
agents if they would for six months purchase their products
from such agents and not resell them at prices less than those
it fixed, upon proof of that fact, it would pay a certain
rebate on the amount of such purchase. It was held that
this did not constitute a restraint of interstate commerce,
for the purchaser was not in any way bound to the per-
formance of the conditions named, nor did the arrangement
operate to monopolize nor was it an attempt to monopolize
trade or commerce.®

§252. Sale of Entire Product by Manufacturer.—A
manufacturer may lawfully enter into a contract to sell his
entire manufactured product to a single person, firm or
corporation. If he enters into such a contract, without
knowledge of similar contracts made by the buyer with

5 Arkansas Brokerage Co. v. (Towa), 140 N. W. 844; Burley
Dunn, 173 Fed. 899; 97 C. C. A. Tobacco Co. v. Gillaspy (Ind.
454; 35 L. R. A. (N.S.), 464; App.), 100 N. E. 89.

Reeves v. Decorah, etc., Society 6In re Greene, 52 Fed. 104.
aU4 THE SHERMAN ANTI-TRUST ACT.

other manufacturers, and without any knowledge of the
fact that such contract was intended by the buyer as one
step in a general scheme to monopolize the trade in that
article and control its price, he cannot be held to have con-
spired against the freedom of commerce, nor to have entered
into a contract in illegal restraint of trade.”

§ 253.
gaged in the South African trade formed a combination and

Contract for Rebates—Foreign ship-owners en-

allowed certain rebates to New York shippers who patronized
the ships owned by the combined owners exclusively. It
was held that the combination was not illegal, because the
arrangement constituted only a partial and reasonable re-
straint of foreign commerce, and was therefore not unlaw-

ful at common law.®

7 Carter-Crume Co. v. Peurrung,
86 Fed. 439; 30 C. C. A. 174.
“If one contracts with a manu-
facturer for his entire product, it
will, of course, restrain the pro-
ducer from selling to others. But
such a contract, taken by itself,
is ordinarily harmless. The pub-
lic are not affected. Another ques-
tion might arise if all or a large
proportion of all the producers of
« particular article should agree
to sell their entire product to one
buyer, who would thereby be en-
abled to monopolize the market.
But, if each independent pro-
ducer contract to sell his product,
or to sell or lease his plant, with-
out concert with others, or knowl-
edge of or purpose to participate
in the plans of the buyer, he can
not be said to have conspired

against freedom of commerce or
to have made a contract in illegal
restraint of trade. The transac-
tion with Peurrung Bros. & Co.
was, on its face, legitimate, and
it can not be impeached simply
by evidence that the Carter-
Crume Company understood and
intended it as one step in a gen-
eral illegal scheme for monopo-
lizing the trade in wooden butter
dishes, and controlling prices. The
principle, if we admit that the
purpose of the Carter-Crume Com-
pany was illegitimate, is that
which is applied to so-called wag-
ering contracts. The proof must
show that the illegal purpose was
mutual.”

8 Thomson v. Union Castle S. 8S.
Co., 149 Fed. 933; reversed 166
Fed. 251; 92 C. C. A. 315.
CONTRACTS AND COMBINATIONS NOT PROHIBITED.

505

ARTICLE II—AGREEMENTS NOT TO ENGAGE JN
BUSINESS.

254. Sale of good will—A. Booth
& Company case.

255. Sale of brick plant—Agree-
ment not to make brick
within fifty miles.

256. Agreement to remain out of
business.
257. Sale of steamboat line.

§ 254. Sale of Good Will—A. Booth Company Case.—
A company doing an interstate fish business bought out
another company doing business at Detroit, and it was a part
of the agreement of sale that the vendor would not during

ees

the next ten years

in territory or the immediate vicinity

of the territory dealt in by”’ it, or operated in by it or
its agents or employees, either directly or indirectly, engage
in or in any manner be interested in the fish business, such

as it was engaged in at the time of the sale.

The sale was

not a mere combination of owners and properties under one

management.
enjoined.®

9 Davis v. A. Booth & Co., 131
Fed. 31; 65 C. C. A. 289; affirm-
ing 127 Fed. 875. The Circuit
Court of Appeals said “We think
there is nothing in the Anti-Trust
Act which rendered unlawful ‘the
purchase by William Vernon
Booth and his transfer, to A.
Booth & Co., of the plant of the
Davis Fresh & Salt Fish Company,
or which necessarily rendered in-
valid the agreement of the stock-
holders of the latter company,
which was ancillary to the con-
tract of sale. Nor can this con-
clusion be affected by the fact
that A. Booth & Co. also pur-
chased other plants and stocks to
an extent that tended to create a
power to monopolize the fish mar-

The contract was held valid, and the vendor

ket. There is a clear distinction,
which seems to be lost sight of
in the argument here, between the
aggregation of properties by pur-
chase when the seller no longer
retains an interest in the prop-
erty, and wu combination of owners
and properties under one manage-
ment, where each owner’s interest
is continued in the combination.
To this latter class belongs the
case of Merz Capsule Co. v.
United States Capsule Co. (C. C.),
67 Fed. 414, affirmed in 71 Fed.
787; 19 C. C. A. 108; 31 L. R. A.
415. It may be that the practice:
of acquiring by a single corpora-
tion through purchase of a great
number of single plants in several
states, of power to control the
506 THE SHERMAN ANTI-TRUST ACT.

§255. Sale of Brick Plant—Agreement Not To Make
Brick Within Fifty Miles——Appellant was engaged in the
business of brick making in the town of Bellaire, Ohio. At
the same time one Wheat was engaged in the same business
at Wheeling, W. Va. The Belmont Brick and Tile Com-
pany had a manufactory at Martin’s Ferry, Ohio. One
Hodgman was conducting the manufacture of brick at
Moundsville, W. Va. The owners of these factories entered
into an agreement whereby they all agreed to sell and con-
vey their several plants to a corporation to be organized
under the laws of West Virginia, having its principal place
of business at Wheeling. They were each to receive in pay-
ment for their respective plants specified amounts of stock
in the new company. The agreement contained the following
stipulation :

“Tt is mutually agreed between the parties hereto, and
each for himself specifically promises and agrees, not to
hereafter engage in the brickmaking business, or in any lines
that may be manufactured hereafter at any of the several
plants to be operated by the corporation whose creation is
here contemplated, or to furnish means, aid or advice to
others seeking to do so in such a way as to come in com-
petition with the said corporation within a territory which
may be described as within a radius of fifty miles from
the City of Wheeling, W. Va., within a period of ten years
from and after the signing of this agreement.’’

The agreement was carried out, and the property ex-
changed for the stock in the new company called the Subur-
ban Brick Company. George O. Robinson took an active
part in the management and control of the new company
for some time. He afterwards sold out all his interest, and
then ceased to have anything to do in the business of the

market of a given commodity in
a wide area of territory, may be-
come injurious to the public; but,
if so, it would seem that the limi-
tations and the means for the re-

striction and correction required
must be supplied by the law-mak-
ing power, since the old law
against forestalling the market
has become obsolete.”
CONTRACTS AND COMBINATIONS NOT PROHIBITED, 507
company. Very soon thereafter he became a stockholder in
the Standard Brick & Stone Company, a corporation organ-
ized under the laws of Ohio, and engaged in manufacturing
brick substantially the same as that of the Suburban Brick
Company, at Bellaire, Ohio, within 10 miles of Wheeling.

The Sururban Brick Company brought suit against Robin-
son to compel a specific performance of his contract as
above set out and to enjoin him prosecuting the business
of brickmaking as manager or adviser of the Standard Brick
and Stone Company. The court held the agreement valid,
and enjoined him as prayed in the bill. The court said
that the Anti-Trust Act was ‘‘intended to protect inter-
state trade and commerce, and does not relate to manufac-
tories within a state.’’?

§ 256. Agreement to Remain Out of Business.—A. was
the patentee of an invention relating to brake beams. For
a consideration of ten thousand dollars he assigned to a
company his patent and agreed not to engage in a brake
beam business in any way, shape or form, and not to be con-
nected with any company manufacturing or selling brake
beams, either as an officer, employee or shareholder. This
agreement was to be binding during the life of the patent;
but he had the right to terminate that part of the contract
binding him not to engage in the brake beam business by

10 Robinson yv. Suburban Brick
Co., 127 Fed. 804; 62 C. CG. A.
484, Citing United States v. F.C.
Knight Co., 156 U. 8. 1; 15 Sup.
249; 39 L. Ed. 325; affirming 60
Fed. 934; 9 C. C. A. 297; 17 U.
S. App. 466; 24 L. R. A. 428; and
Addyston Pipe & Steel Co. v.
United States, 175 U. 8S. 287;
20 Sup Ct. 96; 44 L, Ed. 136;
affirming 85 Fed. 271; 29 C. C. A.
141; 54 U. S. App. 723; 46 L. R.
A. 122. The court quoted the fol-
lowing from Gibbs v. MeNeeley,

107 Fed. 210: “Manufacture with-
in a state of an article of com-
merce is not within the purview
of the Act, although the manufac-
turing combination constitutes a
monopoly. It makes no difference
that the manufacturer intends his
product for sale in other states
and foreign countries. It must go
further, and provide for the sale
and transportation to other
states; otherwise what is pro-
posed can not be said to look to
interstate commerce.”
508 THE SHERMAN ANTI-TRUST ACT.

refunding the consideration he had received. It was held
that that part of the contract to remain out of the brake
beam business did not render the contract unlawful as one
in restraint of trade and competition as creating a monopoly.
Consequently he was allowed to recover the ten thousand
dollars that was to be paid him."

§ 257. Sale of Steamboat Line—A company was main-
taining a packet line on the Ohio river between ports wholly
within that state. It sold its boats to another steamboat
company for $30,500 and an annual payment in advance of
$3,500 for five years; but if the purchasing company met
with opposition, causing it to carry freight and passengers
at certain exceedingly low rates, the time of the payment of
the instalments were to be postponed until the opposition
had ceased. The selling out company agreed for five years
not to ‘‘engage in running or in operating, or in any way
be interested in any freight and passenger packet or busi-
ness, or either of them’’ between the ports it had operated;
and the purchasing company agreed to maintain the rates
the selling company had been charging, but never to ex-

11 American Brake Beam (‘o. v. may be considered as an incident,

Pungs, 141 Fed. 923; 73 C. C.

A. 157. The court said: “We
do not look on this as a
contract in restraint of trade.

It binds no one to stay out
of the trade. At most, it is an
agreement, merely, that if Pungs
renews his connection with the
trade, he shall return the consid-
eration received by him for the
patents transferred. Pungs, per-
sonally, was not a manufacturer
of brake beams. He was in no
true sense a dealer or competitor,
commercially, in that business. His
connection with the business was
that of inventor chiefly; and the
agreement under consideration

only, to the commercialization of
his invention. Even in this he
has put no mortgage on his in-
ventive faculties. THe has merely
put himself where, without put-
ting any binding restraint on his
inventive faculties, or for that
matter, upon his liberty as a man-
ufacturer, he will realize, for the
time being, on what he has al-
ready invented, the largest com-
mercial return. This is not, in
our judgment, restraint of trade.”
See also Brett v. Ebel, 29 N. Y.
App. Div. 256; 51 N. Y. Supp.
573 (covenant by seller of good
will not to compete with buyer
within a specified region).
CONTRACTS AND COMBINATIONS NOT PROHIBITED. 509

ceed railroad rates between the same points. The contract
was held valid.??

ARTICLE III.—MANUFACTURER’S RIGHT TO REGU.
LATE PRICES AND RESTRICT SALES.

258. Proprietary medicines. 259. Restricting sales by pur-

chaser to his state.

§ 258. Proprietary Medicines.—Contracts between a manu-
facturer of proprietary medicines, proffered under a secret
formula, and all dealers whom he permits to sell his products,
comprising most of the dealers in similar articles through-
out the United States, which fix the prices for all sales,
whether at wholesale or retail, is void under the provision
of the Anti-Trust Act and at common law, because in re-

straint of interstate trade and commerce.®

12 Cincinnati, ete. Packet Co. v.
Bay, 200 U. S. 179; 26 Sup. Ct.
208; 50 L. Ed. 428. The court
said: “We will suppose then that
the contract does not leave com-
merce among the states untouched.
But even on this supposition it is
manifest that interference with
such commerce is insignificant and
incidental, and not the dominant
purpose of the contract, if it ac-
tually was thought of at all. The
route mentioned is between Ohio
ports. The contract, in what it
especially contemplates is a do-
mestic contract and, so far as it
is shown to be valid under the
local law by the decision of the
Ohio court. The chief and visible
object of its provisions has noth-
ing to do with commerce among
the states. That which suspends

If two or more

payment of installments in case
of very serious opposition is se-
curity against a losing bargain,
not a combination to gain a mo-
nopoly. The withdrawal of the
vendors from opposition for five
years is the ordinary incident of
the sale of a business and good
will.”

18 Dr. Miles Medical Co. v.
John D. Park & Sons Co., 220
U. S. 373; 31 Sup. Ct. 376;
55 L. Ed. 502; affirming 164 Fed.
803; 90 C. C. A. 579; John D.
Park & Sons Co. v. Hartman, 153
Fed. 25; 82 C. C. A. 158; 12 L.
R. A.; reversing 145 Fed. 358;
Dr. Miles Medical Co. v. Gold-
thwaite, 133 Fed. 794; Dr. Miles
Medical Co. v. Plott, 142 Fed.
606.
510 THE SHERMAN ANTI-TRUST ACT.

combine and agree that neither will sell to any dealer who
cuts the prices of any others, this concerted policy, by which
each seeks, not only to maintain the price of his own medi-
cine, in which he alone is interested or has a right to con-
trol but also the prices to those of all who are thus banded
together, there is a direct interference with and restraint
of trade upon the freedom of trade, and when it affects
interstate commerce is clearly within the prohibitory clauses
of the Anti-Trust Act.™

§ 259. Restricting Sales by Purchaser to His State—A
manufacturer who sells his product to a jobber in another
state under a contract that he, the jobber, will not resell
it out nor allow it to be shipped out of his state does not

restrain interstate trade.%®

14 Jayne v. Loder, 149 Fed. 21;
78 C. C. A. 653; 7 L. R. A. (NLS.)
984. The court refuses to follow
Park v. National Druggists’ As-
sociation, 175 N. Y. 1; 67 N. E.
136; 62 L. R. A. 632; 96 Am. St.
578.

15 Phillips v. Iola Portland Ce-
ment Co., 125 Fed. 593; 61 C. C.
A. 19. “The Iola Cement Com-
pany had no monopoly of the
manufacture or sale of cement in
the United States. It was sur-
rounded by competing manufactu-
rers, and the contract which it
made with Parr & Co., of Gal-
veston, had no direct or substan-
tial effect upon competition in
trade among the states. It left
the manufacturers who were com-
peting with the plaintiff for the
trade of the country free to se-
lect their customers, to fix their
prices, and to dictate their terms

for the sales of the commodities
they offered, so that in this regard
no restraint whatever was im-
posed. If it had the effect to re-
strain Parr & Co. from using the
product which they purchased to
compete with other jobbers or
manufacturers in the country be-
yond the limits of the State of
Texas, this restriction was not
the chief purpose or the main ef-
fect of the contract of sale, but a
mere indirect and immaterial inci-
dent of it. The agreement of sale
imposed no direct restriction upon
competition in commerce among
the states, did not constitute a
restraint of that commerce, and
was not obnoxious to the provi-
sions of the Act of July 2, 1890.”
The court cited Whitwell v. Con-
tinental Tobacco Co., 125 Fed.
454; 60 C. C. A. 290; 64 TL. R.
A. 689,
CONTRACTS AND COMBINATIONS NOT PROHIBITED. 511

ARTICLE IV.—LIVE STOCK ASSOCIATION AND

EXCHANGES.

260. One stockyard in two states 261. One stockyard in two states
—Consignments of cattle —Agreement not to recog-
to commission men to sell nize any yard trader not
Rules governing sales— a member nor employ any
Hopkins case. one except « yard trader

nor pay a commission—
Anderson case.

§ 260. One Stockyard in Two States—Consignments of
Cattle to Commission Men to Sell—Rules Governing Sales—
Hopkins Case.—The Kansas City Stock Exchange was an
unincorporated association having stockyards partly in Kan-
sas City, Missouri, and partly in Kansas City, Kansas.
The main facts involved are stated by the court as follows:

‘“As set forth in the record, the main facts are that the
defendants have entered into a voluntary association for the
purpose of thereby the better conducting their business, and
that after they had entered into such association they still
continued their individual business in full competition with
each other, and that the association itself, as an association,
does no business whatever, but is simply a means by and
through which the individual members who have become
thus associated are the better enabled to transact their busi-
ness; to maintain and uphold a proper way of doing it; and
to create the means for preserving business integrity in the
transaction of the business itself. The business of defend-
ants is primarily and substantially the buying and selling,
in their character as commission merchants, at. the stock
yards in Kansas City, live stock, which has been consigned
to some of them for the purpose of sale, and the rendering
of an account of the proceeds arising therefrom. The sale
or purchase of live stock as commission merchants at Kansas
is the business done, and its character is not altered because
512 THE SHERMAN ANTI-TRUST ACT.

the larger proportion of the purchases and sales may be of
live stock sent into the state from other states or from the
territories. Where the stock came from or where it may
ultimately go after a sale or purchase, procured through the
services of one of the defendants at the Kansas City stock
yards, is not the substantial factor in the case. The char-
acter of the business of defendants must, in this case, be
determined by the facts occurring at that city.

“Tf an owner of cattle in Nebraska accompanied them to
Kansas City and there personally employed one of these
defendants to sell the cattle at the stockyards for him on
commission, could it be properly said that such defendant
in conducting the sale for his principal, was engaged in
interstate commerce? or that an agreement between himself
and others not to render such services for less than a
certain sum was a contract in restraint of interstate trade
or commerce? We think not. On the contrary, we regard
the services as collateral to such commerce and in the
nature of a local aid or facility provided for the cattle
owner towards the accomplishment of his purpose to sell
them; and an agreement among those who render the serv-
ices relating to the terms upon which they will render them
is not a contract in restraint of interstate trade or com-
merce.”’

The court then proceeds to state some additional facts
and give the claims of the defendants:

“Tg the true character of the transaction altered when the
owner, instead of coming from Nebraska with his cattle,
sends them by a common carrier consigned to one of the
defendants at Kansas City, with directions to sell the cattle
and render him an account of the proceeds? The services
rendered are the same in both instances, only in one case
they are rendered under a verbal contract made at Kansas
City personally, while in the other they are rendered under
written instructions from the owner given in another state.
This difference in the manner of making the contract for
CONTRACTS AND COMBINATIONS NOT PROHIBITED. 513

the services can not alter the nature of the services them-
selves. If the person, under the circumstances stated, who
makes a sale of the cattle for the owner by virtue of a per-
sonal employment at Kansas City, is not engaged in inter-
state commerce when he makes such sales, we regard it as
clear that he is not so engaged, although he has been em-
ployed by means of a written communication from the owner
of the cattle in another state.

‘‘The by-laws of the exchange relate to the business of its
members who are commission merchants at Kansas City,
and some of these by-laws, it is claimed by the government,
are in violation of the Act of Congress, because they are in
restraint of that business which is in truth interstate com-
merce. That one of the by-laws which relates to the com-
missions to be charged for selling the various kinds of stock
is particularly cited as a violation of the Act. In connection .
with that by-law it will be well to examine with some detail
the nature of the defendants’ business.

‘*Tt is urged that they are active promoters of the busi-
ness of selling cattle upon consignment from their owners
in other states, and that, in order to secure the business, the
defendants send their agents into other states to the owners
of the cattle to solicit the business from them; that the
defendants also lend money to the cattle owners and take
back mortgages upon the cattle as security for the loan;
that they make advances of a portion of the purchase price
of the cattle to be sold, by means of the payment of drafts
drawn upon them by the shippers of the cattle in another
state at the time of the shipment. All these things, it is
said, constitute intercourse and traffic between the citizens
of different states, and hence the by-law in question operates
upon and affects commerce between the states.

“The facts stated do not, in our judgment, in any
degree alter the nature of the services performed by the
defendants, nor do they render that particular by-law void
as in restraint of interstate trade or commerce because it
514 THE SHERMAN ANTI-TRUST ACT.

provides for a minimum amount of commissions for the
sale of the cattle.

‘‘Objections are taken to other parts of the by-laws which
we will notice hereafter.

‘‘Notwithstanding these various matters undertaken by
defendants, we must keep our attention upon the real busi-
ness transacted by them, and in regard to which the selec-
tion of the by-law complained of is made. The section
amounts to an agreement, and it relates to charges made for
services performed in selling cattle upon commission at
Kansas City. The charges relate to that business alone.
In order to obtain it, the defendants advance money to the
cattle owner; they pay his drafts, and they aid him to keep
his cattle and make them fit for the market. All this is
done as a means towards an end; as an inducement to the
cattle owner to give one of the defendants the business of
selling the cattle for him when the owner shall finally
determine to sell them. That business is not altered in
character because of the various things done by defendants
for the cattle owner in order to secure it. The competition
among the defendants and others who may be engaged in
it, to obtain the business, results in their sending outside
the city, to cattle owners, to urge them by distinct and
various inducements to send their cattle to one of the
defendants to sell for them. In this view it is immaterial
over how many states the defendants may themselves or by
their agents travel in order to thereby secure the business.
They do not purchase the cattle themselves; they do not
transport them. They receive them at Kansas City, and
the complaint made is in regard to the agreements for
charges for the services at that point in selling the cattle
for the owner. Thus everything at last centers at the
market at Kansas City, and the charges are for services
there, and there only, performed.’’
CONTRACTS AND COMBINATIONS NOT PROHIBITED, 515

The court held that there was no interstate commerce or
trade involved and so the federal Act was not violated.’

In the Supreme Court it was further said:

‘‘We agree with the court below in thinking there is not
the slightest materiality in the fact that the state line runs
through the stockyards in question, resulting in some of
the pens in which the stock may be confined being partly
in the state of Kansas and partly in the state of Missouri,
and that sales may be made of a lot of stock which may be
at the time partly in one state and partly in the other.
The erection of the building and the putting up of the stock
pens upon the ground through which the state line ran
were matters of no moment so far as any question of inter-
state commerce is concerned. The character of the business
done is not in the least altered by these immaterial and

incidental facts.’’!7

16 Hopkins v. United States, 171
U. 8. 578; 19 Sup. Ct. 40; 43 L.
Ed. 290; reversing 82 Fed. 529.
The case was removed from the
Circuit Court to the Supreme
Court, 84 Fed. 1018.

17 The case has been cited many
times as in United States v. Joint
Traffic Association, 171 U. S. 505,
568; 19 Sup. Ct. 25; 43 L. Ed.
259; Anderson v. United States,
171 U. S. 604, 612, 615; 43 L Ed.
300; 19 Sup. Ct. 50; Addyston
Pipe & Steel Co., 175 U. 8. 211,
243; 19 Sup. Ct. 50; 50 L, Ed.
300; Montague & Co. v. Lowry,
115 Fed. 27, 30; 52 C. C. A. 621;
64 L. R. A. 58; affirming 106
Fed. 38; Minnesota v. Northern
Securities Co., 123 Fed. 692; 184
U. S. 199; 22 Sup. Ct. 308; 46
L. Ed. 490; 194 U. 8. 48; 24 Sup.
Ct. 598; 48 L. Ed. 870; Whitwell
v. Continental ‘obacco Co.. 125
Fed. 454, 458, 459, 462; 60 C. C.
A. 290; Phillips v. Iola Portland
Cement Co., 125 Fed. 593; 61 C.

C. A. 19; Montague & Co. v.
Lowry, 193 U. S. 38, 48; 24 Sup.
Ct. 307; 48 L. Ed. 608; Northern
Securities Co. v. United States,
193 U. S. 197, 329, 330, 387, 410;
24 Sup. Ct. 436; 48 L. Ed. 679;
affirming 120 Fed. 721; Field
v. Barber Asphalt Co., 194
U. S. 618, 624; 24 Sup. Ct. 784;
48 L. Ed. 1142; Swift & Co. v.
United States, 196 U. S., 375, 399;
25 Sup. Ct. 276; 49 L. Ed. 518;
modifying and affirming 122 Fed.
529; Carmors-McConnell v. Mac-
Connell, 140 Fed. 412, 414: af-
firmed 140 Fed. 987; 72 C. C. A.
681; Chicago Wall Paper Mills v.
General Paper Mills Co., 147 Fed.
491, 494; 78 C. C. A. 607; In re
Charge to Grand Jury, 151 Fed.
834, 839; Loewe v. Lawlor, 208
U. 8. 274, 297; 28 Sup. Ct. 301;
52 L. Ed. 488; reversing 148 Fed.
924; Bigelow v. Calumet & Hecla
Mining Co., 167 Fed. 704, 712;
Bigelow v. Calumet & Hecla Min-
ing Co., 167 Fed. 721, 725; 94 C.
516 THE SHERMAN ANTI-TRUST ACT.

§ 261. One Stock Yard in Two States—Agreement Not
to Recognize Any Yard Trader Except a Member Nor
Supply Anyone Except a Yard Member Nor Pay a Com-
mission—Anderson Case.—The Traders Live Stock Ex-
changes was an unincorported association similar to that of
the Kansas City Live Stock Exchange described in the pre-
vious section. But its members were themselves the pur-
chasers of cattle on the market, while the members of the
Exchange were merchants who sold cattle upon commission
as a compensation for their services.

‘‘The articles of association of the Traders Exchange
contained the following preamble: ‘We, the undersigned,
for the purpose of organizing and maintaining a business
exchange, not for pecuniary profit or gain, but to promote
and protect all interests connected with the buying and
selling of live stock at the Kansas City Stock Yards, and to
cultivate courteous and manly conduct towards each other,
and give dignity and responsibility to yard traders, have
associated ourselves together under the name of Traders’
Live’ Stock Exchange, and hereby agree, each with the
other, that we will faithfully observe and be bound by the
following rules and by-laws and such new rules, additions
or amendments as may from time to time be adopted in
conformity with the provisions thereof from the date of
organization.’ The rules objected to in the bill in this
case were the following: ‘Rule 10. This exchange will not
recognize any yard trader unless he is a member of the
Traders’ Live Stock Exchange. Rule 11. When there are
two or more parties trading together as partners, they shall
each and all of them be members of this exchange. Rule 12.
No member of this exchange shall employ any person to
buy or sell cattle unless such person hold a certificate of

C. A. 13; United States v. Stand- Fed. 899, 902; 97 C. C. A. 454;
ard Oil Co., 173 Fed. 177, 179: Standard Oil Co. v. United States,
Union Pacific Coal Co. v. United 221 U. S. 1, 65; 31 Sup. Ct. 502;
States, 173 Fed. 737, 739; Arkan- 655 L. Ed. 619; 34 L. R. A. (N.S.)
sas Brokerage Co. v. Dunn, 173 834.
CONTRACTS AND COMBINATIONS NOT PROHIBITED, 517

membership in this exchange. Rule 13. No member of this
exchange shall be allowed to pay any other buyer or sales-
man any sum of money as a fee for buying cattle from
or selling cattle to such party.’ ’’

It was held that the agreement, as evidenced by the
by-laws, was not one in restraint of trade, nor was there
any combination to monopolize or attempt to monopolize
trade; but the court found that whatever trade may have
been restrained, was not interstate trade. In discussing
the case, the court said:

‘‘The design of the defendants evidently is to bring all
the yard traders into the association as members, so that
they may become subject to its jurisdiction and be com-
pelled by its rules and regulations to transact business in
the honest and straightforward manner provided for by
them. If, while enforcing the rules, those members who
use improper methods or who fail to conduct their business
transactions fairly and honestly, are disciplined and ex-
pelled, and thereby the number of members is reduced, and
to that extent the number of competitors limited, yet all
this is done, not with the intent or purpose of affecting in
the slightest degree interstate trade or commerce, and such
trade or commerce can be affected thereby only most re-
motely and indirectly, and if, for the purpose of compelling
this membership, the association refuse business relations
with those commission merchants who insist upon buying
from or selling to yard traders who are not members of the
association, we see nothing that can be said to affect the
trade or commerce in question other than in the most
roundabout and indirect manner. The agreement relates
to the action of the associates themselves, and it placed in
effect no tax upon any instrument or subject or commerce;
it exacts no license from parties engaged in the commercial
pursuits, and prescribes no condition in accordance with
which commerce in particular articles or between particular
places is required to be conducted.
518 THE SHERMAN ANTI-TRUST ACT.

“Tf, for the purpose of enlarging the membership of the
exchange, and of thus procuring the transaction of their
business upon a proper and fair basis by all who are
engaged therein, the defendants refuse to do business with
those commission men, to sell to or purchase from yard
traders who are not members of the exchange, the possible
effect of such a course of conduct upon interstate commerce
is quite remote, not intended and too small to be taken
into account,

‘‘The agreement lacks, too, every ingredient of a monop-
oly. Every one can become a member of the association,
and the natural desire of each member to do as much
business as he could would not be in the least diminished
by reason of membership, while the business done would
still be the individual and private business of each member,
and each would be in direct and immediate competition
with each and all of the other members. If all engaged in
the business were to become members of the association,
yet, as the association itself does no business, it can and
does monopolize none. The amount and value of interstate
trade is not at all directly affected by such membership; the
competition among the members and with others who are
seeking purchasers would be as large as it would otherwise
have been, and the only result of the agreement would be
that no yard traders would remain who were not members
of the association. It has no tendency, so far as can be
gathered from its object or from the language of its rules
and regulations, to limit the number of cattle marketed or
to limit or reduce their price or to place any impediment
or obstacle in the course of the commercial stream which
flows in the Kansas City cattle market. While in the case
all the yard traders are not induced to become members of
the association, and those who are such members refuse to
recognize the others in business, we can see no such direct,
necessary or natural connection between that fact and the
restraint of interstate commerce as to render the agreement
CONTRACTS AND COMBINATIONS NOT PROHIBITED. 519
not to recognize them void for that reason. A claim that
such refusal may thereby lessen the number of actual
traders on the market, and thus possibly reduce the demand
for and the prices of the cattle there set up for sale, and so
affect interstate trade, is entirely too remote and fanciful
to be accepted as valid.’’ 18

ARTICLE V.—STOCK EXCHANGE.—DISTRIBUTION
OF QUOTATIONS.

262. Market quotations—Distributing under contract.

§ 262. Market Quotations—Distribution Under Contract.
—The Chicago Board of Trade collected at its own expense
quotation prices offered and accepted for grain and pro-
visions in its exchange and distributed them by telegraph,
pursuant to contract, to persons it had approved and under

18 Anderson v. United States,
171 U. S. 604; 19 Sup. Ct. 50;
43 L. Ed. 300; certified to the Su-
preme Court, 82 Fed. 998. The
court says the case is unlike Hop-
kins v. Oxley Stove Co., 83 Fed.
912. This case has been cited in
the following cases: Lowry v. Tile,
Mantel & Grate Ass’n, 98 Fed.
817, 824; Addyston Pipe & Steel
Co. v. United States, 175 U. S.
211, 243; 20 Sup. Ct. 96; 44 L.
Ed. 136; Montague & Co. v.
Lowry, 115 Fed. 27, 30; 52 C. C.
A. 621; 63 L. R. A. 58; United
States v. Northern Securities Co.,
123 Fed. 692, 700; Whitwell v.
Continental Tobacco Co., 125 Fed.
454, 458, 459; 60 C. C. A. 290;
Phillips v. Iola Portland Cement
Co., 125 Fed. 593, 595; 61 C. C. A.
19; Robinson v. Suburban Brick
Co., 127 Fed. 804, 806; 62 C. C.
A. 484; Montague & Co. vy. Lowry,

193 U. S, 38, 47; 24 Sup. Ct. 307;
48. L. Ed. 608; Northern Securi-
ties Co. v. United States, 193 U.
S. 197, 329, 330, 387, 410; 24
Sup. Ct. 436; 48 L. Ed. 679; Ellis
v. Inman, Poulsen & Co., 131 Fed.
182, 184; 65 C. C. A. 488;
Swift & Co. v. United States,
196 U. S. 375 397; 25 Sup.
Ct. 276; 49 L. Ed. 518; Chi-
eago Wall Paper Mills v. Gen-
eral Paper Co., 147 Fed. 491, 494;
78 C. C. A. 607; Loewe v. Law-
lor, 208 U. 8. 274, 297; 28 Sup.
Ct. 301; 52 L. Ed. 488; Bigelow
vy. Calumet & Hecla Mining Co.,
167 Fed. 721; 94 C. C. A. 18;
United States v. Standard Oil Co.,
173 Fed. 177, 188; Union Pacific
Coal Co. v. United States, 173
Fed. 737, 739; United States vy.
Swift. 188 Fed. 92, 97; United
States v. Union Pacifie R. Co., 188
Fed. 102, 116.
520

certain conditions.

THE SHERMAN ANTI-TRUST ACT.

The object to be obtained by this prac-
tice was to cut out bucket shops.

It was under no obliga-

tion to furnish these quotations, except as it contracted

to do so.
the Anti-Trust <Act.?9

19 The court first considered the
right of the Board of Trade to
protection from the attempts of
others to obtain the information,
as follows: “In the first place,
apart from special objections, the
plaintiff’s collection of quotations
is entitled to the protection of the
law. It stands like u trade secret.
The plaintiff has the right to keep
the work which it has done, or
paid for doing, to itself. The fact
that others might do similar work,
if they might, does not authorize
them to steal the plaintiff’s. Com-
pare Bleistein v. Donaldson Litho-
graphing Co., 188 U. S. 239, 249,
250. The plaintiff does not lose
its rights by communicating the
results to persons, even if many,
in confidential relations to itself,
under a contract not to make it
public, and strangers by the trust
will be restrained from getting at
the knowledge obtained by such a
breach of trust and using knowl-
edge obtained by such a breach.
Exchange Telegraph Co. v. Greg-
ory & Co. [1896], 1 Q. B. D. 147;
F. W. Dodge & Co. v. Construction
Information Co.,
setts 62; 66 N. E. 204; Board of
Trade v. C, B. Thomson Commis-
sion Co., 103 Fed. Rep. 902;
Board of Trade v. Hadden-Krull
Co., 109 Fed. Rep. 705; National
Tel. News. Co. v. Western Union
Tel. Co., 119 Fed. Rep. 294; IIli-
nois Commission Co. v. Cleveland

183 Massachu-.

It was held that its conduct was not a violation of
It was claimed that the contracts

Tel. Co., 119 Fed. Rep. 301. The
publications insisted on in some
of the arguments were publica-
tions in breach of contract, and do
not affect the plaintiff’s rights.
Time is of the essence in matters
like this, and it fairly may be
said that, if the contracts with
the plaintiff are kept, the informa-
tion will not become public prop-
erty until the plaintiff has gained
its reward. A priority of a few
minutes probably is enough. If
then the plaintiff’s collection of
information is otherwise entitled
to protection, it does not cease to
be so, even if it is information
concerning illegal acts. The sta-
tistics of crime are property to
the same extent as any other sta-
tistics, even if collected by a crim-
inal who furnishes some of the
data. The Supreme Court of IIli-
nois has recognized in the fullest
terms the value and necessity of
the knowledge which the plaintiffs
control. It must have known, even
if it did not have the evidence be-
fore it, as to which we can not
tell from the report, what was the
course of dealing on the exchange.
Yet it was so far from suggesting
that the plaintiff’s work was un-
meritorious that it held it clothed
with a public use. New York &
Chicago Grain & Stock Exchange
v. Board of Trade, 127 Illinois,
153; 19 N. E. 855.”
CONTRACTS AND COMBINATIONS NOT PROHIBITED, 521
with the telegraph company not to furnish the quotations
except such persons as the board designated were void under
the Act, and to this the court answered: ‘‘The short answer
is that the contracts are not relied on as a cause of action.
They are stated simply to show that the only communication
of its collected facts by the plaintiff is a confidential com-
munication, and does not destroy the plaintiff’s rights. But
so far as these contracts limit the communication of what
the plaintiff might have refrained from communicating to
any one, there is no monopoly or attempt at monopoly, and
no contract in restraint of trade either under the statute
or at common law.’’ *°

ARTICLE VI.—COMBINATIONS OPERATING WITHIN
THE STATE.

263. Some interference with in- 266. E. C. Knight case distin-

terstate commerce.

264. Manufacturers — Knight
case.

265. E. C. Knight Company case
in Supreme Court.

§ 263.

guished—Not overruled.

267. Contract of sale to inhabit-
ant of another state to be
performed within vendor’s
state,

Some Interference with Interstate Commerce.—

The Sherman law does not apply to a contract or combina-
tion relating to the business of manufacturing within a

state.*?

20 Board of Trade v. Christie
Grain & Stock Co. 198 U. S. 236;
25 Sup. Ct. 637; 49 L. Ed. 1031;
affirming 121 Fed. 608; 61 C.
Cc. A. 11 (which affirmed 116
Fed. 944, but the Federal
act was not considered, which
was reversed by the Circuit
Court of Appeals, 125 Fed. 161,
but still the Federal act was not
considered, and of course it is re-
versed by the above Supreme Court

‘Manufacture within a state of an article of com-

decision) ; and also affirming 130
Fed. 507, which reversed 125 Fed.
72,

21 Robinson v. Suburban Brick
Co., 127 Fed. 804; 62 C. GC. A.
484; Addyston Pipe & Steel Co.
v. United States, 175 U. S. 237;
20 Sup. Ct. 96; 44 L. Ed. 136;
affirming 85 Fed. 271; 29 ©. Cc.
A. 141; 54 U. S. App. 723; 46
L. R. A. 122.
522 THE SHERMAN ANTI-TRUST ACT.

merce is not within the purview of the Act, although the
manufacturing combination constitutes a monopoly. It
makes no difference that the manufacturer intends his
product for sale in other states and foreign countries. It
must go further, and provide for the sale and transporta-
tion to other states, otherwise what is proposed can not
be said to be looked to interstate commerce.’’*? Nor is a
contract to be assumed to contemplate unlawful results,
unless a fair construction requires it.2* And if the inter-
ference with interstate commerce is insignificant and inci-
dental, and not the dominant purpose of the contract, it is
not condemned by the Anti-Trust Act.?+

§ 264. Manufacturers—Knight Case.—The first case on
the Sherman Anti-Trust Act to reach the Supreme Court
was what is known as the E. C. Knight Company case; and
the result was disappointing to the supporters of that Act.
It was decided in 1895, and since then has been repeatedly
distinguished by judges in their opinions. Really the only
question decided that was of importance was that the trans-
actions involved in the record were not interstate commerce.
As this is a case of importance, we set out the substance of
the bill and the material facts proved, as stated by the
trial court. They are as follows:

“i. C. Knight Company, Spreckels’ Sugar Refining Com-
pany, Franklin Sugar Refining Company and the Delaware
Sugar House were, until on or about March 4, 1892, inde-
pendently engaged in the manufacture and sale of refined
sugar. That they were competitors with the American Sugar

22 Gibbs v. MecNeeley, 107 Fed. “is not intended to affect con-
210; reversed 118 Fed. 120; 55 tracts which have a remote and in-
CeCe As 10; direct bearing upon commerce be-

23 Cincinnati ete. Packet Co. v. tween the states.” Field v. Bar-
Bay, 200 U. S. 179; 26 Sup. Ct. ber Asphalt Paving Co., 194 U. 8.
208; 50 L. Ed, 428. 618; 24 Sup. Ct. 784; 48 L. Ed.

24 Cincinnati ete. Packet Co. v. 1142; reversing 117 Fed. 925.
Bay, supra. The Sherman Act
CONTRACTS AND COMBINATIONS NOT PROHIBITED. 523

Refining Company and with one another, and that they were
engaged in trade with the several states and with foreign
nations. That the American Sugar Refining Company had,
prior to March 4, 1892, obtained the control of all the
sugar refineries in the United States, with the exception
of the Revere, of Boston, and the refineries of the said four
defendants. That the Revere produced anually about two
per cent. and the said four defendants about 33 per cent.
of the total amount of sugar refined in the United States.
That in order that the American Sugar Refining Company
might obtain complete control of the production and price
of refined sugar in the United States, it and John Searles,
Jr., acting for it, entered into an unlawful and fraudulent
scheme to purchase the stock, ete., of the said four defend-
ants by which they attempted to obtain control of all the
sugar refineries in this district for the purpose of restraining
the trade thereof among the other states. That, in pursu-
ance of this scheme, on or about March 4, 1892, John E.
Searles, Jr., entered into a contract with the defendant
Knight Company and individual stockholders named for
the purchase of all the stock of the said company, and sub-
sequently delivered to the said defendants in exchange
therefor shares of the American Sugar Refining Company.
That on or about the same time the said Searles entered
into a similar contract with the Spreckels Company and
individual stockholders and made a similar contract with
the Franklin Company and stockholders and with the
Delaware Sugar House and stockholders.

‘‘The bill further avers that the American Sugar Re-
fining Company monopolizes the manufacture and sale of
refined sugar in the United States and controls ihe price
of sugar. That in making the said contracts, the said
Searles and the American Sugar Refining Company com-
bined and conspired with the other defendants named to
restrain trade and commerce in refined sugar among the
several states and foreign nations. That the said contracts
524 THE SHERMAN ANTI-TRUST ACT.

were made with intent to enable the said American Sugar
Refining Company to monopolize the manufacture and sale
of refined sugar among the several states.

‘“‘The material facts proved are that the American Sugar
Refining Company, one of the defendants, is incorporated
under the laws of New Jersey and has authority to pur-
chase, refine and sell sugar; that the Franklin Sugar Re-
finery, the E. C. Knight Company, the Spreckels Sugar
Refinery and the Delaware Sugar House were incorporated
under the laws of Pennsylvania, and authorized to purchase,
refine and sell sugar; that the four latter Pennsylvania
companies were located in Philadelphia, and prior to March,
1892, produced about 33 per cent. of the total amount of
sugar refined in the United States, and were in active
competition with the American Sugar Refining Company
and with each other, selling their product wherever demand
was found for it throughout the United States; that prior
to March, 1892, the American Sugar Refining Company had
obtained control of all refineries in the United States, ex-
cepting the four located in Philadelphia, and that the
Revere Company in Boston, the latter producing about two
per cent. of the amount refined in this country; that in
March, 1892, the American Sugar Refining Company entered
into contracts (on different dates) with the stockholders of
each of the Philadelphia corporations named, whereby it
purchased their stock, paying therefor by transfers of stock
in its company; that the American Sugar Refining Company
thus obtained possession of the Philadelphia refineries and
their business; that each of the purchases was made subject
to the American Sugar Refining Company obtaining au-
thority to increase its stock $25,000,000; that this assent was
subsequently obtained and the increase made; that there
was no understanding or concert of action between the
stockholders of the several Philadelphia companies respect-
ing the sales, but that those of each company acted inde-
pendently of those of the others, and in ignorance of what
CONTRACTS AND COMBINATIONS NOT PROHIBITED, 520

was being done by such others; that the stockholders of each
company acted in concert with each other, understanding
and intending that all the stock and property of the com-
pany should be sold; that the contract of sale in each
instance left the sellers free to establish other refineries
and continue the business if they should see fit to do so,
and contained no provision respecting trade or commerce
in sugar, and that no arrangement or provision on this
subject has been made since; that since the purchase the
Delaware Sugar House Refinery has been operated in con-
junction with the Spreckels Refinery, and the E. C. Knight
Refinery in connection with the Franklin, this combination
being made apparently for reasons of economy in conducting
the business; that the amount of sugar refined in Phila-
delphia has been increased since the purchases; that the
price has been slightly advanced since that event, but is
still lower than it had been for some years before, and up
to within a few months of the sales; that about 10 per cent.
of the sugar refined and sold in the United States is refined
in other refineries than those controlled by the American
Sugar Refining Company; that some additional sugar is
produced in Louisiana and some is brought from Europe,
but the amount is not large in either instance.

‘‘The object in purchasing the Philadelphia refineries was
to obtain a greater influence or more perfect control over
the business of refining and selling sugar in this country.’’

Upon these facts the court said: ‘‘The contracts and acts
of the defendants relate exclusively to the acquisition of
sugar refineries and the business of sugar refining in Penn-
sylvania. They have no reference and bear no relation to
commerce between the states or with foreign nations.
Granting, therefore, that a monopoly exists in the ownership
of such refineries and business (with which the laws and
courts of the state may deal), it does not constitute a
restriction or monopoly of interstate or international com-
merce. The latter is untouched and open to all who choose
526 THE SHERMAN ANTI-TRUST ACT.

to engage in it. The plaintiff contends, however, that such
monopoly in refineries and refining incidentally secures a
monopoly of commerce among the states. This position,
however, is unsound; the deduction is unwarranted. The
alleged control of refining does not of itself secure such
commercial monopoly; and at present none exists. The most
that can be said is that it tends to such a result; that it
might possibly enable the defendants to secure it, should
they desire to do so. Whether it would or not depends on
their ability with this advantage to control such commerce.
They have not tested this ability by attempting to control
it, nor shown a disposition to do so. They sell their prod-
ucts, and purchasers may use it in such commerce, or other-
wise as they choose. At present the defendants neither
have nor have attempted to secure such commercial monop-
oly. As before stated, if they have a monopoly, it is in
refineries and refining, alone—over which the plaintiff has
If they should retire from business, close
their refineries or devote them to other purposes, the plaintiff
could not object. This might and doubtless would indirectly
produce some disturbance of or interference with such com-
merce, but it would not bring the defendants or their prop-
erty within the jurisdiction of Congress.’’ ?°

no jurisdiction.

25 United States v. E. C. Knight
Co., 60 Fed. 306; affirmed 60 Fed.
934; 9 C.C. A. 297; 17 U.S. App.
466; 24 L. R. A. 428; 156 U. S.
1; 15 Sup. Ct. 249; 39 L. Ed.
325. In the Circuit Court of Ap-
peals Judge Dallas said: “There
is no evidence whatever that the
defendants have directly monopo-
lized, or attempted. combined, or
conspired to directly monopolize,
any vart of the trade or commerce
among the several states or with
foreign nations; or that they have
contracted, combined, or conspired
in direct restraint of such trade

or commerce. The utmost that can
be said—and this, for the present
purpose, may be assumed—is that
they have acquired control of the
business of refining and selling
sugar in the United States. But
does this involve monopoly, or re-
straint of, foreign or interstate
commerce? We are clearly of the
opinion that it does not. The par-
ticular language of the Aet which
is now under consideration was
manifestly derived from the clause
of the Constitution by which Con-
gress is empowered to ‘regulate
commerce with foreign nations
CONTRACTS AND COMBINATIONS NOT PROHIBITED, 527

§ 265. E. C. Knight Company Case in Supreme Court.—
In the Supreme Court Chief Justice Fuller said of the facts
disclosed by the record:

“The object was manifestly private gain in the manufac-
ture of the commodity, but not through the control of inter-
state or foreign commerce. It is true that the bill alleged
that the products of these refineries were sold and distributed
among the several states, and that all the companies were
engaged in trade or commerce with the several states and
with foreign nations, but this was no more than to say that
trade and commerce served manufacture to fulfill its func-
tion. Sugar was refined for sale, and sales were probably
made at Philadelphia for consumption, and undoubtedly for
resale by the first purchasers throughout Pennsylvania and
other states, and refined sugar was also forwarded by the
companies to other states for sale. Nevertheless, it does not
follow that an attempt to monopolize, or the actual monop-
oly of, the manufacture was an attempt, whether executory
or consummated, to monopolize commerce, even though, in
order to dispose of the product, the instrumentality of
commerce was necessarily invoked. There was nothing in
the proofs to indicate any intention to put a restraint
upon trade or commerce, and the fact, as we have seen,
that trade or commerce might be indirectly affected was
not enough to entitle complainants to a decree. The subject-

and among the several states,’ and
the authorities are distinctly to
the effect that this grant of power
does not include the regulation of

merce are two distinct and very
different things. The latter does
not include the former. Buying
and selling are elements of com-

manufacturers or productive in-
dustries of any sort, even where
their product is made, or is in-
tended or contemplated to be
made, the subject of commerce be-
yond the territory of the state
where the manufactory or other
producing industry is situated or
operated. Manufacture and com-

merce, but something more is re-
quired to constitute commerce,
which, ‘strictly considered, con-
sists in intercourse and traffic, in-
cluding in these terms navigation,
and the transportation and tran-
sit of persons and property as well
as the purchase, sale,
change of commodities.’ ”

and ex-
528 THE SHERMAN ANTI-TRUST ACT.

matter of the sale was shares of manufacturing stock, and
the relief sought was the surrender of property which had
already passed and the suppression of the alleged monopoly
in manufacture by the restoration of the status quo before
the transfers; yet the act of Congress only authorized the
circuit courts to proceed by way of preventing and restrain-
ing violations of the act in respect of contracts, combina-
tions or conspiracies in restraint of interstate or interna-
tional trade or commerce.’”*

§ 266. E. C. Knight Company Case Distinguished—Not
Overruled.—It has been claimed that this case has been
overruled by subsequent cases decided by the Supreme

26 United States v. E. C. Knight
Co., 156 U. S. 1; 15 Sup. Ct. 249;
39 L. Ed. 325; affirming 60 Fed.
934; 9 C. C, A. 297; 17 U.S. App.
466; 24 L. R. A. 428; which af-
firmed 60 Fed. 306. Mr. Mora-
wetz has this to say of this case:
“The precise grounds upon which
the Supreme Court based its de-
cisions in the Sugar Trust case
are not stated clearly in the opin-
ion delivered by the court. Ap-
parently, however, the court based
its conclusion upon the following
propositions: (1) That commerce
succeeds to manufacture and is
not a part of it, and therefore al-
though a combination or conspir-
acy to control the business of man-
ufacturing an article of interstate
commerce may tend to restrain in-
terstate commerce, the restraint
in such case would be only an in-
direct result, however inevitable,
and whatever may be its extent;
(2) that, under the power to reg-
ulate commerce, Congress can only
prescribe the rules by which com-
merce shall be governed and can

not regulate the use or the dispo-
sition of property, or prohibit mo-
nopolizing « manufacturing busi-
ness, merely because ultimately in-
terstate or international com-
merce may be affected; (3) that
in view of these constitutional
limitations Congress did not at-
tempt by the Anti-Trust Act to
deal directly with monopoly as
such, or to limit and restrict the
rights, of corporations or of citi-
zens of the states in the acquisi-
tion, control, or disposition of
property, or to make criminal the
acts of persons in the acquisition
and control of property which the
states of their residence or crea-
tion sanctioned or permitted, (4)
that the contracts and the acts of
the defendants related exclusively
to the acquisition of certain re-
fineries and the business of refin-
ing sugar in Pennsylvania and
bore no direct relation to com-
merce between the states or with
foreign nations; and (5) that, al-
though the instrumentality of in-
terstate commerce was necessar-
CONTRACTS AND COMBINATIONS NOT PROHIBITED. 529
Court, not expressly so, but by clear implication, but this
claim has been denied.*? President Taft, in his special
message to Congress, January 7, 1910, says of the Knight
case that ‘‘because of the narrow scope of the pleadings,
the combination sought to be enjoined was held not to be
included within the prohibition of the Act, because the
averments did not go beyond the mere acquisition of manu-
facturing plants for the refining of sugar, and did not
include that of a direct and intended restraint upon trade
and commerce in the sale and delivery of sugar across

state boundaries and in foreign trade.’’ 78

ily invoked to dispose of the prod-
ucts of the refineries, it did not
follow that an attempt to monopo-
lize the trade or commerce in re-
fined sugar, the proofs failing to
indicate any intention to restrain
interstate trade or commerce. The
decision in the Sugar Trust case
was one of the earliest decisions
under the Anti-Trust Act and, in
the opinion of the writer, can not
be reconciled wtih the subsequent
decisions of the Supreme Court.
In a number of subsequent cases
the court decided that Congress
had constitutional power to pro-
hibit and by the Anti-Trust Act
did prohibit, monopolizing, or at-
tempting to monopolize, or com-
bining or conspiring to monopo-
lize, interstate trade or commerce
by means of contracts or trade ar-
rangements among competitors,
yet it is clear that Congress has
no greater power to prohibit the
making of contracts that are sanc-
tioned by State laws than to pro-
hibit the acquisition or use of
property sanctioned by State laws.
In the Northern Securities case
the court decided that Congress

had power to prohibit, and by the
Anti-Trust Act did prohibit, a
combination restraining interstate
commerce by acquiring and vest-
ing a holding company a control-
ling amount of shares of capital
stock of two railway companies
owning parallel and competing in-
terstate lines. In the Sugar Trust
case the transaction challenged by
the government consisted of the
acquisition by a manufacturing
corporation, through an exchange
of shares, of a controlling amount
of the capital stock of practically
all its competitors in interstate
commerce.” Columbia Law Re-
view, December, 1910, 290.

27 Stuart Chevalier, of Louis-
ville, in 44 Amer. Law Review
858 (Nov. & Dec., 1910). In Big-
elow v. Calumet & Hecla Mining
Co., 167 Fed. 721, 94 C. C. A. 18.
Judge Cochran discussed the claim
that the Knight case had been
overruled; holding that it deter-
mined the case then before the Cir-
cuit Court of Appeals.

28 Henry R. Seager in 26 Politi-
cal Science Quarterly 581-614
(Dec. 1911), is entirely too severe
530

on the government’s counsel in the
conduct of the Knight case. In
the Addyston Pipe case President,
then Judge Taft, stated the point
decided in the Knight case as fol-
lows: “The argument is that the
power to contro] the manufacture
of refined sugar is a monopoly
over a necessity of life, to the en-
joyment of which by a large part
of the population of the United
States interstate commerce is in-
dispensable and that, therefore,
the general government, in the ex-
ercise of the power to regulate
commerce, may repress such mo-
nopoly directly, and set aside the
instruments which have credited
it. * * * Doubtless the power
to control the manufacture of a
given thing involves in a certain
sense the control of its disposi-
tion, but this is secondary, and
not the primary, sense; and, al-
though the exercise of that power
may result in bringing the opera-
tion of commerce into play, it does
not control it, and affects it only
incidentally and indirectly. Com-
merece succeeds to manufacture,
and is not a part of it. The power
to regulate commerce is the power
to prescribe the rule by which
commerce shall be governed, and is
a power independent of the power
to suppress monopoly. But it may
operate in repression of monopoly
that comes within the
rules by which commerce is gov-
erned, or whenever the transaction
is itself a monopoly of commerce.
* * * The regulation of com-
merce applies to the subjects of
commerce, and not to matters of
internal police. Contracts to buy,
sell or exchange goods to be trans-
ported among several states, the
transportation and its instrumen-

whenever

THE SHERMAN ANTI-TRUST ACT.

talities, and articles bought, sold,
or exchanged for the purpose of
such transit among the states, or
put in the way of transit, may be
regulated; but this is because they
form part of the interstate trade
or commerce. The fact that an
article is manufactured for export
to another state does not of itself
make it an article of interstate
commerce, and the intent of the
manufacturer does not determine
the time when the article or prod-
uct passes from the control of the
state, and belongs to commerce.”
After quoting from the opinion of
Chief Justice Fuller, Judge Taft
says: “The language of the chief
justice in the last passages quoted
above from his opinion, upon
which so much reliance was placed
by the circuit court and the de-
fendants’ counsel at the bar, is to
be interpreted by the facts of the
ease before the court. The state-
ment in the opinion that Congress
did not intend by the Anti-Trust
Act to limit and restrict the
yights of persons and corporations
in the mere acquisition, control or
disposition of property, or to regu-
late the prices at which such prop-
erty should be sold, or to make
criminal the acts of persons or cor-
porations in the acquisition and
control of property which the
states of their residence or crea-
tion sanctioned or permitted, does
not imply that Congress did not
intend to strike down any combi-
nation which had for its object the
restraint and attempted monopoly
of trade and commerce among the
given number of states in a speci-
fied article of commerce, and the
resulting power to regulate prices
therein. The obstacle in the way
of granting the relief asked in
CONTRACTS AND COMBINATIONS NOT PROHIBITED.

United States v. E. C. Knight Co.
was (to use the language of the
chief justice) that ‘the contracts
and acts of the defendant related
exclusively to the acquisition of
the Philadelphia refineries, and
the business of sugar refining in
Pennsylvania, and bore no direct
relation to commerce between the
states or with foreign nations.’
The Supreme Court distinctly ad-
judged that ‘what the law struck
at was combinations, contracts,
and conspiracies to monopolize
trade and commerce among the
several states or with foreign na-
tions.’” , United States v. Addy-
ston Pipe & Steel Co., 85 Fed.
271; 9C. C. A. 297; 17 U.S. App.
466; 24 L. R. A. 428; reversing
78 Fed. 712; affirmed 175 U. S.
211; 20 Sup. Ct. 96; 44 L. Ed.
136. See also United States v.
Trans-Missouri Freight Ass’n, 166
U. S. 290, 313, 325, 326; 17 Sup.
Ct. 540; 44 L. Ed. 1007; revers-
ing 58 Fed. 58; 7 C. C. A. 15;
24 L. R. A. 73; Topkins v.
United States, 171 U. S 578,
597; 19 Sup. Ct. 40; 43 L. Ed.
320; reversing 82 Fed. 529; Bishop
vy. American Preserves Co., 105
Fed. 845; Gibbs v. McNeeley, 118
Fed. 120; 55 C. C. A. 70; 60 L.
R. A. 157; reversing 107 Fed.
210; Chesapeake & Ohio Fuel Co.
v. United States, 115 Fed 610,
623; 53 C. C. A. 256; affirming
105 Fed. 93; Bement v. National
Harrow Co., 186 U. S. 70, 92; 22
Sup. Ct. 747; 46 L. Ed. 1058; af-
firming 163 N. Y. 505; 57 N. E.
764; reversing 21 N. Y. App. 290;
47 N. Y. Supp. 462; United States
v. Northern Securities Co., 120
Fed. 721, 728; affirmed 193 U. S.
197; 24 Sup. Ct. 4386; 48 LL. Ed.
679. Judge Cochran in Bigelow

531

v. Calumet & Hecla Mining Co.,
167 Fed. 721; 94 C. CG. A.
13, has very carefully ana-
lyzed the Knight case and given
an extended review of the facts
therein involved. On appeal the
majority of the members of the
Supreme Court approved the ac-
tion of the lower court dismissing
the bill. “They treated the whole
question to be whether, conceding
that the execution of these con-
tracts and the conveyance to the
American Sugar Refining Company
pursuant thereto of the four re-
fineries embraced therein would
give the sugar company a monop-
oly in manufacture, that monopoly
could be directly suppressed under
act of Congress in the mode at-
tempted by the bill, and decided
that question in the negative, be-
cause the court considered that,
while the power to control the
manufacture of a given thing in-
volves in a certain sense the con-
trol of its disposition, that is, a
secondary and not a primary sense,
for, although the exercise of that
power might result in bringing the
operation of commerce into play,
it did not contro] it, and affected
it only incidentally and indirectly.
‘There was nothing in the proofs,’
said the chief justice, ‘to indicate
any intention to put a restraint
upon trade or commerce, and the
fact, as we have seen, that trade
or commerce might be indirectly
affected was not enough to entitle
complainants to a decree, The sub-
ject matter of the sale was shares
of manufacturing stock, and the
relief sought was the surrender of
property which had already passed
and the suppression of the alleged
monopoly in manufacture by the
restoration of the status quo be-
532

fore the transfers. The decision
in the case, therefore, turned upon
a pure question of fact, and such
a decision binds neither the ecurt
nor anyone else in any subsequent
ease arising out of different facts.
The proposition of law involved
was that the states were left by
the constitution to the exercise by
tl:em of their police power over
persons and property within their
borders, while the constitution
gave to Congress the exclusive
power to regulate commerce among
the states. This distinction was
carefully drawn by the chief jus-
tice in the following language:
‘The regulation of commerce ap-
plies to the subjects of commerce
and not to matters of internal pol-
ice. Contracts to buy, sell, or ex-
change goods to be transported
among the several states, the
transportation and its instrumen-
talities and articles bought, sold,
or exchanged for the purposes of
such transit among the States, or
put in the way of transit, may be
regulated, but this is because they
form « part of interstate trade or
commerce. There was nothing in
the proofs to indicate any inten-
tion to put a restraint upon trade
or commerce, and the fact, as we
have seen, that trade or commerce
might be directly affected was not
enough to entitle complainants to
a decree.” That was the pith of
the whole decision, and on the
findings of fact, assuming their
correctness, no other conclusion
could have been reached. Mr. Jus-
tice Harlan’s dissent was based
upon a different inference, drawn
by him from the same facts, which
was that a broader conclusion was
required than that drawn by the

THE SHERMAN ANTI-TRUST ACT.

circuit court and a majority of
the Supreme Court, and that the
acts of the defendants evidenced a
distinct intention to monopolize
interstate trade and commerce in
sugar. ‘It is said that there are
no proofs in the record which in-
dicate an intention upon the part
of the American Sugar Refining
Company and its associates to put
a restraint upon trade or com-
merce. * * * Did anyone ex-
pect to find in the written agree-
ments which resulted in the for-
mation of this combination a dis-
tinct expression of a purpose to
restrain interstate trade: or com-
merce?’ The majority of the court
did not decide that the acquisition
of 96 per cent. of the manufactur-
ing plants in the United States by
the American Sugar Refining Com-
pany did not constitute a monop-
oly, but that, on the facts stated
in the bill and found by the court,
there was no monopoly of inter-
state commerce. The chief justice
put the proposition involved
squarely: ‘The fundamental ques-
tion is, whether conceding that the
existence of a monopoly in manu-
facture is established by the evi-
dence, that monopoly can be di-
rectly suppressed under the act of
Congress in the mode attempted
by this bill.” The subsequent in-
vestigation was merely into the
question whether or not, on the
evidence, interstate commerce wa3
involved, and having found that
there was nothing in the proofs to
indicate any intention to put a re-
straint upon interstate commerce,
it was held that the fact that such
trade or commerce might be indi-
rectly affected was not enough to
entitle complainants to a decree.
CONTRACTS AND COMBINATIONS NOT PROHIBITED.

Congress, the chief justice said,
did not attempt, by the act of
1890—‘to assert the power to deal
with monopoly directly as such;
or to limit and restrict the rights
of corporations created by the
states or the citizens of the states
in the acquisition, control, or dis-
position of property; or to regu-
late or prescribe the price or prices
at which such property or the
products thereof should be sold;
or to make criminal the acts of
persons in the acquisition and
control of property which the
states of their residence or crea-
tion sanctioned or permitted. Aside
from the provisions applicable
where Congress might exercise mu-
nicipal power, what the law struck
at was combinations, contracts,
und conspiracies to monopolize
trade and commerce among the
several states or with foreign na-
tions. * * * Jn all subsequent
decisions of this court the Knight
case has been treated as turning
upon the point that as a matter
of fact the contracts and acts of
the defendants related exclusively
to the acquisition of properties
in the State of Pennsylvania and
had no direct relation to inter-
state commerce, and that the evi-
dence failed to disclose any inten-
tion to affect interstate commerce.
Thus in United States v. Trans-
Missouri case (166 U.S., 290, 313;
17 Sup. Ct. 540; 41 L. Ed. 1007)

Peckham, J., said: ‘We have held.

that the Trust Act did not apply to
company engaged in one state in
the refining of sugar under the
circumstances detailed in the case
of United States v. E. C. Knight
Company (156 U. S. 1; 15 Sup.
Ct. 249; 39 L. Ed. 325), because

533

the refining of sugar under those
circumstances bore no distinct re-
lation to commerce between the
states or with foreign nations.’ In
the Addyston Pipe case (175 U.
S. 211, 240; 20 Sup. Ct. 96; 44
L. Ed. 136), Peckham, J., said:
‘The direct purpose of the combi-
nation in the Knight case was the
control of the manufacture of su-
gar. There was no combination or
agreement in terms regarding the
future disposition of the manufac-
tured article, nothing looking to a
transaction in the nature of inter-
state commerce.’ The probable in-
tention on the part of the manu-
facturer of sugar, he held, did not
supply that needed proof.” Brief
of Government in Standard Oil
ease, 126.

Attorney General Bonaparte
thus stated his understanding
of the Knight case: “The case
of United States v. E. C. Knight
Company (156 U. 8. 1; 15 Sup.
Ct. 249; 39 L. Ed. 325) deter-
mined, in substance, that the ac-
quisition by the so-called ‘sugar
trust’ of a controlling interest in
four refineries, which, at the time
of such acquisition, constituted
for practical purposes, its only
competitors in the United States,
did not involve a violation of the
Sherman Act which would justify
a suit in equity on the part of the
government to cancel the agree-
ments, by virtue of which the con-
trolling interest in these several
corporations has been so acquired
by the said so-called ‘trust.’ The
Supreme Court held thus, al-
though, in the language of Judge
Butler in the circuit court, ‘the
object in purchasing the Philadel-
phia refineries was to obtain a
034

THE SHERMAN ANTI-TRUST ACT.

§ 267. Contract of Sale to Inhabitant of Another State
to be Performed Within Vendor’s State—Where a com-
bination was formed to restrain competition in proposals
for contracts for the sale of iron pipe which was to be
delivered in the state in which some of the parties to the

greater influence or more perfect
control over the business of refin-
ing and selling sugar in this coun-
try. * * * JT may perhaps
make my meaning a little clearer
if 1 say that I understand the
Knight case to have decided,
first, that the mere acquisition of
the controlling interest in compet-
ing refineries did not violate the
Act; second, that such acquisition,
plus the purpose in making it to
obtain a ‘more perfect control’
over the business in which the
trust is engaged throughout the
entire country, did not.amount to
a breach of the law.’ This is my
view of the decision in the Knight
case.” Senate Doc. No. 687, 2nd
Sess. 60th Congress, 27.

The Knight case has been cited
in the following cases: Dvueber
Watch Case Mfg. Co. v. E. Howard
Watch & Clock Co., 66 Fed. €37,
G42, 646; 14 C. C. A. 14; United
States v. Addyston Pipe & Steel
Co., 78 Fed. 712 720; Minnesota
v. Northern Securities Co., 123
Fed. 692, 699; Robinson v. Sub-
urban Brick Co., 127 Fed. 804,
806; 62 C. C. A. 484; Booth &
Co. v. Davis, 127 Fed. 875, 879;
Montague & Co. v. Lowry, 193 U.
S. 38, 48; 24 Sup. Ct. 307; 48 L.
Ed. 608; Northern Securities Co.
vy. United States, 193 U. S. 197,
329, 371, 380, 402, 405, 410; 24
Sup. Ct. 436; 48 L. Ed. 679; Da-
vis y. A. Booth & Co., 131 Fed.
31, 36; 65 C. C. A. 269; Swift &
Co. v. United States, 192 U. S&S.

375, 379, 402; 25 Sup. Ct. 276;
49 L. Ed. 518; Camors-McConnell
Co. v. McConnell, 140 Fed. 412,
416; United States v. MacAndrews
& Forbes Co., 149 Fed. 823, 834;
In re Charge to Grand Jury. 151
Fed. 834, 837; Loewe v. Lawlor,
208 U. S. 274, 297; 28 Sup. Ct.
301; 52 L. Ed. 488; United States
vy. American Tobacco Co., 163 Fed.
701, 763; Monarch Tobacco Works
y. American Tobacco Co., 165 Fed.
774, 779; Ames v. American Tele-
phone Co., 166 Fed. 820, 824; Big-
elow .. Calumet & Hecla Mining
Co., 167 Fed. 704, 712, 725; 94
Cc. C. A. 13; United States v.
Reading Co., 183 Fed. 427, 470;
United States v. American Naval
Stores Co., 186 Fed. 592, 593;
Standard Oii Co. v. United States,
221 U. S. 1, 68; 31 Sup. Ct. 502;
54 L. R. A. 619; 34 L. R. A.
(N.S.) 834; Gibbs v. MeNeeley.
102 Fed. 594, 597; United States
v. Hopkins, 82 Fed. 529, 537;
Hopkins v. United States, 171 U.
S. 578, 594; 19 Sup. Ct. 40; 43
L. Ed. 290; Lowenstein v. Evans,
69 Fed. 908, 910; Montague & Co.
v. Lowry, 115 Fed. 27, 30; 52 C.
Cc. A. 621; Ellis v. Inman Paulsen
& Co., 131 Fed. 182, 188; 65 C.
C, A. 488; Bigelow v. Calumet &
Hecla Mining Co., 155 Fed. 869,
875; Pennsylvania Sugar Refining
Co. v. American Sugar Refining
Co., 160 Fed. 144, 145; United
States Tobacco Co. v. American
Tobacco Co., 164 Fed. 700, 798.
CONTRACTS AND COMBINATIONS NOT PROHIBITED.

535

combination reside and carried on business, it was held not,

so far as those members were concerned, illegal under the
federal act, although the contract might be awarded to some
party outside the state as the lowest bidder.”

29 Addyston Pipe & Steel Co. v.
United States, 175 U. S. 211; 20
Sup. Ct. 96; 44 L. Ed. 136; affirm-
ing 85 Fed. 271; 29 C. C. A. 141;
54 U. S. App. 723; 46 L. R. A.
122, which reversed 78 Fed. 712.
The Supreme Court said: ‘“Al-
though the jurisdiction of Con-
gress over commerce among the
states is full and complete, it is
not questioned that it has none
over that which is wholly within a
state, and therefore none over com-
binations or agreements so far as
they relate to a restraint of such
trade or commerce. It does not
acquire any jurisdiction over that
part of a combination or agree-
ment which relates to commerce
wholly within a state, by reason
of the fact that the combination
also covers and regulates com-
merce which is interstate. The
latter it can regulate, while the
former is subject alone to the
jurisdiction of the state. The
combination herein described cov-
ers both commerce which is wholly
within a state and also that which
is interstate. In regard to such
of these defendants as might re-
side and carry on business in the
same state where the pipe provided
for in any particular contract was
to be delivered, the sale, transpor-
tation and delivery of the pipe by
them under that contract would be
aw transaction wholly within the
state, and the statute would not
be applicable to them in that case.

They might make any combination
they chose with reference to the
proposed contract, although it
should happen that some non-resi-
dent of the state eventually ob-
tained it. The fact that the pro-
posal called for the delivery of
pipe in the same state where some
of the defendants resided and car-
ried on their business would be suf-
ficient, so far as the act of Con-
gress was concerned, to permit
those defendants to combine as
they might choose in regard to the
proposed contract for the delivery
of the pipe, and that right would
not be affected by the fact that the
contract might be subsequently
awarded to some one outside the
state as the lowest bidder. In
brief, their right to combine in
regard to a proposal for pipe de-
liverable in their own State could
not be reached by the Federal power
derived from the commerce clause
in the Constitution.” A contract
made in Missouri to be performed
there for the sale of wheat for
future delivery is not affected by

‘the Sherman Act, though the buy-

er made other purchases of wheat
through Chicago agencies, for the
wheat to be delivered in Missouri;
the latter contracts being made
Missouri contracts, to be per-
formed there. Albers Commission
Co. v. Spencer, 205 Mo. 105; 103
8. W. 523; 11 L. R. A. (N.S.)
1003.
536 THE SHERMAN ANTI-TRUST ACT.

ARTICLE VIIL—MUNICIPAL CONTRACTS—STATE
MONOPOLIES.

State monopolizing traffic in
intoxicating liquors.

268. Contract for street improve- 269.
ment limited to certain
kinds of material.

§ 268. Contract for Street Improvement Limited to Cer-
tain Kinds of Material—Where a contract for the paving
of a street with asphalt limited the kind of asphalt to be
used to Trinidad asphalt, and one company controlled en-
tirely that particular asphalt, it was held that the contract
was not a violation of the Sherman Act.*° The same result
was reached by the Supreme Court of the United States.**

§ 269. State Monopolizing Traffic in Intoxicating Liquors.
—The Sherman Anti-Trust Act does not apply to a state
under an act of its legislature monopolizing the sale of
intoxicating liquors within the boundaries. And under
section seven of that Act the state can not be sued by any
one who has suffered damages because of such monopoliza-

tion.

39 Field v. Barber Asphalt Pav-
ing Co., 117 Fed. 925. The court
said: “The evidence shows that the
contracts called for ‘Lake Trinidad
asphalt.’ There is evidence tend-
ing to show that good asphalt, and
quite as good as Trinidad, can be
obtained from Bermuda, Mexico
and from places in the United
States. On such facts it is con-
tended that the city had no right
to limit the contract to Trinidad,
and that in so doing the commerce
clause of the constitution was vio-
lated, and that the federal Anti-
Trust statutes were likewise vio-
lated. And this argument is em-
phasized by complainant’s coun-

In discussing this question, it was said by the court:

sel, because, as he contends, the
defendant has a monopoly of Trin-
idad asphalt. The evidence does
not show this to be so. But, if it
does have the monopoly, I do not
believe the point is well taken. An
individual certainly has the right,
in the erection of an improvement,
to get that which he believes the
best, and that which he prefers,
regardless of the reason; and he
should not defeat a recovery by
showing that in fact something
else was as good or better, or that
the vendor had a monopoly.”

31 Field v. Barber Asphalt Pav-
ing Co., 194 U. S. 618; 24 Sup.
Ct. 784; 48 L. Ed. 1142; reversing
CONTRACTS AND COMBINATIONS NOT PROHIBITED, 537

“This act of the legislature of South Carolina evidently
does not create in nor give any individuals the monopoly.
It gives it wholly and entirely to the state.

‘‘Now, the question to be decided is not as to the consti-
tutionality of this act, nor whether it be in the lawful exer-
cise of the police power, but whether, in declaring and
asserting this monopoly in herself, and in assuming and
controlling its enforcement, the state comes within the
provisions of the Act of Congress of 1890. That Act, as
has been seen, declares illegal every contract, combination
in the form of a trust or otherwise or conspiracy in restraint
of trade or commerce among the several states or with for-

117 Fed. 925. “The right to pro-
vide for this paving was vested by
the Missouri statute in the board
of aldermen. The right to select
the material for the paving was
vested in that body; they saw fit
to choose Trinidad Lake Asphalt
for the paving. Their right so to
do, under the charter powers of
such cities as Westport, notwith-
standing competitive bidding is
thereby rendered impossible, has
been sustained by the Supreme
Court of Missouri. Barber As-
phalt Paving Co. v. Hunt, 100 Mis-
souri, 22; 13 8S. W. 98; Warren v.
Paving Co., 115 Missouri, 572; 22
S. W. 490; Verdin v. St. Louis,
131 Missouri, 26; 33 S. W. 480;
36 S. W. 52. With the wisdom
of this choice the courts have noth-
ing to do, and in this case we are
only concerned to inquire as to the
alleged violation of the Federal
rights in such selection. The ar-
gument is that Trinidad Lake as-
phalt, being a product of a foreign
country and brought into Missouri,
and there being other deposits in
other states within the United

States from which suitable as-
phalt could be had, the specifica-
tion of this kind of asphalt is an
interference with and a regulation
of interstate commerce, in viola-
tion of the exclusive right of Con-
gress by the Constitution. It is
unnecessary to cite largely from
cases in this court, which hold that
only such acts as directly interfere
with the freedom of interstate
commerce are prohibited to the
states. Kidd v. Pearson, 128 U.
S. 1; 9 Sup. Ct. 6; 32 L. Ed. 346;
affirming 72 Iowa, 348; 34 N. W.
1; in which case Mr. Justice La-
mar, speaking for the court said:
‘As has been often said legislation
(by a state) may in uw great va-
riety of ways affect commerce and
persons engaged in it, without con-
stituting a regulation of it within
the meaning of the constitution.’
Pennsylvania R. R. Co. v. Hughes,
191 U. S. 477; 24 Sup. Ct. 182;
42 L. Ed. 268; affirming 202 Pa.
222; 51 Atl. 990; 63 L. R. A. 513;
97. Am. St. 713, and cases cited in
the opinion.”
538 THE SHERMAN ANTI-TRUST ACT.

eign nations. But by this act the state makes no contract,
enters into no combination or conspiracy. She declares and
asserts in herself the monopoly in the purchase and sale of
liquors. The section of the Act of 1890, sued upon, gives
a right of action for any injury by any other person or
corporation. The state is not a corporation. A corporation
is a creature of the sovereign power, deriving its life from
its creator. The state is a sovereign having no derivative
powers, exercising its sovereignty by divine right. The state
gets none of its powers from the general government. It
has bound itself by compact with the other sovereign states
not to exercise certain of its sovereign rights, and had con-
ceded these to the Union, but in every other respect it
retains all its sovereignty which existed anterior to and
independent of the Union. Nor can it be said that the state
is a person in the sense of this act. Even were this the case,
no relief can be had without making the state a party, and
this destroys the jurisdiction of this court. No opinion
whatever is expressed as to the right of the plaintiff for
violation of his common law rights. In this proceeding and
under the Act of 1890 he must seek his remedy against the
holder of the monopoly; and, as in the present case, the
monopoly is in the state, this court has no jurisdiction.’’*?

32 Lowenstein v. Evans, 69 Fed.
908; Guy v. Commissioners, 122
N.C. 471; 29.8. E. 771. No mo-
nopoly or combination forbidden
hy the federal Anti-Trust laws is
created by state regulations pro-
viding for the appointment of pi-

lots, and restricting the right to
pilot to those duly appointed. Ol-
sen v. Smith, 195 U. S. 332; 25
Sup. Ct. 52; 49 L. Ed. 224; affirm-
ing (Tex. Civ. App.); 68 S. W.
320.
CHAPTER XIV.

TRANSPORTATION AGENCIES.

SECTION.

270.

2H.

lo
med,
Nw

274.

275.

276.

to
1
=~]

278.

279.

280.

281.

Anti-Trust Act applies to il-
legal combinations of com-
mon carriers.

Anti-Trust Act applies to
railways—History of the
times—Legislative intent.

Anti-Trust Act applies to
railways—Unceertainty of

Act—Difliculty of deter-
mining what is “com-
merce”—Trusts.

Commerce Act, consistent
with Sherman Anti-Trust

Act.

Trans-Missouri Freight As:
sociation case—No inten-
tion to restrain commerce.

Combination necessary to

prevent ruinous rates—
Promotion of trade.
Unrestricted competition
working a_ restraint of
trade.

Unreasonable restraint —

Trans-Missouri Freight
Ass’n case.
Charging reasonable rates
different from combining
to fix the same rates.
Observations on the Trans-
Missouri Freight and
Joint Traffic cases.
Holding company—Northern
Securities case.
Northern Securities
pany as mere custodian—
Ownership of stock.

Com-

SECTION.

282.

283.

284.

285.

286.

287.

288.

289.

290.

291.

292.

Observations on Northern
Securities case.

Purchase of stock of a com-
peting railway company by
another railway company.

One person purchasing con-
trolling interest in two
competing railway com-
panies.

No suppression of competi-
tion.

Inherent conditions result-
ing in illegal monopoly
where otherwise it would
not be—St. Louis termin-
als,

Terminal Railroad Associa-
tion for all railroads not
invalid—Union depots.

Purchase of one railroad’s
stock by another compet-
ing railroad—Union Pa-
cific case.

Advantage of competition
between competing  rail-
roads.

Combination of railroad
companies competing with
coal mining companies to
defeat construction of in-
dependent railroads—Read-
ing Co. case—Sixty-five
per cent. contracts.

Southeastern Freight Asso-
ciation.

Contracts to carry through
freight—Refusing to make
with another carrier,

539
540 THE SHERMAN ANTI-TRUST ACT.

SECTION. SECTION.

293. Pooling earnings and divid- 301. Right-to withdraw from
ing on percentage basis. combination — Effect on

294. Combination formed in for- withdrawing party.
eign country. 302. Combinations indirectly and

295. Pooling receipts from for- not necessarily affecting
eign shipping trade. transportation.

296. Combination formed before 303. Intrastate commerce _ re-
enactment of statute—In- straining.
tent. 304. Prepayment of charges, ex-

297. Shipping contract—Special acting of one carrier and
privileges. not another.

298. Intrastate traffic on Ohio 305. To control a railroad com-
River—Doubt as to wheth- pany not necessary to own
er it is interstate traffic. a majority of its stock.

299. Lease and sale of railroad 306. Federal court’s power to re-
stand on same basis. strain corporation exercis-

300. Lease of boat line and ing its powers under State
agreement not to compete laws.
for a term of years. 306a. Alaska trade—Line of trans-

portation partly outside of
the United States.

§ 270. Anti-Trust Act Applies to Illegal Combinations
of Common Carriers—The provisions of the Anti-Trust
Act applies to common carriers; and an agreement or con-
tract among carriers in restraint of interstate trade or com-
merce is prohibited by it, even though the contract is en-
tered into between competing railroads only for the purpose
of thereby affecting traffic rates for the transportation of
persons and property. In disposing of the question whether
the Act applied to a combination of railroads which
amounted to a restraint of interstate commerce, the Supreme
Court of the United States said:

“The language of the Act includes every contract, com-
bination in the form of trust or otherwise, or conspiracy, in
restraint of trade or commerce among the several states or
with foreign nations. So far as the very terms of the
statute go, they apply to any contract of the nature de-
scribed. A contract, therefore, that is in restraint of trade
or commerce is by the strict language of the Act prohibited
even though such contract is entered into between competing
TRANSPORTATION AGENCIES. 541

common carriers by railroad, and only for the purpose of
thereby affecting traffic rates for the transportation of per-
sons and property. If such an agreement restrain trade or
commerce, it is prohibited by the statute, unless it can be
said that an agreement, no matter what its terms, relating
only to transportation, can not restrain trade or commerce.
We see no escape from the conclusion that if any agreement
of such a nature does restrain it, the agreement is con-
demned for this act. It can not be denied that those who are
engaged in the transportation of persons or property from’
one state to another are engaged in interstate commerce,
and it would seem to follow that if such persons enter into
agreements between themselves in regard to the compensation
to be secured from the owners of the articles transported,
such agreement would at least relate to the business of com-
merce, and might more or less restrain it. The point urged
on the defendant’s part is that the statute was not really
intended to reach that kind of an agreement relating only
to traffic rates entered into by competing common carriers
by railroad; that it was intended to reach only those who
were engaged in the manufacture or sale of articles of com-
merce, and who by means of trusts, combinations and con-
spiracies were engaged in affecting the supply or the price
or the place of manufacture of such articles. The terms of
the Act do not bear out such construction. Railroad com-
panies are instruments of commerce, and their business is
commerce itself.’

‘An act which prohibits the making of every contract, etc.,
in restraint of trade or commerce among the several states
would seem to cover by such language a contract between
competing railroads, and relating to traffic rates for the
transportation of articles of commerce between the states,
provided such contract by its direct effect produces a re-

1State Freight Tax case, 15 Co. v. Texas, 105 U. S. 460, 464;
Wall. 232, 275; 21 L. Ed. 146; 26 L. Ed. 1067; reversing 55 Tex.
reversing 62 Pa. 286; 1 Am. Rep. 314.

399; Western Union Telegraph
542

straint of trade or commerce.

THE SHERMAN ANTI-TRUST ACT.

‘What amounts to a restraint

within the meaning of the act if thus construed need not

now ‘be discussed.’””

2United States v. Trans-Mis-
souri Freight Asso., 166 U. S. 290;
17 Sup. Ct. 540; 41 L. Ed. 1007;
reversing 58 Fed. 58; 7 C. C. A.
15; 19 U. S. App. 36; 24 L. R. A.
73; 3 Interst. Com, Rep. 4438;
which affirmed 53 Fed. 440;
United States v. Joint Traffic
Asso., 171 U. 8. 505; 19 Sup. Ct.
25; 43 L. Ed. 259; reversing 89
Fed. 1020; 32 C. C. A. 491; 45
U. 8. App. 762, which affirmed 76
Fed. 895; Northern Securities Co.
v. United States, 193 U. S. 197;
24 Sup. Ct. 4386; 48 L. Ed. 679;
reversing 123 Fed. 692; Minnesota
v. Northern Securities Co. 194 U.
S. 48; 24 Sup. Ct. 436; 48 L. Ed.
679; Tift v. Southern Ry. Co., 138
Fed. 753; United States v. Read-
ing Co., 183 Fed. 427; reversed
228 U.S. 158; 33 Sup. Ct. 90; 57
L. Ed. —; United States v. Union
Pacific R. Co., 226 U. 8. 61, 470;
33 Sup. Ct. 53; 57 L. Ed.; revers-
ing 188 Fed. 102; Prescott & A.
C. R. Co. v. Atchison T. & 8S. F. R.
Co. 73 Fed. 438 (arguendo) ;
Clarke v. Central R. & Banking
Co. of Georgia, 50 Fed. 338 (ar-
guendo); Gulf, C. & S. Ry. Co. v.
Miami 8. 8. Co., 86 Fed. 407; 30
C. C. A. 142 (arguendo). It does
not apply to independent express
companies not operating railways.
Southern Indiana Express Co. v.
United States Express Co, 88
Fed. 459; affirmed 92 Fed. 1022;
35 C. C. A. 172. “To exclude
agreements as to rates by com-
peting railroads for the transpor-
tation of articles of commerce be-
tween the states would leave little

for the act to take effect upon.
Nor do we think that because the
sixth section does not forfeit the
property of the railroad company
when merely engaged in the trans-
portation of property owned under
and which was the subject of a
contract or combination mentioned
in the first section, any ground is
shown for holding the rest of the
act inapplicable to carriers by
railroad. It is not perceived why,
if the rest of the Act were in-
tended to apply to such a carrier,
the sixth section ought necessarily
to have provided for the seizure
and condemnation of the locomo-
tives and cars of the carrier en-
gaged in the transportation be-
tween the states of those articles
owned as stated in the sixth sec-
tion. There is some justice and pro-
priety in forfeiting those articles,
but we see none in forfeiting the
locomotives or cars of the carrier
simply because such carrier was
transporting articles as described
from one state to another, even
though the carrier knew that they
had been manufactured or sold
under a contract or combination in
violation of the Act. In the case
of a simple transportation of such
articles the would be
guilty of no violation of any of
the provisions of the Act. Why,
therefore, would it follow that the
sixth section should provide for
the Act were intended to apply to
it? To subject the locomotives
and cars to forfeiture under such
circumstances might also cause
great confusion to the general bus-

carrier
TRANSPORTATION AGENCIES. 543

§ 271. Anti-Trust Act Applies to Railways—History of
the Times—Legislative Intent.—It was claimed in the first
transportation case reaching the Supreme Court, of which
mention has been made in the preceding section, that the
debates in Congress showed that Congress did not intend
that the Anti-Trust Act should apply to railroads; but,
after examining the debates at length, notwithstanding the
general acquiescence in the doctrine that debates of a legis-
lative body are not appropriate sources of information from
which to discover the meaning of the language of a statute
passed by a legislative body,’ the court took up the contention
that ‘‘one of the rules for the construction of statutes which
has been approved by this court; that while it is the duty
of courts to ascertain the meaning of the legislature from the
words used in the statute and the subject-matter to which it
relates, there is an equal duty to restrict. the meaning of
general words, whenever it is found necessary to do so, in
order to carry out the legislative intent. It is therefore

iness of the carrier and in that
way inflict unmerited punishment
upon the innocent owners of other
property in the course of transpor-
tation in the same cars and drawn
by the same locomotives. If the
company itself violates the Act, the
penalties are sufficient as provided
for therein.” Unitea States v.
Trans-Missouri Freight Asso., 166
U. 8. 290; 17 Sup. Ct. 540; 41
L. Ed. 1007, reversing 58 Fed. 58;
7 C. C. A. 15; 19 U. S. App. 36;
24 L. R. A. 73; 3 Interst. Com.
Rep. 443, which reversed 53 Fed.
440; United States v. Joint Traf-
fic Ass’n.. 171 U. 8. 505; 19 Sup.
Ct. 25; 43 L. Ed. 290; reversing
89 Fed. 1020; 32 C. C. A. 491;
45 U.S. App. 762; which reversed
76 Fed. 895. “The Act applies
to interstate railroads as carriers
conducting interstate commerce,
and one of the principal instru-

mentalitics thereof.” United States
v. Union Pacific R. Co., 226 U. 8.
61, 470; 33 Sup. Ct. 53; 57 L Ed.
—; reversing 188 Fed. 1020;
United States v. Reading Co, 228
U.S. 158; 33 Sup. Ct. 90; L. Ed.,
affirming in part and reversing in
part 183 Fed. 427.

3 Citing United States v. Union
Pacific Ry. Co., 1 Otto 72; 23 L.
Ed. 224; affirming 10 Ct. Cl. 548;
Alldridge v. Williams, 3 How. 9,
24; 11 L. Ed. 489; Mitchell v.
Great Works M. & M. Co., 2 Story
648; Queen v. Hartford College,
3 Q. B. Div. 693, 707.

4 Brewer v. Blougher, 14 Pet.
178, 198; 10 L. Ed. 408; Petri v.
Commercial Bank of Chicago, 142
U. S. 644, 650; 12 Sup. Ct. 325;
385 L. Ed. 1144; McKee v. United
States, 164 U. 8S. 287; 17 Sup. Ct.
92; 41 L. Ed. 437.
544 THE SHERMAN ANTI-TRUST ACT.

urged that if, by a strict construction of the language of
this statute, it may be made to include railroads, yet it is
evident from other considerations now to be mentioned that
the real meaning of the legislature would not include them,
and they must for that reason be excluded. It is said that
this meaning is plainly to be inferred, because of funda-
mental differences both in an economic way and before the
law between trade and manufacture on the one hand, and
railroad transportation on the other. Among these dif-
ferences are the public character of railroad business, and
as a result the peculiar power of control and regulation
possessed by the state over railroad companies. The trader
or manufacturer, on the other hand, carries on an entirely
private business, and can sell to whom he pleases; he may
charge different prices for the same article to different
individuals; he may charge as much as he can get for the
article in which he deals, whether the price be reasonable
or unreasonable; he may make such discrimination in his
business as he chooses, and he may cease to do any business
whenever his choice lies in that direction; while, on the
contrary, a railroad company must transport all persons and
property that come to it, and it must do so at the same
price for the same service, and the price must be reasonable
and it can not at its will discontinue business. It is also
urged that there are evils arising from unrestricted com-
petition in regard to railroads which do not exist in regard
to any other kind of property; that it is also admitted by
the latest and best writers on the subject, and that practical
experience of the results of unrestricted competition among
railroads tends directly to the same view; that the differ-
ence between railroad properties on the one hand and all
other kinds of property on the other hand, is so plain that
entirely different economic results follow from unrestricted
competition among railroads from those which obtain in
regard to all other kinds of business. It is also said that
the contemporaneous industrial history of the country, the
legal situation in regard to railroad properties at the time
TRANSPORTATION AGENCIES. 545

of the enactment of this statute, its legislative history, the
ancient and constantly maintained different legal effect and
policy regarding railway transportation and ordinary trade
and manufacture, together with a just regard for interests
of such enormous magnitude as are represented by the rail-
roads of the country, all tend to show that Congress, in
passing the Anti-Trust Act, never could have contemplated
the inclusion of railroads within its provisions. It is, there-
fore, claimed to be the duty of the court, in carrying out
the rule of statutory construction above stated, to restrict
the meaning of these general words of the statute which
would include railroads, because, from the considerations
above mentioned, it is plain that Congress never intended
that railroads should be included.

‘‘Many of the foregoing assertions may be well doubted,
while at the same time the correctness of the conclusions
sought to be drawn therefrom need not be conceded. The
points of difference between the railroads and other corpora-
tions are many and great. It can not be disputed that a
railroad is a public corporation, and its business pertains
to and greatly affects the public, and that it is of a public
nature. The company may not charge unreasonable prices
for transportation, nor can it make unjust discriminations,
nor select its patrons, nor go out of business when it chooses,
while a mere trading or manufacturing company may do all
these things. But the very fact of the public character of
a railroad would itself seem to call for special care by the
legislature in regard to its conduct, so that its business
should be carried on with as much reference to the proper
and fair interests of the public as possible. While the points
of difference just mentioned and others do exist between
the two classes of corporations, it must be remembered they
have also some points of resemblance. Trading, manufac-
turing and railroad corporations are all engaged in the
transaction of business with regard to articles of trade and
commerce, each in its special sphere, either in manufacturing
or trading in commodities or in their transportation by rail.
546 THE SHERMAN ANTI-TRUST ACT.

A contract among those engaged in the latter business by
which the prices for the transportation of commodities
traded in or manufactured by the others is greatly en-
hanced from what it otherwise would be if free competition
were the rule, affects and to a certain extent restricts trade
and commerce, and affects the price of the commodity. Of
this there can be no question. Manufacturing or trading
companies may also affect prices by joining together in
forming a trust or other combination, and by making agree-
ments in restraint of trade and commerce, which, when car-
ried out, affect the interests of the public. Why should
not a railroad company be included in general legislation
aimed at the prevention of that kind of agreement made
in restraint of trade, which may exist in all companies,
which is substantially of the same nature wherever found,
and which tends very much towards the same results, whether
put in practice by a trading and manufacturing or by a rail-
road company? It is true the result of truts, or combina-
tions of that nature, may be different in different kinds of
corporations, and yet they all have an essential similiarity,
and have been induced by motives of individual or corporate
aggrandizement as against the public interest. In business
or trading combinations they may even temporarily, or per-
haps permanently, reduce the price of the article traded in
or manufactured, by reducing the expense inseparable from
the ruuning of many different companies for the same pur-
pose. Trade or commerce under those circumstances may
nevertheless be badly and unfortunately restrained by
driving out of business the small dealers and worthy men
whose lives have been spent therein, and who might be
unable to readjust themselves to their altered surroundings.
Mere reduction in the price of the commodity dealt in
might be dearly paid for by the ruin of such a class, and
the absorption of control over one commodity by an all-
powerful combination of capital. In any great and extended
change in the manner of method of doing business it seems
to be an inevitable necessity that distress and, perhaps, ruin
shall be its accompaniment in regard to some of those who
TRANSPORTATION AGENCIES. 547

were engaged in the old methods. A change from stage
coaches and canal boats to railroads threw at once a large
number of men out of employment; changes from hand
labor to that of machinery, and from operating machinery
by hand to the application of steam for such purpose, leave
behind them for the time a number of men who must seek
other avenues of livelihood. These are misfortunes which
seem to be necessary accompaniment of all great industrial
changes. It takes time to effect a readjustment of industrial
life so that those who are thrown out of their old employ-
ment by reason of such changes as we have spoken of, may
find opportunities for labor in other departments than those
to which they have been accustomed. It is a misfortune,
but yet in such cases it seems to be the inevitable accom-
paniment of change and improvement.

“It is wholly different, however, when such changes are
effected by combinations of capital, whose purposes in com-
bining is to control the production of manufacture of any
particular article in the market, and by such control dictate
the price at which the article shall be sold, the effect being
to drive out of business all the small dealers in the com-
modity and to render the public subject to the decision of
the combination as to what price shall be paid for the
article. In this light it is not material that the price of an
article may be lowered. It is in the power of the combina-
tion to raise it, and the result in any event is unfortunate
for the country by depriving it of the services of a large
number of small but independent dealers who were familiar
with the business and who had spent their lives in it, and
who supported themselves and their families from the small
profits realized therein. Whether they be able to find other
avenues to earn their livelihood is not so material, because
it is not for the real prosperity of any country that such
changes should occur which result in transferring an inde-
pendent business man, the head of his establishment, small
though it might be, in to a mere servant or agent of a
corporation for selling the commodities which he once
548 THE SHERMAN ANTI-TRUST ACT.

manufactured or dealt in, having no voice in shaping the
business policy of the company and bound to obey orders
issued by others. Nor is it for the substantial interests of
the country that any one commodity should be within the
sole power and subject to the sole will of one powerful
combination of capital. Congress has, so far as its juris-
diction extends, prohibited all contracts or combinations in
the form of trusts entered into for the purpose of restrain-
ing trade and commerce. The results naturally flowing
from a contract or combination in restraint of trade or
commerce when entered into by a manufacturing or trading
company such as above stated, while differing somewhat
from those which may follow a contract to keep up the
transportation rates by railroads, are nevertheless of the
same nature and kind, and the contracts themselves do not
so far differ in their nature that they may not all be
treated alike and be condemned in common.

“It is entirely appropriate generally to subject corpora-
tions or persons engaged in trading or manufacturing to
different rules from those applicable to railroads in their
transportation business; but when the evil to be remedied
is similar in both kinds of corporations, such as contracts
which are unquestionably in restraint of trade, we see no
reason why similar rules should not be promulgated in regard
to both, and both be covered in the same statute by gen-
eral language sufficiently broad to include them both. We
see nothing either in contemporaneous history, in the legal
situation at the time of the passage of the statute, in its
legislative history, or in any general difference in the nature
or kind of these trading or manufacturing companies from
railroad companies, which would lead us to the conclusion
that it can not be supposed the legislature, in prohibiting
the making of contracts in restraint of trade, intended to
include railroads within the purview of that act.’’ 5

5 United States v. Trans-Mis-

souri Freight Ass’n, 166 U. §S.
290; 17 Sup. Ct. 540; 41 L. Ed.
TRANSPORTATION AGENCIES. 549

§ 272. Anti-Trust Act Applies to Railways—Uncertainty
of Act—Difficulty of Determining what is ‘‘Commerce’’—
Trusts.—Concerning the uncertainty of the Anti-Trust Act
as applicable to railway companies, it was said in the first
transportation case before the Supreme Court where rail-
roads were concerned:

‘Neither is the statute, in our judgment, so uncertain in
its meaning, nor its language so vague, that it ought not to
be held applicable to railroads. It prohibits contracts, com-
binations, etc., in restraint of trade or commerce. Trans-
porting commodities is commerce, and if from one state to
or through another it is interstate commerce. To be reached
by the federal statute it must be commerce among the sev-
eral states or with foreign nations. When the act prohibits
contracts in restraint of trade or commerce, the plain
meaning of the language used includes contracts which
relate to either or both subjects. Both trade and commerce
are included so long as each relates to that which is inter-
state or foreign. Transportation of commodities among the
several states or with foreign nations falls within the de-
scription of the words of the statute with regard to that
subject, and there is also included in that language that
kind of trade in commodities among the states or with
foreign nations which is not confined to their mere trans-
portation. It includes their purchase and sale. Precisely
at what point in the course of trade in or manufacture of
commodities the statute may have effect upon them, or upon
contracts relating to them, may be somewhat difficult to
determine, but interstate transportation presents no difficul-
ties. In United States v. E. C. Knight Co.,* heretofore cited,

1007, reversing 58 Fed. 58; 7 C. 6156 U. S. 1; 15 Sup. Ct. 249;
C. A. 15; 19 U. S. App. 36; 24 39 L. Ed. 325; affirming 9 C. C. A.
L. R. A. 73; 3 Interst. Com. Rep. 297; 17 U. S. App. 466; 60 Fed.
443; which affirmed 53 Fed. 440. 934; 24 L. R. A. 428.

United States v. Union Pacifie Ry.

Co., 226 U. S. 61, 470; 33 Sup. Ct.

53; 57 L. Ed.
550 THE SHERMAN ANTI-TRUST ACT.

it was in substance held, reiterating the-language of Mr.
Justice Lamar in Kidd v. Pearson,’ that the intent to
manufacture or export a manufactured article to foreign
nations or to send it to another state did not determine the
time when the article or product passed from the control
of the state and belonged to commerce. The difficulty in
determining that question, however, is no reason for denying
effect to language which, by its terms, plainly includes the
transportation of commodities among the several states or
with foreign nations, and which may also be the subject of
contracts or combinations in restraint of such commerce.
The difficulty of the subject, so far as the trade in or the
manufacture of commodities is concerned, arises from the
limited control which Congress has over the matter of trade
or manufacture. It was said by Mr. Justice Lamar, in
Kidd v. Pearson, supra; ‘If it be held that the term
commerce includes the regulation of all such manufacturers
as are intended to be the subject of commercial transactions
in the future, it is impossible to deny that it would also
include the productive industries that contemplate the same
thing. The result would be that Congress would be invested,
to the exclusion of the states, with the power to regulate,
not only manufacturers, but also agriculture, horticulture,
stock raising, domestic fisheries and mining—in short, every
branch of human industry.’ In the Knight Company case
(supra) it was said that this statute applied to monopolies
in restraint of interstate or international trade or commerce,
and not to monopolies in the manufacture even of a neces-
sary of life. It is readily seen from these cases that if the
act do not apply to the transportation of commodities by
railroads from one state to another or to foreign nations, its
application is so greatly limited that the whole act might as
well be held inoperative.

7128 U. S.1; 9 Sup. Ct. 6; 32
L. Ed. 346; affirming 72 Iowa 348;
34 N. W. 1.
TRANSPORTATION AGENCIES. 551

‘Still another ground for holding the act inapplicable is
urged, and that is that the language covers only contracts or
combinations like trusts or those which, while not exactly
trusts, are otherwise of the same form or nature. This is
clearly not so.

‘While the statute prohibits all combinations in the form
of trusts or otherwise, the limitation is not confined to that
form alone. All combinations which are in restraint of trade
or commerce are prohibited, whether in the form of trusts or
in any other form whatever.

We think, after a careful examination, that the statute
covers, and was intended to cover, common carriers by rail-
road.’’&

§ 273. Commerce Act Consistent With Sherman Anti-
Trust Act.—In the first transportation case that reached the
United States Supreme Court it was argued by the railway
companies that the agreement in question was authorized
by the Interstate Commerce Act, that it was a special statute
applicable only to railroads, and that a construction of the
Anti-Trust Act (which is a general statute) so as to include
within its provisions the case of railroads, carried with it
the repeal by implication of so much of it (Commerce Act)
as authorized the agreement. ‘‘It is added that there is no
language in the Trust Act which is sufficiently plain to in-
dicate a purpose to repeal those provisions of the Com-
merce Act which permit the agreement; that both acts may

8 United States v. Trans-Mis-
souri Freight Ass’n, 166 U. S.

U. S. App. 762, which affirmed 76
Fed. 895; Minnesota v. Northern

290; 17 Sup Ct. 540; 41 L. Ed.
1007; reversing 58 Fed. 58; 7 C.
C. A. 15; 19 U. S. App. 36; 24
L. R. A. 73; 3 Interst. Com Rep.
443; which affirmed 53 Fed 440.
United States v. Joint Traffic
Ass’n, 171 U. 8. 505; 19 Sup. Ct.
25; 43 L. Ed. 259; reversing 89
Fed. 1020; 32 C. C. A. 491; 45

Securities Co., 123 Fed. 692; re-
versed, but not on this point, 194
U. S. 48; 24 Sup. Ct. 598; 48 L.
Ed. 870; United States v. Reading
Co., 228 U. S. 810; 33 Sup. Ct.
90; 57 L. Ed. —; affirming in
part and reversing in part 183
Fed. 427.
552 THE SHERMAN ANTI-TRUST ACT.

stand, the special or Commerce Act as relating solely to
railroads and their proper regulation and management, while
the later and general act will apply to all contracts of the
nature therein described, entered into by any one other
than competing common carriers by railroad for the pur-
pose of establishing rates of traffic for transportation. On
a line with this reasoning it was said that if Congress has
intended to in any manner affect the railroad carrier as gov-
erned by the Commerce Act, it would have amended that act
directly and in terms, and not have left it as a question of
construction to be determined whether so important a change
in the commerce statute had been accomplished by the
passage of the statute relating to trusts.’’

The court answered this argument by saying that, in its
opinion, the Commerce Act did not authorize the agreement
under consideration, although it did not in direct terms
prohibit it. ‘‘As the Commerce Act does not authorize this
agreement, argument against a repeal by implication, of the
provisions of the act which it is alleged grant such authority
becomes ineffective. There is no repeal in the case, and both
statutes may stand, as neither is inconsistent with the
other.’’ ®

§ 274. Trans-Missouri Freight. Association Case—No In-
tention to Restrain Commerce.—This was the second case
brought on the Sherman Anti-Trust Act which came before
the Supreme Court of the United States; and that Act, as
applied to railway companies, was very carefully considered
by the court and discussed at great length. Several rail-
way companies entered into a combination ‘‘For the purpose

“The Sherman Anti-Trust Act is
an independent statute. It can

® United States v. Trans-Mis-
souri Freight Ass’n., 166 U. S.

290; 17 Sup. Ct. 540; 41 L, Ed.
1007; reversing 58 Fed. 58; 7 C.
C. A. 15; 19 U. S. App. 36; 24
L. R. A. 73; 3 Interst. Com. Rep.
443, which affirmed 76 Fed. 895.

not be held out or assisted by the
Interstate Commerce Act to create
an offense under it.” United
States v. Atchison, T. & 8. F Ry.
Co., 142 Fed. 176.
TRANSPORTATION AGENCIES. 553

of mutual protection by establishing and maintaining rea-
sonable rates, rules and regulations on all freight traffic,
both through and local.’’ Those signing the memorandum
agreed to be governed by its provisions. The combination
covered many states and several territories. The agreement
provided for the election of a chairman of the organization
and for meetings at Kansas City. Each railway company
was to designate to the chairman one person who should be
held personally responsible for rates on his road; be present
at all regular meetings, when possible, and represent the
road, unless a superior officer was present; if he was unable
to attend, he was to send a substitute. One section pro-
vided that ‘‘A committee shall be appointed to establish
rates, rules and regulations on the traffic subject to this as-
sociation, and to consider changes therein, and make rules for
meeting the competition of outside lines. Their conclusions,
when unanimous, shall be made effective when they so order,
but if they differ the question at issue shall be referred to
the managers of the lines parties’’ thereto; and if these
managers disagree, then the question was to be arbitrated in
a particular manner. A written notice of any proposed re-
duction in rates or change in any rule or regulation govern-
ing freight traffic had to be given the chairman five days
prior to each monthly meeting the association was required
to consider and vote upon all changes proposed, of which
a notice had been given, and all parties were bound by the
decision as expressed, unless at the time the parties gave
the association definite written notice that, within ten days
they would make such modification notwithstanding the vote.
If any member insisted upon a reduction of rate against
the views of the majority, or if the majority favored it, and
if, in the judgment of the majority, the rates so made af-
fected seriously the rates upon the other traffic, then the
association might, by a majority vote, upon such other
traffic put into effect corresponding rates to take effect on
the same day. By unanimous consent any rate, rule or
regulation concerning freight traffic might be modified at
554 THE SHERMAN ANTI-TRUST ACT.

<ny meeting without previous notice. Each member at his
peril, might, at any time, without previous notice, make such
rate, rule or regulation as might be necessary to meet the
competition of lines not members of the association, giving
ai the time notice to the chairmen of the change, who, if
he decided such rates was not necessary to meet such com-
petition should notify the members of that fact, and it
should ‘‘immediately withdraw such rate.’’ At the next
ineeting of the association if two-thirds of the members
decided that this rate so made was not made in good faith
to meet such competition, the member offending was subject
to a penalty of not to exceed one hundred dollars; but if
the decision was that it, was made in good faith to meet com-
petition, then it should be considered as authority for the
rate so made. All arrangements with connecting lines for the
division of through rates relating to traffic covered by the
agreement had to be made by authority of the association.
But if one railroad had a proprietary interest in another,
the divisions between them should be what they elected,
and should not be the property of the association. Traffic
contracts in force when the agreement was executed between
lincs not having common proprietary interests were to be
reported, so far as divisions were concerned, to the associa-
tion, to the end that divisions with competing lines might be
made on equally favorable terms, if deemed advisable. The
chairman was required to investigate all apparent violations
of the agreement, and report his findings to the association
which might inflict a fine, not to exceed one hundred dol-
lars. If any party agreed with any one else, to secure a
reduction or change in rates, as fixed in the rules and
regulations, it was liable to a like fine. Ten days after
notice of the fine imposed, the chairman notified the offend-
ing party, drew a draft for the amount of the fine which
was used to defray the expenses of the association, the of-
fending party not to receive any benefit from it. Wilful
underbilling in weights, or billing of freight at a wrong
classification, was declared to be a violation of the agree-
TRANSPORTATION AGENCIES. 555

ment: and the rules and regulations of any weighing as-
sociaiion or inspection bureau, as established by it or as
cntorced by its officers and agents, were declared binding,
and any wilful violation of them subjected the offenders to
a fine. Eighteen railroads, besides the Traffic Association,
were parties to this agreement; and the government brought
suit to have it declared illegal and void and the association
dissolved, and alleged that under the agreement rates un-
duly high were exacted of the public. The lower court
held that the agreement did not constitute an illegal com-
bination in restraint of interstate commerce ;”° and on appeal
to the Cireuit Court of Appeals this decision was af-
firmed; but on appeal to the Supreme Court both de-
cisions were reversed, the court holding the agreement within
the prohibition of the Sherman Act, saying: ‘‘In the view
we have taken of the question the intent alleged py the
government is not necessary to be proved. The question is
one of law in regard to the meaning and effect of the
agreement itself, namely: Does the agreement restrain
trade or commerce n any way so as to be a violation of
the Act. We have no doubt that it does. The agreement on
its face recites that it is entered into ‘for the purpose of
mutual protection by establishing and maintaining reason-
able rates, rules and regulations on all freight traffic, both
through and local.’ To that end the association is formed
and a body created which is to adopt rates, which, when
agreed to, are to be the governing rates for all companies,
and a violation of which subjects the defaulting company to
the payment of a penalty, and although the parties have
a right to withdraw from the agreement on giving thirty
days’ notice of a desire so to do, yet while in force and
assuming it to be lived up to, there can be no doubt that

10 United States v. Trans-Mis- 7 C. C. A. 15; 19 U. 8. App. 36;
souri Freight Ass’n, 53 Fed. 440. 24 L. R. A. 73; 3 Interst. Com.
11 United States v. Trans-Mis- Rep. 443.
souri Freight Ass’n, 58 Fed. 58;
506

THE SHERMAN ANTI-TRUST ACT.

its direct, immediate and necessary effect is to put a re-
straint upon trade or commerce as described in the act.
‘‘Mor these reasons the suit of the government can be
maintained without proof of the allegation that the agree-
ment was entered into for the purpose of restraining trade
or commerce or for maintaining rates above what was rea-

sonable.

The necessary effect of the agreement is to restrain

trade or commerce, no matter what the intend was on the

part of those who signed it.’’”?

12 United States v. Trans-Mis-
souri Freight Association, 166 U.
S. 290; 17 Sup. Ct. 540; 41 L.
Ed. 1007, reversing 58 Fed. 58;
19 U.S. App. 36; 24 L. R. A. 73;
3 Interst. Com. Rep. 448; 7 C. C.
A. 15, which affirmed 53 Fed. 440.
The principal opinion contained a
lengthy quotation from District
Justice Shiras’s dissenting opin-
ion, with words of approval. Jus-
tice White, with whom concurred
Justices Field, Gray and Shiras,
dissented in a lengthy opinion.
See article of William D. Guthrie
in Harvard Law Review 80, May
No., 1897, on unconstitutionality
of the Sherman Act as interpreted
in this and the next case. A very
similar contract was held to be a
violation of the Sherman Act the
next year (1898) after the above
case was decided. United States v.
Joint Traffic Ass’n, 171 U. 8S. 505;
19 Sup. Ct. 25; 43 L. Ed. 259;
reversing 89 Fed. 1020; 32 C. C.
A. 491; 45 U. S. App. 762,
which affirmed 76 Fed. 895.
This case was argued at great
length by able counsel notwith-
standing the decision in the Trans-
Missouri case. This case has been
approved in Delaware etc. R. Co.
v. Frank, 110 Fed. 689; State v.

Armour Packing Co., 173 Mo.
356; 73 S. W. 645; 61 L. R. A.
464; 96 Am. St. 515; National
Lead Co. v. Grote Paint Store Co.,
80 Mo. App. 247; Tift v. Southern
Ry. Co., 138 Fed. 753; and distin-
guished in Cincinnati etc., Packet
Co. v. Bay, 200 U. 8. 179: 26
Sup. Ct. 208; 50 L. Ed. 433; and
Monongahela ete. Coke Co. v.
Jutte, 210 Pa. St. 288; 59 Atl.
1088; 105 Am. St. 812. There was
a clause in the agreement not con-
tained in the agreement involved
in the Trans-Missouri Traffic case,
as follows: “To aid in fulfilling
the purpose of the Interstate Com-
merce Act, to co-operate with each
other and adjacent transportation
associations to establish and main-
tain reasonable and just rates,
fares, rules and regulations on
state and interstate traffic, to pre-
vent unjust discrimination and to
secure the reduction and concen-
tration of agencies and the intro-
duction of economics in the con-
duct of the freight and passenger
service, The powers conferred upon
the managers shall be so construed
and exercised as not to permit
violation of the Interstate Com-
merce Act, or any other law appli-
cable to the premises, or any pro-
TRANSPORTATION AGENCIES. 507

§ 275. Combination Necessary to Prevent Ruinous Rates
—Promotion of Trade—In considering the agreements in-
volved in the Joint Traffic Association Case, it was claimed,
just as had been done in the Trans-Missouri Freight As-
sociation Case, that combinations concerning rates were es-
sential to the welfare, if not the very lives, of railway
companies; and that the agreement involved were ‘‘promo-
tive instead of in restraint of trade.’’ To this the court
said:

‘This conclusion is reached by counsel after an examina-
tion of the peculiar nature of railroad property and the
alleged baneful effects of competition upon it and also upon
the public. It is stated that the only resort open to rail-
roads to save themselves from the effects of a ruinous com-
petition is that of agreements among themselves to check
and control it. A ruinous competition is, as they say, apt
to be carried on until the weakest of the combatants goes
to destruction. After that the survivor, being relieved from
competition, proceeds to raise its prices as high as the busi-
ness will bear. Commerce, it is said thus finally becomes
restrained by the effects of competition, while, at the same
time, otherwise valuable railroad property is thereby de-
stroyed or greatly reduced in value. There can be no doubt
that the general tendency of competition among competing
railroads is towards lower rates for transportation, and the
result of lower rates is generally a greater demand for the
articles so transported and this greater demand for the
articles so transported, can only be gratified by a larger sup-
ply, the furnishing of which increases commerce. This is the
first and direct result of competition among railroad carriers.

vision of the charters or the laws established hereunder. The man-
applicable to any of the companies agers are charged with the duty of
parties hereto, and the managers securing to each company party
shall co-operate with the Inter- hereto equitable proportions of the
state Commerce Commission to competitive traffic covered by this
secure stability and uniformity in agreement so far as can be legally
the rates, fares, charges and rules done.”
558 THE SHERMAN ANTI-TRUST ACT.

‘‘In the absence of any agreement restraining competition,
this result, it is argued, is neutralized, and the opposite one
finally reached by reason of the peculiar nature of railroad
property which must be operated and the capital invested in
which cannot be withdrawn, and the railroad managers are
therefore, as is claimed, compelled to not only compete
among themselves for business but also to carry on the war
of competition until it shall terminate in the utter destruc-
tion or the buying up of the weaker roads, after the sur-
vivor will raise the rates as high as is possible. Thus the
indirect but final effect of competition is claimed to be the
raising of rates and the consequent restraint of trade, and
it is urged that this result is only to be prevented by such
an agreement as we have here. In that way alone it is said
that competition is overcome, and general uniformity and
reasonableness of rates securely established.

‘‘The natural, direct and immediate effect of competition
is, however, to lower rates, and to thereby increase the de-
mand for commodities, the supplying of which increases
commerce, and an agreement, whose first and direct effect is
to prevent this play of competition, restrains instead of
promoting trade and commerce. Whether, in the absence of
an agreement as to rates, the consequences described by
counsel will in fact follow as a result of competition, is a
matter of very great uncertainty, depending upon many
contingencies and in large degree upon the voluntary action
of the managers of the several roads. Railroad companies
may and often do continue in existence and engage in their
lawful traffic at some profit, although they are competing
railroads and are not acting under any agreement or com-
bination with their competitors upon the subject of rates.
It appears from the brief of counsel in this case that the
agreement in question does not embrace all of the lines or
systems engaged in the business of railroad transportation
between Chicago and the Atlantic Coast. It cannot be said
that destructive competition or, in other words, war to
TRANSPORTATION AGENCIES. 559
the death, is bound to result unless an agreement or com-
bination to avoid it is entered into between otherwise com-
peting roads,

‘Tt is not only possible but probable that good sense and
integrity of purpose would prevail among the managers, and
while making no agreement and entering into no combina-
tion by which the whole railroad interest as herein repre-
sented should act as one combined and consolidated body,
the managers of each road might yet make such reasonable
charges for the business done by it as the facts might jus-
tify. An agreement of the nature of this one which di-
rectly and effectually stifles competition, must be regarded
under the statute as one in restraint of trade, notwithstand-
ing there are possibilities that a restraint of trade may also
follow competition that may be indulged in until the
weaker roads are completely destroyed and the survivor
thereafter raises rates and maintains them.’’!®

§ 276. Unrestricted Competition Working a Restraint of
Trade—An agreement which directly and effectually pre-
vents competition is condemned by the statute notwithstand-
ing a possibility that a restraint of trade might also follow
unrestricted competition, which might destroy weaker roads
and give the survivors power to raise rates.**

§277. Unreasonable Restraint—Trans-Missouri Freight
Ass’n Case—The court declined to interpret the statute to
mean only an unreasonable restraint of traffic, as the rail-
way companies contended. Those companies contended that

18 United States v. Joint Traf-
fie Ass’n, 171 U. S. 505; 19 Sup.
Ct. 25; 43 L. Ed. 259; reversing
89 Fed. 1020; 32 C. C. A. 491;
45 U. S. App. 762; which affirmed
76 Fed. 895.

14 This clearly appears from the
quotation made from the case of

the United States v. Joint Traffic
Association, 171 U. 8. 505; Sup.
Ct.; L. Ed.; reversing 89 Fed.
1020; 32 C. C. A. 491; 45 U.S.
App. 762, which affirmed 76 Fed.

895.
560

THE SHERMAN ANTI-TRUST ACT.

this interpretation was necessary to prevent ruinous compe-
tition; and if not, railroads would be ruined by law compet-

ing rates.1®

15 We give here the argument of
the companies as outlined by Jus-
tice Peckham: “The great stress
of the argument for the defend-
ants on this branch of the case
has been to show, if possible, some
reason in the attendant circum-
stances, or some fact existing in
the nature of railroad property
and business upon which to found
the claim, that although by the
language of the statute agreements
or combinations in restraint of
trade or commerce are included,
the statute really means to de-
clare illegal only those contracts,
ete., which are in unreasonable re-
straint of trade. In order to do
this the defendants call attention
to many facts which they have al-
ready referred to in their argu-
ment, upon the point that rail-
roads were not included at all in
the statute. They again draw at-
tention to the fact of the peculiar
nature of railroad property. When
a railroad is once built, it is said,
it must be kept in operation; it
must transport property, when
necessary in order to keep its bus-
iness, at the smallest price and
for the narrowest profit, or even
for no profit; provided running
expenses can be paid for, rather
than not to do the work; that rail-
road property can not be altered
for use for any other purpose, at
least without such loss as may
fairly be called destructive; that
competition while, perhaps, right
and proper in other business, sim-
ply leads in railroad business to

financial ruin and insolvency, and
to the operation of the road by
receivers in the interest of its cred-
itors instead of in that of its own-
ers and the public; that a contest
between a receiver of an insolvent
corporation and one which is still
solvent tends to ruin the latter
company, while being of no bene-
fit to the former; that a receiver
is only bound to pay operating ex-
penses so he can compete with the
solvent company and oblige it to
come down to prices incompatible
with any profit for the work done,
and until ruin overtakes it to the
destruction of innocent stockhold-
ers and the impairment of the
public interests. To the question
why competition should necessar-
ily be conducted to such an extent
as to result in this relentless and
continued war, to eventuate, only
in the financial ruin of one or all
of the companies indulging in it,
the answer is made that if com-
peting railroad companies be left
subject to the sway of free and un-
restricted competition the results
above foreshadowed necessarily
happen from the nature of the
case; that competition being the
rule, each company will seek busi-
ness to the extent of its power,
and will underbid its rival in or-
der to get the business, and such
underbidding will act and react
upon such company until the
prices are so reduced as to make
it impossible to prosper or live
under them; that it is too much
to ask of human nature for one
TRANSPORTATION AGENCIES. 561

“These arguments,’’ said the court, ‘‘it must be confessed,
bear with much force upon the policy of an act which would
prevent a general agreement upon the question of rates
among competing railroad companies to the extent simply
of maintaining those rates which were reasonable and fair,’’
and then added:

“‘There is another side to this question, however, and it
may not be amiss to refer to one or two facts which tend
to somewhat modify and alter the light in which the subject
should be regarded. If only that kind of contract which is
in unreasonable restraint of trade be within the meaning
of the statute, and declared therein to be illegal, it is at.
once apparent that the subject of what is a reasonable rate
is attended with great uncertainty. What is proper standard
by which to judge the fact of reasonable rates? Must the
rate be so high as to enable the return for the whole busi-
ness done to amount to a sum sufficient to afford the share-
holder a fair and reasonable profit upon his investment?

If so, what is a fair and reasonable profit?

company to insist upon charges
sufficiently high to afford a rea-
sonable compensation, and while
doing so to see its patrons leave
for rival roads who are obtaining
its business by offering less rates
for doing it than can be afforded
and a fair profit obtained there-
from. Sooner than experience ruin
from mere inanition, efforts will
be made in the direction of meet-
ing the underbidding of its rival
until both shall end in ruin. The
only refuge, it is said, from this
wretched end lies in the power of
competing roads agreeing among
themselves to keep up prices for
transportation to such sums as
shall be reasonable in themselves,
and to agree not to attack each
other but to keep up reasonable

That depends

and living rates for the services
performed. It is said that as rail-
roads have a right to charge rea-
sonable rates it must follow that a
contract aomng themselves to keep
up their charges to that extent is
valid. Viewed in the light of all
these facts it is broadly and con-
fidently asserted that it is impos-
sible to believe that Congress or
any other intelligent and honest
legislative body could ever have
intended to include all contracts
or combinations in restraint of
trade, and as a consequence there-
of to prohibit competing railways
from agreeing among themselves
to keep up prices for transporta-
tion to such a rate as should be
fair and reasonable.”
562 THE SHERMAN ANTI-TRUST ACT.

sometimes upon the risk incurred, and the rate itself differs
in different localities: which is the one to which reference
is to be made as the standard? Or is the reasonableness of
the profit to be limited to a fair return upon the capital
that would have been sufficient to build and equip the
road, if honestly expended? Or is still another standard
to be created and the reasonableness of the charges tried
by the cost of the carriage of the article and a reasonable
profit allowed on that? And in such case would contribution
to a sinking fund to make repairs upon the roadbed and
renewal of cars, etc., be assumed as a proper item? Or is
the reasonableness of the charge to be tested by reference
to the charges for the transportation of the same kind of
property made by other roads similarly situated? If the
latter, a combination among such roads as to rates would,
of course, furnish no means of answering the question. It
is quite apparent, therefore, that it is exceedingly difficult
to formulate even the terms of the rule itself which should
govern in the matter of determining what would be reason-
able rates for transportation. While even after the standard
should be determined there is such an infinite variety of
facts entering into the question of what is a reasonable rate,
no matter what standard is adopted, that any individual
shipper would in most cases be apt to abandon the effort
to show the unreasonable character of a charge, sooner than
hazard the great expense in time and money necessary to
prove the fact, and at the same time incur the ill-will of the
road itself in all his future dealings with it. To say, there-
fore, that the Act excludes agreements which are not in un-
reasonable restraint of trade, and which tend simply to
keep up unreasonable rates for transportation, is substan-
tially to leave the question of reasonableness to the com-
panies themselves.

‘“‘The business which the railroads do is of a public nature,
closely affecting almost all classes in the community—the
farmer, the artisan, the manufacturer and the trader. It
is of such a public nature that it may well be doubted, to
TRANSPORTATION AGENCIES. 563

say the least, whether any contract which imposes any re-
straint upon its business would not be prejudicial to the
public interest.

‘We recognize the argument upon the part of the de-
fendants that restraint upon the business of railroads will
not be prejudicial to the public interest so long as such
restraint provides for reasonable rates for transportation
and prevents the deadly competition so liable to result in
the ruin of the roads and to thereby impair their usefulness
to the public, and in that way to prejudice the public in-
terest. But it must be remembered that these results are by
no means admitted with unanimity; on the contrary, they
are earnestly and warmly denied on the part of the public
and by those who assume to defend its interests both in and
out of Congress. Competition, they urge, is a necessity for
the purpose of securing in the end just and proper rates.

“*Considering the public character of such corporations,
the privileges and franchises which they have received from
the public orler that they might transact business, and bear-
ing in mind how closely and immediately the question of
rates for transportation affects the whole public, it may be
urged that Congress had in mind all the difficulties which
we have before suggested of proving the unreasonableness
of the rate, and might, in consideration of all the circum-
stances, have deliberately decided to prohibit all agreements
and combinations in restraint of trade or commerce, regard-
less of the question whether such agreements were reason-
able or the reverse.’’?®

§ 278. Charging Reasonable Rates Different from Com-
bining to Fix the Same Rates.—‘‘The claim that the com-
pany has the right to charge reasonable rates, and that,
therefore, it has the right to enter into a combination with

16 United States v. Trans-Mis- C. A. 15; 19 U. S. App. 36; 24
souri Freight Association, 166 U. lL. R. A. 73; 3 Interst. Com. Rep.
S. 290; 17 Sup. Ct. 540; 41 L. Ed. 448; which affirmed 53 Fed. 440.
1007, reversing 58 Fed. 58; 7 C.
064 THE SHERMAN ANTI-TRUST ACT.
competing roads to maintain such rates, cannot be admitted.
The conclusion does not follow from an admission of the
premise. What one company may do in the way of charg-
ing reasonable rates is radically different from entering
into an agreement with other and competing roads to
keep up the rates to that point. If there be any competi-
tion to the extent of the charge for the service will be
seriously affected by that fact. Competition will itself bring
charges down to what may be reasonable, while in the case
of an agreement to keep prices up competition is allowed
no play; it is shut out, and the rate is practically fixed by
the companies themselves by virtue of the agreement, so
long as they abide by it.’’!”

§ 279. Observations on the Trans-Missouri Freight and
Joint Traffic Cases.—These were the two first cases involving
combination of common carriers, and both cases were re-
versed. They were argued at great length by as able counsel
as could be found. No effort was spared to secure de-
cisions favorable to the combination the railroad companies
had entered into. The Trans-Missouri Traffic case was first
argued at great length,1® and the same argument with ad-
ditions thereto was presented in the Joint Traffic case,”
and a petition was filed for a rehearing in the former case.”

17 United States v. Trans-Mis-
sonri Freight Association, 166 U.
S. 290; 17 Sup. Ct. 540; 41 L.
Ed. 1007; reversing 58 Fed. 58;
19 U. S. App. 36; 24 L. R. A. 73;
3 Interst. Comp. Rep. 443; which
affirmed 7 C. C. A. 15; 53 Fed.
440; United States v. Joint Traf-
fic Association, 171 U. S. 505; 19
Sup. Ct. 25; 43 L. Ed. 259; re-
versing 89 Fed. 1020; 32 C. C. A.
491; 45 U. S. App. 762; which
affirmed 76 Fed. 895.

18 United States v. Trans-Mis-
souri Freight Association, 16é U.

S. 290; 17 Sup. Ct. 548; 41 L.
Ed. 1007; reversing 58 Fed. 58;
70. C. A. 15; 19 U. S. App. 36;
24 L. R. A. 73; 3 Interst. Com.
Rep. 443; which affirmed 58 Fed.
440.

18 United States v. Joint Traffic
Asso., 171 U. S. 505; 19 Sup. Ct.
25; 438 L. Ed. 259; reversing 89
Fed. 1020; 32 C. C. A. 491; 45 U.
8S. App. 762; which affirmed 76
Fed. 895.

20“Soon after the decision a
petition for «a rehearing of the
case was made, supported by a
f

TRANSPORTATION AGENCIES. 565

Those two cases were instances of combinations of railway
companies by written agreements for the maintenance and

regulation of rates in their several territories.

There was

no provision for the pooling of earnings and a division of
them among the railway companies parties to the agree-

printed argument in its favor, and
pressed with an earnestness and
vigor and at length which was cer-
tainly commensurate with the im-
portance of the case. This court,
with care and deliberation and
also with a full appreciaton of
their importance, again considered
the questions involved in its for-
mer decision. A majority of the
court once more arrived at the
conclusion it had first announced,
and accordingly it denied the ap-
plication. And now for the third
time the same arguments are em-
ployed, and the court is again
asked to recant its former opin-
ion, and to decide the same ques-
tion in direct opposition to the
conclusion arrived at in the Trans-
Missouri case. The learned coun-
sel while making the application
frankly confess that the argument
in opposition to the decision in
the case above named has been so
fully, so clearly and so forcibly
presented in the dissenting opinion
of Mr. Justice White, that it is
hardly possible to add to it nor
is it necessary to repeat it. The
fact that there was so close a divi-
sion of opinion in this court when
the matter was first under advise-
ment, together with the different
views taken by some of the judges
of the lower courts, led us to the
most careful and scrutinizing ex-
amination of the arguments ad-
vanced by both sides, and it was

after such an examination that the
majority of the court came to the
conclusion it did. It is not al-
leged that the court on the former
occasion overlooked any argument
for the respondents or misapplied
any controlling authority. It is
simply insisted that the court,
notwithstanding the arguments for
an opposite view, arrived at an
erroneous result, which, for rea-
sons already stated, ought to be
reconsidered and reversed. Aud we
have twice already deliberately and
earnestly considered the same ar-
guments which are now for a third
time pressed upon our attention,
it could hardly be expected that
our opinion should now change
from that already expressed.
While an erroneous decision might
be in some cases properly recon-
sidered and overruled, yet it is
clear that the first necessity is

‘to convince the court that the de-

cision was erroneous. It is scarce-
ly to be assumed that such a re-
sult could be secured by the pres-
entation for a third time of the
same arguments which had twice
before been successfully urged
upon the attention of the court.
We have listened to them now be-
cause the eminence of the counsel
engaged, their earnestness and
zeal, their evident belief in the
correctness of their position, and,
most important of all, the very
grave nature of the questions ar-
566 THE SHERMAN ANTI-TRUST ACT.

ments according to a certain percentage basis, nor that a
particular company should have the entire amount of money
received for handling freight in a certain district or a
certain percentage of it. Nor was there an acquisition of
the stock of two or more companies by a holding company,
as in the Northern Securities case ;?! nor the gaining of con-
trol by another through the medium of purchasing a ma-
jority of its stock and thereby be enabled to stifle competi-
tion, as in the case of the Union Pacific case.??

§280. Holding Company—Northern Securities Case.—
Railway companies had failed in their efforts to prevent
competition among themselves resulting in ruinous rates.
They therefore hit upon another scheme. The Great North-
ern Railway and the Northern Pacific Railway Companies’
main lines of track were parallel and led from the Great
Lakes and the Mississippi River to Puget Sound on the Pa-
cific Coast. The stockholders conceived the scheme of organ-
izing a corporation under the New Jersey liberal laws of
incorporation to which they would transfer their stock and
receive back stock of the New Jersey company, in payment
for the stock transferred to it, a ‘‘holding company”’ as it
was afterwards popularly named. The New Jersey Com-
pany was incorporated, and more than nine-tenths of the
stock of the Northern Pacific, and more than three-fourths
of the stock of the Great Northern were transferred to it,
and the stockholders who delivered their stock to it received

gued, called upon the court to
again give to those arguments
strict and respectful attention. It
is not matter for surprise that we
still are unable to see the error
alleged to exist in our former de-
cision, or to change our opinion
regarding the questions therein in-
volved.” United States v. Joint
Traffic Ass’n, 171 U. 8. 505, 573;
19 Sup. Ct. 25; 43 L. Ed. 259;

reversing 89 Fed. 1020; 32 C. C.
A. 491; 45 U. 8. App. 762; which
affirmed 76 Fed. 895.

21 Northern Securities Co. v.
United States, 24 Sup. Ct. 436; 48
L. Ed. 679; 193 U. 8S. 197; affirm-
ing 120 Fed. 721.

22 United States v. Union Pacific
R. Co., 226 U. S. 61, 470; 33 Sup.
Ct. 53; 57 L. Ed., reversing 188
Fed. 102.
TRANSPORTATION AGENCIES. 567

from it the agreed amount of stock in payment for their
stock so transferred. As a result of this combination the
two railway companies ceased to be in active competition for
trade and commerce along their respective lines, and be-
came for all purposes, a powerful, consolidated corporation,
by the name of a holding corporation. The sole principle,
if not sole object for this formation of this company was
to carry out the purpose of the original combination under
which competition between the two companies would cease.
The court adjudged the combination illegal under the Anti-
Trust Act; and that the United States could maintain an
action, brought by its attorney-general after the comple-
tion of the transfer of the stock, in the Cireuit Court, to
enjoin the holding company from voting the stock trans-
ferred to it and from exercising any control whatever over
the acts and doings of the two railroad companies, and also
to enjoin these two railroad companies from paying divi-
dends to the holding corporation on any of the stock held by
it. The court considered that the holding company was
more properly the ‘‘custodian’’ than the owner of the stock
transferred to it. The principal opinion was written by
Justice Harlan (there was a dissenting opinion, as there is
in all these cases), and he thus describes the effect of the
combination.

‘“‘The stockholders of these two competing companies dis-
appeared, as such, for the moment, but immediately re-
appeared as to guard the interests of both sets of stock-
holders as a unit, and to manage, or cause to be managed,
both lines of railroad as if held in one ownership. Neces-
sarily by this combination or arrangement the holding com-
pany in the fullest sense dominates the situation in the in-
terest of those who were stockholders of the constituent
companies; as much so, for every practical purpose as if it
had been itself a railroad corporation which had built, -
owned, and operated both lines for the exclusive benefit of
its stockholders. Necessarily also, the constituent companies
ceased under such a combination to be in active competition
568 THE SHERMAN ANTI-TRUST ACT.

for trade and commerce along their respective lines, and
have become, practically, one powerful consolidated corpora-
tion, by the name of a holding corporation the principal,
if not the sole, object for the formation of which was to
carry out the purpose of the original combination under
which competition between the constituent companies would
cease. Those who were stockholders of the Great Northern
and Northern Pacific and became stockholders in the holding
company are now interested in preventing all competition
between the two lines, and as owners of stock or of cer-
tificates of stock in the holding company they will see to
it that no competition is tolerated. They will take care that
no persons are chosen directors of the holding company who
will permit competition between the constituent companies.
The resut of the combination is that all the earnings of the
constituent companies make a common fund in the hands
of the Northern Securities Company to be distributed, not
upon the basis of the earnings of the respective constituent
companies, each acting exclusively in its own interest, but
upon the basis of the certificates of stock issued by the holding
company. No scheme or device could more certainly come
within the words of the act—‘combination in the form of a
trust or otherwise * * * in restraint of commerce among
the several states or with foreign nations,’—or could more
effectively and certainly suppress free competition between
the constituent companies. This combination is, within the
meaning of the act, a ‘trust;’ but if not, it is a combination
in restraint of interstate and international commerce; and
that is enough to bring it under the condemnation of the
act. The mere existence of such a combination and the
power acquired by the holding company as its trustee, con-
stitute a menace to, and a restraint upon, that freedom of
commerce which Congress intended to recognize and protect,
and which the public is entitled to have protected. If such
combination be not destroyed, all the advantages that would
naturally come to the public under the operation of the
general laws of competition, as between the Great Northern
TRANSPORTATION AGENCIES.

569

and Northern Pacific Railway companies, will be lost, and
the entire commerce of the immense territory in the northern
part of the United States between the Great Lakes and the
Pacific at Puget Sound will be at the mercy of a single
holding corporation, organized in a state district from the

people of that territory.’’??”

23 Northern Securities Co. v.
United States, 193 U. 8. 197; 24
Sup. Ct. 436; 48 L. Ed. 67; af-
firming 120 Fed. 721. In a con-
curring opinion Justice Brewer
said: “If the parties interested in
these two railroad companies can,
through the instrumentality of a
holding corporation, place both
under one control, then in like
manner, as was conceded on the
argument by one of the counsel
for appellants, could the control of
all the railroad companies in the
country be placed in a single cor-
poration. Nor need this arrange-
ment for control stop with what
has already been done. The hold-
ers of $201,000,000 of stock in the
Northern Securities Company
might organize another corpora-
tion holding the majority of the
stock in the Northern Securities
Company and acting in obedience
to the wishes of the majority of
its stockholders would control the
action of the Securities Company
and through it the action of the
two railroad companies, and this
process might be extended until a
single corporation whose stock was
owned by three or four parties
would be in practical control of
both roads, or, having before us the
possibilities of combination, the
control of the whole transporta-
tion system of the country. I can
not believe that to be a reasonable

or lawful restraint of trade. Again,
there is by this suit no interfer-
ence with state control. It is a
recognition rather than a disre-
gard of its action. This merging
of control and destruction of com-
petition was not authorized, but
specifically prohibited by the state
which created one of the railroad
companies, and within whose boun-
daries the lines of both were large-
ly located and much of their busi-
ness transacted. The purpose and
policy of the state are therefore
enforced by the decree. So far as
work of the two railroad com-
panies was interstate commerce, it
was subject to the control of Con-
gress, and its purpose and policy
were expressed in the act under
which this suit was brought.”
Judge Thayer in the Circuit Court
had said of the scheme: “The
scheme which was thus devised
and consummated led inevitably to
the following results: First, it
placed the control of the two roads
in the hands of a single person, to
wit, the Securities Company, by
virtue of its ownership of a large
majority of the stock of both com-
panies; second, it destroyed every
motive for competition between
two roads engaged in interstate
traffic, which were natural compet-
itors for business, by pooling the
earnings of the two roads for the
common benefit of the stockholders
570

THE SHERMAN ANTI-TRUST ACT.

§ 281. Northern Securities Company as Mere Custodian—
Ownership of Stock—One of the claims in the Northern
Securities case was that the circumstances under which the
company obtained the stock of the constituent companies
imported simply an investment in the stock of other corpora-
tions, a purchase of that stock; which investment or pur-
chase, was not forfeited by the charter of the company, and

could not be made illegal by an act of Congress.
court answered this contention in this wise:

of both companies; and, according
to the familiar rule that every one
is presumed to intend what is the
necessary consequence of his own
acts when done willfully and de-
liberately, we must conclude that
those who conceived and executed
the plan aforesaid intended, among
other things, to accomplish these
objects.” United States v. North-
ern Securities Co., 120 Fed. 721,
724. In addition to the Northern
Securties Company being made
parties to the bill, the Great
Northern and Northern Pacific
Railway Companies, James J.
Hill, William P. Clough, D. Willis
James, John 8S. Kennedy, J. Pier-
pont Morgan, Robert Bacon,
George F. Baker and Daniel §8.
Lamont were made parties. These
individuals controlled the holding
company and thus practically the
two railway companies. The court
commended the language used in
Pearsall v. Great Northern Ry.
Co., 161 U. S. 646; 16 Sup. Ct.
705; 40 L. Ed. 838, quoting the
following language: “The consoli-
dation of those two great corpora-
tions will unavoidably result in
giving to the defendant (the Great
Northern) a monopoly of all the
traffic in the northern half of the

But the
“This view 1s

state of Minnesota, as well as of
all transcontinental traffic north of
the line of the Union Pacific,
against which public regulations
will be but feeble protection. The
acts of the Minnesota legislature of
1874 and 1881 undoubtedly re-
flected the general sentiment of
the public, that their best security
is in competition.” Justice Har-
lan in the Northern Securities case
said that the following proposi-
tions had been settled by former
decisions: “That although the act
of Congress known as the Anti-
Trust Act has no reference to the
mere manufacture of production
of articles or commodities within
the limits of the several states,
it does embrace and declare to be
illegal every contract, combination
or conspiracy, in whatever form,
of whatever nature, and whoever
may be parties to it, which di-
rectly or necessarily operates in
restraint of trade or commerce
among the several states or with
foreign nations. That the act is
not limited to restraints of inter-
state and international trade or
commerce that are unreasonable
in their nature, but embraces all
direct restraints imposed by any
combination, conspiracy or monop-
TRANSPORTATION AGENCIES. 571
wholly fallacious, and does not comport with the actual
transaction. There was no actual investment, in any sub-
stantial sense, by the Northern Securities Company in the
stock of the two constituent companies. If it was, in form,
such a transaction it was not, in fact, one of that kind.
However that Northern and Northern Pacific Railway com-
panies, no matter how it obtained the means to do so, all
the stock it held or acquired in the constituent companies
was acquired and held to be used in suppressing competi-

tion between those companies.
If any one had full knowledge of what

for that purpose.

oly upon such trade or commerce.
‘That railroad carriers engaged in
interstate or international trade or
commerce are embraced by the act.
That combinations even among pri-
vate manufacturers or dealers
whereby interstate or internation-
al commerce is restrained are
equally embraced by the act. That
Congress has the power to estab-
lish rules by which interstate and
international commerce shall be
governed, and, by the Anti-Trust
Act, has prescribed the rule of
free competition among those en-
gaged in such commerce. That
every combination or conspiracy
which would extinguish competi-
tion between otherwise competing
railroads engaged in_ interstate
trade or commerce, and which
would in any way restrain such
trade or commerce, is made ille-
gal by the act. That the natural
effect of competition is to increase
commerce, and an agreement whose
direct effect is to prevent this play
of competition restrains instead of
promotes trade and commerce.
That to vitiate a combination, such
as the act of Congress condemns,
it need not be shown that the com-

It came into existence only

bination, in fact, results or will
result in a total suppression of
trade or in a complete monopoly,
but it is only essential to show
that by its necessary operation it
tends to restrain interstate or in-
ternational trade or commerce or
tends to create a monopoly in such
trade or commerce and to deprive
the public of the advantages that
flow from free competition.” See
also United States v. Reading Co.,
228 U.S. 158; 33 Sup. Ct. 90; 57
L. Ed., affirming and reversing in
part 183 Fed. 427. For articles
on the Northern Securities case,
see G. Carroll Todd, in 22
Harvard Law Review 114 on
“The Federal Anti-Trust Act and
Minority Holdings of the Share-
holders by Competing Companies ;”
David Walter Brown in 7 Colum-
bia Law Review 41, 168, 305, and
also see 4 Columbia Law Review
315; 16 Harvard Law Review 539;
17 Harvard Law Review 479, 511,
533; 52 American Law Register,
358; 13 Yale Law Journal 17 and
W. P. Rogers on “Pooling Agree-
ments among Stockholders” in 19
Yale Law Journal 345 (March No.
1910).
072 THE SHERMAN ANTI-TRUST ACT.
was designed to be accomplished, and as to what was ac-
tually accomplished, by the combination in question it was
the defendant Morgan. In his testimony he was asked,
‘Why put the stocks of both these constituent companies into
one holding company?’ He frankly answered: ‘In the first
place, this holding company was simply a question of cus-
todian, because it had no other alliances.’ That disclosed
the actual nature of the transaction, which was only to or-
ganize the Northern Securities Company as a holding com-
pany, in whose hands, not as a real purchaser or absolute
owner, but simply as a custodian, were to be placed the
stocks of the constituent companies—such custodian to repre-
sent the combination formed between the shareholders of
the constituent companies, the direct and necessary effect of
such combination being as already indicated, to restrain and
monopolize interstate commerce by suppressing or (to use
words of this court in United States v. Joint Traffic Ass’n)
‘smothering competition between the lines of two railway

earriers.’’?4

24 Northern Securities Co. v.
United States, 193 U. S. 197; 24
Sup. Ct. 436; 48 L. Ed. 679; af-
firming 120 Fed. 712. Justice
Brewer in concurring opinion made
these observations on this point:
“Congress did not intend to reach
and destroy those minor contracts
in partial restraint of trade which
the long course of decisions at com.
mon law had affirmed were rea-
sonable and ought to be upheld.
The purpose rather was to place a
statutory prohibition with pre-
scribed penalties and remedies
upon those contracts which were
in direct restraint of trade, un-
reasonable and against public pol-
icy. Whenever a departure from
common law rules and definitions
is claimed, the purpose to make

the departure should be clearly
shown. Such a purpose does not
appear and such a departure was
not intended.” Again he said:
“Again, there is by this suit no
interference with state control. It
is a recognition rather than a dis-
regard of its action. This merging
of control and destruction of com-
petition was not authorized, but
specifically prohibited by the state
which created one of the railroad
companies, and within whose toun-
daries the lines of both were large-
ly located and much of their busi-
ness transacted. The purpose and
policy of the state are therefore
enforced by the decree. So far as
the work of the two railroad com-
panies was interstate commerce, it
was subject to the control of Con-
TRANSPORTATION AGENCIES.

573

§ 282. Observations on Northern Securities Case.—Four
justices dissented in the Northern Securities Case—Chief
Justice Fuller, Justice Peckham, Justice Holmes, and Jus-
tice White wrote a long dissenting opinion in which the
other three joined. He denied that under the interstate
commerce clause Congress could not reach the transaction in-

volved in litigation—that it was not commerce.

Justice

Holmes filed an additional concurring dissenting opinion, in
which Fuller, White and Peckham concurred. The decision
occasioned much comment and not a little criticism.?®

gress, and its purpose and policy
were expressed in the act under
which this suit was brought.”

25 See Prof. F. C. Gray in 17
Harvard Law Review 474 (May,
1904), who claims this supposed
illustration contains a case paral-
lel to that of the Northern Securi-
ties: “Three Jerseymen, whom we
will call Morgan, Hill and La-
mont, own each a cart and one
horse. Their occupation is the
carrying of eggs and chickens from
the neighboring farmers to a mar-
ket town over the New York bor-
der. They agree to form a corpo-
ration under the name of the In-
terstate Poultry Traffic Associa-
tion. The only capital they turn
in consists of their horses and
earts, except a few dollars con-
tributed to pay for their charter.
Are they criminals liable to be
fined $5,000 apiece and imprisoned
for a year? This simple but typi-
cal case seems to serve better to
test the doctrines laid down in
the Merger decision than the sen-
sational facts which were there
actually before the court. There
are two questions: I. Could Con-
gress declare such men to be
criminals? II. Has Congress

declared them to be crimin-
als? In our typical case, and
in the case of the Northern Se-
curities Company, there was no
contract by which a person or cor-
poration abandoned or restricted
his own business. If a junction
of interest is a restraint of trade,
then two expressmen who have
been carrying on business between
the city of New York and Jersey
City became criminals by forming
a partnership. Such an intention
is not to be lightly attributed to
a respectable legislative body like
Congress. Neither was there any
monopolizing of the business. If
our egg collectors had combined to
drive or keep another person off
their route, they would have vio-
lated the act. If the Great North-
ern Railway Company and the
Northern Pacific Railway Company
had combined to keep another rail-
road out of the territory which they
served, that would have been a
monopoly.” See also G. Carroll
Todd in 22 Harvard Law Review
114 (December, 1908). Professor
F. C. Gray has this to say of the
dissenting opinion of Justice
Holmes: “The direct object of the
ordinary common law contract in
O74.

THE SHERMAN ANTI-TRUST ACT.

In this case it was decided that the persons in control
of the two railway companies involved, in jointly promoting
the organization of the Securities Company and causing
stock to be transferred to it had violated the first section
of the Anti-Trust Act by forming a combination in re-
straint of trade; and it was also decided that the vesting
of the shares of the two railroads in the holding company
created a monopoly within the meaning of the second section

of that Act.?6

restraint of trade is the infliction
of a detriment in carrying on his
trade upon the tradesmen, for the
benefit of a stranger; that it may
have the effect of limiting compe-
tition is only in an indirect conse-
quence. But traffic agreements
had not for their direct object the
infliction of a detriment upon any
railroad in carrying on its busi-
ness, but, on the contrary, to con-
fer benefits upon them all in car-
rying on their business. The com-
mon law contract in restraint of
trade restrains a man from carry-
ing on business of a certain kind
or in a certain place, or from
making as high charges as_ it
wished. The object of the agree-
ment was to secure a railroad
from being forced to charge less
than it wished. The limiting of
competition was the primary ob-
ject of the contract. Such an
agreement may be a contract to
forestall or engross or do some-
thing else weighty, but it does not
appear to come within what had
previously been deemed the defini-
tion of a contract in restraint of
trade. The Traffic Association
Cases (United States v. Freight
Association, 166 U. S. 290, 17
Sup. Ct. 548; 41 L. Ed. 1007; 7

C. ©. A. 15; 19 U. S. App. 36; 24
L. R. A. 73; 3 Interst. Com. Rep.
443; and United States v. Joint
Traffic Association 171 U. S. 505;
19 Sup. Ct. 25; 43 L. Ed. 259; 32
C. C. A. 491; 45 U. S. App. 762),
do, therefore, appear to have held
that the Statute covered not mere-
ly common law contracts which
were neither, but were contracts
to limit competition. On this
point, we find it difficult to fol-
low Judge Holmes. This does not
mean that Judge Holmes is wrong
in his conclusion, and the Traffic
Association decisions right, but
simply that his conclusion seems
not consistent with those deci-
sions.” 17 Harvard Law Review
477.

26 This last point decided ap-
pears in these quotations: “Ts the
case as presented by the plead-
ings and the evidence one of a com-
bination or a conspiracy in re-
straint of trade or commerce
among the states, or with foreign
states? Is it one in which the
defendants are properly chargeable
with monopolizing or attempting
to monopolize any part of such
trade or commerce? Let us see
what are the facts disclosed by
the record.” Having seen what
TRANSPORTATION AGENCIES,

575

But it does not necessarily follow from this decision, as it
has been claimed,?” that because the purchase of the stock
of two competing railroads is a violation of the Act, that it
is also a violation of that Act if one of such railroads itself

buys a majority of the shares of the other.

discussed elsewhere.”®

the facts disclosed by the record
were, this was the answer: “In
our judgment, the evidence fully
sustains the material allegations
of the bill, and shows a violation
of the Act of Congress, in so far
as it declares illegal every combi-
nation or conspiracy in restraint
of commerce among the several
states and with foreign nations,
and forbids attempts to monopol-
ize such commerce or any part of
it.” And in his concurring opin-
ion Mr. Justice Brewer said: “It
must also be remembered that un-
der present conditions a single
railroad is, if not legal, largely
a practical, monopoly, and the ar-
rangement by which the control of
these two competing roads was
merged in a single corporation
broadens and extends such monop-
oly.”

27G. Carroll Todd in 22 Har-
vard Law Review 115 Dec., 1908.

28 This case is discussed very
acutely by Mr. G. Carroll Todd in
22 Harvard Law Review 114 (Dec.,
1908). This very acute analysis
was made in the brief of the
Standard Oil Company, p. 70, filed
in that case when pending in the
Supreme Court. “The Northern Pa-
cific and Great Northern Railroad
Companies were competitive trans-
continental railroads, each with its
own stockholders and board of di-
rectors. The property of each was

This has been

‘interstate in its character and the
operation thereof was interstate’
(Cochran, J. Bigelow vs. Calumet
Mining Co., 167 Fed. 739).
Neither Company had the legal
power of authority to acquire the
other; in fact, such an acquisition
was prohibited. They were also
prohibited from consolidating or
merging. Each was a quasi-pub-
lic corporation and bound by law
to maintain its separate and in-
dependent existence. To bring
them under what would be prac-
tically a common control and man-
agement certain leading  stock-
holders of both Companies com-
bined together to organize the
Northern Securities Company un-
der the laws of the State of New
Jersey as a purely holding com-
pany to exchange its shares at
fixed ratios for the shares of the
two companies. Mr. Morgan and
his associates were the leading
stockholders of the Northern Pa-
cific Company, and Mr. Hill and
his associates were the leading
stockholders of the Great Northern
Company. But for the combina-
tion Mr. Morgan and his associates
and the other stockholders of the
Northern Pacific Company would
have continued to control that
Company, whilst Mr. Hill and his
associates and the other stockhold-
ers of the Great Northern Com-
pany would have continued to have
576

THE SHERMAN ANTI-TRUST ACT.

The Northern Securities case was in a measure reviewed in
a subsequent case concerning the same transaction, wherein

controlled it. The combination
emanated from an agreement be-
tween stockholders of the North-
ern Pacific and stockholders of the
Great Northern. An agreement
between these two sets of stock-
holders creating a board of trus-
tees to control and manage both
corporations in harmony would
have been ‘equivalent to an agree-
ment between several persons en-
gaged in business to surrender
their discretion as to the manner
in which they shall conduct their
business’:—in other words an
agreement or combination in re-
straint of trade. Instead they
adopted the device of a purely
holding company to attain the
same results. This is the view
that the majority of this Court
took and on which it founded its
decision. Mr. Justice Harlan said
(p. 346) : ‘The Securities Company
is itself a part of the present com-
bination; its head and front; its
trustee.’ Mr. Justice Brewer said
(p. 362): ‘The transfer of stock
to the Securities Company was a
mere incident of the manner in
which the combination of diverse
owners of separate and diverse
properties, bound by the law of
their being as quasi-public corpora-
tions invested with public fran-
chises to continue separate, inde-
pendent, and competitive, creating
through the instrumentality of a
holding company a common con-
trol which would restrict to the
point of nullification that obliga-
tion and duty of separate control
and management and the conse-

quential competitive relations.’”
In the brief of the American To-
bacco Company (p. 190), filed in
the Supreme Court these observa-
tions were made: “The controlling
circumstances in this transaction
are readily seen: The companies
dealt with—publie service com-
panies—owed the public duty of
continued existence and continued
competition—private manufactur-
ing companies owe no duty of con-
tinued existence, and their duty to
compete can continue only so long
as they continue an actual and in-
dependent existence. The forma-
tion of the Northern Securities
Company could have no purpose
or effect of increasing economy or
efficiency or other such public ad-
vantages; its only practical util-
ity was the elimination of the
competition that had theretofore
existed between the two roads,
which elimination had been already
determined to be against public
policy. There was a vigorous dis-
sent in this court, even with all
these facts, and the great question
which divided the court was wheth-
er the Northern Securities Com-
pany was a fact, to be taken at
its face value, or a fiction to be
brushed aside in order to discover
the real situation. A majority of
this court held the latter view, and
they looked and found, behind the
fiction, a scheme between large
stockholders of the competing
roads to end competition between
them through the instrumentality
of this Northern Securities Com-
pany, and a majority of this court
TRANSPORTATION AGENCIES,

577

arose the question of the status of the stock transferred to it
and the respective rights of the original holders of the rail-

way stocks.?°

decided that this court could reach
and nullify such scheme by treat-
ing the Northern Securities Com-
pany as the trustee of those stock-
holders.”

29 Harriman v. Northern Securi-
ties Co, 197 U. 8. 244; 25 Sup.
Ct. 493; 49 L, Ed. 739 affirming
134 Fed. 331; 67 C. C. A. 245;
which reversed 132 Fed. 464.

Sir Frederick Pollock has the
following comment on this deci-
sion in the Northern Securities
case: “It appears that the control-
ling corporation was created in
fact, if not on the fact of its char-
ter, for the very purpose of acquir-
ing control of the other two; that
it was formed by members of those
others, and that it has substan-
tially no other members of its own.
Corporations which are giving to
deal in affairs of that scale are not
formed by casual meetings in the
street or even in an office. -I as-
sume therefore, that the Northern
Securities Company was formed in
pursuance of an agreement, and
that all or most of the parties
thereto were shareholders in the
Northern Pacific or Great North-
ern Railway. Was that in re-
straint of trade? An agreement
between two or more firms to ap-
point a committee and conduct
their business wholly or in any
material part, according to their
directions, is in restraint of trade,
and will not be enforced (citing
Hilton v. Eckersley, 6 E. & B. 47).
There seems to be-no lack of recent
American decisions to the same ef-

fect. It obviously makes no dif-
ference in point of law whether
the parties to such an agreement
be natural persons acting singly,
or groups of persons acting as
friends, or corporations, or a mix-
ture of all or some of these. A
corporation is a person distinct
from its individual members. But
it does not follow that the busi-
ness of a trading corporation is
not the business of its members.
It is so much their business that
they have, in many respects, rights
analogous to those of partners, as
we know from a long line of de-
cisions in courts of equity. An
agreement whereby one or more
shareholders, not to say a major-
ity of shareholders in a company,
renounce their rights of exercising
an independent control in the com-
pany’s affairs would seem, on the
face of it, to be an agreement in
restraint of trade. This is not, in
form, the present case. Here the
shareholders in question agree to-
transfer, and did transfer, their
shares to the new company, and
to take, as they did take, the con-
sideration in its shares. They re-
ceive, or but for the decree under
appeal would receive, dividends on
these last-mentioned shares, and
not on the railway shares which
they have transferred. If the
transaction were a real out-and-
out sale, it is difficult to see what
fault could be found with it on
the point of restraint of trade,
which alone concerns us. But has
there been a genuine sale? Will
578 THE SHERMAN ANTI-TRUST ACT.

§ 283. Purchase of Stock of a Competing Railway Com-
pany by Another Railway Company.—A combination which
places railroads engaged in interstate commerce in such
relations as to create a single dominating control in one
corporation, whereby natural and existing competition in
such commerce is unduly restricted or suppressed, is within
the condemnation of the Anti-Trust Act. In the case
wherein this proposition was announced, the Union Pacific
Railway Company purchased enough shares of the Southern
Pacific Railway Company to control it; and the combination
was declared illegal. The court said it made no difference
that instead of resorting to a holding company,*° the con-
trolling interest in the stock of one corporation was trans-
ferred to the others. ‘‘The domination and control, and
the power to suppress competition, are acquired in one case
no less than in the other, and the resulting mischief, at
which the statute was aimed, is equally effective whichever
form is adopted.’’ ‘‘A more effectual form of combination
to secure the control of a competing railroad than for one

such results equivalent to an agree-
ment between several persons en-
gaged in business to surrender

the court not see any ground for
going behind the form? The
Northern Securities Company has,

I understand, no property and no
funds out of which to pay divi-
dends other than the very railway
shares which have been transferred
to it; nor does it seek to distribute
profits to any persons other than
those transferrors. And, if this is
so, may it not be held that the
transaction, as a sale, is merely
eolorable, and that in truth it is
a device to the effect of enabling
the transferrors to retain their
beneficial interest in the several
railway companies while each of
them renounces his individual voice
as a shareholder? And if that
be the correct view of the facts, is
not the agreement which leads to

their discretion as to the manner
in which they shall conduct their
business? Jn other words, is it
not an agreement in restraint of
trade within the authority of Hil-
ton v. Eckersley (6 E. & B. 47)
and the recent decision of the Su-
preme Court of the United States
in the Addyston Pipe and Steel
Co.'s case?” Sir Frederick refuses
to diseuss the question of Inter-
state Commerce 17 Harvard Law
Review 151 (January No. 1904.)
39 As was done in the case ot the
Northern Securities, Northern Se-
curities Co. v. United States, 193
U. 8. 197; 24 Sup. Ct. 436; 48 L.
Ed. 699, affirming 120 Fed. 721.
TRANSPORTATION AGENCIES. 579
road to acquire a dominating stock interest in the other
could hardly be conceived.’’ Such a transaction, the court
concluded, is ‘‘within the statute.’’ The fact that the
purchase is authorized by a statute of the state where it
was made, and within the corporate powers conferred by
it, is no defense to the charge that the act contravenes the
federal statute.*?

§ 284. One Person Purchasing Controlling Interest in
Two Competing Railway Companies.—Competing railway
companies stand upon different grounds from manufacturing
or other like companies. A railway company is often prac-
tically a monopoly of the carrying trade in the territory
it occupies. If there be two competing lines of railway
in that territory, then their combination under one control
renders them non-competing lines; for no railway will com-
pete with itself, or two railways where they are controlled
by one single interest. A manufacturing or selling company
does not occupy any particular territory; or if it does its
operations are not necessarily restricted to it, and in this re-
spect it differs from a railway company. A purchase,
therefore, by one person of sufficient stock to give him con-
trol of two competing lines is just as menacing as the pur-
chase of a controlling interest in a railway company by
another competing company, which has been condemned ;*
or the purchase by a single corporation of a controlling in-

(N.S.) 834; affirming 173 Fed.
177, and United States v. Ameri-
can Tobacco Co., 221 U.S. 106; 31

31 United States v. Union Pacific
R. Co. 226 U. S. 61, 470; 33 Sup.
Ct. 53; 57 L. Ed., reversing 188

Fed. 102. The court cited North-
ern Securities Co. v. United States,
193 U. S. 197; 24 Sup. Ct. 436;
48 L. Ed. 699; affirming 120 Fed.
721; Standard Oil Co. v. United
States, 221 U. S. 1; 31 Sup. Ct.
502; 55 L. Ed. 648; 34 L. R. A.

Sup. Ct. 632; 55 L. Hd. 695; re-
versing 164 Fed. 700.

32 United States v. Union Pacific
Ry. Co., 226 U.S. 61, 470; 33 Sup.
Ct. 53; 57 L. Ed. —; reversing
188 Fed. 102.
580 THE SHERMAN ANTI-TRUST ACT.
terest in two compcting railway companies, which has like-
wise been condemned.**

§ 285. No Suppression of Competition.—In most of the
cases there was an actual suppression of competition or a
contract for it®' while in another there was a combination
which gave the power to suppress competition, and such
was the intent of those controlling the combination ;"* and
in a third an actual suppression. And the question na-
turally arises if the statute be violated where the combina-
tion be such as to give those interested in it the power to
suppress competition in interstate commerce, though none
has actually taken place? Here a distinction must be drawn
between an action concerning a restraint of trade and one to
dissolve an unlawful combination. In the first instance
it is the actual restraint of interstate commerce that con-
stitutes the offense, leaving aside the question of criminal
intent. The cases, especially those of more recent date, lend
a decided color to the claim that any combination which
gives those combining power to suppress competition in in-
terstate commerce will be condemned and dissolved by the
courts as unlawful, regardless of the fact that no actual
suppression has taken place. The temptation to suppress
commerce when there is the power and it is the interest
of those controlling such power to do so, is teo dangerous
an agency to be permitted to continue when the fact is
brought before the court; and it no doubt would be dis-

2% Northern Securities Co. v.15: which aflirmed 53 Fed, 440;

United States, 193 U. S. 197; 24
Sup. Ct. 436; 48 L. Ed. 679; af-
firming 120 Fed. 721.

#4 As in United States v, Trans-
Missouri Freight Asa’n., 166 U. §.
290; 17 Sup. Ct. 548; 41 L. Ed.
1007; reversing 58 Fed. 58; 19 U.
S. App. 36; 24 L. R. A. 73; 3 [n-
terst. Com. Rep. 443; 7 C. C. A.

and United States v. Joint Traffic
Ass’n., 171 U. S. 505; 19 Sup. Ct.
25; 43 L. Ed. 259; 89 Fed. 1020;
32 CU. C. A. 491; 45 U.S. App. 762.

“5 United States v. Union Pacific
tw. Co., 226 U.S. 61, 470; 33 Sup.
Ct. 53; 57 L. Ed. —; reversing
188 Jed. 102; C. ©. A.
TRANSPORTATION AGENCIES. 581

solved upon a strong presentation that it was the intent of
those combining to suppress interstate commerce.**

§ 286. Inherent Conditions Resulting in Illegal Mon-
opoly Where Otherwise it Would Not Be—St. Louis Ter-
minals.—Usually the mere combining of several independent
railway terminal systems with one does not necessarily oper-
ate as a forbidden restraint under the Anti-Trust Act; but
if the location of the terminal systems is such that the in-
herent conditions prohibit any other reasonable means of
access to the city to be reached, then there may be an il-
legal monopoly of such interstate commerce as must pass
through such city and which must use such combined ter-
minals, where such terminals are not owned by all the
railway companies that are compelled, by reason of such
inherent conditions to use them. This was held to be the
case with the terminals at the city of St. Louis. We cannot
do better than give the statement of the facts involved, in
a case where the above points were decided, than that stated
by Justice Lurton in his opinion:

“The consequences to interstate commerce of this com-
bination cannot be appreciated without a consideration of na-
tural conditions greatly affecting the railroad situation at
St. Louis. Not one of them passes through. About one-
half of these lines have their termini on the Illinois side of
the river. The others coming from the west and north, have
their termini either in the city or on its northern edge. To
the river the city owes its origin, and for a century and
more its river commerce was predominant. It is now the
great obstacle to connection between the termini of lines on
opposite sides of the river and any entry into the city by
eastern lines. The cost of construction and maintenance of

26 United States v. Reading Co., fact restrain interstate commerce
228 U. S. 158; 33 Sup. Ct. 90, 96; is illegal regardless of the fact that
57 L. Ed. —; affirming and revers- those combining had no intent to

ing in part 183 Fed. 427. Of restrain such commerce; and the
course « combination that does in combination will be dissolved.
582 THE SHERMAN ANTI-TRUST ACT.

railroad bridges over so great a river makes it impractical
for every road desiring to enter or pass through the city to
have its own bridge. The obvious solution is the mainten-
ance of toll bridges open to the use of any and all lines,
upon identical terms. And so the commercial interests of
St. Louis sought to solve the question, the system of a car
ferry transfer being inadequate to the growing demands of
an ever-increasing population. The first bridge, called the
Eads bridge, was, and is, a toll bridge. Any carrier may use
it on equal terms. But to use it there must be access over
rails connecting the bridge and the railway. On the St.
Louis side the bridge terminates at the foot of the great
hills upon which the city is built; on the Tllinois side it
ends in the low and wide valley of the Mississippi. This
condition resulted in the organization of independent com-
panies which undertook to connect the bridge on each side
with the various railroad termini. On the Missouri side it
was necessary to tunnel the hills, that the valley of Mill
Creek might be reached, where the roads from the west had
their termini. Thus, though the bridge might be used by all
upon equal terms, it was accessible only by means of the
several terminal companies operating lines connecting it
with the railroad termini.

“This brought about a condition which led to the con-
struction of the second bridge, the Merchants’ bridge. This
too, was, and is, a toll bridge, and may be used by all
upon equal terms. To prevent its control by the Eads
Bridge Company, it was carefully provided that no stock-
holder in any other bridge company should own its shares.
But this Merchants’ bridge, like the Eads bridge, had no
rail connections with any of the existing railroad systems,
and these facilities, as in the case of the Eads bridge were
supplied by a number of independent railway companies
who undertook to fill in the gaps between the bridge ends
and the termini of railroads on both sides of the river. It
must be also observed that these terminal companies were’ in
many instances so supplied with switch connections as not
TRANSPORTATION AGENCIES. 583

only to connect with the bridge but also to connect’ such
roads with each other and with the industries along
their lines. Now, it is evident that these lines connecting
railroad termini with the railroad bridges dominated the
situation. They stood, as it were just outside the gateway,
and none could enter, though the gate stood open, who did
not comply with their terms. The topographical situation
making access to the city difficult does not end with the
river. The city lies upon a group of great hills which hug
the river closely and rapidly recede to the west. These
hills are penetrated on the west by the narrow valley of
Mill Creek, which crosses the city about its center. Rail-
ways coming from the west use this valley, but its facilities
are very restricted and now quite occupied. North of the
city the hills drop back from the river gradually, and there
exists a valley formed by the Mississippi and Missouri rivers.
Railroads coming from the north on the west side of the
river come by this valley. As we have stated before, the
valley of the Mississippi at St. Louis is on the Illinois side
of the river. Railroads coming from the east, northeast, and
southeast have their termini in that valley. As a conse-
quence, there have grown up numerous cities and towns of
some consequence as manufacturing places, the chief of
which is East St. Louis.

“The result of the geographical and topographical situation
is that it is, as a practical matter, impossible for any rail-
road company to pass through, or even enter St. Louis, so
as to be within reach of its industries or commerce, with-
out using the facilities entirely controlled by the terminal
company. The averment of the bill that the railroad com-
panies, here defendants, being the sole stockholders of the
terminal company, as we shall later see, compel all other
railroad companies converging at St. Louis to use the fa-
cilities owned and operated by the terminal company, is
therefore borne out by the facts of the situation. Nor is
the effect denied for the learned counsel representing the
proprietary companies, as well as. the terminal companies,
584 THE SHERMAN ANTI-TRUST ACT.

as well as the terminal company, say in their filed brief:
‘There indeed is compulsion, but it is inherent in the situa-
tion. The other companies use the terminal properties be-
cause it is not possible to acquire adequate facilities for
themselves. The cost to any one company is prohibitive.’
Obviously, this was not true before the consolidation of the
systems of the Wiggins Ferry Company and the Merchants’
Bridge Company with the system theretofore controlled by
the terminal company. That the non-proprietary companies
might have been compelled to use the instrumentalities of
one or the other of the three systems then available, and that
the advantages secured might not have been so great as those
offered by the unified system now operated by the terminal
company, must be admitted. But that there existed before
the three terminal systems were combined a considerable
measure of competition for the business of the other com-
panies, and alarger power of competition, is undeniable.
That the fourteen proprietary companies did not then have
the power they now have to exclude either existing roads
not in the combination, or new companies from acquiring an
independent entrance into the city, is also indisputable.
The independent existence of these three terminal systems
was therefore a menace to complete domination, as keeping
open the way for greater competition. Only by their ab-
sorption or some equivalent arrangement was it possible
to exclude from independent entrance the Rock Island Com-
pany, or any other company which might desire its own
terminals. To close the door to competition, large sums
were expended to acquire stock control. For this purpose
the obligations of the absorbed companies were assumed and
new funds obtained by mortgages upon the unified system.

The physical conditions which compel the use of the com-
bined system by every road which desires to cross the river,
either to serve the commerce of the city or to connect with
lines separate by the river, is the factor which gives greatest
color to the unlawfulness of the combination as now con-
trolled and operated. If the terminal company was in law
TRANSPORTATION AGENCIES. 585
and fact the agent of all, the mere unification which has oc-
curred would take on quite a different aspect. It becomes,
therefore, of the utmost importance to know the character
and purpose of the corporation which has combined all of
the terminal instrumentalities upon which the commerce of
a great city and gateway between the East and the West
must depend. The fact that the terminal company is not
an independent corporation at all is of the utmost signif-
icance.’’ 37

The fact that the terminal facilities were not owned by
all the railway companies compelled to use them; and the
further fact that the terminal association discriminated in
the handling of the business between those railway com-
panies owning stock in it and those that did not, were the
controlling factors in the decision; and it was by reason of

37 United States v. Terminal R.
Ass’n., 224 U. 8. 383; 32 Sup. Ct.
507; 56 L. Ed. 810. Of this com-
bination the Supreme Court of
Missouri said: “A more effectual
means of keeping competition up
to the highest point between par-
allel or competing lines could not
be devised. The destruction of the
system would result in compelling
the shipper to employ the railroad
with which he has switch connec-
tion, or else cart his product to a
distant part of the city, at a cost
possibly as great as the railroad
tariff. St. Louis is a city of great
magnitude in the extent of its
area, its population, and its man-
ufacturing and other business. A
very large number of trunk-line
railroads converge in this city. In
the brief of one of the well-in-
formed counsel in this case it is
said that St. Louis is one of the
largest railroad centers in the
world. Suppose it were required
of every railroad company to ef-

fect its entrance to the city as
best it could establish its own
terminal facilities, we would have
a large number of passenger sta-
tions, freight depots and switch
yards, scattered all over the vast
area, and innumerable vehicles to
and from those stations and de-
pots. Or suppose it became nec-
essary in the exigency of commerce
that all in-coming trains should
reach a common focus, but every
railroad company provide its own
track; then not only would the
expense of obtaining the necessary
rights of way be so enormous as
to amount to the exclusion of all
but a few of the strongest roads,
but, if it enuld be accomplished,
the city would be cut to pieces with
the many lines of railroad inter-
secting it in every direction, and
thus the greatest agency of com-
merce would become the greatest
burden.” State v. Terminal R.
Asso., 182 Mo. 284; 81 8. W. 395.
586 THE SHERMAN ANTI-TRUST ACT.

this fact that the court found that there was an illegal re-
straint of interstate commerce. ‘‘But the illegal restraint
upon commerce among the states which we here find to
exist consists in the possession acquired by the proprietary
companies through the means and with the object we have
stated, of dominating commerce among the states, carried
on by other railroads entering or seeking to enter the city
of St. Louis and by which such railroads are compelled
either to desist from carrying on interstate commerce, or
do so upon the terms imposed by the proprietary companies.
This control and possession constitute such a grip upon the
commerce of St. Louis and commerce which must cross the
river there, whether coming from the east or west, as to be
both an illegal restraint and an attempt to monopolize.’’ #*

§ 287. Terminal Railroad Association for all Railroads
Not Invalid—Union Depots—All the railroads entering a
city may combine to construct or maintain terminal facili-
ties and union depots, and not meet with the charge of a
violation of law. That was declared, though not decided,
in the St. Louis Terminal Association case, Justice Lenton
saying:

“Plainly the combination which has occurred would not
be an illegal restraint under the terms of the statute if it
were what is claimed for it, a proper terminal asso-
ciation acting as the impartial agent of every line which is
under compulsion to use its instrumentalities. If, as we
have pointed out, the violation of the statute, in view of
the inherent physical conditions, grows out of administrative
conditions which may be eliminated and the obvious advan-
tages of unification preserved, such a modification of the
agreement between the terminal company and the proprie-
tary companies as shall constitute the former bona fide
agent and servant of every railroad line which shall use its
facilities, and an inhibition of certain methods of admin-

38 United States v. Terminal Asso. supra.
TRANSPORTATION AGENCIES. 587

istration to which we have referred, will amply vindicate the
wise purposes of the statute, and will preserve to the public
a system of great public advantage.’’ °°

§ 288. Purchase of One Railroad’s Stock by Another
Competing Railroad—Union Pacific Case——After the de-
cision in the Northern Securities case* the device of elim-
inating competition between competing railroad lines was
hit upon by one of the railroad companies buying enough
stock in the other railway company to control it. It was
sought to justify this action by the right of the buying
corporation under the state laws, to buy stock in another
corporation of the same kind; but the device failed. In
1901 the Union Pacific Company purchased thirty-seven and
one-half per cent of the-shares of the capital stock of the
Southern Pacific Company, and afterwards increased its
holdings to forty-six per cent, but vested the title thereto
in the Oregon Short Line Railroad Company, one of the
Union Pacific Company’s proprietary companies. With this
amount of stock it was able to control the Southern Pacific
Company’s action by reason of the fact that it could at any
election of the latter’s officers it represented vote in a solid
mass more shares of stock than the owners of shares attend-
ing such election held.

The lines of those two railroads and the interests they
controlled, are thus described by the Supreme Court:

‘‘Prior to the stock purchase in 1901 the Union Pacific
system may briefly be described as a line of railroad from
the Missonri River to the Pacific Coast; namely, from
Omaha, Nebraska, or perhaps more strictly from Council
Bluffs, Iowa; and from Kansas City, Missouri, to Ogden,
Utah, and Portland, Oregon, with various branches and con-
nections and a line of steamships from Portland to San

39 United States v. Terminal R. 49 United States v. Northern Se-
Ass’n, 224 U. S. 383; 32 Sup. Ct. curities Co., 193 U. 8. 197; 24
507; 56 L. Ed. 810. Sup. Ct. 436; 48 L. Ed. 679; af-

firming 120 Fed. 721,
588 THE SHERMAN ANTI-TRUST ACT.

Francisco, California, and from Portland to the Orient; and
a line of steamships from San Francisco to the Orient (the
Occidental & Orient Steamship Company, in which the
Union Pacific and the Southern Pacific each owned a half
interest. The main line from Council Bluffs to Ogden, a
little over 1,000 miles in length with the branch from
Kansas City, through Denver, Colorado, to Cheyenne, Wyo-
ming, on the main line, was owned and operated by the
Union Pacific; the line from Granger, Wyoming, on the
main line of the Union Pacific, to Huntington, Oregon, was
owned and operated by the Oregon Short Line Railroad
Company, the capital stock of which was owned by the
Union Pacific; and the line from Huntington to Portland
was owned and operated by the Oregon Railroad and Navi-
gation Company, the stock ownership of which was in the
Oregon Short Line. The boat line from Portland to San
Francisco and to the Orient, the Portland & Asiatic Steam-
ship Company, was organized early in 1901, its stock being
owned by the Oregon Railroad & Navigation Company.

The Southern Pacific Company, a holding company of the
state of Kentucky, also engaged in operating certain lines
of railroad under lease, controlled a line of railroad ex-
tending from New Orleans through Louisiana, Texas, New
Mexico, Arizona, California, and Oregon to Portland, reach-
ing Los Angeles and San Francisco, with several branch
lines and connections extending into tributary territory. A
line of boats running between New York and New Orleans
was also owned and operated by the Southern Pacific, and
later the same ships entered the port of Galveston, where
also the Southern Pacific reached tidewater, and it had
branches extending to various points in northern Texas, con-
necting with other lines of road. The Southern Pacific also
operated, under lease, the railroad of the Central Pacific
Railway Company, all the stock of which is owned by the
Southern Pacific. The lines of the Central Pacific con-
sisted of the road from San Francisco to Ogden, about 800
TRANSPORTATION AGENCIES. 589

miles, in length, and connecting at the latter place with
the Union Pacific and the Denver & Rio Grande Railroad
Company’s line. It also had various branches in and about
California, aggregating in mileage about 500 miles. The
Southern Pacific also owned a majority of the stock of the
Pacific Mail Steamship Company, which operated a line of
steamships plying to ports in the Orient and running be-
tween San Francisco and Panama, which, with the Panama
Railroad and its boats, constituted the so-called Panama
Route.’’

The government claimed that prior to the purchase of
the stock of the Southern Pacific by the Union Pacific these
two railroads were competing systems engaged in interstate
commerce, and acted independently as to a large amount of
such carrying trade; and that after the acquisition of the
stock the dominating power of the Union Pacific eliminated
competition between the two systems, and that the combina-
tion was one in restraint of trade. The Supreme Court held
that the evidence sustained the claim, and reversed the de-
cision of the lower court, and ordered the combination dis-
solved without another trial had. It was contended that the
Union Pacific was only a connecting road and really had no
line from Ogden to San Francisco, and was therefore de-
pendent on that line of the Southern Pacific (the old Cen-
tral Pacific) from Ogden to San Francisco for such terms
as it could make over that part of its road, but to this
the court said:

‘‘Competition between two such spstems consists not only
in making rates, which, so far as the shipper was concerned,
the proof shows, were by agreement fixed at the same figure
whichever route was used, and then apportioned among the
connecting carriers upon a basis satisfactory to themselves,
but includes the character of the service rendered, the ac-
commodation of the shipper in handling and caring for freight,
and the prompt recognition and adjustment of the shippers’
claims. Advantages in these respects were the subjects of
590 THE SHERMAN ANTI-TRUST ACT.

representation and the basis of solicitation by many active,
opposing agencies. The maintenance of these by the rival
companies promoted their business and increased their
revenues. The inducement to maintain these points of ad-
vantage—low rates, superiority of service and accommoda-
tion did not remain the same in the hands of a single
dominating and common ownership as 1t was when they were
the subjects of active promotion by competing owners
whose success depended upon their accomplishment. The
consolidation of two great competing systems of  rail-
road engaged in interstate commerce by a transfer to one
of a dominating stock interest in the other creates a com-
bination which restrains interstate commerce within the
meaning of the statute, because, in destroying or greatly
abridging the free operation of competition theretofore ex-
isting, it tends to higher rates.’ It directly tends to less
activity in furnishing the public with prompt and efficient
service in carrying and handling freight and in carrying
passengers, and in attention to and prompt adjustment of
the demands of patrons for losses, and these respects puts
interstate commerce under restraint. Nor does it make any
difference that rates for the time being may not be raised
and much money be spent in improvements after the com-
bination and their power to suppress or stifle competition
or create monopoly which determines the applicability of
the act.

“Tt is further contended that the real purpose in acquir-
ing the stock was not to obtain the control of the Southern
Pacific as a system, but to secure the California connection
via Ogden, and to avoid the situation which has been termed
the ‘bottling up’ of the Union Pacific at that point. That
process, we have undertaken to show, might have been detri-
mental to the Southern Pacific business in California, as it

41 United States v. Joint Traffic ing 85 Fed. 1020; 32 C. C. A. 491;
Ass’n, 171 U. S. 505; 43 L. Ed. 45 U. S. App. 762.
290; 19 Sup. Ct. Rep. 25; revers-
TRANSPORTATION AGENCIES. 591
is apparent that much of it would not have gone over the
‘Sunset’ route of the Southern Pacific. It may be conceded,
as is undoubtedly the fact, that the connection at Ogden
was a valuable one, the one practically and largely, if not
exclusively, used in the transportation of freight to and
from the state of California; but this case is not to be
decided upon the theory that only so much of the Southern
Pacific system as operates between Ogden and San Fran-
cisco has been acquired. Conceding for this purpose that
it might have been legitimate, had it been practicable, to
acquire the California connection at Ogden over the old
Central Pacific line, we must consider what was in fact
done; and that was the purchase of the controlling interest
in the entire Southern Pacific system, consisting of ocean
and river lines with a mileage of about 3,500 miles, and
railroad lines aggregating over 8,000 miles, together form-
ing a transportation system from New York and other
Atlantic ports to San Francisco and Portland and other
Pacific Coast points, with various branches and connections
besides a steamship line from San Francisco to Panama and
from San Frascisco to the Orient, and a half interest in
another line between the two latter points. The purchase
may be judged by what it in fact accomplished, and the
natural and probable consequences of that which was done.
Because it would have been lawful to gain, by purchase or
otherwise, an entrance into California over the Old Central
Pacific, does not render it legal to acquire the entire sys-
tem, largely engaged in interstate commerce in competition
with the purchasing road.’’ #?

42 United States v. Union Pa- court; failing which, or, upon the

eifie R. Co., 226 U. 8. 61, 470: 33
Sup. Ct. 53; 57 L. Ed. —; revers-
ing 188 Fed. 102. The court contin-
ued as follows: “Any plan or plans
shall be presented to the district
court within three months from the
receipt of this mandate of this

rejection by the court of plans
submitted within such time, the
court shall proceed by receivership
and sale if necessary, to dispose of
such stock in such wise as to dis-
solve such unlawful: combination.
The government has appealed from
592 THE SHERMAN ANTI-TRUST ACT.

§ 289. Advantage of Competition between Competing
Railroads.—Th advantage of competition between competing
railroad lines, and the injury to the public by their com-
bination, has thus been stated by the Supreme Court:

“It is urged that this competitive traffic was infinitesimal
when compared with the gross amount of the business trans-
acted by both roads, and so small as only to amount to that
incidental restraint of trade which ought not to be held to
be within the law; but we think the testimony amply shows
that, while these roads did a great deal of business fur
which they did not compete, and that the competitive busi
ness was a comparatively small part of the sum total of all
traffic, state and interstate, carried over them, nevertheless
such competing traffic was large in volume, amounting tu
many millions of dollars. Before the transfer of the steck,
this traffic was the subject of active competition between
these systems; but by reason of the power arising from sucii
transfer it has since been placed under a common control.
It was by no means a negligible part, but a large and
valuable part, of interstate commerce which was thus directly
affected.

‘“‘The fact that the Southern Pacific had a road of its own
from the Gulf to the Pacific Coast did not prevent competi-
tion for this traffic. The Union Pacific and its connec-
tions were engaged in the same carrying trade, and as a
matter of fact were competing for that trade by all the

the decree, which is a general one,
dismissing the bill. So far as con-
cerns the attempt to acquire the
Northern Pacific stock and the
stock of the Atchison, Topeka, &
Santa Fe Railway Company, after-
wards abandoned, and a certain in-
terest in the San Pedro, Los An-
geles & Salt Lake Railroad Com-
pany, and other features of the
case which dealt with and disposed
of by the decree and opinion of
the court below, it is sufficient,

without going into these matters
in detail, to say that as to them
we find no reason to disturb the
action of the court below but for
the reasons stated the decree
should be reversed, and one en-
tered in conformity to the views
herein expressed, so far as concerns
the acquisition of the Southern Pa-
cific stock.” Decree construed U.
S. v. Union Pacific R. Co. 226 U.
S. 470; 33 Sup. Ct. 162; 57 L. Ed.
TRANSPORTATION AGENCIES. 593
usual means of competition resorted to by rival railroad
systems. As this court said, speaking by Mr. Justice
Holmes, in Swift & Co. v. United States.*? ‘Commerce among
the states is not a technical legal conception but a practical
one, drawn from the course of business.’ That commerce,
as conducted from the East to the Pacifie Coast, was, in a
substantial part, the subject-matter of rivalry and compe-

tition between these two systems.

Since the stock transfer

the companics have common officers, and the rival soliciting
agencies have been, for the most part, abandoned.’’ **

43. Swift & Co. v. United States,
196 U. 8. 375; 49 L. Ed. 525; 25
Sup. Ct. Rep. 276; modifying 122
Fed. 529.

44 United States v. Union Pacific
R. Co., 226 U. 8. 61, 470; 33 Sup.
Ct. 53; 57 i. Ed.; reversing 188
Fed. 102. Citing United States v.
Joint Traffie Ass’n, 171 U.S. 505;
19 Sup. Ct, 25; 43 L. Ed. 290; re-
versing 89 Fed. 1020; 32 C. C. A.
491; 45 U. 8. App. 762, which
affirmed 76 Fed. 895; and Pearsall
v. Great Northern R. Co., 161 U.
S. 646; 16 Sup. Ct. 705; 40 L. Ed.
838. In the Union Pacific case
it was further said: ‘The facts
disclose, as we have already said,
that the Union Pacific had a line
to Portland by way of the Oregon
Short Line and the Oregon Rail-
road & Navigation Company, and
thence to San Francisco by steam-
boat connection. It may be ad-
mitted that this was a much long-
er route than by way of the Ogden
connection, and that, as a practical
matter, nearly all of the freight
intended for San Francisco and
nearby points went over the Ogden
route; nevertheless, the Portland
route was a factor in rate making
to the coast, and the testimony

shows that the Union Pacific and
the Southern Pacific, up to the
time of the sale of the stock,
had been working for many years
under a satisfactory arrangement
as to rates. It is going too far to
say that the Union Pacific was
entirely at the mercy of the South-
ern Pacific in making rates for
freight by way of Ogden connec-
tion, because the latter company
controlled the old Central Pacific
line to San Francisco. It certain-
ly would have been detrimental
to the Southern Pacific to have
declined an arrangement for the
carriage of freight received from
the Union Pacific and its connec-
tions for transportation to Cali-
fornia by way of the Ogden route.
The traffic manager of the South-
ern Pacific testified that the divi-
sion of the through rate from
Omaha to San Francisco has been
the same since 1870, that he
thought it unfair to the Southern
Pacific, but that it was the best
that could be obtained at the time.
One of the reasons for the Central
Pacific leasing its lines to the
Southern Pacific that it had se-
cured control of the Oregon Short
Line, and thereby obtained an out-
594 THE SHERMAN ANTI-TRUST ACT.

§290. Combination of Railroad Companies Competing
with Coal Mining Companies to Defeat Construction of In-
dependent Railroads—Reading Co. Case—Sixty-five Per
Cent. Contracts.—Certain railroad companies possessed a
substantial monopoly of the transportation facilities be-
tween the anthracite coal mines in Pennsylvania and sea-
water distributing points. They controlled nearly three-
fourths of the annual supply of anthracite, by the aid of
their subsidiary coal mining and coal selling companies.
With the purpose of defeating the construction of a pro-
jected independent competing railway line and thus pre-
serving their existing monopoly of transportation, these
railway companies purchased, through another corporation
whose capital stock they first acquired, the coal properties and
colliers, which, considered as an independent act, and which
without taking into consideration the other acts of the
railroads, was perfectly lawful under the law. The court
held that those railroads were guilty of a violation of the
Sherman Anti-Trust Act. These railway companies with
the aid of their subsidiary coal mining and coal selling com-
panies controlled nearly three-fourths of the annual supply
of anthracite, and by reason of this fact a large number of
independent coal operators were induced to enter singly
into uniform perpetual agreements for the sale to someone
of these railway companies, or its subsidiary coal company,
of the entire output of their several mines and any others
they might thereafter acquire, at a fixed percentage of the
general average price prevailing at sea-water points either at
or near New York City, which would net the operator
slightly more than if he had shipped and sold on its own

let to the Pacific, other than over
the Central Pacific, ‘and thus in
that respect placed itself in oppo-
sition to the interests of the Cen-
tral Pacific, and that it wae ‘not
only to the best interests of, but
absolutely necessarv that, the Cen-

tral Pacific Railroad Company, in
order to maintain itself against
these diversions (of the Union Pa-
cific and others), should be ope-
rated in connection with a friend-
ly through line to the waters of
the Atlantic.’ ”
TRANSPORTATION AGENCIES.

account.

595

The necessary result was that these railway com-

panies secured the control at sea-water markets of a sale

of a large part of the independent output.

This was like-

wise held to be a violation of the same Act.*®

45 United States v. Reading Co.,
228 U.S. 158; 33 Sup. Ct. 90; 57
L. Ed. —; reversing and affirming
in part 183 Fed. 427. The court
said in part: “The projected com-
peting railroad was undoubtedly a
yood faith proposition and held
out promise to independent coal
operators not only of the prospect
of competition in transportation
from the mines to tidewater, but
the possibility of selling their coal
either to the controlled coal com-
panies defendant at better prices,
or to the consuming public at tide-
water in competition with that of
the controlled coal companies. But
if we assume that its construction
was doubtful, the result must be
the same as characterizing the pur-
pose and design of the concerted
action of the defendants. They
were so far convinced of the
threatening character of the enter-
prise that they were moved at
great cost to thwart it and at the
same time remove the temptation
for like competition by securing to
themselves forever the product of
the collieries named. That the col-
lieries to be reached by the new
road were not all reached by each
of the defendants is true. The
great bulk of tonnage from them
seems to have been carried by the
Erie, the Lehigh, and the Lacka-
wanna. But the preservation of
the monopoly of transportation
from the mines to tidewater held
by the six lines which were servy-
ing the region was plainly a com-

mon interest, a collective monopoly
by which the profits in coal could
be secured and the monopoly main-
tained by shutting out any new
line to tidewater. The extent of
the interest of each in the desired
result seems to have been esti-
mated by themselves as fairly
measured by the percentage of the
total tonnage theretofore carried
annually by each. Thus it was that
they became owners of the shares
in the Temple Company, and guar-
antors of its obligations in the
same proportions. It hag been
suggested that since the New York,
Wyoming, & Western Railroad has
been effectively strangled that it
will be idle to enjoin the doing of
an act already accomplished. But
that it is a narrow view of the
relief which may be granted under
the statute and the frame of this
bill. The combination by means of
the Temple Company still exists.
It has been and still is an effi-
cient agency for the collective ac-
tivities of the defendant carriers
for the purpose of preventing com-
petition in the transportation and
sale of coal in other states. That
under the law of Pennsylvania
each of the defendant carrier com-
panies has the power to acquire
and hold the stock of coal-produc-
ing companies may be true. That
the Temple Company may, under
the same law, have the power to
acquire and hold the capital stock
of the Simpson & Watkins’ col-
lieries may also be conceded. But
596

THE SHERMAN ANTI-TRUST ACT.

Where coal carrying railroads extended into the same
coal fields, although they reached different mines, and where
they extended into different fields where competing coal was
produced, and they traversed generally parallel lines and
reached either directly or through their connections the same
markets in other states, it was held that they must be re-
garded as natural competitors in interstate commerce, and

if the defendant carriers did, as
we have found to be the fact, com-
bine to restrain the freedom of in-
terstate commerce either in the
transportation or in the sale of
anthracite coal in the markets of
other states, and adopted as a
means for that purpose the Temple
Company, and, through it, the con-
trol of the great Simpson & Wat-
kins’ collieries, the parts of the
general scheme, however lawful,
considered alone, become parts of
an illegal combination under the
Federal statute which it is the
duty of the court to dissolve ir-
respective of how the legal title
to the shares is held. Northern
Securities case, 197 U. 8. 197, 291;
49 L. Ed. 739, 761; 25 Sup. Ct.
Rep. 493; affirming 120 Fed, 721.
So long as the defendants are able
to exercise the power thus illegally
acquired, it may be most efficiently
exerted for the continued and fur-
ther suppression of competition.
Through it, the defendants, in com-
bination, may absorb the remain-
ing output of independent produc-
ers. The evil is in the combina-
tion. Without it the several
groups of coal-carrying and coal-
producing companies have the pow-
er and motive to compete. That
each may for itself advance the
price of coal or cut down the pro-
duction is true. But in the power

which each other.group would have
to compete would be found correc-
tive. The statute forbids the con-
certed action which has already
brought about the strangling of a
projected competing railroad and
the complete control of the sale of
an immense tonnage of independ-
ent coal which had prior thereto
not only been a menace to their
collective control of the meaas of
transportation to New York Har-
bor points, but a large competing
factor in sales at these points.
The Temple Company, therefore,
affords a powerful agency by
means of which the unlawful pur-
poses which induced its acquisition
may be continued beyond the mere
operation of the Simpson & Wat-
kins’ collieries.” The court con-
cludes with the following: “We are
thus led to the conclusion that the
defendants did combine for two dis-
tinct purposes; first, by and
through the instrumentality of the
Temple Iron Company, with the
object of preventing the construc-
tion of an independent and com-
peting line of railway into the an-
thracite region; and, second, by
and through the instrumentality
of the sixty-five per cent. contracts,
with the purpose and design of
controlling the sale of the inde-
pendent output at tidewater.”
TRANSPORTATION AGENCIES. 597

any arbitrary agreement between them or between them and
the coal companies, by which natural competition was elim-
inated was a violation of the Sherman Act. It was also
held that the acquiring by such railroads of large coal
mining interests tributary to their several lines, so that both
the railroad and mining interests were under a single con-
trolling power, the result being a division of the traffic and
the elimination of competition as to interstate as well as
domestic shipments, and a discrimination against all new
and independent mines, was one in restraint of interstate
commerce and created a monopoly.*®

§ 291. Southeastern Freight Association.—An association
was formed in the south by railroads which entered into
an agreement for the fixing of rates in the state of Virginia,
the Carolinas, Georgia, Florida, and those portions of Ten-
nessee and Alabama east of a line extending from Chatta-
nooga by Birmingham, Zelma and Montgomery to Pensa-
cola. The association advanced the rates two cents a hun-
dred pounds on lumber shipped from Georgia points to
points of delivery on the Ohio river and beyond; and an
action was brought against one of the parties to the com-
bine to prevent it from enforcing the additional rate. A
temporary restraining order was denied,*? but upon final
hearing it was granted. The Interstate Commerce Com-
mission had examined the contract of combination and
pronounced it illegal. The trial court and the Interstate
Commerce Commission both considered the combine an il-
legal one under the Sherman law.**

46 United States v. Lake Shore & teen years before the same judge,

M. S. Ry. Co., 203 Fed. 295. Speers, had spoken of the same
47 Tift v. Southern Ry Co., 123 or a similar combination or agree-
Fed. 789. ment as follows: “It is not diffi-

48 Tift v. Southern Ry. Co., 173 cult to perceive that a combination
Fed. 753. The court relied upon of corporations which produces a
the first transportation cases de- condition so inequitable can not be
cided by the Supreme Court. Thir- sanctioned by the law. We believe
598 THE SHERMAN ANTI-TRUST ACT.

§ 292. Contracts to Carry Through Freight—Refusing to
Make With Another Carrier—A carrier may enter into a
contract with another carrier, to the exclusion of other car-
riers, for the interchange of freight and passengers by
through tickets and bills of lading without a violation of
the Anti-Trust Act. ‘‘There is no principle of the common
law which forbids an individual corporation, or two or three
or more corporations, from selecting as to which one or
two or more corporations they will employ, as auxiliary to
their own lines, as the agency by which they will send
freight beyond their own lines, or as their agent to receive
freight or the auxiliary line to be transmitted to their own
line upon through bills, without breaking bulk. And I do
not find in the interstate commerce law sufficient to warrant
the conclusion that the law has been changed in that par-
ticular.’’#®

“The conclusion is reached, therefore, that this was not
a contract in unlawful restraint of trade, within the mean-
ing of the Act of July 2, 1890, for the reason that it was
not so at common law, was not made so by the Interstate
Statute, and that the Act of 1890 is directed solely against

that transactions of this character
are within the spirit if not within
the letter, of the act of Congress
known as the ‘Sherman Anti-Trust
Law’ (Act July 2, 1890,) C. 647,
26 Stat. 209 (U. S. Comp. St. 1901,
p. 3200). It is certainly, as we
have seen, obnoxious to the law
of Georgia, and it was certainly
as obnoxious to the common law.”
Clarke v. Central R. R. & Bank-
ing Co. of Georgia, 50 Fed. 338:
15 L. R. A. 683, 763. This was
a pioneer case.

49 The court explained its for-
mer decisions: “This court sitting
in May, 1892, at a term where the
present judge sat, reached a some-
what different conclusion in New

York & N. Ry, Co. v. New York &
N. E. R. Co., 50 Fed. 867. Of that
case it is to be said that the de-
cision was to some extent induced
by the way in which the case came
to the court, after action by the
interstate commerce commission,
already partially accepted by both
sides; and, moreover, there had not
been at that time so exhaustive a
judicial examination and exposi-
tion of the terms of the interstate
commerce law as we now find in
the authorities, notably in the de-
cisions of circuit courts of ap-
peals.” See U.S. v. Pacific, etc.,
Nav. Co., — U. S. —; 33 Sup. Ct.
443; 57 L. Ed. —.
TRANSPORTATIUN AGENCIES. 599
contracts which would have been unlawful before the passage
of the Act.” °°

§ 293. Pooling Earnings and Dividing on Percentage
Basis—An agreement among railroads selling passenger
tickets for interstate commerce to a certain common point
to pool the gross amounts received from sales of tickets and
divided the gross sum on an agreed basis is a violation of
the Anti-Trust Act; and a railroad company which is a
party to such an agreement cannot enjoin a ticket broker
to prevent the sale of a ticket it has sold for transportation
to such common point in violation of a condition therein
that it is not transferable from the original purchaser to
the broker’s customer.*+

§ 294, Combination Formed in Foreign Country.—A
combination formed in a foreign country to restrain foreign
commerce with this country if carried out so as to monopo-
lize transportation to and from the United States is a vio-
lation of the Statute. ‘‘That the combination was formed

59 Prescott & A. C. R. Co. v.
Atchison T. & S. F. R. Co., 73 Fed.
438. Appeal dismissed 84 Fed.
213. The case was an action for
unlawful discrimination in refus-
ing to accept freight from the
plaintiff on through bills of lading,
while such freight was accepted
and carried on through bills, un-
der contracts with other railroad
companies. The complaint was
dismissed. The court relied upon
Dueber Watch-Case Mfg. Co. v. E.
Howard Watch & Clock Co., 66
Fed. 637; 14 C. C. A. 14; affirm-
ing 55 Fed. 851; and United States
v. ‘rans-Missouri Freight Ass’n.,
58 Fed. 58; 7 C. C. A. 15; affirm-
ing 53 Fed. 440. Afterwards this
last case was reversed, 166 U. S.

290; 17 Sup. Ct. 548; 41 TL. Ed.

1007. The same point was
decided in Gulf CGC. & S F.
Ry. Co. v. Miami 8S. S. Co.,

86 Fed. 407; 30 C. C. A. 142. In
this last case the effect of grant-
ing the relief prayed for would
have been the granting of a man-
datory injunction to compel the
defendant railway company to en-
ter into a contract with the plain-
tiff on the same terms it had done
with other companies. The court
declined to grant such relief.

51 Delaware L. & W. R. Co. v.
Frank, 110 Fed. 689. This case
arose in 1901 over the special tick-
ets issued on account of the Pan-
American Exposition at Buffalo,
New York.
600 THE SHERMAN ANTI-TRUST ACT.

in a foreign country is likewise immaterial. It affected the
foreign commerce of this country, and was part in operation
here.’’ ©?

§ 295. Pooling Receipts from Foreign Shipping Trade.—
An agreement to divide the traffic of foreign steamships,
engaged in carrying passengers between this and other coun-
tries into stated percentages derived from the pooling of
receipts received from excessive charges made in the trans-
portation of passengers is void under the statute and a
violation of it.

‘“Whether or not the statute is directed against all com-
binations in restraint of competition, it is certain that it
embraces those in which the purpose and effect are to charge
arbitrary and excessive transportation rates. Whether the
statute be broadly or narrowly construed, it is clear that
it prohibits combinations and conspiracies to restrain the
business of transporting passengers when accompanied with
acts of oppression and attempts to monopolize.’’ **

So a combination made in this or another country between
ship owners to maintain uniform rates is a foreign trade
between this and a particular country, and to eliminate the
possibility of competition with other lines by requiring ship-
pers to pay forfeit money in case they patronize other lines,
constitutes a violation of the statute, being in restraint of
foreign trade.** .

52 Thomsen v. Union Castle Mail
S. S. Co., 166 Fed. 251; 92 0. C.
A. 315; reversing 149 Fed. 933.
United States v. Hamburg-Ameri-
canische Packetfahrt-Actien-Gesell-
schaft, 200 Fed. 806. See Steele
vy. United Trust Company, 190
Fed. 631, where one company
bought enough stock in a compet-
ing company to control it.

53 United States v. Hamburg-
Americanische Packetfahrt-Actien-
Gesellschaft, 200 Fed. 806.

54 Thomsen v. Union Castle Mail
S. 8. Co., 166 Fed. 251, 92 C. C.
A. 315; reversing 149 Fed. 933.
Reversed on appeal after a second
trial. Union Castle Mail 8. 8. Co.
v. Thomsen, 190 Fed. 536; 111 C.
C. A. 674. See also as to the ef-
fect of buying stock enough in an-
other competing company to con-
trol it, Steele v. United Trust Co.,
190 Fed. 631.
TRANSPORTATION AGENCIES. 601

§ 296. Combination Formed Before Enactment of Stat-
uate—Intent.—It is not a defense to the charge of monopoliza-
tion of interstate commerce that the combination among
shippers was formed before the statute was enacted. ‘‘The
statute applies to continuing combinations. It is as unlaw-
ful to prevent a person from engaging in business as it is
to drive a person out of business.’’*> Such a construction
does not give to the law a retro-active effect; for the com-
bination is a continuing one.

‘‘In the view we have taken of the question, the intent
alleged by the government is not necessary to be proved.
The question is one of law in regard to the meaning and
effect of the agreement itself, namely: Does the agreement
restrain trade or commerce in any way so as to be a viola-
tion of the act? We have no doubt that it does. The agree-
ment on its face recites that it is entered into, for the pur-
pose of mutual protection by establishing and maintaining
reasonable rates, rules and regulations on all freight traffic,
both through and local.’ To that end the association is
formed and a body created which is to adopt rates, which,
when agreed to, are to be the governing rates for all the
companies, and a violation of which subjects the defaulting
company to payment of a penalty, and although the parties
have a right to withdraw from the agreement on giving
thirty days’ notice of a desire so to do, yet while in force
and assuming it to be lived up to, there can be no doubt
that its direct, immediate and necessary effect is to put a
restraint upon trade or commerce as described in the act.

‘‘For these reasons the suit of the government can be
maintained without proof of the allegation that the agree-
ment was entered into for the purpose of restraining trade
or commerce or for maintaining rates above what was rea-
sonable. The necessary effect of the agreement is to restrain

55 Thomsen v. Union Castle Mail
S. 8S. Co., 166 Fed. 251; 92 C. C.
A, 315; reversing 149 Fed. 933.
602 THE SHERMAN ANTI-TRUST ACT.

trade or commerce, no matter what the intent was on the
part of those who signed it.’’**

§ 297. Shipping Contract—Special Privileges.——A plain-
tiff brought an action to recover damages for breach of a
contract that was to cover ten years. The terms of the
contract are thus summarized by the court:

‘‘By the terms of the contract, Westcott undertook to use
his best endeavors to ‘build up, develop, increase, facilitate,
and conduct the business of transportation of milk’ over the
lines of defendant’s railroad; that he would be wholly re-
sponsible for the milk transported over said lines, and save
the defendant harmless from all claims arising from or con-
nected with the milk business, except those from accidents
and casualties to its trains or its own negligence; that he
would save the defendant harmless from all liability for loss
of life or injury to any person doing business over its lines
on his account; that he would not charge for transportation
of milk ‘rates in excess of those charged by competitive rail-
roads for similar services’; and that he should monthly pay
over to the defendant 80 per cent. of all charges collected by
him for the transportation of milk during the preceding
month, retaining 20 per cent. thereof in full compensation for
his own services. The defendant on its part undertook to re-
ceive, load and transport, at and from all stations on its lines,
all the milk furnished at said stations for transportation, and
to transport the same upon its trains at such times as might
be best calculated to promote its business; that it would not
permit any of its agents or servants to do any act to prevent
or interfere with the developing, building up and conducting
of the milk business of Westcott, and would grant him the
exclusive privilege of transporting milk over the said lines
‘so far as it was permitted to do so by law’; that it would
furnish sufficient depot accommodations for the conduct of
the milk business, render such assistance to the messengers of

56 United States v. Trans-Mis- 1007; reversing 58 Fed. 58; 32 C.

souri Freight Ass’n., 166 U. S. C. A. 491; 45 U. S. App. 762;
290; 17 Sup. Ct. 548; 41 L. Ed. which affirmed 53 Fed. 440.
TRANSPORTATION AGENCIES. 603

Westcott accompanying the milk trains as might be necessary
for the prompt unloading of such milk, and promptly re-
transport and return to the several stations the empty milk
cans used in the transportation of the milk. The contract
was, by its terms, ‘subject to revision after three years, and
at the end of any one year thereafter, on giving three months’
notice, and, in case of any difference between the parties, pro-
vided for a submission to arbitration.’’

The court held that the contract was not wlira vires, but
also that it did not violate the Anti-Trust Act, although it
operated on interstate commerce. The court said that ‘‘it
did not have any tendency to create a monopoly, or evidence
any conspiracy in restraint of trade. It could only operate
in restraint of trade, by permitting Wescott to charge such
extortionate rates to milk shippers as would discourage ship-
pers; and this it did not permit or contemplate.’’®"

§ 298. Intrastate Traffic on Ohio River—Doubt as to
Whether it is Interstate Traffic—Two packet or steamboat
companies had lines of communication on the Ohio River
from points within the state of Ohio to other points within
the same state. One of them purchased the boats of the
other, and agreed to pay it annually in advance several
thousand dollars if it would discontinue its operations for
five years. The purchasing company agreed to maintain the
rates then in force, with some slight modifications; but if a
competitor should enter the field, causing it to carry freight
and passengers at exceedingly low rates, the time of the
payment of the instalments were to be postponed until the
opposition had ceased. If the opposition continued for two
years without interruption, and no annual payment was
made, the veudor could cancel the agreement. The court
held, even though the contract affected interstate commerce,
it was not necessarily void because of the agreement of the
vendors to withdraw from business for the period specified ;

57 Delaware L. & W. R. Co. v.

Kutter, 147 Fed. 51; 77 C. oc. A.
315.
604 THE SHERMAN ANTI-TRUST ACT.

and it also held that the purchaser could not set up the
Sherman Anti-Trust Act to relieve it from its obligation to
pay the purchase price, because of its covenant to maintain
the traffic rates then in force, which were not declared by
the contract to enter into the consideration of the sale.
This was said to be especially true because of the fact that
the rates referred to primarily, if not exclusively, related to
domestic and not interstate commerce.*®

§ 299. Lease and Sale of Railroad Stand on Same Basis.
A lease and sale of a railroad or line of ships stand on
the same basis so far as a violation of the Sherman Act. is
concerned. But speaking of a line of boats, it seems obvious,
however, that a lessor may have a greater interest in creating
and maintaining a monopoly than a vendor from the fact
that on the termination of the lease the lessor, as the owner
of boats suitable for the traffic in question, would be inter-
ested in the existence of as little competition as possible.®®

§ 300. Lease of Boat Line and Agreement Not to Com-
pete for a Term of Years.—Two ship companies were oper-
ating a line of vessels between Toledo and Detroit, and for

58 Cincinnati etc. Packet Co. v.
Bay, 200 U. 8. 179; 26 Sup. Ct.
208; 50 L. Ed. 428. Justice
Holmes said this concerning wheth-
er the contract fell within the
scope of the Sherman Act: “It
would accomplish no public pur-
pose but simply would provide a
loophole of escape to persons in-
clined to elude performance of
their undertaking, if the sale of
a business and temporary with-
drawal of the seller necessary in
order to give the sale effect were
to be declared illegal in every case
where a nice scrutiny could dis-
cover that the covenant possibly
might reach beyond the state line.
We are of opinion that the agree-
ment before us is not made illegal
by either of the provisions thus

far discussed.” This case was ap-
proved in Merchants National
Bank v. Wehrmann, 202 U.S. 299;
26 Sup. Ct. 613; 50 L. Ed. 1040;
reversing 69 Ohio Ct. 160; 68 N.
E. 1004.

59 Darius Cole Transp. Co. v.
White Star Line, 186 Fed. 63. Cit-
ing United States v. Trans-Mis-
souri Freight Ass’n., 166 U. 8.
290; 17 Sup. Ct. 540; 41 L. Ed.
1007; reversing 58 Fed. 58; 7 C.
C. A. 15; 19 U. S. App. 36; 24
L. R. A. 73; 4 Interst. Com.
Rep. 443; which affirmed 53 Fed.
440, and United States v. Joint
Traffic Ass’n., 171 U. S. 505; 19
Sup. Ct. 25; 43 L. Ed. 259; which
reversed 89 Fed. 1020; 32 C. C. A.
491; 45 U. S. App. 762, which
affirmed 76 Fed. 895.
TRANSPORTATION AGENCIES. 605
a number of years had operated them under a pooling
arrangement which gave them a monopoly. At the expira-
tion of this arrangement the libellant sold one of its vessels
to the respondent and leased its only remaining vessel to a
third company for a term of three years, to be run between
the same two cities, and at the same time transferred its
good will, and agreed not to engage in competition during
the term. The rental reserved was more than the vessel
rented could have earned if operated independently. It
was held that the arrangement showed that the dominant
purpose of the parties was to enable the respondent to
maintain its monopoly of the business, and that the lease
was void.

§ 301. Right to Withdraw from Combination—Effect on
Withdrawing Party.—The fact that one of the parties to
an agreement for the fixing of rates by its express terms
has the right to withdraw therefrom does not render it
immune from the condemnation of the law. Such a privi-
lege is ‘‘merely a recitation of a privilege which any party
to an unlawful enterprise inherently enjoys. Confederates
or conspirators who unite to do an unlawful act or to do
a lawful act in an unlawful way may jointly or severally
abandon the project. The law affords them the locus
penitentae. If, however, the object of the conspiracy is
accomplished, its character is not to be determined in view
of the consideration that the conspirators might have re-
pented, but with an eye single to the fact that they did
not repent.**

In the case of the Joint Traffic Association was a provis-
ion giving a party to the agreement the right to change
agreements of the association were
made to be kept, and not to be
broken. Good faith between the

members, not to mention a power-
ful compulsory force behind them,

60> Darius Cole Transportation
"Yo. v. White Star Line, 186 Fed.
63; 108 C. C. A. 165; White Star
Line v. Star Line of Steamers, 141
Mich. 604; 105 N. W. 135; 113

Am. St. 551.

61 Tift v. Southern Ry. Co., 138
Fed. 753. The court adds: “Be-
sides, it is indisputable that the

obliged that the agreements to be
kept, and the fact is, as the com-
mission finds, they were kept.”
606 THE SHERMAN ANTI-TRUST ACT.

the rate for freight upon giving notice to the board estab-
lished by the agreement for fixing rates. In the Trans-
Missouri Freight Association case no such agreement was
provided for. In the first case (the Joint Traffic case) the
court compares the two agreements involved on this point,
and then declares the effect of a party to it withdrawing,
and the little likelihood it would do so, saying, referring to
the Trans-Missouri Freight case:

“In that case the rates were established by the agreement
and any company violating the schedule of rates as estab-
lished under the agreement was liable to a penalty. <A
company could withdraw from the association on giving
thirty days’ notice, but while it continued a member it
was bound to charge the rates fixed, under a penalty for
not doing so. In this case the companies are bound to
charge the rates fixed upon originally in the agreement or
subsequently recommended by the board of managers, and
the failure to observe their recommendations is deemed a
violation of the agreement. The only alternative is the
adoption of a resolution by the board of directors of any
company providing for a change of rates so far as the
company is concerned, and the service of a copy thereof
upon the board of managers as already stated. This
provision for changing rates by any one company is absent
from the other agreement. It is this provision which is
referred to by counsel as most material and important,
and one which constitutes a material and important dis-
tinction between the two agreements. It is aid to be
designed solely to prevent secret and illegal competition
in rates, while at the same time providing for and permit-
ting open competition therein, and that unless it can be
regarded as restraining competition so as to restrain trade,
there is not even an appearance of restraint of trade in the
agreement. It is obvious, however, that if such deviation
from rates by any company from those agreed upon, be
tolerated, the principal object of the association fails of
accomplishment, because the purpose of its formation is
TRANSPORTATION AGENCIES. 607

the establishment and maintenance of reasonable and just
rates and a general uniformity therein. If one company
is allowed, while remaining a member of the association, to
fix its own rates and be guided by them, it is plain that as
to that company the agreement might as well be rescinded.
This result was never contemplated. In order, therefore,
not only to prevent secret competition, but also to prevent
any competition whatever among the companies parties to
the agreement, the provision is therein made for the prompt
action of the board of managers whenever it receives a copy
of the resolution adopted by the board of directors of any
one company for a change of the rates as established under
the agreement. By reason of this provision the board
undoubtedly has authority and power to enforce the uni-
formity of rates as against the offending company upon
pain of an open, rigorous and relentless war of competition
against it on the part of the whole association. A company
desirous of deviating from the rates agreed upon and which
its associates desire to maintain is at once confronted with
this probability of a war between itself on the one side and
the whole association on the other, in the course of which rates
would probably drop lower than the company proposing,
and lower than it would desire or could afford, and such a
prospect would be generally sufficient to prevent the in-
auguration of the change of rates and the consequent com-
petition. Thus the power to commence such a war on the
part of the managers would operate to most effectually
prevent a deviation from rates by any one company against
the desire of the other parties to the agreement. Competition
would be prevented by the fear of the united competition
of the association against the particular member. Counsel
for the association themselves state that the agreement
makes it the duty of the managers, in case the defection
should injuriously affect some particular members more than
others, to endeavor to furnish reasonable rates so as to meet
such competition, or by recommending such fierce competi-
tion as to persuade the recalcitrant to fall back into line.
608 THE SHERMAN ANTI-TRUST ACT.

By this course the competition is open, but none the less
sufficient on that account, and the desired and expected
result is to be the yielding of the offending company, induced
by the war which might otherwise be waged against it by
the combined force of all the other parties to the agreement.
Under these circumstances the agreement, taken as a whole,
prevents, and was evidently intended to prevent, not only
secret but any competition. The abstract right of a single
company to deviate from the rates becomes immaterial and
its exercise, to say the least, very inexpedient, in the face of
this power of the managers to enlist the whole association
in a war upon it. This is not all, however, for the agreement
further provides that the managers are to have power to
organize such joint freight and passenger agencies as they
may deem desirable, and if established, they are to be
arranged as to give proper representation to each company,
and no soliciting or contracting passenger or freight agency
can be maintained by any of the companies, except with
the approval of the managers. They are also charged with
the duty of securing to each company, party to the agree-
ment, equitable proportions of the competitive traffic cov-
ered by the agreement, so far as can be legally done. The
natural, direct and necessary effect of all these various
provisions of the agreement is to prevent any competition
whatever between the parties to it for the whole time of its
existence. It is probably as effective in that way as would
be a provision in the agreement prohibiting in terms any
competition whatever.”

§ 302. Combinations Indirectly and Not Necessarily
Affecting Transportation.—It has been said ‘‘that contracts
which do not directly and necessarily affect transportation,

62 United States v. Joint Traf-  Trans-Missouri Freight Associa-
fic Ass’n., 171 U. S. 505; 19 Sup. tion, 166 U. S. 290; 17 Sup Ct.
Ct. 25; 43 L. Ed. 259; reversing 540; 41 L. Ed. 1007; 4 Interst.
89 Fed. 1020; 32 C. ©. A. 491; Com. 443; reversing 19 U. S. App.
45 U. 8. App. 762; which affirmed 36; 24L. R. A. 73; 70. C0. A. 15;
76 Fed. 895; United States v. which affirmed 53 Fed. 440.
TRANSPORTATION AGENCIES. 609
or rates therefor, are not in restraint of trade, or within
the statute, even though they may remotely and directly
appear to have some probable effect in that direction.’’
This case was reversed because the court did not have juris-
diction of the cause of action; and it was also decided
wrongly because of the subsequent decision of the Supreme
Court in the Northern Securities case. The statement
quoted, however, seems to contain a sound enunciation of
law, for as we have seen elsewhere, the Anti-Trust Act
only applies to contracts or combinations which directly
(and necessarily) restrain interstate commerce.

§ 303. Intrastate Commerce Restraining.—if the contract
only affects intrastate commerce, then the Federal statute
does not apply to it. Thus a combination between the
owners of things operating entirely within the confines of
a state was held not to be a combination in restraint of
trade or commerce among the several states cr with foreign
nations, so as come within the prohibitions of the Sherman
Anti-Trust Act, although most of the owners held coasting
licenses.*#

63 Minnesota v. Northern Secur-
ities Co., 123 Fed. 692; reversed

able and ought to be upheld. The
purpose rather was to place a stat-

194 U. S. 48; 24 Sup. Ct. 598; 48
L. Ed. 870. The court refused to
follow United States v. Northern
Securities Co., 120 Fed. 721; which
was afterwards affirmed, 193 U. S.
197; 24 Sup. Ct. 436; 48 L. Ed.
679. The statement made above
finds support in Justice Brewer’s
opinion in Northern Securities Co.
v. United States, 193 U. S. 197,
361; 24 Sup. Ct. 486; 48 L. Ed.
679; affirming 120 Fed. 721; viz.:
“Congress did not intend to reach
and destroy those minor contracts
in partial restraint of trade which
the long course of decisions at com-
mon law had affirmed were reason-

utory prohibition with prescribed
penalties and remedies upon those
contracts which were in direct re-
straint of trade, unreasonable and
against public policy. Whenever a
departure from common law rules
and definitions is claimed, the pur-
pose to make the departure should
be clearly shown. Such a purpose
does not appear and such a de-
parture was not intended.”

64The Charles E. Wiswall, 86
Fed. 671, 30 C. C. A. 339; affirm-
ing 74 Fed. 802. See United States
v. Pacific, ete., Co. — U. S. —;
33 Sup. Ct. 443; 57 L. Ed. —.
610

THE SHERMAN ANTI-TRUST ACT.

' §304. Prepayment of Charges, Exacting of One Carrier
and Not Another.—A carrier may demand prepayment of
freight charges delivered to it by one connecting carrier,
without exacting such prepayment when delivered by an-
other connecting carrier, and may advance freight charges
to one connecting carrier without advancing such charges
to another connecting carrier, without a violation of either
the common law or interstate commerce law or the Anti-

Trust Act.

65 Gulf, C. & S. F. Ry. Co. v.
Miami S. 8. Co., 86 Fed. 407; 30
Cc. C. A. 142; Southern Indiana
Express Co. v. United States Ex-
press Co., 88 Fed. 657; affirmed,
92 Fed. 1022; 35 C. C A. 172. In
the latter case the court said:
“There is no principle of the com-
mon law requiring a common car-
rier receiving articles of trade and
commerce from a connecting line
to advance or assume the payment
of the charges accrued thereon for
the transportation of such articles
from the point of origin to the
connecting line. If it does thus
pay or assume such accrued charg-
es it can retain a lien upon the
property transported for their pay-
ment as well as for the payment
of the charges due to itself for
such transportation. An express
company, like any other common
carrier, has a right to demand that
its charges for transportation shall
be paid in advance, and is under
no obligation to receive goods for
transportation unless such charges
are paid if demanded. Nor is such
express company under any obli-
gation to pay to the tendering com-
pany the charges due to it for its
services in transporting such ar-
ticles of trade and commerce from

the point of origin to the point of
tender. It is true that the gen-
eral practice is to collect the charg-
es upon delivery of the goods to
the consignee, and, when goods are
received without payment in ad-
vance being demanded, it becomes
the duty of the carrier to trans-
port them to their destination, or
to deliver them to the next receiv-
ing carrier. Receiving the goods
for transportation without any de-
mand for payment of charges con-
stitutes a waiver of such right.
The carrier holds a lien upon the
goods for payment of charges, and,
in case of delivery of them to con-
signee before payment, it can hold
him responsible therefor. The
same rule applies whether the ar-
ticles of trade and commerce are
received from the original consign-
or or from a connecting carrier.
An express company, in the abs-
ence of contract, is under no obli-
gation to receive and transport for
the original consignor, or to con-
tinue the transportation for a con-
necting carrier without the pre-
payment of its charges if de-
manded. The furnishing of equal
facilities, without discrimination,
does not require a common carrier
to advance money to all other car-
TRANSPORTATION AGENCIES. 611

§ 305. To Control a Railroad Company Not Necessary
to Own a Majority of its Stock.—It is often and usually
not necessary to enable a single interest to control a rail-
road company that that interest should own a majority of
the shares of stock of such railway company. Where stock
is owned by widely scattered stockholders, a single stock-
holder of less than half the stock issued is very often, and
usually does, control the company in the election of its
officers and consequently fixing its policies and actions. If
the stock owned by the single individual prove sufficient
to obtain control of the competing line of railway or to
form the combination, that is all that is needed, in this
event, to render the transaction illegal.®*

§306. Federal Court’s Power to Restrain Corporation
Exercising its Powers Under State Laws.—As we have seen,
the Northern Securities Company was organized under the
laws of New Jersey as a holding company, oracompany to
purchase the stock of other companies, and the claim was
made that Congress could not enact a law that would reach
such a situation, although it should be found that the object
of the formation of the New Jersey corporation was to
secure the stock and control the two competing railway com-
panies, The Great Northern and the Northern Pacific. The
court rejected the claim, declaring that such a view could
not be maintained without destroying the just authority
of the United States, and saying:

‘‘No state can, by merely creating a corporation, or in
any other mode, project its authority into other states, and

riers on the same terms, nor to 465. Little Rock & M. R. Co. v.
give credit for the carriage of ar- St. Louis S. W. Ry Co., 11 C. CO.
ticles of trade and commerce to all A. 417, 63 Fed 775; Little Rock
carriers because it extends credit & M. R. Co. v. St. Louis, I. M. &
for such services to others. Ore- S. Ry. Co., 41 Fed. 559.”

gon Short-Line & U. N. Ry. Co. 66 United States v. Union Pa-
v. Northern Pac. R. Co, 9 C. C. cific R. Co., 226 U.S. 61, 470: 33
A. 409; 61 Fed. 158; Id., 51 Fed. Sup. Ct. 53; 57 L. Ed. —.
612 THE SHERMAN ANTI-TRUST ACT.

across the continent, so as to prevent Congress from exert-
ing the power it possesses under the Constitution over inter-
state and international commerce, or so as to exempt its
corporation engaged in interstate commerce from obedience
to any rule lawfully established by Congress for such com-
merce. It can not be said that any state may give a cor-
poration, created under its laws, authority to restrain inter-
state or international commerce against the will of the
nation as lawfully expressed by Congress. Every corpora-
tion created by a state is necessarily subject to the supreme
law of the land. And yet the suggestion is made that to
restrain a state corporation from interfering with the free
course of trade and commerce among the states, in violation
ef an act of Congress, is hostile to the reserved rights of
the states. The Federal court may not have power to
forfeit the charter of the Securities Cempany; it may not
declare how its shares of stock may be transferred on its
books, nor prohibit it from acquiring real estate, nor
diminish or increase its capital stock. All these and like
matters are to be regulated by the state which created the
company. But to the end that effect be given to the national
will, lawfully expressed. Congress may prevent that com-
pany, in its capacity as a holding corporation and trustee,
from carrying out the purposes of a combination formed in
restraint of interstate commerce. The Securities Company
is itself a part of the present combination; its head and
front; its trustee. It would be extraordinary if the court,
in executing the act of Congress, could not lay hands upon
that company and prevent it from doing that which, if
done, will defeat the act of Congress. Upon like grounds
the court can, by appropriate orders, prevent the two com-
peting railroad companies here involved from co-operating
with the Securities Company in restraining commerce among
the states. In short, the court may make any order neces-
sary to bring about the dissolution or suppression of an
TRANSPORTATION AGENCIES. 613

illegal combination that restrains interstate commerce. All
this can be done without infringing in any degree upon the
just authority of the states. The affirmance of the judgment
below will only mean that no combinaton, however powerful,
is stronger than the law or will be permitted to avail itself
of the pretext that to prevent it doing that which, if done,
would defeat a legal enactment of Congress, is to attack
the reserved rights of the states. It would mean that the
government which represents all, can, when acting within
the limits of its powers, compel obedience to its authority.
It would mean that no device in evasion of its provisions,
however skillfully such device may have been contrived,
and no combination, by whomsoever formed, is beyond the
reach of the supreme Jaw of the land, if such device or
combination by its operation directly restrains commerce
among the states or with foreign nations in violation of the
Act of Congress.

‘‘Of course, every state has, in a general sense, plenary
power over its corporations. But is it conceivable that a
state, when exerting power over a corporation of its creation,
may prevent or embarrass the exercise by Congress of any
power with which it is invested by the Constitution? In
the case just referred to the court does not say, and it is
not to be supposed that it will ever say, that any power
exists in a state to prevent the enforcement of a lawful
enactment of Congress, or to invest any of its corporations,
in whatever business engaged, with authority to disregard
such enactment or defeat its legitimate operation. On the
contrary, the court has steadily held to the doctrine, vital
to the United States as well as to the states, that a state
enactment, even if passed in the exercise of its acknowledged
powers, must yield, in case of conflict, to the supremacy of
the Constitution of the United States and the acts of Ccn-
gress enacted in pursuance of its provisions. This results,
614 THE SHERMAN ANTI-TRUST ACT.
the court said, as well from the nature of the government
as from the words of the Constitution.’’ °7

§ 306a. Alaska Trade—Line of Transportation Partly Out-
side of the United States —An agreement between a connect-
ing railway company and a steamship line and a wharfage
company to establish a through route and joint rates for trans-
portation between Puget Sound and Yukon River points, to
refuse to make such arrangements with other connecting car-
riers, and to charge high local rates and discriminating wharf-
age charges, all with the intent and result of eliminating all
competition, violates the Sherman Anti-trust statute. Exterri-
torial effect is not given to the provisions of that statute by
construing it to forbid a combination of foreign and domestic
corporations to restrain competition in, and to monoplize,
transportation of freight and passengers between Puget
Sound and Yukon River points over a route which lies partly
outside the United States.%®

67 Northern Securities Co. v. R. Co. v. Kentucky, 161 U.S 677,

United States, 193 U. S. 197; 24
Sup. Ct. 436; 48 L. Ed. 679; af-
firming 120 Fed. 712. The court
distinguished Railroad Co. v.
Maryland, 21 Wall. 456; 22 7, Ed.
678, and Louisville & Nashville

702; 16 Sup. Ct. 714; 40 L. Ed.
849; affirming 97 Ky. 675; 31
S. W. 476.

68 United States v. Pacific & Arc-
tic Ry. & Nav. Co., 228 U. S. 87;
33 Sup. Ct. 443; 57 L. Ed. —.
CHAPTER XV.

PATENTS.

SECTION. SECTION.

307. Patent as a monopoly. 320. Patentee agreeing not to

308. Failure to use patent—Pat- license any other person
entee reserving exclusive than his first licensee to
use to himself. manufacture and sell pat-

209. Distinction between right to ented articles—Vice versa.
exclude others and his 321. Agreement not to use inven-
right to sell a patented ar- tion.
ticle. 322. Combination of patentees

310. Patentee subject to Anti- and jobbers — Agreement
Trust Act. unnecessary to protect pat-

311. Combination of Independent entee’s rights.

Patentees. 323. Combination formed in or-

312, Patentee requiring his ven- der to avoid infringement
dee to sell patented articles suits.
at w fixed price. 324. Combinations of corpora-

313. Patentee selling patented ar- tions, each manufacturing
ticle fixing price for resale non-competing patented
of article. machines.

314. Patentee requiring licensees 325. Agreement to defend in-
to form pool to control fringement suits.
prices. 326. Contracts conveying several

315. Good faith in patentee— patents in return for lic-
Void patents. enses under all of them.

316. Contract extending life of 327. Infringers setting up illegal-
patent beyond statutory ity of combination as u de-
limitation. fense.

317. Requiring license to pur- 328. Specifie performance of con-
chase unpatented articles tract relating to patents.
for use on patented ma- 329. Public deceived by inferior
chine. goods, combination to pre-

318. Unlawful combination as to vent.
the unpatented article to 330. Contract to assign future in-
be used on a patente1 ma- ventions made after termi-
chine. nation of service.

319. Contract to keep up the

monopoly given by the con-
tract.

615
616 THE SHERMAN ANTI-TRUST ACT.

§ 307. Patent as a Monopoly.—In his famous definition
of a monopoly, Lord Coke says that ‘‘A monopoly is an
institution, or allowance by the king by his grant, com-
mission or otherwise to any person or persons, bodies
politique, or corporate, of or for the sole buying, selling,
making, working, or using of any thing, whereby any person
or persons, bodies politique or corporate, are sought to be
restrained of any freedom or liberty that they had before,
or hindered in their lawful trades.’?! The right conferred
by the Act of Congress upon a patentee is thus defined:
“The franchise which the patent grants consists altogether
in the right to exclude every one from making, using, or
vending the thing patented, without the permission of the
patentee. That is all he obtains by the patent.” ? The statute
confers upon the patentee ‘‘the exclusive right to make, use
and vend the invention or discovery.’* ‘‘Tf the patent be
for a machine, the moncpoly extends to the right of making,
selling and using, and these are inseparable and substantial
rights.’’*

13 Coke’s Insts. 181, ch. 85. For
an article on Patents under the
Sherman Law, see 12 Columbia
Law Review, 709 by Edwin H.
Abbot, Jr.

2 Bloomer v. McQuewan 14 How.
539, 549; 14 L. Ed. 532; Conti-
nental Paper Bag Co. v. Eastern
Paper Bay Co., 210 U.S. 405, 425;
28 Sup. Ct. 748; 52 L. Ed. 1122;
Bauer & Cie v. O’Donnell, 229 U.
S. 1; 33 Sup. Ct. 616; 57 L. Ed, —.

2U, 8. R. S. No. 4884.

+ Henry v. Dick Co., 224 U. 8. 1;
32 Sup. Ct. 364; 56 L. Ed. —;
Bement v. National Harrow Co.,
186 U.S. 70; 22 Sup. Ct. 747; 46
L. Ed. 658; affirming 163 N. Y.
505; 57 N. E. 764; reversing 21
N. Y. App. Div 290; 47 N. Y.
Supp. 462; United States v. Win-

slow, 57 U.S. 202; 33 Sup. Ct. 253;
227 L. Ed. —; Continental Paper
Bag’ Co. v. Eastern Bag Co., 210
U.S. 405, 429; 28 Sup. Ct. 748;
52 L. Ed. 1122, 1132. “To pro-
mote the progress of useful arts,
is the interest and policy of every
enlightened government. It en-
tered into the views of the fram-
ers of our Constitution, and the
power ‘to promote the progress of
science and useful arts, by secur-
ing for limited times to authors
and inventors, the exclusive right
to their respective writings and
discoveries,’ is among those ex-
pressly given to Congress. This
subject was among the first which
followed the organization of our
yovernment. It was taken up by the
first Congress at its second session,
PATENTS.

617

§ 308. Failure to Use Patent—Patentee Reserving Ex-
clusive Use to Himself—So much is a patent a monopoly
that the patentee may absolutely reserve to himself its ex-
clusive use, and thereby deprive the public of his invention

or discovery.

“Tf he sees fit, he may reserve to himself the exclusive

use of his invention or discovery.

and an act was passed authorizing
a patent to be issued to the in-
ventor of any useful art, etc., on
his petition, ‘granting to such pe-
titioner, his heirs, administrators
or assigns, for any term not ex-
ceeding fourteen years, the sole and
exclusive right and liberty of mak-
ing, using and vending to others to
be used, the said invention or dis-
covery.’ The law further declares
that the patent ‘shall be good and
available to the grantee or grant-
ees by force of this act, to all and
every intent and purpose herein
contained.’ The amendatory act of
1793 contains the same language,
and it can not be doubted that
the settled purpose of the United
States has ever been, and continues
to be, to confer on the authors of
useful inventions an exclusive
right to their inventions for the
time mentioned in their patent.
it is the reward stipulated for the
advantages derived by the public
for the exertions of the individual,
and is intended as a stimulus to
those exertions. The laws which
are passed to yive effect to this
purpose ought, we think, to be con-
strued in the spirit in which they
have been made; and to execute
the contract fairly on the part
of the United States, where the full
benefit has been actually received;

If he will neither use

if this can be done without trans-
cending the intention of the stat-
ute, or countenancing acts which
are fraudulent or may prove mis-
chievous. The public yields noth-
ing which it has not agreed to
yield; it receives all which :t has
contracted to receive. The full
benefit of the discovery, after en-
joyment by the discoverer for four-
teen years, is preserved; and for
his exclusive enjoyment of it dur-
ing that time the public faith is
pledged.” Grant v. Raymond 6
Pet. 218, 241; 8 L. Ed. 376; Dr.
Miles Medical Co. v. Jobn D.
Parks & Son Co., 220 U. 8. 1; 31
Sup. Ct. 376, 382; 55 L. Ed. 502;
affirming 164 Fed. 803; 90 C. C.
A. 579; John D. Parks & Sons Co.
vy. Hartman, 153 Fed. 24, 34; 82
Cc. C. A. 150; 12 L. R. A. (N.8.)
1135; affirmed, 220 U. 8. 373; 31
Sup. Ct. 376; 55 L. Ed. —; Dr.
Miles Medical Co. v. Jaynes Drug
Co., 149 Fed. 888; Bobbs-Merril
Co. v. Straus, 210 U. S. 339; 28
Sup. Ct. 722; 52 L. Ed. 1086; Vir-
tue v. Creamery Packages Mfg. Co.,
228 U. S. 8; 33 Sup. Ct. 202; 57
L. Ed. —; Standard Sanitary Mfg.
Co. v. United States, 226 U.S. 20;
33 Sup. Ct. 9; 57 L. Ed. —; affirm-
ing 191 Fed. 1772; Bauer & Cie v.
‘YDonnell, 299 U. S. 1; 33 Sup.
Ct. 616; 57 L. Ed. —.
618 THE SHERMAN ANTI-TRUST ACT.

his device nor permit others to use it, he has but suppressed
his own. That the grant is made upon the reasonable ex-
pectation that he will either put his invention to practical
use or permit others to avail themselves of it upon reasonable
terms is doubtless true. This expectation is based alone upon
the supposition that the patentee’s interest will induce him
to use, or let others use, his invention. The public has re-
tained no other security to enforce such expectations. A
suppression can endure but for the life of the patent, and
the disclosure he made will enable all to enjoy the fruit
of his genius. His title is exclusive, and so clearly within
the constitutional provisions in respect of private property
that he is neither bound to use his discovery himself nor
permit others to use it.’’®

§ 309. Distinction Between Right to Exclude Others
and His Right to Sell a Patented Article—A moment’s

5 Heaton-Peninsular Co. vy. Eu-
reka Specialty Co., 77 Fed. 288;
25 C. C. A. 267; 47 U. S. App.
146, 160. The court adds: “The
dictum found in Hoe v. Knapp, 17
Fed, 204, is not supported by rea-
son or authority.” Quoted with
approval in Bement v. National
Harrow Co., 186 U. 8. 70, 90; 22
Sup. Ct. 747; 46 L. Ed. 658; af-
firming 163 N. Y. 505; 57 N. E.
764, and in Henry v. A. B. Dick
Co., 224 U. 8. 1; 33 Sup. Ct. 9;
56 L. Ed. 645; United States v.
Standard Sanitary Mfg. Co., 191
Fed. 172, 190; affirmed, 226 U. 8.
20; 33 Sup. Ct. 9; 57 L. Ed. —;
see also Continental Bag Paper Co.
v. Eastern Paper Bag Co., 210 U.
S. 405; 28 Sup. Ct. 748; 52 L.
Ed. 1122. In this last case an
injunction was granted to the pat-
entee, though he had not made use
of his patent for many years, to
prevent another infringing on the

patent. “The right of a patentee
to suppress his own rests upon
the ordinary considerations of
property right. The public has no
right to compel the use of patented
devices or of unpatented devices,
when that is inconsistent with fun-
damental rules of property. When
a patentee agrees, however, to re-
strain his own trade in the ar-
ticle of his own invention, not as
an incident to a granting of rights,
but for the purpose of enhancing
his price by the removal of com-
petitors, he is then quite outside
the sphere of any right granted
him by the government. He may
engage in interstate trade or not
as he pleases; but, being engaged
in that trade, he is subject to all
restrictions upon interstate trad-
ers.” Blount Mfg. Co. v. Yale
& Towne, 166 Fed. 555, 559;
Bloomer v. McQuewan, 14 How.
539; 14 L. Ed. 532.
PATENTS. 619
‘reflection will show that there is a marked distinction be-
tween a patentee’s right to exclude others from making,
using or selling a patented article and his right himself to
make, use or sell the same article. The right to exclude
others is his right or franchise under his patent. That
right can not be taken away from him by any state, even
when acting under its police powers.* But his right under
the patent did not give him the right to make and vend
the article patented; for he could as validly and lawfully
have had and sold the article before he obtained his patent
as he did after he obtained it. The right to exclude others
was given him by the patent law; but the right to sell the
article he possessed under the general law governing sales,
which may still regulate his sales’ under the police power
of the state. Thus the patentee of a lottery may not draw
it in a state where the laws of the state forbid lotteries; ®
nor the patentee of a medicine prescribe it without a phy-
sician’s license where the law of the state requires physicians
prescribing medicine to have a license;*° nor sell oleomar-
garine in violation of a state statute;’* nor sell patented
illuminating oil.1?, A patented article is subject to the laws
of a state regarding taxation when they are found in that
state.13

seen in those cases where equity will refuse to enforce an

This distinction we are seeking to draw can be

6 Allen v. Riley, 203 U. 8S. 347; 9Vanninini v. Paine, 1 Harr

27 Sup. Ct. 95; 51 L. Ed. 216; af-
firming 71 Kan. 378; 80 Pac.
952; 114 Am. Ct. 481; Woods v.
Carl, 203 U. S. 358; 27 Sup. Ct.
99; 51 L. Ed. 219; 75 Ark. 328;
87 8S. W. 621.

7 Patterson v. Kentucky, 97 U.
S. 501; 24 L. Ed. 1115; affirming
11 Bush 311; 21 Am. Rep. 220.

8 Opinion of the Justices 193
Mass. 605; 81 N. E. 142; in re
Brosnahon, 18 Fed. 62; Patterson
v. Kentucky, 11 Bush 311; 21
Amer. Rep. 220.

(Del.) 65.

10 Jordon v. Overseers of Dayton,
4 Ohio 294.

11 In re Brossnan, 18 Fed. 62.

12 Patterson v. Kentucky, 97 U.
8. 501; 24 L. Ed. 1115; affirming
11 Bush 311; 21 Am. Rep. 220;
Patterson v. Kentucky, 11 Bush
311; 21 Amer. Rep. 220.

13 Webber v. Virginia, 103 U. S.
344; 26 L. Ed. 565; reversing 33
Gratt 898.
620 THE SHERMAN ANTI-TRUST ACT.
unconscionable license agreement under a patent.1* Where
a telephone company, holding patents, entered into an agree-
ment with a telegraph company not to give any other tele-
phone company service, the agreement was held invalid,
because it was in violation of the telephone’s duty to serve
all alike.1® The distinction we are endeavoring to draw
clearly appears in certain suits concerning patents and agree-
ments thereunder. If an action be based upon an infringe-
ment of a patent, then the Federal district courts have exclu-
sive jurisdiction;?® but those courts have no jurisdiction
over suits growing out of licenses granted by patentees, as
to enforce such agreeinents,’’ or to set them aside,'® or to
recover royalties under an agreement for them.’® This dis-
tinction arises out of the sources of the two laws from which
the two rights spring. The right to maintain a suit for an
infringement of the patent is given by the patent law, but
the right to recover under contracts for the use of the pat-
ented right under a contract arises under the general law
of contracts, thus determining the jurisdiction of the federal
and state courts.*°

14 Pope Mfg. Co. \. Gormully, 18 Wilson v. Sandford, 10 How.

144 U. S. 224; 12 Sup. Ct. 632;
36 L. Ed. 414; affirming 34 Fed.
877.

15 State v. Bell Telephone Co.,
23 Fed. 529; Chesapeake, etc., Tel.
Co. v. Baltimore, ete., Tel. Co., 66
Md. 399; 7 Atl. 809; State v. Dela-
ware, ete., Tel. Co.. 47 Fed. 633;
affirmed, 50 Fed. 677.

16 Henry v. A. B. Dick Co., 224
U. S. 1; 32 Sup. Ct. 364; 56 L.
Kid. 645.

17 Brown vy. Shannon, 20 How.
55: 15 L. Ed. 826; Burr v. Greg-
ory, 2 Paine 426; Goodyear v.
Union ete. Co. 4 Blatchf 63;
Hartell v. Tilghwen, 99 U. S. 547;
25 L. Ed. 357; reversing 11 Phila.
500; Fed. Cas. No. 14039.

99; 13 L. Ed. 344; Merserole v.
Union etc., Co., 6 Blatchf 356.

wAlbright v. Teas, 106 U. S.
613; 1 Sup. Ct. 550; 27 L. Ed.
295; affirming 13 Fed. 406; Dale
Tile Mfg. Co. v. Hyott, 125 U.S.
46; 8 Sup. Ct. 756; 31 L. Ed. 683;
affirming 106 N. Y. 651; 12 N. E.
705; Blanchard ,. Spague, 1 Cliff.
288.

20“A patentee may not require
his licensee to sell a patented oil
which flashes below the minimum
temperature prescribed by state
law. Patterson v. Kentucky, 97 U.
8S. 501; 24 L. Ed. 1115. He may
not authorize his licensee to pre-
PATENTS.

§ 310.

621

Patentee Subject to Anti-Trust Act.—Notwith-

standing his monopoly under the patent laws, a patentee is

still subject to the Sherman Anti-Trust Act.

He may not

enter into contracts or eombinations which would, without

scribe and sell his patented med-
icine in a state which requires of
all who write prescriptions that
they shall have qualifications not
possessed by the license; Jordon v.
Overseers of Dayton, 4 Ohio 295.
Selling oil with a low flashing point
or prescribing patent medicine
without having a state license
to practice medicine would no
more strike the average man
as akin to murder or arson
than would «a combination to fix
prices. In one respect they are
like murder and arson. They are
violations of law outside the pat-
ent laws. So is a combination in
restraint of trade. What the
court meant was what the court
said—a patentee can not require
his licensee to violate a law out-
side of the patent law. Murder
and arson are outside the patent
law. Every obligation which a
patentee attempts to impose upon
his licensee to break any law out-
side of the patent law is in that
respect like a requirement to com-
mit murder or arson. In the na-
ture of things such must be the
law. <A patentee is as much sub-
ject to the law as is any other
man. From special application of
one class of laws he is exempt.
At common law and by statute
monopolies are unlawful. At com-
mon law and by statute a man who
invented a new and useful thing
might be given a right which
would enable him for a limited
time effectually to monopolize it.

The courts have said that this
right to monopolize what he in-
vented can not be taken from a
patentee by state laws. They say
it has not been taken away by Con-
gress. All men know that Con-
gress never intended when it
passed the Sherman Act to change
the patent law. It did not do so.
The patentee may, in spite of that
law, monopolize for the terms of
his patent the thing which he or
his assignor invented. Neither at
common law nor in this country
by statute has he ever had a right
to monopolize anything else. As
to everything not validly claimed
in his patent he is as other men.
If by the common law or the stat-
utes of the state or by the enact-
ments of Congress men are for-
bidden to restrain trade or to mon-
opolize it, 4 patentee may not re-
strain trade or attempt to mon-
opolize it in everything except that
which is covered by his patent.”
United States v. Standard Sani-
tary Mfg. Co., 191 Fed. 172, 189;
affirmed 224 U.S. 1; 33 Sup. Ct. 9;
56 L. Ed. 645; Excelsior Wooden
Pipe Co. v. Pacific Bridge Co., 185
U. S. 282; 22 Sup. Ct. 681; 46
L. Ed. 910; Pratt v. Paris Gas-
light & Coke Co., 168 U. S. 255,
259; 18 Sup. Ct. 62; 42 L. Ed.
458; affirming 155 Ill. 531; 40
N. E. 1032; White v. Rankin, 144
U. 8. 628; 12 Sup. Ct. 768; 36 L.
Ed. 569. “While it is the ordi-
nary privilege of the owner of
patent rights to use or not to use
622 THE SHERMAN ANTI-TRUST ACT.
reference to his patent rights, violate that Act. Although
he may sell his patented article, even admitting he can;*
prescribe a resale price; yet if such a contract operates in di-
rect restraint of interstate commerce, the statute is violated.
“It is true that a patentee has the exclusive control of
his invention during the life of the patent. He may prac-
tice the invention or not, as he sees fit, and he may grant
to others licenses upon his own terms. But where, as was
the case here, a large number of independent manufacturing
concerns are engaged in making and selling, under different
patents and in various forms, an extensively used article,
competition between them is the natural and inevitable re-
sult, and thereby the public interest is promoted. Therefore,
a combination between such manufacturers, which imposes a
widespread restraint upon the trade, and destroys competi-
tion, is as injurious to the community, and as obnoxious to
sound public policy as if the confederates were dealing in

unpatented articles.

them without question of motive,
the grant of letters patent confers
upon the patentee no right not to
use his invention, or to make an
agreement in restraint in that ar-
ticle, save in connection with an
assignment of the rights conferred
by letters patent. The proposition
that an agreement not to manu-
facture, or to restrain trade, is
within some rights of non-use con-
ferred upon a patentee, seems un-
sound, if we consider the nature
of the grant of letters patent. The
right of the patentee or of his as-
signee to withhold the invention is
quite apart from any grant con-
tained in the letters patent. The
privilege of restraining others is
granted to the owner of letters
patent. He is given no right or
privilege to restrain himself. By
the terms of the patent he has

By the united action of more than a

the exclusive right to make, use,
and vend. The right to make, use,
and vend he has without the grant
of letters patent. When we say
that a patent grants an ‘exclusive
right,’ we do not mean that the
right to make, use, and vend is
granted, but only that the pat-
entee’s existing right is made ex-
clusively by the grant.” Blount
Mfg. Co. v. Yale & Towne Co., 166
Fed. 555, 558.

21New Jersey Patent Co. v.
Schaefer, 144 Fed. 437; United
States v. New Departure Mfg. Co.,
204 Fed. 107; Automatic Pencil
Sharpener Co. v. Goldsmith, 190
Fed. 205; Robert H. Ingersoll &
Bro. v. McColl, 197 Fed. 147; (see
25 Harvard Law Review 454). The
Fair v. Dover Mfg. Co., 166 Fed.
117.
PATENTS. 623
score of different manufacturers, natural and salutary com-
petition is destroyed. To sanction such a result, because
accomplished by a combination of patentees, would be, I
think, to pervert the patent laws.’’ 7

‘‘The added element of the patent in the case at bar can
not confer immunity from a like condemnation, for the
reasons we have stated. And this we say without entering
into the consideration of the distinction of rights for which
the government contends between a patented article and a
patented tool used in the manufacture of an unpatented
article. Rights conferred by patent are indeed very definite
and extensive, but they do not give any more than other
rights a universal license against positive prohibitions. The
Sherman law is a limitation of rights—rights which may
be pushed to evil consequences, and therefore restrained.’’ ?*

22 National Harrow Co. v. Hench,
76 Fed. 667; affirmed, 83 Fed. 36;
27 C. C. A. 349. “The fact that
the property involved is covered
by letters patent is urged as a
justification; but we do not see
how any importance can be at-
tributed to this fact. Patents con-
fer a monopoly as respects the
property covered by them, but
they confer no right upon the own-
ers of several distinct patents to
combine for the purpose of re-
straining competition and trade.
Patented property does not differ
in this respect from any other.”
National Harrow Co. v. Hench, 83
Fed. 36; 27 C. C. A. 349; Nation-
al Harrow Co. v. Hench, 84 Fed.
226; Goshen Rubber Works v.
Single Tube ete. Co., 166 Fed.
431.

23 Standard Sanitary Mfg. Co.
v. United States, 226 U. 8. 20; 33

Sup. Ct. 9; 57 L. Ed. —; aflirm-
ing 191 Fed. 172; Blount Mfg.
Co. v. Yale & Towne Mfg Co.,
166 Fed. 555; Rubber Tire Co. v.
Muiiwaukee Co., 154 Fed. 358; 83
C. C. A. 336. In this last case
it was said: “The Sherman law
contains no reference to the pat-
ent law. Each was passed under
a separate and distinct constitu-
tional grant of power. Each was
passed professedly to advantage
the public. The necessary impli-
cation is not that one iota was
taken away from the patent law.
The necessary implication is that
patented articles, unless or until
they are released by the owner
of the patent from the dominion
of his monopoly, are not articles
of trade or commerce among the
several states.”
624 THE SHERMAN ANTI-TRUST ACT.
Judge Brown has very clearly stated the proposition that
a patentee holds his rights subject to the Trust Act. He
says:

‘“‘The Sherman Act is not inconsistent with any rights
acquired by the patentee when it prevents agreements in
restraint of trade which are not designed to make valuable
the right of use. There is no inconsistency between the
grant of an exclusive and assignable right to make, use and
vend, and the prohibition of an agreement restraining or
suppressing the sale of the article in interstate commerce,
because any profit from such an agreement does not arise
from the value of making, using and vending. There is no
inconsistency between the proposition that an inventor may
withhold his invention from use as he sees fit, and the
proposition that he may not make an agreement whereby,
for the advantage of a competitor, trade in his patented
article is restrained or suppressed.

‘“‘Though an invention may be suppressed by the patentee
or his assignee, yet the fact that there are now two ways
of suppressing a patent is no reason for disregarding a
statute designed to prevent a third way.

‘In the consideration of this case I have dwelt principally
upon the broad contention that the Sherman Anti-Trust Act
has no application to patented articles. It seems quite clear
that an agreement in restraint of trade, though it relates
to patented articles, may tend to create a monopoly which
is different from that conferred by grants of letters patent.?**

23* An indictment alleged that
the defendant, N. D. Company,
was the owner of a basic patent
for making coaster brakes, and
issued licenses to manufacture
thereunder, and charged, however,
that the defendant corporations
(several manufacturers having
been made defendants) were sepa-
rately the owners of patents and
patent rights for improvements

in the coaster brake and other bi-
cycle and motorcycle accessories,
but that the defendant, to effectu-
ate their plan to restrain trade,
feigned the making of a license
agreement ostensibly covering a
part, but not the whole, of the coas-
ter brake manufactured by the N.
D. Company, and also charged
that the pretended license agree-
ments, which were to be entered
PATENTS, 625

‘‘Combinations between owners of independent patents,
whereby, as part of a plan to monopolize the commercial
field, competition is eliminated, are within the Sherman Act,
for the reason that the restraint of trade or monopoly arises
from combination, and not from the exercise of rights
granted by letters patent. As by the terms of the contracts
under consideration the owners of distinct patents each
agreed to restrain its own interstate trade, I am of the
opinion that the contracts are in these particulars obnoxious
to the Sherman Anti-Trust Act.’’ *4

§ 311. Combination of Independent Patents.—‘‘Combi-
nations between owners of independent patents, whereby, as
part of a plan to monopolize the commercial field, competition
is eliminated, are within the Sherman Act, for the reason
that the restraint of trade or monopoly arises from com-
bination, and not from the exercise of rights granted by
letters patent.’’ Consequently, where each owner of sev-
eral distinct patents agreed to restrain his own interstate
trade, it was held that the agreements were void under the

Sherman Anti-Trust Act.”

into simultaneously by the N. D.
Company as ostensible licensor
with the remaining corporation
defendants as ostensible separate
licensees, were to be in all re-
spects uniform in character, were
to contain schedules of uniform
and non-competitive prices and re-
strictions upon all sales, and it
was held that these averments
negative any inference that the
licenses were for a basic patent,
but that the conditions were im-
posed on competitors in good faith
and without an intention to vio-
late the statute, since the fact
that patents are issued to various
persons or corporations, does not
entitle them to combine to re-

strain the manufacture or sale of
the patented article or to enhance
prices in restriction of commerce.
United States v. New Departure
Mfg. Co. 204 Fed. 107.

24Blount Mfg. Co. v. Yale &
Towne Mfg. Co., 166 Fed. 555,
561. The statement of Judge
Baker in Rubber Tire Wheel Co.
v. Milwaukee W. Co., 154 Fed.
358; 83 C. C. A. 336; that patents
are not subject to the Sherman
Anti-Trust Act can not be regard-
ed as sound.

25 Blount Mfg. Co. v. Yale &
Towne Mfg. Co., 166 Fed. 555, 562;
Standard Sanitary Mfg. Co. v.
United States, 226 U. S. 20; 33
Sup. Ct. 9; 57 L. Ed. —; affirm:
626

THE SHERMAN ANTI-TRUST ACT.

§ 312. Patentee Requiring His Vendee to Sell Patented
Articles at a Fixed Price.—A patentee has the right, it has
been said, to fix the price of the patented article below
which a purchaser from him may not sell it, (it has been
held) ; and if such purchaser does sell it below that price, he
thereby becomes an infringer, and the Federal courts have
jurisdiction of a suit brought against him on account of

ing 191 Fed. 172. Where a pat-
entee gave licenses to various
companies to manufacture and to
sell under his several patents for
their full unexpired terms; and
afterwards an agreement was
made with those licensees to secure
the payment of royalties on ar-
ticles to be subsequently manu-
factured, by which the owners of
the patents were enabled to ascer-
tain the exact sales of the pat-
ented products made by each licen-
see, and the percentum of roy-
alties severed by the agreement
was rendered certain in amount,
it was held that there was no vio-
lation of the Anti-Trust Act. Go-
shen Rubber Works & Single Tube
ete. Co., 166 Fed. 431. “A paten-
tee who monopolized his invention
breaks no law. He who used his
property right to exclude others
from the making, selling or us-
ing his invention, for the purpose
and with the effect of making a
combination to restrain trade in
something from which his patent
gives him no right to exclude oth-
ers, does break the law. He breaks
it precisely as the individual de-
fendants in the Standard Oil and
American Tobacco companies
broke it. They had the same right
to use their brains, their capital,
and their credit as they thought
best, as he had to use his right
to exclude all others from mak-

ing, using, or selling automatic
dredgers, He was subject to the
same limitations that they were.
They could not lawfully use their
brains, their money, and their
credit to restrain trade in petro-
leum and tobacco. He can not
use his patent rights to restrain
trade in unpatented bath tubs.”
United States v. Standard Sani-
tary Mfg. Co., 191 Fed. 172, 190;
affirmed 226 U. 8. 20; 33 Sup. Ct.
9; 57 L. Ed. —. See also Vulcan
Powder Co. yv. Hercules Powder
Co., 96 Cal. 510, 516; 31 Pace.
581; 381 Am. St. 242. “There
can be no question that the holder
of a duly issued patent has a law-
ful monopoly in its use, and he
violates no publie policy in pro-
tecting his monopoly to the full-
est extent. But it does not fol-
low from this that the patentee
acquires the right by combining
with other patentees to extend the
monopoly granted to each, and
thus abuse the privilege conferred
upon him by the government.”
State v. Creamery Package Co., 110
Minn. 415; 126 N. W. 126, 623.
“No word or phrase in the Sher-
man Anti-Trust Act reveal» an
intent to exempt the owners of
patents from its sweeping provi-
sions against monopolistic combi-
nation. We are unable to per-
ceive any underlying reason for
PATENTS.

627

such sale, irrespective of the amount in controversy or
the citizenship of the parties.** Such agreements, it has been
held, are not in violation of the Anti-Trust Act, even if they

supposing that by implication
growing out of economics or busi-
ness conditions such as exemp-
tions was intended. There ap-
pears to be no inherent natural
distinction between owners of pat-
ents and owners of oil which
would justify the application of
the statute to one and not to the
other. The conclusion seems to
follow that the comprehensive con-
demnation of the act against ev-
ery person who monopolizes inter-
state commerce by combination
with others includes holders of
patents as well as others.” United
Shoe Machinery Co. v. La Cha-
pelle, 212 Mass. 467; 99 N. E. 289,
292. “Within the proper domain
of his monopoly the patentee may
combine and conspire and restrict
as much as he pleases. But I
can not conceive that enlightened
courts, under a government of law,
will find it consonant with just
notions of duty to permit a paten-
tee, however worthy his invention
or large and extensive his rights,
by means of his royalties to cre-
ate a fund for crushing Jawful
opposition, destroying legitimate
and proper competition, and re-
straining trade and all others
competing with them. Even in
territory lawfully. subject to his
monopoly, I can not believe this
possible; still less in a broad do-
main covering four populous
states in which the patent has be-
come practically worthless—a ter-
ritory greater in extent than that
of the British Isles.” Rubber

Tire Wheel Co. v. Milwaukee R.
W. Co., 142 Fed. 531.

26 Henry v. A. B. Dick Co., 224
U. S. 1; 32 Sup. Ct. 364; 56 L.
Id. 645; see 149 Fed. 424. This
case is distinguished in Bauer &
Cie v. O'Donnell, 229 U. 8S. 1; 33
Sup. Ct. 616; 57 L. Ed. —.
See next section. In Henry v. A.
B. Dick & Co., supra, the com-
plainant sold his patented ma-
chine, and attached to the machine
a license restriction that it only
could be used in connection with
certain unpatented articles made
by the vendor of the machine;
with the knowledge of such license
agreement and with the expecta-
tion that it would be used in con-
nection with this machine. De-
fendant sold to the vendee of the
machine an unpatented article of
the class described in the license
restriction. It was held that the
act of the defendant constituted
contributory infringement of the
patentee’s patent. “We repeat.
The property right to a patented
machine may pass to a purchaser
with no right of use or with only
the right to use in a specified
way, or at a specified place, or
for a specified purpose. The un-
limited right of exclusive use
which is possessed by and guaran-
teen to the patentee will be
granted if the sale be conditional.
But if the right of use be confined
by specific restriction the use not
permitted is necessarily reserved
to the patentee. If that reserved
control of use of the machine, be
628

THE SHERMAN ANTI-TRUST ACT.

include interstate commerce and restrain interstate trade,
provided they involve only the reasonable and legal condi-
tions imposed under the patent law.?”

violated, the patent is thereby in-
vaded. This right to sever owner-
ship and use is deducible from the
nature of a patent monopoly and
is recognized in the cases. In
Sawin v. Guild, 1 Gall. 485, Mr.
Justice Story, as far back as 1813,
recognized the distinction by hold-
ing that a sale of patented ma-
chines under an execution against
the patentee did not render the
sheriff liable under a_ statute
which made any person liable
who should sell a patented device
without consent of the patentee,
because the sheriff had merely sold
the materials and had not under-
taken to pass any right of use
But in Wilder v. Kent, 15 Fed.
Rep. 217, it was held that under
such an execution sale there
passed whatever right of use the
debtor had if the sale was uncon-
ditional. Judge Lowell, in Porter
Needle Co. v. National Needle Co.,
17 Fed. Rep. 536, after saying
that an absolute and unqualified
sale of a patented machine carried
with it the right of use, said: ‘But
the mere value of the patented
machine is often, as proved to be
in this case, insignificant in com-
parison with the value of its use;
and the courts have permitted a
severance of ownership and right
of use, if the patentee had chosen
to discover them and if his intent
is not doubtful.’ It is plain from
the power of the patentee to sub-
divide his exclusive right of use
that when he makes and sells a
patented device that the extent of

the license to use which is carried
by the sale must depend upon
whether any restriction was placed
upon the use and brought home
to the person acquiring the ar-
ticle.” Henry v. A. B. Dick Co.,
supra; see also Mitchell v. Haw-
ley, 16 Wall. 544; 21 L. Ed. 322,
affirming Holmes 42; Fed. Cas.
No. 6250.

27 Henry v. A. B. Dick Co., 224
U. S. 1; 32 Sup. Ct. 364; 56 L.
Ed. 645; see 149 Fed. 424. At page
31 of the official report it was
said: “If the stipulation in an
agreement between patentees and
dealers in patented articles, which,
among other things, fixed u price
below which the patented articles
should not be sold, would be a rea-
sonable and valid condition, it
must follow that any other rea-
sonable stipulation, not inherently
violative of some substantive law,
imposed by a patentee as part of
a sale of a patented machine,
would be equally valid and en-
forceable. It must also follow, that
if the stipulation be one which
qualifies the right of use in a ma-
chine sold subject thereto, so that
a breach would give rise to a
right of action upon the contract,
it would be at the same time an
act of infringement, giving to the
patentee his choice of remedies.
The Constitution, in the interests
of invention, grants to the paten-
tee the absolute right to exclude
or debar the world from making,
using and selling his device; and
Congress by passing acts in aid
PATENTS.

629

§ 313. Patentee. Selling Patented Article Fixing Price
for Resale of Article——Notwithstanding what is said in the
previous section and has been decided concerning the power
of a patentee to fix the price for his vendee for the patented
article he has sold him and require him to carry out the
agreement, it is now settled that he has no such power, no

of powers given it, like the power
to regulate commerce, can not in-
terfere with this constitutional
right of exclusion, embargo, or in-
hibition. Having the absolute
power of complete exclusion, the
proprietor may exclude, condition-
ally or in part, by imposing limits
as to time, place, price or persons.
He may deal arbitrarily, may sell
or withhold from sale, vend to one
at one price and to another at a
different price, permit use in one
state and not in another, give rea-
sons or not, or deal fairly or un-
fairly; and in doing all or any
of these he is within his right,
until the patent expires or is
avoided, or the articles pass be-
yond the limits of monopoly. He
may even bring non-patented ar-
ticles within his monopoly by pro-
viding that the patented device
shall be sold only in connection
therewith. All this is so well
settled, not only as to patents, but
copyrights, secret process remedies,
and trade secrets, that it is only
necessary to refer to a few cases.
Victor Talking Machine Co. v.
The Fair, 123 Fed. 424; 61 C. C.
A. 58; Bement v. National Har-
row Co., 186 U. S. 70; 22 Sup.
Ct. 747; 46 L. Ed. 1058; United
States’ Consol. S. R. Co. v. Griffin
& Skelly Co., 126 Fed. 364; 61
C. ©. A. 334; Rupp, Wittengeld
Co. v. Elliott, 131 Fed. 730; 65
Cc. C. A. 544; Dr. Miles Medical
Co. v. Goldthwaite (C. C.), 133

Fed. 794; Board of Trade v. Chris-
tie Grain & Stock Co., 198 U. S.
236; 25 Sup. Ct. 637; 49 L. Ed.
1031; reversing 125 Fed. 161; 130
Fed. 507. Like every kind of ar-
bitrary power it is liable to abuse,
but the power to abuse it resides
in its very nature. These obser-
vations apply only to patented ar-
ticles which have not passed be-
yond the monopoly limit through
sale by the patentee, licensee, or
assignee. Here the monopoly ends.
The articles are then in the same
condition as if unpatented, sub-
ject to all trade and commerce reg-
ulations like any other property.”
Rubber Tire Wheel Co. v. Milwau-
kee R. W. Co., 142 Fed. 531; Vir-
tue v. Creamery Package Mfe. Co.,
227 U. S. 8; 33 Sup. Ct. 202; 57
L. Ed. —; affirming 179 Fed 115;
102 C. C. A. 413; John D. Park
& Sons Co. v. Hartman, 153 Fed.
24; 82 C. C. A. 158; 12 L. R. A.
(N.S.) 146; reversing 145 Fed.
358; Edison Phonograph Co, vy.
Kaufmann, 105 Fed. 960; Edison
Phonograph Co. v. Pike, 116 Fed.
863; Heaton-Peninsular Button
Fastener Co. v. Eureka Specialty
Co., 77 Fed. 288; 25 ©. C. A. 267;
35 L. R. A. 728; Dickerson v. Tin-
ling, 84 Fed. 192; 28 C. C. A. 139;
Rupp v. Elliott, 131 Fed. 730; 65
C. C. A. 544. “Obviously it is
time to call a halt to those who
speak of a patentee’s unrestricted
monopoly of sale. His patent con-
fers the right of exclusive manu-
630 THE SHERMAN ANTI-TRUST ACT.

more so than the holder of a copyright on a book has the
right to dictate the price at which the trade shall retail
the book. Thus the assignee of a patent to manufacture
“‘Sanatogen,’’ a certain water soluble albumenoid, put it
on the market, stating that it was a patented article, and
placed upon each package a notice that it ‘‘is licensed by
us for sale and use at a price not less than one dollar
($1.00). . Any sale in violation of this condition or use when
so sold will constitute an infringement of our patent No.
601,995, under which Sanatogen is manufactured, and all
persons so selling or using packages or contents will be liable
to injunction and damages. A purchase is an acceptance of
this condition. All rights revert to the undersigned in the
event of violation.’’ This notice was signed by the assignee
of the patent and original vendor of the package. A retailer
of these packages sold several of them at less than one
dollar a package, without the consent of the assignee of the
patent, and announced that he would continue such sales.
On the case being certified to the Supreme Court by the
Court of Appeals of the District of Columbia, it was held
that the retailer had the right to sell the packages at what-
ever price he saw fit, notwithstanding the conditions con-
tained in the notice. The court was unable to distinguish
the case in principle from the case holding that a copyright
holder could not dictate the price at which his vendee should

facture of his product, and per-
haps also the exclusive manufac-
ture of his product, and perhaps
also the exclusive right to its use,
but in selling it he is subject to
the exercise of the police power,
like the vendor of any unpatented
article, and even such protection
a3 may have been afforded by the
mimeograph and other cases is
likely to be taken away, so that
the patentee will occupy no more
favored position than the holder
of a copyright or ordinance trade-
mark. It may be that these limi-
tations in the interest of public

policy are sound, at all events they
are likely to come by legislative
action if not anticipated by judi-
cial construction. The time, how-
ever, has arrived to distinguish be-
tween the law of trade in general
and the law of patents. In the
Mimeograph case the legal fiction
of an infringement of patent by
violation of a license restriction
served only to confuse, and in the
Bath Tub case (Standard Sanitary
Mtg. Co. v. United States, —- U.
Ss. —; — Sup. Ct. —; — L. Ed.
—) it is puzzling to learn that
conduct serving to promote the en-
PATENTS. 631
sell the copyrighted book.2® The court then proceeds as
follows: ‘‘It is contended in argument that the notice in
this case deals with the use of the invention, because the
notice states that the package is licensed ‘for sale and use at
a price not less than one dollar;’ that a purchase is an accep-
tance of the conditions, and that all rights revert to the
patentee in event of violation of the restriction. But in
view of the facts certified in this case, as to what took place
concerning the article in question, it is a perversion of terms
to call the transaction in any sense a license to use the
invention. The jobber from whom the appellee purchased
had previously bought, at a price which must be deemed to
have been satisfactory, the packages of Sanatogen afterwards
sold to the appellee. The patentee had no interest in the
proceeds of the subsequent sales, no right to any royalty
thereon or to participation in the profits thereof. The
packages were sold with as full and complete title as any
article could have when sold in the open market, excepting
only the attempt to limit the sale or use when sold for not
less than one dollar. In other words, the title transferred
was full and complete with an attempt to reserve the right
to fix the price at which subsequent sales could be made.
There is no showing of a qualified sale for less than value for
limited use with other articles only, as was shown in the Dick
case. There was no transfer of a limited right to use this
invention, and to call the sale a license to use is a mere play
upon words.

“The real question is whether in the exclusive right
secured by statute to ‘vend’ a patented article there is
included the right, by notice, to dictate the price at which
subsequent sales of the article may be made. The patentee

joyment of the fruits of a patent
‘transcend what was necessary to
protect the use of the patent or
monopoly which the law conferred
upon it. The rights of the paten-
tee may be limited by new law of
trade, but they are not limited by
anything inherent in the privilege

of a patentee, whose profits are
not restricted by anything in the
terms of his letters patent.” (Ed-
itorial, 25 Green Bag 36 (Janu-
ary, 1913).

28 Bobbs-Merrill Co. v. Straus,
210 U. S. 339; 28 Sup. Ct. 722:
52 L, Ed.
632 THE SHERMAN ANTI-TRUST ACT.

relies solely upon the notice quoted to control future prices
in the resale by a purchaser of an article said to be of great
utility and highly desirable for general use. The appellee
and the jobbers from whom he purchased were neither the
agents nor the licensees of the patentee. They had the title
to, and the right to sell, the article purchased without
accounting for the proceeds to the patentee and without
making any further payment than had already been made in
the purchase from the agent of the patentee. Upon such
facts as are now presented we think the right to vend secured
in the patent statute is not distinguishable from the right of
vending given in the copyright act. In both instances it
was the intention of Congress to secure an exclusive right
to sell, and there is no grant of a privilege to keep up
prices and prevent competition by notices restricting the
price at which the article may be resold. The right to vend
conferred by the patent law has been exercised, and the
added restriction is beyond the protection and purpose of
the act. This being so, the case is brought within that line
of cases in which this court from the beginning has held that
_ a patentee who has parted with a patented machine by pass-
ing title to a purchaser has placed the article beyond the
limits of the monopoly secured by the patent.’’ °°

29 Bauer & Cie v. O’Donnell, 229
U. S. 1; 33 Sup. Ct. 616; 57 L.
Ed. —. The court says of the
ease of Bement v. National Har-
row Co., 186 U. S. 70; 22 Sup.
Ct. 747; 46 L. Ed. 1058; affirm-
ing 163 N. Y. 505; 57 N. E. 764;
which reversed 21 N. Y. App. Div.
290; 47 N. Y. Supp. 462; that it
was one arising upon license
agreements, originating in a state
court, and did not involve the con-
struction of the patent act in the
circumstances now disclosed. The
court distinguishes the case of
Henry v. Dick Co., 224 U. S. 1;
32 Sup. Ct. 364; 56 L. Ed. 645;
by saying that it involved a pat-

ent mimeograph sold which bore
an inscription in the form of a
notice that the machine was sold
with the license restriction that
it might only be used with stencil,
ink, and other supplies made by
the A. B. Dick Company, the own-
ers of the patent. “The alleged
infringer sold to the purchaser of
the mimeograph a can of ink suit-
able for use with the machine
with full knowledge of the restric-
tion and with the expectation that
the ink sold would be used in con-
nection with the machine. It is
expressly stated in the opinion
that the machine was sold at cost
or less and that the patentee de-
PATENTS.

633

§ 314.. Patentee Requiring Licensees to Form Pool to
Control Prices—Since the patentee may sell his articles
manufactured under his patent at whatever price he may
see fit to impose, though far beyond the actual value of
the article, so he may fix the price at which his licensees
under the patent shall sell the articles they manufacture;
for in doing so he is merely doing by another what he may

himself do.

Not only may he do this, but he may require

his licensees to form a pool to maintain prices and control
the output, thus completely preventing competition among

pended upon the profit realized
from the sale of the non-patented
articles to be used with the ma-
chine for the profit which he ex-
pected to realize from his inven-
tion (224 U. S. 26). After com-
menting upon the copyright stat-
utes and the resemblance between
the author’s right to vend copies
of his work and the patentee’s
right to vend the patented thing,
it was said (p. 46): ‘To the in-
ventor, by § 4884, Revised Stat-
utes, there is granted the exclusive
right to make, use and vend the
invention or discovery.’ This
grant, as defined in Bloomer v.
McQuewan, 14 How. 539, 549,
‘consists altogether in the right to
exclude every one from making,
using or vending the thing pat-
ented.’ Thus, there are several
substantive rights, and each is the
subject of subdivision, so that one
person may be permitted to make,
but neither to sell nor use the pat-
ented thing. To another may be
conveyed the right to sell, but
within a limited area, or for a par-
ticular use, while to another the
patentee may grant only the right
to make and use, or to use only
for specific purposes. Adams v.
Burke, 17 Wall. 453; Mitchell v.

Hawley, 16 Wall. 544; Rubber Co.
v. Goodyear, 9 Wall. 788, 799.’
(Italics in the original opinion.)
That case was distinguished from
Bobbs-Merrill v. Straus, supra,
construing the copyright act, be-
cause of the differences in the
terms of the copyright and the
patent statutes, the patent act
conferring not only the right to
make and sell, but the exclusive
right to use the subject matter of
the patent. It was under the right
to use that the license notice in
question was sustained, and it is
obvious that the notice in that
case dealt with the use of the ma-
chine and limited it to use only
with the paper, ink and supplies
of the manufacture of the paten-
tee. While the title was trans-
ferred, it was a qualified title, giv-
ing a right to use the machine
only with certain specified sup-
plies. It was said in the Dick
case that ‘there is no collision
whatever between the decision in
the Bobbs-Merrill case and the
present opinion. Each rests upon
a construction of the applicable
statute, and the special facts of
the cases.’” The plaintiff made
and sold, under different trade
names watches containing parts
634

THE SHERMAN ANTI-TRUST ACT.

such licensees. In doing this, he is doing nothing more than
he himself may do if he had given out no license.®°

§ 315. Good Faith of Patentee—Void Patents.—The good
faith of the patentee in the preservation of his monopoly
is always to be considered. He can not use the right of

which were patented, each watch
was placed in a box, and on some
of the boxes was printed a notice
or what was sometimes called a
license, restriction by which plain-
tiffs attempted to control the
price at which the watch wight
be sold by jobbers and retailers
under penalty of being charged
with infringements of the patents.
Others of the watches sold under
different trade names, but having
the same mechanism and contain-
ing the same patented parts were
sold without restriction. It was
held that these restrictions were
clearly not intended to protect the
use of the patents or the monop-
oly which the law confers upon
them, but for the protection of
certain of the trade marks, and
that a purchaser who had no con-
tract relations with the plaintiffs
was not bound thereby. Robert
H. Ingersoll & Bro. v. McColl, 204
Fed. 147.

30 Indiana Mfg. Co. v. J. I. Case
Threshing Machine Co., 154 Fed.
365; 83 C. C. A. 343; reversing
148 Fed. 21. “The only grant to
the patentee was the right to ex-
clude others, to have and to hold
for himself and his assigns a mo-
nopoly, not a right limited or con-
ditioned according to the senti-
ment of judges, but an absolute
monopoly constitutionally con-
ferred by the sovereign lawmak-
ers. Over and above an absolute
monopoly created by law, how can

there be a further and an unlaw-
ful monopoly in the same thing?
If plaintiff were the sole maker
of Grant tires, how could plain-
tiff’s control of prices and output
injure the people, deprive them of
something to which they have a
right? Is a greater injury of dep-
rivation inflicted, if plaintiff au-
thorizes a combination or pool to
do what plaintiff can do directly?
To say yes means that substance
is disregarded, that mere words
confer upon the people some sort
of a right or interest counter
to the monopoly, when by the
terms of the bargain the people
agreed to claim none until Grant’s
deed to them shall have matnred.”
Rubber Tire Wheel Co. v. Milwau-
kee R. W. Co., 154 Fed. 358. Judge
Grosscup in a concurring opinion
reasoned as follows: “The patentee
in this case, in good faith believed
the patent valid, as did also the
parties entering into the contracts.
Whatever, therefore, their cffect
may have actually been, the con-
tracts were not intended to affect
prices, except as the parties be-
lieved they had the right, because
of the patent, to fix and maintain
prices. Now were the patentee
the manufacturer he would un-
questionably have had the right
to fix and maintain his own
prices; and were the other parties
to the contract manufacturers for
the patentee, at a given figure for
such manufacture, the patentee’s
PATENTS.

635

monopoly his patent gives him as a cloak to violate the

Anti-Trust Act.

If he act in good faith, keeping within the

lines of the monopoly his patent pretends to give him, he
will not violate that Act, even if his patents have been held
invalid by some Federal courts, when held valid by other

such courts.*!

right to fix and maintain the sell-
ing price would still remain; nor
could this be questioned were he
to make the manufacturers his
selling agents also. How, then,
does the contract under review
make a case in which the patentee,
through his manufacturer, is not
entitled to fix and maintain prices
—how is the arrangement, in ef-
fect, different in any way of re-
straining trade or competition,
from the arrangement just sup-
posed, in which the patentee un-
questionably has that right? True,
in the case under review, the man-
ufacturers, as to the public, are
not competitors; but neither
would they be in the cases sup-
posed; in both cases the public
suffered nothing, except what the
patentee had the right to exact;
for so long, at least, as the paten-

tee is not exacting, as the value’

of his invention, an unreasonable
sum (and his action in that re-
spect is not here questioned) it is
within his own right to say
whether the price exacted should
be retained by himself, or shall be
distributed among the people man-
ufacturing for him. The contracts,
therefore, in the case before us,
having been made in good faith,
and not as a mere subterfuge, I
can see in them nothing that the
Sherman Act was intended to pite-
vent.”

81 Rubber Tire Wheel Co. v.
Milwaukee R. W. Co., 142 Fed.
531. The contracts held void in
this case is thus stated by the
court: “The three contracts plead-
ed and proved show a combination
in restraint of trade and are in
substance as follows: On October
10, 1903, plaintiff and defendant
made the license agreement. It re-
cites that plaintiff is the owner
of the patent, and that defendant
desires to obtain the right to man-
ufacture, use, and sell vehicle tires
made under the patent. Therefore
it is agreed that plaintiff grants
defendant such rights for one
year, to the extent set forth in
a ‘supplementary agreement’ at-
tached to the agreement of license,
in the United States, except 19
states and certain counties and
cities in other states. Three coun-
ties in Ohio are excepted from the
grant. Plaintiff agrees to vigor-
ously prosecute infringements, ex-
cept such as may be committed in
the sixth federal circuit. Defend-
ant agrees to pay a royalty of 4
per cent. of the net selling price
of tires made under the license,
and the further royalty of 20 per
cent. over its ‘quota’ fixed by the
supplementary agreement. The
supplementary agreement, of even
date with the license, recites li-
censes like the foregoing to 17
other rubber tire manufacturing
636 THE SHERMAN ANTI-TRUST ACT.

§ 316. Contract Extending Life of Patent Beyond Statu-
tory Limitation—The immunity a patentee enjoys, by
reason of his patent, from a charged violation of the Anti-
Trust Act in making contracts with his licensee of an
exclusive or monopolistic character can not be extended
beyond the life of his patent. He therefore can not impose
restrictions which extend beyond the life of his patent—as
where the patentee exacted as the price of the license an
agreement which in effect would have extended the patent
fifty years.°*?

§317. Requiring Licensee to Purchase Unpatented Ar-
ticles for Use On Patented Machine.—A condition inserted
in a license given for the use of a patented machine that the
licensee shall only use thereon an unpatented article alone
purchased of the patentee is valid, and not a violation of

the Anti-Trust Act.

companies, and fixes the quota
which defendant shall manufac-
ture each month during the license
year at 2 per cent. In dollars and
cents of the aggregate amount
made and sold by all the licenses.
The third agreement, made at the
same time, called the ‘Licensees’
Agreement,’ is between plaintiffs
as first party and all the licensees
as second parties, It recites the
licenses, and that it desired that
the right of manufacture shall be
exercised on uniform terms and
conditions, and the operation of
all the licensees supervised by an
impartial administration. There-
fore it is agreed that if any licen-
see shall sell more than its quota
it will pay, in addition to the 4
per cent. royalty 20 per cent. on
the amount sold by it in excess
of its quota; and, on the other
hand, if it shall sell less than its
quota, it shall be paid 20 per
cent. on the shortage. Prices for

The fact that the article to be used on

the first quality tires are fixed at
65 cents a pound, and for second
quality 55 cents. Plaintiff agrees
to employ a commission of five
persons to supervise the operations
of the licensees, and pay it one-
half the royalties, or 2 per cent.
If any licensee sells at less than
the fixed prices it is to forfeit its
right to license rebates under this
contract. The licensees are to
manufacture only two grades of
tires. The commissioners may, by
written consent of a majority of
the licensees, purchase tires from
any of them, and resell at such
prices as they may deem for the
interest of all the parties. These
contracts most clearly make a
combination within the Sherman
Act, if the subject matter be with-
in that Act. That is the only
question in the case.”

32 Strait v. National Harrow Co.
(N. Y.), 18 N. Y. Supp. 224.
PATENTS.

637

the machine is unpatented does not change the situation or
convert it into an unlawful transaction or make it an illegal

contract.

Any person selling an unpatented article to the

licensee, to be used on the machine, is a contributory in-
fringer, if the article be used thereon, and liable to an action
in damage for an infringement of the patent.?*

§ 318. Unlawful Combination as to the Unpatented Ar-
ticle to be Used on a Patented Machine.—The fact that a
patentee may put such restriction on the use of his patented

33 Henry v. A. B. Dick Co, 224
U. S. 1; 32 Sup. Ct. 364; 56 L.
Ed. 645; see 149 Fed. 424; at page
31 of the official report the court
said: “But it has been very earn-
estly said that a condition re-
stricting the buyer to use it only
in connection with ink made by
the patentee is one of a character
which gives to «a patentee the
power to extend his monopoly so
as to cause it to embrace any sub-
ject, not within the patent, which
he chooses to require that the in-
vention shall be used in connec-
tion with. Of course the argu-
ment does not mean that the ef-
fect of such a condition is to cause
things to become patented which
were not so without the require-
ment. The stencil, the paper and
the ink made by the patentee will
continue to be unpatented. Any-
one will be free to make, sell and
use like articles as they would be
without this restriction, save in
one particular—namely, they may
not be sold to a user of one of the
patentee’s machines with intent
that they shall be used in viola-
tion of the license. To that ex-
tent competition in the sale of
such articles, for use with the ma-
chine, will be affected; for sale to
such users for infringing purposes
will constitute contributory in-

fringement, But the same conse-
quence results from the sale of
any article to one who proposes to
associate it with other articles to
infringe a patent when such pur-
pose is known to the seller. But
could it be said that the doctrine
of contributory infringement ope-
rates to extend the monopoly of
the patent over subjects not with-
in it because one subjects himself
to the penalties of the law when
he sells unpatented things for an
infringing use? If a patentee says,
‘I may suppress my patent if I
will, I may make and have made
devices under my patent, but I
will neither sell nor permit any-
one to use the patented things,’ he
is within his right, and none can
complain. But if he says, ‘I will
sell with the right to use only
with other things proper for the
using with the machines, and I
will sell at the actual cost of the
machines to me, provided you will
agree to use only such articles as
are made by me in connection
therewith,’ if he chooses to take
his profit in this way, instead of
taking it by a higher price for the
machines, has he exceeded his ex-
clusive right to make, sell and use
his patented machines? The mar-
ket for the sale of such articles to
the users of his machine, which,
638

THE SHERMAN ANTI-TRUST ACT.

machine that his licensee can only use thereon an article,
though unpatented, furnished exclusively by the patentee,
will not authorize him to create an unlawful monopoly,

otherwise, of the unpatented article.

by such « condition, he takes to
himself, was a market which he
alone created by the making and
selling of a new invention. Had
he kept his invention to himself,
no ink could have been sold by
others for use upon the machines
embodying that invention. By sell-
ing it subject to the restriction
he took nothing from others and
in no wise restricted their legiti-
mate market.” ‘This decision is
explained in Bauer & Cie v.
O’Donnell, 229 U. 8. 1; 33 Sup.
Ct. 616; 57 L. Ed. —. In another
case it was said: “In a number of
cases the owner of a machine pat-
ent has licensed others to use the
machine on condition that they
would buy certain unpatented
things upon which the machine
operated exclusively from the pat-
entee. Those conditions have been
held valid by a number of courts.
Persons who with knowledge of
the terms of the license have sold
to the licensee some of the unpat-
ented things to be used on the
patented machine have been held
liable for contributory infringe-
ment. Heaton Peninsular Button
Fastening Co. v. Eureka Specialty
Co., 77 Fed. 288; 25 C. C. A. 267;
35 L. R. A. 728; Rupp, Witten-
feld Co. v. Elliott, 131 Fed. 730;
65 C. C. A. 544; A. B. Dick Co.
v. Henry (C. C.), 149 Fed. 424;
Aeolian Co. v. Harry H. Juelg Co.,
155 Fed. 119; 86 C. C. A. 205;
Crown Cork & Seal Co. v. Brook-
lyn Bottle Stopper Co. (C. C.),
172 Fed. 225; Crown Cork and
Seal Co. v. Standard Brewing Co.

If such monopoly

(C. C.), 174 Fed. 252. In the
case of Cortelyou v. Johnson, 145
Fed. 933, the majority of the Cir-
cuit Court of Appeals for the Sec-
ond Circuit declined to hold that
a third person who with knowledge
of the restriction sold a licensee
ordinary articles of commerce to
be used upon the licensed machine
was a contributory infringer. All
the judges held that in the partic-
ular case there was not sufficient
evidence that the defendant made
the sale with knowledge as to the
terms of the license, and the use
to be made of the ink. The Su-
preme Court affirmed the decision
below on the ground of want of
sufficient evidence of notice. It
expressly refused to express any
opinion as to whether the defend-
ant could have been held had no-
tice been shown. Cortelyou v.
Johnson, 207 U. S. 196; 28 Sup.
Ct. 105; 52 L. Ed. 167. A pat-
entee may or may not be entitled
to obtain his pay for his patented
machine in whole or in part by
stipulating that he shall have the
sole right to furnish material to
be used with it. We express no
opinion upon the question. It
would have been presented in this
case had Wayman bargained with
the corporate defendants that they
should buy all their enameling
powder from him. Such a bargain
would have been a very different
one from that now before us The
purposes aimed at by sucha bar-
gain, the relations among the de-
fendants, and between: them and
the public would have all been
PATENTS. 639

reaches to the extent of a restraint of interstate commerce,
it is a violation of the Anti-Trust Act.**

§ 319. Contract to Keep Up the Monopoly Given by the
Contract.—It is not a violation of the statute for an agree-
ment to be so drawn and with the intent as to keep up or
maintain the monopoly given by the patent. The patent laws
of the United States give the patentee a monopoly to manu-
facture and sell his patented article, and any agreement with
respect to the maintenance of that monopolistic advantage
he enjoys under his patent, which is not broader than the
right granted him by those laws are valid. ‘‘The general
rule is absolute freedom in the use or sale of rights under
the patent laws of the United States. The very object of
these laws is monopoly, and the rule is, with few exceptions,
that any conditions which are not in their very nature illegal
with regard to this kind of property, imposed by the patentee
and agreed to by the licensee for the right to manufacture
or use or sell the article, will be upheld by the courts. The
fact that the condition in the contracts keep up the monopoly
or fix prices does not render them illegal.’’*> But if the

unlike those shown in the record.”
United States v. Standard Sani-
tary Mfg. Co., 191 Fed. 172, 191;
affirmed 226 U. S. 20; 33 Sup. Ct.
9; 57 L. Ed. —. ‘The maker of
patented machines for the manu-
facture cf shoes has a right, under
the patent laws, to provide by
lease of the machines that the les-
sees shall use no shoe machinery
made by any one else, and so,
though thereby securing to itself
a monopoly of machinery used in
shoe manufacturing, does no in-
fringe the Federal Anti-Trust Act.
United Shoe Machinery Co. v. La
Chapelle, 212 Mass. 467; 99 N. E.
289.

34 United States v. Standard
Sanitary Mfg. Co., 191 Fed 172,
192; affirmed 226 U.S. 20; 33 Sup.
ot. 9; 57 L. Ed. —.

35 Bement v. National Harrow
Co., 186 U. S. 70; 22 Sup. Ct.
747; 46 L. Ed. 1058; affirming 163
N. Y. 505; 57 N. E. 764, which re-
versed 21 N. Y. App. Div. 290; 47
N. Y. Supp. 462. After holding
that the contracts involved in-
clude interstate commerce, the
court said: “The contracts plainly
look to the sale, and they deter-
mine also the price of the article
sold, throughout the United
States, as well as to the manufac-
ture in the State of Michigan. As
these contracts do, therefore, in-
clude interstate commerce within
their provisions, we are brought
back to the question whether the
agreement between these parties
with relation to these patented ar-
ticles is valid within the act of
Congress. It is true that it has
640 THE SHERMAN ANTI-TRUST ACT.
agreement transcend what is necessary to protect the use of
the patent or the monopoly which the law confers upon it,
then it is void; and if in restraint of interstate commerce,
they pass to the purpose accomplished in a restraint of trade
condemned by the Sherman law.**

§ 320. Patentee Agreeing Not to License Any Other
Person Than His First Licensee to Manufacture and Sell
Patented Articles—Vice Versa.—A patentee may license
another to manufacture and sell articles covered by his patent
and attach to or insert in the license an agreement not to
give any other person permission to manufacture and sell any
articles of the peculiar style and construction to be
made or sold by the licensee. Such a contract is not in
restraint of trade within the meaning of the Anti-Trust
Act. And the same is true of an agreement by the licensee
not to manufacture or sell any other articles than those
which he had made under his patent before granting him
the license, or which he was licensed to manufacture and
sell under the terms of the licensee, except such other style
and construction as he might be licensed to manufacture and
sell by the licensor. Thus where agreements licensed a person
to manufacture harrows under certain patents at a royalty
of one dollar per harrow, and that person agreed to defend

been held by this court that the
act included any restraint of com-
merce, whether reasonable or un-
reasonable. United States v.
Trans-Missouri Freight Associa-
tion, 166 U. S. 290; 17 Sup. Ct.
540; 41 L. Ed. 1007; reversing
58 Fed. 58; 7 C. C. A. 15; 19
U.S. App. 36; 24 L. R. A. 73; 4
Inters. Com. Rep. 443; United
States v. Joint Traffic Association,
171 U. 8. 505; Addyston Pipe, ete.
Company v. United States, 175 U.
S. 211; 19 Sup. Ct. 25; 43 L. Ed.
259; reversing 89 Fed. 1020; 32
C. C. A. 491; 45 U. S. App. 762.
But that statute clearly does not
refer to that kind of a restraint

of interstale commerce which may
arise from reasonable and legal
conditions imposed upon the as-
signee or licensee of a patent by
the owner thereof, restricting the
terms upon which the article may
be used and the price to be de-
manded therefor, Such a con-
struction of the Act we have no
doubt was never contemplated by
its framers.” But now see Bauer
& Cie v. O’Donnell, 229 U. ©. 1;
33 Sup. Ct. 616; 57 L. Ed.

36 Standard Sanitary Mfg. Co. v.
United States, 226 U. S. 20, 33
Sup. Ct. 9, 14; 57 L. Ed.; affirmed
191 Fed. 172.
PATENTS. 641

suits for infringement and made it a condition of the license
that the harrow should be sold at a certain price and that
the licensor should not make other harrows, the agreement
was upheld on the ground that it was not in restraint of
trade, and was only a carrying out of only such a monopoly
as the patent laws gave the patentee. It will be noted that
the restriction as to sale price was not a restriction attached
to the chattel upon its transfer. It was a restriction by the
patentee upon the production of the patented article. So
far as it appears in the case, this restriction as to price was
not to be imposed upon the purchaser of the patented article.
Even though it had been so attached, it would merely have
subdivided the patentee’s monopoly. The licensee fee was
only one dollar per harrow. The condition as to making
other harrows was not oppressive; for such a restriction
would confine the licensee’s energies to one channel, thus
bringing about the fullest exploitation of the invention, The
conditions imposed had an honest relation to the subject-
matter of the agreement. The court thus commented upon
the contracts:

‘‘On looking through these licenses we have been unable
to find any conditions contained herein rendering the agree-
ment void because of a violation of that act. There had
been, as the referee finds, a large amount of litigation be-
tween the many parties claiming to own various patents
covering these implements. Suits for infringements and for
injunction had been frequent, and it was desirable to pre-
vent them in the future. This execution of these contracts
did in fact settle a large amount of litigation regarding the
validity of many patents as found by the referee. This
was a legitimate and desirable result in itself. The pro-
vision in regard to the price at which the licensee would
sell the article manufactured under the license was also an
appropriate and reasonable condition. It tended to keep
up the price of the implements manufactured and sold, but
that was only recognizing the nature of the property dealt
in, and providing for its value so far as possible. This the
642 THE SHERMAN ANTI-TRUST ACT.

parties were legally entitled to do. The owner of a patented
article can, of course, charge such price as he may choose,
and the owner of a patent may assign it or sell the right
to manufacture and sell the article patented upon the con-
dition that the assignee shall charge a certain amount for
such article.

“It is also objected that the agreement of the defendant
not to manufacture or sell any other float spring tooth
harrows, etc., than those which it had made under its patents
before assigning them to the plaintiff, or which it was
licensed to manufacture and make, under the terms of the
license, except such other style and construction as it may be
licensed to manufacture and sell by the plaintiff, is void
under the act of Congress.

‘The plain purpose of the provision was to prevent the
defendant from infringing upon the rights of others under
other patents, and it had no purpose to stifle competition in
the harrow business more than the patent provided for, nor
was its purpose to prevent the licensee from attempting to
make any improvement in harrows. It was a reasonable
prohibition for the defendant, who would thus be excluded
from making such harrows as were made by others who
were engaged in manufacturing and selling other machines
under other patents. It would be unreasonable to so con-
strue the provision as to prevent defendant from using any
letters patent legally obtained by it and not infringing
patents owned by others. This was neither its purpose nor
its meaning.

‘‘There is nothing which violates the act in the agree-
ment that plaintiff would not license any other person than
the defendant to manufacture or sell any harrow of the
peculiar style and construction then used or sold by the
defendant. It is a proper provision for the protection of
the individual who is the licensee, and is nothing more in
effect than an assignment or sale of the exclusive right to
manufacture and vend the article. In brief, after a careful
examination of these contracts, we are unable to find any
PATENTS. 643
provision in them, either taken separately or in connection
with all the others therein contained, which would render
the contracts between these parties void as in violation of
the act of Congress.’’ °”

§ 321. Agreement Not to Use Invention.—Although a
patentee has the right to not use his invention and may
refuse to permit any other to use the privilege it confers,
yet “‘it does not follow that he may by agreement bind him-
self to non-use, save in connection with an assignment of
his letters patent. Ownership of a patent involves no obli-
gation to use, nor does ownership of other property. Non-
use ordinarily violates no law; but contracting with another,
putting it in the power of another to compel one not to use,
is a contract in restraint of trade, designed for the purpose
of suppressing competition.’’ °°

37 Bement v. National Harrow
Co. 186 U. 8. 70; 22 Sup. Ct.
747; 46 L. Ed. 1058; affirming
163 N. Y. 505; 57 N. E. 764;
which reversed 21 N. Y. App. Div.
290; 47 N. Y. Supp. 462.

38 Blount Mfg. Co. v. Yale &
Towne, 166 Fed. 555. In this case
it was said: “Section 4884 cr the
Revised Statutes (U. 8. Comp.
Nt., 1901, 3881) defines the nature
of a right conferred upon the pat-
entee. Jt is an assignable and
heritable exclusive right to make,
use, and vend. The profit which
arises from suppressing an inven-
tion, from non-use, flows from com-
mercial tactics, and not from the
use of the invention. The vublic
interest which forbids contracts
in restraint of trade arises from
no right in the public to create
trade by compulsion, but only from
the expectation of tne ordinary
course of conduct, and the harm-
ful results of interference with it
by monopolistic schemes. The in-

ventor who has not patented his
invention can not make an agree-
ment in restraint of interstate
trade without violating the Sher-
man Act, even though he is in fact
an inventor. The rules of public
policy, expressed in the Sherman
Act, apply to him, and I do not
think are affected by his taking
out a patent, save in the single
particular of an assignment or li-
cense. The object of the constitu-
tional provision upon the subject
of patents, etc., was: “To promote
the progress of science and useful
arts by securing for limited terms
to authors and inventors the ex-
clusive right to their respective
writings and discoveries.’ The sup-
pression of intellectual products
for the preservation of the old
market does not promote the
progress of science and the arts.
A patentee who agrees to suppress
his is not promoting it. He is
not deriving his profit from its
promotion, but from the manipula-
644 THE SHERMAN ANTI-TRUST ACT.

§ 322. Combination of Patentees and Jobbers—Agree-
ment Unnecessary to Protect Patentee’s Rights.—An agree-
ment that is broader than is necessary to protect the pat-
entee’s monopoly, if in restraint of trade, is illegal.*”’

Thus certain agreements to which 85 per cent. of the
manufacturers of enameled ware were parties, and 90 per
cent. of the jobbers therein were also parties, which, in
addition to a provision against the marketing of what were
known as ‘‘seconds’’—inferior ware—intended to carry out
the ostensible object of the agreement, also provided for the
regulation of prices through a price and schedule com-
mittee, fixed preferential discounts, confining them to sales
to jobbers only, authorized rebates if the agreements were
faithfully observed, making the condition of their entry a
promise not to resell to plumbers execpt at the prices de-

tion of the market. It is no part
of the constitutional scheme, or
of the scheme of the patent laws,
to secure to inventors a profit
from the suppression of their cre-
ations. The trade rule seems to me
to be well expressed by Judge Sea-
man in Jndiana Manufacturing
Company vy. J. I. Case Threshing
Machine Company (C. C.), 158
Fed. 21-25: ‘[ am of the opinion
that sueh combination must be
limited to the express policy and
object of the patent grant—mo-
nopoly. in beneficial use of a spe-
cific invention and when extended
beyond that purpose by concert of
action may thus be brought within
the inhibition of the general law.’
To limit the application of the
Sherman Act merely because prof-
its may be made by a patentee in
the course of business strategy
seems to me to be unsound, for the
reason that it misinterprets the
language of the patent law, and

perverts its spirit, and excludes
from the Sherman Anti-Trust Act
a very considerable class of agree-
ments which are quite as objection-
able as agreements covering non-
patented articles. Is it possible
that the manufacturers of auto-
mobiles, of typewriters, of shoe
machinery, or spinning machin-
ery, are without the scope of
the Sherman Act for the reason
that their machines generally ‘em-
body one or more patented im-
provements?’ Regard must be had
to the actual conditions of inter-
state trade and to the general
course of combination. The rea-
sons for enacting the Sherman law
seem quite as applicable to articles
of this character as to articles
having no connection with pat-
ents.”

39 Standard Sanitary Mfg. Co.
v. United States, 226 U.S. 20; 33
Sup. Ct. 9; 57 TL. Ed.; affirming
101 Fed. 172.
PATENTS.

645

termined by the manufacturers, and not to deal in the prod-
ucts of manufacturers not parties to the combination, were
held void; and they could not escape condemnation because
they took the form of licenses from the owners of the
patent for a device used in the process of enameling

the ware.*

40 Standard Sanitary Mfg. Co. v.
United States, 226 U. 8S. 20: 33
Sup. Ct. 9; 57 L. Ed.; aflirm-
ing 191 Fed. 172. The Supreme
Court said: “In this statement,
certain things are prominent. Be-
fore the agreements the manufac-
turers of enameled ware were in-
dependent and competitive. By
the agreements they were com-
bined, subjected themselves to cer-
tain rules and regulations, among
others, not to sell their product
to the jobbers except at a price
fixed, not by trade and competi-
tive conditions, but by the decision
of the committee of six of their
number, and zones of sales were
created. And the jobbers were
brought into the combination and
made its subjection complete and
its purpose successful. Unless they
entered the combination they could
obtain no enameled ware from any
manufacturer who was in the com-
bination, and the condition of the
entry was not to resell to plumbers
except at the prices determined by
the manufacturers. The trade was,
therefore, practically controlled
from producer to consumer, and
the potency of the scheme was es-
tablished by the co-operation of
85 per cent. of the manufacturers,
and their fidelity to it was se-
cured not only by trade advan-
tages, but by what was practically
a pecuniary penalty, not inaptly

termed in the argument, ‘cash
bail’ The royalty for each fur-
nace was $5, 80 per cent. of which
was to be returned if the agree-
ment was faithfully observed; it
was to be ‘forfeited as a penalty’
if the agreement was violated. And
for faithful observance of their
engagements the jobbers, too, were
entitled to rebates from their pur-
chases. It is testified that 90
per cent. of the jobbers in number
and more than 90 per cent. in pur-
chasing power joined the combina-
tion. The agreements clearly,
therefore, transcend what was nec-
essary to protect the use of the
patent or the monopoly which the
law conferred upon it. They passed
to the purpose and accomplished
a restraint of trade condemned by
the Sherman Law. It had, there-
fore, a purpose and accomplished
a result not shown in the Bement
ease. There was a contention in
that case that the contract of the
National Harrow Company with
Bement & Sons was part of a con-
tract and combination with many
other companies and constituted a
violation of the Sherman Law, but
the fact was not established, and
the case was treated as one be-
tween the particular parties, the
one granting and the other receiv-
ing a right to use a patented ar-
ticle with condilions suitable to
protect such use and secure its
646 THE SHERMAN ANTI-TRUST ACT.

§ 323. Combination Formed in Order to Avoid Infringe-
ment Suits——It is perfectly legitimate for patentees, when
the validity of their patents are threatened, to form a com-
bination in order to avoid infringement suits; but they can
not make the occasion an excuse or cloak for the creation
of monopolies to the public’s disadvantage.**

§ 324. Combination of Corporations, Each Manufactur-
ing Non-competing Patented Machines.—Three companies,
each manufacturing a different non-competing group of
patented machines collectively used for making shoes, uniting
in one corporation and continuing the manufacture of the
machines, do not viclate the Sherman Act, notwithstanding
a large percentage of all the shoe machinery business may
thus have been put into a single hand. ‘‘On the face of it,’”’
said the court, ‘‘the combination was simply an effort after
greater efficiency.

““The business of several groups that combined, as it
existed before the combination, is assumed to have been
legal. The machines are patented, making them a monopoly
in any case, the exclusion of competitors from the use of
them is of the very essence of the right conferred by the
patents, and it may be assumed that the success of the
several groups were due to their patents having been the

benefits. And there is nothing in as offending the Sherman Law.”

Henry v. A. B. Dick Co., 224 U. S.
1, 56 L. Ed. 645; 32 Sup. Ct. Rep.
364, which contravenes the views
herein expressed. The agreements
in the case at, bar combined the
manufacturers and jobbers of
enameled ware very much to the
same purpose and results as the
association of manufacturers and
dealers in tiles combined them in
W. W. Montague & Co. v. Lowry,
193 U. S. 38; 48 L. Ed. 608; 24
Sup. Ct. Rep. 307; which combina-
tion was condemned by this court

See also Virtue v. Creamery Pack-
age Mfg. Co., 227 U.S. 8; 33 Sup.
Ct, 202; 57 L. Ed.; affirming 179
Fed. 115; 102 C. C. A. 413.

41 National Harrow Co. v.
Hench, 83 Fed. 36; 27 C. C. A.
349: “The fact that the property
involved is covered hy letters pat-
ent is urged ‘as a justification;
but we do not see how any import-
ance can be attributed to this fact.
Patents confer a monopoly as re-
spects the property covered by
them, but they confer no right
PATENTS. 647
best. As, by the interpretation of the indictment below *
and by the admission in argument before us, they did not
eompete with one another, it is hard to see why the collective
business should be any worse than its component parts.
It is aid that from 70 to 80 per cent. of all the shoe ma-
chinery business was put into a single hand. This is inac-
curate, since the machines in question are not alleged to be
types of all the machines used in making shoes, and since
the defendants’ share in commerce among the states does
not appear. But taking it as true, we can see no greater
objection to one corporation manufacturing 70 per cent. of
three non-competing groups of patented machines collectively
sued for making a single product than to three corporations
making the same proposition of one group each. The disin-
tegration aimed at by the statute does not extend to reducing
all manufacture to isolated units of the lowest degree. It is
as lawful for one corporation to make every part of a steam
engine, and to put the machine together, as it would be for
one to make the boilers and another to make the wheels.
Until the one intent is nearer accomplishment than it is by
such a juxtaposition alone, no intent could raise the conduct
to the dignity of an attempt.’’ ‘?*

§ 325. Agreement to Defend Infringement Suits—An
agreement to defend all infringement suits brought against

upon the owners of several distinct 42* United States v. Winslow,

patents to combine for the purpose
of restraining competition and
trade. Patented property does not
differ in this respect from any
other.” See Rubber Tire Wheel
Co. v. Milwaukee R. W. Co., 154
Fed. 358, 363; and Rubber Tire
Wheel Co. v. Milwaukee R. W.
Co., 142 Fed. 531. See also Vir-
tue v. Creamery Package Mfg. Co.,
227 U. S. 8; 33 Sup. Ct. 202; 57
L. Ed. —.
42195 Fed. 591.

227 U.S. 202; 33 Sup. Ct. 253: 57
L. Ed. —; affirming 195 Fed. 578.
See Virtue v. Creamery Package
Mfg. Co., 227 U. S. —; 33 Sup.
Ct. 202; 56 L. Ed.—; affirming
179 Fed. 115; 102 C. C. A. 413;
Swift & Co. v. United States, 196
U. S. 375; 25 Sup. Ct. 276; 49
L. Ed. 518; modifying 122 Fed.
529; Continental Paper Bag Co. v.
Eastern Paper Bag Co., 210 U. S.
405; 28 Sup. Ct. 748; 52 L. Ed.
1122.
648 THE SHERMAN ANTI-TRUST ACT.
the licensee, and also promptly attack all infringers of the
patent leased, does not show a common and illegal purpose
between the licensor and licensee. ‘‘It is but an assurance
of title to the rights conveyed.’’ **

§ 326.. Contracts Conveying Several Patents in Return
for Licenses Under All of Them.—Where several patentees
having patents covering similar inventions conveyed their
patents to one of their number, who in return granted rights
under all to the others, it was held that the arrangement was
not a violation of the statute, because of the fact that pro-
visions intended to protect and keep up the patent monopoly
required the licensor to prosecute all infringers, limited the
licenses to be granted to such licensees as should be agreed
upon, imposed conditions on each licensee as to the use and
ownership of the patented machines, and prohibited him from

using any others.**

43 Virtue v. Creamery Package
Co., 227 U. S. 8; 33 Sup. Ct. 202;
57 L. Ed. —; affirming 179 Fed.
115; 102 C. C. A. 413. In this
case it was also held that a sup-
plementary contract for the settle-
ment of claims growing out of re-
ciprocal charges of infringements
which had no connection with the
alleged illegal contract other than
that some of the claims were
against corporations, which were
parties to the alleged unlawful
agreement, or because of any ne-
gotiations preceding the execution
of a sales agency contract which
had for their inducement and ob-
ject the settlement of controver-
sies and rights growing out of ear-
lier contracts or because of the
simultaneous bringing of infringe-
ment suits, was not invalid.

44 United States Consolidated
Seeded Raisin Co. v. Griffin. 126

Fed. 364. The court relied upon
Bement v. National Harrow Co.,
186 U. S. 70; 22 Sup. Ct. 747; 46
L. Ed. 1058; but inasmuch as the
court seems to have had a miscon-
ception of the Harrow case, the
soundness of the decision may well
be doubted. Thus “the court first
declared the Bement case had held
such a combination was proper [a
manifest error! ] and then followed
that conception of the Bement case
as binding authority. The error
of the court has been noticed in a
later case (Indiana Mfg. Co. v.
J. I. Case, ete. Co., 148 Fed. 21),
and the doctrine therein laid down
has not been followed in two sub-
sequent decisions in other cir-
cuits.” Edwin H. Abbot, Jr., in 12
Columbia Law Review 719 (Dec.
No., 1912). The Indiana Mfg. Co.
case was reversed, 154 Fed. 365;
83 C. C. A. 343.
PATENTS. 649

§ 327. Infringers Setting Up Illegality of Combination
as a Defense.—In an action for infringement of a patent,
the defendant can not set up as a defense that the plaintiff is
party to a combination which is a violation of the Anti-
Trust statute, or urge that the plaintiff is a corporation
organized merely for the purpose of holding the legal title
to various patents, among them the one in controversy, for
the purpose of controlling sales and enhancing prices without
itself engaging in the manufacture and sale of the patented
products. Until the United States Government has acted
and sought to prosecute the plaintiff for a violation of the
statute, such infringer will not be permitted to raise such

an issue as a defense.**

# Otis Elevator Co. v. Geiger,
107 Fed. 131. In this case the
court said: “It might, indeed, be
quite possible for the general ob-
jects of the alleged combination
to be unlawful, and such as could
he enjoined at the suit of the
United States, without necessarily
affecting other special acts, and as
« conveyance to the complainant
of the patent. And, as there is
no doubt that the conveyance of
this patent was in fact made and
recorded, it seems to the court
that the defendant, under those
circumstances, and in an acticn of
this character, can not be allowed
to question the title of the com-
plainant to the patent upon this
ground, and the weight of the au-
thorities supports this view. In a
sense, the granting of a patent
confers a monopoly on the inven-
tor or owner of such patent, but
such a monopoly is granted in the
interest of the public as well as
of the grantee of the patent, and
is an encouragement to the devel-
opment of inventive skill and ge-

nius. The patent laws of the
United States, while sometimes
abused or perverted, have had
much to do with the growth and
prosperity of our country, and
have added much to our material
and intellectual development. UlI-
timately, these inventions are sur-
rendered to the public, and it is
only just that for a time the in-
ventor reap the rewards of study
and industry. Grant v. Raymond,
6 Pet. 218, 241; 8 L. Ed. 376;
Bement v. Harrow Co., 186 U. S.
70, 88; 22 Sup. Ct. 747; 46 T..: Ed.
1058. The ery of monopoly, there-
fore has no place in the discussion
of the question of infringement or
priority of invention. It is diffi-
cult to understand how or why a
violation of the Sherman Anti-
Trust law by this complainant, if
there has been such a violation,
confers any right on the defendant
to infringe his patent. That Act
points out the penalties for its
violation, and it is not understood
that such law denies the grantees
of patents the protection of the
650

§ 328.

THE SHERMAN ANTI-TRUST ACT.

Specific Performance of Contract Relating to

Patents.—While an infringer may not set up as a defense
that the patent is controlled by an illegal combination, yet
where the action is brought to enforce a contract with ref-
erence to rights under supposed advantage to be secured
by the patent, the defendant may set up as a defense
that such patent belongs to or is controlled by such a
combination.’® But a suit by the owner of a patent to enjoin

law because they may be violating
some statute.” General Electric
Co. v. Wise, 119 Fed. 922. Na-
tional Folding Box & Paper Co. v.
Robertson, 99 Fed. 985 (reviews
many cases and declines to follow
National Harrow Co. v. Quick, 67
Fed. 130). “They [the owners of
the patent in suit] do not lose
that right merely because they
may have joined in a combination
with others, holding other patents
securing similar monopolies, which
combination may, when judicially
examined in a proper forum, be
held to be unlawful. We do not
feel to be justified in assuming
upon the facts before us in the
present suit, that the use which
the complainants propose to make
of the injunction—an injunction
which seem necessary to secure
their monopoly and make theiz pat-
ent fruitful—will be such as to
promote any other monopoly. When
it shall be made to appear that
some one, to whom in fairness and
good conscience these complainants
should sell their lamps, has been
arbitrarily refused them, save up-
on oppressive and unreasonable
terms, it will be time to consider
whether the cureplainants should
be allowed to continue in posses-
sion of the injunction.” Edison

Light Co. v. Sawyer-Mann Electric
Light Co., 53 Fed. 598; 3 C. C. A.
605- Fraser v. Duffey, 196 Fed.
900; Soda Fountain Co. v. Green,
69 Fed. 333; Motion Picture Pat-
ents Co. v. Laemmle, 178 Fed. 104;
United States Fire Ext,, ete. Co.
v. Joseph Halsted Co., 195 Fed.
295; Virtue v. Creamery Package
Mfg. Co., 179 Fed. 115; 102 C. C.
A. 413; affirmed, 227 U. 8. 8, 33
Sup. Ct. 202; 57 L. Ed. —; Strait
v. National Harrow Co., 51 Fed.
819; Independent Baking Powder
Co. v. Boorman, 130 Fed. 726; Mo-
tion Picture Patents Co. v. Ullman,
186 Fed. 174.

46 Indiana Mfg. Co. v. J. I. Case,
etc., Company, 148 Fed. 21 (re-
versed 154 Fed. 365; 83 C. C. A.
343, but not on this exact propo-
sition). “These contracts are set
up in the bill and are in evidence,
as one of the fundamental grounds
for the relief sought, and unless
they are valid the rule is elemen-
tary (McMullen v. Hoffman, 174
U. S. 639, 654; 19 Sup. Ct. 839;
43 L. Ed. 1117; affirming 83 Fed.
372; 28 C. ©. A. 178; 48 U. 8.
App. 596; 45 L. R. A. 410) that ‘no
court will lend its assistance in
any way towards carrying out the
terms’ of such contract, ‘nor will
a court of equity enforce any al-
PATENTS. 651
a licensee from using any of the patented devices except on
the terms imposed by the license contract is not one for
specific performance of the contract. It is one to enjoin the
infringement of the patents by excluding the licensee from
that part of the patent domain not granted by the contract;
and the defendant can not set up as a defense that the patent
is controlled by an illegal combination.*7

§ 329. Public Deceived by Inferior Goods, Combination
to Prevent.—A combination to fix prices and prevent the
sale of inferior goods sold as goods of the first class, can
not be justified if in restraint of interstate commerce. An
attempt was made to justify a combination to sell enameled
ware in a monopolistic way, on the ground that the market
was flooded with what was known to the wholesale and retail
dealers as ‘‘seconds,’’ an inferior article which could be and
was usually sold to the unsuspecting consumers as a first-
elass article, and by the combination the trade in these
seconds was controlled or suppressed and thereby the public
protected. The court did not look with favor upon this
defense.**.

§ 330. Patents—Tied Leases.—By various leases in 1903
and 1904, the owners of patents leased to certain manufac-
turers for twenty years machines made and used for certain
processes in the manufacture of shoes, and in the lease was
what is called a ‘‘tying lease,’’ the effect of which was to
prohibit the use by the lesseees in their factories of any

leged right directly springing’ 47 Indiana Mfg. Co. v. J. I. Case,

therefrom. So, their validity must
be ascertained, under the issue, as
a condition precedent to any relief
in equity, irrespective either of
the seeining want of the equity in
the attitude of the defendant re-
specting such issue, or hardship
which may be imposed upon the
complainant.”

ete., Co., 154 Fed. 365; 83 C. C.
A. 343; reversing the court on this
point.

48 Standard Sanitary Mfg. Co. v.
United States, 226 U. S. 20; 33
Sup. Ct. 9; 57 L. Ed. —; affirm-
ing 191 Fed. 172.
652 THE SHERMAN ANTI-TRUST ACT.

machines not leased from the lessors. In an action for an
injunction and damages the lessees pleaded that this covenant
in the lease, by reason of its unjust and oppressive nature
and of the practical monopoly which the lessors (patentees)
had acquired in Canada in the manufacture and supply of
shoe-making machinery, was in restraint of trade and void.
But it was held that the covenant was not in restraint of
trade, for the shoe manufacturers of Canada were at liberty
to hire or not hire the patentees’ machines on the latters’
terms as they pleased; and that the patentees were at liberty
to prescribe terms so long as they were not illegal, and were
under no obligation to produce and dispose of their manu-
facture on terms similar to those imposed as patentees by the
Canadian Patent Act.*®

§330a. Contract to Assign Future Inventions Made Af‘er
Termination of Service.—The contract of one having a
monopcly in shoe machinery, with one employed by it, to
design and improve such machinery, the same that it makes
with all others employed by it for such purpose, constituting
90 per cent. of those skilled in the manufacture of such
machinery, that he shall assign to it all inventions made by
him within ten years after termination of his contract of
employment, is in direct aid of the monopoly of interstate
trade and commerce, within the Federal Anti-Trust Act,
prohibiting such a contract.*°

49 United Shoe Machinery Co. v. 50 United Shoe Machinery Co. v.
Brunet, [1909] A. C. 330; 78 L. La Chapelle, 212 Mass. 467; 99
J. Pac. 101; 100 L. T. 579; 53 8S. N. E. 289.

J. 396; 25 L. T. 442.
CHAPTER XVI.

PATENT MEDICINE.

SECTION. SECTION.

331. Combination to fix prices of 333. Prevention of demoralization
patent medicines. of prices.

332. Secret formula for medicine 334. Trade name—Secret For-
unpatented. mula.

§ 331. Combination to Fix Prices of Patent Medicines.—
Three distinct national associations (one of them manufac-
turers of proprietary medicines) entered into an agree-
ment, the purpose of which was to maintain the retail
prices of proprietary patent medicines. This agreement
proved that wholesalers (the wholesale druggist association
were a party to the agreement and also the retail association)
should refrain from selling such medicines at any price to
‘“‘ageressive cutters’’ of prices or brokers. An aggressive
cutter was defined by the agreement as a dealer who was so
designated by 75 per cent. of the local trade at any given
place. The three associations were all bound to carry this
agreement into effect. The proprietors of the patent medi-
cines thereafter sold only at fixed uniform prices to those
wholesalers who agreed to maintain prices and not to sell
to the so-called ‘‘aggressive cutters’’ or brokers, in accord-
ance with a list furnished by a committee of the whole-
saler’s association, while the list of aggressive cutters was
furnished by the secretary of the retailers’ association.
If a wholesaler sold to an ‘‘aggressive cutter,’’ he was at
once reported, and his name added to that list, and notice of
the fact sent to all the retailers who were members of the
retailers’ association, with the suggestion that they act for
the protection of their interest. If he was reinstated, a
second notice’ of that fact was sent. The trade of these

653
654 THE SHERMAN ANTI-TRUST ACT.

associations extended through many states. It was held that
there was a combination and conspiracy in restraint of trade
within the meaning of the Anti-Trust Act. The court dis-
cussed the question at length, saying:

‘‘Undoubtedly the originator and compounder of a pro-
prietary medicine may shape his own policy, and sell or
withhold from selling as he pleases, according to supposed
self-interest or whim; fixing the prices and naming the terms
and conditions at and upon which alone he will do so,
refusing to thcse who will not comply. And so far as this
is confined to his own goods, and pursued by independent
and individual action, it can not be challenged. It is quite
a different matter, however, when two or more combine and
agree that neither will sell to any one who cuts the prices
of any of the others. This concerted policy, by which it is
sought not only to maintain by each the price of his own
medicines, which alone he is interested in or has the right
to control, but also the prices on those of all who are thus
banded together, is manifestly a direct interference with
and restraint upon the freedom of trade, which in commerce
between the states it was the object of the act of Congress
to preserve.’’ +

1 Jayne v. Loder, 149 Fed. 21; at uniform rebate prices, so that

78 C.C. A. 653; 7 L. R. A. (N.S.)
984; 9 A.& E. Am. Cas. 294. The
court further said: “It is useless,
in the face of these authorities, to
urge upon us the decision in Park
vy. National Druggists’ Association,
175 N. Y. 1; 67 N. E. 136; 62 L.
R. A. 632; 96 Am. St. Rep. 578,
affirming 54 N. Y. App. Div.
223; 66 N. Y. Supp. 615,
where a different conclusion has
apparently been reached. It is to
be noted, however, with regard to
that case, that the agreement
there, was viewed by the majority

of the court, was merely to sell’

to all wholesale distributing agents

the small dealer, with limited cap-
ital, was put on a par with the
large ones, whose capital was more
ample, thus tending to fairness and
equality, on which stress is laid.
There was, however, the further
provision (to say nothing of other
restrictions) that until a whole-
saler agreed to the plan he could
not buy of any member of the as-
sociation whatever, in view of
which three of the judges dis-
sented; the case being still fur-
ther weakened as an authority by
the failure of the majority to al-
together agree in their reasoning.
At the best, therefore, it is near
PATENT MEDICINE. 655

§ 332. Secret Formula for Medicine Unpatented—A
restraint of trade which would be unlawful as to other
manufactured articles can not be justified on the ground
that the article in question is a proprietary medicine made
under a secret formula; so that contracts between such a
manufacturer cr proprietor making a medicine under such
formula and all dealers whom he permits to sell his products,
comprising most of the dealers in similar articles throughout
the United States, which fix the price for all sales, whether
at wholesale or retail, operate as a restraint of trade, are un-
lawful both at common law and as to interstate commerce
under the Sherman Anti-Trust Act.?

The court distinguishes the case at bar from those cases
where it had been held that a patentee had the right to: fix
the price at which articles manufactured under his patent
shall be sold,? and adds:

‘“‘The complainant has no statutory grant. So far as ap-
pears, there are no letters patent relating to the remedies in
question. The complainant has not seen fit to make the dis-
closure required by the statute, and thus to secure the privi-
leges it confers. Its case lies outside the policies of the
patent law, and the extent of the right which that law secures
is not here involved or determined. The complainant relies
upon the ownership of its secret process and its rights are
to be determined accordingly. Any one may use it who
fairly, by analysis and experiment, discovers it. But the
complainant is entitled to be protected against invasion of

the line, and in no event can it
be taken, contrary to the cases
cited, as giving the law there.”
See also Dr. Miles Medical Co. v.
John D. Parks & Sons Co., 220 U.
S. 373; 31 Sup. Ct. 376; 55 L.
Ed. 502; affirming 164 Fed. So. 3;
90 C. C. A. 579.

2Dr. Miles Medical Co. v. John
D. Parks & Sons Co., 220 U. S.

373; 31 Sup. Ct. 376; 55 L. Ed.
502; affirming 164 Fed. 8031; 90
C. C. A. 579. Justice Holmes filed
a dissenting opinion.

3 Citing Bement & Sons v. Na-
tional Harrow Co., 186 U. S. 70;
22 Sup. Ct. 747; 46 L. Ed. 1058
and Grant v. Raymond, 6 Pet. 241-
243; 8 L. Ed. 376, 384, 385.
656 THE SHERMAN ANTI-TRUST ACT.
its rights in the process by fraud or by breach of trust or
contract.*

“‘The secret process may be the subject of confidential com-
munication and of sale or license to use with restrictions as
to territory and prices.’ A similar principle obtains with
respect to the confidential communication of quotations col-
lected by a board of trade.’’®

The court then proceds to discuss the question involved:

‘‘Here, however, the question concerns not the process of
manufacture, but the manufactured product,—an article of
commerce. The complainant has not communicated its pros-
ess in trust, or under contract, or executed a license for the
use of the process with restrictions as to the manufacture
and sale by the licensee to whom the communication is made.
The complainant has retained its secret which apparently it
believes to be undiscoverable. Whether its remedies are sold
or unsold, whether the restrictions as to future sales are valid
or invalid, the complainant’s secret remains intact. That
the complainant may rightfully object to attempts to dis-
cover it by fraudulent means, or to a breach of trust or
contract relating to the process, does not require the con-
clusion that it is entitled to establish restrictions with respect
to future salse by those who purchase its manufactured
product. It is said that the remedies ‘embody’ the secret.
It would be more correct to say that they are manufactured
according to the secret process, and do not constitute a com-
munication of it. It is also urged that, as the process is
secret, no one else can manufacture the article. But this
argument rests on monopoly of production, and not on the

+ Citing Tabor v. Hoffman, 118
N. Y. 36; 16 Am. St. 740; 23 N.
E. 12; Chadwick v. Covell, 151
Mass. 190; 23 N. E. 1068; 21 Am.
St. 442; 6 L. R. A. 839.

5 Citing Fowle v. Park, 131 U.
S. 88; 9 Sup. Ct. 658; 33 L. Ed.
67.

6 Citing Board of Trade v. Chris-
tie Grain & Stock Co., 198 U. S.
236; 25 Sup. Ct. 637; 49 L. Ed.
1031; reversing 125 Fed. 181; 130
Fed. 507.
PATENT MEDICINE. 657

secrecy of the process or the particular fact that may confer
that monopoly. It implies that if, for any reason, monopoly
of production exists, it carries with it the right to control
the entire trade of the produced article, and to prevent any
competition that otherwise might arise between wholesale
and retail dealers. The principle would not be limited to
secret prosesses, but would extend to goods manufactured by
anyone who secured control of the source of supply of a
necessary raw material or ingredient. But, because there is
monopoly of production, it certainly cannot be said that there
is no public interest in maintaining freedom of trade with
respect to future sales after the article has been placed on
the market and the producer has parted with his title. More-
over, every manufacturer, before sale, controls the articles he
makes. With respect to these, he has the rights of ownership,
and his dominion does not depend upon whether the process
of manufacture is known or unknown, or upon any special
advantage he may possess by reason of location, materials, or
efficiency. The fact that the market may not be supplied
with the particular article unless he produces it is a prac-
tical consequence which does not enlarge his right of prop-
erty in what he does produce.

“Tf a manufacturer, in the absence of statutory privilege,
has the control over the sales of the manufactured article
for which the complainant here contends, it is not because
the process of manufacture is kept secret. In this respect,
the maker of so-called proprietary medicines, unpatented,
stands on no different footing from that of other manufac-
turers. The fact that the article is represented to be cura-
tive in its properties does not justify a restriction of trade
which would be unlawful as to compositions designed for
other purposes.’’

The complainant was seeking to restrain the defendant
from inducing any party to the contracts he had signed
agreeing to sell its goods at prices fixed by it, to violate or
break them, or to sell or deliver to any person for
658 THE SHERMAN ANTI-TRUST ACT.

it; or attempting to procure in any way its remedies
from wholesale or retail dealers who had executed contracts
with it, as well as from advertising, selling, or offering for
sale the remedies obtained by any of the means it had
adopted in restriction of its trade at less ‘‘than the estab-
lished retail price thereof,’’ or to dealers who had not en-
tered into contracts with the complaint. It also prayed for
an injunction to prevent the defendant from obliterating,
mutilating, removing, or covering up the labels and cartoons
complainant used upon the bottles containing the remedies,
and from making sales without such labels and cartoons,
and prevent the letterpress and numerals (used for identi-
fication) being kept intact. There was also a prayer for an
accounting. The court then, after disposing of the former
question, took up the contention of the complainant that,
irrespective of the secrecy of its process, it was entitled to
maintain the restrictions on prices by virtue of the fact that
they related to products of its own manufacture, saying:

‘The basis of the argument appears to be that, as the
manufacturer may make and sell, or not, as he chooses, he
may affix conditions as to the use of the article or as to
the prices at which purchasers may dispose of it. The pro-
priety of the restraint is sought to be derived from the lib-
erty of the producer.

‘‘But because a manufacturer is not bound to make or sell,
it does not follow in case of sales actually made he may
impose upon purchasers every sort cf restriction. Thus, a
general restraint upon alienation is ordinarily invalid. ‘The
right of alienation is one of the essential incidents of a
right of general property in movables, and restraints upon
alienation have been generally regarded as obnoxious to
public policy, which is best subserved by great freedom of
traffic in such things as pass from hand to hand. General
restraint in the alienation of articles, things, chattels, except
when a very special kind of property is involved, such as
a slave or an heirloom, have been generally held void. ‘If
PATENT MEDICINE. 659

a man,’ says Lord Coke, in 2 Coke on Littleton, No. 360,
‘be possessed * * * of a horse or of any other chattel,
real or personal, and give or sell his whole interest or prop-
erty therein, upon condition that the donee or vendee shall
not alien the same, the same is void, because the whole in-
terest and property is out of him, so as he hath no pos-
sibility of a reverter; and it is against trade and traffic
and bargaining and contracting between man and man.’’

‘“‘Nor can the manufacturer by rule and notice, in the
absence of contract or statutory right, even though the re-
striction be known to purchasers, fix prices for future
sales.’’®

The court then cites the case holding that a person having
a copyright cannot fix the price of an article published under
the copyright,® and adds: ‘‘It will hardly be contended with
respect to such matters, that the manufacturer of an article
of commerce not protected by any statutory grant is in any
better case.° Whatever right the manufacturer may have
to project his control beyond his own sales must depend upon
an inherent power incident to production and original own-
ership, but upon an agreement.’’ The court then distin-
guishes the question involved from one of good will, saying:

“‘The present case is not analogous to that of a sale of
good will, or of an interest in a business, or of the grant
of a right to use a process of manufacture. The complain-
ant has not parted with any interest in its business or in-
strumentalities of production. It has conferred no right by
virtue of which purchasers of its products may compete with
it. It retains complete control over the business in which

7 John D. Park & Sons Co. v. 9 Bobbs-Merrill Co. v. Straus,
Hartman, 12 L. R. A. (N.S.) 185; 210 U.S. 339; 28 Sup. Ct. 722; 52
82 C. OC. A. 158; 153 Fed. 24. See LL, Ed. 1086.
also Gray, Restraints on Alienation 10 Citing Toddy & Co. v. Sterious

of Property, Nos. 27, 28. & Co., [1904] 1 Ch. 354; McGuther
8 Dr. Miles Medical Co. v. John & Pitcher [1904] 2 Ch. 306; Garst
D. Park & Sons Co., supra. v. Hall & L. Co., 179 Mass. 588;

61 N. E. 219; 55 L. R. A. 681.
660 THE SHERMAN ANTI-TRUST ACT.
it is engaged, manufacturing what it pleases and fixing such
prices for its own sales as it may desire. Nor are we deal-
ing with a single transaction, conceivably unrelated to the
public interest. The agreements are designed to maintain
prices after the complainant has parted with the title to
the articles, and to prevent competiton among those who
trade in them.’’ The court then concludes:

‘The complainant’s plan falls within the principle which
condemns contracts of this class. It, in effect, creates a
combination for the prohibited purposes. No distinction can
properly be made by reasons of their particular character of
the commodity in question. It is not entitled to special
privilege or immunity. It is an article of commerce, and
the rules concerning the freedom of trade must be held to
apply to it. Nor does the fact that the margin of freedom
is reduced by the control of production make the protection
of what remains, in such a case, a negligible matter. And
where commodities have passed into the channels of trade
and are owned by dealers, the validity of agreements to pre-
vent competition and to maintain prices is not to be deter-
mined by the circumstance whether they were produced by
several manufacturers or by one, or whether they were
previously owned by one or by many. The complainant
having sold its product at prices satisfactory to itself, the
public is entitled to whatever advantage may be derived
from competition in the subsequent traffic.’’"

11 Dr. Miles Medical Co. v. John sumer. The manufacturer’ re

D: Parks & Sons Co., 220 U. S.
373; 31 Sup. Ct. 376; 55. L Ed.
502; affirming, 164 Fed. 803; 90 C.
C. A. 579. It approves John D.
Parks & Sons Co. v. Hartman, 153
Fed. 24; 82 C. C. A. 158; 12 L. R.
A. (N.S.) 185. “It would be dif-
ficult to conceive of a restraint of
trade more complete than one seek-
ing to fix the prices on all sales
from the manufacturer through the
intermediate dealers to the con-

strains himself by agreeing to sell
at only one price and only to con-
tracting dealers. All competition
between wholesale dealers is de-
stroyed by their agreement to sell
only at a minimum price and only
to authorized purchasers. The re-
tail dealer likewise is removed
from the possibility of competition
by his agreement to sell at fixed
prices and to none other than the
consumer. No discoverable room
PATENT MEDICINE. 661

§ 333. Prevention of Demoralization of Prices.—It has
been claimed that contracts with a manufacturer producing
medicine under secret formulas (not patented formulas)
were valid, on the ground that they prevented that con-
fusion and damage which results from sales at less than the
prices fixed. To this claim the Supreme Court of the United
States said: ‘‘But the advantages of established retail prices
primarily concerns the dealers. The enlarged profits which
would result from adherence to the established rates would
go to them, and not to the complainant. It is through the
inability of the favored dealers to ‘realize these profits on ac-
count of the described competition, that the complainant

works out its alleged injury.

for competition is left. from the
manufacturer to the consumer.
The merchandise, the subsequent
trade in which the manufacturer is
thus attempting to control, is a
separate and distinct trade. Being
manufactured under secret pro-
cesses and formulae which the sin-
gle producer alone has power to
use, no other manufacturer can
make it. There are of course oth-
er preparations used for the same
purpose, but the articles controlled
are, from their very nature, all the
articles of their precise kind in
commerce. The attempted _ re-
straint is therefore complete. Even
though the public might not have
much -general interest in the trade
in the articles in question, when
the public has some interest and
the restraint is total, the unim-
portance of the trade does not, pre-
vent the restraint from being gen-
eral.” William J. Shroder in 25
Harvard Law Review 59 (Nov.,
1911); Montague & Co. v. Lowry,
193 U. S. 38; 24 Sup Ct. 307; 48
L. Ed. 608; affirming 115 Fed. 27;

If there be an advantage to

52 C. C. A. 621; 63 L. R. A. 58.
See Dr Miles Medical Co. v. Platt
(C. C.) 142 Fed. 606; Wells &
Richardson Co. v. Abraham (C.
C.) 146 Fed. 190; Dr. Miles Med-
ical Co. v. Goldwaite, (C. C.) 133
Fed. 794; Bement v. National Har-
row Co., 186 U. S. 70; 22 Sup. Ct.
747; 46 L. Ed. 1058; Board of
Trade v. Christie, 198 U. S. 236,
252; 25 Sup. Ct. 637; 49 L. Ed.
1031; Garst v. Harris. 177 Mass.
72, 74; 58 N. E. 174; Fowle v.
Park, 131 U. S. 88, 97; 9 Sup. Ct.
658; 33 L. Ed. 67; Park & Sons
v. National Wholesale Druggist’s
Ass’n., 175 N. Y. 1; 67 N. E. 136;
62 L. R. A. 632; 96 Am. St. Rep.
578; Standard Fireproofing Co. v.
St. Louis Co., 177 Mo. 559; 76
S. W. 1008; Victor Talking Ma-
chine Co. v. The Fair, 123 Fed.
424; 61 C. C. A. 58; Heaton-Pen-
insular Co. v. Eureka Specialty
Co., 77 Fed. 288; 25 C. C. A. 267;
35 L. R. A. 728; Central Shade
Roller Co. v. Cushman, 143 Mass.
353; 9 N. E. 629; Good v. Daland,
121 N. Y.1; 24 N. E. 15.
662 THE SHERMAN ANTI-TRUST ACT.
the manufacturer in the maintenance of fixed retail prices,
the question remains whether it is one which he is entitled
to secure by agreements restricting the freedom of trade on
the part of dealers who own what they sell. As to this,
the complainant can fare no better with its plan of identical
contracts than could the dealers themselves if they formed
a combination and endeavored to establish the same restric-
tions, and thus to achieve the same result, by agreement
with each other. Of the immediate advantage they would
thus obtain would not be sufficient to sustain such a direct
agreement, the asserted ulterior benefit to the complainant
cannot be regarded as sufficient to support its system.
‘‘But agreements or combinations between dealers, having
for their sole purpose the destruction of competition and the
fixing of prices, are injurious to the public interest and void.
They are not saved by the advantages which the participants
expect to derive from the enhanced price to the con-

sumer.’’??

12 Dr, Miles Medical Co. v. John
D. Park & Sons Co., 220 U. 8. 373;
31 Sup. Ct. 376; 55 L. Ed. 502;
affirming 164 Fed. 803; 90 C. C.
A. 579. Citing People v. Sheldon,
139 N. Y. 251; 23 L. R. A. 221;
36 Am. St. Rep. 690; 34 N. E. 785;
Judd v. Harrington, 139 N. Y.
105; 34 N. E. 790; People v.
Milk Exch., 145 N. Y. 267; 27 L.
R. A. 487; 45 Am. St. Rep. 609;
39 N. E. 1062; United States v.
Addyston Pipe & Steel Co., 46 L.
R. A. 122; 29 C. C. A. 141; 54
U. S. App. 723; 85 Fed. 271, on
appeal 175 U. S. 211; 44 L. Ed.
136; 20 Sup. Ct. Rep. 96; W. W.
Montague & Co. v. Lowry, 193
U.S. 38; 48 L. Ed. 608; 24 Sup.
Ct. Rep. 307; Chapin v. Brown
Bros., 83 Iowa 156; 12 L. R. A.
428; 32 Am. St. Rep. 297; 48 N.
W. 1074; Craft v. MceConoughy,

79 Ill. 346; 22 Am. Rep. 171;
W. H. Hill Co. v. Gray & Wor-
cester, 163 Mich. 12; 30 L. R. A.
(N.S.) 327; 127 N. W. 803. The
following quotation shows the
substance of the contracts in-
volved in these celebrated cases:
“The burden of proving the exist-
ence of this agreement, contract,
combination, and conspiracy, and
that the defendants were engaged
and took part in it was upon
the plaintiff, and for that pur-
pose evidence, which was uncon-
tradicted, was offered to prove
that the National Association of
Retail Druggists had its central
office in Chicago, and received
financial support from all the oth-
er associations and many of the
members belonging to them; that
from this central point organiz-
ers were sent out for the purpose
PATENT MEDICINE.

663:

§ 334. Trade Name—Secret Formula.—The fact that an
article of commerce is sold under a trade name or in a
trade dress does not afford it exemption from the common

law or statutory rules against restraint of trade.

Thus

where the sole manufacturer of a medicine made in accord-
ance with a secret unpatented formula, to which medicine

of bringing the local retail deal-
ers into associations, and, as a
result, Philadelphia retailers were
organized into an incorporated as-
sociation known as the Philadel-
phia Association of Retail Drug-
gists. In accordance with the
plans suggested by the organizers
sent from Chicago, the Philadel-
phia retail druggists working
with the organizers secured a con-
sensus of opinion of the retail-
ers here from which they fixed
the minimum rate at which drugs
should be sold at retail druggists
in Philadelphia and vicinity. All
the retail dealers were then no-
tified of this minimum rate, and
in case the retailer cut below the
price so fixed, his name with this
information, was sent to the Na-
tional Association of Retail Drug-
gists at Chicago, and the secre-
tary, Mr. Wooton, then placed the
name of this retail druggist upon
what was known as an ‘ aggres-
sive cutter’s’ list, and this ag-
gressive cutter’s list, with his
name thereon, was sent to all
proprietors, members of the Pro-
prietary Association of America,
and all the wholesalers, members
of the National Wholesale
Druggists’ Association, with the
request that they cease selling
any drugs whatever to such ag-
gressive cutter; and it was fur-
ther established, in case any pro-

prietor or wholesaler, after re-
ceiving this notice from the secre-
tary of the National Association
of Retail Druggists, failed to obey
and cease selling to such aggres-
sive cutter, this information of
his failure to obey also found its
way to the secretary of the Na-
tional Association of Retail Drug-
gists, and such disobedient pro-
prietor or wholesaler was dis-
ciplined by being put upon what
was designated as a ‘pink slip,’
and his name was sent to all re-
tailers throughout the United
States with the information that
ne had been selling to aggressive
cutters, and the request made to
the retailers throughout the coun-
try to cease making any further
purchases from such delinquent
wholesaler or proprietor. It is
very plain that this arbitrary fix-
ing of a minimum retail price
for drugs which are of universal
consumption and of absolute and
daily necessity and then restrict-
ing their sale to such retailers
only who conduct their retail
business in accordance with this
arbitrary standard of prices is a
clear restraint of interstate com-
merce in the drug trade to the
extent of excluding the aggres-
sive cutters and those who deal
with them and is in violation of
the act. The plaintiff was re-
ported to secretary Wooton, and on
‘664 THE SHERMAN ANTI-TRUST ACT.

he for many years had given a distinctive name, so labeling
and advertising it, sold it under a system of contracts be-
tween himself and wholesale dealers, to whom alone he sold
at uniform prices, by which they bound themselves to resell
at a certain price and only to retail dealers designated hy
him, and these retail dealers, by the consideration of being so

designated, bound themselves to sell to consumers only

and at a certain price; and the dealers who had
signed such contracts were doing business in many
states, it was held that they were void, because

in restraint of interstate commerce, and the court refused
to enjoin a defendant who violated them or obtained the
medicine in violation of their terms; and also refused to

allow the plaintiff an accounting."*

November 1, 1900, his name was.

placed upon an aggressive cutter’s
list, from which date down until
the 28th day of July, when suit was
brought in this case, he was un-
able to buy drugs direct from the
proprietors or wholesalers in the
United States, but was compelled
to purchase them in the name
of other persons and in various
indirect ways, and even then was
unable to keep his store stocked
as extensively as a retailer usu-
ally requires. Thus embarrassed,
he was compelled to secure these
drugs at much greater cost than
he would have paid had be been
able to purchase in the regular
way.” See article of William J.
Shroder on this case of Dr. Miles
in 25 Harvard Law Review, 59
(Nov. 1911); Loder v. Jayne, 142
Fed. 1010; reversed 149 Fed. 21;
78 C. C. A. 653; 7 L. R. A. (N.
S.) 984; 9 A. & E. Am. Cas, 294,
but not on this point.

13 John D. Park & Sons v. Hart-
man, 153 Fed. 24; 82 C. C. A.

158; 12 L. R. A. (N.S.) 185;
reversing 145 Fed. 358; approved
in Dr. Miles Medical Co. v. John
D. Park & Sons Co., 220 U. S.
373; 31 Sup. Ct. 376; 55 LL. Ed.
502; involving like contracts, and
decided in the same way. “The
court declined to follow the cases
holding valid these contracts fix-
ing the price at which the medi-
cine was to be sold on the same
ground that a similar contract be-
tween a patentee and his vendee
had been held valid: Jayne v.
Loder, 149 Fed. 21. The cases
directly in point are all nisi prius
decisions, except Jayne v. Loder,
149 Fed. 21, decided by the cir-
cuit court of appeals, third cir-
cuit, and are all quite recent.
They include three cases in which
the Dr. Miles Medical Company
was the plaintiff, namely, Dr.
Miles Medical Company v. Gold-
waite (C. C.), 183 Fed. 794. The
force of this case is weakened be-
cause the decree was not resisted.
The next is Dr. Miles Medical Co.
PATENT MEDICINE.

v. Jaynes Drug Co., 149 Fed. 838,
decided by the same judge who
decided the Goldwaite Case. The
next is Dr. Miles Medical Co. v.
Platt (C. C.), 142 Fed. 606. This
was followed by Wells & Richard-
son v. Abraham (C. C.), 146 Fed.
190, in which the legality of the
contracts was not denied, thus
lessening the value of the opinion
as an authority. The ground up-
on which the two contested cases
cited above was rested was the
identity between the rights of a
patentee and the owner of a mere
trade secret or private formula
with respect to the product or
manufactured article.” The court
also declined to follow Park v.
National Wholesale Druggists As-
so. 175 N. Y. 1; 67 N. E. 136;
32 L. R. A. 632; 96 Am. St. 578
and Straus v. American Publish-
ers Asso., 177 N. Y. 473; 69 N.
E. 1107; 64 L. R. A. 701; 101
Am. St. 819. “The similarity of
conditions surrounding the manu-
facture of articles under patents
and under trade secrets is super-
ficial and consists only in the
monopoly of production enjoyed
by both manufacturers. Even in
this similarity there is the vital
difference that the statutory mon-
opoly of the patentee is under
the protection of the law, while
the natural monopoly of the pos-
sessor of a secret exists only as
long as the secret is preserved,
and is protected by law only
against fraudulent discovery or
disclosure. Vulcan Detinning
Co. v. American Can Co., 67
N. J. Eq. 243; Stewart v. Hook,
118 Ga. 445; Westervelt v. Nat.
Paper Supply Co., 154 Ind. 673;
Peabody v. Norfolk, 98 Mass. 452;

665

Chadwick v. Covell, 151 Mass.
190; Tabor v. Hoffman, 118 N. Y.
30; Chain Belt Co. v. Von Spreck-
elsen, 117 Wis. 106; Park & Sons
Co. v. Hartman, 153 Fed. 24. The
consideration for the statutory
monopoly is the giving of the full
benefit of discovery, after a period
of exclusive use, to the general
public. Grant v. Raymond, 6
Pet. 218; 8 L. Ed. 376; Wheat-
on & Donaldson v. Peters & Grigg,
8 Pet. 591; 8 L. Ed. 1055; re-
versing 8 Pet. 725; 8 L. Ed. 1106;
Wilson v. Rousseau & Easton, 4
How. 646; 11 L. Ed. 1141; Be-
ment v. Nat. Harrow Co., 186 U.
S. 70. The owner of the trade
secret gives nothing to the public,
the value of his property being
dependent upon its secrecy. Hence
public policy, as expressed in stat-
utes or decisions, favors the stat-
utory and opposes the natural
monopoly. The natural monopoly
is in the secret itself and has no
relation to the article manufac-
tured by its use when once it is
offered as a subject of commerce.
Citing, this conclusion necessarily
follows from the reasoning upon
which the right of a patentee to
exercise monopolistic rights over
his product is sustained; and so
held in the case unde: discussion
and in John D. Park & Sons Co. v.
Hartman, 153 Fed. 24. See also
Chadwick v. Covell, 151 Mass. 190.
The right and power to refrain
from production can not of itself
embrace the right to sell, when
produced, upon illegal conditions,
nor, as has been suggested (17
Harvard Law Review 415), can
such conditions be imposed on the
theory that they attach to person-
al property so as to bind equit-
666

ably those who take with notice.
A condition rightfully imposed on
the original vendee can not bind
a sub-purchaser of chattels by
operation of notice. Dr. Miles
Medical Co. v. Park & Sons Co.,
220 U. 8. 373; 31 Sup. Ct. 376;
55 L. Ed.; Bobbs-Merrill Co. v.
Straus, 210 U. 8. 339; 28 Sup.
Ct. 722; 52 L. Ed. 1086; John D.
Park & Sons Co. v. Hartman, 153
Fed. 24, and cases there cited;
Taddy & Co. v. Sterious & Co.
[1904], 1 Ch. D. 354; McGruther
v. Pitcher [1904], 2 Ch. D. 306;
Garst v. Hall & Lyon Co., 179
Mass. 588 (1901). It will hardly
be contended that conditions ille-
gal as to the original vendees can
be legalized as sub-vendees by the
operation of such rule. The stat-
utory monopoly, by the terms of
the patent laws, extends to the
sale and use of the property cre-
ated by the use of the invention.
The right to impose restrictions
upon sales of chattel property
manufactured under patent, sub-
sequent to the original sale by the
patentee, if such exists, is not an
incident to the monopoly of pro-
duction but is the result of stat-
utory grant.” The author of this
article adds the following note:
“Bement v. National Harrow
Co. 186 U. S. 70; Edison
Phonograph Co. v. Kaufmann, 105
Fed. 960 (1901); Edison Phono-
graph Co. v. Pike, 116 Fed. 863
(1902); Victor Talking Machine
Co. v. The Fair, 123 Fed. 424
(1903). Because of these and
numerous additional authorities
apparently sustaining the right of
a patentee to retain dominion by
contract over the resale of his ar-

THE SHERMAN ANTI-TRUST ACT.

ticle after parting with all his
title except this right, the writer
hesitates in expressing his doubt
as to the existence of the right of
a patentee to impose general price
restrictions upon the subsequent
commerce in his product when he
has sold the same for the purpose
of re-sale.” William J. Shroder
in 25 Harvard Law Review 59
(Nov. 1911). “In conclusion it
might be suggested that public
policy, apart from that involved
in the technical questions of re-
straint of trade, should oppose
the enforcement of such systems
of fixing prices. The inducement
now offered for the disclosure of
beneficial discoveries, to the ul-
timate advantage of the general
public, includes a monopoly of
manufacture, use, and sale. Be-
ment v. National Harrow Co.,
186 U. 8. 70; Teaton, ete. Co.
v. Eureka Specialty Co., 77 Fed.
288; Dickerson v. Tinling, 84 Fed.
192; Edison Phonograph Co. v.
Kaufman, 105 Fed. 960; Edison
Phonograph Co. v. Pike, 116 Fed.
863; Victor Talking Machine Co.
v. The Fair, 123 Fed. 424. To
sanction and establish any part
of these rights of the owners of
general chattel property is te re-
duce the consideration for the dis-
closure of inventions. A second
consideration adverse to the estab-
lishing of such right is the means
it would afford to the large pro-
ducers, or so-called ‘trusts,’ of do-
ing what the publie is now using
every means to prevent their do-
ing. The ultimate object of all
producers is to enlarge the profit
which they are to receive for their
productions. If a larger profit
PATENT MEDICINE.

could be insured to the intermedi-
ate dealer he would be willing to
pay an enhanced price to the man-
ufacturer. To legalize the system
of fixing prices would furnish the
‘Trusts’ the most simple and least
expensive method of accomplish-
ing this end. The establishment

667

of such tight would render nug-
atory the efforts of a quarter of
a century to enforce the public
policy declared in all the anti-
trust statutes.” William J. Shrod-
er in 25 Harvard Law Review,
59, 69 (Nov., 1911).
CHAPTER XVII.

COPYRIGHTED BOOKS.

SECTION. SECTION.

335. Combination of book pub- 338. Fixing price—copyright
lishers and sellers to con- holder retaining title to
trol prices. book licensing retailer to

336. Owner suppressing his own sell.
copyright. 339. Unlawful contract, enforce-

337. Fixing price—Sale in viola- ment.

tion of agreement — In-
fringement of copyright.

§ 335. Combination of Book Publishers and Sellers to
Control Prices.—In a case the Supreme Court had before
it the question of the right of a publisher and seller of books
to control the price of copyrighted books it published and
sold arose. It with other publishers and booksellers had en-
tered into an agreement, which was held illegal, to control
the prices of books, and which the court summarized as
follows:

‘“‘The American Publishers’ Association has adopted a net
price system for all copyrighted books published or con-
trolled by any member or members of the association and
made an agreement to maintain it. By this agreement the
members thereof are to cut off all supply of their copy-
righted books to any dealer who fails to maintain the net
price of such books as fixed by such association, or, what
is the same thing, by its members. In short, this combina-
tion fixes the price of copyrighted books published by its
members, and the price at which such books are to be sold,
both at wholesale and at retail and agrees not to furnish or
sell any of these books to any dealer who fails to maintain
such price; that is, demand and exact from the purchaser the
price so fixed.

668
COPYRIGHTED BOOKS. 669

‘‘Another association, the American Booksellers’ Asso-
ciation, assents to this, agrees to co-operate and be bound by
such system and arrangement and to aid and assist in carry-
ing it into effect, and to this end agrees not to buy, or keep
in stock, or offer for sale, the copyrighted book of any
publisher who refuses to join the combination and enforce
this price system and demand and exact of the customer
this price fixed by the combination. Two-thirds of the mem-
bers of this association govern. If any member fails to live
up to the agreement, etc., he may be expelled, and he is not
to have books, and all members are ‘restrained’ from supply-
ing books, etc. The objects are: (1) To compel the would-
be owners and readers of copyrighted books to purchase their
books of the members of this combination, made up of two
combinations embracing at least 90 per cent. of all publish-
ers and dealers in copyrighted books at an arbitrary price
fixed by the combination, regardless of the actual value of
the book as determined by a demand therefor established in
a free and open market or the condition of the books. (2)
To compel all publishers of and dealers in copyrighted books
to come into the combination, submit to and be controlled
by it, and sell books at prices fixed by it, regardless of the
value of the books, etc., or of the exigencies of the trade and
situation of the seller, or be deprived of the privilege of
purchasing, owning, and selling such books. In short, such
as refuse to come in are to be crippled, or perhaps ruined, in
their business. As the combination extends throughout the
United States by the very terms of the agreement, inter-
state commerce is necessarily restrained.’”

1 Bobbs-Merrill Co. v. Straus, Y. 473; 69 N. E. 1107; 64 L. R.

139 Fed. 155; affirmed 147 Fed.
15; 77 C. C. A. 407; 15 L. R. A.
(N.S.) 766; 210 U. S. 339; 28
Sup. Ct. 722: 52 L. Ed. 1086. See
also Bobbs-Merrill Co. v. Snellen-
burg, 131 Fed. 530 and Straus v.
American Publishers Asso., 177 N.

A. 701; 101 Am. St. 819; affirm-
ing 93 N. Y. App. Div. 350; 86
N. Y. Supp. 1091; Mines v. Serib-
ner, 147 Fed. 927; Bobbs-Merrill
Co., v. Straus, supra, distinguished
in Henry v. Dick Co., 224 U. S.
1, 43; 32 Sup. Ct. 364; 56 L. Ed.
670 THE SHERMAN ANTI-TRUST ACT.

§ 336. Owner Suppressing His Own Copyright.—‘‘But if
the complainant has. turned over to the combination the
fixing of prices, and has entered into the combination de-
scribed, and becomes a party to the agreement for the pur-
pose described, and is now, through his suit, attempting, as
this court holds it is, to enforce such combination agreement
in whole or in part, and such agreement was unlawful, be-
cause in violation of the act referred to, then this action
cannot be maintained. The complainant confessedly is a
party to the combination and the agreement, and cannot,
if it be illegal, nave a standing in a court of equity vo en-
force any part of it, directly or indirectly. When a com-
plainant comes into court, asking equity, it must come with
clean hands, so far as the transaction involved is concerned.
If a party, person or corporation in attempting to violate
the rights of the public and the rights of those persons who
will not join in the attempted violation of law, suffers some
injury to his property or property rights, which are being
used by his consent by these who are thus violating the law,
in perpetrating such violation, at the hands of one who is
lawfully resisting such attempted injury, he or it cannot,
while continuing the illegal acts, have an injunction to en-
join the resisting acts resulting in such injury.’”

§ 337. Fixing Price—Sale in Violation of Agreement—
Infringement of Copyright.—The fact that a retail dealer
sells a copyrighted book in violation of the terms for selling
it he entered into with the publisher when he purchased it,
is not an infringement of the publisher’s copyright. Thus
where a publisher printed a signed notice upon the page
back of the title page that ‘‘The price of this book at retail
is one dollar net. No dealer is licensed to sell it at a less

2 Bobbs-Merrill Co. v. Straus, 69 N. E. 1107; 64 L. R. A. 701;
139 Fed. 155. See also Bobbs- 101 Am. St. 819, affirming 93 N.
Merrill Co. v. Snellenburg, 131 Y. App. Div. 350; 86 N. Y. Supp.
Fed. 530, and Straus v. American 1091.

Publishers Asso., 177 N. Y. 473;
COPYRIGHTED BOOKS. 671

price, and a sale at a less price will be treated an infringe-
ment of the copyright,’’ it was held that a sale at a less
price than one dollar per copy by a retail dealer was not
an infringement of the copyright, the court saying after
quoting a section of the copyright law:

“‘This section declares what acts constitute a violation of
the copyright of a book. It declares that, to constitute a
violation of the copyright, the cffender must have, within
the terms limited—that is, the life of the copyright—and
without the consent of the proprietor thereof, first obtained
in writing and executed in the presence of two or more wit-
nesses, printed or published or imparted, contrary to the
provisions of the act, within such time and without such
consent, must have sold or exposed to sale a copy of such
copyrighted book, known to have been illegally printed. In
substance this section declares that it is an infringement
of a copyright to print or publish the copyrighted book
without the consent of the proprietor, given in writing,
signed in the presence of two witnesses, or to import a copy
of such book without such consent, or knowingly to sell or
expose for sale a copy or copies of such copyrighted book
when lawfully printed or imported. From this it would
appear that an infringement by the sale of a copyrighted
book consists in the selling or exposing for sale of a copy
of such book that has been unlawfully printed or imported.
If this be the law, it is not an infringement of a copyright
to sell or expose for sale a copy or copies of such book, when
the same was lawfully printed or lawfully imported. The
result would be that it is not an infringement of the copy-
right of a book to sell a copy or copies thereof lawfully
printed, as in this case, in violation of a mere condition im-
posed upon a dealer by the publisher, by which such dealer
agrees not to sell below a certain price; the title to the book
having been vested in such dealer by the publisher, or even
in cases where the absolute title had not passed to the
dealer. If the publisher of the book, being the proprietor
672 THE SHERMAN ANTI-TRUST ACT.

of the copyright, parts with the title to such book, either
a single copy or a numher of copies, and receives his pay
therefor, he has voluntarily parted with all control over that
or those particular books. The owner of those books is
neither a licensee nor an agent. He has the absolute prop-
erty therein, and the absolute ownership of an article of
personal property carries with it the right to give away or
sell for such consideration as the owner sees fit to impose,
prescribe, or demand, so long as he violates no law.’’*

§ 338. Fixing Price—Copyright Holder Retaining Title
to Book—Licensing Retailer to Sell—So long as the holder
of the copyright retains his title to the copyrighted book he
may impose upon the retailer a restriction as to the price at
which he is to sell the book; for the retailer is a mere
licensee and not the owner of the book. But if he parts with
the title to the book, then he may not impose such a
restriction.*

“The owner of the copyright may not be able to transfer
the entire property in one of his copies and retain for him-
self an incidental power to authorize a sale of that copy,
or, rather, the power of prohibition on the owner that he
shall not sell it, holding that much, as a modicum of his
former estate, to be protected by the copyright statute; and
yet he may be entirely able, so long as he retains the owner-
ship of a particular copy for himself, to find abundant pro-
tection under the copyright statute for his then incidental
power of controlling its sale. This copyright incident of
control over the sale, if I may eall it so, as contradistin-
guished from the power of the sale incident to ownership in
all property—copyrighted articles, like any other—is a thing
that belongs alone to the owner of the copyright itself, and

3 Bobbs-Merrill Co. v. Straus,
139 Fed. 155; Mines v. Scribner,
147 Fed. 927.

4 Bobbs-Merrill Co. v. Straus,
139 Fed. 155; affirmed 147 Fed.
15; 77 C. C. A. 607; 15 L. R. A.
(N.S.) 766; 210 U. S. 339; 52

L. Ed. 1086; 28 Sup. Ct. 722;
Henry Bill Publishing Co. v.
Smythe, 27 Fed. 914, 925; Garst
v. Hall & Lyon Uo., 179 Mass.
588; 61 N. E. 219; 55 L. R. A,
631; Harrison v. Maynard, 61
Fed. 689; 10 C. C. A. 17.
COPYRIGHTED BOOKS. 673

as to him. only so long as and to the extent that he owns
the particular copies involved. Whenever he parts with that
ownership, the ordinary incident of alienation attaches to
the particular copy parted with in favor of the transferee,
and he cannot be deprived of it. This latter incident super-
sedes the other—swallows it up, so to speak—and the two
cannot co-exist in any owner of the copy, except he be the
owner at the same time of the copyright; and, in the nature
of the thing, they cannot be separated, so that one may
remain in the owner of the copyright as a limitation upon or
denial of the other in the owner of the copy.’’

§ 339. Unlawful Contract, Enforcement.—A publisher
who was a party to the combination or agreement described
in the first section of this chapter, sought to enjoin the sale
at retail of books containing a copyrighted novel, upon the
page following the title page was a notice with its printed
signature thereto, as follows: ‘‘The price of this book at
retail is one dcllar net. No dealer is licensed to sell it at
a less price, and a sale at a less price will be treated as
an infringement of the copyright.’’ The injunction was
sought on the ground that sales were being made in viola-
tion of the terms of this printed notice. The defendant
contended that the contract of combination was void, and he
could therefore urge that as a defense; but the complainant
answered that this was an action for an infringement of its
copyright, and therefore the defendant could not set up the
illegality of the combination contract in order to escape lia-
bility incurred by reason of its own unlawful act. The court
readily conceded the rule prevailing in patent cases that
where an infringer is sued he cannot set up as a defense that
the patentee is a party to an illegal combination formed for
the sale of his patented products, but said that rule did
not apply to the case, adding:

5 Henry Bill Publishing Co. v.  ete., Co., 61 Fed. 689; 10 C. C. A.
Smythe, 27 Fed. 914; quoted with 17; 26 U. S. App. 99.
approval in Harrison v. Maynard,
674 THE SHERMAN ANTI-TRUST ACT.

‘‘Kach owner of the copyright of a book has a monopoly
of that particular book. Copyrights, like patents, are as-
signable, and hence a person or a corporation may lawfully
become the owner of any number of copyrights or of all the
copyrights of books issued by the United States, and it is
immaterial that the purpose is to monopolize the whole busi-
ness of publishing and selling copyrighted books. In such
case such person or corporation would hold, and control all
the monopolies for such copyrights of books, and he or it
could print and sell, or print and not sell, or refuse to print
at all, or refuse to allow others to print or publish, Should
he or it print or publish one or more copies of these books,
such person or corporation could appoint agents to sell and
prescribe and limit their powers. He or it could license one
or more persons to sell, and prescribe the terms and condi-
tions of such sale, and limit the price at which same should
be sold. Assume that such person or corporation has fixed
the price at which such book shall be sold at retail by such
agents and licensees, and may restrain a disposition of such
books in violation of the conditions, we have no combina-
tion or conspiracy. One man cannot combine or conspire.
It takes two or more to make a combination or a conspiracy.
So an agreement by all holders of copyrights to assign same
to one person or corporation is but a sale of their own, and
they may take pay in cash, horses, scrap iron, or licenses
to sell the copyrighted book, provided they actually sell
their copyrights. If the agreement he a mere pretense,
however, a mere cover for a combination to violate some
statute, then such agreement to sell their copyrights would
be void, and the whole combination would be illegal and
void. So one person may purchase and own all the hay,
oats, or potatoes existing in the country. If he becomes such
owner, he may fix the price at which he will sell. Here
there is no conspiracy or illegal combination. But if the
several owners of such produce combine, and agree that
they will fix ‘prices, interfere with and limit interstate com-
COPYRIGHTED BOOKS. ‘675

‘merece, drive all other dealers and owners of similar property
who will not join them in their purpose out of business, and
deprive them, if possible, of their right to purchase and ship
produce from state to state as a part of interstate commerce,
we undoubtedly have an illegal combination, and no member
of such conspiracy can enforce in a court of equity any
contract or agreement made in execution in whole or in part,
of such conspiracy. It is evident that one may do, in fixing
and enforcing prices, and in exacting tribute from the people
and restraining interstate commerce, what two or more can-
not do in pursuance of an agreement or combination. <A
corporation, on becoming the owner of several patents or of
several copyrights, may do all acts under each that the person
to whom such rights were originally granted might have done.
Having become the owner, it is entitled to the benefits and
privileges of the monopolies granted. But all this affords no
sanction or support | whatever to the doctrine that the several
owners of distinct patents each, ‘having, a monopoly of ‘his
particular patent, or the several owners of distinct vopy-
rights, each having a monopoly of this particular copyright,
may combine and conspire as to their patented articles, or
as to their copyrights or books published under and pro-
tected thereby, to restrain interstate commerce in articles
made or produced thereunder. A right or privilege to form |
such a combination or conspiracy is not embraced or included
within the monopoly granted. The monopoly of one patentee
cannot be extended and made more of a monopoly by that
of another. The grant of an exclusive right to make and
vend a certain machine does not include a license to com-
bine and conspire with another having a like exclusive right
to restrain trade and commerce between the states in those
articles, if made and put on the market, or to conspire not
to put them on the market. The right to elect not to make
or sell is necessarily included. The right to combine and
conspire is not. In any event the so-called Sherman law for-
bids any and all combinations in restraint of such commerce.
676 THE SHERMAN ANTI-TRUST ACT.

“In the case of copyrighted books it is evident that, if the
publisher of one or two should demand and exact of the pur-
chaser at retail a grossly unreasonable price, he would sell
but few, if any, copies. Others would supply the market,
for readers would forego that book, or those books, and find
reading matter elsewhere. But when all publishers of and
dealers in copyrighted books—and nearly all new books are
now copyrighted—combine to exact a fixed arbitrary price,
etce., the readers of bocks become powerless, if they would
read at all, not because of the monopoly granted or sanc-
tioned by the government in granting the copyright, but be-
cause of the new monopoly (the conspiracy of monopolists),
created by the agreement and combination of these monopo-
lists—one that is forbidden and denounced by Act of July 2,
1890.’’6

6 Bobbs-Merrill Co. v. Straus, (N.S.) 766; 210 U. S. 339; 28
139 Fed. 155; affirmed 147 Fed. Sup. Ct. 722; 52 L. Ed. 1086.
15; 77 C. C. A. 607; 15 L. R. A.
CHAPTER XVIII.

LABOR COMBINATIONS.

SECTION.

340. Statute applies to combina-
tions of workmen which
restrain interstate
merce.

341. Boycotting manufacturer’s
goods—Danbury Hat Case.

342. A strike of railway em-
ployees to injure inter-
state commerce—Right of
laborers to combine.

com-

§ 340.

SECTION.

343. Rule of union in violation
of Anti-Trust Act.

344. Inciting employes of rail-
roads to leave their serv-
ice—Sympathetic strike.

345. Incorporation of national
trade union.

345a. Use of appropriation to
prosecute working men or
farmers.

Statute Applies to Combinations of Workmen

Which Restrain Interstate Commerce.—We have seen that
an effort was made in Congress on the passage of the Anti-
Trust Act to exempt combinations of laboring men for ecer-
tain purposes and agriculturists and also horticulturists;
but the effort was defeated under the lead of Senator Ed-
munds.: Whether or not the Statute applied to working-
men’s combination which had the effect to restrain interstate
commerce was first decided in the affirmative in the Eastern
District of Louisiana, less than three years after it was
enacted. In disposing of the case on this point Judge Bil-
lings said: ‘‘I think the congressional debates show that
the statute had its origin in the evils of massed capital;
but, when the Congress came to formulating the prohibition
which is the yardstick for measuring the complainant’s right
to the injunction, it expressed it in these words: ‘Every
contract or combination in the form of trust, or otherwise
in restraint of trade or commerce among the several states or
with foreign nations, is hereby declared to be illegal.’ The

1See section, No. 16.

677
678 THE SHERMAN ANTI-TRUST ACT.

subject had so broadened in the minds of the legislators that
the source of the evil was not regarded as material, and the
evil in its entirety is dealt with. They made the interdiction
include combinations of labor, as well as of capital; in fact,
all combinations in restraint of commerce, without reference
to the character of the persons who entered into them. It
is true this statute has not been much expounded by judges,
but, as it seems to me, its meaning, as far as relates to the
sort of combinations to which it is to apply, is manifest, and
that it includes combinations which are composed of laborers
acting in the interest of laborers.

‘Tt is the successful effort of the combination of the de-
fendants to intimidate and overawe others who were at work
in conducting or carrying on the commerce of the country,
in which the court finds their error and their violation of
the statute. One of the intended results of their combined
action was the forced stagnation of all the commerce which
flowed through New Orleans. This intent and combined ac-
tion are none the less unlawful because they included in
their scope the paralysis of all other business within the
city as well.’

In the Debs case, decided in 1894, Judge Woods decided
that the act applied to combinations of workingmen which
unduly restrained interstate commerce.* Judge Taft, a few
months earlier, had also decided that the Act applied to such
combinations,! and the subsequent year Judge Morrow like-
wise decided.” In 1893 Judge Spear had held that the act
applied to the combination of railroad men whose conduct
prohibited a receiver of an interstate commerce railroad op-

2United States v. Working-
men’s Amalgamated Council, 54
Fed. 994: 26 L. R. A. 158; af-
firmed, 57 Fed. 85; 6 C. C. A.
258; cited with approval in
Loewe vy. Lawlor, 208 U. S. 274;
28 Sup. Ct. 301; 52 L. Ed. 488;
13 Am. Case 815; reversing 148
Fed. 294. See also Judge Mor-

row’s charge to the grand jury.
In re Grand Jury, 62 Fed. 834,
840.

3 United States v. Debs, 64 Fed.
724,

4 Thomas vy. Cincinnati No. & T.
P. Ry. Co., 62 Fed. 803.

5 United States v. Cassiday, 67
Fed. 698.
LABOR COMBINATIONS. 679

erating his road.*
rendered their opinions.

The same year Judges Woods and Taft
Judge Thayer also held that the
Act applied to combinations of workingmen whose conduct
prohibited the operation of interstate railways ;’ and Judge
Phillips in the same case at a further hearing held the same
way. After his conviction cf contempt of court? Debs ap-
pled to the Supreme Court of the United States for a writ
of habeas corpus, which was denied, but the court refused
to pass upon the question whether the Act applied in the
case, putting its decision upon the broad ground that it is
the duty of the Federal government to keep interstate com-
merece highways free from interruption and that it could do
so to the extent of restraining a combination of striking rail-
road men who had paralyzed by their conduct the movement
of trains on such highways carrying the United States

Aails.7°

In 1908 the Supreme Court held in the Danbury

Hlat case that the Act applied to such combinations where
they directly affected interstate commerce.’!

6 Waterhouse v. Comer, 55 Fed.
149.

7 United States v. Elliott, 62
Fed. 801.

8 United States v. Elliott, 64
Fed. 27. In Arthur v. Oakes, 65
Fed. 310; 11 C. C. A. 209, 25 L.
R, A. 414, the court declined to
decide the question.

9In the case of United States
v. Debs, 64 Fed. 872%

10In re Debs, 158 U. S. 564;
15 Sup. Ct. 900; 39 L. Ed. 1092.

11 Loewe v. Lawlor, 208 U. S.
274; 28 Sup. Ct. 301; 52 L. Ed.
488; reversing 148 Fed. 924. The
other phases of this case can be
found in 130 Fed. 633 and 142
Fed. 216. After the case was re-
versed it was tried in the lower
court and a_ verdict returned
against the “strikers” for $74,500,

which the court trebled and ren-
dered judgment against them,
holding, of course, that they were
liable under the Statute; Lawlor
v. Loewe, 187 Fed. 522; decided
in 1911. In United States v. Pat-
terson, 55 Fed. 605 it was held, in
effect, that the statute did not
apply. See case on rehearing
United States v. Patterson, 59
Fed. 280; Judges Taft and Law-
ton declared that they could not
concur in the reasoning of this
case. Thomas v. Cincinnati, N. O.
& T. P. Ry. Co., 62 Fed. 803, 821;
as also did Judge Woods, United
States v. Debs, 64 Fed. 724, 754.
“It is intended,” said Senator Ed-
munds in the Inter-Ocean Noy. 21,
1892, speaking of the Sherman
Act, “ and I think it will cover
every form of combination. that
680

§ 341.

THE SHERMAN ANTI-TRUST ACT.

Boycotting Manufacturer’s Goods—Danbury Hat

Case.—Members of a labor union attempted to compel a hat
manufacturer to unionize his factory by leaving his employ-
ment; and, also with the assistance of the members of af-
filiated organizations, declared a boycott upon his hats in
other states into which they had been shipped for sale at

retail.

the hats were manufactured.

seeks to in any way interfere
with or restrain free competition,
whether it be capital in the form
of trusts, combinations, railroad
pools or agreements, or labor
through the form of boycotting
organizations that say a man shall
not earn his bread unless he joins
this or that society. Both are
wrong; both are crimes, and in-
dictable under the Anti-Trust
Law.” See article of James A.
Emery entitled “Labor Organiza-
tions and the Sherman Law.” 20
Jr. of Political Economy 599; and
in 19 Political Science Quarterly
193 on Trusts and Trade Unions.
“Congress has declared illegal
‘every’ contract, combination, etc.,
in restraint of trade among the
several states, and there can be
little room for doubt in an un-
prejudiced mind that the combina-
tion of which the defendants were
members was directly within the
letter of the act. The trade of
the plaintiff was interstate, and
the purpose and effect of the plan
of the defendants was to restrain
directly that trade. It is true
that the Sherman Anti-Trust Act
was in its inception aimed at the
evils of massed capital, and it
is not surprising that its present
application has called forth some

The boycott also extended to sales in the state where
It was held that this was a

bitter attacks by those who in
their eager effort to throttle oppo-
sition in its infancy have over-
looked the broad principles that
must govern the judiciary in the
faithful performance of its duty.
But, without comment as to de-
cisions along this line evidence a
disregard of the shackled condi-
tions of the laboring classes or
abridge in any way their rights
of natural liberty, it is obviously
certain that, if any justice exists,
the remedy will not be found in
the courts. The Congressional
records show that before this stat-
ute became a law, and even dur-
ing the last session of Congress,
strenuous efforts were made to ex-
empt from its operation organiza-
tions of labor, and that these ef-
forts failed. The interdiction was
made to include the evil in it en-
tirely, and is enforced according-
ly.” 17 Yale Law Journal 617
(June, 1908). Where the board
of directors of a corporation set-
tled with striking workingmen and
an appeal to the Supreme Court
by such workingmen was dis-
missed, it was held that the board
had power to make the settle-
ment and a dissenting stockholder
could not maintain an action for
the benefit of the corporation:
LABOR COMBINATIONS. 681
combination in restraint of trade within the scope of the
Anti-Trust Act.* The action was brought to recover dam-
ages of the members of the union, and after a reversal it
was tried, resulting in a verdict for $74,000 which was treb-
led by the court under Section Seven of the Act and judg-
ment rendered on the verdict.1*

§ 342. A Strike of Railway Employees to Injure Inter-
state Commerce—Right of Laborers to Combine.—Laboring
men have the right to combine for their own benefit by the
organization of unions for mutual benefit and protection and
for the purpose of securing the highest wages and best con-
ditions they can command. They have the right to appoint
officers to advise them as to the course to be taken by them
in their relations with their employers. They may unite
with other unions. The officers they appoint, or any other
person to whom they will listen, may advise them as to the
proper course to be taken by them in regard to their em-
ployment, or, if they choose to repose such authority in one,
they may order them upon pains of expulsion from their
union, peaceably to leave the employ of their employer, be-

Post v. Buck Stove Co., 200 Fed.
918. See Gompers v. Buck Stove
& Range Co., 221 U. 8. 418; 31
Sup. Ct. 492; 55 L. Ed. 797; 34
L. R. A. (N.S.) 874, and Buck’s
Stove & Range Co. v. American
Federation of Labor, 219 U. &.
581; 31 Sup. Ct. 472; 55 L. Ed.
345.

12 Loewe v. Lawlor, 208 U. §.
274; 28 8. C. 301; 52 L. Ed. 488;
reversing 148 Fed. 94. Other
phases of this case can be found
in 142 Fed. 216, and 130 Fed. 633.

18 Lawlor v. Loewe, 187 Fed.
522. In the report of the case
in the Supreme Court the com-

plaint is set out in full, and in
187 Federal Reporter 922 the
facts as shown by the evidence.
See article of Charles E. Little-
field on Danbury Hat case and the
Hopkins proposed amendment of
the Sherman law, 28 Green Bag
587. The case of Gompers v.
Buck Stove Co., 221 U. S. 418;
31 Sup. Ct. 492; 55 L. Ed. 797;
34 L. R. A. (NS.) 874; re-
versing 33 App. D. C. 516 may
be advantageously examined on
the power of the courts to restrain
a sympathetic or secondary boy-
cott. It was held that the Sher-
man Act applied to the case.
682 THE SHERMAN ANTI-TRUST ACT.

eause of any of the terms of their employment is unsatis-
factory.1* But there is just and reasonable limitation to the
power and privilege of railway employees, even under the
protection of their organizations. ‘‘They are not entitled
to interfere with the rights and property of others, and by
force and intimidation compel carriers of the United States
mails or of interstate commerce to suspend the operations of
such necessary and lawful business; or, to state the proposi-
tion more exactly, they have no privilege or right to violate
a law of the United States.”®

‘A combination whose professed object is to arrest the
operation of railroads whose lines extend from a great city
into adjoining state until such railroads accede to certain
demands made upon them, whether such demands are in
themselves reasonable or unreasonable, just or unjust, is
certainly an unlawful conspiracy in restraint of commerce
among the states. Under the laws of the United States,
as well as at common law, men may not conspire to accom-
plish an unlawful purpose by unlawful means.’’® In the
Elliott case the court said: ‘‘It would present a most
anomalous state of affairs in a country like this, if men, be-
cause of some supposed or real grievance with an employer in
a distinct business, should be permitted to confederate and
conspire together for the purpose of coercing the employer
into acceding to their demands, and, as a means to a specific
end, tie up and stop independent railroads extending from
the Pacific Coast to the Lakes on the north and northeast,
deaden all the engines on the tracks; thereby intercepting
the transportation of passengers and the necessary supplies
passing from one state to another, and stop the shipment of
cattle, sheep, hogs, corn, wheat, oats, fruits, and vegetables.

14 Thomas v. Cincinnati, N. O. 16 United States v. Elliott, 62
& T. P. Ry. Co., 62 Fed. 808. Fed. 801; 64 Fed. 27. See also
15 United States v. Cassiday, 67 Arthur v. Oakes, 63 Fed. 310, 324;
Fed. 698; Thomas v. Cincinnati 11 C. C. A. 209; 25 L. R. A. 414
N. 0. & T. P. Ry. Co., 62 Fed. 803,
821.
LABOR COMBINATIONS. 683

It is impossible to state in language the far-reaching de-
structiveness and ruin of such a scheme, if permitted to
proceed to accomplishment. The business of this country has
adjusted itself to operations of interstate commerce. Large
communities of people are dependent for the necessaries of
life upon the agricultural products of other communities.
While we have a state here with a productive energy and
capacity for producing nearly all the necessaries of life, yet,
because of the fact that other localities can produce with
less labor and more profit certain supplies than the local
community, people forbear giving attention to the produc-
tion of articles which they can thus obtain more cheaply and
readily, and depend therefor upon other communities, and
the railroads for transporting such supplies from one state
to another. If persons may combine and confederate to-
gether to stop the railroad trains from passing from one
city and one state to another, it is easy to be seen how
quickly and readily they could produce ruin, famine, and
death in our great cities. They could cut off such neces-
‘saries for the sustenance of life as an adequate supply of
coal, and in one month, or less, produce a coal famine in
the city and country. It certainly ought to be permissible
to the government, representing the whole people, to inter-
pose, to preserve and protect the public life and the public
health. The framers of the Federal Constitution builded
wisely when they gave to Congress control over our inter-
state commerce. With prophetic eye, they looked far into
the future of their country, and foresaw the development of
its commerce, and the absolute necessity of the freedom of
commercial intercourse between the different communities ex-
tending from ccean to ocean. The fact that Congress did
not enact the statute above recited until 1890, is no argu-
ment against the existence of its power. Many powers
lodged by the Constitution in the legislative department long
lie dormant, until the exigency arises to invoke them into
684

activity.’’17

THE SHERMAN ANTI-TRUST ACT.

So where the effect of railroad employees strik-

ing as set forth in the note below, was to restrain interstate
commerce an injunction restraining them was granted.?®

i7The court still farther said
in this case: “Congress passed the
act of 1890 in response to the pub-
lic necessities. And as the sequel
proved, in the great extremity to
which the country was forced last
summer, the framers of the law
‘builded wiser than they knew.’
The furious assaults made on the
federal judiciary in connection
with this trouble, for grasping
jurisdiction, are wholly unwar-
ranted, in view of the express au-
thority given the courts by said
act of Congress. The Federal
courts are the creation of the Fed-
eral Constitution, and the laws
made in pursuance thereof. It is
their office to execute, and not
make, the laws. They possess just
such powers, and all the power
and jurisdiction, as are conferred
on them by the supreme law of
the land. And when they come in
the exercise of the jurisdiction
with which they have been clothed
by an express act of the Federal
legislature, and grant injunctions,
as they did last summer, against
unlawful combinations of men, to
restrain and prevent the operations
of the unreasoning and unappeas-
able spirit of the mob, in the pro-
tection of the freedom of trade and
commerce, to break the blockades on
the public highways so as to open
up travel and the transportation
of the United States mails, and
restore by civil processes the
healthful glow and flow of a na-
tion’s commerce, they come as
servitors, within the meaning of

the preamble to the Federal Consti-
tution, ‘to establish justice,’ and
tu conserve the public welfare. In
such office they deserve the com-
mendation of all good men, rather
than the hurtful criticisms to
which they have been exposed. It
is well in such a crisis, that the
American people should be remind-
ed that this is a government of
law, and not of the tumultuous
assembly controlled by one spirit
today, and by another to-morrow.”
United States v. Debs, 64 Fed.
724, was a case whereby the mails
were stopped and interstate com-
merce paralyzed by a strike of
train men; and Judge Woods held
that there was a violation of the
Anti-Trust Act; but upon a writ
of habeas corpus to release Debs
the Supreme Court refused to
place its decision on that act, al-
though refusing to release the pe-
titioner. In re Debs, 158 U. S.
564; 15 Sup. Ct. 900; 39 L. Ed.
1092.

18 United States v. Working-
men’s Amalgamated Council, 54
Fed. 994; 24 L. R. A. 158; af-
firmed 57 Fed. 184; 6 C. C. A. 258.
“A difference had sprung up be-
tween the warehousemen and their
employes and the principal dray-
men and their subordinates. With
the view and purpose to compel
an acquiescence on the part of the
employers in the demands of the
employed, it was finally brought
about by the employed that all
the union men—that is, all the
members of the various labor as-
LABOR COMBINATIONS. 685

§ 343. Rule of Union in Violation of Anti-Trust Act.—
A rule of the ‘‘Brotherhood of Locomotive Engineers’’ pro-
vided ‘‘that hereafter, when an issue has been sustained by
the grand council, and carried into effect by the Brotherhood
of Locomotive Engineers who may be employed on a rail-
road run in connection with or adjacent to said road to
handle the property belonging to said railroad or system
in any way that may benefit said company with which the
Brotherhood of Locomotive Engineers are at issue, until the
grievances or issues or differences of any nature or kind
have been amicably settled’’ was held void, because it re-
quired the members of the Brotherhood to put a restraint
upon interstate commerce whenever a strike was declared.”

sociations—were made by their
officers, clothed with authority un-
der the various charters, to dis-
continue business, and one of these
kinds of business was transport-
ing goods which were being con-
veyed from state to state, and
to and from foreign countries. In
some branches of business the ef-
fort was made to replace the
union men by other workmen.
‘This was resisted by the intimida-
tion springing from the vast
throngs of union men assembling
in the streets, and in some in-
stances by violence; so that the
result was that, by the intended
effects of the doings of these de-
fendants, not a bale of goods con-
stituting the commerce of the
country could be moved. The
question simply is, do these facts
establish a case within the stat-
ute? It seems to me this qucs-
tion is tantamount to the ques-
tion, could there be a case under
the statute? It is conceded that
the labor organizations were at
the outset lawful. But, when

lawful forces are put into unlaw-
ful channels, i. e., when lawful as-
sociations adopt and further un-
lawful purposes and do unlawful
acts, the associations themselves
become unlawful. The evil, as
well as the unlawfulness, of the
act of the defendants, consists in
this: that, until certain demands
of theirs were complied with, they
endeavored to prevent, and did
prevent, everybody from moving
the commerce of the country.”

19 Waterhouse v. Comer, 55 Fed.
149; 19 L. R. A. 403. See also
Toledo, Ann Arbor & N. M. Ry.
Co. v. Pennsylvania Co., 54 Fed.
730, 746; 19 L. R. A. 387,
395; in which the court said
of the rule mentioned above:
“We have thus considered with
some care the criminal char-
acter of rule twelve and its en-
forcement, not only because, as
will presently be seen, it assists
in determining the civil liabilities
which grow out of them, but also
because we wish to make plain, if
we can, to the intelligent and gen-
686 THE SHERMAN ANTI-TRUST ACT.

§ 344. Inciting Employees of Railroads to Leave Their
Service—Sympathetic Strike——A combination of railroad
employees to induce the employees of all the railway com-
panies in the country to suddenly quit their service, without
any dissatisfaction. with the terms of their employment, so
to thereby paralyze utterly all railway traffic, in order to
force the railway companies and the public into compelling
an owner of cars used in the operating the roads to pay
his employees more wages, they having no lawful right so
to compel hin, is an unlawful conspiracy by reason of the
purpcese, whether such purpose is effected by means usually
lawful or otherwise; and its purpose being to paralyze the
interstate commerce of the country, it is unlawful under the

Anti-Trust Act.?°

erally law-abiding men who com-
pose the Brotherhood of Locomo-
tive Engineers as well as to their
usually conservative chief officer,
what we can not believe they ap-
preciate, that, notwithstanding
their perfect organization, and
their charitable temperance, and
other elevating and most useful
purposes, the existence and en-
forcement of rue twelve, under
their organic law, make the whole
brotherhood a criminal conspiracy
against the laws of their country.”
See also Bailey v. Slumbers As-
sn, 103 Tenn. 99; 52 8. W. 853;
46 L. R. A. 561, and Hitchman
v. Coal & .Coke Co., 202 Fed. 512.

20 Thomas v. Cincinnati N. O.
& P. Ry. Co., 62 Fed. 803; U.S.
v. Patterson, 55 Fed. 605. The court
said: “But the legal character of
this combination with Debs at its
head and Phelan as an associate
does not depend alone on the gen-
eral law of boycotts. The gigan-
tic character of the conspiracy of
the Amercan Railway Union stag-

gers the imagination. The rail-
roads have become as necessary to
life and health and comfort of the
people of this country as are the
arteries of the human body, and yet
Debs aud Phelan and their asso-
ciates proposed by inciting the em-
ployes of all the railways in the
country to suddenly quit their
service without any dissatisfac-
tion with the terms of their own
employment, to paralyze utterly
all the traffic by which the people
live, and in this way to compel
Pullman, for whose acts neither
the public nor the railway com-
panies are in the slightest degree
responsible, and over whose acts
they can lawfully exercise no con-
trol, to pay more wages to his em-
ployes. The merits of the contro-
versy between Pullman and his
employes have no bearing what-
ever on the legality of the com-
bination effected through the
American Railway Union. The
purpose, shortly stated, was to
starve the railroad companies and
LABOR COMBINATIONS. 687

§ 345. Incorporation of National Trade Union.—Congress
has passed a statute ‘‘to legalize the incorporation of a Na-
tional Trade Union.’’? This does not authorize or sanction
a combination of workingmen in restraint of interstate com-
merce.”*

§ 345a. Use of Appropriation to Prosecute Working Men
or Farmers.—In the Appropriation Act, approved June 23,
1913, is this clause:

“Enforcement of anti-trust laws: For the enforcement of
anti-trust laws, including not exceeding $10,000 for salaries
of necessary employees at the seat of government, $300,000:
Provided, however, That no part of this money shall be spent
in the prosecution of any organization or individual for enter-
ing into any combination or agreement having in view the in-
creasing of wages, shortening of hours or bettering the condi-
tions of labor, or for any act done in furtherance thereof, not
in itself unlawful. Provided further, That no part of this ap-
propriation shall be expended for the prosecution of producers
of farm products and associations of farmers who co-operate
and organize in an effort to and for the purpose to obtain and
maintain a fair and reasonable price for their products.’ ’??

the public into compelling Pull-
man to do something which they
had no lawful right to compel him
to do. Certainly the starvation
of a nation can not be a lawful
purpose of a combination, and it
is utterly iminaterial whether the
purpose is effected by means usu-
ally lawful or otherwise.” In re
Grand Jury, 62 Fed. 834, 840. See

United States v. Kane, 23 Fed.
748.

2124 Stat. at Large Ch. 567.

22See Farmers’ Loan & Trust
Co. v. Northern Pacific R. Co., 60
Fed. 803; 25 L. R. A. 414.

23 President Taft vetoed an ap-
propriation bill because it con-
tained a similar provision.
CHAPTER XIX.

GOVERNMENT’S SUIT IN EQUITY.

SECTION.

346.

347.

348.

349.
350.

Statute authorizing govern-
ment to bring suit in equi-
ty to prevent violations of
Act.

Process—Summoning other
parties—Subpoenas.

District court has supersed-
ed circuit court.

Validity of section four.

Equity restraining commis-
sion of a crime—Non-pe-
cuniary interest of govern-
ment.

Suit by private person or
state.

Necessary parties.

Where suit may be brought.
Process for non-resident of
district—Constitutional.
How bill or demurrer to be

construed generally.

Interstate or foreign com-
merce.

Intent.

Multifariousness waived.

General charge of conspir-
acy.

Pendency of criminal case.

SECTION.

361. Injunction.

362. Injunction—Bond.

363. Restraining order without
notice.

364. Injunction—Temporary  re-
straining order.

365. Injunction against person
not named in bill.

366. Injunction— Strike ended.

367. Injunction — Combination
completed before suit
brought.

368. Injunction inadequate relief
—Injury to general public
—Tobacco case.

369. Northern Securities Com-
pany’s distribution of
stock.

370. Injunction—Enjoining the
voting of stock—Northern
Securities case.

371. Injunction not adequate re-
lief—Standard Oil case.

372. Injunction—Dissolution of
illegal combination.

373. Decree reorganizing illegal
combination.

374. Expedition act.

§ 346. Statute Authorizing Government to Bring Suit in
Equity to Prevent Violations of Act.—‘‘The several circuit
courts of the United States are hereby invested with juris-
diction to prevent and restrain violations of this act; and it
shall be the duty of the several district attorneys of the
United States, in their respective districts, under the direc-
tion of the Attorney General, to institute proceedings in

688
GOVERNMENT’S SUIT IN EQUITY. 689
equity to prevent and restrain such violations. Such pro-
ceedings may be by way of petition setting forth the case
and praying that such violation shall be enjoined or other-
wise prohibited. When the parties complained of shall have
been duly notified of such petition the court shall proceed, as
soon as may be, to the hearing and determination of the
case; and pending such petition and before final decree, the
court may at any time make such temporary restraining
order or prohibition as shall be deemed just in the prem-
ises.’’?

§ 347. Process—Summoning Other Parties—Subpoenas.—
‘‘Whenever it shall appear to the court before which any
proceeding under section four of the act may be pending,
that the ends of justice require that other parties should
be brought before the court, the court may cause them to
be summoned, whether they reside in the district in which the
court is held or not; and subpoenas to that end may be
served in any district by the marshall thereof.’”

§ 348. District Court has Superseded Circuit Court.—
Since the Sherman Act was enacted the Circuit Courts have
been abolished; and the district courts exercise the jurisdic-
tion the circuit courts formerly exercised under that Act.’

1Sec. 4, 26 Stat, at Large 209;
U. S. Comp. Stat. p. 3200. “This,
it must be remembered, is a suit

Securities Co. v. United States,
193 U. 8. 197; 24 Sup. Ct. 436;
48 L. Ed. 679; affirming 120 Fed.

in equity, instituted by authority
of Congress ‘to prevent and re-
strain violations of the Act,’ and
the court, in virtue of a well set-
tled rule governing proceedings in
equity, may mould its decree so
as to accomplish practical results
—such results as law and justice
demand. The defendants have no
just cause to complain of the de-
cree, in matter of law, and it
should be affirmed.” Northern

721.

2Sec. 5, 26 Stat. at Large, 209;
U. S. Comp. Stat. p. 3200. This
section does not authorize the
sending of process to another dis-
trict in an action by a private
individual to recover damages:
Greer, Mills & Co. v. Stoller, 77
Fed. 1.

8“The district court shall have
equal jurisdiction as follows:
* * * 22. Of all suits and pro-
690 THE SHERMAN ANTI-TRUST ACT.
§ 349. Validity of Section 4.—This section is valid. Con-
gress has the power to authorize the civil proceedings pro-
vided for in it, just as much as it has power to adopt the
penal provisions of the statute.* This statute is not void
because it is an invasion of the right of trial by jury.’

§ 350. Equity Restraining Commission of a Crime—Non-
Pecuniary Interest of Government.—The statute especially
authorizes the court to entertain proceedings in equity at the
instance of the government, to prevent and restrain violations
of its provisions. This settles the question of the jurisdic-
tion of a court of equity to prevent by injunction the com-
mission of crime.

‘*A well and long established exception to this rule is that
where parties threaten to commit a criminal offense, which,

ceedings arising under any law
to protect trade and commerce
against restraints and monopo-
lies.” 36 Stat. at Large 1091; 1
Fea. Stat. Am. Sup. 1912, p. 141.
State courts may determine if a
coutract is violative of the Sher-
man Anti-Trust Act; First Na-
tional Bank v. Missouri Glass Co.,
(Mo. App.) ; 152 8. W. 378.

4United States v. Elliott, 64
Fed. 724.

5 United States v. Debs, 64 Fed.
724. “It is also argued that the
United States have no standing in
court to maintain this bill; that
they have no pecuniary interest in
the result of the litigation or in
the question to be decided by the
court. We think that the fourth
section of the act invests the gov-
ernment with full power and au-
thority to bring such an action as
this, and if the facts be proved,
and injunction should issue. Con-

gress having the control of inter-
state commerce, has also the duty
of protecting it, and it is entirely
competent for that body to give
the remedy by injunction as more
efficient than any other civil rem-
edy.” United States v. Trans-
Missouri Freight Ass’n., 166 U. S.
290; 17 Sup. Ct. 540; 41 L. Ed.
1007; reversing 58 Fed. 58; 7 C.
C. A. 15; 24 L. R. A. 73; 4 Interst.
Com. Rep. 443; 19 U. S. App. 36;
which affirmed 53 Fed. 440; citing
the Debs case, 158 U. S. 564; 15
Sup. Ct. 900; 39 L. Ed. 1092;
Cincinnati N. O. ete. Ry. Co. v.
Interstate Commerce Commission,
162 U. S. 184; 16 Sup. Ct. 700;
40 L. Ed. 935; Texas & Pacifiz Ry.
Co. v. Interstate Commerce Com-
mission, 162 U. S. 197; 16 Sup.
Ct. 666; 40 L. Ed. 940; reversing
4 Inters. Com. Rep. 408; 6 C. C.
A. 653; 20 U. S. App. 1; 57
Fed. 948.
GOVERNMENT’S SUIT IN EQUITY. 691
if executed against private property, would destroy it, and
occasion irreparable injury to the owner, and especially
where such destruction would occasion a multiplicity of suits
to redress the wrong if committed, courts of equity may in-
terpose by injunction to restrain the threatened injury.’”*
The fact that the government does not have a pecuniary
interest in the suit is not sufficient to defeat it.7. In an in-
stance where interstate commerce was involved and an in-
junction had been granted, which had been violated, Judge
Baker thus spoke of the new remedy the statute gave:
‘*Prior to the 2nd day of July, 1890, it is entirely clear
that the United States, as a municipal corporation, had no
power, either by petition or bill, to go into the courts of

6 United States v. Elliott, 64 peal to the courts of the United

Fed. 27; United States v. Elliott,
62 Fed. 801; United States v.
Trans-Missouri Freight Ass’n, 166
U. S. 290; 17 Sup. Ct. 540; 4
Inters. Com. Rep. 443; 41 L. Ed.
1007; reversing 7 C. C. A. 15; 19
U. S. App. 36; 24 L. R. A. 73;
which affirmed 53 Fed. 440;
Minnesota v. Northern Securi-
ties Co., 194 U. S. 48; 24 Sup.
Ct. 598; 48 L. Ed. 870; reversing
123 Fed. 692. “This section of
the act makes the jurisdiction of
the court clear over the parties
and subject matter, if the bill now
before the court, which has been
exhibited with the sanction of the
attorney-general, shows the exist-
ence of a conspiracy among the
defendants to restrain trade or
commerce among the _ several
states, and that acts have already
been done or threatened by the
several defendants in furtherance
of the alleged conspiracy. Con-
gress has seen fit, on grounds of
public policy, to authorize the law
officers of the government to ap-

States by a bill in equity filed in
behalf of the people of the United
States, to arrest, by writ of in-
junction or prohibition, the com-
mission of acts which are designed
to obstruct the free flow of com-
merce between the states, and no
one can doubt the power of Con-
gress to confer such authority.
From the very foundation of the
government it has been accepted
as a proposition which admitted
of no controversy that the right
to regulate commerce among the
several states, and to pass laws’
to protect the character, pertained
to the general government, and
that its power in that respect was
plenary and paramount.” United
States v. Elliott, 62 Fed. 801.
7United States v. Trans-Mis-
souri Freight Ass’n, supra. Judge
Woods’ seems to have considered
that relief would only be granted
where it was grantable before the
statute was adopted. United
States v. Debs, 64 Fed. 724, 753.
692 THE SHERMAN ANTI-TRUST ACT.

equity of the United States, and invoke the aid of those
courts, by their restraining power, to prevent interference
with the carriage of the mails or with the carriage of inter-
state commerce. Prior to that time the sole remedy was on
the criminal side of the court. The sole method in which
the United States, as a government, could prosecute violators
of the law who interfered with the carriage of mails or inter-
fered with the instrumentalities used in the conduct of in-
terstate commerce, was by indictment or information on the
criminal side of the court; but the growth of railways in
this country, and the combinations of laborers employed on
those roads for the purpose of enforcing, by strikes or other-
wise, what they conceived to be their just rights, had led
to a condition of things that, in the judgment of Congress,
made it imperative that the courts of the United States,—
in other words, that the nation itself,—for the purpose of
protecting the mails of the country, and for the purpose of
protecting the passenger and freight traffic on interstate
railroads, should have the right to invoke not only the crim-
inal jurisdiction of the court by fines, or by sending to the
penitentiary those who were guilty of violations of those
laws, but that the government should also be clothed with
the power—or rather the courts of the United States should
be clothed with the power—of laying their strong hands on
these men, and not waiting until crimes had been committed,
but restraining, not for the purpose of preventing people
from doing what is lawful, or to prevent their getting better
wages, but for the purpose of saying to everybody that civil
liberty cannot exist where combinations of men undertake by
force and violence to arrest the peaceable and orderly con-
duct of business among the states. With that view of na-
tional duty, on July 2, 1890, Congress enacted a law that
enlarged the jurisdiction of the federal courts, and author-
ized them to apply the restraining power of the law for the
purpose of checking and arresting all lawless interference
with the peaceable and orderly carriage of mails, and with
GOVERNMENT’S SUIT IN EQUITY. 693
the peaceable and orderly conduct of railroad business be-
tween the states. This law was intended to lay its strong
hand, not only upon the capitalists or monopolists who, by
combination, undertook to interfere with the business and
commerce of the country, and subject them to punishment,
but, on the other hand, it also undertook to say to the labor-
ing men of the country that ‘you shall not enforce your
rights, however just they may be by violence and by law-
lessness.’

‘*Civil order cannot exist where men undertake by strong
hand to enforce rights, whatever their rights may be. In
civilized and organized society there is only one avenue that
is alike open to the rich and the poor—that is the avenue
of the courts—for the purpose of settling disputes between
men. No man has a right, even though he has been wronged,
even though he may have been oppressed, to take the law
into his own hands, and, by force and terrorism or threats,
redress his wrongs. It means a condition of things that
would be absolutely intolerable in civilized society, and it
was in order that the peaceable and quiet and orderly prov-
esses of the law might be applied to men who are thus en-
gaged, whether they were monopolists, on the one side, or
laboring men, on the other, that the law was enacted for
the purpose of arresting lawlessness, composing these dis-
turbances, and bringing about that orderly and peaceful con-
dition of affairs that is essential to the life and happiness of
the community.’’®

8 United States v. Alger, 62 Fed.
824. Judge Baker said that the
failure to pray for process against
the defendants was a mere techni-
cal defect. “It is a mere tech-
nical defect. It is one that does
not, in the language of the Su-
preme Court, go to the jurisdic-
tion of the court. The jurisdic-
tion of the court depends upon
the law of the land. Nor do I

think it is necessary in this sort
of cases for the government to
file what is technically known as
a ‘bill in equity’ on the chancery
side of this court as in a civil
ease. The right at all to file this
sort of a proceeding is a new stat-
utory right, and the courts can
not—they would be derelict in the
discharge of their duty if they
did—disregard the purpose and
694

§ 381.

THE SHERMAN ANTI-TRUST ACT.

Suit by Private Person or State—Only the gov-

ernment can bring a suit under Section 4 to obtain an in-
junction ; it cannot be brought by a private person.® Nor can

object of the enactment of the
law. 1 do not undertake to sit in
judgment on either capitalists or
laboring men. | have, as a mag-
istrate, nothing to do with that.
I am simply bound as a judge
to take notice that a condition of
things had grown up in this coun-
try of strikes, of interruption of
mails, and interruption and inter-
ferences with interstate com-
merce; that it provoked comment,
and had created feeling; and, in
order that labor troubles should
be settled without interfering with
the commerce and the happiness
of millions of innocent people, it
was determined that the national
government should clothe its
courts with power on the civil side
to stop these things without wait-
ing until crimes had been com-
mitted, and then send men to the
penitentiary for the crimes so
committed. That is the reason of
it. It was intended to be a pre-
ventive remedy. ‘Ihat was the sole
purpose of it. So far as this
phase of it is concerned, it is true
there are other sections that au-
therize men who do these things
to be punished by fine of not more
than $5,000, and imprisonment for
a year in state prison; but so far
as the civil side of it is concerned,
it was intended to meet an emer-
gency and a public exigency. It
could not sue until the mails had
been interfered with, or until the
commerce of the country had been
lawlessly stopped, but it was not
intended, in my judgment, in or-
der to invoke the judgment and

jurisdiction of the court that all
of the old nicety of pleading and
practice of the English chancery
courts should apply. The courts
would be powerless if that were
the case, to accomplish the benefi-
cent purpose of the law, because
it is a beneficent purpose. It is a
praiseworthy purpose, in the
midst of tumult and excitement,
when lawlessness seizes upon the
arteries of the commerce of the
nation, for the courts of the land,
in their peaceable and orderly
way, to lay their hands on these
men, and bid them cease. It is a
lawful thing—a commendable
thing. The law gives them that
power. So much, then, on the
question of jurisdiction.”

9 Piddock v. Harrington, 64 Fed.
821; Greer, Mills & Co. v. Stoller,
77 Fed. 1. In this last case it
was held that in an action for
damages brought by a private per-
son the provisions of this section
and section 5 could not be invoked
to authorize the issuance of a
summons for a defendant residing
in another district. Blindell v.
Hogan, 54 Fed. 40; affirmed 56
Fed. 696; 6 C. C. A. 86; 13 U. 8.
App. 354; Gulf, C. & 8. Ry. Co.
v. Miami S. S. Co., 86 Fed. 407;
30 ©. C. A. 142; 52 U. 8S. App.
732; Southern Indiana Exp. Co. v.
United States Exp. Co., 88 Fed.
659; affirmed 92 Fed. 1022; 35 C.
C. A. 172; Metcalf v. American
School Furniture Co., 122 Fed.
115; see Bigelow v. Calumet &
IIecla Mining Co., 155 Fed. 869.
GOVERNMENT’S SUIT IN EQUITY.

a state maintain an acticn
nation.?°

10 Minnesota v. Northern Securi-
ties Co., 194 U. S. 48; 24 Sup.
Ct. 598; 48 L. Ed. 870; reversing
123 Fed. 692. The court said:
“Tf Minnesota may, by an original
suit, in its name, invoke the juris-
diction of the Cireuit Court, be-
cause alone of the alleged remote
and indirect injury to its proprie-
tary interests arising from the
mere absence of free competition
in trade and commerce as carried
on by interstate carriers with-
in its limits, then every state upon
like grounds may maintain, in its
name, in a circuit court of the
United States, a suit against in-
terstate carriers engaged in busi-
ness within their respective limits.
Further, under that view, every
individual owner of property in a
state may, upon like general
grounds, by an original suit, irre-
spective of any direct or special
injury to him, invoke the original
jurisdiction of a circuit court of
the United States, to restrain and
prevent violations of the Anti-
Trust Act of Congress. We do
not think that Congress contem-
plated any such methods for the
enforcement of the Anti-Trust
Act. We can not suppose it was
intended that the enforcement of
the Act should depend in any de-
gree upon original suits in equity
instituted by the states or by in-
dividuals to prevent violations of
its provisions. On the contrary,
taking all the sections of that Act
together, we think that its inten-
tion was to limit direct proceedings
in equity to prevent and restrain

695

to enjoin an illegal combi-

such violations of the Anti-Trust
Act as cause injury to the general
public, or to all alike, merely
from the suppression of competi-
tion in trade and commerce among
the several states and with foreign
nations, to those instituted in the
name of the United States, under
the fourth, section of the Act, by
district attorneys of the United
States, acting under the direction
of the attorney-general; thus se-
curing the enforcement of the Act,
so far as direct proceedings in
equity are concerned, according to
some uniform plan, operative
throughout the entire country.
Possibly the thought of Congress
was that by such a limitation
upon suits in equity of w general
nature to restrain violations of
the act, irrespective of any direct
injury sustained by particular
persons or corporations, interstate
and international trade and com-
merce and those carrying on such
trade and commerce, as well as the
general business of the country,
would be needlessly disturbed by
suits brought, on all sides and in
every direction, to accomplish im-
proper or speculative purposes. At
any rate, the interpretation we
have given of the Act is a more
reasonable one.” An agreement
or combination in violation of the
Sherman Act can not be declared
void in equity at the suit of deal-
ers engaged in purchasing and
selling the product of a company
sought to be compelled to join
‘such combination, but having no
contract with it for the purchase
696 THE SHERMAN ANTI-TRUST ACT.

§ 352. Necessary Parties——Every party who has an inter-
est in the controversy and who ought to be made a party to
the suit in order that the court may finally adjudicate the
whole matter, should be made defendants to the bill and
brought in by process, whether residing in the district of
the suit or in some other district. It is immaterial that final
justice might be administered between some of the parties
without the presence of the others; for the government may,
and it is entitled to the process of the court for that pur-
pose, to bring in all the parties to the controversy. Mort-
gagees of the property held by the illegal combination need
not be made defendants where the suit is not designed
primarily to deal with or dispose of property rights.?? Of-
ficers of corporations which entered into an illegal combina-
tion, who personally took no part in the formation of the
combination, are not proper parties defendant in an action
for an injunction.’®

§ 353. Where Suit May be Brought.—The suit must be
brought in a district where at least one of the defendants
resides; it need not be brought in the district where a ma-
jority of them have their residence. The defendants cannot
insist that it be brought in the latter district. ‘‘That ques-
tion is not open to the consideration or adjudication of this
court. The Congress did not confer jurisdiction, in this class
of cases, upon the circuit court in whose district the largest
number of conspirators resided, but upon every circuit court
in whose district a resident conspirator could be found and

of such product. Such a result 12 United States v. E. I. Du

can only be accomplished at the
suit of the United States. Leon-
ard v. Abner-Drury Brewing Co.,
25 App. D. C. 161.

11 United States v. Standard Oil
Co., 152 Fed. 290; affirmed 221
U. 8. 1; 31 Sup. Ct. 502; 55 L.
Ed. 619; 34 L. R. A. (N.S.) 834.

Pont de Nemours & Co., 188 Fed.
127.

18 United States v. Standard
Sanitary Mfg. Co., 191 Fed. 172,
affirmed 226 U.S. 20; 33 Sup. Ct.
9; 57 L. Ed. —.
GOVERNMENT’S SUIT IN EQUITY. 697
served with process. It did not grant to any of the circuit
courts the power to select the court in which the United
States should institute its suit. If it had done so, each
court might have selected another. It left the complainant
free to commence its suit in any circuit court in which it
could find and serve a resident conspirator. It instituted
its suit in this court and invoked its exercise of its power
to acquire jurisdiction of the defendants by the issue and
service of its process, The question presented by the peti-
tion for that purpose was, not in which court the ends of
justice required the complainant to choose to institute its
suit; but whether or not in this suit the ends of justice
required that the non-resident defendants should be brought
in.’’14

§ 354. Process for Non-Resident of District—Constitu-
tional.—In conferring on Federal courts jurisdiction to sum-
mon the proper parties to a suit to a hearing and decree,
wherever they reside or are found within the United States,
although beyond the limits of the district court, Congress
did not exceed its power; and the inhibition of the general
judiciary act that ‘‘no suit shall be brought before either -
of said courts (the circuit and district courts) against any
person by any original process or proceeding in any other
district than that whereof he is an inhabitant,’’ is inef-

14 United States v. Standard Oil diction depends on other condi-

Co., 152 Fed. 290; affirmed 221 U.
S. 1; 31 Sup. Ct. 502; 55 L. Ed.
619; 34 L. R. A. (N.S.) 834. “It
may be further observed, to pre-
vent misconstruction, that in a
suit such as this, in the name of
the United States, jurisdiction de-
pends alone upon the act of giv-
ing jurisdiction to enforce its pro-
visions, and the court is concerned
with no case between private per-
sons or corporations, where juris-

tions, and in which proceeding a
common law remedy might become
available.” United States v. Ad-
dyston Pipe & Steel Co., 78 Fed.
712; reversed 85 Fed. 271; 29 C.
C. A. 141; 54 U. S. App. 723; 46
L. R. A, 122; but not on the point
quoted.

1524 Stat. at Large 522; and
25 Stat. at Large 433; U. S.
Comp. St. 1901, 508.
698 THE SHERMAN ANTI-TRUST ACT.
fective and inapplicable in cases brought under the Sherman
Act. Under this latter act the court may cause a necessary
party residing in another district to be summoned before it.
The practice to be followed under this act is to make all the
conspirators both resident and non-resident parties de-
fendant to the bill, to set forth in it the existence and history
of the conspiracy or combination or contract and the con-
nection of each defendant therewith, and immediately upon
filing the bill to present a petition to the court in which the
places where the non-resident defendants can be served with
process are disclosed, and pray therein that they be sum-
moned. An order granting such a petition before service
of process upon the resident conspirators and without notice
to the non-resident cqnspirators is neither premature nor ir-

regular."®

16 United States v. Standard Oil
Co., 152 Fed. 290; affirmed 221 U.
S. 1; 31 Sup. Ct. 502; 55 L. Ed.
619; 34 L. R. A. (N.S.) 834.
“Was the order irregular or pre-
mature? Immediately after the
filing of the bill, and before a
subpoena had been issued or
served upon the resident defend-
ant, the United States presented
its petition that the non-resident
defendants should be brought in,
and it was granted. It is insisted
that the order was premature, and
that the court was without power
to make it, until after the resident
defendant had been served with
process, and notice of the hearing
upon the petition had been given
to the defendants without the dis-
trict. But the statute requires
no notice of the application for
the order, and there is no reason
for it, because the order conclu-
sively adjudicates nothing, and
every question which conditions its
validity or propriety is open to

challenge, hearing, and decision
as completely after, as before it
was made, as in the case now
under consideration. The act does
not prescribe the time or the man-
ner in which it shall be made to
appear to the court that other
parties should be hrought before
it, and, in the absence of any pro-
vision of this nature, the requisite
appearance may be made at such a
time and in such a way a3 the
court, in the exercise of «a sound
judicial discretion, may direct or
permit. The method suggested by
counsel for the defendants is that
the United States should first file
its bill against the resident con-
spiratois, and cause service of
process to be made upon them, and
that thereafter it should present a
petition that the non-resident con-
spirators should be brought in and
made parties to the suit. The
method pursued was to make all
the alleged conspirators ‘defend-
ants to the bill, to set forth there-
GOVERNMENT’S SUIT IN EQUITY. 699

“‘The granting of process to other districts is not discre-
tionary with the court; the government is entitled to it as
a matter of right. It is an imperative duty, which may not
be renounced, and whose discharge may not be evaded. It
is the duty of a court of equity to finally determine the
entire controversy before it, and to do complete justice
by adjusting all the rights involved therein. Henee, in every
suit in which the power to acquire jurisdiction of the sub-
ject-matter and of the parties is conferred upon the court,
the duty is imposed upon it, if its discharge is invoked by
the complainant, to summon and hear, before devision, not
only every indispensable party, but every necessary party
within reach of its process, every party who has an interest
in the controversy, and who ought to be made a party to the
suit in order that the court may finally adjudicate the whole
matter, although if he were not amenable to process, final
justice might be administered between the other parties with-

out his presence.’’!*

in the existence and history of the
conspiracy and the connection of
each defendant therewith, and im-
mediately upon its filing to pre-
sent a petition, in which the
places where the non-resident de-
fendants could be served with pro-
cess were disclosed, and to pray
therein that they be summoned.
In the prosecution of each meth-
od, the question of whether the
non-resident conspirators are nec-
essary or proper parties to the
suit between the government and
the resident conspirators equally
conditions the duty of the court
to bring them before it. In the
prosecution of each method, that
question may be well determined.
No sound reason occurs to us why
the former is preferable to the

latter. On the other hand, the
presentation of its entire cause of
action in the original bill, in
which all the alleged conspirators
are named as defendants and
wherein their connection with the
conspiracy set forth, accompanied
by a petition which discloses the
places where non-resident defend-
ants may be served, is the more
concise, logically satisfactory man-
ner of presenting the issue wheth-
er or not the conspirators without
the district should be brought in-
to the suit, and the presentation
of this question in this way and
the order in this case were neither
irregular nor premature.”

17 United States v. Standard Oil
Co., supra.
700 THE SHERMAN ANTI-TRUST ACT.

§ 355. How Bill or Demurrer to be Construed Generally.
—A bill in equity, brought under the statute, is not to be
read and construed as it would have been a hundred years
ago, but is to be taken to mean what it fairly conveys to a
dispassionate reader by a fairly exact use of English speech.
The demurrer is to be read with the same liberality.7®

§ 356. Interstate or Foreign Commerce.—The bill must
contain an allegation of facts showing that the commerce re-
strained, monopolized or attempted to be monopolized, was in-
terstate or foreign commerce.’? But trade in fresh meat is
sufficiently shown to be commerce among the states by al-
legations charging meat dealers with violations of the Sher-
man Act, which, even if they import a technical passage of
title at the slaughtering places in cases of sales, and that
the shipments to other states are pursuant to such sales,

and by allegations charging

18 Swift & Co. v. United States,
196 U. 8. 375; 25 Sup. Ct. 276;
49 L. Ed. 518; affirming 122 Fed.
529. In this case, speaking of
the multitude of facts alleged, the
Supreme Court said: “The general
objection is urged that the bill
does not set forth sufficient defi-
nite or specific facts. This objec-
tion is serious, but it seems to us
inherent in the nature of the case.
The scheme alleged 1s so vast that
it presents a new problem in
pleading. If, as we must assume,
the scheme is entertained, it is of
course, contrary to the very words
of the statute. Its size makes the
violation of the law more con-
spicuous, and yet the same thing
makes it impossible to fasten the
principal fact to « certain time
and place. The elements, too, are
so numerous and shifting, even the

sales of such meat by their

constituent parts alleged are aud
from their nature must be s0 ex-
tensive in time and space, that
something of the same impossibil-
ity applies to them. The law has
been upheld, and therefore we are
bound to enforce it notwithstand-
ing these difficulties. On the other
hand, we equally are bound by
the first principles of justice not
to sanction a decree so vague as
to put the whole conduct of the
defendants’ business at the peril
of a summons for contempt We
can not issue a general injunction
against all possible. breaches of
the law. We must steer between
these opposite difficulties as best
we can.”

19 United States v. Patterson,
59 Fed. 280; Steers v. United
States, 192 Fed. 1.
GOVERNMENT’S SUIT IN EQUITY. 701

agents in other states, which indicate that some, at least,
of the sales were in the original packages.”°

§ 357. Intent.—Intent is almost essential to a combination
in restraint of commerce among the states, or commerce with
foreign nations, and attempts to monopolize. ‘‘Where acts
are not sufficient in themselves to produce a result which
the law seeks to prevent—for instance, the monopoly—but
require further acts in addition to the mere forces of na-
ture to bring that result to pass, an intent to bring it to
pass is necessary in order to produce a dangerous probability
that it will happen.?+. But when the intent and consequent
dangerous probability exist, this statute, like many others and
like the common law in some cases, directs itself against that
dangerous probability as well as against the completed re-
sult.’’? This was said in answer to the claim that the several
acts declared were lawful and that the intent can make no
difference.??

§ 358. Multifariousness Waived.—lIf the defendants fail
to object to a bill on the ground that it is multifarious until
after final hearing, or until after the complainant has taken
his proofs, they waive their right to object to the bill on
that ground; and while the court on the hearing may of its
own motion dismiss the bill for that reason, yet it will not
do so if that objection does not embarrass or prevent the
decreeing of relief.?*

§ 359. General Charge of Conspiracy.—If the bill con-
tains specifie charges which are followed by a general allega-

20 Swift & Co. v. United States, 22 Swift & Co. v. United States,
196 U. S. 375; 25 Sup. Ct. 276; 196 U. S. 375; 25 Sup. Ct. 276;
49 L. Ed. 518; affirming 122 Fed. 49 L. Ed. 518; affirming 122 Fed.

529. 529; United States v. Patterson,
21Citing Commonwealth v. 201; Fed. 697.
Peaslee, 177 Mass. 267; 59 N. E. 23 United States v. Reading Co

35. 183 Fed. 427, 462.
‘702 THE SHERMAN ANTI-TRUST ACT.

tion that the defendants are conspiring with one another to
monopolize certain specified articles of produce entering into
interstate commerce, the general allegation of intent colors
and applies to all such specific charges.?*

§ 360. Pendency of Criminal Case——The pendency of a
criminal case against the defendants is no reason for post-
poning the suit in equity against such defendants concerning
the same offense charged in the indictment. The court will
not wait, unless in an exceptional case, the determination of

the criminal case.?°

24 Swift & Co. v. United States,
196 U. S. 375; 25 Sup. Ct. 276;
49 L. Ed. 518; affirming 122 Fed.
529; United States v. Patterson,
201 Fed. 697.

25 United States v. Standard
Mfg. Co., 191 Fed. 172; affirmed
226 U.S. 20; 33 Sup. Ct. 9; 57 L.
Ed. —. “The defendants have
moved that further proceedings
herein be put off until the crimi-
nal case has been finally disposed
of, and that the taking of testi-
mony be then reopened. It is urged
that the individual defendants
should in justice to themselves
testify fullv and freely. It is said
that this they dare not now do.
They fear that something to which
they swear in the civil proceeding
‘may be used in the criminal to
their hurt. This motion we can
not grant. The Sherman Act
provides for both civil and crim-
inal proceedings. The attorney-
general must decide whether and
when either or both shall be
brought. To postpone finding an
indictment until after a petition
for an injunction had upon final
hearing been granted or dismissed

would be frequently, if not usu-
ally, to wait until after the period
of limitations had expired. To
refuse to decide the equity cause
so long as the criminal charge
had not been finally disposed of
might leave the public to suffer
for years from what the attorney-
general believed to be a harmful
interference with its rights and in-
terests. The courts can not, un-
less in exceptional cases, say that
either must wait upon the other.
A court of equity has a wide dis-
cretion. There may be circum-
stances which would justify its re-
fusal finally to act until after the
indictments had been tried. In
our view such circumstances are
not found here. The fact that
many of the defendants are now
under indictment makes it our
duty to be careful not to say
anything which might be used
either to their prejudice or to
that of the government in the im-
pending criminal trial.” See also
United States v. Winslow, 195
Fed. 578: affirmed 227 U. S. 202;
33 Sup. Ct. 253; 57 L. Ed: —.
GOVERNMENT’S SUIT IN EQUITY. 108

§ 361. Injunction.—Combinations may be enjoined by a
court of equity, at the suit of the government, if its object
be such as violate the provisons of the act.2° But a mem-
ber of a combination who has in good faith withdrawn from
it, is not subject to a suit for an injunction; nor, if such
member be a corporation, is the fact that a minority part
of its stock owned by members of the combination sufficient
to sustain such a suit, in the absence of proof that such own-
ership is employed to aid the combination.2?7 A minority
stockholder, who is not an officer and takes no part in the
management of the business of his corporation, is not sub-
ject to a suit for an injunction, because his corporation may
be a party to a contract or combination to restrain or mon-
polize interstate commerce.?®

§ 362. Injunction—Bond.— When asking for an injunction
the government gives no bond; for the injunction comes at
the end of the hearing in a final decree; and even if it ask
for a restraining order or temporary injunction, the govern-
ment gives no bond in order to obtain it.?®

§ 363. Restraining Order Without Notice—Under Sec-
tion 4 a restraining order may be issued without notice under
the circumstances sanctioned by the established usages of
equity practice in other cases. ‘‘That practice requires, as a
general rule, that notice of an application for a temporary
restraining order, as well as for an injunction, shall be given
to the person against whom it is desired; but in very press-

26 Swift & Co. v. United States,
196 U. S. 375; 25 L. Ed. 276;
49 L. Ed. 518; affirming 122 Fed.
529; Monarch Tobacco Works v.
American Tobacco Co., ‘165 Fed.
774; United States v. Alger, 62
Fed. 824; United States v. Debs,
64 Fed. 724; United States v. EI-
liott, 62 Fed. 801; United States
vy. Workingmen’s Amalgamated

Council, 54 Fed. 994; affirmed 57
Fed. 85; 6 C. C. A. 258; 26 L. R.
A. 158.

27 United States v. Du Pont,

“ete., Co., 188 Fed. 127.

28 United States v. Du Pont,
ete., Co., 188 Fed. 127.

29 United States v. Jellico Coke
& Coal Co., 43 Fed. 898.
704 THE SHERMAN ANTI-TRUST ACT.
ing cases, where the mischief sought to be prevented is
serious, imminent, and irremediable, the courts will grant
a restraining order without notice, and they will do so where
the mere act of giving notice to the defendant of the inten-
tion to make the application might of itself be productive of
the mischief apprehended, by inducing him to accelerate the
act in order that it might be complete before the time for
making the application has arrived. In the present case there
is no allegation in the bill that the retail coal dealers or
coal consumers of San Francisco, for whose benefit it may be
assumed the action is brought, will suffer irreparable injury
by delay; but the Anti-Trust Act does not, in terms, require
such a showing to justify the court in issuing a restraining
order, and it may well be doubted whether such a showing
would be required even under the general rules of equity
practice in a case involving a question of monopoly and re-
straint of trade.’’®

§ 364. Injunction—Temporary Restraining Order.—If the
material allegations of the government’s bill to enjoin a com-
bination in restraint of trade be denied by the defendarits’
affidavits a temporary restraining order or preliminary in-
junction will not be granted, as the plaintiff gives no in-
demnifying bond in case the injunction should me dissolved.*+
An interlocutory order granting or continuing a temporary
injunction will not be reversed unless it be clearly shown
that it was imprudently granted and is hurtful to the ap-
pellant.®?

30 United States v. Coal Dealers
Ass’n, 85 Fed. 252; United States
v. Alger, 62 Fed. 824. In this last
case a defendant was not named
in the bill, except in a general
way as among the unknown per-
sons who were violating the stat-
ute, and it was held that the re-
straining order was binding on
him as soon as it was served upon
him. “I think the injunction as

against unknown defendants is
valid and binding when the in-
junction is served upon them, al-
though they are not at the time
parties to the suit.”

31 United States v. Jellico Mtn.
Coke & Coal Co., 43 Fed. 898.

82 United States v. Working-
men’s Amalgamated Council, 57
Fed. 85; 6 C. C. A. 258; 26 L. R.
A. 158.
GOVERNMENT’S SUIT IN EQUITY. 705

An appeal from a decree denying a temporary restraining
order does not lie, and the consideration of that fact is en-
titled to no weight where, on the application it clearly ap-
pears that the complainant cannot prevail on the final hear-
ing, yet it is often of controlling importance where, on such
application, there is reasonable doubt concerning the ultimate
result.®?

Concerning the rules with respect to granting temporary
restraining orders, it was said in one case:

“The granting or refusal of a preliminary injunction,
whether mandatory or preventive, calls for the exercise of a
sound judicial discretion in view of all the circumstances of
the particular case. Regard should be had to the nature of
the controversy, the object for which the injunction is sought,
and the comparative hardship or convenience to the respec-
tive parties involved in the awarding or denial of the in-
junction. The legitimate object of a preliminary Injunction
preventive in its nature, is the preservation of the property
or rights in controversy until the decision of the case on
a full and final hearing upon the merits, or the dismissal
of the bill for want of jurisdiction or other sufficient cause.
The injunction is merely provisonal. It does not, in a legal
sense, finally conclude the rights of parties, whatever may be
its practical operation under exceptional circumstances. In
a doubtful case, where the granting of the injunction would,
on the assumption that the defendant ultimately will pre-
vail, cause greater detriment to him than would, on the con-
trary assumption, be suffered by the complainant, through
its refusal, the injunction usually should be denied. But
where, in a doubtful case, the denial of the injunction would,
on the assumption that the complainant ultimately will pre-
vail, result in greater detriment to him than would, on the
contrary assumption, be sustained by the defendant through
its allowance, the injunction usually should be granted. The
balance of convenience or hardship ordinarily is a factor of

33 Harriman v. Northern Securities Co., 182 Fed. 464.
“1
Oo
a

THE SHERMAN ANTI-TRUST ACT.

controlling importance in cases of substantial doubt existing
at the time of granting or refusing the preliminary injunc-
tion. Such doubt may relate either to the facts or to the
law of the case, or to both. It may equally attach to, or
widely vary in degree as between, the showing of the com-
plainant and that of the defendant, without necessarily being
determinative of the propriety of allowing or denying the in-
junction. Where, for instance, the effect of the injunction
would be disastrous to an established and legitimate busi-
ness through its destruction or interruption in whole or in
part, strong and convincing proof of right on the part of the
complainant and of the urgency of his case is necessary to
justify an exercise of the injunctive power. Where, how-
ever, the sole object for which an injunction is sought, is
the preservation of a fund in controversy, or the mainten-
ance of the status quo, until the question of right between
parties can be decided on final hearing, the injunction prop-
erly may be allowed, although there may be serious doubt of
the ultimate success of the complainant. Its allowance in
the latter case is a provisional measure, of suspensive effect
and in aid of such relief, if any, as may finally be decreed
to the complainant.’’**

§ 365. Injunction Against Person Not Named in Bill.—
If the court has jurisdiction of the subject matter, an in-
junction is binding on a person not named in the bill and
not served with a subpoena, as soon as the injunction order
is served on him as one of the unknown defendants referred
to in the bill.®®

The order may provide, in an action to enjoin an illegal
conspiracy against interstate commerce, that it shall be en-
forced on defendants not named in the bill, but who are
within the terms of that order, where it also provides that

34 Harriman v. Northern Securi- v. United States, 124 Fed. 156,
ties Co., 132 Fed. 464, 475. See 161; 59 C. C. A. 579, 584.
also Denver & Rio Grande R Co. 35 United States v Alger, 62
Fed. 824,
GOVERNMENT’S SUIT IN EQUITY. 707
it shall be operative on all persons acting in concert with
the designated conspirators, though not named in the writ,
after the commission of some act by them in furtherance of
the conspiracy, and service of the writ on them.*®

§ 366. Injunction—Strike Ended.—If{ an injunction be
asked against the interference with interstate commerce by
combinations of striking workingmen, the fact that the strike
is ended and labor resumed since the filing of the bill is no
ground for refusing the injunction. The invasion of rights,
especially where the unlawfulness of the invasion is not dis-
claimed, authorizes the injunction.

“The defendants urge (1) that, the strike or cessation of
labor being ended, and labor resumed throughout all branches
of business, there is no need for an injunction. I know of no
rule which is better settled than that the question as to the
maintenance of a bill, and the granting of relief to a com-
plainant, is to be determined by the status existing at the

time of filing the bill.

36 United States v. Elliott, 64
Fed. 27. The order was as fol-
lows: “It is ordered that the afore-
said injunction, with writ of in-
junction, shall be in force and
binding upon such of the defend-
ants as are named in said Dill,
* *  * and shall be binding
upon such defendants whose
names are not stated, but who are
within the terms of this order.”
The court commented on this as
follows: “The order further di-
rected that the injunction should
be operative upon all persons act-
ing in concert with the designated
conspirators, and’ their direction
and control, and where parties
were not named especially in writ,
but were found to be acting in
concert with and under the direc-
tion of the alleged conspirators,

Rights do not ebb and flow. If they

and commit some act in further-
ance of the conspiracy then the
marshal should serve the writ
upon them, and if, after service
of the writ upon them, they did
any act in violation of the injunc-
tion, they would come within the
terms of the restraining order.
This, I think, it is competent for
the court to do, under section 5
of the act aforesaid, and that it
was comfortable to the custom and
usage of courts of equity, where
there are engaged such large num-
bers of unknown persons in such
unlawful conspiracy. As the or-
der of injunction was not to be-
come operative upon them until
served with a copy thereof, it does
not lie in their mouths to ques-
tion the regularity of the proceed-
ing.”
708 THE SHERMAN ANTI-TRUST ACT.

are invaded, and recourse to courts of justice is rendered
necessary, it is no defense to the invasion of a right, either
admitted or proved, that since the institution of the suit the
invasion has ceased. With emphasis would this be true
wherc, as here, the right to invade is not disclaimed. The
question, then is, what was the state of facts at the time of
and prior to the filing of the bill? or whether, if the facts
alleged in the bill were true at that time, there was need of
an injunction ?’’#7

§ 367. Injunction—Combination Completed Before Suit
Brought.— Where a combination, in the shape of a company
holding the stock of two great interstate commerce railroads,
was completed before suit was brought to restrain the holding
company and those connected with it, it was suggested that
the combination having accomplished its ohject before the
commencement of the suit, in that the holding company had
been organized, and had actually received a majority of the
stock of the two constituent companies, that no effective re-
lief could then be granted the government. The answer of
the court was this:

“Concerning the second contention, we observe that it
would be a novel, not to say absurd, interpretation of the
Anti-Trust Act to hold that after an unlawful combination
is formed and has acquired the power which it had no right
to acquire, namely, to restrain commerce by suppressing
competition, and is proceeding to use it and execute the
purpose for which the combination was formed, it must be
left in posession of the power that it has acquired, with
full freedom to exercise it. Obviously the act, when fairly
interpreted, wil] bear no such construction. Congress aimed
to destroy the power to place any direct restraint on trade
commerce, when by any combination or conspiracy, formed
by either natural or artificial persons, such a power had
been acquired; and the government may intervene and de-

27 United States v. Working- Fed. 994; affirmed 57 Fed. 85;
men’s Amalgamated Council, 54 6C. C. A. 258; 26 L. R. A. 158.
GOVERNMENT’S SUIT IN EQUITY. 709

mand relief as well after the combination is fully organized
as while it is in process of formation. In this instance, as
we have already said, the Securities Company made itself a
party to a combination in restraint of interstate commerce
that antedated its organization, as soon as it came into exis-
tence, doing so, of course, under the direction of the very
individuals, who promoted it.’’*® On appeal the decree
met the approval of the supreme court, which said:

““The circuit court has done only what the actual situation
demanded. Its decree has done nothing more than to meet
the requirements of the statute. It could not have done less
without declaring its impotency in dealing with those who
have violated the law. The decree, if executed, will destroy,
not the property interests of the original stockholders of
the constituent companies, but the power of the holding cor-
poration as the instrument of an illegal combination of
which it was the master spirit, to do that which, if done,
would restrain interstate and international commerce. The
exercise of that power being restrained, the object of Con-
gress will be accomplished; left undisturbed, the act in
question will be valueless for any practical purpose.’’ *°

§ 368. Injunction Inadequate Relief—Injury to General
Public—Tobacco Case.—In the tobacco case the court thus
laid down what principles should control it in disposing of
a case involving the great interests involved in that case:

‘‘We hence, in determining the relief proper to be given,
may not model our action upon that granted by the court
below, but in order to enable us to award relief coterminous
with the ultimate redress of the wrongs which we find to
exist, we must approach the subject of relief from an original
point of view. Such subject necessarily takes a two-fold as-
pect—the character of the permanent relief required and

38 United States v. Northern Se- 24 Sup. Ct. 436; 48 L. Ed. 679;
curities Co., 120 Fed. 721. affirming 120 Fed. 721. The court
39 Northern Securities Co. v. further said: “This, it must be
United States, 193 U. S. 197, 485; remembered, is a suit in equity,
710 THE SHERMAN ANTI-TRUST ACT.
the nature of the temporary relief essential to be applied
pending the working out of permanent relief in the event
that it be found that it is impossible under the situation
as it now exists to at once rectify such existing wrongful
condition. In considering the subject from both aspects
three dominant influences must guide our action: (1) The
duty of giving complete and efficacious effect to the prohibi-
tions of the statute; (2) the accomplishing of this result
with as little injury as possible to the interest of the general
public; and (3) a proper regard for the vast interests of
private property which may have become vested in many
persons as a result of the acquisition either by way of
stock ownership or otherwise of interests in the stock or
securities of the combination without any guilty Imowl-
edge or intent in any way to become actors or participants
in the wrongs which we find to have inspired and dominated
the combination from the beginning.’’

The court said that the situation involved ‘‘difficulties in
the application of remedies greater than have been pre-
sented by any case involving the Anti-Trust Act which has
been hitherto considered by this court,’’ and it then pro-
ceeds to point out the reasons why these difficulties exist.
The court then discusses which of two remedies it might
resort to, but declares them inadequate, and then proceeds.
“We might at once resort to one or the other of two gen-
eral remedies—(a) the allowance of a permanent injunction
restraining the combinaticn as a universality and all the
individuals and corporations which form a part of or co-
operate in it in any manner or ferm from continuing to
ehgage in interstate commerce until the illegal situation be
cured, a measure of relief which would accord in substan-

instituted by authority of Con-
gress ‘to prevent and restrain vio-
lations of the Act,’ section 4; and
the court, in virtue of a well-settled
rule governing proceedings. in
equity, may mould its decree so

as to accomplish practical results
—such results as law and justice
demand. The defendants have no
just cause to complain of the de-
cree, in matter of law, and it
should be affirmed.”
GOVERNMENT’S SUIT IN EQUITY. 711

tial effect with that awarded below to the extent that the
court found illegal combinations to exist; or (b) to direct
the appointment of a receiver to take charge of the assets
and property in this country of the combination in all its
ramifications for the purpose of preventing a continued
violation of the law, and thus working out by a sale of the
property of the combination or otherwise, a condition of
things which would not be repugnant to the prohibitions of
the Act. But, having regard to the principles which we
have said must control our action, we do not think we can
now direct the immediate application of either of these reme-
dies. We so consider as to the first because in view of the
extent of the combination, the vast field which it covers,
the all-embracing character of its activities concerning to-
baceo and its products, to at once stay the movement in
interstate commerce of the products which the combination or
its co-operating forces produce or control might inflict in-
finite injury upon the public by leading to a stoppage of
supply and a great enhancement of prices. The second be-
cause the extensive power which would result from at once
resorting to a receivership might not only do grievous injury
to the public, but also cause widespread and perhaps irrepar-
able loss to many innocent people. Under these circum-
stances, taking into mind the complexity of the situation in
all of its aspects and giving weight to the many-sided con-
siderations which must control our judgment, we think, so
far as the permanent relief to be awarded is concerned, we
should decree as follows:

“Ist. That the eccmbination in and of itself, as well as
each and all of the elements composing it, whether corporate
or individual, whether considered collectively or separately
be decreed to be in restraint of trade and an attempt to
monopolize and a monopolization within the first and second
sections of the Anti-Trust Act.

‘‘Ond. That the court below, in order to give effective
force to our decree in this regard, be directed to hear the
parties, by evidence or otherwise, as it may be deemed proper,
712 THE SHERMAN ANTI-TRUST ACT.

for the purpose of ascertaining and determining upon some
plan or method of dissolving the combination and of re-
creating, out of the elements now composing it, a new con-
dition which shall be honestly in harmony with and not
repugnant to the law.

‘8rd. That for the accomplishment of these purposes, tak-
ing into view the difficulty of the situation, a period of six
months is allowed from the receipt of our mandate, with
leave, however, in the event in the judgment of the court
below, the necessities of the situation require, to extend such
period to a further time not to exceed sixty days.

‘‘4th. That in the event, before the expiration of the
period thus fixed, a condition of disintegration in harmony
with the law is not brought about, either as the consequences
of the action of the court in determining an issue on the sub-
ject or in accepting a plan agreed upon, it shall be the duty
of the court, either by way of an injunction restraining the
movement of the products of the combination in the channels
of interstate or foreign comerce or by the appointment of a
receiver, to give effect to the requirements of the statute.

‘*Pending the bringing about of the result just stated, each
and all of the defendants, individuals as well as corporations,
should be restrained from doing any act which might further
extend or enlarge the power of the combination, by any
means or device whatsoever. In view of the considerations
we have stated we leave the matter to the court below to
work out a compliance with the law without unnecessary in-
jury to the public or the rights of private property.’’*

40 United States v. American
Tobacco Co., 221 U. S. 106; 31
Sup. Ct. 632; 55 L. Ed. 663; mod-

cember 4, 1911, the attorney gen-
erals of North and South Carolina
and Virginia filed a petition in

ifying and affirming 164 Fed. 700.
The decree as finally formed is set
out at length in Shield’s Federal
Courts and Practice 395-416. In
the same work (p. 416) is given
Attorney General Wickersham’s
explanation of the decree. On De-

the Supreme Court requesting that
the Circuit Court judges be di-
rected by mandamus to set aside
the decree approving the dissolu-
tion plan and to enter a decree
according to specifications they
set forth in their petition. Seven
GOVERNMENT’S SUIT IN EQUITY. 713

§ 369. Northern Securities Company’s Distribution of
Stock.—After the affirmance of the decree in the Northern
Securities Company’s case, adjudging the combination illegal
under the Anti-Trust Act, the company adopted a resolution
reducing its capital stock and distributing the surplus of
assets created by the reduction and consisting of shares of
the Northern Pacific and Great Northern Railway Com-
panies ratably among the stockholders. Certain parties in-
terested objected to the pro rata distributions of the stock
and insisted that the Northern Pacific stock they had de-
livered to the Securities Company was not so delivered in
pursuance of an absolute sale but to be held in trust; that
they were entitled to have their stock returned to them;
that the decree in the government suit practically so adjudi-
cated and that as they acted in good faith, believing that
the original contract was not within the prohibitions of the
Anti-Trust Act, the doctrine of in pari delicto did not apply.
The circuit court granted a temporary injunction against pro
rata distribution but the circuit court of appeals reversed
the order and practically disposed of the entire case ad-
versely to these persons. The case was taken by writ of
certiorari to the Supreme Court, where it was held. (1) That
the decree in the Northern Securities Company’s case did not
determine the quality of the transfer as among the defend-
ants, and the provisions therein as to the return of shares
of stock transferred to it by the railway stockholders were
permissive only, and not an adjudication that any of the
vendors were entitled to a restitution of their original rail-
way company shares. (2) That that decree went no further
than the decree itself, and while it left the circuit court
at liberty to proceed in the execution of its decree as cir-

days later the petition was denied, the decree be set aside on the
chiefly because one not a party to ground that it was not in accord-
a record and judgment is not en- ance with the mandate of the Su-
titled to appeal therefrom. Janu- preme Court. His efforts were fu-
ary 15, 1912, a retail dealer in _ tile.

tobacco filed a petition asking that
714 THE SHERMAN ANTI-TRUST ACT.

cumstances might require, it did not operate to change the
decree or import power to do so not otherwise imposed. (3)
That nothing in the judgment of the Supreme Court enlarged
the scope of the decree of the circuit court so as to make
it an adjudication that any of the vendors of railway
stocks were entitled to judicial restitution of the stocks
transferred by them to the Northern Securities Company,
or that that company could not distribute the shares of
the railway stock held by it pro rata between its own share-
holders. (4) That the transaction between these persons
and the Securities Company was one of purchase and sale
of Northern Pacific Railway Company stock for shares of
stock of the Securities Company as each and not a bail-
ment or trust. (5) That when a defendant testified that
the transaction was an unconditional sale and that he at-
tached to his negotiations no other conditions than that of
price, he was estopped from afterwards denying that this
was a statement of fact and claiming that he only swore
to a conclusion of law; the property he had delivered under
the illegal contract he could not recover back because all
were parties in pari delicto and the courts cannot relax the
rigor of the rule where the record discloses no special con-
siderations of equity, justice or public policy; and the fact
that these persons acted in good faith and without intention
to violate the law did not exempt them from the doctrine in
part delicto. (7) That all the parties having supposed the
Sherman Act would not be held applicable to the transac-
tion no one of them could plead ignorance of the law as
against the other and the Securities Company secured no
unfair advantage in reclaiming the consideration voluntarily
delivered for the price agreed. (8) That where one of these
parties after transferring his shares of railway stock to the
Securities Company for its shares became a director of the
purchasing company and participated in acts consistent only
with absolute ownership by it of the railway stocks, and did
so after the action had been brought to declare the transac-
GOVERNMENT’S SUIT IN EQUITY. 715

tion illegal, his right to rescind the contract and compel
restitution of his original railway shares, if it ever existed,
was lost by acquiesence and laches. (9) That the Northern
Pacific System, taken in connection with the Burlington sys-
tem, was competitive with the Union Pacific system, and to
deliver to these persons the Northern Pacific Railway stock
claimed by them and distribute the remainder of the stock
ratably between the other Securities Company stockholders
would not only be inequitable, but would tend to smother
competition and thereby contravene the object of the Sher-
man Act and the purposes of the suit brought against the
Northern Securities Company by the government. (10) And
that it was the duty of the Northern Securities Company
under the decree in the government suit to end a situation
which had been adjudged unlawful, and as this could be
effected by sale and distribution in cash, or by distribution
in kind, that company was justified in adopting the method
of distribution and thereby avoiding the forced sale of sev-
eral hundred million dollars of stock which would probably
have involved disastrous results.**

§ 370. Injunction—Enjoining the Voting of Stock—
Northern Securities Case—Where a holding company took
over the stock of two great competing railroads, in order
to control them and eliminate competition in interstate com-
merce between them, the following decree was entered:

“That the Northern Securities Company, its officers,
agents, servants and employes, be and they are hereby en-
joined from acquiring, or attempting to acquire, further
stock of either of the aforesaid railway companies; that
the Northern Securities Company be enjoined from voting
the aforesaid stock which it now holds or may acquire, and
from attempting to vote it, at any meeting of the stock-

41 Harriman v. Northern Securi- 134 Fed. 331; which reversed 132
ties Co., 197 U. S. 244; 25 Sup. Fed. 464.
Ct. 493; 49 L. Ed. 739; affirming
716 THE SHERMAN ANTI-TRUST ACT.

holders of either of the aforesaid railway companies and
from exercising or attempting to exercise any control, direc-
tion, supervision or influence whatsoever over the acts and
doings of said railway companies, or either of them, by vir-
tue of its holding such stock therein; that the Northern Pa-
cific Railway Company and the Great Northern Railway
Company, their officers, directors, servants and agents, be
and they are hereby respectively and collectively enjoined
from permitting the stock aforesaid to be voted by the
Northern Securities Company, or in its behalf, by its at-
torneys or agents, at any corporate election for directors or
officers of either of the aforesaid railway companies; that
they, together with their officers, directors, servants and
agents be likewise enjoined and respectively restrained from
paying dividends to the Northern Securities Company on ac-
count of stock in either of the aforesaid railway companies,
which it now claims to own and hold; and that the aforesaid
railway companies, their officers, directors, servants and
agents, be enjoined from permitting or suffering the North-
ern Securities Company or any of its officers or agents, as
such officers or agents, to exercise any control whatsoever
over the corporate acts of either of the aforesaid railway
companies. But nothing herein contained shall be con-
strued as prohibiting the Northern Securities Company from
returning and transferring to the Northern Pacific Railway
Company and the Great Northern Railway Company, re-
spectively, any and all shares of stock in either of said rail-
way companies which said, The Northern Securities Com-
pany, may have heretofore received from such stockholders
in exchange for its own stock; and nothing herein con-
tained shall be construed as prohibiting the Northern Se-
curities Company from making such transfer and assign-
ments of the stock aforesaid to such person or persons as
may be the holders and owners of its own stock originally
issued in exchange or in payment for the stock claimed
to have been acquired by it in the aforesaid railway com-
panies.”’
GOVERNMENT’S SUIT IN EQUITY. 717

In holding this decision a proper one, Justice Harlan said:

‘‘Concerning the second contention, we observe that it
would be a novel, not to say absurd, interpretation of the
Anti-Trust Act to hold that after an unlawful combination
is formed and has acquired the power which it had no right
to acquire, namely, to restrain commerce by suppressing
competition, and is proceeding to use it and execute the pur-
pose for which the combination was formed, it must be left
in possession of the power that it has acquired, with full
freedom to exercise it. Obviously the act, when fairly in-
terpreted, will bear no such construction. Congress aimed
to destroy the power to place any direct restraint on inter-
state trade or commerce when by any combination or con-
spiracy formed by either natural or artificial persons, such
a power had been acquired; and the government may in-
tervene and demand relief as well after the combination is
fully organized as while it is in process of formation. In
this instance, as we have already said, the Securities Com-
pany made itself a party to a combination in resraint of
interstate commerce that antedated its organization, as soon
at it came into existence, doing so, of course, under the
direction of the very individuals who promoted it.’’*

§ 371. Injunction not Adequate Relief—Standard Oil
Case.—Ordinarily where it is found that acts have been done
in violation of the statute, an injunction restraining such
acts in the future will be an adequate means of relief.*?
However, this may not afford adequate relief. Thus in the
Standard Oil case the Supreme Court said:

“But in a case like this, where the condition which has
been brought about in violation of the statute, in and of
itself, is not only a continued attempt to monopolize, but

42Northern Securities Co. v. 48 Swift v. United States, 196
United States, 193 U. S. 197, 356; U. S. 375; 25 Sup. Ct. 276; 49
24 Sup Ct. 436; 48 L. Ed. 679; L. Ed. 618; modifying 122 Fed.
affirming 120 Fed. 721. 529.
718 THE SHERMAN ANTI-TRUST ACT.

also a monopolization the duty to enforce the statute requires
the application of broader and more controlling remedies.
As penalties which are not authorized by law may not he
inflicted by judicial authority, it follows that to meet the
situation with which we are confronted the application of
remedies two-fold in character becomes essential: 1. To
forbid the doing in the future of acts like those which we
have found to have been done in the past which would be
violative of the statute. 2. The exertion of such measure of
relief as will effectually dissolve the combination found to
exist in violation of the statute, and thus neutralize the ex-
tension and continually operating force which the possession
of the power unlawfully obtained has brought and will con-
tinue to bring about.

‘‘In applying remedies for this purpose, however, the fact
must not be overlooked that injury to the public by the pre-
vention of an undue restraint on, or the monopolization of
trade or commerce is the fundation upon which the prohibi-
tions of the statute rest, and moreover that one of the funda-
mental purposes of the statute is to protect, not to destroy,
rights of property.’’**

44 Standard Oil Co. v. United
States, 221 U. S. 1; 31 Sup. Ct.
502; 55 L. Ed. 6191; 34 L. R. A.
(N.S.) 834. The court extended
the time for compliance with the
decree entered in that case from
‘thirty days to six months; in do-
ing so assigning the following rea-
sons for its action. “We think
that in view of the magnitude of
the interests involved and their
complexity and the delay of thirty
days allowed for executing the de-
cree was too short and should be
extended so as to embrace a period
of at least six months. So also,
in view of the possible serious in-
jury to result to the public from
an absolute cessation of interstate

commerce in petroleum and its
products by such vast agencies as
are embraced in the combination,
a result which might arise from
that portion of the decree which
enjoined carrying on of interstate
commerce not only by the New
Jersey corporation but by all the
subsidiary companies until the
dissolution of the combination by
the transfer of the stock in ac-
cordance with the decree should
not have been awarded.” The de-
cree in full is set out in the re-
port of the decision of the Circuit
Court. United States v. Standard
Oil Co., 173 Fed. 177, 197. On
appeal the Supreme Court slightly
modified this decree.
GOVERNMENT’S SUIT IN EQUITY. 719

§ 372. Injunction—Dissolution of Illegal Combination.—
If an existing combination in corporate form has been ad-
judged illegal, and also it has been adjudged to have mon-
opolized and to be monopolizing a large part of interstate
commerce in a particular commodity, in order to ‘‘prevent
and restrain’’ its violation of the Anti-Trust Act, the court
not only will enjoin further violation of the Act, and to
render its decree effective it will dissolve the illegal combina-
tion. Thus it was said by Judge Lanning in a particular
case:

‘‘Our power is defined in the fourth section of the Anti-
Trust Act. That section invests us ‘with jurisdiction to
prevent and restrain violations’ of the Act. The same sec-
tion provides that petition may contain a prayer that the
violation of law therein alleged ‘shall be enjoined or other-
wise prohibited.’ It is our purpose, as it is our duty, to
exert the power thus conferred on us to the extent neces-
sary to ‘prevent and restrain’ further violations of the act.
In other words, the relief we can give in this proceeding is
preventive and injunctive only. If our decree, limited to
that purpose, shall necessitate a discontinuance of present
business methods, it is only because those methods are il-
legal. The incidental results of a sweeping injunction may
be serious to the parties immediately concerned; but, in
carrying out the command of the statute, which is as obliga-
tory upon this court as it is upon the parties to this suit,
such results should not stay our hand. They should only
challenge our care that our decree be no more drastic than
the facts of the case and the law demand.’’ *

45 United States v. E. I. Du
Pont de Nemours & Co., 118 Fed.
127. After referring to the reme-
dies adopted in the Standard Oil
ease, and also quoting from the
opinion in that case, Judge Lan-
ning proceeds as follows: “Both
of these remedies are as clearly de-

manded in the present case as they
were in the Standard Oil case.
The existing combination in the
explosive trade is one in restraint
of interstate commerce. Its sales
board fixes prices and exercises
powers which Mr. Haskell, its
chairman, admits are even more
720 THE SHERMAN ANTI-TRUST ACT.

§ 373. Decree Reorganizing Illegal Combination.—In the
St. Louis Railroad Terminal Association case, the court or-
dered a reversal and decreed as follows:

‘‘The case is remanded to the district court, with direc-
tions that a decree be there entered directing the parties
to submit to the court, within ninety days after receipt
of mandate, a plan for the reorganization of the contract
between the fourteen defendant railroud companies and the
terminal company, which we have pointed out as bringing
the combination within the inhibition of the statute.

First. By providing for the admission of any existing or
future railroad to joint ownership and control of the com-
bined terminal properties, upon such just and reasonable
terms as shall place such applying company upon a plane
of equality in respect of benefits and burdens with the pres-
ent proprietary companies.

Second. Such plan of reorganization must also provide
definitely for the use of the terminal facilities by any other

extended in their scope than were
the powers of the advisory and
special committees which the sales
board superseded on June 30,
1904, after co-operating with them
from July, 1903. It has also at-
tempted to monopolize and in at-
tempting to monopolize, and has
monopolized, and is now in the
possession of a monopoly of, a
large part of the explosives trade
in the United States. Our de-
cree must therefore be one which
will forbid future acts violative
of the law and compel a dissolu-
tion of the combination existing
in violation of the law. To stop
the business of the combination
immediately, however, might be
attended with very disastrous con-
sequences. The defendants, or
some of them, for example, fur-
nish military and ordnance pow-

ders to the United States govern-
ment. We understand, also, that
they furnish explosives used in the
construction of the Panama Canal.
Their ability to continue so to do
should not be destroyed before the
expiration of a reasonable time
for adjusting their business to the
changed conditions. In the Stand-
ard Oil and American Tobacco
cases six months were allowed for
making the changes necessitated
by the decrees entered therein.
What time should be allowed in
the case now in hand, and what
other details should be embodied
in the final decree, we can not now
determine. The present decree will
therefore be interlocutory.” The
interlocutory decree is set out at
length in the opinion delivered in
this case.”
GOVERNMENT’S SUIT IN EQUITY. 721

railroad not electing to become a joint owner, upon such
just and reasonable terms and regulations as will, in respect
of use, character, and cost of service, place every such com-
pany upon as nearly an equal place as may be with re-
spect to expenses and charges as that occupied by the
proprietary companies.

Third. By eliminating from the present agreement be-
tween the terminal company and the proprietary companies
any provision which restricts any such company to the use
of the facilities of the terminal company.

Fourth. By providing for the complete abolition of the
existing practice of billing to East St. Louis, or other junc-
tion points and then rebilling traffic destined to St. Louis, or
to points beyond.

Fifth. By providing for the abilition of any special or so
called arbitrary charge for the use of the terminal facilities
in respect of traffic originating within the so-called 100-mile
area, that is not equally, and in like manner applied in re-
spect of all other traffic of a like character originating out-
side of that area.

Sixth. By providing that any disagreement between any
company applying to become a joint owner or user, as herein
provided for, and the terminal or proprietary companies,
which shall arise after a final decree in this cause, may be
submitted to the district court, upon a petition filed in this
cause, subject to review by appeal in the usual manner.

Seventh. To avoid any possible misapprehension, the de-
eree should also contain a provision that nothing therein
shall be taken to affect in any wise or at any time the power
of the interstate commerce commission over the rates to be
charged by the Terminal Company, or the mode of billing
traffic passing over its lines, or the establishing of joint
through rates or routes over its lines, or any other power
conferred by law upon such commission.

‘Upon failure of the parties to come to an agreement
which is in substantial accord with this opinion and decree,
722 THE SHERMAN ANTI-TRUST ACT.

the court will, after hearing the parties upon a plan for the
dissolution of the combination between the terminal company,
the Wiggins Ferry Company, the Merchants Bridge Com-
pany and the several terminal companies related to the Ferry
and Merchants Bridge Company, make such order and
decree for the complete disjoinder of the three systems and
their future operation as independent systems, as may be
necessary, enjoining the defendants, singly and collectively,
from any exercise of control or dominion over either of the
said terminal systems, or their related constituent com-
panies, through lease, purchase or stock control, and en-
joining the defendants from voting any share in any of said
companies or receiving dividends, directly or indirectly, or
from any future combination of the said systems, in evasion
of such decree or any part thereof.’’**

§ 374. Expedition Act.—On February 11, 1903, Congress
passed what is popularly known as the ‘‘Expedition Act,”’
its object being to enable the government to secure speedy
trials. It is as follows:

‘“‘That any suit in equity pending or hereafter brought
to any circuit court of the United States under the act
entitled, ‘An act to protect trade and commerce against
unlawful restraints and monopolies,’ approved July 2, 1890.
‘An act to regulate commerce,’ approved February 4, 1887,
or any other acts of a like purpose that hereafter may be
enacted where in the United States is complainant, the
Attorney General may file with the clerk of such court a
certificate that, in his opinion, the case is of general im-
portance, a copy of which shall be immediately furnished
by such clerk to each of the circuit judges of the circuit
in which the case is pending. Thereupon such ease shall
be given precedence over others and in every way expedited
and be assigned for hearing at the earliest practicable day,

46 United States v. Terminal
Ass’n, 227 U. S. 683; 32 Supt. Ct.
507; — L. Ed. —.
GOVERNMENT’S SUIT IN EQUITY. 723

before not less than three of the circuit judges of said circuit,
if there be three or more; and if there be not more than
two circuit judges, then before them and such district judge
as they may select.’’ *”

This statute requires hearing or a trial before at least
three judges, but where a decision of the circuit court was
reversed after the Judicial Code went into effect, with spe-
cific instructions as to the judgment to be rendered, it was
held that either the district judge or a presiding judge of
the Circuit Court of Appeals could alone enter the judgment
so directed.*

4732 Stat. at L., 823; U. S. 48 United States v. Terminal
Comp. St. Supp. 1911, 1383. This Ass’n, 197 Fed. 446.
act is in force In re United States,
33 Sup. Ct. 170.
CHAPTER XX.
FORFEITURE OF PROPERTY.

SECTION. SECTION.
375. Statute. 377. Procedure—Jury trial.
376. Not limited to cases of con-

tract or combination or

conspiracy—Not limited

by other sections.

§ 375. Statute—Section six of the Sherman Anti-Trust
Act is as follows:

‘‘Any property owned under any contract or by any
combination, or pursuant to any conspiracy (and being the
subject thereof) mentioned in section one of this Act, and
being in the course of transportation from one state to
another, or to a foreign country, shall be forfeited to the
United States, and may be seized and condemned by like
proceedings as those provided by law for the forfeiture,
seizure and condemnation of property imported into the
United States contrary to law.’’?

§ 376. Not Limited to Cases of Contract or Combination
or Conspiracy—Not Limited by Other Sections.—‘‘Section
six provides for the forfeiture of ‘any property owned under
any contract or by any combination, or pursuant to any
conspiracy (and being the subject thereof) mentioned in
this Act, and being in the course of transportation from one
state to another, or to a foreign country,’ but it does not say
nor imply that only cases, whether of contract or combination
or conspiracy, in which property shall be found subject to
forfeiture shall be deemed to come within the scope of the
Act. The force of the section is the same, I think, as if it

126 Stat. at Large 209; U. S. Comp. Stat. 3200.
724
FORFEITURE OF PROPERTY. 725

read: ‘If in any case there shall be found any property
owned,’ etc., ‘it shall be forfeited,’ ete.; and so read it
neither expresses nor implies any limitation of the provisions
of other sections.’’ ?

§ 377. Procedure—Jury TrialUnder section six the
procedure is like that prescribed in sections 3309-3391 of the
Revised Statutes, and involves trial by jury. In the carry-
ing out of a contract or combination there can be no seizure
of goods in course of transportation pursuant to the un-
lawful contract. Such seizure can only be made under the
sixth section of the Anti-Trust Act.’

2 United States v. Debs, 64 Fed. C.C. A. 141; 54 U. S. App. 723;
724, 752. 24 L. R. A. 122; reversing 78

3 United States v. Addyston Fed. 712; affirmed 175 U.S. 211;
Pipe & Steel Co., 85 Fed. 271; 29 20 Sup. Ct. 96; 44 L. Ed. 136.
CHAPTER XXI.

 

INDICTMENTS.

SECTION. SECTION.

378. Introduction. 396. Monopolizing and attempt-

379. First and second sections. ing to monopolize distinct

380. Constitutionality. offenses: )uplicity.

381. Section 73 of the Wilson 397. Corporation officers as de-
Tariff Act. fendants designated by

382. Common law offenses groups—Corporation  offi-
against United States— cers liable.

Sherman law creates new 398. Purpose to engross trade in
offense. hands of one of the de-

383. Sufficiency of charge. fendants—Interest of de-

384. Charging offense in lan- fendants in beneficiary of
guage of statute—Monop- conspiracy.
oly. 399. Ownership of patents—Law-

385. Averments as to interstate ful commerce.
commerce—Extent of mo- 400. All concerned may be charged
nopolization. as principals—Corporation

386. Allegations as to trade or and officers — Separate
commerce restrained or acts.
monopolized. 401. Indicting part of persons to

387. Duplicity. the illegal combination.

388. Joinder of counts. 402. Indictment of stockholders

389. Surplusage—Demurrer. for acts of corporation.

390. Alleging intent without set- 403. Demurrer to indictment,
ting out facts—No aver- practice on appeal.
ment not to engage in 404. Sufficiency of evidence to
business or to sell at less find indictment.
than list price. 405. Plea in abatement—Grand

391. Acts charged in harmony jury.
with lawful purpose. 406. Review of grand jury evi-

392. Conspiracy. dence on motion to quash.

393. Setting out precise time 407. Grand jury giving offense
when purpose was formed charged a wrong designa-
and first devised. tion.

394. Intent to monopolize—Acts, 408. Special assistant attorney
of violence and intin:ida- appearing before grand
tion. jury.

395. Use of the word “group” to 409. Summons issued to another
designate different collec- district for corporation.
tion of defendants. 410. Removal of defendant from

726

one district to another.
INDICTMENTS. 727

§ 378. Introduction Only cases involving indictments
under the Sherman Anti-Trust Act are here considered, and
cases involving the law applicable to indictments generally
have not been cited.

§ 379. First and Second Sections.—The punishments pro-
vided for in the first and second sections are identical, and
they may be combined as follows:

‘‘Every contract, combination in the form of trust or
otherwise, or conspiracy in restraint of trade or commerce
among the several states, or with foreign naticns is hereby
declared to be illegal. Every person who shall make any
such contract or engage in any such commerce or conspiracy ;
[and] every person who shall monopolize, or attempt to
monopolize, or combine or conspire with any other person
or persons, to moncpolize any part of the trade or commerce
among the several states, or with foreign nations, shall be
deemed guilty of a misdemeanor, and, on conviction thereof,
shall be punished by a fine not exceeding five thousand
dollars, or by imprisonment not exceeding one year, or by
both said punishments, in the discretion of the court.’’?

§ 380. Constitutionality of Penal Provisions.—The pro-
visions of the Sherman Anti-Trust Act as a penal statute are
constitutional and not void for uncertainty.”

126 Stat. at Large 209; U. S.
1 Comp. Stat. 3200. The third
section is almost identical in form,
but its provisions only apply to
the District of Columbia or a ter-
ritory.

2 United States v. American Na-
val Stores Co., 186 Fed. 592;
United States v. Patterson, 55
Fed. 605; United States v. Wins-
low, 195 Fed. 578, 583. In this
last case it was claimed that the
statute was so general in its terms
as to be unconstitutional; but the
court decided otherwise, saying

“certainly it is not so plain that
the statute so violates the Consti-
tution as to justify us in holding
it unconstitutional in the absence
of any judicial decision by the Su-
preme Court;” affirmed 227 U. S.
202; 33 Sup. Ct. 253; 57 L. Ed.
—. See also United States v. Pat-
terson, 201 Fed. 697; and United
States v. New Departure Mfg. Co.,
204 Fed. 107; Ellis v. United
States, 206 U. 8S. 246; 27 Sup.
Ct. 600; 51 L. Ed. 1047; 11 Am.
Cas. 589.
728 THE SHERMAN ANTI-TRUST ACT.

§ 381. Section 73 of the Wilson Tariff Act.—Sec. 73.
“That every combonation, conspiracy, trust, agreement or
contract is hereby declared to be contrary to public policy,
illegal and void, when the same is made by or between two
or more persons or corporations either of whom is engaged
in importing any article from any foreign country into the
United States, and when such combination, conspiracy, trust,
agreement or contract is intended to operate in restraint of
lawful trade, or free competition in lawful trade or
commerce, or to increase the market price in any part of
the United States or any article or articles imported or
intended to be imported into the United States, or of any
manufacture into which such imported articles enters or
is intended to enter. Every person who is or shall hereafter
be engaged in the importation of goods or any commodity
from any foreign country in violation of this section of
this act, or who shall combine or conspire with another to
violate the same, is guilty of a misdemeanor, and, on convic-
tion thereof, in any court of the United States, such person
shall be fined in a sum not less than one hundred dollars
and not exceeding five thousand dollars, and shall be further
punished by imprisonment, in the discretion of the court,
for a term not less than three months nor exceeding twelve
months.’’ #

§ 382. Common Law Offenses Against United States—
Sherman Law Creates New Offenses.—There are no common
law offenses against the United States, and the Federal courts
ean not resort to the common law as a source of criminal
jurisdiction. Crimes and offenses cognizable under the
authority of the United States are such, and only such, as
are expressly designated by statute, and Congress must

328 Stat. at Large 570; U.S. cited relate to the first and second
Comp. Stat. 1901, 3202. This sec- sections of the Sherman Anti-
tion has not been to our knowledge Trust Act.
before the courts; and the cases
INDICTMENTS. 729

define these crimes and offenses, fix their punishment and
confer the jurisdiction to try them.*

‘“When Congress, under and in the exercise of powers
conferred by the Constitution, adopts or creates common
law offenses, the courts may properly look to that body of
jurisprudence for the time, meaning and definition of such
crimes, if they are not clearly defined in the act creating
them.

“The Act of July 2, 1890, on which the present indictment
is based, in declaring that contracts, combinations and con-
spiracies in restraint of trade and commerce between the
states and foreign countries were not only illegal, but should
constitute criminal offenses against the United States, goes
a step beyond the common law in this: that contracts in
restraint of trade, while unlawful, were not misdemeanors
or indictable at common law. It adopts the common law in
making combinations and conspiracies in restraint of the
designated trade and commerce criminal offenses, and creates
a new crime, in making contracts in restraint of trade mis-
demeanors, and indictable as such. But the act does not
undertake to define what constitutes a contract, combination
or conspiracy in restraint of trade, and recourse must there-
fore be had to the common law for the proper definition of
these general terms, and to ascertain whether the acts
charged come within the statute. We regard it as well
settled by the authorities that an indictment, following
simply the language of the act, would be wholly insufficient,
for the reason that the words of the statute do not of them-
selves fully, directly and clearly set forth all the elements
necessary to constitute the offense intended to be punished.’’®

4In re Greene, 52 Fed. 104, States v. Britton, 108 U. 8S. 199;
110; United States v. Hudson, 7 2 Sup. Ct. 531; 27 L. Ed. 701.
Cranch 32; 3 L. Ed. 259; United 5In re Greene, 52 Fed. 104,
States v. Coolidge, 1 Wheat. 415; 110; citing United States v.
4 L. Ed. 124; reversing 1 Gall. Cruikshank, 92 U. 8. 542; 23 L.
488; Fed. Cas. No. 14857; United Ed. 588; 1 Woods, 308; Fed. Cas.
730 THE SHERMAN ANTI-TRUST ACT.

§ 383. Sufficiency of Charge.—‘‘The point is made against
the counts of indictment No. 4,509, that they fail to charge
properly the defendants with responsibility for the acts done;
that it appears that the defendants were officers of corpora-
tions, and that they could not be liable for corporate doings
unless it appeared clearly that they knew of, connived at
and directed the things done. The answer to this is found
in the indictment, which charges, not that the corporations,
but that the groups of individual defendants, did what was
alleged to be unlawful; and, further, that the defendants
managed and controlled ‘the various corporations, and
directed the corporate action. More was not necessary.’’ °

Modern practice fully justifies references in the later parts
of an indictment to earlier parts of it for the details of

No. 14897; United States v. Sim-
mons, 96 U. S. 360; 24 L. Ed.
819; United States v. Carll, 105
U.S. 611; 26 L. Ed. 1135; United
States vy. Britton, 107 U. S. 655;
2 Sup. Ct. 512; 27 L. Ed. 520;
United States v. Trumbrill, 46
Fed. 755.

6 United States v. Swift, 188
Fed. 92. The court cites Hume v.
United States, 118 Fed. 689; 55
Cc. C. A. 407; and quotes section
1045 of the Revised Statutes (U.
8S. Comp. St. 1901, 720) as fol-
lows: “No indictment found and
presented by a grand jury in any
district or circuit or other court
of the United States shall be
deemed insufficient, nor shall the
trial, judgment or other proceed-
ing thereon be affected by reason
of any defect or imperfection in
matter of form only, which shall
not tend to the prejudice of the
defendant.” See also United
States v. American Naval Stores
Co., 186 Fed. 592. If the indict-
ment contains every element of

the offense intended to be charged,
and sufficiently apprises the de-
fendant of what he must meet it
is sufficient. Armour Packing Co.
v. United States, 209 U. S. 56; 28
Sup. Ct. 428; 52 L. Ed. 681; United
States v. Virginia Carolina Chem-
ical Co., 163 Fed. 66; United
States v. Winslow, 195 Fed. 578.
Where an indictment for a com-
bination or conspiracy in restraint
of trade was uncertain in some of
its allegations, owing to the fact
that the offense was charged in
the language of the statute, and
the purposes and object of the con-
spiracy were not fully stated until
the overt acts were described, it
was held that the defect was one
of form, and not of substance, not
prejudicial to the defendant, and
therefore immaterial under United

States Rev. St. 1025 (U. S.
Comp. St. 1901, 720), providing
that no indictment shall be

quashed for a non-prejudicial de-
fect of form. Tribolet v. United
States, 11 Ariz. 486; 95 Pac. 85.
INDICTMENTS. 731
matters properly set out in the earlier parts; but this prac-
tice is subject to the fundamental rules of pleading that
duplicity and repugnancies must be avoided.?

An indictment which avers that the defendants were the
managing officers and agents of a corporation, who con-
trolled the conduct of its business, and, while not naming
particular instances specifically, describes the course of
conduct and means used by the corporation, by which it
compelled many competitors, some of whom are also named,
to go out of the business, or to sell their business to it, is
sufficiently specific.®

§ 384. Charging Offense in Language of Statute—Monop-
oly.—It is not sufficient to charge the offense committed in
the language of the statute.

‘‘This is not a case where every fact necessary to constitute
the offense is charged, or necessarily implied, by following

7 United States v. Winslow, 195
Fed. 578; affirmed 227 U. S. 202;
33 Sup. Ct. 253; 57 L. Ed. —;
United States v. New Departure
Mig. Co., 204 Fed. 107.

8 United States v. Patterson, 201
Fed. 697. “It would manifestly
be impossible to set forth in de-
tail each separate transaction and
the names of the individuals en-
vaged therein, by which those
plans of operation were carried
out, without producing a paper
so voluminous as possibly to war-
rant the court in striking it from
the files of its own motion as
needlessly encumbering the record.
The names of the individuals who
carried on the - various transac-
tions, the names of the other cash
register companies which were
dealt with are alleged, and the
quality and character of the acts
by which the alleged illegal re-

sults were obtained are clearly de-
tailed. If there were no such

_transactions, then, of course, the

government would fail; and if
there were any innocent transac-
tions through any of these indi-
viduals or other employes of the
National Cash Register Company
who are named, all the facts con-
nected with those transactions are
in the possession of the defend-
ants, who know them beter than
anybody else can know them, and
if they are susceptible of an ex-
planation consistent with inno-
cence, the defendants know whom
to call in their defense. It would
seem that the particulars for
which the defendants call are mat-
ter of evidence which the govern-
ment must produce when it at-
tempts to prove the charges made
by it.”
732 THE SHERMAN ANTI-TRUST ACT.

the words of the statute; aud the words themselves fully
and directly, without any uncertainty or ambiguity, set
forth all of the elements necessary to constitute the offense ;
and it is not sufficient to follow only the language of the
statute. Where the act becomes illegal and an offense only
from the means used to effect it, as in this statute, the
indictment must state, where it is practicable, so much as
will show its illegality and charge the accused with a sub-
stantial offense. The charge must contain a statement of
facts constituting the offense, and a certain description of
it, which this indictment does not, in either if the first six
counts, and they can not be sustained.’’ ®

In a case of monopoly brought under the statute, it was
said:

‘‘This statute is not one of the class where it is always
sufficient to declare in the words of the enactment, as it
does not set out all the elements of a crime. A contract or
combination in restraint of trade may be not only not illegal,
but praiseworthy; as, where parties attempt to engross the
market by furnishing the best goods or the cheapest. So
that ordinarily a case can not be made under the statute
unless the means are shown to be illegal, and therefore it is
ordinarily necessary to declare the means by which it is
intended to engross or monopolize the market. And by the
well-settled rules of pleading it is not sufficient to allege
the means in general language, but, if it is claimed that
the means used are illegal, enough must be set out to enable
the court to see that they are so, and to enable the defense
to properly prepare to meet the charge made against it.’’’”

® United States v. Nelson, 52
Fed. 646; United States v. Cruik-
shank, 92 U. 8. 558; 23 L. Ed.
588; in re Greene, 52 Fed. 104,
110, 111; see United States v.
New Departure Co., 204 Fed. 107.

10 United States v. Patterson, 55
Fed. 605, Judge Putnam further
said: “I regard the rule laid down

by the Supreme Court in United
States v. Hess, 124 U. S. 483; 8
Sup. Ct. Rep. 571; 31 L. Ed. 516;
as applying to this case; and I
think the case of United States v.
Simmonds, 96 U. 8. 360, 24 L.
Ed. 819, is easily distinguished.
Tf it is not, the later case will, of
course, control. In reference to
INDICTMENTS, 733

But it is sufficient to use the language of the statute in
charging the interstate commerce restrained, without setting
out in detail the operations supposed to constitute such
commerce."

An indictment for illegal combination and conspiracy must
set out the facts in detail to enable the court to determine
for itself whether or not the alleged combination or conspir-
acy is to be carried out by what are in truth unlawful
methods.”
documents which in themselves are not directly the subject-
matter of the litigation, it is not necessary to set out each

But where it.is necessary to plead numerous

instrument by its tenor."*

the suggestion of the counsel for
the United States, as to cases at
common law alleging conspiracy
to prevent a man from pursuing
his trade, it is sufficient to say
that to conspire to prevent a man
from pursuing a trade which he is
entitled to pursue is in itself ille-
gal. But the case at bar is not at
common law, and the proceedings
under this statute are peculiar to
the statute. I think the rules laid
down in United States v. Hess dis-
tinguish this indictment on this
point from all the cases and prin-
ciples of law relied on by the
United States. The allegations of
what was done in pursuance of the
alleged conspiracy are under this
particular statute irrelevant, and
can not be laid hold of to enlarge
the necessary allegations of the
indictment, and are of no avail.
I think it was so conceded at the
argument. If not, there is no
question about the law.”

11 United States v. Patterson,
59 Fed. 280. See also Tribolet v.
United States, 11 Ariz. 436; 95
Pac. 85.

12 United States v. Winslow, 195
Fed. 578; United States v. John
Reardon & Sons Co., 191 Fed. 454.

18 United States v. Winslow, 195
Fed. 578; Pooler v. United States,
127 Fed. 509; 62 C. C. A. 307;
United States v. Grumberg, 131
Fed. 137. Speaking of the suffi-
ciency of the indictment in the
National Cash Register case Judge
Hollister said: “These defendants
are charged with a conspiracy in
restraint of trade in cash regis-
ters generally, and particularly
that carried on by the several con-
cerns named. The defendants, as
officers and agents of the National
Cash Register Company, were in
control of its affairs, as alleged.
They know the detail of deal-
ings between the company and each
of those concerns, and the manner
of treatment of them by the Nation-
al Cash Register Company as the
agency through which the officers
and agents controlled and ope-
rated, and the methods of their
respective absorption, if they were
absorbed by the National Cash
134 THE SHERMAN ANTI-TRUST ACT.

§ 385. Averments as to Interstate Commerce—Extent of
Monopolization.—It is necessary to show that the commerce
involved was such as is covered by the statute, but it is un-
necessary to set out in detail the operations claimed to con-
stitute interstate commerce; that may be done in the language
of the statute. But upon a charge of a conspiracy to
monopolize interstate commerce, it is not necessary to aver
the existence of such commerce, for the statute, neither in
its letter nor purpose, ‘‘distinguishes between strangling a
commerce which has been born and preventing the birth of
a commerce which does not exist.’’!* It is not necessary to
aver that the defendant monopolized the entire trade; it is
sufficient to merely allege that he monopolized part of the
trade in a single article entering into interstate commerce.

Register Company. They must
know whom to call in each to es-
tablish their defense. It seems to
me they are advised of the nature
of the charges against them quite
sufficiently for them to make a
defense, and that, under the pecu-
liar circumstances of the case, it
is sufficient to set out the charac-
ter of the acts of the defendants
controlling the National Cash
Register Company, and that these
acts had to do with the various
cash register companies named.”
United States v. Patterson, 201
Fed. 697, citing United States v.
Cruikshank, 92 U. S. 542; 23 L.
Ed. 588; United States v. Hess,
124 U.S. 483; 8 Sup. Ct. 571; 31
L. Ed. 516; Swift & Co. v. United
States, 196 U. S. 375; 25 Sup.
Ct. 276; 49 L. Ed. 518; and Smith
v. United States, 157 Fed. 721;
85 C. C. A. 353.

14 United States v. Patterson,
59 Fed. 280. “The indictment then
proceeded under the heading ‘overt

acts,’ to describe the things which
were done by defendants being the
same things which it had already
recited as planned. It is said that
the description of overt acts can
not be carried over into the accu-
satory portion of an indictment,
nor make it good when that accu-
satory portion fails from the lack
of stated facts, and this seems to
be the applicable rule for plead-
ing (United States v. Britton, 108
U. S. 199, 205; 2 Sup. Ct. 531;
27 L. Ed. 698). Here, however,
the specific statement of the sev-
eral means which were deter-
mined upon as a part of the plan,
should be treated as in the accu-
satory portion, and when so
treated, the indictment is not open
to the objection that it states con-
clusions only.” Steers v. United
States, 192 Fed. 1; 112 C. C. A.
423; United States v. Winslow,
195 Fed. 578, 584.

15 United States v. Patterson,
201 Fed. 697.
INDICTMENTS. 735

§ 386. Allegations as to Trade or Commerce Restrained
or Monopolized.—An indictment must show that the contract,
combination or conspiracy to restrain or to monopolize, or
attempt to monopolize, or combination or conspiracy to
monopolize trade or commerce or any part thereof was
“‘trade or commerce among the several states, or with foreign
nations ;” and if it do not, it is fatally bad. This charge
may be in the words of the statute or in equivalent language.
It is not sufficient cn this point to allege that the defendant
did certain acts with intent to restrain or monopolize a
particular trade among the several states, and that they
had destroyed free competition in such trade in one of the
states, and increased the price of the particular article
therein.'®

§ 387. Duplicity—An indictment charging in separate
counts a combination and a conspiracy in restraint of inter-

16 United States v. Greenhut, 50
Fed. 469. Speaking of the second
section the court said: “An in-
dictment framed under this section

so they had monopolized trade and
commerce in distilled spirits
among the several states or with
foreign nations. It is true that

should contain a distinct averment
in the words of the statute, or in
equivalent language, that, by
means of the acts charged, the de-
fendants had monopolized, or had
combined or conspired to monopo-
lize, trade and commerce among
the several states or with foreign
nations. This indictment contains
no such averment. It does not
charge that the defendants entered
into any unlawful combination or
conspiracy. Nor does it contain
any averment that they had mo-
nopolized trade or commerce
among the several states or with
foreign nations. It avers merely
that by means of the acts alleged
they had monopolized the manu-
facture and sale of distilled spir-
its, without stating that in doing

the indictment charges that the
defendants have done certain
things with intent to monopolize
the traffic in distilled spirits
among the several states, and that
they have increased the usual
prices at which distilled spirits
were sold in Massachusetts, and
have prevented and counteracted
the effect of free competition in
such traffic in Massachusetts. But
none of these things are singly
made offenses by the statute. The
indictment in this particular is
clearly insufficient and according
to the elementary rules of crim-
inal pleading, and charges no of-
fense within the letter or spirit
of the second section of the stat-
ute.” United States v. Winslow,
195 Fed. 578.
736 THE SHERMAN ANTI-TRUST ACT.

state trade and an attempt to monopolize a portion of such
trade, all based on the same transaction, is not bad for
duplicity as to either count, on the theory that each alleged
overt act set out to support the charge of conspiracy is
charged as a separate offense.?”

An indictment is not bad for duplicity because it charges
and enumerates different means adopted or different things
done to accomplish the object of the combination.?8

The words ‘‘combination’’ and ‘‘conspiracy’’ are synony-
mous, and hence an indictment alleging in a single count that
the defendants entered into a ‘‘combination or conspiracy”’
in restraint of trade is not bad for duplicity, for it alleges

only one offense.?9

17 United States v MacAndrews
& Forbes Co., 149 Fed. 823, 832.
In this case the defendants were
indicted in separate counts, one
for combination and the other for
monopoly, and it was held that the
offenses were not identical, but
were legally distinct and justified
separate punishment on _ each
charge. United States v. MacAn-
drews & Forbes Co., 149 Fed. 836.
In the last case it was said: “If
all the crimes charged against a
given person are committed in ac-
complishing one unlawful action
or in bringing about one unlaw-
fully desired result, it is clearly
improper to split up the transac-
tion into as many parts as there
are crimes incident to the fulfil-
ment of unlawful desire, and thus
multiply punishment by multiply-
ing indictments or counts.”

18 United States v. Swift, 188
Fed. 92. The court on this point
said: 2, “It is urged also that
the first and second counts of in-
dictment No. 4,509 are bad for
duplicity, because they charge ua

combination in restraint of trade
in the purchase of live stock, and
also in the sale of fresh meat.
The objection is not sound. The
crime charged is a combination in
restraint of trade. Such a com-
bination may design to accomplish
its objection in many different
ways, and the enumeration of the
various means adopted does not
render the indictment bad for du-
plicity. Duplicity in an indict-
ment means the charging of more
than one offense, not the charging
of a single offense committed in
more than one way. Duplicity
may be applied only to the result
charged, and not the methods of
its attainment.” Anderson v.
United States, 171 U. S. 604; 19
Sup. Ct. 50; 43 L. Ed. 300; Con-
nors v. United States, 158 U. S.
408; 15 Sup. Ct. 951; 39 L. Ed.
1033.

19 Tribolet v. United States 11
Ariz. 436; 95 Pac. 85. “It is
claimed that, if any offense is
pleaded, the indictment is bad for
duplicity, for that three separate
INDICTMENTS.

737

Under the first section the offense may be charged in one
count by an allegation of only a single transaction, as the
allegation of making one contract or engaging in one com-

and distinct offenses are alleged in
the single count of the indictment,
namely: (1) The making of a
contract in restraint of trade and
commerce; (2) a combination in
form of trust in restraint of trade
and commerce; (3) a conspiracy
in restraint of trade and com-
merce, and that the statute de-
nounces each of them as a sepa-
rate and distinct offense. As we
view the indictment, it does not
charge the defendants with the
making of a contract which in it-
self was in restraint of trade and
commerce. It would be difficult,
if not impossible, to effect a com-
bination or conspiracy without a
We con-
strue the indictment as alleging
the contract to have been made
as one of the steps by which the
combination was brought about,
and as an overt act in furtherance
of the conspiracy. The indictment
does, however, directly charge a
combination and conspiracy. It
appears to be appellant’s conten-
tion that Congress means to pun-
ish as conspirators those who en-
gage to do those things which are
unlawfully in restraint of trade or
commerce, though in fact no re-
straint is accomplished, and also
to denounce a combination which
actually results in restraint of
trade or commerce and punish
those who engage in it. The mean-
ing of these terms as used in this
section, which are precisely those
used in the first section of the
Act, which relates to interstate

contract or agreement.

commerce, have been commented
upon by different courts, but the
difference between a combination
and a conspiracy in restraint of
trade, if any exists, has not au-
thoritatively been pointed out. By
same the words as used here seem
to be regarded as synonymous. Mr.
Justice Holmes, in his dissenting
opinion in Northern Securities
Company v. United States, 193
U. S. 197, in discussing the Act,
says, at page 403, 24 Sup. Ct.
436, at page 469 (48 L. Ed. 679):
‘The words hit two classes of
cases, and only two—contracts in
restraint of trade, and combina-
tions or conspiracies in restraint
of trade.’ The bill of the govern-
ment in that case refers through-
out to the acts of the defendants
as constituting an ‘unlawful com-
bination or conspiracy.’ The ma-
jority opinion also frequently re-
fers to the defendants as having
engaged in a ‘combination or con-
spiracy,’ and quotes with approval
from the case of Morris Run Coal
Company v. Barclay Coal Com-
pany, 68 Pa. 173; 8 Am. Rep. 159,
in which the Supreme Court of
Pennsylvania says, in referring to
a combination in violation of a
state statute: ‘In all such com-
binations where the purpose is in-
jurious and unlawful the gist of
the offense is the conspiracy.’ In
Tice v. Standard Oil Company
(C. C.), 184 Fed. 464, Judge Lan-
ning quotes the words of Mr. Jus-
tice Holmes, and says: ‘In one
count there may be a charge of an

’
738

THE SHERMAN ANTI-TRUST ACT.

bination or conspiracy, although such a combination or con-
spiracy, when once effected, may be continuous.”

§ 388. Joinder of Counts.—Counts for conspiracy in re-
straint of interstate commerce, for conspiracy to monopolize
a part of such commerce and for monopolizing a part of such

commerce may be joined.?*

unlawful contract, and in another
charge. of an unlawful combination
or conspiracy; but the two unlaw-
ful things can not be declared
upon as synonymous terms, and
charged in a single count.’ See
also, Chicago W. & V. Coal Co. v.
People, 214 Ill. 444; 73 N. E.
770; affirming 114 Ill. App.
75. But whether the words have
the same meaning, or whether
they describe the two offenses,
they both have reference to the
same object sought to be accom-
plished by the statute, to wit, the
prevention of restraint of trade
and commerce.” The court quotes
at length from Crain v. United
States, 162 U. 8. 625; 16 Sup. Ct.
952; 40 L. Ed. 1097, and adds:
“In enacting the statute under
consideration the general purpose
“of Congress was to prevent re-
straint of trade and commerce. It
is directed against certain defined
modes of accomplishing that gen-
eral object, and declares that the
engaging in either of those modes,
each having reference to that ob-

ject shall be punished. We think.

this indictment comes squarely
within the rule as above an-
nounced by the Supreme Court,
and that this objection to it is
not well taken.” An indictment
having several counts is not bad
for duplicity because of reference
therein to other courts charging

different offenses, only to give de-
tails of the offenses charged in the
counts objected to. United States
v. Patten, 187 Fed. 664. The court
said: “The final question to which
it is necessary to give any ex-
tended consideration is whether
the fifth and sixth counts are sub-
ject to the objection of duplicity
because they each charge the com-
mission of two substantive of-
fenses. The defendants contend
that the fifth count charges a
combination in restraint of trade,
and then bring in by reference all
the material allegations of the
tirst count, which charges a con-
spiracy in restraint of trade, and
therefore it is urged that there is
«a misjoinder of two crimes in one
count. Similar contentions are
made with respect to the sixth
count. In my opinion the conten-
tions of the defendants are not
well founded. Referring to the
charging part of each count it
will be found that only a single
offense is charged against the de-
fendants and the references in
other parts of the counts are only
for the purpose of giving details
of the offenses charged.”

20 United States v.
195 Fed. 578.

21 United States v. Patterson,
201 Fed. 697; Painter v, United
States, 151 U. S. 396; 14 Sup. Ct.
410; 38 L. Ed. 208; Terry v.

Winslow,
INDICTMENTS. 739

§ 389. Surplusage—Demurrer.—Surplusage can not be
reached in an indictment by a demurrer of any character.”
If the questions raised by the demurrer are both intricate
and doubtful, it may be overruled, and their decision post-
poned until trial on the merits.”

§ 390. Alleging Intent Without Setting Out Facts—No
Averment Not to Engage in Business or to Sell at Less
Than List Price.—It is not sufficient to charge an unlawful
intent to restrain trade, or to aver that a combination or
a course of business is in restraint of trade, or a monopoly
of trade, in order to charge the commission of an improper
‘*Acts relied upon to make
the offense must be stated. A combination of act and
intent is needed to constitute a crime. No averment of
intent alone is sufficient; neither is any amount of act alone;
the two must combine.’’** Consequently, where the indictment

restraint or monopoly of trade.

United States, 120 Fed. 483; 56
C. C. A. 633; State v. Bailey, 50
Ohio St. 636; 36 N. E. 233; U.
S. Rev. Stat. 1024; United States
v. New Departure Mfg. Co. 204
Fed. 107.

22 United States v. Patterson, 59
Fed. 280. The court said, how-
ever, if it be assumed that a spe-
cial demurrer does lie, it must
point out the specific language ob-
jected to, and does not require
counsel and the court to search
through the indictment for what
is claimed demurrable. The opin-
ion in this case contains quite a
discussion and the citation of a
number of authorities on special
demurrer.

23 United States v. Winslow, 195
Fed. 578; Kansas v. Colorado, 185
U. S. 125; 22 Sup. Ct. 552; 46
L. Ed. 838. :

24In re Corning, 51 Fed. 205;
United States v. Nelson, 52 Fed.
646. “Under the principle estab-
lished by those cases, the several
counts of the present indictment
must be tested, not by the general
recitals and averments thereof, al-
though in the words of the stat-
utes, but by the specific acts or
particular facts, which are al-
leged to have been actually done
and committed by the accused. If
the particular acts or facts
charged do not, as a matter of
law, constitute contracts, combina-
tions, or conspiracies in restraint
of trade and commerce among the
several states, or a monopoly or
attempt to monopolize any part
of such trade or commerce, no
amount of averments and allega-
tions that the accused ‘engaged
in a combination,’ or ‘made con-
tracts in restraint’ of such trade
740 THE SHERMAN ANTI-TRUST ACT.
averred that the defendants, in pursuance of a combination
to restrain trade in distillery products among the states and
monopolize the traffic therein, acquired by lease or purchase,
before the enactment of the Sherman law, about seventy
distilleries, producing three-quarters of the distillery prod-
ucts of the United States, and that they continued to operate
them after the passage of that statute, and by certain
described means sold the product at increased prices, it
was held that it charged the commission of no crime in
respect to the purchase and continued operation of the dis-
tilleries, because there was no averment that the defendants
obligated the vendors of the distilleries not to build others
nor to withhold their capital or experience from the business.
In a count it was averred that the defendants, in pursuance
of the combination, shipped certain of the distillery products
to another state and sold them there, through their cis-
tributing agents to dealers, who were promised a rebate of
five cents per gallon on their purchases, if they purchased
their distillery products exclusively from such distributing
agents and sold them no lower than the listed prices, the
rebate to be paid when they signed a certificate that they
had so purchased and sold for six months; and that by this
means the defendants had controlled and increased the price
of distillery products in such other state; and it was also
held that a crime was not charged with respect to such
sales, because there was no averment of any contract
whereby the purchasers bound themselves not to purchase
from others, or not to sell at less than list prices.?5

or commerce, or ‘monopolized’ or
‘attempted to monopolize’ the
same, will avail to sustain the
indictment. Whether the accused
is charged with an offense is to
be determined by the particular
acts or facts set forth, and not
by the conclusions of the plender,
although asserted in the words of
the statute.” In re Greene, 52

Fed. 104; citing United States v.
Cruikshank, 92 U. S. 542, 563;
23 L. Ed. 588; affirming 1 Woods
308; Fed. Cas. No. 14897. See also
United States v. Winslow, 195
Fed. 578.

25In re Corning, 51 Fed. 205.
The court said: “It is not averred
that, when defendants purchased
their 70 distilleries, they obli-
INDICTMENTS.

741

So where an indictment alleged that on a particular date
named the defendants, under the disguise of a distilling
corporation, sold to certain persons in Boston a quantity
of alcohol, then in Illinois, and that, by reason of the fact
that said corporation controlled the manufacture and sale

gated the vendors not to build
other distilleries, or not to con-
tinue in the distillery business in
the future. It is not averred that
defendants attempted in any way
to bind the vendors to withhold
their capital or skill or experience
in the business from the public in
the future. There is no averment
that the defendants in any man-
ner or at any time, attempted to
control the business of the re-
maining one-fourth of the distil-
leries in the United States, or in
any way attempted to limit their
output, or by agreement with
them control the price at which
their products should be sold, or
in any degree restrain their trade,
or limit the territory over which
their trade should extend. The
full scope of the averments in this
respect is that before this law was
passed by Congress the defendants
legally purchased with their own
capital three-fourths of the distil-
leries in the United States, and
that they produced 77,000,000 gal-
lons of the distillery products, and
sold these products in the market
of the several states at the best
possible prices; and that they con-
tinued so to own and operate said
distilleries, and so to sell their
products, after the passage of this
Act. This they did without any
attempt at any time, by contract,
to control the production of the
other distilleries, or the prices at

which they should sell, or without
any contract with such distillers
in any way restraining trade. The
indictment, therefore, in my judg-
ment, wholly fails to charge a
crime, so far as the purchase of
said distilleries or their manufac-
ture of distilled products before
the passage of the Act is con-
cerned, or so far as they are
charged with continuing to own
and operate them with unlawful
intent after the passage of the Act.
Do the acts, in connection with
the transportation and sale of
said products in the district of
Massachusetts as charged, consti-
tute an offense? The substantial
facts in this respect, as averred,
are that defendants sold their
products there, who were promised
a rebate of five cents per gallon
on all their purchases, provided
said dealers purchased their dis-
tillery products exclusively from
defendants’ agents, and provided
they sold the same at prices no
lower than the list prices of such
agents; and said rebate was to be
paid when the dealers should sign
a certificate that they had so ex-
clusively purchased from defend-
ants’ agents, and had so sold at
prices no lower than the list
prices of said agents. The indict-
ment in these averments is again
significant for its omissions. It
fails to charge a contract on the
part of the dealer that he would
742 THE SHERMAN ANTI-TRUST ACT.

of 75 per cent. of all distillery products in the United States,
defendants fixed the prices at which the purchases should
be sold and did sell such alcohol, and ‘‘did compel’’ them ‘‘to
sell said alcohol, at no less price than that fixed’’ by such de-
fendants, but it contained no allegations of other compulsion,
it was held that it could not be assumed from these allegations
that the means used was a contract with the purchaser, and
the indictment was bad, because too vague to charge any
contract or restraint of interstate trade or commerce.”®

§391. Acts Charged in Harmony with a Lawful Pur-
pose.—Where the indicement charged that the defendants
were engaged in a combination and conspiracy to monopo-
lize and control the trade and manufacture and sale of
coaster brakes in the United States, and that for that pur-
pose they, in combination with an association, had com-
mitted certain specified acts tending to restrain competition
among themselves, including the assignment of pretended
patent license rights, tending toward the establishment of
uniform prices for the products, and an agreement between
them for non-competitive discounts to jobbers and dealers,
all of which are alleged to have been done with an un-
lawful intent to control the market, the indictment was held
sufficient, and not defective on the theory that the acts
charged were in perfect harmony with a lawful purpose.?**

not purchase distillery products
from other distilleries, or any
contract on his part binding him-
self to sell at defendants’ prices.
Such dealers were offered the re-
bate as an inducement to purchase
exclusively from the defendants,
and to gell at the prices defendants
fixed; but there is no contract
averred by which the dealers ob-
ligated themselves to do so. In
what respects, then, are these acts

charged different from the custom-
ary efforts of manufacturers or
dealers to increase the sale of their
products and push their business
by the many artifices of trade?”
An almost identical indictment
was likewise held insufficient, ap-
proving the case cited above. In
re Terrell, 51 Fed. 213.

26In re Greene, 52 Fed. 104.

26* United States v. New Depar-
ture Mfg. Co., 204 Fed. 107.
INDICTMENTS. 743

§ 382. Conspiracy.—The indictment should describe some-
thing that amounts to a conspiracy under the act conform-
ably to the rules of pleading at common law, as perhaps
modified by general federal statutes. The elements of con-
spiracy to be considered are that it must depend upon the
concerted action of two or more persons to accomplish an
unlawful result by any means, or a lawful result by un-
lawful means. What was done in pursuance of the alleged
conspiracy can not be used to enlarge the allegations neces-
sary to show a conspiracy.?"

It must be alleged ‘‘in the indictment that there was a
purpose to restrain trade as implied in the common law
expression, ‘contract in restraint of trade,’ analogous to
the word ‘monopolize’ in the second section. I think this is
the basis of the statute. It must appear somewhere in the
indictment that there was a conspiracy in restraint of trade
by engrossing or monopolizing or grasping the market, and
it is not sufficient simply to allege a purpose to drive certain
competitors out of the field by violence, annoyance, intimida-
tion or otherwise.’’ °°

27 United States v. MacAndrews
& Forbes Co., 149 Fed. 823. See
149 Fed. 836; United States v.
Patterson, 55 Fed. 605, 639;
United States v.. New Departure
Mfg. Co., 204 Fed. 107.

28 United States v. Patterson, 55
Fed. 605, 640. “It is further
claimed that the indictment should
allege the means by which the com-
bination or conspiracy was to be
accomplished; but this we regard
ag unnecessary, since the object to
be attained by the combination or
conspiracy in itself is unlawful
both at common law and by stat-
ute.” ‘Tribolet v. United States,
1l Ariz. 436; 95 Pac. 85. An al-
legation that «a conspiracy was
“calculated” to produce a certain

if previous steps failed.

result is an allegation of a mere
conclusion, and ineffective. United
States v. Patten, 187 Fed. 664.
“The indictment is further at-
tacked because so many different,
contemplated means of accomplish-
ing the conspiracy are alleged, and
it is said that this makes the in-
dictment vague and uncertain. It
is not open to this objection. The
allegations of the various means
in contemplation are not of simul-
taneous and inconsistent plans,
but plans for successive action,
one step of which should be taken
Com-
plaint as to such an indictment
would come with better force from
the government which might have
been embarrassed by so specific an
744

THE SHERMAN ANTI-TRUST ACT..

§ 393. Setting Out Precise Time When Purpose Was
Formed and First Devised.—In an indictment for engaging
in a combination in restraint of interstate trade, or for
attempting to monopolize a portion of it, the time of the
formation of the combination or attempted monopoly is suf-
ficiently set out if the time when the several acts relied upon
to establish the offense were done be alleged; and it is not
necessary to set out the precise time when the purpose was
formed or the plan of the combination or attempted monop-

oly was first devised.?®

allegation of all the plans in-
volved.” Steers v. United States,
192 Fed. 1; 112 C. C. A. 423. Suf-
ficient facts must be alleged to
show that the combination was in-
tended to be carried out by un-
lawful methods. United States v.
Winslow, 195 Fed. 578.

29 United States v. MacAndrews
& Forbes Co., 149 Fed. 823. The
court said: “It is true that the
gist of the alleged offenses is the
combination or the attempt at
monopoly, but it is not true that
the offenses are complete when the
combination is mentally formed or
the mental intention to monopol-
ize arises. The statutory offense,
and the one charged herein, does
not depend upon ‘a single agree-
ment, but (on) a course of con-
duct intended to be continued’ yet,
nevertheless, ‘the thing done and
intended to be done is perfectly
definite.’ Swift v. United States,
196 U. 8. 375, at page 400; 25 Sup.
Ct. 281; 49 L. Ed. 518; affirming
122 Fed. 529. That case arose on,
the civil side of the court, but it
is to be remembered that the same
facts and acts which expose vio-
lators of this statute to civil suit
also render them subject to indict-

ment. In this case, while the time
is indefinite, the thing done is
definite, and that is all that the
statute requires. To show that an
exact time may be, and therefore
must be, assigned for the commis-
sion of the offense of combination,
the defendants argue upon the
meaning of the word ‘engage’ as
used in the statute, and strenuously
urge that since the offense prohib-
ited is that of ‘engaging in’ a com-
bination, it must be complete as
soon as the accused employs his
attention or effort in or about the
same, that such employment of at-
tention or effort is capable of pre-
cise assignment in point of time,
and they challenge the prosecution
to name the day. The statute is
not directed against such an ab-
straction as this. It does not re-
quire on the part of the prosecu-
tion clairvoyance to discover or
locate the offense. Its prohibition
is not directed against a state of
mind, but against a state of facts.
The facts do not simultaneously oc-
eur; the events are not contem-
poraneous. It may, and natural-
ly would, require time for the work-
ing parts of the combination to
become co-operative, or for the mo-
INDICTMENTS. 145

§ 394. Intent to Monopolize—Acts of Violence and In-
timidation.—In an indictment for engrossing, monopolizing
or grasping interstate trade or commerce, ‘‘acts of violence
and intimidation may be alleged as means to accomplish the
general purpose. Instead of lying outside of the statute,
they may aggravate the offense. They are within the logic
and spirit of the statute, which are not to be defeated by
distinctions which its letter does not suggest to the ordinary
mind. Violence and intimidation are as much within the
mischief of the statute as negotiations, contracts or pur-
chases. The former are often used to compel the latter.’’ °°

§ 395. Use of the Word ‘‘Group’’ to Designate Different
Collections of Defendants——Where an indictment charged
a combination in restraint of trade among the defendants
as representatives of three different packing concerns, and
charged that each concern was represented by certain indi-
viduals, each one of whom was authorized to act for the
others of his ‘‘groups,’’ and that the word ‘‘groups’’ as
used therein was intended to apply to any or all of the
members of the particular group, it was held to be sufficiently
specific where it charged that acts had been done by a par-
ticular group without averring that each particular member
of that group individually took part therein.*?

dictment.” Affirmed, United States
v. Mac Andrews & Forbes Co., 149
Fed. 836. Appeal dismissed by

nopoly to become more than a hope;
and what is forbidden and renders
the actors obnoxious to the crim-

inal law is not an undiscoverable
thought or hope, but a perfectly
obvious result or condition. The
condition or state of facts against
which the statute is directed is
a continuing condition, and there-
fore the offense of creating and
maintaining that condition is nec-
essarily a continuing offense, and
does not, from its very nature, re-
quire greater particurlarity in as-
signment than is used in this in-

counsel for defendants October 12,
1908; 212 U. S. 585; 29 Sup. Ct.
681; 53 L. Ed. 661.

30 United States v. Patterson, 55
Fed. 605, 640; United States v.
Winslow, 195 Fed. 578.

31 United States v. Swift, 188
Fed. 92. The court said: “The in-
dictments show that the Armour,
Swift, and Morris interests were
represented each by certain indi-
viduals and the individuals com-
746

THE SHERMAN ANTI-TRUST ACT.

§ 396. Monopolizing and Attempting to Monopolize Dis-
tinct. Offenses—Duplicity—Monopolizing and attempting to
monopolize interstate commerce are separate and distinct
offenses under the statute, and they can not be embraced
in a single count of an indictment.”

posing each class are designated as
‘the Swift group, the Armour
group, and the Morris group.’
This is followed by the charge that
each member of each group had
full authority to act for this group,
and that whenever the word
‘group’ is used it is intended to
apply to any or all of the mem-
bers of each group. In other
words, the charge against a group
is to be taken to mean that what-
ever wax done was done by one of
the members of the group, in be-
half and by authority of all. In
this connection it is argued, ‘first,
that not all of the defendants are
charged with the commission of
and, second, that those
charged and those not charged can
not be separated from each other
under the averments.’ Grand Jur-
ors are required to state their
charge with as much certainty,
and no more, as the circumstances
of the case will permit. In this
case the jurors knew the men en-
gaged in the matter under their
investigation; knew with which of
the three concerns (Armour, Swift,
or Morris) each one was associ-
ated; believed that they were of
one mind as to the plan of opera-
tion of their business. It was
not known, and probably could not
have been discovered, what part
in the general programme was as-
signed to each individual. The
practical way, and probably the
only possible way, was for the

acts;

jury to charge as it did that the
combination was entered into by
the separate groups of men, and
that the action of each group was
with the consent, knowledge, and
design of each constituent member.
The indictments charge an unlaw-
ful combination, conspiracy and
monopoly as a result of joint ac-
tion, and it is not necessary, to
sustain those charges that each
one of the individual participants
should have been doing the same
thing at the same time. United
States v. Mac Andrews (C.C.), 149
Fed. at page 832. It is quite con-
sistent with a charge of combina-
tion or conspiracy or monopoly
that the individuals concerned
therein should each have been as-
signed to different tasks aimed to
bring about the result planned by
all. The indictments charge the
ultimate plan, the specific acts by
which it was carried out; and,
further, that those specific acts
were planned and executed by the
three groups of individuals, each
member of each group acting for
himself and every other member of
each group acting for himself and
every other member of the group.
I do not see how the grand jury
could have made the charge more
definite, and believe that it is suf-
ficiently specific to satisfy the sub-
stantive law.”

82 United States v. American
Nava] Stores Co., 186 Fed. 592.
INDICTMENTS. 747

§ 397. Corporation Officers as Defendants Designated
by Groups—Corporation Officers Liable—If the indictment
charges that the defendants were officers of certain corpora-
tions which they managed and controlled, directing the cor-
porate action, and that the groups of the defendants (the
groups having been previously properly designated) repre-
senting the several corporations combined together to do
the illegal acts, it sufficiently charges the defendants as
individuals.** Officers or directors of a corporation can not
protect themselves from criminal liability behind the cor-
poration organization where they are the actual, present
and efficient actors in the commission of the offense.**

§ 398. Purpose to Engross Trade in Hands of One of
the Defendants—Interest of Defendants in Beneficiary of
Conspiracy.—‘‘Neither the letter of the statute nor the
philosophy of pleading conspiracies require that it should
appear that the purpose was to engross, monopolize or
grasp into the hands of one of the persons indicted, or that
the defendants were interested in behalf of the party for

33 United States v. Swift, 188
Fed. 92; medified, 196 U. 8S. 375;
25 Sup. Ct. 276; 49 L. Ed. 518.
“The point is made against the
counts of indictment No. 4,509
that they fail to charge properly

corporations, and directed the cor-
porate action. More was not nec-
essary.” Where the defendant and
one H. entered into a combination
and conspiracy in restraint of
trade to control the meat busi-

the defendants with responsibility
for the acts done; that it appears
that the defendants were officers
of corporations, and that they
could not be liable for corporate
doings unless it ‘appeared clearly
that they knew of, connived at and
directed the things done. The an-
swer to this is found in the indict-
ment, which charges, not that the
corporations, but that the groups
of individual defendants, did what
was alleged to be unlawful; and
further, that the defendants man-
aged and controlled the various

ness in a certain city, and for this
purpose organized a corporation,
the fact that the defendant acted
merely as an officer and stock-
holder in such corporation, and
that the corporation was held not
guilty, it was held not to prevent
the defendants’ conviction. Tribo-
let v. United States, 11 Ariz. 436;
95 Pac. 85.

34 United States v. Winslow, 195
Fed. 578; 227 U. S. 202; 33 Sup.
Ct. 253; 57 L. Ed. —; United
States v. Patterson. 201 Fed. 697.
748 THE SHERMAN ANTI-TRUST ACT.

whose benefit they combined to monopolize, engross or grasp,
or, indeed, what their relations were to that party. Even if
the statute should finally be held to be limited to combina-
tions to engross, monopolize or grasp in behalf of some
party to the combination, yet there remains the well-known
rule of law that it is unnecessary to indict all the persons
involved in a conspiracy.’’

§ 389. Ownership of Patents—Lawful Commerce.—In an
indictment charging a conspiracy to monopolize interstate
commerce in a patented article, the ownership of the patent
by the defendants need not be negatived, nor need it be
averred that the commerce proposed to be carried on was a
lawful one. That is a matter of defense.**

§ 400. All Concerned May be Charged as Principals—
Corporation and Officers—Separate Acts.—The statute de-
clares that the offense committed in violation of its pro-
visions are misdemeanors. Therefore, under the well-known
common law rule, all who aid in the commission of the
offenses may be charged as principals, and a corporation
and its officers, who personally participate in committing
the offenses, may he joined as defendants, although their
acts may have been separate and not done at the same time.*”

35 United States v. Patterson, 59
ied. 280; United States v. New
Departure Mfg. Co., 204 Fed. 107.

36 United States v Patterson, 59
Fed. 280.

27 United States v. Mac Andrews
& Forbes Co., 149 Fed. 823. See
149 Fed. 836. On the improper
joinder, the court said: “By this
branch of the demurrer all the de-
fendants admit that the acts al-
leged were done. The individuals
aver that, ex necessitate rei, the
acts were of the corporation. The
corporations declare that, inas-

much as no corporation can com-
mit a crime except through hu-
man instrumentality, the acts were
human; but, as there was but one
crime it must be fundamentally
wrong to charge both the corpora-
tion and its instrument therewith.
This argument scems to depend
upon the assumption that every
factum set forth in the indictment
is a piece of joint activity by all
the defendants. This is not true.
It is charged that the unlawful
combination, conspiracy, or mon-
opoly was the result of joint ac-
INDICTMENTS.

tion, but all of the persons alleged
to be jointly responsible were not
necessarily all doing the same
things at the same time. There is
nothing inherently impossible in
the corporation doing one thing
and the individual another at or
about the same time, which things
were utterly different; yet all,
when dovetailed together, go to
make up the joint product labelled
by the act—combination, conspir-
acy, or monopoly. It is conceiy-
able that the evidence may show
that the individual defendants
were not free agents, but acted
under a species of corporate coer-
cion, for which they should not
be held personally responsible; but
it is impossible to arrive at this
conclusion on demurrer.” The
court further said on this point:
“Tt is not without significance that
offenses are serious, in congres-
sional opinion, as those created by
this statute are made misdemean-
ors. When the statute declares
that certain acts notoriously to be
accomplished under modern busi-
ness conditions only through cor-
porate instrumentality shall be
misdemeanors, and further de-
clares that the word ‘person’ as
used therein shall be deemed to in-
clude corporations, such statute
seems to me clearly passed in con-
templation of the elementary prin-
ciple that in respect of a misde-
meanor all those who personally
aid or abet in its commissions are
indictable as principals. This is
learnedly and fully treated by Van
Brunt, J., in People v. Clark (0.
& T.) 14 N. Y. Supp. 642, and I
am compelled to the conclusion
that, under this statute, if the of-
ficer or agent of a corporation

‘749

charged with fault be also charged
with personal participation, direc-
tion, or activity therein, both may
be so charged in the same indict-
ment. This procedure has been
followed in People, ete. v. Detroit
White Lead Works, 82 Mich. 471;
46 N. W. 735; 9 L. R. A. 722, and
Overland Cotton Mill v. People,
etc., 32 Colo. 263; 75 Pac. 924;
105 Am. St. Rep. 74; nor do I
think the holding in the rebates
cases (United States v. N. Y. C.
& H. R. R. et al., lately decided
in this court, 146 Fed. 298) irrele-
vant to the present issue. The in-
dictments in those cases were
based upon those clauses of sec-
tion 1 of the Act of February 19,
1903 (“Elkins Act’), chapter 708,
32 Stat. 847 (U. S. Comp. St.
Supp. 1905, p. 599), which declares
that ‘anything done * * * by any
* * * officer thereof * * * would
constitute a.misdemeanor * * *
shall be held to be a misdemeanor
committed by such corporation,’
and ‘every person or corporation
who shall * * * grant or give * * *
any * * * rebate * * * shall be
deemed guilty of a misdemeanor.’
This is not a specific authorization
for a joint indictment; it is a
declaration that the same act shall
at one and the same time be a
misdemeanor on the part both of
the officer, who is the actor, and
the corporation, who suffers him
to act. The language of that stat-
ute seems to me to render a joint
indictment permissible, but if, as
in this case and under this stat-
ute, that which is complained of
is not one single act, which is at
the same time individual by na-
ture and corporate by act of Con-
gress, but a condition of facts to
750 THE SHERMAN ANTI-TRUST ACT.

§ 401. Indicting Part of Persons to the Illegal Com-
bination.—It is not necessary to indict all of the persons
who have entered into the illegal combination or conspiracy,
and all such need not be convicted in order to convict one.**

§ 402. Indictment of Stockholders for Acts of Corpora-
tion.—In an indictment of stockholders of a corporation,
where all the acts alleged to constitute the offense are
charged to have been dcne by the corporation, it must be
alleged what relation other than stockholders the defendants
bore to the corporation, for stockholders can not be held
primarily criminally responsible for the acts of the cor-
poration.**

§ 403. Demurrer to Indictment—Practice on Appeal.
The Supreme Court, when reviewing under the Criminal

which both corporate and indi-
vidual action may be contributed,
a joint indictment is not only per-
missible, but if it be desired to
bring in all the actors and pro-
duce all the evidence, it may even
be necessary.” United States v.
Winslow, 195 Fed. 578..

88 United States v. Patterson,
59 Fed. 280; United States v.
Winslow, 195 Fed. 578.

39 In re Greene, 52 Fed. 104, 119.
The court on this point said: “By
the eighth section of the statute,
it is provided ‘that the word “per-
son” or “persons”’ wherever used
in that act ‘shall be deemed to in-
clude corporations and associa-
tions existing under or authorized
by the laws of either the United
States, the laws of any of the ter-
ritories, the laws of any state, or
the laws of any foreign country.’
If the acts charged’ constitute
criminal offenses, the Distilling &

Cattle Feeding Company is the
‘person’ who has committed the
same. It would be unheard of in
criminal jurisprudence to make its
stockholders criminally responsible
for the corporation’s violation of
the statute. That corporation can
readily be reached and prosecuted
by the government, either civilly
or criminally, for what it may
have done in contravention of the
law, without requiring the courts,
by strained construction of the
statute, to extend its provisions
and make them embrace all par-
ties merely interested in such cor-
poration. Except in conspiracy
offenses, there is no criminality by
representation.” That officers and
directors are liable where they are
the actual, present and efficient ac-
tors in the commission of the of-
fense, sce United States v. Win-
slow, 195 Fed. 578; and United
States v. Patterson, 201 Fed. 697.
INDICTMENTS. 751

Appeals Act of March 2, 1907,*° the judgment'of a Federal
district court whose ruling sustaining a demurrer to an
indictment charging violations of the Sherman Act, was
based upon the construction of the statute, must accept the
district courts’ construction of the indictment, 'and can con-
sider only whether the decision that the acts charged are not
condemned as criminal by the statute when it is based upon
an erroneous construction of that statute.*

§ 404. Sufficiency of Evidence to Find Indictment.—‘‘In
your investigations you will receive only legal evidence, to
the exclusion of mere reports, suspicions and hearsay evi-
dence. Subject to this qualification, you will receive all the
evidence presented which may throw light upon the matter
under consideration, whether it tend to establish the inno-
cence or the guilt of the accused. And more, if in the course
of your inquiries you have reason to believe that there is
other evidence not presented to you within your reach,

4034 Stat. at Large, 1246, ch. Ct. 123; 53 L. Ed. 230, 244;

2504.

41 United States v. Patten, 226
U. S. 525; 33 Sup. Ct. 141; 57 L.
Ed. —; reversing 187 Fed. 664.
It was held that a judgment of
the District Court sustaining a de-
murrer to several counts in such
an indictment, upon the ground
that the acts charged were not
within the condemnation of the
Sherman Act, was based upon a
construction of that statute within
the meaning of the Act of March
2, 1907 (34 Stat. at Large 1246,
ch. 2564), governing the right of
the Government to a review in a
criminal case. See as to the prac-
tice, United States v. Bitty, 208
U. S. 393, 399; 28 Sup. Ct. 396;
52 L. Ed. 543; United States v.
Keitel, 211 U. S. 370, 398; 29 Sup.

United States v. Biggs, 211 U. 8S.
507, 518; 29 Sup. Ct. 181; 53 L.
Ed. 305; United States v. Mason,
213 U. S. 115, 122; 29 Sup. Ct.
480; 53 L. Ed. 725, 727; United
States v. Meseal, 215 U. S. 26, 31;
30 Sup. Ct. 19; 54 L. Ed. 77,79;
United States v. Stevenson, 215 U.
S. 190, 195; 30 Sup Ct. 35; 54
L. Ed. 153; United States v.
Heinze, 218 U. S. 532, 540; 31
Sup. Ct. 98; 54 L. Ed. 1139, 11438;
21 Am. Cas. 884; United States
v. Heinze, 218 U. 8. 547, 550; 31
Sup. Ct. 102; 54 TL. Ed. 1145,
1146; United States v. Kissel, 218
U. S. 601; 31 Sup. Ct. 124; 54
L. Ed. 1168, 1178; United States
v. Miller, 223 U. S. 509, 602; . 32
Sup. Ct. 323; 56 L. Ed. 568, 589.
752 THE SHERMAN ANTI-TRUST ACT.

which would’ qualify or explain away the charge under in-
vestigation, it will be your duty to order such evidence to
be produced. Formerly it was held that an indictment might
be found if evidence were produced sufficient to render the
truth of the charge probable. But a different and more just
and merciful rule now prevails. To justify the finding of
an indictment you must be convinced, so far as the evidence
before you goes, that the accused is guilty; in other words,
you ought not to find an indictment unless, in your judg-
ment, the evidence before you, unexplained and uncontra-
dicted, would warrant a conviction by a petit jury.’’ ”

§ 405. Plea in Abatement—Grand Jury.—In Federal
courts a plea in abatement in a criminal case may properly
raise the issue of fact as to what evidence was presented to
the grand jury.*®

§ 406. Review of Grand Jury Evidence on Motion to
Quash.—Except in states having statutes on the subject,
requiring indictments to be returned on ‘‘legal’’ or ‘‘com-
petent’’ evidence, the courts will not review the evidence
received by the grand jury for the purpose of passing on
its competency.**

§ 407. Grand Jury Giving Offense Charged a Wrong
Designation.—If the indictment charges acts constituting a
contract, combination or conspiracy in restraint of interstate
commerce, it is immaterial whether those acts are alleged to
constitute a contract, combination or conspiracy. ‘‘It makes
no difference what the grand jury labeled the offense.’’ *®

§ 408. Special Assistant Attorney Appearing Before
Grand Jury.—A special assistant to the district attorney

42 In re Grand Jury, 62 Fed. 840. 44 United States v. Swift, 186
43 United States v. Swift, 186 Fed. 1002.
Fed. 1002; Hale v. Henkel, 201 U. 45 United States v. Swift, 188
S. 43; 26 Sup. Ct. 370; 50 L. Ed. Fed. 92.
652. “e
INDICTMENTS. 753

appointed by the Attorney General can not appear before
and participate in the proceedings of a grand jury; and the
presence of such,an attorney specially appointed for a par-
ticular case and their examination of witnesses on whose
testimony an indictment is returned, renders it invalid.**

§ 409. Summons Issued to Another District for Corpo-
ration.—Section 716 of the Revised Statutes provides that
‘“‘The Supreme Court and the circuit and district courts
shall have power to issue writs of scire facias. They shall
also have power to issue all writs not specifically provided
for by statute, which may be necessary for the exercise of
their respective jurisdictions, and agreeable to the usages
and principles of law.’’*7 Upon an indictment under ‘the
Sherman Act the court has power by virtue of this section
to issue process to another district or state to bring before
it corporation defendants who are citizens of such district
or state and can not be found or served in the district or
state of the indictment.*®

§ 410. Removal of Defendant from One District to An-
other.—An order to remove a defendant from a district to
the district where he is indicted is not a mere ministerial
act on the part of the district judge, but is a judicial
function, including the exercise of a legal discretion upon
the papers presented in support of the application.*® In the
case just cited it was said:

“‘T can not agree to the proposition in the breadth claimed
for it in the present case. The provision devolves on a high
judicial officer of the government a useful and important

46 United States v.

107; 42 L. Ed. 507.

47 Same Section U. S. Comp. St.

1901, 580.

Virginia-
Carolina Chemical Co., 163 Fed.
66. See United States v. Cros-
thwaite, 168 U. S. 375; 18 Sup. Ct.

48 United States v. Virginia-
Carolina Chemical Co., 163 Fed.
66. Citing United States v. Stan-
dard Oil Co., 154 Fed. 728.

49 In re Buell, 3 Dill. 116.
754 THE SHERMAN ANTI-TRUST ACT.

duty. In a country of such vast extent as ours, it is not a
light matter to arrest a supposed offender, and, on the
mere order of an inferior magistrate, remove him hundreds,
it may be thousands of miles, for trial. The law wisely pro-
vides the previous sanction of the district judge to such
removal. Mere technical defects in an indictment should
not be regarded; but a district judge who should order the
removal of a prisoner when the only probable cause relied
on or shown was an indictment, and that indictment failed
to show an offense against the United States, * * * would
misconceive his duty, and fail to protect the liberty of the
citizen.’’*° If the defendant be arrested under a warrant
based upon an indictment in another district and is held
pending an application for a warrant of removal for trial,
the district court of the district in which he is arrested has
authority on habeas corpus to examine the indictment, and to
release him, if in its judgment the indictment would be

quashed on demurrer.*?

50 “Ordinarily, where an offense
charged was committed in the dis-
trict where one or more of the
several defendants reside, the trial
of the accused should be had in
the district of which he is or they
are inhabitants. Where an offense
has been committed in several dif-
ferent districts, and the accused
reside in other and different dis-
tricts, the government has a right
to elect in which one of the dis-
tricts the prosecution may be con-
ducted; and, under proper condi-
tions, may elect to prosecute them
in a district other than that in
which they or either of them re-
side. There may be exceptional
eonditions which would justify
prosecution in a district remote
from that in which any one of a
number of defendants resides, or
far remote from the district where

the principal business of the ac-
cused is conducted. But the spirit
of our laws is to indict and try
offenses in the district where the
defendants reside, if the offense
was committed in such district,
and if local influences anu preju-
dices are not too serious obstacles
to be overcome.” In re Corning,
51 Fed. 205.

51 In re Terrell, 51 Fed. 213. In
re Doig, 4 Fed. 193; United States
v. Brawner, 7 Fed. 86; United
States v. Rogers, 23 Fed. 658;
United States v. Fowkes, 49 Fed.
50; In re Pallisser, 136 U. S. 257;
10 Sup. Ct. 1034; 34 L. Ed. 514;
affirming 40 Fed. 575; Horner
v. United States, 143 U. 8.
207; 12 Sup. Ct. 407; 36 L. Ed.
126; In re Greene, 52 Fed. 104. In
the Terrell case it was said:
“There is good cause for holding
INDICTMENTS. 759

that this power should be exercised
liberally, whenever the judge be-
fore whom the questions are raised,
on application for a warrant of re-
moval, or on habeas corpus, is sat-
isfied, from the face of the in-
dictment, that were such indict-
ment before him for trial, and de-
murred to, he would quash it.
This is a country of vast extent,
and it would be « grave abuse of
the rights of the citizen if, when
charged with alleged offenses com-
mitted perhaps in some place he
had never visited, he were remoy-
able to a district thousands of
miles from his home, to answer to
an indictment fatally defective, on
any mere theory of a comity which
would require the sufficiency of the
indictment to be tested only in the
particular court in which it is
pending. Nor should the mere

novelty of the points raised be
held to preclude the court, before
which comes the question of re-
moval, from passing upon them,
when it has no doubt as to how it
would pass upon them if the cause
were pending before it, If the
questions are of such a character
that it is thought desirable that
the opinion of an appellate court
should be obtained, such a proceed-
ing as this is the more appropriate
way in which to raise them, for a
decision here adverse to the gov-
ernment. is reviewable by appeal;
but « similar decision on the trial
is final, as the government can
not appeal from a criminal judg-
ment. United States v. Sanges,
144 U. S. 310; 12 Sup. Ct. Rep.
609; 36 L. Ed. 445.” In re Ter-
rell, 51 Fed. 213.
CHAPTER XXII.

ACTION FOR DAMAGES.

SECTION,

411. Statute.

412. Constitutional.

413. Violation of statute must
cause damages.

414, Jurisdiction — Removal of
suit.

415. Where suit brought.

416. Action by way of set off.

417. Pleading—Action at law—
State practice followed.

418. Conspiracy, pleading—Dup-
licity.

419. Exhibits.

420. Motion to strike out parts
of complaint.

421. A civil and not a penal ac-
tion.

422. Plaintiffs—Municipality.
423. Parties defendant—Associa-
tion—Corporation.

424, Every member of combina-
tion liable.

425. Jury trial.

426. Burden.

427. Injunction to prevent injury.

428. Pendency of suit in state
court.

429. Intrastate trade involved.

430. Injury wholly within a state.

431. Conspiracy formed abroad.

432, Accord and satisfaction—
Settlement of suit in state
court bar to suit in Fed-
eral court—Attorney fees.

433. Statute of Limitations.

434. Continuing combination —

Preventing plaintiff enter-
ing into business.

756

SECTION.

435.

436.

437.

438.
439.

440.

441.
442.

443.

444.

445.

446.

447.

448.

Damages recoverable—Loss
of profits.

Treble damages — Attorney
fees—Practice.

Damages—Effect of combina-
tion to enhance price—
Plaintiff not engaged in
interstate business.

Right to rebates.

Injury by boycott—Effort of
combines to better their
condition—Evidence.

Conspiracy to control com-
peting corporation—Inter-
state commerce—Directors’
action.

Excessive railroad rates.

Freight rates unreasonable
—Conspiracy — Action of
Interstate Commerce Com-
mission.

Preventing embarking on
new enterprise.

Preventing pursuance of
business — Intention and
preparedness to engage jn
business.

Stockholder’s action to pre-
vent violation of Sherman
Act.

Stockholder’s right to sue
for damages to his corpor-
ation—Creditor.

Conspiracy to do unlawful
act in foreign country.

Enforcing illegal ordinance.
ACTION FOR DAMAGES. 157

§ 411. Statute—‘‘Sec. 7. Any person who shall be
injured in his business or property by any other person or
corporation by reason of anything forbidden or declared to
be unlawful by this act may sue therefor in any circuit court
of the United States in the district in which the defendant
resides or is found, without respect to the amount in
controversy, and shall recover threefold the damages by him
sustained, and the costs of suit, including a reasonable
attorney’s fee.’’

§ 412. Constitutional—tThis seventh section is constitu-
tional.

“There can be no doubt that Congress had power to give
an action for damages to an individual who suffers by
breach of the law. The damage complained of must almost
or quite always be damage in property, that is, in the
money of the plaintiff, which is owned within some
particular state. In other words, if Congress had power
to make acts which led to the damages illegal, it could
authorize a recovery for the damage although the latter was

suffered wholly within the boundaries of one state.’’ ?

126 Stat. at Large, 209 U. 8.
Comp. Stat. 3200, section 7. It
is not necessary that the plaintiff
and defendant be residents of dif-
ferent states at the time the ac-
tion arose nor when it is brought.
Chattanooga Foundry & Pipe
Works v. Atlanta, 203 U. S. 390;
27 Sup. Ct. 65; 51 L. Ed. 241.
See also 127 Fed. 23; 61 C. C.
A. 387, which reversed 101 Fed.
900. Since the Sherman Act was
adopted the Judicial Code has been
enacted which provides: “The Dis-
trict Court shall have original jur-
isdiction as follows: 22. Of all
suits and proceedings arising un-
der ‘any law to protect trade and
commerce against restraints and

monopolies”; 36 Stat. at Large
1091; 1 Fed. Stat. Am. Supp. 1912
p- 141.

2Chattanooga Foundry & Pipe
Works v. Atlanta, 203 U. S. 390;
27 Sup. Ct. 65; 51 L. Ed. 241; af-
firming 127 Fed. 29; 61 C. C. A.
387, which reversed 101 Fed. 900.
In the Circuit Court of Appeals
it was said: “If Congress had the
power to declare unlawful a com-
bination which was intended to re-
strain interstate commerce by
enhancing the value of a commod-
ity when the subject of interstate
commerce, it had the power to give
« compensatory remedy to any per-
son directly affected by the unlaw-
ful agreement.”
758 THE SHERMAN ANTI-TRUST AC1.

§ 413. Violation of Statute must Cause Damages.—An
essential element, upon which the plaintiff’s cause of action
is founded, is that the defendant’s acts in violation of the
Anti-Trust Act.caused his damages; ‘‘by violating a criminal
or penal statute a person, either natural or corporate, does
not render itself liable to be used by a private citizen unless
the unlawful conduct is the proximate cause of, or results
in, some special injury to the business or property of the
person bringing the action.’’*? It is the combination, or
conspiracy, to restrain or to monopolize interstate trade,
which is condemned, and if this be established an injury
“‘done to the business or property’’ of ‘‘any person,’’ by
reason thereof, constitutes a cause of action.* The cause
of action must be complete when the action is brought;
and the plaintiff is not entitled to buy in as defendant
corporations which have been organized after he brought this

action.®

§ 414, Jurisdiction—Removal of Suit.—The district court

of the district wherein
found’’ has jurisdiction to

him under section § seven.

3 Ware-Kramer Tobacco Co. v.
American Tobacco Co., 180 Fed.
160.

4 Ware-Kramer Tobacco Co. v.
American Tobacco Co., 180 Fed.
160. The court said: ‘Whether,
under the language of the statute,
the members of the illegal combi-
nation, or the conspiracy, may, in
the prosecution of their business,
resort to the legal methods open
to those who are living in obedi-
ence to the law, with immunity
from an action for injuries in-
flicted upon the business or prop-
erty of others—that is, resort to
fair competition—has not, so far

‘‘the defendant resides or is

entertain an action against

regardless of the amount

as the industry of counsel has re-
vealed, been decided. The position
of the plaintiff is that the unlaw-
ful combination and its members
are ‘outlaws’ and not within the
pale of the protection conferred
upon those who pursue a lawful
calling in a lawful way.” See
also Meeker v. Lehigh Valley R.
Co., 162 Fed. 354; affirmed, 183
Fed. 548; 106 C. C. A. 94; Mon-
arch Tobacco Co. v. American To-
baceo Co., 165 Fed. 774.

= Locker v. American Tobacco
Co., 197 Fed. 495. See Locker v.
American Tobacco Co., 194 Fed.
232.
ACTION FOR DAMAGES. 759

involved, and regardless of the citizenship of the
plaintiff. If the action be brought in a state court,
it may be removed to a Federal court of the

district wherein such state is situated.© But it has been
decided that a state court has no jurisdiction of a cause of
action under this statute.? The averments of the pleadings
purporting to give jurisdiction must be positive; and argu-
mentative inferences are insufficient.®

§ 415. Where Suit Brought.—The action must be brought
in the district where the defendant resides or is found.? If
not sued in such district the question of venue may be raised,
either by motion to set aside the service of process, or by
special demurrer if the non-residency appears on the face of
the complaint—if the service of process was not made in
that district—or by a special appearance made fer
that purpose only and made before pleading to the
merits, but the right is waived by filing a general
demurrer to the pleading. In the case of a corporation it
may be sued in any district in which ‘‘it is found,’’ and it is
‘‘found’ wherever there is some agent or representative of
it upon whom service of process may be made. In the case
of an action at common law for damages the action can only
be brought in the district where the defendant is an
““inhabitant,’’ and in case of a corporation where it is
incorporated. Therefore, if a cause of action under the Anti-
Trust Act be joined with one at common law to recover

6 Mannington v. Hocking Valley
Ry. Co., 183 Fed. 133.

7 Loewe v. Lawler, 130 Fed. 633.
The question of the jurisdiction of
the District Court, when not the
sole question determined, is re-
viewable by the Circuit Court of
Appeals under the Act of March
3, 1891, ch. 517 section 6, 26 Stat.
at Large 828, or a writ of error
brings up the whole case. Meeker
v. Lehigh Valley R. Co., 183 Fed.
552.

8 Strout v. United Shoe Co., 195
Fed. 313. A state court may pass
upon the question whether a con-
tract sued upon is in restraint
of trade and violative of the Sher-
men Act. First National Bank v.
Missouri Glass Co. (Mo. App.)
152'8. W. 378.

9Dueber Case Mfg. Co. v. C.
E. Howard Watch & Clock Co., 66
Fed. 637; 14 C. C. A. 14.
760 THE SHERMAN ANTI-TRUST ACT.

damages, and the action is brought in a district where the
defendant ‘‘resides’’ or is ‘‘found,’’ but not an ‘‘inhabitant,’’
the action at common law will be abated on proper presen-
tation of the question to the court.° But if some persons
who might be made parties defendants with those so made
reside in another district or are not found in the district
where the suit is brought, process cannot be sent to such
other district for them under the provisions of section five
of the Sherman Act, that section applying only to pro-
ceedings in a suit in equity brought by the United States.%*
Consequently if two persons, residing in different districts
have injured a third person by entering into a contract,
combination, conspiracy in restraint or monopoly of inter-
state trade, such third person may sue each of those two
persons in separate actions, and the plea of non-joinder will
be of no avail. The action to be brought to recover damages
is in the nature of a tort; and the action against each
defendant is a joint and several action at the option of the
injured person.??

§ 416. Action by Way of Set Off.—When sued for goods
sold him the defendant can not plead by way of set-off
or counter claim that he has been damaged by the plaintiff
by reason of the latter having violated the Sherman Act.
To recover damages under that Act the action must be
brought direct for that purpose.78

10 Ware-Kramer Tobacco Co. v.
American Tobacco Co., 178 Fed.
117. See 180 Fed. 160.

11 Greer, Mills & Co. v. Staller,
77 Fed. 1.

12 People’s Tobacco Co. v. Amer-
ican Tobacco Co., 170 Fed. 396,
408; 95 C. C. A. 566.

13 Connolly v. Union Sewer Pipe
Co., 184 U. S 540; 22 Sup. Ct.
432; 46 L. Ed. 679; affirming 99
Fed. 354. On this point the Su-
preme Court said: “ We shall not

attempt to declare the full scope
and meaning of that section of the
act of Congress. It is sufficient to
say that the action which it au-
thorizes must be a direct one, and
the damages claimed can not be
set off in these actions based upon
special contracts for the sale of
pipe that have no direct connection
with the alleged arrangement or
combination between the plaintiff
and other corporations, firms or
companies. Such damages can not
ACTION FOR DAMAGES. 761
§ 417. Pleading—Action at Law—State Practice Fol-
lowed.—An action to recover damages is a civil one at law
and not in equity.1* The procedure conforms, as near as
may be, to those rules prevailing at common law or in the
State Code of practice and pleading * according as to which
of the two prevails in the state where the district court is
sitting. But if the Supreme Court of the United States had
decided a question of practice, not based upon the local
practice, then its decisions control on that question.

“‘The elementary principle, upon which all modern codes
of pleading is based, requires the plaintiff, in his complaint
or declaration, to set forth ‘a plain and concise statement of
the facts constituting a cause of action without unnecessary
repetition.’ For a violation of this rule, the defendant may
move the court to strike out irrelevant and redundant matter.
While the courts will, in proper cases, grant such motion,
they usually permit a plaintiff to state his cause of action in
his own way, provided he avoids scandalous and indecent

matter. It is very difficult

be said, as a matter of law, to
have directly grown out of that
arrangement or combination, and
are, besides, unliquidated. Besides,
it is well settled in Illinois that
‘unliquidated damages arising out
of covenants, contracts or torts dis-
connected with plaintiff’s claim
can not be set off under the stat-
ute.’ Robinson v. Hibbs, 48 Ill.
408, 409, 410; Hawks v. Lands, 3
Gilm. 227, 232; Hubbard v. Rog-
ers, 64 Ill. 434, 437; Evans v.
Hughey, 76 Ill. 115, 120; Clause v.
Bullock Printing Press Co., 118
Ill. 612, 617; Dushane v. Benedict,
120 U. S. 630, 648. If the act of
Congress expressly authorized one
who purchased property from a
combination organized in violation
of its provisions to plead, in de-

to analyze a complaint and

fense of a suit for the price, the
illegal character of the combina-
tion, that would present an en-
tirely different question. But the
act contains no such provision.”

14 Meeker v. Lehigh Valley R.
Co., 162 Fed. 354; Southern In-
diana Exp. Co. v. United States,
88 Fed. 659; affirmed, 92 Fed.
1022; Pidcock v. Harrington, 64
Fed. 821; Gulf C. & S. F. Ry. Co.
v. Miami S. 8S. Co., 86 Fed. 407;
30 C. C. A. 142; Strout v. United
Shoe Machinery Co., 195 Fed. 313;
Buckeye Powder Co. v. E. C. Du
Pont, ete., Powder Co., 196 Fed.
514.

15 Connolly v. Union Sewer Pipe
Co., 184 U. S. 540; 22 Sup. Ct.
431; 46 L. Ed. 679; affirming 99
Fed. 354.
762 THE SHERMAN ANTI-TRUST ACT.
eliminate all matter which may, upon the trial, prove to be
immaterial or irrelevant without unduly restricting the
plaintiff’s right to ‘tell a connected story’ of his grievance.
The strict technical rules of pleading, the enforcement of
which so often delayed and frequently defeated justice, have
been abrogated by modern codes, or rules of court. It is,
however, an elementary rule of pleading which should always
be observed and enforced that facts, and not evidence,
should be alleged. The purpose of all pleading is to bring
the parties, at the earliest possible period, after the writ
is issued, to either the general issue or, when proper, to
specific issues of fact, the decision of which, by the jury,
will enable the court to determine and declare the legal right
and enforce the legal remedy. There are a number of causes
of action, or remediable wrongs, which, from their nature,
cannot be stated with sufficient definiteness to enable the
court to proceed without resorting to more than the usual
particularity of allegation.” 1°

The plaintiff in his declaration must aver not only facts
showing a contract or combination as the statute declares
unlawful, but he must show that he has thereby been injured
in his business, for mere proof that the defendant entered
into a contract, or engaged in a combination or conspiracy
in restraint of trade or commerce among the several states

16 Ware-Kramer Tobacco Co. v. may be unlawful. If that is left

American Tobacco Co., 178 Fed.
117, 121. Sce 180 Fed. 160; Mur-
ray v. McGarigle, 69 Wis. 483; 34
N. W. 522. “Conspiracy is an of-
fense which specifically demands
the application of that wise and
humane rule of the common law
that an indictment shall state,
with as much certainty as the na-
ture of the case will admit, the
facts which constitute the crime
intended to be charged. It is never
enough that the purpose or the
means are so described that they

uncertain, the indictment is fatally
defective. It must appear to the
court that, if the facts alleged are
proved as stated, without addition-
al fact, or circumstance, there can
be no doubt of the illegality of the
conduct charged, nor of its crim-
inality.”. Commonwealth v. Hunt,
4 Met. 126; 38 Am. Dee. 346;
Cilley v. United States Mac. Co.,
152 Fed. 726; Monarch Tobacco
Co. v. American Tobacco Co., 165
Fed. 774.
_ ACTION FOR DAMAGES. 763
or with foreign nations, will not be sufficient to support a
cause of action under the seventh section, for there must, in
addition thereto, be proof that the plaintiff, by reason
thereof, sustained damage.” In a particular instance the
petition alleged that the plaintiff was a manufacturer of
tobacco which it sold in interstate commerce, and then set
forth facts to show that the defendant conspired to render
its business unprofitable and ruin and destroy the same
through competing companies, which they secretly con-
trolled, by enticing away its workmen, by compelling it to
pay more than the normal price for leaf tobacco, and to
adopt unnecessary and expensive means to sell its products,
and that such conspiracy was carried out to the damage of
the plaintiff in a sum stated, and this was held to be a
sufficient complaint, it showing acts that constituted both a

17 Rice v. Standard Oil Co., 134
Fed. 464; Hale v. O’Connor Coal
& Supply Co., 181 Fed. 267; Strout
v. United Shoe Machinery Co., 195
Fed. 313. “The plaintiff must set
forth its own origin, character of
business, and other relevant mat-
ter, so that the court may see that
its business bears such relation to
the alleged unlawful character as
brings it within the provisions of
the statute. The final and essen-
tial allegation is, that ‘by reason
of’ the conduct of defendant in do-
ing the things forbidden, or de-
clared to be unlawful, it has been
injured in ‘its business or prop-
erty,’ and the character and ex-
tent of the damages.” Ware-
Kramer Tobacco Co. v. American
Tobacco Co., 178 Fed. 117, 124.
See 180 Fed. 160 Loewe v. Lawlor,
208 U. S. 274; 28 Sup. Ct. 301;
52 L. Ed. 488; People’s Tobacco
Co. v. American Tobacco Co., 170
Fed. 396; 95 C. C. A. 566. “The

evil at which this statute is aimed
is of national importance, and the
remedies provided for its punish-
ment and repression should not be
restricted by technical and narrow
rules of pleading. If the plain-
tiff in an intelligent way and by
a connected story sets forth his
grievance, he should not be turned
away from the court or his plead-
ing so mutilated, by striking out
more or less essential averments,
as to embarass him and unduly
limit the scope of his proof when
he comes to trial.” Ware-Kramer
Tobaceo Co. v. American Tobacco
Co., 178 Fed. 117, 125. See Ware-
Kramer Tobacco Co. v. American
Tobacco Co., 180 Fed. 160; Addy-
ston Pipe & Steel Co. v. United
States, 175 U. S. 211; 20 Sup. Ct.
96; 44 L. Ed. 136; affirming 85
Fed. 271; 54 U. S. App. 723; 29
c. ©. A. 141; 46 L. R. A. 122,
which reversed 78 Fed. 712.
764 THE SHERMAN ANTI-TRUST: ACT.

conspiracy to restrain interstate commerce and also an
attempt to monopolize it.* The complaint must show that
the plaintiff was engaged in interstate or foreign commerce
when he suffered the damages he seeks to recover; and an
averment that he was engaged in manufacturing a certain
product, out of which he claims damages arose, throughout
the United States and foreign countries is not a sufficient
statement that he was engaged in interstate commerce. Thus
where a complaint alleged an agreement by a number of
manufacturers and dealers in watch cases to fix an arbitrary
price on their goods, and not to sell them to any persons
buying watch cases of the plaintiff, without avering the
absorption or the intention to absorb or control the entire

market, or a large part thereof, was held bad.?®

18 People’s Tobacco Co. v. Ameri-
can Tobacco Co., 170 Fed. 396, 95
Cc. C. A. 566. In this case it was
said: “It is plain that the peti-
tion need only aver, and state facts
to show, that the defendants have
committed one or more of the of-
fenses condemned by the first and
second sections of the Act, that
the plaintiff is « person injured
within the meaning of the seventh
section, and the amount of dam-
ages it has sustained by such in-
jury. The complaint should be
construed to mean what it fairly
conveys by a fairly exact use of
English speech.” Ware-Kramer To-
bacco Co. v. American Tobacco Co.,
189 Fed. 160. In this case it was
also held that an allegation that
plaintiff has “reason to believe,”
and therefore “alleges,” etc., is suf-
ficient as to plaintiff’s knowledge
or upon “information and belief.”

19 Dueber Case Mfg. Co. v. E.
Howard Watch & Clock Co., 55
Fed. 851; affirmed, 66 Fed. 637;
14 C0. C. A. 14. The sound-

If the

ness of this decision that the
complaint must show that the
plaintiff was engaged, when dam-
aged, in interstate commerce may
well be doubted. Thus if the ar-
ticle has entered into interstate
commerce, and by reason of the
illegal conduct of the defendants
its price has been enhanced, so
that the plaintiff has been com-
pelled to pay a greater price for
the article than he would other-
wise have been compelled to pay,
even though he purchased it of a
local dealer, he would have a cause
of action; and yet he would not be
engaged in interstate commerce.
Atlanta v. Chattanooga Foundry
& Pipe Works, 127 Fed. 23; 61 C.
C. A. 387; reversing 101 Fed. 900;
affirmed, 203 U. 8. 390; 27 Sup.
Ct. 65; 51 L. Ed. 241. See also
Montague & Co. v. Lowry, 193 U.
S. 38; 24 Sup. Ct. 307; 48 L. Ed.
608; affirming 115 Fed. 27; 61
C. C. A. 387; 63 L. R. A. 58;
which affirmed 106 Fed. 38 and
98 Fed. 817.
ACTION FOR DAMAGES.

765

complaint fails to show that the plaintiff has been damaged,

it is fatally defective.?°

20 Gibbs v. McNeeley, 102 Fed.
594. Verdict directed for defend-
ant 107 Fed. 210; but reversed
118 Fed. 120; 55 C. C. A. 70. An
allegation generally of damages is
sufficient to recover treble dam-
ages; Monarch Tobacco Co. v.
American Tobacco Co., 165 Fed.
774. A complaint which alieges
that the defendant corporation
was formed to suppress competi-
tion in shoe machinery; that, in
pursuance of the plan, its officers,
co-defendants, acted in combina-
tion and conspiracy in restraint of
plaintiff’s trade; that the trade to
be restrained was interstate; that
enumerated things were done by
the corporation and its officers to
attain such restraint of plaintiff’s
trade; that thereby competition
was destroyed and the monopoly
of the corporation sustained, and
that plaintifi’s property and busi-
ness was injured thereby in a cer-
tain amount, states a cause of ac-
tion under the Sherman Act.
Strout v. United Shoe Machinery
Co., 195 Fed. 318, The above case
also holds that the averments of
the pleadings purporting to give
jurisdiction must be positive, and
argumentative inferences are insuf-
ficient. The facts may be stated
in narrative form showing a
scheme, or plan of combination,
which, as a whole may constitute
an unreasonable or undue restraint
of trade, within the meaning of
the Act. Strout v. United Shoe
Machinery Co., 202 Fed. 602; Cil-
ley v. United Shoe Machinery Co.,
202 Fed. 598. These last two

cases also hold that it is not nec-
essary that the complaint set forth
in one or more counts the separate
thing or things declared to be un-
lawful by the Act. A charge in
a single count that the defendant
was an illegal combination in re-
straint of trade, and that by rea-
son of conspiracy and monopoly it
had practically monopolized the
entire business of manufacturing
shoe machinery in the United
States, and had utterly destroyed
plaintiff’s interstate trade and
commerce in such machinery and
rendered his patents valueless is
not objectionable for difficulty and
uncertainty on the theory that each
one of the things forbidden in sec-
tions one and two are distinct of-
fenses and should be charged in
separate courts. Cilley v. United
Shoe Machinery Co., 202 Fed. 598.
The plaintiff must allege that the
defendant committed at least one
of the offenses declared unlawful
by sections 1 ana 2. by either en-
tering into a contract combination
or conspiracy in restraint of inter-
state or foreign commerce, or by
monopolizing or attempting to
monopolize or entering into a con-
spiracy to monopolize such com-
merce, in clear and unambiguous
language and with reasonable cer-
tainty that the defendant and the
court may be apprised of the al-
leged cause of action. But he need
not set out his cause of ac-
tion in the complaint with
that degree of nicety and pre-
cision in stating times, places,
methods and persons required by
‘766 THE SHERMAN ANTI-TRUST ACT.
§ 418. Conspiracy, Pleading—Duplicity—What is suf-

ficiently definite for a complaint in an action for a

conspiracy has thus been very satisfactorily stated:

‘The elementary principle, upen which all modern codes
of pleading is based, requires the plaintiff, in his complaint
or declaration, to set forth ‘a plain and concise statement of
the facts constituting a cause of action without unnecessary
repetition.’ For a violation of this rule, the defendant may
move the court to strike out irrelevant and redundant
matter. While the courts will, in proper cases, grant such
motion, they usually permit a plaintiff to state his cause
of action in his own way, provided he avoids scandalous and
indecent matter. It is very difficult to analyze a complaint
and eliminate all matter which may, upon the trial, prove to
be immaterial or irrelevant without unduly restricting the
plaintiff’s right to ‘tell a connected story’ of his grievance.
The strict technical rules of pleading, the enforcement of
which so often delayed and frequently defeated justice, have
been abrogated by modern codes, or rules of court. It is,
however, an elementary rule of pleading which should
always be observed and enforced that facts, and not evidence,
should be alleged. The purpose of all pleading is to bring
the parties, at the earliest possible period, after the writ is
issued, to either the general issue or, when proper, to
specific issues of fact, the decision of which, by the jury,
will enable the court to determine and declare the legal
right and enforce the legal remedy. There are a number of
causes of actions, or remediable wrongs, which, from their
nature, cannot be stated with sufficient definiteness to enable

the ordinary rules of the common
law pleading; for to require that
would be to nullify the beneficent
purpose of the statute; and a
complaint will not be stricken out
though it may contain some state-
ments of a general or indefinite
character, if it sets out with rea-
sonable certainty and definiteness
the causes which resulted in plain-

tiff’s injury and connects the de-
fendants therewith. Any defend-
ant deeming himself prejudiced by
such generality of pleading may
move for a bill of particulars.
Buckeye ‘Powder Co. v. E. DuPont
DeNemours Powder Co., 196 Fed.
514. This case contains the com-
plaint in full,
ACTION FOR DAMAGES. 767
the court to proceed without resorting to more than the
usual particularity of allegation.’’?! Chief Justice Shaw,
in a leading case, has thus discussed what is necessary to
allege in a criminal action for a conspiracy:

“‘Conspiracy is an offense which specifically demands the
application of that wise and humane rule of the common law
that an indictment shall state, with as much certainty as
the nature of the case will admit, the facts which constitute
the crime intended to be charged.

“It is never enough that the purpose or the means are so
described that they may be unlawful. If that is left
uncertain, the indictment is fatally defective. It must
appear to the court that, if the facts alleged are proved as
stated, without any additional fact, or circumstance, there
can be no doubt of the illegality of the conduct: charged,
nor of its criminality.’’°? And Chief Justice Fuller has
said this concerning the sufficiency of the allegations for an
indictment :

“‘The general rule in reference to an indictment (for
conspiracy) is that all the material facts and circumstances
embraced in the definition of the offense must be stated, and
that, if any essential element of the crime is omitted, such
omission cannot be supplied by intendment or implication.
The charge must be made directly, and not by implication,
or by way of recital.’’?? A declaration alleging a con-

21 Murray v. McGarigle, 69 Wis. not set forth the elements of the

483; 34 N. W. 522; quoted with
approval in Ware-Kramer Tobacco
Co. v. American Tobacco Co., 178
Fed. 117, 122.

22Commonwealth v. Hunt, 4
Met. 126; 38 Am. Dec. 346; State
v. Parker, 43 N. H. 85.

23 Pettibone v. United States,
148 U. S. 197; 13 Sup. Ct. 542;
37 L. Ed. 419. “Under the Act of
July 2, 1890, it is not sufficient to
frame the declaration in the words
of the statute. The statute does

offenses which are forbidden; and,
further, there may be contracts in
restraint of trade between the
states or with foreign countries,
and attempts to monopolize such
trade or commerce which are not
within the statute. These cireum-
stances made it imperative that
the substance of the contracts in
restraint of trade, or the substan-
tial facts which constitute the at-
tempt to monopolize, should be set
forth in the declaration.” Swift
768 THE SHERMAN ANTI-TRUST ACT.

spiracy to monopolize interstate commerce in certain articles
is not bad for duplicity because it also alleges the making
of contracts and combinations, where they are but steps in
such conspiracy.**

§ 419. Exhibits—Exhibits containing merely evidence
cannot be resorted to sustain the complaint. Nor can
exhibits be used or resorted to that are irrelevant to the
issues made.?®

§ 420. Motion to Strike Out Parts of Complaint.—A
motion to strike out irrelevant and redundant matter cannot
be resorted to for the purpose of trying the question of the
sufficiency of the complaint; that can be done only by a
demurrer. ‘‘If the complaint sets out no more than is
required to sustain the action, such matter cannot be said
to be irrelevant or redundant, although there may be, inter-
mingled with the essential allegations, expressions and
language not, strictly speaking, necessary.’’ Although by
critical analysis some allegations in a complaint may seem
irrelevant or redundant, yet if striking them out would

& Co. v. United States, 196 U. S.
375; 25 Sup. Ct. 276; 49 L. Ed.
518; modifying 122 Fed. 529. “It
is uniformly held that, in order
to recover, the plaintiff must al-
lege that the defendants have
formed a conspiracy, or combina-
tion, in restraint of trade, or, if
there be but one defendant whose
acts are made the basis of the ac-
tion, that it is of itself such a
combination, within the purview of
the Act. To do this it is not only
proper, but necessary to set forth
fully the origin, character of de-
fendant, its history, in regard to
the alleged unlawful conduct,
growth, methods of business in the
respect complained of, and its com-

bination with the other persons
or corporations involved, ete. It is
only in recent years that actions
of this character have found their
way into the courts.” Ware-
Kramer Tobacco Co. v. American
Tobacco Co., 178 Fed. 117, 123.
See 180 Fed. 160, as said by Mr.
Justice Holmes: “They present a
new problem in pleading.” See
also Strout v. United Shoe Ma-
chinery Co., 195 Fed. 313.

24 Buckeye Powder Co, v. E, I.
DuPont de Nemours Powder Co.,
196 Fed. 514.

25 Ware-Kramer Tobacco Co. v.
American Tobaceo Co, 178 Fed.
117. See 180 Fed. 160.
ACTION FOR DAMAGES. ‘769

endanger the structure upon which the plaintiff’s cause of
action is founded, the motion to strike them out will be
denied. But matters purely evidentiary or clearly irrele-
vant should be stricken out on motion, especially if such
action will not endanger the complaint.?¢

Upon a motion to strike out a complaint because so
defective in form as to prejudice a fair trial of the cause,
the court will notice and strike out objectionable parts,
although not directly challenged, where necessary to a proper
disposition of the motion.2*7 If a conspiracy be charged
among a large number of persons and corporations named,
only those who are served with process, where service of
process precedes the filing of the complaint, should be declared
against as defendants, and the naming of all as defendants
in the complaint, together with general references to the
defendants, without specifically naming those referred to,
constitutes a defect which will be corrected by the court on
a motion to strike out the pleading.**

§ 421. A Civil and Not a Penal Action.—An action to
recover damages under the Act is a civil and not a penal
action—a civil action for a private injury, compensatory
in its purpose and effect.2°. On this point a Cireuit Court
of Appeals has said:

“The remedy is not given to the public, for no one may
bring the action save the person ‘who shall be injured,’ etc.,
and the recovery is for the sole benefit of the person so
injured and suing. It is not reasonable to construe the
remedy so conferred as a penal action, for that would be to
add to the punishment by fine or imprisonment imposed by

26 Ware-Kramer Tobacco Co. v. 29 Atlanta v. Chattanooga Foun-
American Tobacco Co., 178 Fed. dry & Pipe Co., 101 Fed. 900; re-
117. See 180 Fed. 160. versed, but not on this point, 127

27 Buckeye Powder Co. v. E. I. Fed. 23; 61 C. C. A. 387. The
Du Pont de Nemours Powder Co., decision of the Circuit Court of
196 Fed. 514. Appeals was affirmed 203 U. S.

28 Tbid. 390; 51 L. Ed. 241; 27 Sup. Ct.

65.
770 THE SHERMAN ANTI-TRUST ACT.
the other sections of the act an additional punishment by
way of pecuniary penalty. The plain intent is to compensate
the person injured. True, the compensation is to be three
times the damage sustained. But this enlargement of the
compensation is not enough to constitute the action a penal
action.’’ *°

§ 422. Plaintiffs—Municipality—The person damaged is
the person to bring the action for damages. If two or more
suffer a joint damage they must join in the action, or a
lawful excuse be alleged for lack of such joinder. A failure
for all parties suffering the joint damage to join will be
fatal to the action. A municipality damaged may maintain
an action under the statute the same as an individual; as
where it has been forced to pay a price for pipe higher than
what it is reasonably worth by reason of the illegal com-
bination.*?

A receiver of a corporation may maintain an action to
recover damages for his corporation; but a mere chancery
receiver, having no title to the assets or to the claim sued
on, cannot.*?

§ 423. Parties Defendant—Association—Corporation.—
All the directors of an unincorporated association are neces-

s0“The whole subject of penal
and compensatory actions has been
so thoroughly considered in Hun-
tington v. Attrill, 146 U. 8. 657;
13 Sup. Ct. 224; 36 L. Ed. 1123,
reversing 70 Md. 191; 2 L. R.
A. 779; 14 Am. St. 364; 16 Atl.
351 and Brady v. Daly, 175 U. 8.
148; 20 Sup. Ct. 62; 44 L. Ed.
109; affirming 83 Fed. 1007; 28
C. C. A. 253; 51 U. S. App. 621,
as well as by the very full and
able opinion of Judge Clark in the
court below in disposing of a de-
murrer to a plea, that we feel we
can add nothing to the subject.”

See also Monarch Tobacco Co. v.
American Tobacco Co. 165 Fed.
774 and Strout v. United Shoe Ma-
chinery Co., 195 Fed. 313; Buckeye
Powder Co. v. E. I. DuPont De
Nemours Powder Co., 196 Fed. 514.

31 Chattanooga Foundry & Pipe
Works y. Atlanta, 203 U. S. 390;
27 Sup. Ct. 65; 51 L. Ed. 241; af-
firming 127 Fed. 23; 61 C. ©. A.
387, which reversed 101 Fed. 900.
Section 8 of the Sherman Act un-
der the term “person” includes a
municipality.

32 Strout v. United Shoe Ma-
chinery Co., 195 Fed. 318.
ACTION FOR DAMAGES. T71

sary parties to a suit arising out of contractual relations,
even though a less number are authorized by the association
to transact business.** But officers of a corporation who
personally took no part in the formation of the illegal com-
bination, are not proper parties defendant in an action for
an injunction under the act.*t Nor are mortgages of the
trust property.**

The state is a necessary party in an action against the
officials of the state to recover damages for acts done under
the authority of a state statute, which gives the state an
entire monopoly of the traffic in intoxicating liquors.**

Where three district associations entered into a tri-partate
illegal agreement for the purpose of maintaining prices of
proprietary medicines, and adopted plans and methods for
carrying it into effect by preventing retailers who cut
medicines from obtaining medicines; and subsequently to
forward the same general purpose, the retailers’ association,
one of the three associations, proposed further plans and
methods far more drastic, under which such price cutters
were prevented from obtaining any druggist’s supplies, the
plans not being adopted by the other two associations, but
were assented to by some of their members individually upon
direct appeal but not by others, it was held that the two
combinations were separated and distinct, and that a party
to the first, who did not become a party to the second, was
not bound thereby, and could not be joined as a defendant
with the other defendants, who were parties only to the
second agreement, nor was the latter admissible in evidence
against him.%”

Where several brewing companies forming a trust were
charged by complainants in a bill in equity, retail dealers

33 Greer, Mills & Co. v. Stoller, 35 United States v. Du Pont, ete.
77 Fed. 1. Co., 188 Fed. 155.
34 United States v. Standard 36 Lowenstein v. Evans, 69 Fed.

Mfg. Co., 191 Fed. 194; affirmed, 908.

226 U. S. 20; 33 Sup. Ct. 9; 57 37 Jayne v. Loder, 149 Fed. 21;

L. Ed. 78 C. C. A. 653; reversing 142 Fed.
1010.
772 THE SHERMAN ANTI-TRUST ACT.

in mult liquors, with having entered into a conspiracy to
compel another company to join such association or trust,
and such trust was held to be in restraint of trade,
individuals who were officers of a labor union, and who
were charged with attempting to procure its members to
leave the employment of the company unless it would agree
to enter such association were held equally within the
scope of the remedy by injunction sought to prevent injury
to the complainants through the execution of the conspiracy
entered into by their co-defendants.*

§ 424, Every Member of Combination Liable.—Every
member of the combination is liable for damages resulting
to the business or property of the plaintiff by reason of the
combination, and it is immaterial that there were no direct
contract relations between him and the defendant.*®

§ 425. Jury Trial.—As the action is one at law the parties
are entitled to a jury trial.”

a8 Leonard v. Abner-Drury Brew-
ing Co., 25 App. D. C. 161.

29 Atlanta v. Chattanooga Foun-
dry & Pipe Works, 127 Fed. 23;
61 ©. ©. A. 387; reversing
10) Fed. 900, and — affirmed
by Supreme Court 203° UL. 8.
390; 27) Sup. Ct. 65; 51
LL. Kd, 241, The Cireuit Court of
Appeals said on this point: “We
lave, then, a direct action by this
plaintiff against two of the mem-
hers of this unlawful combine.
That there was no purchase made
direct. from cither of them is of
no importance. Their guilt is as
great as that of the Alabama cor-
poration from whom the plaintiff
did buy its pipe. If the agree-
ment between the defendants and
their associates was unlawful and
tortious, each is responsible for the

torts committed in the course of
the illegal combination. These de-
fendants have themselves partici-
pated in the benefits resulting from
the bonus paid by the Alabama
member of the association, and
have no ground to complain. that
they have been alone sued.” Where
two parties are jointly responsible
to a third party for one wrong,
while the wronged party may sue
either or both, and recover judg-
ments against either or both, he
can have but one satisfaction for
the same wrong. Clabaugh v.
Southern Wholesale Grocers As-
s’n, 181 Fed. 706.

40 Meeker v. Lehigh Valley R.
Co., 162 Fed. 354; affirmed 183
Fed. 548; 106 ©. ©. A. 94; suffi-
cient evidence to send case to
jury, Hale v. Hatch, 204 Fed. 433.
ACTION. FOR DAMAGES. 173

§ 426. Burden.—The burden in on the plaintiff to prove
the unlawful combination or conspiracy on the part of the
defendants, or some of them, or that they took part therein;
that their acts were injurious to the plaintiff, and the extent
of his damages.‘

To support an action plaintiff need only allege and prove
that his business or property had been in some way injured
by reason of the defendant’s illegal scheme.*?

§ 427. Injunction to Prevent Injury.—While a private
person may not maintain an acticn under section four to
prevent a monopolization of interstate commerce, yet he
may maintain a suit in equity in the Federal court for an
injunction when he has sustained a special injury, the
injury being a continuing one, where, by reason of diverse
citizenship, the court has jurisdiction of the suit.**

§ 428. Pendency of Suit in State Court.—The pendency
of a suit in a state court is no bar to an action in the
District Court of the United States to recover damages under
section seven, for the state court is without jurisdiction to
enforce the remedy given by that section, and therefore the
same case cannot be pending in both courts.*#

§ 429. Intrastate Trade Involved.The fact that the
interstate trade or commerce is so blended with intrastate
trade or commerce as to be inseparable will not defeat the

41 Loder v. Jayne, 142 Fed. 1020,
reversed, but not on this point;
149 Fed. 21; 78 C. C. A. 653.

42 Monarch Tobacco Co. v. Amer-
ican Tobacco Co., 165 Fed. 774;
Buckeye Powder Co. v. E. I. Du
Pont de Nemours Powder Co, 196
Fed. 514; Hale v. Hatch, 204 Fed.
433.

43 Bigelow v. Calumet &. Hecla
Mining Co., 155 Fed. 869; affirmed,
167 Fed. 721; C. C. A. See 167

Fed. 704. See Metcalf v. Ameri-
ean School Furniture Co., 108 Fed.
909; affirmed, 113 Fed. 1020; 94
Cc. C. A. 13. Amended bill dis-
missed, 122 Fed. 115.

44Loewe v. Lawlor, 130 Fed.
633. The pendency of a suit in a
state court to recover damages
not based on the statute, is not a
bar on the same cause of action in
a Federal court.: Robinson v. Sub-
urban ‘Brick Co. 127 Fed. 804.
774 THE SHERMAN ANTI-TRUST ACT.

action for damages, although part of the damages are
incurred in intrastate trade. Thus an association of
manufacturers of and dealers in tiles, mantels and grates
was formed in California. The dealers agreed not to
purchase materials from manufacturers who were not
members and not to sell unset tiles to any one not members
for less than listed prices, which were fifty per cent. higher
than prices to the members. The manufacturers, who were
non-residents of California, agreed not to sell to any one
except a member of the association, Violations of the
agreement rendered the members subject to a forfeiture of
his membership. Membership in the association was pre-
scribed by rules and dependent on conditions, one of which
was the carrying of at least three thousand dollars worth of
stock; and whether applicants were admitted was a matter
for the arbitrary decision of the association. A firm of
dealers in tiles, mantels and grates in San Francisco, whose
members had never been asked to join the association, and
who had never applied, and which did not always carry
three thousand dollars worth of stock, brought suit to
recover damages; and it was held that although the sales of
unset tiles were within the State of California, yet consti-
tuted a very small portion of the trade involved, the agree-
ment of the manufacturers outside the state not to sell to
any one except members was part of a scheme which included
the enhancement of the price of unset tiles by the dealers
within the state and that the whole thing was so bound
together that the transactions within the state were insepar-
able and became a part of a purpose which when carried
out amounted to, and was, a combination in restraint of
interstate trade and commerce; and that the plaintiffs
were entitled to recover threefold damages with attorney’s
fees.*®

45 Montague v. Lowry, 93 U. S. 38 and 98 Fed. 817. See also
38; 24 Sup. Ct. 307; 48 L. Ed. Bishop v. American Preserves Co.,
608; affirming 115 Fed. 27; 52 C. 105 Fed. 845,

C. A. 621; which affirmed 106 Fed.
ACTION FOR DAMAGES. 775

§ 430. Injury Wholly Within a State.—If the combina-
tion results in raising the market price of an article beyond
what it would have been under natural competitive condi-
tions, then there is an injury to the business in that line,
and a violation of the statute has occurred if the article has
passed into interstate commerce; and it matters not that it
has reached its destination and become a part of the mass
of the property within the state. The person thus injured
has a right of action against one or all of those to the
combination because of the enhanced price he has been
compelled to pay.*®

§ 431. Conspiracy Formed Abroad.—If a combination or
conspiracy be formed in a foreign country which effects
foreign commerce with this country, any one damaged by
reason of such combination or conspiracy may maintain an
action in this country to recover damages.*”

§ 432. Accord and Satisfaction—Settlement of Suit in
State Court Bar to Suit in Federal Court—Attorney Fees.—
A plaintiff began an action in a state court against the
president of an wholesale grocer’s association to recover
damages for a wrongful interference with his business.
Afterwards he began an action in a Federal court against
the association to recover damages for the same injury,
alleged to have been caused by a conspiracy in restraint of
trade, in violation of the Anti-Trust Act; and pending the
action in the Federal court he settled the action in the state
court and received the amount of money agreed upon as
damages. It was held that this payment was an accord and
satisfaction of his entire claim and a bar to the action in the

46 Atlanta v. Chattanooga Foun- 47 Thomsen v. Union Castle Mail
dry & Pipe Works, 127 Fed. 28; 8. S. Co., 166 Fed. 251; 92 C. C.
61 C. C. A. 387; reversing, 101 A. 315; reversing 149 Fed. 933.
Fed. 900; affirmed, 203 U. S. 390;

27 Sup. Ct. 61; 51 L. Ed. 241.
776 THE SHERMAN ANTI-TRUST ACT.

Federal court, and that, he was not entitled to recover
threefold damages or attorney fees.**

§ 433. Satute of Limitations.—Section 1047 of the Revised
Statutes of the United States providing a five years’ limita-
tion ‘‘for a suit or prosecution for any penalty or forfeiture,
pecuniary or otherwise, accruing under the laws of the
United States’’ has no application to an action to recover
damages under section seven of the Sherman Act, for sueh
an action is a civil action and not a penal one. But the state
statute of limitations does apply.”

§ 484. Continuing Combination—Preventing Plaintiff
Entering Into Business.—If the combination in restraint of
trade be a continuing one, it is not material to the plaintiff’s
right to recover damages thereby sustained, whether it was
entered into before or after the plaintiff commenced
business, it being equally unlawful to prevent a person from
engaging in business as to drive him out of business.®

§ 435. Damages Recoverable—Loss of Profits.—Only
actual damages can be recovered. ‘‘Those that are specula-
tive, remote, uncertain, may not form the basis of a lawful
judgment.

“The actual damages which will sustain a judgment must
be established, not by conjectures or unwarranted estimates
of witnesses, but by facts from which their existence is
logically and legally inferable. The speculations, guesses,
estimates of witnesses, form no better basis of recovery than
the speculations of the jury themselves. Facts must be
proved, data must be given which form a rational basis for

48 Clabaugh v. Southern Whole- Affirmed, 203 U. S. 390; 27 Sup.
sale Grocers’ Ass’n, 181 Fed. 706. Ct. 61; 51 L. Ed. 241.

49 Atlanta v. Chattanooga Foun- _ 50Thomsen v. Union Castle S. §.
dry & Pipe Works, 127 Fed. 23; Mail Co., 166 Fed. 251; 92 C. C.
61 C. C. A. 387; reversing 101 A. 315; reversing 149 Fed. 933.
Fed. 900, but not on this point.
ACTION FOR DAMAGES. TTT

a reasonably correct estimate of the nature of the legal
injury and of the amount of the damages which resulted
from it, before a judgment of recovery can be lawfully
rendered. These are fundamental principles of the law of
damages. Now, the anticipated profits of a business are
generally so dependent upon numerous and uncertain con-
tingencies that their amount is not susceptible of proof
with any reasonable degree of certainty; hence the general
rule that the expected profits of a commercial business are
too remote, speculative, and uncertain to warrant a judg-
ment for their loss.*t There is a notable exception to this
general rule. It is that the loss of profits from the
destruction or interruption of an established business may
be recovered where the plaintiff makes it reasonably certain
by competent proof what the amount of his loss actually
was. The reason for this exception is that the owner of a
long-established business generally has it in his power to
prove the amount of capital he has invested, the market
rate of interest thereon, the amount of the monthly and
yearly expenses of operating his business, and the monthly:
and yearly income he derives from it for a long time before,
and for the time during the interruption of which he
complains. The interest upon his capital and the expenses
of his business deducted from its income for a few months
or years prior to the interruption produce the customary
monthly or yearly net profits of the business during that
time, and form a rational basis from which the jury may
lawfully infer what these profits would have been during
the interruption if it had not been inflicted. The interest
on the capital and the expenses deducted from the income

51 Howard v. Stillwell& B.Man- 411; Trust Co. v. Clark, 92 Fed.
ufacturing Co., 139 U. S. 199, 206; 292, 296, 298; 34 C. C. A. 354,
11 Sup. Ct. 500; 35 L. Ed. 147; Cin- 357, 359; Simmer v. City of St.
cinnati Siemens-Lungren Gas Il- Paul, 23 Minn. 408, 410; Griffin
luminating Co. v. Western Sie- v. Colver, 16 N. Y. 489, 491; 69
mens-Lungren Co., 152 U. S. 200 Am. Dee. 718.

205; 14 Sup. Ct. 523; 38 L. Ed.
778 THE SHERMAN ANTI-TRUST ACT.
during the interruption show what the income actually was
during this time; and this actual net income, compared
with that which the jury infers from the data to which
reference has been made the net income would have been
if there had been no interruption, forms a basis for a
reasonably certain estimate of the amount of the profits
which the plaintiff has lost. One, however, who would
avail himself of this exception to the general rule, must
bring his proof within the reasons which warrant the
exception. He who is prevented from embarking in a new
business can recover no profits, because there are no provable
data of past business from which the fact that anticipated
profits would have been realized can be legally deduced."
And one who seeks to recover for the loss of the anticipated
profits of an established business without proof of the
expenses and income of the business for a reasonable length
of time before as well as during the interruption is in no
better situation. In the absence of such proof, the profits
he claims remain speculative, remote, uncertain, and
ineapable of recovery.’’

The burden is on the plaintiff to show some real actual
damage to his business by reason of the alleged unlawful
combination. Thus where the plaintiff claimed $5,000 com-
pensation to himself for extra work claimed to have been
required by reason of an unlawful combination, but failed

52] Sedg. Dam. § 183; Red v.
City Council, 25 Ga. 386; Kenny
v. Collier, 79 Ga. 743; 8 S. HE. 58;
Greene v. Williams 45 Ill. 206;
Hair v. Barnes, 26 Ill. App. 580;
Morey v. Light Co., 38 N. Y. Sup.
Ct. 185.

58 Central Coal & Coke Co. v.
Hartman, 111 Fed. 96; 49 C. C. A.
244, In this case the plaintiff tes-
tified that the acts of the defend-
ant had greatly diminished his
business, prevented him from mak-
ing contracts for future delivery
of coal, and diminished his sales

from 15 to 20 car loads per month,
on which he would made a profit
of from $12 to $20 per car; that
he could not tell what the volume
of his business was before or after
the acty complained of, and that
he had no books or papers which
would show this fact. He pro-
duced no evidence of the expense
or income of his business before or
after the acts complained of. It
was held that the evidence was in-
sufficient to sustain a verdict for
damages for the loss of anticipated
profits.
ACTION FOR DAMAGES. 779
to show how much additional time he was required to spend
in his business after the combination went into effect, it
was held that he was not entitled to recover for such alleged
extra services.°* By reason of an unlawful combination
plaintiff was compelled to conduct his business at a greater
loss, though it was greater in volume, and by reason of the
injury he received a less percentage of return; it was held
that he was entitled to recover such additional cost, though
by reason of his increased efforts and the natural increase
of his business he was enabled to withdraw from the business
for his personal services an amount equal to, or larger than,
he drew from the business before the conspiracy became
operative.*®

§ 436. Treble Damages—Attorney Fees—Practice.——The
jury find the actual damages the plaintiff has suffered, and
the court renders a judgment for three times that amount.”
But the court fixes the amount of the attorney fees, upon

54 Loder v. Jayne, 142 Fed. 1010.
See 149 Fed. 21.

55 Ibid. The plaintiff claimed he
had to put $10,000 extra capital
into his business from rents of his
building, which were collected
from time to time, but on cross-
examination he testified that the
payments of interest and taxes on
the building were in excess of the
amount paid into the business, and
it was held that he was not en-
titled to recover interest on such
alleged additional capital, Ibid.
The damages are merely compen-
satory, except when trebled, when
they are exemplary. Strout v.
United Shoe Machinery Co., 195
Fed. 313.

56 Chattanooga Foundry & Pipe
Works v. Atlanta, 203 U. S. 390,
395; 27 Sup. Ct. 65; 51 L. Ed.
241; affirming 127 Fed. 29; 61 C.
C. A. 387, which reversed 101 Fed.

900; Lawlor v. Loewe, 187 Fed.
522; 109 C. C. A. 288. “There
is one other thing which I
should have said. The Act
of Congress under which this
suit is brought provides for
the recovery, not of single damages,
but three-fold damages; but the
construction of that Act by the Su-
preme Court in the case of Mon-
tague & Co. v. Lowry, 193 U. S.
38; 24 Sup. Ct. 307; 48 L. Ed.
608; affirming 115 F. W. 27; 52
Cc. C. A. 621; 63 L. R. A. 58,
is to the effect that three-fold dam-
ages are only recoverable when
the plaintiff has a cause of action
that would entitle the jury to
award single damages. In other
words, the function of the jury is
to only render a judgment for ac-
tual damages, and the court then
triples them; but if there is noth-
ing to go to the jury for single
780: THE SHERMAN ANTI-TRUST ACT.
proof made of their value, yet the amount is really within
the discretion of the trial court, reasonably exercised; and
the case will not be reversed on appeal because of the amount
allowed, unless there is an abuse of such discretion.*”

§ 437. Damages—Effect of Combination to Enhance Price
—Plaintiff Not Engaged in Interstate Business.—If the effect
of a combination be to enhance the price of an article, then
the purchaser may recover the difference between the price
paid and the reasonable price under natural competitive
conditions, as an injury to his business, whether such
business was interstate or not, if the transaction by which
the purchase was made was interstate.

“Tf the effect of a combination to enhance the price of a
commodity which is the subject of interstate commerce be
to restrain such commence, within the meaning of the law
of Congress, by reason of its tendency to affect the volume
of such trade, then the effect upon the business -of one who
has paid the enchneed price in an interstate transaction, must
be to correspondingly affect the volume or profit of that
business. The difference between what he was thus compelled
to pay and the reasonable price of the commodity under
natural competitive conditions would be an injury to that
business directly resulting from such unlawful combination.
The injury to his business, whether it be in its volume or
profits, is the same whether that business be inter or intra
state—whether he buy to extend his plant, or to sell again in

damagés, then the court has no
jurisdiction to render any judg-
ment for triple damages. And the
same is true as to the attorney’s
fees. I think they are merely an
incident to a judgment for the
plaintiff. If no such judgment is
obtained, then there can be no al-
lowance for attorney’s fees, though
the settlement was made afte: this
suit’ was commenced.”

57 Montague & Co. v. Lowry, 193
U. 8S. 38, 48; 24 Sup. Ct. 307;
48 L. Ed. 608; affirming 115 Fed.
27; 52 C. C. A. 621; 63 L. R. A.
58; which approved 106 Fed. 38,
and 96 Fed. 817; Clabaugh v.
Southern Grocers’ Asso., 181 Fed.
706.
ACTION FOR DAMAGES. 781

“an interstate business. This excessive price is the expected
and intended result of the unlawful combination to restrain
interstate trade in that commodity. That such plaintiff
is entitled to recover the damages thus sustained in his
business, whatever its character, would seem to be the plain
purpose of the seventh section of the law of Congress, under
the logic of the decision in Addyston Pipe Co. v. United
States. It is possible to so construe this seventh section as
to devitalize this section by confining compensatory relief
to such persons as shall sustain an injury in some interstate
business whose volume or profit has been diminished. But
this construction does not seem consistent with the wide
economic purposes of Congress, as manifested by the whole
tenor of the act. Congress evidently foresaw the wholesome
effect of pecuniary responsibility for injuries resulting from
such forbidden combinations and the courts should not
devitalize the remedy by strained interpretations calculated
to encourage disregard of the law. The Act gives the remedy
to ‘any person’ injured in his business or property by any
other person or corporation by reason of anything forbidden
or declared to be unlawful by this act.’ If Congress had
the power to declare unlawful a combination which was
intended to restrain interstate commerce by enhancing the
value of a commodity when the subject of interstate com-
merce, it had the power to give a compensatory remedy to
any person directly affected by the unlawful agreement.’’5*

58 Atlanta v. Chattanooga Foun-
dry & Pipe Works, 127 Fed. 23;
61 C. C. A. 387; reversing
101 Fed. 900; affirmed 203 U.
S. 390; 27 Sup. Ct. 65; 51 L. Ed.
241, “We see no application of
the case of Connolly v. Union
Sewer Pipe Co., 184 U. S. 540; 22
Sup. Ct. 431; 46 L. Ed. 679;
affirming 99 Fed. 354; to the
case at bar. Undoubtedly the
contract of purchase, and sale of
pipe was a contract wholly collat-

eral to the unlawful trust agree-
ment between the makers of such
pipe, and the vendor could make
out a case for the purchase price
without reliance upon the unlaw-
ful agreement between such mak-
ers. The contract of bargain and
sale between the Anniston Pipe
Company and the plaintiff was
therefore a valid and enforceable
agreement, and the plaintiff could
not defend a suit for the price by
showing that the seller was a part-
782 THE SHERMAN ANTI-TRUST ACT.
But the owner of goods may dictate the prices at which he
will sell them, and the damages which are caused to an
applicant to buy by the refusal of the owner to sell to him
at prices which will enable him to resell them at a profit
constitute no legal injury, and are not actionable, because
they are not the result of any breach of duty or of contract
by the owner.*®

§ 438. Right to Rebates.—Ship owners formed a com-
bination to organize and control steamship business between
New York City and South African ports. After that
plaintiffs, who had never been engaged in the South African
trade, began to ship goods to such ports, and in common

with other patrons of the

ner in an illegal association. The
court in that case did decide that
the damages recoverable under the
seventh section were recoverable
only in a direct action, and could
not be set off in a suit under a
contract for the price. But this
was based, not upon any construc-
tion of that section, but upon the
general principle of law which for-
bids the setting off of unliquidated
damages not directly growing out
of the principal transaction. The
present suit is a direct action,
and is therefore unaffected by any-
thing decided in that case.” The
Supreme Court said: “The facts
gave rise to a cause of action un-
der the act of Congress. The city
was a person within the meaning
of section 7 by .the express pro-
vision of section 8. It was injured
in its property, at least if not in
its business of furnishing water,
by being led to pay more thau the
worth of the pipe. A person whose
property is diminished by a pay-
ment of money wrongfully induced

defendant’s vessels, became
is injured in his property. The
transaction which did the wrong
was a transaction between parties
in different states, if that be ma-
terial. The fact that the defend-
ants and others had combined with
the seller led to the excessive
charge, which the seller made in
the interest of the trust by ar-
rangement with its members, and
which the buyer was induced to
pay by the semblance of competi-
tion, also arranged by the mem-
bers of the trust.” See also Gibbs
v. McNeeley, 118 Fed. 120; 55 C.
C. A. 70; reversing 107 Fed. 210.
Demurrer to complaint overruled
102 Fed. 594; Montague & Co. v.
Lowry, 193 U. S. 38; 24 Sup. Ct.
307; 48 L. Ed. 608; affirming 115
Fed. 27; 52 C. GC. A. 621; 63 L.
R. A. 58; which affirmed 106 Fed.
38 and 96 Fed. 817; Monarch To-
bacco Works v. American Tobacco
Co., 165 Fed. 774, 779.

59 Whitwell v. Continental To-
baceo Co., 125 Fed. 454; 60 C. C.
A. 290.
ACTION FOR DAMAGES. 783

entitled to rebates under a circular issued by the defendants
in case the plaintiffs did not patronize competing vessels,
which they afterwards did, whereupon the defendants refused
to pay further rebates. It was held that this was in
violation of the Anti-Trust Act.®

§ 439. Injury by Boycott—Effort of Combiners to Better
Their Condition—Evidence.—Where the members of a labor
union undertook to induce a manufacturer engaged in
interstate commerce to conduct his business as they decided,
and, upon his refusal, further combined not only to prevent
him from manufacturing articles intended for interstate
commerce, but also to prevent his vendees in other states
from reselling the articles which they had imported from the
state of manufacture, or from further negotiating for the
purchase and transportation of such articles, the combiners
intending thereby to destroy or obstruct an existing interstate
traffic, it was held that the combination essentially obstructed
the free flow of interstate commerce; and having brought
injury to the plaintiff’s business, such members were liable to
him in damages, although the impelling motive of the
members of the combination was an effort to better their
condition, which they might have done except for the Anti-
Trust Act. A clause in the constitution of the union
required its officers to ‘‘use all means in their power’’ to
bring non-union shops into the trade. This was held not
necessarily to imply that those officers should use other than
lawful means; and the fact alone that a member of the union
contributed money to the support of the organization did
not make him responsible as a principal for unlawful acts of
the officers or their agents, but in order that his contribu-
tions should have such effect something more had to be
shown, as, for instance, that unlawful means had been so

60 Thomsen v. Union Castle Mail
S. S. Co., 166 Fed. 251; 92 C. C. A.
315; reversing 149 Fed. 933.
-to withdraw such question of damages.

784 THE SHERMAN ANTI-TRUST ACT.

frequently used with the express or tacit approval of the
association that its agents were warranted in assuming that
they might use such means, and that the association and its
individual members would approve or tolerate such use,
whenever the end sought to be attained might be best
attained thereby. It was also held that if there was
conflicting evidence from which inferences might be drawn,
the question of lability was for the jury, and it was error
Evidence that the
defendants paid dues to the organization after served with
summons was held not competent either as showing a ratifi-
eation by the defendants of the acts of such agents or that
such acts were authorized when committed. One of the
violations charged was that the defendants combined to
prevent customers of the plaintiff from buying his goods
by means of threats or boycott, and it was held that
testimony of plaintiff’s salesmen that customers told them

‘of such threats, made by persons claiming to represent the

‘had previously been reversed, on

defendant organization, was incompetent, being hearsay.*!

§ 440. Conspiracy to Controll Competing Corporation—
Interstate Commerce—Directors Action.—Where a corpora-
tion was engaged in the purchase of raw sugar in different

187 Fed.
The case

strike in a manufactory located in
a particular state, where the im-
mediate object is the unionizing

61 Lawlor v. Loewe,
522; 109 C. C. A. 288.

the first trial, by the Supreme
Court. Loewe v. Lawlor, 208 U. 8.
274; 28 Sup. Ct. 301; 52 L. Ed.
488; reversing 148 Fed. 924. In
the Circuit Court of Appeals it
was said: “It may be well, how-

-ever, that we should indicate for

the guidance of the Circuit Court
in the new trial that, as we un-
derstand the decision of the Su-
preme Court in this case, there
may be «a distinction drawn be-
tween a combination to cause a

’ its

of that factory although a part of
product, if manufactured,
would have become the subject of
interstate trade, and (b) a combi-
nation directly to restrain and put
a stop to the importation by a
person in one state of goods pro-
duced at a manufactory in an-
other state, although the ultimate
result sought to be obtained by

‘such restraint might be merely

the changing of conditions in that
particular manufactory.”
ACTION FOR DAMAGES. 785
states and its transportation to Pennsylvania, where it
manufactured the product into refined sugar and sold it in
interstate commerce; and it suspended business during the
Spanish War and then enlarged its refinery, preparing and
intending to resume business, when another corporation con-
spired to prevent it from engaging in business, and
accomplished this result by inducing the first corporation’s
majority stockholder to accept a loan, pledging his
stock as collateral with voting power, by which such second
corporation elected new directors, who voted that the first
corporation should do no business; and the object of this
conspiracy was to prevent the first corporation engaging in
competitive business with the plaintiff, it was held that this
conspiracy operated not alone on the manufacture of sugar
within the state of Pennsylvania, but on interstate commerce
in the transportation and delivery of both the raw material
and the manufactured product, that the first corporation
was still engaged in business, and that a complaint setting
up these facts stated a conspiracy in restraint of trade and
entitled the first company to recover damages. It was also
held that while a corporation could not conspire that its
own directors should be unfaithful to it, yet the action of
the directors in the name of their corporation, detrimental to
its interests and in bad faith, was, with respect to them, the
act of the corporation in name only; that they and others
conspiring to obtain action by the directors against the
interests of the corporation for wrongful and ulterior
purposes were liable to the corporation for the damages
thereby occasioned, and that the corporation and the
defendants were not in pari delicto. The action was brought
by the Pennsylvania Company to recover treble damages.”

62 Pennslyvania Sugar Refining
Co. v. American Sugar Refining
- Co., 166 Fed. 254; 92 C. C, A. 318;
‘reversing 160 Fed. 144. The court
said in part: “But the defendants
-further urge that the complaint

merely shows a naked intention
to engage in interstate commerce,
and the legal damages can not be
predicted upon the prevention of
the carrying out of any such in-
tention. We can not so regard
786

THE SHERMAN ANTI-TRUST ACT.

§ 441. Excessive Railroad Rates—If a shipper of inter-
state commerce be discriminated against in shipping rates,
-as where he is charged the full shipping rates but his
competitors are permitted by the carrier to ship similar
products at a lower rate, he has a cause of action for
damages, but his cause of.action is based on the Interstate

the allegations of the complaint.
It is averred that the plaintiff had
been engaged in interstate com-
merce, had temporarily ceased to
do business, had built a new re-
finery at great expense, and was
prepared and intended to resume
business as before. Something
more than a mere mental intention
to engage in interstate commerce
is involved when a_ corporation
spends millions of dollars in build-
ing a sugar refinery which is only
of use when operated and which
can only be operated by engaging
in interstate commerce. The
amount of money actually lost in
the enterprise can not be regarded
as wholly speculative and proble-
matical. It is next contended that
the complaint failed to show that
the defendants did anything which
was ‘forbidden or declared to be
unlawful’ by the Federal Anti-
Trust statute. As already shown,
however, the complaint charges
that defendant combined and con-
spired to prevent the plaintiff from
engaging in business and in inter-
state commerce; that they induced
Segal to accept a loan from the
American Sugar Refining Com-
pany and to pledge as security
therefor a majority of the capital
stock of the plaintiff corporation
under such conditions that the
American Company obtained the
absolute voting power thereon;

that the American Company used
this power to elect directors tavor-
able to the carrying out of the ob-
ject of the conspiracy, and that
such directors accomplished such
object by voting that the plaintiff
should not engage in business.
The substance of the charge is
that the defendants obtained the
control of the plaintiff corporation
to ruin it and to prevent it from
ever becoming « competitor of the
American Company, and that they
carried out their unlawful pur-
pose in violation of the trust im-
posed upon the majority stock-
holders for the benefit of the
minority, and by inducing direc-
tors to be unfaithful in the per-
formance of the duties of their of-
fice. In our opinion, the com-
plaint sufficiently states a conspir-
acy in restraint of interstate trade
and commerce within the meaning
of the Federal statutes. Indeed,
no more effectual means to make a
conspiracy effective could be de-
vised than the manipulation, in
the manner described in the com-
plaint of the control afforded by
holding a majority stock interest
—manipulation wholly in viola-
tion of the trust obligation of a
majority stockholder to the minor-
ity and of the directors to all the
stockholders. It is finally con-
tended that, if the conspiracy was
illegal, the plaintiff was a party to
ACTION FOR DAMAGES. 787
Commerce Act,** and not on the Sherman Act. But if the
rates he was charged were the duly posted rates he can
not recover under either of these acts on the ground that
they were unlawful or unreasonable, his remedy being an
application to the Interstate Commerce Commission to have
the schedule of tariffs adjusted on a reasonable and lawful
basis.®*

§ 442. Freight Rates Unreasonable—Conspiracy—Action
of Interstate Commerce Commission—A complaint which
alleges a conspiracy and combination between defendant and
other railroad companies to restrain and monopolize inter-
state commerce in anthracite coal carried into effect (1) by
the increasing the price of coal at the mines, through owner-
ship by the conspirators of the coal mines, and (2) by
increasing the charge for carrying coal to a city in another
state, so that the two together exceeded the price at such
city, and which contains a sufficient allegation of damage

it, and can not maintain an action
against the other parties. The an-
swer to this contention is that a
corporation can not conspire that
its own directors shall be unfaith-
ful to it. Action which directors
take in the name of their corpora-
tion detrimental to its interests
and in bad faith, is, with re-
spect to them, the act of the cor-
poration in name only. Directors
and other persons entering into a
conspiracy to obtain such action
for wrongful and ulterior purposes
are liable to the corporation for
the damages caused thereby. Noth-
ing is shown in this case to call
for the application of the doctrine
‘in pari delicto potior est conditio
defendentis” It may be that the
plaintiff will be unable to estab-
lish the allegations of its com-

plaint—will be unable to show any
such unlawful conspiracy as it al-
leges. But the allegations are very
broad and sweeping. They state a
cause of action, and the plaintiff
is entitled to an opportunity to
prove them if he can.” See Peo-
ple’s Tobacco Co. v. American To-
bacco Co., 170 Fed. 396; 95 C. C.
A. 556, where the complaint is set
forth in extenso.

6324 Stat. at Large 379; U. S.
Comp. St., 1901, 3155.

64 American Union Coal Co. v.
Pennsylvania R. Co., 159 Fed. 278.
Texas & Pacific R. Co. v. Abilene
Cc. & D. Co., 204 U. 8S. 426; 27.
Sup. Ct. 350; 51 L. Ed. 553;
reversing (44 Tex. Civ. App.) 85
S. W. 1052; Clement v. Louisville
& Nashville R. Co., 153 Fed. 979.
- 188 THE SHERMAN ANTI-TRUST ACT.

to the plaintiff in his business as a coal dealer, states a
cause of action; the gist of the action being the unlawful
conspiracy, and the fact that one of the means for carrying
it into effect being an increase in freight rates, the reason-
ableness of which, must first be determined under the pro-
visions of the Interstate Commerce Act of February 4, 1887,°
by the Interstate Commerce Commission, not constituting
any ground for depriving the plaintiff of the right of action
expressly given by the Anti-Trust Act. In such an instance
the plaintiff need not first resort to the Interstate Commerce
Commission for relief, no more than the United States before
it proceeds against a railroad company for a rate fixed by

an illegal combination.*

6524 Stat. at Large 379; In.
104; U. 8. Comp. Stat. 1901, 3154.

66 Meeker v. Lehigh Valley R.
Co., 183 Fed. 548; 106 C. C. A.
94; reversing 175 Fed. 320. See
also Meeker v. Lehigh Valley R.
Co., 162 Fed. 354, where the orig-
inal complaint was held defective,
and where it was held that the
Sherman Act gave no relief for
damages sustained by the payment
of excessive, unjust, or unreason-
able rates to interstate carriers,
relief being provided for by the
Interstate Commerce Act; and also
that an allegation that plaintiff
had been obliged to pay excessive
and unlawful rates without any
facts to support the same was a
statement of a mere conclusion of
law, which was not admitted by a
demurrer. In another case it was
said of unreasonable rates: “The
complaint alleges, in substance,
that the plaintiffs were coerced by
the unlawful combination into
paying a sum in addition to a rea-
sonable freight rate which was

held practically subject to forfeit-
ure in case the plaintiffs shipped
by other lines or their consignees
received freight by other lines.
These are allegations of injuries
inflicted by the combination. If
the plaintiffs were coerced into
paying sums of money, in excess
of reasonable rates, which were
held for the very purpose of pre-
venting that competition which the
statute is designed to promote,
they were damaged within the
meaning of the statute, to the ex-
tent of the sums so paid. More-
over, the complaint contains gen-
eral allegations of damages which
we do not find to have been with-
drawn upon the triai. It may be
that the plaintiffs will be unable to
establish the essential elements of
the claims for damages which they
set up. But they are entitled to
their opportunity, to their full day
in court.” Thomsen v. Union Cas-
tle Mail S. S. Co., 166 Fed. 251;
92 C. C. A. 315; reversing 149
Fed. 933.
ACTION FOR DAMAGES. 789

§ 443. Preventing Embarking on New Enterprise ——The
Sherman Act gives no right of action to a person who has nut
been merely deprived of earning profits, trade or commerce
by the formation of an unlawful combination or monopoly,
but has been merely prevented from embarking on a new
enterprise (for which he has made no preparation before the
unlawful restraint), by the threatening aspect of an already
existing monopoly or combination.

§ 444. Preventing Pursuance of Business—Intention and
Preparedness to Engage in Business.—In order to state a
cause of action for damages under the statute, it is not
“Tt is
as unlawful to prevent a person from engaging in business
as it is to drive a person out of business.’’® ‘‘But it is
necessary to state facts showing an intention and prepared-
ness to engage in business. Thus in the Pennsylvania
Sugar Refining Case © it was alleged that the plaintiff had
erected and equipped a sugar refinery, and was prepared
and intended to engage in the manufacture and sale of sugar,
when it was prevented from so doing by the acts of the
defendants.’’ “°

necessary to aver an injury to an existing business.

67 American Banana Co. v. lawful obstruction; but he has

United Trust Co., 160 Fed. 184;
affirmed 166 Fed. 261; 92 C. C. A.
325; affirmed 213 U. S. 347; 29
Sup. Ct. 511; 53 L. Ed. 826;
Thomsen v. Union Castle Mail
S. S. Co., 149 Fed. 933; reversed
166 Fed. 251; 92 C. C. A. 315.
And: this is in accord with the
general rule of speculative dam-
ages, especially in actions of tort.
Dudley v. Briggs, 141 Mass. 582;
6. N. E. 717; 55 Am. Rep. 494.
“A eitizen who finds a desirable
avenue of business activity closed,
for reasons obnoxious to the Sher-
man Act may pray the depart-
ment of justice to remove the un-

suffered no actual pecuniary dam-
age by being thwarted in what he
would like to do at some future
time.” American Banana Co. v.
United Trust Co., 160 Fed. 184,
188; affirmed 166 Fed. 261; 92
C. C. A. 325.

68 Thomsen v- Union Castle Mail
8. S. Co., 166 Fed. 251; 92 C. C.
A. 815; reversing 149 Fed. 933.

69 Pennsylvania Sugar Refining
Co. v. American Sugar Refining:
Co., 166 Fed. 254; 92 C. CG. A.
318; reversing 160 Fed. 144.

70 American Banana Co. v.
United Fruit Co., 166 Fed. 261;
92 C. C. A. 325; ‘affirming 160
790 THE SHERMAN ANTI-TRUST ACT.

In the Pennsylvania case referred to the court said it
could not regard the allegations in the complaint as showing
a mere naked intention to engage in interstate commerce,
and therefore legal damages could not be predicted on the
prevention of the carrying out of any such intention. ‘‘It
is averred that the plaintiff had engaged in interstate
commerce, had temporarily ceased to do business, had built
a new refinery at great expense, and was prepared and
intended to resume business as before. Something more than
a mere mental intention to engage in interstate commerce is
involved when a corporation spends millions of dollars in
building a sugar refinery which is only of use when operated
and which can only be operated by engaging in interstate
commerce. The amount of money actually lost in the
enterprise cannot be regarded as wholly speculative and

problematical.’’

Fed. 184; affirmed 213 U. S. 347;
29 Sup. Ct. 511; 53 L. Ed. 826,
The court then proceeds: “In the
present case, however, it is not al-
leged that the plaintiff had made
any preparations to engage in the
business of buying bananas inde-
pendently of the operation of its
own plantation, nor that it de-
sired or intended to engage there-
in as a separate and independent
business. It is not averred that
the plaintiff invested any money
in preparing to engage in any such
independent business, nor does the
extent to which, nor even the
country, in which, it desired or
intended to engage therein, appear.
The only allegation is that the
defendant’s control of the banana
market in the West Indies and
Central and South America pre-
vented the plaintiff ‘from buying
any bananas and shipping them
and selling them in the United

States, as it would otherwise have
done to its great profit. But in
view of the other allegations of
the complaint, and of the fact that
this demand is stated as the basis
for claiming ‘additional’ damage,
we think that it should be treated
as being incidental to the more
substantial demand for damages
for injuries to the plantation and
raiJroad—that the plaintiff intend-
ed to deal in bananas from other
plantations only as auxiliary to
its principal business of growing
and shipping its own fruit. Cer-
tainly the allegations are too in-
definite and uncertain to state a
cause of action based upon aa in-
dependent and separate demand.
Therefore, unless our inquiry shows
that the complaint states a cause
of action growing out of the facts
of the Costa Rican officials, we
must hold that it was properly dis-
missed.”
ACTION FOR DAMAGES. 791

§ 445. Stockholder’s Action to Pevent Violation of the
Sherman Act.—A stockholder who has suffered a special in-
jury by a violation of the Sherman Act may sue in a Federal
Court for an injunction under the general equity jurisdic-
tion of the court, where, by reason of the diversity of citizen-
ship of the parties, the court has jurisdiction of the suit; and
such an action lies to restrain another corporation which has
obtained control of a majority of its stock from voting it for
the purpose of electing its own directors and eliminating
competition between the two companies in violation of the
Act and to the irreparable injury of the stockholder. He has
a special interest, distinct from the public, and such threat-
ened irreparable injury to his rights as to justify the grant-
ing of a preliminary injunction.”

So a minority stockholder may maintain a suit in equity
in behalf of himself and all other stockholders similarly sit-
uated to set aside an alleged unlawful transfer of the prop-
erty of the corporation in pursuance of a conspiracy between
its officers and the transferee in restraint of trade and com-
merce, if the corporation, on demand, has refused to bring the
suit. But if in the same bill damages are sought under the
Sherman Act it will be multifarious, for they are recoverable
only in an action at law by the plaintiff as an individual, and
not as a stockholder, while the equitable relief prayed for is
on behalf of the corporation, and if granted would inure to
the benefit of all the stockholders.”

§ 466. Stockholder’s Right to Sue for Damages to His Cor-
poration—Creditor.— A stockholder of a corporation has the

71 Bigelow v. Calumet & Hecla
Mining Co., 155 Fed. 869; Bigelow
v. Calumet & Hecla Mining Co.,
167 Fed. 704; affirmed 167 Fed.
721; 940. 0. A. 13.

72 Metcalf v. American School
Furniture Co., 108 Fed. 909; af-
firmed 113 Fed. 1020; 51 C. C. A.

599; amended bill dismissed 122
Fed. 115. If the stockholder was
a party to the trust combinations
and «a member thereof, he can not
maintain an action for damages.
Bishop v. American Preserves Co.,
105 Fed. 845; see 51 Fed. 272.
792

THE SHERMAN ANTI-TRUST ACT.

right to maintain an action to recover damages it has sus-
tained by reason of a combination or conspiracy in violation
of the Sherman Act, even though such combination or con-
spiracy caused its bankruptcy, resulting in the loss of his
stock. And the same is true of a creditor of the corporation.
The right of action in such an instance is in the corporation
when it has not gone into bankruptcy; and in the case of

bankruptcy, in its trustee in bankruptcy.”

73 Loeb v. Eastman Kodak Co.,
183 Fed. 704; 106 C. C. A. 142.
“Admittedly the words of the stat-
ute are comprehensive. Prior to
the statute, however, a stockhold-
er in a corporation would have
been without direct relief for an
injury to his stock, through a
wrong done to the corporation.
The remedy for such an injury re-
sided in the first instance, solely
in the corporation. By means of
such a suit it could have enforced
the rights and _ redressed the
wrongs of each of the stockhold-
ers. The statute above referred to
was passed, as we must assume,
with full knowledge of existing
law in that respect. We have no
reason to suppose, much less to
assume, that it was intended there-
by to run contrary to the settled
policy of the law. Such an as-
sumption would require us to be-
lieve that the act was intended,
among other things, to multiply
suits. Certainly it is not apparent
that the act was intended to or
did confer upon hundreds or thou-
sands of stockholders individual
rights of action when their wrongs
could have been equally well and
far more economically redressed by
a single suit in the name of the
corporation. Moreover, it is mani-

So if the corpo-

fest that the plaintiff did not re-
ceive any direct injury from the
alleged illegal acts of the defend-
ant. No conspiracy or combina-
tion against him as a stockholder
or creditor is alleged. The injury
complained of was directed at the
corporation, and not the individual
stockholder. Hence any injury
which he, as a stockholder, received
was indirect, remote, and conse-
quential. If a stockholder could
successfully maintain such a suit,
why not any creditor of the corpo-
ration? A creditor would appar-
ently be injured in the same way
and to the same extent as a stock-
holder, assuming that their inter-
ests were equal. Indeed, the claim
demurred to assumes that both are
equally injured, since the plaintiff
sued not only for damages for al-
leged injuries to his rights as a
stockholder, but also as a creditor
of the Liberty Photo Supply Com-
pany. There must exist some bar-
rier which will effectually prevent
such a multiplicity of suits as
the plaintiff’s petition suggests,
and we believe not only that that
barrier exists, but that it is found
now just where it was prior to
the passage of the Act in question.
To illustrate, before bankruptcy a
right of action, of the character in
ACTION FOR DAMAGES. 793
ration has passed into the hands of a receiver, the receiver
must bring the action.’*

§ 447. Conspiracy to Do Unlawful Act in Foreign Coun-
try.—A conspiracy to do an unlawful act in a foreign
country gives no cause of action, even if damages follow,
if the acts involved in the conspiracy are permitted by the
local law of that country. The general rule is that the char-
acter of the act must be determined wholly by the law of the
country where it is done, unless done in a region subject to
no sovereign, like the high seas, or to no law recognized as
adequate. So that the prohibitions of the Sherman Act do
not extend to acts done by citizens of the United States in
another country which injuriously affect other citizens of the
United States. Acts of soldiers and officials of a foreign
country are taken to have been done by its order. Conse-
quently where the complaint charged an injury to the plain-
tiff’s plantation by Costa Rican officials resulting from an al-
leged conspiracy with the defendant, and also that the de-
fendant controlled the banana market in the West Indies and
in Central and South America and prevented the plaintiff
from buying and shipping bananas to the United States and

question, resided, as we have said,
in the corporation, and subsequent
to bankruptcy we think it equally
elear that it resided in the trus-
tee. It was suggested, however, on
behalf of the plaintiff, that a trus-
tee in bankruptcy could not insti-
tute such an action, nor could a
suit in equity be maintained under
the Sherman Act. The answer is
obvious even if we assume that a
suit of the suggested character
could not be maintained in equity.
The stockholder could certainly ap-
ply to the court to have the trus-
tee instructed to bring the action,
and the court could require it to

‘to bring such a suit.

be brought, or it could permit the
stockholder to sue in the name of
the trustee upon indemnifying the
estate against the costs of the suit.
Moreover, it appears that the
plaintiff herein evidently thought
that the trustee could maintain
the action, for in his proposed
amended statement of claim he al-
leges that he requested the trustee
We think
the statement of claim demurred
to is bad, in that it did not, under
the circumstances, set forth a
cause of action in the plaintiff.”

74 Ames v. American Tel. & Tel.
Co., 166 Fed. 820.
194 THE SHERMAN ANTI-TRUST ACT.
selling them to its great profit, which it would otherwise
have done, it was held that the Sherman Act did not apply
and no damages were recoverable under it.”

§ 448. Enforcing Illegal Ordinance.—Citizens of a munici-
pality, who in good faith combine to enforce one of its ordi-
nances, believing on reasonable grounds that it is valid, while
in fact it is invalid because its provisions conflict with the
Sherman Act, and it is so finally decreed, are not guilty of a
violation of that Act and are not liable for damages sustained
by the person prosecuted by them for violating such invalid
ordinance. ‘‘A citizen has a right to act in good faith upon
the belief that a law or an ordinance passed by a constituted
authority is valid. Prima facie it is valid, and although his
belief may no doubt be erroneous now and then, and he may
have his labor and cost for his pains, we think it clear that
even then he is not to be treated as a deliberate wrongdoer.
We cannot suppose that the general words of the Anti-Trust
Act were intended to include an agreement in good faith to
test a municipal ordinance in the courts. Such a construc-
tion would impose an extraordinary burden upon the citizens,
and could only be justified by unmistakable language. It
would require very plain speaking to make us believe that
Congress had said, in effect, that citizens while acting in good
faith to redress the violation of an ordinance prima facie

75 American Banana Co. v.
United Fruit Co., 213 U. S. 347;

right to sue. We think it entirely
plain that what the defendant did

29 Sup. Ct. 511; 53 L. Ed. 826.
affirming 166 Fed. 261; 92 C. C.
A. 325, which affirmed 160 Fed.
184. In the Supreme Court Jus-
tice Holmes said: “In the case of
the present statute the improbubil-
ity of the United States attempt-
ing to make acts done in Panama
or Costa Rica criminal is obvious,
yet the law begins by making crim-
inal the acts for which it gives a

in Panama or Costa Rica is not
within the scope of the statute
so far as the present suit is con-
cerned.” The correctness of this de-
cision has been sharply criticized
by Mr. Warren B. Hunting of the
Baltimore bar in a paper prepared
for the Political Science Seminary
of the Johns Hopkins University,
and printed in 6 Illinois Law Re-
view 34.
ACTION FOR DAMAGES. 795

valid, or even of fairly doubtful validity, must anticipate the
decision of some ultimate tribunal, and must do so at the risk
of being fined or imprisoned if their forecast should be
wrong. The policy of the law encourages the peaceful set-
tlement of disputes, and we see nothing in the conduct of
the merchants’ association that was deserving of blame. In
good faith and on plausible grounds they believed the law
to be with them, and they had a right to try out such a
controversy in the courts, although the litigation might be
expensive for their antagonist as well as for themselves.’’’®

76 Citizens’ Wholesale Supply Co. v. Snyder, 201 Fed. 907.
CHAPTER XXIII.

ACTION UPON ILLEGAL CONTRACT.

SECTION.

449. Action upon illegal contract.

450. Collateral agreement to
agreement in restraint of
interstate commerce.

451. Contract of transportation
of interstate commerce.

SECTION.

452. Member of combinations su-
ing to restrain infringe-
ment of patent.

453. Infringement of patent.

§ 449. Action Upon Illegal Contract.—An action upon a
contract entered into in violation of the Anti-Trust Act can-
not be maintained. Such a contract need not be canceled by
a court of equity to enable the defendant to set up its in-
validity and successfully defend himself in an action upon
it. And the fact that patents are involved does not render

the defense unavailable.

1 National Harrow Co. v. Hench,
76 Fed. 667; affirmed 83 Fed. 36;
27 0. C. A. 349; 39 L. R. A.
299. The first decision cited has
been thus explained in National
Folding Box & Paper Co. v. Rob-
ertson, 99 Fed. 985; “National
Harrow Co. v. Hench, supra, was a
suit to enjoin licensees from vio-
lating a license contract by selling
below the price agreed on therein,
and for a decree for the specific
performance thereof, which con-
tract was made with a combina-
tion controlling 90 per cent. of the
manufacturers of certain harrows
in the United States. Said con-
tracts prevented licensees from
selling their products at a price
less than was set forth in a sched-

796

ule annexed to the license, so that,
as the court said, the corporation
is simply clothed with the legal
title to the assigned patents, while
‘the several assignors are invested
with the exclusive right to manu-
facture and sell their old-style
harrows under their own patents;
but all of them must sell at uni-
form prices, and upon the same
terms, without respect to cost or
the merits of their respective
styles of harrows, and all the mem-
bers of the combination are strictly
forbidden to manufacture or sell
any other kind or style of float
spring-tooth harrow than they
are thus licensed to make and
sell.” Judge Acheson refused the
injunction, and the Court of Ap-
ACTION UPON ILLEGAL CONTRACT. 797

Thus a recovery upon an account for goods sold and
delivered by a corporation created to effectuate a combina-
tion of wall paper manufacturers, intending and having the
effect to directly restrain and monopolize interstate trade
and commerce cannot be had where the account is made up,
within the. knowledge of both vendor and purchaser, with
direct reference to and in execution of the agreements which
constitute the illegal combination. To give a judgment to
the plaintiff in such an instance ‘‘will be to give the aid
of the court in making effective the illegal agreements that

constituted the forbidden combination.’”?

peals affirmed his decision, taking
the ground that the prior owners
were the beneficial owners, with
right to continue their business,
subject only to the restriction in
its management imposed by the
contract, and that ‘the result
would be the same in legal con-
templation, if the corporation and
licenses had been dispensed with,
and the contract had provided
simply, as it does, for combination
and restraint of competition.’ This
was not an infringement suit, but
w suit to compel the performance
of an unlawful contract. The de-
cision rests upon the fact that the
corporation was organized sclely
for the purpose of making a com-
bination to restrain competition
and trade and to enhance prices.
In the same line, Judge Coxe, in
the suit of the same complainant
against the same defendant (C.
C.; 84 Fed. 226), to restrain in-
fringement of a patent which had
been assigned in accordance with
said contract, held that, as the
contract was illegal and void ,the
assignment was also void, and
solely on that ground dismissed
the complaint.”

So an illegal com-

2 Continental Wall Paper Co. v.
Voight & Sons Co., 212 U. 8. 227;
29 Sup. Ct. 280; 53 L. Ed. 483;
affirming 148 Fed. 939; 78 C. C.
A. 567. In this case it was held
that the defendants were entitled
to judgment on a demurrer ad-
mitting the allegations of defense
set up by way of answer, which
in substance disclosed that the
plaintiff was the selling agent of
a combination of wall paper man-
ufacturers which offended the
Anti-Trust Act, that, in carrying
out such combination, defendants
were virtually compelled to sign
a jobber’s agreement which in ef-
fect bound him to buy from the
plaintiff all the wall paper need-
ed in their business at certain
fixed prices, and not to sell at
lower prices or upon better terms
than those at which plaintiff it-
self sold to dealers other than
jobbers, that the goods in ques-
tion were ordered pursuant to
such agreement. and at the prices
fixed, that such prices were unrea-
sonable, and that all the transac-
tions between the parties were in
furtherance of the illegal combina-
798

THE SHERMAN ANTI-TRUST ACT.

bination cannot resort to equity to enforce a contract of sale
calculated to perpetuate the illegal features of the combina-
tion.? And a party to its organization or stockholders therein
cannot recover damages resulting from the enforcement by
the defendant of rights given it by the illegal agreement.*
Nor can a person who purchases goods from an illegal com-
bination, though impelled thereto by business needs and pol-
icy, retain the goods and recover the price paid, or any part
thereof, on the ground that the combination was illegal, or

the price excessive.®

tion. The court at considerable
length distinguished the case in
hand from that of Connolly v.
Union Sewer Pipe Co., 184 U. S.
540; 22 Supt. 431; 46 L. Ed. 679;
affirming 99 Fed. 354. In the Cir-
cuit Court of Appeals Judge Lur-
ton said: “The defense which we
sustain here is not for the sake
of William Voight & Sons. The
averment that they paid fifty per
cent. more for their gross pur-
chases in consequence of the il-
legal combination has little merit
in it, moral or otherwise. They
doubtless sold again at the great
maximum profit they agreed to
exact from retailers, and the re-
tailers later exacted the undue
profit from the consuming public.
There, at last, like all burdens, it
must rest. The defense here sus-
tained is good only because it is
only possible to protect the pub-
lie by refusing all assistance in
carrying out an illegal agreement.
This is the policy of our law, and
to maintain this policy the judg-
ment of the Circuit Court must be
affirmed.”

8 American Biscuit & Mfg. Co.
v. Klotz, 44 Fed. 721.

+ Bishop v. American Preserves
Co., 105 Fed. 845, See also Greer,
Mills & Co. v. Stoller, 77 Fed. 1,
7 and Steamship Co. v. McGreagor,
21 Q. B. Div. 544.

5 Dennelry v. McNulta, 86 Fed.
825. “The first section of the Act
provides that ‘every contract, com-
bination in the form of trust, or
otherwise, or conspiracy, in re-
straint of trade or commerce
among the several states, or with
foreign nations, is hereby declared
to be illegal.’ Every person mak-
ing such a contract is deemed guil-
ty of a misdemeanor, and on con-
viction is to be punished by fine
or by imprisonment, or both. As
the statute makes the contract in
itself illegal, no recovery can be
had upon it when the defense of
illegality is shown to the court.
The section provides for the pre-
vention of violations thereof, and
makes it the duty of the several
district attorneys, under the direc-
tion of the Attorney General, to
institute proceedings in equity to
prevent and restrain such viola-
tions, and it gives to any person
injured in his business or property
the right to sue, but that does
ACTION UPON ILLEGAL CONTRACT. 799

§ 450. Collateral Agreement to Agreement in Restraint
of Interstate Commerce.—It should be noticed that the stat-
ute does not declare illegal or void any sale made by a com-
bination formed in restraint of interstate commerce; and so
any person buying from the combination cannot refuse to
comply with his contract of purchase on the ground that
the seller was an illegal combinaticn. uch a contract is
only collateral to the illegal contract, or understanding creat-
ing the combination or monopoly. ‘‘Congress did not de-
clare that a combination illegally formed under the Act of
1890 should not, in the conduct of its business, become the
owner of property which it might sell to whomsoever wished
to buy it.’’¢

§ 451. Contract of Transportation of Interstate Com-
merce.—A person who delivers his goods to a railway com-

not prevent a private individual
when sued upon a contract which
is void, as in violation of the Act,
from setting it up as a defense,
and we think when proved it is
a valid defense to any claim under
a contract thus denounced as il-
legal.” Bement v. National Har-
row Co., 186 U. S. 70; 22 Sup. Ct.
747; 46 L. Ed. 1058; affirming
163 N. Y. 505; 57 N. E. 764,
which reversed 21 N. Y. App. Div.
290; 47 N. Y. Supp. 462.

8 Connolly v. Union Sewer Pipe
Co., 184 U. S. 540; 22 Sup. Ct.
431; 46 L. Ed. 679; affirming 99
Fed. 354. Citing the Charles E.
Wisewell, 74 Fed. 802; affirmed,
86 Fed. 671; 30 C. C. A. 339. This
ease is distinguished in Conti-
nental Wall Paper Co. v. Voight &
Sons, 212 U. S. 227; 29 Sup. Ct.
280; 53 L. Ed. 483; affirming 148
Fed. 939; 78 C. C. A. 567. See
also Hadley Dean Plate Glass Co.
v. Highland Glass Co., 143 Fed.

242; 74 C. C. A. 462; Motion Pic-
ture Patents Co. v. Laemmle, 178
Fed 104; Virtue Creamery Pack-
age Mfg. Co., 179 Fed. 115; 102
C. C. A. 413; affirmed 227 U. 8.
8; 33 Sup. Ct. 202; 57 L. Ed. —;
Reynolds Tobacco Co. v. Allen
Bros. Tobacco Co., 151 Fed. 819;
Motion Picture Patents Co. v. Ull-
man, 186 Fed. 174; Independent
Baking Powder Co. v. Boorman,
130 Fed. 726; Chicago Wall Paper
Mills v. General Paper Co., 147
Fed. 491; 78 C. C. A. 607; Me-
Connell v. Camors-McConnell Co.,
152 Fed. 321; 81 C. C. A. 429;
reversing 140 Fed. 412; Interna-
tional Harvester Co. v. Oliver, 192
Fed. 59 (Agent denying right of
his principal to call him to an ac-
counting). An illegal combina-
tion may maintain an action for
an injunction against a person or
corporation unlawfully infringing
upon its rights. Coea Cola Co. v.
Gay-Ola Co., 200 Fed. 720.
800 THE SHERMAN ANTI-TRUST ACT.

pany for transportation, and also one who requests and ac-
cepts the services of a tug for towage purposes, cannot escape
on the ground that it is a party to a combination which is
prohibited by the Anti-Trust Act, it has been held, paying the
reasonable value of the services rendered.

§ 452. Member of Combinations Suing to Restrain In-
fringement of Patent.—A member of an illegal combination
is not by reason of such membership prevented from suing
to restrain an infringement of a patent of which he is
owner.®

§ 453. Infringement of Patent.—In an action for damages
because of an infringement of a patent it is no defense that
the plaintiff is a corporation illegally formed in violation of
the Sherman Anti-Trust Act and that the patent was as-
signed to it in furtherance of the illegal purpose to create a

7The Charles E. Wisewall, 74
Fed. 802; affirmed, 86 Fed. 671;
30 C. C. A. 339. “He should not
be permitted to repudiate his just
debts to the individual tugs be-
cause their association was illegal..
Having asked for their services,
and having accepted the benefit
thereof, he should pay. Counsel
for the claimant asked for addi-
tional time in which to present
authorities to establish the propo-
sition that the towage contracts
were void and in restraint of trade
because the agreement by which
the tugs were associated was void
for that reason, The authorities
furnished fail, in my judgment to
meet the point in question. It is
a mistake to confound the two con-
tracts. An agreement by the tug

Mayflower to tow the dredge Wise-
wall, for a reasonable sum, from
Albany to Troy, is not void be-
cause the Mayflower is associated
with other tugs to regulate the
price of towing at Albany. Should
the claimant purchase a pair of
trousers at an Albany clothing
shop he would find it difficult to
avoid paying their actual market
value because the vendor and other
tailors of that city had combined
to keep up prices. So when he
employs the Albany tugs during
an entire season and receives serv-
ices worth, upon the present proof,
over $900, he should not be per-
mitted to disavow his just obliga-
tions upon a pretext so illogical.”

8General Electric Co. v. Wise,
119 Fed. 922.

1
ACTION UPON ILLEGAL CONTRACT, 801
monopoly and control the price of an article of interstate
commerce.® Thus in a case where it was sought by a stranger
to enjoin an illegal corporation bringing suits against him for
an infringement of its patent on the ground that it had en-
tered into a combination with other manufacturers to secure
a monopoly in its manufacture and sale, to that end secured
all the rights of other manufacturers for the exclusive sale
and manufacture of such machines under patents, it was
said:

‘‘Such a combination may be an odious and wicked one,
but the proposition that the plaintiffs, while infringing the
rights vested in the defendant under letters patent of the
United States, is entitled to stop the defendant from bring-
ing or prosecuting any suit therefore because the defendant
is an obnoxious corporation, and is seeking to perpetuate the
monopoly which is conferred upon it by its title to the let-
ters patent, is a novel one, and entirely unwarranted. The
party having such a patent has a right to bring suit on it,
not only against a manufacturer who infringes, but against
dealers and users of, the patented article, if he believes the
patent is being infringed; and the motive which prompts
him to sue is not open to judicial inquiry, because, having a
legal right to do so, it is immaterial whether his motives are
good or bad, and he is not required to give his reasons for
the attempt to assert his legal rights.’’?°

9 National Folding-Box Paper
Co. v. Robertson, 99 Fed. 985; Co-
lumbian Wire (Co. v. Freeman

v. Manufacturing Co., 44 Fed. 19;
Chemical Works v. Hecker, 11
Blatchf. 552; Machine Co. v. Smith,

Wire Co., 71 Fed. 306.

10 Strait v. National Harrow Co.,
51 Fed. 819; Celluloid Mfg. Co. v.
Goodyear Dental Vulcanite Co., 13
Blatchf. 384; Asbestos Felting Co.
v. United States & F. Salamander
Felting Co., 13 Blatchf. 453; Tut-
tle v. Mathews, 28 Fed. 98; Kelley

70 Fed. 383; Otis Elevator Co. v.
Geiger, 107 Fed. 131. It is no
defense to a suit for an infringe-
ment of a trade-mark that its
owner’s sales are wicked under the
Sherman Act. Coca-Cola Co. v.
Dacon Brown Bottling Co., 200
Fed. 105.
CHAPTER XXIV.

EVIDENCE.
SECTION. SECTION.
454. Acts of one party—Conspir- 461, Report of Interstate Com-
acy. merce Commission contain-
455. Books and papers of corpora- ing evidence.
tions. 462. Admission of incompetent
456. Subpoena Duces Tecum. evidence—New trial.
457. Statements of customers— 463. Sufficiency question for jury
hearsay. —Liability.
458. Payment of dues to labor 464. Directing verdict—Circum-
organization after suit stantial evidence,  suffi-
brought—Ratification. ciency.

459. Purpose, former acts to show 465. Evidence before grand jury.
—Acts performed before 466. Examination before 4 mas-

Sherman Law enacted. ter or examiner.
460. Overt acts—Intent and pur- 467. Examiner taking evidence in
pose. another district.

§ 454. Acts of One Party—Conspiracy.—Where several
persons combine together for the same illegal purpose, any
act done by one of them in pursuance of the original con-
certed plan, and with reference to the common object, is, in
the contemplation of law, the act of the whole party, and the
proof of such act is evidence against any of the others who
were engaged in the same conspiracy. Any declaration made
by one of the parties during the pendency of the illegal
enterprise is not only evidence against himself, but also
evidence against his fellows, who, when the combination is
proved, are as much responsible for such declaration and
acts to which they relate as if made and committed by them-
selves. This rule applies to the declaration of a co-
conspirator, although he may not be under prosecution, his
declaration being equally admissible with those of one under
indictment and prosecution.?

1 United States v. Cassidy, 67 States, 192 Fed. 1; 112 C. C. A.
Fed. 698. 702; Steers v. United 423.

802
EVIDENCE. 803

The court, in its discretion, may admit evidence of acts
and declarations of various of the conspirators made in the
absence of the other defendants, before a prima facie case of
conspiracy has been established, and before privity of some of
the conspirators has been proven, on condition that such con-
necting evidence shall thereafter be given.2 When a
conspiracy is shown at some time in the past to have existed,
it is presumed to have continued until its object was
accomplished. So that on the trial of certain defendants with
having conspired to prevent the shipment of certain tobacco,
statements made by one of the defendants while the tobacco
was being withheld from shipment, at their instance, were
held admissible against all of them. But where items of
evidence are necessarily admitted which at the time are
competent against one of the defendants only, it is proper
for the court to caution the jury as the trial proceeds as to
the effect of such evidence, yet its failure to do so, when not
requested so to do, is not reversible error.®

§ 455. Books and Papers of Corporations.—Documentary
evidence in the shape of books and papers of corporations
are in the possession of their officers, and these may be
brought into court by a subpoena duces tecum; and such
officers cannot refuse to produce them on the ground that
they are not in their possession or under their control. Such
officers cannot refuse to bring in such instruments of
evidence nor refuse to answer the questions put to them,
on their examination before a special examiner, or before
the court, on the ground that the evidence they contain are
immaterial; and objections to the immateriality of the testi-
mony are not open to consideration on a writ of error sucd
out by a witness to review a judgment of contempt, entered
against him for disobeying an order to testify.*

2 Loder v. Jayne, 142 Fed. 1010. 4 Nelson v. United States, 201 U.
3Steers v. United States, 192 8S. 92; 26 Sup. Ct. 358; 50 L. Ed.
Fed. 1: 112 C. C. A. 423. 473. In this case the court said:
804

THE SHERMAN ANTI-TRUST ACT.

§ 456. Subpoena Duces Tecum.—To obtain a subpoena
duces tecum the party desiring it must apply to the court
for it and state in his application that the documents called

for are ‘‘material and necessary.’’

Whether or not the

subpoena duces tecum will be ordered depends upon the

“The claim of immateriality of the
testimony can not avail plaintiffs
against the orders of the Circuit
Court. The procedure before an
examiner and his powers are ex-
plained in Blease v. Garlington,
92 U.S. 1; 23 L. Fd. 521. It is
there said: “he examiner before
whom the witnesses are orally ex-
amined is required to note excep-
tions; but he can not decide upon
their validity. He must take down
all the examination in writing,
and send it to the court with the
objections noted. So, too, when
depositions are taken according to
the acts of Congress or otherwise,
under the rules, exceptions to the
testimony may be noted by the
officer taking the deposition, but
he is not permitted to decide upon
them; and when the testimony is
reduced to writing by the exam-
iner, or the deposition, is filed in
court, further exceptions may be
there taken. Thus both the excep-
tions and the testimony objected
to are all before the court below,
and come here upon the appeal as
part of the record and proceeding
there.’ And an application to a
court to compel the delivery of tes-
timony in aid of the examination
does not change the rule. The tes-
timony is taken to be submitted to
the court where the suit is pend-
ing and all questions upon the evi-
dence, its materiality and suffi-
ciency are to be determined by it

and after it by an appellate court.
Even if the trial court permit the
examination of witnesses orally in
open court upon the hearing in
cases in equity, as further said in
Blease v. Garlington, the testimony
must be taken ‘down or its sub-
stance stated in writing and made
part of the record, or it will only
be disregarded here on an appeal.’
So, too, if testimony is objected
to and ruled out. it must still be
sent here with the record subject
to the objection, or the ruling will
not be considered by us. Blease
v. Garlington has been applied at
Cireuit in a number of cases.”
Thomsen-Houston Elec. Co. v. Jeff-
rey Mfg. Co. 83 Fed. Rep.
614; Maxim-Nordenfeldt Guns
& Am. Co. Ltd. v. Colt’s
Patent Firearms Mfg. Co., 103
Fed. Rep. 39; Parisian Comb.
Co. v. Eschwege, 92 Fed. Rep. 721;
Fayerweather v. Ritch, 89 Fed.
Rep. 529; Appleton v. -Ecaubert,
45 Fed. Rep. 281; Edison Elec.
Lt. Co. v. United States Elec. Ltg.
Co., 45 Fed. Rep. 55, 59; Johnson
Steel Street Rail Co. v. North
Branch Steel Co., 48 Fed. Rep.
196; Adee v. J. L. Mott Iron
Works, 46 Fed. Rep. 39; Lloyd v.
Pennie, 50 Fed. Rep. 4; Brown
yv. Worster, 113 Fed. Rep. 20; Mac
William v. Conn. Web. Co., 119
Rep. 509; Whitehead & Hoag Co.
v. O'Callahan, 139 Fed. Rep. 243.
EVIDENCE. 805
showing made in the petition; and it is not sufficient to
merely allege the bald statement that the books and docu-
ments are ‘‘material and necessary.’’ They must be shown
to be material and relevant. Thus in one case it was said:

‘‘A party undoubtedly has the right to invoke the process
of the court to compel the attendance of witnesses and the
production of such papers as are material to his cause; but
neither the right of a party nor the power of the court
extends beyond this. A party has no right, and the court
has no power, to compel the production, either in court or
before a magistrate, of the private papers of a witness which
are not relevant and material to the case. Any practice
which sanctions such a proceeding is unwarranted and an
infringement upon a fundamental personal right guaranteed
by the Federal Constitution. The courts have always recog-
nized this protection to the individual secured by our organic
law. Such a recognition is seen in the distinction which is
made between a subpoena of testtficandum and a subpoena
duces tecum. The former is a process of right, while the
latter is addressed to the discretion of the court. The dis-
cretion here does not mean that the court has power to refuse
the compulsive production of a paper which is material
evidence in the case, but that before compelling its produc-
tion by a subpoena duces tecum it will sufficiently inquire
into the matter to determine if the evidence appears to be
material, and, if not satisfied on this point, it will decline
to issue the writ.’’>

5 Daniel v. Goodyear Show Ma-
chinery Co., 128 Fed. 753, 770;
United States v. Terminal R. As-
s’n, 154 Fed. 268; reversing in ef-
fect, 148 Fed. 486; Crocker-
Wheeler Co. v. Bullock, 134 Fed.
241; ex parte Brown, 72 Mo. 83;
37 Am. Rep. 426; United States
v. Hunter, 15 Fed. 712; Bischoff-
sheim v. Brown, 29 Fed. 341;
United States v. Tilden, 10 Ben.

566; Fed. Cas. No. 16522; Hale v.
Henkel, 201 U. S. 43, 77; 26 Sup.
Ct. 370, 380; 50 L. Ed. 652; af-
firming 139 Fed. 496; ex parte
Peck. 3 Blatchf. 113; Fed. Cas.
No. 10885; in re Judson, 3 Bletchf.
116; Fed. Cas. No. 7563. “The
deeds are not sought for the pur.
pose of discovery. * * * As to
the other documents, it may as a
general rule be true that, when a
806 THE SHERMAN ANTI-TRUST ACT.

A court of equity has the inherent powcr to compel the
production of books and papers necessary to a determination
of a matter pending before it.®

A witness cannot excuse himself for his failure to produce
them in obedience to a subpoena duces tecum on the ground
that they are immaterial and irrelevant; for that is a
question for the court.”

§ 457. Statements of Customers—Hearsay.—Statements
of customers that persons boycotting the plaintiff and his
goods had told plaintiff’s salesman that threats had been
made to them by persons claiming to represent the defendant
wherein they were threatened by such defendants to injure
such customers’ trade if they did not cease to deal with

plaintiff are inadmissible, because hearsay.®

witness is required to produce doc-
uments in his custody, he ought to
produce them simply and leave to
the court adjudicating between the
parties to decide whether they are
evidence; but my impression is
that on a motion of this kind
the court is bound to exercise a
discretion not to order a document
to be produced unless some reason

is shown rendering it probable that

it will be evidence between the par-
ties in the cause. Now, as to the
documents in question, I do not
see any ground for supposing that
they would be evidence between the
parties upon the record, and I do
not think that the court ought to
compel the private documents of
a third person to be produced,
without some probability, to say
the least, of their being useful for
some purpose between the parties.
Upon this ground, without enter-
ing into the other objections, and
without giving any opinion upon

them, I think that the court ought
not to interfere.” Phelps v. Pro-
thero, 2 De Gex & Smale 274, 290.
In United States v. Babcock, 3
Dill. 566; Fed. Case No. 14484, it
was held sufficient to merely allege
“the said books and papers are
material and necessary evidence in
said cause;” and this was followed
in United States v. Terminal R.
Ass’n, 145 Fed. 486; but that case
was practically reversed in 154
Fed. 268, and denied in ex parte
Brown, 72 Mo. 83; 37 Am. Rep.
426.

6 United States v. Terminal R.
Ass’n, 145 Fed. 486.

7 United States v. Terminal R.
Ass’n, 145 Fed. 486. “That would
leave the determination of the
whole matter with the witness
himself and the court would be
powerless.”

8 Lawlor v. Loewe, 187 Fed. 522,
527; 109 C. C. A. 288. “A sales-
man of plaintiff’s testified that he
EVIDENCE. 807

§ 458. Payment of Dues to Labor Organization After
Suit Brought—Ratification— Evidence that the defendants,
claimed to have been members of a Labor Union when the
boycott was established and in force, paid dues to the Union
after service of the summons in the case is not competent,
either as showing a ratification by the defendants of the acts
of the Union’s agents in committing unlawful acts nor to
show that such acts were authorized when committed.®

§ 459. Purpose, Former Acts to Show—Acts Performed
Before Sherman Law Enacted.— Allegations as to acts of the
defendants performed prior to the date of the enactment of
the Sherman law are admissible if they throw light on the

called at various times or. several
different customers, giving their
names. In some instances he was
allowed to state that the customer
told him that at some prior time
he had been interviewed by some
labor representative who told him
that unless he ceased to handle
plaintiff’s goods he would get into
trouble with the union. This was
hearsay, the narrative of a past
transaction given by an outside
party, not under oath. It was not
competent to prove that threats
had been made by some one pur-
porting to represent defendants.
Its admission is sought to be sus-
tained upon the authority of cases.
which hold that it is proper to
show a part of the res gestae what
reason was piven by a person as
an excuse for discontinuing some
former practice. Wigmore on Evi-
dence, section 1729, and cases cited.
This exception to the general rule
should not be extended as far as
it was in some of the instances
testified to.” The cases cited in

Wigmore show that a declaration
of a third party made accompany-
ing his act may be given in evi-
dence to show the reason why he
was performing the act when he
might have been placed on the wit-
ness stand and asked to give the
reason why he had done as he did.

® Lawlor v. Loewe, 187 Fed. 522,
527; 109 C. C. A. 288. “The court
admitted evidence of the payment
of their dues to the unions by de-
fendants, after complaint was
served. This was not competent as
showing ratification, and, as we
understand their brief, plaintiffs
do not so contend. It was offered
as ‘tending to show that the acts
(of the missionaries) were author-
ized at the time they were per-
formed previous to the suit,’ upon
the theory that otherwise the dis-
closures made to an individual de-
fendant by his reading of the com-
plaint would have brought forth
a protest and disapproval on his
part. ‘We think ‘it should have
been excluded.”
808 THE SHERMAN ANTI-TRUST ACT.
acts done after its passage; and of course if they may be
alleged they may be proven.’°

But in an action for damages, the defendant’s action and
conduct prior to the organization of the plaintiff corporation
and entering on the business alleged to have been injured by
the defendant is immaterial as res inter alias acta.’

§ 460. Overt Acts—Intent and Purpose.—Proof of overt
acts is not always necessary to show a combination in
restraint of interstate commerce. It is only necessary to
show the combination with intent to bring about restraint
on interstate commerce; the overt acts being merely
cumulative evidence from which the intent, purpose, and

continuance of the combination may be inferred.”

10 Standard Oil Co, v. United
States, 221 U. 8. 1; 31 Sup. Ct.
502; 55 L. Ed. 619; 34 L. R. A.
(N.S.) 834. “The overruling of
the exceptions taken to so much
of the bill as counted upon facts
occurring prior to the passage of
the Anti-Trust Act—whatever may
be the view as an original ques-
tion of the duty to restrict the
controversy to a much narrower
area than that propounded by the
bill—we think by no possibility in
the present stage of the case can
the action of the court be treated
as prejudicial error justifying re-
versal. We say this because the
court, as we shall do, gave no
weight to the testimony adduced
under the averments complained of
except in so far as it tended to
throw light upon the acts done
after the passage of the Anti-Trust
Act and the results of which it
was charged were being partici-
pated in and enjoyed by the al-
leged combination at the time of
the filing of the bill.” In the

lower court it was said: “The acts
of these and other defendants prior
to July 2, 1890, did not violate
the Anti-Trust Act of that year,
because it was not then in exist-
ence. Whether or not their trans-
actions constituted a violation of
the common law is a question
much discussed, which it is un-
necessary to determine in this case.
However that may be, the acts of
the defendants and the effect of
their transactions in the conduct of
the oil trade prior to July 2, 1890,
which, if done thereafter, would
have constituted a violation of the
law of that date, are competent
and material evidence of the dom-
inant purpose and the probable ef-
fect of their similar transactions
in that business since that date,
and for that purpose they may be
considered.” United States v.
Standard Oil Co, 173 Fed. 696.

11 Monarch Tobacco Co. v. Amer-
ican Tobacco Co., 165 Fed. 774.

12 United States v. Mac Andrews
& Forbes Co., 149 Fed. 836.
EVIDENCE. 809

§ 461. Report of Interstate Commerce Commission Con-
taining Evidence—A copy of the testimony shown by a
report of the Interstate Commerce Commission to have been
given by a witness in an investigation before that body, not
otherwise authenticated, is not competent evidence in an
action subsequently brought, between different parties and in
which different issues are involved.!®

§ 462. Admission of Incompetent Evidence—New Trial.—
If the claim for damages be submitted or is competent
evidence as to certain of the items claimed, and a verdict
he returned for the plaintiff for less than the total amount
claimed, the only remedy is a new trial, and the error cannot
be cured by requiring a remittitur of the amount of the items
so erroneously admitted, for the court cannot know whether,
or to what extent, such items entered into the verdict.'*

§ 463. Sufficiency Question for Jury—Liability—The
sufficiency of the evidence is, as a rule, a question for the
jury. Thus in an action to recover damages where it was
charged that the defendants, as members of various local
unions of labor organizations were liable for the acts of
agents of the organization on the ground of a combination
in restraint of trade, and there was conflicting testimony
concerning their knowledge of such acts and other evidence
from which inferences might be drawn, the question of
liability was held to be for the jury, and it was error to
withdraw that question from them and to submit only the
question of damages.’

13 United States v. Reading Co.,
183 Fed. 427; affirmed 228 U. 8S.
158; 33 Sup. Ct.; 57 L. Ed. —.

14 Jayne v. Loder, 149 Fed. 21;
78 C. C. A. 653; Jacoby v John-
son, 120 Fed. 487; 56 C. C. A. 637;
Watt v. Watt L. R. App. Cas.
[1905] 115.

13 Lawlor v. Loewe, 187 Fed. 522,
527; 109 C. C. A. 288. “Different

inferences were at least possible,
and in a case of this sort, where
conspiracy to do an unlawful act
is charged, it should be left to the
jury to say which inference shall
be drawn. Moreover, it was for
the jury to determine from the en-
tire body of proof what was the
intent of the individuals who made
up the combination or what they
810 THE SHERMAN ANTI-TRUST ACT.

§ 464. Directing Verdict—Circumstantial Evidence, Suffi-
ciency.—In a criminal prosecution there must be substantial
evidence of facts which exclude every other hypothesis
except that of guilt; and if there is not that amount of
evidence, it is the duty of the court to direct a verdict for
the defense. If such evidence is as consistent with innocence
as with guilt, the appellate court will reverse a judgment
of conviction.1* To warrant a conviction on circumstantial
evidence, the facts proven must not only be consistent with
the hypothesis of guilt, but must clearily and satisfactorily
exclude every reasonable hypothesis except that of guilt.?’

§ 465. Evidence Before Grand Jury.—The evidence that
may be received before a grand jury is not subject to
judicial control.?®

§ 466. Examination Before a Master or Examiner.—In
an examination before a master or special examiner, whether
the testimony sought be material or not it must be taken,
even over a claim that it is immaterial, and exceptions noted
by the master or examiner; and then the materiality of the
evidence will be passed upon by the court. A witness cannot
make objections as to the materiality of the evidence in order
to be relieved from testifying. The tendency or effect of the
testimony on the issues between the parties is no concern of
his. He must produce documents and books of his corpora-
tion if he be the officer in whose possession by law they
should be; and he cannot escape upon the plea that they
are not in his actual possession or under his actual control.’®

must have known were the neces-
sary and inevitable consequences
of their acts.” See also Hale v.
Hatch, 204 Fed. 433.

16 Union Pacific Coal Co. v.
United States, 173 Fed. 731; re-
versed 226 U. S. 1, 470; 33 Sup.
Ct.; 57 L. Ed. —.

17United States v. American
Naval Stores Co., 172 Fed. 435.

18In re Kittle, 180 Fed. 946.

19 Nelson v. United States, 201
U. S. 92; 26 Sup. Ct. 358; 50 L.
Ed. 673. Where application was
made for an enlargement of time
to take evidence based upon the
ground that the applicants had
been prevented by the action of the
EVIDENCE. 811

§ 467. Examiner Taking Evidence in Another District.—
If an examiner be appointed to take evidence in a suit
pending in the court of the district where the action is
pending, he may lawfully discharge his duty in another
district, the court of that district being authorized to issue
subpoenas commanding persons living within the district
whose legal domicile is elsewhere, to appear and _ testify
before him or before a master.2? If such a witness refuse to
testify or answer a proper question, it is the duty of the
judge of the district, on application, to compel the witness
to testify or produce the evidence sought, although the judge
may deem it incompetent, irrelevant, or immaterial, unless
the witness or evidence is privileged or it clearly and affirm-
atively appears that it cannot be competent, material, or
relevant, and that it would be an abuse of process to
compel its production.”?

government in instituting crim- advice of the counsel they refused

inal proceedings from properly pre-
senting their defense, in that the
government apprehending that the
witness for the defense were called
to give them immunity from crim-
inal prosecution then pending, noti-
fied them that if they testified,
they would do so at their peril,
it was held not error to grant the
petition for extension; for im-
munity could only be claimed by
witnesses for the government, and
this was true even though upon

to testify, leaving the defendants
without the benefit of the evidence
which they could have given. Stan-
dard Sanitary Mfg. Co. v. United
States, 226 U. S. 20; 33 Sup. Ct.
9; 57 L. Ed. —; affirming 187
Fed. 232.

20 United States v. Standard
Sanitary Mfg. Co., 187 Fed. 232;
affirmed, 226 U. S. 20; 33 Sup. Ct.
9; 57 L. Ed. —.

21 United States v.
Sanitary Mfg. Co., supra.

Standard
CHAPTER XXV.

IMMUNITY.

SECTION. SECTION.

468. Fifth amendment to consti- 475. Witnesses not called by
stitution—Construction. government.

469. Statute granting immunity 476. Monopoly continued after
—Appropriation. right to immunity due.

470. Other immunity statutes. 477. What is the giving of evi-

471. Immunity and pardon, dif- dence under compulsion of
ference. law.

472. Corporations, fifth amend- 478. Immunity a question for
ment—Books and papers. judge.

473. Unreasonable search— 479. Contempt—Appeal.
Fourth Amendment. 480. Release on habeas corpus.

474. Answer in equity furnish-
ing immunity in criminal
prosecutions.

§ 468. Fifth Amendment to Constitution—Construction.
—The Fifth Amendment to the Constitution of the United
States provides that ‘‘Nor shall [any person] be compelled
in any criminal case to be a witness against himself.’’ This
amendment is given ‘‘a broad construction in favor of the
right it was intended to secure.’’ ‘‘To entitle a witness to
plead the privileges of silence, the criminal case does not
have to be one against himself. Any criminal case is
covered by it; as a case before a grand jury under investi-
gation. In the adoption of this amendment the object was to
insure that a person should not be compelled as a witness in
any investigation, to give testimony which might tend to
show that he himself had committed a crime. The privilege
is limited to criminal matters, but it is as broad as the
mischief against which it seeks to guard.” +

1Counselman v. Hitcheock, 142 268. The court said: “This pro-

U. S. 547; 12 Sup. Ct. 195; 35 vision distinctly means a criminal

L. Ed. 1110; reversing 44 Fed. prosecution against a’ person who
812
IMMUNITY. 813

Legislation cannot detract from the privilege afforded
by this amendment; and it cannot replace or supply one,
unless it is so based as to have the same extent in scope and
effect. Any statute which leaves a witness or party subject
to a prosecution after he answers the criminating question
put to him cannot have the effect of supplanting the
privileges conferred by this amendment. A_ statutory
enactment, to be valid, must afford absolute immunity
against future prosecuticn for the offense to which the
question relates.”

“Tf the testimony sought cannot possibly be used as a
basis for, or in aid of, a criminal prosecution against the
witness, the rule ceases to apply, its object being to protect
the witness himself and no one else—much less that it shall
be made use of as a pretext for securing immunity to

others.’’®

is accused and who is to be tried
by a petit jury. <A criminal
prosecution under article six of
the amendments, is much nar-
rower than a ‘criminal case,’ un-
der article five of the amend-
ments. It is entirely consistent
with the language of article five,
that the privilege of not being a
witness against himself is to be
exercised in a proceeding before
a grand jury.” The court disap-
proved of People v. Kelly, 24 N.
Y. 74.

2Counselman v. Hitchcock, su-
pra. The court held that section
860, hereafter quoted, did not sup-
ply a complete protection from all
the perils against which the con-
stitutional prohibition was de-
signed to guard, and was not a
full substitute for that prohibi-
tion. The provisions of the Fifth
Amendment were examined at
length in Brown v. Walker, 161

U. S. 591; 16 Sup. Ct. 664; 40
L. Ed. 819; 5 Interst. Com. Rep.
369; affirming 70 Fed. 46, and the
provision in the Interstate Com-
merce Commission Act, quoted
hereafter, held valid as affording
absolute immunity against prose-
cution, Federal or State, for the
offense to which the question re-
lates, and deprives the witnuss of
his constitutional right to refuse
to answer.

3 Brown v. Walker, 161 U. S.
591, 597; 16 Sup. Ct. 644; 40 L.
Ed. 819; 5 Interstate Commerce
Rep. 369; affirming 70 Fed. 46.
The court proceeds as follows:
“Thus, if the witness himself
elects to waive his privilege is for
his protection and not for that
of other parties, and discloses his
criminal connections, he is not
permitted to stop, but must go
on and make a full disclosure.
Green]. Ev. -section 451; Dixon v.
814

THE SHERMAN ANTI-TRUST ACT.

This amendment was discussed quite recently somewhat

at length:

“‘The cbject of the amendment is to establish in express
jJanguage and upon a firm basis the general principle of
English and American jurisprudence, that no one shall be

compelled to give testimony which

Vale, 1 C. & P. 278; East v. Chap-
man, 2 C. & P. 570; 8. GC. M. &
AL 46; State v. K- , 4+ N.
H. 562; Low vy. Mitchell, 18 Maine
372; Coburn v. O’Dell, 10 Fost.
(N.H.) 540; Norfolk v. Gaylord,
28 Conneticut 309; Austin v.
Poiner, 1 Sim. 348; Common-
wealth v. Pratt, 126 Mass. 462;
‘hamberlain v. Willson, 12 Ver-
mont 491; Lockett v. State, 63
Alabama 5; People v. Freshour,
55 California 375. 1. So, under
modern statutes permitting ac-
cused persons to take the stand
in their own behalf, they may be
subjected to cross-examination up-
on their statements. State v.
Wentworth, 65 Maine 234; State
vy. Whitham, 72 Maine 531; State
v. Ober, 52 N. TH. 492; Common-
wealth v. Morgan, 107 Mass. 199;
Commonwealth v. Mullen, 97
Mass. 545; Connors v. People, 50
N. Y. 240; People v. Casey, 72
N. Y. 393. 2. For the same
reason if a prosecution for a
crime, concerning which the wit-
ness is interrogated, is barred by
the statute of limitations, he is
compellable to answer. Park-
hurst v. Lowten, 1 Merivale 391.
400; Calhoun v. Thompson, 56
Alabama 166; Mahanke y. Cle-
land, 76 Towa 401; Weldon v.
Burch, 12 Illinois 374; United
States v. Smith. 4 Day 121; Close

 

may expose him to

v. Olney, 1 Denio 319; People v.
Mather, 4 Wend. 229, 252-255;
Williams v. Farrington, 11 Cox
ch. R. 202; Davis v. Reid, 5 Sim.
443; Floyd v. State, 7 Tex. 215;
Maloney v. Dows, 2 Hilt. 247;
Wolfe v. Goulard, 15 Abb. Pr. 336.
3. If the answer of the witness
may have a tendency to disgrace
him or bring him into disrepute,
and the proposed evidence be ma-
terial to the issue on trial the
great weight of authority is that
he may be compelled to answer,
although, if the answer can have
no effect upon the case, except so
far as to impair the credibility
of the witness, he may fall back
upon his privilege. 1 Greenl. on
Ev. sections 454 and 455; People
v. Mather, 4 Wend. 229; Lohman
v. People, 1 N. Y. 379; Common-
wealth v. Roberts, Brightly, 109;
Weldon v. Burch, 12 Illinois, 374;
Cundell v. Pratt, Moody & Malkin,
108; Ex parte Rowe, 7 California
184, But even in the latter case,
if the answer of the witness will
not directly show his infamy, but
only tend to disgrace him, he is
bound to answer. 1 Greenl. on
Ev. section 456. The cases of
Respublica v. Gibbs, 3 Yeates 515
to the contrary, are opposed to
the weight of authority. The ex-
tent to which the witness is com-
pelled to answer such questions
IMMUNITY. 815
prosecution for crime. It is not declared that he may not be
compelled to testify to facts which may impair his reputation
for probity, or even tend to disgrace him, but the line is
drawn at testimony that may expose him to prosecution. If
the testimony relate to criminal acts long since past, and
against the prosecution of which the statute of limitations
has run, or for which he has already received a pardon or
is guaranteed an immunity, the amendment does not apply.

‘‘The interdiction of the Fifth Amendment operates only
where a witness is asked to incriminate himself—in other
words, to give testimony which may possibly expose him to
a criminal charge. But if the criminality has already been
taken away, the amendment ceases to apply. The criminality
provided against is a present, not a past criminality, which
lingers only as a memory and involves no present danger
of prosecution. To put an extreme case, a man in his
boyhood or youth may have committed acts which the law
pronounces criminal, but it would never be asserted that
he would thereby be made a criminal for life. It is here
that the law steps in and says that if the offense be outlawed
or pardoned, or its criminality has been removed by statute,
the amendment ceases to apply.’

as do not fix upon him a criminal
culpability is within the control
of the legislature. State v. No-
well, 58 N. H. 314, 316. 4. It is
almost a necessary corollary of
the above propositions that, if the
witness has already received a
pardon, he can not longer set up
his privilege, since he stands with
respect to such offense as if it had
never been committed. Roberts v.
Allat, Moody & Malkin, 192; over-
ruling Rex v. Reading, 7 How. St.
Tr. 259, 296, and Rex. v. Earl of
Shaftsbury, 8 How. St. Tr. 817;
Queen v. Boyes, 1 B. & S. 311,
321; Brown v. Walker, 161 U. S.

591, 597; 16 Sup. Ct. 644; 40 L.
Ed. 819; 5 Interst. Com. Rep.
369; affirming 70 Fed. 46. <A wit-
ness can not set up the beuefits
of the amendment on behalf of any
other person or of a corporation
of which he is an officer. Hale v.
Henkel, 201 U. 8S. 43; 26 Sup. Ct.
370; 50 L. Ed. 652; affirming 139
Fed. 496; McAllister v. Henkel,
201 U. S. 90; 26 Sup. Ct. 385:
50 L. Ed. 671; Nelson v. United
States, 201 U. S. 32; 26 Sup. Ct.
358; 50 L. Ed. 673.

4Hale v. Henkel, 201 U. S. 48,
66; 26 Sup. Ct. 370; 50 L. Ed.
652; affirming 139 Fed. 496.
816 THE SHERMAN ANTI-TRUST ACT.

A witness is not excused from testifying before a grand
jury under a statute which provides for immunity, because
he may not be able, if subsequently indicted, to procure the
evidence necessary to maintain his plea of immunity; for
the law takes no account of the practical difficulty which
a party may have in procuring his testimony. He cannot
refuse to testify before a Federal grand jury in face of a
Federal statute granting him immunity from prosecution as
to matters sworn to, because the immunity does not extend
to prosecutions in a state court. In. granting immunity the
only danger to be guarded against is one within the same
jurisdiction and under the same sovereignty. A witness who
cannot avail himself of this amendment as to oral testimony,
because of a statute granting him immunity from prosecu-
tion, cannot set it up as against the production of books and
papers, as the same statute would equally grant him
immunity in respect to matters proved thereby.°®

This constitutional provision applies to a witness before
a grand jury; and if asked concerning his participation in
and knowledge of the Interstate Commerce Commission Act
of February 4, 1887,° and he cannot be prosecuted for a
violation of the Sherman Act upon the facts he has thus
disclosed.”

A statute granting immunity to be valid must be as
broad as the privilege given by this amendment.® If the
offense the witness is guilty of has been barred by the statute
of limitations at the date of his testimony, he cannot claim
his privilege under the constitution but must answer regard-
less of whether he has been indicted or not.”

= Hale v. Henkel, 201 U. S. 438;
26 Sup. Ct. 370; 50 L. Ed. 652;
affirming 139 Fed. 496.

624 Stat. at Large, 379.

7¥Foot v. Buchanan, 113 Fed.
156. In this case it was held that
the immunity granted by the Act
of February 11, 1893, (27 Stat.
at Large, 443) had no application

to facts disclosed before a grand

‘jury investigating violators of the

Interstate Commerce Commission
Act of February 4, 1887 (24 Stat.
at Large 379).

8 United States v. Armour &
Co., 142 Fed. 808.

®In re Kittle, 180 Fed. 946.
IMMUNITY. 817

A corporation has no privilege against self-incrimination
under the Fifth Amendment.’

§ 469. Statute Granting Immunity—Appropriation—Stat-
ute.—In the Federal Appropriation Act of February 25,
1903, it is provided as follows:

‘“‘That for the enforcement of the provisions of the act
entitled ‘An Act to regulate commerce,’ approved February
fourth, eighteen hundred and eighty-seven, and all acts
amendatory thereof or supplemented thereto and of the
act entitled ‘An Act to protect trade and commerce against
unlawful restraints and monopolies,’ approved July second,
eighteen hundred and ninety, and all acts amendatory
thereof or supplemented thereto, and sections seventy-three,
seventy-five and seventy-six of the act entitled ‘An Act to
reduce taxation, to provide revenue for the government, and
for other purposes,’ approved August twenty-seventh,
eighteen hundred and ninety-four, the sum of five hundred
thousand dollars, to be immediately available, is hereby
appropriated, out of any money in the Treasury not hereto-
fore appropriated, to be expended under the direction of
the attorney general in the employment of special counsel
and agents of the Department of Justice to conduct pro-
ceedings, suits and prosecutions under said acts in the
courts of the United States: Provided, That no person
shall be prosecuted or be subjected to any penalty or
forfeiture for or on account of any transaction, matter, or
thing concerning which he may testify or produce evidence,
documentary or otherwise, in any proceeding, suit, or
prosecution under said acts: Provided further, That no

10 Simon v. American Tobacco 652; affirming 139 Fed. 496;
Co., 192 Fed. 662; Wilson v. Heike v. United States, 227 U. S.
United States, 221 U. S. 361, 382, 131; 33 Sup. Ct. 226; 57 L. Ed.
388; 31 Sup. Ct. 538; 55 L. Ed. —; affirming 192 Fed. 83; 112 C.
771; Hale v. Henkel, 201 U. S. 43, C. A. 615.

70, 78; 26 Sup. Ct. 370; 50 L. Ed.
818 THE SHERMAN ANTI-TRUST ACT.
person so testifying shall be exempt from prosecution or
punishment for perjury committed in so testifying.’”? * * *

The word ‘‘proceeding’’ used in this statute must be given
as wide a construction as is necessary to protect the witness
in his disclosures. It covers an instance where a grand jury
has begun an investigation on its own initiative without a
presentment or formal indictment.??

This statute furnishes a sufficient immunity from prose-
cution to satisfy the constitutional guaranty, although it
does not afford immunity from prosecution in the state
courts for the offense disclosed.*

§ 470. Other Immunity Statutes——Under section nine of
the Interstate Commerce Act of February 4, 1887, any one
damaged by an interstate common carrier was given a right
to recover damages, and the court can ‘‘compel any director,
officer, receiver, trustee, or agent of the corporation or
company defendant in such suit to attend, to appear and
testify in such case, and may compel the production of books
and papers of such corporation and company party to any
such suit; the claim that any such testimony or evidence may
tend to criminate the person giving such evidence shall not
excuse such witness from testifying, but such evidence or

1132 Stat. at Large 904; U. S.
Comp. Stat. Supplement, 1905,
1142.

12Hale v. Henkel, 201 U. S.
43; 26 Sup. Ct. 370; 50 L. Ed.
652; affirming 139 Fed. 496; Mc-
Allister v. Henkel, 201 U. S 90;
26 Sup. Ct. 385; 50 L. Ed. 671;
in re Kittle, 180 Fed. 803.

13 Hale v. Henkel, supra; Nel-
son v. United States, 201 U. S.
92; 26 Sup. Ct. 358; 50 L. Ed.
673. The statute above quoted
was amended June 30, 1906, by
adding the provision that such

“immunity shall be extended only
to a natural person who, in obedi-
ence to a subpoena, gives testi-
mony under oath or produces evi-
dence, documents or otherwise un-
der oath.” Stat. at Large, 798;
U. S. Comp. St. Sup. 190, 1168;
Heike v. United States, 192 Fed.
83; 112 C. C. A. 615; affirmed,
227 U. 8. 131; 33 Sup. Ct. 226; 57
L. Ed. —. (“This last proviso
was added only from superfluous
caution and throws no light on its
construction.” )
IMMUNITY. 819
testimony shall not be used against such person on the trial
of any criminal proceeding.’’ 1*

On February 11, 1893, a supplementary act was passed
which provided as follows: ‘‘But no person shall be pro-
secuted or subjected to any penalty or forfeiture for or on
account of any transaction, matter or thing concerning which
he may testify or produce evidence, documentary or other-
wise, before said commission, or in obedience to its
subpoena, or the subpoena of either of them, or in any such

case or proceeding.”?°

1424 Stat. at Large, 382; 3
Fed. Stat. Annotated 833; amend-
ed, March 2, 1889, 25 Stat. at
Large 855, in’ 382 and February
10, 1891. 26 Stat. at Large, 743
in 128; U. S. Comp. St. 1901, 3154.
Many decisions on immunity of
witnesses relate to section 860 of
the Revised Statutes; but that sec-
tion has been repealed in 36 Stat.
at Large 352. It was as follows:
“No pleading of a party, nor any
discovery or evidence obtained
from a party or witness by means
of a judicial proceeding in this or
any foreign country, shall be given
in evidence, or in any manner used
against him or his property or
estate, in any court of the United
States, in any criminal proceeding,
or for the enforcement of any pen-
alty or forfeiture: provided, that
this section shall not exempt any
party or witness from prosecution
and punishment for perjury com-
mitted in discovery or testifying
as aforesaid.” This was the Act
of February 25, 1868, ch. 13; 15
Stat. at Large 37. This section
860 has been construed in these
cases; United States v. Highes,
12 Blatehf. 553; 26 Fed. Cas. No.
15417; reversing Wl. Int. Rev.

Rec. 76; 26 Fed. Cas. No. 15419;
United States v. Myers, 1 Hughes
533; United States v. McCarthy,
21 Blatchf. 469; United States v.
McCarthy, 18 Fed. 87; United
States v. Smith, Fed. 501; ex
parte Irvine, 74 Fed. 954; United
States v. Bell, 81 Fed. 830; United
States v. Brown, 1 Sawy. 531; 24
Fed. Cas. No. 14671; Snow v.
Mart, 62 Fed. 623; La Baurgogue,
104 Fed. 823; Wyckoff v. Wagner
Typewriter Co. 99 Fed. 158;
United States v. Kimball, 117 Fed.
156; Tucker v. United States, 151
U. S. 164; 14 Sup. Ct. 299; 38
L. Ed. 112; Counselman v. Hitch-
cock, 142 Fed. 547; 12 Sup. Ct.
195; 35 L. Ed. 1110; 3 Interst.
Com. Rep. 326; reversing 44 Fed.
268.

1527 Stat. at Large, 443; U. S.
Comp. St. 1901, 3173. This clause
affords absolute immunity against
prosecution, Federal or state, for
the offense to which the question
relates, and deprives the witness
of his constitutional right to re-
fuse to answer. Brown v.. Walker,
161 U. S. 591; 16 Sup. Ct. 644;
40 L. Ed. 819; affirming 70 Fed.
46.
820 THE SHERMAN ANTI-TRUST ACT.

The Commerce and Labor Act of February 14, 1903, pro-
vides as follows:

‘‘All the requirements, obligations, liabilities, and immu-
nities imposed or conferred by said ‘Act to regulate com-
merce,’ and by ‘an Act in relation to testimony before the
Interstate Commerce Commission,’ and so forth, approved
February eleventh, eighteen hundred and _ ninety-three,
supplemental to said ‘Act to regulate commerce,’ shall also
apply to all persons who may be subpoenaed to testify as
witnesses or to produce documentary evidence in pursuance

of the authority conferred by this section.’’ '®

16 32 Stat. at Large, 827; U. 8.
Comp. St. Supp. 1905, 68. The
purposes of Congress in passing
this last act has thus been stated:
“lt is necessary to look into the
purposes of Congress in passing
the Commerce and Labor Act in or-
der that the court may determine
what construction will best carry
out the legislative intent. It is
the duty of the court in constru-
ing an act to give it such con-
struction as will carry out the
legislative purpose expressed in
the act itself. It is clear to my
mind that the primary purpose of
the Commerce and Labor Act was
to enable Congress, by information
secured through the work of the
officers charged with the execution
of that law, to pass such remedial
legislation as might be found nec-
essary. I regard this as the prim-
ary purpose, the chief purpose, a
legislative purpose. It is clear
from the act itself that, if there
be a secondary purpose, the legis-
lative purpose, was vastly more
important in the mind of Congress
than any other. Congress wanted to
know how the laws with regard to

Section 12

corporations were operating, how
they were being evaded, how to
strengthen them, in case they need-
ed strengthening. In my judgment,
the purpose of every one of these
laws, the high aim of Congress in
passing them, was a determined
purpose that the corporation, the
creature of the law, should not be
allowed to grow beyond the law.
The Commerce and Labor Act is
the repeated attempt of Congress
to bring to its aid such informa-
tion as would enable Congress to
do whatever might be necessary
for the control of corporations.
Perhaps a secondary purpose was
the punishment of offenders. It is
perfectly clear to my mind that
this was not the main purpose, be-
cause there were abundant laws
already on the statute books for
that, and a great department
skilled in the work of punishing
offenders. And still I am not able
to say but that a secondary pur-
pose of the Commerce and Labor
Act might have been the punish-
ment of offenders. And I say this
because it is not inconsistent with
the act, or with the declared prim-
IMMUNITY. 821
of the Interstate Commerce Commission Act, as amended
March 2, 188917 and February 10, 1891,?* provides among
other things, as follows:

‘‘And for the purposes of this Act the Commission shall
have the power to require, by subpoena, the attendance and
testimony of witnesses and the production of all books,
papers, tariffs, contracts, agreements, and documents relating
to any matter under investigation.

‘‘Such attendance of witnesses, and the production of
such documentary evidence, may be required from any place
in the United States, at any designated place of hearing.
And in ease of disobedience to a subpoena the Commission,
or any party to a proceeding before the Commission, may
invoke the aid of any court of the United States in requiring
the attendance and testimony of witnesses and the production
of books, papers, and documents under the provisions of this
section.

‘‘And any of the circuit courts of the United States within
the jurisdiction of which such inquiry is carried on may, in
case of contumacy or refusal to obey a subpoena issued to
apy common carrier subject to the provisions of this Act, or
other person, issue an order requiring such common carrier
or other person to appear before said Commission (and
produce books and papers if so ordered) and give evidence
touching the matter in question; and any failure to obey
such order of the court may be punished by such court as
a contempt thereof. The claim that any such testimony or
evidence may tend to criminate the person giving such
evidence shall not excuse such witness from testifying but
such evidence or testimony shall not be used against such
person on the trial of any criminal proceeding.’’®

ary purpose, that this should be
done so far as the corporation it-
self is concerned. This is made
pretty clear by the late decision
in the Hale case.” United States
y. Armour, 142 Fed. 808.

1725 Stat. at Large, 858, ch.
382, section 3.

1826 Stat. at Large, 743, ch.
128.

19 The Act of February 11, 1893,
supra, was enacted to satisfy the
822 THE SHERMAN ANTI-TRUST ACT.

§ 471. Immunity and Pardon, Difference.—Immunity and
pardon differ. ‘‘Immunity does not mean that no acts in
fact were done, but that there may be no prosecution in
respect thereto. Immunity does not wipe out the history
of events.’’*° But the legal effect of a pardon or amnesty
is to wholly obliterate the offense, and all its consequences;
to furnish a legal equivalent for conclusive proof that the
person receiving it can never be punished for the offense he
had committed. It puts the offender in the same position
as though what he had done never had been unlawful; but
it does not close the judicial eye to the fact that once he

had done the acts which constituted the offense.**

demand of the Fifth Amendment,
and does so by affording the wit-
ness absolute immunity from fu-
ture prosecution for any offense
arising out of the transactions to
which his testimony relates, and
which might be aided, directly or
indirectly, thereby so as to leave
no ground on which the constitu-
tional privilege may be invoked.
It operates as an act of general
amnesty for all such offenses, but
does not operate or shield against
prosecution for offenses committed
aiter the testimony is given or
the evidence furnished. United
States v. Swift, 186 Fed. 1002. “T
see no significance, helpful to re-
spondents, in the fact that in this
immunity statute reference is
made to persons who gave testi-
mony, and in the commerce and
labor statute reference is made to
persons who ‘gave testimony as
witnesses.’ Although possible rea-
sons are suggested for a distinc-
tion, I see no substantial reason,
and I should draw the inference
that Congress uses the two phrases
indiscriminately, intending that

one should mean the same as the
other.” United States v. Stan-
dard Sanitary Mfg. Co., 1°7 Fed.
229. The Immunity Act of Feb-
ruary 11, 1893, quoted above, has
no application to facta disclosed
before the grand jury investigating
a violation of the Interstate Com-
merce Commission Act of Febru-
ary 4, 1887 (24 Stat. at Large
379). Foot v. Buchanan, 113 Fed.
156. Under the Act of February
19, 1903 (32 Stat. at Large, 848;
U. 8. Comp. St. Supp. 1903, 365),
an inquisition by a grand jury
to determine the existence of sup-
posed violations of the Sherman
Anti-Trust Act, is a “proceeding”
within the meaning of that word
as used therein. In re Hale, 139
Fed. 496; affirmed, 201 U. S 43;
26 Sup. Ct. 370; 50 L. Ed. 652; in
re Kittle, 180 Fed. 946.

20 United States v. Swift, 186
Fed. 1002.

27 United States v. Armour, 142
Fed. 808; Garland’s Case 18
Wall. 333; 18 L. Ed. 366; Brown
v. Walker, 161 U. S 591; 16 Sup.
Ct. 644; 40 L. Ed. 819; affirming
IMMUNITY, 823

§ 472. Corporations, Fifth Amendment—Books and
Papers.—A corporation being a creature of the state has not
the constitutional right to refuse to submit books and papers
for an examination at the suit of a state; and an officer of
it, when it is charged with a criminal violation of a statute
cannot plead the immunity of the corporation as a refusal
to produce its books. Its franchises, so far as they involve
questions of interstate commerce, are exercised in subordina-
tion to the power of Congress to regulate such commerce;
and while Congress may not have a general visitorial power
over state corporations, its powers in vindication of its
own laws are the same as if the corporation had been created
by an act of Congress.2? An officer of a corporation
producing the books of his corporation, before a grand jury,
containing statements of facts shown in violation of the
Sherman Act, produced in obedience to a subpoena, is not
entitled to immunity for an offense against the United States
committed in his official capacity, but which has no connec-
tion with the matter being investigated. Statements compiled
by the officers of a corporation do not constitute testimony
given or documentary evidence produced by him within the
meaning of the act of February 25, 1903.7%

70 Fed. 46; Heike v. United States,
227 U. S. 308; 33 Sup. Ct. 226; 57
L. Ed.; affirming 192 Fed. 83;
112 ©. C. A 615. The privilege
against self-incrimination is per-
sonal to the witnesses and can not
be availed of by a corporation, to
justify withholding its books, cor-
respondence, and accounts, or clos-
ing the mouths of its servants and
agents as witnesses. Simon v.
American Tobacco Co., 192 Fed.
662. A corporation has no priv-
ilege against self-incrimination un-
der the fifth amendment. Simon
vy. American Tobacco Co., supra;
Wilson v. United States, 221 U. S.

361; 31 Sup. Ct. 538; 55 L. Ed.
771; Hale v. Henkel, 201 U. S.
43; 26 Sup. Ct. 370; 50 L. Ed.
652; affirming 139 Fed. 496.

22 Hale v. Henkel, 201 U. S. 43;
26 Sup. Ct. 370; 50 L. Ed. 652;
affirming 139 Fed. 496; Simon v.
American Tobacco Co., 192 Fed.
662; United States v. Armour &
Co., 142 Fed. 808; Wilson v.
United States, 221 U. S. 361; 31
Sup. Ct. 538; 55 L. Ed. 771;
United States v. Terminal R. As-
s’n, 148 Fed. 486; United States
v. Terminal R. Ass’n, 154 Fed. 268.

23 Heike v. United States, 192
Fed. 83.
824 THE SHERMAN ANTI-TRUST ACT.

§ 473. Unreasonable Search—Fourth Amendment.—The
Fourth Amendment to the Federal Constitution provides as
follows: ‘‘The right of the people to secure in their persons,
however, papers, and effects against unreasonable searches
and seizures shall not be violated; and no warrant shall issue,
but upon probable cause, supported by oath or affirmation,
and particularly describing the places to be searched and
the persons or things to be seized.’’ This provision does
not prevent Congress investigating the Interstate Commerce
Commission with authority to require the attendance and tes-
timony of witnesses, and the production of books, papers,
tariffs, contracts, agreements and documents in any matter
legally committed to that body for investigation.”*

This amendment ‘‘was not intended to interfere with the
power of courts to compel, through a subpoena duces tecum,
the production upon a trial in court, of documentary
evidence.’’ Without this writ it would be utterly impossible
to carry on the administration of justice.**

It applies to a corporation and protects it from unreason-
able search.*®

A subpoena duces tecum requiring a corporation to produce
all its books, letters, contracts, agreements, is practically a
search warrant, unsupported by oath, and unreasonable. An
officer of a corporation to whom it is directed is justified in
refusing to obey it. But that does not mean that he may
not be compelled to produce a certain document or documents
of the corporation, although incriminating, in a criminal
prosecution against it.27 This Fourth Amendment affords no

24 Interstate Commerce Commis-
sion v. Brimson, 154 U. S. 447;
14 Sup. Ct. 1125; 15 Sup. Ct. 19;
38 L. Ed. 1047; reversing 53 Fed.
476; Interstate Commerce Com-
mission v. Baird, 194 U. S. 25;
24 Sup. Ct. 563; 48 L. Ed. 860;
reversing 123 Fed. 969.

25 Hale v. Henkel, 201 U. S. 43;
26 Sup. Ct. 370; 50 L. Ed. 652;
affirming 139 Fed. 496.

26 Boyd v. United States, 116 U.
S. 616; 6 Sup. Ct. 524; 29 L. Ed.
746; Hale v. Henkel, supra.

27 Hale v. Henkel, 201 U. S. 43;
26 Sup. Ct. 370; 50 L. Ed. 652;
affirming 139 Fed. 496.
IMMUNITY. 825
protection to a witness for his refusal to produce books and
papers in his possession in obedience to a subpoena duces
tecum issued by a court of equity.?®

§ 474. Answer in Equity Furnishing Immunity in Crim-
inal Prosecution.—If the government bring a suit in equity
and require the defendants to answer, under oath, the fact
that the government exacted an answer, whether under oath
or not, does not entitle him to claim immunity from prose-
cution for a criminal offense involved in the same criminal
acts as those set forth in the answers. The _ evidence
furnished by the answer is not evidence ‘‘produced in
obedience to’’ a subpoena, in an equity proceeding.”

§ 475. Witnesses Not Called by Government.—The
statutes have no application to a person not called as a
witness, or of whom information has not been sought, by the
government. Thus, though applying to both a criminal
and a civil suit, it does not apply to witnesses called by the
defense in either a civil or a criminal action, and especially
to defendants called by co-defendants.*

28 United States v Terminal R. 30 United States v. Standard

Ass’n. 148 Fed. 486.

29 United States v. Standard
Sanitary Mfg. Co., 187 Fed. 232.
‘Defendants under such a bill as
was filed here are not, with my
construction of this immunity stat-
ute, in danger of losing any con-
stitutional rights. They mav ab-
solutely refuse to incriminate
themselves by any statement, by
whatever name it may be called,
and with or without an oath. It
may not be pleasant to take this
position, but such is the constitu-
tional method of preserving a con-
stitutional right.” See also Simon
v. American Tobacco Co., 192 Fed.
662.

Sanitary Mfg. Co., 187 Fed. 232.
The court said: “If, then, it was
the intention of Congress to per-
mit defendants to call each other
and give them immunity, it is clear
that the power to do so extended
as well to civil proceedings as to
criminal prosecutions. Was such
the intention? If it was, it ena-
bles a defendant in either a civil
suit or criminal prosecution un-
der the act to be called as a wit-
ness for a co-defendant, and there-
by become immuned against the
conviction under the indictment,
and each defendant could call the
other, until they brought about an
immunity of all the defendants in
826 THE SHERMAN ANTI-TRUST ACT.

§ 476. Monopoly Continued After Right to Immunity
Due.—In the case of a monopoly continued after the defend-
ant has disclosed the facts, or furnished evidence of them,
constituting the monopoly then and prior thereto, such
disclosure will not furnish immunity from prosecution for
the offense committed after such disclosure. To so hold, then
all who have formed or become parties to a monopoly may
entirely escape immunity from prosecution by disclosing
their criminal conduct when required by the government to
do so and thereafter, without any fear of prosecution,
continue the illegal monopoly into which they had formerly

entered.**

the indictment. It would follow
that no conviction under the Act
could in any case be had, because
the trial of the offenders would
simply afford them the opportun-
ity of calling each other as wit-
nesses, and the result of the trial
would be an expensive pe:formance
on the part of the government to
enable the defendants to secure im-
munity. Such a construction, lead-
ing to the absurd and unreason-
able results indicated, can not, un-
der the authorities, be adopted by
this court, when the statute is sus-
ceptible of a rational construction,
such as will enable a proper and
effective enforcement of all the pro-
visions of the Act.” The court
added: “We hold that it was not
the intention of Congress, in pass-
ing the Immunity Act for the en-
forcement of the provisions of the
Sherman law, either in civil or
criminal proceedings, to extend im-
munity to defendants called as wit-
nesses by co-defendants to testify
in the latter’s behalf so that the
motion to compel the witnesses to
answer the questions is overruled.”

31 United States v. Swift, 186
Fed. 1002. “Again, suppose in
1904 the defendants admitted to
the Commissioner of Corporations
that they had conspired together
to restrain the fresh meat trade in
this country. Suppose that the
confession were used to searca out
other evidence tending to show
that the conspiracy organized in
1904 had been in continuous opera-
tion up to and including the month
of September, 1910. Can they
stand holding upon the proposition
that with respect to those matters,
transactions, and things which
they had confessed they are im-
mune for all time to come? Not
only immunc from punishment con-
cerning the things of the past
which they disclosed, but immune
from punishment for eontinuing in
their unlawful engagement? Not
only that, but immune from the
use of the evidence against them
for any purpose at any time there-
after? Immunity does not mean
license. If it does, then one need
only to confess his crime, and his
license to violate the law becomes
IMMUNITY. 827
§ 477. What is The Giving of Evidence Under Compul-
sion of Law.—In order to get immunity the compulsion to
give the evidence need not become irresistible. This question
has been discussed by Judge Humphrey wherein he said:

“The contention has been made that in order to get
immunity the citizen shall wait until the compulsion becomes
irresistible. That is the effect of the government contention.
I am not able to bring my mind to accept that doctrine. If
I am right in saying that immunity flows from the law,
without any claim on the part of the defendant—and at
different times that has been conceded here in argument—
then no act of any kind on his part which amounts to a
claim of immunity, which amounts to setting up a claim
of immunity, is demanded by the law. The law never puts a
premium on contumacy. <A person does not become a
favored citizen by resistance to a lawful requirement. On
the contrary, the policy of the law favors the willing giving
of evidence whenever an officer entitled to make a demand

perpetual. Any consideration of
the so-called immunity or consti-
tutional privilege which results in
the giving of license to continue an
unlawful act, or immunity from
prosecution for future crime, would
be intolerable. The defendants
must rest squarely upon the propo-
sition that the immunity granted
by the statute is broader than the
privilege of the Constitution. How-
ever, both the Constitution and the
immunity statute apply only to in-
criminating evidence; the former
by construction given by the Su-
preme Court of the United States,
and the latter by its very terms.
I can not agree that the immunity
act purposely was made attractive
as a kind of bonus or bribe to
induce innocent disclosures by the
promise that a future crime con-

eerning the acts, transactions, and
things testified about would pass
unpunished. I do not believe that
the defendants here accused are
immune for all time to come from
the punishment prescribed by the
Sherman Act, with respect to in-
terstate commerce in meat in this
country. No matter how the ar-
guments of counsel are analyzed,
they lead ever to that result. It
must follow, if their position is
sound, that a general statement
of one’s business made to the
Commissioner of Commerce and
Labor will prevent the govern-
ment from using such information
in any way, for the purpose of
ferreting out or prosecuting
future crimes connected with that
business.”
828 THE SHERMAN ANTI-TRUST ACT.

makes it upon a citizen who has a right to refuse. And it
would be absurd and un-American to favor the citizen who
resists and places obstacles in the way of the government
as against the citizen who, with a full knowledge of the law,
obeys without resistance the demand of an officer who has
the legal right to make the demand for something which the
citizen has no legal right to refuse. This, then, is the pro-
position to which we are led: When an officer, who has a
legal right to make a demand, makes such demand upon a
citizen, who has no legal right to refuse, and that citizen
answers under such conditions, he answers under compulsion
of the law.”’

The evidence need not be secured in pursuance of a sub-
poena; nor need the books and papers for which immunity
is claimed have been produced with the oath of any person,
if they have been produced and show admissions against
interest and against the party producing them. If the
information has been furnished an officer of the government
in his official capacity when he had a right to demand it,
by an examination of the books of the defendant or by
answers to questions lawfully asked him which it was the
duty of the defendant to produce or answer, then such books
cannot be demanded and put in evidence in a criminal
prosecution against the defendant persons nor their answer
be given in evidence. The information need not be furnished
under oath.2? Notwithstanding what is said above, the
Amendment of June 30, 1906,** to the Act of February 25,
1903,34 provides that ‘‘immunity shall extend only to a

82 United States v. Armour & 532; 18 Sup. Ct. 183; 42 L. Ed.

Co., 142 Fed. 808. In this case
the defendants had testified before
the Commissioner of Corporations
pursuant to a resolution of the
House of Representatives of
March 7, 1904, without being
subpoenaed or sworn. See also
Bram v. United States, 168 U. S.

568; Boyd v. United States, 116
U. S. 616; 6 Sup. Ct. 524; 29 L.
Ed. 746.
3334 Stat. at Large, 798; V.
S. Comp. St. Supp. .909, 1168.
3432 Stat. av Uarge, 904; U.
S. Comp. St. Supp. 7909, 1142.
IMMUNITY. 829
natural person who, in obedience to a subpoena, gives
testimony under oath or produces evidence, documentary or
otherwise, under oath.’’®

§ 478. Immunity a Question for Judge.—lIt is not for the
witness to decide that a question will incriminate him, or
tend to do so, but for the judge to decide whether under all
the circumstances such might be the effect, and the witness
entitled to the privilege of silence. But where a witness
refused to answer a question put to him by grand jurors
on the ground that it would incriminate him, and he was
carried before the judge who assured him that no informa-
tion given by him would or could be used against him in
any prosecution in any court of the United States, it was
held that he still had the right to stand on his constitutional
privileges notwithstanding such assurance, and to remain
quiet whenever any question was asked, the answer to which
might tend to incriminate him.*®

30 Heike v. United States, 192 danger appears, great latitude

Fed. 83; affirmed 227 U. S. 131;
33 Sup. Ct. 226; 57 L. Ed. —.
36 Foot v. Buchanan, 113 Fed.
156. The court relied upon Tem-
ple v. Commonwealth, 75 Va. 892,
wherein it was said: “It is true
that the witness can not avoid
answering questions upon his
mere statement that his answers
to them will tend to criminate
him. It is for the judge to de-
cide whether his answer will rea-
sonably have such tendency, or
whether or not the witness is
entitled to the privilege of silence,
the court may look at all of the
circumstances of the case, and de-
termine whether or not there is
reasonable ground to apprehend
danger to the witness from his
being compelled to testify. In
the fact that the witness is in

should then be allowed to him in
judging for himself of the effect
of any particular question. A
question which might appear at
first a very slight and innocent
one might, by establishing « link
in a chain of evidence, become
the means of convicting the wit-
ness. Ex parte Irvine (C. C.) 74
Fed. 954. In the case at bar it
appears that the defendant was
already indicted for the offense
about which he was examined,
and the questions tended to con-
nect him with the offense for
which he is indicted. There can
be no doubt that under such cir-
cumstances, when the questions
are such as seek to connect him
with the crime under investiga-
tion, the court will not require
him to answer them.”
830 THE SHERMAN ANTI-TRUST ACT.

Where a circuit judge directed the issuance of a subpoena
duces tecum, and the witness was committed for contempt
for a failure to obey it, it was held, on application for a
writ of habeas corpus, that he would not be discharged by
another judge of the same court, though the latter was of
the opinion that the subpoena authorized an unconstitutional
search and seizure of private papers.°”

§ 479. Contempt—Appeal.—lIf a witness refuse to answer
questions asked lim before an examiner after order of the
court to do so, he is in contempt of court and may be
punished. The immateriality of the evidence sought to be
elicited cannot justify him in refusing to obey the order
requiring him to answer or to produce the books of a
corporation of which he is the officer by law in custody of
its books.** Such an order is interlocutory in the principal
suit and not a final one, it is not practically an independent
proceeding amounting to a final judgment. An appeal does
not lie therefrom to the Supreme Court.*®

§ 480. Release on Habeas Corpus.—If a witness be im-
prisoned because he will not answer an improper question,
he will be released on habeas corpus, and if he be required
to answer all the questions in a series, some of which are
proper and some not, he will not be denied the writ because
his refusal covered those that were proper.*® If the witness
refuses to obey and the court goes further and punishes

37 In re Hale, 139 Fed. 496; af- 358; 50 L. Ed. 373. If a witness

firmed, 201 U. 8. 43; 26 Sup. Ct.
370; 50 L. Ed. 652.

38 Nelson v. United States, 201
U. S. 92; 26 Sup. Ct. 358; 50 L.
Ed. 573.

39 Alexander v. United States,
201 U. S. 117; 26 Sup. Ct. 356;
50 L. Ed. 686; Nelson v. United
States, 201 U. S. 92; 26 Sup. Ct.

refuses to obey and the court goes
farther and punishes him for con-
tempt there is a right of review,
and this is adequate for his pro-
tection without unduly impeding
the process of the case. Alexan-
der v. United States, supra.

40 Foot v. Buchanan, 113 Fed.
156.
IMMUNITY. 831

him for contempt, there is a right of review, and this is

adequate for his protection without unduly impeding the
progress of the case.‘

41 Alexander v. United States, States, 201 U. S. 92; 26 Sup. Ct.
201 U. 8. 117; 26 Sup. Ct. 356; 358; 50 L. Ed. 673; in re Kittle,
50 L. Ed. 686; Nelson v. United 180 Fed. 946.
APPENDIX A.

An Act to Protect Trade and Commerce Against Unlawful
Restraints and Monopolies.

{Act of July 2, 1890, ch. 647, 26 Stat. L. 209.]

§1. (Trusts, Etc. in Restraint of Trade, Etc., Illegal—
Persons Combining Guilty of Misdemeanor.) Every contract,
combination in the form of trust or otherwise, or conspiracy,
in restraint of trade or commerce among the several states,
or with foreign nations, is hereby declared to be illegal.
Every person who shall make any such contract, or engage
in any such combination or conspiracy, shall be deemed
cuilty of a misdemeanor, and, on conviction thereof, shall be
punished by fine not exceeding five thousand dollars, or by
imprisonment not exceeding one year, or by both said
punishments, in the discretion of the court. (26 Stat. L.
209.)

§2. Persons Monopolizing Guilty of Misdemeanor.)
Every person who shall monopolize, or attempt to monopolize,
or combine or conspire with any other person or persons
to monopolize any part of the trade or commerce among the
several states, or with foreign nations, shall be deemed
guilty of a misdemeanor, and, on conviction thereof, shall
be punished by fine not exceeding five thousand dollars, or
by imprisonment not exceeding one year, or by both said
punishments, in the discretion of the court. (26 Stat. L.
209.)

§3. Trusts, Etc., in Territories or District of Columbia
Illegal—Persons Combining Guilty of Misdemeanor.)
Every contract, combination in form of trust or otherwise,

833
834 THE SHERMAN ANTI-TRUST ACT.

or conspiracy, in restraint of trade or commerce in any
territory of the United States or the District of Columbua,
or in restraint of trade or commerce between any such
territory and another, or between any such territory or
territories and any state or states or the District of Columbia
or with foreign nations or between the District of Columbia
and any state or states or foreign nations, is hereby declared
illegal. Every person who shall make any such contract, or
engage in any such combination or conspiracy, shall be
deemed guilty of a misdemeanor, and, on conviction thereof,
shall be punished by fine not exceeding five thousand dollars,
or by imprisonment not exceeding one year, or by both
said punishments, in the discretion of the court. (26 Stat.
L. 209.)

§4. (Jurisdiction of Courts—Duty of district attorneys—
Procedure—Hearing.) The several circuit courts of
the United States are hereby invested with jurisdiction to
prevent and restrain violations of this Act; and it shall be
the duty of the several district attorneys of the United
States, in their respective districts, under the direction of the
attorney general, to institute proceedings in equity to pre-
vent and restrain such violations. Such proceedings may
be by way of petition setting forth the case and praying
that such violation shall be enjoined or otherwise prohibited.
When the parties complained of shall have been duly notified
of such petition the court shall proceed, as soon as may be,
to the hearing and determination of the case; and pending
such petition, and before final decree, the court may at any
time make such temporary restraining order or prohibition as
shall be deemed just in the premises. (26 Stat. L. 209.)

§5. (Bringing in parties.) Whenever it shall appear
to the court, before which any proceeding under section four
of this Act may be pending, that the ends of justice require
that other parties shall be brought before the court, the
APPENDIX A. 835

court may cause them to be summoned, whether they reside
in the district in which the court is held or not; and sub-
poenas to that end may be served in any district by the
marshal thereof. (26 Stat. L, 210.)

§6. (Property of Trusts in Transit Forfeited.) Any
property owned under any contract or by any combination,
or pursuant to any conspiracy (and being the subject there-
of) mentioned in section one of this Act, and being in the
course of transportation from one state to another, or to a
foreign country, shall be forfeited to the United States, and
may be seized and condemned by like proceedings as those
provided by law for the forfeiture, seizure, and condem-
nation of property imported into the United States contrary
to law. (26 Stat. L. 210.)

§8. (Damages to Persons Injured—Suits.) Any
person, who shall be injured in his business or property by
any other person or corporation by reason of anything
forbidden or declared to be unlawful by this Act, may sue
therefor in any circuit court of the United States, in the
district in which the defendant resides or is found, without
respect to the amount in controversy, and shall recover
threefold the damages by him sustained, and the costs of
suit, including a reasonable attorney’s fee. (26 Stat. L.
210.)

§8. (‘‘Person’’ or ‘‘persons’’ defined.) That the
word ‘‘person,’’ or ‘‘persons,’’ wherever used in this Act,
shall be deemed to include corporations and associations
existing under or authorized by the laws of either the
United States, the laws of any of the territories, the laws
of any state, or the laws of any foreign country. (26
Stat. L. 210.)
APPENDIX B.
WILSON TARIFF ACT.

§73. (Trusts, Etc., in Restraint of Import Trade, Illegal
—Persons Combining, Etc., Guilty of Misdemeanor.) That
every combination, conspiracy, trust, agreement, or contract
is hereby declared to be contrary to public policy, illegal,
and void, when the same is made by or between two or more
persons or corporations, either of whom is engaged in
importing any article from any foreign country into the
United States, and when such combination, conspiracy,
trust, agreement, or contract is intended to operate in
restraint of lawful trade, or free competition in lawful trade
or commerce, or to increase the market price in any part of
the United States of any article or articles imported or
intended to be imported into the United States, or of any
manufacture into which such imported article enters or is
intended to enter. Every person who is or shall hereafter
be engaged in the importation of goods or any commodity
from any foreign country in violation of this section of this
Act, or who shall combine or conspire with another to
violate the same, is guilty of a misdemeanor, and, on con-
viction thereof in any court of the United States, such
person shall be fined in a sum not less than one hundred
dollars and not exceeding five thousand dollars, and shall
be further punished by imprisonment, in the discretion of
the court, for a term not less than three months nor
exceeding twelve months. (28 Stat. L. 570.)

This and sections 74-77 following are from the Act of
Aug. 27, 1894, ch. 349, ‘‘An Act to reduce taxation, to pro-
vide revenue for the Government, and for other purposes.’’

§74. (Jurisdiction of Courts—Duty of District Attor-
neys—Procedure—Hearing—Injunction.) That the several
circuit courts of the United States are hereby invested with

836
APPENDIX B: 837

jurisdiction to prevent and restrain violations of section
seventy-three of this Act; and it shall be the duty of the
several district attorneys of the United States, in their re-
spective districts, under the direction of the Attorney-Gene-
ral, to institute proceedings in equity to prevent and restrain
such violations. Such proceedings may be by the way of pe-
titions setting forth the case and praying that such viola-
tions shall be enjoined or otherwise prohibited. When the
parties complained of shall have been duly notified of such
petition the court shall proceed, as soon as may be, to the
hearing and determination of the case; and pending such
petition, and before final decree, the court may at any time
make such temporary restraining order or prohibition as shall
be deemed just in the premises. ( (28 Stat L. 570.)

See note to Section 73, supra.

§75. Bringing in Parties.) That whenever it shall
appear to the court, before which any proceeding under the
seventy-fourth section of this Act may be pending, that the
ends of justice require that other parties shall be brought
before the court, the court may cause them to be summoned,
whether they reside in the district in which the court is
held or not; and subpoenas to that end may be served in
any district by the marshal thereof. (28 Stat. L. 570.)

See note to Section 73, supra.

§76. Property of Trusts in Transit Forfeited.) That
any property owned under any contract or by any combi-
nation, or pursuant to any conspiracy (and being the sub-
ject thereof) mentioned in section seventy-three of this Act,
and being in the course of transportation from one State to
another, or to or from a Teritory, or the District of Colum-
bia, shall be forfeited to the United States, and may be seized
and condemned by like proceedings as those provided by law
for the forfeiture, seizure, and condemnation of property
838 THE SHERMAN ANTI-TRUST ACT.

imported into the United States contrary to law. (28 Stat.
L. 570.)

See note to Section 73, supra.

§77. (Damages to Persons Injured—Suits.) That any
person, who shall be injured in his business or property
by any other person or corporation by reason of anything
forbidden or declared to be unlawful by this Act, may sue
therefor in any circuit court of the United States, in the
district in which the defendant resides or is found, without
respect to the amount in controversy, and shall recover three
fold the damages by him sustained, and the costs of suit,
any district by the marshal thereof. (28 Stat. L. 570).

See note to Section 73, supra.
APPENDIX C.
NATIONAL TRADE UNIONS.

An Act to Legalize the Incorporation of National Trades
Unions. (Act of June 29, 1886, ch. 567, 24 Stat.
L. 86.)

§1. (‘‘National Trade Unions’’ Defined.) That the
term ‘‘National Trade Union,’’ in the meaning of this act,
shall signify any association of working people having two
or more branches in the States or Territories of the United
States for the purpose of aiding its members to become more
skillful and efficient workers, the promotion of their general
intelligence, the elevation of their character, the regulation
of their wages and their hours and conditions of labor, the
protection of their individual rights in the prosecution of
their trade or trades, the raising of funds for the benefit of
sick, disabled, or unemployed members, or the families of
deceased members, or for such other object or objects for
which working people may lawfully combine, having in view
‘their mutual protection or benefit. (24 Stat. L. 86.)

§2. (Incorporation in District of Columbia.) That
National Trade Unions shall, on filing their articles of in-
corporation in the office of the recorder of the District of
Columbia, become a corporation under the technical name
by which said National Trade Union desires to be known to
the trade; and shall have the right to sue and to be sued,
to implead and to be impleaded, to grant and to receive, in
its corporate or technical name, property—real, personal, and
mixed—and to use said property, and the proceeds and in-
come thereof, for the objects of said corporation as in its
charter defined: Provided, That each union may hold only
so much real estate as may be required for the immediate

purposes of its incorporation. (24 Stat. L. 86.)
839
840 THE SHERMAN ANTI-TRUST ACT.

§3. (Constitutions, Rules, and By-laws.) That an in-
corporated National Trade Union shall have power to make
and to establish such constitution, rules and by-laws as it
may deem proper to carry out its lawful objects, and the

same to alter, amend, add to, or repeal at pleasure. (24 Stat.
L. 86.)

§4. (Officers—Branches in the Territories.) That an
incorporated National Trade Union shall have power to de-
fine the duties and powers of all its officers, and prescribe
their mode of election and term of office, to establish branches
and sub-unions in any Territory of the United States. (24
Stat. L. 86.)

§5. (Headquarters to be in District of Columbia.)
That the headquarters of an incorporated National Trade
Union shall be located in the District of Columbia. (24
Stat. L. 86.)

§8. (National Trade Unions’ Constitutions to Forbid
Force, Violence, Etc., During Strikes, Lockouts, Etc.—Ap-
pearance Before Arbitration Board.) That in every incorpo-
ration under the provisions of chapter five hundred sixty-
seven of the United States Statutes of eighteen hundred
eighty-five and eighteen hundred eighty-six, it must be pro-
vided in the articles of incorporation, and. in the constitution,
rules, and by-laws that a member shall cease to be such by
participating in or by instigating force or violence against
persons or property during strikes, lockouts, or boycotts, or
by seeking to prevent others from working through violence,
threats or intimidations. Members of such incorporations shall
not be personally liable for the acts, debts, or obligations cf
the corporations, nor shall such corporations be liable for
the acts of members or others in violation of law; and such
APPENDIX C. 841

corporations may appear by designated representatives be-
fore the board created by this Act, or in any suits or pro-
ceedings for or against such corporations or their members in
any of the Federal courts. (30 Stat. L. 42.)

This is from the Act of June 1, 1898, ch. 370, ‘‘An Act
concerning carriers engaged in interstate commerce and their
employees,’’ set out in title LABOR, vol. 4, p..784.
APPENDIX D.

CONTROL OF CORPORATIONS, PERSONS, AND FIRMS
ENGAGED IN INTERSTATE COMMERCE.

[Senate Report No. 1326, Sixty-second Congress, third session.]

Mr. Cummins, from the Committee on Interstate Com-
merce, submitted the following report of the committee:

The Committee on Interstate Commerce, to which was re-
ferred the following resolution—

Resolved, That the Committee on Interstate Commerce is
hereby authorized and directed, by subcommittee or other-
wise, to inquire into and report to the Senate at the earliest
date practicable what changes are necessary or desirable in
the laws of the United States relating to the creation and con-
trol of corporations engaged in interstate commerce, and what
changes are necessary or desirable in the laws of the United
States relating to persons or firms engaged in interstate com-
merce, and for this purpose they are authorized to sit during
the sessions or recesses of Congress, at such times and places
as they may deem desirable or practicable; to send for per-
sons and papers, to administer oaths, to summon and compel.
the attendance of witnesses, to conduct hearings and have re-
ports of same printed for use, and to employ such clerks,
stenographers, and other assistants as shall be necessary, and
any expense in connection with such inquiry shall be paid
out of the contingent fund of the Senate upon vouchers to be
approved by the chairman of the committee.

begs leave to make the following report:
On the 26th day of July, 1911, the Senate adopted the
foregoing resolution, and acting under the authority and in

pursuance thereof, the Committee on Interstate Commerce
842
APPENDIX D. 843

provided for open hearings upon the subject matter of the
resolution. The hearings began on the 15th day of Novem-
ber, 1911, and were continued from day to day for more than
three months, during which time 103 men appeared before
the committee, and their statements, together with the ex-
hibits and documents submitted by them, fill 2,799 printed
pages. A printed copy of these statements, exhibits and
documents, including an index, laws and reference concern-
ing industrial combinations in foreign countries, and a col-
lection of judicial decisions touching the power of Congress.
in the regulation of commerce among the States, in all, five
volumes, is herewith presented to the Senate.

While the committee is conscious that some of the matter
adduced at the hearings and submitted as a part of this re-
port is not relevant to the questions under consideration and
of little worth, it believes that, upon the whole, the hearings
have furnished one of the most valuable contributions that
ean be found in the literature of the subject. It is not yet
ready to report any of the bills which are now before it, and
which propose specific modifications of or additions to the ex-
isting statute; nor is it prepared at this time to report a
substitute for them. It hopes that it may be able before the
close of the present session to act finally upon these bills and
recommend in definite form the legislation which it may think
necessary or wise to meet modern business conditions. It is,
however, prepared to answer the general inquiries pro-
pounded in the resolution, and in view of the overwhelming
importance of the subject it ventures to add to the direct
response some observations upon the origin, purpose, and ef-
fect to the enactment commonly known as the anti-trust law,
to indicate wherein it is inadequate, and to suggest the general
scope of further regulation.

The committee is of the opinion:

First. That the statute should stand as the fundamental
law upon the subject, and that any supplemental legislation
for more effectual control and regulation of interstate and
844 THE SHERMAN ANTI-TRUST ACT.

foreign commerce should be in harmony with the purpose cf
the existing statute.

Second. That whatever may be our views respecting the
power of Congress to enact a general Federal incorporation
law, it is neither necessary nor desirable at this time to pro-
vide for the organization under act of Congress of industrial
corporations which propose to engage in commerce among the
States and with foreign nations,

Third. That it is desirable to impose upon corporations
now or hereafter organized under State law, and engaged or
proposing to engage in such commerce, further conditions or
regulations affecting both their organization and the conduct
of their business, and also to impose further conditions or
regulations upon persons, copartnerships, and other associa-
tions now engaged, or hereafter engaging, in such commerce,
the general character of such regulation to be the same as
those laid upon corporations, except such conditions or regu-
lations as are in their very nature peculiar to the corporate
form of commercial activity.

It is plain that the first question to he answered in con-
sidering what additional legislation upon the subject is neces-
sary or desirable is a vital one, it is this: Should Congress
attempt to maintain competitive conditions in the general in-
terstate commerce of the country, where they still exist, and
to restore such conditions where they have heen destroyed, or
should it accept the complete or partial overthrow of compe-
titicn and resort to some other method cf protecting the pec-
ple against the power of combination and monopoly ?

Withcut doubt the chief if not the only object in mind,
when the anti-trust law was passed, was to maintain compe-
tition as an effective regulating force in business by making
it unlawful to enter into any contract or combination in re-
straint of trade or commerce among the States or with for-
eign nations, or to monopolize or attempt to monopolize, such
trade or commerce. The bill introduced by Senator Sherman,
out of which the present statute grew, was in terms directed
against the suppression of competition. After a long debate
APPENDIX D. 845

and much reflection the Judiciary Committee of the Senate
reported a substitute in which ‘‘restraint of trade” was the
thing forbidden instead of interference with competition. This
was accepted not because there was any abandonment of the
desire to preserve competition, but because there was a com-
mon law on the subject well established and carefully eluci-
dated in the English decisions. The common law was that
both contracts and acts in restraint of trade were injurious
to the public welfare and therefore opposed to public policy.
The Congress of 1890 very wisely borrowed the language of
the common law and with it came the learning of the judges,
who had from time to time declared and expounded it. It is
not the purpose of the committee to recite the development
of the English doctrine. It was not always stated with exact
accuracy and there is some inharmony of expression, but it
may be said with confidence that a restraint of trade con-
sisted of such unreasonable restriction of competition as
impaired substantially, and to the public injury, the freedom
of trade or the freedom to trade. Interference with free
competition was generally but not necessarily a restraint of
trade, for there were some restrictions that could be put upon
competition and upon competitors that left the competitive
force as an adequate protection to the people. Hence the
common law was that unreasonable, unfair, undue restraint
upon or interference with competition or competitive con-
ditions constituted a restraint of trade.

The committee has made this comment upon the common
law, and pointed out the distinction between ‘‘restraint of
competition’’ and ‘‘restraint of trade’’ in order that it may
be fully understood in its analysis of the conflict between the
earlier and later opinions of the Supreme Court of the United
States relating to the construction and application of the
anti-trust statute.

The committee will not at this time enter upon an extended
argument respecting the policy of maintaining competition
o7 competitive conditions in the business of the country. it
is well understood that there are many distinguished students
846 THE SHERMAN ANTI-TRUST ACT.

and: highly trained thinkers who believe that the age of
competition is past, and that for the struggle which com-
petition involves there should be substituted combination and
cooperation, under such regulation and supervision as will
protect the people from the oppression of monopolistic power,
and added to the students and thinkers who have reached this
conclusion through mere observation and investigation there
are many men engaged in commerce, and who therefore speak
from a practical standpoint, who have also concluded that
some form of regulated monopoly or concentration should Le
adopted. All these men, whether theorists or otherwise, admit
that if we abandon the effort to maintain competition the
Government must undertake, directly or indirectly, to fix
prices for the combinations or monopolies. The committee
feels that the time has not yet come for so radical a departure
from the long-established policy of the country, and it hopes
that the time may never come when it will be necessary for
the Government to assume the task of establishing prices for
general commodities. It believes that the progress of the
world depends in a large measure upon that fair, reasonabie
rivalry among men which has hitherto characterized tle
advances of civilization.

It is frequently declared that the law can not compel men
employed in like business to compete with each other. There
is a sense in which this is true, but it is only technically
true. What is meant when we use the phrase ‘‘maintaining
competition’’ is maintaining competitive conditions. We can
both create and maintain competitive conditions, and, until
human nature is revolutionized, when competitive conditions
exist there will be actual competition; but if for some extra-
ordinary reason that should fail there will be, at least, a
potential competition tending to prevent undue prices and
unfair practices. Without going further into the issue
between regulated competition and regulated monopoly, the
committee reiterates its finding that the anti-trust statute
should stand and that every possible effort to create and
preserve competitive conditions should be made.
APPENDIX D. 847

Assuming, therefore, that Congress should maintain the
policy established by the anti-trust law and should make it
more effective by additional legislation, if it be within our
power to do so, the committee calls attention to the interpre-
tation which the Supreme Court has given to the statute and
to the application of its provisions which that tribunal has
made in cases which have come before it for decision. It is
not the intent of the committee in this report, to review the
opinions of the Supreme Court one by one, but rather to
select certain types which will either demonstrate the wisdom
of additional legislation or show that the law is adequate «s
it is.

The committee selects for the purpose indicated the
following cases, all of which arose under the statute now
being considered :

United States v. E. C. Knight Co. (156 U. S., 1).

United States v. Trans-Missouri Freight Association (166
U. S., 290).

United States v. Joint Traffic Association (171 U. S., 503)

Hopkins v. United States (171 U. S., 578).

Northern Securities Company v. United States (193 U. S.,
197).

Standard Oil Co. v. United States (221 U.S., 1).

United States v. American Tobacco Company (221 U. &,
106).

United States v. Union Pacific Railroad Co. (not yet
reported, opinion delivered Dec. 2, 1912).

The committee does not give a statement of the facts in
each of these cases, for to do so would greatly prolong the
report, and it will be taken for granted that those who are
interested in the subject are already familiar with the facts
as they appear in the Supreme Court reports.

The rule of law announced in United States v. Knight Co.
and in Hopkins v. United States is that a restraint of trade
however unreasonable is not prohibited by the anti-trust
statute, no matter how general or disastrous the interference
848 THE SHERMAN ‘ANTI-TRUST ACT.

or restraint may be upon commerce among the States unless
it directly affects such commerce. There is a general under-
standing among the judges and lawyers of the country that
the Knight case has been overruled or modified in subsequent
decisions. Undoubtedly it can be fairly inferred from the
recent opinions of the court in like cases that, if the facts of
the case were now presented, it would be held that the
restraint was direct; but the rule of law established has never
been questioned by the court and hus been emphatically
reasserted in every prominent opinion hitherto rendercc.
The committee does not bring these cases forward for the
purpose of disputing the soundness of the rule under existing
‘legislation. Its object is to disclose, as clearly as possible, the
scope of judicial discretion, and therefore of business
uncertainty which it creates. In every prosecution under
the act wherein there is proven or admitted a contract or
combination which restrains trade among the States, the first
thing that the court must ascertain and declare is whether
the restraint is direct or indirect. In the Knight and
Hopkins cases, and others of that type, it was held to be
indirect. In the Northern Securities Co., Standard Oil Co.,
and American Tobacco Co. cases it was held to be direct. It
is obvious that the opinion of any given man in any given
case upon this question, whether he be.judge or not, must
depend largely, not upon his learning in the law but upon
his training and bent in the economy of commerce. The
result has been, and necessarily will be, that the law officer
of the Government before he institutes a prosecution must
determine whether the restraint is direct and immediate, and
the court in order to decide the issue must employ the
functions of the legislator rather than the lawyer.

The consequence is twofold: First, the Department of
Justice will ignore a great many unlawful transactions
because there will be doubt as to whether the interference
with interstate or international trade is direct or indirect;
second, the business community has found itself, and will find
itself in a state of uncertainty as to whether a particular
APPENDIX D. 849

transaction is to be judged by the law of the State or the law
of the Nation. It is not claimed that this undefined and
undefinable field of judicial discretion can be wholly- occupied
by legislation, but it is manifest that it is the duty of the
legislative branch of the Government to circumseribe it
within the closest practicable bounds. The committee will
recur to this subject in connection with another aspect of the
judicial power, and contents itself now with a statement of
its conclusion that there should be further legislation
specifically prohibiting certain forms of association, combina-
tion, or monopoly which admittedly restrain trade and com-
merce among the States and with foreign nations, but which
may be held by the courts to be indirect or remote inter-
ferences.

The committee has first referred to the point just
mentioned, not because it is first in importance, but because
it first arose. It now passes to another and more serious
weakness in the law as now interpreted

In the Trans-Missouri Freight Association case there
developed a controversy among the members of the Supreme
Court that was carried on with unabated vigor through the
15 years intervening between the opinion in the Freight
Association case and the opinion in the Standard Oil Co.
ease. In this period the vicissitudes of life and the changes
upon the bench which necessarily ensued converted the
opinion of the court in the Freight Association case into a
single dissenting opinion in the Standard Oil Co. case, and
the dissenting opinion in the former case into the opinion of
the court in the latter case. In the Freight Association case
Mr. Justice Peckham, in delivering the opinion of the court,
said:

Second. The next question to be discussed is as to what
is the true construction of the statute, assuming that it
applies to common carriers by railroad. What is the meaning
of the. anguage as used in the statute that ‘‘every contract,
combination in the form of trust or otherwise, or con-
850 THE SHERMAN ANTI-TRUST ACT.

spiracy in restraint of trade or commerce among the several
States or with foreign nations, is hereby declared to be
illegal’’? Is it confined to a contract or combination which
is only in unreasonable restraint of trade or commerce, or
does it include what the language of the act plainly and in
terms covers, all contracts of that nature? (p. 327.)

The learned justice answered the question thus propounded
many times and in great variety of phrase in the course of
the opinion, and the committee quotes some of these answers.

When, therefore, the body of an act pronounces as illegal
every contract or combination in restraint of trade or com-
merce among the several States, ete, the plain and ordinary
meaning of such language is not limited to that kind of
contract alone which is in unreasonable restraint of trade,
but all contracts are included in such language, and no
exception or limitation can be added without placing in the
act that which has been omitted by Congress (p. 328).

But we can not see how the statute can be limited, as it
has been by the courts below, without reading into its text
an exception which alters the natural meaning of the
language used, and that, too, upon a most material point, and
where no sufficient reason is shown for believing that such
alteration would make the statute more in accord with the
intent of the lawmaking body that enacted it (p. 329).

“The arguments which have been addressed to us against
the inclusion of all contracts in restraint of trade, as provided
for by the language of the act, have been based upon the
alleged presumption that Congress, notwithstanding the
language of the act, could not have intended to embrace all
contracts, but only such contracts as were in unreasonable
restraint of trade. Under these circumstances we are, there-
fore, asked to hold that the act of Congress excepts contracts
which are not in unreasonable restraint of trade, and which
only keep rates up to a reasonable price, notwithstanding the
language of the act makes no such excep’ion. In other words,
we are asked to read into the act by way of judicial legisla-
APPENDIX D. 851

tion an exception that is not placed there by the law-making
branch of the Government, and this is to be done upon the
theory that the impolicy of such legislation is so clear that
it can not be supposed that Congress intended the natural
import of the language used. This we can not and ought not
to do (p. 340).

‘‘The conclusion which we have drawn from the examina-
tion above made into the question before us is that the
anti-trust act applies to railroads, and that it renders illegal
all agreements which are in restraint of trade or commerce
as we have above defined that expression, and the question
then arises whether the agreement before us is of that
nature’’ (p. 341).

The issue was clearly joined by Mr. Justice White (now
Chief Justice), who in his dissenting opinion, in which
Justices Field, Gray and Shiras concurred, thus stated the
question :

“‘To state the proposition in the form in which it was
earnestly pressed in the argument at bar, it is as follows:
Congress has said every contract in restraint of trade is
illegal. When the law says every, there is no power in the
courts, if they correctly interpret and apply the statute, to
substitute the word ‘some’ for the word ‘every.’ If Con-
gress had meant to forbid only restraints of trade which were
unreasonable it would have’ said so; instead of doing this
it has said ‘every,’ and this word of universality embraces
both contracts which are reasonable and unreasonable”
(p. 345).

The distinguished justice begins his answer to the propo-
sition just quoted as follows:

I commence, then with these two conceded propositions, one
of law and the other of fact, first that only such contracts as
unreasonably restrain trade are violative of the general law,
and, second, that the particular contract here under con-
sideration is reasonable, and therefore not unlawful if the
general principles of law are to be applied to it (p. 344).
852 THE SHERMAN ANTI-TRUST ACT.

Again:

Its title is ‘An act to protect trade and commerce against
unlawful restraints and monopolies.’’ The word ‘‘unlawful’’
clearly distinguishes between contracts in restraint of trade
which are lawful and those which are not. In other words,
between those which are unreasonably in restraint of trade,
and consequently invalid, and those which are reasonable
and hence lawful (p. 352).

Again:

If these obvious rules of interpretation be applied, it seems
to me they render it impossible to construe the words ‘‘every
restraint of trade’’ used in the act in any other sense than
as excluding reasonable contracts, as the fact that such con-
tracts were not considered to be within the rule of contracts
in restraint of trade was thoroughly established both in
England and in this country at the time the act was adopted
(p. 354).

Again:

Indeed, it seems to me there can be no doubt that
reasonable contracts can not be embraced within the pro-
visions of the statute if it be interpreted by the light of the
supreme command that the intention of the law must be
carried out, and it must be so construed as to afford the
remedy and frustrate the wrong contemplated by its
enactment ¢p. 355).

It will be noted that but once in the dissenting opinion is
the word. ‘‘unreasonable’’ used to qualify the phrase ‘‘in
restraint of trade.’’ It is generally employed to qualify the
word ‘‘contract.’’ There is some difference between saying
that there may be a reasonable interference with competition
or freedom in trade or freedom to trade which did not, at
the common law, constitute a restraint of trade, and saying
that there can be, under our statute, a reasonable restraint
of trade. But this was only the beginning.
APPENDIX D. 853

Two years later the suit of the United States v. Joint
Traffic Association came on for decision. Again Mr. Justice
Peckham delivered the opinion of the court, and upon the
point we are considering there seems to have been no change
in the attitude of the members of the court toward it. It
is instructive to observe, however, that in referring to
Hopkins v. The United States, in which the opinion was
handed down at the same term, the learned justice said:

In Hopkins v. The United States, decided at this term,
post, 578, we say that the statute applies only to those
contracts whose direct and immediate effect is a restraint
upon interstate commerce * * * the effect upon inter-
state commerce must not be indirect or incidental only
(p. 568).

Five years thereafter the well-known Northern Securities
case was decided, and the struggle was renewed with intense
earnestness. Mr. Justice Harlan rendered the opinion of
the court, and this is the way he stated the question:

Is the act to be construed as forbidding every combination
or conspiracy in restraint of trade or commerce among the
States or with foreign nations? Or does it embrace only
such restraints as are unreasonable in their nature? Is the
motive with which forbidden combination or conspiracy is
formed at all material when it appears that the necessary
tendency ‘of that particular combination or conspiracy in
question is to restrict or suppress free competition between
competing railroads engaged in commerce among the States?
Does the act of Congress prescribe, as a rule for interstate
or international commerce, that the operation of the natural
laws of competition between those engaged in such commerce
shall not be restricted or interfered with by any contract,
combination, or conspiracy (p. 328) ?

In answering the question he probably goes a little further
than Justice Peckham. He states as the conclusion to ba
drawn from former opinions of the courts:
854 THE SHERMAN ANTI-TRUST ACT.

That the act is not limited to restraints of interstate and
international trade or commerce that are unreasonable in
their nature, but embraces all direct restraints imposed by
any combination, conspiracy, or monopoly upon such trade
or commerce; * * * . That every combination or con-
spiracy which would extinguish competition between other
wise competing railroads engaged in interstate trade or
commerce, and which would in that way restrain such trade
or commerce, is made illegal by the act; * * * . That
to vitiate the combination, such as the act of Congress con-
demns, it need not be shown that the combination in fact
results or will result in a total suppression of trade or in a
complete monopoly, but it is only essential to show that by
its necessary operation it tends to restrain interstate or
international trade or commerce or tends to create a
monopoly in such trade or commerce and to deprive the
public of the advantages that flow from free competition
(p. 331).

Whether the free operation of the normal laws of com-
petition is a wise and wholesome rule for trade and commerce
is an economic question which this court need not consider
or determine. Undoubtedly there are those who think that
the general business interest and prosperity of the country
will be best promoted if the rule of competition is not
applied. But there are others who believe that such a rule
is more necessary in these days of enormous wealth than it
ever was in any former period of our history. Be all this as
it may, Congress has in effect recognized the rule of free
competition by declaring illegal every combination or con-
spiracy in restraint of interstate and international commerce
(p. 387).

Mr. Justice Brewer was with the majority of the court in
the Trans-Missouri Association case, and he concurred in the
decision in the Northern Securities Co. case; but upon the
question we are discussing he rejected the reasoning of
Justice Harlan and adopted the views expressed by Justice
White in the former case. He said:
APPENDIX D. 855

Instead of holding that the anti-trust act includes all
contracts, reasonable or unreasonable, in restraint of inter-
state trade, the ruling should have been that the contracts
there presented were unreasonable restraints of interstate
trade, and as such within the scope of the act. That act, as
it appears from its title, was leveled at only ‘‘unlawful
restraints and monopolies.’? Congress did not intend to
reach and destroy those minor contracts in partial restraint
of trade which the long course of decision at common law had
affirmed were reasonable and ought to be upheld. The
purpose rather was to place a statutory prohibition with
prescribed penalties and remedies upon those contracts which
were in direct restraint of trade, unreasonable, and against
public policy. Whenever a departure from common-law
rules and definitions is claimed, the purpose to make the
departure should be clearly shown. Such a purpose does
not appear and such a departure was not intended (p. 361).

The Chief Justice and Justices White, Peckham, and
Holmes dissented. Justice White, while discussing many
phases of the relation between the General and the State
Governments, finally rested his opinion upon the Knight case,
holding that there was no direct restraint of interstate com-
merce. Justice Holmes, while concurring with Justice White,
took occasion to say, in substance, that the method adopted
by the defendants for the suppression of competition did not
constitute a restraint of trade in the sense of the anti-trust
law.

With the Northern Securities case there terminated one
distinct, striking period in the interpretation and application
of the anti-trust statute. It is needless to inquire at length
whether or not the views of the court, as expressed in the
opinions of Justices Peckham and Harlan, were in exact
harmony with the common law as to the meaning or definition
of the phrase ‘‘restraint of trade.’’ Even if these learned
judges were not quite successful in distinguishing the differ-
ence, at the common law, between a restraint of competition
and a restraint of trade, it still remains true that for more
856 THE SHERMAN ANTI-TRUST ACT.

than 13 years repeated decisions of the highest tribunal of
the country had declared that every contract or combination
which prevented free competition was a restraint of trade,
and that, if the restraint directly affected commerce among
the States, then the contract or combination was unlawful,
under the first section of the act.

Inasmuch as the committee is of opinion that legislation
should be so clear in its terms as not to admit of unlimited
judicial discretion, it pauses here a moment to point out just
what the range of discretion was under the decisions ending
with the Northern Securities case. It is manifest that the
inquiry that the court was then required to make in each
case was this: Jas the evidence established a restraint of
trade; that is to say, has the evidence established a contract
or combination which interfered with free competition ?

There was some, but not great latitude for difference of
opinion upon such an inquiry, and the uncertainty in the
application of the law was reduced to a minimum; nor would
the uncertainty have been much increased if the inquiry had
been as to an unreasonable interference with free competi-
tion, which would have been the inquiry had the common-law
understanding been strictly adopted by the Supreme Court.

If the more recent construction of the statute were in
harmony with the earlier decisions, further legislation might
nevertheless be required; but it is unnecessary to make the
inquiry. That question is purely academic, for the later
rulings have completely reversed the former ones, in so far
as the phase of the subject now being discussed is concerned.

On the 15th day of May, 1911, the case of the Standard
Oil Co. v. The United States was passed upon by the Supreme
Court. Chief Justice White (formerly Justice White)
delivered the opinion and reiterated, as the conclusion of the
court, the views that he had so forcibly urged as a dissenter
15 years before. It was not necessary for the court to deal
with the question at all, inasmuch as it found the defendants
guilty of a restraint of trade under any and every meaning
of the term, but for the very purpose, the committee assumes,
APPENDIX D. 857

of advising the country that a new rule had been adopted so
that business might be guided by it, it was stated in the most
emphatic way imaginable that the statute which declares that
‘Every contract, combination in the form of trust or other-
wise, or conspiracy in restraint of trade or commerce among
the several States or with foreign nations is hereby declared
to be illegal’’ means that a contract or combination in order
to be illegal must cause an undue restraint of trade. The
following quotations from the opinion will need no comment:

That in view of the many new forms of contracts and
combinations which were being evolved from existing
economic conditions, it was deemed essential by an all-
embracing enumeration to make sure that no form of con-
tract or combination by which an undue restraint of inter-
state or foreign commerce was brought about could save
such restraint from condemnation. The statute under this
view evidenced the intent not to restrain the right to make
and enforce contracts, whether resulting from combination or
otherwise, which did not unduly restrain interstate or foreign
commerce, but to protect that commerce from being restrained
by methods, whether old or new, which would constitute an
interference that is an undue restraint (pp. 59, 60).

Again:

In other words, having by the first section forbidden all
means of monopolizing trade—that is, unduly restraining it
by means of every contract, combination, etc.— the second
section seeks, if possible, to make the prohibitions of the act
all the more complete and perfect by embracing all attempts
to reach the end prohibited by the first section (p. 61).

That the Chief Justice intended to announce a rule at
variance with the declarations of Justice Peckham and
Justice Harlan in the Trans-Missouri Freight Association
and Northern Securities cases is made clear in the following
extracts:
858 THE SHERMAN ANTI-TRUST ACT.

The question is pertinent and must be fully and frankly
met, for if it be now deemed that the Freight Association
case was mistakenly decided or too broadly stated, the
doctrine which it announced should be either expressly over-
ruled or limited. * * * And in order not in the
slightest degree to be wanting in frankness, we say that in so
far, however, as by separating the general language used in
the opinion in the Freight Association and Joint Traffic cases
from the context and the subject and parties with which the
cases were concerned, it may be conceived that the referred
to conflicts with the construction which we give the statute,
they are necessarily now limited and qualified (pp. 68, 69).

The learned Chief Justice contends that this rule of con-
struction, which he repeatedly calls the ‘‘rule of reason,’’
must be applied in order to prevent the entire overthrow
of the statute.

It is one of the interesting things in our judicial history
that so great had been the change in the personnel of the
court that when the dissenting opinion of Justice White in
1896 became the opinion of the court in 1911 Justice Harlan
was the only member remaining to protest against the
reversal. He recorded his dissent in one of the most vigorous
opinions that can be found in the reports, but for the pur-
poses which the committee has in view it is not necessary to
do more than to mention it.

Justice Harlan has passed away, and it may be assumed
that the Supreme Court is now unanimously in favor of the
doctrine so often and so ably promulgated by Chief Justice
White. The rule was reasserted in the American Tobacco Co.
case and has not since been questioned by any member of the
court.

It is true that in the important opinion rendered in the
suit of the United States v. The Union Pacific Railroad Co.,
Justice Day says:

The act is intended to reach combinations and conspiracies
which restrain freedom of action in interstate trade and
APPENDIX D. 859

commerce and unduly suppress or restrict the play of com-
petition in the conduct thereof—

Citing as authority the Joint Traffic Association case.

It is true also that the court quotes, with apparent
approval, the following extract from Mr. Justice Harlan in
’ the Northern Securities case:

In all the prior cases in this court the anti-trust act has
been considered as forbidding any combination which by its
necessary operation destroys or restrains free competition
among those engaged in interstate commerce; in other words,
that to destroy or restrict free competition in interstate
commerce was to restrain such commerce.

But thereafter the court says:

In the recent discussion of the history of the meaning of
the act in the Standard Oil Co. and Tobacco Co. cases this
court declared that the statute should be given a reasonable
construction with a view to reaching those undue restraints
of interstate trade which are intended to be prohibited and
punished.

The fair conclusion is that it is now the settled doctrine
of the Supreme Court that only undue or unreasonable
restraints of trade are made unlawful by the anti-trust act,
and that in each instance it is for the court to determine
whether the established restraint of trade is a due restraint
or an undue restraint.

Whatever may be the opinion of the several members of
the committee with respect to the soundness of the rule as
now established, the committee as a whole accepts it as the
present law of the land. It is profoundly convinced that,
in view of the rule and its necessary effect, upon the business
of the country, the inherent rights of the people, and upon
the execution of the statute it has become imperative to enact
additional legislation.

The committee has full confidence in the integrity, intelli-
gence, and patriotism of the Supreme Court of the United
860 THE SHERMAN ANTI-TRUST ACT.

States, but it is unwilling to repose in that court, or any
other court, the vast and undefined power which it must
exercise in the administration of the statute under the rule
which it has promulgated. It substitutes the court in the
place of Congress, for whenever the rule is invoked the court
does not administer the law, but makes the law. If it con-
tinues in force, the Federal courts will, so far as restraint
of trade is concerned, make a common law for the United
States just as the English courts have made a common law
for England.

The people of this country will not permit the courts to
declare a policy for them with respect to this subject. If
we do not promptly exercise our legislative power, the courts
will suffer immeasureable injury in the loss of that respect
and confidence so essential to their usefulness. It is incon-
ceivable that in a country governed by a written Constitution
and statute law the courts can be permitted to test each
restraint of trade by the economic standard which the
individual members of the court may happen to approve. If
we do not speedily prescribe in so far as we can a legislative
rule by which to measure the forms of contract and combina-
tion in restraint of trade with which we are familiar or which
we can anticipate, we cease to be a Government of law and
become a Government of men, and, moreover, of a very few
men, and they appointed by the President.

It may be that the Supreme Court will be so enlightened
and so alert that its opinion respecting what is due and what
is undue restraint of trade will be in harmony with an
awakened public conscience and a disinterested public judg-
ment, but to fashion our conduct upon that hypothesis is to
repudiate the fundamental principles of representative
government.

When the commercial development of the country is
considered, when the forms of industrial activity are taken
into account, it must be admitted by every student of affairs
that the policy of the Government with respect to restraints
of trade and commerce should remain a judicial question in
APPENDIX D. 861

those cases only in which Congress can not prescribe a
definite rule.

In order to look at the subject in the light of illustration,
it is suggested that there will presently come before the
courts the combination centered in the United States Steel
Corporation, In the end nine justices of the Supreme Court
will be asked to say whether the restraint of trade brought
about through this combination is a due or an undue
restraint, and the answer which each justice makes to that
question will depend upon his individual opinion as an
economist or sociologist, the conclusion of the court being
in substance an act of legislation passed by the judicial
branch of the Government to fit a particular case.

Further, it is believed by many thoughtful people that a
substantial identity in the managing boards of competing
corporations constitutes a restraint of trade and is harmful
to the public interest. If such a case were brought before
the court, what would be the ‘‘rule of reason?’’ What guide
would the court have in determining whether such community
of directors or managers was a due or an undue restraint of
trade?

Again, suppose there were a dozen establishments in a
given field of production competing with each other and six
of them were to consolidate, employing half of all the capital
and advancing the consolidated enterprise to a dominating
position in the trade, where would the judge go for light
in determining whether the restraint of trade was due or
undue? These illustrations might be indefinitely extended.
but it would serve no useful purpose to multiply them.

The committee does not intend in this report to indicate
the terms of the act or acts that should be passed to supply
the court with such legislative tests and standards as will
limit the scope of judicial discretion. To do so would be to
report upon the bills now before it, and that the committee
is not prepared to do. It is prepared, however, to say that
Congress should, in as far as is possible, specifically be
permitted to engage in commerce among the States and with
862 THE SHERMAN ANTI-TRUST ACT.

foreign nations. These conditions should be of a character
that will tend to preserve reasonable competition, or sub-
stantially competitive conditions, and to compel independence
in both organization and conduct. They should be so clear
that the business world can understand them and go con-
fidently forward, guided by them.

Not only should such conditions be imposed upon those
who are engaged or propose to engage in commerce among
the States, but our legislation should further recite certain
known forms of combination and declare them to be unlawful
because in restraint of trade. With respect to other forms,
we should declare that if restraint is established the burden
of proof is upon the persons or corporations involved to show
that the restraint is reasonable.

These suggestions are not made solely for the better pro-
tection of that general body of our citizens, commonly called
the people, who must deal with, buy from, and sell to thie
combinations sought to be regulated, but are made also in
the interest of safety and certainty for the men who compose
what is ordinarily known as the business community.

There are many forms of combination, and many practices
in business which have been so unequivocally condemned by
the Supreme Court that as to them and their like the statute
is so clear that no person can be in doubt respecting what is
lawful and what is unlawful; but as the statute is now con-
strued there are many forms of organization and many other
practices that seriously interfere with competition, and are
plainly opposed to the public welfare, concerning which it is
impossible to predict with any certainty whether they will be
held to be due or undue restraints of trade.

The committee does not conceal the difficulty of reaching
an agreement concerning the details of the legislation just
outlined, but it has no hesitation in reporting that legislation
of the general character pointed out is both wise and neces-
sary.

The committee further reports that if the additional legis-
lation, the general scope of which has been pointed out, is
APPENDIX D. 863

enacted it will be very desirable to accompany any such legis-
lation with a measure establishing a commission for the bet-
ter administration of the law and to aid in its enforcement.
It may be fairly said that there is need of such a commission,
even though the present statute is not supplemented in any
manner; but it is apparent that if the new legislation is en-
acted the need of a commission will become more imperative.

There are three general fields in which the commission
could work to the great advantage both of the people for
whose protection the law exists and the people against
whom it is directed.

First. If the Bureau of Corporations were converted into
an independent commission composed of trained, skillful men,
and clothed with adequate authority, there could be gathered
more complete and accurate knowledge of the organization,
management, and practices of the corporations and associa-
tions engaged in national and international commerce than we
now have. In saying this the committee does not mean to
disparage the work of the Bureau of Corporations as hitherto
carried on, but, valuable as the work has been, it is believed
that a greater service could be rendered by a commission
with a distinct organization with adequate appropriations
and added authority. Moreover, it is clear that the constant
inquiry into and investigation of interstate commerce in order
to ascertain whether the law is being violated should be more
closely connected with prosecutions for violations, when
found to exist, than at the present time.

Second. When the conditions upon which the fulfillment
of which persons and corporations may engage in commerce
among the States and with foreign nations are imposed. as
the committee has heretofore recommended, there will be some
of them upon which the Government must act with adminis-
trative promptness rather than with judicial deliberation and
delay. For instance, suppose Congress were to declare, as
the committee thinks it ought to declare, that no corporation
should be permitted to engage in interstate or international
commerce unless it be honestly capitalized, and that when
864 THE SHERMAN ANTI-TRUST ACT.

anything but money is accepted for its stock that the value
at which the property is taken must be its fair, reasonable
value. It seems clear that a corporation proposing to enter
business should have an opportunity to come to some gov-
ernmental tribunal and say, here is the property purposed to
be taken for stock, and here is the price at which it is to
be taken, and thereupon ask for approval or disapproval of
the proposition. It would be most unjust in such a case to
allow the corporation to go on for years and then be told
that it must cease to do business because the value of the
property was less than the par value of the stock issued
for it.

And, again, suppose that 10 out of 20 manufacturing es-
tablishments heretofore in competition with each other desire
to consolidate into one enterprise. There ought to be a way
in which the men in such a venture could submit their plan
to the Government and an inquiry made as to the legality of
such a transaction, and if the Government was of the opin-
_ion that competitive conditions would not be substantially im-
paired there should be an approval, and in so far as the law-
fulness of the exact thing proposed is concerned there should
be a decision, and if favorable to the proposal there should
be an end of that particular controversy for all time. Such
results as these can be attained in no other way than through
a commission which, though administrative in its character,
would, in some instances, exercise quasi judicial functions. It
is believed that through the intervention of such a body of
men the legislative policy with respect to combinations and
monopolies could be vastly more effectual than through the
courts alone, which in most cases will take no cognizance of
violations of the law for months or years after the violations
occurred and when the difficulty of awarding reparation for
the wrong is almost insurmountable.

The committee has not attempted to be comprehensive as
to the usefulness of the commission in this field, and has made
these suggestions only to indicate in the most general way
APPENDIX D. 865

the assistance that could be rendered in the enforcement of
the law.

Third. One of the most serious problems in connection
with suits brought under the antitrust act is to find the
proper method of disintegrating combinations that have been
adjudged unlawful. The dissolution of a corporation or a
series of associated corporations must often involve the con-
sideration of plans for reorganization in order that the prop-
erty which has been unlawfully employed may thereafter
be lawfully used in commerce. The courts are not fitted for
the work of reconstruction, and whatever jurisdiction they
now have, or that may hereafter be conferred upon them
with respect to such matters, it can not be gainsaid that-a
commission, the members of which are in close touch with
business affairs, and who are intimately acquainted with the
commercial situation, might be extremely helpful in the re-
quired readjustment.

Respectfully submitted.

ADDITIONAL VIEWS OF MR. POMERENE.

With the report in general I am in accord. But there is
one feature of it about which I desire to be more explicit,
and that is the paragraph discussing the certainty of the pro-
visions of the Sherman law as applicable to certain cases and
its uncertainty as applicable to others.

I approve the view that—

There are many forms of combinations and many practices
in business which have been so unequivocally condemned by
the Supreme Court that as to them and their like the statute
is so clear that no person can be in any doubt respecting
what is lawful and what is unlawful.

There are other forms of organization and acts which se-
riously interfere with competition, such as interlocking di-
rectories, watering of stock, selling of merchandise in one lo-
eality at a less price than in another, and other practices
866 THE SHERMAN ANTI-TRUST ACT.

which are so contrary to sound business principles and good
morals that they can and should be specifically controlled or
prohibited by statute. As to these, in the interest of cer-
tainty, there should be other and fuller legislation. But,
whatever may be the additional legislation, there will be
many other contracts, combinations, and practices in ‘‘undue
and unreasonable restraint of trade,’’ which it is impossible
for Congress to define by statute, because any attempt to so
define them will, in practice, be found to exclude many other
contracts, combinations, and practices which are equally in-
imical to the public good. As to these, we must always de-
pend upon the sound wisdom and diserction of courts and
juries for relief, just as in the past we have been obliged to
trust to their judicial administration.

To illustrate: We know that legislatures and courts have
constantly refused to define fraud because the multiplicity of
acts and circumstances involved in human affairs make it
impossible of definition.

The same may be said with equal truth as to what consti-
tutes ‘‘undue or unreasonable restraint of trade.’’

It is said with a great deal of force that men are not al.
ways able to tell in advance whether certain acts are in ‘‘un-
due or unreasonable restraint of trade.’’? But however diffi-
cult this may be, it is no reason why they should be left for
decision to the selfishness of interested partics uncontrolled
by judicial decision under the principles of the common Jaw
or under the broad provisions of the Sherman law,

In criminal cases it is often difficult to say in advance
whether a given state of facts constitutes a reasonable doubt.
But is that a reason why courts and juries should not at-
tempt to say in a specific case whether there was, in fact, a
reasonable doubt or not?

In negligence cases it is equally difficult to say whether a
given state of facts constitutes contributory negligence on
the part of the plaintiff or reasonable care on the part of
the defendant. But can this be urged as a reason for not
leaving special cases to the judgment of the court and jury?
APPENDIX D. i 867

In my judgment, what is ‘‘undue or unreasonable restraint
of trade’’ must, in many cases if not in most cases, be left
largely for judicial determination and sound judgment and
good morals will be a sufficient guide for those who are actu-
ated by a proper public spirit rather than by selfish motives.

While I believe there can be some additional legislation
along the lines indicated, I am firmly of the opinion that the
Sherman law is a clear and certain guide for reasonable men
who desire to comply with the law and do not exert them-
selves to evade its provisions.

ATLEE POMERENE.

ADDITIONAL VIEWS OF MR. TILLMAN.

The undersigned, after carefully considering the antitrust
statute or Sherman law, agrees to the first proposition laid
down by the committee contained on the second page of this
report, and to that portion of the second proposition begin-
ning with the words, ‘‘it is neither necessary nor desirable at
this time to provide for the organization under act of Con-
gress of industrial corporations which propose to engage in
commerce among the States and with foreign nations.’’ It
would be unwise for Congress to interfere by Federal corpo-
ration acts, and he believes it wiser to leave such things
where they now are, to the States.

With the third proposition the undersigned is not now pre-'
pared to express concurrence, preferring to wait until the
specific conditions and regulations contemplated are presented
for decision.

He assents to the lucid and masterly exposition in the re-
port of the vacillation of the Supreme Court of the United
States, which has made the minority opinions of fifteen years
ago become the majority opinions now. That powerful tri-
bunal has thus reversed the law on a most important question
relative to crimes in connection with trusts and monopolies,
and instead of a congressional statute we have judge-made
law. These opinions were rendered in lawsuits of all sorts;
868 THE SHERMAN ANTI-TRUST ACT.

and thus made by piecemeal, instead of properly explaining
and defining the scope of the antitrust law, have made it a
judicial question to be decided by the judges trying the case,
whether a proven destruction of competition operating as a
restraint of trade is to be prohibited and punished because
contrary to law, or is to be allowed to go unwhipped of
justice because the judges think it is not an ‘‘unreasonable”’
crime, but one which may be permitted.

The undersigned agrees that Congress should legislate so as
to destroy any such preposterous and dangerous judicial dis-
eretion, because such discretion was never contemplated by
the Constitution.

The undersigned is not now prepared to say that a new
national commission should be established for the better ad
ministration of the antitrust law. He is inclined to believe
that we have too many commissions now, composed largely
of so-called ‘‘lame ducks,’’ both Democrats and Republicans,
who have been defeated at the polls and are given those
places mainly as a compensation and means of support. He
thinks Congress ought to perform its own functions rather
than surrender them to commissions thus created by Execu-
tive appointment.

As the committee is not now ready to propose specific meas-
ures of legislation, he prefers to wait and to listen to the
recommendations of the incoming President of the United
States.

B. R. TrutMan.

ADDITIONAL VIEWS OF MR. GORE.

I concur in the main body of the report and in the conclu-
sions arrived at, except as to the specific recommendation
looking to the establishment of a commission. Upon that
recommendation I reserve my judgment for the present. I
could not yield my assent to this proposition without first
considering both the principles and details of any measure
proposing such a commission. My ultimate assent would
APPENDIX D. 869

depend upon the constitution and character of the commis-
sion and upon the extent and limitation of its powers and
purposes. It may be possible that a commission could with
propriety be vested with power to pass upon the form of a
proposed organization, but no commission should have au-
thority to grant indulgences as to the methods, conduct, and
operations of any such organization.
T. P. Gore.

ADDITIONAL VIEWS OF MR. NEWLANDS.

Whilst I agree with the general conclusion reached by Mr.
Cummins in his report, I have not been able to study with
sufficient care the decisions of the Supreme Court relating to
trusts to enable me to form an independent opinion as to his
analysis of them. For years I have contended that if at the
time the Sherman Act was passed (the date of its passage
being almost contemporaneous with that of the interstate-
commerce act regarding the railroads) we had organized an
interstate trade commission similar to the Interstate Com-
merce Commission, and with somewhat similar powers of in-
vestigation and correction, we would have prevented or rem-
edied many of the abuses which have since grown up, and
that we would have gradually evolved a system of commer-
cial law, through administrative process, as complete as that
which has been built up regarding our system of transporta-
tion.

I presented my views relating to this matter at the first
hearing of this committee regarding the control of corpora-
tions on the 4th day of August, 1911, and on the 16th of No-
vember, 1911 (hearings, pp. 1 to 26 inclusive). I then dis-
cussed a bill for the organization of an interstate trade com-
mission (Senate bill No. 2941), which was introduced by me
on the 5th of July, 1911, and a substitute bill of the same
number, introduced by me August 21, 1911.

As a result of the additional light shed upon this subject
by the hearings, I introduced in the Senate, on February 26,
870 THE SHERMAN ANTI-TRUST ACT.

1912, a bill (Senate Bill 5485, 62d Cong., 2d sess.) entitled
‘‘A bill to create an Interstate Trade Commission,’’ ete.

Later on, as a result of subsequent consideration, this bill
has been amended, and I present it with the alterations as a
tentative proposal for criticism and suggestion. The bill as
amended is annexed hereto.

Whilst I believe that the Sherman Antitrust Act should not
be altered, I believe that it should be supplemented by such
legislation as is shown to be necessary by the experience of
the time. Such variety of view exists as to what this sup-
plementary legislation shall be that I do not believe early
legislation on this line is practicable. But I do agree that all
can agree upon an Interstate Trade Commission with powers
of investigation and correction, and with the power to aid
the courts in the administration of the Sherman Act and
other supplementary legislation; and I believe that such a
commission should be organized immediately, so that Congress
can soon have the benefit of the recommendations which it
will make as the result of its experience.

I shall not enter into any labored argument upon this ques-
tion. I shall simply content myself with quoting from pre-
vious utterances in the Senate.

In the Senate, January 11, 1911:

Mr. Newuanps. * * * The railroad commission bill fur-
nishes a model for the action of Congress upon matters in-
volving minute and scientific investigation. Had we followed
the same method regarding trusts that we followed regarding
railroads, we would have made much better progress in trust
regulation. The antitrust act was passed 21 years ago, about
the same time that the railroad commission was organized.
The railroad question is practically settled; the settlement of
the trust question has hardly been commenced. Had we sub-
mitted the administration of the antitrust act to an impar-
tial quasi judicial tribunal similar to the Interstate Com-
merce Commission instead of the Attorney General’s office,
with its shifting officials, its varying policies, its lack of tra-
APPENDIX D.° 871

dition, record, and precedent, we would by this time have
made gratifying progress in the regulation and control of
trusts, through the quasi judicial investigations of a compe-
tent commission and through legislation based upon its recom-
mendations. As it is, with the evasive and shifting incum-
bency and administration of the Attorney General’s office,
oftentimes purely political in character, we find that the
trusts are more powerful to-day than when the antitrust act
was passed, and that evils have grown up so interwoven with
the general business of the country as to make men tremble
at the consequence of their disruption.

In the Senate, May 16, 1911:

Mr. Newuanps. Mr. President, whilst I was addressing the
Senate yesterday upon the importance of taking up immedi-
ately certain questions upon which public opinion has been
formed, and crystallizing them into legislation, I referred,
among others, to the great questions of the combinations of
capital called trusts which have assumed of late years so
powerful and menacing an aspect. * * *

The Supreme Court yesterday acted upon this matter with
reference to one of the great trusts in a decision which ap-
plies to them all, and, as the result probably of the inertia
and the inaction of Congress, has taken upon itself what the
dissenting member of that court, Mr. Justice Harlan, declared
to be judicial legislation, and has written into the statute
words which Congress never put there; and so to-day we have
a decision upholding the antitrust act so far as it applies to un-
reasonable restraint of trade.

The question, therefore, presents itself to us whether we
are to permit in the future the administration regarding these
great combinations to drift practically into the hands of the
courts and subject the question as to the reasonableness or un-
reasonableness of any restraint upon trade imposed by these
corporations now existing and to be brought into existence in
the future to the varying judgments of different courts upon
the facts and the law, or whether we will organize, as the serv-
872 THE SHERMAN ANTI-TRUST ACT.

ant of Congress, an administrative tribunal similar to the In-
terstate Commerce Commission, with powers of recommenda-
tion, with powers of condemnation, with powers of correction
similar to those enjoyed by the Interstate Commerce Com-
sion over interstate transportation.

* * * * * * *

* * * What has been our experience regarding that
branch of interstate commerce which covers transportation ?
Our experience has been that 20 years ago, just about the time
the antitrust act was passed, Commerce passed the interstate-
commerce act, creating a commission as its servant to attend
to its duties under rules prescribed by Congress. The regula
tion of interstate commerce belonged to Congress. Congress
wisely saw that it could not undertake that regulation in all its
details ; that it could not pass rate bills which would be satis-
factory to every section of the country; that it could not re-
duce rates that were claimed to be excessive and increase
rates that. were claimed to be too low; that it could not cor-
rect the varying abuses which creep into the administration
of every great enterprise. Therefore it created this commis-
sion as its servant, to carry out its will under rules established
by it.

The history of the last 23 years proves the wisdom of our
action. By a gradual process of evolution this commission, as
the result of gradual improvements in legislation and as the
result of constantly increasing powers recommended by it and
affirmed by Congress, has become a tribunal second in impor-
tance only to the Supreme Court of the land. It has made
transportation a science. It has studied all the intricate ques-
tions relating to it, and in a recent illuminating decision has
formulated a great state paper that has impressed the coun-
try and the world with its wisdom.

Now, contrast that action with other action taken by Con.
gress regarding the trusts. It would have been possible 23
years ago, when the interstate-commerce act was passed, with
reference to interstate trade, to have established an industrial
or trade commission or board similar to the Interstate Com-
APPENDIX D. 873

merce Commission with reference to transportation. If we had
done so and had put upon that commission the same class of °
men who have been appointed upon the Interstate Commerce
Commission, we would have had the constant corrective power
of that commission applied both to the existing trade corpora-
tions and to the trade corporation afterward created. Many
abuses would have been prevented. Many abuses would: have
been corrected. As a result of the constant study and inquiry
of a competent board engaged in this work as a specializa-
tion recommendations would have been made to Congress
which would have been accepted, as were those recommenda-
tions made with reference to interstate transportation, and a
great body of administrative law would have been built up
and combinations of capital would have been effected without
the abuses which have existed during the past 23 years. * * *

In the Senate, June 22, 1911:

Mr. Newnanps. What is the second one which I suggested ?
I suggested legislation providing, in connection with the Bu-
reau of Corporations, for a board of interstate trade, with
powers of examination, correction, and recommendation with
regard to interstate trade similar to those conferred upon the
Interstate Commerce Commission regarding interstate trans
portation. This resolution was offered before the recent de-
cision of the Supreme Court regarding the trusts, and I then
declared that, whatever might be the decision of that court,
the creation of such a commission was essential. Interstate
trade is just as much a part of interstate commerce as inter-
state transportation. The abuses of interstate trade have be-
come just as great as the abuses of interstate transportation
in’ the past have been. Obviously the teachings of experience
lead us to the organization of a commission or board similar
to the Interstate Commerce Commission, with a view of tak-
ing hold of the great combinations of capital and making them
obedient to the law, giving such a commission powers of ex-
amination, recommendation, and condemnation similar to those
enjoyed by the Interstate Commerce Commission.
874 THE SHERMAN ANTI-TRUST ACT.

Since that decision the trust managers themselves have seen
a great light, and in public examinations have stated that in
their judgment the time has come for as complete regulation
of corporations engaged in interstate trade as of corporations
engaged in interstate transportation. Whether that regula-
tion will ever extend so far as the regulation of the price itself
is a matter to be determined in the future, for Congress will
be called upon to decide how great these corporations shall be,
what the extent of their capital shall be, what number of
plants they shall own, and what shall be the extent of their
operations. If they conclude to maintain the principle
of competition, even though it leads to destruction,
there will then, of course, be no necessity of regulating prices.
But if they recognize the principle of helpful cooperation in-
stead of destructive competition, then it will be necessary for
them in extreme cases to face the question of regulation of
prices just as the prices of any public utility are regulated.

I do not venture to express an opinion now as to what
course should be pursued with reference to this great question,
but it is time that the Interstate Commerce Committee of
the Senate were entering upon an inquiry of the most im-
portant question in economics that has engaged the attention
of the country since the railroad question was first presented
to it.

Quotation from Mr. Newland’s statement before the com-
mittee on the 15th day of November, 1911 (hearings, p. 25) :

I may later on have something further to lay before this
committee regarding this bill; but I wish to state at present
that since the bill was introduced there has been a wide dis-
cussion throughout the country upon two divergent lines of
thought, one insisting upon absolutely free and unrestricted
competition as the regulator of corporate business, and the
other inclining toward allowing large combinations of capital
and applying thereto Government supervision and direction
as the prime regulator. It is difficult to say now which of
these opposing tendencies should or will ultimately prevail.
APPENDIX D. 875

The bill which I have introduced is, in my judgment, adapted
to this undeveloped situation. It will help us to determine
which of these theories is the correct one; it will furnish to
Congress and to the public the accurate and broad information
on corporate conditions that is necessary to determine the line
of further advance. It does not affect the operation or the en-
forcement of the Sherman law; its work of publicity and
supervision will tend to promote fair competition and keep
equally open to all the highways of commerce. On the other
hand, it takes the situation as it is, recognizes that there is 2
large degree of combination already existing, and makes that
condition a subject for supervision, study and report to Con-
gress. Its frankly tentative character and its moderation
recommend it as a step upon which all can unite in doing what
is imperatively needed for the present, without prejudicing
the future.

I trust that the committee will see the wisdom without wait-
ing for the end of this investigation, of recommending this ten.
tative measure, which will aid in the final solution of all the
pressing questions relating to trade corporations.

Francis G. NEWLANDS.

APPENDIX.

The following is the Interstate Trade Commission bill in-
troduced by Senator Newlands, as tentatively amended by the
Senate Committee on Interstate Commerce:

[S. 5485, Sixty-second Congress, second session.]

A bill to create an Interstate Trade Commission, to define
its powers and duties, and for other purposes.

Be it enacted by the Senate and House of Representatives
of the United States of America in Congress assembled, That
this act shall be referred to and cited as the Interstate Trade
Commission act. Corporations a majority of whose voting
securities is held or owned by any corporation subject. to the
876 THE SHERMAN ANTI-TRUST ACT.

terms of this act are referred to herein as subsidiaries of such
holding or owning corporation.

Sec. 2. That there is hereby created a body to be known as
the Interstate Trade Commission, which shall consist of three
members, of whom no more than two shall belong to the same
political party. The commission shall be appointed by the
President, by and with the advice and consent of the Senate,
and the terms of such commissioners so first appointed shall
be three, six and nine years, respectively, and shall be so des-
ignated by the President in making such appointments; and
thereafter all the commissioners shall hold office for the term
of nine years, and shall be appointed by the President, by and
with the advice and consent of the Senate. Vacancies shall be
filled by like appointment and confirmation for the unexpired
term. Each member of said commission shall receive a salary
of $10,000 a year. The office of the commission shall be at
Washington, in the District of Columbia, but the commission
may hold meetings elsewhere when necessary and convenient

Src. 3. That the Bureau of Corporations is hereby trans-
ferred to and merged in said commission, and all of the pow
ers, duties, records, papers, and funds belonging to or pertain-
ing to the Bureau of Corporations shall hereafter belong and
pertain to the Interstate Trade Commission, and all the officers
and employees of said bureau shall thereupon be officers and
employees of the Interstate Trade Commission. The said com-
mission shall also have a secretary, a chief clerk, and such
clerks, inspectors, examiners, experts, messengers, and other
assistants as from time to time may be necessary and as may
be appropriated for by Congress.

Sec. 4. That all corporations engaged in commerce among
the several States or with foreign nations, excepting common
carriers, shall from time to time furnish to the commission
such information, statement and records of their organization,
business, financial condition, conduct, and management and
the organization, business, financial condition, conduct, and
management of their subsidiaries at such time, to such degree
and extent, and in such form as may be prescribed by the com-
APPENDIX D. 877

mission; and the commission at all reasonable times, or its
duly authorized agent or agents, shall have complete access to
all records, accounts, minutes, books and papers of such cor-
porations and their subsidiaries including the records of any
of their executive or other committees. Failure or neglect on
the part of any corporation subject to this act, or of any of its
subsidiaries, to comply with the terms of this section within
such time after written demand shall have been made upon
such corporation by the commission requiring such compliance,
as shall be fixed by the commission, shall constitute a mis-
demeanor, and upon conviction such corporation shall be sub-
ject to a fine of not more than $1,000 for every day of such
failure or neglect.

Sec. 5. The information so obtained shall be public records,
and the commission shall from time to time make public such
information in such form and to such extent as it may deem
necessary.

Sec. 6. That the district courts of the United States, upon
the application of the commission alleging a failure to comply
with any order cf the commission or alleging a failure to com-
ply with or a violation of the provisions of this act by any
corporation subject thereto, shall have jurisdiction to issue 1
writ or writs of mandamus or injunction or other order en-
forcing such order of the commission or commanding such cor.
poration, its officers and employees, to comply with the pro-
visions of this act.

Sec. 7. That for the purposes of this act the commission
shall have the power to require by subpcena the attendance
and testimony of witnesses and the production of all books.
papers, contracts, agreements, documents, or other things of
every kind and nature whatsoever relating to any matter
under investigation by the commission. Such attendance of
witnesses and the production of such documentary evidence
may be required from any place in the United States at any
designated place of hearing, and in case of disobedience to a
subpeena the commission, or any party to a proceeding before
the commission, may invoke the aid of any court of the
878 THE SHERMAN ANTI-TRUST ACT.

United States in requiring the attendance and testimony of
witnesses and the production of books, papers and documents
under the provisions of this section.

And any of the circuit courts of the United States within
the jurisdiction of which such inquiry is carried on may, in
case of contumacy or refusal to obey a subpcena issued ta
any corporation subject to the provisions of this act, or other
person, issue an order requiring such corporation, or other
person, to appear before said commission (and produce books,
documents and papers, if so ordered) and give evidence
touching the matter in question, and any failure to obey such
order of the court may be punished by such court as a con-
tempt thereof. The claim that any such testimony or evi-
dence may tend to criminate the person giving such evidence
shall not excuse such witness from testifying.

The testimony of any witness may be taken at the instance
of a party in any proceeding or investigation pending before
the commission by deposition at any time after the inquiry
is instituted. The commission may also order testimony to
be taken by deposition in any proceeding or investigation
pending before it at any stage of such proceeding or investi-
gation. Such deposition may be taken before any person
authorized so to do by the commission and who has power to
administer oaths.

Any person may be compelled to appear and depose, and
to produce documentary evidence, in the same manner as
witnesses may be compelled to appear and testify and pro.
duce documentary evidence before the commission as herein-
before provided. Such testimony shall be reduced to writing

Witnesses whose testimony is taken under the provisions of
this act shall severally be entitled to the same fees as are
paid for like service in the courts of the United States.

No person shall be excused from attending and testifying,
or from producing books, papers, documents, or other things
before this commission or in obedience to the subpena of the
commission, whether such subpena be signed or issued by
one or more of the commissioners on the ground or for the
APPENDIX D. 879

reason that the testimony or evidence, documentary or other
wise, required of him may tend to criminate him or subject
him to a penalty or forfeiture. But no natural person shall
be prosecuted or subjected to any penalty or forfeiture for
or on account of any transaction, matter, or thing concerning
which he may testify under oath or produce evidence, docu-
mentary or otherwise, before said commission in obedience to
a subpena issued by it in a proceeding instituted upon its
own initiative; Provided, That no person so testifying shall
be exempt from prosecution and punishment for perjury
committed in so testifying. The purpose of this provision
is to give immunity only to natural persons who under oath
testify in response to a subpcena of the commission in an
inquiry instituted by the commission.

Sec. 8. That che said commission shall, on or before the
first day of January in each year, make a report, which shall
be transmitted to Congress. This report shall contain such
information and data collected by the commission as it may
deem of value in the determination of questions connected
with the regulation of commerce, togethger with such recom-
mendations as to additional legislation relating thereto as
the commission may deem necessary.

Sec. 9. That any person willfully making or furnishing to
said commission any statement, return, or record required by
this act, when knowing such statement, return, or record to
be false in any material particular, shall be guilty of a mis-
demeanor, and upon conviction shall be fined not more than
$1,000 or imprisoned not more than one year, or both.

Sec. 10. That in case a final decree shall be issued against
any corporation under the act entitled ‘‘An act to protect
trade and commerce against unlawful restraints and monopo-
lies,’’? approved July second, eighteen hundred and ninety,
or under sections seventy-three to seventy-seven, inclusive,
of ‘‘An act to reduce taxation, to provide revenue for the
Government, and for other purposes,’’ which became a law
August twenty-seventh, eighteen hundred and ninety-four,
the court entering such decree may, in its discretion, refer to
880 THE SHERMAN ANTI-TRUST ACT.

the commission its decree, with instructions to take evidence,
consider such facts, and report to the court the findings as
to method of dissolution or reorganization as the commission
shall consider best fitted to carry out such decree; if a
reorganization takes place under a decree, the commission
shall inform itself respecting the reorganization, and if it is
of the opinion that it is not in harmony with the decree it
shall, through counsel, inform the court for such action as
the court may take.

Sec. 11. That the said commission may at any time, upon
complaint of any person or corporation, or upon its own
initiative, or upon the request of the Attorney General, or
of the corporation affected, investigate any corporation sub-
ject to the provisions of this act for the purpose of deter-
mining whether such corporation has been guilty of a viola-
tion of the act entitled ‘‘An act to protect trade and
commerce against unlawful restraints and monopolies,” ap-
proved July second, eighteen hundred and ninety, or under
sections seventy-three to seventy-seven, inclusive, of an
‘“Aet to reduce taxation,’’ and so forth, which became a law
August twenty-seventh, eighteen hundred and ninety-four, or
of any of the provisions of this act, and may hold such
hearings and take such evidence as it may deem necessary ;
and in case the commission shall find that such corporation
has been guilty of a violation of the provisions of said acts
or of this act it shall make a finding, stating the facts, and
prescribing the acts, transactions, and readjustments neces-
sary in order that said corporation may thereafter comply
with the terms of said acts and of this act, and shall transmit
a copy of the said finding in full to such corporation. If
within sixty days after transmitting said finding, or such
extension thereof as shall be given by the commission, the
corporation shall not have complied with the terms of the
finding, and shall not have performed the acts prescribed as
necessary to make it comply with the said acts or with this
act, the commission shall report the fact of noncompliance to
the Attorney General, together with a copy of such finding,
APPENDIX D. 881

for his action under the said acts or of this act. But the
commission may, if it deems it proper, report the facts to
the Attorney General without calling upon such corporatiou
for compliance with said acts or with this act.

Nothing contained in this act shall be construed to prevent
or interfere with the Attorney General in enforcing the pro
visions of the act to protect commerce, and so forth, approved
July second, eighteen hundred and ninety.

MINORITY VIEWS.

The undersigned members of the Senate Committee on Inter-
state Commerce are unable to agree to the report of the
majority of the committee on Senate resolution 98, as to ‘‘what
changes are necessary or desirable in the laws of the United
States relating to the creation and control of corporations en-
gaged in interstate commerce and what changes are necessary
or desirable in the laws of the United States relating to per-
sons or firms engaged in interstate commerce.’’

While certain features of the report are commendable, there
are several conclusions therein which do not accord with our
views, and therefore we are prevented from approving the
report as a whole.

W. M. Crane.

Frank B. BRANDEGEE.
GEORGE T. OLIVER.
Henry F. Lippitt.

COMMITTEE ON INTERSTATE COMMERCE.

Moses E. Clapp, of Minnesota, Chairman; Shelby M. Cul-
lom, of Illinois; W. Murray Crane, of Massachusetts; George
S. Nixon, of Nevada; Albert B. Cummins, of Iowa; Frank B.
Brandegee, of Connecticut; George T. Oliver, of Pennsyl-
vania; Henry F. Lippitt, of Rhode Island; Charles E. Town-
send, of Michigan; Benjamin R. Tillman, of South Carolina;
882 APPENDIX D.

Murphy J. Foster, of Louisiana; Francis G. Newlands, of
Nevada; James P. Clarke, of Arkansas; Thomas P. Gore, of
Oklahoma; Clarence W. Watson, of West Virginia; Atlee
Pomerene, of Ohio.

Lee F. Warner, Clerk; G. B. Spaulding and R. J. McNeil,
Assistant Clerks.
INDEX.

[References are to pages.]

Actions—
Damages, see.
Forfeiture of property, 321.
Suit in equity, see.

Addyston Pipe Co. Case—
Combination held illegal, 481, 483.

Agent—
Corporation combining with their own, 345, 354.

Agricultural Association—
Discussion concerning or passage of Sherman Act, 25.
Use of government funds to prosecute, 687.

Alaska—
Transportation between it and Puget Sound, 614.

American Brake Beam Case—
Sale of good will, 507, 508.

American Tobacco Co. Case—
Analysis of combination, 471, note 12.
Combination held illegal, 470, 475.

Anderson vs. United States—
Operation of stockyards, 516.

Anti-Trust Bill—
History of congressional action, see.
Sherman Act, see.

“Any Part’—
Construction of in Sherman Act, 277, 312, 385, 425.

Attorney Fees—
Recoverable in damage suit, 757, 775, 779.
When allowed, 319.

Attorney General—
Directs suits brought, 318, 320, 688.
883
884. INDEX.

[References are to pages.]

B.

Bauer & Cie Case—
Price of patented article, fixing price for resale, 629.

Beer—
Combination to fix price of held illegal, 465.

Bement v. National Harrow Co.—
Contract to keep up monopoly of harrows, 639, 640.

Bids—
Agreement to make fictitious bids, 481, 487, 488.

Bigelow v. Calumet & Hecla Mining Co,—
Control of mining campany not illegal, 500.

Blount Manufacturing Co, Case—
Agreement not to use patent, 643.
Sherman Act construed, 624.

Bebbs-Merrill Co. Case—
Copyright book, resale price fixing, 630, 670, 673.

Booth Co. Case—
Sale of good will held legal, 505.

Boycott—
Damages occasioned by, 783.
Illegal under Sherman Act, 680.

Brokerage Company—
Organizing to purchase merchandise, 500, 644.

Brake Beam Case—
Sale of good will, 507, 508.

Brick Plant—
Sale of good will, 506.

Cc.
Capital—
Combinations, right to make, 11.
Great aggregations of dangerous, 237.

Carriers—
Transportation agencies, see.

Cattle Market—
Combination to control, 488.
INDEX. 885.
[References are to pages,]

Chesapeake & Ohio Fuel Co. Case—
Contract to control prices illegal, 456.

Cincinnati Packet Line Case—
Sale of good will, 508, 603.

Coal Dealers—
Combination to control prices, 451, 453, 455, 456.

Coal Mines—
Lake Shore and Michigan Southern case, 596.
Railway company controlling, 594.
Reading Company case, 594.

Coke, Lord—
Definition of monopoly, 42.

Combinations—
Agents of corporation combining with it, 345, 354.
Aggregations of capital, 237.
All not condemned by the law, 140.
in restraint of trade invalid, 266, note 39.
Attempt to form not an offense, 417.
Beer, fixing prices for, 465.
Beneficial results not considered, 270, note.
Brokerage company, 500.
Burden to prove, 662, note 12.
Capital, right to make, 11.
Cattle market, to control, 488.
Coal dealers, 451, 453, 456.
Commercial combinations not forbidden, 252, note 24.
Competition in place of combinations preferred, 239, 241, note.
suffering, 134.
Consolidation, see.
Consolidation of property rights’ not forbidden, 403.
Conspiracy defined, 97.
Continuing (a) one, 776.
Contract, distinguished from, 430, note 3.
may be, 324.
Corporations combining with its own agent, 345, 354.
right to make, 11.
when illegal as a combination, 116.
Criteria in determining its invalidity, 282.
Dangerous to commerce, when, 238.
Deceiving the public, preventing, 651.
Defense against, when allowed, 797.
Defined, 96, 329.
Dissolving, 709, 719.
886 INDEX.
{References are to pages.]

Combinations—Continued.
Distinguished from a contract, 730.
Dividing interstate trade among the parties to, 355.
Every member to it liable, 772.
one in restraint of trade illegal, 259.
Foreign country, formed in, 599, 600.
Formed before Sherman Act enacted, 362, 601.
Form, immaterial to make it illegai, 340.
Government protecting its citizens from, 16.
Holding company, 560.
custodian of stock, 570.
Incomplete, may be illegal, 386.
Indictment, see.
Indirect restraint of transportation, 608.
Inducement for, 546.
Inferior goods, preventing production, 651.
Injoining after competition, 708.
Innocent parts producing illegal result, 345.
Intent not to create immaterial, 340.
presumption as to, 270.
when material, 342.
Intrastate does not violate Sherman Act, 521.
Labor, right to make, 11, 681.
Limit as to territory, 14.
Lumber dealers, 459.
prices to control, 495.
Manufacturers, Congress forbidding combinations of, 223.
Meat market, to control, 488.
Menace, size may be, 396.
Mergers, 399.
Monopoly, see.
differs from, 374.
Necessity to prevent ruinous railroad rates, 557.
Not amounting to a monopoly, 154.
Object to suppress competition, 13.
not to violate statute, 340.
Output restricting, 467.
Ownership of property changing, 408.
Part legal, part illegal, 348.
Parties to only persons affected by it, 364.
Partnerships, 399.
failure to create, 402.
Patents, see.
Patented machine manufacturing unpatented article, 357.
Potency in numbers, 395.
Power to suppress, 17 to 20.
INDEX. 887

[References are to pages.]

Combinations—Continued.
Prices, to fix, 131, 343.
lowering, no defense, 422.
reducing, 22.
Prior to enactment of Sherman Act, 472.
Purchase of another enterprise not illegal, 217.
competing plant, 402.
Railway preventing, 217.
under right to contract, 215.
Rates for transportation fixing, 563.
Reasonable, not condemned, 140.
Reorganizing, 720.
Restricting production, 351.
Result unlawful, 394, note.
Rival corporations controlling, 499.
Separate acts producing illegal result, 345, 347, 348.
Several of them may do what one may do, 129.
Shingle dealers, 459.
Size giving power to monopolize trade, 396.
State corporations, forbidding combining, 224.
Stock exchange, 519.
yards, 511, 516.
Stockholders illegally combining, 222.
taking no part in, not liable, 703.
Strangers to combine compelling not to engage in business, 357.
Swift Company case, 487, 488.
Synonymous with conspiracy, 736.
Telephone case, 480.
Test of illegality, 258, 338, 339, 356, note 64.
of legality, 250, 255.
Tied leases, 651.
Tile and mantel dealers, 461.
Transportation agencies, sce.
Transportation companies, 214, 220.
Unification of interests, 399.
Wall paper, fixing price of, 466.
When illegal, 329.
Window glass, restricting output, 467.
Withdrawal, contract for not affecting illegality, 605.
form, 703.
Wooden dishes, combine illegal, 463.

Commerce—
Broader than trade, 162, 328.
Constitutional sense, 174, note.
Defined, 158.
888 INDEX.
[References are to pages.]

Commerce—Continued.
Foreign commerce, see.
Free-flow preventing illegal, 345.
Interstate commerce, see.
Manufacture is not, 168.
Sales may be, 179.
Succeeds manufacture, 168.
Trade, see.
Trade not synonymous with, 328.
Traffic in defined, 167.
Transportation and commerce, 163.

Commodity—
Monopoly of any part of it an offense, 425.

Commen Carrier—
Transportation agencies, sce.

Common Law—
Anti-trust Act goes farther than common law, 460.
Congress adopted its definition of restraint of trade, 325.
Sherman Act construed in light of, 276.

Common Law Offense—
None against United States, 728.

Competition—

Advantage of between railways, 592.
Agreement to suppress, illegal, 470.
Combination to suppress, 134.

inimical to trade, 240.

object to suppress, 13.
Cotton compressing, suppressing, 473.
Contract to suppress void, 46, 141, 149.

to withdraw from, 141.

reason why illegal, 47.

Sherman Act does not forbid, 309, note 2.
Defined, 333.
Destroying, illegal, 104, note 17.
Encouragement of trade policy of law, 48.
Enhancing by combination of interests, 242, note.
Excessive means of, 136.
Fostered by Sherman Act, 235, 309, note 2.
Indirect restraint not condemned, 251.
Law does not require, 103.
Leases to suppress illegal, 473.
Lessening or preventing, 342.
Monopoly implies attempt to eliminate competition, 377, note 10.
INDEX, 889
[References are to pages.]

Competition—(Continued.

Monopoly destroys, 112, note.

prevents, 140, 368.

suffering, 104.

to establish, 426.
Natural effect, 558.
No suppression in railroads combining, 580.
Purchase of competing plant, 401.
Purpose of contract to prevent, 149.
Railroads ruinous competition, 544.
Restraint of not same as restraint of trade, 333.
Sherman Act does not refer to, 309, note 2.
Sleeping car contract, 148.
Stifling, 250.
Suppressing a monopoly, 104.
Test of validity of contract restraining, 257, 258.
Unrestricted, working restraint of trade, 559.

Congress—
Contracts in restraint of interstate commerce may prohibit, 202,
203, 222, 266.
regulating under interstate commerce clause, 209, 210.
Control of interstate commerce, 229.
Courts can not restrict the will of Congress, 226.
Debates of considered in construing statute, 246.
History, see.
Interstate commerce clause, power to control, 208.
regulate, 212.
Intrastate commerce no control over, 231, 535, note 29.
Power under interstate commerce clause, 172, 197.
in territories, 197.
Railroads, combinations preventing, 218.
Sherman Act, see.
State corporations may reach, 224, 611.

Consolidation—
Combination, see.
Corporations may consolidate, 404.
Differ from combination, when, 404.
Property rights after perfected, 403.

Conspiracy—
Act of one conspirator act of all, 432, 435, 802.
All equally guilty, 432, 435, 802.
Assemblance of conspirators not necessary, 432, 435.
Attempt to conspire not an offense, 417.
Burden to prove, 662, note 12.
890 INDEX.
[References are to pages.]

Conspiracy—Continued.
Confederacy regarded by the law as dangerous, 434.
Continuing offense, 439, 441, 442, 443, note, 444 note.
Contract, may be, 324.
but is not, 429.
Corner, to form, 449.
Corporation may form, 438.
may join in, 445.
offense of forming, 438.
Declarations of conspirators, 432.
Defined, 97, 336, 428, 429, note 2.
Distinguished from a contract or combination, 330.
Duplicity in making charge of, 766.
Evidence, see.
Foreign, damages allowed for, 775.
General charge of in pleading, 701.
Gist, 98, note, 430, note 4, 434.
Indictment, see.
Indictment, sufficiency, 767.
Intent, none to violate the law, 436.
evidence to show, 807, 808.
presumption as to, 270.
Interstate trade, to restrain or monopolize, 439.
Joining after formation, 433, 443.
Monopolizing interstate commerce, 439, 441.
Monopoly continuing after conspiracy has ceased, 412.
Overt acts unnecessary to commission of offense, 432, note, 436,
note.
Pleading, 766, 767.
Proof sufficient to convict, 435, 436.
Railroads, operation to arrest, 446.
Separate lawful acts combined in a conspiracy, 437.
Shingle trade, to control, 446.
Statute limitations running against, 439, 441, 442, 443, note,
444, note.
Statutory provision, 428.
Synonymous with combination, 736.
with collusion, 98.
Tacit understanding, 432.
Test of illegality, 255, 258, 338, 339.
Two or more persons necessary to formation, 430.
Unlawful it itself, 326, note.

Constitutionality of Act of Congress—
Congress, see.
Construction of Sherman Act adopted which will render it valid,
247.
INDEX. 891.
[References are to pages.]

Constitutionality of Act of Congress—Continued.
Contracts, see.
Courts can not restrict will of Congress, 226.
Damages, statute as to valid, 757.
Due process of law, 221.
Fifth amendment, 199, 812.
object, 814.
Fourth amendment, 824.
Fourteenth amendment, 199, 221.
Freedom of contract, 199.
Interstate commerce, see.
Interstate commerce clause, 196.
Penal provisions of statute are valid, 727.
Power under interstate commerce clause, 17.
Section four of Sherman Act valid, 690, 697.
Uncertainty of Sherman Act, 227.

Construction of Sherman Act—
Ambiguity in second section, 277.
“Any part” as used in statute, 277, 312, 385, 425.
Change in time, effect on public policy, 271.
Combination, as used in statute, 261.
Common law, statute construed in light of, 276, 325.
Conspiracy, as used in statute, 261.
Constitutional, act to be construed as valid, 247.
Contract as used in statute, 261.
Criterion in construction, 282.
Debates in Congress considered, 246.
Early construction of act, 259, 279.
Electical construction, 242.
Every contract, when illegal, 259.
in transportation, 267, note 40, 269, 276.
Expediency or non-expediency of statute, 247.
History of industrial business, 544.
of times considered, 246.
Indirect restraint, act not applicable to, 242.
Intention of Congress to be sought, 245.
Monopolize, reaches every act prohibited, 277.
Monopoly, what kind statute forbids, 277.
unreasonableness, 378.
Object of bill stated by Senator Sherman, 9.
“Or otherwise,” as used in act, 261, 337.
Reasonable construction must be adopted, 242, 245, 252.
“Rule of reason” adopted, 273.
Second section of act, 277.
State decision in Standard Oil case, 279.
892 INDEX.

[References are to pages.]

Construction of Sherman Act—Continued.
Title of act, 262, 263.
Uncertainty, Senator Turpie upon, 23.
Understanding of bench and bar, 272.
Continental Wall Paper Co. Case—
Combination to fix prices of wall paper held illegal, 466.
Contracts—
Ancillary to principal contract, 50.
Coal, to control prices, 451, 453, 456.
Collateral not condemned, 253, 254 note 25, 264.
Combination, may constitute, 324. ;
distinguished from, 330, 430, note 3.
Competition to suppress void, 46, 149.
reason why, 47.
Congress’s power over, 202, 203, 206, 222.
Conspiracy is more than contract, 429.
may be, 324.
Covenants in partial restraint of trade void, 81.
Criterion in determining its invalidity, 282.
Effect may be illegal, 346.
Every one restraining trade illegal, 259, 262, 267 note 40, 269.
Every unreasonable contract or combination forbidden by stat-
ute, 331.
Fifth amendment’s effect upon, 216.
Freight contracts, railroad refusing to make, 598.
Illegal contract, see.
Injurious to public, void, 86.
Interstate commerce clause limiting power to make, 209, 210.
need not refer to in order to be illegal, 346.
Liberty to make, 201, 204 note 13, 206, 210, 220.
control of Congress, 209, 210.
limiting, 207.
no justification for illegal combination of railroads, 215.
Minor contracts not touched by Sherman Act, 572, note 24.
Normal and usual not made illegal by Sherman Act, 288.
Output, restricting, 467.
Prices, to control, illegal, 309 note 2.
Public policy, see.
Reasons why void, 49.
Residence of parties immaterial in testing their illegality, 347.
Restraint of trade, see.
States’ control over, 206, 211.
Test of illegality, 347.
of validity, 64, 72.
Unreasonable restraint, void, 110.
What contracts the Sherman Act forbids, 276.
Withdrawal from right to, effect, 605.
INDEX. 893
[References are to pages.]

Copyright—
Bobbs-Merrill Co. case, 630, 670, 673.
Combination to control prices, 668.
Infringing by selling below prices fixed, 670.
Price of copyrighted book, fixing, 630, 670, 673.
Suppressing, owner may, 670.
Title to book retained by owner, fixing price, 672.
Unlawful contract, enforeing, 673.

Corner—
Conspiracy to form illegal, 449, 481.
Sherman Act applies to, 449, 481.

Corporations—
Agent of combining with it, 345, 354.
Agreement not to compete illegal, 470.
Books and papers, producing for evidence, 803.
Combination, right to make, 11.
under disguise of, 116.
Consolidation of not illegal, 404.
with competing corporation, 401.
Conspiracy may join or form, 438, 445.
officers of forming, 438, 785, 787.
Control by Congress of state corporations, 224.
Damages occasioned by conspiracy to control, 784.
Defined by Sherman Act, 319.
Difference between consolidating and combining, 404.
Directors, when liable for acts of corporation, 438, 785.
Dismantling and ceasing work, 490.
Dividends in holding company can not recover, 463.
Forming to conduct business in restraint of trade, 409.
to absorb another corporation, 404.
Holding company illegal, 404, 409.
Immunity, not entitled to, 823.
Insolvent company, purchasing, 500.
Legally organized but illegally controlled, 117, 118, note 23,
Minority of stockholders controlling, 611.
restraining illegal act of majority, 124.
Officers of can not protect themselves, 438, 747, 785.
One may create a monopoly, 424, 425, note 56.
Organized for illegal purpose, 120 note.
to control plants, 112.
“Person,” word applies to, 319, 835.
Pooling stock by holding company, 358.
Prices, organized to control, 123.
Property, acquiring in another state, 226.
Proxies to secure illegal combination, 408, note 44.
894 INDEX.
[References are to pages.]

Corporations—Continued.
Purchasing competing plant, 401.
Rival corporation controlling, 499.
Size not creating a monopoly, 101 note.
does not make it a monopoly, 387, 391, 390, note 24.
State, federal court controlling, 611.
restricting interstate commerce, 361.
Stock, purchasing that of another to control it, 119, 404.
Stockholders, see.
Stockholders conducting their affairs illegally, 123.
indictable, 750.
illegally combining, 222.
Usefulness, limiting by contract in restraint of trade, 89.

Cotton—
Competition, suppressing compressing in, 473.
Corner of, forming, 449.

Courts—
District courts, see.
Jurisdiction to enforce Sherman Act, 317, 320.

Cravens v. Carter-Crume Co.—
Combination to control output of woodenware illegal, 463.

Crimes—
Common law, see.
Sherman Act creates, 248.

D.

Damages, Action to Recover—
Accord and satisfaction, 775.
Action at law to recover, 319, 322, 757, 761.
Attorney fees recoverable, 757, 775, 779.
Boycott occasioning, 783.
Burden to show, 773, 778.
Civil action, is, 769.
Combination a continuing one, 776.
every member of liable, 772.
Complaint, motion to strike out parts of, 768.
Conspiracy, averring, 766.
duplicity, 766.
Constitutional, statute authorizing, is, 757.
Competing corporation, conspiracy to control, 784,
Defendants, who may be, 770.
Duplicity in pleading, 766.
Evidence, see.
INDEX. 895
[References are to pages.]

Damages, Action to Recover—Continued.

Exhibits attached to pleading, 768.

Foreign conspiracy causing, 793.

Injunction to prevent, 773.

Injury sustained wholly within state, 775.

Interstate commerce, averring, 764.

Interstate Commerce Commission’s actions, 787.
plaintiff not engaged in, 780.

Joinder, common law action cannot be joined with, 759.

Jurisdiction to recover, 758.

Jury trial may have, 772.

Measure, 776.

Motion to strike out parts of complaint, 769.

Municipality may recover, 770.

New enterprise preventing, 789.

Ordinance, attempt to enforce when it is illegal, 794.

Parties defendant, 770.

Pendency of suit in state court, 773.

Penal, action is not, 769.

Parties defendant, 770.

Pleading, state practice followed, 761.
sufficiency, 762.

Practice in state courts followed, 761.

Preparedness to engage in business, 789.

Prices, enhancing, 780.

Process, sending to another district, 760.

Profits, losing, 776.

Pursuance of business, preventing, 789.

Railroad rates, excessive, 786, 787.

Rebates, 782.

Receivers may recover, 770.

Removal to district court, 758.

Set-off, cannot be recovered in, 760.

Settlement in state court, 775.

Statute concerning, 757.

Statute of limitations, 776.

Stockholders suing to recover damages, 791.

Suit in equity, see.

Surplusage, striking out, 761, 769.

Tort, action sounds in, 760.

Trebled, 779.
practice concerning, 779.

Verdict directing, 809, 810.

Violation of statute must cause damages, 758.

Where action must be sought, 759.
896 INDEX.
[References are to pages.]

Danbury Hat Co. Case—
Loewe v. Lawlor, 680. 4

Darcey v. Allen—
Holds monopolistic grants void, 36.

Darius Cole Transportation Co.—
Illegal combination in restraint of transportation, 684.

Debates in Congress—
Considered in construing statute, 246.

Debs Case—
Strike injuring interstate commerce, 684.

Diamond Match Co.—
Ilegal organization, 113.

Dick Case—
Resale price, power of patentee to fix, 626, 636.

Distillery Co, Case—
Corporation organized for an illegal purpose, 116, 118, note 23.

District Attorney—
Duty under direction of attorney-general, 318, 320, 688.
Special assistant appearing before grand jury, 752.
Suit to dissolve illegal combine brought, 318, 320, 688.

District Courts—
Courts, see.
Damage, jurisdiction of suit, 758.
amount immaterial, 757.
Jurisdiction to enforce Sherman Act, 317, 320.

District of Columbia—
Sherman Act applies to, 316.

Dyer’s Case—
Stated by Chief Justice White, 77.

E.

E, C. Knight Co. Case—
Interstate commerce not involved, 191.

Edmunds, Senator—
Definitions, Sherman Act did not adopt, 327.
Second section of Sherman Act, meaning of, 312, note 6.

E. I. Du Pont de Nemours & Co. Case—
Combination to fix price of powder illegal, 472.
INDEX. 897

[References are to pages.]

Elizabeth, Queen—
Monopolies granted, 34.
Evidence—

Books and papers of corporation, 803.
power of court to require production, 806.
Burden to prove conspiracy, 662, note 12.
Conspiracy, act of one conspirator act of all, 802.
circumstance to prove, 434, note 8.
declaration of one conspirator, 432, 433.
Customer’s declaration not admissible, 806.
Damages, burden to show, 773.
Declarations of one conspirator admissible against all, 432, 433.
Dues of labor union, payment, 807.
Examination before a master, 810, 811.
Former acts to show purpose, 807.
before enactment of Sherman Act, 807.
Grand jury, evidence before not subject to review, 810.
Immunity, see.
Incompetent, granting new trial, 809.
Intent and purpose, 807, 808.
Overt acts or charge of conspiracy, 808.
Report of Interstate Commerce Commission, 809.
Subpoena duces tecum, 803.
ordering, 804.
petition for, 804.
Sufficiency question for jury, 809.
Verdict, directing, 809, 810.

¥F.
Farmers’ Associations—
Discussed by Congress in passing Sherman Act, 25.
Use of appropriation to prosecute, 677.

Federal Court—
District court, see.
State corporation, power over, 611.

Fifth Amendment—
Liberty of contract secures, 199, 216.

Fish Business—
Sale of good will, 505.

Foreign Commerce—
Alaska, Sherman Act applies to, 614.
Combine in foreign country, 599, 600.
898 INDEX.
[References are to pages.]

Foreign Commerce—Continued.
Commerce, see.
Defined, 177.
Interstate commerce, see.
Monepolizing forbidden, 320.

Forfeiture of Property—
Contracts, not applicable to, 724.
Jury trial, 725.

Not limited by other sections, 724.
Procedure, 725.

Property in transportation, 318.
Seizure of illegal imports, 321.
Statute concerning, 724.

Formula—
Patent medicines, see.

Fourteenth Amendment—
Applies only to states, 199.
Due process of law, 221.

Freight Rates—
Combination to secure rebates in, 478.
Prepayment, discrimination in, 610.
Refusing to carry through freight, 598.
to make contracts for carriage, 598.

G.

Glucose Sugar Refining Case—
Illegal combination, 119 note.

Good Will—
Brake Beam case, 507.
Brick plant selling, 506.
Distinction as to, 659.
Fish business selling, 505.
Patent medicine, fixing price of sales, 659.
Sale on condition vendor quit business, 505, 506.
Steamboat line, 508.

Gray, Senator—
Moves to strike out the word “monopolize,” 312,

Grand Jury—
Evidence, see.
Evidence before not subject to control by court, 810.
Indictment, see.
INDEX. 899

[References are to pages.]

H.
Habeas Corpus—
Releasing witness by means cf, 830.

Harrow Cases—
Contract to keep up monopoly, 639, 640.

Hawkins—
Defines monopoly, 43.
Discusses law of monopoly, 41.

History of Congressional Action—
Abbott, representative, introduces bill, 3.
Allison, joins in debate, 23.
Anderson, representative, introduces bill, 3.
Author of bill on final passage, 29.
Bills and debates, volume containing, 1, note 1.
Breckenridge, Senator, introduces bill, 2.
Conference committee on, 30.
Crippling combinations of capital and labor, 12.
Culberson, representative, introduces bill, 3.
Dingley tariff sections, 31.
Early House anti-trust bills, .1.
Senate anti-trust bills, 2.
Edmunds, Senator Geo. F., chairman of judiciary committee, 29.
labor organizations, remarks on, 25, 26.
Farmers’ associations discussed, 25.
Fourth section, author, 30, note 58.
George, Senator, introduces a bill, 2, note 6.
creates section fcur, 30, note 58.
Harrison’s, President, message on anti-trust legislation, 4.
Henderson, Representative, introduces a bill, 3.
Hiscock, Senator, entroduces a bill, 23.
Hoar, author of bill, 29.
criticizes bill, 25, note 41.
House action on bill, 29.
Industrial history of country, 544.
Jones, Senator, approves bill, 2 note 6.
Labor organizations discussed by Edmunds, 25, 26.
McDonald, Representative, introduces bill, 2.
Newton, Representative, introduces bill, 3.
Partnership forming, 12.
Patents a monopoly, 12.
Raynor, Senator, introduces bill, 2.
Reagan, Senator, introduces bill, 2.
addition to Sherman bill, 21.
discusses bill, 23.
900 INDEX.
(References are to pages.]

History of Congressional Action—Continued.
Referred to judiciary committee, 29.
Republican platform of 1888, 3.

Sherman, first bill introduced in 1888, 2.
amendment offered, 6.
bill as introduced, 4.
constitutionality of bill discussed, 11.
duty of government discussed, 16.
lawful trade, interfering with, 10.
object of bill stated, 9.
substitute offered, 5.
trusts described, 12.
Springer, Representative, introduces bill, 3.
Subsequent legislation, 30.
Teller, Senator, debates bill, 23.
Times considered in construction of Sherman Act, 246.
Trusts: described by Senator Sherman, 12.
Turpie, Senator, discusses, 23.
Uncertainty in bill, 23.
Vest, Senator, discusses, 23.

Holding Company—
Corporations, see.
Dividends cannot be recovered from, 463.
Northern Securities Case, 566.
custodian of stock, 570.
observations on, 573.
Pollock, Sir Frederick, on, 573.
Pooling stock of competing corporation, 358.

Hopkins Case—
Did not involve interstate commerce, 184.
Operation of stockyards, 511.

Horner v. Graves—
Test of reasonable restraint of trade, 64.

I.
Illegal Contract—
Action upon cannot be maintained, 796.
Collateral agreement in restraint of trade, 799
Combination, see.
Conspiracy, see.
Contract, see.
Monopoly, see.
Patent, infringement, defense as to action, 800.
Transportation of interstate commerce, 799.
INDEX. 901

[References are to pages.]

Immunity—
Answer in equity, 825.
Compulsion, what is, 827.
Contempt, appeal, 830.
Corporation, statute does not apply to, 823.
Fifth amendment, 812.
object, 814.
Fourth amendment, 824.
Habeas corpus to release witness, 820.
Judge decides what is, 829.
Monopoly continued after immunity due, 826.
Pardon, differs from, 822.
Statute as broad as privilege, 816.
various, 817, 818.
Unreasonable search, 824.
Witness claiming, 816, 829.
not called by government, 825.

Imports—
When illegal, 320.

Indiana Manufacturing Co. v. J. I, Case Co.—
Case stated, 650.

Indictment—
Abatement, 752.
Acts charged harmonizing with a lawful purpose, 742.
Acts of violence, alleging, 745. :
Appeal, practice in construing indictment, 750.
Averments as to not engage in business, 739.
Combination, indicting only part of conspirators, fae
synonymous with conspiracy, 736.
Common law offenses, none, 728.
Conspiracy, 733, note 12, 734, 743, 767.
formed abroad, 775.
intent of defendants, 747.
Defect not tending to prejudice defendant, 730, note 6.
Demurrer, 750. :
raising interstate questicn by, 739.
Details to show interstate commerce restrained, 733.
Documents, setting out, 733.
Duplicity, 430, note 3, 377, note 10, 735 746...
Evidence, sufficiency to support, 751.
plea in abatement, 752.
review on motion to quash, 752.
Facts to show transactions were illegal, 732.
relied on must be averred, 739.
902 INDEX.
[References are to pages.]

Indictment—Continued.

Grand jury, review of evidence on which it found indictment, 752.
special assistant attorney appearing before, 752.
wrong name giving offense, 752.

“Group,” use of to designate certain defendants, 745, 747.

Intent alleging, 739.
to monopolize, averring, 745.

Interstate commerce, restraint of, averring, 733, 734.
must show is involved, 735.

Joinder of accounts, 738.

Language of statute, following, 729, 731.

Misdemeanor, all are principals, 748.

Monopolizing, 746.
attempting, 739, note 24, 746.
showing intent, 745.

Monopoly of entire trade, 734.
sufficient averments concerning, 734.
time of forming, 744.
trade monopolized, showing, 735.

Name of offense wrongly stated, 752.

Numerous -documents, setting out, 733.

Officers of corporation, 730, 731, 747.

Patents, ownership, 748.

Principals, all defendants are, 748.

Purpose to engross trade, 747.

Reference in latter parts to former parts for facts, 730.

Removal of defendant from one district to another, 753.

Restraint of trade, averring, 743.

Separate acts, alleging, 748.

Single transaction, 737.

Special assistant attorney appearing before grand jury, 752.

Stockholders, for act of corporation, 750.

Sufficiency of charge, 730.

Summons, issuing to another district, 753.

Surplusage, 739.

Time, stating when purpose was formed, 744.

Injunction—

Against person not named as defendant in bill, 706.

Bond, to secure, 703.

Combination completed before suit brought, 708.
dissolution by means of, 719.
enjoining, 703.
member withdrawing from, 703.

Damages preventing, 773.

Inadequate relief, 709, 717.

Northern Securities Co., 713. 717.
INDEX. 903
[References are to pages.]

Injunction—Continued.
Restraining order without notice, 703.
granted, when, 704.
Strike ended, 707.
Suit in equity, see.
Voting stock, enjoining, 715.

Intent—

Averring in indictment, 739.
in petition, 701.

Conspiracy, 436.

Essential to attempt to monopolize, 384.

Evidence to show, 807, 808.

Good motives no excuse, 416.

Monopoly, intent to form, 413.

Motive, when unnecessary to offense, 383.

None to violate statute, 601, 436.
to restrain trade, 349.

Not meaning to render combination illegal, 340.

Parties to combination presumed to intend inevitable result, 270.

Unintentional monopoly, 382.

Violation of law, no intent to, 436, 601.

When material to commission of offense, 384, note 17, 342, 384.
to attempt to monopolize, 384, note 17.

Interstate Commerce—
Addyston Pipe Co. case, 483.
Agent in another state, shipping produce, etc., to, 188.
Agency of, Congress regulating, 175.
Alaska, Sherman Act applies to, 614.
Amount restrained immaterial to be illegal, 332.
“Any part” monopolizing is illegal, 277, 312, 385.
Cab carrying railroad passengers, 174 note.
Combination of railroads, preventing, 217.
Commerce clause, 196.
Sherman Act based on, 196.
Congress alone can regulate, 212.
power over, 172, 197.
Constitutionality, see.
Contract to be illegal need not refer to, 346.
Control by Congress, 229.
extent of, 207.
Deceiving public, preventing, 651.
Defined, 158, 173.
Division among parties to combine, 355.
E. C. Knight Co. case, 191, 522, 527.
distinguished, 528.
904 INDEX.
[References are to pages.]

Interstate Commerce—Continued.
Express wagons on state line combining, 269.
Foreign commerce, see.
Free flow of, preventing, 345.
Indictment, see.
Indirect restrain not illegal, 257, 205.
Inferior goods, combining to prevent production, 651.
Initiatory and intervening acts, 181.
Instrumentalities and dealings, 181.
Internal police, regulation of not touched, 530.
Intrastate commerce, s¢e.
combinations of not illegal, 521.
restrained by Sherman Act, 360.
Knight case, 191, 522, 527.
distinguished, 528.
Labor combinations, see.
Local facilities and incidents, 182.
effect on interstate commerce, 182.
Manufacture is not, 168, 191.
in one state and storing product in another, 194.
Plan to dominate, 362.
Police power affecting, 206.
Power of Congress over, 17, 208.
Practical conception, is, 195.
Prices, combination to fix, 186.
Prohibition of all contracts in restraint of trade, 266.
Purchase within state with plan to dominate, 362.
Regulating, Sherman Act does not, 275, 326, note 4.
Restraint of trade, see.
Restraining illegal under Sherman Act, 238.
Rules regulating, power to prescribe, 233.
Sales, may be, 179.
Sample, sales by, 189.
Service rendered by agents handling interstate products, 183.
Soliciting orders in another state, 354.
Sherman Act, see.
Sherman Act based on interstate commerce clause, 172.
State has no control over, 231.
State corporations, Congress restraining, 361.
Stock exchanges, controlling by, 519.
Stockyards case, 184, 511, 516.
Swift & Company case, 186.
Taxation does not determine question of, 176.
Test to determine question of, 182.
Transportation, 163.
does not necessarily constitute, 182.
on Ohio river, 194.
INDEX. 905:
[References are to pages.]}

Interstate Commerce—Continued.
Trust, government’s power to suppress, 17.
Unit under constitution, 174.
What it comprehends or embraces, 178.

Interstate Commerce Act—
Not inconsistent with Sherman Act, 551.

Interstate Commerce Commission—
Reports of not evidence, 809.

Intoxicating Liquors—
State monopolizing sale of, 536.

Intrastate Commerce—
Congress no control over, 231.
Damages, recovering, 773.
Interstate commerce restrained with, 360, 521.
On Ohio river, 194, 603.
Restraining, 609.
Sherman Act does not apply to, 359.

J.

James I—
Statute concerning monopolies, 38.

Jayne v. Loder—
Price of patent medicines, fixing, 653.

Jellico Mountain Coal Co,—
Combination to. fix prices, 451.

Jobbers— one
Forming corporation to deal in products, 500, 644.

John D. Park & Sons Co. Case—
Price fixing under secret formula, 655.

Joint Traffic Association Case—
Explained in Standard Oil case, 284, 286. ~~

Judgment—
Dissolving corporation, 709.
Northern Securities case, 713, 715.
Reorganizing illegal combines, 720..
Standard Oil case, 717.
Tobacco case, 709.

Jury—
Damages, action to recover, 772.
Forfeiture of property case tries, 725.
906 INDEX.

[References are to pages.]

K.
Knight Case—
Distinguished, 528.
Sherman Act not violated, 522, 527.

L.
Labor Organizations—
Amendment of Sherman bill ’as to, 25.
Boycotting, 680.
distinguished from strikes, 448, note 22.
Combining, right to, 11.
Conspiracy to arrest operation of railroads, 448, note 22.
Danbury Hat case, 680.
Debs case, 684.
Dues, paying after suit, evidence of not admissible, 807.
Edmunds, Senator, upon, 26.
Enjoining after strike ended, 707.
Loewe v. Lawlor, 679.
National Labor Union, incorporation, 687.
statute as to, 839.
Railway employes strike affecting interstate commerce, 681.
Right of labor to combine, 681.
Rule of union held illegal, 685.
Sherman Act applies to, 677.
Strikes not in restraint of trade, 155.
Sympathetic strike, 686.
Thomas v. Cincinnati & N. O. Ry. Co., 681, 686.
United States v. Workingmen’s Amalgamated Council, 677.
Use of funds to suppress labor and farmers’ combinations for-
bidden, 687.

Lake Shore & Michigan Southern Railway Case—
Case stated, 596.

Lead Trust—
Held illegal, 120.

Lease—
Boat line, 604.
May violate Sherman Act, 473.
Patent tied to lease, 651.
Sherman Act applies to, 604.
Telephone case, 480.

Legislature—
History, see.
INDEX. $07
[References are to pages.]

Leonard v. Abner Brewing Co.—
Combination to fix prices of beer held illegal, 466.

License—
Patents, see.

Licorice Paste—
Combination to suppress competition in, 470, 475.

Loewe v. Lawlor—
Illegal combination of workingmen, 679.

Louis XVI—
Edict of 1776, 33.

Lumber Dealers—
Combine on freight rates, 597.
Prices, controlling, 137, note, 495, 459.
Southeastern Freight Association case, 597.

M.

Magazine Articles—
Discussion of Sherman Act, 305, note 17.

Manufacture—

Addyston Pipe Co. case, 483, 484, note 22.
Commerce is not manufacture, 168.
Congress forbidding combinations of, 223.
Contract controlling interstate shipments, 257.
Intent to put products into commerce, 168.
Interstate commerce does not constitute, 191.
Intrastate combinations not illegal, 521.
Knight case, 522, 527.

distinguished, 528.
Shoe fastener machines, 490.
Storing in another state, 194.

Matches—
Diamond Match case, see.

Meat Market—
Combination to control, 488.

Merger—
Combination, see.
Unification of interests, 399.

Milk Combine—
Held illegal, 124 note.

Mitchel v. Reynolds—
Statement of case, 48, 49.
908 INDEX,

[Reférences ‘are to pages.]

Mogul Case—
History of,':126;°127, ‘note 29.
Not an illegal combination, 125.

Monopolize—
Attempt to create monopoly, 421.
Distinct from monopoly, 377, note 10.
Means to destroy competition, 368, 369, 370, note 4:
Tendency to monopolize, 417.
Monopoly—
Addyston Pipe Co. case, 481, 483.
Asphalt paving contracts, 536.
Attempt to create forbidden by statute, 278, 376, 417.
“Any part of trade or commerce,” 277, 312, 385, 425.
Beneficial results considered, 270.
Brokerage company, 500.
Cattle market, 488.
Combinations, see.
Combination differs from, 374. 5
not amounting to monopoly, 154.
Commodity, monopolizing any part an offense, 425.
Common law inhibitions, 50.
Competition, see.
Competition, destroying, 104, note 17, 368.
in order to establish, 426.
law encourages, 103.
prevents, 368.
Complete, not necessary to commission of offense, 107, 385.
Congress, power: to prevent, 234.
Consolidation of intérésts is not, 140.
Conspiracy, see.
Construction of Sherman Act as to, 277.
Continuing after conspiracy has ceased, 412.
after right of immunity due, 826.
Corner, forming, 449, 481.
Cotton compressing, 473.
Contrary to public policy, 243 note.
Control of product, 112 note.
Corporations organized to monopolize trade, 112.
under disguise of monopoly, 116.
Darcy v. Allen, 36.
Definition of, 42 to 44, 367, 135 note.
Cokes, 42, 616.
Edmunds, 312, note 6.
Hawkins, 43.
Distinct from attempt to monopolize, 377, note 10.
from attempt to create, 377, note 10.
INDEX. 909
[References are to pages.]

Monopoly—Continued.
Division of trade among parties to combine, 355.
Dominant motive of, 372.
Duplicity in charging, 377, note 10.
Duration of contract for, 427.
Edmunds’ definition, 312, note 6.
Effect of agreement to create, illegal, 135 note.
Every act, statute reaches, 314.
Exclusion of others necessary result, 373.
means of, 414.
Formed before Sherman Act enacted, 601.
Free government cannot exist under, 114. rm
Good will, see.
Good will, 507.
selling and quitting business, 505, 506. pr aes
Gross profits, agreement to divide, 116 note.
Hawkins’ discussion of, 41.
Holding companies, 409.
How created in legal sense, 107.
Illegality determined at early day, 36.
Implies action taken to eliminate competition, 377, note 10.
Incomplete, 101.
still may be illegal, 110, 111, 112 note.
Indictment, sce.
Inherent conditions producing a monopoly, 581.
Intent, necessary to offense, 382.
to create by acts performed, 413.
Intoxicating liquor, state monopolizing, 536.
James I statute, 38. ‘
Jobbers organizing company to purchase products, 500.
Licorice paste, 470, 475.
Louis XVI edict, 33.
Means adopted to secure, 414. ii
Meat market, 488.
Menace, size may be, 396. ;
Mental intention to form not offense, 384, note 17.
Merchants, gross profit dividing, 116 note.
Mitchel v. Reynolds, stated, 48, 49,
Modern idea of, 45.
meaning, 371, 373 note.
Mogul case, 125. ;
history, 126, 127, note 29.
Monopolize, means to destroy, 368, 370, “Heit 4.
Motive ,immaterial in determining offense, 383.
Natural law of commerce creating, 245.
interfering with, 108. : So ea
Odious to our form of government, 114, a
910 INDEX.
[References are to pages.]

Monopoly—Continued.
Offense under, necessary elements, 372, note, 374, note 7
One person or corporation may create, 424.

Overt act, when necessary to offense of, 382.
Part of interstate commerce, 281.
Parties to alone affected by combination, 364.
Partnership is not, 102 note.
Patents, see.
Plumbers’ supplies, 115, note 24.
Popular meaning of, 44.
Potency in numbers, 395.
Powder manufacture, 472.
Power, 472.
to fix prices, 104.
to monopolize, 391.
Preference given to customers not illegal, 128.
Prices, see.
Prices, fixing, 104, 105, 131.
lowering no defense, 422, 352.
not controlled, though power exists, 111.
of proprietary medicines, fixing, 509.
power under disguise to fix, 105.
Production, restricting, 104, 132, 133.
Suppressing, 104.
Public not injured, yet illegal, 110.
forbids, 243, note. *
Purchasing merchandise by erganizing company, 500.
Queen Elizabeth grants, 34.
Reaches every result prohibited by Sherman Act, 277.
Reasonable, illegal, 271.
no such a thing, 381 note.
not condemned, 140.
Rebates to induce purchase, 503.
Restricting output, 103, note 17.
Sale of entire product to one person, 352.
Sales, restraining, 352.
Second section of Sherman Act construed, 277.
construed with first section, 311.
Sherman Act on, 366.
Shoe fastener machinery, 490.
Size no test, 99, 396, 387, 391, 390, note 24.
Standard Oil case, 477, 491.
State contracts are not unlawful, 536.
Status prohibited by Sherman Act, 382, 383, note 14
Statute forbidding, 366, 310.
construed with first section, 311.
scope, 310.
INDEX. 911

[References are to pages.]

Monopoly—Continued.

Steamship case, not illegal, 125, 130.
history, 126, 127, note 29.

Stock exchange quotations, 519.

Stock yards cases, 511, 516.

Sufficient to be illegal, 102.

Tendency to monopolize, 105.

Tends to monopolize, 417.

Test of illegality, 107, 258, 351, note 56.
of validity, 255, 271.

Tobacco case, 470, 475.

Trade suppressing, 104.

Transportation agencies, see.

Undue restraint of trade, 80.

Unification of interests, 399.

Unintentional result, 382.

Union of capital and plants, none required, 103.

Unreasonable, must be, 378.

Where exists, 135, note.

Withdrawal from, right under contract, 605.

Zeno’s edict, 32, 483.

Montague & Co, v. Lowry—
Combination of tile and mantel dealers, 462.
Motives—
Immaterial in determining offense, 383, 416.
Intent, see.
Municipality—
Addyston Pipe Co., see.

Asphalt paving contracts valid, 536.
Damages, may recover, 770.

N.

National Harrow Co. Case—
Combination to avoid infringement suits, 646.
Restraint of trade by patentee, 622.

Nelson Case—
Price of lumber, controlling, 495.

Nordenfeldt’s Case—
Case stated, 60.

Northern Securities Co. Case—
Adjudged to be an illegal company, 409, 566, 570.
Decree in, 713, 715.
Observations on, 573.
Pollock, Sir Frederick, on, 577.
912 INDEX.
[References are to pages.]

Notice—
Injunctions, see.
Restraining order to secure, 703.

QO.
Obiter Dictum—
Early construction of Sherman Act was not, 272.
Rule of reason adopted is not, 289.

Offenses—
New under Sherman Act, 728.
None at common law, 728.

Officers—
Corporations, see.

Oil—
Monopoly by Standard Oil Company, 477, 491.

“Or Otherwise”—
Meaning as used in Sherman Act, 261, 337.

Ordinance—
Damages not liable for attempting to enforce, 794.

Otis Elevator Company—
Infringement of patent as a defense, 649.

Output—
Contract restraining output illegal, 467.

P.
Pardon—
Differs from immunity, 822.

Parties—
Residence not material to illegality of contract, 347.
Summons for, 318, 321.
Who necessary in suit to dissolve trust, 696.

Partnerships—
Combination of interests without creating a partnership, 402.
Members not violators of Sherman Act, 402.
Monopoly,‘when are’ not, 102 note.
Not illegal combinations, 399.
Size constituting it a monopoly, 388.
INDEX. 913
[References are to pages.]

Patents—
Bauer & Cie case, 629.
Bement v. National Harrow Co., 639, 640.
Blount Manufacturing Co., 624, 643.
Combination of patentees in restraint of trade, 622.
independent patents, 625.
Contract to assign future inventions made after termination of
service, 652. ‘i
Conveyances of several patents for license under all of them, 648.
Copyright, see.
Corporation organized to receive assignment of, 115, note 24.
Dick case discussed, 626, 636.
Extending by contract life of patent, 636.
Failure to use no violation of Sherman Act, 617.
Good faith of patentee of void patent, 634.
Harrow cases discussed, 636, 639, 640.
Illegal contracts, see.
Indiana Manufacturing Co. case discussed, 650.
Indictment on violation of Sherman Act, 748.
Infringement, combination to avoid, 646.
suits to defend, 647.
restraining, 800.
Infringers setting up illegality of combination as a defense, 649,
650.
License, contract not to give another, 640.
Life of patent extending by contract, 636.
Manufacturers of unpatented article made on patented machine,
357.
Monopolistic features, 616, 618.
Monopoly secured by permit, 12.
National Harrow Company cases, 622, 646.
Noncompeting patentees combining, 646.
Otis Elevator Co. v. Geiger, 649.
Pool, patentee acquiring license to form, 633.
Prices, see.
Prices for articles can not be fixed by patentee, 626, 629.
Right to sell differs from right to exclude others, 619.
Rubber Tire Wheel Co. case, 634.
Sherman Act reaches patentee, 621.
not inconsistent with patent laws, 624.
Standard Sanitary Manufacturing Co., 637, 638, 644.
Strait v. National Harrow Co., 636.
State controlling, 619.’
taxing patented article, 619.
Suppression, right of patentee to, 618.
, not to make use of, 643,
914 INDEX.
[References are to pages.]

Patents—Continued.
Suit to recover royalties, 620.
for infringement, 620.
Taxing, state may tax patented articles, 619.
Tied leases, 651.
United States Consolidated Seeded Raisin Co., 648.
Unpatented articles for use on patented machine, 636, 637.
Use, agreeing not to make use of patent, 643.
Virtue Creamery Package Co., 647.
Void patent, 634.
Winslow case discussed, 646.

Patent Medicines—
Bauer & Cie case, 629.
Demoralization of prices, preventing by combination, 661.
Dr. Miles Medical Company case, 660, 662.
prices of patent, fixing, 660.
Good will, distinction as to, 659.
Jaynes v. Loder case, 653.
John D. Park & Sons Company case, 655.
Prices, see.
Prices fixed by manufacturers, 653.
Secret formula protecting, 663.
as an excuse for fixing price of resale, 655.
Trade name, combination to protect, 663.

Periodical Articles—
Discussion of Sherman Act, 305, note 17.

Persons—
Defined by Sherman Act, 319, 835.
Number necessary to commit offense under first section, 333.

Petroleum—
Monopoly of trade as by Standard Oil Co., 477, 491.

Pipe—
Combination to regulate prices illegal, 481.

Pleading—
Damages, see.
Indictment, see.
Suit in equity, see.

Police Power—
Congressional legislation affecting, 234 note.
Interstate commerce, legislation concerning, 206.
Regulations of interstate commerce do not apply to, 530.
State’s power to enact legislation concerning, 234, 233 note.
INDEX. 915
[References are to pages.]

Pooling—
Defined, 95.
Earnings of railroad dividing on percentage basis, 599.
Patentee acquiring license to form, 633.
Popular meaning, 371 note.
Stock, by formation of a third corporation, 358.

Powder—
Combination to control the price of, 472.

Prices—
Bauer & Cie case, 629.
Beer, combination to fix prices, 465.
Bids, agreements not to make, 487.
fictitious, 481.
Cheapened by monopoly, 112, note.
Coal, fixing prices for, 451; 453, 456.
Combination to control illegal, 115, 131, 309, note 2, 343.
reducing, 15.
Corporation organized to control, 123.
Copyright, see.
Damages, recovering because enhanced by combine, 780.
Demoralization of no defense, 660, 662.
Fixing, a monopoly, 104.
by vendor, 507, 509.
Lowering, no defense for combination, 422.
Lumber, price controlling, 459, 495.
Patents, see.
Patented medicines, see.
Patentee fixing for his vendee for resale, 626.
Powder, controlling price of, 472.
Power, to control not exercised, 111.
to fix under disguise, 105.
to raise menacing, 547.
Preventing demoralization through a combine, 660, 662.
Recoverable though monopoly exists, 111, note 23.
Reducing no defense, 352.
ruinous character of, 546.
Regulating, 397, 467.
Secret formula, excuse for regulating, 655.
Shingles, prices of regulating, 459.
Tile and mantels, price for regulating, 461.
Trade name, combination to protect, 663.
Unreasonable transportation charges, 545.
Wall paper combination illegal, 467.
Window glass combination illegal, 545.
916 INDEX.
[References are to pages.]

Production—
Limiting, 132, 133.
Restraining by combination, 104, 351.

Property Rights—
Consolidation of not forbidden, 403.

Public Policy—
Agreement in restraint of trade, 52, note 30.
All restraints void, 66, 67, 68, 69.
Change of times affecting, 60, note, 271.
Contracts injurious to void, 86, note, 108.
Corporation engaged to control, 115.
Encouragement of trade, 48.
Monopoly, it forbids, 243, note.
Restraint not injurious, 110.
Statutes determine, 119, note.
Trusts, it forbids, 119.
Varies with times, 60, note 271.

Q.
Quotations—
Stock exchange restricting them to its customers, 519.

R.
Railroads—
Congress controlling, 219.
Transportation agencies, see.

Rates—
Charging reasonable differs from combination to fix same rates,
563.
Rebates—
Damage occasioned by, recovering, 782.
Freight rates, 478.
Inducements for purchase, 503, 504.
Swift & Company case, 487, 488.
Transportation agencies, see.

Receiver—
Damages, may recover, 770.

Reading Company—
Case against stated, 594.

Report—
Evidence, see.
Committee on Sherman Act, 842.
INDEX. 917.
[References are to pages.]

Republican Platform—
Demand for anti-trust legislation, 3.

Restraint of Trade—
Accidental restraint, 253, 353.
condemned by Sherman Act, 251.
American law follows English law, 77.
Amount of interstate commerce restrained immaterial, 332.
Ancient rule relaxed, 136, note.
Ancillary contracts, 50.
Asphalt paving contracts, 536.
Attempts to restrain no offense, 377.
Boat line, 604.
Brokerage company, 500.
Collateral contract not illegal, 253, 254, note 25, 264.
Combinations defined, 96.
Commercial combinations not forbidden, 252, note 24.
Common law meaning of adopted by Congress, 276, 325.
illegality of under, 262.
rule of not relaxed, 141.
Competition unrestricted, 559.
Conspiracy defined, 97.
Contracts, see.
Contract to restrain merely, 141.
to suppress competition void, 46.
reason why, 47.
sale to be performed in another state, 534.
unreasonable, can not be enforced, 110.
Corporations, public usefulness restrained by contract, 89.
Criminal, is not at common law, 87, 244, note.
features under Sherman Act, 248.
Criterion in determining its invalidity, 282.
Customers in other states, 357, note 65.
Direct and appreciable forbidden, 271.
must be to be illegal, 309.
only forbidden, 252.
Dyer’s case, 77.
Earliest case of, 50, note 21.
Every contract forbidden, 259, 262.
Extent as to time and territory, 51.
Fairness, 130, note 30.
General restraint, usually void, 83, 85.
Good will, 505 to 508.
Historical review of, 51.
by Chief Justice White, 77.
Illegality involving, 155.
Indictment, see.
918 INDEX.
[References are to pages.]

Restraint of Trade—Continued.
Incidental, not forbidden, 338.
Indirect, not forbidden by Sherman Act, 205, 242. 249, 256, 257.
transportation, 608.
Intent to restrain absent, 349.
presumption as to, 270.
Intoxicating liquors, traffic in, 536.
Liberty of contract vitiating, 201, 204, note 13, 206, 210, 215, 220.
Motives good, no defense, 383, 416.
Normal and usual contracts do not embrace, 288.
Offense, none at common law, 728.
under Sherman Act, 728.
Old doctrine of common law, 136, note.
Onus to show reasonableness, 55, 56.
Partial restraint valid, 53, 81.
may be unreasonable, 81, 109.
Partial and general, distinction between, 83.
Pivotal words in Sherman Act, 325.
Policy of law against, 52, note 30.
Public must be considered, 58.
Public policy as to, 66, 67, 68, 69.
Purpose of contract solely to restrain, 149.
Quasi public corporations, usefulness restricting, 89.
Reasonable, lawful, 72, 109, 135, note, 264.
burden to show, 55, 56.
monopoly, is not, 135, note.
test of, 72.
Reasons for invalidity of contracts as to, 49.
Restraint of competition not interchangeable with restraint of
trade, 333.
Sherman Act, see.
Size, see.
Size of business no test, 99.
Space, unlimited, 86, note, 108.
must be limited in territory, 53, 54.
Special shipping privileges, 602.
Standard shifting, danger of, 142.
State contracts, 536.
State corporations restricting, 361.
Statute, direct restraints only prohibits, 309.
analysis of, 307.
imports affects, 319.
scope, 308.
second section construed with first, 311, 315, note 8.
Stock exchange quotations, 519.
Stockyards cases, 511, 516.
Strikers are not, 155.
INDEX. 919

[References are to pages.]

Restraint of Trade—Continued.
Territory, vendor restricting his vendee to, 510.
Test of legality or illegality, 255, 258, 351, note 56.
extended by Sherman Act beyond common law test, 415,
note 49.
of reasonableness, 64, 72.
size of business is not a test, 99.
standard shifting, danger of, 142.
Total not necessary to create an offense, 350.
Trade depressing and stimulating, 353.
Trusts, see.
Undue restraint tending to monopoly, 80.
Uniform action resulting in restraint, 353.
Unreasonable, must be, 142, 304, 324, 273, 559.
in point of space, 53, 60.
need not be to be illegal, 267.
test as to, 72.
Void, contracts as to, when, 86.

Robinson v. Suburban Brick Co.—
Sale of good will legal, 506.

Rubber Tire Wheel Co.—
Void patents, effect as criminal offense, 634.

Rule of Reason—
Adopted in construction of Sherman Act, 273.
Not an obiter dictum, 289.

Ss.
Sales—
May constitute interstate commerce, 179.
Refusing to make not a violation of Sherman Act, 496.
Restricting, 359, 496.

Salt Combination—
Held illegal, 138.

Sample—
Sale by may constitute interstate commerce, 189.

Shawnee Compress Co.—
Leases to suppress competition in compressing cotton held illegal,
473.

Sherman Act—
Act in full, 833.
Alaska trade, 614.
Ambiguity dispelled by history of common law, 276.
restraint of trade, 277.
“Any part” as used in statute, 277, 312, 425.
920 INDEX.
[References are to pages.]

Sherman Act—Continued.
Articles discussing statute, 305, note 71.
Attorney general’s duty under, 318, 320.
Based on interstate commerce clause, 196.
Boycotting, forbids, when, 680.
Combination, meaning of as used in statute, 261.
Competition fosters in place of combinations, 239, 241, note.
Conspiracy, construed, 261.
Constitutionality, see.
Constitutional, penal provisions are, 727.
Construction, see.
Construction in light of common law, 276.
reasonable, should be, 242.
Contract, meaning as used in Act, 261.
Corner, applies to, 481.
Corporation defined, 319.
Courts, what can enforce, 317.
Criminal convictions under not rendered uncertain, 297.
Damages, see.
Damages, allows to injured person, 319.
District attorney brings suit under, 318, 320.
District of Columbia applies to, 316.
Early construction, 259, 279.
Eighth section construed, 319.
Every contract or combination illegal, 259.
in restraint of trade covers, 267, note 40, 269.
not condemned, 276.
Extension beyond common law test, 415, note 49.
Fifth section, 318.
First section analyzed, 307, 324.
combined with second section, 727.
construed with second, 311.
scope, 308.
second section, 310, 366.
two persons necessary to commit offense under, 333.
Forfeiture of property, 318, 319, 724.
Fourth section, 317. :
Instances to which it does not apply, 302.
Interstate commerce does not regulate, 326, note 4.
Interstate Commerce Act, consistent with, 551.
Intrastate commerce does not apply to, 603, 609.
both it and interstate commerce restrained, 360.
Labor organizations, applies to, 677.
Lawful trade, interfering with, 10.
Leases, applies to, 473, 480, 604.
Monopoly, reaches every act forbidden, 277.
New offense creates, 728.
INDEX. 921
{References are to pages.]

Sherman Act—Continued.

Object of enactment, 9, 235, 251, 261.

Obiter dictum, 272, 289.

“Or otherwise” construed, 261, 337.

“Person” defined, 319, 835.

Partnership forming, no violation of, 402.

Patents, see.

Pivotal words in, 325.

Policy of Act, 238, 265.

Prepayment of freight rates, discrimination in, 610.

Prior combinations applies to if continued, 472.

Railroads, applies to, 549.

Reasonable construction must have, 242, 286, 287.

Regulates interstate commerce, 275.
does not, 326, note 4.

Revolutionary in character, 268.

Rule of reason for its construction, 273, 289, note.
not an obiter dictum, 272, 289.

Sales, refusing to make, 496.
restricting, 496.

Second section, 310, 366.
broader than first, 375, 376, note 1.
complement of first, 311, 312, 314, 378, 727.
construed with first section, 311. ,
construed, 277.
in pari materia with first, 367, note 1.
monopolizing does not prohibit, 377, note 10.
scope, 310.

Seventh section, 319, 757.

Sherman Act in full, 833.

Sixth section, 318.

Stare decisis, early cases discussed, 279.

State, Act not applicable to, 536.

State corporation reaches, 611.

Statute in full, 833.

Telephone applies to, 480.

Territories apply to, 316.

Third section, 316.

Title used in construing, 239, 262, 263.

Uncertainty does not render invalid, 227.
is not, 297.
under Standard Oil decision, 294.

Understanding of bench and bar as to meaning, 272.

Vested rights disturbing, 362.

Wilson Tariff Act, 319.
922 INDEX.

[References are to pages.]

Shingle Trade—
Conspiracy to control, 446, 459.

Shoe Fastener Case—
Combination to control machines for making shoe fasteners, 490.

Size of Combination—
Measure, when is, 396.
Not the test of illegality, 99, 269, 391, 390 note.
Power to monopolize, 396.
Unification of interests, 399.

Sleeping Car Company—
Competition in business, 148.

Southeastern Freight Association—
Held illegal combination, 597.

Special Privileges—
Shipping contract, 602.

St. Louis Terminal Association—
Held to be an illegal combination, 581.

Standard Oil Case—
Combination held to be illegal, 490.
Construction of statute adopted in, 273.
Criticism of decision, 291.
Decree of dissolution, 717.
Importance of decision, 291.
Monopoly by illegal, 477, 491.
Record of on appeal, 477, note 16.
Results of decision, 299.
Stare decisis, rule of discussed, 279.

Standard Sanitary Manufacturing Co.—
Unlawful combine as to unpatented article to be used on patented
machine, 637, 638, 644.

Stare Decisis—
Discussion in Standard Oil case, 279.

State—
Contracts controlling, 206.
Corporation under, controlled by Congress, 224.
Monopoly, see.
Suit in equity to restrain combination can not maintain, 695
note 10.

’

State Lines—
Stockyards situated upon, effect on trade, 511, 516.
INDEX. 923

[References are to pages.]

Statute—
Expedition Act, 722.
Immunity statute, 817, 818.
James I on monopolies, 38.
Louis XVI edict, 33.
National labor cases, 839.
Sherman Act in full, 833.
Wilson Tariff Act, 319, 728, 836.
Zeno’s edict, 32.

Statute of Limitations—
Conspiracy a continuing crime, 439, 441, 442, 443, note, 444, note.
at an end and monopoly continuing, 412.
Damages, action to recover, 776.

Steamship Companies—
Combinations between, 125.

Stevedoring Trade—
Combination of held illegal, 134, note, 136, note, 137 note.

Stock—
Competing railroad purchasing, 587.
Corporation purchasing to control another one, 119.
Distribution under decree of court, 713, 717.
Pooling by means of third corporation, 358.
Purchasing that of a competing corporation, 404, 578.

Stock Exchange—
Distribution of quotations, 519.

Stockholders—
Combining to monopolize production, 123.
Combinations of may be illegal, 222.
Controlling without control of majority of stock, 611.
Damage to corporation may recover, 791.
Dividends in illegal holding company can not recover, 463.
Indicting for act of corporation, 750.
Majority may secure control of corporation, 611.
Minority restraining illegal act of majority, 124.
Not liable when he takes no part in corporate illegal proceedings,
703.
Suit to restrain his corporation, 130, note 31.

Stockyards—
Operation not in restraint of interstate commerce, 511, 516.

 

Strait v. National Harrow Co.
Contract extending beyond life of patent, 636.
924 INDEX.

[References are to pages.]
Strike—
Injunction to restrain, 707.
Labor combinations, see.
Not illegal, 155.
Not in restraint of trade, 155.

Subpoena—
Court may issue, 318.
Issues for witnesses, 321.

Subpcena Duces Tecum—
Books of corporation to secure, 803.
Ordered by court, 804.
Petition for, 804.
Search warrant, may amount to, 824.

Sugar Refining—
Knight case, 522, 527.
distinguished, 528.

Suit in Equity—
Attorney general directs suit brought, 688.
Conspiracy, general charge of, 701.
Constitutionality of statute as to, 701.
Crime, commission enjoining, 690.
Damages, see.
Demurrer construed liberally, 700.
Dissolving combine, 709.
District attorney brings, 688.
District court has jurisdiction, 689.
Expedition Act, 722.
Injunction, see.
Intent, averring, 701.
Interest of government, lack of not defeating suit, 690.
Interstate or foreign commerce, petition must show restraint of,
700.
Judgment, see.
Necessary parties, 696.
Northern Securities Company decree, 713, 715.
Notice of suit, 689.
Pendency of criminal case no bar, 702.
Petition construed liberally, 700.
for dissolution of combine, 689.
restraint of trade must aver, 700.
Private person can not maintain, 694.
Process, failure to pray for, 693, note 8.
nonresident for, 697.
order granting, 698.
INDEX. 925
[References are to pages.]

Suit in Equity—Continued.
Reorganizing illegal combination, 720.
Standard Oil decree, 717.

State can not maintain, 695, note 10.
Statute authorizing, 688.

Stock distributing, 713, 717.
Subpoenas to other districts, 689.
Summoning other parties, 689.
Temporary restraining order, 689.
Where may be brought, 696.

Summons—
Court may issue, 318.
Issuance, 321.
Sending to another district, 753.
Suit in equity, see.

Swift & Company Case—
Combination held illegal, 487, 488.
Freight rates, securing rebates in, 478.
Interstate commerce restrained, 186.

T.
Taxation—
Does not determine question of interstate commerce, 176.

Telephone Companies—
Combination of may violate Sherman Act, 480.

Terminal Facilities—
Monopolizing, 581, 585.
Union depots, 586.

Territory—
Applies to, Sherman Act does, 316.
Alaska commerce, 614.
Division of by fake bids, 481.
Fifty miles limit in cotton compress case held illegal, 473.
Limiting sales to particular state, 467.
Restricting purchaser’s right to sell to a particular state, 510.

Thomas v. Cincinnati, N. 0. & T. P. Ry. Co.—
Strike injuring interstate commerce, 681, 686.

Tift v. Southern Ry. Co.—
Right to withdraw from combine, 605.

Title of Statute—
Use of in construing statute, 262, 263.
926 INDEX.
[References are to pages.]

Tobacco Case—
Combination to suppress competition, 470, 475.
Decree in, 709.
Sales of, refusing to make, 496.

Trade—
Commerce broader than trade, 162, 328.
Defined, 164, 166, 327, 328.
Depressing and stimulating, 353.
Division of, when illegal, 470.
Encouragement policy of law, 48.
Preference in not illegal, 128.
Sherman Act fosters, 251.
use of term trade, meaning. 166.
Suppressing or monopolizing, 104.
Trade Name—
Combination to protect illegal, 663.

Trafiic—
Defined, 167; 327.

Trans-Missouri Freight Association—
Explained in Standard Oil case, 284, 286.
Observations on, 564.

Right to withdraw from combine, 605.
Second case before Supreme Court, 551, 599.
Sherman Act applies to, 540, 543, 552.

Transportation Agencies—
Cincinnati Packet Line case, 603.
Coal transporting, 594, 596.
Combination of common carriers, 214.
preventing, 218.
Commerce as transportation, 163.
Competition between, advantage of, 592.
not suppressed, 580.
Conspiracy to arrest operations of, 446, 448, note 22.
Contract illegal, enforcing, 799.
Controlling without control of majority of stock, 611.
Darius Cole Transportation Company, 684.
Fares, regulating, 218.
reasonable, no defense, 215.
Foreign country, combine made in, 599, 600.
Franchise controlling, 219.
Freight rates, prepayment, not a discrimination, 610.
refusing to carry through freight, 598.
refusing to make contracts for, 598.
INDEX. 927
[References are to pages.]

Transportation Agencies—Continued.
Good will of line, selling, 508.
Indirectly affecting transportation, 608.
Inherent conditions producing monopoly, 581.
Interstate commerce, see.
Intrastate transportation on Ohio River, 194.
Lake Shore & Michigan Southern Railway Co., 596.
Lease with agreement not to compete, 604.
Low rates, combine to determine, 131.
Lumber, shipping, 597.
Mogul case, 125.
Necessity for combination to prevent rate cutting, 557.
Northern Securities Co. case, 409, 566.
mere custodian of stock, 570.
observations on, 573.
Pollock, Sir Frederick, on, 577, note 29.
One person purchasing controlling interest in two competing rail-
road companies, 579.
Pools to divide earnings, 599, 600.
Prepayment of charges, discrimination, 610.
Public character of business, 544, 562.
Rebates of freight rates, 478, 487, 488.
to secure customers, 504.
Rates recoverable, charging differs from combine to fix same
rates, 563, 606.
Reading case stated, 594.
Refusing to carry through freight, 598.
to make contract for carrying, 598.
Sherman Act applies to, 540, 549.
Southeastern Freight Association case, 597.
Special shipping privileges, 602.
Stock of competing railroad, purchasing, 578, 587.
Subject to different rules, may be, 548.
Swift & Company rebates, 478.
Tift v. Southern Railway case, 605.
Terminal case, 581.
facilities, 581, 585.
Trans-Missouri Freight Association case, 540, 548, 551, 559, 605.
observations on, 564.
Union depots, 586.
Union Pacific case, 587.
Unrestricted competition, 544.

Trusts—
Combinations defined, 96.
Conspiracy defined, 97.
Described by Senator Sherman, 12.
928 INDEX.
(References are to pages.]

Trusts—Continued.
Defined, 93, 94, 335, 336.
Extension beyond common law rule, 415, note 49.
Indictment for forming, 546.
Object of Sherman Act to prevent, 9.
Origin of name, 336, note 29.
Pooling, 95.
Power to control prices, 106.
Protection by government agent, 16.
Public policy against, 119.
Purpose of Sherman Act to suppress, 261.
Restraint of trade, see.
Species of combination to monopolize traffic, 266, note 39.
Usual form, 119, note.

Uv.
Union Depots—
Sherman Act does not prohibit, 586.

Union Pacific Railroad Case—
Combination illegal, 587.

United Shoe Machinery Case—
Tied case, 651.

United States v. Winslow—
Non-competing patentees combining, 646.

United States v. Workingmen’s Amalgamated Council—
Sherman Act applies to strike, 677.

United States Consolidated Seeded Raisin Co.—
Contracts covering several patents in return for lease under all
of them, 648.

Verdict—
Directing, 809, 810.

Vested Rights—
Combination formed before passage of Act, 362.

Virtue Creamery Package Case—
Agreement to defend infringement suits, 647.
INDEX, 929

[References are to pages.]

w.
Wall Paper—
Combination to fix prices illegal, 466.

Wheeler-Stenzel Co. Case—
Combination to fix price of window glass illegal, 467.

Whitwell v. Continental Tobacco Co.—
Refusing to sell tobacco not an offense, 496.

Wilson-Tariff Act—
Section taken from, 319, 837.
Seventy-third section, 728.

Window Glass—
Combination to restrain sales and fix prices, 467.

Witnesses—
Evidence, see.
Immunity, see.
Released by writ of habeas corpus, 830.
Subpoena for, 318, 321.

Wooden Dishes—
Combination to control output illegal, 463.

Zeno’s edict against trusts in 483, 32.
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