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The Columbia University Libraries reserve the right to refuse to accept a copying order if, in Its judgement, fulfillment of the order would involve violation of the copyright law. Author: United States. Courts Title: Federal anti-trust decisions 2V. Place: Washington, Date: 1907 COLUMBIA UNIVERSITY LIBRARIES PRESERVATION DIVISION BIBLIOGRAPHIC MICROFORM TARGET MASTER NEGATIVE * ORIGINAL MATERIAL AS FILMED - EXISTING BIBLIOGRAPHIC RECORD wsmEss D22S Un3944 I C™^='*-'' Federal anti-trust decisions. U. SL Courts, Federal anti-trust decisions. Cases decided in the United States courts arising under, involving, or growing out of the wiforcement of the anti-trust act of July 2, 1890 (26 Stat 209) including a few somewhat similar decisions not based wpon that act, 1890-1899, 1900-1906. Prepared and edited ^ James A. Finch, by direction of the attorney-general. Washington, Govt print off., 1907. 2v. 23} cm. r!«£S!!*K"Tl^^»"?®^®^** antitrust decisions ... 1899-1912 rf. e 1911, Comp. by John L. Lott under the direction of the attorney-woeriL In fotir Tolumes ..." (r. 1, 1890-1899, published 19™) ««>erai. m 1. m^^^^^^K^^"^' ^-^^^ 2. Intewtate commerce-Cawsa. tUiranr of OoagMt / HD2780iA14 laSOolj T-«5259 h RESTRICTIONS ON USE: TECHNICAL MICROFORM DATA FILM SIZE: '^^^- REDUCTION RATIO: ^S^ IMAGE PLACEMENT: lA ^ IB IIB DATE HLMED: IQ-I'i- 9 H INITIALS: ^ TRACKING « : MZH OliSi . O/ J S 7 RLMED BY PRESERVATION RESOURCES, BETHLEHEM, PA. BIBLIOGRAPHIC IRREGULARITIES MAIN ENTRY: United States. Courts- Federal anti-trust decisions...2V. Bibliographic Irregularities in the Original Document: List all volumes and pages affected; include name of Institution if filming borrowed text, Page(s) missing/not available: yolume(s) missing/not available:. Illegible and/or damaged page(s):_ .Page(s) or volume(s) misnumbered: Bound out of sequence: X_Page(s) or volume(s) filmed from copy borrowed from: Cornell University pages 1024-1029 (vol. 2) Other: TRACKING*: MSH01257 FILMED IN WHOLE OR PART FROM A COPY BORROWED FROM: CORNELL UNIVERSITY ^r i^FA 3 CD 00 ?9.o ztQ cn ^-< OOM CJl 3 > Q) O o m OQ CjO_, ^5 O CX)^ no CO X -< M "'S^^ 2.0 mm s 3 3 3 3 8 3 3 1.25 mil I.I 1.0 ^ f;"^I^EC|sE 1^ Is is is K5 O ^ i^ ABCOEFGHIJKLMNOPQRSTUVWXYZ atxdefghiiklmnopqrstuvwxyz 1 234567890 ABCDEFGHIJKLMNOPQRSTUVWXYZ abcdefghijklmnopqrstuvwxyzl234567890 ABCDEFGHIJKLMNOPQRSTUVWXYZ abcdefghijklmnopqrstuvwxyz 1234567890 ABCDEFGHIJKLMNOPQRSTUVWXYZ ^ _ abcdefghijklmnopqrstuvwxyz 2.5 mm 1234567890 L^ ^^ *<*%» ^^>.^^ ».^***<^^" « ^o 1= 'Sr O o -om-D I Tj ^ m 3D o m 4,^ 3 3 o 3 3 IS In 5^ 8 *-> CobQiitQa ®nttiewfti> THEUBRARIES SCHOOL OF BUSINESS il'mi • K ^4^5. FEDERAL ANTI-TRUST DECISIONS CASES DECIDED IN UNITED STATES COURTS ARISING UNDER INVOLVING. OR GROWING OUT OF THE ENFORCEMENT OP .*-.-"j'' THE ANTI-TRUST ACT OF JULY 2, 1890 (26 Stat., 209) INCLUDING A FEW SOMEWHAT SIMILAR DECISIONS - NOT BASED UPON THAT ACT 1890-1899 PREPARED AND EDITED BY JAMES A. FINCH BY DIRECTION OF THE ATTORNEY-GENERAL VOL. 1 WASHINGTON GOVERNMENT PRINTING OFFICE 1907 \;>^ k 00 CASES REPORTED. VOLS. 1 AND 8. A, Booth&Co. V. DaviP, 127 R, 875 2—318. 131 F., 31 2—566. Addyeton Pipe & Steel Co., U. S. r., 78 F, 712 1—631 . 85 F., 271 1—772. 175 U. S., 211 1—1009. Agler, U. S.v., 62 F., 824 1-294. Alexander r. United States, 201 U. S. , 117 2—945. American Biscuit & Manfg. Co. v. Klotz, 44 F. ^ 721 I — 2. American Brake Beam Co. v. Pungs, 141 F. , 923 2—826. American Preservers' Co. , Bishop v, , 51 F. , 272 1 — 49. ia5F., 845 2-51. American School-Furniture Co. , Metcalf v., 108 F., 909 2 — 75. 113F.,ltJ20 2—111. 122 F., 115 2—234. Anderson r. United States., 82 F., 998 1—742. 171 U. S.,604 1—967. Armour & Co., U. S. ?., 142 F., 808 2—851. Atchison, T. & S. F. Ry. Co., Prescott & A. C. Ry. Co. r., '73 F., 438 1—604. 84 F., 21 3.. (note) 1—604. Atchison, T. AS. F. Ry. Co., U. S. v., 142 F., 176 2—831. Barber Anphalt Paving Co., Field v., 117 F., 925 2—192. 194 U.S., 618 2-555. Bay (Cincinnati, Portsmouth, Big Sandy and Pomeroy Packet Co. y.), 200 U. S., 179 ' 2—867. Beef Trust cases. See U. S. r. Swift, and U. S. r. Armour & Co. Bement v. National Harrow Co., 186 U. S., 70 2—169. Bishop V. American Preservers' Co. , 51 F. , 272 1—49. 105 F., 845 2—51. BliDdell V. Hagan, 54 F., 40 1—106. 56 F., 696 1—182. Block r. Standard Distilling & Distributing Co., 95 F., 978 1—993. Board of Trade r. Christie Grain & S. Co., 116 F., 944 (note) 2—233. 121 F.,608...' 2—233. 125 F., 161 (note) 2—233. 198 U.S., 2:36 2—717.5 III 410231 IV CA8E8 REWmTEl). Bobbs-Merrill Co. ,-. Straus., 13» F., 155 2—755. Booth & Co. #. Davis, 127 R, 875 2—318. 131 F.,ai 2— 5««. Buthauan, Fcwit r. , 113 F., 156 2—103. l| i f CamorB-McConnell Co. t\ McConnell, 140F., 412 2—817. 140 F., 987 2-826. Carter-Cnime Co. , Cravens * . , 92 F. , 479 1— 9a'l. Carter-Crnme C< >. *•. Peurriiiig, 86 F., 439 1—844. Cas^kly, U. S. *., 67 F., 698. ,,[[[ 1—449. Ceotral Coal & Coke Co. v . Hartman, 111 F. , 96 2—94. Central Railroad and Bankinj? Co. of (ia., Clarke r., 50 F., :i:^8. . 1—17. Charles E. Wisewall, The, 74 F., 802 1—608. 86 F., 671 .'...]." l_85o! Chattanooga Fonndry & Pif>e Workn, City of Atlanta r., 101 F., 900 2—11. 127 F., 23 2—299. 203 r. S., — (note) 2—299. Chesapeake & O. Fuel Ct»., V. 8, v., 105 F., 93 2—34. 115 F.. 610 2—151. Chicago Wall Paper Mills r. General Paper Co., 147 F., 491 2—1027. Christie Grain & 8to<'k Co., Bd. of Trade r., 116 F.,944 (note) 2— 23;i. 121 F., 608 2—233. 125F., 161. ...(note) 2—233. 198 r. S., 236 2—717. Ciminnati, X. O. <& T. P. Ry. (o., Thomas i-., 62 F., 803 1—262. Cincinnati, Portwmouth, Big Sandy and Pomerov Packet Co. r. Bay, 200 U. S., 179 ....' 2-867. City of Atlanta r. Chattanooga Foundry & Pipeworks, 101 F., 909 2—11. 127 F., 23 2—299. 203 U. S. — ..( note) 2-299. Clarke r. Central Railroa Minnesota v. Northern Securities Co., 123 F., 692 2—246. 194U. S., 48 2-533. Montague & Co. f. Lowry, 115 R, 27 2 112. 193U. 8., 38 .'.'.".'.".".*.' 2-327. Moore «;. U. 8., 85 F!, 466 1—815 National Folding-Box & Paper Co. v, Robertson, 99 R, 985 2—4. National Harrow Co. r. Hench, 76 F., 667 1—610. 83R, 36 .'.'.'." 1-742. 84F., 226 1—746. National Harrow Co. v. Quick, 67 F., 130 1—443. 74R,443'. ;;;;.*.' l_608! National Harrow Co., Bement r., 186 U. 8., 70 2—169. National Harrow Co., Strait r., 51 R, 819 "...... 1—52. Nelson, United States v., 52 R, 646 2—77. Nelson f. United States, 201 U. 8., 92 2-920. Northern Securities Co., Harriman r., 132 R, 464 2—587! 134 R, 331 2-618! ^, _,, 107U. 8., 244 2-669. Northern Securities Co., U. 8. v., 120 R, 721 2—215. 193U. 8., 197 2—338! Northern Securities Co., Minnesota v., 123 R, 692 2—246. 194U. 8., 48 2-533! Otis Elevator Co. v. Geiger, 107 R, 131 2—66. ? ^'^" CA8B8 BEPORTED. Birki, John D & Sona Co.. Hartnmn r., 145 F., m 2-999. Piitteison, U. S.r.,65F., 605.. * |_^' ^^ 59 F., 280.. 1—244 rtwrniiig, Carter-Crame Co. »., 86 F., 439 1—844.* PhOlipe r, Portland Cement Oa. 125 F., 593 ... ] a_284 Kdcockr. Harrington, 64 F., 821 "*".",'l*." 1-377* Preecott & A. C. R. Co. f . Atchi»on, T. AS. F. Co., ' 73F.,438 1_604. I^ngB, Amenaui Brake B«aiii Co. r., 141 F., 923 ...... .....^... 2II826 [, National Harrow Co. r., 67 F., 130 1—130 74F.,236 1—609. Bice I. 8tandar«l Oil Co., 134 F., 464 •—OSS Bobertuon, National Folding-Box & pipe'r Co] V. * 99 F.' 985 ' 2-4 * Robin«on t;. Soburban Brick Co., 127 F., 804 . . . " 2-m Rubber Tire Wheel Co. p. Milwaukee Rubber Works" Co.* 142 F., 531 ...... ^ 2—855. ficribner, Minee »., 147 F., 927 *_iaS5 Shingle Trust ^i* Gibbe r. xMeNulty. *" Southern Ind. Exp. Co. v. United States Exp. Co., 88 F., 659... 1-862. Southern Railway Co., Tift r.. 138 F., 753 ^ ^*' ^^' ' IZ^' Standard Distilling & Distributing Co. . Block p„ 95 F.V978 l-^s* Standard Oil Co.. Rice r.,mF., 464 2-633* State of Minnesota r. Northern Securities Co., 123 F., 692....... 2—246. StoUer, (Greer, Mills & Co. ..), 77 F., 1 !^ ^'* ®" ^ |lff * Strait t. National Harrow Go. , 51 F. , 819 . l-'ig ' Straus, Bobbs-Merrill Co. r., 139 F., 155 .... "** o_7^ Suburban Brick Co., Robinson v., 127 F., 804 «_qi9* Swift* Co., r.S.,., 122 F., 529 ^IZ'^ZZZZ 2-237.' 196 U. S., 375 J /»ii Terrell, In re, 51 F., 213. . ,^ Thomas r. Cin., N. O. & T. P. Ry. Co., 627.ym.',Z'''' 1I266 Tift 1;. Southern Railway Co., 138 F., 753 iyoo* Tile, Mantel & Grate Ass'n, LowTy r., 98 F., 817*.".".".'.'.'.;'.;;;;;; i_995; _^ 106 F., 38 2— "S^ Tobacco Trust Cases. See Hale r. Henkel and McAlister^H Jnkel". " Trans-Missoun Freight Ass'n, U. S. *•., 53 F., 440 i_8o 5«F.,58 .■.*.*.",■;.■; i_i86. 1«6U.S.,290 l™648. CASES REPORTED. I Union Sewer-Pipe Co. ? . Connolly, 99 F., 354 2— I. . 184U.S.,540 2—118. U. 8. r. Addyston Pipe & Steel Co., 78 F., 712 : 1—631. 85 F., 271....... 1-772. 175U.S.,211 1—1009. U. S. V. Agler, 62 F., 824 1—294. U. S. V. Armour & Co., 142 F., 808 2—951. U. S. V. Atchison, T. & S. F. Ry. Co., 142 F., 176 2—831. U. S. r. Cassidy, 67 F., 698 1—449. U. S. r. Chesapeake* & Ohio Fuel Co., 105 F., 93 2—34. 115 F., 610 2—151. U. S. V. Coal Dealers' Association of Cal., 85 F., 252 1—749. U. 8. r. Debs, 64 F., 724... 1—322. Inre Debs, 158 U. S., 564 1—565! U. S. r. E. C. Knight Co., 60 F., 306 1— 25o! 60 F., 934 1_258. 156U. S., 1 1-379. U. S. r. Elliott, 62 F., 801 1—262 64F., 27 y.y,y.[]... isu. U. S. V. Freight Association. See U. S. v. Trans-Missouri Freight Association. U. 8. r. General Paper Co. See Nelson v. U. S., and Alexan 'er V. U. 8. U. 8. V. Greenhut, 50 F., 469 1—30. U. 8. r. Hopkins, 82 F., 529 1—725 84F., 1018 .......VZZ 1-748.* 171 U. 8., 578 1—941. U. S. V. Jellico Mountain Coke & Coal Co., 43 F., 898 1—1. 46 F., 432 1—9. U. 8. V. Joint Traffic Association, 76 F., 895 1—615. 89 F., 1020 [\ 1-869! 171U. S., 505 1-869. U. 8. V. MacAndrews & Forbes Co. (Licorice Paste Trust). De- murrer overruled by Cir. Ct. for Sn. D. of N. Y., Dec. 4, 1906. Opinion not yet published. U. 8. V. Nelson, 52 F., 646 i_77, U, 8., Nelson /•., 201 U. 8., 92 ..!!!!].....! 2—920. U. S. V. Northern Securities Co., 120 F., 721 2—215. 193 U.S., 197 2—238! U. 8. V. Patterson, 55 F., 605 1-133. 59 F., 280 .!1]!...!.... 1—244 U. S. V. Swift & Co., 122 F., 529 [[[ 2—237 196U. 8., 375 !!!!.!..*..!!! 2—641! U. 8. V, Trans-Missouri Freight Association, 53 F., 440 1—80. 58F., 58 1-186. n fi „, ,. 166 U.S., 290 1-648. u. b. V. Workmgmen's Amalgamated Council, 54 F., 994.... 1—110. TT n ,, , 57F., 85 1-184. U. 8., Alexander v., 201 U. S.,117 2—945. # ^ CASES BEPORTED. U. 8., Anderson v., 82 F., 998, .. . |_- .„ mU. S.,604...;i"l".',' 1 oft^' U. 8., Moore r., 85 F., 465..... i-Ji^' V 8 Srrf'^ fK""- '^•; ''"^'^ ^'sidivb;;; Y26 F.;3^-: g-m u. S. hxp. Co., Southern Ind. Exp. Co. v., 88 F., 659 i__862 92 F., 1022....;.".".".".' i-_992.* Waterhouse v. Comer, 55 F., 149.. . i__iiq Whitwell V. Continental Tobacco C^^fm ^'454" ^971 Wise, General Electric Co. t;., 119 F., 922 o t^' Wisewall. The Charles E., 74 F., 802.. . ffz' 86F.,671.... ! ^' Workingmen's Amalgamated Coimcil, U.S. t., 54 f"," 99*4* "'!'.'.' l-m 57F., 85 l-_ig4." CASES CITED. VOLS. 1 AND a. A. A. F. Booth & Co. >: Davis, 127 F., 875 2—820 Ackerman «. Shelp. 8 N.J. Law 125 **"".-.......... 2— «i Adams v. Burke, 17 Wall., 453 2—863 Adams v. Palmer, 6 Gray, 338 .."!*."..!.... 2-307 Adams r. New York. 192 U. S., 585 2—903 Adams r. Wpod.«, 2 Craneh, 337 ."[.".....!!.* 1—353 Adderley r. Dixon, 1 Sim. «fc S., 607,611 1—109 Addyston Pipe «M032. Annie *'. Railway Co.. I5i r. §., 1 5^-276,277.286. Appleton r. Rrnubert. 45 F 281 1— 287; S— 88. Annstrong i-. Tolf r. 1 1 Wheat., 258 — ^^' Amot r. Coal Co., tl8 X Y .%« 1—854. «--«32.766,7»»,a58; m . *-'-^6- AnjoC..M.,M<>„4Elmimr«.Co. (.^'Arnoin ci.rCo^fiHX; v.; '-^- '-^' Arthur i\ ( takeii. 68 p., sio 824 I— 317,;{72. AalM»r t. Texas, 128 C. s., m. "'• '~''^- Anhleyr. Ryan. 1581. S.. 436 440 44^ 1-737.805; 2-60. AMOciation r. Houi-k. 30 s. w.. m (88Tex "i84» 2-50*..W. Aimiatlon r. Koclt. 14 U. Ann ^^'^''•'^>- 1-868. AnBociation r. Xiezerow»ki. 95 Win 129 1-90,798. AsBociation r. Walsh. 2 Daly I '~^^- AtcheHonr. Mallon. 43 X Y 147 '~^^- Atchison. T. & .< F Rv Vn "r iLl^l^^V '^'^'L ^-^*^ «— 321. 1—342. 1—590. * ♦» ^ "• ^'*> ''^ '•^" ^''«ire. 37 WlH.. 400 '. '*" ""■ ■ I~^' Attorney-Genenil r. F,.rf>es. 2 Mvlne & Co V*i " lin:-T""1 '• "^•■''»^""- 3c. E. Green (i8N::r:Eq:;;4Vo i-**'-^^'^^.*^. Attomey-(ieneml r. Hunter. 1 Dev Eq 12 ''«•'• *^" 1-vW. A^ey^ieneml .. .Jamaica Bmd Aqueduct ^Corpo'ration.'iW Ma*;; '"^' Attorney-General r. Johns^in. 2 Wilg Ch * 87 '~'^' ^^' Attorney-General v. X..r. R. r., 2 C. E.GiWnVlVN'Vpn'ri;;: \~^' Attorney-General r Xichol. 16 Ve. ^'"^" <" ^''^qK 136 ,_690. aST^"^^'*™! ' '^""^^^<>'nP«nie«,i6Wi«'.;*5i,V587: I~^' him Attoraey-Geneml r. Richards. 2 Anstr 603 ' ''^^ Attomey-fieneralr.Terrv. L. R 9Ch"Vi *~^^- Attor„e.v-General . Tudor U-e Co.. 104* Man^VaSJ,' 24^ J-^''"^' Attoniey-General r. Woods, 108 Ma*... 886 . J~1f Austin r. Tennessee. 179 i: 8 849 1— '"»86. Ayerst r Jenkin.. L. R. 16 Eq;,'275.il' :;;.;.': f-^^" *'"***' • » — 714. Ball r. Rutland. 93 F., 516 Bank r. Lamb, 26 Barb.. 6961 !!.'''..*" " Bank r. Owens. 2 Pet., .'iSS Bank r. Schermerhorn. 9 Paige, 372, 375 ! «-75i. 1-852. 1—852. 1-339. CA8E8 CITED. Bank of Australasia r. Breillat, 6 Moore. P. C, 152. 201 «_«74 Bannon r. U. S.. I.t Sup. Ct., 4(i7 (1.56 U. S., 464) ] i^^' Barber Asphalt Paving Co. r. Hunt, 100 Mo., 22 «-^560 Barbier r. Connolly, 113 U. S., 27, 31 !.!!....". 2— i:}x Barthet »•. City of Xew Orleans, 24 F., 563 1—761) Beal »•. Chase. 31 Mich., 490 XIII 518. 521. "Beck r. Real Estate Co., 65 F.. 30 Bells Gap R. R. r. Penn., 134 C. S., 232 .^! . . Belton I'. Hatch. 109 X. Y., 593 Bement r Xationnl Harrow Co., 186 U. S. 70 1— 75.91, ia^Tftl. 1—702. 1—96. 2—92. i— 141,14«. 1—630. 2—293, 732. 8«B, X*l\ 70. ^8. 89 2—208. 70.88-91 2—209! 70,88,92.93 2-78.5, 7«iand. 74 Md.. 153 2—21. 2—997. '"•••• •-••--•.......«»».,.. •• 809 894 Blease i\ Garlington. 92 l\ 8., 1 , 2-942* Bleistcin v. Donaldson Lithographing Co., 188 r. S., 239. 2*49 250 2-731 Blindell r. Uagan. 54 F.. 40: 56 F.. «96 Bloi'k r. Distributing Co.. 95 F.. 978 Board of Trade r. Christie Grain and Stock Co., 198 V. 8., '2:^6.! Board of Trade v. C. B. Thompson Commission Co., 103 F.. 902 Board of Trade r. Hadden-Krull Co., 109 F.. 705. Boatmen's Bank r. Fritzlen. 135 F., 650 ............ !1......'.'..'.. 2—850 Bobbs-Merrill Co. r. Snellen burg, 131 F.. 530 BonsHck Mach. Co. r. Smith, 70 F.. 386 Bof)th, A., & C<)., r 1-379. 623, S41.>;12, 995; 2—79. 2-79. 2—863, 1007. 2—731. 2—731. ........... a — 804. ^ . 2—824,1007. Davis, 127 F., 875 2—820 Bowen r. Matheson. 14 Allen, 499 Bowman r. Chicago & X. W. Railway Co., 125 U.S.. 465..... ....... ... u - .,.. - 465,497 Boyd r. Gill, 19 F., 145 Boyd r. State, 19 Xeb., 128 '. .^"^""^ "'.'.'. ..'. Boydr. r. S.. 116U.S..616 1—202. 1—388, 1027. 1—738, 739. 1—627. 1—363. Brady r. Dalv, 175 I Bram r. V. S. Brawley r. U. Brennan fii«_«o. 2-813,902,912,973. -^^6-^^ 1-359. ~^}^'^^ • 1-593; 2-917. ^ . • 2—13,307,308. ''^ 2 — 17. ]^ U.S., 532 2_97., S..96U. S.. 16«,172 2—997 »•. City of Titusville. 153 U.S., 289 |_7; Brennan r. People, 15 111., 511 . Bre.slin r. Brown, 24 O. St., 566 Brewerr.Blougher, 14 Pet., 178,198 \Z^' Bridge Co. r. Hatch, 125 U. S.. 1 " Brinckerhoff t-. Brown, 7 Johns. Ch.. 217 BrKsbane r. Adams, 3 X. Y.. 129 «rown r. Houston. 114 U. S 6'>2 623 Hrown 1: .lacobs Pharma 37, 8a5; 2—60, 241. 1—374. 1—803. l< y Co.. 41 S. E., 55:1 (115 Ga.,4'29) 1—345. 1—212. 1—803. 1—68,978. 1—741. 2—276. fc — -^ t 1 'I . ^^^ eABm CITfCD. Brown ^ Maryland, 12 Wheat., m.. , 1—741,958.1023: ... 2-466. ZZ >-3i4. *** • i i«i Brown r. Boun«aveIi, 78 111 589 >— 388. Brown r. United States, 113 U. 8.^568.571 J -75, 206. 277. 279. Brown f. Walker, 161 U. 8 591 1—720. 2—108.109.812.898, Brown r. WoMter, 113 F., 20 • 899,900,968. Brace f. Baxter, 7 Lea, 477 *— 943. Buchanr. Broad well, 8S Mo., 31 .^ «— 310. Buckr. Buck. 60 III.. Ift5, 106 . - 2—569. Budd r. New York. 143 U, S.^bll.... 1~^^- Bull r Loveland, 10 Pick., 9.. *— *33, 738, 740. Bullard r. Bell, l Mason. 243!.".!!^.'.**.'."." *~*'^' Bnnnell's Anpeal. 69 Pa. St., 59.... 2-311. Bnskirk f. KiuK. 72 F 22 1—344. Bntcher,' 4 Drovers' »>ocl^Ya,^ci]::Lon^;;:-j;y '^ c^— ^ f-f"'- • c. Cady ,'. Norton, 14 Fiek.. 236. .. . c^Iifr' wT""' Navigation Co. .. wrVghr6cai.;ii: :;;;;:: Iz^, Callan », Wilson. 127 r. 8., ,540 556 — Callawayf. MeMillian. ll*Hei.vk .557 *~~*^^' Campbell r. City of Haverhill. 15^ U.sV.^lO."." .■.■.■:.':.■:.:.■:::;:;:::::;;; tlTie, is m Cammeyer r. Lutheran Churches. ^dLCh^.i-oil^ ?~fJ'- Oirbon Co. ik McMillin, 119 N Y 46 l-62b. Carew r. Rutherford, 106 Mass., 1.14 1-745,766,799. Carleton r. Rugg. 149 Mass., 55(]L667 1-202,290. €amn*..Caroirs Lessees, 16 How., 275 " \~^^- Oarr r Fife, 156 U. S., 494 " ^-^l^. . Carrol r. Green, 92 U. 8.. 509 2-316. Cartwrights Case, 114 Maas., 230,*i38 2-22,311. ^ of the Earl of Shaftesbur>'. 2 St. Trials 615; Is^c'l Mod' 14^ t^' CHwe of Greene, 52 F., 104 - ' • ^- i Moa., 144 .... I-.193. Case of Phelan, 62 F., 803. 1—262. Case of the State Freight TaxVlS Wall.; m 275 !~?f !' Case of Yates, 4 Johns., 314. 369 1-1/3,351,355. Casey v. Typographical Union, 45 F., 135 144 J~^^' Castner r. Coffman, 178 U. 8., 168 183 1-108,290. ""BlalcLl'^^^^^^ '*• ^^*y--''^««t«l Vulcanii^^ central Ohio SalVcoVrGuthrie.a^OhiosV'^^^ /■~^- Central R. R. ,. Macon, 110 F 871 ''''''' ^''^ *^'^^^ 1-403:3-470. Central Stoik and Grain Exch. v. Bd. of Trade" 196 lii "s96 l~l^' Centml Stock YaMs Co. . Louisville ^ N. R. Co . m f ^23* 8>V '828- tLI' centra Tran.sportationCo.r. Pullman Palace Ca Co., m US ;;!4t M^ ,nos Champion r. Ames, 188 U. S., 321 . . -s^-^rf. a— 1006, 1008. Chandler 1. Hanna, 73 Ala., 390 2— '224. Chapin r. Brown. 83 la., 156 '.".'.' ^~^^* Chapman *•. Kirbv, 49 111.. 211 219 1—796. c^lZn 'w?'*' ^"/' '''■' ^>- ^■«''i^"mo7-«iV508;;:;;;:;:: tzZ Chappell V. Walerworth, 165 U. S., 102, 107 Charge to the Grand Jury, 2 Sawy 667 • 2—547. Charles E. Wisewall (The), 74 F 802 2—894. Charlotte, etc.. R. R. r. Gibbes, 142 u's 'sse' t~^^' Chemical Works v. Hecker, 11 Blatchf., 552... ".".V.'.' ".*.'*.' T"??^' OASES CITED. ^y Cherokee Nation v. Southern Kansas Ry. Co., 136 U. S., 641, 667 1-354,357,687; ^. 2 — 481 Chesapeake & Ohio Fuel Co. V. U.S., 115 F., 610 2-203i278. 619 .' 2 ^276 Chicago, Burlington & Q, R. Co. v. Chicago, 166 U. S. 226 *_9i4 Chicago Gaslight, etc., Co. v. People's Gaslight, etc., Co., 121 nV.," 530." 1-206' 222 688 724 Chicago, etc., R. Co. v. Pullman 8n. Car Co., 139 U. S., 79 l-^m,m'TH, 798. 79,90... 2 481 Chicago, M. «fe St. P. Ry. v. Tompkins, 1 76 U. S., 1 73 ^_-,r^ Chicago & N. W. R. R. Co. v. Osborne, 52 F., 914 ^JjTg Chicago, St. L. & P. R. Co. V. Cin. W. & M. Ry. Co., 126 IndV, 516 1-86?' Chicago, etc., Ry. v. Minnesota, 134 U. S., 418 ■" 0^74074,^ 7=j Chittenden r. Brewster, 2 Wall., 191, 196 Z 7Z! Church v. Railroad, 78 F., 626 "*' IZrT' Chinese Exclusion Case, 130 U.S., 581.... J „' Church of the Holy Trinity v. U. S., UdU. S.,'457 iZtny Cincinnati, N. O.. etc., Ry. Co. v. Interstate Commerce Com.^ 162 U." sV 184 ' Cincinnati Siemens-LungreniJas" ' lil'uminating'co' ' "v ' WesVern '~^^' ^^' ^* Siemens- Lungren Co., 152 U. S.. 200. 205 ^-97 City of Georgetown v. Alexandria Canal Co., 12 Pet. 91 98 1 '^ City of Newton v. Levis, 79 F., 715 . . . IzT-' CityofSt.Loui8t'.Laughlin,49Mo.,559 l~^' CityofTltusvilIer.Brennan,143Pa.St..642 t^' Clark r. Fredericks, 1(.5 U. S., 4 rj^. Clark f. Kansas City, 176 U. S., 114 ^^f^' Clause i'. Bullock Ptg. P. Co., 118111., 612, 617 Li^' Clemens r. Estes, 22 F., 899 »_ Cleveland City Ry. v. Cleveland, 94 F., 409 .'.*."." ' I"!?!' Clews V. Jamiesou, 182 U. S., 461 J" ClothCo. t-. Lor8ont,L. R.9Eq.,346 f"^^" 3^ 354 1-94,199,785,788. Coal & Coke Co. v. Hartman, 111 F., 96 !! l~^' CoalCo.tr. Bates, 156 U. S., 677... ' 2—989. CoalCo.?;. People, 214111., 421"""!]; ! 1—739,741. Cockrillv. Butler, 78 F., 679.. ....!;;;.. * 2—1034. Coddingtou r. Webb,4Sandf.,639... 2—14,22,23. Coe v. Errol, 116 U. S.. 517 1—363. 1—257,429,807. 517-^20 2—198. ^517 529 ^' Cohens v. Virginia, 6 Whekt., 264^ 340, 399 J^^^" zzS^'^" "":::::::::::::::::::: 2i:j^: 413 2-710. Collins v. Locke, 4 App. Cas 674 1-396,578,466. Columbia Wire Co. .. Freem'an wirecoV.Vi *F.V302::;;;;;::::::::::::: Ji^;^; Commission v. Louisville & Nashville R. R Co m F* "fi^ 2-9, 296. Commonwealth . Carlisle, Brightly, ^ P ^^ Z^Z^ZZ: I'llt' ^^ 1—202. ^ 1—402. Commonwealth v. Green, 126 Pa. St., 531 ^^ 1"^^^' Commonwealth r. Grinstead (Ky.), 63 S W ''^'"niVi^v '^«; f"^' commonwealth .. Hunt, 4 Metc^^ Mass '). lii.lL "' ^^ '''li'T' Commonwealth .. Martin, 17 Mass., 359, 362. IZ^''"^' Commonwealth n Peaslee, 177 Mass 267 272 *~^^- Commonwealth t'. Shaw, 4 Cusb m ' 2-531,663,668. Commonwealth r. Smyth, 11 Cush., 473 *~^- ' 2—894. I" ri ^^^ CASES CITEB. €liiik P. RiiilitMid Co.. 1 Tenn. Cm., 409 CSonnolly ,. iT„io„ sewer Pipe Co.. 184 ij.'g.'m !~^'^^ €o^^Iidat«J Rubber Ti^Wh^^ €m,ti„e„tel N^iionaVia'nk ;: B«fo«i: WlilVaVni: ] t~^- Cooley f. Board. 12 How.. 298 S-646. Coosaw Mining Co.,. south Carolina' 144 Us "^ J"^^" CoppeU t. Hall, 7 Wall., 542 ' »« "^ • ». 350- l-«87, 619, 70&. Corson v. Maryland, 120 U. S.. 542 I— «47. Cortelyou and Another and Neobtvi^c«.^*^Kl..iII*^ 11 '~*°*= *-^' Co., 138 F., 110 J^eobiyie u>. r. Charles Eneu Johnwn & Cutting r. Kansas City Stock Y. Co., 188 U 8 79 " *~^*- COunselman ,: Hitchcock, 142 U 8 547 ^~^^' '^9- 2647-^";;;; «-io8.iw».8io.«ia 517 586 1—859. County of Lane r. Oregon, 7 Wall 76 " 2-898,899. CouiityofMobiler. Kimball, 102 r 8 mi *~^" 1-354.366,787; -afi *-466, 496, 504. — m: 1-^ -n., » — 224. 702 1—6". 302. 397. 439, Codington. *e., Bridge Co. r.Kenttickr, 154 U. 8 204 . f '' ^^' Craft f . McConough V. 79 III 346 • • '*^ ^- »•. -aH j.ygg ^3^ '34»;350;;: I-«l. 202. 766,796. 850 ■ ^-^^ Cialg *•. People, 47 III. 487 «-470. Cmndallr. Nevada. 6 Wall.ri!.... *"*"• Cianford »•• Tyrrull, 128 N. Y., 341 444 1—178. Craven.H,. Carter-CrunieOo..92F 47i * '""^ €r««eent Mfg. CO. .. Nel«on Mfg. 6k. lOOMoTi^m !~i^ (rook V. People, 16 111.. 534, 537 «— 99/. Cross I-. North Carolina. 132 U. 8. 131 '~^ Cmtcher r Kentucky. 141 u. 8 \i " I— 173. '* jjjl 1—737,738. Cui,tinr.cilyofVinK,tta.67WK,8i4'fflO* *~^- i IWll , B. .. I— a.**!. .. i— 973. . 1—93. .. 1—342. I)e Forest r. Thomp*.on, 40 F 375" ^ ' "" *""' ^'^ *~-^*'- Delaware & Atlantic. &e., Co.'n Delaware exreV ' etc ar h'V" i^' !"*" Be Mattos .. Gib«on. De Oex A Jones, m ' ' ' ' " **' '''^ ^- f-^^^ DeNeufviller. Railroad Co., 81 F 10 *~^** I>ennehyr. MeN«lt«.8«F.,8S» *-78,80. 827 829 2-H21,1082. Benver&R.G.R.Co. r.r.s..l24F'i.56i61 ^^'^'^■ Benver&N.O. Ry.Co.i .\tchison V ic Vo"^ *-«>7.«I7. IV Wit* wt^ />! *1 X -^itmson, r., & S. F. R. Co., 15 F 650 1 o(v> we Witt Wire-Cloth Co. r. x. .]. Wire-rioth r« 1^ »t v ,' '*" 1—202. Diamond Match Co. r. Roe»>er. 106 N Y 473 ' ^^^" ^'^" "-201.202.795. Bier's Case, « Year Bof»k 5. 2 Hen. V 1-702; i--820. Dillon /•. Barnard, 21 Wall 430 437 1—699. Distilling .% cattle Feeding Co.' r. People! ii*iii.:4ii"* J"?]?', '*** 1—745,766.799.858: Bodge. P. W. Co.. 1. Construction Information Co 183 Ma«H m a *~^-' Bower r. Richard.,. 151 U. s.. 6.58,666 " ^ *-^^ S— 181. CASES CITED. XVII Drexel.r. Tme, 74 F., 12 ,_^^- Dr. Miles Medical Co. v. Goldthwaite, 133 F., 794 . . . « gaq' mia Dr. Miles Medical Co. v. Piatt, 142 F., 606 2—1020 Dubowski V. Goldstein, [1896] 1 Q. B., 478. .* " i_7g6 Dueber Watch Case Mfg. Co. v. E. Howard Watch, etc., Co.! 55 R, 851 .... I-257! 357; i-21. T. w . ,= w. 66 F., 637.... l-6a5.'812.' Duncan <-. Missouri, 152 U. S., 377, 382.... 2—139 Dunlop r. Gregory ION. Y., 241 .T-'.V.V.V.V.V.V.V.V.V.V.V 1-786;' 2-1011 Dushaner. Benedict. 120 U.S.. 630,648 2—131 East Tennessee, V. & G. R. Co. r. Interstate Com. Com., 99 F., 64 2—743. w, , „^ 181 U.S., 1,27.. 2-847. Eastmanr. Sherry. 37 F., 844,845 ' ^_g^2 Easton and Amboy Railroad Co. v. Greenwich, 25 N.J. Eq.,665 1—586 Edison Electric Light Co. r. Sawyer-Man Electric Co., 53 F.,'598 2-^q 82.1 Edison Elec.Lt.Co.r.U.8.Elec.Ltg.Co..46F.,55.59 2-94^ Edison Phonograph Co. r. Pike, 116 F., 863 . . 2— "87 Edwards. .Elliott, 21 whu.. 532 '.**:.'.".';.';.';.*::::::;: 1-847: Egan..Hart.l65U.S..188 g.^^j Eilenbeckerr. Plymouth Co., 134 U.S., 31, 36 1-3,59 594 Ellerman t-. Chicago Junction Rys., etc., Co., 49 N. J. Eq., 215 217 1-702' Ellimanr.Carrington,[1901] 2Ch.,275 ' "\ T^'imx Elliott r. Osborne, I Cal., 396 " i~S Elliott r.Peir8ol,lPet.,328,340 .'.■;;;; i~^'u^ Ely r. Supervisors, 36 N.Y., 297 l~!f'^*- Emackr.Kane,34F..47 :;;;;;;::;; ;ij^ Embreyi..Jemi8on,131U.S.,336,348 2-127'79q Emert r. Missouri, 156 U. S., 296 ^ tfl' Emery ..Ca„dleCo..47O.sr320:;;:: IlS'?^''''- Emery 1^. City of Lowell, 127 Mass., 138, 140 iJ^V Evans r. Hughey, 76 111., 115. 120 i^Tqi Ewingn-Iohnson, 34HOW. Pr., 202... . ,' ^' Ex parte Bain, 121 U. S.. 1 *— *3. Ex parte Brown, 72 Mo., 83 \~ ^' Ex parte Buskirk, 72 F 14 — «««, W8. ExparteCrowDog,109'u.S.V556;'570".'".".' f~i^n Kx parte Fisk. 113 U. S.. 713 ;;;."; i ]t^\^^ 7i« iiQ 2—106,839. Ex parte Irvine, 74 F., 954. J-^^' Ex parte Mirzan, 119 U.S., 584-586::::::::::::;:;:;: I'T Ex parte Neet, 157 Mo., 627 l"^^' Ex parte Robinson, 19 Wall., 505... 7^' Ex parte Reynolds, 15COXC.C., 108, 119 l~^ Ex parte Rowland, 104 U. 8., 604 J~:^' Ex parte sieboid, 100 U.S., 371, 395 ;;;:;:.: r1z\^ .,« Ex parte Terry, 128 U. S 289 '— <»4, 366, 578. !^Qan; 1-340,594; 2-839. Ex parte Watkins, 3 Pet., 193 '^^• Ex parte Yarbrough, 110 U.S., 661." !~S^' ^' Exchange Tel. Co. v. Gregory & Co., [1896] 1 Q. b; D. "u7 il?^' Express Cases, 117 U S 1 vt. j>. 1/., 14/ 2—781. 1—794. Factor Co. v. Adler, 90 Cal., no Farmer r. Storer, 11 Pick. (Mass.), 241 :;:::;;;; I'l^' IIZIZ I" f l ''"• '■ ^'^^ «*• ='• ^' «• Co.. i73*ni.:;^;::;;; Izl^- rarmers L. & T. Co. r. Northern Pacific R. R. Co., 88 F.. 249.267 2-846; 11808--VOL 1—06 M ^11 i ■iiiiiiiiiiiiiiiiniii iilM I ^^"^^^ GABEB CITED. Fanners' & Merchants' Ins. t^. r. Dc»bney, 1«9 U. a, 801 *_ii7i Farrerr. Close, L. R. 4 Q.B.. 602.612... T ,',* • Fan 1'. Marsteller, 2 Cranch, 10. . . . I ,„" Fayerweather r. Riteh. 89 P., r>29 ;~?^' Ficklen r. Shelby Co. Taxing Dist., mihS.',T.'.Z ,Ia^f ' a-, Finney I'. Ackerraan, 21 Wif*.,271 ^^voo.vai. Fitegemld r Clmmpenys. SOL. J..N. 8. Eq.;7^;'2}oh„9.*iHe,n*.;3ll54". 1-m Fong 1 ue Ting r. United States. 149 V. S., 698 , „"" Ford I'. Association, 155 111., 166 ,~.l!" F06dicki'.Sehall,99U.S.,28ft.... J '^• Fowie .. Park. mu. 8.. 8« -■-•"":":::::::::;::::: I J5. 197. 785.7«8; 88,97 2-732,1008. Freight Association Case, 'sec U.'sVr'Trani^Ml'iMiuriFreighVAs^^^^ '~^' Freight Tax Case. 15 Wall., 232... , -^ Frisble I'. United States. 157 U S 160 * J—^dS. Fuchs..8t.Loui8.i67.Mo..62o..:.. :::; - 1-935; 2-8O8.896. F. W. Dodge Co. i^. Construction Infonnation Co;,' 183 M«;s.V62." .'."." .'.";.* al^.' o. Gainewell. etc.. Co. v. Crane, 160 Maas.. 50.... a_^ Gardinerr. Mor8e,25Me.. 140.... ' ,~I^' Gar8tr.HaIl& Lyon Co., 179 Mass,. 588.,.. .'.*.' »'~^'in,xi Oarstv. Harri.s.i77Mas8., 72.. «--5M.1020. Gelpcke t'. City of Dubuque, 1 Wall.. 220 T"'?!^' ^^'*'' General Electric Co. r. Anchor Electric Co.. 106 F.,'m.'.'. iJZ'iu General Electric Co. r. Wise. 119 F., 922-924 l_ZZ' Georgia v.Brailsfortt. 2 DalL, 402 *_Jn«'wo. Gibbons v.Ogden, 9 Wheat 1 - -— w»,»-4. Z'„ 1-1028,1024. iz '-^• :Z 1-388.411. ZZjiJ >-^"- is '-'"^ ;^ 1-3M,396. l^ 1-^96.4S6. 1-554,688; 2—224, 465 471 ■ 1—645,388; 2—138, — ^ .J^f 231 «— -t'the.27F*"9i4l926 !~?fJ'*^^- Herreshoff r. Boutineau. 17 R. I. 3 "•''"^*^ 2-'98. Hill r. Mining Co.. 119 Mo.. 9-24 *-^^- Hilton r. Eckerslev, 6 El. «fe Bl 47 '~*^*- m 1-781,798. 7. *" 1-781; 2-1002. Hitchcock r. Anthony, 88 F., 779.* " ^-^^^ Hitchcock r. Colter, 6 Adol. & E 454 "'" 1-786:2-317,1011. Hinckley r.Httsburg Steel cro.,i21U*.S.Viii.':." 1~I^' ^^• Hodge »'. Sloan. 107 N. Y., 244 *~^' Hoet. Knap,17P..2 S'^1 Co.. 4*^F..' 1% 2-943" iom TimHic Aiwiclation Cane (Me U. 8. ^ Joint Traflic Assn.. 171 U. 8 ' «•©). ' '' J<»«i r. Clifford'fi Exr., 5 Fla., 510, 615 |_2,« • IflHei r. North. L. R. 19 Eq., 426 jf^* Jonei r. Pope, l Saanders, 88. *Z^ jM^dr. Harrington, 139 N.Y., 105 ' .-!^-'""*][l!!...."...".T' 1-795 Kearney v. Taylor. 16 How., 494, 519 ,_,^ Keeler r. Standard Folding Bed Co., 167 u' 8.7659.'*."*".'.".'*** 4-794 «53 Keeler r. Taylor, 68 Pa. St., 467 , L^^' Kelley v. Manufacturing Co., 44 F., 19 , r. Kellogg r.Larkin. 3 Pin.. 123 .-^ ^, ,60 I-'89.7»1. Keiiy.'..Faek«on,6Pet.,63i...;..:;;;;::;;'; '~:'^- Kenny r. collier. 79 G«., 743 :;;;;: l-'''' Kentucky & ind. Bridge Co. *-. LoulBville 4 N. R. Co.. 37 F.. 567. . .... I-tjrJ. 955. Kentucky Railroad Tax Cases. 116 U. 8., 321 i~^ Kerfoot r. People, 61 III. App., 409 ^ rT. Kerr t». New Orleans, 126 F.. 920 .'. IZV^' Kidd I'. Pearson. 128 C. s.. i ,..*'■ ' • 1— 6«, 257,409,411, ♦'.80, 681, 808; 1—390,398,439,641, 74W, 1036. fi • 1—390, 1023. g 1-390. «— 560. 668. ^ *— 668. MM. V. Youmans, 86 N. Y., 329. . . ,_..' , Klrlnian t-. Philips' Heirn, 7 Heisk.. 222. 225'**' 1^ IZ}'^*"- King tr. Inhabitant of Hodnett. 1 T. R., 69 101 IJT-' Kingv.TheVaughan.2Doug.,516 ,["[[ "' ,_^ King BridKe Co. r. Otoe County, 120 U. S., 226 " 2-546 King of the Two SicilleH v. WilUox, 7 St. Tr. ( N. 8.*),' 1049.' ioei'. 2-900* Kingman r. Wt-steni Mfg. Co., 92 F.. 486 a 007 Kippr.Deniston,4J.»hn,s.,:M ~To Klelni'. Insurance Co., 104 l. S.. 88. 91 ."."] ,__y=9 Knappt'. S.Jarvi8 Adams Co., 135 F., 1008.. «_>W4 Kramerif.Old.1(6aE.,8l8(U9N.C.l) 2^7 CASES CITED. XXIII Lafond r. Deem.«!. 81 N. Y., 507-614 ,_j^ Lake Front Case, 146 U. S., 387 ' 1Z347' Lake Shore, &c., Ry. Co., t-. Ohio, 173 U.' 8.. 285,'3oi'. 2-481* Lake Shore & M. S. R. Co. v. Cin. W. & M. Ry. Co., 116 Ind.,578." 1-867" I^mb r. People. % 111., 74 t^^' Lamsonr.Boyden, 160111.. 613, 620, 621.....".. 2— Land Co. v. Peck, 112 111., 408,439 Lane Co. v. Oregon, 7 Wall., 71, 76 Lange v. Werk, 2 Ohio St., 519, 520 Lau Ow Bew v. U. S., 144 U. S Leckie v. Soott. 10 La.. 412. . . . Lee V. Angas, L. R. 2 Eq. 59. . . _ Leeter. State Bank of St. Louis, 115 Mo., 184 ^^^ T^.' Legal Tender Ca.ses, 12 Wall. , 457, 565 2-«4o. Lehman r. Graham, 135 F., 39 Leby..Hard,n,i35tj.a,,oo.....";;; ...:.;;::::::.". T-a*,, 739, 768; 2—61, 998. 969. 2—972. 1—395, .578. '*'• ** 1—706. 2—972. 2—908. 2-«45. 1—578. 2—826. 107 108 1—736. 1—741. Leloupr. Port of Mobile. 127 U. S., 640, 647.. " ,_-.,- ^ „.., Leonard r. Poole, 114 N. Y., 371, 377. '^/. -— bOJ. Leslie v. Lorillard, 110 N. Y. ,519... 533... Lewis V. Board of Commissioners, 74 N. C, 194 Lewis ». Wilson, 121 N. Y., 284-287 *...... License Cases, 5 How., 504 599 **■*•••••>«•■•*•»» . 1—795.852. . 1—789,791. . 1—702. . 2-895. . 1—630. - 1—739. 1—388. 2—10. 2 — 741 Ry. Co., 63 F.. 775 l-6ft5.866. . 1—866. . 1-359. 1-108. ^60 2—824, Light Co. V. Electric Co., .53 F.. 598 Lllienthal's Tobacco v. U. 8., 97 U. 8., 268 Little Rock & M. R. Co. v. St. Louis S W Little Rock & M. R. Co. v. St. Louis, I. M. .fe's. Rv. CoVil F "5^" Littleton V. Fritz, 65 la.. 488 * ' * Livingston v. Livingston, 6 Johns. Ch., 500 501 Liverpool & L. ife G. Ins. Co. r. Clunie, 88 F Lloyd r. Pennie, 60 F., 4 Loeb V. Columbia Township Trustees," ni'u's" '472' "477 '~^^ Logan V. Penn. R. R. Co., 132 Pa. St., 403, 410 ' ' Logan r. U. S., 144 U. S., 263 Lonerganr. Ruford,148U. S.,581,59oir. , ^'^^*' Lord Eldon's Opinion, 7 Ves., 257-259 ... V , ZI' Lottery Case, 188 U. 8., 321, 355 1—^63. ^348 t~^^' Loum-ille Gas Co. v. Citizens' Gas Co., *n*5u'.'s:,"6i".::::: r^' Louisville, etc., v. McChord, 103 F., 220 " Louisville & Nashville R. Co. v. Behliner.'ns'uVs.', '675 '. '. 677.. 2—124. 2—951. Ix)wry V. Tile, Mantel & Q. Assn., 2—754. ........... 2 — 743. 2-262,477,507,630. 701 2—507,530. Loyd V. Malone, 23 111., 41.,. Lumber Co. t». Hayes, 76 Cal., 387.".'."'.'.'.'.'*.".*.".".' ^~^^- ................. ........_._^^^^^ J — ^201. 766,799. |i XXIV CASES CITED. McAlist«r V. Henkel. 201 V. 8., 90 . . MeBlairr. Gibbes, 17How.,286........... McCall r. California. 136 U.S., 104.. McCool I'. Smith, l Black. 459.469 McCredier. Senior. 4 Paige. 378. 381. 882 , McCollochrMaryl«iM!,4Wheat.,316,40&.'.*.*.".';;.;." J~^'.- 415,423 ...1. '^' 421 «— 1M4. 1— «64. 1— 737.963L 1—198. 424. 1—409,578; 8— 466 1—416. 1— OS. 1—198. l-«24. 1—675. «— 915. MeCiiIlough »■. Brown, 41 8. C. 220 1—678. McCullough r. Commonwealth. 67'pii* "st." 80 ' " * * l~^' McDonaldr.Hovey. 110 U.S.. 619,628 — ***' McGreary v. Chandler, 68 Me.. 538 . . . . .*.' McKee v. United States, 164 U. 8.. 287.!. McKlnleyi'. Wheeler. 130 U. 8., 630..! McMuJlen r. Hoffman. 174 V. S 689 654 69 F.. 515. 2-128,819. MaeWIUiiim r. Conn. Web Co.. 119 F 509 *~*^^' Machine Co. I'. Smith, 70 F.. 883 2—943. MachineryCo. r. Dolph, 138U. S.,'6V7*'28"f"553' *"~^- MadisonAve. Baptist Church "-Oliver St. Biptisichurehi'N'Vo^* 1~IT Magennis v. Parkhurst. 4 X. J. Eq 433 434 ' 78 N. \ .. 96. 2-79. Magoun r. Illinois Trust & .Savings Bank 170 u' 8 ' iV V~'^' Mail Company r. Flanders. 12 Wall.. ISO ' 2-140.146.550. Maillard r. Lawrence. 16 How., 251 .... "' 2—558. Miillan r. May. 11 Mee.*;. AW. ,652. 657. 667. Manehester^etc. R. R. ,.. concord R. R.. 20 Atl.:3^"(;;'v' Manufacturing Co. r. Hollis. 55 N. W. H. 1—363. 1—784. 1—205. 1—75, 199. 100)... 1-206,507. Manufacturing Co. v. Klou « F 721 (^IM-nn.. 22S) |_630. Market Co. r. Hoffman, 101 r. 8., 115 »- 64b. Marsh v. Russell. 66 N. Y., 288. Mason r. Dullagham, 82 F.,689 Massie r. Buck. 128 F., 31. . . 1003. 1008. 1-353. 1-213. S— 89. Mast. Fot>s& Co.;.; Stiver Mfg.' Co.Vm^^^ 2-^20.826, Match Co. n Roetier. 106 N Y 473 "''•*'•' "^^'^ 2-707. 1-^201,785.788 Matthews i.. Associated Press of New York, 136 N. Y 333 340 i -nl ' V^' Mattuig^- .Northwestern Va. R. R., i.58 U. 8.. 53. 57 ' l~'^ '^'• Maxi™^" J'"^^//*' ^^"'^'n^elt r. Maxim Nordenfelt Co.) .... ^ «_ ^S:1::^^:^^ ^"- ^''■' ^*'^- - ^'^-s Patent F.eam;.; Mayor of Georgetown ,, Alexandria Ci;naVco7.'l2 Pei' 91 98* f ~^' Mayor, etc.. of Kn<,xville v. Africa 77 F 501 '^^"^'"^^'^ >-^'* Merz Capsule Co. r. l^. 8. Capsule Co., 67 F., 414 .*' 71 F 7S7 Metcalf r. Am. School Furniture Co mjf'iiK *~^"^' Metc«lfr.Watertown,l28U8 586 ' --*^- Mexican Nat. Railroad r. Davidson. IsVu.a, Ml.W !l2-' Miller r.Ammon, 146 U.S., 421 427 "«'^.^.-. S-64/. Miller r. Davi.s. 88 Me 454 '*'* 1-52: j!-l28. Milwaukee, etc.. Co. r.\MiIwa«ke;,'8VF7.OT f~!?!' M nnlT"' t^."^- ''^- ^^- '•• B«<^kwith, i29u.a;"26';:; flu Minnesota r. Barber. 136 U. S., 313 «— 914. Minnuci r. Phlla. & Reading R. Co.."V8N."j.'£iw 4^ l~^: Missouri ex rel.. etc., ,'. Bell Tel. Co.. 23 F. 589..!. I ■ »— 188. 1—344. 2—707. 1—613; 3-574. CASES CITED, XXY Missouri v. Lewis, 101 U. S., 22, 81 2—138 Missouri, K. & T. Ry. v. Haber, 169 U. S., 613. 626.!!!!!!!!!!!!!!!!!!!!! 2_i38!466. 613,626,627 2-476! MissouriPac. Ry. Co.t?. Mackey, 127U.S.,205.... 2_9i4 Missouri Pac. Ry. Co. r. U. 8., 189 U. 8., 274 2-843,844,847. Mitchel V. Reynolds, 1 P. Wms., 181 1—203 700* 785 788 190 ...!!!! 1-782. Mitchell V. Great Works Milling and ManTg. Co., 2 Story, 648, 653 ... . 1—673. Mitchell r. Ha wley, 16 Wall., 544, 546, 647 2—795! Mobile v. Kimball, 102 U. S., 691 !!!!!!!!! 1—388! 960 1023 697 J JQ27 Mobile V. Louisville & Nashville R. R., 84 Ala., 115. 126 ! 1— 592. Mogul Steamship Co. v. McGregor, Gow & Co., 21 Q. B. Div., 554 ....".'.* I— 75.204, 207, 629. 689. 23 Q. B. Div.. 598 1—75, 204, 630. 689. [1892] App. Cas., 25.... 1—75,204, 689, 781, 792. Monongahela Mav. Co. »-. U. S., 148 U. S., 312 1—740- 2—914 329,330 .".'.".".' 1-865.' " 336 1—934. Montague & Co. r. Lowry, 193 U. 8., 38 2— 459, 460, 513, .527 w «. 583, 663, 804, 998, Moore r. State, 96 Tenn., 209 2—973 Moores i-. Bricklayers' Union, 23 Wkly. Cin. Law Bull!, 48 1—287 More r. Bennett, 140 111., 69 ; i_^^' Morey r. Light Co., 38 N. Y. Super. Ct., 185 2-98 Morgan r. Louisiana. 118 U. S.. 455, 465 1—1027 Morrill r. Railroad Co., 55 N. H., 531 !!!!!! i_9q.> " Morris & Essex Railroad v. Prudden, 6 C. E. Green (20 N. J! Eq ) 530 532 ' ' ,_^^ Monis Run Coal Co. v. Barclay Coal Co., 68 Pa. St., 173 i_9i, 201, 440, 613, 745, 766, 795; 2—276. 184,186,187 1—401- 2—469 Moi^e. etc Co. r. Morse, 103 Ma.ss.. 73 2-831,'l007. ' Mosher r. Railway Co., 127 U. S., 390 ^-88 Mount Adams & E. P. Inclined Ry. Co. v. Lowery {see Railwav" Co* r" Lowery). Mugler V. Kansas, 123 U. 8., 623, 672 1— .594 Mulcahy v. Reg., L. R. 3 H. L., 306, 329 ."!.'!'! ,_247" Munnr. niinois.94U.S.,113 1-433*738 740 Murphy V. Christian Press, etc., Co., 38 App. Div. 426; 56 N. Y. Supp., 597. 2-10-20. ' ' Nathan r. Louisiana, 8 How., 73 ,_«,- ..^ -^ National Benefit Co. v. Union Hospital Co., 45 M"inn!,"272!!!!! 11^2* 7^ National Distilling Co. v. Cream City Importing Co., 86 Wis.. 352.355'!! 1-858'- 2-126 Na lonal Enameling & Stamping Co. .. Haberman, 120 F., 416 2^8^ ' National Harrow Co. t-. Hench, 83 F., 36 2_«i-^' National Harrow Co. r. Quick, 67 F.. 130 oZ^' National Phonograph Co. v. Sehlegel, 128 F., 733 ..! 2-«y>" National Tel. News Co. v. Western Un.Tel.Co., 119 F.',"^!! *Im* Navigation CO... Winsor,20Wall..64 '. !!!!!!!!! 1-94 '204, 207. 786. ^ 1-43L Nestert-. Brewing Co., 161 Pa. St., 473!!!!!!!!!!! ]llt 74= .^ .0^ Newburyport Water Co. .. Newburyport, 193 U.S..56l!!!!!! J;^3, 74.5, 766. 796, New Memphis Gas & Light Co. v. Memphis, 72 F.. 592 JZeo? New Orleans r. U.S., 10 Pet.. 662 'TZl' New Orleans Gas Co.t-. Louisiana Light Cx).,U5 u!s.;66i)*!!! '" i-^* XXVI CA818 CITED. I » »;<;^^ 127 III., 168.. 867 Nonie„,eI.r. M..,„, x„r.. [IfW] App. C. ■saR.;:;: 667 Norfriiv I. \v *» ^ -. [18981 1 Ch., 680 Wolk & Western Ry. .. simg, IMu'g ^Y 1-737. Wmgtonr. Wright, 115 U.S.. 188. 2CM.*: *-^^- NorthernSecuritle*Co.r. U.8.,MSU 8 im *~^^- - Z — .^86. «--1020. 2—732. 1—607. 1—740, 957. 2—920. 1-700,785,788. 1—786. 2—1008, 1008. 198. 356. 586, 634, 746, 804. 2— «20. 2-627. 62a 2—1002. 666. o. 0»te! r. Xational Brnik, lOO U. 8., 289 OIlCo. '. Adoue, 83Tex.,650 1—707. Ollvemr. Insurance Go.,*3 Wheat 198 " 1—797. Ontario Salt Co. t\ .Merchant*.' «;«i#V« ' tL*.V 1—316. Oregon Sh„« u„e . S^X.I^ u •s^.lo"':^ *■■• "" t-^.m.7^ Oregon Short Line & IT. N Uvea ^'kIUu ^ 51 F..465 ... .[ Northern Pm. R. Co.. 61 F., 168; Oregon .^team NiiTi«»tion"co."i" -." winKM-'/i Wali.* M.l.'.Z " ' " ' 08. 88. 70. 0*orne r. Detroit, 32 F.. 36 '—108. «KM»yani'.AnnsCo..l(i3rVs.V26il268"" * '~^^' *'. Aiken. s.e Packet Co. r. Aiken. ~*^'- f-547. 1-868. 1—702; 2-^4,874. 1011. 1—400. 2—317. 2-296. Ouachita Packet Co. 0.1ey Stave Co. .. V..^rii;;te^;—;\;2: of N. Ain«r.,TOF.0l5. t-«9. ■i^ltel Cot V. Aiken, 121 € fmkm. Co. S.. 444 mtet Co. t-. Catlettsburg. 106 U. a. 669 "* Bicket Co. r. Keokuk. 96 IT. 8 80 • P»icketC^. r St. Loui«,10or.a,4^ " ^risian Comb Co. r. Exchange. 92 F 721 l^atter^on Case. 3.=» P.. ,m, 629W Piitterwn r. Kentucky 97 r g 50^ ^«Ii.Viiginia.8Wan..l«8.iii.. ftucton r. Douglas, 16 Ve«., 240, a« * fm r. Waggoner. 5 Ha.vw 19 pearsaii r. Great ^>nhernV a.;.' i6i'u;8:.'ii;i7i* :::::::::;;; on r. Yewdall, 95 V. 8.. 2»i... r. Burr. ION. Y.. 294 r. Saalheld, fl892] 2 Ch.. I49 Pembina Mining Co. r. Penn.. 128 U. s'l'si" Fennsylvaolar. Wheeling, etc., Bridge'c«.;i3Ho;.:.5li BefU»on Peekr Peels . 1—740,967. . 1—740,967. . 1—739. • 1-740,967. . 2—943. • 2-.8O4.1016. . 2—516. 1— 3i4.740. 1-739. 1— a58. 2—188. 2-498. .508. 2—110. 2—312. 2--222,263,452,45 461.488,50(1 1—359. 1—858. «^786» 2-914. 1—844. CASES CITED. XXVII Pennsylvania R. Co. t'. Commonwealth, 7 Atl., 368, 371 2—222. Pennsylvania R. R. Co. r. Hughes, 191 U. S., 477 2—660. Pennsylvania R. R. Co., r. Knight, 192 U. S., 21 2-667. Pensacola Tel. Co. r. Western Un. Tel. Co., 96 U. S., 1 1—68,354,355,737; 2—515. Pentleton r. Rieke.v, 32 Pa. St., 58,63 i— 5. People r. American Sugar Refining Co., 7 Rey. & Corp. (Cal.). 83.* 1—257. People V. Batchelor, 22 N. Y., 134 1—624. People v. Barstow, 6Cowen, 290 2 ise. People V. Butler Street Foundry Co., 201 111.. 236 2—1033. 248 2—969. People r. Caldwell, 71 N. Y. Supp., 66t 2—87. People t'. Chicago Gas Trust Co., 130 111., 268, 292, 297 1—404,470,799: 2—222. People?'. Ferry Co., 6« N. Y., 71 1—342. People r. Fisher, 14 Wend., 1 1 443 9 1—89,201.202. 18 1-118. People r. Gillson, 109 N. Y.. 389. 398 2—276. People r. Mather, 4 Wend., 230, 254 2—110. People *'. Milk Exchange, 145 N. Y'., 267 1—799; 2—197. People r. Miner, 2 Lans., 396 1—342. People t'. North River Sugar Refining Co., 54 Hun., 354 1— -202, 257. 366 1—799. People r. Sharp, 107 N. Y., 427 2_969. People r. Sheldon. 139 N. Y., 251. 264 1—795. People t'. Vanderbilt, 26 N. Y.. 287 !^1!.]*!! 1^42 2»NY.,396 .*.'.■; 1-341,342,586. People ex rel Tyroler r. Warden, 157 N. Y., 116 2—87,88. Perkins v. Lyman, 9 Mass., 522 1—204. Perkins v. Nichols. 11 Allen, 642 " " " i_2i2. "Permoli v. First Municipality, 3 How., 589 1— 8-2o! Petri V. Commercial Bank of Chicago, 142 C. S., 644, 650 1—675! Perry v. Gibson, 1 Ad. & Ell., 48; 3 Nev. & M., 462 2—973. Petit r. Minnesota, 177 U.S., 164 2—146 Pettibone v. U. S., 148 U. 8., 197 ".'". l_266,286. 203 1-455' Philadelphia r. 13th & 15th Street Passenger Railway Co., 8 Phil., 648. 1—586! Philadelphia, etc., Co. v. Howard, 13 How., 307, 344 2—997 Phippen r. Stickney. 3 Mete, 384, 389 [[[[' i_2i3' 803 Phipps .'. Jones, 69 Am. Dec. 711 (20 Pa. St., 260) i_623 Pickard r. Car Co., 117 U. 8., 34 1—737 Pidcock r. Harrington, 64 F., 821 ................. 1—623; 2—17.79.80, 237. Pierce v: Fuller. 8 Mass., 222 i_7j^ Pigot'sCase,llCo.Rep.,26b,27b !!!!!.!!!!!.'.'"!"! 2-^74^ Pine River Logging Co. v. U. S., 186 U. S., 279: 89 F., 907 2-997 Pittsburg Carbon Co. r. McMillin, 119 N. Y., 46 i— 613 Pittsburg & Sn. Coal Co. r. Bates, 156 U.S., 577 1-978* Pittsburg & Sn. Coal Co. r. La., 156 U. S., 590 ",, 1—739! 697..... 1—957. p. , „ 598 i_98i. Pleasants J.. Fant, 89, U. S., 116 2_993 Plnmley t'. Mass.. 156 U. S., 461 1—739 Porter r Sabin, 149 U. S., 478 '.!!!!!!!:!!!!!!:! 2-78.' ^^^;i;\^'l«l^'S..583 2_8i3. Postal Tel. Cable Co. v. Alabama, 155 U. S., 482, 487 2-546 547 Powers t'. Hurmert, 51 Mo , 136-138 *_845' Pratt V. Paris Gaslight & Coke Co., 168 U. S., 255, 258 ....".'."'." 2-548 Prescott & A. C. R. Co. 7-. Atchison, T. & S. F. R. Co., 73 F.. 438 1-609.' "•inting, &c.. Registering Co. v. Sampson, L. R. 19 Eq., 462 1-688 708 II I ■xxvin CASES CITED. ^«ty K Draper. 2 Story, 199 ^Iman Car Co. P.Missouri Pic C« itVn';"*; «-915 ^terb««»h .. smith, m m^n ' ^' ^* "^^ ^ ■ 2-222' " • . -•• 1—359. Qweeiir.Brye8,iB.&S.,311 Qiieen ...Hertford college. 3 iB-i;; WW *-«)0. 1—673. ^rj^on & Amboy R. Co.. 62 N. j. La^ 586 MroadCo...Colll„B,40Ga..5^ ,_^ S^^r'''-£""^'"^«"'56o*-:;;;;; 1-202.799. K«^lroadCo.r.H«zen,84IlJ..36.. 2-515. Railroad Co. ... HuHen. 95 0. 8.. 465;4TO.';.' 1-306. 4gg ••— t — jeg K». K*ni««y t. Temple. 3 Lea, 253 2-19. ««i»iief.Irvine,7Man.&G m'i^ 2-310 Raymond r.Leavltt. .6 Mich.; 4^ 1-703 R^?%f*™''^''^^°*Tru8tCo:,i;54'u'«-3;;' '-^• Kector r. Lip«comb. 141 U. s.. 557 ' ^^ 8-742. Red ..City Council, 25 Ga., 386 ' " ' 2-316. «^ '.Smith. 40 F. s^2 '"^^ 1-665: ST-SIS Reichc » . Smythe, 13 Wall., 164 ''i'^'^ ,_2i3 Rexr. Eccle8.3Doug..3:J7.. 1-101 Rex i-.8baft8biiry, 8 Howell's St. TrVi"' '-440. Rexr. Turner. 13 East.. 228. 231 " 2-892 Hjee rjlailroad Co.. 1 Black, 379 1-441." ^h«j^snAm.Desk.788 sS;;;;::::;; *~^- Rowand r. Commonwealth, 82 Pa. St 405 1—213. Rowe V. The Granite Bridge Corporation. 2rpi;k.; ■^;'347 J"!^' Rowena Clarke v. Central R. R. and Banking Co. if Ga 60 'f"338 " ' i^T-' Royer r. Coupe, 23 F., 358 .... ' ^^^ *• 33»..-- 2-/4/. Rubber Tire Wheel Co. t^ Columbia Pneumatic* Wagon Co' tlJJ' Rubber Tire Wheel Co. .. Victor Rubber Tire Co., m F 8^ ' t^^' Rupp, Wittgenfeld Co. v. Elliott, 131 F 730 ' ^ "^ ' *^ 2-859. Russell r. Farley, 105 U. S., 433 438 -^^• Rutherford r. Metcalf, 5 Hayw.' (Tenn!)*,* 58; *61,*62: :.*;:;; f"^J- Ryder*'. Holt, 128 U.S.. 525 1—339. 1—439. s. Saddle Co. v. Troxel, 98 F., 620 St. Louis r. St. Louis Gas Light CoV, 7'o*Mo"69 f"*^' St. Louis r. W. U. Tel. Co.. 148 U S 92 *-^- ft J:^""' v^' I' ""■ "^^ "■ ^-^' ^^ Mo:;:^;*265::;:;:: l:^,^'"'- ^: i^;^:;^^;,^^^vS^-r 1^ ^ - -- - -: - : 1:^1: St. Joseph .. Porter, 29 Mo. App., ^5 " ^"^^2. Salt Co. V. Guthrie, 36 O. St 666 '^~*^- Sandford r. Nichols. 133 Mass.. 286 1-92,202,766,796. Sands r. Manistee R. Imp. Co ' 123 U S 288* ^4 "^r *~*^^- ' Santa Clara Co. v. Southern Pac. R. R ns U s w qiLT 2-^07,824. Santa Clare Mill & Lumber Co. .. Hay;s 76 Cal' ^7 Z '-'''• Saratoga Bank t- King 44 N ^87' ^-^'' *-^70. Saville r. Roberts, 1 Ld. Raym '378 *~"*^- Sawyer V. Hoag, 17 Wall., 620 ' '-^35. Schooner Exchange .. McF^dd'on; 7* CrV. 'lie "i^ J"? ^• Schooner Industry, 1 GaU 114 117 1-^78. Schollenberger v. Penn., 171 u's 1 *-^^- Schwalm v. Holmes, 49Cal 665 *~^^- Scott r. Donald, 165 U. S 58 2—276. Scott r. Neely. 140 U. S 106 ^-739. Searight v. Stokes, 3 How., 151*169 ' *-^- Secort- Railroad Co., 7 Biss 513 l-«46,582. Shafer r. Wilson, 44 Md 268*278 *"~283. Shaftfiburyr.Arrowsmith,4Ve8.**66 *-^- Seldon etal... Wabash Ry. Co.. 105 F*.;?^' *-^- Shepard.. Milwaukee Gas Co.. 6 Wis., 639..* f"^' Sherlock r. Ailing, 93 U. S.. 99 1-^88. .'oq *.m* 1—981. „, 100 1—408,957. Sherry t. Perkins, 147 Mass 212 '"^39. Shields^. Barrow, 17 How., 130 1—108.284. Shrewsbury & CheatPT R rL ..'oi ^ 1—626 •*». •427; ^. ■ ''°- "• «'««"»»ury E. Co., 1 Sim. N. 8., MIO, Simmer v. City of St." Paul; m Minn." "■m'iio *"^- Stamens Medicine Co.,.. Simmons irr^^" *-^- Singer,., vvalmsley, Ked. c. ko. .'^fi Z^-^-S^;^-- t^S^. I ^^* CASES CITEB. Sinnot i\ Diiveiiport, 22 How. . 223, 238 227 213 ^ — ^^' Slnsheimer r. Garment Workers, 77 Hun " 21 V '^k v '^I :: *~^^' ^^^• 8. Jarvi« Adam« Co. r. Kn*pp lil F sT" '*^' *^^ " ' • '^-*^- Skinker I'. Heman, 14« Mo 349 " «— 820. sfautr,!? w!:!'"' "r ^*"^"' ** ^'»- "^pp" '^"s^sV ::::;;; f-^-^ SJttUter t\ Whiteloek, 12 Ind 338 1—202, 206. Smaney ,.. Greene, 52 I». 2« *-«73. Smithr. Alabama, 124 tJ. 8.. Ififtim "-276. Smith r. Bivon.s 5(»F.,a«. ' 1—879,981; 2— 277 Smith f. Oil Co., 86 F., 359 *— 90. Smythr. Ames. 169 r.'s.. 466 *-«9. 1544 «-90,74«.754. Smyther. Fixke, 23 Wall.. 374 380* *~-**^- Snow r. Wheeltr. 113 Mai««. 179 185 1-705,706. Soda Founiain C4». r. Green, 69 F., 333 '~202- Sonth Carolina p. Seymou 1 , 168 IT ' g 3f g ^^7 *~^0' ^9, 209. &>«then. Indiana Exp. c«. r. V. 8. ixp/c^^mF^m]:::::::::":"] 11^7. 8«ithem Pac, Co. iM>entou. 146 U 8 202 'kT^'^^^ *-^' SmmiefnPiie.Co.r. l.krl,82F.,69o' "' «-1003.10O4. SaiBllitm p«e. Co. r. Hamilton 54 F 468 i-Wl. Speer If. Skinner, 35 III.. '282 2—993. SpringCo. r. Knowlton.iOSU s"4i '"^l- 5»rin*fleld tr. Connecticut Rlver*k«ii;««dV4CiBi;"ii f-714,819. Stafford r. fnifersol 3 Hill 3« <"«»"• ^«»n., es l-^m. Stamford .. Stamford Hor^; RaVln^d Co:.' iconn "m ' \~^- Standard Fire Proofinif Co. t.. St. Loui..Co. 177T0 ' ^ - l-"^'"^- Stanton r. Allen, 5 Denlo.. 434 . ^ " • * ^ ' -^i".. o59 2-1008. Stanton f. Embrv. 93 r S 548 '—90.202,403,799. Star Brewery Co. r. United' Brewerie«; 121 F." m f"^^* Starrif. Mayer. 60 Ga.. 546 . *** i". /m 2-1032. Stater. Adams, 70 Term.. 647 ^^"^2. State r. Andemon, 5 Kan 90 114 *-«». Stater. Ancker. 2 Rich. Law' 246* '-*»• Stater. Bryant, 90 Mo., 534 1-626. Stater. Dayton A Southeastera italiwiad/seoh^^^^ ■~^^- State ex rel., elc.. ... Delaware, etc.. cri7 F^ '-''^• State r.Gliiiden, as Conn.. 46 ••"-««» 2_i«a. .75 1- '290,411. State tr. Ooo«1night, 70 Tex 682 I— MO. State r.GrKHlvvlIl, 108. E., is. »is8*WVamv '"'**• State r. Grant. 79 Mo., 118._:.^^^^ ^~'^^ Stater. Harper* Ferry Boat ci*," WW VaMA^'a^ *~^- State r. Hope. 100 Mo.. 347 '^•' "* "^^ ^••' **<• »»»• 1-389. 8tater.McCahill.30N.W.,fiMm'i; m; ' *-^ 8tater.Ma|rrath.44K.XL.,227... ' " *-'^*- 8l«ter. Mttidi, lianas (N.C.), fiOi «— 8W, r.Xebrad«Iltetiuin|,Co;,29ifeb.77w' ?~^ r. Qiwrles. 13 Ark 307 1— ♦46.799. •••lt«.8chnehinami,M8Mo"*iii *-^ 8l»ltP.8mltli.l00N.w..4O42a24'ii**i^V' ■ --^• State ...Smith, Meigs. 99 T^^'*"^ - • ^m. ttattf. Standard Oil C^. 49 o/stV/w.l* f"^* SI»te«.8tewart»fltVt.,27J 1-799:2-197. _280] 1—290,441. State 1. Terry, ao Mo., 368... *-*'<>• aiit« t. Thomas 9« N. C. 699 *-«W- State ft Woleott. 21 Conn., 272. io «— 900. State IF. Wentworth. 65 Milne! an ati •~"**^- CASES CITED. XXXI State of Pennsylvania v. Wheeling Bridge Co., 13 How., 518 564 |_fwfi ^«7 State Freight Tax Case, 15 Wall., 232, 275 ' ' Jl^' fir 272 1— <»68. 1023. Steamship Co. v. McKenna, 30 F., 48..."/'".. \l^' Steamship Co. v. McGregor. {See Mogul Steamship Co.* 'r'.' McGregor.' ^' Steams Co. r. St. Cloud. Mankato and Austin Railroad. 36 Minn 425 1-586 Stephens & Condit Transp. Co. r. Centml R. R.Co.. 34 k. J. ,2 2m" --m Stevens r. Pratt, 101 111., 2O6 ' ^^ Zj;^' Stewart r. Transportation Co., 17 Minn., 372,391 7 .1'' „, Stilwellr.Wilkens, .Jac, 280 l--'01,213. Stockardr. Morgan, 185 U.S., 27.. .. ". ^^' Stocktons. Railroad Co., 50 N.J. E(i., 62] T"!??' Stockwellr. U.S.,13Wall.,a51 i"'^' Stock Yards Co. r. Keith, 139 U. S., 128 •" "T^^' Stoutenburg r. Hennick. 129U. S., 141 J"'^" Straus V. Amer. Publishers' A.ssn..' 177 N. Y 473 l^''' '~^- Strait V. Harrow Co., 18 N. Y. Supp., 224, 233* 7 !lf ' ,.. Strait r. Harrow Co., 51 F 819 1— J46,74o. " 2-9. 69, 125, 800, Summers v. Moseley, 2 Cromp. & Mees. 477 „ ^' Supreme Lodge f. Wilson, 66 F., 788 —904,973. Swanr. Chorpenning. 20Cal., 182 1—630. Swan V. Scott, 11 Serg. & R., 155 '~^^" Swann r. Swann, 21 F. 299 *— »&4. Swift & Co. r. U.S., 196 U.S.," 375, "396 !~^- ' 2—822,851. T. Taddy & Co. v. Stevens & Co., 20 T. L. R m 102 Fno- c\^ n Tainter v. Clark, 5 Allen, 66 ^'^ ' ^' ^^^ ^ --^020- Tallis r. Tallis, 1 El. & Bl., 391 ^"^12. Taylor r.Blanchard, 13 Allen 370 1-203,213,786. Telegraph Co. V.Crane, 160 M^ss 60* *~'^^- Telegraph Co. V. Texas, 105 U. S., 460 464 *~^^^- Temperton w. Russell, [1893J 1 Q B 715 1—668,737. Temple V. Com.. 75 Va., 892 * ' *-289- Tennessee r. Davis, 100 U. S 257 sf— 110. Tennessee r. Union &PlanteWBank,*152'u. 8* '454*^6*1 i"^"^* Texas r. White, 7 Wall., 700 725 ^•»m4M,461 i_^^ Tenn. Coal Co. r. Waller, 37 F 54*5 M7 *~^'^- Texas & Pacific Ry. Co. r. Cody, 16iu.S.*,'606'608 f"^^' Texas ^ Pac. Ry. Co. . Intestate Comm'ere'^m:;-l^2 U.-8.rm [i::: ;:f96';840. Texas & P. Ry. Co. r. Southern Pac Rv Cn 41 t a ^^^' ^- *-^^'^^- Texas Standard Oil Co. r. AdTu ^S ^ex 6^ ^' ^^^^ ''' *-^- lJennometerCo.r.Pool,51Hun,157.163' ^~^- Third St. & Suburban Ry. .. Lewis, m u! *S ' *457 460 J-H 200,205. Thomas r. Miles' Adm'r., 3 Ohio St., 274 " ''^''"^ 2-548. Thomas r. Railway Co., 62 F 803 2—317. ' 1- 817 ■ 1—537. . 000 1—467. o« 101 U S 71 1—468. Thomas V.Richmond, 12 Wall*, m 355 *-^- ^ompson-Houston Elec. Co. v. Jeffrey Mfg "co * "83* *F " "fii'i ^~'^^^' Thomley v. U. S., 113 U. 8., 313 ' ' ^^* 2-943. Thorpev. Adams, L. R. 6 C P 135 1—353. Tfcdalev. Munroe, 3Yeig.,320* * *" 710. Tode r. Gross, 127 N Y 480 2—312. 1—439. f CASES CITED. Transportation a>. r. Pttrkersbnrg, 107 U. 8., «M 1-957, 959. TrostCo.r. Clark, 92 F., 298, 296, 288 2—97. Tulk r. Mohay, 2 Ph.. 774 «— 1020. Tuttle r. Matthews, 2S F., 98 l—hi. Tyroler, People ex rel. r. Warden. 187 N. Y.,116 «— 87,88. V, Union Pae. Ry. Co. r. Wyler, 168 U. 8., 288 , t-M7. U. 8. V. AddyHton Pipe & Steel Co.. 78 F.. 712, 716 1— 7S9,760. 86F.,271 1—980,991,992; 8—61, 62, 278, 817, 676, 1004. 279 1—1008: 8—161. 281 2—323,820. 28a 2-47. 294 £—276. (See aim Addyston Pipe and Sted Co. V. U. 8.) U.S. r. Amedy, 11 Wheat., 892, 412 2—915. U. 8. r. American Bell Tel. Co., 159 U. 8., 648,668 2-^7. U. 8. r. Bell Telephone Co., 128 U. 8.. 315, 367 t— 684,619. U.8.r. Auon.21 F., 761, 768 1—339. U. 8. r. Armstrong, 2 Curt., 446, 248 1—64,198. U.S. r. Babcock, SDill., 686.... 1—456. U.S. v. Bell. 81 F.,880 2-972. 0. S. r. Bevans, 8 Wheat, 336 2—850. U. S. t'. Brawner, 7 F., 86 1—47,58. U. 8. r. Britton, 107 IT. S., 666, 670 1—65,176. U.8.r. Britton, 108 U. S., 199-206 1—64. U.S. V. Cadwallader, 69 F., 677 2—635. U. 8. n Cam, 106 U. S., 611 l_«5. U. 8. V. Clark, Fed. Cas. No. 14806 1—304,536. U. 8. v. Coal Dealers' AsBn., 86 F., 232 1—980,1007; 2—62, 276,278. U. 9. v. Oo1 688. — -339,8J0,342 2-276,286. U. 8. r. Thomas, 55 P., 381 "•• 5^— 167,746. U, 8. «. Thompson, 12Wwy.,'l56, 31 F.; 831 ".".;; l'^ U. 8. V. Trumbull, 46, F., 755 1—460. U. 8. V. Tynen, 11 Wall., 96..]. *~*'^- U.S.*. Union Pacific Railroad Co., VlU.' 8..' iiVg':.'.*:"^^^^^^^^^ 1-i'n 67^ tor U. 8. w. Waddell, 112 U. 8 , 76 '—1/7,673,706. U. 8. V. Walsh, 6 Dill., 68 1-173,174. u.s.v.w.u.Tei.co..6op.Vi,';i";.r."'.";:r' i~s?- U. 8. t». Williams, 1 Cranch C. C. 178 . « ^• U. 8. V. Wiltbei^er, 6 Wheat.. 76, 96 J^^^Z aZ!«* U. 8. V. Workingmen'8 AmalR. Council 54 F 9cu ? «^MMmm. wuacii, M J., 994 1-202,266,291,860. ^^ 1—302,459. *r 1^.. 1—202,469. U. 8. Chemical Co. v. Providem Chemical Co.^ti'pi'iie *~!f?'^'^- U. 8. Consol. Seeded Raisin Co. .. Griffin & Skelly Co.. li* F.:364;:::: ll^]^ U. 8. Exp. Co. t'. Henderson, 69 la., 40 . ^ !~?S' Urmstonv. Whitelegg.63L.T.(N.8.).466. f"1Z' Underwood's Case, 2 Humph., 48. 49 , !?r Union Pac. Ey. Co. v. Chicago. R. I. & p. Ry."^::*6VF.:'3;«;;iw:iii;;; Jl^; V. Van Horn «. Van Horn. 62 N.J. Law, 286 ^ ^, Veazie ir. Moor, 14 How.. 568, 674 f~!^o^ Verdin ». St. Louis, 131 Mo., 26 * '• 1-25., 392. Vicksburg tr. Tobin, lOOU. S.. 430 !"."] 2—560. Victor Talking Machine v. The Fair 128 P 424 i~^^^' Vickery t. Welch, 19 Pick.. 523 2-786.868. Vidalt;.Girard'.sExra..2Hovv..lW,'i97.'l*;; f"!??®" Village of Pine City V. Munch. 42 Minn, 342.. , fZ" Vnkan Powder Co. «. Hercules Powder Co., 96 dalV, sVo:.'..;.'.;:'.';;:: 1-^2-808.1006 t WW • Wabash R. R. Co. v. Defiance, 167 U. 8., 88 . . , ;^„ Wabash, etc.. Ry. Co. t^. Illinois, 118 U.S. 657. .'.''.".' :~Tl' ' ^^ 1-354,3: '^'^ 8-604. CASES CITED. XXXV Waffle «. Vanderheyden, 8 Paige, 45 1—863 Walker V. Collins, 167 U. S.. 57. 59 ........."."!.! 2^548. Walker v. Cronin, 107 Mass., 585 1—284." Wall V. Thomas, 41 F., 620 '.[..." 1—624 Wallace r. Lincoln Savings Bank, 89 Tenn., 631 2—310. Walling t'. Michigan, 116 U. S., 446 1—737,739. — ^^— 464 i^73g^ Walsh V. Dwight, 68 N. Y.Supp., 91 /..*". 2—1015,1017. 93 ;j 277 279 Ward t'. Byrne, 5 Mees. & \V., 547 1—786. — 649 .7."!.;!'.;;.'! 1-75.' Ward V. state, 2 Mo., 120 2—891 Warew, Curry, 67 Ala., 274 2— 82L Warren V. Exchange, 52 Mo. App., 157-167 i—eso Warren v. Paving Co., 115 Mo., 572, 680 2-660,562. Waterhouse t;. Comer, 55 F., 149 '..'.'.'.'.'.'.'.'. 1—361* Watson V. Fuller, 9 How. Pr., 425 '*...."....!! 1—368 Watson V. Jones, 13 Wall., 679 ". .,."'... 2—565 Watson v. Williams, 36 Miss., 331, 341 ..........!!.... 1— 694! Weare Commission Co. V. People, 209 111., 528 2—729 Wedding t'. Meyler, 192 U. S., 573 7.!!*!!!!!!! 2—872 Weeks v. Smith, 3 Abb. Prac., 211-214 2—839 Weirv.GasCo.. 91 F., 940 "*-.!!]!.!..]]!!.! 2—78 Weiss t'. Herlihy, 23 App. Div.. 608; 49 N. Y. Supp., 81. 2-92 Welch «. People, 30 111. App., 399, 409 " i_^ Welch V. Phelps & Bigelow Windmill Co.. 36 S. W., 71 (89 Tex., 653) 2-277 Welton .. MLssouri. 91 U. S.. 275 .': 1-739; 960; 2-515. 280... t J i02S West Viiginia Transp. Co. t;. Ohio R. Pipe L. Co., 22 W. Va., 600....!!! 1-222,688,724,799. ^^~'~~ 625 j oAfi Western Union Tel. Co. v. Ann Arbor R. R. Co., 178 U. S.. 2S9 . .'.'.'.".'.'. i-5is[ 243 2 — 555 Western Un. Tel. Co. v. Amer. Un. Tel. Co., 65 Ga., 160 i_20'; 206 688 724 Western Un. Tel. Co. v. James, 162 U. S.. 650, 6d6 l_i027 Western Un. Tel. Co. v. Penn. R. R. Co., 195 U. S.. 540, 547....:....".'.*;; 2-707 * 120 F., 981 ;;; 2-707; 123 F.. 33, 36 ... 9 a'mi "^ivt Weston r. Ives. 97 N.Y.. 222-228 i-l^' Wetmore 1-. Mellinger, 64 Iowa * li;^ Whipple V. Cumberland Cotton Mfg. Co., 3 Story,'84 2-972 White V. Brownell, 2 Daly, 329, 337. 342, 350; 3 App. Prac. (NVs;)",'3i8;; l-63o' White r. Parkin, 12 East, 678 9!^' Whitehead & Hoag Co. v. O'Callahan, 139 F.; 243 «~Lo' Whiteside r.Haselton. 110 U.S., 296 '" Z'^^' , „^ Whitney r. Fairbanks, 54 F., 9 i5. . ' " " i~:f' *"^^*- Whitneyr.Slayton, 40Me., 224... " J^'^l whittaker v. Howe, 3 Beav., 383 ;;;;;;;;;;;;;;;;;;;;;;;;;;;;; rj,tm, 205. 786. Whitwell t;. Continental Tobacco Co., 125 P.. 464 ^Jife lOl-i loia Wickens r. Evans, 3 Younge & J., 318 , !r^i2i ' Ztir xf?' ''^' '• ''*^''*^^ * ^- »• ^«- 73 Mo.", m;;;;;;;;;;;;;;- \zf^"^ Wight v. U. 8., 167 U. S.. 516 . t ^w>,.aw. Wilbur r. How.. 8 Johns., 444 ..".".'.'.'.'. 2-1025. Williams r. Fears, 179 U. S., 270 1—803. Wilson r. Blair, 119 U.S., 387. *. ' l~^^- Wilson V. McNamee. 102 U. S., 572 f^?' Wilsonv. Rousseau, 4 How.. 645, 674.... « ^' g^g 2—186. Windsor I,. McVeigh, 93u.s.,274',*282,"2i';;;;;;; ' !"!??• wisconsint;. Pelican Ins. Co.. 127 U.S., 265 ;;;;;;;;;;;;;;;;;;;;; ain ^^^^' OASES CITED. r!!J'"*!l' ^^' ^ ^^^" »». 262 ..... . Woodward r. Alston. T2 Hei8k.. 681 >-a», Wootonw. H!iikle.20Mo..290.. «-aW. Worden r. Searls, 121 U. 8., 26 ** *-«)8. * S— 839. Y. Tl'^Xf -ft"'-''- '^^*"*»«* ^^*'«» .^^ rates Case. 4 Johns, 317. 373 »-«21. Yatott. TheQueon.14 Q. B. D 648 1-339. y<»ton t. U. a, 5 Cr.. 281 8-«e«. Ylck Wo t«. Hopkins, 118 lJ.8.,"856.*86i" '-*'»• 2—139. FEDERAL ANTI-TRUST DECISIONS. VOL. 1 1890-1899. 1898] UNITED STATES v. JELLICO MOUNTAIN COKE & COAL CO. ET AL.« (Circuit Court. M. D. Tennessee. October 13, 1890.) [43 Fed., 898.] preliu.i„arrSrctl wm n^ T'"^ '^ 'Jefendants' affidavits, a indemnifying birLca^"'""*."^ T"*"^' "' P""°«« ^^^ -<> 1 s oona in case the injunction should be dissolved.6 In Equity, the^ct T "''^ "° " **'" ^^^^ ^^ *« United States imder the city ohz^c^::^^:'7zi^'^'r!'''''''^ ^ made parties defendant On 7hf I. i * ^^<=^*°g«' ^^^e temporary injunction wa' rl^ ' """"^ '"^^^ '^ Gl:aM?;SCg;-sX^- ^- ^«A Acting Atty. « See also page 9 (46 Fed., 432). Syllabus copyrighted, 1891, by West Publishing Co 11808— VOL 1—06 M 1 iS 44 FEDERAL REPORTER, 721. Syllabus. G. N. Tillman and W, L, Granheryy for defendants. Hammond, J. This is an application for a preliminary injunction only, and it appears to the court better to await the hearing, and determine upon plenary proof of the exact facts those grave questions which have been suggested, than to decide them now upon the bare statements of the bill which are so general in their character, and quite too barren of any averments of specific facts to enable the court to determine whether the general conclusions of fact averred are true, particularly in view of the affidavits of defendants denying some of the most important of them; and in this view it is unnecessary to hear any counter-affidavits. The court is the more inclined to this course since the bill is not that of a private citizen, complaining of an injury to him, but only by the United States [899] on behalf of the public, and in pursuance of a public policy of enforcing a recent act of congress to prevent combinations in restraint of trade and commerce. It is mani- fest that the act is new, and this a most important appli- cation of it. It would more injure the defendants to grant this preliminary injunction if, on the hearing, it should turn out that the case does not fall within the act, than it would injure the public to withhold the injunction until the final hearing; and the more since the United States gives no bond to protect the defendants against that injury, as a private suitor would be compelled to do. When this is the situation of the parties the rule is to refuse the preliminary injunction, and abide the hearing. The court reserves all expression of opinion on the subject-matter of the bill until that time, as the best for all concerned. [7211 AMERICAN BISCUIT & MANUF'G CO. v. KLOTZ ET AL. (Circuit Court, B. D. Louisiana. January 8, 1891.) [44 Fed., 721.] Eeceivebs— Combinations to Restrain Trade.— Defendant and his partner sold their bakery business to complainant corporation, re- ceiving payment in its stock, and defendant leased to it the prem- AMERICAN BISCUIT AND MANFG. CO. V. KLOTZ. 3 « Opinion of the Court. I't'^nT, «^ *^ !:""°^' '^'^ conducted, and contracted to carry nostue claim, for an accounting, and a receiver. Defendant Ld for fraudulent representations, and tendered back the stocit c™^^ plainant was practicaily a "trust," organized to monSi.e Te bus nes^ and bad already secured control of 35 leadlnrbaLies In 12 different states. UeW that, while a case was made for 1 receiver, pending litigation between ordinao' parties "he nraver ::Zi^tT^.r «r""^ -* -couTag^ a "mbtaaUoTm X " T^\ """^ P"'"""y '"^S"'' »"«ler Act Cong. July 2 1890, to protect trade and commerce against unlawful restraLt« and monopolies," and Act La. July 5. 1890. lor the same iu^r In Equity. W. S. Benedict and Rome <& Grant, for defendants. Before Pardee and Billings, JJ. Pbr Cumam. This cause is submitted upon an aDDhV.a Klotz and J itzpatnck, his partner,' composing the firm of B Klotz & Co., sold to the complainant theif biscuirand confectionery manufactory for the price of $259 0^ »„/ assumption of the debts of B KlSl Po V' '*^ T 84,000 hich it was unde.tood^an?a^S-'sh3Sr?ai*S out of the income from the future business T^n^- -ki C3 z .tir '" '^ °' '"« "~«"^ i' me good-will of the business to be of the value of $'>00 000 ^timS 7t ^f T '''''' '' *^^ complainant' corpSl of thetmirntft*: sXVS^""^"^' '""^ «^^"* " continued U, carrv StL h ■ ^ ^' y**"*- ^lotz ■ !l^:^!':'7on^^hebusm^asa^^ complain- • Syllabus copyrigh^i;i^i;i^~i^^s^^;;^j^rj^ 4 44 FEDERAL REPORTEB, 722. Opiniou of the Court ant down to some time in November, when he repudiated the sale and the lease, erased the name of complainant from the bakery, as agent, transferred the policies of insurance from the complainant to himself, as an individual, then to B. Klotz & Co., and, for and in the name of the late firm, resumed the possession of all the property he had sold to the (XMnplainant, and the conduct of the business of the bakery and the confectionery establishment. He did this without resort to any legal proceedings. He thereafter held possession adversely to the complainant, and excluded it from the bakery. In this state of things, the complainant filed its bill for an injunction, and for an account and for a receiver, against Klotz and W. A. Schall, who was alleged to be co-operating with him in the possession adverse to the complainant. Klotz has filed an answer, and he, together with his former partner, Fitzpatrick, who intervened by petition pro interesse suo^ have filed a cross-bill asking a rescission of the entire transaction, i. e., the sale and the lease, and tendering the stock which had been received by them as the consideration of the sale. Numerous exhibits and affidavits have been adduced by each party upon this hearing. The recital thus given shows that, in an order in- verted from what would be expected, we have before us a cause in which a party who has sold and delivered a busi- ness to another, and become his agent, and, as such agent, was in possession of the property sold, sets up a possession adverse to his principal, asks for a cancellation of the sale, and the purchaser and principal asks that the agent shall account, shall be enjoined from asserting any claim hostile to his principal, — in a word, for a confirmation of its rights under the purchase. The immediate question before us is, what disposition shall be made of the res, the business of the bakery and manufac- tory, pending this contest? The vendor and agent asks that he be allowed to remain in adverse possession. The pur- chaser and principal asks for a receiver. It is clear that, as to this provisional disposition of the res, the defendant Klotz cannot be allowed to gain anything by his ouster of his vendee and principal. He must stand with those equities, and none other, which existed before the ouster. The case as to tiie AMERICAN BISCUIT AND MANFG. CO. V. KLOTZ. 6 Opinion of the CJourt. !fffl"*?'^?*.*'f .* ?^'^*'' """* ^ '^^^^^^'l ''nd determined wh K J ^i^u^ '^'^ ^^ ^'" averring possession as agent, which he asked to have changed by a decree into a poss^ion as owner, through the cancellation of the sale and the lease: that IS he must aver a legal title in the American Biscuit & Manufacturing Company, which he seeks to have avoided and annulled. If, as m this case, he seeks to do all this by reason of fraud and he establishes the fraud, a court of equity will not refuse to hear him. He would not be estopped, for fraud vitiates and sets aside even estoppels. Herm >^top. par. 22, p. 244; Pendleton v. Rickey, 32 Pa. [723] St. TJa \ ,' ^ ^^ '' "*** ^'^^'PP*'^ fr""* proceeding to set aside the sale and the lease by reason of his agency Tnd hk obligations as trustee, he comes into court assailing and seek- s that of the complainant. Under these circumstances, until (he hearing, the practice in the courts of chancery is ^ot to disturb the possession under the legal title prior to the find Sr;/;;^// "T •'Ir"^*-- -onj - establish^; ^^Muell V. Wtlkem, Jac. 280, reported in full in Edwards on Receivers, p 28, Ix>rd Ei.don, when a similar question wts presented, observed : Hue^uon was for?;L\sr'trtL't*TntrZrso"'a^^ *•"'!? rp*-^ ••« -■« take away tbe possession from Arsons UoMi^iT,.*„'!f "^f'^^ ''^ *» deeds not yet set aside by deeree." ''<"<''ng it under the effect of co,t't" '%;:'^%'^'' "it --« not the general habit of the ^stronJ t > """ r^? '"'*"^*^*'"^' ''"d the proof was This i?« 1 f ^^"^ *'*^^ ^^' interfered with. Ihis IS a leading case, and gives what we find is the rule c^^iction 7h t t f, ""^ r *^ ^''^ *he court to the fclear The Sud t ""f T ^^' ^""^ hearing, be established. terveZ-t S ^ T^ ""'^''^ "P*"^ ^y the defendant and in- tervenor is false and fraudulent representations bv the agents of the complainant in this: that they represented tf,!f?.. stock was fully paid-un sfn^t „k represented that the was none of it n^iH "P.^**^''' whereas, m truth and fact, it and, to the xt'ent oTth T^T T^ '""'^ ^^'"^ »P >» ^^^^ bakeries and r^ S ! P^'"'' ^^ *'''^"^^«'- "^ P'ante or eries and manufactories at an estimated value as capital I " 44 FEBEBAIi REPORTEB, 723. Opinion of the CJourt. The stock delivered to the defendant and intervenor was not paid up until it was issued to them, and was paid for by a transfer of the bakery and good-will; and then it became paid up, and they were discharged from all liability to be made to contribute as shareholders therefor. The testimony as to what was represented by complainant's agents about the stock being paid up is conflicting; but, when viewed in connection with the circumstances under which the stock was received, fails to satisfy us, upon this preliminary hear- mg, that any false representations are proved to have been made. The case of the defendant and intervenor, set up in their cross-bill, whereby they oppose the appointment of a receiver, is that of parties who seek to rescind a deed on the ground of fraud, which upon this hearing they fail to estab- lish. So far we have considered the question of appointing a receiver of the property in controversy inter partes, and mainly from the stand-point presented by the defendant's showing, and thereon such appointment seems proper, and we should accord it, but for an aspect of the case originally suggested by the defendant, when the case was pending in the state court, apparently abandoned here, but sufficiently brought to our notice by the exhibits of both parties. We are not satisfied that the complainant's business is legiti- mate. While the nominal purpose of the complainant's cor- poration, as stated in its charter, is the manufacture and [724] sale of biscuit and confectionery, its real scope and purpose seems to be to combine and pool the large com- peting bakeries throughout the country into practically what IS known and called a "trust," the effect of which is to partiaUy, 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 m leading articles of breadstuffs. The case shows that an insignificant number of shares of complainant's stock was unconditionally subscribed for, apparently enough to quahfy directors; but the great mass was taken and held by irresponsible parties, to be used in parceling out as full- paid stock to such leading and successful bakeries through- out the country as could be induced to come in on an agreed a AMEKICAI. BISCUIT AND MANPG. CO. V. KLOTZ. t Opinion of the Court xitiui, dna pooled the business of ^^ t^^ +i.« i j- expressly prohibits, under severeTenS ^t ™"'^<'P»1^««'" combination, in the form of Trust nrl/if' ""^ ''""*'"^*'*' acy, in restraint of trlde or rS "*''^''^^*' «>• <=°nspir- stat«s," and declarL punisLrw '\^'"''' monopolize, or attemp? to mcSopoUzeVrT "'*' '^^" spire with any other person oTpei to Z" V' '°"- part of the common tradp nr L monopolize, any states." The enf^riment of fV T-"" ""^"^ *^»^ ^^^""l volved upon the ci^T °^*''''/«t i«' by the statute, de- first and ^rdt Sf ^ i "o £ ^^^^ or conspiracy il'rttrS oTt^deor '"°^*"'" '° *>=« f«™ of trust amount or quantity of any arHcit "^'^"'""^'•ce, or to fix or Itmitthe =ir& «. p-Vcr^ ^KiLVtn^^.^^ mo.^^-,4?/^«;^7^ ^'^nsn?p"' ^^' monopolize, or atten.pt to to monopolize, any part of the t?!!^'*" ^"^ "*« ^^^ or MrsoM this state, shall be deemwi euflil nf „ PT^eree within the llmK thereof, shall be punished t^ a fl„/ "'i^'lemeanor, and, on conWction Punishm^"^ imprisonmm not ex~* "^r"'"^ five'thoimnd do" punishments, m the discretion of t^cl>urt°° ^^"' °'" "^ "<"" ««'olize, or attempt to monopolize, any of the trade or commerce." To compass either of these things, with no other motive than to compass them, and by any means, constitutes the offense. One just and decisive test of the meaning of the expression " to monopolize " is obtained by getting at the evil which the law-maker has en- deavored to abolish and restrict. The statutes show that the evil ^vas the hindrance and oppression in trade and conmierce wrought by its absorption in the hands of the few, so that the prices would be in danger of being arbitrarily and ex- orbitantly fixedj because all competition would bo swallowed up, so that the man of small means would find himself ex- cluded 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 defining words, does not this corporation, thus glutfed with the 35 industries of 12 states, disclose an " at- tempt to monopolize? " So far, therefore, as the complain- ant's business is a combination in restraint 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 stami>s it as unlawful, and the courts should not encourage it. Aside from this, the com- plainant's business, even if lawful, being of the kind shown above, is not of that meritorious kind that it should be encouraged by a court of equity. The appointment of a re- U. S. V. JBLLIOO MOUNTAIN COAL & COKE 00. 9 Syllabus, ceiver by a court of equity is not a matter of strict right, but of judicial discretion. Fosdick v. Schall, 99 U. S. 235. It falls withm that class of interlocutory remedies which courts must grant or withhold, according to a discretion conscien- tiously exercised, upon a consideration of all the facts which a cause presents, involving the rights of the parties and the interests ot the public. The attempt to accumulate in the hands of a single organization the business of supplying bread itse f to so large a portion of the poor, as well as the rich people of the United States should not be favored by a court of equity It carries with it too much of danger" of excluding healthy competition, thereby increasing the diffi- culty to the general public of participating in a most useful business, as well as adding to the possibility of multitudes of citizens being temporarily, at least, compelled to pay an arbitrary and high price for daily food ^^ UTiatever we may feel compelled to do, on the final hearing rL tl rr'' u"^" recognizing the complainant's legal Clear that at this preliminary stage, [726] with our present impressions of the character and general cope of coiEn ^^T:-^ T'- ""^'^' ""*' ^-^ *•>« aPPointZfof a receiver, to aid complainant to perfect, and peihaus to Pn large, h.s combination or trust; and the refusal o appoint a receiver can result in no serious and lasting inj "rvT^L form W tt"' r "" ^'"T '' '"^'^ °* -mpfainintcompZ hrrit.rrdrrtdiTr"""\^T'^«^ h.d a. Hty for any ^^:2^!^;^^2^ LI tl rTuh Tt" '^ niismanagement of the prlperU- "end- ing ti.e suit. The motion for a receiver is denied. im UNITED STATES .. JELLICO MOUNTAIN COAL & COKE CO. ET AL." (Circuit Court, M. D. Tennessee. June 4, 1891.) [46 Fed., 432.] • See also page 1 (43 Fed., 898)^ " ■ I « j 10 46 PBDIBAL REPORTEB, 432. Opinion of llie Court, and dealers In coal In a city in another state, creating a coal ex- change to advance the interests of the coal business, to treat all parties to the business in a fair and equitable manner, and to estab- lish the price of coal, and change the same from time to time by which it was agreed that the price of the coal at the mines should be 4^ cents, the freight being 4 cents, and the margin of the dealer should be 41 cents, making the price to the consumer 13 cents, and that, whenever the price of the coal is advanced beyond an ad- vance in freights, one-half the advance shall go to the mine owner and the other half to the dealer, and a penalty was provided by line, of any member selling coal at a less price than the price fixed by the exchange, and by which it was forbidden for owners or operators of mines to sell coal to any person other than members of the organization, and for dealers to purchase of miners who were not members, but exempting coal used for manufacturing and steam- boat purposes from the prices prescribed until all the mines tribu- tary to that market shoud come into the exchange, or until the exchange could control the prices of coal used by manufacturers. Is within the language of Act Cong. July 2, 1890, declaring " every contract or combination in the form of a trust or otherwise or con- spiracy in restraint of trade or commerce among the several' states " and also the monopolizing, or combination with another to monopi- liie, trade or commerce among the several states, a misdemeanor.* In Equity. On bill for injunction. John Ruhm, U. S. Atty., Lee Brooch, Asst. Dist. Atty., and James TrimUe, for the United States. Tillman c§ TiUm^n, Henderson dk Jourolman, and HiU A Granherry, for defendants. [483] Key, J. The petition in this case is filed against the members of the JSTashviUe Coal Exchange. The membership of the ex- change is composed of various coal mining companies oper- atmg mines in Kentucky and Tennessee, chiefly in Kentucky and of persons and firms dealing in coal at Nashville, Tenn! It IS aUeged that the purposes, objects, and agreement of the defendants are in violation of an act of congress approved July 2, 1890, entitled "An act to protect trade and commerce against unlawful restraints and monopolies," and the peti- tion seeks to restrain and prevent the violations of the act by inj unction under section 4 of the law. The first section « Syllabus copyrighted, 1891, by West Publishing Co~ V. S. V, JELMCO MOUKTAIN COAL & COKE CO. H Opinion of the Court "hetm o/trtr *r.' "'"'^^ *="'^*^^''* «^ combination in tne torn of trust or otherwise, or conspiracy in restraint nf ^ade or commer^ among the several stetes.'^s deS Hie ^1. The second section declares that "every person whn StrnsTt' " r "'"^ - --P- -thTncjr^r:^: also. By the fourth section jurisdiction is conferred unon violations of the act, and it is made the duty of district uttr.,. neys m their respective districts, under the d rtSn of thJ fntTJTf '' '^^ ^""^ ^"^^-^ ^ instS'roce^l' ings in equity to prevent and restrain such violations T^ axticte of agreement between the defendantsTrS amln^ o her thmgs, that the objects of this exch^niriT-TT/. all m Its power to advance the interests ofZ^. 7' k at Nashville tr, f™of „ii 1- "*'^®*®®'* "* tl^e coal business ^iny memb?r of .f"""?'^''*'?- None others are eligible. and^St^^'tSrit^^^^^ fr- i^ to Nashville shall fnrf!;!! '» Nashville, or ship any coal and every £fr ''''*^'* ^"1^ rehnquish all interest of any will fr m tte 't^'^tTrist k'TT' "' ^™''- ^^^ ^-^anS sold in Nash,1lk SaT? /"T "* ''^'^ ^"^^ '^^^^ ^ the mines at Scents minit''''^ "" ^Z" ' *"" ^ ^^'"^"^ -^ lump, and fretht £;"' ] "? ^T ^"^ ''"^*'^' °* ^^ P«"nds No. 2 to be v!l td atTcrnts a7thr^- '' T*^ ^' ''"^^^^ '^-rfi^ihrz^^^^ "ceL^thrd: -e owneitS '^^X'^Sr S^/H:^ 46 FEDERAL REPOBTER, 433. >l , Opinion of the Court found guilty of selling coal at a less price than the price toed by the exchange, either directly or indirectly, shall be hned 2 cents per bushel and $10 for the first offense, and 4 cents per bushel and $20 for the second offense. A majority of aU the members shall constitute a quorum for the transac- tion of busme^. Owners or operators of mines [434] shall not sell or ship coal to any person, firm, or corporation in Nashville, or West Nashville, or East Nashville, who are not members of the exchange, and dealers shall not buy coal from any one not members of the exchange. All coal used for man- ufacturing and steam-boat 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 exchange can control prices to govern coal used bv manufac- turers, ^o coal shall be sold in any month to be delivered m 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 It can hardly be denied that such provisions as these, by a body of persons such as compose this exchange, is a contract or combmation in restraint of trade or commerce, or an attempt between different persons to monopolize a part of the ti-ade or commerce, between parties who are citizens of or reside in different states. It is shown that several minin.' companies in Kentucky engaged in raising coal, and most of the coal dealers of Nashville, Tenn., have entered into the foregoing mentioned arrangement. It is insisted for the de- fendants that the subject of agreement is not interstate com- merce; that the obligation as to the mining companies ends at the mines. The price is fixed and paid at that point, and consequently controversies in regard to the contract as to them belong exclusively to the courts of the state of Ken- tucky ; that, so far as the dealers are concerned, the price of the coal is fixed for its sale at Nashville, and after it becomes their property by delivery to them, and therefore the courts of Tennessee have the jurisdiction as to them. Various authorities are cited, and the debates in the senate of the United States are read, to sustain this view of the case. As r tr. S. V, JELLICO MOUNTATTSr nnxr » JXLuuJsiAIN COAL & COKE CO. 13 Opinion of tlie Court iTtXC;, ^:';^^ ;^ ^f "^^ ability by those representL^ gl'l^f 'T '"' weighing T:;X7ri::soT^:^'^'^ f -*-^ -^ tion in restraint of trade or commence S::nZf^^^Z il ! 14 46 FEDERAL BEPORTEB, 435. Opinion of the CJourt they evidence of a combination to monopolize " any part of the trade or commerce " between the states of Tennessee and Kentucky? The coal mines are in Kentuclty, and the coal is to be mined there for a certain price, and the agreement contemplates its shipment to Nashville. To be sure it is not to be transix>rted thither by the defendants or any of them, but the price for which it is to be shipped is fixed or stated, and becomes a part of the price for which the coal is to be sold at Nashville ; and when the prices fixed " are advanced in excess of the advance in freights, the one-half of the ad- vance shall go to the mine owners and one-half to the deal- ers," In making the agreement the transportation of the coal from Kentucky to Nashville was a necessary incident to and element in the arrangement, and its execution would have been impossible without it. The instrumentality of transportation did not belong to nor was it controlled by them, but it was used by them and paid by them for services rendered. The contract provided for the sale of coal in Kentucky, its shipment to Nashville, Tenn., to dealers there, for its retail to consumers. It was, to all intents and pur- poses, a traffic, trade, commerce between states. Was the purpose of the exchange to monopolize a part of this trade, or to combine in restraint thereof? The exchange does not propose to be governed and controlled by the public markets arising from competition and the operations of the laws of supply and demand. On the contrary, it announces that its purpose is " to establish prices on coal at Nashville, Tenn., and to change the same from time to time as occasion may require," and in carrying out this object it asserts that>— "The exchange will establish prices at which coal shall be sold in NashTille, subject, however, to the following conditions and basis- Coiil classed as No. 1 to be valued at the mines at 4i cents minimum price per bushel of 80 pounds for lump, and freight being 4 cents the dealer's margin to be 4| cents, making the price of lump coal 13 cents per bushel; No. 2 to be valued at 5 cents at the mines, No. 3, 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. Any member found guiltj* of selling coal at a less price than the price fixed by the exchange either directly or Indirectly, shall be fined 2 cents per bushel and $l6 for the first offense, and 4 cents a bushel and $20 for the second offense.*' IT. S. V. JELLICO MOUNTAIN COAL & COKE CO. 15 Opinion of the Court. [436] These provisions, so far as this combination could do so fixed the lowest price of coal to consumers in and near Nashville at 13 cents per bushel, and prevented coal bemg sold there at a cheaper rate, no matter how much less It might cost m an open and unobstructed market JVor is that all. The exchange ordains that " owners or operators of mines shall not sell or ship coal to anv firm person, or corporation in Nashville or West Nashville or East JNashvi le who are not members of this exchange, and deal- ers 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 concerned, to transactions between the miner and dealer, the prices are fixed by them, and the mmer and dealer only are eligible to membership. The miners of the concern cannot sell to any dealer in or near ' Nashville who is not a party to the agreement, nor can such dealer purchase coal of any miner anywhere who is not a member of the body. The operations of both are confined withm the membership. So far as Nashville is markets, or deal with those who would give more favor- able terms. The restraint is positive and undenTabTe Moreover, in the first section of the by-laws of the excInS 1 IS asserted that " all coal used for manufacturrrand steam-boat purposes shall be exempt from prices made Ev this exchange until all mines tributary to tMs market shaU ?his ckal^rr . ^T'^ '""^ ""''^ ^y manufacturers^ 2ed in In if . ^"'' '^'^.'^ ^^ '^' ^^^h^i"- "market cou?d thTtV. ""^ r^ '^ steam-boats whenever it r ex' 2 t' r"'' '^ ''l^ '"^"'^^^ ^^ N^^h-lle were UDonX r^^" "''"^^'"^ ^^ ^^^ exchange, where- Zessarv ' T '^ T^ ^'"^^ ^' ^^'^ absolutely, 'and the m that market, to a large extent, at least, and that 16 46 FEDERAL REPORTER, 436. Opinion of the Court. I this exchange might now monopolize the business of deal- ing in domestic coal in the Nashville market, and in the future monopolize by and confine to its membership the entire trade in coal at that point. It seems to me that the purposes and intentions of the association could hardly have been more successfully 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 authorities to sustain such view of the case. Regarding the act as constitutional, I see no way for the defendants to escape its condemnation. Proof has been taken, on one hand, to establish that the people of Nashville have been and are being injured by the high prices which have been and are being paid for coal, and the extent of the injury. On the other hand, defendants have introduced proof to show that the higher freight rates to Nashvillef and the want of facilities for transportation by railroad and water, are the causes for the higher prices of coal at Nashville than at Louisville or Memphis, but it is needless to enter upon this branch of dispute. " The attempt to monopolize or combine " is de- [437] nounced by the second section of the act, and the first section declares that "every contract or combination * * * in restraint of trade or commerce among the sev- eral states * ♦ * is hereby declared illegal." The at- tempt — the contract to do the thing prohibited — is enough to incur the penalties of this law. I conclude that the defendants, by the organization of the Nashville Coal Exchange, and their operations under it, have been, and at the time of filing the petition in this cause were, guilty of a violation of sections 1 and 2 of the act of July 2, 1890, and should be enjoined from further violations of the law, as provided by the fourth section thereof. The petition will be dismissed as to such of the defendants as are not, or were not, members of the exchange at the time of the filing of the petition. CLARKE V, CENTRAL R. R. & BANKING CO. OF GEORGIA. 17 Syllabus. [338] CLARKE v. CENTRAL RAILROAD & BANK- ING CO. OF GEORGIA ET AL. CENTRAL TRUST CO. OF NEW YORK .. COMER ETAL.- (CJrcult Court, S. D. Georgia, E. D. May 14, 1892.) [50 Fed., 338.] Chase a iSy o't^Z^^-ofZ^n^T^ Tf"^. '' T" U afterwards deposited wUh the Ce^t^^LI" ^^ „? ^eTr'oV'and finally transferred to the Terminal Pn n «xrof^ ' eral competitive lines of railroad Thf;' ^ composed of sev- of the Cent R r^l ''^'^'^^^^' ^his company created a directory K. Co., and provided that the Rtnohr /^^ f*.^ ^^°^* Terminal Co should not be vot^iu ,. . TT"^ '""*""*^ "^ *"*' In good faith Th^ Zll . ^'®**"'° ""'*'^ transferred 40MnJ2t J '° ''"^^"°° consisted of 42,000 shar^ «,000 of which were those deposited by the Ga Co „.th ^ C. Trust Co. and transferred to the Termfnai r^ „' ?' """ *''^ der, 2.200 shares, acquired by the TermiZ pw' ^.*^ '■^""""• The Terminal Co. and the Ga Co fl.L """ ""'^'' ^'^'^■ Cent. Trust Co any rishf th^' ►.. ^"^^ relinquishing to the Heia. no lutei^t in the stol^^ ^ ""' *" "°*" ""'' '^^■ other than thaf^f'^ mere rjhortlat"thf T' ^"^^ ^•• question did not entitle It to vote. ^* relinquishment in Same— Incapacitating Teust.— The Cent Tr,,^ n pacitated to vote such stock by the fact Sat ,t w T '"'° ""*■ large amount of indebtedness of the Cent r n ^<'\^»^i^ for a Charter apparently gives no such ^wer ''°' """• '^'^'^' '^^ expert, was engaged^n an 'JL ?!* ?''* "" President, a financial Cent R. Co. w°th ^mLn^ lin "" ^".."'"'"^ '"^"* « "'•^'•S«r of the ' and Place them u^ef the 0,^™"?!° *'''''''«"' «««^«'«- trary to the constitution of the staTe '"' '''™'""' ^- «"- Same— CoMn-Y between the States —r-nr^tf^ i *™ - Syllabus copyrighted. 1892, by West PubHThVco ' 11808— VOL 1—06 M 2 I I 18 50 FEDERAL BEPORTER, 338. Opinion of the Ck»iirt. « Samb— Competing Corporations— Acquisition of Stock.— The fact that the charter of the Cent R. Co., granted before the adoption of the constitution of 18T7, permitted municipal corporations to pur- chase its stocls, would not authorise a competing corporation to ac- quire such stock after the adoption of the constitution. Same— DisQUALiFTiNQ Interests.— The fact that the Terminal Co. has no appreciable interest in the stock of the Cent. R. Co., because of a mortgage on the railroad executed by the Terminal Co.. does not remove the objection to its voting in person or by representative in the election of the directors of that railroad company. In view of the fact that it has large pecuniary interests in two directly com- peting lines of railroad. [Same— Anti-Trust Law.— Transactions of this character are within the spirit, if not within the letter, of the " Sherman Anti-Trust Law." Act of July 2, 1890 (26 Stat 209). See page 2ai In Equity. Bill by Eowena M. Clarke against the Central Railroad & Banking Company of Georgia and others, and bill by the Central Trust Company of New York against H. M. Comer, receiver, and others. Motion by the Central Trust Company to modify an interlocutory decree. Motion denied. Butler, StUlman <& Hubhard and H, B, Tompkins, for the motion. Lawton d; Cunningham, Denmark, Adams db Adams, Dan- iel W, Rountree, Marion Erwin, and A, 0. Bacon, opposed. Sfeer, District Judge. It is essential to a clear understanding of the questions involved in this motion that a brief statement be made of the [SS91 proceedings heretofore had in the equity cause in which the motion is presented. It is also essential to direct attention in the outset to paragraph 4 of section 2, art. 4, of the constitution of the state of Georgia. This clause of the constitution is as follows: ••The general assembly of this state shall have no power to au- thorize any corporation to buy shares or sto(* in any other corporation In this state or elsewhere, or to make any contract or agreement what- ever with any such corporation, which may have the eflTect, or be in- tended to have the effect, to defeat or lessen competition in their re- gpective businesses or to encourage monopoly ; and all such contracts and agreements shall be ill^cal and void.*' The constitution in which this clause is found was adopted in the year 1877. It was evident at that time, and has be- CLABKE V. CENTHAL K. B. * BANKING CO. OT GEOBGIA. 19 Opinion of tlie Court come more plainly evident since then thai if w,o • a- tendencies which conlH n^f u \**^^^^^"ons of power; state, and which threatpn ^^ Lf^' 4. cieated by the dimcull ,0 ,™S, Tn ZZ >■""*"■ " ""M be peth.p, " t Lu cApress m such narrow comnAcc o ««^^ •\' » corporate power more conclusive TnTrhibitrrlffT **' more difficult to evailn K„ fk^ Z ^ inhibitory effect, or to avoid i s iLl W ^ r "'^'^ ^'"' *">' '""^i^^ ^0"W ^k ^al' b1.randTtertnrs fit'/ ^t' ^P" «^- Tht ori^-' to the facts of the cas^^Te Sal Tffect" TT ^"^ ^ '^^'^ provision and, further, to invS hrdol LrfT'*"*^'''^^^ nounced with great force and clearness brir J^^^Z; in the supreme court of the United ^tL .t ^ Central Transv Co v P, 77 , n , ^^^ "^ *•»« <^* of 46, 11 Sup T£; 489; '^'^^ '^"''" '''"• ^^•- ''' U. S. and of no legal effect. The obiectio?. 7n ?i?^'^ """"^y^ ^"^ ^^^^Ily void Further: SS^*'"'^™"- " ~K^?V/a '^o,r^^ ""<» '--«"«« foJtI'lS STofryT'sT^Lr'^ '^^^ ^'^^ - - ^- sign to obtain cZtZi t ■' • ^''^ ^"^'''^ f«™ed a de- CeTtralTaTroTd I Ba^^^^^^^^ "' '''' f^''^' ^^^ o^ the J'^is «>n>pany bat J^'Znt'^:Zt'^r- ^t lai., Its capital stoct is only $r,5"of,(So"Xr Xpl':^^ 9(\ 60 FEDEBAL BEPORTEB, 340. Opinion of tbe C3ourt retaining an exemption from state taxation granted by the original charter the capitalization of the stock had been pre- served at that com- [340J paratively low figure. From this fact it became relatively an easy matter to obtain a majority of the stock bearing the voting franchise. To accomplish this purpose, D. Schenke, Samuel H. Wiley, and Thomas B. Keogh organized, or attempted to organize, at Hight Point, in North Carolina, a corporation bearing the significant name of " The Georgia Company." The charter was granted by the clerk of the superior court of Guilford county, and the business of the company was, as therein stated, ''to pur- chase, acquire, and to hold, or guaranty, to indorse the bonds or stocks of any railroad company in this or any adjoining state; to lease any railroad in this or any adjoining state; to engage in the business of transportation, and to operate railroads in this and adjoining states; to aid any railroad company in this or any adjoining state; ' except building any railroad,' which is forbidden in said statute." The charter does not appear to have any validity. See St. N. C. Acts 1885, p. 70. This appears to be both a banking and railroad corporation, and such corporations can be created by the legislature only. It appears, however, that the i^ersons mentioned in the orig- inal bill, who had bought about 40,000 shares of the stock of the Central Railroad & Banking Company of Georgia, turned over their entire holding to said Georgia Company ; and it was further stipulated and agreed that this stock should be held in a block, with the view to permanently con- trol the management of the Central Railroad and its prop- erties. Thereafter it appears that the Georgia Company deposited with the Central Trust Company of New York its entire holding of this stock, aiid had issued thereon and sold to the public four millions of the bonds of said Georgia Company. In the mean time, by virtue of its majority con- trol, it had taken charge, through a president and board of directors elected in the main by this block of stock, of the Central Railroad & Banking Company of Georgia. There- after the Georgia Company transferred all its capital stock to the Richmond & West Point Terminal Railway & Ware- house Company. This latter company thus came into control CLABKE V. CENTBAL. R w ^ ba^t^,^ JNXBAL B. B. A BANKING CO. OP GEOBGIA. 21 Opinion of the Court (as w dull aUl kt„SZL Vt /^'""' C«mp.„y properties under its control ^^oiaings, m all the the Georgia Comoa^v VI f^'^f' ^ ^"'"^^ '^e bonds of whenevef thrSna rf P"'"**'^ '" '''' """^^'^'Se that Georgia Coi:pn:;"Zc^S7r Tr'^' '" '""'^ '' ^^e in lieu thereof a bond of^t T ^""^' ^^^pany should issue lions of the bonds oftheTtL^nrrol''''"^''"^- ^^'« """- l)osit with the Central r/Tn ^""P^ny ^ere left on de- pose of prZ^Xtl^L^rS): t\^ ^^"^^^ p- of stock of the CenlrXZl/ i^''^' *^« ^2,000 shares cured by the Tem "' n"^' "^^""^ ^^^ "»* ^^t been se- of the 4el ""is aT"^''^*'•^ P^"" !««] voters * Banking Coll.^7cZtrt r ?"*"' ^"^'^--^ pany thus became the tru^'i^for S' T^ ^'■"^^ ^"'■ feature of which was thlZT T ' mortgage, a salient undivided ownt;?; S'theTntltlTar fl '"^'^'^ -'^ controlling rival lines I«rLV, k ^"'^"^"^^^ by a company had been made of a mL if ^> '""'"' *** ^^' ''«' ^^ch this contrac or votinTC*^ °' ^*^ ^^^^^ ^^^'^ ^^ * block by to obtain $S,mltt sS TtZT' ^ -'"P-^te purpo^ $2,000,000. The Termini rl ^^T '* <=°ntrolled for 2,200 kares of stocrwl?7rr ^''^ "^*"^"^ ^'^^^^^^re Central Trust Compa^vanS 'VJ^'^^'^^/^Po^ited with the thus deposited, nvasiTe. T'^'.f *' ^" ^^ '"^^ ''^^' scheme that its voTfnV^ u ^^ ^^^ promoters of the Georgia Co:;;;:^7a^Zrdt:Llt^^^^^ 'V'^ pany absorbed that, by the latter R Terminal Com- Power the Terminal Compa^ ^as^^owThT "' ?" 'f "^ destinies of the fpnfroi i> -i ^ /'as now the master of the of directors t?Cl a S' "' ^^ P-^'^^-* and board aa Decome a directory which was in the control 22 60 FEDEBAL BEPOKTER, 341. Opinion of the Court. oil Uic Temiml Compinj-, .„d, if need be, rmovibie b. it most disastrous results to the immense a^Ttd ^n S which U had thus become possessed. This W atd the proceedu,^ of those in charge of the contro ofthe Centra! Bjilroad * BanJcing Company are attacked byt' oril" bill. A temporary receiver was appointed. While thisTffi cer was proceeding to take possessor, «f fK„ V ! . f\xni^i -D -1 1 f ^ possession oi the assets of the Central Railroad & Banking Company the Georgia Pac fi! and Richmond & Danville Companies threap the leal and formally abandoned the pos^^ssion of all theVrtpert e"' At the hearing of the rule to show cause why the inWi'^n prayed for should not be granted, and the receiver Snted ^uTt rjud^LT"*"" 'T^' *'''""^^ several Ta^^he court (Judges Pakdee and Spker presiding) granted an in teriocutory order appointing i-eceivers to tfkeTS o the properties and assets of the Central Railroad & Bar,ldt' pan es The order directed an election for a board of Wire t ors to be held on the 16th day of Mav 189* 7^1 , • ,' the Central Railroad & BankinllLmiafv' T ""'■"""'' ^vot. of the 42^.00 shareToHoc^rS, XX'^ nunal Company, and held by the Central Trust ("n.panv of New York. It provided, however that in Ml ^^ nhnni/i ki. o <^.. ^ V. , ""n«5ver, r,nai, m case there Should be a transfer of that stock in good faith it niiohr hi C£;srtrr -' -- "- -"••-"-- tha?:rS™'^"ir^ "^"'^ '""^ --' '^ »>-ght to have d^^L T T"^ ^^ '°""*^ ^ «>« «'«<=««« on Mon- day next. The motion mvolves the control of the Central Trust IU2] Company ,s a party defendant to the original CLABKE V. CENTEAL B. E. * BANKING CO. OF GEORGIA. 23 Opinion of tlie Court. bill, and, in the opinion of the court, miffht well h^ >,nU f u b«„nd by .h. „„„ rfj„di».i„, , Ji'„™' ^ «^^ .t lh« h„™g. Th. c»u» b.d b«n continued in L' ™ f "J, «y jonn A. Kutherford, second vice Dre^iHAnf t^v. representations both recite thp ^^a.f /^ PJ^^'^^'^^- The g» ."."ASS K Sf.Sj;S'a '?' "■«•".".•»« any right which it possesses or n^^I/ ^ J'^?^' transfers, and surrenders any part thereof, K?1l,e el^tfnn nf ?? *^'^^*^ "P^" ^^^ said stock or Railroad & Banl. „g Co'Lanv o?pf "'? shareholders of tlie Central at any adjournment theZf 'in favor TA^ ^^-^^'^ ^^^^ 16? 1892 or pany, representative of tliP «i?H . I.*^^, *^® ^^'^ Centi-al Ti^st Com owners of the said ' aU^shZ^s ""^Xl^'^'j '""^ }'.^-' and^uiS)?; of any right to vote upon the sViri If^^T iu ^^ salving this surrender «ents to the court that U has not pnf.^1:,*?^ ^^''^'^ Company reprl^ ga n or understanding of anvkinSoi^n'f^ ^""^ arrangement baT said Central Trust Companr^n rLsneot tn^^ whatsoever with the IW)wer upon the said stock bv JLr^i *^ *^^ exercise of the voting or endeavor to make aiTsuch h«/ "'^'"''y' ^"^^ ^^^^ it will not makf that the said Cenhal TrU Comnn^^^^ «^ arrangement and ent, and untrammeled so fS^Tf.'^t^^^^ ^^e entirely freS, independ cerned, from any direction ^f*.rL. ^^'^ Georgia Companv is con it Of such voting pow^,"' ^"^^^f^r^n^e, or control in the^xerciseX' The representation of the Terminal n only to surrender the voting rlhTbl ''ST"'' ^r^'^'^ Both representations restrict^he traisfefo^ £Z '*"t reserved by the Terminal CompanvLVh. „i . !"? "«''* on Mav 16 1892 nr «f ^^^"".P^^y *<> the election to be held PnJf tlJ I *°y adjournment thereof It i« Hiffl cult to perceive how this instrumpnf H,fl>„ • "' substance from an ordinal p'o^vTh T'"^. '"'*'*'' *»* Georgia Companv of if« rZZ F I' , transfer of the ered W f^ f ^'^^ *" """t^ the stock is not consid erea by the court as material for that „„ . '^"^'" no control over the stook tTlkT ^^mpany has reallv oi over the stock to which a court of equity will pay 24 so PBDEBAL BEPOBTEB, 342, Opinion of the Court any attention. The Geoi^a Company has been whnllv „K Borbed by the Tenninal G^mpany! but Te T^LLa, L™" ST*" *%""'''*' ""^ tra,!sfer of the riJtTvL thJ 40^000 shares of stock in question, and limits its Sp^lta tion to the court to 2,200 shares whi.K it k '^P'^^enta- acquired from ««.,.vw, IT 7^ ' . "^° '* ''^^ presumab y "«I"'rea irom sources other than the Georria f!omn«n« t* follows, therefo.^, that as to 40,000 sha^rhtsS thl condition is preciselv thp ««„-. -» u f, "^"^ '^'*® the Central £SS h^^T • • ''^'" '''" """' *"J''»"«i°'' ''"'^""^ ^* ^"'^^ in vi„l»t;„„ * lu , ''*** *^" purchased and held m violation of the laws and constitution of Georgia But Ic we have seen, the transfer of f343l the T^if^'n relating to 2,200 shares is nothint Lor^ IT ^""P*"^ luii n naiever for this transfer. The Central Trii*;f P^,r. pany of ^ew York holds this stock merely asa^n^ T to secure certain bond*? f«n ^k; Tv ^^^^ ^f ^ "«^ea trustee security W wh! *i^^ u ^^ '* ""^^ P^"^^^^ *^« collateral occuiuj. ixow, When those bonds were k«iia^ fk^ ,t i .1 pledged had attached to it no votinTir.r f \ u'^'^"' the Trust Company or the l^X deThld t'ht ^h^^^^ ^^^\h?^^""'i^ '"^^^' *»>-'- --7^r ? £ aecunty. 1 his transfer eiron if ;* ^t«« ic • ^ieii the voting franchise ffdl the stlToi^a^^^^^ '^ ''^""^ tempt to ingn^ft upon the trust a tC We^S [hrbe^ eficiaries of the trust did not seek, or exoect «f Th„ V^ ^ creation. ' The voting of the sto^kw! '• • ! *.""^ °* '*^ was deem.1 by the cfurt that touTd bZ'atu^"' m'* wrong, the gravity of which cannot well tfoi^^ " j^"'"'*' further deemed to threatAn ih^ « *• foretold. It was .(Kravation of thl Se^ tSr^uTi' h^d^T *^- accomplished. If the Central Trnrf r- ^"^ ^^'^''^^ relieved of any entangleme^lilSe ^XTd Inl ^ r' condition, which the voting power of ttK I * . . *°''*' the iUegal, reckless, and 'SZ^l:^::^:^,^^'^''^ cise, has entailed upon these proDertie-Ttl," ! ' its e^er- then hesitate long tefore it^oSd aS th ^''^ T'^^ ''^^" WJ.S the outcome of the m^i„^; ^ '"i ""'*'""' ^^'^J* "iiie 01 tne most anxious consideration by the CLABKE V. CENTBAL B. B. & BANKmo nr, «™ « iJAJSKING CO. OF GEOBGIA. 25 Opinion of the Court had gratuitouTyiS? tJ'JhrCsT'r '■"" ^^^'"^ ^^^'' which the latter' apparSyt5\Irdti^7-J tje P" in no sense a part of the f«ntr».f ..^^^^^°' ^nd which was the Central Trust 00— /*^ '*' bondholders. But view, a proper ;artyJSlSk" Ttr^"'""' ^" ^^ its own in the stock 7> "c ? ^^^ ''*' "° '^terest of . -any situations J..; eh a^'nr^t'"'^^^^ ^^^^ «- becomes inequitable or i LartrTt K '" '''T'' ''^^' '* Pla<^ the voting Po.erot^XdsLi^lT ,?^ '^" mortgagor, even where therp if . ** P^^""^*" <»• that effect, -^^/..^e^." ^^^2 cLTlfTc T.'t*'" "T y. Thompson, 3 Cranch C C lioa a 7 , ^- "^' ^"^'"^^ or mortgagor' is di^uTlifiedt vote ^ T^'tV'"' P'«^«- cation extends as well to the nW ''^ *^' disqualifi- Holr.es, 5 Cow. 426 1 W^ods"^ Kv^T "" 'T"^' ^^ ^-^"^^ ca-s cited. See, als^, it'^J ^^6 'f ' ''"' V. .'° ''« •=«»- counsel and as it appears fro^^ ^T' '"***™«^ ^y ^'^ millions of the indEd:eJ7/^j^;;;trit^^^ 'T'''''' agent for its creditors r«n if i u . "^* '^' ^'i®"' the debtor? Ifso,itis^"lyp:iiithrt ».*^\'^^"* *"' ^'^^ creditor perceives a debt toT^. .f '''''" *^" «^«"t «* t^e may make default, and th^s^he ? r ' '^'"* ^°' ^'^^ ^^^tor to the block. In s\.at4 tSL ts^TbH^: """'^''l ^ '"•""^'^* tended on this great ^^^JS:^^CS!l^^Z i » I 1^ 26 50 FEDERAL REPORTER, 344. Opinion of the Court. permit conflicting trusts or conflicting interests to be reposed in one trustee. Besides, it appears from the evidence that the accredited president of the Central Trust Company is and has been con- cerned as the financial expert seeking to bring about a con- solidation and reorganization of all the railroads which are or have been under the control of the Terminal Company. These roads operate the competing lines in the state of Georgia, and in the statement of March 1, 1892, addressed by Mr. Frederick P. Olcott, president of the Central Trust Company, to the holders of securities of the Terminal Com- pany, this appears: " In view of the pending litigation affecting the Central Railroad & Banking Company of Georgia, and questions which are before the courts undetermined respecting its existing lease, and considering the legal difficulties attending a consolidation embracing that company, the committee has found it advisable to make no provision for the present for taking up the outstanding stocks or securities of the Cen- tral Railroad & Banking Company of Georgia, but the interest of the Richmond Terminal Company in these stocks and securities will vest In a new corporation, and form a part of the security on a new first mortgage bond." The East Tennessee, Virginia & Georgia securities will be covered by the same mortgage, and the two roads will be under the same control. Can it be denied that this avowed purpose would have the effect, or be intended to have the effect, to defeat or lessen competition, and to encourage monopoly? And yet with the voting power of this stock in its control the Trust Company can accomplish this result. Not only is this true, but if it be competent for the Central Trust Company to operate one railroad system of which it holds securities, if a few words from the mortgagor, trans- ferring the voting power of stocks pledged with it, can give it control, what it may do with one road it may do with another. If it may vote the stock of the Central, it may vote the stock of the East Tennessee, Virginia & Georgia, the Louisville & Nashville, and all the others, and thus the railroads of an entire section may be the playthings of the officers of this corporation. Surely this may tend to defeat or lessen competition and to encourage monopoly. But whatever may be the powers of the Central Trust Company elsewhere, it certainly cannot exercise such powers as we I CLAKKE V. CENTEAL B. S. & BANKING CO. OF GEOEGIA. 27 Opinion of the Court, have described within the state of Georgia. A corporation of this state could not do so. Comity between the states authorizes a corporation to exercise its charter powers . within another state, but it does not permit the exercise of a pow-er where the policy of [345] that state, distinctly marked by legiSative enactments or constitutional provi- sion forbids It. Bunyan v. Coster, 14 Pet. 122; McDonoqh V. Murdoch, 16 How. 367; Marshall v. Railroad Co, 16" How. 314. ' It is said, however, that, by the charter of the Central Rail- road & Banking Company, other corporations mav own stock in that company. It is quite evident that the language upon which counsel for the movant rely relates to corpora- tions of the classes mentioned in the charter. The cities of Macon and Savannah are mentioned, and other corporations are authorized. Under a familiar rule of construction, thic would seem to mean other municipal corporations. Be this as it may, if any other corporation had not purchased the fit. 5' constitution of 1877, such other corporations cannot since then buy it, or hold it on anv contract or agree- riav! t^rff ''f'f'ff^' h'-« the effect, or be intended to have the effect, to defeat or lessen competition or to en- courage monopoly. This would be especially true of a non- ^sident corporation, which, when it enters the state, does so with submission to the settled policy of the state. The court recognizes the soundness of the authorities cited by the ZTh TT'^l ^^^ '"''^'*"* '" ^'•^'"^"t- It i«' however, trn! tV. . S^ •""* 'PP'y *^ " ''^^ "'^^ this. It is perhaps true that there is no precedent precisely pertinent to the grave issues presented by this controversy. They have sprung into existence because of the marvelous railroad development of the country, and because of the ease and facility with Avhich a trust owning a bare majority of the stock of a cor- poration can nullify and deaden the vote of all the minority stock, however great the minority, or however rightful and intelligent would be its exercise. The alarming effect of this power may be illustrated by the facts of this case. Fortv thousand shares of stock have deadened the votes of 32 000 IS I" T '"'"troUed as many millions in values. These 40,000 shares have been deposited, and bonds issued thereon' 28 50 FEDERAL BEPORTEK, 345. I: Opinion of the Court If tlie voting power of the stock is apportioned among the bonds, 20,100 shares may control the policy of the entire block and these 20,100 shares may thus control all the millions be- longing to the Central properties, and yet stockholders who have 32,000 shares have no voice in the management of the properties, in which perhaps their all is invested. Even where individuals form a combination to control the majority stock of a corporation, and agree not to transfer their shares to the opposition or not to vote against the com- bination, such contracts have been held to be void as in re- straint of trade, and against public policy. Ordinarily any stockholder may withdraw from such a contract, although it is expressly agreed that it shall be irrevocable. 1 Beach, Priv. Corp. § 305, and cases cited. It is insisted by the petitioners that the Terminal Company has no appreciable interest in the stock of the Central Rail- road. The interest it formerly had was conveved bv the mortgage of 1889. The bonds executed under thai mort<^ffe and secured by the Central stock, have long ago been'sold' and the proceeds appropriated by the Terminal Company But that company has a substantial and large pecuniary in- terest in the [3461 Richmond &r Danville and the East Ten- nessee, Virginia & Georgia Railroads. These roads are the natural competitors of the Central. Is it surprising, then, that the Terminal Company, controlling by this "Voting trust " the management of the Central, should make the road m which It IS not interested sutfer for the benefit of its rivals which It not only controls, but possesses? It is not difficult to perceive that a combination of corporations which produces a condition so inequitable cannot be sanctioned by the law We believe 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 liaw." Act July 2, 1890, (26 St. at Large, p. 209.) It certainly is, as we have seen ob- noxious to the law of Georgia, and it was certainly as obnox- ious to the common law. The baleful effects of such an un- lawful scheme have been most significantly illustrated by the record itself. The property of one of the oldest and most renowned railroads in the United States has been brought to the verge of ruin. These stocks were once so solvent and { CLABKE V. CENTBAL B. E. 4 BAKKING CO. OF GEOBGIA. 29 Opinion of the Court. - reUable that trust estates, the property of widows and o^. phans, of charitable and eleemosynary institutions, were in- vested in them, at the will of the trustees, without an order of court to sanction the investment. The properties have bom impoverished in every department. Skillful artisans and mechanics, who from their apprenticeship have been in the service of the companies, have been turned away. Vast muldings which were once musical with the whirr of machin- ery and the voices of prosperous and contented workingmen earning by their useful and valuable labor a comfortable Jivelihood, are now voiceless. The ashes sleep undisturted on the forge, and the hammer rusts on the anvil. Merchants and tradesmen who have depended upon the purchasing lM)wer of these operatives have been threatened with ruin • numberless houses once occupied by their happy families are now vacant; and those whose all is invested in the securities of this company are haunted with the expectation that the hanlT'' f "'*, "P"" ''' obligations, and be sold under the hammer on foreclosure, and the provision made for their de- clining years swept from existence. But this, and all of thi. IS unimportant, compared with the greater interest of the Tttr T "^'J*?' ^'"'"''^ ^''^ *'^« corporation created by them and granted vast and valuable franchises, shall be managed as a railroad upon lawful business prindple in aie ransportation of freight and passengers, and for the development of the state, and that it shall not be the toy S the speculator, and that the franchises which they granted for nobler purposes shall not be made the instrument S thS s^i J^^""^^*'"" «* th« «tate. The possession of ij stodc does not give uncontrollable right in the management cornon V^r'^^'r ^'^^ ''^^' «f the state that the corporation should conform to the purposes for which the law created it is wholly paramount to any and all rights S stockholders. It may not be doubted that the values repi^ sented by these 42,000 shares of stock are entitled t^The^^. tection of the court, and they will be protected. When ftl^s offered to vote them with the ligitimate purpose for wMch Uie majority of shares of stock in a corporation may be law fuly voted, at the instance [347] of parties who havVCl authority to hold and vote them, they will be voteT The 30 50 FEDERAL BEPOBTEB, 469. Till 1 I Byllabvm, court will be, moreover, happy to entertain any proposition for voting them which wiU result in the management of this road m such manner that it need not be wrecked ; in such manner that its matchless properties may be utilized to pay Its obligations as they mature, and to protect its values. It is weU understood by the court that the mere fact that this stock may not be voted in its present illegal status is a menace to the credit of the Central Railroad, and to the power of the court and of its receivers to redeem it for the benefit of all concerned. We have no doubt that, properly managed in accordance with the law, with the encouragement of those who are friendly to it, which its great importance deserves, the Central Eailroad & Banking Company cannot only pay Its obligations as they mature, but rehabilitate its fortunes, imperiled as they are by this illegal trust voting a majorty of the stock, the exercise of which the court has enjoined. Th.- court is quite as solicitous to protect the interest of the credit- ors as of stockholders of this great property, but there is nothing in this motion which will justify the court in chang- ing the order, which was mainly, indeed, we may say abnost wholly attributable to the wisdom, experience, and acumen of the learned circuit judge; an order intended to preserve the property for the present, to gather anew its dissipated assets, and to restore it as speedily as possible to the lawful charge of those who may be found legally entitled U> its management and control. Let an order be taken, denying the application. [469] UNITED STATES v, GREENHUT ET AL. (District Court, D. Massachusetts. May 16, 1892.) [50 Fed., 469.] Illegal Tbusts and Monopolies— lNDiCTMENT.~Act Cong. July 2, 1890, (26 St p. 209,) " to protect trade and commerce against unlaw- ful restraints and monopolies," provides, in section 2, that " every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons to monopolize, anv part of the trade or commerce among the several states, or with foreign nations, shall be deemed guilty of a misdemeanor," etc. Held that an indictment thereunder which fails to allege that defendants mo- nopolized, or conspired to monopolize, trade and commerce among UNITED STATES V. GBEENHUT. Opinion of the Court. 31 fvLThShirroes'a^^ t'^tt ""T^' ^^"^ '^ ''^'^ - o^-- monopolize t^etTmlT^^^^iTL'^ '"*'^" '''' ^''"^ ^°*-* *<> and that they have destrov^ i "^'"'^^ ^™^°^ ^^^ ^^^^^^^ «t«tes. Of the statesf and inerea^^^^^^^^ *" ^"^^ *^^«- '^ one na mcreased the price of distilled spirits therein.* fof ti'^ion'^rttr "' -"""^^ ^- ^'^^-' -<* °tte^ quashed ^^^ "«"''*^* monopolies. Indictment Frank D. Allen, V. S. Atty. Nelson, District Judge. This is an indictment under the second section of the act of congress approved July 2, 1890, entitled " A^ act tZ the defendants ate Mce^^'^rt™^?,,"*^ '""^^ *** the UnitirSatef and w vr '"'^^'^^ '^'"'^^^'^^ within -naged,toSL'd fndlSelS d£ ^^"^'^'; ""**' nfactured sixtv siv mill; " n . distilleries, and man- sold the prSt litS Xe VnZ t f ^*'"^' T'*^' ^^^ district of Massachui, at S fSo^'firdV'.? '° *^ whole being seventy-five ^ c^rofaS^h^l^letr' '1" manufactured and sold within the 1^11^^*^ J -P'"*' period; that all said acts (excent tW ,, *^ '^"""S the of the distilleries) werrdteTtl !lf "'f '?^ '"<* '^"^^"^ to the company the ZlZu:ZT:^1^2mT'^'T MassachuseL and Tf S 1^^ 1":"'/^ "*"^"^ '' 32 60 FEDERAL REPOBTEB, 470. I ii Opinion of the Court, imts, as such officers, agreed with D. T. Mills and Co and ottier dealers in Massachusetts thai, if such dealers would buy all their supplies 6f distilled spirits from the company for SIX months, the company would give them a rebate of two cents a gallon on their purchases; that by means of the rebate nijreements and by their control of the distilleries, and of the manufacture, sale, and prices of seventy-five per cent, of all the distilled spirits manufactured and sold in the United , States during the period named, the company, and the de- fendants as its officers, had made large sales of distilled spirits to D, T. Mills and Co. and other dealers in Massachu- setts at prices fixed by the defendants in excess of the usual prices at which such spirits were then sold in that state, such spirits having been manufactured in other states, and trans- ported therefrom into Massachusetts, and had unlawfully monopolized to said company the manufacture and j^ale of distilled spirits, and had increased the usual prices at which distilled spirits were then sold in Massachusetts, and had lirevented and counteracted the effect of free competition in the price of spirits in Massachusetts, and had exacted and procured great sums of money in said district from D. T. Mills and Co. and others. To this indictment the defendant Greenhut filed a motion to quash, and the other defendants demurred, upon the ground that the indictment is insufficient m law, and does not charge any offense created by any statute of the United States. The second section of the act is as follows: i«on.MZ^r**^niI^ Sf " »^^"?r»t»»«' «'• attempt to monopolize, or ^^ nSff nf H??!?,'*'^^*' ^"^ ""^^ ^'•***'° ^"^ I^'^^"^ to monopolize SSIiS! Ii "*® *r?,^u'*'' «>'»™^rce among the several states, or with !lSf 52!^^ T'u^^ ^^^"^ ^•^^' ^f ^ misdemeanor, and, on ^n vlrtfon flwreof. filiall be punished by a fine not exceeding five thousand doUars, or by imprisonment not exceeding one year, or by l^th aaW punishments, in the discretion of the court?' » w oy ootn said An indictment framed under this section should contain a distinct averment in the words of the statute, or in equiva- lent language, that, by means of the acts charged, the defend- ants had monopolized, or had combined or conspired to mo- nopolize, trade and commerce among the several states or with foreign nations. This indictment contains no such aver- ment. It does not charge that the defendants entered into any unlawful combination or conspiracy. Nor- does it con- m BE COBNING. Syllabus. 33 tarn any averment that they had monopolized trade or com merce among the several states [471] or with forpi^n Ti It avers merely that by means of tL 7^*" ^f^^^f^ nations. monopolized th'e manuCur anV t^^^ that the defendants have done certain things with intent^ monopolize the traffir. in ^;^4.;ii j • • ^ intent to whether the acts char^edrnl w ""P^^tant questions within the n^ealto/ heTtu : a^S '^'^^"''^"'o^T'', congress has the constitutional aithork.: ! i T ''"' ^'''*'^^'- to be unlawful and Prim;^ i j"*''°"*3' *» declare such acts against the Sentry ^^Jt :^^^^^^^^^^^^ poration than of its officers. In^et'd t teT '^' '''- IS only necessary to remark th.ttf ^ questions it character as to requlr^ Zt fJ,l V 1^ ''"" *^ ^ ''^ ^"«h a against the govS^ent bv 1^1 f 7^^ °"* ^' ^''^^'^ fi"«»y -ved for tie ^Zln^^ oTtZ',^^ ^^^m be re' presented upon an indi..tmJf ,''^^fPP'^"ate court, when law. Indictment quashld?/ °"'f "'* insufficient in quashed. Judgment for the defendants. f*«5] iif Kjj CORNING ET AL. UNITED STATES v. GREENHUT ET AI. (District Court. N. D. Ohio. E. D. June U, a892.) " [51 Fed., 205.] AfoNopoLiES— Criminal Taw t.. USOg-voi, iJoe M— i "'°"°P''"«s. averred that defendants, 1 51 MDEBAL BBPOBTIB, 105. i Syllabus. to pursuance of a combination to restrain trade In dlstlllerr Drod- ucts between the states and monopolize the traffic therein, acquired by lease or pun^hase. prior to the passage of the act, some 70 dis- n r/rj*?'"'''"'^ **"* "'"•'**" °' *"« distillery products of the Cnlted States, and that th^ continued to operate the same after the passage of the law, and by certain described means sold the product at increased prices. Held, that no crime was charged in r^pect to the purchase or continued operation of the distlUeries, ^» Hrir?" "" '"'*""^°' *"* lete^lants obligated the vendors o^ the distilleries not to build others, or to withhold their capital or experience from the business.' « «^»piiai or Same -The Indictment further averred that defendants. In pursuance of the combination, shipped certata of the products to Massachu^ »ette, and sold them there through their distributing agents to dealers, who were promised a rebate of five cents per gallon on their purchases, provided such dealers purchased their distlllerv products exeluKlveiy from the distributing agents, and sold them" no lower than the prescribed list prices, said rebate to be paid when such dealers should sign a certificate that they had so purchased and sold for six months ; and that by this means defendants had controlled and increased the price of distillery products In Mas.sachusetts. Held, that no crime was charged with respect to such sales, since 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. , Cbiminal Law— Pedebai. Cobiits— Removai op Prisoner— On an application to a federal court fbr the removal of a resident of the district to a distant state and district for trial, it is the duty of the court to scrutinize the indictment, disregarding technical defects but to refuse the warrant If the crime alleged is not triable in the district to which a removal is sought, or If the indictment fails to charge any offense under the law. At Law. Indictment against Joseph B. Greenhut and others for violating the law against monopolies. Heard on application for a warrant to remove defendants to another district for trial. Denied and prisoners discharged. Allen T. Brinsmade, Dist. Atty., for the United States. Elihu Root, Thos. Thatcher, and S. E. Williamson, for defendants. • See U. S. V. Greenhut, 30 Fed. Rep. 469 [ante p. 30], for a decision In the district court of Massachusetts on motion to quash. • S.vllabus copyrighted, 1892, by West Publishing Co. IN BE COENING. Opinion of the Court. Ricks, District Judge. 35 This cause comes before me upon the application bv the district attorney for a warrant for removal to the district of Massachusetts of Warren Corning and Julius French citi zens of this judicial district, against whom is pending an indictment preferred by the United States in Sie disfrict court for the district of Massachusetts. A certified copy o1 UniLdST ' *"^''^" '''V"" ^^'"™ "^ ^- J- William's, a S ?hat /r.'"?"'"''" ^"^ '^' "'™^* ^''•"■t of this d s- trict, that said defendants refused to give bail, and were bv him committed, is filed. The defendants object to thel^nt ing of a warrant for removal, because the indictment d^ not charge an offense against the laws of the UntTd Stat^ B«ng residents and citizens of this judicial dis rL tS [206] claim the right, upon this application, to cha'lWe the sufficiency of the indictment, and insist that it is the dT of the district judge, before ordering the removal o? a cittel o a distant district for trial, to scrutinize the ind^cW and to refuse the warrant in case it appears upon the faTof MlontdS? ^''''"*"'^ '"-^ '""^ -^--* '>* --oval. Jute the prScre"" T^hfrnl^Xon^'r '? ^"^ ""''^^'"^ <^'«-ed for It in of tim government a MindlmiZt'i'T,''." " "^'sh Judicial officer vast extent as ours."it is not a HgM mX^; /" " '^'"'''^ «' «'^h offender, and, ou the mere order of nninf^;*^"^ to arrest a supiwsed hundreds, it may be thousand^ Ll ,'"«"0'" magistrate, remove him provides the Previous sanet on if th^dfstr^l' V' ''^^ '•''^^ ^'^^ Mere technical defects in \n!„^fJz ^'^''^'et judge to such removal a dishict ^«lge Who srul^oS'tte^rL^ovTof"".* "^ -^^rdeS^ but lue lemoval of a prisoner when the r 36 51 FEDERAL EEPOBTEB, 206. Opiuiun of the Court. IN HE COENING. 37 I only probable cause relied on or shown was an indictment, and that In- dictment failed to show an offense against the United States, * # ♦ would misconceive his duty, and fail to protect the liberty of the citizen." Ordinarily, where an offense charged was committed in the district 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 different districts, and the accused re- side in other and different districts, the government has a right to elect in which one of the districts the prosecution may be conducted ; and, under proper conditions, may elect to prosecute them in a district other than that in which they or either of them reside. There may be exceptional condi- tions which would justify prosecution in a district remote from that in which any one of a number of defendants re- sides, or far remote from the district where the principal busi- ness of the accused is conducted. But the spirit of our laws is to indict and try offenses in the district where the defend- ants reside, if the offense was committed in such district, and if local influences and prejudices are not too serious ob- stacles to be overcome. I am moved to these remarks because it appears in this case that, if the indictment sufficiently charges an offense in the district of Massachusetts, a similar offense was committed in almost every other district of the United States, and more flagrantly in the district in which some of the accused re- side, and in one of which several of them reside and conduct their principal business. It appears from the indictment that one of the defendants resides in the southern district of. New York, where [207] many transactions similar to those averred in the indictment take place ; several reside in the southern district of Ohio; several reside in this district; and several reside in the northern district of Illinois, where the corporation was organized and has its legal residence, and conducts its principal business. In each of these four dis- tricts similar offenses were conamitted. These are not stated as reasons why they should not be removed for trial, if, in fact, a sufficient indictment is pending against them in the district of Massachusetts, but rather as justifying a closer scrutiny into the indictment than if the Opinion of the Court. only offenses committed were those alleged in this indict- ment, or the district of Massachusetts was the only place where the strong arm of the law could reach them. Does the indictment charge an offense under the act of July 2, 1890, known as " An act to protect trade and commerce against unlawful restraints and monopolies ? " The first section of the act declares illegal " every combination in the form of trust or otherwise, or conspiracy in restraint of trade or com- merce among the several states, or with foreign nations." The second section declares 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 for- eign nations, shall be deemed guilty of a misdemeanor." The indictment alleges that before the enactment of the law in question the defendants, for the purpose of monopo- • hzmg and restraining the trade and commerce in distillery products among the several states of the nation, combined with others, and purchased or leased or otherwise obtained control of 70 distilleries, which had theretofore been com- petmg, separate distilleries, and so operated them as to pro- duce 77,000,000 gallons of distillery product, which output comprised about 75-100 of the total production of the dis- tilleries of the United States; and that the condition of trade in such products during the period charged was such that the defendants, by means of their combination, were able to prevent free competition on the actual price of such prod- ucts, and thereby control the price, so as to augment and in- crease the price thereof to consumers in the district of Mas- sachusetts, and to restrain trade therein among the several states. The first count of the indictment alleges a combination on the part of the defendants to restrain the trade and commerce in the district of Massachusetts, and between that state and other states of the Union, in distillery products, of which it charges that defendants produced 75-100 of the entire pro- duction of the United States, and avers that on October 3, 1890, they sold to Mills & Gaffield, in Boston, 5,642.82 cal- lous of alcohol, said alcohol being part of the product of s^'aid distilleries, and made in Peoria, 111., and intended to be trans- If k4- 38 81 FEDEKAL BEPOBTEB, 207. Opinion of tlie Court ported and sold to said Mills & Gaffield in Boston ; and with tlie intent to restrain the trade therein they fixed the price at which said Mills & Gaffield should sell the same in the dis- trict of Massachusetts, or for transportation to the other States, and did compel said Mills & Gaffield to sell said alco- hol at no less price than that fixed by the defendants ; and, by reason of their com- [208] bination, said defendants did control the amount of said products sold in said district or for transportation to other states, and did counteract the effect of free competition on the usual price at which said products were sold in Massachusetts or for transportation to other states, and did increase and augment the price at which said products were sold in said state, and- for trans- portation to other states, and did thereby exact and procure great sums of money from the citizens of said district, and thereby, and by other means to the jurors unknown, restrain the trade and commerce in said products, between the state of Massachusetts and other states of the Union. The second count charges the defendants with combining and monopolizing to themselves the trade and commerce in distillery products. It charges, in the same terms set forth in the first count, the purchase and lease of 70 distilleries, controlling 75-100 of the distillery products of the United States, which distilleries had been before that time compet- ing producers; and with the same purpose, to monopolize the trade in said products, they made 75-100 of the entire output of the distilleries of the several states ; and with the intent of controlling the trade and price of said products in said state of Massachusetts, and between the several states, and of monopolizing the trade in said state and between said states, did, on the 18th day of September, 1890, sell to C. I. Hood & Co., of Lowell, in said state, through Webb & Harrison, as distributing agents for defendants, 526.52 proof gallons of alcohol, and with intent to monopolize said trade did then and thereby promise said Hood that if, for a certain time agreed upon, said Hood should purchase exclusively from the defendants his supplies of such goods as defendants were then making, and during that period should not sell such goods at any lower prices than the list of the defendants' dis- tributing agents, and should subscribe to a certificate that he IN BE CORNING. 39 Opinion of tlie Court had purchased all such supplies from defendants, and had not sold the same at prices lower than their distributing agents had sold the same, then defendants would return to said Hood ^ve cents per proof gallon on the goods so pur- chased by Hood. On September 23, 1891, Kelly & Durkee having purchased from said Webb & Harrison, as distrib- uting agents of defendants, 85.54 proof gallons of alcohol, said defendants, with intent to, and in pursuance of said at- tempt to monopolize the trade, etc., did at Boston, on said date promise Kelly & Durkee that, if for the period agi-eed on they purchased exclusively of one or more certain dealers named, their supplies of goods then made by defendants, said dealers being then distributing agents for defendants, and should not sell such goods at any lower prices than such dealers list prices, which said defendants controlled and hxed, and should certify that they purchased all their dis- tillery products for said period from some one of the dealers so named by defendants, and had not sold any goods so pur- tTtV,'"^ lower prices than said dealers' list prices, with fl^ 1^1 Til ^^'^' *^^^ '"^^ defendants would repay to said Kelly & Durkee five cents for each proof gallon pur^ chased; and that defendants, in pursuance of said comC tion did make other promises to Hood, to the [209] same effect, and also to Kelly & Durkee, and did thereby, in the way charged, attempt to monopolize the trade in said prod- ucts^in said district, and between the several states of the tr2\if'^ """"^^ '^''^'' ^ combination in restraint of trade, alleging a transaction with Hood on October 2. 1891 mvolving purchases by him of 518.81 gallons of distillery' Lerrefi^Th '''T"''''''' ^"^stantially the same as nrom^JV ^T'^^ ^"^^^^^ ^^^^ defendants rXT if' "^ "^"^'^^ ^'""^ '^' ^^^ ^f ^-i^ Purchases, a lebate of five cents per gallon, upon conditions similar to those averred m the second count, and averring divers other similar contracts with Hood in the said district. 1892 J^^ r^^ "T^ "^""^ *^"* ^^ ^^' ^^^ dav of May, stramt of trade and commerce in distillery products amon^ the several states, and especially in restraint of radra;! I I* *" 61 FEDERAL BEPOBTEB, 200. Opinion of the Court, commerce in Massachusetts and other states with Tr^ii^ a D«rkee, which cou.i-act was. in subsSnS ^h^t J^ tK ^ pose of ring the continuous itona^; "u^eUir Kelly & Durkee five cents per proof gallon of defendants" products then purchased, upon conditio^ that sad purchased or their successors, from date of voucher or purcharto tiZ ofpayment, shall bu, exclusively slh kindTg^l^tre produced by .lefendants from some one of their aZtl de^^ nated, and shall not sell the same at prices WMha.fsafd fenEs "V"""'' r' ^'^"" ^^'"y ^ that eject, sdde fendants acting i„ the name of the Distillery & Ca tie Feed t7th?r.- ' ^".'^ ^"^ *'*« 22d of SeptLber 891 up nifr: tijfot *'n "'"*"^"*' ™-"f-'urers of said 'd^s' iiiiery products withm certain states of the United «;t«to other than Massachusetts, and the kind of gLd^^ftrod to m said contract being distiller,^ products, satd Ke«y & d* kee hsLvms on the ^airl 7th r?«,r ^* njr V^ ^ "^ tlie condifL« ^r 1 : ^ ""^ ^^^ complied with all cue conditions of said contract The first, third and fnnrfi, coinits are based on the first section of the act and cC^^ a corobmat on and consnirnnv ;^ .. , x ?' charge the second count chr^TUbn^i to '"''' ,"'"'^ paj of the tn.de in disTille; Sees SwlTeT ae^ '' struZ^'"'^ *" '''^ '"**'*'^™»* *•»« »>"«dest possible con- struction; giving to the facts therein set forth nnTV ?u acts committed the meanino- ,,.^JV set torth and to the *;-.„ 1 . • . 'neaning most favorable to the Dro<«vii tion,_what IS the offense charged? It is th.ttLiT^' ants, prior to the act of July 2 1890 hv I. !'"^" acquiml some 70 distillerts fhm Sl'.t fh »•• Purchase, ^e Union, and from themTr:;3^;^i,^0rS^^^^^^^ dS ""^"T "'"^^^ *''™ '^«''^*>'"t-d 75-100 of the endre distillery prorI„.,ts of the United States and tW th! tinued to operate said distilleries nn th. ' ! ^'' *'°"" nfto, *i, 4. 1 u'-iiiienes on the same extended soiIp after the act became a law • that narf ^t tu "=""«" scale •hrough their distributing aiJtstoH .^ <^,«f««dants, setts, under a promise on^heC 'of thet? '." ^T'"" said dealers should purchase their dtnf"^' '^'' '* clusivelv from the f'lOl dlt.iK ! ^'^"^^^^y Products ex- . om ine i,i«j distributing agents of the defend- IN BE COBNING. n Opinion of the Court ants, and should sell the same at prices not lower than the list prices of such distributing agents, and should at the ex- piration of six months after such purchases certify that they had so exclusively purchased from defendants' agents, and had so sold at the said prices, then defendants would pay to such dealers a rebate of five cents per gallon on all their pur- chases. The indictment avers that the price at which said products sold was higher than had before that time pre vailed, and that by said arrangement defendants controlled and augmented the prices of said products, and by said nieans exacted and received from the people of the district of Massachusetts a large amount of money over and above ttiat usually received for such products. These are the substantial facts relied upon to constitute the thT'n ?u ''""■''^^* '' '"'«'^' *•*'» ^^^ "^"'il particularity, that all this was done in pursuance of a combination to re- strain trade between the states, and to monopolize to the de- fendants the traffic in the several states in distillery products, tTon Ir ^ . ? '"''".' ""** P"'"P"^'' *° <=«""•«• the produc- tion of said articles and fix the prices at which they should be sold. But It IS not sufficient to charge an unlawf.fl intent Lr.inT'f t ^°'"''"^«tion or a course of business is in lestraint of traae, or a monopoly of trade, in order to consti- stated. A combination of act and intent is needed to consti- tute a crime. No averment of intent alone is sufficient- neither is any amount of act alone; the two must combbfe ' Assuming an unlawful intent and purpose of a combina- tion to restrain trade and monopolize traffic in those dltillerv products, as charged in the indictment, do the acts s f oS «ute such restraint and monopoly? In what re pec the fl«r T:^r ^ '^^""■^^^' ^^^t™'" t-de or monopolize the traffic in distillery products ? These terms, as used in the mon laT^"; -''er consideration, are well definerft'om mon law, and must be considered with reference to such ^tabhshed meaning. The indictment was prepared w th g-eat care by the district attorney of Massachustttrand t Z t\ uT""^ *^** ^" ^^' *=»'«''ged therein all the acts suming this to be true, the indictment is significant in what U ill I 51 FMBERAh BEPOBTBB, 210. Opinion of tlie Court they obligated tZtn^TotZtZ' '.k"' '' **'^''"--. not to continue in the dS^ t S "^ I'f "^"-' - not averred that defendan^^ttf^Tf -^ ^''^ *"*"'*• It is the ve„d„, to withhSdri;is o "sy7or "'•'•"•^ m the biisuiess from the nnhl.v : 7u i ""^ experience ■ averment that the drfenSants ' L '"*"'^- ^'^^''^ ^^ •»« attempted to control th^S "s ofthTrra'/ninf "Z ^''^t' of the distilleries in the United Stef J ^ **"* *°"'^ tempted to limit their outDut 1 ^ ' "'' '" '"^ ^"^ «*- control the price at wLnhetnL^/^""""' '^^^'^ *»>«"> any degree LtraintS tiTdef "^Stlf. "^ r'*^' ''^ " which their trade should extend -k^ n^ ^"^^"^ "ver ments in this respect is that tefn-TK^ , "^^ "' ^^^ ''^^'- congress the defend- ISUjlntZ fj' 'T'^"' ^''"^ ^^ own capital three foirthV oT h! ?^^.f "^"''"''^ ^'"» ^''^'^ States, and that they prSuli^^t^'i^"«^ >« *»>« Unit«l 1-y products, and soId'S^tro^'r'r^hf ""t f t"'" several states at the best possible priL Ind Th"??!' "^ '^' tinued so to own and operat* said H wn i """^ **^ ^'n- their products, after the p™ t ^ of S'T' ^^^ '" '° ^«" without any attempt at an^ Z hV f ''• ^^'' '^''^ '^'^ production of the ^other "fst^^^^^r, ™^' .*» «>n'-I 'ho they should sell, or without any J^^^^^^^^^ 'j. -hich m any way restraining trade tZ n 1 , ""'' "^'^^'^^^ my judgment, wholly fey, to cSr^ ""'"'' •''^'•^*"^^' '" purchase of said distUleS or tfe" ^H' '° 'f'^ *^« products before the passage of J"'^ ""?""f««t"re of distilled as they are charged witEtin ,1 f " ^on-^rn^-J, or so far wiU unlawful iTt.n^ZTZTZ^ «- and ope«te them -le of^'^ir^r^jrif;;: :"^*^f-Sortation and charged, consC t "if ^ ^ TH «' Massachusetts ^ this respect, as averred areTa ^ J ". ^''^^''"tial facta in ucts in Massachu^ttrthr^ugh dSXt: "" ^^ P^^' ^TiiotTn Ti? x-psr ;3 o-^ -st; Chased their distil^ ^'^ts^^u:^ ^.^TefS IN BE COENING. 43 Opinion of the Court, ants' agents, and provided they sold the same at prices no lower than the list prices of such agents; and said re- bate was to be paid when the dealers should sign a certif- icate that they had so exclusively purchased from defend- ant* agents, and had so sold at prices no lower than the list prices of said agents The indictment in these averments IS again significant for its omissions. It fails to charee a contract on the part of the dealer that he would not purchase distillery products from other distilleries, or any nrlUT r^^ P?"* ^^^^^ '^^^^ t° ^^» ^t defendants^ prices Such dealers were offered the rebate as an induce- ment to purchase exclusively from the defendants, and to sell at the prices defendants fixed; but there is no con^ to do so. In what respects, then, are these acts char<^d differen from the customary efforts of manufacturers or dealers to increase the sale of their products and push 7h^r busmess by the many artifices of trade « There are no contracts averred, as between the defendants and their customers, which are in restraint of 1^^ The t acts are rather intended to increase their trldebuJ^'^'^ ofherf if r^ *\' "f ^*^ "^ '"^^ -^^-- to dea?luh nnf\ i^ fK ^'^^^^^^cts are illegal and in restraint of trade we?i L^"^ '"''''''".*' " ™^^"P«ly "^^-^ this act, it may well be denominated an act to rPQfrai,. i •^' 1 ^ ucts as se f .K™'""'u"^ "^""^^^ ^1«« of their prod! ucts, as set forth m the indictment, the act i, ZZ. sweeping m its provisions than ever contemplated L gress, as manifestly appears from Th/rw • .. ^ *"""" 1 JSBUllBl Jl , y illrt 61 FEDERAL BEPORTEK, 212. Opinion of the Court or devices, restrain others fm™ «. • . or deprive the pubHc W el'^ "!f ^ '^' ^"""^ ''"«"e^. fr«e use of capital In IdTn "? "'' '^dr^inUges of the "n therefore of th o^ion thZrrf. "^ '=*''"P««t°-- I the defendants made fte sal^ of . ' T"""'" ^" ^^^^^'^ Star *•" -' ""* "' ^'^-n^i^^^^^^^^^^ f- of trade or monopoly shown, and there i,.T • '^^*'""nt charged. The indictment is rerefo^ " "^"T'*"**''^ "'• ieries or as to the sale of their products *^'^*'*- n was contended by connLj tu / ^ • -ched the state of 4^^?^ 'th^^L*"^ "^"'"''^^ owned and held bv th« «q«*o j ! ' ^ became property «tate, and what was donfSV'"^^ '''' laws of thai that Stat* did not iS^^a^ iaytlaTet ''"'^'''^ '""'''''^'^ i° states, and therefore the ^ 0^. commerce between the apply to such sales. It was furCSTh^f T *" '^"^ ^° tended to say that the acauiskl.7„71^ >*' '* ''""^^^^ in- chas^or lease, bythedeJSlrfoStf/'""'^^'''^?"- « crmie, such act was rniconstSi™.! I ''^ "^"^ P*^^'^**' ^^^ its character. It w^^° fhl ' ^.'*"* "* ?'''*^ A''^'' in -eant to define LZo^^;^:;^':'^;'^'^' '' '=""»-- the acquisition by the defendant of tf' "' " *="■""- distiUeries alleged in the iSiT ? . ^"^^ ""^ber of or cont^l was U^in'^sttil Sv" ''^ ''""^^^'^''' then congress exceeded its powe,? Id suctj T'' V"'^' I have not deemed it necessarvTo Jl ''*. '' ''°'^- ^ut I have ca^fuUy considrXfl ^hractsTnH *'? r^"^'^^- binatjons set forth in th^ ;L * ^""^ unlawful com- Wh counts, 2, L tL "etlt " *^/"*' *'^''-'^' -<1 satisfied they are ins^ffi • nt tT ^T""^^^' ''^'^^^ ^ ««» prpri K,, tu c ^ 'iisumcient to make out thp r...;^„ ered by the first section of the act vi, „ l "^ '^''■ form of trust or otherwise or!.^!:.^ ' •="™^"»«tion in the or commerce amongThe ;e;e^rftr^ '° 'f*™'"* °^ ^^^^^^ word "monopoly "1tri,mmon, at ^'' ""^ ^^'"^ *" «>« meaning cong^ei clearirrendedTTJ"'/:.^' ''^''^ '' "»« the second count insuffideitlotV f *^ ""egations in b. the s^ond .ction ofT 1^ rtltTt H^^ IN BE CORNING. 45 Oj^inioii of the Court. JtXrsZ: '""^^ ^"^ ^^^* ''' ^'^^ ^-'^^ - — ce be- In reaching this conclusion, I am relieved to know that if T "Pon the c,re„,t com. „, ,he UniW State to .n oi" „rt ° Sin If^l, ?; •"°''"'''' °' "" f "i""! Sl.t«, by Lr c ^peeaing such cases to an earlv hearinty A o..v of this nature was lately instituted in the uSd iT circuit court [21,3] at Nashviiu t^o 1 7, United States through its distrii attor^eyTLd ^S^^^^^^^ ^*- nopoly, doing business ur,/.l T ? • "^^''^ ""o^' ™°- from Sis casf, an^JiS; n^^f.'^^ tht"^^ ^^«^™^ enjoined from doing business a nS ur <=°'°Pany was tected against the highTrS^'fcla wh .' '" '""r' ^"'* P™" contract held illegal under d'is 17 t7/, T"^*"'' ^''"'^ * ney general of the VniZ S . ., "' *'^«'-«f«'-«. the al;tor- furthi test the\tsYroft£Ltrbu"" ^' ^r ^ fendants in this case is « n. "^ , ^"^ *•»? business of the de- he may autho;Lni;ra"c^Ci"^^^^ ^f.^-de, and by such suit speedily secure an ,^!. .^ instituted, circuit courts as to the Iffo f / adjudication from the much as thie deJendants '",** ''T "* '^^ '»<=*• I°as- tended busi^ss S'L^^^^^ T^ -^^^^^ - this ex- would be fair and Dronlrl T^"'' """^ P'^^*^' ^t such civil suit Thennhr ^T."!*^ "^^"^* t*'«'n A'^t by moreprom^^JbeLfite^t'^Jr'^ ^ 5^«- P-'-ted, and be ^peedily'leLratd SrX"^^^^^^ ^""" " "'"''^ Junction restraining s:tL^:i^'^',S:^l^l\^- ^■ nopply. If such the court should ad iZ TtoZVu" "''' rant for removal will therefore hJT ■ ^ , " ^^^ '^"'■- ants discharged from f^Sf ^I^t'dy.""'' '''' *^^ ^^*-^- if ( f V f 46 51 FEDEBAL REPORTER, 213. Opinion of the Conrt f^^^i IN BE TERRELL. UNITED STATES .. GREEKHUT ET AL. (Cireoit Conrt, S. d. New York. June 28, im,y ISl Fed., 213.] based „p„„ a„ moietment ta dl^^f^ f'"*'^**' «°"« "«^ ««"<>" products exclusively from tte dTstrfbrnt ''"'""'"^ "■«"• <''«t'"eT lower than the prescribed Hst prt^'"?,!/*'^''' ""^ ^""^ «'«'" "» "Hieh dealers should sign a cert^rt; ?h * ^""^ *° "« ^"'0 ^hen and sold for six monthV; anTthaT h *?m *""'' *""* ^ P-^-^^ased controlled and increased the pricL „f ai!?,,^ ""^"^ defendants had chusett^ ir«W. that no crime was ehrr^"""' F"^'"=*' '" ««««- sales, since there was no a"erm"nt T? """^ '^"^^ *" »"eh dealers bound themselves not to^^llT' '"'''""'' ^^""^^^ the at less than list prices /« „ n^^ ^ '""" ""''rs, or not to sell prices. /„ re Coming, 51 Fed. Rep. m. approv^ ^>^.. Tkaeker and ^.^. /..../f,, ^^^^^^^^^ l»l*J Edward Mitchell Disf Af^x ^ ,. Assist. Dist. Atty., for the Un^J Ste;;s ""'"''' ^^'"•^' I^COMBE, Circuit Judge. K-.^^ P«"^««« ^^as arrested in this district unn„ „ ' !"1 '!," ^"'*'^ ^^*«^ commissioner hei"^"u! """"'■''"* was based upon an aflSdavit, whioh wL -f",. T^ warrant _^vii^icjj was Itself based solelv • Svllah™^,^;;«3IZrT^r:— »"ieiy IN BE TEBEELL. 47 Opinion of the Court, iipon the fourth count in an indictment found by the grand jury in the district court of the United States fo7the dfs net United States marshal to await the order of the district judge, under Rev. St. § 1014, for his removal to the d Sr c of Massachusetts, writs of haleas corpus and certiora.^ issued, to wh,ch returns have been made. It is not disputS dJtt of tt1?T'' ''"* '' '^ ""* ""Jy '^' "«h^- b.^t he ito 'the indJ / "f '""/*' "^^"'^ "'•^^""^ '•<''"-'«l- to look into the indictment, so far as to be satisfied that an offense against the United States is charged, and that it i" uch an offense as may lawfully be tried in the forum to wliich it" s ckimed the accused should be removed; and the s:,me r gh fs hefd Ih"' « "P°" '"^"^. '"'^'''^ ^^^*^- «- Petitioner IS held under the warrant of removal issued by th« district judge whose decision is Ihus reviewed, or under^ le « Th l.tTT'''-"""' i" f ""'* '^'' '"''''"' °f the district judie Ihe later decisions of the circuit courts abundantly establSh ^ep.Lya, O.d.v. Brawner, 7 Fed Ren Sfi- // ' conti-act states, is demurrage " ''^"'''' '^' ''''''^' ">' ^'^erent At Law. On demurrer to declaration. --f!*!!!!_^L^^^^ Pre- " See alsovoi. 2, p. 5r(l^l^ed!7845) " " ^Syllabus copyrighted, 1892, by West Publishing Co. 11808--VOL 1—06 M 4 50 51 FEDEBAL BEPORTEE, 272. Opinion of the Court. servers' Company, Bernard E. Ryan «„rf T P r, ,. for injuries alleged to have hirLtM in\ T^""^' and property bv reason of acts of f .,?!,] j " business of the '^Wi-frust W," (26 St at T ^'^ ^'"'««»" act makes illegal aU combat « n S.St of ^ J'** commerce among the several st- Its manu other manufacturers for Se e^H T ""^""^ "" »« rtghts of ■nieh „u.chines under p„te„X wn^^. ""* """ ™anufaoC of combination to enjoin fhe ^o^ on L™"."' " ^'"'»««' *° «h« •"""genent against him or hte Sltome^" ""^'"^ ""^ «"*« '<"• ^ In Equity. Suit by WiUi.m «!*,„•. , , i^r^cfenH- <7^»6,, for plaintiffs f:''^'*''^-^%, for defendant. Waixace, CSrcuit Judge. TTiis is a suit wherpin *k i- * , injunction to restrain ie d^fe^^'t S^'1? " ^'™''"^'^* ecutmg any action in any .Jurt oj la^t •*"*'"^ *"• P^«^ •Not decided m^der the *^tl t™^ 7 — "^"'^^ "^"^^ <*« commented upon. »Ml-tr„gt ,a^_ ^^ occaalonaHy^^JSTiia » Syllabus copyrighted, 18B2. hy Weet Publishing Co. STBAIT V. NATIONAL HAEBOW CO. 53 Opinion of the Court plaintiffs for the infringement of any letters patent owned by the defendant covering improvements in spring-tooth har- rows, or from instituting or prosecuting any such suits against any person using the spring-tooth harrows manu- factured by the plaintiffs. The defendant has demurred to the complamt. In substance, the complaint shows that the defendant has entered into a combination with various other manufacturers of spring-tooth harrows for the purpose of acquiring a monopoly in this country i„ the manufacture nn. T .,1 f'"^'/"*^' ^ «n incident thereto, has ac- quired al the rights of the other manufacturers for the ex- clusive sale and manufacture of such harrows under patents, or interests m patents, owned by them respectively Such a combination may [820] be an odious and wicked one, but the proposition that the plaintiffs, while infringing the United States, IS entitled to stop the defendant from bring- ng or prosecuting any suit therefor because the defendant s an obnoxious corporation, and is seeking to perpetuate etLraTenf ilf ' '\ ''""'"^f "P°" '' "^^ '^ *^'e' » tt nnrtrr ' l"*"'"' °°'' ^"^ ^""^^^y unwarranted. The are good or bad, and he is not required to give his rea sons for the attemt to assert his legal rights «^l • of the legal right cannot be affefted bv tbp rJ^ T u controls it." -^^ v. r.«^.«,S y ^29 " "'*'''' Js'Zltf wfthSt no?^"*^^^' ^'"<^ *^ "^^'^ P- of the defendanT h.!f ' "^""^^ ^"^ «* *« Patents 13 Blatchf. sZT Goodyear Dental Vulcanite Co., partT°s. "whoever S°es"le«er? m't'f /"'! '^"'^ P"-^'""" "f the received thereby a ^ZfiZ^l^CTJ^? ■ *"« U°'t«> State! t^^^r XbViVbiiHr -f •"-- ^-"^'""t «: prepared to -intaK^n^ThrcSlfrts^UntL^^r.ris"^^^ 54 S2 FEDERAL REPORTEB, m. W'oijld eonvertthA ^!«l".® ®"^^ alleged vIolafA^. m,. "on against each m£ • 1 The defendLfi ^"®^' ^^hich is 8a« the whole of t^m **^ ^^^se indivrd„ai" " f ^k ' « ''^Sht o^ ac ««(! to allow th/ iJf *"• ^* *»as the rlX m . * ^"^^ ^^^ right to least able to defpT!? i ,*® seeking the feeblesf nf Ik"*^' «» « "matter that indiWdnal shn f ^ to imkl f ^^f^ ^H-the one patents, he is iLhi '^^^*'* *<> have infr ni^ "" '''^^''» of him r? unable'to^^^ f tn/.'li;^^^ '^'l t^^ndanrs' « greater den-AA ««? /'~~**lthough othPr« » ^ ^^^ he poor -^ «^l^ted him Ts^ibrL"!^?'^^ ^^ may condenfn "l^ ^^^nde^ in he doubted." ''"^ Particular defendant. On principle ^''^♦'* '"'^^'^^ See, also, Asbestos Felfi'nr, n ^^er Felting Co., 13 £1^2^45^"? f f ^* ^ ^- ^«^- 28 Fed Rep. 98; Kelley y. Manuft^f' ■ T ^- ^"t^^ews, 19;Chem^al Works AecZtTrd f "' ^ ^«<^- ^^P If the defendant had hr^ ll B'atchf. 552. ^ founded upon the combinatinn j"'"''**" ^^ '»« alleged rights c?me pertinent to inquire toth^'t"'*''*' *''^" it^ighfbi' fon and ascertain Xther t£ ?'^'" '^^ ^''^ ««^Wna- r^hts growing out of it Xt in «". T"'' ''"^"'-'^ any fnnpjnent of a patent by the 1 '"" '''•°"^''' '"^ the in the behest of the infringer ll ZT' '"^ ^"«'' '"qinry Tt "> "spect to the morafSetIrT, "T "V'"^^'-*'"^"' a? one « an ordina,y suit for tr^sn'r ''t^'"*^ ''* ^^^^ Plaint.ff o^^plSe^^ t'^-''- "^rbrS tnCr^ ^^ ' "ness it was removed or detr/'' *^' ^''^^P'-^ "PonTt nmsance, that it was led tZT '" '''' ^'^PPressioHf a Pation. ^Zy , S.p^Jj:^^^--S^ the unlawful occu The demurrer is sustained. ^^• no4j IN RE GREENE. tareuit Conrt. S. D. Ohio, w D ^n \ [52 F ' * ^^^^ Habeas Corpus t» -1^*3 ^ State, eo««,^,„„,, ,„ a^rL^r^^vrL: IN BE GRBEKE. 55 SyllaJ[)us. district Judge for his removal to another, district to answer an ndictment, it is the right and duty of the circuit court to exlf^ the C^'t I" "'^'^'"' "'''"■^' " '""^^^ ->■ Offense «t the United States, or whether the offense comes within the turll diction of the court in which the indictment is pending" ^ Z^Z.0.7^ZZ7""" '""'"' ^'"™'' STATES-^OMMO.-,-L.W s^rproff-: :=eirthTreX:r:re"r common-law oflfense the courts may nrooerlv \na} Z .1 CONSTITUTIONAI, Law— InteESTATE fTnuu™™, ,, gress has no authority uXT. *^''"™'^— ^""""OWES-^Jon- provision of the Z^Z tTu:TZ:V^n "^ '"" "*''^'- created by a state in the ac^u rw.i ...^ ^ ' " '^'^■1»'-«"°>1 tlon Of property in the several tates and"'itT*"'' T ^''''^''■ such property, or the Drort„„tc « T ^ immaterial that interstate commerce and it tin ' T7 '^'"" *"« ^""^^t^ <>' ison i„ , . "^^'™ • ■*"" "t 's apparent that by the act of Tniv o species of ™ tv as to enabirr""'"" "' ''*' ''''' '^ "••'« »' ••">-- therein amongThe Je™! T^f ''''°^''' ^-^ ^-f"' '"e traffic MOKOPOUKS-R^sxt-To ^l^r^r'lVr'"--"' '"'^"^«- "monopoiizing, or attempting tom«ze>t.de ""'"" "" among the states vxruu;.. +k "i^uopoiize, trade or commerce necessary^^ii: t ^rempTrV' ^•"""" ' "' ''''' '"'*• " ^ such commerce by means wWcb win ''""■^' "" ^'''^'"*""« ''^^' '" therein. '^'"'''' """ """^^ent other-s from engaging 'tr^ns^ir^^tecTti^arr -"^ ^-•""" ^ - ^--^ - <>' one count alleged, insubVn^l 2. "" ''^'""''* "'"""PoUes. under the guise ;f the D Sng 1 p"h,T'""^ "''' "^^-'l^nts. to certain persons in Bofton " auatfi^v ,' T"^'"^ ^"""''"'•^- ^o'" and that, by reason of he Mrtha L?. *"""• '"^^ '" """«>'«• manufacture and sale of 75 7^1 ^n of .,^7?? '""*'■''"•''» 'he J-lli^^^^^^^^^-^-^endants B^ed^ ;L^'ier,:;^'h7hercrseL" <■ Syilabus copyrighted, 1893, by WesT^JiblisliingTTo. - 56 ^ FEDERAL KEPOBTEB, 105. ehasers "fa «^ii .1 ^*^^ alcohol, and "^i^ "■en.. it'Lt'::^^^-' - '- pHc^tCc; r'", ""'• aeans used w^! ** '"«'™«1 '">m thL r^"" °f """PnWon. Same-Restraist of Tba. w res»->lnt of trade agents, and wonM w ^^^"'^^ Produtts exc^«i !, ?"'^' *''«}- of trade, ivitliin ,11 ' ""^ "»* «»i8tltule a en . ^ ** "" *"« ^"•Ution. na.:eS7^/j;j Tl '^""'^ '» «^ l^rLLt,. ""'! "«^ Itee," or "ii« r "'^ ®"<^^ arranireiHAnf **'^'^^'^'^""ce of the •^thiatL .::«.." "o'r''' *" -o-p^^,- t^rrr """"'o'- 8A^l._.Vor .varHe«lr"°" ^ "' ^'^ »et. ""''' ""-^ «">""«'«*. Pnrcliaser oonmH«rt f.^ ""^^"^^ ""der the 8t«f..f "etire effe^ "^ ^^^^ /^^ /«• 'or s»c/i~«, ^ hereby thereto. "*"*•* " "«"<» contract betw^n .? ^'"'' '"' «'«>• S^-E.-Even if the „,«„„«. """^ "«»' I^tween the p.«i^^^* ""•"• be considered as a hl„^. "«d w«»onaWe in^H "*«♦«'« thereby iZo^a *""•""» ""'tract »»* o' the g^L™,^/™*'^""' »' defrndarn-wr ""'^ '^^"'" contract in ^t"«i„?":;T "'^^'^ to "n't intl"""- """ '^'" 8ame-i.xdk.i.3,e„ op «, • "PP^ved. *-"• '• *cOre<,or. •ndlctinents of inrtu,"! °?'"'°"«8 «» Acts „, n «<*. alleged .o c^"n'4 ^'"" !. """- the saM «a^.e^'""»''-I» by a corporatioT!.! ''*°''«'"eai«eharJ«i;^', *^'* "" 'be ««»-of the'^isror-* -^ «-" --i isiL^o'; At I^w. Petition bv Lo„k it r- ^^/^i/. to release him W ,1 ^^^ ^'^^« ^^^ « writ of ;j^7,.. niarslial k,^ «.i. ? "^ ^^^ custody of tho tt •. , ^^^ ".ti, Dy whom he is helrl n«^ "^ ^"^ United States otates eoniiiifcci-^. " "nder a wamm^ «* j^t^aces ^^""iiisfeioiipr, awaiting « ? *^***^^nt of a ITnitP/l the district of Massach.Ze f " "'^"'' '«' h'"" t^n.ova I„ »lJeged violation of the act U" ^""''^'' "" '"'^•''""<'" ^r - nopolies P-;^„. ,. *" "' July 2. ison .«i *• "^ "" P 'es. i'risoner discharged. "^ ' ^'*^"' '^''•t'ng to mo- IN BE GBEENE. kt Opinion of the Court. John W.Herron, for the United States. Ramsey, Maxwell c6 Ramsey, for Greene. Jackson, Circuit Judge. The petitioner, a citizen and resident of Ohio, havinir been arrested and taken into the custody of the UniS nS States .narshal of this district upon'a wat!::nf ofa S States commissioner, hei^ to await an order of the judge of the district cotirt, under section 1014 of the Revised sSe« for his removal to the district of Massachusetts for trial unon an indictment found and pending therein aga n t hiiTm others for alleged violatinna «f tiZ 4. t s""'*!^ "im anti Julv 2 1800 enfitlli " A . ! "^^ °^ ""''^^^ approved dgama unlawful restraint and monopolies," has annli^^ t^ this court to be discharged from such custodv cTaimfnwhlt ath.;" Sm i^rf 1 ^'^ "'>-'y '• that-:'aS^^mL hi aTrli;' "n %o fi r: TsoL?! J'--lnisetts, on which TisranS? *^d f^^^^!^^':^ ;^ij to remove him there for trial * '' ^"S''* ' termine whether thp ^J- 7^^'^ ^'^'^^ *« consider and de- xi« wneiner the indictment pending a^aincf fu^ ^ ^• tioner in the di-^fri^f ^# ti/t i "^*"g against the peti- court. It is well sPttlpH fk«f ^^^c jurisdiction of that of removal undt sTt n Ou"K T^^^T 'V" ""'''' udge may properlv look intl^ * J'- '^''^"''* «'"'■* <>»• whether a^ o'tfen^Te igaS the ^1^811"'"* [' «^*'^'*''- whether the court tn Jhi 11 ^*^^ '^ charged, and -ved has u^l :ntftetmri:^s\""^'* If "" '^- exercises something more than Tmexi^^^tTri:! T ^^"' involving no judicial discretion. Tre'liStf oi L t '"' and his general right to be tripH ;„ oTk , "^^ *''*'^®''' domicile, itnposes%::;'Thf Mge t£ttv "oV™/-'^'^ and passing upon those quesL? SucKstenl/""^ form practice of the federal courts. Int ^"^"D^i' S: ,^ I il Jf 58 ® ^EDEBAL BEmXEB, 106. 86; V S vr^ ^P- ^»3; V. 8 v n^ proved by JudJ^T ^"""^ '*<'ently been fl' ,®"P- ^t ^e Terrell, (^' J' ^^ '"^' ""^ by Judt T^' ?= «■ --oval P^c^difgs" t'fj'^'^ ^^ Fed t/tr'* '" «™e, indictment affK f ^^ *^« ^^^, or sub!f ' !• .'. "P"" ^^eU Case, ^dt! ^* P^"'^'"? "gainst petittri^ ^''^ right and dntv „f1 ^^"'"^ Properly stat? ' u ^" '''« "nt of remJj- ^ '^« Petitioner i« K.ij "*^ "Pon » "- »s,rit ij" ""'"^ ^S r,: :;: ."- to await the n^f/ ^ ^ ^^^ warrant of fK decision ,/* is i:d Sl^,i^«!-t iudt ' ''^ -"--oner, United States fi3 *^.•^'«trict attorney «„ u u . »- -et by r:;;t\:Vi*"''''*'"«"'^-i^^^^^^^ '^'^ "ceding in the court n 1., .' "•■ '""« other annm? f """* 'vould be subject t^i ^'"^ '' '« P«"d'n/and r"*' P'""" '•-contention tha1"L£; t^, ^^^' ^ -«ed o"to s^f:' sufficiency of fli^ ; j- ^^^^^ ^l>eas coTm,^ support against then, t t ""'^''•''^ ""der \^,^Z "''**'*'-^ of ^--g'VaSiedtthr" '^'''"•^ '- the it^"' r"'^'"^ court their ^Sion 1 '"P'^'"*' «'"'•* 'or leaved fit'"*'' "^ gronnds that the Itt * ^"* °^ ^«S J?Ji , ^^' '" ^'''^ ■gainrt them ;11 * "^"^ ""^ thinffs StlT ' ^^^^ the under the rM"o?'th'"rt''"^''* ^'^ not^nsS"' '''''"•^^^ cuit court « Tn I ^""^^ States, or ^S u? '"'"•^ "'f*'"^' that the Xc wf '''"' *" interfere." Tk ""^ '''^ ^"P"»ne h-dtakenSdrr '" ^'^''^^ the i„d^JtLtr""'''PP««'^ f not invokiu J4 5 -«-hal and „o reaS.X ^Jf" ciencv of fJio ;«!i- . •'""s^ent of saiVl r.^., ,. shown ^ the indictment. The sun^l '^ "P°" the suffi- snpreme court, i„ decli„i^ IN BE GBEENE. rg Opinion of the Court original JurTsdJ t oZX^wrnlrV"''^ "^^"'" "^ ''' the p'ropiillr tha' no ore^i'lhrL't"' '.° '^^ ^^- dictment was pending couW iX Lto ^ «" '^ "" '"' indictment, or pass LTILT T^ ^ sufficiency of such offen.se, or was SintL' ''*•"" ^^'''^^' '' °^«'-g«d an for in the more ret^; ct?o7E"f ^^ f.^^ -"-''• 12 Sup. Ct. Rep. 410, it is said: ' "'^ ^^ ^- 2^*' petitioner wa's simply helTtl?"u ''''" ^°""<^' b"t the jury, and prematurdy solt t'"' '\' '^''"" *'^ *•>« ^^^nd ceedings, the quest^^n Si ''''' ''^^"^^'^* ^'''"^"^ P^O" offense had been ell £ ™'"''^-' whether any essentially different «T . P^'^^t proceeding is by Judge' Latrbe.' wrindS'" ^^"^ ?'^ ^'^**^ '»'•'- committed against theUnited Si '"\f ''^^ "» offense petitioner is unlawfully and ilwS' '" *'''^»«l>usctts, the erty in being held in c'us ^ „f ^^•/"''^^^"'^'^ of his lib- moval to thft district for trL T "" °''^^'" *«'• ^is re- measure of relief as thoul .i' '^ '"*'"^^ *« the same by the district iudi T'fri'hl TT' ''*' ^" ^^^''^--l the petitioner tried in the lit' ! *^/overnment to have the indictment is pe^dinlt 1 "^ Massachusetts where against him comes under irtion 73 Vft'^'l^ '' '"^^ -- providing that, « when anv oZc • ^"^'"''^ Statutes, is begun in one judSalTirc!^ T'"'* '^' ^"'*«« ^orne States are^ r^ir \ u «"t'iority of the United 77 c » y'»ncn, dw, ..j ^ «^""rts may properly look to that body of iiiri« prudence for the true meaning and definition of such crim^' U ?? r T '''"''' '^^^"^^ ^ '^'^ »«t creating th"m £p^yisraTt'ffX"%st\STr^^^^"- dictment i, ha.d, in ^^cllriXtZ:^:!^!^!::: lheZ£7:rr '"*""^ °' *™^^ ""-^ commerce w'n r ti ®°° '""^'Sn countries were not onlv ill,.orai T^ should constitute criminal offenses against thTundL goes a step beyond the common law, in hi. thatln^ ? in restraint of trade, while unlawful werenoi Li.!. *^ or indictable at common law. TadTpts the .1 '7"^ designated trade and commerce criminal offenses, and creates « new cnme, m making contracts in restraint of trade ml IN BE GREENE. G5 Opinion of the Court. 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 themselves fully, directly, and clearly set forth all the elements neces- sary to constitute the offense intended to be punished. U. S, V. Cruikshank, 92 U. S. 542; V, S. v. Simmonds, 96 U. S. 360 ; U. S. V. Carll, 105 U. S. 611 ; U, S, v. BHtton, 107 U. S. 655, 2 Sup. Ct. Rep. 512 ; U. S. v. Timmhnll, 46 Fed. Rep. 755. Under the principle established by those cases, the several counts of the present indictment must be tested, not by the general recitals and averments thereof, although in the words of the statutes, but by the specific acts or particular facts, which are alleged 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, combinations, or conspiracies in restraint of trade and commerce among the several [112] states, or a monopoly or attempt to monopo- lize any part of such trade or commerce, no amount of aver- ments and allegations that the accused " engaged in a com- bination," or " made contracts in restraint " of such trade 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 pleader, although asserted in the words of the statute: Every offense consists of certain acts done or omitted under certain circumstances, and in the indictment for the offense it is not sufficient to charge the accused generally with having committed the offense, but all the circumstances con- stituting the offense must be specially set forth." U S y ^rM^A•Ma7l^, 92 U. S. 542, 563. Do the particular facts set forth in the indictment consti 11808— VOL 1—06 M 5 \ 66 S8 FEDEBAL BEPOBTEB, 112. h,tP v.; I . OP""oa Of the Conrt tute violation of the statiitp? t the provisions of the act to fh ™"'^t''"ng and apnlyinj, --t be aasunied thattn^^^^'J «f "- <^^Zil enactoent ehhei- -t^mctivfTg t j iT /V'"^« "^^ «tion and effect. \o criminoiT '"^ '"'^'^ A^^o oner- ^° the act. of the alurL tl^^'; "r'°- "- -£ nation on February 11. iggj ^r/ ''*'"" "'"'^'^ «"«"- Cattle I.ee' P'-«>"«te or ^tes of a«,uiri„g said d^H leS ■:S^^^^^^^^^^^^ "- ^ate ndictment. It is not alleged th«t Tk * ''"'''"^ «' the ro of the 70 other distiller^ by th ' "''""'*'°" ""^ «»«- t'Umg & Cattle Feeding ColaLL"'''""^ "'^ ''^^ ">« Ws- large production was secLd" as in '.n^ ""'"'•'' "' '^'"•^'' this '« 't alleged, or eyen recifS tW u ^ '^''''* ""'""*"' ' »«r ro other distilleries wei^e al'u ^^^ wefT'" '™" ^•''-» -»'d ft^ni thereafter e„gagi„„i;S"''f.,':>'«>ntract restrained pnerally or partiafly! Frl i„vt""'"'-' '""'"^^' «ithS to the contrary, it niust be pr^r/d""?^^ or recited the defendants, or the DiJ^TcZ I" Pf^^ing' that in whose form and guise theTcctS"'" *!*^^"g Company, were in the rightf ul ^ ^^^'^jr* '« ^'d to haye acted dtstilleries employed ^^TL the T"1 °' *'*' ""'"«'•«»« or small, can m no way affect th.. SV^V^ whether large dem to lawful ownershi; S>^^^m;' t^'^'«» -«^ and limitations upon the rio^h? 5^ "^ P'*"* '^striction ««anized under its authoi^f to acoTr"''""' ^"«^«^ ■"><» property, ft „,ay gj^o :„, 'L "^""*' "*' and dispose of tions upon the ciLen i. T^ T''^ restrictions and liniita- Privilege or '^nS "nf^Vv^th:;;":^^' " ^^'^ congress certainly has not thTlZ. ' ' ^"V'^ ^'^tes. But eonmiem, clause, or .„v other ^ ■'"' «"*'«»"ty under the to limit and t^riet the^S"? ^2";' *'^ institution gnt Of corporations created by the IN BE GBEENE. 67 Opinion of the Court, states, or the citi- [113] zens of the states, in the acquisition, control, and disposition of property. Neither can congress regulate or prescribe the price or prices at which such prop- erty, or the products thereof, shall be sold by the owner or owners, whether corporations or individuals. It is equally clear that congress has no jurisdiction over, and cannot make criminal, the aims, purposes, and intentions of persons In the acquisition and control of proi^ertv. which the states of their i-esidence or creation sanction and ,>ern.it. It is not material that such property, or the pi-oducts thereof, may become the subject of trade or commerce among the several states or with foreign nations. Commerce among the state* within the e.xclusive regulating power of congress. - consists of intercourse and traffic between their citizens, and includes the transix>rtat.on of persons and j)iopertv, as well as the purchase, sale, and exchange of commodities.'- Co.wtv of ■Vobde y Kimball, 102 U. S. 0.91-702; Gloucester Ferry Co V. Pe„ylrania, 114 U. S. 203, 5 Sup. Ct. Rep. 826. In the application of this comprehensive definition, it is settled by he decisions of the supmne court that such commerce in eludes, not only the actual transportation of commodities and persons between the states, but also the instrumentalities and processes of such transportation. That it includes all the negotiations and contracts which have for their object or involve as an element thereof, such transmis.sion or p~ from one state to another. That such commerce begi is, arfd the «g„lating power of congress attaches, when fhe com mod, .y or thing traded in commences its transportation SI the state of its production or situs to some ^her state Tr comSed tY'tb "' '""""r ^'^™ "^^ transportatiSi Z completed, and the property has become a part of the gen- eral mass of the property in the state of its destination tro?:hr"""r'r^"^ ^ '*'^™"-'*' -^ ^y the d r: acter of the commodity, nor by the intention of the owner to ransfer it to another state for sale, nor by his p^paraTion of for transportation, but by its actual delivery to a com mo carrier for transportation, or the actual commencement of It transfer to another state. At that time the powS- and gulatmg authority of the state ceases, and that of^Tol^ attaches and continues, until it has ^.ached another stateS • • i i\ £*0 S2 FEDERAL BEPORTER, U3. Opinion of the* Court merce, a„,, ,vhiel> are intended LTaTl/fl-*' "V""- izen« of other states nn- thl • ^ "'"''"' "'"» "it- tation fron. the state Ze^ll^ST '" ^'"' '"'"'^°'- to the co„u,.euce,ue„t?f K"„H "n T"""*'"''"^-'' P^or thereof to another st-ite ^n * ? f«"«f«r, or transmission which con^eH^Ti:* £ ~tt: "' "^"'"'^ ''^"'"'"•- further, that after the teSjt "f ifT^ ?^ '""^'"^'^' '"'^' conunodities or articles oJTrlffi f ^' transportation of and the -inglinrlrtrgin^th^^flThVr *", '""'"*^'; property in the state of deftinatTon th Xdit^^^^^^^ and consumption thereof in the latter sLtpf ''"'*"''"*"'"' of hiterstate commerce. PerJro/„f,r i^ ''"' "" l'"''* i/w., !»o u. o. 1 , Zf/'OM,! V. Houston, 114 IT S r.-w -> c Ct. Rep. 1091; Coe v. ^-^.^Z ne u g' 5i7^:,^-«-i' " ^^"f Rep. 475; Rohbim [lU] r rZil ^^ Ton Vt f "''• ^*- Sup. Ct. Rep. 592; and ELlypZZnmis l\\ '"'nl citals and conclusions of uItZa -T' ^*'"*'™' '"''- charge any real offZ aiiisr;T;:^S:it:d sT t"""' ^'^ ' the district court of M!^^^^t^'^^]^Z^Z:^^^^t specific offense charged in the first count s S tti * ^' ants, under the form and guise of thfnl tir *'*^*^^*«"«'- Feeding Comnanv sold „/^ * u Distilling & Cattle r> m ,? '^'"Panj, sold on October 3. 1890 t« \f;iio „ j Gaffield, copartners under the name of D T MUls 1 Po certain quantity of distilled products then in h! 1?!' 1 niinois; that, by reason of said Distillin^t cJi^ ^ r Company's controlling the nianuf^ tu 1 f. d ^^ e':/^^^^^ cent, of all such products in the United States thev fi 5 ff price at which said nni-nh^. ^"'wu oiaies, they fixed the 1- »!- wmcn saw purchasers should and did sell «,iA „i hoi for use in Massachusetts, or for tramnnlr ^ ''"" other st«t« «an/i a; A , "* xor transportation into any oiuer siaie, and did compel said Mills «nd Poffi u ^ partners, to sell said alcohol at no le. p^haiS IN RE GREENE. 69 Opinion of the Court. by them. It is not alleged how said Boston purchasers were " compelled " to sell at the prices fixed by the defendants, nor how, or under what arrangement, the defendants fixed the price at which the alcohol should be sold in Massachu- setts, or for transportation therefrom. Was it one of the pro- visions of the contract of sale and purchase, or Avas it by a combination or conspiracy between the defendants and the Boston purchasers ? The means described by which the de- fendants were enabled to fix the price at which the purchasers should sell the alcohol was certainly not a " contract, combi- nation, or conspiracy in restraint of trade and commerce among the states." If they, by force or duress, " compelled " the purchasers to sell at a price fixed by them, such compul- sion would not constitute either a contract, combination, or conspiracy in restraint of trade. It cannot be assumed, un- der the language employed in this count, that there was any " contract " between the defendants and Mills and Gaffield which by its terms and provisions restrained the latter in respect to the price at which they should or did sell the alco- hol. The count certainly charges no " combination or con- spiracy," within the meaning of the act, between the defend- ants and the Boston purchasers. The charge is too vague and general to show a " contract " in restraint of trade, such as the first section of the act contemplates and declares illegal. It cannot be aided by presumption or intendments. It is bad upon its face, and charges no offense committed in the state of Massachusetts of which the United States courts in that state could take jurisdiction. The second count charges an attempt on the part of defend- ants to monopolize to themselves, under the form and guise of said Distilling & Cattle Feeding Company, the trade and commerce in distillery products among the several states, and between the state of Massachusetts and other states; the spe- cial acts on which this charge is based being that, [115] on the purchase of certain quantities of alcohol bv C. I. Hood and Kelly & Durkee, (citizens and residents of Massachu- setts,) in September, 1890, from certain distributing agents of the Distilling & Cattle Feeding Company, the defendants, r^^^i r r'" f''^ ^"''^ ^^ '^^^ company, agreed and prom- ised that If said purchasers would, for a certain designated • » I 70 ,, ■ *'^EBAL BKPORTEB, 115. Ol)iui„„ „f tbp (.^^^ period, (six months.) buv all th„;- agents. (two of whom, as an^L *?"'P''"-^*'^ distributing -t Boston. Mass..) and «3 . ^ "**""*' ^^--^ 'ocated ;iji'jeopr.KhK.ti:'?.:c,ra:",i': "'-'>"' - <'^'- lii't prices of s„ch distributing al^lf !r ^'"''' f'""' *he proper certificate of such fact! T iJ""^ '"""^'^ "'"ke a Cattle Feeding Conipa^^^ould i ''!,"''' "'^t^'-^ & chasers a rebate of five LTs Tl u """^ ^^^ '" ^i*' Pur- <*a«ed by them, -^e tS Z fT. °" '^'"''^ ^""o" P"- «tantial]y the same arranSnl, T '^"""^^ '^^ °"t ^"b- payment of a rebate of fiTcTtl "n^^ *^'"*"' "« *« "»« chasers- compliance, during thTJii^ f / T "P°" ^''^ P'""- -.d ^nns and conditions "aLdcC^ TtZf l'" l*"^- contracts m restraint of tradp «„^ '" '**''« "^n states within the purriew of tt steLru""" "'"°"« ""^ -nsider those th.^ counts to^t W "k h' T ''"^••**°'^ «"t forth coiLstitute either «n "Smnf * ^ ^""''^ *^''^'» and commerce in distillery orc^ZF "'"""?•»''"«' " trade «>ntracts i„ ^^raint of If ^adej T""^ "" ^^"*^^- ^ what cong,*.ss meant by the «e^„H '" ""' ^^^-^ «'«««• July 2, 1890. in declaring it a '^ *''*'"" «^ the act of - "attempt to nionoS « rytr T/'' " ~Po'i-," nierce among the ^tat^or^ith fo^!." *'■' *™''« «•• """i- certam that congress could not a"d ^""'IT }' '« '^^ ment, attempt to prescribe Cits /„ l ' ''' ^^'' «'"'^t- by the private citizen or stTte^'n .^"^ •«!"i«ition. either might become the subject Jj ST""' "* '""'"'^>- ^^ich that, when the accumulat o„ or SmI T""''""'- "^ ''^«''«* -ate means and lawful methods "k ", ^^"^'^^ ^y '^gi'i- proportions as enab J the owner^r ""'' '""^'•"''« or traffic therein, or anv part thereof „ '*'"'T '^ •^^""'••«' ""e wal offense was eonuifitred bTsL "^ '^' '^*«*«^' « •"••i'"- Persons. i.uli, ich.allv or in corL » '"'""' "*• »'*»«^'^- All on business avocations andTf^"'""'.'*'"«»"'='«ti<"'s. '""rrvin-. chase s,,,, „r e..ehanV:f' aTt r r tr^'^T ^''^ P"- •nanufacture of commc^ties whi "h^ ^ Production and fierce, will, in a popular ^„t ^J"™ .''« ^.''''i^t^ of com- ■nterstate traffic in sJch artWe^'orc^r r ^"'^ •'^^"*« ""d Portaon as the owner's but^ Z "l^^^ J"^ 'l' "^^ increased, enlarged, and IN BE GBEENB. 71 Opinion of the Court. developed. But the magnitude of a party's business, pro- duction, 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 com- modities forming the subject of such business, production, or manufacture, is not the monopoly, or attempt to monopolize, which the statute condemns. A " monopoly," in the prohibited sense, involves the ele- ment of an exclusive privilege or grant which restrained others from the exercise of a right or liberty which they had before the monopoly was secured. In commercial law^ it is the abuse of fi^ee commerce, by which one or more f 116] indi- viduals have procured the advantage of selling alone or exclusively all of a particular kind of merchandise or com- modity U) the detriment of the public. As defined by Black- stone, (4 Bl. Comm. 159,) and by Tx)rd Coke, (3 Co. Inst. 181,) it is a grant from the sovereign power of the state by commission, letters patent, or otherwise, to any person or corporation, l)y which the exclusive right of buying selling making, working, or using anything is given. Wien this section of the act was under consideration in the senate dis- tmguished meml^rsof its judiciary committee and lawyers of great ability explained what they understood the term "mo- nopoly^' to mean; one of them saying: "It is the sole engrossing to a man\s self by means which prevent other men from engaging in fair competition with him." Another sen- ator defiiied the term in the language of Webster's Diction- ary : To engross or obtain, by any means, the exclusive right of, especially the right of trading, to anv place or with any country, or district; as to monopolize the India or Le- vant trade." It will be noticed that, in all the foregoing defimtions of " monopoly," there is embraced two leading elements, VIZ an exclusive right or privilege, on the one side, and a restriction or restraint on the other, which will operate ZtZT ""f" "^ ' "^^' "^ ''"^"^'y -i-- '- ^he public before the monopoly was secured. This being, as we think Ictir^f' h"".tf '' ''' ''^"' ^^ employed^n the second sec ion of the statute, an "attempt to monopolize" anv part Of the trade or commerce among the states must be an attempt to secure or acquire an exclusive right in such trade or com- f fi2 FEDERAL BEPORTER, U6. Opinion of tbs ck>„rt sense of the term, for the al,c!^ "monopoly," i„ the legal Feeding Con,p„„ • to IwnT^,^? *^* ""^""'"^ * Catde them,f, whether such S«l tmo S ;-'*"« P-^ucts large part of what was produ«!ir? ''^ ^''^ ^^''"le ««• » ership and control of su^^pS. ts t T^'l' T^*- -- com„.erce, is not what the^t^' ^ ^""^ "* ^'-^-^^ «nd nopoly or attempt to mono^^ T 7' ' '"' ^'^^ •"- commerce therein. In this Z. v- ""^'^tete trade or 70 distilleries, which enablJT''"" ""'^ °P«™«°" of the A Cattle Feeding Sm" " lot "T'*' ''^ ^'^ "'^tilling «ale of 75 per cent, of the LhIw" "^l"'^ """^ '"•"^^°' ^^^^ ; does not appear, nor 1 IrS^^Z/'itlr ' '""^ ^"""*'-^' whom said distilleries wer« aZS', ^ P'''^"^ *'^'" restraint, by contract JZl^^^ ''^'^ P'«<*d "nder anv W -tinLgrXgLTirs„r? ''^^^''"'^'^ ^''^^ pei-sons who chose to en^Lf thl ''""^^- ^^ «ther JJe effort to control theSS ran^^* "^-^-^ *" ^" - Wlery products, by the LuJl \ ^ manufacture of dis- ness, was not an attemptTo ZT"" • '^^ '^'^"^•"° «* ^usi- ;n such products withTn he raW '7 /."': ""'^ '="'"— WalThe"^ '''' ""* "' '"'^herToSdlHr^"*^' ''"'' """^ -^r.tmTxrstorttdr'^" '-^^^^^^ as to to monopolize any part o7?h taT '7' '*"*''' "" ''"^'"P* f f ^ in distillery products? ui^^^.TT'' "'"""« ''^^ inferml fron, anything that is set/ ff *'l"'"' ** '* *° *>« cha«.rs bound themsell or entet/"?' '^"^ '''^ P"'- fini obligations or nnd^rsL^^n . T ""-^ <^«ntractual supplies exclusively from Tjl frf 'k •''"•'' *'**''• ^^'^ti'l^y KstiUing « Cattle F^TngJomnan '"4. ''^^"^^ "^ ^^^ perfect liberty to purcW f hJ ^u -^- ^'^^^ ^^'"'^ '«« at pleased. Xo-contSSuaHr o^""' '"''"''' "'" ''•°'» ^^om they *em Upon ..rtattitrwrcH "" ^'"^^^ "''- tional with them to comply witK ~, "^"^ ^"''"''.v op- promised by the seS^^ Such an """^''^' » ^"'"'^^ -«« amount to a contract to nnl^ f rangement does not tilling company o " ts diSfuhW ^^^^^^^ '^'"" -^<^ ^^- did, there was nothing rsuch^n^'^"*'- ®"*' «"PP««« i* g in such an agreement unlawful or in IN BE GREECE. 73 Opinion of the Court contravention of the statute. The promise of a rebate, as an inducement for exclusive trading, certainly does not con- stitute an " attempt to monopolize," when the purchaser is left at liberty to buy where he pleases, and when all other sellers of the article are left unrestrained in offering the same, or greater, inducements. As to the remaining condition upon which the rebate was to be payable, the same observa- tion may be made. The purchasers were placed under no contractual or other restraint in respect to the price at which they should sell. They were simply offered a rebate, as an inducement not to undersell the vendor's distributing agents, two of whom were located at Boston, Mass. The arrange- ment relied on, considered either in detail or as a whole, in- volved no " attempt to monopolize any part of the trade or commerce among the states." The rebate promised, upon condition of exclusive purchases and not underselling the vendor's distributing agents, was a legitimate method of in- ducing trade; but the means thus employed in no way op- erated to prevent or restrain others from offering the same, or greater, inducements. The condition as to not selling at lower prices than those of the distributing agents may have had a tendency to maintain prices, but that would not have been an attempt to monopolize trade. The inducements of- fered for the exclusive trade, and to sell at no lower prices than the price list of the distributing agents, was not preju- dicial to the public. It was in no way contrary to public policy, or an unlawful restraint of trade, as will be seen from the authorities hereinafter referred to. But, aside from this, it is not shown that said arrangement necessarily involved or related to interstate traffic. It is not alleged that Webb & Harrison, the distributing agents, from whom Hood and Kelly and Durkee made their purchases of alcohol, were located or made such sales in some other state than Massachusetts; nor that the alcohol itself was beyond the limits of that state when purchased. Neither is it shown that the exclusive purchases thereafter to be made, as one of the conditions on which the rebate was to be paid, could not have been made in the state of Massachusetts, it appearing from the face of the count that two of such distributing agents were located at Boston, in said state. Without dwell- i! I 74 52 FEDEBAL BEPOBTEB, Ul. »^ ft-ther upon ur'T "^ '"""• opinion that CiT^trr,' ^^ «" ''^-'•Jv of the agy the petitioner. ' """' '*'^^ ^ ^^arge any offenj *»^«at has been ahpiti^x^ • i •nd fourth counts. The n^ ^^^ ^'"•g^lv to the third "1 ^**assachusetts and nfh^ T ^" between the V ^"'^ they should .sell T|,„' *"* P"ce or prices ducemeut in aspect to f I.. '^ ''^'■** "^''nP'y offered an ^ perfect Jiberfi, * "'*** matters, which th "" t" II iioerty to comply with «- j ',. tnev were at retrained by any contractli oWi ! "'^ '^'^^^ '^^'^ no l«ted period. The aimJ„ ! °'^^'S»twn during the stinn that period tt "^«^'n«nt was wholly unil.f ^/'P"" lo^^ • . ■ ^P**" compliance wifK /i!* """«te«al during iSjh ''' ''*'""'' -""'■ Cwete enrHT''''*">^ "^ «1 a valid and subsisting contrJIT.! °P«"«"on to create thereto, or during the p^"!. fi ^''"^'^ the parties prior of the promi.se and the f^r '"^•^*'">ng between theS -hich the rebate was totrif T "'*' "'^ -ndi«:ns on -- '-tween the parties no^^t^a^"""^ *'"* P"""'"^ ^^e" But suppose the arran^emlr 1^* '" restraint of trade construed into a con[:;'cTrwee?Hl '" T ^-'O'" ^t of the promise, or during the ^n., t f *'"" '"'n, the date he held to be a contract T *'?"?'*'' P*'"°<'< it could not deemed necess«rv T ? " '^straint of trade iT- • necessary to reyiew th*. «..*!, J ™''*- " is not of contracts in i^straint of LZ ""*''""*'«« "Pon the subject «hle. It is well ^.ttled SiaS. C """'' '^ '^ «* «" P-fi - 5^de are eontraiy to p„bl1 p^ L?*^ '" ^^neral i^strahit of J*e arrangement under conCl V therefore unlawful ' "onsidemi as one in TnerT- , ""° """"°* l>os.siblv i^! -^"•int is partial, eiC™ tm^^^''^'^.- ^^^^^ th^i "me or place, its yalidity is IN BE GREENE. 75 Opinion of the Court to be determined by its reasonableness and the e.xistence of a consideration to support it. The question of its reasbnable- iiess depends on the con.sideiation whether it is more injuri- ous to the public than is required to afford a fair protection (o the party in whose favor it is secured. No precise bound- ary can be laid down as to when, and under what circum- stances, the restraint would be reasonable, and when it would be excessive. Navigation Co. v. Wimor, 20 Wall. 64-68- Beal V. Chase, 31 Mich. 490; Ward v. Byrne, 5 Mees & w' m;Ho7iier v. Graves, 7 Bing. 735; Mallan v. May, 11 Mees! fn^;,*'*'^' ^^''>'**'''^'^^ "■■ Howe, 3 Beav. 383; Hodge v. Sloan. 107 N. \ . 244, 17 N. E. Rep. 335. In the present case, the arrangement treated as a contract was founded upon a valid consideration, and only secured to the vendors a rea sonable protection in their business. It was not an unlawful contract in restraint of trade. The authorities fully support this conclusion. In addition to those referred to above, we cite the following: ^wj/'M v. Roumanell, 78 111. 589- Fow-Ze v ^P,dhmn South. Car Co., 139 U. S. 79, 11 Sup. Ct. Rep. 490: f7 A: ,''• ''• ^t'^^^^gor, [1892] App. Cas. pt. 1. p. 25, ^decided by the house of lords in December, 1891 ) In this latter case there was a combination or association of ship owners who, being engaged in the trade with China, with a view of obtaining a monopoly of the homeward tea trade ajid e.x- fll91 eluding the plaintiffs from competing with hem for the same, and thereby keep up freight, offered to rebate or repay every si.xth month, to such merchants and shippers ,n China as should have shipped their tea exclu- sively m vessels of the association, 5 per cent, on all freight paid by them. The plaintiffs, as rival and competing shin owners, were thereby excluded from this business, and sued tor damages, and the question (almost identical with that nder consideration) was pi^sented whether the combina- tion and arrangement adopted by the association to secure the X lusive traiisportation of tea trade was in any way unlaw- rnl It was first passed upon, and held to be free from ob- jection, by Lord Coleridge. 21 Q. B. Div. 5.54, 4 Ry. & Corp I -aw ,;. 61 1. His decision was sustained on api>eal." (23 Q. b" 't I I 62 FEDEBAI, EEPOBTEB, U9. "> II iJie Jiniits of this onini^.. • '^'^^ ^^"se of »g and conclusions the« Zh^ J,™'"""-, ^he mson- -•o^s j„ fhe present case. ""'^ ""^^ «»«• conclu- of ^VtSiTnl^rL^-ri^^^^^^^^^ *« »" *'»« -nts «nminal offenses were as d?!*''^ *"'' "»«tters charged as -ent, the act. of Z CSr&T.^.'''" «' *'>^^«di,i- not alJeged what relation thf . **' Illinois. It ;= t'on; nor does it ^^Z^CT """ '*» ^"'^ -^ra r/ ojher than that „f mTr^^^.-kCT"^^**''" "»«^^'* defoliant Greenhut. By Z Zt!^ ?■' ""^P' «« ^ the rt K provided « that the word ' Lr T*""' •*' «'« statute, e^er used in that act, sha^rJ. f ", *"■ 'P^^^ns ' wher- •ons and associations e^sfin^ n„T^ '^ '"'^^"'^^ <^«'-pora- W of either the Unit^sTatTlT "'*'""^«^ ''^ »he terntones, the laws of any stat ' ^ "'"' "^ ""y of the «»untry." If ^^ .^^ ;;[«'»<«. or the laws of any foreign the Distilling & Cattle FS/^r*"** *="'^"«1 offens^ ^ho has conunitted the same %f?P?7j^ ">« "P«'-«on" '^minal jurisprudence to make^t.. ^ f .^^ ""''««^<' <" « responsible for the oor^Sn's t' w^''"'''*"'"* ^""""""y l^at corporation can i^S b^ reald "/ '""^ ^*^'"'« the government, either civiL „r. '"?.'^ Prosecuted by ry have done in contravS Z "r.'"""-"' *•"• ^''«t it ">g the courts, by strain^ ^Ltrnr ^"''i ^'*''*'"* requir- «tend its provisions animX f^ " t^ ^''^ '*"'»"*'. to mere V interest/^? ;„ t *® them embrace all ,.«„♦• offens;s thil • ^""'^ corporation. ExcentTn '^ "^ "uenses, there is no criminaU*„ k„ ^^.cept m conspiracy not d^„,ed it necessarTor pro^rTT'**'""- ^^« ^ave ^sk of defining the caL to'^TS LT:"' '^^ '^''S^"'^ The enactment was maniWl, • \ ^^*"t« '^'i" apply faons,- whieh the state cou^ ha.^fi^^'^'^^'''''^ ""^ corpora- Illegal. The conclusion oTthell'""'."''*""'^^ ^"^^'^^^ I*wis H. Gi^ene should be dZC^.'' *^* *'^« Petitioner, so ordered and adjudged '^''''""^Sed, and it is accordingly UNITED STATES V. NELSON. 77 Opinion of the Court. [646] UNITED STATES i;. NELSON ET AL. (District Court, D. Minnesota. October 10, 1892.) [52 Fed., (M6.] Monopolies— Sufficiency of Indictment— Words of Statute.— An indictment under tlie act of congress, "to protect trade and com- merce against unlawful restraint and monopolies," (26 St. at Large, p. 209,) must contain a certain description of the offense, and a statement of facts instituting same, and it is not sufficient simply to follow the language of the statute.^ Same— What Constitutes— Agreement to Raise Price.— An agree ment between a number of lumber dealers to raise the price of lum- ber 50 cents per thousand feet, in advance of the market price, cannot operate as a restraint uix>n trade, within the meaning of the act of congress, " to protect trade and commerce against unlawful restraint and monopolies," (26 St. at Large, p. 209,) unless such agreement involves an absorption of the entire traffic, and is entered into for the purpose of monopolizing trade in that commoditv with the object of extortion. At Law. Indictment under the act of July 2, 1890, (26 St. at Large, p. 209,) " to protect trade and commerce against unlawful restraints and monopolies." Demurrer to all the counts sustained. The United States District Attorney, W, E, Hale^ for defendants. Nelson, District Judge. In the case of United States v. Benjamin F, Nelson, Sum- ner T. McKnight, William H. H. Day, et al, a demurrer is interposed to the indictment. Pressure of business in court has prevented an earlier decision, and I can now only ffive my reasons briefly for sustaining the demurrer. The indict- ""tv, Tu ^'^^ ^ '^^^''^^ ^^^^^^^ ^^^^^ th^ act of congress entitled An act to protect trade and commerce against un- lawful restraints and monopolies." This statute declares contracts, combinations in the form of trusts or otherwise and monopolies t» restrain trade or commerce among the « Syllabus copyrighted, 1893, by West Publishing Co. «2 FEDEIUI. BEPOBTER, c«. *-eral states and J""'"" "' "" •^"*- offenses, and affixes "^^..""^"^ "%«'. and n,akes th. Porte to charge the TtJ^T'^"''^- The indicTmt, entering i„to f ' , *'«'endants with violating /^f P"""' ,^-o,f in Ve Xr: ' a^rr ^^"^ ^^^^t i^I^^ •'''-S the oirr in^;, *"? -<^-tn,r %?; r.?? ^'••n^- others ^f ^ ^, . ^ ^'^® ^anffuaffe of th ! ^' ^^""^s T„ ^"""'^ had formerly anni;„^ ! «>ntracts which thp to order tn i.,i.«: • . •' "PP"ed to nrofpr.* i„ i • "* wfc.* • ""minister the I«w *k *^ "'*" ^wal interests what IS an unreasoii»Ki„ ^^'■''' the court must ,l»to • «>mn.eree by o^J^eK^^! ""f ""'«''ful lestraTnt of t 7'"' a contrart ,•; • . '"/'^tS trusts, and consn.V.. ^^^^^ or th^^tenedlel?"*^' *" "PP««'- that the ir""' '".''*"»'"™ tho r " interests of the n„Ki- , *** complained of the remedy sought to be ant r'^^"'' ""^ 'his is true wZthJ ceedings. ft is urged hv*t^^.^ '•" ^-^ "''il or crb,i„„, '' heing statutory t^T ^ ""^ *''*"«* "ttorney th«T?K Lp*""- that it is ...ffi ^' ^*"*™^ rule in such o. ' ^^"^ "^ense Stat ,t^,w ^'"'f /" ""ege the off^^t th*^' *** '''*' f«*'J that T; LT?'" *'''' "-^t six co^^t, * i%^»"^"«ff« of the •" of tteLrn?""* ""^ ""certainty TaJb ^^"r'^" '""^ 8 y and charge the accused with T " ^^ow its Hie- either of thTfi^r '*' ""h^ch this indfctnlf ! '"' »"** « TV, .V '^* hrst SIX counts, and tbo,/ "* <^oes not in offSll ri*t forth in Jhe ter"* •* ^"^t«'"«d- offense .h.ch the statute forbids /"ThTfir"?.?"""" «» or these counts UNITED STATES V, KELSON. 79 Opinion of the Court, charges, in substance, that the defendants were each dealers in lumber m the United States, and each transactefbu itS emr Tra^rhT > ' 1 M- •" ''*'"^"* ^*''*-' -^ -" p- lemoer 7th, at the city of Minneapolis, they agreed tn,rMhL that they would raise the price of lumLr sVlnS 'Sou tne states of Wisconsin, Minnesota, Iowa, lUinois and Mi« mere raise the price of pine lumber 50 cents per thousand How "th ;' '"" ""'''' ^" ^^hich they transacted buref How this adyance m price by these parties in the seyTrIi states mentioned could regulate thereby the pr ^ fX al dealers is not set forth. It appears that the IZ of the h Uh™ 'u* ^""'"«' "^^ t l-tween seyerS dllt^ that they would raise the price of the lumber owned or rn^.r some of the other deaS Sight nTZ I 71 "^ *"'t ''''' to be goyerned by the pricffixe^Tn ,J^ f '^.P"'"*'''^^'^ parties to the agreement an!^ Tf ^"""''tv by the petition in the SZolVii J Z^ZZ tt"" '^!,'"'"- unless there were fraudulL or l;Xe mea^' ' s^^Td toT' tesitSr^^^^^^^^^ An agreement between a number of rl^fi j turers to raise nrices „„l! T ^"^ ^""^ manufac- entir^ con^Si^ .J^nof 7 ? Practically controlled the nor do.s it ^I'^Zrt,:: thelS" Tl *1^' entire contro ofTwftb *K V^"" P^'P^ °* obtaining the jectionable to the stat 1 1 .^ ' *" ''*''''''^"' '' '' "»* o^" ^tifled by suci an ;i^' ?^ "?'"'"'"• Competition is not force theVrtL?oX~LTt'otuat^^"^ T^'' -"" or a reasonable price at W wwf l ** ""''^t ?"<•«' 80 S3 FEDEBAl, BEPOKTEB, 440. I l\ Syllabus. trade and commerce in lumber in the several states men- tioned. The allegations are too indefinite and uncertain, and the demurrer to all the counts is sustained. [440] UNITED STATES v. TKANS - MISSOUEI FEEIGHT ASS'N ET AL.* (Circuit Court, D. Kansas. November 28, 1892.) [53 Fed., 440.} Cabjuehs—Combinations to Maintain Rates.— An agreement be- tween several competing railway companies, and the formation of an association thereunder, for the punK)8e of maintaining just and reasonable rates, preventing unjust discriminations by furnish- ing ade(iuate and etiual facilities for the interchange of traffic be- tween the several lines, without preventing or illegally limiting comi)etition, is not an agreement, combination, or conspiracy in restraint of trade in violation of the act of July 2, 1890. § l 6 SAMB~MoNopoLrES.~Nor is such an agreement in violation of section 2 of such act, as tending to the monopolization of trade and com- meree. Same—Public Policy— Than sfeb of Fbanchise.— Where each com- pany, by such agreement, maintains its own organization as before elects Its own officers, delegates no powers to the association to govern in any respect the operations or methods of transacting the routine [441] business of the several competing lines, but simply requires that each company shall charge just and reasonable rates and provides for certain regulations in regard to changes in such rates, such contract or agreement is not forbidden by public policy as amounting to a transfer of the franchises and corporate powers of such companies. Same— Monopoues— Interstate Commebce Act.— It was not the in- tention of congress to include common carriers subject to the act of FebruaiT 4, 1887, within the provisions of the act of July 2 1890 which Is a special statute, relating to combinations in the form of trusts and conspiracies in restraint of trade. In Equity. BiU by the United States against the Trans- Missouri Freight Association, the Atchison, Topeka & Santa « Affirmed by the Circuit Court of Appeals, Blghth^rcuit (58 F^ 58). See p. 186. Reversed by the Supreme Court (166 U. S 20o/ See p. 648. ' ^' » Syllabus copyrighted, 1893, by West Publishing Co. UNITED STATES V, TRANS-MISSOURI FREIGHT ASSN. 81 Opinion of the Court. Fe Eailroad Company, and others, for the dissolution of an association or combination alleged to be in restraint of trade m violation of the act of July 2, 1890, and for an injunction restraining the several companies from carrying into effect the agreement under which the association was formed, oill dismissed. /. W. Ady and .S'. R, Peters, for complainant. George R. Peck, B, P. Waggener, Wolcott c& Vaile, Wal- lace Pratt, J. P Dana, Spencer, Bnmes c& Mosman. /. Z>. Strong, W, F GuthHe, J. M, Thurston, A. Z. Williams, N. H. Loorms R, TF. Blair, John R. HawUy, W, F, Evans, M. A. Low, James Hagerman, and T, N. Sedgwick, for defendants. RiNER, District Judge. ,1^'^f \^''\^ ^"^"^^^^^ '''■^"^^* ^y *^^ U^it^d States at- torney for the district of Kansas, by direction of the attornev EsonVV I r'. '' '^' .^"^^'^ ^'^*^^ ^^-^^^' «^^ Trans- Missour Freight Association and 18 railway companies which. It IS alleged in the bill, constitute the association. ' The object and purpose of the bill is to obtain a decree declaring said freight association dissolved, and enjoin W defendants, and each of them, from carrying out thetermf tLT7 --orandum of agreement LL^lZC^^^ between the 18 railway companies forming this association t^td bfr' /' '^ ^"^^^'' ^^ -^-^"^' because S tamed by said railway companies in violation of an act of TgS miTatf t "t' ^"^ *^ P^^*^^^ ^-^^ -^ ^^^^'^ against unlawful restraints and monopolies," approved July commodi iesT Vhf '"''■''"^" '"'^ transporting freight and of tlJ United si. ""^^ ""*^ '^''^■^" ^^^ ^^^'•''1 '^t-tes -tater^^-Tf f • ""'^ ^"'""^ """i between the several states and terntones of the United States, and betweTn the 11808— VOL 1—06 M 6 Qf) 53 FEDERAL RKPortkr, 4^1. Opinion of tlM> <'(iiii-t «t"t.- ami k'iiit()ri<.s of til,. TTi.ito,! <. , •'•'.'^; a„.I thnt prior .o Ma rh f s's , ".'"'i '"'■*"'^"' ""'"- »-i o„u...s. ,.„..„.,, tiu! ::;t;;;;:s'''-''^r;' *" trace states, ^pai-ac, ,|i,H„,.t .,,u} f*' "'«"'<'^ "f the United of «jh- co„.,H.ti„^ lin' f ; T/;"*' *'"'•" ""• '"""■fit the .state. a.,.l territluC u- j h''' ""•.''"'""' ■^^"•- '">'I had jn-a„te,I »«. the defenda.Us I, "'/''-'"''?' ''"' ""'"tioned -eurities. and subsidies 7!:^!^^,^'"^^ '"'"' ^"••'"^•^' hein,. ™„te,.t witl. I „ ; f"" 'T ""•^- '•"■■"l-"ies. „ot vv»h ftH.. e„n,, ,.,i,i„„ nut t ,...'' /'''-■ '■""''' '"'■^^^'^ 'ntendin. uniLtiv and ^Z-s T '"• '"'* '■"""ivinir and tain arbiti^rt ran. f S"! iVr "*''''"^'' "'"' '"""'- interstate eonnnen-e thro. £ . ^''-''.^i'-'^-'i^'" in the '•<>-,.ire,c.o„federate/and3"^^^ '''''""• '"'' -'l^'-. ::■;;-• i"to a written .^^ 'cS;:::'^"""^- """ "'^ Mc"n.ora„dn.„ of A,^reen.ent of the t! ' V i •". '" ''*'' Association." by the tern.s of v id, h"?^'""'"' ^'"'^'^ assoeiation has control of ,11 I V. ''^■*''*'"<'"t the ix'ints in that iv^non of conn. Iv I ""' '"'^' ''^•'"•««" fencing at the niT.etv-fiftl ,i •"'^' T' "' " ''"•' «>»«- ""«' -"ni..g north to fh R^ ' ' . -.L* T "'"' "' ^'-'- ern Iwmdarv of the Indian t'I '''""^e to the east- ea.s.ernline;.f...idt.S"Jn7' '''«"- «'-.^ the Kansas Cit,. Mo.; thene b^ t^Mi Uti"^''*' "' ^'""^'"^ *" of intersection of that ri er ^vhull ^'''^''' *" "'« P«int "f Montana: thenc-e b ■ sa d !«/ T'^" ^'"""^''•'•>' '*"« international line In-t veen hf ™ """'''"■■^' '"'" '" the i'oss....sio„s. That the ^:,^T\ "1 "''^ «''^'«'' hy each con,pany ap,,«inti„; ^e-'Il^^ ••!" ''"'"•'^ seated the association, and that the evC^" ^ '"'''''■"'""' '"^ '» to establish and maintain rules re^T* " *^^ P"'^*'' competitive traffic, throngh a^/ff S ""f. ''^^^ °" «" fr "u locai, \Mtliin the region of 1 UNITED STA'TES V. TRANS-MISSOURI FREIGHT ASSN. 83 Oliiiiinu of the Court. country described in the agi-eement; and that said associa- tion, by the terms of the agreement, is given the power to punish by fine any member that reduces the rate fixed by the association. It is further alleged in the bill that the said agreement took effect on the 1st day of April, 1889, and that ever since that time the said railway companies, by reason of said agree- ment and combination, and under duress of the finas andljen- alti^s prescribed in tho articles of agreement, have put in force and maintained, and now maintain, tariffs and rates ot freight fixed by .said association; and that the officers and agents of said railway comjianies have, ever since said agreement took effect, refused to put in force reasonable rates of freight, based upon the cost of construction and op- eration of their .several lines of railroad and other proper elements to be considered in the making of freight rates; and that the people engaged in trade and commerce within the region of country mentioned in said articles of agreement are, by reason of said combination and association, deprived of rates of treight, benefits, and facilities which might rea- sonably be expected U> flow from free competition between .said sev;eral lines of transportation. It is further alleged n he bill that, notwithstanding said association is in viola- ncel! H T i "^""gress of July 2, 1890, said defendants, since the date of said act, have, and still continue to main- • tain, the arbitrary rates of freight fixed by the [443| said rrans-Missouri Freight Association, to the great niury and sE Tl t,r'"l ''"'* *" '""^ P-Pl« °* the Unked States Then follows the prayer that the defendants, and each of them, be enjoined from further agreeing, combini, g •on.spiring, and acting together to maintain rufes an 1 Zf ItrtoZTT'. '"'^'* "P"' ""'"^ —1 lines of S Sis of H.e n '/'^''.^"•"•^'•^^ •-t--" the states and territoues of the United States; and that they be enjoined from contimiing i„ a combination, association, or cons^^cv tte sE ndr^t '"^'^n' '" '^"^ «"<^ --nerramong me states and territones of the United States of such fa w ! T; rtS'n:d"'. '''r^^ -^ '^•^'^^* ^-^^ transplaSnt will be attained by free and unrestrained comnetition 1^ tween said several lines of railroad; and that rd'deSait M 53 FEDERAL REPORTER^ 443. ODininii of tlio ('ciirt I l>e enjoined from affreeinfr comhinin^ « • • togsther to monopfE of^TSpZ ""^'""^V""';"^*'"^ traffic in the states and terr oZ „f It "^^.^^T ^'^'^^'' that all and each of the„rCS W "- -"' «g, conspiring, and acting t^^lhT . agreeing, conibm- of their assocktes in ,«n^ ^ ' ^° P^**^^"* *«"■'' "^ »"v and co.nn,o^S ■ r h: ZTZf '"■" '^"'''•^"'^ '-«'•* states and territoriL of th" UnSl s/r""" '"*""'" ''^^ rates as shall be voluntarilv LS^bwhfoffi '' '""f '"* ''"''*' each of said roads acting ind^^l^^^r '"''"';" ''''^' ''^ its own behalf. "'dependently and *parately in The defendants the Missouri, Kansas & Tev«« Tf i Company, the Chicago, Kansas & NebJasta R^r n'"*'' pany and the Denver,' Texas & Ft Worth RaTlrTil ?*"" pany have filed answers, denying th-tih Ra.lroad Com- the Trans-Mis.souri Freight W^.f they were men, I .ers of panies have each m^~^' ^u' '''^'' '' «"»■ substantiaUythesant^astorflTSlnotlT ''''' "^^ to refer to them senarafplv %C , "°^ "^ necessary common carrie" J Ja^* '„ t^^L^^L" ""* *""* ^^ "^ ertv afn,.»» tu . «™n.sporting [jersons and nron- eny among the several stat<>« an^ ♦..—•r • . . I""P- States, and alle^ th„/ ,c i *''^"*«"«« "^ the United , nuu allege tnat as such coninjoii oan-u.i- tu . subject to the provisions of the act nf ' " '' '"^ February 4, 1887, entitled '•Anaitorer:!!^"' "'''"°'**^ with the various amendments the,if„n7J^v- "°'"'"«'-««'" and that «.id act and thTateidrn slnsS^ti: *'T°' of regulation which has been establltd by fo^r i StT common earners subject to said act; and thev denvThlr.h are subject to the provisions of thp «Mr^f ^ '^^^ "An act to protectLde aTd Imer^^^ag^irt^J iT' straints and monopolies," approved Tulv 2 si;^ answenng, the defendants admit that Jh»; ,f "'•ther rruptr"^™*^ ^^-«*^ -^ ^iSn^t^rri^Cd nited up for carrying on bnaini>w no «« ""'roaa ftwffht indPi«.i.H<.„« J onamess as common carriers of ^nt independently and disconnectedly with each other except that common interest exists between certain nfK companies named in the answer Tt i« IT^k ^ ^^^ the defendants that the linT^ Ll* ^^^T- "'''"'"^'^ ^^ i;««« i! X . ^ ^^ ^^*^d mentioned in thp Km o«^ ™ffl ''l*r"^P«'^««'>« and communication engaged in Sr traffic between and among the states and teSie" JSe UNITKD STATES V. TRANS-MISSOtTEI FEEIGHT ASSN. 85 Opiaicn of the Court. United States, and are through lines for freight traffic in that region of country lying west of the Mississippi and Missouri rivers and east of the Pacific ocean, but deny that they are the only such lines, and [Ui] allege that there are several others, naming them. It is further admitted that prior to the organization of the freight association the de- fendants furnished to the public, and persons enga^^ed in trade, traffic, and commerce between the several states and territories of the United States and countries named in the bill, separate, distinct, and competitive lines of transporta- tion and communication, and allege that they still continue to do so. It is further admitted that some of the roads men- tioned m the bill received aid by land grants from the United States, and others received aid from the states and territories by loans of credits, donations of depot sites and right of way and ma few cases by investments of money, and the people of LrnTJi !^ and territories to a limited extent made invest- wSe oH,P /^K r'"^ ^""^^ '" ^*""^ "* ^•<1 railroads, while other of the lines mentioned in the bill were almost entirely constructed by capital furnished by nonresidents of Zi ^'T- /' '' ^''^'' ^^'"«^hich -ted in joint rates. 1 doTg btw """'^r""^ •"'^'- country, r«,„iring preconS Si r Jw:::f jJ "1 1 wornrri::^-:^ r ^d"f ":r ^-- p'-^^^^^^^ chairman of thtT^ Jon^ ^^Se^To f "'l- ^'^^ ^''^ cutting, and that the artides of «J1 „ ? "'''^\'^^^ ^ate may assess fines for vTi * f g'*«'nent provide that he T ^-c» nnes tor violations thereof lint aii„„ *i x attempt has l^n made to enforce the cojlei on S, • " Sii/'t". "Tr"'- ^'- '''•fendan" : :.i' ::;Tr principal object of the as«oeiaHnn ,« ♦.. ^ ui . *"^ rates, rules, and regiila^^r , f^i:S'?t "''^"r'''' maintenance of UU] such r.t "'' ^ f " ^-affic, and the ner pi^vided bySaw^ Itl W."""'„''''''T^ '" *»>« """»- ment was filed v HMhe nirstal ^ ^^' *'"" *'" ''^- -luir^ by .^tion « oVtt^fo "'i^a^T';^ fendante further allege that it is n„. th7p~ „/h " '^- ciation to pivvent mpml^... f \ puipose of the asso- the rules oJ i.^l W fi^JrtW r^ T' "' ^^^""^"^^ the terms of Uie agreemeii each ' T '"' ""^^ ^'^"^ ^^ preliminary required Sl^^^^^^ '"^■^ ^'« ««^- ^he be voted lirat thrn^leHn^^^^^^^^^^^ ' ^'"'^"'^^^ ^^^"'^'^' ^^^«" if the proj:sal is i 07;^:^^^^^^^^^ posal can make such redSltp'* T\ "'"/^"'^ '^'^ P'^' tion of the other lits St /h "^^'^^^^'^^^^'^^'"^^ the objec is to afford oppLri ; fir 1 ^'"T^' ^^^ '^"'^ ^'^'^^^ lines iBtere Ja^a':^^^^^^^^^^^ ^-^ ^^^^'«^-" »>.v all such reduction I and tha td '^^^^^ f^ ;;;:^.^ ^ ^^ ^"^"^ ^' in many instances, through s^Z^^t^T ^'" "^'^^ It is admitted bv the answei thaf V^i ^ association. answei that this agreement took effect UNITED STATES V, TKANS-MISSOUEI FBEIGHT ASSN. 87 Opinitm of the Court. April 1, 1889, and that it has since remained operative, and that the rates, rules, and regulations proi^erly fixed and es- tablished from time to time, under said agreement, have been put into effect and maintained in conformity to law ; but it is denied that by reason of said agreement, or under duress of fines and penalties or otherwise, the defendants have re- fused to establish and maintain just and reasonable rates, and it is alleged that the object of the association at all times has been and is to establish all rates, rules, and regulations upon a just and reasonable basis, and to avoid unjust discrimina- tion and undue preference. The answer further denies that shippers or the public are in any way oppressed or injured by reason of the rates fixed by the association, but, on the contrary, it is alleged that the agret'^nent, and the association established under it, have been beneficial to the patrons of the defendant railway lines, com- posing the association, and the public at large. A copy of the agreement is set out at length, and attached to the answer of the Atchison, Topeka & Santa Fe Railway Company.! The case was set down for hearing on bill and answer, and the pleadings only are to be considered. The answer, therefore, is admitted to be true in all its allegations of fact, even when not stated positivelv; and the defendants only aver that they believe, and hope to be able to prove, such facts, but the complainant does not thereby admit con elusions of law, nor matters concerning which the court takes judicial notice. The act of congress of July 2, 1890, which it is alleged in the bill is violated by the agreement to form and the forma- tion of the freight association, in the first section declares every contract, combination in the form of a trust or other- wise, or conspiracy in restraint of trade or commerce amona the several states, to be illegal, and provides for the punish "lent by fine or imprisonment of every person who shall make any such contract, or engage in any such combination or conspn-acy. Section 2 declares that every person who shall monopolize [M6] or attempt to monopolize or combine or ^^"^^^ ""^"^^^^^^^^ to monopolize any * See note at end of case. ^ 53 FEDEBAL BEPOKTEB, 446. Opinion of the Court part of tlie trade or roniiiiert-** mnnnnr fi, xvitu 4 ' . ' """"^rte among the several state*; m* Te ofS'rr"- :""\'" "^""'^ ^^'""^ «f « - de- meanor. .,nd, on conviction thereof, shall be punished bv finP cue :^z;^!^^jt:::^^^^ '-^r state, and lK>tween the DUtriot^tnT, **"'*««•>' ""d » or state. Section rconfoi^ ,1.^" f '" ""' ". ^"^'■'•'•"••'^' .^iw..,;* ^ ^ . Winers jurisdiction upon the several circuit conrts of the United State, to pievxL uu\ ,T^^ violations of the act, and makes it tL 1 / "'" attorneys in the resm'tive dufri f ^ ^,"* "'" '"'*"*=* the attm-nov ^ei.^ral to ins. t ,? ''" "" r '^"' ^'•'■''^''"'» »* prevent and r ^^^at iT^^t^tT '" '"•>"'*^' *" for bringing in other ne; L^^a S« ^"L^V ''""f for the .eiznre and eondemnati Tpl-optXl Jd'r'f any contract or combination prohibiterbv ui ^^ . m the course of ti-ansportation fro^^^le state t« » H ^ to a foreign country. Section 7 giv" ^11 ! Vaof i '"" "' pei-son injured by violations of iract^ and a!^r ^"'' recovery of threefold damages. The eSth Ind . !' " provides that the word " ne,-so„ " L - i*"* ■'**'*'°" u«Kl in the act, shall 1^ con^^^^rd to nclir"' I""""'" associations existing under or .thor zed K^^ ^7""" m "'" of the United Stat^ or of the te rhories or ) "•''"'■ of any foreign country. "' "^ '"'•^' ^'^^^ or It will be seen from' an examination of this statute th.t -, purpose was to reach two evils- F,r=; ! ^** '*^ tions, or conspiracies in ^:^tt' ZTIm'^'^'Z monopolies. It was urged at the arguLnUh^t the ""T^l mentioned in the bill ar,A tu^ "^gument that the contract came within ft! ' ? *« f^sociation formed thereunder came within the provisions of this act of Julv o ison 7 the reason that it is a contract or agreement S Z!t \ * trade, in that it prevented free com.S^H '"'*«*'•""* of transportation of freiJhV IT. '^'"f *'*'"» '" ^he matter of the 4on specildt te Z^l^JZlr^' ""'^^" insisting that " tr^A^ ar.A counsel for the government •* o» oongrea, ,„d that no M.„,^.- Jf rMr.med by UNITED STATES V, TRANS-MISSOURI FREIGHT ASSN. 89 Opinion of the Court. hand, it is insisted by the defendants that there is ho fixed rule of law by which to determine whether any given con- tract is in restraint of trade, but that in determining the question the courts must look to the particular circumstances of each case. In disposing of this branch of the case, I will first briefly refer to some of the decided cases cited by counsel in their briefs. The case of Com. v. Carlisle, Brightly, N. P. 36, was a case where certain master shoemakers had entered into an agree- ment not to employ any journeymen shoemakers who would not consent to work at reduced wages ; the purpose being to re-establish wages for this class of labor which had prevailed before that time, but which the defendants had been com- pelled to advance by reason of a combination among the workmen. The court, in deciding the case, said : " Wlure an act is lawful for an individual it can be the subiert of conspiracy when done in conceit only where there is a dir^t i i^tio„ that in- [447] jury shall result from it, or where the ob/^t is to b^n efit the conspn-ators to the prejudice of the public or tl^ onnr^sTon of individulas, and where such prejudice or oppression is the n!?nr i^ and necessary cons, quence flowing from the act." The case of People- v. Fisher, 14 Wend. 9, was an indict- ment against journeyman shoemakers for conspirinor to- gether to fix the price of making boots, and establishtng a penalty agamst any journeyman shoemakers who should make boots for a less rate than that fixed by the parties to the agreement, and also agreeing to refuse to work for anv master shoemaker who should hire a man who reduced the rates for makmg boots; and it was held in that case that snch ^r i\T?''^5 ^^^^'^ *"^^" "^^ commerce, and, as such, prohibited under a statute providing: " If one or more persons shall conspire to commit any act injurious to trade or commerce, they shall be guilty of a misdemeanor." In passmg upon the case, Savage, C. J., said : to'SVr 7^^:;^^';!^^ ^ *-^^ -r — erce is not obliged to labor for an^^>arSr n^ i^^^ Z '' *^^ »»eci,anic obliged by law coarse boots for less thai «Tm^^ "''''^, ^^^ t^^^t he will not make that no other mechanic shln'^^f/r*'*' .^"* ,^^ ^^^ ^« ^'^^^^ to say «"»»t>er to effect such an oC are i ibiHnnf ^^ T^" ,«>ml>inations, therefore. tioularly oppres.edXt%:\'hrSriaVg^^ '" '"^ "^"'^^^"'-^^ ^^^ 90 53 FEDERAL BEPORTEB, 447. Opinion of the C€>urt. Hooker v. Vondewaier. 4 Thnia %lq «.„o pel a division nf naf • ? ' ' ^^^ *^ ^^^lo'^ *o com- Oswego canals. The affreempnt ». Tf T "^ *"'^ mn i.;„ r i . "S™einent was that each party should run us hne of boats upon these canals during the ,irS S canal navigation in 1842, at rates of freighffi^S Tv tt^ selves, from which neither should deviat! and f „ . r T the interest of each the resi^nfJ™ i ' ° 'ndicate ^k amounting L^'/i.Tb '1 ^ AlTrreT'h"*" eqnaUy i„ the net earnings of all thTiin^ " • *"* the number of shares of l^ch stock anit '" /^"P^^^r *" -nee of the contract a "ommon -/"'"'**''** P*""*"™- whom each nartv f^L "^"* '^»'' appointed, to to time to r^Sett^^s of thiT ' ""'^ ".'"^ "''^ ^^^'^ *'"- *i:xt;i»e returns of the business done hv t^anh i;«« and adjust the proportions from the earniZ due to eich' •nd out of this common fund to pay and Sdat! In t amounted T,; - '" *'"' *** *'''•* ^'^« transaction amounted to a conspiracy to commit an act iniurions to trade, ^^d was therefore illegal and void. ^ " The case of Sfnnfon v. A77,i, 5 Dpnin s-^i ni>on a pm„i. "P"" "i*" "'e of the ■" '""*' '"r the season of 1843 Tn thU ease an agreement had been entered into hv f I 7 ! of boats on the Erie nnrl n.J . • *''*" P'""Pr'<>tors of frei^hf „.J anfl Oswego canals, to regulate the price Z^^u ''"T^ ^y " ""''""n «"'!«' to be fixed by a committee chosen by themselves, and to divi.le th^ pn^fit! • U^t me I';s7l^E;;^i " ■"v't'"-' •"••""•'•*- the associati... and i: Zf SI h"atT ":entrof""::h an «gre..„,e„t „,. ., p^. f^, ^^^^ whoZmM^t " t;thee.ectt;a:;o::7.'fSr;::r:^^ out the con.sent of a mninrifx- «„j „ j- ""^B'ng with- for P«ph h.i„ * • ""."J"'"-^- «na providing a penalty of $10 for each bale of bagging sold in violation of the agreement and the action was to i^over penalties under the n^ZZm, » UNITED STATES V. TRANS-MISSOURI FREIGHT ASSN. 91 Opinion of tlie Court. amounting to $7,400. The court in that case decided that the contract was a combination in restraint of trade, for the reason that its purpose was to enhance the market price of an article of prime necessity to cotton planters, and was therefore contrary to public policy, and could not be enforced. The 3Iorrw Run Coal Co. v. Barclay Coal Co., QS Pa. St. 173, was an agreement between five coal companies to divide two coal regions of which they had control, and to appoint a conunittee to take charge of their interests, which commit- tee was to decide all questions, and appoint a general agent at Watkins, X. Y.; the coal mined to.be delivered through him. Each corporation was to deliver its proportion, at its own cost, in the different markets, at such time, and to such persons, as the committee might direct, and the com- mittee to adjust the prices and rates of freight. By the terms of the agreement the companies might sell their coal themselves, however, to the extent only of their proportion; the agent to have the power to suspend shipments of either beyond their proportion. Prices were to be averaged, and payments made to those in arrear bv those in excess. Neither party to the contract was to sell coal otherwise than specified m the agreement. The action was to recover on a bill of exchange drawn for balances under this contract It was held that there could be no recovery, for the reason that the contract under which the balances were claimed was void as against public policy. The case of Craft v. McConoughy, 79 111. 346, was an action tor a division of profits under a contract between grain dealers at the town of Rochelle, in Illinois, in which it was provided : founts iv.v fi,„.- partiiei-sliip in apiwarance. keen their ao- fro... time to time fs SZZnt *" ^h'*"*"? """ ^""^^ *» "* ^^^ busUel." "^ "^ ""y P-""'*-^ «t « '«^s rate than 2 eeuts p^r The court held the agreement void, as in restraint of trade, trinlTrt"^ *"*.*,' "**"' "'** "^^"«"t "P°" 'ts face seemed to mdicate that the parties had formed a partnership for M «l« 53 FEDER.\L BEPORTER, 448. Opinion „f tlip Court. the purpose of controlJii,' g«age of the court: ''hipment; adopting the lan- a town ami >.uri„iin,ii„g ,-„„„try '• "^ ^ ""* '^"*"'<' S™''" trade of f«9J In the case of Salt Co. v /?«/*«> q« ,., • , the contract was for th^ .>„....„ '^•/'«**"«, 35 Ohio St. C66, •nn. j„ t ,. l/""^ ">« purposes of reguiatino' tKo .,-; , grade of salt. Bv the terms «* * u ^"'"""g '"e prices and of the association was nSTh.tL / ^^^^'^^ e«<^h '"ember 2 ^'^-ntinuancetfrii a r ^7 T'! •'"^; then only to actual consumers at Vh! i ^ ^. '■"*^''' «""* and at the prices fixed bT^he t, ! ^ T °^ n»an.,facture, The action was t« recover tit '"' ^''"'' ''"'^ *° '■">« -It manufactured iiX he coCr^T:' ''T^^'^'^'-^ «^ Plamtiff's right to recover. stX "TheT'' ^T"^ '^' such an agreement was to estrw^fh » T *^"'^'"'=-^ "^ stroy competition in trade »»nSf f "^"""Poly, and to de- of public ^licy, court wm not a ^in £ T' "' ^''""'^^ The case of Te^,^ ^ p r^ nfl""'^ enforcement. 41 La. Ann. 9T0, fi Sonfh Rep 888 '^''"'''^'^.'P«<^- %• ^o., performance of 'a contract rdivid'e net " ""' '"' ^'^^'^'^ competitive points. The court Zi "f "''"""'^ between force the conLct, saybgl '''"'*' *** specifically en- ?°}r^o"^°--t.C^^^ to sti«e competition or ^ng the niarlvet value of Ztm^liHi ! "*"' ?' "nreasonab v iuc^as contrary to p„Wic jK.lic.v." ^'*"'^ "'« "Ka'nst Puhlic interest and The case of Anderson v. Jett, (Kv M2 «? W t, . was another ca^ of a contract to S n!t earl^'"' Tl was there held that, where the obiect "f, ? ^' ^^^ '* agreement was to prevent l. 7 ^^^ tendency of the tion in the trade Tnd whe^ T ' ^'"^ '"^ *«''' ^o-nP^ti- have that tendei v ^t "S "^T'"'"' "'«'^* '» ^*<=t policy. ^. « ^as void, as being against public The case of Gibbs v. Gnt fn iqnrr o ««„ 553, was a contract for a ^^tlement Utt '' '> ^^^ ^^P' *^ujeinent between certain gas com- UNITED STATES V, TRANS-MISSOURI FREIGHT ASSN. 93 Opinion of the Court, panics, which the plaintiff procured, and for liis services in procuring tlie agreement he sought to recover. The object and purpose of the contract was to regulate' the price of gas in the city of Baltimore, and provided, among other things, that the rate should not be changed except bv mutual agree- ment of the parties, and that the entire receipts fronT the sale of gas should be proportioned and divided between the companies in fixed ratios, without regard to the gas actually supplied by either; and also prohibited one of the companies from laying any more pipes for the purpose of supplyin*^ the city with gas, and provided that in the future all pipes or mams should become the propertv of the other company and also provided that either party violating the tenns of the' contract should pay to the other company the sum of $250,000 as hquidated damages. The court in this case, speaking by Chief Justice Fuller, said : •'Courts decline to enforce contracts wbicli impo^ie a re^tnint thougli only partial, upon business of such character that tlTw^h Lx^l w. f' '"?" '" Pr-J»9- Davuv. Mason, 5 Term K. 120. In this case Ix,rd Kenyon icing ^rofof" "^^""'^ T"'"'"^ ^ --•^-" *-- P - tmng his profession within five miles from a certain town, «InJtL;'^tC'^r^rwafa"lit''rtv I^ "^?-'-^ "-^ *"« ««■•-"'-*. town." iH^iwn was at liberty to practice as a surgeon in the 94 ^^ FEDERAL BEPOKteb, 450. Opiaioii of th.' Court. • m parsing „p„„ f,,, ,„,iji of , '^^; "■ ;' *-*!• '^^''/J'e ^ourt, winch ....„„«, „..,,„„...„ ,he\sr,:i, ;,r:i.r '•"^"'' jil»l*» ft.i. *i. ' """ I"'''<-.v. unless thev jir#» t.nf». i ' '''^ l><'iiig n iiiiie. un tile luotcctlon ,>f *i S '*^ "atuial. ami imf n,,,.^.. . - S,.,. also. n„l.l,ur,l v. J////™ 27 Mid, ^^. TI /?«'^V,., lOfi X. y. 473 , V K 'r - '""•■ "'"''' ' "• ^•• 'l'«w, 20 ^A-all. (-4 ' ■ "''^'- *'**' ^'"■'f/"f'o, Co. V. engaged i„ navigati„;' h: Z:i::^'Zi^' "''"I " '"'-^^ « St......... to otiH... paries, wi; ;;:'e.V:S"'in "' """ the CohiiHbia liver, in Oreiron a.uJ «' i '^^ ""v.ffatn.g and it was agreed l.tw. "To i::'":^!;'" '"■'■'^"'•'«-^' of the steamer sl.oul.l „ot emolo i I "" P"'-^l'"^«rs plow,! for 10 vears f,..T\t ,^ * *"" •'"•'^'''" '^ *" •* e.n- ;, ,-, . ^" i^^i^ noni the date of sal,, i,. . California. Three years afterwJ.tj n T^' ""*•"'■" "^ this contract. soJd ihV laniel '''** P""*"'-'"'-^- ".xler ing P..,.H sou... sl^Zt^T^r'''"' '" ""^•'^«'- not b. r..„ or en.pio^ oVl '^ Sf/;:;,;''' ^ "•""'^ bays, or waters of the state i.f rTf "" *'»'' "^'^^s, river and its trib..taries tie ^^ ;::i''y'^^ ^^""""'^■« supmne court held the contract vaS Mr J ,,r,T .['^ speaking for ,|„. ,,,„„ ^^j^. »""• ^"«- -'"^t"'.' H.a.lley, UNTTKD STATES /'. TRANS-MISSOURI FREIGHT ASSN. 95 Opiiiitiu of tlK- C.mvt. or»ei-;ites merely in partial restraint of trade is j?ood, provided it be not un reasonable. ' Again, in the same case, the learned justice takes occasion to sav that — •■ Cases must be adjudged according to tbeii- circniiistances and ! • . ?""''*'" ^''■'"•='' '« «« be -nt and tht^l^l'll'^ytrVsiS'^ "' *'! "^- to maintain just and ven^nMe ^^Tndl """f"' ^'' discriminations, in compliance wiSlhe terms of rr^* latmg commerce, bv funiishimr enll / i } "''* '■''^"- ehange of traffic betwe theJve? It h" 'T'" "^•'^- be said that the fisoi n,.Ki.- ■ • • "*""' '*>*'"• '^an i* agreement/ The rl ' ■ '' "'J-nousIy affected by this able TnH • . , *^' *"■ *''""■««* "«•« ""'form and reason able and unjust di.scriminations are prohibited ^ ," facilities for the interchanM at *.„«; P'^*""?'**''-. Equal hence no right to whlh thf nl. ' "^ P™^"'«'' '«>'•; The term " conHLkion " t. T .' u' '""""*^ '' ""'"t^d- solelv tn tl.„ '?• . ""'^* ""^ f^ construed to annlv so ely o the question of rates. There are man, /i? ^^^ siderations included Vithin the ten. Th ^ ."" *^"- active competition l>etween the^ ™i "..? "^ ''^'^' ^ ^«^ question of rates, vi.. rofferTnr o .T ''"? «"*-^'^« «f ^e in the matter of equipn^ntl'^Sfti af fe^S.^ Z'^'T the proper care of live stock, shorteninrof r "!, ^f"" many other wavs the most aoH^r 5 • *""''' ""*' '" an of which the pubr;litl;Zro7. Td 'T"' as the rate char^nH] h fnir ««^ fi ^ ""^ ^ ^^^S answer, which mill L clUntrt:^^ " ^*^*^' '" ">« fair compensation to theTrCrll ♦! "" """^ ''""' * " the public cannot comiJain '^' '"^'•*-^ Performed, oIH Jn^ {«"i5!*^ ** *^"^*® as MUCH interested in tK^ citizens in their various avocntrnri« ol V*^ *° *"® prosperity of its Pe ition. The latter may brini low nnl* ''T ^^""^^^^ ^e in their co^ bring them so low th^ eaDitoi hJ^ ^'^^'^^^ *^ Purchasers, but may al^ fail, to the l^neralTnTurTafTe^^unU^^^^ ^""^ businTs'I me'S UNITED STATES r. TBAN8-MIS80UEI PBEIGHT ASSN. 97 Opinion of tlip Court. bounds of reasonable prosi^^rity to the parties engaged in it for surely he citizen investing his capital, whethef t ml whTh V 7f?- " "'*'"«•* *° ^'^^ benefit oflZ^tl which affords to him only a fair protection for hisi S ment, and which does not interfere with the ri^htl of tht pubhc by imposing unjust and unreasonab l cttes o the service performed. Such contracts as was ^.tIX7 T case of Homer v. Uhford "arp „ "r'" .''^''^a■^ ^^a'^d m the sideS, niylr4w;:;r;t^? *•'•' '■r™-^ -'- — bination, ;r Is^LTin ^ trabt'of 7 '." "^'^"'?'' """■ the first section of theLroHuirs! IS^^^^ " "''^^"^" '^^ it IS further urged by counsel for the ffovernm^nf ih , .w aTd°:r:eraT?f j^tr ^ *« « -nfpXar x:^: ond sectio^f the a'cT 1T;T 1800 t " '^" °' ^ "- defined by Mr. Justice Story J; iL-an 7""P""y" '« granted to a few, of something JLh was bJ^ "^''*' right ; " and by Lord Coke to L " ! ^^"""^ "' '"""^nion by his grant, cLmiiiS' :r*:ttrwTse't a"'"" '' *'* '^•""' porations, of or for the sole burf^eilir '^T' "' '"'- mg, or using of evervthinc wh k^' ^' ""aking, work- tions are sought trter^frt/d' of ""' TT °^ •^'^''P"'-*- they had before, or hinSed „ 1 T^ * " ''" "^'"^y it is undoubtedly true Zt th^ ""T ^7*"' *'-«'^«-" Wl'ile quasi public funct ons and f^rTw"'""'"* companies perform to the public, ye after a ' ' . , ''"'"" ''^^^ ^^^ain duties tract, I must'ci' that r h? "l'"'"'"'"''*'"" "^ ^^is con- [«3] it a single element If '^'" """'''« *« ^i.scover in at common lal^ ImJ^iiZ^Z^^T'^tf' ^' ^««-^ to adequate facilities and fl T f ! ^ P"''''^ are entitled hands of these corporattn, ' f '""* ""^"'^^^ '^'^^ ^^ the and no mot.; and'traS^on'ofr"''''^' ""■ ^"^* *''«^' was the very purpose of the^conTmct t' ^'^""""^ 'I '^'' '^^' tion,-which is to be taken <.?' " "'^"^ °* ^^is allega- 1180&-VOL 1-06 „ . ■ *®'"^' ^ ""^ate a mo- 98 53 FEBEBAL REPORTER, 453. Opinion of the Court. 'I nopoly when, by its very terms, everything to which the pub- lic is entitled is provided for, and the public interest fully protected. But it is urged by counsel for the government that this should be held to be a contract tending to mo- nopolize trade and commerce, for the reason that its tendency is to prevent free and unrestricted competition. What I have said in reference to competition in discussing contracts in restraint of trade is equally applicable here. My own view is that the contention of counsel is altogether too broad. The public is not entitled to free and unrestricted competition, but what it is entitled to is fair and healthy compt»tition ; and I see nothing in this contract which nec- essarily tends to interfere with that right. Again, it is urged that this contract amounts to the trans- fer of the franchises and corporate powers of these railway companies, 4ind that the contract, therefore, is forbidden by public policy. There is no doubt but what it is beyond the power of a corporation to disable itself by contract so that it cannot perform every public duty which it has undertaken. Mr. Justice Miller, in delivering tJie opinion of the court in the case of Thomas v. Railway Co,^ 101 U. S. 71, says : " Where a corporation, like a railroad company, has granted to it, by charter, a franchise Intended in a large measure to l>e exercised for the public good, the due performance of those functions being the consideration of the public grant, any contract which disables the corporation from performing those functions, which undertakes, with- out the consent of the state, to transfer to others the rights and powers conferred by the charter, and to relieve the grantees of the Imrien which it imposes, is a violation of the contract with the state, and is void, as against public policy.** Bui wherein the principle announced in this case can be applied to the contract under consideration, I am wholly unable to perceive. In what manner are the franchises or corporate powers of any of these railway companies trans- ferred to this association ? Each company maintains its or- ganization as before, elects its officers and operates its line in exactly the same manner now as it did before the organi- sation of the association. No powers whatever are given to the association to govern in any respect the operations or methods of transacting the business of any of the lines. Each line is left perfectly free to transact all of the business it can secure, and in its own way. True, the contract re- UNTTED STATES IK TRANS-MISSOURI FREIGHT ASSN. 99 Opinion of the Court. riT ^^T r'' '*""P''°y "^^^ ''^'''•^^ J»«t ««d reasonable rS- buti/""*'T.!-P''"''^''"'' *"•■ '^^^^^^S changes in SL intn .r r!i '%* '' * '""■*"'^^'' *** «"y corporate fran- chise into the hands of an irresponsible power ? The contract provides hat this association shall consist of a repre^nS of each of the hnes. This representative fliav or may not U an officer of the company. Suppose we concede that he "s noT but IS a person appointed by the officers of the company au- tL a^nt^f^. '"'^ appointment, he [454] then becomes fullv^c. ?' ^If ^f ^ ^""^ '^^' P"'-P'^' '"» ''"y passengers or propertrilT/r ? *' transportation of road arid Partfy ^1:'""^ t'StlaT a^lt '^ 't services shall be rea^jonaWo jP™y<>f that all charges for tions and undue or ^^rL^K^r*' 'Y ""J"^* di^crimina- naue or unreasonable preferences shall not be 100 53 FEDERAL REPORTER, 454. i Opinion of the Court. made; that reasonable, proper, and equal facilities for the interchange of traffic between lines, and for the receiving, forwarding, and delivering of passengers and property be- tween connecting lines shall l>e provided ; that there shall be no discrimination in the rates and charges as between con- necting linas; that it shall be unlawful to charge a greater compensation for a short haul than for a long haul over the same line, in the same direction, under substantiallv similar circumstances; that there shall be no pooling oi earnings. The act provides for the filing and publication of tariffs, in- cluding joint tariffs of connecting roads, and also provides for TO davs' notice of anv advance in rates. The act further provides that any combination, contract, or agreement, exprass or implied, to prevent, by change of time schedules, carriage in different cars, pr by other means or devices, the carriage of freights from being continuous from the place of shipment to the place of destination, shall be unlawful. The act provides penalties for violations of its provisions, establishes a commission of hve members to exercise a supervisory control over the common carriers sub- ject to the act, and to enforce the provisions of the act. It will be seen from an examination that this act is in the nature of a special act, being confined in its application to common carriers, while the act of Julv 2d is clearlv, bv its terms, a general statute. It includes every contract or combination in the form of a trust or otherwise, or conspiracy in restraint of trade, and every person who shall monopolize or attempt to monopolize any part of the trade and commerce [455] ftoiong the states. I think no rule is better settled than, where a general statute has been enacted, which might in- clude, in the absence of other provisions, a subject-matter which has already received consideration at the hands of the legislature by a special act, that the general act will not be construed to embrace the subject contained in the special act, unless it clearly appears from the language employed that it was the intention of the legislature that it should be included. The intention of the legislature should, of course, be fol- lowed, and that is to be ascertained from the words "used in the statute, and from the subject to which the statute relates, with a view of meeting the mischief sought to be remedied; UNITED STATES V. TRANS-MISSOURI FREIGHT ASSN. 101 Opinion of the Court. and in doing this it is the duty of the court to restrict th. meaning of general words whenever it is satisfied th.J ^l hteral meaning would extend the statute to cal twch h! StteD "^^^".."^^^'^^d ^ i-'ude. As stated bf^ Just ce Davis in the case of Reicke v. Sn^ytke, 13 Walh lU: subjert-uiatter to wljich it relator th-L- ° **'^ statute, and the tbe ii,eani»g of genera? ,1 -rts wheiiev^r ft t^f^*"!,' ""^^ *" ''«'«« so m order to carry out the Ie^iKlati"e fntintion "" °«*^'"^ ^ do such rZsS;;:t£ hrr;rdt ti'/^^.^r- FeZSyi 1887 "..'°'"r" '"'■""'■^ ^"^^'^^t t« the act of 2d « I Sink t J' '', "'" P'-^^i^'^n^ «* the act of July Th"t r T '""^ -t-t'°n orcon;:i'^ '" ■" "•"^'•^'*' hat h :~'„Ef !J' r''- <'"ty it was tJ ^ fo t' ^en., with™;trcrrx7irits t rr- the proper r«g,dations anZntTol Z the " '"""'''^'^ ^"^ have provided for it hv In . ^ ^ carriers, it would including it in r^ntrnT ^Tf ''''''' °^ '^^* """'' ^n^^ad of which wf u;VL es^r ,y co?£^w^rV'^p^^^^ «' force upon a subject which had X «. ^^'''"Z'"" '^^'^ ^ consideration of conlei IthtC/ "^'^''^ '^' ^P^"'**! congress to remedy a v^ ll'^'K '* ^""^ *h« Purpose of number of comb^naVonr^the l" 7! *'^" ^■^'^*'"^- '^^ cies in n^straint of tralhad sL ''^ ''"''' """^ "^^^^P^ra- were dangerous to tTSmmeSS'^nt"^ ? ''^ '"""*'^ ^''''^ steel-rail trust, cordageTLTthe K ?'*'' ^°' "^^'"P^^' ">« oil trust, dres;,d-bif trTst II ^'I'^'^f t"'«t, the Standard trust, and numerou7otheT ;iit"a^'"'t- *""*' ^'^^ ^- X;f tiS: -- %~ ri'nrsi^s: 102 53 FEDEBAIi BEPOBTER, 4o5. Note — Memorandum of agreement. iBg which of the constituent members of the trust should continue operations and which should cease doing business; how much business should be transacted by each, what prices should be [456] charged for their product, and in fact had the power to direct every detail of the business of every cor- poration forming the trust. It was to combinations and con- spiracies of this sort that the act of July 2, 1890, was directed. I conclude, therefore, that the bill should be dismissed, and it is so ordered, but not at the cost of the complainant. NOTE. Memorandum of agreement: "Memorandum of agreement made and entered into this fifteenth day of March, 1889, by and between the foliowing railroad compauies, viz.: Atchison, Topelia & Santa Fe R. R.. Chicago, Rocii Island & Pacific Ry., Chicago, St. Paul, Minneapolis & Omaha Ry., Burlington & Missouri River R. R in Nebraska, Denver & Rio Grande R. R., Denver & Rio Granf. passing between pnints in the following describeil territory: Commencing at the Gulf of Mexico, on the Olth meridian, thence north to the Red river: thence via that river to the eastern boundarj- line of the Indian Territorv : thence north by said boundary line and the eastern line of the state of Kansas to the Missouri river at Kansas Citv : theneo via the said Missouri river to the point of intersection of that river with the east- em boundary of Montana; thence via the said eastern boundary line to the international line,— the foregoing to be known as the ' Missouri River line ; ' thence via said international line to the Pacific coast • thence via the Pacific coast to the international line between the United States and Mexico: thence via said international line to the Gulf of Mexico): and thence via said Gulf to the point of beginning Including business between iK>ints on the boundary line as described' <2) All freight trattic originating within the territory as defined in the first section when destinefl to points east of the afoVesaid Missouri river line. lOxeeptious : (a) The D. & R. G. and the D. & R. G. W except their business to and from points in Colorado west of tlie D & R. G. line l)etween Denver and Trinidad; also business via their lines between points in Colorado and points in Utah. All local busi- ness lietween Denver and Trinidad and intermediate points- all local busi^ness of the A.. T. & S. F. between Pueblo and Canon City. Colo. ; all stone traffic having both origin and destination within the state of Colorado. The jurisdiction of this association in so far as UNITED STATES V, TRANS-MISSOURI FREIGHT ASSN. 103 Note— Memorandum of agreement, the business of th** Tiont'tii. 9 m^ ^ Rio Grande We^er^^^iZay'^^nm^^^^^ ^"^^ '^^ I>-»^er & lowing traffic, namely : AH 'fr^TAffic'trf/"^' "^^^"^ '^^ '*>'" common or nmction points in the sSt^s o?' t^Ik'"' i^"" ^^''^''^^ «" and the Indian Territorv orfJ^offnt ^^ Nebraska and Kansas Colorado Springs, Puellf'or Sdad In'' w^h^"?' ^^ ^"^^^• Ogden, Spanish Fort and infVr,?.L^- ; All freight traffic between and to. from, or th^u-irnoinVs in ^'''"^^ ^'"^'" ^'^ ^^^ one hamf of the 10.3d meridian on the other hTn^ t "L'^'^l^*-^ "P^" ^' ea«t eluded under the annlicntion nf fh I' ^-^^^^ ^^'^^"^^ may be ex- delivered to or recel'^^''?rom the Denve'i'? i^L'p^^ T"" '•»« Vv ^ Denver & Rio Grande Western R nil wax *n^ ""^^^^ ^""^^ Railroad and Trans-Continental and Inten^ationnT LJ - included in the Ing between points in Kansaf or^^^^^^^^^ ^^^ ^'^^^^ P«^s- ^Ints, Carondelet and soX nl% t^^ffie nn^'c/"*^ k^^'^^'^^^PP^ ^iver Kansas or Nebraska nnrl Tv.i'r./J • I. Passing between po'nts in Mississippi rivei^and ^^uth"^ o? the\n??HT'^"''" ""'^''^^ ea.sTof the gnia, regardless of ti?e"*,Ue bv Ti eh Th.^1 "".""^^^^^ ^''^ Vi'- Mississippi or Ohio rivers M^Trnffi. ^^. *^"«^ness crosses the river points and points Tn Oie r4571 tet^-Lf "'? ^^^^^^^" Ml.ssonri All traffic to noint^j nn +1!^ i? hl^ -^ territory east of said river /IV and to Sioux C\ty. Council Bluffs "^i pJ"«'^'?*^'' """l Nebraslca. Josepli. Kansas Citv or Ro^uoii Ar- ^"'^"''^ Junction. Iowa St traffic with the C./lorado Miril«n;. -Ti'""'- "» The intercSe of from AsfH-n. Colorado GIenwo^''snHl?"n'', ^"'"' <^o™Panies ?o oj l>omts. including coal biaXs thpr«flT- ^^^ <"•''<'<>• and Intern ediate and r*advillp. Colorado nt therefrom, and Buena Vista Colorndr. rado. b.v^all lines ""• ^" "*"«'"««« *» »nd from Florenc^.^Sf^ a eha''irni!in''o?"be orglnLMr'"""" ^^a"- "y unanimous vote elect wthirds vote Of thfm^mbers ^^ ^"t;"'"" "'^^ "e remov^ bl^ ings of the association .nt Kansns r/t ^^?'''' ^^" be re^larni^t" by the chairman that the business t? ^' T'"^^ "»"<■« ^b«\\ ^ Sren calling the members togethe? vhw,*L^? transacted does not wafrint f?r"'o?"C?'^*''« day s^t Vr he nSfnt'"!.!^ ''""^ ■«>» '-«' 'ban lar 01 special— is convened it shVii k! ■ ^^ ? ''*° « nieeting— reeu- hereto to be represented br some iffi 'n«imbent upon each nartl SM^tb""".-""' ""««"»"« toTcSasWer^*""^'''^ *" "'•^ •''fln^t^ p.i;vttT™r tc ^oT-S--^" ^"Werrii^i freight tra/Hc- ellh?^'^'""'^^ '" any rule or re^.i .""^ Proposed Colorado or Uf;h^«^'"-'L:' '° ^ f»r asapp^L^^f '«''«n Soverning Shall consider aS,, ?^- ^- ^^ ^^ch monthly m^«Lti.^" *"'"<= «' and vote „.K>n „„ changes^p?J,S. *of S^d^^ 104 I ■ 53 FEDERAL REPORTER, 457. Note — Memoraudiim of agreement. notice has been given, and all parties shall be bound bv the decision or the association, so expressed, unless then and there the parties fehall give the association definite written notice that in 10 days there- after they shall make such modification, notwithstanding the vote of the association : provided that, if the member giving notice of change shall fail to be represented at the meeting, no action shall be taken on Its notice, and the same shall be c-onsldered withdrawn. Should any member insist upon a reduction of rate against the views of the ma- jority, or if the majority favor the same, and if. in the judgment of Buch majority, the rate so made aflfects seriously the rates uiwn other traffic, then the association may, by a majority vote, ui>on such other tninic put mto effoit corresponding rates, to take effect on the same * 1" .7 ""i>»""<>"s coiKseiU. }iny rate, rule, of regulation relating to freight traffic may be modified at any meeting of the association Without previous notice. Sec. 6. Notwithstanding anything In thiB article contained, each member may. at Its i^eril. make at any time, without previous notice, such rate. rule, or regulntion as may l)e neces- sary to meet the coniijetition of lines not members of the asstx-iation fiTing at the same time notice to the chairman of Its action in the prem ses. If the chairman, ui>on investigation, shall decide that such rate is not necessaiy to meet the direct competition of lines not mem- bers of the assmiation. and shall so notify tlie road making the rate Jt shall immediately withdraw such rate. At the next meetinc of the association held after the making of such rate, it shall be reported to the association : and if the association shall deiMde by a two-thirds vote that such rate was not made in good faith to meet such compe- tition, the memljer offending shall be subject to the |»enalty provided in section 8 of this article. If the association shall decide bv a two- thirds vote that such rate was made In good faith to meet such com- petition, it shall be considered as authority for the rate so made. Sec 7. x\ll arrangements with connecting lines for the division of through "■"Ir *;^"^*P*^.*** ^^^^^ covered by this agreement shall be made by authority of the [45a] assocljition : provided, however, tliat when one n>ad has a proprietary interest in another, the divisions l)etween such roads shall be what they may elect, and shall not be the property of the association : provided, further, that, as regards traffie contracts at this date actually existing l>etween lines not having common nro- prietary interests, the same shall l>e reported, so far as divisions are €oneernele liy them, be made on equallv favorable terms. Sec. 8. It shall be the duty of the chairman to investigate all apparent viola tion.*^ of the agreement, and to report his findings to the managers, who shall determine by a majority vote (the member again.st whom (tmi|>laint is made to have no vote) what. If any i>enaltv shall be assessed, the anxMint of eadi fine, not to exceed one hundred dollars to be paid to the association. If any line partv hereto agrees with a shipper or any one else to secure a reiluctlon or change in rates or change in the rules and regulations, and it is shown upon investiga- tion by the chairman that such an arrangement was. effected, and traffic thereliy seinireil. such action shall l>e reported to the managers who shall determine, as above provldetl, what, if any. r»enalty shall be aitesse*!. Sec. 0. When a penalty shall have been declared against any memlier of tins association, the chairman shall notify the manag- ing oflicer of said c.nu the mles r4591 n?,,, "^"',*':?<* " violation of thiV nff„^ X« '"r'-t'"" ^"--etu a^''^,t^^f?'«^<>'?« of any weighing aslSIt officers ana agents, shall be «>iwlrtBr!^i ^ V? '*' °'" "» enforced bv its this agreement, and any wiUfuf vfniff^"""."*^ ""''«■• the pro%^i„ns of 106 ing a crew may be maintained on the ground of preventing a multiplicity of suits at law, and for the reason that damages at law- for interrupting the business and intercepting the profits of pending enterj^rises and voyages must, in their nature, be conjectural, and not susceptible of proof. Same — Injunction Pendente Lite — Evidence. — Evidence that, by reason of the action of a combination of per-sons, the crew left com- plainants' ship as she was about to sjiil, and that another [41] crew could not be procured for nine days, and then only with the assist- ance of the police authorities and the protection of a restraining order, while other vessels in the vicinity had no difficulty in getting crews, is sufficient to jiuthorze the court to enjoin interference with the business of the complainants by such combination, pendente lite. In Equity. Bill by Blindell Bros, against C. Hagan and others to enjoin interference with their business as shipown- ers. On application for an injunction pendente lite. Granted. Henry P. Dart and F. B. Earhart^ for complainants. /. Ward Gurley^ jr.^ and /. Z>. Grace^ for respondents. • Affirmed by the Circuit Court of Appeals, Fifth Circuit (56 Fed., 096). See p. 182. » Syllabus copyrighted, 1893, by West rublishing Co. Opinion of the Court Billings, District Judge. ter affidavit Trsta^cfof rt,? '®'^^'*^ ""^ -"- the complainants r'^enTCsX^cTsTS^^^^ steamship "^thlt^^^nl^lT^^ ''''''' trade between this port and Jverpool-Xt £ ''""•'"^ t^rra— r^ftir^^^^^ that this nnl^Jf^^t2:,ZT^^Tf'f '"^^ *=*'"^' rupting the business 0^^ f defendants is inter- persons engaged ?nt\! ^<"»Pla»'«nts, which is that of andLiveS andisdoin'T^ ''''^' '^*"^'^ New Orleans injunction's' t.n!St\^\ "T"''^^ '^''^'- ^he (26 St. p. 209,) Wvn as "in' ^t' ""''''" '^^ ''^^ «' ^^^^ merce against 'unTa wll ^trtfn^f ^ ^™^^' ''"'"^^ ""^ ^o*"' makes all combinatlT ,wS"of "7^ """•" '^^ '^ lawful, and punishes thenTb^ fin. ^' °' *=*"""'"•<=« ""' authorizes suits at law rtrtle dl ""P"^"""^"^ and but it gives no new riffht to h -in T-^^ ^"'' '^^ ^'«"^i«n. ful study of the ac^ fa toS^.r o'th'"'*"' ^^ "" ''^• suits in equity or injunction 11 I ^ e<»»clus'on that govemmen; of the Unhed St.? ^/"' "'^'^ *^^" ^^e This brings me to X f *"■' "•"* authorized bv it. junction is aid Thl citTzTsJi^^^^K "P**" ^'^-'^ ^he in- the United States circuit cSt?' '^l'"''''' '' ''''^ ^hat Plainants may urge 1:1"^'" l^^ tf ""' ''"' ''' ''^"'■ they may have in law or P«.,iH in ^ grievance which the courts of a state ThTZ '' "^^' '' '^^^ "^«"'d do in « suit at law is co^ed bv M T^}'""^''^' "»>' "maintain The prohibition in The ttatte of"l789 " '°'' '""^ '«^«-'-'-- m the courts of the vJtlTl! ^^^*! "^^'n^t suits in equity plain and adequate rS/edy attw' T^'T '''' ^'^'^''^ '»« '» to enunciate or introdZ ? ,' ''^' ^^^ ^epeatedlv held "gi% by the clTs o;r^:rtedt;r ^* ■* '^ -*-«^ - ^-^y is allowed, the tfeit^?r;?^r j:;5 108 84 FEDERAL REPORTER, 41. 'Illi Upiniou of the Court. of trial by jury, which is by the constitution of the United States guaranteed to him in all common-law cases involving upwards of $20. There can be equity jurisdiction onlv when the case in question belongs to one of the recognized' classes of cases over which equity has jurisdiction. The [42] ques- tion, therefore, is, does this case belong to one of those recog- nized classes? If it does, it is because the nature of the al- leged injury is such that it would be difficult to establish in a suit at law the damage of the complainant, and because to entertain it would prevent a multiplicity of suits. Undoubt- edly Chancellor Kent lays down the correct rule in Jerome V. Robs, 7 Johns. Ch. 333, that cases of ordinary trespass are not withm the cognizance of equity; but in Limnggton v. Livmgston, 6 Johns. Ch. 500, 501, he adds a qualification which shows the ground of discrimination between such tres- passes as equity will enjoin and those which will not ■ " There must be something particular in the case of a trespass, or to make out a case of irreparable mischief," in order to authorize equity to interfere, and an injunction to In Laiissats' notes to Foublanque\s Equity, at page 3, he lays down the principle which is the fundamental one, con- curred m by all the writers upon equity as the basis of equity jurisdiction in cases of trespass, as follows: "The founda- tion of this jurisdiction of equity is the probability of irrep- arable mischief, the inadequacy of a pecuniary compensa- tion, and the prevention of a multiplicity of 'suits." The difficulty has been in applying^ this principle. ^^Tiere there IS a large combination of persons to interfere with a party's business by violence, the equity jurisdiction, if maintainable at all, is maintainable on either of two grounds,— the nature of the injury, including the difficulty of establishing in a suit at law the amount of actual damages suffered, or the pre- vention of a multiplicity of suits. The jurisdiction, for these reasons, was maintained in the following cases: Emack v Kane.U Fed. Rep. 47; Casey v. Typographical Union, 45 Fed. Rep. 135, 144; GilheH v. Mickle, 4 Sandf. Ch. 381 (marg. p. 357;) Shet^y v. Perkins, 147 Mass. 212, 17 N. e! Rep. 307. In O.hon* v. Bank, f> Wieat, 845, the court says': '•In those cases [ wrongful transfer of stocks and other seiiiritiesl the Injured party would have bis remedy at law ; • ♦* but it is BLIl^DELL V. HAGAN. Ophifun of the Court. 109 the province of a court of ormif.- i„ ... ■ and prevent the wroM Tli^^mJ, •"'■'' ™^ ^^ "'"'^t »»>« injur%- than the law can glve/^ ^^ '" """"^ "eneflcial and compile With reference to another class of cases, courts of equity have sometnnes taken jurisdiction for the reason whiTii quires that they should take jurisdiction here, viz. thoi caSs for specific performance when there could be no adeq^a" compensation in damages. In Taylor v. ^^evaf., cS by Lord Hardwicke in Buxton v. Lhter, 3 Atk. 383, a specific performance was decreed of a contract of a sale of sKn^ t::\lV'Zf ^"' P"'*^ ^'^ - « -tain numt oJ because tii°f"'°^"*^- ^^"'t^ -J^in^ in such cases, oecause, though the injured party may have his suit at law oim. & b. 607, 611. So m cases of trespass, where a bnsinl« IS interrupted, and the profits of pen^ling ent rpritanl recovenng full compensation, for his damages must at l«w Zlty T^t^X r'^l ^' "''y' "^y - i"J-«'tion'^ in equity, arrest the threatened wrongdoing, and prevent the l^lr^m:'::^^:^' : i™diabie,T:i^l; proof. P™''*-' '''^'* ""^ "°t susceptible of iurisdiction, in that^J ire 21ert"e ttXlT ^^'^ are irremediable at law as well 1? threatened damages will prevent a multS; Tf su^""' "'*^" *^^ ^"'^^ -i* metirtCaseTalu;2Sl"Vn- ^'''"' '^^ ^^"^ a summary of each of The 7^ I- "'''^**"' *^ ^^'^ «Pin'«n "f proof WaEEe^ ttt ttTvT ?« P'^Ponderance arrived at this port^romV V 'f steamship Violante on the 30th th! ^^'"^ ^'^^ November 29, 1892 and vii ine tjutn the crew was naiH r^ff a + *i, ^ x- , ' ^ou^, ana no complaint regardi^t the 1 !' .1^* *^* *"°" *•>« "^^ """^e ment, or the saff^ of fh ' ^!^^^^^^ ^'^ ^1' *"• '"^'^ '^^■ until about noon of D^^t *£ if lC"!j ''V'"' *^"*'- except that some of the crTw had ,1 ^ '.r*"""* "''"PJaint, they would be n«iH W ? ' **** ^^^ <*PtaJn whether y a oeen lymg at the wharf, to which he answered 110 54 FEDERAL REPORTER, 994. •I Syllabus. 1892, after thp .hil , , . ^""^ J^*^ ^^'P- On December 15, ber iliii «^* J . ^^ ^®^' ^" t^« 15th of Decern- Sis alrle 'Tr '" ^"^"^ "^ '^'^^ ""»" December^, of nine day, the^S tilts' Zf Sed':'^ ^"'l went to the assistance of the mastera^d agSi If T"' '"1 m getting a cr«w: that, while other raStthlviT had no difficulty in e»ttinir Prpw= 7. ^'*'"'"«'^ '"the vicinity protec-tion of the ^straining orde.^C hTlrt" fth C the ev,den<» .^tablishes that the inaWlitv „TT I . SHnltr "'^"^^ ''^'^'^ a?dtTilSy1^or the case, upon the question of facts, as well as laT I with f VT^ "'^JKK.ixM OMEN'S AMAL- ^AM A 1 fci> COUNCIL OF NEW ORLEANS ET AL.» (Clnmlt Court. E. D. Lonfeiana. March 25. im.) [54 Ppd.. !)tt4.] Injunction Is asked aealnst th»^J ? CoMBiNATioss.-Where an to ended a«, labor resumed sin^e t^Xof tbe"blin,*„*''* '*""' for rerustn, tbe ,nJ„^«o„. Tbe .nvasfo:' oT Sr^i^^at 85rt:t V ""■"•"'' "™'* »' ^»-"'- ^'"- C.«.u>t (5t¥S: X^Nmo STATES t;. WOBKINGMEK'S AMAI^G. COr«OIL. Ill Opinion of the Court n^ZZLT'""^ "' "■« '"^"^'^ '« -* •"-"■"ed. authorize* 'Tu:^^l:ZtZ::^:iZ^ "^ 0-H._Wbere the bU. for ,„- denying all the eq„i«4 of he l^r'^^'''^- "^ ""^'^er. under oath, equity rule «. truseTat th« h '• ''"°' ""*'*'" *'«' amendment to affidavit alone wSer the mw^-^ ^'l"* P'""'"'"^* '""^ »' an tennlned by the wholIt.deneelC::!''''"" '"""^ '""^* "^ "^ "«c •errnrcro7fo=«::r ^rr-^'-^ - ^--- wise in restraint of trade 0?^^! *"' '"^ "' *™«*> »' »ther- with foreign nations "(t s/Tr'« """""e the several states or tions Of laborers astell «'of ^S.^"- ^'> "''P"- *« --"'-. Ta-brz^-^-7Z"^riga::;s^*" t'- ^-"^ — - Of interstate commerce thrZ,n^>„/ """"matiou in restraint matter of history, tbe 'offlc ar^n "t^oTof "^t^ '" ■*^^'"'^"<^' "« ment officers, and also newsnan^: !^ . *''*' ''*"■'•*"* S«^e™- eontaining manifestoes and dXatoHf 7""*"* "^ '""•'''^'*» Same-Lawful Coubikations T,m»; "^ respondents. The fact that a combCrn of m" i^n ^ "'"' P™pos.s.- purposes innocent and lawful is im^Z, V . 1 '""^"' ""** S^neral bination is [995, turned to thruXtln"™^ "■'^«" *''<' «•- g taterstate and foreign Commerce '^ '^'' °' restraining Z e^Zr^ZT;-^ bTulTonle"/ ,"'" *" ^-"^'^ "' «>»''- restraint of interstate commerL "ithin th^""^ ^ oombination in When, in order to gain its endsl't ^^tV r^""'"^ "' *"« ^^»*^ by Violence and intimidation a d^„r '"""• """^ '"'^ «"'o^«e. Partments of business, including thT.'^'' "* ""«'• '" «" 1'^ state to state, and to and fr^m f^rIS.l"°~«<"' <" ^oods from _ • In Equity. Suit bv the Jlmt^A q^ ^ f- B. Earhurt, United States Attorney BttLiNGS, District Judge ^7^;r7— ~~~^ ^^nswer^nd numerous affida- • Syllabus copyriehtwi le^kT^T^Tir^ Pyrignted. 1893. by West Publishing Co. ^ 112 54 FEDERAL REPORTER, 995. Opinion of tlie Court. i vits and exhibits. The bill of complaint in this case is filed by the United States under the act of congress entitled "An act to protect trade and commerce against unlawful restraint and monopolies," (26 St. at Large, p. 209.) The substance of the bill is that there is a gigantic and wide- spread combination of the members of a multitude of sep- arate organizations for the purpose of restraining the com- merce among the several states and with foreign countries. It avers that a disagreement between the warehousemen and their employes and the principal draymen and their sub- ordinates had been adopted by all the organizations named in the bill, until, by this vast combination of men and of or- ganizations, it was threatened that, unless there was an ac- quiescence in the demands of the subordinate workmen and draymen, all the men in all of the defendent organizations would leave work, and would allow no work in any depart- ment of business; that violence was threatened and used in support of this demand ; and that this demand included the interstate and foreign commerce which flows through the city of New Orleans. The bill further states that the proceedings on the part of the defendants had taken such a vast and ramified proportion that, in consequence of the threats of the defendants, the whole business of the city of New Orleans was paralyzed, and the transit of goods and merchandise which was being conveyed through it from state to state, and to and from foreign countries, was totally interrupted. The elaborate argument and brief of the solicitors for the defend- ants- presents six objections. The defendants urge (1) that, the strike or cessation of labor being ended, and labor resmned 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. Rights do not ebb and flow. If they are invaded, and recourse to courts of justice is rendered neces- sary, it is no defense to the invasion of a right, either [§96] admitted or proved, that since the institution of the mat the invasion has ceased. With emphasis would this be true where, as here, the right to invade is not disclaimed. UNITED STATES V. WORKINGMEn's AMALG. COUNCIL. 113 Opinion of the Court ITie 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 m the bill were true at that time, there was need of an injunction. The defendants urge (2) that the right of the complain- ants depends upon an unsettled question of law. The theorv of the defense is that this case does not fall within the pur- view of the statute; that the statute prohibited monopolies and combinations which,'using words in a general sense, were of capitalists, arid not of laborers. I think the congressional debates show that the statute had its origin in thf evils of massed capital; but, when the congress came to formulating the prohibition which is the yardstick for measuring the com plainants nght to the injunction, it expressed if in th^ words: " Every contract or combination in the form of tru^ or otherwise in restraint of trade or commerce among the t^ lUegal. The subject had so broadened in the minds of the legislators that the source of the evil was not regarded as maTtt 'f ?.'"'• '" '^ ^"*"^ty '« T^ "* '^^ '^^''""g has necessarilv fZ.ff\^ ^^'''* *'^"^' """^ "» longer solicitors! ^ ^""^ ''"™^ ^«'- 't by the defendants' 11808— VOL 1—06 M 8 114 54 FEDERAL REPORTER, 996. I li r Opinion of the Court The defendants urge (4) that the proofs in the case are vague, and insufficient to establish the allegations of the bill. When I consider the affidavits of individuals, and the procla- mations of the governor of the state of Ijouisiana and the mayor of the city of New Orleans, and the statements in the public journals, supported by testimony, and the affidavits filed in this cause, I find the material allegations of the bill fully sustained. Not only was the flow of commerce through the city of New Orleans purposel5^ arrested, but even the transportation of the goods and merchandise from the gov- ernment warehouses to the landings was forcibly stopped. The following exhibits in the case, consisting of proclama- tions of the governor of Louisiana and the mayor of New Orleans, taken from the official journals, manifestoes, and the recitals of the sayings of [997] the defendants, taken from the public newspapers, which have not been disproved by the respondents, show, as matter of history, the vast pro- portions of the interruption caused by the defendants to the prosecution of all the branches of business within the city of New Orleans, and the purpose with which it was done, to wit, that no business was to be transacted till the demands made by the employes of the warehousemen and the subordinate draymen were complied with : **A Qeneml f^trike Ordered by the Amalgamated Council for To- Morrmc, Vnlem the Merchants E^cognize the Union this Evening, •* PBE8IDENT LEONABD'S STATEMENT. ** When the people of New Orlealis awake to-morrow morning, they will probably find thaj one of the lar^st strikes that has ever taken place 'n this city has been inau^nirated. To-day, at 12:30 o'clock, President Leonard, of the Amalgamated Council, made his promised statement to the members of the press relative to last night's meeting of the council. Mr. Leonard said that it had been decided at the meet- ing to order a general strike for to-morrow morning, unless the mer- chants ask for a conference this afternoon. The unions were deter- mined to compel the employers to recognize them, and they took this step to force this recognition, if possible. Mr. Leonard further said that every trade and line over which the council has jurisdiction will go out, barring none. If at any time during the strike the merchants manifest a desire to recognize the unions, the men will be ordered to return to work, and a conference committee appointed to meet a simi- lar committee from the merchants. The committee of fifteen of the Amalgamated Council will remain in session for some hours this even- ing, and the employers will thus be given their last chance to accede to the demands of the strikers.*' UN.TKD. STATES .. WOBKINGMEN's AMAI,G. COUNCI,. Opinion of the Court. "the strike ordebed. 115 ^i^i' AM.VLGAMATED COUNCIL, ^ "At a meeting of presidents of fhfi k "'' ^oven.her 4. 1892. to represent the entire fSvtn^ .i? ^'^^ ""^ ^^^ ^«^t that thev claim and emphaticaliv tha? S vvnf n^."^^"* "' ''^^ ""'^^ «»d cla in broadly to prevent otljer emnJovers frn^l A^ ""^^^^ ^^^ endeavor bv their flr^« SirL"^^^^^ '"^ ^' ^- ^he^b^t^trrrs"^^^^^^^^^ reeo,iLl!;ru„t^ rerram from working for anv *.Tr,.7i« ^^ organized labor that w-a men have no rights that they are ^J^\ ^"^P^oyers that the laboring mmmMmsm lue iaiK.1 unions are united. 'A. JM. Keir, .. James E. Porter, JOH.V M. Callagiian, " 'Committee.' " [998] " WILL THE STRIKE BE GENERAL? "meeting of the amat«. THE AMAIX^AMAra, COUNCIt THW EVENI=,a. man who was w?th ^''J^ "eterminedto w n fhS^cf'^' f "^« "'"I'M strike will hp J!i'' ^^- Porter is represenT^ ""s struggle. A union unless The SniSTs trt l"^"'^."' *•>« KnfelaLei':*, S'** *"« the imagined. Mr Po^fi'/f'^Snized. there will iSZL £■*''! "^^^ "n* •^'n by nea^ f orter is reported to have n^n i^^, Woodshed than Will b^ e^p^V^ .'^^ ^«° : bnt, if we are'^Uh^^o tT" ''"^'^ ^ met la^t nigM and*d^-^*ij^ oomiltteS of ?b? s?rR •*'"'«• The joiS? merchants with re,^"^ *» P«y no attention to fh°^ Ofsanizationg merchants d«.n„e t^'^*" • *"« P'^Wsed tXnal i?'**''""''" '"' the £rri°S=ra*'i«--i;^^^^^^^ 116 54 FEDERAL REPORTER, 998. Opinion of the Court. ANSWEB TO PROPOSITION OF THE GOVERNOR. " Nov. 8th, 1892. " To His Excellency, Gov. M. X Foster. " Dear Sir : According to agreement, we were to give you an answer this morning in regard to certain propositions that you have sub- mitted ; but, after consideration by the committees, we found that the propositions would have to be first submitted to the executive com- mittee of the merchants' body, and we have not, up to the present time. heard what action was taken in regard to the matter. In consideration of these facts, we now have these propositions to submit, and will have to stand on them: First. We are willing to arbitrate on wages. Second. We are willing to arbitrate on hours. Third. We want the question of 'none but union men to be hired when available, from and after the final adoption of tariff and hours,' to be accepted without arbitration. " James Leonard, Chairman, "John Breen. " A. M. Keir. "John Callaghan. " James Porter." «« proclamation. *• ^Iayoralty of New Orleans, City Hall, Nov, 9, 1892. "Citizens of New Orleans: The time has - mendable general charactei t del^"""'' "* '""''^ '=»'«- of sufficiency of proof of »n '^^t^^'mng the question worth in the accu^ L tl b. ^""^TT *** ""^^^^ "1 "'tent, ' of the charge is s^deM ir^t*^? ' . ''"* ^h^" the proof original purpose of an asiS^^nt^^'^'^g'.V sufficient,-the as a ground of defense '''°"'**'°" ^^' ««a«ed to be available The defendants urge (6) that th. u- • or compel the employment J I combination to secure the restraint of co^rr iTl'^L^T.r'' '^ »«* ^ sition urged as a defense can TTT ^ ^*^^'" *'^« P^PO" must first be stated as it 5 2^ ^^X ^"^ ^^^ '^^^ the case The case is this: tZ combTnat In V"' "*^''"^''<^'^ ^-ts. compel the employment of no^etnt "^ **"* ''^ ^^'''c ""d ncss, as a means to eSeettht. ''T"'^'''''^^^^^ busi- a discontinuance of laEr i * , r^'?"' '^"'•"•^ ^"forced the business of transprrtluo" of 1 '"^'"*^^^' '"'^^"ding which were in transit tWh?.. ^"^'1 """^ '"erchandij «tate to state, and to and frfm t"'' ^' ""'^ ^'•'^'•»«' ^o"" case IS thus stated,-and it T .I^ countries. Allien the facts here proven,ll do nL^'V^!.'" '"^"^^ *" embody the but that the combination of hi ? "" "" ^^^ ""^^tion of commerce. * ^^^ defendants was in restraint 118 54 FEDERAL REPOBTEB, 999. H Opinion of the Court. I have thus endeavored to state and deal with the various grounds of defense urged before me. I shall now, as briefly as possible, state the case as it is established in the voluminous record. A difference had sprung up between the warehousemen and their employes and the principal draymen and their subor- dinates. With the view and purpose to compel an acqui- escence on the part of the flOOO] employei*s in the demands of the employed, it was finally brought about by the em- ployed that all the union men — that is, all the members of the various labor associations — ^>vere made by their officers, clothed with authority under the various charters, to dis- continue business, and one of these kinds of business was transporting goods which were being conveyed from state to state, and to and from foreign countries. In some branches of business the effort was made to replace the union men by other workmen. This was resisted by the intimida- tion springing from vast throngs of the union men assem- bling in the streets, and in some instances by violence; so that the result was that, by the intended effects of the do- ings of these defendants, not a bale of goods constituting the comuierce of the country could \ye moved. The question simply is, do these facts establish a case within the statute? It seems to me this question is tantamount to the question, could there be a case under the statute? It is conceded that the lal>or organizations were at the outset lawful. But, when lawful forces are put into unlawful channels, — i. e. when lawful associations adopt and further unlawful pur- poses and do unlawful acts, — the associations themselves be- come unlawful. The evil, as well as the imlawfulness, of the act of the defendants, consists in this: that, until cer- tain demands of theirs were complied with, they endeavored to i)revent, and did prevent, everybody from moving the commerce of the country. What is meant by *' restraint of trade " is well defined by Chief Justice Savage in People v. Fisher J 14 Wend. 18. He says : , "The iiitHlianic is not obliged by law to lal)or for any particular p*iee. He may say tliat he will not make coarse boots for less than one dollar i>er i»air; but he has no right to say that no other me- chanic shall make them for less. Should the Journeymen bakers refuse to work unless for enormous wages, which the master bakers WATEBHOUSE V, COMEK. Syllabus. 119 bmations would l>e productivp «/ ^ ^^ ^^^ description. Such ^m' certainly must be injurious ^^trade/''"^ ««^ confusiorwS It is the successful effort nf fi,« i.- fendants to i„ti„,idate anJterawe or f °° ""' *^« '^- m conducting or carrying Z2 ' ^^"^ ^^""^ «* ^<>rk in which the court fiKl "'"'"f^ "^ '^' -""^T, the statute. One of the i^^ T*"" ^"'^ *'>'''• ^'ol^tion of action was the CeVt^S'^J^r/S ""' ''^'^ ^'""'^'-^ flowed through New Orlefns Th ! commerce which tion are none the less „„S,, k '"*?"* """^ combined ac- scope the paralysis o aScSL T'^'-''^^^"'''"'^*'^ '" *»>-•• well. • ''" ""'er business within the city as For these reasons I think the injunction should issue. ^ n*9] WATERHOUSE"E7rL. .. COMER [55 Fed., 149.] AanrsTMENT BY TH.. o ^^*^®~-A)lFriCULTIES WITH P»,„. nthn.. "^ <^0URT.— Wherp tho ^ I^mployes— other corporation i.s being ndmin ! P^«I>erty of a railway or «ntendingpowerof Tew Of by a receiver under the COMMERCE-Ano 'DJUriOUS tO the «t.KCE— Agreements t^i »=.« TiONs OF Employes Zi^i Rf strain-Act July 2 iSQO-n «eers, styled the "^^^1^! ^ "^ ^^ as.sociation of l^L^'''''''''^- I>^-ovides " that hereaC wh^ '' "^^-^-^-^^-e Eng~s rVb'^!- grand chief nn^ **^**rrer, wlien an issue has h^r. ^^^^^^ which * 120 55 FEDERAL. REPORTER, 150. Opinion of the Court. road» to handle the property belonging to said railroad or system in any way that may benefit said company with which the Brother- liood of Locomotive Engineers are at issue, until the grievances or issues or differences of any nature or kind have been amicably set- tled/*— is plainly a rule or agreement in restraint of trade or c(Mn- merce, and violative of section 1 of the act of congress of July 2, 1890. Same — Conspibacy— Rev. St. § 5440. — Construing several clauses of the interstate commerce law recited in the opinion with section 5440 of the Revised Statutes, it follows that a combination of persons, without regard to their occupation, which will have the effect to defeat the provisions of the interstate commerce law, inhibiting dis- criminations in the transportation of freight and passengers, and further to restrain the ti-ade or commerce of the country, will be obnoxious to the penalties therein prescribed. Same— Receivebs — Advice of Court. — In this case, the movants hav- ing avowed their purpose, in open court, to submit to the construc- tion to be made by the court relating to rule 12 of the brotherhood, the receiver is directed to enter into an appropriate contract with them, subject to the general operation of this decision with refer- ence to said rule. (Syllabus by the Court.) In Equity. Petition by Waterhoiise and others, styling themselves the " Committee of Adjustment of the Brother- hood of Locomotive Engineers," against H. M. Comer, re- ceiver of the Central Railroad & Banking Company of Geor- gia, asking that the receiver be directed to make a contract with the locomotive engineers. Granted. E. W. Patterson^ for the motion. Lmrfon c^ Cunninghom and Marion Erivin, opposed. Speer, District Judge. Cases are frequent where persons intrusted with corporate properties have applied to the courts for the prevention or redress of grievances threatened or inflicted by labor organi- zations. This is the first instance of which we have any in- formation where members of such an association have by con- certed action, in an orderly way, sought the arbitrament of a court to adjust a controversy relative to the wages and con- ditions of their employment. The recent application to this court of the Order of Eailway Telegraphers, with similar WATERHOUSE V, COMER. 121 Opinion of the Court, purpose, was an attempt of this character. It was defeated in limine. The telegraphers, as a body, had abandoned the service of the receiver before they presented their petition. In the mean time, other telegraphers, with equal [151] right to employment by the receiver, had been engaged, and were performing the functions the striking telegraphers had sur- rendered, and, notwithstanding the solicitude of the court to spare a large number of intelligent young men the distress resulting from their indiscreet action, it was found to be impracticable. The members of the Brotherhood of Loco- motive Engineers, who have presented this petition, have a proper standing in court. There are 250 locomotive engi- neers m the employment of the receiver, upon the various di- visions of the Central Railroad & Banking Companv of Georgia. Of these 211 are members of the Brotherhood of Locomotive Engineers, and the petitioners are a committee from that membership. They recite in their petition the facts that they have been for several years working under contracts made between a general committee of the brother- hood and the officers of the railroad. Since the 1st dav of December, 1891, they have been working under the contract, of which they attach a copy, and since that time the proper- ties have been intrusted to the control of Hugh M. Comer as the receiver of the court. This contract expired on the \st day of December, 1892. A few days prior to that time thev gave notice to George D. Wadley, general superintendent of he company, that they desired certain changes in the con- Irv ^JTi. ' ^""^^'' '^"^ '^'y ^^^^ r^«^^i^^^^ i" the service of the company, although the superintendent and receiver refused to enter into any new contract or consider the old contract longer in force, unless ordered so to do by the court. ^ Pending the adjustment of the controversy, which was postponed or 00 days by virtue of a clause in' he contrlct wh.ch e.mt ed the receiver to notice for that period, td 5 conrrLJintr' ^'^ '^"^'*' '''' '^''^ "^^ -"^--'^ '^^ der tr tllr ''"''"* """'"u ^""f*'^""'^ between the i^- agreement might follow. This expectation has been de- 12^ • 56 FEDERAL EBPORTER, 151. Opinion of the Court, feated by a strike on the Savannah, Americus & Montgomery Eailroad, the refusal of one of the engineers to haul a train to which a car of that company was attached, his immediate discharge, and the friction between the receiver and the en- gineers which resulted therefrom. The engineers then ap- plied to the court. They set forth the objects of their order, the advantages of a contract with their employers, and that such contracts are of force upon a very large proportion of the principal railroads of the country. Thev state that since it has been shown to them that the proi>erties in the hands of the receiver are embarrassed financially, they are content to work in his service without anv increa4 of wages, although they insist that the rate is less than that paid'^by competing and connecting lines, and they pray that the re- ceiver be directed to continue in force the c()ntract under which they were working at the time the receiver was ap- pointed, subject to such modifications and changes as may be made by the order of the court. They annex a copy of this contract. The recei^'er answers i' First. That the Grand National Brotherhood of locomotive Engineers is not incori)orated, and that many of its rules and regulations, which have a bearing upon any con- [153| tract its members might make, are witliheld from the public. This places him at a disad- vantage, and renders nncertain the attitude of the brother- hood in any difficulty which might arise in connection with the contract. Second. That a number of the locomotive engineers onij)loyed by him are not membei-s of the brother- hood, and tliat it is not proper for him to contract in this way with certain employes, while others are employed with- out sudi a contract. Third. That such a contract renders it impossible for the officers charged with the operation of the property to have such freedom in its administration as IS necessary to its prompt and efficient management. Fourth, As a common carrier, the railroad under his control is liable for damages whicli may result from the disorganization of Its service. That the Brotherhood of Locomotive Engi- neers is bound by secret obligations to withdraw from the service of railroad companies in a body, causing great dam- age. Fifth. That he should be at fufl liberty to select the WATERHOUSE V, COMER. 123 Opinion of the Court, best men and means of managing the business, without i-e- gard to organizations of any kind. That his superintend- fo Z ^"""T ' rr '*^*^"'^ °* ^'"g*^ ''"d Editions foi the employment of engineers and firemen, a copy of which IS attached. Sixth. If he should contract with" the brotherhood, it would be holding out a premium for his em p%es to become members of that order, which respondent states IS not to the interest of his trust. That the Cher hocK, render,, it impossible for the officei-s of the r iSl S ce Vh",f""""/' - necssary to good and efficient ZT A "° ''°"*'''"'*' ^""^^ ^««» '■"te'-«d into with the Order of Ka.lway Conductors and the Brotherhood of Lo comofve Kiremen, and that he has had no difficulty wid. the conductors and firemen. He denies that it is ^ ual anS custo„,ary for railroad companies of the United State« to It will be observed that much of the receiver's «..«»•». ; an argument against the propriety and policv of c^uJ- ct! o any character between the officers of ra\lwaj corZ io. and he representatives of labor or«dules of ^vhich are ajreed to hv ti? """P'^y^^nt of their operatives We are s.S H^'t^^TTf'^' "* both'partS: under proper restrictls are W '* f ""^ arrangements, Joth parties, and we therefore 27"' /^ ''"' ^-^-J *« d>rect the i^ceiver to entefwo tn " '°"^'''' ^""''^'^ *« -bedule of rates and regTirns^rt^f^-;--^^^ 55 FEDERAL REPORTER, 154. Opinion of the Court. contract, however, will not be restricted to members of the Brotherhood of Ijocomotive Engineers, although membership of that order is and will be no disqualification to service on railroads under the control of this court so long as the rules and regulations of the order are treated as subordinate to the law of the land. The contract will comprehend all engi- neers employed by the receiver, whether members or non- * members of the brotherhood. This brings us to the consideration — First, what is an ap- propriate contract : and, second, whether there is anything in the rules and regulations of the brotherhood and its relations to these properties which is inconsistent with the law, and which would make it improper for the court to place its re- ceiver in a position where, in his exigent duty to carry on the business of transportation, for which the railroad was char- tered by the state, he may find himself in the power of an organized body of his operatives who will be able to paralyze the operations of the properties. The appropriateness of the contract depends solely upon the arrangement of details. There is no difference between the engineers and the receiver upon the question of compensation. There is an apparent dispute about the effect of seniority of service of an engineer as affecting promotion. The court will provide, however, that, where merit and ability are equal, seniority of service shall prevail, and will arrange a fair tribunal for the purpose of testing the merit and ability of various candidates for pro- motion, w4th the privilege of either party in cases not recon- cilable to appeal to the court. There are other instances of minor disagreement which the court will take time to adjust and to perfect the agreement. -We have noted with gratification the repeated statements made in judicio by the engineers and their counsel that they wDl accept [155] as final and satisfactory of every difference the conclusion and decision of the court. The receiver has also expressed more than once his purpose to abide the deci- sion. This submission, so unlike the violent and irrational course pursued by either party, as their interests might prompt, and without the slightest regard to the rights of the public, in many conflicts between what are popularly called " capital and labor,*' is considerate, judicious, and strongly WATERHOUSE V. COMER. ^^1 Opinion of the Court constituted a„th;r£ro; tLi "^1 't ?" ''^ '" '""^ be for our country if future differTis^f . T\ ^''" '* may be settled bv a metbn,7 ".'"*■' "* « similar character mission of the ^linTt,^:T::u. Z ''''■ ■'^'^'^ -«>- most important difference Cl fu ^^^ remaining and the effect upon the d^ To ^^oT l^T"^^^ "'"^ ^^at is the rule of the brothe^Ld which" '!f *° '''' ^''^''y »* to be as follows : ' ^'"^ '' ""derstood by the court motive EngS/ni*" ?'"'""'y «'»" wblohThe n "thi^i" ? '"^ '"^^ A. B. Youngson, the asskttn. f * " *"' t««timonv, Mr. mitted thaTSe Effect ^ tt lie' '""^T^^ ^^""^'^ -^- ert.es in the hands of the reLl"' ''/PP''^:!ZTl T,Z! ^"^^"j^ ♦» t-« P-visions „, this thing m this act prohibited or SeehZ tn ^^T """^ «'^'- matter or to do any act, matter, or thing in tht^ w^ "niawful, or shall omit J?™"°V?r'^''"''«" be liable to the mrson^ to be done, sS for the full amount of damages snVfJtS^" '^ Persons injured therebv violation of the provision of thi^.^f'*"' «>"^equence of an" such counsel or attorneV's teetl hi « ^ ^"^^ together with a reason?M» "Sec 3 (n) TT H ' ' P^^^^^es: common cnvHerl^X^J^^^^ '' «^«" ^'^ unlawful for anv any imdue or unreasonable vrlZZT''''^ ^i *^^« ^^^^^^ to make or give .^SSnTfTSe fn"a"nS Hi '^^^^^^^^ ^^^^ ^sf So7a-to«S3" --»^^^ Shall, according to their re^^pet^^i.L*'' ^^^ Provisions of this? act " Sf»p ^n r»^ ix. ^".^«i»ea in like busl- suSfer or per Ht n,./^"'!""'^ *" ^ lone o™^'„J« <>« "°.v act, matter. demeanor and .T.'^M "^^ "'e-'ein. shal? be aJ^uL ""^^^^^^ of thl^ Of the VnlZ^^tl^h "'?!'" w-nvlction thereof' f*l5""t^ of « mis- U808— VOL 1—06 M— -9 130 56 FEDERAL REPORTER, 157. Opinion of the Court. The laATs of the United States (section 5440 of the Revised Statutes) provide: " If two or more persons conspire either to commit any offense against the United States or to defraud the United States in any manner or for anv jmrpose, and one or more of such parties do any act to effect t lie object of conspiracy, all the parties to such con- spiracy shall be liable to a penalty of not lesss than one thousand dollar:?, and not more than ten thousand dollars, and to imprisonment not more than two years." Construing these several enactments together, it will be seen that a combination of persons, without regard to their occupation, which will have the effect to defeat the provisions of the interstate commerce law inhibiting discriminations in the transportation of freight and passengers, and further to restrain the trade and commerce of the country, will be obnoxious to severe penalties. This will apply with even greater force to persons in the employ of the railroads con- cerned. Now, it is true that in any conceivable strike upon the transportation lines of this country, whether main lines or branch roads, there will be interference with and restraint of intei-state or foreign commerce. This will be true also of strikes upon telegraph lines, for the exchange of tele- graphic messages between people of different states in in- terstate commerce. In the presence of these statutes, which we have recited, and in view of the intimate interchange of commodities between people of several states of the Union, it Avill be practically impossible hereafter for a body of men to combine to hinder and delay the work of the trans- portation company without becoming amenable to the pro- visions of these statutes. And a combination or agreement of railroad officials or other representative of capital, with the same effect, will be equally under the ban of the penal statutes. It follows, therefore, that a strike, or " boycott," as it is popularly called, if it was ever effective, can be so [158] no longer. Organized labor, when injustice has been done or threatened to its membership, will find its useful and valuable mission in presenting to the courts of the country a strong and resolute protest and a petition for redress against unlawful trusts and combinations which would do unlawful wrong to it. Its membership need not 131 WATERHOUSE V. COMER. ' Opinion of the C!ourt doubt that their counsel will K. i, / exact justice will be adminLred !h^' """" '^"^ ^^^^^^ ^^^ jurisdiction. It will fXw 1^ 7 '''''^^'' ^^^^ ^«"^ts have troversies it will be om^^t^^"^^^^^^^ *'^V^ ^'^ -^h con for the courts to prese/ve tie riZsZ\t'''^ ^^ '"^^ --' spare them hardship, and at th. *^^ operatives, to public the unmerited uJl^^T: ':r '^ '^^'^ '-'^- such conflicts in the past jf wn k "^ ^"' ^"^^^^^ ^om such methods organ zeTlabo/ will h' '''^ '^""^ ^^^^ ^^ antagonism it now encounters an^ ! '^'"'^ "^"^^ ^^ ^^^ ?t will have the sympaS^y of X^^^^^^^^ T'^' ^o the courts ^t has their opposition. a/dltT^t ' "'^"' ^^ ''^ ^'^^^^ ■»^ut, It there were nn cfof,,^ Ject, no court of equi"; could •fsr^K^"*'^ "?"'*"- «ub- to enter into a contract'^with « bodv f ^ ^''^' ''' '"^^i^er selves bound to repudiate their f """" ''^"^ ^^^'^ them- grave public dut/because of reaT:"'',.^"' '"^^^-'^ « ^h'ch some other person or corno ' .i ^^ grievances, contract, inflicts or is alleL S ,' ""' " P^''^' *» *!»« Z:TT\^''' upon soSbod; e£' T "^'''^ ^ ^'^'y ^ ceiver to do this would be mnncf ^^^- ^o compel the re- -1^0% just, consideratlhumrnf r '^'^^. '^'^^^ -ay be engmeers in his employ, ^hey' mav '''v.'"''"'^^"'' *° ^^^^ h'm not only as their kindly eL?^^' T'* '"'''^"n' regard The people of Georgia "„v T^^''^^''' ^"' «« '^eir friend "eeded evidence of fy^^y X,^''"'"^^"^ *<> ^hem eT^ry ample; their future as Eht' <=''°»P«nsatio„ may b^ energetic, and courag^us mthr/'^'''''^ fo'" intelligent difficulty with or wifhou caui ,11^ ^^^*' ^«ause of 1' or Minnesota, they will abanSrthA^^ .*'"«'°«t«« in Maine ticpations, and bring dismav «n^ f *"" ''^" ''"Peful an- ^">% and sympathetirSpra'^^^^' l^ ™in, upon the This IS almost the inevUaWel ""^ '^^""^ they live 's m evidence, and is ^aj ! T'^"''"^ ot this rule, ft n-ssity. The i^tetrof^Ttbll ^'J ^^ » ^^-'"^e ' ''"P '^^ --^Pid transit demand " Th' *^ ^''^^'^ inandit. There are 1.200,000 132 55 FEDERAL REPORTER, 153. Opinion of tlie Court. 1 II cars upon the railroads of the United States. There are 168,400 miles of railroad, or more than seven cars per mile. The Central Eailroad, according to the recent report of the superintendent, has less than two cars per mile. It is therefore indispensable that it should use the cars of other lines ; but, if it were otherwise, it would be impossible, under the present system, to deny to the cars and freight of other lines transit over the lines of the Central without violation of the law. The receiver cannot violate the law, and the en- gineers cannot compel him to do so without themselves be- coming obnoxious to the criminal statutes. And the court [159] does not doubt, from their bearing and testimony in the case; that they only need to be advised of these facts, when thev will immediately recede from the unlawful and most dangerous attitude in which this rule has placed them. It is, indeed, a rule which, more than all othei*s, has given strength and comfort to the enemies of organized labor. It is true, however, that the learned counsel for the peti- tioners, when his attention had been called by the court to the insuperable difficulty in the way of a mutually beneficial contract presented by this rule, while insisting that it ought not to stand in the w^ay of a contract, hastened to aflford ad- ditional evidence of the good faith of his clients, by stating unreservedly that upon this, as upon all subjects, they were willing and anxious to take the direction of the court. This declaration is authoritative, and the court will act upon it. It is binding upon the engineers of the brotherhood, who are officers of the receiver, and who w^ere represented by the committee and their assistant chief engineer, Mr. Youngson, all of whom were in the presence of the court when it was made. It is accepted as made in good faith, and as a condi- tion of the contract which the court will direct the receiver to make. While, therefore, any engineer may, at any time, exercise his right as an individual to leave the services of the receiver, he may not do so in such manner as to injure the properties or impede its proper management. In case of any issue with the management in which the brotherhood or its members are concerned, and the members in the employ of the receiver shall desire to leave his services, in a body or otherwise, in such manner as may in any way UNITED STATES V, PATTERSON. ^^ Syllabus, impede the operations of the road, they will be m,uir^ ,„ do so upon such terms and conditions as toThl.! ^^^^ to proper for the protection of the nSnf th. "*? "^"^ the maintenance of justice and iZl^ T^''^^^' ^""^ In the mean time th^ 0^.2^^.^.^^^^'''^ ways under the general operation of thil dell" i^h V ence to rule 12 of the brotherhood, unti the ir^ 1^1'"'"" contract are definitely settled by the ourt^^d it ^^mT specially directed that no engineer \rliL " ^ employ of the Central RailroaS Z f I ^T° " '^" way injured in his station on accot L of f ^^^^ "^J '" ""^^ any step taken in regard to l:^^^^ ^'2'^^^'^ "' [605] UNITED STATES .. PATTEESON ET AL.- (Circuit Court. D. Ma^achusetts. February 28. 1893.) [55 Fed.. 605.] 1890. c. 64T. declares .^^^?.tl~t" J"^^ ""' ^^-^^ ^J. S. «n restraint of tade, and maresTf m>T °'"°°'' "' «'°«P'racle8 make or engage In hem ^ t? In ""^f^'"^"''"'- f<"- any person to with others to monoS, any p^rt ofThf ^ "I ""*'"''* "^ «'"«'P'«' the several- states or with forel^ n«t. ^J" "' «"^'«roe among ment under this chapter It 7^1 TmT\ f ''* *^' '° «" '°<"^ Of the statute, but the mLns whe^t u 1 ° '"".T '" *"« ^^""^ the market nrnst be set out so as tt - V °"^" *" ■"onopollze they are Illegal.!. ^ ""'^ *° «"«""« the court to see that Same.- -Allegations of what was rtnn« i„ Mracy are Irrelevant In an .ndlcta'" P"'r°'^ °' ="" ""^^^ <»»- Of no avail either to enlarge or rrvl"lf'',*" '"•*"'«• «"«' «« allegations as to the element "of t^Z' "'«- »' ^^^ necessary SAME— Scope of the Statute— Tho ""'"^^• used In the act, are synonymous "'t^ *™^* ""^ oommerce," as first section does not eniaree^e^ , ""* "' '~*'' *«™s ^ the employed In the ^.m^oX e™ loT °' «■?*"*"** "^'-^ '^^ trade." as they are analogous to Z' ,*=°°*^''« '■> restraint of the second section of theart tI t ZT """'"PoH^e." used In Of the statute, and hen^, an iZZTl^T''' '""^ '""'*«'<"> -raint by engrossing or -noSLT XrthrmX" (5rC'S;;rr2:l''~^^ -"-•^ -" «'— overrmea 134 m F£0£BAL BEPOBTEB, 605. Statement of the Case. 135 I ' It Is Eot sufficient simply to allege a purpose to drive certain com- petitors out of the field by violence, annoyance. Intimidation, or otherwlse-o Same — ^Acts of Violence. — Where counts in such indictment allege a purpose of engrossing or monopolizing the entire trade in ques- tion, acts of violence and Intimidation may be alleged as the means to accomplish the general purpose. At Law. Indictment in 18 counts against John H. Patter- son and others for violating the act of July 2, 1890, entitled "An act to protect trade and commerce against unlawful restraints and monopolies," (26 St p. 209, c. 647.) Heard on demurrer to the indictment. Judgment overruling the demurrer as to counts 4, 9, 14, and 18, and sustaining it as to the others. The sections of the statute immediately in question here are the following : [606] " Section 1. Every contract, c-ouibination iu 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 he illegal. ** Sec. 2. Every person who shall nionoiK)lize, or attempt to mo- nopolize, or combine or conspire with any other person or persons to monopolize, any part of the trade or coniinerce among the Feveral states or with foreign nations, shall be deemed guilty of a misde- meanor, 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" The first ten counts of the indictment are for engaging in a conspiracy in restraint of trade and commerce among the several states in violation of the first section of the act. The last eight counts are for a conspiracy to monopolize a part of the trade and commerce among the several states, in violation of the second section of the act. The first half of each set of counts allege the conspiracy, setting forth the means with various degrees of particularity, «See, however, the case of 17. flf. v. Workingmen^s Amalgamated Council of New Orleans, 54 Fed. Rep. 994, decided in the circuit court for the eastern district of Louisiana by Judge Billings, March 25, 1893, In which it was held that the statute included combinations of workmen, who, by means of a strike, combined with threats, intimi- dations, and violence, caused a cessation of business, which resulted in delaying, interrupting, and restraining Interstate and foreign commerce. UNITED STATES V. PATTEBSON. Statement of the Case but without alleging overt apt« ti, " , set repeat the allegaLs 5 the Ltwr^^? """'^ "' ^** tions of overt acts "' ^^^^S also allega- trade, and in the^lnd ^ Jfco * ^, t'"""*' "" ''''''^' «* not by means of any contrTct or 1 k ^"'''"''P^li^e trade,) the parties to the coSracvth !"'*'? "P^^*'"^ »?«« destroying „r prev^rS tS"of"l'"* "^ "^^''^ «^ trade to be restrained was otLl t. f,''*'^*'^; so that the nopoly sought was to bl rutd W-' ^ '''^"' '"** *^' '"'^ of business. ^"^"^ ^^ '^"^"'g other people out coi^'rwr" airpiisfthr^- ^^ ^'^ "•^i- <>' representation, deceitXea i-""^. ^^ ^^^ and mis- -nolestation, a^d oth^r unlajf^ T *'""' •'''^^"'^tion, and means; the second charrs Si w^Tr^' """^ ^'""^'^^^^ venting other persons f^^eat; „" k """'' '^ ^^ that U was to be attained by rreventWoth"''"?''" '^^ '^^^^ m business by means of th-L; ." • ^ ^^^^''^ ^o™ engaging that it was^o ra?tfiitrg;t'::„t"\t-' ''A''^' rymg on business by means „?T.^ "^^"^ ^^m tar- ing competitors, by threatening ^r''"!^ ""'^ ^"^^^dat- and their agents to'^be a iS aid ti '^T'"^ *'»-' their agents and emploves VnL.l'''^^' ^^ inducing -ploying spies to obSwietrof'^r- 7^^™*' by by harassing and intimidatinT DufZ u ''"''""^ '^'^^^^ chasers to break their conSL^Z T' ^ '"'^"'^''^ P*"- •ng to competitors, by a^e^to .^ ^ '" ^'^ ^"""^ «^- persons so refusing to Sv in Z /f^''' ""** maintaining them, by delaying^and Sedin^b '"* '' ^"^*^ «^««t threatening prospective SZ tT^''' "* ^»'t^' ^y tat.on, and injury in the even of T ''""«y«"««. mole^ competitors, by causing persons LI, ' P"'-'=hasing from repeatedly and unnecef saSy " t " vT" '"* P'"-^'^^^'^ suading and persuading thL frn ^/ ^'"' *™^' ^^^ dis- tors, by causing great n^f^™ tZ ^T"^ ^""^ ««™P«ti. actions for the infringement n7.! f'*'""' ^"'^ oppressive -eh [607J Purchase~hrlCfn:*^'']'-''"'«^*'^^^^ ^0. competitor with .4 Sn^gCer^KtS 136 65 FEDERAL REPOKTER, 607. Argument for United States. thereby, and by other similar means, making it impossible for competitors to continue business; the fifth count of the first set gives the names of certain competitors who are en- gaged in interstate trade, and sets forth with still greater particularity the means by which it was the object of the conspiracy to destroy the business of those competitors. Frank Z>. AlUn^ United States attorney. IIBBT. Meaning of the Act. In HeydofCs Case, 3 Coke» 7, the barons of the exchequer lay down the following rules : " For the sure and true interpretation of statutes In general, be they penal or beneficial, restrictive or enlarging of the common law, four things are to be discerned and considered: (1) What was the common law before the making of the act? (2) What was the mischief and effect against which the common law did not provide? (3) What remedy the parliament hath resolved and ap- pointed to cure the disease of the commonwealth, and (4) the true reason of the remedy." These questions will be discussed in their order as relating to the statute now under consideration. (a) state of the law befobe the passing of the act. Two questions naturally present themselves here: (1) What was the common law in regard to the subject-matter of the statute? and (2) what was the relation of the United States government and of the United States courts to that law? The terms in the statute which naturally call for comment in this case, are the following: (a) "Contract," (b) "combination," (c) "conspiracy," (d) "restraint of trade or commerce," (e) "trade or commerce among the several states or with foreign nations," (f) " monoiK)lize." (a) "Contract." The meaning of this word is elementary, and It Is not necessary to discuss it, except in connection with the following words, " in restraint of trade." (b) " Combination." This word is used in the statute in a broader sense than the words " contract " on the one hand and " conspiracy " on the other. It has no technical, legal signification; and the words, " combination in the form of trust or otherwise," are intended to cover broadly any sort of a union of different persons, even though such union may not be suflScient to answer to the technical term "con- ^Iracy," and may not include a binding contract. As modified by the subsequent words, "in restraint of trade," it refers to that class of cases where there is no binding contract, and perhaps includes certain cases in which there are no legal means contemplated so as to make It a conspiracy, and no sufficient union or agreement to make either a monopoly or a contract. (c) "Conspiracy." This is a word of well-known legal significa- tion. It is sometimes used to indicate simply the comirg together and agreeing of i)ersons, but in a penal statute is clearly to be con- strued as including the idea of illegality, created either by the illegal character of the ultimate object sought to be attained, or by the illegal UNITED STATES V, PATTEBSON. Arg^ument for United States. 137 character of the mean°«P^^^- accomplish a thing lawful in ilefhvnnf' ^ ? ""^^ conspiracies to In U. 8. V. Lancaster 44 F^ Sen SQfi th^^"^'"^^"^' ^^^ criminaL Is an unlawful confederacy or ^mbination^n?^twi '^^ ^ ""^^ conspiracy do an unlawful act; or Lve^a?coS^hp^^ n^"" or more persons to Com, V. Hunt, 4 Mete (MassTiJ^^^L ^ ^ ^"^ unlawful purpose." Spies V. [608] People vMluV^^^^ v ^"^' ^ ?^^«- ^t- Tr! 519; S98; 3 Greeil. Ev § 189 Washh Prln,^; ^' ^%- ^' ^^ ^' E- Rep is unnecessary to enter with nJrPtv in? ? * ^'*'^' ^^^ ^^•> ^2, etc. It or means are sufficilntrv \ni la^^^^^^ the question of just what ends since it is quite Sthntn IT • ^"^ ''^""^^^ "" conspiracy criminal for its accoXLl^inent fhr^^^ in* the means assaults, the maintenancrof act^Ls nmw^^^^^ ^^^ committing of under contract to break their contiaoA i« ^.•^*'-® inducing of parties is it necessary to endeavor fn^i«f!?' \^ ^5""»°^i i» character. Nor spiracles which «re S^X ,ctLX carefully between con since it is obvious that a orimfno? ^.^ ""^^ ^^'""^ ^^i^i^ are criminal if anything is done undef U rL^^^^ '^ ^^«'' ^^^^^^ actionable plaining. "*^^ *^ lesultmg in injury to the party com- connection with the word '' rntraet °?i,ev r^infT 'P'^T" '^"^^'^ '» conception viz. "contract in restra nt o( trSSl - a'' '^f'"''?"'"" 'egal effect of which is to restrain trade is roid" h..t if .T"*™*'*- *"« '"tal the trade of one party to the onnJrn„? i^ ' "* '' *''® restraint upon to protect some i.iterest ^fheTher •.c^ir."/^ «*■■ *"»" '« necessS^ dent that the contract enoourLeotL S^ ^''-''•^ ^^^ contract, it is evl- restrains that of the othe^ and ifen^ he nnhH^.^ ""I*^ »« "'»<''' »» " -tract is vaiid. rpon ibis''g^Si%S 'ir.VKd^"r„^ tIe^\'l,e't;\o"irvaiM'if'",L!fti,'"^fr'"* "'. "^« ^'''^^ "^ ^ne of the par- Of the trade, to w ,^t is reaM^ !,fJ"'^L^^'^^' "P^'^- «»«> the extent ^ (2) An agreenient forTe r^traint of th» t T"'f''"'*« °' «>« ^^ thereto is invaJid unless so li[,m«l ** *™^^ °' °°« »' t^e parUM Rep 658; Craft v. i/XouZ TO in litfi"'^.^^/ ^r^' ^' » S»P- Ct Burlington <6 8. W. By. Co ii VoVi L ,' ^^'^ern Union Tel. Co. v erslev, 6 Ei. & Bl 47 66 -Ifnllin ^fP' ^' ""<* ""te ; Bilton v EcL lins V. iocfce. L R 4 Add cT^yl" I, ^O""'""". M Cl^. Div. 351 • Cat Palmer y. 8teii^sa^^^^i,%^J^^ ^°"'"' ^- ^"V' " Mees. & w! ^'j proviSons'^oflhlT^^^r^t'^t^e'i T^ ?f *"« ^^'"'^ '« ■•-t-">«l "y the more Of the parties to the Set A conHfh ii""^ *""*« °f °°e »' .w "\ "'1^°* 'tseif, restrain the trade of ri**^!*'S ^- ""^ »• ™n- restraln the trade of C h„i „, i. ^ ^- ^' "id B. may aeree ta restrain, not a cJnti^a^t'ln restrS ofVdrT'. '^ " ^""-^ *" mTf "/h "^ may be laid down ' ^ *° ^''^ » contract nar to that "to'^i^^Z^J^J'^SXZZ'^'^'''^^. «' '"«'■• own s.m- the contract is illegai. and a TOnsDlrac^ n^? ? intended to promote, trade without the ins lfl™ti7>,r„f ^' .°°* ""'? because it restralna because from thrnaCl'^of the casl"!? rnn f '"'^ "*''«^ trade, 'bTa^ ^,o? w«"<='ously and without cause ^Sreement to do another an (2) A. and B. enter into an agreement for the principal purpose ill 138 56 FEDERAL REPORTER, 608. Argument for United States. of promoting and extending their own business by none but lawful means, and witliout any intention to create a monopoly, such agree- ment is valid, although it have for its natural and expected result the Injury and destruction of the business of C. Such a contract, even when carried out, does not, on the whole, and viewed in its entirety, restrain trade at all, since it only operates to restrain C/s trade in so far as it operates to promote the trade of A. and B. (3) If A. and B. enter into an agreement for the purpose of pro- moting and extending their own business by restraining and desti-oy- Ing the business of C. by the use of unlawful means, such agi-eeinent is illegal, and a conspiracy, whether said unlawful means be of a crimi- nal nature or not. Such a contract is illegal and a conspiracy, both because of the Ille- gal means contemplated, and because it does, when viewed in its entirety, contemplate a restraint of trade. The restraint of C.'s trade In this case is not simply the [609] result of the promotion of the tride of A. and B., and coextensive with it, but the extent of the restraint is wholly independent of the extent of the promotion, and may be abso- lute and entire, without any promotion at all. This must be true w hen- ever the means are other than such as are intended and calculated to Increase the trade of the contracting parties. Hence it was properly decided in Mogul Steamship Co. v. Macgrcgor, Oow rf Co., 15 Q. B. Div. 476. 23 Q. B. DIv. 598, [1892,] App. Cas. 25, that an agreement to drive a competitor out of business by lowering prices is not illegal. In this case shipping compnnfes formed an agreement by which they endeav- ored to get the business of a certain port in China by placing their rates so low that another company could not compete with them, and was bbliged to give up the business. The house of lords held that this was not an unlawful restraint of trade; that a trader could not be pre- vented from charging what be pleased, although he did it with a view of getting the trade himself, and of driving a competitor out of the business ; but it was also laid down as unquestioned law that any such restraint efTecteii by unlawful means would make the restraint ille- gal, and that a conspiracj' to enforce restraint by such means would be criminal. In the queen's l>ench division. Bowen, L. J., (23 Q. B. DIv. 614.) after stating that a merchant may lawfully compete with another by lowering his own prices to any extent even with the intention of driving tlie other out of business, and then raising his own prices, says: " No man, whether trader or not. can, however, justly damage an- other In his conunercial business by fraud or misrepresentation. In- timidntion. obstruction, and molestation are forbidden. So Is the intentional procurement of a violation of individual rights, contractual or other, assuming always that there is no just cause for it. The inten- tional driving away of customers by a show of violence, the obstruction of actors on the stage by preconcerted hissing, the disturbance of wild fowls in decoys by the firing of gims. the impeding or threatening serv- ants or worlvmen, the inducing persons under personal contracts to break their contracts. — all are instances of forbidden acts." On page 616 he defines an " illegal combination " as " an agreement by tme or more to do an unlawful act, or to do a lawful act by unlawful means," and cites two criminal cases in support of the proposition. On page 618. after stating that in cases where there is no intimidation, molestation, or other forms of illegality, acts may be done intentionally which will injure others In their business, provided they are done bona fide " in the use of a man's own property, in the exercise of a man's own trade," he continues : " But such legal justification would not exist when the act was merely done with the intention of causing UNITED STATES V. PATTERSON. Argument for United States. XtSIf - --..... I. n lieu Ktates. support of that part of i,?i • • *''® '^^^ c'ted by Bowen r t . oases are all quot^ again In fhTI" """<^'' "^^^ be^n qS thp^ McGawley, Peake 270 (Ar^ quoted. These cases are • Tn^i^l G. 200. (preconcert^ hissing Tdetov^ ^.Z^"'"- "■ 'B'-«"*«' (^"rntigton v. Taylor 11 p.-f in decoys;) Oiure" y TZVl r^;. ?*• ■«>*«• ^isturbant^ of wild W^ breaic. L.tSts \Z tb^^f ^''' ('"•'"■•'". Persons 'M.^^^^f, la v, however, that a conspikicy nied "of ^^T''"'''^- ^^ '^ elementary The mere agreement in a common nn.r? "'''^''^ ''^^^ binding contract moreover thnf- fii« , «^"uimon purpose is suffipi^nf t* • '-""^racr. Plate tbe acquisition of a benefit i,„«, ^ conspirac.v mar couteni- V^X^'l ""'""■'"' burtlfet^^ct^barin!,'^*"''' ""' th'« '« not Places injury to anollier A mnf-oAV ^^ '^^^^ necessarily contpm aey to restrain trade hlV'J!*'^ "'''"S "n.i"*^tifiable cieawt <^°"^l"™<-y Kay, Contract. Lim. 334-411 *„ ' ^^right. Grim. Cons 144-^ «?" ^Z. b^o^U'^i'bTtbr"^^" -Wecro"""C;^U."ie:''? ^^^n^tZl Mnmi 140 55 FKDEKAL REPOKTER, 610. Arguiueut for United States. It Is true that most of the cases in the books are cases of intimida- tion on the part of workmen against their employers or agrainst other workmen, or of employers against their workmen. Bnt the laugnage of the statutes and the principles of decision apply with eqnal force to conspiratcies by any persons against the trade of other persons. "Trade or commerce among the several states or with foreign nations." This subject will be discussed later. (f) "Monopolize." "Monopolies are much the same offenses in other branches of trade that ingrossing is in provisions, being a license or privilege allowed by the king for the sole buying and selling, making, working, or using of anything whatsoever, whereby the subject in general is restrained from that liberty of manufacturing or trading which he had before. They are said to differ only In this : that monopoly is by patent from the king, ingrossing by the act of the subject, between party and party, and have been considered as both equally injurious to trade and tlie freedom of the subject, and therefore equally restrained by the conmion law. By the common law, therefore, those who are guilty of this offense are subject to fine and Imprisonment, the offense being malum in se. and contrary to the ancient and fundamental law of the kingdom ; and it is said that there are precedents of prosecutions of this kind in former days. And all grants of this kind, relating to any known trade, are void by the com- mon law." 1 Russ. Crimes, 350. " It is said that all grants of this kind, relating to any known trade, are made void by tlie 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 which are manifest inconveniences to the public' Hawk. P. C. c. 79, p. 203. East India Co. v. Sandys, Skin. 224. " Hence, aldo, it seems that the king's charter empowering particular persons to trade to and from such a place is void, so far as it gives such persons an exclusive right of trading and debarring all others ; and It [611] seems now agreed that nothing can exclude a subject from trade but an act of parliament" Hawk. P. C. 293, note 2. In the Case of Monopolies, 11 Coke, 84, it was held that a grant by the crown of the sole making of cards within the realm is void ; and It is said that " there are three Inseparable Incidents to every monopoly against the connnon wealth, i. e. : (1) "That the price of the same commodity will he raised, for he who has the sole selling of any commodity may and will make the price as he pleases. (2) "That after the mouoiioly granted the commodity is not so good and merchantable as it was before, for the grantee, having the sole trade, regards only his private benefit, and not the commonwealth. (3) " It is done to the impoverishment of divere artificers and others, who before, by the labor of their own 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, also. Proprietors of the Charles Rives Bridge v. Proprietors of the Warren Bridge, 11 Pet. 607: Slaughterhouse Cases, 16 Wall. 102. As used in the statute, however, the word " monopolize " clearly does not refer to grants by the goveniment, but to the accomplishment of the same result by private endeavor ; and the word " monopoly," In the meaning it had at the passing of the act, and has now. Is not con- fined to grants by the government. The essential idea of an unlawful monttpoly is fuund not so much in the creating of a very extensive UNITED STATES V, PATTERSON. Argument for United States. 141 business m the hands of a single control n« in fH« -^ . all other persons from engaginl in «nri? V? • *^® '^^^ ^^ preventing competition. The evi of the Ir- ntf ? ^"^"ess, and thereby stiflinl that they gave to the gmntee^^^^^^^^^^^^^ in the fact that thev prevei^^^^^ manufacture and sell, but selling the same arL'^e Thf evU is ^orth'^ ^ manufacturing and son's trade, but the destruction of tie ?rade of ^/rir"^"^ ^^ ^^^ ^"■ same commodity. '^^^ ^^ ^^' ^^her persons in the pmiLl^ot'cvliit Tmononnir. ^^'^r""' *^ '^'''^'^ t^ade for the by liuying out all connLtS^ ^ ^:^'^ "" competition, either agreement is illegal mid void ^ ^ ^^^""^ """^ ^^ business, such i.i^ ^<^^^:u{^!:^i:^^^ 'r ^,r^-e of creat. an unlawful means, whether crimin/l or ^^^^^^ '''." ^^'"Petition by It is clear tliat ninnoS/i ivi ' otherwi.se, is Invalid. law. The difficulty iinst'm ""^/^^^'^"^ ^^ ^«"^"»«n and lawful rivalry in business Thp fniV^ • """"'^ ""lawful monopolies distinction : StoLu Twen 5 De^ui^ 4^^^^^^ ^"* '^'^ ''»« ^^ Ohio St. 066; Morris Run Con) %. T n '^^ ' /'''' ^^- ^'- Outhrie, 35 Craft V. MeConoughp 79 i^^^^ ^'««' C'o., 68 Pa. St. ut; N. W. Rep. 1W2; l^anUl'. Tahro^'7o^''^\ I ^"^i' ''^ ^'^^^^' ^32,43 Vmon Tei, Co. v. BurWmon Ts T Ru'cJ^ ii^pJ^S' ^V ^^^'^'^ 721 ; More v. '^n^l ^^' ^^^^^7 ^ ^ot., 44 F^'r^ SECOND. Relation of the TlNirrn vs'TAmr-c ^ aud with foreign nations and w?h th* "J?*?:^" *^^ ^e'wal states, power over commerce evcnJ «..„7 ■ Indian tribes, it has no stitutlon, and the'unitedXes turts' h-tve' ^T" *" " "/theU" diction over aiiv offenses n?ni,T«t^^„ ''^®' """1 <>an have, no iuris- gress is given the po^?r tf relSTn7;"°.'T " ^^ ™eh as eon- Fed Rep. 104. regulate and control. /« ,e Greene 5-> be^n'mThel^ th^'The"^-rgi''4"^to"''""'"" '» '^'""■««--. 't ba*' cwimerce is exclusive, and fmltes a m^l.?hitT^''^''. *° ■'«'«""»« «"ch upon such coumierce. This i.rnhiMM '"*"*° agamst any restraints SniSftttSlulS^'^^^^^^^^^^ Tcr- -^?^ ^^^^t^X^^ a 8|ige of the act he.^ uS discussfo^ l*^ ^'**«'- P"<"- to the pS^ Blon of the United Stat^ m'nbh,t ^' *''^''* '"■""» "«> statutory nrorl- sp racies in restraint of ^ t" mononoTr?*f ' «"nbina«ons. VZ,. crimes against the United States so tKl?„ '°t«''^t«te or fore gn trade have no jurisdiction over thaf 'sub llctn.?« ^°"^ States courts S 142 55 FEDEKAL KEPORTEB, 612. ArguiueDt for United States. cotubiiintioii8, or ewuspiraeies upou the sole ground that such contracts, combinatious. or conspiracies aflfected interstate or foreign trade or comiuerce; and such courts, therefore, had only such jurisdiction over these matters as might vest in them by reason of other circum- Ktanc»s, sucli as differences in citizenship. (4) Under tlie power to regulate commerce among the several states it has been held that congress has the power to regulate the transiK)rtation of individuals, of proi)erty, and of communications, and also all instruments of such transiwrtation and communication; and that trausi)ortation of property begins when the property is delivei-eil to a conunon carrier for ti-ansportation to another state, and does not end until such property has completed its transportation, JUd has become a part of the general i)roperty of the state to which It is sent. And a state may not, even for the puriwse of supposed self-protection, interfere with transportation into or through the state beyond what is absolutely necessaii-y for its actual self-protection, and within the scope of its police power. See Henderson v. Mayor, etc., 92 r. S. 259 ; Raitrmd Co. v. Huscn, 95 U. S. 465, 472. The ex- tent of this grant to the federal government is further seen in the following cases: Gibhmts v. Off den, 9 Wheat. 1; Welton v. 8taie of Missouri, 91 U. S. 275: Walling v. People of Michigan, IIG U. S. 446, 6 Sup. Ct Rep. 454; Robbins v. Taxing Dist., 120 U. S. 489, 7 Sup. Ct. Rep. 592; Leisy v. Hardin, 135 U. S. 100, 10 Sup. Ct. Rep. 681; III re Rahrer, 140 U. S. 545, 11 Sup. Ct. Rep. 865; Trade-Mark Cases, 100 U. S. !»; ; Philadelphia d Southern S. S. Co. v. Pennsylvania, 122 U. S. 326, 7 Sup. Ct. Rep. 1118. It seem?; clear that what would be a regulation of commerce within the implied prohibition of the constitution, if attempted by a state, would be a sulticient ol>ject of a conspiracy by individuals* to make it " in restraint of trade among the states." Clearly it would be obnoxious to the prohibition of the constitution for a state to pass a law that certain nonresident cash-register companies should not be allowe€l to sell cash registers in the state. If this would be un- constitutional when done by a state, clearly it would be a restraint of trade among the states when attempted by individuals so as to make a conspiracy to acctimplish it a conspiracy in restraint of trade among the states. The (conspiracy in the present case was to prevent certain corporations from carrying on the business of manufacturing and selling cash registers; and it is alleged that said corporations were carrying on this business among the several states, so that the prevention would operate nei'essarily and directly to restrain interstate trade in such cash registers in the same way that the state fCgulation did in Leisy v. Hardin and Rohhins v. Taxing DisL, supra. This, however, i«||i qu<^tion to be determined at the trial. (B) EVILS TO BE REMEDIED. Undoubtedly a prominent evil to be remedied in the minds of the framers of the statute was the concentration of the entire business of the country in certain articles in such a manner as to prevent others from engaging in the same business, and thereby to prevent and stifle comiietition. As stated in the [613] title, it aims to "protect trade and commerce from unlawful restraints and monopolies ;" and the evil of a monopoly lay in the prevention of others, either by prohibition from the sovereign power, or by power of individuals, from exercising the same trade. When, therefore, the statute made it criminal to conspire to monopolize, it did not intend to make it criminal for two or more pei*sons to unite in developing their own business by lawful means, nor for one person to sell out his business to another or to others, provided that the prevention of others from engaging in the UNITED STATES V. PATTEBSON. Argument for United States. 143 " *"^ L'liirea States fortiori, it ism^nfl^^^^^''^ ^^'«'» engaging ?ntL/ k "^ business by (C) THE BEMEDY PROVIDI D. I. Tlie most narrow effect fhn* e; _ they __^ Kep. 997. ""• >. ue^erve, 154 AfivsiiT' '/-"'* "^""^ -i^«=r -"" '" - ••--.«.. t.t a e :,1: : " (1) Personal violenn** o„^ ^, '^ unlaw- As toniaintenance seo i„ f La"- J- C. P. 307: Si ^',"-"''f>' ^- Oye, ,,(3) By bringing „^rt"f ^?""-«c'- TAm. 293 et«^' ^"f' '^ «• 155. the purobasers^and wosnP.tf '""""S to briu^ veVa^:' ^'"1 ?«««« cited, ^ruse, Lamson. Boston ?n?r^ •""'■'^''''sers of cash .»^- /"'*' ••'8»""'t J«e. 5C7; Kellevvi! "*! '^"'»" Compani« ?t '®?"'f"-s from the Cash Renisipl% ' '"""Kfacturing Co Xf „, ?""'«' "■ Taylor civ, 's clear fvomTbeZTtu,^"^^'"^ "'"'-e brSv Vh! '^?""°» '«»•. s *>r trade or commerce I 'M.. .MM 55 FEDEBAL BEPOBTEB^ dU. Argument for United States. Iietween the »>ev»'riil states or with foreign nations, criiufi^ against the United States. therel»y giving the United States courts jurisdiction over them. This oonstmction again, how- [614] ever, is not broact enough, since to suit the statute it also would practically eliminate the words " contract " and " c«)uibination." since neither a i-ontract nor a comltination in restraint of trade is civilly jictionable at common law. III. The net jroos still further, and makes contracts and combina- tions which are illegal in the sense of nonenforceable at common law, crimes against the United States when directed to the restraint or monoi)f»lizing of trade or cummerce among the several states or with foreign nations. That all thi*ee of these effects v\cre intended appears from the act itself, since in no other wjiy can all the terms of the Jict he given eflTect. and may also be shown by a reference to the debates in congress wlion the bill was pending. In the debates in the senate a number of cases jire cited as showing what was meant by " restraint of trade " and ** monopoly," all of which were civil, and not criminal, cases, and include the i>rinciple of the third jiroposition above laid down. Among these cases were Richardson v. Buld, 11 Mich. 632, 43 N. W. Rei>. 1102; Vrnft v. McCononghy, 79 111. 346; Handy v. Raitrmd Co., ;U Fed. Rep. 680; F">- fo as to read*??eou^"rf;"r--' '" '^^fah^ o/ 'r'^dt"""'"*'"*''' --^^^ III. The imi'rnf ''*P- -^^l- "°"Mw v. RmnadellTm r ' »• '»wf«l o^s^"^,^ ."'«»' luffleiently alleges that th» , , ' «&',,.. ft^J-tain o] {he"i^4t''Sra,;" ""^ '-«-«« «f th« trk K- 'I'^^iJea on bv tlipm • A^i . ""siness of sjniH ^ ^^ ^^g con- to hinder and pre^ntfiV "'^ ^" ^^^er counts tho^'^^/^^^-'^tions, then imaJlttUiii TanrT 146 55 FEDEBAL BEPOBTER, 615. Root and Liudsay, in support of indictment trade, and charge that the object of the conspiracy was to restrain the trade then carried on by said named corporations in cash re{,'ister8 among the several states. This language is clear, and as definite as the nature of the case will allow. The statute was intended to cover a conspiracy the object of which was a general restraint or monopolizing of any trade which was of an Interstate character. The conspirators would not naturally in such a case specify, even to themselves, tlie specific interstate transactions which it would be their object to restrain or monopolize, but would formulate the general intention and plan to restrain and monopolize all the trade among the states in a certain given subject-matter; for example, cash registers. The allegations are sutticient to show that the restraint and monoiK)lizing contemplated were unlawful ; that is, that tliey contemplated the prevention and destruction of trade by means which would not involve the corresponding encouragement of the trade of otiiers. It is not material whether it appears on the faco of the indictment that the means alleged are naturally calculated to affect interstate trade or not. It is distinctly alleged that it was the Intent of tlie consi)iracy to restrain and monopolize interstate trade. The means are only alleged to show the unlawful character of the restraint contemplated, not to show the object of the conspiracy to have been against interstate trade. It is submitted, however, that the means alleged are such as would naturally afl'ect interstate trade when directed, as in this cas-e, against corporations engaged in interstate trade, and that the fact that they would also affect domestic trade is immaterial; and this upon the same principle ui)on which it is held that a state cannot tax interstate connnerce even tiiough at tlie same time it tax domestic connr.erce to tlie same extent. J^ci.sy v. Hardin, 135 U. S. 100, 10 Sup. [616] Ct. Rep. C81 ; Robhins v. Taxitiff Dist, 120 U. 8. 489, 7 Sup. Ct Rep. 592. The means alleged are such as would necessarily prevent tlie curijorations engaged in said cash- register business from transiwrting said registers from one state into another, and selling them in the latter state. All the elements required by the statute are therefore sufficiently alleged. Elihu Boot and John D. Lindsay, (also in support of the indictment,) in the interest of certain private individuals. FIBST. In conspiracy the gist of the offense Is the combination ; and, when conspiring to do a particular thing is made criminal by statute, a charge of a conspiracy to do that thing is a complete and sutticient description of the offense. Neither the means by which the conspir- ators intend to do the tiling nor overt acts towards the doing of It need to be alleged. Neither means nor overt acts enter into the description of thjs offense unless expressly made an element of the offense by the statute. If the statutory description of the crime is conspiring to do a thing by unlawful means, then the unlawful means must be set out If the statutory description is a conspiring to do a thing and an overt act, then the overt act must be set out. In the one case the unlawful means, and in the other the overt acts, are elements of the offense which necessarily enter into its description, and must be averred ; otherwise they need not be averred. The rules upon this subject are very fully discussed in Corn. v. Bavger, 37 Leg. Int. 274, July 2, 1880, by Hare, P. J. See, also, Com, v. Hunt, 4 Mete. (Mass.) 125; Rem v. mil, 2 Bam. & Aid. 204; 2 Whart Grim. PI. (4th Ed.) ^mrm states v. pattebson. Root and Lmdsay. ft, ^p^.^t of indictment 147 C25. 028- V S . n "^ "' Indietn.ent. ni T""' '' <^°«'>- 514. ' -■ ^'""- ''• ■^«*"»«''- "cist 1!^ - SECOND. rest,M°rP°'y which is the obVert oAhi'"* "'^ .■•'''^'■•»''>t of S ^ restraint or the kinri r^f ""J*^t.t ot the consp racv f« fh« i I , \. nounee. To thusmale^ap^.^S'^e-';";!; -f er'ia'^enStl" o'al' Sa" «"'K tr.-^ IISHHSS THIBD. •>-.... .wutui rraue with n the intent nf Vi.I . "tanner described is of the act which mak-es a consn!?a5fn t^^^ ^^ the first Section I. To ascertain what constu^ fo5 ^ restraint of trade crimi^m splracy in restraint of tS3f re n„^ ^"^"^^t' ^combination Tr o* 148 65 FEDERAL RBPOBTEB, 617. Hoot and LImlsay, in support of indictment. ■J I tracts in restraint of tmao- th\ rv..i.Ki»»*;^ • x. - or otherwiFe in restraint of triaf^ «v ^* *'"^*" ?**® ^*''*"^ ^^ *™8t8 trade. «-«traint of trade; (c) conspiracies in restraint of Each one of tliese points to n Kf^nnmtti «ti.i .n^** i. . whicli, prior to the Dai^Llf if fCf ! **?»*' distinct class of cases in America Had c^ndemn^ a^ iJ^f "''t' "l^ ^""^'^^ ^^ ^"^''«"d «nd of tlielr effect^iSrtr^e^n* f^^^ ^?."'^ ^J"^*^^ "^t^^'^^t' l>ecause ttoe jcronnd of Senmn^^^^^^ 17*°^ ^^^^ ^^ ^^<^'^i«» and pul>Iic's riglu to Ii ve tm^^^^^ l!l?^ M^^^ interfered with tlie Stricted. ^ ^^^'"^^ **'"* competition in trade free and nnre- contracting parties tbereln^H-m'pn^^^^ * *^^* because some of tlie occupations/and UieSc w^nthl^A^^^^^^^ Dursuing their the competition therein "^ deprived of their contribution to Cof.!^"^e^^ ^ — in A«.V;«.on that^^.S.{^:; ^l^ ^^^^ wliu^l, the doctrine is .>unded One is the injurl' trtl?e Llfllc hv ^.^^"^^^^ .''"^'V""* ''"'^^'^ '^'^^.^^ party's industry ;tl4ote^^^^^^^^ fnlu^v t. i^'"''^' ^^. ^''^ 'estricted precluded f.-ourpursirrhis ~ ^^'"^ "'?^^^'^ ''>' •^^^"g from snpiwtins? himself and hi^fZiv if ^ 'i*^ .^'^•"*^ prevented eWls occur when tircoVt " c-t s ^eni-Vl iUV'^^^''''^ "•''* ''^^^^ *'»««« all. or not to pursue it n t lie enH^riiilm J^^^^ ""'^^^ ^^'"^'^ ^* suffers the loss in both case" n mi h J A li \ country. Tlie country pation, or is obllVd to eTn^iriatl MuZ'^l '" ^^^''l^ "^ ^''^ *^«^- coBtract that Is open to meh^lt n wf,^ ^". *''*?^** *^ ^'^'"^^^ '^- A policy," ' ^ """^^^ ^"^^ objections is clenrly apihist public (2) The second division of thp «fnui*^ „:„ form of trusts or other wke in re«.trnfn/^ combinations in the of cases which, whi ^It inav InchuiA t^i « ^P*^i^' ^"'"^'^ ^^ « ^^"^s »reat number of combinations di^ nLVjf f ^^ '^^^''- '"^'"^^*^** «>«*> « in restraint of fa-ade Iw fhrnL h! ^i^5^^ ^^^^'^ ordlnnry contracts binatlons which the^^^^ IsTo mntrn^t^^'T-T'^?.' ^^^^''^ «»•« *^«^"- terms or by Implica^l^i^^nr t^ '^^mV^^^^^^^^^ lt« express hi3 trade, or not to compete freely wl [rot hPr^hV^f i /? exercise dared by the courts In violation of mln? ^/n^ ^^'^"**** ^^^ ^^- pllsh the effect of preveiU nrfie^lom of fr^^?' *T''"'^ ^^^'' •'^^^"™- a rule the agreements and ^arrangements bv^^^^^^ . ^« tlons are formed are themsAiv^a li Vk^I * • ^'"^"- these comblna- effect alone, upon the miWIo lntpro«V .. w„i f''^*'^*- •'"'^ fJ® dared asainst public no^li,^ The toHnwinJ' ™"n? *'""" *° •» • «"c^irea^s & r^'^ Conspiracies mi..^,. , , ' ^^^^-') App. to PrevU^othe; S-e"''r''' *" ''^y^"". ^ coerce their , this priucinl,. «:„ ?, "^ fo™ worlfins, are fni.,ni •■^'^ employers. ■ 1 Moody & R iil^n"' ''■ ^''^^•'<'«' 1 iSach 2?4^"?i' '»»«tratio«s of RowlaiMs h^- ^^f- ''■Druitt, 10 Coy Cr?m r?"^' i*'^ ; Reg. y. People v:^Jf^ ^"t-i.^r- *^- ''^^^e X Fisl?eT\f^^r «^^- ^• St. Rep. 17 . ;h" • '«•. 8 Atl. Rep. gflO ; P%^: i ^««\ 15" ! «is trade Si^sri rSrr- -vv^^^^^^^ H xou 55 FEDEEAL REPOKTER, 618. Root and Lindsay, in support of Indktiueiit. otT^u:^IL^TZ:e%^yr'':'*'^ 1" *"« state Of New Tork violent and danKeror„L7,n,,, ',.'„* ™"'l*t'tois out of business by attcn.pt the d«.tTuot^on f/ t^l "^ ^''^P'rafors going so far as to EvrrJxt. 51 16191 Hnn in 4 ^-'Jl'"'*""- s I.roperty. See J'copte v. that oaie was fo- »clJLt /Ji Supp G12. The indictment In ""nt-^r?^^ ^ -'""Vt'ara-;',^„ r.rr.rSdJ'^ "' '"^^ "^^^^ ^••'* reJeVrji^^c^^-r/eTh^ri^T^-iT that in all these statTcoibl,^^^^^ "^ ^"''^« *« ^^'^^^''^^e lawful ,nea,.s ^n^i^uZ^^^ 1^^ ."''%"'^ '-^"^^ ^^^^^ ^^ "^- law, and l,v ali4n y elis n" TulfJ^ ^ "''.T'^^' criminal at eoninion making i. a eiin ml " eon"^^ ^^^ ^^''l^^^e of New York, commerce." It was tliSeki,r ,innl '^ j^''^ injurious to trade or existing statntLcTftbl^d^^^^^^^^ ^^«*^« ^^'^'^1^ l^'-^d jnehide in their aet^ L gne ^ n thrm-otx^^^^ ^''T **» in iirovisions aflfecting siicl mn«.nirorlf 1^ J^ ^''^^ competition indictments, ^ conspiracies as are shown in the present But whoii congi-es8 undertook to assert over !nfpr«fnf« «^. same protection which the crmnrmi Hxv nt?^ f^ .f^?*® commerce the states gax-e to connnerce with thLJ .1'^^ ^^ ^^'^ ""^'^^^^^ rant wha (ever Tor "ni4iat"«m^^^^^^ '""''^ ^^^*^^'^ '^ "« '''^^^ field as l>roadIv as the Tvho^o h^^^ ^^ "I*"'*"" ^'^ ^^'''^»* ^^^^ ^"^Ire the respeeti.?s ues .^^4ed withln'thPi? ^''''' 'T^^^ 't^««''>tion in word " conspiracy " i^TpS^Hntelv mldP^ tn ^T^^^^'^'l ^""'^'- ^^^ and " con.hinatioii in fom of tniRt n^l^lf ^ *^» .'''^'^'^^ "contract" complete design. "^"^ **' othenvlse," to arcomplish this ^^^ ^^^^Z'l^ ^^."Z:"!^^^ '" «"^«^-ee between specifiLlly thi n.^.nrt wS th^JrnS^^^^^^^ '''% "ot inclnde element of agiwment is/ii. eod co fm '^' '^^^''^ in the first section of the not iriTf^h^ ?ll ^^^^S'''^'' denounced the combination, and rthfconspi ^e^es'fherrdtc" i >'e^ "u 1^^*" ever, the only contractual eleme it wliich is esSVWn IJ'J^T offenses described 'n tljif sor^Hnn n.wi Vi « essential to any of the must iieceasanrbe si mx^^^ '""^. contractual element the authorities which bad d^lam^ t^ e Hw nV"A'"' conspiracy All «.ngress "evWhS la rt^e "4? o^n.hlnn'tion''.. "T^?'' ''"^'"^^• that same evil by n.eans «1 reaV r^» ^ Swh l" Vr'^^'^l Is asked by the defendants to deprive anxnre^snh^tnnt/./ •*"";* sion of the slatnte of all meaning whateve" t^siy thTu "^M J noMn'; to the other provisions of the statute, for the pnr^^ of i.^ta-ring tin t UNITED STATES V. PATTERSON. Koot and Lindsay. In support of Indictment 151 rnfinTcrp^tiHo't^L^^'s^r *° P'^r^' *"« Siven resnit of pre- crin.infi to.S.o!irthtsre"L"u?t^-rn7o'^e4^"^^^^^^^^^ " FOUBTH. manner described is i .Lnn^w^ ?«.• ^,*™?^ °' competitors in the Hist. Crime, p. 10^ Tnd 1. |t^9^ t *"■ ,^''"°' *'"•'"'<'•" 2 Pllce, "*s^oj^L"?b%^:A1^»'«^^ ' '*• "' «tion"o?SetX excru^iorof'oM,!"""';?'! *° '"-^""^^ ^'" "PP^Prl- ever, that froni the ann 1^1101^ of hn«. " '? ^"""y ">«'"fest, how- appropriation of tradeTo^he exclusir^f7tw.°"r- ^- ^^'""^ "" warrant of law such ns ti,„ ..k* " • "l"^'® "•"<^'' '» ''"ne under patent, the ob "inlng of a „,otno v bv'tbe "i/ '"''"•"""•^' "^ '-^"^^s erty, tlie obtaining of a uh 3v hv n.I nr,?r'''""'"^ purchase of prop- petition and trade as tie r3t -.7 „ ordinary process of fair com- activlt.v. St.Sg wit the " • 4,l.rwe7l"L';*^'l'"!,""^' ""l"''*'^- «>■ leceived meaning of the word nlJ^ .„,.7 • ^^??'''*"'"' ^'^ commonly we find that there renntns nfin^l^f'^'^'^"^,^'''^ ^''"''^^ <" exclusion, have of recent ;iarrbe"o„;e!^rr/,mnMr''fY"'' ""''■'' *"« ^""^ without warrant of law iuich In™ n n i. 1 T"" '■"■! T^'^fel "-UoHv the injurious effects of the fomn.,^ f .? <^'^<''™':tei-istics and all time, .nnd which are acco mi^s « l," ""''''''''^' °f Q"^'" Elizabeth's of the rules above c™"irmln^.!^L^-..i Z'"'.''^."^. l**^^ O'^rt violation condenniation of such^ mononoHe, i, 'tf '"«•"* «' t"<'e- The judicial relating to restraint of trade Th» , f.. f*?"l""^ »t the principles evn resulting fronfre^Sof ^r'^drupr'/l'rlr^^^fe'"^ "" "^*'-""« the nccomplishn ent of the effer^- If /" ^?/ *'''" " ""«« '"elude constitute "an uXwf^i^ re^S'o/pr^veS'rtrll^e""-^ '"'' '^'"<^'' FIFTH. s f:,£s ,r;£» =r,? "-"""•■' ~«r'"js 152 55 FEDEBAi BEPOBTEB, 620. ants— fh«+ "'^^nt from tlie vieu- tni-An k,. /• ^^^ Propos t ons Is tA render the nernw^i^ "f interfering nith inter«t^Il "^ ''<^'- '^o"'- othenvisa lt?s not nLr"^"'^"' "^e hUerferenof w ,? ,"!?''^"' '"« «« « restraint of tr«X nl *^***' *" <»nfeini,lnt}on of Hxv "T, ^^^'^» of to that effect would h "'**»'>P«'y. within tl e ine ,n »<; ?lV^ <*on^tItute ^ In «nsw:f tX .!^,S^ "'''^**^"^* '^^ ctef^,; '::'"^"^ «^ the act. proof head, it is onw r^f *®'"'^'"'ng portion of defenii.in#^» of the laws of ^^r I ?^^'««^^'e- An act nm^^^l ° ""^ f'^^ ^^^^^^^ no-Ittecl; a^d u'does n'^oT ,1^'?^ "«^» ^^ the"s ate^who^'^U'r '^^^ the defendants intendA.i 'i5^* "*® Question of fpderni inV7.,f "^ <^'»- entlon under ^^^"S^^^^ -«a»^ themselves X' S"on>m^' SIXTH. the several i'tatS •!'«."" '^'f'"''"' »' the offe, ^| '""f."'''f "' *"« court of the UniTed kt^^^^T <''''«-'-i''«l an.l ,lem ed hv .f "^ """""S There Is not one ki^'?'''i''; *" "" t>->«Ie <-on.iV.R wilhin .. '^ .'*"*"'« ot>- intended ,o app W" Z ''••""'' """"'«'• > 'ml to whUM''"'" '"-^ ■*»«"! to this ek-nient „f T 'V" "n«>'-t.>intv or „, pn„i, """^ '~* element of the offenifn/, *''* '"f<""*- the oh,.?..p ,, it"'"/""''-''* '" states. I,„t tliat it u ,J I . '. ''■"•'^ '•""' «>uin.eroe „nm..^ .. " **"■ that trade l.v nraVt ^*°,; f';'''''-''' *"« *"'«'e. 'Zuu^t ??., "l" f """ «»n«itute the'^^^itr,^,",""^^';: ""''«■■ the Princlpys a^ e ;hJ:,.""'*T which the oonspin to -^Imir, ""'?*'■ *•"» statute whether ti. accomplish the'Sru't '™ ^? fi^"^ '^^^^ ««'cspirator.s took pface "yJIherl!'^'"^ Each of the tSr^ S~s'nf 't/^'^Ji'^''- ""^J^^t "''''''' '•"^^ «^«^ ff' W. Chaplin, for defend ants. COMAIERCE Amonp the c, ^^^' THE Several States. „„ . ^ — ri^iiAi. STATES. -in's act must rp«f i^« ^^i «^^ir^- rrl*^ "~^^^^ "^" n^an'^./Tfilo^'^rf '4'"" '^ a^S/S *".« -'«»' states.- merce.'- it is ot ..r/"' '" ""=™ Englis"," Xd, m '■''°* "■«•" the iuter,,u,rso of n,,v •?'''''''•'■ '''"■** I'^Micularlv to di,.?^ "?■"'' "«>m- vVall. JOS is-j. .<,,., "^ef Couimeree n in- bV. . "G U. S 517 p ■« "': '■ -fi^''"'*"", 102 U S mi -,!'-/ '• T'''ff''"«. 8 Sup. Ct ,11; 'Vlri'V ■/^'^P- -"^^ r.el„y.%^^^„"f^.<:?^y- t^nol HoMaus. m US 4q. T, '■ Oi/'to,. 9 Wheat if. '«i-®;,'*»' i" Etfi^i' sup. ,., .pp. .^73!^z& ^'%t;:;,T^-^ f "^^^^^ Moreover, it is rrno n^ . . ' ^ ^"P- federal constitution fi;*-"A"^*' ^^ "ot all, of the «'i"inf« ^f> and fixed bv m-inc/n]i« ^^''^ definition of thm is nnt f"'"'^'' "^ ^he 154 I mi ii S5 FEDERAL REPOBTEB, 622. Chaplin, for defendants. fat'r?s"a%'i;r„°;rV.t^t^te°\h°^?^[.-rf= "-• '-- *"« 'act teTn-Kr-tr;^^^^^^^ »•"» °?t as a Citizen Of h?,''^'^,Te" "^i"' ^'/'f " of tl.e United stZ In that range and Beld of his ife n„H .« -'^ •:"" I""*"^' 'li'" only himself as a eitl;con of his state „„dno?^f";i '"r,"'-'."*"" "« P'^"^ line between bis federal and hi. .* i . * of the United States tHb and often a hazy ^TlLXmeUnTnmltTl' '' "" ''"'"^ '^"'t of pro.ximlty or remoteness. Nevmhe?^. -f P'^'^* " ""« of desre^ V. /few, 02 U. S. 214 ; V. 8. v. //«,r,> joo ,, ^ roS"' ^'■'*'^- ^- ■»• Wl, t;. s T. Cn,H«l,a,a; 02 U S ^o. rr i^' **??■ ^ S"''- Ct. Rep. £0ff«.» V. V. 8. 144 U. S. 2Gb. ^2 Sup! «. Re^" GlV.'^' '' "* "• ^- '^^^S CONTKACTUAl ChaBACTEB OF THE STATUTE but the distinction l)et\veei/ w^T?f- ^ ^ *?^ ^''^*^^"' some at cnnital against eapitnl has nhv .Ti,4TX'^^ ,;;^, "f * h.bor and legi^;!;[jon The ancient legishition again^mo; or^n^s " "\^ ^''''^ ^^ ^he statutes, lation against capital. " ^nonopoliziug and engrossing was legisl The act of July 2, 1890, is directed nf r.^..u i , very generally supposed to InvP Ht^l S'^P'^al. it aims at dangers Pitions of capita I. It aims nt ^I fi/ '''J'^" ^"^ ^^ enormous nggre comlunatlons of capitXts nn/ "'^' effected, or to be effected hv aimed at in legisl'uk^ ^^„^ ^^^f^j^f^tmns oj capital. The e^ oTf' "f ,"" ''-'^ *>^ H^er^frand o^r 'io^nol'" ?r\ '" ^^"^^'-'^t"^'! ehar- call for federal protection aeainS nl I il S^\ ^^'^''^ ^^^s no general act of 1890 was ain^ntflrnu I 7^^""^ *^^ '•'»^^<^r character The ^i;t c^Uract, Ir^^l^r^^MlS^T^l^t^ ^^"^11^^'^" ^ ^ was at this, only, that tho imrido*!! ""^ '^"^ publ c snfetv it Which its words'ire ?o h^ cin;True^^ ^'""^I^ ' «"^ ^^ ^« this^only by mei-e fraud and viol^Krit s thus Z^^rt f "f/*'^" "^^» commerce This statute is not a Kn-Klux nrt ^^; .? * ^? ^^^^ '^^''^^^^ to punish. Bopolizing" of the statute are contr-iTt^a f.''/"^."V' ^"^"^ "'« "'"o* ing.-not mere interference >Wtno nmoi-rl ^^ .^^^^^^ '1"'^ monopoliz- ehainperty, bringing of suits^^ or oS forn.« .^' /?^^^*"y' ^^^^^^^^ vexation. ' "*^ ""^^^ forms of violence, fraud or The indictment proceeds nnmi +k« «!"«• thi tract crimes. ^ ^*'""* """y apHy be designateil as con lni^lllx"rg^a'"To mak^^^ '^'''■''^' '« "'« ""'awful sell- sale must have U ^n^e^Tthl^eSs-'X'^!' -.firL^i UNITED STATES V. PATTERSON. Chaplin, for defendants. 155 j'T^an? arofTrSaf laT\-nf b'" t'^'* "r ^ <'^'-""«'. the law of contracts. The Questk>'n« nf ^^ *''* ordinary principles of «nd agent, of delivery, for efa.nn1e,~"H-'''*°*™^t"«' «' P'tacipal I qnor prosecutions prkisely as ta'^^Wi^ctf 'T'^'^ ""'' ««ttled in • icirsaT'f^Ti;'„o;sf,^T"-'^^«^"^ ^o- T- We.«o„. statute a "sale""trh n^"i? n "fact'ailr^'' -^f "'^""'^ «e'«ng knowledge, he is buving for ai nrtn^t ""''oug'i nithout the vendor! t^ eases xlJJon ttf S^^l^^,^^-?;;! ?f ""^' ^« well illustrated feit money to a confederate Th!f^i ^^ "putting off " of counteV- tiuguished from the crfme of n/f.v-^^"'-^ ^^ " P""'"^ off " is dis- c.minal,nuistbeniade^ an uttenng. Vt imply a contract, wi,i]e a - nut^n " Vi » ^ 2"^ '^*^^^ '^^^ necessarily true contract of sale, gift or bir ir ff k ^^^^^'^^^ Paper implies a sale, gift or barter. In /?c^ y Arf//r. .A?..^'*il^^'"^^^^ ^^^^ a^J other tlie indictment (fran.ed o It 8 &Twin ttV ^^ S;'> ^^'^^•- S»PI> ^ off' counterfeit money) chai-ed thnJ « "^- "*• -^*- ^ ^'' ^or "puttinc paid and put off for two si ] 4. tL '^^ counterfeit shillingV" erf hngs were sold for half a cro^n "^tP"''^^ ^'^" ^^'""^ ^''^ bad shi] meeting ofSni^ ;^'vIHc,. ncSiv'"'"'''''"^ "« I "o or Jo'^i.o "ffecTa I represent to a vendo • h.'t I ;nf r^r.^ ".l^" "' o" the one Imnd me goods upon credit tl X i« n I ' ""'' "'creby induce him to a tuJl'" 'l"l>posed purchaser intends or T f..? l"1" "'' "ot what he No ~n?f' ? ""^""S of minds in rontrnctiv **"* '" "'«'•<'• or is Tins Statute a Statute oe Contu..ct Ckime. i-estrainrno?ta?tf"monopoiSze*"nrL.u"*'''''? '^'■'"'^- Neither in its thing else than (a) the i nkw Pjo 1°°^ ^'^^ '* aim to punish -inv conspiring, or atte npt?ng ?o nfa,"^' T^^'^l' *"" «" the'^^mbin Se" tracts ; or, possibly, (c) the comhiM.^ *" ^**"^' *''« making of ^f ' to supjx>rt or enforce contorts i/f, ""■ <^onspiring or attempHng *''?* a/ontrart be made, or thTt contLtrS^^^^^^^^^ to guilt under if rh.s is. .„ .uhstance, the view w^i^ hTs^iS^n^rktu-'o"?- the act ,„ 156 55 FEDEBAL BEPORTEK, 623. Chaplin, for defendants. no one of tliose cases is a d^islonnf "'^ decisions. Since, howeTIr' binding prec^lent „,«„ tWs com or 's'^^n"", ?',""" ^^^o"- «^'s a ^n^ '/if defendants' counsel n„rH,.fi„? "." '"*"'•'' "i"" tlio case at pro„er ,«!„.« inlue'discSn!'" '"""'' ""' ""«> »« reL?^ to TkcII.Mcal TeBJIS in the StATUTE. The use of ffir*tiii{i^.>t ^ necessitate. ti^e'c'SScS^!;::,':. J^f A" ,*•" ^'^'^ '« «->^ «» Of htatutiirj c-oiist ruction th-if .v . ! ^^ *® ^ familiar nrineln a phrases ah-eady hav nL a settled ^I^^^^ '''• T'' ^^«^"t« "^es words ^jr these word« or M,ra.vr^^^^ A Miniiar conj-ervativ#» nriiw>t..i . * ' JJaji. oOo. expressions horrovved froi t.i !f!l£''""^J" ^he rule that statutorv to he taken in the ineanin" of t^.oi "^''^ ''f *''"«"»«»• Jurisdiction a^ by judicial eonstnictio, 1>« -^/^.^^^ ^^^'"ieile, U defined there ado;,'t,:;;::v;Sn™t fe ?f ?/;;:!. ';';"r""''^'«f^ snunnar,- refcronco 'ml ofte,^ hv IZ ""^T"' ^'"KJects. bv a mere a complete title or Ue»a of tlm * J,? '" "V' """Pt'e designation ^ mary adoiition in- feder.1 ITHnJ^" f **'^^ Principle that the sum law. civil or criniinnl i. w L ^"/w .^^ " I>='rticular head or tlfiaT; ma all its exce Ss : it h. ^l **'^^ ^^ ^«^'' wi?haints details the same reading whi .i/ \vo; L ^.^ "^^^^^^ »^«« i" law precisely tailed Code, rehearse at leLfh li **'?' ^'*^"^*' ^t. as would ad/ p"r -^n^t^inf..' S^S =r'^' ^^ti^nri"^ -".V .as .eld to^ ,:^-- »L''Sa?^,;'li;SnI%t UNITED STATUS V. PATTERSON. Chaplin, for defendants. 157 a T«''-'^no«'n. settLl"a"d tect,ic^!"?t'h" ?■''* ""^^'^ " -ord has i° *"« 'r-. ""* '■' t"e language "f a tr de*" nr'*^''"*' ■"«••> ""'S-not the word. In a new statute win L "''de. or in common speech — Laheti. fMiV.S.W- | /),,,: " ', ''*'. ^''^'' i^»*^ meaning, i ■,/;„"• ,. rich. 101 U. S. 278 " '■ •'""■'"""• M. 108: Orccf/ca.f ;' „oo^: ErF»:cT OF Worn. "t«a„k" ,x rnrs Statcte. «oT!f trS i'/muTOworwLrf'l,'- '"..'*' '"^■'•""'« «■" »« individual G,Mo»., V. Off,,,;,, n wWt 1 lio r,?™""'"-^*--" ^Marshall a J therefore, in this statute NoitS,' . '"^■■- ^""^'t' <"■ ».' and there- Even if it were a bro.aS word tinn "I ""''"'""* "'"' " wmn.er^^' more broadi.v than " commeiTe " ,T tl,i« f "iT^" " '"""'d "ot operTte therefore. In this statute is eitw ' ^^'^ ^^e word " trade " or narrower than it. .™d in ertIervi?u"T •'''"'' ^'"' " """"ler^.-" word, surplusage In the st-it.,t« .i-.. '*, ''• "" a mere Individual be given effect, if pS.sshiewl^ . n r'"" t^de" must. ho«4vlr Cov. Hoffman. wTv sn-> ' '^"'"'""^ ^o- ^ ^- «• iSlUarkei ^trahrt'oV'tlT^ff^I connnon','^^-"'?-^ ^'l ""-*'- '■«- 'ar the " re- . io.. b.v its application 1^ 1™"/",";:%?.""'^^ '° '*« "^"J «' "I^r^ «>nu„erce" n,ay be broader than^^ade- "o'"™^^^" '" ^ 'aV a, indictment comes under the henVl i.f „'^''"«' f"T. if an.vthing In this the head of " trade." Noth'n^" fn?«'"^''?/.' '* ""^ """es onde? those outl.ving zones If nnv ^? „ "' '" *is indictment lies In confines of trade ' ''"^' °' f^-^merce, which extend beyond the Teohnical MEANmo or " Resteaini of Tbade." common law b.v " restrainrof *U^e ?""'*"'" "' ""»* '' "'«ant °J Si This phrase. like main- others hns'.f . I mean ngs._a broader and a^arrower Th''" k""^ '«'' *^» technical Includes .III technical " restraint of trade "-r^"""'^'" '" «^"«'-'''- and and includes only unlawful " res^riin? of f '7^e„na'-rower Is specific, vers no obnoxious sugeestion -r^J "' *™''®- The broader con nlficntion. In both lt^S the nhrosf ''""■*'■ " "' obnoxiofis X and only contractual res"St resJT,- i"t''°^ '^"''•aetual restraint contract. Both the broader anTJhenJ"* ^^ »>r,tr»ct, and only by forth by Greenh. Pnb. Pol l&s *"« '"'"''^«'- meaning are wen ^ oomnfonTrm' oon?ert?^°*5 ,^"lf " '« almost always used in the queutl.y, "combination "In It, Ls*"* """■" "contract," or! Ie4^ " conibination," the Phras J mere ^'^ ndlca7^° tC ^T* 'T" ^'''' '^^^ apl niV'^'Tv*" P«'"'«"'s In a contrart ' Mm'mn„ ^'"°^^'" "f ^ eonsldcr- ally ail of them. When as ,^ft«„ I, "™'ting one or more bnt nan do'Lr VrV"-^ in " rest^^lnf^Tt^ad'T."^;, T.f Z^^'^ *° « -"«"^«"- ^"ntrctni,V''o&*nh''rt^° /-- ' -^ xr-ent- r o. a stauehoider, wbr^rL^ro„rtr4tt--£f |n| i X«)o 56 FEDEBAL BEPOETEE, 826. Chaplin, for defendants. I it applies in an e°ce%i«,ml 4 J „L ' m?'' "^^1''"".'*"' «I'<*^H "ow word "trust." As to 1^1X1^}!™^ ]„ ".''f«"e signification, the ^j^^^ I. .\8 to couililnations in restraint of trade, see Id. C0NSP1B.»CV IN ntSTRAINT OF TbADE IN THE CbIHINAI, LAW. It reiiitiins to be consfdeiwl wiw.fii«.. *u^ i trade," eiti.er alone or in com.e^thn witl thi' ^''"'^ '" '■^*''""" »' any otiier word, bad in tiie c" S I- « , V^i -I <»"S|)iraoy," or tHan, or dl,rere,-,t fron.! Its t«l " n^n'ngln the'd^^'ni"? ""^^ " SuiU separate technical meaning In the orh..innl i..w , k"" - ^ here, wonid have to be a nieaniiig ce,,erMfli-\^l?.i ]i?' '",'* eflfectnal a matter of pei-sonal or o.-^n»l,;.f.,f .. . • iT"^'"''^' "'"' '">' merely existed in th'^'c;:Sl'na K I woZ •;;,!" r'tn /.f/"*^" " '"f""'"« boolts,— old and new In tiio »„ii„.. .. "f . .'" ""^ nPProved text- phras^, " rostr lit of tr de ■' .nd ■? "^ > text-boolcs the words and do not u.,«.r , e°s n 1^'ne «mt„^,"?!.M"^^.,"' V'^tralut of trade," ri:^^rv '" ^^f'^^^'i^ '•co^r.?<^"-*-';.irorh' spiracy in rostTaif.t^'T'tr^de':'" 4 Bl "cS 'Twk' ^''^'^'i'TS" Crini. Pr. & PI. ; Chit Crini. LawrRob Crm'^t-^^,^n^;' 'V'^''''- Paley, Conv.; Carr. Crin,. LawrBlsh CriV.r I mvRui %?■'"'• ^''"'• Whart. Crini. Law: \vi,art CHin w V i,.;. )i •, ^'*''- *^'*''"- I^"""*^- = Ij.«-; Maugh. Law li.w is.'" [MeT "«', f^e-^wS n"!"' ?^""- May, Criin. Law; tovis, U S Crini ■.vii^^.V."?'''*-,*^'^''"- '^'"': Crl.„. Law: Gabh. Crin..' U w i Fist' Crin/ Dii'V' i^r.""-,//r = "^ Tlie on y Instances of the nw of tL ..i.-V. .T ' . ' "'*"• Crime, of trade." or " rostrahit oVi^l - fnl'^TT ,<^"«l'i'"' ^Ir study of the erimlnairw ftL ""c^ntmcrfnt n?'!i^** ^^'"'^ '" *"* With referem-e to legislaHo" sVei^ "„ ^t 'V°rin r mw"^^'!*:^: preface. What be wrote in Ro' Wm In Ills " History of the Crln^i i^ subsequently elaborated by The nomenclature^. ^L*splraci'S'"S' uSiinVo^" Trade "'in ^'""^^ J^rs ?«n^\-L.^Tortrtte^Stf 'H^^^ "= the past, and of such pr.bnc';rnd°s^Sol 'Sr^sitfon a" to .^"^HH^' X'-.ot^v^: i"f r«ch"auro'f'^:;sV3riir "^^^^ does not make his phrase a "technir rm^i^'tu're 'SlV^c^^^^ But what he there says begs the question hmv f^vini ?°l* ^*- considered In the matter of " rertralnt of trade " '^""^ '" *° "^ It^d^°Sonr^^sTo"Kmr^uTrlV' fL"*?* " *^^* '"~''' »* «"• fectly at llbe^ to use ^pu^i^l^lSlftul'^UZC.' I?"^ '^^ UNITED STATES V, PATTEBSON. Chaplin, for defendants. 159 wntten in support (if a theory as to freedom of trade at the common law,-a theory which, as Mr. Justice Stephen shows, is erroneous An examination of the English Statutes relating to offenses ag-iinst trade fails, with the exception of one preamble, to detect tS use in a criminal sense, of the phrase, " in restraint of irade " ' (1<20,) t Geo. I. St. 1, c. 13; (1725,) 12 Geo I c 34- n740 ^ 99 ?f^JJ-o^- -^' ^^''-'> ^2 Geo. ill. c. 71: (17??,') 17 GeV IH c^^l (1795.) 3G Geo III c. Ill ; (1800,) 39 & 40 Geo III clOG, repeal Preamble: " Wliereas. it is expedient that such statutes Ffore- 8ta ling and rcgrating,] and other statutes made in hS^m^ nudln 7tvl\''' 'J:'^^*';,^^ repealed." (1859,) 22 Vict. c. 34 WS ) 3? & 39 Vict. c. .Si;. Here "restraint" is plainly contractual. Teciimcal Meaning of "Monopolize." The word "inonoi>olize," and its noun, "monopoly," have in the In J' 'Vlf in'V'* the time of the passage of the act. a techSl min ing. In so far as they implied any exclusive privilege not resting uiK)n a government franchise, or upon individua ownership of nro^ erty they involve the idea of contract. 4 Bl. Comm 159. R.?v 'coS^ tract. Lim. 210-24.-; : Greenh. Pub. Pol G70 et sea Rir^s T^'/« .; Conmig, 51 Fed. Kep. 205. .^" *^^' ' '^" ^" '"^ It is not. in the legal sense, "monopolizing," to raise unon one's ?r.^rT^ '" ' '^ T" y' '''''^''' ^«^- t^^ subsi;;tence of a c?mnnunUy tr'de" "monon;.lv-^^^^ if *'"''^"'" ^'^"^ " ^-^^'"'^^t in restra^ o^i craue. monopoly has, in the common law, a broader and f-ivoi-ihlA sense, including just and rightful monopolies such fj a?ents or^^^^^^ Hghts, and a narrower and obnoxious Fen..e enibracii g only ,1Z'^ les counter to law or public policy. " Monopoly " is limited in ite cSfct''Tf';?r''" '""'"' 'V''''''' ^^•^"»^-^"'^^' I>i-ivate rnersh p. or conti. ct. In Its muiower and obnoxious sense, it is limited to un- lawful contractual means. It is not monopolizing for a band of des peradoes to invade an i^solated community and i^ob it of ts winter's stoie. lie only monopt,llze.s, in the invidious legal sense of the word ^"i^r:nf^L'::^i 'r "^^ '^ ^^«-"i>t« to buy uif thrxil' or suostantially the whole, ot a given commodity in a given loc-ilitv or at le.-is contracts, or attempts to contract, t'or the con?rorof it Case, c'tcd ;ibovp. Section 2 of the statute, therefore? mX-tkes to punish nothing but the making of a particular form [627] of ^n- tract.-usuaiiy a contract of imrchase.-and conspiracie J and At- tempts to make, or to promote the making of, or perhaps to e for^ such contracts. This effect of these technical woi^ hi the Statute has been repeatedly recognized. U, 8. v. Greenhut, 50 Fed Rep 409 In re Corning, cited al)ove; U. S, v. Grccnhut, 51 Fed. Rep •>05 • /n re Orccne,62 Fed. Rep. 104; In re Terrell, (U. 8. v. GreeZtT^lF^^^ The mere fact that England and the several states have varied in details, or uiK,n the shades of meaning and the precise scope of tech nical expressions, does not make it improper for congrS^to emnlov them. At the times of enactment of the various federj^T p^Ll stTtu^^^^^ England and the several states have differed somewl at upl the dl^ tails of the various offenses. None the less, there was a generillt understood crime of "murder," "forgery," '^obbery,'^ 'Vra^y " etc settled in its outlines, and in most of its details, to such a degf^ that the federal courts could have no difficulty in fixing by its definition the meaning of those words in the federal statutes. Ball y US cited above ; Jlf oore v. U. 8., 91 U. S. 270. ' ^" mmm It 55 FEDERAL BEPOfiTEK, 627. suv.ti«« ,. . ,. oMowN Bi Section fi nndor anv contra; f, '" luostioii hrovidp^- "... spinuv. anS M i. u "'' il"^ w.nhi, ;,«;,"" ^ • '^»>; I'^Jfrty owned this act, .i.d beTni*',,! M """^^^ "-oieof . ) "i.emiS L^i '"' *° ""^ «">- anotber < to „ ,"'.""^ "'"'••'e of tmiis. J, .t.; ° *'? "' "action 1 of those nrovi? «tatnte conSaU ^f *I7"". '» the law restraint or nionomw '""''^''"l «t tbeZ.mtou ,,«^'''-*''"'^ ""'> «» In eltber Zi^'ll^\ "* ^'^s nnlnwful at 1^^?. '""*"■ °"'J' such and thereT'^othli^* ^^^L" *"« '^^traln? or nionoDS?'""""' '""'.-since Hon of tbe bmnder^..?f "?^ """ '» the indictmenr^r? ~".f«<-t""l. the widesnre^id^'?^™ meaning would Justify .,s,vni„.^ ®.'.'"^« ""^ "dop- defeud2^;^^XP^^"«'«''?'.<-lon of uncoasVi,mio„ jf^ „? b "*' f"°^^°' tectoloal c^S. natorv L'--"?' ^'"•'*^"'«'e»ce e "?, and nnr*' ?"l^ to e-xtend thos2 pH 'c p1l°"sliST ?' """"^ "'"■•^^ »nd'^s'"?22S?'y; '" ootlylng zones if •• <^mo,p''£',','y '^y'»°«5 the realm of "TAdp®??^f^'^J' s:no-^K£~^ federal consti^tloi nwn''? f*^'*"' J'"-'-''"ictTon to th„^-t **'''*"*^- UNITED STATES ?;. PATTEKSOX. f'haplin, for defendants. THE KOBEOOINO THE ONI.V PbactIC^ Co.SXB.CTIO.V. 161 and nn""" '4^""^ part of such LZ"r^"*'C'""' "" «>n^PiraciS' and uncjualifled. But at the dote if «. ** language is sweeniue Isted, under constitutional nrntp.;f. ' ^"^ Passage of the act tliere « im^nal liberty. deSlenr?orthei'rTx ttn^'^'''^ «' P~I^r^ and'of terstate monopoly and restnirit ^il^ eiisteme upon a complete in- r'ght rights, not only t^e rigbts of natenS^ "^^^ •^"t*" aSd ^py. but, as necessarily incident ti,t™t Patentees and copyright holder absolute monopoly and restraint ^^' ,«>"°t'e8s derivative rightfof Machine Co. v. Mo, J, m Mas, 7?- rTJ" J"'"'^' ^« «o^- *^7 494- Pullman's Palace Car CoTmij' ^ ii^S^i.h ^^""■'" ^rannp. Co. y' E.x,sting rights of this eh.-,rictef "h^tK" ®."P- ^ R«P- 478 p^^!;r.^^r™--^^;^^ n^ tKn/h"t^ fhir^,- ar-m-on^-Sir^^^^ SV f- «"-"'=Ci^ :s;tt-i«^'io ^srlS-'-^C?-"- -""■^'" " '^^ a statute ought, if nossihip Vn 5 '''*'"^^ ^ unconstitutional- ana ^Uutional. U J, ~^;; ;;^^e^^^ -nstru^ as to iSake 'i^' ^^^ 580 , Pflfr«r>,ig y. Bcaford, 3 Pet 4^^- »;/ ^- ^- ^52, 6 Sup. Ct. Ren Central Pac, R. Co., lis U S%f* rf^'^ 0."^^^^ ^^P' ^25: U. 8 y Congress could not, therefore h^ ^."?- ^*- '^^P- ^^38. ^* ButV". '".r^ »-ad,*?rt'e^Sleit'' ^'^'^^^-^ *« "^ the words of the tect^^b^^r c^:?^^^^^^^^ r^h'r^r^- ^^^« - -tte. not pn>- nevertheless many forms of rp«^trd^ ?^ Property or liberty, there am aXt^- -:-t tL€KV?"--*- X rthS busmess, (Co/?m.. ;. LocL L R i^ a ^^^^^^^^e agree to " ^ua S' unreasonable and ruinous 'comrSiition^^;.?^'' ,^'^^'> ^^ *<> reZain In ' ^Tri^t^-altf- i;- ^h£^^^^^^^^ ~^^ "^' '• ^" Assuming tharSg-L™ ^^^^^^^^^ T*^«i°t is reasonable or not such restraints and mononolie^s n «*''/^^'*^^ *^*^^' «nd to m^-e aM Wonally protected rightTTXVrV'l S.f anS"^ "^ «<>* ^^^ti^- Plam that congress meant no nnohthll^ rV^^ P^"^'**' ^t is perfectly make it illegal and penal for a sm«n /' . ^^ «>ugress had ^we? to state commerce to se 1 out Ms littl? hlL-''*'^^^ ^""^^^^ ^n loc^ inter thing of the sort. Nor did cnncriLo • ? J ^*^ "^^ intend to do anv most of those restraint 'Jna^^^^^?°^^"^ ^^ interfere at nil w^^h alwaye b^„ regard^'^^s rigmTnTl^nuT^^ ^ *^^ «*-^tes h'ave ment of the publisher of an edition h1' 1 '^*'' {'''' example, as an agree- Of a tra^ecret, loo.ng ^t^^p^J^ar Tliis-s^-- ^ 11808— VOL 1—^ :a n ' i C! 162 I fl 55 PEDEKAL REPORTER, 628. t'hapli,,, for tlefeiKlanta fAl "'""> other similar >.*rt.«« This Ccnstr,. -r. * *" iitraet8 to Hniit e^n L t" '''"' ^« ^^ Iiave seen nf *" **"*-* "*«^n t on, were ilie«^, ^r ifi^V*"'!- ""*'»'>^ »^ise prlcS ' J'LT"*"^^" 'a^, cfple to fonibiii Hn»i ^ «tatntes, in tern.s sinmlV 5^^"^'^ produe- Ject beinHo m^^^^^^ to maie "„ f .^ ^^ ^*^*« P'''«- »>inding(tnt^^aeft T'l? ***^ Practical difficim nf ' ^^;''^^'t«' ^^^ «»>- "tnistt' tht ciS . ;;i^tr,r^^- '" -^-^ or'S^e^'e^r,"^ •'^" '•^^•^"aJ justice. The8em^K«„ l^^"^ ^*ewme a great o >tn??^*^ """""""ding ^avvs Ala. im-im 74' f T*^ '^""l^- The sh tntes refr^, T"^^*^' ni« act of Jiiiv *> ittcMk t X , -^"»-i, c. UNia^IZ" ""* "■ *'^*^''-^« ALMOST rect and unrontVm^nf"? '"f/esnlts naturally flowinf.r'*/'"" <""«t Violence a"r"w/d'Th a"^^^"« »• '" f"&*^u«rH'''''"- "«"- It is another g^ne*a/rut ""cLr i'*?* " "«*"« fo mLrJe?'"' '""^^" «>nSS'„^«„*^»--. «".! that the^^xr„'orre'rrri UNITED STATES V. PATTERSON. Chaplin, for defendants. 163 they are orinm.allynaWe^i*,"t ^"^ "J '''""'^''J' "nlawfn o^ter which they oomniit : m^^I fn, ^"^ ■'"^* *^'"<^'> they intend and third, for indirect res,!u?- n..? / «>»sPiraey to commit that irt* natural, although unintended "esnU^'^u f"n " "-"^P'^acy' t„ ^Cut persons i-onnnit an act of m.,„i J* follows that if two or mn~ store-burning. chanVrtv "or ""lnte';V.':r'""'T. '"''^'^'y' ^l-op b?ea"r tCaS\?';;!fcrt!nri !^ -^pe. if the -tnteUdVrirr;-rm^.e-t'--i a.ra°Lrge'Xortt;';;'SrSi;r criirr"'' "■"" ""^ «••« -voiced. siraint of interstate tradP -inri iX ^"""^^^^i^e. If. therefoi-e " r<»- brpadly interference witl it it fni.^"'"!?''? "^ ""*« statute mea^ bring witliin the federal in, .J^riiH''^ "'^^ this statute oi>erates^ very large proj>ortimiTfV,T he ^e^^^^^^ "^^ ^"'^e of " consp7ra^'» 'a Furthermore, where eoigress t.deTfnri'T.^'^ ^^^ states^' *" mnies its jurisdiction is exvhi.i e .f th^^'^'l'^^" "^ '» ^*v^» range of takes jurisdiction, not stricdv of tti^ ^■'''^ ""^ ^be states. Where ^t of the crimes, th^n acts n av le nunlshPd'^? '•"' ^^ ^ federal a spe^ of state law ; again, as a b^L of Zw^? twice,-once, as a breach from the government's theo,; of thf^"^?'!^ ^'*''- I* follows, thereforp t.™. _nnder this .tat„te,'t";,r,SrZ;^^^^^^^^^^^ These singular resiilfv* r,f «.„ * ■snfliciently condemn at ^be^rv ^X''"'"^"''?. "'""'J- «' the statute I'y the supreme t^urt upon "question nf ™.' f" '■""'«« «' reason™« Question of Constitutionauty. THE DEFENDANTS- FOBEOOINO CONSTEUCTION E8SENT,., ^ ALrrV, FEOM SEVEHAI. POINTS OF "ew ™-"'«™W»N- oJ^J^Z'! Sr oTt;""^,,*?. '-'"•'«. -n one indiscriminate V. licese, 92 U. S. 2 4 T S r J„ ''•''^'„'' ''«"' *='««««« of acts U I Trade-Hark Cases, 100 n 4 s-> • t/?' •^••^^*- '^ ^up. Ct. Rep 650 7(« • U Si'^^l'l' I ^""P- « Re'p.'9'21.'^2'"'L&? ^''*?- '" ^S. 2to: U- S> 047, 8 Sup. Ct. Ben l<{Sft "77 ' ^^'""P v- Port of Mobile iW say the supreme court, bTS C .T l^r? S^'**""'^ "« dangerous"" at page 221, " if the legislature cn,,M 'J? ^- '*• ''• ««"^«<'. 92 S "li. all possible Offenders, and le?,^ itiithf ^ "f * '«'"«« enough to e.rtch who could he rightfully deS^ Vnd whr^"'.*" ^^^ '°«'de, and say In other words, when congress Pntl.. ^'■"•°''' "« ^^t at large " ^ over whicli it has partial power ft ^ T " ^'ven field of legWitinn part of the field it proposS to o«uT ar?.'^ '° "« iegislatfon what irS wittnl*^ ooLtitutronauSch".-" *'^ ""' ^^ ^I'«''«e'i -ust goes without sayng that a statute cannot be saved from the H d It 164 S5 FEDERAL REPORTER, 630. ChapHn. for defendants. Operation of thi« m^i^ w In part nncoMtitutlonaT of ^iIhI''.'''" ""tute. in part constltnMnn.i At the date of the parage of fhV« ^\^lf ' «* P««e 221. ' *"P- ^*- mlft^.^^^"'^^'"t«* <^"n--el have no o«ii . literal suffidency mereJv hv f Jw * ^°"^' ^^'^^n a stahito in^to ^e courts „,a.v read words i„^",? !^''^ «°^ ^"'Ptical in expression Pet 72 : Brewer vm^ ' l^'fffor4. 3 Pet 43SUfl' ^' n ^. ^"P' U. a 235, 6 sip St^ep I'Z '^' ^^ ^' -' cZra7aVk ^0^11^ The defendant**' fn^I • ^* ' ^^^ ""T^hrvrn.''""*^ Sa^Cfnr ^'"'^- '« --»««, to conBtltutlon- xorowing out of ronsiMAi-nH^^ ^ monopolies and r^tf, a «! T;'^"' ^*>»' ^»ie moment fii^.« i* .. nrotPof^wi ♦». '^^"aints which arp v*i«f^ , ' ^"^'*^ lawful Which it is absurd to sudiio^p /hoT ^^^^^ ^^^ commerce ni nJ tended to ™t .^Ti.„^f restraints, not all of v.m1 ""''* " "«^ , From still anotherTmrnt of ;lL^.^'■'"*""""^•• oitTabove ^"" Congress cannot punish all art/' J '""*°»"t""onaI "*" commerce, however remote it 1^ ?' '"terference with lnter»f.* degree. This Is peculiarly true in in[S.''^^* *« ^ '"atter juteistate commerce. The UNITED STATES V, PATTERSON. Chaplin, for defendants. 165 and ^XTing 'linf'and 'the mll^l^'l Jurisdiction is an arbitrary upon it The line fix^ brtRenl^^^^^^^^ constantly divided although a practical line, is a nnrPlv «rh^-.''^ ^^. ^^^^'"^^ Package, tional power of congressional wfj^f'^^'^'*.^'*'^ "^«- The constihi begins with a vanishing linf JhShln"!? '^ interstate commer™ some point upon that line "^n S cHsf n^J*^*^ commerce. M T^ r. f.^^'itrary point between in te^^^^ transactions, must be Technical "restraint of trade" and "mn^ i "^^^ ^*'**^ commerce, senses of those words, would be wthi^T^^!' ^" ^^^ unfavorable iress ; but not all interference Zll^ - ?^ interstate power of eon would be within the Sffntlonn. '^^^^^^tate trade or commer^ would be at the sta'e end of tSe vd'. ^^P^n^ress, bec^uTu when properly construed, ftseif prmTd^ nn^ ^^"% " ^^^ statute within which it pronoses tn n^f i V ^."^ ^^"'^ ^^ fixiug the field ference with inteSrconLe^^'Thpr^f^^^'^ *^ cover^n inter as is too remote for federal nA^; it covers such interferemi mate. It embraces therefore wth' '"".r" «' ^^^^ ^^h^^h is prox^ St tutionally deal with nmttlrs^^^^^^ '"'^''^^ ^«n^»-^«« can ^n- with, and therefore follows under ^h«* ''^''^^} eonstitutionally ^al being discussed. The s atute can hi • institutional principle now and too great generality of r^-^ou • 'P^^^'P^^ted out of vagueness restricting it to technical iuilZ^' J''^*' constitutionality, only bv nical monopoly, inThe Sav?rlTe'^en^^^^^^^^ ^^ trade,"and U"^ It is further esspnfini f^^l ^en^es of those words there be read"in?rif rhVi-eXm^nf o?^^^^ ^^^ ^^^tnte that nterstate commerce, as such and Lr5 L?'^'''^^ '"*^nt to invade interstate commerce in so furore ^n^^wledge of its character as conscious intent ' ''' ^""^ '^^ ""^^ knowledge is essentialto this It has been stated above thit hxr fi,« iir^r^"?^ «>-e erlmlnally liawl Sot^on.v" 7 ""if <" "^e crhninal direct, and even unconteninlitw! „„^ ^^ ''"' •"'"'^t. but for In- rZn^ i"' ™"«'>"-«cv"toTm.^t sur?;;^,;s'an/' *'"^"- '°'''° s.v^f:;rofTc!,t;;ir^cv%o^^*"'^- ^' ^^^^^^^^^ nece,s.saril.v require orTmprS.n^ tZ "" ■"l!?""'' *"'"«. [838] doe, not intent to do that particular thj^j"' K^^^' "'" *• «»'«<-ious. s^fac robl.er.v. conunit murder wlthonflnLn^^" "i**"' ""^^^^i in a phm of is a natural. althouRh u WeZlntif ri^^,^ f*"""" '^ and mu?der the.v are guilt.v. witliin the meS ' r« " ?' *''^''' P'«" "* robben conunit murder. This stihile thT^ ,"' ^^^ '"""• "i" a conspiracv t,; cases where persons (at l™sl„h^'^^'"™' t""^'™ literally, (ivCT? an reach without knowing it an^ wiH.T.^*^ '" •"'» «^t -nalZ^ln ^) which amounts to resfrainV nr 1 "^'*'^'',"t contemplating it. a result Burmos't" ^:^£^^^si'^ "^ziz^^v'S ."S o^dl^cr- ll^^tHHFv ---n/-f'tS Instance of robberp h.„.^i '^'^ "P*"" federal rights as%.,r.h T^ breaking, cham& or ofher^c?""""?'" " *"««• «hop-bSrn™g ' stl7 t7« «r more Participants? which ba^'T' '° f ' '" which there are piated, of restraining or monon«ri,S. -^^ '■^^"'t- although unconteiT by the act within the fSaf uSirt ^ *"*^•*'""'^'■<"^• '" bTugS" ff ?„'3'vr"'^ «''«'>• ^ch Joint actiiZ^f: ""*'*'■' *"« S»ise of Sm JL^I * '^ conspiracy is not merl^Tn'^VS '^ «"?«Piracy to comm?t tion ^ t .T"*"* "' '"t^"t and knowi^* tb^ref"'^**^ '"^'- ^'""out tion of the serious crime of the counto?may tf nnn, I ''J'"^" "™'»r- i may he punished under this I 166 55 FEDERAL REPORTER, 632. Cliaplia, for defendants. Of the federal courts. S raiL f tL^ niously extended l,y the goUrnnu'nt^ Ll^^ *'^'''/"*^ ''""^^^ ^ ^nor- ot the phrase, rre^traint^f t?a i '• ' "^ ^^^ ^«"«^ n.eaning meaning, and under the min^defsf.tJ^ k "'''""^'^'^^•" Under that to the extennion of fedenilSin i^^ «»>ove no Ihnlts could be set act. lecieraj trlnnnal jurisprudence eflFected l)y this This reasoniuir forct»>< iw tr. *k^ . . Is nni«nstitutl,>m,l " r Zt „ rtrh- I"" V'^'^' *""' ""e statute cjHc Intent t,. Inva le fe rteral riS', Z"!" "' '^"""•leage and spe fl'"T,x. I,„; ,-, s. ,12!.. 1 Sun C-t Rm. ^^f * '■*"*' """ "• V. «. V. U. S. 263, 12 Snp. Ct. Ue„ 617 "^^ ^*- "^''- '" = ^"^O" v. U. S.. 144 eie«"ir;:;;';r;:^„To^*;;r to !'i^'^' ''ffenses n oocasionally a statute "4iti il; «^^^^ •'•'sential to crin.inalit.-. and peiise with the rt.piiren e t ? LmyiZL'''T '^"%"^" "^'^^ ^^» ^^i^" however. are few and exc-epLin^^^^^^^ "^^ "^ ^''^ '^^^^ class, against a stnuijr disj-ent mi. i^ i./V l ''''^ .''^'" '"•»*^^- »'« '« imle sliidlar statutes; ararinv. riu^h v "»M^*^'^»'^ *>f authority upon knowledge is held t/> he iVs , e s Ji u !' 'T ^''*^ >-^auiren.ent of ^, Uy rested, not u,Kn. a„v rl, 'h e o? l. I '?'." "^^*^"^^' ^''^ *^^^'«^" « knowledgi>. hit u,K,n , n^-e U*^ • ; r "" !?• ^^•«l'^'"^i»>^' with view of supposed rt.purenientrorm^^^^^^^ the particular statute. In feasibility. i„ the imrtia fr natte?^ '" ?" ^••■'^*'^ "I>«" the saiT knowledge, and the l»n>pZt th r fom ^n ' ,^/ l*'»^'»'-'i"S "H neces- aetion. of i"M»osJng upon one ;XJut to t h.1 ''* P«'-ti^"lar field of ing Into the facts, and of mth^' t L^ Jh^ r^^sp-nsibJllty of i„c,uir- this, the decisions and the oni ot.« in ^* ^- w^'' '" ^lustration of 472. as <„,npared with Zi^vT,^ 4^' .V KrJV ' ^'^''- <^^^a«s.) i?;«/m|,, 5 Q. R. i>iv. 2r»j». 14 CoV rrin 'ns 4m •. :?^' •''^^'^- ^^^' ^•• of recent Eu::Ii>h ,as,.s upon the sub i^.f lt\. ' T","^ ^^'^ *'"^^«"« «^»-'*^s Won. /^.VA V. Oiifirr. lu Tox. C>lnfc^I *1S "^j'^^^-^ ?^ '''^^ "• »»hUic- Cr. t^s. 1.H4. 11 Cox. (>in. fVi.r"iiV. //ri? ; w^'* '' '^''^''^'■'- '- «• ^ I he opinions, and the confliof^ ..*» ;. • • above, aflford a striking 1™^™^! of thl'''- W"'!"* '" "'« ""'<''< ^'ted ne.-e».saril.v drawn In t-^ntS I for"L"'* flV?^^ !?*" «•"'<•'• »»« '« the «ene™i «.„.„.„..,..„. t-iuif.^e^„t''rrirt'irtruX"'.:„'^T IS UNITED STATES V, PATTERSON. Chaplin, for defendants. 167 ^owedlv s^^'n/^n ^^r^^?^"^ ^««e« (Which are all exceptional, and Ssize thf fact oH.^^^'^'^ exceptional grounds) only serve to em- fhe c?,Vii,^l ?nl f^ ^?T^^' ^.°^ ^^^"^t universal requirement in rdi'ieTn^^^^^ ^^ *^« ^'-^^t^- <^Pi«ions ^ ««PIx>rt of apoloX in lan^^^g^ requirement of knowledge are invariably of'^gunt 'an 1 thThi'sf.fn?"^^ ^"^"^^^^ ^^ the^facts asTn :s'Jntiai offends or cre;rivp nf no °^^"^^«' whether adoptive of common-law be refd iZTlffsV^tn/o •/ T'l?^^' ^'^ ^^^"i^'^^'^nt of knowledge is to oe leaa into the statute, if uot there, see (K 8. v. Carll 105 TT S fill • Com. y Fabun^ 119 Mass. 297, (cited with appmv^l in U F\ Caf^i P r 4- Vli V r ''; ^f'^ ^ ^•'''•- * ^*' -^^Q; ^^^^^*'* ^^^^^^ 1 Hale nV- : •^' ^- ^^^^Ofonl, Car. & M. 002. G05. 1 his statute was never intended to punish persons who loin to^ethpr under an innocent mistake of fact, to enforc^\vhat thlv b^?Lve t^ 1^ a e?re "l eii^^^^^^^^^^ t '^T '' '""^ '''''"^'''' of'L ane^ecMi^d^ or trustee who iol ?it tn 1 • '''' ^^^^T^*; «"d Relieves that an executor or Tiustee \Mio sold it to him had a right to sell it, and if he attPmnta t heTfi^o; withfn'tK 'TW""^ " ^'""^^"^ contract, or to mon^e he is w thii t thin ' "^'V^"^,^^'^» though mistaken iu his facts. If ne IS >\ithin it, then an indictment will lie against everv n-itpntoA who a tempts to enforce his patent, if in fact 1 is pat^^^^ through prionty or some other fact unknown to hm;^and no patent^ can atteinpt to enforce his rights except at his peri . and a the r st of on infamous punishment in case he turns out to have been ig^ioiant ^L"?."- ^T'' T^' ^'"^^^ ^'^ ^«"»<^ not Ivv the strictest d Si fe have ascertained, or have supposed to have be^n made. ^"^'^^"^^ ^«^e now Tn Lesll'^riTU/'^*'.'' "'"^ knowle-'^"- ^ '"■-"- rn^un-ntemT.t'a-s^i'^tt^At""' ''"' '* ""'""' -- '""-"I 168 66 WDHML BBPOBTEB, 684. A8 to th '"""""■ '""■ '^'«'n«rt With hta iLr" '""!?«• <"■ 'nto the hand?nf '^"*"'*^*"'>"y tlonal monopolC """^ ^"" ^ «> »"»<'P<>"^lng witbouTaa Ttel" The »t t '"""' " "" "^""""^ °' ^« ^- "^T^the perl "'""^ "* "* *"^--"^ '«ate 3«n^i^p£"S5 fet— - - .t. ^t™et"'or'^r^':^ ♦••«^« tSat"tbe''S''L':f " contractual re- 6. That the defenrtlnf ^'n^eree. "* '^'"ained or monop- PrlTies have no naSft i-* ^u*"® <«) knowledge thnt ti. commerc^e prC,.^ To Z "*''f exclusive titleT rf^ht tl^^^' "'" "^elr tJwt the trad^'^rlLmn,^, restrained or monon^Hili" *" ^''e trade or «tral„t or n.ono^,;"'' ™"«<^'<'"« »*neflcia,y of the contemplated re- The Indictment. « ^?® indictment avers nnn** «# *i. r Th"e 'alli^*** «^«^ o^e of'/hJ'.^Co'? n?'^?' ""»« above set t^wn trad^or traded nionopoly, but a mere rudr''°i^ '"J^ ""t «>»- •"■ traders by force, fraud, libel. Ind slander ^^''*'' """* •J' UNITED STATES V. PATTERSON. Chaplin, for defendants. 169 acy"as.°if'^a?riK?wSuwt7„T„l"/ !?^""8 *"« P^Po^ed consplr- or monopoly of intei^tT» if'ji ""^ "^^"drng of the statute, a r^h-X* set forth noVeLs at a^,Vif°^.«''n'nerce. Some of the c^'^iS derSi-?r *?t'^ f ««>' c <^ this"^?^r Th^r ^'^ ""-^ ^<^°~ aertake to set forth means Pnfiroilr%«iV^ : Those counts which un- HDd things alleged to have b^n nroS^t J^*'"!"^ ^^^ P^''^^^. matter definition of " interstate mmmprn^MP^^I^ *^ ^® ^^alt with within tS w thia the federal or Tnt^rTt^te Isn^Vorn "^ instruments.^ things, as distinguished from the?r sT^^^. « ^^""^ P^^^^°^' matters or because one is engaged in iXrsfnJp r^l ^^^^^' ^^ *^oes not follow him, or upon any pJrt of hf/ If ^ commerce, that every attack uZ,' commerce The ^tfack ma '^L'upoT^ j Th?"^^'^ n?on intsTte of the state, and upon his matters or thin^ ?^^. ^^^^ «« •'^ ««biect matters of mere state commerce TL^nT^^^ ^° ^ ^^^ «» they aVe son engaged in interstate commerpIf« ^f ^^f tment assunies that a^^r has no other aspect than that ^^^ V ^^^^"«^^ely engaged in it ind merce. and that an in?erference wifh'l.? ^"^'^^^ ^" interstate cSm matters or things is an inff^ ^*** *^''^^' <>r with anv part of I !« Burning it to be f^J^hTt Sr'eTls wit'h T'^''''' -mSU" M^ or thmgs, concerned in local onmn^^ ^^ ^ person, or with matters nection with certain^nte,^tTJ^^^^ ui2)n interstate comnierce thP r^nn^?™^'*''^' ^^ Proximate attacks dflc allegations of the tn^ctn^ f ^V?^ "'"^^ ^^ established b" sr^ Ihdictment in this resr^ct^s pn?^5 J* ^^ "^* *« be inferred. T^p the St t te, ,,^ indfcCntrwrf L'^Tn "n " '^^^'^^^^ "Po^whTch V. Hams, and C7. .S-. v. Fo^ • nnn.o?^^u F" ^^^ ^- (^rniksliank, U 8 federal aspect brings i person nTA/^^ ^^"^^'^ ^^^^t the having a federal protection in all tlfeiraspee^f '" '""^'"^ '^"^ ^^^"^ within def^ndantThad'orTere actingVnXr* ^' ^''^ indictment but that the right to all trade and con merfe or o n • "f ^"^ ^'^^^ ^ad. an exc^usivl among the states, at leaS ,' «^^^^ fendants may have had nTof^^.^^^'^'*^* ^^^ alleged rivals Tho^i' which the corporations n?m^''* "^''^"^"^ ^^^ ^^«h registers" if anv In they did denl, or the defeSt^'^' Proposed to be attached dealt' I? have had exclusive patenUice^^^^^ T^ ^'^^ P^^^^ witSlhem may from the various corSions or frn""*^""*^*^ ^""^^^ ^^ «nch registers claimed title, or the Sdants or T "" ^^^^^^^^ "^^^^r whom ail ha^-e bought out a good wfll or V uLT''^ ''^^ P^^^ ^ith them mav or from some one under whom nil no^^''^^ ^^'^"^ *hese i.^rpora'tlons registers, if any, de.-l^^? irby s "/^coi^n "l^^"^^^' ^^vering^ie cash the same terms as this indi^t.non^ corporations. An indictment in patentee in the country and hf"^,"L^^^^ ^'^ ^^-^^^ againsT every hsher and legatees ; a^iinsf e^erro'' 'wh''^^^^*^"^ EmersonVpub"^ will ; against every owner of « tr oL 7^^ ^^« bought out a eood Who owns anything wh^h ?s tie subTcfof'l^? '^f' ^^^^^^^ eve^^^^ 4. It is not averred that thJrlf "^ ^ ^^ interstate commerce proposed to be carried on t ??^"^«r^^' if any, being car H^* on or tional Company, wT^t l^wfSf c^ml'^T '^^""^^ ^^^^' than1h:\:! tion of a limited and lawful cont^^r^nt^^^K^"^^ ^^^^ been in viola- of division of territorv. «>ntract made by them, of restraint or dictio?al IS:1^ TaS %'f:T' ^^ '^'^ -*-, and a Juris- h/'nrn'/ ^^r^^^or, ai^ for^he couTto '^ ^i '''''■ '' ^^"'^« the prosecutor considers interstitP r^^ ' ^ ^^*^® whether what merce," and of the statute^ eh«r..fT"'^''''^ ^« "interstate ^m- Wale'c J \7^ ^^ ^^^eS^ied'^^^^^^^ ^ ^*"* "'^ - waite, C. J., U. S. y. Cruikshank, cited aboTe Prosecutor." II I I 170 ^55 FEDERAL REPORTER, 635. Chaiiliii, for clefonclaiits. phrase, 'oonmierc* among the sevenU states"' Ts^^mexprl^slonol e?asrof thinU h.ff iV.f * T'^^^% '* ^*''*^"*^ ^^'^^«' ^n terms, a whole ^»,.4. : ^1 "^ * " tiiiege interstate coiumerce in jin inriir**- ment is the way attempted In the [636] first four «uuH of m in" f^"'^^'r'' """.'y '"""" 'n t«"« <"«flrt against thJ^defLdnnts" isters. There are articles hi which the c^.iirt mav. perl ans te sdd to k.i..w. a« ma ter of law, that there is at all tii.ies^ieirc';,, ne^'ce VV ith cash re*?isters " it is different It is verv Xiihtftii i/n 1 ^ can he said to know what a " cash^ist^ ' K U ^cm^i dv hS to see Imw the .-ourt eaii know in what sense the tmn is sir/ h^^^^ ^^.m.,t rotU lately the only n.ennh.^^'/^i^hX ;i n^ wc^ hujTffest IS that ..f an an-cmnt bi.ok fvv cMsh entries \ow n so f. r as the indirtnjent n.ay he deen.ed to refer to h,!ol of iasl/ediv tl e -onrt eannot know that there was at the time in quest on inte^tnte •o. . nene, or exj.eetecl or „r.,rK,sed interstate <()mn?e,ve Blan^^^^^^^ lj^K>ks ,i,ny lie all manufactured and sr.ld within the h>g.,l in itV of state co,.,n.erce. The absence of a siK^cifi,- a U h)n of i erlt.i?p wou;d';:;*f,^r;"';r;J" '**'^ ^"eanin^ of the tenn "cash r^V^" would l)e fatal If the court should take th« expression "cash reels- certinnly to 1... ,„,pris,..l whether it is ,, r n n ene ii m/w; ±v f n .•..nunon-,. ,, uUuU h.,.,ks. that ti«,v ,,re H. r^rt , it ttn^^^^^ fess to exist under letters patent: that the different aS elann unect, imperfect absurd, and impossible. The crime of monopoly implies a conscious monopolizing. A con- spiracy of several mtn, without any knowledge, to drive all the trade in town into my shop, out of love for me, or out of h.itred of my rivals, but without my knowledge, and without benefit to the conspirators, is an unlawful conspiracy, under state laws, against the right of my neighbor to live a pea( eful life, but it is not a conspiracy to monopo- lize. It is not averred here that the defendants were In a iwsition to or expec^ttd or intended to monopolize into their own personal pockets. There is a faint hint that the intended monopolizer was the National Company, but only a hint Acceptanc e of a benefit may indeed sometimes be presumed by law ; but a corporation, any more than an individual, will not be presumed to have accepted itself into a criminal combination. It is a universal rule, as to those crimes which consist in contract or combination, or meeting of minds, that there must be, not a mere fictitious api>earance of a meeting of minds, but an actual contract, or other meeting of minds, as in civil transactions. Where the statute siieaks of monopolizing "a part of the trade," it must mean the whole of a specific part ; while the word " monopo- lize" is not, to be taken in a mathematically exact sense, requiring that a monoiX)list of tlour should have, or intend to have, every tea- spoonful of flour in the United States, it does mean a substantial control of a gi-eat part of any one given article, or enough to enable him to dictate to the market The monoix)ly alleged in counts 5 to II and 15 to 18 is merely a monopoly of the business of five cori)orations namefl. It does not appear how much business they did, or what 172 56 FEDEBAL REPORTER, 637. Chaplin, for defendants. UNITED STATES V. PATTERSON. 173 l^^'^^s^^e^^^^^^^ in cash registers, and that to secure the ,Xif oj*^^"!,,*,^^* l* was extremely trifling, monopolizing. Men camiot b^ indi^.ri^ ""^ constitute the oflfense of wheat by a mere aver ent that thl^ 1 ^ k*"- ^"^bi^^ng to monopolize wheat when owned b^A B Nnt^^ ^"^^'"^ *<> monopolize certain a criminal ease. The names o?the nvn^"^'"^ ^^ *^ ^^ ^^^"'n^' *" the conrt does not know thafthev "J .«^,^n^P«««es sound well, but business. The defendants for nlr^Lf n """^ appreciable amount of Mm Partingtons attei?p?ing to sw^f "E ?^ »«dictment, a«. Bhould have been shown that f hi !?„ ^K'*'® Atlantic ocean. It alleged rival ct>mpan?erwould havp «^^ V ?^. ^^^ ^""^"^^'^ ^^ the the business in cash resistors MnrL*™''"''*^ ^"^ ^ monopolizing of counts, a mou<,ponrf weThavP^^^^^^ upon the language of these ment that the Nation^^SlRelis^r rnr'"'^^^* ^^^^ ^« "^ «^er- with, and, for all that apS^arf ft w„« nnt f "*'' ''''^ ^^ ^^ interfered It may well have been ei^^eT^ LZ % not known to the transaction. the National Company f^^^^o^^^i""^^^, the defendants, if they left ter business, evenTtteyT^ono^lTzZ^^ monopolize the cash regis- panies. Perhaps it h acl flS^ ^^0^0?^ nfMi^^'T^ ^J *^^ ^t^^** «>°>- T'^^h^^is-rp:^^^^^^ '' "' statute, to t,7%S*com ove^s^f to •n'uZ ^^*'"^^'; ""^^^ ^^s An indictment might unXubtwiiJ^ L ,"^"^' *° ^ criminal court into a criminal Jne ajAaln^/ .^.^ f"""'" ^^ P'^^I^^^J- to bring defendants claim^ under a patent ?J?t I'T *^ *^^ ^^^^ that thf show of a patent, anrheld no l^tt^r^ mt^^^^^^ »o pretense, color, or any letters patent. But here some ^ fhi ' "V^ ""^ ^'^'^^^ ""^^r fendants justify under letter? pTntThere^rnn "'"" '^"^ ^^^ *^^ patent claim is not valid and thp'n,.!.^ ^ no averment that the must therefore resolve itself into « nnf! """ ''^'^ ^^ these counts stniction, or both of he let"e^ Da?ln^Vh^ '*''"^'^' ^^ ^^^ ^^°- seem calculated to launch thTmurt^intn« ^^^^ '■''"°^^' therefore, over a complicated tiCe of nn?m? 1 \^ controvei-sy before a jury long time in triaL This was™r imendili'' wL'^ ™'^*'^ ^^^^P^ ^ to an indictment as nn in;on?i '"tended, ^\hen patents appear atiouldbeaSth^tTL'crim ^t ^gls]' claim, and onlv colorable ^ "^ **^®*" *^ " *"®''e sham c^nSt dcL •f!:;!;:^^,!:^^ /^ n.gneness and uncertainty, m no by the conrtsif he UnU^ States «n:l'''"^""*.^ ' ^^'^''^'"^•^ ^^l^^^ed In some of the counts tho rWon/i-,«*J' ^"'*^*''«WA'% cited above, splrimr to re.stn.ln or to nionm^fnlj °^ '^"'»*^-^ ^*^''^'"^^d ^'»th con- states it was, by wbLTcre^ rn'or ~^^^^ ^'"?""^ ^^'^^^ where or how to be restrained or mmuL] 3 h ^^ *'^ "^'"'^'^ ^»' ^r close. The other counts .Sfv tT.P tT. 1^* ^*'^'^ "^""^ *^« n«t dis- ried on by four corpora ti.ins name*? *"'* ^^mmerce as being car- these counts do not S^ N^/ir^ .hi'T' ""^' ""'^"^ ^^«t states, inters" ap,M>,„, We^^"they m«cE or lor'^ ^^ ^'^^ "^««*> ^•^^- Tested by the reauireme t thnt Vii ^% ^ ^'^"-^ ^yoards, or Ixioks? apprised 'of the SroTthl' , a rg^ ZT.rttuT^J^lin''''^''^ prepare tor trial, all the contonts ar^^d In n « v IV*"^"^.*^ cited above, one was charged hnvino. "!. \ , ^' ^' ^- Sinunonds, of orimlnal pleading, to knon- whom hi ^.Tk' *"! reiulremenfa caused or procured to use the stUI ' '"''"^^ '"^^^ ''«'''°« or commerce of XStorf cSaS? "'"'"• " "PP^^'-We amom^t Opinion of the Court. Putnam, Circuit Judge. I do not think there is any constitutional question in this tion(rI!^/lf' °J ^'T "^'"'"^'•'^^ ^«"t«d by the constitu- / rej^A^ 7-0^ 15 Wall. 232) permits broad legislation /and in Son s'SsTonr^*"'' "I'T" ^^ *^« ^--"^ Statutes (se^^ ^on 5o08) on the principle of construction applied to the lat- ^r in U. S. V. Waddell, 112 U. S. 76, 5 Sup. Ct. Reo 35 S«. Logan y. V. S., 144 U. S. 263, 12 Sup. cl Rep cTt ThS may be practical difficulties in applying the statute in S way as to prevent conflicts with state jurisdiction, but th ^ can only arise on the development of the facts at the trilu a particular case, and even then the court will have the guid Ct Ren t^T"" ""T T ""' """'^ '^' U. S. 731, slup. tt. Rep. 1203; Cross v. North Carolina, 132 U. S. 131, 10 Sup 586 Th' ""^ \'' '''■'"'' ''* U. S. 377, 10 Sup. Ct. Rep.' iicf ofTuJStr ''-' '''-' "^^ "**^ ~^^^ ^' This statute is not one of the class where it is always suffi «ent o declare in the words of the enactment, as iXs not L i^' u ' ''^*'*. P^'-t'^' attempt to engross the market by furnishing the best goods, or the cheapest. So that or- dinarily a case cannot be made under the statute unless the means are shown to be illegal, and therefore it is o"dLar Hy ZsTn? '"'r *'t~^ '^ "^* '* '« intend "oen^ rZof nlTT^ f' '^' ""1'^''- ^"'^ ^y *e well-settled rules of pleading it is not sufficient to allege the means in ^en eral language but, if it is claimed thatihe mea^sused Ir^ llegal, enough must be set out to enable the court to ^tSat they are so, and to enable the defense to properly p^,^t meet the charge made against it. y prepare to I regard the rule laid down by the supreme court in U ,ortant to note the rule that this whole statute must be taken together. The second section is limited by its terms to monopolies, and evidently has as its basis the engrossing or controlling of the market. The first section is undoubtedly in pari materia, and so has as its basis the engrossing or controlling of the market, or of lines of trade. The sixth section also leads in the same direction, because it provides for the forfeiture of property acquired pursuant to the conspiracy. Undoubtedly the word " con- spiracy " in that section has reference to the same subject- mattcT as in the first. If the intention of the statute was that claimed by the United States, I think the natural phraseology' would have been " to injure trade," " to restrain trade." [6411 We are now at the point where the paths separate.: Careless or inapt construction of the statute as bearing on this case, while it may seem to create but a small divergence here, will, if followed out logically, ext^^nd into very large fields: because, if the proposition made by the United States IS taken with its full force, the inevitable result will be that the federal courts will be compelled to apply this statute to all attempts to restrain commerce among the states, or com- merce with foreign nations, by strikes or boycotts, and by UNITED STATES V. PATTERSON. I77 Opinion of the Court. ti^7 fttltl 'f^'^-"- by way of violence or intimida- txLaZ "°*.*"^.^,P'-««'™«d that congress intended thus to extend the jurisdiction of the courts of the United Stat« tTetarrTW^T^"^- f r ^^"-^"^^« ^^" -' fi' ^ in me statute Therefore I conclude that there must be alle^^ed implied in the coimnon-law expression, " contract in restraint section. 1 think this is the basis of the statute. It must in pear somewhere in the indictment that the e was aeon-' or Zirr"' 1 ^'^ ""' '^^'^''-^ - monopolizTng or giaspmg the market, and it is not sufficient simply to allege a purpose to drive certain competitors out of tTfield by violence, annoyance, intimidation, or otherwise Something has been said in this connection touching the debates in congress. It is apparently settled lawThat we Jn not take the views or purposes expressed in debate a supX laid^^^t^trLT^^^^^^^^^ --fr gress, as he can from any other source, the history of thl evil which the legislation was intended to remedy ThI debates on this point are very instructive ; butThe/faiUo point out precisely what incidents or detail of the iat Iv^l under consideration were to be reached by this leiSn What I have already said disposes of counte 5 aid io which do not allege any purpose except to desloy the com' petition of four corporations named; and they le^ve for Z" its letter does not surest to tfr 1- ^ <^'^*'.n«t'«n« ^hich and intimidation :^T2^l^Z Sief^SX statute as negotiations, contracts, or purchaseT The former I 178 5*) FEDEBAL REPORTER, 851. Syllabus. applies to both the first and second sections, and finds a suffi- cient place for every word in each. I find in aU the counts which I allow to stand, allegations of an intent to engross, monopolize, and grasp, and of means clearly unlaw- ful, and adapted to accomplish this intent. [6421 I have examined all the cases which have been cited to me as referring to this statute, and I believe that counsel have cited me every case which has been decided in connection with it; but none of them meet the issue which is raised here. Therefore all the expressions in them supposed to touch this case are to be regarded as mere dicta. The result is that counts 4, 9, 14, and 18 stand, and the others are quashed. mi] DUEBER WATCH CASE MANUF'G CO. v. E. HOWARD WATCH & CLOCK CO. ET AL.« (Circuit Court, S. D. New York. May 22, 1893.) [55 Fed., 851.] Combinations in Restbaint of Trade— Action for Damages— Plead- ing.— An action to recover damages alleged to have been caused by acts done in violation of the statute prohibiting monopolies and combinations in restraint of trade (26 Stat. 209) cannot be main- tained when the complaint fails to show that plaintiflf is engaged in interstate commerce, and no such showing is made by an aver- ment that plaintiff is engaged in "manufacturing watch cases throughout all the states of the United States and in foreign coun- tries."* Same— Construction of Statute.— An agi-eement by a number of manufacturers and dealers in watch cases to fix an arbitrary price on their goods, and not to sell the same to any persons buying watch cases of plaintiff, is not in violation of the statute ; and a complaint which, on the last analysis, avers only these facts, without averring the absorption or the intention to absorb or control the entire market, or a large part thereof, states no cause of action. At Law. Action by the Dueber Watch Case Manufactur- ing Company against the E. Howard Watch & Clock Com- oAffirmed Circuit Court of Appeals, Second Circuit (66 Fed., 637). See p. 421. » Syllabus copyrighted, 1893, by West I»ul>lislilug Co. • ME.EB WATCH CASE M,0. CO. „. HOWARO WAtCH CO. 17^t on NovemlSr and watch cases, mutuall/alr^ Id w^fi£f^i° «^»i^g ^^atches throughout the United States aid CanaSa in.V,?H^ *^^ ^'^^^^ ^^^'^^ tiff's customers, " that thev would wtifj *°l"^'ng ^ome of the plain- faotured by them to an/ Sn fir^^^ whatsoever who thereafter sKrthn^' association, or corporation by [852] this Plaintiff ''That "b'^in'/fni^^^^^ manufactur^ a large number of dealers whn^ni^^ informed of said agreement goods withdrew their natr^nr^P.nS'^ Previously purchased plai^Uff^s That the defendants reteertf self th^^^^^ ^.'"^^° P^^-^^^^^'^ ^Z^^ giving as a reason that thp ^pfn If "^ ^^^^ *^ Plaintiff's customers and defendants decIinJ^'?o have anv'Sn^""" ^/^ Plaintiff's g^^' unless they would agree not to dpn7,n "^k°^^1 relations with them prior to November 16 1887 the de?pnrn/^^ Plaintiff's goods. That that they would maintain Vn arbSr^v^^'^ ^T''^ themseh4' and pursuant thereto they have fiS^ ^nn/^ ^T^ ^^^ ^^eir goods, price which the public must Dfl J fnrft^-^^ maintained an arbitrair of November 16, 1887 was for ^im ^i?^'"* ^^^^«- That said agreemeS to Join with the d^fenXts 'in The?r%S'n! Z' compel ling'^Sff TJTi'' l^bitrai-y prices for watch cfsesTu«T^^^°t to fix and the defendants were for the purS)se of If T.v^*i ''" ""^ ^^'^ ^^ts of watch cases, their object beinV^ m^ .tn?l ^^tablishing a monopoly in plaintiff from the busfness unless hrfoin^^.t'^''^° ''''^ ^^^^^ th^ the defendants by their affrppmorffl • f •'^^^^ the conspiracv. That the Plaintiff and d'Lprfveit^^a^^^^^^^^ «> imWer^'h the defendants have used the extpndi^ breakup its business. That of the combination fomed between ^hem^t.^^^ ^'^"^"^ ^^ ^a«on natural y would purchase plaints wati?i iL^'^T''^ P^'"^^^^ ^^o the plaintiff and have threflfPnAd L^ ^ ^^^^ ^^^m dealing with plaintiff's goods they woufdlSf them ^T^''''^ **^^* ^^ ^^^^ bought credit. That such coWtandlLaf^^^^ ^°^ ^'^^ them no resulted in the ostracism of plaintfff from ^//^?P^^^^ "^^^^ott and lawful and ordinary comDetitinn Vn k^ *^® *^^^^' preventing the right to enjoy. That S he plL^^^^^ P^^^^tiff had a entitled, "An act to nrot^t fLS^^ ^^ ^^ *^® ^^t of July 2 1890 restraints and mUUes^1hrp?ain«ff^ ^ against ^unlal^i tomers and re-established ts busfness hLw^^^i'^^ regained its cus- date ratified, confirmed, renew^ and ^nt?nni?1 ^^/^''^^"^^ «*°^^ tha^ tracts, agreements and combinations ^^ "^J° ^^^<^® the said con- all the dealers in plaintS? g^r ^ha? hvTf "^*^^ *^^^^f "Pon and continued threats said deSs haveS^n^^'*'" ?/ ^^'^ renewals purchase plaintiff's goods to ite daLaee tn^r „?'''"P?".^ **^ ^^^^e to mentals demanded for three timt^hf ^^^^Vrua^^^^^^^ The defendant above named demurs on the ground that the court 180 55 FEDEKAL KEPORTER, 852. Opinion of the Court. has no jurisdiction of the defend-inf ni^ ♦».« » • x action, and, on the tunher ermmfthnfL ^ subject-matter of the facts snfficient to conS tute j^ can J nf n 't- ''''"'PifJ^* ^^^« "«* «tate act of July 2, 1890. Vhich a?e dr^^^^^ ^^f "^^^^^°^ «^ ^^^ mry to quote them, are L foIkrwr-Se^otfon^^ ^^' ^" '} '^ °«^- bination in the form of trust r«tho..^f^ ^' ^^^^^ contract, com- of trade or cMimmerce aiii^^^^^^ or conspiracy, in restraint tions, is hereby de^l'afe^rS Segaf TJ^ 'o^'lf ' ^ l'''' '''V^\^^- monopolize. or attempt to monopolfze or ^n7»\iS^^ ^''^'?" '''^^ ^^«" other person or persons, to moToXeaTp;?^^ XT?^ ^''^ ""^ merce among the several states or with f^^f- ^^^..^i^t^e or com- deemed guilty of a misdemeror!" etc ^' Sec 7 An "'"''*'"'' l^'*^" ^^ be injured in his business or Dronert^* h^r «nt ;». "^ ^^''*''''" ^^^ «^^a" tion by reason of anvtlin^ fn IS^ ^ any other person or corpora- this act, may we therefor fnn^^^^ •?'' ^^^^''^^^^ to be unlawful by the distkc i^n whicHhe d^^^^ ^^""t ^^ the United States in to the amount 7nc?ntmTersrnn^ "^^ '" t?""^' ^'•"^^"t '^^l^<^^ by him 8ustaine^?aiul he col'o^^ attorney's fee." . *^^ ^^"^*' including a reasonable Wilber c§ Oldham and /?o&* of facts tending to shoi! that^t p rueed "1" T^T present case. Indeed, it would £L^ * w . "^^'^ '" *^« a contra,^ effect. There las t^ .1- '^ ""'* ^''^^ ^"^ plaintiff from sunn W 7, ^}^ "°*'''"« '« P'-«^«nt ^he which the defendaSSined to tZ? ""'' ^'^'^^^ *•"«« its trade and. stimulate X'Sof' T^XtS'r ^"'^^^ Dusiness. So were all others. The olaintifrr T ^ ^re free to purchase of the plaintiff of th * f * V""''' of any other manufacturer. The c^l flf itr '"''' ""' one m restraint of trade within anv of fh!^ « . ""^ "*** thorities which have been examfn !, *5«. •^^""'tions or au- the defendants' act? a^ n^ k i ?^ '' '^ ^'•""Sht that law in questl ife ""/'T^'*^ ^^ '"^ ^•="'>» «« the plaintiff 'wouW;.„Sr :T7lC .TT'"' '"'^ ''•^ '»»« indictment not only, but would ml T^^'i?*.' """*' *" "^ combination by wh Lh t^^ T ""^"^^' "''""^'t «^«'-v their inffuence'antlt ,hl^ p^rSt^t ,d Tl to every agreement wherfA and R . ".^ "'"^ ^'^'*'' not sell goods to those who buy of C ItT l/\ *^^ ^'" agr^ments by which honest enterSiseltTeltr''' "' "" I isThtlTiHT^ dishonXmp:Sf '" ^™^-* de^^onf rflV'c:iitTon"r "" r '=""'^™'*^ -* the Greene 52 F«? » iL r,*™"'^ *^ ««t of 1890. In re T^W. *^*^;i^P- 10*; U- S. V. ^e&on, Id 646- U^ 7 Tmns-Mtssouri Freight As8\ 53 Fed Ren 44n / ' Vr ' :ng, 51 Fed. Rep. 205; /„ re krr^UuilS^iT ^""^ IS sustained. ' " ^"® demurrer [696] HAGAN ET AL v. BLINDELL ET AL.- (Circuit Com of Appeals, Fifth Circuit. May 29. 1893.) [56 Fed., (JOG.] * Combinations in Restbaint nu. t»»,x» i:. Jurisdiction of the cl^« Zrt T ei^f^"' '''""«''«=-'0''-The ^<^jonrt to jntertam a «ult to enjoin a •Injunction pendente lite granted bv r'i~..,7r7r ' trict of I^oisiaua (54 Fed.. 4^ t^l ,^"" ^"«' ^»«tem Dl,- i HAGAN V. BLINDELL. Opinion of the Court. 183 preventing a n,uSi^ of J^^'f,"'''''''"'"^ "^ ^"^ ground of damages anaw [697 for teCotl 2 Tt '"' '"" "■""""" *"''♦ the proms Of Pending^nteSrsrfndCi'— TtT'^''''^ iziT'' '"' "°* --^«"« - -Of"' s 'rr k:^":^; 'r^^n^ThraXTTcot'r;""''^''^^--^^'^-- «"•*• »- complalnan «• shin a.^ ,h/ combination of persons, the crew left oouW not ^p™ for nZ ?""* '° '^"' ""^ *""* "'"'*•'<'' '™" ance of the ^^^ f„thoriti« nT;.""" *'"° ""'^ '^'*'' *"« "^'^t' order. white^ her veLe^s Tn thV ■''^i''"'*" °' " ''^'''^"'"'' getting crews, is sufflr^ra„\Li^t;.eco:rt^ ''"'^''' ''^ the^Srn^Xtit s^s:;iSr " "^ ^"^^^^ '^-- ^- In Equity. Bill of Blindell Bros. & Co. and others against bus ni" T "^' "''^'•^ '' ^"J"'" interference wlE business as shipowners. From a decree granting an ininnT tion pendente lite, (54 Fed Ren 4n \ Tr j^ ! ^ *'" Affirmed. ^ * ^^ea- «ep. 40,) defendants appeal John D. Grace and /. Wara Gurlc',! i^ tn i Mpllnm /.„ fv,„ u • J! \ ,. ^runey Jr., (Gurlev dt meuon, on the brief,) for appellants. ^. 5. ^arAa^^ and ^. P. Dart, for appellee. MiNtitriiTd^r ^^^--'«-it Judges,and Toxn. TotJLMiN, District Judge. The only practical question presented hv ti,. j • whether the court below had iurislSnlnf *^ ''^''''^ "^ by the bill. We concur in th" ^ ^ ^*'^' "' '"«<'« learned Judge who SdThetseXwXs e^r^idt £ opinion, and which is made a n«rf ^f ,u ^^^^^f ^^^ '^ ^^^ 1 II 184 «. 51 FEDEBAL KEPOBTEK, 85. Opinion of the Court, case satisfies us that, under all the facts beforP it th no error ^n the court awarding a preli" na;"i^> ^^^^^^^^^ -- The decree is therefore afBrmed ^ injunction. ' S SSS CT*^"^""-" COUNC.r. uxij.ii.Ai\fe ET AL. V. UNITED STATES.- (Ciroilt Court of Appeals, Fifth Circuit. June 13, I893.) [57 Fed., 85.] ClBCUIT COUBT OF AppEAI8_W«.,rT»«, Joentory order granting or Z^Z^^^TtT ""* '^^"'"^ *" '"*•"- less It Is clearly shown that thl .1^ temporary Injunction m- and is hurtful to the apS. Jt' " ""' '»P-vldently granted, thtTl^Z .^'^.^ Circuit Court of the United States for tne Jiastem District of Louisiana. in Equity. Suit by the United States against the WnrV ingmen's Amalgamated Council of New QrleanV t « i others, to restrain the defendant, ft!l • . ?' ■^■' ""'^ interstate and foreign commerr AnT-,""^"""^ "'*'' the court below grandntTT^I ■ .^^'' "^"^ '""^^ i" Rep. 994,) and dSendlnl « w?'^i"^""'=*'""' (^4 Fed. f ■*,) ana defendants appeal therefrom. Affirmed. M. Marks, {A. H. Leonard and Fi>n«. ^ n brief,) for appellants. ""** '^ ^'"'«- «» *« ^. 5. ^ar^«r<, for the United States. Before McCormick, Circuit .Tii ihe A\<^^,^ .** trict of Ix)uisiana aci 1/ * u ^™^^ *°'' *^" "''^''^'-n di^- i^uisinjid, acting under the directinn «f *i,„ u. general, in the name of the United q^f ul^ '"^''"'^y circuit court for said eas^SJt of S "^•'^'"'^^'^J" ^^e _ ^ "Mu^ustnct of Louisiana a bill for -Temporary injunction gra"nted by 'the'cirpn.; n . 7 I^nislana (54 Fed., 994). See p lio " '"' *="«*«"» » Syilabus copyrighted. 1«M. by We'st Publishing Co. I.UUJNCIL «;. UNITED STATES. 185 Opinion of the Court, injunction under the act of conOTP« f« ^-..* ^. , merce against unlawful re JraS Id ZT r^' '"'' *'"'"- . 209. The circuit court exSd W T^"''"'- '' ®'^*- fpondents ample time ioSZt.^t^ZllvlS:' ^ a^^d%rrai^-^^irwr7^"^^^^^^^ the 27th ZTl 1m when r"' 'T ""^ "^ '^' ^^^ opinion of the iudm, of tC .^°'^ °^ '» the very able oree now sou^i 'tf l^'ltr^eT'^Thr* t" ^"f *^ *''« '^«- sented to and considered bvh'^ """"'■' ''^ '«^ P^e- appellants, respondent betv Id t^e"' "f ''•''^" '^ ^'^^ to that effect was correct TlTpI^n "'^•^"■7'* <=o"rt's ruling the statute, and the p adfnt ' t'?'''*'*^ '^ '''^'''•'-^ -'^^in «"ch as [86] to requirf h Sutl of T''''^'^'' ^^^e not porary injunction.^ The volume of « f""^'' ^""^ * *<'"- affidavits was large and th? fl- / foisting and counter and emphatic, sufh'aTm: t T^n: LlfofT^''"-^' '""''^ ' variant impressions on the mini ^ ^^ ^^ "^"^^ ""''^« to the facts shown The .LT * . '^'^"^"* J'^^^^^ as opinion of the i^d-^e of thr 'v "^ '^' P"""^ '"'"^^ i" the by the record, and^ shows thTth """"^ " '''''^ ^"PP-ter FREIGHT ASSOCIATIoFeT Al" ''''' (Cmilt court Of Appeals. Klghth Cl«^t October 2. 1893.) rss Fed., 58.] "r^L^rr^^^^ ^ -a. 10 t.e H.M oC eiiai.tii,ent> ^"*^ *"**J^* *" ^*''-<* «t the time of its Rami— €biminal Laws—Commaw t *«, -r. OH.ss.-Where -ng^sXtToVlea^r" ^""'i'' "^ ^- and in doing so uses terms which h^^ « common-law offense, meaning by Judicial IntemretatL !L ''"''^ " "'^''-''lerstood tenns were ™ed In that se^ ,„"",' „^^^^ '- that the decisions lnterr,reting t^nTtortCl^ZI otZJ' "'°'' '" "''"' definition of the offense where there 1«^!,!^k V« ***■"" ""^ ""-* «o»oPor.n.8-RKSTE«»r o, i^" ^"" °?" "*^«"'"°° '" the act combinations In the ft>rm of ^Toth^r^r^'T'"'' "*"*""*^ re^ralnt of trade declared tH^ ine^I?i7r;"f ."'"''""«='"» '» tlonal commerce by the act of JnlyT^ini J„/!^' " ""'' ""«™«- tect trade and commerce a^ln«t .™, T, * "^ ■^" «<^' to pro- oHes." (26 Stat :.-09.^ WT^^eTs" Snn.?'-::?!™'"^ ""<» ""'»«'> combinations, and conspiracies In LraZ if;! T '"' ~"'™'*'' declared l^r the courts to be ^^JTlu ?' ''"''* *""' ""<» "een _«»nmonJaw beforeThe palgT'oTKl^'""'' """ ^°"' "'«'«' "« ^syllabus copyrighted. im"b;\ve;^-^;„1^?„, ^ "^ '^ UNITED STATES V TBiioo „,„ t. TEANS-MISSOXrEI PBEIGHT ASSN. 187 „ Syllabus. !>AME.— The test of the vaiirtit., .. not the existence of restriAtn ^"""^ "'"t^'^ts or comblnaUons i, but the reasonablenesro *^7r:Ctr'"*'""° "»'">-<' «-«"bv cnmstances of each particular cTse p7h." "' *"" ''"^'^ '"«' <='- sidered, and, if the contra?* 1 .,. ""'*' '^^"'"'^ '» first con- n;ade for a Just and hon S Jur^oTar th" '"""''" '" "'•- "^^ not specially injurious to the D^i. .h • ^^'™'°* "P"" trade is taction of the legitimate nterrt "tf "k *' ""* "^^''^ '"«" the pr^! restraint is imposed reasonaWy^.^.ui,''!^^'^ "" "">»«« ta^or the Is not illegal, shiras, District C h' ^ ''°°*™<^' "r combination t'.'s rule is not ^PPl^^Tt^''^l^'Z:''\'>n tUe ,rouna tZ duties. " corporations charged with public [Ml Same-common-Law Rule Th. Classes of contracts and co^i~ti 'L ^""""^ "" ^'''"'' <*--taln "eld illegal at common law w"s tha Th > '■'''""°* "' ^^''^ '-e** P«^«c Poucv-How DETEB^rEo T^e Jhr' "'''"'' """"<= Po"<^- must be determined from ite ^nsTrt.? ^^ ^'"^ "' ">« "atlon clsions. ■" '^ constitution, laws, and Judicial de- SaME-IntebstatE COMMEKCE.-The act nf P- K An act to regulate commercJ" Uelnl T''"''''^ "' ^^^' '^"titled the date of the passage of t^at act it t h' *'" '''' *"" '~"' ot this nation to regulate that , art 'J ^? "^^ *"« P-bllc policy consists Of transportation, and 7/' "';"«^«t«te commerce which freight and pas.,enger ratJL " '■^''*'"'<^' competition in therein as shall be Le^^'' '"*"^° '•"""'ad «,mpanieT engag^ reasonable, uniform, aTste^fl!" Zl ""'" '"''' "P^"' P"hS and undue preferences. ^' ""'' '" Pr^'cnt discriminations Rqwty-Heabing on Bui. *»„ a heard on bill and answer the ot'T~'=""™'^^-^''en a suit is denied in the answer Tr^ i„ be ta^?"; "' ''''' '" *"« hill that a.!^ Same !_w." "" ""^"^^ «'«"<' » d^^t^!, '"''"'''^' '""'' «>« "ferments -- its -rrrs.iierirort""^^''"- --- - are denied by the answer, and meZ f^ "'"tained in the bill honest purpose, tendency, and 11^"^ '""f "^ *^ ^''"'^ a Just and contained In the answer st^nd'tom^"^^' "" "'""'• "^^rments presumed to have been made fo an I^l *"'' *"* «'''t^»<^t will be unless the provisions of the a^J ? ' ""'^ legitimate pun,os,. n the examination of sue,' a c^t ^^^^T" ^"^^ "<« --^a^: to be presumed. contiact. fraud and illegality are not (;oNraACTs-.p„Buc PoLicr.-Preedom „f . » SaAIE— UesTBAINT of TBADE-AxTTr^r railroad companies forming a TrefZ .tfr^ ^"^^^^^ »>-t^^'een S a freight associatiou that they wlJl 58 FEDERAL REPORTER, 59. Statement of the Case. ( establish and maintain such rates, rules, and regulations on freight traffic between competitive points as a committee of their choosing shall recommend as reasonable; that these rates, rules, and regula- tions shall be public; that there shall be monthly meetings of the association, composed of one representative from each railroad com- pany; that each company shall give five days' notice before some monthly meeting of every reduction of rates or deviation from the rules it proiwses to make ; that it will advise with the representa- tives of the other members at the meet4ng relative to the proposed modification, will submit the question of its proposed action to a vote at that meeting, and, if the proposition is voted down, that it will then give ten days' notice that it will make the modification notwithstanding the vote before it puts the proposed change into effect; that no member will falsely bill any freight, or bill any at a wrong classification; and that any member may withdraw from the association on a notice of thirty days,— appears to be a contract tending to make competition fair and open, and to induce steadiness of rates, and is in accord with the policy of the inter- state commerce act. Such agreement cannot be adjudged to be a contract or conspiracy in restraint of trade under the anti-trust act when It is admitted that the rates maintained under the same have been reasonable, and that the tendency has been to diminish, rather than to enhance, rates, and there Is no other evidence of its conse- quences or effect. Shiras, District Judge, dissenting. 53 Fed. Rep. 440, aflirmed. Same.— No monopoly of trade or attempt to monopolize trade within the meaning of the anti-trust act is proved by such a contract. [00] Same.— The railroad companies who are parties to such a con- tract do not thereby substantially disable themselves from the dis- charge of their public duties Appeal from the Circuit Court of the United States for the District of Kansas. Affirmed. * Statement l>y Sanborn, Circuit Judge : This is an appeal from a decree of the circuit court dismissing a bill brought by the United States against the Trans-Missouri Freight Association and 18 railroad rompanies, under the provisions of the act of congress of July 2, 1890, entitled "An act to protect trade and eommeree against unlawful restraints and monopolies," commonly known as the "Sherman Anti-Trust Act," (26 Stat. 209, c. 647: Rev. St Supp. 762.) to dissolve the association, and enjoin the railroad companies from fulfilling an agreement with each other to have and maintain joint rules, regulations, and rates for carrying freight between competing points upon their several roads. The ease was heard on the bill and the answers of the several defendants. The bill alleges that the defendant railroad companies were corpora- tlons and common carriers, and that they owned independent and competing lines of railroad in that part of the United States west of the Mississippi and Missouri rivers; that they were engaged in transporting freight among the states and to and from foreign na- I I UNITED STATES V. TRANS-MISSOURI FREIGHT ASSN. 189 Statement of the Case. tions, and that they had been encouraged to construct and maintain these competing lines of railroad independent of each other by sul^ sidles and grants of lands from the United States and the people of nnl,ci .tf .^""^ territories west of these great rivers. The bill then olleges that, not being content with the rates of freight thev were re- ?^r Puffer t°n?/°^ oppressively to augment those rates, to counteract the effect of free competition upon them, to establish and maintain arbitrary rates, and to procure large sums of money from the i^eople onfl T- ^l^^^^ ^"^ territories engaged in interstate commerce they moS,"^ieV^" S"'"' ^" ''"-^^ ''' ^^^' ^'^^^^^ - subsequently " ^^r"?^^".^""J„*;^ agreement, made and entered into this fifteenth day of March, 1889, by and between the following railroad companies P«;m^*? -f "' '^^^^" * ^'"°^^^ ^^^ ^''^"^^^d, Chicago. Kock I^lSl' Pacific Railway, Chicago, St. Paul, Minneapolis & Omaha Railwav Pri'n^f ?f .,* Missouri Rivcr Railroad in Nebraska. Denver & Rio Grande Railroad, Denver & Rio Grande Western Railway, Fremont Eli^horn & Missouri Valley Railroad, Kansas City, Ft. Scott & "lem- phis Railroad Kansas City, St. Joseph & Council Bluffs Railroad Missouri Pacific Railway, Sioux City & Pacific Railroad, St Joseph & Grand Is and Railroad, St. Louis & San Francisco Raiwav, Union Pacific Railway, Utah Central Railway, and such other c-i^mi^Jinres as may hereafter become ]>arties hereto. Witnesseth, for the our- pose of mutual protection, by establishing and maintaining reasonable rates rules and regulations on all freight traffic, both through and llfV'' \»^«^"»^^^« do hereby form an association, to be knSwn as the Trans-Missouri Freight Association, and agree to be governed by the following provisions : "«^ »u\eiiieu "Article I. tio;?ht,rbe"^s'fol"^"''^ ^" *'^ Trans-Missouri Freight Associa- "1. All traffic competitive between any. two or more members hereof passing between points in the following described territorv commencing at the Gulf of Mexico, on the 95th meridian ; thence north to the Red Rn-er; thence via that river to the eastern boundary line of the Indian territory ; thence north by said boundary line and the eastern line of the state of Kansas to the Missouri ri?er. at Kansas of fh'o vk'.^. "'V^^. '^^^ ^'''T"' ^'^^^^ *^ «^« P«^"t ^f intersection of that river with the eastern boundary of Montana: thence via the said eastern boundary line to the international line,— the foreeoine l?nL'% r"S^ *«^ ' Missouri River line; ' thence via said international line to the Pacific coast; thence via the Pacific coast to the inter- national line between the United States and Mexico ; thence via said international line to [61] the Gulf of Mexico, and then^ via said fiJl L ' A^ ^' v"^ ""^ beginning, including business between points on the boundary line as described. *k" « '^" ^x^^^^* ,*^^^f originating within the territory as defined in the first section when destined to points east of the aforesaid Missouri river line. i^xioowuu " EXCEPTIONS. fn'nni P^ ^' .^?-.^V.''?^ *5^ ^- ^ ^' ^' W., except their business to and from points in Colorado west of the D. & R G line between Denver and Trinidad ; also business via their lines between points in Colorado and points in Utah. "All local business between Denver and Trinidad and intermediate points ; all local business of the A., T. & S. F. between Pueblo and 190 58 FEDEBAL BEPORTEK, 61. Statenient of the Case. Railway Companies Is r^ncerned^^,!^!?''.tr/f^^ "" ^*™"i*' ^^««t«« "All freight traffic to f?Jm'n?^.h^.,;?K ",V''"'°«f t"""™^' nnmely: points In the stat^ of Nehr^Si oL^"^** »" «>mniou or junction irlgimitlng ar or d^S to Um-,^'' n".' ""!? *^^ "'<''«° Territory, Trinidad. "es"ned to Denver, Colorado Springs, PueDlo. or poim" in^'lle'one hand^anTtoXS; 'r?.!^'' ^S'""' »»'« '«e™ediate "^^'S-fffiVT S' -«»' "'« "o^ -r!S> ^on'-Jh^^L^^^^ - .s onT"Scra?.Tb^X^ ^^t\±''rr^^^'^^ ■">»- Hlo Grande Railroad and Yten^ and Rio^r^n^'w" I"^ ^''*'«'' * '•(b) Traffic included in the Trans nLntinIn??f o^^'f? """^W. Association irans-Continental and International Miss?slip;i""rvr ',SSfts'''&de7Jt"*and" ''T *" ."' ^«''™'"^'' ""-J between I»iutsm Kansas or N^rLkf and .^'.n".!'", * h""= ^"^^'"8 rtates east of the Mississippi X" and sonth^Lf thl" .^"Jft, T*''*'^ ter7ifoW'^fs"Ts^i"^^|J'''" *"*'"'"• ^™' P"'"'" »"«• P««»t« '■> fe wayf '^" *""'' *" P°'"** °" '"^ Northern Pacific and Manitoba Rail- «V\ "^^^ *" P"'"*» '" Arkansas. to J^lL''ri^arsa%?n'dSL'^"aSrii"ourcr"? ""'.'^^''i''' "'. wS? TH-'"?n'»"; '°'^«' sr&""Kansas' cfty^oWsweli' M^^' (h) The Interchange of traffic with thA rniAroH^ aJT^ ' ^ ^ South Park Companies to or from As^n Cofor«do r?on ^^*^J"c ^ .^"^ (1) Bnsiness to and from Florence, Colorado, by all lines. "Abticlb II. ^r^^'iJi^- The "ssoclaHon shall, by unanimous vote, elect a chair- SJrvo^o??4"'^rers'''"' '"""""" """' ^ reJ;.T^y\''Zl «»:^.u^rtt'U'^,iT^v^^ry'\rc°h'af^arte'tth"*^''"- to be transacted does not warranrcallfng thfSers toLM?er"wSSS notice shall be given not less than fouf days^fore the div sS i^r tte meeting. When a meeting, regular or siiclaTis Vnven^^ it sh«n s^utart^-iS" drnif:ru;s;;"^° ^ wsHfr"^^^ l^rson shall be present^t aU ?^^ar m^tings w^^^ shall represent his road, unless a ^perior^officefi^T►rP«*.Tff i5 ' \°i^ to attend, he shall send a substitute with writteranthnri^ tT^H Tu £l'i5^""°^ ^^^^^ °^«y arisrand the ^^c^'^^^^^^ tliallbe binding upon the company he represents. suostitute ««^^ f^J^ committee shall be appointed to establish rates rules and reg' [€tt] ulations on the traffic subject to this association 'n!S?n tion of outside lines. Their conclusions, when unanimous! sSXJe I UNITED ST..TES t;. TB..NS-MISSOURI FEEIGHT ASSX. 19l Statement of the Case ^^i^^fl>l^:^^'^^^^^^ the question at iXV-«-« it Shan be a^tS^rtinn^rpS^"^? meettng tha1f i^'given'thrchoTr','!'"" ?'"* P^'"'" '^ «"eh ninthly rates, or change in any roie o? re^l?' ■■'"'' P'"""***'* reduction n eight days in so far as annHnahii T^'"!'"" governing freight traffic- "Sec. 5. At eacL Srmeetine%h?"'°^^'?'»'-«"'"»^ and vote upon ail chang^^prow«S of wM„T!f *'"" """" «>°sider given, and all parties shall bTCi^ hv 7^1^ ^"^ """'"<' "»« been tion so expresmi, unless then m.ri thi^ *k «'«<^'«'on of the associa- association definite wri ten notic^ that ?„*?«„ P^"^" '""'" «"■« the shall make such modification no^vth,t,n^" ^"^'^ thereafter they elation : provided, that, if tile memi^r ^^i** "'^ *''^ ™te of the ass<^ shall fail to be represented t flTn^t- ^"''"^ """^"o "' the change on its notice, and the same shnnt^^*'"?;. "" "''"«■> «hall be takin any member insist ipon " rXttonTf^rt'""^ withdrawn. ShouW the majorit.v. or if thrmajorifv fa™r th» « ^ ''^'""^' the views of nient of said majority, the rate ^ „,.,il i"": •■'"•' "• '° the Judg- npon other traffic then the as"cil?ion mL"?^'" seriously the iatls such other traffic, put into eff^ ~nnL^' " T^°'^''^>' ™te upon upon the same dav Rv nn»„i™ eoriespondiug rates, to take effect relating to freight" tra&cmarbe"mrZ%T^n"'^- '''j!^- "'^ ''s"'«"S^ ciat.on without previous notice '"""'"^ "t any meeting of the asso- menfl^; If *7'*'f ^f/°e «yth '»' af with competing lines may, if thoS "iw^ 1<^ *?« ^"^ that divisions equally favorable terms. ^^* advisable by them, be made on Sec. 8. It shall be the dntv nt ti,» •. . apparent violations of the agr^u?ent Lh .'™*° *° investigate all the managers, who shall de erS hv t ^ T^Port his findings to against whom complaint is m^de t^ LT^""^ ''<'**' (the member penalty shall be assessed, the amo.int ^f ^u"^ '""te) what. If any hundred dollars, to be paid to ?2f ^s^l^?- ^''^- ""t to exceed om hereto agrees with a shiU. *^r X S^r-^o IL^^/'Z^f^Z A 192 58 FEDEKAL REPORTER, 62. Statement of the Case. I i or change in rates, or change In the rules or reguhitions, and it is shown n[X)n investigation by the chainnan that such an arrangement was effected, and traffic thereby secured, sucfr action shall be reported to the managers, who sliall determine, as above provided, what, if any, penalty shall be assessed, *• Sec. 9. When a penalty shall have been declared against any mem- ber of this association, the chairman shall notify the managing officer of said com- [fiS] pany that such fine has been assessed, and that within ten days thereafter he will draw for the amount of the fine; and the draft, when presented, shall be honored by the company thus assessed. *• Sec. 10. All fines collected to be used to defray the expenses of the association, the offending party not to be benefited by the amounts it may pay as fines. " Sec. 11. Any member not present or fully represented at roll call of general or special meetings of the freight association, of which line and proper notice has been given, shall be fined one dollar, to be assessed against his company, unless he shall have previously filed with the chairman notice of Inability to be present or represented. "Abticle III. " The duties and power of the chairman shall be as follows : " Section 1. He shall preside at all meetings of the association, and make and keep a record thereof, and promulgate such of said proceed- ings as may be necessary to inform the parties hereto of the action taken by the association. ** Sec.. 2. He shall at all times keep and publish for the use of the members a full record of the rates, rules, and regulations prevail- ing on all lines parties hereto on business covered by this agreement, and each of the parties hereto agi-ees to furnish such number of copies of the rates, rules, and regulations issued by it as the chairman may require. •* Sec. 3. He shall construe this agreement and all resolutions adopted thereunder, his construction to be binding until changed by a majority vote of the association. ** Sec. 4. He shall publish in joint form all rates, rules, or regula- tions which are general in their character and apply throughout the territory of the association, and shall also publish In the manner abovo such rates, rules, or regulations applying on traffic common to two or more lines as may be agreed upon by the lines in interest. •• Sec. 5. He shall be furnished with copies of all waybills for freight carried under this agreement when called for, and shall furnish such statistics as may be necessary to give members general information as to the traffic moved, subject to the provisions of the Interstate Com- merce Railway Association agreement as to lines members thereof. *' Sec. G. He shall render to each member of the association monthly statements of the expenses of the association, showing the proportions due from each, and shall make drafts on members for the different amounts thus shown to be due. " Sec. 7. He shall hear and determine all charges of violations of this agreement, and assess, collect, and dispose of the fines for such violations as provided for herein. " Sec. 8. The chairman shall be emi)owered to authorize lines in the association to meet the rates of another line or other lines in the as- sociation when in his judgment such action is justified by the cir- cumstances; this, however, not to act in any way as an indorsement of an unauthorized rate made by any member. " Sec. 9. Only parties interested shall vote upon questions arising I Statement of the Case. provided by sectio^^3 oTarticTe 3"ofX1g?Lmeit!'"'^^* *° ""^^^ " "Article IV. rules and regulations of any ww/hin» *°°.°' *'"'« agreement, and thf ™ vocation ff-X -.rrs2/ecf tf lle-SsS "Abticle v. UelTnltSfrrr^rtts^^^'^bl'^x^b'! ?h^ '"r? ''^ «■« — • Par- sx'i^ --• -- -. r dS t r^'o-t.!?dT-^ll "Abticle VI. el^t^'b^ unanl,^ous°voT"Thfrr™il*^ <*' '^''^ "members to be ment and salaries of nlcetar^ l^S"""^^ "'"'" ^PP^ve the apwin^ and authorize all disSZeSts 'l^i1;.«^'*P* *""* <« *« cha^S be unanimous. "ements. All action of this committee SaJI " Abticle VIi. anj'quSo^aSTundeV'thi's''? """^'^ «■«-*» '«" *» agree upon Cti^^^^'L^^^'^' «f three meinbe^ 'of 1.*" '"..^fi"^"'*'? boak r„^'^^ «i"al, ronsrsro7/^r^"r.ele'',^''o7the*° ^" ^^'t^tTon-S 5re interested, the. Z;X'^:^J^'^- "^^T^S "Abticle VIII. r^'^f^^'rX^'^'Z.^^^^tr \- ''^' -"^-t thereafter from or amend the same." °° *•"* P"""' <* »ny "ne to withdraw 18^f thai S;it"S%.i''j:* *f'« "^■•^■'^ent took effect April t, compelled to pay thi arbltrtrf f|?J° f /^'■■'*.\*'' commerce Ce b«^ arbitrary rules and regulation., iff ?.'. ^J^'Sbt, and to submit to thS association formed untoX /gr^^bllshed and mainta?nS*by tSe llSO^voL 1-06 M jg'**"*"*- «"« ""^^ been and are T 194 58 FEDERAL REPORTER, 64. I* • Statement of tbe Case. prlved of the benefits that might be expected to flow from free comi)e- titioii between the several lines of railroad of the defendant com- panies, and that in this way the defendant companies have combined in restraint of trade and commerce among the states, and have at- tempted to monopolize, and have monopolized, a part of this commerce Ihree of the railroad companies were not members of the associa- tion, and will not be further noticed. The answers of the 15 compa- nies who were members of the association are substantially the same, ihe first defense in these answers is that the interstate commerce AT a5 ^^l^i?*"*^ J' ^^"' entitled "An act to regulate commerce," (24 Stat 379, c. 104; Rev. St. Supp. 529,) and the acts amendatoi^v thereof, constitute a complete code of laws regulating that part of commerce among the states and with foreign nations which relates to transi>ortation, and that the act of July 2, 1890, is not applicable to, and does not govern, them or their actions. Coming to the merits of the suit, these defendants admit that they are common carriers ; that, with some exceptions not imixjrtant here they owne (2) Where words have acquired a well -understood mean- ing by judicial interpretation, it is to be presumed that they are used in that sense in a subsequent statute, unless the contrary clearly appears. (3) Where congress creates an offense, and uses common- law terms, the courts may properly look to that body of jurisprudence for the true meaning of the terms used, and, if it is a common-law offense, for the definition of the offense if it is not clearly defined in the act adopting or creating it. U. 8. V. Armstrong, 2 Curt. 446 ; U. S. v. Coppersmith, 4 Fed. Eep. 198; In re Greene, 52 Fed. Rep. 104, 111; Mc- Cool V. Smith, 1 Black, 459, 469 ; McDonald v. Eovey. 110 U. S. 619, 628, 4 Sup. Ct. Rep. 142. Thus we are brought to a consideration of the statutes in force and the decisions that had been rendered when this act was passed to determine what contracts in restraint of trade were then illegal, for it is clear both from the rules to which we have referred and from the title of the act, viz. "An act to protect trade and commerce against milawful re- straints and monopolies," that it was [68] such contracts, and such contracts only, that congress intended to declare unlawful and criminal in interstate commerce. Under the common law, the ground on which contracts in restraint of trade were declared unlawful was that they were against public policy. But when it becomes necessary to consider grounds of public policy in the determination of a case, it is well to bear in mind the oft-quoted remarks of Justice Burrough in Richardson v. Mellish, 2 Bing. 252, that public policy " is a very unruly horse, and when you once get astride of it you never know where it will carry you. It may lead you from the sound law." Public policy changes with the changing conditions of the times. It is hardly to be expected that a people who are transported by r . UNITED STATES V, TRANS-MISSOURI FREIGHT ASSN. 199 Opinion of the Court Steam with a rapidity hardly conceived of a century ago, who are in constant and instant communication with each other by electricity, and who carry on the most important commercial transactions by the use of the telegraph while separated by thousands of miles, will entertain precisely the same views of what is conducive to the public welfare in commercial and business transactions as the people of the last century, who lived when commerce crept slowly along the coasts, shut out of the interior by the absence of roads, and hampered by an almost impassable ocean. In 1415 a writ of debt was brought on an obligation by one John Dier, in which the defendant alleged the obligation in a certain indenture which he put forth, and on condition that if the defendant did not use his art of a dyer's craft, within the city where the plaintiff, etc., for half a year, the obligation to lose Its force, and said that he did not use his art within the time limited. Hull, J., said : " In my opinion, you might have demurred upon him that the obligation is void, inas- much as the condition is against the common law : and, per Dieu, if the plaintiff were here, he should go to j Ison till he paid a fine to the king." Y. B., 2 Hen. V. fol. i , pi. 26. In 1841, Lord Langdale, master of the rolls, heici that a contract made by a lawyer not to practice his profession in Great Britain for 20 years was not against public policy, and that it was valid. Whittaker v. Howe, 3 Beav. 383. In 1843, the court of exchequer held that an agreement not to practice as a surgeon dentist in London or in any other town where the plaintiffs might have been practicing was reasonable and lawful so far as it related to London, but against public policy and void as to the other towns. Mallan V. May, 11 Mees. & W. 652, 667. In 1869, Vice Chancellor James sustained a contract by vendors not to carrv on or allow others to carry on in any part of Europe the manufac- ture or sale of certain kinds of leather so as in anv way to mterfere with the exclusive enjoyment by the purchasing company of the manufacture and sale thereof, and issued an injunction to enforce it. Cloth Co. v. Lorsont, L. R. 9 Eq. 345. In 1889 the supreme court of New York sustained a contract not to manufacture or sell thermometers or storm glasses throughout the JJnited States for 10 years Ther- :. 200 58 FEDERAL REPORTER, 68. Opinion of the Court Ana m 1891 the supreme court held thnf o «« * f ?^' joad corporation giving thrp^llfn SouX^;^^^^^^^ [«»J pany the exclusive right to furnkh »ii !i • ^'°' and sleeping cars r«,„ired by that r^H / '^''''"'^ "^"^ 15 years was not an illegal Sstti^tTf f ;^T^ I ^"'^ "' It CA»ca<70, etc., R cf^ ft w o ''^''' ''"'' sustained U. S. 79,Tl Sup. Ct So ;^^r ^""u^ ^'''- ^''•' 139 of to-day, as mSl^Vlb^lTf *\P"''«<' P<"-y cisions,thatwehaven^tod^ 1"^^ *"*^ ^"'^''^^^^ usly varied The puMic poirif 1 na it^ who constitute the court, constitution, W and iuS^ T ■ ^ ^^^^^^^^^d bj its disclose it, t is ourpri^^^Vr""""-. ^° ''' ^ "^^^ yond that it is Z^ZZ^^ '""'■'^ *°*' ^"'^^'^ it? be- 4"s::^^tSdrt'rtt^~^^^^^^^^ -it ha. ^rZ the SSr t^retS ^ ~ P'^- neC enhance thriTpri^ p^Jll* "' monopolize their supply or tween such P Ju^s'?r'lirrjiviLT''"''*T ^- certain fixed proportions and ^r * ^^^"^ ^'^"^^ »»> tions between c^ S ^ "^ '''""■'•'=*^ ">' <'<'"'^i^<^- between employers or ZLen toT 't ?:;"'"''i"«ti»n« prices for labor or ^r^r^!" t r J"*^ "'"^'' ''^ ^^''^^ but become illegaf ^stZts of * / . '" '^''' '"•=«P''«"' tions fonned .mlrSuT nLflrwIZhtTV'^ T*"'"" who are not members to refu^ toaS ' ! i'*''''"" "^ ^^'^ employ or be employed arothTr ^J^t l''"''" ^''''^- '' *» •nations undertake io prevent L^^' I "^"^f ^^^'^ «"«b *««)- property or their laCrX^T ^r tT "'"^ ^''•^''• pose of contracts of these classes LTare U^uIhelHr T' to suppress, not simply to rem,]«il ~ """^ff^ '"egal is •fiy lo regulate, competition; and, if Vmr^ STATES z;. TBAKS-MISSOtmi ^BEIGHT ASSN. 201 Opinion of the Court suppression is not effppt^d if ;c u accomplish thefr pur2^ ' t J""" *^" "'°*™*=*« ^^^ «« difference betwin s^^ ^ '' *^**'"* ^''^^ ^ « ^^ ^ wide which is to^Te^il ^v'*' ""** **^ **»« Purpose of and healthy and^te^tSr '"'* •* "*^ "^ '"^^ «P«°' that which'is necir, rlcclrsrh-* " '"^'*' ''"' ""^^ not necessarily follow th«t.Tr. }^ P"''P°^- I* ^oes f t„te illega/reS:tstf\ rb:lt t^^^^^^^^^^^ '^"- classes do. because those of the former comLrc^JSrslLrr^'?" *'** ^"^ ^«"*™<=^ ^t-en an illegal r It o t^de tL""'' ?^" " ''"^ '^^^ ^^ has cited numerous ca^s'L T""^ *""■ '^^ g-^^^rmnent lowing are found •: roSsTflh^r"- ^ '"^ ^t the law forbids any a—eS or /"^k^'^'"** ^•""^"'^' «»d price is removed beyS the i^t^ T*'"" ''^'''^y *»»«* competition." Be Wmwl^lt'rT 7'' 1 '^^*''"«^« Cloth Co., (Com. PI. N. Y ) WN Y r- ^^./^''^^y Fir.- is against the general poli^Uth^ia^tP^^^- '"^ " ^* with free competition" or to permit sTich S 7 "^ '"^''"''""^ struction." Stewart 4 r^! . ■ ^"^erference or de- (Gil. 348.) "CombinatirnrT "''"'? ^"'^ ^^ ^imi. 372, price of any articTe of ^H '"1. '=''"^P"'''««« to enhance the jhe public.'^ p£;i:\''iii^iT^::^r'^zr'' A careful ^nd patieft^rjua^l^Tflr '''"'"''''' ^«^- ever, discloses the fact that the tn* . '"'"' *''*"''' '^<'^- cases, which are not of donlf , . ™'*' *=»n«idered in those classes to which" havl twd o""*^'/"*^ "' "^"^ "^ ^'^^ ground than the existence nf?; I '"^'^ "P°" ^''"^ «*er They were cases inS;?coLraf " r "P*^" ^^'"Petition. or dealers to limit the su^nlv * ^ u^ ^'"P^ting producers monopolize, stap e commoS '"f.^^/^^^ the price of, or to Barclay Coal t., 7^8^73^'?^^/'''^ ^'"'^ ^^ ^ 5. >5r«^* <& Co., U La Ann lfi« '/"f"" '^'^^^'^^ -4**'n v 76 Cal. 387, 18 Pac £« S^' ^^^^.""^^'^ Co. v. i7ay,,, ' ''• ^^P- ^^1 •• D^ Witt Wire-Cloth Co y 202 58 FEDEBAl, SEPOBTEB, 70. Opinion of the Court New Jersey Wire-Cloth Co., (Com. PI. N. Y ) 14 N Y Supp TjtKt ^V- ^t^T^ ^ ^^'*» ^^- ^^^' »"<* 'people y. North Rtver Sugar Refining Co., 54 Hun, 354, 7 N. Y Supp 406; or cases involving pooUng contracts, like Craft v. Mc- Cmoughy, 79 Dl. 346; Hooker v. Var^ewater, 4 Denio, 349; Stanton y. Allen, 5 Denio, 434; A,ide,-son v. Jetl, (Ky.) 12 il\f^^f\^t ;• '^'^ ^"-^ ''''' U- S. 396, 9 Sup. Ct. Bep^ 5^; MorrtU v. Railroad Co., 55 N. H. 531 ; Denver d fi^n ; Jw""/- i^'^T'' ^- "^ ^- ^- ^- ^o- ^5 Fed. Rep. ^50;^nA Woodruff v. Berry, 40 Ark. 252; or cases involving- combinations of workmen which compelled nonmembers to abide by the prices for kbor which they had fixed or to aban- don their employment, like People v. FisJ^, 14 Wend. 9, and «:, ;IJ ^^"^"*^'* ^^'igamated Council, 54 Fed. Rep. 994, 1000; or cases where the contracts were ultra vires the corporations, and their purpose «nd effect was to monopolize ??' ^'^«/«'^''''«'' Co. V. Collin,, 40 Ga. 582; Ha^lehurst v. Ratlroad Co 43 Ga. 13; and W. V. Tel. Co. v. Am^an Unta^ Tel. Co., 65 Ga. 160; or cases of questionable author- ity, like Com.y. Carlisle, Brightly, N. P. 36, 39. See. contra, Snow y- ^heeler, US Mass. 179, 185; Bowen v. Uatheson, 14 Allen, 499; Skratnka v. Scharringhausen, 8 Mo. App 522- and Care,, v. Rutherford, 106 Mass. 1, 14. It was natural that m the discussion of contracts of these classes the courts should «>ndemn m unmeasured terms the suppression of competition, but m none of these cases were they required to l)old, and in none of them did they hold, as we understand the opinions when read m relation to the facts of the cases respectively, that^e^ery restriction of competition by contracts of compet- ing dealers or carriers was illegal. These decisions rest upon broader ground,-on the ground that the main purpose of the obnoxious contracts was to suppress competition, and that they thus tended to effect an unreasonable and unlawful re- wkhTn 1'""^";, 'h T* T '^' ^^•^"■^^"'•'d rules, and come vrithin the well-defined classes, to which we have above referred. [71] A more extended view of the authorities strengthens this conclusion, and makes plain the line of demar^tion which separates legal contracts that incidentally restrict competition from illegal contracts in restraint of trade The \ UNITED STATES V. TBANS-MISSOUBI FREIGHT ASSN. 208 Opinion of the C!ourt decision in the leading case upon this subject, {Mitchd v Reyr^Us 1 P Wms. 181, 1 Smith, Lead. Cas 7th tnel' k th/f '' P-;''^') *\« '^^ -hi«t Chief Justice FuUef^^ IS the foundation of the rule in relation to the invalidity Jf contracts m restraint of trade, (Gibbs v. Gas Co., 130 U S restictedTo''*- ^T ''''^ '^''^ ''''' ' -»*-<=* t^at clSrty restricted competition was not an illegal restraint of trade ihe action was upon a bond the condition of which was that the obligor, who was the assignor of a lease of a bakehouse and messuage m the parish of St. Andrews, Holborn, would yearr Th". '"t"t "' I'f^ "'*'^^" ''''' P^^^^ for thr^ yea^ The contract was held valid, and the action sustained. rhis decision was rendered in 1711. Chief Justice Parker, ,f trtr""^ It, deeiared that contracts in partial restrain of trade were valid if made upon sufficient consideration, but hat contracts in general restraint of trade were ilkgal be ause they deprived the party restrained of his livelihSd memW '"S! ^^^^ ^^'^ ff-^'y- ""^ the public of a useful tklr^J' ^"FT^^i ''*"^"y ^'"''^''^^ *^«* «>"tr««ts in par- lal restraint of trade may be sustained, has been uniformlv appro.^d, but in the development of the law applicaWr tl ttt tlTJ^l' '" """ f'^' *° '' '"^^ furthr'condi ion tha the restriction imposed must be reasonable in view of ; marl of CwiTTTI '' ''"'' P^^*'«"'«^ ^^ ^he lemark of Chief Justice Parker that contracts in general restiaint^of trade are illegal-a remark that was notTe^ sary to the determination of the question before himTs stns" tZ* 't •• ^'"''l' ""'^^^^^ •'y '-^^-^-t deci- Jmidiate Z '' ' " r ^'"^'"•'•^ '" *^ '»*^'- authorities to rXlw clnf 1'7P°^'*'°" t^«t th«re is any hard and fast rule that contracts m general restraint of trade are illegal and to apply the test of reasonableness to all contracts' Jalhs,l El. & Bl. 391, the court of queen's bench held, in 1853, that a covenant restricting competition, which bound Usher in London or within 150 miles of the general oost office, or m Dublin or Edinburgh, or within 50 mEof eitC hJ\T^ ? Kr u "" "'^^"' ^^^ covenantee or his successors had an establishment or might have had one within six ^^ 58 PEDEBAL BEPOBTER, 71. Opinion of the Court, .nonths preceding was not an illegal restraint of trade, and f^o., n g B Thy. 544, certain shipowners engaged in the carrying trade between London and China had formed an ^lation for the purpose of keeping up the rate of freights in the t«, trade and securing that trade to themselves. They accomplished this purpose by allowing a rebate of 5 per cen< o^lv alTfl'' P"d by shippers who shipped in their vessels only, and thus partially or entirely excluded the plaintiffs who were competing shipowners, from the tea-carrying trade! The latter brought suit for an injunction and damages, but notwithstanding the obvious restriction upon free competi- an unlawful combination in restraint of trade, and gave iude- ment for the defendants. This decision was rendered in 1888 IffiZVK'^lul^ *"" appeal, (23 Q.B.Div.698,) and finaUy •ffirmed by the house of lords, (App. Cas. 1892, p. 25.) In I^ktmy. Lyman & Mass. 522, the supreme judicial court of Ma^acjusetts held, in 1813, that a contract by a merchant not to be interested in any voyage to the northwest coast of Amen«i was not invalid as in restraint of trade. In Match Co. ylioeber, 106 N. Y. 473. 13 N. E. Rep. 419, a contract of a match manufacturer never to manufacture or sell anv friction match«« in the District of Columbia, or in any part of the United States except Idaho and Montana, was sus- tained and enforced. In Navigation Co. v. Wimor, 20 Wall 64, decided in 1873, a contract between two steam navigation companies engaged in the business of transportation on the rivers, bays, and waters of California, and on the Columbia river and its tributaries, respectively, was declared by the supreme court not to be in restraint of trade, although it prdiibited the use of a certain steamer in the waters of Cali- fornia for 10 years. And in 1890 the supreme court of New Hampshire in an exhaustive and persuasive opinion held that contracts by which a railroad corporation leased its road and rolling stock to a competitor for many years were not neces- sarily against public policy or void at common law, when the purpose of the contracts and combinations did not appear to be to raise the rate of transportation above the standard of fair compensation, or to violate any duty owing to the pubUc t UNITED STATES V. TRANS-MISSOUBI FREIGHT ASSN. 205 Opinion of the Court hy noncompeting companies. Manchester, etc R Co y (onc^dR. Go. (N. H.) 20 Atl. Rep. 383 If 'further "au tl.ority IS wanted for the proposition that it is not th: ;." oTthat*'' 'r^^f '^-P^"^'-' »>"' tie lible ness of that restriction, that is the test of the validity of ontracj that are claimed to be in restraint of trS , U J lie found in Fowle v. Park, 131 U. S 88 97 9 S„n rt NT m; GiUs V. Gas Co. 130 U. S. 396, 1'sl'p Ct^R^" S^: L, ■ e',.i' ^^<'k^ V. Evam, 3 Younge & J 318- Ontano Salt Co. v. Merchar^ts Salt Co., 18 oLt Ch 540 ^ ^ ±5eav. 383; Kellogg v. Larkin, 3 Pin. 123 150- /?W J Uep. 335; Brown v. Roumavell, 78 111 589 ^^,' rrf foTdh Ex\ 5 Fla. 510, 515. ' ^* ^- ^^*^' From a review of these and other authorities, it clearlv appears that when the anti-trust act was passed the rule ha J become firmly established in the jurisprudence of S^laJd and the United States that the validity of contracts restrict JthTre'Sr Tth^ '^*^™^ ''^ *^« ~Slni ovitabj^r a l^:ir:x^;::^x^ tion or create a monopoly, it was illegal If a cont^m posed a restriction that was unreasonably injurious to he" TntrestTS r t '^1^ ''''' -'g-ter "tha^ h interest of the party in whose favor it was imno^rl ^„ manded, it was illegal. But contracts made fo7aTawfoi Sr a" d"'v r-""* -reasonably injurious tTthe pubU welfare, and which imposed no heavier restraint upon trade rates for Th! transportation of freight and passengers ' They at « ous radical, and effective. Th^v- beca'^e opertle by 'n a'^ of congress three years before the anti-trust act was Das«^? rolicvTtr't ''^""'* ^'^^^ '''^' *'-" ^'-^ dlte the^puS policy of the nation was that competition between railroad If we turn now to the published reports of the inti>r<=t«f. STI^dtTr '"""' "'*'" ''P'"'- - such matte'lrl^ tainly entitled to great consideration, we find the v\.J^ more clearly expressed that it was the Durnll 7 . to place important restraints upon comSoT thlr"^"^ trolled struggles for natrnno^. V *'*'?'P***"°n' that uncon- quently detfme^M TZT^c ^^Se X^ T ^ are especially injurious to the^ulel inte^ste of The "'" try and contrary to the snirit «f -. ".'^."'terests of the coun- In the fourth annual rpnnrf r.f fk« • • we find the following stateCt "'""'^""' "* ^"^^ ''^ It is thus seen at evpi-p tm.., *». * ...^ ' consideration of the ne^i.ninn,; I. * ^""^ regulation of rates on . and without a s^eTT'^I 2^TZ,TT'"' "' ^'^ «-«'« ^"d" business may be affected «nrt .vLTi ®'*' "' operations wherebT !ti^ in respect to that rol^dl'ay te^fmUedM^fr'""" *''"* whatTsLn^ antagonistic to all prinelnleT nJ- ioM V* consequences, is entirelv road managers have*^ Sfed this K transportation. The S because they have pcrcelv^ this thn?^ thl''* J"^ ^^^' *""• 't i* f Ml^'S""* themselt^s into rai road as^lati^nr ,^" «>n>PClIed [78] of agreeing upon classiflcattons anTraJr ^^S"".,^^ ^"'^^ 11808-voi. 1-06 M 14 '"^" ^ ^^^ 38 FEBEBAL REPORTER, 76. 0|>riilf»ii of tile Court. terl::',^,,;■^;;r„v;Hir,;];.^.™:l;;:l« ';;„l".r„",";:"r'^ -( c,...au..,ing „.. petltive forces." i'Ukiim^. .i,„i .,|| |,„.s|,„>j,„ affetted l».v oom- And oi> page 21 of the same report the following: fa;;\"..ur;jr?,rrr.!?t;.:;StZ.rn7if^":^ ^" the „„aouMea pushed to ruinous extrwii« S^ Ih,.i T railroiul conipaiiles l« often the «•,„• of yeo^r ne oh^ !^; '"i^ JSf i *^^ "'•«'«•■•'<•<•« tItTo rt^era™^ ?o^ti "' """«'* "■'"*" '« "^'« '"«• to the husine*. of thr^.unm.Jth^ ..''"■•• ."•^'' '"■*' "" ""^-ttling and the spin, of the eSg^aw U^il-ahrs,'"',:^' ••''"'' '" '"- ■'•'•'•'*'•''• ot^thl^L^^'f '-,"""1 "^P""^ •*" P"«"' 25, when speaking Of the unity of railroad interests, the commission uses this language: w^uT.^^.rrs'^nrtr'rrn^.^irvr^^^ »notLs to tber„;^t„r.^:;;^s[s«ir,^^^^^^^^^ ■ And in the same i-eport. on page 23. we find the following: **A short road may BometiineK mnkp it«»if nffi« k«** *i ua.e«.\o;':L™'^p!S. .f?^xto'^.o. 'f.ri;';'U'Ss'i!;r'\hrev''''t ""^ exercise of any nu-h .»,^r R-lT »f ■•^«t<* «« HK'«i>««t the prolmble it goeH to the"^ ™tobn'sZent T.^T^mLT^LiZ^Z.''^'' '"'^^ of roaite as will lead to the extenshn. of th»^,.M?S? *•■* '"«'">8e>* with mutnal reHponKil.ilitieT w ?. V,. '."'"''■ ^Tnnge'iients tbe public may tave In ^e ^nl^ ,^rfon2? in ir'^l""'- '^ """ conveniences that m ght be e^^^ i^ J^f^,^', ' *'"" '*'"'"*'' ""1 Uon. There Is nothiiTe in the^Jfn *i „? l?,"^i '""' «*"*"" '«'^'«- 1. at all Inconsistent wi 2 earnes ZLntZ ' """"««■»«"« ''hid. conveniem* to the oarrle?/^ we 1 Trthe ";«bM^L^,,"''. ^"f"' S?'..1fff"'"r """■ ^ '""""^ tor nnti in the s rife t^twSn ^d»" «ie limits of competition are passed, and warfare l«Bn7»!^ " But In order to form them erent in..h..,i "„",■* '" entered upon, pensable. and such™ nc^SioSTare Kv tr.T*""". '"^. """" '"<»'»- furthefJdT* """" T^ ™ p"«^ ^' *''•' ----'- "To iiuike railroads of the sreateflt nnRMihin ^^t^ * *^ contract relations would he StTal ^auL ThJ:^ *** ^^^ ^""*^' be Joint tariflfs. joint nmnlng ammgeine^rn^d^nr h''"^'^ °^ *«> •nd a giving of credit to a laJge^xtent somp n^^^^^^ ^' ^«''»' iM^yond the reach of c^mpuL'o'^^SaZ? r.U'^enXtSe^ri^ tty^ UNITED STATES r. TRANS-MISSOUKr_ PBEIGHT ASSN. 21] Opinion of the Court, not, could be I»est spttlwi i fixed, by the voluntary cation of 'tL^n^rHo'^.^"*" ^'^^ Qualifications respectively. Agi-eenient upon tlieie ^m l'h T^^^* «^ ^he roads therefore, a settled policv and ^hn,.; ? ^'"^red matters became, seemed to lose their Sdentiti and to hJ^''^'^^'"*^"* ^'"^^ ^^ road lines, and associations were fornZ uhi/T^^K ^^'•*" ^^ ^'^^t trunk of roads in a state or «ectioi? of 1 1. ""*' embraced all the mana-eii were remitted nianrqueSs ,>/ Ir'""^'"^.' ^"^ ^^'^^ associajFo^ as are above referrW ^^ Clwslfi.^H""'''" '"^*^''^'^^- ^"eluding S associations, it heinrevMent «^t nfi?" ''"'' ^'^^ ^'^"fi^l^ to siich serious obstacles t<> a harmonic. ^ differences in classification were traffic^ But what ^.t 7 Z^^ ^^^r':::^i^'' interchang^^ [77] the formation of snAh «lo!; • J- anything else influencpfl them Of large authorUy.'"^ th^^lblmv ^ '''^^'^^'-^•^TuX minent, that destructive wars S r- i« ' ' .T**'^*' "'*^-^ <-onstantlv im- Peting roads to the ^erLri^jSrv oftbr"^ "'* »>etweencC turbance of business. AccordSV LI %^iV'^"'^ '"^^ ^^^ general dis- a^ociations has been the fix "f of Zt ""^ ^^'% ''^'^^ functions of such Whereby their several membe?.f <^u. e ;.onn' .V' i **"^'^''^^ "^ "»*^«s serve the rates when fixed " compelled or induced to ob- Carrie, .mder thfo LliroTr^'rohZ'T ^^"^'^^ ful execution, as pointed o„t by The" nterstL """"''" mission, seems to some extent f^ interstate coimnerce eoin- cert of action It ' l.t """*' "'"^^-^nce «nd con- the rea-sons why ^ilro d I^ """^T'^ry for us to state privilege of iini into, P'"''' '''""^'* ^ ^''^^d^d the which m^y to Z! e^^ T'^^r"*-' ^^''^ «">^^ ^'•npanies to that e£t haTbin'teteT vi' competition. Jasons suasiveforcei.iSt£t Jto w^fh ''"'^ ""'' ^'■ -ferred, notably in ^ait^,^ S^ZT '"^^I Oo., supra But wifV.^ 4. . - ' ^^- ^' Concord R, is sufficfent to say 7£t •'T '"^ "^''* ^'^"^-«»' i* and fast rule ^fo^'wherthl Tf' *'^" "''^ "" ''^^ which made very Z^ J., t.. ** anti-trust act was enacted on grounds or^ubHcX^'^r ""'•"' ^*^'"P'^"'«^ -'<» petition. In oJr ^2 he "" '"^ "'"^ ***^^ ^'"^ then prevailed, espeJalTy 1' ^el 071"'""^ * ^'^*"''' the interstate commerce act tw u ^'^''* P*^«g« »* if. judged in the Sfof all the ""'"'''"''' "^"^ ^^'^J' tions under which fhey te^ idr'tr*'""' ""** <""'''- stricted competition. ' ^^-'^ ""i^asonably re- in view of the foregoing nrinrinlec .f • . gwuig principles, it remains for us to 919 58 FEDERAL REPORTER, 77. Opinion of the Court inal statute, and it sh^i^ot ^'Lt;;Sitt T ^ persons to the DenaltiV*; fKa^K • construed as to subject -plained of ^^:^r^urzz'itrt:!: '^'''-''i suppress competition, enhance rates of S tV ' """" ^ lize the traffic. The answers denv tvT ^ ' monopo- leffP that *K„ answers deny these averments, and al- lege that the purpose of the contmM .«/i ■'='' »"« ai- to carry into effect the provisions nf ft f «f °«'at»on was act. and to malce rati SrL stead rSfhrr" that the effect of the contract T^- ■ ^'" *"*g«^ raise the rates of WhT^K .r ''^'='t'«n has been to wie laies or Ireight above those which thp mihli^ .^; Ui. have reasonably expected to obtain from frit TomoetTtf The answers deny this allegation, and averThaTT ff J has been to maintain reasonable rates «.,frr/ ! ^'^"^^ reductions of rates have C effl^L th wf '''"" ^^ tion. Unon » hB«n;„„ \-V, ^ through the associa- containedTn ttr huf "^ ^ ""'^ ''"'^^'- '^' «^«™«nt« of fact couiamea in the bill are overcome bv the denials r7Sl ^f the answer, and the averments of f«;t in *u ^ ^ "* adifiitted. Tainter v. 67^.? 5 Allen r« ^ '"T"" ''""•* "Th7'i:s„t?:-t?^ T' ^^^^^^nt;^ rests':pLriv;„rcttit~:tctS?ti" -r"- tained under it have not be^ Ireasonabt '^YT:"'^''" reductions have been niade iXri ti:^^^ xhe'T nary ru es of interpretation must then TappH d tltllT giiage of this contract, and, if it aDnearrfW / *"" tendency were to unr asonaWy 31^'^^ ' T '""^ be declared ilWal «,77„ ^ restrict competition, it must ^'"lea Illegal. /Mlon v. Barnard, 21 Wall 4Sn 4fc««y, 3 Mete. (Mass.) 384 389 ' '^'^'^'^'•' ■»•• declaration that the^aL';!^ ^ s'^:^^^^^^^^^ f? '^ » tection by establishing and nJnS """*""' P"^ rules, and regulations b^h nrr? '•"^^Mable rates, declares that fubstrtal^l^^.ffl^^ *"'' '°'''" 'Article 1 or more members tS^p^'/'^^^^^^^^^ between two the Mississippi and UiX^ I ^"'**^ "^^^"^ '''^tween shall be governed by th ^o iaT T- '''' ^'"''^^^ ^^ cle 2 that the assocfation sh«l ^* '' P''"^''^^'^ by arti- mous vote; that theJe sha f h T ' *''''''""''" ^^ »"«ni- the associa'tion, i^whifhl Lt Z'^ 1^ !?' '"*^''"^- <>' by some responsible officer a,.fj.l , f ''^ represented questions to\ consXTd tW ''"^ '" "'* ^'^""''^^y °" «» pointed to establSi r«t! ' , ** *«'"n>'ttee shall be ap- traffic, and that tht S'h .' ""'* '*«"'"'«'- ^^ the road company may Jvf fiv.H ''" '"*^ ''^''''' '^^' «">■ rail- -onthly meeW o? Lv 'r T^" """" P™"* *« ""J change of r„les,^3nd eight E ."'"*=*'"" °* '«**« ""• Colorado or Utih • tCtiL^ t** "' ^ ^^^^ ^affic of shall be considered a^ ^TT"" '^' '^•^"^*'^» ^' change 179] the next mo thl^ J l ""''" ^^ '^^ association S bound by the dTcisW ofTheT ' .''" """'^" ^'^''" «- cision of the association " unless then and ^^^ ^ FEDEBAL REPORTER, 79. Opinion of the Court there the i>artieH shaJl give the association definite written notice that ,n ten days thereafter they shall make such modi- fication notwithstanding the vote of the association;" that any member may without notice, at its peril, make anv rate, rule or regulation necessary to meet the competition of out- side lin..s. subject to a liability to pay a penalty of $100 if the association decides by a two-thirds vote that the rate, rule, or regulation was not necessary for that purpose- that all ar^ngements with connecting lines for the E;. oj through rates relating to traffic covered bv the ag.-ecment shall Ix. made by authority of the as.sociation. aiuHha tJe chairman of the association shall punish violations of the S'r*'!! V"*^ "ot --^^eeding $100 in any case. Article 3 makes the chairman the executive officer of the association requires him to publish and furnish to the members of the association the rates, rules, and i-egulations established, and all changes in them, and requires him to enforce the provi- sions of the c-ontract. Article 4 prohibits under-billing or billing at a wrong classification. Articles 5 and 6 provide for the appointment of the necessary employes and the pavment of the nm-ssary expenses of the association. Article 7 pro- vides for arbitration in case the managers of the parties to t ITT/ f '" ^f^ "P*'" ""-^ •»"«''*•"" rising under LTi 8 P™vides that any member may withdraw trom the association on ?0 days' notice. It is obvious at a glance that this agreement is not affected by any of the vices of an ordinary p,s In the character of Its roadbed, quality of its equipn.ents. length of route, con- venience of Its terminal facilities, and i„ the efficiency of its management, for all of the... considerations will necessarily have a marked niflnence upon the amount of its patronage In other of its feature., also, the contract is not subj^tto UNITED .STATES V. TRANS-MTSSOURI FREIGHT ASSN. 215 Opinion of the Court. critici.sm In these days, when persons engaged in minv . other callings and avocations are in the habif S m^ti^H r e'ndlv ' "l T^'^'T' ^^ ^^e purpose of cultivating 1^^ fiiendly relations and establishing regulations conducive t^ the general welfare of the trade, it is difficult to sT m J^ what just pounds representatives of railway conlo^e^^e^; be denied the right of forming associations" for XpLpl^ of friendly conference and to formulate rules and Sf tions to govern railway traffic. The fact that the buXt of railway companies is irretrievably interwoven tha t^y niterchange cai-s and traffic, that they act as agems fo each other m the delivery and receipt of freight [Sofand h ,>" ng and collecting freight charges, and that coiLodtli ceived for transportation generally pass through the hands of several earners, renders it of vital imijorlaiK^ to S S" tldtT ™>rrV^^"'''*'°"^ .overnii'ig ran,;: iramc sliould be framed by those who have a practical «; quaintaiK-e with the subject, and that thev slo iddT pJI' niulgated and faithfully observed. The' adv abiHty S establishing such rules and regulations in the mor.b.^^ if dicated, particularly for the uniform classificat"o„ of f^ilh " has been frequently pointed out in the reports of theT^'^ ^ t frorm,ir"'"r- '''''''■ '"^^ •--«'« «-'- "* form tv in .1, . "1 '" "' ""' reg"l«tions. and from uni- lormity in the classificat on of freight s^Pm tn .. i that we need not stop to enumeratXm " " "''~ \U are of the opinion, therefore, that the stipulations of resentatives of the various members of the association ,nH he appointment of a committee to formulate"! Jj;,^, ned oui, wiiVtK r^X/Si^;;.^^^^^^^^^ 7- obvious, we think thaf fi. ^- | ' "^ interests, it is also written „oti«, of a ^otV Id t " '""''""^ ^^^ ^»-^«' and of itself render ?r f '^"''*'"" '" ^''^^^ does not. in that a contract Jot J T ''' ""'''"*"'• ^' '« ^^^ain II ^^^ 58 FEDERAL REPORTER, 80. Opinion of the Court. prevent competitors from resorting to secret, unfair and mnous methods of warfare, to make competi'tion f 5 a^d r ; ^r*"' ^PP*'^ *« """^^^ th^ "ction tJ suU the commg changes. There is no purpose of the provision tf ^otttt^'"^ that dictated it, th'at Luld not b^TS; petition in rates, and is therefore unlawful. That it does trCr ^^T^ *^ '^'^ competition in that respect w^ not be demed; but that the restraint imposed is slight tha there IS abundant room within the terms of the aS^me^t for the play of all the healthy forces of competition^TiSZt to":;" rre,';aS;::anXrS; szf " ^" V"^'" ^"^ .K 4. ^"«".v maniieht. it is not reasonable to supoose that any member of the association which, by virtue of iS sanation, can really afford to transport freight or passe™ between any ,w,. competitive points for a fubsta.U alTy k^ Ztat'thlf m-*'"' "'^ •" ""^^^ *« ^«-g« tbe ad vantage that its situation gives it, even under the operation o2' ti"ofrr " '^ ""'''^ """^ P'^^"'"^ »'-t under Z optiation of the agreement, as under the influence of free competition, the rates between competitive pointT Jill fe J«gely, If not entirely, based upon the rate which the oa^ having the shortest line and best facilities esteems fair Tnd reasonable compensation. [811 It will be observed that under the terms of the a^ree- governed by a rate fi.xed by a vote of the majoritv for a Zf^aZt nS ^rn^**" *^ """^^y --«i -^ succeeding its notification of a proposed change in rat^- an,9 for that reason the limitation impLd by thf cont™^;;:' ^t^^stsifitr^^^iUt^rtf""" " ''""''r^ » 111 i» ver> siignt, and the power reposod in th« ^lation IS correspondingly small. We fail to see L« fore that the natural or probable effect of this contr ct Si he to sensibly raise either fi-eight or passenger rates above •he level which they would attain under the influence 15 1 UNITED STATES V. TEAN8-MISS0UBI FKEIGHT ASSN. 217 Opinion of the Court. what is termed " unrestricted competition." On the other hand. It seems highly probable that the contract in t^^n will prevent sudden and violent fluctuations in freTght^r mitres r\? '"^'"^^^ -^^»^''^-- of3r:™m: munities, and that this was one of the main reasons which suaded that it will have a sensible tendency to inducVa more uniform system of classification throughout flT ! stealth'y, -ret^nTtfiitU^TwSar? nd t""T he strife for patronage among the meZ^of te asTi^^ ri:^nie':;rt e'ZetrrittJtf '^t -- ^^^^^ act and an intellig^t'pu JfcToHcV "'^"^'^^ — Ar^ . the situation of the parties theret/, does not impose such unreasonable restraints nn .^ ' as will warrant us in holding that it Is onllf ^h <=»'°P«t»tion or conspiracies in restraint of radeaJ 1 ""'"'*'' 'or ,b. b.;J::;z'^srprtT" -^" ployes. It has hppn «n^ • ^,^ oncers and em- "P- disputed ^tont rbS/'bftr'*' ''' "^'"•-^^ consideration. So far as ZTu f ^ ^^^ *'**"*'^*^t to its each member of the 1„ • ! ^^^'"'^ *'"«"» t^« """tract, in its territi ^tl^ .7^^^^^^^ ^^"^ -"^ othe'r • to divert from the l-itt^r ^''^^^^^ the association or not. trade. There aifp^^v.^rt fhf'" ^ ''t' ^" P°^«'"*" 218 58 FEDERAL REPORTER, 81. Opiutou »f the Court. peril ; but these provisions were necessary for the prot«;tion of members of the association against the'attacks of nonmem- 7ur u Vu! ""* P'"«"«'on« unreasonably low rates es- tablished by the latter would draw away the'busi- [82] ness of the members, and deprive them of the opportunity to compete on equal terms. The.>* provisions give no company »nv higher right or greater power than it had before the contract was made, but simply reserved to each the privilege ^vI^ni'T.^r "'■•^""' '■'?''* '" "'"'^ com,3e,ition withoS giving the 15 days notice in case of a warfare upon it bv a nonmember. i " ■ " u\ A monopoly of trade embraces two essential dements: rlL I ""'"'f «» °f «n «^dusive right to. or the exclusive Z^L.' k! *"•.*'"' """^ (^> ^^' «-^<'l"'^>o" of »" others tract indicating any purpose or attempt to obtain such a ^ZT^ ?** ^"' transportation systems of the Great Northern Railway Company, the Northern Pacific Railroad ?e3p''«^?"r'''T/''"^'= K*ilroad Company, and the Texas Pacific Railroad Company were operated in the region subject to the regulation of this association, but none of these companies were members of it; and,*ven if they had been, there would still have been no evidence of any attenmt to monopolize trade here, because each member is left to compete witib every other for its share of the traffic. In re Greene, 52 Fed. Rep. 104, 116. The position that these railroad companies have .so far disabled themselves from the performance of their public duties by the execution of this contract as to give ground for the avoidance of the contract, and for a forfeifure of their franchises, cannot be successfully maintained. It is well settled upon principle and authority that, where a cor- Ci 1^1 Lt/**"*™'* '°*^^^ 7 ^bstantially disables itself from the performance of the duties to the public imposed upon It by the acceptance of its charter, the contract is void and Its franchise may be forfeited. The reasons for this rule, and some of the limitations of it. were stated by this court in i7niW Pac. Ry. Co. v. Chicago, R. I. & />. Ry Co 51 Fed. Rep. 309, 317-321, 2 C. C. A. 174, 230-235; and it is unneces.sary to repeat them here. It goes without saying ! Iltttki 1*. ' -^-.TED ST.TKS .. XRAKS-MlHSOtTR, PRBrGHT ASS^. 219 Opinion of the Court '^p^iZ^:^^ ^-^ a .r^ration subiL^'f «cXn r^rrs'olt '^'^r^^ "''"" ^'^^ empower him or them tn « *^ *^'^''* "P*" i*"^ ^^^. theSifor40da;::intd.^ S^cSyte t^ "''^"^''^" the rates andr„CgS"r cTsSta^'l °"^"^"^ ^^'^ on rates and rules of f^ffi. ? ^^^^""^ committee mate knowledgfof thfnlr:7tr;' ""' "'*"" '"«" character and quantitL !^f t^ T^' """^ »* '^e through the dita i^rtions tf T^^'f '""^'^^^'^ by these railroads anH „k L ^^^^ ""^ traversed of various SiL^tr ""^^ experience in the effect the busi"nrs hTcX^nir fitth'r °' ^ ''"""^ -^ consider and wisely eSt .^^ '^^" *« carefully • throughout this Mo^ ?\ ^"'* ""•* '^^^"'•ble rat^ acting independeXS;,. ?"* " committee each company the .me men to eilbStt^^XXTrT '1%^''''°^"* Moreover, the power deWateH t^ tv, mittee and chairniaii. is s^ S Lh ^^'/^^'^t'O"' its corn- in time that it is h Jrd l ^hv of" " "' '"'^ ^° "^'"'"'^ the ground for the avoidanT f """' ««"«ideration as of aSranchise. TheTte, \T''''' ""'^ '^' ^^'-^^ture "ally cho.sea to e talE f "*!** *° ^^^ '^""""'"ee origi- 'imitation upon ^30^1 . ™'''/"^ "''•^'^ "-^Pi"^ bv association .. 'the xmtr^yth" "' ^^^^drawal fn>,„ the "•edifications and chal' in t\'"'"r'"'''" '*'*'^ ^"^ P^e^ent ceases after 15 days" m, iL 1/ "'''' ""'' '•"'"^ established "modifications and chants Tnt..*"! '"*'"*'"" *« ""^e the true that there t.Z^i^^f'T'''''^ ''' «^"«"- " i« agreement that regul r mSnii !, """"^ "'''''''^ «* *»»« held, "unless notic^ shallTgife„1;i~*-" ^» ^e business to be transacted does J? ■ chairman that the hers together," but tie remark "«t -a-ant calling the mem- remark of the counsel for the govern- I ! 220 58 FEDERAL KEPORTEB, 83. Shiras, J., diggentiog. ment that this gives the chairman power to prevent the ti^ tnnn?t ^ ^ ^ t' P^^^^^^ing a meeting of the associa- Sn J ? ' ' *'°"'P""y S'^«^ notice of a proposed change of any importance, the meeting shall be held ^h a not.ce presents business to be transac^d that dL warta^ calling the members together If nnrler .,,1 ^f ™nt Si tr- ^^^^ "°^^- ^"* s^^trsth'^urr s avoiivioft; it^a'r '^ "' "*"^ ^^ "" ^"""*' ^- - The result is that neither this contract nor the association formal u„d«. at can be held to be obnoxious to the p^^W laSLr" ^''* "*^ ^" ^^" *»* *^« *««*« "d'nitted by the Irfeadings m this suit, and in the absence of other evidenc! of their consequences and effect evidence Many of the considerations to which we have referred «rp riT r.T T" "r"*"* "' ^'^'^ question .;::;r:r no" the anti-tnist act applies to or in anv Avav governs transnor ^«1^^T * """""eroe which consists solely of the transportation of persons and property, in view of the virx! substantial regulation of this part of imme'iplvtd J bT the interstate commerce act. The views we hJr^„Z^ render it unnecessary to determine this quesdon and'^ ground that, if the anti-trust act applies to and aZ.Zl rn:j:r^„:t^riaron"oi^:^^'"" ^^- ^" ^-«- The decree below is affirmed, without costs. Thayer, District Judge, concurs. [84] Shiras, District Judge, (dissenting.) I sm unable to concur in the conclusion reached hr fh^ majority of the court in this cusp «„<^ reacned by the reasons for such nonl^i"'"' ''""^ "^ '*"** '''' I m* vmr.r> states .. trans-m.sso™ .rhioht assk. 221 All:' •» *# A Shlras, J., diasenting. Assuming that the anti-trust act of July 2 1890 ,•« r cable to mterstate railroad companies anXV ' ^P^*'" acted by them, it ^ms to me'Srcfear thatT" '?'^ entered into by the railw»^ .„ • , * *® contract Missouri Freight AsSL^^"''' ^"™^°^ '^^ Trans- statute, in that U dtpTv : Xe " bl Tlr^ '"" «* *•»« competition between "associatd •? ' '^"'^* *»* *^^ thereby subjects the commerS If th. '^ """P^"'*^' ^'"^ these lines of railway to thf,^ Vv^ "^^""^ ^"''"^'"•y *« of paying incr^ XtX^X'^f' '' Tl'''' ^^^^'^'^^ over the same. transportation of freight tracts affectfng th^^usi;^, triSl tpri vl^ ? ^^ '=''"■ corporations, when the same is e^ZZ^J V ''*'^°' **"' and only indirectly affectTthe S! '. 1 ^ ^T'*^ "**"^' out in the opinion of the court^l T ' "^^ '^ P"'"*^^ tricity in connection with tSf'*' "^,°* ^*«'*'" «"d elec- business of the world Ss so ' ?m *''" ""** commercial for commercial intilul thT ^"'T"'"'* *^" **<="'««« ago would have binTn f H ''"''*''''^*' '"^'<='^ ^ century trade in its Z^oSitio^wTulTT"'''^^ '•"*"<=*'^'^ "P"^ «sult, and hence wouldTotTu tS^ ^'''^'''^ '^"^ ^'•'"^ the principle which del" unla^Sall ; T "^t™"- «' nations which work an ,ml!= ui <=ontracts or combi- and commerce. TL^rbcTr^frf"''*'^'^ "P*"^ ^^d* W at the common Ce ^^ iTr^Jard tT "^"^ ^" prises which deal only with mat^rTf* • "''"^'' ^^t^''- only incidentally affect Thl. * P"''^*^ '""^^'^^r and day a distinction JtVc^^ZTS '' ''"'^'- ^* "" ^^7 the rules applicable rbSVui^or" ^7 '^^'^"^ nature and those connected 4hmatLd ^T'^ P"^''*^ the community at larffe- as forLf . "^^'^ affecting n^odities forming tl^l^^cS^L:^^^' '^J'^'!'^ '^ -- nations tending to create « r^ , ■ ^"tracts or combi- ^ere condemned as co^?«rt ? ff^ '° ^''^ ''*««'• "Nicies facts affecting other SSft'^'f P°"^^' "'»^" ^^^ <=on- and the same yndpk holds fT^.r'"' ^'^^ '" ^ ^^«<^'- other distinction w£h? now fi V^' P"^^"* *'>»«• ^- wnich IS now firmly established and en- 2*>9 58 FEDERAL REPORTEB, 84. SIifni8, J., (liHMeiitJng An individuafor a'^.S: C^S '"^^'^^' *'^«^«*«- private enterprise may lawfSri. T^"^"^ '" " P"'*^^ lUegal ,f the business was of a public natlre^nr. """^ ration was created for the nnr^ * ' ^ *^^ '"'"'^^ Thus in oms V. 6^«, I, So u TSel ^T^'"^ *"-«- the supreme court, speaking bv M; rhiS^T ^.- ^t' '^*' declared tiiat— ^ • *""'®' Justice Fuller, ^pt a-flSSie^net^'ir'-llIf n^t^iV'' ".-'»- <>' « Pub"c nature narj' cwporation eneaeed n fhi , ^ business like that of an orJli Jnstlj urged that those nilJL whiro, i ' .k / H^n^e- while it is public policy should notT^^H»Hr HI* ^^.^^ " ^^''^» ^«°traot is against ^ W^T^ :^J[ ^-«traet!^(^^^^^^^^^^ ^^^ *« interferTw^h *^-v) yet in the in^ton<^^ ;t.<» y^^iyini/ L/O. v. Sampsoth L R iq tj^« «m.ml.I.v oannot l,e rlXainil to 'r^' "'. ''""'' ''••aracter thai H p^" dice to the ,,„hll,. inwi^t l,nliTJ l?'*^"* whatever without nrelT to,et.s i„,p.«,-„g „,,„ r^rrai,rh"owerer"nrlf ",''•■■'" '"• ™''ta'" ^" tlon of puhllc lOTlifv ti.1u\..,k- \. .' '"'a'- lipcause in contraven authorities cited In West iw ^*^'t " "'"*^'' considered and the Hon.. anions tho.so e„gag^^„''bul>e " '"^ P>oi>o«ition that oombina^ quas. public character, wl^b" re m'niw?""'*^*^'^ ""'" a public or 'nterest, cannot be upheld." manifestly prejudicial to the public In West Virginia Transp. Vo y Oh:^ PS »• , . 22 W. Va. 600, it is said ./ ^'^^ ^'^"' ^"''^ P'Pe Lirw Co., ca^'Je*'';^tr^n''Jtol°'e^?f!?Th:?"='* '""" '^^ P«™"ar character public interest, then the c^J^"*!^,",^*?!*'' ""''.''"t Prejudice "rSS contract imposing any rrah-alnt hi ^ compelled to hold void anv business, provided. 7f co^ ft'h^r''*'" P""«'' o" this peculiar business thus atteijpte^to b4 res^^in^'^f. ^'^'''''y *»"« ^^^ S ar any restraint upon It, however mSi 1^.,"* k^ ""<''' * character that "8 prejudicial to the public InteS"' ' ^ ™«"*'^ ^^ t^e court In Chicago Gaslight dk Cohp On ^ j> 7 , ^ , ^«>*. 6V, 121 III. 53?, 13 N E R^ le^li''''^*,'''"]''^^' '^ . ' •'"• ^P- 169. It IS declared that— not Sl^'aJIS&nripi^^^^-ctB in partial restraint of trade are because they were X^taTZ^Z^^^^f «PP«"ant and appelte^ that^whlch was a maKf '^ubV-^cer {^i ^,^^£1^*1 It is not necessary to extend the citation of authorities J^itiras, J., dissenting upon this general proDomtinn k ^ •. • between private individuds or clrnl ? ' '" ""'^ P'"-*i«''«r nary business avocation «„" '.r' '" "'^"^•^'^ '" "''di- m the performance of a i,„h i <'<»'l'oration.s engaged f't of building and ; '':7; f^-'-'tal dut,^ iS form of a railway line ^ ''"'''"' '^'^h^Xv in the From tl,e earliest day.s the dutv of . ■ taming the p,,,,,,-, ,^,l „, { '2^^^^'''''^^ "'«' '"ain- one .„e,„„I.„t ,.„„„ .^e gov^im t t^*^" '''''^''■^ «« ;Struct,on „f „ raihvav nmninj , ° '*'""'*^ ^be con- 'n^ividuals, the right "of "^.T'' "« P'-°Perty of many ■ exercise, and thus^the cha";":"!??""^""-^* "^ '•''"^'^ ^^J pr^s^d upon it both by l^atn of tl. ^ '' '"**'"P"«« *« i™- to subserve and by reaLf.^ "he In ''''"'"''^ '' '' '"^^nded ^^sed in its creation and mainLT ""'T"''" P"""^'- ^^er- tions created for the purpo.4 "f i "d "" ^^ ''''• ™'''"''"- h>ghways in the form of iXads "^ '"/ "P''''''*'"^ P''Wic not prnate. corporations, bJ-lX ,h ' ""^ 'T'^''^ P"Wic. purpose of engaging i„ ti . T ^^^^ "'•« formed for the operating „ b.^.rw';? Vl^^l^ "" T-"'^'^^^^^^ ^^^ because they are authorised toTalf J^ ^"^^^ "* '"'•««• an^J nienta right of eminent donl , ' •'kT''''''* '^' g«-«™- lawfully conferred upon a S"' * "«^''*. '''»'* cannot be mze the dLstinction existing ^t '!„ ^''' *"'''"•« *« recog- [86 J carried on by indiviH„»i " P^^'^te enterprises P"blic duties perftJed tJ" :rtr"*" -r,K>rationl Z Porations, i„ .„^ judgment Si /.f"'^" °^ P"''"« «or- tbe conclusion announced in fte*''" '^"•""^ ■» "'achin.r As applied to private asl «»« /"ajor.ty opinion. undoubtedly sustain tSprZSrV'^""^^™ -*-ties t IS not the existence of^Se r^trl '^''i ^''^ '^"'^' " that the reasonableness of that restn *h '?. *** eompetition, but vaMity of contracts that Zf ""'*** >« tbe test of the t^de; » but that, in mytd^l:':""^^ "> ^ « restraint S 11 . 58 FEDERAL REPORTER, 86. Shims, J., 4is»entiBg. public in connection therewith. They may limit or enlarge^ Ltinue or discontinue the business, as they please, and may charge exorbitant prices or the contrary. In these part.cu- Lrs Sey owe no special duty to the public, for they are nc^ exercising any sovereign or public powers >« carrymg on such private enterprises, nor a,^ they charged ^ * the per^ formance of a public duty. Hence they are at hbeity to enter into contracts with other private parties .engaged in like pursuits which may tend to regulate or restrict the busi- ness carried on by them, subject, however to the ™le that restrictions unreasonably affecting the f^^om^f trade and commerce cannot be sustained, because thereby the publ^ interests are affected. Touching con racts between pnvate mrties in regard to pursuits essentially private in their na- C the test^of validity we thus find to be the -toal effec ther^^of on the public welfare. In regard to such private enterprises the public has no voice in the management thereof, nor anv right of dictating what shall or shall not be done Jv the'owners thereof, nor have the latter become bomid to c;rry on the business in the interest or for the benefit of the pubUc primarily. The contrary is true ^»th regard to pubhc Lporations, clothed with the power to *« fl Pf « f "*' J and engaged in enterprises the purpose of which so dis- charge a governmental duty, and which require in their per formTnce the exercise of the sovereign right of eminent ^"such* public corporations owe primarily a duty to the community, and the relations existing between them and the public are in many Particulars radicaUy different from those J^rtaining to private corporations Neither e^ «"^«d argu- Lnt nor the citation of authorities is ^ "^f *« /"'^^J^* the business of railway transportation is one of » Puhli" character, and which reaches and affects the businej intcr- '^^iiU entire community. When a highway m the form of a railroad is constructed and put in operation, all parties Kving in the regions adjacent thereto are dependent upon the Sad for thi carrying on of all business which mvov^ the transportation of persons or f^^^^^'^^^Z therewith. The farmer is compelled to use the r^lway for the transportation of the products of his farm to market UNITED STATES V. TKANS-MISSOURI FRKIGHT ASSN. 225 Shiras, J., dissenting. 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 [87] in con- nection with articles of prime necessity, like food or fuel, or the other articles which are produced or dealt in by the peo- ple at large, becomes of necessity wholly dependent upon the facilities for transportation furnished by the given rail- way. As to the majority of the community living along its line, each railway company has a monopoly of the business demanding 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 wqrkshop, and manu- factory, 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 carried on in our midst which is so intimately connected with the public as that conducted by the railways of the country. Certainly, if it be true, as held in Gibbs v. Ga^ Co., supra, that the supplying of gas for illuminating purposes is a business of a public nature, because it supplies a ])ublic necessity, and that it is of such a character that contracts between companies engaged therein, looking to a regulating of competition, cannot be sustained because inimical to the public welfare, then it must also be true that the furnishing facilities for the transportation of the products of the coun- try by means of railways is likewise a public business, and one of such character that contracts or combinations be- tween the corporations engaged therein, ihtcnded to limit the effect of free competition upon the rates charged the public, must be held to be prejudicial to the public interests, and there- fore to be invalid. It is said in the opinion of the court that— tfm,]^ %''"'*,*'"'* " ^^^ '""S '^° "ett'e*! «>«* contracts or comblna- to tL niJfni.T''^ "'; '^^i"*''"" '" ''"'P'^ ^-""""Odities of prime neoess^S' nr!^ S .<; " ''f*T* "'■ '"«»0P»"=^e tbeir supply or enhance their dSrsT fi^'J f"''*' «'„ combinations between such produc^ers or nnnir, / ^'^ w*"^ P™"'^ '" Certain fixed proportions and pooliui; me^^Mttrllinr^'r^r' ''^'^^■^" «>'"l««ng comi^on carrie W are Illegal restraints of trade, and void." 11808 — VOL 1 — OC SI 15 -•J' 226 38 FEDERAL REPORTER, 87. r •! Sliiras, J., dissent iiig. Are not railway companies engaged in the transportation of articles of prime necessity to the people? Do they not handle the food products of the country, the fuel, and all the other necessaries of life ? Do not the rates charged for the transportation of the^e articles have as much to do with determining the prices paid by the connnnnity as the rates charged by those engaged in buying and selling the same upon the open market ? If combinations among the dealers in such articles to avoid competition and enhance the cost to the consumer are illegal and void, why are not combina- tions among conmion carriers engaged in the transporta- tion of the same articles, tending to enhance the cost to the consumer by avoiding the effect of competition upon the rates of transportation, equally void ? If I correctly understand the opinion of the majority, it is therein admitted that it is the settled law that contracts or combinations between producers or dealers in staple com- modities of prime neces- [88] sity to the people, tending to monopolize the supply or enhance the price, are contrary to public policy and therefore void; and yet it is maintained that public corporations like railway companies may com- bine to hx the rates to be charged for the transportation of the like conmiodities, which of necessity affects the cost to the consumer, as well as the value to the producer, and that contracts thus arbitrarily establishing the rates to be charged, and avoiding the effect of competition thereon, cannot be held to be invalid, unless it be clearly shown that the rates thus fixed. are unreasonable. It seems to me the two propo- sitions are clearly at variance. The right to freely contract and combine possessed by private parties engaged in private pursuits is limited and denied when they come to deal with staple conmiodities, be- cause the whole community is interested in these articles of prime necessity, and any contract affecting them affects the public; and clearly public corporations are under a more stringent rule in this particular. Unlike private parties engaged in private pursuits, which only incidentally, if at all, affect the public welfare, corpora- tions created for the purpose of constructing and operating the modern form of public highways owe primarily a duty to UNITED STATES t'. TKANS-MtoaorTor „ t- i«AJNh-MrsSOURI FREIGHT ASSN. 227 SUiras, J., dissenting. the public. They are created to subserve a nnhl.V to wit, to furnisli the mean<. fnr 7 7 ' P'Tpose, people and property t Z^^t^^^^^^^^^^ "^ the stant obligation to h^p ih^\ ' ^ ^^^ "^^^^^ ^^^- powers have been derived. ^^^ The right to demand transportation for nnp- ..i* performance thereof the nnhlin La- "^ l'™?*'' proper perfonnan" P"-^- for the priman. pLose of ft 7^'^'T' '""^ ""* ^^^eated este, no; do th^'^aTre tL nS""^ ^"''"^ ^^^^ '"^^^- Conducting priLrerertirfr'"'' "' " ^""'^ ^'"*y- no presumption that S"et *-n ^ ffT,,^'"' J''^^^ *« fare, and hence their fridom „f . ! *''" P""'*= ^«1- to be limited or den ed unt ™ ? T"^'""''^ ""'* «*=t'°n ^^ "«» aenied, unless it clearly appears that the in- 228 58 FEDERAL REPORTER, 89. Slilras, J., fllsseiiting. terests of the community will be injiiriouslv affected by the action proposed to be taken. On the other hand, in the case of public corporations engaged in carrying on a public enterprise, it is apparent that every course of action in- tended to affect the business transacted bv the corporation must of necessity affect the public interests. A railway corporation engaged in the transportation of the persons and proi^erty of the community is always carry- ing on a public business, which at all times directlv affects the public welfare. All contracts or combinations entered into between railway corporations, intended to regulate the rates to be charged the public for the service rendered, must of necessity affect the public interests. By reason of this marked distinction existing between enterprises inherently public in their character and those of a private nature, and further by reason of the difference between private persons and cor- porations engaged in private pursuits, who owe no direct or primarj^ duty to the public, and public coqjorations cre- ated for the express purpose of carrying on public enter- prises, and which, in consideration of the public powers exercised in their behalf, are under obligation to carry on the work intrusted to their management primarily in the interest and for the benefit of the conmiunity, it seems clear to me that the same test is not applicable to both classes of business and corporations in determining the validity of contracts and combinations entered into by those engaged therein. In the case of railway companies engaged in the public business of transporting persons and proj>ertv from state to state over the highways of the country, it is* in my judg- ment, clearly contrary to the public welfare, and therefore illegal, for these public corporations to enter into contracts and combinations intended to limit or nullify the effect of free and unrestrained competition upon the rates to be charged the public for the services rendered in the trans- portation of persons or property over the public highway. So far as the national goverament has dealt with this ques- tion, it has as yet not undertaken to declare by statute what rates shall be charged by the railway companies, nor has it established a fixed maximum or minimum limit. In this I^XIXED STATES r. TKAXS-MISSOCKI FHEIGHX ASSN. 229 Shiras, J., dissenting. Hence itTtS a i iSot'of 1 "'''" "^"'"^'"^ '^-<1- striven to secure tl e !^, 7 ? *^«/«"n^i-y have so eagerly has not felt the need of JuZ aceei Z ri'rr""^ '"^^ portation, in order fhat it ""S access to rival lines of trans- ition in 'redu hi TrST^T "" '""^"^^ "' ^'''^■ railway companies 1/.^ Passenger tariffs of the or taxation eCSd ^U " "•"'""'"ity has by donations of a ^coi dffe of r ilS T"^ ""'""^ '^^ construction io.vi«g the benetitrlf tStS ; '^ r:;;eTt: th:^^- t way coiporatinn^ fr. «^ i • -' ^^ ^P^^^ to the two rail- f 90] esta'blS'r a,?ff Jitr^S'"^./"' ""' ^'""^^'^ liberty to denart ft-l, I , "''"'''''" companv is at thereby deprS of i^ n '' f '"" *'""* '^'' connnunity is theprotectiona^Ltl^r 'r*^' 's ab,„,„t,,y ^,,^j^,J^^ and unrestrained 0^1^?', T' ^^'?^' '' ^^'''^'^ ^y free in the transpo^llrr inTss'^^r ZZ'ZT ^"^"^^ tract or combination which is intenr^l 1 7 ? '■ ^ ''"'^ ''''"■ in this particular is in m c,l^l ^k , r '^""^ *^"™''"*'*'"'> tlierefore illegal. ^^^ P"''''^ ^■«"'-"-^- and is In the opinion of the majority of the court \t ; substance, that it is lawf.il f„ 1 * "* '"'««'• »n upon competition and that V T ' 'T^"'"*''' '••'^^"'"'i"" case is whether Uierestrcti \ 'T '^^ 'l""^**"" i" «ach suits in the impoiion of ""Tf "P*"' con.petition re- ndered. 'STz 2t:::^,t- *- ^'- --« gaged in private nursn /« 1"^^'*^ **» P^vate parties en- It is unreasonable and fho >., i r i pubhc unless endeavoml l„ m.i„l,i„. j„ ,,„ ' „7™, Vi ? ''*" of necessity affect tha or,f; . ^^ charged, must public inteLtt the ra" la?r?f*!- ^ ^^" ">' *»>« the public highway and in tl l **'" l^^^^P^^ation over gnway, and in the absence of legislation afford- S8 FBDKRAL REPORTER, 90. Sbiras, j.. dlmnitlBg: mg other iiieans of ,,rotecJion, the co.nmunitv cannot be deprived of the safeguard secured by free and 'unrestricted conHK>t..,„„ lH.tw.^.n the ditferont lines of railway without placing the welfare of the public in subjection to "the inter- ns or supposed interests of those managing these corpora- tions, which certainly cannot be lawfully done But it may be argued that due protection in this particu- kr IS ..ffor.led by holding that reasonable r«-tri,-tinn upon compo ition as to rates will be sustained, and unrensonable restrictions will U^ held invalid. T a,,proh,.nd that no other meaning can Ik> given to this proposition than that, if the rates estabhs u-d un.ler a given re.<.triotion upon competition are reasonable, then thev will l,c sustained: otherwise not The reasonable rat.-s which the .onnnunity is entitled to enjoy are those which iv nU from fn-e and unreslrained com- petition, and not those which are agreed upon by the railway companies in the absence of competition. In tiie absence of Igislation establishing a standard for reasonable rates and .n the absence of rates fixed by free competition, what prac- ticable entenon is there for determining whether a tariff of rates agreed upon by railway companies is or is not reason- able with reference to the public? If it be the law that rail- way companies may combine together, and by contract agree upon th.- schedule of rates to be charged, and bin.l themselves iinder penalties not to depart from the schedule thus estab- lished, and if the individual citizen can obtain no relief against the exaction of rates thus fixed, unless he can in .Mch instanc-e prove to a court and jury that the rate charged is nnreasonablc. then he is in fact wholly without remedy The great f»l J cost and other evils of litigation of this character uould ordinarily deter the private citizen from the effort to maintain his rights by an appeal to the courts. But if the citizen should as.«ume these burdens, and -hould contest the rightfulness of the charges complained of. he would, under the view advanced in the majority opinion be compelled to establish by competent evidence that the' rate complained of was unreasonable. By what criterion is the question ofthe reasonableness of the 'rate charged to be determined? The article shipped is perhaps a car load or two of live stock or of wheat or other like products. Is the i ®*i'ras, J., dissenting c^^^hf^LT^mpa:: TT "^ ''-^ -'^^^ ** -»V inquiry to embrfcerStrgaCint H"^ ""• '^ '"^^ struction of the road of the «n *^^ "'''* «' *•>« «»«- operating the road Jn the one LJTT^/'^t-^'''"^' '""^ «*■ and character of the businel^ ' 7^ ',"*" ^^"^ *«*^1 amount amounts received tltrefZ ^ tT ^^ '^' ™'''' '^^ "* *he relation exists hetZnZliZ^''^:'^''^^h'^thevadue must be apparent to any o„e h^t '"' .^T"'''*"-^ It is to itined t^r:""'^"^ ''' '"^^ -t*' charged for like services by o Lr So"" tT' ^ "*^^ ^•"-^«'» as the standard of "comoari^n T !' . " ^^^ '"''*«« "^^^Pted of ^- competitioirErrj id^ii^r^*^ ''^ ^'^""* standard rates fixed by a comhinoT 1 *** ''"^'^P* »« a frnown that these rates ar7tT u' ^''' '* ^°"'«' "«>* be standard would be wUhouT ''f '' ""'^ '^^ P'-^Po^d culties that would of netsslt"' " ''''''"^^- 'r''« diffi- in, establishing the i nreasoJ^M ™'=°""i«'-'^d by any citizen charged him are such as to renS **^ " P'"'*^'^"'^'- rate of no value, and hence i is tS' ". T'^^ ""^ ''''' "'«">«d entitled to the protection Vn^ f .'" '"""^ '^'^ ^^i^izen is competition U^T^^^^^'^J^^ '"."^ ^.v absolutely free combination which tend tedUTy!f :.""%• ^""^ '^^'^^<^' or tion thus afforded him is contrj „ ' Tv""'' ''^ '^' ?«•«*««- In the opinion of thi ma "^ *" ^"^^'^ P«"«^ analysis is made of tie vSis t * "''^ *"" '""^ «'"-eful entered into by the defenlanT P'"^''^.'""^ ^i the contract to be derived Lrefrom at Ir^"'?' ''"'' *•»« •^'-'5*. that in many respects the p^v^: "t ' ''' "**' ^-''^ ned out, would operate \Z^T T . ^^'^ contract, if ear- without injury to^^^b b^ L"V'^"'"''''"'" '^' ract, in my j..dgment, lies n the flr.K?"''*^ ^^ '^^ '^i,- ;s to protect the comp n S from the ff/ ''!"'""' P"^P°* tion in reducing the rate! t„ fT ^^^^^ °^ ^^ee competi- tion of freight^tr 5^?H„e^,7"^t''*''•*'^^*'•-«P-ta- contracting corporations. Sabirt^^f .^^I^'"^ ^>' '^'^ ^rtamly the defendants, if they 232 58 FEDERAL REPORTER, 91. ] . Shiras, J., dissenting. considered themselves bound by this agreement, were no longer at liberty to compete with each other in the matter of rates to be charged the public. [921 '^he rates juv to be established jjy a committee, and are to be observed by all the contracting parties, with a lia- bility to a penalty for any breach of the contract. It is clearly evident that the defendants enteretl into this coo- tract in the expectation that thereby a schedule of rates would be fixed which would differ from those which would prevail in the absence of such concerted action. The several companies are no longer left free to fix rates based upon considerations pertaining to their own lines of railway, the cost of operating th? same, and tiie fticilitie. possessed for handling the business If the making and enforcement of this contract would not have the effect of establisliing a schedule of rates other and different from what would obtain in the absence of the contract, wliat in- duced the companies to enter into it ? I can phice no other construction upon this contract than that its main object was to remove the question of rate^ from the field of comj^etition. In my judgment, it is not necessary to enter upon a minute examination of the averments made in the bill and denied or admitted in the answer. The bill charges and the answer admits that the defendant companies entered into the contract in question, and the main issue in controversy is as to the validity of the contract. As I con- strue it, the invalidity thereof is a])parent upon its face, in that it clearly appears that the purpose of the contract was to establish by agreement a schedide of rates which was to bind all the contracting companies, and which each company was bound to enf(»rce as against its patrons; thus depriving the public of the protection residting from free and imre- strained competition between these public corporations. It matters not that the particular rates now enforced under this contract may be wholly reasonable. That is not the <|ues- tion. The point to be decided is whether these public cor- porations, engaged in a public enterprise, have the right to agree that they will cease to compete with each other. Whether these corporations shall or shall not be relieved from the effects of free and fair competition in the carrying i t UNITED STATES U. TRANS-MTSSOURI FREIGHT ASSN. 233 Shiras, J., dissenting. 41 on of the public work they are engaged in is a question to be decided by the people, acting through the proper govern- meiital agency. It is not for the railway companies to decide when they will compete with each other and when they will not. The public welfare demands that they should remain always subject to the operation of this principle of free com- petition, unless they are freed therefrom by legislative action, whereby other safeguards are substituted for that afforded the public by the operation of the principle named. If I correctly apprehend that portion of the majority opinion which deals with the effect of the interstate com- merce act, it is therein argued that this act radically changes the rights of the railway companies and the public in this particular, and that it was intended thereby to free the com- panies from the effects of free competition. With all diie deference to my brethren, I must yet be permitted to say that it seems to me that the opinion always [93] loses sight of the distinction existing at the common law between par- ties following jn-ivate pursuits and public corporations en- gaged in public enterprises. The interstate commerce act did not materially change the rights pertaining to the public. It created certain machinery for the better enforcement and protection of the public in- terests, but the rights to be protected were already in exist- ence, and the statute in this respect is only declaratory of com- mon law principles. Before the enactment of that statute, railway companies were recognized to be public corpora- tier*, chiTrged with the duties and obligations pertaining thereto. As common carriers they were under legal obli- gation to deal with the public, and to afford equal facili- ties to every citizen, and they were only entitled to demand reasonable, and not exorbitant, con.ipensation for the services rendered by them. The purpose of the interstate commerce act was not so much to change the legal rights of the common carriers and of the public as it was to compel a change in the practices of the railway companies, and to enforce com pliance on their part with the duties and obligations which rested upon them under the principles of the common law. The line of argument followed by the majority seems to assume that the main purpose of the interstate commerce "^ 58 FEDBJRAL REPORTER, 93. Shira«, J., flit«Mentiiig. act is to regulate the relationsr between the competing lines of railway and to protect the weaker lines of railway and the capital invested therein from being absorbed by the stronger competitor. That there are evils of this nature of great magnit..de is not to be denied, but the interstate com- meroe »ct was not enacted for their eradication. Ihe j.nnuMy purpose of that act was to deal with the relations exisiing lK.tween the common carriers and the pub- Jic. and to enforce the rights of the latter. E.xperience had shown that railway companies had. in manv instances, favored particular l,«alities „r particular |,arties or par- ticular classes of busiueas at the e.xpen.se of the community at large, an.l the act was, in the language used by the su- preme court in Railwa}, Co. v. GoorMdffr. 14» U. S. (i80, 13 Slip. C t. IJop. <)70. intended " to cut up bv th,. roots the entire system of rebates and discriminations in favor of particular l«.,lities. sp.ecial enterprises, or favored crpora- tions. and to put all shippers on an absolute equality" The uniformity an.l equality of rates sought to be secured by that act are not between the schedules of rates charged by the several companies, but between the charges actually made by each railway company to it.s patrons. The act does not m.u.re the schedule of rates adopted by one company to conform to that of a rival comj.any. What it does deinand of ea<-l, company ,s that, in dealing with its customers, it shall make no unjust di: crimination, but shall, for the like '^rvicc' raTcIo".;' "T^"" 7"'il»r <-inumstancos charge the same rate to all. The act provides that all charges for the trans- portation of poisons or property from state to state shall be reasonable and just, but no standard for ascertaining the act'" " ^"""" """'^ '' '■'""'"""''''' "'■ ""' '^ e.stablished by th.^ ;"'|-/''7*;!'«- 1« Pf«eive the force of the argument that the |«4| adoption of the interstate commerce act worked a radical change in the relations existing between railway companies and the public, and that one effect thereof was to authorize the former to combine together for the purpose of escaping the effect of competition upon the rates to be charged the public for the services rendered. Before the adoption of that act the community was certainly entitled TINITEO STATES V. THAN«-MisS0URI FREIGHT ASSK. 235 Shiras, j., dissentiug. to the protection derived fmm f^^ the linp^ nf .oil """^^^^ ^^^"^ free competition between safetniorr? T].«f ^ vvmcu aeprives the public of thi*^ the public by warfares over r, „ i ' <=»">Panies and that are gained inmaLrr/ u^"' ""^ *^^ aclvantages concert of action ZZ^Z ^\^''''^' *=''"*«'•«»- «n<^ entirely true that, T:f'^:.7irlr''''T- " ™«>' "e policy of public control oy'L;"a'wr:ffi"''TT' '' *"^ devised and put in operation hv i ^, r^*^^' "'''^^"^^ ^'» be by railway cmnpanies ,nd 7 ''^ 'f?'^'"*"'^ enactment where- the evils' ar^ng~nnr!rT*^^'"«^^^^^ rate wars whi^uilirrtl Tk"^*'^ """'"P'*'"*'" «"<* from I fail to perSv^ri: : nra^iutrtnr ' "^"^ in tariff rates, CZ:TLX:^\^T^^^ ^ -^-tions nity of the benefit of IZT'ouin 7"'" "" '^'"'""- rates for the transDort«t;J /Vu •"*"''"'& reasonable Competition, freeTnT. re trtt^/ S^"' "" J^^" r^"'^' governs all the ordin«rv h ' ^''"*"' "''e «hich of life. EvUs as wSTs h fif P"''"'*" ""'' transactions fierce heat of c^mpltft on thTf ' '^'"'* *''*""''*^»'»- I« «>« out the weaker^ Ct 'nslr^" '"""P'^"*"' "'''^ --'> result in wreck and d salr 1. Z^ -^ "^ "'"'^ '''^' against the evils, the laTof e« Z"^ *'' '^'''^'' '^^ trolling element in the businerworii TW%"' '' ^ ^"- restricted competition in the mattir of T . *?' ''"'* """ be productive' of evils do^ no" mH t«t ""**• ^'''"'^''^ '""•'^ that such is the law now goverSwhlt-T'^f '^^ '"'^ be enacted nor system hfZTA^ f "*'^®"'*- ^« ^"^ can affai. that in reTfo^.mrdoe'rnl ^^ "^^ ''' '^"'"- -Its, no matter how beneficial itTgerraCr^yt' 236 58 FEDERAL REPORTER, 94. I Shiras, J., dissenting. There are benefits and there are evils which result from the operation of the law of free competition between railway companies. The time may come when the companies will be relieved from the operation of this law, but they cannot, by combination and agreements among themselves, bring about this change. The fact that the provisions of the interstate commerce act may have changed in many respects the con- duct of the companies in the carrying on of the public busi- es] nese they are engaged in, does not show that it was the intent of congress in the enactment of that statute to clothe railway companies with the right to combine together for the purpose of avoiding the eiffects of competition on the subject of rates. There are three general methods by which these rates may be established. It may be done by direct legislative enact- ment, (whereby either fixed rates or a maximum or mimi- mum limit are enacted by the statute or by provisions for the adoption of rates by a commission,) or the rates may be adopted by the independent action of each company, act- ing under the spur of self-interest, and controlled by the effect of free competition, or the rates may be fixed by means of agreements or combinations between the rival lines of rail- way, wheroby each contracting company is bound to charge the rate thus fixed and agreed upon. Congress has not yet undertaken to establish a standard of rates, either directly or through the action of a commission or the equivalent. Neither, in my judgment, has congress, in enacting the inter- state commerce statute and the amendments thereto, con- ferred upon the railways the right to enter into combina- tions for the purpose of compelling the members to charge the rates fixed by a committee of the association, in whose deliberations the public have no part, and the avowed pur- pose of which is to evade the operations of the law of com- petition, which is as yet the only safeguard upon which the public can rely for the securing of the adoption of reasonable charges upon interstate traffic. I had always supposed that the enactment of the interstate commerce statute was the result of a pojudar demand, which insisted upon relief being given to the community as against the methods pursued by the railway companies which, in some particulars at least, UNITED STATES V. TRANS-MISSOURI FREIGHT ASSN. 237 Shiras, J., dissenting. were deemed to be inimical to the public interests. Looking a the causes which brought about the enactment of this stat that ifis'lVolf^ ''' "'JV* "^^ ''""^''' '^ d- -m ct^ that It IS wholly wrested from its purpose when it is held aa It creates numerous radical and effective cha" ges „ tte pubhc pohcy of the nation touching competition tetwln railroad conipanie. engaged in interstate conCr fTvTZ ; "-' . , *, ''^''tein of discriminations in favor of localitipf ndiyiduals, or classes otbusiness which had co me intoviu!^' he interstate commerce act was intended toItrXefad' railway corporafions In^^ tbTn ^ ^^^^^^^^ '^^ ^^ argument of the majority is that even if ff^j . that under common-law prhiciole. Ilf . T '''"""*** nations between public co:^Z ! /r Ltrte VZ^'t ment of rates would be held to be contrarv to n^H r nevertheless the enactment of the ilrs^^t. ^ P"^"^' revolutionized the law in thi. , '"*®'^^^''*« commerce act way companies to enf^' Particular, and authorized rail- railway compants t^St r'-t '.' *" ""'" "^""^ which, under the pr ncipKf ^b. ""^ «>inbinations illegal, because coStr^Sy to DubHc T"" ^^T' ^"""^'^ ^ of the court is to the effect that '^r ■'^- ^''" "'"^"'"^ law imposes several im^? ! ^^ interstate commerce railwayTmS^ o raT\revT" "^^". ^"^^ "^'^^ "^ making and altering ..? 5 ^^^^ "* *« matter of pressef it^tn^ Tt ZxZfZ ""'' '''^^'y - tween carriers is not at the p^^^^^y^.'^^'P^*'*'"" ^- public welfare, and that other SI a" Tro"'"' r !''' the public good " ^ ™"'^'' essential to 238 58 FEDERAL BEPOBTER, 96. L t f ShIraM. J., flj«sentiiig. «ti" "BiJlowT •" *^;r«- «' ">«ki„g and altering rat*s. But how does that fact tend to show that the act Ss ,yf)l -^ ^'^"^ ""*y P''"^*' restrictions upon the PUW c bn .h'"] ?T."""'P'""*'' ""^ "P°» »he rights of the EitelL t r ' 'k"' """^^ '""y «"»«* laws which are of S^nX « r/"^/"* necessarily .strict the rights "Sin "f r'*™'"^ •'* "'**"*«*« -•"■"-ce act, and the TZ ■! ™'"'""^'r «««ted thereby, it can be held that * jr , " r^ "'^" *•'"' ''*^***»" «* interstate com- merce, so long as the same are reasonable.-which is the do3 .on of the co„rt.-then would it not follow tha the riS h^s created by the interstate commerce act is abrogated! the later «,actment found in the anti-trust act «hich ex fi^f or "'?•%• "* ^""^ ""'"--"^ contric^tmLt tions, or restrictions are illegal, but that ever; contract t^ZmZ''': ''"^' "' *™^ "^ ''*---' or-'conspi™:;' llSr i, *[«f« »■• j^f^erce among the several stites is Illegal? The statute declares that restraint of interstate commerce, all restraints, every restraint of such trade and comme^ brought about by contracts, combiSion't the Ihe statutory declaration in effect is that interstate trade 3lS;Tth? ^ ^"""^/^ fro- -triction. The " UecJaration of the court is, m effect, that railway companies engaged ,„ uiterstate commerce may place restrictions uZ such commerce; that the right so t« do, if not exisirX the common law, is conferml upon railway compa^i^ by he provisions of the interstate commerce act; that such ^ ^nctions cannot be held to be illegal unless it' is shown thTt they are um^nable, and the presmnption is in favor of ltveMr*"f *T """^ "*"^"*"* '«««"ty. I cannot b^ heve that such is the meaning of the inter^ate commerce and ^ «t»-teus^ acte. When the latter act was adopted,^ SJd be the law that, with regard to the classes of b„sine*.s that --n.n SX.XKS .. x„..s-M,sso™r .b.,ohx .ss.. 239 Shims, J., dissenting ne:e^it;?o!:Sac?im' ^^^ ""'^' **" ^ '"^^ « P-^ic ever partial, caimol 2afne7l>r""'^ *'*'"""• ''<'- of public policy. It eJTCt^Zwl ^T"T''"" railway companies engaged in Tn^f., ^.^"r*'""'*^ *'''" merce are carrying on f h.. "'**'?^*« ^""^^^ and com- acter as of ncSty p L^TtTn 1 "1 ' T'^'^ •='"«^- the supreme court to (T of Lh ' ! *'**''"^ ^^ restraint thei^of, however oarti, I " "'*"'* "'"' "« familiar principle thTlf ? ' '' P«»i"««ible- It is a -ference i andt ^^iS^.^:]^ ^ ^-^-d with of their enactment. Thus reading M T'l'"^ "' *''« *'"t« the first section thereof inTntd o'cT "''' '"*' '^ "•** statutory form the nrinrinlo j . ^"^y enunciate in by the -Preme 3 "T£ Sate"'^'"' *^ *" *'*« '»^^- trust acts were passed for the pil^SonTr'"; "'' "'"■ enforcement of the rights nf T u?- ** interests and thereof in the opinion of th/./'^^^'f '^^'^ ^'«^ ^ken rights of the puLc" d i. eXin'T'^' '" ""^'''"^^ '^^ companies. If the law be as slT^- ''w T'"'' "* '"'^'"'y public corporations, engaged in .^ ^^^^''^' *«" ^^^ of constructing and opS," Z^Zlu: ?7""'^ '^"^^ which, of necessity nearlv fhf . P ^ highways, over must be carried, a^ at libfrtw "^- ''^^^ "^ '^' «>»ntry mine in secret condave hel^ combine together and deter- Public for the servirrlnde'^ I ""^^ ''''°*"'* ^o*" the of the schedules thirfixeS bTin if "*"'"''' '^' ""P°^'^i<>« party to the combinadon whicf "" ^"^"^ «^>»«t ^^7 schedule, and the i^Mdu^ttt7 1""' '''"' '""^ '^^ rates thus fixed, unless he rnsatf? "' "" '^""^ '^'^^^ the rate charged is unreaLrbi "^ "' •^"'•' "' ''"-^ '^at in iesSorrslmfiEtr Tr" ''^' '"^^ -*-t but it is said the restraint is slii^t^'J competition in rates, the natural tendency is to I. ?' *"*^ ^^^'^^^'^ lawful. If of rates,and top'Iare^riftrTf "" ^° *^« >»»tter freedom of inte^ta^ trSc wh„^."f ^" '"^''*' "?»» the when the proper boundary 1,7 t "^""*' '^ *° ^^^t^rmine 5,^ndard is^hrlait^„^it^^^^^^^ r '^ ^^"^ The legal con^uence of the positir:;\re l^T tSI 240 58 FEDERAL BEPORTER, »7. Shiras, J., dissenting. railway companies, by combinations between themselves, may fix the schedule of rates to be charged the public, and may bind themselves under penalties not to depart from the rates thus agi-eed upon, and the citizen is bound to pay the tariff thus established, unless he can satisfy a court that the sum charged is unreasonable. It may sound well to say that the courts are open to the citizen, and that they will afford him protection against the exaction of unreasonable rates, but we know that the supposed remedv would only aggravate the original wrong. It is said in the opinion of the court that there is nothing in the contract described in the bill which indicates any purpose or attempt to obtain a monopoly of the trade of the region traversed by the defendant corpora- tions: that the systems of the Great Northern, the Northern Pacific, the Southern Pacific, and Texas Pacific Railway Companies are operated in the region subject to the regula- tions of the defendant association, but thev are not members of it, and therefore the defendant companies cannot monopo- lize the entire traffic of the region. The great [98] majority of the patrons of the several lines of railway represented in the association in question do not live at competitive points. As to each of them the line of railway nearest to them has, of necessity, an absolute monopoly of the carrying trade belong- ing to the business in which they are engaged. Of what ad- vantage to a farmer, a merchant, or a manufacturer doing business at or adjacent to a station upon a given line of rail- way is the fact that 20 or 50 or 500 miles from his place of business there is another railway line? The distance is so great, and the cost of reaching the same is so great, that he is practically debarred from making use of the same, and he has no choice in the matter. Parties doing business at competitive points may have free choice, and as to them it may be true that neither competing line has a monopoly of the business trans- acted at places where competition, being free and unrestricted, may work out its legitimate results, but this is not true of persons engaged in business at noncompetitive points. As to them, the control of the railway company adjacent to them is practically absolute. Of necessity, in such case the railway company has a complete monopoly of the entire transporta- tion traffic of the region in which there is in fact no compet- t'mT.D STATES .. XBAKS-MISSOUBI KKErOHX ASSX. 241 ^'"'■as. J., dissenting. ing line. Against the evil tendpnr.iB= «* *k- tection is afforded to the cSn i? - ' '"^""^°'^' ^"^ restrained competition l^t^e^thl^uT'"''^^ ^^ "°*^ '^- several points ^r localiti The t they in r/"''" '''''' active comnetition n^^ > ,7 ^ ^" ***^* come into secui^d at C n;il ' !T''''' ''''' ^^''""S thus bZ which it mayZ JSi^e ' '1X1:^' T"11 ^^ iiitermediate noncomnetiH™ \f <. ^^^ charged from and the provisions oTtheW T^'' '"^ i^«^onable or not. u greater'^c-harifL a strtP^TK**'' T""'"^ ''' ^^'^^^^^S lar circumstants LVt tvSiyt^"'"'' ""^^^ ^'"^ poitionate relation between hrrats at ^1' ."/''"P'''' ^'^^ competitive points. If, however the H^"^^''''^' ^^^ "on- combine together to fiv f^! T x , ^"^^^ companies may points, tl^uf^^SZlZSe: ^f T''^ '' ^"-"P^""- fares it with the cidfens relS"' Th''"'''""""' ^"" point? By the very necessitLTof hi L Lr^^""^^ from choosing the line of railway he w^ nT^ ^^-T^ compelled to avail himself JZt T T- • P^t'^onize. He is line nearest him. ThTriilwaf th^f '"/"'""••^^'^ ^^ *^« monopoly of the transnoS, ^ tbereiote has the absolute the ciken. It iSrhal^L" fT™"^ *" '""^ ^"-"«^ "f to be charged- andTfTh7 ''^f'^^ '=*'""^' «f *« rates nations wiS the o'h r bes^r^^' '^ '=""*"^^ '^^ -»«- n^gion, may fr^ itseTf from 1^ 7^ T'^''''^ ^" '^^ ^^^ competition, what t lackL . •■*^*"?.''"'»^ -horded by free absolute monopoly of t£ tfaloT?"*l '^ '^'^^''^ ""<* pendent upon ^ gi^* i^^S^^^^^^^ ^e- necessary consequence of ih^ railway^ The direct and defendant comp^fefis to eJte Tnl '"*T' ''''' ^^ '^'^ monopoly in each of the contractL".?"''^''* "° ^'^^'l^^ the business carried over ^h? ^ P*""''^' "''^'" **»»* Pa^t of from that portio^ ofTe ^ir^'^'Z^^'' which'^comes active operation a ^ n^J t " S Tnd "' *'"^ '^ '^*'* '" which are so situated that oL' !•'*•' ^^^"^ *' *« ''^gions absence [99] of ci^c^s SSg^tX* ^ \f ^'^ '""^ like monopoly is created hvthly ^^*^ ^^^^^of' « defendant companies '""* ^^"^ ^°t« ^y the In the matter of rates, competitive points are thn^ ^ 11808-voL 1-00 M 16 ^ ""^^"^ I ' I !| 242 58 FEDERAL REPORTEB, 9!). Shlras, J., dissenting. A« fransDortation business of the locality is sought by t^o the transportanon ^^^^ ^^ property at or more competing Imes. In me p^o- public auction, it '« *^/" J -f *' ^^^ that they will not bid posed P«^l»»^'^: ^^t^^L, proSrty *all be bid off at an ;^d%rt'£':l^o„^St of ;il tl. cc.ntractijg f r' - ^"£nt ;^Lr bT :cL^ loitar t, all fair competition is Pr®^^"^''" /. u„siness of a given the competitors for the transportation b« ot . locality agree that there ^^l^. *". ;^^,^7;i''„^^^ the same them on the subject of rates to be charged does n evil result? In the one case it is 7g5^*".*f/X%,h,e that «f his Dropertv, without paying to him the fair vamej luM ?Xbly be bid in case c-petition was not s^^^^^^^ the agreement between the purchasers. In t^^.*'';*»^7"^. ,, result of free competition, but are the resuii and mutual agreements entei^d into for A e^^^^^^^ of eliminating competition as an ^l^"*;"^ ^J''^^^ i„,3iitift, *T j'are^coCttti : t^t^s^^^t^^ "^^^^ ^- which are compeiiuve -" ^ b K,,cir.p«5Q of the region « «r>*ylA line of railway within his reach, mus is luui Slrr S trl^rtaLroTthe property of the commu- S;«erd^ a lulling influence over the question of the ^IZZ: failure of tiie various ^f^^^^^tZZ, t;nn apon its face the main purpose of the combination, it being UNITED STATES V. TBANS-MISSOUBI FREIGHT ASSN. 243 Sliiras, J., dissenting. therein recited that « the traffic to be included in the Trans- Missouri Freight Association shall be as follows: (1) AU traffic competitive between any two or more members hereof passing between points in the following described territory » etc. Does not this clearly show that the main purpose of the contracting parties is to deal with that traffic which, in the absence of combinations between the railway companies, would be controlled by the results of competition, and to d^ with It in such manner that it will cease to be competitive traffic and become the subject of combinations and a^ rates agreed upon by the comjal ri^rCnr V""* of which the public has no HiiLf TV, ^ estrtblishment "L'r'. 'h""""- "■»"* '5:: .S-: rrs:- state commerce is a riaht wh^^!^i "^!"^ "" '"*«••- which it cannot be de^L ex ept bv"!!: f *'' """''=' "' even, contract or comLadon ttC^hermiblT""' ""' tions which tends fn rnn.^,,^ *i. ' . " ^"®^^ public corpora- from the inS:j:rz^^^^:::]<-ff r "-^ *''«•» public of this right, ofTecSt^^'^rd'^ tTSJiL TJt'^t? commerce to burdens which ar* -a repaint fi. ^*"** imical to the public welfare, is IL^ to " .bHc T.i' '' '"^ m contravention of both th^ langual^and Sf o'i l^' "l'*^ trust act of July 2, 1890. ^ *^^ *''* ""*'■ 1280] UNITED STATES v. PATTERSON ET AL.. (Circuit Oonrt. D. Massachnsett*. Jnne 1, 1893.) 159 Fed., 280.] canoot be reached^ «llctment "luned that a special demn^Twrn aay character; bnt, if it be a- language object to, aTnTr^" ~ ' " ""?* '^"'* "'" *'"' ^P^^'Oc through the indictment for wh^taHTT ""'' *'"' ~"« *» "^^ UNITED STATES V, PATTERSON. Opinion of the Court. 245 2, 1890. — ^An Indictment for commerce in cash registers no-T?* ^"'^ *° monopolize interstate ents by defendants, or aler tS^th; ""'"'"" ""* "'^''^^'''P »f Pat^ on is a lawful one. '"^ commerce proposed to be carried oAME — ^AvebMENTS - It Ic tions supposed to constiti"te"^^,7J" "^^ °"* '" ^"^^^ ^'^ <>Pe™- U is^ufflcient to „. thetn'^^rofTerare ^" '" '"'^ -^'-' OAME.— It is unnecessary to allp^ fi,« • , '^"^^®- defendants conspire to monSi^ r'.'.""* "' ^ <^'°"«'<=« '^"ich Buish between strangling a^^^!!'"^ the statute does not dlstln- venting the birth of ^a ^mmerrXh f" "'" ''^" '^"'' ""<' P«- SAUE._The Indictment n^ZTI ^'^ °°' ^'^'^t- ^Piracy was to grasp T ^1:^: ^^f ''^"^^ of the co.. defendants, or that defendantsTere Vt™ •"'"'^ °' ""« <" «>« for whose benefit they eonspir^ „r ^w '" ***"*" "^ ""« P«rty such party. ^ conspired, oi what were their relations to At Law. Indictment of John H P«tt» conspiracy to monopolize intersta^ fn " '"'' ""'^"^ *«>• tei., in violation of L act of Tufy ^TsT" " "^' "^^■ mku Root and ^. Z>. Allen, for the United States. B. W. Chaplin, for defendants. Putnam, Circuit Judge. is^du^gTeS J cisS-- r-^ -' quashed, and the defendanT '"'*'""''^' ""*' *•»« ^"^ts demurt^'rs to the cott Tust Jn"^ ^''"i 'T' *" «'« ^P^'i"! so-called special [281 1^!*^ ' ""**' *'*'•«'' 7, 1893, a allowed theS '^^J /^'»""«'- ^"s filed, within the time court, and ZrTdurinJtrsa "?'* V""' ""«"*'- »' *" In the opinion han^fi^ same term. May 6. 1893. occurred T ^""'^'^ ^''''' ^'^'^<^^ 28th, the following -r ™- - ^^^^^^^^ the aii^ Again; be"en^o*ss*^« ""m^SSf a^^riS? "^ -""^^ *•"« -arket was t» - remaining counts%-L7ro"''r pCti^TpteS 246 1 1 59 FEDEBAL REPORTER, 281. Opinion of the Court. p 1^^ U^l ^rs'^Sn^'f^'T"'*! *° «"'« <'««e made In V. 8. y. Waddell. hi inlnfliJ^f K P'.P*- ^- ^™® "' '•"« allegations In each count mav t>e insuffldent, but these are only surplusage." ^ Notwithstanding this surplusage, there was sufficient in each of the four counts which the court sustained to render them vahd; and the surplusage is largely of such a charac- ter that It IS entirely disconnected from the essential allega- tions, and may be disregarded at the trial. The pleadin*^ however, are very voluminous, and there may be difficulty in siftuig out the insufficient allegations, especially those touch- ing the means " referred to, from those which are sufficient, and in determining what is thus to be regarded as surplus- age; and, as to this, thei-e may prove to be at the trial differ- ences of opinion between the counsel for the United States, the counsel for defendants, and the court. As the indict- ment runs against many parties, scattered through several states, at remote distances from each other and from the place of trial, and as its subject-matter is complex, and in- volves a great number of transactions, it appeared to the court that the trial, at the best, would be burdensome and ex- pensive, both for the United States and the accused, and that on this account it was important to minimize this by settling in advance, if it could be done, what should be held to be sur- plusage. The court was well aware that what are ordinarily spoken of as special demurrers find their origin in the statutes 27 Eliz. and 4 & 5 Anne, and have been held to be limited to proceedings in the nature of civil suits; but it had in thought that, independently of these special demurrers by statute, there was at common law a special demurrer lyini against surplusage, which reached also indictments and crim- inal informations. Such the court understands to be the statement of the law in Chit. PI. (7th Eng. Ed.) 253 The «)urt had no intention that the questions which had been Mly raised and carefully argued under the general demurrer should again be brought to its attention, and no other inten- tion than that of assisting in simplifying the course of the tnal as above explained. The court is, however, now forced to the conclusion that surplusage in indictments cannot be reached by demurrer of any character. Such is positively laid down as the law in Steph. PI. (3d Amer. Ed.) 365; Heard I UNITED STATES V, PATTERSON. 247 Opinion of the Court Crim. PL 140, 271 ; and is also stated by Lord Cranworth in Mulcahy v. Reg., L. E. 3 H. L. 306, 329. If, however, the law is otherwise, and surplusage and irrelevant matter in indictments may be [282] made the subject of a special or limited demurrer, what has been filed by the defendants in this case, under leave granted February 28th, would be suffi- cient, because it is expressed in general terms, and requires the counsel for the United States and the court to search through the indictment for what is claimed to be demurrable, when, by all the rules of pleading, it ought to set out the specific language objected to, and ask the ruling of the court on that alone. The reason touching this proposition stated m Story, Eq. PI. § 457, applies everywhere. Clearly is this so in this case, because this so-called special demurrer is expressly to the entire 4th, 9th, 14th, and 18th counts. It seemed to the court that there must be some way by which, as a matter of right, parties brought in on a complex and voluminous indictment may have settled in advance of the trial what portions of it, if any, are surplusage. It has been frequently said— certainly with reference to civil pro- ceedings—that surplusage might be rejected on summary mo- tion, and the pleadings left to stand as though it had been struck out or never inserted. Gould, PL (4th Ed. c. 3, § 170 • Chit. PL (7th Eng. Ed.) 252; and many other authorities! It has also been understood that in criminal cases it might be disposed of to a certain extent by a nolle prosequi, and that this would apply to a separable part of anv one count, as well as to the whole of a count, or to an entire indictment Bish. Crim. Proc. (3d Ed.) § 1391. The general expres- sions, however, of the opinion in Ex parte Bain, 121 U. S. 1, 7 Sup. Ct. 781, are sufficient to cause this court to proceed no further with these suggestions, unless the subject of them IS formally brought to its attention and counsel are duly heard. On the whole, therefore, the court is compelled to conclude that the permission which it gave to defendants to file a special demurrer was perhaps inadvertent, and certainly has proved ineffectual for the purposes which the court had in mmd. The counsel for the defendants, however, have availed themselves of this permission to reargue several of the propo- "^B* ^ FEDEKAL BEPOBTEB, 282. Opinion of the CJourt 9R*K. ""' nonced m its opinion passed down FebruarJ 28th,. and they also present at least one additional pn,ZT a^oreSx ?;ra fsrir^^r^; r -■"« *>^ «he court touching eveA au-Sl^T k" ''* "*'' ^'"'^^ "^ wou^d have resnuiiraropE^:: L'Xrj--^^ Acuicuj uv appeal. Iherefore the court toiir>Ko/i ;« ;* • The claim that the indictment should negative fh» «w„ slup of patents by the defendants, and aKt out thTl" wmmerce carried on, or proposed to be Lried on bv It National Cash-Begister [283] Company, wis a kwfufot' and perhaps some other mattpp« «f Vt. 7 u . "*' on the hypothesis Zti^ !n J that character, proceeds every inte^ ^.,11 I ^*'""' ^""'"^ ^ ^^^ain to hhJ A^sSa™ mliiSoTfr ""'^ ''^ ^'^"^ '" «»'»^- by the proseZr **' •'''''"^' "*** *« ^ «"««P«ted anrilw^!,.*^** *^*^ "*""*« '"ft '* fo"- the prosecutor cause, so far as this fpafi.K. «* *k • j- . "'"™'^»™aoJe, be- if ;. 1 . Jr. ^^™'* of the indictment is concernpH t IS clearly sufficient, according to numerous dSonT^f Ae supreme court, which need not be cited, to ShT aS g«age of the statute. The suggestion of the co^ in ^1 opinion passed down February 28th th«t thl T* / ^ «.e of a class where it is suicTent to d^rfr^wor^J of knowledge, on the part of the a^::d:rtll£^^ 'l^piw \ r 4- UNTTED STATES V. PATTERSON. 249 Opinion of the Ck)urt. say that those counts which do allege the existence of such commerce also allege positively knowledge on thT part S the defendants ; and those which do not aUege such eSn^ are sufficient, because neither the letter of the statate Z fh-^.Ttj'"^^'^^^ '"*^-- strangling a tommer" which has been bom and preventing the birth of a coZZ Much 'oi whf ""*•!? r *'^ ^''"^«S« "* *•»« «***"" Much of what IS said by the defendants about judicial faiowledge touching cash registers and patents has no appS sTd^'f^hrorr'^ir"^"'"^' '^^^-'^y - ^^^ ^rfSai uprthU ' ■ ''"' *'^ *=""•* "•" "''^ ^-'^^ «- to -large or^JefrSTh"" 'ly T ''"""* ^"^^^ «° ^''tent to injure relates^o LtL^"^ .'^^ '"'''"^ '^' P"*=«' «' otherwise, this at bar r. "* '" '"*'^'y '^^ff^^^-'t character from tnis at bar, and to conspiracies which are iUe^l i„ thTr. essence, without reference to the means ^ontT plish their purposes. "P*^*^ ^o accom- As to the proposition that the National Cash-Re«rister Company is not alleged to have been a nartv k? ,7^'='^'*'^ phy of pleading conspiracies requii^ that it should a pX ttMsTCeTttl^^' "^TT^-^ - ^-p ^^ fendants wereTtelld rSaw'/te' "/'? *^'*- benefit they combined tn L v P*'^^ ^^r whose indeed, w/atTet tllrX To S""' T ^r' "^' the statute should finally beheld to hlr-f//"*^- ^^'" '* to engross, monopolize,tt; p il^^^^^^^ '" ^'"'Wnations r2«n «^^u- X- ' fe^^^P J^ Dehalf of some partv to th** of lalTwT-""' ^'* ^"^^'^ ^^•"'^^^ *"« well-LSn rile ot law that it is unnecessary to indir-f all fk« • volved in a conspiracy o/J .V *® P^'^^ns in- conspiracy. Of course, the court would have ■A 250 60 FEDERAL BEPORTER, 30«. Syllabus. SeJrtwt' '" "^"''"^ '^^ **J^«° « it l'»urchal th^ tk I'ofTb """i /" ' ^'"'^"'-t ?ittN:frsSf^r--=-^^^^^^^^ trade the^ amonr I ^l^^^^^ ^^^^^ ° Syl'-bus copyrighted, 1894, by West^^blisil^T^ li I 252 I I If II n H 60 FEDERAL BEPOBTEB, 306. Opinion of tlie Court, of this scheme, on or about March 4. 1892 Tohn T? « i Jr., entered into a contract with thelfendant Knthf P ' pany and individual stockholders named fori ^u ^""l all the stock of thp caiH .„ . '^® purchase of to the sa^ def^^nZts re2n"^Vh"'T""^ American Sugar ReSlg ComtT TW "^ '"""'I ''' *^^ same [307] time the said^SeaXZtere^Ltr "' "m°"* '^' tract with the Sn«.^lr»u V^ e^ered mto a similar con- holders and mldfnSrSnrcTwUh'tJrf '';:?' ^^•'^''■ P-ny and stockholders and wTh thl d11« ^™"'^''" ^o™- and stockholders. Delaware Sugar House CanT^^oX^rra^ufatSr^^ ^gar in the UiSted StaSiTm^s 1 " ' "*."'"**' with the othef dettnTs n^eT^ ^Srld' ^^T^ ^^"^ monopolize the ma^f:rt".; a^^ale SreTnfd """"^""^ *** the several states. '*®"*** '"««'' '^'n^ng The material facts proved ar« that the American S.,^r rrf o?Se:ii;td^ifraT i^ ^-•^^^^^ '-^^ and sell sugar tSLpili^e"*"*^ **» ?""*''"'*' "'fi"*. Knight Compknv the Sn^r 1"^' ^^"^'y' *»>« ^^ «. Delaware S^Cw ^P"*'^?'^ Sugar Refinery, and the orp2;i^.r, a^ruthrjr:T;rse";r ^'"7 S iX?ad !T '""T ^--Sr^mS ii" wl' the Unitefst^ \, ^' """""^ "' «"««'• i^fined in ^eridn Sn^^'l^ "'"n^ ""^^^ competition with the ^encan Sugar Refining Company and with each other selling their product wherever demand wa9 f^»^A t -1 ^roughout the United States; thrpriorte S^r'h 892 IS^fn ^SrdSphiran^ti^frr^T'^^ ^^^ in Boston, the lattL pVodu^'^S^'^^, "^IZr^lZ UNITED STATES V. E. 0. KNIGHT CO. 253 ■ Opinion of the Court (on different dat^SSTTu'"**"^^ ^"*« ^^n'^acts ■ Philadelphia cSptlti'n'nltdf"'?" "' ^^^ "^ **>« stock, paying ttZT^ t^^^^lY^^ }' P^^^^^^^^ their that the American Suga^- SSZ rf "" I*" '=°'«P»ny.- possession of the PhiladelnWrrpT ^^"7 ^^"' "^t^'^^d that each of the purchat w ' "fr"!^. '"'^ '^''' ^'''^^'^' Sugar Refining ComtaTv „T.tL '"''J""' *" '"^^ ^^ri^^n stock $25,000,(So tZrthifal ?^ ""^'^^''^y *" "^«r«»^ its and the i™ m de JL r./" ^""^"^^ obtained concert of action bet«Jn J? Tf "" understanding or Philadelp,,, co^pa^ni^r^sXtttS l^l^J ff^ of each company acted inde^ndenVof the; of tt 1 **^ and in ignorance of what was \»iri a u °^^^^' that the stockholder., J oil -^ ''**"^ ^^ ^"ch others; each otherXn^^LtZt^rri''*^^ » -^"^^rt with and prope ty ofThe cILI ^^S"^ '^"' "" '^" "'"^^ tract of Win ea^ insSetThe 5, "''V ''^* ^^^ *=- other refineries and continu! Z ^ '"""':' ^""^ *« ««tehlish fit to do so, and IZT^noto:^::''' '""^ ^'''"^^ ^ commerce in sugar, and that 1 respecting trade or this subject hJl>^nJ^^Z:e"Tr"'''r'^'''''^'^ the Delaware Sugar House liSy ISmlT ?' P"^'"^"*' in conjunction with the SprecketS!' ^"^ '^P^'"**"** Knight Refinery in connSt h^f S„Sn 'JT- ^^ ""• bmation being made apparently for reaso^s!!^' *^"- conducting the business- th,t fu "^^sons of economy in in Philadflphia has S i«' sm* **' ^T^ "^"^'^ the price has been slio'htlv o^ T^ ^^^ purchases; that still lower tharJ^had £ fnr''*^ ''"'" '^''' ^^«°*' ^ut is within a few month 'of^h" "thr^vl^T'""' '""^ "P *« the sugar refined and sdd n Th. n f^"e ^^ P"'" <*"*• »* in other refineries thSn, ^'"*^** ^^"^ is refined Sugar RefinTnrilanv Thr*"""""*'^ '""^ ^-i<=an produced in I^uSHnd sot ""T "'''*^"°"''' ^"S*' is but the amount is nrLrin^Xrint-^f ^- Europe. Ihe object m purchasine the Phiio^ i u- „ to obtain a greater inflner.!^ * Philadelphia refineries was I I 1 1 ! \ I 254 60 FEDERAL REPOETEB, 308. Opinion of the Court. Are the defendants' acts, as above shown, prohibited by the statute of 18> ?' ^*- ^^'-are to the same eifect. Ing sT J^d £ ^- ^r^'*^^. 50 Fed. 469, and /„ .. Com- Xk v^w'ra LI' ' *»»« plaintiff, are in affirmance bination Zk ^^^Z^^^^^^^:!^ ments under consideration there. It wa^h ^howetrlhai interstate or international commerce being charged Thl Dueler Watch Case Manufa Co -^r P n ,\,r ' Clock Co., 55 Fed. 851, £/ by the ^i.^mt "'1''' was not considered or raised. P'^'nt'^' this question (cZ^k^' i.'^r'T ^"^'''" ^'fi'^^ff Co., 7 Rey & Corp 354 [7 NY Su.^' 4(Si ' ^ ••®"PP- ^^^^ ' "- «* «"». The bill must be dismissed with costs. [8031 FARMEES'^DOA^Ttk^^sT CO. v. NORTHERN PAC. R. CO. ET AL. (Circuit Court. E. D. Wisconsin. April 6. 1894.) [60 Fed. 803.] This case was not based upon the anti t-.c* i a petition by Thomas F. Oaki and Si ' ^* '^''^ property of the Northern SSc £ilroaIi;"'"rK "' '""^ against that company by the Ftrnt^^^^llVJ^l^^^'^* pany st^g that their employees con^lat^d IZtS'Z 11808 — VOL 1 — 06 If 17 258 60 FEDEBAL REPORTER, 934. Statement of the Case. the purpose of preventing a reduction of wages, and praying that they be enjoined therefrom. The only portion of the decision relating to the anti-trust law is found on page 823 of the opinion, and is as follows : «„r.?^ ?^ of Congress of July 2, 1890 (26 Stat c 647), every combl- *^^^tn """f^^i <>^ commerc-e among: the several states is TleH^vd to be UlegaJ, Under this act It was held by Judge Speer In Water- honse V. Comer. 55 Fed. 149. that a strike, if it ev^waSctive c^ mnZJl'*, ^Tk^"*' and this view seems to have been held by Judge Ss V^' ^' I ^ *.^ ^}^^ ?*^°**' ^^^^^ Putman. In U. 8. v. Patterson, 55 Fed. 605 Is inclined to the view that the statute has no i-elation to labor organizations. I do not find it needful to enter into this field of discussion, or to express an opinion uiK)n the subject, belne content to rest my conclusion upon the grounds discussed." [934] UNITED STATES v. E. C. KNIGHT CO. ET AL.« (nnuit Court of Appeals, Third Circuit. March 26, 1894.) ICO Fed., 934.1 Monopolies— Contracts in Uestraint of Inierstate Commerce.— The purchase of stock of sugar refineries for the purpose of ac- quiring control of the business of refining and selling sugar in the United States does not involve monopoly, or restraint of interstate or foreign commerce, within the meaning of the act of July 2, 1890,^ Api>eal from the Circuit Court of the United States for the Eastern District of Pennsylvania. This was a bill in equity filed by the .United States against the E. C. Knight Company, the Spreckels Sugar Re- fining Company, the Franklin Sugar Refining Company, the Delaware Sugar House, the American Sugar Refining Com- pany, and numerous individuals, to have canceled and de- clared void certain contracts made by the American Sugar Refining Company with the other defendants, as being the r^ult of a combination or conspiracy to monopolize or re- strain interstate and foreign commerce. There was a de- cree for defendants in the court below, and complainant appeals. • BiU dismissed by the Circuit Court. Eastern District of Penn.syl. ▼tula (60 Fed., 306). See p. 250. Decree affirmed by the Supreme Court of the United States (156 U. 8.. 1). See p. 37a » Syllabw copyrighted. 1894. by West Publishing Co. J. UNITED STATES V. B. 0. KNIGHT CO. 259 Opinion of the Court. ElleryP, Ingham and Samuel F. Phillips (Robert RoLs^ J^, Assistant United States Attorney, on the brief), for the United States. ^ John G, Johnson {John E, Parsons and Richard C Me- Mvrtne, on the brief), for appellees. iS^z^tzr '"' ''""^'- ^'^'^"'^ •^"^^^' -^ «--• t? * Dallas, Circuit Judge. There are three assignments upon this record. The first two aver, m^ general terms, that the court below erred in reZT^ u" ''"' '1 ''""P'^'"*' '^"'^ '" -t granting th^ rehef thereby prayed. The third, alone, specifies tht al- eged error with particularity, and is in these words: "That the court erred m holding that the facts in this case do not show a contract, combination, or conspiracy to restrain or monopohze trade or com- [9.35] merci among the iveral states or with foreign nations." This assignmL corrl^Uv •^ tT K- , «rJ^ ^"''*'''" ^^'''^ the case Evolves. " The bill filed on behalf of the United States is founded «' t actT : r/V""^"^ '^ •^"ly 2, 1890, endtlS An art to protect trade and commerce against unlawful res raints and monopolies." Proceedings, such as hare Wn instituted and pursued in this instance, "to prevent IndT ^fourth section; and these defendants are charged with violation of its first two sections, which are as follows: v.lse^^'°oS„U::7irrS?rIi^"f 'r^^^^^^ *'^ '°"° °' *"■«' or other- eral states, or with "oreT™ ^tlons I hPri^'T^^ ^'"'"'S the sev- Every person who shan mfke any"uoi^^nt™^'*^'"**' *° ^ '"«»"• combination or oonsniraCT <,lmn il^L^"'^.."'^ *'"S"Se in any such and, on conviction thS shn ^ nSlf k"^ °/ * misdemeanor. Ave thousand doilars othV imlu,^ punished by a fine not exceeding by.ix,tt. -M puniSeSWZfeK^^eru'^^ ""* '^'' ^ ..ze.'^- 'coS rrnspi'i: t?^Tnv""^^^' °' «""-«•* *» "»-•- monopolize any part of the trade n^'^^ *''*' P*"^° <"" P^^som, to states, or with foreigrnations sLn hT'Sr'^^ ^'".^''S the several meaner, and, on conviction the^WfiL^f ^"'^^ F"!^^ <" « a'sde- ceeding five thousand dXr^^V tapri^nmenf^t*'^ ^^^ •'^- year. or by both said Puuishn;ents.ln're'drcJ^ron°of t^Turt5'""* 260 I ! It [ i 1 60 FEDEKAL BEPORTER, 935. OiiIiiHai (if th- Court. These sections relate, respectively, to restraint of trade and to monopoly, but, as to both, with respect only to « trlde or coimnerce among the several states, or with foreign na! tions; 'and upon the application of this restrictive Wua" rf the law to the facts of this case we base our judgment states, m the opinion filed by him, that : Sugar Refinery, and the DeliJJl^S;.^,;'^^* ^«- ^^e Spreckels under the laws of PeumyW-ln^^^^ ^'^T '^'^^^ incorporated and sell sugar; that the frrinfw p^^^ *^ Purchase, refine, located in Philkdelnhin nn^ L "? Pennsylvania companies were thlrty-three^r c^^^^^^^ CZ IVunV^ '^^^ P'*^"^^ «*>«»* United States, and were in aX ~titiL' u^^^^^^ '".^^^ Sugar Refining Co and with ro«il ««? ^ ». " ^^^^ ^^^ Amer can ever demand was found for it throni'* f ^ L^^/.^^^'" P^*>^"^t ^h^r- prior to March, ISO^the African w^^^^ S*"*^«' «»at control of all refineries in The TTnftPrt «J .^°'"^ ^''' ^""^ obtained located in Philadelphia and that of til i.''^^'*' ^-^^^P^i'^S the four latter producing almut twfper Ln of t^T'fu ^^; ^^S^^^t^"- the countrj^- that in March l«)o Thi xLl!^- "2""^ ''^""^^^ '*» t»*i« entered into contracts (on dlff^-ont ch^t^r^HH ^n^^'. ^^^"^"^ ^o. each of the Philadelnhi« nnr^Jo*? *^^ ^''"' *''^ stockholders of their .stock pay g theref^T^^^^^^^^^ 7^'^'^^^ ^' purchas^ that the AieVi^n^Sug^^^^^^ i° ^ts company; Philadelphia refineries and fheirbu^P.^^^^^ Po/session of the was made subject to the AmoH^fi I ' *^«* ^2^1» ^f the purchr.ses authority to inclose its stoc^SS^ ^^^- ^^'^''^^'^S quently obtained, and the increS^^^^^ th„V?il^ ^'*''^"* ^''"« «»^««- standing or couce^^ nf «!^i^^ yl^ made, that there was no under company acted independentlVof ttoso ^rtS' JS.^ *'"'^ """*"' "' «"><■>> of what was being done by such «tS^°M=t ^l^^'^' 'll^ '" 'gnoiance company acted In concert with of^S^h *^"* *»» stockholders of each totending that a?! Tbe^toc" and prowr^Jr' oTth'f*' derstauding a>Ml sow : that the contract of snie !n^^^ 7' *"* ,«2™I'«ny sI,o„|,i i^ to establish other reflner?es «nrt ~.^h °1*"".'« '*" t^e sellers free see lit to do so a^ ronta1;,«? n^^"°"*, *''* business. If they shouM merce In sugar and thitnnl^r,^^ Provision respe tli^ American Sugar Refining (^'l.^^^"aSn'rsurr"s'a^^ UNITED STATES t;. E. C. KNIGHT CO. Opinion of the Court 261 la"r^ in 'e1?hV?n'sS '^ """"«" '™"' ^""-"I-. «"* the amount is not a pef SinclTrntf ^^rf^'t'So/^ '^T.'^- ^^ *» «''tal- fining and selling sugar in thKunt^ " ' "*" *"* ""^'"^ »' «" This Statement of the facts is quoted at length merelv for the purpc^e of showing the general nature of the^a^^ the only essential fact-and of that there is no doubrb^L^thtt TO our view of the law, concern interstate or foreign com merce^ There is no evidence whatever that thf 2d3s' con" tT'^rT"""' *"• ^^^« ''««-P*«'^' combted o^ conspired to directly monopolize, any part of the trade or commerce among the several states o/ilth fl^ TatZ or that they have contracted, combined, or coTspiJed L' "rt^ r* It"" i^^^ ^^ «'"— The Tj^ftha" can be said-and this, for the present purpose mav be ,« sumed-is that they have acquired control o^e buLt of refining and selling sugar in the United States BuHoL this involve monopoly, or restraint of #«„„• • commerce? We are o]lZJ7t ■ ' /^'^ '"' interstate „ _i- . , clearly of opmion that it does not Th» particular language of the act which is now undrcoide^ ttn bT rf "*'^ '^^"^^^ fr«- '^^ ciaurof L zS: rjx- xri^j -~J3 - exchange of commodities » purcnase, sale, and conclusion m this case has been reached, and we do not III I 262 62 FEDERAL REPOBTEK, 801. f! 1 1 m »i Opinion of the Court, deem it nece^ry to say more, inasmuch as the subject has ^eene 52 Fed. [937] 104, by Judge Jackson (now one of flie justices of the supreme court), in whose opinion the earher cases are sufficiently referred to. The decree of the circuit court is affirmed. [801] UNITED STATES v. ELLIOTT ET AL.« (Circuit Court. E. D. Missouri. E. D. .Tuly «, im.) [62 Fed., 801.] «™^ r"" f,"""" '^^^^ P"""^ »«««* '» to arrest the^m- tlon Of the r.MIroad8 whose lines extend from a great cL^nto Sn thr wi::tr"' t. """^ "*^« *» certam demani^jrj: upon them, whether such demands are in themselves reasonahlA Z unreasonable, Just or unjust, is an unlawful eonsXrr.^t alnt ?L^ V"i """'"'"^ ""»"« *•* «"♦««• """in the ac Of July 2 1^, and acts threatened in pursuance thereof may be r^t™i„«i ht injunction, mider section 4 of the act» -strained by olJ'i r"V" "'"'^^ "'' ^"''^ ^'"'^^ ««*i"«t M. J. Elliott, George B Kern, Eugene V. Debs, George W. Howard, L. R Rogei^ Sylvester Kelliher, the American Railway Un bn Suncttn.'""^- ^-P'--^ --«! ^or a prelimina^ 1F»7Z»«»» J7. f'fo;>to„, United States Attorney. Thater, District Judge (orally.) TJie unusual chai-acter of the bill filed bv the govermnent !k lu^'""^' *'"'* '^' ^^"'^ ^h°»W «ta te briefly thrr^- .Demurrer overruled (84 Fed.. 27). See p. 311. » Syllabus copyrighted, 1894, by Wert Publishing Co. r UNITED STATES V. ELLIOTT. . 263 Opinion of the Court lawftil restraints and monopolies," declares in its first section or"Sr.TTr^^^r:tt± '^ '""^ "' '"^' - "'"erwise. states or with foreim nations Wh^JZ ^"■"^''i^. """""S the several person who shall SennvRn^h ^Zf^ declared to be illegal. Every bination or oonspiro«r sh^^l T rtSmi?''' or engage In any such corn- on conviction thlr^T sha te pSed^hv^n' " '"'^^'"eanor and thousand dollars or bv imnri^onM^Pnr^f J ^- ""^ exceeding five both said PunishmentrirtSe mSL"°of tte'^i?!"""^ "'^' °^ *" eauS'Z^^ V" ''"^'' ^"^'"^ """' ^^P^'^i*"* for a court of ihat are m themselves crimes. The regular course of judicial procedure requires that persons accused oHi^e Swii ^Tr"^' by information or indictment, and no to thTJule m "'' ^""''''■' ^^"-^^teblished exceptions liable to i; ' '"Tr**^ '"' '' threatened, which is wS^h w T''"" '"^P^^^b'^ '"i"'7 to private persons, or which would give rise to a multitude of suits at law to re- dress the wrong, if committed, a court of equitv mlv is«ue an mjunc ion, at the in.stance of an individual, aga^^It par hes wlio threaten to commit the wrong. But the ^ur^L not called upon, in this instance, to consider whether t'^ pro emitr Bv tri" 1' --i'-ry jurisdiction of a courHf equity. By the fourth section of the act of Julv 2 1890 which IS above referred to, congress has declared fhat: wi';h^tlS!,n''rp*re^e"„?a"nV r^sY-^aT ^^^ "« -^-^^ '--t^J It shall be the duty ofthe ^verTfllZ.Z- °' «'™' "' *'« "<=': «"« States in their respective dfstrirtsnndprthi »."<"-neys of the United general to institute proc^in-S ir^nif^t'''''^*'''" ""^ *''« ^tto^ey such violations. Such p^^J rsM,^ *" k^T^"* «"<^ ■•^^"•ali setting forth the cas-e aM^'lvi^J^h i '^."^ "'"•'' <" Pe"tion Joined or otherwise prohibitidwLntL"*'^" ^^"^ ^ en- have been dulv notified of ^iPh.^tffJl*"'^ complained of shall "oon as may I^ Tthe heLZ ,'^ H»t°J''-^ T"^ *"■«" P™*^ as pending such Petition andTJoVfinnld^Tiel^." "' V"' <="««: •"«» time malce such temporary restrain?ni n^If * "^JJ""' "^^ «* an.v be deemed Just in the premisS^" ^ "'^^ *"■ Prohibition as shall .1 J?'' "^^i?" *** *^^ ^''^ "'"'^^ *•»« jurisdiction of the court t: trcoui'th-'.T' ^"^'^■^•^--tt^r, if the bill noil Of the attorney general, shows the existence of a conspir- acy among the defendants to restrain trade or comS^ 264 62 FEDEKAI, BEPOBTEB, 808. ^11 i I Opinion of the Court ance of the alleged Zn^rZ n •^**«"*^?t« '° further- grounds of publlfpoZ S; ^"«r^ ^'^ ^^ fit. on government VaprZ'^tr'V'i" '*^ ^^^^^"^ «' t^e 1 .1, . appeal to the courts of thp tTtiU^j c^ x i a bill in equity filed in behalf oftl,; ^nit^d States by States, to arrest bv wr.r^* • * ^^^'^ °' ^^^ ^^nited eommiUn^tt^^^S al"^"""*'? "^ Prohibition, the flow of connne^Utt Z ^1^"'^*"'^* ^'^^^ *- the power of con£rrp«« f I ' ^ "^ ^^® ^^ ^oubt pn,p<,dUon which .dSTTi' , ^ (""P*^ - ' plenary and paramount * '*^P^'=* ^"^ lines extend. The bill Srthfr tjSl Zl'^t *''"'" '*''^^™' fendants named therein h- J S^ .**"* ^''^ ^^«™J de- induce persons! fhrempl^or^S^iSl'd '""^'"'^ *« leave the service of their^ip^i^e 1"^*^ ""T"'"" '" vent them from securing ot^^C-atrs^thr'h*"? *." P'"" conspiracy being to v^vent^^.-J' "^^^^ "* '"<* hauling^rtain c!rs w?X« e^^^m'ari^^' JK^ -'T transaction of thpiV hnciT^^o • " "^"•y "®®^ ^y them in the and Passen;t^XtT^.l:';Ss^^^^" "' ^^^'^'^^ divers and sundry acts by somTofl^^Sf JSaZr/TK '' ance of the obiects of *h^ ^* • ! aerenaants m further- o™P.ni. .ho ^Ti» t ZX^tZCltj^tl If 265 UNITED STATES V. ELLIOTT. Opinion of the Court ice they are emKd ? ["^''^"5^" '^^ '^ -'»<'^ -- defendants naSfnthehniL "^^'^f ^'^^^ '^''^^ «* *»»« they will tie uTanrparS TeT'*'? "' *'"*^°*' *«* railway companies whkh^C'^To^r °'r^ "* "^* demands made upon them T„Tl„/l' l^^ ^ "^^^"^ object of the defendant, I' '* '" ^^^ ?'"•?««« «nd such threats, t^ltb^^^irdSppT sS ^u" T "'^'^ nies as to orevpnt fh^r^ 4 ^"Ppie said railroad compa- mon c.iC:it3.Z r/"'°™^"f ^'^-^ * in other states to which the Ll! / J "'' ""'^ P"^"*« companies mentioned in the biW X. ^ the several railroad Pi^vent the persons owning ^ d '^.'^'r** *° '''''"'''' «"•* independent control Zreof TnZf T '^"'"^'^''^e «"y business. The court Sose is effected by means usuaUy "egal every cntroot, oo„.b.„atIon. or ^JZcl' TrJ^T^ Ne^Orieans 7^7 ^T"'/"^"^' '^''^'' **»« Cincinnati, Samud M F^Jn ^^^^^^ R^»^»y Company, in which KlT ^:- } '"'' appointed receiver. The receiver tempt, and for an injunction against him. Harmon, Colston,. Goldsmith d- Hoadly, for receiver. Cogan <& Shay, for Phelan. Tapt, Circuit Judge. Samuel M. Felton was appointed receiver in the above entitled cause. March is irqq »«j u • aoove- "iu«5, jjiarcn is, 1893, and has ever since been [805] 1 I 1 I I Ml M I «2 FIDBBAL BEPOBTEB, 606. ' Opinion of the Court ^'^gaged, under the order of the. ^^„«* • «>ad of the CincinnatrNet OrC'&V"^^^^^^ "••"- way Company, which 4 Z! f ^^^"^ ^"^'^c Rail- filed an interveninff netidon .„^. ^*'°*^»y' /"ly 2, 1894, he he stated that dSwh? **"«""'^ '"'*'°°' '« ^h'^h filing the ion hf wasSrir",' IT' "l^''^ '^« «' of the road by a s rike of w^ i '^ '" *''" operation of other railrid In h/ci vrf^i"^^^ *'"''. "* *•>« ^^^P^^y^ vented from receitU f^S^ t ^"''''^^^}^' who wer« p«. freight carriedTrit^ied"! '^"^T"« *« ''- strike was the result Tt f^ • '''' "'»«''' *»»»* said Phelan, now i„^Sl„ ** """f ""acy between one F. W. othe^/toi^ ;; 'h^oTd V^tHs^hT"/- ^•'^ --^ well knew, by the DetitinLT ' ■ ^ ^'*^ conspirators the weste^ li^:.T^l2TZL'"' rf^' ''^'^ '" mands or alleged erievaL .# f ? ' """' '^''^'''n Re- employ of the SivSr^r ?u'*'"" .P"^"^ "°* i-^ the with the managen^ent of anf^Jf J ^? .^T. TT*'*^*' that the demand of the emJo^T^ n ^"'**** ^^^^'^ or the Pullman Pa W r^r * ^'"^'"S" ^- ^""•»'"'. higher wages was'^d" wl^-J^S^if] SrSe/"' '"^ others, members of an oreaniz^ii^hT ^^' ^'^e''"*, and . Railway Union, combinTaTl^r^d Stf' ""r?" and wiO, sundry persons, who llame me^'be^;"'. tl "*''•' zation for the purpose, to compel the^u" mrfilT"'- comply with the demands of its employfe 3 ^17^^*^ purpose of injuring the Pullman (W^V "nd of tf k' forcing from it the concession demand^ D^fe Ph!,,^"*''J «iCr wrrkim '^ ""^•'•"•' ^'^^ owners of^ott:; though the^-r^xirctTd^r&r ''-'-^ of said conspiracv Phekn « ' ,/ f^'^^** ^^ P^^'^^'^ce Cincinnati a U^beftt;^';^^^^^^^^ *<> foot and incited a strike among the empLrfe of th^ *"" and of other railroad companies wh^r *• '■^'''*''' einnati; that on June m^l^ at oXIT '"" '."*" ^'°- ' ""'' "t other times and places, THOMAS v. CINCINNATI N n * m 'r. -^JSAii, N. O. & T. P. BY. CO. 269 Opiuion of the Court a^rhe^tSlSrr ifV ^^^^^^^^^ - ;-^e" and to prevent oui^ tm :!^i::i^^CZ ^" "^' fering with he eS ?" thT„ "^ *^%^*"'^«' ^^ i«ter- as a result of the ZpTracv an^T'^ '?[: "^ *^ '••'*^' ^'"'t obliged at ntin- for''S:S:the"crtemt'^*'?" ?. ^"-•^-''* - i-ed July he wa arrets TTk T/'^" '"*'™''>g »* the 3d of admWto barand'at the""^ l^*"" "" ''''''■ «« -- of the court frlm ^tS L as Tf ^'-/T '"^^''"^^ ^^ -<*- with others, incitin;reneo-;U olSer^t"^;" "'"''"''"''" other manner causing the emplovfe of L ■ ^' '"' '" ^"^ employ with intent to oScTth. " '^'''^''■' "^* ^'' and thereby compel him n^to fulfill v"'? *** ^'' '''^^' Pullman cars, gn Thurday? iufsS;' T"^^'/-^ f-y receiver for Phelan'^ Pnm,r,;f ^ ^ ' "^ ™*'tion of the week has sincetrtarn"u^;Tth:SV:f': 't^^^'' ^"' ' argument. ^ ^^^^^^ ^^ testimony and applicable to them. *° consider the law the;servLSi:t^3'iro:^f ^^^^^^^^^ ^-- ^ ized in June, 1893. On Mav 11 i«or T^ ,. * ^"^ *""«'"»- employes of 'the Pullman pi"' S*pf ^"'^*"' "1' *»»« manufacturing railway cars o?Tll v ^^P^^' engaged in cars, left the Lpal^irpW L^ '' T'"**'"^ ^'^^P^^ «tore wages which ha'd Z^ed^d luring t^^^^ ^l^' year, and the works were then cj On7fnfn,^St! 270 62 F£D£BAL BEPOBTEB^ 806. Opinion of the Court. general convention of the American Railway Union met at Chi- cago, and decided that the American Railway Union would take measures to compel the Pullman Company to resume business and to re-employ its employes who had left its service on terms to be fixed by arbitration. It does not appear that at this time the Pullman Company's employes were members of the Railway Union, or eligible as such. At the June con- vention of 1894 there were present representatives from 450 lodges of the union, and the number of members, as estimated at that time, was 250,000. It is said that the local unions had voted for the Pullman boycott before the convention met. The question where the boycott originated is not very material, but it may be said that, as the Pullman strike oc- curred but a month before the convention, and as it had been deemed necessary by the union to send men all over the coun- try to explain to its members the merits of the Pullman con- troversy during the boycott, it is obvious that the boycott had its real origin in the union convention at Chicago, where the subject was brought before it, presumably by its board of directors. The chief governing body of the union is a board of direc- tors, which elects a president, vice president, and secretary, who are the chief executive officers of the union. Eugene V. Debs is, and has been since its organization, the president. Section 6 of the constitution of the union, as adopted in June, 1893, provides that " the board is empowered to pro- vide such rules, issue such orders, and adopt such measures as may be required to carry out the objects of the order, pro- vided that no action shall be taken that conflicts with this constitution." By section 11 of the same instrument the president's powers are thus described: "It shall be the duty of the president to preside over the meetings^ of the board and the quadrennial meetings of the general union. He' shall at each annual meeting of the board and at each quadrennial meeting of the general union submit a report of the transactions of his office, and make such recommendations as he may deem necessary to the welfare of the order. He shall enforce the laws of the order, sign all charters, circulars, reports, and other documents requiring authentication. He shall decide all questions and appeals, which de- cisions shall be final, unless otherwise ordered by the board. He may, with the concurrence of the board, deputize any member to per- THOMAS V. CINCINNATI, N. O. & T. P. BY. CO. 271 Opinion of the Court. form any required service, issue dispensations not inconsistent with the constitution [807] or regulations of the order, and perform such other duties as his office may impose; and he shall receive such com- pensation for his services as may be determined at the time of his election." Phelan, when on the stand, said that these were sections of the old constitution, but that he understood the constitution had been generally changed. He would not say that exten- sive or material changes had been made, but siuiply that general changes had been effected. He was in attendance as a delegate only during the last five days of the convention, and this is his explanation for not knowing what the changes Avere. Phelan's answers on this subject had really no effect to sliow that the foregoing sections are not still in force, but simply illustrated the evasiveness and verbal quibbling to which the witness was continually willing to resort under examination. It is certainly strange that if he was here, as he says, as a representative of the union, he should not know the changes, if any really material ones had been made in the constitution, under which he was initiating men into the union, and was receiving orders from his superior officers. We shall see, as we progress, that the two sections of the old constitution are still in force, if we can judge at all from the actual authority exercised by the officers of the union during the present boycott. The plan of the boycott, as shown by the evidence, was this: Pullman cars are used on a large majority of the railways of the countrv. The members of the American Railwav Union whose dut}^ it was to handle Pullman cars on such railways were to refuse to do so, with the hope that the rail- way companies, fearing a strike, would decline further to haul them in their trains, and inflict a great pecuniary in- jury upon the Pullman Company. In case the railway com- panies failed to yield to the demand, every effort was to be made to tie up and cripple the doing of any business what- ever by them, and particular attention was to be directed to the freight traffic, which it was known was their chief source of revenue. As the lodges of the American Railway Union extended from the Allegheny mountains to the Pacific coast, it will be seen that it was contemplated by those engaged in carrying out this plan that, in case of a refusal of the rail- ■"""!53I5i'*!]Jj!F;;i"''S«!K i t'i 11 ^1 li I H I II 272 W FEDEBAL BEPOBTEB, 807, Opinion of the Court. way companies to join the union in its attack upon the Pull- man Company there should be a paralysis of all railway twffic of eyeiy kind throughout that vast territory traversed Sllr "^S ^"""'"J «=«^ It was to be accomphshed, not only by the then members of the union, but also by prc^ur- Zt T^^ Persuasion and appeal, all employes not mem- oers either to jom the union or to strike without joininff, bv pjarantying that, if they would strike, the union would not •ilow ooe of Its members to return to work until thev also Tn 1 w w c *"!• *^f "^y P'*^"* P"rP«^' it i« sufficient ^ TZ ^1**" T***^' "^""^ ^*'^' ^^^^"'^ ^'""« t« Cincinnati as the authorized representative of the president .,nd board of directors of the union, to enforce and carry out the con- templated boycott and paralysis of business on all railway lines running into Cincinnati which used Pullman cars untH they should cease to use them. [8081 I am aware that Phelan denies that such were his authority and instructions, but, as in the case of his answers in respect to the con.Utution and its provisions, his denials do not, in view of the overwhelming proof of the circum- stances not denied, and his previous admissions not denied show the fact to be otherwise, but only decrease the reliancJ which can be placed on any sUtements made by him in this case. He says that he came here with no direction except to visit the employes of the Pullman Company at a branch factory at Ludlow, to explain to them the merits of the con- troversy between their employer and their fellows at Chi- cago, and then, if they struck, to see that they appointed committees who should keep order among them, and look after the sick. At another time he says he was directed to be in Cincinnati during the boycott, but he strenuously denies he was here for the purpose of laying on the boycott or in- citing a gcnei^l strike. He would have the court believe that what occurred was wholly spontaneous, and not through his •gency, and that his business was, if there should be such coincidental spontaneity resulting in a strike, to prevent dis- order, and to look after the sick. This hardly accords with his first telegram to Debs, his chief officer, dated noon, Tuesday, June 2«th, as follows: "Pay no attention to press reports 1 " THOMAS V. CINCINNATI, N. O. & T; P. BY. CO. 273 Opinion of the Court. To be effective, was compelled to postpone action until seven, Wednesday morning." On Sunday, June 24th, after Phe- lan s explanation of the Pullman troubles, the Pullman employes at Ludlow determined to strike, and did so Monday morning at 7 o'clock. Phelan says he did not advise them to strike, but just explained the situation, and then a strike followed. Wien he had explained, and organized commit- tees among the strikers, after the strike had occurred, through no agency of his. his mission was endod. so far as his instruc- urns went. And yet we find him on Tuesday, June 26th, at 12 o clock noon, telegrajjhing his chief that he wns obliged to postpone action until Wednesday morning at 7, in order to be effective Now, what action was this which he hoped to make effective? Can any one doubt for an instant that the action hus foreshadowed was that referred to in Phelan's dispatch to Debs of June 28th following, when he said, - The tie-ur. IS successful » ? On Tuesday night, June 26th, there was a meeting of all the switchmen of Cincinnati at Wuebler's Hall There is no direct evidence how this meeting was called, but the c.rcunistances lewe no doubt. Phelan, having brought out the Pullman men, then set to work u,>on the railway men. and hence the meeting. The telegram of June 26lh indicates that Debs expected him to have the meeting and action eariier, but that he was not able to secure an ^ttendanrar any earlier meeting sufficiently general to make the action taken effective. Indeed,- when the Tuesday night meeting was held It was found that action must be stillfurther d. rfh'r /r"""* """"^'"^ ^°'' Wednesday night was called. At l^th of the^ meetings Phelan explained and discussed the Pullman trouble, and announced the Pullman boycott Now what was his object ? Was it for the purpose of indu": ing the men whom he addressed, and others not present whom he urged them to talk to, to demand of the railwax- Sf 'r'.'Tu* *"'* '" boycotting Pullman, and, on refusal, 1809J to tie them up, or was it simply for their general in- fwh?"? ? -^Prf^ "Pon the stand with much emphasis that he at no time advised any man to strike. What was he ?*T^]m ! '^'^!'^ """^ *" ^'"^^ '<' that end, and, even If he did not use the word " advise," his conduct was exactlv 11808— VOL 1—00 u 18 I 27^ 62 FEDERAL REPORTER, 809. Opinion of the Court. the same as if he had. His trifling with the truth, and his attempt to seek shelter again behind verbal quib])les, simply disparages him as a witness, without concealing the facts. Now, what was done at these meetings of Tuesday and Wednesday night after or during Phelan's speeches? A city committee was appointed, consisting of one employe of each of the great railroads entering the city. This connnittee Phelan continually refers to in his testimony as " my com- mittee," and the term was properly used, for it seems to have spent all its time in his company, and doing his bidding. On this committee was J. Madison, a switchman in ihe receiver's employ. The first duty of each member of the committee was on Wednesday, June 2Tth, or on the next day, to notify the yard master of his road that the switchmen and members of the American Railway. Union would not handle Pullman cars because a boycott had been laid on them. Madison duly notified McCarty, the yard master of the receiver. The nec- essary result was that three switchmen on the Cincinnati, Hamilton & Dayton Railroad were discharged or relieved of duty on the afternoon of Thursday, June 28th, and within six hours a general strike of all the switchmen and yard men, including yard engineers and firemen, on all the roads coming into Cincinnati, took place. This was exactly in accordance with the plan which Phelan had outlined to Westcott, a reporter for the Enquirer, on Tuesday or Wednesday before the strike, in a conversation which he does not deny. Begin- ning with Tuesday night, June 26th, Phelan has made speeches every night since, in which he has continued to ex- plain the Pullman trouble to audiences of railroad men, and has read telegrams from Debs of a character calculated to incite and encourage all railway employes to quit their places, to assist in the Pullman boycott. He says he has made as many as 20 speeches. Two, at least, were made at Ludlow, Ky., a railroad town, the inhabitants of which are, or were, many of them, employes of the receiver. It is in evidence that when the meetings began the number of the receiver's employes who were members of the American Railway Union was 150. And yet Phelan denies that he is in any sense responsible for the strike of the receiver's employes, or of THOMAS V. CINCINNATI, N. O. & T. P. RY. CO. 275 Opinion of the Court. view tTr-""' *f ^'^''"'^ '^^ '^^^"•"^ ^"«l» " Po-^ion i" v^ew of the circumstances and his own declarations Take the evidence of Wentmt* *k. v.^ ■ "■""la.. laKe evidentlv nf ^l '*«^*«'**' ttie Enqmrer w^wrter, a witness Phelan in any wa,: K. JlT^^^^ ^l^^^'i:^: and seems to have found Phelan his best souL of inf^mt' ton. He made notes of everything at the time, and piepa" d them afterwards for publication. Phelan has 'not atteSd to deny anything he says. Westcott testifies that Phelan Sd [810] to enforce a boycott against PuUman cars, by tvine un every road m C mcinnati for the American Kai waySon^ tS tttiTdtv "' --ten^repeated the statement Zl tftey intended t« tie up every road in town, and keep them led up until they refused to handle Pullman cars; tS aft" the strike on Thursday he said he had most of the American mLi^t th„t r \" ^'"^ "°* **"* ^""^'J ^ »"t the next morning, that after his arrest he explained that his course had been to tie up the freight trains, and not so much to stoD Si tb rp'-^'"" *^^ "^^"^y -- - the fre ght b.S ne^. Schaff, Gibson, and Bender, officers of the Bi^ F^„r ilailroad, testify that Phelan saik to them on Thu^^ afternoon when they met him for the purpot of S whether the "embargo," as Phelan and Debfe^piS "t ^uld not be lifted from the Big Four Caui Tw ' Wa^er sleeping car line, that he'pri^Sed^o tfe up evLJ hne m town, and was in a hurry, becaus^ he must go o^er aS tie up the Pan Handle and the C. & O. befo,^ sunsef and that m"; e oflhTB-^'f "'''* "": ^^"'-^ '^^ ^« ^^^ -Sd ou? some' more of he Big Four employes. Phelan and those memb^ of the city committee who accompanied him to thl^s mlt=n^ save that their loyalty to their chief is greater than the r « gard for the sanctity of their oaths. Westcott the Fn^ ^porter, talked with Phelan about thi^^S £S 3 Phelan said that, as Schaff tried to "bluff" him? he" had .^ I t 'i •1 i 1 1 i 1 f 1 \ I 276 62 FEDEBAL REPORTER, 810. Opinion of the Court, called out s(„ne more of his men, to show that he had no Hard feelings: and when Westcott expressed surprise at that way of showing friendliness, Phelan said that was the way the American Railway Union showed its friendliness in a fight On June 28th, the day of the strike, Debs telegraphed Phelan to let the Big Four alone, if not handling Pullmans, to which Phelan answei-ed : ^' I cannot keep others out if Big Four is excepted. The rest are emphatic on all together or none. The tie-up IS successful. Once more will Big Four be let alone." If Phelan was not the chief agent and inciter of the general tie-up m Cincinnati, he has been most unfortunate in the use of the language in his telegrams. \Vliat he here said nee- essarily implied that he had induced all the employes to go out, and was trying to keep them out, and that theV threat- ened to return if the Big Four line was exempted from the tie-up. Wliat I have said of the credibility of Phelan in reference to his agency m enforcing the boycott and tie-up applies with ^ual force to nearly all his witnesses, esi^eciallv to those from his city committee. They would have the court believe that Phelan was merely a peacemaker in this community, with no responsibility for the strike, and no purpose to incite it or continue it. Take Bateman. He was a switchman of the receiver, and on the subcommittee of the road. Debs had been applied to by the president of the stock yards to allow the cattle cars to be unloaded, and Debs— presumably m the exercise of the dispensing power given him by the con- stitution—had directed T»helan to have this done if no in- jury to the cause resulted. Pending this matter, Westcott was inquir- [811] ing into the outcome, and applied to Bate- man as a subcommittee for information. Westcott says Bateman told him the stock matter was in Phelan's hands, and that the cattle could not be handled without Phelan's orders; that "whatever Phelan says, goes." Phelan told Westcott substantially the same thing, and a telegram from Phelan to Debs is in evidence, in which he says, " I am hav- ing stock unloaded." And yet Bateman denies his conversa- tion with Westcott, and another member of the city commit- tee says that Phelan had nothing to do with it, and only applauded when it was done. Every committee man who i 4 THOMAS V. omcn,»»Ti, ». o. , T. ,. „. ^ 277 Opinion of the Court teZeT" t^' '*T*^ ^''"'^ '^'y '"'"^^ the majority of con- temners witnesses) tried to give the impression thJthl and yet his complete command is so apparent that it cannot eTpTssSr- "^^^ '''^^'^" forgot'Lself he nld S TandT' and ""^ :'"'""?'"ee," "I instructed them to do so and so, and occasionally such telltale words would creeo into the evidence of all his witnesses. Another khid of s,^^ tTttllftL;- ^ ^''''''- '•"•' «" «^ ^^^Z to tne eflect that these committees were organized solelv for «ie purpose of keeping the peace, and assisfing the 2k pJo v.ding for parades, and hiring halls; but nft oL ford is the employ of the various railroads, and vet. if Phelan's n unction was followed, persuasion, explanation, and arg" ment were to be used with all who did not join the caui at Phi ?mT'"'""' ^"'^ subcommittees Jr. 7o in Sk," Phelan told Westcott at one time that he had to vis "aT road yards with his committee; at another time that "m stX't ^^kT\l"^ ""'' "'^•^'''^ *•>« "'-> -ho remained still at work, for the purpose of inducing them to quit- and this, though not mentioned by a single Witness for L de S'J:: doubtless one of the chief reasons for ^ ^ With the intention of showing, that he has been guiltv of court PhT" r'' "" •'""P""''* -'*h the ordei-r o this court, T helan said upon the stand that he knew the Southed Railroad was operated by a receiver appointed bv tWs co,^ and was therefor, anxious to avoid interference wi,""' in thH "!!? """"Z*'^ '''' """•"« «"t °f the coach cleanl in the Ludlow yards on this account. Mo«K>ver. Buelte ^ his city committee, testifies that the Cincinnati South"„ wL especially excepted from the operation of the bovcott^oZ because it was in the hands of the court. Ancui"?. e^v night, ,n the preparation for the boycott and ir ke Sch was to be put into eflfect on Thursday following, thi^; ht action of committees in respect to which Phelan hi,3f 2 m ts he made suggestions, and which were appointed unSer his supervising eye, a switchriian from the receiver s"^^ • ri I * 'I M hi II |»l II (I 278 82 FEDERAL, REPORTER, 811. Oiiininn of the Court aUies to notify the receiver's yard master of the boycott, file notice was given, and the strike occurred earlier among the receiver's employfe than among those on some of the other roads. Phelan told Westcott on Thursday afternoon that the men were aU out on the [812] Southern, and yet this was the road he wished to save from the boycott, because it was in the hands of the court. What did he visit Ludlow for on Friday, and address a meeting of railwav employes, .f he intend^ to be careful about interfering with the opera- tion of the Southern Railroad by the court? There are no railway employes in Ludlow but those of the receiver. What was Bateman. the committee man, doing in that place in at- tendance at two other meetings, if the respect of Phelan and his committi-e for the court's orders was so great « The pur pose with reference to the Southern, as with respect to everv other road^s so clearly 'shown by the telegrams between Dete and Phelan, that it could hardly be more certain if Phelan had admitted it. Debs to Phelan : " June ''T 1894 fo^'^'Td^^jV- •'"'* "" "'"*"™ '"^ "'" '* '"^ "P -"Oly be- Phelan to Debs : « T * , , "June 28, 1894. I cannot keep otliers out if Rij? Four is ext-entecT Tho ««♦ «,« emphatic on all together or none. The tie-up irsuSLftU.^' Debs to Phelan : **tK ^ »« tt * "June 2D, 1894. bloelmle' "**''' Parnlyzed. More following. Tremendous Del)s to Phelan : , " XT 1 .X . .^ "July 2. 1894. Knoeic it to them liard as i>ossibIe. Keep B|e Four out nn*i hoin get them out at other places." ^ ^ *^"^' """ "®*P Phelan to Debs : ../^ . , ,. "July 2, 1894. Going out all around. Firemen a unit. Will soon he an avn Ifinche to us. Working outside points." " *^*" Debs to Phelan : «• TT 1 1 »> "July 2, 1894. Hold Big Four solid. Going out to-dav at everv nninf no4«i«« ground rapidly.'* ^ ®*^ ^^^^' <5aliilng 4r 4 THOMAS V. CINCINNATI, N. O. A T. P. RY. CO. 279 Debs to Phelan : Oplnjou of the Court. ..»j I , "JULT 2, 1884. more anTjjI" pin '^'» *",, '"T ""/ P"''"°" strengthened. Baltl- ~ -d^l^oh^^-CeSriire^^^^^^^ ^t ?r S^^t I have now gone over, more at length than necessarv. perhaps, the evidence concerning Phelan's connection with the boycott and strike, his purpose in coming to Cincinnati, and what he did here, and I find the fact to be that he came here deputed by Debs, president of the American Railway Union, and its board of directors, to enforce a bovcott against the cars of the Pullman Company by inciting all the em- ployes of the railroads running into Cincinnati to leave their employ, and thereby to tie up everv road, and [8131 paralyze all traffic of every kind until all of the railroads should consent not to carry Pulhnan cars in their trains; and that his plan and his actions were directed as much against the Cincinnati Southern road in the hands of the receiver of this court as against every other road in the citv; and that he knew when he inaugurated the boycott on the Southern road and incited the receiver's employes to strike, that the road was in the hands of the receiver, and was being oper- ated under the order of this court. We come now to consider the question of fact whether Phe- lan m any of his speeches advised intimidation, threats, or violence m carrying out the boycott. He is charged with rr^/^^ ^ 1" Thursday night, June 28th, at the meeting at West End Turner Hall, that the strike was then declared on; that it was the duty of every A. R. U. man to quit work, to induce and coax other men to go out, and, if this was not succe^ful, to take a club, and knock them out. He is charged with having said, on the same or another occasion during the same week, that the committees should be appointed t« persuade men to go out; that, if they would not go, then the committee should get round behind, and kick them out The meeting^ at which these remarks were said to have been made were behind closed doors, and no newspaper reporters were permitted to be present. Only A. R. U. men and railroad employes made up the audience. The first charge is sup- I" i I I i I i ! i ' 1 1 ^^ 62 FEDEBAL REPOBTER, 813. Opinion of tlie Court. ported by the evidence of oua T n c of the Big Four Railway ZAel JTa7' « *"»«^ri- shows, a wholly iisinte^tTXl ,17 ^^ T ^"?"^^ a""ate an^- th^^'shtuvTf "^ ^"^ r "^'^ ^''^^'^^"^ ™-" them- to be law abidin? L Z"^'' '*''^'«" «"e ex^res- this: I l,ave told the bovsl^iffeJent „nl!^,H''"'»<* "' ^''hleh is „I,ont deinamis npnn me to go aTraml anH ^i^*"'"®!* ""■-' " K<«><1 ""■ """ go to the their .loiualntances.— and evnliill !"","'<'• «" to the hoys.— I luean about it nesee,h t,.e^to^iiten'',^."'^^"r 7':»^^ "^""^ *<> S before they would condemn nsalH^?* , .J",'" '"*"" ♦" ^''t the idea knock then, in the bead al«)nt it" U "' "" ""^ *<'^^ « <-I"b, and elicited applause, hnt 1 1 f.^ 'iV .var't^lk-eTttXrlvi^- ^^"^ evilt^JTw Vlr:i:^Zf i* is -ppo^ted by the it An aceotmt of^hn^^in^tS U tX ^1"^'^ occurred was published in the Cincinnati Enqu.Ver of W 29th, and read to Phelan bv counsel f^- ti. ^ . °* '^""e as follows: «" "J counsel for the receiver. It was in"thtsmS;-;:''!;^irt"" rd\?ir,",'""-'-^- • "«• »"« '*• -or with „« in scathing tones ke vlduals with us : we want war C^ • ?,* V""* "o weak-kneed ndi- «n eloquent denunciation of Or d Master /"'«" *""" ""'"'•""' "'to locou.otive engineers. ' He Ls no the ^nra^f ;."d "^^ '""' '"■'"^' "' 'V lut? njurage to declare a strilce * " »HS~;s^;--" ss K sr to tile i.itter eucl."^ "*' "" "'^^'* "*« ^^^ west will standby yon said ^:.Ji :t:^^X';^^j'T:^:r/' not to go back to work till the Lke ':Ztlll oT whiS V,, I; it THOMAS t;. cmciXXATI, N. O. ^ T. P. Rv. CO. 281 Opinion of the Court " Mr. Phelan then resuniPd • ♦ wr^ this hour of trial. m,d i™^uy Xr.« fo'*''"'l ""'""J' t'^^t"^-- '" Of strikers. .ei.e then, hy thlKi ol^ ^n^^.^^^d t^^lXroil't''-'^ Upon this passage the examination was as follows- t^i,p !z 2; ^i'-t i't,^",* n"^/- * ^^"' •-" -o" to Q- Will you swear vou did noiV i ', "°" * recollect of saying it Q. That is as n.uch as von w"n sTA ' "^l » /^""'eet of sayini ««}•• I will state this, however Tf JZi ^""^ '" "" "'"<•" «» I will tainly if he did no LT V "* "''^ ^"^ »»* '"t^n^. Cer- -a^Mt"u"„1o;tureL™^ ^"^^--^^^^^ ^-^ ^^'^^ An attack i.s made on the credibility of Dormer He ^ otherwise tl an bv .bo^- '!"''**"' ^*"' ""' ^» «"acked xYvise man Dy snowine: his assnmnfio« ^# ^ i pearance and name. There is evidZf , "" "'•■* ^P" willingness on his ..art t^ ^ evidence tending to show a sucsB^n nis pait to involve some of his fell^„ t -i m a trespass on the company's property buM J r"^ say that his accuracy «= \^ property, but I am bound to the meeting which L, ft Tf*^'"^ '^^ that occurred at evidence of^Phe^n and h ' t"' '" """ '^""'^ «"* •'•^' th« ing to recollect Av"e ,h i!"*' "' ^'' «^ *''«>' ««•« '^i"" de^ndent "rDorm ^stltfn'T T '" f*"^'^"'^ '''"^-^ them sufficient weiX .f **"'«"* «'«»«■' I should not give Phelan; butTll S^^ierw^rZLr^"'^- '^'l ^<"» cannrSa ^ ^HrdntendT^ ^""^'^ '"^«"'"^' -"^'^ ^ of inciting viole,rthat hTs ""^'^ *" ^'"''^ °* '^' ^^g- Had his efidei^STnd thl f ^ """^ •'''•■' misunderstood. issues in tlds Tse „„t h '"V""""'"**' ""«" *he main tiiis ca.se not been most evasive and wanting in AH2 62 FEDERAL REPORTER, 814. Opinion of tile Court sincerity, I should still be inclined to give Phelan's e^nla nations credit, and give hi™ the benefit^f a douTtorfi?; Apparent fact^n S *" T**"' ""^ P^^^^^* the most apparent fcct m the case, namely, that he instigated en^* cinnati from begmning to end. After this his denials and evasions can be given little wmdht it • 7 . ""'^ *"** that Phelan did S Ws men JlTi ll ''**"''"*^ *"••* *-ii ii. . ™®° "• ''« law-abidine. that he dJH tdl them to stay out of saloons, and off the co^ny's prop w f tiH»inselves to the punishment of the law. W^cott ^es to this, and so do Dormer and Sweeney, nJS ! hM doubtless prevented many open assa..lf« »n/ But I do not doubt that at tie ZeZ "he el„3S1^„ their fellows who d,d not join with them in this bovcott bv expressions of the kind testified to by Sweeney andSLf Jh^eyr^rgl^ tie ln^'"^f ^^ ^^'^ ^» -"- J uiu oe given a double meaning if questioned. i he expressions were for the purpose of bringinir into operation that secret terrorism which is so effectivf for T- Sfi^VhrrdTo"/'"™'"'"^ '''' ''-'''''-' P^«-' ^ nicn IS so hard to prove m a court of justice unless it «. fliif '1:T r "'*• '''''''* ^''«'- «P«"'y .lis^rajil cot flict with the law is to his credit as a strike organizerfor he wislied public sympathy; but that he wished TaW of thl ^at^tSt tt •^•'f *"^" "' ^•«^'«^ h«« b^^n in such a state that the receiver's employes who live there have been 'T r* ^r'- '^^'"^ ^"^"^^'^ h«ve left the town S ployes within guarded pr^incts. It has been shown that storekeepers of Ludlow have refused to .sell goods to the receiver^ employes because they were bovcott^^ Thread have been made, and an assault. Insulting and agiSe Of tlie nver. Threats are hard to prove. If effective thev ness from the stand. The receiver has been obliged to keep i THOMAS V. CINCINNATI, N. O. & T. P. BY. CO. 283 Opinion of the Court. sidLTf ^hT "' *' y"'*^. ^"^^^ ''^P"*^ """^hals on both S^ 1- r ^'''^ ^" ^'^ ^"^°«« «nd trains in order to induce his employ^ new and old, to remain in his ser^iJT I cannot presume that such protection was invoked b™ c^Sdoo^ ti th f^P'^««'o»« in his speeches behind. Closed doors to the employes of the receiver which were cal- ciilated to induce intimidation is not of primarv important with the'"''' T' ''^ r " ^^'•^''^'' "^ ^"' his interfere;^ with the operation of the Southern road by the instigatio^ and maintenance of the boycott and strike again.st the'^oaS was the main contempt of this court. The suggestions Zd Spt; rtr ^^"'^ ^"'^ ^ «^^--^- ^^ Section 725, Rev. St. U. S., provides that: PowIXTrntra^d adnfinSer''.n°ni''* ™'«<* ^""'^J ^^all have flne or Impri^uu.ent at the discre on^«.?' ""?" ""•* *° P""'"" by authority: nrovldwl that !.,^if"„ ^' ^^ "'""''ts contempt of their be conJmJ^Z'ifteTL Tny eS ex^„T?ifi' <^r^""'t« '"•«" ■»* person In their presence or so nAaTth^.S^ *''! ""^behaviour of any of said courts In their' nfflWnW "'•''eto as to obstruct the oflicere dlen<* or resStanJ^^'anrsuch'Sr "oTI; """ *"* f"«J <"««^ ness, or other person, to ."nvrawfiH^wV ^^ '"'"•'' ^^'^^ J"™"-' »«- or command of the said roSrls " ' "'■'^^^' '"^^'' "•"'«• ™«^ "»^- ord" oTthe cou are not different in any respect from tho^ of a private 3 Ill 1 1 IR^Ba ^'^ . 62 FEDERAL REPORTER, 816. Opinion of the Conrt. whTchTr"^!""- r^ T'^ ^^'''""^ -^ '" the remedy li^J^l "t ''''" 'PP'y ^'^ P^^«"t »r to punish a viola tion of them when such a violation prevents or impedes the openition of the road, and is intended to do so. There is no doubt that Phelan intended to prevent utterly the operation of the Southern road by calling out the re nT'■'„:STh^ "; ^''''^' ^'^"^ *' Paralfj'his bui" n^s. He did the trust a very substantial injury by stopping to pa.> lieavy exj^nses for unusual police protection and crndd he'... ' ' " "^r' ''''' " P"^«t- corporftion, the buste "f ^h T ^ \'?^ '"^■'"••^ ^l"- '"«i<^ted on en^e u,th the business of another by inducing his employes to leave h.s servK^e is an actionable wrong and -ubrr^f franm 10, Mass. ;,5o. ,t was held that a count in a declai-a Shoes, and for the prosecution of his business it was necessarv for hmi to employ many shoemakers; that the deJendanTs auft.l ".'" ""■'■•^'"^ "" ^>'l ''"«n*««. with the un- inent a K o .""•' ^'^'^^^-.s who wei^ in his employ- Sout his r ?" ?"' "'""'* *" ""*•"• 't. *« abandon it he ptin^ ff ] " ;; ""' "^""^^ ''•^ "'"'• «"'! *»"«' thereby ine plaintiff lost their .services and profits and advanta«.; a ^ was put to gi.at expense to pr,K,L other IknlulTk- >"en, and was otherwise injuretl in his business -ZJT, The real question, therefore, is whether the act of Phelan mi icior Th • ''"t^'thout lawful excuse, and therefore trial under the erimkal tw 1. Thltht l^T' ""' lawful in the sen.se that he c;uld te 11 .^ "''7'' ""' for the loss occasioned. Of ^uil ifTh . P*-^, /«""'^'« ^fi course, if the act would subject THOMAS V. CINCINNATI N o ( ,. t> „ "--All, K. o. & T. P. BY. CO. 285 Opinion of the Court be a contempt without being a crime ' "'' of thTriS iTadTrrSh^tr ''""^^ ^''" ''' -P'">-^« labor union which Ih mid S "I^"" ■'* '"*° *"• ^^ J"'" « of employment It soJ h ': r? T""" ''^ *" ^^eir terms that laborers shou W „ite tZ "" ""^ *" '""^ """- lawful purposes TI Ivt w "'"™"" '"t*^'*"^* «"d for together! th^^ofttf able a/rlT^J" *"■ " ^''^>' «*'""' prices for their iZ, h! i ^*''"' ^° ''"""nand better employers, ZlJt^^'^^:^^^'^-? f^^^'^ -" compel hin, to accept an^^r^' ffe^d^ir'Vh?^' T tion of a fund for Hi^ «.., ^ ^^^^^ mm. Ihe acciimiila- wages offered are b^f^.^rft^ ■''*'" "''' ''^^ *•»«* ^he niate objects of such 1: ^r^^Lf^^T T^V '\* '«^'*'- to appoint officers who ^haU aZllTh ^ ''^'■*' '''" ""ht be taken by them in thpH i " "' ''' '^e course to Theymayu'nite::?th:t ' „:f "Siel'c ^'t ^'"''"'•^^^• or any other pei.on to whom Zy c^ " ^l" ^^ "^P""*' Vise them a^ to thp ..-^ ^ cjioose to listen, may ad- «gard to their^^mp o'y^r oTiTtht "^ '''''' '' ^^^ "' authority in any one mav orH^ fK ^ "^ '" ''^P*'* ««ch from their union CTblJf^ ""' .T ^'^ ^'^ ^^P'"-"" e-nployer because arofi^Tt Li:;,'' *""P'''-" ''^ ^^eir unsatisfactory. It follows thl^ . ''"" ^'"P'^yment a«, which win be'uii;:!^;; hir ? PhS^?r '""^*"'*^- «ty when the receiver reduoln K ''*** "^""^ *« ^^is by 10 per cent., and Id S 1 ""^f "^ ^'' ^'^P'-^y^^ succeeded in ma'intai;;:g 2^ C^^^^ f ^^«' -^ had receiver would not be ^onnH fl .^ ''"""*^ »* the Phelan would not have'C^'^iifM T^'""^ ^^"^'^^^ «-l strike much impeded the o^.,. * u """'^^P* «^«n if the of the court. uStctionZT'' 1 ™'"^ ""•*^'' '^^ "''d^'- order based on unsSs^tlf ^is'oVem ? ""' '""'"^ ^ have been entirely lawful RiH *™P^"y"«nt, would advice t« the Southern R«,l ^"'"^ here, and his Ployes of other roads To ^1^^ T. '""f^^'^' "^ ^o the em- terms of employment Til ' ^'"^ """^^""^ *« do with their «rvice or ther;!" P 'e LT "''! ^T'''^'^ ^^h their pay. Fhelan came to Cincinnati to carry illt II m 286 62 FEDERAL REPORTER, 817. Opinion of the Court, out the purpose of a combination of men, and his act in in- citing the employes of all Cincinnati roads to quit service was part of that combination. If the combination was un- lawful, then every act in pui-suance of it was unlawful, and his instigation of the j^trike would be an unlawful wrong done by him to every railway company in the city, for which they can recover damages, and for which, so far a^h» acts affected the Southern Railway, he is in contempt of this court. Now, what was the combination and its legal character* •liLr '*'**^^'^ conspiracy? I do not mean bv this an iBdHtable conspiracy, because that depends on the statute- but was it a conspiracy [818] at common law? If it was' then injury inflicted would be without legal justification,' and malicious. A conspiracy is a combination of two or more persons, by concerted action, to accomplish a criminal or unlawful purpose, or some purpose not in itself criminal or unlawful, by criminal or unlawful means. Pettihom v. U. S., US U. S. 197, 13 Sup. Ct. 542. WTiat were the pur- poses of this combination of Debs, Phelan, and the American Railway Umon board of directors? They proposed to in- flict pecuniary injury on Pullman by compelling the railway companies to give up using his cars, and, on the refusal of the railway companies to yield to compulsion, to inflict pecuniary injury on the railway companies by inciting their employes to quit their services, and thus paralvze their busi- fi!^'i> n "^""^^ "^* ^*''® ^"^ unknown to the ^mbiners that the Pullman cars were operated by the railway companies under contracts with Pullman. Such large transactions are never conducted without contracts saving the rights of both sides, and the combiners had every reason to believe that It would be a violation of those contracts for the companies to refuse further to haul Pullman cars in their trains. One purpose of the combination was to compel railway companies to injure Pullman by breaking their contracts with him The receiver of this court is under contract to Pullman] which he would have to break were he to yield to the demand of Phelan and his associates. The breach of a contract is unlawful. A combination with that as its purpose is unlaw- ' N. O. & T. P. RY. CO. 287 - ^Pi»«on of the Court milwa.v companies had no srSZ ^-'P'oves of the Handling and hauling ^LTrar'T/ '''''^ ""P'"-^"-" services any more burden ome Ti u "°* •*'"'«• »''">• against the Use of P,S,a. ' r" ''' ^"^ "" ^™'P'«i"t no «atnral relation with P „, «'^; ^^ '^.V '^'^f -- into paid them no wages. He d d , 1 . '"^ ^''^ '^'-'- He I" any way detennine their tlX.T'', "•""" ''""'«• «'• ■n l»s business, they were Tn^'d?- , ^"^^^^ ^" "'i-r- hhn •he railway companies To SI '"'' encouraged to compel thR,ats of quitting the r "i^'^'"'': '^"^t*"" fron. him bv -vice. This inflfctf^'Ln^- "; Z r'"''''' '"""'"^ '^ very great, and it was unla "f d h ^''''npa'Hes that was ful excu.se. All the e^W J hadTh" '' T "'*^*'"* l-" employment, but they hJdTo rhrt^ "^^^ *° ''"'* ^heir order thereby to compe their ^fn. ?"''^"" *" n for the thus ^ught to beiotlt d P^'T'/'r '''^ -•««- character or reward of thl T '* ''■^^t'^y'^r on the .for quitting, and the end tlhTir k'* " ^'^^ ">««- injury inflieted unlawfulanT tt .T''^'. *'»''* '""ke the '« effected, an unlawful compfra^^^^^ combination by which it an ordinary lawful and pTaSe T 1 ^'^^'"^"on between obtain concessions in the Srif the ^t ^'f ^ "P°" *» and a boycott is not a fanc.fJl onV ""'"^ employment power of fine distinctio^ to dJ' *" **"' ''^'"^ "««»« the Every laboring man rer^^i,? f termine which is which f 19] ly as th^e lawvTrT riudr' "tV^^ "*^^ ^ ^-^^■ ^er discussion was a boycott n " combination un- Phelan, and all engaged"7n it R """".."^ "^"^"^ ^y D«bs, panied by violence of intfm dati! T "^ *'**'"^'' """ccon,- unlawful in every st.T^^teZnuT^^'' P'-""«"--' ' t : j tri ► «o8 FEDERAL BEPORTER, 819. Opinion fif the Court. Ciiicinimti got into a controveisy with Parker, a boss brick- layer, concerning apprentices and other matters. The union bDvcottcfl Parker, and notified all material men that any one selling him material would themselves l)e boycotted. Moores lie Co. continued to sell Parker lime. Thereupon the union notified all of plaintiffs' customers and probable customers that none of its members would work Moores & Co.'^ niaterials, and seriously damaged the business of Moores & 0>. 1 here was no violence, actual or threatened, in the case. Moores & Co. sued the Bricklayers^ Union and some of its prominent members for the damages caused bv the boycott. This case was tried before a jury in the superior court of Cin- cinnati, and resulted in a verdict for the plaintiffs of $2,500. The motion for a new trial was reserved to the general term, ^Nhen' the case was fully considered, and the conclusion reached that the verdict must stand, because the combination to injure Moores & Co. was an unlawful conspiracy. The - case was then carried by r.rit of error to the supreme court of Ohio, and the judgment of the superior court was affirmed, without opinion. By the common law of Ohio, therefore^ " boycotts are illegal conspiracies. I quote from the opinion of the superior court in that case two passages, which seem to me to state the gi-ound for holding boycotts illegal : «« We are dealing iu this case with common rights. Every man be lie ejipitalist. mercliant. einployi^r, Inlsoier. or professional man' is entitled to invest his capital, to carry on his business, to bestow his lalM.r. or to exenise his calling, if within the law. according to his pleasure. Generally speaking, if. b the exercise of such a right bv one, another suffers a less, he has no ground of action. Thus if two merchants are in the same business in the same place, and the business of the one is injured by the c<)mi)etition, the loss is caused bv the others pursuing his lawful right to carry on business as seems best ^ him. In this legitimate clash of c^^mnon rights the loss whicli !s suffere«9 what on OP'n'on of the Conrt. c^n^^^iS'^i?^^^^^ °-^ -">"ne to everv ono if in.S",,''" *•"» <^omn'on Iround of ^ "^"'"^t ♦""^e who loWs suffer^'"„^l"Jl struggling to/S fsMl^IIir" '''^^*^- '^"ere <>y another in thl^l be borne, there are losses wiiifn^"^' '"»<* "'''ere '-m .ln,p,e'"n,r;--,lo. What other^ffenvr^.T^^.to one securing TtoteJttrm/'?"' '"^™«°n of the ?S LTl"«' *« *"« ^•"ch terms. . . *^™? /^f ''eftising to contract to I, J"'^'" '^ '"e for him e.Yc-ent on i.Bt J *"■* norljmen of .in euminxL ^"^ ^^^P* "n cause great lossMl**"' ^^''■"S' at a time vhen Ih? ' V^*"^ to work relation betw^n pTatatifl^T T. """Petition or ^ *ihL' "**'%' *^™« naturally oppose/ Thif •"■".'' "^efenclants where ?hSi!*'*"""'"'t»al was not oni which i^fj'^" "' ^''^ Plaintiffsto^Sr i,"*?''^** ^ere fllct with the righ/s^P t? r<"-<-Ise. brought t^lmi^f" ,^^^'J material chose. The ronflinf ' defendants to dSnosp!^ 1?*? 'eg'timate con- nse PlaintJffsvlgit J'';' ^/""^"t «bout by^he effort*^'; '"""'• «« fey of this, to use RhinHffi™"® **' '"-fore Parker B^°JJ^'^''« remperion v. RvsseU (mTin^ employment, quite like the case just cited t?' ^^ ^^'' ^^^ « <^^ refused to obey certaii rules Tat dl^^K ' k^™ ''^ ^"'"ers connected with the build W tide Ttw'jr '''^'' ""'»»« joint committee of the nni^ u ^* ^""- Thereupon a that is, they ^tt.LZiZZetTl'i '""^ b„ildin/fi:L materials by notifybg material" ^T P''"^"""^ «ny on pain of being thfrnTelvri ""' *^ f"™ish them material man, reflisIdToXwK 7'^ ''^"''^'^^ unions then demanded of hTslZ^, "' '*^'"«"'^' '•"d the H80S-vor. 1-00 M-!:ir ^^ '"'" ""* *^ furnish h^ 290 6ii FEDERAL KEPOBTER, 820. Opinion of the Court. him any material, with the threat that, if they did so, their workmen would quit. The result of this was that contracte for supplies to the plaintiff were broken, and others who, l>nt for the threats, would have made contracts, were deterred from doing §o. It was held that the boycott was an unlawful conspiracy, and that the joint committee of the unions who were sued were liable in damages for a malicious interfer- ence with the plaintiff's business. There was no violence or threatened violence in this case. The case was decided by the court of appeal of England, consisting of Lord Ester master of rolls, and Lopes and A. L. Smith, lord justices. ' In Carew v. Rutherford, 106 xMass. 1, a contracting stone mason, contrary to the rules of the union, sent some of his material out of the state to be dressed, and his men, members of the union, re- [821] fused to work for him any longer unless he paid a fine to the union, and did not return* until he paid the fine. This was held to be illegal conspiracy for the purpose of extortion and mischief, and the emplover was given a judgment for the recovery of the fine and damages. Boycotts have been declared illegal conspiracies in State v. GMden, 55 Conn. 46, 8 Atl. 890; in State v. Stewart, 59 Vt. 273, 9 Atl. 559; Steamship Co. v. MeKenna, 30 Fed 48- Casey v. Typographicdl Union, 45 Fed. 135 ; Toledo 4 A cfe N 31. Ry. Co. v. Penmylmnia Co., 54 Fed. 730, 738; and m other cases. But the illegal character of this combination with Debs at Its head and Phelan as an aasociate does not depend alone on the general law of boycotts. The gigantic character of the conspiracy of the American Railway Union staggers the imagination. The raUroads have become as necessary to life and health and comfort of the people of this country as are the artenes on the human body, and yet Debs and Phelan and their associates proposed, by inciting the employes of all the railways in the country to suddenly quit their service wthout any dissatisfaction with the terms of their own em- ployment, to paralyze utterly all the traffic by which the peo- ple live, and in this way to compel Pullman, for whose acts neither the public nor the railway companies are in the slightest degree responsible, and over whose acts they can THOMAS V. CIKCINKATl, K. O. & T. P. BY. CO. 291 Opinion of tlie Court. lawfully exercise no control, to pay more w«d-ac i^ k* ploves. The merits nf fi.. . ^ ? ^^^ ^ ^^^ ^^- tamly the starvation of a nation cannot be a lawful puro^i Every person wlio sila I ,u?kpSnv «■? 1^ '^ ^^"^^^ declared illegal and ou conviction thereof shall h^ n.t^ufl,^"'-'' "' ^ misdemeanor, flre thousand dollars, o? V imnr^ZZ w**^ " 1°^ ""* exceeding both said punishments, in the d^scS of tSe c^u^'"« °°« ^^'- »' wiJit\hTttatutr^'?""" '! '''' '''' ""•^''^ f« • 1 F^Adij^ze ine interstate commerce kno,^ of alll" shown conclusively in this case, and S unlawful purr; .^ "" '^''' '^"•"bination was for an cit«d. ^ P ' """^ '^ ^ conspiracy, within the statute It could also be shown, if it were necessarv th^t tu- bmation was an nnlawf..! • "f*^®*s'«^y» that this com- tended to stJo «» ^!^^ conspiracy because its members in- delay and Sard manvT' '^"'" '^ '''''' *^'''"«' -^ ^^ St TT S J^ r- ^' ■" eolation of section 3995 Rev ^ or retarding the passage of the mail. L 1 M' 292 «2 FEDEBAL BEPORTEB, 822. Opfnioji of the Court »«« of q..itting;."n:lat! z TrL:"*?."" to do with thp tArmu ^# 1 "»a"s, and had nothing lu nun me terms of employment. ^ strange, indeed, if thaVriihTcJ rultLlT^ "^ rying out of such an unlawful and ^im^.i ^ '""'' have seen this to be It I«!n K T^^ conspiracy as we one fro™ proJuti^n or suiirforsW "^T' *" P^''*^*^* many n,alicious and toLu „ rri J;£h7h "^ ''"^ 1 '""^ tongue has been «» „ft" ^""*^,^'"<^'» ^^e agency of the «tructinn 7n ^ • ^'npl^yd to inflict. If the ob- struction to the operation of the roarf h^ tK» • unlawful and malicious it u\Ti ^ ^ '^'^^'' ^»^ instrument wh"h he uld to Iff 'f^/ ^^nt^Pt because the than his hand. "^ ''^*''=* '* ""' ^^' t«"^'«- rather i« vrrVdtrThrS'^ *" """^ *'^ ''"«^*'«" f-^her. It »oiy Clear tnat Phelan came here to caprv n,.f „„ n I conspiracy, in the course of which anH t ^ . •'"^^''' he attempted, and DartiaHv «„ 7^ Pursuance of which, ern RailLd operated bvaT'*' '"i^'"« "P *»>« ^outh- court, as he Jknlw H " ""'^"'" ''" '"•<^«'- «* this ploye of tLlouttrrp^"' ^^"^ '" ^^"'"^ "»* 'he em- F j'ra oi me southern Railroad was unlawful hv tK« i t Ohio and the laws of the United ^t«*l u '^ "'' "' prevent entirely its operation H» In "^ '"*^"'^**^ '" he subjected the^eceitr to ^,t«pj;2""^ T':^'f -^ occasioned by his acts. ^^ reducing the loss It follows that the contemnor is guilty as ch«r.«.^ ^ •. cjnly ren^a ns to impose the sentence^f tLlt'^TH " ■ * the discretion of the court tn K» ^^ • ? ^"'^ '^ '" in reference to the co^SS J^^Hwch "th"" "'T.^""" to be reliable. The court wo^^i!.^ ^ """''* ^^'^^'^^ leniency in this cTi if tl ""^^^1^ T '"P'*"' '" shown the slightest regard frhZderlS..' ""'''' ^'^ the receiver was attemntinn , ^ *^ '^'"'* ^^^c'' tion of the road EvTfi'^did notf T/*' V""' ''^'''■ sition in which he had p,7t hi^s^lf /^ '"'"^ *''^ P"" order of the court to the iliveT? \ 'T'' *'' *'"' Railroad, his arrest and fh?^ * to operate the Southern , nis arrest, and the service of the intervening peti- THOMAS V. CINCINNATI, N. O. * T. P. BY. CO. 293 Opinion of the Court -d s^^scit t;rr" r-' t-^^ ^- ^' to P alike, or for the privations and sufferings to 294 62 FEDEBAL REPORTER, 824. Syllabus. which they have subjected innocent people even 'if fK co.plia„rXhe''i''7 th^ ''r *"r"" *"*- -ill JI and unlawful .iSrctilster^r ^"' *" ^^^^^"^ ^posing upon the contemner the tnahvof ""* ITie sentence of the court is that F^ant V pTerr^"' and safely convey ^^^ t^S^.^ ™^- -^^•^' im UNITED STATES .. AGLER. (Circuit Court, D. Indiana. July ,2, ,894.) r82 Fed., 821.] IHJONCnoN AGAINST COMBINATIONS IN Restb*,^. „ T MEKCE— JlmsDicTloN — CndAr W T , ''*™*'-''T "f INTEBSTATE Com- contains no prayer toTpZ^ti^^' " "'" ^"^ ""'='' '"J"°<'«0" although It render, the bl^„?,abte '"f " -"^ ♦«<'huleal defect, tlon Of the court or render thnni™. f ? ""' ""'^ ««* J"'-'«'J'<=- An injunction for ^ulTrZlt^::^Z!Z^" ^"^ '™'"^''*- named in the bill, and notVe^«^^TtH k ^' "' "^"^"^ ""e "ot tlon order Is served «n hi a7te 'f th "^r"- "''"' ""« '"J"°<'- terred to In the bill. °' *^* unknown defendants re- Same— Proceedings to Punish Vmi ..„,„,. . . Violation of s«.b an I„i„„ctIon oMe" whTcrf«lI«T'".'r *** ''"°'«'' order was a lawful one. In the lan«»l , !^ '" *"*^ «>"' the person charged, not nam^ ^^ZTr 1 ' '^''*"*'' "' *"«' «» parties referred to therein or tlTat .uh Z ""* "' "■« nnlcnown •^ was engaged in "MlngVe oollfS^'J;';:^ °^ "'^ '"^'• • »'"«^'^^^'^^^^i^i^^^^^ri8^:^ westpuw — - UNITED STATES t'. AGLER, 295 Opinion of the Court tijf orco^^t t'^xtyi^rr* '^''':- ^'- '- - moved to quash the infomS "'''"'''"" ^*«''^''"' ^. B. Burke and ^-rfWn Con-, for the United States. McGvXlough <& Spmn, for defendant Bakeb, District Judge (orally). ject-matter scorrmnl ?/'"''".* Jurisdiction of the sub- in an the biTand S :;S"in"tt '"',• ^'^»* '^ *^-" preme court of the UntTS-^ i Judgments of the su- defendant has caSed Sfattentt of tf' ""''"' '*"• ^h" the question whether or nnt^l ° * ^''^ '^•""^ *»• Now, Stati had iuSSon ' °? ''''"* **"••* «* ^^^^ United for the ^^^^T^:sz:is^:^f^^^^^^ law that authorized fha n^„ * • ,. . ,^^ ^^ ^^ot there is any of the sort of acSttat S fortT^^f. *** ^^•'^^ '"^'-'>- Prior to the 2d day of Jut £ Tt " ^^'t" **^ ''^ the United States, as'a muS^aXptirn ^ "'"' ^'^ either by petition or bill to L i^l^^^ ' *** "^ P*^*""' the United States, and invok^ th! 5' T[^ "* ^l^^ty of their restraining nower IT ^ ""* *** *^*^ «>urts, by ria^ of the mtLTStSrarotr^^^^^^^ Prior to that time th^ c..] ^^^^ ^^ ^^*^®rstate commerce. of the cour^^^ Z^Ct^^^^ Tu"" *^ '^^^' ^^- as a government co^d nrl . ""^'"^ *'''' U°'*«'n»>ination with the minds of Debs and othl^ or that they we,« engaged in the common purpose, and henTe' ft. they were in the conspiracy that is mentioneS in ?h^ statute, provided the things that thev were trvino- t« T. would naturally i^ult in delaying or interrupting the It Sht'^ln"^ " interrupting the carriage of'pain^ "and freight from one state to another. I think that in these nar ticular. the affidavit is insufficient I think t^^ charge E m«rr«! ''"*'7^«° »* »« sho^u by an affidavit that thi« man was engaged m the combination or conspiracy with other railroad men in aiding and assistino- f« o!l I ?u^ •. and-interstate commerce. f^LZZT^^ZllTsZ': cause of action against him, and then it would Te^ndrnn the proof whether or not the offense was made out "P"" 1^ 301 IN BE GRAND JUBY. Charge to the Grand Jury. [8*0] IN RE GEAND JUEY.- (District court, N. D. California. July 13, 1894.) [62 Fed., 840.] CoNSPraACY— Obsteuction op Intembtatf P«w.,™ Hon or conspiracy on the nnrtif , ^""^K:E.-Any combina- and IntinUdaTn prevent ZZ "^ r "^ '"^° ""o "^ ^""«°«' ;nte.t,e eonrer^c^T,?:^^;^ J^v riZ'lT- " eiaring it an oilenfrto Ino^ *„; /.^^t /Zm' T. ^\ ' '^' ''" the passage of the innli J, . willfully obstruct or retard Any negligence in fhi<\l ! ^ appliances witbin reach. ^ ti jeapiroTbi: ';rx ::nre:^^"^" '^ '^-^-^ •''«-- ri,frLi^:zr:rer^tirr:::r^ r -* *- -- - =:.r;ther.t7 -- ==oirrdS"rf 'ruLrh:;;^ griz™;;thatntrr "r "-^ •- would warrant a conviction "^ ^"''^°'* ''^'"■•« *"«« Charge to the grand jury by Morrow, District Judge: [841] Gentlemen of the Grand Jury: You have been sum ur . "If r? "' ^^^'^'^ ^"^''^ «* th« district Tourt ofT; United States for the northern district of California It UnitTd L'Lr"^' "''°" ^" ^^^-- -<^- *^e '- of ti^ The extraordinary occurrences in this state during the oast t_woweeks^^quire yourmimediate attention, and fall for t "The charges to the Grand Jury t^uM'l^~e2jeA ^«^~^^~r not relate to the anti-trust law and are ther^f^^e^tCnt^ ' " S.yllabus copyrighted, 1894. by West Publishing Co I 302 62 FEDEBAJL. BEPOBTEB, 841. Charge to the Grand Jury. thorough and sweeping investigation. It is a matter of public notoriety that during this time a great railroad strike has prevailed ; that the most important channels of trade and commerce carried by railway service have been closed, the business operations of the state paralyzed, and the passage of the mails seriously retarded and obstructed at several points in the state. The constitution of the United States provides that congress shall have power to regulate com- merce among the states and establish post offices and post roads. Pursuant to the first of these provisions, congress has provided by the Act of July 2, 1800, that " Eyery contmet, wmbiniitiou in the form of trust or otherwise or conspiracy, fn restraint of trade or commerce anions the several states, or with foreign nations, is hereby declared toTilleg^il K person who shall malse any .^uch contract or engage in any such coinbinaticn or conspiracy shall be deemed guilty of a misdemeanor miTJT'''^''''- **'^"^^ ^*'«" ^ punish^ by fine iJ^re^eethug ^5.000 or by imprisonment not exceeding one year, or by both said punishments In the discretion of the court " •^'^ • "^ "^ o""i sani 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 con- sists 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. County of Mobile V. KimhaU, 102 U. S. 702 ; Gloucester Ferry Co, v Pennsylvania, 114 U. S. 203, 5 Sup. Ct. 826. The primary object of the statute was undoubtedly to prevent the de- struction of legitimate and healthy competition in interstate commerce by individuals, corporations, and trusts, grasping, engrossing, and monopolizing the markets for commodities U. 8. V. Patterson, 55 Fed. 605. But its provisions are broad enough to reach a combination or conspiracy that would in- terrupt the transportation of such commodities from one state to another, and in this view the scope and purpose of the statute have been the subject of consideration in the courts, notably in the case of U. S. v. Workingmen's Amalgamated Council, 54 Fed. 995. That action was brought' by the '* IN BE GHAND JUBY. 303 Charge to the Grand Jury. li!' w t^*^' '"', *'^! ^"^"^ ^'"*"<'* «* Louisiana against the Worlnngmen's Amalgamated Council of New Orleans, La., and others, to restrain the defendants from interfering with interstate and foreign commerce. The facts were that a disagreement had arisen between the warehousemen and their employes and the pnncipal draymen [842] and their sub- ordinates concerning the recognition that should be accorded by the employers to the demands of certain labor organiza- tions m New Orleans, and it was threatened that unless there was an acquiescence m these demands all the labor organiza- tions would leave work, and would allow no work in any department of business, and violence was threatened in sup- port of the demands. In some branches of business the effort Thk Z ."? r u ^" ""^''° ""^^ ^y «ther worlonen. thZTjT*^ ^' '^' intimidation springing from vast throngs of the union men assembling in the street, and in some instances by violence, so that the result was that by the intended effects of the doings of the defendants not a bale of goods constituting the commerce of the country could be brought It withm the provisions of the statute. In other words. It was determined that a combination of men who by violence and mtimidation restrained trade and commer^ n violation of this law, notwithstanding they may have had m view .ome other purpose in relation to their employment You will observe that in this case the elements of LiS-' tmn and violence were present. It was not a case where the men merely quit work, putting their emplovers to no ofter inconvenience than of securing other men to fill their pkces, but It was a case where force and intimidation were used to prevent any one in that locality from engaging in S county. The order granting an injunction in that cas^ was -^ffi-d by the circuit court of appeals in the fiThZ cmt. 6 C. C. A. 258, 57 Fed. 85. The law as thus declared S ?n S ^ ^f^^'^oi the circuit court of this dis"- Which I am now directing your attention. This law de- I tl 304 62 FEDERAL REPORTER, 842. Charge to the Grand Jury. termines that any combination or conspiracy on the part of any class of men who by violence and intimidation prevent the passage of railroad trains engaged in transporting the interstate commerce of the country is a violation of the act of July % 1890. Another agency of the government is involved in the transportation of the mails, and to protect and secure the efficiency of that branch of the service it has been enacted that all railroads or parts of railroads which are now or hereafter may be in operation are established as post roads (Rev. St. § 3964) ; that the postmaster general shall in all cases decide upon what trains and in what manner the mails shall be conveyed (section B, Act March 3, 1879; 20 Stat. 358) ; and every railway company conveying the mails shall carry on any train which may run over its road, and without extra charge therefor, all mailable matter directed to be carried thereon, with the person in charge of the same (Rev. St, § 4000). It is further provided in section 3995 of the Revised Statutes that " any person who shall knowingly and willfully obstruct or retard the passage of the mail, or any carriage, horse, driver or carrier carrying the same, shall for every such offense be punished by a fine of not [843] more than $100." This statute has also been before the courts in cases where bodies of men operating as labor organi- zations have prevented the passage of trains carrying the mails. In the case of V. S. v. Clark, in the district court of the United States for the eastern district of Pennsylvania (23 Int. Rev. Rec. 306, Fed Cas. No. 14,805), the defendant was one of a number of persons who assembled at the depot of the Ijehigh Valley Railroad at South Easton, Pa. On the arrival of the mail train at the depot, the defendant, who had no connection with the train, said to persons having charge of it that the mail car could go on, but not the rest of the train. The defendant afterwards got on the train, and, with others, placed it on a siding, where it remained for several days. Judge Cadwallader, in charging the jury upon these facts, said : "The defendant is charged with retarding the transportation of the mail. * * * The mall, in point of fact, was retarded, as the postmaster testifies, two or three days. The occurrence which re- tarded it, according to the tendency of the proofs, was that several IN^ BE GflAKD JURY. Charge to the Grand Jury. 305 ^TndXt^r ^?: o?^th^erUar^T4V^ ^ ^.r" to a siding. If thaTwas thl fapt f^^^^^^^ ""^ ''^^^^"^ "' ^« ^hey did train which transpoi^i the mail ft ^t^^"'^? ^^" *^ "^^^^ ^^^ whether they vvere or were no? wfiiiL^w ?k '''**' ^° ^'""^ <>f ^^w. car or the pa^rticuL'veS ca1^1!ftle^\^f 'sL^d^gH^^^ ^^^^^^^ The learned judge then quotes with approval the opinion lowl" ^^"'""^««*i of Chicago upon the subject, as fol- roldl^tfsli^e Shan't '^^^^^^^^^^^ -f « J^^ -eans of rail- defendants were wUliiig^thn tt^^^^ *? *^*« ^««« that these borne In mind tL^the maU car can onL''^' '^^"^t ^^' "^"^ '^ ^"^^ ^^ the railroad to tranRDoi!f 1 ip mnfi u^ ^V ^"""^ ^ ^^y ^^ to enable panying it. It is nornra^^rfowr^ ^^^""^ ^^^f^ ^''^ ""^^^"^ ^>-s «ecom- transport a mai car bvTsef^^bt^^^^ fhT^^ *?J°^' ^^^ ^ ^^"'^ad to ous IcJss; so thatThi^i^omLl^Xy p^^^^^^^ nf.n""'^^^ '^ ''''- really, by preventing the transit of nfW i^ol ^^'^ ''^'' *^ «^' ^^'^^ with the transportatfon of the mails/' ^^^^^sers cars. Interfere an^rj'".''^'''? ''''\'^" ^"^ '' applicable to the case of an obstruction mterposed for a purpose other than that of retarding the mails. This was decided to be the law by the me case of U. *. v. Airby, where it was said- uniaw^t the Intenti^S't Srucr;iu'n'^"'".J'* '° *"*'»««'-<» although the attainmmt nf ^JsT. » i" *^ '"Puted to their author, object." 7 WalKl^ * °*''^'^ *"''* ""»y ^^''^ been his prlmair tation of the mails had been obstructed by some persons acting under the influence of a strike. JuL JackCL business which is carS on ^t ^r* '^U°'' ""'^e'talce to stop the which is the mainsprVng t " the ^cL^s n?T^' of the country, and all this is done, thei yoi sten nn^Sf Xhf ^/P^'^^'y "ke ours. If to Interfere with I mnto th^ ^""I "^ich you have no right occasion wkh a hoii Zt i i^! general remarks on [844] this masses, ttat they Zy^ at on^ ^. *** f."" "' *'«' '"telligen? Rely not upon comblna^n and^frSL* T"" ^^^ ""« '«"e° '■■to. They are disastrous sCp"nryourm!fte*"„„Tit? your Interests, prises and business of the^LLun"?y whfeh l^irnfshTh^^ *"* ^°**'- the means to sunnort his hmno t^„ ""'*'■■ rurnlsh the wage-earner stop our manufiXres our mins ^r f^ i*^" *" ^"""^ measures to ■T' 306 62 FEDERAL BEPOHTEB, 844. Charge to the Grand Juo'. mSf SS^rir^foiU' S^h'^^d:,";^;"* "^ «"« ^"It that olrcnmiS^ that mSS S^riT^mDaSlTt S!!^ ""^.i"'", "' to enter Into the* combtoattoTalS ."S^^H?"' '*' ^"" """'" '*'"«' _ That the passage of the mails over certain lines of railroad in this state has been retarded and obstructed there is no question. The regular receipt and dispatch of mails over the roads^of the Southern Pacific Company have in fact been suspended at the San Francisco post office for a period of about t>vo weeks. Who is responsible for this state of af- fairs T The strikers, the railroad company, or both? The mlway is a great public highway, and the duty of the rail- road company as a common carrier is first to the public ^e road must be kept in operation for the accommodation of the public, if It is possible to do so with the force and an- phances within reach. Any negligence in this respect is not excused by temporary difficulties capable of being promptly removed. The damage and interruption caused by the elements usually receive prompt attention, that traffic may not be suspended longer than is absolutely necessary. The same energy and good faith should be observed with respect to the removal of labor and other difficulties. RaU- road Co y Hazen, 84 HI. 36. The present controversy be- tween the Southern Pacific and its employes appears to be in relation to the movement of Pullman cars. Both parties to this controversy have announced in the public press that they have been ready and willing from the first to move freight cars and passenger trains without Pullman cars In my opinion, the situation has been of such an extraordi- .nary character, and the interruption to commerce and the transportation of the mails so serious and long-continued as to have required of the railroad company to temporarily waive qu^ions concerning the make-up of regular trains (as the officers of the company claim to have done), and em- ploy such resources as the company had in the movement of other trams m an eflFort to relieve the prevailing congestion and distress. This obligation I believe to have been a public duty, and a willful faUure to perform this duty with respect to the movement of the mails and interstate commercTis therefore, m my judgment, within the purview of the statute IN BE GBAND JUBY. 307 Charge to the Grand Jury. I 111 T^a'^II *" determine this question under the law ^ yo f i P''«^"t'«°- In this inquiry you will not limit your examination to the conduct of any particular class of per«>ns, but carefully scrutinize the acis of all partS con! cerned, whether they are officers of the railroad Z^ZTl^ employes, and without fear or favor or influence 'S^^any kind point out m the proper manner the persons who hive ^ansgr^ssed the law and imperiled the besfinterests of th" S estv !f tl '' '"'/"*^ '° "P^*'^*^ '^ ''"thority and S f ' T'^ "^ ^"^ ^* *•»"* tho^ ^ho have vio- ilr of' -Xr""^' "'"^^' *^^ "''^ *^' «- •'-"ght to the In your inquiry you may find that parties have so asso- ciated themselves together in their conduct as to bring Zi withm the law of conspiracy. The statute of the uS States upon that subject is as follows : <^^t\^fSZ aga..;;t"thrnn,?iS%rr°- --P*- «'ther to United States In an^ manner or for nnt^n^*"**^' *"■ *» "^'^u^ ^e snch parties do any aS to effe^ the ^hL^ T*1f ' ^"^ °"« *"■ ■"«« of ties to such conspiracy sha?Ib?li«hi»i! ' the conspiracy, nil par- ten thousand doLl^^'^or to tapr?sonmentT;'^„,''' •'°' ""■* ««« .vears, or to both fine and ■mprison^'^'InTrth/discrtioro^ti^.lJ.n^S The elemente of this offense are the combination or con- spiracy to violate the law, and the overt act or acts to ca^ the conspiracy into effect. Where several persons are proved to have combined together for the same illegal purpoi ai^ act done by one of the parties in pursuance^f'ZSS concerted plan, and with reference to the common oS i m the contemplation of the law, the act of the whole Srt^ a'^y of 'thel*'' ^T' "' ^"^'* '''' ^'^' "^ evidence aS It is al=^f 7w ° ""T ""«"^^<* ^ «»« «"«« conspiracy, tii during r i "°^ declaration made by one of the par- ties during the pendency of the iUegal enterprise is not onlv pJovel' al ;« *' r ^"^' ^''*' ^^^" *« combination is" STmsflvr ^'""^.f^P^n^ible as if they had done the act of Zw2i7? "'■^] ''^r' ^ ^^ comiection that the act t ZcZlT* ^"''*' *•*" ''**"*« ^^ '^' important element m the cnme of conspiracy. The law regards the act of un- i^sF 308 62 FEDERAL REPORTER, 845. Charge to the Grand Jury. lawful combination and confederacy as dangerous to the ^ace of society, and declare that such combination and con! federation of several persons to commit crime requires an the '.^Z "^"'"i*" '^^'. P«>^de«/. concurrence of at -c ux your number, — ^a mere maioritv will n/.f o,,ffl lou are to ke^n vmi^. ^«i;k x- "»J"*i«'y wm not suffice. to questii: '^; rLt?r"rr.rn ' ^t^^^^- - your associates on the grand iu^ ^ 7h " "*iP'' *»' examinations, should ^^U>i^lriJVn^^^^''j'''' may desire further instructions frlX™;!.^'? -^"^ come into court for that Duroosp «t,^ tK i **".^' y»» may explained to you with rLrecf riV-tttr " "^ '^^^^ [8101 AKTHUR ET AL. .. OAKES ET AL. (Cir«„t Com of AppeaJi^ Seventh Clmilt. October 1, 18M., ' [63 Fed., 310.] injections ?iJ^tl\T '* T."" "PI^l froni certain the decision the courTsaid :] ' ^ ^^ ^^ «>' »f"^nSSrTA"2 "'^"entmr r "*"^ ^«» "-le to the act c^merce against ™TiwfT'rSr« t^.^/'^ *° ^""^^^ trade and 209.) It 18 not uece«^^ ,„ JSr^"«?,n'!? """"J^'le*' (2C Stat meaning of that statute, the acts a^dJn.h'^**^^ whether, within the Injunction was aimed wonld have Sl^S '°"."T "^-'-^^ "hloh the uierce among the several states Th^^^ restraint of trade or com- act The questions now i^fore thJ^^,^ ^ """2 ""* ""^^l "Po" that out reference to the above art «nrt^^ ^^J^ •**» determtoS wlth- contro, the exercise Am^iT^Tr.r^,r^^^F'-<^^^>^^ tLat UNITED STATES V. ELLIOTT. 311 Opinion of the Court. 127] UNITED STATES v. ELLIOTT ET AL.- (Circuit Court, E. D. Missouri. October 24. 1894.) [64 Fed., 27.] CoNSPiBACY IN Restraint op Interstate Commerce Wt... n rr7f"arrrei;r" ^'"'•'"^^" -^^^^^ hauiing ears, and secnrtn., n,^ "-""ymg freight and passengers, ers, and to ind"^ SL to 1^^'^ !' T""" "'""^ *»«"• ^trik- struct and destroy int!^?!!^ combinations and conspiracies to ob- compllsh^ te nof v^lH^ commerce, before such objects are ac such pi^fui " ""^' "' "^"^^ '» '^"^^ to authorize ^j"^' iZTr Off-P^^o-'^ "or Named « BBx._Under Act be in^or<^ rd^Sn^C u^^Tr^r h^" " ^'"'" [88] the terms of the order where it ,i^„'.^ ""* ""* '^*"" ative on all persons actog TZuLnZT;^ '"f " '* ''P*'' splrators. though not name^ to t^ wHt Ifter V^ 1 """ some act by them in furtherance of 7hlJ ^ commission of the writ on them. ™"''^"*"<* »' the conspiracy, and service of Bm by the United States against M. J. EUiott and others to restram a conspiracy to obstruct and destroyTnterete^ commerce m violation of Act July 2, 1890 (ae Stet ?tf's?er^?^"'^ *^« '^«'""-" ««^ J^'^^y^ertainof^hedefendants. The district attor- • Prellmina^lijii^on eranted~?«2 Fort ann — ^ :;;=r ' syllabus copyrighted. I^. brw^ ^tisMng Co"" "^ "^ 312 «* FEDEBAL REPORTER, 28. Opinion of the Court ney submitted the same on the pleadings- and th» -i * ^ ante, on the pleadings and an extfndv^rief ^l ! •. '"'^" out of the recent «strik« " «„-i ♦»! I-., ""^ ^"'* 8^^ of the United Staib; 2^ .! ^'l^ ''*' ^'^ »" ^^^alf rection of the attor^; ^Z oJ^SeV-.TZ' "°'^'- •*•" join the defendantTZ-f /I ^°'***^ ^*«*«s, to en- conspiracy whT^th^T , r^^r^'^tio" of an organized inteLte^colne^'Se ?eS.r '^' T ' '''*^'*^""^ -*^ the material allegations o? ttTbiT'th.f f""'^'/^'-''^ «» are well pleaded tCJ^ ' **' '^ *" '^cts which follows: iSr J?b sZr^^r^'" "'^""^«*» »« -bined and ^n^^Z^ZS^f^Ti^^^^s,...^ radroads named in the biU,-Lng aLt ^Tlf ^K "^^"^^ nnportant roads coming into the fitv nf «/ r ' """"^ which are engaged in ^rr^ng^ United Sta^""' ^'T in interstate commeriv. n.™5 ^***®^ ""^^'^ a^^ X wio union, ana foreiorn countripc? n ;c a «i.i- charged that said a«f<.«^„ * x. ^"""iries. it is further toinfuce J;LTsin t^^^pW^^^^ ^ ^•'"^^'^^^ service of toeir resJrtll.^ ■ ^ "'»'' «ids to leave the panies from^Sfrrrero?"!^ '"""^ ^'^^ •^"'- place of those induced tn „,!?f ^u u- ^"^ P*"^°^ "» the being to p^venf r/^1a "^^ tZlS^^^ i^?i>zsr^^:^ ^" the^necessar;r;iro^ spirators in furthZrof tie o^i of\l ! 1T' "*" Among other things, it is alle^J tKLt oTthSTT ante, under the leadership of one Dete h»i f ^^"/^^f^' and directions to Derson, ir, fj. , ' . '^"^"^ "•"•^ers act subject to the^lSii 1^''^'' "'f^ '^^^^°*'^^ *° been coUianded and Sr^ Tn "" T^ "^^^""^^ ^^^' respective railroads I^^lt^ "T *T ''^'"'^^ 'be said defendante We Sr^tet^S ^Tth^lr^ ""^ tions of trains of such of said ^^m^ • ^ . ^'^^^^^ ^P®^*" certain demands rnl'^lZS^lZZf:^ ^7^ '^ *« «p.™cy, and that it is the p„rp«. a'nd oljSt :7the ctfe^-" ^ UNITED STATES V. ELLIOTT. 313 Opinion of the Court same for food anH Tc oi , *^ Preparation of the from which^int tteS fZ I T •»T*««turing center, tides are distribuldrvl„lrpi%r' T"'^''*""^ - States, and other necislrCrn/iT *^^"gbout the United -ntial to the —"^"^^^th U'^^" '"''**"^ ^^- country, and for ite domI«H^T* ' . .^^e'^e'opment of the terference with Ihe f^nT f ^ *' "T*^ *"* **»« ^fo'^said in- public detrll^i'^X \T "* '^^ ^"PP"«« '« * great to aU the prpTe ;fThe ?ril",^^^^^ '>{''^fOO people^ut and efforts of this distSfng ^Th^'b^tf ^"'''•*'" business, have becomp larc^ni,,^ ^' ' ^^ ^^® <^"rse of supply. The ^Zo^^tmTlT T" ''"'^ ""^^ •'^ their aiders and abettors enil^ ^^ ^^^ P"^'^' a'^d further prosecution of thefrul <.'f '■''*''"°^'^ ^"^^ *be ous conspiracy. unlawful purpose and danger- thiltuiwlTutL*' r*^"" "' '""^ ^---^-ti- of States to Eg su?S r ;*"•' ^'^^ "^'^^ "'^ ^^e United gestions are made of m n„ ^"^ ^1 '°^ ^^"^"^ ''^'^^^ «»«- temporary order of /nZT ''"l^',**"*^- ^s raited in the suit was iLSutLTuS^^^ 'Lf "^^ ^=^-«' *•>« of the United States a^d^LhS^ **' *^' ""''^^^ g«°«™J usual form. I S> L ° *JL " '' ^'^^'^^ «^«™ * 1<»1 1 OUvera v. Insurance 6-^ 3 Xi m T^'° "P*™*'""' " W to prevent and 4^^^^ l2"lXran:?r !' \ 316 M 64 FEDERAL REPORTER, 31. Opinion of the Cowrt binations to interfere with the operation of such commerce. Accordingly, section 4 of said act provides that : T^t^lTIITri J!'??"* ^"""^ °' *^ """'ted states are hereby In- IS?1! oK.li i"'^l?"rt'0D to prevent and restrain violations of thl7«rt. Sftii .n Ik*? "■* ^"*y *" *^ ««''«"• dl'trlct attorneyHf the Un»li SSl^I to*^ mX^ei^ffi'-^- }-« n «8 may petition and before flMld"''^"""^ *i^*™f in""?, "*"""?« ""'^ temporaiT restralnlnr Ardl,^' »^£^i^. ^ "* ""^ ""'e make such tbel^^i^ PWUbltlon as shall be deemed Just In It was pureuant to this statute, inter aUa, that Judge iHAxm issued the temporary restraining order in this ca^ I am unable to perceive the force of the argument against the power of congress to authorize such civil proceedings in equity to suppress and restrain combinations and conspir- acies to accomplish the obstruction and destruction of inter- - state commerce and trade before it is accomplished. It was just as competent for congress to provide this civil remedy of prevention as it was to provide for punishment in a criminal proceeding for the unlawful conspiracy entered upon or consummated. '^ It is urged by counsel for defendants that courts of equity will not interpose by injunction to prevent the commission of an act which, when done, would be a crime penally pun- ishable. This is an « old saw." It is a general rule of equity jurisprudence that courts of chancery will not inter- pose where there is an adequate remedy at law, nor will they ordinarily interpose to prevent the commission of a crime. A well and long established exception to this rule> IS that where parties threaten to commit a criminal offense, which if executed against private property, would destroy It, and occasion irreparable injury to the owner, and esp^ cially where such destruction would occasion a multiplicity of suits to redress the wrong if committed, courts of equity may interpose by injunction to restrain the threatened in- IT 7^" ' f ^*^,*^"» *« m"' ''ould be very imperfect, and indeed impotent, if a number of irresponsible men could conspire and confederate together to destroy my property .. UNITED STATES V. ELLIOTT. 317 Opinion of the Court to demolish or bum down my house, that I should be re- mitted alone to the criminal statutes for their prosecution after my property was destroyed. Most generally, such law- breakers who engage in such conspiracii are a lot of pro- fessional agitators. They have no property to respond hi damages. Their tongues are their principal stock in tead^ and inasmuch as imprisonment for debt is abolished and ^uldtauite"'' 'T""^f ""^ P^'*'''^^^^' - -'-ti- would be quite unavailing. It certainly presents a case that. m<.t strong y appeals to the strong arm' of a court o"^S only means of conserving the rights of private property It IS now a well-recognized office of a court of LiVto conserve and preserve the rights of private propertH'ad^ vance of its molestation and appropriation, whe^, from Jhe EM Arthur wa^t' """"' '"'' ^" ^'»^^''««' i° -hich al 763 Fed ,Tm '^'^T'l ^^^'^^ Thomas F. Oakes et ai. (b3 Fed. 310), Mr. Justice Harlan, in reviewing the ally niet this objection, and presented the law resoectin^ unlawftil conspiracies with a force and cleamei tTw^ Z ^'"If f ^""^ ^^ rest. It may not be out of plaHZ to say that no public decision has perhaos l^n t k misunderstood or ignorantly or intenS^tlfy iS' 'LTtS and perverted, as that of the distbguish^ W^ S zations, ,n the absence of a contract binding the employ^ to a g^ven term of service, whenever they becole disrtfsfild with their employment or their wages t« n.^wi! • of the pmnin™- „.*i, , "^*6^' to quit the service Sve a St t; n ""P""*"'^ "^^ «°U«<=ti^ely; and they nave a right, by preagreement or preconcert n* »-.♦; / unite together for taking peaceful' Id Sfut m^' Z secure an increase of waMs- tn mitkj means to a body, from the sTrvilTf 'tht '''^^•^'•«^' fParately or in 318 64 FEDEBAL KEPORTEB, 32. i ' Opinion of the Court nounces the further proposition that such men have no risht to conspire and combine together, not only for the purSe of securing better conditions and wages, and quit^S X?iipl JT "P/^"« '''' P^**=«^ ^"^'ted with pal th^^ttA "■' '^"u^ ""^ ^"""S *« t«k« their toS;r tr th ^ ' "° r^*** *^ *=*'™'''"« ""'i confederate together for the purpose of wantonly injuring and destrov proDert^ it ^'^,'^"""7n °^f and control of his private telawl^I ^v .1 "^'- '* '^*'°" ''y "° individual, may taken to L 7 ^""^ •^"'i'' * •^'^^'^"* thing when under taken to be done by a confederation among many ha^mr tt iroSrof " '^ T^'- <" iBJuring^and I'stS me property of another, by preventing him from r,roJrJ ng his business by taking into his sefvice othrtHuppt the places of those who vnliiTitanii,. u ""^*^^s w supply learned justice saTs: '^''^""'""^^ ^"^^ ^^^« ^"^- So the c^nspir:^;'^';,*'^^^^.^^^^^ that any combination or has for its objeot t^ crinni th^ '''^"^^ ^ "^^S*^' ^^^^ch receivers, and to embm.r««lTh! *^® Property in the hands of the inanagementrelther ^y SLwfn^^"" ^^ ^^"^ railroad under their gines, cars, ir other iWrt^ Sf th-i^S^^!;^"^ "°^^ ^«'' "^e the en- their possession, oT TSil^ o^truc^i?^* ?h i^^ '"^^^^^ring with ageuient of the property ^hv n«J«?^ ^ ^^^^^ ^"^^^^^ ^r man- or other wrongful m^th^saM^«rfhf /^^' intimidation, threats, against employ^ remain^g iTtLefr servlTo^hl ^' .''^"iT. "^'^^«' «^ to cause employ^ to quit, or prevent Jr^WJ^ methods the service in place of thaZ }^nZJ^^\^ ^^^^L ^^^^^^ ^^^^ entering acter disturb theZceotZilT^J^ "' ^Z? °"*^^'*? ^' ^^^^ ''^^^ They imperil the interests rail o??h!^ m schievous in the extreme, demand ^at the f^ ^urse of tLZlnu^''' A**^^*' ''^^^ rightfully structed. Thev endan^r th5™c.^ 1^*^" "^* ^ unreasonably ob- liberty of inlviduat *^who ,n^fS°"i "^.''"^^ ^'^^ ^^^^ I^rLnal privilege of cho(^?ing the terms uS^n whTni'V ^'^f.^'' inalienable or attempt to enter the se^S^ T t hlo ""^ ?^? "^"^ ^"^^^^ enter binations are aimed. And a7 arts of tS^ho^"^?"* '^^^'^ «"^h com- have defeated the proror fdmini«frn\^ ^^^^r^Jl^r referred to would Inflicted irreparable ^nW n^n it il^*"" n'^' ***® ^^"st estate, and of the publi?, the rcS^ ^t pCrrVramSS'^.f ^r. *^^ ^^^^^^^ as to restrain all such acts m hflVf c^^a n T®^ ^*® injunction so as combinations and ^Z>Zde^^ K.'^Vi^ ^? ^* ^«^»^' «« well physically injuring the orOT^ nr^i^li*"?, ""^^^^ «°d intent of regular, eontiiuouf oMrS'thrrailrS^S^'^ interfering with the Further on, he says : " In our consideration of this case wa ti««A «^4. i , «-a«on or counsel ,„ reBp^.'^Tu^^'J'^Ta^ S^uXl^pt " LSITEIi STATES V. ELLIOTT. Opinion of the Court. 319 v^ent^ wrong wl.icl. If committed, u.ay be otherwise reached by the eQuitv"'shtld t"'"'i? '^'' *^'^ jurisdiction of a court of equity should be cautiously and conservatively exerci.sed, it ;;"fi"jii^t7Kord:s'Lr^'«rr'ir* ,*■'''* *•'« -- -'««> lasting injury about to bl done& X^"?"^. '"J'""«^- <"• S^^at and court owes it to its suitors and i^«"-"' • = ^"*^'' " "^^ ^^^ only remedy the law a?tows to ureL^tTh-."""''"?'^? *" "'''""'ister the aqthorltles all agree that a c^u*;?!,*"**^?, ">""!'??'«'' «£ the act. The this power when the circuu..sti.wl^\,?'ii^ ^''?."''' ■"** h^ltate to use quire it to be done, in oS to 'L? .fl""^"""- <=»«« >» hand re- irrepar.nble damages by wrougdi..rs " ^"'^ '''"'* P'T*''*-'' "ga'n^t •'rL\^''Tt '™'" *"•■• '^"^'••^ Story, the following: tion is mSs^lU'spSb^rr thT "P^''"""^ "^ ^>^"" '"J""c- reiyTfn^'hTtr-'";'*' '""^ ^^^"-^ *»»«* - o^l^- condftLi^of S r ^SSd'" " w"f extraordinary of ehe property, an^d^^l^l^ p^TS/r.t^^^^^^^^^^^ "Lt^nhrettten^t-^^^^^ doer?to*aSSL"/oJ damageri^'rcrr "^'i""'"""^ ^^OJ*-' the wrong- fore in itself. deterSnefhe question a«°?i "^T*^""""' ""'^ »<>* thert I( the acts stop at crlm^r invX ml^Piv f •^'"^"'^^ ""^ injunction, threatened could, if done be id^InnSf^ ^ '"™^- "" " the Injury eqnity would not inter?ere. But T?he^n.^°i?^°'?*^ '» damages irreparable injury to and dtstrn^H™ ? ^'^*^ threatened Involve the country." " ^ '***^°' '^ a great failure of justice in this .^As^said by Judge W«h in granting this provisional in- j;aj™ar^'h"i*:Tln:s'ST?rr ^i!^* ^^cf^^^^* ^ <"--"- «>' until such roads accede to certain ^Lfo^* ^^^ ****<* adjoining states such demands are in themS reaSfnnhi.'"'^ "^^^^ *^^'"' ^^^^^her unjust, is certainly an uXwftiT f^n«iSro^^ ,'''' unreasonable, just or among the states; and under the l^wsTf tL Hnu!??/.^* ^^ commer^ at common law, men may not mnsn^^l JL ® ^°**®^ ^^^tes, as well as by unlawful mians." ^ '^''^P*'^® *^ accomplish a lawful purpo^ 1 "iji— 'irif|iii^«iif|| 1^ ^1 320 It 64 FEDERAL BEPORTEB, 34. Opinion or the Court in atJuntiJ^Mti^^'^*' " '"°!* """""alous state of affairs, m a country like this, if men, because of some supposed or be permitted to confederate and conspir* together for the mar^a^dT"^ ^'^ T '"^^^ in/accedin^t'thJr al mands, and, as a means to a specific end, tie up and ston S^nTh ™"r^ f ^^"'^'"^ '-"^ *»»« Pacific LTt tots J^LoL *r1? '^^. •'°'*^^^*' '^^•*«° «" "»« engines on Sn»St^i T^^ intercepting the transportation of pas- another, and stop the shipment of cattle, sheep, hogs, com in language the far-reaching destructiveness and ruin of such a scheme if permitted to proceed to accomplishment. Of mterstate commerce. Large communities of peVple are dependent for the necessaries of life upon the aSuurS Sr^"!?"'"*"^""'''"- While we have a^tatehe;; w^th a productive energy and capacity for producing nearly aU the necessaries of hfe, yet, because of the fact that othi supplies Uian the local community, people forbear giving attention to the production of articles which they can thuf obtam more cheaply and readily, and depend therefor upon other commumbes, and the railroads for transporting such suppbes from one state to another. If persons may oombme and confederate together to stop the railroad trains from passing from one city and one state to another, it is ea^ to be seen how quickly and readily they could pi^uce rum, famine, and death in our great cities. They could cut off snch necessaries for the sustenance of life as an adequate ripply of coal, and in one month, or less, produce a coal famine m city and country. It certainly ought to be per- missible to the government, representing the whole people, to interpose 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 inteistate commerce. With prophetic eye, they looked far into the future of their country, and foresaw the develop- ment of Its commerce, and the absolute necessity of the free- 321 UNITED STATES V. ELLIOTT. "P'"!"" of the Court. gress did not enaft tlTZZT"^''- ^^' '««' ^^at con- no argument against the 1"^'!^ ^^'"^ "^"^ ''""' '^ powers lodged by the constiH.f ".* '*" P«^«'- Many ment long fie do^rmtt ^ t? " '""^ ''^''^''^^ ^^P^^' them into activity A^\^Tu ^t *^S«°cy arises to invoke " • w2' '' ''^'^■'^' '''"'' '" ^"^^^ objection to such J n?"^ fxigencles of this bn^i^^ '^f' Principles -uM not LT,i^rsi^'^' " '« nii'rrh^e ^iicc^, Congress passed the act of irqa • necessities. And as the seouel nrn a '"^T"'^ ^ *!»« P"Wic to which the comitiy IT^Sul '" '''' ^' ««ty of the law "builded wiir San if"'"'""'"' '^' ^'^'^^^ a-saults made on the i^eraUS^^"■ ^^'^■" '^^^ ^"rious with this trouble, for grasoL !^- ^^'^'^^^ '"^ connection warranted, in vie; of Se^^^Jt"'^'"' ''' "J^«"y "«- by said act of congress tK^ ''T'"''^^ ^'^«« *he courts of the federal conSS Jtd 1? """"^ ''' '^« --'"on thereof. It is their offi^t e"!! '!,' '""^^ '" P^'^uance They possess just such powers "h' 1wk°'' "''^'' '^' ^-^^■ diction, as are conferred^r^hl I 'u' P^^^"" «"d i"ris- the land. And when they cSme^t^^ '"P'''"' '^^ "* diction with which thevT«™T , * ^-^^''^'^^ »* the juris- of the federal legisllTe^?d ^a"„t t^' ^ ^° '^^^ -^ last summer, against unlawful^ol ^'^"'''""'' *^ '^'^ did stram and prevent the opIr^ionToH?""' "* '°^°' *« ^- unappeasable spirit of the mob in .». ! ""'^^^'ning and dom of trade and commit tnh ^ P^^^^'on of the free- Public highways so a?STe'nl'';!! J f*^^ ^^^'^-des on the tion of the United States mail? «T^ """^ *^" transporta- esses the healthful glow-art' ^ "^'''^ ^^ civil proc they come as servitoS"li?hfn fh? ' ""*^°"'^ ~™<*. to the federal constitut on « to it mT'"^ "* '^^ P'^'^ble «erve the public welfare in Ih offl'l.^"^'^^'" «»<* *« -on- mendation of all good^ie^ 7l V^'^ "^^^^^ ^^e eom- cisms to which they have Wn?f'° *^" '^"rtful criti- crisis, that the Am^^JeTSd be'' '' "f ' '° ^'^^ « »«»-vo. i_^ u-I^ '^"""'^"^ tJ'** this s4 322 64 FEDERAI, BEPORTEE, 1U. Syllabus. I'ffirTl'"'"' "' •"^' ""'' ""' "' **'« tunu,lt„ou.s assembly controlled by one spint to-day, and by another to-morrow. thS r /' "'"^* •" **^ demurrer and the brief of counsel that the restraining order granted in this case went against parties jjot named specifically in the bill and the restraining order The language of the provisional order in this respect IS as follows: ^ named In sa^d bin ' " •in,! S.»ll r'?"£*"^ defendants as are ants whose nanies are not stnt^i Jf ** ^""'"'^ "P"» ^'"^^ ^efend- order." '*"•*'• ''"* "''o "■* ^itliin the terms of this The order further directed that the injunction should be operative upon all j^rsons acting in concert with the desig- nated conspiratoi^, and under their direction and control and where parties were not named especially in the writ, but were found to be acting in concert with and under the direc- tion of the alleged conspirators, and commit some act in fartherance of the conspiracy, then the marshal should serve tte wnt upon them, and if, after service of the writ upon them they did any act in violation of the injunction, they would come withm the terms of the restraining order. This 1 think. It IS competent for the court to do, under section 5 of the act aforesaid, and that it was conformable to the cus- tom and usage of courts of equity, where there are engaged such large numbers of unknown persons in such unlawful conspiracy. As the order of injunction was not to become operative upon them until served with a copy thereof it does not lie in their mouths to question the regularity of the proving. My conclusion is that the bill is sufficient, and the demurrer is overruled. [72*] UNITED STATES v. DEBS ET AL.» UNION TRUST CO. v. ATCHISON, T. & S. F. R. CO. (Circuit Court, N. D. Illinois. December 14, 1894.) [64 Fed., 724.] Cohtempt-Pkoceedino in Equity-Conciusiveness op Answeh.- In proceedings tor contempt In equity, a sworn answer, howeve r full •Writ of habeas corps denied (168 U. 8., 664). See p. 565 Debs ^"2W)'°%t^d':l!?, ""''? 'Z'^"'^'""^ *° ""^'^ '^' "«"« <«5 Fed., 210). That decision not rq)rinted. Anti-trust law not considered. UNITED STATES V. DEBS. 323 S.TllabuR. Same— JusTmcATio'._r,.o„ '^° violated." t the order can Justify dis- lliSJ Same.— In a mwpe.iii,o. *„ . ■ t'on the sumciency of^^e miortThl '."•,'"-''^^'»« - 'nJ-c matters of form and averment mZ. '"Junction, m i-espeet to *jQmTv JuaisDioTioN-RE^Trlr ^' •"'"""* ^ 'luestioned. Jurisdiction to restrainrr Ln^- b^.r^-^r'^""'*^ "^ by the proper officer, on behilf ne « "^ information filed CONTEMPT-TaiAL BV CWBT -Thn T^r"^"' tempt and a crime, the contempt ma *,1 T"^ "'* """'"*"«« ••• <^°- curt. ^"""1 niaj be tried and punished by the 'Pf ^O--™.^^^^^^^^^^ OE .HE Ing Illegal "every contract comirin.H ^*''*- ^'' § '• 0«^'ar- otherwise, or conspiracy "in IT' * f '" *"« '""» »' trust, or the states, or with foreign "nttn. *'''"'" •"• """"'^'^^ ««o,^6 and combinations of a ^nt^cZ' " T' "'""^ •■"* ^'''P'fa' ""erely title. "An act to protec.tTade?nJ T '' """■" "'^ '"''^^ «" the «traints and monopolies" Tre iZmT''"".'"""'' """•-''>' - declared unlawful, the words •'Tn1il°,T /' *"* ~"«^ ""ve connection with the words "conTr.^^' :^ ?5 *™''«" '"a-'"8. I" common-law significance but t^^! . " combination," their well-settled legal n.e.2, LVtZ"!" ''T"'''' " '' ^'^ '" ' » merce, if to be accomplish«l^v!vl -^ '"•^tralnt of trade or com- SAME-CONSXBUCTION.JrheCft.r'''"''"^' '' '""'"^'"'• by the use Of the Phrase -.tareCnt o'f /'V^r^-'^ '« "»* ''ff-ted the Phrases " to injure trade " or " to " Z™''''' '""^"^'^ *'*«'' <>-« of SA«E-<;OMMEBCE.-The word "L "'" *^'">«" synonymous with " tradl^as uZ7„T" '" ^"^ ^*^*"*«' '« "ot straint of trade," but has the me^,^" tbe eommon-law phrase "re- the constitution which grant, t!!! ^* "''"■•' 'n that clause of ^AME-ioBFEITCBE OF PbopebtV Th. 8 6. for forfeiture of " „„7^ ^^™* Provision of Act July 2 l«oo any ^nibinati!:^^^ or pnZantT'"*^ """'^ """«' ""^ "'"^ac'' orT' Ject thereof) mentlonTlnTh.s 1*17^^ ""^ ^""^ -^'-^ ^^e aub Portation from one state to anothi ^'"^ '" '"^ ">"'^ of trant not Imply that only casl ta ^h !'' °'" *° " "*«'sn «>untry ■ uc^ to forfeiture shall L Tm^ ZtT'^'"'^ '"«" "« 'ound^subj::^ EQUITT Jt«ISDlCT,ON-Rr^it> '^ ' - '"''* "' *"« ''^- 2. 1^, to Circuit coufte " o^revZT^' T^' ^'^*» "^ ^-^^ ^-'^ _!!!lil!!if^vas,on Of the rTJht of trlaThv? '"""'""" " "' "'« I 324 «. o* FEDERAL BEPORTER. 725 Statement of the Ca«e ta combination wIth^Xr.nr ^^^ '^*'"'™" ""'"^-y ""'«"• to boycott P»llu.an c«^ t „^^'^*^;2 "'^^-^ '" " «>°^'™«y entered Into a conspirart to^L?„ Z j ■""." '"' *""* ""'P"'* engaged in the strike nse^ thr^,! f , ^**'^'- "*"'^' ""^""^'y means of Interference w^tl.l^^*.,''"'"'"'*' ""^ »'•«"• ""'"'r'"' or respecting an Cn^Uon IS ^.^L' t Z^"; ""^ r^^" their purpose, without essential olJn^''„[^ J" f '!!'''• '^'^'^ted In ot contempt. ^-miige or oondact. they were gqllty Same— IntERFESENCE with Rmnv>» t. with the management of a r.^!^?T . ''■ '""""'""■ interference contempt of the conrf-s am ^"^1 1 .! ""^ "' '■"*"-^" " " the receivers, and enjo.n.n'g"^:::^^"™:.'^ tie'Tr Ilr """"'' of the UnitPd r7^i ""L'T T '*'"^'^' ""* *•" complaint m«iveS^Jfhi!?J-®***^' ""*' ^^' °'''«^ "" Petition of the SSC^ " '•^""'^ *"«* -"O by the Union ^,^^ informations were filed July „, ,8M. Tta „u«tance of the «nong other things, that tl^iSfeXntTEuLne "'"'^l""* ^"anjing. Howard, h. w. Rogers. STlvMt^r^Ivii.r'r^u* ^- ''*'"'• Georse W. Onion, and others, «?re e^iS !n f ^i*"^; '"* American Railway fere with and to prevent tl^Sf^s^rt^nr'",".?' ""'"wfully to Inter- conunerce over and upon thl 8^ver^?.^ii,2.'.?' '^^ "'""* ""^ l>iterPl"lnC a writ of Injunction was duly Issn^ v^^i\u^ S'^^'^ "' "»e court persons combining and c^n^piri.^ witS ^bem^nd ",1 r^"'""'**- "'«' »" «t.i.VtI„^?r ' WngTn;-ofX"*S„l^|^^"«„ w, t^ndeTlng. oh- name*! railroads: Atchison TonStii a L ? ^X^"^ ''^ ^'^e following & Ohio Railroad Chi^l^'JlCn nJ^^^^^ Baltimorl nois Railroad; Chicago &Erilnnn^?'^*^i.P^''"S** * ^^ H"- Indiana RailroalT Chicago B^lfZnnirf ^'^''^'^^^ * Wpstern Great Western Railwa^^'hS^m * Chicago Chicago. Rock Island &kcIfirRailwlvV'''rr ? ^}' ^«"* R«"wayi Cligo & St. Lonis RailwayTlIlInois rinf;„r\7n"°^; Cincinnati. Ch|l Michigan Sonthern RaUway ;""^'„,^?, ^"^ N^"^:^' ^"'^^ «'^^^ * ««",^«y J Michigan Central 'RanroaT New Yor^^^ ^^i^«« Louis Railroad; Pennsylvania Comnlinir. wi ^^.' ^^^^Ko & St Wabash Railroad; t^nlon S^t^ikaT TraTsrd p^Hs"^^! VmTED STATES t;. DEBS. Statement of the Case. 325 ^ef^Ster- -" --^-^^ -^-een or among any stat. foppjng Zy ZnlZZ 'expiSs'-ir""' """'-"■S- obstructing or freight or passenger, eng^g^F^^tJ^lT' '"' o*"*^ trains? whe^he? any trains car°vin7tb"mafran°d'f5*''°-« with, hindering, or stopolne railroads for X" pufnZ'V^ntf?"?'*' <"• Premises of any of said or stopping any of sZ niaU tmlnrn! J'*"' hindering. obstractlSl gaged in interstate commerTi 1? VJ, VPT^^*'' or freight trains en ferlng^'f.'th'"^'*'' "r amfn^'th ?a e'l, o^^fTt^^"- <" ---""e^" .r^rVJ^VrnSio"n'-^rS'i;&r " '^^^^ <.on of passengers or Z^Z ^XT^^'"^:, °' *"« transS (6) From -injuring or destmrir^ „^ among the states ; or road, or Permanent strurtures of «,^5 '^^ *" *"« frocks roadbed • destroying, or in anv way interfepfnl ™"roaas, and from inJ,S switches of any of said raTlroads !nrt®>wr"'^..^°y of the signals or ing any of the signals of any o- ^1/?,f, "'T""^'"* or extinguish locking, or in anv mannpr f..it„^'> " railroads, and from snlkfn^ said railroads, and from un^unZr."?^ °* ^^e switcheHf any"f; structing the control b) any of JiSJ.''..*"^.'"''^ hampering o/ot engines, or parts of trains of nL^i railroads of any of the ca« State comn,erce, or in ?he t?answr?atio''n1.r"~'"'^ engaged In iS JfZ ?•'" ?:T'^ fe states Te^^g^°i°'Pi|!?engers or freight bl rM7i " *^ ' engaged m carrymg any of the mails {niuce,\i'&s: rn?i'S"tir SutL%"««'"''"°^ the employes of any of siirt ron,.JP^I 5^*^"' ^^^^^^ or violence anv nf Of their dnties as emXy^roranv 0/^1/^'??^ ^" '"" *^ PeSVni 'any the interstate businek or commerce ofl.-^'*"''^^^' ^^ connection with of the United States mail by such rnn- '^^ railroads, or the carriage passengers or property bet^Ln or amonf «; ^'.^^^ transportation S (8) From comnellfnfr «« ilT - among the states: by thi^ats. mZ dition ?or^"or"fin7 ""^^Pt'^S to ^ 1...M?, - ? i.*^ '"•''*'^ """s ''een, and nmted StatL to 4inie member '^i^d"'t„''L''*' r'l""^^ ^'""° ""O Jurisdiction of the union nd ItTn-Ji^Kl ™"S?"t™te the power and with authoritv to oJdcr" tr»fei^.^T^^'^ .l"*'^'' ""« "»<='•••' ««itrol. such eniplovos wi?™a„v -^f tl.^ ", ''^■"''"""'"'«' "' ""e service of States, at any tline when the ™im u"''. ""'.'I'"'"^ of the United officers, should e ™ t a. to do wIM. 1 '*''.'*""• »' directors or other on the •J.Jti, or 27th^in of 7^^. . T'"""*!' sufficient cause. That the b Hi the i^luiugVfhe^^^t '^f'iSlr'""',.*" ""« """« »' board ..f directors or other fffl^Vs Vuin'uT '^'^"°i'"'' »■• "« directed and ordered nil It.! ,..^1.? ""'""'"g the •defendants, had Illinois Central n^K Co,nm.^,w.l"?'^^' '"/''.^ ^'^"''^ «' «•* and of interstate (•«. n en e nd ^ ,/ii.. r"'-'"''''''''™ «' ""e mails, at«l by that ooni,.a^. „\'",'i ''";", ^ *"'"'' •^«»tj""«l and ope^^ and before the writ of Infnm^lL f " >' '**'""•<'• That thereafter. Issued to the einiXyf^ of thet I , i "" '''^"^''- """""«■ '"•'lers wer^ of ™inplain^ Zl Vhat i num^. ""^'■"l^^^ '» the bill wlH, were members ?'tl.e InS 7.,' n '"'*,J'''?'^'^- "" ^'-Ploy^s leave li.e service of «il,l ,.,ii„.., "a l"ay Union did In a body of hI«.Ie^in^^ preveuti*^ a, S,;,;; "Vh^'*^- 'T- *''*' "™««" i»"T>oZ In the transinlrtatlo, of . e „ u «•' " d ferr.';i""" "' '™"'^ •^"S«S«J order of injunction was ,!l lis] «, , theT.n «>'""'eroe. That the me n.or..Ing of July .! I.sw ThTit e ,ch of ! e-.l;?'^?""/ ^^^""^^ »» edge tl..-.t the onlcr had lee.. ulveteL 1, .^"f""'' '''"'' ''"°«''- • '-x^a' "Dions California. Includlns snbsta tTniu^ ?.i .^ ""rtliwest, from Chicago to coast, and at the ^^^..^t „« ' "se.l.i?*'. ''""'"'••^ *» t"* P«<-'flc upon the main lin^ of road extend n^*'T. '" "'•^•'"''"•'g "oeal unlong coast : and that the woJTof oi^n^fn "' ^?""«''' '" *« Atlantic continued without change or lntSnton'*"nf'le:' ,f t«°«'«° »«« f^MJ Junction for the avow«l m.rpo^ T °";f;VHL^LrtL'? "'."'^ '"" thorlty to order strikes m,.,.. oii * •■ ^ "'"*" 'he union au- local unions *.on!.l b^o^S '"" '""'"■"' "** '"""">• «" ""e a ^"; tt"se!^vL'Vlt' '.Vl'lroa?: .?" ™"««-V. -'PJ-.v*. to leave In « as well as other .ai roads »^il t^f 11'*^ '" "'♦' ^"^ <>' complaint, from the defendanr^te to the offl-rs i^r r""''',V'''"'^ '*-^- '«'^S'-«» at the ,nost Important railway «nt™re and clTl«'4r."' '?™' '""°°» of such telegrams and ordera «. i«of.i? k il " . T""*' "*»'«» <•' »ome before and after the servl^ of ^iMt ^^f ^St defendant Debs, both Berted. for the purpose of sbowlnethlt^hi^""''*""- """^ ''«''«'n '"- t.on did not arrel^^ohan'gel?.:';:^,,:?"^/^^--- tlfe XV.,"&s UNITED STATES V, DEBS. Statement of the Case. 327 relative to said strikp* hn^ i^u^*. tinned, notwithstanding ?he oJderTf h^ TK^^'^'}^'' defendants eon- violation thereof, to dir^t the e^nnlnvr"?'.?''*^ '"^ ^^''^^ and open named in the writ of injunction aTwil n. n.h^^ "^^^^^^^ companies to leave the service of the SantHn Tu^}^'' ""^'^'"''y ^ou^Pauies. delay, and prevent the disSr nf M ? ^^^^' ^""^ ^^^"^^^y ^ind^ especially the discharge of thPirH?,.?^ **'^^^ ^^"ty to the public, and the transix)rtation of !L La^S' s^^^^ ^-^f*" ^^ '^^ government ?n said telegrams, and hundred, of of iZVaf ^'^^^^'^tate commerce. That character, were sent by fhe defendJnf ?£.? ".'^"^^ ^» ^o"" and authority, and approval of each n mi nii f^L ^"^"^ ^^^ knowledge, well as other diilctors of the Ameri^ ^'^^^Z defendantsT^ service wpon them of the writ of 7n nnnf- ^'^'^'^'*^'' ^"^^»>' after the of said orders and directions minv .f T ' """^ *^^^t, in pursuance railways named vvere nduced t^^^^^^^^ employes of the several way strikes " prevailecl Sram ni^,? H^r '^^' ^°^ ^'^^"^ " ^all- railway companies, and thrt^nLX^nn % l\"^' ^^ "^^'^^'^^ ^^ «aid commerce was therebv greatly Sri^^r,! *^ °'^"« «»d interstate upon some lines for seveni 1 days ' delayed, and prevented, and That, as a direct rpsnit ^f \u^ ^ lines,-notably u^n the UHno s Cenfi^' ^ "'"^^ "^"^^ ^^ '^^ Island & Pacific the Ch S BuX^on '^ '?^^^ the Chicago, Rock Alton, the Chicago & Western Ti^dinnV "^ Q«»ncy, the Chicago & Company's Iines,-there w4 ivp.v.?cl? ' ''"'' ."^^^ ^^^ Tennsvlvania strikers or ex-emploj4s o^the r u^. .T" ^^^ P'-"'' «^ »"«nr'of the open violence. TV.t%mplo4s ,X ^e/ns^^^^^^^^ and others who had been emploved bv thl r.1?^ "" *'''*" '"^ ^^^ ^^^^e, and Xlilaoe of strikers, and were Tn the no^f. ""^'^ companies to t.ake the wei^e assaulted and intimfdati" bv thp ^ l '^'•^'•^,*>f the companies. Dost of duty, either by Dhvsio? vLil ^^^'^^P^ and driven from their That, during the 5th fith and -Hy^^"'*''.''^^ ^^''^^^"^ ^^ personal injury acting in sympat.K^ tS, tU ^' ?.n'{"^^' "*^ '^''^^^^'^^ and otS roads within and'adja^nt to 2eVi?v of^P^r^'"^^" ^^ ^^"^« ^^ thi force, prevented the mss-^J J Z.-^ ^ Chicago, and, by physical commerce. That engi^fes and tr-n^^^^ "^«"« and inirsteti senger trains were alsaiLl with stonpf .nT ^'^ ^^emilea, and pas- the employes in charge of such tragus •^nd''*''*''' '"*^""^"' «« ^^'^^i as the passenger cars and engines werpfivLi "^ "' '''''^^ instances both both of employes and Sn^rs ^S TJ^' ^"dangering the livc^ instances led by the strikers of ex-emo^oL^i^^^^ "'^^•?. ^^'^^'^ "» »»a«y who had gone out of service uwnthp'n^^ ^^% 'l^"'''^*^ companie^ officers of the American Railway Union ^' f "'^ defendants as strikers and others were massif ^f.iSr ' V'"^ '"^''^ composed of ferent lines of road witinn «nH „ ?} different points, upon the dif- such numbers as to b^^loiiTthl ''^T*. *^ *^^ "^'^y of Chica^ i^ and municipal authomie^^ That at S'' rSi^'^T'^'-^^^^"*' ^t'at^ to the railway ct*mpanies some of Vhf.h ^'^ ^''^''gbt cars belonging merchandise, were set on 'firrand dr«?i^ J^^t,.*^^^^^ '^''^^ interstatf appurtenances of the railwavs Ll^fV''-^^', ^'^"'^^ ^""'^'^''^ and other way companies who refused tn .V^^k"**"^* Employes of the raU other officers of tSe AnS f RaTfwn v%^' • ^^^^^ ''' the defendants and to the discharge of their rlnlt^^ '""."^^ '^"^ remained faithful and bruised, and in some nsHn^c ''^ violently assaulted, beateS from their engines a^ kep/l^rhour in"'"'^*/ ""''^''^^ ^^^ ^^^^ lives were also sacrificed !!-aIl of wh oh «. f""^"^?"^"*- ^hat many vloWacts'u,i>'n%t%°a1.r^^^ ?l\'."!l ^""^^^^^^ '^-^ ----y of such -- had t^n ^-^^Z-:^^ or^en^oy. J the£ 328 64 FEDERAL BEPORTBB, "J^. Statement of the Case. ylrt'vS^^^^ ^-tbe^- knowledge that daily and continuously and in wn f»? of a similar character, thev the injunction, issu^ their orSerTina j/^'^,V<>n ««er the service of the railways to qu?t service ?n f ^v'^n^^i'^t'^"^ ^^^* ^^^ employes of while the mobs were in pa^tia^ SS^Ls oVnftr"'^^ ^"^^ «^^^^ gaged in forcible resistanc^ of the or^*.l j^i ?L ^^^ "-^'^^oads, and en- That the strikes were m>t order^i nn ^^ ***^! "^"'^ ^""^ ^^^ officers, of the railroad compLnils or Tth^r nSi '^'^T'* ^^ «"-^ wrongful act the American Railwav Union nr^^L.''*''*^'?' towards the membeis of panies: but on th7^„trZ the^^^v^^^^^ ""^ *^^ '''"'*'"^ «^»«- tbe Railway Union, incluS fht^Jl'i^ l'"'^^'^ ^^ *»^^ direetoi-s of lawfully to establish a b^veott^^^^^^^ wrongfully and un- were used in great numlmVbv th! rniil ^"""^"" sleeping cars, which iBg the mail and passengers traveHn^ irnnf ^^T'^?"^^" '" ^'^'^''^ ^^-^^-^r- the several states- rnd tn ^Jif .1^'^^'" ^*^^® ^"^ state, and through the AmericafRanWay Un'on ?nc^^ ^^^/««J' ^^e directo^o? no trains or cars of any k^nd or ci^^^^^^^^ ^'"^^^•^ that of aiiy road within and adiacent to ihl if "J'lP'?^^ ^^'' the tracks of Pullman cars bad b^n abSn^ hv «n"^/^ .^^'^^^^^ "'^til the use That the board of dirmo^ "f^u^^ ?" "*' ^^^ railroad companies, eluding the defendants a ^il^ nln *, American Railway Union. In- Ity and ixTwerand as ^mnl^irn?''i^u^^ ""^^l'^^' ^'"'"»^« the author- power, to ord;r strikesTnd^^^^^^^^^ ^^? ^"" «"thority and iinder the rules Of the lUrfcaSwWuliion^ the same. union, and addre^ed to thl Ln^r ' ""^ Keliher. as officers of the of Which thrfS^gls^a Jpy r^ managers, on the 12th of July! " To the Railwrny Managers— " ^"'^^^^^o- ^^^V 1^. 1891 Gentium EN : The existin*' fpmihi^o „-.. t strike having assunfed «)nt nentTn^^^^^ '!?* ""^ ^^^ Pullman dlcatian of relief fmnXw?dl^^^^ and there being no in- distress Incident th™etotLrnZ^ business demoralization and directors of the American ItJ^^^^^^^ ^^^^'^^^^^ the board of lowinpi^,>ositiora7irsisof"et«e'^^^^^^ respectfully make the fol- shau t%Sed\''ttTr f^r^ef ^^ ^-^' ^-^'^^'e^ they in cases, if anv there be wlTr^ th^ "^ T**^*""^ prejudice, except "This proiJitimt lining t^an^^^^ ?^° convicted of crime, isting strike on all linTof Vihv«v iT n^/>h^,r''r"""* ^^ *»»« «^- serve the public good. The str ke smni nln ' '' 1\»»-P*>se to sub- tant in its ineepUou has evteul^i ?n i ^^paratively unimpor- involves or thriate"s ii^t onirev^rv^S^ "«I" »«^' it security, and prosperity of our c^>miuof Lntr^r^^^n^^^^ ^^f J^«^' waged fieivelv. It has exteiX«i f,!. il ..J*' ^^^ contest has originally in^lveJl and haMal^hS^d o^'^fas ''n. "?^^^' ?'. ^"^^^««^« and enten.rises i„ „o wise rifpou^^^^^^^ **^ industries agreements that led to the trouble F«.Snl^ « m '^^^^^^"^^^^ and dis- been silenced: wid^pread demor^ Of multiplied thousaXTf ,>^X are^^^ ^pY/' ^^^ '""^^'^^^^ Is seriously menaced. The Kc ^a4 mf^ ?£* ^?« f^n^iiion welfare Grave apprehensions for thrfuturrpTevait '^«"^"""^>- «r« ^"^Poriled. "This being ti-ue,— and the statement will nnf k^ «. * we conceive it to be our duty as e tlyAn« n^ ^ ^. controverted.— dinary efforts to end the existinl ^trf;. ^^** ™®"' *^ "^^^^ extraor- whose Shadows are even now u^n u« '}?**,„^P£r*>«<^»»*«^calamities However serious in some of TtsTn"s^U'cLr«^.^ ^^^^t Zl^n /' / . A UNITED STATES V. DEBS. Statement of the Case. 329 tTons. InT^'^if^7sUrsha^'b;'t"* *?f^K^"' ^^^^^ t^^^^* ^^o^P^^a- now so widX depS wiH^^L^^^^ 1^"^^ * ^^ experience, the troubles the years to ^mT T^e^iUences^t^^^^^ ""^ l^'^r^JoT''^^ ^''^^"^ *° complications need not now brSnls^ a.^'V ^^^^^ ^^^ ^^'^^t every consideration of duty and pLtr"ot,^« dtL*ni' ^^^l^"^^ Juncture, existing troubles be found and nnrJi^rp2^™''°^f that a remedy tot their pirt by meeting thlt enmffr^^^^ employes propose to do they do not im^e af v slriou^S^?.mtfn^ .^'''^^•i ^* ^* ^ stated that be returned toXIrTrmer pos" TheV^^^^^ *^^* '""^^ of their organization or an7or^\^S;tio'i!:'^ ^" °"' "'^ **^^ recognition spec«^it'^°y^/t\j^Tirh'"tr^^^^^ r ^"«*' ^* '^ - in the prompt resunn«on of Lffif .»! * \*^ acceptance will result restoration of jSTnd "i^^^^^^^^ ^ ''^''^^^^ ^^ ^°^"'*'^' ^"^ the "Respectfully, |b. y. Debs, Pre.irfenf, ^ G. W. HowABD, Vice President, JiYLVESTEB KeLIHEB, Sec'p, rru^4. 4.1 .. . " ^'merican Railway Union" ment of iy»l^!; shown M all n J?, '^'■^"''.^°'- ""^''''♦"^ *° t^e move- 18H of Which the fonoTing is a ^py • "'""^ "" *"" ^ "^^ «' J"'y- 'To /Ae Panhandle Yard Men—Greeting- Issued. by order oAhe rard of ^rJL''''" ^ ? "''« «*««"°- This is health. "™ *" •J'fectore. m the interest of public That th^ f ., • " *^"''^^'= V- Debs, President." ^^^t.^^ -^ndant Debs butrrLrin\"erSL^-t,^^^^^^^^ ^or -nths. Nothing out that great stretch of coL^A ^t ^ ^}''^'''^ ^^ trains. Through river our men arrsteadf^s^nn^wnr^ '^^^* ^^ the Mississippi You will not^^tha it^s im"LTw^ wait until the bitter end. coast in Chicago to dav L^^tVvlLl^^'l ^^^""^^^ *^ ^^^ Pacific over which no Pullnian^!^^? are ?^ the Great Northern Road, possible grievance This sLw, f ho ^.-^ ^^^^""^^ ^**^<^*^ ^^ ^^a^e no paign is to be carried WeT.lll^^^^ ^'^^^'j ^"^' ^"ture cam- the air is purer and wholfvfr^ ff^ *^f ^^"^ ^^ *^® ^est, where line with our Meas We sLll^rsT li?*"*^"^^^^ combinations, in throughout the East As flrLi? t "u"""^ '^^'"^ ^^ organization unorganized by%Tfai,s1nVlinT we^^s^^^^^^^ l^l TTl ^^^»^^^- keep on doing this until the verV^n^^i S? IJ* ^^^' ^^^ ^e shall struggle, basid, as "? is on motives whnn ^^^^^\ ^^ «"^ P^«^»t cessful, there is no wag; earn^? n thr^,^"^ disinterested, be suc- beneficent effects bef^re^the year cLes And Tf"^ th^"-^ T* '^' '"^ the command of the so-called ♦nrtAH!!..^. ^ *^^^ *^ true, when hands, and the trades' unon« whlnh^ ""^ commerce ' falls into our reciprocation fro^iis w^and^^ J?oni'^«''.t ^'"^^^ "' "^"^^^^ '^"^'^ material assistance ™s ^s an txiom '«n^ x''^!.,^^^*'^" *^ ^^^^ them agree with me." *^^^™' ^"^^ ^ h^WevQ no one will dis ANSWER OF DE«S, HOWARD, ROGERS, AND KELIHER L I 330 «4 FEDERAL REPORTER, 730. Statement of the (*as*». tin^f t'lf P'"'''"** "' ";e American Railway Union w«s the nrotee- . S'Joe H<^r:.^x= ^?L-.-at -r=ii i wiis t<> iiotifv the nieniliPrs nf fii^ ^«i.v«^i *" **^'*i'*^\ ^ »«"a matter, €,M«i. «* Vi \. i. '"«?'>">^rs or tlie hqioh in the serviee coneeme*! in any r.nUM-. direction, or control of the An.erlc^n Ra"h^ r, fo^^^^^^ offlcers or dlrwlors. or of tliero defendants, or any of ttaii " rfn^n roans of nafd comiMiiiles" Timv •* *1a«,. ♦!»«*. ^^ 1. ie»i»ecnve rl'J'K"' '","1 ■"."♦''•'™" ««"»■">• l^n'"n lt« orders or dfrmo™ ornen^lse. but, on the contrary, a lese that dtriu-pa rv^ni/i k« i zl opflers to strike were at anv th ia nr in «.;, "®^ ^^^^ ^^^^ aT/o?':^!h"e^»H^^^ t« „„i!5 • / .^ *^"*' *^ ^"'<^ ***<^«J unions, or any of them as niiocraii In said information or otherwise." alleged •* The defendants deny that any one of the telem-am.* sef f^^u i« said information was sent, or caised to be sent 1^ thL^ ^^ * - them, or that they authorized or ap^ro^ed X Jame^V thereof, except a certain tBlegram dat«l .Tulyfi 1^ in the *wo?^ UNITED STATES V. DEBS. Statement of the Case. 331 and figures following : • We have assurance that within fortv-eieht hours every abor organization in this country will c^me to our retcul Whatever hapi>ens, do not give credence to rumors and nAw« paper reports,'-which said telegram defendan?s admU was ^nt or fi^^\^^^ '^°*' ?y ^^^ defendant Debs, as in said informatton al^ Knt"nn'?:^ ^^' hereinbefore admitted, defendants allege that they nr n? .H '''^^^.^^/''' T''^^ whatever of the sending of said telegra^ or of the contents thereof, until the filing of said informftfo^' They deny that any other telegrams similar in form and chamcJ^r to those in said information set out were sent by the defendant Debs or any of the^ defendants, with the knowledge, authority, of a p^^^^^ of any of said other defendants, at any timi after the Tervfc^ of^Ifd writ of injunction upon said defendants, and deny that anyln?plo?^8 ?L "^ ?^ "'^ ^^"'^^'*^ companies named in said information were induced by reason of any telegram sent, or caused to te^nt by Se defendants, or any of them, by threats, intimidation, for^, w- viofen^ tfoi o7t ^nri^^f r^^ ''^''''^ companies, or that th^ tkus^: tion of the United States mails and interstate commerce was therebv m any way hindered, delayed, or prevented." " The defendants admit that upon some of said lines of railway there was evercS uS^n ^e part of some persons ^o the defendants unknown v^oleni agS persons and property. They deny that they, or any of theuHave any knowledge or information sufficient to form a belief as to t e comm?s sion of the specific acts of violence in said information ^t forth or any thereof; and, upon information and belief, they de^y thlt kny member of said American Rail- [732] way Union in any n^nner paT ticipated in said acts of violence or any of them." " tL" dem that in vio ation of the order of the court, they daily and continuously or at all issued any orders or directions for the employes of said railway companies or any of them, to leave such service in a IkkIv as allelS "ian tinle^r^u" «%f»r'?^ They deny that arsaid tine!^:? at anj time, they knew that violence and unlawful conduct ne^-essarilv followed from strikes of the kind mentioned in said informatton and deny that such is the fact, but. on the contrary, allege tlmtS» far as said American Railway Union, or the members thireof ar^con cerneoard of directors of said American Railway Union, or it.s offlcers, or these defendants, or either of them, at any time assumed the authority and power, or have now or ever have had any autliority or power whatsoever, to order strikes and boycotts, or to dto>ntinue the same." "They admit that on the 12th day of July 1894, the communication set out in said information was addressed to the railvv-ay managei-s, and Signed by the defendants, whose names are affixed thereto, but allege that so much of said communication as implies or assumes any right, power, or authority in said defendants, or either of them, to discontinue said strike, was unauthorized, and that said defendants had no other power or authority in said matter than to im>mmend to the meml>ers of the said American Railway 332 ^ FEDERAL REPORTER, 732. Statement of the Case. /: union the adootion «# *i admit the sending of t hi !! P^^P^««Js therein stated " •• r^, . set forth in said infill l*^'"™"°'ose of rnterfe?[nf w^^^^^^^^ ^^ among tie stat^ nr" ^roijerty .o engaged liforn^eV/^^^^^^^^^ ^fi^^troylng'.nTof J^' or the transport Ion of paRTengerror n. ""^ 7'^^ interstate commerce states ; or that thev, or elthc? of Th2n ^i'^^^'^y »>otween or among the part of the tracks,* rondr>Xor ro^^^^^^^^ ^"J"^'^ or destZ^^any railroads; or that they, oTeitL?of\Z^r'''''T^ «tnictnres'of «,"d In any way interfered with any of Vhi?/ ^""^^^ ^°-^"^^' ^estroved or said ra Iroads; or that thev or LtSer n^^.V* ^'' ^^^^^^^^^ of any of extinguished any of the siSi*, L « i'^ *^*®n»' have displaced nr they, or either of theml^a ?'« '^^ Tll.% '"'^''''^ ^-ailronds ; o^^hat any of the switches of said ran ro^ds^orth^^^ Ik ^"^ '"anner fasten^ have uncoupled or in anv waYhmllLr.Z ***«* *hey, or either of them any of said railroads or any of the i«rf ^^«hstructed the control of any of said railroads engag^ L ,1?/^ f"^*"^^' ^^ Parts of trains of portation of passongerror frei J?^^^^^ eonnnerce. or in the t^ans engaged in eariTing^a,^- of Klnl^ nf/J ^^, "^ng the states or they, or either of them have wmr^n J?^ *^f F"^^^ Spates ; or that compel or induce, by threats l^tTS L?/ ^Z^'^'^i ^^ attempted to iT^lf'^y ""^ *^^ employes of any of sJirt VJTi r^"*"' ^^^^' or vio- to perform any of their duties as emninS^ railroads to refuse or fail connection with the interstotTbusiS or ..1^°^ ^^ ««*^ railroads In or the carriage of the United St^^ m^^i^rS otjuc^ra^^o^^ UNITED STATES V, DEBS. Statement of the Case. 333 o^'lX^^^ 'SZ^TZ^T^'y ^^-- or among the states* tempted to compel or nduce i^* have compelled or induct or «/ lence, any of the employes ^fLM'^^^?' intimidation, for^'or vto such railroads and engS in ff« ? ^f broads who ar^ em^ov^T.; t'hl'nnT; r Jf *^^ 'p-^^^^n'of^n^^^^ «>nd«et of ?n?eM tinn J^*^"* States or doing interstate h.,«i«^''^ carrying the mail of tlon of passengers and frei^hf ^7 busmess, or in the transnort« the service of such^^ur^fs ^ S^ th^^f ""^^'^^ ^he states, to '^ave prevented any person wh^tov^'r bv thrL?^^' .^ ^'^^^"^ of then?, havl control and handling of interstaTmt^ ^ ^^^ ^^^ and unhindered railroad, and of transportatf^ nf ^^nimerce over the lines of said among the states; or tCt thev ^. ^i?*'''** ^""^ ^^^ight be^e^n and aided, assisted, or abetted in nnl"^ ^^^^^'' ^^ ^hem, ordered dTr^?^ sons to commit any or ^tk"; of X'^ol '^"f'^^^' ««>' Person oT^! defendants each for hiuiself d^« ? ^5*^ aforesaid." '^nd the^id he is not guilty of'aSyTlifh'^r o^r'aU !?f 't h' '""'f Intormatfon ttS or of any contempt of the orders of Ihfi ^^ l^^ ^^*« therein charged fendants further allege that aft^^.h^^t "^"^''^ ^° ^^^ Premises." "ot' them, they forthwith «>nsultedcnm.i.^^^^ ^^ ^^^^ injunction up^ and duly authorized and Seeded t^?f*^°J ''^"°^^' ^^arned in the"^ at law in the courts of the Unlfe^S^t.^^^^^^ ^' ^"^^^^ «»d counselor to him all the facts in the proS^[f/^.*f*/^' ?^^: ^"^ and fairly stat^ the court made herein «ni' ^I^^ exhibited to him the ordlr ^ might rlghtfull^ anTlaW^ultyrfufhe^eJ?^ ^^". -« ^o' wha^^They the order of the court or contemnf «J Premises without violation of have since that time in «ii fS- ^* ^^ **^ authority; and that ThoJ duct in regard to sSd trike andfhe^^"^^^' ^° '""^'^ «^^ ^nd '^l accordance with the advice of the ««Mn?/'' engaged therein, in strict And the said defendants each for hil^ fT^^ "^ ^^ ^hem consiifti^^ any way to violato the injunction of thii r^^T' *^^* ^^ intended^ or contempt of its authorityTn aSv Llnir *^ ^^<^ »n defiant ther allege that by the organ 7«fw %^^'^9^- ^nd the defendants furl and by custom and usage^fnffnr^^?^ ""^/^'^ American Railway Union at all the times in sa dTnFo^iS men^'lS"^^"^ Prevaillng^there^n' usage had the force and eff^rof and «t!^f ' iT*^*^^ ^^^^ custom and American Railway Union «nH h^ 1 *^^ ^n lieu of. by-laws of said consent, delegation. an^acq'ieLe^'f ?^^^^^^^ and unanimous' ^li*^ officers and directors of sniri a^;^"- ^x?" *he members thereof thp ng these defendants, 4ro at aTl thrtin'^'"^^ ^ ^^*^ Union'Tnclud tioned fully authorized, emi^wered Inc^Trl'J^^^^ information men- of the members of said AmpHno^'i? •, ^^^^^ted to act as the agents and all the separate untiHhPrrf ^^^^^^'^^ Union, and all of them lal>or had been deternS ui^rbv''s«M''^'' V'""^ ^' cessation Tf either of them, to intornrand^^dvf«o .i? members of said union or and prospects thereof, and the condftinn^'^ concerning the condUIon local unions engaged therein «nH?^^f ^^^ attitude of the several peaceful and ialfi^nXTs pt'u*^ ^ tiem t"^""^ *^"^ of grievances complained of by them and S?^ ^ secure the redress them, subject to their ultimate ratificatfon witlT!?.*,^"^ negotiate for settlenient or adjustment of the causes^ i^^^^^ for a no right, power, or authority to ?n In vwiv^ *h ^^^^ ^^^^^' hut had Of said members In respect "oV^ o^sJa^l^rt^^ r.uTt^^^^ 334 «4 FEDEBAL BEPORTER, 734. Statement of the Case. »trtkf5S''8!;j'd^^Sa^t^„VnH2fJT "^ *"«■" ■» '^^•"•enc-e to the ttereln. was done in pnreuan^ „? ^^Ah "^ '""■' *" ""« Pereons engaged not guilty of coiiteiunf thtt^hL ^7 . ^ ^^^y "lay be adiud^Pd ^'^^^^na'^^^^^^^^ answer, denying and every part thereof ;'nV«/f intoriuation cx>ntained, and Jach expressly admitted oT^deS." "'*^ '"'^^" '^'^ '» "^^^^ forme "answer SECOND IXFORMATION. in the"cau^, direrfetJ^af^In^f ^A " "??^"^' lufoniiation was presented Goodwin. J. F Mr\w^ i f/ i'T^ "«^«»' William E. lirnZ n m the filing Of tlie or glnitln^^^^^ '^'^^« i "forma ti^"''/edt^ therein named npon the vrHf m u^^^^^^^ ^^ '''^ defendant the i>ersan8 nametl were dlrectoi-s of thi ! T"^' *^"*^' alleging that r«* 27. 1804, the officers and directors of Thfi.,- ^*'"^ ^" ^^ «bout entered into a combination and ^s^rnL tnt"!^''^'T Hallway Union ders, their advice, their cminsS n^?i . ^ ^^ **''*"« "*^«t. by their or- more Particularly d^!ri^"rLrifoS^^ V'" ^^'''^^^ «»<1 b^^e^tt the better to (induct the buslneli of ^ h^^^ ^•'^njplalnt; and that and to more eflTectualh anage tL vast n J''^'"*" ^'"^ conspiracy; «ienil»ers of said American KaUwiiv nm^f "'J""*^** ""^ lyevmm being eomblnatlon ami cons^nicy said ^ffi^r''"'* 'W^ ^"«««^» ^» «"eh divided up the ^vork of S manLeme^r^n 1^ *>' director mlttees. That under said arm 'i^S^ «"'«»& «>m- direitors. Debs and Howard wSJ^nva "f^l?' ""^ ^^® ^^a^-d of have, charge of the work of nnhiSl ^^^\ '^""^ thereafter they did and GoK>dwin haTclTrgelt^^''^^^^^^ R^^ers. /urns ganiaitlon of lodges; and Hogan p1?hir^'L ^ speakers, and the or- diPeetors, had chaw of cor?eC'nfii^^^^^^ ?^ '''' ''"** ^^hers of the celving of letters ^d lelTgran ^ o^a^^^^^^^ 'kV" ^^"*^^°^ «»d re That each of the directors is resLisihrA J^"^^^''^^«»>le portion thereof, to be done by all or any of tKw fiJ^'/''^^*' "'** ^^^"^ ^"^ ou^^tted or agents In ^onnec^tlo/ wurthrbu.in^^^^ «»• ^^^^«»tK That, by arrangement or agreement of tIL i^ s^-^ld strike or lioycott. was to have charge of edltlnrand n.l n,?h^?**^ ""^ directors, Rogers paper called the " Rai wTy ti^^ " ivhil' "'^!°^.^^ « ^^'"t^i" news- of the American Rall>vay UnTon' Thnf\u''^ *^ ^ "^« ""^^^^''l organ the city of Chicago by Ro^^^ ind^hL in ^''^l'''^^ published^ in piper the directors counsel^^nc,"^^^^^ ««Jd news- the Anierlcan Railway Union and fn'Jh ^^""^^ the members of eluding the employr^ of the ralhvL Ji.. ^'''^f ''""^«3^ employ^, m- c-omplaint. to dls^TiiS «?id^^e?^n^Tw.^^^ '» "»^ bill of orders and directloL of The offl^L oi^r^^^^^^^ ""^ injunction, and the tlvely. That said officers LddfiLn^/^"^ ^"^*^ railroads, respec- spiracy, did, on different dates in t^mlA" PJ^f^^"^ ot said wn- cause to be sent each and nif^i^K* '?^°**^* ^^ J"»e and July. 1894 infornuUlon.to\?ilch the name ?f lfiT^\' ?* *^"* ^» ^^^ orlgrn^i the several following tel^amrwhfchal^t' l« «««<^hed, and also hundred other telegfamsTf Sk^ pS wrt a^ wi^^^^^^ «^^ «^«^ pn^rt, copies of which, sent to diffwe^t rwji^l? ^^'"^"^ '"*^°^ ^^ UNITED STATES t;. DEBS. Statement of the Case. - 336 ANSWKR OK HOCAN ANI, „t„ebs. «^ntianf dWerenrft'Z"?!;' "'*» t"" «'«e filed a Joint , Sft't„ro/X£:-?-^ Vn^%^-, --.or at an. giving such idvL •'"■,''* "' ""eir e-MoyeJ ,l!i^' Pfx^ably, and either of them Jo ^1^.?* '''".' ^^ «>inpelllng the rnL^^ ^^^ Purpose, any person X' tZn^ f^^ the AmeriSin L'w'^^^^^^ «^ whatsoever and dl^ !l I" '*"^^' '"egal bovcott n^ •^'''"' ^"^ ^'th cars of said Pullman %ioL- ""^^ conspiracy or reftii . company otherwise, or that To li ^^^Pjn^Car Company wbeth^t. ^"^ **^"' ^^e or otherwise. On thf ^^'^^.^'"^t^o'^ was to b^ ^rs ^fl, ^^ """^^^ «r thev wpro „*^ V. the contrary thereof fi.« i^ '^^ed m as alleffcd American Ralltay U^? .r""*'^'^-*' '"''"d^ng Jhl" ^,„t "'"'^ ■*- and successively thev ?;P*'°.^''<=''«' the lines of rni^i*"^ °' t^e property, and nfln»n^ V"® ""road oompanles nnm "*^f separately bers of the AmerS^.n '""^^^''t the empCfe^'*',':.!,*''^"" <^'''^l the wages werf t? hi^"""'*-^ Union, upon each of fi",'?*' *''« •"em- against the a«ton„?^,r"*^'''e'y ■•«<& Som ^ht V"^ "'''ereon unlawful «.n"DiraV *5,« railroad compares i?>n,"'"'""e "^ess and united acHontA S"" P^Posed and iSdi E^'»?l^?<* "' ^neh ana Pea«able Zi8te„r'"^"'« «"<^«s8ively an^„'l thfir combined make to the red^I?^^ l'"** the employ^ °, .„^**2" *'«' 'awful and teliefT t£f Sefenda^''*','; <=°"'Pe''«at^^' ind 'i.^'L *-'n"'' ""«" *""'"'*' ""«»' *«t «uch eon^lrarrasT''J!S 336 64 FEDERAL BEPORTER, 735. Statement of the Case. f^nocd at said time with the intents and for the purposen hereinbefore didVn goS^f^i[b"tX &e%eirv^r -- ^"^---1 -^ pany, a «>rporation orgLiz^^^ Pullman Palace-Car Com- and engaged in the bml^mof^Z^Zi'''^'' ^^ ^^^ «*^*^ «^ I»i«ois, upon the lines of s^^ raVoaZ rwh^Ji"^ ^ITS^f.' «"^ ^^her ear^ Company liad various tLt^aotrfinH^^'^^ Pullman Palace-Car and each of thenr^r The u^ ofTtin^i'^ "5*^ '^""**^^ «>mpanies, of and party to said cSLpl^acy and all Ti.f iT'V ^^" ^ ^"^™t>^'- thereof; and, upon informathMf ' «n^ i^n J*^®, *?tents and purposes 8och was the fart in "eS thereto " T f/^ ^^efendants allege that of the employes of the I^Hman pl?a^ r^Zn^ """^^^ *^«* ^^''^ ^^'^y the said American Rai wTnion nt^h^ .^ Company were members of tloned, and for some nTonths D^of t^^^^^^^^^ ^^ information men- They deny that they, o^either of thin! J^ ^""^ ^" ^"^'^ members. that any such acts were r-erta^n In i ^""Z^' '*'* ^"^^ *»ave known, reasonably to be exi^[«i T^^fn'^iJ'' J^'"^^* ^^''tain or probable oi^ Of labor, or thai tK^were'^^rnv^^ such strike or cessation by or resulted naturalirorofhervvi^'I "'«"" V^ ^^ «^ occasioned counsel, or advice exacts or ekSthl^^^^ the orders, directions, ^^P^Jr^^^^^ railroad cm- o7Sd*^^if.^y^Ctr^^^^^^^^ r o!; ofTheT^M pose of protecting tSselves^nd^?^^^^ f^H^'^^ ^^^^^^' ^^^ the pur- their own pur^sfs and to si>nrp th^f ''" ''*«*^*« /"^ interests, and for directions, coS (Wnsel !fr«^^^^^^^^ own ends, without any orders, either of thSn AmTthev «nLf ^^^^^i^ ^"^"^ *^«^ defendants, oi railway eom^nii. and e^^^^^ information and belief, that'the and for the Purpos^Tmaintaini'n^^^^ conspiracy, pany in its dispute with its ««m i« i ? Pullman Palace-Car Corn- overcoming the resisrance of thPir T^ ^""^ '^^ **»« Purpose of and contemplated by them as «?Zo«mP^''T. ^^ ^^^ ^^^s threatened employes the linaltfes of law and pn.f' «°^ ^ t>''^«« down upon said ployes the action of tSe ^ms of tt nLj^,*"^^^^ ^^^^^^^^^ ^^^ ^^' efforts, contribute lareelv to ?hl h?L , ^°*!f^ ^**'*^®«' did, by their portation of m'l/its'aM^^ttr '^^Z""' ^f^ ^f^^" companies could, had thevhAAiiJnHto!!!! it* i^ "**^* ^^"d railway duties, under the laws of ^e Unl T^nV'^^'^t ^"Ji^ Performed their allege that they and each of thinl^ ^^''^^!'. *° **^«* ''^sard. They and at all timTs in s,^d' Vt tion^ m c^nsistentlj^ advised a great nun.ber of s^id aSZ Ramvnw^^°^ '^''^^'"S, and ail persons actinc with ti mm ^L ; Railway Union members, methods, and to refrain from «^^ fo "'^ ^° ^ P^^^^ble and lawfu duct whatever, and from any XSn ^ ^' "-'^^^^^^"^ '^''^ 1^^ any of the states t^reoTo^a^ tdl^/oiTe ^^u^s%o"^^ thin^urrgatr E^Sg^^^^^ Of contempt had In Keliher. and L. W. Roglre and adSJit' th^^^^ Ya Howard, Sylvester such pei-sons it wis Sed tha??l Iv hn^ "" «*'*^d information against telegrams, and that, in tS aSsJp^^ thf "T^}:? ^ ««»* ^^''tain said telegrams cxc^t a c^r'aironrdatM '^l<^''%'i.^ ^' «" Railway Union except Sj ^teC^^r a^d".^it't^nrlhrt Tn^fhTleT UKITED STATES V. DEBS. Statement of the Case. 337 ~v«.^x«cut or tne Case. information, or am sll, m" '^^**' divisions of work Ttnf^^r'" ?'' a lege tUat in thi „ * . "ferred rn^n thlm hx.'^f^ ^^J_wt, r p ^^^ ianaSnt^ZUr-- 338 64 FEDERAL REPORTER, Vll. Statement of tlie Cast,'. extends through a number of states, and is an hnportant line of com merce, using Pullman sleepers under contract; that on the 22d of June, 1804, the defendants, being officers of the American Railway Union, entered into a conspiracy to boycott Pullman cars, and. upon the refusal of the receivers to submit to their dictation, proceeded to employ substantially the same modes of interference as nre charged in the information presented in the other case in the name of the United States. In addition to the order made when the receivers were appointed, it is also shown that on June 29, 18»4, this (X)urt issued an additional order, for the protection of the receivers in the management of the property, whereby "all persons were enjoined and restrained from interfering in any manner with trains, cars, switches, or other prop- erty, and from interfering, by intimidation, threats, violence, or in any other manner, with the employes of said receivers in the performance of their duties " ; that this order was published in the evening papers of Chicago on June 29th, and in morning papere of the 30th; and that on July 2d an injunction was issued, upon the petition of the United States, enjoining the defendants, and others in conspiracy with them, from interfering with the railroads named, including the Atchi- son, Topeka & Santa F6; that, notwithstanding these orders and injunctions, the defendants persisted in " their illegal acts and doings, without change or abatement,'' etc. The defendants Debs, Howard, Keliher, and Rogers, w!k) only, in the first Instance, were named in this information, filed an answer, differ- ing In no respect which need be pointed out from their answer in the other case. The names of Hogan, Burns, Goodwin, McVean, and Elliott were afterwards [738] inserted in the information, by leave of court ; and it was agreed that they should have the benefit of the answer already filed by Debs and others as if it were their own. ^he two cases were heard at the same time, upon an agreement that they should be considered to be separate hearings, but that any evidence intro- duced in either case might be considered In the other, if relevant Edwin Walker and T. E. MUchtkt, United States District Attorney, for the United Statoa E, A, Bancroft and John S. MiUer, for receivers. IF. IF. Erwin, Clarence S. Darrowy and S. S. Gregory^ for defendants. The attorneys for the receivers presented the following propositions and citations of authorities : "Any interference with property in tbe custody of the court is a con- tempt. Richards v. People, 81 III. 551 ; Noe v. Gibson, 7 Paige, 513 ; In re Sowles, 41 Fed. 752. Such, also, is any act of Interference by force or threats with employes in charge of such property. Secor v. Toledo, P, d W, R, Co., 7 Biss. 513, Fed. Cas. No. 12,605 ; King v. Ohio d M. R, Co., 7 Biss. 529, Fed. Cas. No. 7,800 ; In re Wabash R. Co., 24 Fed. 217 ; In re Higffim, 27 Fed. 443 ; in re Doolittle, 23 Fed. 544 ; V. 8. v. Kane, Id. 74a See, also. In re Chiles, 22 Wall. 157; McCaulay v. Sewing Mim^. Co., 9 Fed. 608; Sherrif v. PerMns, 147 Mass. 219, n N. E. 307. Wliere tbe court has jurisdiction of the person, a disobedience of the court's order is contempt, though committed in another district I UNITED STATES V. DEBS. Opinion of the Court. 3;^9 borne, 14 How Pr If'- ^'. *'/""* ""■ it<"tm, 21 Ga 121' kJJ^'*T* ^ Wooos, Circuit Judge, after making the foregoing state- ^eatXri';Tsl^:r.iJf of le. .ome^t, the verv be overlooked. To trstlZot'^CrC^y '^""''^ '''' time than could well be sn,rL * . ^'"'^ ^^^^^'^^ more to counsel to say that thf 1,1 ^T o^^'" duties. It is due painstaking as ft ha<= bLn\l' t '''' '""*' ^'"''^^'^'^^ «»d contributions of earnin^r' ^ ^'° ^^^^^ "^''^^ed by the the discussion mTtWnrr,''* "'^'''' *«^^' •''''"g^t t J> the question o^ie va iSuyTft:.^^'^^^^^ "" ""* "-' defendants are charged wit J^i r '°J""<=t'o» '^bich the inquiries which in sofe relil k ""^ ^""^ "« ^"^olved 1-bed or unquestion" p":St^" '"^°"' *'^ ""^^ ^' ^^b' tied to be discharged withoutTr; defendants were enti- authorities seem to ^a^ld T^"'"^ '"'*' ^'^^ ^«*'^- The ruled, District Judge Gros^cl'.'''"'^'°«'-^ '^' «»»-f that, in a proceeding for cremS?r'''*f^ '" '''' ^^^'^^^' however full and unequTv^l T^ ^ ^T^' ^ '^o™ ^^^wer, f-^^^A^n, 2 Doug S Sf r:J,T^"^^^«- ^^ingy.Th^ Rutherford v. Metcalf, slS^Tr* T.l ''"'"P^" *«' ^^'^ Ferry Boat Co., 16 W Va gW 8^ ' T' f '^^ "• ^-?-'* 534, 537; Buck [J39] \ Buck m w"t ""■ ^"''^^' ^^ !"• People, 30 111. App. 399 4^^^^^., ^n ^^^' ^'^' ^'^'^^ ^. Johns. 317, 373; £-S,w '/''^ f^ ^^^"'' ^h- J.) 4 Bank y. SckerrLrkorntV.i^^^^^ ^«1' ^83; Fed. 761. 768. ^^'^'^^^'^'^ U. S. y. Anon.,21 340 64 FEDERAL BEPORTEB, 739. Opinion of the Court. the evidence. A great body of evidence, consisting of the testimony of witnesses, telegrams, and other documents, has been adduced to show the guilt of the accused. The de- fendants, claiming the constitutional privilege against self- incrimination, refused to testify at the instance of the prose- cution, and have offered no evidence in their own behalf, ex- cepting parts of certain documents which were allowed to be read in connection with other parts offered by the prose- cution. Besides denying that any violation of the injunc- tion has been proved against them, the defendants now reassert and insist that the injunction is invalid, on the two grounds that the court had no jurisdiction to hear and de- termine the case in which the injunction was ordered, and that, though possessed of such jurisdiction, the court lacked organic power to make the particular order in question. Reference is made to Ex parte Fisk, 113 U. S. 713, 718 719, 5 Sup. Ct. 724 ; In re Smoyer, 124 U. S. 200, 220-222, 8 Sup. Ct. 482; Ex parte Terry, 128 U. S. 289, 9 Sup. Ct 77; Windsor v. McVeigh, 93 U. S. 274, 282, 283; Kerfoot v. People, 51 111. App. 409. If the injunction was, for any reason, totally invalid, no violation or disregard of it could constitute a punishable contempt; but if the court acquired jurisdiction, and did not exceed its powers in the particular case, no irregularity or error in the procedure or in the order itself could justify disobedience of the writ Elliott v. Peir- »ol, 1 Pet 340; Ex parte Watkins, 3 Pet. 193: In re Coy, 127 U.S. 731, 8 Sup. Ct 1263. The considerations of public policy on which this rule rests are too plain and well under- stood to need restatement. Was the case one of which the court had jurisdiction ? No question is made, or could be made in a proceeding for con- tempt, of the sufficiency of the petition for the injunction in respect to matters of form and averment merely. In Coy^s Case, supra, the court said : nnlli^^LT^^^' When the qnestlon of jurisdiction Is raised, the S? .fr!^«^ ^^i^?? ^^ Ti^l^^i *^n ^^ *>^« Jurisdiction of that ilass of offenses If the statute has Invested the court which tried the prisoner with Jurisdiction to punish a well-defined class of offe^es - ilfJ*^^ ^^ *** '*^°^®' ^"^ ^""^^^ *^ **8 court8.-Its Judgment as 'to what acts were necessary under these statutes to constitute th^ crime is not reviewable on a writ of habeas corpus." "^"^"^^^ ^ i 341 ■ UNITED STATES V. DEBS. Opinion of the Court of the remedy by injuncdr "" " "^^"'^ ^"""-^ ^^mite ■nltlrrit.^^^^^^^^^^^^^^ -e Char. ■ Chicago, by mfans and TnamaZe^Z "''T-f ^ ^-*--g - recognized definitions a 12^ '^•'"^*^t"t«. within the "anything that unlatf lirtttT/o?- th',"'""'" '^ venience or damage " S Ri r^ J ^ ^^^ ^^"''t' incon- is such an inconSenc! ft^T '''■ "^ P"''"^ »"'-«<« whole community nTnerJ^^ZJ""r ''^f"^ ^' «»"«y« the person." Id. ij. SdeS^^/'tZ '"'''\^^- Particular 38), " a public nuisanc^ is a vt,^- "^i' ""^ ^"'^«"*=*^ (Page bv a direct encrofc W Jron ^uwfc " ?t'" "-"'^^' ^'^'^^^ or by doing some act which tenSs^o, ^ *" .*"" ^'"P^''^' omitting to do some act whS th« 1'"""""" '"^■"'•"' '' ^^ ■ and which it is the duty^Tp^^Tr ^"^ '"'^'"'^^ Mon to do which result, iJ • ^ ^ *^'*' and the omis- of public nuis n^of ;S7'" ^ '" *'' P""'*=-" "^ fo™ ■ thecourtsof equiTy inSan^T'^-'^''' ^" t«k^n by "Purprestu,.,'? wh'i eh stSn^TtT^ '""^'^ '^ ^""^^ upon lands, or rights and e^T . "" encroachment longing to the m^^ ZtT^Ti^r:^' ^'''''''' '^- of access or of eniovmpnf „ ^ ^ ^^^^^^ have a right streams." " The ~' J^^ TZr^'T' "^^^ "-'^"e information in equity at the suit'ofT T' ''•"^^•^'' '^ "^ other proper officer." wL 1" ^"""""y «'»''«'l <>' In Kerr on Injunctions (page'sPS)'^ Lt-d fA' tU^i'arSr eft^CV •''"^'-*"« ««<> a nuisance. 342 ¥\ 64 FEDERAL BEPOBTEE, 740. Opinion of the Court ^eSZ 1^1Z:TZ:^ t.""""' '''■«*''- 't -"' be more erection to remain aTdbe a?^'ed UT/fhl"''^ °' *° *"««■• »« te^^'Jrf cuid t'T*'?^'*'' ^"'^ ""-~ decisions and 2 Wils Ch 87.^'// ' ^' ^^^^'^'^^ ^^^^^'^^ ^' Johnson, nZ Af, ^^^/^^^^y Oeneval v. F 7 />aw* V. Mayor, etc., UN Y ^o7 d ^ * ^^' win oe lound to be determinative of other aiiPsHonc r.\.\ k have come under discussion. questions which Story says: eo^s'o? ^uW^^if r^^^^ Jurisdiction of jurisdiction is aDnlicablP nnf ^„i ^^ ancient date. ♦ ♦ ♦ The stood to L"ea'n\r^'°rsrt"i StH^? '" - »S: part of 1,1s demesne landsoTuMn H^.„c, ^^**' '''°«' <"'»'er upon crown of the public, such asTi^n 1.^S. ""^ easements held by the streets etc., and other public acXmort^*Hn3?' ^^"'<' ^'"^^- '»'tg. V. y. 8.. 10 Pet. 662; J/oAa,rr«wZ. Jl *• ^^''^ "^ ^^'o Orlemi Paige, 534; .4«or„e» OeWo" v CoW» Bw/" ^"'''' <* ■»• «• Co.. 6 Section 923 : " In casTs nf ^'J^m- ' "/"'"^ *^°-' « Paige, 133. an indictment li^' toTbate them and'i:;'^' P'^>1«'>/ ^ oailed, but an information also lies in m.'.ii^ 1 - ^''""*^'" ""* offenders JJ'ay of injunction. The instane^of^hl . f'^^- ^^^ Srievance b^ however, are, it is said rarT „n^ ■ t''®. '"teriwsition of the court seeking prev'enti,;'"r^1ie?'%C ST.IT "°".'"^ "> Informations maintained against a public nuiiin^h^V"^. '° ^fl""'' have been Section 024; "The i«)und of thi^lnH^ r":?'"^ 2 highway." n cases of purpresture, as well as of ni^n^ ". "' """^^ "' «^""y Is their abilitj- to give a more co,»n^»fr „ h*^ nuisances, undoubtedly attainable at law. m or^er to Zvint ?^ ^"^^ '"^'^^'y «!>»» is a so to suppress opp.-ess"e and ?exItto„s T^?"7,'""> ""«'■•"«'' s°«"« <>' «' some species of information to L** 1 ♦k''* """'•ney general, by court relief as to nalsanc* and ^An^L*^,.*?""'"''^ "'Oe of the to .4«or*,e|/ General v. r ezer^^^ftta'i ?J •,„"'i'*""'^"' *"« ""'y casS SL"?.C* f ">• '»'» '"'n domanrJor 1; ~ntr,^ of encroachment on torn Charlea I. down to the year 1705^ v2 i°^ .* ■""' <»'«>* «». been finally sustained upon the nHnT-i^i Vk^*' *''* Jurisdiction has adequate and con.plete reUef than ™n L ,'. ^""^ ™" -^'^-e more therefore, it is admitted bv all th^t ,t, "^ obtained at law. While and a«x>rdingly the ^taJce"iMt i-.T'^T^'y "»« "^ -n®. "" °°' undertake to original case. There must be a dTrtt J.fnt '" ,'".K^""y ^'od in the order to bring within the swL of^Js ifj^!* °' *^^ ^""cd States In «»urts of law and equity o3rnpfi„^c !; "^ administered by the streams within the states' Snnh «w ?-"** nuisances in navigable reuses against the laws of tSe states" wSr """J "uisances arf of watei^ He, and may be lndict«l or nrohiW iT,'^""^^. *« navigable rh"S^-i-ha?-to-.1-^^^ the^S^;rC^^^^^^^^ it was sough to rl^ove Is nl^^* "^ ''''' '""^ ^""^g« -hich States, inihe absenrof~ e^sfSr "^* *'^ ^"'*^'* tions and nuisances in naSl sS v^^'"^ "'''*'•"*'- national law. "avigable streams withm the scope of tofhe'^arottLXf^re^'^^^^^^^ '-'--- ^^ -'^e March 2, 1889 S St H'?' 'i""""^^*^ ^y '^^ »«* «* (25 Stat. 855) ; and it is contended that by 346 64 FEDERAL REPORTER, 143. Opinion of the Court. th™ *^^ provisions of that statute, passed in exercise of ttie power conferred on congress by the constitution " to i^gu- ?a. Wn"""? TT^ *•"" ''^*™^ '^*^" *»»« »'«tional control has been extended over the channels and agencies of inter- state commerce, including railways as well as navigable waters and that out of this legislation, whatever hadten ttlTn'o^^r^; "r" ^^ "***^^'"^ implication the juris- dic ion of the federal courts, in accordance with the prin- oples of equity to protect that commerce against interfer- ence or obstruction. The right of the federal government to obtam the injunction is also asserted upon the ground of property right in the mails. dispute and that ,t pays large sums amiually for the carry- ing of the mails upon the railroads is well understood. In Seanffht y. Stokes, 3 How. 151, where the question was whether vehicles carrying the mails were " laden with the property of the United States," and therefore exempt from court" S! ^"™^'-'«"<^ '•-•i' in Pennsylvania, the s^ipreme min^^Thov*„S°!.*®? ®*"*^ """^ ^questionably a property m the as well as that otltecmSn^<^^nHfJ"^ guarding its own property tnre.onpuh.icser.i^^rfi'^eSn^trrattr'.jrpX"^^^^^^^^ It is said, on the contrary, to be easy " to show that at common law, jurisdiction of the chancery on information of the attoraey general to restrain a purpresture or nuisance rests on the idea that the king owns the land whereon it exists » It IS doubtless true that, in the cases where the jurisdiction was invoked the tang was the owner of the land, because the land under navigable waters in England has alwavs be- gged to the crown; but the object of the suits has alwavs been, not to vindicate the title to the land, which could ha^e been done by the action of ejectment, but to prevent or re- move obstructions to navigation, which required the prompt and efficient methtHls of equity; and it is not to be believed that If m England, as along the fresh-water rivers of this %s II 347 UNITED STATES V, DEBS. Opinion of the Court exercised for the protection oTtrtK '''*"^'* ""* ^^^^ been The public inteZtTlZ^rn^T^l'' "^'^^ °' navigation. the water, and it is stictarrtf. ^ "^obstructed use of to protect that use 1 deZden ' ""^^^ ''^ '^'' the right underlying soil. If, howeTer * r^"" 't *'^"^^'^'P «' ^he must be held to i^stupritliS"*"" ^" ^"'''^ ^^ ^hich by fiction shall be dimed to u ' or property right, protection, or to afford a £ of ""^'^^^ "^ ^""^^^^le tectmg incidental rights ,t t.L ^""sd'ction for pro- Which the governmeufh^^LrdedaSl?* the prope'rty and Its unquestioned ownershin „T m ^^""^ '" ^^^ niails deemed sufficient for the p^oi T?'^."^^'^* "«» ^ V. S. V. W. V. Tel Co \ll^ L "'*'*=* ■^'•«wer said in always the test S la 'interlf- l!' *'^ "^'^^ '^''"- - no? ficed if anything of higher vTh 1 ^^ T^ J^'''^''^^ ^ «««ri- " But," say counsel "tM/u,'^ ^^^^^^^ attained." to the questL in ^is :ei.n'"Vf ^i^: "^^^'^^ ^g-. railways. They are free to «JI .„ Waterways are not Ject of private ownersh^ nor 0X0^ T T ""* '"^^ ^b" regulation by public authoritv A z.' t ""'"^ "^ municipal 387 13 Sup. Ct^io. The SVol oftl '"/ '''"^' ^*« U.\ with the company that owT a^ ol T''^''^ '' ^"'"^"ly interests are entirely able to ope wS? "^ ^^''' ^^' their property. If they be heW in k { '"""^^^^^^'^ with *or the public, why should eouitv ^^^ .''"^' «^ trustees beneficiaries of this trSunSf "."■■"'" " •^"'* ^y the recreant? These companies own tt /'T'^^ ""^^^ Proved J'nes run, or a right of wavin "^ ^^^'^ "^^'^^ their charged with publfc dudes are 1^^'"^'^' ^"'^' ^^ough porations operated for g2 A to ^n7'* P'*'""'^'^ <^«r- the speed of trains, stuping '"f "^^ "^««^^' ^•-• tracks, and things of th«V I \ crossings, elevation of Jo-I or state 4il„'* Snr'.> *•" ^"''i-* to power of congress exclusive afL 7 T ^ ^^^« *»»« rates. Wabash, etc., Hy. XU^^Z *''" "*"«•• «* interstate U. S. 557, 7 Sup. Ct. 4." It * L ^'"^^ °f ^^^^^, US - - railways; that the lautTnTlllrttlo^tTa^^ 348 64 FEDERAL BEPOBTER, 745. Opinion of the Court, under them are owned and controUed, under legal limita- tions by companies which operate them for gain; but so ai» the boats which ply the rivers and lakes of the country and I see no reason in any of the suggestions advanced for saymg that the courts may give to commerce on the rivers a protection which they may not extend to commerce on the railways. The railroad" companies are clothed with the power of eminent domain, to enable them to acquire lands necessary for their purposes, because the proposed use is for the public benefit To the extent of the share which the companies have in interstate commerce they hold their lands and rights of way for tBe benefit of the general public and subject to the national control. « For this purpose » to use the expression of the supreme court in Gilman v. PMadelphia, 3 WaU. 713, in respect of navigable waters, they are the public property of the nation, and subject to all the requisite legislation of congress." But wliile the reasons to justify, on the grounds considered, the issuing of the injunction for the purpose of protectino- against obstruction or interruption, either the mails alon^e' or interstate commerce, of which the carrying of the mails IS a part, are strong, and perhaps ought to be accepted as convincing, there seems to be no precedent for so holdine and the responsibility of making a precedent need not now be' assunied. AVhile. however, the point is not decided, the authorities on tlie subject have been brought forward so fully because m part, of their bearing upon the question now to be con- sidered^-whether or not the injunction was authorized by the act of July 2. 1890. It was under that act that the order was asked and was granted; but it has been seriously questioned in this proceedmg, as well as by an eminent judge and bv lawyers elsewhere, whether the statute is bv its terms ap- plicable, or consistently with constitutional" guaranties can bnefe for the defendants, and the authorities already quoted ?Tnl -^ "i^onstrate "that were congress to declare"that the United States might maintain a bill to enjoin the obstruc- tion of interstate commerce on railroads engaged therein, t 1- nmrm states v. debs. „,,. Opinion of the Court ^^.^d trS: rr ^ ^» -^-^ on a public high, admissible." Such a„ act nT' ^"^/^^'^'''tion would b^ nnlty jurisdiction in E Ind atT^. '^^""^ *''« '^^ ol constitution was adopted hi. „,1 *™1 ^^«" '^^ ^deral to the objection that it '; Vn inv """l'^ "''* ^ obnoxious na> law which involved ^0—""^.' 't ""^'^ '' -™'- by jury. The jurisdiction of t^ *'' *^' "^^*^ of trial "nphcation their right to nunthf '""'"'' ^* ^"''y, and by by the constitutionrequaT wUht '""^P*' ''' ^^^^^ish J «nd so Jong as there is „„ ,ff . ^ "^'^^ of trial by jury -bjects not prope;,;^:;: sf i^n"' ^""^^'^^^^^ oTi ^ound for the assertion ZtteZZ?' '''''' '=''" '^ "o taken away or impaired. The saf V"'^ '""^ ^^' been eonteiript and a crime. But the l! ' ""^^ ^""««tute a crime another; and the punisImer^^P' '^ ''"^ ^^ng. the rW6] cation of the punishment Ti ""' '^ "ot a dupli- can be tried and punfshefoX bv th '"''''• ^he contempt Thnra^^r r ^^^ ' ^""' '"' '''-'' (26 Stat. .09),tefd :^fot;r °' ''' '''' ^' '^'y 2. 1890 Section 1 • •• Rvpi^ °^'tZ'^.ZT£^"^^^^^^^^^^^^^^^ '«™ <" trust or combination or TOnill„'""''t«"y ''"di wntrert or^i*""^ *° ^ '"egal Wd on conviction Xr^; \^«"„'^ .ews or purposes expressed in debate as suppj^ng he c^n truction of statutes, it is said we may gather XheT JJoubtless, that is often [747 j true; and in this instance IZTn^r "TT **•«* *»»« o"gi"''l "measure, as J^ posed in the senate, « was directed wholly against trusts «nA not at organizations of labor in ajiy for^ " S t „i ' pears that ^fore the bill left thfsenat its a e h f bl' changed, and material additions made to the text; and itTs s^^l re ;^L:dTippi: -t r ''^ ''- -^ agreements or combinalnt Si^betweeTlLrs^^^:;^ ^ew of lessening hours of labor or of increasing the" laL nor to any arrangements, agreements or combinations TS persons engaged in horticulture or agriculture rde™h the view of enhancing the price of a^icultureHr hS U»IXED STATES V. DEBS — p^ducts,":::'::'^"^ --mSJs^S'^ o^rS T. rr- the offerin.. „. .r^^gements of the kinH T . «^clude ncerned, was not overiookerf p t . ^'"■"^'^ should be f--ional KStriT""""' - -port /in hTcf' ^o-'ng statement: ^ '"""^ '^' ?*• «' P- 4089). made t fo"\ cl„r. t!,'/ "»'"MuaI character-? i? •''<»"'» TJ. * • .atever form found it tu l "^ ^orm of trusts J hat IS the effect nt tu ' ^'^^y ^ n restrainf , . ' that those words sho„S\''T'^^ "«' otherwS™ n ^ *™**"- «ke characteTlrr *^'"""^ '« incjr'onl *"*•'' '^ mg words. It is har^i ^f f "^ independently of th °" *rr;;"- «Sp^ tit" "-''^ -^-"^o; 352 64 FEDEKAL BEPORTEB, 747. Opinion of the Court. trade or commerce ; but that construction is controlled by the title, which shows that only unlawful restraints were intended. But what constitutes an unlawful restraint is not defined ; and, under the familiar rule that such federal enactments will be interpreted by the light of the common law, I have no doubt but that this [748] statute, in so far as it is directed against contracts or combinations in the form of trusts, or in any form of a " contractual character," should be limited to contracts and combinations sucli, in their general characteristics, as the courts have declared unlawful. But to put any such limitation upon the word "conspiracy" is neither necessary, nor, as I think, permissible. To do so would deprive the word, as here used, of all signifi- cance. 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 contracts. 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 agreement between two or more to do, by con- certed action, something criminal- or unlawful, or, it may be, to do something lawful by criminal or unlawful means. A conspiracy, therefore, is in itself unlawful, and, in so far as this statute is directed against conspiracies in restraint of trade among the several states, it is not necessary to look for the illegality of the offense in the kind of restraint proposed ; and, since it would be unnecessary^ it would be illogical, to conclude that only conspiracies which are founded upon, or are intended to be accomplished by means of, contracts or combinations in restraint of trade, are within the purview of the act. It would be to make tautologous words which have distinctly different 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. A dis- tinction has been suggested between the phrase " in restraint of trade " and the phrases " to injure trade " and " to restrain trade." Though perceptible, the distinction does not seem to me so significant that the use of one expression rather than the other should vary the interpretation of this statute. Any 353 UNITED STATES V, DEBS. Opinion of the Court - " to i„i„re " or " to restm^ "i2"\ "''* *« '^^^ tion, or conspiracy in restraint of 7" /.'=°"t'-a«t, combina- tract,combination:or conS!^^,l::^« '« t^^-^fo^ a con- It would not, I snpposeXTn^„^f '•!•">«'• to iniu^ trade, charge conspiracy in restr,in^ .7?^ ' •'" ''" indictment, to f tute, but it would be'el/J^^ . ^traint be shown to be in iS TnT 1 ^ '^^ P^P^^d re- means intended to be used in orl !" ' I' ""^^^ *e illegal ^d whether the means stouS ^aT. f''' '''' ^'''-'^■^ . 'n restraint of" or "to riti^n »Tl *^ ^^^^ ^^^ »^ "nportant. There are manTl? 7'"^'*" '''"'^^ hardly be ™le that every, word of a JaJr. "t'^' ''^ -^-^ ^he inapphcable, because, whe^ tl^" "'""''^ ^ ^iv^n effect is court is powerless to ^Z SZ'Z''' T^' ''' "^*J' ^^e ,^^^" ^^«rds of different si Jffil^;!'''^"' T^'^^^' ^ut, forbids that the scope of thl staLl u ""'^^''^'^' '^'^ ™>« ' tin'r""."' the narrower word "it- rP'^^^^d ^i^in . t'Pphng house » are neces^^Tn -^"^^^^'ng house » and 'n ^eff. y. MoCulle^VuZ^'l T' '"'^ '' ^'^ ^«" hdd sheep, and lamb » were an J^^'' ^*' ^^^t « ram ewe but, if the words hld^" Z"'^^ '^' '""^ ^^'^ "*-?'• W been a plain violaMon of th'; 'T "'' ^'^^P'" ■* -"uld comprehensive word « sW "l ^ "■"'" *° '*J«'' [7*91 the ;;ere not included. ^^7; ^„«^.,^y jhat lambs or we hll 2 Cranch, 10; Adams v. Woods jf^!^ '/'''' ^- ^^^^feller, Boifman, lOl IJ. §. II5 rT^/^ ^°^- 251; Market Co v Sup- Ct. 491. And ,> 7' ^'^'^^ ^- V. S.,nz n s \^k k -d.-cnspirf^^/: : "^Cl 'l^'Ti""-^ ^'^e i. stnpitofitswell-settlej^^^ii'f,^^ 1?"^ the same thing withm forms of contract TlTl^'T^'^'"^ ^^ «>nfining % ' trusts. For like reasons 1 1 ?. '^°^*"°««ons in the form of fncrce," in this statut^as svnn "" '^^'^ *« word Tom « the common-law phras^ "V"?^™""^ ^'^^ " trade," as S" ">& but Its chief use is " to denoSlLl ''''''*"^ ''' <'««I- "8(»-vot 1-06 M— 23 ^'^'^ **'" P'"-'=base and Of/Sk 64 FEDEBAIi BEPOBTEB, 749. Opinion of tlie Court sale of goods, wares, and merchandise, either by wholesale OP 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." Const. U. S. art. 1, § 8. In a broader and more distinct exercise of that power than ever before asserted, congress passed the enact- ments of 1887 and 1888 known as the " Interstate Commerce J^w. The present statute is another exercise of that con- stitutional 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 constitution. Ihat meaning has often been defined by the supreme court Gtbbom V. Ogden, 9 Wheat. 195, 197; Oilman v. Phila^ delphm, 3 Wall. 713; The Daniel Ball, 10 Wall. 557; The Case of the State Freight Ta^, 15 WaU. 232, 275; Pensacola S Q o;7*o^*'- ^' ^''^- ^'^-^ ^^' ^- ^- 1' ^^^ Varte SieloU, 100 U. fe. iJ71, 395; County of MohUe v. Kimball, 102 U. S. 691- Wabash, etc., Ry, Co. v. Illinois, 118 U. S. 569, 7 Sup. Ct! 4; Cherokee Nation v. Southern Kansas Ry, Co 135 U S 641, 657, 10 Sup. Ct. 965. I quote passages which wiU serve mcidentally to dispose of a number of points raised in the course of the argument, witliout referring to them more directly : (• ^tion wiiin^o nna?/^^?*''*^' "^ff ""known, "comprehends navi- Snli-ifS^lr t ,^^ ^^ ®^^^ «*a*e in the Union, so far as that J^I^ «n.f "^ ^' ^ ^"^y "^^""^'•' connected with •(^nimeri witii ^J£^„^««*»^«' «-• '^'"ong the several states, or wiTh ?2e inSiaS In Gihnan v. Philadelphia it is said : nniJo^P I^3f >;***. f««"Jatecomnieree comprehends the control for that thJnnl;^ 1!? the extent necessary, of all the navigable waters of In the case of The Daniel Ball, a steamer employed on UNITED STATES V. DEBS. Opinion of the Court 355 ^ . ^i^^^i^u or the Court ^rand river between Granr^ T?o -a Hon of congress Sh/^* '^"^' ^^ 'ar as it Cnt Ih^^*!^ *'''''* -^m- of trade fronf one 't« J?"""''"? ^as te^n to " i" "^ *•"•* «>'»- between tlie states !,!.» '" another, coameroe Tlf ^ *" artiolo and independent iJin*^"""*"***!. The tad th^^ ""** eoniniodity "■odity, some actiDfent',>!.."7 ^•"P'oy^ S trains J^':^™' "ITer^S aoiy tlie transportatinn „» J"'^ ^as never ht^n hJ. C? ?' '^ a oon- ""as the prom nenf M "' artioies of trade frn^ doubted, and prob- tution wLntoZJrZ '" "'« """<»« of theframf ^^"^^ *« another •Ufroe anions thT^^^^ '^as committed thl "aniers of the eon«H ;:estrietioTf/a .tat?™' '*^'^- " Xer to'*:;!'- *» •''"Snlate C-' by the same words a„7?' *?^ *""& deslr^*° C^"* embarrassing power to rewilatp' ^^ "■ ^^^ same elauseh^ . • 'I""'*'' ""as giren absurd to snppo3h»7T'^''^« "'«» foS L^-'""^ ""as conferred tbe state to the buverM"*, """"''""ss'on o^The m-m"'; " would^ was not ^.ntenfpla"^"',"^ ff?" «'« Place of n^"^.^*^"' t^de from trade either with fm^Li"'^ without that there m^SK"" *° ""e niarljet. on the «>nsti^'t on °s'Xr,n?2? °^ a-""" g Se st«eS° eonsnmmat^ in wh ch the wmvi \^^"on 1057), Judee <5fnl!I states, in his wort this interchange of comm.^^?'' ^°^ " nialce au^J^^ ^"^'^ to the case, the hrlngine ^S^/Podities Is by land or hi '^^'"'"'ee whether commerce." "'"^ °^ '"e goods fr^i the LuL '^ater. m eifhir In Pensacola Tel. Co. v. W T7 T.7 ^ , Waite, speaking for the conH.Srrl-^'- ^^ief Justice of the constitution, says: ' ""^ '^^'^'^g the provisions fc'SpS S?^"^" "^--r ,*» r 'r~'a"«es •« -ese - ;^^Kr^c^,--HH^|Hi-S f I 356 64 FEDEBAL REPORTER, 750. Opinion of the Court. and under all cIreuin«tai,op« w »•.!? ^^^"'^ }^^ ""^'ate' »* «" times governuient for the good o?«,ptntf^^^,r^^^^ intrusted to the general duty, of congress to^s^ to it t at^nWn..^* ""'^ »"« ''^ht, but the the triinsml^lon of IntelMeenoe arJ^^f „ ? '■"."""« ""^ »*«♦«» »°a hindered by state legiXtion " * obstructed or unnecessarily In Counij, of MohUe v. Kimhall, in reference to the power of congress over the subject, it is said : shall be conducted between ^S ^? commerce in all its forms Jects of other ^umrles and between t^^citr** "i* ,''""=«°« "■• ^u"- . -d to adopt measures to7ro^o^7s *^;'ra"nriL*S^eTsrfet-"- [751] In Wa>a8h, etc, Ry. Go. y. Illinois, Justice Miller in the course of an exhaustive discussion, says : ' tr:n|^rtr 5^ r "S^, o7'tr cSCri"?: fht --r °f «>°"-«' in modern times to that f re«iivm n7L^ ^ Z^ ^^® ^^^^^ ^^ essential the state might che« the constitution Itself show whteh^l, V^tt.M ^^^l'^'^' ^^ "'""'s <>' JJI laws Which Shall be mde In pnreu^S* LlS''^«>?«",t"«9n,and the supreme law of the land • ?""5""J<* tnereof • • . shall be cute its powers, or It Is no government Tt » f ''^'•""e"* must exe- land as well as on the se?? TS^, wenTsl^^L.'S^'" »" *« 357 POTTED STATES V. DEBS. In /r* , ^^^'"^ °^ *•"« Court speaking by Mr hZ ^f "''^'^^ ^an. Jiy Cn tu "Congfess has ^'''^"' ^y^"" '^"^ Th ^ i2 control and rego- "g^ cnat as emplovpf^ in fi, ^ see no reason fnt. circuit .urt o"f ?;p:^-^i^-2; -d in on^^rns^-ni ^a Fed r7A?, f '"»«'■<=«• For instance ^.?'" P'-^duction of supreme court" sl' ?'" *=*"« ^« Pending on ann' f ^**'- V A- rr ■ ^ also, ZJwc^i.^ XT .. , ^Ppea] m the I; f . ^''^'^rd Watch & 'cuSZ ^f'^'^^'^e Manufn Co decisions are riffht r, ^.^^'^''* ^''•, 55 Fed. 851 t#1 ion^ If * II ^ '* P"'"* upon wJ.,Vi> t " *hese Jon;, It follows that the art in T- *''* ^ «^Press no onin oTm^ -^ — — ____ ^uisse ot move- k. «fdo.. di VBDEBAL BBPOBTEB^ 752. Opinion of tlie Ck>iirt ment among the stetes, and to the agencies or means of transportation ; and if, as is contended, and as seems to have been decided in V. S. v. Patterson, supra, it covers only con- tracts, combinations, or conspiracies '^ intended to engross or monopolize the market," it is an act of very narrow scope. Why should it not be construed to embrace all conspiracies which shall be contrived with intent, or of which the neces- sary or probable effect shall be, to restrain, hinder, inter- rupt, or destroy interstate commerce? The argument to the contrajy, drawn from the sixth sec- tion of the act, is not controlling, nor, as it seems to me, even strongly persuasive. That section provides for the forfei- ture 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 unply 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 read : " If in any case there shall be found any property owned," etc., " it shall be forfeited," etc. ; and so read it neither expresses nor implies any limita- tion of the provisions of other sections. At this point is interposed the constitutional objection which, it is urged, forbids a construction that goes beyond trusts and monopolies to include conspiracies to employ force or violence in restraint of trade or commerce. The argument was employed and amplified in the Patterson Case, 56 Fed. 605, 629-632. It was contended there " that if two or more persons commit an act of murder, robbery, forgery, shop- breaking, store-burning, champerty, or maintenance, which in fact has a natural, though unintended, result of interfer- ence with interstate commerce, they are liable criminally for a conspiracy to interfere with interstate commerce, if the stat- ute broadly covers conspiracy merely to interfere with it." This proposition is built on the assumption— which I believe is supported neither by authority nor reason— that co-con- spirators are responsible as conspirators for the natural, though unintended, results of the commission or attempt by (I II ' UNITED STATES V. DEBS. 359 Opinion of the Conrt. one of them to commit the particular offense [7531 oriei- nal y agreed upon or intended. It is a fundamental and S- sen lal prmciple of law, and of social order, that all engaged Ti/^ '="r:'^'»" of ^ particular crime, whether as counilors, cnrn',n 5 iJ"" **« ''■'^^^' ^'•* i"di^d«aUy responsible cnminally.for other offenses which insult naturaUy from the commission or attempt to commit the crime intended; but as agreement and intent are of the essence of a consp racy a conspiracy to commit a particular offense can hardly bJ deemed io include another conspiracy to commit another of- fense, unless the latter was the necessary result of the com- mission or attempt to commit the crime intended, or to such a degree the probable result that it could itself be chargJln the indictment to have been intended. But if it were possi- eiLnd'.L?"'^/* ^^^^'''^ "•^''^""^"g ^""^ refinement, to expend the law of conspiracy to all crimes known to the aw PutSm'LirT ^T T '™P"-ted. it would, as Judge Putnam held, not mvolve the constitutionality of this art which IS limited to the field of interstate commerce, wheiS power of congress is unrestricted and supreme. The question here, however, is of the validity of the fourth rather than of the first, section of the act It is urged tha^ the power given by that section « to prevent and restrain vio ations "of the act is an unwarranted invasion of tTS, of trial by jury and in support of the proposition are cited i T/AJ- ^'^''*' ^^1 ™- 1^^' 23 N. E. 428; CarletZy Rugg, 149 Mass. 550-557, 22 N. E. 55; Littleto^ y Fritz m Iowa, 488 22 N. W ^1; Eileniecker v. PlyZliK^'S, ^\ ^^V^ ^'ZT ^- ^^""^^^ ^^ U- S- 294; Boyd v. Bttclwook, 142 U. S. 647-^82, 12 Sup. Ct. 195. Little need be added to what has already been said upon ^at sub^t. The same act may be a crime and a contempH? court. If an as^ult or murder be committed in the presence of a court the offender wiU be punishable both for the crim^ fn t^«w wi!^^"?*' ^""^ ^ ^'^^ ''"y «*«•• a«t committed m violation both of a crmiinal statute and of an injmiction or order of court. Within the proper subjects of iuitabte cognizance, as established when the constitution was adopted, 'I ! 360 64 FEDERAL REPORTER, 753. Opinion of the Court it was competent for congress to vest the courts with the juris dS"ofT"*'** ^^ *^' '^*''*°' »°** **» ^P«* "P°° them the duty^of Its exercise m proper cases. Just as, in construing the first section of the act, its general words are limited by force of the title to unlawful restraint, and the words " in IS^^I^^ |f«d«>" in their comiection with the words "con- tract and combination," are to be given their common- law significance, so the jurisdiction in equity, though t been questioned by counsel; their contention being that neither by this statute, nor upoL gen- eral principles, IS the case within the jurisdiction of a L ZJ Z.^""^"^^ inconsistent with the jurisdiction here «ercis^ jae case of U. S. v. Trans-Musonri FreioZ reWn Z""- T' ".•' ^ ^- ^- ^- 1^' 5« Fed. 58,Ihad f„ ^ k!! " *'"".*"^"* ^*^'^" '""•^"'J^' ^hi«h was alleged to have b^n made in violation of the act, but was held to Amalgamated Oonnca of New OrUam, 54 Fed. 994, the ate Judge Billings, under this statute, granted an in unc- tion upon facts which made the question of jurisdiction ™LT' T •' ^"*' ""'^ ^° "^^ ^ t>^»t question his ruling and opinion were distinctly approved by the cireuit F^f «n^ "^-^^ ' '*"■ '^^/'^ «^'=''^t <« C. C. A. 258, 67 *ed. 85). The court said: ' granting of said iXnction Th^r .^ ? """* """•* "^''"'st the and di8|o8edTinbr*e^aWe1nIni^n7;fi'rT."'*^* <"8«°««ed, ronrt who passed the d^^7ee'''^„VJSirh? ?o ^^^v1?t^' ^^L^'^! I J t UNITED STATES V, DEBS. Opinion of the Court. 861 See, also the opinioa of Judge Speer in Waierhouse v. Corner, 55 Fed. 149. In the^o^e of PhMan, 62 Fed. 803, who was charged with contempt of the United States circuit court at Cin- cinnati, growing out of the strike of last summer, and in- volving facts essentially identical with the facts of this case Judge Taft declared the combination to be « in the teeth of the act of July 2, 1890," and after quoting from the act and referring to the rulings of other judges in accord With his own view, said : Lurton and I cannot ^n^ i^h' f^l' ""^^ .coMWeration, Judge Indffff Tho A^tJti,^ ^"" "■* reasoning of that leamml shown conclusively in thrca°T„d*r« ^r""*""*? ?f *"'" """"t-^ Is their combination was for «n^;„^? i .''°"^° "' "" °>«°- Therefore, within the statafe cit^" " '^'^'"' P"'^"«' '"'<' '« « conspiracy! PWHn!''/?''* "''"•.*** ^- ^- ^- ^^''^*' ^ ^^- 27, Judge I'hilips declares similar views. The facts of this case suggest iUustrations of the impro- priety as well as inconsistency of putting upon the statute «^e restrictive construction proposed. If, for example, the sTol enli^th ?T "'"P""^ *"'"' ^'^ '''^' -^^ i-teVest, SoS J f •! ^'^'"?? ""^ switehmen or other em- bS L "^^ "'**'"'■ ^^Ji^idually or in associated bod es, ,n a conspiracy to prevent or restrain the use of Pullman sleepers, by refusing to move them, by secretJv aXT Tfssi "tl ''''" ^-'"^^^^ '"^*"^' ^^-^ monopolLTcS ^r.K ,vf U^ conspiracy would be so evident that, even on the theory that the statute is aimed at contracts orCm" binations intended to engross or monopolize the markeHt Tsuch a '^" V.'if * *i^ ^^^'^^ ""«'^* *« »- Puni^ablf Bu m such a case if the officers or agents of the car companies who might or might not be capitalists, would be individual Z^the b 'r ^"^''"'^g *« statute, upon what princf^ " could the brakemanorswitehmanbeexempt? Canworking- «nen, or, if you will, poor men, acting by themselves, upon CI 362 64 FEDERAL REPOBTBB, 751, Tf' Opinion of tlie CJourt aeir own motion and for their own purposes, whether avowed or secret do things forbidden by the statute without criminal responsibility and yet be criminaUy responsible for the same t^gs done at the instance and to promote the pur- l^ot others? Or wiU it be said that under this statute one who ,s not a «»pitalist may, without criminality, assist capitabste in the doing of things which on their part ar« rrf '.*?!.* ^- "'J *'•"•' " " «'P"»"^t -d -e wh" IS not a capitahst join in doing things forbidden by this statute, neither can be punished, because one alone cannot be guilty of conspiracy. The persistent effort of the de- «Mdants as the proof shows, was to force the railroad com- panies-the largest capitalists of the country_to co-operate, or at least to acquiesce, in a scheme to stop the use of PuU- man sleepers; and for a time they had the agreement of a manager and other officers of one road to quit the use of the obnoxious cars, and perhaps a qualified submission of the officers of another road or two to the same dictation: lioes the guilt or innocence of the defendants of the charge of conspiracy, under this statute, depend on the proof there may be of their success in drawing to the support of their design those who may be called capitalists, or does It depend upon the character of the design itself, and upon what has been done towards its accomplishment by them- selves and by those in voluntary co-operation with them, from whatever employment or walk in life? I have not failed, I think, to appreciate the just force of the argument to the contrary of my opinion,-it has some- fames entangled me in doubt,-but my conclusion is clear that, under the act of 1890, the court had jurisdiction of the case presented in the application, and that the injunction Ka '"^ ""* ^^^"""^ authority of law, nor for any reason This brings me to the question of fact: Did the defendants vidate the injunction? The evidence upon the question is voluminous, but need not be reviewed in detail. The iniunc- bon ifflued July 2d, and on the 8d and 4th was served upon the defendants Debs, Howard, Rogers, and Keliher. It was not served upon the other defendants, and in one of the taief s It IS contended that only parties to a biU can be charged (f 0HITED STATES V. DEBS. Opinion of the Court 363 ynth violating an injunction ; that while strangers to a suit in chancery may be liable for wiUful interference, their cases stand upon the same footing as ordinary criminal contempts, and their answers are conclusive. Authorities cited : WaL^ y. Fuller 9 How. Pr. 425; Eip v. Deniston, 4 Johns. 24; Boyd V. State, 19 Neb. 128, 26 N. W. 925; Lord EUorCs pTT' 7r ^^'^-'^^'^ ^^ ^- ^«^«'^, 5 Kan. 90, 114: V !t7- f^lf?*' ^ ^^ ^^-■' •^^«'^« ^- Bowman, 27 N. j! i!-q. 171; [756] Coddington v. Wehh, 4 Sandf. 639. In another brief the weight of authority is conceded to be that one who has actual notice of an injunction is bound by it eS^ w'i^''°*^'^P*'/^' ^'^^'"^ ^- ^"^"^0^^ 34 How. Pr. ^02 Waffle v. VanderJmyder,, 8 Paige 45. I know of no authority and perceive no reason for treating the answer of l^^Tl Xu" ^"' "' '='"*''^"^'^''' ^^^' th« «°«wer of a party to the bill is not conclusive. ±1^ t^t™ony of newspaper reporters shows that on July 4th Debs said to one of them : ' Again, on the 7th, that: «-nwa.^n.on ^X^^^X^.^^^ llX^^-<^^-^ To another, on July 2d, he had said, in substance- Jnnrtlon ^^r^rdonr^ttof for'* ?^^"^ J-'y- »' »' "-y ta. American Railway oXn wn. ?-f Z^ enjoined against, and that tho they had commln^" ^""^^ continue the fight on the same lines July 3d the defendant Bums, who, it should be observed. m responding jomtly with his codefendants Hogan and others to interrogatories, had asserted that they were not informed of the injunction until near the end of the^riJ^ rutTLfd? ™ °* *'^ "^"*' ^^** *«y ^•^-I'j ^<^ 4t way'^Uki;^?Srl|L'S''''th«?LvVJ5" '^T'^^'^^' «>« the Rail- had «,t interfered ^^'t^t^i^?.^.^' ^^^^T^Z^^iT, II 364 «4 FEDEBAL KEPOBTER, 756. Opinion of the Court II tlil4^nS^^ry''r'?h?"S^^ 'i*^«t «>«y had not done any- peaceably." ^® injunction; that they had a right to strike aid or not is immaterial horo Tk • . ^vneiner they tinn oT.ri *k '"""^^^"a^ 'lere. Their conduct only is in aum ««. but finlHsThTL P'*^«ft *e use of PulLn woSd be thwart! d bv h7^ J ™'",«'>''t«'y. that that aim the day after Si tKcS^atSL^d Z'"^ " """^ ''*'' strike; and from that til„ f„ 5. T ' ^ '^"* "'^e's to ability', they ZVuZ^Za^^tk ^ Vf" ^ 1 ^''^'^ sistent consistency of pur^ f S^Sl f"^^ "^'^^ ^'■ of action. Whatthev d^d^'fl!^ 7 .""*'''*"Sed ^^^hods each su.J^X^t^:^tt^^:i^^l^^^^^^ nat« very closely between what was do^rSf^ f T'" after service of the injunction '^*'''" """^ ^'^«» qufs^rfStthfltdanT h^""'^ ^"•""' ^* '^ '-•-^•J strike, ^idin,*: tty toT the" mC^^^ oT^ "^ ^'^^ t^vely enpged. Is it [757] true, aXfairt thrthTv" dad nothing, and advised or instioatp^ Lf^ ' , -^ and nothing contrary to the SSfonrr'"^'- ""''''^^'' 'iew for the moment the ruletW ■ ^"^""^ <»"* «* sible for the deeSs of each JSer 1^^""!^" ^ ^"P«°- the common design, Ts it true that th ,,'^ *f'*'™"<'^ "' exercise of their aTtoowedS ladLtinHr*^'"''' '" *•»« advise a peaceable ^rike oft thd aw 1 '^ "^ ^'"^ from railroad serviVp n,. ^i^ J""«rawal of their followers violent andtS;2ntX~J rr^"*'^^ ^'''='' prevent the equipment and mov^g oFtrlin^? ^^TT "" of the information that they kne J « that^-!l ^"""^ follows all strikes of a simikrTara^ter » £? '"''"? u^ denying that "they knew that XC'anSim^ UNITED STATES V. DEBS. Opinion of the Court. 365 duct necessarily follows from c!triV«= „* n, i • , When, at an early sta^e ofTh! 1 ^ ^'""^ mentioned." sponsive to the inform«H^ T ^ ^ ^''^^'^ ^''^ !>«* re- was emp,oyed,\ifrr^':,t^;,L'd TcV^ITf -^" been inadvertent, and leave was tek ^ ^ a^nlb" L^l the infor;:tt\nre?htd ::t"; tr™r '•-^ p^^^^ *>' pr^ssly admitted or denied "On V ^''T'" ''"'^«'- «^- other defendants to trsecond ,„&•"'' "^T" ""'^ *^« Plicitly, denying " that thTor e £ of'Sm'r ^ """ ^"- have known that anv ^noh olt .^"^ "^^^ «r could or prboable or libTy\:t IJ^T ^.f^f '*^'^^'^' strikes or cessation of laL " Siwh' ■ ^ ^'""^ '"*''» be equivocal or evasive it^Lm u ^'^ '^ °"* perceived to ligent men fam SHitt htS c^ ""T^"'' '^"'^ ^^^l" P-sumed to have been,lw hont ^ affi^^Tt "s" T' ^ railroad employes have not been inWnTon,; ^^ th,s countiy, and the testimony of th7o„p w.V ^^^^ ^^^^ "» on the subject, and whose expe^ence TdTn T "''° '^''^' him apparently auite mm^.f„ 7 V . intelligence made I supp?. to be^omLrK: i" Thft'trt "'S ^•'^^ tended generally if nnf ;„ ""^'^''f®'— ^bat they have been at- intimidftion oTfor^ Tj'Jf '"'*''*':' ^""^ ^'"^ *«™ «* ception. Under reondSorrC ""' ^^" "* "'^ - were many idle men seeWnr , ^''^^^r, when there that a strfke whXairi a^t T'^'^r'' '' "«^ ^""P^^ible upon the railroads Se 11?^^ T'*"" ""' •'"^^'^^ violence; and it is not to ^^1^ ta^tl'dTH^^"* tered upon the execntinn ^^ fu • , ^ defendants en- ing the fact, aL ShouThav^„:'L?'"' !?^"* ^PP^^^*" it. The inference therefore i^^«f'"*** ^"'^ *« ^^^ ''^^ evidence to the point £^^1 ' T!' '^'^^ *^*"" direct this strike shouirdtffe^iom ^or'^'*^^ '"** '"*^'^'*«*^ *''»* design and boldness ;reScutioi?;l^".'"*^'*""*« «* accessories of intimidation ?^' ^ *^** *^ accustomed found essential toTucSw„^,u'''lT' ^ ^""^ '' '«^^ »« much the striking woSerlf""* ^ T'"'^' ^'^^ *!»«* " --interest, ^ithL "^X^^ ^f su^^^anl ? I I il 366 64 FEDEBAL REPOBTEB, 757. Opinion of tlie Court. even in spite of admonitions to the contrary, may ordinarily be counted on. Such admonitions against violence were [758] sent out occasionally by the defendants, but it does not appear that they were ever heeded; and I am not able to believe on the evidence that, in the fullest sense, it was ex- pected or intended that they should be. I am able and quite ready to believe that the defendants not only did not favor, but deprecated, extreme violence, which might lead to the destruction of property or of human life; but they were not unwilling that coupling pins should be drawn; that Pullman cars should be " cut out " and side tracked ; that switches should be turned and trains derailed; that cars should be overturned and ^tracks obstructed; that false or contradictory signals should be given to moving trains ; that the strikers and lawless rioters should wear a common badge, and should assemble together upon the tracks and yards of the companies to obstruct business; that engineers and fire- men should be pulled from their cabs, if by persuasion or threats they could not be induced to leave them; that the unemployed should be deterred by threats or abuse from taking the places of strikers; and that engines should be "plugged," or otherwise "killed." These things, and the like of them, were done daily in Chicago and elsewhere by members, and sometimes by officers, of the local unions, with- out protest or condemnation, and some of them at the instiga- tion of the defendants, who, it can hardly be doubted, were well aware of what was going on. When, therefore, in his address of June 29th, " To the Railway Employes of Amer- ica," Debs said: "I appeal to the strikers everywhere to refrain from any act of violence. Let there be no interfer- ence with the affairs of the companies involved, and, above all, let there be no act of depredation. A man who will destroy property or violate law is an enemy, and not a friend, to the cause of labor. The great public is with us," etc,— the chief aim, I am convinced, was to secure the good will of the public. To that end the warnings against acts of depredation or visible destruction of property, it may well be believed, were sincere; but their followers did not under- stand, and the court cannot believe, that it was intended to . i UNITED STATES V, DEBS. Opinion of the Court 367 assumed to be nof iinia«r# 1 t_ reason, it seems, were powerful corpon^tions » bT ITwhat^t ""^ 1 ^^ *"•* duty they were governed miihfKu..""^' *** ^"^ «°, "in mat part of the answer which allpm.= « tk / the service of the iniiir,r.f ;^„ *i, j ""J™ alleges that upon tent counsel Wd°fr , *^"*«"d«°^ consulted compe- statement of the fects in th ' '"^' "P''" ^ *"" ^^^ ^^^ what they might SfiH *''%Pf«™'^. ^ey were advised i«g the oJderff th?court andl 7'""^'° "^*'^°"* ^'^'^t- in all things proS^ '"^ ?"* ''""^t^^^ t™« ^^7 have had discloSd rthev oUr^ r' ""^'^ *'^"* «''^''=«'" they mentof thefacSthevmSl ^''^^<^°»«' J^^t what state- -ceived. Without sLrdLluT";."' "'.l' ^^^"^ ^^^^^ the proof, the alleged Lvi'S nSer Tfi° '^' '"''"^'' "'• a wrong or error -nnnittrd in "lli^^^^^^^^^^^^ raises rather, a presumption" that rfSll f^o/t?' ^''* would not be advanta^eonc v \ ''^**I statement the testimony of T'£Z-oniT,^i\7T "?^f ''"^ °^ commission appointed bv th« P -^ . "^'* '^*<"* the other things, he said : ^'^'dent, wherein, among «-e were arrested, and taken Lmt^l^ 'he employes found Tu^ strike. It was sfmply the United «f2l "'"'t'"erhoods that ended the Our men were In a p8sltion thnt nl *®^ "I""^ ""at ended the^ikL any circumstances, if we had^n If '^^."'^ "»"« ^^ sliaben u^det anions them. On<^ wlwere t^en'l""'".^ *» '*"'al° upon tt;e a^^ strained from sending teSm^^r tT ""* ^''^ <" action, and rS tlons, then the minions of ?S^SfJ!™L?8 "'"d*'^ <"• answer neauM • • • Our headquartere were fS:?r""^f *''°"'^ ^ Put tS X^ w?r^'a"n1Z^"''\"°t"^«-^''Ly'S'.S;ef ''S™"^ ""^ Xa^ V • • not'byXVrr ari- ^^^^ ^^'^eTasTr^k'Tul? and solely by the action of ?he nnft,^^B?^ "*■""■ ^^^^' but simply ^m^d^schar^ln, our duUe^as^S^rf '^^^ ^PrLi^ta^^ "£1 ' 368 64 FEDERAL REFOKTER, 76». Opinion of tlie Court If In answer to an inquiry what, if anything, he did to ascer- tain whether his men were concerned in violence, he said : "We did that [by] our committee, which called at headquarters every evening and advised us. They were instructed to guard the company's property, if they were near it at all, and to apprehend any- one that might be caught destroying proi)erty. This instruction was given again and again to the central committee that went out from headquarters. We said we knew that if there was trouble, if there was disorder and riot, we would lose, because we knew enough by ex- perience in the past that we had everything to lose by riot, and nothing to gain. We said that man who incites riot or disorder is our enemy, and we liave got to be the first to apprehend and bring him to justice. So we called upon our men, and advised them, urged them, to do everytliing in their iiower to maintain order, because we felt and knew that if there was perfect order there was no pretext upon which they could call out the soldiers, or appeal for the intervention of the court, and we would win without a question of a doubt." One or two reflections upon these statements will be enough: First, with all that is said about guarding prop- erty, keeping the peace, and being the first to arrest offend- ers, not one was arrested, and no effort was made by strikers or members of the Kailway Union to preserve the peace or to protect property. On the contrary, many of them were leaders in scenes of violence and disorder. Second, if this strike, like others, was understood to be war, not necessarily of blood and bullets, but a conflict between contending inter- ests or classes of interests, in which strategy had to be em- ployed to keep the men in line, it was more than a peaceable strike, or mere cessation from work. Had it been only that, the injunction, instead of being a hindrance, would have been in their hands the very weapon they needed to enable them to suppress the violence and disorder in which alone, they say, they saw possible danger to the success of their cause. "When the trouble began," said Mr. Debs again, in his testimony before the commission, " there were thousands of telegrams and communi- [760] cations pouring in, and it was impossible for me to see them all personally, because I was out among the men, meeting with committers, meeting at different cities, and addressing meetings, and all that kind of work; so it was really impossible for all those telegrams that were coming in to come under my personal notice. So then the work was apportioned by the board to its members. This young man named Benedict (who had been employed 369 UNITED STATES V. DEBS. Opinion of the Comt »s an assistant secretary) answ^npH hr, ■ . ■ board, some telegrams and in 17 ' ^ ""^t^ct'^n of the was all absent, he answe^H T. ' "*'"'' ^''^^ *»»« board when he had anLe^rXSTa^H T^^^^ J'''''^''^ would answer without instructions" Th. '''""'=^'' '^'^ these statements with the averments of th '°*="'>^'^*«''«y «' defendants to the original ;„* !• ^^^ *"«'^«'' <»* the bility for the telegi^S s^lt .nd "'.^'"^'"^ ••^^P""^*- need comment, buf they a^au J^l r"''*' '^ '"^ «^'*^^"t *» out the discrepancy as to shnw .t^ ""* '" ""'^*» *« ^^^ intimate connection with tt Ind! TVl "' ^'- ^'>«' ^^ sequently his direct vZoZh^^ * °* *''" ^*"^«' «nd con- his admission, he wa 3Tmn ^, "^ ^''"* '^''^ '^"n^- Bj tees, and addressi^H^etrr^ S^"^"' "^^'^"^ -»-t^ ^stimony of two of I"e S„esL th^t^'^.K'" ""' *^« June 29th he and Howard Ih vTu **" **** "'gbt of of the local union at Z. lT Y'^^'J^^^^^^^ a meeting the line of the Ck IsTand l P^^/ '^^"""^ ""^ ^'^^^^ ol Howard each adS^d the^n"'"''"*"'^' ^^at he 'and strike; that, uJ^^^^X^Z' "^^"V'^^- ^o join the the men "ought to sZd M T' *"" ^^^ "' ^hem said that if othe/eam:^:tke E';Lr4r 'V "^'^'^ them walk the plank " Jn iZ . ^^ ^'"S^* *<> make "They told thelrkmen ?he?e%tef 1 '''' ^''^^^ the orders of the general m«n! ""^^ ^^^ to resist of the men in dSl'rdXT""! '""" ^'^^ ^^ njonsly organizing and standitby ,Tt T '^ -""'^- Debs told them not to moles Lm"!^! 1 l^ '''^'^^'■ witness puts it, "not to YeTth. P n ''"'' '*"*'" «« '^e ha^ards." How'ard " al S t men^t T/"'' ^* "^^ lence, or anything like that h..t ?! . *" ^^ ""^ ^«- to man, and they" wo^ld win tt* ^0^1' « "1 S'^ •*"^' -" not to commit any violen^P \.S f ^^^^- Howard said ears to run, at no^ha^"^' «"4tidXT ''T. ^""'"^'^ go out and stay out, and heln fh»^ u ^"^ *''''* ^^^^'^ out of trouble, will have to w„ll .^ ^""^ '^'"-^ "^ P«<>Ple These speeche did not mean i. ^''"^ '" '^' ^^^■" the men to whom th:;^" e'iddrlldl ml ""'r'"'' "^ ' distance should be made by them to S I. ' .*"'' "° ••"■ Msoa-voL 1-06 ^-I^ ^^ """^'"^ »f Pullman 370 I 64 FEDEBAL REPORTEB, 760. Opiuion of the Court that night to join the strL / f"""^- ^hey voted !»;' did not believe could eSt^- ^i'tj ""T"^ ^''^''"^ P*lly ex-em ploves of th» il!^, x . . ^^^ °* ""«"' Pnnci- thmtened Ife^ce and tS^'^ '1*"*^ ™«^' blockaded traffic, dition, only wo^' jl^t ."J^ *^; ^f " " The same con-' forts of the United St^iLLhe.K"'""'^"'^ '^"^ '^- and otherwise, to auJ^T H' I "^""^"'^ ^^^ injunction 1761 J complTsked Su tie 5th o7tT' 'f'''''^ ^^ - diers arrived. With tharl!. '^"'^' '"''"" *«<1«™J ^ol- to be moved and tL tf "'"t''"'*' *'"*""^'^ "•""« began sumed on ^e ?th o^Stl hT^"*'"" "^ ^'^^ ™«"« ^«« re- trace on that Z If U ioTS " Tht"tH'^ ^t,*"^ *^»* followed, and in large measu^ T !J' J .^ ''""^ '^^'"^".^ to ^y, were the natu^lTJp^ba ttL^f "^"^""' •'' mde and counsel given to the men by Ss aJd R "'^^'^ the meeting on the night of the 29th «J p. ""'', '^"^'"•d «* ;Iar s^gestions, calculated to incS to StTof "t ^™- intimidation, were contained in manv ottTj '^ ""' were sent out over the name of^M . tflegrams which withstanding the avermen J of thl' ""** '"'' ^'•'*>'>' "o^- tr.^, it is fo lon^: pSCr aT ofTrS ^r^- evade some measure of responsibilitt t . i«'«°d«nts to them, commencing June^S : ^" *"""^ ^^'^ " '«^ «* P.iita.^'r,l''a«4^°^''-'a^'^ap,p«t the Pu.toan Con,pa„y. and no ln« to handle PnUman mm 77.,^ " ■™^° «'« dlscharg^ for rew service of the compMy."'*'^' *™'^ ^'"P'^y* should at olS Irare ^ June 28th; at all on yonr system " •• -pi- "y"' "■«» will handle anv tr»T^ cott Do not m a^- can, i^oSfZfP* "?** I^»""e. trenfor^*^'" move a train of anv W^ S^ """' *™'°8- ^nt no loyal man wm tojin came souti S "o™in'^'^„f^^ »»<»•«<>»«•"" p"^nll^ ^m ,L.s Vegas.) .. Xf yo„ J.^ ^^'lii^ I'o't^^'SWiS'an^^l June 29th : PnH«. with SIC. passe^^r ^^l/SS^^pS^WS s^C.^W.^^ UNITED STATES t.. DEBS. Opinion of the Court. 371 vri/iuiou Of t[jg Court "^^^o^^^^'F'^o'^SllZ'Zre^' oPP-'on. and we 'ere with n.ai, tralL'Ta'-^^?'^ "'«- 'n"tL:.-^''-: work duri^ thio * f ^^^^"^ w"J haul VI inis telegram." (To Mii V T"' "^^ ''^^ present strike will ^ br^; Jf,^*'*^ Stan] " oe branded as scabs. July 3d : Of red. We have rlf^^^'^y »"*•" -^Wear * ^h"^ *^i" inJuncttons "I^t everyCr^ear'"^*^' ^.^k"" ^^'^-I^ to wear whltl"^'"?; '"^tea^ -".our P.aees^-,-«-- -aw ^- „X »- ^a^ [762] July 4th: * »ont be siiiy.~ o^Stivl SJ" ~n« -".T^ i»^a f- ".-'-ed war. a«er locals on ^'?> ads. t"^ X'^Sf sT'^« ~'« * ' '^'""^ July 8th: "^ "'"^ *"« 'fonsest card left" '^^ me7^r"ehllSfsh'^ *^.'^»"<» '» a minute IV. . «oa to newsparr^tan*to*.;s4S,?PPear T^ p^m^Ul^ »J-. July 10th: « J^^fu'*5!!:»'?Kellher, Rogers, In iall r<». ? ^«. ~'?<>™tfon8. Oir ™„i**?„^Pft to so. Thto t [Signed] Hogan." * "* ^"8*- Victory is the last aot nf» ♦kV — "'' **"«««, tain. Stand%'af KiJ5>™«^ oer- 372 H 64 FEDERAL REPOBTBB, 782. Opinion of the Court. Julv 14th: "All negotiations off. Stand to a finish now." The «,nditioii as it was on the liJth of July is aptly de- scnbed m the letter of that date signed by Debs, Howard, ;33,^'f'T' fTf •'^t;^'"""'^" ^""""-^ Union, and addressed, -To tlie Railway Managers." It is set out in full as a part of the information,- and if more convincing evi- dence of the nature of the strike, and of ihe direct pen^nal and oftcial responsibility of the defendants for what was done, and for the results, were neetled. it is found in that document. But the defendants are not entitled to be judged solely by the rules which determine the responsibility of one who has acted without combination or agreement with another, rhe bill u,>on which the injunction was ordered charged them with coiKspiracy, as, under the statute, it must have done, in order to bring them within the cognizance of the court. ( onfomnng to the allegations of the bill, the in- junction, in sulistance, commanded them, and all combining or conspiring with them, " to desist and refrain " from in- terfering with the business, rolling stock, and other property of the roads named; from using force, threats, or persuasion to induce employes of the roads to neglect duty; from usinir force or threats to induce employes to quit, or other persons not to enter, the service of the roads; from doing anv act in furtherance of a conspiracy to interfere with interetate commerce on the roads; and from ordering, aiding, or abet- ting any pei-son to do the forbidden things. It is not neces- sary to consider whether this injunction, when properly construed forbids or whether it might lawfully have teen made to forbid, the employes of the railroad companies to quit work m furtherance of the alleged conspiracy, or to for- Sll ?"'''' -r "1"* *•"" conspiracy, to persuade or advise th^ to quit The order was not intended when issued. 1 7t»] and will not now be construed, to go so far. In the re- cent «»se of Arthur vOakes (C. C. A., 7th Cireuit), 63 Fed. 310 It was decided, with my full concurrence in the opinion, titat a conrt of equity will not " underj ^^circumstances. by •Ante, p. 310. UNITED STATES V. DEBS. 373 • Opinion of the Court what wa 2 nTh T "" ^T"* """^''^'y ^^^ "^ding to or iUsMliiv " ™™i'""om than the ,„,„ wrairfulma, .rhi.„.io„ S «^"„7-;m,"°',:r!: "■ ■ '-"^ the 25th of June- thlton^K ! ! ^°^'=*'"- ^^journed on 374 U FEDERAL REPORTER, 763. Opiuiuii of the Court. Ill IF I the union : '• June 26, 1894, 1 : 30 p. m. Boycott against Pull- man cars in effect at noon to-day. By order of convention. E. V. Debs,"— and that on the same day the following tele- gram was sent to the general officers of labor organizations throughout the country : dflv^ i^niin ^f "f ^ the Pullman CJompany, to take eflfect at noon to- day haH beep declared by the American Railway Union. We ear- aSinV^?"^ir;?7^'^^''°^ co-operation in the %ht of organized laZ- ^nZJi wuh ^"\""** oppressive monopoly. Please advise if you can meet with us in conference, and. if not, if you will authorize SSgLrv.'UrPr^iS^^^^ "^'^ ™«"*^''- ^^'^^ '^' ^«^^»«-^ «»-^- Pullman cars in use upon the roads are instrumentalities of commerce, and it follows that from the time of this an- nouncement, if not [764] from the adoption of the resolu- tion by the convention, the American Railway Union was committed to a conspiracy in restraint of interstate com- merce, in violation of the act of July 2, 1890, and that the members of that association, and all others who joined in the movement, became criminally responsible each for the acts of others done in furtherance of the common purpose, whether mtended by him or not The officers became responsible for the men, and the men for the officers. While I do not accede to the proposition which was advanced in Patterson^s Case, for the purpose of invalidating or of putting a narrow construction upon the statute, that a conspiracy to commit a specified offense includes a conspiracy to commit any other offense which may result and does result from an attempt to conmiit the offense intended, the rule is well settled, and I suppose well understood, that all who engage, either as prin- cipals or as advisers, aiders, or abettors, in the commission of an unlawful or criminal act, are individually responsible for the criminal or injurious results which follow the com- mission or an attempt by any of their number to commit the mtended crime or wrong. It is by the same rule that co- conspirators are responsible for the acts and declarations of each other in the furtherance of their unlawful purpose. Brennan v. People, 15 111. 511; Banna v. People, 86 111. 243; Lamh v. People, 96 111. 74; Wliart. Gr. I^w, § 1405; 1 Bish. Cr. Law, 636 ; Hawk. P. C. c. 29, § 8. I quote : ^C.T^Z}^^^ ^"'**^ ^S^^ Hawkins, supra], it has been adjudged that where persons combine together to stand by one another in the UNITED STATES V. DEBS. Opinion of the Court. 375 sons combine to do an unlawftil thini' if Th^n;* ^^^' therefore, per- In State v. McCahUl (Iowa) 30 N. W. 563, the court said- Tbese defendants were the directors and general officers of the American Kailway Union, and had practical control of the organization. They procured the adoption of the resolu- tions by which the boycott of the Pullman cars was declared and authority given themselves to begin and control the move- ment. They put themselves at once in telegraphic communi- cation with the officers of local unions, advising them of the action of the convention, and that no Pullman cars were to be hand ed ; but, it appearing very soon that men who refused to handle Pullman cars were being discharged, they determined to prevent the running of all trains upon all the roads until the companies should accede to their demands, including the reinstatement of men who had been discharged. Later the Pullman strikers were abandoned, and only the re-employ- ment of 1765] railroad men insisted on. As earlv as the 2 «ere prevailed upon to co-onerat^ m..i... „.> gaged m a conspiracy in restrain or hindrlncTof iZ V conuuerce over the railroads entering Chic "o m i t wer::-ng ;;;t?-'n ^'^^ «f 4- engage:,- iT the":, e" bterfZfe ' tWT.^r::;i„rs'o?t^ ""'r'"' "-'^"^ °^ injunction they we;e:r:red to tiTtt "•"'.''/': superior force ' '' «""'P«"«d »« jieW to evident that these things, whatever the facts nnVh hi been proved .. imagined to be, could furniS^tithfr u^ fi' ction nor pa l.ation for giving up „ citv to disorder a 1^- paralyizing the industries and commer<; „f th„ . My conclusion in the case on ZZt I TT^'^'' States implies a liL clXsI ,n »V 7k " "^ "'" ^'"'*«'' • 1 ime LiiiKiusion in the other c»«m» frm.4 «f *u same tm.e and upon the same evidence, "1",^; ^ ^u i' load, the defeiulaiits were chttrottxA «.;fK ^ i iiiterfemK^ with the ^3^ strike Th«^ fi 1 'P'*'*;*^" «^ ^hat road pending the ttfevideTI" « '' f'^ '"'";^''^ **^ '^^^^^^^ '« -'-Wished by the evidence already considered. Though viohition of the 377 PIDCOCK V. HABBINGTOir. Statement of the Case being in the c.ldTo' i^rrt ;'; ^"""' ^''^ P'^^^^^ with its manage- f Tfifil rT T^'- ^ ""P™l^r mterfemice contempt of the couS^a.T'r " "'" ^"^^' ^^'-'ituted a order 'ppointinr he r^?^:;^';^''""^^^ '" """^"'^ "- with their control TJ,1T enjoining interference Caldwell h^ in ^tfetlTo ''b ?*'^«;.'f"-' "^ J»dg« nized the right of emnh!,'. '.''"*' "^^'^^ *•»«* ^^eog- it containef I o CrtfLr" S ''^ 7"" ''^ *'"^ '^«"-- who were willing rL, 'f ""'dating or abusing those terferingdrrec"v a^/he ,7"^"'""*' """ *°^ «*h«"^i* "'- ;Wth Jman^itr ;:r;^^^^^^ Sl!^ tf '^^^ '^'l each of the cases The li ? contempt as charged in rSSlJ PIDCOCK ,.. HARRINGTON ET AL. (Clnuit Comt, S. U. Ne«- York. December 20, im., ['W Fed.. 821.) MONOPOUKS-SUIT BV PbIV^te rNDIVIDUAL-Tbe Ut " f.. . . «nd .«„„„e,.,.e „g.,i„st unlawful restr-.infs n..'^ "™^''* •™''* C«"«. Jnly 2. 1890) (infers no rUT!,.!; """ n«o.io,x.lies • (Act m e.,nitj- for the LtZ„7n^t^! T, " '"'"'''** '"divulual to h„c vate ,K.rson«, and the riX o brin^lf """"^^ ""'^'"•'•' '"'• '"- the aistrle, attorneyH otuL rninTstaTs.:" '''"'"' '*'"« '*"""" '" ri.S^.::ro£s'lfan" ^ ^'"r"^ ^^«'"^* ^^""^ "ar- fendantsden^t'tlHirbm.'"'"*"" "'' ''^^°""*'"^- I^^ «"^7'™»i'«'ofVi^j«;';,,i!ill^«^^ on the Riounrt that the defend-intl h "'Junction and an aceountinL- ° Syl'abuK <-"Pyrighted;i^6r^Westl^„bli;ii^7^^ 378 U VEDEBAL BEPOBTEB, 822. Opinion of tlie Court. I plalnant and have tlireatened to cease deallriR with people who deal m^ l"HViJ*!r***''*^^"J^ founded upon the ;i.t of coiigresH of July 2, Jm), entitled An act to protect trade and commerce njjniust unlawful restraints and uionopoliea" (26 Stat. 209). WMiam F, Eandeh for complainant. Edward (\ Bdardmmi, for defendants. CoxE, District Judge. At the argrument the counsel for the complainant was asked whether he sought to maintain this action under the general equity principles of the common law or under the provisions of the act of July 2, 1890. He answered that it was foundetl solely upon the statute. It is unnecessary, therefore, to dis- cuss the proix>sition whether or not the action can be main- tained independently of the statute. The demurrer chal- lenges the jurisdiction of this c^urt to maintain, under the act in question, a bill in equity filed by a private individual and his solicitor. It is clear that the right to maintain such a suit is not expressly conferred by the act. Indeed, such right is, by implication, denied— First, because a private person is given (section 7) the right to maintain an action at law; and, 8«?cond, tlie district attorneys of the United States, under the direction of the attorney general (section 4), are charged with the duty of conmiencing suits in equity. If it were the intention of the lawmakers to vest in every irresponsible in- dividual, who may deem himself aggrieved, the right to in- voke the drastic and far-reaching remedies conferred by the act, is it not reasonable to suppose that they would have said so in unambiguous terms? The first three sections are penal statutes. They give no civil remedy. Section 4 vests the right to institute proceedings in equity in the district attor- neys of the United States, and, together with section 5, pre- scril)es the procedure in such suits. Section 6 provides for the seizure and forfeiture to the United States of property illegally owned under the provisions of the act. So far, then, the act is a public act providing no private remedy. If it ended with section 6 there would probably be no pretense that it sanctioned a suit like the one at bar. What follows, how- ever, in no way strengthens the complainant's position. The UNITED STATES V. E. C. KNIGHT CO. 379 Syllabus. to be nnlaw?urbnKt mav «rZ^^^ orae,Li^ nmted States In tte dlstrlrt in „hlrh th^^^^^ '"''"" <*"■■* »' «>« without resnect to ti.» om^,„^ ■ ° !?® defendant resides or is found fold the daC«I by him sZ„ Se^^iJi^r^' """^^ «"''" ^^ver thiS reasonable attorney's f^.'?"'"*^' "* ""* ™**« "^ S"'*- iueluding a But for this section no private person would have anv s anch.^ tn court, and as the only right conferred bv- kl tS ngh to sue for damages in a court of law. it foUow's that th! point presented bv the demurrer is well founded it,, t cse question was decided in favor of the views here expLS' A se tI:\ '"''' '' ^.f • ''^ *'«™*^ '' ^^- «^mTS A. 8t). Ihe demurrer IS. allowed. - ' '^ '^• [1] UNITED STATES .. E. C. KNIGHT COMPANY.. APPEAL KROM THE riHcmx COURT OK APPEALS «)R THE THIRD CIKCLIT. No. 675. Argued Octol>er 24, 1894.^Declded January 21, 1895. ' [15« U. S., 1.] restraints and monolZ - ! * ^ eommeroe against unlawful national trade oT«l!^^ Td noT'''''^'^ '" '"*"'''''' """» '"»<^- Of a u^ssarv of iTfe" ' ^"^ ""' " """""•^'^ '" ">« ""anufacture malorltv of th! . " ^^''^^' "^'"S '■" control of a large eries. such disposition ovU^h "" '"""■ P'"'«vi^ons Of the act of J„Jy 2. 1890. c restraints and monopolies,- In the mode attempted in this suit- "l™«on^„T'trH 1 ™""'^"""'' '««"*'- "^ a N^jS [8] This was a bill filed by the United States against *T Vt ^'Fl ^*""P»»y "nd others, in the Circuit Court of the United States for the Eastern District of Pennsylvania, charging that the defendants had violated the provisions of an act of Congress approved July 2, 1890, c. (547, entitled An act to protect trade and commerce against unlawful restraints and monopolies," 2(5 Stat. 209, " providinff that every contract, combination in the form of trust, or other- wise, or conspiracy in restraint of trade and commerce among the several States is illegal, and that persons who shall monopolize or shall attempt to monopolize, or combine or conspire with other persons to monopolize trade and com- Zr„.'''""x1 '^^rr^ ^"^"^^ *"" ^ «"''ty of a misde- W V R fi n ""'^"•^ "'"* *''" defendani, the American Si^a, Refining Company, was incorporated under and by virtue of the laws of New Jersey, whose certificate of incor- poration nametl the places in New Jersev and New York at which Its principal business was to be transacted, and sev- eral other states in which it proposed to carry on operations, and stated that the objects for which said companv w^ formed were "the purchase, manufacture, refining; and sale of sugar, molasses, and melads, and all lawful business inci- dental thereto ; ■ that the defendant, E. C. Knight Companv was inc-orporated under the laws of Pennsylvania " for the purjiose of importing, manufacturing, refining and dealine in sugars and molasses," at the city of Philadelphia ; that the defendant, the Franklin Sugar Company, was' inc;rporaLd under the laws of Pennsylvania "for the purpose of the manufacture of sugar and the purchase of raw material for that purpos^," at Philadelphia; that the defendant, Spreck- els Sugar Refining Comjiany, was incorporated under the laws of Pennsylvania "for the purpose of refining sugar, which will involve the buying of the raw material therefor UNITED STATES V. E. C. KNIGHT CO. Statement of the Case. 381 and selling the manufactured product, and of doing what- ever else shall be incidental to the said business of refining," at the city of Philadelphia; that the defendant, the Dela- ware Sugar House, was incorporated under the laws of Pennsylvania " for the purpose of the manufacture of sugar and syrups, and preparing the same for [3] market, and the transaction of such woik or business as may be necessary or proper for the proper management of the business of manu- facture." It was further averred that the four defendants last named were independently engaged in the manufacture and sale of M^r until on or about March 4, 1892; that the product of their refineries amounted to thirty-three per cent of the sugar refined, m the United States; that they were competitors with the American Sugar Refining Company ; that the prod- ucts of their several refineries were distributed among the several States of the United States, and that all the compa- nies were engaged in trade or commerce with the several States and with foreign nations; that the American Sugar Befinmg Company had, on or prior to March 4, 1892 ob- tained the control of all the sugar refineries of the United States with the exception of the Revere of Boston, and the refineries of the four defendants above mentioned ; that the Kevere produced annually about two per cent of the total amoimt of sugar refined. The bill then alleged that in order that the American ^uga^ Refining Company might obtain complete control of Tu^Te f^"" '" *^ ^"•*^*' ^*«t«^' that company, ana John E. Searles, Jr., acting for it, entered into an unlawful and fraudulent scheme to purcha.se the stock, machinerv and real estate of the other four corporations defendant, bv which they attempted to control all the sugar refineries for the purpose of restraining the trade thereof with other btates as theretofore carried on independently by said de- mTl\to «" P,"'"'"'^' «* '^'^ ^l^^-^^' «» ««■ about March 4, 1892 Searles entered into a contract with the de- fendant Knight Company and individual stockholders . named, for the purchase of all the stock of that company, and subsequently delivered to the defendants therefor in exchange shares of the American Sugar Refining Company 382 156 UNITED STATES REPORTS, 3. Ill I Statemeiit of the Case, that on or about the same date Searles entered into a sim- ikr contract with the Spwckels Company and individual stockholders, and with the Franklin Company and stock- ho ders, and with the Delaware Sugar House and stock- holders. It was further averred that the American Sugar Rehning Company monopolized the manufacture and 14J sale of refined sugar in the United States, and con- trolled the price of sugar; that m making the contracts, Searles and the .\merican Sugar Refining Company com- bined and conspired with the other defendants to restrain trade and commerce in refined sugar among the several States and foreign nations, and that the said contracts wei^ made with the mtent to enable the American Sugar Refining Company to restrain the sale of refined sugar in Pennsyl- vania and among the several States, and to increase the reg- ular price at which refined sugar was sold, and thereby to exact and secure large sums of money from the State of Pennsylvania, and from the other States of the United States, and from all other purcliasers, and that the same was unlawful and contrary to the said act. The bill called for answers under oath, and prayed— r ^' I^^ *l* *"^ ^^^^ ^^ ^**« »aW unlawful aereements made imii entemi into by and between the said defendante^^on or Stout the foiirth day of March. 1882. shail be delivered up eancened and d^ dared to be void; and that the said defendants, ^theSl?knSu«a^ 2f " S^ ^TIT? "^^ ^''^'' ®- ^^^^ J"-" be ordered to denver to the other said defendants reqjectlvely the shares of stoelTr^iv^ b? ttem in performance of the said contracts: and thatThe Xr^id 2±1^"« ^^ **r?^'^ *° ^^"^^'^ *** ^^^ ^^^ defendants, the American Sugar Reflnnig Company and John E. Searles, Jr., the shares of stock received by them respectively in performance of the «ild ^nt?act8 *i 7^} *" Injunction issue preliminary until the final determina- ttoE of this cause, and peipetual thereafter, preventhig and rei^^l lug the Mid defendants from the further ^Vformancl of thTte?mS and conditions of the said unlawful agreements. 11^^'^*^*^! *" Injunction may issue preventing and restrainine the aaid defendants from further and continued violations of the ^ Id act of CJongress. approved July 2, 1800. "* ^^ In'it. premi^^I" ""** ''"****'' "*"*' "" "^""^^ ^''^ ^"«"^ ™«y ^^^^ Answers were filed and evidence taken, which was thus [5] sufficiently summarized by Judge Butler in his opinion in the Circuit Court: "The material farts proved are that the American Sugar Refinlne Co.. one of the defendants, is incorporated under the laws of New Jer^ UNITED STATES V. E. C. KNIGHT CO. Statement of the Case. 383 Kefinery, ami the DSare%n'^«V h^'^^* "^^ ^he Spreckels Siij^ar thelawVof PennsvlvauiriL^^^^^^^^ were incorporated under sugar; that the fim^TtieTvem^Z'f^^ ^? Purchase, refine, and sell Philadelphia, and prioi to ALarc^h r>^^" n^^^^^^ ^^^'^^ed In per cent of the total amount of su^^^^^^^^ thirty-three and were in active comoptition vvifh f i ^^°"*^? *" the United States, and with each other^U^Tth^^^^ ^"^"'* Refining Co., for it throughoirthe U med stX^ th Y^^T^^^ ^^^mand was found American SugarKefliiin^ Co h«d n?; -^^^ P^^^'* ^o March, 1892, the the United Ss ex^^^^^^^ ""^ «'' refineries in of the Revere Co ^XZ ?he ?.ft^r'n?'^, '", ^^^^^^^^^^P^^i^^ and that of the amount refined In VhT« !^ ^ Producing about two per .^ut American SugL- Refining Co e^^^^^^^^^ '» ^^^''''^' 1«^2, the dates) with the stockholder^ of In^Tnf iS\uTr''^'' ^^» ^"^^^^nt named, wherebv it mi" S tLif il ^^^ Philadelphia eoi-poratlons of stock in It^itinu nv thnt^b f'^'^^^'^y^S therefor by transfers obtained Poss^sZ ^o "'lue Pbil^^^^^^ ^"^^^"^ ^^^^^^^^ ^«- thus that each of The pm^baS^s^^^ f^^^^^ ^"^ their business; Refining Co. obtai^rg'a^'ho^ity Zt^^X^ ^^Z^Tl holders of the seveiit I Mo^ib i? ^^ ^^'tioii l»etween the stock- but that tbo^ o7 each con natv « ' Ji*^^ respecting the sales, othei-8, and in ^-iXiic^ of wLt ^ independently of those of the that the stockbSs "o? eth^^t wa« ^ ^^ «»-h others; other, understanding and Intendh^^ S . n ^ "^ T^"^ ^'^th ,each the company should be 8oblth«tfh !" tfie stoc-k and property of left the 'sellers f^ to S .iliisli otbprTir''- ^^^,*^ ^^ ^^^'^ "^«tance business if they should ?ee fit to dnJL ^^^'*'^l ^^^ '''"^ continue the Bpecting trade or c^mJi'^^n^^^^^^ ^« P^^*«»«» re- vision on this subject has l^n Sl'«?nl* I* no arrangement or pro- Delaware Sugar Hous^Se^hni^**'^* ^"'^ the purchase the with the Spr^les Sefv'^anTthe E ^KnTht'I^fi '" conjunction tion with the Franklin this omnhinnH^,;' k i ^ t Refinery in connec- reasons of economy'ln 'cond^iSg^?^^^^^^^ tTr^^^^'^J sugar refined in PhiladPinhia hoo k "usiuess, tbat the amount of that the price LsiSnly^ht.vL^'' ^^^^^^ '*°^ the purchases; lower than iVhad iwn for^^a .r^^ ^^'^»t, but is stil months of the 4les^?hfl? nZ^f T*"^^ *^^^''^' ^"^ »P to within a few sold in the Uni^ states is^Pfinin^-^^^^^^ ^£ the sugar refined and trolled by the TmS Lgar Xfi"n?ng^^^^^^^^ '^"^ '"iT ^^'^- sugar is produced in Loiii^imVn f^^^ ^ Co., that some additional but^heal«nt;i^no},^r^rre\ge"rlSe!f '"""^''' '"»" ^'>-'-- iag and selling sugar in Jws'lSjrT *^^ ""^'"^"^ °' '^''^■ tr,'?" ^''•^"^* 9«"'* ''^W that the facts did not show a con- tract, combination, or conspiracy to restrain or monopolize trade or commerce " among the several States or with forei«m nations," and dismissed the bill. 60 Fed. Rep. 306 tS SS"L. :h ^*''' ^'T* ^«'*»* Appeals for the Third " Circuit, and the decree affirmed. 60 Fed. Rep. 934. This tJO^ ! 156 UNITED STATES REPORTS, ©. Statement of tlie Case; appeal was then prosecuted. The act of Congress of July 2 1 890, c. 047, is as follows: ^ ' a«7i«r'''' ''"*'" '""' ^•*^"""*^''^ "^«*"«^ "»>'^-^"' «--«t«-«^»t« wiRif''nr^J;I!r *"*"*.*'^***' c.oiiibinati,>n in the form of trust or other- wise, or eouspini -y. in restraint of trade or commerce among the jeveral States, or .vith foreign nations, is hereby deelarecl to be nfegal EveiT I)prs(m who shall make any such contract or eng.^e hi any such mTTZrZlTT'"'^'.' T\\ ^ *^^"^^ ^"'^t>' Of a inisilemea'^^^^^ am on conviction thei-eof. shall be punished by a fine not exceeding ^i^li^'rr^^^-f "^''■^.'*'' ^^' i»»P'-i«onment not exceeding one flTyear or by both said pmiishments, in the discretion of the c4rt SEC. J. hvery person who shall monopolize, or attempt to monoDo- lize. or combine or conspire with any other person or per^nst^ mcnn,»olize any part of the trade or commerce among the^v^ra^ States, or with foreign nations, shall be deemed guilty of a m^S^ meanor, and, cu c^nvi^tion thereof, shall be mmlsh^ by fine not exceeding five thousand dollars, or by imprisonment not exc^^fng """"tn^VV^ '*'^^ ^*^' pmiishments, in the discretion of the^urt Sec. a. Everj' i-ontract, combination in form of trust or oS wise, or conspiracy, in restraint of trade or commerc^ Tn any Terr^ HS^m^ir^^'V" '''"'^^ "'. ''' '^»" ^'^^^^^-^ ^' ColumWa, or in ri- straiut of trade or commerce between any such Territory and another or I.etwet;n any such Territory or Territories and any State o? States Di.tH./^lf r"'i *'^,V«'""»?'«* -r ^vlth foreign nations'^ orTtween the District of CJolumbia and any State or States or foreign nations is hereby declared illegal. Every person who shall iiiakP a v su h eon tract or engage in any such combination or conspiracy shnni^"deeme^^ guilty of a ini^demeaiior. and, cm conviction theVeof/shal L pu^shed ^^\13^^ ''''^ exceeding five thousand dollars, or by imprisonment not th?^u?t ""^^ ''*^"'' ''" *''' ^""'^ ""'*^ punishments. L the diXtL oJ i«r ^f^ ^- ,7*»«,^y^faJ Cir^^uit Courts of the. United States are hereby ic^ml Tt '^hiiVt'^l'i!'"", I" ''7'^^''' «"^^ ^-^^^^^^^ violations of this ?t1; , L^^*'®^' ^^J^^ '^"^-^ *^^ **>« «^^«*»'«l ^.^ reasonable attorney's fee act Shall be deemed T'fnclSToVp'omt'fons? u^seVl^'this under or authorized by the l^Z^nf^uu 1 ^°^ associations existing of any of the Territorlet tieTa>vs of anV'Jf.^^^^'^ ^^^^^«' '^^ '^^^ foreign country." 2fj Stat. 209, c G47. ^ ^^^^' '''' ^^^ ^^^^^ of any Mr. Solicitor General and J/*- R w v*i.'n' bill ch„^ 'i..rs:ei.z«. td"„"':S'^ '''■"* j>- that m entering into them th» A^t T ^^'^^*' o* trade, and spired to r^trf in the t^dt !.?d r """^^""^ """^ '^''^ among the several Stat^td ^^thT^i^ "t "'"^' ^"^^ to the act of Congr^ of July 2 189^ ^ ""*'""'' "'°*™^ The relief sought was the cancellation nt f».. under which the stock was transferSTh! ^^^''^^^^'^^ stock to the parties resn«.H?J? .7 ' f "^^J^l'very of the the further perfomanTe^L^' """* '" ^^J^ction against tions of the act As Zaf i ^^'^^'^^s and further viola- lief, but only such Si S'L''"*' ' f^^'' ^""^ «*"««•*' «" as would be aSSaMelT **"!'*'*^ ""^^'- *«t prayer «xv* uc agreeable to the case mad a hv fli« k;ii j llWti — VOL 1 — 06 M- — 156 UNITED STATES REPORTS, 9. Opinion of tlie Court, monopolize interstate or international trade or commerce and «* the act, could be rescinded, or operations thereunder ar- In commenting upon the statute, 21 Jaa 1, c 3 at thp r-nm A^inst Monopolists, Propounder., and Projectors," rx>rd Coke, m language often quoted, said : to define what a wnnop,,/' i^'"*"'"""- ^ud tlieret-.re it is necessary tlqiie. or corporate, of or ^r the tnl^ Tin, K*'^'*^'^"''• '»''<*'<'« P""" working, oruWof anvthinJ »h.f^^^ "^'"^ buyins. sellins. malting. pollti.,ue. or^^orat^a.^ ^ult '^.''L''f £"?'". "■• P'''«"n«- " >diS or liberty that they tad b^fo^nrhVL^?*!!!";*^' "' "»>' freedome. " For the wort monXS •dT,?'""'^ ■"' "'^"" .'»»"'" fade. rt«i,e»»; hereof vou may remi .f.nrr^, V P*"^""" "^ »'"<»» /«-6«tt», E..Z. Lib. „. f. 84. ^?. .^:^r::,::xii % r* -ss- ™"- « deSS oTth"*" *^"* this definition, as explained by the aenvation of the word, may be applied to all cases in which thiflg, so that only he can continue to sell it, fixing the price at his own pleasure," whether by virtue of legislative S oJ "(C:°*' *^V *%-<>°<>PoH-tion referrJ^to n th?aS ^^J?T^ /'•""' "*°^""*^ '" *•*« *=«'"""«'' >*^ sense of the ^loTl^r? '"•r'T'' ^""*"'>' "^y »"thoritv, of one brand! of industry without legal right of any other ^rson to interfere therewith by competition or othem^ SuTZt U includes engrossing as weU, and covers controlling the market r/Z~i' A- «'"^'•«««- therefore there was no combfna t^ T' ^P^'-'^^l-V put out, cause, according' to Dolit,vT° '" monopolize: or be tal may reduce price':SoTtr?' ^?^^'^^^«<'- "^ -P^- of power is relieved ; or iZ^^Jlf ^^<^''"" '- concentration ni free to go i„t; th bu'b^ss t T" *'^^'^t'-% left onginal stockholders of the pSd/. ^ "f '"^'"•- «"<» ^^e •coming stockholders of the ImeriL ^ " ""^"""^^ ^^^r be- competition with themSvt^ o" T^^''^ ""'^'^^ go into might set up again for tSmseC T"^^ ^''^ ''''' ^'ock, restraint was imposed. '' ^^^'^^'"'^ no objectionable -iJeUTatXlt^^^^^^ conceding that the evidence, that monopofy canT^f ^ '' ^^^^Wished by the act of Congress in the mode mITA""''^''''^ ""'Jc- the It cannot be denied that th ^ ** ^^ ^^'^ ''"I- «-^ health, and proX^r:.".^ -State to prot good order and the pubhc morl T'' '"*^ *« P'^^rve men and things withinVws St f' ^'''' ''^ ^°^c™ originally and always belonSff to th T"'""'" '^ '^ ^''^ dered by them to the generate * ^'''^' "''t ««"-ren- strained by the Constitudon of fhJT^'^'' "'''• '^'''^c^ "- tially exclusive. The rS of^L ?*^ ^*^^«^' ''"d eLn- from the burden of monopoly and the T "' ^"^^ ^tate the r^ tramt of trade among such citt '"^ '''""'"^ ^'•'"° States to deal with, and this court h """^ ^"^ ^'th the session of that power even to 2 f f^^ognized their pos- employment or busineLLried ,nt "* "' '^''^^'"^ that'^an when It becomes a matt^^of ll ,1,?" '""^ individuals, Portance as to create a common pJ/' ;"*^'^* «nd im- citizen; in other words, wE°? t^^^ "' »'"^den upon the y, to which the citizen itmlS?'' ' P'^^"*'^^ '"onop- of which a tribute can liTS^l*^ 'T' '"*^ ''^ ">«««« subject to regulation by sta^ it -^T *' community, is other hand, the power of P^ legislative power. On he among the several'StetL Is afer *" "^^^^'^ <=«°^et " does not p^o^ij, ^^^ ^ '« J^ exclusive. The Constituti^ ^y the grant of this e.clusSTor tT^ te" it^t; ^ i ooo 156 UNITED STATES REPORTS, U. » Opinion of the Conrt. free except as Congress might impose restraints. Therefore It has been determined that the faih.re of Congress to exer- cise his exclusive power in any case is an expression of its wiU that the subject shall be free from restrictions or imposi- tions upon It by the several States, and if a law passed by a btate 'n the exercise of its acknowledged powers comes into conflict [12] with that will, the Congress and the State can- not occupy the position of equal opposing sovereignties, because the Constitution declares its supremacy and that of the laws passed in pursuance thereof; and that which is not supreme must yield to that which is supreme. « Commerce undoubtedly, is traffic," said Chief Justice Marshall, "but It is something more; it is intercourse. It describes the commercial intercourse between nations and parts of nations m all Its branches, and is regulated by prescribing rules for carrying on that intercourse." That which belongs to com- merce IS within the jurisdiction of the United States, but that which does not belong to commerce is within the juris- dirtion of the police power of the State. Gibbons v. Oqdeti, 9 Wheat. 1, 189, 210; Brown v. Maryland, 12 Wheat' 419 448; The License Cases, 5 How. 604, 599; Mobile y. /fm- i^'tt*^ ^J' f ^' ^'««»«« y- Ohieago dk If. W. RaUway, S S' Q f^Khf^ ^- ^'^^^^ ^^^ U- S- 100; Ir, re Rahrer, 140 U. S. 645, 665. The ar^ment is that the power to control the manufac- ture of refined sugar is a monopoly over a necessary of life. to the enjoymfflit of which by a large part of the population Of the United States interstate commerce is indispensable, and that, therefore, the general government in the exercise of the power to regulate commerce may repress such monopoly directly and set aside the instruments which have created it. But this argmnent cannot be confined to necessaries of life merely and must include all articles of general consumption. Doubtless the power to control the manufacture of a given thing involves in a certain sense the control of its disposition, but this is a secondary and not the primary sense; and al- though the exercise of that power may result in bringing the operation of commerce into play, it does not control it, and aflf«jts,it only incidentally and indirectly. Commerce suc- ceeds to manufacture, and is not a part of it. The power to 389 UNITED STATES V. E. C. KNIGHT CO. Opinion of the Court c':il^3rSJottT:n^£T'^^*'^.-«'ebywhich the power to supprL 1™^;!' B.^^l^^'^f'!'' »* pression of monopoly whenever thattmriCth '° T by which commerce is governed or wkT i ^ ™'^ is i^lf a monopoly of S™!? "''"^^^'' *^« ''^^^'^- pollL'5 7^X ;t.ttdt:r '"^^--r^^ them, however sometimes pSeWsLtr^ \^^^^ nized and observed, for wS^S J^'^u ?' ^ ^S' bond of union, the otheH e^X? JT^^ *^« '"'^^^'^ the autonomy of the Bi.i^ ^^^^^^'JITlf''' **f govermnent; and acknowledg^?S h„w *"'™ **' urgent they may aonear tn Tu ^ I ' '^'^'^^^e^ grave and risk be run', X^n\^:;^,^'Z^ ^^''''^ '"'^''.^^ t:sr '' ^^" - --dfiro/t::' tjz:. ~ thaulf po':en?S3inr f r'"'''^ *^« P-P-'«- is exercised'TlL lenT^^^.r'' ' '""""^"^^ ^^^^ '»«y ^ iBtemationaV^::^ Z^^'V^Tr' "^"^^^ - regulationofcor^apDLll'?^ "*'"'**•*• ^^^^ and not to matters oTStTa ' L^'^^^f*! "' ''"'^^'^ or exchange goods tl hT^! ^ Contracts to buy, seU, States, theTrafSortaL 'l^^^ "^'"^ '^^ ^^^^al cles bought sJJi^r^*2 Vf ""f '""mentalities, and arti- sit amof^fte StaL 2 ;S T.*"' "^'^^ *>' ^^^ ^^n- regulated^ but fhisis L^l^ ^ ^^il^lnH t «"*! or comimree. The hoi, t.l,., L T ,^- interstate for »p<.« to .„„,her Stttel^«° ,"*,?," T»"''«""'' 3 390 156 UNITED STATES KEPORTS, 13. Opinion of the Court, of the court, said : « Does the owner's state of mind in rela- tion 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 ex- clusively by the domestic [14] law and begin to be governed and protected 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." And again, in Kidd v. Pearson, 128 U. S. 1, 20, 21, 22, where the question was discussed whether the right of a State to enact a statute prohibiting within its limits the manufac- ture of intoxicating liquors, except for certain purposes, could be overthrown by the fact that the manufacturer in- tended to export the liquors when made, it was held that the intent of the manufacturer did not determine the time when the article or product passed from the control of the State and belonged to commerce, and that, therefore, the statute, in omitting to except from its operation the manufacture of intoxicating liquors within the limits of the State for export, did not constitute an unauthorized interference with the right of Congress to regulate commerce. And Mr. Justice Lamar remarked : " No distinction is more popular to the common mind, or more clearly expressed in economic and political literature, than that between manufacture and com- merce. Manufacture is transformation— the fashioning of raw materials into a change of form for use. The functions of commerce are different. The buying and selling and the transportation incidental thereto constitute commerce; and the regulation of commerce in the constitutional sense em- braces the regulation at least of such transportation. . If it be held that the term includes the regulation of all such manufactures as are intended to be the subject of commercial transactions in the future, it is impossible to deny that it would also include all 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, horti- culture, stock raising, domestic fisheries, mining— in short, UNITED STATES V. E. C. KNIGHT CO. 891 Opinion of the Court. every branch of hmnan industry. For is there one of them that does not contemplate, more or less clearly, an interstate or foreign market? Does not the wheat ^ower of ^ Northwest or the cotton planter of the [15] South plairt Wi """"i '^T?'^ ''^P ^''"^ - «-- - the prill' vested in Congress and denied to the States, it would follow as an inevitable result that the duty would devolve on Congress to regulate all of these delicate, multiform and ^S mterests-interests which in their nature are and ^7^ l«cal in all the details of their successful management '^ ITie demands of such a supervision would require, not uni- form legislation generally applicable throughout the United States, but a swarm of statutes only locally applicable Ind utterly inconsistent. Any movement toward the establS ment of rules of production in this vast country, with Uc many different climates and opportunities, could'Lnryt ^ the sacrifice of the peculiar advantage of a large parV of the localities in it, if not of every one o^f them. On th^e o her hand, any movement toward the local, detailed and incon- gruous legislation required by such interpretation wouW T about the widest possible departure from the declared object of the clause m question. Nor this alone. Even in the e^ ercise of the power contended for, Congress would be confinTd to the regulation, not of certain branches of industrv ZZ ever numerous, but to those instances in each and everSra^h where the producer contemplated an interstate maS b "tllUht;" T''! •" ^'""^ ^"«"^**'' - -« have s,.: : but still there would always remain the possibility, and often c r ke't' LTf^' ^ P"-^"*^^ contemplated a d^mS cuteTw he ^V^ ""! *u' ^."P^'^^*"^ power must be e.xe- cuted by the State; and the interminable trouble would be exercise the au hority in question would be determined not by any general or intelligible rule, but bv the sTr^t and changeable intention of the producer in each and ev^^acJof errand "*"'""" """"^ P^"'y^'"S '^ *•>« «t 'C- • ernments, and more provocative of conflicts between the gen- eral government and the States, and less likely to have £n what the framers of the Constitution intended, it ZluZ I 392 156 UNITED STATES REPORTS, 15. 11 i Opinion of the Oonrt. difficult to imagine." And see Veasie v. Moor, 14 How 568 674. ' In GtT>bons v. Offden, Brovm v. Maryland, and other cases 1 161 often cited, the state laws, which were held inoperative, were instances of direct interference with, or regulations of, interstate or international commerce; yet in Kidd v. Pearson the refusal of a State to allow articles to be manufactured withm her borders even for export was held not to directly affect external commerce, and state legislation which, in a great variety of ways, affected interstate commerce and per- sons engaged in it, has been frequently sustained because the interference was not direct. Contracts, combinations, or conspiracies to control domestic enterprise in manufacture, agriculture, mining, production in all its forms, or to raise or lower prices or wages, might un- questionably tend to restrain external as well as domestic trade, but the restraint would be an indirect result, however inevitable and whatever its extent, and such result would not necessarily determine the object of the contract, combination, or conspiracy. Again, all the authorities agree that in order to vitiate a contract or combination it is not essential that its result should be a complete monopoly; it is sufficient if it really t«ids to that end and to deprive the public of the advanta«i whidi flow from free competition. Slight reflection wiU diow that if the national power extends to all contracts and combinations in manufacture, agriculture, mining, and other productive industries, whose ultimate result mav affect ex- ternal commerce, comparatively little of busines^ operations and affairs would be left for state control. It was in the light of well-settled principles that the act of July 2, 1890, was framed. Cwigress did not attempt thereby to Msert the power to deal with monopolv directly as such ; or to hmit and restrict the rights of corporations created by the States or the citizens of the States in the acquisition, control, « disposition of property; or to regulate or prescribe Oie 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 «• creation sanctioned or permitted. Aside fwrni UNITED STATES V. E. C. KNIGHT CO. Opinion of the Court 393 the provisions applicable where Congress might exercise mu- I17jnicipal power, what the law struck at was combinations, contracts, and conspiracies to monopolize trade and commerce among the several States or with foreign nations; but the contracts and acts of the defendants 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. Ihe object was manifestly private gain in the manufacture of the commodity, but not through the control of interstate 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 fulfil its function Sugar was refined for sale, and sales were probably made at I'hUadelphia for consumption, and undoubtedly for resale by the first purchasers throughout Pennsylvania and other states, and refined sugar was also forwarded by the com- panies to other States for sale. Nevertheless it does not follow that an attempt to monopolize, or the actual monopoly 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 mdicate any intention to put a restraint upon trade or commerce, and the fact, as we have seen, that trade or com- merce might be indirectly affected was not enough to entitle complainants to a decree. The subject-matter of the sale was shares of manufacturing stock, and the relief sought was the surrender of property which had already parsed and the suppression of the alleged monopoly in manufacture bv the rKtoration of the status quo before the transfers; vet the act of Congress only authorized the Circuit Courts to proceed bv way of preventing and restraining violations of the act ik r^pect of contracts, combinations, or conspiracies in restraint of interstate or international trade or commerce The Circuit Court declined, upon the pleadings and proofs, II»J to grant the relief prayed, and dismissed the bill, and 394 156 UNITED STATES REPOBTS, 18. F Dissenting opinion : Harlan, J. we are of opinion that the Circuit Court of Appeals did not err in affirming that decree. Decree afflrmed. Mr. Justice Harlak, dissenting. Prior to the 4th day of March, 1892, the American Sugar Refining Company, a corporation organized under a general statute of New Jersey for the purpose of buying, manufac- turing, refining, and selling sugar in different parts of the cmmtry, had obtained the control of all the sugar refineries in the United States except five, of which four were owned and operated by Pennsylvania corporations— the E. C. Knight Company, the Franldin Sugar Refining Company, Spreckels' Sugar Refining Company, and the Delaware Sugar House— and the other, by the Revere Sugar Refinery of Boston. These five corporations were all in active competition with the American Sugar Refining Company and with each other. Th^product of the Pennsylvania companies was about thirty- three per cent, and that of the Boston company about two per cent, of the entire quantity of sugar refined in the United States. In March, 1892, by means of contracts or arrangements with stockholders of the four Pennsjdvania companies, the New Jersey corporation— using for "^ that purpose its own stock— purchased the stock of those companies, and thus ob- tained absolute control of the entire business of sugar refin- ing in the United States except that done by the Boston com- pany, which is too small in amoimt to be regarded in this discussion. " The object," the court below said, « in purchasing the Philadelphia refineries was to obtain a greater influence or more perfect emUrol over the hmness of refining and selling sugar in this country:' This characterization of the object for which this stupendous combination was formed is prop- erly accepted in the opinion of the court as justified by the proof. I need not therefore analyze the evidence upon this point. In its consideration of the important constitutional question presented, this court assumes on the record before us [19] that the^ result of the transactions disclosed by the pleadings and proof was the creation of a monopoly in the UNITED STATES V, E. C. KNIGHT CO. 395 Dissenting opinion : Harlan J otic statesmen fho Wd tL ^ !"! "f^'"'' '*'"* '^^ P^*"" the necessity of TnvestWti.f '*"*'*'" ^'^ °«* ^°^«^ to deal w; tJ, J: . • ^ "^*"'°^' government with power 10 deal with gigantic monopolies holdin«r in ^i,„i and injuriously controlling in^he r own "LL S T^' trade among the States in food produor^hrf ' "f"* the comfort of every household ZtXT "" ''^""'"^ '"^ the nation and t^^lvZ^^^ ^i\::"^r] T" "' that the Union be sfren^f^! J *. . ®***^^' **» *^^ ^n^ States preser'd In fflt^f ^'^^ r~^^ ^* *« No greater calamity could befall nnrftL-Tx- «"">try. destruction of that aSor^^vK ^,^ '"''''"*'*•"' ^^^"^ t^e -It might be ^cl:S^^Xt^:LTT -"^^ ^ ^; this court has ^^\A " fk , ^ itnout the States in union," the United Sat-; lT T'^^ "" ^"'^'^ P''''*'-' ^o^v as But it is etfat t'ue thaUh^r ^ " ""/'"^^ ' ™- ^'- '^^ ity of theVJe aTooJlLl'n"^^^^^^^ safety of the States arrtrattaii^of ?, "*'" *^ '''' would be fatal to iu ;:!j^j';^::i,x T'''^''' people. The Constitution whic^ nm^frat's tL "" ^^rpretation t S^:li?a^ ^T nt^ttft t ^" by Chief Justice Marshall safd tha "f ' )^ '°"'■^ '"^^""^ " converted their league into a 201 „ """^""^ ^'"""^^ converted their Confess oflmh! f ^'T'"'' ^^^" '^''^ ' erate on their coS Toneerns a^toT:; '^"''^ *' '^''■'■ of general utilitv ,„f« „? w recommend measures g utility, into a legislature empowered to enact laws 396 138 UNITED STATES BBPOBTO, 20. DissentiDgopinloii: Harlan, J. " OB the most interesting subjects, the whole character in which must be determined by a fair consideration of the instrument ^which that change was effected." "What do gentlemen mean, the court inquired, "by a strict construction? If ttey contend only against that enlarged construction, which would extend words beyond their natural and obvious import, one might question the application of the term, but should not controvert the principle. If they contend for that nar- row construction which, in support of some theory not to be found m the Constitution, would deny to the government th^ powers which the words of the grant, as usuallv under- stood, import, and which are consistent with the' general views and objects of the instrument^for that narrow con- Jruction which would cripple the govermnent, and render It unequal to the objects for which it is declared to be insti- tnt^, and to which the powers given, as fairly understood, r«ider ,t competent-then we cannot perceive the proprietv of this sfa-ict construction, nor adopt it as the rule by which the Constitution is to be expounded." p. 188. On the some octaaon the principle was announced that the objects for which a power was granted to Congress, especiallv when those objects are expressed in the Constitution itself,' should have great influence in determining the extent of any given Congress is invested with power to regulate commerce with foreign nations and among the several States. The power to regulate is the power to prescribe the rule by which the sub- ject regulated is to be governed; It is one that must be exer- cised whenever necessary throughout the territorial limits of the several States. Cohens v. Virginia, 6 Wheat. 264, 413 The power to make these regulations » is complete in itself, may be exercised to its utmost extent, and acknowledges no Lmitataons, other than are prescribed in the Constitution." It 18 plenary because vested in Congress « as absolutely as it IW] would be in a single government having in its constitu- ttoH the same restrictions on the exercise of the power as are found in the Constitution of the United States." It may be exercised « whenever the subjects exists." Oibbofu v. Ogden, 9 Wheat 1, 195, 196. In his concurring opiniwi in that case, UNITED STATES V. E. C. KNIGHT CO. 397 Dissenting opinion : Harlan, J. Mr. Justice Johnson observed that the grant to Congress of the power to regulate commerce carried with it the whole sub- ject, leaving nothing for the State to act upon, and that « ^f there was any one object riding over every other in the adoption of the Constitution, it was to keep 'commerckl n tercourse among the States free from all inLious anTpi;- taal restraints." p. 231. « In all commercial regulatC 2„r T ?u^ '^^ ^"^ P«"P'«" Mr. Justice Bradky speaking for this court, said that the United States ai bT St T' ^ n -^ •' *" '"^^'^'^^^ «'""'"«r-- I^ohUns v. ^i^elby Taxing District, 120 U. S. 489 494 thir^ol'^fT™"''' "T"^ '^"^ ®*«*^^- The decisions of edlvTs Iffi^hTr' '^^ r^'^"" " ^^--<^^ undoubt- edly, IS traffic, but It IS something more : it is intercourse It does not embrace the completely interior traffic of the^ pec rve States-that which is « carried on between man and man in a State, or between different parts of the same State Tn J which does not extend to or affect other States "-but U d^ Te UnTt dTf ^P^^/f.—e-al intercoui^" be w^ the United States and foreign nations and among the States and, there ore it includes such traffic or trade, Lying set' ing.andmterchangeof commodities, as directly kffectso^' ^ee ^Cimm:;: " ? "**"^^ °* ^'^^ ^-P^^ ofVlted iat^ uniT^^n^^' *' ^7"'^ '^ "^** '"^ *^« Constitution, is a uni , and cannot stop at the external boundary line of each State, but may be introduced into the interior^' "The" Tacitrr "' ?'. "'**'^ government seem to be, th^^t nation 1L^« "^^'f *" *? ""'' *^^ ^"**™''» «'"«*™« of the These principles were announced in Gihhom v. Ogden and mi tr.^°;^T'^^- '* '^ ^•'^ -*"-i doctrine of ?ht ifoi r .K * "''''^*'''" «""'"«^** ^•^braces something more than the mere physical transportation of articles of property, and the vehicles or vessels by which sSch Li portetion is effected. In County of ^i^t'/^S^Tc^^ U. S^ 691, 702, It was said that « commerce with fo^ign countries and among the States, strictly considered, consist m intercourse and traffic, including, in these terms^ navj I ll 398 156 UNITED STATES REPORTS, 22. Disseuting opinion : Harlan, J. tion and the transportation and transit of pei-sons and prop- erty, a^ well as the purchase, sale, and exchange of commodi- ties." In Gloucester Fen^y Co. v. Pennsylvania, 114 U. S. 196, 203, the language of the court was : " Commerce among the States consists of intercourse and traffic between their citizens, and includes the transportation of persons and property, alid the navigation of public waters for that pur- pose, as well as the purchase, sale, and exchange of com- modities. The power to regulate that commerce, as well as commerce with foreign nations, vested in Congress, is the power to prescribe the rules by which it shall be governed, that is, the conditions upon which it shall be conducted ; to determine when it shall be free, and when subject to duties or other exactions." In Kidd v. Pearson, 128 U. S. 1, 20, it was said that " the buying and selling, and the transporta- tion incidental thereto constitute commerce." Interstate commerce does not, therefore, consist in transportation sim- ply. 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. In the light of these principles, determining as well the scope of the power to regulate commerce among the States as the nature of such commerce, we are to inquire whether the act of Congress of July 2, 1890, c. 64T, entitled "An act to protect trade and commerce against unlawful restraints and monopolies," 26 Stat. 209, is repugnant to the Constitution. By that act " every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or com- merce among the several States or with foreign nations," is declared to be illegal, and every person making any such contract, or engaging in any such combination or conspiracy, [23J is to be deemed guilty of a misdemeanor, and punish- able, on conviction, 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. § 1. It is also made a misdemeanor, punishable in like manner, for any person to "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 UNITED STATES V, E. C. KNIGHT CO. 399 Dissenting opinion : Harlan, J. ^6m'«/^^a^., or with foreign nations." §2. The act also de- clares illegal " every contract, combination in form of trus^ or otherwise, or conspiracy, in restraint of trade or com- merce in any Territory of the United States or of the District r! ^^^7^^^' ^^ ^^ ^^^tr^i^t of trade or commerce between any such Territory and another, or between any such Terri- tory or Territories or any State or States or the District of Co umbia, or with foreign nations, or between the District of Columbia and any State or States or foreign nations," and prescribes the same punishments for every person making con'^pT^^^^^^^^ " '"^'^'"^ '" ^"^ ^"^^ combination of Tbe fourth section of the act is in these words: "Sec 4 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 distric attorneys of the United States, in their respective distSts under the direction of the Attorney General, to ir^tiuS proceedings in equity to prevent and restrain such violation. Such proceedings may be by way of petition setting forth the case and praying that such violation shall be enjoined slSrT P^f !^^*^^-.,^en the parties complained of shall have be^n duly notified of such petition the court shall oTtrt::Tr "^/ '^' ^^ ^^^ ^^^^^^^ -^ deteri::fnatn llTl ' . '^^'"^'''^ '""^ P^^^*^^^ ^^d before final de- cree, the court may at any time make such temporary .estraS- "rfmS:- '^ ^^^^^^^^-^- «^^" ^ deemed ^iTZ JvZtnrT' *^.^/^f P^^^bl^ that no comUnati^n of 3aS ts Ln .^f ^ r' 'f ^^^^' i'^Po^ unlawful restramts upon interstate trade, whether upon transportation tTanrryitorr^^^^^^^^^ ^^*~^^^ apdUrarpitd^ trans- [34] portation, any more than it can, of riaht imno^ oTrStf ^Sr^^ "r ^'^ --P^^^ely^nSl^^^^^^^ oi a btate. The supposition cannot be indulged that thJ« general proposition will be disputed. If it bf true that ^ 400 166 UNITED STATES KEPOBTS, 24. |l Dissenting opinion : Harlan, J. one primary object of the Union, which was to place com- merce among the States under the control of the common government of all the people, and thereby relieve or protect it against burdens or restrictions imposed, by whatever authority, for the benefit of particular localities or special interests. The fundamental inquiry in this case is. What, in a legal sense, is an unlawful restraint of trade ? Sir William Erie, formerly Chief Justice of the Common Pleas, in his essay on the Law Kelating to Trades Unions, well said that " restraint of trade, according to a general prmciple of the common law, is unlawful;" that « at common law every person has individually, and the public also have colkcttrely, a right to require that the course of trade ^ould be kept free from unreasonable obstruction; " and that " the right to a free course for trade is of great importance to commerce and productive industry, and has been carefully mamtained by those who have administered the common law." pp. 6, 7, 8. There is a partial restraint of trade which, in certain cir- cumstances, is tolerated by the law. The rule upon that subject IS stated in Oregon Steam Nav. Co. v. Winsor, 20 Wall. 64, 66, where it was said that " an agi-eement in general restramt of trade is illegal and void ; but an agreement which operates merely in partial restraint of trade is good, provided It be not unreasonable and there be a consideration to sup- port It. In order that it may not be unreasonable, the re- straint imposed must not be larger than is required for the necessary protection of the party with whom the contract is made. Homer v. Graves, 7 Bing. 735, 743. A contract, even on good consideration, not to use a trade anywhere in England is held void in that country as being too general a restraint of trade.'* [261 But a general restraint of trade has often resulted from combinations formed for the purpose of controlling pnoes by destroying the opportunity of buyers and sellers to deal with each other upon the basis of fair, open, free competition. Combinations of this character have frequently been the subject of judicial scrutiny, and have always been condemned as illegal because of their necessary tendency to 401 vmmn states v. k c. kkight co. Dissenting opinion : Harlan J restrain trade. Such comh;. *• and are crimes agains tt 2"' "t ''''^'' '=*'"-- "^^t that character it will be wellttfer ""' "* '""^ '^^ °* in Morris Bvn Coal Co v » f 173, 184, 186, x^,, tL princtlfT ""'f "'"•' '^ ^^^ ^^■ ;ahdity of a contract made See„ I"". ^""^ ""^ *« ^- Pennsylvania, by which thev di^Z, k ! '""' ^''''PO'-ations of coal regions of which thev ha^^h ^'''''" themselves two the case found that tE col'^- '""'^'"- The referee in arrangement the power treoZur "T'"'' ""'^^'- ^he" «>nous coal i„ the northern part oftr^^w '^^'^'' ^^' ^itu- bination was, therefore, a reiLnt *"*'' ""^ *«r com- Pubhc policy. In response to?he "^"'^ '''^' ^""^ against P'-rpose of the combiiation was toT^^*'«" ^^^at the real vance the quality of coal and 1 ^ r'"^"" ^^P^n^'S to ad- 'ntended to be supplied in the be J ord 7 'I" *^« -"-tets Supreme Court of Penn«vl7 .^^'' *° ^^e consumer the the defendants; but it 2.7^. "^^ " This is denied by these positions are sustaiX- not Vl •'"'"**^™' whether ness, ,t does not follow thaT T ^^'"'"ing their correct- contract from the obnoxi^S e^!f ''^^""^"^^^ redeem the by he referee. The imporTant^r ^ f ""^'"^'^ P'-e^ent J control this immense coaSd tt V *\' '""'^ «°"'Panies supply of bituminous coal to \l J^ '' *" ^''^at source of arge territories westward that tv fv '' "' ^^^ ^^''^ and the price of coal in this exten. ^ ' ''*"*™'=t they control ^ms it would not c^mmSTleT^'V"^ ^'^''^ ^riS trade; that it concerns an arl! f ^ ^'^^ ""'"''al laws of corn . ^''^ "^ *=°al as a fuel and th '"^^ '■^^'«"- and combination of all the comnanie " '! accomplished bv a bnsiness [26] in ^he hrT^l^l T^'^ '" '^^' branch oJ combination is wide in scope f^^" ?'"' ^^^ "P^'-ate. The jurious in effects. TheseT'inT! J'' '*' '"^"«"««' and in- agamst public policy, 1w"f 'ts features, the co;tract Js ;n the same ca^: « The effe' , '?''"''"•« ^«'d-" Agai^ tere^s lead to the con^de'S of ''7^ ^^^ *'^« P"Wif b ' ^eight in determining thlilL . f '""*''"'• ^«ature of great " ^he combination resorldt byCfif *'^ ''-^-'' ^o^^- 11808-vo,. 1^ „__2fl ^ companies. Sin<.lv 402 156 UNITED STATES REPORTS, 26. Dissenting opinion : Marian, J. each might have suspended deliveries and sales of coal to suit Its own interests, and might have raised the price, even though «i,s might have been detrimental to the public in- terest. There is a certain freedom which must be allowed to every one in the management of his own affairs. AVhen competition is left free, individual error or follv wUl een- erally find a correction in the conduct of others." But here IS a combination of all the companies operating in the Bloss- huTg and Barclay mining regions, and controllinff their en- tare productions. They have combined together' to govern the supply and the price of coal in all the markets from the Hudson to the Mis.sissippi rivers, and from Pemisylvania to the lakes. This combination has a power in its con- federated form which no individual action can confer The pub ic interest must succumb to it, for it has left rfo com- petition free to correct its baleful influence, men the sup- ply of coal is suspended the demand for it becomes importu- nate, and prices must rise. Or if the supply goes forward, the price fixed by the confederates must accompany it. The domestic hearth, the furnaces of the iron master, and the fires of the mannfactnror, all feel the restraint.-while manv de- pendent 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 necessity cannot be measured. It per- meates the entire mass of community, and leaves few of its members untouched by its withering blight. Such a combi- nation IS more than a contract ; it is an offence. ' I take it ' said Gibson J., ' a combination is criminal whenever the act to be done has a necessary tendency to prejudice the public ^werT?r '"'l'^:'^"'''^' by ™i»^«y subjecting them to the the [27] latter whether of extortion or of mischief.' Com- monroealh v. CarlisU, Brightly, (Penn.,) 40. In all sul combinations where the purpose is ipjurions or unlawS ^e gist of the offence is the conspiracy. Men can often do by the combination of many what severallv no one could L^t " ^ "'J^*"** '"'" "•^"^ ^^^" •^°"« ^y *»»« ^«"W be inno- wWh ♦., f"* '" a potency in numbers when combined, qi^nt " ''^""^'^^' ^^^"^ ^J"^ '« the conse- T* r .» t UNITED STATES V. E. C. KNIGHT CO. 403 • Dissenting opinion : Harlan J to give one of them the monopoly of the tr«Ho ^^^^n was tracts desiimpri Z "'^^''r ? ^^^ P«blic, and that all con- tained, the prices of articks of pure nee sjitv su h "t flour and other indispensable —S ^^ Jir'^T^.^r'^ cially raised to a ruinous ex-tent fn,. . 1- ^ ''^' Booker v. Vandewater, 4 Denio 35] %^9 c . ^*^ "^ 5 Denio, 434; SaraU.a ^anTv.'Skl!'/?? " ^^^' In Central Ohio Salt Co. v. GMrie, 35 Ohio It 666 679 the principal question was as to the Walitv of 1 ' f- ' of substantially all the manufactrreiof fait inVr'"''*^? and to ^^^^z:t::^-:^^i^^ cheaply as possible anH 7/ ^^''^'^^^ *» t^e consumer as tend'to advaC LVefp^L:^^ '° """T^' '^'^•^^ public. [281 Thl f ' . ! '"^""^ ''^ *be general -nt is ti esLlish a mol ran? rj 1 "^>^ *"* ^^- in trade, and for that rZ^^nltltlTlT^'f''' the courts will not aid in its enforTment It^f ^ '^' to say that competition in th '"^r^^^^' " '^ ^o answer stroyed or tZ ttl • ^."'^* *''**^^ ^»« ««* in ^ct de- degree of imWinfl?!^? T '^^ *° ^"*1"'^« «« *« the know thatThe%e"?^h? . ^r *' ^""ic; it is enough to rious to ?he puMc" ' *'"''"'=^ **' ^"^^^ contracts is inju- 404 156 UNITED STATES REPORTS, 28. DiHsenting opinion : Harlan, J. In Craft v. McConoughy, 79 Illinois, 346, 349, 350, which related to a co^obination between all the grain dealers of a particular town to stifle competition, and to obtain control «li^? ^"^^ ^^ ^*^^"' *^® Supreme Court of Illinois said : While the argument, upon its face, would seem to indicate that the parties had formed a copartnership for the purpose of trading in grain, yet, from the terms of the contract, and the other proof in the record, it is apparent that the true object was, to form a secret combination which would stifle all competition, and enable the parties, by secret and fraudu- lent means, to control the price of grain, cost of storage, and expense of shipment. In other words, the four firms, by a shrewd, deep-laid, secret combination, attempted to control and monopolize the entire grain trade of the town and sur- rounding country. That the effect of this contract was to restrain the trade and commerce of the country, is a propo- sition that cannot be successfully denied. We understand It to be a well-settled rule of law, that an agreement in gen- eral restraint of trade is contrary to public policy, illeears that that company was organized, under the laws of Connecticut, for the purpose of uniting in one corporation all the match manufactories in the United States, ahd to monopolize and control the business of making all the friction matches in the country, and establish the price thereof. To that end it beciime necessary, among other things, to buy many plants that had become established or were about to be established, as well as the property used in connection therewith. Chief Justice Sherwood of the Su- preme Court of Michigan said : "The soJe 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 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 con- trolling interest in this corporation — an artificial person, governed by a single motive or purpose, which is to accumu- late money regardless of the wants or neces- [31] sities of over 60.000,000 people. The article thus completely under their control, for the last fifty years, has come to be re- garded 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 purposes and in carrying out its object that the contract in this case was made between those parties, which we are now asked to aid in enforcing. Monopoly in trade, or in any kind of business UNITED STATES V, E. C. KNIGHT CO. 407 f Dissenting opinion : Harlan, J. 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 control in the interest of the public. Its tendency is, how- ever, 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 con- stitutions. . . . All combinations among persons or cor- porations for the purpose of raising or controlling the prices of merchandise, or any of the necessaries of life, are mo- nopolies and intolerable ; and ought to receive the condemna- tion of all courts." In the same case, Mr. Justice Champlin, with whom Mr. Justice Campbell concurred, said : " There is no doubt that all the parties to this suit w^ere active participants in perfect- ing the combination called ' The Diamond Match Company,' and that the present dispute grows out of that transaction, and is the fruit of the scheme by which all competition in the manufacture of matches was stifled, opposition in the business crushed, and the whole business of the country in that line engrossed by the Diamond Match Compam\ Such a vast combination as has been entered into under the above name is a menace to the public. Its object and direct tendency is to prevent free and fair competition, and control prices through- out the national domain. It is no answer to sav that this monopoly has in fact reduced the price of friction matches. That policy may have been necessary to crush competition. [32] The fact exists that it rests in the discretion of this company at any time to raise the price to an exorbitant de- gree. Such combinations have frequently been condemned by courts as unlawful and against public policy." See also Raymond v. Leavitt^ 46 Michigan, 447, and Texas Standard Oil Co. V. Adoue^ 83 Texas, 650. This extended reference to adjudged cases relating to un- lawful restraints upon the interior traffic of a State has been made for the purpose of showing that a combination such as that organized under the name of the American Sugar Refin- ing Company has been uniformly held by the courts of the States to be against public policy and illegal because of its 408 156 UNITED STATES BEPOBTS, 32. ' '' Mi U / Bissenting opinion ; Harlan J Z7HYi^7i^ i-Pose unproper restraints upon trade. S,rt^r;i, T^! '>7"°^"l ^ «>« judgment of any Circuit Court of the Umted States in a case between parties in Xch ments of the state courts rest upon general princinles of law and not necessarily upon statutoiy provisionrexpreilV ^ demmng restraints of trade impisTd by TSiS fZ" rLTr. ?' "''"^' '" ^e- o' the auth^ itis it ;m not be doubted that it would be comoetent f„r « «* f' J P^ of protecting Its people against fraud and injusticf to make it a pubhc offence punishable by fine and impri 1^' t for individuals or corporations to make contract ^7^ bina ions, or engage in conspiracies, which unduly r^aTn rorsr;::StuTs;Xoriitf^^' -^ ^-^ or restraming such combinations and conspiracies. ^ npnnTo T* «, u , , country, and we are one Ke Un t?d%^'^''':^^ •'^ ""'^ ''PP"*='"'>« *« e-ery part Tk^ • J- //"^^^^^® With the enforcement of such thIaq among the StatU ^natever kind, to the free course of trade *h^ « * ; ^" ^ *^""'& 1* would not interfere with the 'autonomy of the States," because the power dms to nrl Sf trstt^rr ;^ ^^^--'^ ^- br^peo^iHf aLi'uLlyl^, etep?: ^Sr'"' *"'^' ""''''''«''= '^ may be iLden'tallyT indi^^i;":^!^ ^ ^'T ^'iumg, ys U. b. 99, 103. It is thft rAncfUi,*,*^ xi. i.w ., ,h, U„a, ..ioh i„e,i SnST'Sr^otT'^' Oj 409 UNITED STATES ». E. C. KNIGHT CO. Dissenting opinion : Harlan, J. tect commerce among the States against burdens and exao lt: ™iuS" ""'7/"' ^"'••''^'^ ^^ what^i^authrr *;■ TeSunLTtyiJ^tirof thl ^"*^' '^ ^'^^^ ^'^*™ ins^ument creates.^ trr^ii^SXtft r urbs or unreasonably obstructs freedo^ in buySg and ^11 ing arhcles manufactured to be sold to persons inXr StTt^' such an U i/Jild :nlylt rrSUT oltTfitdt a government which, this court has said, wfs The g" e« tS ZTV7T f ^^^^^ ^^ ^"' -pi i7at acting tor all. McCulloch v. Man/land, 4 Wheat 316 4nn of difflnT^rr ' *'L** ^ '"'"^-^«- l^twS co'ptatioi what shall and what shall nnlT. authority to say States rwi A^^^ a ^ ^'^nufactured in the several oiates. [«f4j /jf^^^ y Pearson. 12fi 11 d i ™»„ m j • intoxicating liquors inn s/ f ^''^ manufacture of respective Ju^dSrs'^s'^eJerrSf thS'^^ ""'^" ''^''' never surrendered to the natToITgoJ^Lrnt'' J^^ ^T""' for the health, morals, and safety of tlTp:;^,:' '""'"^■ monorolirthrSf:? "rr^"" ^^ *« ^ l:We<,. to to be'sold if other Stated!;;""*: ~*''^*""'^ '^ ^«- n otner btates-no question as to combinations 410 156 UNITED STATES REPORTS, 34. Dissenting opinion : Harlan. J. in restraint of trade as involved in the buying and seUing of articles that are intended to go, and do go, and will always go, into commerce throughout the entire country, and are used by the people of all the States, and the making or manufacturing of which no State could forbid consistently with the liberty that eveiy one has of pursuing, without undue restrictions, the ordinary callings of life. There is no dispute here as to the lawfulness of tlie business of refining sugar, apart from the undm rmtramt which the promoters of such hnsmess, who have combined to control prices, neek to put upon the freedom of interstate tn/fffc hi that mtif le. It may be admitted (hat an act which did nothing more than forbid, and which had no other object than to forbid the mere refining of sugar in any State, would be in excess of any power granted to Congress. But the act of 1800 is not of that character. It does not strike at the manufacture sim- ply of articles that are legitimate or recognized subjects of commerce, but at eomUnations that unduly restrain, because they monopolize, the huylng and ftelling of artJrhs which are to go into interstate commerce. In State v. Stewart, 59 Vermont, 273, 286, it was said that if a combination of per- sons "seek to restrain trade, or tend to the destruction of the material prop- [35] erty of the country, thev work injury to the whole people." And in State v. Glidden, 55 Connect- icut, 46, 75, the court said : "Any one man, or any one of several men acting independently, is powerless; but when several combine and direct their united energies to the accom- plishment of a bad purpose, the combination is formidable. Its power for evil increases as its numbers increase. The combination becomes dangerous and subversive of the rights of others, and the law wisely says it is a crime." Chief Justice Gibson well said in Commonwealth v. Carlisle Brightly, (Penn..) 36, 41: "There. is between the different parts of the body politic a reciprocity of action on each other, which, like the action of antagonizing muscles in the natural body, not only prescribes to each its appropriate state and .-action, but regulates the motion of the whole. The effort of an individual to disturb this equilibrium can never be percep- tible, nor carry the operation of his interest or that of any other individual l)eyond the limits of fair competition; but ifh * f > if UKITED STATES V. E. C. KNIGHT CO. 411 Dissenting opinion : Harlan, J. tlie increase of power by combination of means, being iu geometrical proportion to the number concerned, an assS=i^ SSl b t *' t' '"^ '""P"'-' "•'^ -'^ oppreS^ to ndmduals but nusch.evous to the public at large; and it 1^11? """'■"*,"" ^"^'"^ ^" P°"'''-*"l -d danger- role" Tf '7'"'"''1'*>' t« «" «<=t th^t would be perfectly vidua] These principles underlie the act of Congress which has for its sole object the protection of such traSfand commerce a. the Constitntion conges to national Jurol a'd he question ,s presented whether the oomhlnation assailed by this suit IS an unlawful restraint upon interstate trade in a necessary article of food which, as every one know , has alu-ays entered, now enters and must continue to enter in vast quantities, into commerce among the States In Ktdd V. Pearson we recognized, as had been done in nre- vmus c.ses, the distinction between the mere transport a £" of articles of interstate commerce and the purohaLTZ semng that precede transportation. It is sfid thaTmanu' facture precedes commerce and is not a part of it. Bu" U is th^t bT,r. ^ } n "'"* ■^'^'"""^ '^ ^"''i«'=' of commerce: that buying and selling succeed manufacture, come into ex istence after the process of manufacture is completSp^- cede transportation, and are as much commercial interl^r^ where articles are bought to he carried from one State To another as xs the manual transportation of such artcl^ after hey have been so purchased. The distinction wa^ recognized by this court in Gihlon. v. %c/.«, where thlrin «pal qiiestion was whether commerce included naSaC Both he court and counsel recognized buying and selZ said that the mind can scarcely conceive a system for r*i lating commerce, which was " confiru^d to prescribing ™l^ for the conduct of indivuals in the actual emplovment ff bu^ mg and selling, or of barter." pp 189 190 frSLTsuch "^r^"' '"'T '«'d'p'-ot^''t« the absolute freedom of such intercourse and trade among the States as may or must succeed manufacture and precede transporta ion from the place of purchase. This would seem to be conceded ; 419 156 UNITED STATES BEPOBTS, 36. DimeutlnK opinion : Harlan J 'nay be regulated, but this is W«S . * ''*^' °* *'"^"«'t' which the settled doctrines Tf ?h/« ^ adnussion-^ne tracts to buy and 11^™,^. • ^'''V*'"'^ J«stify-that con- Each part of such tp«H» ;= Vk '"*f ^***« trade or commerce, gress. ^ AnSy^tby ?he opiS a"n1" ?' P"'^*^*'"" *" ^- I do not misIp^XS II Z' ': T;" til" T ""' •' protect the commercial intercZS tL vT ^T"" *^ necessarily involves asainstZ T ■ ^'"''* purchasing nothing more nor less than aTmrlt^K \ TT*'"' '* '^ chase what [371 thev A^JtlT^ ^^"^ '^"^ ""'' P^- right to go in uerson n^ =1 j j Missouri has the New Jersfyfortoe^^;" * "'1"^' *" Pennsylvania and of whatTiHs^L^ri^X'* r'''^'' t^ '^^"^•^ ^"g^'-- But ■p my judgminit, th, cllUms of th« seven! c,.,„ states cannot coexist with such^mSots meT^ '\ of trade I mean the buying and celZJ nf 7} \ ^^""^ kind that are recognized aSefof if Tf"" "* ^^^'^ Whatever improper^ obst.^ctt tT^^^^^^:^^ UNITED STATES t;. E. C. KNIGHT CO. 4] 3 Dissenting opinion : Harlan, J. •intercourse and trade, as involved in the buying and selling of articles to be carried from one State to anoLrmay te reached by Congress, under its authority to regulatT^m^ as to make trade among the States, in all recognized articles of commerce, absolutely free from unreasonaWe or Tl ega restrictions imposed by combinations, is justified by an S SeTfarrof .. T," *" ''""^^^^ ^"^ ^^'^ -^^-n^ " the Tvelfare of the whole country. I am unable to perceive that any such result would imperil the autonomy of the Stai^ especially as that result cannot be attained through the^-' tion of any one State. ^ ^ Undue restrictions or burdens upon the purchasing of goods, m the market for sale, to be transported to ler the Wd" f "nP-«d even by a State without viola ,„g the freedom of conmiercial intercourse guaranteed bv th! Constitution But if a State within whose limits the busi- ness of refining sugar is exclusively carried on may not Z titutionally im [38] pose burdens upon purcha J of sugar to be transported to other States, how comes it that combina- tions of corporations or individuals, within the same State may no be prevented by the national government f"om put' nng unlawful restraints upon the purchasing of haTTrScle made? If the national power is competent to repress State action in restraint of interstate trade as it may beTvoS • m purchases of refined sugar to be transported f^^m one State to another State, surely it ought to be deemTsuffi cient to prevent unlawful restraints attempted tor^'J by combinations of corporations or individuals u^oTSS Orations''" r'J ''^••"^^' '"^g^' combination"^, of c^ J porations or individuals may_so far as national power Td n"otrcrdr ^ -'- eoncemed-^o, with impuL^Xt the^Unked Stel ' '"' -ere brought in one of the courts of the United States-jurisdiction being based, it may be alone X^Montir "'?r"*'P "' theVrties-te ^nft'ce t to acau re th. ' '"'' agreement, which had for its object llJZ7i I P«™on of all the sugar refineries in the United States, in order that those engaged in the combina! f. I ^1^ 156 UNITED STATES REPOBTS, 38. Dissenting opinion : Harlan, J. [t".??*,?*"'" """ """"^ '^•'"^••^l «' *»>« business of refin- ing and selling sugar throughout the country, and thereby o increase or diminish prices as the particular interns of the combination might require.. I take it that the^urt upon recognized principles of law common to the jurirpru- relief asked and dismiss the suit upon the ground that the Ti to the Stl" TPj-!u'^'^* '''''* "«^ '''""P'^t^'-v inter- nal to the State m which the parties resided, but trade and commerce among all the States, and was, therefore agajS public policy and illegal. If I am right in thkvZ t a'iutT r/r""^' "r*^^""^^' '''^' Congress lldTn'a a statute forbidding such combinations so far as they affected interstate commerce, and proyide for their suppress^ fs well through ciyil proceedings instituted for that purpoi •" by penalties against those engaged m them. ' ^ ' li; ^^ na ions and among the several States, the Con- ZtZ^, "1 ^'^: '^' "^"^ '^' "^y be employedto protect the freedom of commercial intercourse and traffic es wisely forbore to mipose any limitations upon the exercise of hat power e.x^pt tho.se arising from the general natu.^ of ^a™„Z"Tr', ""r'^r ■'•^ ^'"^'^'^^ '" the fundamental guarantees of liberty and property. It giyes to Congress in express words, authority to enact all laws necessa^and proper for carrying into execution the power to regulate com- rS t7w? r r "*=' **' ?"^^^' P-*^-** toLompli^h tlS^i "^ ""* «f '"' government is competent, is withm the power granted, must be determined by the rule amiounced through Chief-Justice Marshall three-quartet of a centuiy ago, and which has been repeatedly affirmed by this c«urt. That rule is: « The sound co^ructfon of the Sn^ ! iith IS * r *" """ u""*^*""'^ legislature the discretion w^th respect to the means by which the powers it confers are to ^ earned into execution, which will enable that body to h!!! fi™i ?%v^'' ''"i'"" "'"'S"'^ **» »* *" «»« °»«nner most beneficial to the people. Let the end be legitimate, let it be within the scope of the Constitution, and all means which are ilf •■■■* UNITED STATES V. E. C. KNIGHT CO. 415 l>is»entiiig opinion : Harlan, J. appropriate wWch are plainly adapted to that end, which are not prohibited, but consistent with the letter ands^i^of S Constitution, are constitutional" Vrr«77n.i, ,. ^""'7™*^ 4 '\Vheat .Sifi 491 tu j -^^icVulloch v. Maryland, the a^nf ?«o^ !u ^""^ P^'^'P^^d ^ be accomplished by the act of 1890 is the protection of trade and commerce amo2 Ub^tZ\T/ fl means are not appropriate to at- St'l! ; 1 "*, ^''"^ commercial intercourse among the States from burdens and exactions imposed upon it by combt nations which, under principles Ion? reco?% c^use such means ^.^'Tn *^he ^If T ?T''' "'"P'-^ «- conduciye to the end JLhtJ^^ °' *^^ '^""^s, best in the exemse of Us S^Un t rT"^'^^- '^'^^^ duciye to an end to which t^ '^"'** "' ■"«»»« <">"- reach that end through :t^I ^r^"^*'^"*' ^'''^'-^ *<> vent or restrain thes^ oSuHlZ Z"'"*"*'^ '" P'*' tempts to burden interstarcrmer^ty Z V"'"' ''■ mt^rfere in advance of transpZ^^tZ ^th 1 . ""' ^^'^ of trade between the people of th„ ^^ r * ^'^ <=*'"^ Cong^ss sought to preCt he eotinl iS; '";*" "*"-^^ bmations, the purpose or tendeZ ^f Xh "? "* *=°™- u.Jawf„l restraints upon inters^ ^n^n tt "" *° ^'"^'^ There is nothing in conflict wifiT*!!^ • ^'^^?, 116 U. S. 517 529 t1 1 "" ^""'"'^ •" ^"^ ^• certain logs cut in nI; Ham J^" ItrtT "" "''^*''- they might be transportedTo anoThe,! ^ '*' '" " '''"' ''»»* taxed in the former State be w! ? *^' ^'"'''^ "«"« '« be latter State begTn ^^ !!.t ??^""1 transportation to the ta.^ while thefLa^rnteZe'tftitLo^- "^ of the general mass of property the-? *r!«/'^'" "' P^*"' 417 UKITED STATES t;. E. C. KNIGHT CO. I>i«^nting opinion : Harlan, J following clause in ". „ ®'''.''*° ^« clearly indicated by the at the place of entrenot fn. * T' ' <^^P«>sited or stored the regular way as S ort"^^ ^^Portation, be taxed in answef is plai.^ ifcan L , ^T'*^ "^ ^^^ ^tate? The taxed, in th'e Place wh ^ i . t^n/^f ^t " ''''''''' '^ taxation in the usual manner in whiK ^ *"" '''^''"'^ *«'" and not singled out to be «lt iS ^"^"'^ " '^"^^' exceptional manner l«cause of Its"^. t^^^^^^^^^^ now no question as to the taZt^T 7""'^,"- As we haye by one of the combinatinn! f "f "'"''^^^ manufactured and [42 1 as no on^J '^""^^'^ned by the act of Congress long as they remained withi^" s Sf! ,7 f ^'""^'•^^ ^« tation of them to other Stat- hi f' '"'^ ^^"'^ ^'^^^P^^^- stand how the case Sre u ca'T'ff T/.' ' '*'" ^"^ ""^«- personal property, whTle it rZi„? .f'l''^ " ''*<''«'°" ^h** although it is tot sent at TZ r ' ^^^'^^ *•* '^'^ "^gin. within the iurisdict^oTof^ltrr7tat:r''^^ '''''' '' taxation. ^^mier ^tate for purposes of intl^iniietr^l? "^*"'"*^ "P- ^'^^ ^-dom of «ons. After thetuinSS' it "^^t' ^^•"^- bestow upon this important qS^Sj l ^f^f .•^° ''"e to refuse my assent to this proposSn 'm^. '* '"'^''^^' *« do to protect its completely °S; ^m " ^ ^'''' "''^ unlawful restraints the JenJT " *"" ^''^'^^ against do for the protection of £ oToirTTf '^ '^P^^-^^d to purpose one people^fgainHlw^ *^' ^'"*^^*^'- ^his upon interstate traffic oJSf in ? , J^^t^^^nts imposed commerce among the i;^ g "^1? T f" ^^ ^"^^^ ^"'» State may prevent or supnre^a .. \' *' '''^^^J' shown, a which is to subject its dresStradTtoT'"^';'^^ ^^^"^^ <" sarily arising from their obtaimni .i! u , ""^^t^iuts neces- sale of a particular arLe J ^^iltutt"!^ ""*^"' '^^ ^'^^ there ought to be no hesitat;/ ., ^^ *^^ community," right to suppress rs^ZSr^IZt''. ^^''"^^^ '^^ 11808-voL 1-06 M X7 ^^^ that imposes a like II 41o 156 UNITED STATES REPORTS, 42. Disseatiug opinion : Harlan, J. article. While the States retain, because they have never In^nart !f r'^'A''^ '^' ''■'""^'" ''^ *« Constitution that ^IrTfn '"^"''^"'"'^'''^ ^''""^^ •'« «^«'"ded from the EtW T^'^'V ^'''''' ^'"'^ ^"^ '*«•='» »°<1 «"PPress com whfl th r ?"■ "? '^''^ ""'""*""^ '■^'™'" 't^ '"terior trade, while the national government may reach and suppress them "mile tt^ "'"''"'f/, '••^*-- t-^« -ong tE^sStt the act of t«TrV *^' """'' ^° '^'' '^ •^"^^ "°t declare IbLt J i K ? ''' "^constitutional, it defeats the main object for which it was passed. For it is, in effect held that ^e statute Would be unconstitutional if 'inte^eS s t! [43] bracing such unlawful restraints upon the purchasing of goods in one State to be carried to another State as neces sarily arise from the eanstence of combinations formed forThe purpose and wth the effect, not only of monopolizin" he ownership of all such goods in eveiy part of the count^P, Sj lr!:i'^f "^ *^' fr '^'^ *^«" ^" «" the States. ^Thi view of the scope of the act leaves the public, so far as na- tional power IS concerned, entirely at the mercy of combina- faons which arbitrarily control the prices of articles purla^d fs^t ToTf ^""V"' ^'"'^ *° '"•'*'^«'- State. I cannot assent to that view. In my judgment, the general govern- men is not placed by the Constitution in such a condSon of while capital combines, under the name of a corporation to destroy competition, not in one State only, butThroui^^ etecTa^;? tr"**^' " ''^ '^"^ '^'^^ ^"^ «* -tiSe^ especially the necessaries of life-that go into commerce among the States. The doctrine of the^autonomv oT the St^ri^r TT'^ ^ ^"""^'^ *° J"«tify a denial of power in the national government to meet such an emergencv involving as ,t does that freedom of commercial InZIZ^ TS. It,?."?/'"' '''' ^™^*''"*'- -"g^t to aS It IS said that there are no proofs in the record which in- dioite an zntentton upon the part of the American Sugar Re- fining Company and its associates to put a restraint upon Zli *T nr*^- ^"•' '* "^^""^ that formal proof b! made that the persons engaged in this combination admitted 419 VN,TEDSXAXES,t;.E.C. KNIGHT CO. Dissentiug opinion : Harlan J m words, that they intended to restrain tr«-i I>'d any one expect to find in fh. f ^^ '"* ^on^erce? resulted in the formation of tM ""T" ^^^-"^^ts which . pression of a purZL t^ 1^' combination a distinct es- merce? Men i fom and tT TT'''' '^'^^ '^ ^om- too cautious and la J"o malZ*t ^S'^ combinations are writing. Why, it islncel^tha.lh T ^'""^ "''''"y »' i" nation was to obtain « of th. k' "^^^''^ ''^ '^^' combi- selling i^fined sugar ttrotlout S 7"^ "' '"«'^'"« «»<» interested in its operations SllL.Tf *=*"'"*''y- ^hose than to have the 41 Zl"> "/a ' ""' ""''^^"^ 1«- them. That object [i4?TdiSn.i ''' ^'^ ^"^""^ to the transactions' desirib^d in thf jj "Tf •! ^"^ '"'"' "' •ndeed, it is conceded-thl! tlf 1- f 1** '* '' P™^«<1- Plished to the extent that hf* ^^''^ ^^^ "^n «ccom- pany now contSs litt^f,^'™''' ^""^^ ^^^"'"g Corn- fining business in he counfrv T/Tk "'/" '''' '^^'^ re- price of that article ve";;£eiwT»f"" ""^^''^^ *»>« of a combination having Zhln „hT T' ^^ '^''^ '"^^"^ e:ttraordinary power "s it^ff ^''* ""*^ Possessing such law-there l^in^ JJ^-^^J J ^^ T^ ^^'^^^^ «* country-a direct restraint of tr»^ .t "'"'"'"y '» this control of the sales of S in thi! '". ""' *"*^<=^« *<"• the was organized. And 2 re^™ V"""*^ *'^''* combination for the reason, known L all 1 X ar^f " ''" ^"^ S*^*-' was intended to go and n,,S i ^'^^ '" *l"^tion goes, among the severaf StatS Td i.f ff .^*'' '"*" '^•"""^rce every condition of life ** '"'*' *« ^^^^^^ «* People in coult^lCS^tf riit St"" "^. ~--^ -t^- from one State to\noth"f l^h "I f "^^ *** '^ transported by unlawful r^strair iiP^Jd t ''"?^^^^«'ng burdened tions or individuals, To fTfrl LTv"'"""^ "* '^'"'^^ would tend to preserve fh/„ * nrt i^r^;^ .. ^'^ '"°"^''* "■ *•"« P°««<» States circuit court for the Southern district of New York by a manufacturing company against numerous competitors, in various states a'Sl r 422 66 FEDERAL REPORTER, 637. Syllabus. the formation of a combination, and an attempt to create a monopoly, " in violation of the statutes of this state and the United States,'' whereby plaintiff's business was injured. The formation of the combination was laid on and prior to November 16, 1887, but it was alleged that after the passage of the act of congress of July 2, 1890, defendants ratified, renewed, and confirmed their previous contracts, combinations, etc. Judgment was demanded for treble damages "under and by virtue of the statute." Plaintiff was not a resident of the district where the action was brought, and the case was heard upon the demurrer of a defendant who was also a nonresident, but was "found" within the district; thus making a case in which Jurisdiction is expressly conferred by section 7 of the said act of July 2, 1890. The demurrer was sus- tained, and in all the assignments of error it was contended that the facts charged in the complaint made out a case under that act Held, that the at?tion nmst be deemed to be founded upon the said act ojf July 2, 1890.o Same.— In an action brought by a manufacturer of watch cases against numerous other manufacturers thereof, residing in various states, to recover treble damages under the act of congress of July 2, 1890 (26 Stat. 209), prohibiting unlawful restraints and monopolies of interstate commerce, the complaint alleged that the plaintiff operated an extensive factoiy, first in Kentucky and after- wards in Ohio; that previous to November 16, 1887, it sold all its goods to a great number of dealers " throughout the United States and Canada " ; that prior to that date defendants had agreed with each other to maintain arbitrary and fixed prices for their watch cases; that, for the purpose of compelling plaintiff to Join with them therein, defendants on said date mutually agreed that they would not thereafter sell any goods to persons who bought or sold goods manufactured by plaintiff; that they caused notice thereof to be served upon the many dealers [688] in such goods throughout the United States and Canada, who had formerly dealt in plaintiff's goods, whereupon many of such dealers withdrew their patronage from plaintiff; that after the passage of the act of July 2, 1890, defendants ratified, renewed, and confirmed their previous agi-ee^' meuts, and served notice of such ratification upon all said dealers in plaintiff's goods, whereby said dealers were compelled to refuse to purehn?e plaintiff's watch cases. HeU, that the complaint failed to state a cause of action under, the statute; Lacombe, Cir- cuit Judge, holding that no monopolizing or combination to mo- nopolize interstate commerce, contrary to the second section of the act, was shown, for the reason that the allegations did not preclude the inference that each defendant may have sold his entire product In the state where It was manufactured; and that • Syllabus and statement copyrighted, 1895, by West Publishing Co. DUEBER WATCH CASE MFG. CO. V. HOWARD WATCH CO. 423 Statement of the case. the contracts did not produce an unlawful restraint of trade, under the first section, because the combination and agreement to fix arbitrary prices did not appear to include all manufacturers of watch cases, but was only a partial restraint in respect to an article not of prime necessity, and therefore came withm the* recognized limits of lawful contracts; and that the further agree- ment not to sell to customers of plaintiff was a lawful means of enlarging and protecting the business of the defendants. Shipman, Circuit Judge, concurring on the more technical ground that the acts of the defendants, whether viewed as an attempt to create a monopoly or as a contract in restraint of trade, were not shown to concern interstate commerce, because there were no allegations showing the residence of any dealers who withdrew their patron- age from complainant, and it therefore did not directly appear that any of them resided outside of the state where plaintiff's goods were manufactured. Wallace, Circuit Judge, dissenting on the ground that the allegations were sufficient to show that the attempts to monopolize and restrain did operate upon interstate commerce; and that, while the contracts might not be unlawful in themselves, yet the purpose for which they were alleged to be .made, namely, to compel plaintiff to Join in the agreement for fixing arbitrary prices, and to injure and destroy its business if It refused to do so, was oppressive and unjust, and rendered the acts of defendants unlawful under both sections of the statute. This was an action by the Dueber Watch-Case Manu- facturing Company against the E. Howard Watch & Clock Company and numerous other individuals and corporations, to recover damages alleged to have been caused to plaintiff's busmess by the alleged unlawful acts and combinations of defendants. The case was first heard in the circuit court upon the demurrer of the E. Howard Watch & Clock Com- pany to the first amended complaint, and the demurrer was sustained, the opinion of the circuit court therein being reported m 55 Fed. 851. A demurrer was afterwards sus- tained to the second amended complaint, but no opinion was written, and plaintiff now brings error to review this latter judgment. Robert Sewell^ for plaintiff in error. Edward B, Hill and Elihu Root, for defendants in error. Before Wallace, Lacombe, and Shipman, Circuit Judges. i 1 i I if ' 424 66 FEDERAL BEPOBIEB, S38. Opinion of the Court. Lacombe, Circuit Judge. The complainant corporation is a citizen of Ohio, the de- "Sint r* "''^f """ " '"^^"^ "^ Massachusetts, engaged m the business of manufacturing and selling watch movements, and having a place of business in the city of New a^^; 't^'' "' f^Jr'^ ^' '""^ "'-'-" othe/defend ants ten are individuals whose citizenship is not set forth m the complaint. It is averred that they are engaged in business, two of them in New York City under fnf firm name, two others in [639) Philadelphia and New Yolk C ty under ahother firm name, three others in the city of Nw ^« un"der"str ':.''^ """'' ""'^ **^'^ "'^^^ '^ Cincin- frnHl. ""****'■ ^^ """*"• The nine remaining de- fendants are corporations, two of them citizens of Massa- ^nsetts, two citizens of New York, two citizens of Conn^- cut,_^wo citizens of Illinois, and one a citizen of Pennsyl- crS^"^!!!^^" w"* "''''!.*'"'* P'"^*^* '^ » corporation duly seated and existing under the laws of Ohio, and engaged ^sl Sr:: :l --"^-t-ng goW and silver wafch T^ f ■. *™^' "nentioned in the complaint it Th f H T^"'"^ "" ^^**"'''"^ *"«=t«'3^ "t Newport, K,^ Lme'tZT -' "* '''"^.T ?''"' *^-* '* maintained the rnTnff!T ^^P!"**: ""«* h'd the capacity to manufacture •nd offer for sale m the open market 25,000 watch cases mr month. In the third paragraph it is Iverred " hat X ™.t ^Tt f i^'"'^' P'«'"*"' "^^ « r««^'y market throS' out the United States and Canada for all the ffoods it mfw manufact.jre and in fact sold all of said^cST^o a Slt m2i^' T:1 ""^ r""^ ^'^ •*^" » substantial' I'egiS mate profit of at least $75,000 per annum." Next foUow averments as to the incorporation and partnershTp of the several defendants, who, it is stated are respect" 1 a in the business of manufacturing or selling walches^Tafch cases, or watch movements. In the eighteenth parai-a?ht '^r:^T T -»'-"* November'lC, 1887,'t^Snd! ants, and others to plamtiff unknown, at and ik the oitv nf New York, mutually agreed together Uftwmilft* DUEBER WATCH CASE MFG. CO. t;. HOWARD WATCH CO. 425 Opinion of tlie Court all the others that « they would not thereafter seU any goods manufactured by them to any person, firm, associating or corporation whatsoever who thereafter should buy or =el any goods manufactured by this plaintiff." It is further averred that thereafter defendants caused notice of hb agreement or compact to be given to the many dealers in S r«rf '^ T^' '"^ ""'"'^ -"-'^-^nt^ throughout ti^ TJmted States and Canada ; and gave said notices to " many of he then and theretofore purchasers and dealers in plaTn ml'h!" ; "'T'^^'r'' '' ''"'^'''^ "'• -hereupon. a lar^ number of such purchasers and dealer, withdrew their DaT ronage, and ceased there„;^n entirely to purchase and deal Sieges t^afte''"";'xr'^ ''^'- ^'^^ ^^-P^--^* ^''^-^ alleges tnat arter said Novembpr Ifi lea? j„<„ j ^ f«=!er1 ^f^ c^ii *k • ^^■'"veniDer lb, Ib87, defendants re- , . ..I, '^" ^^^''' S°°*^=«'^.- that said threats were effectual, would h^rK ^',* ""'"•'^'- "* P«^"« -ho otherwise would have purchased large quantities of the goods of the plaintiff from purchasing the same, and did effect in fact against the plaintiff a complete boycott and ostraciU frl he trade, and prevented the lawful and ordinary comitt tion of business which plaintiff had a right to enjoy The concluding paragraph of the complaint alleges that after the passage by congress of the act of July 2, 1890, " all the former dealers ,n watch cases were, as plaintiff is informed and Mieve^ r^ady and willing to buy large quantities of said plaintiff s goods, and this plaintiff would have regained all prlverbvT;' ;'' r'^^.f r* -^^ei^of it had bJn de de^ndal V .. '"^'""' °* defendants; but that said defendants, after the passage of the said act of oong the act a misdemeanor, and Uze f ^mterSpi-'^ft'h'LrXr"^^ »' "««""•* t« -o°oPo- nopolize any part of the trade or ^m^^"^ P*""*"" <" Persons to mo- or with foreign nations sha"be^i?t^rn'^f«T°^ *■>« ^^^^r"' «to?^ low provisions as to punishmentTherefor X ""«'*«'"^»n<"-." [Then fol- other'^ersonT/eo^oUion Tl^. '"%*^ '° •"« business by any clared unlawful in tZ act may Z°t1/'/°^.*'""S forbidden or d/ the United States in tlie disSct In th^wS'' L° ""y '''••<™it court df found, without respect to tte amount 1^ .L?* defendant resides or te three fold the damages by hlm^Zajn^^nH^ir"'^' *"«* «"«" recover Ing a reasonable attorney's f^"^ ""^ ""^ •'"^ts of suit, iuclnd- expressly given by the seventh section n ^ u u ! festlyunfair to permit a plaintir/o bring a dTfindtrT this court on a comnlninf ^^ i • ^ aetendant into thereafter, whrnTcf dlndlT hfs Ed^ "j^ ^*''*"^ »»<* jurisdiction under the stat,,t« !f^ f *" 'V^estion its the case, to transfo m tt^l"; J ^1"''??''' ^~"^ '° law, and insist that detTnt hL^ We^nroJle^r t^ the jurisdiction. Moreover althono-h tl,. i ?^,^^"^^ ^^ « concluding p.„g„pH, j, „.^ ^ ^,^^ ben LSIS 428 66 FEDERAL BEPOKTER, 64). Opinion of the Court, in consequence of the « renewed threats " of defendants (that ^ hose renewed after the passage of the acIrwhS ^^^. pel ed dealers to refuse to purchase plaintiri wateh c^^ or to deal ,n any wise therein. Mor^ver, jud^enTis d? Enff "^^ ^^ "^"^ •^^ ^^^ ^^^^" The counsel for plaintiff m error asserts in his filed brief that "the action b founded solely upon the act of congress passed July 2 TJw the [seventh] section whereof expressly pLfdes tS the c^^' cmt court of the United States shall haJe ex^siv^ „riX eZr ^"^"•'^r'; ^^^'^ '•'* ^ -P''™*^ assi^rente of Zied intr' "Vr'^t '' "^ «'"*«°*'«<^ ^l^^^the Tact! W^ TK i *^"P>"»t n>«ke out a case under the act of 1890. Therefore, unless the complaint sets forth a cause of ?at:r " '"' "' •*' ''''' ^'^^ •*— shouid^r^jL The only acts of defendants as to which plaintiff can in ru„twft.irr.' *'"* ^^ "" "forbidden^or LlZ to be unlawful by this act" are those done after its passa^^ They are set forth in the twenty-seyenth paragraph, rda^ ' as follows: (1) Defend- [648] ants " ratified,^onfirmed r^ newed and continued" an agreement betwin themSyl t«t fi'T"-'* r^/P^" »» ^ t^ . , mierstate trade or com- of trade from one state to another that commerce in that^n„ -^y^^o.L%^ ^ails The complaint alleges that the acts of defendants sub ^uent to j„ly 2 1890, have forced and comS^rLt ;Stiff ^soTd^^gL^^^^^^^ aXS" *^''*'^T'^^ ^^' ^'«^' throuffhnnf fl,l rf TI o. ^ *^ ^^''^ ""'»l>e'" <>* dealers throughout the United States and Canada, plaintiff mam, o£''Tr) ^Tit '"* ''^ ^^'^*"«'^' -d^trwarTsl. Ohio. And plaintiff's counsel contends that this sufficiently 430 I I t 66 F£D£BAL BEPORTER, ©43. Opinion of tile Court. . charges such a restraint of interstate and international trade as IS obnoxious to the first section of the statute. The phrase used m the act of 1890, vys. " restraint of trade," is no new one. It had theretofore been used by courts applying the doc- trines of the common law in determining the validity of con- tracts. 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 different meaning from that which had 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 agamst imlawf ul restraints and monopolies " ; and though the title to an act cannot control ite words, it may furnish some aid in showing what was in the mind of the l^slator. U. S. y. Palmer, 3 Wheat. 610. 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 re Greene, 62 Fed. 104 ; U. S. V. Trans-Missouri Freight Ass\ 58 Fed. 58, 7 C. C. A. I5] It may be assumed that the total amount of any given com- modity which will be purchased by a community is limited and when several sellers of such commodity enter into a com- bination m the form of a partnership, and by ingenious ad- vertismg, or by the devices of business competition, or by the offer of favorable terms to buyers, enlarge their own trade m such commodity, they restrain to some extent the trade of one or more of their competitors therein. But no one, not even the plaintiff in error, contends that the statute forbids any such acts, although, if the words be taken with absolute literalness, the phrase " restraint of trade " is broad enough to cover them. A most elaborate discussion of the meaning of this phrase " restraint of trade," with a careful review of all the leadmg authorities bearing upon the ques- tion, IS found in the opinion of the United States circuit court of appeals for the Eighth circuit in U. S, v. Trans-MissouH Freight Ass\ 58 Fed. 58, 7 C. C. A. 15. The conclusion reached by that court— and on that branch of the case there was no dissent— is that where it is a question as to private parties engaged in private pursuits, and not dealing in staple commodities of prime necessity, " it is not the existence of / i '•I I, DUEBEE WATCH CASE MVr f^r, ., MFG. CO. V. HOWARD WATCH CO. 431 Opinion of the Court the restriction of competition hnf .i, restriction, that is the Sof I'^l^uroT"^''""^ °' '''''' claimed to be in restraint of tridi » V J'T'"""*' *'^«* '»'« fnade for a lawful purpose S ^^ '^^^ "contracts injurious to the publfc wdS'^a^? J^ ""' ""'*''««««% 'er restraint upon the trade than tJ . ""^^'^'^ "» ^'^^- partj required, had been Si w". '"'*.'""'* "^ *^»« ^^^o^ed ing their tendency to^omee^^V?'*'!"'*'' ""^-''^stand- A like statement of tleTw TT '^ '^''^ competition." that " an agreement Weh~! "^?'"' ""'"'■' holds straint of trade is go^rLSd I "^^''^ '" ^''''^^ ^- and there be a consiSation to 1 !^ "*'* unreasonable, that it may not be unrea o„ab,e ' T'';*'- ^ ®**1 '^ "^d-r not be larger than is ^ifd V, t^^^ "'^"^ '^'^ ciiiains only to inquire whether th^ ^ ^ nation set out in the comDlairt ^"*'"*'=* •»• «»•««- or international trade 31^/" T^' "^ ^t^r^^te stramt of trade " is n«.H ;! !t ^^'"^ *e phrase "re- neged unlawful aclr'f deftdan?' T' ""'^^ ^' ^- subsequent to the passage of thf,. "^'^"^ "P«» the^ firmation of an a^eemfnt am^ 1 '' * '""^^«J "nd con- an arbitrary fixedStothS-^"'"^'"^^ *« """"ntain factui^d by them," ^d a car^r^ ' ^Z "" *« ^^^ '«'«nu- by thus fixing akd maintlS^ **"*•'* ^''^ ^g-ee^ent qu^ion are not articleToftrSeL^'r- ^'"^ ^' ^ coal, and other staple commEL 'T^^*^' *' ^*"* ^^' «°"r, cays cited upon the arg^ent no^ "^ *** ^ """y «' the defendants engaged in^^^^^^.^T *' T"^''^*""'^ as were the railroads or the Is L? ^"*'' P"''"*' *'»««c^ to in other cases. Each one^f f *!,"? '=*""P^'»ic« inferred doubted right to determinrfo/ht u?^'""'' """^ «" ""- he would sell the goods he mad. ?u *' ^""^ «* ^hich ^se that right by deciding to til ll ,?.'''""^^ ^"^ »«* which a dozen or so of hi! comr!.?^ V^^ ^'"^ P^ce at they make. Collectively LSJw "*" *^^ ^' ^hich. one of their competitor^ to rtlfatt "^' "" *'"*-^ *" ^^^ urt. ously affected by any such agreement between the combining manufacturers. If the price so fixed is the normal and usual one theretofore prevailing, certainly the public cannot com- plain; still less if the price be reduced. If a combination of the capital and business abilities and factory appliances of many different manufacturing establishments enables them to produce an equally good output at a reduced cost, flo that they can sell such output cheaper than any single manufacturer could, surely the public does not suffer. If, on the contrary, the combining defendants fix the price too high, they restrain their own trade only; the public will buy the goods it wants, not from them, but from their competi- tors. There are no averments in the complaint to show that the defendants are all, or even substantially all, of the manu- facturers of watch cases in the United States, or even in any single one of the different states wherein their manufactories are located. For aught that appears, they represent but a small part of the watch-case industry, and there is nothing to prevent the number of their competitors from increasing to whatever extent the public demand for such goods may require. This is no such case as that presented in Amot v. Coal €a,j 68 N. Y. 558, where, as was said, " the region of the production of [anthracite coal] is known to be limited.'* There is nothing in the complaint nor in common knowledge to show that the production of watch cases may not be prac- tically unlimited. An agreement, therefore, between some of the makers of watch cases to sell their commodities at a uniform price, which they fix upon with regard only to their private emolu- [645] ment and profit, is not an agree- ment in general restraint of trade, or unreasonably injurious to the public welfare, within the authorities. The other contract or combination which plaintiff con- tends to be unlawful is the agreement of defendants not to sell goods of their manufacture to any one who thereafter should buy or sell goods manufactured by the plaintiff. To the extent that such refusal to deal with those persons who dealt with plaintiff induced such persons to cease dealing with the plaintiff, and to buy watch cases from one or other of the defendants, the agreement did not operate in general restraint of trade, the total amount of purchases and sales DtJEBEB WATCH CASF titi.^ ^ ' ''"'■ "°- '■ ««^ABB WAXCH CO. 433 . . <'»""»" of the Court, remaining constant, .«« far as th. .. . • no doubt, operate in partial «straint 7 "!J' "^'''''- ^' ^^^^ ^ome part of plaintiff's trade ,„?u '''''' "'^- *« ^^train factn^d. But it does ml ftoZtt T'^ ^*^^ '* '»«»- reasonable, nor heavier than tlVelf !"'^ '^''^''''' '^"^ ""- J-equired. An individuairanl"/ ^'^ '^^ ^''^'''''^ Pa^tv buy from or sell to whom he nl!"" "" ''^^''' «««>' surely to buy from or to -sell tHny ol"S«"f "^ "'"^"-^ -*"- promote his business interesHo f/ *" ''" ^'^''''^^ '* ^i" «nt.rely a matter of his pr le . * '" '"•^«- That is ernmental paternalism haf not 1?™' ''''^ '^'""^ gov- except when the propertv h^n ^** '°"^'»* ^o interfere -hich the public has':;*^^.::" r ; '*'r^ '» « «- ^- •n the use has as yet been fou 'd . ' ""^ ?"'''•« inte^^t 2,1''" I' P"- -eesrfty X: Tf.^'^'y '« ^^aple com- Sndd V. New York, 143 U S 5i7 ,o i'**"!^' ^* ^- »• "S; business device, probably as old 'h ''^ ^'^ '''• ^' '« * to increase the number of on2s c.L'"'^ '*^'^' to seek of their purchases, by iv^^^^^ T T^^ ^^^ the extent f-come exclusive c;st4.S'*"clrS,t'"^^^^^ those who lawful or unfair in the stnt«.„ f! "^ ^^^""^ ''* nothing un- of any kind of merdand e " S . *: "f '^^'^'^ ^y the m^aker etition 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 a reasonable price, at least." U, S. v. Nehan, 52 Fed. 646. It is difficult to see wherein the agreement complained of is injurious to the public. Certainly it is not one in general restraint of trade. It seems to be a reasonable business device to increase the trade of one set of comi>etitors at the ex- pense, no doubt, of their business rivals, who are equally free to avail of similar devices to secure their own trade. As such it is not obnoxious to the statute. The agreements or contracts complained of being not unlawful, the giving notice to the world of their existence is no oifense. The judgment sustaining the demurrer should be affirmed. Shipmax, Circuit Judge (concurring). I concur with Judge Laoombe in the conclusion that the circuit court proi>erly sustained the demurrer of the E. How- ard Watch & Clock Company in the above-entitled cause. I am not now prepared to adopt, as a reason for that conclu- sion, what I understand to be Judge Lacombe's opinion, that the agreement and conduct of the combined defendants, whk'h are set forth in the complaint, do not constitute a vio- lation of the first or second sections of the act of July 2, 1890. My reason for regarding the complaint as demurrable is the more tecjhnical one that the allegations in regard to the acts which the defendants committed, or in regard to the facts which are charged to have existed, do not show that the defendants restrained any interstate commerct*, or monop- olized any part of such trade or commerce. What the statute struck at was " combinations, contracts, and conspiracies to monopolize trade and commerce among the several states or with foreign nations" (U, S, v. E, €, Knight Co. [Jan. 21. '] DUEBER WATCH CASE MVr nr. ., CASE MFG. CO. V. HOWARD WATCH CO. 435 Sliipmaii, J., concurrmg an injury of some ^tttt^'Sif^'"'?''''' ''^'''^ '" It should therefore appear Itft " ' d Tr'"'" "^"""^ -ce, that the acts of the Snts o" h •' ""•' "* '"'^" "'""opoJi^e fnterstHte co„„„erS t , hed i 7 """"P'^ ^ mo,.opo]y. to the plaintiff's inTurv // //' ' '""*'""' ""• 7 H. ,, m. .'An iction will Zt fof tt " ' " ""'""'"''^ «fy imaginable if nothing iJ 1 "'"^ ^'ea'^'* conspir- I-ty be damaged, rSo :.:?,;: 'T^'"^: '"■*' ^^'^^ lows that the damairr ,„ tu '"'V*^- ^ '<"» wiience it fol- •*g=..' «* fied of this agree„.en fh, „n «"*^*°'»"--. were noti- l«r^e number ff the then and T" rf'"' "^ ^"* '^tice a plaintiff's watch cai w hd'l tT "' '''"''^"'''' «* ""'^ thereuj,o„ entirely toZraflV'V''''^""^'' and ceased tiff « goods; that- all the tt J.l' ,"i "'■^' ""'^* '" ?»«">- and performed for th pur;^^''^'"';;^''"*^ '^^'^ ^«- ■n the supply of ..vatches to STp.^^M.^ "'"'f'''"^ * "«">»P«ly of the law, and in violation ofiir.' "'""■>' *" "'« P^'iev Vork and of the uS\sta ^1 .T H?' ""t"^^ "' "''''^ -^'•"-ving eu.tomer is alleged: S: 'IC^^^ith i^ 436 i»^ . ^ ^ FEDERAL REPORTER, 647. Shliiman, J., coucnirriug. Jh^wm T""""'"'"' ■' ''"*^"- '"""'P^ ^^y i"'^'-ri„g ,l.at some of ind: nir,;;5 rrrnr*^ ^", "-"'^r ^^'♦^ ">«" ^^^'" *-« ; . f>o»gnt the coiiiplainant-s ffood^ infpr^tilfr^ vember 6 Tss- "T 'i' P"?"""''''" "* '^' ««"^P»'^t of lo- «eie done foi ti.e puri,ose of establishing a luonouolv in fl... .supply of watches. i„ violation of the ^tntnt I^^^ V ' v and of the United States is nL "'^f'"*''^''* "* ^ew \ork ^strained, or tha UratteLt « ? n ^^''*'°" "'"' ^'"^ ""*'' state trade or colete ' ^* '*"""-' "-"P^^-^l- inter- IsS ' "".If theT'* ***"* "**f "^^ P-^S" °f "« «ct of July 2, tiff's' w»f h "^f purchasers and dealers in said plain nl!in Ji? '^"^ ""^ ''^''^^ ''^«'«'-« "' -«'cl' cases we^e as plaintiff IS informed and verily believes rpa^„ . T » buy large quantities of said pl^l^X^^^^^ Moiild have a once regained all the businels and he Zfit! Kendal' btftlS" '^7^'^ '"^ '"'^^ «^°--'^ «* 'h-t sr^rf™ * % ^"^ defendants, after the passage of the .aid act of congress, ratified,confirmed, renewedfand c^tim ed S;^^,?^ 5' """T' ""** ^'**' '^' ^"-"^ "'tention as here- inbefore alleged, served notices of their said ratification cZ firniation renewal, and continuance of the sa ra—ienls . and combinations upon all said dealers in plaintiff '^1 oises whereby said dealers have continued to this day W by said renewal threats of defendants, and con penSherrv and not otherwise, to infuse to purcha^ plaiSst t S' or to deal in any wise therein." The allegation is that S former purchasers and dealers, who wer« intimidated bv the were foi by the r^^Z ^ ^"2:^;^:^^ plaintiffs watch cases. The names of the states twhl,! Oiese intimidated persons resided are not given No „ew terstate commerce are alleged. Admitting that the com plaint sufficiently avers renewed acts of the defendants there .s the ^me absence of allegation that any customer old oj new, outs.de of the state of Ohio, refused to purchase or h^ JJUEBEB WATCH CASP i^r^r. ^- ^O^ABD WATCH CO. 437 JJlterstat Wallace, j., aisseut. ^a% of cou7S,'"„'orba'I^^ interfered with. The complaint ™nd that the statut^iEd '' '''"»^'^ '" "- pSSs a eon-sequent injury, wCh 'r fe ZTo""'''' ~ ^-^ l>zed was domestic or interstate hM commerce monopo- cautious in regard to aveS^ tL/' k ' '^'"' *« ^^^^ b^n had affected interstate com^efce * ^ ''''''P'^ "^^-opoly upon a statute, especiallv ..rl •' ^^""^ ^ P'aintiff declares Pos ng, as this' one S f tE timTif ''^ ''' eharact:: 1^ punishment for offenses a^- ?"*""*='"'»' d^'nagesara PJaint should contain eSicT'"'* ''' P^«^'«'o«% htZ controverted, bring hi;?auSoTr^r:;.-h-h would, if^t of the statute. The pleader i„ ih^ '*'"" ^^^ Provisions aver that trade bet witw" ""* ^"^ '""^'^ *« thL has been restrained by acUo„ f/tt 7 ^"^ '"'"^gn co.mtri^ uieiit of the circuit cLrt ^ustJnt' ^t'^^'^'-^ and the juT- m.V opinion, be affirmed '"^ '^' ''^-n^rrer should fn Wallace, Circuit Judce I ■ "^ " must bUeTmi ^tj^^T"^^ «' ^e court that this .• ^hat the complaint does It 'setir' "[*"" '"^^ -nclS Br efly ,t^t^^^ ^^^ avermentsTf 5 '"''*' * -^"^ «f action to the time of the enacS ^f t* T^^^^' ^'^ that pn "^ en^ged in manufacturil «„/ *t '*«*"*« the plaintiff'^^L ttir.f^^'^'^^^ h^vi^g^a tT4T'r ^ ^'^^ ^'^^^ we United States, and sellinn. u , therefor throuehoiit dealers in other states; tt "the 1?*^^ *° ^ great num£ of ers of watches, had B^Z\n,J'^^' ^^"^ manufactnr arbitrary fi,ed price "f^anZ^ '^'T^'''' *« maintai^ an order to compel plaintiff 0/0:^' ^* "'^-fte^- in prevent ,t from selling its In". , "" '" ^''''t compact and ants combined in an ag^^Sf/t ^ '' "^^ «»' '^^^ deC by any of them to anyTaTe^ wT ^ """ ""^ ^«tches mTde he plaintiff, and notified thfdrV *""^*^ ^^''^^fter buTof ''' ^""ed States of the'a^eet ^7 - r-f es througCt ' . ^^ thereafter the de- r 438 66 FEDERAL REPORTEB, 648. WalJiKv. J., iliKHoiit fendants did n-fuse to .sell such dealers as had bought of plaintiff, and thereby they prevented a great number of dealers from buying of plaintiff, and effected a complete boy- cott of Its trade; and that, after the statute was passed, the Mme wmbination and acts were renewed and continued bv the defendants, with the malicious purpose, and with the re- suh, of suppressing plaintiff's trade. The complaint does not e.xplic.tly allege that this combination was entered into or these acts were done by the defendants for the purpose of preventing the plaintiff from selling to customers in other states; but from the facts alleged the conclusion is irresisti- Die that this purpose was comprehended in the [6491 con- spiracy of the defendants, and the law presumes that they contemplated the ordinary and natural consequences of their ■CT.S. JIM- Statute ^t d sylvanm, 114 U S. 196-203, 5 Sup Ct 896 i i JS ^ ^^'"'" son, 128 U. S. 1-20, 9 Sun Ct 6 TK V ^^ '^^ ""■ ^^^''- d.affirmthepropo;itiot^.?i,^t^^^ Case decides is that a combination to control the t / ture of a product within a single «tate kn^f • '""'**'" interstate commerce, notwithstaSingThrfS th J T"' "' merce may be indirectly affected bv it Ti? ""'' "'"'"■ the fact that an article is m»nnf . h ^^ "''''^ '"'^ *•»«* state does not of YtSlf mT^ . "'^'^ ^"^ ''''^^^ *« «"»ther merce, and tJe Lt^S^of X> %" '"■"'^'" "* '"*«^t«t« «>«»- the ti;e when tL i tSfo™ f ""'' ^"^ ""^^ ^^'^^'^^ of the state and belont Z '^ * ^""^"^ ^™'" *»»« ^'ntrol and belongs to commerce. But the court also ,^ f i 440 "^^ m FEDEBAL BEPOBTEB, 650. Wallace, J., dissent bj^use they fonn part of intiTte Sde t' ^^^L" adapted to impinge upon the " contracts to buv seU „r^ ::rct?arei™^^^^^ .^^ or . eLr -he:t«thi^Lr- ^^^:x^z goods or othenvise to drive the corporation luZ bu2t ■ £. many sTt^s !f J ^.°''''"^; '^^'^'"^ «» ^''^i'" business in many states, of the untramme ed exercise of thpir ri„i.* whi'h'a'rnat'^r'^- "^^ "^^^ '^^^n l^ZZ't £ decC o tet'" T^ "" ^ •'"^^^ ««■ ^««'tion ha^ "Bcii ueciarea to be in restraint of trade althniiy law to labor for any particular price. He may say that he will not make coarse ix)ots for less than one dollar per pair, but he has no right to say that another mechanic sliall not make them for less. The cloth merchant may say that he will not ?ell his goods for less than so much per yard, but has no right to say that another merchant shall not sell for a less pric6. If one individual does not iwssess such a right over the conduct of another, no number of individuals can iiossess such a right. All combinations, therefore, to effect such an object are in- jurious not only to the individual particularlv oppressed, Init to the public at large. ♦ * ♦ The interference of the defendants was jurious not only to the individual particularly oppressed, but to the public inconvenience and embarrassment." This language exactly fits the present case. For these reasons I think the complaint states a good cause of action, and the judgment sustaining the demurrer should be reversed. [130] NATIONAL HARROW CO. v, QUICK ET AL.° (Circuit Court, D. Indiana. March 2.3, 1895.) [r,7 Fed., lao.] Monopolies and Combinations — Control of Patents — Public Pol- icy— Equity.— A corporation organized for the purpose of securing assignments of ail patents relating to "spring-tooth harrows," to grant licenses to the assignors to use the patents upon payment of a royalty, to fix and regulate the price at which such harrows shall be sold, and to take charge of all litigation, and prosecute all in- fringements of such patents, is an illegal combination, whose pur- « Rehearing denied April 1.% 1895; affirmed by Circuit Court of Appeals May 4, 1896 (74 Fed., 236), but the questicn of unlawful com- bination was not considered. :i ^ I 1^ I I A A A 67 FEDERAL REPORTEB, 130. Opinion of the CJonrt poses are iMintrary to public policy, and which a court of eoultv "r z:iiy ^"^"«^"^- ^--~ -"« ChrinX"^ Patents— Invention— Pbiob Abt— SmiTwn t/.^^™ » conslstlug substantially In tte adjostment of T cn^rtooTTa cunred seat on the harrow frame, ami fastened thX^o byTL^ed ^ta^rn^th"""' '^^- **" '"""' '" "«'«""'<* to Prior deoTstons snsteining the same, although the court was of oolnlon that 7n ^L^ bv wl "r*^ "'"""^ '"'» that It is therefore n^ NrS& * *° accordance with the Miller patent. F^C o"^ I ^^.^l *i' ^'*^°^'^ H""'>^ Co'^Ponv against Frank Quick and E. Lindahl for infringement of 'a Jatent relating to spnng-tooth harrowa If. H. Stuart and Howard <& Boos, for complainant V. H. Lockwood, for defendants. Baker, District Judge. This is a bill in equity to recover damages, and to re- strain Uie alleged infringement of letters pafSt No SotoS ^ed Apnl 2, 1878, to Dewitt C. Reed, for alleged n^w and useful improvements in harrows, which compfainant ^^w holds by divers mesne assignments. M^'k'^f rr' ^*f P^<1 '"»'l ^i«d on at the hearing are: ill ^\f^ ^-nplainant is a combination or trust attempt- ing to hold and use its naked legal title as assignee for pur- poses contrary to public [131] policy, and that a court of ^ty ought not to aid its unlawful purpo^s by entertain ZiS hvT T\ ^V ""* ^"^ «"«««<^ improvements tt!TJ J t^P"**"* '^^ "*** ^^ol^« invention; (3) that the defendants do not infringe. The complainant is a corporation purporting to be or- purpose of its organization, as shown bv the proofs, is to become (he ass.gncH, of all the patents held by the different • Syllabns copyrighted, 1805. by West Publishing Co. " NATIONAL, HARROW CO. V. QUICK. Opinion of the Court. 445 corporations and business firms in the United States which are engaged in the manufacture and sale of spring-tooth harrows; to grant licenses to such corporations and firms to use the patents so assigned upon the payment by them of a royalty of one dollar for each harrow manufactured and sold; to take charge of all litigation of its licensees in rela- tion to such patents, and to prosecute all infringements of any patent so assigned ; to pay all costs and expenses of such litigation; and to fix and regulate the price at which such harrows shall te sold by its licensees. The complainant corporation is not organized for the manufacture and sale of harrows under the patents assigned to it, nor has it ever engaged in their manufacture and sale. A majoritv of all the corporations and firms engaged in the manufacture and sale of spring-tooth harrows in the United States have as- signed the patents owned by them, resijectivelV, to the com- plainant and have received from it licenses to manufacture and sell harrows under the patents severally assigned by them to It. The patent in suit is one of those so assigned to the complainant by D. C. & H. C. Reed & Co., who have received an exclusive license from the complainant to manufacture and sell harrows under that patent practicallv in all the territory covered by it. So far as I can perceiVe, the com- plainant IS organized to receive assignments of the leo^l title of harrow patents, to grant back licenses to their As- signors to use and enjoy the same, to collect from each mem- ber of the combination or trust one dollar as a license fee for each harrow manufactured and sold, to regulate and control the price at which harrows may be sold by the mem- bers of the combination, and to prosecute and defend all suits involving the alleged infringement of such assigned patents. ^ It seems to me that such a combination is illegal, and that Its purposes are violative of sound public policy. The com mon law forbids the organization of such combinations, composed of numerous corporations and firms. They are dangerous to the peace and good order of society, and the v arrogate to themselves the exercise of powers destructive of the right of free competition in the markets of the coun- try, and, by their aggregate power and influence, imperil f I n I 44fi . «■ FEDERAL REPOKTEB, 131. Oiiiuinn of the Court. the free ami pure a cmen.l t J '''':^''™ ^- .«» the other woMhl Ik. to .rive «i tl 11 ," ^"''' '*' '"''' Protection «#v lu ^i\e aid to tlie unlawful mir I1Q91 j. ,i combination. I„ suit, n l-.w it ! Vin' ' ''*'*^ "^ "»« «.«„] • • '''^ " IS doubtless true n« n «..., eral pwjjosition. (j,at a wi„n.T,l„er will n-,t . . ? dispute the iesr-il titio -.* '""«"« » "'1 not be permitted to quiVed; or thaV the own ' Jn^s t ."" ""'"" '""^ "" - i»-est.n,d:bt:ret?tKd:::.:i;;r::.^^^ conscience ^ ill move the court to siPf T^k« i- ^ ** o""^ re«,nted bv the complain:: ^Je J ^^f^"" "^■ except that the law will not lend its S T "" '^"'^' nient of its nurnosp* T^ V^ *** ""' accomplish- oi us pu^po^«s. The conunon law does not nrni,;K;* .. ;...!.. », z ;t :rx,,''";i ""'"''• ">■ ■"""■« not Ie„,l X • • *" '■^'*'''« " •" s"ch a way as will powers, ought to discountenance and repress then, ve.ftio™'"rfl..t"r ^'"'^"* '" '•"^^"""' - «"^'"^ ^he "i„. springteethoro i.il:^*'^"l:^r" "" *'"^'' '"•- in a novel means for adiitin^W^r^rhT/stS to Us ,-,on.t a gn..ter or less depth of cut, which f'effeS 'I ■• > r 447 --10.^ H.BROW CO. ... ,,,,,. bvmafc;; .K °P'n'™ Of the Court Instead of employing a clt ^^'' "'""> '^« curved seat upon the tonth\„ . ''""tmuous din that ***• its ends for the ^^ ^'^ ^•'"Ply a bar o Vat .rf '"^''"^ snugly by nutl ^''''''^" ^^^ '">Jte, which l,r'"^°'''"^«^ »* ^est uDon « « 1 -^ invention beino- f^o^ ^"'-^^^es, the *vnat 1 claim is • (i\ tu . ^ ^™e m my invo,. frame and harrow t»oth ^ ^^^ combination, with a V longitudinally adb.st w ^""''"^ ^h^reon, [13^,, '^ '''"■'•«^ cribed, wherebv ?f ^''' "^ * ^^^^ninff cl/ "f^ "^''^ t« be of a curved tnnfi ? ^'^^'"^ provided wUh ^ ^ ''^'^' -d :rc:: "Tr""\ ^-"«' 'hL'Xenr "^" '^elf was tn a r \ ^^ Problem which h» ^'"*"*« '^as old *" ^'^"^' '^ ^d tooth tit harroX*' ''' '^■^ narrow beam so that UJL^-':- \ 448 87 FEDERAL REPORTER, 133. Opinion of the Court. it could be readily moved in the direction of its length, and thus elevate or depress the point of the tooth. The inven- tion consists in resting the harrow tooth upon a curved seat, and fastening it in place with an adjustable curved or con- cave clip having biting edges. In view of the prior state of the art, disclosed in the record, and which may be found fully set out in Reed v. HmttK, 40 Fed. 882, 1 am of the opin- ion that the adjustment of a curved tooth to a curved seat on the harrow frame, and fastened thereto by a curved clip hav- ing biting edges, does not amount to invention. It seems to me that a skillful mechanic, familiar with the construction of harrows, could have devised the method of adjusting and fastening the tooth covered by the patent by the simple exercise of mechanical skill. While such is my opinion, I feel bound to hold this patent to be valid out of deference to many formef adjudications in which it has been sustained. It ought not, however, to receive a construction broader than the very terms of the specification and claims require. As said in Reed v. Smithy supra : " We find it impossible to escape the conclusion that the clip, which lies at the foundation of tlie platntirg patent, is limited to a curved clip with biting edges, designed to hold the tooth rigidly to Its seat" The patent then embraces a curved clip, having biting iKlges, in connection with a curved tooth and a curved seat for the same. The specification declares that " the principal feature of the invention is that the tooth shall rest upon a curved seat." The defendants are alleged to have infringed by the sale of harrows manufactured under letters patent No. 444248, dated January 6, 1891, issued to Huson V. Miller for an alleged improvement in spring-toothed harrows. In this patent the harrow beam has a channel crossing its under- face, in which channel a fiat metal plate is fastened by a pin, and the tooth is placed in the channel, and rests against the metal plate at its outer edges, and is fastened by an ordinary flat clip, which comes in contact with the tooth at a point situated centrally in relation to the edges of the plate, and upon its convex side. When the clip is drawn down upon the convex side of the tooth, it presses the concave side of the UNITED STATES V, CASSIDY. 449 Syllabus. is to ^\igmfz,^t^::^T\ 1 *'^^ p^^^^"'-^ »f *»>« clip by a curved SptibiZfr'' T." " ""^'^ '^ Pl*"- dentiv considered rfiffl^ u^"'' ^^^ P'*""* "«<* «^- ^ubstantial that the m1 it l^ 'T'""" *'^ '^' ^'^<-^ ^ infringement of ^^L^X^S^Zr ''''''''' ^ ^ gard the MiSfr p^alt tTS™"*'' P^'^"*' ^ ^' "»* ^■ and, as that deZ tl^Tlf^/^^f ^J^^^^^^^ device; defendants, thev cannot !e Ldd ^iW r^""' '"''' ^^ *^ The bill is therefore dlSedtr wanJ orec't^r"*" plainant's costs. "* equity, at com- I698J UNITED STATES .. CASSIDY ET AL (I>.«tr.ct court. N. D. Ca,«orn,a. S,m I an. 2, :895., ^ [67 Fed., 698.] against the United Sta^ (Rel^s*°S';«^«' *<> «>mmit offenses '"'Ich are necessary to confttate tho^^ '""*''°' *•»■«« «l«n'ent8. Offense against the United Sto?« A1 ^^**''= <2) to conunlt any Of one or more of such wrtlel^o'lnl L "^*" ""*■ »' *^ «'«°<«t the conspiracy.^ ^°'°^ ""^ «<=* ^ effect the object of ^or'^i^e^^^s ^Z^n^ S'T '" " ^■"''inatlon of two " nniawfnl purpose, ortre^i^ not 1^7"^" " «'"""«' »' Inai or unlawful means. Pe««^, n I 1*^" ""»»°al. by crlm- 203. cited. ^* "^^ ''•*•• 18 Sup. Ct 542, 148 u!s. Same— Manneb of CoNspn.i»n _rrh-. -„ tbe cha^e; but It Is ^Z^^ ZIT """*" " *''« '^"'^ of meet together, and enter IntTl^ct^V "?'" "^'^"^ «"<»"'» « Syllabus and state^e«^^^j^,i3~^^rT-— __ 40l/ 67 FEDERAL BEPORTEB, 698. Syllabus. D^^^r^^thl""* *"" """"''"' '^'"'"'* '«" t» »»' ""-J fe details of the Plan or the means by which the unlawful combination was to be ner or through any contrivance, positively or tacitly come to « ^Tvl^rllT' '" '"=~-^"^" « -— a»d -lawruraes^Tga' ^ ~^;, K^ 1 """^ P*"^""- "•*'««* '>y toe «>«"non Purpose oJ th?Z" ,T V '""^ ''''* *"«**''«'■ '» «°y ''"y "> furthera^^ of the unlawful scheme, every one of said persons becomes a mem- ^s f ^ho^rr"^' '"•"'"«'' ^"^ I»« ""^""^ ^<^' to take the»Tn C"the"rerclU"lU'rs^'" *° '^ "-"'«^ " "^ ^-0*^ <«Btance SUMt-Any one who. after a conspiracy Is formed, and who knows of ttatlw^ .iT.**:"'?' "^""^ •" -uch a party thertto T^m ^^^^^T^^^^^"^ "' ^"^ P*"^-Where several persons are proved to have combined together for the same Illegal purpo^ a,^ act done by one of them, ,n pursuance of the orlglnaf conceZTplZ TtZl« fr°!! "i *"* ~"""**° ""l^*- '«• '" the contemplation such act win be evidence against any of the others who were engaged In the conspiracy. v "cic engagea ^♦k'"'?^"*'™''* ""^ PABTiE8.-Any declaration made by one of e^rd^^'^at'^r^r rt"*^ "' "■" "'^' -*«^''- ''-" - ' Tho ,^.^H IT"' ""* ''«*'°^* "" ♦'"e other conspirators. »!h J , «" """"'""tlon is proved, are as much responsible f7; wrnsn^«t^r ^ Ti "^'^ ™" "P'""^ *° *"« declaration of a co-consplrator, although he may not himself be under prosecution ^"^J!!™""^ ^'' ^"^"^ OFKE«sE.-The law Je^IX^he act ^ unlawful combination and confederacy as dangeroTt^bf La^ ^ ^"Z' T ""^"•'^ **"* «"* combination and If^^c^ to commit Crime requires an additional restraint to those provIdS for the commission of the crime Itself. It therefore ma^^ cri^^^ S , ?H *^~ '* """'**' *» "■* «•"»« which may be tto object of the conspiracy. ' Same-Means Cortemh.atei>-Ali4sgation8 and PsooFs.-It is not In n:° indiZi^ '"^r *° ""'•' *"' "" *- -"ni'^f j:,- in the Indictment were In fact agreed upon to carry out the con LbeT^ thfindipL^n. .*"* """ °' -""^^ »' the means de- scrlboain the Indictment were to be used to execute that Duroose 8AMi^^0vB,r Acrs-Whlle at common law it was not ne^'Tr^^^^er or prove an overt act in furtherance ef a conspiracy IT undlth- s^ame relating to conspiracies to commit an 2nL\,Zn^ Z united States, the doing of some act In pursuance of The ^^J™^ UNITED STATES V. CASSIDY. 451 Syllabus. that one or more of thpip .^^^ ' "* '* '^ """fic'ent to show in furthera„"7f "the Z^r^aor ''^' ""' """* " ""^ *>- '^Z7r:Zr:7n'^rs^T^S- ' r^-A.though the law. which Obstruct and i" ta^ the i«f ' "T r""" """^'"^ " an offense to originally pas^ nrior to ?h ^^ '"^ """^ ^'^es mails, was Of the u^eth'^TtrT::^!?^" r"T" '"*° ''^ ^""^^ states of the law conforms to i^nf.r ^ '''""■'""''• ""^ *"« Phraseology 3. 1S25,, yet Ur^u^lly^rbleTr^^irsyr T'' "tsrprr^^drthi^M^T""'""""^^^^^^ o . , ™^ ''iprBSB ana by the old-fnshioned staspcnn^h SAME.-The statute applies to all persons w^o "fnT ? , fully" obstruct and rptnrrt n,J "^'^"^ "ho knowingly and wlll- carrylng the sLef thltl to thoS"',"' ^ """^ "'• *"« «^«"'- formed, however Innm^nt th" i!" """"'^ *"" the acts per- e-fect Of obstruTtirr 're XThetaTL'^wh:'" ^ '"^ acts with the Intent that such shall h^f hi'. '^''°™ ""* Sirby. 7 Wall. 485, cited *'"" "Pe^tlon. p. «. y. ^'^^'^n.U^V^CTrZT'^r '"'' -"^'"^ '- ''- the have the erect Of obstrockeTrV'^r"™ "''""^'°' "««• '^hich in such case, a^ .nto^ 'l^ r^^tr"^, "' '"^ """^^ Pntea to the authors of th» nnu , , ^ """' "'" "e 'm- of other ends ma7 have bl th!lT^ "?»»«" the attainment 7 Wall. 485, cited. ^""""^ ""^^t. P. S. v. Kiriy, 'irrViTe uTinX-^t^n:; riy'rm^r^r "^ -^ — -n ear Is a ^art^nrr^iaTir p^brrre'r %*''^ '^"■ Should p.cjTf ?heT,iirr"wU* iTberr/r *-* ■"-" SAME.-Any train which Is carrying mall „n2, Tk postal authorities. Is a mall train mth!" J ?^ *^'"^'°° "' the Same-Intent —it i. n!>* ' *''® ^^^ °' the law. Which they ha^e : teiued and^rsare^" 0?,^ '^'^ "' " *™"' chargeable with an [700] Intent to^' ww T*^""^' *'^' '■"* and natural consequence of tbeir acte and TJ" !"' '^~'"""* railways postal routes of the Vn.^^.^" ^auiZ^Z:^ "* t"« presumption may be re- ^I ed by the mamier In which he testifies, by the character o^ Z STIZwr: evMence affecting his character '^1? h„^ ^'Z^T»,L " "'« """t';^' "'»-<^«'^«on, it becomes my duty to call your attention to the character of the charges Tf .r t'"^ Pf^*-"*!**" IS being conducted. It is the duty of the court to declare the law; it is your exclusive proving and responsibility to apply the law so declared to the facS ""Si'C^T- ?"*'""•*' '^"""^ *'^«'" t« ^ established. 17«^J The indictment contains two counts, which, in een- ^1 terms diarge that the defendants consp'ired, o^mbifeS, «Bd agreed together, and with divers other persons to oh st^ct and retard the paasage of the United'^Tt::; ma ^ and the earner carrying the same, and also that they en gaged m a combination and conspiracy in restraint of haJe and commerce ,mong the several states of the United Stes ai^with foreign countries. The crime of conspiracy is b^ upon section 5440 of the Revised Statutes of the Uniti States, which provides as follows : e u niiea UNITED STATES V. CASSIDY. Charge to the Jury. 455 aTreffe5""thToE'S tSe Z "^ "''"' ?' ^^^ P-^les do any conspiracy shalf be liaWe t a .tnX^'^'"'^ *" *"« ^""^^^ *« «»«& dollars, or to imprisonment ^o^w^ ?u """"^ *'""' *«" thousand «ne and imprisoXent ^t dLretioT^ the Urt"^'"" "' *" '~''' To make this statute as clear to you as possible, I will call your attention to its three essential provisbns. The S cjement is the act of two or more persons conspiring to^^' btates, and the third is what is termed the « overt act » or the element of one or more of such parties doing any acJ to effect the object of the conspiracy."^ With re^/JZ ie asactr„; "' ^J'f ''''' ' ^''"^P'"^^ •>- been descri^ to ac^omlS a" r '""'"t P''^""^' ^^ ^*'»-^t«d motion, to accomplish a criminal or unlawful purpose, or some nur pose not in itself unlawful or criminal, by criminTor im lawful means. PetHbone v. U. S., 148 U. S 203 3 Sup a M2 The common design is the essence of the'char^^S[ while It IS necessary, in order to establish a conspirfcy to prove a combination of two or more persons, by concfrt^ action, to accomplish the criminal or unlawful puloTu IS not necessary to constitote a conspiracy that two i moi^ persons should meet together, and enter into an e^vLTTr formal agr^ment for an unlawful scheme, o^ ha hel should directly, by words or in writing, stat^ what the un lawful ^heme was to be, and the details of the plan or me^Js it IS sufficient if two or more persons, in any manner op through any contrivance, positively or tacitly come to I S: "L 1^"'"^^ ^7™P"* "^ common'and unlawfu fr^\ ^ . ^^ """"'^^^ ^^^'^ «n unlawful end is «ouffht to be effected, and two or more persons, actuated by h; Z^ under . common piit|,o«! to .ccomplisi, u,e end de.i Ji An, on. ,ho, .ft.r . eo„.pi„., ^. formed -nTthtC I i I 456 67 FEDERAL REPORTEB, 702. Charge to the Jury. of its existence, joins therein, becomes as much a party thereto, from that time, as if he had originally conspired. U. S. V. Babcock, 3 Dill. 586, Fed. Cas. No. 14487. Further- more, where several persons are proved to have combined together for the same [708] 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 con- templation 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 responsible 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- conspirator, 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 con- federacy of two or more persons, to commit crime, requires an additional restraint to those provided for the commission of the crime, and makes criminal the conspiracy, with penal- ties and punishments distinctive from those prescribed for the crime which may be the object of the conspiracy. You will readily understand why this is true. A conspiracy becomes powerful and effective in the accomplishment of its illegal purpose in proportion to the numbers, power, and strength of the combination to effect it. It is also true that, as it involves a number in a lawless enterprise, it is proportionately demor- alizing to the well-being and character of the men engaged in It, and, as a consequence, to the safety of the community to which they belong. The second essential element in the offense described by the statute is the purpose of the conspirators to commit an of- fense against the United States. The indictment charges T 4 UNITED STATES V, CASSIDY. 457 4 Charge to the Jury, that the defendants conspired with others t« commit two of- fense against the United States,— one to obstruct and retard tlie passage of the United States mail and the carrier carry- ing the same; and the 9ther, that they engaged in a combina- tion and conspiracy in restraint of trade and commerce among the several states of the United States and with for- eign countries. The first charge is based upon the provisions of section 3995 of the Eevised Statutes, which provides as follows : tbl'^DassT^p"!!? u^"" '^•^" knowingly and willfully obstruct and retard tlwj passage ot tne mail, or any carriage, horse, driver, or carrier car- rylng the same, shall, for every such offense, be punlshabl^bV i toe of not more than one hundred dollars." ^ ^y ^ "ue This section of the Revised Statutes was originally section 9 of the act of March 3, 1825 (4 Stat. 104), and, having been passed prior to the introduction into the United States of the method of transporting mail by railroads, the phraseology of the law conformed to the conditions prevailing at that time, but it is equally applicable to the modern system of convey- ance, and protects alike the transportation of the mail by the " limited express," as it does the carriage by the old-fashioned stagecoach. There are, however, certain [704] provisions of law directed specifically to the transportation of the mail by railroad trains, to which I desire to call your attention. Section 3964 of the Revised Statutes provides as follows : "The following are established post- roads: ♦ ♦ * \ii nuiroad<» or parts of railroads which are now or hereafter may be in oiiiXn " ^^ Section 3, Act March 3, 1879 (20 Stat. 358), provides that the postmaster general shall, in all cases, decide upon what trains and in what manner the mails shall be conveyed." Section 4000 of the Revised Statutes provides that : TrTof'?^:'!lr^r^ '^ "^ ^'^-^^ ^^--"' With Ve'^lIerA fn^ There is still another provision of law applicable to the transportation of mails on the Pacific railroads, which is as f oUows : comoanv ^^Lu^^^*^^T^^ ''''^ made upon the condition that said company shall ♦ ♦ ♦ transport mails ♦ ♦ ♦ upon said rail- road for the government, whenever required to do so by any depart- ment thereof, and that the govern nent shall at all times have the T I »0o «7 FEDERAL BEPOBTEB, 704 Oliarge to the Jury. ? preference in th«k ii«o **# ♦!» toir aud rea^nmTtntL^ ^Z.nZ?" *"* P-^P^^s aforesaid (at £?«»•? Pr'vate parties for1h~STnd"of"^rll *^'*«> ""« """o™" satlon for services rendered to ^« li ' service), and all eompen- Becon-ing, now, to section Sftfls «* *k„ t> • , ^ ni-ldng it an offend to obSjJct Td ^t.^:^ ^f"^"^ ^*'*'"^' mails, and you wUl ob^^e Sf ^k ^f *''*' P^'^S* «' ^^e the passage of the mails, or the onmL °'^*'^V''* ""*^ f«tard fl»t is to say, to those ;ho £ow Z r^^^ ^^t ^'"«' however innocent they may oSZi^^ wlu ht'T. ""S^' of obstructing and ,4tardi„g trSfs^f^e S th %'^'^. ttey perform the acts with The LenS t^ft, .? T^u ',f ""^ their operation Z^. ^. v. Kirby, T WaU 48^"* « jf *"" J^ •no defense under this statntP » «U • * '^°"'*^ ** "cent case, "thatThe ob2^.tJ "" T""°* ^""^^^ ^ " quitting en^ploymLt wSSf^tSe mo«re 'ZnL'' "^"'^ retard the mails, and had nothLHo do 'irth "? ''"' '^ employment TAoma^ v ff»,7 V ^ *" *''® *«™^ of Tk/ * * X ^"°^'^ ^- iiatlway Co., 62 Fed 8^2 vie? hrrm;thr^:;:^^"* '^•-^ '^'•'^^ ^^-^ ^^ M acts, which^vtr eiro7o^b:SgT„rrr- str:xtrth:;igt?^iri*^^^^^^^^^^^^ the autho.. of the unfawTuf at altho'uS Th Tt™""*^' *° " other ends may have b«.n f^!; ""'^°"^'' ''^e attainment of KMy, supra *^''' P™'"^ "*'J«<'t. j;. ^. v. wrtie'o^jetttrtS :?«:'• '* '^ '''•"^^ •" *« -'^-t™-*, commercellgtie^e3''rf' ^'!,*«. "Strain trade and This offense is le^JbTb ^tt ""/ "'*'^ '""''^ "»*>»"«• act to protect Se and cl^ """^''^ *°*'"«<^ "^ straints and monoDoIii" «n ^^'^tT'""* "°'"^^"1 "- «»), which p^es^folTsT"' """'^ '' ^'^ (^« S^t- «. s«c. cou..l„„tlo„ or'^t.Xri.-a^rd^-rX S« UNITED STATES V, CASSIDY. 459 Charge to the Jury. " Trade" ha^ been defined as "the exchange of commodi- ties for other commodities or for money; the business of buymg and selling; dealing by way of sale or exchange." The word « commerce," as used in the statute and under the tZ\t ^T"*"*'?' ^^' ^•*^«^«'-' '^ broader meaning than the word " trade." Commerce among the states con" sists 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, sa k and exchange of commodities. Gormty of Mobile y. Ktmhall, 102 U. S. 702; Gloucester Ferry Co v Pennsylvania, 114 U. S. 203, 5 Sup. Ct. 826. Pullman cars m use upon the roads are instrumentalities of commerce. l:f' ? ll ^ "^^ ^^^- ^^ P"™^^ ''•'J^^t «f th« statute was, undoubtedly, to prevent the destruction of legitimate and healthy competition in interstate commerce by Individ- uals, corporations, and trusts, grasping, engrossing, and monopohzmg the markets for commodities. VS. v. Patter- ««n, 55 Fed 605. But its provisions are broad enough to reach a combination or conspiracy that would interrupt the transportation of such commodities and persons from one rl 7 T^a\. ^- ^- ^- ^orkingmen^s Amalgamated t/OMre«Z, 54 Fed. 995, 1000. • We come now, to consider the third element involved in the crime of conspiracy, as it is declared in the statute under consideration ; that is to say, the overt act, or the element of one or more of the parties to the conspiracy doing any act to effect Its object. At common law, it was neither ne Jsary to aver nor to prove an overt act in furtherance of a conspiracy Bannon v. V. S., 16 Sud Ct 4fi7 Ti,» „ff -""^piracy. »K»„ *u 1 ^ V P' '■ ^''^ offense was comp ete when the unlawful concert and agreement was entered into and concluded, although nothing was done in pursuanc^ n .^"'^.^ ?"^ '' '""" '^'''- I* -- «"« of the few ca^ m which the law undertook to punish criminally an unext nSti «;^ ^'"- ^"^ ^^^^^- ^"*' ""d^'- th« statute of The United States now under consideration, the doin<. of some act in pursuance of a conspiracy is an ingredient of the crime 460 67 FEDERAL REPOHTER, 705. 4^ ! Glmrge to the Jury. and must be established as a necessary element of the offense, although the act need not be in itself criminal or amount to a crime. V. S, v. Thompson, 12 Sawy. 155, 31 Fed. 331. With this general statement and explanation of the statute involved in this case, I will proceed to consider the allega- tions in the indictment, which, as I said before, contains two counts. The first count charges that the defendants conspired both to obstruct and retard the passage of United States mails, and to unlawfully engage in a combination and conspiracy m restraint of trade and commerce, while the second count charges a conspiracy in re- [706] straint of trade and com- merce alone. Otherwise, both counts are, in substance and form, identical. In general terms, the two counts charge: (1) Formation of the conspiracy; (2) legal corporate exist- ence of the Southern Pacific Company, and its means, man- ner, and methods of transporting the mails and interstate commerce; (3) means conspired to be used in effecting the object of the conspiracy; (4) overt act charged; (5) con- cludmg with an allegation of unlawful intent. Bearing these general features of the indictment in mind, you will now be able to understand the meaning of the various allegations of the indictment, as I proceed to refer to them somewhat more in detail. Taking up the first count: The formation of the con- spiracy is alleged, and it is charged that John Cassidy, John Mayne, Fred Clarke, and James Rice, with divers others, names unknown, did conspire to obstruct and retard the passage of the mails of the United States, and to restrain trade and commerce among the several states and with for- eign nations. (2) The legal corporate existence of the Southern Pacific Company, and its means, manner, and method of carrying the mails and interstate commerce, are set out. It is averred that the Southern Pacific Company was a railroad corporation, duly organized and existing under the laws of the state of Kentucky, engaged in the business of a common carrier of the mails of the United States, and of passengers, freight, express matter, and other commodities, comprising and constituting trade and com- merce, within the meaning of the act entitled "An act to < UNITED STATES V. CASSIDY, Charge to the Jury. 461 protect trade and commerce against unlawful restraints and monopolies, approved July 2, 1890." The lines of railroad over which it carried on its mail and interstate commerce; the manner and means employed and necessary to its doing so, viz. yards, depots, tracks, trains of cars, and other equip^ ment suitable for the transportation of the United States mails, passengers, freight, and express matter, and other commodities,— are also set out. (3) Then follow the means conspired to be used in effecting the object of the conspiracy. These are, briefly: First. By forcibly taking and keeping possession and control of all yards, depots, tracks, and trains of cars upon said lines of railway, and by forcibly holding and detaining the same. Second. By causing to be assem- bled, and assembling with, large crowds of persons in said depots and yards of said Southern Pacific Company, at various points and places upon said lines of railway, in said state and Northern district of California, to wit : 1. At the city and county of San Francisco. 2. City of Sacramento. 3. City of Oakland. 4. City of San Jose. 5. City of Stock- ton. 6. Town or Red Bluff. 7. Town of Dunsmuir, county of Siskiyou. 8. City of Vallejo, county of Solano. 9. Town of Lathrop, county of San Joaquin. 10. Town of Palo Alto, county of Santa Clara. By gathering in great numbers in said yards and depots, and other places, around, in, and upon the trains, cars and engines of the said Southern Pacific Com- pany, and upon the tracks of the railways, preventing the movement and passage of said engines, cars, and trains. Third. By threats, intimidation, personal assaults, and other force and violence, to prevent the engineers, firemen, con- duct- [707] ors, brakemen, switchmen, and other employes of said Southern Pacific Company from discharging their duties, and from moving and operating said engines, trains, and railways. Fourth. By forcibly disconnecting air brakes upon such trains,— mail, passenger, and freight. Fifth. By putting out the fires in the engines drawing the same. Sixth. By throwing switches, in order to prevent the passage of such trains through depots and stations. Seventh. By open- ing drawbridges over navigable and other streams, upon which drawbridges the tracks of said railway cars were situ- ated. Eighth. By burning and destroying bridges, trestles, and culverts, over which such trains necessarily and usually f 462 e7 FEDEBAL BBPOBTBB, 707. , Charge to the Jury. would pass. Ninth. By loosening, removing, and displacing the rails of the tracks of said railroads. Tenth. By greasing the rails of the said tracks. Eleventh. By stopping trains upon railway crossings and upon switches, and by forcibly re- fusing to allow such trains to be hauled from such crossings and switches. Twelfth. By compelling the employes of said railroad company to leave their trains, shops, and the work of said company, while in the performance of their duty. Thirteenth. By using all such other forcible means as to them should seem expedient to prevent, for an indefinite period, the use of the said railways for the transportation of the mails of the United States and interstate commerce. It will be well to observe, at this point, that the indictment does not charge that the defendants did, in fact, use or put in operation the means herein set out, in effecting the object of the conspiracy; the charge is that such were the means con- spired to be used for that purpose. Now, when you come to consider the testimony, you will probably find that some of it tends to show that certain persons did, in fact, use such means to pfvpent Hw mttmmmk of railway trains. This tes- timony was admitted, not to prove that such acts had Im» committed, but because of the relevancy of such testimony to the charge in the indictment,— that such means were to be used in effecting the object of the conspiracy. In other words, it tends to show that a conspiracy was formed to ob- struct and retard the passage of the United States mails, and to restrain trade and commerce among the several states and with foreign nations, and that such means were to be used to carry the conspiracy into effect. This brings us to a feature of this charge of conspiracy which you will bear in mind. It is not incumbent upon the prosecution to prove that all of the means set out in the in- dictment were, in fact, agreed upon to carry out the con- spiracy, or that any of them were actually used or put into operation. It will be sufficient if it be established to your iitisfaction, and beyond a reasonable doubt, that one or more of the means described in the indictment were to be used to execute that purpose. After stating the means by which the conspiracy was to be effected, the indictment then sets out the overt acts ; that is 1 / UNITED STATES V. CASSIDY. 4(^3 Charge to the Jur}\ to say, it charges the doing of certain acts to effect the object of ?„rZT-.?'^ '" '' '*'"''"^= That on the Itta^ ot July, 1894 the defendants, at Palo Alto, (1) forcibly took po^ssion and control of the yards, depote L Iding tracte sembled, and a^en^b^^XXil^rj^J^^ - sazd depots, buUdings, and yards of the SouierTSc Company; and by gathering with said crowds of persons 7„ aforesaid trains, cars, and engines, and upon the tracks of the railways. 2. Bv threats ;nHm,!i„*- iracKs of or other acts of f ntL ! ' '°*™'?at»«ns> personal assaults, en^n Jr, fi ''f ^"'^^"'=^' '"' "P'*"' and towards the engineers, firemen, conductors, brakemen, switchmen a^nTs and other employ^ of said company ha^in^ ^1°' „f ^' depot, buildings, and other property et^ t T f , ^ charged (2) that, on the 6th day S jSv r8<)4 1 ! ^ f ants at Valrx Au^ a ui , "^ ^' ^^*^*' ^^^^ defend- or through the town of Palo Alto- 1 -R^ Jh. ■ ^ crowds Ptr. o R„ „i • , . ^" ^y gathering m Sck 3 Rv ;.^^ P *'"'! P^^''*'"' obstructions upon said track 3. By displacing the switches. 4. By forcihlv «r,^ • n^T^ """''*^!' *^-t--g> and intimidating""'^,^'* n«^rs, firemen conductors, brakemen, switchmen Ss. 3 other employes, while engaged as aforesaid 5 B™?.n luig the cars of said trains and discomiectmg the saTT By removing said cars from said tracks 7 TUr ^t^ ■ the water from the boilers and ^nS'J' -J ^'^^^'"'''"^S putting out and remoyingThetstSeSi 8 bT?""^' "' atpTti^ortiirair^/f- of the rails of said ."S^^rLTto^^^ sion and control of said vnr^c L , f ®^, ^^^ ^^^^ Passes- 464 ^ FEDERAL BEPORTER, 708. Ill Charge to tlie Jury. cluding July 6 to and including July lo, 1894 Jhe same observation,, which I have just made to vn„ o ,'^«^;«* ^ -1. ; ^nargea. It is not necessary to a .erdict of guilty that you should find that each and eTeir one of the overt acts charged have in f^oi w« -./Y If \an ^^ o«*; « J 1, ^, "*^®' ^ ract, been committed. moi of^.. !? ^^T^ " '«««>°»We doubt that one or "rSonfin S ?.^" *^"""'"^'^' ■">•* *''«^ they were done m furtlicrance of the conspiracy alle-ed to have been entered into by and between these defendants and to carry out or effectuate in some way the object of Ihel^ spiracy, that is all that the law r^^uires. lie Vndictr;; ^ndudes with allegations of intenrviz.: That tie deS ^ts, by the acte and means aforesaid, knowingly and willfuUy obstructed and retarded the passage of the maik and the car^ SmThTZ of T r;' ""f .«1^«--■ cumstantial, and invoS T " T" T"* ^' ^'"■^^1^ «'•- members of the Am^^^lt^ ^^^0^- It "*^ 1 methods of the sQcnniof^^ • v •'^ ^mon, the course and and sub^nXt^^^l'l ^^^tting the Pullman cars. Pacific CompS and ^^ * ,f "'^f ^S^i*^* the Southern of the striETnd thi/ T'^'-^^ *"'tude and conduct the strike wa? i^oplrXn "^ ^^'^^ *'*^" ^"""^ *»>« *-« AMERICAN RAILWAY UNION. Ployes below a*'™ i^Se -^^^^^^^ f -1-ad em' sociation are located at S.o m ^T^T""'^'' <>* the as- Eugene V. Debs was ite pSn" ; J° '^^ -"? ''''' president; and Sylvester Keliher, 'secS. J' Sr*^' ^" divided up into local unions ll,ih?.\7!^^ "°'°° '" order, introduced in evident the n^ T*'*"*'"'' "' the - far as they are pert^tTt; ^^s'S^o/"' '"^' stated as follows : leature of the case, are " It Is a self-evident truth thof • i_ . conversely, without union weaknLn~±? ^'^^ '« «twngth.' and 11808— VOL 1—06 M- -30 p j 466 67 FEDEBAL BEPOBTEB, 710. Charge to the Jury. ment must be the rphmn JH- „« 7 1 *^*''^ wages and proper treat- Such a poli^ In™.S harmonloS. «nr^"'*^' /""Wully pi^ormed. The onlCT, while plSg^ to i^Z^i'J"'"* "I'.** satisfactory results, huiublest if its mSre In e^^H^ih^h'"^"''^!- """ »'«*«* «» while the rights of memli« »m ^ right he can Justly claim ; but, demand or un^a«>Se SoSs tL^ wm'^J""?^' T ">t««^rate tlons will not be. permitted toS^tthr »>« entertained. Corpora- organization will tW?th^ i^l*! organization better than the mating spirit, and even Sanded Inifl^tSf of honor must be the anl- Thoroughly organized fnevCT^dcnartolnf wf^^"?"* *" ^ ''"«'°«^ right wherever found it l^^„fl5t„f?K',^'*'L" •*"* ^S^'^ '<>r the may be satisfLtorih' adinstS" tw ^h '^'"'''r' *''«* «" differences established and maintaini?^ J?»V ^\ harmonious relations may be proved; and "h^t the nl^l?^ flrM-ta '"" TT *? '"^'k-l-Wy !■" black-list, alike dlsasfroutT employer i^d ZV^^'"'^ ^^""^ "^ "^l^nd^J'nr "■"*.*" "■« P»Wirwlirfor:"?dTskp"^1,r' '^'P**"'" fbreln^h^SV'XX? "/^"e^'si^^^ Q»estionreoo„omy Is Therefore, tC bring the °xf,?n4S „fT.*' """?'t^ «'*''*• "^e barred. of all is the one thing rwui^ « .^Hr^""'"""?." "'""" *•>« fe"*!' settled before th« headquarters business that may emanate frnm?i??^' ^°l *''^ transaction of such complaints and adjaSnts iH i»nJ^'"„'^'"''^ "^ mediation. AU by the general boaK mldlatio/^°In l^''^?*!' "*"" ^ ^^^ must be taken up first by t^loSS' n^on^?/"""*^* ^"^ adjustments vote, it shall be referr^ to thP^^T^ •.,"-*"*P*«^ "^ » majority ment; and. if failing tte ease sh^fL'^^K^ of mediation for adju^ the general board of meSiation^ fti^„.*"i''""*tf u*° *« cbalrmM of the president of the general iVZ; »i!i 1 S "''"<^''' ^''ey s^all notify able member of the boaM r71lTn7^V^"" «»thorlze the most av«l^ the general chaiman of thl " art of '^1^^.-*° ^'«'t """J ""eet with structions as will be prlufgat^^E^ the d^4tr°" '"^ '"'"^ ''^'' ^■ thiflw* 0* employes o^ railway companies to organize in Mtio^Zr "^ *^ f' ^^^''' ^««^ *"d the best conditions they can command, and they may organize an association or union for that purpose Tl,Pr« i^ . versy on this point. It is a S to ^t" a^d itTn^t T^ft k ^^** ""• ^«^«'«y ^''•, 62 Fed. 817, Judge em diSr^t^Tm* """"^ 'J '''' ^"'^^"^ «***«« *- the South! ern district of Ohio, speaking of the relation of railway em- ployes to the American Railway Union, says; ^ Of "tbem*'t^ i.mmaS'tt S fofttT; /"k*^ ^ »««» «•"«■ «" singly with rich employers bSause thl .1 ^^ *''*° '^•'«" Oeal'^g ployg may compel him to acce^ nnv l^L ^^^'^'^^ "^ *e single em- lation of a fuSd for the sSrt L*t^^ °"l''^ "■"■ The a^n- offer^a are below market prK Is „n«''^TK''".'*?' *"«* «>« «'«ges such an organization. They hive the ri/ht to '*«"'!"?*« objects "of shall advise them as to the coiir«o flL I . * **l aPPoInt officers who tlons with their employer The^m^^.nif ^° •?? ^^^ '° «>«"■ ^'a- offlcers they 'iPPoinllranTfleTLZn%T^^*^L'"'^'"^'^^'' Isten, may advise them as to the prSST^n^ t^T 1"?^ '^'■°°se «<> In regard to their employment or l^^L .Sf^ *".'** ^^^^"^ *>y them thority in any one, they m?y order them ^n^n*^^ to repose such an- their union, peaceably to leave the emSnv^ fS' ° "' expulsion from any of the terms of Llv ^ml^e7^rlZltSlaoZ7"'' '^'""^ lim^tiorlTS T '''"' Y '^''' '' "^ '■"^* -^ -»«'°able errLniS7XLrof-ut?n^:siSs^^^^^^ a^ not entitled to interfere with the rightf a"d p^ert^S others and by force and intimidation compel a Sr of operations of such necessary and lawful businessYor, t^ IP' ,r i if ftlKJ 67 FEDERAL REPORTEB, 711. Charge to the Jury, state the proposition a little more exactly, they have no privi- lege or nght to violate a law of the United States. Now, with H^pect to the general charge of conspiracy contained m this indictment, I will direct your attention * Tu. u*?.^ testimony which the government claims tends to establish that element of the case. ■HMB WHEN THE BOTCOTT TOOK EFFECT. vention of the American Railway Union, assembled at Chi- cago, resolved to boj^cott the PullAian Company; this boycott to take effect in five days, should the difficiilties existine between that company and its employes not be settled at the expiation of that period. On June 26, 1894, the president ofthe general umon sent the foUowing telegram, which was r^ It Vh ^^'^ ^'^•'° ^S«' J^^o^n as « Local union JSo. 310, having its headquarters in Oakland : " PuU- man boycott in effect to-day noon, by order of convention." The telegram was signed by E. V. Debs, the president of the ITiT* ^ •. ^'^''P' ^x^t^fy o' local union No. 310, at Oakland, identifies [7121 this telegram. The boycott was therefore declared at noon of June 26, 1894, which fell on a Xuesday. Mr. Knox, who was an employe of the Southern Pacific Company at Sacramento, and a member of the American R«lway Union at that place, being called as a witness for the defense, testified that he was chairman of the mediation com- mittee; that the duties of the committee were to settle the differences between the employfe and the corporation. He relates the circumstances connected with the commencement of the boycott, as follows : ordered to call at Mr Wriehrs offlrS f mJ* 'ne' *»« cars. 'After to let the Pullmau cars on 2 4 ^n^il^l'T <*°ri"**' '* "'^^ ^^'^^ without boyeottine thim wt' t^M ]■ ^ *'"^"e'> «> their destinations stead of him wf did"ot ^k hin, ^^Z^ "-o"'^ ««"tch the cars In- of the 27th, about 8 -30 iJ^ f h^ i ^1 ""? "'<""''- ^n the morning many shopL.en belon^UK to our nn'Jfn *".*' ^^ops.-there were a great ^J^ ^Z^^S^f?q^-%^'^^ hTeottJ^ weva^d™^-".-^^^^^^^ in the morning, known as 'No ^ ' Vh^ ,^ '^"^4^ l^^""^ *^^^« «^ !<> -25 2. that comes fC Chicago ^nd^noth^ ^^ ^^ ^^^ mento. There is a flrs^cfak car nnt n^^^ ^f% ^"^ ""? *^'^'*^ ^* ®^^^^- a tourist car. The one that rmiii ?L * ^.^^r^^^^t^- The other Is loaded and the other onl was emn^ w"""^? J^??" Sacramento was handle the Pullman car Suse^iW^I^f.^'?^ *^^ switchmen not- to sary for it to go We th^X i Z! ^"'^*^' ^""^ '^ ^^^« »<>* ^eces- Pullmans. Thef re^^dWt Puirm^aVS'^^^^ MHlniP' '"^S'^ came to us, and said he would tniTa inl • 1 ^^- ^laHoran then we should come ud and Lk hi.« n J^.® ^''^'''^ ''"^ ^« *« ^«»P»e on, and not want hlTto scabL us anfl hi t ^^"P'^«°' ^"d tell him w; did else to put on the Pullman cars h^T«^ ^xT^^^i? °^* ^«* ^^^^^ <>«« men.' Mr. Jones said ^Cannot vou hl^ J"*' ^^^^ f*^ ^" ^- R' ^' • No ; they are all A R TJ mpn ' ^Th«f J? ^''"'f ''''^ ®^^'^ ' He said, time. Then it started to n.^i^'f ^^2* ^^l*'' ^*^d t^^^^e until leaving lengths out? ant^'^ one'^^an'Sown'^^u^^^^^^ '""f ^^ «^« <^^ plug on the hind end of tL air hnl^ ^ { ^^^ **®*^^' ^^^ turneid the backed up to the denot and JtJ^^^ ^""^ ^^^^^^ *^^ t^^«°- ShTwas refused to allow thTen^^ne Tl wt'h ^T .t ^^^^^ ^^ ^««»^«- They tried to induce Mr Wr?lht to ipfhr^^^'^K *^^ P""nian car on. We car go on 104, ^^■>^'^e"^,:^:r:^e^:.T.:rr:^^! ^'t ^^ 470 67 FEDERAL REPORTER, 713. Charge to the Jury. He said they would, and they switched the loaded tourist car off of 84, and put it on 104. That Is about all that happened on the 27th. ♦ ♦ ♦ That train was made up at Sacramento. It runs between Sacramento and Oakland, by Tracy, and around that way. The Pull- man cars go to Los Angeles. They carry the Pullmans down to Lathrop, and then they go to Los Angeles. The balance of the traiik comes into Oakland. It starts from Sacramento. The Pullman car, though, that goes through, that comes from Chicago, — that loaded one, — the tourist car. They sent it out on another train at night, 5:30. *104* it is called. Sent it out in the evening, — on the same day. There was nothing left of that train, then, except the mail, bag- gage, express, and passenger cars. There was no one in the passenger cars. They went off on the next train, — the passengers ; the through passengers from Chicago that went on the next train. There were a good many of the local that went on the next train, too. That only runs to Tracy. It does not come clear around to San Francisco, but stops there. Know C. A. Newton. I had a conversation with him on the night of the 20th, and I might have had on the 28th. I would not say for certain. Had a conversation with him on the night of the 26th, at which I showed him a telegram. The telegram read : * Boy- cott declared on Pullman cars. E. V. Debs.* " C. A. Newton, called for the United States, night yard- master at Sacramento, for the Southern Pacific Company, contradicts Mr. Knox on this point, and says that Mr. Knox handed him a telegram, which he read. That the telegram read : " H. A. Knox, Sacramento. Boycott declared against Pullman. Hold all Pullmans. E. V. Debs." That he handed the telegram back to Knox, who left the room where they had met, with the exclamation, "That is hell." The witness Knox further states : " About 12 :30, I think it was, on the morning of the 28th, I received a message from I^s Angeles, saying that some men were discharged for refusing to handle Pullman cars, and saying that the Los Angeles Union had decided to strike for the reinstatement of those men, and asked us to participate in the strike. The committee having full power to act, we considered the matter, and came to the conclusion it was a just fight, and we would take it up and help them out. In that message from Los Angeles they asked us if we would notify all con- cerned, which we did. I went down to the depot, and that special that Mr. Newton was testifying about — the officers' siiecial — was just pulling out of the depot. I had had a conversation with the engineer and the fireman before that, and they told me if there was any strike they wanted a finger in the pie, so I ran up and got on the engine, and told the engineer and fireman about what had occurred. They said, •Well.* Some one stopped them; I don't know who. They were stopped from the hind end of the train, and they said, *Cut us off. and we will go to the house,* so somebody cut the engine off. I don't know who it was. No one was with me on the cab of the engine, — only the engineer and fireman. Did not offer any threats or intimidation or violence. ♦ • * The [714] engine was cut off, and the engineer was taking it around to the roundhouse. I was in the depot by that time. Mr. Wright wanted to know what was the matter with the ^lecial. I told him, as near as I could find out, the engineer was 4¥ T UNITED STATES V. CASSIDY. Charge to the Jury. 471 going to strike with us. He had Mr. Newton stop him there In front of the depot, and he had a conversation with the engineer, and they finally agreed to go on with the special, and asked us if we would couple on. We told him, *Yes; if they wanted to go.' I told Mr. Wright I thought it was foolish for them to go. They would go just as far as Rocklin, and that was no place to stay. There were no ac- commodations there at all. He said, * For Grod's sake, let them go out of Sacramento, if they don't get over the American river bridge.* I thought to accommodate him. We would not ask the conductor and brakeman to boycott the officers* special. We would let them go as far as Rocklin. I knew they would not get any further than that, be- cause the men had already qult^up thera I got on the engine, and rode up through Sixth street yard with them, to see that the switches were all set, and everything ready to go. I rode with the engineer on the en- gine. After I got back from Sixth street the committee then went up to the Western Union & Postal Telegraph C!ompany, and we sent a good many dispatches notifying them that we had struck." (These telegrams will appear further on.) Newton testified as follows with relation to the special car, — or officers' special, as it was called, — and with reference to the statements made by Knox at the time : " I know Mr. Knox personally. He used to work for me. Mr. Mullen, I knew him personally, too. Mr. Compton I did not know until after the strike. I saw Mr. Knox about the 26th of June. * ♦ ♦ The first train that came into the yard after that con- versation I had with Mr. Knox (referring to above) was a special that came from Oakland. It got in about 12:25 on the morning of the 29th. It was a siiecial passenger train, that ran out of its ordi- nary time. It was composed of two officers' cars and the engina * ♦ ♦ Saw Mr. Knox on the arrival of the officers' train, a little while after it got in, when it got ready to leave. Knox came run- ning through the depot and hollered out : ' Stop that train ! Stop that train ! Not a son of a bitch of a wheel will turn on the systeuL* This was on the morning of the 29th, al)out 12 :25." This, it will be observed, flatly contradicts Knox as to what occurred at that time. The witness Newton testifies further as to Knox's attitude, as follows : "Did not have any direct conversation with Knox. When No. .3 came in, going east, there was quite a number of shopmen around there, standing in groups, I guess to the extent of forty or fifty. They came in charge of United States Marshal Long. This was along in the morning, about daylight, probably four o'clock, on the 29th. That was a mail train, — ^the regular Eastern overland, — the Atlantic express; the 'fast mail,' they call it. After No. 3 pulled out, the groups got moving towards the depot, — after she pulled out, — and some one in the groups made the remark to Mr. Knox why he did not hold the train, — what he let her go out for. He said he did not have force enough to hold her, but when seven o'clock came he would call out the shop men, and he would have force enough to hold anything that came along." ■f 472 67 FEDERAL REPORTER, 714. Charge to the Jury. IKmox itsstifies that : .. rpij^ strike was formally declared about 12 :30 or 1 o'clock on the morning of the 2dth of June by the I^s Angeles Union. In Sacra- mento it #88 left In the hands of the coiumittee. The committee had full power to act. The committee decided to strike to have those men in Los Angeles reinstated. As soon as they got the message they consulted probably for 25 or 30 minutes, and went on and did as requested by the message, to notify all those concerned. That was about 12 :30 or 1 o'clock on the morning of June 29th. Had not at that time received any notification from Oakland. Did not act £71ft] on anything but the notification from Los Angeles. The mem- bers that were out on the road, — we notified all the unions along, Truckee, and Rocklin, and Dunsmuir. and all over the system, — we notified them that we had struck; that we had ordered a general strike In Sacramento, and those In Sacramento — the shop men — were all notified the next morning after they went to work, perhaps 8 o'clock or 8 :30." The attitude of the mediation committee, as representa- tives of the American Eailway Union, is stated by Knox ss follows : ••Mr. Baldwin and Mr. Knight wanted to know our position that we had taken in the matter, and between us we explained It as thor- oughly as possible to them, and told them that. In the first place, we had boycotted the Pullman cars on legal advice; and, if I am not mistaken, I told them who our advice was from, — Mr. Ingersoll ; and Mr. Knight said that a Pullman car, as long as it was attached to a mall car regularly made up, was part of a mail car. Of course we had an opinion from a very eminent lawyer and attorney, and we thought he knew as much about It as Mr. Knight did. Consequently we told him we would not handle any trains with Pullman cars attached dur- ing the boycott, and, now that the strike had been ordered, we would not handle any trains at all, except mail trains, until those men that had been discharged had been reinstated. That was about the gist of our conversation all the way through. It was rei)eated several AgaiBhesays: **I told Mr. Baldwin our men would not work on Pullman cars. That is all I told him. • ♦ • We were doing nothing with refer- ence to preventing the movement of trains ; only quit work, that is all. • ♦ ♦ We were trying to induce the men that showed up to strike with us. That was the understanding between Mr. Wright and my- self. * * * I told Mr. Baldwin that our men would not work on PulUnan cars. Did not make the statement that we would not allow Pullman cars to move." As to the power possessed by the mediation committee, Itnox says: " The committee had full power to act The union had given them foB power to act." On cross-examination Knox testifies as follows: ** We discriminated between Pilllmans that were full of passengers and Pullmans that were empts', on the 27th and 28th of June. After UNITED STATES V. CASSIDY. Charge to the Jury. 473 the strike was ordered, we did not. All Pullmans were treated alike, and everything else, except mall. It grew from the Pullman cars to every other form of cars except the mall cars. After those men were discharged It did ; did not matter what the destination of the cars was. We thought that we could control the A. R. U. organization, and we did. Anything that we knew anything about we controlled their action, through the strike. Anything that was done by any of the officers of the A. R. U. organization during the strike was done with the full con- sent, and was under the policy of our organization, as far as Sacra- mento was concerned. We were given full power to act. That power has never been taken away from us yet. Had control on the 3d of July, but do not know whether there was an A. R. U. man who moved the Pullman cars on that day or not. Could not swear to it. I do not think there were very many of them. It appears that on July 5th, and during the strike, Knox, Compton, and Mullen, of the mediation committee, appeared before the Citizens' Protective Association of Sacramento, and made a statement concerning the attitude of the Ameri- can Railway Union. Cornelius C. Howell, who was pres- ent at the meeting, testifies as follows : " Was In Sacramento the latter part of June and the early part of July last. I was employed by the Industrial Improvement & Manu- facturers' As- [716] sociation of Sacramento. I was looking up man- ufacturers' Industries to locate at Sacramento for that company or as- sociation. Became a member of the Citizens' Protective Association, I believe on the 3d of July. That association formed for to get to- gether and see If they could not do something to open up the commerce connected with the city, and such other business as might be neces- sary, owing to the condition that things were In at that time from the cause of the strike that had been ordered on the 29th of June, or the strike that occurred on the 29th of June. I was secretary of the or- ganization fi'om the day that we organized, up until, I think, the 15th or 20th of July; somewhere along there. Performed the duties of secretary at meetings. Recollect a meeting held on or about the 5th day of July last. It was called by the association to see If they could not do something in order to open up the commerce. Members of the mediation committee of the A. R. U. were present at that meeting. They were Mr. Knox, Mr. Compton, and Mr. Mullen. After discussing the ways and means to adjust matters, It was decided that It would be better to bring these people before the association, this mediation committee, and find out the condition of affairs, — what the causes were of all the trouble, — and see If we could not do something to adjust matters ; and In that connection It was agreed that we would admit them, and see what they had to say; they having, I believe, made a proposition to some member of the association that they would like to come before the association, as the mediation committee of the American Railway Union. They came before the meeting and made a statement. Parts of their statement were reduced to writing. This Is a part of the record of the meeting of the Citizens' Protective Asso- ciation held on the 5th of July. Not the entire statements, but I took down part of what they said, and then we dictated It out, and took the minutes to Mr. Knox In his room. Mr. Compton was present when I went there with the minutes. I asked him to read them over, and see If they were correct ; that I did not wish to have them quoted as saying something before the association that they did not say, and. /; JT 474 67 FEDERAL BEPORTEB, 716. Charge to the Jury. SS" Sl'^rteSr lIS.TttLP"'? »'tn ««>'«. I wanted them to see It Compton signed It in my pr^<»--*Sth nf fh«m .^ *^ '** "°^ "'• left the paper with thS S^fS^ mieht^w, itTI ?ff m^I", * another member of tho /v^m«7i*f Jt tt ^^ °*^^ " ^*^ ^"^- Mullen, r^s{s?di^*2?rir ?lw"^^^^^^^ This document reads as follows: - virt^r. *•. ... " Sacbambnto, Jnlv 7th, 189i. '^rZ^*^tlft%^^?^y,'''t ?«•* '"t'oduoel the mediation that the orlginai c"ij for W?^s?rTk^'waTlZ?n?f*n? fll'^™"*** k^nl i'^ T^.^' **"* **^^* °^ passenger ears or freight cars of anv" ^"^'d»eVarha^| S"- if^^^^^^^^ «^*1lp^*re„ro"f*?hTte,!im*^n^''^ef^^^"'^^ rti^^;fr.e™^ent'lrsee''?rth^?'i„1M'''^:t^^e"^r'^*f'^^ fh^r' to accommodate the busiS rthe^*untr *He"?id tC that would help us out. 'We arp in thie aJkI + ^*. ? '^*" *"** ., f UNITED STATES V, CASSIDY. Charge to the Jury. 475 but will not until this question is settled as I have outlined. There is a revolution going on in this country. To-day it is a principle that we are contending for. Should we give up, they would malie us crawl on our bellies after them.' Mr. Compton stated, among other things, that the A. R. U. organization would not resort to any des- perate means, so long as the Railroad Co. would deal with them without using armed force. That their organization was composed of law-abiding citizens, and would not commit any overt acts. At this point Mr. Ray tried to have his resolution read, but was de- clared out of order, and the resolution remained on the table. Several attempts were made by others, but without efltect; whereupon Mr. Avery moved that a vote of thanks be tendered this committee for having made this association of business men so frank and fair a statement In relation to their position with the railroad company and this general boycott. The motion being seconded, it was unani- mously carried, after which the committee retired. " We have read the foregoing statement of the records kept by Mr. Howell of our statements, and certify to their correctness. "Committee: H. A. Knox, Chairman. "Thos. Compto^ " Jas. Mullen." Mr. Knox was askei if he signed the statement produced by Howell. He said he did; that there were some altera- tions, but they were not material. Continuing, Howell further stated : "Saw Knox after the 7th. I had no conversation with him, al- though I saw him a number of times, after the time I went to his room and he signed that paper, until the 9th of July. I saw him then before the executive committee of the Citizens' Protective Association, at the Orangevale office in Sacramento. George B. Katzenstein, Mr. Van Vorhees, Gen. Llewellen Tozier, Mr. Frank Miller, Mr. J. V. McClatchy, of the Sacramento Bee, and I am not sure but I think Senator Cox was present at that meeting. The executive committee was comiK)sed of nine members, but they were not always there. Mr. Knox was there. I was there. I think Mr. James Mott was there. He is the manager of the Crocker Company up there. During the time of this strike we were in the habit of meeting every day, some- times twice a day, and we had received information from some source that the government was going to take charge of affairs, and we had heard a good many rumors. We sent for Knox. We brought him there to see what position he was going to take in view of the fact that the troops were to be expected there. This was the 9th of July. These gentlemen met Mr. Knox in the capacity of the executive board of the Citizens' Protective Association. Mr. Katzenstein, the chair- man of the executive committee, asked Mr. Knox some questions in relation to the position that his [718] association expected to take or that he expected to take after the troops got there. My recollection is that -Mr. Katzenstein in one of the questions said that it was re- ported, and so published, that Mr. Debs, of Chicago, had issued a proclamation advising all men to keep away from these public places, from collecting at the depots, and so forth, and he asked him why that rule could not be enforced by the A. R. U. here. Mr. Knox handed Mr. Katzenstein a telegram. The telegram, as near as I can remember,— the substance of the telegram, — was about this : To pay no attention to newspaper rumors ; that they were sure to win ; that everything was progressing all right in their interests, or words to I I 476 67 FEDEBAl, BEPORTEB, 718. Charge to the Jury. iS**view^f ti^%«^f ^w^^l^* r^^ ^^ *^*« ^^^^^^ question : That W'obabTvLtLrf **,"*** the troops were ordered there, and would probably be there the next day, or the morning after and as thP iTvi;?AKetof tTVr^ **^" ''^'' authorities Vthe'milUaix and in view of the fact that he was a citizen, the same as the balance of in w^E^I.^^ ^5^ ^^'"^ *^^^*« *** °»^t, what position he would t?ke' to which he said, as near as I recollect, that, so far as he xva^ nnn cerned himself, he could not do anything, fo? there we?e two of th?^" ^ISf w^ o^^^'o^\ ?"> «^ '«^ «« ^^« menTlre^n^rne^ wMch was over 2,000, he had no control of them, and he did not believe they would allow any train to go out of the deZt with pSll r? ca'r^e^Xf • ^""T fM^^'^^'h ^^Jer askTwm.^^^^^ a» 1 can recollect, • • • that in view of the fact of the militirv ojm,ng there and if it would be a question betw^n the pHncTn es of t^tu^'^^L T^ ^^ protection of the citizens and his fan ily and so tSrLT?n?trrp%rY!l,Pr"«- ^e said that the p^n'^lp?^ o? the order of the A. R. U. stood first with him in relation to this busi- ness, or in relation to this strike. Mr. Katzenstein as near as T o«n remember, called his (Knox's) attention tH^e proclamation as it JSL^?n"'?^i in the paper. I don^t remember Mr^ KnTsaAng any! JSiZim ^^?."''" *^ ^^^ ^**S'^.^' *^« proclamation. He produced ?hat ^mf Train .iTf ''^^^' "^ ^T^^ ^* «"*' «»^*^ talked in about the same strain that was expressed in the language of the telegram I would not undertake to repeat what he said. I remember (Wstrnctlv he stated you could not depend on the proclamation. He d d not believe there was any truth in it. and used this telegram as evideS^ to corroborate his statement" ^^K^tui «» eviaeuce V. S. McClatchy, called on behalf of the United States, testified: Bj^,^S^ramentV»^^ proprietors and business manager of the Evening A paper being shown the witness, he said : i>«.wiif r ! a statement made by the secretary of the Citizens' Frotective Association, under Instructions from its executive com- S fi!f*r-i« . rK-^^iP^P!*" ^^^ **^"^" "P ^y Mr. Howell, secretary of the Citizens' Protective Association, under instructions of its execu- tive committee, and purported to embody the statements made by the mediation committee of the American Railway Union before the Citi- es Protective Association at its meeting. I think, of Julv 5th. Mr Howell was instructed to draw this paper up and present it to the mediation committee for their approval and signature • ♦ • f JSri* ^^^ ^? ^'^J gentlemen. I did not see the third member of the committee si^ it ♦ ♦ ♦ Mr. Knox, who was chairman of the committee, signed it and, as certain as I can be at this time the second one was Mr. Compton. The third member, who I think was names signed Mr. Howell was present He then left it with Mr. Knox who was to obtain the signature of the third gentleman • • ? f lifJliSv^'^ possession anotter statement signed by Knox, relative to the stoike. ♦ ♦ • Mr. Knox made certain statements before the !J^*\!L*^K™^^^ **' l^^ ^^"^^"«' Protective Association, I ihin^ about July 9th.— I do not want to be certain of the date.— and under instructions I prepared a report of Mr. Knox's remarks before the com- mittee or some of them, and submitted it to him for approval prior to its being published in the newspaper. Mr. Knox approved it after minor amendments, and It was published. • • • Mr Knox sI^S '■ f ■• .. UNITED STATES V. CASSIDY. Charge to the Jurj\ 477 it in my presence. * ♦ ♦ Mr. Knox's signature was obtained in the afternoon, shortly before the Bee would go to press. In order to insure its publication [719] that day, it had to be cut up in what prmters call 'shorttakes' ♦ * * It was signed before^being cut up. It can be readily pasted together." After further testimony tending to identify the document, it was introduced, and is as follows: 4.J' ^^^**'?f ^ J^; ^- ^^^^' ^^ *^® Sacramento mediation committee of tne A. R. U., had a short conference this afternoon with the executive V«i?iS ^^k""^ the Citizens' Protective Association, at the request of the latter. Ihe work of the committee so far had been directed towards preventing a confl ct at Sacramento that could only result in blood- shed, without settling the main issue, and to this end had brought influence to bear on both the Southern Pacific Companv and its striking employes to prevent any aggressive measures on either side. The position of the United States government, however, in ordering the opening of the road and the use of federal troops for such purpose has practically taken all discretion out of the hands of the railroad ^fZ^nl ??^.H*^?r H^*^. f^^^^^ "'^^''^^^- Mr. Knox was asked, therefore, if the United States government insisted on taking charee at Sacramento and running trains, would the A. R. U. permit it to be ^ffl^t 7 ""^l obstacle or would it oppose by force the government officials and troops? Mr. Knox stated that personally he would do all he could to prevent a conflict with the government and, if it moved trains, would not oppose, whether with Pullmans attached or not and would so advise his men. He said, however, that if the government insisted on moving Pullmans without a settlement of the main question ol^ t''''^ Tk'*?^*u® ™^° "'^^^^ *^*™' »s they had notified him-ove^ AOOO strong— that they would not obey orders in that event, and would engage the troops. He said the position of the A. R. U. was in no way changed. It would not permit the running of any trains unless the demands of the organization, as outlined at a former conference with the « lw^°^f'i?°'^^"^V.^''^.P"^i^^*'^ *° ^^^ ^^ <>^ Friday last were com- ?r ^ ^^^^ F^l attention being called to the declaration of Eugene V. Debs, head of the A. R. U.. calling on all members not to attempt interference with trains or railway property, Mr. Knox said that he had not received oflicially any such notice, and had been warned by Debs to pay no attention to newspaper reports, unless officially re- ported to him. He could not therefore, take any notice of the procla- mation referred to, and doubted its genuineness. [Signed] H. A. Mr. Knox denies having signed the statement produced by Mr. McClatchy. In this regard he testifies as follows : SJ ^®Tf^ signed that statement in the world. That statement, or part of it was when they called me before their committee in the n^rf nnrfnV H*^^"^' ^! ^^? ^^- " ^^« ^^^^^ ^^^^ ^^^bally, part Of it! and part of it was not I never signed the statement, and they have got r^°nn«r ^^^"i I ^""^i "^*5- * • * The statement is abfut cowect, until we get down to where it says : • He said, however that if the government insisted on moving Pullmans without a settlement ^L I T\?^l^^lT' ^^ "^"^^ ^<** «»°tr<^^ t*Je men under him, as ^^Ir^M ?2?i^^ ^'i""' ''l^'^ 2'?^ «*^'^^' **^^t t^^y ^<>"ld not obey orders in that event, and would engage the troops.' I never made any such statement as that." r 478 I 67 FEDERAL REPOBTEB, 719. Charge to the Jury. Barry Baldwin, the United States marshal for the North- em district of California, was at Sacramento during the stake, and testifies as follows respecting statements made to him by members of the mediation committee and others, in relation to the attitude of the American Railway Union : w!!J!iJ^°T *•'•?""»• Mr. Compton, and Mr. Mallen Know Mr and T KpHaJf S?* ^' F**®^ ^*^ present and also Mr. Worden S5.Jt^ ,11 ^^' Compton, and Mr. Mullen, and several othP^i TJ^Zl ^r * ^^*^^»--?^d not recognize at the time. • ^ • i S S^k^ me wlfJJIS^%5n' ""^''^ ^ ^^^ ^"^"^ *« Sacramento, and thl^ Kn^waufn *^^^ Pullman cars were to be moved with the traih S^ta 7f^J^^ spokesman, and did most of the speaking The others spoke a little, some of the others and p<;niv>in]iTr jSZ^ZZa^ auc otners SrfS,in% ^"^^ ^^""^ ^^'^^^^ **> I^llinarSrs S fnov^ m«!^^!,i^*i*^^ "^^^ ^""'^^ ">«* t*»e trains should go with the If^li^^u^i^^l passenger ears, but not with Pullman carT Thpv S a'S?[l''^tIn^^l'^ni^1,* '^"'"""^ ^^^^ ^« P^^ of a t?ain!-no pa^ w iT oL^ \ ^°^ ^^"^y ^"^® °^« t<> understand that they would ^l^d'i^''1'hatfS^t '^r.^r^ J^^y '^'^ they had en^neit *Wi aavice. That they had paid $250 for the advice. Thev did nAf state who had advised them. ♦ • • i told them thpt t «h«,^?i perform my duties, and see that the trains were mo^ I told tS iS!:«* ««L*h'fi'*\''*^^l? ^ ^^^«* ^^ often armld7u^with^n,nan Wo "^:?^ Y^^^ *^ ^^« customary to place them. I told them that Hr.!S?-? •"* ^' ""I "P '"'" «» caboose out ^crolT^he tra^ta He asked if we knew who he was nnd t f»»^T» ««,♦ «v-xvoo Lue iracKs. He «aid that Ms "ame was wr.Sen?that^ve,^ ™e''Sw h^^ ?r^ ™i 5L'?^P'T'°«"«y ~°"««t«<» With theZvement ."? **7t "^S.^Sf ^ **• ^- P«>P'e *«t ''«» organized there Thev wero thi mediation committee of the A. R. 0. ^They were ihe^^ JS^.*f UNITED STATES V. CASSIDT. Charge to the Jury. 479 ^tyov^^t"""^ " '^•'"" °' *« ""o^^^e^t-^tenslble leaders The same witness further testifies, as to the action and attitude of the mediation committee, substantiaUy as foUows- the mediation committee of thp a w tt rryZl ^**"^*' ^" see me as U. S. marshal. They c?me to se^me'ayVhJr^ ""T^ *^ ?^ "^^ ^^ not offer any fesistance • tt?t i ^«l i ""^^ *."*' ""« «*■•*«■•« """"d this; It was C du?y to do It ¥heS w»''L ri"l.''"*''"''*y *» <*» Thpv snM fhn^-^i,^ u y^ "• -*^"®'* ^® talked the matter over Ktr A-^n.' vS!? E-5?" Irr-"' -'» - sistent, and would not oontinn^'7^?oi2 f as they were not too per- SirtS^m^Thari-^^-iEtiSHv"^ '--" -"" o^j^=tirar\^^^tr £HHi?* f ^^^^^^^^^ tlon to It, as lon?^s ttey md it l4eSSJy!™' ' *"•* °°* ^ ""^ obje.^ caJL^s^Sulsf ^^^^^'^y- ^«**"^ «^ -t--w in the we'tad tel'^^n flS^m^Jtter^'a'fS^brrr «» "^""^ <>" PO«'«on that oughly as poss ble toZ^ '»?S t^iH'lti° °? we. explained It as thor- boycotted the PuflmM cSs on l«»i^f,' *° ^^^^ P'ace. we had taken, I told them who ouradvii^wi/^^' ^^\" ^ «■" "»* ""«" Knight said that a PunZn car^s^oniTiT"""- "PP^"' """J «'• car regularly made npTas nart of » n,tn" '^"s a^ached to a mall an opinion from a veZ eminent i«wtf, *i' '^'- ^ ~»™e' ^e •>«« he knew as much Ito^tTt as Mr InLh? dM**""*^' ""* ^« t'-'^S"^ him we would not handle anffra^M with^^^"™"' ''* *°" during the boycott, and. now that tto ^^»^",'"k° '^^ attached would not handle any tralM It all «^f™^n^"? '^^ o'^^™^- ^e that had been dischirg^Z^* SL''^rSS*sS^*",lS|i-«' ZZ'Z ■ 480 i! 67 FEDERAL BEPORTER, 721. Charge to the Jury. gist of our conversation all the way through. It was repeated sev- Cfai times. T. W. Heintzelman, master mechanic in the employ of the Southern Pacific Company at Sacramento, called for the United States, testified as follows: ♦k" ^ J^?,**^ ^^^^ ^^^ Compton. They were out on a strike. Before the strike, Knox was a switchman, and Compton was a machinist working In the shop. ♦ ♦ ♦ I was present during a part of a CMiversation between Knox and Mr. Small at the roundhouse on June ^h. Mr. Small was the superintendent of motive power ♦ • • I heard Knox remark that they were In the strike to win * and thev were going to win by any means," E. C. Jordan, locomotive engineer at Sacramento, called for the United States, testified to attending a meeting on June 29, 1894, at which Knox was present, as follows: •* In relation to a telegram he said he would get, it was asked him as to what his jurisdiction was in this matter ; and he stated that his jurisdiction extended from Sacramento to El Paso and to Port- land and to Ogden, out of Sacramento. ♦ ♦ * There were three orders present,— Conductors, the Engineers, and Mr. Knox, of the A. R, U. * * ♦ The meeting was held for the purpose, as I understood it, of taking some action to bring the strikers or the A. R. U. men and the company together, in order to devise some means by which the strike could be adjusted in some manner to start the road. The following telegrams, purporting to have been signed and sent by H. A. Knox to various unions within his juris- diction, respecting the state of affairs at Sacramento, and transmitting advice to other local unions with reference to the action they should take, were in- [722] troduced by the prosecution for the purpose of showing the concert of pur- pose and action among the different branches of the Ameri- can Railway Union. " June 27, 1894. To I. B. Hoffmlre, Portland, Or. : Stop all Pullman sleepers. Answer. H. A. Knox." "June 27, 1894. To B. V. Debs, Pres. A. R. U., Chicago: Will we stop loaded sleepers? Ans. H. A. Knox." " June 27, 1894. To W. H. dune, Los Angeles : Sto^ all Pullman sleepers. Answer. H. A. Knox." " June 27, 1894. To J. M. Wagner, Ogden, Utah : Stop all Pullman sleepers. Answer. H. A. Knox." " June 28, 1894. To M. C. Roberts, Dunsmuir, Cal. : Be ready to tto out at moment's notice. H. A. Knox." " June 28. 1894. To E. V. Debs, Chicago, 111. : The ORG and BRI are going to take train out to-night. We are going to stop everything Answer. H. A. Knox." ^* " June 28, 1894. To J. M. Wagner, Ogden, Utah : Be ready to go out at moment's notice. H. A. Knox." UNITED STATES V. CASSIDY. Charge to the Jury. 481 «ny,';;o: hL'"^. ."^V^ox"^. «^^^^«' I>-«n.uir: Don't know, but if H.7.Tno^:"^'^- ^'"^ ^- ^' ^"^-^' «ocklin: Yes; stay In RockUn. ^2p. 1i.TKno;^,,^- ^- '^^^"'^^-^^ T-e^-, cal.: Hold Nos. 4 ther?"'R a: Zl3', ^* ^^"^«^y' Wadsworth, Nev. : Hold No 4 "June 29. 1894 Tn i? r» rx j ^ tie «yo?dfr^'t'^S.'??|,t^;„0*s Pres. A. R. v., Chicago: General June29]8'»-. S"»»'t. Ca,.: no; stop at once. Pullnmn boycott be reinstated "J^arrnl^ ^l? *"''^'' »«" '" *«"« charged for same cause. Pullman h^tli^'^*^'^^" T° '™° * "e dig- »srr s^d'e. T.^^^r^^-^'^^'r^'^ol ^a^X. engineers and conductor sta^ ^il "^ aZf^rS''^l,f'Z'2 "July 2, 1894. To E. V. Debs Prp« a x> rr V,^. ^"?.T1![y%T^^'^VW^'^5^^^ ""'■ ""' Davis, notbTsacraSe^io^' ^'""'^''' D»°«'»nir, Cal. : She can go Tta ..e;'"'ltLJ1^m;'';e"ar^: ""j^T^^ TiZl'^ ^"'^ '""»'" »«""« end«eS r;^°er:^'*rtX'!'^B?,» g^^kTT ^^^^ 11808— VOL 1-— 06 M 31 r^' 482 en FEDERAL REPORTEB, 723. Charge to the Jurj'. A«^«^^L ' ^ 1S..^* ^^ Walthere, Dunsmulr. Cal. : One thousand ^yalrymeii and militiamen here. CJome with whole outfit by train, without orders, at once. H. A. Knox.*' JLV"^^ *;t^?^* I^ ^' ^ Walthers, Dunsmulr, Cal. : Don't close the Western Union office. That will hurt our cause. And talce guard away from the Postal office. H. A. Knox." " July 4 18W. To E. V. Debs, Pres. A. R. U., Chicago. 111. : We have the troops on out- side. They have refused to obey commands. ""i\''? ^l^ ^}^f^ '~"^ "^'«y back.~bound to succeed. H. A. Knox.'' «,^ii"^* \^^; ^"^P: ^ McCllntock, Truckee, Cal.: Please allow merchants to take perishable freight from cars, but agent must check It to them. H. A. Knox." •t^l?"'*L^' '^^- '^^ Madden & Turner, Dunsmulr, Cal. : All quiet liere. We are sure to win. H. A. Knox." rJ^jfZ « ^^' J^ ^* V. Debs, Pres. A. R. U., Chicago, 111.: It is reported the U. S. marshal and Gen. Dimond, of state troops, has turned our affair over to Washington Have attorney there to work on it. \ye have eveiTthing cur own way. and have not broke the law, only by keeping about 5,0C0 men in sight. Please advise us what to do. Not a wheel moving. H. A. Knox." "July 6, 1894. To E. V. Debs, Pres. A. R. U.. Chicago, 111. : Any truth In reiiort of strikers and soldiers having battle in Chicago? Please ans. We are as fli-m as rock. H. A. Knox." "7/7/18W. To J. M. Wngiier, Ogden, Utah: All quiet. Stand Ann. H. A. Knox." "July 7, 1894. To Wni. O. Leary. Pres. Miners' Union, Virginia City, j\ev. : Resolutions received, and return thanks. We are bound to win. We are as solid as rock. H. A. Knox, Chairman'." "July 8, 1804. To W. H. Clune. Los Angeles, Cal.: Force them to stop, or tell them when we settle, their firemen will run their engines We done that, and you bet it brought them to time. All quiet here. We are solid as rock. H. A. Knox." " July 9, 1894. To W. H. Clune, Los Angeles, Cal. : Everything very quiet here. Nothing moving here. How Is things there? Stand firm. and don't let nothing go. H. A. Knox." "July 9, 1894, To Chas, Fink, Oakland, Cal. : We sent Geo. Hale to Yallejo, but if there at Oakland he is O. K, H, A. Knox," "July 11, 1894. To W. G. Boyce, Pres, Miners' Union, Silver City, Nev. : Thanks for sympnthy. We are under heavy expense. Finan- cial aid would be gratefully received. H. A. Knox, Chairman." "July 11, 1894. To Chick Featherson, Sunmiit, Cal.: I received orders from E. V. Debs to order strike on entire system. Hence mv order. Sacto. is solid yet H. A, Knox." " July 11, 1894. To E. V. Debs, Pres. A. R. U., Chicago, 111, : Sorry you are in jail, but be strong, and we will carry the strike on if they put all of you in Jail. I^ts of soldiers here, but everything quiet so far. Every man out here, but a few scab engineers. H. A, Knox." " July 11, 1894. To J, S. Walton, Oakland, Cal. : Adopt code. Lots of soldiers here, but everything quiet yet. H. A. Knox," " July 12, 1894. To J, Balder, Truckee, Cal. : Train of soldiers get- ting ready to leave here for Truckee. Everything quiet. H. A. Knox." " July 12, 1894. To E. V. Debs, Pres. A. R. U., Chicago, 111. : I will stand [7»4] by A. R. U. as long as life lasts. I refused to run for rail- road commissioner, because I thought so much of the fight. We are doing nothing but what is proper. We are going to fight it out on this line. We have 1,800 soldiers here, but no trains out yet H. A. Knox." " July 13, 1894. To Chairman A. R. U., Truckee. Cal. : Reports all hr A. UNITED STATES V, CASSIDY. Charge to the Jury. 483 t'S^ Easl"^ H TkuoT'^'"' ^'" ^"''' "^^"^ P^^*^"^'^ ^' «o^dlers, for ■ '^^^!T"'J ^^^^ "^^ introduced purporting to have been a^ed by H. A. Knox, addressed to E. V. Debs, at Chicago and to other persons, in relation to the strike, dated July I4th' and subsequent dates; but KnOx testifies that he was arrested on July 14th, and was in jail for three weeks, and he denies specifically having signed the 11 telegrams dated July 22d, which bear his name. It is possible that some member of «»e mediation committee, or other officer of the American Railway Union at Sacramento, acting for the committee, may have signed these telegrams in the name of Mr. Knox- but as the testimony in the case, and particularly the tele- grams sent out by T. H. Douglass, who appears to have been chairman of the mediation committee after July 14th indicate that the strike was declared off on July 21st tele' grams purporting to have been signed by Knox, and dated after July 14th and particularly those dated July 22d, are certainly discredited, and I wUl not, therefore, refer to them t^rCrtant^'^''^" '" ^"^ ^'^^' *^^^ '^ ^^ ^PP«- George Vice testified, on the part of the defense, that he had been a locomotive fireman for the Southern Pacific Com- pany in June last ; that he belonged to the American Railway Union at Sacramento; was the vice president of it; thinks he was present the night that the telegram came frU £ ^go, announcing the fact that there was going to b^ a Pulhnan boycott. He admits signing the following Sle Ta;i,1>!*AVlf:Vliem'^of'^olLf^^^^^^^ Master Cactus Lodge, 94. man: 260. 143, m| S?. ^ 19 58^ ^^«°"iof ^»'*- ^- *° ** you tie division up, will ^aran^'ft^' ^L^^' "".'* Roseburg. If a Wheel turned her^or .li^T^J^.r'^^^y,^^ ^aSer^aeo^ I li I it I ^^ 6*7 FEDEBAL REPORTEB, 724. Charge tq the Jury. Also the following: "Sacrameuto, Cal., July 16, 1894. J. Friant Fremio r-ni • u^i^ men here stand flmi. Scabs scarce. We a,e wfnnerrG^^^ Also the following : men^here' nuUu ^T'u ^*^- ^- ^^^"^^^^^>'' Wadsworth, Nev. : Fire^ G^. \Zl- ^^''^^ '^"'*'*- ^^'^'^^ ^^^"'>«'-«- You stand firm; [725] He also admits sending the following- The witness, being questioned about the wording of the telegram, testified further as follows : "A Juror : Q. What did you mean by * tie un everything ' ? a Leave their work Q. You said, *Quit and tie up evei^nl ? Whai ZZv q' YouC* ^. Zr''^.'''}^^ ' • ^- ^"«* to'^en^e work. "^The^ S^your LIZn for ^^IKT^ a%"^ everything.' • Quit ' seems to .^ •*» V^lrJ **^^ "® ^^- A. I meant the same thine bv it o Quit' and 'tie up' are the same thing? A. Y^ sir Mr Knieht-* Q. By • .e up everything/ you mean ieave work ^om evemhingv^ A Leave the service. Q. From everything? A. Yes sir Q WMt t ^TZZe^'ther^^^^^^^^ ^^" '''^' ' tif up ^veSg' wui* ?^' there is a whole lot of meaning to •everythine' O What s your meaning in that connection? A. If a man is on i lob according to that,-if he is on an engine,-he will leave his work.'' ' He also admits sending the following telegram : " Sacraniento. Cal., July 17, 18»4. J. J. Brennan, Rocklin- Stand. ^ not allow anybody to report for work. Stronger hSe than ever We're sure winners. Geo. Vice." The witness states : " When this telegram was sent, it was only meant for the flrpmon There were lots of liremen that did not belong^^the A. R. u.^' Admits writing and sending this telegram : Niv^TtiTfll^^i/.''".^ V' \^; ?^- ^- r^^°d««y' Wadsworth, wev. . htill firm, and will stay to last. Sure winners Gainine vol miits from scabs. Fillmore weakening. He interviews m^^ftiot board, and makes concessions. Geo. Vice." '^^'v'ews meaiauon Also this one : ti «f«f!*of2™!f**** ^rShJ'^^y ^®' ^^- »• F- Michaels, Tucson, Ariz.: dn ««„fi*?wr J*?^ "? ^^"^ *^Shter than ever. Use all means to do same there. We're winners. Geo. Vice.'* Also this one : nZ^^'^^'^T^; Cal. July 18, 1894. W. J. Featherson, Summit. Cal.: Quit immediately, and tie up everything. Come to Sacrkmento We're sure Winners. Answer. Geo. Vice." » f Also this one : UNITED STATES V. CASSIDY. Charge to the Jury. 485 Extern BT'^^.S'e'n faKi^n/v^- «^''*' T«™ «■"><»■ ^»<>- = will not re-employ us Til. Jii'^t. ^°l *^ « ^^^' *»"« »«• »• ^^ Vice, Master m" ""^""^ *" **''« "»• Answer. Gea The witness states that he had no authority to send tele- grams for the Amenuip Railway Union; that he sent them by virtue of his being a master of the Brotherhood of Loco- motive Firemen. He admits, however, that he was also an ofccer of the American Railway Union, being its vice presi- ♦w\^' ^""^f *"/«l*^' ^''Ued for the United States, testified that he was chief train dispatcher for the Sacramento Divi- sion of the Southern Pacific, at Sacramento; that he knew ?*wi To'^A *^* ""^ ^^^ *** ^«"g»''^ ^»s connected with the A R. U. during the recent strike, because Douglass appeared before Mr. Fillmo,^, or in his rooms, on one or two occasions, m connection with the strike; [726] that on one occasion Douglas came in an official capacity ; that, when he did come m an official capacity, Douglass announced that they had decided to deckre the strike off. This was in the latter part of July. Douglass' position in the American Railway Union was a member of the mediation committee. Douglass was not a member of the mediation committee right ^ough the strike. The witness understood that they (Douglass and the two men who accompanied him on the occasion just referred to) took the place of the original me- diation committee at Sacramento. On the occasion referred to they came into the rooms of Mr. Fillmore, and requested the stenographer who was present to prepare upon the type- writer a stat^nent to that effect, which was read to them by the stenographer, and was signed by them. The witness was present when this was done. Witness knows the handwrit- EiingX^ram's •^""'^^^ ^^ ^^^''*"" *** ^''^^^ - «^« settlemeat? Ans^S T tt'l^gtass"'' ^"^ ^"" ""^ "*»'*' " Debf'^mtu'atu'Ve^Vhe^ 'gJ^^TitST''''^*''"- = ""^^^ '"»» T. H. DouglaML" ^^^'^''^^'^ 8<^- Switchmen have all quit here. ( li I \ I )■ II I I I 486 67 FEDERAL REPOBTEB, 726. Charge to the Jury. fr«in«';i!^ ^^Kl\^^' '^^^ ^' ^' Battenfleld, Rocklin: Four « SLVr* ?^t "*. J*^.?''^*- N<^ ^^«^« t<> ™«^e. T. H. Douglass." from K„,; •^''i^i/ifv^^^- To E. V. Debs, Chicago. 111. : Scab! coming from East. With few exceptions, men solid here. T. H. Douglass." Cal^ SiHr«i::'»^«' ?i*^^ ^^\'T- '^^^ ^- ^- B^ttenfleW, Rocklin. Cal Situation better than yesterday. Prospects brighten every hour lo A. K. u. T. H. Douglass. .nC^n I J''^^^ ^?^ }^- '^'^ ^- " B«ttenfleld, Rocklin: Did aiKf train leave Rocklin this morning? T. H. Douglass " Sacto July 18th, 1894. To W. Balder, Truckee, Cal. : Received tT Douglass?'™^ H«^"- He states situation firm eveJyThe^ nJ Pw'ik/"'^^^^*'' J5^' u^* ^' »'**'"«"' Rocklin : Situation has not changed. No work for shopmen. T. H. Douglass." minZ^ku^^ ^^*?' \^;,nF^ ^- ^' ®«^^"- ^Sden, Utah: Com- mirfirr"^ H.'^D^ugfass/' ""^"- ^^^^'^"^^ -tisfactory. Men re- " Sacto., July 19, 18»l. To G. W. Lindsay, Wadsworth, Nev • No change in situation here. Remain firm. T. H. DouglasV " ' Sacto., July 20, 1804. To James Hogan, Chicago, 111 • Trup sltiift- D^uglal^."'''*'''*'"*"^ *" '"''"^ ^**'*^' ^^""^ ''^"^ '"'^''^ affairs. T.H. Rtrifrwii K?5 ^^}^^'J^^ .I"" ^' ^ <^^' «««»^»n' Cal.: Probably strike will be declared off at 2 p. m. T. H. Douglass " "Sacramento, Cal., July 21st, 1894. To W. Balder * Truckee Hnl • Expect strike to be settled by 2 p. m. T. H. DoiSs.'' ic^ ®*'Tk?®?*^' *^^J' -^"'y 2l8t. 1804. T6 G. W. Lindsay. Wadsworth D^ugla™^ ^^ ^^^^"""^^ ^^^''^ ^^'^ ^''' "n«"i»^o»« vote T a " Sacto., .July 21, 1804. To S. J. Brennan. Rocklin, Cal • This lodge has declared strike off. T. H. Douglass" H*!!i^**^r'"?!l*'' ?"V' -^"^y ^1' ^^- To W. Balder, Truckee, Cal • Strike has been declared off Pacific, unconditional. T. H. Douglass!" T. H. Douglass, called for the defendants, testified : That he was a brakeman last June and July, running between Sacramento and Truckee. That he belonged to the Ameri- can Railway Union and Order of Railway Conductors. That he acted as chairman of the mediation committee, he thinks, from the 12th or 13th or 14th [727] of July. That the occasion of his so acting was because the original mem- bers on that coimnittee were arrested. That John Hurley and G. H. Hale were on the committee with him. That he continued in that capacity until the strike was declared off. That he does not remember the day when the strike was declared off, but he thinks it was the 25th day of July. He at- tended a meeting of the American Railway Union on the 26th of June. There was a message read from E. V. Debs, de- claring a boycott on Pullman cars. The union took action on the matter, and declared a boycott. Was in Truckee when the strike was ordered. First heard of it about 6 : 30 1 UNITED STATES V. CASSIDY. 487 Charge to the Jury. in the morning. " The train master asked the crew if they would go out on No. 20. They told him, ' Yes.' After he [the train master] left, seven or eight men came in, and told us there was a strike ordered, and had not better go. Well, we did not go." Douglass admits having received and sent a number of dispatches during the strike. BEGINNING OF THE STRIKE AT OAKLAND. Thomas J. Roberts, a witness for the defendants, testified that he resided in West Oakland ; that he had been employed for six years as a locomotive engineer for the Southern Pa- cific Company ; that he was president of local union No. 310, of the American Railway Union, which was organized in May, 1894; that the first he knew of any trouble was a communication he received from Mr. Worden, who was dele- gate to the convention in Chicago. He says : " I received a letter from him stating that the Pullman boycott had .^°T> ?,^^'*^A ^"^ ^""^^ ^^^* *^ fi^® <^*y«' ""less the trouble betn een the Pullinan Company and their employes was settled. On the sam«» 9ft?K^* ^^^iu" ''^''^'' ,i^^'^ in om- meeting— that was Tuesday, June Jbth— from the president of our general union, saying, ' PuJhnan Doycott in effect to-day noon, by order of convention.' " He further says : " It was the evening before we received the telegram, and that bemg our regular meeting night, the secretary held the telegram until the meetmg opened ; and after the meeting had opened, and we got through with our preliminary work, the telegram was read, and the matter was discussed, and I think the telegram said the Pullman boy- cott was In effect that day at noon. Still we did not want to take any snap judgment on the company, and we decided not to put it into effect until 12 o'clock the following day, June 27th. That would be Wednesday. A motion was put and carried to that effect, and our secretan^ was instructed to notify the Southern Pacific officials that after Wednesday, June 27th, at noon, we would not handle anv Pull- man cars, or do any Pullman work." Continuing, the witness testified : " June 27th the boycott took effect, at noon. That afternoon we had some trouble in the passenger yard where I was employed. Some of the boys that were cleaning cars were instructed bv some foreman that they were working under to clean some certain Pullman cars and they refused to do so. They told him that they belonged to the Ameri- can Railway Union, and that there was a boycott in effect, and that they could not clean the Pullman cars. He told them that if they did not want to do that there was nothing else for them to do, and that they could go homa" The men were reinstated at his request. They went on with their customary work. The strike was to take effect 488 67 FEDERAL REPORTEB, 728. Charge to the Jury, the morning of the 29th, at 12:30. It was for the reinstate- ment of the men who had 1738] been discharged. By strike, he means that the men were aU to withdraw from the semce of the company, and refuse to work. In case the mm were reinstated, they would be returned to work. By tte men, he means the strikers. There was no resolution. Ihat was the understanding,— his understanding. The sec- retary was instructed to notify all the unions on this system, or in this state ; he is not sure which. All the action that was token was that they advised the men to try and keep men from going to work and taking their places; to persuade those that were at work to quit. « Tie up " is all railroad phrasft It means to cease work. It is used by officials and tram dispatchers. Perhaps a train at Port Costa may get orders " ^^jn No. 18 will tie up at Tracy." That means that they will not go any further. The witness was shown a number of telegrams, among others the following, which he admits having sent : "West Oakland, Gala., June 28, 18M. To F P Saiwnt T»r,» Hante: Firemen's lodge here indorsed Pullman toyrott ^17^? bandle their cars. T.J.Roberts" ui man noycott. win not " Oakiand, CaL, June 30, 1804. To W. H. Russell, Secretary B R ?:' J^terttl-' • ^'"'* " ««»""»•" Define poslt^Ta R. T. "Oakland, Cal., June 30, 1804. To H A Knoi A B tt a.«-, "'"o^S'nd= ?:^,*'^'* "5i °?^~'" l3en>.%TRo^rt^:"''' ""="" Oakland, CaL, June 29, 1894. To E H r.i»on ^nn t/^oa n«i . Firemen ont here. Do not Work. ciL hom;. T J Robert?^' ^''^- ' "West Oakland, July 14, 1894. To F. P Sareent Twre* H«i,tP Ind^: Authorized American Railway Union strTkeTJ^.ShllirL F. men work during strike? T. J. Roberts." West Oakland, July 18, 1894. To F. B. Porter, Reno Nev • Solid here. Da not waver. Victory is ours. T. J. Roberts/^ ' ^ He was in frequent correspondence with the officers of dif- ferent lodges of the American Kailway Union throughout the state, and in some instances with the American Railway Union headquarters at Chicago, during the strike. Does not know particularly that he sent them by virtue of his official position as president of the American Railway Union in Oakland. It was merely for information. The union sent a great many official notifications of the strike through- out the state. He did not. The secretary sent them. The union ordered the secretary to notify the different local t UNITED STATES V. CASSIDY. 489 Charge to the Jury, unions in the state of the strike here. They had no authority to send them m his name. They related to the strike. He got some messages from Knox, of Sacramento, and sent him some. G. D. Bishop, called for the defense, testifies that he was the secretary of the American Railway Union at Oakland. The secretary was instructed, the night of the boycott, to notify other unions in reference to the boycott. BEGINNING OF THE STRIKE AT RED BLUFF, TRUCKEE, AND DUNS- MUIR. John Kelly testified, as a witness on behalf of the govern- ment, that he went out on strike on June 28th or 29th ; that he had been a fireman for the Southern Pacific Company that he went out at Red Bluff; that he was a meml>er of the American RaUway Union; that that had to do with his ffoine out on a strike. .u'l' u' r^«i?^' ^ '^'^''^^^ ''•^"^^ ^^^ *^^ defendants, states that he [739] went to Red Bluff from Sacramento on June 28th ; that he lived at Sacramento, and belonged to the Sac- ramento lodge of the American Railway Union; that he had been brakmg for the Southern Pacific Company; that there was no American Railway Union organization at Red Bluff He testifies as to being advised of the strike bv a telegram from Mr. Knox; that he had asked Mr. Knox if there was a strike ordered, and the latter had replied, "Yes, there is a general strike ordered by Eugene V. Debs." The witness states that he was appointed chairman of a committee at Red Bluff The committee were composed of railroad employes who had struck. Although the witness is very uncertain as to the purpose of the meetings, and the appointment of the committee of which he was chairman, he admits that at least one of Its objects was in order that there might be some au- thorized person to receive and send dispatches for the men out on strike at other points, and be a channel of communi- cation between Mr. Knox and the men at Red Bluff He received quite a number of dispatches from Mr. Knox, and from other places. Although Heaney admits having re- ceived a great many telegrams, his recollection as to their ^> i 1 ; 1 / 1 1 ' *^ 67 FEDERAL BEPORTER, 729. Charge to the Jury, contents is extremely vague. B«t one of these telegrams wa. introduced on the part of the prosecution. It is as follows : Ca?-Jack Seaney^- ^winffwSIh^i ^'"- ^?1'^«<' »* Sacramento, by three thouS^Tf H. T Knot" "^ ""'"'"• '^"''^ '**'»*^ One from Heaney reads as follows: Mrs. Stanford's specialT H^U^Sl l^^. ""^^l^. «° "««" "'"> iJ!ll-^''^7^V^^^ ^"^"^ ''**•" Dunsmuir, purporting tobesignedbyM. C. Eoberts: * "Dunsmuir. Cal.. June 28th isfti « a ir_ .. „ _ Mr. Knox replied : From Truckee comes the following telegram : " Truckee, Cal., July 4. 1804 H A iTn/^'.^ e«« . t., !«? Tram on „,n.l ule r^tJ'doaTAnt^/'"' ^"" "«"* Mr. B[nox replied ; f.:if"Xin^^m'^,Ut"*^^:rLs?.*"' ^ = ^- -«-♦ ^e foUowing tel^ram purports to have been sent by * . H. Almus to Mr. Knox : ' It COm^^t^*' ^V" wm f''*- .^""^ ^"°^- Chairman of A. B. Ahnus testified for the defendants, and stated that he wa«. a member of the American Bailway Union. Knox's reply isasfoUows: '^•' ttiTno^:-'"^ '"' *• ^""™' S"--'*' C-l-= No. Stop at once. • J , ^f following telegrams are from Los Angeles, signed by W. H. dune: ^ge.es, *i aift'^w^^Yf i^s Angeles, Cal. G. D. Bishop, Secretary A R n 810, W. Oakland, Gala. : Stand firm Will iwvc^^n^* «V t I * , this p. m. W. H. Clune, Sect. No. B^hty!^ ^ * "* ^ "^"^^'^ t . •' UNITED STATES V. CASSIDY. Charge to the Jury 491 nlnety-seven are wTh us to till ^,p »n/. "'l? "•""•""^^ engineers here. Shopmen, section ra\"ridt*:i'e*!:iS;^. "^"rSu^r^'tyT'""'' STMKE IN SAN FRANCISCO BV A. K. U. LODGE 345. It is admited by the defense that the defendants John Mayne and John Cas.sidy were members of this lodge at the ime of the strike Eice and Clark, the two other defend- ants charged in the indictment, but who are not on trial were also members of the same lodge. Charles Ault, called for the government, testified: That he was a member of the Amencan Railway Union. That the number of his lodge was 345, San Francisco. It was the same lodge to which the defendants belonged. One Bradley was president, and another person by the name of Elliott, was on the executive committee. This lodge went out on the strike, as a body on June 29th,-the night of June 29th. It al.so ^pj^eare^from the t^timony of H. J. Bederman, a witness for defendant hat one J. E. R.ordan was its secretary. McClintock was also a member of this lodge. The purpose which prompted its ? T rJ'^ ^*"^^ '' '"''^'^ "y *'»« *-*--- aTfol lows T. J. Roberts, president of the Oakland lodged Ameri- can Raihvay Union, testified that the union of whrch hTwas president authorized the secretary to send telegrams to dif- lerent unions, as follows: eff:^tTwl?ve f^Z ^."'r^i^yT? '•-<»■-' t- O-lared striice. Tal.es Mr Roberts when examined, said that he had not per- sona ly authorized the sending of telegrams of such purpS, nd knew nothing about them. Some 21 others of a similar tOiaracter were sent to different places. Mr. Bishop, the secretary of the same organization, tes- ■fied that these telegrams were .sent out by direction S Z umon. They were authorized by the union. It wiU be 492 « FKDEBAL REPOBXEB, 730. CwiW to tbe Jnry noticed that the dispatch clain««i k. .x. been «,nt to Riordan! o7 llS ^^ ***. «»^«™'»«nt to have the defendants were mZb^ uJm^'T "T "' "' ^^»'«=h This witness -cknowS^ifL ^ / .^ "*'"' '^"^ purporting to come fro^.TSln': '""^ '''•^'"' San Francisco, June aft itMu. r% t^ He testified that he authorized the sendin.rn* fK *„ • tdegr^ to J. E. Biord«, on June^Tisw^ "' ^''^ '*'"°""'8 longidtiliS'sa^ '-'"^'".""'"y' *'•«* he be- way UnionT?St the deL^w"^' *** '^' ^-"^"-^ ««'- that the occasion ^f thtS^iXtLTnilVw^ ""^ '"*^^^'- of some of the members hJZ. /■ T ° ^"^ "" account Pullman cars: thraTe^l?""^^''^ *""" "«* h«»d«n« appointed; thitte :rrh:d'^L!rofT™"^ '"' thing concerning the strike of fhll *f ■'"'^* ^''^'y- •-longing to hif union itjed'^nTe' StT - ^"^ T" the committees were appointed on th- • ^/'«'«n; that that all the power re^XI^h! ^t*^*""'^ «>' June 29th; executive coZiitLT^ tS ^ '"" ^"' •'*^*«'"«'J ^o the the strike; did noritcoJ^l ~'«- '"<* ^^'^''^^^ »' a division when, there wei^e no S2-^ '" ''"'^'"« "" of sympathy; thev were LmbS' Ah ""'''• '"* " 'J"^^*'**" supposed to do what was 2ht k """*"'■ ^''^^ *«'« was discharged for a ca?^ h^t[ ^^ T*^ "^'^her; if one try and protect him tntl ."*^i"*^ "'^' '^ej would was se«;tary ofTe'unLr ^ "^"^ **"""' ^- ^'O'^*" thetSdS^^iirKsTf^^^ •^"^ r * -^'"- '- senger yards of the SoJth^ VS r ''''*''""'" ^'^ *he pas- Townsend streets; that 1^ ^S ^"^r^' "* ^""^^ and Union (Lodge 345 San F«nV^ *** American Railway of June or tfe^h; tLfrE.rV'*' "«''* **' *•»« ^Dth «ve committee; that this^ ^j!^- ^r.^tSg UNITED STATES V. CASSID^. 493 Cliarge to the Jury, that was to be done in connection with the strike; they had full power; the question of Pullman cars never, to his knowl- nw' 'T.T/^u^ '*™"'' *•''• *he reinstatement of em- tZ\ 1 \^i *^" discharged. On cross-examination he states that he struck because of the discharged em- ployes; he beheves some" were discharged in Los Aneeles and some m Sacramento; simply struck to see j^ tic^dol' On redirect examination, he said that he first got rmeTn S";?;;,: B*/'" ^*"'^^^^•''" *^^- Bederm!n;rarhe believes that Bederman read a message to him; he doesn't Ednard F. Gerald, a witness called for the government gave test,„^„y tending to prove the handwriting of Mr Riordan He states, respecting the following tfle~s that he " thmks they are all Mr. Riordan's signafurl - ' ColV.^r'ii'^U^'Z:,'^- J^,,^«- E. Bradley. Engineer S. P. Notify San Jos« and alongX Vne"^ tT' m'^'^ """-i"' ^-"'"o »««•>■ June ^ ifiQA IT" V.-1I :i J ®" **• ^' Riordan." strike" or^eVed'^nn.fedS'teh"' tI" ^n'^ ""'T,' «• ^- ««• Cabo.se: Secretar.y .m. A. R u " * ' '^ "" e^eothing. j. E. Riordan, der,^"Tn,^e.S„. Tie''un'""e1e^th'""' ^1"°^' »• ^^ ^O- : Strike or- #345, A. R. U." • "" everything. J. B. Riordan, Secretary ae';^""i!,„?ed work. San Francisco, 6-30 18j«u ^ Committee out oi ^anSe S«S:.w n"*^' ^^^^^°^ ^ard S. P. Co. quired. J. E. Riordan.^^ ^ ^""^"^ ^^"«^- Your assistance re^ It is admitted on the part of the defendants that the fol ** San Fran., 7/1, 1894 Tn w mu^*^ * x ^ ing between 116.4 anT^hicago " It f^o^f SJh?"'- = *'"* « ""<*' t°™- posted. George Elliott, Chalman " ^"^ *""*• ^'" keep yon 7/2, 1894. To Ed Stan wood, Caatrowile Station: Everything Is f I 494 ©FEDERAL REPORTER, 732. Cbarge to the Jury. Elliott, Chairman A RU^' *=''«'Tt'"'»8 is coming our way. George a^TMS' r.,Kv£^<^ -j« r^ as " 7/3, 18W. To W. H. French, Aptos : You are all in to clear Fn ^:<^^eVZr^!Ci:j:" •>-'-"- X.e'^^l^e^ig^a"t »v^^'Se l^ilh^'b^^^lTi!^:- "^'^^ '« »-- -^ win .e '-^<^- I have now directed your attention to some of the testi- mony that tends to show the communications that passed be- tween the various lodges of the American Railway Union and their members concerning the boycott and strike, and the concert of action that was had in pursuance of such com- munications. I have also called your attention to some of the statements of Knox and others as to the purpose of the boycott and strike, and the purpose they had in view in taking the action they did. To review all the testimony in the case bearing on this point would take too much time, and will not be necessary, in view of the argument of counsel for the defendants, who admits the concert of action claimed by the government, but denies that it involved a criminal pur- pose. With respect to these telegrams, and the testimony I have referred to in connection therewith, you will bear in mind that many of them have been admitted in evidence with the consent of counsel for defendants; the genuineness of others has been denied; and the testimony as to still others is, by reason of the contradictory nature of the testimony, involved in more or less uncertainty. As you are the sole judges of the credibility of the witnesses, and of all the evi- dence introduced in the case, whether it be oral or written or documentary, you will determine the genuineness of such of these telegrams as are in controversy, and this you will do from all the circumstances in the case. In passing upon the telegrams not admitted as genuine, you will be justified in resorting to all [733] those facts and circumstances in the Af m' united states v. cassidy. Charge to th(? Jury. 495 case which will tend to establish their genuineness, or, on the other hand, serve to show their want of genuineness. For example, you may consider the occasions and occurrences to which the telegrams purport to relate ; whether they would have been sent, but for such occurrences; the relation they bear to the events which you may deem the evidence estab- lishes to your satisfaction, and beyond a reasonable doubt; their tenor and subject-matter; the fact that the sender or the recipient, as the case might be, was connected with the American Railway Union. In fact, all those circumstances and incidents which may be rationally and naturally con- nected may be considered by you in passing upon their au- thenticity, and the probability of their having been sent and received by the parties whose names appear upon said mes- sages. The importance and materiality of these telegrams as showing, or tending to show, that the conspiracy charged in the indictment did in fact exist, is for you to determine. There are two important facts, however, to which it is proper for the court to call your attention, in your consideration of this question, and these are that most, if not all, of these tele- grams were sent, or purport to have been sent,— whether they were or not is, as I have stated, for you to determine,— by and to members of the American Railway Union, and in the greater number of instances by those in authority in that or- ganization, and who the testimony T have referred to, and other evidence adduced during the trial, tends to show were actively concerned in the strike, and took part in it with the avowed purpose of preventing the movement of all Pullman cars. Another significant circumstance, to which I call your attention, is that you are to consider whether these telegrams related to any of the facts charged in the indictment as con- stituting the conspiracy to commit the acts with which these defendants are accused, and whether they had any bearing or connection in any way with the acts charged in the indict- ment as means to effect the object of the conspiracy, and with reference to which— or some of which— acts the prosecution has introduced evidence showing, or tending to show, the conspiracy and overt acts, and the connection of these de- fendants with such conspiracy and acts. If you are satisfied from the evidence that these messages related to, formed a 496 67 FEDERAL BEPORTER, 733. Cbarge to the Jury. part of, or had any bearing upon the object of the conspiracy, and the means to effectuate such object, charged in the indict- ment, and the overt acts alleged to have been committed in furtherance of such conspiracy, it is a circumstance which you may consider in determining the existence of such con- spiracy. You will consider whether they establish, or tend to establish, the concert or purpose and action which consti- tute important elements in this case as to the existence of the conspiracy charged ; particularly, where a number of tele- grams of similar purport and tenor are sent to different places at or about tlie same time, and all proceeding, or pur- porting to proceed, from the same person or local lodge of the American Railway Union. Thus, the telegrams sent by Knox, who, as testified to, was chairman of the mediation committee at Sacramento, [734] and whose jurisdiction as such extended over a good part of the Pacific coast, or of Eoberts, the president of the Oakland lodge or union, or of Bishop, its secretary, or of Douglass, Vice, Elliott, Riordan, and such others as the evidence shows, or tends to show, sent telegrams of the same general character, these persons being officially connected with the American Railway Union,— whether these show, or tend to establish, a unity of design, a community of purpose, an express or tacit understanding to do the acts charged in the indictment. It is claimed by the defendants that, while there may have been some concert of action on the part of the mem- bers of the American Railway Union with respect to the boycott and strike, the purpose of such concerted action was merely to advise members of that organization to quit work until the controversy between Pullman and his employes should be settled. As I have explained to you before, even this purpose would become a criminal conspiracy, if the concerted action were knowingly and willfully directed, by the parties to it, for the purpose of obstucting and retarding the passage of the mails of the United States, or in re- straint of trade and commerce among the several states. The government claims, however, that the concerted action on the part of the American Railway Union had some- thing more to it than merely advising its members to quit work. It is claimed that the language of the telegrams, UNITED STATES V. CASSTDY. 497 Chtirge to the Jury to which reference has been m^de, indicates that it was the purpose of the strikers to prevent the movement of . railway trams belonging to the Southern Pacific Company, by actua and unlawful obstruction; and in this connection the question will arise in your minds, if these telegrams were intended merely to advise members of the American Railway Union to quit the service of the company, why did thay not so state that purpose in plain language? It would have been an easy thing to have said, " We advise you to quit work." IVhy, then, telegraph such instructions ^Wn^r?'"'!^^^^^^ telegrams were sent: "Stop all Pulhnan sleepers Tie up everything." " Hold Nos. 4 and 2 sure. Tie up strong." Furthermore, if it were simply the purpose of the American Railway Union to advise its members to quit work, why did Mr. Knox use this langua"«*«<=* ^e^ mitted to leave, or nhether f ^Lm . ^*«amer would be pcr- tbe exp.-ess from tbis «rr to tlie ste-TuZ o^n '*™'*I^ *° f=>"«fe«- wagons-tbe large two-borS "^-on nnd «. •^'^"^"^utly I ordered two exi.re.is car, with the idea tl. >t li i^ "\ 9" ®'"S'^ wagon— to [7381 the andK. • . • I %dn J ;lM^."''^'''<'-''"y *•'•'>* express ip to Ott state to them wha fiT^oilT^r wJZ^'JS''!?'''- ' ^'^ °^ we could, and took the express wer fo ti.J^. J*""*^ " '" «« refi^sed to ^o with the P V "' and that this was the cause of ite nofgoTng ot '^""'"''" ""^ Barry Baldwin, United States marshal, who was at Sacr, mento from the 1st of July until the middle of A^.ti" 500 en FEDERAL BEPORTER, 736. Chiirge to the Jury. for the United States, testified, on direct examination, upon being asked in what condition the tracks and the cars and engines in and about the depot at Sacramento were on the evening of Sunday, July 1st, that they were in gi-eat disorder. Engines were driven head to in places, and wheels blocked, and obstructions--car&— placed across the tracks. The cars were placed in such a manner as to impede the business. Saw no steam arising from any of the engines. They were in such a position that the trains and engines could not have free movement. Mr. Knox denies the truth of this state- ment, and in answer to the question : « Q. Wliat was the con- dition of the yard? " says: w In J"^ ^^^^^7 *^***°^ ''•'^*^ ^" ™" '» t**^'^* «»*! the men refused to reiiistatetl and tliey simply died on tlie track of their oun free will. No one injured them at all. So far as any obstruction on the trick there were none at all, excei)t that one block I spoke of under that en- gine to keep her from ninning down hill into another engine." Mr. Baldwin further testified on his dii-ect examination that the depot was constantly overrun with men; that it was in the possession of the strikers. Mr. Knox stalos that this is not correct ; that the depot was in the possession of the rail- road officials all the time. [737] Mr. Baldwin further states, in relation to the effort made on July 5th to couple the engine to delayed train No. 4, that it was standing on the track. It had come in there and had been stopped there. In the morn- ing before commencing at all, he went to the mail car, and saw the postal clerk there, and made him open the car, and went into the car, and saw that the mail was there in the car, and that it was the mail that was ordinarily carried on that train, and had come down from the post office, and that is the way he ascertained. The crowd surged in through the depot. The crowd was heaviest around the engine, and standing in the way of the engine, and obstructing its coming up to the train. He had to get down and move them foot by foot to get the engine through. He got on the engine again, and it was moved up to the train, and, just as they reached the train, the crowd broke past and swept through the depot, and broke the train and rolled back the cars,— the passenger coaches. There were some seven cars rolled back. Possibly 500 people took part in rolluig back these coaches. Thev UNITED STATES V. CASSIDY. Charge to rho Jury. 501 cuU? theTe w '^ "' ""'' "^i^ '^^^^ ^^^^^' -i^^-"t any diffi- tiiity, there were so many of them. G^enlaw a witness for the defendants, testifies : That he depot ThTf '"' ?!;"'""^ *^''"" «* '"^^ «-t -d of tJ: depot That he went down there. That when he got the.^ the Pullman cars had been uncoupled. That th^.; wa^ it^h '='-°"i''-- fi.^ 1 J! -trixeis. ihe witness Greenlaw, called for the defense, contradicts Mr Baldwin'c f. f ! • point. „. «... ,ta ,„,„ w™*„tT„iiSTL°C to r7q«Jl ^r^ *v, ^^^S'— woking on. No effort was made to [738] keep them out. They just stood there in the de^t He did not see the militia make any effort to gei in ^L* 502 67 FEDERAL BEPORTER, 738. Charge to tbo Jury. relation to the stoppage of the movements of all trains be- tw^n the 3d and 11th days of July, Mr. Baldwin states that there was nothing moved out (of the Sacramento depot) between those dates. BED BLUFF. The following testimony relates to the possession taken by the strikers of the yard, depot, and trains at Red Blnff: Joseph C. Day, roundhouse foreman for the Southern Pa- cific Company at Red Bluff, called for the government, testi- fied as follows: That he. was roundhouse foreman at Red Bluff for the Southern Pacific Company in the months of - June and July last; that he recollects an attempt to move ttie Sacramento local No. 12 from Red Bluff on or about the 29th day of June last; that it was composed of the day coach, ^oker, and mail car; that he and Mr. Jones and Mr. Kobb, the conductor, endeavored to move this train. After explainmg the position of the train on the track by means of a diagram on the blackboard, he states : We II?tte7Z4''f^^^f„!" *"* "^L' «>'--"'y«e't Mr. Jones, and Robb. we set tne levers to couple on. When we got very near tht-ra Mi. n™^ SnX??* ^^^ '^^^"2 '""'" •»"*« »he <^aU 7o that we ™um not SLtelTS^^ltT ''w^h^H"^/""'*'' ""^ «''«'"«'•• He toM „s we n^K.t r. " "P- '*® ""^ ^one our part, and thev wonlrt An th^ip. m»^*,w~"'^ °1' """"« «">* f»ln tiether. Sfelder wis the wwV lir°'n„\h'"'* 'r'T- ^^ "t"''-^ there a^ talked ^ulte I wniie. Mr. Robb made the remark thcv were too m-inv for „= IfJ°?H* "",* ""IJ* 't "P- ^e "-""'I have to g re H up The engine rtood there for about an hour, and the engln4r brought her biok ?o ^Xno'tX J.?" ""•" ™' "^^^^^ *"-- t^f^"'i^'fr:^\^ J. P. Heaney, a witness called for the defense, testified: Ihat he was a brakeman for the Southern Pacific Company in June and July last. That he belonged to the Brotherhood of Railroad Brakemen and the American Railway Union at Sacramento. That he went to Red Bluff on the 28th of June. The following morning (the 29th) he went to the depot. As he turned the corner he saw no engine there. He walked along leisurely, and when he got down to the depot he in- quired why the engine was not out. He was told that a strike had been dec ared. He saw the fireman, and asked him what he thought about it. The latter said he did not know The witness said : « Will we go, or will we not ? " and he told the UNITED STATES f. CASSIDY. Charge to the Juty. 503 fireman that he would like awful well to go, but that he would nate to go into Sacramento and have the boys holler « Scab " at hm when he got there. That he would not do that for all the jobs he ever saw. That they talked around there a little while, and finally concluded not to go out. He took off his cap and uniform and gave the job up then. He was told that they were obstructing the mail; that that was a maU states- '"''"''' *" '^^ 1"^^t'°°. " Who told you that?" he mail ear. 'a^d nothing elseH msf fn^^ 17^ '\^ ^"' ^^ ^^^^h the 60.-that I would go with ?Le mnilcir t ini ' ^.^"f^ ^S^ ^^^- ^""^^ it, and asked him whit he tho^^h^'^^^^p^^,^^^^ ^^^ ^^^^^^^^ ""^^^ with the mail, anyhow ' I asSiL tn Lf fn ' ^^^' "^^ ^"-^^ *« SO get the engine came down f hn *?n^ ^"^ ^^* *^^ ^''^*°®- He started to J. C. Shepler, called for the defense, admits that he was present upon the occasion, on the morning of the 29th of June, related by the witness Day. He states that he had nothing to do with the uncoupling the mail from the rest of the tram,— the Sacramento local No. 12 The persons Ray and Clodtfelder, who are implicated bv Day m the uncouphng of train No. 12 on the 29th of Jun^ were not caUed as witnesses. ' Day further testifies, with relation to the stoppage of the Oregon express, train No. 15, on the 1st day of July- That he was not down at the train when she came in. After she ritnn%w dT ': ^^^ •^"^''- «« -- ^'^^ ^^^^^ r He went^ I *.?"* P""*^ "^'^ ^«« somewhere about h;,m w T ^ *''" "■""•■ '"•* °* *« t^^in to see Mr. Kil- „ve?n.. "^"^ .7" sleepers were cut off and backed down over one crossing, the two coaches and a tourist car were cut m another section and standing on the crossing, andThe two mail cars and engine standing in front of the depot, on tie mam track. At the south end there were two Pullmans' next came a tourist car, day coach, and smoker, and ZZl 504 67 FEDERAL BEPOBTEB, 739, Charge to the Jury, press car and baggage car was with those coaches and smoker, and the next was two mail cars and engine,-one a mail car and the other a box car. Men were working there taking off the apphances for connecting the train. He saw Mr. Shade there at work; also saw Richard Roe, and a fireman of the name of Hill. Hill's first name is Joe. Mr. Heaney was around there. He did not see him doing anything. There was probably a couple of dozen around there. He saw Mr Shade and Clodtfelder cut the hose and the Miller hooks Ixshind the mail car. They did that in his presence, when he went down to get the engine to pull her uj). He looked at the couplings m the afternoon. He saw the safety chains taken oif, and the nuts and keys at the back of the Miller hooks had lieen taken off. J. C. Shepler, the same witness whose testimony has been previously referred to on the part of the defense, denies that he assisted in taking any nuts or chains or bolts, or in anv way interfering with the Portland e.xpress which came in on tJie 1st of July ; that he saw no one in any way interfering with the couplings or brake chains, or anv of the nuts or bolts connected with the train. He admits, however, that he saw ^x couple of chains lying on the ground there. He admits, also, that he was at the station when the train came in and that there was a crowd about the train. He states that he does not know who uncoupled the train Jo^ph B. Hill, called for the defense, and the person re- ferred to by the witness Day as the fireman who was engaged, with others, [740] in taking off the appliances for connect- ing the Portland express on July 1st, states that he was pres- ent when the express train came in ; that there was quite a crowd about there. He denies that he ever did anvthing to prevent the coupling of the engine and mail car 'to the coaches of the Portland express. J. P. Heaney, called for the defense, testifies that he was around the depot on the 1st of July when the Portland ex- press came in, or sliortly after it came in. He gives the fol- lowing version of the uncoupling of the train • m J J UNITED STATES V. CASSIDY. Charge to the Jury. 505 would. He went up there and told the eneineer Affor h^ ♦^i^ *., Wniiam H. Jones, agent and train master of the Southern Pacific Company at Red Bluff, testified that on June 29th W^i T^ T' "''"^^ *° '"*'^' *^" ^^ Bl"ff ^^^ Sacramento local. This train carried coaches, the ordinary baggage car, w'p ". nr"« ^' ''"'"^ ""^ '^''P'"'- This train^ due to leave Red B uff at 5:15 in the morning. He attempted to move the tram^ The strikers had cut the train in two.-^ut the mail car off. He could not say who cut it off. He did start the train m regular form. Mr. Clodtfelder and Mr Ray prevented him from coupling it. Mr. Day and Mr' Vn^l T '^'*'"': ^''''*'^ •>™ '» t'-y'^g *° P"t that train together Mr. Day is the foreman of the roundhouse. Thev backed the tram together. He set the Miller hooks to couple; set one of them to couple, and stepped over to the other platform to couple the otiier hook. Threw the lever doint'^t "" m' g'^^tf'^l^'^'' h<"ld it and prevented liim from WWh!' f, , ^^ ^"'r*" '^^ ""'^'^ P'"***'™ «"d threw back the other lever^ so that it would not couple. The effect of this was that they could not couple the cars together. They were endeavoring to couple the mail car and the coaches. Ihe mail and express and baggage were all in the one car at that time. He knows that that train had not been cut m two m tliat manner under the authority of the company. At the time that he endeavored to put this train oge her Clodtfelder told him: "You cannot' col^lS train. You have made your attempt. You have done vour part. Now we will do ours." The witness told him thaJh s overpowering force-there were 50 to 2 of them-prevented hem from coupling it. There was quite a large crold about at tha time. They were all opposing the rail«,ad. They sympathized with the men who were stopping the trail They refused to assist the witness in starting the train, although he called on quite a number of them. Thev said they would not move any trains until the matter was Settled 506 67 FEDEBAL BEPOKTER, 740. Gliarge to the Jury, aodtfelder and Ray said that the mail car coald go. He thinks It was C3odtfelder who said that, or Denunick Dem- mick was one of the leaders. They said the mail car could go by Itself; no other cars of any kind,-Pullmans or day rj^if7^^,''"*J^' "^^ **'• I'"l Knows a man MmedJoeftll. He was a fireman. He was on strike at that time. He went to couple this train together on the '^^r^.^!^"^^ ™^ "^^ *«''' "° motive part in pre- venting tha As they started the engine and mail car to couple onto the coaches, Hill tried to apply the air. By "an- plying the air" the witness means that he opened the auto- mtic air valve of the air hose at the rear of the mail car. That would set the brakes if there had been air enough on tto w, but there was not enough pumped, and they went As previously stated. Hill denies that he interfered with this tram in any way. It is to be noticed that this testimony of WiUiam H. Jones IS corroborative of that of J. C. Day, the preceding witness. SOUTH VALLEJO. The following testimony related to the possession by the stnkere of the yard, tracks, and trains at South Vallejo • Michael Keefe, yard engineer for the Southern Pacific Company at South Vallejo, called for the United States, testified as follows: lol7an/"i?th®l/*1**/^'^^ ^^ *^« Southern Pacific Company on the 10th and llth of July were not in a condition for serviV^ All th! engines were killed; there was no steam in thm/' ^ The same witness further testifies : SomI mert'S^^hf p3„??°^ "?' ^''' ^' '* ^«« « ^^^^tch engine, oome men took the engine away from me. One of them was Thomim ran It «fr thi V.H.^ -rS*" """ *"* ^''^'''e off an open switch. They Ttev tKnn7p^VhJ sL'^fAI.'^^'"'' J"'y lot"; about that timl ±aey tnen banled the flre, let the water out of the holler ohnf «.« engine down, let the water out of the tank, aSd «s^L^K hoi " It would be hard for him to state the particular parts each man played. He did not exactly locate them at the time, or what they were doing, because he was talking with them He tned to get on his engine. He got on the side. Thev '" I UNITED STATES V. CASSIDY. Charge to the Jury. 507 Z i ? !^ ^* "^- ^' ^^^ '' ^*« Smith who would not let him get on. He prevented him getting on. Kelly stake. He was out on strike. Laurie also went out on ^e. He was a fireman. Smith was a stranger to him. He was the man that came there. Smith and Hale were the ones that came to Vallejo and made that trouble D^ not know where Smith came from. Thinks Hale told h?^ he came from Folsom. Thinks Hale said he was a ba^ virThVr^T- Hf «* «" the fol- SoT,fh^ V n' • of ""^ '* ^^'' ""Sine 1,190 was kiUed at Sh^nnlff '^**- w '• '"'"' *■"'" ^''^^^g^ that morning, bhe pulled a mail train. Does not think that there were anv Pu Iman cars on that train. He saw the engine killed He was on the engine. He ran the engine. Smith came there! with a good many others, and took the engine away from him Ihey put the fire out also disconnected the hose, and let the water out ; also out of the boiler. SAN JOSE. The following testimony relates to the possession taken San jL! *'' ''P'**' ^"'•^' '^^*='^^' ^^^ trains, at James Hewitt, called for the United States, testified: That he was the engineer of the San Jose train No. 19, running between San Francisco and San Jose. That he left San evSr ?ha?', '^'^ <^"^?' «- J- ''t 7 o'clock in th^ 3 a^nH '""^. l"""'' *'•''•"' "^"^'"g * combination J-uUmans. That he arrived on time. Going into the vard ri "tht tr *'^ 'r -^"^^ ^'^-^ *-^' ^^^'^'^ the denot tL ^^T ""^r} *^ "' "^ *^t this side of the depot. The people nished up the track, and he had to top or else run over them. Knows a man named McCiin! Mr McClintl\' '"" "''"^' ^""y^'^- ^- ^^ ^topiS, Mr. McClmtock came up on the front part of the enXe and came through the window on the left-hand side ?Le ana says. I wiU take charge of this engine, Jim." Then' 508 W FEDEBAL KEPOBTEB, 742. Cbarge to the Jnry. Hewitt said to him: "Hany, you have got the main track blocked. This IS as far as I am going. Let me put this tram on the side track and put the engine in the round- iiouse. Mr. Eunyon stepped up and said : « No, sir. We will kdl her right here." 'During this time there was a deputy United States marshal on the engine with the wit- ness,-one on each side in the gangway. They tried to keep the crowd off. They overpowered the one on the "left- hand side. McClintock asked him what business he was doing ther^, or what he was doing there. He said he was r, deputy United States marshal, and showed him his badge. At that time they were trying to get hold of the fireman. McChntock, after he asked him to show his authority, which he did says: "We can't help that. Boys, take him away." Ihey took the fireman off of the engine. That left the witness and McClintock and Runyon on the engine, and a lot of boys came up over the baggage car and came up on the tender. After that the witness had some conversation with McChntock with regard to putting the engine away and puttmg the tram on a side track. He told him they had the main track blocked. It was not necessary to hold him there. Wells-Fargo s agent stepped up on the right-hand side, spoke lo McChntock, and asked liim to pull the train down to the crossing, where they could get out their express, mail, and ^"^"n.-^* ^ys: "All right. Boys, cut off tlie baggage car." Which they did, and pulled down to the crossing or over the crossing, right in the front part of the depot, and stopped the engine there. One of the gang says: « No one diall move this engine but McClintock." The witness sat down on the fireman's side, and took hold of the bell cord They got down to the depot. McClintock told him he had better get off and go home; that he would not be responsible for his life. The witness said: "You never mind about my life. I guess I can take care of myself." They got the engine as far as they could get her. [743] WS. Eunyon, the person referred to by witness Hewitt in the testimony just quoted, was called on behalf of the defendants, and testified, in brief, that he was a loco- motive fireman in the employment of the Southern Pacific Company m June last; that he belonged to the Brotherhood UNITED STATES V. CASSIDY. 599 Charge to the Jury. tIJTTw'k ^''■'"''"' ""'^ "'^° *« '^'^ '^«"<=«n Railway Union; that he was a member of the e.-tecutive committ^ . of the American Railway Union in San Francisco; that du^ mg the strike he went to San Jose, on the evening of Juty 5th; that he went there of his own accord, to suppress anv acts of violence or any deeds of violence that migh possibly be committed there, as he understood there werf slme ven^ troublesome people in that locality. His statements alto wha took place at San Jose, and his connection therewith m his own words, are as follows: ' we got to San Josf^^ a" Ve ,veie ' "in- ^"^ ""'' "'^^ """' train slowed up slight^ nnd wi.»/Lhi^ J -5^ ^'""'^ "' ^'"' J"^- '"e House at Sau JoTand the dennf ^h^* °"''"'Y ^^'"'^'^ '^^ "^""l- people in the ccaoL ^„,u'^|„e^?t ™t oSr /".n" '*'""''""• '"^"^ ilr. JIcQiiade, of the Soutlieri, P.,;^fi^ * }• '" """Pany with a delegation of people on the t,.,^f•. ^* "".*• ™«''e "-"s a large was done? State whitvon^nwH.l.'''"' T"'"' ""^ <» fling around one place and inot «.r nn it!?, -^'^ *L'"°S " '"* "^ ^^■ a remark was made that trfwonwi^i ""•.»"'' '" *"• "»'' 8'""'^ had charge of the tr.-i in 1 «i™h ° "'^"■'" "!'•— the man who the near vicinity I saw a rnm^f.^ "'^' "7 ''"'<"'«'' tie crowd. lu on their coat "IWis 1 sa d Ch em .'".^" "■"" ^'"* '""^ «""t«^ "-ibbons a ;• striker," anH nien^i of the a R T ?/* ^°" ordinarily term vyith us I should like to get your tsM^u-. f^T" '"'* «.vmpathizers that might be perpetrated on Mr Sl^^tt^ i oppress any violence and, as I did, those gentlemen folim^.^, ^^* "P *" "^^ engine. 'You need not hare mw fea?oi?H^^^ '"^- ' ^"^'^ *» **••• Hewitt Mbly lend you aTassl'San'c^ Ishtl SnlTdo'"-- V •""" P^ to a crossing or st^Setlu.^ north oTfh"/^^"^'''^/™ '""^ '•°° ^»^ off all the <5aches, with the exeeDtionnfr.*- 3"^^ stopped, and cut Imve for baggage and VelLf a'^oTm„tter 'Ift^r'Vl^ ™' "■"* '"^^ connection between the baggage and Ser thf *^^ severed the car went on the south side of the deX? to leave 1?.'■"^'""' '"'S8'''S« clear. Mr. Hewitt changed h s overnu^ wi, f '^'* ''^™ crossing . stepped down behind him As I did «i Vh. ^h° ^^ '«" •"« engine I the white ribbons on, and who I nlf-^Vl °*^'" sent'emen who had and we walked a?o » of A^r iwVrmT^ '"^- '^••'■"® "'""^ crowd, and then he l?ft Alie he wo« w^it • ^i «"* through the they jeered at him some but thert !.« "^""^'"8 '•'■•ough the crowd •Mr. Hewitt got awav there was nt^lt^ ""k"*"** "* violence. After of the engine,- Je/ aMboys -?"po„ whTf/ ?' ""*? "" *"« '<"'<^^' board.- I got them to dlspeil^and'Te" ve "thl "n^raTonl"" '™"""« ti J^ '^^"^^^^dmits seeing Mr. McClintock ther« at that time. The testimony of Mr. Hewitt as to what took p C at the engine being read to him, he stated that some of th^ statements were correct and others not. He states that Mr i \ i li 510 67 FEDERAL HEPOKTER, 743. Charge to the Jury. Hewitt suggested putting the train on the side track. He testifies that the statement said to have been made by him, viaj. : " No, sir. We will kill her right here,"— is false. He states that there were several thousand people at that time there. In answer to the question : " Q. Hewitt states here that you and McClintock were trying to get hold of the fire- man,"— he replied : " He is a liar. I did not. I had nothing to do with the fireman, and [744] did not see any one pull him off the engine at all. The fireman was off of the engine five or six minutes before I got on the engine." Another of the means alleged in the indictment to promote, carry out, effect, and execute the conspiracy is (2) "by causing to be assembled, and by assembling with, large crowds of persons in said depots and yards of said Southern Pacific Company, at various points and places on said lines of railway, in said state and Northern district of California, and by gathering in great numbers in said yards and depots, to wit, * * ♦ and other places around, in, and upon the trains, cars, engines of the Southern Pacific Company, and upon the tracks of the railways, preventing the movement and passage of said engines, cars, and trains." SACRAMENTO. The following testimony relates to the assembling of crowds at Sacramento : Felix Tracy, the agent of Wells, Fargo & Co., testified on direct examination : That there were no trains moving after the 29th of June. He saw a good many men down there at the station that were not at work,— railroad men. He saw them there, and he saw them in other parts of the city. There were more people at the depot from the 28th or 29th of June, up to the time of the United States soldiers going there,— some time about the 10th or 11th of July,— than usual, a good many more than usual. There were more there on the 3d of July, more there on the 4th of July, than it was customary to see there. He noticed that whenever he went down there. It will be remembered that Mr. Baldwin's testi- mony that there were crowds around the station is to the same effect. On the other hand, Mr. Knox denies emphatic- ally that the depot was in the " possession of the strikers." UNITED STATES V, CASSIDY. 51J Charge to the Jury. with peopIe-neoDle in T u '""'^^ ^'^'^'^ "^^^run oft ^c^af^jj^irstr ^r ''' — "- their coming there anything to do with A^:ZntraflS etrn'-rn^' ''''''' '''' ''^ an office on the 29th of June """'^ °"' "^ "'^ "^'^ »^ Mr. Baldwin further testifies as t« fh» j layed train No. 4, on July 3 18^4 t.^^ T""^ ^"''"'^ **«- track and across the Ll , !, 1 ' "* ^^^^ '^^''^ «» ^^e the way of th^ t^ f 'nf had 'tTl' T '"T ""^ «* engine and get in front of ih. ^ 7° ^'"'"' *'^« back and moy, them back Ind T"" ""^ P"* ''"'"' by foot. They werf Zl.l ^"^'°^ '^^^^ f««t a rock at them ^' ^^'^^^>^^^g, and one man thr«w he was at thrdel^t ^Z "'"'T '"'"""'• '^'"'^^ ""at the strikers cttinuTdtoerpHL d 'l'' ''' ""^ *^"* asked how he knew £yTel^ ^^T'^^'^'f'- B««S that there was a crowd The^e He 4 ""'*"? '***^ these men, and they were constandy^f T""'^ "'"^"S were strikers -that fu!,'^""^ '"^"'•"ing him that they [745] com;T;yluton aVr He"'^'^ *** '""^ ^^"-^ with them, and walkino- ,.^1 lu ^^^ constantly taUdng bin. and U\ZTllZt^''''^^rT''''^ ascertained that they were s rS T J Z "'' ^"^ ^'^ There was always more or less of „ ^ "T^f ""^''' '"^• night and day. With referenrtnl T""^ "* ""'" *^«^' that was there late i^ fi;!^. ^^ character of the crowd states that they we" striW^T "' *'/ '.*' '' "^"^y' ^^^ were there to prVt he "^p^Hy oTtL f"!, "'** *'»^>' and take care of if „J fk? ^ ^^^ railroad company, it was the same crewd in '■h' "'^' "■"""*' "" '^' "'''' '^^ men. The ca" of tl» '\^^''T^^'' ^^cep* that they were pied by ^eCby sSce" slrr.? ""^ "'^'"^ -- apparently for sLp^Huartr t1 "" "'-^^ '^"P'«^ on the tracks in the yard ^^ *^'"P'^ '="''«»«« Thomas Compton, one of the mediation committee .t -aim 512 ! i t I I 67 FEDEBAL REPORTER, 745. Charge to the Jurj'- Sacramento, called for the defense, testified that they " had our men stationed from one end of the yards to another, to see that the men did not get excited and do any damage to the property, and re(] nested other men who came in on trains not to go out any more." C. E. Tjconard, a city trustee of Sacramento last June, and in the employ of the railroad company before the strike, testifies that there was a very large assemblage of people at the depot of the railroad company on the 3d of July. SAN JOSE. The following testimony relates to the assembling of crowds at San Jose: Frank Arnold, a railway postal clerk on the route from San Francisco to San Luis Obispo, testifying as to the crowd at San Jose, says on direct examination that there were sev- eral thousand people around the train that came in on July 5tb. They were all around the train, — inside of it, on the [>latform, swarming all over it. On cross-examination he says that they were occupying all the spaces in the depot, on the railroad car platforms, and so on. Another of the means alleged in the indictment to promote, cany out, effect, and execute the conspiracy is (3) "by threats, intimidations, personal assaults, and other force and I'iolence, to prevent the engineers, firemen, conductors, brake- men, switchmen, and other employes of said Southern Pacific Company from discharging their duties, and from moving and operating the said engines, cars, trains, and railways." SACRAMENTO. The following testimony relates to threats, intimidations, and acts of violence at Sacramento : Mr. Baldwin, speaking of the strikers at the Sacramento depot on July 3d, testified on direct examination that they were threatening, and there was one man that threw a rock at them. It struck the cab of the engine, just below where Mr, Clark was standing — ^between Mr. Clark and himself. He further testifies that there were crowds around the sema- phore. The crowd was demonstrative at this time. There were men threatening them as they took the engine UNITED STATES V, CASSIDY. 513 Charge to the Jury. himLlf to th! X' that inS »- P-t.cuIarly addressing H.rd expression, of l^ t^^^^r^^^ Zt'' Respecting this testimony of Mr RalHwi^ n , ^ fies that there was a good \:1 ^'.X:^?^^! '^'" ^l-oUenng." But he did not hear a"/ threat's made ^Z onhe trT "V:":;''^^ rr "^^ ^^ p'-ntt Taking o! thing that day,t"L?t'L;«Tr^S '" '*' ^"^- While it is to be observed that Mr ji^ia • employe of the railroad company v^^th/r """' ^""^ "" i^ significant with resnoct Tfh ^'/ ! testimony, if true, rinrlr fK. • P ° *'*" ^'^t^o^s of the crowd towards Claric the engineer, and the others on the engine Anthony Green, called for the defense tP«Hfi^^' *i, . .. captain of police of tho cifv " « ®*^"^' testified that he was June and July k<=t- tZf\' S«'Tamento, and was such in but he admits, on cro<=s-evamTnrf ; ^'^'^ ^^i «"*^ committed, cars actually sWed b^™ Lt^o^^^^H^^ T '"^ heard the crowd yelling at 'tht X werf„Thfclf.^ engine that was being moved from ti!! i^ ^ "* **** delayed train No 4- tLtTu , ^* roundhouse to the " Stand by one ano^he; '' " iS.?' ^ ""^V^""' *'^'" <*"*'" the places of those men' who ,'•''"'''" "^°"'' ^^-- there;" « Don' you 7Z H . "'•^^«'•^^'°g.•" "Come out of engin;- "I "Leal L v '"^'"^ °"*'" "^"'^'t ^re that there;'' «Don?L out / T " T"'" "^"^^ ^^^^ o"t of ing t; themTthTtt^~stX St^^^r'^^^'^PP-'- -mings and nights; Z '^. tdt t^ oT^' '^''^ RED BLUFF. Ill 514 67 FEDERAL REPORTER, 746. Cbarge to the Jury. Pacific Company at Red Bluff, testified that he was not at libeiiy to go on the engine. Ho was told to keep away from the engine and let it alone. A brakeman by the name of Harper and two or three other men told him that. He does not know them. He thinks Harper was on strike. He was out with them. This occurred, according to the witness' testimony, on July 1, 1894. The same witness further states, after describing how engine No. 1248 was killed by Van Devinter, Richard Roe, and Harper, that he had a conversa- tion with Van Devinter about the matter. He told him he was doing very wrong, and Van Devinter said he did not think it was any of his danmed business what he was doing. They told him if he did not get out of the roundhouse they iifould have him carried out on a board. Harper made that remark. Richard Roe and Van Devinter, and one or two others he did not know, were present. This was at the time they were killing engines. l«*«J SOUTH VALLEJO. The following testimony relates to what occurred' at South Vallejo : Jeff Gage, passenger conductor for the Southern Pacific Company, runnmg out between South Vallejo and Santa Rosa, whose engine was killed, testified as follows : That on the 12th day of July last he was stopped between North and South Vallejo, and his engine killed. This was near 7 :30 or 7:35 in the morning. It could not have been far from that. H© was running the train,— conductor. He left North Val- lejo, and between North and South Vallejo he found an en- gine on the main line. The engine was called a " killed " engine, — ^no steam in it. As they pulled up near that engine, a crowd of men came out and fixed theirs the same way. They were obliged to stop by this "dead" engine. He thinks he must have been very near on time. He makes con- nection, with passenger and mail cars, with a boat that runs between North and South Vallejo and Vallejo Junction. At Vallejo Junction connection is made with the San Ramon passenger train. It is a mail train that runs between San Ramon and the Oakland pier. He asked a man named UNITED STATES V. CASSIDY. 515 Charge to the Jury. Smith to let him couple on and push the dead engine on the sidmg, so that he could get the train down to the df^t. TWs Td^r rV" 'V*' "^^^ ""' "«^ *'^«- -ns referred to by the witnesses for the prosecu- c«t on as having participated in the spiking of the switch, which prevented the engine and mail car of the Portland express from getting back to the passenger and Pullman nS 7' '"r,^«=tly ^P^alring, those [751] who have t^ed deny that they have been guilty of the acts charged. SOUTH VAI.LEJO. Valk V*'"'*'''"^ testimony relates to what occurred at South Michael Keefe yard engineer of the Southern Pacific Ctom- Z'on T rU''^^'^"""^ '"' '''' government, testified ttat on July 12th last he was making up a passenger train for Calistoga and the vicinity; that it was a mail trein, and that It did not cany any Pullmans. He took the engine and made up the tram with it, to get ready to go out again. He was going to the roundhouse with the engine. He saw a gang of men He thought that he would get to the shops before they took the engine away from him. The switch was 1 l""" K ! fv ^ *"**• "^ ^""''^ ^^^ g«t t» the shop, he ^nks, but th,s man closed the switch on him, so he stopped. Had he gone on he would have run off the track. It was an open switch The crowd remained there. The engine was killed after that, and was there a day or two. Another of the means alleged in the indictment to pro- mote, carry out, effect, and execute the conspiracy is (7) « bv opening drawbridges over navigable and other sireams, upon which drawbridges the tracks of said railways were situated." 8ACKAMKNlt>. Sa^m/nti*^'''"^ testimony relates to what occurred at *K?'«^:.."*''°i^^^-^'"); " ""^^'" mechanic in the employ of' the Southern Pacific Company at Sacramento, called for the UNITED STATES V. CASSIDY. 521 Charge to the Jury. United States, testified that he experienced some difficulty, on June 29th, in attempting to get train No. 4, which is a mail train, and came from Ogden, out of Sacramento,-in attempting to get her through. He testifies that he was re- quested by h.s superintendent, Mr. Wright, to back up the ^gme and mail car ahd express car,-he thinks it was cou- pled to the eng.ne,-to couple on to the balance of the train Se dfd" l.;^ -^ ir ^^'■'' ^"'^ P"" '' ^-^- the dS^t SL .u^'^"" P""'"^ *•*" *■•«'" <^«^^" '« the depot, some- thing was thrown at him while he was on the engine. After he saw what it was,-it proved to be a monkey wrench,-he got the tram down to about its usual stopping place and stopped there After considerable persuasion ht got the en gineer and a fireman on the engine, and got the train started. Ihe tram had not moved a great ways-about 50 yard^ t!. 1! ^^^^bridge was swung open, and the train had riv.r '^T J ' " *^' drawbridge across the Sacramento JfK K 7^ ""f "** ^''''' '" ''«ht to occasion (he openin.. 11 ti"t "^^ ?. w *^P^"'' °"'y *°^ the purpose of stop"! ping the tram at that tune. There was quite a crowd run- nmg down by the drawbridge just prior to the time it was Opened. Mr. Knox gives the following version of what transpiml respecting the opening of the drawbridge: He savs that on m about 6 o clock,-somewhere around there. She came in wi r^T' r"' ^^- ^'^'1 ^''^«' --^ -P-- - h: went to Mr. Saulpaugh,-he was the engineer that was going out on that^tra,n,-and asked him if he was going to do anv ^Iti? "'; f f'^-'he-asnot; they wo^uld have to get some one else to do their switching. Mr. Wright came down there when they were talking, and asked Wm iT he would back up to Sixth or Seventh street, he believes he said, and get the balance of the train. Mr. SaulpZh sut Ml Hemtzelman to do that. They sent for Mr. Clark. The witness here stated that before this strike was ordered it wa! an understood thing with Mr. Wright and the commiZ ^at they should do all in their power to prevent any dama^ being done. On his (Wright's) side he was to iveThem i I!, 522 67 FEDERAL BEPOBTEB, 752. Charge to the Jury. Z^^ITk''^^ *" *^* *"*''^' ''"^°«*'^> conductors, Rre- S^v'^J .r '^A,""*^ ^ " ^'^^y «'"1"^ ind"'^ them to S!.LT . St- .•^*° ^'- ^'''^ «""« «^er they had the nght to talk to h,m to see if they could induce iL not to back up to get the cars. After they talked with him a while he turned around and said he did not want any of this in it They simply asked him if he wanted to scab on his own «,n His son was working there. He said he did not want to away. Heintzelman came, after some time, got up on the engme, and the first thing Knox saw was a monkey ™h coming out of the engine, which pretty nearly hit him. They ^cked up. While they were up there, he, with the balani ^W rh""?"^ f '7u"* '^"""S'* ^^^ ^•'^P^' to notify the men that the strdce had been decided on. mile they were going Zr*t t u^l " ™"" """^ *°* °^«'- «fter them to tell them i if^Lv"'' u^.'"'' °P'"' """^ *" ^'^ '^'"^ to come and see If they could not get it closed. He ran over there, and Td Mrrr 7* 'V '^''* *° '^'^ *^« bridge,-Mr. Hatch S fu' """^ *'"' *"^ *•*"*« ™ore. They closed the Sf' "" ^* ^ent back and told Mr. Saulpaugh that the bridge was closed. After the bridge was closed, he told Mr. Hatch to go up to Mr. Wright's office and get a lock,-a Yale iocfc,-and put It on there, so that the bridge could not be opened Mr. Hatch went and got the lock and locked it on the bridge, so that they couldn't open it. *.?K*'J »**** """* •^^^^"''^ corroborated Knox with respect I^^ w . ri "v*""'"* *^"* ^^ ^"* t^*"" to close the bridge, fnif" '/^ '"' f ' '^ *" ^'^^ '^"^ P'^'^'^ «t Knox's instance, and being placed by Hatch on the bridge Another of the means alleged in the indictment to pro- mote carry out, effect, and execute the conspiracy is (8) by burning and destroying bridges, trestles, culverts, over which such trains necessarily and usually would pass." TRESTLE NO. 2, NEAR SACRABIENTO. The foUowing testimony relates to the wreck of train No 4 at trestle No. 2, near Sacramento : Jfr. Baldwin who saw the wreck of the delayed train No. 4 at trestle No. 2 about two hours after it occurred, testi- " UNITED STATES V, CASSIDY. 523 Charge to the Jury. w!i*"'« t^ o' TRESTLE NO. 2, NEAR SACRAMENTO. I.v^'\^"^*^v°'7^ *f '^""^ ^^* •»« ^"^ the wreck of de- K.^""". »; *.^"'*^^ '^' *^« catastrophe, testified tha^ he made a little diagram of the position of the rails. The north rail was swung over across the south rail. It appar- t UNITED STATES r. CASSTDV. 525 Charge to the Jurj'. ently had been forced over, lifted over. He found there, right at the joint a nut, three washers, and two spikes Thev were loose. "^ m RED Ur.UFF. Bluff^ ^""""^'"^ '"^^ *'''"''^*' *** "* ''"^'"^ occurred at Red Joseph C. Day, roundhouse foreman for the Southern Pa- cific Company at Red Bluff, testified that the spikes and the bolts were pulled out of a rail on the main line. This was between 1 and 2 in the morning of Julv 1st last. He went to the coal bin, just a little ways from the turntable, to see If the coal bm was all right, and there were four men ri-ht across the other side of the fence, working at the rail Thev had shovels there. Hewent to the turntable, and stood tliere talking to the fireman, when the four men came down with those tools m their hands. They came right from the direc- tion where the rail was tampered with. He could hear them working with shovels, scratching away dirt and covering it up. He was not there more than a con,)le of minutes. ^He went back to the roundhouse. He saw' John Shade, John Salstrum Robert Lang, and George Werhing coming from this direction. Mr. Shade had a claw bar in his hand! Sal- strum and Lang had a shovel apiece. He did not see any- thing m Werhmg's hands. A claw bar is a long bar made n the shape of a claw, for drawing spikes. He examined that rail an hour afterwards, and found the spikes pulled T, I? ^"'^ ^.^'''*' *' ''"'ts tal^en from the fishplates and left lying on the ground. He put the bolts back himself. J. F. Heaney, called for the defense, who was at Red Bluff on the occasion detailed by the preceding witness, with ref- tT'V,? i displacing of the rail states that he may know ZZ f i Salstrum Lang, and Werhing, but he does not Imow them by name; that he is pretty sure that they did not ttnTit" Mm^thL^- " *'" '"-'-^ *^»* ''-' '^' - ~- Another of the means alleged in the indictment to promote carry out effect, and execute the conspiracy is (10) "bv greasing the rails." ^ ^ ' ' 1 I 526 [755] «7 FEDEKAL BEPOBTEB, 755. Charge to the Jury, BED BLUFF. U. testifies on direct examination, as to the part he took wi^ Ked Bluff, that on July 1st, at about 3 o'clock in the morning he was about four miles north of Red Blui" that he was Hill, Clodtfelder, and Archie Montanya; that Montanva U a member of the A Tt TT • tk.f i, i"at Juontanya is »„„* u x^ :. ^•' *""* '^^ ^«s on strike; that thev wen about four miles further than Red Bluff, aid ^a«ed «ie track, coming towards Red Bluff, for abou't three'^ui This was done with engine oil. Both rails were greased They ,u J rubbed it on. ITiere is a down-hill ^adTfrom Red Bluff, going north, for about a mile, and theffor abS l^u^ 7l.TV^"^, ^r** "»« ™"^ fro"" the roufd- 2r'~^T ! " *"'.*'"''^''- ^«y ''»<^ oil cans from the en- gines and buckets with which to carry it. They ^t throurf. g^asm^about 4 o'clock. There was S^t any ootft ilteff The witnesses J. C. Shepler, William Sheehan, and J B aW Ir *^"* they participated in, or kno; anything Another of the means aUeged in the indictment to Dro niote, carry out effect, and execute the conspira^ i^ m ) by stopping trains upon railway crossing, and upon switches and by forcibly refusing to aUow suS trains toT hauled from such crossings and switches." SACRAMENTO. 'nie following testimony was given as to what took place at Sacramento with reference to obstructing one ofJeS way crossings; ^ ® "^^ C. A. Newton, night yardmaster for the Southern Pacific Company, called for the United States, testified onTirS ;;! UNITED STATES V. CASSIDY. 527 Charge to the Jury, amination that the three main tracks leading into the Sacra rto^hrithl?T''r'trf ;^"'°^ ^"^ 'ngines tmTe of IV , ? , JuIy,-blocked east, west, and south. One «So.?th." r^; '^"^ *^^ ^^«^t«^« Division, called «!«?. T i^^'l^ "^^ Sacramento Division called t^J ■' T ^1" "^ *■*"" **»« California Pacific, « West »- that IS called the "California Pacific Division.'' These tracks lead both in and out. The roundhouse S situat^ north of the depot. There are several tracks leading frlm he roundhouse to the main track. There is one track^direS to the roundhouse from the main track, that one can go to the roundhouse straight from, without doing any switchU track, and there are several switches to throw to get to the IT^^'^Z ?T°f *'^" '^^•^'^^ --« Mocked befween the 1st and nth of July. By « blocked " he means trains and engines were on the tracks. The engines wei^ dead thej h^d no steam in them.. Some of the t^ins were mad^ u^ aJd some of them, that were coming into the yard, [JsJulat the yard was ,n such a condition that trains could not pass through the Sacramento depot east or west. SeLZl the exact condition of the tracks on the 1st of July l^t t?the r S!* 'T '''' ^"^ ""'^^ "° the crossing kadLg o the roundhouse. No. 4 engine, just about to enter The croi mg to go to the roundhouse. Then there was an engine tl^t came in on No. 69, on the 29th of June. Both pil^Tdml together right on the crossing. That blocked the mdn tm^ to the roundhouse and another track, that we use.^^to 1^ freight trains up and down on, called the « old main track '' erasing Washington, which is on the other side of the Xt n Yolo county, the coaches, the smoker, and the mail ^S the baggage car stood there in Washington. One^f ^e coaches was shoved part of the way in on a siding, and Se S^'thrwe't'" n "" '^'^:' •*• '^^' '''^^'^ that tral On the Western Division there were some three or four ^ part o^ ^'^^■'" *'?'" *'""" "'^ *^« "''^^ track, miZ up, part on a siding and part on the main track. On the Sacramento Division the cars were sandwiched in ev^ way,-^ff the track and on the track, coaches among sleepe^ 528 67 FEDEBAL JIEPOETEB, 756. 1 I Charge to the Jury. "mite Ts' "Ir'^f "f 1"- '^'^"^ """^^ ^l^^ "-kade com jete. As night master he has control of the movement of all trams and engines in the Sacramento yard. tion anJ?». ?*l A*^ ''*"^ "*'*^'"^ *» <^« ^"h this obstruc- nanct nor was in any way responsible for, it. -^ .*'» «"«ci, ana execute the conspiracy is (12) "W compelling the employes of said railroa^d com;Ly lo'leaS their trains, shops and the work of said company whikln the performance of their duties." OAKLAND. Ian?' ^"""""'"^ *''*™°''^ ""'"*"' *° ''^^ 'x^u^ed at Oak- OaklL"""i'i^"r^ 'u '*'"'"' *»* *^« '•'»"'-°«d shops at West Oakland called for the United State* testified on d W Sr/rolc^"^" '" '^^ ^"''^ -re UeSted from S u»g any work. He cannot name any of the parties who dm- "Xt S "^r^ rf "^' ""* *^«y '«<* a machiS Zwd fhl^ ' • .. " '""'P'"' '"** ^^'^y ^«™ t«t«> out by a crowd that came ,n there. He could not now recognize anv Sed thattT« "' *'.' T'- '^' ^^' -*"- f uX t^S" hal to wi^r ^^"^ ?•"" '" ^"''^ «"* *»»« ">«" that they had to work there,-pushed them out of the shops,-thev took no tl *""/'• ' *'"'• '•'""^^ «"<^ *-«bably half past 9 or 10 of the evemng, when another gang came in and said they had decided to close the office, Z^Tl^ 11808— VOL 1--06 M 34 ' r 530 67 FEDERAL BEPOBTEB, 767. Charge to the Jury, went. The other gang were Frierson and RoUer. Both were brakemen. They were on strike. He thinks there were others tiere with Frierson and Roller at that time. There were about 17 there after the station train had left for Sacramento,-about 15 or 17. He does not recollect who They ^,d: "T^e have decided to close your office." He f ^t ""!• "''^"^ 7-"' "' They could not give any reas";; at fin,t. They went out and consulted together, several of them outs.de on the platform. They held a meeting. They ?« ^oasand without ordei-s, at once H AKnox." "^^'^ """* "^ *™'°- saSv'lhlf Iv' ""'^1 "'"' *'"' '^'*«™"' '-^ 'l^ted on the Dmisrauir "''"^^ '" "'^'""^ "* Walthers left Walthers, who was called for the defense, admits that on the morning of July 4th a message arrived in Dunsmuir, pur- porting to have come from Mr. Knox at Sacramento ask- ing the men to come down,_asking their assistance.-to come to Sacramento. Walthers testified as follows: n:e7a'„TerplS^"TnSal"andr.vPT°,*- '^^'^^^ ""^ ""t^"'-'^. going. The/anraidthrwouir^*aud?wSM!f„*^','" '"*""*"'" "' there, prepared an engine and to^i, m«t fS *.'" " *""•''' *"«°t ^"^^ we were gbing to Sacramento T,^^;m t^. ! ?"" "S*"*- «''<' to'^ htm a*ed hln^ to|o wU^uToT whetheTh'e%r tt *Son7'" """'''«'• "" He states that they had a number of guns on the train,- perhaps 35. He states that the train was running without any oi-ders at all. The.^ wex-e no orders from the companyTo run the tm„. He further states that he does not think Mr Agler could have stopped his train. M. C. Roberts^ who was the secretary of the -Werican Rail- way Union at Dunsmuir, of which Walthers was president, testifies to substantially the same facts as Walthers ^ou will also recall that there is testimony with i-eferenoe to an irregular tram from Truokee to Sacramento, which ar- med at the latter place about July 4th; and an;ther from i^athrop to bacramento, on the night of July 10th. You will observe that, so far, I have not alluded to the testimony tend- ing to Hhow acts committed by the defendants at Palo Alto on the 6th of July although the indictment brings that place within the range of such testimony as I have referml to tend- ing to show the means to be employed in carrying out the con- spiracy. I have, however, deferred referenceto this tesitmonv until we reach the consideration of the overt acts charged 534 fl FEDERAL REPORTER, 760. Charge to the Jury, to have lieeii coniniitted by the defendants, wlien such testi- mony niay then l)e considered in the double aspect, namely, as tendini? to show, not only the overt acts required to be established by the statute, but also as tending to show the means whereby the conspiracy was to be carried out. T have now directed your attention to the testimony which it is claimed by the prosecution tends to establish the means whereby the conspiracy was to be promoted, carried out, f ffected, and executed ; that is to say. it is claimed that such means were, in fact, used, and were part and parcel of the conspiracy: that the acts concerning which testimony has been given were unlawful acts, which entered into and became part of the crime of coiuspiracy to prevent the use of the Southern Pacific Railways in this district for the transporta- tion of tlie United States mails and intei-state conunerce. I liave, however, not attempted to exhaust the testimony pre- si'uted for the pi-osecution and defense, nor are you to con- chide or assume that, in your delil>erations upon these mat- ters, you are confined to the testimony referred to by me. T have merely attempted to classify the general features in such a way that you may l)e able to apply the law, as I shall give it to you, to the facts as you may find them. It is for you to determine beyond a reasonable doubt, not alone from the testimony T [761] have alluded to, but from any and all parts of the evident'e, whether any one or more of such JU!ts as have l)een referred to was or were, in fact, connnitted; and, if you should so detennine, whether any one or more of them was or were the means conspired to lie used to ])ro- mote, carry out, effect, and execute the object of the con- spiracy, as charged in the indictment. For, after all, the i-eal question is not whether these acts were, in fact, committed, but whether thest- acts, or some of them, was or were the means to l)e used to carry out the conspiracy. You will observe that it is not necessary, to establish this element of the conspiracy, that you should find that all the means charginl were to be used in carrying out its purpose. If you find beyond a i-easonable doubt that there was a con- spiracy to commit the offense charged, it will be sufficient if you also find beyond a reasonable doubt that one of the acts charged was to be the means for canying out and executing r^^A^ I 4 UNITED STATES V. CASSIDY. 535 Charge to the Jury, that conspiracy. We have now arrived at a stage of the case wliei-e we may properly refer to the law applicable to the conditions which it is claimed prevailed during the occur- rences now under consideration. With the merits of the con- troversy between the railroad companv and its employes you have nothing to do, except in so far as the facts delating thereto may furnish evidence as to the actual parties engaged m violatmg the laws of the United States. Moreover it is no defense in this case to say that the railroad company ob- structed and retarded the passage of the mails, or entered into a conspiracy m restraint of trade and commerce. If the railroad company violated the law, it should l^e punished but we are here now charged with the sole and only duty of determining whether these defendants at the bar have been engaged in a conspiracy as charged in the indictment; and the testimony to which I have referred, bearing upon this question, suggests certain questicms of law, to which I will now direct your attention. The testimony tends to show, as you will remember, that the boycott of the Pullman cars was declared by Debs at Chi- cago on June 2(>th, to take effect at noon on that day It did not, however, take effect at Sacramento until about\nidnight or early on the morning of the 27th, and its first oi>eration in this district appears to have been to stop train No. 84 at Sacramento, due to leave there at 10 : 25 in the morning for Oakland by the way of Tracy. This train, when regularly made up, carries a Pullman car which comes from Chicago to Sacramento on train No. 2. The Pullman car is destined for Los Angeles, and is carried from Sacramento to Lathrop where it is attached to the train for Los Angeles. The mem- u ""V*"^ American Kail way Union at Sacramento refused to handle this car, by reason of the boycott declared by Debs at Chicago the day before. This train carried the^nails. Knox, speaking of this train, says • He says further: •'That train stood there imtil leaving time, when it started to nnU SoL' out'^o^^^lart^^ 'r "^ ^'^ -r^ngths out and^™^^^^ ehalf of the defense in this case that the boycott declared by the American Railway Union on June 26th, and the strike declared on June 29th, were in themselves lawful. The logical effect of this contention would be that, if any unlawful acts were committed during the pendency of the boycott and strike, they should be sepa- rated from these general and admitted acts of the American Railway Union. This feature of the case calls for the most careful consideration of the law as declared by the courts In Thomas v. Railway Co., 62 Fed. 803, Judge Taft, in the United States circuit court for the Southern district of Ohio, determined that the boycott of the Pullman cars, as it was enforced in Ohio, was unlawful. The facts in that case were substantially the same as in this case. He said: "The employes of the railway companies had no grievance aeainst their employers. Handling and hauling Pullman cafs did n^t lender 5- ^ ^oo 67 FEDERAL REPORTER, 76;]. VUnrfse to tli«» Jurj*. <11<1 not regnliitt. their hoiirJ 1^ i., "® I""'^ "^"' •'<> »«ges. He Simply to injure hfm In Ws bu«iueL"%r/ ""*"'?"'!'' «>elr Services! aged to i-ompel the railway oonipa^ ^iu^^ "^^^^ '"^ «"«»»■ by threats of nuittinc their s»r,^ . i withdraw custom from him ice. This lulllrted m injun- u^i^hf^J?*''"^ 'y 3"'«'°« ^eir ser" and it was unlawful. SauseT was wTthn.?t .? Vl* """^ ^'"'^ sreat. employes had the right to unit thet^ LT> * '"*'"' *'^™»e- All the to combine to quit ( heir emDiovminf T '*^^'^°I;. ''"' ^^^^ ^^ "o right employer to withdraw froZth^m.!v.?,?"'^'" P^''^''^ *« «»"I^1 their third person, for the puVZe^ lnU^,l^i\^'?^^^'^ '*'"">''» with a relation thus sought tob^mkl«'l«^^ that third person, when the character or rewani o? thelr^^ c^"" rTwH' "■^'!*^^*'' '"»" the and the end sought thereby that m^^ A! , \^ "°"™ '*"" lultting and the combination bv Thich it h^ i^I 1 '"•""'"y invoired unlawful. The distinction I* ve^n an ordi ,a^^^'/." °°'"«''n' combination entered u,«n to obt«iT™'ne wh ch Is wnfT ''V"^ "^^ t^e man recopnizes tlie one or the otlirif ^ , 'f ,'^'>'<"li- Every laboring Judge. The ".n.binat"m, uiX diirjsi.r'f '^ "'!"« '""'y^'- «' thi though unac(„„„«,nie,l by v oLtlonTor7ntlmfI« *"'?"• Boj^otts, nounced unlawful in everv stnte o?thJi, .'.""J^S*'""*- ""o^e »>een pro- lion has arisen. u..uJ ilTe Minu^ta Thit?* States where the ques- in Kugland. • . . {.„; „'"^„ "; T^^y '""e lield to be unlawful with Debs at Its bed ad Phean^ai nf"'^**"'"- 1* ""« oomblnaTion alone on the general ,w of l«v^«s rVT^'T "r' "»' "^t*"'' conspir.i,y of the -Xmerican llnflw- v T'„T^^ glg'mtlc character of the The railmads have iKMom^ as nel^', ' "tL"?,,!^''*«f ™ *,"? """S'natioiv of tlie pe,.,,le of this conntr^ Lf^ V\ ■"''^^''"*' ''<""*'> '""1 «>i»fort -vet I>el« and Phelan -md t*Kir a"«.i''S^''''l'"J5«,''"™«n body, and employ** „r „|| the railUrvs i ,^ Proposed, by inciting all the service, without am dteaiw. .ti„ wm"'| ' ^*"' """"'«'">• ""» their ployment. to paraiVze nTterlv nlV th^^^^^ **"■""* "' ^heir own em- and in this wav t.\t,„ "rii,lh .n fl^^ "^ *'""<^'' ^^ P«>ple live, nor the railway cvnu" ! 1^ ?,'^'' rthe'^i^.^^'^yliiV "ff"- ""> I'ubHc sible, and over wliose a.ts thev can lawft li J ' ?** *'^'"** ■"^P""- pay more wages to his eiuDlovl ^Jl ^ ^ •'=«/"'se no control, to Iween Pullman and hL Z'loZ ^^ '"f/l"' *"<' ^ntroversy be- legality of the "mibinatlon eff«"te. IL™?„i »k "*; 'Whatever on the Union. TlH> punH..se, shor ly ^a/^ wnHn /"^ American Railway panics and the public into iS,,r,^ii^:. 1> n*" "^""^ *''« railroad com- they had no I«>i?^lrigSTiS,l,!," '"'»'' V".^r"""S ""Ich tion of a nation cannot l4 a l-m^,n^.„.i^ I"" <^''tainly the starva- utterly Innnaterlai ,X her / be ^ZT^ 1" ^'iT!:'"'"'''"- ""-J " •» lawful or otherwise. More tian th?. «J effected by means usually of the act of Julv 2 1^ which matk. » '•""'^nation Is in the teeth state .•ounnerce.-' 82^. 821 "° "'^^'^ *" restrain inter- ^flL^' *■ r ^"'"f ' '•*• ^^' ^''^^ Thayer, in the United "A coiiibiiiatioii whom* i»rof(^HMi tiiiio^.f i^ ♦ railroads whose lines SS fiTnVa ^^^^^^^ ^*'^ oi»eiatio,i of until such roads acvede tr^rtaTn demaZ ^^^ ^°*^ adjoining states such demands are in theni^hes i^Z^laT.^® "^^^ ***^'»- ""^^^^^ unjust is eertainl. an u«la;^;:^,r^ra!!l^rrS^^^^^^^^^^ -^t UNITED JSTATES V, CASSIDY. Charge to the Juty. 539 ' among the states. Under the laws of the United ^taft^ «« «r^ii «« * rurw^.rn=.Tero^rrr;%~H^^ Com. V. Hunt. 4 Mete. (MaS.f lil " ' ^^ ^®^' ^* ^"P" ^ ^^ In 4r!;e», 11 C. C. A. 209, 63 Fed. 324, Mr. Jus- tice Harlan of the supreme court of the United States, sitting in the circuit court of appeals for the Seventh circuit, stat^ the law m the following terms: conspirr;' m«n "The ™4'-„fT" ""'i""'.**- ""•* '"«' ««»blnation or ment!p';ZX*?4rS' or" ^U^ln'^'uXforure rifn^ and Other property in their hands, or by interfering with th?iV^ «LlnJt Hi ''''^'- '''"'"'^^*'^"' threats, or other unlXfuf method! aga nst the receivers or their agents, or against employ ™remrin?^ in their service or by using like methods to cause the eSv^s^oZt ^ea?h?r;r T^I^' ^Z*^^^ ^^^^^ ^^^^^^^^^ ^^^ service in i^uf^o? ltof\ ^ V <^oml)inations of that character disturb the neace of^ eiety. and are mischievous in the extreme Thev imrXr w^ i * ortrade':./r"'*'/?^^'' ""'^^ nghtluUy ™LanSThlr?Ce ^ of trade shall not be unreasonably obstructed Tiiev endam^ f^ I^n^onal security and jK^rsonal liberty of indVv^uals who in th^^^^^^ flZ ^ n7'. "^«"^"«l>»e privilege of choosing the terns Z>nwWch they shall labor, enter and attempt to enter the service .St WnJaTiS whom such comr»inations are specially aimed " ^^'"^^ The right of labor to organize for its own benefit and pro- tection, as I have before explained to you, is a substantial right, which the laboring class is entitled to enjoy to the greatest extent consistent with the rights of others The limitation is that in the exercise of this right the property and rights of others must be resi^ected. It remains for vou to apply this law to the facts in the case at bar. I will now direct your attention to the overt acts charged against these defendants. OVERT ACTS OF DEFENDANTS. Oeorge Cornwall, an engineer on train No. 13, going down towards San Jose, and No. «, coming up, on the Gth of July testified to what occurred at Palo Alto as follows: That he' wa^ the engineer on [765] train No. 13 on the 6th dav of July last; that they took x\o. 6's time in coming back.' It was express train No. 13, from San Francisco. It went down as far as this side of Santa Cruz crossing: They car- ried the mail and had a mail car. He saw some mail on 540 87 FEDERAL BEPORTEB, 765. m i Charge to the Juiy. going along. Left San Francisco at 3:15, he thinks W« returned towards San F«ncisco. He back;d „p a tmin to l«awreiice's Station Ko i.«r. „« i ^ ^ "P « tram to and pulled it S Si^i dCth e ^17 *'' "''" ^"J' ».;«j. 1. I v.viiij5 uown, tne mail car was on ha. nmd ; when he was cnininir k.«l- ;* • . ^ enmne H» K«l i f * '* "^"^ "> ^'O"'' "ext to the ftTlh"*^ "? *™"* Lawrence's Station towards J-alo Alto station, at the switch there. Reached P«I« AU^ somewhere about 5 o'clock. It was ^H^rT J when h ,„ ,,,., ,,^,.^ „/t^- ^i:t3;"Th'e' Cassidy. * * * He first iT ^iu^'**' ***^"*' ''"** This was at Palo £ hIT f"* "'/^em on his engine. turntable dn; ^' * u ,.* '" *** *"™ '"'"""d «" the luimaoie. iie got about half way turned nrm.nrl „„j saying something to the brakJiin k! * .' ^ ^'^ i^ju nun. uont break it off. TalrA tK«. .««„i wrench and unscrew it " RJpp ««„! u- !u monkey told Mavne to go under it iZ f " ^'l* '''^"<'*'' *""* did. May,, th^n went i tS:: 7ZT^' '' *^" '^ of the tank ; shook the fire twn. X"" el fZti T Rice did most of the shaking M«^„ 1. "^^ He said he would take charl „f ^rf' T **" *^' ""«'"«• init the ^fltP« V, ^ ,Y^ "' her, and commenced shak- knows a man named Clark hnt ic. ..^* " ^'^Aayne. He much. Believes he kSw^him W si? cS 1* ''" whether Clark was there with thLle„ o^n^ "'S. T' was u„«>upled. One side was u^o^d by ^^aj^;.'^.^ other side, he could not say. The 1.1 wa7„nco"Sd ^. ^. VNITED STATES V. CASSIDY. 541 Charge to the Jury. tw^i the tank and the engine. The eflFect of uncoupling that hose was to let the water all out of the tank if the valve was open on top. * • * It is necessary to go under this engine to unscrew the nut. He handed Mayne the wrench, and saw him go under. The turntable was then turned half around. Cornwall wanted them to turn it around, that he might clean the fire out of the ash pan, so that it would not burn the gratis. Some one did turn it around, and he ran her over the pit where they put out the ashes. Then the boys vvent up to the other engine, and, as everything was aU quiet down there, he put his coat on, and went up too. He had a talk with Mayne about the mail. He called him to r r7««r''/'^f' *" '""• ^"^ ''''^■- "Mr- Mayne, aren't Till/ ^**" '"'" ^* '"^ ''""bl^ by stopping the mai ? " Mayne said : " Damn the mail. You ain'^ g^t no mail. Cornwall said: " You have fired on this train long enough to know we do carry the mail ail the time." And then Mayne went away, and that is the last Cornwall saw of him to speak to him. * * * There is very seldom a Pullman car on that train. His engine was killed at that time. After these men left his engine, they went up to Mr. Mmatt s^engme and killed that one. He.saw what was go- ing on there He saw her blowing off, and some one backed her on a split switch in front of the ticket office, and blew the steam right into the ticket office. The back drivers were partly off. It would take five minutes to get her on if they had another engine there to do it. Could not see who was on the Mmatt engine from the time it was moved from Its position. There was too much steam. He could not say that these same men were there. Supposes they were. He believes he heard some of them say: « Come on. Let us go tZ wV . f/^^"'" * * * On cross-examination the witness stated that he did not tell those men that they were interfering with the United States mail train when he was on the turntable there, for the reason that there were so many around there he did not think of it * * • Nothing said, to his knowledge, at the time that engine was mrtv' "if h H "'"^ *" '*" ^'"« * '"*" *'*'"' ^y either party. It had a mail car on, though, and mail in it going north and south. * * * This convei^tion that he had 542 67 FEDERAL REPOBTER, 766. Charge to the Jurv. e^'e ils X ''"»/««»« «ide, close by where Minatt's engine w»s No one else heard it. Is sure that no one else Si nn^K '■' *''^ *'"^y convenmtion he had with him. ^.^in,, ft f*" "t?"* y°" ^'" ««t ""o trouble about ^ppingthemail?" Mayne said : « No. I did not know L"r thf„%t^r:" T^t * ' * ^hinl^^ ther^^e.^ • *!. X ,? About seven or eight. Somewhere Se lrr:'"f •, "^ '•"•^ -^"^ ^™'^~ and aTret:" He thinks he was helping turn around. He did not offer Kiri^r r Sr™- '''^^ '^"•^ - '^^ - i"ly th^ he did not think about much of anything. ■ " • R- Sowers testified that he was a brakenian in the em ploy of the Southern Pacific Company. That he «;" u , o r U„ ts I ri "^ '"' « "■'"'. '" "»^ "" ^^-d-t- Go-W'^ hit t^in k"- ^^^"^ "'"•* ''""'""^■'^ ♦" the engine of Uto " .' f ^T'"*"- ^^^"^^ *'^^"^ -•»« in^ Palo '^inZZ^: "%''"•/'' '" "" *"'' "'^- off from the S Ld U T, " *''' '"™*«^'*' ''"^' ^^t"--*-' to turn it. S.. hvforTTff r " '"'"^ *"'-"^'^ *'°""''' -'-" there iTor SIX Hiff \ "' P^''"' ''""' ^'•°'" o^*"- the i5eld.- thl cJ h, t ""* '"•'?• ^'r-^- "^'^ »" '"S«ther, as close as they could be coming towards the engine. Thev came over ' and proceeded to kill the engine. One of the gent erne in thl crowd spok, to him and said : " You don't nefd to t^ t a 'j further. > on rema.nin Palo Alto over to-night. Yon ha v.. run far enough to-day." Does not know who^hat ma^ Z He was a tall gentleman, with a black mustache. He would ttTtSne h '"' r?'"^" *•"•* "«"' I'«'' -'th them t •^ . « «nd Ca«,,dy being directed to stand up. the witness Identified them both.) After one of these men'l.ld him th^ in Palo Alto, the light-headed gentleman (Mr Cassidv^ uncouple the hose between the tender and engine. He could not .see who was on the other side. Did not notice who was UNITED STATES t'. CASSIDV. 543 Charge to the Jury. Jng Ititnf '■ .*'"•"" r '" '"^ «"'' ""' -hat he was do- aTthat tin^ \t. T "'"''' " *=^"P'"^ "^ "thers in the cab of „,! u 1"^ *'** occurred, that he knows of, outside of uncoupling the hose between the tender and the e^SnT letting the water out. and blowing the steam o*f slw the ^a". escaping. Water escaped from the boiled' Th"; 1^ gnie was killed a. tl.at time. The fire was .shook ,low„ He supposes It was all out. * * * Mr \f..l.l / ;;efore tbese men reached the caK^'S^^l.ti 1^ wneie IK «as After thoy killed the engine, these men went from hi.s engine om- to Palo Alto station. * ^ " "\"' weix. going at a „„„h.rate little trot. They wore not ru^ ning very ast, or anything like that. • * * VZ' quainted with the signals that are used on passenger tLns" This was a regular train "gei riains. ^I^Z^^^r '"""" "" '""^ •'"^"■'"' "f -hich Cornwall ^>ah engineer He was present when rr^t.,.,..,!!' killed, but he is unable to'^ident f ^ tl^ d^™!" T"' T persons who assisted in killing tt e/X' the 7 ': headed <^e nth ^ u"^'"" "'""""•l' because she was Is soon s th ^'"^' ""'' '^'' ^'""-^ ^""'^ to San Francisco As .soon as the engine stopped on the turntable he crr.t „ff Ik enguie, to help push the engine arounf * '^''^ He^^t: ita: "eSt^L^js r-r Tt t:; ^"r Drettv fflcf G^,. . &^"*^* ^'^^y were walkiiiflr pretty fast. Some were running a few stens Smn. ^i^ fK 67 I1DERAL REPORTER, 7»j7. Charge to the Jury. P-rUj- anmnd a little ways. Mulder got up on his seat, aud sat down to see what was going „„. Cornwall, the engi^r at the t,me he (Mulder) got up, was sitting on the seaX^: (h.. ,.f ,1, «ng»^« was killed. Saw the squirt hose used. One of the men said to him, " Turn that squirt hose oT" oi^i tL dr^^'.^i' 'T"' *"™'"^ '* - •»--»• They f T^f A fi . ^!'^,,^ '^*' »"^ ^"•'^«d the water over 1768] the fire, and killed it. They had already shaken the Sr Vr ' "*''"*'* '*•* «^ ^'^ »«* -""gather shaken wT' ff l'*'^" 7"' *^"« ''^*1' « Pi<* to open the blow-off cock, and the engineer told him it could not te opened that way; he would have to take a wnmch and ^ unden^th and loosen the nut before he could turTit tS engineer handed him a monkey wrench. One of the mo„ watti out of the lK.iler and out of the tank. Thenj were engaged in that work at least si,, if not seven. He thTnJ! there were seven,-thr«e behind the tank when he left there ana tour m the cab when he got up there. 0«™i:n^ ^'* "If * brakeman on Uie train pulled by Oomwall s engine. He accompanied the engine to the turn tobl., to assist m turning it around. He saw the killing of the «,gine, but is unable, like Fireman Mulder, to identify disabling of the engine. He noticed some of the men com- mg down in the train with him. He recognizes c"Sdy^ bemg a member of that party. Cannot sayVs to Mayne^o^ as to Rice and Clark. * ' h« S S ^"""^ ^"^ «°g"'««''. ^"8 killed. He states that he left San Franasco on July 6, 1894, at 8 : 05, on train No. teS^TJ^' tT ^'■'^' ''"f '^'y """^ '»' ''^P' to take to San Jose. It was a mail train, having a mail car. He had ^^ge and express and mail, smoker, and, he thinks, two or three c<«ches. He had no Pulhnan cars,-no PuU- man sleeper. He went as far as Santa Clara crossing, left S tS V r;""*' '^^"^ immediately as No. 6; th t is, on train No. 6's time. Those were his orders. It w4 a mai train returning. I*ft Santa Clara crossing at 5:16 p m i UNITED STATES V. CASSIDY. 545 Charge to the Jniy. Reached Palo Alto at, a • nti ti,„ » • i , . the W9V fr„,r, « ; ^! ■ * ^"^'"^ ^^^ "^n backed all ^e way from Santa Clara crossing, there being no turntable l^tween that place and Palo Alto. Arrived at'palo I o he ;f thrtrabi:, *t^ tr \:rt\a?rTt -. -^' - would come first. He toV ll/s meft gt.'p': thleT^ neer and fireman and turn the engine, fh iThe welt to tt depot to get orders, if there weie any to obtain Tt J L .ntention to take that train right Zugh'o tlie 0^7 Did not n>te.ul to stay at Palo Alto more thfn abo i? min.U s n" t^:rd7retSnf T hVd r f -' -r- ^^ ^ffi^« u ^"gme. He had just arrived at the ticket office when some one san^ out to him " T «aw ^: J. -. ^ iiiiii, 1 saw some nna rnr» Sckl o;"'' SZ T""" "^ ■•- to *•>« -/- from he rhrnK;achedit T '^' ''"'*, ^^^"« -"und the engine nen ne reached it. Rice was shaking the grate. The W of the engine was cut ; that is, it was uncoupled. That is t^ hose between the tender and the eno-ine n;^ . r® cut it. mile examining thet^L ^^ieS SJ^: a "fair/rom Sal 7' '" '''"^ ^^' ^'^ J"^' «--«d with a tram trom ban Francisco. He followed them ud When he arrived, it a so had been killed Witi Vu ^' seeinir Rine r7«Qi I. i ."^",'^"'®d. With the exception of ZTL ^ f 1 ''*.*^'"^ *'^*' ^«te, he did not see anv of the acts connected with the killing of the two engines Tn answer to the aiiessHnn « n;j i. "'" ^wo engines, in Mr Rice and T P. i ^''" ''*''" ^^^ conversation with stated. "" """P""* *" t'*'^ ««t? " the witness ««ii^Sdtt"w;,"rLd"l^'„*do^'i'' 't^P" •"«« «"1 """fled the track to go to mr train wWch w,". ^^V^^ ''"^'■- ^ P«''«' down protect it. and I met m^ Rlc^ a^ m^ n^.■"'"" *"<"^ '«'»«'. to ticket office. I said to Mr^«r «„^ « "^^ •^'"'"S towards the tied us up.' Hesaid: "y^ W^lv^^Tfr-./'l'JfJ. ""^e"- mi hare unlawful act. and von ha™ ^!. . I said: ' This Is a verv wrong Southern raciflc 14^'^,.^«„; „„"" othe/r"^ """t^^^"- "S^inS tTe Of them as the A. R. r.?/ T^?s ?"tV""'"''= f"* '«• '=I*«king railroad companies whip Pullman or ' in „^i, '* ""'•'^ *"> '"al^e the th^r^terms.. „e stateJ: '"'^Z.^'^r^lr^'^^Zs: a^Xe^"^a*: I 546 67 PEDER.\L BEPORTEB, 769. Charge to the Jury. Alto about 20 or 30 iiiinutes. Possibly it might have been more. There were no other engines at Palo Alto save those two. They laid there until the next morning, until they got another engine to pull these engines to Menlo Park and filled them with water and got up steam, so that they were able to make the trip out. Got back to San Francisco about half past 10 or 11 o'clock the next morning. Were due m San Francisco the night before. Edward J. Kincaid, assistant agent at Palo Alto, called for the United States, testified that his attention was at- tracted to Cornwall's engine by hearing some one holler. They have got it." He was then in the ticket office, and ran out, and saw four or five men coming from the field be- tween the county road and the railroad track. He saw the men climb over the fence and climb up on the engine The engine was half turned around on the turntable, and he did not see what they were doing to her, but he states that steam soon began to issue from the boiler, and the engine was turned clear around and run onto a side track, and there the steam was blown off. This crowd remained around the engine probably about six or seven minutes. They then went to Minatt's engine, and climbed up on the engine and told them to get out,— told the fireman to get out. They then let the steam and water out of the engine. Knows Rice, Clark, and Cassidy by sight. Does not know the others. He saw them there at the time these two engines were killed. Saw them mingling with the crowd. The only one he saw on the engine, to recognize, was Rice. Did not see either Clark or Cassidy on the engine. But they could have been on the engine, and still he might not have seen them. Could not see what they were doing. On redirect examination he states that he could see that the hose between the engine and tender was uncoupled, hanging down, and he could see under this hose where the water had run out Robert Dannenburg, station agent at Palo Alto, also agent for Wells, Fargo & Co., and Western Union operator, called for the prosecution, testified that he saw some hve or SIX men coming from the county road towards the railroad track east, at a sort of dog trot; that they went to Corn- waU's engine; that he saw them stop the turntable when .. " UNITED STATES V. CASSIDY. 547 Charge to the Jury, about half way around, but he could not dis- [7701 tinffuish who It was that stopped the turntable. He saw steam es- caping from the engine, and shortly after they (the crowd) turned the enpne clean around, and ran over the ash pit. Kan her off the turntable, right ont« the track. He could not see any particular thing that was done on the engine from where he was. The crowd then went over to Minftt's m'f„""AlWh'^K ^'"" ^"•■•^ '^^' ""^'°«' «"d also another man. All that he saw with reference to Minatt's engine was S 7f t rT '''rtr '''' ^"^"^- "^ ^'^ -^- the rest of it But, probably two or three minutes after these e"iM:t ?' T"'^'^ "" '"^^ '"^^'"^ "ff *-™'^ ZTL /I ''''^' ^*y"^' ^^^'^' «"«» Iii«« in the neigh- borhood of those engmes at these times. Distinguished them near Muiatt's engine, but could not see what they wei. dS^ E. F. Minatt, called for the United States, testified that he the r^^T^- ' °" '^u' ®""*''^^'^ P'^^'ifi*' ^^tem, running on t?l f ^^ . , , ^' """"^ *»* *"• N«- 17 »««rding to the time card, which leaves San Francisco at 4:25 in the after puiM :?%*'"^ 't' ^^'^ '' --t- late oi ttt i:;: Pulled a local tram between San Francisco and Palo Al«i He reached Palo Alto that day. He was to return fromiS Alto the next niornmg at 6: 40. Four of the boys.-two of them fired for him before, and he pulled the other wo Z brakemen (Cassidy and Mayne, they'^both fired f^him and a fellow named Rice,.a brakeman, and Clark) ,-thev^mc He tlinT "p- ""V^- ''""" "" *^« ^'"""-i -d they go ™! He thuiks Kic^he is not sure-commenced to iL the fire out of the grates down into the ash pan. CaSS^ and Mayne co„,^enced to uncouple the hose.^ Thev wantd "« itTh s tim! r"* "' *'* '""^'•' ""** ''' '' »"* 0* the t nde^ « Bnt« n r '""'" f ''""''' ""^ the witness said to him. Boys don't damage the engine." They said they wS S'ttf Ther'" ""^"' *'^ '""^^- ""^ tender -Id tS am that. There was such a crowd around there ih«t hi could not tell how many there were. Ca^id^.^n^Ri and Clark were actively taking part and kilLgl^^enS' Joosening the blow-off cock. The witness gave them . 548 67 FEDERAL KEK)RTER, 770. '/ i Charge to the Jury, wrench to do it^o „„lo<^n the blow-off cock.-and they £iJr ^ '^ ^"^ .""''" **•* ^"^^^ Partly out of the boilei^he water was about out of the tender,-the younir man Clarf. got up and backed her out through an oZ swuch. W,tn^ hollennJ to hin,, and told hinf the sw'S rr T"^- • "* ^* '^' **""*^^ «"t and the back drivers out Zn * swud, then I... undertook to run her »head on the mau, track, and derailed her. She stood ther* like that until they sent a man from San Francisco to pull her on • » • for'lTRT'''Tt'"'*'""' "".*'•' '^ "^'P' J^'P' hurrah »r tne A. R U. There was such a crowd around ther«_ ltd" 'TirT ^" .^."'^ "*** ^' *** ♦'^^ «"g'»« f-m the Z^i ^° 't^-^. '»''l 't he don't know. The only man that he saw at the time of the hurrahing was Clark: The mter was on the engine after he derailed her. He did not *e Mayne or €a«sidy or Rice at the time the hip. hip. hur- rahing «-as gon.g on. After the excitement |7rr| was over, ne sav> the parties going towards Menlo Park. He saw Mayne, Ca^.dy Rice, and Clark going towards Menlo Park. Mward C. Murray, a witness for the United States, testi- fied that he was the railway postal clerk who ac.o.npanied train .\o 13. coming back on the same-train.-it comine hack as No. (i; that is. on No. 6's time. He testifies as to te being a mail train. He did not see the engine killed. He testifies as follows : were „>,, due .it San Frauelsco with that nmll? A. 6: ^■" "* AS TO CONVERSATIONS HAD WITH CLARK. R. M. Donne states that he was a conductor on the Coast Division, and that he was at San Mateo on the evening of the Wh of July, and the morning of the rth. He saw Cassidy, Rice, and Clark there that night (the 6th). Also aw a gentleman with them who weighed about 180 pounds- had a smooth face; was heavy set. He had a talk with Clark that night. He spoke to him outside of the ticket ; UNITED STATES i\ CASSTDY. 549 Charge to the Jury. her 1 /""*■■• r^ '^^' ''* ^^■«"''' '"Produce him to heir assis ant general passenger agent, and several others He acceded, and came in. F. S. Douty. the ^cretarv of the lacihc Improvement Company: H. R. J„dah. the aListanI general passenger agent; L. H Fuller, an emplove he n. ;: I bi^ ^T«f •-"»= the station agent Mr. Peck lan, ,n.l his assistant, Mr. Elines.-were present He . testifies as to the conversation as follows: tlmt the Iw.vM „„ the other side T»r», ^""f .P»'«">''- Well, he .said taking „n,-,«irt in tbtZ^r- tZZT^ul'iVT '""^K ""*'"' ""' also tlie Xarrovv r.ausre in.! thm" h.i / . *'"' "*''*■■ *"<•« tied up, Q. no yon rec.m«:^%tbTL farther thnf" *''""•'♦'!''■« «» this side! A. XothliiK more ev«.nt fhof ["""^'^ that was said at that time' grievaMc-es^Sr^tX^^lVr^f ofvisZ: ""^f '"^^^Y"' "^^^ ^<^^ "»> not partienlarly.- •• division. He replied hy saying. 'No; F. S. liouty, a witness on the i)art of the .rovernment I think the <' your end up?'^WeS we beJ; n<. f"^" ' ^^'*^*'' ^*« ^^^ where we have taken an oath to stiml tnZ^ ^*' ''I' organization If we don't win this fight, I will so t^ Chinn?^^?^'*' '. ^"^ ^^ «^^«J' any complaint to make against thfs Co-S n^Vi - ^V^^ l"''^'^ J-^" «<>* there is no kick mning.' «sM him if it '"'"•. "^ "*'»^^' '^o; s^^nipathetic strike ': if he was st-aii • ''''** '''^'^^ '»^ «i"ed a _Ye8,; he thought that wis suSLn ia iv^ iJ" Tr'""'' "^ ^'»*^' othr plYr^^^^^ ^ ^^"^^ ^-^ ^^^ — of anv another C '' '' "^"^ ^"^ ^'^ -"^- 'r^>«" Mr. Douty^sked him-1^ think that wag the next question that was asked-why the Coast wltTthe tH^lty/l?^^"^ ?"'' r^ '"^^^^^ '"^y^ entirely dis^nnSt^* fl!^.r"i« f^: J} vephea, in substance, that that did not cut any ?SV ♦k" ^^^ ™*'"? *"* **'"* ^*™^ ' *^^t tliey were into this fight, and i^twIL^T^.^^"^ ^Z "*"*^ '^''^^^ *^' «"^' furthermore, S tha t Ls conn^v ^h'^**""^ ^^ "^f ^^""^ *^ China,-he would not live in this country. Ihe convei-sation was carried on by all of us Ones tions would be asked, but I cannot recall every single question th^t was asked, or every answer that was given. In substance it ^s the same as Mr IX>uty has given, and Mr. Peckham. My memory might be refr^hed if some questions were asked of me, but in th^ main to mV n;;^'?i^rr/*^" ^T"; . ^^ ^"^«^' ^ ^o^ ^ "al'wasTal^d f?.o3^'i? fV ^^ ^ ?,"** persuade him to have the men cease on the Coast Division ; to allow that to be an exception, as there did not exist, in fact, any cause for complaint on the part of those emnlov^ on the division, and if they continued in blockiifg the traffic it ZsTte ZJ^^T""^ of sympathy, and nothing else Then Mr cCk r^ Iw If ~'" ^""i*' ^.^ '•e^t^'-ated on two or three occasion J:the fart that they were in this fight, and they proposed to see it through " The witnesses Peckham and Elmes testify substantially to the conversation between Clark and Douty as detailed above. On page 644, vol. 8, of the testimony, appears the follow- ing admission : " Mr. Monteith : We will admit that both of these defendants are members of lodge No. 345 of the American Railway Union l(Jatld[S San Francisco. Mr. Knight: Q. In the latter part of jS Mr Monteith : In all of June, and all of July last. Mr Foote I>t th«f We'hate nofwn.f ' '^'''''f'L ^f.""' ^^"" anyt^hing^^'f th^t^k^'nd* We^have nothing to conceal about it. Our side of the case is an open TESTIMONY ON BEHALF OP DEFENDANTS. The defendant John Mayne testified : That he was a loco- motive fireman on the Coast Division last spring. That he was hostler at San Francisco at the time of the strike. He had charge of the engines after they came in off the road, put the necessary supplies on, put the engines in the house, and got other engines out to go out on the road. Had been employed on the railrpad about six years. Understands all the duties of a fireman. Was familiar with the rules of the company at the time of the strike. Belonged to the Brotherhood of Ix)comotive Engineers and the American Eailway Union. That he attended meetings of the A. R. U. UNITED- STATES V, CASSTDY. 551 Charge to the Jury. in the last part of June. He belonged to the San Francisco lodge. He attended a meeting on the night of the 29th of June. The lodge met on Mission street, between Fifth and Sixth. After the admission of members there was a message read stating that the members of the local union 310, in Oak- land, had declared a strike on account of the discharge of [773] men. He identifies Exhibit No. 296 as the message, as near as he could remember. It reads as follows : RoomTl \ 18^' Oakland Calif. To J. E. Riordan, 118 Sixth St., Snv^ ; f ^- A»"T''^'' Railway Union three hundred ten has de^ pSent' "" ^^^'' ^""^^''^ ^^'"^ '"• "»• ^^-^^y- T. J. Rohertt He further states that he thoroughly understood the cause of the strike. His union never participated in the boycott against the Pullman cars. With regard to the strike at Oakland, a motion was made, and a standing vote taken, that they indorse the action of the Oakland Union in strik- ing, and that a strike be declared by their lodge for the re- instatement of the discharged employes. So far as this lodge was concerned, there was no other purpose in strikin^id W hat are you going to do ? " Mayne replied, " Nothing in particular." Cornwall then stated, >' Don't hurt my enJiie boys." To which Mayne replied, " We have no intention of caught hold of the grates, and started to shake the fire out. He tried o shake the fire out. It was in such a condition- it was an chnkered-that it would not go through the gj^tes^ He was about to give it up, when the idea struck him that he could put it out with a squirt on the left-hand injector. He put on the injector, turned the water into the MMMII 554 W FEDEKAL BEPOBTEH, 775. Cbarge to the Jury, fire box, and drowned the fire out. * • • About the 0.7 li !^r^! ^"?L'* ^°"'^ ^ ^«*« t« '«t the wafer out The latter stooped down, looked into the fire box, and said he thought^it was all right. Then Mayne took the coal n^hr? .k' . "!! ^^"^"^ '^'^- "« ^"gg««ted to the engi- »Z.„t firK," •* '^i**'' "'" '•*" ^''g^"^ »ff the turntable, on . .rSl ^ hl«w-off pipe coming against the timber of the turntable, and it would 8cald the paint on the engine. He approved of that, arid the table was turned back for the straight track, and the engineer ran the engine off over the !!i'^t ^"''""' ^"^ *^'* "*''"■*'* *"^'^' """* he could not open It The engineer told him he would have to get down IT^rt!!* ^'^\ « monkey wrench, and loosen up the nut Z \ ^r "*•*' •*•'• ^•^^"" «*^ him the monkev rJT * ^'"yn* jumped down on the ground. It was nefc"- e^ry for him to get under the engine, so he took off his hat »nd coat, and handed it to the engineer. The latter held his hat and coat while he opened it, and until he got bade on the engine . • • There was nothing said, 4- Iher than what he has stated. The engineer requested them not to hurt his engine. He said: "Boys, don't hurt my engine. I like my engine." And he repeated that remark two or three times, and that was all that was said • • • Just before he finished killing the engine. Rice came back from up towards the depot, and after he let about four inches of wat^- out of her he went back into the cab, and opened the blow-off cock Then he stood by the water glass, and Th!'\ ', Zli 'uf """'r ^*"* ''''* «* ^«ht in the glass. Then he closed the blow-off cock. He did not know but what the fire might kindle up again, and he was not taking anv chances on it. He shut the blow-off cock as soon as th^ water went out of sight. After they killed the engine. Rice and he walked up to the depot. There was a crowd of 20 people up there, he supposes. Just before they reached the depot, the other engine that Minatt was running was blowing out agamst the side of the station-house,-* little statioiK SIX by SIX. He said to him (Rice) : « That won't do. You don t want to spoil the paper in there." He mentioned the I>aper and instruments. Rice went up on one side, and he ■ " ■' UNITED STATES V. CASSIDY. 555 Charge to the Jury. on the other. They moved the engine ahead a foot, so that she would clear the building. Rice was moving the engine and lie had hold of the brake wheel. About the time they moved a foot, some one hollered, " Whoop ! you are off the track." They stopped immediately. The water was all, or nearly all, out. He kicked the blow-off cock shut, and statement testified to by Cornwall, as follows : " I says ' Mr Alayne. aren't you afraid you wiU get into trouble by stoo- ping the mail? ' He [Mayne] said, ' Damn the mail. You !un t got no mail.' " Cornwall replied, " You have fired on this tram long enough to know [776] we do carry the mail all the time." He, on the contrary, affirms that statement was just exactly as he gave it, word for word. He further states that he had no knowledge of any mail train coming along at that time, and before he killed the engine; did not know that a mail train was due at that time on the schedule, is familiar with the surroundings at Palo Alto. The train could not be seen from that turntable. He remained in Palo Alto about 40 minutes; then went over to Menlo Park Cassidy told him he had heard that Haydock had tele- graphed to the constable at Palo Alto to arrest them. The hi^t thing they thought of was to move over to Menlo Park They stayed in Menlo Park an hour, or may be an hour and a half. Ate supper over at the hotel. TheA they tried to ^t a rig The livery stable man wanted too much. He suo-- gested to the boys that they walk over to Redwood; there was a friend of theirs over there who would drive them up. ihey walked to Redwood, got a rig there, and they were taken as far as San Mateo. Got to San Mateo between half past 10 and 11 o'clock. Did not do anything in particular ^^ 67 FEDEBAL REPORTER, 776. Charge to the Juiy. U;^fe"()n'o«>' P'"***'"" «"'> .'""'-l -itl> the bo,s around t leie On cross-examination the defendant Mavne testified hat he bonght his ticket as far as he could go in th> itc ion of ^.ng hon.e.-to San Jose. The distance from mTv- field to i5an Jose is 16 miles. He was thei-e when the ra n left He made no effort to get „„ and buy a ticket f romT conductor, and proceed on his journey, wllen he saw it In" Jose He did not think they wei-e carrying passenirers anv f ..rthcr than Mayiield. He supposed 1.; w^dd^S le ^ dar Palo Alto ci-ews at Palo Alto. He knew that two tiS laid oyer at Palo Alto at night. From where he wis he on mg He was oyer 200 yards from the r,«,d. He admits hat. although he neither heard nor saw the train conT n he suddenly started oyer to kill a live engine. He had IS m that tram. He knew that Cornwall sometimes went ou hat engine He knows all the engineers on the Coast Diyi- Mon He states that he did not know what engine wa- on the ™in th.U he went up on, but he admits tlfat he Lew ^peat t le circumstances under which he jumped up and ran ,ts*v!t r^Ti '; ^"u" ^'"•^ ^^•'"" "- -i- -"- over llie s„ ,teh. just before she came on the tunitable the cylinder c.Hks were opeiu.!. and made a lot of noise.-steam lilowing off. They got u|, and looked at the engine. He don't know now whether he suggested to Ric.. or the latter sug^este to h»n. • Le s go and kill he." They did not debatele 1^ tioii at all. They went and killed her. ing Hnnemng, I .„,>,.,se. We wS , fro . n^ nlV"*^ ^'' '*^ ^^■ that a live engine mild nuH a trTi, v l 'r Jf" I^^*' .^o" "ot know one mild not? \ Vd i .iJi I" A' J *"'^- ^- And a dead kill that engine bec;u,s von di^ n^r ^T^ll "*^^- ^ ^'^ y«» not did not know one wr« he e afthrtinr"V'n';V'"" '" ?r' ^^' ' not know that to kUI thnf h,t« ^. i ' "* *«• ^^^ .vou pulling a train. 1 I di^ Q Yet ^^^"li.Y'T -^ ^""^*^^^ ^* ^^^"^ ix)8e? A. I did not know there wal ^, ?r Jh l^^ '^' ^'"^^ ^^'^ '^ P^^- thought it was a light en 17771 eine if ?I" ^^T'^' attached to it. I want anything about custonarv T t.nf ^"ft""^«0- Q. I do not Now. Mn Mayne. dUl 3«t know tha?t;yui..*H'''V^^^^^ '''^' ^^"^«"««- render it iuii;.ssible to take a tTJn ?h^^^^^^^^ "''^' ^"S»»« ^^"^d UNITED STATES V. CASSTDY Charge to the Jury. 557 up there out of pure devilfrrv a v«„ , ^ whether there was a trai. or not o? wh^n'"- ^^ ^''" "'"* ""t ^'^^ n>ail, or not anv mail and von km«i h ^''^'je'' <>'■ "ot there was auv not debate it. 'l thouX it w as f /ih^l^^- •'"'"^ ^r"^'^' -^ ' <>« aurt killed her for no rcln^l, whateve? o fifn' ""** r"* °''^' ""«■•« reason? A. For deviltry' o y»« V.. *^- ^^'<' J»" "ot do it for that and deviltr,-. A. I Ju^^ vo,', n?t'i.. " " ,'.""* ''"'"t <"' n«i«chier Without caring what'ThTr^sZ vfs^' ^ That T' '* *"!?* ««>- «• aB any." " '^ ^^**^- ^- That Is as good an answer Keferring to the conyersation he had with Cornwall about effl w • ^'>e «'gine was killed. He made no effort whatever to repair that which he was told was a iola CIark!^Crd;;ndyr " "'"^""^ ^^^'^ ^'^^ — stantll^tw"; ,"'' "'""Z '*^**'"'^''"^ "" trial, testifies, sub- S CWanvLrr ' "T ^"P^^y^** ^-^ t''^ Southern ci2 years Sat 1 1?'^ ' *'''" '" ^'^ '^^ -"^^^ *- «bout „w; 1^ ' ^•*'"S' *" the Brotherhood of Loco «iotiye Firemen, and San Francisco Lodge \o MSof t^" American Railway Union,- that he attended the miinVo IS he oJl T,'" '■'"**. ""^""t t''* 0»'^'»nd strike, or about the Oakland boys going out on a strike and we in dor.sed their action * * * w^ n j . /V ' ' e '"" .i 4. ^1 /*"-"""• We all decided to strike " W« states that most of the members nf kJo • nn tK^ ri„ i T-.- • • ""eraoeis of his union were enmloved on the Coast Division • tliaf ot J k„j. ^- ■ ° ^'"P'oyea a strike thev tilt ' ^* *•*,* ™^t'"S' '^^i'^^s ordering a strike, they took in a number of new members and an witness further -statoc ♦!,„* u n . lesiimony. ihe r.ilv „,/""''«'^ fates that he first saw Rice and Clark on inat, after an meffpptnal Qff/^^,A j. ^cues San Jose- '""""^t""' ««««"?* to secure a conveyance to I.rto"^'"inata!^^r*eom,„P«'» ^'^ ^'^ «-* '««'^ to Pa,o opposite Palo Alto%n thfwTurf t^r^^' ^^" "^^ ^ot up abo,u lue way up, there was some cavalry marcbing 558 11 67 FEDERAL REPORTER, 17!, Charge to the Jury. back from Santa Cruz ; mme regular troops. Thev were In the ApM We stopped and talked with them for quite a while We wniked on IS^'Vr.^^ ^PP^"**^ ^«^« ^"«- 1 1>«S « new pair of sh^es o^ i told the fellows they could go on the rest of the way, if they wanted ^J ITt^iP^ *** ^^ "^y «*»«^ ^fl^' I ^^"^nbed over a fence l„X; park, took off my shoes, and laid down in the grass Thev a 1? eot OTer the fence, too. We were sitting there, or llXg there tellfne stori^ and yarns, for about ten or fifteen minutes, when we hVrd thf cylinder cock of an engine blowing off. Some of the boys^got ud ami looked over the fence, and saw an engine. Sonie one savs- There is 8t>:s°^n%'nVY.Sr"''"' ^'^^ they Itarted for'it'^^^'^d^o'^p'uTmy 8hws on, and, I believe, my coat. Somebody else had their coat off as I could, after I got my shoes and coat on. There were two or threo in the cab of the engine. I went around to the lef t. and start^ to take off or uncouple the tank hose. [778] I turned around and hiin pened to see Minatt's engine up the track, ind I quU my job' and wen^ up to Mmatt's engine. Q. What did you do with Minatt's eiJne' M-^^iw^" ?^*"^" «"^ ™y«^*'' ^^'« loosened the blow-off ^cl^^^ and blew the water out The fire was already out of it. I had to crawl under the engine to do it. The tank valve was open, and the watir TnJ^''^^^:^' «i *^^tank. Q. Did Minatt off^r 'aSy r^istln^? A^ No ; he stood off, and seemed tickled. He gave me a wrench to A> It; told me where I could get one. I had to lay down fl^t Ther? unSerft' ^(^ Wnf.f '^^MT^' "S^ ^ ^^^ *« ^^^ ^^^'» A^^' «nd crawl No s^r n'^u '"'-'Tk ^^T ri**" y^" ^^'•^ *^"'»»g that engine? A. n«Vk «n^^T .^J^?w ^4 l^®^? ^^^^ ^^'^^^ «»^ .yourself? A I think Clark and I did that Job. I am pretty sure Clark was there." Upon being asked by his counsel if he knew what the in- dictment charged, he states that he does, but that he never did anything except to let water out of that engine. Respecting the cause of his leaving Palo Alto that night, he states that somebody in the crowd told him that the division superin- tendent, Haydock, had ordered the constable at Palo Alto to arrest them ; that they thereupon went over the county line to Menlo Park, and subsequently to San Mateo. On cross- examination, being interrogated as to his motive in running towards ComwalFs engine to assist in killing her, he states that he went because the others did ; that he helped kill the engine because the rest of them were killing it; that he simply wanted to be with the crowd, or, to use his own Ian- guage, *^ I suppose I wanted to be in the swim." Respecting the killing of Minatt's engine, he states that he thinks he was the first man to reach it ; that when he did he got up and looked mto the fire box; the fire was out of her; he started m to open the blow-off cock; that the effect of this was to let the water out ; that he let nearly all of the water out ; that the effect of this was to kill the engine. He also states that, while engaged in killing Minatt's engine, he heard some one UNITED STATES V. CASSIDY. 550 Charge to the Jury, holler, " Three cheers for the A. R. U." Being asked to give his reason for killing Minatt's engine, he states that it fvas to have a good tune." He states that he would done what he could towards killing CornwaU's engin* if the other engine (Minatt s) had not been there. Further, that he did not think of any consequences that might ensue, from the killing hf^ ri.M'JT"'' ^ ''• "' '•''* ** °"'y '^^^'n that prompted ^ w "^i ®°^'"^' "^"^ " *<* '^^P my hand in." f • W Clark, one of the defendants in the indictment, but hlr i"! I '"'" '^"^ **«■ *•*« defendants, and testified, briefly, that he was a brakeman on the Coast Division of the Southern Pacific Company, and had been such for about two years; that he was braking between San Francisco and Mon- terey, on the freight trains; that he knows Rice; that he met W. Z ^ TT^ *** *^' ^* *»* J"'y ** *« A. R. U. meet- u.g, that after the meeting adjourned. Rice asked him to go forl«n ?'"' "^ 7^^ ^^' '^^' '^'y "^"'d "«t g«t tickete for ban Jose, and they went as far as Mayfield. On cross- examination he states that he met Cassidy and Mavne on the train between San Mateo and Redwood City; that" he staved 2fftTu I '""u "''"' ""'" *^y ^' •^'^^ t« S-» Mateo; and that he finally came to San Francisco with them. He states that when they got opposite University Park, Cassidy complamed that his shoes were hurting him. Th;y theS upon chmbed over the fence [779] of the park, and ^t down under the shade of a tree. After they had been sitting the^^ about 10 minutes, he heard a noise of steam blowing out of a cylmder cock of an engine. He rose up, and looked over, and ^w an engine going on to the turntable. Either Mayne or Rice said : "There is an engine. Let's kill her." Thev jumped over the fence. He followed them over to the en- Tr^ti, ,^^°i" reached there, Mayne got up on the engine.- on the left side,-and Rice on the right side. He got up be- hind Rice. Cornwall was standing by his lever. He had his head inside the cab when he (Clark) first got up. Then he stuck hjs head out, and said to some one in front of the engine: " What do you want? A little more ahead. I 1 " Sh'et ',f r ^' "^"'"^^ '' ^^' ^'y^' -ho replied, HW v^J'^ * ':t^ '^^ ''' ^^''•S*-" Cassidv was some distance behind. The witness stayed on Cornwall's engine t r 560 67 FEDERAL REPORTER, 779. 'I ' li Charge to the Juiy. abm,t a couple of „,i„„tes, ,nd then went over to Minatt's en- r«<^iH. r". •'' , r'* "^''•- ^'«' «"t «" the engine, and CaBsidy did also The witness got up behind Caiidy. rheiv was ,„> fire ,» the fire box: the witnL took o„t a ham- Zl Zv I^ ^'^V^' "V*"" **"'^' ""•^ «li«connected the hose, put the hook and hammer and strainer back in the box Re- speoting the conversation he had with Douty. Jndah, Donne. and others .n the station at San Mateo, he testifies that he was called by Conductor Donne, who said to him- "There H '''T r?«n,'" ''^'' '"•*" '^""' *« ''»^« a talk with you." He asked: "^o are they?" Donne said : " Doutv and Ju- dah. They want to talk with you aboirt the strike. This is He sH;r^.w k" '"'* •'"" •" " '^'''''' "^ '"'yt'''"^ "ike that." Vndi tI L^^ ""''"• '"' •■""' '""^ introduced to Doutv and 1 r .. ^ ^ T^ '* "^"^ ^"ty ^l^" a*^ them "what Ilnl 1? f,l :?•'■• u"' ***''' *'^*'" '"^"''^'•^ "f the Oaklnnd car^nd"i^.K ''"^^ ^'''' ""*'"'"« to handle Pullman caix and that the union over there had ordered a strike, and Union 345, in San Francisco.-the union he was a member of,-indoi^d the action of Union 310, and thev struck. Douty said: "What do you want to strike on the Coast Di- vision for? They are not hauling any Pullman cars here." And he wanted him (Clark) to go back to San Francisco «id declare the strike off. dark told him (Doutv) that he could not declare the strike off. Respecting his motive in participating in the killing of the engines, the testimonv is as follows: Q. You were witlX'^Srs.Ud hS ttm'' T Yet ^fJ'^o*''^ you h«d no Idea In the worUl as to «Lt the object wS? T ^o st"" This concludes the review of the testimony relating to the overt acis charged as having been committed by the defend- ants at 1 a o Alto. It is for you to say whether it establishes, to your satisfaction and beyond a reasonable doubt, that the defendants committed any of the following acts charged in the indictment, to wit : ^ t( giiies (1) Forcibly taking posseRHion and control of the ♦ ♦ ♦ en- s of tlie Southern Pacific Company, by (1) ♦ ♦ i UNITED STATES V, 0AS8IDY. Charge to the Jury. 561 (2) threats, intiniidatinn« r7ftm ^^-^ force and violence In, Zn a^^St^T'.K'"^""''- »'• ''^^^ "«8 of ductors, brakenien swuSen aLZ?/^. *5^ engineers. fl,-en>en. con- company having cha^e of said ^ ^' ? " °ther employe, of said of Palo Alto, by (!) gathlr ng rncrCds etc ^^k '''?"?•' '^ ^"^ obstructions upon said track • (31 hTrtf^ni .;■' ^1 ^^ Placing physical forcibly and violently assai.lVint ^^ "4"'' <^"»S the switches ; (4) by engineei-s. flieineu, ZdSS brakem;^; T'".^', «'°'> ">tlmidatln« 'said en.„lo.vfs while enga«^ „s Tforesafd^^^^ V^^^^^ ''P"*^' «•"» "t^er "tua trains, and disronnec'lng tS. R,n.e 'rfiT r'*"^'"'? »"* °'« »' from said tracks; (7) by ulthdratvlnTth. ^ ^ ''•''.'■*"'<"''''8 ««'1 «"« tanks of said engines and nuttii,. n?,f i""^^ «"•*«■• '«>m the hollers and [I call your particular attentton to ^htf"! '■™'°'""« **"" ^^ ">erem Mng to the overt acts ,fX tS^s headi^^fsf",'' '"f- 7'"*°^ «" removing valves, pins, bolts nlntJ. LS .V ' **> ^^ displacing and of the machiner; of saia^e„ginlsfnd° .«"*''*'. "?»'«»<*» «n«l Portion" ways, thereby loosening said rails • (9) bv°th« '^''.'■''"' "' «"•* ™"- unlawful acts and n.eaL, to%he'i:and^X?^*''„'i.notn " '°""'"*' ""<* As I have before explained to you, it is not necessarv th«t wool's tt. sxLt:*",;'" •« "^*'^ tiS„„, „, Mr. L.„,i„g upon th"„i„t L ,u ** *.. .h.. a,, train' c„3'.hT^.ij^:a^rr "k*- " cmri over p«,. „„,. k,x neoS.' m tt " "" ^i"* 1180S— VOL 1—06 M 36 It' i. i. 562 67 FEDERAL REPORTER, 1m, C^harjre to the Jur.v. It is claimed by counsel for the defendants that an intent to obstmct and retard the passage of the mails cannot be in- ferred against these defendants unless they had knowledge that the mails were on board the train when they killed the engine on the turntable. In the language of Judge (Jross- cup in the case of U, S. v. Debs (in the United States district court of Illinois) 65 Fed. 211 : .JJ ^tl^""^ ^^P*""*' '" ****^ ^*®^^- The defendants aie proi)erly charee- aWe with an intent to do all the acts that are the rXmable and natural conm,uence of the acts done. The laws make all thrra Iways post routes of the United States, and it is within every one's know! ttJ^u % r^^ ?*'''"^" "^ "*^ passenger trains on the^e roads cX the mail. There is no stretch, therefore, either of law or common seme, to presume the person obstructing one of those trains contm plates, among other intents, the obstnietion of the mail." »^«""em [7811 And in U. S. v. Debs, U Fed. 764, Judge Woods, of the circuit court, uses the following language : wh7en^e,''^^^Jm.rl^^!^^' T*^ ^ ^"PP^ ^^" understood, that all Who engage, either as principals, or as advisers, aiders, or abettors In the commission of an unlawful or criminal act, are individual y responsible for the criminal or injurious results which folow the ^S^S**"", *''* **" ""^*"P* ^y ^'^y «' their number to c^mmU thi i~ ±l'''"^fKf ^^ ''TS"«' ^* *« *»y the same rule that co-conspirators are responsible for the acts and declarations of each other in the furtherance of their unlawful purpose. ♦ • • 'A man may bl Tit oL'IaTo'Jf '^n^''^ ^^ ^^"^ ''*** specifically intend (says Bishop), if it came naturally, or even accidentally, through some other specific, or a general, evil purpose. When, therefore, persons combine to do an unlawful thing, if the act of one. proceeding and growing Zll *w t^l.«>V»'non PJ«n' terminates in a criminal result, though not the particular result meant, all are liable.' " i"ougn But, aside from this responsibility which the kw imposes upon those who commit unlawful acts, the testimony of the defendants Mayne and Cassidy may throw some light on the real motive that actuated the defendants in ktlling the engine at Palo Alto. When asked by Cornwall if he did not think he had done something serious in stopping the mail, he admits that he replied : " Even if I have, this is a hell of a time to come and tell us of it, after it is all over." And, hearing, soon after, that an officer was after them, the de- fendants fled from that place. Was the motive " deviltry," as Mayne says; and the consequences, whatever they might be? Was the motive " to be in the swim," as Cassidy says; and the consequences, whatever they might be? If so, how can they avoid responsibility for such consequences? In considering the testimony relating to the whole case, it t UNITED STATES V. CASSIDY. 563 Charge to the Jury the members of L ImeSn VS ^^"^™"?«"*' *"^«lving bination and concert of T.H . , *-" ^"'"" '" « «»™- of trade and commerce and Ih^tr^ ' Tf "i '^*'^'"'' memlK-rs of that con J'raev but t^ defendants were case, under this indiot^^rr •.,, ^ ^^■' "'"" '""^^'^^' the passage of the Unhid sVl? obstructing and K^tarding the trade and co.mner" L in ! "'" ' "^ '" '"'''''"' *** • they committed r'o:e"rt atTwCl:"' ""^^'^^^ turntable; and if von h^hl? t fu ^ ^"^'"^ <»> ** reasonabi; douJ^ Z^^^tj^tTI' ''""'' '^ spiracv to commit «n^i. a ""^^ ^^^^^ » con- they dM in pTsuance of "tl"f "' '"' ''"^'''^^ '^^ «»«* dut^ to find rdXda'ts'tirrr'f "t""' ^ ^^-^ that occurence aJone. withorilrd to tt'^ T^""^ '° lating to occurrences elsewher" testimony re- REASONABLE DOUBT. in W^o? tttfenZts ''a '"""P^"" "" -"«*- ^ mony, i„ a crimtal case ^ not "^Z' P'^^^^^^'^-r^ce of testi- tion, and it musl nro J! ^ ^^^^ '' "P°" ^^ P^ose^u- ehe guilt o5 rhfderdU: t^ ^Ti^'^'r^ reasonable doubt. The decree nfTfw!-""' ^^'"''^ * -luir^ is not absolui S tilTc^Svt tT"*^ dence must produce thaf »ff» * or certainty, but the evi- ndual jurors s^ that «1 . "".*''" '"'"*'' "* ^^^ ^di- of his oathrCe !o ^ ^*!,f«"f' '^^'-ation, he can, in view accused. Bv ' reaiab^^rt ' x"''* "* *^' ^^'* "^ *»»« arising out of tTe "^cf fnd n„r"-" '""""''"« ^'^'>' a fanciful conjecture or seined .nf ""t^"""^ '*""•»*' « «-^ « --b,e man '^:£::t-t:2^i::^: ^ 564 «7 FEDERAL BEPORTER, 782. Charge to the Jury. whMj his own concerns are involved,-a doubt for which a good reason can be given, which reason must be based on the evidence, or the want of evidence. When such a doubt exists the accused is entitled to its benefit, and should be acquitted. But where the evidence is satisfactory to the im- partial mind that the crime was committed; that the de- fendant committed it as chai^,-when the mind comes naturally and reasonably to this conclusion, from a fair con- sideration of the evidence, properly, there can be no reason- able doubt, and the prisoner should be convicted. iVKT BOLE JVDGE8 OF CBEWBILITY OF THE WITNESSES. Now, in relation to all the testimony in this case, vou, gen- ttemen Of the jury, are the sole judges of the credibility and ttie weight which is to be given to the different witnesses who have testified upon this trial. A witness is presumed to speak the truth. This presumption, however, may be re- pelled by the manner in which he testifies; by the character of his testimony, or by the evidence affecting his character tor truth, honesty, or integrity, or his motives; by contrary evidence^ And you are the exclusive judges of his credi- bility In judging the credibility of the witnesses in this case (and their testimony is, to some extent, conflicting), .you may believe the whole or any part of the evidence of any witness, or may disbelieve the whole or any part of it ^ may be dictated by your judgment as reasonable men.' You should carefully scrutinize the testimony given, and in doing so consider all the circumstances under which anv witness has testified, his demeanor, his manner while on the ^and, the^ relations which he bears to the government or tiie defendants, the manner in which he might be affected by the verdict and the extent to which he is contradicted or ^rroborated by other evidence, if at all, and any construc- Jon that tends to shed light upon his credibility, and to J .nnir^ ^' "mount of credence to which each statement 18 entitled at your hands, as reasonable and intelligent men- but, in this respect, you must remember that vour nower and duty to judge the effect of evidence is noi arbitrary ilr* .^ "T*^ "^f ^'^' discretion, and in subordina- tion to the rules of evidence. This is a government of law, 365 IN RE DEBS, PETITIONER. Syllabus. gation we owe to societv tk. i highest obh- affords protection St ilel^^^ZZ^I adininistered, and the poor. Popular clamor tuTd'not d^^f^l/t the court, and it is t^thS . *« «»* P-^^ented to you by and intelligent IndVlT'^T ,T^^«"'* ^^ y*>"«- reason appreciate ^theXortldutrimt^'r' *'"* ^''" '^'^"^ --Ms to^yourlSrd-^ -„- - ^ JKWe. and 4in-,/cha»^'"'^™""« T^.""?* and nights, failed to ?tVTr"nra„ranV/«J^^ [564] IN RE DEBS, Petition OBIGINAL. No. 11. Origrlnal. Argued March 25 2« ifio« r. 25. 26, 1895.-Declded May 27, 1895. [158 U. S., 564.] nient or deeree.ft imprisonment, was not a final judg- The government of the ITnitivi «*„*«„ t. Of soil within Its tetltorrand al r ^r"""^'°" "^"^ '^^^ ^* While it is a government of 'enumertt h ''' "•*" ""^ ^'"^«»- Of sovereignty Within the imTofthl'^''""' " ""^ '»» "tWntes [565, power over ^nt^:^'^!^^^^^''^^''"^''''^^ mission of the malls. """"en* and the power over the trans- ment f?r sTmornhMW TTTa fT^^^'^^^^^to ^^^^^ ^^Syllahns and abstract of argmnent oopyHghted. 1««. h.v Banks * 566 158 UNITED STATES REPORTS, 565. Statement of the Case. The powers thus coaferred are not dormant, but have been assumed and put into practical exercise by Congressional legislation. in the exercise of those powers the United States may remove every- thing put upon highways, natural or artificial, to obstruct the pas- sage of Interstate commerce, or the carrying of the mails While it may be competent for the government, through theexecutlve branch and in the use of the entire executive power of the Nation, to forcibly remove all such obstructions, it is equally within its com- petency to appeal to the civil courts for an inquiry and determina- tion as to the existence and the character of any of them, and if TOch are found to exist or threaten to occur, to invoke the powers of those courts to remove or restrain them, the jurisdiction of courts to interfere in such matters by injunction being recognized from ancient times and by indubitable authority. Such jurisdiction Is not ousted by the fact that the obstructions are accompanied by or consist of acts in themselves violations of the criminal law, or by the fact that the proceeding by injunction is of a civil character, and may be enforced by proceedings in con- tempt; as the penalty for a violation of such injunction is no sub- stiUite for. and no defence to, a prosecution for criminal offences committed in the course of such violation. The complaint filed in this case clearly shows an existing obstruction of artificial highways for the passage of interstate commerce and the transmission of the mails, not only temporarily existing but threatening to continue, and under it the Circuit Court had power to issue its proc-ess of injunction. Such an injunction having been issued and served upon the defend- ante, the Circuit Court had authority to inquire whether its orders had been disobeyed, and when it found that they had been dis- obeyed, to proceed under Rev. Stat. 8 725. and. to enter the order of punishment complained of. The Circuit Court having full jurisdiction in the premises, its findings as to the act of disobedience are not open to review on hahean corpus in this or any other court. The court enters into no examination of the act of July 2 1890 c 647, 26 Stat. 20», on which the Circuit Court mainlv relied to sus- tain its jurisdiction ; but it must not be understood that it dissents ftrom the conclusions of that court in reference to the scope of that ' act, but simply that it prefers to rest its judgment on the broader ground discussed in its opinion, believing it important that the principles underlying it should be fully stated and fully affirmed. On July 2, 1894, the United States, by Thomas E. Mil- Christ, district attorney for the Northern District of Illinois nnder the direction of Eichard Olney, Attorney General^ filed their [S66] bill of complaint in the Circuit Court of the United States for the Northern District of Hlinois ■ I IN RE DEBS, PETITIONER. 5^7 Statement of the Case, against these petitioners and others. This bill set forth among other things, the following facts: It naif twtt' ZJ'lTrf r"^'"''^' ^"^ '' ^"^^^^ ^hat they were! gaged m the business of interstate commerce and su^ect to the provisions of the act of Congress of February 4 lis? known as " the Interstate Commerce Act " anT^n fif' , ' of the TTnifnri G* 4. 1 r"""^**^^c6 ^ct, and all other laws ner that the freight so carried into and out of the citv of TTnitprI «5f.t *{' X r, ^''^ carrying, the mails of the United States; that all were by statute declared post roads Sr7rceVof7e Unit^'d ST "^ ""•^' '"^^ '''^^^^^^ ly i«rces ot the United States, and provision*^ mnr.,' The bill further averred that four of the defendants n«m arS:rheTattft-tS^^:it-^^^^^^ that thereafter the four office^^Z r«i "'"P'"'^^ ^^^L,i. ^^ ''"^'"" *«'•'"«* P""n'»n sleeping cars by causing strikes among employes of all railroads^tlmp^ij^ i 158 UNITED STATES REPORTS^ 567. StatemeDt of the Gate. to haul the same. It charged knowledge on the part of the defendants of the necessity of the use of sleeping cars in the operation of the business of the railroads as common carriers, of the contracts for such use between the railroad companies and the car company, of the contracts, laws, and regulations binding the railway companies and the receivers to the carry- ing of the mails; also of the fact that sleeping cars were and of necessity must be carried upon the trains of said carriers with cars containing the mails; that with this knowledge they entered into a combination and conspiracy to prevent the railroad companies and the receivers, and each of them, from performing their duties as common carriers of inter- state commerce, and in carrying into execution that con- spiracy did induce various employes of the railway companies to leave the service of the companies, and prevent such com- panies and the receivers from securing other persons to take their places; that they issued orders, notifications, etc., to the members of the railway union to leave the service of the companies and receivers, and to prevent the companies and I«ceivers from operating their trains; that they had asserted that they could and would tie up, paralyze, and break down any and every of said railway companies and receivers which did not accede to their demands; that in pursuance of the IHBtructions, commands, and requests of said officers large numbers of the employes of the railway companies and re- ceivers left their service. Then followed these allegations: "ADd your oKitor further ehar»?e« that fiald defendants aimed and intended and do now aim and Intend in and by the said conspiracy and eoml»ination. to secure unto themselves the entire control of the interstate, indu'^trlal and cumnienfal bushiess in which tlie population of the dty of Chicago and of the other communities along the lines of road of said railways are engaged with each other, and to restrain any and all oth »r p?r8t?ns from anv lndei>?iident control or manage- ment of such Interstate. Industrial or commercial enterprises save according to the will and with the ct)Ur>ent of the defendants. [568] " Your lracy and to acct)mpllsh the purpose thereof as here- inbefore set forth, the said defendants Debs. Howard, Rogers. Kellher and others, officers of nald American Railway Union, Issued or caused to be Iss-ied the orders and directions as aliove get forth, and that In obedience of such orders and in pursuance of said consplracv and com- bination, numerous employ^ of said railroad companies and receivers Unitedly refuted to obey the orders of said employers or to perform the usual duties of such service, and many others of such employ^ quit r IN BE DEBS, PETITIONER. Statement of the Case. mu such service with the common purpose, and with the result of prevent- ing said railroad companies and receivers from operating their said railroads and from transporting the United States mails, and from carrying on or conducting their duties as common carriers of inter- state traffic. "Your orator further avers that, pursuant to said combination and conspiracy, and under the direction as aforesaid of said officers and directors of said American Railway Union, said other defendants and other persons whose names are to your orator unknown, proceeded by collecting together in large numbers, by threats, intimidation, force and violence at the station grounds, yards and right of w^ay of said railroad companies, respectively, in the State of Illinois, to prevent said railroad companies from employing other persons to fill the vacancies aforesaid ; to compel others stUl employes of said railroad companies to quit such employment and to refuse to perform the duties of their service, and to prevent the persons remaining in such service and ready and willing to perform the duties of the same, from doing so. "Your orator further avers that said de''endants, in pursuance of said combination and conspiracy, acting under the direction of said officers and directors of said American Railway Union, did with force and violence at divers times and places within said State of Illinois and elsewhere, step, obstruct and derail and wreck the engines and trains of said railroad companies, both passenger and freight, th«i and there engaged in interstate commerce and in transijorting United States mails, by locking the switches of the railroad of said [5691 railroad companies, by removing the spikes and rails from the track thereof, by turning switches and displacing and destroying signals, by assaulting and interfering with and disabling the switchmen and other employes of told railroad companies having charge of the sig- nals, switches and tracks of said companies, and the movement of trains thereon, and in other manners by force and violence, depriving the employes of said railroad companies In charge of such trains of the control and management of the same, and by these and other un- lawful means attempted to obtain and exercise absolute control and domination over the entire operations of said railroads." The bill further set forth that there had become established in the city of Chicago a business conducted under the name of the Union Stock Yards, at which for many years immense numbers of live stock from States and Territories beyond the State of Illinois had been received, slaughtered, and con- verted into food products, and distributed to all quarters of the globe, and that all the large centres of population in the United States were in a great degree dependent upon those stock yards for their food supply of that character; that for the purpose of handling such live stock and the product thereof the company conducting such business operated cer- tain railroad tracks, and that in pursuance of the combina- tion and conspiracy aforesaid the four defendants, officers of the railway union, issued orders directing all the em- ployes handling such railroad tracks to abandon such service. 570 158 UNITED STATES REPORTS, 569. Statement of the Case. To this .was added the following: "And your orator further alleges that in pursuance of a like com- bination and unlawful conspiracy, the said defentots and ot?Z. combining and conspiring with them for the pu^^^ of stiU fimS restraining and preventing the conduct of suchb^s?ne^ have bv S^i^rsV^tX^'th^" n,i^""^i^^^^ ^T^^*^ ^^« employment or'ther persons to take the place of the employes quitting the service of said company so operating said Union Stock Yards. comh!n«Hnr«n!?!Cr ^"'^^^'* ^^''''-^ ^^''^ ^^ ^^^^^ ^t Said uulawful TOder the Lnnlv^?'^^^ ''J'1 '^/^^" «"^ ^^'"^^ «^«^-*'««J^ there- ««WK 5?- '^Py «^^ ^^^ *"^ ^"^^ ^or consump- [5701 tion throuffh- tebles fnlT^lftl''*^^^^V^" ^'^^^^ ^"^ ^^ ^«»i bread't^iffs Tell laples. fniits, meats and other necessaries of life, has been c-iit off interrupted and interfered with, and the market therefor Se iargef; unavailable, and dealers in all of said various produces S^^"d the^n^ tSIn amX'the'^irV'^^f "^ ^"^"^^' and^raTmfd ^'1^0 de^t^y^" *" *''*^^ ^''^ ^'^'^ restrained, obstructed and largely The bill alleged that the defendants threatened and de- clared that they would continue to restrain, obstruct, and interfere with interstate commerce, as above set forth, and that they " will if necessary to carry out the said unlawful combmation and conspiracy above set forth tie up and para- lyze the operations of every railway in the United States, and the business and industries dependent thereon." Follow- ing these allegations was a prayer for an injunction. The bill was verified. On presentation of it to the court an injunction was or- dered commanding the defendants " and all persons combin- ing and conspiring with them, and all other persons whom- soever, absolutely to desist and refrain from in any way or manner interfering with, hindering, obstructing or stopping any of the business of any of the following named railroads," (specifically naming the various roads named in the bill,) " as common carriers of passengers and freight between or among any States of the United States, and from in any way or manner interfering with, hindering, obstructing or stop- ping any mail trains, express trains or other trains, whether freight or passenger, engaged in interstate commerce, or carrying paasengers or freight between or among the States; and from in any manner interfering with, hindering or stop- ping any trains carrying the mail ; and from in anv manner interfering with, hindering, obstructing or stopping any engines, cars or rolling stock of any of said companies en- gaged m interstate commerce, or in connection with the car- IN RE DEBS, PETITIONER. Statement of the Case. 571 nage of passengers or freight between or among the States; and from in any manner interfering with, injuring or de- stroying any of the property of any of said railroads en- gaged in or for the purpose of, or in connection with, inter- state commerce or the carriage of [571] the mails of the United States or the transportation of passengers or freight between or among the States; and from entering upon the grounds or premises of any of said railroads for the purpose of interfering with, hindering, obstructing, or stopping any of said mail trains, passenger or freight trains engaged in interstate commerce, or in the transportation of passengers or freight between or among the States, or for the purpose of interfering with, injuring, or destroying anv of said property so engaged in or used in connection with interstate commerce or the transportation of passengers or property between or among the States; and from injuring or destroying any part of the tracks, roadbed, or road, or permanent structures of said railroads; and from injuring, destroving, or in anv way in- terfering with any of the signals or switches of anv of ^ said railroads; and from displacing or extinguishing a Ay of the signals of any of said railroads, and from spiking, ^locking, or in any manner fastening any of the switches of any of said railroads, and from uncoupling or in anv way hamper- ing or obstructing the control by any of said railroads of any of the cars, engines, or parts of trains of anv of said railroads engaged in interstate commerce or in the trans- portation of passengers or freight between or among the States or engaged in carrying any of the mails of the United States; and from compelling or inducing or attempt- ing to compel or induce, by threats, intimidation, persua- sion, force, or violence, any of the employes of anv of said railroads to refuse or fail to perform anv of their duties as employes of any of said railroads in connection with the in- terstate business or commerce of such railroads or the car- nage of the United States mail by such railroads, or the transportation of passengers or property between or amonieua herein, and shall be blndin"unon^iTXf^^^^ :^:.:;f^Cenr.,^vredr/„.ro^S of toiid injum-tlon." ™'^'^ "'"' ">* existence This injunctitjn was served upon the defendants-at lea«=t upon those who are here as petitioners. On July 17 the district attorney filed in the office of the clerk of said court an information for an attachment against the four defend- ants, officers of the railway union, and on August 1 a similar information against the other petitioners. A hearing was had before the Circuit Court, and on December 14 these petitioners were found guilty of contempt, and sentenced to 1678] imprisonment in the county jail for terms varyinir from three to six months. 64 Fed. Rep. 724. Having been committed to jail in pursuance of this order they, on Janu- ary 14, 1895, applied to this court for a writ of error and also " IN RE DEBS, PETITIONER. 573 ATRoment for petitioners, one of habeas corpus. The former was, on January 17 de- 2 ' T . f '""^ '''"* '^' '"'^''^ «' *»»« Circuit irt'was Mr. Lyman TrumbuU for petitioners. I. The extraordinary proceeding under which the orison ei^ were deprived of liberty, was commenced by t^e fiErof a bill in equity m the name of the United State^^ bv aZtrict a torney, under the direction of the Attorney (kneral The tion, so far as the record shows, with the case, stating that he has read the b, IK and " believes the statements thereiS co^ nulr ™'- T'l^»>\»^«« filed July 2. The same davTn prisoners and unknown persons, and the next day was served railrr "^"»^rT^- Th« bill states that^wenty-two fttock ■'^ard and Transit Company, were chartered and or- ganized for the purpose of continuously doing the businl of common earners of passengers and freight genera Hnd were doing such business among the differant Stat^ So far atd^TranTp"'*^ P""^"" *" ^"^^^^' ^he Union Stock Ya^ and Transit Company, one of the roads named, wa.. organizS for the purpose of locating and conducting s ock yaSs aS connecting them by rail with railroads entering cScl on the south side, and transporting between said cattleTrdT <«ttle and live stock and persons accompanying the iS and by the 11th section of its charter it is'^dec^lar^d : « nTS- ferring upon the company hereby created any power or an thonty to maintain or operate a 'railroad f or thfrnv^aJ^ the amount Jb "''"* °V^' "'" '^ ^'^'"''^ *« * ^-^-"^^-t of the amount of business done at the Union Stock Yards the quitting of work by the employes of the company the lian dhng of live stock and its conversion into food^S^' °' The bill states that the prisoners are officers and member 574 158 UNIThlD STATES REPORTS, 574. Argument for petitioners. of an organization known as the American Railway Union; that m May, 1804, a dispute arose between the Pullman Pal- ace Car Company and its employes which resulted in the employes leaving the service of the company; that the pris- oners, offi(-ers of the American Railway Union combining together, and with others unknown, with the purpose to com- pel an adjustment of the said difference and dispute between said Pullman Co. and its employes, caused it to be given out through the newspapers of Chicago, generally, that the American Railway Union would at once create a boycott against the cars manufactured by said Pullman Palace Co., and that in order to make said boycott effective, the members' of the American Railway Union who were some of them em- ployed as trainmen or switchmen, or otherwise, in the service of the raihoads mentioned,.which railroads or some of them are ^.ccustomed to haul the sleeping cars manufactured by the Pullman Palace Car Co., would be directed to refuse to perform their usual duties for said railroad companies and receivers in case said railroad companies thereafter attempted to haul Pullman sleeping cars. Such is the gist of the bill. All that is subsequently al- leged as to what was done by the prisoners, was for the pur- pose of compelling an adjustment of the difference between the Pullman Company and its employes. To accomplish this, the American Railway Union called upon its members to quit work for the companies which had persisted in hauling the Pullman cars. Was there anything unlawful in this? If not, then the prisoners and the memjbers of the American Railway Union were engaged in no unlawful combination or conspiracy. The allegation that the prisoners, officers and directors of the American Railway Union did issue and pro- mulgate certain orders and requests to the members of the union in the service of certain railway companies in pursu- ance of said [575] unlawful purpose or conspiracy, did not make the purpose unlawful, when the facts stated in the bill show that the purpose was not unlawful. AU that the prison- ers are charged with threatening to do, or having done, was for the purpose, primarily, of bringing about an adjustment of the differences between the Pullman Company and its employes. It is only incidentally in pursuit of this lawful IN RE DEBS, PETITIONER. 5^75 Argument for petitioners. Jt ^'r*."' "■" ■^""""' ""i"" "". " '*« bill shows J« to otetrocl o.„,„.^, b,„ ,„ „ „a„|j. j„^ ~; equity has jurisdiction; if not th^n ih/- ■ f ^ "* chancery of England «t tZ7- ^^"^^^ ''^ **»« ^igh court of stitution', or haf i^ltrd ;';t"*'- "^^'^^ ^- Milh V. Cohn, 150 U S 2ot ^ ^^ Congn^. roads. It is im b^thfl °* ^"^ °"* «^° ^^^ ™»- ence with the prfi Utrjtr v*" ^T^"* ^*«^^«'- f~ rest^iS ^i!:ri:^:s^: '-^ '-'^^- alludrngTolh/ ntraf'' ^^'^'^' ^'^ Oases, 5W.llm,) States:^" Over tttZr"™;^''** *"• ^"'"^"*' '^^^^ «* the sively to the sLZ % ! h ^'^ ^''^'^ •^'""g^ exclu- businL ofcitt%ratacr;'Srn 'l S^u"^ ^'^ '''. nniterStaTrrany-^^^^^^ r JL. 11 576 158 UNITED STATES REPORTS, 576. ' ▲rgnment for petitioners, portation of the mails, the laws provide for their punish* ment; but equity has no jurisdiction to grant an injunction to stay proceedings in a criminal matter. " If they did, said Chief Justice Holt, " the court of Queen's Bench would break it, and protect any that would proceed in contempt of it" Accordingly, in the case of Lord Montague v. Dudman, Lord Hardwicke allowed a demurrer to a bill for an injunc- tion to stay proceedings on a mandamus issued to compel the lord of a manor to hold a court. " The court," he said, "has no jurisdiction to grant an injunction to^tay proceed- ings on a mandamus, or on an indictment, or an information, or a writ of prohibition." 3 Perkins' ed. Darnell's Ch. Pr. 1721. . III. It is not in the power of Congress to confer upon a court of equity jurisdiction unless of an equitable nature, which jurisdiction over crimes is not. The Constitution recognizes and confers upon the judicial department juns- diction in certain cases in law and equity, and provides that trial of all crimes, except in cases of impeachment, shall be by jury, and in common law cases preserves the nght of trial by jury. It is not competent for Congress to break down this distinction between law and equity by conferring upon courts of equity, jurisdiction of criminal and common law cases and thereby deny parties the right to a jury trial. The act to protect trade and commerce against unlawful restraints and monopolies does not apply to the case stated in the bill. If it does, then it is unconstitutional. If a court of equity is authorized to restrain and prevent persons from the commission of crimes or misdemeanors prohibited by law, it must have the power to enforce its restraining order. In this case some of the parties are sentenced to imprisonment for six months, and for what? For doing some of the things forbidden by a criminal statute. If they have done none of the [677] things forbidden, fhey have not violated the injunction, for it could only restrain them from doing what the law forbade. It follows that by indi- rection a court of equity under its assumed jurisdiction to issue injunctions and punish for contempts, is made to exe- cute a criminal statute and deprive persons of their liberty without a jury trial. This a court of equity has no power 577 IN BE DEBS, PETITIONEB. Opinion of the Court ^^^Assise^nt Attorney General WKitney for the United ^r. xS. ^S. ^Vejrory for the petitioners. ^^- Edwin Walker iovthe\]mteASUii^ Mr. Attorney Ger^al for the United States. Mr. O. S. Harrow for the petitioners. o^to'Tz^::r' '"^^ ^""^^ '"^^ --' <^«"--d the propefty, as weU as rctii^^^^^^^^ ^•^"■'^ «"'^ structed, and that a coXadon «nH ''•'' ^""''''''-^ «»'- subject the control of 7^hZT ?f • *^""P"^«y ^^^ists to conspirators, ap^d o one "fT"''"" *** "'^ ^"^ «* ^he court of equity for an in,- !• *^"' '=*'"'^^' «'"ing as a and preveSHLyfnSXr '"k'^*'""" ^"*=^ ^'^'^-'^'^ ^ of ^rn,ortI.:\T^^^^-TZtJl T"^ •ferenL to p^vtnt a f" Jbl'lr T^'T* ^"^^ ^"^- If authority exists, LShoritv'^'*'-**^'"^*- Second, plies both ^wer and dS h^l " ^7'T'''^'''^ ^^air. im- to issue an injunction in Sd^fttr , °* "^""''^ Jurisdiction [6781 Firsl What retel^t i^fSr " °' T'^ ^'''^■ ment to interstate iSmmerS ^nd th! f ^ ^"''^' ^"^*"'- mailsf They di^e thoj^rdir^ct su JrT'"''*"*"" "* '""^ managemeht; While nnrlo. tK j ^"P^'^'^sion, control, and with u^ the po^r^^of ~n ? ''''^'" ''^'"^ P"^^"'^ ^ State and%hrN:LrrdTh i:if sse"*^' •^*-- . *^led a governn,ent of enumerated ,^ " P''''P«'''y -Imits of such enunierationTa 1llTr;/K "'*'^'" *« ereignty, and, in the exerci^ of thi ««"butes of sov- -acts dirwtly upon the 0,^^ ^ enumerated powers, mediate f^gLyZ the st^"' '"'**""* ^^^^^ '^^ i'^*^- 11808--VOL 1—06 M -37 578 158 UNITED STATES REPORTS, 578. Opinion of tlie Court. The goTeninient of the Union, then, 1«, emphatically and truly agovenmient of the people. In form and in substance it euianatw from them lt« powers are granted by them, and are to be exercised directly on them, and for their benefit." "No trace is to be found in the CJonstitution of an intention to create a dependence of the government of the Union on those of the states, for the execution of the great ijowers assigned to it. It« means me adequate to its eiids; and on those means alone was it ex- S^^ tl!^ ^^ i^^ ^^^ accomplishment of its ends. To imiwse on It the necessity of resorting to means which it cannot control, which f.'^^^f government niay funiish or withhold, would render its c«ourse precmrlous the result of its measures uncertain, and create a depend- ence on other governments, which might disappoint its most important rhifriJ*;? »« JiK-ompatible with the language of the Constit'^tlon '' 4^ 424 ^^«r8hall in McCMM-h v. Maryland, 4 Wheat. 316, ♦^♦'i^^'^'V^K® ^*"\^^ *?^ ^^^ ^""^^^ ^♦^^^^ e^*»^e<^ before the Consti- tution. The iieople, through that instrument, established a more per- fect union by sul)stitutiug a uational government, acting, with ainnle power, directly upon the citizens, instead of the confederate govTi^ Sltf ' :!'^]^}'^ ^""i^ /'"*^ P**^'^'"*' greatly restricted, only upon the «f t^ ^tt!^ J^. "" incontrovertible principle, that the government ?hm^h It. I ffi f i"**^ !""^' **^' "^^^"^ ^^ P^^>'^^^«» f^''^'^' exercised through Its offic n»l agents, exc< ute on every foot of American soil the ^J^r.?"^ functions that belong to [»79] it. This necessarily ll ^Zlt . t '^'^If **" ^-o*""'""^ obedience to its laws, and hence the IJower to keep the peace to that extent. " This power to enforce its laws and to execute its functions in all Fit^nf T "^^ ^t^^sate i^m the power of the State to execute its i? ^ at the same time and in the same places. The one does not ex- tw^ T« il!*^' ^"""^H^ "^^^""^ ^^^ *^«'^»**^ ^ executed at the same time. In that case, the words of the Constitution itself show which Is to yield. Jhis Constitution, and all laws which shall^ made in pursuance thereof, . . . shall be the supreme law of the land '" Mr. Justice Bradley in Em parte SHhold, 100 U. S. 371. 395 See also 'Xr74i:^rZ/\^S^T''''; 7 Cranch, 116. 136;' Cohens vvt^ jjiila, 6 Wheat. 264, 413; Leffal Tender Cases, 12 Wall 467 M5- Tennessee v. Dams, 100 U. S. 257: The Chinese Exclusion Owe, m IL S. 581 : In re beagle, 135 U. 8. 1 : Logan v. United States, 144 U. a !Si ^^^ ^*^ ^'''^ ""' '^''^'^ ^*^'«'^*' ^4» U. S. 698; /n re QuarlZ. Among the powers expressly given to the national gov- ernment are the eontfol of interstate commerce and the crea- tion and management of a post office system for the nation. Article I, section 8, of the Constitution provides that " the Congress shall have power. . . . Third, to regulate commerce with foreign nations and among the several States, and with the Indian tribes. ... Seventh, to establish post offices and post roads." Congress has exercised the power granted in respect to interstate commerce in a variety of legislative acts. Passing by for the present all that legislation in respect to commerce IN RE DEBS, PETITIONEB. 579 Opinion of the Court. rLJ"^"' T^ '^''^^^'i^S only that which bears upon rail statutes as'sectir i' I'h pr?;idr ' "*" ''' ^^^ several States, to establish vZi r!,^H ^"'"i"" ^""•"'er.e among the .mules: Therefore, ft- 1 e„aS iH^' r^S^ *° ™'^ «■>'« as to form eontlnuous lln^ for X 1^1 1"'' Z^*''' "' "t^"*-'- States so I'lac-e of .lestination." trausixjitation of the same to the Second. That of March 3, 1873 c 252 17 <4*»t -^a /i> Stat. §§ 4386 to 4389,) which reSlateslL t ^**'.(R«^- live stock over inters ite rl IrS S Th?Tt["° *" 1884, c. 60, 8 6, 23 Stat si ^9 un, ^"^ *** ^"^ ^' portation by^ailfoad";!^^^^^^^^^ T^''''' *-- gious or infectious disease. Srth Jw ^XT •^""**- 1887, c. 104 24 Stat -^TQ Ji^ ^ "* February 4, 1889 c. Si 2 Stt sS' ^'**'Jitt«'»«»d'nents of March 2 a commikon was cited"S , '""""''■*=' ''^*'" ""^ "'»'«'> and control of intetj^ 'orLiTrS^slnTtr "" teen.th sect on of which act m^^c * A. "'^*'***''' ■*"«• *«« six- States power to en W the oXsoVfhe ""*'*"' *'^ ^'''^^ That of October 1, 1888 c T(«3 9/ ^ttT!f "•'"*"• ^''^^■ arbitration between raLadTtlft ! ^^' P'"""'*''"« '«' employes; and 3xth th! T ^f^ companies and their Stat 531 ZwJ^h. . *** ^'''"'^ 2' 1893, c. 196, 27 state ^^^^z^::ztcTz::^r^'- - ^- mission to enforce ite provisfons Commerce Com- -ne.,de^-:;2'-rrt:s.t;^^^^^^^^^^^ 580 158 UNITfeD STATES REPORTS, 581. Opinion of the Court. prices of carriage, and also prescribing penalties for all offences against it. Obviously these powers given to the national goveniment over interstate commerce and in respect to the transportation [581] of the mails were not dormant and unused. Congress had taken hold of these two matters, and by various and spe- cific acts had assumed and exercised the powers given to it, and was in the full discharge of its duty to. regulate interstate commerce and carry the mails. The validity of such exercise and the exclusiveness of its control had been again and again presented to this court for consideration. It is curious to note the fact that in a large proportion of the cases in re- spect to interstate commerce brought to this court the ques- tion presented was of the validity of state legislation in its bearings upon interstate commerce, and the uniform course of decision has been to declare that it is not within the com- petency of a State to legislate in such a manner as to obstruct interstate commerce. If a State with its recognized powers of sovereignty is impotent to obstruct interstate commerce, can it be that any mere voluntary association of individuals within the limits of that State has a power which the State itself does not possess? As, under the Constitution, power over interstate com- merce and the transportation of the mails is vested in tlie national government, and Congress by virtue of such grant has assumed actual and direct control, it follows that the national government may prevent any unlawful and forcible interference therewith. But how shall this be accom- plished ? Doubtless, it is within the competency of Con- gress to prescribe by legislation that any interference with these matters shall be offences against the United States, and prosecuted and punished by indictment in the. proper courts. But is that the only remedy ? Have the vast inter- ests of the nation in interstate commerce, and in the trans- portation of the mails, no other protection than lies in the possible punishment of those who interfere with it? To ask the question is to answer it. By article 3, section 2, clause 3, of the Federal Constitution it is provided : " The trial of all crimes except in cases of impeachment shall be by jury; and such trial shall be held in the State where the IT i . IN RE DEBS^ PETITIONER. 581 Opinion of the Court. said crime shall have been committed." If all the inhabit- ants of a State, or even a great body of them, should com- bine to obstruct interstate commerce or the transportation [682] of the mails, prosecutions for such offences had in such a community would be doomed in advance t» failure. And if the certainty of such failure was known, and the national government had no other way to enforce the free- dom of interstate commerce and the transportation of the mails than by prosecution and punishment for interference therewith, the whole interests of the nation in these respects would be at the absolute mercy of a portion of the inhabit- ants of that single State. But there is no such impotency in the national govern- ment. The entire strength of the nation may be used to enforce in any part of the land the full and free exercise of all national powers and the security of all rights entrusted by the Constitution to its care. The strong arm of the na^ tional government may be put forth to brush away all ob- structions 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 JNation to compel obedience to its laws. But passing to the second question, is there no other alter- native than the use of force on the part of the executive authorities whenever obstructions arise to the freedom of interstate commerce or the transportation of the mails « Is the army the only instrument by which rights of the public can be enforced and the peace of the nation preserved* Irrant that any public nuisance may be forcibly abated either at the mstance of the authorities, or by any individual suffering private damage therefrom, the existence of this right of forcible abatement is not inconsistent with nor does It destroy the right of appeal in an orderly way to the courts for a judicial determmation, and an exercise of their powers by writ of injunction and otherwise to accomplish the same result. In Stamford v. Stamford Horse Radlroad Co., 56 ^Connecticut, 381, an injunction was asked by the borough to restrain the company from laying down its\rack in a street of the borough. The right of the borough to forcibly re- move the track was insisted upon as a ground for question- 582 158 UNITED STATES REPORTS, 583. Opinion of the Court. ing the jurisdiction of a court of equity, but the court sus- tained the injunction, adding: "And none the less so because of Its right to remo^^ [5881 the track by force. As a rule, injunctions are denied to those who have adequate remedy at law. Whei-e the choice is between the ordinary and the extraoi-dmary processes of law, and the former are sufficient, the rule will not permit the use of the latter. In some cases of nuisance and in some cases of trespass the law permits an individual to abate the one and prevent the other by force, because such permission is necessary to the complete protec- tion of property and person. When the choice is between redress or prevention of injury by force and bv peaceful process, the law is well pleased if the individual will con- sent to waive his right to the use of force and await its action. Therefore, as between force and the extraordinary writ of injunction, the rule will permit the latter." So, in the ca.se before us, the right to use force does not exclude the right of appeal to the c-ourts for a judicial deter- mination and for the exercise of all their powers of preven- tion. Indeed, it is moiv to the praise than to the blame of the goveiTiment, that, instead of determining for itself ques- tions of right and wrong on the part of these petitioners and their associates and enforcing that determination by the club of the policeman and the bayonet of the soldier, it submitted all those questions to the peaceful determination of judicial tribunals, and invoked their consideration and judgment as to the measure of its rights and powers and the correlative obligations of those against whom it made complaint. And it is equally to the credit of the latter that the judgment of those tribunals was by the great Ixxiy of them respected, and the troubles which threatened so much disaster terminated. Neither can it he doubted that the government has such an interest in the subject-matter as enables it to appear as party plaintiff in this suit. It is said that equitv only interferes for the protection of property, and that the government ha- no property interest. A sufficient reply is that the United States have a proi>erty in the mails, the protection of which was one of the puri>oses of this bill. Searif/ht v. Stokes. S How. lol, 169. arose upon a compact between the United States and the State of Pennsylvania in respect to the Cmn^ Wf ^^ IN BE DEBS, PETITIONER. 583 Opinion of the Court berland Road, which provided, among other things, " that no t«ll shall be [684J received or collected for the passage of any wagon or carriage laden with the property of the United States; " the question being whether a carriage employed in transporting the mails of the United States was one " laden with the property of the United States," and it was held that It was, the court, by Chief Justice Taney, saying: " The United States have unquestionably a property in the mails. They are not mere common carriers, but a government, per- forming a high official duty in holding and guarding its own property as well as that of its citizens committed to its care; for a very large portion of the letters and packages conveyed on this road, especially during the session of Con- gress, consists of communications to or from the officers of the executive departments, or members of the legislature on public service, or in relation to matters of public concern. . . . We think that a carriage, whenever it is carrying the mail, is laden with the property of the United States within the true meaning of the compact." We do not care to place our decision upon this ground ftlone. Every government, entrusted, by the verv terms of Its being with powers and duties to be exercise'd and dis- charged for the general welfare, has a right to apply to its own courts for any proper assistance in the e.xercise of the one and the discharge of the other, and it is no sufficient answer to its appeal to one of those courts that it has no pecuniary interest in the matter. The obligations which it IS under to promote the interest of all, and to prevent the wrongdoing of one resulting in injury to the general wel- fare, Js often of itself sufficient to give it a standing in court. This proposition in some of its relations has heretofore re- ceived the sanction of this court. In United States v. San Jactnto T,n Co m U. S. 273, 285, was presented an appli- cation of the United States to cancel and annul a patent for knd on the ground that it was obtained by fraud or mistake. The ngh of the United States to maintain such a suit was affirmed, though it was held that if the controversv was really one only between individuals in respect to theiV claims to property the government ought not to be permitted to in- terfere, the court saying: " If it be a question of property 584 158 UNITED STATES REPORTS, 585. Opinion of the Court a ^se must be made in which the court can afford a remedy in 1686] regard to that property; if it be a question of fraud which would render the instrument void, the fraud must operate to the prejudice of the United States; and if it is apparent that the suit is brought for the benefit of some third party, and that the United States has no pecuniary interest in the remedy sought, and is under no obligation to the party who will be benefited to sustain an action for his use; in short, If there does not appear any obligation on the part of the United States to the public or to any individual or any interest of its own, it can no more sustain such an action than any private person could under similar circumstances." l-his language was relied upon in the. subsequent case of United states v. Bell Telephone Company, 128 U S 315 367, which was a suit brought by the United States to set aside a patent for an invention on the ground that it had been obtained by fraud or mistake, and it was claimed that the United States, having no pecuniary interest in the subject-matter of the suit, could not be heard to question the validity of the patent. But this contention was overruled the coMTi saying, in response to this argument, after quoting the foregoing language from the San Jacinto case: « This language is construed by counsel for the appellee in this MSB to limit the relief granted at the instance of the United States to cases in which it has a direct pecuniary interest. But It IS not susceptible of such construction. It was evi- dently m the mind of the court that the case before it was one where the property right to the land in controversy was the matter of importance, but it was careful to say thkt the ^ses m which the instrumentality of the court cannot thus be used are those where the United States has no pecuniary interest in the remedy sought, and is also under no obliga- tion to the party who will be benefited to sustain an action for his use, and also where it does not appear that any obliga- tion existed on the part of the United States to the public or to any individual. The essence of the right of the United States to interfere in the present case is its obligation to pro- tect the public from the monopoly of the patent which was procured by fraud, and it would be diflScult to find language more aptly used to include this in the class of cases which 1 IN BE DEBS, PETITIONEE. 585 i Opinion of the Court are not «tcluded [586] from the jurisdiction of the court by want of interest in the government of the United States." It IS obvious from these decisions that whUe it is not the province of the government to interfere in any mere matter of private controversy between individuals, or to use its great powers to enforce the rights of one against another, yet, whenever the wrongs complained of are such as affect the public at large, and are in respect of matters which by the Constitution are entrusted to the care of the Nation, and concerning which the Nation owes the duty to all the citi- zens of securing to them their common rights, then the mere . fact that the government has no pecuniary interest in the controversy is not sufficient to exclude it from the courts, or prevent it from taking measures therein to fully discharge those constitutional duties. The national government, given by the Constitution power to regulate mterstate commerce, has by express statute as- sumed jurisdiction over such commerce when carried upon railroads. It is charged, therefore, with the duty of keeping those highways of interstate commerce free from obstruction, for It has always been recognized as one of the powers and duties of a government to remove obstructions from the high- ways under its control. As said in Gihnan v. Philadelphia, 3 Wall. 713, 724: « The power to regulate commerce comprehends the control for that purpose, and to the extent necessary, of all the navigable waters of the United States which are accessible from a btate other than those in which they lie. For this purpose they are the public property of the nation, and subject to aU the requisite legislation by Congress. This necessarily in- cludes the power to keep them open and free from any ob- struction to their navigation, interposed by the Stat^ or otherwise; to remove such obstructions when they exist : and to provide, by such sanctions as they may deem proper, against the occurrence of the evil and for the punishment of offenders. For these purposes, Congress possesses all the powers which existed in the States before the adoption of the national Constitution, and which have always existed in the Parliament m England." See also the foUowing authorities in which at the instance ! 158 UNITED STATES BEPORTS, 587. Upbiion of the Court whif ?iUIl\!*"'t!'" "' y?* municipality thereof within whose linute the obstructed highway existed, a like power ^XSI' f^l/^'^P^ ^- VanderMt, 28 N. Y. 396; State iff^Z *'^f^'«*^ ^"il'-oad, 36 Ohio St. 434 ; Spring. General v. Woods, 108 Mass. 436; Eastan and Amhoy R„l J«o ^W^ ^a,7r<«.rf Go. v. Z?r^«^„.%, 45 l^xas 88- nis.nT4 m'f' '^:,ff'^f^^ «' » highway is a public S^XTh k ?r- u^^' """^ " P"''"*' "»'^"<* has always ^n held subject to abatement at the instance of the govern- ment Attorney General v. Tudor Ice Co., 104 Mass 239 ^; -^orney General ^.Jamaica P^ A^r^du^ZpTa- ^. 133 Mass. .361; .Village of Pin^ City y Mnnch 42 E n,«ota, 342; State v. Goodnight, 70 Tex^ 682 r,v! r/^"** ^ "'"''' *** ""*''* • **^ «' the leading cases. f^^ty of Georgetown X.Alexandria Caned Co 12 Pet 91 9S aTaiulT '^ '\r'^'' ^ '^™- thei^ctl^f facts oflw ""^the Potomac River. While under the fS!l -1 fl ^^ '*'"'^ P'^y*^ *"■• ^«« denied, yet, the rSST of he court was sustained. After ref;ing to Ihe^nght to maintain an action at law for damages, it las formation ai«l by O^Mto^Iv c^J ^^}K nolsance, by an In- s^ lefts H^^-^'"^'"^"^^-^--"' ivirj^^z could realh It." '"^P"™"'® '"l«l>lef before the tarrtiness of the law [688] ;S\S^^^^^^^^ ^-m difficulty as waste or trespass. The oweS of a cS^T^'"^ ^^ *^''' ^'^ ^« «tay adapted, and as effectual for l^elief in thpll ^J^^^^^rj' ai^ as well as in either of the cases nan^ aL • ^ '*^.'' ''""'^^te nuisance, these powers, it is T?o rnwanl^wf^/iT^H '^ ''^ ex^r^ise.of over which the bridge irthrown ^ 1 1 n^^^*"'' t**^ ^astem channel, State of Virginia The nh^ w. ^ ^^""^^^^ ^^^hin the limits of the the <«mmerciT*^ J.*^^f^cXt?^nd"o;i^"''t,l^^^ ^^^^^^^ ^^ been exerted, if the river br^tfiU^^ J^. "^^^^^ **»«* power has merce upon it,, which extends To other r.^^I'*^ ^^ ^^'^^^'^^^' ^he c^m- diction ; con*<^uenth , If the ac? of Vir^fni^^' ^L''''^ ^'****^ »ts juris- bilf filTbf ;rC " ^""^f-"'^' 144 U. S. 550, was a d Lw • ^*'* "* "'"^ *** '^ "^n «>"rts to enjoin the m the bed of a navigable river within ite territories The case was removed by the defendant to the Federal Zi* ^, m that court the ..lief prayed for was gm^S tUc^ of the Circuit Court was sustained by this court anH Tn T opinion by Mr. Justice Harlan, the mat e «?;. dt^tr^^^^^ .on IS discussed at some length, and several caSd a^^ ^-^Xr ' ^^^.^"^^^ 3«1. From Attorney General v K.. 5 f c«ses might have been produced in which the court has nterfered to prevent nuisances to public ri^^rs and t^ public harbors; and the Court nf i? *^r ^*'^'' *"<^ *" thifi ^/...^ *• i^urt of Exchequer, as well as jurisdiction, upon a proceeding by wav of infnrn,,f 7 prevent nuisancs to public harbofs InJ ^uwf Zdl "..i" in short, generally to prevent public nuisances" ^..^'ft Atto^y General v. Jan^i.a Pond 42^ these IriTi the Supreme Court of the State of MaLchuse^teT" Th"; • another ground upon which, in our opinion, this inforSon i 588 158 UNITED STATES REP0BT8, 589. Opinion of the Court, can be maintained, though perhaps it belongs to the same general head of equity jurisdiction of restraining and pre- venting nuisances. The great ponds of the Commonwealth belong to the public, and, like the tide waters and navigable streams, are under the control and care of the Commonwealth. The rights of fishing, boating, bathing, and other like rights whidi pertain to the public are regarded as valuable rights, entitled U> the protection of the government. ... If a corporations an individual is found to be doing acts with out nght, the necessary effect of which is to de.stroy or impair these rights and privileges, it furnishes a proper case for an information by the Attorney Qpneral to restrain and prevent the mischief." An additional .case, not noticed in that opin- T^^iT^o. ^ referred to, Attorney General v. Terry, ""l Ch. 423, in which an injunction was granted against extending a wharf a few feet out int« the navigable part of a nver, MeUish, L. J., saying: « If this is an indictable nuisance there must be a remedy in the Court of Chancery and that remedy is by injunction," and James, L. J., adding- I entirely concur. Where a public body is entrusted witii the duty of being conservators of a river, it is their duty to take proceedings for the protection of those who use the nver. It is said that the jurisdiction heretofore exercised by the nahonal government over highways has been in respect to [690] waterways-the natural highways of the country- and not over artificial highways such as railroads; but the occasion for the exercise by Congress of its jurisdiction over the latter is of recent date. Perhaps the first act in the course of Mich legislation is that heretofore referred to, of June 14 !r«' -TJ^l *'"^'''. "P**" ^^'""^ '■«^*'' it« jurisdiction over artificial highways is the same as that which supports it over the natural highways. Both spring from the power to regu- late commerce. The national government has no separate dominion over a nver within the limits of a State; its juris- diction there IS like that over land within the same State. Its control over the river is simply by virtue of the fact that It IS one of the highways of interstate and international commerce The great ease of Gibbons v. Ogden, 9 Wheat. I, 19 k in which the control of Congress over inland waters was "W IN HE DEBS, PETITIONER. 5^9 Opinion of the Court:. a^rted, rested that control on the grant of the power to regulate commerce The argument of the Chief JuSice was that commerce includes navigatioii, " and a power to recoHate addXl^th" " 7^^'' ^''f^'^ ^ '' '"^^ **™ had £ added to the word commerce.' " In order to fully regulate conimerce with foreign nations it is es^ntial that L ^wer of Congress does not stop at the borders of the nation, and equally so as to commerce among the States : l.m.te'ofTefv "4teTt?e u'SonTr'''°'!fH "''^'^««" "'t"'" ^e in any m-^nniv.^^^^^t^'J'irJ^-J^^'^'l^t navigation may be. among the several States orivith JhlTS^ T *k '?'«'«>» nations, or sequence, pass the jSctUil li,fp 'f°l2° v"^^ " '""y- "' «>"- ver^ waters to ,vhU thf priifc'„r „X rs^raS Z it trslT/t^' "• ^'''^^P'^^^ 3 Wall. 713, 725, in which he Ler of ^^'T" ' '"'^*''"*=" "-"""S '^'^ ^tutes ' goes, ^UhT, of the nation, as represented in this court, goe^ with it to protect and enforce its rights " Up to a recent date commerce, both interstate and inter- national was mainly by water, and it is not strange "hat both the legislation of Congress and the cases in the courts hate boen prmcpally concerned therewith. The fact thatTn ret^J 1591] years interstate commerce has come mainly to bJ SI ned on by railroads and over artificial highways has In no .-.nanner narrowed the scope of the constitutional provilio^ ^r abridged the power of Congr^s over such Zmeir '(J^ he contrary the same fulness of control exists in thf^e c2 ?:om%tr::rmt xr^- '^ ~ --^"^ extends ri' ''T"""' 'r °* ^'^^"««' ^"* ♦»»«- operation haWtsof life Jtr "".'' '^' '"'^^ "* b-i»««« ^n'J the habits of life of the people vary with each succeeding genera- tion. The law of the common carrier is th^ ««n^. f j tion if ^/..,..K„„ J "i"ijg vessel, yet in its actual opera- tion It touches and regulates transportation by modes the^. unknown, the railroad train and the steamship.' iul t s U with the grant to the national government, of »nw ' terstate commerce. The ConstfuZn™ no ZZr^Z power IS the same. But it operates to-day upon ^es^f interstate commerce unknown to the fathers; and it Ti^Jer r" I O^KI 158 UNITED STATES BEPORTS, 591. ! Opinion of the Court. toll^rair'bf in'r^'^r •*"'' '^^^ "•"'•'* -""■"^'^ jurisdiction ekh? ,1^ '"J""*:*'"" '» f "s brought by the government, eUher ,tate or national, obstructions to highways either M«i 1^ that the necessity for such interference has onlv been occasional. ( rdinarily the local authorities havTteS, ftJu or m some k iidretl way, have secured the removal of the ob struc ion and the cessation of the nuisance. As sai^ Yn /«t The ,., .....diction of courts of equity to redress the grievance established; but it is well settled that, as a general rule 3 Vafeilntf^d- ^'^"^ 'i' "'^•^* ^"^ - »> "- weji attained m the ordinary tribunals. Attorney General V. .\e,r Jer^ Railroad, 2 C. E. Gr«,n, (17 N J L TtZ- Jer^y City v. City of Hudson, 2 Bea^ lev (13 N T F„ ^ C F fits ^U v' f T*.** ^"^^ ^"'■^'•'^ ^- 'P'-«'''/««, 5 ?52i W £! "^^ •':.^'^ "^^ -'^^^ "'«h «» Injunctions, cio" cJnrts ^""*/''« ?'»«^y by indictment is so effica- cious, courts of equity entertain jurisdiction in such casp, with great reluctance, whether thir intervention slnvrk^ a the instance of the attorney general, or of a priJateTiT oit'C "tr-"'*Tr"'^ >»i-y therefix.™ distinct fr m that t T.^^ ?:^ "'" ""'^ ^^ ^ ^''*'- t''- appears to ^ a necessity for their interference. Rov'e v. The Granite /W *. /'^•,,./rf«i, supra. The jurisdiction of the court of chancery with regard to public nuisances is foui^eron the n-reparable damage to individuals, or the great pS "njury w hich IS hkely to ensue. 3 Daniell's Ch. fr. 3d ed. Perkins^ i has Se ^;:* T •" !f T*' *'"'* '" - -"-eonsiderd case has the power of a court of equitv to interfere bv ininn,. tion m cases of public nuisance bLn denied, tbconly del,' Eq. Jnr. §§ 921, 923, 924; Pomeroy's Eq. Jur. « 1349- High IN BE DEBS, PETmONEB. 591 Opinion of the Ciourt. Z'JTm,: ^^ ''' ''"' ^'^' ' ^--"-^ Ch. P,. and Pr. That the bill filed in this case alleged special facts callinir question. The picture drawn in it of the vast interests in^ volved, not merely of the city of Chicago and the State of ment, and the threatened continuance ff such intasCs of DUl, and we need not turn f^^ *k« V^• i • ^"'^^"^^ oy tms Which oni, rea^Tli;™ rtZtti^r ^^ at^t^:^' The difference between a public nuisance and a privftenur same, and'tL juV^S^of t^coTrt ov:r It' ^"T '^ '""^ the same principles and goes o thT^l^Iten't^'" S^t"*"" circumstances may exist in one ca«e ^hW-CT \ ^*"^' u rrofitajr sr' ''* ^""'*' '"^••*-«' --'« ^ individual Z by the Srto' """ ^"^ ''" •'^""^'»* ''^ •re two reasons f 0^ this Fi^ k ^ ^"f '"''""""""' ''"* *»»«'* ous of privTtCn „f ^1 ' ' '"'*""**' "^ "^«re numer- that whSTsti tcuJbli " """""''• '"^'' ^^'^""^' often of a private ilS if itse "X To^r^"^^ f *^ ^"* a special injuiy resulting t^reX*" '"' """^ '"'""* "' a ^rof'ii^r^ttnS 1'^ "'^''^ "' ^'^^ ^■""^^•'=«- «* as a genera^proUroCrstqrSnT A r^^„ ™^' no criminal jurisdiction ^^J^fu A chancellor has 1. l»"y »"■ "gUM o( , pecunr.!,. nature, but when 592 158 UNITED STATES BEPORTS, 593. • Opinion of the Court. such interferences appear the jurisdiction of a court of equity arises, and is not destroyed by the fact that they are ac- companied by or are themselves violations of the criminal law. Thus, in Cranford v. Tyrrell^ 128 N. Y. 341, an injunc- tion to restrain the defendant from keeping a house of ill- fame was sustained, the court saying, on page 344 : " That the perpetrator of the nuisance is amenable to the provisions and penalties of the crmiinal law is not an answer to an action against him by a private person to recover for injury sus- tained, and for an injunction against the continued use of his premises in such a manner." And in Mobile v. Lonvt- mUe (& Nashville Railroad, 84 Alabama, 115, 126, is a similar declaration in these words: "The mere fact that an act is crimins^l does not divest the jurisdiction of equity to prevent it by injunction, if it be also a violation of property rights, and the party aggrieved has no other adequate remedy for the prevention of the irreparable [594] injury which will result from the failure or inabilitv of a court of law to re- dress such rights." The law is full of instances in which the same act may give rise to a civil action and a criminal prosecution. An assault with intent to kill may be punished criminally, under an in- dictment therefor, or will support a civil action for damages, and the same is true of all other offences which cause injury to person or property. In such cases the jurisdiction of the civil court is invoked, not to enforce the criminal law and punish the wrongdoer, but to compensate the injured party for the damages which he or his property has suffered, and it is no defence to the civil action that the same act by the de- fendant exposes him also to indictment and punishment in a court of criminal jurisdiction. So here, the acts of the de- fendants may or may not have been violations of the criminal law. If they were, that matter is for inquiry in other pro- ceedings. The complaint made against them in this is of disobedience to an order of a civil court, made for the protec- tion of property and the security of rights. If any criminal prosecution be brought agamst ^em for the criminal offences alleged in the bill of complaint, of derailing and wrecking engines and trains, assaulting and disabling employes of the railroad companies, it will be no defence to such prosecution 598 IN RE DEBS, PETITIONER. Opinion of tlie C!ourt court by Mr Justi^Tn ^i „ declaration made for the ■ for the IsS; 1, %:itoi2 1 ""'^ ''. '' ^^^^'^^"^ steahhy encroachmen;^ thereon rf""' "? "^""'^ '"'^ carried wif hT;. P'"''"'" ""^ * <=*'"'■* *« make an order ofZ:i Vnd tZT ^°"" *° P™^'^ '^^ « disobedient that a court may2pllUeSirtotsTrd " > '" ".^'^^^ - -2'Tot«^^^^^^ Yates, 4 Johns 3U voT- '*%«ffi«ency. In the Case of tice of thfsujre^ 'S;t?;Sf- f ^t^J^en C^^^^ j J "In the Case of TheEZof^ZSl ^T ^""^^^ ^"'^^^ S. C. 1 Mod 144 ^aZJ ^^"^■^'f^'-y^ 2 St. Trials, 615; lit r.t— n;^Sr ^^-' which they never have ^.ZlJw. * Principle from the due administTattn of -uSe' Th" "'"'". """*^^^ *« conrt, at least of the superior W ^\^T"'^^' '^'^' '^^^'^ is placed, must be tke Zljute^nn^fT''' ""'''^"'=« tempts arising therein is mn^ !' r If f '■*'°'^' °* «>°- emphatically "enforid' in ^/V^'P^''^'"^ ^'^^^ and men, Q^'ecny.PaljandTtfjs^^LTl 'ff^^^^^ cases of the "gain, on page 371, " Mfjusle R. '5r^ "^ ^'-''^'^" ""^^ train of otvati^n, a^d 1 Ire^tS^^^ P"""''' "^^ ^^' he meant to include\be tJo houL ^ j" r''%'-" "''^'» 11808-voi. 1-^ „_«. ^' "^ Parliament, and the I i 594 158 UNITED STATES REPORTS. 595. >l| •I Opinron of the Ck>urt. courts of Westminster Hall, could have no control in matters of contempt. That the sole adjudication of contempts, and the punishments thereof belonged exclusively, and without interfering, to each respective court." In Watson v ir«7- hams, 3C Mississippi, 331, 341, it was said: "The power to fine and imprison for contempt, from the earliest history of jurisprudenee, has been regarded as a necessary incident and attribute of a court, without which it could no more e.^ist than without a judge. It is a power inherent in all courts of record, and coexisting with them by the wise provisions of the common law. A court without the power ^flFectually to protect Itself against the assaults of the lawless, or to en- force Its orders, judgments, or decrees against the recusant parties before it, would be a disgrace to the legislation, and ?r««'f"* "P**° ^^^ "Se which invented it." In Cart- [596] vniffht^s Cose, 114 Mass. 230, 238, we find this lan- guage: The summary power to commit and punish for contempts tending to obstruct or degrade the administration of justice IS inherent in courts of chancery and other superior courts, as essential to the execution of their powers and to the maintenance of their authority, and is part of the law of the land, within the meaning of Magna Charta and of the twelfth article of our Declaration of Rights." See also rZ\ foi"^ V Z7«rf,^, 7 cranch, 32; Anderson v. Dunn, 6 Wheat. 204; Eai parte Robinson, 19 Wall. 505; Muoler v Kans^, 12.3 U. S 623, 672; Ea, parte Terry, 128 U. S. 280;' EtUnhecJcer y Plymouth County, 134 U. S. 31, 36, in which Mr. Justice Miller observed: "If it has ever been under- stood that proceedings according to the common law for contempt of court have been subject to the right of trial bv jury, we have been unable to find any instance of it; " Inter- state Commerce Commission v. Brimson, 154 U S 447 488 Ir. this last case it was said " surely it cannot be supposed that the question of contempt of the authority of a court of the Umted States, committed by a disobedience of its orders. IS triable, of right, by a jury." ' In brief, a court, enforcing obedience to its orders by pro- ceedings for contempt, is not executing the criminal laws of A- A A ., "" ^ fl™'''"^ *•* '"'*"'^ tl'^ "ghts which it has adjudged them entitled to. / IN RE DEBS, PETITIONER. Opinion of the Court. 595 Further, it is said by counsel in their brief: hoc k"" ^'^^^^^^'} pe ^'^^ ^vbere sucli a bill in behalf of the sovereien has been entertained against riot and mob violence though occur ,!^ on the highway. It is not such fitful and tempora?^ obScth^n tiat constitutes a nuisance. The strong hand of executive Dower^^^ quired to deal with such lawless demonstrations ^ ^" The courts should stand aloof from them and not invade execiitivA prerogative nor even at the behest or request of the ex^utive^atl! no bl'supSdTln^ '^"^'^ authority.'l'^ifob^'In! vl?ted! a^^sLn?et^^n^^^^^^^^ "^^ ^^" ''' ^^^^-« ^ tried, con- " It IS too great a strain upon the judicial branch of tho rii07i »^« We do not perceive that this argument questions the juris- diction of the court, but only the expediencv of the action of the government in applying for its process.' It surelv cannot be seriously contended that the court has jurisdiction to en- join the obstruction of a highway by one person, but that its jurisdiction ceases when the obstruction is bv a hundred per- sons. It may be true, as suggested, that in the excitement of passion a mob will pay little heed to processes issued from the courts, and it may be, as said by coimsel in argument, that it would savor somewhat of the puerile and ridiculous to have read a writ of injunction to Lee's army during the late civil war. It is doubtless true that inter arma leges silent, and in the throes of rebellion or revolution the processes of civil courts are of little avail, for the power of the courts rests on the general support of the people and their recognition of the fact that peaceful remedies are the true resort for the cor- rection of wrongs. But does not counsel's argument imply too much? Is it to be assumed that these defendants were conducting a rebellion or inaugurating a revolution, and that they and their associates were thus placing themselves beyond the reach of the civil process of the courts? We find in the opinion of the Circuit Court a quotation from the testimonv given by one of the defendants before the United Stat4 Strike Commission, which is sufficient answer to this sue- gestion : ° "As soon as the employ^ found that we were arrested nnd tm-^n uever would have been shaken, under anrciro,™stauL^,1f' we had J 596 ii !l 158 UNITED STATES REPORTS, 597. Opinion of tlie Court. been peiiuitted to remain upon the field among them. Once we were ■ taken from the scene of action, and restrained from s^ndin^t^emn^ or issuing oilers or answering questions, th^ tJ^e mSi^^^^^^^^ porations would be put to worli. [5M] ... Our headm^artera were temporarily demoralized and abandoned, and we coKot an Sm'k;r;rtt:'.?riK^^^' ^^^ T' *^^^^ ^^ ^^^^^' and'he ranks le^ DTORen, and the strike was broken up. . . . not bv the armv mui ??Jf.tS »?y "t"'^'- P^r-"- •"■» «"»P'> "no solely by ihe actfon of the offl^re ^nd m^rift H.'T*''?'"'"- "^'""" <>'^haVging our duties as omeers ana lopiejaentjuives of our employees." Whatever any single individual may have thought or planned, the great body of those who were engaged in these transactions contemplated neither rebellion nor revolution, and when in the due order of legal proceedings the question of right and wrong was submitted to the courts, and by them decided, they unhesitatingly yielded to their decisions. The outcome, by the very testimony of the defendants, attests the wisdom of the course pursued by the government, and that It was well not to oppose force simply by force, but to invoke the jurisdiction and judgment of those tribunals to whom by the Constitution and in accordance with the settled conviction of all citizens is committed the determination of questions of right and wrong between individuals, masses, and States. It must be borne in mind that this bill was not simply to enjoin a mob and mob violence. It was not a bill to command a keeping of the peace ; much less was its purport to restrain the defendants from abandoning whatever employment they were engaged in. The right of any laborer, or any number of laborers, to quit work was not challenged. The scope and purpose of the bill was only to restrain forcible obstructions of the highways along which interstate commerce travels and the mails are carried. And the facts set forth at length are only those facts which tend to show that the defendants were engaged in such obstructions. A most earnest and eloquent appeal was made to us in eulogy of the heroic spirit of those who threw up their em- ployment, and gave up their means of earning a livelihood not in defence of their own rights, but in sympathy for and to assist others whom they believed to be wronged. We yield to none in our admiration of any act of heroism or self- Tk^"^' ^."^ "^^ ""^y ^ permitted to add that it is a lesson (59»J which cannot be learned too soon or too thoroughly that under this government of and by the people the means of ,. f f IN BE DEBS, PETITIONEE. 597 Opinion of the Court, redress of all wrongs are through the courts and at the ballot- box, and that no wrong, real or fancied, carries with it legal warrant to invite as a means of redress the cooperation of a mob, with Its accompanying acts of violence We have given to this case the most careful and anxious attention, for we realize that it touches closely questions of supreme importance to the people of this country. Sum- ming up our conclusions, we hold that the government of the United States is one having jurisdiction over every foot of soil withm Its territory, and acting directly upon each citi- zen; that while It IS a government of e/Sumerated powers, it has within the limits of those powers all the attributes of sov- ereignty; that to it is committed power over interstate com- merce and the transmission of the mail; that the powers thus conferred upon the national government are not dormant, but have been assumed and put into practical exercise by the legislation of Congress; that in the exercise of those powers it IS competent for the nation to remove all obstructions upon highways, natjiral or artificial, to the passage of interstate commerce or the carrying of the mail; that while it mav be competent for the government (through the executive branch and m the use of the entire executive power of the nation) to forcibly remove all such obstructions, it is equallv within its competency to appeal to the civil courts for an inquiry and determination as to the existence and character of any alleged obstructions, and if such are found to exist, or threate^ occur, to invoke the powers of those courts to remove or restrain such obstructions; that the jurisdiction of courts U> interfere m such matters by injunction is one recognized from ancient times and by indubitable authority; that such juris- diction IS not ousted by the fact that the' obstructions Ire accompanied by or consist of acts in themselves violations ol temlt trat? T """^^ '"'"'•'=**' ^y proceedings in.con- tempt, that such proceedmgs are not in execution of the IbW] injunction is no substitute for and no defence to a pros- ecution for any criminal offences committed in the couiie of such ,aolation; that the complaint filed in this case clearly showed an existing obstruction of artificial highwavs for the !|i ' !Wp W I « w »" «l't ; !i i ffc i 598 m FEDEBAL BEPOBTER, 908. Syllabus. passage of interstate commerce and the transmission of the mail— an obstruction not only temporarily existing, but threatening to continue: that under such complaint the Cir- cuit Court had power to issue its process of injunction; that It having been issued and served on these defendants, the Cir- cuit Court had authority U, inquire whether its orders had been disobeyed, and when it found that they had been, then to proceed under ^tion 725, Revised Statutes, which grants power " to punish, by fine or imprisonment, . . dis- obedience, by any party ... or other person, to any lawful writ, process, order, rule, decree or command," and enter the order of punishment complained of; and, hnally, that, the Circuit Court, having full jurisdiction in the premises, its finding of the fact of disobedience is not open to review on habeas corpus in this or any other court. Ex parte Watktns, 3 Pet. 193 ; Ex parte Yarhrongh, 110 U. S. 651 • Ex parte Terry, 128 U. S. 289, 305; In re Swan, 150 U. S. 637- Umted States v. Pridgean, 153 U. S. 48. ' We enter into no examination of the act of July 2 1890 €. 647, 26 Stat. 209, upon which the Circuit Court relied mainly to sustain its jurisdiction. It must not be understood from this that we dissent from the conclusions of that court m reference to the scope of the act, but simply that we prefer to rest our judgment on the broader ground which has been discussed in this opinion, believing it of importance that the principles underlying it should be fully stated and affirmed. The petition for a writ of habeas corpus is Denied. [9081 LOWENSTEIN i;. EVANS ET AL. (Circuit Court D. Soutli Carolina. October 9, 1895.) [69 Fed.. 908] Monopolies and Trusts— Monopoly by State.— The act of Julv 2 1890 (26 Stat. 209. c. 647), to protect trade and commerce against unlawful restraints and monopolies, is not applicable to the case 0* a state which, by its laws, assumes an entire monopoly of the traffic in intoxicating liquors (Act S. C. Jan. 2. 1895). A state is neither a "person " nor a "corporation." within the meaning of the act of congress.** .. ■f i LOWENSTEIN V, EVANS. 599 Syllabus copyrighted, isa5, by West Publishing Co. Complaint Same-Necessaby Pabties-Jubisdiction op Fedebal Coubts — Where a person brings an action under section 7 of the anti-trust law of July 2. 1890. against the officials of a state, to recover dam- ages for acts done under authority of a state statute, which gives Al/o *^ ^"^ ^''**'*^ monopoly of the traffic in intoxicating liquors (Act S. C. Jan. 2, 1895), the state itself is a necessary party thereto and consequently the federal courts would have no jurisdiction of the action. This was an action brought under the seventh section of the act of congress of July 2, 1890, entitled "An act to pro- tect trade and commerce against unlawful restraints and mo- nopolies." The complaint was as follows: The complaint of the above-named plaintiff resnectfullv showQ t, r« « • ^ * I ^^i^ Carolina, and is engaged in business in StatPsvlllA in said state, under the name and style of Lowenstein & O^ (2)^11^ L-arolina (3) That the defendants John Gary Evans D H TVmin- ^°f J» ^""^ ^^^^l ^°^^'^' ^t5^"^g themselves a " State Board of^^ trol," and the defendant Frank M. Mixson, styling hiSf"Ste?; Commissioner," together with divers other persons to the nHinttff ?endTautSorrtv*nf *^' "^ ^^^^^^^^^r me^tion^; under the p^ «!.^^trn i?^^*'^ ^^ ^ certain act of the legislature of the s^ti^Tf South Carolina, entitled "An act to further declare the law in rpfpr nf L ?H n'^^f '*^'''' ""^ alcoholic liquids or liquors within the stat,^ of South Carolina, and to police the same," approved Jam aiT^ 1^5 combined to monopolize a certain nart of fhl fr-Ti^ „„", ^ ' "®^' among the states a'^d forei Jnat'ioSfto'U^hT^"^^^^^^^ hquids and liquors, including whiskys, brandies, w^nLn^esnnd beer to prevent the purchase of such whiskys brandies win^ aZ and beer from citizens of other states and foreign nations Ind to nS llf^'^ in^Portation thereof into this state in^est^a nt of the trad^ and commerce between the states and foreign nations and tndl^nr?^ inate against the products of other states^nd the d«"enl o^f ^^^ states, in favor of the products of the state of South CaroZa and ?hP citizens of said state, which said legislative ena^ent the nlaintS? s advised and therefore alleges is null and void ?n^s that the lame ^«I?nH^^/^°*^*''' ^^ ^°.^^* ^^ ^°^^««« entitled '^n act to protS? IT^^/?^, ^^™™erce against unlawful restraint and mononolv " ^ proved July 2 A. D. 1890, in that the said legislative enTctSunde?' takes to and does create a monopoly in the traffio in ni^i^n« V and operates as a restraint upon the yade'Lml^^^^^^^^ feS ?imiTJ°,'"2' *'^®^1: ^^> T^^* ^^^ plaintiff now is and was a^th^ time hereinafter mentioned, engaged in the hiifiinoBo Vvi „ at tne in exercise Of fht r liff ' ^^^l '° Pursuance of his said business, and in exercise of the rights conferred by and reserved in the constitu- ■Mljlik iSjilliBiuisSL ilittt ^^ ^ ^ ^^^^^^ 600 III 69 FEDERAL REPORTER, 909. Opinion of the Court. LOWENSTEIN V, EVANS. remained inThepIain«ff rS^TS nn^n^^oo/i^*** «**^ property still while the said barrel of whilw^«?ii**? ^^^^.^^^ ^' ^^y- ^' ^' 1895, state of Sonth Sina Tnd w^tWn thl^n^.'^*'/* Columbia, in the the plaintiff unk^noW wittonT wirrnnJ^ ff'^^''^' "^^^^^ ^^''s^^S' *« the Common canler^i TnS^ Tn thw?' ^*'^' .^'^^''^ **^^ ^«^« <>' and of interstate wmmerSflSd thi tn^.'Jf^'*^**^'' ^^ "^'^ ^^isky and carried the same^w^' aSd tSp?Pn?w ^^Tf ^''^S ^^^ ««^^ ^^^^^y Whisky to be deC^^'unto tL S^^ '^^^ thereupon, and in furtheranop nf ««1h ^ 5 ^^ ^- ^ixson, who and In^traint of thTtrade an^^^^ """^ monopoly. and in furtheran^ of tte monthly afoZaT^nrt^^ oombtoatlon and /,o„ dollars, for a reasonable attornev's fPP nn^ J/tt ki« Y provided in the act of congress aforesaid! ^ ''^'*^' ^^ Murphy, Farrow <& Legare, for plaintiff. ^m^. ^ar^er, Attorney-General of South Carolina, and 6. Z'. lowmend, Assistant Attorney-General, for defendants. SiMONTON, Circuit Judge. This is an action brought under the seventh section of the act of congress approved July 2, 1890, entitled "An act to protect trade and commerce against unlawful restraints and monopolies (26 Stat 209, c. 647). The section is in these words : an?^t'L^'^rlir*!?r!^^^ *^ ***« ^^^^ «r business by alfi«^^L^ ,^^ corporation by reason of anything forbiddPn nr ^^it'^t^.*TTn'l?i3''?;''/^'*^^« ^^^ '"^y «"« therefor ^inaoTcf^^^^^ 22L fr. \% ^"^i^ f^^^ ^"^ *^® d^^t^'ict in which the defendant re- sides or is found, without respect to the amount in controversy and shall recover three-fold the damages by him 8U8tflin«? «nS th/'J? * of the suit, including a reasonable So^n^l f^" "" **^°^ ^°^ ^^^ ^«*« i 601 Opinion of the Court. The act declares : •' Every contract, combination In the form of trust or otherwi«. nr conspiracy in retraint of trade or commerce Mionrthe My«^^t^ or with foreign nations Is hereby declared Illegal " several sutea The cause of action set out in the complaint is on this statute of 1890, and seeks the special remedy provided in the statute The rehef is sought, not because the rights of the plaintiff were violated, but because they were violated in order to enforce and perpetuate a monopoly declared illegal by this statute. The defendants interpose a demurrer on two grounds: P'irst, that on the face of the complaint this court has no jurisdiction of the matters and things forming the subject of this action ; second, that from the face of the complaint it does not state facts sufficient to constitute a cause of action cognizable in this con it. ["**'l THE JURISDICTION-. The first ground of demurrer was sustained in argument because this is an action against the state, and the state is a necessary party thereto. The act of 1890 strikes at contracts^, combinations, and conspiracies in restraint of or to monopo- lize trade and commerce among the several states or with foreign nations. V. S. v. E. C. Knight Co., 156 U. S. 17, 15 Sup. Ct. 249. The complaint charges that the defend- rif . r^' Tompkins, and Norton, styling themselves a ^^ State Board of Control," and Mixson, styling himself State Commissioner," together with divers other persons to the plaintiff unknown, under the pretended authority of an act of the legislature of South Carolina, "giving the title of the act," combined to monopolize a certain part of the trade and commerce among the states and foreign na- tions, to wit, the trade in alcoholic liquids and liquors with citizens of other states and foreign nations, to prevent their importation into this state, and to discriminate against the products and citizens of other states in favor of the products and citizens of the state of South Carolina. This act of the legislature of South Carolina, the complaint avers, is void as in contravention of the act of 1890. Does this act of the legislature of South Carolina authorize M ! I 602 «» FIDBBAL KEPORTEB, 910. Opinion of the Court contracts or combinations in form of trust or otherwise, or conspiracy in restraint of trade or commerce among the several states or with foreign nations? Does it create a monopoly, and in whom? The answer to this question must be found in the act It is entitled "An act to further dedare the law in reference to and further regulate the use, sale, consumption, transportation and disposition of alco- holic hquids or liquors within the state of South Carolina and to police the same," approved January 2, 1895. It is impossible after examining this act to avoid the conclusion that it declares in the state the monopoly in the purchase and sale of alcoholic Uquors. Not only so, but it protects this monopoly in the state in every way possible and by the most drastic methods. Every attempt to interfere with this monopoly by the receiving, keeping, vending, giving away, or mercantile use of alcoholic liquors, is made an offense against the state, punishable by criminal proceed- mgs m her name in her courts. The governor, secretary of state, and comptroller general are officially charged with the direction and entorcement of this monopoly. The mo- nopoly is not given to them. They have no pecuniary in- terest whatever in it All the profits of the monopoly go to the state, to be used and applied for public purposes,— mcrease of her revenue. The close analysis made of the net by the counsel for the plaintiff shows that this was their conviction. They find that its manifest object is to raise revenue, and not to prevent the consumption of liquor, except that owned and furnished by the state ; that $50,000 was appropriated from the public treasury for the purpose of purchasing liquors and to enable the state to go into the business of buying and seUing intoxicating liquors: that liquors are not contraband, except when not purchased from n dispenser,--that is, one who holds and sells for the state • that the act creates a monopoly. So, also. Chief Justic^ Mclver, speaking for the majority of the supreme court [»Ilj of South Carolina, in McCullough v. Brown, 41 S. C. 220, 19 S. E. 458, dissecting the dispensary law, says: "Tlie manifest object of the act is tliat the state shall mononnn^o the entire traffic in intoxicating liquors, to the ent ?e exc uTiZ^ an l^rsons whomsoeyer. and this, too, for the purpose of profit "otSe state # LOWENSTEIN V, EVANS. Opfuiou of the Court. 603 and its governmental agencv. * * * wp think- if caf^ f^ c.« *», * It is an act forbidding tl,e .innufactnre o7sa e of intoXtm ' lUSS as a beverage within tbe limits of this state by X nr Ivate Ind? Jlt"^}\'"'^ T*.'"^ *"^ '■'«"* to maiwfacture and"Lch ZuorsTn the state exclusirely, through certain designated officers and agents ° This act of the legislature of South Carolina evidently does not create in nor give to any individuals the monopoly. It gives It wholly and entirely to the state. Now, the question to be decided is not as to the constitu- tionality of this act. nor whether it be in the lawful exercise 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 foreign nation.s. But by this act the state makes no contract, enters into no combina- tion or conspiracy. She declares and asserts in herself the monopoly m the purchase and sale of liquors. The section of the act of 1890, sued upon, gives a right of action for anv injury by any other person or corporation. The state is not a corpoi-ation. A corporation is a creature of the sovereign power, deriving it^ life ft-om its creator. The state is a sovereign having no derivative powers, exercising its sover- eignty by divine right. The stete gets none of its |K.wers from the general government. It has bound itself by com- pact with the other sovereign states not to exercise certain of Its sovereign rights, and has conceded 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. ?v" rr.u ^^^ ''"''' "' *•>* monopoly now complained of IS that of the state, no relief can be had without making the state a party, and this destroys the jurisdiction of this cturt. No opmion whatever is expressed as to the right of the plain- tiff for violation ot his common-law rights. In this pro- ceeding and under the act of 189t 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 jurisdic- '4 ^^ 73 FEDERAL REPORTER, 438. Statement of the Case. tion. The demurrer is sustained, and the complaint is dis- missed. As this case has gone off on the demurrer, a copy of the complaint is filed as an exhibit to the opinion. [438] PKESCOTT & A. C. E. CO. v. ATCHISON, T & S. F. R. CO. ET AL.« * (Circuit Court, S. D. New Yoric. .Tanuary 8, 189G. [73 Fed., 438.] ^rr.l'T^r'*''?^-'™'' ""^ COMPLAINT-DEMUBREB.-A Complaint Railboad Companies-Abbanoements fob Thbouoh Billing —There is no principle of common law which forbids a single railroad cor- poration, or two or more of such corporations, from selecting, from two or more other corporations, one which they will employ as the agency by Which they will send freight beyond their own lines, on through bills of lading, or as their agent to receive freight anS ransmit It on through bills to their own lines, and without breaking bulk; and the right to make such selection is not taken away by the in ei^tate conimerce law. New York d N, Ry. Co, y. New York d N. E. R. Co., 50 Fed. 867, explained. CoNTBACTs IN Restbaint OF Tbade-Act July 2. 1890.-A contract by "^^ . „" ^^^'"'"''^ coniPany arranges with another, to the exclusion of still others, for the interchange of passengers and freight by through tickets and bills of lading, is not a contract in unlawful restraint of trade, within the meaning of the act of July 2, 1890. This was an action by the Prescott & Arizona Central Rail- road Company against the Atchison, Topeka & Santa Fe Railroad Company and other railroad corporations and indi- viduals for aUeged unlawful discrimination in refusing to accept freight from the plaintiff company, on through biUs oi ladmg, while such freight was accepted and carried on through biUs, under a contract with other railroad com- panies. The case was heard upon a motion, by all of the •Appeal to Circuit Court of Appeals, Second Circu^ dismissed^ T^ZT ^f. *""* ''^^^^'' '*^ '"*'''**'" ^^^ «"*^ *>^ ^'•te^^al Judgment (84 Fed.. 213). Not reprinted. Merely a matter of practice. 6 Syllabus and statement copyrighted, 1896, by West Publishing Co. PKESOOTX A A. O. E. CO. V. ATCHISON, T. & S. P. B. CO. 605 Opiuiou of the Court defendants save one, to direct a verdict in their favor upon the pleadings and opening, the remaining defendant asking judgment m his favor on demurrer. C. N. Sterry, for the motion. Deloa McCurdy, opposed. Lacombe, Circuit Judge (orally). In this case I have examined the authorities submitted yesterday by the parties on both sides, and have reached the conclusion that the motions to .dismiss must be granted I am unable, however, in so brief a time to formulate any elaborate opinion; and it will be sufficient to indicate that the lines of thought which lead to this conclusion may be ascertained by reference to the cases of V. S. v. Tram-Mis- souri Freight Ass\ 7 C. C. A. 15, 58 Fed. 58, Little Bock db MR. Co. V. St. Louis S. W. Ry. Co., 11 C. C. A. 417, 63 Fed. 775, and the Dueber Watch-Case Co. Case, 14 C. C. A. 14 66 Fed. 637; all three being opinions of circuit courts of appeals. All legislation interfering with the right of the individual, whether he be a natural person or a corporation, to enter into contracts or to exercise his preferences as to the persons with whom he shall do business, should be cautiously construed. It IS legislation of a novel character, and should not be ex- tended beyond the plain import of the language used by the lawmakers. Stripped of the adjectives and of the averments as to conclusions of law, the gist of this complaint is the making of the particular contract known as " Exhibit \ » and [439] the carrying out of that contract according to' its terms coupled with the further set of facts that, in carrying out that contract according to its terms, the parties theMo necessarily ceased to continue with the plaintiflf corporation the relations which had existed before. That contract con- templates, and the acts of the parties defendant set forth in the complamt show, that what was done was to institute a system of interchange of freight and interchange of passen- gers by the new corporation to and with the other four de- fendant corporations, and to cease, from and after the execu- tion of that contract or some subsequent date, the further I<~I" II 1 73 FEDERAL BEPORTEK, 439. OpinioD of the Court. interchange of freight and passengers on through bills, nnd by through tickets, with the plaintiflf corporation. Now, it IS true that the complaint contains a single clause, at the close of the sixty-ninth paragraph, which uses the words « by utterly refusing to receive or deliver freight or passengers to or from it." That language, taken in its full scope, im- ports a refusal to receive freight, that had its origin on the Jine of the Prescott & Arizona Central Railroad Company, wherever and under whatever circumstances it was tendered. But It IS a fair rule of pleading that the complaint is to be interpreted, even upon demurrer and upon motion to dismiss, as a whole; and examining it a second time, after the argu- ments yesterday, with great care, I am constrained to the conclusion that the case which it makes out is the case stated in general terms in the sixty-ninth paragraph, but set forth specifically and distinctly in the seventy-eighth paragraph, namely, 'that the defendants have refused to acceptor de- liver local and interstate freight at said Seligman [or Pres- cott Junction] upon through bUling from or to the line of the plaintiff, m conjunction with the lines of said defendants, although the said defendants now accept and deliver frei-' -- act of 18or«?- 1 "'}T^^^'' commerce statute, and that the £FiSSiT-""-^-^^^^ support of their motio^; ttoe^tTpJIS puuf T cision in this case upon the broader grounf ^"' ''' ^" indiXl rS ;5^^t"' *° ''^'"- - t« John J. McCook peka & Santa Fe' a? „T' "" "^'^'' "* '^"' ^'<=J"«'»' To- ft r.„ Vl^"^* ^ f' "s to the same as receiver of the AtU^ti. Baring, ^:SvSra5n;::ScSoT" dT' " '"^ ^^^ utors of Georrrp r \r J»cCook and Crane, as escc- director of onfor m^1,TH' ""*""' '? '^"'^" ^- McCook, as and the demurrer of Gelt Tc^tT't' ''" ^^''^' ground that it does nottlTrtwSfffi-^' ''"'' °" "'"^ a cause of action, is suSined T ? !"°* *** "°"^""*« rected in f«™. "* 7i ^"^t""^***- Judgment is therefore di- rected in favor of the moving parties for dismissal of Z ' 608 74 FEDERAL REPORTER, 802. 3jllabu& complaint, and the ordinary form of order on demurrer will tt Sot J" r""l'''- ^ ^^^P"«'» - e^-'«d as to the ^ho e disposition of the case, and exceptions separatelv as to each one of the separate motions will be recorded Stay of 30 days to plaintiff. ' [2301 NATIONAL HARROW CO. v. QUICK ET AL. (Circuit Court of Appeals, seventh circuit May 4, ISOO.) 174 Fed., 23a] ri^ree of the Circuit Court (67 Fed., 130) dismissing the bill for want of equity affirmed, but not upon any «ro,.nd [802] THE CHARLES E. WISEWALL.- (District Court, N. D. New York. June 12. ISOft) [74 Fed., 802.] tZ t ," "^'«"'"'"« ^••'"»« <" fe services rendeVed. on the g3 that the tug owne.-s are members of an association which IsTlS under the act of July 2, 181)0. relates to Uusts and minoiiilT This was a libel in rem by certain tug owners against the steam dredge Charles E. AVisewall to recover the value of SnTal^h^r'^^^'^ '' '''- '^^ ^° '^^'-^ '^« ^^ Joseph A. Lawson and Isaac N. Laicson, for libelants. IV. FrotJd ngham, for claimant. « r»ecree nffiniied by Circuit Pmii^^* a«^ i I~ ~ ~~ — r.. I If^ ' '^^* ^*^ P- S^' ^'i^ere tbe case is entitwi "ti.^ Cbnrles E. Wiswall." eniitied Tbe ^ 6 Syllabus copyrlgbted, ISOC, by West Publlsbing Co. 609 THE CHABLES E. WISE WALL. Opinion of the Court. CoxE, District Judge (orally) . The proof shows conclusivplv tK„* j ■ 1895, the tugs mentionS „ ;L rt, """^ **"" ^'"°™«'' «' the claimant? d^dgriTsl.,' ' !*"'^^^*' '^'^'^ to dollars. The claimfnt^eks to a^^i^ "^ ^''''' '''^'^^ ;oes thus requested and ateptd bj .f'^^"* '"'' ^'^^ ^- that the tug owners were ZS ^ . ' "P*'" *•>« g«>"nd was illegal and ^oi^ZTl^Z^' T, r*^"*^""^ "'^^<=h courts have found it very d ffic.^f , "^"^ ^' ^«^<'- T^e generalities of this act tlVtTj" '^^'^ *^^ '''^'^^*- cod c&A.C.S Co V 4,7- l *°^ S'^^n case. Pr«. 438, and cases cited. Assumino. I^ ' • ' ^''•' ^^ ^ed. argument, that the agrletert wr w','" "'"^^^ *° «-°W to act in unison was prTSed^h!' I* *'^« *"«« ™dertook straint of trade, my prelntT. '" **'*' *' ^'''^^ '" ^- tion will not aid the Eant W^'^'k" f *'^"* '^^ ~P- to repudiate his just dTtrtl ^^ '^""'^ ""* ^« P^^^tted their- association Ts iZS \*J«. "'d'V'dual tugs because ices, and having accented fi ^T^ '^^^'^ ^"'- ^^eir serv- Counsel for the'claSritf aVd^l^ ^'"^""^ P^^' to present authorities to establiX fK *™^ '° ^'''ch • towage contracts were void a'ld Tn f P^P^^^^tion that the the agreement by whichThe lut Z *'"'"* *** ^''^'^^ because that reason. The au fSO^ f !'** "^""^ted was void for judgment, to meet he poSil 2 r '"T'^*^ *«''' '- ^l confound the two contr^ci 'l'^""^*'''"- I* i« a mistake I . flower to tow the dredgr?^;ewan T'""'"* ''^ *^^ ^''g ^ay Albany to Troy, is nft vo ?2ut fheT "f ^ ^'^' '^""^ ciated with other tugs to rp^^mf ^^^^Aower is asso- Albany. Should the claLI'f ^'*" *^ P"'^^ »' towing at at an Albany clothing Jop "e wS fi". \ ?'^ '' *"•— paying their actual market vat" K "^ '* '^'®'="^* *« avoid other tailors of that dty hid tlt^f f' ^^"'^^'^ ««<» So when he employs the Albany^" ^'^. *" '^'^^P »P P^ces. and receives ^rvices worth Ynl^!;^"""^ '" «°«'* ^ason $900, he should not be pe^itteST ? P''^^^"* Proof, over tjons upon a pretext so mS %f 7^ "« i"st obliga- the dredge shall pay any moS tt I ' *"^ ^'^ °«* «^fe that "««-vo. 1 Jl ,.:!^r --— actually 610 76 FEDERAL REPORTER, 667: Opmlon lit the Court. worth. If they are worth less than $924 demanded in the libel, it is still open for the claimant to show it. But it is unnecessary to pursue the subject further. Above and be- yond every other consideration stands the indisputable fact that the tugs rendered valuable services to the dredge at her request. These debts she should pay. To i^ermit her to escape would be aiding a scheme of repudiation. The tugs are entitled to a decree. Unless there is a reasonable prospect that the claimant can produce testimony reducing the amount proved to be due, a reference would seem unnecessary. How- ever^ if the claimant desires it a reference will be^ ordered The Ubelants may amend the libel in the resj^ects heretofore suggested if on reflection they desire to do so. [667] NATIONAL HARROW CO. v, HEXCH ET AL.« (Circuit Court, E. D. Pennsylvania. August 25, 1896.) [76 Fed., mi.] Monopolies- Combination of Patent Owners.— A coniblnntlon among manufacturers of sprlng-tooth harrows, by wbicb eacb manu- facturer assigns to a corporation organized for the purpose the patents under which he Is operating, and takes back an exclusive license to make and sell the same style of harrows previously made by him, and no other, all the parties being bound to sell at uniform prices, held to be an unlawful combination for the enhancement of prices, and in restraint of trade.* EMey, Rohimon <& Love^ for complainant. Strawhridge (& Taylor and Jahn G. Johnson, for defend- ants. AcHESON, Circuit Judge. The plaintiff, the National Harrow Company, seeks an injunction restraining the defendants, Hench & Dromgold, frran selling float spring-tooth harrows, harrow frames, and attachments applicable thereto, upon more favorable terms -Affirmed by Circuit Court of Appeals, Third Circuit (83 Fed., 36). See p. 742. A similarly entitled case (84 Fed., 226), p. 746, is another suit, brought In the Circuit Court, N. D. of New York. * Syllabus copyrighted, 1896, by West Publishing Ck>. NATIONAL HARROW CO. V, HENCH. 611 Opinion of the Court specific enforcement of saTd contrLts ^^^^^^ ^"^'"^ '*^^*''« at the rate of five dollars fJTlt ' "'^ *°'' *° accounting Mmly, UiM these 1,",^ , f ''* "" "' "'•B, .taint «( l"i „j r T ;"* '" '" ""™»»>l.l« »- ■»«„] tU „.„u6«„^'lf " *" "»'"'"' "»l.in«io„ to mintai. high pric,^'" Th. N«to,irS '* pI"'' "'' . coi-porelion of the a,lS> of Ne« y" """"'. C»"P«"y. • the good will of ?h^fr h ^ spring-tooth harrows, and woufd notX^eaSrC;^^^^^^^^^ of such harrows, except IstTl or l^^L^fof £" '"" "'•* tion; that the corporation should LVp^^T T"*- and corporations, respectivdr«>aT*i*^P™^'. «™^ patents and the ff^d ^H Iti^ f> ^ss gning to it their said to manufacture TdJll ,1 h '""''"'''' '^"'"^^^^ ^^^^ uniform terms aTd condE, T "^" '*=•="*"*' ^"^J^*'* *« which they were making anT^n •'""^ "'^^^ *** ^^""'^^ ment, and'iha rcoSSlti'lf '"^f""" "^ '''' '^- and sell anv stvlJ T™'°" '^^'f ^ould not manufacture every float SDrinTtlfh^/ corporation one dollar on such^icens^n/d-rt ^7X7^^^ ""^^ ^'' '' transferring to the corpora tionTeg^o/VofTSr sprmg-tooth harrow businP<5Q or.^ «: • ®^^ °^^* « ^ upon 0. „ ,,J4 .H,i^'-'- 'X«^X' 612 76 FEDEHAL REPORTER, 668. Opinion of the Court. the corporation. The agreement in the first instance was signed by six different manufacturers, but the contract con- templated and provided that others should come into the ar- rangement and become parties thereto. Accordingly, other manufacturers of float spring- tooth harrows soon joined the combination, which then embraced 22 different persons, firms, or corporations. Thus, almost the entire output of float spring-tooth harrows made in the United States was brought under the regulation and control of this organization, its licensees manufacturing and selling at least 90 per cent, thereof. The defendants were the owners of two United States let- ters patent relating to float spring- tooth harrows, under which they had been manufacturing and selling harrows. They joined the combination, and, agreeably to the provi- sions of the above-recited agreement, they assigned to the New York corporation their patents, and that corporation then issued to the defendants a license to manufacture and sell their old style of harrows. The New Jersey corporation, which was formed in furtherance of the general scheme, is- sued to the defendants ji second Ecense on terms and condi- tions substantially like the former license. These are the two license contracts here sued on. The following stated provisions are common to both licenses: The defendants agree not to sell float spring-tooth harrows, float spring-tooth harrow frames without teeth, or attachments applicable thereto, at less prices or on more favorable terms of payment and delivery to the purchasers [669] than as is set forth in the schedule annexed to the license, unless the licensor should reduce the selling prices and make more favorable terms for purchasers, and that the defendants will not directly or indi- rectly manufacture or sell any other float spring-tooth har- rows, etc., than those which they are thus licensed to sell and market, except for another licensee, and then only of such style as he is licensed to manufacture and sell. They agree to pay to the corporation one dollar upon each float spring- tooth harrow, etc., manufactured and sold by them agreeably to the terms of the license, and the sum of five dollars as liqui- dated damages for every harrow, etc., manufactured or sold by them contrary to the terms and provisions of the license, NATIONAL HARROW CO. V, HENCH. 613 ' Opinion of the Court. and the corporation agrees to defend all suits for alleged in- fringement brought against the licensees. All the licenses issued by the corporation are upon the like terms and condi- tions. . It will be perceived that the corporation through whose instrumentality the purposes of the combination are effected is simply clothed with the legal title to the assigned patents, while the several assignors are invested with the exclusive riglit to manufacture and sell their old style of harrows under their own patents; but all of them must sell at imi- form prices and upon the same terms, without respect to cost or the merits of their respective styles of harrows, and all the members of the combination are strictly forbidden to manufacture or sell any other style or kind of float spring- tooth harrow than they are thus licensed to make and sell. Now, it is quite evident to me, as well by the papers them- selves as from the testimony of witnesses, that this scheme was devised for the purpose of regulating and enhancing prices for float spring-tooth harrows, and controlling the manufacture thereof throughout the whole country, and that the combination, especially by force of the numbers engaged therein, tends to stifle all competition in an important branch of business. I am not aware that such a far-reaching com- bination as is here disclosed has ever been judicially sus- tained. On the contrary, the courts have repeatedly ad- judged combinations between a number of persons engaged m the same general business to prevent competition among themselves, and maintain prices, to be against sound public policy, and therefore illegal. Morris Run Coal Co v Bar- <^^yCoal Co 68 Pa. St. 173; Pittslurg Carhon Co. v. Mc^ milm 119 N. Y. 46, 23 N. E. 530; Merz Ca^mle Co. v. United States Capsule Co., 67 Fed. 414; Nester v. Breiving Co., 161 Pa. St. 473, 29 Atl. 102. I am not able to concur in the view that the principle of these cases is inapplicable here, because the agreement in question involves patents. It is true that a patentee has the exclusive control of his invention during the life of the patent. He may practice the invention or not, as he sees fat, and he may grant to others licenses upon his own term<= But where, as was the case here, a large number of inde- 614 76 FEDEKAL REPOBTEB, 670. Opinion of the Court. pendent manufacturing concerns are engaged in making and selling, under different patents and in various forms, an ex- tensively used article, competition between them is the nat- ural and inevitable result, and thereby the public interest is pro- [670] moted. Therefore, a combination between such manufacturers, which imposes a widespread restraint upon the trade, and destroys competition, is as injurious to the community, and as obnoxious to sound public policy, as if the confederates were dealing in unpptented articles To the present case may well be applied the remarks of the su- preme court of Pennsylvania in Morrh Run Coal Co v Barclay Coal Co,, supra: " This combination has a power in Its confederated form which no individual action can con- fer." By the united action of more than a score of different manufacturei-s, natural and salutary competition is de- stroyed. To sanction such a result, because accomplished by a combination of patentees, would be, I think, to pervert the patent laws. Moreover, it is to be noted that under these license contracts the licensees can only make or sell their own specific form of harrow. All other forms, whether patented or unpatented, are prohibited to them. For this interdiction there is no justification. In the case of Harrow Co. v. Qvick, 76 O. G. 1574, 07 Fed. 130, Judge Baker expressed the opinion that this combination was unlawful, and against sound public policy. I am constrained to regard the license contracts sued on as part of an illegal combination, and in unwarrantable restraint of trade. I must, therefore, deny the plaintiff the relief sought. The other defenses I need not consider. The matter of the cross bill was not much noticed by coun- sel, if discussed at all. My conclusion is that the plaintiffs therein have not shown themselves to be entitled to affirma- tive rehef. They entered into this combination voluntarily. The preliminary agreement does not remain executory in any particular. These cross plaintiffs do not owe any duty or service to the public, the performance of which is hin- dered by an improvident and unlawful contract. No special ground for equitable relief is disclosed by the cross bill, i^nd the plaintiffs therein do not require a decree of cancellation m order to defend against suits based upon the license con- .. . 615 UNITED STATES V, JOINT TRAFFIC ASSN. Statement of the Case. tracts. The cross bill will be dismissed, without prejudice to the nght of the plaintiffs therein to defend against'suij or their nght to maintain a bill should circumstances S exigencies arise to justify equitable interposition • Let a decree be drawn in conformity with the views ex- pressed in the foregoing opinion. [895], UNITED STATES .. JOINT TRAFFIC ■ ASS'N." (Circuit Court, S. D. New York. May 28, 1896.) [76 Fed., 895.] Railboads-Joint Traffic Associations-Interstate Tomw™™ Law._a combination of railroad companies intrLlnt t^fZ ciat^o^s under article, of a^eemeut ^y .^Te^ZnZLlZ^Z against unlawful restraints and monoloC" ^ ^^ Same— Jurisdiction of Federal Courts- Th» nmt^ o* * iStnl ! f° agreement alleged to be Illegal under the Charter of r.T'* '""• "'^^° " "'''^^ *•"" " lid notTrant the Charter of, and has no proprietary interest In, any of the i-ofld« it. r.ght .s to prosecute for breaches of the law. not to prov^: ^/^ the™irTraffi" A ''"• 'f' ^'"^ ^^ '^' U"'*^*^ States against theiitr.^tl ^^^'^f «"> t« «"i»in alleged violations of tne interstate commerce law. TFaZZace J/ac/arZa>ie, United States Attorney. - James € Carter and Edward J. Phelps {George F Ed- »!wn&, on brief), for defendants. J^'f-aa V^"T. "'' ^i""'"" *^"" Of "Appeals, Second Cireuit (^' F^ 1020). Memorandum decision Spp n »aq r> ^^ \o^ rea., court united States (171 V. l£ 'see^f sj""""* '' """«""« " Syllabus copyrighted, 1896, by West Publishing Co. 616 76 FEDERAL REPOBTER, 896. Opinion of the Court. i ' Wheeler, District Judge. The interstate commerce law (24 Stat. 379) provides : -,.K„^'''" '• ^^''^'■y <-ontract, ccmblnatlon In the form of tn^t n, otnenvise, or oonsnlrafv in rn:frf , •• »-„.i. inist or aevernl «t«to<, «. .. iVi . '"/c-i™mt <,t trade or coimnerce among the several states, or with foreign nations Is hereby declared illegal." The 32 railroad companies defendants, immensely engaged m competitive interstate commerce, have made an arrange- ment forming this Joint Traffic Association, with a board of mne managers, consisting of one each from the Baltimore & Oluo Chesapeake & Ohio, Erie, Grand Trunk, Lackawanna, Lehigh Valley, Pennsylvania, Vanderbilt, and Wabash sys- terns; and with jurisdiction over competitive traffic which passes to, from, or through the western termini of the farunk hnes, viz. Toronto, Can., Suspension Bridge, Niagara FaUs, Tonawanda, Black Rock, Buffalo, East Buffalo, Buf- lalo Junction, Dunkirk and Salamanca, N. Y. : Erie Pitts- burgh, and Allegheny, Pa.; Bellaire, O.; Wheeling, p'arkers- burg, Charleston, and Kenova, W. Va.; and Ashland. Ky • and such other points as may hereafter be designated by the managers as such termini. The arrangement provides as to rates, fares, charges, and rules (article 7) : .„'^^'°".'- The.'Ju'y-PnWIsliedschednlesof rates, fares andchnrnim..^ Tl *u . ^S'Z r a^^Klatio// „„T tK^-Sr^rtWeiX Tin mLiiL^" ^"P "O""" ""« nereement be^mes effective aTi with the Z'X"rnS''.1pi;U'.'el2^?etr«'"'- °' ™'-- "-^ ''^<^^^ »t h r ="F '"-- - -- ^^^^ 2,«^» -i"",^ necessary for governing the traffic covered by thlsTCT«! Sffl th^",^.,""" ""teft'ne tte Interests of the parJli hereto ihereta S .Si* '1"""* to «»>8erve such recommendations by any Mrty hereto •» and when made shall be deemed a violation of this ag?^men° f i <> UNITED STATES V. JOINT TRAFFIC ASSN. 617 Opinion of the Court. Sli^f^^r^ ^^""^^ u^^''^*^ «*^^"' f'^rough any of its officers or agents t^^^nL^te: rr^-vi^Ji^trTt^etn-tL'Tat:^ It also provides, as to competitive traffic (article 8) • be employed, Is g" ven to the ma^a^"rs " ' "'""'^'" "' '"'''' "«^"« *» This bill is brought at the request of the intei-state com- merce commission, under the direction of the attorney gen- eral, by the district attorney of the United States for this district, against this agreement, as made, without countin.r upon any statutes, or alleging anything actually done under ;^ to be of Itself unlawful otherwise than because so done. Ihe answer denies, as a conclusion, any illegality within or under the agreement; and, as a matter of fact, anything un- !^ v.''"km?' °i *"■ ''^y*'"'' '*• The case has been heard upon the bill and answer, and so is made to turn upon the question of the legality or illegality of the contract, and If J ' 1 a 'y^^- '^^^ P'^^'^'""^ "* the contract stated are understood to be the ones challenged as being con- trary to the statutes quoted. ^ The restraint and monopoly act expressly authorizes such u proceeding in equity as this to prevent its violation, and this suit IS well maintained if this contract is within it Kailroads are not expressly named in this act, and are said ■ m argument not to be within its terms. No one is so named • 618 T6 FE EBAL REPORTER, 897. Opinion of the Court but it applies to all contracts and combinations in restraint of trade or commerce among the states. Railroads do not ^irr^ S' ''"*''' ^"* '^'^ "''•^ *»^ those who do; and what would restram their so carrying would seem to b^ a restramt of such commerce. in JlT P^ri"^**"/ ""^ *•»« «>ntract do not provide for lessen- ing the number of carriers; nor their facilities; nor for rais- ^iw^"" 7*f ' ^f^P* ^P'^'y ^y '^^ ^^' not contrary to law, and therefore not beyond what are reasonable. The interstate commerce law (section 1) requires all rates to be reasonable, and the making of reasonable and lawful rates upon carnage in any traffic cannot be any restraint in law lioiHn„ * '. • ^- ^- ^^' ^® ^«J- 58. The so- liciting of custom IS no part of the duty of common carriei-s, and dispensing with soliciting agents, or with the control of them cannot be illegal, nor an agreement to do so be an Illegal contract. As this case rests wholly upon the con- tract as made, and not upon anything actually done under color of or beyond it and each road is left by it to carry on Its own business within lawful limits as before, no unlawful restraint of commerce seems to be provided for by it; and no ground for rebef under that statute of 1890 is made out Wo provision is made by the interstate commerce law for enforcing its provisions in equity, except to carry out orders of the commission; and authority for this suit to restrain . any violation of that law must appear otherwise, or fail. That governments and states exercising general municipal control over the people, their property, their rights and their convenience, may, by their law officers, maintain suits in equity to restrain actual nuisances to ways, parks, commons, and the like, which are injurious to the common rights of all to their enjoyment, is not to be questioned. The United States government is limited in such control to such particu- lar subjects as are committed to it, which include, of course, interstate and foreign commerce, car- [898] rying the mails, and such These railroads' are not federal instruments, al- though they may be, and probably are, engaged in the busi- ness of, and are within control of the laws of, the govern- ment to some extent. As so engaged, no nuisance would be '>'*' ^1 m ■! UNITED STATES l\ JOINT TRAFFIC ASSN. 619 Opinion of the Court. federal till it should become actual by obstructing these functions. In re Dehs, 158 U. S. 564, 16 Sup. Ct. m This contract if illegal, is intangible, and is not aUeged or claimed to have obstructed the roads for government pur- poses in any manner whatever. The United States may maintain a bill in equity to repeal ^73, 8 Sup. Ct. SoO), or a patent for an invention (U. S. y dmencan Bell Tel. Co., 128 U. S. 315, 9 Sup. Ct 90) and a state to protect its interest in components o'f tte scS ^nder 144 L. S. 550, 12 Sup. Ct. 0.89), or to prevent abuse of charters granted by it {Attorney General v. Railroad Com- pames, 35 Wis. 524), because of the interest in the propeX UniteTstT' " " ^.r "* "^ "^ P»^y *« '*• But'heTE United States are not alleged, or understood, to have granted oi,tZ ^ '/' '" ''^^" ""^ proprietary interest in, any of these railroads; or to have any other concern about them m any respect involved here, but to have its prohib torv ; Id oh '°7T''*'"^ •"'"- "'^'^^^ the state^s^S and obeyed, ilie same as those against counferfeitina, or anpering with the mails, should be. Breaches of sucl^ statutes are misdemeanors punishable by indictmenror n formation, and that merely such are not preventaWe b 1 ty" ^™3 r. ,r"""''" P"»«ii»8. in such c.i Id Sfmi. M to .ulhonze any Ih.l ,«„ a„k„„„ be,„„ n»," 2tf trp^:Se^ii— t: -^^ '- ^--^-^^-> a«nts^3re prohiSSts ^l ttheTo^rg^^ir or dmding aggregate or net proceeds of earnfngs. So Ir as this agr^ment goes, each road carries the freiSts it mav get, over Its own line, at its own rates, however fixi"^ and has the proceeds, net or other, of the 4rnings to it^' Very able judicial opinions and learned commeSa Lf^d J ■^ 620 11 FEDERAL REPOBTEB, 1. 1 1 Syllabua. wS""',!!^" ^^^^' *«» """««>«« for separate notice hemn, have been referred to, but none make it LTude whS ^leftm wholly separate channels. Provision forTasonlble although equal or proportional, rates for each TrrTerTfl; a )ust and proportional rate for each caS TZ' ■ 1 This statement of^ftViTs'o^^t?"^; " ''"^ """• vprv fnii „.,j ui '™»"ns se^ms quite inadequate to the very fuU and able argument upon which this case h«<= nn o.„i! as they appear to be sufRdfnf L th "dislsS" f ^^ ""'' no mor« is attempted. Bill dismiss^ ^ " "^ '^' '"''' 1 [11 GREER, MILLS & CO. v. STOLLER ET AL. (Clmilt Coart. W. D. Missouri. W. D. November 6, 1896.) [77 Fed., 1.J ^^-^^^J^^ZT^'r^"^"'' °^ D,sx.:cx-Mo.oPo- elation on the ^nnd ttof thf * "" '*'■*•■"" "''-"''" «' *"« «««>- Of trade and co^^l 1*^^^.* ::: '"'^'"' "^ **'»« '" ^^'"'"t of July 2, 1890 (^I'ta^^,^ L"!^,r" *^ "^^'Tr"" Law " thereof to brine suits f«^ In, « , ^ "'^^^ ^^'^^^ ^ «ect'on 4 behalf Of the^vlrL^ent Th r '' i""""^ *° «""^ '"""^^t^J <>» 5. to bring 'n n™~eLI'T^j ree^irrS^^" "' ^"°'' prirate suits, and the coJt ^„ 7 ' ""* ** '""'"«<' <>' «>" All the director of ^nZTn^^^rsT'^^^ilZ^tT'''"''''''- partles to a suit iimlnst it „r,=i„„ / - asNocIatlon are necessary though „ less nuXfaU a„rr^"*b:^r!.''r'^''!.™'''"°"^- '^'^ business. aumouzed by the association to transact TrXvrZ'a°^f«rhrL"' M.«„»3.-Where a n,e.- for nonpayn^ent 7t IZt^.^^t^JT^^f '' '^ "'^*°" be restored to the privlleees of mlmil t ^ ^■''''™' "'* "<=*''"' «» tract between hS Im 1 :^h«o„ T^t "'*° *"« ~- accept In Its entirety or Znrtl!t»^ ^ ' ""'"''' ^ """«* «'"»«• Of a stranger .0.::^";^ arof^clfrparer''^ ''' '^"""' • Syllabng copyrighted, 1896, by West Publishing Oo. ~ T GREEB, MILLS & CO. V. STOLLEB. Statement of the Case. 621 This IS a biU in equity seeking to enjoin the defendants from doing certain specified acts. The complainant is a non- resident of the state. The respondents constitute the board of directors of the Kansas City Live-Stock Exchange, a vol- untary business association of this district. ass?cLtfor aVe^^'lo'r tl^l' ^^^<^^'^tlou, as declared in its articles of bSS exchaLp nnt^^^^^^ ^^ organizing and maintaining a action of buslnP?^' hnt \ P^^^^j^^^y P^'^fit or gain, nor for the tr^s- wifi? fhi ous »ebs, but to promote and protect all interests connect*^ with the buying and Felling of live stock at the Ssis rihT^tn^ Mills SmUh&HoUs, Lathrop, Morrow, Fox dk Moore, and Albert H. Horton, for complainant ■ mrr. I ( :f ^2 n FEDERAL BEPORTER, 2. Opinion of the Court Philips, District Judge (after stating the facts). The defendant Hanna being a nonresident nt th. * . this court can acquire no iurifdir-f, •„?!., ^.* '****' consent, unless it cLn beZ^MZtZ Z "^''"'* ^'' cable of the act of oontZT^^ tmTjm^, "r"'" to protect trade and Sinnierce agist u^S^^^^ and monopolies." 26 Stat 209 n^t^ clu • '^^''^'nts ^t, the «.„rt, whenevSX ?nds?f tst^rrurit ' ^'^'^ bnng before it other parties bv m,mrn!. ^^ , *' ""^ r^ide in the district in wlS^htc: ^s^Sd oT ^ " Sj s fsr' - --X"dir i- -a/- lenses against the government of the TTnif/.^ «*.* -k the fourth section, the jurisdiction i! * ! '^'^ ^^ circuit courts of the United Stll"/ ""^ "P°" ^^^ the violations of this act « aS t^t if T.u* ""'^ '■^"•^^'^ several district atto™:;s\f''S?e UnS Staf '"?k°' ^'^^ spective districts, under the direction olth^tf '" *^''' '*■ to institute proiedin,^ in Z^^l . attorney general, such violationsT^^X^2^l,!° LT" * ''"*' '•^^^^«'" setting forth the ca2 I^'aXXttt "'T ?' P^"*^"" J« enjoined 13, or otherw^L^fwh ted"' ^"e:S^^^^ ^ any other person or corporation by reason of iT^K^ ^ forbidden, or declared to be unlawful V" act ''7^2 to sue in a circuit court of the Jlr,it.^ l\ i ■ !,' * "^^* m which the defendant*^^!"";?!^ tS Irlf fS damages by him sustained. The stat L il" u' ^^'^^''^^ in its character, must be stStlycon^t'r^d ^ an^ '/"'"' created a new offense, and imposed new Tab1lit.iL ' 5T^ lug provided the modes of redressT th7 m ' ""^l^"^- private citizen, by establi.L^ T /^ P""'*' """^ *« remedies are e'iTeTajf o SS '''sTTT' '""'^ f^M 399; umiak v. fir^.^^! Mo 147 ^S^ ^^ While there has been some contrariety of 'opinion amonj *?!* GREER, MILLS & CO. f. STOLLER. 023 Opinion of tlie Court judges as to whether or not th^ r.in.v.f * • • private citizen is accorded L^Ws^-t f '"'""'=*'"" *« « is that the Hffht is limi^p!? hi I 1"*^' "^ conclusion tion at the Stion of th. J- . ^'^ '^""" *° '"J""'^- seventh section gtes to the nt^aT f ""l^' *""* '''^' *»>« Fed. 696- P^'/7rn^h ^r rr - I , /«^., o o. C A. 86, 56 u. oifo, t-iacock V. Harrington, 64 Fed 821 Tho^^i Hanna has a ri^ht to in^i«f fLf . iherefore residence. ground of his non- partVr T^e K^nrail -vtsroerEr '^ ^ "^'^^^''^'^ corporated volnntarv .Z \ Exchange is an unin- members sTcr SliZn ' 7 T^"^"" "* «^"* ^00 their rights and Till i^ '"dividuals, in respect of p-ersV'^tilt'rs :afors:?i;r " ^^ ™^- those of its directors or ma— %^t'Ih'',"''' P'""'"^^^' ■^"t only bj and that it is not dissolved bv 'thl i??""^^^ '" '* ««> transferable • etc., Of its individual members." '^ Pa|e 749'^'"*'"' ^'^'^' •'anlcnip?^; As said in P^;,, v. Jones, 69 Am. Dec. 711 • ifefir^ V. Moulton, SOMai^^^"''''^ ^"^ ^^ affecting such interest consent to the articles of aSL 1 k *' *'^ '"''y' ''^ right. In the absence of sTcra^M 2'"™"''"^ ^"^'^ of the associates could bind th^Ti' ^ 7^"" * "''' ""t^ judgment would remafn SpendeS ^ "T'"'"- «^ fore, to control the action S'lnd Wndir""^- ?' ***'"- be directed against the whnLT T J^^^ associates, must gain.t the whole membership. But where, as 624 77 * 1 I- r FEDERAL REPORTEB, 4. Opinion of the Cuurt. in this instance, the executive administra- [4] tion of the business affairs of the association is by articles of agreement committed to a designated board of less number than the whole, It may be conceded that a judicial proceeding against tihe^i^ssociation may be maintained by summons against such Rule 1 of the association, referred to in the bill of com- plaint, vests the government of the exchange in a board of 11 directo,^, composed of the president and vice president of the association, , members of which shall constitute a quorum for the transaction of business. Unquestionably, but for the provision clothing the number 7 with the functions of gov- ernment It would require the presence and co-operation of the whole 11 to transact any business. But this 7 must not only be pr^ent, assembled as a beard, to perform any official act {Hay-Pres8 Co. v. Bevol, 72 Fed. loc. cit. 721, 722) but they are clothed with the functions of acting for and repre- senting the board only for the transaction of business of the associatiOT, and not for any other purpose. It does not au- thorize affirmative action against the association by notice to seven of the directors. As to third persons moving against the association to bind the constituent members, notice must be given to all. As said in People v. Batchelor, 22 N Y 134 • See, also, 1 Mor. Priv. Corp. (2d Ed.) §§ 479-539 In McGreary v. Chandler, 58 Me. 538, which was an action served on a portion of the directors of a voluntary asssocia- tion, the court said : "The Macblas Mining Company Is a volnntarv assoplntinn n* i^hi vldnals, and not a corporation under the law? of the s?«t« S-^^ defendants are n.einbers, and assume to act as its dir^tnrf;n7 rn^bers. In the present case It Is against tSit of"fhiTss^'iat« The question under consideration was passed upon in Wall r. Thonuu, 41 Fed. 620. The suit was by a member of an unincorporated association, whose management was intrusted "' " GREER, MILLS & CO. V. STOLLER. Opinion of the Court. 625 and, indeed, esseXTtf the p'^ot^SonTf^^^^^ '""?V ^"^^ a«th7ri^ management of which the tinist^f «^p\?5. *^f,^.** interests with the according to the averments of tte SIu thiTJi • " *' "^* ^««"S^ **>«*' and a breach of trust becaiisA th^oK ' A^^ ^^^^^^^ ^^e unauthorized, beard before these aV^menfs a'retken l?S ^^"? '^" ''^''' ^^^ they cannot be assumed to be tnfe a^ tha L ^^^ "^^'"^* **^^'»- And those who have a right to XiLntf ^i!^ ^^^^^ ^^^ ^ ^^^^ until all tnnlty to do so. A centra ,^^'^?|^^^^^^^^ ^T?"^'^ ^*^^° ^'^ «PP^" minority of unfaithful trustees bv r^n-iri^. ^° ^^^ Power of a whose interests might not Ih^ Vm, ^^^"^'^'l f^l ^ith a beneficiary defeat the performance of plinio* ^^"^^ ""^ ''^^^'' beneficiaries to faithful trustees.' ^ ^egitmiate and exigent official dutlS by The logic of the opinion clearly shows th«t if i. .• . • .th: d^SSsta'^at's^Xir frl's*? S" ^ «*"■<>«« »«« o-^ that tees have done so. and todee^ tTift'^SL^if "■."* ^^ "bsent trus- Pose to do Is unauthorlz^ anHuiaw J Whn "ii"*"* *™^t<^ P">- would not be bound by such a dw^ it J^^'^^ t'^f '"'>*«■>* t™«tees embarrassing, and perhaps defeats?' thli?iir* ^ '""•'^ «"'«'»* cause it would deprive th^em ofX°!i4^TatC We^co^^^^ee^ The court then proceeds to arffue that if n,» ; • .• attempt b/ indWW" to cotrlrtt ' '"* """" ^ '^" trust fund without giving some of ttlT*^'"'"* ^' * with^^edutyof man^Sg^rn^htSt ht^d^ ^'"^^ inis IS a wholesome rule A^ sir^r^i;^^ + u • quired «u^ all a*ts of such trustees affecting the property 11808— VOL 1—06 M 40 r f J 624 77 FEDERAL EEPOBTEB, 4. I i III ill I ;-l M III i i ii Opinion of the Court in this instance, the executive administra- [4] tion of the business affairs of the association is by articles of agreement cominitted to a designated board of less number than the whole, It may be conceded that a judicial proceeding against the association may be maintained by summons against such board. " Eule 1 of the association, referred to in the bill of com- plaint, vests the government of the exchange in a board of 11 directoi^, composed of the president and vice president of the association, 7 members of which shall constitute a quorum for the transaction of business. Unquestionably, but for the provision clothing the number 7 with the functions of gov- ernment It would require the presence and co-operation of the whole 11 to transact any business. But this 7 must not only be pr^nt, assembled as a beard, to perform any official act {Hay-Press Co. v. Devol, 72 Fed. loc. cit. 721, 722), but they are clothed with the functions of acting for and repre- senting the board only for the transaction of business of the associatiOT, and not for any other purpose. It does not au- thorize affirmative action against the association by notice to seven of the directors. As to third persons moving against the association to bind the constituent members, notice must be given to aU. As said in People v. Batchelor, 22 N. Y. 134 : ♦hlVl '* ""* ""'^ ? ''■'''° •'''^"te of reason, but a general rule of law that no prnier or fnnctlon Intrusted to a body conflstlne o7n nnm^T; See, also, 1 Mor. Priv. Corp. (2d Ed.) §§ 479-532 In McGreary v. CUndler, 58 Me. 538, which was an action served on a portion of the directors of a vojuntary asssocia- tion, the court said : •' Tlie Macbiag Mining Company is a voluntary association of indl viduais. and not a corporation under the law" o?the "tate The defendants are members, and assume to act as Its rtwtnr« „„/ such to bind the association. If they havebound tl^^^HtZ a» they purport to have done, all Its members are bound bt nnrt n^hu members. In the present case It Is against three of the associate The question under consideration was passed upon in Wdtt y. ThornoB, 41 Fed. 620. The suit was by a member of an unincorporated association, whose management was intrusted GKEEB, MILLS A CO. V. STOLLER. Opinion of the Court. 625 iTent 'of *r; 7" ''"* "'.^'■^ ^"^^ '^^'"^ -'th misman- Sction S^iw"^ "\ u' "^i^tio"' ««d asked for In stLrai^rSer^-- --- - - -" and, indeed, essential to the prote^lon n/fhf ^""^^^ 5^*^ authorized, manasreinent of which the trust^rl .h ^^IF^?^ interests with ttS according to the averments of t^ bill thi^^thn" '' "^' ^"^"^*^ *^«^ and a breach of trust, because the absent t^?«.^l^ ^""^ unauthorized, heard before these averments are talpn n?. ^ ^^""^ ^^^ ''^^^t to be they cannot be assumed to be w as th/L -"^^ "^^^""^ ^'^^^^^ And those who have a right to ch«nrrir *k^ ^^^'^ ^^^* ^ decree until all tnnity to do so. A eonh-an i^^^^^^ ^^''^ ^^" S»^«° an opp^r- niinority of unfaithfuT tnisSa« l, ''^H^<^.P"t it in the power of a whose interests night , lot H^^^^ ^'"1> a'benefidar^ defeat the performance of le^itTma J 3 o^ other beneficiaries, to faithful trustees." legitimate and exigent official duties by The logic of the opinion clearly shows that it is iust a. \r. tees have done so, and to decr^ ZwSnf If ^^^^ ^^^ ^^^""^ t^is- pose to do is unauthoriz^ and^niawful^^'^^^^^^ P^" would not be bound by such a d^r^ it ,v.Yih ^ ^^t ''^^''^ ^^^^ embarrassing, and perhaps defea«n?' thli?^ T* ^ "^^^^ ^*thout cause it would deprive th^em olr"£>.*^Tatr^^^^ The court then proceeds to arffue that if ih^ ^^- ^- would prevent the absent trustees'S^JLiity S' U should not be granted without giving suchXnt nfw?' trawTtJrrvi:;re"s\itT^---^ withthedutyof man^ginf irrri^h'tStnt^d^r ^^^^ This IS a wholesome rule. As applied to business comon. f L:^r:ir^T '^^"'"^'^^ committeTToXM quireJS'a r,T'^ "f ^^yi^^lding decision, have «- quired that all a«ts of such trustees affecting the property n808-voL l-OC M 40 ^ 626 77 FEDERAL REPORTER, 5. 1 I Opinion of tlie Court. of the corporation, and aU acts of an administrative char- acter should be performed by them when assembled as a board so that their action should be a unit, and the result of deliberation with that mutual interdependence of jud..- ment which comes from consultation one with another Cammeyer y. Lutheran Churches, 2 Sandf. Ch. 208-2O9- 7^^ I' f.T'^^'J ^'''^- ^''' 2*^5 ff^y-Press Co. y. Devol, U *ed. 717; Htll y. Mining Co., 119 Mo. 9-24, 24 S W 203 If a suitor may proceed against less than the whole number of trustees to bmd the association, against how many and which of the number ? Shall he select them ? He might omit those from the summons whose wise counsel and staid judg- ment would be most valuable and reliant to the bodv in de- fendmg m court. While section 739, Rev. St US de- clares that, where there are several defendants in any suit at law or m equity, and any number of them are not in- habitants of nor found in the district where suit is brought, and do not voluntarily appear, the court may proceed to ad^ • judication, yet it is the recognized construction of this stat- ute that It has reference only to instances of mere formal ^r:.*^!" ^^^"^ ^^ cause may be determined, and justice satisfied without essentially affecting the interests of absent parties ; as where the interests of the parties absent are separable from those before the court But where persons have not only an interest in the controversy, but such an in-- terest that a final decree would affect it, or leave the contro- versy to be fought over in subdivisions, in order to conclude the rights and measure out the equities of all. they are indis- pensable parties to the exercise of jurisdiction. Shields v Barrow, 17 How. 130; Wall v. Thomas, supra. The defend-' ant Hanna, both as trustee and member of the association, has a direct personal interest in and important official relation to the management and [6] property of this association. There IS not only committed to his keeping, by the rules of the as- sociation the responsible duty of assisting and managing its affairs, but in the custody and management of the $12,000 of assets which the bill alleges to be now in the treasury of the association, as also in the management and disposition of the $1,000 fine assessed against the complainant, the col- lection or enforcement of which the bill seeks to enjoin «BER, MILLS & CO. V. STOLLER. 627 .. X Opinioa of the Court. And as a member of the board of business managers he is entitled to a voice in deciding whether ori»t the board shaU resist or accede to complainant's demand. To enable the complainant, therefore, to proceed to judgment against the segment of the managing board of trustees before the court. It must be held that the suit, in its legal effect, presents the instance of an a<:tion ex delicto by a party wrongfully in- jured in his property rights by the tortious acts of sevei-al persons, in which case the injured party may proceed jointly or seyeraUy against the tort feasors for satisfaction. Boyd y. Gill, 19 Fed. loc. cit 145. This brings us to a consideration of the character of the case presented on the face of the bUl, around which is cen- tered the real battle between the contending parties. What IS the real gravamen of the bill? Do the facts alleged con- stitutive^of the cause of action depend upon a contractual relation between the complainant and the association, or does It occupy the attitude of a stranger injured by the act of co-trespassers? If the cause of action is dependent upon a contract between the parties sustaining inter sese the relation of co-partners, the rule of equitable procedure seems to be well established that all the partners, or at least all the board of trustees, representing the association, must be made par- ties. The bill alleges the existence of a voluntary business association, and sets out or refers to in appropriate form the articles of association and its by-laws. It appears that the complamant became voluntarily a member thereof, and sub- scrited to the articles of agreement, and thereby became en- titled to share in and enjoy the privileges, rights, and bene- hts of the busmess organization. Reduced to its actual es- sence, the complaint is that, although the complainant, in becoming a member of the association, agreed that its board of managers, for any infraction of the established rules of business ethics, might, in its discretion, visit upon the offend- ing member a fine, to be enforced, if not paid, by suspension and expulsion, with a further disability of being refused by other members of the a^ssociation recognition in their dealing as live-stock commission men, so that, so far as they are con- cerned, he would be proscribed in the dealings of the associa- tion,— it then complains that, by reason of the visitation 628 Tl FEDERAL BEPOBTER, 6. Opinion of the Conrt. upon it of the penalty of these regulations, it is barred the prrnleges and benefits accn.ing to a n.emb;r of the .I^k^;! tion. It complains that it is practically prevented from col- kc ing Its commissions on live stock sold at the stock yards, whidi a« secured to it by the articles of association. ^ And among the grievances complained of it is alleged that a fine was imp<^ upon it by the board of directors for a violation order of sus- (7] pension was made and published; and that -nong Its regulations is one providing that no h^ 1 £ sold on the exchange unless the same have been " docked,"- Z; '"'/•^ ^"".*'' ""'•** ^^ *••" inspector of the associa ion d^gnated therefor as to the average weight of the hogs,- and that by reason of the refusal of the managing boa^ to have hogs consigned to it for sale « docked " it is unable to make sales thereof on the exchange; whereby, in connec- tion with other efforts of the board to visit upon it the pen- alty of disbarment, a practical « boycott '' is put in force agams^ it. The bill then alleges that so much of the by-lZ as aiithorizes the board to impose such fine, to suspend and expel the complainant, is contrary to sound public policy l!ri'%"ir*"""* **' ^""^^ •"«* ^^""^^ t« gi^« the other mem- bers of the association a monopoly of such business at the sUKk yards m question, and that this complainant, having notified the board of its withdrawal and its assent to such rules and regulations when it became a member, it is now entitled to have the same nullified, and its rights as a member recognized by the board. It thus is quite apparent that the whole predicate of the action has its root in the contract by which complainant became, and yet claims to be, entitled to *1!'?^ ^ ' T'^^'' *** *^'' association. In substantive effect It seeks to be restored to aU the rights, privileges, and benefits of a membership in the live-stock exchange, the de- privation of which is the sole gravamen of the complaint. The right, for instance, to have the hogs consigned to it for «.Ie on commission « docked," whereby it may be able to seU them on the exchange, is wholly dependent upon its oon- ^ww?u**!f^ *"...*^* ''*^''"*"- The™ is no ckim in the biU that the "docking" regulation is vicious, as conflicting with any public policy of this state or at common law .. . GBEEB, MILLS A CO. V. STOLLER. (^29 Opinion of the Court. tSs of 1r .*'!^'=«'"P'«in«nt complain that the general ar- ticles of the joint association to which it subscribed is con- trary to law, or that the limitations in the articles of ag,^- ment and by-laws fixing a minimum commission at whSi Zhrh-r f '" ^u ''"I^'^'^ *'PP^*^ t« this market, and « o^thf "^/^ "^r^"" ^"^ conducting here such business on the outside," are m restraint of trade, or tend to create a monopoly. So that the complainant occupies in thisTon trover^y the anomalous attitude of claiming the prtilTl and benefits attaching to and ensuing from^the aSti?^ the irttr^'"^ "'. '"'^"^ ''"'^ inoperative that portion of the articles designed to make the combination effLtive and obligatory on the associates. It may be conceded that in re- spect of a certain character of contracts thev mav be ffood in part and bad in part, so that the court may enforSll" which IS valid and reject that which is vicio^; l^^That ^ not this case The rights of the complainant being Lt tomed on its having become a member of the association by subscribing to its articles and its body of by-laws can it fellowship, while rejecting a part of the creed of the order* As said by Chief Justice Coleridge in SUamship Co. y Z'. Gregor, 21 Q. B. Div. 544: " It is a bargain which peris in the position of the defendants here have a riSo'^S So, waiving any question of whether or not certain pro- ^sions of the articles of agreement and by-laws are contrTy to public policy the fact remains that, had the complainant declined when it applied for admission into the association It would not have been admitted to membership. In such contingency it would hardly need the citation of authorS to command the assent of the learned counsel represTnS this complainant to the proposition that no court wouw"S a mandatory injunction compelling the admission of uchT^ £r, r'"'?'^'*'^' **»•• '''' P''^P'''>'« --«>n that it*s a Si^r ^^ "* ""*''*=*' '"'^ '* "^^"^ *"» Parties to make a contract; and courts ought never to undertake to make a • contract between two free, responsible persons. It do^ Sm 1 630 77 FEDERAL BEPORTEB, 8. Opinion of the Court. to me that this complainant must choose to be either in or out of this association. It cannot be half in and half out. If a member, and the contract of membership be what is some- times inaptly termed " illegal," but is simply one in contra- vention of a sound public policy, as said by Lord Justice Bowen in S^mship Go. v. McGregor, 23 Q. B. Div. 698, 619, it is one which the courts do " not prohibit the making of," but which they will sunply « not enforce." And the converse of the proposition must hold good,— that, if he be outside of such an association, he cannot appeal to a court of equity to reinstate him after expulsion; nor can he base any right of action on the alleged illegal character of part of the articles of association of the exchange or its by-laws (American Live- stock Commission Co. v. Chicago Live-Stock Exchange, 143 m. 210, 32 N. E. 274), so long as he insists upon the rights of ^ member. A member is entitled to the privileges and rights inhering in a membership so long only as he keeps his part of the contract, expressed in his subscribing to the articles and by-laws of the association. 1 Beach, Priv. Corp. §§ 19, 83, 84, 309; Boone, Corp. § 333 ; Supreme Lodge y.Wilson.WQ.Q. A. 264, 66 Fed. 788 ; Hammerstein v. Parsons, 38 Mo. App. 336, 337; Warren v. Exchange, 52 Mo. App. 157-167. It is a general rule of law, applicable to such voluntary associations, that a member must either submit to its rules or surrender his membership. White v. Brownell, 2 Daly, 329 337, 342, 350; M, 3 Abb. Prac. (N. S.) 318; Hyds v. Woods, 2 Sawy. 655-659, Fed. Cas. No. 6,975; Lafond v. Deems, 81 N. Y. 507-514 : Weston v. Ives, 97 N. Y. 222-228 ; Leiois v. WiUon, 121 N. Y. 284-287, 24 N. E. 474; Belton v. Hatch, 109 N. Y. 593, 17 N. E. 225; 24 Am. Law Rev. 538. The member has his option to retain his membership by comply- ing with the by-laws, or cease to be a member by refusing a compliance. Manufacturing Co, v. Hollis (Minn.) 55 N. W. im-ll%l',Rorke v. Board (CaJ.) 33 Pac. 881-883. But, without undertaking to enter upon any discussion as to the legality of this association, and its right to continue its organization and prosecute its business, and accepting the averments of the bill that the relation of the complainant to the association rests upon a mutual contract between the asso- ciates, my conclusion is [9] that this court cannot proceed i UNITED STATES V, ADDYSTON PIPE & STEEL CO. 631 Opinion of the Court. to judgment in this action for the want o* jurisdiction over all the necessary parties to a fuU and final determination. Therefore the motion to dissolve the injunction must be sus- tained. Decree accordingly. [712] UNITED STATES v. ADDYSTON PIPE & STEEL CO. ET AL." (Circuit Court, E. D. Tennessee, S. D. February 5, 1897.) [78 Fed., 712.] "" JnIyTl89^"L!"'r'r' CoMMKBCE.-The act of congress of July 2, 1890, commonly Icnown as the " Anti-Trust Act," does not and could not constitutionally, affect any. monopoly or ^t°art in restraint Of trade, unless it interferes directly ^d subsZaUy C.rf WH *" "•"""«■•<*• "^ «"""'«rce with foreign nations.. easurl rjr"".""'""''''"""' ""^«^ '" *•■« manufacture of east-iron pipe formed an association whereby they agreed not to compete with each other in regard to work done or pirfur^l^ m certain states and territories, and, to make effectual th^Xte of the association, agreed to charge a bonus upon all work don^ and pipe furnished within those states and territories, which b^Z was to be added to the real market price of the pipe s^d by ft^ companies, this combination was not a violation of the anti-tr^ act, as ,t affected interstate commerc* only incidentally SAME.-In the examination of such a contract, fraud and illegality are .»t to be presumed, but must be proved, as in all other ca!^ ^ " ,rJ;\. " '"" ""<=" «« «"«. m the name of the United States. jur.sdict.on depends alone upon the act; and the court is o™ cern^l with no case between private persons or «>rpo.^rons wh^^ Jurisdiction depends on other «>nditions, and in which pv^Z a common-law remedy might become available. P'-o««Ung James H. Bible, for complainant. Brovm <& Sjmrlock and W. E. Spears, for defendants. [713] Clark, District Jjidge. This suit is brought on behalf of and in the name of the Lnited Statesagamst six named corporations. The state of TT^^^yCi^^-^itC^^oTTpp^anr^l^^ Circuit (85 Fea, 271^: » Syllabus copyrighted, 1897, by West Publishing Co. 632 78 FEDERAL BEPOBTEB, 713. II H' Opinion of the Court, creation and the chief place of business of the several defend- ants are as follows: Addyston Pipe & Steel Company, Cin- cinnati, Oh,o. Deimis Long & Co., Louisville, Kv. How- ard-Harrison Iron Company, Bessemer, Ala. Anniston lipe & Foundrj' Company, Anniston, Ala. South Pitts- bijrg Pipe \\ orks^ South Pittsburg, Tenn. Chattanooga Pipe & Foundry Works, Chattanooga, Tenn. The petition charges that the defendants are practically the only manu- facturers of cast-iron pipe within the following states and territories: Alabama, Arizona, California, Colorado, North Dakota South Dakota, Florida, Georgia, Idaho, Kansas, Kentuclqr, Louisiana, Mississippi, Missouri, Montana, Ne- braska Indian Territory, North Carolina, South Carolina, ^ew Mexico, Minnesota. Michigan, Tennessee, Texas. Illinois, Wj^mi^g, Indiana, Ohio, Utah, Washington, Oregon, Iowa West Virginia, Nevada, Oklahoma, and Wisconsin. It i« further charged upon information that the defendants, in or- der to monopolize the trade in cast-iron pipe in the above- named states and territories, entered into a contract or associa- tion known a.s the Associated Pipe Works ; that the purpose of the association was to destroy all competition within said ter- ritory, and to force the public to pay unreasonable prices for the cast iron pipe manufactured and sold by said com- panies; that for such purposes each company .selected a representative; and that these representatives con.stituted an executive committee. It is charged that the defendants, bv the terms of said association, agreed not to compete with each other in regard to work done or pipe furnished in the states and territories above named, and, to make effectual the objects of the association, a bonus was agreed to be charged upon all work done and pipe furnished within said territory, and the petitioner charges that this bonus was put upon the real market price of the pipe sold by these com- panies, and, to that extent, increased the price to the pur- chasing public; that the amount of this bonus ranged from Sa to $9 per ton; that the purpose of the association was thus to force up the price of cast-iron pipe to an exorbitant and unreasonable extent. It does appear from the bill, as well as the answer and the proof, that upon what may be called " stock goods," regularly sold, there is a fixed bonus, and that tmiTED STATES V. ADDYSTON PIPE & STEEL CO. 683 Opinion of tlie Court upon goods supplied by special contract the bonus is deter- mined as follows: When bids are advertised for by any municipal corporation, water company, or gas companv, the executive committee determines the price at which the bid IS to be put in by some company in the association, and the question to which company this bid shall go is settled by the highest bonus which any one of the companies, as among themselves, will agree to pay or bid for the order. When the amount is thus settled the company to whom the right to bid upon the work is assigned sends in its estimate or bid to the city or company desiring pipe, and the amount thus bid IS " protected " by bids from such of the other mem- bers of the association as are invited to bid, and by the bid- ding in all instances being slightly above the one put in by the company to whom the contract is to go. There are within the 36 states and territories what are called " reserved cities," by which it is [714] agreed that particular members of the association shall have the work at particular cities imd on this they pay the regular bonus, just as on stock goods when sold otherwise than by special contract obtained by bidding. It appears, too, that by far the larger part of the work done with goods furnished by these companies is under special contract with municipal corporations and gas and water companies, as above stated. Practically, all the profitable business is thus done. The general pubfic, so far as affected by the business at all, is affected mainly throu«^h municipal corporations. All of the states of the United States outside of the states and territories above named are called " free territory," and the states named are dis- tinguished as "pay territory." Settlements are made at stated times of the bonus account debited against each com- pany, where these largely offset each other, so that small sums are in fact paid by any company in balancing accounts. Ihe aggregate annual manufacturing capacity of the 6 companies belonging to the association is 220,000 tons with a daily capacity or output of about 650 tons; there are 9 other companies or corporations engaged in the manufacture and sale of cast-iron pipe within the pay territory, with an aggre- gate daily capacity of about 835 tons, though most of thase are small concerns; and there are 10 companies or corpora- • 634 78 FEDEBAL KEPORTER, 114. ( 1 1 I' Opinion of the Court • tions engaged in the same business located within the free territory, as above explained, with a daily capacity or output of, say, 1,560 tons. It appears, also, that members of the Associated Pipe Works, while they do not compete with each other, are subjected to competition by the other companies and corporations, both within and without the pay territory though just to what extent and with what effect this compe-' tition IS carried on does not clearly appear. It does appear, however, sufficiently, that the companies within the associa- tion have so far not been able to raise or maintain prices above what IS reasonable, compared with the prices at which similar goods and similar work may be obteined from the companies outside of the association. It now appears that all corpora- tions, with one or two unimportent exceptions, which have let contracts to the members of this association, are satisfied with the prices, and make affidavit to the fact that they are reason- able, and that the prices furnished are, in the main, consid- erably below the estimates made by the expert engineers of such companies prior to advertising for the bids. The proof shows, too, that the defendant companies have, at least in cer- tain instances, made quotations on goods to be delivered in the free territory below corresponding prices within the pay territory. It is said by the defendants that this is explained by reason of the difference in the cost of goods manufactured under contracts obteined by bidding, and stock goods which are sold on general orders, and consisting of goods which have been rejected as not coming up to the specifications, and goods manufactured during the winter season in order to keep men and machinery from becoming idle, during which period there is practically no demand by companies which purchase goods on special orders, and contract by bids. [7151 I think it does sufficiently appear that the average prices obtained by this association since its formation are above what was obteined before, though, as above steted, the proof IS not sufficient to show that the ruling prices are now above what is reasonable, as determined in the markete and by competition. The defendants, in their answer, denv the purpose attributed te the association by the plaintiff's peti- tion. On the contrary, they say and set up that prior to the association they were engaged in reckless and ruinous compe- t UNITED STATES V, ADDYSTON PIPE & STEEL CO. 635 Opinion of the Court tition among themselves, as a result of which their business was not prosperous, and under which condition of things it was certein that some or all of them would fail and leave the entire field to such as might be able to survive. It is set up that what is called the " bonus " does not affect the price to the purchaser at all, but that the association determines in the first place what the market price should be, having regard also to the competition to which it is likely to be subjected by other companies not in the association, and that the price is not at any time unreasonable, and that the bonus is merely a mode of determining as between themselves, to an extent, who shall secure the work, but chiefly to make it certein that each company does its fair share of the business, by making the bonus burdensome to such companies as might undertake to do more than their reasonable share of the business within the territory named. It is further said that under the asso- ciation the business has been fairly divided between the com- panies, and that they have been enabled to keep all of the plants in operation, their operatives at work, and the machin- ery from becoming idle. I think it could be safely stated that in some instances prices have been above what was probably fair or reasonable, but the proof fails to show that the average prices have been so. The leading witness for the government was for some time a stenographer in the service of the defendant CJhattanooga Foundry & Pipe Works, and in that position did the work of the association, became familiar with all of the deteils by which the business was conducted, and, after giving up his position, made known to the government's law officer all the facts of the case, and has persistently and industriously corresponded with persons who had dealings with members of the association, and has done all in his power to instigate suits by purchasers from these companies against the associated companies, and has offered to become a witness in their behalf in such suits; always making the condition that he was to be liberally compen- sated, exacting generally a very large per cent, of what might be recovered. A complete exposure of all the business de- tails of these companies has been thus made. So far, he has not been able to cause any suit to be institutedr But, upon the facts laid before him, the district attorney, under the direc- 636 T8 PEDEBAL KEPOBTER, 716. Opinion af the Ctonrt iJ^f ?'* '' '^'^ "P*>° **>« «ct of July 2 1800 « f„ (26 Sfat 2^,T647 sLn i^ ""c"^ *^" "Anti-Trust Act " provisions of the f^ L S ^^^ ®*- ^^ ^''>- ^"ch of the ation are as f o W *' "'*'*' "^"^ »»«^«'- ««"«ide- ?eTeraI states, or with forSJ^natlol L^j'\"'" i^'nn'erce among the ETery person who shal) malS^anv „^A Is hereby declared to be lllesal Sec. 2. Every person who shall mXn^.!?ii*^^ ^' ^ misdemeanor, or combine to inspire wi?h ^y oTher^'.^n''" *"^°^P* *^ monopolize me any part of the trade or ^mmil ^^^^ or persons, to monono- l^-ed w.th Jur.sd.ot«'p^'JSt1n«''r ^^Z'.YZ has taken a w We «Z," JS u '""'"''''i **" *'»'^ '»««""' that the enti« le hi Cn o^.tf Tt*^ ^^ '''^ •»*«'« as could be done Tnon f .^"^ *. '^ developed as much Therecord,soferarirupTS**iXe 'tv"' '^"^^^• affidavits, and exhibits the^to A tm^,?,' P**'*'°"' »»«^«-. in the answer of the defe^a^fa tn^TT/' "«=*»-P«™t«d two grounds- (U Th«f Tk ' ^^ ** '^*^*"* ^^^ts upon the p^Sns of L^ / 5' ««soc,ation is not one subject to thisLsr/h^and ; ns "* ^"'**'-" "•^'^'^ "'-« poses and mode of dolL K - ^ 1'*^"*'*'"' '" '*« P'»r- ^Poly, aTd talTiiSrof 't^d "''' r "*"^ " be unlawful at the com^o^It u -f,*^!' '""'' »" ^'>"I<' solution of the first 0^?^ ., '"'" ^''^^'^^ "P«n the will become n^^'irlr """'f."' *^ "''^*''«'- «»• »«* ^t whether this irr^oSatfr'^V''' "T"**' "^^ 'l"«««o" visions of thel' of ^^ "^ as subjecte it to the pro- act, like wtri:*^'o:;rThrr-'^rc^r*^- h - new and experimental legislationTl^^^e^dt f UNITED STATES V. ADDYSTON PIPE & STEEL CO. 637 » Opinion of the Court, cussion which attended the passage of the act by congress, as shown by the records, makes it plain that the ablest and most thoughtful jurists of that body experienped much of the same difficulty which has since been felt by the courts in the attempt to enforce the act. It was recognized that congress was restricted in anything that it might do upon the particular subjects named in the act to a very narrow field; that the constitutional validity of the legislation was doubtful as a whole. Up to the date of the enactment of the interstate commerce law, and of the act now under consider- ation, the interstate commerce clause of the constitution, under which le^slation of this character is justified, has been considered by the courts almost entirely with relktion to state legisation, and its constitutional validity. Never- theless It will be profitable to refer briefly to the doctrine announced m some of these cases before making anv more particular reference to cases in which this act has be^n con- sidered. It has, of course, been recognized from the begin- legislate upon domestic commerce, or commerce wholly within a state, than it was within the power of the legisla- ture of a state to legislate upon the subject of intestate commerce or tnide. In Nathan v. Louisiana, 8 How. 73, a tax was [717] imposed on every money or exchange broker, and this legislation was objected to upon the ground that the sole business of the defendant in that case was the buying and selling of foreign biUs of exchange, which were inS ments of commeree, and the act was repugnant to the consti^ tutional power of congress to regulate commerce with foreign nations and among the several states. It was admitted bv the court tha foreign bills of exchange were instruments of commerce, but the court also said, in effect, that the products • of agriculture or manufacture were in like mamier instru- on^.t:^r- ^•'^"^-M<'^-.^^ng the opinion comSerl^rS"^ '^n^Sr^.h".\l'"PP'y*°8 »» Ihstrnment of Whose l^^r^oJ^ZZ^^^V^^^rj^^-^^'^-^' '^'"'»« The court further pointed out that domestic bills or prom- issory notes were as necessary to the commerce of a state as inBiiwiiiiiii !} » it 9 f . i 538 78 FEDERAL REPOBTER, 717. Opinion of the Court. foreign bills were to the commerce of the Union. In the State Freight Taw Cases, 15 Wall. 272, the court observed : "The transportation of artlclefl of trade from one state to another was the prominent idea in the minds of the framers of the constitu- tion, when to consress was committed the power to regulate commerce among the several states. A power to prevent embarrassing restric- tions by any state was the thing desired." In Railroad Co, v. Richmond, 19 Wall. 584, a contract had been entered into between the Dubuque & Sioux City Rail- way Company and the Dubuque Elevator Company, both created corporations by the laws of Iowa, by the terms of which contract, among other things, the elevator company was to erect an elevator on land leased from the railroad company, to be situated at Dubuque, for the purpose of receiving, storing, delivering, and handling all grain that should be received by the cars of the railroad company, not otherwise consigned, and to receive and discharge at Du- buque, for the company, all " through grain " by which was meant grain transported, by the terms of shipment, through that place to points beyond, at a certain stated price per bushel. The railroad company stipulated on its part that it would not erect a similar building for receiving, storing, or delivering grain at Dubuque, and would not lease to any others the right to erect any such building; that the elevator company should have the exclusive right to handle all through grain at Dubuque at the stipulated price per bushel. The railroad company having leased its road and property to the Illinois Central Railroad Company, the latter com- pany disregarded the contract ; and suit was brought in the United States court to enforce the same on behalf of the elevator company, and the defense was that the contract was repugnant to the constitution, as violating the interstate commerce clause. This defense was overruled, and decree entered in favor of the elevator company, and the case was taken to the supreme court of the United States. The ruling of the lower court was affirmed, and the supreme court, in doing so, enunciated again the controlling rule upon this subject, by saying: "The power to regulate commerce among the several states was vest^ in congress in order to secure equality and freedom in com- mercial intercourse against dlBcrimlnatlng state legislation It was t ,.. i UNITED STATES V. ADDYSTOK PIPE * STEEL CO. Opinion of the Court 639 provisions designed for theCrs;cuS?ofi1- Tfr* passengers on board vessels prop^STn Ln. '' °* ^^^ ^team, and the contention waS as ann^H l' "'' '" P"""' ^^ the act was invalid, as interferW ikSl . "'""' '"'"'"' tion of comnier<><. v»«t.^ ^ °* exclusive regula- discussing Z nit aSdtr ""'"^'^- ^^ J"^««« ^ield, the following iLTl^- "'^™^ '« P-™ d-i-ons, used' <»uA"a?^Trb;SL,l'tt e-SI^XtTr?"^ "-'^'0- <" this lation, place burdens upon commt,^ *H.k' P" ^^"'^ ««nnot. by leei^ the several states. Thrdecl^C, '^ ^"''Ik ?"■*'«" ""tions, or aSe ness Is not questioned ^.f ^ ^° '" *">«* extent, and their aminH Which they were Serel t "■!?", ""^^^minatioi of the ca^°f„ Judged invalid lmpot^^a^i,,"„^^' ^/?"f """* "e leglslatfoTad" merce or exacted a license fT?nl^ '"5™'°«"* <"• «»bject of com- pureults, or created an iSini^t J^?hf ?"'^* ^^''Saged in eommerc"l waters, or prescribed eoumtim^TuV^ J"^ navigation of some pub ic particular articles, as ^tw^n narH^^'*''"*? '^"'' «'I'i<^I> comme,^ in conducted. In all the ca^whS ^"/■'T P'"«S' ^as required to hS ■•ectly upon .H)n.mer«%Xr bv waf nt"'"" «>nden»ed oSeS^ di upon Its pursuit in part IcutL chrnLi *"^ "P"" '*« busInU, I^^ni on. Thus, in the p£s^Z Lt^>?u' «^ conditions for carry Sru and Massachusetts exartl^ a tax fr^n fT- ^' ""« '""^^ of New York te5l"ero'h1o-1ftr^Sf^^^^^^ X";ti»'-,fetr^^^^^^^^^^^^ for carrying on the coasting tSdP 1^ f?^' ^^ *^"« ^'"Po^^ condit o^ t on to those prescrib*^ hH; *" *^® ^^^ers of the statP in n^^i legislation of^aXte^s^i^'nS 'Vl' *^^ -ther'^ease Vhere 91 U S It^^Th'^T T^"^ ^'«*^* 12 Wall 1^ L^Tir^^ ^2 Wheat. ^7^. ^' ^^^' the leg slation erPflfpri {« +1, ' ^^^ Welton v. Missouri fered with its freedom." ™erce, or in some way directly inter- And in the further proffres^ nf fi. observed: Progress of the opinion the court ri 640 78 FEDEBAL BEPORTEB, 718. Opinion of the Ck>nrt I relating to tli« hwilth, life, and safety of their citizens, though the legis- lation might indirectly affect the commerce of the ^unti^ I^glfla- tlon m a great variety of ways, may affect commerce and pers^s en- ff^^e ^istTtufio^^^^ *" regulation of it. within th^ mining It will be readily seen that the cases recognize the distinc- tion between the subjects of commerce and commerce itself, as well as between the instruments and aids to such commerce, and the actual business of commerce. In regard to state legis- lation, it has been declared from the beginning that, to render such legislation subject to constitutional objection under the conunerce clause, the effect of the legislation upon interstate commerce must be direct, and not incidental or indirect. This general statement of the law so often repeated has been illustrated by the varying facts of many cases, but it would extend this opinion beyond reasonable limits to now refer to [719] these. It has often been observed that the line of demarkation between state and federal jurisdiction and regu- lation is a delicate one, and at times grows dim and shadowy. In considering a question of this delicate nature, proper and practical distinctions become extremely important. A par- ticular business must be distinguished from the mere subjects of the business, and from mere incidents to or instruments by which the business is carried on. It is hardly conceivable that any large industrial or manufacturing establishment could be carried on without shipping products from one state to jfnother, and such would certainly be the course of busi- ness contemplated. Nevertheless the business of such an establishment would be related to interstate commerce only mcidentally and indirectly. Commerce would not be the main business, nor within the main purpose of the ordinary manufacturing establishment. Interstate commerce would be altogether an incident. There is no direct relation between the two. It is probably true that every wholesale establish- ment within the limits of the larger cities is engaged in such mode of business as that it is known that the business can be conducted only by the method of interstate commerce in part. Such commerce is, however, not directly affected, and least of all impeded or restricted. If every private enterprise which is carried on in part or chiefly by interstate shipments. UNITED STATES V, ADDYSTON PIPE & STEEL CO. 641 Opinion of the Court, or by a modeof business which makes this necessary, is to be regarded as thereby so related to interstate comnSd as to come withm the regulating power of congress, it 1 obvLl that this power could at once be extendi to almost eC form of busmess m the country which is conducted onln^ t this wlu T"'r ^''- «« «»--l - interpretatl as this would obviously, m a large sense, obliterate the lines Mween federal and state jurisdiction/and, as an act o1 congress ,s paramount in authority, would s rike down thf autonomy of the states. The ^LiJl^^^^^Z ^ it::;grats:w.^~"' ^^« ^- «• ^^«' ^ ^up. a. lo, i. ufacture and commer^ Manufirtni^l^ .*"'^' i*""" *""* '**«'«en wan- ing of raw materials^nto a Se^f f^r'?™""""'-*''* '»«'"<«'■ of commerce are different The hntint 1„T' m' "^- ''"« funotlona tatlon Incidental thereto constth,?/^!"' *®"'°^- ""'I t""" transpor- at least such transS«or int ..Th^rtrv"*?^ *"« regulation of regulation of all such manufa rtn^^s aie ln?i*j!^*f"S '°^'"<'«« '"e of commercial transactions InThe^Cre ft ,^*r^ -.,'* ^^^ ^''^Jert >t would also Include all productive l^dn^tifi^VJI'l'''''^ *» ^^'* *>«•* same thing. The result would hi ti..,*"^ *""* contemplate the to the exclusion of the stages with thl *^"*™'! "'•'""' "^ '""ested, manufactures, out aZ. agrl^l^,^ ^lUflf^ *« --^'"te. "ot on1& mestic fisheries, minlne— in «h«« 1' ""rtjcuiture, stock-raising, do- For is there one o? "hem that^'nT n^/™"** "* '«^''° "««»«try. clearly, an Interstate or forei™ rnaXt" i^L'*'"?'!^ """•« »•• '«» of the Northwest, or the cotti? ul«^ttl\f^J"'V^ ''^^^ g~wer and harvest his crop wItT an ev^nn M*"*.^""*"' •"""♦• cn'tivate. York, and Chicago? The powerXfn^ ^^JS,'\'^ ^* Liverpool, New to the states, It would fol^wL„n^il 1*^*1.'° <»"K'*ss and denied would devolve on congressT. .^o?,?.* *^'.*'"'i* '■^^"'t »at the duty form, and vital rntSeste!!i«eroste' which In' f^ """"^'^^ ""'t^ .must be local in all the details of n.»T,.L^.;J° i",*'"" "*»*""■«• are and demands of such a suplrvtsfon wonM ^^f**^^*".' «'«°«g<'ment. The generally applicable "KghoutTi U^t^'^W^n"!"'^'"."" '«8'«'8«o» statutes only locally appllMble and nt?lrw i^ ^^: .""* " ''»""™ <>' movement towards the e^^hli=h!lIL„<.^^.'""*°^'**ent. Any [7201 vast country, with its mC SST* °/ ^'^ «' Production in thU <»nld only S'at the s^criK th™ iar -T**". '""' opportunities, of the localities In it. If not of everv m i nJ fh /""^^i^ "^ « '""^ Part any movement towards the lo«fr,^taiiL . ^*?- °" **•« "♦''cr baud, required by such InterpretaH^n wonid1^%"^ Incongruous legislation departure from the declar«l obirct nf ^ *?"' *^^ ^'^^^ P»ssiWe this alone. Even In the exIrcNe of thf .1^ *''*'"'^ '° "»"«»«<'•»■ Nor would be confined to the %^Tatfon n^'^S"' ^"t™''*^ '"r, congress dustry, however numerous ^St to tho^ • I '*''*"'° "ranches of In- branch where the pro=rteSpl^^ "ntStJ^rkr ^ 11808— VOL 1—06 M 41 ■Miiiiiiap 642 78 FBDERAL BEPOBTEB, 720. Opinion of tlie Court. 7 I?ni?J^^ ''^*'"'^ be almost Infinite, as we hQire seen; but still there would always remain tlie possibility, and often it would be the case ^at the producer contemplated a domestic market. In that case the wiTou'SlI TonfJ r'* *^ "f Tlr^ »^^' ^^^ «*«^«' «»^ the intermina- «IL K . ^^^^^ }^ presented, that whether the one power or the other should exercise the authority in question would b^ determln^ JwettenL^nr'fhr intelligible rule, but by the secret and Tan^ fi^fol? ^^'^ ""^ the pi-oducer in each and every act of production. A l^fiZ T"^ J]!ir"^r*°^ *** ^^^ «^«*^ governments, ind more pro^ IS?W*?iL-T .^^l^^^''^"* t^l««''e'-«> government and the states, and less likely to have been what the framers of the constifntinn Intended, it would be difficult to imagine." constitution The distinction before refen-ed to between commerce and the subjects of commerce, and between the direct and indi- rect effect of the business, or mode of doing business, upon interstate commerce, is here clearly recognized and declared, as was also done in U. S, v. E\ C\ Knight Co., 156 U. S. 1, 15 Sup. Ct. 249, in which the opinion in Kidd v. Pearam ia expressly referred to, and the ruling reaffirmed. It was easy to anticipate that, when called upon to enforce the provisions of the anti-trust act, the interpretetion would be in harmony with the construction of the commerce clause which had been unifowily given in considering state enactments alleged to infringe, or supposed to be an infringement upon, thi's pro- vision of the constitution. In re Greene^ 52 Fed. 104-119, is the first case in which the act in question was extensively treated. The question arose upon a petition for a writ of habeas corpus. The defendants and others, under the form of what was called the Distilling & Cattle-Feeding Com- pany, a corporation organized under the laws of Illinois, had obtained possession and authority over such a number of distilleries that the company controlled the manufacture and sale of 75 per cent, of all distillery products in the United States, and the defendants had fixed the price at which the purchasers should and did sell the products of the distil- leries. Sales were made to agencies established in Massa- chusetts and other places, and one of the questions con- sidered was whether this was a combination subject to the provisions of the anti-tnist act, under which the defendant had been indicted, and Judge Jackson (afterwards Mr. Jus- tice Jackson) ruled that it was not. Discussing the point of UNITED STATES V, ADDYSTON PIPE & STEEL CO. 64S Opinion of the Court. whether the whisky trust was subject to the act, the eminent judge observed : Jl^} is certain that congress could not, and did not by this enact- ^rtvnV/^r^* *^ prescribe limits to the acquisition, either by t?e ?hi «nhw^T-''y ^^f% corporation, of property which might become the subject of interstate commerce, or declare that, when the accu maf2n'rj''H^°*^*'^K''^ property by legitimate means and lawful . methods reached such magnitude or proportions as enabled the owner ILZl^^ 1^ control the traffic therein, or any part thereo? among the states, a crimmal offense was committed by such owner or own- ers. All persons, individually or in corporate organizations carrvine on business avocations and enterprises involving the purchase Ta?^^ or exchange of articles, or the production and [721] manufachii^of ' commodities which form the subjects of commerU will, in a p^lar ^^^' monopolize both state and interstate traffic in such art cles or commodities just in proportion as the owner's business is increl^^ enlarged, and developed. But the magnitude of a party's busing production, or manufacture, with the incidental and indirect noweri thereby acquired and with the purpose of regulating prices and con- ^m"^? interstate traffic in the articles or commodities forming the subject of such business, production, or manufacture, is not the mo- Fed^lis*^^ attempt to monopolize, which the statute condemns." 52 And, speaking somewhat more specifically, it was further said : /JllJ"'' certainly not a 'monopoly,' in the legal sense of the term, for the jK-cused or the distilling and cattle-feeding companv to own seventy distilleries and the products thereof, whether ZchprX^ aniounted to the whole or a large part of what was prodS to the country Their ownership and control of such product as subjects of trade and commerce, is not what the statute condemns ^t the monopoly or attempt to monopolize the interXte trad^ or commerce therein. In this acquisition and operation of the ^vlnty distilleries, which enabled the accused or said distilling andlattl^ 0^11'!?^,^,^''°*^ ^"^ manufacture and control the sale of 75 per cent ?s it iiwi^^Th n^"''*" ^^ *^^ ^""^'•y' *t ^««« not apiJTar, nor IL , ^^^^^' ^^""^ ^^^ I»ersons from whom said distilleries were acquired were placed under any restraint, by contract or other^i^ nil''^ IT^K*^ ^^^"^ ^"^"^ continuing or r^ngaging in suchTuS ?o1o s^ ThfJffn'S^-^.' who chose to engage thirein were at liberty to do so. The effort to control the production and manufacture of distillery products by the enlargement and extension of buSneS was not an attempt to monopolize trade and commer^ in sudh RTi^'^nn^ 7*?^K*^^ '"^^^^^^ «^ t^« «t^tnte. and may tS^reforlte left out of further consideration." "^leiure oe Much of the discussion in the opinion is devoted to show- ing that the trust arrangement there considered was neither a monopoly nor a contract in restraint of trade, according to the common-law sense, which it was held, in that and subsequent cases, must be allowed to settle the question of what is a monopoly or contract in restraint of trade, in the 614 78 FEDERAL REPORTER, 721. Opiuiou of the CJourt. absence of any definition in the act of congress. In the pre- vious case of In re Terrell, 51 Fed. 215, Judge Lacombe liad declared that: "It is not the actual restraint of trade (if such be restraint of trade) that is made illegal by the statute, but the making of a con- tract in restraint of trade.— fjf a contract which restrains, or is intended to restrain, trade." The statute came before the supreme court of the United States for the first time in U. S. v. E. C, Knight Co., 156 U. S. 1, 15 Sup. Ct. 249. The American Sugar-Refining Company, a corporation existing under the laws of the state of New Jersey, being in control of a large majority of the manufactories of refined sugar in the United States, ac- quired, through the purchase of stock, four other refineries in Philadelphia, and thus obtained such disposition over these refineries throughout the United States as gave it a practical monopoly of the business, and it was held that the result of the transaction was the creation of a monopoly in the manufacture and sale of a necessary of life; but it was nevertheless distinctly held that the monopoly was not one which could be suppressed under the provisions of the act of congress now in question, and that the business of sugar refining in Pennsylvania bore no direct relation to commerce between the states, nor with foreign nations. And the doctrine upon this subject, and the distinctions before adverted to, which pervade all of the previous cases, are again declared in the opinion with great clearness. Mr. Chief Justice Fuller, speaking for the court, said: [m] "The argument is that the power to control the manufacture of refined sugar is a mon(i[Kjly over a neeessai-y of life, to the en- joyment of which by a large part of the population of the United States mterstate commerce is indispensable, and that, therefore the general government, in the exercise of the power to regulate com- naerce, may repress such monopoly directly, and set aside the in- struments which have created it. But this argument cannot be confined to necessaries of life merely, and must include all articles of general consumption. Doubtless the power to control the manu- facture of a given thing involves, in a certain sense, the control of its disposition, bqt this is a secondary, and not the primary sense- and, although the exercise of that power mav result in bringing the operation of commerce into play, it does* not control it, and affects it only incidentally and indirectly. CJommerce succeeds to manufacture, and is not a part of it. The power to regulate com- merce is the power to prescribe the rule by which commerce shall ir •>« UNITED STATES V. ADDYSTON PIPE & STEEL CO. 645 Opinion of the Court. l)e governed, 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 that comes within the rules by which commerce is gov- erned, or whenever the transaction is itself a monopoly of com- merce. It IS vital that the independence of the commercial power and of the police power, and the delimitation between them, how- ever sometimes perplexing, should always be recognized and ob- served, for, while the one furnishes the strongest bond or union, the other is essential to the preservation of the autonomy of the states, as required by our dual form of government ; and acknowledged evils, however grave and urgent they may appear to be, had better be borne, than the risk be 'run, in the effort to suppress them of more serious consequences, by resorts to exi)edients of even doubtful constitutionally. It will be perceived how far-reaching the propo- sition IS that the power of dealing with a monopoly directly may be exei-cised by the general government whenever interstate or international commerce may be ultimately affected.*' After r^erring with approval to Gibhom v. Ogden, 9 Wheat. 1, 210, Brown v. Mai-yland, and other previous cases, the opinion was concluded by saying: .o!l?* ^^^ I'* ^^^ "^^^ ^^ well-settled principles that the act of July 2. 1890, was framed. Congress did not attempt therebv to assert the power to deal with monopoly direct, as such; or to limit and restrict the rights of corporations created by the states, or the citizens of the states, m the acquisition, control, or disposition of property • or to regulate or prescribe the price or prices at which such property, or the products thereof, should be sold ; or to make criminal thracts of persons in the acquisition and control of property which the states of tlieir residence or creation sanctioned and permitted. Aside from the provisions applicable where congress might exercise municipal power, what the law struck at was combinations, contracts, and con- spiracies to monopolize trade and commerce among the several states. ^IioT , f ^ nations; but the contracts and acts of the defendant o«^V^ exclusively to the acquisition of the Philadelphia refineries, and the business ot sugar refining in Pennsylvania, and bore no direct relation to commerce between the states or with foreign nations. The subject-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 restraining violations of the act in respect to contractaL t^a'Se of cZmerct"'''''^'*^' in restraint of interstate or intematioiS It is a doctrine expressly stated and clearly implied in these cases that the act of congress does not, and could not constitutionally, deal directly with a monopoly or a contract in restraint of trade, as such, according to the common-law definition of these terms; and, as has been seen, the act of congress gives no definition of its own. To do so would be f I 646 78 FEDKRAIi BEPOBTER, IM. Opinion of tbe Court clearly to trench upon the exclusive jurisdiction of the states. Federal authority exists only when a monopoly or a contract in restraint of trade assumes such form or has such effect as to go beyond any common-law conception of these terms, and interferes di- [723] rectly and substantially with interstate commerce or commerce with foreign nations; and this it must do directly, and not incidentally. Now, I am unable to perceive, in the light of these cases, that the act of con- gress can be regarded as applicable to the association under consideration. It cannot be suggested, and has not been, that this association had in contemplation as one of its purposes the subject of interstate commerce, any more than any ordi- nary manufacturing establishment would have, where the products of such manufactory must find a market in other states as well as in domestic markets. It seems to me evident that private gain was the object of the association, just as was observed in regard to the sugar trust in V, S, v. E, C. Knight Co, Nor does the mode in which the association conducts its business have any direct relation to interstate commerce, so far as I can see. The sugar trust was con- fessedly a monopoly, in the common-law sense, and in a com- modity of prime necessity. And the extent to which inter- state commerce would be used in carrying on its busine>ss would be in magnitude out of all proportion to a similar use made by the association in question. The learned district attorney has leveled most of his criti- cism at the bonus feature of the association, but it has not been pointed out, and, I think, cannot be, how the manner of using the bonus operates in restraint of interstate* commerce. The object of the bonus and of the association really is not to prevent all members of the association from furnishing and shipping their manufactured products, but to determine among themselves which one of them shall do so. and it is really contemplated that some one will do so. There is cer- tainly no restraint in this, as the supply in such case is regu- lated by the demand, so far as shipment is concerned. It has not been argued that the fact that certain cities are reserved to a particular company would bring the association within the provisions of the act. It is true that generally one of the rf .. ■ I UKITBD STATES V. ADDYSTON PIPjs * STEEI. CO. 647 Opinion of tlie Conrt. reserved cities is that in which the company has its chief place of business. For example, the Chattanooga Foundry & Pipe Works is allowed, under the arrangement, to supply the cities of Chattanooga and New Orleans. If it be argued that this prevents companies in other states from shipping goods to Chattanooga, it would be merely to follow a theory having no practical bearing on the cafe, because, in the ab- sence of an association, the entire freight charges being in favor of the local company, and the disposition to patronize a local concern being in its favor, it would easily furnish tbe supplies. It remains to remark, as should have been done before, that upon the bill and answer, where the contract of the associa- tion IS admitted in the answer, as is virtually done here, but the allegations tending to show its sinister purpose, tenden- cies, and effects, contained in the bill, are denied bv the answer, and averments are made in the answer tendi'ng to show a just and equitable purpose and effect, the averments m such answer upon this application stand admitted, and the contract must be presumed to have been made for the purposes honestly as stated in the answer, unless the pro- visions of the agreement and the mode of doing business clearly show the contrary. In examination of such a con- tract fraud and illegality are not to be presumed, but 17-44J must be proved as in all other cases. U. S v Tram Missouri Freight Ass\ 7 C. C. A. 15, 58 Fed. 58. It may be further observed, to prevent misconstruction, that in a suit such as this, in the name of the United States, jurisdiction depends alone upon the act giving jurisdiction to enforce its provisions, and the court is concerned with no case between private persons or corporations, where jurisdiction depends on other conditions, and in which proceeding a common-law remedy might become available. Having reached the con- clusion that the defendant association is not subject to the provisions of the act of congress, according to the ruling in Re Greene and in U. S. v. E. C. Knight Co., I do not feel "^ JIi"?m1 *" f^'P*^ "*' ^^^ ''**'*'• '^''"«« n*"*!* Jn this ca»., and the bill is therefore dismissed. 'i '^ m vmrm states reports, 290. Syllabug. cm, ^ITED STATES .. TRANS-MISSOUEI FREIGHT ASSOCIATION.' APHEA. ™oM XHK CIBCmx CX>Xn« or APTKAI^ ^H THE EIGHTH cmcuiT. No. «7. Argned December 8 o isoa *^ .^ */wsinoer ». 9, 1896.— Decided March 22, 1897. ciee u. a, 29a.] The dissolution of the fteljrht aR«v»inf i^« ^ merits ; as. where parties have TtelTlto^l'""^, '"^ '"^ "" '«« and are acting under It. and ILr" fJl ndl / ^''"' "»'«*•"«■'* and the Jnrlgdiction of the ^uTlLJ^ i^fTl "** """'^ "* ""'• to restrain such or like a,^l ^ '^ "^ *"* «""« «' » bill trial has been had a.^aJdl"."!'' " """" «er«>ment, and a of this court is «,t^t{!^T;"' TT- *' "•"*""*« J»risdlctlon tlon. effected snCuent f to th! 7 ' "'^^o'^Ion of the as^^rfa- ^.e the statutor^aruTtir aTa'^lt^rrT^^JT! '^ veray. yet the fact that It is so nA«i L* *^ '° *^°*''*>' N. sl^wn to the satlsfa'ln o^ rrt."""^' '" '"^ "'"• "« -' foreign ^r^^S Z^ZZ t^^l':^ ^ZTZ'''^ Z ""- protect trade and commerce aeniZtZZ ^ . ' ^' ''• ^^' " t<^ ones," apply to BBd corir r ar^^^^^^^^ tract between them in restrainf ^^ \. ? ^ "^a^road; and a con- bihlted. even tho^^hlr^^^e^'relr In^o 17"" '^ ""- lug railroads, only for the mimn«. ^f ♦• u »^tween compet- for the transportation rpiZTand'Jr'TS"'''^'"' *"""'' ™*** The act of February 4 irst ^ irvi .. /^™i^"y- .neon. f«»,3 slst7ntt.T;,:-r,;,i--^« TsTZ'" '^ ""* fer upon competing railroad miim«ni J J " *^^ not con- tract in restriint o'f trrdTa'nrZml^LT^^^ "'" ^"*^ ^ "^'^- the subject of this suit ^''""^erce. like the one which forms Debates in Congress are not appropriate sonr^K. «# i * which to discover the meaninV3 «! , ' Ji^formatlou. from by that body. ^ ""^ "*^ ''^"^"S*^ «^ « statute passed •Bill asking the dissolution of the ns«nni«*i«« ^T . to restrain the several comnnniL 7 ''^^'''"«° «°er.. ,f mrmns^^-^:^- ''t:'^he"L*o7fn,;TC" r%'^'""*' "■•*«' - «■« >- ^tfrst rg-r:r -hrrTt:iir r- are proved, an injunction should IkJ '^'' """^ ^?^ ?1^tt"*- "^"^y' ^^^<'' *" »«* ^"s passed by the Con gress of the United States, entitled "An act to protect trade _^tat.^9^^^ This ac^iBgivenm full in the margin." and'^o:::io*nr*"' *™'"' """ '=''"""*""* agala, or tn other, or between any Tu^T^rrr^''^''^ '''''' '^"""'"^ "<» «•>- States or the DlsS ^fMr k? ^ "' Territories and any state or tween the ntsSct o^ (^.u^i?""""; "' '""" 'o-*'^ ">a"on«- or be^ nations, Is heS d^ia^" "eial" P> ""^ ^*"* "' ^'«*^ «■• '»"'8° Buch contract or'enga^t "^ uch^^XZ T^^^^^Z 650 166 UNITED STATES EEPOBTS, 892. Statement of the Case. [8981 On the 15th day of March, 1889, aU but three of the defendants, thb railway companies named in the bill, to olTr^ThlV ' '»"«'«"'«'"«"' "'J. 0° conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by Im- prlsomnent not exceeding one year, or by both said punishments. In the discretion of the court oumeuts, m Sec. 4. The several Circuit Courts of the United States are hereby ^^ :^,TJT^T'' *" ""'""'' '"" ^''- vlolatior of ^ta A«^™i^ . T . '"^"^^ ""^''^t''. ""«,n who shall be injured in bis business or property by any other |*r«on 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 re- Sides or is found, without respect to the amount iu controversy, and shall recover threefold the damages by him sustained, and the costs of suit. ln< Inding a reasonable attorney's fee thu"^*^ 7'?!' L*"." *""* "person," or "persons," wherever used in this art shall be deemed to Include corporations and associations ex- isting 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 law. of any foreign country. Approved. July 2, 1890. 'i V;> */ UNITED STATES V. FBEIGHT ASSOCIATION. 651 Statemoit of the Case, made and entered into an agreement by which they formed themselves into an association to be known as the « Trans- Missouri Freight Association," and they agreed to be gov- erned by the provisions contained in the articles of a^ The memorandum of agreement entered into between the railway companies named therein, stated, among other things, as foUows: " For the purpose of mutual pJtection by establishing and maintaining reasonable rates, rules and regulations on all freight traffic, both through and local, the ubscnbers do hereby form an a^ociationlo be know^ ^ the Trans-Missour. Freight Association, and agree to be governed by the following provisions." "Abticle I. . tlo7^"airr as*?on:4r'""'*' *" "•" T.-a.«-Missourl Freight Ass«;ta. h!5?lf, 'passtnLtet^reen'oX^'Tn'T^T'!,"''? *"» »' '"»'« "'«"''>e™ Commendng a^t the 0^^''^ Mc"i*%n tZ'^Q^h'""'''''':? *"""="y = north to the Red River • thmcav^^^'.* . . ^}^ m<'ridian, thence line of the In^an Te^r ?„^y'^ I^enTn '7h h ^""^^ and the eastern line of th^ « " -d - and an parties «han b?"^^bv thprt^.i"" ""."fi! """^ •"*" «'"««. expressed, unless then Vl thnre f«M? fh^ ^L"^,"' ^^^ association, as elation definite written Sothirtat^n t.n r"'tl'""'" «'^'' ""^ "«»<>- make such modlflcati™ not^ith^La^ n^the fnf^T?!'"- *''«'^ «»>«" Piwided, That If the member eWta^lrfti^ J"*.f "' ^"^ association: represented at the meeMn" no f m ?^ k* f k°' '""""Se shall fall to be the same shall te Sde^eSV&l"" ^unfJtr "" "* "o*"^- «»<* upon a reduction of rate nSIiw Ih^^' ^'i»"''> ""y member Insist majority favor the same and If m ft ''^H" "' ^""^ majority, or If the rate so made aK Slrlo^ll SLe ™t^'^*°'*"* "' "»'•'' "'nJority, the association mav. t^a mSltr vnt. n^, "Pm other traffic, then the effect corresponding ?aKo tiki effpT'" ^^^ "^^^^ """"'^ P"* mto mous consent any rate rnfe nrrTf^,. ""^ '^"'^ *"y- ^^ "nanl- may be modified at™S^ m^tin- orthV ^« '^ ".V"^ *" "*'^" traffic notice. ^ meeting of the association without previous mLter ma^''aTK"rfl'°Sa'Lrat'^v'°tl,:.'"' '1^^'''^ ">"*-'"«>• «-" such rate, lile op reKulations „ *„"°V''"'^' "'^''ut previous notice, petition of lines no" member o? r/.^r^'^.*" "'«*' the eom- time notice to the chalman rf l?s itfJT^l""""- ^'^'''K «* ">e same man. upon investUt^rshaS d^Mi'fh»l° '"t P'!"'** « the chair- meet the direct TOmpetitlon of^Ll ^ » such rate Is not necessary to * and shall so notiT tte r^ad makl^ °?1 members of the association, withdraw such rata At the next m^fi^^* J^^ " «'"'" l>">n«liately the making of such rate It shan h??Bn^£j the association held after the association shall dS^lde by a^Shf^ *" '"e association, and If not made h. ^ faith T^l^^^^^^Tt^^^J^^^^ ™^^ w^s t 4^ UNITED STATES V. PREIGHT ASSOCIATION. Statement of the Case. 653 *K ' ^^*i; ^" f" i"angemento with connecting lines for the division of through rates relating to traffic covered bf thU agrement sha^f ^ made by authority of the association : ProvLdho^et^^ri^lL^ sLVroa^"s\t..Te''r&A°rff '" """r^' the mtCions'^blt;^ contracts at this date actually cxistii^ betWn lines not h«v7n»-!P,M:^ mon proprietary Interests, the same shall brreport^ so far af d^" sions are concerned, to the association, to the lud that divisLns tZh SXiratler^s" ""•"«" ''<^^"-"« by 'thl' . ^ Tamo's P^^L^tr^f^th^ag^r'^^^^^^^^ manaj^ers Who shall determine, by a majority vote (the mpn.Sr X'^'hSY^^'" complaint is made to have no vote ), what Tfa^v^^ alty sha be assessed, the amount of each fine not t^elee^ on^ hnn' &3'ir. ate'i ri.-r Ts,.-^ rJsSH" the traffic thereby secured, such action shall be renarted to thP m^ sfiifbra^^scr:] ''^**"™'"''' "« «"»- '"-""^- wh^rr'a^'^nX be^Jftl^s L^S'la"tlS» Sim^TsS „ttff%/^tlU7oS of said company that such fine has been assessed Ami thnf^t^?!,- f^ "Sec. 11. Any member not present or fully represented at rnli nnii S^d-^^rraX!a"?.v1n!^sirrfi^T^^^^ sessed against his company, unless he shafi K prevfouL^' fifed w?tt ArtMeri' bTL'?/- ^T'"^ *" ^ P'^*"t »' reprlZt^"^ ""^ mjtnftfl ™. ' """^ J ^?°tttin appropriate provisions for the carrvhie °s?t%trfo?t"hTdeteIK'' '"'■'''"^"*' ""' " '« -* ne«J?ryX'Ze^ [297] Article IV reads as follows: "AaiicLE IV. i^^reaTasrtaS'^'".-,r„ra^ -!i^l^%-^^^^^ Article VIII provides that the agreement should take effect Apnl 1, 1889, subject thereafter to thirty days' notice of a desire on the part of any line to withdraw from the same. 1- 654 I I M i! M I I II 166 UNITED STATES REPORTS, 297. Statement of the Case. On the Gth of January, 1892, the United States, as com- plainant, filed in the Circuit Court of the United States for the District of Kansas, through the United States attorney for that district, and under the direction of the Attorney General of the United States, its bill of complaint against' the Trans-Missouri Freight Association, named in the agree- ment above mentioned, the Atchison, Topeka and Santa F6 Kailroad Company, and some seventeen other railroad com- panies, the officers of which had, it was alleged, signed the agreement above mentioned in behalf of and for their respec- tive companies. The bill was filed by the Government for the purpose of having the agreement between the defendant railroad companies set aside and declared illegal and void, and to have the association dissolved. It alleged that the defendant railroad corporations, signing the agreement, were at that time and ever since had been common carriers of all classes and kinds of freight and com- modities which were commonly moved, carried and trans- ported by railroad companies in their freight traffic, and at all such times had been, and then were, continuously engaged in transporting, freight and commodities in the commerce, trade and traffic which is continuously carried on among and between the several States of the United States, and among [298] and between the several States and Territories of the United States, and between the people residing in, and all persons engaged in trade and commerce within and among and between, the States, Territories and countries aforesaid; that each of the defendants was, prior to the 15th day of March, 1889, the owner and in the control of, and that they were respectively operating and using, distinct and separate Imes of railroad, fitted up for carrying on business as such carriers in the freight traffic above mentioned, independently and disconnectedly with each other, and that said lines of lailroad had been and then were the only lines of transporta- tion and communication engaged in the freight traffic be- tween and among the States and Territories of the United States having through lines for said freight traffic in all that region of country lying to the westward of the Mississippi and Missouri rivers and east of the Pacific Ocean ; that these lines of railroad furnish to the public and to persons engaged mp I UNITED STATES V, FREIGHT ASSOCIATION. Statement of the Case. 655 in trade and traffic and commerce between the several States and Territories and countries above mentioned separate, dis- tinct and competitive lines of transportation and communica- tion extending along and between the States and Territories of the United States lying westward of the Mississippi and Missouri rivers to the Pacific Ocean, and that the construc- tion and maintenance of said several separate, distinct and competitive lines of railroad aforesaid had been encouraged and assisted by the United States and by the States and Ter- ritories in the region of country aforesaid, and by the people of the said several States and Territories, by franchises and by grants and donations of large amounts of land of great value, and of money and securities, for the purpose of secur- ing to the public and to the people engaged in trade and com- merce throughout the region of country aforesaid competitive lines of transportation and communication, and that prior to the 15th day of March, 1889, and subsequently and up to the present time^ each and all of said defendants have been and are engaged as common carriers in the railway freight traffic connected with the interstate commerce of the United States. It was then alleged in the bill as follows : [299] "And your orator further avers that on or about the fifteenth day of March, 1880, the defendants not being content with the usual rates and prices for which they and others were accustomed to move carry and transport propertj-, freight and commodities in the trade and commerce aforesaid and in their said business and occupation, but contriving and intendUig unjustly and oppressively to increase and augment the said rates and prices, and to counteract the effect of free competition on the facilities and prices of trasporation. and to estab- lish and maintain arbitrary rates, and to prevent any one of said de- fendants form reducing such arbitrary rates, and thereby exact and ^Z^^^^J^^i sums of money from the people of the said States and Territories aforesaid, and from the people engaged in the interstate commerce, trade and traffic within the region of country aforesaid and Irom all persons having goods, wares and merchandise to be transported by said railroads, and intending to monopolize the trade traffic and commerce among and between the States and Territories aforesaid, did combine, conspire, confederate and unlawfully agree together, and did then and there enter into a written contract, comh bination, agreement and compact, known as a memorandum of agree- ^«oH f ^^% Trans-Missouri Freight Association, which was sign^ by each of said above-named defendants." s -« "j The bill then set forth the agreement signed by the various corporations defendant It was further alleged that the agreement went into effect 656 168 UNITED STATES REPORTS, 299. Statement of the CaRe. on the 1st day of April, 1889, and that since ihat time each and all of the defendants, by reason of the agreement, have pat into effect and kept in force upon the several lines of rail- roads the rules and regulations and rates and prices for mov- ing, carrying and transporting freight fixed and established by the association, and have declined and refused to fix or establish and maintain or give on their railroads rates and prices for the carrying of freight based upon the cost of con- acting and maintaining their several lines of railroa.i and the cost of carrymg freights over the same, and such other ele- ""^wo^^'i""^*^ ^ considered in establishing tariff rates upon each [800) particular road, and the people of the States and remtories subject to said association, and all pei-sons en- gage.! m trade and commerce within, among and between the different States and Territories had been compelled to and were stiU compelled to pay the arbitrarv rates of freight and submit to the arbitrary rules and regulations established and maintained by the association, and ever since that date had been and still were deprived of the benefits that might be expected to flow from free competition between said soveral hnesof transportation and communication, and were deprived of the better facilities and cheaper rates of freight that might be reasonably expected to flow from fiw competition between the lines above mentioned, ^nd that the ti-ade, traffic and commerce in such region of country, and the ft eight traf- ficrn connection therewith, had be^ and were monopolized and restramed, hindered, injured and retarded by the defend- ants by means of and through the instrumentality of such association. The bill further averred that notwithstanding the passa<^ of the act of Congress above mentioned on the 2d dav of Jnly 1890, the « defendants still continue in and still en-a-e m said unlawftil combination and conspiracy, and still m^'ain- tain said Trans-Missouri Freight Association, with all the powers specified in the memorandum of agreement and articles of association hereinbefore set forth, which said agreement, combination and conspiracy so as aforesaid en- tered into and maintained by said defendants is of great mjnry and grievous prejudice to the common and public UNITED STATES V, FREIGHT ASSOCIATION. 657 Statement of the Case, good and to the weif ^f ,^^ ^^^^^ ^^ ^^^ ^^.^ The prayer of the bill was as follows : ha;e^Satrrrfl^Te%?S^r^^ can only that B^lXls^:ourFre^^ f^^^^^^^^ ^^^"^ said defendants, and all and each of Xm h. ^ dissolved, and that from further a^eeing combining nJit^' be enjomed and prohibited toniaintainrule¥^df;/natiii'J^^^^^ ^^^ acting together . upon their several SofrXoa^^^^ ^^°^^ ''""^ ^^^^^^^^ tween the States and Territories of th^ ri ?.^^ o?*^^ ""'"'^ commerce be- each of them be enjoined and nrnhfh-. ^°i*^^ ^*^*^^' **«<^ that all and in a combination aTociat^nn^nr'*^-^^^"" entering or continuing or attempt to mcnopolize the frPtohArnm? °*K°^f '""f "^ *» '^"'^opoHze bet^veen the States' anri^rrltS of thP nn?»l «?1^ ""*" commerce and each of said defeudint« hf ^i • 5 '^S'^^ ^*"*^''- "••<> «>at all any of their associatTfrom nn?rvfni^f together to prevent each and trade and commerce^tw^n ?h« «tif "^^'Sht ana coniuiodities In the Pbites at such ratei as sh^n uf v^**! "?,•* Territories of the United agents of each of^iS roads tti^l"^T'^^ ^"""^ ^^ *"« «'B<*'-s and Its own behal°" ***'"« independently and separately in .n^'^.i'^l"!!^*"*' """"^ '■*^''''""<* *« «°^«'- f""y. etc., each and all of the matters charged in the bill, but such an«wS Sn™"^,r"' '''^ "^^^ -^>^' - --- undrois oemg specially waived. The Chicago, Kansas and Nebraska Railway Company the Missouri, Kansas and Texas Railway Company and the Den SilTthf ''"* :^°'^V«,-'-J ComU deni*eS\^:g partieo to the association. The other fifteen companies filed separate answers, each setting up substantiall/ the^I:^ They admitted they were common carriers en^ged in the transportation of persons and property in the^Xt and Territories mentioned in the agreement, and they Se^d Sn'olte^r'Tr'""" *'^^ "^^^ ^"^^'-^ ^ the;?o Visions of the act of Congress, approved Februarv 4 i««7 ^04 24 Stat. 379, entitled "in act to 1^:^:1^^^ r8021 andT"',r^'r"*^ "^'^^ and additions thereto. [802] and they aUeged that that act and the amendments con- ^ 11808— VOL 1—06 M 42 658 106 UNITED STATES REPORTS, 302. Stiiteiiiimt Iff tlif» OiisK*. ^^ TB stituted a system of regulations established by Congress for common carriers subject to the act, and they denied that they They admit that they severally own. control and operate wparate and distinct lines of railroad constructed and fitted for carrying on business as common carriers of freight inde- pendently and disconnectedly with each other; except that a common interest exists between certain companies, named ii ' i^riT*. ^?V*^'t "»«* '^^ lines of railroad mentioneS in the bJl furnish lines of transportation and communication to persons engaged in freight traffic between and among the Stat«s and Territories of the United States, having through hnes for freight traffic in that region of country lying to the westward of the Mississippi and Missouri rivei and east of the Pacific Ocean, but deny that they are the only sucli lines, and allege that there are several others, naming them They further admitted that prior to the organization of the freight association the defendants furnished to the public and to persons engaged in trade, traffic and commerce between the several States and Territories named in the agreement, separate, distinct and competitive lines of transportation and comniumcation, and they allege that they still continue to uo so* They admitted that some of the roads mentioned in the bm received aid by land grants from the United States, and others received aid from States and Territories by loans of credits, donations of depot sites and rights of way, and in a few c»ses by investments of money, and that the people of the States and Territories to a limited extent made invest- ments m the stocks and bonds of some of the roads, while others, mentioned in the biU, were ahnost exclusively con- stmcted by capital furnished by non-residents of that region It was also admitted that the purpose of the land grants! loans, donations and investments was to obtain the construc- tion of competitive lines of transportation and communication to^e end that the public and the people engaged in trade [3^ and commerce th«,ugho„t that region of country might have facilities afforded by railways in communicating t 1 , UNITED STATES V. FEEIGHT ASSOCIATION. 659 Statement of the Case, with each other and with other portions of the United St«.«« and the world, and denied that thev wen, oLnt^l other purpose. " granted for any Is'^JjsflTfr*' f""''"^ "^^ '''™>''*i"« on «r about March IL " t!' tr ''"'""**'^ "^■''ociation described in the Su^ the rrans-Missouri Fmight Association." ^ the^L r„dtrtf ^^''*T '""'''"^^y -- -t content with they deni^l4TLrt;"uir^ '''' "' '""^ «^— *' tha^the ^^LntSJ-^tZTorT^^iS^ r St ZS^r^tSfrattdr -'^^^^ -- that the effect of free como^tiHn i ^ k " »'«^'*''*d' or and Territories wkhintf; """^"'^"' ''^*^**° *»»« States they deniedXtthe ; iTrr^^"^ '" ^^ ''"= ""^ result of any unlawfuSrratr risXl Th^T' fendants alleged that the proper object oTthT' J^^ ^^ ch-n^a^ tl 'it p™;srr ,:: -s. r "'" ment was filed with tha T..f. ! . V. ' ^ *^^ ^S^' tiie terms of the agreement each member might do ^ \l prehmmary requirement being that til Zx ^ ^' *•"* should be vot«d ..nnr. .* "^"^S. »"»* the proposed change which itZ ^, ' '"^^'^^ of the association after wftich, if the proposal was not ampany executing the ■grcement, and the stipulation entered into between th» parties hereto shows that thp « ««"ier knew that they had been manufactured or sold mider a contract or combination m violation of the act. In the case of a sim- ple^ transportation of such articles the carrier would be mv fK "** r1il*,*T "* ^°y ''^ ^'^^ provisions of the act. <2\ M ' ^^*t' ^°'*' '''"»'•* ^* *"""^ *at the sixth sec- tion should provide for the forfeiture of the property of the To subject the locomotives and cars to forfeiture under such circumstances might also cause great confusion to the gen- eral business of the carrier and in that way inflict unmerited punishment upon the innocent owners of other property in the course of transportation in the same cars and drawn by I"^ !f"'V*^«"«t'^««- K.the company itself violates the act the penalties are sufficient as provided for therein. But It IS maintained that an agreement like the one in question on the part of the railroad companies is authorizeS by the Commerce Act, which is a special statute applicable only to railroads, and that a construction of the Trust Act (which IS a general act) so as to include within its provi- sions the case of railroads, carries with it the repeal by im- plication of so much of the Commerce Act as authorized the agreement. It is added that there is no langua^ b the Trust Act which is sufficiently plain to indicate fpurpt to repeal those provisions of the Commerce Act which S mit the agreement; that both acts may stand, the speciafor Commerce Act as relating solely to railroads aM theS proper regulation and management, while the later and gen- eral act will apply to all contracts of the nature therein de- scribed, entered into by any one other than competing com- ^fTraTr ^""'■'''' *""• tJ'^P-PO-of estabUshinlrrs .ssaTd that if r^ '.;"!;• • ^° ^^ ""« ^^^^^ ^^^ reasoLgit IS said that if Congress had intended to in any mamier aff^t ■ i 670 166 UNITED STATES KEPORTS, 314. Opinion of tlie Court. the railroad carrier as goveraed 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 deter- mined whether so important a change in the commerce stat- ipite had been accomplished by the passage of the statute re- lating to trusts. The first answer to this argument is that, in our opinion, the Commerce Act does not authwize an agreement of this mature. It may not in terms prohibit, but it is far from conferring either directly or by implication any authority to make it. If the agreement be legal it does not owe its [815] validity to any provision of the Commerce Act, and if illegal it is not made so by that act. The fifth sec- tion prohibits what is termed "pooling," but there is no express provision in the act prohibiting the maintenance of traffic rates among competing roads by making such an agreement as this, nor is there any provision which permits it. Prior to the passage of the act the companies had some- times endeavored to regulate competition and to maintain rates by pooling arrangements, and in the act that kind of an arrangement was forbidden. After its passage other devices were resorted to for the purpose of curbing compe- tition and maintaining rates. The general nature of a con- tract like the one before us is not mentioned in or provided lor by the act. The provisions of that act look to the pre- vention of discrimination, to the furnishing of equal facili- ties for the interchange of traffic, to the rate of compensation for what is termed the long and the short haul, to the attain- ment of a continuous passage from the point of shipment to the point of destination, at a known and published schedule, and, in the language of counsel for defendants, " without reference to the location of those points or the lines over which it is necessary for the traffic to pass," to procuring uniformity of rates charged by each company to its patrons, and to other objects of a similar nature. The act was not directed to the securing of uniformity of rates to be charged by competing companies, nor was there any provision therein as to a maximum or minimum of rates. Competing and non-connecting roads are not authorized by this statute to make an agreement like this one. -'--i I ,% f i UNITED STATES V. FREIGHT ASSOCIATION. 671 Opinion of the Court. As th^e Commerce Act does nnt Q«*k^ • xi • It IS plain, also, that an aniendiDent of thVn would not be an appropriate « etld of entS^h'T '^^ of or oonibStSstt i'SadVa'd "" J/'" '^"^'**'*^ [316] prohibition of ot£,r .^ ."racis h^,H f^"^ *" '^' to transportation. The omisin thp f ' ""^'""^ Commerce \ct fiimil" """*'''*"'' therefore, to amend the statute Zinl^ZSToVr^J"!'' '^'"'"'"^ ''^'' ^^e later the regulation and government Xn Z ' ^"''''' '^'^ *«•• treated of therein it 1? ! k '^"''"^"^^ VP«n the subjects a complete a r^ertcTr of J^^^ ''''' '* *""•-^''- .re to govern them i «„ ca^s and th"f "^'f "" ^"^'''^ in relation to them mus , S'"',^^* fj;"^-^"^"' act repeal some provision of hat stat^ft! tk f^^ "'"^"'^ '>' cover all cases concerning trans^rt^n^^^^^ sta ute joes not contracts relating thereto ?"!P<'"'''i«n by railroad and aU an extensive field. ^'^ "*»* ^""^^ *« ""^er such bll^tTcSi^rtTe r""-: *- *^'^ ^- -^ ^-e Act, although wT a^lt «w V P""^** *« Commerce agreement !f tZ kTnd had .T' ^ '^"^ ''""'^^ *•"»* «> known prior to the pis we of tl%^" '""'*" *"•* P^W'^'y had been known to S«-ti ST ^"""'"'^ ^'''- ^^ ^^ ^^ that time. wWle proS^' he Zw a" P"''''* '' »* no reason for assuming that when ^ arrangements, is meant to except aU clnfraSoT r . ^"T"^ '^"^ '^^^^ ^^t i* to traffic rates^fromr :;rt Lro'rst^^^^^ ^'^ ^^/^ Its own reasons, even if aware „f fk ■. Congress for -nts, did not 'see fit Ihl^ pV^d 'tST ""' "^'^ ''^'-- prohibit them with re^rd J n . Commerce Act to the act was not In a3tkte S r™''""" *'""'' '"^*' on the subject. And af Z^til^^ f*"" ^"""^^ legislation 672 1«8 UNITED STATES REPORTS, 316. Opinion of the Court, subject at all. Finally it passed this Trust Act, and in our opinion no obstacle to its application to contracts relating to teansportation by railroads is to be found in the fact that proWbiS.''""^ "*''' '"'•' agreements was not in terns dollj'tw r^. *''"* '^' •'"•^^^ ^ ^"g^ "ho'^ beyond a iS hiL^ Z ^^l^^f •'<'«°t« "^^'^r in considerable detail to t^ S7 *! *T °' ^''^ int«>d»<=tion in the Senate to tli^T"^^ -^^ *u" '"* ""^"""y P«^ th« Senate the statute. On Its receipt by the House that body proposed an amendment, by which it was in terms made un WuTtTente? »to any contract for the purpose of preventing competition . t^nsportation of pei-sons or property. As thu" amended the bUl went back to the S^naS, which it«J? amended the amendment by making the act ap^ly to anysiTch attract as tend^ to raise prices for transporUtionXve what was just and reasonable. This amendment by the Sen! hwh.fl!^"'^^*"* P™P*^^ **y ^^"^ H""^^ ^«« disagreed to by that body. The amendments were then considered by con- ference committees, and the firrt conference committee re- Th?™2 "^- '" ^''T ""^ "*" <"nendment of the Senate, lin. Jl^ K- T^ *^'T^ ^'^ ""'* ""<'*''«'• committee ap- rveiln! "fr^ t^^t-^e out both amendments and leave the bill as it stood when it first passed the Senate and that report was finally adopted, and the bill thus passed bil^i!"v!/* *?K ''f "'"' *^"""« *''" '^""""^ ^^^ ^hen the bill was^fore the Senate and the House, both on its original parage b> the Senate and upon the rep;rt from JheZf" ^^rH ?Tk T' ' '.' "^^ *'''•* ^""""^ ^^'^^ ^«™ declared in regard to the legal import of the act Some of the membei^ S.IM^T,''"^*!" P'"**'^ ^^"""^ ^*'"*'* «^ «'^1 that con- tracts m relation to the transportation of persons and property r^":^* 1"/'' ''"• ^""^ *''»"^^''^« amendmenfu? necessary as the language of the act already covered it and some refused to vote for the amendment or for the bill if the amendments were adopted on (he ground that it would then interfere with the Interstate Commerce Act, and tenS to ci^ UNIIEIi STATES V. FREIGHT ASSOCIATION. 673 Opinion of the Court, ate confusion as to the meaning of each act. Senator Hoar who was a member of the first committee of confei^n^ fa^m the benate) when reporting the insult arrived at by the juSi ciary committee recommending the adoption of L nli amendment, said: "The other clause of the House amenT pose of [318] preventing competition in the transportation iTTu Z r^^"'' *'•'"" "»*^ State or Territory into t asmul Lh "* ''*'■ *^'** '"' '^''' t^«n«Portation is ^le of J.^ ' '"T''''' "'"^'"^ '^^ ^^^••''' St«te« «s the sale of goods in one State to be delivered in another and Uierefore, that it is covered already by the bill as it stands' But here is no harm in agreeing in an amendment wh ch e7 pressly describes it, and an objection to the amendment milt' we;s:;i« '' ''- y-'- -"^ — ^^^ ^^ Looking simply at the history of the bill from the time k was inh-odnced in the Senate until it was finally pa^T L «-dd be impossible to say what wei^ the views of a mjoritv of the members of each house in relation to the meTnii "5 'ot riee wirr t ^t' ^'^* - """^-''^ »^ bo^hriTd i lot agree w th Senator Hoar in his views as to the construe tion to be given to the act as it passed the Senate lu Zt' members had various views, and we are left to determine t},« neaning of this act, as we determine the meaning o ot^er acts from the language used therein. ^ Rmlroad Company 91 TT S 7o Ta au •, ^'""^^^otfic ?. How 24 Tn nV ; T ' ' ^^• that i^son be excluded. It IS said that this meaning is plainly to be in- ferred, because of fundamental differences both in an eco- nomic way and before the law between trade and manufoc- CnVthrd'T'' ^"' ""T' transportation on the oter. Among these differences are the public character of railroad business, and as a result the peculiar power of control a^d regu ation possessed by the State over railroad comp Lies 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 ditfe;^nt 676 166 UNITED STATES REPORTS, 321. Opinion of the Court. individuals; he may charge as much as he can get for the article in which he deals, whether the price be reasonable or [SiSl] unreasonable; he may make such discrimination in his business as he chooses, and he may cease to do any busi- ness 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 cannot at its will discontinue its business. It is also urged that there are evils arising from unrestricted competition in regard to railroads which do not exist in regard to any other kind of property, that it is so 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 difference between rail- road property on the one hand, and all other kinds of prop- erty on the other hand, is so plain that entirely different eco- nomic 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 indus- trial history of the country, the legal situation in regard to railroad properties at the time of the enactment of this statute, its legislative history, the ancient and constantly maintained different legal effect and policy regarding rail- way transportation and ordinary trade and manufacture, together with a just regard for interests of such enormous magnitude as are represented by the railroads 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, therefore, claimed to be the duty of the court, in carrying out the rule of statutory construc- tion, above started, 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 founded, 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 railroad and other corpora- tions are many and great. It cannot be disputed that a rail- UNITED STATES V, FREIGHT ASSOCIATION. 677 S Opinion of tlie Court. road [322] 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 legis- lature in regard to its conduct, so that its business should be carried on with as much reference to the proper and fair in- terests of the public as possible. While the points of differ- ence just mentioned and others do exist between the two classes of corporations, it must be remembered they have also some points of resemblance. Trading, manufacturing 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. 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 enhanced from what it otherwise would be if free competition were the rule, af- fects 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 maj"^ also affect prices by joining together in forming a trust or other combination, and by making agreements in restraint of trade and commerce, which when carried out affect the in- terests 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 railroad company? It is true the results of trusts, or combinations of that nature, may be dif- ferent in different kinds of corporations, and yet they all have an essential similarity, and have been induced by mo- tives of individual or corporate aggran- [3231 dizement as against the public interest. In business or trading combi- 678 166 UNITED STATES REPORTS, 323. Opinion of the Couit. nations they may even temporarily, or perhaps permanently, reduce the price of the article traded in or manufactured, by reducing the expense inseparable from the running of many different companies for the same purpose. Trade or commerce under those circumstances may nevertheless be badly and unfortunately restrained by driving out of busi- ness the small dealers and worthy men whose lives have been spent therein, and who might be unable to readjust them- selves 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 or method of doing business it seems to be an inevitable necessity that distress and, perhaps, ruin shall be its accompaniment* in re- gard to some of those who were engaged in the old methods. A change from stage coaches and canal boats to railroads tlirew 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 naisfortunes which seem to be the necessarv accompaniment of all great industrial changes. It takes time to effect a re- adjustment of industrial life so that those who are thrown out of their old employment, 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 accompaniment of change and improvement. It is wholly different, however, when such changes are effected by combinations of capital, whose purpose in com- binmg is to control the production or manufacture of any particular article in the market, and by such control dictate the price at which the article shaU be sold, the effect being to drive out of business all the small dealers in the commodity and to render the pubUc subject to the decision of the com- 13S41 bination 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 combination to IJNlTiiD STATES V, FREIGHT ASSOCIATION. 679 i Opinion of tlie Court. raise it, and the result in any event is unfortmiate 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 sup- ported themselves and their families from the small profits realized therein. AAliether 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 independent business man, the head of his establishment, small though it might be, into a mere servant or agent of a corporation for selling the coniniodities which he once manufactured or dealt in, having no voice in shaping the business policy of the com- pany and bound to obey orders issued by others. Nor is it for the substantial interests of the country that any one com- modity should be within the sole power and subject to the sole will of one powerful combination of capital. Congress has, so far as its jurisdiction extends, prohibited all con- tracts or combinations in the form of trusts entered into for the purimse of restraining trade and commerce. The re- sults naturally flowing from a contract or combination in restraint of trade or commerce, when entered into by a manu- facturing or trading company such as above stated, while differing somewhat from those which may follow a contract to keep up transportation rates by railroads, are neverthe- less of the same nature and kind, and the contracts them- selves do not so far differ in their nature that they may not all be treated alike and be condemned in common. It is en- tirely appropriate generally to subject corporations or i^er- sons 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 unquestion- ably 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 [325] statute by general language suffi- ciently broad to include them both. AVe see nothing either in contemporaneous history, in the legal situation at the time of the passage of the statute, in its legislative historv, or in any general difference in the nature or Idnd of these trading sssa 680 166 UNITED STATES REPORTS, 325. Opinion of the Ckmrt or manufacturing companies from railroad companies, which would lead us to the conclusion that it cannot be sup- posed the legislature in prohibiting the making of contracts m restraint of trade intended to include railroads within the purview of that act. Neither is the statute, in our judgment, so uncertain in its meaning, or its language so vague, that it ought not to be held applicable to railroads. It prohibits contracts, combinations, etc., in restraint of trade or commerce. Transporting com- modities 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 several States or with foreign nations. When the act prohibits con- tracts m restraint of trade or commerce, the plain meaning of the language used includes contracts wliich relate to either or both subjects. Both trade and commerce are inchuled so long as each relates to that which is interstate or foreign. Transportation of connnodities among the several States or with foreign nations falls within the description of the words of the statute with regard to that subject, and there is also included m that language that kind of trade in commodities among the States or with foreign nations which is not con- fined to their mere transportation. It includes thc'ir purchase and sale. Precisely at what point in the course of the trade m or manufacture of commodities the statute mav have effect upon them, or upon contracts relating to them, mav be some- what difficult to determine, but interstate transportation presents no difficulties. In Umted States v. E. C. Knight Co, 156 U. S. 1, heretofore cited, it was in substance held, reiterating the language of Mr. Justice Lamar in hidd v Pearsm., 128 U. S. 1, 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 [8S«1 belonged to commerce. The difficulty in determining that question, however, is no reason for denying effect to lan- giiage which, by its terms, plainly includes the transportation of commodities among the several States or with foreign na- tions, and which may also be the subject of contracts or combinations in restraint of such commerce. The difficulty UNITED STATES V, FREIGHT ASSOCIATION. 681 , J . Opinion of tlie Court, 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 (svpra) : " If it be held that the term " (commerce) " in- cludes the regulation of all such manufactures 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 manufactures, but also agriculture, horticulture, stock raising, domestic fish- eries and mining— in short, every branch of human industry." In the Knight Company ease {supra) it was said that this statute applied to monopolies in restraint of interstate or in- ternational trade or commerce, and not to monopolies in the manufacture even of a necessary of life. It is readily seen from these cases that if the act do not apply to the traiispor- tation of commodities by railroads from one State to another or to foreign nations, its application is so greatlv limited that the whole act might as well be held inoperative.^ Still another ground for holding the act inapplicable is urged, and that is that the language covers onlv contracts or combinations like trusts or those which, while not exactlv trusts, are otherwise of the same form or natui-e. 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. i^l\ *^"'^'' ^^^^"^ "^ ''^''^^"^ examination, that the statute ld^7 1 covers, and was intended to cover, coimnon carriers bv railroad. -^ Second. The next question to be discussed is as to what i^ the true construction of the statute, assuming that it applies to common carriers by railroad. What is the meaning of the language as used in the statute, that "every contract, com- bmation in the form of trust or otherwise, or conspiracy in restraint of trade or commerce among the several Stat^ or 682 166 UNITED STATES REPORTS, 327. Opinion of the Court with foreign nations, is hereby declared to be illegal" ? Is It confined to a contract or combination which is only in un- reasonable 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 ? ' We are asked to regard the title of this act as indicative of Its purpose to include only those contracts which were un- lawful at common law, but which require the sanction 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 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 bv the Federal statute. We are of opinion that the language used m the title refers to and includes and was intended to include those restraints and monopolies which are made un- lawful m 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 now with much amplification of argument urged that the statute, in declaring illegal every combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce, does not mean what the language used therein plainly imports, but that it only means to declare illegal any such contract which is in unreasonable restraint of trade ri^ilTi ^^^"'"^ ^" ""^^^'"^ unaffected by the provisions of the [838J act; that the common law meaning of the term " con- tract in restraint of trade " includes only such contracts as are in imreasmiahle restraint of trade, and when that term is used m the Federal statute it is not intended to include all contracts m restraint of trade, but only those which are in unreasonable restraint thereof. ^ The term is not of such limited signification. Contracts m restraint of trade have been known and spoken of for hundreds of years both in England and in this countrv, and the term includes all kinds of those contracts which in fact ' UNITED STATES V, FREIGHT ASSOCIATION. 688 Opinion of the Court, restrain or may restrain trade. Some of such contracts have been held void and unenforceable in the courts by reason of their restraint being unreasonable, while others have been held valid because they were not of that nature. A contract may be m restraint of trade and still be vaUd at common law Although valid, it is nevertheless a contract in restraint of trade, and would be so described either at common law or elsewhere. By the simple use of the term " contract in re- stramt of trade," all contracts of that nature, whether valid or otherwise, would be included, and not alone that kind of contract which was invalid and unenforceable as bein- bra?clTthf "^ k' ^'^u '"■^•"''"* '"^ '»>« defendants on this . ™hf alldl^''''''' •?" *** ^''*'''' •* P^^^'ble, some reason m ine attendant circumstances, or some t»ot «v;.»:„ !u nature of railroad Drooertv »n^ K • «x'*'t'nff m the the claim th«f oUk T u' . ''"SMJess upon which to found ™n,,« prta .nd (or ,h. „.™.« m,TS t « ». for z^' *i^™?,'''r"T ""°'» I* •"•«! '» « ijr uiiier purpose, at least without such ln«Q qc «,«„ fairly be called destructive; that competiL wiiirpelZ of rL^ k" """ ""'' insolvency, and to the operation of ^" ^"'^X'^'''"^ '" *••" •"'"'^t »' »*'•' creditors instead of m that of Its owners and the public ; that a contest hZln . receiver of an insolvent corporation' and one whSi i "S \ . 4 ft 1 »•;:'> 1 mm UMIHD STATES V. FBEIQHT ASSOCIATION. 685 Opiuion of the Court telTt*/"!? '; "■"'" '^' ^'''"'' *^'"P«"y' ^'Wle being of no benefit to the former; that a receiver is onlv bound to pav anTnrlt T* '" r* **°"" *« P"*'^^ incompatible wiTh any profit for the work done, and until ruin overtakes it to :?tirbrrnti;r^"^ -'-''^^'-^ -^ ^^^ ^™-^-- ^ To the question why competition should necessarily be con- conSLed r ''**"' '' *« '■•'^"'* ^" this relenflei Td or all of the companies mdulging in it, the answer is made waVIfT^*"? '^"'*'''*^ """?«"'*'« •* '-ft -bject t^ the sway of free and unrestricted competition the results above foreshadowed necessarily happen from the nature of the ^sl ^ trh'ettn^t'l"? ''^ '■"'^' ^"^•^ ^"-"P-^ -" -k bul' orTer to 12; ' ''"T' *"^ ^'" ""'^^'''''d '«« ^ival in order to get the business, and such underbidding will act and react upon each company until the prices are so reduci as t^ make it mipossible to prosper or live under them; t^t it t 00 much to ask of human nature for one company to insit Sn an! whf t""^ '^'^^ ^ «^"'^ ^ — ^«"' ^n sation, and while doing so to see its patrons leave for rival roads who are obtaining its business by offeringLi rate for doing It than can be afforded and a fair profit obSe" it ertswi'SllL" T"'T ™'" ^^^^ --« --iti-, enorts will [331] be made m the direction of meeting the un SI t fsl;? r' T ''''' **" «"^ '" ruin!' VeV ry retuge It is said, from this wretched end lies in the power of competing roads agreeing among themselves tT keep up selvesZm thp , «*»"Pf "'«« may be allowed to save them- selves from themselves, and to agree not to attack each oth^r perfLr "f .'**^"f « -5«;it:65^rgia^t^:^^ '-• - '— court ifmalffor^;X'S^^^^^^ of th^ ejist. J^tween a prii T.tXr^:^:^:-^^^, Of a piiblic corporation which whilo a J u • ^ mune^tion, is y^t so con3 in ittrji'rthr 1? "■ while, m the absence of a statute prohibiting them ^^rlt 11 'I UNITED STATES V. FREIGHT ASSOCIATION. 689 Opinion of the Court, of private individuals or corporations touching upon i-e- stramts in trade must be unreasonable in their nature to be held void, different considerations obtain in the case of pubUc corporations like those of railroads where it well may be that any restraint upon a business of that character as 'atrecting The plaintiffs are, however, under no obligation in order to maintain this action to show that by the common law all agreements among competing railroad companies to keep ud rates to such as are reasonable were void as in restraint of rade or commerce^^ There are many cases which look in that direction ,f they do not precisely decide that point, borne of them are referred to in the opinion in the Balti- more Go, Company case, above cited. The case of the A/oqul Steamship Company v. McGregor, 21 Q. B D 54-1 • oq o t, ^- ''V ,i'''' ^PP- C^^- 25' l"'^ •-«« «ted by L cfurte be ow as holding in principle that contracts of this nature are valid at common law. The agreement held valid there was 1^35] an agreement fqr lowering rates of transportation among the parties thereto, and it was entered into for the purpo^ of driving out of trade rival steamships in order that Stf r.f ' ™'" ""'^^^ ^ '"^^""•"''- The English courts he d that the agreement was not a conspiracy, and that it was the field, because so long as the injury to such rival was not the sole reason for the agreement, but self-interest the pre- dominating motive, there was nothing wrong in law with an a^«nt of that kind. But assuming thft agreemlte Tt this nature are not void at common law and that the various cases cited by the learned courts below show it, the Tswer to the statement of their validity now is to be foundTn The terms of the statute under consideration. The pr^L S the Interstate Commerce Act relating to realaWeTte/ discriniinations, etc., do not authorize such an agreement as' Jhis, nor do they authorize any other agreements ^r^T^^a be inconsistent with the provisions of this act foTIl^-^'T!^ ^^"^ *"•■ ^"'*""« agreements of this nature to be invahd even at common law, on the part of railroad companies are quite strong, if not entirely conclusive 1180&— VOL 1—06 M^ U I 690 X66 UNITED STATES REPORTS, 335. Opinion of the Court. T Considering the public character of such corporations, the privileges and franchises which they have received from the public in order 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 circumstances, have deliberately decided to prohibit all agreements and com- binations in restraint of trade or commerce, regardless of the question whether such agreements were reasonable or the reverse. It is true that, as to a majority of those living along its line, each railroad is a monopoly. Upon the subject now under consideration it is well said by Judge Oliver P. Shiras, United States District Judge, Northern District of Iowa, in his very able dissenting opinion in this case in the United States Circuit Court of Appeals, as follows : [888] "As to the majority of the comimmlty llvinj? along its line, each railway eompau>' has a monopoly of the husineRs demanding trans[)ortat km as one of its elements. By reason of this fact the ac- tion of this corporation in establishing the rates to be charged largely inllnences the net profit coming to the fanner, the mannfactnrer and the merchant, from the sale of the products of the farm, the workshop and manufactoi-y, 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 transi>orted over the line of railway. There is no other line of business carried on in our midst which is so intimately connected with the public as that conducted by the railways of the country. ... A railway corporation engaged in the transporta- tion of the persons and property of the community is always carrying on a public bushiess which at all times directly affects the public wel- fare. All contracts or combinations enteretl into lH-twc»en railway cor- porations intended to regulate the rates to be chai-ged the public for the senrice rendere^ stricte„* ^"'^"'^ ^""^ «"" "^«"'ts, no and there are evils whchresulffZ?Z """•" ^- '^"^'^ ^^ benefits competithm bet,v^n rall«!^y i^m^^,!^^ "^"V"" "' ^^ '"'^ <»' ^^ the companies will be reliev^ ^^J^^ .? *'™** ™*y ">me when about this change. The fact tli« tTf I ™ = themselves, bring Commerce act mfy have chinLrt In i?!'''^"''^'""* "^ the Interstate companies In tte car?vin^ n„ nf fi ^- ''pPeets the conduct of the m does not show tSTlas the taten?of'p"n'""^ ^•"'^.'"^ «"^««^ of that statute to clothe tXayrSntes wTthT» ?• "f enactment together for the purpose of avoidiM ?h» fw^I ^"^ ^'^^^ ^ combine subject of rates." avoiding the effects of competition on the [338] The whole opinion is a remarkably strong presenta- tion o the views of the learned judge whoLote ij btiJl, again, it is answered that the effects of free comne- tition among railroad companies, as described by the coun^l for the companies themselves in the course of their argumeS are greatly exaggerated. According to that argument the moment an agreement of this nat«« is prohibited tie 'rat roads commence to cut their rates, and they cease only with heir utter financial ruin, leaving, perhaps, one to raii ra tS ndefimtely when its rivals have been driven away. It is S that this IS a most overdrawn statement, and that while abso- utely free competition may have in some instances and for a time resulted m injury to some of the railroads, it is not at all clear that the general result has been other than beneficial to the whole public, and not in the long run detrimental to 1 I (I 692 166 UNITED STATES REPORTS, 338. " Opinion of the Court, the prosperity of the roada It is matter of common knowl- ^ edge that agreements as to rates have been continually made of late years, and that complaints of each company in regard to the violation of such agreements by its rivals have been frequent and persistent. Rate wars go on notwithstanding any agreement to the contrary, and the struggle for business among competing roads keeps on, and in the nature of things wiU keep on, any alleged agreement to the contrary notwith- i^ding, and it is only by the exercise of good sense and by the presence of a common interest that railroads, without entering into any affirmative agreement in regard thereto, will keep within the limit of exacting a fair and reasonable return for services rendered. These agreements have never been found really effectual for any extended period. The Interstate Commerce Commission, from whose reports quotations have been quite freely made by counsel for the purpose of proving the views of its learned members in re- gard to this subject, has never distinctly stated that agree- ments among competing railroads to maintain prices are to be commended, or that the general effect is to be regarded as beneficial. They have stated in their fourth annual report that competition may degenerate into rate wars, and that such wars are as unsettling to the business of the country [839] as they are mischievous to the carriei-s, and that the spirit of existing law is against them. They then add: "Agreements between railroad companies which from time to time they have entered into with a view to prevent such occurrences have never been found effectual, and for the very sufficient reason, that the mental reservations in forming them have been quite as numerous and more influential than the written stipulations." It would seem true, therefore, that there is no guaranty of financial health to be found hi entering into agreements for the maintenance of rates, nor is financial ruin or insolvency the necessary result of their absence. The claim that the company has the right to charge reason- able rates, and that, therefore, it has the right to enter into a combination with 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 "' UNITED STATES V. FEEIGHT ASSOCIATION. 693 Opinion of tlie Court, way of charging 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 the extent of the charge fqr the service will be seriously affected by that fact. Competition will itself bring charg^ 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 com- panies themselves by virtue of the agreement, so long as they abide by it. "^ As a result of this review of the situation, we find two very widely divergent views of the effects which might be expected to result from declaring illegal all contracts in restraint of trade, etc.; one side predicting financial disaster and ruin to competing railroads, including thereby the ruin of sharehold- ers, the destruction of immensely valuable properties, and the consequent prejudice to the public interest; while on the other side predictions equally earnest are made that no such mournful ^tesulls will follow, and it is urged that there is a necessity, m order that the public interest may be fairly and justly protected, to allow free and open competition among railroads upon the subject of the rates for the transportation of persons and property. [840] The arguments which have been addressinl to us against the inclusion of all contracts in restraint of trade as provided for by the language of the act, have been based u^n the alleged presumption that Congress, notwithstanding the language of the act, could not have intended to embra^ 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 exception. In other words we are asked to read into the act by way of judicial legidation 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 cannot be supposed Congress intended the natural import of the language it used. This we cannot and 694 leC UNITED STATES REPORTS, 340. f Opinion of the Court ought not to do. That impolicy is not so clear, nor are the reasons for the exception so potent as to permit us to inter- polate 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 ear- ned 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 m substance, and Congress may and very probably did share in that belief in passing the act. The public policy of the Government is to be found in its statutes, and when they have not directly spoken, then in the decisions of the courts and the constant practice of the government officials ; but when tlie lawmaking power speaks upon a particular subject, over which it has constitutional power to legislate, public policy in such a case is what the statute enacts. If the law prohibit any con- [341] tract or combination in restraint of trade or commerce, a contract or combination made in violation of such law is void, whatever may have been theretofore decided by the courts to have been the public policy of the counti-y on that subject. 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. Although the case is heard on bill and answer, thus mak- ing it necessary to assume the truth of the allegations in the answer which are well pleaded, yet the legal effect of the agreement itself cannot be altered by the answer, nor can its violation of law be made valid by allegations of good inten- tion or of desire to simply maintain reasonable rates ; nor can the plaintiffs' allegations as to the intent with which the agreement was entered into be regarded, as such intent is *« UNITED STATES V, FREIGHT ASSOCIATION. 695 ,. . Opinion of the Court. denied on the part of the defendants; and if the intent alleged in the bill were a necessary fact to be proved in order to maintain the suit, the bill would have to be dismissed. 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 agree- ment itself, namely: Does the agreement restrain trade or conunerce in any way so as to be a violation of the act? We have no doubt that it does. The agreement on its face re- cites that it is entered into " for the purpose of mutual pro- tection 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 viola- tion of which subjects the defaulting company to the pay- ment 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 [342] that its direct, un- mediate 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 main- tained without proof of the allegation that the agreement was entered into for the purpose of restraining trade or commerce or for maintaining rates above what was reasonable. The necessary effect of the agreement is to restrain trade or com- merce, no matter what the intent was on the part of those who signed it. One or two subsidiary questions remain to be decided. It is said that to grant the injunction prayed for in this case IS to give the statute a retroactive effect; that the con- tract at the time it was entered into was not prohibited or de- clared illegal by 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 continuing one. The parties to it adopt certain machinery, and agree to certain methods for the purpose of establishing and main- taming m the future reasonable rates for transportation. 696 1116 t^NITKD STATES REPORTS, 342. Dissenting Opinion: White. Field, Gray, Shlras, JJ. Assuming such action to have been legal at the time the agree- ment was first entered into, the continuation of the agreement, after it has been declared to b© illegal, becomes a violation of the act The statute prohibits the continuing or entering into such an agreement for the future, and if the agreement be continued it then becomes a violation of the act. There is nothing of an ex post facto character about the act. The civil remedy by injunction and the liability to punishment under the criminal provisions of the act are entirely distinct, and there can be no question of any act being regarded as a violation of the statute which occurred before it was passed. After its passage, if the law be violated, the parties violating it may render themselves liable to be punished criminally; but not otherwise. 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 [S48] the act invests the Government with full power and authority to bring such an action as this, and if the facts be proved, an injunction should issue. Congress having the control of interstate commerce, has also the duty of protect- ing it, and it is entirely competent for that body to give the remedy by injunction as more efficient than any other civil remedy. The subject is fully and ably discussed in the case of In re Dels, 158 U. S. 564. See also Cincinnati, New Or- ham <&€. Railway v. Interstate Commerce Commission, 162 U. S. 184; Texas cfe Pacific Railway v. Interstate Commerce Commission^ 162 U. S. 197. For the reasons given, the decrees of the United States Circuit Court of Appeals and of the Circuit Court for the District of Kansas must be Reeersed, and the case remanded to the Circuit Court for further proceedings in conformity with this opinion. Mr. Justice White, with whom concurred Mr. Justice Field, Mr. Justice Gray and Mr. Justice Shiras, dissenting. It is unnecessary to refer to the authorities showing that although a contract may in some measure restrain trade, it is not for that reason void or even voidable unless the restraint 49 1 i united states v. freight association. 697 Dissenting Opinion : White, Field, Gray, Sliiras, JJ. which it produces be unreasonable. The opinion of the court concedes this to be the settled doctrine. The contract between the railway companies which the court holds to be void because it is found to violate the act of Congress of the 2d of July, 1890, 26 Stat. 209, substantially embodies only an agreement between the corporations by which a uniform classification of freight is obtained, by which the secret under-cutting of rates is sought to be avoided, and the rates as stated in the published rate sheets, and which, as a general rule, are required by law to be filed with the Inter- state Commerce Commission, are secured against arbitrary and sudden changes. I content myself with giving this mere outline of the results of the contract, and do not stop to demonstrate that its provisions are reasonable, since the opin- ion of [344] the court rests upon that hypothesis. I com- mence, 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 consid- eration is reasonable, and therefore not unlawful if the gen- eral principles of law are to be applied to it. The theory upon which the contract is held to be illegal is that even though it be reasonable, and hence valid, under the general principles of law, it is yet void, because it conflicts with the act of Congress already referred to. Now, at the outset, it is necessary to understand the full import of this conclusion. As it is conceded that the contract does not un- reasonably restrain trade, and that if it does not so unreason- ably restrain, it is valid under the general law, the decision, substantially, is that the act of Congress is a departure from the general principles of law, and by its terms destroys the right of individuals or corporations to enter into very many reasonable contracts. But this proposition, I submit, is tan- tamount to an assertion that the act of Congress is itself unreasonable. The difficulty of meeting, by reasoning, a premise of this nature is frankly conceded, for, of course, where the fundamental proposition upon which the whole contention rests is that the act of Congress is unreasonable, it would seem conducive to no useful purpose to invoke reason f 698 166 UNITED STATES REPORTS, 344. - Dissenting Opinion : White, Field, Gray, Shlras, JJ. ,T^h- K "' ^ '^^ T «">*«>"»& the construction of a stat- question then, is, is the act of Congress relied on to be so mterpreted as to give it a reasonable meaning, or is it to to oonjrued as being unreasonable and as violative of L elt mentary principles of justice ? th^^ '"•«"'n«f t npon which it is held that the act forbids Jose reasonable contracts which are universally admitted to be legal is thus stated in the opinion of the court, and I quote s -rrv^sf """ "*^* '"'"''**'^ "^p"^"- *»>« *•>-«»»* term IneludlTSl kiKf^^^l'iS'' ''^- I.".*"'" eo.mtry, and the Some of such contracts havnT.fh^M^M'''' L" '*'^' '■«''"''"° t^le- courts by reason of their^iirtot J^fnJ.''* """^ ""enforcible in the have been held valid h«^^th^' ^^„"^^^^^^^- """"e others tract may be to r^raSt^f teadr^d"°i„f *?"»* "»t°^!- A con- law. Although valid It l« Lvlwh^i " "* ^""'^ at common trade,andwonldbesodeserIb!^Im?lr*" "'"*™'=* '" restraint of By the simple use of the tem ' ™nJr»^t ?* ""1^™ '""' ""• ""1 ""<--"' the body of an act pronoSXa a« liul^l * "' "■""*• ^•«'''- therefore. to restraint of tra^^r co^ulr^''^"' ^5^ "*"*"'?' "■• """"Wnation plain and ordinary meaXro??noh?i? ^^ ^''^'■'" ^^''^' etc the kindof contract aline which is InTnJ.^^"''.^* '* ?"* ""'*«* *« that all contracts are taciud^ to such ran™^?*^'*/**'™'"* "' *'"'»''*• "« tatlon can be added ™tooutDbiclnTfSfK' ""^ S? e^<*Pt'on or ihnl- omltted by Congress." "'"^'"^ '" *"« ""^ that which has been nelw'!!!^ th6 proposition in the form in which it was ear- n^Uy pressed m the argument at bar, it is as follows: Con- men t hi? """"^ "°"*™*'* •" '^*™°* «* t™d« i« illegal. When the law says every, there is no power in the courts if Jrw^rd"^^ interpret and apply th^tatute, to sS ^ te liry * TI ^'■ *^" '^'"^ " •'^^'•y-" M Congress had meant to forbid only n^traints of trade which were unrea ^"^31""" ^^^-'.-«*-^ »f doing th" it has Sts wWh ' """'u.*'* ""'^^'^"ty embraces both con- tracts which are reasonable and unreasonable Is the proposition which is thus announced by the court »d which was thus stated at bar, well founded? i the S question which arises for solution. I quote the title and the ^ean>' t UNITED STATES V. PBEIGHT ASSOCIATION. 699 Dissenting Opinion : White, Field, Gray, Shiras, JJ. * first section of the act which, it is asserted, if correctly inter- preted, destroys the right to make just and reasonable con- tracts : 8tr&'n^m«fr"^ """^^ '^^ """"^"^ '»««•"«* '"•"-^ "- " Every contract, combination in the form of trust or otherwl«. nr conspiracy fc restraint of trade or commerce among thrseverTstoC or with foreign nations, Is hereby declared to be illlg^ EvI^ nS^ sand dollars, or by imprisonment not exceeding one year or bv iwrfh said punishments to the discretion of the court" ^ Is it correct to say that at common law the words " restraint of trade ' had a generic signification which embraced all con- tracts which restrained the freedom of trade, whether reason- able or unreasonable, and, therefore, that all such contracts are within the meaning of the words « every contract in re- straint of trade » ? I think a brief consideration of the his- 7uTt "«^»«^ of the differonce be- questioned, until the matter was set finally at rest hv tv,^ House of Lords in A^orrfen//.// V r*. w • »t ^ . , • ""^ ^j A .7. oraenfeit \. Ihe Maanm Nordenfelt Gua» and Ammunition C<,.. reported in (1894) App Cas 535 T^ that case it was held that the distinction betwee^p^S an3 general restrant was an incormrt criterion, but thartjether .contract was invalid because in restraint'of trade ,n.'de pend upon whether, on considering all the circumstances the contract was found to be «asonable or un^asonable Tf Mt sonable, ,t was not a contract in restraint of trad; and if unreasonable it was. ' " fo™'*f wi*"!!***.*^' ^*'"«"' «'»^ substantially con- staunt has been either expressly or impliedly admitted the rabje^ of discussion and varying adjudication. And al- toade and yet valid, it results from an analysis of all the A^am cases, as it does from the English,-that these e^! pressions m no way unply that contracts which were valid be- cause Uiey only partially restrained trade were yet^ns^de^ of trade. On the contrary, the reason of the cases whe~ STbeTaSd"" ^Z"""^' ^r*^" ^^'^ excepted^ W ^int of t«de in the legal meaning of those words. Re- ferring to the modem and Ameri- [848] can rule on the tC" r UNITED STATES V. FREIGHT ASSOCIATION. 701 Dissenting Opinion : Wliite, Field, Gray, Shiras, JJ. subject, Beach in his recent treatise on the Modern Law of Contracts, at section 1569, says: The fact that the exclusion of reasonable contracts from the doctrine of restraint of trade was predicated on the conclusion that such contracts were no longer considered as coming withm the meaning of the words " restraint of trade " IS nowhere more clearly and cogently stated than in the opmion of the Court of Appeals of the State of New York in tl^ case of Matthews v. Associated Press of New York T.u J*/^^' ■^'^ «>nsidering the contention that a by-law of the defendant association which prohibited its members from receiving or pubUshing " the regular news dispatches Of any other news association covering a like territory and or- ganized for a like purpose " was void, because it tended to restrain trade and competition and to create a monopoly, the learned judge said (p. 340) : nevertheless, valid contracts, and ZiTtnforcld^thXL*!^^ "''*' by-laws must also be limitwi hv fhl oJ.^: ^ autnonty to make atloTi T fhi«r +».• "™/«-^ py the scope and purpose of the assooi- ^^ of^ad^^s .nu^ r JK r .r.!5. '■* '" • This lucid statement aptly sums up the process of reason- ing by which partial and reasonable contracts came no longer r li! 1 I 702 166 UNITED STATES BEPOBTS, 349. Dlssentrng Opinion : White. Field. Gray. Shlras. JJ !trattTf1r!7' ^}^'^^^^^ in the words contracts in re- So^ition tht " J^T t"^' ^""•''y ^-bodied in the ^position that contracts which were held not to be in TTT t'?^' "'"^ y*** '^^'^ "^y the wordst Sst^ilt of trade; that ,s that although they were not such c^lnTct" ot the by-law the opinion proceeds as follows (p 341) • other than that of the paSne^wr^^th.?"'** S"^"'* *" ^^^ "ustoe^ mmt agree not to do anTXr iusC™ LT'' P"/*"r """ '=»'"« «" bos ness as he had theretofore done Z^rl""** «"'^ "P ^11 such be in reatraint of trade althomrh 1?f ,ii£!!» - " agreement would not to eome extent the trad^ whWad'b^S^*on^^' ""^'" "^ '» '««^'"" This adds cogency to the demonstration, and shows in the n,(«t conclusive manner that the words contracts i^TLt™ 2 of rade do not continue to define those contracts wS"^ BO longer covered by the legal meaning of the words non between partial and general restraints, but ha^ nl«« eff^rbVt i? t J r^^'n*"" '" ** '"*«'^"'* 't P'-^duces such effect, but whether under all the circumstances it is reason 68; Crtbhs V Baltimore Gas Co., 130 IT. S. 396, W As it is rsX'pen'dTn^r"*^' '"*" " f""^ -minationt/tV S^he stT I T"^'" " '^f«'-«n«e to decisions of some of the state courts and to several writers on the subiect of Twitn'thTlTtf V *™'^' ^J ^'"^ *^« do:t2Ts r:' viewed and the authorities very fully referred to.' -i^^ll!!!i^:!^!_^l^!^^i^gf^'|^^^ common 0^*0000 j^tu>:^u^Z:.c::^^'rzi:^,'^^ Tr^ '• tracts, p. 748; Note to Angier yWeiL ^ a™ r2^ T' "° ^°- plemental Note. 9th Am ed Tift l^asul\.^ 7 ^^ '**• ""'^ ^"P- Eaton m 4 HarV. Law Ke^ew p i^ io^*^L* V ^"^ "' ^ "• of Trade (18M). '^^ "***^ = Patterson on Restraint UNITED STATES V. PBEIGHT ASSOCUTION. , 703 Dissenting Opinion : White, Field, Gray, Shiras. JJ. law contracts which only partially restrain trade, to use the precise language of Maule, Justice, in Rannie v Irvine 7 rule that IS, the rule as to contracts in restraint of trade, and that the exception is in furtherance of the rule itself " tClT'- T' '"f?**^*'^ *«t the further development of the dottrme by which it was decided that if a contract was reasonable ,t would not be held to be included within con! tracts in restraint of trade, although such contract might in some measure produce such an effect, was also an e.x^ption to the general rule as to the invalidity of contracts in re- Tilf^ T The theory, then, that the words restraint of trade define and embrace all such contracts without refer- ence to whether they are reasonable, amounts substantiallv to saymg that, by the common law and the adjudged American cases certam classes of contracts were carved out of and ex- cepted from the general rule, and yet were held to remain embraced within the general rule from which they were removed. But the obvious conflict which is shown by th! contradictory result to which the contention leads rests not upon the mere form of statement but upon the [3511 reason of hings This will, I submit, be shown by a veiyTrkf analysis of the reasons by which partial restraints were held not to be embraced in contracts in restraint of trade, and by which u timately all reasonable contracts were like^i^^^ b.t"l ..r ""'"^"^- ^'' '' *« ^y- '^'^' the reason- ng by which the exceptions were created conclusively shows the error of contending that the words contracts in restraint of trade contmued to embrace those reasonable contracts Which those words no longer described res't™inr„'J'tr T^^''' *]>« P^nciple by which contracts in restrain of the fr^dom of the subject or of trade were held whi^h n^ "T ''"' ""'*^'^'"'"* *« ^'"hrace all contract, which in any degree accomplished these results. But as trade developed it came to be understood that if contracts which only partially restrained the freedom of the subS or of trade were embraced in the rule forbidding colaS n restraint of trade, both the freedom of contracf an" Se tself would be destroyed. Hence, from the reason of things, arose the distinction that where contracts ojJ^ted 704 166 UNITED STATES REFOBTS, 351. Ill Fil }i Dissenting Opinion : White, Field, Gray, Shiras, JJ. only a partial restraint of the freedom of contract or of trade they were not in contemplation of law contracts in restraint of trade. And it was this conception also which, in its final aspect, led to the knowledge that reason was to 1)6 the criterion by which it was to be determined whether a contract which, in some measure, restrained the freedom of contract and of trade, was in reality, when considered in all its aspects, a contract of that character or one which was necessary to the freedom of contract and of trade. To de- fine, then, the words " in restraint of trade " as embracing every contract which in any degree produced that effect would be violative of reason, because it would include all those contracts which are the very essence of trade, and would be equivalent to saying that there should be no trade, and therefore nothing to restrain. The dilemma which would necessarily arise from defining the words " contracts in restraint of trade " so as to destroy trade by rendering illegal the contracts upon which trade depends, and yet pre- supposing that trade would continue and should not be re- strained, is shown by an argument advanced, and which has been com- [852] pelled by the exigency of the premise upon which it is based. Thus, after insisting that the word " every " is all-embracing, it is said from the necessity of things it will not be held to apply to covenants in restraint of trade which are collateral to a sale of property, because not " supposed " to be within the letter or spirit of the stat- ute. But how, I submit, can it be held that the words '""every contract in restraint of trade " embrace all such con- tracts, and yet at the same time be said that certain con- tracts of that nature are not included ? The asserted excep- tion not only destroys the rule which is relied on, but it rests upon no foundation of reason. It must either result from the exclusion of particular classes of contracts, whether they be reasonable or not, or it must arise from the fact that the contracts referred to are merely collateral contracts. But many collateral contracts may contain provisions which make them unreasonable. The exception which is relied upon, therefore, as rendering possible the existence of trade to be restrained is either arbitrary or it is unreasonable. But, admitting arguendo the correctness of the proposi- . • UNITED STATES V. FBEIGHT ASSOCIATION. 705 Dissenting Opinion: White, Field. Gray, Shiras, JJ. tion by which it is sought to include every contract, however reasonable, within the inhibition of the law, the sM^Z sidered as a whole, shows, I think, the erro; of the con tac- tion placed upon ,t. Its title is "An act to protect trade ^nd commerce against unlawful restraints and monopolies " The word " un awful " clearly distinguishes between contract in restraint of trade which are lawful and those which at not. In other words, between those which a.* unreasonably m restraint of trade, and consequently invalid, and th^ which are reasonable and hence lawful. When therefT n the very itle of the act the well-settled distinction bl' tween lawful and unlawful contracts is broadly marked how can an interpretation be correct which holds that al contracts, whether lawful or not, are included in L prol used to destroy the plain import of the language found in its body, yet when a literal interpretation will wfrk out wrftng or injury, or where the words of the statute ai. ambi— the title may be resorted to as an instrument of constrifctbn ^-VM States [353] v. Paln,.er, 3 meat. 610. where cT-' eral language found in the body of a criminal statute tls SZhaVLT ''"' n"r ■"^""•"^' ^'•- Chief jL^^ Marshall, in the course of the opinion, said (p. 631) : "The title of an act cannot control its words, but may furnil some aid m showing what was in the m nd of the iSf ture. The title of this act is 'An act for the punisWof certain crimes against the United States.' ft w^U im that offences agamst the United States, not offences agJS he human race, were the crimes which the legidatuS Sf tended by this law to punish." «gisiature m- .?was Lid tW S ''T^"^*'"" °f - statute was invol^ tTrntlV:- f'^P^'^'i-- adopted was supported Se^had 1; v^ r"^- '^' ^'"^••^^ P^'-Po^^ which Con- gress had in view m adopting the law under consideration ''irr^t^,^ r!jr- ''^ *»>« ^^^^ -not be 1 r I > :f I! 1 1 1 1 1 706 166 UNITED STATES REPORTS, 353. Dissenting Opinion: White, Field, Gray, Shiras, JJ. denied that the words " restraint of trade " used in the act in question had long prior to the adoption of that act been con- strued as not embracing reasonable contracts. The well- settled rule is that where technical words are used in an act, and th6ir meaning has previously been conclusively settled, by long usage and judicial construction, the use of the words without an indication of an intention to give them a new significance is an adoption of the generally accepted meaning affixed to the words at the time the act was passed. Particu- larly is this rule imperative where the statute in which the words are used creates a crime, as does the statute under consideration, and gives no specific definition of the crime created. Thus in United Statea v. Palmer (supra), Mr. Chief Justice Marshall, referring to the term "robbery" as used in the statute, said (p. G30) : " Of the meaning of the term ' robbery,' as used in the statute, we think no doubt can be entertained. It must be understood in the i^ense in which it is recognized and defined at common law." [3o4] 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 Eng- land and in this country at the time the act was adopted. It is, I submit, not to be doubted that the interpretation of the words " every contract in restraint of trade," so as to embrace within its purview every contract, however reasonable, would certainly work an enormous injustice and operate to the un- due restraint of the liberties of the citizen. But there is no canon of interpretation which requires that the letter be fol- lowed, when by so doing an unreasonable result is accom- plished. On the contrary, the rule is the other way, and exacts that the spirit which vivifies, and not the letter which killeth, is the proper guide by which to correctly interpret a statute. In Smythe v. Fiske^ 23 Wall. 374, 380, this court declared that " a thing may be within the letter of the statute and not within its meaning, and within its meaning, though not within its letter. The intention of the lawmaker is the law." In Lau Ow Bew v. Tlie United States, 144 U. S. 47, UNITED STATES V. FREIGHT ASSOCIATION. 707 Dissenting Opinion : White, Field, Gray. Sliiras, JJ. Of me Holy Trinttyy uZTsmel m" u" S "S? "t"<, *'*""'* Mayor of New York 92 TT "tended that vested wth ? f' ''^'' " ''^' '^^ C''-<="it Courts were vested with jurisdiction concurrent with District Courts Znir "n ■ '''' ^'T"^"^'^ «* t'^^ argument, baS upon the literal language of the statute, was conceded bv the court, but the [355] results which would follow from sus taming the construction contended for were pointed out by the court, and it was observed (p. 107) : "A construction Jhuc^ evolves such results was clearly nit contem^ted S; Indeed, it seems to me there can be no doubt that reason- able contracts cannot be embraced within the provisioTof the statute If it be interpreted by the light of the ZTeme ried out and it must be so construed as to afford the remedv and frustrate the wrong contemplated by its enactment Ihe plain intention of the law was to protect the libertv nf contract and the freedom of trade. Will tS i tenttnVo aUea"tt^', '•' construction which, if it does not destr^; Itractld ttTT' ^^ *^' '^""^ «* *^« '" *« P««««aWy better their con- amon either by obtammg an increase or preventing a decrease [357J of wages, or by securing a reduction in the ho^^ol labor, or for mutually protecting each other froni u.d.rt S.Ttrem?'" t" "^r"'^ ^"••P"-' havetZ-! ac7of ison f T''^*" ^^^*'»«'- *»»« provisions of the ?ln frr e"?orT:''' '" "PP'^/" ^S— nts made ^ hit ^"^^^ ^"^ *l>e purpose of classifying the freight in be by them carried, or preventing secret cutting ofThfti hshed rates; ,n other words, whether the termsSf (h! 1^?" into for the purpose of securing fairness in thl i i »«.. ih.„.o, »n™.„„ ta,„w„ rs S ?,'^'^::t a controlled by the interstate commerce law. The H |{ 710 166 UNITED STATES REPORTS, 357. Dissenting Opinion: White. Field, Gray, Shlras, JJ. statute, commonly known as the Interstate Commerce Act, was a special act, and it was intended to regulate interstate commerce transported by railway carriers. All its provisions directly and expressly related to this subject. The act of 1890, on the contrary, is a general law, not referring specif- ically to carriers of interstate commerce. The rule is that a general will not be held to repeal a special statute unless there be a clear implication unavoidably resulting from the general law that it was the intention that the provisions of the general law should cover the subject-matter previously, expressly and specifically provided for by particular legis- lation. The doctrine on this [358] subject is thus stated in Em forte Crow Dog, 109 U. S. 556, 570 : M « JThe general principle to be applied,' said Bovill, C. J., in Thorpe V. Aaams, L. R. 6 C. P. 135. * to the construction of acts of Parliament, 18 that a general act is not to be construed to repeal a previous par- ticnlar act unless there is some express reference to the previous legislation on the subject, or unless there is a necessary inconsistency in the two acts standing together.' 'And the reason is,' said Woo-*-^- connec'^ng'^'es "i2 "It is made unlawful to charge or receive any greater comoansatlon if nnL^^f^^^^*.^ ^^' ?^ transportation of passen|era or ^e Hke kM fnrPl^lK "^1^ "* substantially similar circumst^ces and conditions for a shorter than for a longer distance over the 4itip linl i« ??f same direction, the shorter behig includ^ within thelSigefdisL^' Contracts, agreements or combinations for the Doolinrof fS^h?« of diffei^ent and competing railroads, or for dividing^et^^n th^^h^ ^ffS^^J^r.'^l* ^^7^^^« ^^ «"^1^ railroads or any porZi th^r^f are declared to be unlawful. portion luereoi, ^^r^K carriers subject to the law are required to print their tar!ff« for the transportation of persons and propertTand to keen iLm fJ? ?aniL' in r^tesTs not'l'Z.^'^'.' "^ «^"^ ^^ tSeir'ro^Sr'^ '^- K,^?^ ~i ^. ^? ^^^ *** ^ "^ade until after ten days' oublic notlT^J but a reduction in rates may be made to take effect at on?^ the ^otw of the same being immediately and publicTy giver Thrrates publl^^ 714 166 UNITED STATES REPORTS, 362. Dissenting Oplnlrai : White, Field, Gray, Shlras, JJ. ll ij S2'/^lf^«.n"L*"J;? *JSS "'»="°"™ "8 well as the minimum charges ;j£!|t?e^rnr^^-rhe°LSS^^^/°' *•* »"'- -BP-fvelyT whioif ?i^f 1^ all tariffs are required to be filed with this commlsslan Xe LmT rt ^oT.'J^'^S^"^.^ ^^ ^" ^^^^^«« that shXS ma^e S S «^? T , ^**^^* ^^^^s of connecting roads are also reaulr^d time schedules^ carriage In different cars, or by other means of d^ ^iiJCLTraperd^'iSSoS^i-^ ^ [863] These provisions substantially exist in the act as «I "" ' ^'''^P* *•"*' •'y "» amendment made March 2, 1889, It was provided that rates should not be reduced by earners except upon three days' public notice of an intention so to do. This summary of the act, which omits reference to a num- ber of its provisions relating to the power of the commission and the mode in which these powers are to be exercised, will snflice for an examination of the matter in hand. Now, a consideration of the terms of the statute, I submit makes it dear .that the contract here sought to be avoided as Ulegal is either directly sanctioned or impliedly authorized thereby. That the act did not contemplate that the relations of the earner should be confined to his own line and to busi- ness going over such line alone, is conclusively shown by the faet that the act specifically provides for joint and continu- ous lines; in other words, for agreements between several roads to compose a joint line. That these agreements ai« to arise from contract is also shown by the fact that the law provides for the filing of such contracts with the commission. And It was also contemplated that the agreements should cov«- joint rates, since it provides for the making of such joint tanffs and for their publication and filing with the ronmission. The making of a tariff of this character in- cludes necessanly agreements for the classification of freight as the freight classification is the essential element in the making up of a rate. That the interstate commerce rates, aU of which are controlled by the provisions as to reason- ableness, were not intended to fluctuate hourly and daily as competition might ebb and flow, results from the fact that the published rates could not either be increased or reduced y UNITED STATES V. FEEIGHT ASSOCIATION. 715 Dissenting Opinion : White, Field, Gray, Shlras, JJ. except after a specified time. It foUows, then, that agree- ments as to reasonable rates and against their secret reac- tion confonn exactly to the terms of the act. Indeed, the authority to make agreements on this subject not only re- sults from the tenns of the act just referred to, but from its mandatory provisions forbidding discrimination against or preference to persons and places. The argument that these provisions referred to joint lines alone and not to competi- tive I'nes IS without force; since joint rates necessarily relate to and [364] are mfluenced by the rates on competitive lines. To Illustrate, suppose three joint lines of railroads between Chicago and New York, each made up of many roads. How could a joint rate be agreed on by the roads composing one of these continuous lines, without an ascertainment of the rate existing on the other continuous line? What contract could be made with safety for transportation over one of the lines without taking into account the rate of all the others? There certainly could be no prevention of unjust discrimination as to the persons and places within a given temtory, unless the rates of all competing lines within the terntory be considered and the sudden change of the pub- lished rates of all such lines be guarded against. I do not further elaborate the reasons demonstrating that classification is essential to rate making, and that a joint rate to be feasible must consider the competitive rates in the same territory, since these propositions ai-e to me self-evident, and their correctness is substantiated by statements found in the reports of the Interstate Commerce Commission to Congress of which reports judicial notice may be taken. Heath "v Wallace, 138 U. S. 573, 584. I excerpt from some of these reports of the commission to Congress statements bearing on these subjects, as well as other statements indicating that agreements among carriers competitive as well as connecting, for the purpose of securin.. a uniform classification and preventing of undercutting of rates, underbilhng, etc., existed prior to the Interstate a>m- merce Act were contmued thereafter, and were deemed not to be forbidden by law, but, on the contrary, were considered AVhilst It IS doubtless true that in a recent report the com- • ' tl (! H I I .716 loa UNITED STATES REPORTS, 364, Dissenting Opinion : White. Field, Gray, Slilras, JJ. mission, as now constituted, has said that agreements between competitors to prevent the undercutting of rates may operate to cause carriers to disregard the lawful orders of the com- mission, this fact does not change the legal inference to be deduced from the construction placed upon the law by those charged with its administration in the period immediately following its adoption and which was then reported to Con- gress. [365] On the subject of relative rates, the commission, at page 39 of their first annual report said : " Questions of rates on one line or at one point cannot be considered by themselves exclusively; a change in them may affect rates in a consid- erable part of the country. . . . Just rates are always rel- ative ; the act itself provides for its being so when it forbids unjust discrimination as between localities." That is to say, if one continuous line made joint rates and fixed and pub- lished them, and the other then made a different rate, not only would the first jomt rate be injurious to the interests of the railroads making it, during the period in which it could not be changed, but would also be against the interests of the public and of those who had contracted to ship, since it would create among shippers and the receivers that inequal- ity which it was the express purpose of the act to prevent. In the same report of the commission, at page 33, not only the expediency but the necessity of contractual relations be- tween railroad companies is pointed out in the following language : " To malje railroads of the greatest possible service to the country contract relations would be essential, because there would need to be johit tariffs, joint running arrangements, an interchange of cars and a giving of credit to a large extent, some of which were obviously beyond the reach of compulsory legislation, and even if they were not could be best settled and all the incidents and qualifications fixed by the voluntary action of the parties in control of the roads respectively." Also at page 35, after referring to the fact that the former railroad associations had been continued in existence since the enactment of the interstate commerce law, though pool- ing had been prohibited, among other objects, for the " mak- ing of regulations for uninterrupted and harmonious rail- road communication and exchange of traffic within the terri- tories embraced by their workings," the conmiission observed ck UNITED STATES V, FREIGHT ASSOCIATION. 7l7 Dissenting Ophiion : White, Field, Gray, Shiras. JJ. that " some regulations in addition to those made by the law are almost if not altogether indispensable." On the same page the fact is emphasized that classification had not been taken, by the act, out of the hands of the car- riers, [366] and it was observed that classification was best made by the joint action of the railroads themselves. In its second annual report the commission, in commenting upon the evils arising from the want of friendly business relations between railroads and the injury that a short road might cause by simply abstaining from extending accommodation that could not be lawfully forced from it, said (p. 28) : ^.vZ?!^''^^'''' ^"^^ u" interest in being protected against the probable ft toP« to tTfJ"^' f "kk E^"^^^: ^"* '^^ *^*^^^«t ^«^« f"^'ther than this ; it goes to the establishment of such relations among the managers of roads as will lead to the extension of their traffic arrangements with mutual responsibility. Just as far as may be passible, so that the pub ic may have in the service performed all the benefits and con veniences that might be expected to follow from general federatToS There is nothing in the existence of such arrangements which is at aU hiconsistent with earnest competition. They ar^ of^ener^^ vemence to the carriers, as well as to the pulilic and their vo?unta^ ex ensicn may be looked for until in the strife between the roiTs ?h^ in ordPr tnT^'^Hr '''"^ ^""^^^ ''*°^ ^^'•^^^-^ i« ^^t^red upon. Bu? * ioK? }^ ^T"" *^^'" ^''^'^^ '""tual concessions are often indisneii- ??iendir''hnrn/^''Tr\' ^'^ '''^^'^ *^ »^^ ^^'-^^^ ^^^^ relatTons'^; At page 29 of the report the existence of traffic arrange- ments between railroads is called to the attention of Congress m the following language : " While the commission is not at this time prepared to recommend tTonO^'^^^'^^^r^ *^^^"^' *^^ establishment and promotion oT^efa fhnn ^^t^^^^/? the^'-iiTiers that shall better subserve the public interest to th. n'n^oih-?^^'*? now common, it must nevertheless look forward imnol? ^^'^*^\^ ""^ something of that nature becoming at some time imperative, unless a great improvement in the existing conditioHf things IS voluntarily inaugurated." ^uuuiuon or So, also, the existence of traffic associations, between com- petitive roads, for purposes recognized by the act as lawful, [367] and their favorable tendency seems to be conceded in the fourth annual report of the commissioners, where, at paffe 29, It is said: » ' f s tions^w?rp''nn?fnriT^ "^^^""^ ^^^ established by the railroad associa- res^T^vpIv fh.^ ^' «J\e^en generally, observed by their members, respectively, there would be little difficulty in enforcing a rule of [herwoufd'p'S '^' f,^e competition betw^n thrr^ds wSich even then would exist would be such as would prevent the establishment p?!«pi|sp»!|!if!i||||i| II t ^1 718 166 t-XITED STATES BEPOBTS, 367. Dissenting Opinion: White, Field. Gray, Shiras, JJ. obsened." satisnea that the rate sheets were ^ The character of associations such as that under consider- ation IS alluded to at page 26 of the same report, wE hi discussing the subject of how best to secure a uSt^of rki?^ nfttle oTt' !,* "T'^^'-^^J "without legislatio/to favor It little can be done beyond the formation of consulting and advisory a^ociations, and the work of these is not S n^ ^^J^defective, but it is also limited to a TcumscXd The significance of the statement that to obtain uniformity was es JntS '•^""'"'%'**''"^ '^' "'^''•»«'" " business lutesuinoftliemone^cK^exaclll for ti!:j Perceived that the abso- beyond the bounds of reaso^ wa, of ^nw T"''*'''"- " ■>»* «'«arly son with the obtatoing"? raterthflt «h„h.Ti; ""?»«»■«* 'n compari- Jnst [368] as betweeSVaeS^ndag steady a^l^T' ^r'' """'^^'^ was practicable." steady as in the nature of things iurl^.!! T'*"" • ".•*' '^*'''"" competing carriers lead to in- «l"^\Z"^^,^. '^"e»«y oPerattag to cause compl.tata More Often, ^rharZ^ng^„"tol?SL2^1SeX"^l^"**^ • ' companies, which, when they becoin» SK^"® '' between compettog rates between th«in. Ware of ra£^ w^Ii ' "Y.'-esult in wars of purpose in view, as Is^Sethn^s tte^« '""'J"^""^ '« *"« '='"e' to their immediate '^tl^u^t^^^JZ Thln"'^ "'Ischievous business community whose ca^ulaW^s'^and ViSis mnrt "fS? aTSe*b^ a •jt I ^1 ii UNITED STATES V. FREIGHT ASSOCIATION. 719 Dissenting Opinion : White, Field, Gray, Shiras JJ ?i!frfiX^&s^of^h^xzf!f^^^^^^^^^^^^ The evil effects of shifting rates was also treated of at page 22 of the second annual report, where the commission inserted a letter received from a business man of Kansas Uty, not connected with railroads, who said • ?frS '1Z^^ n= S£--^^^^^^^^^^^ So, also, in the fourth annual report it was observed that shifting, unstable rates, by competing roads, was contrarv to the purpose of the Interstate Commerce Act, and ham- Jage 21 ''P^'"''*'""' "* "^^ commission. It was said at the business of the count^ «« th»t .^ : *u?^ """^ ^^ unsettling to and the spirit of elisUng'lTwTs againrthTi'^''''"""' *" "^^ "^"''"^ In addition to the text of the law heretofore commented on, the section which forbids pooling adds cogency to the con stniction that the law could not have been intended to forWd Sr^At r "^"''^ *"•■ '^' P"''P''^ «* preventing the doing of those things which the law forbade. For, as I have said It cannot be denied that at the time of the passage of the act there existed associations and contracts between carriers for other purposes than the pooling of their earnings. Whilst the e^act scope of these contracts is not shown, tS fact that face of the act, since it requires that agreements and contracts be^een earners shall be filed with the commission. M^Je X; o s.'\ rr^""*' "* *^' commission, as I have shown, s^i i T r.^' «g'^'»ente, and state that after the pas- sage of the act they continued to exist as they had existed before ebminating only the pooling feature. In view of these facts, when the act expressly forbids con- r 720 166 UNITED STATES REPORTS, 369. Dissenting Opinion: Wblte. Fleid, Gray, Shiras, JJ. tracts and comhinatiom between railroads for pooling, and makes no mention of other contracts, it is clear that the con- tinued existence of such contracts was contemplated, and they are not intended to be forbidden by the act. The ele- mentary rule of expressio itnius entirely justifies this im- plication. And it is, I submit, no answer to this reasoning to say that the record does not show the terms of these contracts, since judicial notice may be taken of the reports made by the com- mission to Congress, from which reports the nature of the contracts is sufficiently pointed out to authorize the con- clusion that they were of the general character of the one here assailed. Whilst the excerpts from the reports of the commission which have been heretofore made, serve to elucidate the text [370] of the act, they also, I submit, constitute a contempo- raneous construction of the provisions of the act made by the officers charged with its administration, which is entitled to very great weight. Brown v. United States, 113 U. S. 568, 571, and cases there cited. The rule sustained by these authorities receives additional sanction here, from the fact that the construction at the time made by the commission was reported to Congress, and the act was subsequently amended by that body without any repudiation of such construction. It is, I submit, therefore not to be denied that the agree- ment between the carriers, the validity of which is here drawn in question, seeking to secure uniform classification and to prevent the undercutting of the published rates, even though such agreements be made with competing as well as joint lines, is in accord with the plain text of the Interstate Commerce Act, and is in harmony with the views of the pur- poses of that law contemporaneously expressed to Congress by the body immediately charged with its administration, and tacitly approved by Congress. But, departing from a consideration of the mere text and looking at the Interstate Commerce Act from a broader as- pect, in order to discover the intention of the lawmaker and to discern the evils which it was intended to suppress and the i-emedies which it was proposed to afford by its enactment, it UNITED STATES V. FREIGHT ASSOCIATION. 721 Dissenting Opinion : White, Field, Gray, Shiras, JJ r.r/''-r.J''^ '^''' *^^* ^^^ ^^^*^«t ^^ question is in accord with the act and should not be avoided ^^ '^ "^ It cannot be questioned that the Interstate Commerce Act was intended by Congress to inaugurate a new v^TTov^, purpose of reasonably controlling interstate commeL rat and the dealings of carriers with reference to such i^t^ Two systems were necessarily presented: the one a prohS S toTif ' : T'""n^' ""'' ~-aWe rates and sub- ject to this restriction, aUowing ih^ hourly and dailv plav of untrammelled competition, resulting in inequality M^^^ aTsTnrwkS t" ^"^^--^ ^ '^^ d-tyl ^ --at rates, and whilst allowing competition subject to this limita- tion preventing the injurious consequences arising fri a [371] constan and daily change of rates between cLecSnJ or compehng lines, thus avoiding discrimination and p2 erence as to persons and places. ^ o J!!!-T.'''^ Z^ ^^^"^ '^'^^^^ ^^' I submit, plainly the one embodied m the Interstate Commerce Act At the outlet reasonable rates are exacted, and the power to stride down rates which are unreasonable is provided. In the subLue^t provisions discrimination against persons and a^a STaS requiring pubhcation of rates and forbidding chan4 of the pubhshed rates, whether by way of increase or fed^ct on Jd^r ^"t^.*'-f: To hold, then, the contract undertn cJassification and seeks to prevent secret or sudden changes in the published rates, would be to avoid a contract covS by the law and e^^^^^ uJXl\Zit correctly said that whilst the avowed purpose of he coS LT!r;t""'r'^ ^'^ foregoing objects, irulSr mtent was to brmg about results in conflict with the inSr state commerce law. The answers to the bill of ™ W specially denied the allegations as to the improper motiv^'^f ttie parties to the contract, and also expressly^^^eSX lawful and inno<.nt intention. As the ^case was Wd ^pon dnlif r • : tb«, opinion of the court sustains this view I I - I* • A A 166 UNITED STATES REPORTS, 371. Dissenting Opinion : White, Field, Gray, Shiras, JJ. holds that the validity of the contract must depend upon its face, and deduces as a legal conclusion from this premise that the contract is invalid, because even reasonable contracts are enabraced within the purview of the act of 1890. To my mind, the judicial declaration that carriers cannot agree among themselves for the purpose of aiding in the enforce- ment of the provisions of the interstate commerce law, will strike a blow at the beneficial results of that act, and will have a direct tendency to produce the preferences and dis- criminations which it was one of the main objects of the act to frustrate. The great complexity of the subject, the nu- merous interests concerned in it, the vast area over which it |372] operates, present difficulties enough without, it seems to me, its being advisable to add to them by holding that a contract which is supported by the text of the law is invalid, because, although it is reasonable and just, it must be con- sidered as in restraint of trade. Nor, do I think that the danger of these evil consequences is avoided by the statement that if the contract be annulled, these dangers will not arise, because experience shows that contracts such as that here in question, when entered into by railroads, are never observed, and therefore it is just as though the contract did not exist. How, may I ask, can judicial notice be taken of this fact, when it is said that judicial notice cannot be taken of the fact that there are such contracts? How, moreover, may I ask, can it be said on one branch of the case that the contract, although reasonable, must be avoided, because it is a contract in restraint of trade, and then on the other branch declared that contracts of that character never do restrain trade because they are never carried out between the parties who enter into them? There is another contention which, I submit, is also un- sound, that is the suggestion that it is impossible to say that there can be such a thing as a reasonable contract between railroads seeking to avoid sudden or secret changes in reason- able rates because the question of railroad rates is so complex and is involved in so much difficulty that to say that a rate is reasonable is equivalent to saying that it must be fixed by the railroads themselves, as no mind outside of the officials of UNITED STATES V. FREIGHT ASSOCIATION. 723 Dissenting Opinion : White, Field, Gray, Shiras, JJ iDJe or not. But this proposition absolutely conflicts with he methods of dealing with railroad rates adoptedin En^ land and expressly put in force by Congress in the InterSafe Commerce Act and by many of the States of the Union FoJ years, he rule m England was reasonable rates eSLdbT judicial power, and subsequently by enactment sec^SuS re^asonable rates by administrative authority. T^Wstat Commerce Act especially provides for reaLable rates Ind v^ts primarily in the commission, and then in the courts tSe power to enforce the provision and like machinery isXlded [373] m many of the States. Will it be said that p!^!^ and created the machinery to enforce them, when wheth« ?thisTro«:sr"K '"' "''* " '""^^^'^ of'ascerteSen't" :'rntr?4^4^;:^r^ ;he — .,oi:-Lr^ correct? railroad to be unreasonable was it t rdmiSVr''? ^"^^^ '''' P"P*'«'t'«" th«t though It be admitted that contracts, when made by individuals or aT^n r:sZror'7'^" '■"""^•''^' -"' -^ be clTder^^ as in restraint of trade, yet such is not the case as to nnhli-! corporations, because any contract made bTthem in a^^ Z hl'Ai, ! V '" *'" proposition consists in overlook- such a^orporation which is assaiS tJl Xlt ^ Fuller in oZZ R^r *=""''* ^^P-^f ^^ by Mr. Chief Justice uiier m Otbis v. Baltimore Gas Co., 130 U. S. 396, 408- Buu.ISr;ia"nl'o^t 'S^1^,1iXZ''LZ^ a Character that It pre- d-oe to the p„h„e .nteres,..1o^"rtr^rLrr?rronXW„": r 724 166 UNITED STATES REPORTS^ 373. Dissenting Opinian : White, Field. Gray, Shlras, JJ. tracts imposing such restraint, however partiai, because in contra- ^®??°^ ?^ P"^"*^ policy. This subject is much considered, and the authorities cited in West Virginia Transportation Co. v. Ohio River Pipe Line Co,, 22 West Va. 600; Chicago dc. Gas Co, v. PeopWs Gas Co,, 121 Illinois, 530; Western Union Telegraph Co. v. American Union Telegraph Co., 65 Georgia, 160." But, manifestly, this language must be construed with reference to the facts of the case in which it was used. What the facts were in that case is shown by the statement in the [»74] opinion (p. 406) that the contract there considered " was an agreement for the abandonment by one of the com- panies of the discharge of its duties to the public." It is also to be remembered that it was this character of contract, that is, one which was nUra vires, which was held to be illegal in the West Virginia, Illinois and Georgia cases, which were cited in the Gihhs case in support of the excerpt just quoted. That the language in the Gibhs case referred to, conditions of fact like that there passed upon, that is, contracts ultra vires, is shown by the subsequent case of Chicago dsc. Railway Co, V, Pullman Car Co,, 139 TJ. S. 79, where a contract of the railway company was assailed as in restraint of trade, and the court held that although by the contract the company had restrained itself for a long period of years from using other than certain drawing room and sleeping cars, the contract was yet a valid and proper contract. Manifestly, this de- cision is utterly irreconcilable with the view that in the case of a railroad company, every restraint imposed by contract upon its freedom of action is necessarily injurious to the public interests, and hence invalid. Indeed, the proposition that any restraint of its conduct which a railroad may create by contract is invalid, because such road is a public corpora- tion, is demonstrated to be erroneous by the Interstate Com- merce Act, which, in the provisions heretofore referred to, not only expressly authorizes, but in some instances, com- mands agreements from which restraint of the action of the corporation necessarily arises. I am authorized to say that Mr. Justice Field, Mr. Jus- tice GBAYy and Mr. Justice Shiras concur in this dissent. UNITED STATES V. HOPKINS. Syllabus. [629] UNITED STATES v. HOPKINS ET AL.. 725 (Circuit Court, D. Kansas. First Division. Septeml»r 20, 1807.) [82 Fed.. 529.] "trZr' \"" «f ^'^■'" »■' TBADE.-In a suit to restrain alleged affecting interstate commerce, the existence of an illeeal comh? nation among the defendants Is to be determined no i^mm what appears on the face of the preamble, rule^ "nd bSws^ tteir association, but from the entire situation, and the praltic^ working and results of their methods of doing busings as d^ closed by the evidence.* "usiness, as dls- Same-Live-Stock ExcHANGE.-The defendants were members of . voluntary, unincorporated exchange or association at Ka^™ cL and had agreed to be bound by Its articles of asl^«on ru S' «nd TZ^- '''"" ""^'"""^ *=<'°^'«*«* '" '■«<=e'^'ng. buying semni' Kansas C,t"/'st"r'"T'r '"^'^•""'*^' "^*' «*»* "-^'v^ « tte Kansas City stock yards from, and sold for shipment to various awe n T, '"■'^'"'- "^"^ ""^ y-^O^ '"™'*^ the only avan TncL, ""■'■*' '"' *■"•* "'"•P"^^ '»' "- exceedingly large a^ .noluding many states and territories. One of the ru^ of Ti association fixed a minimum rate of commissions toTcharl by members of the association, and prohibited the empio™ by any commission firm or con>oration, of more than thZ ~r sons to travel and solicit business, and prohibit^ the ^ZnTaf prepaid telegram or telephone messages quotinglhe marrete .„^ another rule shut out all dealings and business intercTribeiw^n members and nomnembers. Persons attempting toTrS^on LT -n7 ^S^'a^^r T''"^ -e syUatical^lucklSi" ana boycotted, and thus effectually prevented from seeurlna. nr fran«'<^ting business. BeU, that the association was an XaTU Same— Reasonableness of Restraints — Tho o/»f ^# ^ against al, restraints of .nterstr^mL^Ln: UsT^clLtto rnrsrrarZbfnrnf r^'" ■*« --"-: nopoiies whatieve^. ~::Zabi:nr ?f tr.^^:::!:' In": given case is immaterial. resrnctions m a Commerce between the Statjts ^T«h^ ^o«* *u ^ ^»- Memorandum nomtlon^'' 7 tT pl'*1"T <"* ^^- ^''^«>- with dlr^tlons to d.smlss^e b^ill^Sl VJ^T.^' ^;^^ ^^^ " Syllabus copyrighted, 1898, by West Publishing Co - f 726 82 FKDEKAL REPORTER, 529. Statement of the Case. Btot^ i8 In Itself of no material Importance In determining whether J^! ''"^'"^ T'"™,'^*'^ "' " '' ^"""^''^ "^t-**- «>e «atL ^:r^ .T°*' "' ""* '"^'^ ''»■" 8«"^«"' ^"-'e™. and traders In varlons states and territories to the defendants was solicit^ by the latter chiefly through personal solicitation of traveling aeente . and through advertisements. The course of business InvXTfJ^ gages on herds, and frequent drafts drawn by shlDoers on th» IZ,! ♦ ^ °' shipment attached thereto. Shipments were made to Kansas City, and the loans or drafts paid from pro<^ of sale, and the balance remitted to the shippers Sales at [^s City were made for shipment to markets In other sta es, as well Immense proportions, and defendants were active promoters and ^^Z tL ^' T"; '^ "^^ ""^ '"^'^ ""«« ""d regulations covered the entire business, and extended over the whole fleld ^t^^ the"- t?"' T •'^''^"•'""*^ '^■^"^ -^"^•^ "■ """•"-^ of July 2. 1890, against trusts and monopolies Subjects of Intebstate CoMMEHCE.-The live stock shipped to defend- ^ « ^ m«rL r f.f ?"' '•"■ '•«^'"P"'™t t° [»«>] other states or. If the market should be unsatisfactory, for reshipment for sale toteZf ° ""■'' '*"*^- ""^ ""* ''»'^'' to be "he subj^t of Interstate commerce as soon as it reaches Kansas City or Is there unloaded, nor until It has been so acted upon that it has become tocor^rated and mingled with the mass of property In the statr ,^!r '^^'^""^ iNTEBsrATE CoMMEBCE.-Llve stock shipped from various states to the yards of a stock-yards association In anothe" Tt t^ ^ solicitation and procurement of the members them,f! to be there sold, or to be reshlpped to other states. If the marke Should be unsatisfactory, does- not cease to be a subject of iuTer state commerce as soon as It reaches such yards and is there nn- ^n^^'thT " ""' '^•' ^""•^ "<='-• »P- - as to bLme mingled with the mass of property In the state. ITie biU in this case is presented under the act of congress of July 2, 1890 (26 Stat 209) . ^ mi^l^raTa^^lLTi °' I"* defendants, about 300 In number, are ^^rs 1 ••as''c."^'l?v^^J^rBThar"'a'Lrr ""•^^'^i tx««n»er ; Its p,a«> of busIneLfs'?n^a\ulMInSlt^ "n the ■JiAe^^^ i f UNITED STATES V. HOPKINS. Statement of the Case. 727 tween the states of Missouri and Kansas, and that defendants tran.*- stltial ran'lf/Vt^ '•" '*"^ ^'^^ ^^^"^ '"^ the oth^rr haf^b stantially all of the business transacted in the matter of receiving buying, selling^ and handling live stock at theTaSas CiTst^k Yards 18 carried on by defendants and other members of said exchange as commission merchants; that a large proportion of such live* stock f^ shipped from the states of Kansas, Nebraska, (>)rorado!Texas Missouri NeT M^'xIcfaMTs sold bvMf^^'^^^ ^^ Oklahoma',Trtzonran1 ^it^ 1 ' " Kansas City market is a public market nnri «iir^. and shippers of livrstoc^th^onivin/^^^^^ ^""''^^ ''^^''^^ ^« ^^"^^s handling selling and res hipKi^I?^^^^^^ ^* *^^^ ^^^^ ^^^ uation, said Kansas Citv^fonif vlt/ ' !?^*' ^^' ""^^^^^ ^ ^^s sit- market for the purchase f nd sal ^/ ull *^ Ti^ available public large territory of the TTr^t Ad «f^i i'lf ^^^^^ ^""^ ^^ exceedingly the exchang7of interSa^^^^^^^ ^^""''^^ ^^^"^"^^^ ^^^'^^ ^or named, theltock beng^d in *fd ^arT?^*,^^ f^'ZT^ territories of the Union; that it irthe rntw n *"* l>e shipped to other states growers and ship^rs wL^nsL^H^^^ ? large n«u,ber of cattle Yards to draw drafts on Hip ^n » • ^•^'"''^ ^"^ "'^ ^^^^^^^ City Stock stock is consf^ed and att^hin?^ mT j^^^^'^^^t^ to whom such rier therefor, to draw'™ on ^?n^L°fV%^^ *f""^ ^^ ^^ ^' when presented to thi c^Se^ s« d dr5^^ ^^^^'^ ^^^^ ^''"^^^ ^''^ in Kansas and Missour? and^; nrlfS^"^ are paid by [531] them the various towns anrckeswh^^^^^^ *^^ ^^"^^ i« by reason of the fact that L^^.! ^^ Hve stock was shipped; that and Kansas, and tL live stock ha nrfiL''''^*'' *?/ "*^*^ «^ ^iisouri In Kansas, and at otLrrin M^^sonH l^d^''^ f ^^ ^^'^^^^'^ ^« «t times ent states to be sold and shlnn^ t^ V^°** ?''^ transported from differ- state in character! Vnfca'n^^nl. fV^^^^" as a part of commerce between thP 2LfI ^u^^.,.^?*®^^^ legislation, that, if the person or partnershin to whf* r^**^ ^*" ^"""^^^"^ ''^^^sei Kansas Cit/ is not a Siber of said .v^J^''^ "l^^'K '^ consigned at to sell or dispose of such live stock on th^S^^' ^^ ^" ^^^^ permitted the reason that the defendants ..h n ^^1 ^^^^^ City market, for doing and contro lingTe Sess at'^sL merchants rules of said exchany to rSf to Lt n ^^""^ .^''^ required by the deal With a person ^'^oV^^^ :^e^Z'Z\!^re.l^ 728 82 FEDERAL REPORTER, 531. Statement of the Case. Yards; and tliesale of ttP^,^f.*hf.*K°*K.*^*''* ^«"^« City Stock expend and toss ^tall^ to th* «S?^^ ^^*'''^ """^ ^^^"^^^ ^^ npon the mark^nTo? mve tt^'^^hit'^nVn" "'ift™^'"- P'«eed government of said excSn^ are t^^^ollowinr ™ *" "" *^ "RuuB IX. — Commissions, tlon^'^I,?i/5?e~SS'li^M ni'lS^ "^r""*" »' *'« «»»» the following named or'sE^R^and ten^dZi^^rLJ-'f^f/ '^^^Je-aeck car loads of hogs same: provlikA mlmt^rTJ^^Z}^^ ^'''^ •'""''le-deck car loads of tte mission? aJ atoV?pro^l^ ™!f r^l*'^ T^' "««' <=''W8'n8 «»»- yards a sum ofmoneJ^ZSn JS? ' !!f L""" '5*^P salesman on these twen'^fonr^^^m^e^^n^m'^eV^'nrif "'/'.I ««- '" -r'S of aollaS per si-^H:* c^r^Cds^aSd^IlgK car load of veal calves. eigoteen dollars per double-deck ^^^^^'J"^ ^ie^Lt^VrilT]^' 1"" t'-«°ty-fl-e cents per load. Six dollars per slnlle^eck car in^rT^.. k^ -^ **?"'''*^ ^'^^ ^^'^ dollars per dp„ble-d^k car^d iVpurcS^'s^TaM tTL''''^ '*^° mission house or shipDine clearanr^ mnSn k? ^ i? »**? ^^ * ^™- p-r^-^-^r'^^ '^^ "'^^"rprv^'eS" """ *"" •" "'^-«» » !« l^bU'J^'rr f^"d%?r"h,^Xrh"•> *»"«« hereK^li 2o%1Si'^L%ora'va^°? "r "■■ «"-'X.ratlon represented missl^- tZ ?or 1^ th-rl^f..*"^ ""t'"?^ "' » nonresident com- r UNITED STATES t;. HOPKINS. Statement of the Case. 729 n !2l^ T"^ .^^ *°y *'*''®'' P*^*y <^^ parties, or who is actively enea^ed ^r^nf.!?."''''^!' ^'^^^ ^« provided in section 2 of thirrule) mIS^ bers of this exchange must file with the secretary, within five days of employment, the names and addresses of their solicitors More^Ln three solicitors shall not be employed at one time by a <^mmiss^^ ^^^'^'^^^^^^^^^^on. Members of a commission firm or coS^ratfon resident or nonresident of Kansas City-may travel as S^^^Siors Si;; T'i ^1 ';i^"*^''f1 ^« ^'^^ «^ tJ^e three aUow^Vach firm ofSStio^^ It shall be a violation of this rule for any solicitor r^oiSinl^ claiming to represent a commission firm or c^^Sion ^n anv ofhpr market to solicit for any Kansas City firmrand mem^rs sLh^ of soHo'S^nf .n*'^^ 1^^ **l^^^*" ^^ «°y ^^^^^^or who. rdefthe g^i^ ^rat^n ^ ' "" *''^''''*' ^^"'^' ^"^'^^^ ^^' ^ K^^^^s City firm orTr rol'.!r* }i- ;^°^. '"e^^^er of this association or firm or cornoration Ifftf!^^ ^^''^"'' '^"^^'^^ «^ ^^"^^°« to be sent a IJrepaiTtSam ?L ^^J^?.""^ message quoting the markets, giving information St^ tSlnT^'''"Tf^L?/f ^^t' '^^" ""' ««^ not^less^than llXor moie man^SOO. If said fine be not paid within three davs said firm r.^ member shall be suspended until said fine is pail^ providS howe^^^^^ that prepaid messages may be sent to shipperf quot^nracSil sa^e^^^^^^ fhlLr^th^^r.!,^^^ "'^-^^^^ ^'-^ '^ parties ^desirinVttarelur^ J^SSJE^ - - ^=r^ th^ f «fl h""S "^ """Pended from membership untU same ifnaid F^r Sec. 14. For the purpose of making effective s«v»fmn io «* 4.u«„ , J^ such special assessments in such amounts as will kL a ^?nd n? penalty imposed for violation of the foS?S iha ^hP nn iil?'* /""v such uartv If nnt nnfri «T{fi.<» 4.1k ^"^J6"*"s snail oe on account of doing's busin°sL^shall^viv i?i"^ ^'^' *"« ^^ " corporation si'r .sii ES^ ~S -"HKivs " Rule XYl.—Limitatious. I I 730 82 FEDERAL REPORTER, 532. Statement of the Case. of congress approved July 2. 1890 entitl*ii " aJ! IIV ♦ ^ ? .^ °5* buying and selling the sf ml^nd have ftrtter in^^Zt^oZ^Z uud eoinnierce hptw^An fh^ a4-<>4-»« »c runner, m resiraint or trade and resJl^inThe fr^Tr^^^^^^ *^^^*^?r *« Prevent of tlie market by ^\egr:^^Mcm^^ regarding the state employment of agents and soliSslnVh^^^ restricted the free said stock ynrdsfthat [538] t^^^^^^ f ^"«^»^«« «t SI^ ""'p^r^ ^« ^'^ P^^^'"^ theTl^iSnf o^anTC Kansas City market, unless shipped to the Kansas rut ?S t ^^^ and to defendants or other memberB of said ex chaLe */^^^^^^ purpose was to compel shippers to nav to dPfpn^nnf« J^^ the further ciates the commissions prodded fo^lnri,ipQ?H T'^ ^^^^"^ "^^^^ of the same on tlie niarlset at Knni.no Af„ Zf '° *''^ ^"'^ plalnant pravs for a < e m> disLvrn^ ..m ^- J^^'^^"!^" the cohi- JuiKtion against ^id UeV^d'nfs^'r^t^raTnfng^tte^^^^ f " '"■ £d|S«trL"=LlLTnr •• „"X* ■^^KVn^r.^rL-iv-e' not to .««triet the sa„,e.' The pJ^mble o( tLTr^^g^n^XHs'^^ toi* lows: "We, the undersigne' is carried on. On the contrarf any Sr- son desiring to se 1 live stock at said city is under no obHga?ionTo employ a commission merchant, but is at full llbertv To nnt fr.. ?»,!. self, and the stock-yards compaiy extends to sucKson all thP nri^' leges and facilities afforded by it; and pe^L dSg to purS^e live stock at the yards may, and they constantly do, purchas^dirS? t UNITED STATES V, HOPKINS. Statement of the Case. 731 '^Pe^'^lrlZTnXZu^t^^^^ of the cattle pur- f ion merchant. The oX restriction 11^^^'"'^?'^°* ^f any commis- is that contained in rule 16 v^ tha?tw° ^f'^bers of the exchange as a commission merXnt who'v^otnfio fH'^*"i''^* ^^^* ^***> « P^^s^^ 7,ho %^ suspended or expelTed JemK^^ t^^^^^' ^^ that the Kansas Citv market is 3 n r:„Kii V^ ^^ further averred vate character merely Defendants ft,.?H^"'' ™^'*^^*' ^"^ ^« «f a prl- tion of the firm of Greer Si ^^^^^^^^^^ that with the ex^ep- membership in the ex7han^P fnr ^;' ^^^"^^ "^""^ ^^st suspended fr^ Violation of the rules the^^^^^^ ""k ^ ^°^ ^"^^'^ ^or^ withdrew from said exchln^' nU J^ul" subsequently voluntarily said yards are members of Hi^ ILZ *^^ commission merchants at that, whenever d^aSs are draw^i fr^^^'T' .^f ^^^'-^^ts further aver paid either at the place where 'ava^.fr^ merchant, they are presentation to the drawer-and tS ^L?/.?*'^ ^^J""" *^^^^^' ^r <>« in the state of Kansas or Mfs^our acmr^in^iT ?h P^'^'^^"* ^« e**^^^ action is closed. Defendants are in?ZfJ5^K^^ *^^ particular trans- that the exercising of their oe^Dat?on«^n?^ '^""'^*' ''^"^ ^^^''^^ e- states, within the meaning of ?SecoZi^,H^* cx)mmerce between the States: that it is not true that a roS'[^!?n^ IJ^^'r ^^""l ^^ *^^ ^"^^^^ mitted or cannot sell the same 1? 4^-S l^n.^ ""^ Kl^ ^^^ck is not per- said exchange refuse to dpn^wHHo^ ^^^^l' ^r that the memberrof that any pefson sh pp^ng^ Tsatd" vT h*^""^! '' '' ^^^t tr^e to employ a member of R«MLfi?o ^^ said yards, and refusing [534] to some otheT market Sefendan^^^^^^ *^ '^'^'^ ^^e ^^^ combination among them or thnrnnv^^ *^^* *^^^^ ^^ ^^-^ unlawful ing stock to the KansaTci^ ^tnhi -^^^^ is prevented from deliver- hindered or de'ayeror ex^^ensr^^ '^^^ t^^^eof is any obstruction or embargo ninoPd n^n h "'^ 1"^^^^ entailed, or Stock. Defendants dert'tat'Lnrof th^ r, !f. 'T'^'fl'''^ "^ '•^"•^' "^^ in restraint of commerce lletw^n /hi !f? ""^ ^^^^ association are ants deny that tZ:^ have ^f^^^ otherwise. Def end- laws of the United Stntlc ^"^^^^atecl together, in violation of the selling live sYo^ci^ltl';' rya^n^^^^^ ^^ ^"-^^"^ ^^^ for buying and selling such fve stoci Hvf^U'' ^ minimum price mission of information resn Jtinir fh^^^^^^ ^^i f^^^train the free trans- by telegraphic me™' ™^^^^ ^ity market solicitors in said bucinpss • thnf II.L • ^ employment of agents or cess of such an organization i^^ ^^^ '^'^^' '^ *h«*' to the suc- be a uniform sSr^fcommiiion^^^ observe the same; and tlmt b" 'er^Vf^n^ *^'''*- ^" members shauld such schedule, a ^nditiof is cUtii 1 v wh?Jh '.'^"' ^^ violations of might and would bring Tout aTtftf o^Lh^l^H/"'^'JJ?"*-^ P^^'^«^ a practice unfair to shimevs ^nT^fJL ^^^^^I ^"^^''^^ ^f prices.— ble persons who carr^Sn thp n.^.^^^^^^^^ '*"'°ous to responsi- fairly. They have no des"re to r^^^JutZ ""^ commission merchants commission merchant at KansL^cT ^.'o»" «<^ting as a to the interest of the public or shto^r«tn"'^^,^^'"** ^^* ** *« «ot that individually and collectivelf tV^^^^^^^^^ and association are invoked forth^^^ ^f their articles of any competitor eitherin hi^fffn^fl S^ Preventing the success of ThTlFr^^"^''"^ su^h'Ses^fi^mTh^^Sfrd ^' ^^ The act of congress of July 2 1890 <2fi <5tot Sm\ 1 ?. . pro<^ing is brought, provides as Mlows *' ^^ ""''"' """^'^ *•"» otheS,°or eo^n^7rari^'^.S"'„f T !? *« '»"" <" *"»«♦ »' the^severa, states. Mt^o-i^rn^atroyrhe^^brd^-edT SI li ll 732 82 FEDERAL REPORTER, 534. Opinion of tlie Court. ^ii„5 I?^-^ ^^'^ ^^^ ^^*" monopolize, or attempt to monop- olize 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. ♦ » ♦ »♦ O J ». ixiio- Section 4 gives to circuit courts of the United States jurisdiction to prevent and restrain violations of the act, and makes it the duty ? JS®.**^**'"*^* attorney, under directions of the attorney general, to Institute proceedings in equity to restrain such violations. W. C, Perry y United States Attorney. Karnes, Holmes <& Krauthoff, McGrew, Watson db Watson, and Hutchings <& Keplinger, for defendants. Foster, District Judge (after stating the facts). It will be observed that the answer of the defendants denies and puts in issue the allegations of the bill charging a combination or conspiracy or contract in restraint of trade or commerce, and denies any monopoly or attempt to monopo- lize or combination to monopolize any part of the trade or commerce among the several states, and denies that the busi- ness for which the exchange was organized, and in which its members are engaged, comes under the class of commerce or trade among the states. The first question, whether there is any combination in restraint of trade or commerce, or a combination to monopo- lize any part of trade or commerce, on the part of the defend- ant association, is to be determined, not alone from what api)ears upon the face of its preamble, rules, and by-laws, but from the entire situation and the prac- [535] tical work- ing and results of the defendants' methods of doing busi- ness, as disclosed by the testimony in the case. The defend- ant association is located at Kansas City, on the line between Kansas and Missouri, in the immediate vicinity of the Kan- sas City Stock Yards, and in close association therewith, being tenants of said stock-yards company. Said yards, with, perhaps, the exception of the yards at Chicago, are the largest in the country, and handle great numbers of live stock. These yards, the packing houses, and this exchange are all situated at the gateway through which flows the great stream of conamerce of several states and territories, and among all the business tributary to this locality probably UlflTED STATES V, HOPKINS. 733 Opinion of the Ck)urt. none is as important as the live-stock business and the vari- ous industries connected therewith. The defendant associ- ation is entirely voluntary in form, and does not directly require any person engaging in the live-stock commission business to become a member; but it will be observed that rule 16 prohibits any member from dealing with any person violating any of the rules or regulations of the exchange, or an expelled or suspended member, after notice of such sus- pension has been issued by the secretary or board of directors. In practice, as amply appears from the testimony of many witnesses, this rule shuts out all dealings and business inter- course between members and nonmembers of the association. It is shown beyond cavil that the entire membership of the association regards a commission merchant attempting to do business at the Kansas City Stock Yards without joining the exchange as one violating this rule, and treat him accord- ingly. And this construction is a natural one, for a compli- ance with the rules of the exchange requires a party to sub- scribe to its rules and by-laws, and to pay a membership fee (which is now $2,500), to pay his assessments, and observe all other requirements, including the fees and commissions fixed for handling live stock; and it may well be said that any dealer or broker does business in violation of these rules who does business at all and fails to join the association. The testimony discloses several instances of parties attempt- ing to enter the field, and do business there, without joining the exchange; and in every instance, unless protected by the courts, they have been »-- of buying and seHi gS stock at the Kansas City Stock Yards. It is clearly a c^mW nataon to restrict, control, and monopolize that dass ofTade and commerce. The defendants declare that the r les rel- and fair and for the best interests of buyer and seller Po« fnt^L t's"o; uS' ft"^' '' '' "''^ "P^' looking at ^he" if sSStUf l""^ grower or purchaser, why the number otsolicitors of business should be limited to three for eaoh WH "'^ ;'T ^''"'•^ •" " ^^*"«"on on telerraphic in forma on as to the state of the market, or why he should be compelled to pay a commission of 50 ^nts a head on cattl^ when he paid 25 cents before the exchange was or^nfzei indX'^suLlS^"*' '""' "•*^ ~«* the states, but also thriustrnmpnt«^?J?<^^ *■ *^ """^ '*''^°» between portatlon that t indud^ aTX ll^*'''!? PWc-esses of such trans- have for their object or ^volv»« „„^?*"'*"!?^ ""Btraets which sion or passage fS o^'ZlrtoYnotheT-'"' *''""'"'' '"^^^ "•""*'"'«- Mr^PM ^t t' f •■ ^i^?/^^^ ^''•' 156 U. S. 13, 15 Sup. Ct 254, Mr. Chief Justice Fuller, speaking for the court, savs- changed for the DurooT^f «nih t;.^^?. »vtK\eii bought, sold, or ex- the lay of such^trrsH, may" be St^""Z thtl"'^"' ""* «° form part cf interstate tradj or Sner™.'" ^ '^""'^ "■*' It has been repeatedly held by the supreme court that a per- son soliciting orders for goods or freights to be shipped fr^m one state to another, and express agfnts transport^^gZ^ from state to state, are engaged in commerce betwln^; states, and a local tax or license cannot be imposed for trans- acting such business. Walling v. Michigan; m U S wS 63?"^^?. ''*' ?'''^'"'' " ^'^^ ^''•' "^ U. S. 34, 6 Sup. a 635; Robhrns v. Taking Dist, 120 U. S. 489, 7 Sup Ct 592 S mTs lo?- fo ?' ' n'"P- ^'- ' ' ^^<^-^- T&mta, 136 U. S. 104, 10 Sup. Ct 881 ; Norfolk d- W R Co. V. Pennsylvania, 136 U. S. 114, 10 Sup. Ct. 951-^7 Cher y. Kentucky, 141 U. S. 47, 11 Sup. Ct.^851 ; B^nnaTv Czy ofTrMU, 153 U. S. 289, 14 Sup. Ct. 829 vLJ" T \ i"T' '•'' ^- ^- ^1^' 1« Sup. Ct 862. It hfs a^ been held that telegraphy between the states is int^rsJate 57380%^''"^ Vr' "^ ''''''^^^ 12' U. S. 640 8 Sup (Y^n ;/ ' ^f^'-^'P^ ^^- ^- Tezae, 105 U. S. 460. The qii protected by the constitution, and that which is merelv an incident or aid to such commerce, and exempt rom federal control, has been much conside«>d by the federal courts and 31808— VOL 1— OC M- II 738 82 FEDERAL REPORTEB, 538. I' . Opinion of the Court. sometimes the line of distinction is difficult of discernment. Having a watchfid regard for the police powers of the states, and the right of taxation, the federal courts have carefully discriminated in these cases, so that the general government should take nothing to itself not fairly delegated by the con- stitution. Nathan v. Louisiana, 8 How. 73 ; Crutcher v. Ken- tucky, 141 U. S. 47, 11 Sup. Ct. 851 ; Budd v. New York, 143 U. S. 517, 12 Sup. Ct. 468; Kidd v. Pearson, 128 U. S. 1-20 9 Sup. Ct. 6; U, S, v. E, C. Knight Co., 156 U. S 1. 15 Sup Ct. 249;.il/ww7* V. Illinois, 94 U. S. 113; In re Greene, 52 Fed. 113; Henderson v. Mayor, etc., 92 U. S. 259; Coving- ton d' C. Bridge Co, v. Kentucky, 154 U. S. 204, 14 Sup. Ct. 1087; Henderson Bridge Co. v. Kentucky, 166 U. S. 150 17 Sup. Ct. 532. ' Perhaps a fair test of the character of defendants' rules and by-laws would be presented by these questions : Could a state, by leg- [539] islation, impose on this traffic the re- strictions and regulations demanded by these rules and by- laws? Could it limit the number of agents a merchant should have soliciting business in other states? Could it re- strain telegraphic communication between points in different states ? Could it make a discrimination in rates for handling stock shipped from different localities outside of the state? It is indisputable that all the live stock shipped to these defendants for sale from states other than Kansas. and Mis- souri, after it has entered the current of commerce between the states, continues and remains the subject of such com- merce until the transportation is terminated, and the prop- erty becomes a part of the general property of the state. It is also well settled that, while this property is the subject of interstate commerce, no state, municipality, or other power but congress can impose taxes, restrictions, or regulations upon it, except so far as is proper, in the exercise of police regulations, for the protection of the health, morals, and person of the citizen, and except for proper charges and regulations for the use of local instruments as aids or inci- dents to such commerce, such as docks, bridges, wharves, elevators, ferries, pilotage, etc., when congress has not acted in the matter. In the case of Bowman v. Railway Co., 125 U. S., at page UNITED STATES V. HOPKINS. Opinion of the Court. 739 I 497, 8 Sup. Ct. 704, Mr. Justice Matthews lays down this principle m the following language : J wn mis onl^Va/^^^w'hVh'^^^^^^^ - tr^ ^°"^^^*^' *^^* «>« affected by state la w^Ts when T.f^fl^ states can be legitimately tablishment anl7e^la«on oJ h.^^^^^ commerce,-8uch as the S feiTies, and other SmmerHHlfnniif^^^ railroads, wharves, to seci^re thrdue^^aXTnd r^ir^' *?^ ^^^^^^^ «^ inspection laws direct y connert^ w?thfnrfia^ employments pursued therein not regulations, a state ean^t kiinnslta;.. ' '"^ "taking such internal the state, or coSng int^i^^Si/^f a ^Zln^IT' ^"'^''^^ ^^^^"^^ if connected with interstate or forl^L^?.?^^*^ Purpose, especially such taxes upon proS immrtS fnfn f hnT?"^ ' """^^ ^^^ ** ^^^ another state anH^ vet Sm^'^lt^,^^ ^^«°» abroad, or from erty therein ; and no dLcrlu^SSon c.n be l^?h '"''° "'^^.^^ P^^^- tions adversely to the nersonvf nr r.^!^^?L™^.^® ^J ^^^ ^^^^ ^egula- reguutions can^ ^"mX'^S/affS^er^taT^^rr^.?''"' "» w!l'i^l r"": ■^'"''~' 8 How. 73; Freight Too, Case, 15 Wall. p2;Letsy v. Hardin, 135 U. S. 100, 10 Sup. Ct. 681 {Or^ff^ml Package Case) ; Henderson v. Mayor, 92 U S Co V » f ' ^« V:, ^'^^*'«'^^> 100 U. S. 434; RaUwap vl>I/ f ■ 1^'^ f T ^*- ^^' ^""'■"^^'^ cfe (7. Bridge Co. P^Ve& Steel Co 78 Fed. 712; Packet Co. v. KeolJlc, 95 L. b 80 (wharfage); Welton v. Missouri, 91 U S 275- U ?t'.^n ?• ^-^^^l ^' ®"P- C*- «5; In re Rahrer, 140 v'D^b iiT o*- ^^^' ^'^ ""' ^'"^^ 69 Fed. 233; ScoU Cn^lT ' l^-- ^- ''' '^ '*^"P- ^- 265; Pittsburg & S. Coal Co v.Lonmana, 156 U. S. 590, 15 Sup. Ct 469; Hooper V, Caltfomia, 155 U. S. 648, 15 Sup. a. 207; EmertVTil souri, 156 U. S. 296, 15 Sup. Ct 367 M 740 f 82 FEDERAL REPORTEB, 540. Opinfon of the Court. Counsel for defendants contend that their business is only an aid or incident to commerce,— something in the nature of personal service; but it is not apparent that a combination for services may not be a restraint or monopoly of commerce under the act of congress. U, S. v. Trans-Missouri Freioht Ass\im U. S. 312, 17 Sup. Ct 540. But the business of defendants is more than personal services; it is not merely a local instrumentality in aid of commerce. Defendants are active promoters, and frequently interested partes, in this immense traffic. They reach out over many states and ter- ntories by their solicitors and advertisements, and gather in for sale and slaughter, millions of cattle, sheep, and hogs' and their rules and regulations cover the entire business, and extend over the whole field of operation. Touching the ques- tion of what are aids or incidents to commerce, as Well as po- lice powers of the states, the following cases are in point- Packet Co. V. .9^. Louis, 100 U. S. 423; Vicksburg v. Tobin, Id. 430; Packet Co. v. Catlettsburg, 105 U. S. 559; Parkers- burg & O, R, Tramp. Co. v. City of Parkersbnrg, 107 U. S ??!'tt o"^* ^^' ^^^' (Gloucester Ferry Co. v. Pennsylvania. 114 U. S. 196, 5 Sup. Ct. 826; Huse v. Glover, 119 U S 543 T Sup. Ct. 313; Hall v. De Cuir, 95 U. S. 485; Cooley v. Board, 12 How. 298; Packet Co. v. Aiken, 121 U. S. 444, 7 Sup. Ct. 907; Sands v. Improvement Co., 123 U. S. 288* 8 Sup. Ct. 113; Monongahela Nav. Co. v. U. S., 148 U. S 312 13 Sup. Ct. 622 ; St. Louis v. W. V. Tel. Co., 148 U S 92' 13 Sup. Ct. 485 ; Munn v. Illinois, 94 U. S. 113 ; Budd v. New York, 143 U. S. 517, 12 Sup. Ct. 468; New York, L. E. d: TT. R. Co. V. Pennsylvania, 158 U. S. 431, 15 Sup. Ct. 896; Henderson Bridge Co. v. Kentucky, 166 U. S. 150 17 Sun' Ct. 532. , • oup. The defendants further contend that when this live stock reaches Kansas City, and is unloaded into the stock yards it ceases to be the subject of interstate commerce. This prop- osition, however, covers but one point in the controversy for several of the rules and by-laws of defendants have more than a local operation, and extend beyond state lines. Does this stock, once upon the stream of commerce, cease to be such when unloaded at Kansas City? Could the state of Kansas tax these cattle in the stock yards? m { UNITED STATES V. HOPKINS. 741 Opinion of the Court. The defendants cite the case of Brown v. Houston, 114 U, S. 623, 5 Sup. Ct 1091, and Coal Co. v. Bates.^ 156 U. S. 577, 15 Sup. Ct. 415. In the former case the coal which was subjected to taxation had reached its destination,— i. e. the state of Louisiana,— and was there offered for sale in great or small quantities to suit the purchaser. The court says: [541] " It might continue in that condition for a year or two veara or for only a day. * ♦ * We do not mean to say thatlfTta^ll^: ck^of'NPw^Vn^i.'*^*'^''!^ ^*,.r^ ^«^ry ^^d railroad dep^t 1^ Se city of New York, charged with the duty of collecting a ta^on every P ;T fhi^H "*" T ^?? ^^ P"^^"^^ «»• merchandise brought ^nto S^ city, that it would not be a regulation of and restraint upon mteretate commerce, so far as the tax should be imposed on aX?es Sht from other states. We think it would be, ^nd that it would b^an encroachment upon the exclusive power of congress. Bearing upon this question is the case of Brown v Mary- land, 12 Wheat. 419 ; also, Leisy v. Hardin, 135 U. S. 108, 10 Sup. Ct. 684. In this case, Air. Chief Justice Fuller, speak- mg for the court, says : "That the point of time when the prohibition ceases, and the dowot ll,l^\t^^^ to tax commences, is not the instant when the a^^ enters the country, but when the importer has so acted upon it th^ it has become incorporated and mixed' up with the mals Tprope^ in the country which happens when the original package is nri^^!^ fnt.^r^.^nt'l''.^^^' ' *?^* **^^ distinction is obviousC^f n a t^ S w^fh tTi intrT'''* ^%^° ^™P?2 ^^ "^ ^«y to *>^'°e incorpoTatS 1^1 i 1 ^^"^"^^^ ^^^^ ^^ property, and a tax which finds the article already incorporated with that mass by the act of the im^rter." This live stock is shipped from different states for imme- diate sale, and, if the market at Kansas City is not satisfac- tory. It IS to be shipped to another market. I cannot believe It ceases to be the subject of interstate commerce when un- loaded into the stock yards. Sections 4386 and 4387 of the Revised Statutes humanely prohibit any railroad company whose road forms any part of a line over which animals are r^onveyed from one state to another from confining them in cars over 28 consecutive hours without unloading them for rest, water, and food for at least 5 consecutive hours. Under the act of congress of May 29, 1884, establishing a " Bureau of Anrnial Industry," and the act of March 3, 1891, for the inspection of live cattle, hogs, etc., the general government has established inspectors at the Kansas City Stock Yards assuming that such stock comes within the purview of said acts of congress. While realizing the importance of the issue 1 I 1 1 -••» _ ; 742 83 FEDERAL REPORTEB, 36. Syllabus. involved in this case, and the responsibility of making ap- plication of the "Anti-Trust Act " to a new order of facts, I am impelled to the conclusion that, under the facts and the law applicable thereto, the prayer of this bill should be granted. 1998} ANDEKSON ET AL. v. UNITED STATES. (Circuit Court of Appeals, Bightli Circuit) [82 Fed., 998.] Certified to Supreme Court for instructions upon certain questions, under the provisions of section 6 of the act of March 3, 1891. ^ [Copyrighted, 1898, by West Publishing Co.] [Decision in the Supreme Court (171 U. S., 604). See p. 967. Case in the Circuit Court not reported.] [36] NATIONAL HARKOW CO. v. HENCH ET AI..« (Circuit Court of Appeals, Third Circuit October 29, 1897.) [83 Fed., 36.1 Restraint of Tbade— Combination of Patentees.— Numerous manu- facturers, under various United States patents, of float spring-tooth harrows, agreed to organize a corporation, to assign to it all the patents thus owned or thereafter to be acquired, and the good will of their business, and not to be interested in the manufacture or sale of such harrows except as agents or licensees of the corporation ; that the corporation should license them to manufacture and sell, for their own account, subject to uniform terms and conditions, their respective makes, and should not itself manufacture or sell ; that each licensee should pay one dollar for each such harrow manufactured and sold by him, and should receive paid-up stock in return for the patents and good will. Those who entered the agreement represented 70 per cent of the total manufacture and sales of the United States. The corporation was formed and the aasigmnents made. The licenses issued also bound the licensees not • Suit originally brought hi the Circuit Court for the Eastern District of Pennsylvania (76 Fed., 667). See p. 610. A similarly entitled case (84 Fed., 226), p. 746, is another suit, brought in the Circuit Court, Northern District of New York. ■K r.» i NATIONAL HARROW CO. V, HENCH. 743 Opinion of the CJourt to cut prices, not to sell other float spring-tooth harrows except under the licenses, and provided liquidated damages for every breach. Held, that the arrangement was an unlawful combination in restraint of trade.** Same.— Though the fact that several patentees are exposed to litiga- tion, justifies them in composing their differences, they cannot make the occasion an excuse or cloak for the creation of monopolies to the public disadvantage. [37] Appeal from the Circuit Court of the United States for the Eastern District of Pennsylvania. W. P. Quinn, for appellant. John G, Johnson^ for appellees. Before Dallas, Circuit Judge, and Butler and EIirkpat- RiCK, District Judges. BuTLEri, District Judge. The essential facts are well stated by the circuit court, as follows : vnrt ^^f^^^i?'*^^ Harrow Company, a corporation of the state of New York,— to whose contract rights and general purposes the olainUff a na^S^/J.'^*^^ r^*"*^ ^^^ ?l^^'^ corporation, hS^l^c^^J^^^fig* nated in a written agreement between a number of leading and distinct ^X t^thT "^^^'^ 1^'^^k"" .^^"^ States letters patent, S flo2 spring-tooth harrows, whereby it was agreed that they would organize a corporation under the laws of New York and would assig^ to tol corporation ail United States letters patent which they reS^tivS^ hafrowr^r.i^^^"^*^%?"r "^^^^^ relatfngTo floTt sp?K1S ?w fw ^ *i^^ good will of their business in such harrows, and that they would not thereafter be interested in the manufacture or sale of such harrows except as agents or licensees of the corpo^tton ; that the corporation should issue to the persons, firms and corporations respectively so assigning to it their said patents and the Jood will of their business exclusive licenses to manufacture and sell noon their own account, subject to uniform terms and conditions, the same style of harrows which they were malting and selling just EriS^/^*^® agreement, and that the corporation itself would not manufacture and sell any style of harrows covered bv its li^nses • that each licensee should pay to the corporation one dollar o^^fri float sprmg-tooth harrow manufactured and sold by such licen^ and that each person, firm, or corporation transferring to the i^^- tion the good will of their float spring-tooth harrow businS?^nd their patents relating thereto, should deceive In payment tSrefor ^^^.tT^^^^"^^ ^' ^^J^ "P^° ^^ *« fl^^ *>y arbitration, f ptid- up stock of the corporation. ^ " The agreement in the flrst instance was signed bv six different manufacturers, but the contract contemplated and provided that others f«»i" ^^™® into the arrangement and become parties thereto. Accord- ingly other manufacturers of float spring-tooth harrows soon joined the combination, which then embraced twenty-two different pei-sons, firms « Syllabus copyrighted, 1898, by West Publishing Co. 744 83 FEDERAL REPORTER, 37. Opinion of the Court NATIONAL HARROW CO. V, HENCH. 746 and control of this or«mlMtl«?^a n^ ^^"^^^ under the regulation mg at lea^t m^^Zftt^?' *^ ""^""^ manufacturing and sell- relaSng *\o ^SSf^LX^ wh T ^'' ^^ *^^ ^^*^ states letters patent «rl««#^^. ^^ spring-tooth harrows, under which thev had h«»n manufacturing and selling harrows. They Joined the ' •"" [Copyrlglitecl. 1898, by West I^ubHsliliiif Co.] ? 7. 4 UNITED STATES V. COAL, DEALEKS' ASSN. 749 Statement of the Case. [262] UNITED STATES v. COAL DEALERS' ASS'N OF CALIFORNIA ET AL. (Circuit Court, N. D. California. January 28, 1898.) [85 Fed., 252.] Monopolies-Anti-Tbust Law-Restraining OaDEB—Under section 4 of the anti-turst law of July 2, 1890, a restraining order may be Issued without notice, under the circumstances sanctioned by the established usages of eT.o5 ^ commerce, in violation of the act of jSv 2 1«S^ 12^ i-^ *^^^^. ^""^ tion restraining the defendant? from furtheragr^ing ^mbVn?^^ fnTrJ °^' ^5^ ''?^^''^ *«^^*^«r ^'^ maintaining rSfef^l' r^^on^' and rates and prices for coal brought from British Cohunhtrwl^h iagton, and Oregon to San FranciscS, for d™meX pur^as S r ^//r^^'. V""'*^^ ^*^*^^ ^^'*^^^^ Attorney, and Alfred L, Black, Sp mal^ssistant United States Attorney. « Syllabus copyrighted, 1808, by WestPubllshtag Co! * 85 FEDERAL REPOBTEB, 252. Opinion of the Court. D^ ie J fX'JrM^^'^J'''''^^ *"' respondents Coal W O St^ff / CaWornia^Oregon Coal & Navigation Co.. W. I,. Stafford, and E. D. Chandler. pj*"" f ,f "^'^/f ^"w. 'Of respondents Central Coal Co., John Rosenfeld, Louis Rosenfeld, and Henry Rosenfeld miC^ trading as John Rosenfeld Sons. ^o^nie'^- Partners J. t Wifson^'l'S ''"' ^^'"^^ ^- ^^-' *- -Pon«^-ts FrkcL ^'"'^''"' **" '^'P*'"^*"*^ C^'^ries R- Allen and George MoRBow, Circuit Judge. This is a bill in equity, brought by the United States attorney^ upon the authority of the attorney ^eral Tn l2o3] he name of the United States, against^the Col" Dealers Association of California and the members of the association and certain firms and corporations doi^g bu^! Z^ '^^r ^^r^""^.' '"' *•'« P"^P°* of dissolving X t^. i Association, as an unlawful combination^ and to set aside an agreement between the said association and the other defendants, alleged to be in restraint of trade ^d "Tr^tlT^*'"" 1 *'*' '^ ''' "^^^^ -«"« of San Francisco; that R. Dunsmuir's Sons are the ageS the Wei ington colliers of British Columbia, from whi^ SrTntTr?."*.*?' '°'^ '^^^^ fr"-" British Colum- bia, that R. D. Chandler is a wholesale coal dealer in the city of San Francisco, and imports and brings and d^ in and seUs coal brought from the state of WaThingtonTttiS UNITED STATES V. COAL DEALERS ' ASSN. Opinion of the Court. 751 J. C. Wilson & Co. deal in coal brought from British Columbia; that the Oregon Coal & Navigation Company own coal mines in the state of Oregon, and import and bring coal to the state of California from said mines, and sell the same at wholesale ; that W. G. Stafford & Co. import and bring coal from the state of Oregon ; that the defendants and their associates comprise all the wholesale dealers who handle, brmg, and import, and sell coal, used in San Fran- cisco for domestic purposes as fuel; and that the said de- fendants, combined together, can absolutely control the price charged for coal for domestic purposes as fuel at said city of San Francisco, by reason of the fact that San Francisco is located at such a distance from all coal mines, other than those controlled by the defendants, that the rates of trans- portation are prohibitory, and make it an impossibility to import or bring coal as fuel for domestic purposes from any place or places or mines other than the mines owned, oper- ated, and controlled by the defendants, or some of them; that all the coal mined in the state of California that is used as fuel in said San Francisco is owned and controlled by the defendants, or some of them. The bill further alleges that the city of San Francisco is a city of 290,000 population and upward; that the inhabitants generally use coal as fuel for domestic purposes, and that it is to them one of the prime and common necessaries of life; that they use, as fuel for domestic purposes, about 800,000 tons of coal annuaUy, of which amount more than 700,000 tons are mined in British Columbia and in the states of Oregon and Washington, and imported and brought to San Francisco ; that the small per- centage of about 50,000 tons is mined and produced in the state of 'California; and that this domestic product has no practical effect on the market price of coal in San Francisco. It IS further alleged that in the year 1895 there were in the city of San Francisco divers and numerous persons engaged 111 the retail coal business, supplying coal as fuel for domes- tic purposes to the inhabitants of said citv; that said coal came, m large part, through the agency of the dealers men-^ tioned m the [254] bill, from British Columbia, the state of Washington, and the state of Oregon; that the retail { 752 85 FEDERAL REPORTER, 254. Opinion of the Court. [m"rl^'r " combination with certain wholesale dealers and .Tnlw Tk *''"" ^"^'^^ ^^"'"bia, and those bring otL^ Lf*"" '^•'*'*^ *•' Washington and Oregon, an^ Ss^ ntn '".""^'''i^*' '^ith intent to form a Sn ract! cf O^ln 5 ^•'"nb.a, the state of Washington, the state of Oregon, and the state of California, and with intent to "S To' '"' '" f'^^t "^ """"P^"-' -<1 oomWne anmP'ete a list be decided upo™ ^nromers, and such other matters as may to"^^le^/*e^»«J*?^^«„°*«>«- (a) ^^y person who engage. Bhall own and ^rate Tf^ard Sl^ an"^Sl>*" "?'.?«""'• '^"o sign. Shan be r^arded as a reto?I dMS>r ^k/??. '''^P'"^*'* " shippers shall bel^iglble to memt^«hi„ ^'!k, <•*> ■*" ""'"ers and ■och miner and sUpwr shaTi n«?^iL -*•"* association, provided .t_retaiI.atIessprloe''SJan?he'Utandea'llrs".''"''"^ of selling coal. mem^hlp^l^te"?^tS^"T^/Sin'^''* aiirt ** Sec. 11. New Yards. Any member oneniiifi: a new vnrd or vania after June 14th, 1805, in addition to the oie that se^rld l?Is admissi^ in the association, shall be liable for an additional t^rhund?edS? dollars admittance fee and monthly dues for each yardT oi^nedli ass^iaUon'"'** '^"'*' "' '^"^ *** participate in the berTeflT of tiS mom^o; IL fw**fi^ ^^"^^i and Weights, (a) No dealer shall give tT!XniT 1 SS^^^ ^"'l*^.^'' ^ f**^^' ^ I^"°^« ^« 5 sacks, or f ton (short) : 1,000 pounds to 10 sacks, or i ton (short) • 2 000 nmindJ to 20 sacks, or 1 ton (short) ; 2,240 p;>unds to 1 toMIong) (b) All long tons must be delivered in bulk. Names of coal must appear on k" v^k'^J \"^ "*^y ^^«^ **« »*«^^ ^«rd. A load of coal deliveml ^n bulk sha 1 be per ton of 2,240 pounds. If handled after arr?>'?l at customers place, an additional charge of fifty cents per ton must be S:'o?;notnr.i« T^ delivered in twenty sacks, and put in bin, shall De -.000 pounds. No premiums or presents are permitted to be offered as inducements for purchasers to buy coal, (c) Dealers shall be permitted to sell and deliver fifty pounds of ial T(1^7-half card rates for one hundred pounds, but in no case shall they be allowed to oiindT " 1""^^i*i«s ranging between fifty pounds and one hundred "Sec. 13. Violations— Penalties, (a) If a dealer or agent, member or non-member, be found guilty of selling coal in violation of the card rates or rules, he shall be subject to a fine of not less than ten (10) dollars nor more than one hundred (100) dollars for first olfense, not less than twenty-five (25) dollars nor more than two hundred (200) dollars for second offense; if a member of the association, be sus- I>euded and compelled to pay retail prices for third ofl*ense until restored to membership in good standing by the board of directors. WWW " Sec. 14. Agreement. The following agreement between the whole- sale coal dealers of the city and county of San Francisco, Cal. and this association, is hereby embodied in this section, and made a part and parcel of the by-laws of this association : ** * This agreement, made this first day of June, A. D. 1896, by and between the Coal Dealers' Association of California, an association and the undersigned wholesale coal dealers, witnesseth* (1) That the purposes of this agreement are : [256] First, protection to con- sumers in receiving full amount and kind of coal purchased ; second protection to dealei-s in obtaining suflicient margin to carry on a safe business with justice to consumers. (2) That said wholesale dealers wlH not. nor will any or either of them, during the continuance of this agreement, sell coal at trade rates to anv one not having an estab- lished yard ; nor will any or either of them sell coal at less than card rates to consumers, except in such cases as may be provided for by agreement among said wholesale dealers themselves. (3) That said wliolesale coal dealers hereby acknowledge the request of the Coal Dealers' Association of California, made to them on the sixth day of May, 1890, to charge one dollar ($1.00) per ton additional over present trade rates for all coal sold by said wholesale dealers, or any or either of them, to the retail dealers in the city and county of San Franci.sco, who are not members of said association, and hereby agree to comi>ly with said request, and will during the continuance 'of this agreement charge one dollar ($1.00) i)er ton additional over trade rates for all coal sold to dealers carrying on business in said city and county who are not membei*s of said association. (4) That upon receiving proof from the Coal Dealers' Association of the violation by any retail coal dealer of any of the rules of business printed on the rate card issued by said association, and being satisfied that the i I] UNITED STATES V. COAL DEALERS ' ASSN. 7.55 Opinion of the Court. have paid such i^asoSle S^ beTm";^^^ "''*" ^.^ ^^S" said association (.5) Thn/ Thl f^iiL • ^^ i imposed upon him by enforced dur ng the conti^^^^ ''"^^' ^°^ ^^*«« ^hall he factorily made by such debtor and creditors. (8) That inl^e l?ent That, after the application of the proceeds of such sale to thP ^vm^; ment shnll continue in full foro« S effect fir VhJ^*-*^'^ 2^" " ' In witness whereof, the parties hereunto set their hnnrts tho rt„„ to nSpn?' "IT"'^ ^V'*^"- ""'-^ <^"' Dealers' LsocIation«gCy Its piesident and secretary, thereunto authorized by resolution of laid ■» 756 85 FEDERAL REPORTER, 257. Opinion of tlie CJourt tt % association duly passed, and said wbolesale coal dealers signing tlieir respective names. "* [Signed] Coal Dealebs* Ass'n or Califobnu, •* • By P. Lynch, President, ** * By E. K. Cabson, Secretary. "* Charles R. Allen. ** ' Central Coal Co., " ' By J. J. McNamara. " ' R. D.' Chandler. " * Geo. Fritch, " * Per J. Homer Fritch. " * C. WU-SON & Co. "* Oregon Improvement Co., "*JoHN L. Howard, Manager. * Oregon Coal & Navigation Co., ByC. M. GooDALT., Vicc-Pres. " * W. G. Stafford & Co. " ' R. DuNSMUiR & Sons, " * By C. H. Jouett.' ** Sec. 15. Agencies or Offices, (a) Any member having agencies or offices otlier than those located at his yard, for the sale of coal, shall be compelled to have a certificate of membership for each of said agencies or offices, (b) In the event of the failure of any member to secure a certificate of membership for each agency or office, as re- ferred to in paragraph (a) of this section, within* five days after a written notice shall have been sent him by the secretarv, he shall im- mediately cause the same to be closed, or subject himself to a fine of not less that ten (10) dollars nor more than one hundred (100) dol- lars for each agency or office that is known to be operated by him or for his benefit. " Sec, 16. Sales to Nonmember Dealers or Agents, (a) No member of this association shall be permitted to sell dealers or agents, who are nonmembers, coal for less than consumers' prices. • . • *.*» The bill further alleges that the constitution and by-laws, since their adoption, have been, and now are, in full force and effect, save as amended by making the fee of membership $500 instead of $200, as provided in article 4 of the consti- tution, and by amending subdivision 3 of the agreement, set out in section 14 of the by-laws, by changing the words " one dollar ($1)" to "two dollars ($2)," where the same appears in said paragraph, and by changing the schedule of rates from time to time, so that the schedule of rates and rate card are as set forth in the bill. The terms of the agreement be- tuoen the Coal Dealers' Association and the importers and wholesale dealers in coal, as set forth in the by-laws of the Coal Dealers' Association, are made the subject of still fur- ther allegations of combination, conspiracy, and confedera- tion between the coal dealers in the establishment and mainte- nance of arbitrary rates for coal in San Francisco, and in depriving tiie residents of San Francisco of the benefits of .>!» ■i H UNITED STATES V. COAL DEALERS ' ASSN. 757 Opinion of the CJourt free competition between owners, importers, and dealers in coal from British Columbia, Washington, and Oregon, whereby the trade, traffic, and commerce in this article has been monopolized and restrained, and dealers in coal who have been refused or were unable to become members of the Coal Dealers' Association have been compelled to desist from said business, and have been restrained from carrying on their trade, business, and dealing in coal in the ^ city of [258] San Francisco brought from British Columbia, Wash- ington, and Oregon. The prayer of the bill is that the Coal Dealers' Association be dissolved ; and t^at the agreement between said association and the wholesale dealers be set aside; and that the defendants be enjoined and prohibited from further agreeing, combining, conspiring, and acting together to maintain rules and regulations and rates and prices for coal brought from British Columbia, Washington, and Oregon to San Francisco, for domestic purposes as fuel! to hinder trade and commerce between said states and for- eign countries; and that all and each of them be enjoined and prohibited from entering and continuing in the combina- tion, association, and conspiracy to deprive the people of the city of San Francisco of such facilities, rates, and prices for coal brought from British Columbia, Oregon, and Washing- ton to the city of San Francisco, in the state of California, as will be afforded by free and unrestrained competition be- tween the owners, operators, importers, and dealers of said coal used from said places in said city of San Francisco, for domestic purposes as. fuel; and that all and each of said de- fendants be enjoined and prohibited from agreeing, com- bining, and conspiring and acting together to monopolize, or attempt to monopolize, said trade and commerce in coal be- tween said states of Oregon, Washington, California, and said foreign country of British Columbia ; and that all and each of said defendants be enjoined and prohibited from agreeing, combining, and conspiring and acting together to prevent each and any of their association from importing dealing, and delivering coal from British Columbia, Wash- ington, and Oregon to the city of San Francisco, state of California, and from dealing in the trade and commerce of the same between said states and said foreign countrv at 11 I n I i: '^^ 85 JPEDERAL REPOKTEB, 258. Opinion of the Court such rates as shall be fixed by each of said defendants acting independently and separately on its own behalf. Two affidavits supporting the material aUegations of the bill were filed with the bUl on December 16, 1897. One of these, made by a retail coal dealer in San Francisco, who is not a member of the CJoal Dealers' Association, alleged ainong other things, that, by reason of the fact thai the L- stitution and by-laws of the Coal Dealers' AssociaUon and the agreement between the wholesale dealers and said as,so- mtion prohibited the sale to him of coal brought from Washmgton, Oregon, and British Columbia except at ad- vanced prices, he had been greaUy restr^ned and hindered in ^uSLT J^n*^!" *"^^«' '^' *=»"'* ^^^^ «° order requmng the defendants to show cause, on the first Monday m Januwy 1898, why an injunction should not be issued Zrj !r '^ ?' J'"^' P""'*'"^ *« "t'g^tion. ^nd in the meantime the defendants were restrained and prohibited from charging or collecting from persons engaged in the retail eoal trade in the city of San Francisco a pri^ in exci ofthe «.me charged and collected from members of the Coal D«,lers Association for like purchases, in quantity and quality, of coal imported or brought from British Columbia Sr STsS' T^ ? Washington and Oregon. On Decem-' fa! Jr A .v** *^^*':'?'^«»*« appeared specially, and moved to set aside the preliminary restraining order, upon the grounds that the order was made without notice 12591 to !Jl. K If '^ *^'* "^ irreparable injury had been shown to be probable by reason of the conduct of the defendants in the particulars in which they are sought to be restrained in iatT«T?'^ .restraining order, nor in any particular; that the restraining order was not in accordance with the S« ; ^^^^ ^""•nonly fenown as the "Anti-Trust Act," does not provide for any preliminary injunction or restrai.^- ing order. The hearing of this motion was noticed for De- cember 28, 1897, and afterwards continued to the first Mon- ifh'^ 7"^' ^f*' "^''^ •* ""' ^'^'^ »t the same time :^LtdX;Lr '^"^- ^— tt^rs wm now be ,. . T f ) UNITED STATES V. COAL DEALEBS' ASSN. 759 Opinion of the Court Section 4 of the act of July 2, 1890, provides as follows- shall be the duty of thr^verai di?H^^^^ *^'^ ^^*' ^°<^ '* in their respective dis^^tsundprfhl ^t^^^jeys of the United States, eral, to institute proce^dfnV^^^ ^^ ^^^ ^"^'•"^y sen^ violations. Such proce^ nS m«fl ^ ^"^ P''®''®"* ^"^ restrain such the case and praying thft^if^h 11^^ ^^ T.? ^^ P^*^^^«° netting forth prohibited. WhJn the Dartres Pnm^^^ ^'^j^^"^ «r otherwise fled of such petitTon K^^^^^ ^^«" ^«^« ^^ duiy noti- hearing and determinat^nf the ciS^?^' ^^ %'^'''' "^ '''^^ ^' *« ^^^ before final decree, the^urt inav nt «nv .-P^''^'"? '"^** P^"tion and restraining order 'or pSitZI as shall T T^^ T^ temporaiy premises." "*uiuoii as shall be deemed just in the Under s^tion 718 of the Revised Statutes, the court or an injunction, to grant an order restraining the act sought o be enjoined untU the decision upon the motion, wher^ th!re soTr':,*:^,''"^" of irreparable injury froiL delay. l" so far as the language of the anti-trust act differs from the intention of congress to provide a more direct and summarv proceeding m reaching the mischief which it was the pTp^ of the sta ute to remedy than had prevailed before und^ the general rules of equity practice. I am therefore cWy of the opinion that, under section 4 of the anti-trust act a restraimng order may be issued by the court or j„Z wUh out notice, under the circumstances sanctioned bl thTeltab- hshed usages of equity practice. That practice Uuirf as a general rule that notice of an applicatL for a tempTra^ restraining order, as well as for an injunction, shall lI^Z to the person against whom it is desired; but in very pre^ mg cases, where the mischief sought io be prevTnteHs serious, imminent, and irremediable, the courts will Sjnt a tTe mrfcttf"-*'*'"*^'*'^' '"^^ *«y -» -^o so^i the mere act of giving notice to the defendant of the inten- tion to make the application might of itself be pr^icti^e of the mischief apprehended, by inducing him to a^Sfte he act m order that it might be complefed beforeTe t me for making the application has arrived. Fost. Fed. Si thS the^t I ^Tf T"" *''" ^' "o »"^S«t'o° i" the bill that the retail coal dealers or coal consumers of San Fran- cisco, for whose benefit it may be assumed the action is '«■ w II 760 f^o FEDERAL REPORTER, 260. Opinion of the Court brought, will suffer irreparable injury by delay; but the anti- trust act does not, in terms, require such a showing to jus- tify the court in issuing a restraining order, and it mav well be doubted whether such a showing would be [260] required even under the general rules of equity practice in a case in- volving a question of monopoly and restraint of trade. Bar- thet y.City of New OrUans, 24 Fed. 563; U, S, v. Addyston Ptpe <& Steel Co,, 78 Fed. 712, 716. It will not be necessary, however, to pass definitely upon this question in this case, since It IS my purpose to consider and determine, without further delay, the questions presented upon the order to show cause why an injunction should not issue pending the litiga- tion. But, l)efore proceeding to that feature of the case, there is a further objection to be noticed. It is contended that, as the Coal Dealers' Association is an unincorporated company, it cannot be brought into court by making it a party defendant by that name. In equity, the action must be against the individuals comprising such an association: but there is this exception: Where the parties are numerous, some of them mav be brought in as representing the whole association. The title of this case IS against " The Coal Dealers' Association of California, and All the Members of Said Association," and also against 17 individuals, who are designated as " Members and Officers of said Association." The return of the marshal shows that all these individuals have been served; that the president of the association has been served as an individual, and as president of the association; and he has appeared in the capacity of president in the affidavit filed bv him, as has also the secretary of the association. This, I think, is suf- ficient, under the rule requiring sufficient parties, to represent all the adverse interests in the suit. In response to the order to show cause, affidavits have been interposed by the defendants for the purpose of disproving the equity upon which the motion is founded; also a de- murrer to the bill and parol exceptions to its legal sufficiency. The affidavits tend to show that the statement in the bill, that 800,000 tons of coal are used annually as fuel for domes- tic purposes by the inhabitants of San Francisco, is not true ; that the number of tons so used does not probably exceed •ft* [ i UNITED STATES V. COAL DEALERS' ASSN. 761 Opinion of the Court 400,000 tons, and the amount imported and brought into San Francisco annually from British Columbia, Washington, and Oregon, and used for domestic purposes, is not in excess of 300,000 tons; that the defendants named in the bill as wholesale dealers and importers of coal are not all the whole- sale dealers who handle, buy, and import, and sell coal used m San Francisco for domestic purposes ; that the Black Diamond Coal Company is a corporation which handles, brings, and imports and sells coal used as fuel for domestic purposes, and that this corporation is not associated with any of the defendants, nor a party to the agreement with the Coal Dealers' Association of California ; that the price and cost of mining and transporting coal from British Columbia, Washington, and Oregon have not been materially cheapened within the past few years, but have lately been increased, owing to the mine owners' inability to procure a sufficient number of miners since the exodus to the Alaska gold fields, and also by reason of the high rate for transport- ing coal from the above-mentioned places, due to the great demand for vessels in Alaska trade; that before the organi- zation of the Coal Dealers' Association, and before the ac^ree- ment mentioned [2G1] in the bill, the prices of all coals sold m the city and county of San Francisco, except British Columbia coal, used as fuel for domestic purposes, were largely in excess of the prices now charged ; that in May, 1896, one month previous^ to the organization of the Coal Dealers' Association, British Columbia coals were $9.50 and $10 per ton, Washington coals were $8 per ton, Oregon coals $7.50 per ton; and a few months after said organization Washmgton coals were reduced to $7.50 per ton, and fluctu- ated from that price to $8, $7, and $7.50, which is the highest price; Oregon coals were reduced to $7 per ton, then $6 50 and $6.25, and now is $6.55; British Columbia coals have not changed m price, notwithstanding the dutv on coal has been increased 40 cents to 67 cents per ton ; that, prior to the organization of the Coal Dealers' Association, there were many persons engaged in the retail coal trade in the city of San Francisco who practiced dishonest methods, in giving short weights, substituting lower grades of coal for better grades, and in omitting to pay the amounts due from them \ « ii 762 85 FEDERAL REPORTER, 261. ^ Opinion of the Court. to the wholesale dealers, to the injury of the wholesale deal- ers as well as to the retail trade. It is alleged that, in order to discourage these evils, the Coal Dealers' Association was formed and the agreements entered into between the associa- tion and the wholesale dealers, and it was in consideration of this partial security that the wholesale dealers agreed to sell to members of the association at a price less than that charged to nonmembers; that the agreement was entered into only for the purpose of dealing with and affecting coal in the state of Cahfomia and city and county of San Francisco, and not for the purpose of monopolizing, conspiring, or attempting to monopolize or restrain the coal trade and commerce be- tween British Columbia, Washington, Oregon, and Cali- fornia. It is further alleged that no sale of coal imported from any other state or territory is made to any member of the Coal Dealers' Association until after the same has been imported and delivered to the wholesale dealers, and bulk broken. The affidavits contain other allegations in relation to the coal business, which it will not be necessary to notice, m the view I take of the matters proper to be con- sidered on this motion. The title of the anti-trust act indicates the comprehensive scope and purpose of the statute. It is "An act to protect trade and commerce against unlawful restraints and monop- olies. It IS not limited to contracts and agreements that were unlawful at common law, nor to restraints and monopo- lies in violation of state statutes. In U. S. V. Trans-Missouri Freight Ass\ 166 U. S. 290- m, 17 Sup. Ct. 540, the supreme court, referring to this title, said: ••The title refers to, and includes, and was intended to inHndA The first and second sections of the act are as follows: it Section 1. Every contract combination in the form of trust or otherwise, or conspiracy, in restraint of trade or c^mm^ceamXtSe several states, or with foreign nations, is hereby d^Tar^to^iUe^^^^^ Every person who shall make any such contract or ^igLe in f Sv such combination or conspiracy, shall be.[26a] de^m^^^flt} o? a • ■ '^ f UNITED STATES V. COAL DEALERS ' ASSN Opinion of the Ckiurt. 763 on conviction, thereof, shall b^ n^n^hp.^ h?^ « ^ misdemeanor, and, J^!!'^ f^'^^^. ^f^ ^'^' '"P"""' " ^»« contended that A^ statute in declaring illegal every combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce, did not mean what its language imports, but «iat It only meant to declare illegal any such contract which ,nl/T?r!^ ' '*'*':''^"* "^ ^'"'^^' ''^^^ l«^^g aU others unaffected by the provisions of the act. The court discusses this question, and arrives at the conclusion that: eou;;y/A^"or"rbh;S,„*i",„'''^,,;'', --"^^^^^^^^^^^ - '"«««' e.ery several states etc tho niai„ tli i- *™''® "'■ «>i''iuerce among the restraint of trade, but all contrTol'^nJTI JY^ '^ '" unreasonable no exception or Ihuitation Sn ^ nrtrtlS mcluded in snch language, and which has been omiffiy Z^-^s." "* '""""« '" *"« '"'^ »"« alkJdtor*"'' w*'"*Tu*'* * •='^"*'-''<'* «"• combination, alleged to be m violation of the act, to say that, in view of all the circumstances and conditions, the contract or combina- tion imposes only a fair and reasonable restraint upon trade ThatrrTTf J^' '^''^''^ '^ ^^ it -P«- any'restrlin mav r i • J^^l "° '"^***'" ^'"' "*"« «^ i^asonable it may be, it is within the prohibition. This interpretation is in harmony with the other provisions of the statute which anl litTftl"/ ^ ^P**""' ^^ ^**^™P' t" --P»^' nrli^w "5^ *"■ '=°'"'n«rce among the several states tL FreiSTT ' "T" ?' "*"*'"'=* ""'^^ consideration Z the Freight Ass'n Case related to traffic rates for the trans- portation of pei^ons and property by competing common ear- ners by railroad; but the doctrine of the casef ppli J^a" well k d*^,l".^ r"""T-*^ ^"''i^^* "* transpLation-a indTJ?- "^ of transportation itself; and the clear and positive purpose of the statute must be understood to be that trade and commerce within the jurisdiction of the fed- eral government shall be absolutely fr^, and no contract or 7f)4 8a FEDERAL REPOBTER, 262. Opinion of the Court. combination will be tolerated that impedes or restricts their natural flow and volume. Under the law as thus interpreted, two questions arise upon the facts in the present case. First. Do the constitution and by-laws of ^he Coal Dealers' Association and the agreement of the association with the importers and wholesale dealers operate in restraint of trade and commerce, or monopolize any part of the trade or commerce of San Francisco ? And, ^ if so, second, does this restraint or monopoly extend to any part of the trade and commerce carried on between this state and Oregon, Washington, or British Columbia ? There is no difficulty in arriving at a conclusion with re- spect to the first question. The constitution of the Coal Dealers' Association provides, among other things, that its object is to furnish information [263] to its members as to sales of coal made by wholesale 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 to time by the organization. A retail dealer is defined as any person who engages in the sale of coal as regular business, 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^ the association, provided such miner and shipper shall not make a practice of selling coal at retail at less prices than the retail dealers. The admittance fee for memljership 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 not less than $25 nor more than $?0C for the second offense; and, if the nonmember 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 de- faulting consumers' prices for coa!^ and the wholesale deal- ers agree to comply with the notice. The board of directors of the association may employ detectives lo purchase coal at retail through any citizen. The purpose of this provision appears to be to discover those dealers who sell coal at other • f ' UNITED STATES V. C0.4L DEALERS ' ASSN. 765 Opinion of the Court. than card rates. A grievance comiuittcp is provided to as- semble whenever requested to do so bv the secretary, to re- ceive and investigate all charges of violation of card rule* or rates preferred against any coal dealer or npent in the city and county of San Francisco, it will be observed that the jurisdiction of this committee is not limited to the investi- gation of charges against members of the association, but includes aU dealers. Dealers in advertising coal are not per- r u^ ^^ '*''*^ P™^' '^"*'°"* "'^'^'"g t^« name of the coal to be had for the prices named. Both names and prices to cor- respond exactly with those on the rate card. Any circulars posters, dodgers, cards, or signs conflicting with the card rates or rules displayed, found on the streets, or circulated m any manner whatsoever, subjects the dealer or agent who caused their distribution to the penalties for selling coal in violation of card rates or rules. No dealer in coal is permit- ted to ^ve more or less than certain weights in selling coal m 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 offered as inducements for pur- chasers to buy coal. The agreement with the wholesale deal- er is made part of the by-laws of the association. The wholesale dealers agree not to sell at trade rates to any one not havmg an established yard, and not to sell coal at less than card rates to consumers, except in such cases as may be provided for by agreement among the wholesale dealers themselves. They agree to charge two doUoars per ton addi- tional over current trade rates to retail dealers who are not members of the Coal Dealers' Association, and consumers' rates to dealers who violate any of the rules of the associa- tion. A schedule of rates is adopted for the different quaU- ties and classes of coal sold in San Francisco. [264] It is claimed on the part of the defendants that the Coal Dealers Association is a beneficial organization ; that It protects the coal consumers from the dishonest methods of some of the coal dealers in giving short weights and in substituting lower grades of coal for better grades; and that It also protects the wholesale dealers in enabling them to col- lect their bills from the retail dealers. All this may be true, but it is clear that the power of the association extends '.'I I ; M t 9 t P i 766 85 FEDERAL REPORTER, 264. Opinion of tlie Court much further, and that it has another purpose. It establishes arbitrary rates for coal, from which the dealer is not per- mitted to deviate in any particular. It stifles all compe- tition between retail dealers, restricts trade within prescribed limits, and establishes a monopoly of the most odious char- acter in an article of daily consumption and prime necessity. In Nester v. Brewing Co., 161 Pa. St. 473, 29 Atl. 102, the supreme court affirmed the judgment of the court of common pleas of Philadelphia, holding that a combination among a niunber 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 is what the trial court had to say about it: "Where a price is fixed arbitrarily for which a manufactured article may he sold, it necessarily limits the production of that 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 i)roduction. It is no answer to say : ' We do not restrict your jiroduction. You may produce any amount you like. We only restrain your sale of it.* Is this not practically a limit to produc- tion? Where a pool or combination reserves the right to regulate prices, they can. by the manipulation of prices, drive their competi- tors out of business, create a mouoiwly, and enhance at their pleasure the prices to eont?umers." This is precisely the attitude of the Coal Dealers' Associa- tion, 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 association and the wholesale dealers clearly constitute a restraint of trade, which is injurious to the public interests, against public policy, and therefore unlawful. Amot v. Coal Co., 68 N. Y. 558 ; Salt Co. v. Gutlme, 35 Ohio St. 666 ; Carbon Co. v. 3IeMillin, 119 N. Y. 46, 23 N. E. 530 ; Morris Run Coal Co. V, Barclay Coal Co., 68 Pa. St. 173; Craft v. McConoughy, 79 111. 346 ; Ltimler Co. v. Hayes, 76 Cal. 387, 18 Pac. 391 ; Distilling c§ Cattle Feeding Co. v. People (111. Sup.) 41 N. E. 188 ; Ham^mo Co. v. Bench, 83 Fed. 36. The next question is as to whether this restraint or mo- nopoly extends to the trade or commerce among the several states or with foreign nations. In other words, do the facts UNITED STATES V. COAL DEALERS ' ASSN. 767 Opinion of the Coiirt. in the case bring it within the jurisdiction of the national government, under the provisions of the anti-trust act ? The retail prices for coal at San Francisco established by the Coal Dealers' Association, and agreed to by the wholesale dealers, are for different quantities of the following named coals, used as fuel for domestic purposes, namely : Welling- ton (Dunsmuir), Wellington (Southfield), Roslyn, Seattle, Bryan^ and Coos Bay. The Wellington coal is imported from British Co- [265] lumbia; the Roslyn, Seattle, and Bryant, from Washington; and the Coos Bay, from Ore^^?"^°**'*'^'- ^""-''^y "f ^^"^'^ ^- Kimlall, 102 U. b. 702; Gloucester Ferry Co. v. Penmylmnia, 114 U S J !|i ! l\ i. t 768 85 FEDERAL REPORTER, 265. Opinion of tbe Court » 196, 5 Sup. Ct 826. Commerce among the states can- not stop at the external boundary line of each state, but may be introduced into the interior. Gihhona v. Ogden^ 9 Wheat. 1,194. In Lewy v. Hardin, 135 U. S. 100, 10 Sup. Ct..681, the su- preme court held that a state statute, prohibiting the sale of intoxicating liquors, except for certain purposes and under license from a county court, was unconstitutional and void when applied to a sale by an importer of liquors brought from another state in the original packages, because the op- eration of the law was repugnant to the power of congress to regulate commerce among the several states. The court, in passing upon the question, said : " Tbe power vested in congress * to regulate commerce with foreign nations and among tl»e several states and with the Indian trib^ * is the power to prescribe the rnle by which that commerce is to be gov- erned, ami is a [wwer complete in itself, acknowledging no limitations other than those prescribed in the constitution. It Is co-extensive with the subject on which it acts, and cannot l)e stopped at the exter- nal boundary of a state, but must enter its interior, and must be capa- ble of authorizing the disposition of those articles which it intro- duces, so that they may become mingled with the common mass of proi>erty within the territory entered." Again, to make this limitation on state authority over in- terstate commerce more clear, the court said : ** It is only after the importation is completed, and the property im- ported has mingled with and become a part of the general property of the state, that its [266] regulations can act upon it, except so far as may be necessary to insure safety in the disposition of the import until thus mingled." If a law of a state, regulating the sale of intoxicating liquors, so as to prohibit their sale except for certain purposes and under license from a county court, is unconstitutional and void when applied to a sale by an importer of liquors brought from another state in the original packages, because the law in that relation is in restraint of trade and commerce " among the several states," what shall be said of the consti- tution and by-laws of the Coal Dealers' Association, and the agreement of that association with the wholesale dealers re- specting the sale of imported coal in San Francisco under the anti-trust act? If one is in restraint of commerce, is not the other? The claim that the coal is not sold until im- ported, delivered, and bulk broken is not sufficient. The UNITED STATES V. COAL DEALERS' ASSN. 769 Opinion of the Court principle of the original package does not apply to the sale of <«al. Itnxustbemanifestthatthearbitrai^rulLrdtwWch the combination of wholesale and retail dealers conduct thet business affects the sale and disposition of coal immediately upon Its arnva at San Francisco, and that, as aTTrdSf of STd , ''"'""V" ^^^^'-^^^^^ «"d tampered at the tr buted by sale, and mingled in the common mass of proo- erty in the state. But the agreement of the importers 3 wholesale dealers, which alone gives life and forSo h^c^m bnation IS directed specifically to the maintenance of ^^ rates for certain imported coals by name; and it is this agreement, and what may be accomplished under it W the ombmation, that is te be considered, and not what the'^par! ties to It may be doing at any particular time. it wLteWbr;/'""^ ''"'•' ''' U- ^^- ^«^' ^ S«P. Ct. 592, quiring that all drummers and all persons not having a rLu- ^'uirotri ""f "' 'r^" '" '''' *«^'"^ ''i^t-t o^f sSy Z hL T^ ?'' "' ^"'"« ^'^'^ ^^^^^ or nierchan sum ofTlO ' '""?'' '^r'** P**^ *° '"^^ ^•'""ty trustee the sum of $10 per week, or $25 per month, for such privilege Stat? a rl I . ?^' '*'■ ^'"^^ ^"""'^ ^"^"'^^-^ in another state, a regulation of commerce among the several states This case also arose before the passage of the anti-trus a^ and was considered as coming withinfhe established dtt^^^ that congress had the exclusive power to regulate comm^^ under the constitution of the United Stat^. Now if Z doctrine IS applied to the facts of the present cas^^l ow can a be said that the rules and regulations imposed bj^ he cJd Dealers' Association upon retail coal dealers of San FrT^ CISCO, selbng imported coal, is less an obstruction teZ merce than the law of Tennessee, imposing a liceni tax uTn drummers soliciting the sale of go^ds ffom anoTherstate" Mamfestly, a court could not consistently condemn the latter and excuse the first. Suppose the state of CalifornL were to provide by statute, a fixed price for the sale, at reJlZ San Francisco, of Wellington, Roslyn, Seattle, Brvant and 11808— VOL 1—06 M 49 I: if ii! 770 85 FSDERAL BEPORTER, 267. Opinion of the Court Coos Bay coal, and require that all retail dealers in such coals should i)ay a license to the state of $500 for the privilege of dealing in such coals at the established rates, and, to secure the [367] enforcement of such a law, should impose penalties on dealers who did not comply with the statute. Would there be any question as to the validity of such a stat- ute? Would it not be so plainly in violation of the consti- tution and laws of the United States that no court would hesitate for a moment to declare it void? With what com- placency, then, should the court view the terms of the agree- ment of the wholesale dealers with the Coal Dealers' Asso- ciation, and the regulations, fees, dues, assessments, fines, and penalties provided by the latter association for the pur- pose of controlling all coal dealers engaged in dealing in these imported coals? In the Sugar Trust Case, 156 U. S. 15 Sup. Ct. 249, it was held, substantially, that contracts relating to commodi- ties, to come within the range of federal jurisdiction, must he subsequent to production, but it was also said that con- tracts to buy, sell, or exchange goods to be transported among the several states form part of interstate trade or com- merce. A case entirely in point is that of U. S. v. Jellico Mountain Coal db Coke, Co.. 46 Fed. 432, brought under the anti-trust act, in 1891, against the members of the Nashville Coal Exchange. The purpose of the agreement in that case was to establish the price of coal at Nashville, and to change the same from time to time. Members found guilty of sell- ing coal at a less price than the price fixed by the exchange, either directly or indirectly, were fined 2 cents per bushel and $10 for the first offense, and 4 cents per bushel and $20 for the second offense. Owners or operators of mines were not to sell or ship coal to any person, firm, or corporation in Nashville who were not members of the exchange, and dealers were not to buy ooal from any one not a member of the exchange. It appeared that several mining companies in Kentucky engaged in raising coal and most of the coal dealers of Nashville had entered into this agreement. The court held the agreement was in restraint of trade and com- merce, and that the defendants, by the organization of the Nashville Coal Exchange, and in their operations under it, UNITED STATES V, COAL DEALERS^ ASSN. 771 Opinion of the Court had violated the law; and they were accordingly enjoined from further violations of the law In TJ S 7 ^^^^^^ 82^Fed. 529, the Kansas City Liv.StSk'^ihang^Ttl' untary unincorporated association, adopted articlesff ass^ - would flhS "h '^"''"! r'^^'*'^^ *^«y ^'^ tj^a'rv th^ roll for^lj "■"' ""** ^ •^""'^ ^y *e same. ,Wng the rules for the government of the exchange were fixed ratj SonT^dTr:^?:• *'' *"""^*''^" «* ^-^"-' -dHmS lions and prohibitions upon its members in dealing with tions of the exchange; these rules and regulations S^n^ St I *''?,*'"«'"«^ transacted in the matter of «- Stv I' l"^"?' ^""'^' ''"^ '^''"•^""g "^« ^t<^k at Kansas City stockyards was carried on by the members of the eT change as commission merchants. A large oroportLn of th!« SoS W T' ^"i '""^ ^'^ of Kal? nXi^ i^^ rkorii of Sh!^"^r- ^""''' ""'^ ^^'^''"^«' -d th« ter- JTrZ *^ "^'*^*""*' /"zona, and New Mexico, and was b Kansas cSr^r "' ? u !f ""^ *« "^^ P-^^'W houi m Aansas City It was held that the association (2681 was tieScrmrr " '^"^"' "'"-^•^-' -'^ -t^i ini*witrth?r''''T' "'"^I'^y to multiply authorities deal- era! states and with foreign nations must be abso"Stefy f^" ^ Srr ?;T^* ".'* ""'' ^ regulated by It ST: that no state taw, with certain exceptions not neces- say to be here stated, will be allowed to interfere wi^hlt directly, to hinder or restrain its natural current or volume In the hght of the authorities and the principles thev itX thMTr K "^ *^* "^^ constitution aS Saws o^ Lle^ie^tS Irr*'**" "^"^ ^•^^ «^™-t of the whole sate dealers with that association come within the nrohihi Wur Ate? ''' '""'^ '' ''''^ *"*» '"^^y a- turt of Appeals, Sixth Circuit February 8, 1888.) [85 Fed.. 271.1 MOlfOPOIJES— CONTBACTS IH RlSTKAIirr OF TRADE— COMBINATIONS. — Contracts tbat were in unreasonable restraint of trade at common law were not unlawful in tbe sense of being criminal, or as giving rise to an action for damages to one prejudicially affected thereby, but were simply Toid, and not enforceable. The effect of the anti> trust law of 1890 is to render such [S78] contracts, as applied to interstate commerce, unlawful in an affirmative or positive sense, and punishable as a misdemeanor, and also to create a right of civil action for damages in favor of persons injured thereby, and a remedy by injunction In favor both of private persons and the public against the execution of such contracts and the maintenance of such trade restraints.^ Same — Restraints Lawful at Common Law. — ^No contractual re- straint of trade is enforceable at common law unless the covenant . embodying it is merely ancillary to some lawful contract (involving some such relations as vendor and vendee, partnership, employer and employ^), 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. The main purpose of the contract suggests the measure of protection needed, and furnishes a sufficiently uniform standard for determin- ing the reasonableness and validity of the restraints. But where the sole object of both parties in making the contract is merely to re- strain competition, and enhance and maintain prices, the contract is void. Bamb — ^**Anti-Tru8t " Law. — ^A number of companies manufacturing iron pipe In different states formed a combination whereby the territory In which tliey operated (comprising a large part of the United States) was divided into "reserved** cities and **pay" territory. Tlie reserved cities were allotted to particular members of the combination, free of competition from the others, though pro- vision was made for pretended bids by the latter at prices previously arranged. In the iwy territory all offers to purchase pipe were • Bill asking for a preliminary injunction was dismissed by the Cir- cuit Court for the Eastern District of Tennessee (78 Fed., 712). See p. 631. Decree reversed and defendants perpetually enjoined by the Circuit Court of Appeals, Sixth Circuit (85 Fed., 271), which latter decree was modified and affirmed by the Supreme Court (175 U. S., 211). See p. 1009. » Syllabus and statement copyrighted, 1896, by West Publishing Ck>. ii' TJOTTBD STATES V. ADDYSTON PIPE & STEEL CO. 773 Statement of the Case. 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 " to be divided among the others. Held, that this was an unlawful combination, both at common law and under the act of 1890, against trusts and monopolies. 78 Fed. 712, reversed. Same-Contbacts in Restraint of Interstate CoMMERCE.-^ntract8 which operate as a restraint upon the soliciting of orders for. and the sale of, goods In one state, to be delivered from another, are contracts In restraint of interstate commerce, within the meaning of the act of July 2, 1890. V, 8. v. E. C. Knight Co., 15 Sup. Ct Lo, 156 U. S. 1, distinguished. Same-Suit in Equity-Forfeitute op GooDs.-In a suit in equity brought by the United States to enjoin the carrying out of a con- tract or combination In restraint of Interstate commerce, under the act of 1890, there can be no seizure of goods In course of transporta- tion pursuant to the unlawful contract. Such seizure can only be made under the sixth section of the act, which authorizes seizures and condemnation by like proceedings to those provided in cases of property Imported Into the United States contrary to law. ,,f^PP^f^ ^?r? /he^if cuit Court of the United States for the Eastern District of Tennessee. mercc m sued pipe, m violation of the so-called "Anti-Tni«t row" ptorl ^t^i"?!^' -""^ -; '^- The defendant wt"e thriddvston Pipe & Steel Company, of Cincinnati. Obio : Dennis Li.^ * o« ^? M^^fll^:-."^^-'. the Howard-Harrison Irin ComZv of ^Sier ^^4 ».« k""*"^.^'!* * Foundry Company, of Anniston Ala^ tte South Pittsburg Pipe Works, of South PIttsbure Tenn • «nrt iSf Chattanooga Foundry & Pipe Works, of Chartan«.?a TeSn ' Th^ Jff Hon prayed that all pipe sold and transpor^^^Lm one stotfto another nnder the combination and conspiracy de"?^ther^n S S^^iVlt'lildr/; T^ "^ ^^ir* """^ co^fls^alSl^ the ma"nn^ Sel'r"re",The'"de/en3an^' nt '^^ T'' f '^^- '" -^^tlTtl%^ thev admitted the «v1=f^„ / ^*""* """^ separate answer. In which puj^TfvofdfnrJbrgVt' cir?s r^ouroZ,^^r !zi^ ^^"at?or£LT=KTr*^^^^^^^ fte ai^tlw *"/T*« " «<"«'I«>Iy. and denied It w^ a Violation It I ■spuv I I I ' I 774 85 FEDERAL REPORTER, 273. Statement of the Case. was agreed that the final hearing might be had thereon. Judge Clarlv, who presided in the circuit court, dismissed the petition on the merits. His opinion Is reported in 78 Fed. 712. From the minutes of the association, a copy of which was put In evidence by tlie petitioner, it api>eared that prfor to December 28, 1894, the Anniston Company, the Howard-Harrison Company, the Chattanooga Company, and the South Pittsburg Company had been associated as the Southern Associated Pipe Worlcs. Upon that date the Addyston Company and Dennis Long & Co. were admitted to membership, and the following plan was then adopted : " First. The bonuses on the first 90,000 tons of pii)e secured in any territory, 16" and smaller, shall be divided etiually among six shops. Second. The bonuses on the next 75,000 tons. ."^O" and smaller sizes. to be divided among five shops. South Pittsburg not participating. Third. The bonuses on the next 40,000 tons, 36" and smaller sizes, to be divided among four shops, Anniston and South Pittsburg not participating. Fourth. The bonuses on the next 15,000 tons, con- sisting of all sizes of pipe, shall be divided among three shops, Chattanooga, South Pittsburg, and Anniston not participating. The above division is based on the following tonnage of capacity: South Pittsburg, 15,0(X) tons; Anniston, 30,000 tons; Chattanooga, 40.000 tons; Bessemer, 45,0<)0 tons; Louisville, 4.5,000 tons; Cincinnati. 45,000 tons. When the 220,000 tons have been made and shipped, and the bonuses divided as hereinafter provided, the auditor shall set aside into a reserve fund all bonuses arising from the excess of shipments over 220.000 tons, and shall divide tlie same at the end of the year among the respective companies according to the percentage of the excess of tonnage they may have shipped (of the sizes made by them) either in pay or free territory. It is also the intention of this proposition that the bonuses on all pipe larger that 3(> inches in diameter shall be divided equally between the Addyston Pipe & Steel Company. Dennis Long & Co., and the Howard-Harrison Com- pany." " It was thereu[>on resolved : First. That this agreement shall last fortwo years from the date of the signing of same, until Decem- ber 31, 1896. Second. On any question coming hetove the association requiring a vote, it shall take five affirmative votes thereon to carry said question, each member of this association t>elng entitled to but one vote. Third. The Addyston Pipe & Steel Company shall handle the business of the gas and water companies of Cincinnati, Ohio, Covington, and Newport, Ky., and pay the bonus hereafter men tioned, and the balance of the parties to this agreement shall bid on such work such reasonable prices as they shall dictate. Fourth. Dennis I^ng & Company, of Louisville, Ky., shall handle Louisville, Ky., JeflfersonvlUe. Ind., and New Albany, Ind., furnishing all the pipe for gas find water works in above-named cities. Infth. The Anniston Pipe & Foundry Company shall handle Anniston, Ala., and Atlanta, Ga., furnishing all piiie for gas and water companies in above-named cities. Sixth. The Chattanooga Foundry & Pipe Works shall handle Chattanooga, Tenn., and New Orleans, La., furnishing all gas and water pipe In the al)ove-nanied cities. Seventh. The Howard-Harrison Iron Company shall handle Bessemer and Birming- ham, Ala., and St. Louis, Mo., furnishing all pipe for gas and water companies in the above-named cities; extra bonus to be put on East St. Louis and Madison, 111., so as to protect the prices named for St Louis, Mo. Eighth. South Pittsburg Pipe Works shall handle Omaha, Neb., on all sizes required by that city during the year of 189."i, conferring with the other companies and co-operating with them. Thereafter they shall handle the gas and water companies of Omaha, Neb., on such sizes as they make. ft I J UNITED STATES V, ADDYSTON PIPE & STEEL CO. 775 Statement of the Case. t^^^'^^^oJ^Jn ^ a., members of panics Of the cities set apart f "Ah\T^i„%.%f-^^^^^^ Jultla '^e^^Tln^ai^ZZ cTverf nTri^ '^^ ***5 ^^^^^^^ «^*- or sewerage nuriwses on 19- oL Vo * ^^.^ ^^ ^^^ ^^r any drainage Htory Shan payTbonSs of Ifoo ^Sf /^^'^'^^PP^ ^^*« ^^^ t^ and shipped into • Ss torrUo^ '^or^Th* ^° ^" «^^^ ^^^'^ 12" there shall be a bonus of $2 W^rTon P^rpones above named. Mobile, Ala i OO Arizona Ter 3 oO California i oO Colorado ] 2 00 Jnd. Ter 3 00 North C 1 00 Tenn., East of C'laud 2 00 Tenn., Middle and West 3 00 Illinois, except Madison and • East St. Louis, as previously provided 2 00 J. 12 00 Ky 2 00 i? 3 00 Miss 4 OQ Mo ;;; 2 00 Montana 3 qq Nebraska [ 3 oq J^-^ex 3 00 o. 1 OQ Mmn 2 00 Utah 4 00 Indiana 2 00 Iowa .' 2 00 List of Bonuses. B&Aia:::::1SS &„'"« *t«« ^-^ Annieton,Ala.... 2 00 Ohio. 1 g5 |\^.-: 2 00 i'londa 1 00 9^oi^ia 2 00 Atlanta, Ga 2 00 Ga. Coast Pts 1 00 Idaho 2 00 Nev ]* 3 00 Oklahoma .* 3 oo ^^»8 2 00 Texas, Interior. . . 3 00 Texas Coast 1 oO Wash 'ton Ter... 1 00 Michigan 1 50 WestVa 1 00 " All other territory free ten-ltory. in ^biXtem^tB^^rlll' r^ distinguished from "free" restriction and without pav?ng Iny l^nnL '^^^k"','"^^ ««'*« ^'t^out an auditor of the assoi-intiln „I.^ Donns. The by-laws provided for the business doni by^ci shoo iTh t*^ " ^'^ *" ^^^ »«»»°t »' the 1st and leth of eacTmonth h^^ ""': "'"' ''«« territory. On "a statement of all shipments' r^noTfLT"!^*^ *° ^""^ *" ^«<^»' ^^op with a balance sheet showfn^tK*^ " ^""^ P^vlous half mont^ Shipments, the dfvi^on o^tLe slme «n^ ^"^^r* °i. *•>« Pr-mlums on company." The STStem «f ^n^,?f ' ^"^ '*^'"*- "<^"- balance of each petition and maintatamgpr&Tfls^Lf '"«'»"%»' restricting corn- therefore made by which nrS ZllJ^l successful. A change was by the association and «^^t Z " "^ ^^^ '"■" «ach contract detennined by competuTve bMdini Vllf""^ 1'"^' *"« "Idder was to give the highest blnus for dl4?on amZr^^h""'' .V"^ ""^ "^'"8 contract. The plan was embodied n^,^?°^ ^""^ "^^^s getting the In the words following :™erea° ?heTiw° ^""^ ""y 27, 1895. this association of having a fix «i hon,,« .^'^th """' '" »l'eration In In its operation, resulted in ti!? ^T ° ^^^ ^^*''"a> states has not. as was antioipat'e^""^^? '^ r^vTtm^'' '""^ "'"^ "' ^'^^ action is imperatively neeessarv in^JJo . **' *"*^ ^"^ further Which this association ^sTL^Thpr^fn^rSiP'^"'' *"*' ^"^ '»■■ from and after the first day o?T„n»thff*'., "^ '* resolved, that P.pe lettings shall ta.e platM^The t^io^u'^ '^^"^^^Vt on all city work as paid into the 1 ■I 11^ 776 85 FEDERAL BEPOBTER, 274. Statement of the Case. the said letting. To accomplish this purpose it is proposed that the six competitive shops have a representative board located at some central city, to whom all Inquiries for pipe shall be referred, and said board shall fix the price at which said pipe shall be sold, and bids taken from the reE9»ective shops for the privilege of handling the order, and the party securing the order shall have the protection of all the other shops.'* In pursuance of the new plan, it was further Agreed "that all parties to this association, having quotations out, shall notify their customers that the same will be withdrawn by Jime 1, 1805, If not previously accepted, and upon all business ac- c^ed on and after June Ist bonuses shall be fixed by the committee." At the meeting of December 19, 1895, it was moved and carried that, upon all inquiries for. prices from ** reserved cities ** for pipe required during the year of 1896, prices and bonuses should be fixed at a regular or called meeting of the principals. At the meeting of December 20, 1895, the plan for division of bonuses originally adopted was modified by making the basis the total amounts shipped into •• pay ** territory rather than the totals shipped into " pay " and " free '* territoiy. [175] To illustrate the mode of doing business, the following ex- cerpt from the minutes of the meetings of December 20. 1895, Febru- ary 14, 1896, and March 13, 1896, Is given : " It was moved to sell the 519 pieces of 20" pipe from Omaha, Neb., for $23.40, delivered. Car- ried. It was moved that Anniston participate In the bonus, and the jiil> be sold over the table. Carried. Pursuant to the motion, the 519 pieces of 20" pipe for Omaha was sold to Bessemer at a premium of 18." "Moved that * bonus* on Annlstcm's Atlanta Waterworks con- tract be fixed at $7.10, provided freight is $1.60 a ton. Carried." An illustration of the manner in which " reserved " cities were dealt with may be seen in the case of a public letting at St. Ix>uis. On Fel)ruary 4, 1886, the water department of that city let bids for 2.800 tons of pipe. St. Louis was " reserved " to the Howaird-Harrison Company, of Bessemer, Ala. The price was fixed by the association at $24 a ton, and the l>onus at $6.50. Before the letting, the vice president of this company wrote to the other members of the association, under date of January 24, 1896. as follows : ** I write to "say that, in view of the fact that I do not as yet know what the drayage will be on this pipe, I prefer that, if any of you find it necessarj' to put in a bid without going to St. I^uis. please bid not less than $27 for the pipe, and 2f cents per pound for the specials. I would also like to know as to which of you would find It convenient to have a representative at the letting. It will l»e necessary to have two outside bidders." Tlie con- tract was let to the Howard-Harrison Company, of Bessemer, at $24, who allowed the Shiclde, Harrison & Howard Company, a pipe com- pany of St. liouis, not in the association, but having the same presi- dent as the Howard-Harrison Company, of Bessemer, to fill part of the order. The only other bidders were the Addyston Pipe & Steel Company and Dennis Long & O)., the former bidding $24.37, and the latter $24.57. The etidence shows that the Chattanooga Foundry could have furnished this pipe, delivered in St. I^uis, at from $17 to $Mk find could have made a profit on it at that price. The record Is full of instances of a similar kind, in which, after the successful bidder Iiad l)een flxeil by the " auction pool." or had been fixed l^y the arrangement as to " reserve " cities, the other defendants put In bids at the public letting as high as the selected bidder requested, in order to give the appearance of active competition between defendants. In January, 1896, after the auction pool liad l)een in oi)eration for more than six months, the Chattanooga Company wrote a letter to Its representative in the central committee to outline its policy for the new year, and the statements of the letter cast much light on the UNITED STATES V. ADDYSTON PIPE & STEEL CO. 777 Statement of the Case, prices bid and the character of bonime tnno „» -J J -«'.on copy of your favor of the 24th instant, to F. B. Nichols, V. P., in reference to Atlanta. Ga. We certainly regret that the matter has assumed its present shai)e and that R. D. Wood & Com- pany should make a lower bid by one dollar a ton than the Southern shops. You know we have always been oiiposed to special customers and ' reserved cities.' We do not think that it is the right principle, and we believe, if the present association continues, that all special customers and reserved cities should be wii)ed out. There is no good reason why we should be allowed to handle New Orleans; you, Atlanta; Howai-d-Harrison Iron Co., St. LkiuIs; or South Pittslmi-g. Omaha. We are not in the business to award special privileges to any foundry, and we believe that the result would be more benefit to all concerned if all business was made competitive. It is hardly right, and we I)elieve, if you will think over the matter carefully, you will concede it, for us to be put into a position of being unable to make prices or furnish pipe for the city of Atlanta, when we have always heretofore had a large share of their trade. We cannot ex- plain our position to the Atlanta people, and we consider it is detri- mental to our business, and think no combination should have the liower to force us into such a iKwition. The same argument will apply with you as to New Orleans, St. Louis, and other places. We think this matter should be considered seriously, and some action taken that will result in re-establishing ourselves (I mean the four Southern shops) in the confidence of the Atlanta people. Wistar, R. D. Wood & Company's man, has no doubt told them all about our association, or as much as he could guess, and has worked up a very bitter feeling against us. The very fact that you have been protected, and have hiid all their business for the past two years, is proof to them that such a 'combination' exists; and they state that, if they find out positively that we are working together, they will never receive a bid from any one of us again. We cannot afford to leave these people under that impression, and something ought to be done that would disprove Mr. Wistar's statement to them. We believe that all busi- nefls ought to be competitive. The fact that certain shops have cer- tain cities ' resened ' is all based upon mere sentiment, and no good reason exists why it should be so. We l»elieve that, as a general thing, we have had our prices entirely too high, and especially do we be- lieve this has been the [277] case as to prices in reserved cities. The prices made at St. Louis and Atlanta are entirely out of all rea- son, and the result has been, and always will be, when high prices are named, to create a bad feeling and an agitation against the combina- tion. There is no reason why Atlanta, New Orleans, St. Louis, or Omaha should be made to pay higher prices for their pipe than other places near them, who do not use anything like the amount of pipe, and whose trade is not as desirable for many other reasons. There is no sentiment existing with us in reference to Atlanta, as we would as soon sell our pipe anywhere else, only, as stated above, it Is wrong In principle that we should be forced to give up Atlanta or any other point for no good reason that we know of." It appears quite clearly from the prices at which the Chattanooga and the South Pittsburg Companies offered pipe in free territory that any price which would net them from |13 to $15 a ton at their foun- dries would give them a profit. Pipe was freely offered by the de- UNITED STATES V. ADDYSTON PIPE & STEEL CO. 779 Statement of the Case. af £rprr^?Tha*n"the.7 "pr^SSll^h^';? I™^ *«'^ '«-<>"« let in ciHes In pay terrlto^ n^i^^ tl h^^ 1*f^ •"■'<*« '»■• i<^ miles or more. The defSn?« »h5. ^^*^^^^^^' foundries by 300 type, chiefly from ?^r^nt°^i°A,«^''^»«?J' affidavits of a foraial and other companl«^h„^^fit^ ^ ''"''"'*^ P'"® '''•»°» defendants at Which the pi^ISd C X^b? deffSs X^ ^fX"''*^ rde'r^rc^^^r-eo^r^Hr^s *f -^4"" -"-^ «" -i^ a single case w^e the sn^i^in^LS^"';'"'" "J"* '"'^'Sbt, and In not - petitioner disput^ Threvide^c? aTVf Z" "^ »?e^'"* '"^'^ «™ Of the actual Hmit of%*aX but was nnii''iL''''' ""^ " statement restricted output upon which tSLV 1 * ^ ^^^^ "^ « standard of bonuses. NowhereT tha ii,». calculate an equitable division of ment of the j^r diem caDacf^„r-,i'/ ^""'r.'*" '" ^^^'"^ ""y state Sprrd"en7of^r„£lX^«^^^^^^ was a member of thi fssriltifn. ind i?"! Bessemer, Ala., which by the Bessemer min nf«fT.' ^°^ ** appears that an order taken m^ll. Vhr Xr ^X.V^^Z Terrifor^v ^ ^""^ '^ *^^ «** ^»^« Ohio, with an annual capacit^ of In ^ ^^5 ^^^""^ ^^^^^ ** Columbus, of 60,000 tons ; on^at N^wmrnp^^^w f''''^ ' .?''^ ^* Cleveland, Ohio, tons; and one at Detro^rS oH^'o^"^^^^^ ^^^^' ^^ ^'^ annual capacity W2^n^^tonflf^JT'' f^^.^^heir aggregate one mill in eastern VireiniT^wYfh .« o ^^^ ,^^^ territory there was four mills in Srn PennsV^lnin ^^^^^^ ''^^^''>^ ""^ ^^'^ tons ; three mills in 4w Jerspr^^th T ' ^. ^ capacity of 87,000 tons mills in New Yor^ one lt'u«c« .IT'^'^L''^ ^^^'^ t^'^^' ««i;ipetition sold pipe at so mSS cSer ratPsTn^?hJ /^^^t the reason why they [«78] pay territory was b^auspthev ,^/'"^.»ff'*''"^'^ *^«« ^'^ the to keep their mills%oinVr1S th^ to^i^op^S; Vaf thi V^ 780 85 FEDERAL BEPORTER, 278. Opinion of tlie Ck>urt ii at a city like St. Louis In which the specifications were detailed and precise, were higher because pipe had to be made especially for the Job, and they could not use stock on hand. The defendants devoted a good deal of evidence to showing that the stenographer who fur- nished copies of the minutes of the association and of the correspond- CTce between the members had a pecuniary motive In thus betraying the confidence of his employers ; but no evidence was ofl'ered by them to contradict any statements made by him, or to Impeach the accuracy of the copies he has produced. On one point alone was he contra- dicted, and that was in his statement that the bonuses represented the increase over and above a reasonable price made possible by the combination of the defendants. /. E. Bible and Edward B, Whitney^ for the United States. Frank Spurlock, for appellees. Before Harlan, Circuit Justice, and Taft and Lurton, Circuit Judges. Taft, Circuit Judge, after stating the case as above, de- livered the opinion of the court. The first section of the act of congress entitled "An act to protect trade and commerce against unlawful restraints and monopolies," passed July 2, 1890 (26 Stat. 209), declares illegal "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." The second section makes it a misdemeanor for any person to monopolize, or attempt to monopolize, or combine or con- spire with others to monopolize, any part of the trade or commerce among the several states. The fourth section of the act gives the circuit courts of the United States jurisdic- tion to hear and determine proceedings in equity brought by the district attorneys of the United States under the direc- tion of the attorney general to restrain violations of the act. Two questions are presented in this case for our decision: First. Was the association of the defendants a contract, combination, or conspiracy in restraint of trade, as the terms are to be understood in the act? Second. Was the trade thus restrained trade between the States? The contention on behalf of defendants is that the associa- tion would have been valid at common law, and that the UNITED STATES V. ADDYSTON PIPE & STEEL CO. 781 Opinion of the Court. federal anti-trust law was not intended to reach any agree- ments that were not void and unenforceable at common law. It might be a sufficient answer to this contention to point to the decision of the supreme court of the United States in U. S. V. Tram-Missouri Freight Ass'n, 166 U. S. 290, 17 Sup. Ct. 540, in which it was held that contracts in restraint of interstate transportation were within the statute, whether the restraints would be regarded as reasonable at common law or not. It is suggested, however, that that case related to a quasi public employment necessarily under public con- trol, and affecting public interests, and that a less stringent rule of construction applies to contracts restricting parties i^! sales of merchandise, which is purely a private business, having in it no element of a public or quasi public character! Whether or not there is substance in such a distinction,— a question we do not decide,— it is certain that, if the con- tract of association which bound the defendants was void and unenforceable at the common law because in restraint of V219] trade, it is within the inhibition of the statute if the trade it restrained was interstate. Contracts that were in unreasonable restraint of trade at common 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 by the courts. Mogul Steamship Co. v. McGregor, Gow ct* Oo., [1892] App. Cas. 25; Hornby v. Close, L. R. 2 Q. B. 153 ; Lord Campbell, C. J., in Hilton v. Eckersley. 6 El. & Bl. 47, 66 ; Hannen, J., in Farrer v. Close, L. E. 4 Q. B. 602, 012. The effect of the act of 1890 is to render such contracts unlawful in an affirmative or positive sense, and punishable OS a misdemeanor, and to create a right of civil action for damages in favor of those injured thereby, and a civil rem- edy by injunction in favor of both private persons and the public against the execution of such contracts and the main- tenance of such trade restraints. The argument for defendants is that their contract of association was not, and could not be, a monopoly, because their aggregate tonnage capacity did not exceed 30 per cent, of the total tonnage capacity of the country; that the re- iTT' fi 782 85 FEDERAL BEPORTER, 279^ Oplnlan of the CSourt f ^mts upon the members of the association, if restraints they could be called, did not embrace all the states, and were not unlimited in space; that such partial restraints were justified and upheld at common law if reasonable, and only proportioned to the necessary protection of the parties; that m this case the partial restaraints were reasonable, because without them each member would be subjected to ruinous competition by the other, and did not exceed in degree of stringency or scope what was necessary to protect the parties m securing prices for their product that were fair and reasonable t» themselves and the public; that competition was not stifled by the association because the prices fixed by it had to be fixed with reference to the very active competi- ticm of pipe ccHnpanies which were not members of the asso- ciation, and which had more than double the defendants' capacity ; that in this way the association only modified and restrained the evils of ruinous competition, while the public had aU the benefit from competition which public policv demanded. From early times it was the policy of Englishmen to en- courage trade in England, and to discourage those voluntary restraints which tradesmen were often induced to impose on themselves by contract. Courts recognized this public policy by refusing to enforce stipulations of this character. The ob- jections 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 other was thai such restraints tended to give to the covenantee, ttie beneficiary of such restraints, a monopoly of the trade' from which he had thus excluded one competitor, and by the same means might exclude others. Chief Justice Parker, in 1711, in the leading case of Mitchel V. Reynolds, 1 P. Wms. 181, 190, stated these objections as follows: " First The mischief which may arise from them (1) to the party by the loss of his llyelihood and the subsistence of his family ; (2> to tS pnbllc by depHyIng it of an nsefal member. Another reai)n is the great abuses these voluntary restraints are liable to; as, for Instance from coiyorations who are perpetually laboring for exclusive advan- tages in trade, and to reduce it into as few hands as possible " UNITED STATES V. ADDYSTON PIPE & STEEL CO. 783 Opinion of the Court [880] The reasons were stated somewhat more at length in Alger v. Thacher, 19 Pick. 51, 54, in which the supreme judicial court of Massachusetts said : " The unreasonableness of contracts in restraint of trade and busi- ness is very apparent from several obvious considerations : (1) Such contracts injure the parties making them, because they diminish their means of procuring livelihoods and a competencv for their families They tempt impi-ovident persons, for the sal^e '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 communitv as wel as themselves. (3) They discourage industry and enterprise, and dimmish the products of ingenuity and skill. (4) Thev prevent competition and enhance prices. (5) They exiwse the public'to all the evils of inonopoly ; and this especially is applicable to wealthy com- panies and large corporations, who have the means, unless restrained by law, to exclude rivalry, monopolize business, and engross the mar- 1*1- tf'^T^^ ^Y"^ ^'^^ th^se, wise laws protect individuals and the public by declaring all such contracts void." The changed conditions under which men have 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 disposi- tion 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 cer- tainly lost nothing in weight in the present day, if we may judge from the statute here under consideration and similar legislation by the states. The inhibition against restraints of trade at common law seems at first to have had no exception. See language of Justice Hull, Year Book, 2 Hen. V., folio 5, pi. 26. After a time It became apparent to the people and the courts that it was m the interest of trade that certain covenants in restraint of trade should be enforced. It was of importance, as an incentive to industry and honest dealing in trade, that, after a man had built up a business with an extensive good will, he should be able to sell his business and good will to the best advantage, and he could not do so unless he could bind him- self by an enforceable contract not to engage in the same busi- ness m such a way as to prevent injury to that which he was about to sell. It was equally for the good of the public and 784 85 FEDERAL REPOKTER, 280. ♦• Opinion of the Court trade, when partners dissolved, and one took the business, or they divided the business, that each partner might bind him- self not to do anything in trade thereafter which would dero- gate from his grant of the interest conveyed to his former partner. Again, when two men became partners in a busi- ness, although their union might reduce competition, this effect was only an incident to the main purpose of a union of their capital, enterprise, and energy to carry on a successful business, and one useful to the community. Restrictions in the articles of partnership upon the business activity of the members, with a view of securing their entire effort in the common enterprise, were, of course, only ancillary to the ihain end of the union, and were to be encouraged. Again, when one in business sold property with which the buyer might set up a rival business, it was certainly reasonable that the seller should be able to restrain the buyer from doing him an injury which, but for the sale, the buyer would be unable to inflict. [281] This was not reducing competition, but was only securing the seller against an increase of competi- tion of his own creating. Such an exception was necessary to promote the free purchase and sale of property. Again, it was of importance that business men and professional men should have every motive to employ the ablest assistants, and to mstruct them thoroughly; but they would naturally be reluctant to do so unless such assistants were able to bind themselves not to set up a rival business in the vicinity after learning the details and secrets of the business of their employer. In a case of this last kind, Median v. May, 11 Mees. & W. 652, Baron Parke said : " Contracts for the partial restraint of trade are upheld, not because ™«L''ra^''^^''^^fr"' ^^ ^^^ individual with wholn th^ cont^ctH made, and a sacrifice pro tanto of the rights of the communltv hiif because it is for the benefit of the public at large tLTey ^ouid Se enforced. Many of these partial restraints on trade. are vertecSv S^n*1Sn*J^S P"Wic convenience and the general interest! a'^d ^ve been supported. Such is the case of the disposing of a shop in a ?«rii*'''.r/l^'^^' "^"^.K* *^"*'*^^* ^'^ ^^^ P^'-* *>' «>e vendor not to ^J^ui « /^% '" *^^ ^"^""^ P*""*^- ^* *»' ^° «ff«^t' the sale of a good will, and oflfers an encouragement to trade bv allowinir a nartv to dispose of all the fruits of his industry. ♦ *• •And such 1^ the class of cases of much more frequent occurrence, and to which this present case belongs, of a tradesman, manufacturer, or profes sional man taking a servant or clerk into his service, with a contract UNITED STATES V, ADDYSTON PIPE & STEEL CO. 785 Opinion of the CJourt that he will not carry on the same trade or profession within certain limits. * * ♦ In such a case the public derives an advantage in the unrestrained choice which such a stipulation gives to the employer of able assistants, and the security it affords that the master will not withhold from the servant instruction in the secrets of his trade, and the communication of his own skill and experience, from the fear of his afterwards having a rival in the same business." For the reasons given, then, covenants in partial restraint of trade are generally upheld as valid when they are agree- ments (1) by the seller of property or business not to com- pete with the buyer in such a way as to derogate from the value of the property or business 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 as- sistant, servant, or agent not to compete with his master or employer after the expiration of his time of service. Be- fore such agreements are upheld, however, the court must find that the restraints attempted thereby are reasonably necessary (1, 2, and 3) to the enjoyment 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 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 em- ploye of the confidential knowledge acquired in such busi- ness. Under the first class come the cases of Mitchel V. Reynolds, 1 P. Wms. 181; Fowle v. Park, 131 U. S. 88 9 Sup. Ct. 658; Nordenfeldt v. Maxim Nordenfeldt Co!, [1894] App. Cas. 534; Rousillmi v. Rousillon, 14 Ch. Div. 351 ; Cloth Co. V. Lorsont, L. R. 9 Eq. 345 ; Whittaker v! Howe, 3 Beav. 383 ; Match Co. v. Roeher, 106 N. Y. 473, 13 N. E. 419 ; Tode v. Gross, 127 N. Y. 480, 28 N. E 469 • Real V. Chase, [282] 31 Mich. 490; Huhhard v. MilUr, 27 Mich. 15; National Ben. Co. v. Union Hospital Co, 45 Minn. 272, 47 N. W. 806; Whitney v. Slay ton, 40 Me. 224; Pierce v. FulUr, 8 Mass. 222 ; Richards v. Seating Co., 87 Wis. 503, 58 N. W. 787. In the second class are Tallis v. 11808— VOL 1—06 M— 50 786 85 FEDERAL BEPOBTER^ 282. Oplnloii of tbe Court TaMU, 1 El. & BL 391, and Lmge v. Werk, 2 Ohio St. 520. In the third class are Machinery Co, v. Dolph^ 138 U. S. 617, 11 Sup. Ct 412, Id., 28 Fed. 553, and Matthews v. Aa- Bociated Press, 136 N. Y. 333, 32 N. E. 981. In the fourth class are American Strawhoard Co. v. Haldeman Paper Co,, 83 Fed. 619, and Hitchcock v. Anthony, Id. 779, both de- cisions of this court; Navigation Co, v. Winsor, 20 Wall. 64; Dunlop v. Chregory, 10 N. Y. 241; Hodge v. Sloan, 107 N. Y. 244, 17 N. E. 335. While in the fifth class are the cases of Homer v. Ashford, 3 Bing. 322; Holder v. Graves, 7 Bing. 735; Hitchcock v. Coker, 6 Adol. & E. 454; Ward v. Byrne, 5 Mees. & W. 547; Duhowski v. Gold- stein, [1896] 1 Q. B. 478; PeeU v. SaalfeU, [1892] 2 Ch. 149; Taylor v. Blancliard, 13 Allen, 370; Keeler v. Taylor, 53 Pa. St. 467 ; Herreshojf v. Boutinemu 17 R. I. 3, 19 Atl. 712. It 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 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 conventional restraint of trade can be enforced unless the covenant embodying it is merely ancillary to the main purpose of a lawful contract, iind 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. In Homer v. Graves, 7 Bing. 735, Chief Justice Tin- dal, who seems to be regarded as the highest English judicial authority on this branch of the law (see Lord Macnaghten's judgment in Nordenfelt v. Maxim Nordenfelt Co,, [1894] App. Cas. 535, 567) , used the following language : "We do not see how a better test can be applied to the question whether this is or not a reasonable restraint of trade than by con- sidering whether the restraint is such only as to afford a fair protec- tion to the interests of the party in favor of whom it is given, and not io large as to interfere with the interests of the public. Whatever reftraint is larger than the necessary protection of the party requires tan be of no benefit to either. It can only be oppressive. It is, in the t'ye of the law, unreasonable. Whatever is injurious to the interests |f the public Is void on the ground of public policy." This very statement of the rule implies that the contract nust be one in which there is a main purpose, to which the 1* UNITED STATES V. ADDYSTON PIPE & STEEL CO. 787 Opmlon of the Ck)urt covenant in restraint of trade is merely ancillary. The cove- nant is inserted only to protect one of the parties from the mjury which, in the execution of the contract or enjoyment of Its fruits, he may suffer from the unrestrained competi- tion of the other. The main purpose of the contract suggests the measure of protection needed, and furnishes a sufficiently uniform standard by which the validity of such restraints may be judicially determined. In such a case, if the re- straint exceeds the necessity presented by the main purpose of the contract, it is void for two reasons : First, because it oppresses the covenantor, without any corresponding benefit to the convenantee; and, second, because it tends to a mo- nopoly. But where the sole object of both parties in making the contract as expressed therein is merely to restrain compe- tition, and enhance or maintain prices, it would seem that there was nothing to justify or excise [283] the restraint, that It would necessarily have a tendencv to monopoly, and therefore would be void. In such a case there is no measure of what is necessary to the protection of either party, except the vague and varying opinion of judges as to how much, on principles of political economy, men ought to be allowed to restrain competition. There is in such contracts no main lawful purpose, to subserve which partial restraint is per- mitted, and by which its reasonableness is measured, but the sole object is to restrain trade in order to avoid the competi- tion which it has always been the policy of the common law to foster. Much has been said in regard to the relaxing of the original strictness of the common law in declaring contracts m restraint of trade void as conditions of civilization and public policy have changed, and the argument drawn there- from IS that 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 regulate prices, though in restraint of trade, and having no other purpose, will be upheld. We think this conclusion IS unwarranted by the authorities when all of them are con- sidered. It is true that certain rules for determining whether a covenant in restraint of trade ancillary to the main pur- pose of a contract was reasonably adapted and limited to 788 85 FEDERAL REPORTER, 283. P^lHHIi:' Opinion of the CJourt the necessary protection of a party in the carrying out of such l)nrpose have been somewhat modified by modem authori- ties. In Mitchel v. Reynolds, 1 P. Wms. 181, the leading early case on the subject, in which the main object of the con- tract was the sale of a bake house, and there was a covenant to protect the purchaser against competition 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 iiseful contract. Subsequently, it was decided in Tlitchcoch V. Goher, 6 Adol. & E. 454, that the adequacy of the con- sideration was not to be inquired into by the court if it was a legal one, and that the operation of the covenant need not be limited in time. Mdre recently the limitation that the restraint could not be general or unlimited as to space ha?: been modified in some case by holding that, if the protec- tion necessary to the covenantee reasonably requires a cove- nant unrestricted as to space, it will be upheld as valid. Whittaker v. Howe, 3 Beav. 383 ; Cloth Co, v. Lorsont, L. K. 9 Eq. 345 ; Bousillon v. Rouaillon, 14 Ch. Div. 351 ; Norden- feldt V. Maxim Nordenfeldt Co,, [1894] App. Cas. 535. See, also, Fowle v. Park, 131 U. S. 88, 9 Sup. Ct. 658 ; Match Co, V. Roeber, 106 N. Y. 473, 13 N. E. 419. 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 cove- nantee in the carrying 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 restraint 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 [284] 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 UNITED STATES V, ADDYSTON PIPE & STEEL CO. 789 Opinion of the Court of the parties, how much restraint of competition is in the public interest, and how much is not. The 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 a^mning such a power in the courts are Wickeru^ y. Evari^, 3 Younge & J. 318 ; Collim v. Locke, 4 App. Cas. 674 ; Ontario Salt Co. v. Merchants^ Salt Co,, 18 Grant (U. C.) ri.tSx: S: ' ^''' ''"^ "-^^ ^- ^-''-'^ ''^ In Wtckem v. Evans, three trunk manufacturers of Enff- land, who had competed with each other throughout the reahn 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 partial and reasonable, because it left the trade open to any third party m either district. In answer to the suggestioi that such an agreement to divide up the beer business of Lon- don among the London brewers would lead to the abuses of monopoly, it was repHed 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 monopoHes cannot endure long, because their very existence tempts outside capital into competition; but the public policy embodied in the com- mon law requires the discouragement of monopolies, how- ever temporary their existence may be. The public interest may suffer severely while new competition is slowly develop- ing. The case can hardly be reconciled with later cas^, hereafter to be referred to, in England and America. It is true that there was m 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 re- duce the expenses incident to a business covering th^ realm by restricting its territorial extent; but it is difficult to escape the conclusion that the restramt upon each two of the thi^ parties was imposed to secure to the other a monopoly and w,,. 790 85 FEDEKAL BEPORTEB, 286. Opinion of the Oourt power to control prices in the territory assigned to him, because the final clause in the contract implies that, when it was executed, there were no other COTipetitors except the parties in the territory divided. CoUim V. Locke was a case in the privy council. The ac- tion was brought.to enforce certain articles of agreement bv and between four of the leading master stevedore contracting firms m Melbourne, Australia, who did practically all the busmess of that port. The court (composed of Sir Barnes Peacock, Sir Montague E. Smith, and Sir Robert P. CoUier) descries 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 narcel out the stevedoring business of the port among the parti^ to ^tTnd 2^ 1 1"^""' ^^Petition, at least among themseK^llso. it may l^ ~Pec?l*tr/^.*^ "^ P"^^ '^^ *^^ ^^^^- Their lo^dshlpl ™re\ot S«^?fir iir iJS'*!*'' agi-eement having these objects is invalid if carried into effect by proper means,— that is, by £2851 oro vision J reasonably necessary for the purpose.-though the effectTf S No attempt is made to justify the view thus comprehen- sively stated, or t» support it by authority, or to reconcile It with tlie general doctrine of the common law that con- tracts 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 mo- nopoly if it affect only one port, so as to be but a partial re- straint of ti-ade. The ca^e is directly at variance with the decision of the supreme court of Illinois in More v. BennM 140 111. C.9, 29 N. E. 888, hereafter discussed, and cannot 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 H UNITED STATES V. ADDYSTON PIPE & STEEL CO. 791 Opinion of the Court that they intended to raise prices, but only to maintain them, the contract of union was not in unlawful restraint of trade. The conclusion and argument of the court in Salt Co v Guthrie, 35 Ohio St. 666, hereafter stated, would seem to be a sufficient answer to this case. Kellogg V, Larhin, 3 Pin. 123, was an early case in Wiscon- sin, m which the action was on the covenant of a warehouse- man m a lease of his warehouse, by which he agreed to de- vote his services to the lessee at certain compensation, and not to purcliase 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, be- cause such a covenant might well have been reasonably nec- essary 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 warehousemen of Milwaukee to the umted grain dealers of that city, to enable the latter to obtain absolute control of the wheat market in Milwaukee. The court held the latter combination valid also. The de cision cannot be upheld, in view of the more modern authori- ties hereafter referred to. The case of Leslie v. Lorillard, 110 N. Y. 519, 18 N E 363 would seem to be an authority against our view. In 'that' case a stockholder sought to restrain the payment of an an- nual payment about to be made by the Old Dominion Steam- ship Company under a contract by which it bought off the Lorillard Steamship Company from continuing in coni- petiti^ with it m carrying passengers and freight between New York and Norfolk. The contract was held valid, al- though It had no purpose except the restraining of compe- tition, and, so far as appears, the obtaining of the complete control of ih^ business. The case is rested on Match Co v Roeher, 106 N. Y. 473, 13 N. E. 419, which was a case of ihe purchase of property and good will. It proceeds on the 12861 general proposition " that competition is not invari- ably a public benefaction; for it may be carried on to such a degree as to become a general evil," and thus leaves it <(» the discretion of the court to say how much competition is desirable, and how much is mischievous, and accordingly 792 85 FEDEBAI. BEPORTEB, 285. I 'IIPPI Opinion of the Ck>iirt. to determine whether a contract is bad or not. The case is directly opposed to Anderson v. Jett, 89 Ky. 375, 12 S W • 670, hereafter cited. It should be said that nothing appeara m 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 regulating prices, but this natural inference from the terms of the contract is not negatived. The case of 3fognl Steamship Co, v. McGregor, Goto d Co,, [1892] App. Cas. 25, has been cited to sustain the position of the defendants. It does not do so. It was a suit for dam- ages, brought by a company engaged in the tea-carrying trade at Hankow, China, against six other companies engacred m 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 constantlv underbid the plaintiff, and take away his trade by offering exceptional and very favorable terms to customers dealing exclusivelv with the members of the association, and that they did this to control the business 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 pvmg 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 judg- ment (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 opinion that contracts void as in restraint of trade were not unlawful in a criminal sense, and gave no right of action for damages to one mjured 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 Co. Case has in this discussion makes for, rather than against, our conclusion. Two other cases deserve mention here. They are Roller Co, V. Cushman, 143 Mass. 353, 9 N. E. 629, and Gloucester ' UNITED STATES V. ADDYSTON PIPE & STEEL CO. 793 Opinion of tlie Court. Isinglass d; Glm Go. v. Russia Cement Co., 154 Mass 92 27 N. E. 1005. In these cases it was held that contracts in restraint of trade are not invalid if they aflfect 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 manufacture 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 onlv furnishes another opportunity for courts to give effect to the varying economical opinions of its in- [287] dividual mem- bers It might be difficult to say why it was any more im- portant to prevent restraints of trade in beer, mineral water, leather clcth, and wire cloth than of trade in curtain shades or glue However this may be, the cases do not touch the case at bar because the same court, in TeUgraph Co. v. Crane 160 Mass. 50, 35 N E. 98, held that fire-alarm telegraph "- struments were articles of sufficient public necessity lo Lder unreasonable restraints of trade in them void, and certainty such articles are not more necessary for public use than water, gas, and sewer pipe. 1*1? wLT ,"*''"'■ 'T "P*'° ^'^'^ *''*""^1 «* defendant ^ if Th.v ,: ""' '1'^^""*' ^''^^ °" ^«"°g »" the issue. sS/i n '' *"* "^'"'■'^ ^'*^" '^^ '•"'^ ^« have already stated. One is a case in which a railroad company made a agreed to do the sleeping-car business of the railway com- otW Z " °"'"^'" t r '*"^°"^' «"« «* ^hi«h ^as that no other company should be allowed to engage in the sleenimr ear business on the same line. Ckicagl ft. l2 TlT Co^ v.PuTlman Southern Car Co., 139 U. S. 79, 11 Sup. Gt. 490. The mam purpose of such a contract is to furnish deeping-car facilities to the public. The railroad company may discharge this duty itself to the public, and aUow lo 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 It 794 85 FEDEKAL BEPORTER, 287. w ! I i Oplniou of the Court. of the duty, may secure to the sleeping-car company the same freedom from competition that it would have itself in discharging the duty. The restraint upon itself is properly proportioned to, and is only ancUlary to, the main purpoi 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 de- livery companies. Exprest Oases, 117 U. S. 1, 6 Sun. Gt 5^,628; Stock-Yards Co. v. Keith, 139 U. S. 128, 11 Sup! r*.; i' ^''^^^*' ** Covers' Stock-Yards Co. v. Louisville f« rf • ^f-' ^} ^- ®- ^PP- 252, 14 C. C. A. 290, and 67 Fed. 35. The fact is that it is quite difficult to conceive how com- petition would be possible upon the same line of railway between sleeping-car companies or express companies. Such contracts involve the hauling of sleeping cars or express cars on each express train, the assignment of oflSces 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 company. Ihe railway company could not ordinarily be expected to have more than one general station for the delivery of cattle m any one town. It would only be required by the nature of its employment to furnish such facUities as were reason- ably sufficient for the business at that place. There is hardly more objection on the ground of public policy to such a re- striction 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 satisfactorUy secured by the requirement, which may be enforced by any member of the pubUc, to [288] wit fliat the charges allowed shaU not be unreasonable, and the business is of such a public character that it is entirely sub- ject to legislative regulation in the same interest Having considCTed the cases upon which the counsel for the defendants have relied to maintain the proposition that contracts having no purpose but to restrain competition and maintain prices, if reasonable, will be held valid, we must I UNITED STATES V. ADDYSTON PIPE & STEEL CO. 795 Opinion of the Court now pass in rapid review the cases that make for an opposite In People v. Sheldon, 139 N. Y. 251, 34 N. E. 785, all the coal dealer 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 au- tT^ 1 ^^T "^ ^ "^^^^ ^y "^^^bers for coal sold by them, and the price was thus fixed. The court ap- proved a charge to the juiy that even if this was merely a combination between independent coal dealers to prevent competition between themselves for the due protection of the parties to it against ruinous rivalry, and although no at- tempt was made to charge unreasonable or excessive prices It was inmiical to trade and commerce, whatever might be done under it, and was within the state statute making a conspiracy injurious to trade indictable. Said Andrew* C. J. (page 264, 139 N. Y., and page 789, 34 N. E.) ,^^'' ar;'" L^aT^J^rrtrtoTa^e'^riXr;""* T"^"""" '" •"■"^ . agreements of that character If the^vlndlfvTf*^ 'f *" •"'<"'"'" «" u^-sff he%^n.te^rr '"^^^^^^^^^^ 'U^TT'lJ^t" T' '^"f *' '^'"^'^ ^- ^"^^ffion, 139 N. Y. 105, d4 l^ K 790; Leonard v. Poole, 114 N. Y. 371, 21 N E 707 f^oiTpn'^f/v't ^"^ '■ ^^^ "^^-^ Wire^lolJo: (Com. PI.) 14 N. Y. Supp. 277. _l^Jlf orris Bun Coal Co. v. Barclay Coal Co., 68 Pa. St 173 five coal companies controlling the bituminous coal trade in Northern Pennsylvania agreed to aUow a committee to fix PiW ?"™f *'*'«" ^"^ not destroyed, because the anthra- cite coal and Cumberland bituminous coal wei^ sold in com- held void, as in illegal restraint of trade and competition and tending to injure the public. In Ncsfer v. Brewina Co 161 Pa. St. 473, 29 Atl. 102, 45 brewers in Philafelphkmade an agr^ment to sell beer in Philadelphia and Camden at a certain price to be fixed by a committee of their nimiber Though beer could hardly be said to be an article of7r£^ necessity like coal, yet, as it was an article of merchaSd^ , 796 85 FEDERAL REPORTER, 288. Opinion of the Ck>urt the contract was held void, as in restraint of trade, and tend- ing to a monopoly. In Salt Co, V. Guthrie, 35 Ohio St 666, the salt maniifac- tiirers of a salt producing territory in Ohio, with some excep- tions, combined to regulate the price of salt by preventing ruinous competition between themselves, and agreed to sell only at prices fixed by a committee of their number. The supreme court of Ohio held the contract void. Judge Mcll- vaine, who delivered the opinion of the court, said : [t8»] " The clear tendency of such an agreement is to establish a monopoly, aud 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 competition in the salt trade was not in fact destroyed, or that the price of the commodity was not unreason- ably advanced. Courts will not stop to inquire as to the degree of Injury inflicted upon the public. It Is enough to know that the inevi- table tendency of such contracts is injurious to the public." Other Ohio cases which presented similar facts, and in which the same rule was enforced, are Emery v. Candle Co,^ 47 Ohio St. a20, 24 N. E. 660, and Hoffman v. Brooks, 11 WMy. Law Bui. 258. In Anderson v. Jett, 89 Ky. 375, 12 S. W. 670, two owners of steamboats running on the Kentucky river made an agree- ment to keep up rates, and divide net profits, to prevent ruin- ous competition and reduced rates. The contract was held void. In Chapin v. Brown, 83 Iowa, 166, 48 N. W. 1074, the grocerymen 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 exclusively. The agreement was held invalid, because in restraint of trade, and tending to create a monopoly. In Craft v. McCononghy, 79 111. 346, ^y^ grain dealers in Rochelle, HI., agreed to conduct their business as if inde- pendent of each other, but secretly to fix prices at which they would sell grain, and to divide profits in a certain propor- tion. This was held void, as in restraint of trade, and tend- ing to create a monopoly. In More v. Bennett, 140 111. 69, 29 N. E. 888, articles of association entered into by only a part of the stenographers of Chicago to fix a schedule of prices, and prevent competition among their members and a UNITED STATES V. ADDYSTON PIPE & STEEL CO. 797 Opinion of the Court consequent reduction of prices, was held void. The court ^^^nZ'T^^: ir^ll^r^^l^l^^^.'^-^'^^f ^ a particular diminish prices to a ooint nho^r^ fli ' "."^ tliereby to enhance or to the influence o? S^rest"r?^t^ °' ^i^)^,,':''''*. '"^^ f"""! be it ieft policy. Contracts in parOal r^rata?^??^^^.' I.'^ll™'^ *<* P>"»lie are those entered Into by a Vendor „? „ k ■ ""^ ^»«tains With its vendee, by which the vendor agr^'^not"?^'en^ "? ^^ ^"' business within a limited territory -nnTil^ I ■ ^"S^se "> the same be no more extensive ^an"reTs;>n?hlv^r^*™'"*; *° "^ "«""• ""^t or the vendee in the enJo^nent'^'JX^tsinr prcha^^/? •'™'"=""" V ^''Lfrt^!^'^''}'^ "^ '' '" '^''•^t conflict with Collins 39 N E iX: " ^.T^l' '" ^'"•'^ " Association, 155 111. iZ, N E.' Ss "" ^ ^^ ^.Preservers Co., m 111. 284, 41 In Association v. Niezerowski, 95 Wis. 129, 70 N W Ififi he suit was on a note given in pursuance of the secret ruies of an association of 60 out of the 75 master masons in Milwau b., by which all bids for work about to be let were firTmade to the association, and the lowest bidder was then required to ^in "f. '" '" '^''' ^"'' '' '""^ ^'^ -- -<>- than 8 pl; cent below the next lowest bidder, more than C per ce^ might be added. Each member was requited to pf; to the association 6 per cent, of his estimates when due, for "ib^! ql.^«,t distribution. In declaring the contract, void, thelurt stSalThI Sste':? 'thoTof^hif "^l^^l '" P"''""^ P°«<^y- «"0 between whom and toe assodaHon „r tL''""''=K^^''"'°2 '<> ""'M. «"« no contract reiations/' ^*^"'*'<"' °' tbe members thereof there exist In F«fc*7 Co. V. Adoue, 83 Tex. 650, 19 S. W. 274, five owners a Z7r^ :'™"^ "7^^''^ ""'^^ - ^g^— t not o"; ?he four „r ".'^'!'^ P"*="- ^"-^ ^'^'^'^'^^ profits to was heW y^TL r^-^'' ^••*'"«'^* "" the guaranty. It was held void, as restraining trade, and tending to a monop- 798 85 FEDERAL REPORTER, 290. i ! ' i I Opinion of the Ctonrt. oly, even though the evidence failed to establish that it effected a monopoly. In Association v. Kock, 14 La. Ann. 168, eight commercial firms in New Orleans holding a large quantity of cotton bag- ging 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 a combination in restraint of trade, and to enhance the price in the market of an article of primary necessity to cotton planters. Such combinations aro contrary to public order, and cannot be enforced in a court of justice." In Hilton v. Eclcersley. 6 El. & Bl. 47, it was held that an agreement between 18 cotton manufacturers to submit to the control of a committee of their number for 12 months the question as to prices to be paid for labor and the terms of employment, in order to resist the aggressions of an associa- tion of workingmen. was void and unenforceable, because in restraint of trade. In Ui^ston V. WMtelegg, 63 L. T. (N. S.) 4.55, a case m the queen's bench division, before Day and Lawrence, JJ., the action was brought to enforce a penalty under the rules of the Bolton Mineral Water Manufacturers' Association, which recited that the object of the association was to main- tain the price of mineral water, and bound the members for 10 years not to sell at le^^s 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 tlie public interest is a con- tract in restraint of trade, this is undoubtedly such a contract. Dur- IS the laS "^^ years'great changes have taken place in the views of the public, of the legislature, and therefore of the J"^ges on the matter, and many old-fashioned offenses have disappeared ; but the 1-11 G still obtains that combination for the mere purpose of ra sing pr ces s not enforceable in a court of law. This contract is illegal Kelense of not being enforceable It is ^otneo^^^}^''^ " should be such as to form the ground of criminal proceedings. In the foregoing cases the only consideration of the agree- ment restraining the trade of one party was the agreement of the other to the same effect, and there was no relation of part- nership, or of vendor and vendee, or of employer and em- ploye. Where such relation exists between the parties, as fi UNITED STATES V. ADDYSTON PIPE & STEEL 00. 799 Opiulon of the Ctourt. already stated, restraints are usually enforceable if com- mensurate only with the reasonable pro- [291] tection of the covenantee in respect to the main transactions affected by the contract But, in recent years, even the fact that the contract IS one for the sale of property or of businass and good will, or for the making of a partnership or a corpora- tion has not saved it from invalidity if it could be shown hat It was only part of a plan to a was 170,500 tons. Of this, 45,000 tons was the ca- [89^1 Icitv of mills in Texas, Colorado, and Oregon, so far. re^ S ?«.m that part of the pay territory where the demand was considerable Ihat necessary freight -^es exduded Jhem from the possibility of competmg, and 12,000 tons was the J^Sbie aLal capacity of a mill at St. I--' -J^^ J^ practically under the same management as that of one of the defendants' mills. Of the remainder of the ^d s m pay territory and outside of the combination, one was at Colum- ST So two in northern Ohio, and one m Michigan. Their ag^egate possible amiual capacity was about one- half thelSial annual output of the defendants' mills. They were it wUl be observed, at the extreme northern end of r^ay territory, while the defendants; mills at Cincinnati, Wsi, Chattanooga, and South Pittsburg and Anms- ton and Bessemer, were grouped much nearer to the center S tie pay territory. The freight upon cast-iron pipe Lounts to a considerable percentage of the prioe a twhid. manufacturers can deUver it at any great distance from the pl^ of manufacture. Within the margin of the freight Jer ton which Eastern manufacturers would have to pay to UNITED STATES V. ADDYSTON PIPE & STEEL CO. 801 Opinion of the Court deliver pipe in pay territory, the defendants, by controlling two-thirds of the output in pay territory, were practically able to fix prices. The competition of the Ohio and Michi- gan mills, of course, somewhat affected their power in this respect in the northern part of the pay territory ; but the further south the place of delivery was to be, the more com- plete the monopoly over the trade which the defendants were able to exercise, within the limit already described. Much evidence is adduced upon affidavit to prove that de- fendants had no power arbitrarily to fix prices, and that they were always obliged to meet competition. To the ex- tent that they could not impose prices on the public in ex- cess of the cost price of pipe with freight from the Atlantic seaboard added, this is true; but, within that limit, they could fix prices as they chose. The most cogent evidence that they had this power is the fact, everywhere apparent in the record, that they exercised it. The details of the way in which It was maintained are somewhat obscured by the manner in which the proof was adduced in the court below upon affidavits solely, and without the clarifying effect of cro^-exammation, but quite enough appears to leave no doubt of the ultimate fact. The defendants were, by their combination, therefore able to deprive the public in a large territory of the advantages otherwise accruing to them from the proximity of defendants' pipe factories, and, by keeping prices just low enough to prevent competition by Eastern manufacturers, to compel the public to pay an increase over what the price would have been, if fixed by competition be- tween defendants, nearly equal to the advantage in freight rates enjoyed by defendants over Eastern competitors. The defendants acquired this power by voluntarily agreeing to ^^ I ^^^'?^ ^""^^ ^y ^^^'^ committee, and by allowing the h'ghest bidder at the secret " auction pool " to become the lowest bidder of them at the public letting. Now, the re- straint thus imposed on themselves was only partial. It did not cover the United States. There was not a complete monopoly It was tempered by the fear of competition, and tf^f^, 7f * r'* *** *^^ P"*^- B"* ^^^ •'^'-tainlv does not [393] take the contract of association out of the an- 11808— VOL 1—06 M 51 800 m FEDERAL REPORTEB, 291. Opinion of the CJourt 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 neces- sity for curbing themselves by joint agreement from commit- ting 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. The defendants, being manufacturers and vendors of cast- iron pipe, entered into a combination to raise the prices for pipe for all the states west and south of New York, Penn- sylvania, and Virginia, constituting considerably more than three-quarters of the territory of the United States, and sig- nificantly called by the associates " pay territory." Their joint anual output was 220,000 tons. The total capacity of all the other cast-iron pipe manufacturers in the pay territory was 170,500 tons. Of this, 45,000 tons was the ca- [292] pacity of mills in Texas, Colorado, and Oregon, so far. re- moved from that part of the pay territory where the demand was considerable that necessary freight rates excluded them from the possibility of competing, and 12,000 tons was the possible annual capacity of a mill at St. Louis, which was practically under the same management as that of one of the defendants' mills. Of the remainder of the mills in pay territory and outside of the combination, one was at Colum- bus, Ohio, two in northern Ohio, and one in Michigan. Their aggregate possible annual capacity was about one- half the usual annual output of the defendants' mills. They were, it will be observed, at the extreme northern end of the pay territory, while vhe defendants' mills at Cincinnati, Louisville, Chattanooga, and South Pittsburg, and Annis- ton, and Bessemer, were grouped much nearer to the center of the pay territory. The freight upon cast-iron pipe amounts to a considerable percentage of the price at which manufacturers can deliver it at any great distance from the place of manufacture. Within the margin of the freight per ton which Eastern manufacturers would have to pay to UNITED STATES V. ADDYSTON PIPE & STEEL CO. 801 Opinion of the Court deliver pipe in pay territory, the defendants, by controlling two-thirds of the output in pay territory, were practically able to fix prices. The competition of the Ohio and Michi- gan mills, of course, somewhat affected their power in this respect in the northern part of the pay territory; but, the further south the place of delivery was to be, the more com- plete the monopoly over the trade which the defendants were able to exercise, within the limit already described. Much evidence is adduced upon affidavit to prove that de- fendants had no power arbitrarily to Rx prices, and that they were always obliged to meet competition. To the ex- tent that they could not impose prices on the public in ex- cess of the cost price of pipe with freight from the Atlantic seaboard added, this is true; but, within that limit, they could fix prices as they chose. The most cogent evidence that they had this power is the fact, everywhere apparent in the record, that they exercised it. The details of the way in which it was maintained are somewhat obscured by the manner in which the proof was adduced in the court below, upon affidavits solely, and without the clarifying effect of cross-examination, but quite enough appears to leave no doubt of the ultimate fact. The defendants were, by their combination, therefore able to deprive the public in a large territory of the advantages otherwise accruing to them from the proximity of defendants' pipe factories, and, by keeping prices just low enough to prevent competition by Eastern manufacturers, to compel the public to pay an increase over what the price would have been, if fixed by competition be- tween defendants, nearly equal to the advantage in freight rates enjoyed by defendants over Eastern competitors. The defendants acquired this power by voluntarily agreeing to sell only at prices fixed by their committee, and by allowing the highest bidder at the secret " auction pool " to become the lowest bidder of them at the public letting. Now, the re- straint thus imposed on themselves was only partial. It did not cover the United States. There was not a complete monopoly. It was tempered by the fear of competition, and It affected only a part of the price. But this certainly does not [293] take the contract of association out of the an- 11808— VOL 1—06 M 51 802 m FEDERAL REPORTER, 293. i »■ Opinion of the Ciinrt. iHilliiig effect of the rule against monopolies. In U. S. v. E. C. K,*i(jht Co,, 150 U. S. 1, 1€>, 15 Sup. Ct. 255, Chief Justice Fuller, in speaking for the court, said : "Again, all the authorities agree that, in order to vitiate a contract or combination, it is not essential that its result should he a complete monopoly. It is gufficicnt if it really tends to that end, and to de- prive the public of the advantages which flow from free competition." It has been earnestly pressed upon us that the prices at which the east-iron pipe was sold in pay territor}' were rea- sonable. A great many affidavits of purchasers 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 de- fendants have l)een reasonable. We do not think the issue an important one, l)ecanse, as already stated, we do not think that at common law there is any question of reasonableness 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 so. But, if it were important, we should unhesitatingly find that the prices charged in the instances which were in evidence were unreasonable. The letters from the manager of the Chatta- nooga foundry written to the other defendants, and discuss- ing the prices fixed by the association, do not leave the slight- est doubt upon this point, and outweigh the perfunctory affidavits prwluced by the defendants. The cost of produc- ing pipe at Chattanooga, together witli a reasonable profit, did not exceed $15 a ton. It could have been delivered at Atlanta at $1? to $18 a ton, and yet the lowest price which that foundry was permitted by the rules of the association to bid was $24.25. Tlie same thing was true all through pay territory to a greater or less degree, and especially at " re- served cities." Another aspect of this contract of association brings it within tlie 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 UNITED STATES V. ADDYSTON PIPE & STEEL CO. 803 Opmion of the Court bidding invited by the intending purchaser. It would have much interfered with the smooth working of defendants' association had its existence and purposes become known to the public. A part of the plan was a deliberate attempt to create m the minds of the members of the public 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 liave the lowest 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 to prevent Competition, is a fraud upon the intending vendor or contractor, and the en- suing sale or contract will be set aside. Breslin v. Brown, 24 Ohio St 565; Atcheson v. Motion, 43 N. Y. 147; Loyd v Malone, 23 111. 41; Wooton v. HinJde, 20 Mo. 290; Phippen V. Stickney, 3 Mete. (Mass.) 384: Kem-ney v. Taylor 15 How. 494, [294] 519; WUhnr v. How, 8 Johns. 444; Han- nah V. Fife, 27 Mich. 172; Gihhs v. Smith, 115 Mass. 592; Swan V. Chorpenning, 20 Cal. 182 ; Gardiner v. Morse, 25 Me. 140; Ingram v. Ingram, 49 N. C. 188; BHshane v. Adams, 3 N. Y. 129; Woodruff v. Be^-ry, 40 Ark. 251 ; Wald, Pol. Cont. 310, note by Mr. Wald, and cases cited. The case of Jones V. North, L. R. 19 Eq. 426, 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 defend- ants in their plan of combination was this illegal and fraudu- lent effort to evade such laws, and to deceive intending pur- chasers. No matter what the excuse for the combination by defendants in restraint of trade, the iUegaUty of the means stamps It as a conspiracy, and so brings it within that term of the federal statute. The second question is whether the trade restrained by the combination of the defendants was interstate trade. The mills of the defendants were situated, two in Alabama, two in Tennessee, one in Kentucky, and one in Ohio. The in- variable custom in sales of pipe required the seller to deliver the pipe at the place where it was to be used by the buyer, 804 86 FEDERAL REPORTER, 294. Opinion of the Court and to include in the price the cost of delivery. The con- tracts, as the answer of the defendants avers, were invariably mad© after public letting at the home, and in the state, of the buyer. The pay territory, sales in which it was the pro- fessed object of the defendants to regulate by their contract of association, included 36 states. The cities which were espe- cially reserved for the benefit of the defendants were Atlanta and Anniston, reserved to the Anniston mill, in 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, Xew Albany, and Jeffersonville, reserved to Dennis Long & Co., of Louis- ¥ill©; and Cincinnati, Newport, and Covington, reserved to the Addyston mill, in Ohio. Under the agreement, every request for bids from any place, except the reserved cities, sent to any one of the defendants, was submitted 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 l>een already fixed, the association determined the price and bonus to be paid. The contract of association restrained every defendant except the one se- lected 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 4, each one of the defendants, by his con- tract of association, restrained his freedom of trade in re- spect 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 such a contract at all, and the sixth agreeing not to make the contract below a fixed price. With respect to sales in Ohio, Kentucky, [295] Tennessee, and Alabama, the effect of the contract of association was 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 UNITED STATES V, ADDYSTON PIPE & STEEL CO. 805 Opinion of the Court 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 delivery, 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 pro- posed 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 pric'3 they might see fit to fix. Can there be any doubt that this was a restraint of interstate trade and commerce? Mr. Justice Field, in Ooimty of Mobile v. Kimball, 102 U. S. 691, 696, said: "Commerce with foreign countries and among tlie states, strictly considered, consists in intercourse and traffic, and the transiwrtatiou and ti-ansit of persons and property, as well as the purchase, sale, and exchange of commodities." In Robbins v. Taking Dist., 120 U. S. 489, 7 Sup. Ct. 592, a law of Tennessee, which imposed a tax on all " drunimei-s " who solicited orders on samples, was held unconstitutional in so far as it applied to the drummer of an Ohio firm, who was soliciting orders for goods to be sent from Ohio to pur- chasers in Tennessee, on the ground that it was a tax on in- terstate commerce. In delivering the opinion of the court in that case, Mr. Justice Bradley said (page 497, 120 IT. S. and page 596, 7 Sup. Ct.) that a tax on the sale of goods, or the offer to sell them before they are brought into the state, was clearly a tax on interstate commerce. He further said : •* The negotiation of sales of goods which are in another state, for the purpose of introducing them into the state in which the negotia tion is made, is interstate commerce." The principle thus announced has been reaffirmed by the court in Corson v. Maryland, 120 U. S. 502, 7 Sup. Ct. 655 ; in Asher V. Texas, 128 U. S. 129, 9 Sup. Ct. 1; in Stoutenhim/k V. Hennick, 129 U. S. 141, 9 Sup. Ct. 256; and in Brennmi \, City of Titusville, 153 U. S. 289, 14 Sup. Ct. 829. The point of these cases was emphasized by the distinction taken in Emert v. Missouri, 156 U. S. 296, 15 Sup. Ct. 367, in which 806 85 FEDERAL REPORTER, 295. Opinion of the C!ourt the. validity of a law of Missouri, imposing a tax on peddlers, was in question. The plaintiff in error, convicted under the law of failure to pay the tax, was the selling agent of a New Jersey sewing machine manufacturing company, who carried the machine for sale with him in his wagon. It was held that in such a case, the machine having become part of the mass of property in the state, the tax on the i>eddler was not a tax on interstate conmierce. If, then, the soliciting of orders for, and the sale of, goods in one state, to be delivered from another state, is interstate commerce in its strictest and highest sense,— such that the states are excluded by the federal constitution from a right to regulate or tax the same, — it seems clear that contracts in restraint of such solicita- [296] tions, negotiations, and sales are contracts in restraint of interstate commerce. The anti-trust law is an effort by congress to regulate interstate commerce. Such commerce as the states are excluded from burdening or regulating in any way by tax or otherwise, because* of the power of congress to regulate interstate com- merce, must, of necessity, l)e the commerce which congress may regulate, and which, by the terms of the anti-trust law, it has regulated. We can see no escape from the conclu- sion, therefore, that the contract of the defendants was in restraint of interstate conunerce. The learned judge who dismissed the bill at the circuit was of opinion that the contract of association only indirectly affected interstate commerce, and relied chiefly for this con- clusion on the decision of the supreme court in the case of U. S. V. E. C. Knight Co,, 156 U. S. 1, 15 Sup. Ct. 249. In that case the bill filed under the anti-trust law sought to enjoin the defendants from continuing a union of substan- tially all the sugar refineries of the country for the refining of raw sugars The supreme court held that the monopoly thus effected was not within the law, because the contract or agreement of union related only to the manufacture of refined sugar, and not to its sale throughout the country ; that manu- facture preceded commerce, and although the manufacture under a monopoly might, and doubtless would, indirectly af- fect both internal and interstate commerce, it was not wkhin the power of congress to regulate manufactures within a state UNITED STATES V. ADDYSTON PIPE & STEEL CO. 807 Opinion of the Court on that ground. The case arose on a bill in equity filed by the United States under the anti-trust act, praying for relief in resi^ect of certain agreements under which the American Sugar-Refining Company had purchased the stock of four Philadelphia sugar-refining companies with shares of its own stock, whereby the American Company acquired nearly com- plete control of the manufacture of refined sugar in this country. The relief sought was the cancellation of the agreements of purchase, the redelivery of the stock to the parties respectively, and an injunction against the further performance of the agreements and further violations of the act. The chief justice, in delivering the judgment of the court, said : "The argument is that the power to control the manufacture of refined sugar is a monopoly over a necessity of life, to the enjoyment of which by a large part of the population of the United States" inter- state commerce is indispensable, and that, therefore, the general gov- ernment, in the exercise of the power to regulate commerce, may repress such monopoly directly, and set aside the instrmrents whicli have created it. * ♦ ♦ Douijtless the power to control the manu- facture of a given thing involves in a certain sense the control of its disposition, but this is a secondary, and not the primary, sense; and, although the exercise of that power may result in bringing the opera- tion of conunerce into play, it does not control it, and it affects it only incidentally and indirectly. Commerce succeeds to manufacture, and is not a part of it. The power to regulate conunerce is the power to prescribe the rule by which commerce shall be governed, and is a IK)wer independent of the power to suppress monopoly. But it may operate in repression of monopoly whenever that corner within the rules by which conmierce is governed, or whenever the transaction is itself a monopoly of conunerce. * ♦ ♦ The regulation of commerce applies to the subjects of commerce, and not to matters of internal police. Contracts to buy, sell, or exchange goods to l>e 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, mav be regu- lated ; but this is because they form part of interstate trade or com- merce. The fact [297] that an article is manufactured for export to another state does not of itself make it an article of interstate wnunerc-e, and the intent of the manufacturer does not determine the time when the article or product passes from the control of the state, and belongs to commerce." The chief justice then refers to the prior case of Coe v. Errol, ms IL 8.517,6 Sup. Ct. 475, in which it was held that logs Avere not made subjects of interstate commerce by the mere intent of the owner to ship them into another state, so that state taxation upon them could be regarded as a burden upon interstate commerce, until that intent had been carried so far into execution that " they had commenced their final 808 85 FEDEBAL REPOKTEB, 297. Opinion of the Court movement from the state of their origin to that of their desti- nation." Kidd V. Pearson, 128 U. S. 1, 9 Sup. Ct. 6, is also referred to. In that ease it was held that a law of Iowa, which forbade the manufacture of spirituous liquor except for certain purposes, was not in conflict with the commerce clause of the federal constitution, although it appeared by proof that the liquor was to be manufactured only with in- tent to ship the same out of the state. The chief justice fur- ther said : ** It was in the light of well-settled principles that the act of July 2. 189D, was framed. CongreRs did not attempt thereby 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 disposition of proi)erty ; or to reg- ulate or prescribe the price or prices at which such proi)ertv or the prmlucts tliereof should be sold : or to make criminal the acts of per- sons in the acquisition and control of property which the states of their residence or creation sanctioned or permitted. Aside from the provisions applicable where congress might exercise municipal power, what the law struck at was combinations, contracts, and conspiracies to monopolize trade and commerce among the several states or with foreign nations ; but the contracts and acts of the defendants 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 object was manifestly private gain in the manufacture of the commodity, but not through the control of interstate or foreign commerce. * * * * There was nothing In the proofs to indicate any intention to put a re- straint upon trade or commerce, and the fact, as we have seen, that trade or commerce might be indirectly affected, was not enough to ^ititle complaints to a decree.*' ^ We have thus considered and quoted from the decision in tie 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 argument on behalf of the defendants here. It seems to us clear that, from the beginning to the end of the opinion, the chief justice draws the distinction between a restraint upon the business of manufacturing and a re- straint upon the trade or commerce between the states in the articles after manufacture, with the manifest purpose of showing that the regulating power of congre&s under the constitution 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 UNITED STATES V. ADDYSTON PIPE & STEEL CO. 809 Opinion of the Court it to be plainly inferred that the statute does embrace com- binations and conspiracies which have for their object to re- strain, and which necessarily operate in restraint of, the freedom of such contracts. The citation of the case of Coe v. [298] Errol was apt to show that merchandise, before its shipment across state lines, was not within the regulating power of congress, and, a fortiori, that its manufacture was not; while Kidd v. Pearson clearly made the distinction between the absence of power in congress to control manufac- turing merely because the manufacturer intends to add to interstate conmierce with the product, and the power which congress has to prevent obstructions to interstate trans- portation 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 articles 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 contracts, all of which, as we have seen, do not merely affect interstate com- merce, but are interstate commerce. It can hardlv be said that a combination in restraint of what is interstate com- merce does not directly affect and burden that conmierce. The error into which the circuit court fell, it seems to us, Avas in not observing the difference between the regulating power of congress over contracts and negotiations for sales of goods to be delivered across state lines, and that over the merchandise, the subject of such sales and negotiations. The 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. 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 defendants' counsel at the bar, is to be interpreted by the facts of the case before the court. The statement in the opinion that congress did not ^1^* 85 FEDERAL REPORTER, 298. Opinion of the CJourt intend l)y the ant i -trust act to limit and restrict the rights of persons and corporations in the mere acquisition, control, or disposition of property, or to regulate the prices at which such property should be sold, or to make criminal the acts of persons or corporations in the acquisition and control of property which tlie states of their residence or creation sanc- tioned or permitted, does not imply that congress did not intend to strike down any combination -which had for its object the restraint and attempted monopoly of trade and connnerceamojiga given number of states in specified articles of commerce, and the resuhing power to regulate prices therein. The obstacle in the way of granting the relief asked in ^ . aS. v. E. C. Khireme court distinctly adjudged 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.'' That the defendants in the prasent case combined and contracted with eacli other for the purpose of restraining trade [290] and connnerce 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, " notliing in the proofs to indicate any intention to i)nt a restraint upon trade or commerce.'' In the present case the proofs shoAV that no one of the companies in this pipe-trust combination was al- lowed t(» send its goods out of the state in which they were manufactured except u[)on the terms established by the agree- ment. Can it Im doubted that this was a direct restraint upon interstate connnerce in those goods? To give the lan- guage (»f the opinion in the Knight Case the construction 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 pur[)ose of not deciding any case but the one before it, then priMt^eded to confuse the cases by using language which UNITED STATES V. ADDYSTON PIPE & STEEL 00. 811 Opinion of the Court. decided both. We cannot concur in such an interpretation of the opinion. Counsel for the defendants also find in the language of Mr. Justice Peckham, in the case of U. S. v. Trans-Missouri F'reight Ass'n, 166 U. S. 290, 313, 326, IT Sup. Ct. 540, an argument against our conclusion in this case. The question in that case was whether the anti-trust act applied to rail- road companies which combined in establishing traffic rates for the transportation of persons and property. It was vig- orously contended on behalf of the railroad companies that the. act was never intended to apply to them, because con- gress had already provided for their regulation by the inter- state commerce law. In meeting this position, Mr. Justice Peckham used the following language (page 313, 166 U. S., and page 548, IT Sup. Ct.) : " We have held that the trust act did not apply to a eompanv engaged m one state in the refining of sugar under fircunistanees detailed in the case of U. ^. v. E, C. Knight Co., 156 U. S. 1, 15 Sup. Ct. 249, because the refining of sugar under those circumstances bore no dis- tinct relation to commerce I)etween the states or with foreign nations To exclude agreements as to rates by competing railroads for the transportation of articles of connnerce betAveen the states would leave little for the act to take effect upon." Again, upon page 326, 1(U; U. 8., and page 553, 17 Sup. Ct., Justice IVf'kham repeats the same idea: " In the Knight Co. Case, supra, it was said that this statute ap- plied to monopolies in restraint of interstate or international trade or commerce, and not to inonciwlies in the manufacture even of a neces- sary of life. It is readily seen from tliese cases that, if the act does not apply to the transportation of commodities bv railroads from one state to another or to foreign nations, its application is so greatly limited that the whole act might .is well be held inoperative." This is not a declaration that cases might not arise within the statute which were not combinations of common carriers in relation to interstate transportation. The language used means nothing more than that, if such combinations were excluded from the effect of the act, the great and manifest scope for the operation of a federal statute on such a subject would be denied to it. To give the language more weight would be to violate the first canon for the construction of a judicial opinion laid down by Chief Justice Marshall in Cohens v. Virginia, 6 ^Vlieat. 264, 340, 399 : [300] " It is a maxim, not to be disregarded, that general expressions in every opinion are to be taken in connection with the case in which 812 85 FEDERAL REPORTER, 300. Opinion of the Court those expi'essions are used. If they go beyond the case, they may be respei'ted, but oiight not to control the Judgment in a subseciuent suit when the very point is presented for decision. Tlie reason for this maxim is obvious. The question actually before the court is investi- gated with care, and considered In its fuli extent. Other principles which may ser%e to illustrate it are considered in their relation to the case de( ided, but their possible bearing on all cases is seldom com- pletely investigated." In m Greene, 52 Fed. 104, cited for the defendants, is to be distinguished from the case at bar in exactly the same way as the Knight Co. Ca.se. The indictment against Greene, drawn under the anti-trust act, charged him with being a member of a combination to acquire possession and control of 75 per cent, of the distilleries of the country, for the pnrjiose of fixing the price of whisky, and controlling the trade in it between the states. The immediate object of the combination was a monopoly in manufacture. The effect upon interstate trade in whisky was as indirect as was the monopoly of the refining of sugar in the Knight Co. Case upon interstate trade in that article. The case of Dueher Watch €me Mfg. Co, v. E. Howard Wateh <& Clock Co,,Z^ U. S. App. 16, 14 C. C. A. 14. and 66 Fed. 637, cannot be regarded as an authority upon either of the questions considered in this case, because of the division of opinion among the judges. It was a suit brought by a watch manufacturing company against 20 other companies to re- cover damages for a boycott of tlie plaintiff. The averment was that the defendants had agi'eed not to sell any goods manufactured by them to any person dealing with the plain- tiff, and had caused this to be known in the trade, and that they fixed an arbitrary price for the sale of their goods to the public, and, because plaintiff's competition interfered with their maintaining this price, they were using the boycott against plaintiff, to stifle competition. The pleadings were not drawn with care to bring the case within the anti-trust law. The questions arose on demurrer to the bill. Judge Laeombe held that the facts stated gave rise to no cause of action; Judge Shipman held that the averments were not sufficient to show that the trade i-estrained was interstate; and Judge Wallace dissented, on the ground that a cause of action was sufficiently stated, and that the restraint was upon UNITED STATES V, ADDYSTON PIPE & STEEL CO. 813 Opinion of the CJourt- interstate commerce. These varying views decided the case, but they certainly furnish no precedent or authority. There is one case which seems to be quite like the one at bar. It is the case of ZJ. S. v. Jellico Mountain Coal dj Coke Co,, 46 Fed. 432, a decision by Judge Key at the circuit. The owners of coal mines in Kentucky entered into a contract of association with coal dealers in Nashville, by Avhich they agreed that the mine owners bhould only sell to dealers who w^ere members, and the members should only buy from mine owners who were members, and that the dealers should sell at certain fixed prices, of which the mine owners should re- ceive a proportionate part, after payment of freight, and that prices might be raised by a vote of the association, in which case the addition to the price should be divided between the dealers and [301] the mine owners. The contract recited that it was intended to establish and maintain the price of coal at Nashville. It was held to be an attempt to create a monopoly in the interstate trade in coal between Kentucky and Nashville, Tenn., and it was enjoined. It is pressed upon us that there was no intention on the part of the defendants in this case to restrain interstate com- merce, and in several affidavits the managing officers of the defendants make oath that they did not know what inter- state comnierce 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 combi- nation they were making contemplated the fixing of prices for the sale of pipe in 36 different states, and that the pipe sold would have to be delivered in those states from the 4 states in which defendants' foundries were situate. They knew that freight rates and transportation were a most im- portant element in making the price for the pipe so to be delivered. They charged the successful 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 successful 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 extensive scheme to control the whole commerce C^-JLjt 85 FEDERAL REPORTER, 301. Opinion of the Court. among 3G states in cast-iron pipe, and that the defendants were fully aware of the fact whether they appreciated the application to it of the anti-trust law or not. Much has been said in argument as to the enlargement of the federal governmental functions in respect of all trade and industry in the states if the view we have expressed of the application of the anti-trust law in this case is to prevail, and as to the interference which is likely to follow with the control which the states have hitherto been understoo«l to have over contracts of the character of that before us. We do not announce any new doctrine in holding either that contracts and negotiations for the sale of merchandise to be delivered across state lines are interstate conunerce (see cases above cited), or that burdens or restraints upon such commerce con- gress may pass appro[)iiate legislation to prevent, and courts of the United States may in proper proceedings enjoin. In re iJehs, 158 r. S. 564. i:. Su]>. Ct. !KX>. If this extends federal jurisiliction into fields not befoie occupied by the general government, it is not because such jurisdiction is not within the limits allowed hy tlie constitution of the United States. The prayer of the petition that pipe in transportation un- der the contract of association be forfeited in a proceeding in equity like this is, of course, improper, and must be denied. The sixth section of the anti -trust act, after providing that property tnvned and in transportation from one state to another or to a foreign country under a contract inhibited by the act " shall be forfeited to the United States," contin- ues " and may be seized and condemned by like proceedings as those provided by law for the forfeiture, seizure and con- denmation of property imported into the United States con- trary to law." This rtMiuires a like procedure to that pre- scribed in sections |3021 a300-;3391, Eev. St., and involves a trial by jury. The only remedy which can be afforded in this proiwding is a decree of injunction. For the reasons given, the decree of the circuit court dis- missing the bill must be reversed, with instructions to enter a decree for the United States perpetually enjoining the defendants from maintaining the combination in cast-iron pipe described in the bill, and substantially admitted in the tui-w er. and from doing any business thereunder. [465J MOORE V. UNITED STATES. Opiniou of the Court. MOORE V. UNITED STATES. 815 (Circuit Court of Appeals, Eiglith Circuit. February 14, 1898) [85 Fe5.] Jurisdiction of Federal Courts—Admission of Territory \s State- Statute.— In 1895 the plaintiff in error was indicted, with others in a district court of the territory of Utah, under section 3 of the act of July 2, 1890 (20 Stat. 209), which declares illegal "every * * ♦ combination * * * in restraint of trade or commerce in any territory." In January, 189G, Utah was admitted as a state and thereafter the case was transferred to the federal court for the district of Utah, where, after hearing on demurrer to the indictment the plaintifle in error was tried and convicted. Held, on writ of error, that neither under the act of congress authorizing Utah to form a state government (28 Stat. Ill, 112), nor the constitution of Utah (article 24, § 7), nor by other legislation, was jurisdiction con- ferred upon the federal court to proceed with the case.« Same.— ffeW, further, that the case did not come within the provisions of Rev. St. § 13, regulating the effect of the rei)eal of statutes for the admission of Utah as a state did not operate to repeal the act of July 2, 1890, which still applies to the territories of the United States. In Error to the Circuit Court of the United States for the District of Utah. B, Harhness, George Sutherland, and WaUemar Van Gott for plaintiff in error. ' /. TF. Judd, United States Attorney, and IF. L. Maginnis Assistant United States Attorney. ' Before Brewer, Circuit Justice, Sanborn, Circuit Judge, and EiNER, District Judge. RiNER, District Judge. November 4, 1895, the plaintiff in error, with others, was indicted m the district court within and for the Third judi- cial district of the territory of Utah, Salt Lake county, for unlawfully engaging in a combination in restraint of trade and commerce in that territory. The indictment charged that the defendants therein named, " on the 22d day of Octo- o Syllabus copyrighted, 1898, by West Publishing Co. 816 S5 TEDERAL REPORTER, 465. Opinion of the CJourt ber in the year of our Lord 1895, in the district and territory aforesaid, and within the jurisdiction of this court, did will- fully and unlawfully engage in a combination in restraint of trade and commerce in said territory in this : That the said defendant B. L. Carpenter, being then and there the agent in Salt Lake City, Salt Lake county, territory of Utah, of the Pleasant Valley Coal Company, a corporation engaged in mining coal, and selling the same at wholesale to dealers in coal in said Salt Lake City, and the said defendant F. H. Moore, being then and there the agent of the Union Pacific Coal Company, a corporation engaged in mining coal and sell- ing the same at wholesale to dealers in coal in said Salt Lake City, and each and all of the said defendants other than said Carpenter and said Mooi*e being then and there engaged in the business of baying coal and selling the same at retail la said Salt I^ake City, and each and all of said defendants except said Carpenter and said Moore being then and there members of an association designated and known as the Salt Lake [466] Coal Exchange, said Salt Lake Coal Exchange being a voluntary association of nearly all of the dealers in coal at retail in said Salt Lake City, and not a corporation; each and all of the defendants did then and there combine together to prevent any person engaged in the Inisiness of buying coal and selling the same at retaU in said Salt Lake City, and not a member of said exchange, and any person desiring to engage in such business in said citv, and not a member of the said coal exchange, from purchasing coal from said Union Pacific Coal Company and from the said Pleasant Valley Coal Company at as low a price as that for which the same kind of coal was being sold by said corpora- tions to members of said Salt Lake Coal Exchange, and to make the price of coal from such corporations to dealers in coal at retail in said city, and persons desiring to engage in dealing in coal at retail in said city, who are not members of said exchange, so great as to prohibit and prevent them pur- chasing coal of said corporations, and selling the same at retail in said city, and to unlawfully raise, augment, and in- crease the price of coal at retail in said Salt Lake City, and to destroy free competition in the sale of coal in said city, and to compel the consumers of coal in said city to pay therefor MOORE V, UNITED STATES. 817 Opinion of the Court the prices fixed by the said coal exchange ; that in pursuance of said combination said F.H. Moore, as agent of said Union Pa- cific Coal Company, did on the 23d day of October, 1895, re- fuse to sell to one T. P. Lewis, who was then and there desir- ous of engaging in the business of buying coal and selling the same at retail in said Salt Lake City, and who was not a member of said coal exchange, a carload of what is known as Rock Springs coal,' which said Moore, as said agent, was selling to the members of the said coal exchange in car-load lots at three and "/,,, dollars ($3.75) a ton, except at the price of five ($5) dollars per ton, which was then the retail price of said coal in said city, and refused to sell said coal at all except to the members of said exchange; and in pur- suance of said combination the said Carpenter, as agent of said Pleasant Valley Coal Company, in said countv, on the said 23d day of October, 1895, refused to sell to said T. P. Lewis, who was then and there desirous of engaging in the business of buying coal and selling the same at retail in said Salt Lake City, and who was not a member of said exchange, a car load of coal, said Carpenter having said coal for s^le as said agent, for the reason that said Lewis was not a mem- ber of said exchange,— against the peace, and contrary to the form of the statutes of the United States in such case made and provided." December 14, 1895, the defendants were ar- raigned in the territorial court, and severally pleaded not guilty to this indictment. January 4, 1896, Utah was ad- mitted into the Union as a state upon an equal footing with the original states. President's Proclamation, 29 Stat. 876 Thereafter this case was transferred to the circuit court of the United States for the district of Utah. November U 1896, the defendants obtained leave of court (counsel for the United States consenting thereto) to withdraw their pleas of not guilty theretofore entered in the territorial court, and to file a demurrer to the indictment upon the grounds (1) that the indictment charged no offense; (2) that it set out no means by which the alleged combination was to [467] be effected; (3) for the reason that it stated no act or fact to show that the alleged combination was in restraint of trade; (4) that the acts charged as overt acts were not shown 11808— VOL 1— enalty can he enforced nor punishment Inflicted for violations of the law committed while it was in force, unless some special provision he made fc r that purpose by statute." By its terms, the provision of the statute under which this indictment was found applies only lo the territories of the United States, and, while it may yet be in full force within the territories, it is clear that no prosecution could be main-' tained under it for entering into a combination or conspiracy in restraint of trade in Utah after the date of her admission as a state. Permoli v. First Municipality^ 3 How. 589. When Utah became one of the states of the Union, this statute ceased to be in force within its boundaries, unle&s, by appropriate legislation, it was continued in force for the purpose of prosecuting violations thereof committed during L existencTof a territorial form of government. The act of congress authorizing Utah to form a state gov- ernment, after providing that the state of Utah should con- stitute one judicial district, to be called the " District of Utah," and providing the lime and place for holding the circuit a;id district courts of the United States therein, and conferring upon the circuit and district courts for that dis- trict, and the judges thereof, the same powers and jurisdic- [409] tion, and requiring them to perform the same duties, |)ossessed and required to be performed by the other circuit and district courts and judges of the United States, also pro- vided : "That the convention herein provided for shall have the power to provide, by ordinance, for the transfer of actions, cases, proceedings, and matters pending in the supreme or district courts of the territory of Utah at the time of the admission of said state into the Union, to such courts as shall be established under the constitution to be thus formed, or to the circuit or district court of the United States for the MOORE V, UNITED STATES. Opinion of the CJourt 821 district of Utah ; and no indictment, action, or proceeding shall abate by reason of any change in the courts, but shall be proceeded with in the state or United States courts according to the laws thereof respectively." * "And the laws of the United States shall have the same force and OQ St r^i^l" .*?« ^^^ ®^^*® "^ elsewhere within the United States." Zo otat. Ill, 112. Under the authority conferred upon the constitutional convention by the enabling act, a schedule annexed to the constitution of the state provided that: "All actions, causes, proceedings and matters which shall be pend- ing in the district courts of the territory of Utah, at the time of the admission of the state into the Union, whereof the United States circuit and district courts might have had jurisdiction had there been a state government at the time of the connuencement thereof, respec- tively, shall be transferred to the proper United States circuit and district courts, respectively, and oil files, records, indictments and proceedings relating thereto, shall be transferred to said United States courts." Const. Utah, art. 24, § 7. The above provisions of the enabling act and the schedule comprise the legislation relating to the transfer and trial of cases pending in the district courts of the territory at the time Utah was admitted as a state, and for the continuation of the laws of the United States therein after her admission. Clearly, no peculiar jurisdiction or authority is conferred upon the circuit court, for that district, by this legislation; on the contrary, the enabling act would seem to inhibit and exclude the exercise of any extraordinary or peculiar power either by the circuit or district courts within the newly created district. That act provides: "That the circuit and district courts for the district of Utah, and the judges thereof respectively, shall possess the same powers and juris- diction and perform the same duties possessed and required to be per- formed by the other circuit and district courts and judges of the United States, and shall be governed by the same laws and regulations." There is no provision of the enabling act, nor any other general or special act of congress, continuing the provision of the act of July 2, now under consideration, in force in Utah after the admission of the state; neither is there any statute which, in terms, provides for the transfer to and the trial of cases arising under that act in the circuit court for that district. This case was transferred to and tried in that ' court for the reason, doubtless, that it was considered one of the cases which the enabling act declares shall not abate by reason of any change in the courts, but shall be proceeded 85 FEDERAL REPORTEB, 470. Opinion of the Ck)urt with in the state or United States courts according to the laws thereof; and, as the indictment charged the defendants with violating a law of the United States, that the case came within the provisions of the enabling act, and also within the provision of the schedule annexed to the consti- [470] tution authorizing the transfer of cases whereof the circuit court might have had jurisdiction had there been a state govern- ment at the time of the commencement thereof. We do not think the case is included within either of these provisions. There are some acts which congress may by law designate as a crime against the general government or against the opera- tions of government which affect every citizen, whether of a state or territory; such as treason, illegally holding office, violations of the postal laws, counterfeiting, false impersona- tion in procuring naturalization, presenting false claims against the government, etc. The federal laws defining these and kindred offenses operate upon ail citizens of the United States, and that they reside in a state constitutes no exemp- tion from a prosecution for a violation thereof in the courts of the United States, for jurisdiction is expressly conferred by statute upon the federal courts. As applied to criminal laws, it is these laws of the United States that the enabling act declares shall have the same force and effect within the state of Utah as elsewhere within the United States; and it is prosecutions for violations thereof which, under the pro- visions of that act, are not to abate upon the admission of the state by reason of any change in the courts, but are to be transferred from the territorial district court, a court having jurisdiction in such cases during the existence of a territorial form of government, to the circuit and district courts, courts having jurisdiction in such cases after the admission of the slate. That the provisions of the enabling act were so un- derstood and construed by the constitutional convention is evidenced by the fact that in the schedule (annexed to the constitution) providing for the transfer of causes to the fed- eral courts it provides only for those cases " whereof the United States circuit and district courts might have had jurisdiction had there been a state government at the time of the commencement thereof," and this is iiot such a case. If there had been a state government at the date of this indict- GULF^ C. & S. JF. BY. CO. V. MIAMI S. S. CO. 823 Syllabus. ment, no indictment could have been returned, for the reason that there would have been no law in force in the state of Utah defining such an offense. Neither do we think the present case comes within the pro- visions of section 13 of the Revised Statutes. That section reads as follows : "The repeal of any statute shall not have the effect to release or extinguish any penalty, forfeiture, or liability incurred under such statute, unless the repealing act shall so expressly provide, and such statute shall be treated as still remaining in force for the puriK)se of sustaining any proper action or prosecution for the enforcement of such penalty, forfeiture or liability." It is clear from the language of the section that it applies only to cases where the statute defining an offense has been repealed. The act of July 2d was not repealed by the en- abling act, for it yet applies to the territories of the United States. It ceased to be in force in Utah only because it was superseded by the constitution upon the admission of the state. Our conclusion is that no power existed by law in the cir- cuit court for the district of Utah which did not appertain to the circuit courts in other districts; that the power and jurisdiction claimed for the circuit court in this case is a pe- culiar and extraordinary power, and [471] does not belong to it regularly by its constitution ; that no such power has been bestowed upon it by any special legislation, and could not, therefore, be legally and properly exercised by it. In the view we have taken of this case it becomes unnecessary to consider the other assignments of error set out in the record. The judgment of the circuit court must be reversed, and the case remanded to that court, with instructions to dismiss the indictment. [407] GTJI.F, C. & S. F. RY. CO. ET AL. v. MIAMI S. S. CO. (Circuit Court of Appeals, Fifth Circuit. March 29, 1898.) [86 Fed., 407.] Carriebs— Connecting Lines— Prepayment of Freight. — A common carrier engaged in interstate commerce may at common law, and 824 86 FEDERAL BEPOETEB, 407. Opinion of the Ck)urt under the interstate commerce. law, demand prepayment of freight charges, when delivered to it by one connecting carrier, without exacting sus Is engaged in exactly similar service as those of your orator, and said line has at New York and at Galveston wharves and sheds which connect with the several lines of railway running into said cities. Tliat said Mallorv Line has been in operation between said ports for a number of vears, and for several years prior to the time your orator's line of steamships was put in operation had no competitor for the business between said ports. That the accommodations of said MalloiT Line and of j^our -'^ 86 FEDERAL REPOKTEB, 408. Opinion of the Court. orator for tlie reception and delivery of freight, in unloading and loading vessels. In receiving and delivering freight, are in every respect similar and equal. Their resi)ective wharves connect with the several lines of the respondents in the same and similar manner, and the same and similar accommodations prevail for the reception and delivery of freight, for the loading and unloading of cars. That the cost of loading and unloading ears at the resi)ective wharves is the same, Rn{^ the respondents have contracts for loading and unloading cars at the respective wharves for the same price. Tlmt it has been, and is now. the estal)lished custom and usage bv and between said railroad companies and the Mallory Line and your orator, in the interchange of freight, for the line over which freight might be routed to advance to the line over which tlie freight originated the charges attached to such freight up to the time of delivery to the steamship company or railroad company over which It was to he forwarded to destination. [409] That it is. and has been, an estab- lished custom and usage between tfie respondents and the Mallory line and your orator since it has been in business, with reference to freight originating at New Yorls or beyond, and destined to points In Texas on the lines of railway operated by resiwndents, for the Mallory Line and your orator to bill .such freight thron«.;li from its point of origin to the iwint of destination at a througlj rate previously agreed ui>on, but on equal, exact, and similar conditions with refer- ence to both steamship lines, and for said railroads to i)ay to the steamship company delivering the freight at Galveston the freight charges earned Ijy it in transporting the freight from point of origin to Galveston under such agreement, and to receive the freiglit ten- dUPed by such steamship company, and forward sjime to its destination under such agreement And it is, and has been, an established custom and usage betiiieen the i-espondents and the Mallory Line and vour orator, with reference to freight originating at points on the lines of the several railway companies in Texas destined for New York or to points beyond on lines of railway connected with the ALilIory Line and your orator at that point, to bill freight from point of origin to point of destination at a through rate previoasiv agreed upon, and at the same and similar rates and ujuler the same exact and similar conditions, and for the steamship emnpany receiving such freight to pay to the raiiroad company delivering the freight at Galveston the charges for freights earned l>y said railroad comi)anv in transmrting the freight from point of origin to Galveston. Texas, under said agree- ment, and to receive the freight tendered by the railroad companv, and fonvard the same to New Yoriv. if that be the point of destina- tion, or, if beyond, to deliver same to connecting lines reaching said point, under said agreement This custom and usage is established In all cases, except in the case of peri8hja)Ie goods, when the custom aoes not apply. **TlKit tlure is a combination of railway companies and steamship companies known and dj'signated by t\\3 name of th- Soutlnvestern Freight BiUTaii. conqiored cf and by llio principal railway systems in the sonthwestern portion of the Unitefl States, of which \hi resi^ond- ents the Southern Pacific Company, the M(»rgan Steamship Company, and tha Cromwell Steamship Coirpaiiy. which latter stpamshi]) compa- nlee operate lines ot steamship iHtween the i)orts of Nuw Orleans, in the state of Lonisiana, and New Yoriv. and the Mallory Line, are memiiers. organized for the purjiose cf eoutrollir.g freK'ht of interstate connuerce in that iKirtion of the Unittnl States reaciied by the said railroads and tlieir countvtions by rail and water. That hLM-etofore, to wit, on or atout the .Slst day of January, 1808. at a meeting of said freight bnrean. called for that pun>'>8e in the city of New Yorlc, state of New York, at which representatives of the lines herein com- GULF, C. & S. F. RY. CO. r. MIAMI S. S. CO. Opinion of the Court 827 plained of,— the MalloiT, the Morgan, and the Cromwell Steamship Lines, thereunto duly authorized, — were present said railroads entered Into a conspiracy with said steamship companies against your orator, wherein and whereby it was and is attempted to prevent your orator from carrying on its business as a <' Line or consignors of said freight would be re- quired to pay not more than thirty-five cents per hundred pounds: that the cost of such transportation to New York so required shall be absorbed, and all lines participating in the carriage of such freigiit from New York shall prorate such cost of carriage to New York with the Mallory Line, and the Mallory Line will be called upon to pay only thirty-five per cent, of such charge. The said agreement affects all freights originating outside of New York City, and imposes upon your orator in its competition for such freight the amount, at least, rebated to the Mallory Line as its pro rata of the arbitrary paid out in getting said freight to New York. That said roads have agreed with said Mallory Line that upon all freights transported by It from New York to Galveston, jind from Galveston to New York, destined to points on the lines of the several railways outs'de of Galveston, shall receive thirty-five per ceot. of the through rate, the balance to be prorated upon an agreed basis between the participating railroads. That said railroads will not grant, but, on the contrary, will refuse to grant, to your orator equal rights and privileges with the Mallory Line as above set forth, but exact and demand that all freight routed via your orator's line, whether it originates at New York or beyond, or at points on respondents' lines of railwny, shall be required to pay the total of local rates, which would be largely in excess of the amount required and exacted of the Mallory Line or other meml)ers of such association, and that all freights routed over your orator's line will have to pay a higher rate than if the same were routed by way of the Mallory Line. That, [411] as hereinbefore alleged, the service, accommodation, connections, and ffieilities of the Mallory Line and tlioFe of your orator are in every sense equal, exact, and similar; and that by the imjiosition on the part of the railroads herein complained of your orator will be caused to suffer great and irreparable injury, its business prostrated, and probaltly prevented from continuing in its line of business. That at law there exists no plain, full, complete, and adequate remedy; that your orator lielieves, and it so charges, that resi)ondents intend to and will enforce said threats and demands on and after February 15, 18J>8, and thereby divert business and freight from it to the Mallory Line, and prevent it from cumix^ing with said line in the trajisuorta- tion of state and interstate counnerce. " Wherefore your orator prays that your honors will gviun your most gracious writ of injunction restraining the respondents, and each of them, tlieir agents and servants, from in any way interfering with the business of your orator as it has been heretofore and is now being carried on between the resiwndents and your orator in tlie manner and by the means hereinbefore alleged, and restraining them from discriminating against your orator in the making and ^.-ranting of GULF, 0. A S. F. RY. CO. V, MIAMI S. S. CO. 829 Opinion of the Court through rates, restraining them, and each of them, from carrying out the agreement between them and others in so far as it affects your orator, and commanding them to afford to your orator the same facilities, and to accept freight under the same conditions, as by them extended and granted to the other connecting steamship lines between Galveston and New York, and commanding them to make the same rate of freight on interstate and through business, and to allow your orator the same pro rata of through rates, as is given to the Mallory Line; that upon the final hearing had said injunction be made per- manent ; and for such other and further and general relief as to your honors may seem meet and proper." On Februaiy 12, 1898, this bill was exhibited to one of the judges of the circuit court for the Eastern district of Texas, who thereupon ordered: " Upon consideration of the within petition, the same is set down for hearing before me at Galveston, Texas, on February 21, 1898, at 10 o'clock a. m. of said day, at the United Stjites court house, and in the meantime respondents are directed to maintain with com- plainant the same relations with respect to rates, divisions, . and freights as are by them granted to the Mallory Line." At the time and place appointed the defendants appeared by counsel. The Missouri, Kansas & Texas Railway Com- pany of Texas submitted an answer, which, after certain admissions and denials not necessary to note, proceeded thus : "This defendant, for full and complete answer to the bill of com- plainant filed herein, shows: It is engaged in the operation of lines of railway lying wholly in the state of Texas, with a mileage of about nine hundred and seventy-six miles, extending from Galveston, Texas, in a northwesterly direction to the north line of the state of Texas near Denison, in Grayson county, Texas, together with certain branches in the state of Texas, and that it reaches with its own lines many of the most important cities in Texas, such as Houston, Waco, Ft. Worth, Dallas, Denison, Sherman, and others, and connects with all the principal railroads in said state, and that its business con- sists of the transportation of passengers, freight, mail, and express, and that such business constitutes inteniational, interstate, and state commerce, and that such conunerce in the natural course of business moves in all directions over this defendant's lines of railway and its connections. It is to the best interests of this defendant, as well as to the l)est interests of its connecting lines and the general public which they serve, as the defendant believes and avers, that this com- merce be carried at reasonable, open, published, and stable rates, filed with the interstate commerce commission where the commerce is in- terstate, and with the railroad commission of the state of Texas where the commerce is state. It is likewise to the interest of this defendant, its connections, and the public generally, that it should have a joint through tariff from points on its lines and connections to New York in connection with some steamship line from Galveston ; and this defendant shows that recently, and a short time before the filing of the bill [412] herein, it effected an arrangement with the New York & Texas Steamship Company, hereinafter and in the bill referred to as the * Mallory Line,' by which a through rate has been agreed upon between New York and what is known as 'Atlantic Sea- board Territory' and points on this defendant's lines and its con- 830 86 FEDERAL REPORTER, 412. Opioion of the Court nections, and in conformity thereto a joint through tariff has been adopted by this defendant and the Mallory Line and others, and filed with the interstate comuieree eomniission, a copy whereof is hereto appended, marked ' Exhibit A,' for convenient reference, and made a part hereof; and that the rates therein agreed upon, published, and established are reasonable and just, and under the provisions of the act of congress to regulate interstate conmierce constitute the niaxl- muni and the minimum charges which can be made by this defendant and the Mallory Line for the transportation of freight between the points named. This defendant shows that prior to July 15, 1897, when the complainant first entered its ships in the service between Galveston and New York, this defendant, in connection with other railroads of the Southwest, had in force certain joint tariffs from New York to points on its line and those on its connections, by the Gulf liorts, but the assent of the steamship companies was never given to such joint tariffs by filing the same with the interstate com- merce commission, or by general adoption thereof, and tlie steamship companies were bound by said through tariffs only when they ac- cepted shipments of freight thereunder. That almost immediately after the complainant entered into the New York and Galveston trade a rate war broke out as to Texas traffic between it and the Mallory Line, which resulted in a notice being given by this defend- ant to the complainant and the Mallory Line that it would charge them its regular established rates from and to Galveston on Texas traffic; and since such natiee was given this defendant has charged on all freight to and from said steamship lines its regularly estab- lished rates to and from Galveston; and the Malloiy Line and the complainant have at all times allowed such rates to this deiendant, and at the time of the filing of the bill of complaint herein no other or different arrangements were in effect between this defendant and the complainant, or between this defendant and the Mallory Line, save and except that this defendant had made a contract arrange- ment with the Mallory Line for joint through rates and joint billing such as hereinbefore stated and liereinafter set out, and pursuant thereto this defendant and the Mallory Line filed with the interstate commerce commission such joint through tariff as stated. The de- fendant further avers that the complainant has substantially at all times since it has been engaged in the trade between New York and Galveston allowed to this defendant its established rail rates to and from Galveston on such ti-aflic ; and further avers that the defendant has not and does not intend to deny the right to the complainant hereafter of having its commerce carried to and from Galveston at the defendant's regularly established Galveston rates. And defend- ant further alleges that its regularly established rates heretofore, now, and hereafter to be in effect to and from Galveston have been, are. and will be reasonable, just, and lawful. "The contract agreement between this defendant and the Mallory Line includes a through joint rate between the points established by the Joint tariff hereinabove referred to, through bills of lading, and through billing, and, for the present a division of the through rate on the basis of allowing the defendant and its connecting lines, as their proportion of the through rate, the established tariff rate from Galveston to the southwestern inland point of ortgin or destina- tion. The defendant however, alleges that it Is and will be entlrelj lawful for the defendant and the Mallory Line to make any division of the through rate between themselves, as from time to time they may determine to be just and equitable. The reasons which led the defendant to enter into this contract arrangement with the Mallory Line are, among others: (1) The Mallory Line has been long running, and is now running, and is to continue to run. well-equipped steam- GULF, C. & S. F. RY. CO. V. MIAMI S. S. CO. 8a 1 Opinion of the Court ships between New York and Galveston, carrying a large commerce, and has a well-established business, and the good will of the shippers of the country, and is comijetent and reliable, and in every way capable, trustworthy, and responsible. (2) That the arrangement be- tween the defendant and the Mallory Line, whereby they carry upon a joint through rate, published and known to the world, and filed with the interstate commerce commission, can but be beneficial to the public at large, and redound to the mutual advantage and benefit [413] of both parties to the arrangement (3) The steamships of the Mallory Line engaged and to be engaged in the Galveston and New York busniess are equal, if not superior, to any steamships in the United States engaged in what is known as the 'Atlantic Coast Service.' (4) The steamships of the Mallory Line are provided with ample facilities for the carriage of both freight and passengers. (5) The Mallory Line is equipped with much better ships than any other line running between Galveston and New York, and makes several days' better time between the t^vo ports than anv other ships. (G) The steamships of the Mallorj- Line plying between Galveston and New York arrive and depart at regular stated times; and in the arrangement which has been made bet\veen this defendant and the Mallory Line hereinabove referred to it has been understood and agreed that the necessary number of steamships of the Malloi-y Line should arrive and depart each week, arriving and leaving upon certain days of the week so far as possible. (7) The Malloi-v Line afforded the best opportunity and tlie best facilities for a through business connection with the defendant. "The defendant further shows that the complainant company has not such a service between Nev»' York and Galveston as to make it specmlly desirable for this defendant to establish a joint through tariff with it with through bills of lading and through billing. The complainant's steamships are not equal in speed or appliances to those of the Mallory Line. They require eight to ten days to make the trip between Galveston and New York, while the steamships of the Mallory Line make the trip in about six days. The steamships of the complainant are not combined freight and passenger ships, but are built only for freight though they may be able to cari-y a few passengers. Since the complainant entered the Galveston and New York trade, its ships have not arrived or departed at regular and stated periods. At first they ran a ship about once a week, but leav- ing upon no particular day, and for some time past and at present their ships are not running so often, and arrive and depart on no particu- lar day or regular time. This defendant further distinctly avers that it does not intend, by the establishment of the through rate and through billing and through business connections with the Mallory Line, to in any way unduly or unreasonably discriminate against the complainant's line, and states that whatever advantage the Mallory Line may secure over the complainant's line is the result of the contract arrangement between the Mallory Line and the de- fendant and that such contract arrangement is reasonable, justifiable and lawful. The defendant avers that it is, and will be at all times ready to deliver to or receive from the complainant's line all business which shall be consigned to or from that line, and destined over the line of the defendant or its connections. But the defendant avows the purpose of requiring, so long as it deems proper, the prepayment of freight delivered by the complainant to the defendant, and says that such requirement is and will be no unjust discrimination against complainant but one that is authorized and justified by law. The defendant states that it is not ready to enter into an arrangement with the complainant for a through joint service such as it has made with the Mallory Line, and submits that it ought not and cannot be 832 86 FEDERAL REPORTER, 413. Opinlou of the CJourt miiiired to enter into such an arrangement, as under the law the defendant Is not bound to carry beyond its own line. The defendant will at all times move with promptness and dispatch to and from complainant all freight which may be tendered at the established rates from Galveston, and accord to the complainant every right which it accords to every other shipper tendering it freight at Gal- veston. The defendant further shows that the complainant, by the bill, seeks to avail itself of the benefits of a contract arrangement euteretl into between this defendant and the Mallory Line, which ft has no right to do. The defendant shows that the complainant is not subject to the interstate commerce laws, and has not moved, and does not move, its commerce under any tariff filed with the interstate commerce commisgiion ; and, not being subjected to the burdens and penalties of the interstate commerce laws, cannot in this proceeding, avail itself of the benefits thereof by securing the advantage of a joint through rate, which, under the interstate com- merce laws, can only be made by the joint assent of the parties. The defendnat further shows that the complainant has moved the freight whiili it carried between Galveston and New York at rates not published, and varying from time to time, and that the rates at all times heretofore charged by the complainant since it has been in the business of carrying between Gal- [414] veston and New York have been such that, when added to the establislied railroad rates from Galveston over defendant's line and connections, would be less than the through rates established by the arrangement herein- before referred to which has been made between the defendant and the Mallory Line to and from New Jork and a large portion of sea- board territory.** The other defendants each separately submitted its demur- rer, on the following grounds, and in identically the same words: "(1) That the said complainant hath not. In and by its said bill, stated such a case as doth or ought to entitle it to any such relief as It liereby sought and prayed for fi-om or against this defendant * • ♦ (3) That, if the matters stated do give the complainant any cause of complaint against this defendant, the same is triable and determinable at law, and ought not to be inquired of by this court. (4) That it appeai-s from the bill of complaint that the relief is sought for under and by virtue of an act of congress approved July 2, 1890, entitled *An act to protect trade and commerce against unlawful restraints and monopolies.* That under the said act the only remedy given to a private party, or any party other than the government of the United States, is that of a suit for threefold damages, costs, and reasonable attorney's fees ; and it appears from the said act that the only party entitled to maintain bill for injunction for any alleged breach thereof is the government of the United States, by its district attorney, on the authority of the attorney general. That it further appears that, independently of such statute, the mattei-s set forth in the bill of complaint do not show any cause of action, at law or in equity, as independently of such statute the matters set forth in the said bill do not show any illegal or Avrongful combination or con- spiracy. And herein this defendant says that it has the legal right to decide what parties it will credit and what parties it will not credit, by refusing to carry freight without prepayment of charges, and has the right to decide what parties it will lend money to by ad- vancing charges and what parties it will refuse to so lend money to. And herein this defendant further says that it is under no legal obll- GULF, C. & S. F. RY. CO. V. MIAMI S. S. CO. 883 Opinion of the Court gation to transport or enter into any extra terminal arrangement con- cernmg the transportation of freight except on its own terms • and when It does of its own volition, enter into such extra terminal ariinge- Sn"" L ?''^- ^'^ through carriage of freight, through billing, through bills of ladmg, e c it is entitled to select the connection with which it desires to establish such arrangements, and that it has the perfect right to make such arrangements with one connection without making the same or similar arrangements with others. Defendant further says that the bill fails to allege any facts which show that Ln la n ant is entitled to have this defendant compelled by process of the court to enter into traffic relations with it" pi^tess or tue On March 2, 1898, the judge of the circuit court passed his decree as follows : .mi'^m^^^^-f^-*'*''''"'^ ^"^ brought on to be heard on the pleadings ad amdavits in support of same, and solicitors for both complai laS and respondents having been heard, and due deliberation having S had, It IS ordered, adjudged, and decreed by the court that the prelimi- nary injunction prayed for in complainant's bill be granted? and The respondent the Gulf, Colorado & Santa Fe Railway Company the Missouri, Kansas & Texas Railway Company of Texas, and the Inter national & Great Northern Railroad Company, and each of them theh- respective agents and servants, are hereby enjoined, until S hea ' Z Mi.n i%'.r'^'/'^?J interfering in any way with the business of the Miami Steamship Company, as it has heretofore and is now bein- carried on between said railway companies and the Miami Steamshin Company, or from discriminating against said Miam S e sM Company in the making and granting of through rates in the mannei- ^l^l^^htimnrorr* ?t '^T?' '^"^ eharges,^nd in Vl?e mmmerTf through billing of freight, and from enforcing and carrving into effect the agreeinent between them and others operating as the South western Fiveight Bureau, in so far as the same affects the Smi Steamship Company ; and you and each of you, your respect ie agents and servants, are hereby commanded to afford to the Miami S, r^^.STF^I'^ ^^^ f?^ facilities with reference to the interchange of freight, to accept from and deliver to it freight [4151 under thP same conditions and terms, as are by you or eifher of ^w grant^ Yoi nrfd r«liV"-^ ^*^/' steamship line operating between New Yoik and Galveston; and you are further commanded to make to Miaim Steamship Company the same rate of freight on interstate and through business, and to allow to said Miami Steamship Companv the same pro rata or division of such through rates a^bv ^"n or either of you gh-en to any other steamship line operating between New York and Galveston, and especially to the New S & S Steamship Company." AeJia^ The defendants jointly and severally asked to be allowed to appeal, and have jointly and severally assigned errors as follows : ronsoil fTo! Tr T'^'\ ''' ^^^^^^'.t'-ii^'ng the bill for injunction, for the leason that it disclosed no equity on its face. (2) Defendants had raent ot freight cliarges when delivered to them or either of them bv a connecting carrier, without exacting such prepayment when delivered by another connecting carrier. (3) The defendants had and ha\^ 11808 — VOL 1 — 06 M 53 834 86 FEDERAL REPOBTER, 415. Opinion of the Court and each of them had and has, the right to advance freij^lit charges to one eonnectiujjT carrier from wliich they or either of them may re- ceive freight for further transportation, without obligation to advanct* freight charges to another connecting carrier. (4) The defendants had and hav«\ and each of them had and has. the right to enter into a contract with cue connecting carrier for the through transpiu'tation of freight, for through joint rates, for through billing, and for the division of through rates, without being obligated t(» make the same contract with another connecting carrier. (5) The bill fails to show any such discrimination as falls within the purview of the third sec- tion of the act to rt-gulate commerce. [Specifications C to 15, in(;Iu- sive, omitted.] (1(>) The act to regulate commerce (and the several amendments thereof) provides its own ma.-hinery and its own reme- dies for the enforciMnent thereof, which remedies were intended to be exclusive, and no right to injumtitin is thereby given ui) n the c«.m- plaint of any private suiter." The appellants contend that the several arrangements effected between the Mallory Line and the defendant railway companies do not violate the common law, or the interstate commerce law of the United States, or any statute of the state of Texas. They contend that there is no obligation imposed upon the defendant companies to make any arrange- ment for through joint shipments, with a joint tariff, through billing, and a waiver of prepayment of freight, with the Lone Star Line because of the fact that they have such ar- rangements with the Mallory Line. They contend that there is no general usage or custom having the force of law or local custom at Galveston, Tex., which gives to one con- necting carrier the right to have the same arrangements as to through shipments on joint tariffs which other carriers may have acquired by contract. They contend that the ar- rangements existing between the Mallory Line and the de- fendants are several contract arrangements between it and each of the defendants, and that the same are in no way af- fected by the fact, if it is a fact, that there was an under- standing in advance between the defendant railway com- panies that they would each make a .several arrangement with the Mallory Line. Tlie alleged agreement between the steamer lines and the defendants, so far as it provides " that the Mallory Line is to cancel all existing contracts or special arrangements with the Kansas City, Pittsburg & Gulf on Missouri river business, and hereafter abide by rates and regulations fixed by this association," does not appear, on the face of it, or in the allegations of the bill, to give any ground of grievance to the complainant. The complainant GULF, C. & S. F. RY. CO. V. MIAMI S. S. CO. 835 Opinion of the CJourt does not expect to receive any [416] freight from these steamer lines, or desire to furnish any freight to either of them, but, so far as it is related to either, it is a rival of each, competing with each, more or less, for the " Missouri River business." This part of the agreement looks like it would work in the interest of the complainant by throwing to it all of the business of the Kansas City, Pittsburg & Gulf Railroad and any other carriers in the territory from which the complainant solicits traffic who are not members of the Southwestern Freight Bureau. The provision "that all rates less than association basis between Texas points and all territories be withdrawn February 15th" would likewise seem to affect the complainant favorably, whether the com- plainant's rates are lower or not so low as those authorized by the association basis. If the complainant's rates are lower, this provision would seem to constitute an inducement to traffic to patronize the complainant's line. If its rates are higher, the provision is an abatement of competition to the extent that the association rate is higher than the rate that the other steamship lines have been offering, for it is only " rates less than association basis " that are to be with- drawn. There is then left as the subject of complaint by the appellee the provision " that all through rates and divisions by Gulf ports be discontinued from and to domestic ports with steamer lines not members of this association, and all interchange of traffic with such lines be discontinued as far as possible, and that prepayment of freight be demanded from the steamer lines not members of this association." It is urged that at common law a common carrier is not bound to carry except on its own line, and, if it contracts to go beyond, it may, in the absence of statutory regulations, determine for itself what agencies it will employ, and its contract is equivalent to an extension of its line for the pur- pose of the contract. And if it holds itself out as a carrier beyond its line, so that it may be required to carry in that way for all alike, it may nevertheless confine its carrying to the particular route which it chooses to use. It puts itself in no worse position by extending its route with the help of others than it would occupy if the means of transportation employed were all its own. It may select its own agencies 836 86 FEDERAL Ui'-POKTER, 116. Opinion of the Court and its own associates for doing its own work. Atchison^ T. €& S. F, E, Co, V. Denver cC* N. O, E. Co,, 110 U. S. 667, I Sup. Ct. 185. We listened attentively and with interest to the able oral argument of counsel who appeared for the appellee, and we have diligently examined the printed brief which they submitted, and the numerous authorities cited thereon, but we do not find in all that they have advanced, or in any of the authorities we have examined, anything to weaken the force of the above suggestions and the authority on which the suggestions rest. On a subject so prolific of litigation as the rights, duties, and liabilities of railroad carriers, and the rights of individual consignors and con- signees and of connecting carriers doing business with the railway companies, an immense mass of litigation has neces- sarily arisen, and a large number of adjudged cases from courts of high respectability are reported. Many of these cases are comprehensive in the reach of their authority, and more comprehensive in the compass of their [417] dicta. They distribute themselves more or less through all the ques- tions involved in the case now before us, and are hardly susceptible of close alignment with the questions here, or satisfactory review in connection with these questions. They are instructive in their analogies, but the facts are different from those we have now to consider, and we think it best to let our application of their analogies appear rather in the disposition of the questions on which we are called to pass than in any attempted formulation of their doctrine in lan- guage which, quoted out of its logical connection, and con- strued from the standpoint of new cases hereafter arising, might tend to mislead. Counsel for the appellee cite sections 2, 3, and 7 of the act to regulate commerce of February 4, 1887: also section 2 of the act of March 2, 1889 (amending section 10), to amend the act to regulate commerce. Section 2 of the act of 1887 clearly defines what shall constitute the unjust discrimination which it prohibits, and cannot be made to apply to this case without assuming that the contract existing between each of the defendants and the Mallory Line for the extension of the business of each over that line does not constitute sub- stantially dissimilar circumstances and conditions under GULF, C. & S. F. RY. CO. V, MIAMI S. S. CO. 837 Opinion of the Court which the defendants are doing business with the Mallory Line from the circumstances and conditions under which the Lone Star Line is claiming the right to do business with the defendants. Such an assumption, we think, is rei^elled by the authorities which support our conclusion as to the de- fendants' contract arrangements being valid at common law. To support appellee's claim under the third section of the act to regulate commerce, we should have to hold that the defendant carriers could not contract with the Mallory Line for extending their business over that line without at the same time making a similar contract with any other party who is shown to be able and offering to do the same carryiuff with equal safety, dispatch, and responsibility, and that to decline to let such stranger carrier into their contract, or to make an equivalent contract with it, is to give an undue and unreasonable preference and advantage to the line con- tracted with and to subject the stranger to an undue and unreasonable prejudice or disadvantage in respect to the traffic it desires to carry. If it should not be so held, the contract arrangements which the defendant carriers have with the Mallory Line do not constitute the facilities for the interchange of traffic, or that discrimination in rates and charges between connecting lines to which the second para- graph of section 3 applies. The last clause of the second paragraph of section 3 provides that that paragraph shall not be construed as requiring any such common carrier to give the use of its tracks or terminal facilities to another carrier engaged in like business. It is provided in section 6 that every common carrier subject to the provisions of the act shall file with the commission copies of all contracts, agreements, or arrangements with other common carriers in relation to any traffic affected by the provisions of the act to which the carrier may be a party. And in cases where pas- sengers and freight pass over continuous lines or routes operated by more than one common carrier, and the carriers operating such lines or routes establish joint tariffs of rates or fares or charges for such [418] continuous lines or routes, copies of such joint tariffs shall also in like manner be filed Avith the commission. These provisions do not expressly au- thorize the separate carriers to contract with reference to 86 FEDERAL REPORTER, 418. Opinion of the Court through routes and joint tariffs because the carriers had that authority. But these provisions do necessarily imply the recognition that that authority did exist, and that it could be exercised after the passage of the act in like manner as it was known to have been exercised for long periods before the passage of the act, and to be in general use at the time of its passage. The act does not expressly authorize the separate carriers to establish rates, fares, and charges on their respective lines, but it recognizes that such carriers have that right, in like manner as it recognizes that two or more connecting carriers have the right to contract for through routing and a joint rate, subject in each case to the leading limitations embraced in the first four sections of the act. The fact that these parties were left free to contract in refer- ence to this subject necessarily includes a freedom to decline to contract in case they cannot agree upon the terms, or in case they consider it to their interest not to contract on any terms. This legislation was had, as all useful legislation is had, in reference to the existing conditions and the manifest tendencies of the subject embraced. It was at that time matter of common knowledge, and minutely within the knowledge of the committees of congress which had this subject in charge, that freight and passengers were being carried through all the states from one extremity of the Union to the other, over continuous lines or routes, operated by more than one carrier, on tariffs of rates and fares and charges regulated as to their amount, the time and place of their receipt, the pro rata division thereof by the respective carriers, the accounting for, paying, and distribution of the same by and to the respective carriers according to their con- tract agreement or understanding, express or implied. The committees of congress, especially certain members who were most active in promoting this legislation, had knowledge of the English acts on the same subject, and studied profoundly the different clauses, and even the phraseology, of those acts, and their practical application to the business of transporta- tion in England, and the decisions of the commission there established and of the courts in construing those acts. And we are greatly aided in construing our act by observing what provisions of the English act it adopts, what provisions it GULF, C. & S. F. RY. CO. V. MIAMI S. S. CO. 839 Opinion of the Ck)urt modifies, and how they are modified, and what provisions are omitted. The English act of 1873, amendatory of the act of 1854, authorized the commission by it established to estab- lish through routes, and to fix through rates between connect- ing lines, and provided that the facilities to be afforded shall include the due and reasonable forwarding and delivering by any railway company and canal company, at the request of any other such company, of through traffic to and from the railway or canal or any other such company, at through rates, tolls, or fares, but required the commissioners, in the apportionment of such through rates, to take into considera- tion all the circumstances of the case, including any special expense incurred in respect of the construction, maintenance, or making of the route, or any part of the route, as well as any special charges which 1419] any company may have been entitled to make in respect thereof. This provision is wholly omitted from our act. The intersta^te commerce com- mission was early impressed Avith the view that there were cases in this country Avhere through routes and reduced through rates, which would facilitate the movement of traffic, and thereby benefit the public, are prevented from being made by the unreasonable refusal of carriers to unite in granting such facilities; and, being impressed with the view that the statute was apparently designed to require connect- ing carriers to join in the formation of through routes at lower aggregate rates than a combination of their locals, have repeatedly called the attention of congress to the fact that it had failed to provide the machinery necessary to accomplish that purpose. As the commission, in one of their latest opinions, say, the correction of this defect requires the exer- cise of some public authority which can investigate the cir- cumstances of each case, allow the parties to a proposed through rate an opportunity to be heard, and fairly deter- -mine the matter— including, if need be, the aggregate rate and divisions thereof— with due regard to the interest of the several carriers as well as the public. Such a scheme for establishing compulsory through rates should be surrounded by proper safeguards, and its operation lunited by proper restrictions. Atchison, T, c& S. F. R, Co, v. Denver <& N, O. B. Co., supra; Interstate Commerce Commission v. Balti- 840 86 FEDERAL REPOBTER, 419. Opinion of the Court mare <£' 0. IL Co., 145 U. S. 26S, 12 Sup. Ct. 844; Gmmn- nati, W, O. <£• T. P, Ry, Co. v. Interstate Commerce Commh- mmi, 162 U. S. 184, 16 Sup. Ct. 700; Texm d^ P. Ry. Co, v. Interstvfr Commrree Comm'mimi, 162 U. S. 197, 16 Sup. Ct. 666; Interstate Commerce Commission y, Alabama M. R. Co.j 18 Sup. Ct. 45; Kenttfrl-y cC* /. Bridyc Co, v. Lomsville 1^ iV. R. Co., 37 Fed. 620 et seq.; Railroad Co. v. Piatt (de- cided by the Interstate Conimerce Gommissiuu June 26, 1897). As we view the complainant's bill and construe sections 2 and 3 of the act to re^ilate commerce, in connection with the contract or arrangement shown to exist between the de- fendant carriers and the Mallory Line, section 7 of the act and section 10 as amended have no bearing on the case made. We think it clear from our construction of the text of the in- tei-state commerce act and its amendments, and the reasoning and authority of the few eases just cited, and the numerous other cases in liij^ with them, more or less pertinent to our inquiry, that the case attempted to be made in the appellee's bill of complaint to the circuit court cannot be maintained under the interstate commerce act. The bill shows that for many years prior to July 15, 1897, there had been no compe- tition with the Mallory Line in the transportation of traffic by steam vessels from Galveston to New Yorlc ; that the com- plainant's own line began business on the 15th of July, 1897, or seven months, less three days, before the exhibition of its bill. The custom and usage that obtained with reference to this interstate and foreign traffic, if any existed and was observed by the defendant carriers before July 15, 1807, was necessarily restricted to receiving and delivering freight from and to the Mallory Line (as they are continuing to do), and not of delivering or receiving to or from other lines, or to or from all lines, because none other than the Mallory Line theretofore existed. [420] It can hardly be claimed that the usage which has obtained with the complainant's line has acquii-ed the force of local custom. Where a local custom does exist in reference to matters about which parties contract, and they refer expressly to the custom of the port or place, or make no express reference to it, such custom will be considered in construing such contracts. But it is beyond the power of a local custom to compel parties to GULF, O. & S. F. RY. CO. V. MIAMI S. S. CO. 841 Opinion of the Court contract, or to impose its terms on their dealings, against their expressed wall, or against the duly-expressed will of either of them. Counsel for appellee also cite articles 4536, 4537, and 4539 of the Revised Statutes of Texas of 1895. It is shown by the bill that all the traffic which the complainant is engaged in handling is interstate or foreign commerce. Such com- merce is subject to exclusive regulation by the national gov- ernment. This power to regulate such commerce is vested in congress, and is not a dormant power, but has been put into full exercise by the act of February 4, 1887. Hence the arti- cles of the Texas statutes cited can have no application to such commerce as that which the complainant is engaged in conducting. There is nothing in the language of the Texas statute that indicates a purpose upon the part of the legis- lature that the articles quoted should apply to interstate or foreign commerce. The appellee contends that the defendant railway com- panies entered into such a combination, conspiracy, and agreement as is prohibited by the act to protect trade and commerce against unlawful monopoly, approved July 2, 1890, for the purpose and with the intention of monopolizing the traffic of interstate commerce betAveen NeW York and Galves- ton, in restraint of such commerce, and for the purpose of preventing complainant from carrying on its business of common carrier in such traffic. Counsel cite sections 1, 2, 4, and 7 of the act named. Sections 1 and 2 are strictly penal. So far as section 4 confers any new jurisdiction upon the circuit courts of the United States to prevent and restrain violations of this act, such new jurisdiction, if any is con- ferred, appears to be limited in its exercise to suits on behalf of the government instituted by the district attorneys of the United States in their respective districts, and under the direction of the attorney general. Blindell v. Hagan, 54 Fed. 40 ; Eagan v. Blindell, 13 U. S. App. 354, 6 C. C. A. 86, 56 Fed. 696. Section 7 provides 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 the act may sue therefor in any circuit court of the United States in the district in which the 842 86 FEDERAL. BEPORTER, 420. Opinion of the Ck>urt defendant resides or is to be 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. In the case of Blindell v. Tlagan^ mpra, it was said by the learned judge of the circuit court that this act makes all combinations in restraint of trade or commerce unlawful, and punishes them by fine or imprison- ment, and authorizes suits at law for triple damages for its violation. But it gives no new right to bring a suit in equity, and a careful study of the act leads to the conclusion that suits in equity or injunction [421] suits by other than the government of the United States are not authorized by it. However, as the citizenship of the parties was such that the United States court had jurisdiction, the learned judge re- tained the case, and awarded the preliminary injunction prayed for, because the nature of the alleged injury was such that it would be difficult to establish in a suit at law the dam- age to the plaintiff, and because to entertain it would prevent a multiplicity of suits. In the same case on appeal this court said : " We concur in tlie conciiision readied by the leanied judge who de- cided the case below, as expressed in his opinion, and which is made a part of the record, that the jurisdiction is maintainable on general principles of equitable jurisdiction, and a careful examination of the case satisfies ns that under all the facts before it there was no error in the court awarding a preliminary injunction." In U. S. V. Dehs, C^4: Fed. T24, the circuit court, to sustain its jurisdiction, relied mainly on the act of July 2, 1890. When the case came in review before the supreme court in Be Dehsj 158 U. S. 564, 15 Sup. Ct. 900, that court entered into no examination of the act of July 2, 1890, preferring to rest its judgment on the broader ground of the general juris- diction of a court of equity to prevent injury in such cases. The supreme court was careful to observe that it must not be understood from its putting its judgment on the broader ground that it dissented from the conclusion of the circuit court in reference to the scope of the act. The provisions of the act in question apply to railroads, and render illegal all agreements made by them which are in restraint of trade or commerce. U. S. v. Association, 166 U. S. 290, 17 Sup. Ct. 640. We do not doubt the general jurisdiction of the circuit GULF, C. & S. F. RY. CO. V. MIAMI S. S. CO. 843 Opinion of the Court court as a court of equity to afford preventive relief in a proper case against threatened injury about to result to an individual from any unlawful agreement, combination, or conspiracy in restraint of trade. Does the complainant pre- sent a proper case for affording such preventive relief? It asks for a preliminary injunction restraining the respondents from interfering with its business as it has been heretofore and is now being carried on between the respondents and the complainant in manner and means in the bill alleged, and restraining them from discriminating against the complain- ant in making and granting through rates, and restraining them from carrying out the agreement between them and others in so far as it affects the complainant, commanding them to afford to complainant the same facilities, and accept freight under the same conditions, as by them extended and granted to the other connecting steamship lines, etc. Although the language " restraining them " is used in this prayer, it is manifest from the nature of the case and all the allegations in the bill that the preliminary injunction sought for and obtained by the appellee is wholly mandatory in its nature and effect. The bill does not claim that the com- plainant has any contract arrangement with the defendant railroad carriers which those carriers are about to breach. It does not charge that the carriers are obstructing the com- plainant's traffic in any particular by violence or other af- firmative action so as in any way to hinder the prompt, safe, and [422] convenient interchange of traffic between its line and the respondents' lines, or to hinder the prompt dispatch thereof to its respective destination, at the reasonable rates therefor, which the respondents demand and receive from all persons not connected with them by their contract ar- rangement for through routing, billing, and rating. It therefore is manifest that the circuit court has no power to grant the relief asked, unless it has power to command that the respondents shall contract with the complainant for such through routing, billing, and rating; and, not only so, but shall contract with the complainant therefor on the same terms that they have contracted with the Mallory Line. All the reasons which have prevailed with congress to with- 844 86 FEDERAL REPORTER, 439. Syllabus. hold this power from the interstate commerce commission, and many additional reasons with strongest force, forbid that the numerous circuit courts should, in advance of legis- lative action, take jurisdiction, and by mandatory injunc- tion compel such through routing, billing, and rating. We conclude that the several arrangements effected be- tween the Mallory Line and the defendant railway com- panies are not violative of the common law; that the case attempted to be made in the appellee's bill of complaint in the circuit court cannot be maintained under the interstate commerce act ; that the statutes of Texas relied upon do not and cannot apply to interstate commerce ; and that the bill does not present such a case as the circuit court has jurisdic- tion to relieve by mandatory injunction, either under the anti-trust act or under its general jurisdiction as a court of equity. From these conclusions it results that the decree of the circuit court must be reversed. It is therefore ordered that the order of the circuit court granting an injunction pendente lite be, and the same is hereby, reversed, and the injunction dissolved, and this cause is remanded, with in- structions to thereinafter proceed in accordance with the views expressed in this opinion, and as equity may require. I4m\ CAETEK-CRUME CO. v. PEURRUNG. (Circuit Court wf Appeals, Sixth Circuit April 5, 1898.) [86 Fed., 439.] IlEviEw OS Error— Sufficiency of EviDENCE.^If there is any sub- stantial evidence upon which the jury could reasonably have based their verdict it will not be disturbed on appeal, though there may have been a motion for a verdict or a motion for a new trial which was overruletl.o Same—Contract m Restraint op Trade— Waiver of Defense.— While the eouit may possibly reverse a judgment involving the en- forcement of a contract contravening public policy in the absence of an ol>jectiou on that ground in the trial court it will only do so when puch ilk^gality appears as matter of law upon the face of the plead- ings, the face of the contract, or from the admitted facts. o Syllabus copyrighted, 18S)8, by West Publishing Co. CABTER-CRUME CO. V. PEURRUNG. 845 Opinion of the Court Contracts in Uestkaint of Trade.— A contract with an independent manufacturer for the entire product of his plant is not in itself a contract in illegal restraint of trade. Same. — If an independent manufacturer contracts to sell his entire product, without Icnowledge of similar contracts made by the buyer with otlier manufacturers, and without any knowledge of the fact tliat such contract was intended by the buyer as one step in n gen- eral scheme for monopolizing tlie trade in that article and controlling prices, such independent manufacturer cannot be held to have con- spired against the freedom of commerce, or to have made a contract in illegal restraint of trade. Appeal and Error— Jurisdiction of Federal Courts— Objection not ItAisED liELow.- The ol>jection that the suit was not brought In the district of the residence of either party does not affect the gen- eral jurisdiction of the court, and cannot be raised for the first time on appeal. In Error to the Circuit Court of the United States for the Western Division of the Southern District of Ohio. Oscar M. GottschUl^ for plaintiff in error. Charles W. Baher^ for defendant in error. Before Litrton, Circuit Judge, and Severexs and Clark, District Judges. LuRTON, Circuit Judge. This is an action at law. The suit was brought upon a written contract made August 14, 1894, between Peurrung Bros. & Co., a firm then engaged in the business of jobbing wooden Avare in Cincinnati, Ohio, composed of Joseph P. and Charles J. Peurrung, and the Carter-Crume Company, a cor- poration of West Virginia. By this contract, for considera- tion therein recited, which will be hereafter referred to, the Carter-Crume Company became obliged to pay to Peurrung Bros. & Co. $250 on the 15th of each month for the next en- suing 3 years, 6 months, and 15 days, unless the contract should be sooner terminated under a provision contained therein. The installments which became due prior to Sep- tember 15, 1895, were duly paid. The suit was for install- ments thereafter falling due, which had not been paid. The petition alleged that the firm of Peurrung Bros. & Co. had 846 m FEDERAL REPORTER, 440. Opinion of the CJonrt been dissolved, and the interest of Charles J. Peurrung in th© contract had [440] been assigned to the plaintiif, Joseph P. Peurrung, who therefore sued in his own name, as he might under the law of Ohio. There was a judgment in favor of the plaintiff for the amount due on the first day of the trial term. The errors relied upon to reverse this judgment as presented by the brief and argument of counsel will be considered in the order in which they have been argued. 1. It is said that the evidence did not show that the plaintiff was the sole owner of the claim in suit; that for this reason the court erred in not instructing for the plaintiff in error as requested at the close of the evidence for the defendant in error; and that for the same reason it was error to refuse a new trial at the close of all the evidence. It is only by the strongest stretch of liberality that ^e can discover that there was a request for a direction at the close of the evidence for the plaintiff below. But that motion was waived by the sub- sequent introduction of evidence, and was not renewed at the close of all the evidence. Railway Co, v. Lowry, 43 U. S. App. 408, 20 C. C. A. 596, and 74 Fed. 463. There was evidence tending to show that Charles J. Peurrung, in a settlement of the partnership affairs with his brother, Joseph P. Peurrung, assigned this contract, and all due or to become due thereun- der, to the said Joseph P. Peurrung. The witness to this was Charles J. Peurrung himself. That this assignment occurred before this suit was brought is also fairly made out. The cir- cuit judge instructed the jury that the plaintiff must show, in order to recover, that he was the real owner of this claim ; and that, if the assignment was fictitious, or unproven, the case of the plaintiff must fail. It is not for this court to weigh the evidence. That is the province of the jury, and, where there is any substantial evidence upon which a jury could reasonably find, this court will not disturb the verdict, although there may have been a motion for a verdict, or a motion for a new trial, which was overruled. This is too long and well settled to need other authoritv than Railway Co. v. Lowry, cited heretofore. 2. But it is said that the contract in question is one in re- straint of trade, and therefore void. This defense is here CARTER-CRUME CO. V. PEURRUNG. Opiuion of the Court. 847 made for the first time. No suggestion as to its illegality is found in the pleadings. No reference thereto occurs in the charge, nor was any exception taken to any instruction given or refused. If it be true that this contract is one which, for reasons of public policy, is void, the defense in the court below would not be waived by failure to plead properly. It was said in Coppell v. Hall^ reported in 7 Wall. 542, and re- peated in Oscanyan v. Arms Co., 103 U. S. i>61-268, that: " In such cases there can 1 e no waiver. The defense is allowed, not for the sake of the defendant, but of the law itself. The principle is indispensable to the purity of its administration. It will not enforce what it has forbidden and denounced. The maxim, ' Ex dolo malo ncn oritur actio,' is limited by no such qualification. The proposition to the contrary strikes us as hardly worthy of serious refutation. Whenever the illegality appears, whether the evidence comes from one side or the other, the disclosure is fatal to the case. Xo consent of the de- fendant can neutralize its effect. A stipulation in the most solemn form to waive the objection would be tainted with the vice of the original conti-act, and void for the same reasons. Wherever the con- tamination reaches, it [441] destroys, -The principle to be extracted from all the cases is that the law will not lend its support to a claim founded upon its violation.'' But the' general rule is that a defense not presented to the court below cannot be considered on writ of error from a superior court. Edwards v. Elliott, 21 Wall. 532: Wilson v. iVcNa7nee, 102 U. S. 572 ; Clark v. Eredencks, 105 U. S. 4 ; Drexel v. True, 20 C. C. A. 265, 74 Fed. 12. Objections going to the jurisdiction are an exception to this rule, l)e- cause made so by Act March 3, 1875, § 5. Possibly, it would be the duty of this court to reverse and remand for dismissal a suit brought here on writ of error which appeared to involve the enforcement of an obligation contrary to good morals or in contravention of public policy, although no such objection had been made in the court below. But such action by an appellate court, as a tribunal for the review of the action of trial courts, would not be justifiable unless such illegality should appear as matter of kiw from the pleadings, the face of the contract in suit, or from the confessed facts of the case; otherwise the right to introduce evidence in rebuttal and of trial by jury, if the suit be one at law, would be cut off. The plaintiff below did not rely upon any contract Avhich was in itself illegal or void as in contravention of public policy. Counsel for plaintiff in 848 8G FEDERAL REPORTER, 441. Opinion of the Ck)urt error say that the Carter-Cruine Company were engaged in an illegal effort to suppress competition, and put np prices in the wooden butter-dish trade, and that as one step in this scheme they bought from Penrrung Bros. & Co. their contract with Tower & Matthews. Manifestly, Perrung Bros. & Co. liad l^een guilty of no conspiracy against the public in contracting for the entire output of the small factory of Tower St Matthews. Neither was it an ilWal restraint of trade for the Carter-Crume Company- to con- tract for the same product, if their trade demanded it. The prior contract with Peurrung Bros. & Co. alone stood in the way. They therefore bargained with them to release Tower & ^lattliews, and to supply them for a definite time with the same ware, at the market price, less a fixed trade discount. At the same time they contracted with Tower & Matthews for the entire product of their factory. These two contracts were concurrent in time, and were sul>ject to be determined on same notice. There were some features about this last contract which indicate an intention to close the Tower & Matthews factory after the delivery of a certain quantity of ware for the term of the lease, if circumstances; should make it desirable. AVilliam E. Crume, of the Carter-Crume Company, in the effort to make out a defense of misrepre- sentation as to the extent of the trade of Peurrung Bros. & Co. in such goods as one inducement to the contract, did say that his company were, by the contracts with Peurrung Bros. & Co. and Tower & Matthews, endeavoring to hold up the prices of such goods, and that Peurrung Bros. & Co. had been selling such ware at a less price than the Carter-Crume Company. The same witness also said that they at that time had other such contracts, — whether with factories or dealers he did not say. There is no evidence that Peurrung Bros. [442] & Co. were aware of any others contracts, or of the purpose of tlie Carter-Crume Company to control prices, or that they had any purpose of aiding and abetting that company in any such scheme. They did know of the contract with Tower & Matthews. But that of itself was not a contract in general restraint of trade. If one con- tracts with a manufacturer for his entire product, it will, of course, restrain the producer from selling to others. But CARTEB-CRUME CO. V, PEURRUNG. Opinion of the Court 849 such a contract, taken by itself, is ordinarily harmless. The public are not affected. Another question might arise if all or a large proportion of all the producers of a particular article should agree to sell their entire product to one buyer, who would thereby be enabled to monopolize the market. But, if each independent producer contract to sell his prod- uct, or to sell or lease his plant, without concert with others, or knowledge of or purpose to participate in the plans of the buyer, he cannot be said to have conspired against free- dom of commerce, or to have made a contract in illegal restraint of trade. The transaction with Peurrung Bros. & Co. was, on its face, legitimate, and it cannot be impeached simply by evidence that the Carter-Crume Company under- stood and intended it as one step in a general illegal scheme for monopolizing the trade in wooden butter dishes, and controlling prices. The principle, if we admit that the purpose of the Carter-Crume Company was illegitimate, is that which is applied to so-called wagering contracts. The proof must show that the illegal purpose was mutual. Roundtree v. Smitli, 108 U. S. 269, 2 Sup. Ct. 630; Irwin V. Williar, 110 U. S. 499, 4 Sup. Ct. 160; Bihh v. Allen, 149 U. S. 481, 13 Sup. Ct. 950. This defense, not being one which appears either upon the face of the contract in suit or from the admitted purposes of both parties, cannot be urged as an objection here, the objection not having been made in the court below. 3. The next and last ground urged for a reversal is that this suit was not brought in the district of the residence of either the plaintiff or the defendant. This objection was fatal to the jurisdiction if it had been taken in time. The plaintiff was a citizen of Indiana, and the defendant a cor- poration of West Virginia. Diversity of citizenship, there- fore, existed, and the case was one of which the court could take jurisdiction. The act of congress which prescribes the particular district in which a defendant may be sued is not one affecting the general jurisdiction of the court. The exemption from being sued out of the district of the domicile of either of the parties was a privilege which the Carter- Crume Company could and did waive by pleading to the 11808— VOL 1—06 M ^54 850 86 FEDERAL REPORTEB, 671. Statement of the Case. merits. Railway Co. v. McBride, 141 U. S. 127, 130, 132, 11 Sup. Ct. 982 ; Railroad Co. v. Cox^ 145 U. S. 593, 603, 12 Sup. Ct. 905; Trmt Co, v. McGeorge^ 151 U. S. 129. 14 Sup. a. 286. The judgment is accordingly affirmed. [671] THE CHAKLES E. WISWALL. THE CHARLES E. WISWALL v. SCOTT ET AL. CCircuIt Court of Appeals, Second Circuit March 2, 1898.) [86 Fed., 671.] Monopolies — Interstate Commerce. — A combination or trust be- tween the owners of tugs o|>erating entirely within the confines of a state is not a combination in restraint of trade or commerce among the several states or with foreign nations, so as to come within the condemnation of the statutes of the United States, al- thoui;h most of the owners held coasting licenseao Same — Towage Charges. — One who requests and accepts the serv- ices of a tug for towage puriwses cannot escaiie paying the reason- able value of tlie services rendered, on the ground that the owners Oif the tugs were members of an unlawful combiiiatlon to raise prices. 74 Fed. 802, affirmed. [See p. 608.] This cause comes here upon appeal from a decree of the district court, Northern district of New York, in favor of the libelants, twelve in number, who were severally owners of fourteen propellers or steam tugs which had rendered towage service to the dredge and her scows. The suit was origiwally l>egun by the present libelants, and by eight others, who owned, respectively, nine additional steam tugs or propellers; but, it appearing that no services had been reu- dered by these last-mentioned nine vessels, the libel was amended accordingly, at final hearing. The court found that the remaining libelants were entitled to recover the value of the services rendered by their respective tugs, and referred it to a commissioner to ascertain, on the evidence already taken, and such additional evidence as may be produced and given by the respective parties before such commissioner. Abundant oppor- liJlJ tunity was given to all jiarties by the commissioner to take additional evidence, but none was offered. The commissioner there- after re|K>rted the value of the senices of the vessels over and above oSyllabus and statement copyrighted, 1898, by West Publishing Oa THE CHARLES E. WISWALL. Opinion of the Court. 851 all payments, separately as to each vessel. He did not separately state the value of the services of each tug, and the amount of the pay- ment thereon, but, inasnmch as it appears conclusively that $310 was paid, it would .seem that he found the total value of'the services to be $1,2G9.16. The value asserted in the amended libel was $1,300. Claimant filed exceptions to the report, and, the report and exceptions coming on to be heard, the decree now appealed from was entered. Worthington Frothingham^ for appellant. Isaac Lawson^ for appellees. Before Wallace, Lacx}mbe, and Shipman, Circuit Judges. Lacombe, Circuit Judge (after stating the facts). The record is long and somewhat involved, and the com- missioner's report has not set forth his findings with suf- ficient detail to be of much assistance to the court in de- termining just what he did find and upon what proof. This appeal may be best disposed of by taking up the assignments of error seriatim. 1. It is assigned as error that the libelants in the original libel and in the amended libel were a combination in the form a trust or otherwise, or conspiracy in restraint of trade or commerce among the several states and with for- eign nations; that libelants were engaged in an attempt to monopolize such trade or commerce; and that all the work alleged to have been done by them collectively or individually was under a contract or combination in such form, and that such contract or combifiation was void, and the libelants cannot maintain this suit either collectively or individually. We do not find any satisfactory evidence that these boats were "engaged in trade or commerce among the several states or with foreign nations." Most of them held coasting licenses, but there is not a scintilla of evidence to show that they ever did anything except to tow canal boats, barges, and such craft on the waters of the Hudson Eiver above Pough- keepsie, and entirely within the limits of the state of New York. And it seems wholly unnecessary to inquire whether their owners had entered into any unlawful combination un- der the laws of the state. Finding that the rates of compensa- tion for the services of themselves, their crews and their tuffs* were becommg so low as to be unremunerative, uncertain, 852 m FEDKRAL REFOK TEK, erformed by the libelants or either of them, and no proof excepting of such value as was made and estab- lished by the libelants themselves while engaged in s;uch com- bination," etc. The recoM shows that as to each item of charge there was evidence that the service rendered was worth the price charged, and, as much of the work done by the d liferent scows was similar in character and quantity, many of the items of charge are supported by the evidence of several wit- nasses. The witnesses stated that, in testifying to the value of the services, they did not give consideration to the schedule of prices adopted by the association. The mere fact that in some instances the sum testified to as the fair and reasonable value of a particular service and the price for such service named in tlie schedule were identical is not controlling. It is not inconceivable that men may combine together to ask a perfectly fair price for their work. Co-operation does not necessarily imply extortion. We have not seen nor heard the witnesses, but the commissioner, who had that oppor- tunity, reached the conclusion that their estimate* of value was more nearly correct than that of the single witness called by claimant. As the record discloses evidence to sup]>ort his finding upon this disputed question of fact, the decree should not be reversed on the ground assigned. A])pellant's brief refers to an instance where the tug .Vndrews charged DENNEHY V. M NULTA. 855 Syllabus. five dollars for towing the dredge from Troy to West Troy, when the regular charge was two dollars, the additional three dollars being charged for the reason that Wiswall (the owner of the dredge) had previously towed with a boat outside of the association. There [675] is no persuasiveness, however, to any such evidence, in view of the fact that the owner of the Andrews is not included among the libelants; that no claim on behalf of that tug is made; and that whatever charges are made, testified to, and allowed for towing from Troy to West Troy and vice versa are at the rate of two dol- lars only. 3. It is further assigned as error that judgment was ren- dered against the sureties for this claimant in the original libel wherein the Hudson River Tug-Boat Association was libel- ant, and that such sureties were discharged by the proceeding allowing the libel to be amended and the libelants to proceed therein individually. It appears, however, that the Hudson River Tug-Boat Association was not the libelant in the origi- nal libel. Twenty different persons were individually libel- ants, of whom eight have been removed by amendment, hav- ing no claims. In other words, the suit began with twenty individual libelants, and ended with twelve of them, the obli- gation of the sureties being to answer the decree of the court. The assignment of error is unsound. 4. The last assignment of error (the sixth) is the general one that judgment should have been given for claimants instead of for libelants. It has been disposed of with the other assignments. The decree of the district court is affirmed, with interest and costs. [825] DENNEHY ET AL. v. McNULTA. (Circuit Court of Appeals, Seventh Circuit. May 2, 1898.) [86 Fed., 825.] Contracts — Illegal Condition as Consideration — Effect of Non- performance. — Rebate vouchers issued by a distilling company to customers, by which it promised to refund a certain sum per gallon on their purchases at the end of six months, on condition of their purchasing exclusively from the company during that time, cannot 856 86 FEDERAL BEPORTEB, 825. Statement of the Case. be enforeed, either at law or in equity, where the condition has not been performed, though such condition be Iliegal, as in restraint of trade ; there being no other consideration for the promise. 23 C a A. 415, 77 Fed. 700, affirmed.* Monopolies— Illegal Combination to Contbol Business— Leoalitt OF Contracts.— One purchasing liquors from an illegal combination of distillers, which controls the market and prices, though impelled thereto by business needs and policy, enters into the contract volun- tarily, and cannot retain the goods, and recover the price paid, or any part of it, either on the grounnd that the combination was ille- gal, or the price excessive. 23 C. C. A. 415, 77 Fed. 700, affirmed.* Appeal from the Circuit Court of the United States for the Northern District of Illinois. I Ti*® appellants filed claims for allowance against the funds in court In the consolidated causes against the Distilling & Cattle-Feeding Com- pany, of which sufficient description api>ears in the case of DistiUing Co. V. afc2Vii7J« (decided by this court Jan. 4, 1897) 46 U. S. App. 578, 23 C. C. A. 415, and 77 Fed. 700. [Mfi] (1) The claims of Dennehy & Co. were presented by petition to their name, and consisted of 91 written instruments, called rebate certificates or vouchers, issued by the Distilling & Cattle-Feeding Company to Charles Dennehy & Co., aggregating the sum of ^5,238 23 The mstruments are of various dates, numbers, and amounts, and in form as follows, with appropriate insertions in the blank soaces respectively: f^^^o. *' Peoria, 111., , 189-. No. ** Subject to the conditions named herein, and for the purpose of securing the continuous patronage of the within-named purchaser the miccessors and assigns of the same, for its products, the 'Dis- tilling & Cattle-Feeding Co., six months from the date of this purchase voucher, will pay to Charles Dennehy & Co., of Chicago, purchaser, dollars (| ). being a rebate of seven cents per proof gallon on proof gallons of the Distilling and Cattle-Feeding Company's product purchased this day. This voucher will be valid and payable only upon condition that the above-named purchaser, the successors and assigns of the same, from the date of this voucher to the time of Its paynunt shall have bought their supply of such kinds of goods as are produced by the Distilling and Cattle-Feeding Company and all compounds thereof, exclusively of one or more of the dealers named "** ,?^ ^^^K thereof, until further notified, and shall also have sub- scribed to the certificate on the back hereof. **Di8tUling and Cattle-Feeding Co., " By J. B. Greenhut. President *• Not transferable nor negotiable. " When due. fonvard to the (ierman-American National Bank of H '"*^%' ^^ ^^^ ^^^^ voucher is payable withjut exchange or other cnarge. « Decision In 77 Fed., 900, not reprinted. Nothing in it relating ta anti- trust law, restraint of trade, or illegal combination. ^ Syllabus copyrighted, 1898, by West Publishing Co. DENNEHY V, M NULTA. 857 Statement of the Case. Printt^ upon the back is the following indorsement : " It is hereby certified that from the date of this voucher to the maturity thereof the within-named purchaser, and the successors and assigns of the same, have purchased all of their supply of such kind of goods, and their compounds, as are produced by the Distilling and Cattle-Feeding Co., exclusively from one or more of the dealers named hereon." Appended thereto is a list of 61 dealers or distillers referred to, vari- ously located throughout the United States. (2) The petition of Moses Salomon sets up that he is the assignee of sundry judgments rendered in justices' courts against the Distilling & Cattle-Feeding Company, and also the holder of vouchers on which said judgments were rendered : but it appeared, and was undisputed, that appeals from the judgments were perfected and pending, whereby the judgments became ineffective; and thereupon the petitioner Introduced 47 certificates or vouchers issued to Stein Bros., of various dates, numbers, and amounts, aggregating the sum of $3,60i.64, and similar in form and tenor to the instrument above described, except that in a portion thereof the rebate was named at " five cents per proof gallon," instead of seven cents, as recited in the sample form, and the words, " Not transferable nor negotiable," do not appear, from the record, to have been printed or stamped thereon. It is not claimed that the payees or holders in either case complied in any respect with the conditions named in the voucher. On the con- trary, it appears, and is conceded, that there was neither compliance not attempt to i)erform the condition. It further appears that no inerest is in fact asserted by either of the payees named in the vouchers: but that (1) the Dennehy & Co. vouchers were indorsed in blank, without recourse, by that corporation, delivered to the United States Distilling Company, and were subsequently delivered to one G. E. Jones, for whose benefit, as finally divulged, the claim was filed in the name of the original payees; and (2) that the vouchers issued to Stein Bros, were by them indorsed payable to the order of one Joseph Wolf, without recourse, and by the latter indorsed in blank, and delivered to the petitioner, Salomon, an attorney at law, under an arrangement that Salomon should bear all expenses, and receive one- half of any amount realized. The hearing upon the claims was before a special master, who reported to the circuit court "the testimony and evidence, with his conclusions thereon." Aside from the matters above recited, volum- inous testimony was introduced on behalf of the claimants, directed to showing that the Distilling & Cattle-Feeding Company, as organized and conducted, was a combination of a large percentage [8271 of the distillers of the coimtry,— asserted to be 85 per cent, thereof,— con- stituting an illegal trust, monopolizing and controlling the product of the country in that line to the extent of nearly 90 per cent ; that the system of rebate vouchers in evidence was entered into and designed to carry out and secure the purposes of the monopoly; that, through this control of the major share of distillery products, it was deemed a business necessity on the part of Dennehy & Co., Stein Bros., and other dealers throughout the country, to make all their purchases in that line from the distributors of the combination ; or, as stated in the argument of their counsel, it became " impracticable and detrunental to their trade to buy liquors elsewhere," in the face of the monopoly; but it also appears that an independent and accessible supplv existed in fact. The conclusions of the special master were against the allow- ance of the claims in both cases. Exceptions filed by each claimant were subsequently heard and overruled in the circuit court the report of the special master in each case was confirmed, and final decree entered accordingly. The opinion thereon, by Showalter, Circuit Judge, is reported in 77 Fed. 265. 858 86 FEDERAL BEPORTER, 827. Opinion of the CJonrt Moses Salomon^ for appellants. Levy MayeVy for appellees. Before Woods and Jenkins, Circuit Judges, and Sea- man, District Judge. Seaman, District Judge, after stating the case as above, delivered the opinion of the court. Passing technical objections to consider this controversy upon the merits, it is manifest that no liability is chargeable against the Distilling &, Cattle- Feeding Company, except upon one or the other of the following propositions: (1) That the conditions contained in the vouchers may either be ignored or set aside for illegality, and the promise thus seg- regated may be enforced without performance of the condi- tions; or (2) that in the original transactions money was paid to this corporation under circumstances from which the law raises an implied promise of repayment, within the doc- trine of money had and received, which, ex aequo et bono, belongs to the party by whom it was so paid. Under either head, the mere fact that the corporation, as one of the con- tracting parties, may constitute an unjust monopoly, and that its general business is illegal, — a status apparently held in Distilling <& Cattle-Feeding Co, v. People, 156 111. 448, 41 N. E. 188, — cannot serve, ipso facto, to create default or liability on its contracts generally; nor can such fact be invoked collaterally to affect in any manner its independent contract obligations or rights. Natio7ial Distilling Co. v. Cream City Importing Co.. 86 Wis. 352, 355, 56 N. W. 864. 1. Can a cause of action be predicated upon the written agreement? In substance, the instrument promises that, " subject to the conditions named," and " for the purpose of securing the continuous pati*onage" of the purchaser as payee thereof, the Distilling & Cattle- Feeding Company will, in six months after date, pay to the purchaser the amount named, " being a rebate of seven [or five] cents per proof gallon " on a purchase that day made, and to be " valid and payable only on condition " that the purchaser named, his successors and assigns, from date of the voucher to the time of payment, "shall have bought their supply of such DENNEHY V. M NULTA. 859 opinion of the Court. goods as are produced " by the promisor corporation " exclu- sively from one or more of the dealers named on the back," and "shall also have subscribed to the certificate on the back." The terms are une- [828] qui vocal that the promise was not to bind the corporation unless the promisee per- formed the acts stated. In other words, the obligations of the contract are dependent upon a condition precedent; and there can be no default by the promisor without performance of the condition, unless waived or excused by acts or conduct on the part of the promisor. Under the contract in question, compliance with the conditions was neither obstructed on the one side, nor attempted on the other, and it is manifest that no right of action at law has accrued in favor of the prom- isees. In view of this status, the appellants contend that the claims are entitled to equitable consideration, because (1) they are presented in the course of a proceeding in equity; and (2) this condition is affixed to the contract as a means by which to carry out the illegal purposes of a monopoly oper- ating in restraint of trade, and for that reason a court of equity should either disregard the condition, or strike it out. But assuming, for the argimient, that both premises are well taken, no relief can then be granted for enforcement of the contract, as no consideration is left to support the promise. The condition is the sole consideration for the promise, and, if that is illegal, the promise falls with it. Even if the con- sideration were invalid only in part, the same result would follow, the promise being indivisible. Bish. Cont. §§ 74, 487 ; 3 Am. & Eng. Enc. Law, 886 ; Greenh. Pub. Pol. rule 24. No element of the contract as actually made between the par- ties remains to be enforced. A court of equity cannot make a new contract for them, nor can it destroy the substance of the one which they have entered into, and at the same time preserve the contract obligation. Recovery upon the vouch- ers in question, with the conditions unfulfilled, would have that effect, and must be denied in equity as well as in law. Klein V. In8ura7ice Co., 104 U. S. 88, 91. 2. The second and final proposition calls for the applica- tion of the equitable doctrine on which assumpsit may be maintained as for money had and received, and the right to this remedy must be found in the original transactions and 860 86 FBBERAX. REPORTEB, 828. Opinion of the Court circumstanoes under which the payments were made to the Distilling & Cattle-Feeding Company. These were, on their face, simple contracts of bargain and sale, and the only pay- ments referred to were made upon distinct purchases of su^ plies at stipulated prices. These goods were legitimate sub- jects of trade, and there was no illegality in the nature of the contract of purchase. There is no pretense that the pur- chaser was either deceived or mistaken. On the contrary, Ms purchase, so far as appears, was in exact compliance both with his expectations and Ms bargain. It is not asserted that fraud entered directly into any of these transactions; nor is there impeachment for any cause, except upon the hypothesis for which the appellants contend, by way of col- lateral attack namely: (1) That an unlawful combination enabled the seller to control and arbitrarily fix prices upon nine-tenths of the distillery products of the country; (2) that the exigencies of business on the part of the purchasers constrained them to deal with this combination; (3) that the amount named in the vouchers as rebate was bevond the fair price, and a distinct addition to the price which was imposed and withheld to secure continuance of the trade. And upon the line of testimony introduced as tending in some measure to show this state [829] of facts the appellants rest their right to recover the alleged excess in the prices paid, ai> money paid under constraint or duress. Without consider- ing whether the testimony referred to was either admissible under the issues, or of the effect alleged, and conceding, for the purposes of the case, the truth of each of the above propositions of fact, there can be no recovery of the money so paid, for the reason that no actual duress is shown, and no element exists to make the papnent involuntary or compul- sory. Radich v. Hutchins^ 95 U. S. 210, 213; Lonergan v. Buford, 148 U. S. 581, 590, 13 Sup. Ct. 684 ; 6 Am. & Eng. Enc. Law, 57, tit. " Duress," and cases cited. In Radich v. Hutch- insj supra^ it is said : "To constitute the coercion or duress which will be regarded as sufficient to make a payment involuntary, . . . there must be some actual or threatened exercise of power possessed, or believed to be possessed, by the party exacting or receiving payment, over the per- son or property of another, from which the latter has no other means of immediate relief than by making the payment. As stated by the court of appeals of Maryland, the doctrine established by the authori- DENNEHY V. M NULTA. Opinion of the Court. 861 ties Is that ' a payment is not to be regarded as compulsory, unless made to emancipate the person or property from an actual and ex- isting duress imposed upon it by the party to whom the money is ^paid.' Mayor, etc., v. Lefferman, 4 Gill, 425 ; Brumagim v. Tillinghast, 18 pal. 265 ; Mays v. Cincinnati, 1 Ohio St 268." In the case at bar neither the persons nor the property of the purchasers were within the physical control of the sellers when the contracts of purchase were entered into, or when the payments were made thereupon, and in the eye of the law the transactions were voluntary. At the utmost, the cir- cumstances here assumed show an urgent need for the goods to keep up their stock and continue in trade, and to that end a business necessity to make their purchases from the illegal combination, because it so far controlled the market that they had reason to fear disastrous results if supplies were sought elsewhere. However urgent this need may have seemed for preservation of business interests, it cannot operate to change the payment made upon such purchases from the voluntary character impressed by the contract into the involuntary payment which may be reclaimed. Emery v. City of Lowell^ 127 Mass. 138, 140; Custin v. City of Viroqua, 67 Wis. 314, 320, 30 N. W. 515, and cases cited; 6 Am. & Eng. Enc. Law, 71. As the purchaser elected to take the goods upon the terms fixed, and with all the circumstances in mind, his rights must be measured by the contract, and not by the motives which influenced either party to enter into it. If the seller took advantage of his necessities, and made the price excessive, it would be subversive of the well-established rules* which govern contract rights to receive testimony of such circumstances, to so modify the terms agreed upon, and allow recovery of the excess in price. In the case of an injurious combination of the nature asserted here, the remedy is by well-recognized and direct proceedings; but one who voluntarily and knowingly deals with the parties so com- bined cannot, on the one hand, take the benefit of his bargain, and, on the other, have a right of action against the seller for the money paid, or any part of it, either upon the ground that the combination was illegal, or that its prices were un- reasonable. We are of opinion that no foundation is es- tablished for either set of claims, and the decree thereupon is affirmed. 862 88 FEDERAL REPORTER, 659. Opinion of the Court. m^ SOUTHEKN INDIANA EXP. CO. v, UNITED STATES EXP. CO. ET AL.« (Circuit Court, D. Indiana. August 4, 1898.) [88 Fed., 659.] Cakbiebs of Goods — ^Duties of Connecting Lines Inter Se. — ^The rules of tlie common law do not require a carrier to receive goods for carriage, either from a consignor or a connecting carrier, with- out prepayment of its charges if demanded, nor to advance the charges of a connecting carrier from which it receives goods in the course of transportation; nor can it be required to extend such credit or make such advances to one connecting carrier because It does so to another.^ 1060] Same — Expbess Companies — Intebstate Commebce Act. — ^The Interstate commerce act does hot apply to independent express com- panies not operating railway lines. Monopolies— Anti-Tbust Law— Remedies.— The anti-trust law of July 2, 1890, does not authorize a court of equity to entertain a bill by a private party to enforce its provisions, his remedy being by an action at law for damages. Cabriers— Express Companies — Indiana Statute. — The statute of Indirtua prescribing the duties of railroads with reference to inter- secting lines (2 Bums' Kev. St. 1894, § 5153; Rev. St 1881, § 3903) has no application to express companies. Same— Custom— Sufficiency op Allegation.— In a bill against three express companies, an allegation of a custom between defendants to receive goods from each other for transportation without pre- payment of chai-ges, and to advance back charges to each other, is not an allegation of a general custom of the business, which would bind defendants to pursue the same method with other companies. This was a bill by the Southeni Indiana Express Company against the United States Express Company and others. Heard on demurrer to bill. Joseph H. Shea and Francis M. Trissall, for complainant. Baker <& Daniels^ for defendants. Bakeb, District Judge. This bill is filed by the Southern Indiana Express Com- pany, a corporation organized and existing under the laws « Affirmed by Circuit Court of Appeals, Seventh Circuit (92 Fed., 1022). Memorandum decision. See p. 093. » Syllabus copyrighted, 1898, by West Publishing Co. SOUTHEBN IND. EXP. CO. V, U. S. EXP. CO. 863 opinion of the Court of the state of Indiana, against the United States Express Company, the American Express Company, the Adams Ex- press Company, and certain individual defendants, alleged to be officers and stockholders in said companies. The ex- press companies are allied to be joint-stock associations organized under the law of the state of New York, which is as follows : "Any joint-stock company or association consisting of seven or more shareholders or persons may sue and be sued in the name of the presi- dent or treasurer for the time being of such joint-stock company or association ; and all suits and proceedings so prosecuted by or against such joint-stock company or association, and the service of all process or papers in such suits and proceedings on the president or treasurer, for the time being, of such joint-stock company or association, shall have the sauie force and effect as regards the joint rights, proi)erty and effects of such joint-stock company or association, as if such suits and proceedings were prosecuted in the names of all the share- holders and associates in the manner now provided by law." The bill alleges that the defendant companies have been for many years engaged in the express business, and in carrying articles of trade and commerce over railroads under contracts with them, and have been declared by the law of this and other states to be common carriers, subject to all the lia- bilities, and bound to perform all the duties, of such common carriers; that the complainant entered into a contract with the Southern Indiana Railway Company, a railway located wholly within this state, to carry on an express business over said railway for fiYQ years from and after June 30, 1898 ; that the defendant companies carry on an express business over railroads which connect with the Southern Indiana Railway, and that the express business originating on the line of railway over which the complainant carries on its business cannot be transported to its destination without pass- [661 ] ing over one or more of the lines of railway over which some one of the defendant companies carries on its business; that the usage, long established, over the Southern Indiana Railway by the defendants, as well as long, continuously, universally, and uninterruptedly established by them over the lines of railway on which they carry on their business, was to receive and deliver to each other packages for points beyond their own routes, so that a package for a distant point is transferred from one express company to another as often as required to reach its destination, and is taken by one 864 88 PEDEKAL KEPOBTER, 661. Opinion of the Court continuous and unbroken carriage, and, to facilitate prompt- ness and simplicity in transfers from one company to another, the receiving company pays to the tendering company all charges which have accrued for carriage to the point of ten- der, known as " accrued charges " or " advance charges," so that the company having advanced all the accrued charges receives from the consignee and retains the whole amount of charges to the point of destination; that another of such established customs and usages is to receive and forward packages from each others' lines to consignees at points of destination over the lines of the others without requiring the prepayment of charges from the consignor or the company to which the package is delivered to be forwarded; that another of the customs and usages established is the fixing and publication of tariff charges for carrying packages from and to all points, which tariffs are divided pro rata between each of the companies handling the package. The bill then pro- ceeds to aver that these usages and methods of doing busi- ness were safe, reasonable, and essential to the quick and simple transfer of packages, and to the transaction of the express business, and that any company denied the facilities thus afforded would be unable to compete in the same busi- ness with another company which could avail itself of such usages, and could not do a general express business so as adequately to accomodate the public. The bill then proceeds to allege that the defendant companies refuse, when articles of trade and commerce carried by the complain fan] t are ten- dered to the defendants, to pay the accrued charges, or to re- ceive and transport to their destination any such articles without the prepayment of the charges for such transfers. The prayer of the bill is that the defendants may be enjoined and restrained from refusing to receive any and all parcels offered or delivered to them by complainant for transporta- tion and delivery to consignees, and from demanding prepay- ment of their charges for such transportation, and from re- taining and withholding from the complainant all sums of money known as accrued charges for express matter delivered to them by the complainant, and from refusing to or retain- ing from the complainant the reasonable pro rata part of the SOUTHERN IND. EXP. CO. V. IT. S. EXP. CO. 865 Opinion of the Court. charges and compensation complainant may earn ui)on ex- press business originating off its line. The grounds upon which these claims for injunctive relief are predicated are: (1) That such is the duty of common carriers at common law; (2) that such is their duty under the interstate commerce act; (3) that such is the require- ment of the anti-trust law; (4) that such duty is imposed upon them by the custom and usage set up in the bill. The defendant companies have demurred to the bill and the amendment thereto, on the ground that the court is with- out jurisdiction, [662] and also because the bill and the amendment are without equity, on the facts stated. Waiving, without deciding, the question of jurisdiction, the court is of opinion that the bill cannot be maintained on any one of the above-stated grounds. 1. There is no principle of the common law requiring a conmion carrier 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 charges, it can retain a lien upon the property transported for their payment 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 transpctrtation unless such charges are paid if demanded. Nor is such express company under any obligation to pay to the tendering company the charges due to it for its services in transporting such articles of trade and commerce from the point of origin to iho^ point of tender. It is true that the general practice is to collect the charges upon delivery of the goods to the consignee, and, when goods are received without payment in advance being demanded, it becomes the duty of the carrier to transport them to their destination, or to deliver them to the next re- ceiving carrier. Keceiving the goods for transportation without any demand for prepayment of charges constitutes a waiver of such right. The carrier holds a lien upon the 11808— VOL 1—06 M 55 866 88 FEDERAL KEPORTER, 662. Opinion of the Court goods for payinent of charges, and, in case of a delivery of them to the consignee before payment, it can hold him re- sponsible therefor. The same rule applies whether the ar- ticles of trade and commerce are received from the original consignor or from a connecting carrier. An express com- pany, in the absence of contract, is under no obligation to receive and transport for the original consignor, or to con- tinue the transportation for a connecting carrier, without the prepayment of its charges if demanded. The furnishing of equal facilities, without discrimination, does not require a common carrier to advance monev to all other carriers on the same terms, nor to give credit for the carriage of articles of trade and commerce to all carriers because it extends credit for such services to others. Oregon Short-Line cf? U, N, Ry. Co, V. Northern Pac, R. Co,, 6 C. C. A. 409, 61 Fed. 158; Id., 51 Fed. 465; Little Roch d' M, R. Co, v. ;S'^. Louis S. TF. Ry, Co., 11 C. C. A. 417, 63 Fed. 775; Little Rock & M, R, Co, V. St. Louis, L M, d; S, Ry, Co,, 41 Fed. 559. 2. The interstate commerce act has, so far as express com- panies not operating railway lines are concerned, wrought no change of the common law in this regard. At an early day the question was raised whether express companies were subject to the provisions of the interstate commerce act, and, after full argument and deliberate consideration, the inter- state commerce commission unanimously decided that the act did not apply to express companies properly so termed; that is to say, to independent organizations that carried on an express or parcel business in the usual manner, and which did not operate railway lines. In re Express Companies, 1 Interst. Commerce Com. E. 349. [663] This case was de- cided on December 28, 1887. The commission shortly there- after called the attention of congress to their ruling, and suggested such an amendment of the law as would place ex- press companies within their jurisdiction; but, although more than 10 years have elapsed, congress has taken no action on the subject. The same conclusion was reached in U. S. v. Morsman, 42 Fed. 448. After a careful consideration of the question, I see no reason to doubt the correctness of the / SOUTHERN IND. EXP. CO. V. U. S. EXP. CO. 867 Opinion of tlie CJourt conclusions reached in these cases. Under the averments of the bill, it is manifest that neither of the express com- panies is affected by the interstate commerce act. 3. The anti-trust law of July 2, 1890, has wrought no such change in the law as will enable the court to enforce its provisions in favor of a private party by a bill in e^juity. Under this act, the only remedy given to any other part}^ than the government of the United States is an action at law for threefold damages, with costs and attorney's fees, and the only party entitled to maintain a bill in equity for in- junctive relief for an alleged violation of its provisions is the United States by its district attorney, on the authoriza- tion of the attorney general. Gulf, C, c& S. F. Ry. Co. v. Miami S. S. Co., 30 C. C. A. 142, 86 Fed. 407, and cases there cited. Nor does section 5153, 2 Burns' Rev. St. 1894 (section 3903, Rev. St. 1881), aid the complainnt's contention. The sixth paragraph of that section is as follows: "Every siicli corporation shall possess the generdl powers and be subject to the liabilities and restrictions expressed in the special powers following: ♦ ♦ * To cross, intersect, join and unite it« railroad with any other railroad before constructed at any other point on its route and upon the grounds of such other railway com- pany, with the necessaiy turnouts, sidiugs, switches and other con- veniences in furtherance of the objects of its connections; and every company whose railroad is or shall be hereafter intersected by any new railroad, shall unite with the owners of such new rail- road in forming such intersection and connections and grant the facilities aforesaid." This paragraph plainly is not applicable to express com- paines which, like these defendants, do not own, control, or operate a railroad line, but Avhich simply contract for space on railroad trains for iho^ transportation of articles of trade and commerce committed to their care. Besides, the con- nections and facilities referred to are manifestly the physical connections essential to constitute the two railroads connect- ing lines. Such is the view of ih^ supreme court of this state. Lake Shore <& M. S. Ry. Co. v. Cincinnati, W, <& M. Ry. Co., 116 Ind. 578, 19 N. E. 440; Chicago, St. L, d P, R. Co, V. Cincinnati, W, d M, Ry. Co., 126 Ind. 513, 26 N. E. 204. The same view of a very similar provision of the constitution of Colorado Avas taken by the supreme court of 868 88 FEDERAL REPORTER, 663. Opinion of the Court. the United States in Atchison, T. <§ S. F. Ry. Co, v. Denver dt N, O. R. Co., 110 U. S. r>r,7, 4 Sup. Ct. 185. 4. There is not shown bv the averments of the bill and the aiiieudment to be any such custom or usage as would juscify the court in granting the relief prayed for. The right of the complainant to such relief depends upon its showing the existence of a custom or usage having the force of law in the express business of the country. It is not enough to ullege and pi-ove a custom or usage among one ur more express companies to jwiy accrued charges by the receiving company, [664] or to transport without prepayment of charges to the jxjint of destination. Before a custom or usage can acquire the forc^e of law, it must appear that it is general and luiiforni in the business to be affected b\ it, and that such custom or usage has lieen i>eaceably acquiescetl in without dispute for a long period of time. The custom or usage set out in the bill is not shown to be of this char- acter. It is certainly beyond the power of the defendants, by any custom or usage established between themselves, to comi^el all other express companies in this country to sub- mit to the customs and usage's which they have adopted. Nor because the defenerinit violation of the Interstate Connnerce act, or any other law applicable to the premises, or any provision of the charters or the laws applicable to any of the companies parties hereto; and the managers shall cooperate with the Interstate Commerce Commission to secure stability and uni- [511] formity in the rates, fares, charges and rules estab- lished hereunder." An injunction to construe and exercise powers conferred so as to permit no violation of law, is an admission that the j>owers may l>e so construed and exercised as to violate law. If the anti-trust law- prohibited only those contracts in un- reasonable restraint of trade or commerce there might be saving force in this section. But the anti-trust law prohibits all contracts in restraint of trade or commerce. Wliether the rates be reasonable or unreasonable, an agreement pro- viding for their establishment and maintenance by an associa- tion of interstate railways, is prohibited. The managers can exercise none of the essential powers conferred by the agree- ment without violating the law. In the matter of the essen- tial powers, it is not a question of method or degree; the powers cannot be exercised, because they are in themselves illegal. The association itself is illegal. It is formed for the purpose of controlling certain competitive traffic. The cen- tral authority — the managers — is given the power to estab- lish and maintain rates on that traffic. Take away from the association the power to establish and maintain rates, and it immediately falls to pieces. It ceases to have a raison The authority of the Government to mamtain this suit is sustained in United States v. Freight Associc^tion, 166 U. S. 290, 343, citing in re Dehs, 158 U. S. 564 ; Cincinnati, New Orleansj d-c. Railway v. Interstate Commerce Commission^ 162 IT. S. 184; Texas d Pacific Railway v. Interstate Com- merce ComtHi'ssimi, 162 U. S. 197. Mr. James C. Carter (with whom was Mr, Lewis Cass Ledyard on the brief), for the Joint Traffic Association, appellee. There are certain observations in relation to the Anti- Trust act which are properly to be made before proceeding to the argimient. UNITED STATES V. JOINT TRAFFIC ASSOCIATION. 877 Mr. Carter's argument for Tlie Joint Traffic Asgoeiatiou. There is no doubt that prior to and at the time of the pas- [512] sage of this law there were, as there still are, certain tendencies in the industrial world which drew widespread attention and excited, in some minds, much alarm. Many industries were seen, or supposed, to be under the conti-ol of great aggregations of capital, either in the hands of individ- uals united under some form of agreement, partnership or other, or contributed as the capital of corporate bodies. Some of the most conspicuous were called by the vague name of " trusts," and this term came to be employed, in a general way, to designate all of them. For obvious reasons, and quite aside from the question whether their objects and effects are mischievous or beneficial, such combinations of capital are not popular, and the designation '^ trust -' came to be a rather reproachful one. Undoubtedly it mav be possible for a larsre airirreffated capital to wield a greater power in many ways than would be possible for the same amount distributed among many sep- arate owners or managers, and the suspicion was entertained that such power was employed in controlling markets, and perhaps in controlling legislation, and it was also thought to be an instrumentality by which the unequal distribution of wealth was fostered and increased. The disfavor thus ex- cited was, as was natural, turned to political account. Those opposed to a protective tariff charged upon its advocates that they were favoring and stimulating trusts, and the lat- ter felt the need of repelling the charge by doing something to show that they were the declared enemies of trusts. Under such circumstances it was quite natural that schemes of legislation aimed against these supposed public enemies should be started, and any opposition to them would naturally draw upon the authors of it the reproach that they were the friends and, perhaps, the paid defenders, of these powerful interests. ^Vhile, therefore, all, or nearly all, professed themselves in favor of repressive legislation, the question what legis- lation could be contrived was a difficult one and suggested, some difficult questions. How was a " trust " to be legally defined so that a prohibition of it should not include a pro- hibition of [513] the exercise of the clearest constitutional 878 171 CJNITED STATES REPORTS, 513. Mr. Carter's aq^nient for The Joint Traffic Association. rights? Congress, surely, could not prevent the creation of corporations under state laws, or limit the capacity of forming partnerships, or in any manner interfere with the internal business of States. And was it certain that these so called trusts were, in every instance, necessarily mischiev- ous? Indwd, sensible legislators for the most part under- stood very clearly that the things complained of were but the necessary incidents and consequences of the progress of in- dustrv and civilization and could not be arrested without checking the advance of the nation and crippling it in the fierce competitions with other nations, and that any useful effort to remedy the supposed evils must be directed against the abuses of the power of aggregated capital and not at the aggregations themselves. Under these circumstances Coiigress proceeded very cautiously and enacted the only measure which seemed possible without passing the plainest constitutional limits. It did not attempt to define '' trusts," or limit aggregations of capital in any form. The general charge was that these combinations wei*e in some form monopolies, and in restraint of trade, but Congress did not in the remotest degi-ee attempt to define what a monopoly or restraint of trade was. It was, however, perfectly safe to declare that if these combinations did in any case create monopolies, or restraints upon trade, they should be prohib- ited from so doing in the future; and this is what Congress did and all it did, by passing the act in question. It prohib- ited contracts and combinations to create monopolies or re- strain trade, and left it to the courts, without a word of direction or instruction, to determine what contracts did create monopolies or restrain trade,' and what did not. It cannot be said that Congress has done an unwise or im- prudent thing, and that if calamity occurs the fault lies at its door. It has prohibited nothing but contracts and com- binations to create restraints of trade and monopolies. These, when properly defined, are, beyond question, public mis- chiefs and ought to be prohibited. If any useful thing be- comes stricken down by the law, it must be the result of some eri'oneous interpretation. [514] The first question we design to consider is whether the agreement vloiates any of the provisions of the act re- UNITED STATES V. JOINT TRAFFIC ASSOCIATION. 879 Mr. Carter's argument for The Joint Traffic Association. ferred to. To this end it is of much importance to have in mind the particular nature of the subject with which this act deals, and how that subject has heretofore been treated in law and legislation. It is immediately obvious that Congress conceived itself to be dealing with acts supposed to be productive of injury to the public, and of injury to such an extent as to justify repressive legislation. We next observe that it is not contracts onlv of a certain character which are condemned, but that they are coupled together with certain other acts, presumably of a similar nature or tendency, namely, combinations or conspiracies in restraint of trade, and monopolies, or combinations or con- spiracies to monopolize. Contracts, therefore, are dealt with, not so much as contracts, but as one form of acts re- lating to trade and commerce assumed to be injurious in their tendencv and effect. That contracts of a certain class may be opposed to a ' sound public policy has been recognized in the law from a very early period. The grounds or reasons of pol^py upon which they are held void or illegal are very numerous and varied, but a class embracing numerous instances is formed of such as are supposed to have an injurious effect upon trade or commerce; between these, however, there is quite a marked distinction observable in the way in which they are treated in the law. One description embraces simply or- dinary business transactions, where parties make agreements with each other for supposed mutual profit and advantage, a breach of which would result in pecuniary loss or damage to the one or the other, and a demand for redress. In such cases the parties expect and intend to enforce the contract, and look to the ordinary legal remedies as the means of en- forcing it. Contracts whereby a business is sold and the seller covenants that he will not thereafter carry it on, or where a man takes an apprentice with an agreement that he will not set himself up in opposition to his master in trade, supply familiar instances of this character. [515] Inasmuch as such contracts would not be entered into unless it was believed that the law would afford redress in case of a breach of them, the repressive purposes of the 880 171 UNITED STATES REPORTS, 515. Mr. Carter's iirnruuient for The Joint Traffic A8«o<*iatioii. law, where they are supposed to be opposed to public policy, are, in general, fully satisfied by declaring them void and denying redress, and this is usually the extent of the notice which the law takes of them. There is no occasion for crim- inal legislation, both for the reason that there is not present, ordinarily, any criminal purpose, and if there were, repression is sufficiently accomplished without a resort to it. The doc- trine respecting contracts of this character belongs therefore to the law^ of contracts, and the treatises on that law usually embrace a chapter devoted to it. But there is another and much snuiller description of con- tracts supposed to be injurious to trade of quite a different character. They are not, properly speaking, business trans- actions. They do not involve the sale, leasing or exchange of property, or the hire of services; nor does a breach of them usually result in distinct and ascertainable pecuniary loss. They are not, indeed, entered into by parties in differ- ent interests, as in the case of buyer and seller, one of which expects to gain something from the other, but })y parties in the sai»e interest having in view an object for the common good of all ; nor do the parties to them generally look to, or rely upon, any legal remedies to secure obedience to theni. They spring out of circumstances which impress the parties to them with the belief that they have a common interest, or that it is expedient to create a common interest among them, and seek to control or regulate the conduct of each other in relation to business. Instances of this description of agree- ment ai-e found where laborers, or employers, unite, in the form of agreement, to regulate hours of labor, or prices, or where merchants, or tradesmen, combine to transact their business in certain prescribed ways, or to establish uniform prices for their goods, or to j uppress, or regulate, competi- tion among themselves; or where a class of producers or dealers combine together to control a product, or a business, with a view of imposing upon others their own terms as to prices, or other incidents of the business. [516] The marked distinction between these cases and the ordinary business transactions first spoken of is, that in the latter there is a difference of interest, sometimes regarded as UNITED STATES V. JOINT TRAFFIC ASSOCIATION. 881 Mr. Carter's argumenf for The Joint Traffic Association. a hostility of interest between the parties, each seeking to gain the utmost from the other; whereas, in the former, the parties are in the same interest, each seeking the same end. The term *' contract " does not well express this sort of agree- ment. It is a uniting together for a common purpose^a combination— or, when thought to be of an objectionable character, a conspiracy. Such unions always suppose agree- ment, but it nepd not be in writing; where it is in writing it is often called an agreement, or contract; but, in giving it this name we should not lose sight of its real character. In 1-eality it is simply an act, and innocent, or guiltj, according as the law may be inclined to regard it. It is riianifest that where the law does regard it as mis- chievous, and to such a degree as to call for repression, it is not enough to simply declare it illegal. The practice may, nevertheless, be persisted in, and as it does not rely for its efficacy upon legal remedies, the mere withholding of such remedies may be ineffectual. The action, therefore, which law usually takes in respect to such so called contracts is in the form of prohibition and penalty, and the subject belongs not to the law of contracts, but to the criminal law, where it is usually dealt with under the head of conspiracy. We do not mean by the above observations that there may not be instances which partake, to a greater or less degree, of the qualities of both the classes above mentioned ; but the distinction between them is so constant and pervading that it will be at once recognized. As a conclusion to what is said we desire to point out that the legal doctrine and policy to which this Anti-Trust act be- longs, is manifestly the one last described. The circumstance that contracts are grouped together with combinations and conspiracies and made the subject of criminal treatment, shows this very plainly. The ineptitude of some of the language of this legislation is quite apparent. Undoubtedly the object of Congress was to [617] reach that class of supposed mischiefs which flow from combinations. But the great bulk of the cases, proba- bly nine tenths, in which courts have felt called upon to say anything about contracts in restraint of trade, has been the 11808— VOL 1—06 M 56 882 171 UNITBB STATES RErORTS, 517. Mr. Carter's argument for The Joint Traffic Association. business transactions first alluded to in which an agreement has been entered into, not to exercise a particular calling, as where the keeper of a well-patronized tavern sells out his establishment and good will, and covenants not to further carry on the business. Such agreements at the conunon law have been held valid or void according to the supposed rea- sonableness of the covenant; but, surely even when void, there was nothing about them calling for the intervention of the criminal law. And yet this statute bunches the valid and the void all together, and makes them all criminal, when probably there was not the i-emotest intention to make any of them criminal. These observations, of course, fully admit that the particu- lar agreement or combination against which this action is aimed, would be, assuming that the act covers contracts be- tween railroad companies, obnoxious to the penalty imposed by the act, provided it were, in fact, in restraint of trade or commerce between the States. That it is, in fact, in restraint of trade or commerce must be shown before this action can be maintained, and this is the proper subject for discussion in this action. This question is broadly open and unaffected by any decision of this court, and we expect to be able to show that the agreement is not only not in restraint of trade and commerce, but highly beneficial to both; that Congress has never declared, or intended to declare, it criminal, and that it is deserving, not of judicial condemnation, but of judicial en- couragement and approval. Unless the act is subject to the interpretation hereinafter maintained, it is open to grave objection on constitutional grounds, which will be dealt with by other counsel. Having presented this preliminary matter, Mr, Carter argued the following points. I. The court has no jurisdiction to entertain this suit, un- less it can be found in the provisions of some statute. The bill sets forth simply the commission of a misde- meanor, [518] and an intention on the part of the defendants to repeat the offence. No principle of the public remedial law of America or England is more fundamental than that the ordinary administration of criminal justice by the ordi- nary courts of common law, is sufficient for the repression of UNITED STATES V, JOINT TRAFFIC ASSOCIATION. 883 . Mr. Carter's argument for The Joint Traffic Association. crime, and exclusive adhesion to it necessary for the protec- tion of the citizen. II. The Anti-Trust act contained provisions purporting to create a jurisdiction in equity to give relief by way oi'm- junction; and, perhaps, the decision made by this court in the suit of the United States v. The Trans-Missouri Freight Association, should be regarded as a determination that the Attorney General was at liberty in case of any violation of the provisions of the act to file a bill for an injunction, al- though it would seem necessary, upon familiar principles, to make out a case for equitable interposition, in order to justify an appeal to the equitable jurisdiction thus created. But so far as it is sought to maintain the present action on the basis of an alleged violation of the provisions of the In- terstate Commerce act, no support can be derived from the decision above referred to. No such jurisdiction in equity is given by that act. And by implication, at least, it is withheld; for in certain cases specially mentioned in sections 6 and 13, jurisdiction is expressly given to courts of equity to grant injunctions. If it is not given in other cases it must be taken to be for the reason that it was not intended. " Expressio nnius est exdnsio alteriusP III. A clear understanding should be had at the outset, of the meaning of the terms with which we are dealing. The class of contracts condemned by the Anti-Trust act is defined by the effect they have upon trade or commerce. They are such, and such only, as have the effect of restraining trade or commerce. The actual effect which the contracts have upon trade or commerce is the material consideration which deter- mines whether or not they are included within the class. This may seem self-evident, and indeed is so. But the possible suggestion might be made that there is a class of contracts, called, or named, " contracts in restraint of trade," and that the statute relates to these irrespective of their real and true effect. There is no foundation for such a sugges- tion. There [519] is no class of contracts known to the law by the name of contracts in restraint of trade irrespective of their actual effect upon trade. Whenever, heretofore, the point has been made in the case of a particular contract whether it was in restraint of trade, it has been determined m UNITED STAT18 BEPOBTS, 519. Mr. Carter's urgunient for Tlie Joint Traffic Association. by an inquiry as to its actual effect upon trade. No sugges- tion would have been indulged that it was valid or void ac- cording as it might, or might not, be called or styled a con- tract in restraint of trade. Moreover we are dealing with the criminal law, whicli never dasses acts and makes them punishable under arbitrary names, without regard to their supposed effects, as being actually niischevious or otherwise. This would be putting innocence on a par with guilt. IV. There seems to be no room for doubt concerning the meaning of the term ** in restraint of trade or commerce." To restrain is to hold back, to check, to prevent, and thus to diminish. It is injury to trade or commerce which the act is aimed to prevent. IFnless, therefore, a contract injures and thus diitiinishes, or tends to diminish, trade or commerce, it cannot be deemed as in restraint of trade or commerce. V. The agreement under which The Joint Traffic Associa- tion was formed, and the carrying out of which is sought to be enjoined, is not a contract in restraint of trade m com- merce within the meaning of the act of July 2, 1890. [Over one hundred pages of appellant's brief are taken up with the discussion of this point. The following synopsis of its reasoning was filed by counsel.] The bulk of the whole discussion, so far as respects the Anti-Trust act, is contained under this Fifth Point, and the line of argument pursued is substantially as follows: (1) That no restraint is directly, or in terms, imposed upon trade or commerce; that all the members of the association will, as the agreement assumes, continue in business, doing the utmost they can, and in competition with each other; that whatever restraint is imposed by it is imposed simply upon 11 single feature of this competition; that, competition and trade not being identical with each other, a restraint upon competition is not necessarily a restraint upon trade. It is admitted, how- [5S0] ever, that a restraint upon competition may be a restraint upon trade ; but it is asserted that whether it is so or not, in any particular case, depends upon the nature and effect of the restraint imposed in such case. (2) The argument thus reaches one of the main subjects of discussion, namely, what the effects of competition in trade UNITED STATES V. JOINT TRAFFIC ASSOCIATION. 885 Mr. Carter's argument for The Joint Traffic Association. are; when they are good, and when, if ever, they are bad; and how such restraints have been regarded in public economy, law and legislation. This subject is treated at first generally, without reference to the particular effects of competition in the business of railroad transportation. (3) It is then pointed out that the particular field of dis- cussion in the case has been, by what precedes, fuiiy dis- closed, namely, the effects of restraints upon competition as restraining, or not restraining, trade and commerce, and a particular proposition, substantially equivalent to the main one, is stated as follows : " The agreement in question, as a whole, and, particularly, so much of it as affects competition, is in the highest degree promotive of trade and commerce." The discussion on this head jnirsues the following course : (a) It begins with a statement of " the origin, development and present condition in this country of the business of rail- way transportation," and shows that by the delibsrate policy of all our governments, state and National, business has been, from the first, subjected to the severest involuntary competition, and it points out the ruinous results to which such competition leads when it takes place on rates, and aims to show that such results can be arrested, or mitigated, only by allowing the competing parties to displace the strife by some form of agreement, (h) This discussion is proceeded with by pointing out what the main requisites of a good rail- way service are, and how they are affected by railway compe- tition in rates. It aims to show that such competition, by making uniformity in rates impossible, makes it impossible to secure any of these essential requisites, and that they can be secured only by some form of concerted agreement be- tween the parties. [521] (4) The subject of agreements between railway com- panies and cooperative traffic associations being thus reached, a sketch is made of their origin and development down to the time of the passage of the Interstate Commerce law, and it is shown that the most efficacious form of agreement down to that time had been found to be that of pooling. (5) The Interstate Commerce law and its effects are then discussed, and it is shown that one of its main objects was to 886 171 UNITED STATES REPORTS, 521. Mr. Carter's argument for The Joint Traffic Association. bring about, so far as Federal legislation could accomplish it, uniformity in rates, and thus put an end to the practice of discrimination, and attention is called to the incidental feature of the law. which prohibited pooling agreements. It is then shown that the effect of that law was to increase and aggravate the very evils which it was designed to remove. Pooling being prohibited, the most effective method for se- curing uniformity in rates could no longer be employed, and ruinous competition, with every form of discrimination, fol- lowed, and to these evils was added the unendurable aggra- vation that the practices which the law could not prevent, were, nevertheless, converted into crimes. (6) It is then shown that the necessity was universally felt for some form of concerted action which would put an end to these deplorable conditions and that the present agreement was the result of an earnest effort in this direction. (7) An analysis of the agreement is then made, and it is pointed out that it is not aimed against competition in general, but assumes that such competition will still continue actively and earnestly on every point except that of rates. Its precise effect upon competition in rates is dealt with, and it is shown that while its object is to secure uniformity in rates by inducing competing companies to consent to such uniformity, it does not purport to require it or compel it. That it does not really, or in any proper sense, seek to restrain competition at all, but aims to render competition open, hon- est and lawful, so that the business of railway transportation may be conducted in conformity with the requirements of the Interstate Commerce law, and without the daily commission of crime. It shows that, to this end, it is necessary that each railroad [522] company should first establish its rates and should adhere to them for a reasonable period, which is fixed at thirty days, in order if it intends a change that it may give reasonable notice of its intention in time to en- able the competing parties to meet it, and to shape their own conduct accordingly; that this is absolutely the only restraint upon competition effected by the agreement, and being only slight and temporary, and necessary in order to enable compe- tition to be open and lawful, cannot be regarded as a re- straint upon trade. It admits that one of its main objects UNITED STATES V. JOINT TRAFFIC ASSOCIATION. 887 Mr. Carter's argument for The Joint Traffic Association. is to secure what the Interstate Commerce law sought to secure, uniformity in rates, but its method of effecting that result is, not by a compulsory agreement, but by taking away the motives to ruinous, secret and unlawful competi- tion in rates. It also points out the many other beneficial provisions of the agreement by which it is sought to make the railroad transportation of the country regular, orderly, safe and effective. (8) It further seeks to emphasize the beneficial purposes of the agreement by showing that every great industry in which the cooperation of many different proprietors and agencies is required, necessarily calls for a system of regu- lation which must be supplied either by the action of gov- ernment, or, in the absence of such action, by the volun- tary action of those who are engaged in it, and it pronounces the association as " an institution for the regulation of trans- portation business in those respects in which the State, either from lack of jurisdiction, or because it deems that the regu- lation could be best devised and administered bv the railroad systems themselves, has choosen not to regulate it." ' (9) Throughout this part of the argimient the central proposition is that of the absolute necessity for some agency by which uniformity in rates may be brought about, and a uniformity not only in the case of merchandise shipped from the same point to the same terminus, but also in the case of merchandise shipped from, or to, any points in any way competing. So long as competition in rates exists differ- ent men and different places will necessarily be put up, or pulled down, enriched or ruined, as one railroad company may think it to be [523] for its interest to make lower rates than another, and without regard to comparative skill, in- dustry or other natural advantages which furnish the true and only field for useful competition. Railway transporta- tion is a public function, and absolute neutralitv in relation to the multitudinous competitions of life is an essential con- dition of its just discharge. This neutrality can be secured only by uniformity in rates. If this is not secured by Gov- ernment it must be brought about by some private agency. It cannot be secured by governmental action, because the Government has committed the business to private hands. 888 VH UNITED STATES REPOBTS, 523. lUr. Carter's argument for Tlie Joint Traffic Association. The Interstate Commerce law had this uniformity for its prime object ; and went to the limit of Congressional power in the effort to accomplish it. The prime object of the present agreement is to supplement the effort, not by compul- sorily restricting competition, but by taking away the motives to it. It is asked whether it is possible to regard an organ- ization formed to effect an object which the law and public policy unite in viewing as essential, but which Congress can- not by law reach, as a restraint upon trade ? It is believed that when this single subject is considered in all its various relations, it is, of itself alone, decisive of the whole controversy. (10) The important matter of the classification of freight is taken up and considered, and it is shown that tfie great end of uniformity in rates cannot be attained without a system of classification; that classification is only a part, although a necessary part, of nite making; that its only object and pur- pose is to maki^ iiniforniity in rates possible ; thai it has never been attempted, except as part of an effort to bring about such uniformity, and can never be perfected, or even pre- served, except upon the condition of such uniformity. (11) The general usefulness of the organization formed by the association is dwelt upon by calling attention to the mul- titude and variety of subjects upon which it is daily engaged, and especially to its constant occupation with the question, how any particular rates which may happen to have been established, or which may be proposed to be established, affect different places and different merchants or manufacturers en- [524] gaged in the same business, and who are in competi- tion with each other, whether they may be a few miles or hundreds of miles apart. It is asserted that the association becomes the practical arbitrator in cases where the Interstate Commerce law cannot operate between competing merchants and manufacturers, and between comfjeting places, as to what rates even-handed justice to all requires; that from the na- ture of the case and the interest of the railroads themselves, no rules can be adoj)ted for decision of such questions except those of justice and equality, and that it is practically impos- sible that it should be made a medium of monopoly, or for the exaction of anything mor*? than reasonable charges; and that UNITED STATES V, JOINT TKAFFIC ASSOCIATION. 889 Mr. Carter's argument for The Joint Traffic Association. this is proved by a reference to the course of railroad charges during the whole period, embracing many years, in which such agreements have existed, the fact being that they have continually declined from the rate of about three cents a ton or mile to less than one cent a ton or mile, a rate lower than that of railway transportation in any other quarter of the world. (12) The argument then refers to the matters of fact which were involved or assumed in the foregoing discussion, and justifies whatever assumptions have been made in the fol- lowing ways: (a) That, by the very nature of the case, they are matters which must necessarily be true, because they are the if^esults of the operation of the familiar and well-known laws relating to industrial pursuits, (h) Because they have that notoriety which requires a court to take judicial notice of them, (c) Because they are fully established by aver- ments in the answer admitted by the appellant in setting down the cause for hearing upon bill and answer, (d) By the declarations, repeated in multiplied forms, of the Inter- state Commerce Commission, the great public agency which has such supervision and control over the business of railway transportation as Congress can assert. Copious extracts from thchc declarations are set forth. (13) These extracts and other proofs thus referred to are again declared to stamp this association as one instance, of which industrial life furnishes a multitude, where industrial [696] interests of great magnitude are subjected to private regulation, and for the reason that the State recognizes, and always has recognized, the fact that such regulation is far more effective over a large range of subjects than any which the State itself could devise and enforce. This statement is confirmed and illustrated by reference to many different in- stances, (a) To the multitudinous associations ajuong woi-k- » men and employes of various descriptions, all based upon agreements far more in restraint of competition than any contained in this instrument, (b) Similar unions among the employers of labor, (c) To the numerous Commercial, Stock and Produce Exchanges and Boards of Trade, all of which prescribe rates of commission and for compensation for various services, and forbid any departure from them, 890 171 UNITED STATES BEPOBTS, 525. Mr. Carter's argument for The Joint Traffic Association. and are far more restrictive of competition than any pro- vision in the agreement in question. (14) The question is submitted whether trade is in any way restrained by the agreements between laborers and em- ployes, or those between the employers of labor, and it is answered by saying that the final and general results, not- withstanding occasional abuses, are greatly to increase the efficiency of labor and the amount of work done, and to ele- vate the character of the laboring classes. The same ques- tion is asked in respect to Commercial Exchanges and Boards of Trade, whether tKey restrain the business with which they are conducted, whether there is less buying or selling of goods in consequence of commissions or other charges being fixed at particular sums. It is answered by saying that, as every one knows, these are all agencies by which the number and magnitude of business transactions is enormously increased. . The same question is put in relation to the operation of the present agreement, or of any agreement tending to se- cure uniformity in railroad rates and the stability, certainty and safety of railway transportation; and it is asked whether, in consequence of such agreements, the business of railway transportation or the exchange of commodities is in any particular diminished, and whether it is not, on the con- trary, prodigiously extended and enlarged. [526] (15) Under general subdivision V the conclusion to which the foregoing line of argument leads is drawn in .these words: "That the agreement which this action seeks to condemn is not by reason of any restraint effected by it upon competition, or otherwise, a contract in restraint of trade or commerce, but is on the contrary highly needful to, and promotive of, both." Its necessity to beneficial purposes, as thus established, is then separately pointed out by way of summing up: (a) Its , necessity to stability in rates, (h) Its necessity to uniform- ity in rates and to prevent unjust discrimination, (c) Its necessity to secure the general benefits of harmonious coop- eration in classification and interchange of traffic, (d) Its necessity as a supplement to the Interstate Commerce act, and in order to make the objects of that act attainable, {e) UNITED -SfATES V. JOINT TRAFFIC ASSOCIATION. 891 Mr. Phelps's argument for the New York Central R. R. Co. Its necessity for the prevention of crime, for its punishment when committed, and for the prevention of perjury, com- mitted in order to conceal crime. VI. If the Anti-Trust act is interpreted as forbidding agreements, such as the one under discussion, one of three alternatives must necessarily follow. (1) That all railroad transportation be abandoned; or, (2) The consolidation of all competing railroads under a single ownership, either governmental or private; or, (3) That all competing rail- road business must be carried on in constant and daily vio- lation of criminal law. Of these alternatives neither the first or the second can be contemplated as possible. Rail- road transportation cannot be abandoned, and no govern- mental ownership can, under present, or any probably near future conditions, be brought about. We have no sovereign government possessing the requisite powers. It is the third alternative which must follow. VII. These positions are fully supported by the weight of authority. VIII. The agreement is in no manner in violation of the provisions of the second section of the act. It creates no monopoly, nor is it an attempt, or conspiracy to monopolize. IX. In the attempt, made by the bill, to array every pos- sible objection to the agreement, there is an evident purpose to [527] suggest that its eighth article, in connection with other subsidiary provisions, constitutes pooling, and there- fore is a violation of section 5 of the Interstate Commerce act. There is no foundation for such a charge. The agree- ment in no manner violates any provision of the Interstate Commerce law. 3/r. E. /. Phelfs for the New York Central and Hudson Eiver Railroad Company, appellee. I. As the case is set down forliearing on bill and answers, no fact alleged in the bill can be taken as true if denied in the answers, and every fact alleged in the answers must be taken to be true if responsive to the bill. The facts on which the case stands are therefore to be found exclusively in the answers, either in the admissions or in the responsive aver- ments which thev contain. 892 171 UNITED STATES REPORTS, 527. Mr. Pbdps's argument for the New York Central B. R. Go. II. The denials in the answers completely negative all the charges of illegal intent on the part of the defendants which are contained in the bill, unless they are found to result necessarily from the terms of the agreement itself. III. Whether the agreement by its terms violates the Fedr eral law, depends entirely on the inquiry whether it conflicts with any statute of the United States. The bill is not based upop any statute, but proceeds apparently upon common law grounds. No statute is referred to, or charged to have been violated. IV. The only statutes of the United States that are claimed to be infringed by the terms of the agreement, are the Inter- state Commerce act, of February 4, 1887, amended by acts of March 2, 1889, February 10, 1891, and February 8, 1895, and the Anti-Trust act of July 2, 1890. V. The agreement violates no provision of the Interstate Commerce act. The only provision in that act that is claimed to be infringed, is contained in § 5, which prohibits " pool- ing." " Pooling " means a division of the money earnings of traflic, which this article does not contemplate. VI. Even assuming that tt||s clause in the agreement can be construed into a violation of the 5th section of the Inter- state Commerce act, this suit would not be maintainable, be- [528] cause it is unauthorized by that act, and precluded by its express provisions. This court has no power to grant an injunction, either interlocutory or upon final decree, at the suit of the United States (lovemment, against the com- mission of a crime, where no other grounds for the injunc- tion exist except that the act sought to be enjoined is an offence; unless such power is specially conferred by statute. No such power is granted. VII. The Anti-Tnist act of July 2^ 1890, does not apply to the business of railway transportation. It will be claimed that the decision of this court in the case of the Trans-Mis- mmri Assorkdion, 100 U. S. 290, is decisiA^e upon this point, as well as upon the further question whether the agreement here under consideration is a violation of the provisions of the Anti-Trust act It will be found on comparison that very material differences exist between the agreement shown in that case, and the case that is presented here. So that the UIJITED STATES V. JOINT TRAFFIC ASSOCIATION. 893 Air. Phelps's argument for the New York Central R. R. Co. decision there is by no means controlling in the present case. These points of difference are clearly pointed out in the brief of Mr. Edmunds, and need not be restated. But we conceive it not to be improper, so far as it may be necessary, re- spectfully to ask of the court a reconsideration of the con- clusions reached by the majority of the judges in that de- cision, which overrules the judgment of six United States Circuit and District Judges who sat in the different stages of that case and this. The argument in opposition to it has been so fully, so clearly and so forcibly presented in the dissenting opinion of Mr. Justice WTiite, that it is hardly possible to add to it, nor is it necessary to repeat it. VIII. Assuming for the purposes of the argument, that the Anti-Trust law does apply to railway traffic contracts, ho provision of that law is violated by the agreement now under consideration. The prohibitions of the act are two : 1. Against contracts, combinations or conspiracies in restraint of trade or com- merce. 2. The monopoly of, or the attempt or combination to monopolize any part of the trade or commerce of the States, or with foreign nations. [529] The agreement in this case is not " in restraint of trade or commerce." The theory of the bill appears to be that the agreement comes within this description, because it tends to restrict competition, and because any agreement that restrains competition is " in restraint of trade." Both these assumptions are erroneous, the one in fact, the other in law. The agreement does not restrain competition to any such appreciable extent as would justify an injunction, except that competition which is unlawful because it is secret. Assuming, against the fact, that a certain restriction of competition is the necessary result of this agreement if it is al- lowed to proceed, it plainly appears by its terms to be only such restriction of competition as is necessary to secure " just and reasonable rates." By the Interstate Commerce act all rates are required to be "reasonable and just." Every unjust and unreasonable charge is made unlawful. Schedules of rates, as has been pointed out, are required to be published and kept open to 171 UNITED STATES KEPORTS, 529. Mr. Phelps's iirguineiit for the New York Central R. R. Co. public; inspection, and to be filed with the Commissioners; and not to be changed without due notice to the public and the Commissioners. Ample remedies, criminal and civil, are provided for the violation of these requirements, the enforce- ment of which is made the duty of the Commissioners, and the companies are also made subject to the state laws regulat- Ing rates. The precise question, therefore, under this clause of the Anti-Trust act, is whether a contract that produces a result which the Interstate Commerce act in terms authorizes and provides for, and helps to repress a practice which that act forbids, is for that reason a contract for the unlawful re- straint of trade. Or, in other words, whether it can be made unlawful by a forced construction of the general provisions of one statute (»f the United States, for a carrier company to provide by a traffic contract for the maintenance of those "just and reasonable rates" which another statute of the United States not only authorizes, but creates elaborate means for making permanent, and for preventing the secret changes of rates which the Interstate Commerce act prohibits. It is the statutes themselves that have prescribed a defini- [530] tion of this clause of the Anti-Trust act, so far as it applies to railway traffic contracts, if it is held to apply to them at all, whatever its meaning as to other contracts maybe. That the just and reasonable rates of transportation which the Interstate Commerce act contemplates and provides for, are rates that are just and reasonable to the carriers as well as to the carried, cannot be open to doubt. The very words "just and reasonable " employed in that act, necessarily im- ply that meaning. They are words of comparison and rela- tion, and unless the rights of both parties to a contract are considered, there can be no comparison. It would be pre- posterous to call a price just and reasonable, that was not so to one side as well as to the other. This is the construction which this court have given to the Interstate Commerce act in this very particular. The validity of the agreement here in question must be determined, therefore, not merely upon the language of the Anti -Trust act taken by itself, but by that language consid- UNITED STATES V. JOINT TRAFFIC ASSOCIATION. 895 Mr. Phelps's argument for the New York Central R. R. Co. ered in connection with the other statute of the United States which (if this applies) is in pari materia, and which deals with the subject so much more exhaustively, and in words so plain that there can be no ambiguity raised in respect to them. Granting that the Anti-Trust act in terms makes all contracts unlawful that are in anywise " in restriction of trade," how- ever reasonable and necessary they may be, is that to be understood to invalidate a railway contract made to secure that, and only that, which the Interstate Commerce act as construed by this court recognizes as the right of railway companies to receive, and provides means to secure ? It will hardly be claimed that the elaborate provisions of the Inter- state Commerce act on the subject of reasonable rates are repealed by the Anti-Trust act. If both are to stand, as applicable to this case, they must be read together, the same as if their provisions were contained (so far as they refer to the same subject) in separate sections of the same act. Quite aside from the provisions of the Interstate Commerce act, giving to the companies the right to just and reasonable rates, and to use proper means to maintain them, the same [531] result is reached under the principles of the common law. The term " restraint of trade " employed in the Anti- Trust statute has a common law definition. And as the act furnishes no other, that, upon the general rules of construc- tion, must be taken to be intended. To make the agreement an infringement of this statute, it must, therefore, be one that would be void at common law. It is respectfully submitted on this point that in the construction of statutes the rule is absolutely without exception, that where a word or phrase employed has a well-settled common law definition distinct from its literal meaning, that is assumed to be the meaning mtended, unless a different definition is prescribed in the statute. Even the Constitution of the United States, a polit- ical document of an entirely unique character, has been from the outset subjected by this court to this rule of construction. Even if it should be held that the language of the Anti- Trust act forbids any contract in restraint of trade, how ever just, reasonable and necessary, the agreement here in question would not fall within the prohibition, bocaus- it does I 896 111 UNITED STATES REPORTS, 531. M*. Phelps's argament for tlie New York Central R. R. Co. not tend to restrain trade or commerce, but rather to pro- mote them. A restraint upon excessive and unwholesome competition is not a restraint upon trade, but is necessary to its mainte- nance. This view is so fully presented and discussed in the nrief of Messrs. Carter and Ledyard, that further argument in support of it is not requisite. There is no ground whatever for asserting that the agree- ment infringes the provision of the Anti-Trust act against monopolies. The definition of the word " monopoly," both in its legal fiiid its ordinary signification, is the concentration of a busi- ness or employment in the hands of one, or at most, of a few. That is the plain meaning of it as employed in the act. No feature of the agreement, in any view that can be taken of it, approaches this definition. So far from tending toward the concentration ol railroad transportation in fewer hands, it does not in any possible event withdraw it from a single road now in existence, nor throw the least obstacle in the way of the construction of others. 1532] Its effect will be, if it is successful, not to diminish, but to increase transportation facilities, by preserving roads that might otherwise be driven from the field. IX. If the construction of the Anti-Trust act which was adopted by the court in the Trans-Missouri case is to stand, it is respectfully insisted that the act, so far as thus interpre- ted and applied, is in violation of the provisions of the Con- stitution of the United States, since it deprives the defend- ants in -error of their liberty and their property without due process of law, and deprives them likewise of the equal pro- tection of the laws. This point was not made on the argument of the Trans- M4mmui ease, because no such construction of the act was anticipated by counsel. Nor was it considered by the court, since it is an unvarying rule that no objection to the constitu- tionality of a law will be considered, unless raised by the party affected. UNITED STATES V. JOINT TRAFFIC ASSOCIATION. 897 Mr. Phelps's argument for the New York Central R. R. Co. The question thus presented is not whether the act in gen- eral, or in its application to the many other cases to which it is obviously addressed, is unconstitutional, but whether the agreement here under consideration is one that may be pro- hibited by legislation, without infringing the freedom of con- tract and the right of property, which the Constitution de- clares and protects. In the Trans-Missouri case, where the contract under con- sideration was similar to the one here in controversy, though far more open to the objections here urged, it was conceded, both in the majority and the minority opinions of the court, that its substantive character and purpose were such as the answers in tlie case aver and set forth. It was for this rea- son believed by the minority of the judges that it could not have been the intention of Congress that such a contract should be made a penal offence. But it was held by the majority that the language of the act admitted of no other construction. Though it was conceded in the opinion of the court that the arguments against that conclusion " bear with much force upon the policy of an act which should prevent a general agreement of rates among competing railroad com- panies, to the extent simply [533] of maintaining those rates Avhich were reasonable and fair." And in the opinion of the minority of the court by Mr. Justice ^Vliite, he remarks, after stating the general features of the contract, " I content my- self with giving this mere outline of the contract, and do not stop to demonstrate that its provisions are reasonable, since the opinion of the court rests upon that hypothesis." The accuracy of the statement we have made above, of the legal effect upon this case of the Anti-Trust act, as so con- strued, is thus both established and conceded, and the ques- tion distinctly arises, whether legislation having such a re- sult is within the power of Congress. That the operation of the act as thus interpreted does in fact, by prohibiting the contract here in question, deprive the defendants (whether rightfully or not) of both liberty and property to a very grave and perhaps ruinous extent, is not open to question. A just freedom of contract in lawful busi- ness is one of the most important rights reserved to the citi- 11808— VOL 1—06 M 57 898 111 UNITED STATES REPORTS, 533. Mr, IHielps's iirgiiiueiit for the New York Ceiitral R. 11. Co. zeo under the general term of " liberty," for all human in- dustry depends upon such freedom for its fair reward. The use of property is an essential part of it, and when abridged the property itself is taken. Its use Is abridged when the owner is precluded from anv contract that is neces- sary or desirable in order to secure to him a just compensa- tion for its employment. And when any class in the commu- nity is so precluded, it is to that extent ** deprived of the equal protection of the laws." These are elementary propositions in constitutional law, and have been often asserted by this court. In recapituhition of the points above presented upon the question of the const itutionalitv of the Anti-Trust act. if it is held applicable to the agreement in this case, we n^spect- fully insist: (1) That the act deprives the defendants of both liberty and property, by forbidding a contract just and reasonable in itself, essential to the use of their property and the prosecution of their business, and never before held or claimed to \ye unlawfid or wrong, and l)y which they only agree' to do what they have a right to do. That no such contract can be prohibited by law without a violation of the [534] constitutional provision, whatever advantage to the public in keeping down rates of transportation may be ex- pected to result from it. And that in attempting such a prohibition, the case contemplated by the Constitution is dis- tinctly presented, in which the legislature deems that a public taiefit is to Ix* etiVcted by depriving the citizen of his liberty or proj)erty without due process of law. (2) That even if such a deprivation could Ije justified in any case, the public good in this case does not in any sense require it, because (a) Those intended to be benefited are not the public, but only one class of the public who are seeking a business advantage over another and much larger class, which is equally entitled to protection, (h) Even if such class is held to constitute the public, it is not entitled to tht^ suppression of all restriction upon competition. Because such a suppression would be a plain and oppressive violation of the equal rights of the other class, inasmuch as it would compel the latter to serve the former by labor and property without just compensation, (e) The legislation in question UNITED STATES V, JOINT TRAFFIC ASSOCIATION. S99 ^ Mr. Edmunds's argument for tbe Pennsylvania Railroad Company, is not necessary, even if it is admissible. The complete sup pression of all the restriction upon competition to which the public has a right to object, is already effectually provided for by full and careful Congressional legislation, in which no defect or msufficiency can be pointed out; so that the fur- ther suppression now proposed only extends to those re- strictions, just and reasonable in themselves, to which the pubhc have not a right to object. And even without that or any legislation, it would be utterly impossible under exist- ing facts, notorious and undisputed, for railwav companies to restrict competition to a degree that would result in anv injury to the public, (d) That if all restrictions upon com"- petition were prohibited, the result, instead of a public ad- vantage, would be a public calamity, and would injure rather than benefit the very class in whose behalf it is contended for (3) That even if it were admitted that further legislation against restrictions upon competition was both constitutional and necessary, the provisions of this act, in forbiddircr all such restrictions, are not justly adapted to the onlv endlhat IS 15J5] admissible on public policy. If this one^is of that character it must fail, but if not, it cannot be made unlawful because it is unnecessary. Few special contracts would be necessary if all parties concerned in the transactions to which they refer would always do right. Mr. George F. Edmunds for the Pennsylvania Railroad Company, appellee. Before the agreement in question was made, the rates of each road had been independently and fairlv established by Itself, and duly filed with the Interstate Commerce Commis- sion ; and these rates were in truth just, reasonable, and in conformity with law in every respect, and were in full opera- tion. ^ This is admitted by pleadings. This being true, t^hese rates could not have been either raised or lowered, under then existing conditions, without in- justice to patrons or else injustice to those interested in the roads, including the people along their lines, as well as through shippers. To have changed any of them would have been against 900 111 UNITED STATES REPORTS, 535. Mr. Edmunds's argument for the Pennsylvania Railroad Company. justice and reason, disobeying the first commandment of the commerce law. In this state of things the agreement was made. The pre- amble contains five distinct declarations, as follows: (1) To aid in fulfilling the purposes of the Interstate Commerce act ; to cooperate (2) with each other and adjacent transportation associa- tions to establish and maintain (3) reasonable and just rates, fares, rules and regulations on state and interstate traffic ; to (4) prevent unjust discrimination, and to secure the reduc- tion and concentration of agencies (5) and the introduction of economies in the conduct of the freight and passenger service. Every one of these declarations is admitted to have been true in all respects; and it is admitted that there was no other [5S6] purpose, and no secret or covert design in re- spect of the subject. The preamble thus became, certainly as between the parties to it, the constitutional guide in the interpretation of the body of the contract. The parties next declare that they "make this agreement for the purpose of carrying out the objects above named." The first six articles of the contract provide for organiza- tion and administration, in respect of which no criticism has been suggested, except as to section 5 of Article V in con- nection with the Solicitor General's contention in regard to Article VII. Article VII is the first one that is assailed in respect of its fundamental character. It is the fundamental one in regard to rates. If it violates law, it is bad, and must not be put in execution. If it provides for the fullest obedience to law and promotes trade, it must be upheld. The first section provides : " Section 1. The duly published schedules of rates, fares and charges and the rules applicable thereto now in force and authorized by the companies parties hereto upon the traffic covered by this agreement (and filed with the Interstate Commerce Commission as to such of said traffic as is interstate) are hereby reaffirmed by the com- panies composing the association, and the companies parties hereto shall, within ten days after this agreement becomes effective, file with the managers copies of all such schedules of rates, fares and charges, and the rules applicable thereto." UNITED STATES V. JOINT TRAFFIC ASSOCIATION. 901 Mr. Edmunds's argument for the Pennsylvania Railroad Company. This section is the immediate and affirmative act of the association. Its essence is that all parties agree to abide bv the preexisting just, reasonable and lawful rates then on file with the Interstate Commerce Commission. It has not been contended by the learned Solicitor General that this section is contrary to law. It is submitted with confidence that no such contention can be made, and that if the associa- tion agreement had stopped there, the agreement would have been simply one to stand by just and reasonable rates inde- pendently fixed, on file with the Interstate Commerce Com- mission, which would be agreeing to do the very thing that the plain [537] words of the statute commanded should be done. The commerce law does not demand competition ; it only demands justice, reason and equality. Every one of its clauses is devoted directly to these ends ; anclHhe com- petition that produces departure from the reason and justice and equality that the act requires violates the essential principle upon which it is founded. I take it to be plain that if these thirty-one defendants had united in an engagement to truly and faithfully adhere to and carry out in their respective conduct all the requirements of the commerce law, and had agreed to the imposition of penalties for infraction, it would be manifest that they had not contracted to restrain trade, either in a general or a par- tial sense, or any sense whatever. In the instance of this first provision of the agreement, they have engaged to do that very thing and that very thing only in the form of specific language referring to a specific and existing just, reasonable and lawful state of things which they were then acting upon. The second section of Article VII is the one upon which the principal assault of my learned brother on the other side is made. He maintains that the language used in describing the powers and duties of the managers is intended to be evasive and to conceal its real purpose, and to make the managers the absolute masters, subject to an appeal to the board of control (being the presidents of all the roads), of the changing and fixing of future rates. The first answer to this is that the pleadings distinctly admit that there was no evasive intention, or other unjust purpose, in any part 902 171 UNITED STATES BEPOBTS, 537. Mr. Ednmnds's argoment for the PeniiaylTania Railroad Company. of the arrangement. It is, therefore, not just to maintain what the I'ecorcl admits to be untrue. But whatever construction or implication may exist in i-espect of the language of this section, it is sufficient to say that the very next section of the same article declares that — "The powers wnfenred upon the managers shall be so construed and exercised as not to permit violation of the Interstate Commerce act, or any other law applicable to the premises, or any provision of the chartere or the laws applicable to any of the companies parties hereto, and the managers shall co- [538] operate with the Interstate Comiiierw Commission to secure stability and uniformity in the rates, fares, clmrjres sind rules estal>lished hereimder." Here is, in words as clear and specific as the English lan- guage is capable of, a distinct jurisdictional liuiitation upon the powers of the managers, as describiMl in the preceort and to its ability to make lower rates to all its jjeople from one end of the line to the other. This provision of the eighth article then, I submit, was wholesome, lawful and necessary, and it was the very thing that one of the clauses in the Commerce act and the spirit of all its provisions required. I may be allowed to say a word in respect of the objection that no one of the roads could change its rates without giving thirty davs' notice, and therefore that this was a restraint of trade, in one sense or another. It will be seen on examining the agreement that each road had the absolute right, under the agreement and pursuant to its provisions, to change its own rates, and still continue a member of the association. This being so, it seems to me impossible to contend that any part of the agreement was any sort of restraint, unless it can UNITED STATES V, JOINT TRAFFIC ASSOCIATION. 907 Mr. Edmunds's argument for the Pennsylvania Railroad Company, be established that the thirty days' notice was too long. It is a matter of history that when the Conmierce act was passed there was inserted in it the requirement that no rate should be raised except on ten days' notice, and none should [543] be lowered except on three days^ notice, publicly displaved. What was the principle of this ? It was that justice and fair play to customers and to the public and to all persons directly or indirectly interested in transportation required that sufficient and timely knowledge of changes in rates which, as we know, affect in a greater or less degree all com- mercial and productive transactions, should be had by every person and community interested. I suppose I may prop- erly state it as a public fact, now known to everybody engaged in business, that the time fixed in the Conmierce act for notice was much too short, and that unjust inequalities have arisen, again and again, from changes in rates by particular roads on such short notice that favored custoiners and favored localities, etc., would get advantages over others, in violation of the spirit and substance of the Commerce act. It was for the purpose, then, and with the effect of producing the widest fair play and equality among all persons, all ro'^ds and all communities, that this period of thirty days instead of ten was agreed upon. It was obviously right, and being right, it should not be condemned, unless the rigor of a law^'that can- not be otherwise construed and applied compels it. I submit with sincere confidence, as it regards the provision I have just spoken of, as well as it regards all the other pro- visions of the contract, that, instead of being even a partial restraint of trade, they are- all provisions of constraint in sup- port of and in promotion of trade. Trade is a general word, and its operations, lilce all other operations that require co- operating and associating forces and arrangement, are ad- vanced by, and indeed, cannot be carried on truly and hon- estly for public interests without checks and regulations, some of which may restrain and regulate the behavior of a particu- lar element in the whole operation, and by doing so do not restrain but advance and promote the whole; just as, to take the simplest of illustrations that occurs to me, in mechanics, the safety valve of a locomotive, with its counterweight, regu- lates and restrains, or gives off. the accumulating stean^in 908 111 UHITED STATES REPOKTS, 514. Mr. Edmunds's ai-gument for tbe Fennsylvaniu Railroad Company. «„ b„il„, in ae «,« p,.«, oo„.™ng i, n^r.ini.g ie fr.™ escape, and in the second place, enabling it to escape. But all [M4] this does not restrain the operations of the loco- motive; it is necessary to its best and safest performam^e of duty. A hundred illustrations might be given. My brother on the other side suggests that the clause in the agreement providing for abolishing soliciting agencies is a restraint of the trade. I have stated in my printed points my answer to this. I may add, however, that soliciting trade or ceasing to solicit trade is not trade itself, and does not belong to it, even as an incident. Wherever it is practised, it is prac- tised apart from any act of trade; it precedes it, and some- times leads up to it, and sometimes repels it. It was per- fectly competent, therefore, and certainly wise, for these roads to agree to abolish such agencies, and to join, so far as it might l^ convenient to do for the information of the pub- lic, in having agencies at various important points to assist shippers and manufacturers in the most rapid and economical transmission of their productions. The plan, therefore, sub- stituted for the old practice is one far more advantageous to the public who wish for honest and equal dealing than the old practice. But I submit that whatever character may be imputed to soliciting business, it does not fall within the au- thority of Congress to regulate it at all. While it is going on the business solicited has not reached the point of being interstate commerce, and cannot reach it until its movement has commenced, or is about to commence, definitely from one State to another. I refrain from making any observations on the constitu- tional question arising if the Trust act is to be construed as forbidding innocent contracts promotive of public policy, which I have insisted upon in my printed points, for the reason that in the division of our subjects of discussion this matter is left entirely to my brother Mr. Phelps. In respect of the meaning of the words of the Trust act, I beg to ask your Honors' careful attention to the suggestions I have ventured to make in my printed points. I need not enlarge upon them, and have only to call your attention, first, to the grammatical construction of the first section, and, second, to the citations I have made from law writers, show- UNITED STATES V. JOINT TRAFFIC ASSOCIATION. 909 Mr. Solicitor General's argument for the United States. ing a distinct and separate classification of the two phrases, [545] " restraint of trade in general " and "partial restraint of trade." If these writers are correct (as nobody doubts, I think, they are), and the two phrases were known and treated in the law at the time of the passage of the act as separate things, the one obnoxious and the other just and wholesome, then I respectfully and earnestly insist that the universal rule of construction requires that the words in the act shall be assigned to the first class, and not carried over into the second. Mr. Solicitor General, for the United States, in conclusion. I. It is claimed that because nothing has been done under the agreement, no irreparable injury has been or can be shown, and therefore no injunction lies. But the Anti- Trust law makes the agreement illegal and vests the court with jurisdiction to prevent violations of the act. The carry^ ing out of an illegal contract will result in irreparable injury to the public, and this sufficiently appears from the provision of the law declaring the illegality and authorizing injunc- tion proceedings. II. It is insisted that an agreement in restraint of trade must restrain trade— that is, reduce or diminish it; that trade must be injured. An agreement in restraint of trade may or mav not dimin- ish or reduce trade. The injury sought to be averted bv pro- hibiting such agreements is the injury to the public.*^ The stifling of competition, the creation of a monopoly, may in- crease the trade in the product controlled, but nevertheless to the injury of the public. To stifle competition is to create a monopoly and place the public at the mercv of the monop- oly. The benefits resulting from cheaper products through monopolies have never been held by courts or legislatures as suihcient to overbalance the evils to the Government and people from the creation of monopolies. It is a question of method rather than result. Trusts and monopolies are for- bidden in order to preserve competition, and thereby, as far as possible, freedom of action in industrial and commereial life. III. It is said that competition is not trade, but a mere 910 171 UNITED STATES KEPORTS, 546. 1 Mr. Solicitor Geiierarg argiiiiient for the United States. incident of trade; that what prevents competition does not [540] necessarily injure trade; on the contrary, to restrict competition may benefit trade, that the whole world is now ^•oaning nnder competition; that the hard rule of the sur- vival of the fittest bears heavily upon the mass of the people; that tht^re is a spirit of unrest, of dissatisfaction, and that to avoid the effects of ruinous competition among employers and employes combination is the rule. It may be conceded that the law of the survival of the fit- test is a hard one; that the necessity of competition under exist iu*r conditions presses heavily upon the weak. But, after all, competition is not oidy the life of trade, but the underlying basis of our social and industrial life. There may k^ a better way, bi\.t we have not yet found it. Compe- tition goes along with freedom, with independent action. This country was founded on the principles of liberty and equality. It sought to secure to every citizen an equal chance under the law. That is all the i>eople have demanded or do demand — a fair show in the race of life. Undoubtedlv there is unrest, dissatisfaction, tendencies to anarchv and socialism. hut tlu'se result not from ooinpetition. hut the throttling of conipetition hy trusts and coinhiiiation.s. wliich seek to control production and transportiition and dominate hoth working- men and consumers. Against these the individual citizen protests. He does not demand no competition, hut fair com- petition. Combinations of workingmen acconipanv aggre- gations of capital. Tims the masses are arrayed against the classes. If comhinations of capital were prevented, if com- petition among employers of lalior were enforced, the inde- pendent demand for labor from competing sources would tend to fair wages, such as prices might warrant. IV. It is insisted that this agreement among railroads to prevent competition is not only innocent, but wise and salu- tary. l»eeause in the case of railroads competition is ruinons; that if competition reduces rates below the point of profit for any line, it nuist idtimately l>e bankrupted, for it cannot stop running nor can the capital invested in it be withdrawn. But this argmnent ajiplies to all great modem industries, in manufacture as well as transportation. Capital fixed in a [547 1 valuable plant cannot be withdrawn, nor can labor UNITED STATES V. JOINT TRAFFIC ASSOCIATION. 911 Mr. Solicitor Geneiai's argument for tlie United States, skilled in one uidustry be readily shifted to another. Both manufacturers and workingmen are subject to the contin- gencies of competition. The estal)lishment of a new .)lant with modern improvements may destrov s(.me old one in which both have virtually risked tjieir all. There are sec tions where a number of years ago it was j.rofitable to make iron out of local ores. Millions of dollars were invested in furnaces. Workingmen skilled in iron-making .settled there and with their earnings bought ],ropeity aiu'l built home^.' Subsequently, m other sections more accessible to the markets with cheaper ores, modern furnaces were erected and cheaper iron began to be made. The ol,l furnaw-s could not meet the competition of the new. They had to be abandoned. Was It possible to withdraw the capital invested in them' Aot at all. It was lost. The workingmen, too, suffered They were thrown out of work, ran up debts, lost their homes. Why are not men who put their capital or skill into a manufacturing plant just as much entitled to protection against ruirtous comi3etition as thos,. who jiut their monev or skill in a transportation plant? Why should the railroads be singled out from all the gi-eat interests of this countrv and alone be authorized to combine and prevent ed and managwl in the best way, will get the bulk of the competitive 1648] business, and it ought to. It can afford to carrv the traffic at lower rates than the poorer roads, and it ought "to be allowed to, m the public interest. The i>oorer roads can get 912 111 UNITED STATES REPORTS, 548. Mr. Solicitor Genera I's argiiiueot for the United States. the business by putting themselves in shape to do tlie business. Roads equally fitted to do the work will naturally divide the competitive business in equitable proportions. Competition for traffic by improved service and lower rates will result, naturally, not m ruining the roads, but in building them up. Under eompi'tition, the best road fixes the rate; under com- bination, the poorest road. Is it just to make the public pay rates from Ciiicago to the East fixed by the poorest system protected by the Joint Traffic agi'eenient? \^. It is contended there is no re-traint on trade, because the railways still exist with all their facilities for transporta- tion, ready and willing to serve the public, and with no in- ducement for service weakened; that competition in every desirable aspect remains, the railroads l>eing permitted to compete, but compelled to do it openly, under the provision that a deviation from the association rate cannot l>e made except by resolution of the board of a member and after thirty days' notice to the managers. It is true the railways exist with their original facilities, but the inducement for improvement by cheaper methods of transportation is weakened, the motive for competition re- moved, the means of competition destroyed, and competition itself absolutely forbidden. The natural result of preventing competition is to keep up rates. An excess in rates over what would obtain under competition amounts in effect to a tax on the things tran*^ported. This operates as a burden upon com- merce, and a restraint of trade. If a State should levy a tax on goods transported through it, this court would hold such an act unconstitutional, because it laid a burden upon interstate commerce. Moreover, to in- crease rates and maintain them at a i)oint above what would obtain under competition decre^ises the business of railroads but enhances the cost of it, and thus restrains trade or com- merce. Lower rates mean more traffic, both freight and passenger. Higher rates means less traffic. It may be to the [549] interest of the railroads to increase the rates and lessen the traffic. The profits may be as much or more, but it is done at tlie expense of the public and to the restraint of trade. VI. It is insisted that rates must be stable, not subject to change; that a manufacturer cannot safely make goods nor a UNITED STATES V, JOINT TRAFFIC ASSOCIATION. 913 Mr. Solicitor General's argument for the United States. dealer buy them unless he knows the rates for transporting them to market, and may rely upon these rates continuing; therefore agreements for maintaining rates at a fixed point should be encouraged. It is obvious that the manufacturer or dealer must not only take into account the rates he will have to pay to market, but the rates his competitors from every quarter, by land and water, will have to pay. It is impracticable to attain a cast- iron uniformity of this land, and neither the Interstate Com- merce law nor the Joint Traffic agreement attempts it. Moreover, the agreement does not assume to prevent a change of rates. It virtually takes the power to change from the companies, but gives it to the managers of the association. For natural it substitutes arbitrary change. The protest against any change in rates is a protest against progress. The history of railroads shows a constant tendency towards cheaper rates. This has resulted from improvements forced by competition. The interest of the public lies not in main- taining but in reducing rates, and to effect such reduction competition is essential. yil. Uniformity in rates is declared to be essential, and it is urged that the provisions of the Interstate Commerce law favoring uniformity cannot be enforced except by suppress- ing competition through this agreement; and, to illustrate the need of uniformity, it is said that without it an industry in Michigan equidistant from market with a similar industry in Indiana might be wiped out of existence by reduced rates in favor of the Indiana industry. But neither the Interstate Commerce act nor this agree- ment would prevent the alleged injustice suggested. The case instanced involves a reduction in rates on local traffic, and the agreement only applies to competitive traffic. There is nothing in the agreement to prevent any member of the [560] association from changing the rates from local points; the jurisdiction of the association is restricted to competitive traffic. The uniformity demanded by the Interstate Commerce act is uniformity in the treatment by each railroad of its own patrons. The second section prohibits a common carrier 11808-~voL 1—06 M 58 171 UNITED STATES REPOBTS, 550. Mr. Solicitor General's argument for the United States. from charging one person more than another for the same service; it does not prohibit a carrier from charging one per- son more or less than another railroad charges another person for an equal distance. The third section forbids a common carrier to give any undue preference or advantage to any per- son or locality over any other. But this only applies to the action of a railroad toward the people or the places served by it. And so, too, with reference to the long and short haul provisions in the fourth section. The Interstate Commerce law declares that all charges must be reasonable and just. It provides no means for secur- ing this desideratum except competition. The only method of stifling competition when the law was passed was the pool- ing agreement, and this was forbidden. Competition be- tween railroads was preserved, and to secure the benefits of competition to all patrons of each road it was provided that the competition should be open and above board, so that the people might be advised of the existing rates, and each rail- road was required to treat its patrons with uniformity, with- out discrimination and without preferences. The object of the law was to secure the benefits of compe- tition to all, and not permit a road to charge those shippers for whose patronage it does not have to compete excessive rates, while secretly granting lower rates to those shippers for whose patronage it has to compete. The competition was to be restricted to where it belongs; between the railroads and not between the shippers. If a railroad can afford to carry the freight of one shipper for a certain rate, it can afford to carry for the same rate like freight under similar conditions for every other shipper. VIII. It is- contended that uniform rates should be main- tained on the trunk lines in order to keep the weaker roads in [551] operation for the benefit of the sections through which they run. As I have pointed out, the agreement does not apply to local traffic. As to it, each road has a monopoly, with power to fix its own rates. The agreement applies only to com- petitive traffic between great centres. The argument, then, Amounts to this, that the rates on through traffic are to be icept up in order to preserve the weak roads as going con- UNITED STATES V. JOINT TBAFFJC ASSOCIATION. 915 Mr. Solicitor General's argument for tbe United States, cerns for the benefit of the sections through which they run What is this but to tax the many for the benefit of the few? It IS not the function of Government to neutralize the advantages of locality. The people pay for these and are entitled to them. If I settle in a flourishing region on a good line, I pay for the privilege in the cost of the land, in taxes, etc. If I settle m an undeveloped region on a poor road, I pay httle for either the privilege or the land, and must ex- pect to help bear the cost of development. IX. It is said that the Interstate Commerce act was passed to suppress competition and secure uniformity in rates. ^ It was not passed to suppress competition, but to preserve It and secure its benefits to all. Competition between inde- pendent lines was preserved and uniformity enforced to secure the benefit of this competition to all. Each carrier was required to treat its patrons with uniform fairness, with- out preference and without discrimination. The only effect- ive arrangement used at that time by the trunli lines to stifle competition was the pooling agreement, and this was prohibited. It was recognized that competition would keep the rates reasonable, and the long and short haul provision was intended to secure to all points on each road the benefit of such competition. Unjust discrimination and undue pref- erences by a railroad among its patrons were prohibited. Thus the benefits of open competition were insured to aU. The policy was— among the patrons of each road uniformity^ but between the roads open competition. X. The point is made that railways are public highways, and the furnishing of railway transportation a governmental function; therefore the Government should eliminate the ad- [552] vantage of locality by enforcing absolute uniformity m rates, or permit the railroads to do it by preventing com- petition and maintaining arbitrary rates. It may be conceded that the furnishing of railroad trans- portation is a public function, and therefore the Government may regulate it. Government, state and Federal, has done this, by forbidding the consolidation of competing lines, by prohibiting pooling contracts, and by making illegal' ail agreements in restraint of trade. The absolute uniformity demanded is neither practicable 916 171 UNITED STATES REPORTS, 552. Mr. Solicitor General's argument for the United Stutes. nor desirable. Absolute imiformity, extending to every rate, from every point, on every railroad, means absolute consoli- dation of control and absolutely arbitrary rates, and this is absolutely inconsistent with competition. It admits of no competition. The desirable uniformity is that which goes along with competition, and supplements it, and secures its benefits to all shippers, without distinction. Each railroad should be required to treat its patrons—persons and places — with fairness and equality, without preference or discrimina- tion. It should not be required, however, to treat its ship- pers no better than other lines treat theirs. On tlie contrary, it should be induced to treat its shippers the very best it can, and thereby make it incumbent upon competing lines to treat their shippers as well. It should be induced to do this not only in rates but in service. The rigid, cast-iron, arbitrary rule of absolute unifonnity as between railroads, contended for by Mr. Carter, would logically prevent all competition, whether in rates or st r\ ice. If the railroads are not to be permitted to conibint^ and prevent ruinous conipetitiun, and establish anil maintain rea- sonable rates by arbitrary methods, then, it is said, they nnist either abandon transportation, or consolidate, or persistently violate the law. There is a virtual consolidation of these roads now under the agreement. The public is not interested in consolidation except as it affects competition. Tlie constitution and laws of many States prohibit the consolidation of railroads, but only of competing railroads. Lines which do not compete may con- [55ai solidate, and the public thus gains the benefit of broader and more economical administration. Railroads whicli compete may not consolidate, because it prevents com- petition and keeps up rates. Public policy has demanded the prohibition of the consoli- dation of competing lines; for the same reason Congress enacted the antipooling section of the Interstate Commerce act The pooling of freights and the division of earnings is not bad in itself. It is bad, because used to stifle competi- tion. Equally bad is the Joint Traffic agreement before the court, which operates as effectively as any pooling arrange- ment ever devised. The people have not stopped to inquire ^ UNITED STATES V, JOINT TRAFFIC ASSOCIATION. 917 Mr. Solicitor General's argument for the ITnited States. whether consolidation would result of necessity in unreason- able rates; neither have they stopped to inquire whether pooling would result necessarily in unreasonable rates. It is the tendency, not the absolute result, which has operated to prohibit consolidation, to prohibit pooling, to prohibit con- tracts in restraint of trade. The railroads say that if they are not permitted to prevent competition they will compete and in doing so violate the Interstate Commerce law; that they should be permitted to combine for the purpose of preventing violations of law, even if in doing so competition be prevented. But to prevent competition is in itself to violate the law. Better the chance to violate one law than the certainty of violating another. Better the motive to violate one law than the mandate to violate another. If the ability the railroads employ to circumvent the law were used to observe it, neither this agreement nor the arguments in support of it would be before the court. The railroads promise to obey one law if the court will permit them to violate another. Would they keep the compact, if made ? Respect for law based solely on self-interest is delusive and evanescent. XI. An attempt is made to distinguish this case from the Trans-Missouri case by saying that here the association sim- ply adopted the admitted fair and reasonable rates then in force and filed with the Interstate Commerce Commission bv the companies; while in the Trans-Missouri case the associa- tion was given power to fix rates. But in the Trans-Missouri [554] agreement the association was only given power to fix reasonable rates, and the fact that the rates fixed bv the asso- ciation during its existence were fair and reasonable was ad- mitted. In tl^ Trans-Missouri case^ the association had been dis- solved. The only question was the legal effect of the author- ity conferred by the agreement. If there were no power under the Joint Traffic agreement to change rates, neverthe- less the power to maintain rates arbitrarily would involve authority to keep them up after progress and invention should render them excessive and unreasonable. But in point of fact, as pointed out, the Joint Traffic agreement vests in the association, through the managers, with appeal to the 918 m UNITED STATES REPORTS, 554. Mr. Solicitor General's argument for tbe United States. board of control, the authority to change rates. This author- ity is more coercive than that conferred by the Trans-]^Iis- souri agreement. Under the Trans-Missouri agreement five days' written notice prior to each monthly meeting was required to be given the chairman of any proposed reduction in rates. At each monthly meeting the association voted on all changes proposed. All parties were bound by the decision of the association " unless then and there the parties shall give the association definite written notice that in ten days thereafter they shall make such modification, notwithstanding the vote of the association. . . . Should any member insist upon a reduction of rates against the views of the majority, and if in the judgment of said majority the rates so made affect seri- ously the rates upon through traffic, then the association may, by a majority vote upon such other traffic, put into effect cor- responding rates to take effect upon the same day." More- over, each member of the Trans-Missouri association might, at its peril, make a rate without previous notice to meet the competition of outside lines, giving the chairman notice of its action, so the good faith of the transaction might be passed upon by the association at its next meeting. Thus, under the Trans-Missouri agreement each member might, at its peril, make a rate to meet outside competition, and each member might, upon giving ten days' notice, make an independent rate, notwithstanding the action of the asso- ciation. But under the Joint Traffic agreement no company can [555] deviate from the rates as fixed by the managers, except by a resolution of its board of directors, and thirty days after a copy of such resolution is filed with the man- agers. This absolutely prevents competition, and the inten- tion to prevent competition is plain from the provision tliat "the managers, upon receipt of such notice, ^all act promptly upon the same for the protection of the parties hereto." Mr. Carter, in his argument, explained the operation of this clause. Thirty days' notice of the intention of any company, by resolution of its board, to deviate from the rates fixed by" the association, through its managers, was required in order that the association might have time to UNITED STATES V. JOINT TRAFFIC ASSOCIATION. 919 Mr. Solicitor General's argument for the United States. determine its course of action. If it could meet the rate proposed by the deviating member, it would do so. If it could not, it would take steps, in Mr. Carter's language, " to exterminate " the recalcitrant company. In no other way, according to Mr. Carter, could ruinous competition be pre- vented and the interests of all members of the association protected. XII. It may be conceded that the public along each line is interested in the line getting its fair share of the through traffic and earnings; and this it will get under competition. The local public is not entitled, however, to an arbitrary share of the through traffic and earnings. It has a right to no more than the advantages of the line attract. To give it more is to take what belongs to another line and another section. A prosperous section, with an intelligent, progres- sive population, makes a good railroad, and a good railroad attracts through traffic; and it is not just or right to take this traffic away and give it to a poor road in order to do for it what the public along its line ought to do. XIII. The provisions of the Interstate Commerce law preventing discrimination and undue preferences have been discussed ; they can be enforced without suppressing compe- tition. The tenth article of the Joint Traffic agreement pro- vides that " the managers shall decide and enforce the course which shall be pursued with connecting companies not par- ties to this agreement which fail or decline to observe the rates, fares and rules established under this agreement." and it is [546] contended that this provision is necessary to prevent discrimination against one company and in favor of another by connecting lines ; but a reading of the third sec: tion of the Interstate Commerce act shows that the mischief suggested is fully provided for in its concluding paragraph, which provides that every common carrier shall afford equal facilities for the interchange of traffic and for receiving and forwarding freight or passengers from connecting lines, "and shall not discriminate in their rates and charges be- tween such connecting lines." XIV. It is insisted that if Congress had intended the Anti- Trust law to prohibit every contract in restraint of trade, whether partial or general, reasonable or unreasonable, it 920 m UNITED STATES REPORTS, 5.56. Mr. Solicitor General's argument for the United States. would have used the language " every contract in any re- straint of trade," etc., " is hereby declared to be illegal." It seems to me, and I submit to the court, that the expres- sion " every contract in restraint of trade " is quite as com- prehensive as "every contract in any restraint of trade," and much better language. With due respect to the learned counsel, it might be suggested that if his criticism of the language used be a valid one, why may not the next commen- tator on this section forcefully insist that Congress should have said "every contract in any and every restraint of trade is hereby declared to be illegal " ? XV. The reply to Mr. Phelps' attack upon the constitu- tionality of the Anti-Trust law as construed by this court in the Tram-Missouri case^ is to be found in the argimient of Mr. Carter that railways are public highways, and in the furnishing of public transportation perform in a sense a governmental function. The right of the Government to regulate contracts between carriers and shippers and to place proper restrictions upon contracts among carriers them- selves, in order to protect the interests of the public, as affected by these instrumentalities of commerce, has not heretofore been seriously questioned. The States regulate the construction, maintenance, and operation of railroads, prescribing and enforcing maximum rates, preventing the consolidation of competing lines, and securing to the public the benefit of competition. The doctrine laid down in the case of Munn v. Illinois, 94 [557] U. S. 113, applies. When a man devotes Tiis property to a public use, to that extent he grants the public an interest in that use. The same policy which supports the prohibi- tion against consolidation, and the fifth section of the Inter- state Commerce law forbidding the pooling of freights or the division of earnings, is the justification for the declara- tion that all contracts in restraint of trade shall be deemed illegal. The result of the consolidation, the pooling or the combination in restraint of trade, is beside the question. Congress is entitled to pass judgment upon the tendency of a contract in restraint of trade. If it deems such a contract reprehensible, injurious in its tendencies, it may prohibit UNITED STATES V. JOINT TRAFFIC ASSOCIATION. 921 Mr. Solicitor General's argument for the United States. it, whether the act will result in a particular case in the establishment of reasonable or unreasonable rates. XVI. As to the remedy in the case of an unreasonably low rate» Judge Cooley, in a well-considered opinion, In re Chicago^ St, Paul <& Kansas City Railway^ 2 Int. Com. Com. 231, approved by this court in Interstate Commerce Commis- sion V. Cincinnati^ N, 0, c& Texas Pacific Railway, 167 U. S. 479, 511, held that under the Interstate Commerce law the commission has no power to determine that a rate is un- reasonably low and to order the carrier to refrain from charging such rate on such ground. XVII. As to the remedy in the case of an unreasonably high 7'ate. The common law requires that rates shall be reasonable and fair. So does the Interstate Commerce law. But this is a mere declaration, and there is no adequate remedy to en- force the right. The commission has no power to prescribe a reasonable rate and enforce it, or to declare that a rate is unreasonable and prohibit it. The shipper is therefore left to recover the excess in rate paid. I know of no case where the excess charged over a reasonable rate on interstate commerce has been recovered back. The amount involved in any particular transaction would be small ; it would require years to carry the case through the courts, and no individual shipper would invite the ill will of a powerful railroad by beginning such a contest. [558] Moreover, the man who actually pays the freight is not the man who suffers from the unreasonable charge. Take the case of grain. The farmer sells to the commission merchant. If the rates are excessive, he gets so much less for his grain or the purchaser from the commission merchant pays so much more for it. The commission merchant who pays the freight has no real interest in the charge. Of course this is not always true, but it does apply with respect to the great shipments handled by middlemen. Finally, it is questionable under the Interstate Commerce act whether a suit to recover back an excess paid above a reasonable rate can be maintained, if the rate charged was that fixed in the schedule filed with the commission and pub- lished under the Interstate Commerce law. M2 171 UNITED STATES REPOBTS, 558. Opinion of the Court. Mr, James A, Logan and J/r. John O. Johnson filed a brief on behalf of the Pennsylvania Railroad Company and eight other railroad companies, appellees. Mr. Eohert If. de Forest and Mr. Damd Willcox filed a brief on behalf of the Central Kailroad Company of New Jersey, appellee. Mk. Justice Peckham, after stating the ease, delivered the opinion of the court This case has been most ably argued by counsel both for the Government and the railroad companies. The suit is brought to obtain a decree declaring null and void the agree- ment mentioned in the bill. Upon comparing that agreement with the one set forth in the case of United States v. Trans- Missouri Freight Association, 166 U. S. 290, the great simi- larity between them suggests that a similar result should be reached in the two cases. The respondents, however, object to this, and give several reasons why this case should not be controlled by the other. It is, among other things, said that one of the questions sought to be raised in this case might have been but was not made in the other; that the point therein decided, after holding that the statute applied to rail- [550] road companies as common carriers, was simply that all contracts, whether in reasonable as well as in unreason- able restraint of trade, were included in the terms of the act, and the question whether the contract then under review was in fact in restraint of trade in any degree whatever was neither made nor decided, while it is plainly raised in this. Again, it is asserted that there are differences between the provisions contained in the two agreements, of such a mate- rial and fundamental nature that the decision in the case referred to ought to form no precedent for the decision of the case now before the court. It is also objected that the statute, if construed as it has been construed in the Trans-Missouri case, is unconstitu- tional, in that it unduly interferes with the liberty of the in- dividual and takes away from him the right to make con- tracts regarding his own affairs, which is guaranteed to him by the Fifth Amendment to the Constitution, which provides UNITED STATES V, JOINT TRAFFIC ASSOCIATION. 923 Opinion of tlie Court that " no person shall be . . . deprived of life, liberty or property without due process of law; nor shall private property be taken for public use without just compensation." This objection was not advanced in the arguments in the other case. Finally, a reconsideration of the questions decided in the former case is very strongly pressed upon our attention, be- cause, as is stated, the decision in that case is quite plainly erroneous, and the consequences of such error are far reach- ing and disastrous, and clearly at war with justice and sound policy, and the construction placed upon the Anti-Trust statute has been received by the public with surprise and alarm. We will refer to these propositions in the order in which they have been named. As to the first, we think the report of the Trans-Missouri case clearly shows not only that the point now taken was there urged upon the attention of the court, but it was then intentionally and necessarily decided. The whole foundation of the case on the part of the Government was the allegation that the agreement there set forth was a contract or combina- tion in restraint of trade, and unlawful on that account. If [560] the agreement did not in fact restrain trade, the Gov- ernment had no case. If it did not in any degree restrain trade, it was immaterial whether the statute embraced all contracts in restraint of trade, or only such as were in unreasonable restraint thereof. There was no admission or concession in that case that the agreement did in fact restrain trade to a reasonable degree. Hence, it was necessary to determine the fact as to the char- acter of the agreement before the case was made out on the part of the Government. The great stress of the argument on both sides was un- doubtedly upon the question as to the proper construction of the statute, for that seemed to admit of the most doubt, but the other question was before the court, was plainly raised, and was necessarily decided. The opinion shows this to be true. At page 341 of the report the opinion contains the fol- lowing language : " The conclusion which we have drawn from the examination above made into the owestion before us is that the Anti-Trust act applies to 171 UNITED STATES REPORTS, 560. Opinion of the Court. railroads, and that it renders illegal all agreements which are in restraint of trade or commerce as we have above defined that expres- sion, and the question then arises whether the agreement before us is of that nature. "Does the agreement restrain trade or conmierce in 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 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 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 its direct, immediate and necessaiy effect is [561] to put a restraint upon trade or commerce as described in the act. For these reasons the suit of the Government can be maintahied without proof of the allegation that the agreement was entered into for the purpose of restraining trade or commerce or for maintaining rates above what was reasonable. The necessary effect of the agreement is to restrain trade or commerce, nj matter what the intent was on the part of those who signed it." The bill of the complainants in that case, while alleging an illegal and unlawful intent on the part of the railroad companies in entering into the agreement, also alleged that by means of the agreement the trade, traffic and commerce in the region of country affected by the agreement had been and were monopolized and restrained, hindered, injured and retarded. These allegations were denied by defendants. There was thus a clear issue made by the pleadings as to the character of the agreement, whether it was or was not one in restraint of trade. The extract from the opinion of the court above given shows that the issue so made was not ignored, nor was it assumed as a concession that the agreement did restrain trade to a reasonable extent. The statement in the opinion is quite plain, and it inevitably leads to the conclusion that the ques- tion of fact as to the necessary tendency of the agreement was distinctly presented to the mind of the couR, and was consciously, purposely and necessarily decided. It cannot, therefore, be correctly stated that the opinion only dealt with the question of the construction of the act, and that it was assumed that the agreement did to some reasonable extent restrain trade. In discussing the question as to the proper construction of the act, the court did not touch upon the other UNITED STATES V. JOINT TRAFFIC ASSOCIATION. 925 Opinion of the Court. aspect of the case, in regard to the nature of the agreement itself, but when the question of construction was finished, the opinion shows that the question as to the nature of the agree- ment was then entered upon and discussed as a fact necessary to be decided in the case, and that it in fact was decided. An unlawful intent in entering into the agreement was held im- [562] material, but only for the reason that the agreement did in fact and by its terms restrain trade. Second. We have assumed that the agreements in the two cases were substantially alike. This the respondents by no means admit, and they assert that there are such material and substantial differences in the provisions of the two instru- ments as to necessitate a different result in this case from that arrived at in the other. The expressed purpose of the agreement in this case is, among other things, " to establish and maintain reasonable and just rates, fares, rules and regulations on state and inter- state traffic." The companies agree that the schedule of rates and fares already duly published and in force and authorized by the companies, parties to the agreement, and filed, as to interstate traffic, with the Interstate Commerce Commission, shall be reaffirmed, and copies of all such schedules are to be filed, with the managers constituted under the agreement, within ten days after it becomes effective. The managers may from time to time recommend changes in the rates, etc., and a failure to observe the recommendations is deemed a violation of the agreement. No company can deviate from these rates except under a resolution of its board of directors, and such resolution can only take effect thirty days after service of a copy thereof on the managers, who, upon receipt thereof, " shall act promptly for the protection of the parties hereto." For a violation of the agreement the offending com- pany forfeits to the association a sum to be determined by the managers thereof, not exceeding five thousand dollars, or more upon the contingency named in the rule. So far as the establishment of rates and fares is concerned, we do not see any substantial difference between this agree- ment and the one set forth in the Trans-Missouri case. In that case the rates were established by the agreement, and any company violating the schedule of rates as established 926 111 UNITED STATES REPOBTS, 563. Opinion of tiie Court wnder 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 [o63] this case the companies are bound to charge the rates fixed upon originally in the agreement or subsequently recom- mended by the board of managers, and the failure to observe their recommendations is deemed a violation of the agree- ment. 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 that company is concerned, and the service of a copy thereof upon the board of managers as al- ready stated. This provision for changing rates by any one company is absent from the other agreement. It is this pro- vision which is referred to by counsel as most material and important, and one which constitutes a material and im- portant distinction between the two agreements. It is said to b© designed solely to prevent secret and illegal competition in rates, while at the same time providing for and permitting open competition therein, and that unless it can be regarded m restraining competition so as to restrnin 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 the establishment and maintenance of reasonable and just rates and a general uni- formity 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 contem- plated. In order, therefore, not only to prevent secret compe- tition, but also to prevent any competition whatever among the companies parties to the agreement, the provision is there- in 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 uniformity of rates as against the offending com- UNITED STATES V, JOINT TKAFFIC ASSOCIATION. 927 Opinion of tlie Court pany upon pain of an open, rigorous and relentless war of competition against it on the part of the whole association. [5G4] 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 was proposing, and lower than it would desire or could afford, and such a prospect would be generally suffi- cient to prevent the inauguration of the change of rates and the consequent competition. 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 agree- ment 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 mem- bers more than others, to endeavor to furnish reasonable protection to such members, presumably by allowing them to change rates so as to meet such competition, or by recom- mending such fierce competition as to persuade the recalci- trant to fall back into line. 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 other- wise 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 so arranged as to give proper rep- resentation to each company, and no soliciting or contract- 928 171 UNITED STATES REPORTS, ^565. Opinion of tlie Court. mg passenger or freight agency can be maintained by any of the [5651 companies, except with the approval of the mana- gers. They are also charged with the duty of securing to each company, party to the agreement, equitable proportions of the competitive traffic covered 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 effect- ive in that way as would be a provision in the agreement prohibiting in terms any competition whatever. It is also said that the agreement in the first case con- ferred upon the association an unlimited power to fix rates in the first instance, and that the authority was not confined to reasonable rates, while in the case now before us the agreement starts out with rates fixed by each company for itself and filed with the Interstate Commerce Commission, and which rates are alleged to be reasonable. The distinc- tion is unimportant. It was considered in the other case that the rates actually fixed upon were reasonable, while the rates fixed upon in this case are also admitted to be reason- nble. By this agreement the board of managers is in sub- stance and as a result thereof placed in control of the busi- ness and rates of transportation, and its duty is to see to it that each company charges the rates agreed upon and re- ceives its equitable proportion of the traffic. The natural and direct effect of the two agreements is the same, viz., to maintain rates at a higher level than would otherwise prevail, and the differences between them are not sufficiently important or material to call for different judg- ments in the two cases on any such ground. Indeed, coun- sel for one of the railroad companies on this argument, in speaking of the agreement in the Trans-Missouri case, says of it that its terms, while substantially similar to those of the agreement here, were less explicit in making it just and reasonable. Eegarding the two agreements as alike in their main and material features, we are brought to an examination of the question of the constitutionality of the act, construed as it has [566] been in the Tram-Missouri case. It is worthy of UNITED STATES V. JOINT TRAFFIC ASSOCIATION. 929 Opinion of the Court, remark that this question was never raised or hinted at upon the argument of that case, although, if the respondents' present contention be sound, it would have furnished a con- clusive objection to the enforcement of the act as construed. The fact that not one of the many astute and able counsel for the transportation companies in that case raised an ob- jection of so conclusive a character, if well founded, is strong evidence that the reasons showing the invalidity of the act as construed do not lie on the surface and were not then apparent to those counsel. The point not being raised and the decision of that case having proceeded upon an assumption of the validity of the . act under either construction, it can, of course, constitute no authority upon this question. Upon the constitutionality of the act It IS now earnestly contended that contracts in re- straint of trade are not necessarily prejudicial to the secur- ity 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 restrain trade in some degree, renders it in- jurious or prejudicial 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 sup- ported only as an exercise of the police power, and that the constitutional guarantees furnished bv the Fifth Amend- ment secure to all persons freedom in the pursuit of their vo- cations and the use of their property, and in making such contracts or arrangements as may be necessary therefor. In dwelling upon the far-reaching nature of the language used m the act as construed in the case mentioned, counsel con- tend that the extent to which it limits the freedom and de- stroys the property of the individual can scarcely be exag- gerated, and that ordinary contracts and combinations, which are at the same time most indispensable, have the effect of somewhat [567] restraining trade and commerce 11808~voL 1—06 M- -59 930 ni UNITED STATES REPORTS, 567. Opinion of the Court. although to a very slight extent, but yet, under the con- struction adopted, they are illegal. As examples of the kinds of contracts which are rendered 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 for- mation of a corporation to carry on any particular line of business by those already engaged therein ; a contract of part- nership or of employment between two persons previously en- gaged in the same line of business ; the appointment by two producers of the same i>erson to sell their goods on commis- sion ; the purchase by one wholesale merchant of the product of two producers; the lease or purchase by a farmer, manu- facturer 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 decree. 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. Nevertheless, we might say that the for- mation of corporations for business or manufacturing pur- poses 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 pro- ducers 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 withdrawal from business of any farmer, merchant or manufacturer, re- strained commerce or trade within any legal definition of that term; [568] and the sale of a good will of a business with an accompanying agreement not to engage in a similar busi- UNITED STATES V. JOINT TRAFFIC ASSOC^TATION. 931 Opinion of the Court. ness was instanced in the Trans- Missouri case as a contract 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. In Hopkins v. 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, and that to treat the act as con- demning all agi-eements under Avhich, as a result, the cost of conducting an interstate commercial business may be in- creased, would enlarge the application of the act far beyond the fair meaning of the language used. The effect upon in- terstate commerce must not be indirect or incidental only. An agreement entered into for the purpose of promoting the legitimate business of an individual or corporation, with no purpose to thereby affect or restrain interstate commerce, and which does not directly restrain such commerce, is not, as we think, covered by the act, although the agreement may indi- rectly and remotely affect that commerce. We also repeat what is said in the case above cited, that " 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, directly or remotely, some bearing upon interstate commerce, and possibly to restrain It To suppose, as is assumed by counsel, that the effect of the decision in the Trans-MissouH case is to render illegal most business contracts or combinations, however indispensa- ble and necessary they may be, because, as they assert, they all restrain trade in some remote and indirect degree, is to make a most violent assumption and one not called for or justified by the decision mentioned, o» by any other decision of this court. 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 [669] of interstate commerce, a contract or combination be- tween competing railroad corporations entered into and formed for the purpose of establishing and maintaining inter- 932 111 UNITED STATES KEPORTS, 569. Opinion of the Court state rates and fares for the transportation of freight and passengers on any of the railroads parties to the contract or combination, 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 com- modities, 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. If 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 anions: the railroad coni})anies the rates and fares would be Ic-s ihau they are under such contract or coinbiuation, that is not by rea- son of any provision of th«* act wliich itself lowers rates, but only becaiTse the railroad companies would, a : it is urged, voluntarily and at once inaugurate a war of coni]x»tition amonsr themselves, and therebv themselves red net* their rates and feres. Has not Congress with regard to interstate conunerce and in the course of regulating it, in the case of railroad corpora- tions, the power to say that no contract or combination shall be legal which shall restrain trade and coinmercc by shutting out the operation of the general law of competition? We think it has. As counsel for the Traffic Association has truly said, the ordinary highways on land have generally been established and maintained by the public. When the matter of the building of railroads m highways arose, a question was pre- sented whether the State should itsflf build them or permit others to do it. The State did not build them, and as their building required, among other things, the appropriation of [570] land, private individuals could not enforce such ap- propriation 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 UNITED STATES V. JOINT TRAFFIC ASSOCIATION. 93^ Opinion of the Court. grant the right of appropriation unless the use to which the land was to be put was a public one. Taking land for rail- road purposes is a taking for a public purpose, and the fact that it is taken for a public purpose is the sole justification for taking it at all. The business of a railroad carrier is of a public nature, and in performing it the carrier is also per- forming 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 trans- portation of passengers and freight, is a part of trade and commerce, and when transported between States such com- merce becomes what is described as interstate, and comes, to a certain extent, under the jurisdiction of Congress by vir- tue of its power to regulate commerce among the several States. Where the grantees of this public franchise are competing railroad companies for interstate commerce, we think Con- gress is competent to forbid any agreement or combination among them by means of which competition is to be smothered. Although the franchise when granted by the State becomes by the grant the property of the grantee, yet there are some regulations respecting the exercise of such grants which Con- gress may make under its power to regulate commerce 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 contracts relating to interstate commerce, which Avould extinguish all competition between otherwise competing railroad corpora- tions, and which would in that way restrain interstate trade or commerce. We do not think, when the grantees of this public franchise are competing railroads seeking the busi- ness of transportation of men and goods from one State to another, that ordinary freedom of contract in the use and management of their property requires the right to combine ' [571] as one consolidated and poAverful association for the purpose of stifling competition among themselves, 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 934 111 UNITED STATES REPORTS, 571. Opinion of the Court. the time l>e not more than are reasonable. 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 ers of that association for selling live stuck is not in restraint of Interstate commerce, or a violatitm of the act of July 2. 18:»0, to protect commerce from un- lawful restraints.] [A commission agent wJiu sells cattle at their place of destination, which are sent from an:»th -r state to b;» sold, is nat engaged in in- teretate commerce; nor is his agreement with othei-s in the same business, as tt» the c anuiissions ta b^ charged for such sales, void as a contract in restraint of that commerce.] |lE order to come within the provisions of the statute, the direct effect of an agreement or combinatiiin must be in restraint of trade or commerce among tlu' s«;veral states or with foreign nations.] [Restrictions on sending prepaid telegrams or telephone messages, made by a by-law of a live-stock exchange, when these restrictions are merely for the regulation of the business of the members, and do not affect the business of the telegraph company, are not void as regulations of interstate commerce.] [The business of agents in soliciting causignments of cattle to com- mission merchants in another state for sale, is not interstate com- merce ; and a by-law of a stock exchange restricting the number of solicitors to three does not restrain that commerce, or violate the act of Congress,] [The fact thait a state line runs through stock yards, and that sales may be made of a lot of stock in the yards which may be partly In one state and partly in another, has no effect to make the business of selling stock interstate commerce.] [A combination of commission merchants at stock yards, by which they refuse to do business with those who are not members of their association, even if it is illegal, is not subject to the act of Congress of July 2. 18110, to protect trade and commerce, since their business is not interstate commerce.] This suit was commenced by the United States attorney for the District of K ansas, acting under the direction and by « The following paragraphs inclosed in brackets are taken from the syllabus to this case in the U. S. Supreme Court Reports, Book 4:^, p. 290. Copyrighted, 1899, by The Lawyers' Co-Operative Publishing Co. HOPKINS V. UNITED STATES. Statement of the Case. 94B the authority of the Attorney General of the United States, against Henry Hopkins and the other defendants, residents of the State of Kansas and members of a vohintary unin- corporated association, known and designated as the Kansas City Live Stock Exchange. The purpose of the action is to obtain the dissohition of the exchange, and to perpetually enjoin the members from entering into or from continuing in any combination of a like character. As a foundation for the relief sought it was alleged in the bill that the members of this association, known as the Kansas City Live Stock Exchange, have adopted articles of as- sociation, rules and by-laws which they have agreed to be bound by ; that the business of the exchange is carried on and conducted by a board of directors at the Kansas City stock yards, which are situated partly in Kansas City in the State of Missouri and partly in Kansas City in the State of Kansas, the building owned by the stock yards company being located one half of it in the State of Missouri and the other half in the State of Kansas, and half of the defendants have offices and transact business in these stock yards and in that part of the building w^hich is within the State of Kansas, and the other half in that part of the building which is in the State of Missouri; that the Kansas City Stock Yards Company is a corporation owning the stock yards, where the business is done by the members of the exchange ; that substantially all the business transacted in the matter of receiving, buy- ing, selling and handling their live stock at Kansas City is carried on by the defendants herein and by the other members of the exchange as commission merchants, and that large numbers of the live stock, consisting [580] of cattle and hogs and sheep bought and sold and handled at the stock yards by the defendants and their fellow members in the exchange, are shipped from the States of Nebraska, Colorado, Texas' Missouri, Iowa, and Kansas, and the Territories of Okla- homa, Arizona and New Mexico; that when this stock is received at the stock yards it is sold by the defendants, members of the exchange, to the various packing houses situ- ated at Kansas City, Missouri, and Kansas City, Kansas, and it is also sold for shipment to the various other markets, par- ticularly Chicago, St. Louis and New York ; that vast numbers 171 UNITED STATES REPORTS, 580. Statement of the Case. of cattle, hogs and other live stock are received annually at the stock yards and handled bv the members of the exchange. The bill also alleges that large numbers of the live stock sold at the stock yards by the defendants are incumbered by mortgages thereon, executed by their owners in the various States and Territories, which mortgages have been given to various defendants as securitv for monev advanced bv them to the different owners to enable them to feed and j.n^pare the cattle for market, and that w^hen the live stock so mortgaged are ready for shipment, they are sent to the defendants who have advanced the money and received the mortgages, and on the sale of the stock the amount of these advances and in- terest is deducted from the proceeds of the sale of the cattle by the connnission merchants owning the mortgages; that ninety per cent of the members of the exchange make such advances, and that the market is largely sustainci] b\ means of the money thus advanced to the cattle raisers by the de- fendants, and that Kansas City is the only place for many miles about, which constitutes an available market for the purchase and sale of live stock from the large territory located in the States and Territories already named ; that it is the custom of the owners of the cattle, many of them living in different states, and who consign their stock to the Kansas City stock yards for sale to draw drafts on tlie commission merchants to whom the live stock is consigned, which the consignors attach to the bill of lading issued by the carrier, and the money on these drafts is advanced by the local banks throughout the western States [581] and Territories. These drafts are paid by the consignees and the proceeds remitted to the various owners through the banks. The business thus conducted is alleged to be interstate com- merce, and it is further alleged that if the i^erson to whom the live stock is consigned at Kansas City is not a member of the exchange, he is not permitted to and cannot sell or dis- pose of the stock at the Kansas City market, for the reason that the defendants, and all the other commission merchants, members of the exchange, refuse to buy live stock or in any manner negotiate or deal with or buy from a person or com- mission merchant who is not a member of the exchange, and thus the owner of live stock shipped to the Kansas City mar- HOPKINS V, UNITED STATES. Statement of the Case. 945 ket is compelled to re-ship the same to other markets, and by reason of the unlawful combination existing among the defendants and the other members of the exchange the owner is prevented from delivering this stock at the Kansas City stock yards, and the sale of stock is thereby hindered and delayed, entailing extra expense and loss to the shipper, and placing an obstruction and embargo on the marketing of all live stock shipped from the States and Territories to the Kansas City market which is not consigned to the stock yards company or to the defendants, or some of them, mem- bers of the stock exchange. It is alleged that the defendants, as members of the ex- change, have adopted certain rules, among them being rules 9 and 16, which are particularly alleged to be in restraint of trade and commerce between the States, and intended to create a monopoly, in contravention of the laws of the United States in that behalf. Kule 9 provides as follows : "Section 1. Commissions charged by members of this association for selling live stock shall not be less than the following named rates." Sections 2, 3, 4, 5, 6 and 7 relate to the amounts of such commissions, and it is alleged that in some instances the com- missions are greater than had theretofore been paid. Section 8 permits the members to handle the business of f582] non-resident commission firms when the stock is con- signed directly to or from such firm, at half the rates fixed by the rule, provided the non-resident commission firms are established at the markets named in the section. Section 10 prohibits the employment of any agent, solic- itor or employe except upon a stipulated salary not contin- gent upon the commissions earned, and it provides that not more than three solicitors shall be employed at one time by a conmiission firm or corporation, resident or non-resident of Kansas Citv. Section 11 forbids any member of the exchange from send- ing or causing to be sent a prepaid telegram or telephone message quoting the markets or giving information as to the condition of the same, under the penalty of a fine as therein 1180&— VOL 1— urt to protect trade and commerce against unlawful restraints and monopoHes," commonly spokefof as the Anti-Trust act. 26 Stat 209. The act has reference only to that trade or commerce which exists, or may exist, among the several States or with foreign nations, and has no application whatever to any other trade or commerce. The question meeting us at the threshold, therefore, in this case is, what is the nature of the business of the defendants, and are the by-laws, or any subdivision of them above re- ferred to, in their direct effect in restraint of trade or com- merce among the several States or with foreign nations; or does the case made by the bill and answer show that any one of the above defendants has monopolized, or attempted to monopolize, or combined or conspired with other persons to monopolize, any part of the trade or commerce among the several States or with foreign nations! [S871 That part of the bill which alleges that no one is permitted to do business at the cattle market at Kansas City unless he is a member of this exchange, does not mean that there is any regulation at the stock yards by which one who is not a member of the exchange is prevented from doing business, although ready to pay the established charges of the stock yards company for its services; but it simply means that by reason of the members of the exchange re- fusing to do business with those who are not members the non-member cannot obtain the facilities of a market for his cattle such as the members of the exchange enjoy. It is un- necessary at present to discuss the question whether there is any illegality in a combination of business men who are members of an exchange not to do business with those who are not members thereof, even if the business done were in Wgard to interstate commerce. The first inquiry to be mj»de is as to the character of the business in which defendants are engaged, and if it be not interstate commerce, the validity of this agreement not to transact their business with non- members does not come before us for decision. We come, therefore, to the inquiry as to the nature of the business or occupation that the defendants are engaged in. Is it interstate commerce in the sense of that word as it has HOPKINS V, UNITED STATES. 951 Opinion of the Court been used and understood in the decisions of this court? Or is it a business which is an aid or facility to commerce, and which, if it affect interstate commerce at all, does so only in an indirect and incidental manner. 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 [588] of the business itself. The business of defendants 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 con- signed to some of them for the purpose of sale, and the ren- dering of an account of the proceeds arising therefrom. Tlie sale or purchase of live stock as commission merchants at Kansas City is the business done, and its character is not altered because 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, pro cured through the services of one of the defendants at the Kansas City stock yards, is not the substantial factor in the case. The character of the business of defendants must, in this case, be determined by the facts occurring at that city. If an owner of cattle in Nebraska accompanied them to Kansas City and there pel^sonally employed one of these defendants to sell the cattle at the stock yards for him on commission, could it be properly said that such defendant in conducting the sale for his principal was engaged in inter- state conunerce? 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 com- merce? We think not. On the contrary, we regard the •tDZ 171 UNITED STATES REPORTS, 588. Opinion of the Ck^nrt 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 services relating to the terms upon which they will render them is not a con- tract in restraint of interstate trade or commerce. Is 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 c«n,tlle 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 Kai'i-as [589] 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 con- tract for the services cannot alter the nature of the services themselves. If the person, under the circumstances stated, who makes a sale of the cattle for the owner by virtue of a personal employment at Kansas City, is not engaged in inter- state commerce when he makes such sale, 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 fo examine with some detail the nature of the defendants business. It is urged that they are active promoters of the business 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 HOPKINS V, UNITED STATES. Opinion of the Conrt 953 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 [590] of interstate trade or commerce because it 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 de- fendants, we must keep our attention upon the real busi- ness transacted by them, and in regard to which the section 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 busi- ness 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 send- ing outside the city, to cattle owners, to urge them by dis- tinct 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 themselve or by their agents travel in order to thereby secure the business. They do not purchase the cattle themselves; they. do not trans- port them. They receive them at Kansas City, and the com- plaint made is in regard to the agreements for charges for the 954 m UNITED STATES REPOBTS, 590. Opinion of the Court services at that point in selling the cattle for the owner. Thus everything at last centres at the market at Kansas City, and the charges are for services there, and there only, per- formed. The selling of an article at its destination, which has been ient 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 commerce, and a [5911 combination m 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 frim 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 theiriselves engaged in that commerce, or that their agreements among each other relative to the compensa- tion to be charged for their services are void as agreements made in restraint of interstate trade. The commission agent in selling the cattle for their owner simply aids him in find- ing 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 necessarily a violation of the act, although such agreements may undoubtedly affect that commerce. The charges of the agent on account of his service? 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 be- tween different States are 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, in- terstate commerce, although the cattle may have come from HOPKINS V. UNITED STATES. 955 Opinion of the Court. another State. Charges for services of this nature do not immediately touch or act upon nor do they directly affect the subject of the transportation. Indirectly and as an incident, they may enhance the cost to the owner of the cattle in find- ing a market, or they may add to the price paid by a pur- chaser, 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 [592] 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. 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. Charges for such facilities as we have already mentioned are not a restraint upon that trade, although the total cost of marketing a subject thereof may be thereby increased. Charges for facilities furnished have been held not a regulation of commerce, even when made for services rendered or as compensation for benefits conferred. Sands v. Manistee River Improvement Co,^ 123 U. S. 288; Monongahela Navigation Co. v. United States, 148 U. S. 312, 329, 330; Kentucky c& Indiana Bridge Com^ pany v. Louisville d:c. Railroad, 37 Fed. Rep. 567. To treat as condemned by the act all agreements under which, as a result, the cost of conducting an interstate com- mercial business may be increased would enlarge the applica- tion of the act far beyond the fair meaning of the language used. There must be some direct and immediate effect upon interstate commerce in order to come within the act. The State may levy a tax upon the earnings of a commission mer- chant which were realized out of the sales of property be- longing to non-residents, and such a tax is not one upon in- terstate commerce because it affects it only incidently and remotely although certainly. Ficklen v. Shelby County Tax- ing District, 145 U. S. 1. Many agreements suggest them- selves which relate only to facilities furnished commerce, or else touch it only in an indirect way, while possibly enhanc- ing th^ 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 956 Itl UNITED STATES KEPORTS, 539. Opinion of tlie Court in their effect operate in furtherance and in aid of conunerce by providing for it facilities, conveniences, privileges or services, but which do hot directly relate to charges for ii% transportation, nor to any other form of interstate 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. [639 J It is not difficult to imagine agreements of the charac- ter above indicated. 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 reception. Would an agreement among the landowners along the line not to lease their lands for less than a certain sum be a contract within the statute as being in restraint of inter- state trade or commerce t Would it be such a contract even if the lands, or some of them, were necessary for use in furnish- ing the cattle with suitable accommodations? Would an agreement between the dealers in com at some station along the line of the road not to sell it below a certain price be cov- ered by the act, because the cattle must have corn for food f Or would an agreement among the men not to perform the service of watering the cattle for less than a certain compen- sation come within the restriction of the statute? Suppose the railroad company which transports the cattle itself fur- nishes the facilities, and that its charges for transportation are enhanced because of an agreement among the landowners along the line not to lease their lands to the company for such purposes for less than a named sum, could it be successfully contended that the agreement of the landowners among them- selves would be a violation of the act as being in restraint of interstate trade or commerce? Would an agreement bstween builders of cattle cars not to build them under a certain price be void because the effect might be to increase the price of transportation of cattle between the States ? Would an agree- ment 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 agree- ment the expense of sending the horses from one State to an- HOPKINS.t;. UNITED STATES. Opinion of the Court 957 eculator at the Kansas City stock yards unless said buyer or speculator is a member of the Traders' Live Stock Exchange, and these defendants (and each of them), unlawfully and oppressively refuse to purchase cattle, or in ANDERSON V. UNITED STATES. Statement of tb^ Caso. 971 any manner negotiate or deal with or buy from any commis sion merchant who shall sell or purchase cattle from any specu- lator at the said Kansas City stock yards who is not a member of the said Traders' Live Stock Exchange; that by and through the unlawful agreement, combination and con spiracy of these defendants the business and traffic in cattle at the said Kansas City stock yards is interfered with, hindered and restrained, thus entailing extra expense and loss to the owner, and placing an obstruction and embargf) on the marketing of cattle shipped from the States anc^ Terri- tories aforesaid to the Kansas City stock yards." It is further alleged that, acting in pursuance of the un- lawful combination above descril^ed, the board of directors of the exchange have imposed fines upon certain members of the exchange " who had traded with persons, speculators upon the markets, who were not members of the said live stock exchange, and within three months last past have imposed fines upon members of said live stock exchange who have traded with commission firms at said Kansas City stock yards [608] which said commission firms had bought from, and sold cattle to speculators upon said market who were not members of the said live stock exchange." It Avas further stated in the bill that in carrying out the purposes and aims of this exchange and by the conduct of its members engaged in this alleged combination, conspiracy and confederation, they were acting in violation of the laws of the United States, and particularly in violation of section 1 of the act of Congress, approved July 2, 1890, c. 647, entitled "An act to protect trade and commerce against unlawful restraints and monopolies," 26 Stat. 209, and in the prosecu- tion of this unlawful combination they had agreed to hinder and delay the business of buying and selling cattle at the market named and had confederated together in restraint of trade and commerce between the States, and that tiie object of the defendants in organizing the exchange was to prevent the sale by any commission merchant at the Kansas City stock yards of any cattle to any person who might be a bujer and speculator upon the market who is not a member of the exchange. Accompanying this bill were several affidavits of indi- 972 171 UNITED STATES KEPOETS, 608. Statement of the Case. viduals not members of the exchange, but who were tradeis or speculators at the stock yards, and those persons said that they were acquainted with the association in question and with the officers and members, and that they did everything in their power to prevent other persons who were not members from trading at the stock yards, and a number of instances were given in which the affiants who were not members of the exchange were endeavoring to do business with commis- sion merchants and others at the exchange in question, when the affi|nts were notified that they could not continue in busi- ness unless they became members of the association, and where partnerships were engaged in business where one partner was a member of the association, the partner who was a member was notified that he could not continue in the partnership business with the other unless such other also became a mem- ber; that they had attempted to buy cattle from a great many commission firms and from their salesmen at these stock yards, f 609] but as soon as they went into the yards where the cat- tie were that were consigned to commission firms and at- tempted to purchase them, some of the defendants would appear, call the salesman aside, and, after having a conversa- tion with such salasman, the latter would invariably return to affiant and say that he could not price cattle to the affiant or sell the same to him, as he had been warned by members of the exchange not to do so ; that the Traders' Live Stock Ex- change would not permit other traders and speculators upon the market, and that the exchange does not permit commis- sion firms at the stock yards to sell cattle consigned to them to any trader or speculator upon the market who is not a mem- ber of the exchange, and that commission firms had been notified by the officers of the stock exchange not to sell to speculators on the market who were not members of the Live Stock Exchange, and where commission firms sold cattle to traders and speculators upon the market who were not mem- liers of the exchange, the association and members thereof would boycott the commission firm making such sales, and refuse to purchase any cattle from them, and refuse to go into the lots and look at cattle which had been consigned to them. Upon the bill and affidavits application was made to the Circuit Court for the Western Division of the Western Dis- ANDERSON V. UNITED STATES. Statement of the Case. 973 irict of Missouri for an injunction as prayed for in the bill, in opposition to which application various affidavits were read on the part of the defendants, and copies of the articles of association and by-laws of the exchange were attached to the affidavit of the president of the exchange and read on the motion. Among other affidavits was that of the general superintend- ent of the stock yards company, who said that he had known the organization, the Traders' Live Stock Exchange, since its formation, and that it had been a benefit to the live stock market at Kansas City by furnishing constant buyers for cat- tle shipped to the market, no matter how large the receipts for any one day or series of days might be, and also by raising the standard of business integrity among its members, because it required every member to comply with his business promises 1 610] and verbal agreements; that no embargo was placed upon any one purchasing or desiring to purchase cattle at the yards, but a free and open market was oflPered to all buyers and sellers; that the members of the organization were en- gaged in the business of buying and selling cattle on the mar- ket, and were competitors among and against each other; that their organization did not restrain or interfere with interstate or local commerce, and the members did not monop- olize or attempt to monopolize the business of buying and selling cattle at Kansas City, nor did the organization in any manner tend to limit or decrease the number of cattle mar- keted at Kansas City, but that it had the contrary effect; that about eighty-five per cent of the total receipts for the years 1895, 1896 and 1897 at the Kansas City market of cattle had l:>een billed to the Kansas City market alone for purposes of sale there. Other affidavits were presented to the same effect. Also the affidavit of the president of the exchange. The president denied all allegations in relation to conspiracies to prevent other persons than members of the exchange from buying and selling cattle upon the Kansas City market, and on the con- trary alleged that in buying cattle the defendants were in com- petition with each other, with the representative buyers of all the packing houses, with the representatives of the various commission merchants who buy constantly on orders from a rought this action against the Carter-Crume Company, a West Virginia cor- poration, the National Mercantile Company, an Ohio coriwration, and the Crume & Sefton Manufacturing Company, another West Virginia corporation, to recover the sum of $9,000, whifh lie claimed bad inured to htm under the guaranty of the Carter-Crume Company that the dividends upon certain stock, sold to him by contract between the National Mercantile Company and -himself, should amount to the sum of 19,000 for the year then next eusuinp. The National Mercantile Company demurred to the petition, and, the demurrer being sustained, the case was dismissed as to that company. The Crume & Sefton Manufacturing Company dropped out of the case by consent of pnrtiea The Carter-Crume Company answerwl the petition, and the plaintiflT relied. As no question arose upon the pleadings, and none of the errors assigned has relation thereto, it is unnecessary to give any de- tailed statement thereof. The only riuestlons involved are such as arose upon the trial of the case, and they are based entirely upon the testimony. The facts as they appeared upon the trial were substan- tSiilly these: The plaintiff. Cravens, was, and for some time had beim, engaged in manufacturing wootlen dishes and dish machines at Paducah, Ky., at the time of the making of the wntract of gimrantj', which was on the 28th day of August, 1890. At that time tliere were also a num- ber of parties engaged in the same kind of business at various other places scattered throughout the United States, principally in the north- em portion thereof. One of these was the Carter-Cnnne Company, wlilch, by its charter, was required to establish its principal office at Niagara Falls, N. Y. The president and secretary kept their offices at that place, but the vice-president and manager had offices at Day- ton, Ohio. Another of such manufacturers was tlie Crume & Sefton Manufacturing Company, the locality of whose principal office is not stated, but it appears to have been doing business at Dayton, Ohio. The National Mercantile Company was an Ohio corporation, having its principal office at Dayton, the majority of the stock in which was owned by parties largely interested in the other two companies just mentioned. William E. Crume, of the Carter-Crume Company, and John C. Crmne, of the Crume & Sefton Company, were charter mem- l)ers thereof. William E. Crume was the secretary, and appears to have been largely influential in the direction of the management of the National Mercantile Company. He was also vice president of the Carter-Crume Company, and managed its affairs at Dayton, Ohio. The business for which the National Mercantile Company was incor- CRAVENS V. CARTEB-CRUME CO. Statement of the Case. 1^85 porated is thus set forth in the third article of incorporation : " Said corporation is formed for the purpose of buying and selling and deal- ing in wooden ware and grocers' novelties." It was not a manufac- turer. This corporation appears to have been formed for the purpose of creating a common controlling liead, into connection with which the various manufacturers of wooden dishes throughout the country should, as far as possible, be brought, whereby the output and safe of their manufactures should he controlled in respect to quantity and price. The plaintiff, Cravens, after some preliminary negotiations with the parties representing the corporations doing business at Day- ton, as above stated, went there on the date above mentioned, August 28, 1806, for the purpose of meeting and conferring with those parties and others [481] interested in the n;anufacture of wooden dishes and dish machines. A considerable number of such persons from different places in the country, representing about 80 per cent, of the entire output of wooden dishes in the country, convened there that day, and a meeting was held, which the plaintiff attended, for the purpose of effecting a combination whereby the output of their goods should be restricted and prices maintained. This plan involved the making of contracts by the manufacturers with the National Mercantile Com- pany of a kind similar to that hereinafter stated between the plaintiff and the National Mercantile Company. Having taken some of the stock, the plaintiff was made a director of that company on that day. The following is an extract from his testimony, as found in the bill of exceptions: ^' Q. Mr. Cravens, you were contemplating that deal before that? A. I was contemplating a deal with the National Mercantile Company. Q. You went down to Dayton for the purpose of getting into that deal? A. I didn't know. I was asked to go and attend a meeting. Q. In what way? A. A m?eting of the dif- ferent manufacturers. Q. How much of the output of the country was represented at that time? A. I could not say. Q. Have yoii no idea? A. (No response.) Q. What was the cbject of tlie meet- ing, as stated to yon? A. Mr. Crume had l)een to see me; wanted me to go into the National Mercantile Ccmpauy. He wanted me to put my factory in. My factory would represent so much stock. My dividend, he said, would amount to six thousjind dollars or move. I refused to do it. I told him that I would if Carter-Crume Com- pany would guaranty me nine thousjiiul dollars. I would close mv factory, and not run it at all. Q. You were made director of the National Mercantile Company? A. Yes, sir. Q. What was the object of that company, as you understood as a director? A. W^ell, I saw- that they were then working to get all these factories in line. Q. For what purpo.se? A. They wantey, and to be made for. the party of the first part shall not become the property of the party of the first part until they are loaded on board cars oV vessel, and receipted for by the transportation company. " (8) It is further agreed that the party of the second part shall make a weekly factory report to the party of the first part : said rei)ort to be made out on the Monday following the close of each week, and mailed to the ofiice of the first party. This report to contain a record of the quantity of each size dish made and shipped for the week, and quantity on hand at the end of each week. These reports to be made out on report blanks furnished by the party of the first part. " (9) The partj' of the second part agrees to furnish wood dishes additionally in proportion to ai>ove-named quantity, at the same prices, and upon the conditions, herein named, if called to do so by the party of the first part. CRAVENS V. CARTER-CRUME CO. Statement of the Case. 987 "(10) Where the words 'wood dishes' are used herein, it is understood that wire-end wood dishes are meant. "August 28, 1895. "The National Mercantile Company, " By W. E. Crume, Scc'y. " By Charles Cravens & (Do." SUPPLEMENTARY AGREEMENT. " Between the National "Mercantile Company of Dayton, Ohio, party of the first part, and Charles Cravens & Co., party of the second part to be attached to and become a part of an original agreement between the above parties, dated August 28, 1895: " (1) Party of the second part, being desirous of obtaining forty- nine shares of the capital stock of the National Mercantile Company, hereby agrees to pay for the same five hundred dollars (.$500). to be paid for in wood dishes shipped to the order of the party of the first part, all to be of first quality, and at the prices named vk the original agreement of August 28, 1895. " (2) The value of said dishes to be placed to the credit of the second party on the books of the company, representing its shares in the capital stoclv of the company. " (3) Said quantity of dishes in value to be furnished by the party of the second part before the party of the first part shall be required to pay cash for dishes, as specified in section 5 of the original agree- ment. " (4) It is agreed, upon the expiration of this agreement or any renewal thereof, that the share of assets of the company, as represented by the shares of stock held by the party of the second part, shall be paid over to the party of the second part.. [483] "(5) This agreement to remain "in force and effect during the continuance of the contract between the parties hereto of even date herewith. "The National Mercantile Company. " By W. E. Crume, Secretary. " By Charles Cravens & Co. " It is hereby agreed, by tlie parties hereto, that the Carter-Crume Company, a corporation under the laws of West Virginia, agrees to assume, and does hereby assume, to make the above quantity of wood dishes at the prices and upon the conditions above named. " Dated August 28, 1895. "The Carter-Crume Company, "By W. E. Crume, Vice President. "ByCHARLBs Cravens & Co." " Memorandum of agreement made this 28th day of August, 1895, by and bet\\een the Carter-Crume Company, a corporation organized under the laws of the state of West Virginia, party of the first part, and Charles Cravens & Co., of Paducah. Kentucky, parties of the second part, referring to a contract and supplementary agi-eement made this day between the National Mercantile Company, Dayton, Ohio, and Charles Cravens & Co., of Paducah, Kentucky, parties of the second part: Inasmuch as, under the agreement above referred to, Charles Cravens & Co. have become owners of fifty shares of stock In the National Mercantile Company, parties of the first part guar- anty to parties of the second part that the dividends paid by the National Mercantile Company to Charles Cravens & Co., on said fifty shares of stock, shall amount to seven hundred and fifty dollars dm 02 VEDKBAIi REFOBTEB, ^M, Stateineiit of tlie Case. (1750) iM»r iiioiitli, or a total of nine thousand (|d,000) dollars for the year, ending ou«- year from to-day, or, In the event of such dividends not amountinur to »neh amount, then parties of the first part agree to pay to parties of the sei-ontl part, on or before one year from to-day, the diffei-ence in money between the total amoimt of dividends paid on said mty shares of stock and the sum of nine thousand (:?9,000) ; It also being a ndition of this agreement that party of the second part Is not to manufacture the dishes for the National Mercantile Com- panj% as specified in their contract of this date, referred to above, but such diilim are to be made in fulfillment of said contract bv the part}' of the first jMirt. Party of the first part to receive all raonev paid by tie National Mercantile Company for such dishes. •" Signed Auj;ust 28, 1805. **TlIK CARTER-CRrME COMPANY, **By W. E. Crume, Vice President, •• By Charles Cravens & Co." TyiJewritten iiiiuutes of tlie proceeiliugs at a meeting of the direct- ors of the Nati<»ual Mercantile Coiiii>any attended by the plauitiflf on that day, which i\ witness testifiinl were taken at the time, were offered in evidence by defendant, and. against objection on behalf of the plaintiff, reeeu ♦•ritered in any reconl liook of the company. The plaintiff ex«Huteeen transferred to them for sale, and that these contracts were made for the pui-pose of main- taining prices, and that for the purpose of maintaining prices fur- ther they made contracts to limit the production of machines for the making of wooden dishes." The record proceeds to state : " Whereupon the counsel for plaintiff excepted to that part of the charge of the court touching the contracts as being against public policy." In explanation, it is proper to say that the above ruling was given in charge to the jury in its preliminary instructions. The jury reported a disagreement. Wliereupon the court gave them direct instructions to find for the defendant. The K 990 92 FEDERAL REPORTER, 484. Opinion of the Court latter instruction superseded the former, and opens the whole case. The third assignment is based upon the exception to the direction of the verdict in favor of the defendant. We can- not, of course, assume, and the court below could not, that any fact was established about which there was room for controversy. All questions of fact [485] material to the issue, about which different opinions could fairly have been formed, were for the jury; and the question for us is whether upon the facts, which were substantially uncontro- verted, including those to which the plaintiff himself testi- fied, the verdict which the court directed was the only one which the court would have allowed finally to stand. Rail- way Co. V. Loxmry, 20 C. C. x\. 59G, 74 Fed! 463, and 43 U. S. App. 408. From the preceding statement of the case as ex- hibited upon the trial, the material and uncontroverted facts may be gathered into the following synopsis. But first, we lay out of consideration the typewritten minutes of the proceedings at the meeting of the directors of the National Mercantile Company, on August 28, 1896. We think it might well be that the jury would have been justi- fied in sharing the suspicion of counsel for the plaintiff in re- gard to their genuineness and veracity. It must be ad- mitted that it is most remarkable that any board of directors of a business establishment should pass such a resolution as is quoted in the foregoing pi-eliminary statement, however much in line it might be with their real purposes. The parties who were engaged in these transactions, of whom the plaintiff was one, representing 80 per cent, of the total product, undertook to, and did in fact, form a combina- tion for the purpose of restricting the production of wooden dishes throughout the country and keeping up the prices thereof. The articles to which this combination had refer- ence were articles in common use. The plaintiff's contracts were part of the means employed for effecting the common object, and he secured the means of sharing in the profits ex- pected to be gained through the combination. To this end all the factories were expected to be brought under the con- trol of the National Mercantile Company, which was to regu- late the prices. The plaintiff testified that it was the purpose CRAVENS V, CARTER-CRUME CO. m\ Opinion of the Court. 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 guarantied $9,000 for closing his factory for a year, and the contract included all the dish machines that might come into his possession or con- trol, thus disabling himself from manufacturing, and he obli- gated himself not to sell any wood dishes to any other person, directly or indirectly, during the continuance of the contract. It is manifest that it was the expectation, and that the parties intended, to get a sufficiently large number of manufacturers into the combination to practically accomplish their purpose. We cannot doubt that such a combination, for such purposes, was opposed to public policy, and therefore unlawful. It is the settled doctrine that one cannot maintain a suit in a court of justice upon a contract entered into for the purpose of promoting such objects. The doctrine was elaborately dis- cussed, upon the principles of the common law, by Judge Taft in a case recently decided by this court. TJ. S. v. Addy- Hon Pipe (& Steel Co., 29 C. C. A. 141, 85 Fed. 271. In that case the question was also discussed whether the anti-trust law of 1890 was applicable to the contract then under considera- tion. But the relation of that act to the common law was in- volved in the discussion, and much research was bestowed upon the established principles of the latter. The proposi- tion there maintained [486] was that "no conventional re- straint of trade can be enforced unless the covenant embody- ing it is merely ancillary to the main purpose of a lawful con- tract, and necessary to protect the covenantee in the enjoy- ment 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." It was not doubted, nor, indeed, can it be, that where the direct purpose of the contract in suit is to establish, for increasing their profits, a combination among manufac- tivrers and tradesmen whose function is to prevent competi- tion, and thereby prevent the public from obtaining those ar- ticles which are in general use, at the prices at which they could be obtained as the result of fair and untrammeled. com- petition, such contract is unlawful, and cannot be enforced. We have, in the foregoing statement of what we suppose to be the conceded rule, restricted it to the case of "articles in 992 €»2 FEDERAL REPORTER, 1022. Statement of the Case. general use.'* in order to indicate a test which is not affected by a feature put forward in some decisions as creating a dis- tinction. We do not eonunit ourselves upon the question whether such distinction exists or not. The result of the ap- plication of the test above formulated to the facts of this case is, manifestly, that the contract here in question cannot be en- forced. It is argued by counsel for plaintiff that the contract should be sustained, within the principles stated and ap- proved in r. JS. V. AMy^tmi Pipe <& Steel Co., upon the theory that the contract upon which the action is based was collateral merely, and did not require the aid of the agree- ment for combinatioii. But it seems clear to us that this proposition cannot Ije maintained. This contract was one of the steps in the forbidden organization, and was intended to be one of many by which the objects of the combination were to be accomplished. Seeing what has been the result to the plaintiff, one cannot, help feeling that he may have been duped by more artfid men. But he was a business man. It is not claimed for him that he was mentally incompetent in any such sense as to absolve him from responsibility for the legal consequences of his acts, and, in such a case as this, the court does not administer equities according to the relative merit of the parties. We think the court below was right in directing a verdict for the defendant. The judgment is affirmed, with costs. 110^2] SOrTHERN INDIANA EXP. CO. v, UNITED STATES EXP. CO. ET AL. (Circuit Court of Appeal!*, Seventh Circuit. March 28, 1899.) [92 Fed.. 1022.1 Carriers of Omiiis — Duties hf I'o.n.necting Lines Inter Se. Appeal from the Circuit Court of the United States for the District of Indiana. This was a suit in equity by the Southern Indiana Express Company against the United States Express Company and others. A demurrer to the bill was sustained by the circuit BLOCK V. STANDARD DISTILLING CO. 993 Syllabus. court, and the bill dismissed (88 Fed. 659), from which order complainant appeals. F, M, Trissal^ for appellant. Edward Daniels^ for appellee. Per Curiam. A statement and sufficient discussion of this case will be found in the opinion of the circuit court as re- ported in Southern Indiaiia Exp. Co. v. United States Exp, Co.^ 88 Fed. 659. The decree sustaining the demurrer and dismissing the bill is affirmed. [Copyrighted, 1899, by West Publishing Co.] [For 88 Fed., t;59, see p. 862.] 1978] BLOCK ET AIj. v. STANDARD DISTILLING & DISTRIBUTING CO. (Circuit Court, S. D. Ohio, W. D. July 31, 1899.) [95 Fed. 978.] JUBISDICTION OF FeDEBAL CoURT— CITIZENSHIP OF CORPORATION— SUF- FICIENCY OF Allegation.— An allegation that defendant is a corpor- ation "organized under and pursuant to the laws of the state of New Jersey " is an affirmative statement that defendant is a citizen of New Jerf^ey.o [979] Equity Pleading — Multifariousness — [Anti-Trust Law]. A bill setting up a claim for damages under the anti-trust law of July 2, 1890, and also asking an injunction restraining defendant from using complainant's trade-mark and trade-name, is multifar- ious, as joining two distinct causes of action, having no connection with each other, and one of which is triable at law. Unfair Competition— Imitation of Trade-Name.— A bill which alleges that complainant and defendant are competitors in the same line of business ; that defendant has assumed a trade-name similar to, and in imitation of, complainant's trade-name, and the public has been deceived thereby, and great confusion and injur>' have resulted to complainant's business therefrom; that defendant's incorpora- tors, before it was organized, knew of the existence and character of complainant's business, and the trade-name under which it had for a number of years been conducted ; and that defendant has re- o Syllabus copyrighted, 1899, by West Publishing Co. 11808— VOL 1—06 M «;? 994 95 FEDERAL EEPOBTER, 979. Opinion of the Court. fused, on complainant's request, to desist from the use of the name, — !>«tates a cause of action against defendant for unfair com- petition. Same^ — Tbade-Name — Fbaud Which will Debar Relief. — The mere fact that complainants, as partners, conduct their business under the name of the " Standard Distilling Ck>mpany," is not sufficient to show that they represent themselves as a corporation for the pur- pose of deceiving and defrauding the public, so as to debar them of the right to involve the protection of a court of equity in the use of such njinie. George W. Hardaere and Peck,, Shaffer db Peckj for com- plainants. /. Shroder and Levy Mayer^ for defendant. Thompson, District Judge. This cause is submitted to the court upon a demurrer to the bill. The fi.^ assignment of the demurrer denies the jurisdic- tion of the court. It is claimed that the citizenship of the defendant does not appear affirmatively, and that it cannot be inferred. I think it does affirmatively appear that the de- fendant is a citizen of the state of New Jersev. The state- ment that it was " organized under and pursuant to the laws of the state of New Jersey " is an affirmative statement that it is a citizen of New Jersey. In Insurance Co. v. Francis, 11 Wall. 210, 216, it was alleged that the defendant was a corporation created by the laws of New York, located and doing business in Mississippi imder its laws, and the court said : " This, in lejral effect, is an averment that the defendant was a citi- zen of New York, because a corporation can have no legal existence outside of the sovereignty by which it was created. Its place of resi- dence is there, and can be nowhere else. Unlike a natural person, it cannot change its domicile at will, aiid, although it may be permitted to transact business where its charter does not operate, it cannot on that account acquire a residence there." The objection to the jurisdiction of the court therefore is not well taken. The second and third assignments of the demurrer allege that the bill is multifarious, in that it joins two distinct causes of action not necessarily connected or blended, and joins an action at law with a suit in equity. I think these objections to the bill are well taken. The claim for damages LOWRY V, TILE, MANTEL & GRATE ASSN. 995 Syllabus. under the anti-trust law of July 2, 1890, and the facts set forth upon which the complainants ask that the defendant be enjoined from using complainants' trade-mark and trade- name, constitute distinct causes of action, having no connec- tion or relation to each other; and, besides, one is a cause of action triable [980] at law, while the other is of equitable cognizance. The case attempted to be set forth under the anti-trust law would not justify the allowance of an injunc- tion. So far as the court is advised by the statement of that part of the case, there would be an adequate remedy at law. Gulf, C. di S. Ry. Co, v. Miami S. S. Co., 30 C. C. A. 142, 86 Fed. 407, 420; Blindell v. Hagan, 54 Fed. 40; Hagan v. Blindell, 6 C. C. A. 86, 56 Fed. 696. The fourth assignment of the demurrer is not insisted upon. The fifth assignment of the demurrer is upon the ground that the bill does not state facts sufficient to constitute a cause of action.<» 4> * * 4t 4t [982] The demurrer will be overruled as to the first and fifth assignments, and sustained as to the second assignment thereof. [817] LOWRY ET AL. v. TILE, MANTEL & GRATE ASS'N OF CALIFORNIA ET AL.^> (Circuit Court, N. D. California. November 13, 1899.) [98 Fed., 817.] Misjoinder of Parties — Waiver by Appearaxce. — Defeiidaiits by a general appearance waive the objection of a misjoinder because otber defendants are not inhabitants of the district.c General Appearance. — There is a general appearance by a demurrer which does not alone object to the jurisdiction, but goes to the mer- its of the ease. o The matter omitted has no l)earing whatever upon the anti-trust law. 6 See also charge to jury (106 Fed. 38). See vol. 2, p. 53. Judg- ment affirmed by Circuit Court of Appeals, Ninth Circuit (115 Fed., 27). See vol. 2, p. 112. Case there and subsequently entitled Monta- gue & Co. V. Lowry. Affirmed by the Supreme Court (193 U. S., 83). See vol. 2, p. 327. Syllabus copyrighted, 1900, by West Publishing Co. 996 98 FEDEEAL BEPOBTEB, 817. Opinion of tlia Court Antitrust Law— Unlawful Combination.— A complaint alleging that members of an association liave conspired and combined to raise the prices of tiles, mantels, and grates, to control the output, and to regulate the prices thereof, with the intent to monopolize the trade and commerce between the other states aud California in regard thereto, as well as to arbitrarily fix their prices independ- ently of their natural market value, brings the case within the antitrust act of July 2, 1890 (26 Stat. 209). Action at Law to Recover Damages under the Provisions of Act July 2, 1890 (26 Stat. 209). Reddy^ OampheU d; Metson, for plaintiffs. Linforth di Whitaker, for certain defendants. Morrow, Circuit Judge. This is an action at law brought to recover damages al- leged to have been sustained by plaintiffs by reason of injury to their business caused by the forming of an association by defendants claimed to be within the prohibitoiy provisions of the act of congress of July 2, 1890, commonly known as the " Sherman Antitrust Act." The amended complaint al- leges: That plaintiffs are co-partners doing business under the firm name of Lowry & Daly, citizens of the state of Cali- fornia, and residents of the Northern district of said state. That the Tile, Mantel & Grate Association of California, and the officers and members thereof, have since the day of January, 1898, and do now, constitute an unincorpo- rated organization composed of wholesale dealers in tiles, mantels, and grates, and that they are now, and ever since that day have been, citizens and residents of the city and county of San Francisco, and of the city of Sacramento, and of the city of San Jose, in the state of California, and of the states set forth hereinafter, and that all said defend- [818 1 ants have been since that date, and now are, carrying on busi- ness in the state of California, and within the jurisdiction of the Northern district thereof. That the defendants herem- after named are corporations created and existing under the laws of the respective states set opposite to their names : Co- lumbia Encaustic Tile Company, Indiana; United States Encaustic Tile Works, Indiana; Cambridge Tile Manufac- turing Company, Kentucky; Pittsburg Tile Company, Penn- LOWRY V. TILE, MANTEL & GRATE ASSN. Opinion of the Court. 997 sylvania ; Trent Tile Works, New Jersey ; W. W. Montague & Co., California; Bush & Mallett Company, California; Star Encaustic Tile Company, Limited, Pennsylvania; Man- grum & Otter, California ; American Tile Company, Ohio ; Providential Tile Works, New Jersey; the John Stock Sons, California. That the defendants the Columbia Encaustic Tile Company, Cambridge Tile Manufacturing Company, the American Tile Company, the Pittsburg Tile Company, the Providential Tile Works, and the Star Encaustic Tile Company, Limited, are, and were at all the times mentioned, manufacturers of tiles in the states set forth, and that the defendants Heavener Meir, the John Stock Sons, W. W. Montague & Co., Bush & Mallett, Bennett & Schutte, and Mangrum & Otter are, and ever since January 1, 1898, have been, engaged in the wholesale and retail business of buying and selling tiles, mantels, and grates in the cities of Sacramento, San Jose, and San Francisco, in this state. That the following cities, with the respective populations placed opposite their names, are each situated in the North- ern district of California: San Francisco, 290,000 and up- wards; Oakland, 40,000 and upwards; Sacramento, 30,000 and upwards ; San Jose, 20,000 and upwards. That in said cities there are a great number of dwelling houses, buildings used for business, trade purposes, and manufactories. That new buildings are being constantly erected, and in their con- struction large quantities of tiles, mantels, and grates are necessarily used for their safe construction and comfortable occupation. That none of the tiles used about buildings or dwellings are made in the state of California, but are manu- factured in Eastern states, and imported thence, and such importations into this state amount to the annual value of $100,000 or thereabouts. That for many years past plain- tiffs have been engaged in the wholesale business of dealing in tiles, mantels, and grates, and in conducting this business have purchased these articles from the various corporations defendant, and shipped them to the state of California, and there sold them; that defendants and their associates who are bound by contract with them comprise all the whole- sale dealers who handle and import and sell tiles in the cities aforesaid, and, when cx)mbined together, can and do abso- 998 m FEDEBAL BBPORTEB, 818. Opinion of the CJonrt lutely control the price charged for tiles in said cities, by reason of the distance of these citias from any manufacturers or wholesale dealei*s other than defendants and those com- bined with them in other states or foreign countries, who do not belong to the said Tile, Mantel & Grate Association of California, The rates of transportation are prohibitory, so that no tiles hare been or can be imported from places other than those in whicli the corporations and above-named per- sons have manufactories, stock on hand, or warerooms, and all the grates and tiles made and manufactured within reach of the state of Cali- [819] fomia, where the rate of freight is such that an imjiortation can be made to San Francisco and said other cities at such an amount as to admit of their importation at all, are, and at all times mentioned have been, controlled by the said defendants, or some of them, or those bound by contracts to them. That before the association, combination, and conspiracy hereinafter inferred to, defend- ants were uncombined, and were selling grates, mantels, and tiles on their respective merits, their prices being determined by the law of su[)ply and demand. That in the j^ears 1896 and 189T there wei-e in San Francisco and the other said cities numerous persons engaged in the wholesale and retail business of selling tiles, and in the placing and laying of them. That defendants, with intent to form a contract, trust, and conspiracy in i^estraint of trade and commerce between the state of California and the states of Indiana, Kentucky, New Jersey, Pennsylvania, and Ohio, for the pur- pose of controlling the output and regulating the price of these commodities, and monopolizing the said trade, com- bined and conspired to monopolize the grate, tile, and mantel importations and trade and commerce from other states to and with the state of California, to the extent of the tiles, grates, and mantels that could be used in the state of Cali- fornia in the erection and construction of dwellings and buildings, and so conspii-ed to raise the price of these com- modities in the California market, and for this purpose on or about the day of January, 1898, formed an organi- zation and adopted a constitution and by-laws, which consti- tution and by-laws are now in effect. That the said consti- tution and by-laws provided that no sales and deliveries, or LOWBY V, TILE, MANTEL & GBATE ASSN. 999 Opinion of the Court contracts for the sale or delivery, or the placing, of tiles, grates, or mantels, will be made by the manufacturer thereof to any person dealing in these commodities, unless such person belong to the said unincorporated association, and shall pay or cause to be paid dollars to that organization, and bind themselves to abide by its constitu- tion and by-laws ; that is to say, that no one who is a member of that organization shall sell to, or deal with or deliver to, any person engaged in the business of buying, selling, or placing tiles, grates, or mantels in the cities of San Fran- cisco, Oakland, Sacramento, and San Jose, and other cities in this state, unless such person shall become a member of the said unincorporated organization, and shall agree that in their general business of selling such commodities to the general public they shall sell them at such prices as may be arbitrarily fixed by the said unincorporated association. That, prior to the formation of that organization, plaintiffs were doing a large business in selling tiles, mantels, and grates, and were making an annual profit of about $5,000. That plaintiffs are unable to join the said organization, be- cause, according to its constitution and by-laws, a unanimous vote of the members of the association is required to elect a member thereof, and certain members of that organization are so antagonistic to plaintiffs, by reason of business differ- ences, that they would not allow them to enter the organiza- tion; and further, the rules and regulations of the associa- tion require that members must keep constantly in stock goods to the value of $3,000, and there are times when plain- tiffs' stock does not amount to that value. That, if [820] plaintiffs join said association, they would be bound to sell their wares at prices arbitrarily fixed by the association, and not at their fair market value. That said association is illegal and void, by virtue of the act of congress approved July 2, 1890, and by joining it plaintiffs would be guilty of a crime under the said act. That, since the formation of said organization, plaintiffs have been unable to purchase tiles, mantels, or grates from any of the defendants, although they have tendered to the defendants the price of the same. That defendants have refused to deliver any tiles, mantels, or grates to them since the organization of said association. 1000 98 FEDEBAL REPORTEB, 820. Opinion of the Court. That, about the time of the formation of said association, plaintiffs had placed with defendants certain orders for tiles; but these ordei-s were not filled, but were canceled, by the parties with whom they had been placed, for the reason that plaintiffs did not belong to, and would not join, said organi- zation. That, about the time of the formation of the asso- ciation, plaintiffs had placed orders for tiles with the Colum- bia Encaustic Tile Company, which canceled plaintiffs' orders because plaintiffs did not belong to the Tile, Mantel & Grate Association. That said organization is within the statute of the 51st congress, passed and approved July 2, 1890, known as '* Chapter 647, Supplement to the Revised Statutes at Large of the United States." That, by reason of the monopoly of such association, plaintiffs are damaged in the simi of $10,000. Plaintiffs pray for treble the sum of $10,000, in accordance with the provisions of the above- named act, and for further equitable relief. To this amended complaint the defendants W. W. Mon- tague & Co., a corporation ; the Bush & Mallett Company, a corporation ; Mrs. Mary Bennett and John H. Schutte, part- ners trading as Bennett & Schutte: the John Stock Sons, a corporation; Heavener Meir; Mangrum & Otter, a corpora- tion; and the Tile, Mantel & Grate Association, — filed a demurrer. The grounds of this demurrer are: That the amended complaint does not state facts sufficient to consti- tute a cause of action against defendants, or any of them. That there is a misjoinder of parties defendant, in that the Columbia Encaustic Tile Company, the United States En- caustic Tile Works, the Cambridge Tile Manufacturing Company, the Pittsburg Tile Company, the Trent Tile Com- pany, and the Star Encaustic Tile Company, Limited, are all improperly made and joined as defendants in this action. That the amended complaint is uncertain, (1) in that it does not appear therefrom whether the plaintiffs were at any of the times mentioned in the amended complaint engaged in interstate commerce; (2) in that it cannot be ascertained therefrom whether the acts of defendants complained of in- terfere with interstate commerce directly, immediately, or at all; (3) in that it cannot be ascertained therefrom with sufficient certainty whether plaintiffs have been damaged in LOWBY V. TILE, MANTEL & GKATE ASSN. Opinion of the Court 1001 the sum of $10,000 or at all. It does not appear from the record that the foreign corporations joined as defendants have been served with process, and they have made no ap- pearance. This action is brought under the provisions of an act of congress dated July 2, 1890, and entitled "An act to protect trade and com- [821] merce against unlawful restraints and monopolies." 26 Stat. 209. Section 7 of this act provides: "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 re- sides 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 including a reasonable attorney's fee." It is contended by the counsel for defendants that there is a misjoinder of parties defendant in the amended complaint, in that certain corporations organized and doing business in states other than this state have been joined as defendants in this action; such corporations being residents of districts other than this, and not found within this district, so that no service of process can be made upon them, and themselves subjected to the jurisdiction of the court. The allegations of the amended complaint in this respect are as follows : "All of said defendants have been since that date, and are now, carrying on business in the state of California, and within the juris- diction of the Northern district thereof." Defendants' counsel contend that these allegations are not such as to give the court jurisdiction over such defendants as do not reside in this district, and that, as the defendant corporations joined with them reside only in the states in which they have been respectively organized, they can only be sued in their own districts. It is contended by plaintiffs' counsel that the defendants who have demurred are estopped from demurring to the amended complaint upon the ground that some of their co-defendants are being sued in the wrong district, since they have made a general appearance, and by so doing have lost the right to raise the question that there is a misjoinder of parties on these grounds. In the case of Improvement Co. v. Gihney^ 160 U. S. 217, 16 Sup. Ct. 272, 40 L. Ed. 401, the action was at law, and the court discussed 1002 98 FEDERAL REPORTEB, 821. Opinion of t!ie Court. the effect of a general appearance by a defendant upon a demurrer by the same defendant based upon jurisdictional grounds. In this case the complaint alleged that the plain- tiff was incorporated under the laws of New Jersey, and was a citizen of that state, and that all the defendants were citi- zens and residents of the state of Indiana. " On June 19, 1890, the defendants Gibney, McElwaine, and Wheeler, by their attorney, entered a general appearance, but Gibney neither pleaded nor answered, and the defendant Hartley never appeared or made any defense. On September 19, 1891, McElwaine and Wheeler pleaded in abatement that at the time of the bringing of this action, and ever since, Gibney and Bartley were citizens of the state of Pennsyl- vania, and not citizens or residents of the state of Indiana, and that therefore the court had no jurisdiction of the case. The plaintiff demurred to this plea as not containing facts sufficient to constitute a cause for the abatement of the action. The plaintiff declining to plead further, but electing to stand upon its demurrer to the plea, the court adjudged that the plaintiff take nothing by its action, and that the defendant recover costs." The case was [82«| taken to the supreme court upon a writ of error. Mr. Justice Gray delivered the opinion of the court, and in the course of that opinion said, at page 220, IGO U. S., page 27a, 16 Sup. Ct., and page 402, 40 L. Ed. : yn .Smith V. Lymi, 13.3 U. S. 315. 10 Sup. Ct. 303, 33 L. Ed. 635. tins court li€»ld tliat the provision of the act of 1888 as to the district In which a suit lietwwn citizens of different states should be brought, re«iuired sucli a suit, in which there was more than one plaintiff or more than «ine defendant, to be bnmght in the district in which all the plaintiffs or all tlie defendants were inhabitants When there are several defendamts, some of wiiom are, and some of whom are not, inhabitants of the district in which the suit is brought the que«ecially where, as in this case an action is brought against the princijials and sureties on a bond, and one of the principals is a nonresident and does not appear, the defend- ants who do come in may object at the proper stage of the proceedings to being comi>elleeing all the defendants who pleaded to the juris- diction, had entered a general appearance long before they took the objection that the sureties were citizens of another district Defend- ants who have appeared generally in the action cannot even object that tliey were themselves inhabitants of another district and of eoui-se, cannot object that others of the defendants were such " ' LOWRY V. TILE, MANTEL & GRATE ASSN. Opinion of the Court. 1003 The judgment of the circuit court was reversed, and the case remanded, with directions to sustain the demurrer to the plea. A general appearance, therefore, on the part of these de- fendants, must be deemed a waiver of the objection of a misjoinder because the other defendants are not inhabitants of this district. Counsel contend that they have not made such a general appearance, but have demurred specially on the ground that certain defendants are improperly joined with them. The terms of the demurrer constitute a sufficient answer to this contention. The grounds of demurrer are not confined to the jurisdic- tion of the court, but the merits of the case are involved in the objection that the complaint does not state facts sufficient to constitute a cause of action. In the case of Sou them Pae. Co, V. Denton, 146 U. S. 202, 13 Sup. Ct. 44, 36 L. Ed. 942, the question of special appearance was considered. The action was at law, and was brought in the circuit court of the United States for the Western district of Texas. The peti- tion alleged that the defendant was a corporation duly incor- porated under the laws of the state of Kentuclvy, a citizen of the state of Kentuckv, and a resident of El Paso countv, in the state of Texas ; that defendant " was and is engaged in the business of running and propelling cars for tlie con- veyance of freight and passengers over the line of railway extending eastwardly from the city of El Paso, Texas, into and through the counties of El Paso and Presidio, and the city of San Antonio, all of the state of Texas; that the defendant is now doing business as aforesaid, and has an agent for the transaction of its business in the city and county of El Paso, Texas, to wit, W. E. Jessup." The plain- tiff resided in the county of Red River, which is in the Eastern district of Texas. Defendant, by leave of court, filed a document desig- [823] nated as an " answer or de- murrer," '' for the special purpose, and no other, until the question herein raised is decided, of objecting to the juris- diction of this court," and demurred and excepted to the petition because, upon the above allegations, " it appears that the suit ought, if maintained at all in the state of Texas, to be brought in the district of the residence of the plain- 1004 98 FEDEKAL BEPOBTEB, 823. Opinion of the Court tiff,— that is to say, in the Eastern district of Texas "; and tlie defendant prayed judgment whether the court had juris- diction. The court overruled the demurrer. Defendant thereupon answered to the merits, and, judgment being given against it, sued out a writ of error in the United States supreme court on the question of jurisdiction only, under the act of February 25, 1889 (25 Stat. 693, c. 236). Mr. Justice Gray said, at page 206, 146 U. S., page 45, 13 Sup. Ct., and page 944, 36 L. Ed. : " It may be assumed that the exemption from being sued in any other district might be waived by the corporation bv appearing genera ly or by answering to the merits of the action without first objectiing to the jurisdiction. Railway Co, v. McBride, 141 U. S 127 ]l i"P- SI* JSf' ^^ ^' ^^' *^^' Railway Co. v. Cox, 145 U. S. 593, iz feup. Lt. 905, 30 L. Ed. 829. But In the present case there was no such waiver. The want of jurisdiction, being apparent on the face of the petition, might be talcen advantage of by demurrer, and S? F®?J" „5**^*^^^"^ ^'«s necessarj'. Coal Co. v. Blatchfwd, 11 Wall. Ii2, 20 L. Ed. 179. The defendant did file a demurrer for the special and single purpose of objecting to the jurisdiction; and it was only after that demurrer had been overruled, and the defend- ant bad excepted to the overruling thereof, that an answer to the merits was filed." The case of Raihmy Co, v. MeBride, 141 U. S. 127. 130, 11 Sup. Ct, 982, 983, 35 L. Ed. 659, cited in Southern Pae. €o. V. Denton^ mpra, was also an action at law ; and the only question involved was what constituted a general appear- ance, and its effect upon the jurisdiction of that court. Mr. Justice Brewer, delivering the opinion of the court, said : "Assuming that service of process was made, although the record contains no evidence thereof, and that the defendant did not volun- tarily api>eur, its first appearance was not to raise the question of jurisdiction alone, but also that of the merits of the case Its de- murrer, as appears, was based on three grounds; two referring to the question of jurisdiction, and the third, that the complaint did not state facts siimcient to constitute a cause of action.. There was therefore m the first instance a general appearance to the merits. If tlie case was one of which the court could take jurisdiction such an appearance waives, not only all defects in the service, but all special privileges of the defendant in respect to the particular court in which the action is brought." In the case at bar defendants did not file their demurrer "for the special and single purpose of objecting to the juris- diction,-' but for the further purpose of attacking the merits of the case upon the facts as stated in the complaint ; and this last issue the court is called upon to decide as a mate- rial question in controversy, as will appear hereafter. The LOWRY V. TILE, MANTEL & GRATE ASSN. 1005 Opinion of the Court. appearance of defendants demurring in this action must, in view of these authorities, be regarded as a general appear- ance, and they are therefore prevented from objecting that their co-defendants are improperly joined with them on the ground that they are being sued in the wrong district. Considering next, the ground of demurrer that the amended com- [824] plaint does not state facts sufficient to constitute a cause of action: The statute under which this action is brought (26 Stat. 209) provides: "Section 1. 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. ♦ ♦ * < " Sec. 2. Every person who shall monopolize or attempt to monopo- lize or combine or consjiire with any other person or persons to mon- opolize any part of the trade or commerce among the several states or withforeignnations, shall be deemed guilty of a misdemeanor. ♦ * » " See. 3. Every contract, combination in form of trust or otherwise, or conspiracy in restraint of trade or commerce in any territory of the United States, or the District of Columbia, 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." Defendants' counsel rely upon the case of Anderson v. U. S., 171 U. S. 004, 19 Sup. Ct. 50, 43 L. Ed. 300, as supporting their demurrer upon this point. The bill in that case was filed, under the direction of the United States attorney gen- eral, by the United States district attorney for the Western district of Missouri. It alleged, among other things, that defendants — " Have unlawfully entered into a contract, combination, and conspiracy in restraint of trade and commerce among the several states and with foreign nations, in this, to wit : That they have unlawfully agreed, contracted, combined, and conspired to prevent all other persons than members of the Traders' Live Stock Exchange, as aforesaid, from buying and celling cattle upon the Kansas City market, at the Kansas City Stock Yards, as aforesaid; that the commission, firm, person partnership, or corporation to whom said cattle are consigned at Kansas City, as aforesaid, is not i^ermitted to. and cannot sell or dispose of said cattle at the Kansas City market, as aforesaid to any buyer or speculator at the Kansas City Stock Yards, unless said buyer or speculator is a member of the Traders' Live-Stock Exchange and these defendants, and each of tliem, unlawfnllv and oppressively refuse to purchase cattle, or in any manner negotiate or deal with or buy from any commission merchant who shall sell or purchase cattle from any speculator of the said Kansas City Stock Yards who is not a member of the said Traders' Live-Stock Exchange; that by and through the unlawful agreement, combination, and conspiracy of 1006 98 FEDEKAL BEPOBTER, 824. Opinion of the Court. these defendniits, the business and tralMc in cattle at the said Kan- sas City Stoclv Yards is interfered with, hindered, and restrained, thus entailing extra expense and loss to the owner, and placing an ob- struction and embargo on the marlvCting of cattle shipped from the states jind territories aforesaid to the Kansas City Stocli Yards." Mr. Justice Peckhani, in the course of the opinion of the court, sa vs : " The agreement now under discussion differs radically from those of U. 8. V. Jcllicfi Mountain Coal d Coke Co. (C. C.) 46 Fed. 432, 12 L. R. A. 753; U, S. v. Coal Dealers' Ass'n (C. C.) 85 Fed. 2.52; and r. -S. Y. Addmtoti Pipe d iiteel Co., 29 C. C. A. 141, 85 Fed. 271. The agreement in all of these cases provided for fixing the prices of the articles dealt in by the different rompanies : being in one case iron pipe f(»r gas. water, sewer, and other puri>0!^es. and conl in the other two cases. If it were concetled that these cases were well decided, they differ so materially and radically in their nature and purix>se from the case under consideration that they form no l)asis for its decision. This asscM-iation does not meildle with prices, and itself does no business. In refusing to recognize any yard trader who is not a member of the exchange, we see no purpose of thereby affecting, or in any manner restraining, interstate L-onnuerce, which, if affected at all, can only be in a very [825] indirect and remote manner. The rule has no direct tendency to diminish or in any way impede or re- strain interstate commerce in the cattle dealt in by defendants. There is no tendency, as a result of the iiiie. directly or indirectly, to restrict the competition among defendants for the class of cattle dealt in by them. Those who are selling the cattle have the market «oniiM»seortunity of becoming meml>ers of the exchange, and to thus obtain all the advantages thereof." The allegations of the amended complaint in the present case are that the members of the Tile. Mantel & Grate Asso- ciation have conspired and combined to raise the prices of tiles, mantels, and gi'ates. to control the output and to regu- late the prices of these commodities, with the intent of monopolizing the trade and commerce between the other states and California in regard to such commodities, as well as to arbitrarily fix their prices independent of their natural market price. It wdll be seen, therefore, that the case of An- derson v. U. S. cannot be considered as applicable to the case at bar. The case of U, 8. v. Jellieo Mmmtain Coal <& Coke Co, {€. G.) 46 Fed. 432, 12 L. R. A. 753, is more in point. The LOWBY V, TILE, MANTEL & GRATE ASSN. 1037 Opinion of the Court. action was brought under the antitrust act against the mem- bers of the Nashville Coal Exchange. The purpose of the agreement in that case was to establisli the price of coal at Nashville, and to change the same from time to time. Mem- bers found guilty of selling coal at a less price than tlie price fixed by the exchange, either directly or indirectly, were fined 2 cents per bushel and $10 for tha first offense, and 4 cents per bushel and $20 for the second offense. Owners or operators of mines were not to sell or ship coal to any per- sons, firms, or corporations in Nashville who were not mem- bers of the exchange, and dealers were not to buy coal from any one but a member of the exchange. The court, com- menting upon the agreement of this association of coal deal- ers, said : "This clearly indicates the purpose of the asstn-iation to be t<> con- trol the price of coal in the Xashvillt^ niarlcet used in manufacturing and m steamboats whenever it conid; that the mines ot coal tributary to Nashville were all expected to btn-ome members of the exchan-e whereupon the prices of coal could be fixed absolutely ; and the necSs- ^2?i 'Jijerence from this declaration and the entire organic structure of the body is that it felt strong euinigh already to regulate and estab- ish the prices of domestic coal in that market to a large extent at least, and that this exchange might now monopolize the busirfesssof dealing in domestic coal in the Nashville market, and in the fnture monopolize by and confine to its membership the entire trade in coal at that point. It seems to me that the purposes and intention of the association could hardly have been more snccessfnlly framed to fall within the provisions of the act of July 2, 181J0, had the obiect been'to organize a combination, the business of which should subject it to the pnalties of that statute ; and there is no need of authorities to sus- tain such view of the case." In the case of U. 8, v. Coal Dealers' Ass'n (C. C.) 85 Fed. 252, the bill alleged that defendants comprised all the whole- sale dealers handling coal in San Francisco, and that they, together with certain retail dealers, had conspired with' intent to monopolize the coal [826] trade and commerce between British Columbia, Washington, and Oregon, to the extent of the coal used for domestic purposes in the city of San Francisco. It was said by this court in that case : "But the agreement of the importers and wholesale dealers, which alone gives life and force to the ce ac<'omplished under it by the combination, that is to be considered, and n<.t <>liat it mav be doing at any particular time." lOOo 98 FEDERAL REPORTER, 828. Opinion of the Court In U. S. V. Addffsion Fife cfe Steel Co.^ 54 U. S. App, 723, 2^ C. C. A. 141, and 85 Fed. 279, the United States began proceedings in equity against six corponitions engaged in the ma nil fact 11 re of cast-iron pipe in localities in Ohio, Kentucky, Ahibama, and Tennessee. The bill of complaint charged the defendants with a combination and conspiracy in unlawful restraint of interstate commerce. It appeared that the defendants, who were manufacturers and vendors of cast-ii-on pipe, entered into m combination to raise the price of pipe for all the states west and south of New York, Pennsylvania, and Virginia, coni[)rising some 36 states in all; and, to carry out this combination, the associated de- fendants entered into an agreement which provided certain methoils of procedure in dealing with the public, whereby competition between themselves was avoided in the territory mentioned. The court, in an able opinion reviewing the whole subject of the law relating to combinations and con- tracts in restraint of trade, arrived at the conclusion that the association of the defendants was a contract, combination, or conspiracy in restraint of trade, as the terms are to be understood under the act of July 2, 1890. The doctrine of that case is applicable here. The allegations charging con- spiracy and combination to raise the price of the com- modities in question, and of an agreement by the members of such combination to sell these commodities at such price-j as shall l)e arbitrarily fixed by the combination in question, together with the further allegation that such combination has been made with the intent of monopolizing trade and commerce between California and other states, are sufficient, under these authorities, to bring the case within the opera- tion of the provisions of the Sherman act. Defendants' demurrer upon the ground of the insufficiency of the facts stated to constitute a cause of action cannot, therefore, be sustained. Defendants also demur on the gi^ound of uncertainty, con- tending that the complaint fails to show that defendants were engaged in interstate commerce, or that their acts directly or immediately interfered with interstate commerce, or in what manner plaintiffs have been damaged, or at all. Upon consideration, however, this ground of demurrer does ADDYSTON PIPE & STEEL CO. V. UNITED STATES. 1009 Syllabus. not appear to be well founded. The allegations of the complaint are obviously free from uncertainty in these par- ticulars, and this ground of demurrer must therefore be denied. The demurrer of defendants will therefore be over- ruled. [2111 ADDYSTON PIPE AND STEEL COMPANY v. UNITED STATES.- APPEAL FROM THE COURT OF APPEALS FOR THE SIXTH CIRCUIT. No. 51. Argued April 26, 27, 1899.— Decided December 4, 1899. [175 U. S., 211.] Under the grant of power to Congress, contained in Section 8 of article I of tbe Constitution, " to regulate commerce with Foreign Nations and among the several States, and with Indian Tribes," that Ijody 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 shall be, when car- ried out, to directly and not as a mere incident to other and inno- cent purposes, regulate to any extent interstate or foreign com- merce. The provision in the Constitution regarding the liberty of the citizen is to some extent limited by this commerce clause ; and the power of Congi'ess to regulate interstate commerce comprises the right to enact a law prohibiting the citizen from entering into those private contracts which directly and substantially, and not merely indirectly, remotely, incidentally and collaterally, regulate, to a greater or less degree, commerce among the States. Interstate commerce consists of intercourse and traffic between the citizens or inhabitants of different States, and includes not only the transportation of persons and property and the navigation of public waters for that purpose, but also the purchase, sale and exchange of commodities. The power to regulate interstate commerce, and to prescribe the rules by which it shall be governed, is vested in Congress, and when that , body has enacted a statute such as the act of July 2. 1890, c. G47, entitled "an act to protect trade and commerce against unlawful restraints and monopolies," any agreement or combination which o Bill asking for a preliminary injunction was dismissed by the Cir- cuit Court for the Eastern District of Tennessee (78 Fed., 712). See p. 631. Decree rcAcrsed and defendants perpetually enjoined by the Circuit Court of Appeals, Sixth Circuit (85 Fed., 271). See p. 772. This latter decree was modified and affirmed by the Supreme Court of the United States in the present case (175 U. S., 211). 11808— VOL 1—06 M 64 1010 175 UNITED STATES BEPORTS, 211. Syllabus. directly t)i>erates, not alone upon the manufacture, but upon the sale, transportation and delivery of an article of interstate commerce, by preventing or restricting its sale, thereby regulates interstate com- merce to that extent, and thus trenches upon the power of the na- tional legislature, and violates the statute. The contracts considered in this case, set forth in the statement of facts and in the opinion of the court, relate to the sale and trans- portation to other States of specific articles, not incidentally or col- laterally, but as a direct and immediate result of the combination entered into by the defendants; and they restrain the manufactur- ing, purchase, sale or exchange of the manufactured articles among the several States, and enhance their value, and thus come within the provisions of the "act to protect trade and commerce against unlawful restraints and monoi>olies.** [812] When the direct, immediate and intended effect of a contract or combinatitm among dealers in a commodity is the enhancement of Its price, it amounts to a restraint of trade in the commodity, even though contracts to buy it at the enhanced price are being made. The judgment of the court below, which perpetually enjoined the de- fendants in the court below from maintaining the combination in cast-iron pipe as described in the petition, and from doing any busi- ness under such combination, is too broad, as it applies equally to commerce which is wholly within a State as well as to that which is interstate or international only. Although the jurisdiction of Congress over commerce among the States Is full and complete, it 19 not questioned that it has none over that which is wholly within a State, and therefore none over combina- tions or agreements so far as they relate to a restraint of such trade or commerce : nor does it acquire any jurisdiction over that part of a combination or agreement which relates to commerce wholly within a State, by reason of the fact that the combination also covers and regulates commerce which is interstate.* [44 L. ed., 13a]» [The power of Congress to regulate interstate or foreign commerce includes the power to legislate upon the subject of private contracts in respect to such commerce.] [The constitutional guaranty of liberty of the individual to enter into private contracts does not limit the power of Congress so as to prevent It from legislating upon the subject of contracts in re- straint of interstate or foreign commerce.] .1 » • The foregoing syllabus and the abstract of argument copyrighted, 1899, 1900, by The Banks Law Publishing Co. 6 The following paragraphs inclosed in brackets comprise the syl- labus to this case in the U. S. Supreme Court Reports, Book 44, p. 13a Copyrighted, 1900, by The Lawyers' Co-Operative Publish- ing Co. ADDYSTON PIPE & STEEL CO. V. UNITED STATES. 1011 Statement of the Case. [An agi-eement or combination between corporations engaged in the manufacture, sale, and transportation of iron pipe, under which they enter into public bidding for contracts, not in truth as com- petitors, but under an arrangement which eliminates all competition between them for the contract, and permits one of their number to make his own bid, while the others are required to bid over him, is in violation of the anti-trust act of Congress of July 2, 1890, so far as It applies to sales for delivery beyond the state in which the sale Is made.] [A combination may illegally restrain trade by preventing competi- tion for contracts and enhancing prices, although it does not pre- vent the letting of any particular crmtract] [A combination to restrain competition in proposals for contracts for the sale of certain articles which are to be delivered In the state In which some of the parties to the combination reside and carry on business Is not, so far as those members are concerned, in violation of the antitrust law of Congress, although the contract may he awarded to some party outside the state as the lowest bidder.] This proceeding was commenced in behalf of the United States, under the so-called anti-trust act of Congress, of July 2, 1890, c. 647, 2(> Stat. 209. It was undertaken for the pur- pose of obtaining an injunction perpetually enjoining the six corporations, who were made defendants, and who were en- gaged in the manufacture, sale and transportation of iron pipe at their respective places of business in the States of their residence, from further acting under or carrying on the combination alleged in the petition to have been entered into between them, and which was stated to be an illegal and un- lawful one, under the act above mentioned, because it was in restraint of trade and commerce among the States, etc. The trial court dismissed the petition, 78 Fed. Rep. 712, but upon appeal to the Circuit Court of Appeals the judgment of the court below was reversed with instructions to enter a decree for the United States perpetually enjoining defend^ ants from maintaining the combination in cast-iron pipe as described in the i^etition, and from doing any business under such combination. 54 U. S. App. 723. The six defendants are The Addyston Pipe and Steel Company of Cincinnati, Ohio; Dennis Long & Company, of Louisville, Kentucky; The Howard-Harrison Iron Company, of Bessemer, Ala- bama ; The Anniston Pipe and Foundry Company, of Annis- ton, Ala- [213] bama: The South Pittsburg Pipe Works, of South Pittsburg, Tennessee, and The Chattanooga Foundry 1012 175 UNITED STATES BEPOBTS, 213. Statement of the Case. and Pipe Works^ of Chattanooga, Tennessee; one company being in the State of Ohio, one in Kentucky, two in Alabama and two in Tennessee. The following are in substance the facts upon which the judgment of the Circuit Court of Appeals rested, as stated in the record : It was charged in the petition that on the 28th of Decem- ber, 1894, the defendants entered into a combination and con- spiracy among themselves, by which they agreed that there should be no competition between them in any of the States or Territories mentioned in the agreement, (comprising some thirty-six in all,) in regard to the manufacture and sale of cast-iron pipe, and that in obedience to such agreement and combination, and to carry out the same, the defendants had since that time operated their shops and had been selling and shipping the pipe manufactured by them into other States and Territories, under contracts for the manufacture and sale of such pipe with citizens of such other States and Territo- ries. There was to be a " bonus " charged against the manu- facture of the pipe, to the extent set forth in the agreements and to be paid as therein stated. The whole agreement was charged to have been entered into in order to enhance the price for the iron pipe dealt in by the defendants. The petition prayed that all pipe sold and transported from one State to another, under the combination and con- spiracy described therein, be forfeited to the petitioner and be seized and confiscated in the manner provided by law, and that a decree be entered dissolving the unlawful conspiracy of defendants and perpetuaUy enjoining them from operating under the same and from selling said cast-iron pipe in ac- cordance therewith to be transported from one State into another. The defendants filed a joint and separate demurrer to the petition in so far as it prayed for the confiscation of goods in . transit, on the ground that such proceedings under the anti- trust act are not to be had in a court of equity, but in a court of law. In addition to the demurrer, the defendants filed a joint and separate answer, in which they admitted the exist- 12141 ence of an association between them for the purpose of avoiding the great losses they would otherwise sustain, due to ADDYSTON PIPE & STEEL CO. V, UNITED STATES. 1013 Statement of the Case. ruinous competition between defendants, but denied that their association was in restraint of trade, state or interstate, or that it was organized to create a monopoly, and denied that it was a violation of the anti- trust act of Congress. Testimony in the form of affidavits was submitted by peti- tioner and defendants, and by stipulation it was agreed that the final hearing might be had thereon. From the minutes of the association, a copy of which was put in evidence by the petitioner, it appeared that prior to December 28, 1894, the Anniston Company, the Howardr Harrison Company, the Chattanooga Company and the South Pittsburg Company had been associated as the Southern Associated Pipe Works. Upon that date the Addyston Com- pany and Dennis Long & Co. were admitted to membership, and the following plan was then adopted : " First. The bonuses on the first 90,000 tons of pipe secured in any territory, IG" and smaller, shall be divided equally among six shops. " Second. The bonuses on the next 75.000 tons, 30" and smaller, sizes to be divided among five shops. South Pittsburg not partici- pating. " Third. The bonuses of the next 40.000 tons, 3G" and smaller, sizes to be divided among four shops, Anniston and South Pittsburg not participating. " L^ourth. The bonus on the next 15,000 tons, consisting of all sizes of pipe, shall be divided among three shops, Chattanooga, South Pitts- burg and Anniston not participating. " The above decision is based on the following tonnage of capacity : South Pittsburg 15,000 tons. Anniston 30,000 tons. Chattanooga ^ 40,000 tons. Bessemer 45,000 tons. Louisville 45,000 tons. Cincinnati 45,000 tons. [215] " When the 220,000 tons- have been made and shipped and the bonuses divided as hereafter provided, the auditor shall set aside into 2.»A^^r'^ ^""^ ^^^ bonuses arising from the excess of shipments over 220,000 tons, and shall divide the same at the end of the year among the respective companies according to the percentage of the excels of tonnage they may have shipped (of the sizes made bv them) either in pay or free territoi-y. It is also the intention of this proposition that the bonuses on all pipe larger than 30 inches in diameter shall be divided equally between the Addyston Pipe and Steel Company, Dennis Long & Co. and the Howard-Harrison Company. "It was thereupon resolved: " First. That this agreement shall last for two years from the date of the signing of same, until December 31, 189C. " Second. On any question coming before the association requiring a vote, it shall take five affirmative votes thereon to carry said ques- tion, each member of this association being entitled to but one vote "Third. The Addyston Pipe and Steel Company shall handle the 1014 175 UNITED STATES BEPORTS, 215. • Statement of the Case. business of the gas and water companies of Cincinnati, Ohio, Coving- ton and Newport, Ky., and pay the bonus hereafter mentioned, and the balance of the parties to this agreement shali bid on such work «uch reasonable prices as they shall dictate. " Fourth. Dennis Long & Company, of Louisville, Ky., shall handle Louisville, Ky., Jeflfersonville, Ind., and New Albany, Ind., furnishing all the pipe for gas and water works in above-named cities. "Fifth. The Anniston Pipe and Foundry Company shall handle Anniston, Ala., and Atlanta, Ga., furnishing all pipe for gas and water companies in above-named cities. "Sixth. The Chattanooga Foundry and Pipe Works shall handle Chattanooga, Tenn., and New Orleans, La., furnishing all gas and water pipe in above-named cities. "Seventh. The Howard-Harrison Iron Company shall handle Bes- semer and Birmington, Ala., and St. Louis, Mo., furnishing all pipe for gas and water companies in the [216] above-named cities ; extra bonus to be put on East St. Louis and Madison, 111., so as to protect the prices named for St. Louis, Mo. "Eighth. South Pittsburg Pipe Works shall handle Omaha, Neb., on all sizes required by that city during the year of 1805, conferring with the other .companies and cooperating with them; thereafter they shall handle the gas and water companies of Omaha, Neb., on such sizes as they make. "Note.— It is understood that all the shops who are membei-s of this association shall handle the business of the gas and water com- panies of the cities set apart for them, including all sizes of pipe made by them. "The following bonuses were adopted for the diflPerent States as named below: All railroad or culvert pipe or pipe for any drainage or sewerage purposes on 12" and larger sizes shipjied into bonus ter- ritory shall pay a bonus of $l.tJO per ton. On all sizes below 12" and shipped into 'bonus territory' for the puri)oses above named, there shall be a bonus of $2.00 per ton. List of Bonuses. Alabama $3 00 S. D ....$2 00 Ky $2 00 B'gham, Ala... 2 00 Florida 100 I^ 3 00 Anniston, Ala.. 2 00 Georgia 2 00 Miss 4 00 IHobile, Ala ... . 1 00 Atlanta, Ga .... 2 00 Mo 2 00 Arizona Ter 3 00 Ga. coast p'ts .. 1 00 Montana 3 00 California 1 00 Idaho 2 00 Nebraska .. 3 00 Colorado 2 00 Nev 3 00 N. Mex 3 00 Ind. Ter 3 00 Oklahoma 3 00 8. C 100 NorthC 1 00 Wis 2 00 Minn 2 00 Tenn., east ot C'land 2 00 Texas, interior . 3 00 Tenn., middle and west 3 00 Texas coast 1 00 niinois, except Madison and East St. Louis, as previously provided 2 00 Wyoming 4 00 Wash'ton Ter . . 1 00 Utah.. 4 00 Oregon 1 00 Mi higan ....... 1 50 Indiana 2 00 Ohio 1 50 West Va 1 00 Iowa 2 00 N.D 2 00 Kansas 2 00 All other territory free. "On motion of Mr. Llewellyn, the bonuses on all city work as •peeially reserved shall be $2.00 per ton." [217] The States for sale in which bonuses had to be paid into the association were called " pay " territory as distin- ADDYSTON PIPE & STEEL CO, V. UNITED STATES. 1015 Statement of the Case. guished from " free " territory in which defendants were at liberty to make sales without restriction and without paying any bonus. The by-laws provided* for an auditor of the association, whose duty it was to keep account of the business done by each shop both in pay and free territory. On the 1st and 16th of each month he was required to send to each shop " a statement of all shipments reported in the previous half month, with a balance sheet showing the total amount of the premiums on shipments, the division of the same and debt credit balance of each company." The system of bonuses as a means of restricting competi- tion and maintaining prices was not successful. A change was therefore made by which prices were to be fixed for each contract by the association, and except in reserved cities, the bidder was determined by competitive bidding of the mem- bers, the one agreeing to give the highest bonus for division among the others getting the contract. The plan was em- bodied in a resolution passed May 27, 1895, in the words following : " Whereas, the system now in operation in this association of hav- ing a fixed bonus on the several States has not in its operation re- sulted m the adranremetit in the prices of pipe as was anticipated, except in reserved cities, and some further action is imperatively nec- essary in order to accomplish the ends for which this association was formed: Therefore, be it resolved, that from and after the first day of June, that all competition on the pipe lettings shall take place among the various pipe shops prior to the said letting. To accomplish this purpose it is proposed that the six competitive shops have a rep- resentative board located at some central city to whom all inquiries for pipe shall be referred, and said board shall fix the price at which said pipe shall be sold, and bids taken fmm the respective shops for the privilege of handling the order, and the party securing the order shall have the protection of all the other shops." In pursuance of the new plan it was further agreed " that all parties to this association having quotations out shall f218] notify their customers that the same will be with- drawn by June 1, 1895, if not previously accepted, and upon all business accepted on and after June 1st bonuses shall be fixed by the committee.'- At the meeting of December 19, 1895, it was moved and carried that upon all inquiries for prices from " reserved cities " for pipe required during the year of 1896, prices and 1016 115 UNITED STATES BEPOKTS, 218* Statement of the Case. bonuses should be fixed at a regular or called meeting of the principals. At the meeting of December 20, 1895, the plan for division of bonuses originally adopted was modified by making the basis the total amounts shipped into " pay " territory rather than the totals shipped into " pay " and " free " territory. To illustrate the mode of doing business the following excerpt from the minutes of the meetings of December 20, 1895, February 14, 18%, and March 13, 1896, is given: " It was inored to sell the 519 pieces of 20" pipe from Omaha, Neb., for ^23.40, delivered. Carried. It was moved that Annistoii partiii- pate in the bonus and the Job be sold over the table. Carried. Pur- suant to the motion, the 519 pieces of 20" pipe for Omaha was sold to Bessemer at a premium of $8. " Moved that * bonus • on Anniston's Atlanta water works contract be fixed at |7.10, provided freight is $1.00 a ton. Carried." An illustration of the manner in which " reserved " cities were dealt with may be seen in the case of a public letting at St. Louis. On February 4, 1896, the water department of that city let bids for 2800 tons of pipe. St. Louis was " re- served" to the Howard-Harrison Company of Bessemer, Ala- bama. The price was fixed by the association at $24 a ton, and the bonus at $0,50. Before the letting the vice president of this company wrote to the other members of the association under date of January 24, 1896, as follows : ** I write to say that in view of the fact that I do not as vet know what the drayage will be on this pi|ie, I prefer that if any of you find it necessary to put in a bid without going to St. Lnufs, please bid not less than $27 for the pipe, and 2} [219] cents per pound for the specials. I would also like to know as to which of you would find it convenient to have a representative at the letting. It will be necessary to have two outside bidders." The contract was let to the Howard-Harrison Company of Bessemer, at $24, who allowed the Shickle, Harrison and Howard Company, a pipe company of St. Louis, not in the association, but having the same president as the Howard- Harrison Company of Bessemer, to fill part of the order. The only other bidders were the Addyston Pipe and Steel Company, and Dennig Long & Co., the former bidding $24.37 and the latter $24.57. The evidence shows that the Chatta- nooga foundry could have furnished this pipe, delivered in St Louis, at from $17 to $18, and could have made a profit on it at that price. The record is full of instances of a similar ADDYSTON PIPE & STEEL CO. V, UNITED STATES. 1017 Statement of the Case. kind, in which, after the successful bidder had been fixed by the " auction pool," or had been fixed by the arrangement as to " reserve " cities, the other defendants put in bids at the public letting as high as the selected bidder requested, in order to give the appearance of active competition between defendants. In January, 1896, after the auction pool had been in opera- tion for more than six months, the Chattanooga Company wrote a letter to its representative in the central committee. The letter is dated January 2, 1896, and is as follows : " Dear Sir : Referring to our policy for 1896, in bidding on pipe, we have had this matter under consideration for some time past, and from the information obtained from Mr. Thornton's statement as to the amount of business done last year in pay territory and from esti- mates that we have made for business, that will come into that ter- ritory for 1890, we have been able to determine to what point we could bid on work and take contracts, and if bonus is forced above this point, let it go and take the bonus. We note from your letter of yes- terday that you have sized up the situation in its essential points, and it agrees exactly with our ideas on the subject. It is useless to argue that Howard-Harrison Iron Co., [220] Cincinnati, and other shops, who have been bidding bonuFes of $6 or $8 per ton, can come out and make any money if they continue to bid such b3nus. In the case of the Howard-Harrison Iron Co., people on Jacksonville, Fla The truth of the business is they are losing monev at the prices they bid for this work. If they take the contract at $19 delivered, it will only net $16 at the shop after they have paid pack the bonus of $4.75 ; if they should continue to buy all the pipe that goes up to such figures as they have paid for Jacksonville and other points, they would wreck their shop in a few months. However, they of course calculate this bonus will be returned to them on work taken by other shops We are very much pleaded with the bonus that has been paid and we only hope they will keep it up as it is only money in our pockets. As long as there is no money to us let them make the pipe, as we shall continue to do so. " For the iire^ent you will adopt the following basis • " On 16" and under standard weights, $14.25 at shop. " On 18" and 36" standard weights, $13. •• On 16" and under light weights, $14.50 to $14.75 at shop. That is, you will bid all over $13, $14.25 and $14.50 on work. If we get work at these prices it will be satisfactory. If the others run bonus above this point let them take it, as it will be more money to us to take the bonus. "We note Mr. Thornton's report of average premiums from June 1st to December, that the average was $3.63. The average bonuses that are prevailing to-day are $7 to $8. We cannot expect this to continue, and we think your estimate of $6 ton average bonus is hish— as we do not believe the premiums of '96 will average that price, unless there is a decided change for the better in business We ^Sl*^®*"® ^®^*^ ^^^^^ ^^^ shipped into pay territory from Jauuarv 1 189o, to date, including the 40,000 tons of old business that did not pay a bonus, about 188,000 tons, and we think a very conservative esti- mate of shipments into this territory will amount to fully 200 000 this year: more than that, probably overrun 240,000 tons, from 'the 1018 175 UNITED STATES REPORTS, 221. Statement of the Case. fact that the city of Chicago and several other places that annually use large quantities of pipe were not in the market [221] last year, iwr last season, from the fact that they were out of funds. On the basis as fiTen you above, if the demand should reach 220,000 tons, which would give us our entire 40,000 tons, provided we did no busi- ness, then the association would pay us the average * bonus,' which might be from $3.50 to $5 on our 40,000. If we cannot secure busi- ness in • pay territory * at paying prices, we think we will be able to dispose of our output in 'free territory,* and of course make some profit on that "At the prices that Howard-Harrif?on people paid for Jacksonville, Des riaines and one or two other points, they are loshig from $2.50 to $3 per ton, that is, provided * bonuses ' would not be returned to them. Therefore when business goes at a loss, we are willing that other sbeps make It** Another letter was written by the same company pending a trouble over a letting at Atlanta. The Anniston Company to whom Atlanta had been " reserved " made its bid so high ($24) that a Philadelphia pipe firm, R. D. Wood & Co., had been able to underbid the Anniston Company in spite of dif- ference in freights. All the bids had been rejected as too high, and upon a second letting Anniston's bid was $1.25 a ton less, and the job was awarded to it. The charge was then made by Atlanta persons that there was a " trust " or " combine." This was vigorously denied. The letter of the Chattanooga Company evoked by this difficulty was dated February 25, 1896, and reads as follows : " Gentlemen :• We are in receipt of a carbon copy of your favor of the 24th instant to F. B. Nichols, V. P., In reference to Atlanta. Ga. We certainly regret that the matter has assumeelieve that the re- sult would be more benefit to all concerned if all business was made competitive. It is hardly right, and we believe if you will think over the matter carefullv you will conceile it, for us to be put Into a posi- tion of b9inar unable to make prices or furnish pipe for the city of Atlanta, when we have always heretofore had a large share of their trade. We cannot explain our po.«ltlon to the Atlanta people and we consider it is detrimental to our business, and think no combination should have the power to force us into such a position. The same argument will apply with you as to New Orleans, St Louis and other places. We think this matter should l>e considered seriously and some action taken that will result in reestablishing ourselves (I mean the four southern shops) in the confidence of the Atlanta people. Wia- tar. R. D. Wood & Company's man, has no doubt told them all about ADDYSTON PIPE & STEEL CO. t% UNITED STATES. 1019 Statement of the Case. our association, or as much as he could guess, and has worked up a very bitter feeling against us. The very fact that you have been pro- tected and have had all their business for the past two years is proof to them that puch a * combination ' exists, and they state that if they find out positively that we are working together, they will never re- ceive a bid from any one of us again. We cannot aflPord to leave these people under that impression, and something ought to be done that would disprove Mr. Wistar's statement to them. We believe that all business ought to be competitive. The fact that certain shops have certain cities ' reserved ' is all based upon mere sentiment and no good reason exists why It should be so. We believe that as a general thing; we have had our prices entirely too high, and espe- cially do we believe this has been the case as to prices in ' reserved cities. The prices made at St Louis and Atlanta are entirely out of all reason, and the result has been and always will be, when high prices are named, to create a bad feeling and an agitation aginst the ' com- bination.' There is no reason why Atlanta, New Orleans. St Louis or Omaha should be made to pay higher prices for their pipe than other places near [223] them, who do not use anything like the amount of pipe and whose trade Is not as desirable for many other reasons. There is no sentiment existing with us in reference to Atlanta, as we would as soon sell our pipe anywhere else, only as stated above, it is wrong In principle that we should be forced to give up Atlanta or any other point for no good reason that we know of." It appears quite clearly from the prices at which the Chat- tanooga and the South Pittsburg Companies offered pipe in " free " territory that any price which would net them from $13 to $15 a ton at their foundries would give them a profit. Pipe was freely offered by the defendants in " free " territory more than five hundred miles from their foundries at less prices than their representative boards fixed prices for jobs let in cities in " pay " territory nearer to defendants' foundries by three hundred miles or more. The defendants adduced many affidavits of a formal type, chiefly from persons who had been buying pipe from defend- ants and other companies, who testified in a general way that the prices at which the pipe had been offered by defendants all over the country- had been reasonable, but in not one of the affidavits was any attempt made to give figures as to cost of production and freight, and in not a single case were the specific instances shown by the evidence for the petiti^^ner disputed. There was some evidence as to the capacity of the defend- ants' mills. The division of bonuses was based on an aggre- gate yearly output of 220,000 tons, but there are averments in the answer that indicate that this was not a statement of the actual limit of capacity, but was only taken as a standard of restricted output upon which to calculate an equitable 1020 175 UNITED STATES REPORTS, 223. Statement of the Case. division of bonuses. Nowhere in the large mass of affidavits is there any statement of the fer diem capacity of the defend- ants' mills. Taking their aggregate capacity, however, as 220,000 tons, that of the other mills in the " pay " territory was 170,500 tons, and that of the mills in the " free " terri- tory was 348,000 tons, according to the affidavit of the chief officer of one of the defendants. Of the non-association mills in the [224] " pay " territory one was at Pueblo, Colorado, another was in the state penitentiary at Waco, Texas, and a third in Oregon. Their aggregate annual capacity was 45,500 tons. Another non-association mill was the Shickle, Howard-Harrison mill of St. Louis, Missouri, with a capacity of 12,000 tons. John W. Harrison, who was president of this company, was also president of the Howard-Harrison mill at Bessemer, Alabama, which was a member of the asso- ciation, and it appears that an order taken by the Bessemer mill at St. Louis was partly filled by the St. Louis mill. The other mills in the " pay " territory were one at Columbus, Ohio, with an annual capacity of 30,000 tons, one at Cleve- land, Ohio, of 60,000 tons, one at New Comerstown, in north- eastern Ohio, of 8000 tons, and one at Detroit, Michigan, of 15,000 tons, and their aggi*egate annual capacity was 113,000 tons. In the " free " territory there was one mill in eastern Virginia with an annual capacity of 16,000 tons, four mills in eastern Pennsylvania with a capacity of 87,000 tons, thi-ee mills in New Jersey with a capacity of 210.000 tons, and two mills at New York, one at Utica and another at Buffalo, with an aggregate capacity of 35,000 tons. The evidence was scanty as to rates of freight upon iron pipes, but enough appeared to show that the advantage in freight rates wliich the defendants had over the large pipe foundries in New York, eastern Pennsylvania and New Jer- sey in bidding on contracts to deliver pipe in nearly all of the " pay " territory varied from $2.00 to $6.00 a ton, according to the location. The defendants filed the affidavits of their managing offi- cers, in which they stated generally that the object of their as- sociation was not to raise prices beyond what was reasonable, but only to prevent ruinous competition between defendants which would have carried prices far below a reasonable point; ADDYSTON PIPE & STEEL CO. V. UNITED STATES. 1021 Argument for Appellants. that the bonuses charged were not exorbitant profits and addi- tions to a reasonable price, but they were deductions from a reasonable price in the nature of a penalty or burden intended to curb the natural disposition of each member to get all Ihe business possible and more than his due proportion ; that the prices fixed by the association were always reasonable and [225] were always fixed, as they must have been, with refer- ence to the very active competition of other pipe manufactur- ers for every job; that the reason why they sold pipe at so much cheaper rates in the '' free " territory than in the " pay " territory was because they were willing to sell at a loss to keep their mills going rather than to stop them; that the prices at a city like St. Louis, in which the specifications were detailed and precise, were higher because pipe had to be made especially for the job and they could not use stock on hand. Mr. Frank Spurlock (with whom was Mr, Foster V, Brown on his brief) and Mr, John W, Warrington for appellants, cited in their briefs: Printing and Numerical Reg, Co, v. Sampson, L. R. 19 Eq. 462, 465 ; Rousillon v. Rousillon, 14 Ch. Div. 351, 365 ; National Benefit Co, v. Union Hospital Co,, 45 Minnesota, 272; Oregon Steam Navigation Co, v. Winsor, 20 Wall. 64, 68; Oakdale ManufactuHng Co, v. Garst, 18 E. I. 484; Tode v. Gross, 127 N. Y. 480; Shrainka V. Scharringhausen, 8 Mo. App. 522 ; Beal v. Chase, 31 Michi- gan, 490; Dolph v. Troy Laundry Machinery Co,, 28 Fed. Rep. 553; S, C, 138 U. S.,617; Kellogg v. Larkin, 3 Pinney, (Wisconsin,) 123; Dueler Watch Case Manufacturing Co. V. E, Howard Watch di Clock Co., 35 U. S. App. 16 ; Central Shade Roller Co, v. Cushman, 143 Mass. 353; Diamond Match Co, V. Roeher, 106 N. Y. 473; Leslie v. Lorillard, 110 N. Y. 519; Gihhs v. Baltimore Gas Co,, 130 U. S. 396; United States v. Trans Missouri Freight Ass\ 166 TJ. S. 290 ; Eastman v. Clark, 53 N. H. 276 ; Mayrant v. Marston, 67 Alabama, 453; Fay v. Davidson, 13 Minnesota, 523; Wickens v. Evans, 3 Younge & Jervis, 318 ; Nat, Benefit Co. V. Union Hospital Co,, 45 Minnesota, 272; Huhhard v. Mil- ler, 27 Michigan, 15; Robhins v. Shelby County Taxing Dis- trict, 120 U. S. 489 ; Emert v, Missouri, 156 U. S. 296 ; Asher 175 UNITED STATES BEPORTS, 225. Opinion of the Court. ¥. Texas J 128 U. S. 129 ; Stoutenhurgh v. Hennick, 129 U. S. 141; Brennan v. TitusvUle^ 153 U. S. 289, 307; Hopkim v. United States, 171 U. S. 578; Bohn Marmfacturing Co, v. HolliSy 54 Minnesota, 223 ; United States v. E. 0, Knight Co,, 156 U. S. 1; Brown v. Maryland. 12 Wheat. 419; Stats ltt%\ Freight Tax case, 15 Wallace, 232 ; Coe v. Errol, 116 U. S. 517 ; Kidd v. Pearson, 128 U. Si 1 ; Welton v. Missouri, 91 U. S. 275 ; In re Greene, 52 Fed. Rep. 104 ; Paul v. Vir- ginia, 8 Wall. 168; Civil Rights cases, 109 U. S. 3; /n iv Dehs, 158 U. S. 564; Scudder v. Union NaVl Bank, 91 U. S. 406; United States v. De Witt, 9 Wall. 41; License Tax eases, 5 Wall, 462 ; In re Rahrer, 140 U. S. 545 ; Patterson v. Kentucky, 97 U. S. 501; Barron v. Baltimore, 7 Pet. 243; Monongahela Naty. Co, v. United States, 148 U. S, 312; #iitin V. Illinois, 94 U. S. 113; 5w<^«? v. iV^c-w? yower to interfere in the case of the State, and yet have none in the case of the individual 1 Commerce is the impor- tant subject of consideration, and anything which directly obstructs and thus regulates that commerce which is carried or among the States whether it is state legislation or private contracts between individuals or corporations, should be sub- ject 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 mentioned, free from the control of Congress, because the direct results of such contracts might be the regulation of cominerce among the States, possibly quite as effectually as if a State had passed a statute of 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 regu- lation, to some extent, of a subject which from its general and great importance has been granted to Congress as the proper representative of the nation at large. Regulation, to any sub- stantial extent, of such a subject by any other power than that of Congress, after Congress has itself acted thereon, even ADDYSTON PIPE & STEEL CO. V. UNITED STATES. 1027 Opinion of the Court [231] though such regulation is effected by means of private contracts between individuals or corporations, is illegal, and we are unaware of any reason why it is not as objectionable when attempted by individuals as by the State itself. In both cases it is an attempt to regulate a subject which, for the purpose of regulation, has been, with some exceptions, such as are stated in Mobile County v. Kimball, 102 U. S. 691,697; Morgan v. Louisiana, 118 U. S. 455, 465; Bowman v. Chicago <& N. W. Railway, 125 U. S. 465 ; Western Union Telegraph Co, V. James, 162 U. S. 650, 655, exclusively granted to Con- gress; and it is essential to the proper execution of that power that Congress should have jurisdiction as much in the one case as in the other. It is, indeed, urged that to include private contracts of tJiis description within the grant of this power to Congress is to take from the States their own power over the subject, and to interfere with the liberty of the individual in a manner and to an extent never contemplated by the franiers 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 mentioned, because the constitutional provision as to the liberty of tlie citizen limits, to that extent, its power to regulate interstate com- merce, 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 power, then v/e 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. Thih- cannot l)e the case. If 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 probably would differ in regard to the matter, according to what each State might regard as its own particular interest. One State [332] might condemn all kinds of contracts of the class de- scribed, while another might permit the making of all of 1028 175 UNITED STATES BBPOBTS, 232. Opinion of tlie Court 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 regulating interstate commercje. 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 con- sequences would seemingly necessarily follow if it were de- cided that the state legiflatures had Ltrol over the .ubject to the extent mentioned. It is true, so far as we are informed, that no state legisla- ture has heretofore authorized by affirmative legislation the making of contracts upon the matter of interstate coiiimerce of the nature now under discussion. Nor has it, in terms, condemned them. The reason why no state legislation upon the subject has been enacted has probably been bebanse it was supposed to be a subject over wliich 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 filreaJv indicated. On the other hand, if it be true that in no event foiild a state legislature enact a law affirmatively authorizing; -nch contracts, (even if Congress had no jurisdiction over the sub- ject,) because in so doing it would to a greater or less extent itself thereby, though indirectly, regulate interstate ('oni- merce, then the question whether such contracts were legal without legislative sanction would depend upon the de(nsi()ns of the various state courts having jurisdiction in the cases, and in that event, as the same question might arise in dif- ferent States, there would be great probability of inconsis- tent and contradictory decisions among the courts of the dif- ferent States, and that, too, upon questions of contiaots amounting to the regulation of interstate commerce. It is true that under our system of government there are numerous subjects over which the States have exclusive jurisdiction, resulting in the enact- [233] ment of different laws npoii tin* same subject in various States, and also in varying and in consistent judicial judgments in the different States upon the same subject. That condition has never been regarded ADDYSTON PIPE & STEEL CO. V. UNITED STATES. 1029 Opinion of the Court as an end in itself desirable. It undoubtedly results in some confusion as to the law applicable to the particular oase, and in many instances thereby increases the cost juid renders doubtful the result of the litigation arising under such cir- cumstances. They are results and the necessary accompani- ment of the division of sovereignty between the States on fhe one hand and the Federal Government on the other, and vet the enormous and inestimable benefits arising from the ex- istence of separate, independent and sovereign States have completely submerged the comparatively minor evils of in- consistent judgments and different laws upon many of the subjects over which the States have exclusive 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 impor- tance of having but one source for the law which regulates that commerce throughout the length and breadth of the land cannot in our opinion be overestimated. Each State in that event would have complete jurisdiction over the com- merce which was wholly within its own borders, while ihe jurisdiction of Congress, under the provisions of the Constitu- tion, over interstate commerce would be paramount, and would include therein jurisdiction over contracts of the na- ture we have been discussing. The remark in Railroad Company v. 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 commerce, when read in coimection with the facts 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 Con- gress passed acts relating to the construction of bridges over rivers and streams and authorizing railroads to carry ]^as- [234] sengers on their way from one State to another. The railroad company becoming tired of its contract with the elevator company, desired to take advantage of this legis- lation and contended that under it, the contract which it had theretofore made with the elevator company became void as 1030 175 UNITED STATES REPORTS, 234. Opinion of the CJourt. an obstacle to or a regulatioE of commerce. The court held that contracts which were valid when made continue valid and capable of enforcement, so long, at least, as peace lasts between the governments of the contracting parties, notwith- standing a change in the condition of business which origi- nally led to their creating. It was then added that it never was 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 commerce. There is no intimation in this remark that Congress has no power to legislate regarding those contracts which do directly regulate and restrain interstate commerce. The inference is quite the reverse, and it is plain that the case assumes if private contracts when entered into do directly interfere with and regulate interstate commerce, Congress had power to con- demn 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 manifestly immaterial whether the design to so regidate 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 direct and substantial regulation is the important part of the contract, and that regulation existing, it is unim- portant that it was not designed. Where the contract affects interstate commerce onlv inci- dentally 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 execu- tion of a contract pertaining to and directly affecting, and more or less regulating, interstate commerce is of no impor- tance. We conclude that the plain language of the grant to Congress of power to regulate coimnerce among the several [235] 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 can find no reasonable ground for asserting that the constitu- tional provision as to the liberty of the individual limits the extent of that power as claimed by the appellants. We there- ADDYSTON PIPE & STEEL CO. V. UNITED STATES. 1031 Opinion of the Court fore think the appellants have failed in their contention upon this branch of subject. We are thus brought to the question whether the contract or combination proved in this case is one which is either a direct retraint or a regulation of commerce among the sev- eral States or with foreign nations contrary to the act of Con- gress. It is objected on the part of the appellants that even if it affected interstate commerce the contract or combina- tion was only a reasonable restraint upon a ruinous compe- tition among themselves, and was formed only for the pur- pose of protecting the parties thereto in securing prices for their product that were fair and reasonable to themselves and the public. It is further objected that the agreement does not come within the act because it is not one which amounts to a regulation of interstate commerce, as it has no direct bearing upon or relation to that commerce, but that on the contrary the case herein involves the same principles which were under consideration in United States v. E, C, Knight Company, 156 U. S. 1, and, in accordance with that decision, the bill should be dismissed. Keferring to the first of these objections to the mainte- nance of this proceeding, we are of opinion that the agreement or combination was not one which simply secured for its members fair and reasonable prices for the article dealt in by them. Even if the objection thus set up would, if well founded in fact, constitute a defence, we agree with the Circuit Court of Appeals in its statement of the special facts upon this branch of the case and with its opinion thereon as set forth by Circuit Judge Taft, as follows : " The defendants being manufacturers and vendors of cast-iron pipe entered into a combination to raise the prices for pipe for all the States west and south of New York, Pennsylvania [236] and Virginia, constituting considerably more than three quarters of the territory of the United States, and significantly called by the associates * pay ' territory. Their joint annual output was 220.000 tons. The total capacity of all the other cast-iron pipe manufacturers in the *pay' territory was 170,500 tons. Of this, 45,000 tons was the capacity of mills in Texas, Colorado and Oregon, so far removed from that part of the * pay ' territory where the demand was considerable that neces- sary freight rates excluded them from the possibility of competing, and 12,000 tons was thfc possible annual capacity of a mill at St. Louis, which was practically under the same management as that of one of the defendants' mills. Of the remainder of the mills in *pay* territory and outside of the combination, one was at Columbus, Ohio, two in northern Ohio, and one in Michigan. Their aggregate possible 1032 176 UNITED STATES BEPORTS, 236. Opinion of the Court annual capacity was about one half the usiiai annual output of the ilefendants' mllla They were, it will be observwl, at the extreme northeni end of the 'pay* territory, while the defendants' mills at Cincinnati, Louisville, Chattanooga and South Pittsburg, and Annis- ton and Bessemer were grouped much nearer to the centre of the 'pay' territory. The freight upon cast-iron pipe amounts to a con- siderable i>erwntage of the price at which manufacturers can deliver it at any great distance from the place of manufacture. Within the margin of the freight per ton which Eastern manufacturers would have to pay to deliver pipe in *pay' territory, the defendants, by controlling two thirds of the output in 'pay' territory, were practi- cally able to fix prices. The competition of the Ohio and Michigan mills of course stHuewhat affected their power in this resi)ect in the northern part of the ' pay ' territory, but the further south the place of delivery was to be, the more complete the monopoly over the trade which the defendants were able to exercise, within the limits already described. Much evidence is adduced upon affidavit to prove that defendants had no power arbitrarily to fix prices and that they were always obligetl to meet competition. To the extent that they could lot impnse prices on the public in excess of the cost price of pipe r.ith freight from Atlan- [237] tic seaboard added, this is true, but •vithin that limit they could fix prices as they chose. The most cogent evidence that they had this power is the fact everywhere apparent in the record that they exercised it. The details of the way in which it was maintained are somewhat obscured by the manner in which the proof was adduced in the court below upon aflldavits solely, and with- out the clarifying effect of cross-exam Ination, but quite enough ap- pears to leave no doubt of the ultimate fact. "The defendants were by their combination therefore able to de- prive the public in a large territory of the advantages otherwise accruhig to them from the proximity of defendants' pipe factories and, hy keeipng prices Just low enough to prevent competition bv Eastern manufacturers, to Cv>mpel the public to pay an increase over what the price would have been if fixed by competition between defendants, nearly equal to the advantage in freight rates enjoyed by defendants over Eastem competitors. The defendants actiuired this power by voluntarily agi-eeing to sell only at prices fixed by their committee and by allowing th? Iiii:h3st bidder at the secret * auction pirol ' to become the lowest bidder of them at the public letting. Now, the restraint thus imposetl on themselves was only partial. It did not cover the United States. There was not a complete monopoly. It was tempered by the fear (;f competitinu and it affected only a part of the price. But this certainly does not take the contract of associa- tion out of the annulling effect of the rule agamst monopolies. In United States v. E. C. Knight Company, 156 U. S. 1, 10, Chief Justice Fuller, in speaking for the court, sjiid : 'Again all the authorities agree that in onier to vitiate a contract or combination, it Is not essential that its result should be a complete monopoly; it is sufficient if It really tends to that end and to deprive the public of the advantages which flow fntm free ciinitetitian.' "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 attidavits (»f purha;sers of pip^ in ' pay ' territorv, all drawn by the same hand or from the same model, are produced. In which the affiants say that in their [238] ophiion 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 reasonableness open to the courts with reference to such a contract. Its tendency ADDYSTON PIPE AND STEEL CO. V, UNITED STATES. 1033 Opinion of the Court was certainly to give defendants the power to charge unreasonable prices, had they chosen to do so. But if it were important we should unhesitatingly find that the prices charged In the instances which were in evidence were unreasonable. The letters from the manager of the Chattanooga foundry written to the other defendants and dis- cussing the prices fixed by the association, do not leave the slightest doubt upon this point, and outweigh the perfunctory affidavits pro- duced by the defendants. The cost of producing pipe at Chattanooga together with a reasonable profit, did not exceed $15 a ton. It could have been delivered at Atlanta at $17 to $18 a ton, and yet the lowest price which that foundry was permitted by the rules of the associa- tion to bid was $24.25. The same thing was true all through * pay ' territory to a greater or less degree, and especially at 'reserved' cities. The facts thus set forth show conclusively that the effect of the combination was to enhance prices beyond a sum which was reasonable, and therefore the first objection above set forth need not be further noticed. We are also of opinion that the direct effect of the agi-ee- ment or combination is to regulate interstate commerce, and the case is therefore not covered by that of United States v. E. C. Knight Company^ Sfrpra. It was there held that although the American Sugar Refining Company, by means of the combination referred to, had obtained a practical monopoly of the business of manufacturing sugar, yet the act of Congress did not touch the case, because the combina- tion only related to manufacture and not to commerce among the States or with foreign nations. The plain distinction between manufacture and commerce was pointed out, and it was observed that a contract or combination which directly related to manufacture only was not brought within the purview of the act, although as an indirect and incidental result of such combina- [239] tion commerce among the States might be thereafter somewhat affected. Mr. Chief Justice Fuller, in delivering the opinion of the court, spoke of the distinction between the two subjects, and said : «t The argument is that the power to control the manufacture of re- ^, t,^^^*'*^ ^^ ^ monopoly over a necessity of life, to the enjovment of which by a large part of the population of the United States inter- state commerce is indispensable, and that, therefore, the General Gov- ernment, m the exercise of the power to regulate commerce, mav re- press such monopoly directly and set aside the instruments which have created it. " Doubtless, the power to control the manufacture of a given thing Involves in a certain sense the control of its disposition, but this is a secondary and not the primary sense; and although the exercise of that power may result in bringing the operation of commerce into XUtj4 175 UNITED STATES BEPOBTS, 239. Opinion of the Court play, it does* not control it, and affects it only incidentally and in- directly. Commerce succeeds to manufacture and is not a part of it ♦ ♦ ♦ ♦ ♦ ** It will be ijerceived bow far reaching the proposition is that the power of dealing with a monopoly directly may be exercised by the General Government whenever interstate or international commerce may be ultimately affected. The regulation of commerce applies to the subjects of commerce and not to matters of internal police. Con- tracts to buy, sell or exchange goods to be transported among the several States, the transportation and its instrumentalities, and arti- cles 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. 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 manufactnrtT dues not determine the time when the article or pnxluct passt»s from the control of the State and belongs to commerce. ♦ ♦ * * * "There was nothing in the proofs to indicate any intention to put a restraint upon trade or commerce, and the fact, as we [240] have seen, that trade or commerce might be indirectly affected, was not enough to entitle complainants to a decree." The direct purpose of the combination in the Knight case was the control of the manufacture of sugar. There was no combination or agreement, in terms, regarding the future disposition of tlie manufactured article; nothing looking to a transaction in the nature of interstate commerce. The probable intention on the part of the manufacturer of the sngar to thereafter dispose of it by sending it to some mar- ket in another State, was held to be immaterial and not to alter the character of the combination. The various cases which had been decided in this court relating to the subject of interstate connnerce, and to the difference between that and the manufacture of connnodities, and also the police power of the States as affected by the commerce clause of the Constitution, were adverted to, and the case wes decided upon the principle that a combination simply to control manufacture was not a violation of the act of Congress, be- cause such a contract (»r coml)ination did not directlv con- trol or affect interstate connnercv, but that contracts for the sale and transportation to other States of specific articles were proper subjects for regulation because they did form part of such commerce. We think the case now before us involves contracts of the nature last above mentioned, not incidentally or collaterally, but as a direct and immediate result of the combination engaged in by the defendants. ADDYSTON PIPE AND STEEL CO. V. UNITED STATES. 1035 Opinion of the Court. "While no particular contract regarding the furnishing of pipe and the price for which it should be furnished was in the contemplation of the parties to the combination at the time of its formation, yet it was their intention, as it was the purpose of the combination, to directly and by means of such combination increase the price for which all contracts for the delivery of pipe within the territory above described should be made, and the latter result was to be achieved by abolishing all competition between the parties to the combi- nation. The direct and immediate result of the combina- tion was therefore necessarily a restraint upon interstate commerce in respect of arti- [241] cles manufactured by any of the parties to it to be transported beyond the State in which they were made. The defendants by reason of this combination 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 pursuant to the provisions of such combination. As pertinently asked by the court below, was not this a direct restraint upon interstate commerce in those goods? If dealers in any commodity agreed among themselves that any particular territory bounded by state lines should be fur- nished with such commodity by certain members only of the combination, and the others would abstain from business in that territory, would not such agreement be reg^irded as one in restraint of interstate trade ? If the price of the connnod- ity were thereby enhanced, (as it naturally would be,) the character 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 attempt to supply the demand for the pipe or to enter into competition for the busi- ness? Does not an agreement or combination (^f 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? As has frequently been said, interstate commerce consists of 1036 175 UNITED STATES REPORTS, 241. Opinion of tlie Court intercourse and traffic between the citizens or inhabitants of different States, and includes not only the transportation of persons and property and the navigation of public waters for that purpose, but also the purchase, sale and exchange of commodities. Gloucester Fei^ry Co, v. Pennsj/lvania^ 114 U. S. 196-203; Kidd v. Pearson, 128 U. S. 1, 20. If, there- fore, an agreement or combination directly restrains not aione 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 regulate [242] such commerce, that is, the power to pre- scribe 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 di- rectly operates, not alone upon the manufacture, but upon the sale, transportation and delivery of an article 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. We think it plain that this contract or combination effects that result. The defendants allege, and it is true, that their business is not like a factory manufacturing an article of a certain kind for which there is at all times a demand, and which is manu- factured without any regard to a particular sale or for a par- ticular customer. In this respect as in many others the busi- ness differs radically from the sugar refiners. The business of defendants is carried on by obtaining particular contracts for the sale, transportation and delivery of iron pipe of a certain description, quality and strength, differing in differ- ent contracts as the intended use may differ. These contracts are, generall} spetiking, obtained at a public letting, at which there are many competitors, and the contract bid for includes, in its terms, the sale of the pipe and its delivery at the place desired, the cost of transportation being included in the pur- chase price of the pipe. The contract is one for the sale and delivery of a certain kind of pipe, and it is not generally essential to its performance that it should be manufactured for that particular contract, although sometimes it may be. If the successful bidder had on hand iron pipe of the kind ADDYSTON PIPE AND STEEL CO. V, UNITED STATES. 1037 Opinion of tlie Court. specified, or if he could procure it by purchase, he could in most cases deliver such pipe in fulfilment of his contract just the same as if he manufactured the pipe subsequently to the making of the contract and for the specific purpose of its performance. It is the sale and delivery, of a certain kind and quality of pipe, and not the manufacture, which is the material portion of the contract, and a sale for delivery be- yond the State makes the transaction a part of interstate commerce. Municipal corporations and gas, railroad and water companies [243] are among the chief customers for the pipe, and when they desire the article they give notice of the kind and quality, size, strength and purpose for which the pipe is desired, and announce that they Avill receive proposals for furnishing the same at the place indicated by them. Into this contest (and irrespective of the reserved cities) the de- fendants enter, not in truth as competitors, but under an agreement or combination among themselves which elimi- nates all competition between them for the contract, and permits one of their number to make his own bid and requires the others to bid over him. In certain sections of the coun- try the defendants would have, by reason of their situation, such an advantage over all other competitors that there would practically be no chance for any other than one of their num- ber to obtain the contract, unless the price bid was so exorbitant as to give others not so favorablv situated an opportunity to snatch it from their hands. Under these circumstances, the agreement or combination of the defend- ants, entered into for that purpo e and to directly obtain that desired result, would inevitably and necessarily give to the defendant, who was agreed upon among themselves to make the lowest bid, the contract desired and at a higher price than otherwise would have been obtained, and all the other parties to the combination would, by virtue of its terms, be restricted from an attempt to obtain the contract. The combination thus had a direct, immediate and intended relation to and effect upon the subsequent contract to sell and deliver the pipe. It was to obtain that particular and specific result that the combination was formed, and but for the restriction the resulting high prices for the pipe would not have been obtained. It is useless for the defendants to say 175 UNITED STATES BEPOBTS, 243. Opinion of the Court. thej did not intend to regulate or affect interstite commerce, They intended to make the very combination and agreement which they in fact did make, and they must be held to have intended (if in such case intention is of the least importance) the necessary and direct result of their agreement. The cases of HofMns v. United States^ ITl U. S. 578, and Anderson v. United States^ 171 IT. S. 604, are not relevant. In the Hopkins ntse it was held that the business of the mem- I2i4r] bers of the Kansas. City Live Stock Exchange was not iutei-state conunerce. and hence the act of Congress did not affect them; while in the Anderson case it was held that whether the members of the Traders' Live Stock Exchange were or were not engaged in the business of interstate com- merce, was inmiaterial, as the agreement proved was not in restraint of trade, and did not regulate such commerce. It was said that when it is seen that the agreement entered into does not directly relate to and act upon and embrace inter- state commerce, and that it was executed for another and entirely different purpose, and that it was calculated to attain it, the agreement would he upheld, if its effect upon that com- jaerce were only indirect and incidental. The agreement involved in that case was held to be of such a character. The case we have here is of an entirely different nature, and is not eovei'ed or affected by the decisions cited. It is also urged that as but one contract would be aAvarded for the work proposed at any place, and therefore only one {person would secure it by virtue of being the lowest bidder, the selection bv 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 oper- ated 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 combina- tion to restrain the action of the parties to it so that there shall be no competition among tliem 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 ADDYSTON PIPE AND STEEL CO. V. UNITED STATES. 1039 Opinion of tlie Court 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 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 [245] trade in the commodity is not necessary in order to i-en- der the combination one in restraint of trade. It is the effect of the combination in limiting and restricting the right of each of the members to transact business in the ordinary way, as Avell as its effect upon the volume or extent of the dealing in the conunodity, that is regarded. All the facts jind circum- stances are, however, to be considered in order to determine the fundamental question— whether the necessary effect of the combination is to restrain interstate commerce. If iron pipe cost one hundred dollars a ton instead of the prices which the record shows Avere paid for it, no one, we think, would contend that the trade, in it would amount to as much as if the lower prices prevailed. The higher price would operate as a direct restraint upon the trade, and there- fore any contract or combination which enhanced 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 combination 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 combina- tion 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 combina- tion upon the trade in the article, and if tliat effect be to 1040 175 UNITED STATES REPOBTS, 246. Opinion of the Court destroy competition and thus advance the price, the combina- tion is one in restraint of trade. Decisions regarding the validity of taxation by or under state authority, involving sometimes the question of the point of time that an article intended for transportation beyond the [246] State ceases to be governed exclusively by the domestic law and begins to be governed and protected by the national law of commercial regulation, are not of very close applica- tion liere. The coomiodity may not have commenced its journey and so may still be completely within the jurisdiction of the State for purposes of state taxation, and yet at that s^arne time the commodity may have been sold for delivery in another State. Any combination among dealers in that kind of commodity, which in its direct and immediate effect, fore- closes all competition and enhances the purchase price for which such commodity would otherwise be delivered at its destination in another State, would in our opinion be one in restraint of trade or commerce among the States, even though the article to be transported and delivered in another State were still taxable at its place of manufacture. It is said that a particular business must be distinguished from its mere subjects, and from the instruments by which the business is carried on ; that in most cases of a large manu- facturing company it could only be carried on by shipping products from one State to another, and that the business of such an establishment would be related to interstate com- merce only incidentally and indirectly. This proposition we are not called upon to deny. It is not, however, relevant. Where the contract is for the sale of the article and for its delivery in another State, the transaction is one of interstate commerce, although the vendor may have also agreed to manufacture it in order to fulfil his contract of sale. In such case a combination of this character would be properly called a combination in restraint of interstate commerce, and not one relating only to manufacture. It is almost needless to add that we do not hold that every private enterprise which may be carried on chiefly or in part by means of interstate shipments is therefore to be regarded as so related to interstate commerce as to come within the regulating power of Congress. Such enterprises may be of ADDYSTOK PIPE AND STEEL CO. V, UNITED STATES. 1041 Opinion of the Court the same nature as the manufacturing of refined sugar in the Kmght case-thfit is, the parties may be engaged as manu- facturers of a commodity which they thereafter intend at 1247] some time to sell, and possibly to sell in another State; but such sale we have already held is an incident to and not the direct result of the manufacture, and so is not a regula- tion of or an illegal interference with interstate commerce. That principle is not affected by anything herein decided. The views above expressed lead generally to an affirmance of the judgment of the Court of Appeals. In one aspect, however, that judgment is too broad in its terms-the in- junction IS too absolute in its direction&-as it mav be con- strued as applymg equally U> commerce wholly within a State as well as to that which is interstate or international only. This was probably an inadvertence merely. Although the jurisdiction of Congress over commerce among the States IS full and complete, it is nt)t questioned that it has none over that which is wholly within a State, and therefore none over combinations or agreements so far as they relate to a restraint of such trade or commerce. It does not acquire any jurisdic- tion over that part of a combination or agreement which relates to commerce wholly within a State, by reason of the fact that the combination also covers and regulates commerce which IS mterstate. The latter it can regulate, while the for- mer IS subject alone U> the jurisdiction of the Stat«. The combination herein described covers both commerce which is wholly within a State and also that which is interstate. In regard to such of these defendants as might reside and carry on business in the same State where the pipe provided for m any particular contract was to be delivered, the sale transportation and delivery of the pipe by them under that contract would be a transaction wholly within the State, and the statute would not be applicable to them in that case. Ihey might make any combination they chose with reference to the proposed contract, although it should happen that some non-resident of the State eventually obtained it. The fact that the proposal called for the delivery of pipe m the same State where some of the defendants resided and carried on their business woyld be sufficient, so far as the act 11808— VOL 1—06 M 66 1042 116 UNITED STATES BBPOBTS, 248. Opinion of tbe Court of Congress is concerned, to permit those defendants to com- bine as they might choose, in regard to the proposed contract [248] for the delivery of the pipe, and that right would not be affected by the fact that the contract might be subse- quently awarded to some one outside the State as the lowest bidder. In brief, their right to combine in regard to a pro- posal for pipe deliverable in their own State could not be reached by the Federal power derived from the commerce dause in the Constitution. To the extent that the present decree includes in its scope the enjoining of defendants thus situated from combining in regard to contracts for selling pipe in their own State, it is modified, and limited to that portion of the combination or agreement which is interstate in its character. As thus modi- fied, the decree is INDEX— DIGEST, [Volumes 1 and 2.] ABATEMENT. See Statutes, 70. ACQUISITION OF PROPERTY, fi^ee Combinations, etc., 140-143. ACTIONS AND DEFENSES. I. Actions. /. By private parties. 1. Private Individual can not Sue in Equity under the Statute- Remedy at Law.— The act " to protect trade and commerce against unlawful restraints and monopolies" (act Cong. July 2, 1890) confers no right upon a private individual to sue in equity for the restraint of the acts forbidden by such statute, an action at law for damages being the only remedy provided for private persons, and the right to bring suits in equity being vested in the district attorneys of the United States. Pidcock v. Harrington, 64 F., 821. i 377 2. Remedy, Action for Damages— No Recourse in Equity.— The Anti-Trust Law of July 2, 1890, does not authorize a court of equity to entertain a bill by a private party to enforce its provisions, his remedy being by an action at law for damages. Southern Ind. Exp. Co. v. U. S. Exp. Co., 88 F., 659. 1—862 S. A municipal corporation engaged in operating water, light- ixig, or similar plants, from which a revenue is derived, is, in relation to such matters, a business corporation and may maintain an action under section 7 of the Anti-Trust Act of July 2, 1890 (26 Stat, 210), for injury to its "business" by reason of a combination or conspiracy in restraint of inter- state trade or commerce made unlawful by such act. City of Atlanta v. Chattanooga Foundry d Pipeworks, 127 F., 23. - ^ . . . 2—299 4. Bringing m Nonresidents.— The authority given by section 5 of the act of July 2, 1890 (26 Stat, 209), to bring in nonresi- dents of the district can not be availed of in private suits, and the court can acquire no jurisdiction over them Qreer Mills d Co. V. Stoller, 77 F., 1. 1—620 1043 1044 INDEX — ^DIGEST. AOnOirS AND BEFENSES-Continued. 2, By parties to the combination, 5. Members of the Kansas City live Stock Exchange can not en- join the board of directors of that exchange, under the Anti- Trust Law of 1890, from enforcing against them certain by- laws of the association claimed to be illegal and in violation of that act. Greer, Mills d €o. v. Stoller, 77 F., 1. 1—620 8. Where a member of a voluntary association has been suspended by the directors for nonpayment of a fine for violation of the by-laws, his action to be restored to the privileges of mem- bership is founded upon the contract between himself and the association, which he must either accept in its entirety or repudiate. He does not occupy the position of a stranger injured by the acts of co-trespassers. Ih, 7. May Maintain Action to Set Aside TTnlawful Transfer of Prop- erty. — A minority stockholder in a corporation may main- tain a suit in equity in behalf of himself and all other stock- holders similarly situated to set aside an alleged unlawful transfer of the property of the corporation in pursuance of a conspiracy between its officers and the transferee in restraint of trade and commerce, where it is alleged that the corpora- tion, on demand, has refused to bring such suit. Metcalf v. Amer. School-Furniture Co., 108 F., 900. 2—75 S. Same— Multifariousness.— A bill for such relief which also seeks the recovery of treble damages under the Anti-Trust Act of July 2, 1890, is multifarious, since such damages are only recoverable in an action at law by the plaintiff as an indi- vidual, and not as a stockholder, while the equitable relief prayed for is in behalf of the corporation, and, if granted, would inure to the benefit of all the stockholders. lb. t. Ho Bight of Action Against Trust to Recover Damages. — Section 7 of the Anti-Trust Act (26 Stat. 209), giving to any persoa Injured by any other person or corporation by reason of any- thing forbidden in the act the right to recover treble dam- ages, does not authorize an action against an alleged trust corporation, by one who was a party to its organization and a stockholder therein, to recover damages resulting from the enforcement by defendant of rights given it by the alleged unlawful agreement. Bishop v. Amer. Preservers Co., 105 F., 845. »— 51 10. Member of a Combination in Violation of Anti-Trust Law may Maintain Suit to Enjoin Infringement of Patent Owned by Complainant. — That a complainant is a member of a com- bination in violation of the Anti-Trust Law of July 2, 1890 (26 Stat, 209), does not give third persons the right to in- fringe a patent of which complainant is owner, nor preclude complainant from maintaining a suit in equity to enjoin such infringement General Electric Co. v. Wise, 119 F., 922. »— 205 INDEX — ^DIGEST. 1045 ACTIONS AND DEFENSES— Continued. II. Recovery on Collateral Contract.— -The act of July 2, 1890, sec- tion 1 (26 Stat, 209), known as the "Sherman Anti-Trust Act," does not invalidate, or prevent a recovery for the breach of a collateral contract for the manufacture and sale of goods by a member of a combination formed for the pur- pose of restraining interstate trade in such goods. Hadley Dean Plate Glass Co. v. Highland Glass Co., 143 F., 242. 2—995 See also Jayne v. Loder, 149 F., 22. 3. By illegal combinations. 12. Can not Enforce Illegal Contract.— An illegal combination or trust can not resort to equity to enforce a contract or sale calculated to perpetuate the illegal features of the combi- nation. Amer. Biscuit & Mfg. Co. v. Klotz, 44 F., 721. 1—2 13. May Recover on Collateral Contracts the Price of Goods Sold.— A violation of the Sherman Anti-Trust Act of July 2, 1890 (26 Stat, 209), by the formation of a combination in restraint of trade, by which a penalty is incurred under the statute, does not preclude the company thus illegally formed from recovering on collateral contracts for the purchase price of goods. Connolly v. Vnion Sewer Pipe Co., 184 U. S., 540. 14. Same.— Nor does the illegality, at common law, of such a com- bination formed by corporations and persons in restraint of trade, preclude it from recovering the purchase price of goods sold in the course of business. /ft. -f. By the United States. 15. The right to bring suits in equity for violations of the Anti- Trust Act of July 2, 1890, is vested in the district attorneys of the United States. Pidcock v. Harrington, 64 F., 821. 18. The right to bring suits for injunction under section 4 of the act of July 2, 1890 (26 Stat, 209), is limited to suits msti- tuted on behalf of the Government. Greer, Mills d Co. v Stoller, 77 F., 1. 1—620 17. Same.— The only party entitled to maintain a bill of injunction for an alleged breach of the Anti-Trust Act of 1890 is the United States, by its district attorney, on the authority of the Attorney-General. Gulf, C. d S. F. Ry. Co. v. Miami S. S Co., 86 F., 407. 1—823 18. The intention of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), w^s to limit direct proceedings in equity to prevent and restrain such violations of the Anti-Trust Act as cause injury to the general public, or to all alike, merely from the suppression of competition in trade and commerce among 1046 INDEX — ^DIGEST. ACTIONS Aim DEFENSES— Gontinued. the several States and with foreign nations, to tliOM laitl- tuted in the name of the United States, under section 4 of the act, by district attorneys of the United States, acting under the direction of the Attorney-General; thus securing the enforcement of the act, so far as such direct proceedings in equity are concerned, according to some uniform plan, operative throughout the entire country. Minnesota v. Northern Securities Co., IM U. S., 48. 2—533 5. By States. It. A State can not maintain an action in equity to restrain a corporation from violating the provisions of the act of Jnly 2, 1890| on the ground that such violations by decreasing competition would depreciate the value of its public lands and enhance the cost of maintaining its public institutions, the damages resulting from such violations being remote and indirect and not such direct actual injury as is provided for in section 7 of the act Minnesota v. Northern Securities Co., 194 U. S., 48. 2—533 20. Municipal Corporation may Maintain Action for Damages under Section 7, Act of 1890. — A municipal corporation en- gaged in operating water, lighting, or similar plants, from which a revenue is derived, is, in relation to such matters, a business corporation, and may maintain an action under section 7 of the Anti-Trust Act of July 2, 1890 (26 Stat, 210), for injury to its "business" by reason of a combina- tion or conspiracy in restraint of interstate trade or com- merce made unlawful by such act City of Atlanta v. Chat- tmiooffa Fomidry d Pipeworks, 127 F., 23. 2 — ^299 6. At common law — Damages. 21. Action for Damages Must Show that Plaintiff is Engaged in Interstate Commerce. — An action to recover damages alleged to have been en used by acts done in violation of the Anti- Trust Act (26 Stat, 209) can not be maintained when the complaint fails to show that plaintiff is engaged in interstate commerce, and no such showing is made by an averment that plaintiff is engaged in " manufacturing watch cases throughout all the States of the United States and in foreign countries." Dueber Watch Case Mfg. v. Howard Watch, etc., Co., 55 F., 851. . 1—178 Case affirmed, 66 F., 637 (1—121). 22. Same — ^Must Show Intention to Control Market, or a Large Por- tion of it. — An agreement by a number of manufacturers and dealers in watch cases to fix an arbitrary price on their goods, and not to sell the same to any persons buying watch cases of plaintiff, is not in violation of the statute; and a INDEX — ^DIGEST. 1047 ACTIONS AND DEFENSES— Continued. complaint which, on the last analysis, avers only these facts, without averring the absorption or the intention to absorb or control the entire marlcet, or a large part thereof, states no cause of action. /^^ 23. Action Alleged to be in Violation of the Statutes of a State and of the ITnited States Held to be Founded upon Act of July 2, 1890 (26 Stat, 290).— An action brought in the United States Circuit Court for southern New York by a manufac- turing company against competitors in various States, alleg- ing the formation of a combination and an attempt to create a monopoly, " in violation of the statutes of this State and the United States," whereby plaintiff's business was injured, and alleging the formation of the combination on and prior to November 16, 1887, but that, after the passage of the act of Congress of July 2, 1890, defendants ratified, renewed, and confirmed their previous contracts, combinations, etc, and judgment being demanded for treble damages "under and by virtue of the statute." Held, that the action must be deemed to be founded upon the said act of July 2, 1890. Dueber Watch Case Mfg. Co. v. Hotcard Watch, etc., Co., 66 F., 637. I 421 24. Same — A Cause of Action not Stated. — Where, in the above action, complaint alleged that previous to November 16, 1887, it sold all its goods to a great number of dealers " throughout the United States and Canada ; " that prior to that date de- fendants had agreed with each other to maintain arbitrary and fixed prices for their watch cases ; that for the purpose of compelling plaintiff to join with them therein, defendants on said date mutually agreed that they would not thereafter sell any goods to persons who bought or sold goods manu- factured by plaintiff; that they caused notice thereof to be served upon the many dealers in such goods throughout the United States and Canada, who had formerly dealt in plaintiff's goods, whereupon many of such dealers withdrew their patronage from plaintiff ; that after the passage of the act of July 2, 1890, defendants ratified, renewed, and con- firmed their previous agreements, and served notice of such ratification upon all said dealers in plaintiff's goods, whereby said dealers were compelled to refuse to purchase plaintiff's watch cases. Held, that the complaint failed to state a cause of action under the statutes. /j. 26. S&me— Held, that no monopolizing or combination to monopo- lize interstate commerce, contrary to the second section of the act, was shown, for the reason that the allegations did not preclude the inference that each defendant may have sold his entire product in the State where it was manufac- tured, ^j^ 1048 INDEX — DIGEST. AOnoirS AND DEFENSES— Continued. 26. Same— f/eM, that tlie contracts did not produce an unlawful restraint of trade, under the first section, because the com- bination and agreement to fix arbitrary prices did not ap- pear to include all manufacturers of watch cases, but was only a partial restraint in respect to an article not of prime necessity, and therefore came within the recognized limits of lawful contracts. /j,^ S7. Mame—Held, that the further agreement not to sell to customers of plaintiff was a lawful means of enlarging and protecting the business of the defendants. /j. Shipmtm, Cir, J., concurring, on the ground — 28. That the acts of the defendants, whether viewed as an attempt to create a monopoly or as a contract in restraint of trade, were not shown to concern interstate commerce, because there were no allegations showing the residence of any , dealers who withdrew their patronage from complainant, and it therefore did not directly appear that any of them . resided outside of the State where plaintiff's goods were manufactured. jj, Wallace, Cir., dissenting, on the ground — 29. That the allegations were sufficient to show that the attempts to monopolize and restrain did operate upon interstate com- merce, jjf 30. That, while the contracts might not he unlawful in themselves, yet the purpose for which they were alleged to be made, namely, to compel plaintiff to Join in the agreement for fix- ing arbitrary prices, and to injure and destroy its business if it refused to do so, was oppressive and unjust, and ren- dered the acts of defendants unlawful under both sections of the statute. /^^ SI. The Only Remedy to Party other than the TFnited States is a Suit for Damages.— Under the act of July 2, 1890, entitled **An act to protect trade and commerce against unlawful re- straints and monopolies," the only remedy given to any other party than the Government of the United States, is a suit for threefold damages, costs, and attorney's fees. Gulf, €, d 8. F. Ry, Co. v. Miami S. 8. Co., 86 F., 407. 1^823 32. The only remedy of a private individual to restrain acts for- bidden by the Anti-Trust Act of 1890 is an action at law for damages. Pidcock v. Harrington, 64 F., 821. 1—377 88. The remedy of a private party under the Anti-Trust Act of 1890 is an action at law for damages. 8outhem Ind. Exp. Co. v. " U. 8. Exp. Co., 88 F., 659. 1^862 84. By Direct Action.— A recovery of the treble damages authorized by the Sherman Anti-Trust Act of July 2. 1890, section 7 (26 Stat. L., 209, chap. 647), in case of injury sustained by vio- lation of the act, can be had only by direct action, and not INDEX — ^DIGEST. ' 1049 ACTIONS AND DEFENSES— Continued. by way of set-off in an action brought for the price of goods by a company illegally formed in violation of the act— espe- cially when the State practice does not permit the set-off of unliquidated damages. Connolly v. Union Sewer Pipe Co., 184 U. S., 540. 2—118 35. Municipal Corporation may Maintin Action for Damages under Section 7, Act of 1890.— A municipal corporation en- gaged in oi)erating water, lighting, or similar plants, from which a revenue is derived, is, in relation to such matters, a business corporation, and may maintain an action under section 7 of the Anti-Trust Act of July 2, 1890 (26 Stat, 210), for injury to its "business" by reason of a combina- tion or conspiracy in restraint of interstate trade or com- merce made unlawful by such act. City of Atlanta v. Chat- ta/nooga Foundry d Pipeicorks, 127 F., 23. 2 — ^299 86. Statutory Limitations Governed by the Laws of the State in which Action is brought. — An action under section 7 of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), providing 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, * * * and shall recover threefold the damages by him sustained," is not an action for a penalty or forfeiture, within section 1047, Revised Statutes, prescribing a limita- tion of five years for a " suit or prosecution for any penalty or forfeiture, pecuniary or otherwise, accruing under the laws of the United States," but one for the enforcement of a civil remedy for a private injury, compensatory in its pur- pose and effect, the recovery permitted in excess of damages actually sustained being in the nature of exemplary damages, which does not change the nature of the action, and such action is governed as to limitation by the statutes of the State in which it is brought City of Atlanta v. Chattanooga Foundry and Pipe Co., 101 F., 900. 2—11 Aflarmed by Circuit Court of Appeals, 127 F., 23 (2—299). The judgment of the circuit court was, however, reversed, but upon other grounds— a construction of section 4470, Tennessee Code. Aflirmed by Supreme Court (203 U. S., 390). 87. Same— Every Member of the Combination Liable for Damages. Every member of an illegal combination in restraint of inter- state trade or commerce in violation of the Anti'Trust Act is liable for the damages resulting to the business or property of a plaintiff by reason of such combination, and it is imma- terial that there were no direct contract relations between plaintiff and defendant City of Atlanta v. Chattanooga Foundry and Pipe Works, 127 F., 23. 2—299 1050 INDEX — ^DIGEST. ACnONS AND DEFEirSBS— Continued. 38. Same — ^Measure ef Recovery for Injury to Business.— If the ef- fect of an Illegal combination bet\Neen manufacturers to prevent competition in tlie sale of a commodity which is a subject of interstate commerce be to enhance the price of such commodity to a purchaser, he is entitled to recover the difference between the price paid and the reasonable price under natural competitive conditions, as an injury to his business, whether tnch business ii interstate or not, provided the transaction by which the purchase was made was in- terstate, fff^ Conspirinsr to Mure Another in Business— HaiUng Printed Circulars.— The action of an aasociation of manufacturers in adopting 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 in printing such resolution in circulars, and mailing the same to other manufacturers and customers of the dealer, whereby his business was injured, constituted an illegal combination or conspiracy in restraint of interstate and foreign commerce, and gives the person injured a right of action in a circuit court of the United States, under the Anti-Trust Law of 1890, to recover the damages sustained. Qihhs v. McNeeley, 102 F., 5M. j^_25 Verdict for defendant directed, 107 F.. 210 (2^71), but Reversed by Circuit Court of Appeals, 118 F., 120 (2 — IM). Complaint Fatally B^ective where it Faihi to Show that Plain- tiir Suffered Bamage.— A complaint in a civil action, based on the Anti-Trust Law of 1890, alleging an illegal combina- tion by defendants in restraint of trade, is fatally defective where It fails to show that plaintiff has suffered damage by reason of such combination. ih, 41. Treble damages are recoverable under the Auti-Trust Act of 1890 only in an action at law by the plaintiff as an indi- vidual and not as a stockholder In a corporation violating that act. Metcalf v. Amer, School Fimuture Co., 108 F., 900. a— 76 Where Manufacturer Refused to Sell because Complainant was not a Member of Trust Association.— A dealer in tiles, mantels, and grates in San Francisco, to whom a manufac- turer in another State refused to sell tiles on the sole ground that he was not a member of an association to which he belonged, which association sought to control the output and regulate the prices thereof in California and adjoining States, Held, entitled to damages under section 7 of the Anti-Trust Act of 1890. Montague v. Lowry, 115 F., 27. »— 112 Affirmed, 193 U. S., 38 (2—327). Bee also Bishop v. Amer. Preservers Co., 105 F., 845. 2-^1 40. INDEX — ^DIGEST. 1051 ACTIONS AMD DEFENSES— Continued. 7. Equity— Injunctions, etc 43. Private Individuals no Remedy in Equity under the Statute. — The Anti-Trust Act of July 2, 1890, confers no right upon private individuals to sue in equity for the restraint of acts forbidden by that statute. Pidcock v. Harrington, 64 F., 821. 1—377 44. Private Party no Remedy in Equity.— The Anti-Trust Act of July 2, 1890, does not authorize a court of equity to enter- tain a bill by a private party to enforce its provisions. Southern Ind. Exp. Co. v. V. 8. Exp. Co., 88 F., 659. 1—862 45. The right to bring suits for injunction under section 4 of the act of July 2, 1890 (26 Stat, 209), is limited to suits instituted on behalf of the Government. Oreer, Mills & Co. v. Stoller, 11 F., 1. 1—620 46. The only party entitled to maintain a bill of injunction for an alleged breach of the act of July 2, 1890 (26 Stat, 209), is the United States, by its district attorney, on the authority of the Attorney-General. Qulf C. & 8. F. Ry. Co. v. Miami 8. 8. Co., 86 F., 407. 1—824 47. Suit Enjoining Infringement Maintainable by Owner of Patent though Member of Illegal Combination. — (Complainant though a member of a combination in violation of the Anti- Trust Law of July 2, 1890, can maintain a suit in equity to enjoin an infringement of a patent owned by him. General Electric Co. v. Wise, 119 F., 922. 2—205 8. Purchases from, or services rendered J)y, illegal corporations. 48. Can not Retain Goods and Recover Price Paid. — One purchas- ing liquors from an illegal combination of distillers, which controls the market and prices, though impelled thereto by business needs and policy, enters into the contract voluntar- ily, and can not retain the goods, and recover the price paid, or any part of it, either on the ground that the combination was illegal, or the price excessive. 77 Fed., 700, affirmed. Dennehy v. McNulta, 86 F., 825. 1—855 49. Rebate vouchers issued by a distilling company to customers, by which it promised to refund a certain sum per gallon on their purchases at the end of six months, on condition of their purchasing exclusively from the company during that time, can not be enforced, either at law or in equity, where the condition has not been performed, though such condition be illegal, as in restraint of trade ; there being no other con- sideration for the promise. 77 Fed., 700, affirmed. /b. 1052 INDEX— DIGEST, ACTIONS AND BEFENSBS-Continued. fO. Mmt Pay Beasonable Yalue of Senrices — ^Towage.— One who re- quests and accepts the services of a tug for towage purposes can not escape paying the reasonable value of the services rendered on the ground that the tug owners are members of an association which is illegal under the act of July 2, 1890, relating to trusts and monopolies. The Charles E. Wise- wall^ 74 F., 802. 1—608 Affirmed, 86 F., 671 (1—850). 9. Patents— Actions for infringement, 91. Third Party can mot Enjoin Combination from Bringing Suit for Infringement of its Patents.— The fact that a corporation owning letters patent upon a particular kind of machinery has entered into a combination with other manufacturers thereof to secure a monopoly in its manufacture and sale, and to that end has acquired all the rights of other manu- facturers for the exclusive sale and manufacture of such machines under patents, will not entitle a stranger to the combination to enjoin the corporation from bringing any suits for infringement against him or his customers. Strait V. Wational Harrow Co., 51 F., 819. 1^52 See also National FoUimg Box d Paper Co. v. Robertson, 99 F., 985 (8 — i) ; and Otis Elevator Co. v. Geiger, 107 F., 131 (8—66). 68. Owner of Patent, though Member of Illegal Combination, can Maintain Action for Infringement. — That a complainant is a member of a combination in violation of the Anti-Trust Law of July 2, 1880, does not give third persons the right to in- fringe a patent of which he. the complainant, is owner, nor preclude complainant from maintaining a suit in equity to enjoin such infringement. General Electric Co. v. Wise, 119 F., 922. ji— 205 L Combination Organized to Receive Assignments of Patents can not Maintain Action for Infringement against Assignor. A combination among manufacturers of spring-tooth har- rows, whereby a corporation, organized for the purpose, be- comes the assignee of all patents owned by the various man- ufacturers, and executes licenses to them, so as to control the entire business and enhance prices, is void both as to the assignments and licenses, so that the corporation can not maintain a suit against one of its assignors who violates the agreement, for infringement National Harrow Co. v. Bench., 84 F., 226. 1—7-10 See also National Harrow Co. v. Quick,, 67 F., 130 (1—443). INDEX — DIGEST. 1053 ACTIONS ANB DEFENSES— Continued. 10. Generally. 54. What must be Shown. — To vitiate a combination, such as the Anti-Trust Act condemns, it need not be shown that the com- bination, in fact, results, or will result, in a total suppres- sion of trade or in a complete monopoly, but it is only essen- tial to show that by its necessary operation it tends to re- strain interstate or international trade or commerce, or tends to create a monopoly in such trade or commerce, and to de- prive the public of the advantages that flow from free compe- tition. Northern Securities Co. v. United States, 193 U. S., 197. (Harlan, Brown, McKenna, Day.) 8--340 66. Same. — In order to maintain this suit 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 restraint is its necessary effect. U. S. v. Trans-Mo. Ft. Assn., 166 U. S., 290. 1—649 See also Pleading and Practice. 56. A suit brought by the Attorney-General of the United States to declare the Northern Securities Co. combination illegal under the act of July 2, 1890, is not an interference with the con- trol of the States under which the railroad companies and the holding company were, respectively, organized. Northern Securities Co. v. United States, 193 U. S., 197 (Brewer, concurring). 8—342 57. No Right of Action Growing out of Suits against Plaintiff which have not been Decided.— The Anti-Trust Act of July 2, 1890 (26 Stat, 209), which gives a right of action to any person injured by acts in violation of its provisions, does not authorize suit where the only cause of action is the bringing of two suits which have not been decided. Bishop v. Amer. Preservers' Co., 51 F., 272. i 49 See also Indictments. II. Defenses. 1. Indeflniteness, duplicity. 58. Indeflniteness.— In an action by a corporation for the infringe- ment of elevator patents, an answer alleging as a defense that the plaintiff is an unlawful combination in restraint of trade and in violation of the Sherman Anti-Trust Law (26 Stat, 209), but which fails to state who are in the combina- tion in the agreement characterized as unlawful, and does not disclose fully and in detail that the combination was en- tered into after the act took effect, and all the facts neces- sary to show its illegality, is insufficient for indeflniteness. Otis -Elevator Co. v. Geiger, 107 F., 131. 2—66 1054 INDEX — ^DIGEST. ACTIONS AND DEFENSES -Continued. II. DEFBNSEa— Continued. TO. Duplicity. — ^A declaration in an action brought under section 7 of tlie Sherman Anti-Trust Act (act July 2, 1890, c. 647, 26 Stat, 210) to recover damages for a violation of section 1 of the act, which alleges in a single connt that defendant en- tered into a "contract, combination, and conspiracy" in re- straint of trade, is bad for duplicity. Rice v. Stcmdard Oil Co., 1.34 F., 464. 2— 6S3 60. Same.— The Anti-Trust Act of 1890 makes a distinction between a contract and a combination or conspiracy in restraint of trade. /5. Multifariousness. See Pleading and Practice. 2, Contract in violation of Anti-Trust Act, or of an act of Congress. •1. The defense that a contract is in violation of the act of Con- gress of July 2, 1890 (26 Stat, 209), to protect trade and commerce against unlawful restraints and monopolies, which makes illegal every contract violative of its provisions, may be set up by a private individual when sued thereon, and, if proved, constitutes a good defense to the action. Bement v. National Harrow Co., 186 U. S., 70, 2 — 170 6S. Same. — ^Anyone sued upon a contract may set np as a defense that it is a violation of an act of Congress. lb. (169) 3. Illegal co^mMnaiion — Purchases from, services, 63. Payment for Services can not be Avoided because Performed by a Trust — ^Towage. — One who requests and accepts the serv- ices of a tug for towage purposes can not escape paying the reasonable value of the services rendered on the groimd that the tug owners are members of an association which is illegal under the act of July 2, 1890, relating to trusts and monopolies. The Charles E. Wisewall, 74 F., 802. 1—608 Affirmed, 86 F., 671 (1—850). 61. Payment of Hote for Goods Purchased can not be Avoided be- cause Bought from a Trust.— A note made for a balance due on goods bought from a corporation can not be avoided merely because the latter is a trust organized to create and carry out restrictions in trade contrary to the Anti-Trust Act of July 2, 1890, as that only covers contracts which are themselves In restraint of trade, and does not affect those which "merely indirectly, remotely, incidentally, or collat- erally regulate, to a greater or less degree, interstate com- merce between the States." Union Sewer-Pipe Co. v. Con- nelly, 99 F., 354. a_i Affirmed, 184 U. S., 540 (2—118). Bee also Dennehy v. McNulta, 86 F., 825 (1— S85). INDEX — ^DIGEST. 1055 ACTIONS AND DEFENSES— Continued. II. Defenses —Continued. 65. A contract for the sale of merchandise is not rendered illegal by the fact that the selling corporation is a trust or mo- nopoly organized in violation of law, either Federal or State; the contract of sale being collateral and having no direct / relation to the unlawful scheme or combination. Chicago Wall Paper Mills v. General Paper Co., 147 F., 491. 2 — 1027 See also Continental Wall Paper Co. v. Lewis Voight di Sons Co., 148 F., 940. 66. Recovery on Collateral Contract by Member of Combination in Restraint of Interstate Trade.— The act of July 2, 1890, sec- tion 1 (26 Stat, 209) does not invalidate or prevent a recov- ery for the breach of a collateral contract for the manufac- ture and sale of goods by a member of a combination formed for the purpose of restraining interstate trade in such goods. Hadley Dean Plate Glass Co. v. Highland. Glass Co., 143 F., 242. 2—995 -^ Patents — Illegal combination. 67. Infringement of Patent — ^No Defense that the Owner is an Illegal Corporation under Anti-Trust Law. — The fact that the owner of a patent is a corporation alleged to have been formed in violation of the Anti-Trust Law, and that the patent is alleged to have been assigned to it in furtherance .. of the illegal purpose to create a monopoly and control the price of an article of commerce, is not available to an in- fringer of such patent to defeat a suit for the infringement Nation.al Folding-Box S Paper Co. v. Robertson, 99 F., 985. 2—4 68. Same. — In an action by a corporation for the infringement of ^ elevator patents, a private defendant was not entitled to urge as a defense that plaintiflf was a coiporation organized merely for the puipose of holding the legal title to various elevator patents alleging to have been infringed, for the pur- pose of controlling sales and enhancing prices of elevators and apparatus, without itself engaging in the manufacture and sale of such appliances, in violation of the Sherman Anti-Trust Law (26 Stat, 209), since until the United States has acted and sought to prosecute the plaintiflf for violation of such act an infringer of the plaintiff's patent will not be permitted to raise such issue as a defense thereto. Otis Elevator Co. v. Geiger, 107 F., 131. 2 — 66 69. Infringement Suit can not be Maintained by Combination of Patent Owners against Assignor. — A combination among manufacturers of spring-tooth harrows, whereby a corpora- tion, organized for the purpose, becomes the assignee of all patents owned by the various manufacturers, and executes licenses to them, so as to control the entire business and en- 1056 INDEX DIGEST, ACTIOlfS AWD BEFEMTSBS-Coiitmoed. II. Defenses — Ck)iitinued. hance prices, is void both as to the assignments and licenses, so that the corporation can not maintain a suit against one of its assignors who violates the agreement, for infringe- ment. Natimal Harrow Co, v. Hetwh, 84 F., 226. 1— 74« Bee also National Harrow Co. v. Quick, 67 F., 130 (1— i43) ; and Actions and Defenses 51-153. 5. Affreement not to engage in business, 70. Suit to enforce. — In a suit to enjoin a defendant from violating a contract by which for a valuable consideration he cove- nanted not to engage in business for himself or another in competition with that of complainant for a term of years, and to enjoin a codefendant fi-om employing his services in a competing business, it is no defense that his codefendant hired him in ignorance of the contract, and will suffer dam- age if deprived of his services. A. Booth 4 Co. v. Davis, 127 F., 875. a— 319 Affirmed, 131 F., 31 (»-526). See also Robinson v. Suburban Brick Co., 127 F., 804 (»— 312), 6. Cfenerallff. 71. That Combination has not been Injnrions to the Public. — It is no defense to a suit to dissolve a combination as ill^al, under the Anti-trust Law, that it has not been productive of Injury to the public or even that it has been beneficial, by enabling the combination to compete for business in a wider field. U. 8. V. Chesapeake & O. Fuel Co., 105 F., 93. 2—34 Affirmed, 115 F., 610 (»— 151). 78. That Combination is in the Form of a Corporation or Holding Company.— The fact that the purpose of an illegal combina- between stockholders of two railroad companies operat- ing parallel and competing interstate lines, to secure unity of interest and control of such companies, and to prevent competition, has been accomplished by the formation of a corporation which has acquired the ownership of a majority of the stock of each of the companies, can not be urged to defeat a suit by the United States to restrain the exercise of the power so illegally acquired by the corporation through such combination, as imposing a restraint upon interstate commerce in violation of the Anti-Trust Law (act July 2, ISOT). 20 Stat., 209). 17. S. v. Northern Securities Co.. 120 F., '*^' 2 215 78. Same— auestions of Benefit to the Public— Public Policy.— Where the effect of a combination is to directly prevent com- petition between two parallel and naturally competing lines INDEX— DIGEST. 1057 ACTIONS AND DEFENSES— Continued. 11. Defenses — Continued. of railroad tnigaged in interstate Imsiness, it is in restraint of interstate commerce, and a violation of the Anti-Trust Act (act .July 2, 189(). 2«; Stat., 209), and the court, in a suit to enjoin it as sucli, can not consider the question whether the conil»ination may not l)e of greater benefit to the public tha'n competition would be; tliat being a question of public I)olicy. to l»e determined l>y Congress. /ft. Affirmed. 19:? TT. S., 197 (2—3.38). 74. The pendency of a suit in a court can not be pleaded in abatement of an a(tiy said section, and therefore tlie same case can not be depending in l)otli courts. Locn-c v. Lauhtr, 130 ¥., 0.33. 2—563 AGREEMENTS NOT TO ENGAGE IN BUSINESS. See Actions AND Defenses. 70; Combinations, etc., 152-159. AGREEMENTS NOT TO COMPETE IN BIDDING. See Combina- tions, ETC, .39-52. ALLEGATIONS AND PROOF. See PLEAmNo and Practice. 12-15. ANTICIPATED PROFITS. See Damages, 3. APPEAL. Sec Courts, 23, 30, 38, 40, 42, 43. APPORTIONMENT, DIVISION, OR RESTRICTION OF TERRI- TORY. Sec Combinations, etc, 39, 136, 137, 166. ATTACHMENT. Grounds for Dissolution— Prior Attachment in State Court.— Wliere the State statute provides for successive attachments of tlie same proi)erty, a prior attachment in a State court affords no ground for the discharge of an attachment in a Federal court. Loire v. Lanlor, 130 F., 633. 2-563 ATTORNEY-GENERAL. See Actions and Defenses, 17, 18, 55; Parties, 7. ATTORNEY'S FEES. See Costs. AVOIDANCE OF PAYMENT. See Actions and Defenses, 63, 64. BAILMENT. See Sale, 4. BIDDING, AGREEMENTS NOT TO COMPETE. See Combina- tions, etc, 39-52. 11808— vol 1—06 M 67 1058 INDEX — ^DIGEST. INDEX — DIGEST. 1059 BILL. See Equity, 2, 4 ; Pleading and Pbactice, 1, 2, 6-9, 15-17, 19, 20. BOOKSELLEBa See Combinations, etc., 28, 96. BOYCOTT. See Combinations, etc., 124, 213. BTTBDEir OF PBOOF. See Evidence. 3. 4. OABBIEBS. 1. Common Carricra Not Included Within the Statute.— It was not the intention of Congress to include common carriers sub- ject to the act of February 4, 1887, within the provisions of the act of July 2, 1890, which is a special statute, relating to combinations in the form of trusts and conspiracies in restraint of trade, l^ 8. v. Trans-Mo. Ft. Assn., 53 F., 440. Case reversed, 166 U. S., 290 (1—048). l— SO 8. May Demand Prepayment of Freight from One Connecting Car- rier and Not from Another. — ^A common carrier engaged in interstate commerce may at common law, and under the in- terstate commerce law, demand prepayment of freight charges, when delivered to it by one connecting carrier, with- out exacting such prepayment when delivered by another connecting carrier, and may advance freight charges to one connecting carrier without advancing such charges to an- other connecting carrier. Qulf, C. & S. F. By. Co. v. Miami S. S. Co., 86 F., 407. 1—823 8. Same— Through Transportation— Joint Rates and Billing.— Such carrier may enter into a contract with one connecting carrier for through transi)ortation, through joint traffic, through billing, and for the division of through rates, with- out being obligated to enter into a similar contract with an- other connecting carrier. /&, 4. Not Required to Receive Goods Without Prepayment of Charges. — ^The rules of the common law do not require a carrier to receive goods for carriage, either from a consignor or a connecting carrier, without prepayment of its charges if demanded, nor to advance the charges of a connecting car- rier from which it receives goods in the course of transpor- tation ; nor can it be required to extend such credit or make such advances to one connecting carrier because it does so to another. Southern Ind. Exp. Co, v. O. S. Exp. Co., 88 F., 659. 1—862 0. Same— Express Companies. — The interstate commerce act does not apply to independent express companies not operating railway lines. i&. See also Combinations, etc., lOO-lll, 189-200, CBBTIOBABI. See Courts, 48. COAL. See Combinations, etc, 25-27, 59. I COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC., IN RESTRAINT OF TRADE AND COMMERCE. I. In General. 1. Distinction. 1. Distinction between a Contract and a Combination or Con- spiracy in Restraint of Trade.— Section 1 of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), which declares illegal " 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," makes a distinc- tion between a contract and a combination or conspiracy in restraint of trade. Rice v. Standard Oil Co., 134 F., 464. 2—633 2. Declaration which Made no such Distinction Bad for Duplicity. A declaration in a suit based on section 7 (26 Stat, 210 j to recover damages resulting to plaintiff from a violation of such provision, which alleges in a single count that defend- ant entered into a " contract, combination, and conspiracy " in restraint of trade, is bad for duplicity. /ft. 2. Legality — How determinahle — Test. 8. The test of the validity of contracts or combinations in re- straint of trade is not the existence of restriction upon com- petition imposed thereby, but the reasonableness of that re- striction under the facts and circumstances of each par- ticular case. Public welfare is first considered, and, if the contract or combination appears to have been made for a just and honest purpose and the restraint upon trade is not specially injurious to the public and is not greater than the protection of the legitimate interests of the party in whose favor the restraint is imposed reasonably requires, the con- tract or combination is not illegal. Shiras, District Judge, dissenting, on the ground that this rule is not applicable to coi-porations charged with public duties. U. S. v. Trans-Mo. Ft. Assn., 58 F., 58. 1—186 Case reversed, 166 U. S., 290 (1—648). 4. Provisions Apply to all Contracts in Restraint— Not Merely to Unreasonable Restraints.— The prohibitory provisions of the said act of July 2, 1890, apply to all contracts in restraint of interstate or foreign trade or commerce without exception or limitation, and are not confined to those in which the restraint is unreasonable. U. S. v. Trans-Missouri Freight Association, 166 U. S., 290. 1—649 5. Any restraint of interstate trade or commerce, if it be accom- plished by a conspiracy, is unlawful. U. S. v. Dehs, 64 F., 724. 1—322 6. In a suit to restrain alleged violations of the law of July 2, 1890, against trusts and monopolies affecting interstate com- 1060 INDEX — DICKST. COMBINATIONS, CONSPIBACIES, CONTRACTS, ETC.— Cont'd. I. Ix General — Continued. uieiTe, the* twisttMice of an niepil comljination anions' the defendants is to he determined not alone from what appears om the face of the preamble, rules, and by-laws of their asso- ciation, bnt from the entire situation, and the practical work- ing and results of their metlnxls of dohig husiness, as dis- closed hy the evidence. l\ S. v. H(Ji)kin8, 82 F., 529. 1—725 7. The only question in each case where the validity of a contract or wn lb illation under the hiw is involved is whether or not its necessary effect is to restrain interstate commerce. VJirsapruhe d O. Fuel Co. v. IJ. 8., 115 F., 010. 2—151 8. In deteniiininj; whether or not a coiiihination is in violation of tlie Fwleral Anti-Trust Law. as in rostra int of interstate commerce, it is immaterial that such is not its ultimate ob- ject, which is in nn>st eases to increase the trade and profits of the parties to such comhinatlon : n«u' is it material to ascertain what proportion the result inj; restraint of inter- state commerce beai-s to other results. The true inquiry is whether it tends directly to appreciably restrain interstate trade, and, if it does, it is within the statute, althouj,'h such effect may not l»e so considerable as its other effects. Ellis V. huiHtn, I'ouhen rf Co., 131 F.. 1S2. 2—577 9. The test of the violation of the Anti-Trust Art of July 2, 1890 (26 Stat, 209), by a contract or combination is its effect upon competition in commerce among the States. If its necessary effect is to stifle or to directly and substantially restrict in- terstate commerce, it falls under the ban of the law. but if it promotes or only incidentally or indirectly restricts com- petition, while its main punxise anolize the business, and had already secured control of 35 leading bakeries in 12 different States. HeUU that, while a case was made for a receiver, pending litigation between ordiuao' parties, the prayer would be denied, as equity would not encourage a combination in restraint of trade, and probnlily illegal, under act of Congress, July 2, 1890, " to protect trade and commerce against unlawful restraints and monopolies!.*' and act of Ix>ui8iana, July .">, 1890, for the same purpose. Amer. Biscuit d Mfg. €o. v. Klotz, 44 F.. 721. 1—2 19. A railroad company, belonging to an illegal combination in violation of the Anti-Tmst Law, can not invoke the aid of a Federal court of equity for the protection of its rights claimed under contracts wiiich were the dirert result and evidence of such unlawful combination. Delaware, L. d W, R, Co. V. Frank, 110 F., 689. 2—82 20. Illegal Condition as Consideration — Effect of Konperf ormance. — Rebate vouchers issued by a distilling company to customers, by which it promised to refund a certain sum per gallon on their purchases at tlie end of six montlis, on condition of their purchasing exclusively from the company during that time, can not be enforced, eitlicr at law or in equity, where the condition has not been [performed, though such condition be illegal, as in restraint of trade, there being no other con- sideration for the i>romise. 77 Foil.. 700, affirmed. Dennehy V. MeXuitu, 86 F„ 825. 1—855 4 What constitutes monopolizing, unlairfnl eomhination, etc. 21. To constitute the offense of *' monopolizing, or attempting to monopolize,*' trade or commerce among the States, within the meaning of section 2 of the Anti-Trust Act of 1890, it is necessary to acquire, or attempt to acquire, an exclusive right in such commerce by means which will prevent others from engagaing therein. In re Greene, 52 F., 104. 1 — 55 I. Unlawful Combination. — ^To render a combination unlawful under the Anti-Trust Act of 1890 it need not l>e one which by its terms refers to interstate amimerce, but itxis suffi- cient if its purpose and effect are necessarily to restrain in- terstate trade. Glhha v. McNeeley, 118 F., 120. 2—194 IKDEX — DIGEST. 1063 COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.— Cont'd. I. In Geneeal— Continued. 23. Combination of Lawful Elements of an TTnlawful Scheme. — Even if the separate elements of a scheme are lawful, whefl they are bound together by a common intent as parts of an unlawful scheme to monopolize interstate commerce the plan may make the parts unlawful, f^wift d Co. v. United States, 196 U. S., 375. 2—641 5. Liabilitt/. 24. Liability of Members of Combination. — Every member of an illegal combination in restraint of interstate trade or com- merce in violation of the Anti-Trust Act is liable for the damages resulting to the business or property of a plaintiff by reason of such combination, and it is immaterial that there were no direct contract relations bet\^'een plaintiff and defendant. City of Atlanta v. Chattanooga Foundry d Five Works, 127 l!\, 23. 2—299 Enforcement of Contracts and Collection of Debts. See Actions and Defenses. Reco\'eby. See Actions and Defenses. Defenses. See Actions and Defenses, II. II. Prohibited. 1. Agreements, contracts, or combinations to establish, maintain, raise, or control the prices, production, or output of articles or commodities. 25. Coal— Agreement Between Mining Companies and Coal Dealers to Control the Price of Coal. — An agreement between coal- mining companies operating chiefly in one State and dealers in coal in a city in another State, creating a coal exchange to advance the interests of the coal business, to treat all parties to the business in a fair and equitable manner, and to establish the price of coal, and change the same from time to time, by which it was agreed that the price of the coal at the mines should be 4^ cents, the freight being 4 cents, and the margin of the dealer should be 4^ cents, mak- ing the price to the consumer 13 cents, and that, whenever the price of the coal is advanced beyond an advance in freights, one-half the advance shall go to the mine owner and the otlier half to the dealer, and a penalty was provided bj' fine of any member selling coal at a less price than the price fixed by the exchange, and by which it was forbidden for owners or operators of mines to sell coal to any person other than members of the organization, and for dealers to purchase of miners who were not members, but ctempting coal used for manufacturing and steamboat purposes from the prices prescribed until all the mines tributary to that market should come into the exchange, or until the exchange 10G4 INDEX DIGEST. COMBINATIONS, CONSPIBACIES, CONIBACTS, ElC.-Conrd. 11. PKoniHiTED-Continued. f-oulil control tlie prices of van\ usvd l>.v lusimif.uturers, is within the Ismj^infro of act of July 2, 1890, (leclariug "every coiitrart or t-oiiibination in tlie form of a trurg or otherwise, or wiisi)irat'.v in restraint li>:e, trade or ratlrtatie fixed hy an exe<*ntive coimnitt**' a|)|K)inte(l by the prodm^Ms. jnid to ae- «mnt for and jtav over to sneh pnidncers the entire proeeease being to 't'ularge the western market," and nnder whieh the shijnnents nre mak.sellers* Assmiation." whereby they together eontrollecl the pMhlleation and sale of at least 90 lier cent of all iH>pyright«Ml Imoks. the object being to eompel owners ;hh1 dejilers of sueh iMioks to inir<-hasi> them of the mendw^rs of the condonation at an arbitrary price fixed by It, regardless fjf the actnal vahie of the l)ooks as determineectively, of drugs, proprietary medicines, etc., were organized to arl)itrarily fix a nuninunn retail prilies in restraint of interstate trade and c<»i!nnerce. etc. Lfnlrr v. Jat/ne, 142 F.. 1010. 2 — 976 Judgment j-eversed by the Circuit Crmrt of Ai>penls (149 F., 21), but uix>n other grcunids than above. 30. Lumber— Combination of Local Lumber Dealers Seeking to Raise and Maintain Price of Lumber by Refusing to Sell to Consumers who Bought from Outside Parties, some of such Mills being Located in a Neighboring State. — A complaint alleged tliat plaintiff was a laiilder doing business in Port- land. Oreg. : that in ^nch business he imrchased large quan- tities of rough lumber from nulls located at Vancouver, Wash., wliich wjis 7 miles fniui Portland, but that sueh mills did not mtiiuifacture finished or kiln-drieil lumber; that defendants, wlu) cel all consumers in Port- land to pay such prices by refusing to sell any finished lum- l>er at any ]>rice to such consumers jis bought lumber of any kind from other dealers, except on condition that such con- smner pays to defendants the difference between the price he paiers of an associa- tion have conspired and combined to raise the prices of tiles, mantels, and grates, to control the output, and to regulate the prices thereof, with the intent to monoiiolize the trade and commerce between the other States and California In regard thereto, as well as to arbitrarily fix their prices in- deiiendently of their natural market value, brings the case within the Anti-Trust Act of July 2, 1890 (26 Stat, 209). Loirry v. Tile, Muni el c( Orate Asmi. of Cah, 98 F., 817. 1—995 84. Same— Combination of Tile Manufacturers in California and Adjoining States Agreeing not to Sell to or Purchase from Dealers not Members.— The Tile, Mantel and Grate Associa- tion of California was organized by defendants, who were dealers in tiles and similar articles, for the declared purpose of uniting "all acceptable dealers" in tiles, fireplace fix- tures, and mantels in San Francisco and vicinity (within INDEX ^DIGEST. 1067 COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.— Cont'd. II. Prohibited — Continued. a radius of 200 miles), and all American manufacturers of tiles and fireplace fixtures. The articles prescribed that other local dealers who had an established business and car- ried a stock of a stated value, and who were " acceptable," might, on motion of a member, be permitted to join, and that all manufacturers of tiles in the United States might become members by signing the constitution and paying an entrance fee. The local members were bound by the articles not to buy goods from any manufacturer who was not a member nor to sell goods to other dealers not members at less than list price, which was about double the market price, and the manufacturing members were bound not to sell to any dealer within the prescribed territory who was not a member. Held, That such association was a combination in restraint of trade among the States, illegal under section 1 of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), and also an attempt to monopolize a part of the trade and commerce among the States, within the prohibition of section 2, by shutting out from such trade all local dealers who were not members, and that defendants were liable in damages, under section 7 of the act, to such a dealer to whom a manufac- turer in another State refused to sell tiles, as it had pre- viously done, on the sole ground that such dealer was not a member of the association. MwUngue v. Lotvry, 115 F., 27. 2—112 Aftirming Louru v. Tile. Mantel and Grate Assn. of CaL, 106 F., 38 (2—53). 35. Same — An Association of Dealers in Tiles Agreeing Not to Pur- chase from Nonmembers or to Sell to Them Except at an Advance of 50 per cent on Price to Members. — An association of wliolesale dealers in tiles, mantels, and grates in Cali- fornia and vicinity, and manufacturers in other States, of tiles and fireplace fixtures, in which the dealers agree not to purchase from manufacturers not members of the associa- tion, and not to sell unset tile to nonmembers for less than list prices, which are more tlian 50 per cent higher than prices to members, while the manufacturers agree not to sell their products or wares to nonmembers at any price, under penalty of forfeiture of membership, is an agreement or combination in restraint of trade within the meaning of the Anti-Trust Act of July 2, 1890 (26 Stat, 209). Montague & Co. V. Loitry, 193 U. S., 38. 2—327 86. Same— Where the Sales were Made within the State.— Although the sales in question were within the State of California and although such sales constituted a vei-y small portion of the trade involved, the agreement of manufacturers without the State not to sell to anyone but members was part of 1068 INDEX — DIGEST, COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.-ContM. II. Proh I BiTKD— Continued, a scheme which included the enhancement of the price of ii!j>;c»t tilen hy tlu* dealers within the State, and the whole thinj,' was s.> hnund to^'etlier that the transactions witljin tlie State were iiisei>anible and heeanie a part of a }»unM)se wlu<-li wlu'ii caniwl out aniount(Hl to, and was, a ionihiuation in restraint nf interstate trade and commerce. AiMifiitwi P'nw it strvJ Co. V. ( iiitnl States, 175 U. S., 211, folIowtHl; H uphills V. f iiitci stftfcM, 171 U. S., 578; Ander- mil V. I nitrd Sfatt's. 171 F. S.. <;04, distinguished. lb. 37. Same.— The parties aggrieved, l>eing a Hrm of dealers in tiles, mantels, and grates, in San Franrisco. whose menihers had nevin- heon asked t«) join the association and who had never applied for a. VoHiiiT & Sons Co., 148 F.. UtVX r. Lewis LICORKE Pastf. Sci' v. S. r. MacAxdrkws ^^ Fokkes Co., 14! ► F.. ,S24. 2. CoiiihiitatifHis. ,'ontnietft, etc., (litniuathiff ((mipetition in bidditiff. 39. Combination of Manufacturers— Dividing Territory and Al- lotting Contracts by Pretended Bids.— The formation of a itmil»ination hy a junnher of companies manufacturing iron I>i|)e in difTerent States, whereliy the territory in which they operate M-outprising a large part of the Fniteil States) is divided into " reservinl " cities and " i)ay *' territory, the re- serve5ing, 78 Fed., 712 (1— a-Ji). 40. Combinations to Enter into Public Bidding for Contracts, but Where only One of the Combination Really Bids, the Others Being Required to Bid Above Him.— An agreement or com- bination between cori)orations engaged in the manufacture, sale, and transportation of iron pipe, under which they enter into public bidding for contracts, not in truth as competitors, but under an arrangement which eliminates all competition between them for the contract and i)ermits one of their num- ber to make his own bid, while the others are required to bid over him, is in violation of the Anti-Trust Act of July 2, 1890, so far as it applies to salc^ for delivery beyond the State in which the sale is made. Adrliston Pipe nnd Steel Co. V. V. s., 17.5 u. s., i»n. 1— Kxm Amrming 85 F., 271 (1—772). 41. Same.— A combination may illegally restrain trade by prevent- ing competition for contracts and enhancing prices, although it does not prevent the letting of any particular contract. lb. 42. Same— Where Goods are to be Delivered in the State.— A com- bination to restrain competition in proposals for c-ontracts for the sale of certain articles which are to be delivered in the State in which some of the parties to the c*ombination reside and carry on business is not, so far as those members are concerned, in violation of the Anti-Trust Law, although the contract may be awarded to some party outside the State as the lowest bidder. j^ 43. Same.— Any agreement or combination which directly operates] not alone upon the manufacture, but upon the sale, trans- portation, and delivery of an article of interstate commerce, by preventing or restricting its sale, thereby regulates inter- state connnerce to that extent, and thus trenches upon the power of the national legislature, and violates the statute. 44. Same.— When the direct, immediate, and intended effect of a contract or combination among dealers in a commodity is the enhancement of its price, it amounts to a restraint of trade in the connnodity, even though contracts to buy it at the enhanced price are being made. /& 45. Same.— The contracts considerele as a mi8- deiiK>niM>r, :ind also to cre.Mte a riglit of civil .iction for dani- i»g('s in favor <»f ikm-sohs injnred tlu*reh.v, and a remedy hy iiijnnrtion in favor hotli of private* jH'rsoiis and tlie pnldie .igainst the exerntion <:f sneli tontracts an.. 15 Snp. Ct., 249; mo U. S., 1, dis- tingiiished. I . S. v. Adiiitstoii ripe d Steel Co.. S5 F., 271. 1—772 61. To render a combination unlawful inider the Anti-Trust Act of 18JM> it need not Ite one which by its terms refers to inter- state conunerce, but it is sufficient if its purpose and effect are necessarily to restrain interstate trade. Gibbs v. Mc- Weefetf, 118 F., 120. 2-194 62. Every Contract, Combination, or Conspiracy, in Whatever Form, of Whatever Nature, and Whoever May be Parties to it, which Directly or of Necessity Operates in Restraint of In- terstate Trade or Commerce. — Although the act of Congress known as the Anti-Trust Act has no reference to the mere nnmnfactnre or pi-oduction of articles or commodities within the limits of the several States, it embraces and declares to be illegail every c*ontract, wmlanation. or conspiracy, in whatever form, of whatever nature, and whoever may be parties to it. which directly or necessarily oi^erates in re- straint of trade or commerce among the several States or with foreign nations. Northern Seeun'ties Co. v. United States, im U. S., 197 (Harlan, Brown, McKenna, Day). 2—339 68. Same.— The act is not limited to restraints of interstate and international trade or commerce that are unreasonable in INDEX — DIGEST. 1073 COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.— Cont'd. II. Prohibited — Continued. their nature, but end)races all direct restraints, reasonable or unreasonable, imposed by any combination, conspiracy, or nioiioiK)ly upon such trade or commerce. lb. 64. Railroad carriers engaged in interstate or international trade or coinnierce are embraced by the act. lb. 65. Combinations, even among private manufacturers or dealers, whereby interstate or international commerce is restraiuetl, or coinniorce are embraced l>y the act. lb. 66. Every combination or conspiracy which would extinguish com- petition between otherwise 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. lb. 67. The natural effect of competition is to increase conunerce. and an agreement whose direct effect is to prevent this play of competition restrains instead of i>roniotes trade and com- merce. /5, 68. The Northern Securities Company comiiination is a " trust " within the meaning of the act of Congress of July 2, 1890, known as the Anti-Trust Act; but if not. it is a combination in restraint of interstate and international commerce, and that is enough to bring it under tlie condemnation of the act. lb. 69. Every contract, combination, or conspiracy, the necessary effect of which is to stifle or to directly and substantially restrict competition in commerce among the States, is in restraint of interstate commerce and violates section 1 of the act of .July 2, 1890 (20 Stat, 209). WhitireU v. Continental To- baceo Co., 12.5 F., 4.-54. 2—271 70. Same. — Every 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 conunerce among the States, violates section 2 of the act of July 2, 1890, c. 647 (20 Stat, 209). /&. For what acts and comliinations do not violate the act i^ee same case, and Comiu.nwtions. i:tc.. III. 71. Monopolies Prohibited are Those Engaged in Interstate Com- merce — Not Merely Because the Commodity is a Necessity of life.— The monopoly and restraint denounceil by the act of July 2, 1890 (20 Stat, 209) "to protect trade and com- merce against unlawful restraints and monopolies," are a monopoly in interstate and international trade or commerce, and not a monopoly in the manufacture of a necessary of life. U. S. v. /:;. C. Knight, 156 U. S., 1. 1^79 72. Any Restraint of Interstate Trade or Commerce if Accom- plished by Conspiracy.— The act of July 2, 1890 (26 Stat, 209), section 1, declaring illegal "every contract, combina- 1180g— VOL 1—06 M 68 1074 INDEX — DIGEST. COMBINATIONS, CONSPIBACIES, CONTRACTS, ETC.— Cont'd. II. Pbohibited — Continued. tlon in the form of trust, or otherwise, or consi)ir!iey " in restraint of trade or commerce among the States, or with foreign nations, is not aimed at capital merely and com- 1»inatio]is of a contractual nature, >>hich by force of the title, "An act to protect trade and commerce against unlaw- ful restraints and monoiwlies," are limited to such as tlie courts have declared unlawful, the words " in restraint of tra«1e " liaving, in connection with the words " contract," and "combination." their common-law significance, but the term **consi)iraey " is used in its well-settled legal meaning, so that any restraint of trade or commerce, if to be accom- plished by consipraej , is unlawful. (/. S. v. Dehfs, CA F., 724. 1—322 75. Same — Construction. — The construction of the statute is not affected by the use of the phrase "in restraint of trade," rather than one of tlie phrases "to injure trade" or "to restrain trade." /6, 74 Same. — ^The word "commerce," in the statute, is not synony- mous with " trade," as used in the common-law phrase " re- straint of trade," but has the meaning of the word in that clause of the Constitution which grants to Congress power to regulate interstate and foreign commerce. Jh. 71. Supreme Court does not Bissent from Above Conclusions. — The court enters into no examination of the act of July 2, lvS90 26 Stat, 209). on which the Circuit Court mainly relied to sustain its jurisdiction ; but it must not be understood that it dissents fmm the conclusions of that court in reference to the scoi)e of tJiat act, but simply that it prefers to rest its judgment on the broader ground discussed in its opinion, be- lieving it important that the principles underlying it should be fully stated and fully affirmed. In re Debs, 158 U. S., 904. 1—565 76. A contract by which a corporation agrees to take the entire product of a number of persons, firms, and corporations en- gaged in mining coal and making coke in a certain district, wMcli Is intended for " western shipment," to sell the same at not less than a minimum price, to be fixed by an executive eommittee appointed by the producers, and to account for and pay over to such producers the entire proceeds above a fixed sum per ton, t?o be retained as "compensation" — the stated purpose being "to enlarge the westei-n market"— and under which the shipments are made into other States, is one aifecting intezstate commerce, and is subject to the provision of the Anti-Tnist Law. XJ. 8. v. Chesapeake rf O. FiieJ Co., 106 P., 93. 2 — 34 Afllrmed, 115 F., 610 (8—151). 77. Iffect of Illegal Proyisions — ^Divisibility.- Stipulations in a INDEX DIGEST, 1075 COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.— Cont'd. II. Prohibited — Continued, contract which are invalid as in restraint of trade, if capa- ble of being constiued divisibly. do not affect the validity of other provisions. U. 8. Con soli da icd Seeded Raisin Co. v. Orim & Skelley Co., 126 F., ,Sn competitioii, lb. 82. A combination entered into by independent meat dealers to secure less than lawful freight rates, with the intent to moiioiw)lizt' (ininiierre in fresh meat among the several States, is forbidden by the Anti-Trust Act of .July 2, 1890 (2ti Stat, 2tl9). .Sicift *(• Co. v. Initrd l^tafrs, 10(3 U. S., .7. ('onsitinKj/ (') injure in fmsinc.ss. 83. Printing and Mailing Circulars. — The action of an association of manufacturers in adopting a resolution denouncing a dealer in the product they manufactured (shingles), who bought and shipi>eer the damages susinined. flihhs v. J/r.Vrr/c//. 102 F., 2—25 El (i. StfXJkholding cmniHinies or corporations. 84 Holding Companies to Vote Stock in the Interests of a Rail- road Combine. — Where one company (The Georgia Company of North Carolina) acquired a majority of the stock of the Central Railroad Company of Georgia, which it deposited with a trust company of New York, and transferred to the Tenninal Company, a system con|>oseil of several competing lines of railroads, which latter company and the Georgia Company relinquished to the tnist company any right they might have to vote such stock. Held, That the trust com- pany was a mere stakeholder and that the relinquishment did not entitle it to a vote. Clarke v. Central R. R. d Bank- inff Co. of Off., 50 F., 3.%. 1—17 85. Same — ^Disqualifying Interests. — The fact that the Terminal Company has no appreciable interest in the stock of the Central Railroad Company, because of a mortgage on the railroad executed by the Terminal Company, does not re- move the objection to its noting 5» person or by representa- tive in the election of tlie directors of that railroad com- INDEX — DIGEST. 1077 COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.— Cont'd. II. Prohibited— Oontinued. pany. in view of the fact that it has large pecuniary inter- ests in two directly competing lines of railroad. lb. 86. Same — Anti-Trust Law. — Transactions of this character are within the spirit, if not within the letter, of the "Sherman Anti-Trust Law." act of July 2, 1890 (2« Stat, 209). *lb. 87. Northern Securities Co. — Any contract or comlVination by which a majority of the stock of two railroad companies owning and oper.Mting parallel and competing interstate lines of road is transferred to a corporation organized for the purpose of holding and voting the same and rec-ei\ ing the dividends thereon, to l)o divided pro rata among the stockholders of the two companies .so transferring their stock, directly and substantially restrijiny has its own board of directors, which nominally directs its operations and tixes its rates, r. 8. v. Northern Secnri- tie.'i Co., 120 F., 721. 2—215 88. Northern Securities Company— Corporation Organized to Hold Majority of Stock of two Competing and Parallel Lines of Railroad for the Purpose of Preventing Competition. — Stock- holders of the Gro.it Northern and Northern Pacific Railway companies — corporations having competing and sul>stantially parallel lines from the Grent Lakes and the* Mississippi River to the Pacific Ocean at Puget Sound — combined and conceived the scheme of orgnnizing a cori)oration. under the laws of New Jersey, which should hold the shares of the stock of the constituent conii)anies. such shareliolders, in lieu of their sluire-^ in those companies, to receive, upon an agreed Imsis of vahie. shares in tlie holding corporation. Pursuant lo sucli combination tlie Northern Securities Com- l)any wns organized as the holding corporation through which tliat scheme should l)e executed; and under that scheme such holding corixu-ation became the holder — more proiterly >jpeaking. the custodian— of more than nine-tenths of the stock of the Northern Pacific, and more than three- fn the agreetl basis, sliares of stock in the holding cor|K)ration. Held, That the arrangement was an illegal combination in restraint of interstate commerce and fell within the prohi- bitions and provisions of the act of July 2, 1890, and it was within the power of the Circuit Court, in an .action, brought by the Attorney-General of the United States after the com- pletion of the transfer of such stock to it, to enjoin the holding company from voting such stock and from exercising 1078 INDEX — ^DIGEST, COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.— Cont'd. II. Prohibited— Continued, any control whatever over the acts and doings of the rail- road companies, and also to enjoin the railroad companies from paying any dividends to the holding corporation on any of their stocls: held by it. Northern Securities Co. v. • United States, 193 U. S., 197. 2—338 19. Same.— Necessarily, the constituent companies ceased, under this arrangement, to be in active competition for trade and commerce ahnig tlielr respective lines, and l)ecame, practi- cally, one puwerfnl consolldateil corporation, by the name of ii holding cori>oration, the principal, if not the sole, object for the formation of which was to enrry out the purpose of the original ombiuatioii under which comi>etition between the constituent compniiies would cease. /&. m. Same.— A combitiation by stockholders in two competing inter- state railway companies to form a stoclvholding corporation which should acquire, in exrhange for Its own capital stock, a controlHns? interest in the capital stock of each of such railway companies, violates the Anti-Trust Act of July 2, 1890 (20 Stat.. 2()0i. which declares illegal every combina- tion or conspiracy in restraint of interstate commerce, and f«>rbids attempts to monoiwlize such commerce or any part of it (48 L. e*!.. <;70.) 2—342 91. Same. — Where n«» individual investment is involved, but there is a combinatitrn by several individuals separately owning stock in two comi)eting railroad comi)anies engaged in inter- state conunerr*'. to place the control of both in a single cor- l^>ration, \vlii«li is organizeil for tliat purpose expressly and as a mere instrumentality i)y which the comi>eting rail- roads can lie combined, the resulting combination is a direct restraint of trade by destroying comiJetilion, and is illegal within the meaning of the act of July 2, 1890. (Brewer, ccmcurrlng.) 2 — 341 7. Patent ami coitiirhjht tiiimopolh-H —lUvifal coiublnatlons and contracts. 92. A corporation organized for the purpose of securing assign- ments of all patents relating to " spring-tooth harrows," to grant licenses to the assignors to use the patents upon pay- ment of a royalty, to fix and regulate the price at which .such harnnvs shall be sold, and to take charge of all litiga- tion and prosecute all infringements of such i)atents, is an illegal combination, wliose purposes are contrary to public policy, and which a court of equity should not aid by en- tertaining infiini^ement suits brought iu pursuance thereof. Natimtal Hurroic (Jo. v. QmicA;, 67 F., 130. 1^443 93. Corporation Organized to Receive Assignments of Patents. — A combination among manufacturers of si)ring-tooth har- rows, by wliich each manufacturer assigns to a corporation INDEX — ^DIGEST. 1079 COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.— Cont'd. II. Prohibited — Continued, organized for the purpose the patents under which he is operating, and takes back an exclusive license to make and sell the same style of harrows previously made by him, and no other, all the parties being bound to sell at uniform prices, held to be an unlawful combination for the enhancement of prices and in restraint of trade. National Harrow Co. v. Hench, 76 F., 667. 1—610 Affirmed, 83 F., 36 (1—742). 94. Same. — Though the fact that several patentees are exposed to litigation justifies them in composing their differences, they can not make the occasion an excuse or cloak for the crea- tion of monopolies to the public disadvantage. Ih. 1 — 743 95. A combination among manufacturers of spring-tooth harrows, whereby a corporation organized for the purpose becomes the assignee of all patents owned by the various manufacturers, and executes licenses to them, so as to control the entire business and enhance prices, is void both as to the assign- ments and licenses, so that the corporation can not maintain a suit against one of its assignors, who violates the agree- ment, for infringement. National Harrow Co. v. Hench, 84 F., 226. 1—746 96. An agreement by the members of a publishers' association. controlling 90 per cent of the book business of the country, under which all agreed not to sell to anyone who would cut prices on copyrighted books, nor to anyone who should be known to have sold to others who cut prices, etc., was an agreement relating to interstate trade or commerce within the Anti-Trust Act of July 2, 1890 (26 Stat., 209. Mines v. Scrihner, 147 F., 927. 2—1035 97. Same — Conspiracy — Restraint of Trade. — Defendants became members of an association of book publishers controlling 90 per cent of the book business of the country, which associa- tion adopted a rule that they would not sell to anyone who cut prices on copyrighted books, nor to anyone who should be known to have sold to others at cut prices. A blact list was kept containing the names of such persons, and no one on the Idack list could not Iniy any books of anybody in the scheme. Held, That such scheme constituted a conspiracy iu restraint of interstate trade or commerce. /&. 98. Same — Copyright — Effect — Extent of Rights Acquired. — The rights acquired by publishers of copyrighted books under the copyright law did not justify them in combining and agi*ee- ing that their books should be subject to the rules laid down by the united owners, one of which was that no member of the as.soriation should sell any books to a blacklisted pur- chaser who was kftown to cut prices. lb. 99. License Contracts by Patentee in District where Patent De- IBDEX — DIGEST. COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.— (Cont'd. 1 1. FnoHiBXTED — Contimieve tbe tben market price, and providing for a system of rebates, ;iiid for the appointment of a l)oard to receive one half of the royalties, to lie used in iJun-basing said tires and selling them at prices det'iiitHl to be for tbe l>est interest of all. Hi hi. that such contracts went beyond the rights of com- plainant under its patent monopoly in raising and maintain- ing prices in the Stntcs c<.mp«>sing tbe sixth Fetleral cir- cuit, in which the mcn«)iM»ly had no practical existence, and in creating a fund to be used to crush competition by outside manntactnnr^. as weU in t!ie sixth circuit as elsewhere, and were illegal and void as creating a combination in restraint of intcrsTatc trade and «-oiiimenc in violation of the Anti- Tnist Act «>f .July 2, 1S!M> (2<; Stat.. 2ply to and cover com- nion carriers by railroad. ( \ s. v. Trnns-Mf,. Ft. Assn.. 106 U. S., 21M>. 1—648 101. Contracts Between Railroads Affecting Rates.— .V contract be- tween railroads in restraint of interstate trade or connnerce is prohibited, even thougli the contract is entereil into be- tween eting railroads, only for the purpose of thereby alteeting traffic rates f(»r the tninspttrtation of r>orsons and property. /b. 102. Same— No Authority Therefor Under Act to Regulate Com- merce.— The act of Fclauary 4, ISSI, - to regulate lonnuerce," is not inctinsistent with the of July 2, IStMX ;»s it does not con- fer uiMin cinnpeting railroad ct»mi>anies power to enter into a contract in restraint of trade and connnerce, like the one which forms the subject of this suit. lb. 103. Right to BcTiate from Rates Prescribed.— I'he right of a rail- road company in .i joint t rathe association to deviate from the rates presed, provided it acts on a resolution of its Iwaitl of dirtHtors and serves a it)i)y thereof on the managers INDEX DIGEST. 1081 COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.— Cont'd. II. Prohibited — Continued. of the association, who, upon its receipt, are required to ** act pmmplly ftir rhe protection of the i)arties hereto,' does not relieve the association from condenniation as an illegal re- straint of conjpetition, as the privilege of deviating from the rates would be exercised upon i)ain of a war of competi- tion against it by the whole association, l. ♦y concert of agreement and action advance tlie rates upon shipments of a particular class throughout all the territory to which their organiza- tion and influence with similar organizations extend, and when they actually advance such rates and exact the same of shippers, it is of no consequence that they have a stipulation in such articles that each and all members can at will and at any time withdraw from the agreement. Such a com- bination is in restraint of trade. Tift v. Southern Railway Co., 138 F., 753. 2—734, 746 See also Carkiebs. • 111. Combinations of Bailroads to Prevent Competition, Pooling Pas- senger Receipts— No Relief in Equity Against Ticket , Brokers. — In a suit by a railroad company to enjoin the de- fendants, who were ticket brokers, from dealing in special tickets issued by complainant on account of the Pan-Ameri- can Exposition, which were by their terms nontransferable, it appeared from the showing made on a motion for a pre- liminary injunction that complainant was a member of a combination known as the " Tnmk Line Association." formed by a number of railroads operating in ditfereut States for the purpose of preventing competition; that the passenger receipts of all such roads were iwoled and divided on an agreed basis; and that the si>ecial rates made on account of the expisition were flxetise. in f»i>en court, to submit to the construct imi to l.e nunlc by tlic court relating to nile 12 of tlie BnitliorliotKl. the receiver is ilirectcHl to enter into an jipprnpriate «'«iiitr.Ht with tlieni. subjec't to the general opera- tion «tf this derision uitli reference to said nile. /ft. 120. A combination of lalNU' organizations whose professed object is to arrest the operation of the railroads whose lines extend fnnu a great city into adjoining States until such roads ac- cede to certain demands made ui>on them, whether such de- mands are in tlHMiist'lvrs n\isonable or unreasonalde, just or unjust, is an unlawful conspiracy in restraint of trade and connnene among the States, witliin the act of July 2, 1890, iiud acts threatem^l in pursuaiue theretif may be restrained by injunction, under seetion 4 of the act. f . »V. v. Elliolt, iVI F.. 801. 1—262 DeniiU'rer overruled, (U F.. 27 (1- J^ll). 121. Same — Interference with Mails and Interstate Commerce. — A comliinatiou by railroad empbiytvs to jirevent all the rail- rojids of a large city eiigaired in carrying the Unitetl States mails and in interstate <-onnnerce from cari-jing freight and i>asscngers, hauling cars, and se<-uring the services of perHins orlier than strikers, and to induce persons to leave the servict^ of such railroads, is within section 1 of the act of July 2, 1890, and is illegal. I . s. v. I':Hifttt, CA F.. 27. 1—311 Its. Combination of Railroad Employees Interfering with Operation of mailroad in Hands of a Keceiver— Instigating Strike.— Maliciouifly inciting employees of a receiver, wluj is operat- ing a rail wad under tirder of the court, to leave his employ, In imrsnance of an unlawful cy intticting injuries on its business, for wliicb damages wcnld l>e re F.. 80:J. 1—266 123. Same — Combination to Compel Breach of Contract.— .V co)nbina- tltm to intiict i»ecu!iiiry injury on the owner of cars, oper- ated by railway <«»n!panies under ntracts with him, by ci)niiM»lling them to :,'lve ui> using his cars, in violation of their contracts, ami, on their refusal, to inflict pecuniary injury on tliem by inciting their employc«>s to quit their servi«e. and thus i>aralyze their laislness. the existence of the contracts l)cing Ivuown to the parties so con^bining, is an unlawful cc»U8i»ira<'y. /5, 184. Same — Boycott. — A combination by enjidoyees of railway com- IKinies to injure in his laisiness the owner of cars operated by the coni|>anies by compelling them to ce.ise using his INDEX — ^DIGEST. 1085 COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.— Cont'd. II. Prohibited — Continued, cars by threats of (juitting and l>y actually quitting their service, thereby inflicting on them great injurj, where the relation l»etwceii him and the conq)anies is nmtually profit- able, and has no ett'tMt whatever on the character or reward of the services of tlie employees so combining, is a boycott and an unlawful eonsi)iracy at conunon law. Jh. 125. Same — A combination to incite the employees of all the rail- ways in the country to suddenly quit their service, without any dissatisfaction with the terms of their employment, thus i>aralyzing utterly all railway traffic, in order to starve the railr(»ad anies and the public into conqielling an owner of cars used in «)i)erating the roads to pay his em- ployees more wages, they h:i\ ing no lawful right so to compel him, is an unlawful conspiracy by rea.son of its purpose, whether such purpose is effected by means usually lawful or otherwise. /j. 126. Same — Restraint of Interstate Commerce. — Sudi combination, its purpose l>eing to i»aralyze the interstate commerce of the country, is an unlawful conspiracy, within the act of July 2, • 181)0. declaring illegal every contract, combination, or con- spiracy in restraint of trade or commerce among the several States, r. «S'. V. Patterson, 55 Fed., 0(15. disapproved. Jb. 127. Same — Obstructing Mails. — Such combination, where the mem- bers intend to st(ii> all mail trains, as well as other trains, and do delay many, in violation of Revised Statutes, section 3995, punishing any one willfully and knowingly obstructing or retarding the i)assage of the mails, is an unlawful con- spiracy, although the obstruction is effected by merely quit- ting employuK^nt. /ft. 128. Combination or Conspiracy to Prevent Passage of Trains Ob- struction of Interstate Commerce. — Any c-ombination or con- spiracy on the part of any class of men who by violence and intinndation i)revent tlie passage of railroad trains engaged in interstate connnerce is in violation of act July 2, 1890, de- claring illegal every contract combination in the form of trust or otherwise, or conspiracy in resti-aint of trade or commerce among the States. In re Grand Jury, 62 F., 840. 1-^301 129. Mail— Obstructing Passage of Mail Trains.— It is a violation of section 995, Revisetl Statutes, declaring it an offense to knowingly and willfully obstruct or retard the passage of the mail, for one to prevent the running of a mail train as made up ,though he is willing that the mail car shall go on, and his purix>se is other than to retard the mails. 76. 180. Same.— The railway is a great public highway, amhthe duty of the railroad company as a common carrier is first to the pub- lic. The road must be kept in operation for the acommoda- tion of the public, if it is possible to do so with the force and 1086 INDEX — DIGEST. COMBINATIONS, CONSFIBACIES, CONTRACTS, ETC.— ContHi. II. Prohibited — Continued. appliances within reach. Any negligence in this resi>ect is not excused by teniiwrnry difficulties capable of being promptly removed. lb, 131. Same. — Where the transiwrtation of the malls and interstate conmierce has long l>een interrupted by the refusal of the employees of the railway company to move trains carrying Pullman cars, it is the duty of the railway company to use every effort to move the mails and interstate commerce, with- out regard to the make-up of regular trains; and any willful failure to perform this duty is a violation of the statute. Ih. 188. Railway Employees — Strikes for the Purpose of Injuring a Third Party. — It is unlawful for the employees of railway com- panies to combine and quit work for the purpose of com- pelling their employer to withdraw from his relations with a third party, for the puriwse of injuring that third party. They have, however, a right to organize for mutual benefit and protection, and for the purixise of securing the highest wages and the best conditions they can command. They may appoint officers, who shall advise them as to the course to be taken in their relations with their employer, and they may, !f they choose, repose in their officers authority to order them, or any of them, on pain of expulsion from their union, peaceably to leave the employment because the terms thereof are unsatisfactory. Thomas v. Railnay Co., 62 F., 817, followed. U. 8, v. Cmsidif, C7 F., 698. 1^52 188. Strike — Obstruction of Mails — Restraint of Interstate Trade or Commerce. — ^A strike, or a preconcerted quitting of work, by a combination of railroad employees is, in itself, unlawful if the concerted action is knowingly and willfully directed by the parties to it for the purpose of obstructing and retarding the passage of the malls, or in restraint of trade and commerce among the States. Ih, III. Not Prohibited. J. Agreements, combinations, etc., only incidentally affecting interstate commerce, 134. Agreements to Raise Prices of Lumber, Not Involving an Ab- sorption of the Entire Traffic. — An agreement between a number of lumber dealers in different States to raise the price of lumber 50 cents per thousand feet in advance of the market price can not operate as a restraint upon trade within the meaning of the act of Congress " to protect trade and commerce against unlawful restraint and monopolies" (26 Stat., 209) unless such agreement involves an absorption of the entire traffic and is entered into for the purpose of monopolizing trade in that commodity with the object of extortion. U, 8, v. Nelson, 52 F., 646. 1 — 77 But see Combinations, etc., 8-15. INDEX — ^DIGEST. 1087 COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.— Cont'd. HI. Not PROHimTED— Continued. 185. A combination between all the lumber manufacturers of a city to raise and maintain the price of lumber to local consumers, and to refuse to sell lumber to consumers who purchase any part of their supply from outside mills, some of such mills supplying the local market being situated in another State, is not in violation of the Sherman Anti-Trust Law, as in restraint of interstate commerce, its effect on such commerce being indirect and incidental only. Ellis v. Innian, Poulsen <& Co., 124 F., 956. ' 2—268 Reversed, 1.31 F., 182 (2—577). 136. Apportionment of Territory— Agreements Not to Compete— Iron Pipe.— The combination of several corporations engaged in the manufacture of cast-iron pipe whereby they agree not to compete with each other in regard to work done or pipe furnished in certain States and Territories, and, to make effectual the objects of the association, agree to charge a bonus upon all work done and pipe furnished within those States and Territories, which bonus was to be added to the real market price of the pipe sold by those companies, was not a violation of the Anti-Trust Act, as it affected inter- state commerce only incidentally. U. 8. v. Addyston Pipe and Steel Co., 78 F., 712. 1—631 Reversed, 85 F., 271 (1—772) ; 175 U. S., 211 (1—1009). See Combinations, etc, 39-46. 137. Same.— In the examination of such a contract, fraud and illegality are not to be presumed, but must be proved, as in all other cases. jj 188. Acts, contracts, and combinations which promote, or only inci- dentally or indirectly restrict competition in commerce among the States, while their main purpose and chief effect are to foster the trade and increase the business of those who malie and operate them, are not in restraint of inter- state commerce, or violative of section 1 of the act of July 2 1890 (26 Stat., 209). Whitwell v. Continental Tobacco Co' 125 F., 454. 2—271 139. Same.— Attempts to monopolize a part of commerce among the States which promote, or only incidentally or indirectly restrict, competition in interstate commerce, while their main purpose and chief effect are to increase the trade and foster the business of those who make them, were not intended to be, and were not, made illegal or punishable by section 2 of the Anti-Trust Act of July 2, 1890, chapter 647 (26 Stat, 209), because such attempts are indispensable to the existence of any competition in commerce among the States. ,, 140. Combination to Monopolize Refining and Selling Sugar by Buy- ing up all Competitors not a Violation of the Statute.— A combination whose object is to enable a single company to 1088 INDKX — DIGEST. COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.— Cont'd, III. Not Prohibited — Continued. iiioiiopolijse fioci control the Imsiiiess of ivtininjj and selling sugar, by buying up all competing concerns in the Uniteil States, is not in vioiatiiin of Federal Anti-Trust Act of July 2, 1890, for it constitutes no restriction upon, or monoiwly of, commerce between the States, but, at most, only makes it possible for the promoters of the combination to restrict or monopolize such commerce, should they so desire. V. .V. v. E, V. KnUiht Co.. (iO F., 306. 1— 25(» 141. Same. — The purchase of stock of sugar refineries foi the pur- pose of acquiring control of the business of refining and sellini^ !*ugar in the Uuitetl States does not involve monopoly, or restraint of interstate or forei'^Mi commerce, within the me.iuing of the act of .Inly 2. lHiM». / . s. v. /;. r. Kniijht Co., tiO F.. im. 1—258 148. Purchase of Similar Establishments in other States and thus Securing a Monopoly Bears no Birect Relation to Interstate or Foreign Commerce. — Although the American Sugar Refin- tuff VoiiiitaHif. a cori» »ratinu cxistinir under the laws of the State of New .Jersey, obtained through tlie purchase of storix in four l*liibideli>lna refineries such disposition over those nuuuifactorii's tbntujxliout tin* rniteil States as gave it a pr:M thai na luspoly of the laisiness. Ilchl. that the ac- ciuisitiun id' thi.sc refineries by tlu' New .lersey cj»rporation, find the laisiness of sugar relinin.:; in IViinsylvania, l>ear no direct relation to rjinuucrcc between tlte States or with for- eign nations: and tliat tlic result of the transaction was the creation of a nionoin>ly in tli*' manufacture of a necessary of life, which could not be suppressetl uiuUh- the Anti-Trust Act of July 2, 1890 (2<; Stat.. 2<«l>. / . .S. v. /;, C. Knhjht Co., ].•♦> l*. S., 1. 1— .379 143. Corporate Rights as Regards Acquisition of Property to an Ex- tent which Gives Control of Traffic Therein Among the States Not Prohibited. — Congress Ims no authority, under the com- merce clause or any other lu-ovislon of the Constitution, to limit the right of a c«M'iM>ration created l)y a State in tlie a«iuisiti«in, contnd, and disiw)sitioii of property in the several States, and it is immaterl.il tliat such proi)erty, or the iirud- ucts thereof, may become the subjects of interstate com- merce. It is apparent that by the act of July 2. 1800, in rela- tii>n to monoiK)lies, Congress did not intend to de«Iare that the acquisition by a State corimration of so large a i»art of any spe<'ies tif i»roi>erty as to enal>le the owners to control tlie traffic therein among the several States, constituteeriod of ten years, or do any act tending to impair the good will of the business sold, was not contrary to public policy. Davis v. .4. Booth tC- Co., 131 F., 31. 2—566 158. Same — Construction. — Where such contract ancillary to the sale provided that the stockholders of the seller would not again engage in a similar business for a period of ten years in the territory, or the immediate vicinity of the territory, dealt in by the corix)ration, or operated in by it or its agents, or the immediate vicinity of such territory, the localities guarded against were restricted to those in which the selling company had establishments for doin^ business, and the immediate vicinity thereof, and did not include all parts or every one of the United States in which a former customer reside>j* 1092 INDEX — DIGEST. COMBINATIONS, CONSPIRACIES, CONTBACTS, ETC.— Cont'd. III. Not Prohibited— Continued. J. Manufacturer's right to regulate prices and restrict sale of his omi products, 160. Contracts ICade by Manufacturer with Wholesale Dealers to Sell Proprietary Medicines at a Certain Price Only.— A system of contracts made by the manufacturer of a proprietary med- icine between him and wholesale dealers, to whom alone he iold his medicine, by which they were bound to sell only at a certain price and to retail dealers designated by him, and between him and the retail dealers by which, in considera- tion of being so designated, they agreed to sell to consumers only at a certain price, is not unlawful as in restraint of trade, but is a reasonable provision for the protection of the manufacturer's trade, and he is entitled to an injunction to restrain a defendant from inducing other parties to such con- tracts to violate the same. Hartman v. John D. Parks d Sons Co., 145 F., 358. »— 1000 See also Dr. Miles Medical Co. v. Japnes Drug Co., 149 F., 838. 161. Agreement for Bebate if Price is Maintained, where Purchaser was not Bound in any way. — An arrangement whereby a dis- tillery company promised persons who purchased from its distributing agents that if for the ensuing six months they would purchase their distillery products exclusively from Buch agents and would not resell the same at prices less than those fixed by the company, then, on being furnished with a certificate of compliance therewith, it would pay a certain rebate on the amount of such purchases, did not constitute a contract in restraint of trade, within the meaning of section 1 of said act, since the purchaser was not in any way bound to the performance of the conditions named; nor did such arrangement operate to " monopolize," or " as an attempt to monopolize," trade and commerce, within the meaning of section 2 of said act. fn re Ore^me, 52 F., 104. 1 — 56 16JI. Same — ^No Offense even after Compliance with the Conditions. — Nor was there any offense under the statute, even after the purchaser complied with the conditions of the promise, and thereby became entitled to the rebate, for such compliance had no retroactive effect to create a valid contract between the parties prior thereto. /ft. 163. Same. — Even if the promise could be considered as a binding contract between the parties, the restraint thereby imposed was only partial and reasonable in the protection of de- fendant's business, and was not of the general character necessary to constitute an unlawful contract In restraint of trade. Mogul 8. 8. Co. v. McGregor [1892], App. Cas., pt. 1, p. 25, approved. 76. 164. A mannfacturer, a corporation, and its employee restricted the tales of its products to those who refrained from dealing in INDEX — ^DIGEST. 1093 COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.— Cont'd. III. Not Prohibited — Continued. the commodities of its competitors by fixing the prices of its goods to those who did not thus refrain so high that their purchase was unprofitable, while it reduced the prices to those who declined to deal in the wares of its competitors so that the purchase of the goods was profitable to them. The plaintifl! applied to purchase, but refused to refrain from handling the goods of the corporation's competitors, and sued it for damages caused by the refusal of the defendants to sell their commodities to him at prices which would make it profitable for him to buy them and sell them again. Held. The restriction of their own trade by the defendants to those purchasers who declined to deal in the goods of their competitors was not violative of the Anti-Trnst Act. Whit- well V. Continental Tobacco Co., 125 F., 454. 2 — ^271 165. Sales.— The owner of goods may dictate the prices at which he will sell them, and the damages which are caused to au 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. /[,. 166. Contracts Restricting Territory within Which Purchasers may Sell. — A contract of sale by a manufacturer to jobbers of some of its product, to be shipped across State lines to the latter, whereby the parties agree that the purchasers shall not sell, ship, or allow any of the product thus purchased to be shipped outside of a certain State, is not in restraint of trade or illegal under the act of July 2, 1890. Phillips x. lola Portland Ceinent Co., 125 F., 593. Si— 284 4. Live-stock associations and cmnmission merchants. 167. A combination of commission merchants at stock yards, by which they refuse to do business with those who are not members of their association, even if it is illegal, is not sub- ject to the act of Cougi-ess of July 2, 1890, to protect trade and commerce, since their business is not interstate com- merce. Hopkins v. U. S., 171 U. S., 578. 1—941 Reversing 82 F., 529 (1—725). 168. Same. — In order to come within the provisions of the statute, the direct effect of an agreement or combination must be in restraint of trade or commerce among the several States or with foreign nations. , /j,. 169. Same.— A by-law of the Kansas City Live- Stock Exchange. which regulates the commissions to be charged by meml>ers of that association for selling live stock is not in restraint of interstate commerce or a violation of the act of July 2. 1890, to protect conunerce from unlawful restraints. /ft. 1094 INDEX — ^DIGEST, COMBINATIOirS, COHSPIIIACIES, CONTRACTS, ETC.-ContU •III., Not Prohibited— Continuetl. 170. Same.— A commission apent who sells cattle at their place of defttlnation, which are sent from another State to be sold. Is not engaged in interstate commerce; nor is bis agreement with others in the same bnsiness, as to the commissions to be charged for such sales, void as a contract in restraint of that commerce. 1ft. 171. Same.— The bnsiness of agents in soliciting consignments of eattle to commission merchants in another State for sale Is not interstate commerce; and a by-law of a stock exchange restricting the number of solicitors to three does not re- strain that commerce or violate the act of Congress. 76. 178. LlTe-Stock Exchange— -Agreement not to do Bnsiness with Other Yard Traders who are not Members of the Exchange. — An agreement among persons engaged in the common busi- ness, as yard trader, of buying at a city stock yard cattle which came from different States, that they will form an association for the better conduct of their business, and that they will not transact business with other yard traders who are not members, or buy cattle from those who also sell to yard traders who are not members of the association, is not in violation of the act of July 2, 1890, to protect trade and commerce against unlawful restraints and monopolies. Anderson v. U, 8., 171 U. S., 604. 1—967 178. Same. — A rule of a live-stock exchange that its members shall not recognize any yard trader who is not also a member of the exchange is not in restraint of, or an attempt to mo- nopolize, trade, where the exchange does not itself do any business, and there is nothing to prevent all yard traders from being uieml)er8 of the exchange and no one is hindered from having access to tlie yards or having all their facilities, except that of selling to meuil>ers of the exchange. Ih, 174. Same. — Rules to enforce the purpose and object of such ex- change, if reasonable and fair, can not. except remotely, affect interstate trade and commerce, and are not void as violations of the act of July 2. 1890. /ft. 175. Same. — ^In order to come within the provisions of the statute the direct effect of an agreement or combination must be in restraint of that trade or commerce which is among the several States or with foreign nationa /ft. 176. Same. — Where the subject-matter of the agreement does not directly relate to and act upon and embrace interstate com- merce, and where the undisputetl fact.^ clearly show that the pnn^^se of the agreement was not to regulate. ol)struct, or restrain that conniien^. but that it was entered into with the object of proiierly and fairly regulating the transaction of the business in which the parties to the agreement were en- gaged, such agreement will be upheld as not within the INDEX — ^DIGEST. 1095 COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.— Cont'd. III. Not Prohibited — Continued, statute, where it can be seen that the character and terms of the agreement are well calculated to attain the purpose for which it was formed, and where the effect of its forma- tion and enforcement uix)n interstate trade or commerce is in any event but indirect and incidental, and not its purix)se or object. /ft. 5. Stock exchanges — Cotifraet for distribution of quotations. 177. A contract between a board of trade, having a property right in the quotations made on its exchange, and a telegraph com- pany relating to the transmission and distribution of such quotations by the latter is not in violation of the Anti-Trust Act of 1890 (26 Stat, 209), as in restraint of trade and com- merce, because of a provision that the quotations shall only be furnished to persons who sign an agreement to the effect that they shall not be used in the conduct of a bucket shop. Board of Trade v. Christie Grain & Stock Co., 121 F., 608. 2—333 178. Contracts under which the Chicago Board of Trade furnishes telegraph companies with its quotations, which it could re- frain from communicating at all, on condition that they will only be distributed to persons in contractual relations with, and approved by, the board, and not to what are known as bucket shops, are not void and against public i)olicy as being in restraint of trade either at common law or under the Anti-Trust Act of July 2, 1890. Board of Trade v. Christie Grain and Stock Co., 198 U. S., 236. 2—717 179. Same — Property Right in Quotations — Entitled to Protection. — In a suit brought by the Chicago Board of Trade to restrain parties from using the quotations obtained and used without authority of the board, defendants contended that as the board of trade permitted, and the quotations related to, transactions for the pretended buying of grain without any intention of actually receiving, delivering, or paying for the same, that the board violated the Illinois bucket-shop statute and there were no property rights in the quotations which the court could protect, and that the giving out of the quota- tions to certain persons makes them free to all. Held. That even if .such pretended buying and selling is permitted by the board of trade it is entitled to have its collection of quo- tations protected by the law and to keep the work which it lias done to itself, nor does it lose its property rights in the quotations l»y conniiunicating them to certain persons, even tliough many, in confidential and contractual relations to itself, and strangers to the trust may be restrained from ob- taining and using tlie (juotations by inoludinsr a In-each of tlie trust. /5, 1096 INDEX — DIGEST. COMBINATIONS, CONSPIBACIES, GONTBACTS, ETC.— Confd. III. Not Prohibitei>— Continued. 180. Same— Entitled ta Protection Though it Concerns Illegal Acts.— A collection of information, otherwise entitled to protection, does not cease to be so because it concerns illegal acts, and statistics of crime are property to the same extent as other statistics, even if collected by a criminal who furnishes some of the data. /^^ 6. Sloekholding corporations — Minnesota. ISI. Anti-Tmst Law of Minnesota Should ReceiTe Same Construction at Sherman Anti-Trust law. — ^The anti-trust law of Minne- sota (Laws 1899, p. 487, ch. 359), making unlawful any con- tract or combination in restraint of trade or commerce within the State, is in substantially the same language as the Anti- Trust Act of July 2, 1890 (26 Stat., 209), and must receive a similar construction. Minnesota v. Northern Securities Co., 123 F., 692. 2—246 Reversed, 194 U. S., 38. Circuit Court had no jurisdiction (»— 533). 188. Same — Stockholding Corporation. — A bolding corix)ration or- ganized by individual stockholders of two railroad companies owning and operating substantially parallel and competing lines of railroad within the State of Minnesota, for the sole purpose of acquiring, by the exchange of its own stock there- for, stock of the two companies, and holding and voting the same, but having no power or franchise to operate a rail- road, is not in violation of the Minnesota anti-trust law (Laws 1899, p. 487, ch. 359), which provides that " any con- tract, agreement, arrangement, or conspiracy, or any com- bination in the form of a trust or otherwise ♦ ♦ ♦ which Is In restraint of trade or commerce within this State • * ♦ Is hereby prohibited and declared to be unlawful," where the purpose of its promoters was thereby to acqdire and retain in the same hands a majority of the stock of one or both companies, to insure uniformity of policy and stabil- ity of management, although it in fact acquired the con- trolling interest in both, in the absence of any evidence that It ever exercised its power to prevent competition between the two roads, or to interfere in any manner with the fixing of rates by either company. /j». 7. Patents — Combinations, etc., to keep up the monopolies, 18S. Holding Company.— Contracts by which a number of patents covering similar inventions are conveyed by the several own- ers to one of the parties, which grants licenses under all to the others, are not void as against public policy or as In INDEX DIGEST. 1097 COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.— Cont'd. III. Not Prohibited — Continued, violation of the Sherman Anti-Trust Law, because of pro- visions intended to protect and keep up the patent monop- oly by requiring the licensor to prosecute all infringers, limiting the licenses to be granted to such licensees as shall be agreed on, and iuiix)sing conditions on each licensee as to the use and ownership of the patented machines, and pro- hibiting him from using any others. U. S. Consolidated . Seeded Raisin Co. v. Oriffin d Skelley Co., 126 F., 364. 2—288 1S4. Conditions imposed by the patentee in a license of the right to manufacture or sell the patented article, which keep up the monopoly or fix prices, do not violate the act of Congress of July 2, 1890 (26 Stat., 209), to protect trade and commerce lagainst unlawful restraints or monopolies. Bement v. National Harrotc Co., 186 U. S., 70. 2—170 185.. Reasonable and legal conditions imposed by the patentee in a license of the right to manufacture and sell the patented article, restricting the terms upon which the article mauu- fact\ired under such license may be used and the price to be demanded therefor, do not constitute such a restraint on commerce as is forbidden by the act of Congress of July 2, 1890 (26 Stat, 209), to protect trade and commerce against unlawful restraints and monopolies. lb. 186. The agreement of the licensee of a patent for improvements re- lating to float spring-tooth harrows not to manufacture or sell any other such harrows than those which it had made under its patents before assigning them to the licensor, or which it was licensed to manufacture and sell under the terms of the license, except such other style and construction as it may be licensed to manufacture and sell by such licensor, is not void as an unlawful restraint on trade or commerce forbidden by the act of Congress of July 2, 1890 (26 Stat, 209), since the plain purpose of this provision is to prevent the licensee from infringing on the rights of others under other patents, and not to stifie competition or prevent the licensee from attempting to make any improve- ment in harrows. . /ft. 187. An agreement by the licensor of a patent for impi-ovements re- lating to harrows not to license any other person than the licensee to manufacture or sell any harrow of the peculiar style and construction then used or sold by such licensee does not violate the act of Congress of July 2, 1890 (26 Stat, 209), to protect trade and commerce against unlawful restraints and monopolies. /&. 188. 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 1098 INDEX — DIGEST. COMBINATIONS, CONSPIBACIES, CONTRACTS, ETC.— Confd. III. Nw PRCHiBiTEi*— rontinueil. the right to manufacture or use or sell the article, will be upheld by the courts. The fact that the conditions in the contracts keep up the monopoly or fix prices does not render them illegal. Benient v. National Harrow Co., 186 U. S., 70, m. 2_189 8ee aim Combinations, etc., 92-90. 8, Railroads — Rate» — Contracts, etc., favoring particular roads or individHals. 189. Combinations to Maintain Bailroad Bates, but not Preventing or Illegally Limiting Competition, not a Violation of Section 1 of Statute. — ^An agreement between several comj)eting rail- way companies and the formation of an association there- under for the purpose of maintaining just and reasonable rates, preventing unjust discriminations by furnishing ade- quate and equal facilities for the interchange of traffic be- tween the several lines, without preventing or illegally limit- ing competition, is not an agreement, combination, or con- spiracy in restraint of trade in violation of the act of July 2, 1890. section 1. U. S. v. Trms-Missouri Freight Asnn., 5:3 F., 410. 1_^5;0 Reversed, 166 U. S., 290 (1—648). 190. Same — Hot a Violation of Section 2 as Tending to a Monopoliza- tion, etc.^ — Nor is such an agreement in violation of section 2 of such act tending to the monopolization of trade and com- merce. U>, 191. Same — Separate Organizations, etc. — ^Wherc each company, i)y such agreement maintains its own organization as before, elects its own officers, delegates no powers to the association to govern in any respect the oi)erations or methods of trnns- acting the routine business of the several comi>eting lines, but simply requires that each company shall charge just and reasonal>le rates, and provides for certain regulations in re- gard to changes in such rates, such contract or agreement is not forbidden l)y public policy as amounting to a transfer of the franchises and corporate powers of such companies. /6. 192. Same. — A contract Itetween railroad companies f«>rmfng a freight association that they will establish and maintain such rates, rules, and regulations on freight traffic between competitive points as a committee of their choosing shall recommend as reasonable ; that these rates, rules, and regu- lations shall be public ; that there shall be monthly meetings of the association, composed of one rei)resentative from each railroad company; that each company shall give five days' notice liefore some monthly meeting of o\ery reduction of INDEX—DIGEST. 1099 COMBINATIONS, CONSPIBACIES, CONTRACTS, ETC.— Cont'd. III. Not PROHiBiTED-U.'ontinued. rates or deviation from the rules it proposes to make ; that it will advise with the representatives of the other members at the meeting relative to the proposed modification, will sub- mit the question of its proposed action to a vote at that meeting, and, if the proposition is voted down, that it will then give ten days' notice that it will malie the modification notwithstanding the vote before it puts the proposed change into effect; that no member will falsely bill any freight, or bill any at a wrong classification ; and that any meml)er may withdraw from the association on a notice of thirty days, appears to be a contract tending to make competition fair and open, and to induce steadiness of rates, and is in accord with the policy of the Interstate Commerce Act. Such agree- ment can not be adjudged to be a contract or conspiracy in restraint of trade under the Anti-Trust Act when it is ad- mitted that the rates maintained under the same have been reasonable and that the tendency has been to diminish rather than to enhance rates, and there is no other evidence of its consequences or effect. Shiras, district judge, dissent- ing. 53 Fed. Kep., 440, affirmed. lj\ S. v. Trans-Mo. Ft. Assn., 58 F., 58. l — 186 Reversed, 16G U. S., 290 (1—648). 193. Same. — No monoi>oly of trade or attempt to monopolize trade within the meaning of the Anti-Trust Act is proved by such a contract. /ft. 194. Same. — ^The railroad companies who are parties to such a con- tract do not thereby substantially disable themselves from the discharge of their public duties. rb. 195. A contract by which a railroad company arranges with another, to the exclusion of still others, for the interchange of pas- sengers and freight by through tickets and bills of lading is not a contract in unlawful restraint of trade, within the meaning of the act of July 2, 1890. Prescott & A. C. R. Co. Y. Atchison, T. y defendant, and 1100 INDEX — ^BIOBST. COMBINATIONS, CONSPIBACIES, CONTRACTS, ETC.— CJonfd. III. Not Prohibited— Continueer8 of a labor union in at- tempting to compel a hat manufacturer to unionize his fac- tory by^ leaving his employment and preventing others from taking employment therein, and also, with the assistance of the members of affiliated organizations, by declaring a boy- cott upon his goods in other States into which such goods INDEX Dr(3EST. 1103 COMBIMAMONS, CONSPIRACIES, CONTRACTS, ETC. -Cont'd. III. Not Prohibited— Continued. have been shipi>ed for sale at retail, does not have such rela- tion to interstate commerce as to constitute a combination or conspiracy in restraint of such commerce in violation of the Sherman Anti-Trust Act of July 2, 1890 (26 Stat, 209). Loctvc V. Lawlor, 148 F., 924. (Decision not in print when body of this book went to press.) See also Combinations, etc., 112-133. II. Municipal contracts— State monopolies. 214. Contract Limiting Character of Material to be Used to that Controlled by a Single Corporation.— Where the contract for the paving of a street with asphalt limited the kind of as- phalt to be used to Trinidad asphalt, such fact, and the fur- ther fact that such asphalt was controlled by a single cor- poration was not violative of the commerce clause of the Constitution or of the Federal anti-trust statutes, and did not affect the validity of the contract. Field v. Barber Asphalt Pav. Co., 117 F., 925. 2—193 215. Same.— The specification in an ordinance by a municipal council that Trinidad Lake asphalt shall be used for street improve- ment, does not violate the commerce clause of the Federal Constitution or the Sherman Anti-Trust Act of July 2, 1890 (2f> Stat., 209), notwithstanding this particular kind of asphalt is the product of a foreign country and competitive bidding was thereby rendered impossible. FieU v. Barber Asphalt Paviiig Co., 194 U. S., 618. 2—555 216. Same.— The necessity for an improvement of streets is a matter of which the proper municipal authorities are the exclusive judges and their judgment is not to be interfered with except in cases of fraud or gi-oss abuse of power. /ft. 217. State Monopoly of Liquor Traffic— The act of July 2, 1890 (26 Stat, 209) is not applicable to the case of a State which, by its laws, assumes an entire monoix)ly of the traffic in intoxi- cating liquors (act S. C, Jan. 2, 1895). A State is neither a " person " nor a " corporation," within the meaning of the act of Congress. Loicenstein v. Evans, 69 F., 908. 1—598 COHMEBCE. See Interstate Commerce. COMMON CARRIERS. See Caeriebs. COMMON LAW. 1. Common-Law Oflfenses— Definitions.— There are no common-law offenses against the United States, and the offenses cogniza- ble in the Federal courts are only such as the Federal stat- utes define, provide a punishment for, and confer jurisdic- tion to try ; but when Congress adopts or creates a common- law offense the courts may i)ioperly look to the common law for the true meaning and definition thereof, in the absence of a clear definition in the act creating it. In re Greene 52 F., 104. j_5^ 1104 INDEX — ^DIGEST. OOMMOir LAW-Coiitiniied. 8. Common-Law Offente Adopted liy Congress — Presumption— In- terpretation. — Where Congress adopts or creates a common- law offense, and in doing so uses tenns wbich have acquired a well-understood meaning by judicial Interpretation, the presumption is that the terms were used in that sense, and courts may properly look to prior decisions interpreting them for the meaning of the terms and the definition of the ofltense where there is no other diflnition in the act. U. 8. v. Tram-Mo, Ft Assn,, 58 F.. 58. 1—186 Case reversed, ICS V. S., 290 (1— (J48). 8. Common-Law Bnle.— The ground on which certain classes of contracts and combinations in restraint of trade were held illegal at common law was that they were against public policy. I^' 4. Public Policy— How Determined.— The public policy of the na- tion must he determined from its Constitution, laws, and judicial decisions. /&• «. Railroad Companies— Arrangements for Through Billing.— There is no principle of common law which forbids a single railroad corporation, or two or more of such corporations, from select- ing, from two or more other corporations, one which they will employ as the agency by which they will send freight beyond their ow^n lines, on through bills of lading, or as their agent to receive freight, and transmit it on through bills to their own lines, and without breaking bulk; and the right to make sueh selection is not taken away by the Interstate Commerce Law. New York t§ N. Ry. Co, v. New York d N. E. R. Co., 50 F., 867, explained. Preacott d A. C, R. Co. v. Atchism, T. d 8. F. R. Co.. 73 F., 438. 1—604 €. Prepayment of Freight.- A common carrier engaged in inter- state commerce may at common law, and under the Interstate Commerce I^*iw, demand prepayment of freight charges,when delivered to it by one connecting carrier, without exacting such prepayment when delivered by another connecting car- rier, and may advance freight charges to one connecting carrier without advancing such charges to another connect- ing carrier. Gulf, C. d 8. F. Rtf. Co. v. Miami 8. 8. Co., 86 F., 407. 1—823 7. Some.— The rules of the common law do not require a carrier to receive goods for carriage, either from a consignor or a connecting carrier, without prepayment of its charges if demanded, nor to advance the charges of a connecting car- rier from which it receives goods in the course of transporta- tion; nor can it be required to extend srch credit or make such advances to one connecting carrier because it does so to another. 8outherfi Ind. Exp. Co. v. V. 8. Exp. Co., 8S F.,. 650. 1—862 INDEX ^DIGEST. 1105 COMMON LAW— Continued. 8. Contracts in Restraint of Trade — At Common Law. — Contracts that were in unreasonable restraint of trade at conmion law were not unlawful in the sense of being criminal, or as giving rise to an action for damages to one prejudicially affected thereby, but were simply void, and not enforceable. U. 8. V. Addyston Pipe and Steel Co., 85 F., 271. 1 — 772 0. Same. — No contractual restraint of trade is enforceable at com- mon law unless the covenant embodying it is merely ancil- lary to some lawful contract (involving some such relations as vendor and vendee, partnership, employer and employee), and necessary to protect the covenantee in the enjoyment of the legitimate fniits of the contract, or to protect him from the dangers of an unjust use of those fruits by the other party. The main purpose of the contract suggests the measure of protection needed, and furnishes a sufficiently uniform standard for determining the reasonableness and validity of the restraints. But where the sole object of both parties in making the contract is merely to restrain competi- tion, and enhance and maintain prices, the contract is void. />. See also Continental Wall Paper Co. v. Lewis Voighi & Sons Co., 148 F., 939. 10. The illegality, at common law, of a combination formed by corporations and persons in restraint of trade, does not pre- clude it from recovering the purchase price of goods sold in the course of business. Connolly v. Union Sewer Pipe Co., 184 U. S., 540. 2—118 11. Kote to Trust — Avoidance. — A note made for a balance due on goods bought from a corporation can not be avoided merely because the latter is a trust organized to create and carry out restrictions in trade contrary to the common law. Union Sever Pipe Co., 99 F., .354. 2—1 Affirmed, 184 U. S., 540 (2—118). COMPETITION. See Statutes, 22, 23, 31. CONGRESS. 1. Debates in Congress are not appropriate sources of information, from which to discover the meaning of the language of a statute passed by that body. 17. 8. v. Trans Mo. Ft. Assn., 166 U. S., 290. 1—648 a. Power to Prohibit Combinations to Establish and Maintain Bailroad Rates. — Congress has the power to prohibit, as in restraint of interstate commerce, a contract or combination between competing railroad companies to establish and main- tain interstate rates and fares for the transportation of freight and passengers on any of the railroads parties to the 11808— VOL 1—06 M 70 1106 INDEX — ^DIGEST. CONGBESS— Cuntinuei!. contract or combimitlou, even thougrh the rates and fares thn» established are reasonable. U. S. v. Joint Traffic Assn., Ill U. S., 505. 1—869 5. Same — Combinations by Means of Which Competition is Pre- Tented. — Congress has the iwwer to forbid any agreement or combination among or between competing railroad companies for interstate commerce, by means of which competition was prevented. lb, 4. The Anti-Tmst Law is a legitimate exercise of the power of Congress over interstate commerce, and a valid regulation thereof. /ft. i. Power to Legislate Upon the Subject of Private Contracts in Respect to Interstate Commerce. — The power of Congress to regulate intei*state or foreign commerce includes the power to legislate mwn the subject of private contracts in respect to such commerce. AiWuslon Pipe d Steel Co. v. United States, 175 U. S., 211. 1—1009 6. Same. — Congress may enact such legislation as shall declare Yoid and prohibit the performance of any contract between individuals or corporations where the natural and direct effect of such a contract shall be, when carried out, to directly aud not as a mere incident to other and innocent purposes, regulate to any substantial extent interstate or foreign commerce. 1ft. 7. Same. — The power of Congress to regulate interstate commerce comprises the right to enact a law prohibiting the citizen from entering Into those private contracts which directly and substantially, and not merely indirectly, remotely, In- cidentally, and collaterally, regulate, to a greater or less degree, connntn'ce among the States. /ft. 5. Same — ^No Jurisdiction Over Commerce Wholly Within a State. — Although the jurisdiction of Congress over conuuerce among the States is full and ccjmplete, it is not questioned that It has none over that which is wholly within a State, and there- fore none over combinations or agreements so far as they relate to a restraint of such trade or commerce; nor does it acquire any jurisdiction over that part of a combination or agreement which relates to commerce wholly within a State, by reason of the fact that the combination also covers and regulates commerce which is interstate. /ft. 9. Congress did not exceed its power under the commerce clause of the Federal Constitution in enacting the Anti-Trust Act of July 2, 1890 (26 Stat, 209), declaring illegal every combi- nation or conspiracy in restraint of interstate commerce, and forbidding attempts to monopolize such commerce or any part of it, although such statute is construed to embrace a combination of stockholders of two competing interstate INDEX — DIGEST. 1107 CONGBESS— Continued. railway companies to form a stock-holding corporation which should acquire, in exchange for its own capital stock, a controlling interest in the capital stock of each of such rail- way companies. Northern Securities Co. v. Umted States, 193 U. S., 197 (48 L. ed., 279). 2-^42 10. Had Power to Enact Anti-Trust Law. — Under its powers to regulate commerce among the several States and with for- eign nations Congress had authority to enact the Anti-Trust Act of July 2, 1890. Northern Securities Co. v. United States, 193 U. S., 197 (Harlan, Brown, McKenna, Day). 2—340 See United States v. E. C. Knight Co., 156 U. S., 1; United States y. Trans-Missouri Freight Association, 166 U. S., 290; United States v. Joint Traffic Assoeiatimi, 171 U. S., 505; Hopkins v. United States, 171 U. S., 578; Anderson v. United States, 171 U. S., 604; Addyston Pipe <(• Steet Co. v. United States, 175 U. S., 211 ; Montague tl- Co. v. Lowry, 193 U. S., 38. 11. The constitutional guarantee of liberty of contract does not prevent Congress from prescribing the rule of free competi- tion for those engaged in interstate and international com- merce, jjf^ 12. Congress may protect the freedom of interstate commerce by any means that are appropriate and that are lawful and not prohibited by the Constitution. /ft. 13. If in the judgment of Congress the public convenience or the general welfare will be best subserved when the natural laws of competition are left undisturbed by those engaged in interstate commerce, that must be, for all, the end of the matter, if this is to remain a government of laws, and not of men. jj^ 14. When Congress declared contracts, combinations, and conspira- cies in restraint of trade or commerce to be illegal, it did nothing more than apply to interstate commerce a rule that had been long applied by the several States when dealing with combinations that were in restraint of their domestic conmierce. jj 15. The power of Congress over interstate and international com- merce is as full and complete as is the power of any State over its domestic commerce, subject, of course, to such restrictions as are imposed by the Constitution upon the exercise of all power. /j,^ 16. No State can, by merely creating a corporation, or in any other mode, project its authority into other States, so as to prevent Congress from exerting the power it possesses under the Constitution over interstate and international commerce, or so as to exempt its corporation engaged in interstate com- merce from obedience to any rule lawfully established by Congress for such commerce ; nor can any State give a cor- 1108 INDEX — DIGEST. OON0BES8— Continued. poration created under its laws authority to restrain inter- state or international ccjmmerce against tlie will of the nation as lawfully expressed by Congi'ess. Every coriwra- tion created by a State is necessarily subject to the supreme law of the land. /&• 17. Whilst every instrumentality of domestic commerce is subject ,, to State control, every Instrumentality of interstate com- merce may be readied and controlled by national authority, so far as to compel It to resjject the rules for such commerce lawfully established by Congress. 1ft, 18. Congress has the power to establish rules by which interstate and international commerce shall be governed, and by the ifiiti-Trust Act has prescrilwHl the rule of free comijetition among those engaged in such cij!nmeietition l)etween their mem- iKsrs ; and it is no defense to an action to dissolve sucli a com- bination as illegal under the Anti-Trust Law that it has not in fact been productive of injury to the public, or even that it has been beneficial, by enabling the conil)ination to com- pete for business in a wider field. 1 . 8. v. ('Iks a pea he d- O. Fuel Co., 105 F., 93. 2— iU Affirmed, 115 F.. 610 (2—151). 21. Authority over State Corporation. — Congress has no authority, under the commerce clause or any other provision of the Constitution, to limit the right of a corporation created by a State in the acquisition, control, and disposition of property in the several States, and it is immaterial that such property, «r the products thereof, may become the subjects of inter- state commerce; and it is apparent that by the act of July 2, 1890, in relation to monopolies, Congress did not intend to declare that the acquisition by a State corporation of so large a part of any species of property as to enable the owners to control the traffic therein among the several States consti- tuted a criminal offense. In re Greene, 52 F., 104. 1 — 55 2fl. AVhile Congress may not have general visitatorial 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. Hale v. Henkel, 201 U. S.. 43. 2—847 INDEX — ^DIGEST. 1109 CONGRESS— Continued. 23. Franchises of a corporation chartered by a State are, so far as they involve questions of interstate commerce, exercised in subordination to the power of Congress to regulate such com- merce, lb. See also Injunctions, 16. CONSENT OF PARTIES. See Courts, 14. CONSPIRACY. 1. A conspiracy consists in an agreement to do sonietliintr: but in the sense of the law, and therefore in the sense of the act ot 1890, it must be an agreement between two or more to do, l)y concerted action, something criminal or milawful, or, it maj^ be, to do something lawful by criminal or unlawful means. A conspiracy, tlierefore, is in itself unlawful, and, in so far as this statute is directed against conspiracies in restraint of trade among the several States, it is not necessary to loolv for tlie illegality of the offense in the iiind of restraint proi>osed. Any proiK)sed restraint of trade, . tliongli it l)e in itself innocent, if it is to be accomplished by conspiracy, is unlawful. I. S. v. Debs, 04 F., 724, 748. 1— :^2 See also I. S. v. MiicAndrews d- Forbes Co., 149 F.. 823, 831. 2. Conspiracy to Commit Offenses Against the United States — Ee- vised Statutes, Section 5440. — The statute relating to conspir- acies to commit offenses against the United States (Rev. Stat., sec. .5440) contains tln-ee elements, which are neces- sary to constitute the offense. Tliese are: (1) The act of two Of more i)ei'sons consiuring together; (2) to commit any offense against the United States; (3) the overt act, or the element of one or more of such parties doing any act to effect the oliject of the conspiracy. U. S. v. C(if(sU1y, 67 F., 098. 1—449 3. Same — Conspiracy Defined. — A conspiracy is a combination of two or more persons by concerted action to accomplish a criminal or unlawful puri)ose, or some puri)ose not in itself criminal, by criminal or unhnvful means. Peltibone v. U. S., 148 U. S., 203, cited. lb. 4. Same — Manner of Conspiring. — The common design is the es- sence e shown that one or more of the means descriiied in tlie indictment were to be used to execute that purpose. lb, 11. Same — Overt Acts. — While at common law it was not iie( essary to aver or prove an overt act in furtherance of a conspiracy, yet, under the statute relating to conspiracies to commit an oflfense against the United States, the doing of some act in CONSPIRACtr— Continued. pursuance of the conspiracy is made an ingredient of the crime, and must be established as a necessary element thereof, although the act may not be in itself criminal. V. S. v. Thompson, 31 F., 331, 12 Sawy., 155, cited. lb. 12. Same. — It is not necessary, however, to a verdict of guilty, that the jury should find that each and every one of the overt acts charged in the indictment was in fact committed; but it is sufficient to show that one or more of these acts was com- mitted, and that it was done in furtherance of the con- spiracy, lb. 18. A combination of labor organizations whose professed object is to arrest the operation of the railroads whose lines extend from a gi-eat city into adjoining States until such roads accede to certain demands made upon them, whether such demands are in themselves reasonable or unreasonable, just or unjust, is an unlawful conspiracy in restraint of trade and commerce among the States, within the act of July 2, 1890, and acts threatened in pursuance thereof may he restrained by injunction, under section 4 of the act. U. 8. v. EllioU, 62 F., 801. 1—262 14. A combination to incite the employees of all the railways in the country to suddenly quit their service, without any dissatisfaction with the terms of their employment, thus paralyzing utterly all railway traffic, in order to starve the railroad companies and the public into compelling an owner of cars used in operating the roads to pay his employees more wages, they having no lawful right so to compel him, is an unlawful conspiracy by reason of its purx)0se, whether such purpose is effected by means usually lawful or other- wise. Thomas v. Cith, N. O. & T. P. Ry. Co., 62 F., 803. 1—266 15. Same. — Such combination, its purix)se l)eing to paralyze the interstate commerce of the country, is an unlawful con- spiracy, within the act of July 2, 1890, declaring illegal every contract, combination, or conspiracy in restraint of trade or commerce among the several States. V. 8. v. Patterson, 55 F., 605, disapproved. /ft. 16. Same — Obstructing Mails. — Such combination, where the mem- bers intend to stop all mail trains as well as other trains, and do delay many, in violation of Revised Statutes, section 3995, punishing anyone willfully and knowingly obstructing or retarding the passage of the mails, is an unlawful con- spiracy, although the obstruction is effected by merely quitting employment. lb, 17. Any combination or conspiracy on the part of any class of men who by violence and intimidation prevent the passage of railroad trains engaged in interstate commerce is in viola- tion of act of July 2, 1890, declaring illegal every contract, 1112 INDEX — DIGEST. CONSPIRACY— Continued. combination in the form of trust or otherwise, or conspiracy In restraint of trade or eounnerce among the States, lu re Grand Jury, 62 F., 840. 1—301 18. A combination of persons, without regard to tlieir ocxupation, whicli will haye the effect to defeat the proylsions of the interstate commerce law, inliibiting discriminations in the transportation of freight and passengers, and further to restrain the trade or commerce of the country, will be obnoxious to the iienalties prescribed in section 5440, Revised Statutes, relating to conspiracy. Waterhonsc v. Comer, 55 F.. 149. 1—120 1». The tenn " wnspinuy," in section 1 of tiie act of ,Iuly 2. 1890 (2r» Stat. 209), is used in its well-settled legal meaning, and any restraint of trade or commerce, if to be accomplished by conspiracy, is unlawful. U. 8. v. Dvbs, G4 F., 724. 1— »22 80. Conspiracy to Injure in Business.— The action of an association of manutiuturers in adopting a resolution denouncing a dealer in the product they manufacturetl. who bought and shipped such i>roduct to customers in other States and for- eign countries, ami in printing such resolution in circulars, and mailing the same to other nmnufaloye€s of a rei-eiver, wlio is op- erating a railroad under the onler of a court, to leave his emi)loy, In order to carry out an unlawful conspiracy, is not protwted liy constitutional guaranties of the right of assemitly and frw speech, and is not less a contempt be^ cause effected by words only, if the obstruction to the oiiera- tion of the wad i>y the receiver is unlawful and malicious. Thouuts V. Cfn., Y. O. d T. F. Ry. Co., 02 F., 8a*i. 1—266 1, The constitutional freedom of contract as to tlje use and man- agement of proi>erty does not include tbe right of railroad companies to combine as one consolidateil and powerful asso- ciation for the purpose of stifling competition among them- selves, and of Huis keeping their rates and charges higher than they might otherwise be under the laws of comijetition, even if their rates and charges are reasonaible. U. 8. v. Joint Traffic Asm., 171 U. S., 505. 1—869 INDEX DIGEST. 1113 CONSTITUTION— ("ontinued. 3. Legislation which renders unlawful contracts, the direct effect of which is to shut out from interstate commerce the opera- tion of the general law of competition, is not an interference with the general liberty of contract possessed by the citizen under the fifth amendment to the Constitution. lb. 4. The constitutional guaranty of liberty of the individual to enter into private contracts does not limit the power of Congress so as to prevent it from legislating upon the subject of con- tracts in restraint of interstate or foreign commerce. Ad- dyston Pipe and Steel Co. v. U. 8., 175 U. S., 211. 1—1009 5. The provision in the Constitution regarding the liberty of the citizen is to some extent limited by the commerce clause ; and the power (>f Congress to regulate interstate commerce com- prises the right to enact a law prohibiting the citizen from entering into those private contracts which directly and sub- stantially, and m;t merely indirectly, remotely, incidentally, anse of acquiring a controlling interest in tlie cai>ital stock of such companies, from exercis- ing the powers acquired by such corijoration by virtue of its acquisition of such stock. iJ,8 L. erf., 679.) 2—342 9. Only such acts as directly interfere with the freedom of inter- state conunerce are prohibited to the States by the Constitu- tion. Field V. Barber Asphalt Co., 194 U. S., 618. 2—555 10. Article IV — Has Nothing to do with the Conduct of Individuals or Corporations.— Article IV of the Constitution of the United States only prescribes a rule by which courts. Federal and State, are to be guided when a question arises in the prog- ress of a pending suit as to the faith and credit to be given by the court to the public acts, records, and judicial proceed- 1114 INDEX — DIGEST. CONSTITimOir— (^ontiniied. iBffS oC m State other than that In which the court is sitting. It has nothing to do with the conduct of individuals or cor- porations. JflmietoKi ¥. Northern Securities Co,, 194 U. S„ 48* 2—533 11. Vomrth Amendment. See Immunity, 34, 15; Witnesses, 8, 20; Seabch, 2-4 ; Coepobations, 14, 25 ; and Courts, 22. IS. Vifth Amendment. See Immunity, 1, X 7, 9, 16; and Wit- nesses, 1, 2, 4. 11-13, 15, 16, 20, 23. 18, Fourteenth Amendment.— It is not the purpose of the four- teenth amendment to prevent the States from classifying the subjects of legislation and making diflfereut regulations as to the property of different individuals diflferently situated. The provision of the Federal Constitution is satisfied if all persons similarly situated are treated alike in privileges conferred or liabilities imposed. Field v. Barber Asphalt Paving Co., 194 U. S., 618. 2—555 14. Same. — ^A State statute which provides that certain improve- ments are not to be made if a majority of resident owners of property liable to taxation protest, Is not unconstitutional because it gives the privilege of protesting to them and not to nonresident owners. /ft. 15. Same.— Discrimination in favor of agricultural products. See Connolly v. Union Setoer Pipe Co., 184 U. S., 540. 2—119 CONTEMPT. 1. Interference with Beceiver — Impeding Operation of Railroad.— Any willful attempt, with knowledge that a railroad is in the hands of the court, to prevent or impede the receiver thereof apijointed by the court from complying with the order of the court in running the road, which is unlawful, and which, as between i»rivate individuals, would give a right of action for damages, is a contempt of the order of the court. Thomas v. Chh, Y. O. rf T. P. R, Co., 02 F., 803. 1— 26G S. Same— Instigating Strike— Unlawful Combination.— Maliciously inciting employees of a receiver, who is operating a railroad nnder order of the court, to leave his employ, in pursuance of an unlawful combination to prevent the operation of the road, thereby inflicting injuries on its business, for which damages would be recoverable if it were operated by a pri- vate corporation, is a contempt of the court. ih. 8. Same— Constitutional Guaranty of Right of Assembly and Free Speech. — Such inciting to carry out an unlawful conspiracy is not protected by constitutional guaranties of the right of assembly and free speech, and is not less a contempt because effected by words only, if the obstruction to the operation of the road by the receiver is unlawful and malicious. lb, 4. Contempt — Proceeding in Equity— Conclusiveness of Answer. — In proceedings for contempt in equity, ji sworn answer, how- ever full and nnequivociil. is not conciusive. even in the case INDEX — ^DIGEST. 1115 CONTEMPT— Continued . of a stranger to the bill for the injunction which has been violated. V. 8. v. Dehs, 64 F., 724. 1—322 5. Same — Justification — ^Irregularities. — Where a court had juris- diction of an injunction suit, and did not exceed its powers therein, no irregularity or error in the procedure or in the order can justify disobedience of the WTit. 76. 6. Same. — In a proceeding for contempt in disobeying an injunc- tion, the sufficiency of the petition for the injunction, in respect to matters of form and averment merely can not be questioned. /ft. 7. Contempt— Trial by Court. — ^Though the same act constitute a contempt and a crime, the contempt may be tried and pun- ished by the court. /ft. 8. Contempt — ^Violation of Injunction — Conspiracy. — Where de- fendants, directors, and general officers of the American Railway Union, in combination with members of the union, engaged in a conspiracy to Iwycott Pullman cars, in use on railroads, and for that purpose entered into a conspiracy to restrain and hinder interstate commerce in general, and, in furtherance of their design, those actively engaged in the strike used threats, violence, and other unlawful means of interference with the operations of the roads, and, instead of respecting an injunction commanding them to desist, per- sisted in their purpose, without essential change of conduct, they were guilty of contempt. /ft. 9. Same — ^Interference with Receiver. — ^Any improper interference with tlie management of a raih-oad in the hands of receivers is a contempt of the court's authority in making the order appointing the receivers, and enjoining interference with tlieir control. /ft. 10. The order of the Circuit Court finding the petitioners guilty of contempt, and sentencing them to imprisonment, was not a final judgment or decree. Ir re Debs, 158 U. S., 564. 1—565 11. Violation of Injunction — Contempt. — An injunction having been issued and served upon the defendants, the Circuit Court had authority to inquire whether its orders had been disobeyed, and when it found that they had been disobeyed, to proceed under Revised Statutes, section 725, and to enter the order of punishment complained of. /ft. 12. Same— Habeas Corpus.— The Circuit Court having full juris- diction in the premises, its findings as to the act of disobe- dience are not open to review on habeas corpus in this or any other court. /ft 18. Witness— Incriminating Evidence.-~Where a witness is com- mitted for contempt in refusing- to answer all of a series of questions, for tlie reason tliat tlie answers would tend to criminate him, and some of tlie answers would have that tendency, he should not be denied relief on habeas corpus 1116 INDEX — DIGEST. CONTEMPT— Continued. becjiiise mme of the qiieKtit.ns niigljt l»e safely answered. Foot V. Buchafiau, 118 F., 156. 2 — 104 14. Although the subpoena duces tecum may be too broad in its requisition, where the witness has refused to answer any question, or to produce any books or papers, this objection would not go to the validity of the order committing him for contempt. Hule v. Hen Id. 201 U. S., 43. 2—874 CONTRACTS. 1. Contract for Entire Product. — ^A contract with an independent manufacturer for tlie entire pi-oduct (if his jjlant is not in itself a contract in illegal restraint of trade. Carter-Crume Go. V. Pvrnnifi, r,S F.. 4H0. 1—845 8. Same. — If an independent manufacturer contracts to sell his entire product, without knowledge of similar contracts made by the buyer with other manufacturers, and without any knowieilge of the fact tliat such contract was intended by the buyer as one stei» in a general scheme for nionoix)lizing the trade in that article and c-ontrolling prices, such inde- l^endent niannufacturer can not be held to have conspired against the freedom of commerce, or to have made a con- tract in illegal restraint of trade. Jft. S. Purchase of Business— Combination in Kestraint of Trade.— A contract by which a iierson sells his proi^erty and business good will to another can not be repudiated on the ground that the purchaser acfjuired the property for the purpose of ob- taining a monoiK>Iy of the business and in pursuance of an illegal combination in restraint of interstate trade and com- merce. enmors-Mrr^tuurll Vo, v. MvCotriiell 140 F., 412. 2—817 4. Same. — ^In order to defeat a suit to enforce such a contract on tile ground that its enforcement is sought to aid and facili- tate the carrying out of an illegal combination to monoijolize interstate trade and counuerce, it must appear that the con- tract is directly connected with such unlawful purpose, and not merely collateral thereto. /&. 5. Same. — Although the combination may be unlawful, an action fior the performance of the contract can not be defeated ui)on the ground that plaintiff is carrying on its business in an unlawful manner as a monojioly. /&. 6. Same. — ^An agreement, as in<-idental to the sale of property as a business, that the seller will not enter into a competing busi- ness, is valid and enforceable, notwithstanding it is in partial restraint of trade. /ft, 7. Same — Specific Performance — Sale of Business — Enjoining Vio- lation. — A court of ecpiity will enjoin a defendant from vio- lating a ctmtract, clearly shown, by which he deliberately obligated himself for a raluable consideration not to engage in a certain business. /ft. INDEX — ^DIGEST. 1117 CONTRACTS— Continued. 8. Purchaser of River Craft not Relieved from Obligation to Pay Purchase Price Because of His Agreement to Maintain Pres- ent Traffic Rates. — A purchaser of river craft can not in- invoke the Anti-Trust Act of July 2, 1890 (26 Stat, 209). to relieve him from his obligation to pay the purchase price, be- cause of his covenant to maintain the present traffic rates, which is not declared by the contract to enter into the con- sideration of the sale — especially where the rates referred to primarily, if not exclusively, relate to domestic, and not to interstate, business. Cmcmnati, etc.. Packet Co. v. Bay, 200 U. S., 179. 2— S67 9. Same. — A contract is not to be assumed to contemplate unlawful results unless a fair construction requires it. /ft, 10. Same. — Where a contract relates to commerce between points within a State, both on a boundary river, it will not be con- strued as falling within the prohibitions of the Sherman act because the vessels affected by the contract sail over soil belonging to the other State while passing between the intra- state points. /ft. 11. Same. — Even if there is some interference with interstate com- merce, a contract is not necessarily void under the Sherman Act if such interference is insignificant and merely incidental and not the dominant purpose; the contract will \w con- strued as a domestic contract and its validity determined by the local law. /ft, 12. Same. — A contract for sale of vessels, even if they are engaged in interstate commerce, is not necessarily void because the vendors agree, as is ordinary in case of sale of a business and Its good will, to withdraw from business for a specified period. /ft, 13. Any contract or combination which directly and substantially restricts the right of an interstate carrier to fix its own rates, independently of its natural conii)etitors, places a direct re- straint upon interstate conmierce, in that it tends to prevent competition, and is in violation of the act, whether the rates actually fixed be reasonable or unreasonable. V. 8. v. Northern Senuritics Co., 120 F., 721. 2 215 14. Contracts— Proprietary Medicines.— A system of contracts made by the manufacturer of a proprietary medicine between him and wholesale dealers, to whom alone he sold his medicine, by which they were bound to sell only at a certain price and to retail dealers designated by him, and between him and the retail dealers by which, in consideration of being so desig- nated, they agreed to sell to consumers only at a certain l)rice, is not unlawful as in restraint of trade, but is a rea- sonable provision for the protection of the manufacturer's trade, and he is entitled to an injunction to restrain a defend- 1118 mDEX — ^DIGEST. GOlf TRACTS— Conti nmnl . ant from inducing other parties to such contracts to violate the same. Hartmmt v. John D. Parks d Sons Co., 145 F.. wm. »— 1000 Bee also Br, Miles Medical Co, v. James Drug Co,, 149 F., 15. A contract for the sale of merchandise is not rendered illegal by the fact that the selling corporation is a tmst or monopoly organized in Tiolation of law. either Federal or State, the contract of sale being collateral and having no direct relation to the unlawful scheme or combination. Chicago Wall Paper Mills V. General Paper Co., 147 F., 491. a— 1027 16. Contracts limiting Character of Material to be Used to that Controlled by a Single Corporation. — Where the contract for the paving of a street with asphalt limited the kind of asphalt to be nit«e to Trinidad asphalt, »ueh fact, and the further fact that such asphalt was controlletl by a single corporation, was not violative of the commerce clause of the Constitution or of the Federal Anti-Ti*ust Sbitutes, and did not affect tlie validity of the contract. Field v. Barber Asphalt Pav. Co., 117 F., 925. 8—193 Affirmed, 194 U. S., 618 (2—555). 17. Illegal. — Parties to a transaction adjudged to violate the Anti- Trust Act of July 2, 1890 (20 Stat, 209), ate not exempt from the doctrine m pari delicto on the theory that they acted in good faith and without intent to violate the law, where, witli knowledge %>t the facts and of the statute, they acted under the mistaken supposition that the statute would not be held applicable to the facts. Uarriman v. Northern Securities Co., 197 U. S., 244. 2—669 Affirming. 134 F., 331 (2--618). , Reversing, 132 F., 464 (2—587). 18. Same. — ^Property delivered under an ezecuted illegal contract can not be recovered back by any party in pari delicto, and the courts can not relax the rigor of this rule where the record discloses no siK?cial consldenitions of equity, justice, or public policy. lb. 19. Same. — ^Where a vendor after transferring shares of railway stock to a corporation in exchange for its shares becomes a director of the purchasing corporation and participates In acts consistent only with absolute ownership by it of the railway sttx'ks. and does so after an action has been brought to declare the transaction illegal, his right to rescind the contract and compel restitution of his original railway shares, if it ever existed, is lost by acquiescence and laches. lb. INDEX DIGEST. 1119 OONTRACTS— Continued. 20. Effect of Illegal Provisions— Divisibility.— Stipulations in a contract which are invalid as in restraint of trade, if capable of being construed divisibly, do not affect the validity of other provisions. U. S. Camolidated Seeded Rusin Co. V. Gri/fln d Skelley Co., 126 F., .364. 2— 288 21. Same — Validity — When Question for Jury.— Conceding that a contract legal in its terms and in its consideration may be rendered illegal as against public policy by reason of the intention of the parties to so use it as to commit civil injury to third persons, where the evidence as to such intention is conflicting, tlie contract can not .be declared illegal by the court as matter of law. /&. 22. Effect of Anti-Trust Law upon Contracts in Restraint of Trade which at Common Law were Not TTnlawful. — The effect of the Anti-Trust Law of 1890 is to render contracts in i-e- straint of trade, as applied to interstate commerce, unlaw- ful in an affirmative or ix)sitive sense, and punishable as a misdemeanor, and also to create a right of civil action for damages in favor of persons injured thereby, and a remedy by injunction in favor both of private r>ersons and the public against the execution of such contracts and the main- tenance of such trade restraints. V. 8. v. Addystmi Pipe d Steel Co., 85 F., 271. 1—772 See also Continent ul Wall Paper Co. v. Lewis Voight d Sons Co., 148 F., 939. , 28. The statute is not limited to contracts or combinations which monopolize interstate commerce in any given commodity, but seeks to reach those which directly restrain or impair the freedom of interstate trade. The law reaches contracts and combinations which may fall short of complete control of" a trade or business, and does not await the consolidation of many small combinations into the huge ''trust" which shall control the production and sale of a commodity. Chesa- peake d O. Fuel Co. V. United States, 115 F., 610, 624. 2—168 24. Applies to Common Carriers by Railroads— Contracts Affecting Rates.— The provisions respecting contracts, combinations, and conspiracies in restraint of trade or commerce among the several States or with foreign countries, contained in the act of July 2, 1890, apply to and cover common carriers by railroad ; and a contract between them in restraint of such trade or commerce is prohibited, even though the con- tract is entered into between competing railroads, only for the purpose of thereby affecting traffic rates for the trans- l)ortation of persons and property. U. 8. v. Trans-Mo. Ft. Assn., 166 U. S., 290. 1—648 1120 INDEX — ^DIGEST. COHTBACTS— Continued. S8. Act Applies to All Contracts In Restraint of Interstate or For- eign Commerce — Not Confined to Unreasonable Eestraints. — The prohibitory provisions of the said act of July 2, 1890. apply to all contracts in restraint of interstate or foreign trade or eomnieree without exception or limitation; and are not coutiued to those in whicli the restraint is unreason- able. U. 8. V. Tranif-Mo. Ft. Asmi., ir>6 U. S., 290. 1—648 26. Test of Legality of a Contract or Combination. — The Anti- Tmst Act of July 2, 1890 (20 Stat., 2etition in commerce among the States, while their main puriwse and chief effect are to foster the trade and increase the business of those who make and operate them, are not in restraint of interstate commerce or violative of section 1 of the act of July 2, 1890 (26 Stat, 209). lb. 33. Section 1 of the Sherman Anti-Trust Act of July 2, 1890 (26 Stat., 209), makes a distinction between a contract and a combination or conspiracy in restraint of trade. Rice v. Standard Oil Co., 1.34 F., 464. 2—633 34. Contract for Sale of Goods by Member of Combination. — The act of July 2, 1890, section 1 (26 Stat, 209), known as the " Sherman Anti-Trust Act" does not invalidate or prevent a recovery for the breach of a collateral contract for the manufacture and sale of goods by a member of a combination formed for the purpose of restraining interstate trade in such goods. HadleyDcun Plate Glass Co. v. Highland Glass Co., 143 F., 242. 2—995 In Restraint of Trade. 8e€ Comisinations, etc., 54-77. Not Enforceable. See Combinations, etc., 16-20. Freedo&c of Contract — Right of Private Contract. See Constitution, 2-8 ; and Congress, 5-7, 11, 19. Contracts for Entire Product. See Combinations, etc, 149, 150. Agreements not to P^ngage in Business or Compete. See Combinations, etc, 144-146, 148, 159, 208. Contracts in Violation of Anti-Trus^ Act. See Actions and Defenses, 61, 62. Defenses. See Actions and Defenses. COPYBIGHT. The rights acquired by publishers of copyrighted books under the copyright law did not justify them in combining and agreeing that their books should be subject to the rules laid down by the united owners, one of which was that no member of the association should sell any books to a black- listed purchaser who was known to cut prices. Mines v. Scribner, 147 F., 927. 2—1035 See also Combinations, etc, 28, 96-98. COVENANTS. See Combinations, etc, 152, 153, 155. COBPOBATIONS. 1. A corporation, while by fiction of law recognized for some pur- poses as a person and for purpo.ses of jurisdiction as a citi- zen, is not endowed with the inalienable rights of a natural 11808— VOL 1—06 M ^71 M i. Zm INDEX — ^DIGEST. CORPOKATI0NS— ( '. .iitimied. person, but it is an artificial i>ersoii, created and existing only for the convenient transaction of business. Northern fifc- CHritie.$ Co. v. iHikd States, 19:1 U. S., 107 (Brewer con- curring). 2 — 341 2. Stockholding — Corporations to Acquire Stock of Competing Kailroads — Legality. — The real control of a corporation is in its stockholders, who have the power to determine all im- portant eorix)rate acts and policies, and any contract or conilti nation by which a majority of the stock of two rail- road cnni])anies owninj? and oi^erating parallel and competing inti'ist.itr lines of i-oad is transferred to a corporation or- gsinized for the inirpose of holding and voting the same, and receiving tbe dividends thereon, to be divided pro rata among the stock liolders of the two eomi>anies so transfer- rin*? their stock, directly and siiibstantially, restricts inter- stale trade and connnerce, and Is In violation of the Anti- Trust Act of July 2, 18fH) (2(; Stat., 209). since it destroys any motive for comijetition between the two roads ; and it ia immaterial that each company has its own board of direct- ors, which nominally directs its operations and fixes its rates, r. S. v. \.;///.'/a Securities Vo., 120 F., 721. 2—215 3. Same.^ — Tht fact that the imri^ose of an illegal* combination be- tween stockholders of two railroad companies operating par- allel and comi>eting interstate lines, to secure unity of inter- est and control of such companies, and to prevent competi- tion, has been accomplished by the formation of a corpora- tion which has aeciuired the ownership of a majority of the stock of each of the c«jmpauies, can not be urged to defeat a suit by ^e United States to restrain the exercise of the power so megally acquired by the corporation through such combination, as imi)Osing a restraint upon interstate com- merce in violation of the Anti-Trust Law (act July 2, 1890, 26 Stat, 209). lb. Affinned. 193 U. S., 197 (2—338). 4. Powers of Corporations — New Jersey Statutes. — The language of the New Jersey enabling act (Laws 1899, p. 473), author- izing the organization of cori>orations " for any lawful pur- pose," imiM>ses a limitation upon the powers of any corpo- ration organized thereunder, however broad may be the terms of its articles of incorporation. lb. 5. northern Securities Company — ^Distribution of Stock — Purchase and Sale. — ^A contract by which defendant, the Northern Se- curities Company, acquired from complainants certain shares of stock of the Northern Pacific Railway Ck)mpany (193 U. S. 197), Held, under the evidence, to have been one of purchase and sale, by which defendant, on ijiayment of the agreed price, became the absolute owner of the shares, free from INDEX — ^DIGEST; 1123 CORPORATIONS^Continucd. any trust In favor of the complainants, and free to distribute the same pro rata among all its stockholders upon the entry of a decree declaring it to be an illegal combination, and prohibiting it from voting or receiving dividends on such stock. Northern Securities Co. v. HaiTiman, 134 F., 331. 2—618 Affirmed, 197 U. S., 244 (2—669). 6. Same — Should not be Enjoined from Distributing Stock. — ^De- fendant corporation having been adjudged an illegal combi- nation in restraint of interstate commerce, and enjoined from voting or receiving dividends on certain railroad stock which it owned, but permitted to transfer the same to its stockholders, a plan adopted by its directors and stockholders to distribute the same pro rata among all its stockholders was equitable, and its execution should not be enjoined, lb, 7. Same. — The decree of the Circuit Court in the Northern Securi- ties case, aflirmed by this court (193 U. S., 197), did not determine the quality of the transfer as between the defend- ants, and the provisions therein as to 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 shares. Harriman v. Northern Securities Co., 197 U. S.^ 244. 2—669 8. Same. — The judgment of the Supreme Court in the Northern Securities case went no further than the decree of the Circuit Court itself, and while it leaves that court at liberty to proceed in the execution of its decree as circumstances may require, it does not operate to change the decree or import a power to do so not otherwise possessed. lb, 9. Same. — The judgment or opinion of the Supreme Court in this case did not enlarge 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 restitu- tion of the stocks transferred by them to the Securities Company, or that the Securities Company could not dis- tribute the shares of railway stock held by it pro rata between its own shareholders. jb. 10. Same. — The transaction between complainants and the Northern Securities Company was one of purchase and sale of North- em Pacific Railway Company stock for shares of stock of the Securities Company and cash and not a bailment or trust. jj 11. Same— Duty of Securities Company to Distribute Stock. — It was the duty of the 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 distribu- tion in cash, or by distribution in kind, the company was 1124 INDEX — DIGEST. INDEX — ^DIGEST. 1125 00RF0RATI0N8—(«»n tinned. , i Justified in adopting tlie latter nietliod and avoiding the forced sale of several hundred million dollars of stock which would have Involved disastrous results. /b. 18. Unreasonable Search and Seizure of Contracts and Correspond- ence — Immnnity — Grand Jury. — A corix)ratiou charged with a violation of the Anti-Trust Act of July 2, 1800, is entitled to immunity under the fourth amendment of the Constitution from such an unreasonalile search and seizure as the compul- sory production before a grand jury, under n ftiihpwna duces tecum, of all understandings, contracts, or correspondence between such corijoration and six other companies, together with all reports and accounts rendered by such companies from the date of the organization of the cori)oratiou, as well as all letters received by that coiporatiou since its organiza- tion, from more than one dozen different companies, situateii in seven different States. Hale v. Henhel, 201 U. S., 43. 2—874 IS. Same. — A corporation is but an association of individuals with a distinct name and legal entity, and in organizing itself as a collective body it waives ni> appropriate constitutional im- munities, and although it can not refuse to produce its boolis and papers it is entitled to immunity under the fourtli amend- ment against unreasonable searches and seizures, and where an examination of its books is not authorized by an act of Congress a subpoena duces tecum requiring the production of practically all of its books and papers is as indefensible as a search warrant would be if couched in similar terms. /B. 14. Same. — The protection against unreasonable searches and seiz- ures afforded by the Fourth Amendment can not ordinarily be invoked to justify the refusal of an officer of a corpora- tion to produce its books and papers in obedience to a sub- poetia duces tecum, issued in aid of an investigation by a grand juiT of an alleged violation of the Anti-Trust Act of July 2, 1890, by such corporation. 16. 15. Same — Contempt. — ^Although the subpoena duces tecum may be too broad in its requisition, where the witness has refused to answer any question, or to produce any booivs or papers, this objection would not go to the validity of the order com- mitting him for contempt. /&. 16. Same— Reserve Eight to Investigate Contracts of a Corpo- ration. — ^A corporation is a creature of the State, and there is a reserved right in the legislature to investigate its contracts and find out whether it has exceeded its powers. /&. 17. Same.— There is a clear distinction between an individual and a corporation, and the latter, being a creature of the State, has not the constitutional right to refuse to submit ita books and papers for an examination at the suit of the State. CORPORATIONS— Continued. 18. Same. — An officer of a corporation which is charged with crimi- nal violation of a statute can not plead the criminality of the corporation as a refusal to produce its books. /b. 19. Franchises of a corporation chartered by a State are, so far as they involve questions of interstate commerce, exercised in subordination to the power of Congress to regulate such com- merce ; and while Congress may not have general visitatorial power over State cori^orations, its powers in vindication of its own laws are the same as if the corporation had been created by an act of Congress. /&. 20. In an action against corporations for violations of the Anti-Trust Law, the boolvs of the various defendants both before and after the alleged combination, and the contracts between them, as well as other papers, referred to in the opinion, are all matters of material proof, but whether material or not the testimony must be taken and exceptions can be noted by the examiner and the materiality of the evidence passed on by the court. 'SeUon v, Vmied States, 201 U. S., 92. 2—920 21. Corporate Officers — Production of Documentary Evidence. — The refusal of corporate ofticers to obey orders of a Federal circuit court requiring them to produce certain documentary evidence, on their examination before a special examiner, can not be justified on the theory that such evidence was not in their possession or under their control, because their ix>s- session was not personal, but was that of the corporations. 76. 22. Same. — Documentary evidence in the shape of books and papers of corporations are in the possession of the officers thereof. lb. 23. Same — Officers and Employees Can Not Refuse to Testify or Pro- duce Books, etc.— Hale v. Henkel (vol. 2, p. 874) followed, to the effect that officers and employees of corporations can not, under the fourth and fifth amendments, refuse to testify or produce books of coii)orations in suits against the corpo- rations for violations of the Anti-Trust Law of July 2, 1890, in view of tlie imnmnity given by the act of February 25, 190.^.. /?,. 24. Corporation can not Claim Immunity Because of Testimony or Evidence Furnished by its Officers. — A corporation, whether State or Federal, can not claim immunity from prosecution for violation of the interstate commerce or anti-trust laws of the United States because of testimony given or evidence pro- duced by its officers or agents before the Interstate Commerce Commission or the Commissioner of Corporations, or in any l)roceeding, suit, or prosecution under such laws ; the right to immunity on account of evidence so given in the several cases granted by act February 11, 1893 (27 Stat, 443), and acts February 14 and February 25, 1903 (32 Stat, 827, 904), 1126 INDEX^ — DIGEST. COBPOBATIOKS— C on t i n ium I . being limited to individuals who as witnesses give testimony or produce evidence. United States v. Armour d Co., 142 F., 808. 2—951 M, Article IV of the Constitution of the United States has noth- ing to do with the conduct of individuals or corporations. It only iH-escribes a rale by which courts, Federal and State, are to be guided when a question arises in the progress of a pending suit as to the faith and credit to be given by the court to the public acts, records, and judicial proceedings of a State, other than that in which the court is sitting. Mlimwaota v. Northern fieenrities Co., 1M V. S., 48. 2 — 533 26. Indictment — Criminal Responsibility — Joinder of Defendants — Corporation and its Officers. See l\ S. v. Mac Andrews d Forbes Co., 149 F., 823, 836. COSTS. The discretion of the trial court under section 7 of the Anti- Trust Act of .July 2, 1890 (26 Stat, 209), to allow a reason- able attorney's fee to the successful plaintiff in an action brought under that section to recover damages for a viola- tion of the provisions of that act against combinations in restraint of trade, Is not abused by an allowance of |760, although the verdict was but for ^500, where the trial took live days, and from the proof offered it appeared that from 1750 to ^1,000 would he a reasonable sum. Montague v. Loury, 193 U. S., 38. 2 — 329 COXJBTS. I. Feoebal Coubts in Genekal- AND Power. -Jurisdiction 1. Jurisdiction over Nonresident Defendants in Private Suits.— The authority given by section 5 of the act of July 2, 1890 (26 Stat.. 209), to bring in nonresidents of the district can not be availed of in private suits, and the court can not acquire jurisdiction over them. Greer. Mills d Co. v. Stoller, 77 F.. 1. 1—620 8. Jurisdiction in Private Suits Against a State for Violation of Anti-Trust law — Necessary Parties. — Where a person brings an action under section 7 of the Anti-Trast Law of July 2, 1890, against the officials of a State, to recover damages for acts done under authority of a State statute, which gives the State an entire monoiwly of the traffic in intoxicating liquors (act S. C, Jan. 2, 1895), the State itself is a necessary party thereto, and consequently the Federal courts would have no jurisdiction of the action. Loicenstein v. Evans, 69 F., 90S. i_598 INDEX — DIGEST. 1127 COURTS— Continued. I. Federal Courts in Gkxeral — Continued. 3. Court of Equity can not Entertain Bill of Private Party to Enforce Anti-Trust Law. — The Anti -Trust Law of July 2, 1890, does not authorize a court of equity to entertain a bill by a private party to enforce its provisions, his remedy be- ing by an action at law for damages. Southern hid. Exp. Co. V. V. S. Exp. Co., 88 F., 059. 1—862 4. The United States can not maintain a bill in equity to restrain an association of railroads from carrying into effect an agree- ment alleged to be illegal under the Interstate Commerce Law, when it appears that it did not grant the charter of, and has no proprietary interest in, any of the roads. Its liglit is to prosecute for breaches of the law, not to provide remedies. 17. S. v. Joint Traffic Assn., 76 F., 895. 1—615 Case reversed, 171 U. S., 505 (1—869). 5. Jurisdiction After Admission of Territory as State. — In 1895 the plaintiff in error was indicted, with others, in a district court of the Territory of Utah, under section 3 of the act of July 2, 1890 (26 Stat, 209), which declares illegal "every * * ♦ combination * * * in restraint of trade or commerce in any Territory." In January, 1896, Utah was admitted as a State, and thereafter the case was transferred to the Federal court for the district of Utah, where, after hearing on demurrer to the indictment, the plaintiff in error was tried and convicted. Held, on writ of error, that neither under the act of Congress authorizing Utah to form a State government (28 Stat, 111, 112), nor the constitution of Utah (art 24, sec. 7), nor by other legislation, was juris- diction conferred upon the Federal court to proceed with the case. Mome v. U. S., 85 F., 465. 1—815 6. Same. — Held, further, that the case did not come within the provisions of Revised Statutes, section 13, regulating the effect of the repeal of statutes, for the admission of Utah as a State did not operate to repeal the act of July 2, 1890, which still applies to the Territories of the United States. lb. 7. Court of Equity — Adjustment of Difficulties Between Receiver of Railroad and Employees. — Where the property of a railway or other corporation is being administered by a receiver under the superintending power of a court of equity, it is competent for the court to adjust difficulties between the receiver and his employees, which, in the absence of such adjustment, would tend to injure the property and to defeat the pui-pose of the receivership. Waterhouse v. Comer, 55 F., 149. 1—119 8. Same. — It follows, then, that it is in the power of the court, in the interest of public order and for the protection of the proi^erty under its control, to direct a suitable arrangement with its employees or officers, to provide compensation and 1128 INDEX — DIGEST. COtJBTS— Contintieil . I. Federal Coukt?? in GEXEKAL—Continuetl. conditions of their employment, and to avoid, if possible, nil interruption of their labor and duty, which will be disastrous to the trust and injurious to the public. lb. ». A Conrt of Equity Should Not Aid by Entertaining Infringe- ment Suits Brought by an Illegal Corporation.— A corpora- tion organized for the purpose of securing assignments of all patents relating to "spring-tooth harrows," to grant licenses to the assignors to use the patents upon payment of a royalty, to fix and regulate the price at which such hai- rows shall be sold, and to take charge of all litigation, and prosecute all infringements of such patents as an illegal couilM nation, whose purposes are contrary to public policy, find which a et>urt of equity should not aid by entertaining infringement suits brought in pursuance thereof. National H arrow Co. v. Quick, 67 F., 130. 1 — 443 10. Jurisdiction of a Court of Equity can not be Invoked to Enforce a Contract Arising out of an ITulawful Combination of Rail- roads — Ticket Brokers. — In a suit by a railroad company to enjoin the defendants, who were ticket brokers, from deal- ing In siiecial tickets issued by complainant on account of the Pan-American Exposition, which were by their terms nontransferable, it apiwared from the showing made on a motion for n preliminary Injunction that complninnnt was a member of a combination known as the " Trunk Line Associ- ation," formed by a number of railroads oi>erating in differ- ent States for the purpose of preventing eompctititm ; that the passenger receipts of all surh roads were pooled and dividefl on an agreed Imsis: and tliat tlie si>ecial rates made on account of the exposition were fixed, and tlie terms of the tickets which were the basis of the snit were pre- scribed l>y such association through its passenger com- mittee. IJehl Tliat such combination was illegal, as in violation of the Federal Anti-Trust Law (2(J Stat.. 209), and that ecmiplainant could not invoke tlie aid of :i Federal court of equity for the protection of rlglits claimed under contracts which were the direct result and evidence of such unlawful combination. Delauare. L. tC W. 11. Go. v. Frank, 110 F., (180. 2—82 11. A railroad company, belonging to an illegal combination in violation of the Anti-Trust Act of 1890, can not invoke the aid of a Federal court of equity for the protection of its rights clainicil under contracts which were tlie direct result and evidence of such unlawful C(»mbination. /ft.. 12. Will Enjoin a Combination Between Two Parallel and Competing Lines of Bailroad — Question of Public Policy. — Where the effect of a combination is to directly prevent competition between two parallel and naturally comi>eting lines of rail- INDEX — DIGEST. 1129 ■COURTS— Continued. I. Federal Colkts in General— Continued, road engaged in interstate business, it is in restraint of interstate commerce and a violation of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), and the court, in a suit to enjoin it as such, can not consider the question whether the combination may not be of greater benefit to the public than competitiou would lie; that being a question of public l>olicy to be determined by Congress. U. *Sf. v. Northern SecurUies Co., 120 F., 721. 2—216 18. May Restrain Violations of Anti-Trust Act and Frame its Decree to Accomplish Practical Results. — Although cases should not be brought within a statute containing criminal provisions that are not clearly embraced by it, the court should not l3y narrow, technical, or forced construction of words exclude cases from it that are obviously within its provisions, and while the act of July 2, 1890, contains crim- inal provisions, the Federal court has power under section 4 of tlie act in a suit in equity to prevent and restrain violations of the act, and may mold its decree so as to accomplish i)ractical results such as law and justice demand. Northern Securities Co. v. United States, 193 U. S., 197. 2— ;«9 14. Consent of Parties can Never Confer Jurisdiction upon a Federal Court. If the record does not affirmatively show jurisdiction in the circuit court, this court must, upon its own motion, so declare, and make such order as will prevent the circuit court from exercising an authority not conferred upon it by statute. Minnesota v. Northern Securities Co.. 194 U. S., 48. 2—533 15. A State is not a citizen within the meaning of the provisions of the Constitution or acts of Congress regulating the jurisdic- tion of the Federal courts. n. 16. A case can not, under existing statutes regulating the jurisdic- tion of the courts of the United States, be removed from a State court, as one arising under the Constitution or laws of the United States unless the plaintiff's complaint, bill, or declaration shows it to be a case of that character. 76 17. While an allegation in a complaint filed in a circuit court of the United States may confer jurisdiction to determine whether the case is of the class of which the court may prop- erly take cognizance for purposes of a final decree on the merits, if notwithstanding such allegation, the court finds, at any time, that the case does not really and substantially involve a dispute or controversy within its jurisdiction then, by the express command of the act of 1875, its duty is to proceed no further. And if the suit, as discussed by the complaint could not have been brought by plaintiff originally in the circuit court, then, under the act of 1887-88 it \ 1130 INDEX — ^DIGEST. INDEX — DIGEST. 1131 COUBTS— Continued. I. Federal CorRTs ix (iEXEKAL— Continued. should not have been removed from the State court and should be remanded. Ih. 18. A State can not, by a suit in its own name, invoke the original jurisdiction of a Federal circuit court to restrain and pre- vent violations by competing interstate railway companies, of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), because, alone, of the alleged remote and indirect injury to its pro- prietary interests arising from the mere absence of free com- petition in trade and conmierce as carried on by such car- riers within its limits. lb. 19. Article IV of the Constitution (»f the United States only pre- scribes a rule by which courts, Federal and State, are to be guided when a question arises in the progress of a pending suit as to the faith and credit to be given by tlie court to the public acts, records, and judicial proceedings of a State, other than that in which the court is sitting. It has nothing to do with the conduct of individuals or corporations. Ih. 20. Allegation of Amount in Controversy. — It is not essential that a bill in a Federal court should state the amount or value in eontro\ersy. if it appears to be within the jurisdictional limit, from the allegations of the bill, or otherwise from the record, or from evidence taken in the case before the hearing of objections to the jurisdiction. Rohinfton v. Suburhan Brick Co,, 127 F., 804. 2—312 21. Abatement — ^Pendency of Action in State Court. — ^The pendency of a suit in a State court is not a bar to one on the same cause of action in a Federal court. lb. 22. Production of Documents. — The search and seizure clause of the fourth amendment was not intended to interfere with the power of courts to compel the production upon a trial of documentary evidence through a subpwna duces tecum. Hale v. Henkel, 201 U. S., 43. 2—874 Bee also Search, and Witnesses. 23. Orders of a Federal circuit court directing witnesses to answer the questions put to them and produce written evidence in their ix>ssession on their examination before a sj^ecial ex- aminer appointed in a suit brought by the United States to enjoin an alleged violation of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), is interlocutory in the principal suit, and therefore not appealable to the Supreme Court. An ap- I)eal does lie, however, from a judgment of contempt, at- tempting to enforce the order. Alexander v. Ufiited States, 201 U. S., 117. 2—945 See also Nelson v. United States, 201 U. S., 92 (2—920). 24. Admission of Evidence — Order of Proof. — In an action to recover damages for an alleged conspiracy in restraint of intei-state commerce, it was within the discretion of the trial court to COURTS— Continued. I. Federal Coikt-s ix Gexeral — Continut-d. admit evidence of Jicts and declarations of various of the defendant associations, their officers, committees, members, and agents, made in the absence of many of the other de- fendants, before a prima facie case of conspiracy had been established, and before privity of some of the defendants had been proven, on condition that such connecting evidence should be thereafter given. Loder v. Jayne, 142 F., 1010. 2—977 II. Circuit Courts. 25. Jurisdiction to Restrain and Punish Violations of Anti-Trust Act. — The circuit court have jurisdiction under the Anti- Trust Act of July 2, 1890, to issue injunctions to restrain and punish violations of that act. T. S. v. Agler, G2 F., 824. 1—294 26. Jurisdiction — ^Habeas Corpus — Removal of Prisoner. — Where a prisoner, arrested under warrant based uik)u an indictment in a distant State and district, is held pending an applica- tion to the district court for a warrant of removal for trial, the circuit court of the district in which he is held has authority on habeas corpus to examine such indictment and to release the prisoner, if in its judgment the indictment should be quashed on demurrer. In re Terrell, 51 F., 213. 1-^6 27. Habeas Corpus — Removal of Prisoner — Examination of Indict- ment. — It is the right and duty of the circuit court on an application for habeas corpus for the purpose of releasing a person held under a warrant of a United States commis- sioner to await an order of the district judge for his re- moval to another district to answer an indictment, to ex- amine the indictment to ascertain whether it charges any offense against the United States, or whether the offense comes within the jurisdiction of the court in Avhich the in- dictment is pending. In re Greene, 52 F., 104. l — ^54 28. Jurisdiction— Obstruction of the Mails. — The circuit court had power to issne its process of injunction upon complaint which clearly showed an existing obstruction of artificial highways for the pjissage of interstate commerce and the transmission of the mails, not only temporarily existing, but threatening to c-ontinue. In re Debs, 158 U. S., 565. 1—565 29. Same— Violation of Injunction— Contempt. — Such an injunction having been issued and served upon the defendants, the cir- cuit court had authority to inquire whether its orders had been disobeyed, and when it found that they had been dis- obeyed, to proceed under Revised Statutes, section 725, and to enter the order of punishment complained of. lb. 80. Same — Habeas Corpus. — The circuit court having full jurisdic- tion in the premises, its findings as to the act of disobedi- 1132 INDEX — DIGEST. COUBTS— Contimit'd. II. CiRcriT (.01 KTsi— Contiiuunl. eni-e are not op<*n to review 011 habeas eori^us in this or any other court. 76. 31. The eirenit court lias power, in an action brought by the At- torney-General, to enjoin the Northern Securities Company, a CMiriK nation organized to hold the majority of tlie stoclc of l\v«i coniiietiisg and parallel lines of railroad for the purpose _ of |»reventing eonipetition. from voting such stock, and from exerrisiiit: any control whatever over the acts and doings of the railroad conipjinies in question, and also to enjoin them from paying any diviilends to the holding corporation on any of the stock fo lield hy it. North mi Srcuritics Co. v. ruitcd 8i(itvs, 1IKI IT. S., 11)7. 2—338 32. The circuit court can have no jurisdiction of a suit instituted by a State, because of an allegation in the complaint that full faith and credit will not be given to its public acts if a New Jersey corporation organized for the puri)ose of acquiring the control of two competing interstate railway companies engaged in business within its limits is allowed to carry out the object of its incorporation. Minnesota v. Northern Se- citritie.^ f'o., 194 U. S., 48. 2—533 18. The jurisdiction of the circuit court to entertain a suit to en- join a combination of persons from interfering with and pre- venting shipowners from shipping a crew may be maintained on tiie ground of preventing a multiplicity of suits at law, and for the reason that damages sit law fur interrupting the business and iuten»ei>ting the jirofits of pending enterprises and vny.M.i^es nnist. in their nature, be conjectural and not susceptible of proof. 54 Fed. Kep,, 40, affirmed. BUndell v. Hoffau. 5(J ¥., CiSXI. 1—182 34. The jurisdiction of the circuit court over a l»ill in equity to enjoin a railroad company from granting rebates to favored shipitcrs can not be nuiintainod wihmi the ground that such act of the railroad company is a monopoly within the mean- ing of the second se« tion of said Anti-Tnisl Art (act July 2, 18JM), 20 Stat.. 209). United States v. Ateltimn, T. d 8. F, Hit. Co., 142 F., 17<;. 2—831 35. The pendency of a suit in a State court can not be pleaded in abatement of an action in a circuit court of the United States to recover treble damages under section 7 of the Anti- Tru*!t Act of July 2, 1800 (2(J Stat.. 210), since the State court is without jurisdiction to enforce the remedy given by said section, and therefore the same case can not be depend- ing in both courts. Loen:e v. Lnulor, VM) F., 633. 2 — 563 3«. Appeal to Supreme Court. — ^Where there are allegations of di- verse citizenship in the bill, but the jurisdiction of the circuit court is also invoked on constitutional grounds, the case is appealable directly to the Supreme Court under sec- INDEX DIGEST. 1133 COTJBTS— Continued. II. CiKcrrr Courts— Continued. tion 5 of the act of March 3, 1891, as one involving the con- struction or application of the Constitution of the United States, and where both parties have appealed the entire case comes to this court, and the resi)ondent's appeal does not have to go to the Circuit Court of Appeals. Field v. Barber Asphalt Paving Co., 194 U. S., 618. 2—555 III. Circuit Court of Appeals. 37. The Circuit Court of Appeals will not reverse an interlocutory order granting or continuing a temporary injunction unless it is clearly shown that the same was improvidently granted and is hurtful to the nppellant. Worlingmcn's Amalg. Coun- cil V. U. S., 57 F., 85. 1—184 IV. Supreme Court. 38. Jurisdiction — ^Appeal — Dissolution of Illegal Association. — The dissolution of the freight association does not prevent this court from taking cognizance of the appeal and deciding the case on its merits; as, where parties have entered into an illegal agreement and are acting under it, and there is no adequate remedy at law, and the jurisdiction of the court has attached by the filing of a bill to restrain such or like action under a similar agreement, and a trial has been had and judgment entered, the appellate jurisdiction of this court is not ousted by a simple dissolution of the association effected subsequently to the entiy of judgment in the suit. 17. 8. v. Trans-Mo. Ft. Assn., 166 U. S., 290. 1—648 39. Same. — While the statutory amount must as a matter of fact he in controversy, yet the fact that it is so need not appear in the bill, but may be shown to the satisfaction of the court. lb. 40. Jurisdiction — Appeal — Refusal of Witness to Answer Questions in Anti-Trust Investigation — Fifth Amendment. — In a suit in the Circuit Court of the United States brought by the United States against corporations for violations of the Anti- Trust Law of July 2, 1890, a witness refused to answer ques- tions or submit books to inspection before an examiner ap- pointed by the court on the ground of immateriality, also pleading the Fifth Amendment ; after the court had overruled the objections and directed him to answer he again refused and judgment in contempt was entered against him. On ap- peal to the Supreme Court, Held, That questions under the Constitution of the United States were involved and the court has jurisdiction of an appeal direct from the circuit court. Nelson v. United States, 201 U. S., 92. 2 — ^920 41. Same. — In such an action the books of the various defendants, both before and after the alleged combination, and the con- tracts between them, as well as other papers referred to in the opinion, are all matters of material proof, but whether .JL' ilk V' -M- INDEX — ^DIGEST. COUKTS— Ci lilt i n lie. 1 . IV, SrPREME Coi'RT— ContimuHl. material or not the testimony must be taken and exceptions can toe noted by the examiner and the materiality of the evidence passed on by the conrt. lb. 4t. Jurisdiction — The Order of a Judgre of the Circuit Court to a Witness to Answer or be Punished for Contempt is Interlocu- tory and Not Appealable to Supreme Court. — In a suit in a circuit court of the United States brought by the United States against corporations for violations of the Anti-Trust Law of July 2, 1890, a witness refused to answer questions or produce books before the examiner on the ground of im- materially, also pleading the privileges of the Fifth Amend- ment; the court overruled the objections and ordered the witness to answer the questions and produce the books; an appeal was taken to this court. Held, That while such an order might leave the witness no alternative except to obey or be punished for contempt it is interlocutory in the prin- cipal suit and not a final order, nor does it constitute a prac- tically indeiJendent proceeding amounting to a final judg- ment, and an appeal will not lie therefrom to this court. Ahjander v. United States, 201 U. S., 117. 2—946 43. Same — But an Appeal from a Judgment of Contempt is Review- able. — If the witness refuses to obey and the court goes fur- ther and punishes him for contempt there is a right of re- view, and this is adequate for his protection without unduly imi>etling the process of the case. [See also Nelson v. United Stiihs, 2(11 U. S., 92 (2— 920).l Ih. 44. The jurisdiction of the Supreme Court of the United States on writ of error to a circuit court, under the Circuit Court of Appeals act, when the constitutionality of a State statute is in question, extends to all cases in which such a question is decided against the claim of either party, and therefore in- cludes a case in which the writ of error is taken by a de- fendant who set up In defense of the action a statute which the c-ourt held unconstitutional. Connolly v. Union Sewer Pipe Co., 184 U. S., 54'. 2—118 45. Same,— If a claim is made in the circuit court that a State en- actment is invalid under the Constitution of the United States, and that claim is sustained or rejected, the Supreme Court may review the judgment at the instance of the unsuc- cessful party. /&• 46. Consent of Parties can Never Confer Jurisdiction upon a Federal Court. — If the record does not affirmatively show jurisdic- tion in the circuit court, the Supreme Court must, ui)on its own motion, so declare, and make such order as will prevent the circuit court from exercising an authority not conferred upon it by statute. Minnesota v. Northern Securities Co., 194 U. S., 48. 2—533 INDEX — DIGEST. 1185 COURTS -Continued. II. Supreme Coc in— Continued. 47. The findings of fact made in a State court in a suit in equity are conclusive upon the Supreme Court of the United States on writ of error to that court Dement v. National Harrow Co., 186 U. S., 70, 83. 2—169, 181 48. Certiorari. — Where the decree of the Circuit Court of Appeals in an action in equity only reverses an order of the Circuit Court granting an injunction, but the court, the record pre- senting the whole case, practically disposes of the entire con- troversy on the merits, certiorari may issue from the Su- preme Court and that court may finally disix)se of it by its direction to the Circuit Court. Harriman v. Northern Se- curities Co., 197 U. S., 244. 2—669 CREDIBILITY OF WITNESSES. See Jury, 2. DAMAGES. 1. Damages Recoverable.— Only actual damages, established by the proof of facts fi'om which they may be rationally inferred with reasonable certainty, are recoverable under the Sher- man Anti-Trust Law (26 Stat., 209). Speculative, remote, or contingent daniages can not form the basis of a lawful judgment. Cenirm Coal & Coke Co. v. Jfnrtman, 111 F., 96. 2—94 2. Same — Speculative Damages — Evidence — Sufficiency. — The esti- mates, speculations, or conjectures of witnesses unfounded in the knowledge of actual facts from which the amount of the dajnages could have been inferred with reasonable cer- tainty will no more sustain a judgment than the conjectures of a jury. /^^ 3. Same — Anticipated Profits— When Recoverable. — The general rule is that the anticipated protits of a commercial business are too remote, speculative, and dependent upon changing circumstances to warrant a judgment for their loss. There is an exception to this rule that the loss of profits from the interruption of an established business may be recovered where the plaintiff makes it reasonably certain by compe- tent proof what the amount of his actual loss was, Jb. 4. Same — Profits of Established Business — Evidence — Indispensable to Recovery,— Proof of the expenses and of the income of the business for a reasonable time anterior to and during the interruption charged, or of facts of equivalent import, is indispensable to a lawful judgment for damages for the loss of the anticipated profits of an established business. lb. 5. Same— Loss of Profits.- The plaintiff testified that the acts of the defendants had greatly diminished his business, pre- vented him from making contracts for future delivery of coal, juid diminished his sales from 15 to 20 carloads per' month, on which he would have made a profit of from $12 to $20 ])er car ; that he could not tell what the volume of his 1136 INDEX — ^DIGEST. DAMAGES— Conti iiuwl. business* was before or after the acts complained of, and tliat lie bad no books or papers which would show tliis fact. He produced no evidence of the expenses or income of his busi- ness before or after the acts comphiined of. Held, That the evidence was insufficient to sustain a verdict for damages for tlie less of anticipated profits. lb. ft. Burden of Proof. — In an action for damages for conspiracy in restraint of interstate conmierce in violation of act of Con- gress of July 2, 1890 (26 Stat., 209), the burden was on plaintiff to show some real actual damage to his business by reason of the alleged unlawful combination. Loder v. Jupne, 142 F., 1010. 2—977 7. Same — Compensation for Extra Work — Evidence. — Where, in an action for damages to plaintiff's business because of an alleged con^ipiracy in restraint of interstate commerce, plaiu- tiflf clainietl $5,(J00 comiiensation to himself for extra work claimed to have been required by reason of such unlawful combination, but failed to prove how much additional time he was required to spend in his business after the combina- tion went into effect, he was not entitled to recover for such alleged extra services. Jb. 8. Same — ^Additional Capital. — Wliere, in a suit for damages to plaintiff's business because of an alleged unlawful combina- tion in restraint of interstate connnerce, plaintiff claimed that because of such combination it was nec-essary to put 110,000 extra capital into his business from rents of his building, which were collected from time to time, but he testified on cross-examination that tlie payments of interest and taxes on the building were in excess of the amount paid Into the business, he was not entitleii to recover interest on such alleged additional capital. /&. 9. Same — ^Increased Cost. — Where, by reason of an unlawful com- bination in restraint of interstate connnerce in violation of the Sherman Act, plaintiff was compelled to conduct his business at a greater cost, though it was greater in volume, and by reason of the injury he received a less i)ercentage of return, he was entitled to recover such additional cost, though by reason of his increased efforts and the natural in- crease 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. /ft. 10. The owner of goods may dictate the prices at which he will sell them, and the damages which are caused to an appli- cant to buy by the refusal of the owner to sell to him at prices which will enable him to resell them at a profit con- ttitnte no legal injury, and are not actionable, because they are not the result of any breach of duty or of contract by INDEX — ^DIGEST. 1137 DAMAGES— Continued. the owner. Whitwell v. Continental Tobacco Co., 125 P., 454. 2—271 Actions fob Recoveby. See Actions and Defenses, 21-42; Statutes 62-71. DECLABATIONS. 1. Averments.— A declaration in an action for damages under the Anti-Trust Act of 1890, which does not aver that the goods manufactured by plaintiff, and in respect of which he claims to be injured, are a subject of interstate commerce, or that the acts complained of have anything to do with any con- tract in restraint of trade, or that the parties are citizens of different States, is demurrable. Bishop v. American Pre- servers Co., 51 F., 272. 1 ^9 2. Duplicity.- A declaration in a suit based on section 7 of the Anti-Trust Act of July 2, 1890 (26 Stat, 210), to recover damages resulting to plaintiff from a violation of such pro- vision, which alleges in a single count that defendant en- tered into a " contract, combination, and conspiracy " in re- straint of trade, is bad for duplicity. Rice v. Standard Oil Co., 134 F., 464. 2—633 8ee also Pabties, 3. DEFENSES. See Actions and Defenses. DEFINITIONS. See Words and Phbases. DEMUBBEB. A bill in equity, and the demurrer thereto, are neither of them to be read and construed strictly as an indictment, but are to be taken to mean what they fairly convey to a dispas- sionate reader by a fairly exact use of English speech. Swift d Co. V. United States, 196 U. S., 375. 2—642 See DECLABATIONS, 1 ; Habeas Cobpus, 1. DIBECT AND IMMEDIATE EFFECT. Dibect. See Combinations, etc., 14, 19, 30, 43, 51, 63, 67, 91, 168, 175; Constitution, 9; Intebstate Commebce, 32, 37; Statutes, 11, 19, 23. Dibect and Immediate. See Combinations, etc., 14, 44 45 105. ' * DiBECTLY AND APPBECIABLY. See COMBINATIONS, ETTC., 8, 31; Statutes, 26. DiBECTLY AND EFFECTUALLY. SCC COMBINATIONS, ETC., 104. DiBECTLY AND NeCESSABILY. SCC COMBINATIONS, ETC., 9, 197; Statutes, 17. DiBECTLY AND SUBSTANTLALLY. ScC COMBINATIONS, ETC., 9, 11, 12, 69, 70, 87, 108 ; Congbess, 7 ; Statutes, 10, 11, 14, 15', 16 43, 48. DIVISION OF TEBBITOBY. See Combinations, etc, 39, 136, 137. 11808— VOL 1—06 M 72 1188 IHDEX — ^DIGEST. BOOVMEKTABT BVIBBNCB. See Evidence, 8, 9 ; and PBODUonoN IMF Documents. BBVGMS. See Combinations, etc., 29, 160. ENFOBCEMBNT. See Injunctions, 5, 8, 9, 13, 20, 21; Combina- tions, ETC., 16-20. 1. Equity will not encourage a combination in restraint of trade and probably illegal uuder the Federal Anti-Trust Act of July 2, 1890. Amer, Biscuit Mfg, Co, v. Klotz, 44 F., 721, X"'" "O 2. Jurisdiction.— Equity lias jurisdiction to restrain public nui- lances on bill or infonimtion filed by the proper officer on behalf of the people. V, S, y, Dehs, 64 F., 724. 1—322 8. Same — Right to Jury. — ^The power given by act of July 2, 1800, to circuit courts " to prevent and restrain violations " of the act is not an invasion of the right of trial by jury, as the Jurisdiction so given to equity will be deemed to be' limited to such cases only as are of equitable cognizance. lb, 4. A bill in equity and the demurrer thereto are neither of them to be read and construed strictly as an indictment, but are to be taken to mean what they fairly convey to a dispas- sionate reader by a fairly exact use of English speech. Swift d Co. V. United States, 196 U. S., 375. 2—642 See also Parties ; Coubts ; Pleading and Pbactice. EVIDENCE. 1. Admissibility— Proclamations of Various Government Officers — newspaper Reports. — In order to sustain the allegations of a ^ bill praying an injunction against a combination in restraint of interstate commerce, the complainant may offer in evi- dence, as matter of history, the official proclamation of the various Government officers and also newspaper reports sup- ported by affidavits containing manifestoes and declarations of the respondents. U. S, v. Workingmen's Amalg. Counoil, 54 F., 994. 1—110 Case affirmed, 57 F., 85 (1—184). 2. Admission of Evidence — Order of Proof. — In an action to re- cover damages for an alleged conspiracy in restraint of inter- state commerce it was within the discretion of the trial court to admit evidence of acts and declarations of various of the defendant associations, their officers, committees, members, and agents, made in the absence of many of the other defendants, before a prima facie case of conspiracy had been established, and before privity of some of the defend- ants had been proven, on condition that such connecting evi- dence should be thereafter given. Loder v. Javne, 142 F., 1010. 2—977 3. Same— Burden of Proof.— The burden of proving a combination and conspiracy between manufacturers and wholesale and INDEX — ^DIGEST. 1139 EVIDENCE— Continued. retail dealers of proprietary medicines and drugs in re- straint of trade, in violation of act of Congress of July 2, 1890 (26 Stat, 209), injurious to plaintiff, and that defend- ants were engaged and took part in such conspiracy, was on the plaintiff. * 75, 4. Same — Damages — Burden of Proof. — In an action for damages for conspiracy in restraint of interstate commerce, in viola- tion of act of Congress of July 2, 1890 (26 Stat, 209), the burden was on plaintiff to show some real actual damage to his business by reason of the alleged unlawful combination. lb, 5. Same — Compensation for Extra Work — Evidence. — ^Where, in an action for damages to plaintiff's business because of an al- leged conspiracy in restraint of interstate commerce, plaintiff claimed $5,000 compensation to himself for extra work claimed to have been required by reason of such unlawful combination, but failed to prove how much additional time he was required to spend in his business after the combina- tion went into effect, he was not entitled to recover for such alleged extra services. 75. 6. Sufficiency — Injunction Pendente Lite. — Evidence that, by rea- son of the action of a combination of persons, the crew left complainants' ship as she was about to sail, and that another crew could not be procured for nine days, and then only with the assistance of the police authorities and the protection of a restraining order, while other vessels in the vicinity had no difficulty in getting crews, is sufficient to authorize the court to enjoin interference with the business of the com- plainants by such combination pendente lite. Blindell v. Hagan, 56 F., 696. • 1—182 Affirming 54 F., 40 (1—106). 7. Acts of One Party. — Where several persons are proved to have combined together for the same illegal purpose, any act done by one of them, in pursuance of the original concerted plan, and with reference to the common object, is, in the con- templation of the law, the act of the whole party, and there- fore the proof of such act will be evidence against any of the others who were engaged in the conspiracy. U. 8. v. Cas- sidy, 67 F., 698. 1 119 8. Documentary or Oral— Materiality.— Evidence, whether docu- mentary or oral, sought to be elicited from witnesses sum- moned in an action brought by the United States to enjoin an alleged conspiracy by manufacturers of paper to suppress competition, in violation of the act of July 2, 1890 (26 Stat, 209), by creating a general selling and distributing agent, is material, where it would tend to establish the manner in which such agent executed its functions. Nelson v. United States, 201 U. S., 92. 2—920 1140 INDEX — ^DIGEST. EVEDBirCE— Continued. i. Same. — ^Documentary evidence in the shape of books and papers of corporations are in the possession of the officers thereof, who can not refuse to produce them on the ground that they are not in their possession or under their control. J6. 10. Same.— The immateriality of the evidence sought to be elicited can not justify the refusal of witnesses to obey the orders of the Federal circuit court, requiring them to answer the questions put to them and to produce written evidence in their possession, on their examination before a special ex- aminer. /J. 11. Same.— Objections to the materiality of the testimony are not open to consideration on a writ of error sued out by wit- nesses to review a judgment for contempt, entered against them for disobeying an order to testify. /ft. OvEBT Acts— CuMULATRE Evidence. See U, 8. v. MacAndrewa d Forbes Co., 149 F., 836. See also Witnesses. EXPBESS COMPANIES. See Statutes, 83. FAIB AND SEASONABLE RESTRAINTS. See Combinations, etc., 59, 174, 191. FISH. See Combinations, 144, 147. FIIRFEITT7RE OF OOOBS. See Seizure ; Statutes, 59. FRANCHISES. See Corporations, 19. * GRANB JURY. lowers— Witnesses— Refusal to Testify — Contempt.— Where, after a witness had refused to testify before a grand jury considering supposed infractions of the Anti-Trust Law, the grand jury made a presentment to the court charging the witness with contempt, and the court, after hearing, ordered the witness to answer the questions and to forthwith pro- duce the papers required, the court*s action was equivalent to an express instruction to the grand jury to investigate . the matter referred to in the presentment, and hence the fact that the grand jury had been previously acting beyond its power was harmless. In re Hale, 139 F., 496. 2—804 Order affirmed. Haie v. Henkel, 201 U. S., 43 (2—874). See also Immunity. HABEAS CORPXra I. Removal of Prisoner — Jurisdiction of Circuit Courts. — Where a prisoner, arrested under warrant based upon an indictment in a distant State and district, is held pending an applica- tion to the district court for a warrant of removal for ti-ial, the circuit court of the district in which he is held has authority on Jiaheas corpus to examine such indictment and to release the prisoner, if in its judgment the indictment INDEX — ^DIGEST. 1141 HABEAS CORPUS— Continued. should be quashed on demurrer. In re Terrell, 51 F., 213. - • . 1—16 2. Same.— On haleas corpus to release a person held under a warrant of a United States commissioner to await an order of the district judge for his removal to another district to answer an indictment, it is the right and duty of the circuit court to examine the indictment to ascertain whether it charges any offense against the United States, or whether the offense comes within the jurisdiction of the court in which the indictment is pending. In re Greene, 52 F., 104. 1—54 3. Witness — Contempt— Incriminating Evidence.— Where a wit- ness is committed for contempt in refusing to answer all of a series of questions, for the reason that the answers would tend to criminate him, and some of the answers would have that tendency, he should not be denied relief on haheas corpus because some of the questions might be safely an- swered. Foot V. Buchana/n, 113 F., 156. 2 104 4. Witness Committed for Contempt by One Judge Would Not be Discharged by Habeas Corpus by Another Judge of Same Court.— Where a suhpcena duces tecum was directed to be issued by a circuit judge, and the witness was committed * for contempt for failure to obey the same, he would not be discharge on haheas corpus by another judge of the same court, though the latter was of the opinion that the sub- poena authorized an unconstitutional search and seizure of private papers. In re Hale, 139 F., 496. 2—804 Order affirmed in Hale v. Henkel, 201 U .S., 43 (2—874). 6. Jurisdiction of Circuit Courts in Contempt Proceedings.— Where the circuit court has full jurisdiction, its findings as to the act of disobedience of its orders are not open to review on " haheas corpus in the Supreme Court or any other court. In re Dehs, 158 U. S., 564. 1—566 HOLDING COMPANIES. To Vote Stock. See Combinations, etc., 84-91, 181, 182. To Receive Assignments of Patents. See Combinations, etc.. 92-95, 183. IMMUNITY. 1. Of Witnesses Before the Grand Jury.— Act of Congress, Febru- ary 11, 1893 (27 Stat, 443), providing that no person shall be excused from testifying in a proceeding growing out of an alleged violation of an act to regulate interstate commerce, approved February 4, 1887, on the ground that his testimony will tend to incriminate him, and that no person shall be prosecuted, etc., on account of anything concerning which he may testify in such proceeding, applies only to proceed- ings connected with the act of February 4, 1887, and does 1142 INDEX — ^DIGEST. lOflTY— Continued. not apply to a prosecution for Violation of the Anti-Trast Act (26 Stat, 200), bo as to abrogate in relation thereto the Fifth Amendment to the Constitution, providing that no per- son shall be compelled in a criminal case to be a witness against himself. Foot v. Buchanan, 113 F., 156. 8— 104 %, Same — dnestion of Incrimination one for Jndge. — ^Where a wit- ness daims that the answer to a question will tend to in- criminate him, it is not for the witness, 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. Ik 8. Same. — ^Where a person has already been indietei for an offense abont whioh he is to be examined as a witness, and the ques- tions asked him tend to connect him with such offense, the testimony sought is within the inhibition of the Fifth Amend- ment to the Constitution providing that no person shall be comi)eIled In any criminal case to be a witness against him- self, lb. 4. Same — ^Witness not Compelled to act Upon an Assurance of Jndge. — Where a witness before a grand jury declines to answer certain questions, and is talcen before the judge, who assures him that he can safely answer, as his testimony can not be used against him, he is not compelled by such assur- ance to relinquish his constitutional privilege, where the answer may tend to criminate him. /6. 9. Same. — ^An inquisition before a grand jury to determine the ex- istence of supposed violations of the Anti-Trust Act was a "proceeding" within the act of February 19, 1903 (32 Stat, 848), providing that no person shall be prosecuted or sub- jected to any penalty for or on account of any transaction, matter, or thing concerning which he may testify or produce evidence in any "proceeding" under several statutes men- tioned, including such Anti-Trust Act In re Hale, 139 F., 486. 8—804 8. Same. — ^The examination of witnesses before a grand jury con- cerning an alleged violation of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), is a "proceeding" within the mean- ing of the proviso to the act of February 25, 1903 (32 Stat, 854r-903), that no person shall be prosecuted or be subjected to any penalty or forfeiture for, or on account of, any trans- action, matter, or thing concerning which he may testify or produce evidence in any proceeding, suit, or prosecution under certain named statutes, of which the Anti-Trust Act Is one. The word "proceeding" should receive as wide a construction as is necessary to protect the witness In his disclosures. Hale v. Hefikel, 201 U. S., 43. 8 — 874 7. Same.— The interdiction of the Fifth Amendment operates only where a witness is asked to incriminate himself, and does not apply if the criminality is taken away. /&. INDEX — ^DIGEST. 1143 IMMTJNITY— Continued. 8. Same. — ^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. The law takes no account of the practical difficulty which a party may have in procuring his testimony. /b. 8. Same. — The difficulty, if any, of procuring such testimony does not render the immimity from prosecution or forfeiture, given by the proviso to the act of February 25, 1903, In- sufficient to satisfy the guaranty of the Fifth Amendment to the Constitution against self-incrimination. /ft. 10. Same. — A witness can not refuse to testify before a Federal grand jury in face of a Federal statute granting immunity from prosecution as to matters sworn to, because the immu- nity 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. 75 11. Same.— The privilege against self-incrimination afforded by the United States Constitution, Fifth Amendment, is purely personal to the witness, and he can not claim the privilege of another person, or of the corporation of which he Is an officer or employee. [To same effect, McAlister v. Henkel, 201 U. S., 9(J (2—919).] /J,. 18. Same.— Under the practice in this country the examination of witnesses by a Federal grand jury need not be preceded by a presentment or formal indictment, but the grand jury may proceed, either upon their own knowledge or upon examina- tion of witnesses, to inquire whether a crime cognizable by the court has been committed, and if so, they may Indict upon such evidence. /j,, 13. Same. — In summoning witnesses before a grand jury It is sufficient to apprise them of the names of the parties with respect to whom they will be called upon to testify, without indicating the nature of the charge against such persons. Ih. 14. Same.— A corporation charged with a violation of the Anti- Trust Act of July 2, 1890, is entitled to immunity under the Fourth Amendment to the Constitution from such an un- reasonable search and seizure as the compulsory production before a grand jury under a suhposna duces tecum of all understandings, contracts, or correspondence between such corporation and six other companies, together with all re- ports and accounts rendered by such companies from the date of the organization of the corporation, as well as all letters received by that corporation since Its organization, from more than one dozen different companies, situated In seven different States. /^^ 1144 INDEX — ^DIGEST. nnftUNlTY— Continued. 19. Same. — The protection against unreasonable searches and seiz- ures afforded by United States Constitution, Fourth Amend- ment, can not ordinarily be invoked to justify the refusal of an officer of a corporation to produce its books and papers in obedience to a suhpGena duces tecum, issued in aid of an investigation by a grand jury of an alleged violation of the Anti-Trust Act of July 2, 1890, by such corporation. lb. 18. Same. Hale v. Henkel (vol. 2, p. 874) followed as to the inquis- itorial powers of the Federal grand jury and the extent of privilege and immunity of a witness under the Fifth Amend- ment McAUater v. Henkel, 201 U. S., 90. 2—919 17. Persons who furnished evidence in the "beef trust" investi- gation conducted by the Commissioner of Corporations pur- suant to a resolution of the House of Representatives of March 7, 1904, although they did so without being sub- pcenaed or sworn, can not be prosecuted for violation of the Anti-Trust Law on account of the transactions, matters, or things to which such evidence relates. United States v. Armour & Co., 142 F., 808. 2—951 18. Same— Scope of Immunity Provisions of Statutes.— The im- munity provisions of the various statutes applicable to the investigation, to be valid, must be as broad as the privilege given by the Fifth Amendment to the Constitution. lb. 18. Same.— Section 6 of the act creating the Department of Com- merce and Labor (act Feb. 14, 1903, 32 Stat, 827), de- fining the powers and duties of the Commissioner of Cor- porations, requiring him to make investigation into the organization, conduct, and management of the business of all corporations or combinations engaged in interstate or foreign commerce, other than common carriers, and giving him the same powers in that respect as is conferred on the Interstate Commerce Commission with respect to carriers, including the power to subpoena and compel the attendance of witnesses, and to administer oaths and require the pro- duction of documentary evidence, contemplates that he shall proceed by private hearings. Jb. 20. Same.— Section 6 (32 Stat, 827) provides that "all the re- quirements, obligations, liabilities, and immunities imposed or conferred by the • act to regulate commerce ' and by ' an act in relation to testimony before the Interstate Commerce Commission ' shall also apply to all persons who may be sub- pcenaed to testify as witnesses or to produce documentary evidence in pursuance of the authority conferred by this section.'* /!>, 21. Same.— The act of February 11, 1893 (27 Stat, 443), which is supplementary to the Interstate Commerce Act, provides that "no person shall be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter, INDEX — ^DIGEST. 1145 IMMUNITY— Continued. or thing concerning which he may testify or produce evi- dence, documentary or otherwise, before said commission or in obedience to its subpoena * * * or in any such case or proceeding. jb. 22. Same. — ^And the appropriation act of February 25, 1908 (32 Stat, 904), making provision for the enforcement of the in- terstate commerce and Anti-Trust Laws, contains a similar immunity provision relating to persons giving testimony or producing evidence in any proceeding, suit, or prosecution under said acts. jb. 23. Corporations can not Claim Immunity* because of Testimony Given or Evidence Furnished by its Ofllcers or Agents. — A corporation, whether State or Federal, can not claim im- munity from prosecution for violation of the interstate com- merce or Anti-Trust Laws of the United States because of testimony given or evidence produced by its officers or agents before the Interstate Commerce Commission or the Commis- sioner of Corporations, or in any proceeding, suit, or prose- cution under such laws; the right to immunity on account of evidence so given in the several cases granted by act of February 11, 1893 (27 Stat, 443), and acts of February 14 and 25, 1903 (32 Stat, 827, 904), being limited to indi- viduals who as witnesses give testimony or produce evi- dence. United States v. Armour d Co., 142 F., 808. 2 — 951 IN PABI DELICTO. See Sale, 6, 7. INCIDENTALLY, INDIBECTLY, OR REMOTELY. See Combi- nations, ETC., 9, 105, 135, 136, 138, 139, 142, 151, 174, 176, 205 ; Congress, 7 ; Statutes, 7, 8, 14, 44, 49. INCITING STRIKES. See Combinations, etc., 119-125. INCRIMINATING EVIDENCE. See Witnesses; Immunity. INDICTMENTS. 1. Failure to Allege that Defendants Monopolized or Conspired to Monopolize Trade and Commerce Among the Several States, etc. — An indictment under section 2 of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), which fails to allege that de- fendants monopolized, or conspired to monopolize, trade and commerce among the several States, or with foreign nations, fails to state an offense, even though it does allege that they did certain acts with intent to monopolize the traffic in distilled spirits among the several States, and that they have destroyed free competition in such traffic in one of the States and increased the price of distilled spirits therein. U. S. V. Oreenhut, 50 F., 469. i 30 1146 INDEX — DIGEST. INBICTMBNTS— Continued. S. failure to Charge a Crime.— An Indictment under the act of July 2, 1890, relating to monoiiolies, averred that defend- ants, in pursuance of a combination to restain trade In dis- tillery products between the States and monoi)oliKe the traffic therein, acquired by lease or purchase, prior to the passage of the act, some 70 distilleries, producing three-quarters of the distillery products of the United States, and that they continued to operate the same after the passage of the law, and by certain described means sold the product at increased prices. Held, That no crime was charged in respect to the purchase or continued operation of the distilleries, since there was no ayerment that defendants obligated the vendors of the distilleries not to build others, or to withhold their capital or experience from the business. In re Coming, 51 F., 33. 1—33 S. Same.— The indictment further averred that defendants, in pur- suance of the combination, shipped certain of the products to Massachusetts, and sold them there through their distribut- ing agents to dealers, who were promised a rebate of 5 cents per gallon on their purchases, provided such dealers pur- chased their distillery products exclusively from the distrib- uting agents, and sold them no lower than the prescribed list prices, said rebate to be paid when such dealers should sign a certificate that they had so purchased and sold for six months; and that by this means defendants had controlled and increased the price of distillery products in Massachu- setts. Held, That no crime was charged with respect to such sales, since 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. /&. 1 — 34 i. Failure to Charge a Crime.— An indictment under the act of July 2, 1890, relating to monopolies, averred in the fourth count that defendants, in pursuance of a combination to restrain trade in distillery products between the States, shipped cer- tain whisky to Massachusetts and sold it there through their distributing agents to dealers under a contract whereby said dealers were promised a rebate of 5 cents per gallon on their purchases, providing such dealers purchased their dlstilleiy products exclusively from the distributing agents and sold them no lower than the prescribed list prices ; said rebate to be paid when such dealers should sign a certificate that they had so purchased and sold for six months ; and that by this means defendants had controlled and increased the price of distillery products In Massachusetts. Held, That no crime was charged with respect to such sales, since there was no averment of any contract whereby the dealers bound them- INDEX — ^DIGEST. 1147 INDICTMENTS— Continued. selves not to purchase from others, or not to sell at less than list prices. In re CornUig, 51 F., 205, approved. In re Terrell, 51 F., 213. l_46 5. Failure to Allege Contract or Means of Compulsion — ^Vagrue- ness. — In an indictment under section 1 of the act of July 2, 1890, to protect trade and commerce against monopolies, one count alleged, in substance, that on a specified date de- fendants, under the guise of the Distilling and Cattle Feed- ing Company, sold to certain persons in Boston a quantity of alcohol, then in Illinois, and that, by reason of the fact that said company controlled the manufacture and sale of 75 per cent of all distillery products in the United States, defend- ants fixed the price at which the purchasers should and did sell such alcohol, and " did compel " said purchasers " to sell said alcohol at no less price than that fixed " by them, but there were no allegations as to the means of compulsion. Held, That it could not be assumed from these allegations that the means used was a contract with the purchasers, and the count was bad, as being too vague to charge any contract or restraint of trade between the States. In re Cheene, 52 F., 104. i_55' 6. Indictments which Simply Follow the Language of the Stat- ute—Tested by Specific Facts Alleged.— Under the act of July 2, 1890, " to protect trade and commerce against unlaw- ful restraints and monopolies," an indictment simply follow- ing the language of the statute would be wholly insufficient, for the words of the act do not themselves fully, directly, and clearly set forth all the elements necessary to constitute the offense ; and the indictment must, therefore, be tested by the specific facts alleged to have been done or committed. 76. 7. Indictment of Stockholders for Acts of Corporation — Omission to State Relation Defendants Bore to the Corporation. — In indictments of individuals under the said statute, where all the acts alleged to constitute the ofljeuse are charged to have been done by a corporation, an omission to state what rela- tion defendants bore to the corporation, other than that of stockholders, is fatal, since mere stockholders can not be held criminally responsible for the acts of the corporation. 76. 8. Must Contain Description of the Offense and a Statement of the Facts Constituting Same— Words of Statute.— An indict- ment under the act of Congress, "to protect trade and com- merce against unlawful restraint and monopolies " (26 Stat, 209), must contain a certain description of the offense, and a statement of facts constituting same, and it is not sufficient simply to follow the language of the statute. U. 8. v. Nelson, 52 F., 646. i__77 1148 INDEX — DIGEST. INDICTMENTS— Continued. ». An Indictment under the anti-trust law should describe some- thing that amounts to a conspiracy under that act conform- ably to the rules of pleading at common law, as perhaps modified by general Federal statutes. V. 8. v. MacAndrewa d Forbes Co., 149 F., 823, 831. 10. Must Show Means Whereby it is Sought to Monopolize.— In an indictment under the Anti-Trust Act of 1890 it is not sufli- cient to declare in the words of the statute, but the means whereby it is sought to monopolize the market must be set out, so as to enable the court to see that they are illegal. V. 8. V. Patterson, 55 F., 605. 1—133 Rehearing on general demurrer, 59 F., 280 (1—244). 11. Allegations of what was done in pursuance of an alleged con- spiracy are Irrelevant in an indictment under this statute, and are of no avail either to enlarge or to take the place of the necessary allegations as to the elements of the offense. n. Scope of the Statute.— The words " trade " and " commerce," as used in the Anti-Trust Act of 1890, are synonymous. The use of both terms in the first section does not enlarge the meaning of the statute beyond that employed in the common- law expression, " contract in restraint of trade," as they are analogous to the word « monopolize," used in the second sec- tion of the act jj 18. The word "monopolize" is the basis and limitatiou of the statute, and hence an indictment must show a conspiracy in restraint by engrossing or monopolizing or grasping the market. It is not sufficient simply to allege a purpose to drive certain competitors out of the field by violence, annoy- ance, intimidation, or otherwise. z^,. 14. Acts of Violence.— Where counts in such indictment allege a purpose of engrossing or monopolizing the entire trade in question, acts of violence and intimidation may be alleged as the means to accomplish the general purpose. /&. 18. Surplusage in an indictment can not be reached by demurrer of any character; but, if it be assumed that a special de- murrer will lie, it must point out the specific language ob- jected to, and not require counsel and the court to search through the indictment for what is claimed as demurrable. U, 8. v. Patterson, 59 F., 280. 1—244 15. An indictment for conspiracy to monopolize interstate com- merce in cash registers need not negative the ownership of patents by defendants, or aver that the commerce proposed to be carried on is a lawful one. /j,, 17. Averments.— It is unnecessary to set out in detail the opera- tions supposed to constitute interstate commerce, and in this respect it is sufficient to use the language of the statute, lb. INDEX — ^DIGEST. 1149 INDICTMENTS— Continued. 18. It is unnecessary to allege the existence of a commerce which defendants conspire to monopolize, as the statute does not distinguish between strangling a commerce which has been born and preventing the birth of a commerce which does not 19. The indictment need not show that the purpose of the con- spiracy was to grasp the commerce into the hands of one of the defendants, or that defendants were interested in behalf of the party for whose benefit they conspired, or what were their relations to such party. /^^ 20. Grand Jury— Finding— Indictment.— An indictment should only be found where the grand jury believe that the evidence be- fore them would warrant a conviction. In re Grand Jury, 62 F., 840. 1—310 8ee also XJ. 8. v. MacAndrews & Forbes Co., 149 F., 823. INDIBECTLY. See Incidentally. INFRINGEMENT OF PATENTS. 8e€ Patents. INJUNCTIONS. 1. Must be Brought by the Government.— The act of July 2, 1890 (26 Scat, 209), does not authorize the bringing of injunc- tion suits or suits in equity by any parties except the Gov- ernment. Blindell v. Hagan, 54 F., 40. 1—106 Case affirmed, 56 F., 696 (1—182). 2. Same.— The intention of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), was to limit direct proceedings in equity to pre- vent and restrain such violations of the Anti-Trust Act as cause injury to the general public, or to all alike, merely from the suppression of competition in trade and commerce among the several States and with foreign nations, to those instituted in the name of the United States, under section 4 of the act, by district attorneys of the United States, acting under the direction of the Attorney-General; thus securing the enforcement of the act, so far as such direct proceedings in equity are concerned, according to some uniform plan, operative throughout the entire country. Minnesota v. Northern Securities Co., 194 U. S., 48. 2—533 3. The right to bring suits for injunction under section 4 of the act of July 2, 1890 (26 Stat, 209), is limited to suits insti- tuted on behalf of the Government. Greer, Mills d Co v Stoller, 11 F., 1. 1— 62() 4. The fourth section of the Anti-Trust Act (26 Stat, 209) in- vests the Government with full power and authority to bring a suit to set aside an agreement between competing railroads for the regulation of rates and to have an association founded for that purpose dissolved and its members en- joined from carrying out the terms of the agreement U. 8. v. Trans-Missouri Ft. Assn., 166 U. S., 290. 1—648 1150 INDEX — ^DIGEST. IN JUNCTIONS— Continued. 5. Jurisdiction of Circuit Courts. — ^The circuit courts have juris- diction under tbe Anti-Trust Act of July 2, 1890, to issue injunctions to restrain and punish violations of that act. V. 8. V. Agler, 62 F., 824. 1—294 6. Same— Technical Defects in Bill.— That a bill for such injunc- tion contains no prayer for process, this being a mere tech- nical defect, although it renders the bill demurrable, does not affect the jurisdiction of the court or render the injunc- tion issued thereon void. /ft. 7. Same— Defendants Hot Named in Bill, nor Served with Sub- poena. — An injunction for such purpose becomes binding, as against one not named in the bill, and not served with sub- p(ena, when the injunction order is served on him as one of the unlcnown defendants referred to' in the bill. lb. 8. Same — Proceedings to Punish Violation. — An information to punish violation of such an injunction order which fails to allege that the order was a lawful one, in the language of the statute, or that the person charged, not named in the order, was one of the unknown parties referred to therein, or that, either by Ins words or his acts, he was engaged in aiding the .^Kinimon object with other members of the al- leged combination, lacks the necessary certainty. lb, 9. Equity Jurisdiction— Power to Enjoin— Right to Jury.— The ix)wer given by section 4 of the act July 2, 3890, to circuit courts "to prevent and restrain violations" of the act, is not an invasion of the right of trial by jury, as the jurisdic- tion so given to equity will be deemed to be limited to such cases only as are of etiuitable cognizance. U. 8, v. Debs, m F., 724. 1—323 See also V. 8. v. Elliott, 64 F., 27 (1—311), and V. 8. v. Agler, ti2 F., 824 (1—294). 10. Obstruction of Mails— Jurisdiction of Circuit Court.— The cir- cuit court has power to issue its process of injunction upon a couiplnint which clearly shows an existing obstruction of artificial highways for the passage of interstate commerce and the transmission of the mails, not only temporarily existing, but threatening to continue. In re Debs, 158 U. S., 564. 1—565 11. Same — ^Violation of Injunction — Contempt. — Such an injunction having been issued and served upon the defendants, the circuit court had authority to inquire whether its orders had hecn disobeyed, and when it found that they had been disolteyed, to proceed under Revised Statutes, section 725, and to enter the order of punislAnent complained of. lb. 12. Same — Habeas Corpus. — ^The circuit court having full jurisdic- tion in the premises, its findings as to the act of disobedience are not open to review on habeas corpus in this or any other court, lb. INDEX — ^DIGEST. 1151 INJUNCTIONS— Continued. 18. Enforcement— Contempt.— The proceeding by injunction is of a civil character, and may be enforced by proceedings in con- tempt, j^ 14. Such proceedings are not in execution of the criminal laws of the land. jj^ 16. Penalty for Contempt no Defense in Criminal Action.— The penalty for a violation of an injunction is no substitute for, and no defense to, a prosecution for any criminal offense committed in the course of such violation. /ft. le. Obstruction of Railroads.— An injunction will lie under section 4 of the Anti-Trust Act of July 2, 1890, to restrain a com- bination whose professed object is to arrest the operation of the railroads whose lines extend from a great city into adjoining States until such roads accede to certain demands made upon them, whether such demands are in themselves reasonable or unreasonable, just or unjust. Such a combina- tion is an unlawful conspiracy in restraint of trade and com- merce among the States, within the meaning of section 4 of that act. U. 8. v. Elliott, 62 F., 801. 1—262 Demurrer overruled, 64 F., 27 (1—311). 17. Same— Power of Congress to Authorize.— Act of July 2, 1890, section 4, which provides that the circuit courts of the United States have jurisdiction to restrain combinations and conspiracies to obstruct and destroy interstate commerce, before such objects are accomplished, is not void for want of po^^ er in Congress to authorize such proceedings. U. 8 v Elliott, 64 F., 27. 1—311* 18. Injunction Order— Persons not Named in Bill.— Under act of July 2, 1890, section 5, an injunction order in an action to enjoin an illegal conspiracy against interstate commerce may provide that it shall be in force on defendants not named in the bill, but who are within the terms of the order, where it also provides that it is 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. ,, _ lb. 19. Strike— Interference with Interstate Commerce.— Where an in- junction is asked against the interference with interstate commerce by combinations of striking workmen, 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 lawfulness of the invasion is not disclaimed, authorizes the injunction. U. 8. V. Workingmen's Amalg. Council, 54 F., 994. 1—110 Case afl5rmed, 57 F., 85 (1—184). 1152 INDEX — DIGEST. nrJOTfCnONS— ttontinued. to. Injunction in Horthem Securities Case no Invasion of States' Rights to Create Corporations. — The enforcement of the pro- visions of the Anti-Trust Act of July 2. 1890 (26 Stat, 209), by a Federal court decree enjoining a corporation organized in pursuance of a combination of stockholders in two com- peting interstate railway companies for the purpose of ac- quiring a controlling interest in the capital stock of such companies, from exercising the power acquired by such cor- poration by virtue of its acquisition of such stock, does not amount to an invasion by the Federal Government of the reserved rights of the States creating the several corpora- tions, tiorthem Securities Co, v. United States, 193 U. S., 197 (48 L. ed., 679). 2—342 81. Same. — A Federal court, by its decree in a suit instituted under the authority of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), section 4, to prevent and restrain violations of the act, may properly enjoin a corporation organized in pursuance of a combination of stockholder of two competing interstate railway companies for the purpose of acquiring a controlling interest in the capital stock of such companies, from acquir- ing any further stock therein, from voting such stock as it then holds or may subsequently acquire, and from exercis- ing any control over the railway companies by virtue of its holdings, and may restrain the railway companies from per- mitting or suffering any such action on the part of the stock- holding corporation, and from paying any dividends on ac- count of the stock held by it. Id. 82. Allowance — Comparative Hardship or Inconvenience. — In an application for a preliminary injunction to prevent the Northern Securities Company from parting with, disposing of, transferring, assigning, or distributing the stock of the Northern Pacific Railway Ck)mpany, or any part thereof, by reason of the decision of the Supreme Court in the Northern Securities Company case (193 U. S., 197), during the pend- ency of a suit to determine the rights of the Northern Pa- cific Company in regard to such return or distribution, Held, That the preliminary injunction should issue, regard being had to the comparative hardship or convenience to the respective parties resulting from the awarding or denial of the Injunction. Harriman v. Northern Securities Co., 132 F., 464. 2-— 587 Reversed by Circuit Court of Appeals, 134 F., 331 (2—619). Action of Circuit Court of Appeals afiHrmed by Supreme Court, 197 U. S., 244 (8—669). 23. Same. — ^Where, in a doubtful case, the denial of a preliminary injunction would, on the assumption that the complainant ultimately will prevail, result in greater detriment to him INDEX — DIGEST. 1153 INJUNCTIONS-(^ontiniied. than would, on tlie contrary assumption, be sustained by the defendant, through its allowance, the injunction usually should be granted. /^^ 84. Same. — The balance of convenience or hardship ordinarily is a factor of controlling importance in cases of substantial doubt existing at tlie time of granting or refusing the preliminary injunction. j^ 25. Same.— 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 complainant and of the defendant, without necessarily being determina- tive of the propriety of allowing or denying the injunction. lb. 8e. Same.— Preservation of Fund.— Where the sole object for whicli an injunction is sought is the preservation of a fund in controversy, or the maintenance of the status quo, until the question of right between the parties can be decided on final hearing the injunction properly may be allowed, although there may be serious doubt of the ultimate success of the complainant - /j, 27. Same.— While the consideration that an appeal does not lie from an interlocutory decree denying a preliminary injunc- tion is entitled to no weight wliere, on the application, it clearly appears that the complainant can not prevail on the final hearing, it is often of controlling importance where, on such application, there is room for reasonable doubt as to the ultimate result. lb 28. Preliminary Injunctions— Where Material Allegations are De- nied.— Where the material allegations of a bill filed by the United States against various coal companies, under act of Congress, July 2, 1890, to enjoin their combination in re- straint of trade, are denied by defendants' affidavits, a preliminary injunction will not be granted, as plaintiff gives no indemnifying bond in case the injunction sliould be dissolved. V. 8. v. Jeltico Mtn. Coke & Coal Co,, 43 F., 898. 1—1 29. Injunction Pendente Lite— Evidence.— Evidence that, by reason of the action of a combination of persons, the crew left com- plainants' ship as she was about to sail, and that another crew could not be procured for nine days, and then only with • the assistance of the police authorities and the protection of a restraining order, while other vessels in the vicinity had no difficulty in getting crews, is sufficient to authorize the court to enjoin interference with the business of the com- plainants by such combination pendente lite. 54 F., 40, affirmed. Blvndell v. Hagan, 56 F., 696. 1—183 21220— VOL ^—06 M 73* 1154 INDEX — DIGEST. nrjUNCTIONS-Contimied. 30. Ecstraining Orders— May Issue Without Notice.— Under section 4 of the Anti-Trust Law of July 2, 1890, a restraining order may be issued without notice, under the circumstances sanc- tioned by the established usages of equity practice in other cases. I/, 8. v. Coal Dealers' Asm. of Cal, 85 F., 252. 1—749 31. Preliminary Injunctions— Review.— Where the opinion of a circuit court in granting a preliminary injunction shows that the judge regarded as of controlling importance the fact that an order denying the injunction would not be re- viewable by appeal, the rule that the appellate court will not interfere with the exercise of the discretionary power of the court of first Instance unless there is strong reason for it does not apply, and the (question of the right to the injunc- tion will be determined on the merits. NortJiern Securities Co. V. Harriman, 134 F., 331. 2—018 Reversing 132 F., 404 (2—587). 32. Same — Should Not be Enjoined from Distributing Assets. — De- fendant corporation having been adjudged an illegal com- bination in restraint of interstate commerce, and enjoined from voting or receiving dividends on certain railroad stock which it owned, but permitted to transfer the same to its stockholders, a plan adopted by its directors and stock- holders to distribute the same pro rata among all its stock- holders was equitable, and its execution should not be en- joined. ^ ift. 33. Same — Bissent. — It is a proper exercise of discretion for a court to grant a preliminary injunction where the bill and evidence present a prima facie case and raise important and doubtful questions of law and fact, and, unless the injunction is gi-anted to preserve the status quo until the hearing, the suit would be ineflfective ; and an order for an injunction, granted on such grounds after the court has given due consideration to the balance of inconvenience and injury which may result to one party or the other, should not be reversed by an ap- pellate court before the case has been finally heard and de- termined by the court below on full proofs. Per Gray, Cir- cuit Judge, dissenting. /ft, 34. Keview of Order Granting Temporary Injunction.— The Circuit Court of Appeals will not reverse an interlocutory order granting or continuing a temporary injunction unless It is clearly shown that the same was improvidently granted and Is hurtful to the appellant. Workingmen's Amalg. Council V. U. 8., 57 F., 85. 1—184 See also Dr. Miles Medical Co. v. Jaynes Drug Co., 149 P., 838. INDEX — DIGEST. 1155 INTERSTATE COMMERCE. 1. Commerce Defined. — The word " commerce," as used in the Anti-Trust Act of July 2, 1890, and in the Constitution of the United States, has a broader meaning than the word *• trade." Commerce among the States consists of intercourse and traffic between their citizens, and includes the trans- portation of persons and property, as well as the purchase, sale, and exchange of commodities. U. 8. v. Cassidy, 67 F., 698. i_^52 2. Scope of Anti-Trust Act.— While the primary object of the statute was doubtless to prevent the destruction of legiti- mate and healthy competition in interstate commerce, by the engrossing and monopolizing of the markets for commodi- ties, yet its provisions are broad enough to reach a combina- tion or conspiracy that will interrupt the transportation of such commodities and persons from one State to another. U. 8. V. Workingmen's Amalgamated Council, 54 F., 995, cited. jj^ 8. Pullman cars in use upon railroads are instrumentalities of " commerce." U. 8. v. Dehs, 04 F., 763, cited. /ft. 4. Commerce — Definition. — Commerce 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 ex- change. It includes the intercourse— all the initiatory and intervening acts, instrumentalities, and dealings — that di- rectly bring about the sale or exchange. U. 8. v. Swift & Co., 122 F., 529. 2—237 6. Interstate Commerce Includes Purchase, Sale, and Exchange of Commodities. — Interstate commerce consists of intercourse and traflic between the citizens or inhabitants of different States, and includes not only the transportation of persons and property and the navigation of public waters for that purpose, but also the purchase, sale, and exchange of com- modities. Addyston Pipe and Steel Co. v. United States, 175 U. S., 211. 1—1009 6. Same— What Constitutes a Violation of the Statute.— Any agree- ment or combination which directly operates, not alone upon the manufacture, but upon the sale, transportation, and de- livery of an article of interstate commerce, by preventing or restricting its sale, thereby regulates interstate commerce to that extent, and thus trenches upon the power of the na- tional legislature, and violates the Anti-Tnist Act of 1890 (*>6 Stat, 209). j^ 7. Commerce Between Two Points in Same State— Vessels Passing Over Soil of Adjoining States.— Where a contract relates to commerce between points within a State, both on a boundary river, it will not be construed as falling within the prohibi- 1156 INDEX — ^DIGEST. INTEBSTATE COMMEBCE-1 Ontiniied. ttons of tlie Sheriiiaii Aft because the vessels affeeted hy the contract sail over soil lieloiigiiig to the other State while Iiassing between the interstate points. Chicinnuti, eta. Packet Go, v. Buy, 200 U. S., 179. 2—867 8. Same. — Even if there is some interference with interstate com-* merce, a contract is not necessarily void under tlie Sherman Act if such interference is insignilicunt and merely inci- dental and not the dominant purpose; the contract will be construed as a domestic wntract and its validity determined by the local law. /&. t* Same. — A contract for sale of vessels, even if they are engasecl in interstate commerce, is not necessarily void because the vendors agrree, as is ordinary' in case of sale of a business and its good will, to withdraw from business for a specified period. /&. 10. Policy of Congress. — It is the declared policy of Congress, which accords with the principles of the common law, to promote individnal competition in relation to interstate conmierce. and to prevent combinations which restrain such competition between their luemliers, or between such nieml>ers as individ- uals and outside competitors. L'. 8, v. Chexapcake tC O. Fuel Co., 105 F., 93, 2 — :u Affirmed, 115 F., 610 (2—151). 11. Policy of the Nation in Regard to.— It has been the public policy of this nation, from tlie date of the passage of the Interstate Conmierce Act of 1887, to regulate that part of interstate commerce which consists of transportation, and to so far re- strict competition in freight and passenger rates l>etween railroad companies engaged therein as sliall be necessary to make such rates open, public, reasonable, uniform, and steady, aiul to prevent discriminations and undue preferences. I, 8. V. Trans-Mhsouh Freight .la»Vi., 58 F., 58. 1—186 Decision reversetl. HUi U. S., 290 (1—648). 12. The Anti-Trust Act of July 2, 1890. embraces and declares to be illegal every contract, combination, or conspiracy, in what- ever form, of whatever nature, and whoever may l>e p irties to it, which directly or necessarily operates in restraint of trade or connnerce among the several States or witli foreign nations. Nmthern t>vrnritirH Co. v. I nitrd Stateit, 193 U. S.. 197. (Harlan, Brown, McKeuna, Day.) 2 — :i39 13. Combinations, even among private manufacturers or dealers, whereby interstate or international miner(e is restrained, are equally embraceil by the act. /ft. 14. Every combination or conspiracy which would extinguish com- . petition between otherwise competing railroads, engaged in interstate trade or commerce, and which would in tliat way restrain such trade or commerce, is made illegal l>y tlie 1 aci. Io% INDEX DIGEST. 1157 INTERSTATE COMMERCE-Continued. 16. Congress may, in the exercise of the power conferred upon it by the connnerce clause of the Constitution, prohibit private contracts which operate directly and substantially to restrain interstate commerce. U, 8. v. Northern Securities Co., 120 F., 16. The power of Congress to regulate interstate conmierceTfm^ prises the right to enact a law prohibiting the citizen from entering into those private contracts which directly and sub- stantially and not merely indirectly, remotely, incidentally, and collaterally, regulate to a greater or less degree com- merce among the States. Ad15 as. Powers of the United States-Transmission of the Mails -While the United States is a Government of enumerated powers It has full attributes of sovereignty within the limits of those powers, an.ong which are the power over interstate commerce and tlie power over the transmission of the mails In re Dehs, 1.58 U. S., 564. ^__^ 19. Same.-The powers thus conferred are not dormant, but have been assumed and put into practical exercise l»v (N>ngres- sional legislation. ' ^ J" 20. Same-Removal of Obstructions.-In the exercise of those po.^rs the United States may remove everything put upon iHghways, natural or artificial, to obsti-uct the passage of interstate connnerce, or the carrying of the mails. /ft 21. Same-Executive Power May Appeal to Civil Courts.-While it may bo competent for the Governn.ent, through the executive l>ran<.h and in the use of the entire executive power of the na ion, to forcibly remove all such obstructions, it is equally within Its competency to appeal to the civil courts Tor an inquiry and detennination as to the existence and the char- iZl r "' """' ^^"^ '' ^^"^^ -^ '-^-^ to exist or threaten to occur, to invoke the powers of those courts to remove or i^strain them, the jurisdiction of courts to ntel fere in such matters by injunction being reco<^nized from ancient times and by indubitable authority. T pltrnniTlnT ''' ^7" '^ '"^^ InJanction.-The cm plaint filed m this case clearly shows an existing obstruction o art ficial highways for the passage of intersta'tetm J :: .u d the transmission of the mails, not only temporarily e^ isting, but threatening to continue, and under it the cfrc^t court had power to issue its process of inlunction /^ 1158 I NDEX — ^DIGEST, IHTBBSTATE COMMEBCE— Continued. 28. Carriers — Connecting^ Lines — ^Prepayment of Freight. — A com- mon carrier engaged in interstate commerce may at common law, and under the Interstate Commerce Law, demand pre- payment of freight charges, when delivered to it by one con- necting carrier, without exacting such prepayment when delivered by another connecting carrier, and may advance freight charges to one connecting carrier without advancing such charges to another connecting carrier. Gulf, C. <§ 8, F, Ry. Co. V. Miami S, S. Co., 80 F., 407. 1—823 24. Bailroad Companies — Arrangements for Through Billing. — There is no principle of common law which forbids a single railroad corporation, or two or more of such corporations, from selecting, from two or more other corporations, one which they will employ as the agency by which they will send freight beyond their own lines, on through bills of lading, or as their agent to receive freight, and transmit it on through bills to their own lines, and without breaking bulk ; and the right to make such selection is not taken away by the Interstate Commerce Law. {New York d N. Ry. Co. t. liew York d N. E. R. Co., 50 Fed., 867, explained.) Prescott d A. C. R. Co, V. Atchimti, T. d 8. F. R. Co., 73 F., 438. 1— fi04 25. Kansas City Live Stock Association — Engaged in Interstate Commerce.— Where the shipments of live stock from growers, dealers, and traders In various States and Territories to the defendants, the Kansas City Live Stock Association, was solicited by the latter chiefly through personal solicita- tion of traveling agents, and through advertisements, the course of business involving frequent loans to shippers in other States, secured by chattel mortgages on herds, and frequent drafts drawn by shippers on the defendants, and discounted at their local banks in other States on the strength of bills of shipment attached thereto, shipments being made to Kansas City, and the loans or drafts paid from proceeds of sale, and the balance remitted to the shippers, and sales at Kansas City were made for shipment to markets in other States, as well as for slaughter at pack- ing houses near by, the traffic being of Immense proportions, and defendants active promoters, and frequently Interested parties, gathered In for sale and slaughter millions of cattle, sheep, and hogs ; and their rules and regulations covered the entire business, and extended over the whole field of opera- tion, held, that defendants were engaged in commerce be- tween the States, and were subject to the provisions of the law of July 2, 1890, against trusts and monopolies. U. 8. v. Hopkins, 82 F., 529. 1—725 Reversed, 171 U. S., 578 (1—941). INDEX — ^DIGEST. 1159 INTERSTATE COMMERCE— Continued. 26. Same. — Live stock shipped from various States to the yards of a stock-yards association in another State, by the solicitation and procurement of the members thereof, to be there sold or to be reshipped to other States, if the market should be unsatisfactory, does not cease to be a subject of interstate commerce as soon as it reaches such yards and is there un- loaded, nor until it has been further acted upon so as to become mingled with the mass of property in the State. /&. 27. Same.— The fact that the place of business of an association is located upon both sides of the line dividing two States is in itself of no material importance in determining whether the business transacted by it is commerce between the States. 7^ 28. Same. — ^The fact that a State line runs through stock yards, and that sales may be made of a lot of stock in the yards which may be partly in one State and partly in another, has no effect to make the business of selling stock interstate commerce. Hopkins v. United Stales, 171 U. S., 578. 1—941 29. Same. — The business of buying and selling live stock at stock yards in a city by members of a stock exchange as commission merchants is not interstate commerce, although most of the purchases and sales are of live stock sent from other States, and the members of the stock exchange are employed to sell l>y letter from the owners of the stock in other States, and send agents to other States to solicit business, and advance money to the cattle owners, and pay their drafts, and aid them in making the cattle fit for market. Hopkins v. United States, 171 U. S., 578. 1—941 Reversing, 82 R, 578 (1—725). 30. Same.— A by-law of the Kansas City Live Stock Exchange, which regulates the commissions to be charged by members of that association for selling live stock is not in restraint of interstate commerce, or a violation of the act of July 2, 1800, to protect commerce from unlawful restraints, lb. 31. Same.— A commission agent who sells cattle at their place of des- tination, which are sent from another State to be sold, is not engaged in interstate commerce; nor is his agreement witli others in the same business, as to tlie commissions to he charged for such sales, void as a contract in restraint of that conniierce. ^^ 32. Same.— In order to come within the provisions of the statute, the direct eflfect of an agreement or combination must 1)0 in restraint of trade or counnerce among the several States or with foreign nations. f^^ 33. Same.— Restrictions on sending prepaid telegrams or telephone messages, made by a by-law of a live-stock excliange, when INDEX — DIGEST. INTERSTATE COMMERCE- Continual. these restrictions are merely for the regulation of the business of the members, and do not affect the business of the tele- graph eomi»auy, are not void as regulations of intei-state commerce. ij), 34. Same.— The business of agents in soliciting consignments of cattle to commisison merchants in another State for sale is not interstate commerce, and a by-law of a stock exchange re- stricting the number of solicitors to three does not restrain that connnerce or violate the act of Congress. /ft. S5. Same. — A combination of commission merchants at stock yards, by which they refnse to do business with those who are not members of their association, even if it is illegal, is not sub- ject to the act of Congress of July 2, 1$90, to protect trade ami couHiierce, since their business is not interstate com- merce. . /ft. 9i. Beef Trust — Combination to Monopolize Interstate Commerce in Iresh Meats. — Interstate couuuerce is unlawfully restrained, in violation of the act of July 2, 1890 (2G Stat.. 209), by a combination of indei)endent meat dealers, in aid of an at- tempt to monoiiolize connnerce in fresh meat among the States, to bid up prices for live stock for a few days at a time, in order to induce cattle men In other States to make large shipments to the stock yards, or by a combination for the same puriJO.«e to fix the selling price of fresh meat, and to that end to restrict shipments, when necessary, to estab- lish a unlfonn rule of credit to dealers, and to keep a black list, or by a combination in aid of such purpose to make uttifonn and improper charges for cartage for the delivery of meat sold to be sliipped to dealers and consumers in the several States. Sicift tC- Co, v. UnHed States, 196 U. S., 375. a— 043 37. The effect rpon interstate commerce of a combination of a doniinnnt portion of the dealers in fresh meat throughout the United States not to bid against, or only in conjunction with, each other in order to regulate prices in and induce shipments to the live-stock markets in other States, to restrict shipments, etc., with intent to monopolize commerce among the States, is direct and not accidental or secondary as in U. S. v. E. C. Knight Co,, 150 U. S., 1. Swift <£ Co, v. United States, 190 U. S., 375. a— 041 35. When cattle are sent for sale from a place in one State, with the expectation they will end their transit, after purchase, in another State, 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 constantly recurring conrse, it constitutes interstate commerce and the purchase of the cattle is an incident of such commerce. /ft. INDEX — DIGEST. 1161 INTERSTATE COMMERCE— Continued. 39. Although the jurisdiction of Congress 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 combinations or agreements so far as they relate to a restraint of such trade or commerce; nor does it acquire any jurisdiction over that part of a combina- tion or agreement which relates to commerce wholly within a State by reason of the fact that the combination also covers and regulates commerce which is interstate. Addy- 8ton Pipe and Steel Co. v. U. S., 175 U. S., 211. 1—1009 Power of Congress Over. See Congress. Prepayment of Freight. See Carriers. See also Corporations, 2, 3; Actions and Defenses, 72, 73; and Combinations, etc., generally, particularlv paragraphs 54-70, 134-151. IRON PIPE. See Combinations i-tc, 130. JOINT RATES AND BILLING. See Carriers. JOINT TRAFFIC ASSOCIATIONS. *Sfec Combinations, 103-104. 180-192. JUDGMENT. Oeneral expressions in an opinion which are not essential to dispose of a case are not i>ermitted to control the judgment in subsequent suits. Harriman v. Northern Securities Co,, 197 U. S., 244. 2—669 JURISDICTION. 1. In a suit instituted in the name of the United States, under the Anti-Trust Law, jurisdiction depends alone upon the act, and the court is concerned with no case between private persons or corporations, where jurisdiction depends on other condi- tions, and in which proceeding a common-law remedy might become available. U. S. v. Addyston Pipe d Steel Co., 78 F., ■^l-- 1—631 2. Nonresidents.— The authority given by section 5 of the act of July 2, 1800 (20 Stat., 290), to bring in nonresidents of the district can not be availed of in private suits, and the court can acquire no jurisdiction over them. Greer, Mills d- Co. v. Stoller, V7 F., 1. 1—620 Sec also Courts; States, 8, 10; United States. JURY. 1. Reasonable Doubt.— A reasonable doubt is one arising out of the evidence ; not an imaginary doubt, a fanciful conjecture, or strained inference, but such a doubt as a reasonable man would act upon or decline to act upon when his own concerns are involved— a doubt for which a good reason can be given, which reason must be based upon the evidence or want of evidence. U. S, v. Cassidy, 07 F., 098. 1-^52 1162 INDEX — ^DIGEST. J UJftY— Conlimieii " 8. Oredlliility of Wltiie»se«.— Tlie Jury are the exclusive judges of tbe credibility of tiie witnesses. A witness is presumed to speak tbe trutb, but tbis presumption may be repelled by tbe manner in wblch lie testifies, by tbe character of bis testi- mony, or by tbe evidence affecting bis character for truth, honesty, or integrity, or bis motives, and by contrary evi- dence. But the i)ower of the Jury to Judge of tlie effect of evidence is not arbitrary; it must be exercised with legal discretion, and in subordination to the rules of evidence. lb. 8. Validity of Contract — ^Whcii Question for Jury. — Ck)nceding that a contract legal in its terms and in its consideration may be rendered illegal as against public policy by reason of the intention of the parties to so use it as to commit civil injury to third persons, where tbe evidence as to such intention is conflicting the contract can not be declared illegal by the court as matter of law. U, 8, v. Consolidated Seeded Raistn Co., 126 F., 364. 2—288 See also Witnesses ; Gbano Juby. IiABOB OBQANIZATIOITS. 1. Ibe employees of railway companies have a right to organize for mutual benefit and protection, and for the pui-pose of securing the highest wages and the best conditions they can command. They may appoint officers, who shall advise them as to the course to be taken in their relations with their employer, and they may, if they choose, repose In their officers authority to order them, or any of them, on pain of expulsion from their union, i^eaceably to leave the employ- ment because the terms thereof are unsatisfactory. But it is unlawful for them to combine and quit work for the pur* pose of compelling their employer to withdraw from his re- lations with a third party, for the purix>se of injuring that third party. Thomas v. Itmlwan Co., 02 Fed., 817, followed. 17. 8. V. Cassidy, 67 F., Gl)8. 1—452 2. Same. — ^A strike, or a preconcerted quitting of work, by a com- bination of railroad employees, is, in itself, unlawful, if the concerted action is knowingly and willfully directed by the parties to it for tbe puriwse of obstructing and retarding the passage of the mails, or in restraint of trade and com- merce among the States. lb. See aUo Combinations, etc., in Restraint of Trade, 113-133, 213 ; Courts, 7, 8. LIABIUTY. See Statutes. 64. LICOmCE PASTE TRXTST. See U. S. v. MacAndrews & Forbes Co., 149 F., 823. MMITATION OF ACTION. See Actions anii Dki exsks. P.Ck INDEX DIGEST. 11G3 IiIQXrOR TRAFFIC. *S'ee Combinations, etc., 217; Courts. 2. LIVE-STOCK ASSOCIATIONS AND EXCHANGES, ETC. See Combinations, etc., 78-«1, 167-176. LUMBER. x< V Combinations, etc., 30-32, 134, 135, 211, 212. MAILS, OBSTRUCTION OF. See Combinations, etc., 127, 129, 133. MARKET QUOTATIONS. See Combinations, etc, 177-180. MANUFACTURERS. Right to Regulate Prices of Their Own Products. See Combinations, etc., 160-166. MINNESOTA. 1. Anti-trust law of Minnesota Should Receive the Same Con- struction as the Sherman Anti-Trust Law. — The anti-trust law of Minnesota (Laws 1899, p. 487, c. 359), maldng un- la\^ful any contract or combination in restraint of trade or commerce within the State, is in substantially the same language as the Sherman Anti-Trust Law of July 2, 1890 (26 Stat., 209), and must receive a similar construction. Minnesota v. Northern Securities Co., 123 F., 692. 2 — 246 Case reversed, 194 U. S., 48, and remanded to State court. Circuit court without jurisdiction (2—533). 2. Following the decisions of the United States Supreme Court construing the latter act, the Minnesota law applies to rail- roads, and any contract or arrangement between railroad companies for the purpose and having the effect of prevent- ing competition by fixing rates to be maintained by the par- ties is in violation of its provisions; but contracts or com- binations which do not directly and necessarily affect trans- portation, or rates therefor, are not in restraint of trade or commerce, nor within the statute, even though they may remotely and indirectly appear to have some probable effect in that direction. /j. 3. Same — Stockholding Corporation. — ^A holding corporation or- ganized by individual stockholders of two railroad compa- nies, owning and operating substantially parallel and com- peting lines of railroad within the State of Minnesota, for the sole purpose of acquiring, by the exchange of its own stock therefor, stock of the two companies, and holding and voting the same, but having no power or franchise to operate a railroad, is not in violation of the Minnesota anti-trust law (Laws 1899, p. 487, c. 359), which provides that "any con- tract, agreement, arrangement, or conspiracy, or any com- bination in the form of a trust or otherwise ♦ * * which is in restraint of trade or commerce within this State * * * is hereby prohibited and declared to be 1164 INDEX — DIGEST. MIlfNESOTA— Continuetl. luilawfiil." where the imvitoMi of its i»i*omoters was thereby to acqiiiio and retain in the same hands a majority of the stoclt of one or both coiiipauies, to insure uniformity of pjliey and stability of manaj?enient, although it in fact ac- quired the controiling: interest in both, in the absence of any evidence that it ever exercised its power to prevent competition l>etween the two roads, or to interfere in any manner with tlie fixing of rates by either company. lb. 4. Same — Enforcement of Statute— Jurisdiction or Equity. ^The anti-trust law of Minnesota (Laws 1809, p. 487, c. 359) im- poses severe i>enalties for its violation, but contains no pro- vision for restraining or enjoining violations, and without such statutory authority a court of equity has no jurisdic- tion to enjoin an act which constitutes a criminal offense. MONOPOLY. 1. Need not be a Complete Monopoly. In order to vitiate a contract or combination it is not (essential tliat its result should be a complete monoiwly ; it is sufficient if it really tends to that end and to deprive the i)nl»rH- of the advantages which flow from free ♦•omi»etitiou. r. .V. v. E, V. Kn'njht Co., 156 U. S. 1, 16. * 1—392 2. Congress did not attempt by the act of July 2, 1890, to assert the power to deal with mono|M»Iy 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, con- trol, or disposition of property; or to regulate or prescribe the price or prices at which such property or the products thereof slmuld be sold ; or to make criminal the acts of per- sons in the anpiisition and conti'ol of proi)erty which the States of their residence or creation sanctioned or per- mitted. Aside from the provisions applicable where Con- gress might exercise nuinicipal i)ower, what the law struck at was combinations, contracts, and conspiracies to monopolize trade and commerce among the several States or with for- eign nations. j^^ 8. Bie word '* monopolize " was not intended to be used with ref- erence to the acquisition of exclusive rights under Govern- ment concession, but the word was used to mean " to aggre- gate " or 'concentrate" in the hands of few, practically, and, as a matter of fact, and according to the known results of human action, to the exclusion of others; to accomplish this end by what, in popular language, is expressed in the word " pooling," which may be defined to l)e an aggregation of property or capital l»elonging to different i>ersons, with a view to common liabilities and profits. ,4wier. Biscuit & Mfg. Vo. v. Klotz, 44 F.. 721, 724. i— 7 INDEX — ^DIGEST. 1165 MONOPOLY— Continued. 4. To constitute the olTense of "monopolizing, or attempting to monoi)olize," trade or connuerce among the States, within the meaning of section 2 of said act, it is necessary to ac- quire, or attempt to acquire, an exclusive right in such com- merce by means which will prevent others from engaging therein. In re Greene, 52 F., 104. i 54 6. A " monopoly," in the prohibited sense, involves the element of an exclusive privilege or grant which restrained others from the exercise of a right or liberty which they had before the monopoly was secured. In commercial law, it is the abuse of free connuerce, by which one or more individuals have procured the advantage of selling alone or exclusively all of a particular kind of merchandise or commodity to the detri- ment of the public. 76. \—ll 6. The word " monopolize," used in section 2 of the act of 1890, is the basis and limitation of the statute, and hence an in- dictment must show a conspiracy in restraint by engrossing or monoiiolizing or grasping the market. It is not sufticient simply to allege a purpose to drive certain competitors out of the field by violence, annoyance, intimidation, or other- wise, v. 8. V. Patterson, 55 F., 605. 1—138 7. The statute is not limited to contracts or combinations which monopolize interstate commerce in any given commodity, but seeks to reach those which directly restrain or impair the freedom of interstate trade. The law reaches combinations which may fall short of complete control of a trade or busi- ness, and does not await the cH)nsolidation of many small combinations into the huge "trust" which shall control the production and sale of a commodity. Chesapeake d O Fuel Co. V. United States, 115 F., 610, 624. 2—168 8. Monopoly Not Necessary— Tendency Sufficient.— It is not re- quired, in order to violate tliis statute, that a monopoly lie created. It is sufficient if that be the necessary tendency of the agreement. ' * ^^ 9. Every attempt to monopolize a part of interstate. connncne tlie necessary effect of which is to stifle or to directly and sub- stantially restrict competition in commerce among the States, violates section 2 of the act of July 2, 1890 (26 Stat., 209). Whitwell V. Continental Tobacco Co.. 125 F., 454. 2—271 10. Attempts to monopolize a part of commerce among the States which promote, or only incidentally or indirectly restrict, competition in interstate commerce, while their main imrpose and chief effect are to increase the trade and foster the busi- ness of those who make them, were not intended to be, and were not, made illegal or punishable by section 2 of the \nti- Trust Act of July 2, 1890 (26 Stat., 209), because such at- tempts are indispensable to the existence of anv competition in counnerce among the States. ' jj, 1166 INDEX — DIGEST. MONOPOIiY— Cciiitimied . 11. Statute Opeirates Only on Monopolies in Intentaie Commerce^ and Hot Beoanse Commodity it a Necessary of Life. — The moiiDIioIy aud restraint denounced by the act of July 2, 1890 (26 Stat, 200), "to protect trade and commerce against un- lawful restraints and monopolies," are a monopoly in inter- state and international. trade or commerce, and not a monop- oly in the manufacture of a necessary of life. U. 8. v. B, C, Knight Co.. 156 U. S., 1. 1—379 11. Bebate to EzclnsiTe Purchasers. — An arrangement whereby a distillery company promised persons who purchased from its distributing agents that if, for the ensuing six months, they would purchase their distillery pix)ducts exclusively from such agents and would not resell the same at prices less than those fixed by the company, then, on being furnished with a certi^cate of compliance therewith, it would pay a certain rebate on the amount of such purchases, did not operate to •'monopolize," or "as an attempt to monopolize," trade and commerce, within the meaning of section 2 of said act. In re &rmn0, 62 F.. 104. 1—56 13. A monopoly of trade embraces two essential elements: (1) The acciuisitioii of an exclusive right to, or the exclusive control of, that trade; and (2) the exclusion of all others from that right and control. V, 8. v. Trans-Mo. Ft. Asm., m P., 58. 82. 1—218 14. State Monopoly of liquor Tral&c. — ^The Anti-Trust Act is not applicable to the case of a State which by its laws assumes an entire monopoly in the traffic in intoxicating liquors ( S. C. act of Jan. 2, 1895). Lowenstein v. Evans, G9 F., 908. 1— r»81> 15. Validity of Sale of Property where Object is Monopoly.— Tlie sale and transfer by a corporation of its property and go d will to another corporation, where such sale was within its powers, oan not be repadiated on the ground that the pur- chaser acquired the proi)erty for the purpose of obtaining a monopoly of the business and in pursuance of an illegal combination in restraint of trade. Metcalf v. Amer. School Furniture Co., 122 F., 115. 2—234 See also Combinations, etc., in Resteaint of Tbade, II and III. MiriiTIFABIOUSlTESS. See Actions and Defenses, 8; Pleading AND Practice, 19. 20. MUNICIPAL CONTBACTS. See Combinatioxs, etc., 214-216. MUNICIPAL OBDINANCE. The siieelfication in an ordinance, not invalid under the laws of the State, that a particular kind of asphalt produced only in a foreign country* shall be used for street improvementa INDEX — ^DIGEST. 1167 MUNICIPAL ORDINANCE— Continued. does not violate the Sherman Anti-Trust Law or any Fed- eral right. Field v. Barher Asphalt Paving Co., 194 U. S., ^1^- 2—555 NEW JERSEY. See Cobpobations, 4. NEW TRIAL. See Jayne v. Lodeb, 149 F., 21. NONRESIDENTS. See Statutes, 58. NOTE. See Actions and Defenses, G4. NOTICE. See Statutes, 55. OBSTRUCTION OF MAILS. 1. Obstructing the Mails— Section 3995 Revised Statutes.— Al- though the law (section .3995 Revised Statutes) which makes it an offense to obstruct and retard the passage of the United States mails was originally passed prior to the in- troduction into the United States of the method of trans- porting mail by railroads, and the phraseology of the law conforms to conditions prevailing at that time (March 3, 1825), yet it is equally applicable to the modern system of conveyance and protects alike the transportation of the maU by the "limited express" and by the old-fashioned stage- coach. U. S. V. Cassidy, G7 F., 698. 1—451 2. Same.— The statute applies to all persons who " knowingly and willfully " obstruct and retard the passage of the mails or the carrier carrying the same; that is, to those who know that the acts performed, however innocent they may other- wise be, will have the effect of obstructing find retarding the mail, and who perform the acts with the intent that such shall be their operation. U. S. v. Kirhy. 7 Wall., 485, cited. J J 3. Same.— The statute also applies to persons who, having in view the accomplishment of other purposes, perform unlawful acts, which have the effect of obstructing and retarding the pas- sage of the mails. In such case, an intent to obstruct and retard the mails will be imputed to the authors of the un- lawful act, although the attainment of other ends may have been their primary object. V. S. v. Kirhy, 7 Wall., 485, cited. * J J 4. Same— Mail Trains.— A mail train is a train as usually and regularly made up, including not merely a mail car, but such other cars as are usually drawn in the train. If the train usually carries a Pullman car, then such train, as a mail train, would include the Pullman car as a part of its regular make-up. Therefore, if such a train is obstructed or retarded because it draws a Pullman car, it is no defense 1168 INDEX — DIGEST. OBSTRUCTION OF MAILS-( ontiiuuil. that the imrties so delaying it were willing that tlie mail should proceed if the PuUmau ear were left behind, t/. S. v. Clark, Fed. Cas. No. 14805, 23 Int. Rev. Rec., 30«. followed. 76. 5. Same.— Any train which is carrying mail, under the sanctioo of the postal authorities, is a mail train, in the eye of the hiw. /&• 6. Same — Intent. — It is not necessary that defendants should be shown to have had knowledge that the mails were on board of a train which they have detained and disabled. On the contrary, they are chargeable with an intent to do what- ever is the reasonable and natural consequence of their acts; and as the laws make all railways postal routes of the Uniteerating, and takes back an exclusive license to make and sell the same style of harrows previously made by him, and no other, nil the parties being bound to sell at uniform prices, held to t>e an unlawful combination for the enhancement of prices, and in restraint of trade. National Harrow Co, v. Bench, 76 F., 667. 1 610 Affirmed, 83 F., 36 (1—742). See also Indiana Mfg. Co. v. J, I. Case ThrasUiiiu Mnch. Co., 148 h ., 21. 3. Same. — Though the fact that several patentees are exposed to litigation justifies them in composing their differences, they can not make the occasion an excuse or cloak for the creation of monopolies to the public disadvantage. National Harrow Co. V. Bench, 8:1 F., 3G. 1—743 4. Same — ^Infringement Suit. — A combination among manufactur- ers of spring-tooth harrows, whereby a corporation organized for the purpose, becomes the assignee of all patents owned by the various manufacturers, and executes licenses to them, f» as to control the entire business and enhance prices, is void both as to the assignments and licenses, so that the corporation can not maintain a suit against one of its as- signors who violates the agreement, for infringement. National Barrow Co. v. Bench, 84 F., 226. 1—746 5. Contracts by which a number of patents covering similar inventions arc conveyed by the several owners to one of the parties, which grants licenses under all to the others, are not void as against public policy, or as in violation of the Sherman Anti-Tmst law, because of provisions intended to protect and keep up the patent monopoly by requiring the licensor to prosecute all infringers, limiting the licenses to be granted to such licensees as shall be agreed on, and impos- ing conditions on each license as to the use and ownership of the patented machines, and prohibiting him from using any others. U. 8. Consolidated Seeded Raisin Co, v. Qriffin & Skellev Co., 126 F., 364. . S8— 288 INDEX — ^DIGEST. 1171 PATENTS-Continued. 6. Same.— Eights acquired under the patent laws of the United States can not be affected by a State statute. /j. 7. The object of the patent 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 agi-eed to by the licensee for the right to manufacture or use or sell the article, will be upheld by the courts ; and the fact that the conditions in the contracts keep up the monopoly does not render them illegal. The prohibition 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; but it would be imreasonable to so construe the provision as to prevent the defendant from using any letters patent legally obtained by it and not infringing patents owned by others. Bemcnt v. National Harrow Co., 186 U. ^•' '^^- 2 169 8. Conditions imposed by the patentee in a license of the right to manufacture or sell the patented article, which keep up the monopoly or fix prices, do not violate the act of Congress of July 2, 1890 (26 Stat, 209), to protect trade and commerce against unlawful restraints or monopolies. /ft. 9. Eeasonable and legal conditions imposed by the patentee in a license of the right to manufacture and sell the patented article, restricting the terms upon which the article manu- factured under such license may be used and the price to be demanded therefore, do not constitute such a restraint on commerce as is forbidden by the act of Congress of July 2, 1890 (26 Stat., 209), to protect trade and commerce against unlawful restraints and monopolies. /ft. 10.- The agreement of the licensee of a patent for improvements re^ lating to float spring-tooth harrows not to manufacture or sell any other such harrows than those which it had made under its patents before assigning them to the licensor, or which it was licensed to manufacture and sell under the terms of the license, except such other style and construction as it may be licensed to manufacture and sell by such licensor, is not void as an unlawful restraint on trade or commerce forbidden by the act of Congress of July 2, 1890 (26 Stat., 209), since the plain purpose of this provision is to prevent the licensee from infringing on the rights of others under other patents, and not to stifle competition or prevent the licensee from attempting to make any improve- ment in harrows. ,- io. 1172 INDEX — DIGEST. PATENTS— Continued. 11. An agreement by the licensor of ii [niteiit for iuiproveinents i*e- lating^ to harrows not to license any other person than the licensee to nianufaeture or sell any harrow of the peculiar style and construction then usetl or sold by such licensee does not violate the act of Conju'ress of July '-, 1890 (26 Btat., 209), to i>rotect trade and i-onnnerce against unlawful restraints and monopolies. lb. 19. Licenses — Right to Attach Conditions. — It is within the rights of the owner of a patent to grant licenses conditioned that the licensees shall sell the patented article only at prices fixed by the agreement and also restricting the production of a licensee, and such agreements, if made in good faith and for the purpose of protecting the patent monopoly, are not illegal as in restraint of trade and t-onnuerce, and such good faith is not inipeaciied by the fact that the patent ha.H been held invalid by the Federal courts in some circuits, where it has l>een sustained in others. Rubber Tire Wheel €o. V. itilicaukee Rubber Works Co., 142 F., 531. 2—855 13. Same. — Such patent monoijoly does not include, however, the right of the patentee to enter into a combination in the form of license contracts with manufacturers throughout the United States, not only to raise and maintain the prices of such articles, being articles of interstate connnerce, above the normal market price, but to crash out competition by outside manufacturers. lb. 14. Suit for Infringement — Befenses. — The fact that the owner of a patent is a corporation alleged to have been formed in violation of the Anti-Trust Law. and that the patent is alleged to have been assigned to it in furtherance of the illegal purpose to create a monopoly and control the price of an article of commerce, is not available to an infringer of such patent to defeat a suit for the infringement. National Fold'mg-Box & Paper Co. v. Robertson, 99 F., 985. 2 — 1 15. In an action by a coriwration for the infringement of elevator patents, a private defendant was not entitled to urge as a defense that plaintiff was a corporation organized merely for the purpose of holding the legal title to various elevator patents alleging to have been infringed, for the purpose of controlling sales and enhancing prices of elevatoi-s and apparatus, without itself engagaing in the manufacture and sale of such appliances, in violation of the Sherman Anti- Trnst law (26 Stat., 209), since until the United States has acted and sought to prosecute the plaintiff for violation of such act an infringer of the plaintiff's patent will not be permitted to raise such issue as a defense thereto. Otis Elevator Vo. v. Geiger, 107 F., 131. 8 — 66 INDEX — DIGEST. 1178 PATENTS— Continued. 16. Infringement of Patent Belonging to Memher of a Corporation in Violation of Anti-Trust Law.— That a complainant is a member of a combination in violation of the Anti-Trust Law of July 2, 1890 (20 Stat., 209), does not give third persons the right to infringe a patent of which complainant is owner, nor preclude complainant from maintaining a suit in equity to enjoin such infringement. General Eleetric Co. V. Wise, 119 F., 922. 2—205 PATENT MEDICINES. See Combinations, etc, 29, ICO. PAYMENT. See Actions and Defenses, 63, 64. PLEADING AND PBACTICE. 1. Bill and Answer— Waiver of Oath.— Where the bill for injunc- tion A>'aives the oath of the respondents, an answer, under oath, denying all the equities of the bill, can, under the amendment to equity rule 41, be used at the hetiring with probative force of an affidavit alone. Whether the injunc- tion should issue must be determined by the whole evi- dence submitted. U. S. v. Workingmen's Amalg. Council, 54 F., 994. i_iio Case attlrmed, 57 F., 85 (1 — 184). 2. Hearing on Bill and Answer— Evidence. — When a suit is heard on bill and answer, the allegations of fact in the bill that are denied in the answer are to be tal^eu as disproved, and the averments of fact in the answer stand admitted. U. 8. V. Trans-Mo. Ft. Assn., 58 F., 58. 1—186 3. Same. — ^Where the contract is admitted, but the allegations tending to show its sinister purpose, tendency, and effect con- tained in the bill are denied by the answer, and averments tending to show a just and honest purpose, tendency, and effect are made, the latter averments contained in the an- swer stand admitted, and the contract will be presumed to have been made for an honest and legitimate purpose, unless the provisions of the agreement clearly show the contrary. lu the examination of such a contract, fraud and illegality are not to be presumed. jy^ 4. Notice— Eestraining Order.— Under section 4 of the Anti-Trust Law of July 2, 1890, a restraining order may be issued with- out notice, under the circumstances sanctioned by the es- tablished usages of equity practice in other cases. U. 8. v. Coal Dealers' Assn. of Cal., 85 F., 252. 1—749 5. Allegations.— A complaint alleging that members of an asso- ciation have conspired and combined to raise the prices of tiles, mantels, and grates, to control the output, and to reg- ulate the prices thereof, with the intent to monopolize trade and commerce between the other States and California 1174 INDEX^ — DIGEST. FI-EADING AND PRACTICE— Continued. in regard thereto, as well as to arbitrarily fix their prices independently of their natural marl^et value, brings the case withia the Anti-Trust Act of July 2, 1890 (26 Stat., 209). Lowry V. Tile, 3Iantel & arate Asm. of Cal„ 98 F., 817. 1—995 6. Averments.— A bill charges a violation of the Anti-Tmst Act of July 2, 1890 (26 Stat, 209), as against the objections of want of equity, multifariousness, and failure to set forth sufficient definite or specific facts, where it avers the existence of a combination of a dominant proportion of the dealers in fresh meat throughout the United States, not to bid against each other in the live-stoclc markets of the different States, to bid up prices for a few days, in order to induce shipments to the stock yards, to fix selling prices, and to that end to restrict shipments of meat when necessary, to establish a uniform rule of credit to dealers, and to keep a black list, to make uniform and improper charges for cartage, and to secure less than lawful freiglit rates, to the exclusion of competitors. Bwift d Co. V. United States, 196 U. S., 375. 2—643 7. Same. — Trade in fresh meat is sufficiently shown to ue commerce among the States, protected from restraint by the act of July 2, 1890 (26 Stat, 209), by allegations in a bill charging meat dealers with violations of that act, which, even if they import a technical passage of title at the slaughtering places in cases of sales, also import that the srtles are to persons in other States, and that the shipments to other States are pursuant to such sales, and by allegations charging sales of such meat by their agents in other States, which indicate that some, at least, of the sales were in the original packages /ft. 8. Same. — ^A general allegation of intent may color and apply to all the specific charges of a bill which seeks relief against alleged violations of the Anti-Trust Act of July 2, 1890 (26 Stat, 209). /ft. 9. Same. — ^Vagueness can not be asserted of a charge in a bill seek- ing relief against an attempt to monopolize commerce in fresh meat among the States, in violation of the Anti-Trust Act of July 2, 1890 (26 Stat, 209). that a combination exists among independent meat dealers to restrain tlieir respective agents from bidding against each other when purchasing live stock for them in the stock yards, /ft. 10. Sufficiency of Complaint — Action Under Anti-Trust Act.— The complaint, in an action to recover damages under section 7 of the Auti Trust Act (act July 2, 1890, c. 617, 26 Stat, 210), which sets forth, among other things, that defendants are members of a local labor union, which is a branch of a larger organization covering several States, which in its turn is subordinate to the American Federation of Labor, which INDEX — ^DIGEST. 1175 PLEADING AND PBACTICE— Continued. covers still other States ; that defendants, by reason of such membership, were able to compel, and undertook to compel, and did compel, plaintiffs, against their will, to unionize their factory, by withdrawing from plaintiffs' employment, by pre- venting others from working for them, and by boycotting, with the aid of their associates, plaintiffs' goods in the hands of plaintiffs' customers in other States. Held sufficient on motion for correction of same. Loewe d Co. v. Lawlor et al.y 130 F., 633. 2—854 Sufficiency — 'Injunction. See Dr. Miles J^Iedical Co. v. Jaynes Drug Co., 149 F., 838. 11. What Must be Shown. — In order to maintain a suit under the Anti-Trust Act 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 restraint is its necessary effect. L\ S. v. Trmis-Mo. Ft. Assn., 166 U. S., 290. 1—649 12. Allegations and Proofs — ^Means Contemplated. — It is not in- cumbent upon the prosecution to prove that all the means set out ill the indictment were in fact agreed upon to carry out the conspiracy, cr that any of them were actually used or put in operation. It is sufficient if it be shown that one or more of the means described in the indictment were to be used to execute that purpose. U. S. v. Cassidy, 67 F., 698. i_450 13. Same — Overt Acts. — While at common law it was not necessary to aver or prove an overt act in furtherance of a conspiracy, yet, under the statute relating to conspiracies to commit an offense against the United States, the doing of some act in pursuance of the conspiracy is made an ingredient of the crime, and must be established as a necessary element thereof, although the act may not be in itself criminal. U. 8. V. Thompson. 31 Fed., .331, 12 Sawy., 155, cited. 76. 14. Same. — It is not necessary, however, to a verdict of guilty, that the jury should find that each and every one of the overt acts charged in the indictment was in fact committed; but it is sufficient to show that one or more of these acts was committed, and that it was done in furtherance of the conspiracy. 75, 15. Allegation of Amount in Controversy. — It is not essential that a bill in a Federal court should state the amount or value in controversy, if it appears to be within the jurisdictional limit, from the allegations of the bill, or otherwise from the record, or from evidence taken in the case liefore the hearing of objections to the jurisdiction. Robinson v. Suburban Brick Co., 127 F., 804. 2—312 1176 INDEX — DIGEST. PLEADING ANB PBACTICE— Continued. 1€. Technical Defects in Bill.— That a hill for injunction contains no prayer for process, this being a mere technical defect, although it renders the bill demurrable, does not affect the jurisdiction of the court or render the injunction issued thereon ▼old. U. 8, v. Affler, 62 F., 824. 1—294 17. Same—Defendants not Named in Bill, nor Served with Snb- pcena. — An injunction for such purpose becomes binding, as against one not named in the bill, and not served with sub- poena, when the injunction order is served on him as one of the unknown defendants referreil to in the bill. 76. 18. Same — ^Proceedings to Punish Yiolation. — An information to punish violation of such an injunction order which fails to allege that the order was a lawful one, in the language of the statute, or that the person charged, not named in the order, was one of the unknown parties referred to therein, or that, either by his words or his acts, he was engaged in aiding the common ol»jeit with other members of the alleged combination. l:icks the net^essarj' certaintj*. lb. 19. Multifariousness.— A hill setting up a claim for damages under the Anti-Trust I^w of July 2, 1890, and also asking an in- junction restraining defendant from using complainant's trade-mark and trade name, is multifarious, as joining two distinct causes of acticiu, having no connection with each tither, and one of which is triable at law. Block v. f^tand- urd DistUlbig d Distributing Co., O.'i F.. 978. 1-^993 20. Multifariousness of Bill. — A bill for relief by a minority stock- holder, on behalf of himself and all other stockholders simi- larly situated, to set aside an alleged unlawful transfer of the property of the corporation In pursuance of a conspiracy between its officers and the transferee in restraint of trade and ccMnmerce; and which also seeks the recovery of treble damages under the Anti-Trust Act of July 2, 1890, is multifa- rious, since such damages are only recoverable in an action at law by the plaintifT as an individual, and not as a stock- holder, while the equitable relief prayed for is in behalf of the t^rporation, and, if granted, would inure to the l)enefit of all the stockholdei's. Metcalf v. Amer. School Furniture Co., 108 F.. IHiO. 2—75 SI. Indefiniteness. — In an action by a coi-poration for tlie infringe- ment of elevator patents, nn answer alleging as a defense that the plaintiff is an unlawful combination in restraint of trade and in violation of the Sherman Anti-Trust I^w (26 Stat, 2(»9), but which fails to state who are in the com- bination in the agi-eement characterized as unlawful, and does not disclose fully and in detail that the combination was entered into after the act took effect, and all the facts necessary to show its illegality, is insufficient for indefinite- ness. Oii» EJerntor Co. v. Geiger, 107 F., 131. 2—66 INDEX — ^DIGEST. 1177 PLEADING AND PBACTICE— Continued. 22. Duplicity. — A declaration in an action brought under section 7 of the Sherman Anti-Trust Act of July 2, 1890 (26 Stat., 210), to recover damages for a violation of section 1 of the act, which alleges in a single count that defendant entered into a " contract, combination, and conspiracy " in restraint of trade, is bad for duplicity. Rice v. Standard Oil Co., 134 F., 464. 2—633 88. Same.— The Anti-Trust Act of 1890 makes a distinction be- tween a contract and a combination or conspiracy in re- straint of trade. lb. See also I. S. v. MacAudrcas d Forbes Co., 149 F., 824. 24. Under the practice in tliis country the examination of wit- nesses by a Federal grand jury need not be preceded by a presentment or formal indictment, but the grand jury may proceed, either upon their own knowledge or ui>on examina- tion of witnesses, to inquire whether a crime cognizable by the court has beei\ committeed, and if so, they may indict upon such evidence. Hale v. Henkel, 201 U. S., 43. 2 — 874 25. In summoning witnesses it is sufficient to apprise them of the names of the parties with resjMxt to whom they will be called to testify without indicating the nature of the charge against them, or laying a basis by a formal indictment. lb. See also Witnesses; and Grand Jury. 26. In an action against (oiporations for violations of the Anti- Trust Law the books of the various defendants both before and after the alleged combination, and the contracts be- tween them, as well as other papers referred to in the opinion, are all matters of material proof, but whether ma- terial or not the testimony must be taken and exceptions can be noted by the examiner and the materiality of the evidence passed on by the court. Nelsmi v. T'nited States. 201 U. S., 92. 2—921 PBELIMINABY INJUNCTIONS: See Injunctions, 28, 31, 34. PBEPAYMENT OF FBEIGHT. See Carriers. PBOCEDUBE. See Pleading and 1»kactice. PBODUCTION OF DOCUMENTS. See Corporations, 12-15, 17, 18, 20-23 ; Witnesses. 8, 16, 20, 23 ; Search, 2-4. PBOFIT AND LOSS. See Damages, 3, 5. PUBLIC POLICY. 1. Pnblic Policy— How Determined.— The public policy of the na- tion must be determined from its constitution, laws, and judicial decisions. U. S. v. Trans-Mo. Ft. Assn., 58 F., 58. 1—186 Case reversed, 166 U. S., 290 (1—648). llio INDEX — DIGEST. FITBIilC POIilCY— Continued. 8. Same— Interstate Commerce.— The act of February 4, 1887, en- titled "An act to regulate commerce," demonstrates the fact that from the date of the passage of that act it has been the public policy of this nation to regulate that part of interstate commerce which consists of transportation, and to so far restrict competition in freight and passenger rates between railroad companies engaged therein as shall be necessary to make such rates open, public, reasonable, uni- form, and steady, and to prevent discriminations and undue preferences. /6. 3. Contracts — ^Fublic Policy. — ^Freedom of contract is as essential to unrestricted commerce as freedom of competition, and one wlMi asks the court to put restrictions upon the right to contract ought to make it clearly appear that the contract assailed is against public policy. /&. Bee Actions and Defenses, 73 ; Combinations, 92, 157. PUBLISHEBS. iSfee Comhinations, etc, 28, 9i». PTJBCHASE AND SALE. See Sale, 4. FBOFItlETABY PATENT MEDICINES. .Sfcf Com ni nations, etc., 29, 160. BAILBOADS See Combinations, otc, 100-111, 180-201. BAILBOAD EMPLOYEES. See Combinations, etc. 117-133. BATES. See Railroads. BEASONABLE DOUBT. Sec Jury, 1. BEASONABLENESS OB UNBEASONABLENESS. -See Combina- tions, ETC, 3, 4, 13, 48, 55, 59. G3, 79, 81, 163. 174; Statutes, 5, 6, 13, 16, 19, 31. BEBATES. /?ee Actions, 49, ; Combinations, etc, 161, 162; Indict- ments, 3, 4. BECEIVEBS. See Courts, 7; Contempt, 1, 2; Combinations, etc., 119, 122. BECOVEBY. See Actions and Defenses, 11. 13, 14, 38, 39, 41, 66. BEMEDIES. I. Suit by Private Individual Must Be at Law. — ^The act " to pro- teolies " (net Cong. July 2, 1890) confers no right upon a private individual to sue in equity for the restraint of the acts forbidden by such statute, an action at law for damages being the only remedy provided for private persons, and the right to bring suits in equity being vested in the dis- trict attorneys of the United States. Pidcock v. Harrington, 64 F., 821. * 1-^77 INDEX ^DIGEST. 1179 BEMEDIES— Continued. 2. Voluntary Associations — Stispension of Members. — Where a member of a voluntary association has been suspended by the directors for nonpayment of a fine for violation of the by-laws, his action to be restored to the privileges of mem- bership is founded upon the contract between himself and the association, which he must either accept in its entirety or repudiate. He does not occupy tlie position of a stranger injured by the acts of cotrespassers. Greer, Mills tC- Co. v. Stoller, 77 F., 1. 1—620 See also Actions and Defenses. BEMOTELY. See Incidentally, Indirectly, and Remotely. BEMOVAL FBOM STATE COITBT. ^S-ee Courts, 16. BEMOVAL OF PBISONEBS. 1. From One State to Another for Trial. — On an application to a Federal court for the removal of a resident of the district to a distant State and district for trial, it is the duty of the court to scrutinize the indictment, disregarding tech- nical defects, but to refuse the warrant if the crime alleged is not triable in the district to which a removal is sought, or if the indictment fails to charge any offense under the law. In re Corning, 51 F., 203. 1—33 2. Habeas Corpus — Jurisdiction of Circuit Courts. — Where a pris- oner, arrested under warrant based upon an indictment in a distant State and district, is held pending an application to the district court for a warrant of removal for ti-ial, the circuit court of the district in which he is held has authority on habeas corpus to examine such indictment, and to re- lease the prisoner, if, in his judgment, the indictment should be quashed on demurrer. In re Terrell, 51 F., 213. 1 — 46 3. Same. — On habeas corpus to release a person held under a war- rant of a United States commissioner to await an order of the district judge for his removal to another district to answer an indictment, it is the right and duty of the cir- cuit court to examine the indictment to ascertain whether it charges any offense against the United States or whether the offense comes within the jurisdiction of the court in which the indictment is pending. In re Greene, 52 F., 104. 1—54 BESTBAINING OBDEBS. See Injunctions, 30. BESTBAINT OF TBADE. ^ee Combinations, etc, in Restraint of Trade, particularly paragi-aphs 1, 3-5, 7-16, 18, 20, 22, 23. 43, 48, 54-77, 79, 81, 91, 107, 108, 133-150, etc. ; mid Statutes, 5-7, 10, 11, 13, 17, 19, 21-24. 26, 28, 31, 35. 36, 43, 44, 48, 49. 1180 INDEX — ^DIGEST. BIOHT OF ACTIOM. See Actions and Defenses, 9, 57. BUBBER TIBES. ^ee Combinations, etc., 99. BX]XES OF LABOB UNIONa See Combinations, etc.. 117. 1. Yalidity of Sale. — ^The sale and transfer by a corporation of Its property and good will to another corporation, where such sale was within its powers, can not be repudiated on the ground that the purchaser acquired the property for tht purpose of obtaining a monopoly of the business and in imrsuamt* of an illegrni combination in restraint of trade Metcalf V. Amen School Furniture Co., 122 F., 115. 2 — 234 t. A contract for sale of vessels, even if they are engaged in inter- state commerce, is not necessarily void because the vendors agree, as is ordinary In ease of sale of a business and its good will, to withdraw from business for a specffied period. VimhimtL t(-r., Packet Co. v. Bay, 200 U. S., 170. 8— fiST 3. Contract for Sale of Goods by Member of Combination.— The act of July 2, 1890, section 1 (26 Stat, 209). known as the **8heiinan Anti-Trust Act," does not invalidate or prevent a recovery for the breach of a collateral contract for the manufacture and sale of goods by a member of a combination fonued for the purpose of restraining interstate trade in such goods. Hadleif Dean Plate Glass Co. v. Highland Glass Co., 143 F., 242. »— 995 4. The transaction between the complainants and the Northern Securities Company by which the former parted with and delivered to the latter, as a holding corporation, certain shares of the stock of the Northern Pacific Railway Com- pany and received in exchange certain other shares of the Securities Company stetitors by fixing the prices of its goods to those who did • not thus refrain so high that their purchase was unprofit- able, while it reduced the prices to those who declineti to deal in the wares of its competitors so that the purchase of the goods was profitable to them. The plaintiff ai)plied to purchase, but refused to refrain from handling the goods of the cori)oration's competitors, and sued it for damages caused by the refusal of the defendants to sell their couunod- ities to liim at prices which would make it profital>le for him to buy them and sell them again. Held, the restriction of their own trade by the defendants to those purchasers who declined to deal in the goods of their competitors was not violative of the Anti-Trust Act. Whitwell v. Continental Tobacco Co., 125 F., 454. 2—271 10. Same.— The owner of goods may dictate the prices at which he will sell them, and the damages which are caused tn 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. * j^ See also Combinations, etc., 18. 8EABCH AND SEIZUBE. 1. Unreasonable Searches— Subpoena Duces Tecum— Eights of an Agent. — A suhpwna duces tecum commanding the secretary and treasurer of a corporation supposed to have violated the Anti-Trust Act to testify and give evidence before the grand .jury, and to bring with him and produce numerous agi-ee- ments, letters, telegrams, reports, and other writings, de- 1182 INDEX — DIGEST. SEARCH ANB SEIZVBE— Continued. scribecl generieally, in effect including all the correspondence and documents of his corporation originating since the date of its organization, to which nineteen other named corpora- tions or i>ersons were iiarties, for the purpose of enabling the district attorney to establish a violation of such act on the part of the witness' principal, constituted an unreasonable search and seizure of papers, prohibited by Fourth Amend- ment to the Constitution. In re Hale, 139 F., 49C. 2—804 2. Same. — A corporation charged with a violation of the Anti-Trust Act of July 2, 1890, is entitled to immunity under the Fourth Amendment to the Constitution from such an unreasonable search and seizure as the compulsory production before a grand jury, under a subpoena duces tecum, of all under- standings, contracts, or correspondence between such cor- poration and six other comiianies, together with all reports and accounts rendered by such companies from the date of the organization of the corporation, as well as all letters received by that corporation since its organization, from more than one dozen different companies, situated In seven different States. Hale v. Henkel, 201 U. S., 43. 2—874 3. The search and seizure clause of the Fourth Amendment was not intended to interfere with the power of courts to compel the production upon a trial of documentary evidence through a suhpmia duces tecum. J&. 4. The protection against unreasonable searches and seizures af- fonled by the Fourth Amendment tothe Constitution can not ordinarily be invoked tt> justify the refusal of an officer of a corporation to produce its books and papers in obedience to a stihitffiia (hicen fpcimi, issued in aid of an investigation by a gi-aud juiy of aa alleged violation of the Anti-Trust Act of July 2. 189(^ by such corporation. /&. 5. In a suit in equity brought by the United States to enjoin the carrying out of a contract or combination in restraint of interstate commerce, under the act of 1890, there can be no seizure of goods in course of transportation pursuant to the unlawful contract. Such seizure can only be made under the sixth section of the act, which authorizes seizures and condemnation by like proceedings to those provided in cases of property imported into the United States contrary to law. U. S. X. Adfhfston Pipe ct Steel Co., 85 F., 271. 1—773 SHINGLES. See Combinations, etc., 32, 211, 212. SOUTH CABOLINA DISPENSABY LAWS. See Lowemtein v. Evans, 69 F., 908 < 1—598). SPECIFIC PEBFOBMANCE. ^ee Contracts, 7. INDEX — DIGEST. 1183 SPECULATIVE DAMAGES. See Damages, 2. STATES. 1. Bight to Create Corporations — Interstate Commerce. — ^A State can not invest a corporation organized under its laws with the power to do acts in the corporate name which would operate to restrain interstate commerce. C7. S. v. Northern Securities Co., 120 F., 721. 2—216 2. Same. — No State can, by merely creating a corporation, or in ^ any other mode, project its authority into other States, so as to prevent Congress from exerting the power it possesses under the Constitution over interstate and international commerce, or so as to exempt its corporation engaged in interstate conmierce from obedience to any rule lawfully established by Congress for such commerce; nor can any State give a corporation created under its laws authority to restrain interstate or international commerce against the will of the nation as lawfully expressed by Congress. Every corporation created by a State is necessarily subject to the supreme law of the land. Northern Securities Co. v. United States, 193 U. S., 197 (Harlan, Brown, McKenna, Day). 2—341 8. Bight to Create Corporations — Injunction in Northern Securi- ties Case no Invasion. — The enforcement of the provisions of the Anti-Trust Act of July 2, 1890 (26 Stat., 209), by a Federal court decree enjoining a corporation organized m pursuance of a combination of stockholders in two com- peting interstate railway companies for the purpose of ac- quiring a controlling interest in the capital stock of such companies, * from exercising the power acquired by such corporation by virtue of its acquisition of such stock, does not amount to an invasion by the Federal Government of the reserved rights of the States creating the several cor- porations. Northern Securities Co. v. United States, 193 U. S., 197 (48 L. ed., 679). 2—342 4. Jurisdiction of Federal Courts. — A State is not a citizen within the meaning of the provisions of the Constitution or acts of Congress regulating the jurisdiction of the Federal courts. Minnesota v. Northern Securities Co., 194 U. S., 48. 2 — 533 5. Same. — A State can not maintain an action in equity to re- strain a corporation from violating the provisions of the act of July 2, 1890, on the ground that such violations by decreasing competition would depreciate the value of its public lands and enhance the cost of maintaining its public institutions, the damages resulting from such violations being remote and indirect and not such direct actual injuiy as is provided for in section 7 of the act. /&. 1 184 INDEX — DIGEST. STATES— Continued. 6. State Corporations — Power of Congress. — C'ougreHs has no au- thority, under the fonuuew'© clause or any other provision of the Constitution, to limit the right of a corporation cre- ated liy a State in the acquisition, control, and disposition of property in the several States, and it is immaterial that such pi*oi>erty, or the products thereof, may become the sub- jects of interstate ccjuunerce; and it is apparent that by the act of July 2, 1890, in relation to monopolies, Congress did not intend to declare tliat the acquisition by a State conioration of so large a part of any species of proi^erty as to enable the owners to w>ntrol the traffic therein among the several States constituted a criminal offense. In re Greene. 52 F., 104. 1 — 55 7. State Corporations— Interstate Commerce— Power of Congreu.— Franchises of a corfmratlon chartered by a State are. so far as they involve rpu^stlons of interstate commerce, exercised in subordination to the power of Congress to regulate such commerce. While Congress may not have general visita- torial power over State coriM>ration8, its powers in vindica- tion of its own laws are the same as if the corporation had been created by an act of Congress. Hale v. Henhel, 201 U. 8., 4X a-»74 i. state courts are without jurisdiction of a suit to recover dam- ages under section 7 of the Federal Anti-Trust Act of 1890. Locttc V. Laiclor, \m F., «». 8—563 fl; A State is neither a " [person " nor a ** coiiwration," within the meaning of the Anti-Trust Act of 1890, and the provisions of that act are not applicable to the case where the State by its laws assumes a monopoly of the traffic in intoxicating liquors. LoireiiHtein v. Evaim, 69 F., 008. 1 — 598 10. Where an action is brought against the officials of a State under s«iction 7 of the Anti-Trust Law of July 2. 1800, to recover damages for acts done under authority of a State statute which gives the State an entire monoiKily of the traffic in intoxicating liquors (act S. C, Jan. 2, 1895). the State itself is a necessary party thereto, and conseersons and property. V. 8. V. Trans-Mo. Ft. Assn., 166 U. S., 290. 1—648 5. Act Applies to All Contracts in Restraint of Interstate or For- eign Commerce — Not Confined to Unreasonable Restraints. The prohibitory provisions of the said act of July 2, 1890, apply to all contracts in restraint of Interstate or foreign ' trade or commerce without exception or limitation; and are not confined to those in which the restraint is unreason- able. j^ 11808— VOL 1—06 M ^76 1186 INDEX^ — DIGEST. STATUTES— Coiitiime&easonableness of Restraints Im- material.— The act of Congress Is aimed against all restraints of» interstate commerce, and its purijose is to permit com- merce between tlie States to flow in its natural channels, unrestricted by any combinations, contracts, conspiracies, or monopolies whatsoever. The reasonableness of the restric- tions in a given case is immaterial. V. 8. v. Hopkins, 82 F., 529. 1_725 Reversed, 171 U. S., 579 (1—941). 7. Test of Validity of Contract or Combination under Anti-Trust Act.— The test of the violation of the Anti-Trust Act of July 2, 1890 (26 Stat. 209, c. 647). by a contract or combina- tion, is its effect upon competition in commerce among the States. If its necessary effect is to stifle or to directly and substantially restrict interstate commerce, it falls under the ban of the law, but if it promotes, or only incidentally or indirectly restricts, competition, while its main purpose and chief effect are to promote the business and increase the trade of the makei-s, it is not denounced or avoided by that law. PhiUips v. lola Portland Cement Co., 125 F., 59y. »— 284 8. The Sherman Act of July 2, 1890, is not intended to affect contracts which have only a remote and indirect bearing on conmieree between the States. Field v. Barber Asphalt Paving Co., 194 U. S., 618. 2—665 i. The Anti-Tnist Act of July 2. 1800 (20 Stnt, 209), does not apply to a contract or combination relating to the business of manufacturing within a State. Robimton v. Suburban Brick Co., 127 F., 804. 2—312 10. The act of July 2, 1890, commonly known as the "Anti-Trust Act" does not, and could not constitutionally, affect any monopoly or contract in restraint of trade, unless it inter- feres directly and substantially with interstate commerce, or commerce with foreign nations. I. S. v. Addystmi Pipe 4 Steel Co., 78 F., 712. 1—6.30 11. Any agreement or combination which directly operates, not alone upon the manufacture, but upon the sale, transporta- tion, and delivery of an article of interstate commerce by preventing or restricting its sale thereby regulates interstate commerce to that extent, and thus trenches upon the power of the national legislature and violates the statute. Addys- ton Pipe d Steel Co. v. U. S., 175 U. S., 211. 1—1009 12. Effect of Anti-Trust Law upon Contracts in Restraint of Trade which at Common Law were Not Unlawful.— The effect of the Anti-Trust Law of 1890 is to render contracts in re- straint of trade, as applied to interstate commerce, unlaw- ful in an affirmative or positive sense, and punishable as a INDEX — DIGEST. 1187 STATUTES— Continued. I. Act of 1890-Continued. misdemeanor, and also to create a right of civil action for damages in favor of persons injured thereby, and a remedy by injunction in favor both of private persons and the public against the execution of such contracts and the main- tenance of such trade restraints. U. S. v. Addystmi Pipe c6 Steel Co., 85 F., 271. ^_^^.^ 18. Test of Legality.— The Anti-Trust Act of July 2, 1890 (26 Stat 209), declaring all contracts and combinations illegal if in restraint of trade or commerce among the States, does not leave to the courts the consideration of the question whether the restraint is or is not unreasonable and such as would have rendered the contract invalid at common law. The only question in each case where the validitv of a contract or combination under the law is involved is whether or not its necessary effect is to restrain interstate commerce. Ches- apeake d- Ohio Fuel Co. v. U. S., 115 F., 610. 2—151 14. Same.— The test of the violation of the Anti-Trust Act of July 2, 1890 (20 Stat, 209), by a contract or combination is its effect upon competition in commerce among the States If its necessary effect is to stifle or to directly and substan- tially restrict interstate commerce, it falls under the ban of the law, but if it promotes, or 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 makers, it is not denounced or avoided by that law. Phillips V. lola Portland Ceme^it Co., 125 F., 593. (See also Combinations, etc., 9-15.) 2— '>84 15. Construction— Act Includes Every Combination which Directly and Substantially Restricts Interstate Commerce.— The gen- erality of the language used in the Anti-Trust Act of r890 (act July 2, 1890, 26 Stat, 209), declaring illegal "every contract, combination, or conspiracy in restraint of trade or commerce among the several States or with foreiga nations," indicates tlie purpose of Congress to include in the prohibition every combination which directly and substan- tially restricts interstate commerce, whatever its form U S. V. Northern Securities Co., 120 F., 721 2— *>15 16. Same.-The Anti-Trust Act (act July 2, 1890, 26 Stat, 209) Ip- plies to interstate carriers of freight and passengers, and any contract or combination which directly and substantially restricts the right of such a carrier to fix its own rates in- dependently of its natural competitors, places a direct re- straint upon interstate commerce, in that it tends to prevent competition, and is in violation of the act, whether the rates actually fixed be reasonable or unreasonable. lb 17. Saftie.-The Anti-Trust Act of July 2, 1890, embraces and de^ Clares to b- illegal every contract, combination, or con- 1188 INDEX — DIGEST. STATUTBS— Continued. I. Act of 1890 — Continued. 18 19. 20. 81. 3E3f> 84. 85. spiracy, in whatever form, of whatever nature, and whoever may be parties to it, which directly or necessarily o^ierates in restraint of trade or commerce among the several States or with foreign nations. Northern Securities Co. v. United States, 193 U. S., 197. (Harlan. Brown, McKenna, Day.) 2—339 That act has no reference to the mere manufacture or pro- duction of articles or commodities within the limits of the several States. /&. The act is not limited to restraints of interstate and inter- national trade or commerce that are unreasonable in their nature, hut embraces all direct restraints, reasonable or unreasonable, imposed by any combination, conspiracy, or monopoly upon such trade or commerce. /&, Bailroad carriers engaged in interstate or international trade or commerce arc embraced by the act. Jh, Combinations, even among private manufacturers or dealers, whereby interstate or international commerce is restrained, are equally embraced by the act. /ft Every combination or conspiracy which would extinguish com- petition between otherwise competing railroads, engaged in interstate trade or commerce, and which would in that way restrain such trade or commerce, is made illegal by tho act. 76. 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 com- merce. /&. The act of July 2, 1890, was leveled, as appears by its title, 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 decisions at common law had affirmed were reasonable and ought to be upheld. Northern SecuHties Co. v. United States, 193 U. S., 197. (Brewer, concurring.) 2 — 341 The general language of the act is limited by the power which each individual has to manage his own property and deter- mine the place and manner of its investment. Freedom of action in these respects is among the inalienable rights of every citizen. /^ In determining whether or not a combination is in violation of the Federal Anti-Trust Law, as in restraint of interstate commerce, it is immaterial that such is not its ultimate ob- ject, which is in most cases to increase the trade and profits of the parties to such combination ; nor is it material to as- certain what proportion the resulting restraint of inter- INDEX — ^DIGEST. 1189 STATUTES— Continued. I. Act of 1890-Continued. state commerce bears to other results. The true inquiry it whether it tends directly to appreciably restrain interstate trade, and, if it does, it is within the statute, although such effect may not be so considerable as its other effects. Ellis V. Inman, Poulsen & Co., 131 F., 182. 2—577 27. The statute under review (act of July 2, 1890) is a legitimate exercise of the power of Congress over interstate commerce, and a valid regulation thereof. U. 8. v. Joint Traffic Assn., 171 U. S., 505. 1— «69 88. Section 1 of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), makes a distinction between a contract and a combination or conspiracy in restraint of trade. Rice v. Standard Oil Co., 134 F., 464. 2_633 89. The Interstate Commerce Act and the act known as the " Sher- man Anti-Trust law" are separate and independent acts, not germane in character and purpose ; and therefore juris- diction in the circuit court of the United States over a bill in equity to enjoin a railroad company from granting re- bates to favored shippers can not be maintained upon the ground that such act of the railroad company is a monopoly within the meaning of the second section of said Anti-Trust Act (act July 2, 1890, 26 Stat, 209). United States v. Atchison, T. d S. F. Ry. Co., 142 F., 176. 2—831 30. Acts done under an agreement legal when made, but which be- came illegal on the passage of the act of July 2, 1890, are done in violation of that act. U. S. v. Tra/ns-Mo. Ft. Assn., 166 U. S., 290. 1—669 81. 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 competition. Restraint of trade is not dependent upon any consideration of reasonableness or unreasonableness in the combination averred, nor is it to be tested by the prices that result from the combination. U. S. v. Swift & Co., 122 F., 529. 2—237 32. The Anti-Trust Act should have a reasonable construction- one which tends to advance the remedy it provides and to abate the mischief at which it was leveled. Whitwell v. Continental Tobacco Co., 125 F., 454. 2—271 83. Scope of the Statute.— The words " trade " and " commerce," as used in the Anti-Trust Act of 1890, are synonymous. The use of both terms in the first section does not enjarge the meaning of the statute beyond that employed in the con- mon-law expression " contract in restraint of trade," as they are analogous to the word " monopolize," used in the second section of the act U. S. v. Patterson, 55 F., 605. 1—133 84. Same.— The word "monopolize" is the basis and limitation of the statute, aud hence an indictment must show a conspiracy 1M»0 STATUTES— Continueti INDEX — DIGEST. I. AtT OF 1890— Continued. in restraint by engrossing or monopolizing or grasping the market. It is not sufficient simply to allege a purpose to drive certain competitors out of the field by violence, annoy- ance, intimidation, or otherwise. Ih, 85. Scope of the Statute— Conspiracy.— The act of July 2. 1890 (2« Stat, 209), section 1, declaring illegal "every contract, com- bination in the form of trust or otherwise, or conspiracy " iu restraint of trade or comniert*e among the States or with foreign nations, is not aimed at capital* merely and combina- tions of a contractual nature, which l>y force of the title, "An act to protect trade and commerce against unlawful re- straints and monopolies," are limited to such as the courts have declared unlawful, the words " in restraint of trade " having, in connection with the words " contract " and " com- bination," their c^mnion-latw significance, but the term *' conspiracy " is used iu its well-settled legal meaning, so that any restraint of trade or commerce, if to be accom- plished by conspiracy, is unlawful. IJ. ii. v. Debs, *J4 F.. 724. 1 — 322 86. Same — Construction. — The construction of the statute is not affected by the use of the phrase "in restraint of trade," rather than one of the phrases " to injure trade ' or " to restrain trade." /ft. 87. Same. — The word ''commerce," in the statute, is not synony- mous with " trade," as used in the common-law phrase " re- straint of trade," but has the meaning of the word in that clause of the Constitution which grants to Congress power to regulate interstate and foreign commerce. /ft. 88. Supreme Court Does Not Bissent from Conclusions in V. S. ▼. Debs.— The court enters into no examination of the act of July 2, 1890 (21 J Stat.. 209), on which the circuit wurt mainly relied to sustain its jurisdiction; but it must not be understood that it dissents from the conclusions of that court in reference to the scope of that act, but simply that it prefers to rest its judgment on the broader ground discussed in Its opinion, l)elieving it important that the principles underlying it should be fully stated and fully aflirmed. in re Debs, 158 U. S., 564. 1—565 89. While the primary object of the Anti-Trust Act of 1890 was doubtless to prevent the destruction of legitimate and healthy competition in interstate commerce by the engross- ing and monopolizing of the markets for commodities, yet its provisions are broad enough to reach a combination or conspiracy that will interrupt the transportation of such commodities and persons from one State to another. U. 8. V. WorJcinffmen*a Amalgamated Council, 54 F., 995, cited. U. 8. V. Cassidp, 67 F., 698. 1—452 INDEX — ^DIGEST. 1191 STATUTES— Continue*!. I. Act of 1890 — Contiiuie«l. Section 1. 40. Conspiracy in Eestraint of Interstate Commerce. — A combina- tion by railroad employees to prevent all the railroads of a large city engaged in carrying the United States mails and in interstate commerce from carrying freight and pas- sengers, hauling cars, and securing the services of persons other than strikers, and to induce persons to leave the service of such railroads, is within act of July 2, 1890, sec- , tion 1, which provides that every contract, combination in the form of trust or otherwise. " or conspiracy in restraint of trade or commerce " among the States is illegal. U. 8. v. Elliott, 64 F., 27. 1—311 41. Same.— Act of July 2, 1890 (26 Stat., 209), section 1, is not aimed at capital merely and combinations of a contractual nature, which by force of the title, "An act to protect trade and connnerce against unlawful restraints and monopolies," are limited to such as the courts have declared unlawful. U. 8. V. Dels, m F., 724. 1—322 42. Same. — The term " conspiracy " in section 1 of the act of July 2, 1890 (26 Stat, 209), is used in its well-settled legal meaning, so that any restraint of interstate trade or com- merce, if accomplished by conspiracy, is unlawful. /ft. 43. What Contracts, Combinations, or Conspiracies Violate Anti- Trust Act. — Every contract, combination or conspiracy the necessary effect of which is to stifle or to directly and sub- stantially restrict comi>etition in connnerce among the States is in restraint of interstate commerce, and violates section 1 of the act of July 2, 1890 (26 Stat, 209). Whitm'll v. Continental Tobacco Co., 125 F., 454. 2—271 44. What Acts, Contracts, and Combinations Do Not Violate Anti- Trust Act. — Acts, contracts, and combinations which promote, or only incidentally or indirectly restrict, competition in commerce among the States, while their main purpose and chief effect are to foster the trade and increase the business of those who make and operate them, are not in restraint of interstate commerce or violative of section 1 of the act of July 2, 1890 (26 Stat., 209). /ft. 46. Section 1 of the Sherman Anti-Trust Act of July 2, 1890 (26 Stat, 209), makes a distinction between a contract and a combination or conspiracy in restraint of trade. Rice v. Standard Oil Co., 134 F., 464. 2—mS 46. Contract for Sale of Goods by Member of Combination. — ^The act of July 2, 1890, section 1 (26 Stat, 209), known as the " Sherman Anti-Trust Act," does not invalidate or prevent a recovery for the breach of a collateral contract for the manufacture and sale of goods by a member of a combination 1192 INDEX — ^DIGEST. STATUTES— Continued. I. Act of ISW— Continued, formed for the purpose of restraining interstate trade In such goods. Hadley Dean Plate Glass Oo. v. Highland Glass Co., 143 F., 242. a— 995 See also Inijictmemts, 5* Section 2. 47. Monopolies. — ^To oonstitute the offense of " monopolizing, or attempting to monopolize," trade or commerce among the States, within the meaning of section 2 of the Anti-Trust Act of 1890, it is necessary to acquire, or attempt to acquire, an exclusiTe right in such commerce by means which will prevent others from engaging therein. /» re Greene, 52 F., 104. 1_55 4S. Every attempt to monopolize a part of interstate commerce, the necessary effect of which is to stifle or to directly and sub- stantially restrict competition in commerce among the States, violates section 2 of the act of July 2, 1890 (26 Stat., 209). WhUwefl V. Continental Tobacco Co., 125 F., 454. 2—271 49. Same. — ^Attempts to monopolize a part of commerce among the States which promote, or only incidentally or indirectly re- jitrict, competition in interstate commerce, while their main purpose and chief effect are to increase the trade and foster the business of those who raalie them, were not intended to be, and were not, made illegal or punishable by section 2 of the Anti-Tnist Act of July 2, 1890 (c. 647, 26 Stat, 209), because such attempts are indispensable to the existence of any competition in commerce among the States. /&. Sec also iNDicx^rEXTs, 1; Monopoly. • Section |* 50. Power of Congress to Authorize Injunction.— Act of July 2, 1890, section 4, which provides that the circuit courts of the United States have jurisdiction to restrain combinations and conspiracies to obstruct and destroy interstate com- merce, before such objects are accomplished, is not void for want of power in Congress to nuthorize such proceedings. U. S, V, Elliott, 64 F., 27. 1—311 51. Oovernment Has Power to Bring Suit.— The fourth section of the act of 1890 invests the Government with full power and authority to bring suit against the Trans-Missouri Freight Association : and, if the facts alleged are proved, an injunc- tion sliould imie. l. is. v. Tra>i>i-Mo, Ft. Assn., 166 U. S., 290. 1_P^9 52. Who May Sue to Restrain.— The intention of the Anti-Trust Act of July 2, 1890 (26 Stat.. 209), was to limit direct pro- ceedings in wiuitj' to prevent and restrain such violations of the Aiiti-Tnist Art :is ( anse injury to the general public, INDEX — ^DIGEST. 1193 STATUTES— Continued. I. Act of 1890— Continued. or to all alike, merely from the suppression of competition in trade and commerce among the several States and with foreign nations, to those instituted in the name of the United States, under section 4 of the act, by district attor- neys of the United States, acting under the direction of the Attorney-General; thus securing the enforcement of the act, so far as such direct proceedings in equity are con- cerned, according to some uniform plan, operative through- out the entire country. Minnesota v. Northern Securities Co., 194 U. S., 48. 2—533 53. The right to bring suits for injunction under section 4 of the act of July 2, 1890 (26 Stat, 290), is limited to suits insti- tuted on behalf of the Government. Greer, Mills d Co. v. Stoller, 77 F., 1. 1—620 54. Although the act of July 2, 1890, contains criminal provisions, tlie Federal court has power under section 4 of the act in a suit in equity to prevent and restrain violations of the act, and may mold its decree so as to accomplish practical re- sults such as law and justice demand. Northern Securities Co. V. United States, 193 U. S., 197. 2—339 56. Eestraining Order— Notice.— Under section 4 of the Anti-Trust Law of July 2, 1890, a restraining order may be issued without notice, under the circumstances sanctioned by the established usages of equity practice In other cases. U. S. V. Coal Dealers* Assn. of Cal, 85 F., 252. 1 — 749 56. Injunction. — A combination whose professed object Is to ar- rest the operation of the railroads whose lines extend from a gi'eat city Into adjoining States until such roads accede to certain demands made upon them, whether such demands are In themselves reasonabe or unreasonabe, just or unjust, is an unlawful conspiracy In restraint of trade and com- merce among the States, within the act of July 2, 1890, and acts threatened In pui-suauce thereof may be restrained by injunction under section 4 of the act. V. 8. v. Elliott, 62 F., 801. 1— 2f2 See also Injunctions, 9, 16, 17, 21. Section 5. 67. Injunction Order— Persons Not Named in Bill. — Under act of July 2, 1890, section 5, an Injunction order In an action to enjoin an illegal conspiracy against Interstate commerce may provide that it shall be in force on defendants not named in the bill, but who are within the terms of the order, where it also provides that it Is operative on all persons acting in concert with the designated conspirators, though not named In the writ, after the commission of some act by 1194 IHDEX — DIGEST. STATUTES— Continued. I. Act of 1890 — Continued. tliem In furtherance of tlie conspiracy, and service of the writ on them. U. S, v. EUwtt. (H F.. 27. 1—311 18. llie authority given by section 5 of the act of July 2, 1890 (26 Stat., 290), to hrlng in nonresidents of the district can not be availeil of in private suits, and the court can acquire no jurisdiction over them. Greer, Mills it Co. v. Poller, "7 F., 1. 1—620 See aim Injunctions, 18. Section 6, 59. Forfeiture of Property.— The provision of act of July 2, 1800, section 6, for forfeiture of " any proi3erty owned under any contract or by any combination, or pursuant to any con- spiracy (and l>eing the subject thereof) mentioned in this act, and being in the course of transportation fi-om one State to another or to a foreign country," does not imply that only cases in which property shall be found subject to forfeiture shall be deemed within the scope of the act. U, S. V. Debs, 64 F., 724. 1—322 00. Seizure of goods in course of transportation pursuant to the unlawful contract can only he made under the sixth section of the act of 1890, which authorizes seizures and condemna- tion by like proceedings to those provided in cases of prop- erty imported into the United States contrary to law. V. S, v. Addyston Pipe iC Steel Co., 85 F.. 271. 1—773 81. There can be no such seizure in a suit in equity Itn.ught by the United States under the act of 1890 to enjoin the carrying out of a contract or combination in restraint of interstate commerce. /b. Section 7. 88. Necessary Parties— Jurisdiction of Federal Courts.— Where a person brings an action under section 7 of the Anti-Trust Law of July 2, 1890, against the officials of a State to re- cover damages for acts done under authority of a State statute which gives the State an entire monoiwly of the traffic in intoxicating liquors (act S. C, Jan. 2, 1895), the State itself is a necessary party thereto, and consequently the Federal courts would have no jurisdiction of the action. Lmcemstein v. rJians, m F., 908. 1—598 83. A municipal corporation engaged in operating water, lighting, or similar plants, from which a revenue is derived, is, in re- lation to such matters, a business coriK>ration, and may maintain an action under section 7 of the Anti-Trust Act of July 2, 1890 (20 Stat., 210), for injury to its business" by reason of a combination or conspinicy in restraint of inter- state trade or commerce made unlawful by suoli act. Ciiy of Atlanta v. Vhnttanooga Foiindri/ d- PiiKirorlfi. 127 F., 23. Affirmed, 203 U. S.. 390. 2—299 INDEX — DIGEST. 1195 STATUTES— Continueii. * 1. Act of 1890— Continued. 64. Same — ^Who Liable. — Every member of such an illegal combina- tion is liable for the injury resulting to the business or property of a plaintiff l)y reason of such combination, re- gardless of any contract relation between the plaintiff and defendant. , ih. 65. Does Not Authorize an Action for Damages by Party to the Trust.— Section 7 of the Anti-Trust Act (26 Stat, 209), giv- ing to any person injuretl by any other i)erson or corpora- tion by reason of anything forbidden in the act the right to recover treble damages, does not authorize an action against i\n alleged trust corrx)ration by one who was a party to its organization and a stockholder therein to recover damages resulting from the enforcement by defendant of rights given it by the alleged unlawful agreement. Bishop v. American " Preservers Co., 105 F., 845. 2 — 51 Affirming 51 F., 272 (1—49). 66. For an action for recovery under this section brought under this section against an association of manufacturers of and dealers in tiles, mantels, and grates, where the party suing was not a member of the association, and the sales were made within the State, see Montague v. Loivry, 193 U. S., 38. 2-327 67. Attorneys' Fees. — The discretion of the trial court under the Anti-Trust Act of July 2, 1890 (26 Stat, 209), section 7, to allow a reasonable attorney's fee to the successful plaintiff in an action brought under that section to recover damages for a violation of the provisions of that act against combina- tions in restraint of trade, is not abused by an allowanc-e of $750, although the verdict was for but $500, where the trial took five days, and from the proof offered it appeared that from $750 to $1,000 would be a reasonable sum. lb. 68. A recovery of the treble damages authorized by the Sherman Anti-Trust Act of July 2, 1890, section 7 (26 Stat., 209), in case of injury sustained by violation of the act, can be had only by direct action, and not by way of set-off in an action brought for the price of goods by a company illegally formed in violation of the act, especially when the State practice does not permit the set-off of unliquidated damages. Con- nolly V. Union Sewer Pipe Co., 184 U. S., 540. 2 — 118 88. A declaration in a suit based on section 7 of the Anti-Trust .\ct of 1890 (26 Stat, 210), to recover damages resulting to plaintiff from a violation of such provision, which alleges in a single count that defendant entered into a " contract, combination, and conspiracy " in restraint of trade, is bad for duplicity. Rice v. Standard Oil Co., 134 F., 464. 2—633 70. The pendency of a suit in a State court can not be pleaded in abatement of an action in a circuit ctnn-t of the United 1196 INDEX^ — ^DIGEST. STATUTBS— Con ti u iied. I. Act or 1890— Continued. States to recover treble damages under section 7 of tlie Anti-Trust Act of July 2, 1890 (26 Stat, 210), since tbe State court is without Jurisdiction to enforce the remedy given by said section, and therefore the same case can not be depending in both courts. Loewe v. Lawlor, 130 F., 633. 2—563 71. Limitation. — ^An action under section 7 of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), providing 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, • ♦ ♦ and shall recover threefold the damages by him sustained," is not an action for a penalty or forfeiture within Revised Statutes, seetion 1047, prescribing a limitation of five years for a " suit or prosecution for any penalty or forfeiture, i)ecuuiary or otherwise, accruing under the laws of the United States," but one for the enforcement of a civil remedy for a private injury, compensatoiy in its purpose and effect, the recovery permitted in excess of damages actually sustained being in the nature of exemplary damages, which does not change the nature of the action, and such action is governed as to limitation by the statutes of the State in which it is brought. dtp of Atlanta v. Chattanooga Foundry tC- Pipe Co., 101 F., 900. 8_lt Affirmed, 127 F., 23 (2—299). Affirmed, 203 U. S., 390. ITOB Combinations, etc., pbohibited, see Combinations, Con- spiBAciEs, Contracts, etc., in Restraint of Trade, II. Fob Combinations, etc., not within the Statute, see Com- binations, Conspiracies, Contracts, etc., in Restraint of Trade, III. Fob Actions, Defenses, or Parties, see Actions and De- fenses; AND Parties. For Jurisdiction of Federal Courts, see Courts. Fob Damages, see Actions and Defenses, 21-42; and Dam- ages. II. Immunity Statutes. Act of February 11, 1893, 72. Immunity of Witnesses.— Act of February 11, 1893 (27 Stat, 443), providing that no person shall be excused from testi- fying In a proceeding growing out of an alleged violation of an act to regulate interstate commerce, approved Feb- ruary 4, 1887, on the ground that his testimony will tend to incriminate him, and that no person shall be prosecuted, etc., on account of anything concerning which lie may tes INDEX — ^DIGEST. 1197 STATUTES— Continued. U. Immunity Statltes — Continued, tify in such proceeding, applies only to proceedings con- nected with the act of February 4, 1887, and does not apply to a prosecution for violation of the act of July 2, 1890 (26 Stat., 209), so as to abrogate in relation thereto the Fifth Amendment to the Constitution, providing that no pei*son shall be compelled in a criminal case to be a witness against himself. Foot v. Buchanan, 113 F., 156. 2 — 104 73. The act of February 11, 1893 (27 Stat, 443), which is supple- mentary to the Interstate Commerce Act, provides that " no 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 or produce evidence, documentary or otherwise, before said Commission or in obedience to its subpoena * * * or in any such case or proceeding." V. S. v. Armour & Co., 142 F., 808. 2—951 Act of February 19, 1903. 74. Immunity of Witnesses— Anti-Trust Act— Inquisitions.— An in- quisition before a grand jury to determine the existence of supposed violations of the Anti-Trust Act was a "proceed- ing" within act of Congress, February 19, 1903 (ch. 708, 32 Stat., 848), providing that no person shall be prosecuted or subjected to any penalty for or on account of any transaction, matter, or thing concerning which he may tes- tify or produce evidence in any " proceeding " under several statutes mentioned, including such Anti-Trust Act. In re Hale, 139 F., 496. 2—804 Act of February 25, 1903. 75. The examination of witnesses before a grand jury concerning an alleged violation of the Anti-Trust Act of Jnly 2, 1890 (26 Stat, 209), is a " proceeding " within the meaning of the proviso to the act of February 25, 1903 (32 Stat, 854-903), 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 in any proceeding, suit, or prosecution under cer- tain named statutes, of which the Anti-Trust Act is one. Hale V. Henkel, 201 U. S., 43. 2—874 76. The right of a witness to claim his privilege against self-in- crimination, afforded by the Fifth Amendment to the Con- stitution, when examined concerning an alleged violation of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), is taken away by the proviso to the act of Febmary 25, 1903 (32 Stat, 904), that no person shall be prosecuted or be sub- jected to any penalty or forfeiture for or on account of any transaction, matter, or thing concerning which he may tes- 1198 STATUTTES— Contimied. INDEX — DIGEST. II. Immunity SxATrTES— Continued. tify or produce evidence in any proceeding, suit, or prosecu- tion under certain named statutes, of whicli tlie Anti-Trust Act is one, which funiislies a sufficient immunity from . prosecution to satisfy the constitutional guaranty, although it may not afford immunity from prosecution in the State courts for the offense disclosed. [See also Nelson v. United States, 201 U. S., 92 (2—920).] lb, 77. Imnmiiity Provision. — The appropriation act of B'ebruary 25, 1903 (32 Stat, 904), making provision for the enforcement of the Interstate Commerce and Anti-Trnst Laws, contains an immunity provision relating to persons giving testimony or producing evidence in any proceeding, suit, or prosecution under said laws. U. S. v. Amiour d Co., 142 F., 808. 2—952 III. Commerce and Labor Act. Act of Februaru i^, J903. 78. The primary purpose of Commerce and Labor Act of February 14, 1903 (32 Stat, 825), was legislative, to enable Congress, by information secured through the work of officers charged with the execution of that law to pass such remed'al legis lation as might be found necessary, and the act must be construed in view of such purpose. United States v. Ar- mour d Co., 142 F., 808. 2—951 79. Commissioner of Corporations — ^Investigation of Corporations or Combinations.— Section 8 of that act (32 Stat., 827), defining the powers and duties of the Commissioner of Corporations, requiring him to make investigation into the organization, conduct, and management of the business of all corporations or combinations engaged in interstate or foreign commerce other than common carriers, and giving him the same powers In that respect as is conferred on the Interstate Commerce Commission with respect to carriers, including the power to subiwena and compel the attendance of witnesses, and to administer oaths and require the protluctlon of documentary evidence, contemplates that he shall proceed by private hearings; and, having such fiowers. a person who appears before him on his demand or by his request, and gives testi- mony or produces documents, although not sworn, is entitled to the same privileges and immunities as though his attend- ance was compelled by subpoena and his testimony given under oath. /b^ 80. Same— Immunity.— Section 6 (32 Stat., 827) requires the Com- missioner of Corporations to investigate all corporations and combinations engaged in interstate or foreign conunerce, exceiit common carriers, and provides that " all the require- ments, obligatu»ns, liabilities, and immunities imiK>sed or INDEX — ^DIGEST. 1199 STATUTES— Continued. III. Commerce and Labor Act — Continued. conferred by said 'Act to regulate commerce ' and by *An act in relation to testimony before the Interstate Commerce Commission ' * * * shall also apply to all persons who may be subpoenaed to testify as witnesses or to produce documentary evidence in pursuance of the authority con- ferred by this section." y^ * IV. Interstate Commerce Act. Act of February 4, 1881. 81. Public Policy.— The act of February 4, 1887, entitled "An act to regulate commerce," demonstrates the fact that from the date of the passage of that act it has been the public policy of this nation to regulate that part of interstate commerce which consists of transportation, and to so far restrict competition in freight and passenger rates between railroad c-ompanies engaged therein as shall be necessary * to make such rates oi>en, public, reasonable uniform, and steady and to prevent discriininations and undue prefer- ences. V. S. V. Trans-Mo. Ft. Assn., 58 F., 58. 1—186 Case reversed, im U- S., 290 (1—648). 82, Not Inconsistent with Anti-Trust Act.— The act of February 4, 1887 (24 Stat., 379), "to regulate commerce," is not incon- sistent with the act of July 2, 3890, as' it does not confer upon competing railroad cumpanies i>ower to enter into a contract in restraint of trade and coumierce, like the one which forms the subject of this suit. U. S. v. Trans-Mo. Ft. Assn., 166 U. S., 290. 1—648 88. Express Companies.— The Interstate Commerce Act does not apply to independent express companies not operating rail- way lines. Southern Ind. Ewp. Co. v. U. S. Exp. Co., 88 F., ^^- . 1—862 V. Revised Statutes. 84. Section 725.— Where an injunction had been issued and served upon the defendants, the circuit court had authority to in- quire whether its orders had been disobeyed, and when it found that they had been disobeyed, to proceed under Re- vised Statutes, section 725, and to enter the order of pun- ishment complained of. In re Debs, 158 U. S., 564. 1—566 85. Section 1047.— An action under section 7 of the Anti-Trust Act of July 2, 1900 (26 Stat, 209), to recover threefold the dam- ages, is not an action for a penalty or forfeiture, within Re- vised Statutes, section 1047, prescribing a limitation of five years for a "suit or prosecution for any penalty or for- feiture, pecuniary or otherwise, accruing under the laws of the United States," but one for the enforcement of a civil 1200 INDEX — DIGEST. STATUTES— Coiiti nueti. V. Revised Statutes — Continued. remedy for a private injury, eompemsatory in its purpose and eifeot, tbe recovery permitted in excess of damages actually sustained being in tlie nature of exemplary damages, whlcli does not change tbe .nature of tbe action, and sucb action is governed as to limitation by tbe statutes of tbe State in wbicb it is brought. Atlanta v. Chai^moga Foundry S Pipe Cfi., 101 F., 900. t— 11 Affirmed, 127 P., 23 («— 290). Affirmed, 203 U. S., 390. 86. Section 8899. — Obstnieting the Maili. — ^Although tbe law, which now appears in Revised Statutes, section 3905, and wbicb malies it an offense to obstruct and retard tbe passage of tbe United States mails, was originally passed prior to tbe in- troduction into the United States of tbe method of trans- porting mail by railroads, and tbe phraseology of tbe law conforms to conditions prevailing at that time (Mar. 3. 1825), yet it is equally applicable to the modern system of conveyance and protects alike tbe transportation of the mail by the " limitel express " and by the old-fashioned stage- coach. U. S. V. Cassidy, 67 F., 098. 1—449 87. Same. — Tbe statute applies to all persons who " knowingly and willfully" obstruct and retard the passage of the mails or the carrier carrying tbe same; that is, to those who Icnow that tbe acts performed, however innocent they may other- wise be, will have tbe effect of obstructing and retarding the mail, and who perform the acts with the intent that such shall be their operation. D'. 8. v. KirJty^ 7 Wall., 485, cited. /». 88. Same. — ^The statute also applies to persons who, having in view the accomplishment of other purposes, perform unlawful aett, which have the effect of obstructing and retarding the passage of tbe mails. In such case, an intent to obstruct and retard the mails will be imputed to the authors of the un- lawful act, although tbe attainment of other ends may have been their primary object. U. 8. v. Kirby, 7 Wall., 485, cited. It>. L Section 5440 — Conspiracy. — Onstruing several clauses of the interstate commerce law recited in the opinion with sec- tion 5440 of the Revised Statutes, it follows that a combina- tion of persons, without regard to their occupation, which will have the effect to defeat the provisions of the interstate commerce law, inhibiting discriminations in the transporta- tion of freight and passengers, and further to restrain the trade or commerce of tbe country, will he obnoxious to the penalties therein prescribed. Waterhouse v. Comer, 55 F., 149. 1—119 INDEX — DIGEST. 1201 STATUTES— Continued. V. Revised Statuteh— Continued. 90. Same. — The statute relating to conspiracies to commit offenses against the United States (Rev. Stat, sec. 5440) contains three elements wbicb are necessary to constitute the offense. These are: (1) The act of two or more persons conspiring together; (2) to commit any offense against the United States; (3) the overt act, or the element of one or more of such parties doing any act to effect the object of the con- spiracy. U. S. V. Cassidy, 67 F., 698. 1 449 VI. State Laics. 91. The anti-trust law of Minnesota (Laws 1899, p. 487, c. 359), mailing unlawful any contract or combination in restraint of trade or commerce within the State, is in substantially the same language as the Sherman Anti-Trust Law of July 2, 1890 (26 Stat, 209), and must receive a similar construc- tion. Minnesota v. Northern Securities Co., 123 U. S., 692. a— 246 Decision reversed, 194 U. S., 38. (Circuit court had no juris- diction (2—533). STATUTORY CONSTRUCTION. 1. When Congress adopts or creates a common-law offense, the courts may properly look to the common law for the true meaning and definition thereof, in the absence of a clear definition in the act creating it In re Greene, 52 F., 104. 1—55 8. Where Congress adopts or creates a common-law offense, and in doing so uses terms which have acquired a well-understood meaning by judicial interpretation, the presumption is that the terms were used in that sense, and courts may properly look to prior decisions interpreting them for the meaning of the terms and the definition of the offense where there is no other definition in the act V. 8. v. Trans-Mo. Ft. Assn., 58 F., 58. i_i86 3. Every statute must be read in the light of the general laws upon the same subject in force at the time of its enactment V. S. V. Trans-Mo. Ft. Assn., 58 F., 58. 1—186 4. The Anti-Trust Act should have a reasonable construction — one which tends to advance the remedy it provides, and to abate the mischief at which it was leveled. Whitwell v. Conti- nental Tobacco Co., 125 F., 454. 2—271 6. Debates in Congress are not appropriate sources of information from which to discover the meaning of the language of a statute passed by that body. V. 8. v. Trans-Mo. Ft. Assn., 166 U. S., 290. 1—648 STOCK AND STOCKHOLDERS. See Corpobations, 2-11; Com- BINATIONS, 177-182. 11808— VOL 1—06 M ^76 1202 INDEX — DIGEST. STOCK QITOTATIONS. See Combinations, 177-180. STBIKES. See Combinations, etc., 115, 116, 121-127, 132, 133, 213. SUBPCEIIA DUCES TECUM. See Cobpobations, 12-15 ; Coubts, 22. SU6AB. See B. C. Knight Co, case. Vol. I, pages 250, 258, 379. SUIT. See Actions and Defenses. TELEOBAMS AND TELEPHOITE MESSAGES. See Intebstate COMMEBCE, 33. TESTIMONY. See Witnesses. THBOUGH TBANSPOBTATION. See Cabbiebs. TICKET BBOKEBS. See Combinations, etc., 111. TILES. See Combinations, 33-37. TOBACCO TBUST CASES. Whitwell V. Continental Tobacco Co., 125 F., 454 (2—271). In re Hale, 139 F., 496 (2—804). Hale V. Henkel 201 U. S., 43 (2—874). McAlisier v. Henkeh 201 U. S., 61 (S^— 918). TBANSPOBTATION. See Cabbiebs; and Statutes, 81. TBEBLE DAMAGES. See Actions and Defenses 21-42 ; Statutes, 62-71. TBINIDAD ASPHALT. See Combinations, etc., 214-2HJ. TBUSTS. See Wobdb and Phbases. UNITED STATES. Tlie Government of the United States has jurisdiction over every foot of soil within Its territory, and acts directly upon each citizen. In re Debs, 158 U. S., 564. 1 — 565 See aUo Actions and Defenses, 15-18. UNSEASONABLE SEABCHES. See Seabch and Seizube. WAGES, ETC., OF EMPLOYEES. See Coubts, 8. WALL PAPEB TBUST. See Continental Waix Papeb Co. v. Lewis VoiOHT & Sons Co., 148 F., 939. WITNESSES. I. Incriminating Evidence — ^Protection— Constitution— Statute.— A witness before the grand Jury can not be required, under the Fifth Amendment to the Constitution, to answer as to his participation in and knowledge of a combination to regulate and control the price of cotton seed and the product and price of oil throughout certain States, in violation of the act to protect trade and commerce against unlawful re- straints and monopolies (26 Stat, 209), notwithstanding INDEX — DIGEST. 1203 WITNESSES— Continued. section 860, Revised Statutes, providing that no evidence obtained from a witness by means of a judicial proceeding shall be given in evidence or in any manner used against him in any court in any criminal proceeding, since such sec- tion does not exempt the witness from prosecution for the offense which may he disclosed by his testimony. Foot v. Buchanan, 113 F., 156. 2 — 103 2. Same — Immunity of Witnesses. — Act of February 11, 1893 (27 Stat., 443), providing that no person shall be excused from testifying in a proceeding growing out of an alleged violation of an act to regulate interstate commerce, approved Febru- ary 4, 1887, on the ground that his testimony will tend to incriminate him, and that no person shall be prosecuted, etc., on account of anything concerning which he may testify in such proceeding, applies only to proceedings connected with • the act of February 4, 1887, and does not apply to a prosecu- tion for violation of the act of July 2, 1890 (26 Stat, 209), so as to abrogate in relation thereto the Fifth Amendment to the Constitution, providing that no person shall be compelled in a criminal ca^ to be a witness against himself. lb. 3. Same — Question of Incrimination for Judge to Decide. — Where a witness claims that the answer to a question will tend to incriminate him, it is not for the witness, 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. /f,. 4. Same. — Where a person has already been indicted for an offense about which he is to be examined as a witness, and the questions asked him tend to connect him with such offense, the testimony sought is within the inhibition of the Fifth Amendment to the Constitution, providing that no person shall be compelled in any criminal case to be a witness against hiuiFelf. 6. Same — Assurance of Safety — Relinquishment of Privilege — Can Not Be Compelled. — Where a witness before a grand jury declines to answer certain questions, and is taken before the judge, who assures him that he can safely answer, as his testimony can not be used against him, he is not com- pelled by such assurance to relinquish his constitutional privilege where the answer may tend to criminate him. lb. 8. Same — Contempt — Commitment — Habeas Corpus — Relief. Where a witness is committed for contempt in refusing to answer all of a series of questions, for the reason that the answers would tend to criminate him, and some of the answers would have that tendency, he should not be denied relief on habeas corpus because some of the questions might be safely answered. /^^ 1204 INDEX — DIGEST. WITNESSES— Coutiiiuwi 7. Ijnmiiiiity of Witnessei — ^Anti-Tmtt Aet— laqniiitions. — An In- quisition before a grand Jury to determine the existence of supposed TiolatlouB of ttie Anti-Trust Act was a " proceed- ing " witliln act of Congress of February 19, 1903 (32 Stat., 848), providing that no person shall be prosecuted or sub- jected to any penalty for or on account of any transaction, matter, or thing concerning which he may testify or produce evidence in any " proceeding " under several statutes men- tioned, including such Anti-Trust Act In re Bale, 139 F., 4®^ j^— 804 f. fkmt — ^Unreasonable Starches — Rights of an Agent — Subpoena Bnces Teonm. — ^A subpoena duces tecum commanding the secretary and treasurer of a corporation supposed- to have violated the Anti-Trust Act to testify and give evidence be- fore the grand Jury, and to bring with him and produce numerous agreements, letters, telegrams, reports, and other writings, described generically, in effect including ail the correspondence and documents of his corporation originating since the date of its organization, to which nineteen other named corporations or persons were parties, for the purpose of enabling the district attorney to establish a violation of such act on the part of the witness* principal, constituted an unreasonable search and seizure of pai)er8, prohibited by the Fourth Amendment to the Constitution. ib. 9. Same — ^Habeas Corpus. — Where a subpcena duces tecum was directed to be issued by a circuit judge, and the witness was committed for contempt for failure to obey the same, he would not be discharged on liabeas corpus by another Judge of the same qpnrt, though the latter was of the opinion that the subpoena authorized an unconstitutional search and seizure of private papers. /j. 10. Protection of Witness— Act of February 25, 1903 (32 Stat, 905). —The examination of witnesses before a grand jury conceming an alleged violation of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), is a "proceeding" within the mean- ing of the proviso to the act of February 25, 1903 (32 Stat, 903), that no person shall be prosecuted or be subjected to any penalty or forfeiture for, or on account of, any trans- action, matter, or thing concerning which he may testify or produce evidence in any proceeding, suit, or prosecution under certain named statutes, of which the Anti-Trust Act is one. The word "proceeding" ihonld receive as wide a eonstraction as it necessary to protect the witness in his dis- closures. Hale V. Henkel, 201 U. S., 43. 2-^4 11. The constitutional right of a witness to claim his privilege against self-incrimination, afforded by the Fifth Amendment, INDEX — ^DIGEST. 1205 WITNESSES-( 'ontiiinea. when examined concerning an alleged violation of the Anti- Trust Act of July 2, 1890 (2G Stat, 209), is taken away by the proviso to the act of February 25, 1903 (32 Stat, 904), that no person sliall 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 in any proceeding, suit, or prosecution under certain named statutes, of which the Anti-Trust Act is one, which furnishes a sufficient immunity from prosecution to satisfy the constitutional guaranty, although it may not afford im- munity from prosecution in the State courts for the offense disclosed. • [See also Nelson v. United States, 201 U S 92 (2—920).] ' "j^ 12. The interdiction of the Fifth Amendment operates only where a witness is asked to incriminate himself, and does not apply if the criminality is taken away. 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 sub- sequently indicted, to procure the evidence necessary to maintain his plea. The law takes no account of the practi- cal difficulty which a party may have in procuring his testimony. ,, 13. The difficulty, if any, of procuring the testimony which a person has given on his examination before a grand jury concern- ing an alleged violation of the Anti-Trust Act of July 2, 1890, does not render the immunity from prosecution, or forfeiture, given by the proviso to the act of February 25, 1903,' insufficient to satisfy the guaranty of the Fifth Amendment against self-incrimination. jj^ 14. A witness can not refuse to testify before a Federal grand jury in face of a Federal statute granting immunity from prosecu- tion as to matters sworn to, because the immunity does not extend to prosecutions in a State court. In granting immu- nity, the only danger to be guarded against is one within the same jurisdiction and under the same sovereignty. /ft. 15. The privilege against self-incrimination afforded by the Fifth Amendment is purely personal to the witness, and he can not claim the privilege of another person, or of the corporation of which he is an officer or employee. [To same effect McAUster v. Henkel, 201 U. S., 90 (2—919).] /&. 16. A witness who can not avail himself of the Fifth Amendment as to oral testimony, because of a statute granting him immu- nity from prosecution, can not set it cp as against the production of books and papers, as the same statute would equally jjrant him immunity in respect to matters proved thereby. ., * 1206 INDEX — ^DIGEST. INDEX — DIGEST. 1207 WimESSES— Con t ill iieil . 17. Corporations Can Not Befuse to Answer Unless Protected by Immunity Statute. — While an individual may lawfully re- fuse to answer incriminating questions unless protected by an immunity statute, a corporation is a creature of tbe State, and tliere is a reserved right in the legislature to investigate its contracts and find out whether it has exceeded its powers. 16. 18. Under the practice in this country the examination of witnesses hy a Federal grand jury need not be preceded by a present- ment or formal indictment, but the grand jury may proceed, either upon their own knowledge or upon examination of witnesses, to inquire whether a crime cognizable by the court has been committed, and, if so, they may indict upon such evidence. /&. 19. In summoning witnesses before a grand jury it is sufficient to ^ apprise them of the names of the parties with respect to whom they will be called to testify without indicating the nature of the charge against tlioni, in- laying a basis by a formal Indictment lb. 80. Hale v. Henkel (vol. 2, page 874) followed to the effect that officers and employees of corporations can not, under the Fourth and Fifth Amendments, refuse to testify or produce books of corporations in suits against the coriwrations for violations of the Anti-Trust Law of July 2, 1890, in view of the immunity given by the act of February 25, 1903. Nelson v. Umted States, 201 U. S., 92. 2—920 SI. Witnesses can not by objections to materiality of evidence be relieved from testifying. The tendency or effect of the testi- mony on the issues l>etween the parties is no concern of theirs. . lb. 22. Objections to the materiality of the testimony are not open to consideration on a writ of error sued out by witnesses to review a judgment for contempt entered against them for disobeying an order to testify. 76. 23. Eefusal to Answer or Produce Books — Order of Circuit Court to Answer or be Held in Contempt Not Reviewable by Supreme Court.— In a suit in a circuit court of the United States brought by the United States against corporations for violations of the Anti-Trust Law of July 2, 1890, a wit- ness refused to answer questions or produce books before the examiner on the ground of immateriality, also pleading the privileges of the Fifth Amendment ; the court overruled the objections and ordered the witness to answer the ques- tions and produce the books; an appeal was taken to this court Held, that while such an order might leave the wit- ness no alternative except to obey or be punished for con- tempt it is interlocutory in the principal suit and not a ' WITNESSES— Continued. final order, nor does it constitute a practically independent proceeding amounting to a final judgment, and an appeal will not lie therefrom to this court. Alea^ander v. United States, 201 U. S., 117. 2—945 24. Same — But an Appeal from a Judgment of Contempt is Review- able. — If the witness refuses to obey and the court goes further and punishes him for contempt there is a right of review, and this is adequate for his protection without un- duly impeding the process of the case. I -See also Nelson v. United States, 201 U. S., 92 (2—920).] /6. Cbedibility. See Juby, 2. Immunity. See Immunity. WOODEN WARE. ,8^ee Combinations, etc., 38, 149. WORDS AND PHRASES. 1. " Boycott." — A combination by employees of railway companies , to injure in his business the owner of cars operated by the companies, by compelling them to cease using his cars by threats of quitting and by actually quitting their service, thereby inflicting on them great injury, 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, is a boycott, and an unlawful conspiracy at common law. Thomas v. Cm., N. O. d T. P. Ry. Co., 62 F., 803. 1—267 2. "Commerce." — The word "commerce," in the statute, is not synonymous with " trade," as used in the common-law phrase "restraint of trade," but has the meaning of the word in that clause of the Constitution which grants to Congress power to regulate interstate and foreign commerce. U. S. V. Dehs, 64 F., 724. 1—322 3. Same. — ^The word "commerce," as used in the act of July 2, 1890, to protect trade and commerce against unlawful restraints and monopolies, and in the Constitution of the United States, has a broader meaning than the word " trade." Commerce among the States consists of intercourse and traflic between their citizens, and includes the transportation of persons and property, as well as the purchase, sale, and exchange of commodities. U. S. v. Cassidy, 67 F., 698. 1—452 4. Same. — Commerce is the sale or exchange of commodities, but that which the law looks upon as the bodj^ of com- merce is not restricted to specific arts of sale or exchange. It includes the intercourse — all the .initiatory and inter- vening acts, instrumentalities, and dealings — that directly bring about the sale or exchange. U. S. v. Swift d Co., 122 F., 529. 2—237 1208 INDEX — ^DIGEST. WOBBS AHB PHBABBS-C^iitiiuiwl. «. " Conspiracy."— The term " conspiracy," In section 1 of the act of July 2, 1890 (26 Stat, 209), Is used in its well-settled legal meaning, and any restraint of interstate trade or com- merce, if accomplished by conspiracy, is unlawful. V. 8. v. Debs, 64 F., 724. 1—822 «. i«»e.--A conspiracy consists In an agreement to do something ; tout In the sense of the law, and therefore in the sense of this statute. It must be an agreement between two or more to do, by concerted action, something criminal or unlawful, or, It may be, to do something lawful by criminal or unlawful means. A conspiracy, therefore, is in itself unlawful, and, in so far as this statute is directed against conspiracies in restraint of trade among the several States, it is not necessary to look for the illegality of the offense In the kind of restraint proposed. Any pi-oiK)sed restraint of trade, though It be In itself innocent, if it is to be ac- complished by conspiracy, is unlawful. lb. (1—352) 7. Same. — A conspiracy is a combination of two or more per- sons by concerted action to accomplish a criminal or un- lawful purpose, or some purpose not in itself criminal, by criminal or unlawful means. Pettibone y. U. 8., 13 Sup. Ct. 542 ; 148 U. S., 203, cited. U, 8, v. CaaHdtf, 67 F., 698. 1—449 a Same.— Unlike "combination," "conspiracy" is a term of art. In the Anti-Trust Law It is to be interpreted independently of the preceding words, and an indictment thereunder should therefore describe something that amounts to a conspiracy under the act conformably to the rules of pleading at com- mon law, as perhaps modified by general federal statutes. U. 8, V. Mac Andrews 4 Forbes Co., 149 F., 831. ». " In Eettraint of Trade."— The words *• in restraint of trade," In section 1 of the act of July 2, 1890 (26 Stat, 209), have, in connection with the words "contract," and "combina- tion," their common-law significance, but the term "con- spiracy" is used in its wellsettled legal meaning, so that any restraint of trade or commerce. If to be accomplished by conspiracy, is unlawful. U. 8. v. Debs, 64 F., 724. 1—322 1©. Same.— The construction of the statute Is not affected by the use of the phrase " in restraint of trade," rather than one of the phrases " to injure trade " or " to restrain trade." /&. 11. "MaU Traint."— A mail train is a train as usually and regu- larly made up, including not merely a mail car, but Such other cars as are usually drawn in the train. If the train usually carries a Pullman car, then such train, as a mall train, would include the Pullman car as a part of its regular make-up. Therefore, if such a train Is obstructed or r©. tardeil because it draws a Pullman car. it is no defense that INDEX^ — ^DIGEST. 1209 WOBBS AND PHBASES-Continued. the parties so delaying it were willing that the mail should proceed if the Pullman car were left behind. U. 8. v. Olark Fed. Gas. No. 14805, 23 Int Rev. Rec., 306, followed. V 8 V. Cassidy, 67 F., 698. 1—449 12. Same.— Any train which is carrying mail under the sanction of the postal authorities is a mail train in the eye of the law. -.- 18. « Monopolize."— The word "monopolize" can not be Intended to be used with reference to the acquisition of exclusive rights under Government concession, but that the lawmaker has used the word to mean " to aggregate " or " concentrate " in the hands of few, practically, and, as a matter of fact, and according to the known results or human action, to the ex- clusion of others ; to accomplish this end by what in popular language, is expressed in the word " 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. Amer. Biscuit d Mfg. Co. v. Klotz, 44 F., 724. 1—7 14. "MonopoUzing, or Attempting to Monopolize."— To constitute the offense of " monopolizing, or attempting to monopolize." trade or commerce among the States, within the meaning of section 2 of said act, it is necessary to acquire, or attempt to acquire, as exclusive right in such commerce by means which will prevent others from engaging therein. In re Green, 52 F., 104. ^__^ 15. Monopoly of trade embraces two essential elements: (1) The acquisition of an exclusive right to, or the exclusive control of, that trade; and (2) the exclusion of all others from that right and control. U. 8. v. Trans-Mo, Ft. Assn., 58 F., 58, °** 1 218 le. " Municipal Corporation."— A municipal corporation engaged operating water, lighting, or similar plants, from which a revenue is derived, is, in relation to such matters, a business corporation, and may maintain an action under section 7 of the Anti-Trust Act of July 2, 1890 (26 Stat. 210), for injury to its " business " by reason of a combination or conspira^ in restraint of interstate trade or commerce made unlawful by such act. City of Atlanta v. Chattanooga Foundry c€ PtpeworJts, 127 F, 23. 2—299 17. "More or Le8s."-Where, In a contract for the manufacture and delivery of goods, the statement of quantity is qualified by the words " more or less," these, unless supplemented by language giving them a broader scope, apply only to such accidental or immaterial variations in quantity as would naturally occur in connection with such a transaction. Ha^ ley Dean Plate Glass Co. v. Highland Glass Co., 143 F., 242. 2—994 1210 Il^DEX — DIGEST. WOBBS AWD PHBASES— Continuwl. It. ** Trust"— What 1» commonly termed a "trust" is a species of combiniitioii organized by individuals or corporations for tlie purpose of monopolizing the manufacture of or traffic In various articles and commodities, which were well known and fully understood when the Anti-Trust Act was approved. U, S. V. Northern Securities Co., 120 F., 721, t24. S— 220 o , COLUMBIA UNIVERSITY LIBRARIES This bcxik is due on the date indicated below, or at the expiration of a definite period after the date of borrowing, as provided by the library rules or by special arrangement with the Librarian in charge. DATK BOflllOWCO DATK DUK DATK BOIIIIOWCD 1 ll DATS DUK • i 1 i !! j 1 i 1 ■ Gas(a4a)M«o i 1 COLUMBIA UN VERSITY LIBRARIES 0044258402 D225 Un3944 APR 1 21994 HSH OizSCd OEC 2 b ^95^ [#■ I hi Cfdnmlria (Htittrei«ftp THE UBRARIES . I « %^ FEDERAL ANTI-TRUST DECISIONS CASES DECIDED IN UNITED STATES COURTS AMSme tJNDER. INVOLVING. OR GROWING OUT OP THE ENFORCEMENT OP ii .1 THE ANTI-TRUST ACT OF JULY 2, 1890 (26 Stat., 209) INCLUDING .4. FEW, SQMSjypAt SIMILAR DECISIONS NOT?. 9isEi) .bi-tK :? iii*.VcT • ••«•••-- *'.•• : •• • ••••• •• •• "v' ••• • •• • »•••• •" •• ••• »• • • ••• •• • •••••••• • • 1,900-1906... • • • • • • •• • ." • • • * « •* • • • • • •" • • • * • » • • • PREPARED AND EDITED BY JAMES A. FINCH BY DIRECTION OP THE ATTORNEY-GENERAL VOL.2 ;\ WASHINGTON GOVERNMENT PRINTING OFFICE 1907 r< .AJ> -VJ S \ V"\ a.-'Sa Sk CASES REPORTED. VOLS. 1 ANB a. • • '« • • • • ■ • • • . • • - • • • • • m • • i * « • • • • • ■ • > • ••... ! > • • • • • a • •• • « • • • • •• • • • I • « • • • • • r • • • ..• :•• -•♦• • I A. Booth & Co. V. Davis, 127 F., 875 2—318. 131 F., 31 2—566. Addyston Pipe & Steel Co., U. 8. v., 78 F., 712 1—631. 85 F., 271.. 1-772. 175 U. S., 211... 1—1009. Agler, U. S. v., 62 F., 824 1—294. Alexanderv. United States, 201 U. 8., 117 2—945. American Biscuit & Manfg. Co. v. Klotz, 44 F., 721 1 — 2. American Brake Beam Co. v. Pungs, 141 F. , 923 2 — 826. American Preservers' Co. , Bishop t;. , 51 F, , 272 1 — 49. 105 F., 845 2-51. American School-Fumiture Co. , Metcalf v. , 108 F. , 909 2—75. 113 F., 1020 2—111. 122 F., 115 2—234. Anderson V. United States., 82 F., 998 1—742. 171 U. S.,604 : 1—967. Armour & Co., U. S. v., 142 F., 808 2—861. Atchison, T. & S. F. Ry. Co., Prescott & A. C. Ry. Co. y., 73F.,438 1—604. 84 F., 213.. (note) 1—604. Atchison, T. & S. F. Ry. Co., U. S. v., 142 F., 176 2—831. Barber Asphalt Paving Co., Field r., 117 F., 925 .' 2—192. 194U. S., 618 2-555. Bay (Cincinnati, Portsmouth, Big Sandy and Pomeroy Packet Co. v.), 200 U. S., 179 '. 2—867. Beef Trust cases. See U. S. v. Swift, and U. S. r. Armour & Co. Bement v. National Harrow Co., 186 U. S., 70 2—169. Bishop V. American Preservers' Co. , 51 F. , 272 1 — 49. 105 F., 845 2—51. Blindell v. Hagan, 54 F., 40 1—106. 56 F., 696 1—182. Block V. Standard Distilling & Distributing Co., 95 F., 978 1—993. . Board of Trade v. Christie Grain & S. Co., 116 F., 944 (note) 2—233. 121 F., 608 2—233. 125 F. , 161 (note) 2—233. 198 U. S., 236 2—717. Ill 410232 W CASES REPORTED. Bobbs-Merrill Ca t. Straas, 139 F., 156 2—755 Booth & Co. r. Dftvis,127F., 875 ...........'.. 2—318. 131 F., 31 1....... i— 666. Biicliaiiaii, Foot v., 113 F., 156 ...IIV^I... 2—103, Oamors-McConnell Co. v, McConnell, 140 F. , 412 . : 2—817. 140 F., 987 "''' 2-825.* Carter-Crume Co., Cravens v., 92 F., 479 1—983. Carter-Crume Co. v, Peummg, 86 F., 439 lllll 1—844 ClMiridy, U. 8. t., 67 F., 698 llll.ll.ll... 1-449. Central Coal & Cok© Co. v. Hartman, 111 F., 96.... *'*".".[.. 2—94. Central Railroad and Banking Co. of Ga., Clarke r., 50 F., 838.! 1—17. Charles £. Wiaewall. the, 74 F., 802 1—608. 86 F., 671 .,!!."!!]. 1— 85o! Chattanooga Foundry & Pipe Works, City of Atlanta »., 101 F., 900 2—11. 127 F., 23 2—299. 203 U. a, — (note) 2-299. Chesapeake & O. Fuel Co., U. 8. »., 105 F., 93 2—34. 115 F., 610 2—151. Chicago Wall Paper Mills v. General Paper Co., 147 F., 491 2—1027. Christie Grain & Stock Co., Bd. of Trade v., 116 F., 944 (note) 2—233. 121 F., 608 2—233. 125F., 161. ...(note) 2—233. _ . 198U. 8., 236 2-717. Cincinnati, N. O. A T. P. Ry. Co., Thomas f., 62 F., 803 1-262. Cincinnati, Portsmouth, Big Sandy and Pomeroy Packet Co. i;. Bay, 200U. 8., 179 2—867. City of Atlanta r. Chattanooga Foundry A Pipeworks, 101 F., 909 2—11. 127 F., 23 2-299. ^ ^ ^ 203 U. S. - . . ( note) 2-299. Clarke v. Central Railroad & Banking Co. of Ga., 50 F., 338 .... 1-17. Coal Dealers* Association of Cal., U. 8. r., 85 F., 252 1—749. Comer, Waterhouse r., 55 F., 149 .] 1—119 Connolly, Union Sewer-Pipe Co. w., 99 F., 354 ..!.!"". 1 "... ! 2—1. 184 U. 8., 540 2—118. Continental Tobacco Co., Whitwell t?., 125 F,, 454 2—271 Coming, In re, 51 F., 205 ...III... 1—33. Cravens v. Carter-Oume Co., 92 F., 479 HH l— ggg Davis etal., A. Booth & Co. w., 127 F., 875. 2—318 131 F., 31 .!.!]]]".!!! 2-566 Debs, U. S., r., 64 F., 724 1—322.' Debs, In re., 158 U. 8., 564 lllll.l 1—566 Delaware, L, A W. R. Co. ». Frank, 110 F., 689 2—81 Delaware, L. & W. R. Co. r. Kutter, 147 F., 51 IJ.lll.l.l 2—1021. D. E. Loewe & Co. 17. Lawlor, 130 F., 633 " 2—563 142 F., 216 IVZlll^ 2-854.' CASES REPORTED. V Dennehy V. McNulta, 86 F., 825 1—855. 77 F., 900 (note) 1—856. Dneber Watch Case Mfg. Co. v. Howard Watch and Clock Co., 55 F., 851 1—178. 66 F., 637 1—421. E. C. Knight Co., U. 8. t?., 60 F., 306 1—250. 60 F., 934 1—258. 156 U. 8., 1 1—379. E. Howard Watch & Clock Co., Dueber Watch Case Mfg. Co. r., 55F.,851 1—178. 66 F., 637 1—421. Elliott, U. 8. t'., 62F., 801 1—262. 64F., 27 1-311. Ellis V. Inman, Poulsen & Co., 124 F., 956 2—268. 131 F., 182 2—577. Evans y. Lowenstein, 69 F., 908 1—598. Farmers' Loan & Trust Co. v. Northern Pac. R. Co., 60 F., 803 1—257. Field V. Barber Asphalt Paving C!o., 117 F. , 925 2—192. 194U. 8., 618 2—555. Foot v. Buchanan, 113 F., 166 2—103. Frank (Delaware, L. & W. R. Co. v.), 110 F., 689 2—81. Geiger (Otis Elevator Co. ».), 107 F., 131 2—66. General Electric Co. v. Wise, 119 F., 922 2—205. General Paper Co. v. Chicago Wall Paper Mills, 147 F., 491 2—1027. Gibbs V, McNeeley ( Shingle Trust) , 102 F. , 594 2—25. 107 F., 210 2—71. 118 F., 120 2-194. Grand Jury, In re, 62 F., 840 1—301. Greene, In re., 52 F., 104.. 1—54. Greenhut, U. S. r.,50 F., 469 1—30. Greer, Mills & Co. v. StoUer, 77 F., 1 1—620. Griffin & Shelley Co., U. 8. Consolidated 8. R. Co. v., 126 F., 364. . 2—288. Gulf, G. & 8. F. Ry. Co. v. Miami 8. 8. Co., 86 F., 407 1—823. Hadley Dean Plate Glass Co. v. Highland Glass Co., 143 F., 242. 2—994. Hagan, Blindell r., 54 F., 40 1 loe. 56 F., 696 ; 1-182! Hale, In re., 139 F., 496 2—804. Hale v.Henkel, 201 U. 8., 43 2—874! Harriman v. Northern Securities Co. , 132 F. , 464 2—578. 134 F., 331 2—618. 197 U. 8., 244 2-669. Harrington, Pidcock t., 64 F., 821 1—733. Hartman, Central Coal & Coke Co. v. , 111 F. , 96 2—94. VI CASES REPORTED. Hartman v. John D. Parks & Sons Co., 146 F., 358 2—999. Hench, National Harrow Co. v., 76 F., 667 1—610. 83F., 38 1—742. 84 F., 226 .' 1—746. Henkel, Hale v., 20111. S., 43 2—874. In re Hale, 139 F., 496 2—804. Henkel, McAlister v., 201 U.S., 90 2—919. Highland Glass Co., Hadley Dean Plate Glass Co. r.,143 F., 242 . 2—994. Hopkins, U. 8. v., 82 F., 529 1—725. 84F., 1018 1—748. 171 U.S., 578 1—941. Howaivi Watch & Clock Co., Dueber Watch Case Mf' g Co. t>., 55 F., 851 1—178. 66 F., 637 1—421. In re Coming, 51 F., 2a5 1—33. In re Debs, petitioner, 158 U. S., 564 1—565. U. S. V. Debs, 64 F., 724 1—322. In re Grand Jury, 62 F., 840 1—301. In re Greene, 52 F., 104 1—54. In re Hale, 139 F., 496 2—804. Hale I'. Henkel, 201 U. S., 43 2—874. In re Terrell, 51 F., 213 1—46. Inman, Poulsen&Co., Ellis v., 124 F., 956 2—268. 131 F., 182 2—577. lola Portland Cement Co. , Phillips «;. , 125 F. , 593 2—284. Jayne, Loder r., 142 F., 1010 2—976. Jellico Mountain Coke <& Coal Co., U. S. i., 43 F., 898 1—1. 46 F., 432 1—9. John D. Parks & Sons Co., Hartman t., 145 F., 358 2—999. Joint Traffic Association, U. S. r. , 76 F., 895. 1—615. 89 F., 1020 1—869. 171U. S., 505 1—869. KinseyCo. r. Board of Trade, 198 U. 8., 236 2—717. Klotz, American Biscuit & ManfgCo. r., 44 F., 721 1—2. Knight Co., U. S.t;., 60 F., 306 1—250. 60 F., 934 1—258. 156 U. S., 1 1-379. Kutter, Delaware, L. & W. R, Co. i., 147 F., 51 2—1021. Lawlor, Loewet?., 130 F., 633 2—563. 142 F., 216 2—854! Licorice Paste Trust. See U. S. v. MacAndrews & Forbes Co. Loderv. Jayne, 142 F., 1010 2—976. CASES REPORTED. VII Loewe&Co. v. Lawlor, 130 F., 633 2—563. Loewe et al. V. Lawlor, 142 F., 216 2—854. Lowenstein v. Evans, 69 F., 908 1—598. Lowry v. Tile, Mantel & Grate Ass'n, 98 F., 817 1—995. 106 F., 38 2—53. Lowry, W. W., Montague & Co. v., 115 F., 27 2—112. 193U. S., 38 2—327. McAlisterv. Henkel, 201 U. S., 90 2—918. McConnell, Camors-McConnell Co. v. , 140 F. , 412 2—817. 140 F., 987 2—825. McNeeley, Gibbsv., 102 F., 594 2—25. 107 F., 210 2—71. 118 F., 120 2—194. McNulta, Dennehyt;.,86F.,825 1—855. Metcalf V. American School Furniture Co., 108 F., 909 2—75. 113 F., 1020 2—111. 122 F., 115 2—234. Miami S. S. Co., Gulf, C. & S. F. Ry. Co. v., 86 F., 407 1—823. Milwaukee Rubber Works Co., Rubber Tire Wheel Co. v., 142F.,531 2—855. Mines v. Scribner, 147 F., 927 2—1035. Minnesota v. Northern Securities Co. , 123 F. , 692 2—246. 194U. S., 48 2—533. Montague & Co. V. Lowry, 115 F., 27 2 112. 193U. S., 38 2—327. Moore v. U. S., 86 F., 465 1—815. National Folding-Box & Paper Co. v. Robertson, 99 F., 985 2—4. National Harrow Co. v, Hench, 76 F., 667 1—610. 83 F., 36.... 1—742. 84F.,226 1—746. National Harrow Co. v. Quick, 67 F., 130 1 — 143. 74F., 443 1—608. National Harrow Co. , Bement v. , 186 U. S. , 70 2—169. National Harrow Co., Strait v., 51 F., 819 1—52. Nelson, United States v., 52 F., 646 2—77. Nelson V. United States, 201 U. S., 92 2-920. Northern Securities Co., Harriman r., 132 F., 464 2—587. 134 F., 331 2— 6ia 107 U. S., 244 2—669. Northern Securities Co., U. S. v., 120 F., 721 2—215. 193U. S., 197 2—338. Northern Securities Co., Minnesota r., 123 F., 692 2—246. 194U. S., 48 2--533. Otis Elevator Co. V. Geiger, 107 F., 131 2—66. '*^lft,„ Vni CA8E8 BEPOBTED. Parks, John D. & Sons Co., Hartman v., 146 P., 358 2—999. Patterson, U. 8. t?.,55F., 605 1— 133. 59 F., 280 :.....'.. 1—244. Pteuming, Carter-CromeCo.f., 86 F., 439 ...[..]] 1—844] Phillips V, Portland Cement Co., 125 F., 593 2—284] Pidcockr. Harrington, 64 F., 821 [[[[ 1— 37?] Preacott & A, C. R. Co. v, Atchison, T. & 8. F. Co., 73F.,438 1—604. 84 F., 213. (note) 1—604. PungB, American Brake Beam Co. »., 141 F., 923 2—826. Quick, National Harrow Co. v., 67F., 130 1—130. 74 F., 236 1.* I-6O9] Bice r. Standard Oil Co., 134 F., 464 2—633. Robertson, National Folding-Box & P&per Co. r., 99 F., 985 .. 2—4. Robinson v. Suburban Brick Co., 127 F., 804 2—312. Rubber Tire Wheel Co. w. Milwaukee Rubber Works Co., 142 F., 531 2-855. Scribner, Mines v., 147 F., 927 2—1035. Shingle Trust. *Sec Gibbs v. McNulty. Southern Ind. Exp. Co. v. United States Exp. Co., 88 F., 659... 1—862. 92 F., 1022.. 1—993. Southern Railway Co., Tift »., 138 F., 753 2—733. Standard Distilling & Distributing Co., Block v., 95 F., 978 1—993. Standard Oil Co., Rice t'., 134 F., 464 : 2—633. State of Minnesota v. Northern Securities Co., 123 F., 692 2—246. 194U. a, 48 2—533, Stoller, (Greer, Mills & Co. v.), 77 F.,1 1—620. Strait r. National Harrow Co., 51 F., 819 1—52. Straus, Bobbs-Merrill Co. v., 139 F., 155 2—755. Suburban Brick Co., Robinson t?., 127 F., 804.. 2—312] Swift & Co., U. 8. v., 122 F., 529 2—237] 196U. 8., 375 l..'..'.ll.".. 2— 64l] Terrell, In re, 51 F., 213 i |q Thomas v. On., N. O. & T. P. Ry. Co., 62 F., 803.. .^l^l]]]*]]] 1—266. Tift V. Southern Railway Co., 138 F., 753 2—733. Hie, Mantel & Grate Ass'n, Lowry r., 98 F., 817 .]]] 1— 995] 106F.,38 2—53. Tobacco Trust Cases. See Hale v. Henkel and McAliater t>. Henkel. Trans-Missouri Freight Ass^n, U. S. p., 53 F., 440 1—80. 68F.,58 ....;.'] 1-186. 166U. 8., 290 1—648. CASES REPORTED. IX Union Sewer-Pipe Co. v. Connolly, 99 F., 354 2—1. 184 U. S., 540 2—118. U.S. v. Addyston Pipe & Steel Co., 78 F., 712 1—631. 85 F., 271 1—772. 175U. S., 211 1—1009. U. S. r. Agler, 62 F., 824 1—294. U. S. V. Armour & Co., 142 F., 808 2—951. U. S. V. Atchison, T. & S. F. Ry. Co., 142 F., 176 2—831. U. S. r. Cassidy, 67 F., 698.. 1—449. U. S. V. Chesapeake & Ohio Fuel Co., 105 F., 93 2—34. 115 F., 610 2—151. U. 8. V. Coal Dealers' Association of Cal., 85 F., 252 1—749. U. S. V. Debs, 64F., 724 1—322. In re Debs, 158 U. 8., 564 1—565. U. 8. V. E. C. Knight Co., 60 F., 306 1—250. 60 F., 934 1—258. 156 U. 8., 1 1—379. U. 8. 1'. Elliott, 62 F., 801 1—262. 64F., 27 1—311. U. 8. V. Freight Association. See V. 8. v. Trans-Missouri Freight Association. U. 8. V. General Paper Co. See Nelson v. U. 8., and Alexander V. U. 8. U. 8. V. Greenhut, 50 F., 469 1—30. U. 8. V. Hopkins, 82 F., 529 1—725. 84F., 1018 :.... 1—748. 171 U. 8., 578 1—941. U. S. V. Jellico Mountain Coke & Coal Co., 43 F., 898 1—1. 46 F., 432 1—9. U. 8. V. Joint Traffic Association, 76 F., 895 1—615. 89 F., 1020 1—869. 171 U.S., 505 1—869. U. 8. V. MacAndrews & Forbes Co. (Licorice Paste Trust). De- murrer overruled by Cir. Ct. for Sn. D. of N. Y., Dec. 4, 1906. Opinion not yet published. U. 8. V. Nelson, 52 F., 646 1—77. U. 8., Nelson r., 201 U. 8., 92 2—920. U. 8. V. Northern Securities Co., 120 F., 721 2—215. 193 U. 8., 197 2—238. U. 8. V.Patterson, 55 F., 605 1—133. 59 F., 280 1—244. U. 8. V. Swift & Co., 122 F., 529 2—237. 196 U. 8., 376 2—641. U. 8. V. Trans-Missouri Freight Association, 53 F., 440 1 — 80. 58 F., 58 1—186. 166U. 8., 290 1—648. U. 8. V. Workingmen's Amalgamated Council, 54 F. , 994 1 — 110. 57 F., 85 1—184. U. S,, Alexander!;., 201 U. S.,117 2—945. ^ 0A8E8 EEPOBTED. TJ. 8., Anderson t?., 82 F., 998... * t— 742. 171 n. S., 604 '*........,* 1—967. U. 8., Moore v., 85 F., 465 ' 1—815 V. S. Consolidated 8. R. Co. v. Griffin & Shelley Co., 126 F., 364 . 2—288, U. 8. Exp. Co., Southern Ind. Exp. Co. »., 88 F., 659 * 1—862. 92 F., 1022.....,.".".' 1-992." Waterhouse i». Comer, 55 F., 149 1—119. Whitwell V. Continental Tobacco Co. , 125 F. , 464 .1...... 2—271. Wise, General Electric Co. v., 119 F., 922 ..."."]". 2—205 Wisewall, The Charles E., 74 F., 802 1—802 86 F., 671 .]".]]1^^]*]]!'. 1— 85o! Workingmen's Amalgamated Council, V. 8. »., 54 F., 994 1—110. 57F., 86 1-184. CASES CITED. TOLS. 1 AND 2. A. F. Booth & Co. V. Davis, 127 F., 875... 2—820. Ackennant;. Shelp, 8 N.J. Law 125 2—641. Adamsv. Burke, 17 Wall., 453 2—863. Adams V. Palmer, 6 Gray, 338 2-307. Adams «. New York, 192 U. S., 685 2—903. Adamsv. Woods, 2Cranch, 337 1—353. Adderley v. Dixon, 1 Sim. rv> - Anderson ». U. 8.. 171 U 8 604 1—92,202,792,796. '^•o.,niv.o.,tsm 1—1005, 1038; 2— 117,226,226,258, 318,337,469,460, • 631, 664, 612... 2_5ii. ^l 2-581,1032. Anfiei».Kaiiwftyco.,i5iu.s..'i"";.;"".*;;;;; * IzZt'.^!:^' Appleton V. Ecaubert, 46 F., 281 *.*'." ^-MS Arkansasv. Kansas & Tex. Coal Co., 183 U.S. 185. r.] 2-648 Armstrong t?. Toler, 11 Wheat., 268 1—864 Amot..coaico..68N.Y.,658 ;.*:.":::;;::;::;:;;:::: i-4*2;766,799.85»; 2—276. w5. . • . « i__403* g 160 Arnot V. Pittston & Elmim Coal Co. {See Amot v. Coal Co., 68 N.Y.* 668). ' Arthur ». Oakes, 68 F., 310 * ,,, „„ 324 1-317,372. «** 1—689 Aabestoa FeltingCo. v. United States* P. Salamander Feltineii "is Blatch.,463 l "ii Asherv. Texas, 128 U.S., 129.. ".r.!r."r.r.".';;r.*.;; i-7W8nR. 9^jui Ashley t'. Ryan, 153 U.S., 436. 440, 446 2-5w'6S' Aiiuociation r. Houck, 30 8. W., 869 (88 Tex., 184).... i-gss' " Aasociationi. Kock, 14La. Ann., 168... 1-90 798 Association I?. Niezerowski, 95 Wis., 129... i_-^ ' Association «% Walsh, 2Daly, 1 [[ I— 2O6 Atcheson ». Mallon, 43 N. Y., 147 ."......"..............'.'." i_^3' Atchison, T.ife S. F. Ry. Co.. v. Denver* N. 0. R. Co., 110 U. 8 667 1-836 «» iliw Atchison. Topeka & 8. Fe. R. R. .. Matthews. 174 U. 8., % .. !' gl^' '*"• Atlanta v. Chattanooga F. & P. Works, 127 F., 23 2—324 Attorney-General r. Birmingham, 4 Kay & J.. 528 .. . i_^2. Attorney-General v. Brown. 24 N. J. Eq. (9 C. E. Green), 89,'9i.';r."" 1-690 Attorney-General v. Cambridge Consumers' Gas Co., L. R. 6 Eq., 282 I-344" Attorney-General r. City of Eau Claire. 37 Wis., 400 . * " 1-344' Attorney-General r. Forbes, 2 Mylne & Co.. 128 .'*."*".'""" l-^i "342 ai4 W Attorney-General t;. Heishon. 3C. E. Green (18 N. J. Eq.). 410 :. jl^' ^^' *"' ^^• Attorney-General r. Hunter, 1 Dev. Eq., 12 1— 342' Attorney-General v. Jamaica Pond Aqueduct Corporation, m Mass.! 361 '_ 1 5gfi fig7 Attorney-General V. Johnson, 2 Wils. Ch., 87 i_^2' * Attorney-General v. N.J. R. R., 2 C. E. Green (17 N. J.EqiJ.lM.'".*. 1-690* Attorney-General r. Nichol, 16 Ves., 888 ** 1I344* Attorney-General v. Railroad Companies, 36 Wis., 624, 527."!! 1-844 619 Attorney-General v. Richards, 2 Anstr.. 608 1 1-687 Attorney-General ». Terry. L. R. 9 Ch., 423 1-342 688 Attorney-General v. Tudor Ice Co.. 104 Mass., 239, 244 i-sge' Attorney-General v. Woods, 108 Mass., 836 1-686 Austin v. Tennessee, 179 U. 8.. 849 2^^ Ayerst V. Jenkins, L. R. 16 Eq., 275, 284 !.!!!.!!!.!!!!!!!...!..*.". 2—714 Ball V. Rutland. 93 F.. 616 * g_«^ Bank V. Lamb. 26 Barb., 696 tl^' Bunk V. Owens, 2 Pet.. 588 .'*.'".'.' t^^' Bank v.Schennerhom, 9 Paige, 872. 878. '.'.*..*. i_889 CASES CITED. XTII Bank of Australasia v. Breillat, 6 Moore, P. C. , 152, 201 2—874. Bannon V. U. S., 15 Sup. Ct., 467 (156 U. S., 464) 1—469. Barber Asphalt Paving Co. v. Hunt, 100 Mo., 22 2—560. Barbierv. Connolly, 113 U. S., 27, 31 2—138. Barthet V. City of New Orleans, 24 F., 663 1—760. Beal V. Chase, 31 Mich., 490 1—75,94,205,786. 518 1—702. 521 1-96. Beck t*. Real Estate Co., 65 F., 30 2—92. Bell's Gap R. R. v. Penn., 134 U. S., 232 .* 2—141,148. Belton V. Hatch, 109 N. Y., 593 1—630. Bement v. National Harrow Co., 186 U. 8., 70 2—293,732,863,866. 70,88,89 2—208. 70,88-91 2—209. 70,88.92,93 2—785,786. 70,92 2—873. 70,92,93 2—998. 70,94 2—803,804. Bensley v. Texas & Pac. Ry. Co., 191 U. S., 492 2—573. Bessette v. ConkeyCo.,194 U.S., 324 2—838. Bibbv. Allen, 149 U.S., 481 1—849. Birch r.Somerville, 2Ir. Law R.,N.S., 243 2-^973. Bishop V. Preservers' Co., 157 III., 284 1—797. Bishop V. Preservers' Co., 51 F., 272 2—21. Black River Lumber Co. r. Warner. 93 Mo., 374,388 2—997. Blaney v. Maryland, 74 Md., 153 2—809,894. Blease v. Garlington, 92 U. S., 1 2—942. Bleistein v. Donaldson Lithographing Co., 188 U. S., 239, 249, 250 2—731. Blindell v. Hagan, 54 F., 40; 56 F., 696 1—379,623,841.842, 995- 2—79 Block V. Distributing Co., 95 F., 978 2—79. Board of Trade v. Christie Grain and Stock Co., 198 U. S., 236 2—863, 1007. Board of Trade v. C. B. Thompson Commission Co., 103 F., 902 2— 73L Board of Trader. Hadden-KruU Co., 109 F., 705 2—731. Boatmen's Bankf. Fritzlen, 135 F., 650 2—850. Bobbs-Merrill Co. v. Snellenburg, 131 F., 630 2—804. Bonsack Mach. Co. v. Smith, 70 F.,386 2—824,1007. Booth, A., &Co., V. Davis, 127 F., 875 2—820. Bowen v. Matheson, 14 Allen, 499 1—202. Bowman v. Chicago & N. W. Railway Co., 125 U. S., 465 1—388, 1027. 465,497 1—738,739. Boyd V.Gill, 19 F., 145 1—627. Boyd r. State, 19 Neb., 128 1—363. Boyd V. U. S., 116 U. S., 616 2-813,902,912,973. 616-634 1—869. 616,635 1-693: 2—917. Bradyt;. D^ly, 175U. S., 148 2—13,307,308. 154 2—17. Bram t>. U. S., 168 U. 8., 632 2—972. Brawley V. U. S., 96 U. S., 168,172 2—997. Brennan v. City of Titusville, 163 U. 8., 289 1—737, 806; 2—60, 241. Brennan v. People, 16111., 611 1—874. Breslin v. Brown, 24 O. St., 666 1—803. Brewer r. Blougher, 14 Pet., 178,198 1—676. Bridge Co. v. Hatch, 125 U. S.,1 1—345. Brinckerhoff v. Brown, 7 Johns. Ch., 217 1—212. Brisbane r. Adam8,3N. Y.. 129 1—808. Brown V. Houston, 114 U. 8., 622 1—68,978. 623 1-741. Brown V. Jacobs Pharmacy Co., 41 8. E. , 653 (116 Ga., 429) 2—276. ' J^JI V CA8E8 ClTJfiD. Brown*. Maryland, 12 Wheat. 419 1-741,968.1028: a-466. ♦*» 1—314. **6 9—481. 44S i_3]^ Brown V. Rounwvell, 78111., 589 1—76,206 277 27f. Brownv. United States, 118 U.S., 668,571 1—720 Brownie. Walker, 161 U.S., 591 2-108.109,812.898. 899.900,968. Brown v.Woister, 113 F., 20 f— 943. Brace V. Baxter, 7 Lea, 477 .'"".]]...!......."... a-310. BQehanv. Broadwcll, 88 Mo., 31 , '.'.'.'.'. 2—569 Buck V. Bock, 60 111., 106,106 .....-......*......."...... 1—339 Bndd p. New York, 148 U. 8., 617 .[.[...[..... 1— 433] 738, 740. Bull V. Loveland, 10 Pick., 9 ' *""* g-^goc Bullard V. Bell, 1 Mason, 213 ........". 2-311. Bunnell's Appeal, 69 Pa. St, 69 1— 344^ Buskirkt;. King, 72 F., 22 ........"...... 2—607! Butchers' & Drovers' Stock- Yards Co. v. Louisville & N. K. Co., 67F., 85. 1—794. ButcheW Union Co.v. Crescent tMy, etc., Co., Ill U. 8., 746,755 2-277. 0. Cadyv.Morton, 14Pick.. 236 2—973. California Steam Navigation Co. v. Wright, 6 Cal., 258 2—276. Callanv. Wilson, 127 U.S., 540,656 2—165. Callawayv. McMillian, llHeisk.,667 .,....!]..*!!! 2—308. Campbell t . City of Haverhill, 155 U. S., 610 2-13, 16, 18,308. 614 2-307. Cammeyex v. Lutheran Churches, 2 Sandf . Ch., 208-229 1-626. Carbon Co. r. McMillin, 119 N. Y., 46 I-745, 766, 7», Carew «. Rntherford, 106 Mass., 1,14 1— 202!29o! Carletonw.Rugg, 149 Mass., 550-657 ,,,,,] 1— 359! Caroll V. Caroll's Lessees, 16 How., 275 [ 2_7io. Carrw Fife, 156 U. S., 494 11....!]]!]]!]! 2—316. Carrol v. Green, 92 U. S., 509 2—22,311. Cartwrlght's Case, 114 Mass., 230, 288 1—694. case of the Earl of Shaftesbury, 2 St. Trials 615; S. C. 1 Mod., 144 ... . 1-693. Case of Greene, 52F.,104 1—262. Case of Phelan, 62 F.. 803 '.'.* i_36l! Case of the State Freight Tax, 15 Wall., 282, 275 !..'...',!..!!].".! 1—178,364,856. C^se of Yates, 4 Johns., 314, 369 I— 593'. Casey V. Typographical Union, 45 F., 136. 144 1—108,290. Castner V. Coffman, 178 U. 8., 168,183 2-707! CeUuloid Manufacturing Co. v. Goodyear Dental Vulcanite Co., 18 Blatchf.,384 1_53 Central Ohio Salt Co. v. Guthrie, 35 Ohio St., 666,6?2 1—403; 2— 47a Central R. R. t>. Macon, 110 F., 871 2—754! Central Stock and Grain Exch. v. Bd. of Trade, 196 El. , 396 ! 2—733! Central Stock Yards Co. v. Louisville At N. R. Co., 112 F., 828, 827, 828. 2-^7. Central Transportation Co. v. Pullman Palace Car Co., 189 U. S., 24-43. 2—1006, 1008. Champion t>. Ames, 188 U. S., 321 2—224. Chandler V. Hanna, 73 Ala., 390 ! 1—622! Chapin v. Brown, 83 la., 156 1—7%! Chapman w. Kirby, 49 ni., 211, 219 .'* 2—98. Chapman v. Kansas City, etc., Ry. Co., 146 Mo., 481, 608 !....!! 2—997. Chappellv. Walerworth, 156 U. 8., 102, 107 2— W7. Charge to the Grand Jury, 2 Sawy., 667 .....! 2—894! Charles E. Wisewall (The), 74 F., 802 .!.!..! 2— 13o! Charlotte, etc., R. R. v. Gibbes, 142 U. 8., 386 .!!!.!! 2— 914! Chemical Works v. Hecker, 11 Blatchf ., 668. 1-^. OASES CITED. XV Cherokee Nation v. Southern Kansas Ry. Co., 136 U. 8., 641, 657 1—354,357,687; 2— 48L Chesapeake & Ohio Fuel Co. v. U. 8., 115 F., 610 2—203,278. 619 2—276. Chicago. Burlington & Q. R. Co. v. Chicago, 166 U. S., 226 2—914. Chicago Gaslight, etc., Co. v. People's Gaslight, etc., Co., 121 111., 530.. 1—206,222,688,724. Chicago, etc., R. Co. r. Pullman Sn. Car Co., 139 U. S., 79 1—75, 200, 207, 724, 793. 79, 90 2—481. Chicago. M. & St. P. Ry. v, Tompkins, 176 U. S., 173 2—754. Chicago ]958. Emery v. Candle Co., 47 O. St., 320 i_446! 796] Emery »•. City of Lowell, 127 Mas.s., 138, 140 1—861. Evans r. Hu^e.v, 76 111., 115. 120 2— 13l] Ewing r. Johnson, 34 How. Pr., 202 1— SOs] Ex parte Bain, 121 U. 8., 1 1— 247] Ex parte Brown, 72 Mo., 83 2—894 90s Ex parte Buskirk, 72 F.. 14 ], g—^isg] ExparteCrowDog. 109U. S..556. 570 ]]]]]] l— 710] Ex parte FLsk. 113 U. S.. 713 ^ ]].]." »— lOe] 8:19. 718,119 * ]]]]]]] S[_34o] Ex parte Irvine, 74 F.,954 2—110. Ex parte Mirzan. 119 U. S.. .584-686 ]..]]]]]] 1^59. Ex parte Neet, 157 Mo., 527 ]]]]]]]] 2—850. Ex parte Robinson, 19 Wall., 505 ]]]]]]]] 1— 594] ExparteReynolds, 15CoxC. C.,108, 119 ]] 2— 92o] Ex parte Rowland, 104 U. 8., 604 2—839] ExparteSiebold. lOOU.S., 371, 395 ]]]]]]]]] 1—3^ 356 578 Ex parte Terry, 128 U. S., 289 l-34o!.=i94:' 2-«39 289,305 1-598. Ex parte Watkins, 3 Pet., 193 1—340. 598. Ex parte Yarbrough. 110 U. S., 651 ]] l— 598! Exchange Tel. Co. v. Gregory & Co., [1896] 1 Q. B. D., 147 2-73l] Express Cases, 117 V. 8., 1 1—794. F. Factor Co. v. Adler, 90Cal., 110 1—799. Farmer r. Storer, 11 Pick. (Ma.ss.), 241 2—972] Farmers' L. & T. Co. v. Lake St. El. R. R. Co., 173 111., 439 2—13?] Farmers' L. & T. Co. v. N. Y. & Northern Ry. Co., 160 N. Y.. 410,425... 2—222. Farmers' L. & T. Co. v. Northern Pacific R. R. Co., 83 F., 249,267 2—846] 21220— VOL 2—07 m 11 :X¥iii CA8E8 CITED. Fanners' & Merchants' Ins. Co. r. Dobney, 18l> U. S.. 901 f-871. Farreri*. Close, L. R. 4Q, B., 602, 61 2 ". 1—781. Fan V. Manite]Ier,2 Cram-h, 10 , 1—853. Fayerweather t?. Ritch, 89 F., 529 i— 943. Ficklen v. Shelby Co. Taxing Di.«it., 146 U. 8., 1 1—955, 957. Finney v. Ackerman, 21 Wis., 271 2—845. Fitzgerald v. Champenyti. 30 L. J., N. & Eq,, 782; 2 Johns. & Hem., 81-^. 1—710. Wong Yiie Ting r. United States, 119 L'. S., 698 1—578. Ford V. Association, 156111., 166 1—797. Fosditk I'. Scfhall, 99 IT. 8., 236 1—9. Fowle ti. Park. 131 U. a, 88 '.■.'■ 1-75,197,785,788: 4—732. 1008. 88,97 1—205. Flight Association Case. Sec U. S. ir. Tnum-Missouri Freight A.««n, Freight Tax Case, 15 Wall.. 232 ! , 1—739. Frisbiep. United States, 167 IJ. S., 160 1—935; *— 808,895. Fnchs V. St. Louis, 167 Mo.. 620 2—850. F. W. Dodge Co. u. Construction Information Co., 183 Mass.. 62 «— 731. Qaiuewell. etc., Co. IT. Crane. 160 Mam.. 60 «-808. QaMinerr. Morse, 26 Me., 140 1—803. Oust V. Hall dc Lyon Co., 179 MaM , 688 2-794.1020. Garatir. Harris, 177 Mass.. ?2 2—1016,1016. Gelpcke t'. City of Dwbuque, 1 Wall.. 220 1—353. General Electric Co. v. Anchor Electric Co., 106 F., J? 03 f— 209, 211. OenexalElectricCo. p. Wliie, 119 F., 922-924 2—799. Georgia v. Brailsford, 2 Dall., 402 2— 608, 824. Gibbons r. Ogden, 9 Wheat., 1. 1—1028, 1024. 187 1—395. 189 1— 388,4n. 1«0 1— 4h. 1^ 1-768. '■ 195 1—364.896. 196 1-396, 4(;6. IW--. 1-351,688; 2-224, 465.471. 210 1-645,388; 2—188, 476. 222 1-421. 281 1-396. Gibbsiv Bammore Gas. Co., 130 U. 8., 396 i— 92, 202, 2ft5, 222 226, 227. 799. 406 1—724. 408 l-«88,723. -MW 1-197.203,206,702. Qlbbs «. Mc.N'eelcy. 107 F., 211 2-317 118F.,120... 2-276.278. Glbbs ir. Smith. 116 Mass., .692 1—803. Olbaoii ». Shufeldt, 122 U. 8., 27.... i—^e?! Gilwoii V. Smith, 2 Atk., l62 *' i— ,'S87! Gilbert v. Mickel, 4 Sandf. Ch., 381 (marg. p. 367) ] i— 108 Gilmanf. Philadelphia. 8 Wall., 713 1-318,364. 724 i-m. V-iS 1-689. Glaseottv. Laxig,8MfL &C., 461, 466 2—606. Gloucester Ferry Co. v. Penn., 114 U. S., 196 l— 737, 740, 767. 960; 2—616. 208 1—67,302, 398. 489, 45ia036; 2-115. CASES CITED. XIX Glouce.'«tcr Isinglass A Glue Co. v. Russia Cement Co., 164 Mass., 92 1—94, 793. 94.... 1—206. Goebel i\ Hough, 26 Minn.. 252, 256, 258 2—98. Goldsmith v. State. 32 Tex. Cr. R., 112 2—973. Goodt'. Daland. 121 N. Y., 1 2—1007.' Goodpaiiter v Voris. 8 Iowa, 334 2—972. Goodridge r. Rogers. 22 Pick,, 495 2—307. Goodyear r. Beverley Rubber Co., CliflF. 34»-354 2—795. Goodyear Tire «fe Rubber Co. v. Rubber Tire Wheel Co., 116 F., 363. . . . 2—859. ■ Gordon r. Gil foil, 99 U.S., 168 2-318,564. Gorton V. Brown, 27111., 489 1—61. Grant v. Raymond, 6 Pet., 218, 241 2—187,208. Grasselli v. Lowden, 11 Ohio St., 349 2—316. Great Southern Fire Proof Hotel Co. v. Jones, 177 U. S., 449, 453 2—546. Great Western R. Co. v. Birmingham, etc., R. Co., 2 Phil. Ch., 597 .... 2—606. Gulf, Colo. & Santa Fe R. Co. v. Ellis, 166 U. S., 160, 154 2—659, 906, 914. Green r. Williams, 45 111., 206 2—98. Greene's case. 52 F.. 104 1—867. Griffin f. Colver, 16 N, Y., 489,491 2—97. Grove »'. Grove. 93 F., 865 '. 2—89 Gulf, C. & S. F. R. Co. V. Miami S. S. Co., 86 F., 407 1—867; 2—79. 420 1—996. Gulf, Colo. & S. Fe Ry. v. Ellis. 165 U. 8., 160, 166, 159, 160, 165 2—140, 145. Gundling v. Chicago. 177 U. S., 183 2—146. Guy r. Baltimore, 100 U. S., 434 1—739. Hadden v. Dooley, 74 F., 429,431 2—006. Hagan v. Blindell. See Blindell v. Hagan. Hair r. Barnes 26 III. App.. 580 2—98. Haler. Henkel, 201 U.S.,43 , 2-944,962,968. Hall V. DeCuir,96U. S., 486 1—740. Hammersteln v. Parsons, 38 Mo. App., 336, 337 1—630. Hanchett v. Humphrey, 93 F., 895-897 2—972. Hanley v. Kansas City Southern Ry., 187 U. 8., 617 2—872. Hanna r. People, 86111., 24:^ 1—374. Hannah v. Fife, 27 Mich., 172 1—803. Hard r. Seeley, 48 Barb., 428 2—1008. Harriman v. Northern Secur. Co., 197 U. S., 244 2—819. Harrison r. Glucose Refining Co., 116 F,, 304 2—831, 1007, 1032. 307 2—820. -310 2-825. Harrison v. Maynard, Merrill & Co., 61 F.. 689 2—785, 793. Harrow Co. r. Hench, 83 F., 36 1—766, 799; 2— 8, 69, 198. 76 F., 667 2—8,69. Harrow Co. r. Quick, 67 F., 130 1—614,746; 2—8,9, 69,209. Hathaway r. Rojich. 2 Woodb. & M., 63,73 2—972. Hawes v. City of Oakland, lOl' U. 8., 450 2—78. Hawks r. Lands, 2 Gilm., 227, 232 2—131. Hayes v. Missouri, 120 U. 8., 68, 71 2—139, 559. Hay-Press Co, v. Devol, 72 F., 717 1—626. 721,722 1-624. Hazlehurst r. Railroad Co., 43 Ga., 13 1—202,799. Heath r. Wallace, 138 U. 8., 573, 584 1— 715! Heaton-Peniusular Co. v. Eureka Specialty Co., 47 U. 8. App., 146, 160. 2—187. 77 F., 288 2—784. Hedrick v. Atchison, T. & 8. Fe R. R. Co., 167 U. 8., 673, 677 2—181. Heckerr. Mayor, etc., 28 How., Pr., 212 2—86. XX CASES dlTKD. Henderson r. Mayor . .f New York, 92 U. 8., 259 1—707, 73», 739; 2—466. Henderson Bridge Co. r. Ky.. IWU. 8., 150 1—738, 740. Hendrick >'. Lind.*«iy. 93 V. S., Uh '. 2—324,325. Henry Bill I'uhlishiJiK Co. r. .^niythe. 27 F., 914-925 2—703. Herreshoff r. Boutinean. 17 R. I., 3 1-786. Hill t'. Mining Co.. 119 Mo., 9-24 1—626. Hilton r. E«'ker.- «_-^ MeBlttir , . Gibbes. 17 How.. 296 ;;'.*.". ,_^' McCallr. California, 136 U.S.. 101. i_-^ ofis McCool r. Smith. 1 Black, 4i>9. 469 .'.*.'.'.*.".'.'.'.' .*'' ' t-m McCredkr. Senior, 4 Paige. 37S.S81. 382 | ^39" Mcculloch I'. Maryland. 4 Wheat. , 316. 405 iZ^q^ 5;^. ^_^^ — ^J5,*28 :;.'i* ,_4,6; ' • " *^^ I--11.5. 424 |_=-o McCullouKrhr. Brown, 418. C.iM "' i-^jo-'* McCullough r. Commonwealth. 67 P«. St.. 30 "-^ee McDonald r. Hovey, 110 U. 8.. 619,628. l—igg Mt»Ore«ry r. Chandler, .W Me., 638 .' *.' ,_^24 McKeer. United States, 164 U.S.. 287 ,.,,[ I~(i75 McKinley r. Wheeler. 130 U. 8.. 680 2—915 McMullen r. Hoffman. 174 V. S., 689.6M .............7 a-l'>8 819 K9F.. 515 2— S-M Mae William r. COnn. Web Co.. 1 19 F.. 509 ' ] *~94!} MachineCo. /■". Smith. 70 F.. 383 J_g " Machinery Co. r. Dolph. m U. S.. 617: 28 F.. siis'.V.'.V. ."..".". .".'.'.*.".*".*.'.'. 'i_78t;. Madiwn Ave. Baptist Chnrcli r. Oliver i^it. Baptist Church 73 N Y 96 *— "9 Magennis v. Parkhurst. 4 N. J. Eq., 433. 434 . .. t_^ MagtMH. ,-. Illinois Tn,st & Saving. B*mk, 170 U. 8.. 2^. '■.'.".'.'.■.';;;;;;;. i-uo. U6,m, Mail Company /. Flanders. 12 Wall,, 130 .»_55g Maillard r. Lawrence, 16 How., 251 1—3^8 Mallan r. May. 11 Mee.s,& VV.,652 ".."......"..7^."..". 1—784 ^^7 1— 20i>. 667 I y^ 1^ Manchester, etc.. R. R. r. Concord R. R.. 20 Atl., 383 (66 N. H.','ioO).'.*; l-m5 507 Manufacturing Co. r. Hollis, 55 N. W., 1119. 1121 {64 Minn.. 223) I-^iso' ' Manufacturing ('<.. r. Klotz, 44 F.. 721 i_.,.- ' -oq. a 107 Mansfield C. & L. M. Ry. Co. r. Swan. Ill l. .^.. 379 38-> » !,« '"" Market Co. r. Hoffman, 101 U. S.. 115 1— 353' Marsh r. Rnssell. 66 N. Y.. 288 ] 1—213 Mason 1: Dullagham, 82 F..689 !...."....... »_^9 * Massier. Buck, 128 F., 31 '....... ^—{V^ 826 Ma.st, Foos & Vo. ". Stover Mfg. Co.. 177 U. 8., 4a=i, 495! ." " -_707" * Match Co. r. Roeber. 106 N. Y., 473 • ' " i_94. 201 785 788 Matthews v. Awiwx'iated Press of New York. 136 N. Y., 333, 840 . . 1—701 786 Mattiiigly r. Northwestern Va. R. R.. l.-iS U. S., 53, 57 .......... " . . ..., 2— ;>4ti ' Ma.xim Nordenfelt Guns and Ammunition Co. r. Nordenfelt, [1893] 1 ' Ch., 680. (^Sfca/w>Nordenfelt r. Maxim Nordenfelt Co.) «— KXXS 100« Maxim Nordenfelt Gnns & Am. Co., Ltd.. r. Colt'.M Patent Firearmi Mfg. Co.. 103 F., 39 _ j_y^^ Mayor of Georgetown v. Alexandria Canal Co.. 12 Pet.. 91. 98 1—844 Mayor, etc., of Knoxville r. Africa. 77 F.. 501 •»— 707 Merz Capsule Co. r. U. 8. Capsule Co.. 67 F., 414 ....'.. .'.'.'.'.*.'.".' .*.".'.'.".'.'.' I'-^jiS;" 2_574. 71 F., 787 2— 57V ~~^ Metcalf *'. Am. Scho(»l Furniture Co., 122 F., 116 •»— 82o" Metcalf r. Watertown, 128 U. S.. 586 ..........."!..."!. S— .>17 Mexican Nat. Railroad r. Davidson, 1.57 U. S., 201, '208 1 !.!!."]!!. 2^7 Miller r.Ammon, 145 U.S., 421, 427 T v,. ^ ,.,« Miller r. Davi.s 88 .Me., 454 "..'.'.'.'.".V.r. ^I^'g" Milwaukee, etc., Co. r Milwaukee. 87 F., .577 2-754 Minneapolis & St. L. Ry. Co. r. Beckwith, 129 U. 8., 26 .....*...'.'..'"*" o_^u Minnesota r. Btirber, 136 U. S.. 313 * " i_737 Minnuei r. Phila. & Reading R. Co., 18 N. J. Law. «"".."." 2—641 Missouri ex rel., etc., r. Bell Tel. Co., 23 F., 539 •»— 188 CASES CITED, XXV Missouri c. Lewis. 101 U. S.. 22, 31 2—138. Mi8.souri, K. & T. Ry. r. Haber, 169 U. 8.. 613, 626 2—138, 466. 613.626,627 2—476. Missouri Pac. Ry. Co. t', Mackey. 127 U. 8., 2a5 2—914. MissonriPac. Ry. Co. r. U. S., 189 U. S.. 274 2—843,844,847. Mitchel I'. Reynolds. 1 P. Wms., 181 1—203, 700, 785, 788. 190 1—782. Mitchell V. Great Works Milling and Man'f'g. Co., 2 Story, 648, 653 ... . 1—673. Mitchell V. Hawley, 16 Wall.. 544, 546, 547 2—795. Mobile r. Kimball, 102 U. S., 691 1—388.960,1023. 697 1—1027. Mobile r. Louisville & Nashville R. R, 84 Ala.. 115, 126 1—592. Mogul Steamship Co. v. McGregor, Gow &. Co., 21 Q. B. Div., 554 1—75, 204, 207, 62», 689. 23 Q. B. Div., 598 1—75, '204, 630. 689. [1892] App. Cas., 25.... 1-7.5,204, 689, 781. 792. Monongahela Mav. Co. r. U. S.. 148 U. 8., 312 1—740; 2—914. 329,330 -. 1—855. 336 1—934. Montague & Co. v. Lowry, 193 U. 8., 38 2—459. 4«iO, 513, 527, 583,663,804,998. Moore v. State. 96 Ten n., 209 2—973, Mwres v. Bricklayers' Union, 23 Wkly. Cin. Law Bull., 48 1—287. More J'. Bennett, 140 111., 69 1—796. Morey r. Light Co.. :i8 N. Y. Super. Ct., 185 2—98. Morgan v. Louisiana, 118 U. S.. 455, 465 1—1027. Morrill r. Railroad Co.. 55 N. H., 531 1—202. Morris & Essex Railroad r. Prudden, 5 C. E. Green (20N. .1. Eq.), 530. 532 ' 1—590. Mom's Run Coal Co. v. Barclay Coal Co., 6.s Pa. St., 173 1—91 , 201, 440, 613. 745. 766, 795; 2—276. 184,1S6.1S7 1—401; 2—469. Morse, etc.. Co. r. Morse, 103 Mass.. 73 2—831,1007. Mosher v. Railway Co., 127 U. S.. 390 2—88. Mount Adams *Si E. P. Inclined Ry. Co. r. Lowery (see Railway Co. r. Lowery). Mugler r. Kansas. 123 U. 8.. 623. 672 1—594. Mulcahy i\ Reg.. L. R. 3 H. L.. 306. 329 1—247. Munn V. Illinois. 94 U.S., 113 1—4.33,738,740. Murphy /'. Christian Press, etc., Co., 38 App. Div. 426; 56 N. Y. Supp., .597. 2—1020. N. Nathan r. Louisiana, 8 How., 73 1—637, 738, 739, National Benefit Co. /'. Union Hospital Co., 45 Minn., 272 1—702, 785. National Distilling Co. v. Cream City Importing Co., 86 Wis.. 3.52.355 .. 1—8.58; 2—126. National Enameling & Stamping Co. r. Haberman, 120 F., 415 2—820. National Harrow Co. v. Hench, 83 F., 36 2—803. National Harrow Co, /'.Quick, 67 F., 130 2—803. National Phonograph Co. t'. Schlegel, 128 F., 733 2—865. National Tel. News Co. r. Western Un. Tel. Co., 119 F., 294 2—731. Navigation Co. r. Winsor,20 Wall,, 64 1—94, 204, 207, 786. 66 1^43L 68 1—75, Nesterv. Brewing Co., 161 Pa. St., 473 1—613,74.5,766,795, Newburyport Water Co. v. Newburyport, 193 U. 8., 561 2—549. New Memphis Gas & Light Co. r. Memphis, 72 F.,592 2—607. New Orleans r. U.S., 10 Pet., 662 1—341. New Orleans Gas Co. V. Louisiana Light Co., 115 U.S., 650 1—688. ^^VI CASES CITED. New York Bank Note Co. v. Hamilton, etc., Co., 28 App. Div. 411. 50 N. Y. Slipp.,1093 2—1020 New York & Chi. Grain & SUx-k Exchg. v. Bd. of Trade, 127 111., 153 .,.. 2-732 New York & N. Ry. Co. v. New York & N. E. R. Co., 50 P., 867 l-mi New York,L.E.& W.R.Co....Penn.,1.58 r.8.,431,439 1-740957 New York Life Ins. Co. r. People, 195 111. ,430 2—920 Nordenfelt r. Maxim Nordenfelt Co., [IBU] App. Cas., 535 ...... '....'.' i _70C, 785, 788. 567 1—786. [18831 1 CJi., 680 2—1003 1008 Norfolk & W. R. Co. r. Peiin., 1361". 8., 114 i_737 Norfolk & Western Ry. i>. Sims, 191 U. S., 441 •—665 Norrington r. Wright, 115 (T. s., 188. 2(M.. "] «_997' Northern Securities Co. v. V. 8.. 19S U. S., 197. .*'.".'.'." 2-086, 634, 666, 746, 804. 198 2—820. 356.... 2—627.628. 404 2—1002. O. Gates V. National Bank. 100 T. S., 239 1—707 Oil Co. r. Adoue, 83Tex.,650 1—797. Olivera v. Insurance Co., 3 Wheat., 193 .!!.".].... 1— 315! Ontario Salt Co. r. Merchants' Salt Co.. 18 Grant, Ch., m.............. 1-205 789 790 Oregon Short Line v. Skottowe. 162 U. S. , 490, 494 2— &47I ' Oregon Short Line & U. N. Ry, Co. 1;. Northern Pac. R. Co., 61 F., 1.58; 51 P., 465 ^ I jj^y. Oregon Steam Navigation Co. v. WInsor, 20 WalL^M ......"....,......* l_702; 2-324,874, 1011. 66 1-400. 69 2-317. ^— — 70 2—296 Odginal Package Ciwe; Leisy r. Hardin, 135 U. 8., 100 •. l -739 Osbom r. Bank, 6 Wheat.. 815 *'* i_iog' Osborne r. Detroit, 32 F., 3ii.. ...........*...* 2—973 OBcanyan v. ArnwCo.,103 U.S.. 261-268 .l].!!..!... ].......'! 1-847 Ouachita Packet Co. i». Aiken. See Packet Co. r. Aiken. Oxley Stave Co. r. Coopers' International Union of N. Amer.,?2F.695. 2-8». F. Packet Co. r, Aiken. 121 U. S., 444 |_74o 95- Packet Co. n Catlettsburg. 105 U. 8., 559 i_74o'967' Packet Co. t. Keokuk, 95 IT. S.. 80 "" 1—739' Packet Co. r. St. Louis, 100 U. 8., 423 1— 740^957 Parisian Com b Co. r. Exchange, 92 F. . 721 2—943. Birk & SonsCo. r. National Wholesale Druggists' Assn., 175 N. Y., 1. . . . . i-mi 1015 Parker r. Ormsby, 141 l. 8., 81 2—546* Parkersburg & o. R. Transp. Co. v. City of Parkersbui*, 107 U. 8., 691. l-»44 740 Passenger Cases, 7 How., 283 1-739' Patterson Case, 55 P.. 605. 62»-632 1—3.58 Patterson t\ Kentucky, 97 U. 8., 501 2—188 Paul «•. Virginia, 8 Wall.. 168, 183 l."*..."...]!"."]l!.... i-498 503 Flaxton v. Dongla.H, 16 Ves.. 240, 243 " "" f—no Fmv. Waggoner. 5 Hay w., 19 »— 312 Pearsallr. Great Northern Ry. Co., 161 U. 8., 646,671 ..."".......'**.*.'' 8-222,263,452,459, _ 461,488,506. Fttiiwnr. Yewdall. 9511. 8., 294... I— 359 Peck If. Burr. 10 N. Y.. 2»4 .."!...]..!!.!..." 1—853 Peels w. Saal field. [1892] 2 Ch., 149 1—786 Pembina Mining Co. r. Penn.. 125 U. 8., 181 *™. "*...".., ]]!.!!. 2—914 Pennsylvania r. Wheeling, etc.. Bridge Co., 13 How., 518 ...'..[ t-ui CASES CITED. XXVII Pennsylvania K. Co. v. Commonwealth, 7 Atl., 368,371 2—222. Pennsylvania R. R. Co. v. Hughes, 191 U. S., 477 2—560. Pennsylvania R. R. Co., r. Knight, 192 U. S., 21 2—667. Pensacola Tel. Co. r. Western Un. Tel. Co., 96 U. 8., 1 1—68, 3.54,3.55,737; 2—515. Pentleton r. Rickey. 32 Pa. St., 58,63 1—5. People t\ American Sugar Refining Co., 7 Rey. «& Corp. (Cal.), 83 1—257. People V. Batchelor, 22N. Y., 134 1—624. People V. Barstow, 6Cowen, 290 2—186. People r. Butler Street Foundry Co., 201 111.. 236 2—1033. 248 2—969. People V. Caldwell, 71 N. Y. Supp.. 6.54 2—87. People c. Chicago Gas Trust Co., 130 111., 268, 292, 297 1—404,470,799: 2—222. People V. Ferry Co., 68 N. Y., 71 1—342. People '. Fisher, 14 Wend., 1 1—443. 9 1—89,201.202. 18 1—118. People r. Gillson, 109 N. Y.. 389, 398 2—276. People V. Mather, 4 Wend. , 230, 254 2—110. People *•. Milk Exchange, 145 N. Y., 267 1—799: 2—197. People r. Miner,2 Lans,,396 1—342. People V. North River Sugar Refining Co., 54 Hun. ,354 1—202, 257. 366 1—799. People V. Sharp, 107 N. Y., 427 2—969. People r. Sheldon, 139 N. Y., 251,264 1—795. People*. Vanderbilt, 26 N. Y., 287. 1—342. 28N. Y., 396 1—341,342,586. People ex rel Tyroler r. Warden, 1.57 N. Y., 116 2—87. 88. Perkins r. Lyman, 9 Mass., 522 1—204. Perkins v. Nichols, 11 Allen, 542 1—212. Permoli r. First Municipality, 3 How., 589 1—820. Petri r. Commercial Bank of Chicago, 142 U. S., 644, 650 1—67.5. Perry r. Gibson, 1 Ad. «k Ell., 48; 3 Nev. & M., 462 2—973. Petit V. Minnesota. 177 U. S., 164 2—146. Pettibone r. U. S., 148 U. S., 197 1—265.286. 203 1-455. Philadelphia r. 13lh »fc 15th Street Passenger Railway Co., 8 Phil., 648. 1—586. Philadelphia, et<'., Co. v. Howard, 13 How., 307, 344 2—997. Phippen r. Stickney. 3 Mete, 384, 389 1—213, 803. Phipps V. J 799 lailroadCo. r. FiiUtT. 17 WhI1.,o60.. '"".'^" ".'.'.'. i-nl'^ Railroad Co. r. Hazen, Hini.. 3ti 1—;^, Railroad Co. r. Hiiscn. 9.1 1*. s. . 46ft, 472 ........ 2— 4f)<; 469 , ^ «»— 99s RailrwdCo. »•. MH'onnell. 82 F,. 65 ....".'. t-m >*x 90 Railrnad Co. r. Maryland. 21 Wall., 45t!, 473 '..."". "-"'"!*^.^! 2-478 -soa oW Railroad Co. /. Richmond, lit \Vall..»l [.._ [-^is! 1029. 5W I— 102:i Ealhvny Co. /•. Becker. 32 F.. 849 ,_73y Railway (\.. r. chirk, 7.'i F.. 76: 74 F.. 362 [,["[ s_.>2 Railway Co. «. Good ridge, 149 U. 8., 680 ' i—^\ Railway €0. r. Humej*. ll.i U. S.. M2 f—is Railway Co. r. Lowery. 74 F.. 463 ^ . I— Mti y'«) Railway Co. r. .McBride. 141 U. 8.. 127, 130 . . . . ^ ! ! ] 1 ] . T. T. ". ' ] ] 1 T. 1 i -loilj Railway Co. r. .Methven, 21 Ohio St.. !m .»_iy Ramsey r.Tempk. 3 Lea, 2.W.. ^_3,o Raniiier. Ir\iue. 7 Man. & G.. 960, «B 1—703 Raymond r, Leiivitt. 6 Mieh.. 447 .'.'.'.'.'.''.'.'.['.'.'.'.'.■ 1—407 Reagan r. Fanners' I^oan & Trast Co.7 irvl F. S.. 362 *..... 1-742 Reeiorr, Lli»«»onib, 141 U. 8., 567 ■»— 3ie; Red r. CityCouneil.2jGa., 8%.. '.".'.' J.'.'.'.'^.'.'.'^.'. i-9S Ri-d River Cattle Co. i\ Ntn^lham. 137 F. S.. 632 '.'.I'. I— 66.V *— 316 Reed r. Smith. 40 F. .H>2 .!....l 1—448 " Reg. r. MtCulky. 2 .MiHMly. Cr. Cas.. M ....'' 1—175 353 Registering Co. r. .Sampson, L. R.. 19 Eq.. 4»'2 |->13 Reiche t\ Smythe. 13 Wall.. 164 / ' |_ioi Rex r. Eeeles, 3 Doug.. 3;{7 1—440 Rex r. .«haftsb»ir.v. 8 Howell'sSt. Tr.. 759 *.".*. ••— ,s9-» Rex r. Turner. 13 East.. 228. 231 ......................I [ iZmi Riee r Railnmd Co.. 1 Black. 379 ....."......[^." 1— 353 Riehanis >\ Am. De)*k &e. Co., 87 Wis., otti '..'."'.'.'.'. '.]'."" 1—702 RiuhardM c. Hugh, .>1 L. J. Q. B.. 361 '.".'.'.'.'.'.'.'.'. f- 973 Riehards r. Seating Co.. 87 \Vi.s...i03 " 1— 7a5 Rirliartmm r. Buhl. 77 Mich., 632 ...".*..."..*. i —446 799- fi— 197 470. 635,tJ57,660.. i_4or, Richanlson >\ Melli.>9,«i0. 490 I— 73»;. J— 4M S— 497. ^^ 1-397. "*^ : 1— 68.«).->: f— 198 CASES CITED. JL a1 A Robertson r. Cea.^e. 97 C. S., M6 2—546. Roljertstm /•. Parks, 76 Md., lis, 135 2—304. Robinson r. Hibbs. 4S 111.. 408.409,410 2—131. Roehm v. Horst. 178 l". S.. 1,21 2—997. Roller Co. v. Cushman. 143 Mass.. 35;i 1—93. 792. Rorke r. Board. *^ Pac. 881-X83 (99 Cal.. 19t>) 1—630. Roundtreer. Smith. 108 V. S.. '269 1— M9. Rousillon I'. Kousilhtn, 14 Ch. Div., 351 1 — 785. 7sh 363 1— -205. 365 1—213. Rowand v. Commonwealth. 82 Pa. St.. 4a5 2— 89«;. Rowe r. The Granite Bridge Corf»t)ration, 21 Pick., 340. 347 1—590. Rowena Clarke v. Central R, K. and Banking Cf». of Ga.. 50 F., 338 2—747. Royer v. c:ou|X' . 2 J F. . 3>s 2—21 1 . Rubber Tire Wheel «'o. /'. C<»lumbia Pneumatic Wagon Co., 91 F., 978. 2—859. Rubber Tire Wheel Co. r. Victor Rubl>er Tire Co.. 1*23 F., 85 2—859. Rupp, Wittgenfeld Co. r. Elliott. 131 F., 730 i—m^. Russell r. Farley. ia5 V. S.. 4:«. 43« 2— 4505. Rutherford r. .Metcalf, 5 Hayw. (Tenn.). 5x. 61. 62 1—339. Ryder r. Holt. 12.s C. S.. 525 1—439. s. Saddle Co. v. Tro.xel. 9s F , 62t) 2— 4>9. St. Louis V. St. Louis JJas Light Co.. 70 Mo.. 69 1— (-88. St. Louis »'. W. r. Tel. Co.. 148 U. S.. 92 1—740,957. 8t, Louis, etc., R. R. Co. r. Wear. 135 Mo., 230, 265 2—839. St. Loui-s. V. ifc T. R. R. Co. r. Terre Haute & 1. K. Co.. 145 V. S.. 393.. 2—714. St. Matthews Bank v. Fidelity Co., 105 F.. 161 2—972. St. Joseph r. Porter, 29 Mo. App. . <'»U5 2 — 850. Salt Co. V. Guthrie, 35 O. St., tUMi 1—92, 202, 766. ' Sandford r. Nichols. Vim Mass.. iS*; 2—816. Sands r. Manistee R. Imp. Co., 123 U. S., 288, 294. 295 1—710, 955. 959. Sanitary Reduction Works r. California Reduction Co., 94 F., 693 2—607,824. Santa Clara Co. v. Southern Pac. R. R., 118 U. S., 394. 39(» 2—914. Santa Clare Mill tt Lumber Co. r. Hayes, 76 Cal., 387, 390 1— 4a5: 2—470. Saratoga Bank r. King. 44 N. Y.. 87 1—403. Saville v. Roberts, 1 Ld. Raym., 378 1 — 135. Sawyer r. Hoag. 17 Wall., 6'20 1—321. Schooner Exchange v. McFaddon. 7 Cr., 116, 136 1—578. Schooner Indu-^try, 1 Gall.. 114, 117 2 — 186. Schollenberger r. Penn.. 171 U. S., 1 2-998. Schwalm v. Holmes, 49 Cal., 6(»5 2—276. Scott r. Donald, 165 U. S., 58 1—739. Scott r. Neely, 140 U. S.. 106 1—359. Sea right r. Stoke.s. 3 How., 151. 169 1—346,582. Secor V. Railrotid Co., 7 Bis.s., 513 1—283. Shafer r. Wilson, 44 Md.. 268,278 2—98. Shaftsburj- r. Arrowsmith, 4 Ve.s., 66 2—908. Seldonetal. v. Wabash Ry. Co., 105 F., 785 2—846. Shepard v. Milwaukee Gas Co., 6 Wis., 539 1— 6s.s. Sherlm-k r. Ailing, 93 V. S.,99 1—981. 99,103 1—408,957. 100 l-€39. Sherry r. Perkins, 147 Mass.. 212 1— 108,2S4. Shields r. Barrow, 17 How,, 130 1—626. Shfewsbury & Chester R. Co. i'. Shrewsburj- R. Co., 1 Sim. N. S., ♦410. ♦426, *427, *432 2—607. Simmer v. City of St. Paul, 23 Minn., 408, 410 2—97. Simmons Medicine Co. v. Simmons, 8] F., 163 2— 100«. Singer r. Walm.sley, Fed. Cas. No. 12900; 1 Fish. Pat. Cas., 558 2—862,865. %. ^^^ CASES CITED. Sinnot r. Davenport. 22 How., 223,238.... ^^^gg 227,243 a 1Q« j7»; mmhelmerr. Gannent Worker.. 77 Hun..21.r 2. N. Y.'supp:."32i':;:: i-92 8. Jarvm Adams Co. v. Knapp. 121 R, 34 !_Jt Skinkerr. Heman. 148 Mo., 349 ']] l^^; Skrainka /•. .Scharritighansen, 8 Mo. .\pp.. .V22 rll^ *" .JT'.v^ eiauter r. Whitelock, 12 Iml, 338 l~^' Smalley r. Greene, 52 la., 241 ""l!:' Smith r.Aiaimma. 124 U.S.. 465.473 ::::;:::::::::::: tiSoo«, * .^7 Smith r. Biven.s. 56 F.. 3^32 !~ori Smith J'. Oil Co.. 86 F., 359 l_y' Smyth f. AmeM69 U. S.. 466 ."" : !?'.,. ,,, r,j S— 90, 74«. 75-1. Smyth* r. Fiske, 23 Wall.. 374, 3S0 jZtT. -„« Snow r. Wheeler, 113 Mas*., 179. 185 i_-^' ' Soda Fountain Co. r. Green, 69 F., 333 .' a_iVfiQ .«o South Carolina v. Seym.mi, 153 U. S., 3.=i3, 357 1-4(m Southern Indiana Exp. Co. v. U. S. Exp. Co., 88 F.. 659.'." .".'.' .";;.".'".".'.".■ 2-80.287. ^ .^ ,, 92F.,1022 2—80 Southern Pac. Co. v. Denton, 146 U. S., 202. 2(« ilTfun in«M Southern Pac. Co. v. Earl, 82 F.. 690 i-gftT' SoulhernPac.Co. F.Hamilton. 54 F., 468.. l_^^' Speer J'. Skinner. 35 111.. 282 J -T Spring Co. V. Knowlton. 103 U. S., 49 -..".','.**.* ^ZS'. s,u Springfield r. Connecticut River Railroad, 4 Cash., 63. .' ! I-.w.' ' Stafford*. Ingersol, 3 Hill., 38... \Z^ Stamford v. 8tamf<.rd Horse Railroad Co., .56 Conn.^ 381 i vji \ai Standard Fire I»roofing Co. v. St. Louis Co. , 177 Mo. 559 * innii Stanton r. Allen. 5 Denio., 434 t^l^ .n.. -«« Stanton r.Embry, 93 U.S., 548 [[ lzf{^ Star Brewery Co. v. United Breweries, 121 F., 713 --inao Starr v. Mayer, 60 Ga., 546 l_qZ State i\ Adams, 70 Tenn., 647 »— 896 State V. Anderson, 5 Kan., 90, 114 ' T ^' State r. Ancker, 2 Rich. Law, 245 \Z^' State t'. Bryant. 90 Mo., 534 !..."...."' iZn,^' State r. Dayton & Southea.stern Railroad, 36 Ohio Stl, 4sV l-,586 State e.x rel., etc., v. Delaware, etc.. Co.. 47 F., 688 ••—isk State f. Glidden. 55 Conn., 46 7 .^\,, ^g 1—290.441. Stater. Goodnight. 70 Tex., 682..!.....*.''.*'.' J^^' State V. Goo«l will, lO S. E.. 285. 286 (33 W. Va., 179) »_^fi State t'. Grant, 79 Mo.. 113 •—84- Slate ». Harpers Ferry Boat Co., 16 W. Va., sij*. 873 i_.«q State t». Hope. 100 Mo., 347 2-97^ States. M3(72Ia., Ill) ,_Zl' State t'. M^g^ath. 44 N. J. L.. 227 atZ' States. March, lJonc.M(X.c.). 526 IZq State r. Neirraska Distilling Co.. 29 Neb., 700 " i_44« Voa State r. Quarles. 13 Ark.. 307 iZqla State r. Schuchmann, 133 Mo.. Ill [ l_7^' State v. Smith, 100 -V. W.. 40. 42 ( 124 la.. 834) . . I_q^' State «». Smith, .Meigs, 99.. 2— sqr" State V. Standard Oil Co.. 49 O. St., 187. .".'.*.".' *."' ,_-!!: ,, ,„- 8tate r. Stewart, 69 Vt., 273 : !Z'L7 2S6 '90,441. State V. Terry. 80 Mo.. 368 -...l."]*!!!.]] fiZsw State *;. Thoma.s 98 N. C, 599 ] ftZono State ». Wolcott. 21 Conn., 272. 280 2— «94 State I?. Weutworth. 65 Maine, 234, 241 ......!.... 2—920 CASES CITED. XXXI State of Pennsylvania r. Wheeling Bridge Co., 13 How., 518, 564 1—586, 587. State Freight Tax Case, 15 Wall., 232, 275 l—ms, 1023. 272 1—637. Steamship Co. v. McKenna, 30 F., 48 1-290. Steamship Co. r. McGregor. {See Mogul Steamship Co. r. McGregor, Gow & Co.) Stearns Co. v. St. Cloud, Mankato and Au.stin Railroad, 36 Minn., 425.. 1— .586. Stephens & Condit Transp. Co. v. Central R. R. Co., 34 N. J. Law, 280. . 2—641. Stevens t'. Pratt, 101111., 206 2—137. Stewart i'. Transportation Co., 17 Minn., 372,391 1—201,213. Stilwell r. Wilken.s, .Jac, 280 1—5. Stockard v. Morgan, 185 U.S., 27 2—998. Stockton V. Railroad Co., .50 N. J. Eq., 52 1—799. Stockwell r. U. S., 13 Wall., 351 2—304. Stock Yards Co. r. Keith, 139 U. S., 128 1—794. Stoutenburg ?•. Hennick, 129U. S., 141 1—805; 2—60. Straus V. Amer. Publishers' Assn.. 177 N. Y., 473 2—772. Strait r. Harrow Co., 18 N. Y. .Supp., 224,233 1-446,745. Strait r. Harrow Co., 51 F., 819 2—9,69, 125, 800, 823. Summers r. Moseley, 2 Cromp. & Mee-s., 477 2—904,973. Supreme Lodge v. Wilson, 66 F., 788 1—630, Swan r. Chorpenning, 20 Cal., 182 1— 103. Swan i\ Scott, 11 Serg. & R., 155 1—854. Swann r. Swann, 21 F., 299 1—200. Swift & Co. t'. U. S., 196 U. S., 375, 396 2-^22,851. T. Taddy & Co. v. Stevens & Co., 20 T. L. R. [?] 102, Eng. Ch. D 2—1020. Tainter r. Clark, 5 Allen, 66 1—212. Tallis «'. Tallis, 1 El. & Bl., 391 1—203,213,786. Taylor t'. Blanchard, 13 Allen, 370 1—786. Telegraph Co. v. Crane, 160 Mass.. 60 1—793. Telegraph Co. v. Texa.s, 105 U. S., 460,464 1—668,737. Temperton y. Rus.sell, [1893J 1 Q. B., 715 1—289. Temple v. Com., 75 Va., 892 2—110. Tenneasee v. Davis, 100 U. S.,257 1—578. Tennessee v. Union & Planters' Bank, 152 U. S. , 454, 461 2—547. Texas r. White, 7 Wall., 700,725 ." 2—476. , Tenn. Coal Co. v. Waller, 37 F., M5,647 2—969. Texas & Pacific Ry. Co. r. Cody, 166 U.S., 606,608 2—548. Texas & Pac. Ry. Co. v. Interstate Commerce Com., 162 U. S., 197 1—696,840. 219, -220- 2—1025. Texas & P. Ry. Co. v. Southern Pac. Ry. Co., 41 La. Ann., 970 1—92. Texas Standard Oil Co. v. Adoue, 83 Tex., 650 1—407. Thermometer Co. v. Pool, 51 Hun, 157,163 1—94,200,206. Third St. & Suburban Ry. v. Lewis, 173 U. S., 457,460 2—348. Thomas v. Miles' Adm'r., 3 Ohio St., 274 2—317. Thomas I'. Railway Co., 62 F., 803 1—537. • 817 1—467. 8'22 1—4.58. lOlU. S., 71 1—98. Thomas I', Richmond, 12 Wall., 349,355 2—714. Thompson-Houston Elec. Co. v. Jeffrey Mfg. Co., 83 F., 614 2—943. Thornley V. U. S., 113 U. S., 313 1—353. Thorpe V. Adams, L. R. 6 C. P., 135 1—710. Tisdalev. Munroe, 3 Yerg., 320 2—512. Todev. Gross, 127 N. Y., 480 1—785; 2—1008. Toledo, A. A. & N. M. Ry. Co, v. Pennsylvania Co., 54 F., 730, 738 1—290, Trade-Mark Cases, lOOU. S., 22 1—439. XXXII CA8E8 CITED. Tmniportiitlon Co. r. Parkfrsburg. lOT U. 8.. «S»1 1-957 95U Trust €0. i. Clark, 92 F., 293, 29ti, 298 '*' 2_97 ' ' Tulk r. Molmy, 2 Ph.. 774 * i—im Tuttle r. Matthews. 28 F.. 9» ...............]... I— fti Tyroler, P«?ople ex rel. i-. Warden. Ift7 N. Y.. 116.*. "17.. ""[..l]]].].*. 1-^7,88. Union P«e. Ry. Co. r. Wyler. 158 U. S.. 286 f^^-j U. 8. r. Addyxtoii Pipe & Steel Co.. 78 F.. 712, 71« * 1—739' 760. ®^*'"271 1—980,991,992: f-61, 62. 278. 817. 576, 1004. 279.... 1—1008: 2—161. 281 S— 323,820. 282.... 2_|7, ^®* «— 27«. {See itim Addystoii Pipe and Steel Co. ir, IT. 8.) 0.8. r. Amedy. 11 When t.. 392, 412 t-^MS. U. 8. r. American Bell Tel. Co.. 159 U. 8.. (i48, 558 """"**.]'!.. «-4i7 0. 8. r. Bell Telephone Co.. 128 U. 8.. 315,867 i—ag^'gig U.8.t». Anon. 21 F., 761, 768 1— 3.W 0.8. p. AnuHtrong, 2 Curt., 446. 248 |_g4 jjjg U.S. 1". Babemk.SDUI.. 586... i—^w U. 8. V. Bell. 81 F., 830 , IZlZll]]]'.'.'.'.'.'.'.'."'.' S— 972 U. 8. w, Beviins. 3 Wheat., 886 '.'.'.'.'.'.'.'.'.'.'.'.'.'.'.'.'.'.'.'. i— k6o U. S. If, Brawner, 7 F., 86 | |- L U. 8. P. Britton, 107 U. a. 8B5. 670 '. .'.'.'.'.'.lll'.'.'.'Z'.'.'. l-(i5'l75 U. 8. r. Britton, 108 U. 8.. 199-206 i_^ U. 8. If. Cadwallader. 60 F.. 677 «_«.« 0. 8.it. Caril. 10SU.8., 611 i_^^ U. 8. V. Clark, Fed. Ca«. No. 14805 1— 3tM ,536 U. 8. «. Coal BealeW Abhi., 85 F.. 252 ....^.."^Z".. I-9H0.1007; £-62, 276 **7H U. 8. V. Coolidge, I Wheat., 41§ |_^ '* * IJ. 8. ». Coombs, 12 Pet,, 72 i— a'ia U. 8. w. Coppersmith, 4 F., 19H ..].'."'.". |_64 19^ 0. 8. f. CruikDhank, 92 IJ. 8., 642. 568 1.......................... I— ^i ~~-~— ~ 008' ••••-••••••..•.........,,..,,.,,.,.,,,. 1__7R U. 8. f. Dcbn («ee «l« In re Debs) 64 F., 763 1. '!"!*' 1—459. 761 1—562, ?i4 1— 84i. 65F.,211 ' 1—562 U.S. i». K. C. Knight Co., 60 F., 306,931 1—357. 156 i:. 8., 1 1—429,434,642,644, 668,680,681,735, 738.806,810,960, 1031, 1033; Jf— 52, 72, 168, 189, 199.225,256,817, 322,337,469,460, 497,531.573,668, 770,820. ** 2-505. " 2-30,505. ^^ 1—737: 2—668. ^® 1—802,957; 2—116, 585. " 1-601; 2—524,526. CASES CITED. XXXIH U. 8. v. Elliott, 62F.,801 i_^^ 64F.,27 ZZZZ;;i-S6L U. 8. V. Fowkes, 49 F.. 50 | 17 53 U. 8. V. Freight Association, 166 U. S., 290. (Sec U. 8. v. Trans^Mo. Freight Assn.) U. 8. V. Greenhut, 60 F., 469 1—257 U.S.v.Hess, 124 U.S., 483 !..!.]].!!!!!....!!!! 1—173 U.S. V.Hill, 1 Brock., 156 2—892. U.S. V.Hopkins, 82 F., 629 1—771 U.S. V.Howell, 11 Wall., 436,437 !!!!!!!.!!.... 1— 175 U. 8. V. Hudson, 7Cr., 32 .!!!!!...!..! 1—64 594. U.8.r.JellicoMtn.Coal&CokeCo.,46 F.,432. 1—201,257,770 818 980, 1006; 2—276, 278 U.8.v.JointTraffic A.ss'n, 171U.S,505 2—61,92, 189, 221 225,267.278,469. 460,510,527,746, 746. 5^ 2—244,585. 567..... 2-165. ^68 2—162,166,276,277, 282,286,582,783, 840,866. 569.571 2-468. 572 1—1025. „ ^ ^ 576,577 2-276. U. 8. V. Kane, 23 F., 748 1—283 U. S. v. Kilpatrick, 16 F., 765 ...!.. !!!!.!!!.."! 2—810 U. S. V. Kimball, 117 F., 156,161 .-!.-!!'.". T.!. 2-«96 U. S. r. Kirby, 7 Wall., 482 1—305 707. 486 I |5g U. S. r. Lee, 106 U. S., 196, 220 2—479 U.8.V. Mooney, 116 U. S., 104, 107 .."!!!!]]!!!!. 1—707 U. S. V. Morris, 14 Pet., 464,475.... !.!..]]!!...." 2—486 U. 8. V. Morsman, 42 F., 448 '][[ 1—866 U. 8. V. Nelson, 62 F., 646 !... "!]]..!!!!!!.! 1—182 434 U. 8. r. Northern Secur. Co., 120 F., 721 2— 260,278 627. 726 2—276,286. 193U. 8., 197.. 2-686,034,666,746, 804. 198 2-«2o! 356 2—627,628. ■ 404 2 1002 U. 8. V. Northwestern Exp. Co., 164 U. S., 686 2— 915^ U.S.,. Palmer. 3 Wheat., 610 : '.'.'.'.'.".".".' 1-430,' 705. 630 1—706. 631 I 7^5 U. 8.1. Patterson,. 5.5 F., 606 ■..:";":;;:; 1-291; 302, 469. U. 8. V. Pridgeon,153 U.S., 48 1—698 U. S. r. Reed, 2Blatch.,435,449 2—895 U. S. V, Rogers, 23 F., 658 ';.."!."!.]!!!!!!!.!]!! 1—47 58 U. 8. V. Saline Bank,l Pe't.,100 2—900 U.S. V.San Jacinto Tin Co., 125 U.S., 273, 286 ]!!.!!!...!!...! 1—583 619 U.S. V. Sanborn, 28 F., 299, 301, 302 '"' 2—972 U. 8. V. Sanges,144 U.S., 310 ....I........ l—ig U. S. V. Simmond8,96U.S.,360 1— €6 17^^ U. 8. V. Speed, 8 Wall, 77,84 .'..'.".''*.'.'.*'.'.*.'.**.*.'." 2-997 U.S. V. Swift «fe Co., 122 F., 534 2—m U. S.V.Terry, 39 F., 355 l"-'.l"!".'."!.*!."!" 2-896! 21220— VOL 2—07 m in XXXIV OASES CITED. V. 8. v.. Tmiis^-Misroari F»eif ht Awn.. fi8 F.. 440 i_i82, 300, 618. S8F.,ii8 1-360,430,605,618, 647. 166 U.S., 290 1-7A781,842,8.'>2, 923, 925, 928, eSl, 936: « — 51, 91, 162,189,221,225, 244,256.278,322, 469,460,009,527. * «11 «— 316. 312 1-740. 813,826 1-^11. 323 2-167. 327 1—762. 328 2-585. 329 2-873. 381 2-638. 382 2—481,638. 389,840,342 2-276,286. 341 2 167,746. U. 8. V. Tbonifts, S6 P., 881 ' i— aos U. 8. r. Thompson, 12 Sawy., 155. 31 P.. 331 .'...7... ....!.... 1-460 U. S. V. Trumbull, 46, F., 755 1—65. U. 8. V. Tynen, 11 Wall., 96 ."*"["*!"!![]] 1-820 U. 8. V. Union Pacific Railroad Co., 91 U. 8., 72, 79................ .... 1-177 678 705 U. 8. V. Waddell, 112 U. 8., 76 1-173174 U. 8. V. Walsh, 5 Dill., 58 [['[[ i_4^' U. 8. V. W. U. Tel. Co., 50 P., 28, 42 ^. ....... ....... l-«47. U. 8- r. Williams, 1 Cranch C. C. 178 2—972 U. S. V. Wlltberger. 5 Wheat., 76. 96 "!.............!!'. 2-485. U. 8. V. Worlcingmen's Amalg. Council, 54 P., 994 1—202, 266, 291, 360. W5 1-302,459. 1000 1-202.459. 57F.,86 1—266,308,360. U. 8. Chemical Co. v. Provident Chemical Co., 64 P., 946 2—276. U. 8. Consol. Seeded Raisin Co. v. Griffin & Slcelly Co., 126 P., 364.. .1! 2—863,867 366 8-865. U. S. Exp, Co. r. Henderson, 69 la., 40 i-Wi Urmston v. Whitelegg, 63 L, T. (N. S.), 466 7.1.......[.!! 1—798. Underwood's Case. 2 Humph., 48, 49 ...'■'*.".*. 1— 399] Union Pac. Ry. Co. v. Chicago. R. I. & P. Ry. Co., 51 P., siw, 317^1!!. l-'llS. Van Horn r. Van Horn. 52 N. J. Law, 286 2-304. Veazie i. Moor. 14 How., 568, 574 1—257 392. Verdin r. St. Louis. 131 Mo., 26 .."..'.!"..!""]*.] 2— 56o! Vicksburg f. Tobln. 100 U. S., 430 ......!..!!.. IT...! 1—740. Victor Talking Machine r. The Pair, 128 P., 424 2— 786i863 Vicker>-i'. Welch, 19 Pick., 528 []] 2—1008. Vidal r. Girard's Exrs., 2 How., 127, 197 1— 200 Village of Pine City v. Munch, 42 Minn., 342 1—586. Vulean Powder Co. r. Hercules Powder Co., 96 Cal., 310 1—797; 2—808,1006. w. Wabash R. R. Co. t'. Defiance, 167 U. S., 88 ..,, 2—562. WalMKh, etc., Ry. Co. v. Illinois, 118 U. 8. 557 .....I......... 1—U7. ^ 1-354,356. , 574 8-504. CASES CITED. XXXV Waffle V. Vanderhej'den. 8 Paige, 46 1—363. Walker V. Collins. 167 U. S., 57, 59 2—548. Walker t>. Cronin, 107 Mass.. 555 1—284. Wall v. Thomas, 41 P., 620 1—624. Wallace v. Lincoln Savings Bank. 89 Tenn.,631 2—310. Walling r. Michigan. 116 U.S., 446 1—737,739. 454 1—736. Walsh V. Dwight. 68 N. Y.Supp., 91 2—1015,1017. 93 2—277,279. Ward I'. Byrne, 5Mee8. & W.,647 1—786. — 549 1—75. Ward v. State, 2 Mo., 120 2—894. Warev. Curry. 67 Ala.. 274 2—821. Warren V. Exchange, 52 Mo. App., 157-167 1—630. Warren r. Paving Co., 115 Mo.. 572, 680 2—660,562. Waterhouse V. Comer, 55 P., 149 1—361. Watson V. Puller, 9 How. Pr.. 425 1—368. Watson V. Jones, 13 Wall.. 679 2—565. Watson V. Williams, 36 Miss., 331, 341 1—594. Weare Commission Co. v. People, 209111., 528 2—729. Wedding?'. Meyler, 192 U. S., 573 2—872. Weeks v. Smith, 3 Abb. Prac, 211-214 2—839. Weir v. Gas Co.. 91 P., 940 ^i--... 2—78. Weiss t). Herlihy, 23 App. Div., 608; 49 N. Y. Supp., 81 2—92. Welch V. People, 30 111. App., 399. 409 1—339. Welch V. Phelps & Bigelow Windmill Co., 36 8. W., 71 (89 Tex., 653) .. 2—277. Welton i'. Missouri, 91 U. S., 276 1—739,960; 2—515. 280 1—1023. West Virginia Transp. Co. v. Ohio R. Pipe L. Co., 22 W. Va., 600 1—222, 688, 724» 799. 625 1—206. Western Union Tel. Co. v. Ann Arbor R. R. Co., 178 U. S., 239 2—548. 243 2—565. Western Un. Tel. Co. v. Amer. Un. Tel. Co., 65Ga., 160 1—202,206,688,724. Western Un. Tel. Co. v. James, 162 U. S., 650,655 1—1027. Western Un. Tel. Co. v. Penn. R. R. Co., 195 U. 8.. 540, 647 2—707. 120P.,981 2—707. 123P.,33,36 2—620,707. Weston r. Ives, 97 N. Y., 222-228 1-S30. Wetmore v. Mellinger, 64 Iowa i— 51 . Whipple V. Cumberland Cotton Mfg. Co., 3 Story, 84 2—972. White V. Brownell, 2 Daly, 329, 337, 342, 350; 3 App. Prac. (N. 8.), 318.. 1—630. Whiter. Parkin, 12 East. 578 -. 2—311. Whitehead & Hoag Co. v. O'Callahan. 139 P., 243 2—943. Whiteside V. Haselton. 110 U. 8., 296 1—665; 2—316. Whitney v. Fairbanks, 54 P., 985 2—79. Whitney t>. Slayton, 40 Me., 224 1—785. Whittaker r. Howe, 3 Beav.. 383 1—75,199,205,785. 788. Whitwell V. Continental Tobacco Co. , 125 P., 454 2—286, 1015, 1019. Wickensv. Evans, 3 Younge& J., 318 1—206,789. Wiggins Ferry Co. v. Chicago & A. R. Co., 73 Mo., 389 1—205, 208. Wight V. U. 8., 167 U. S.. 516 2—1025. Wilbur V. How. , 8 Johns. ,444 1—803. Williams V. Fears, 179 U. S., 270 •. : 2—146, Wilson t'. Blair, 119 U.S., 387 2—316. Wilson V. McNamee, 102 U. 8., 572 1—847. Wilson V. Rousseau, 4 How., 645, 674 2—186. 646 2—796. Windsors. McVeigh, 93 U.S., 274. 282,283 1—340. Wisconsin r. Pelican Ins. Co., 127 U. S., 265 2—14. XXXVI CASES CITED. Woodruff V. Berry. 40 Ark., 261, 252 1—202,808. Woodward©. Alston, 12 Helsk., 681 2— W. Wooton V. Hinkle, 20 Mo., 290 ] [ 1—803. Wordenv. Searls, 121U. S., 26 !]]"!]..]1!!!!!!!!]! 2—839! Y. Yarborough's Admr. r. Avant, 66 Ala., 526 2— «21. Yates' Case, 4 Johns, 317,373 ......[.... 1—339. Yatesv. The Queen, 14 Q. B. D.. 648 7^....,.... 2-898! Yeatonv. U. S., 5 Cr., 281 1—820. Yiek Wo V. Hopkins, 118 U. S., 856, 369 2—139! FEDERAL ANTI-TRUST DECISIONS VOL. 2 11)00-10()(). [354] UNION SEWER-PIPE CO. v, CONNELLY.' (Circuit Court, N. D. Illinois, N. D. January 29, 1900.) ' [99 Fed., 354.] Note to Trust— Avoidance.— A note made for a balance due on goods bought from a corporation cannot be avoided merely because the latter is a trust organized to create and carry out restrictions in trade contrary to the common law.* Same. — A note made for a balance due on goods bought from a corpor- ation cannot be avoided merely because the latter is a trust organ- ized to create and carry out restrictions in trade contrary to the " Sherman Act" (Act Cong. July 2, 1890), as that only covers con- tracts which are themselves in restraint of trade, and does not aflfect those which "merely indirectly, remotely, incidentally, or collaterally regulate, to a greater or less degree, interstate com- merce between the states." Illinois Trust Law— Constitutionaijty.— Act 111. July 1, 1893, de- fining trusts and conspiracies against trade, declaring contracts in violation of its provisions void, etc., provides (section 9) that it shall not apply to agricultural products or live stock while in the hands of producers. Held, that such section rendered the entire act void, as a violation of section 1 of the fourteenth amendment of the fed- eral constitution, and the provision of Const. 111. art. 4, § 22, that, in cases wfiere a general law can be made applicable, no special law shall be passed. o Affirmed by Supreme Court (184 U. S., 540). See p. 118. 6 Syllabus copyrighted, 1000, by West Publishing Co. 21220— VOL 2—07 m 1 j ^ ^ FEDERAL KEPORTEB, 354. Opinion of the Court. Herbert II'. Hamlin aiid Edwin Walker, for plaintiff. O^DmneU S Coghlan and John R, MeFee, for defendant. KoHLSAAT, District Judge. Plaintiff in this case brinijp^ snit to recover on certain promissary notes given by defendant for balance due on pur- cliases and deliveries of sewer pipe. IX^fendant pleads the general issue, and gives notices thereunder of thi-ee spe- cial defenses, all of which are based unon the theory that plaintiff was a trust or combination organized for the ex- press purpose of creating and carrying out restrictions in trade, contrary (1) to tlie common law in force both in Ohio and Illinois; (2) to the act of congress of Julv 1. 1800, com- monly called the ^* Sherman A(t"; and (3) 'to the statute of the state of Illinois taking effect on July 1, I8im. As to the matters set out in the first notice of special de- fense, it is undoubtedly true that by the common law con- tracts which are themselves directly in restraint of trade may, in a proceeding based thereon, 1h> declared void and un- enforceable by the courts; but there is no case brought to the attention of the court in which it has been held tliat at common law a contract not in itself in restraint of trade is void because one of the parties thereto is a party to a con- tract which is in restraint of trade, and the one contract is indirectly based upon the other. The fact that one party to a contract is engagt^d in illegal acts will not, at common law, avail the other party as a defense to the enforcement of a contract in itself legal. The first notice of special defense will therefore be stricken out. It will be seen by an inspection of the so-called " Sherman Act,'' and of the opinion of Mr. Justice Peckham in the Addyston Pipe cC- Steel Co, Cam (decided by the United States supreme court, Dec. [355] 4, 1899) 20 Sup. Ct. 9G, Adv. S. U. S. 96, 44 L. Ed. , that the act only covers con- tracts which are themselves directly in restraint of trade, and does not affect those which " merely indirectly, remotelv,' incidentally, or collaterally regulate, to a greater or less UNION SEWER-PIPE CO. V, CONNELLY. Opinion of tlie Court. degree, interstate connnerce among the states." It therefore follows that the second matter of special defense set up must be stricken out. Now, coming to the ground of special defense set up in the third notice, to wit, the Illinois statute which went into effect on July 1, 1893 : This statute, in terms, provides that the defense herein set up may be maintained as a bar; and, if the statute is valid, then plaintiff cannot recover in this case, if it be, as averred by defendant, a corporation organized in restraint of trade, and a trust, under the defi- nition contained in said statute. Plaintiff contends that the said statute is unconstitutional (1) because it is obnoxious to section 1 of the fourteentli» amendment of the federal constitution, which reads, in part, as follows: "No state shall nuike or enforce any law which shall abridge the privi- leges or immunities of citizens of the United States, nor shall any state deprive any person of life, liberty or prop- erty without due process of law, nor denj^ to any person within its jurisdiction the equal jDrotection of the laws;" and also (2) because it is in contravention of section 22 of article 4 of the constitution of the state of Illinois, which reads, in part, as follows : •' In all other cases where a gen- eral law can be made applicable, no special law shall be enacted." The said statute of July 1, 1893, after defining a trust, and setting out the various penalties provided for violation of the act, provides, in section 9, that " the pro- visions of this act shall not apply to agricultural products or live stock while in the hands of the producer or raiser." Can it be claimed that, under this clause 9, every person >vithin the jurisdiction of the state of Illinois has equal pro- tection of the law^s? Is not this class legislation? Is it in accordance wath section 1 of the fourteenth amendment to the federal constitution that those who produce or raise agricultural products or live stock shall be exempted from the provisions of a statute which, by its terms, are binding on every other citizen or person within the state ? I think clearly not. I am of the opinion that this statute contains both class and special legislation, and is in contravention of both the federal and state constitutions, and therefore void. 4 99 FEDERAL REPOBTEB, 985. Statement of the Case. It is urged that, granting the unconstitutionality of said ninth clause, yet it may be declared void without affecting the validity of the remaining clauses of said act. If this were so, then, by declaring said clause void, the courts would make the act binding upon those classes pi persons within the state which the legislature had specially exempted from its provisions. This would be judicial legislation of the most flagrant character. In my opinion, the said clause 9 taints the whole act, and renders it all void. Therefore the special defense set up in the third notice must be stricken out. It follows upon the record, as it is with the said three matters of special defense stricken out, that a verdict must be given for the plaintiff fqr the face of the notes in suit, and interest thereon from maturity at 5 per cent., and the jury will be so instructed. [985] NATIONAL FOLDING-BOX & PAPER CO. r, ROBEKTSON, ET AL. (Circuit Court, D. Counecticut. February 0, 1900.) [99 Fed., 985.] Patents^ Infringement— Folding Paper Boxes.— Tlio ^^'ilsun pat- ent, No. 286300, for an improvement in folding paper l>axes. held not anticipated, and valid, on motion for a preliminary injuuctio?^ Same— Suit fob Infringement— Defenses.— The fact tliat the owner of a patent is a corporation alleged to have been formed hi vio- lation of the anti-trust law, and that the patent is alleged to have been assigned to it in furUierance of the illegal purpose to create a monopoly and control the price of an article of commerce, is not available to an infringer of such patent to defeat a suit for the infringement.o This is a suit in equity for the infringement of a patent. On motion for a preliminary injunction. Walter D, Edmonds^ for complainant. Charles W. Comstoch and W, E. Simonda, for defendants. « Syllabus copyrighted, 1900. by West Publishing Co. NATIONAL FOLDING-BOX & P. CO. V, BOBERTSON. 5 Opinion of the Court Town SEND, District Judge. On motion for a preliminary injunction against infringe- ment of the first claim of patent No. 286360, granted Octo- ber 9, 1883, to Arthur Wilson, for improvement in folding paper boxes. This claim has been sustained by Judge Thomas, after exhaustive consideration of the issues of an- ticipation and noninfringement, in two opinions in the suit of this complainant against Robert Gair (C. C; 91 Fed. 905, and 97 Fed. 813). The new evidence introduced related only to patents set up in the answer, but not discussed, in said Gair Case. The defendants relied chiefly on one only of said patents, namely. No. 269682, to Linnett, which they claim exactly corresponds with the boxes of the patent in suit, except in the use of what are known as the tongues and slits for securing the same, and that this construction was suggested by Linnett when he said, " the parts at the ends being attached together to secure them, as by pasting or otherwise [986] securing the parts," and they contend that the use of such slits and tongues was well laiown in the art. As pointed out by J\idge Thomas in his carefully con- sidered opinion, the merit of the invention in suit is that the end piece, with its tongues, when caught into said aper- tures and loosely held therein, closes and holds together the end of the box by means of its lever function. This con- struction dispensed with the exterior perforations of the boxes of the prior art, and reinforced the sides of the box against strain. Counsel for complainant says the Linnett patent was not presented for Judge Thomas' consideration, because the pat- ent to Arthur, May 15, 1877, No. 190803, which was dis- cussed and considered, covered everything embraced in the Linnett construction. The construction of Arthur is nearer to the patented construction than that of Linnett. It is apparent that neither Arthur nor Linnett had any idea of the clutch invention which Wilson devised. All the other questions herein were before Judge Thomas, and were dis- posed of by him. The defendants have also filed a plea in abatement alleg- ing that certain partnerships and corporations which were O m FEDERAL BEPORTER, 986. Opinion of tlie Court rivals in business, situated in various states, engaged in the manufacture of these boxes, being articles of commerce and in gi-eat demand throughout the United States, for the pur- pose of stifling competition, and controlling and limiting the output of each of said manufacturing concerns, or lessen- ing the amount of production of said goods and articles of commerce, entered into a conspiracy, for the purpose of stip- ulating and providing for uniform minimum prices of said articles of commerce sold throughout the states, and enhanc- ing the price thereof, and limiting the production of the same, and that, in pursuance of said conspiracy, each of the parties entered into a contract to sell its plant to a new corporation, to be organized under the laws of the state of New Jersey. Said contract was set forth in full. It com- prised an agi*eement between certain firms, persons, and corporations to take stock in said corporation, and provisions for the appraisal of the property of each of the constituent members, and for the allotment to each of them of stock in the new corporation in proportion to such appraisal. The plea in abatement further alleged that said parties further agreed that neither of the persons or companies mentioned in said agreement should engage in the manufacture or sale of said articles of commerce, or directly or indirectly continue in, carry on, or engage in said business of which said articles might form a part, indej>endently of the said National Folding-Box & Paper Company, to be organized as aforesaid, for the period of 49 years, and that durmg said period the parties should refrain from entering into competition as rivals of said company; and that in pursu- ance of said conspiracy the parties abandoned the manu- facture of such articles, and that said National Folding- Box & Paper Company has carried out all the designs of said parties; and that, in pui*suance of said agreement and conspiracy, all the patents have been transferred to said cor- poration ; and that " it was further agreed between the par- ties ♦ * * that each of the parties to said agreement could and did [987] manufacture said articles of commerce under patents owned by them prior to the formation of said company," and that such articles " were sold by said parties ♦ ♦ * at uniform prices, and upon the same terms, NATIONAL FOLDING-BOX & P. CO. V, ROBERTSON. T Opinion of the Court without respect to the cost of production or the merits of the respective articles ''; and that the patent in suit was con- veyed to the complainant corporation in pursuance of said conspiracy to restrain the trade in the states where said plants wei'e located. The plea further alleges as follows: " Tlie direct tendency and tlie direct result of said conspiracy and agreement between said parties, as aforesaid, was and did, as intended by the parties thereto, create a scarcity of said articles of commerce, and enliance the price thereof, in the states where said plants were located, and throughout the several states where said articles were in use by the public to a great extent ; and the said conspiracy, and the natural results of the same, as intended and designed by the parties to said agreement, and the acts of the parties thereto under the same, are all and each in violation of law, in restraint of trade ami commerce between the several states, and are directly prohibited by the common law and the laws of the United States, and, as said illegal and unlaw- ful combination of the parties to said agreement, the said National Folding-Box & Paper Company, have no right, power, or authority to sue or plead in the courts of the United States, in any civil action wherein it invokes the aid of the courts of the United States, to pro- tect the plaintiff to further engage in or carry on the business for which it was illegally organized, and especially to protect it as de- manded in this suit, and said combination is illegal and void, and your res{>ondents, therefore, pray that the proceeding in the cause may be abated and dismissed." This plea was argued under an oral stipulation to the effect that, for the purposes of the motion for a temporary injunc- tion, the facts alleged in said plea should be taken as true, so far as thev referred to the contents and execution of the agr(>euients therein alleged, but that this admission should not l)e construed to extend to anv innuendoes contained in the plea respecting the purposes of said agreements, except so far as they appeared on the face thereof, nor respecting the intent or animus of the parties thereto. The conclusioiis reached dispense with the necessity of resting the decision on the legality of the agreement alleged in the plea in abatement. It does not appear that the orig- inal ccmtract was illegal. There are no provisions therein which, directl}^ or indirectly, refer to any restriction of trade or regulation of output or of prices. The parties thereto bound themselves not to engage in like business for 49 years. This was essential to effectuate the transfer of the good will, and is not unusual in such cases. The allegation that it was further agreed that the parties " could and did manufac- ture/' etc., is in direct • conflict with the previous allegation of the plea. To sustain this plea, it would be necessarj^ to 8 m FEDERAL REPOBTEE, 987. Opinion of the Court. hold, as claimed by defendants, that a corporation formed in restraint of trade in one state could not, in another state, maintain a suit to restrain the infringement of its patent. The federal cases chiefly relied on by defendants are Har- row Co, V. Bench (C. C.) 76 Fed. 667, affirmed in 27 C. C. A. 349, 83 Fed. 36, 39 L. E. A. 299 ; Harrow Co. v. Quick (C. C.) 67 Fed. 130. ^ \ / Harrow Go. v. Hench, supra, was a suit to enjoin licensees from violating a license contract by selling below the price agreed on therein, and for a decree for the specific perform- ance thereof, which [988] contract was made with a combi- nation controlling 90 per cent, of the manufacturers of cer- tain harrows in the United States. Said contracts prevented licensees from selling their products at a price less than was set forth in a schedule 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 mvested with the exclusive right to manufacture and sell their old-style harrows under their own patents; but all of them must sell at uniform prices, and upon the same terms, without respect to cost or the merits of their respective styles of harrows, and all the members 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 Achason refused the injunction, and the court of appeals affirmed his decision, taking the ground that the prior owners were the beneficial owners, with right to continue their business, subject only to the restric- tion in its management imposed by the contract, and that " the result would be the same, in legal contemplation, 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 a suit to compel the performance of an unlawful contract. The decision rests upon the fact that the corpora- tion was organized solely 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 com- plainant against the same defendant* (C. C; 84 Fed. 226), NATIONAL FOLDING-BOX & P. CO. V. ROBERTSON. 9 Opinion of the Court. to restrain infringement of a patent which had been assigned in accordance with said contract, held that, as the contract was illegal and void, the assignment also was void, and solely on that ground dismissed the complaint. The only opinion in the federal courts cited by defendant which would seem to support the doctrine that an infringer might defend his illegal acts, even in a case where the com- plainant was a combination formed for the purpose of re- straining trade and competition, is Harrow Co. v. Quick, supra, in which the learned judge disposed of the question of. infringement on the merits, but, in passing on the defense that this same harrow company was an illegal combination, said: " It seems to me that the court cannot sustain the present bill with- out giving aid to the unlawful combination or trust represented by the complainant. The question is not free from doubt, but in a case of doubt I feel it my duty to resolve it in such a way as will not lend the countenance of the court to the creation of combinations, trusts, or monopolies." The court of appeals, however, said on this point : " While not prepared, in view of the authorities, to sanction the prop- osition that the infringer of a patent may escape liability by showing that the legal owner is engaged in a supposed unlawful combination or trust, we do not consider the point" 20 C. C. A. 413, 74 Fed. 239. And in Columbia Wire Co. v. Freeman Wire Co. (C. C.) 71 Fed. 306, Judge Adams said : " I would quite agree with the learned judge who wrote that opinion, that the correctness of his conclusion, even in that case, was not free from doubt." [989] And he refused to apply said doctrine in a case of infringement. The question here presented was discussed by Judge Wal- lace in Strait v. Harrow Co. (C. C.) 51 Fed. 819. Judge Wallace says : "The proposition that the plaintiff", while infringini: the rights vested in the defendant under the letters patent of the United States, is entitled to stop the defendant from bringing or prosecuting any suit therefor because the defendant is nn obnoxious corporation, and is seeking to i3erpetuate the monopoly which is conferred upon it by its title to letters patent, is a novel one, and entirely unwarranted." ' The opinion in Machine Co. v. Smith (C. C.) 70 Fed. 383, is to the same effect. Judge Simonton says: "The issues are these: Do the complainants hold letters patent of the United States giving them the exclusive right to make, vend, 10 m FEDEBAL EBPORTEB, 989. Opiiiron of the Court and n»» certain patt'iitahlo dt'vKos? Have tin* aotVndants infringed the rights thus grantetl? If in pmeiiring these exelnslve rights, or if. in their exereiae, the eoinplaiiiants have lu^en gniltv of fraudulent or iiuproiier conduct towards these defendants, the fuiiehe8t of the infringer. w8 : "They fthe owners of the imtent in suit! do not los*. that right merely b«H:nise th€»y may have joined in a combinatieen arbitrarily refused them, save upressive and unreasonable terms, it will lx» time to ctjusider whether the complainants shouhl be allowee liniit-d by the limitation existing for the t»en ustHl in various senses. Strictly and pri- marily, they denote punishmint. whether <'orp>iaI or ptMMuiiary, iuj- IHiseil and enforced by the stale for a crime or offense aiiainst its laws." In the previous case of Wiscomin v. Pelican Ins. Co,, 127 U. S. 265, 8 Sup. Ct. 1370, 32 L. Ed. 239, Mr. Justice Gray, for the court, had said : ** The rule that the courts of no country execute the penal laws of another applies not only to prosecutions and sentences for crimes and iiiisdemeanors, [903] but to all suits in favor of the state for the re- covery of i)ec!uiiary penalties for an.v violation of statutes for the protection of- its revenue, or other municipal laws, and to all judg- ments for such penalties." In HnnUngton v. Attrill [1893] App. Cas. 150, before the privy council of England, precisely the same question was in CITY OF ATLANTA V, CHATTANOOGA F. & P. CO. Opinion of the Court. 15 judgment as that involved and decided in Hvntingtmi v. Attrill,, mimi. the suit being between the same parties. Lord Watson, delivering the judgment of their lordships, quoted the above passtige from Wiscomin v. Pelican Ins, Co., rendering in italics the words " but to all suits in favor of the state,-' and then went on to say : " Their lordships do not hesitate to accept that exposition of the law which, in their opinion, discloses the proper test for ascertaining whether an action is penal within the meaning of the rule. A pro- ceeding, in order to come within the scoi)e of the rule, must be in the nature of a suit in favor of the state whose law has been infringed. All the provisions of numicipal statutes for the regulation of trade and trading companies are presumably enacted in the interest and for the benefit of the community at large; and persons who violate these provisions are, in a certain sense, offenders against the state law, as well as against individuals who may be injured by their con- duct. But foreign tribunals do not regard these violations of statute law as offenses against the state, unless their vindication rests with the state itself, or with the community which it represents. Penalties may be attached to them, but that circumstance will not bring them within the iiile, except in cases where these penalties are recoverable at the instance of the state, or of an official duly authorized to prose- cute on its behalf, or of a member of the public in the character of a common informer. An action by the latter is regarded as an actio I)opularis i)ursued, not in his individual interest, but in the interest of the whole community." In Dicey, Confl. Laws, p. 220, the general proposition is laid down (as rule 40) that the high court of justice in Eng- land cannot entertain an action for the recovery of a penalty due under the laws of a foreign country, or an action on a foreign judgment for such penalty. Upon the authority of leading cases cited, the rule is then commented on as follows : "What is a penal law? The application of rule 40 raises the diffi- cult question, when is a law to be considered a penal law? Or, what is really the same inquiry under another form, when is an action to be considered a penal action? These inquiries are to be answered as follows : A ' penal law ' is strictly and proi^erly a law which imposes punishment for an offense against the state; and a * penal action' is a proceeding for the recovery, in favor of the state, of a' penalty due under a iienal law. A law, on the other hand, is not a penal law merely because it imposes an extraordinary liability on a wrongdoer, in favor of the person wronged, which is not limited to the damages suffered by him; and an action for enforcing such liability by the recovery of the penalty due to the person wronged is not a penal action. The essential characteristic, in short, of a penal action is that it should be an action on behalf of the government or the com- munity, and not an action for remedying a wrong done to an indi- vidual. A proceeding, then, in order to c-ome within rule 40, must be in the nature of a suit in favor of the state whose law has been infringed." This question of distinction between penal actions brought 16 101 FEDERAL BEPOKTER, 903. Opinion of the CJourt by a common informer, or on behalf of the state, to redi-ess a public wrong, and remedial actions brought by the party injured to redress a private wrong, has been under consid- eration in many adjudged cases. 13 Am. & Eng. Enc. Law (2d Ed.) 52; 16 Enc. PL & Prac. 229, where the subject wiU be found fully treated, and the cases cited. [904] It is quite obvious that no sound i-eason could be suggested why eongi-ess would have been concerned in i)re- scribing a limitation to actions for penalties or forfeitures other than such as are prescribed in favor of the United States for breaches of public law, punishable by i>ecuniary mulct, or otherwise, at the instance of the United States. In Cmn.pb€U v. City of Haverhill j the court said : - '* Is it not more reasonable to pre»iiiiie that eongreas, in authoriz- ing an action for infrinj,'eineiit. intended to subject such action to the general laws of the state applicable to actions of a similar nature? In creating a new right and providing a court for the enforcement of such right, must we not presume that congress intended that the reme«ly should be enfon^ed In the manner common to lilce actions within the same jurisdiction/' Til is languagfi is equally api)licable to the remedy pro- vided by section 7 of the act in question. In examining the question of what " suit or prosecution for any penalty or forfeiture, pecuniary or otherwise, ac- cruing under the laws of the United States," is within the purpose and meaning of section 1047, it would seem that reference may, with propriety, be made to section 919 as possibly tlirowing light on the inquiry, in which it is pro- vided that: "All suits for the i-ecovery of any duties, imposts, or taxes, or for the enforcement of any penalty or forfeiture provided by any act respeen damaged by diminution of trade in conse- quence of the action of the association in raising the price of shmg es: and the third cause of [596] action is similar, the complamt bemg that a shrinkage of the plaintiff's business was caused hy the action of the association in suspending the operation of mills controlled by it, so as. to prevent an overstocking of the market. Both of these causes of action appear to be predicated upon a notion that because the plain- tiff was a buyer and exporter of shingles he had a vested right to the benefit of uni-estrained competition for trade among manufacturers, and that the plaintiff has a vested right at all times to have a surplus of shingles on the market so that he may enjoy that advantage in buying to supply the demands of his customers, and that bv deprivinor him of these benefits and advantages the association has committed a lega wrong, and deprived him of valuable property rights for which he is entitled to recover damages. There is no allegation m the complaint that the price of shingles fixed by the association is higher than the reasonable price, con- sidering the necessary cost of production, and allowing something for the value of the tiniber to the owners of the land upon which it grows, and a reasonable profit to the manufacturers, nor that the wants of consumers have not been promptly supplied. On the contrary, the pleader has boldly advanced the selfish theoiy that, unless conditions are maintained so that a middleman or speculator may operate with profit to himself, he has a right to comj^ensation in damages from the ownei-s of mills who refuse to operate for his benefit, or t<. sell the product at prices satisfactoiy to him regardless of losses which may result to them from such oper- ation. It is a well-known and lamentable fact that for half a century loggei-s have been permitted to cull the magnificent GIBBS V, mVeELEY. 29 Opinion of the Court, forests of this state, wasting the greatest of her natural en- dowments, by cutting fir and cedar trees recklesslv, sending only the best logs to the mills to be manufactured into lumber for shipment to market in distant states and countries, leav- ing the residue to decay upon the ground, or give additional energy to the destructive force of forest fires in the summer months. They have paid but little for stumpage, and fre- quently their hired laborers have been defrauded of their wages. Unrestrained competition has been the means by which this state has been stripped of its wealth. Cedar trees standing and growing in our forests are a blessing to the state, and they ought to be preserved, at least until their value is appreciated, so that the crop which has required many centuries of time for its perfection will be worth to owners of the land something more than the price which a farmer may reasonably expect for his annual production. It seems ridiculous that while land producing wheat, hay, vegetables, or fruit in this state usually brings annual re- turns over and above expenses of cultivating and harvesting of from $10 to $50 per acre, the average market price for a fee-simple title to timber land in western Washington has never yet been above $10 per acre. An association which will check the wanton destruction of cedar trees in this state, by reckless lumbermen, for the benefit of speculators, instead of being condemned, deserves the gratitude of the common- wealth. No principle of natural justice is appealed to by that part of the complaint now under consideration, and I do not think that the act of congress commonly designated as the "Anti-Trust Law of 1890," to which the complaint refers, can be fairly construed so as [597] to make the Washington Red-Cedar Shingle Manufacturers' Association a criminal organization, so long as its operations are properly con- ducted, and kept within the scope of the object for which the association was formed, as set forth in its constitution, the first article of which reads as follows: Qi •"''^^.^i*^® ^* *^^^ organization shall be the Washington Red-Cedar fehiugle Manufacturers' Association, and its object shall be to secure a full understanding of the conditions surrounding the red-cedar shingle market throughout the United States; the establishing of uniform rules for grading and manufacturing; the establishing of uniform rates and prices; and for purpose of carrying out such other measures as 30 102 FEDERAL RBPOBTER, 597. Opinion of the Court may Iw deemed for the welfare and in the Interest of the manu- faetnrew of red-cedar shingles." There is in this declaration no hint of a purpose to create a monopoly, or to place any burden upon interstate or foreign commerce. The association, judged by the instrument which defines its object and circumscribes its powers, is iimocent of any wrong intent, because its object is to influence tlie con- duct of its members, and not to assail the rights of others. Concert of action for mutual protection among farmers or craftsmen or miners whose operations are entirely within the state may indirectly affect the prices or the abundance of commodities brought for sale within the state by importers, as well as commodities produced within the state for sale elsewhere; but associations of persons not themselves en- gaged in interstate commerce, having no object other than to protect their own rights and serve their own interests in business operations wholly confined within the state, cannot be held to be amenable as violators of the anti-trust law, which is necessarily so limited as to reach only combinations intended to prevent competition in interstate or foreign commerce. The distinction between the business of manufacturing staple-commodities for sale to whomsoever will buy, whether for home consumption or transportation to distant markets, and interstate commerce, is very clearly brought into view, and the principle upon which I intend to rest in making this decision is explained, in the opinion by Chief Justice Fuller in the case of U. S, v. E. C, Knight Co., 156 U. S. 1-11, 15 Sup. Ct. 253, 89 L. Ed. 329. The sense of that decision is epitomized in the following excerpts : "The relief of the citizens in eadi state from the burden of mo- nopoly and the evils resulting from the restraint of trade amone such citizens was left with the states to deal with, and this otmrt has recognizeii their possession of that power, even to the extent of holding that an employment or business carried on by private individuals when it became a matter of such public interest and imi)ortanco as to create a common cliarge or burdeu upon the citizen,— in other words when it becomes a practical monopoly, to which the citizen is com- Iielled to resort, and by the means of which a tril)ute can be exacted from the connunnity.— is snbject to regulation !)v state legislative power. On the other hand, the power of ft>ngres.s to regulate com- merce among the several states is also exclusive. The constitution does not provide that interstate commerce shall be free but bv the Erant of this legislative power to regulate it, it was left free except as GIBBS V. M NEELEY. 31 Opinion of the Court. congress might impose restraints. ♦ * * ' Counuerce und^iubtedly is traffic/ said Chief Justice Marshall ; ' but it is something more ; it is intercourse. * * * That which belongs to commerce is within the jurisdiction of the United States, but that which does not belong to conunerce is witliin tlie jurisdiction of the police power of the state.' Gibbons v. Ogdcn, 9 Wheat. 189-210, 6 L. Ed. 23; Bronn v. Mariflaml, 12 Wheat. 410-448, 6 L. Ed. 678; License Cases^ 5 How. 505-599, 12 L. Ed. 256; [598] Mobile Co. v. Kimball, 102 U. S. 691, 26 L. Ed. 238; Bowman v. Railicav Co., 125 U. S. 465, 8 Sup. Ct. 689, 1062. 31 L. Ed. 700; Leisy v. Hardin, 135 U. S. 100, 10 Sup. Ct. 681, 34 U Ed. 128; In re Rahrer, 140 U. S. 545-555, 11 Sup. Ct. 865, 35 L. Ed. 572. * * * Doubtless the ijower to control the manufacture of a given thing involves, in a certain sense, the control of its disiwsition, but this is a secondary, and not a primary, sense; and. although the exercise of that power uiay result in bringing the operation of com- mene into play, it dees not ct)ntrol it, and affects it only incidentally and indirectly. Commerce succeeds to manufacture, and is not a part of it. * * ♦ The regulation of commerce applies to the subjects of connnerce, and not to matters of internal police. Contracts to "buv, 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, uiay be regulated, but this is because they lorm r>art of interstate trade or conmierce. The fact that an article is manufactured for exi)ort to another state does not of itself make it an article of interstate commerce, and the intent of the manu- facturer does not determine the time when the article or product passes from the control of the state, and belongs to commerce. * * * Contracts, combinations, or conspiracies to control domestic enter- prise in manufacture, agriculture, mining, production in all its forms, or to raipe or lower prices or wages, might unquestionablv tend to restrain external as well as domestic trade; but the restraint would be an indirect result, however inevitable and whatever its extent, and such result would not necessarily determine the object of the contract, combination, or conspiracy. * * * It was in the light of well- settled principles that the act of July 2, 1890, was framed. Con- gress did not attempt thereby to assert the power to deal with mo- nopoly directly as such, or to limit and restrain the right of corpora- tions created by the states or citizens of the states in the aquisition, control, or disposition of property, or to regulate or prescribe the price or i>rices at which such property or the product thereof should be sold, or to make criminal the acts of persons in the acquisition and control of projierty which the states of their residence or creation sanctioned or permitted." See, also, Kidd v. Pearsoiu 128 U. S. 1-26. 9 Sup. Ct. 6. 32 L. Ed. 346. The more recent decision of the supreme court in the case of Addyston Pipe di Steel Co. v. TJ . S., 175 U. S. 211-248, 20 Sup. Ct. 96, Adv. S. U. S. 96, 44 L. Ed. , does not conflict with the decisions above cited. That case is to be distinguished from the one luider consideration by the fact that it involved an agreement between manufacturing firms and corporations located m several states, binding them- selves to refrain from all competition with each other for tJA 102 FEDEKAL REPORTER, 598. Opinion of the Court the sale of iron pipe in the 36 states and territories named in the agreement. The history of the hop industry in this state may be re- ferred to as an illustration. There was a time when the production of hops was a favorite industry in this state, but during several years past it has grown more and more into disfavor because it has been unprofitable, and interstate commerce in this commodity has been diminished by reason of the convei-sion of many hop fields into meadows and vege- table gardens. It may be true that the hop farmers, acting individually and without advice from any one, have, one after another, converted their hop fields; but if they had joined an association of farmers who for general welfare had adopted efficient measures to obtain true information with regard to the supply and demand for hops and other products of the state, and had conformed to an intelligent resolution of the association to meet an increasing demand for onions, potatoes, and hay, instead of continuing to lose the value of their labor and the use of their farms, year after year, by producing [599] hops in excess of the require- ments of the market, it would certainly be tyrannical for the courts to ]>unisli them for resulting losses of profit by dealers and speculators in hops. In my opinion, it would be equally absurb to apply coercive measures to compel shingle manufacturers to operate their mills without profit to themselves, or to forbid them to have the benefit of co- operation for their own advantage. The demurrer to the second and third affirmative defenses will be sustained on the ground that the object of the association is not unlaw- ful. The anti-trust law was not intended to oppress any class, and it cannot be so construed as to prohibit the right of manufacturers, whether acting individually or in concert, to be prudent, and use common sense in maintaining reason- able prices, and avoiding losses by overproduction. 3. According to the statement of the fourth cause of ac- tion, the association appears to have been used for a purpose not suggested by its constitution, and highly prejudical to the plaintiff. In my opinion the complaint states ii good cause of action to recover damages for libel, and the onlv GIBBS V. m'nEELEY. 33 Opinion of tlie Court question as to the right of the plaintiff to maintain the action in this court is whether the facts alleged make a case of which jurisdiction is given to this court by the terms of the anti-trust law. The first and second sections of the act declare contracts, combinations, and conspiracies in restraint of trade or commerce among the several states or with foreign countries, and all attempts of persons to monopolize intersate and foreign commerce, to be illegal, and the seventh section reads as follows : ^ "Any person wlio sliall 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 m 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 fees." It is essential to a right of action pursuant to this law to show that the defendants have entered into a combination or conspiracy to restrain or monopolize interstate or foreign conimerce, and that the plaintiff has been injured in his business or property by an act of the defendants pursuant to their agreement with each other, and intended to affect interstate commerce, and the injury must be of a pecuniary nature, involving a loss of business or damage to property. I find that all the requirements of the statute are met in the plaintiff's statement of his fourth cause of action. He does directly and positively charge that the defendants have en- tered into a combination to restrain interstate and foreign commerce, and constitute an organization; that at a meet- ing of the central committee, controlling the affairs of the association, a resolution denouncing the plaintiff was adopted, and recorded, so as to be preserved in the records of the association; that said resolution was printed and widely distributed as a circular, and especially directed to persons, firms, and corporations in the state of Washingon, and in other states, and in Canada, with whom the plaintiff had theretofore transacted business as a buyer and exporter of shingles. The resolution was obviously intended to create a prejudice against the plaintiff, and to have the effect to impair his credit, [600] and to destroy his business, by in- 21220— VOL 2—07 m ^3 81 105 FEDERAL BEPORTEB, 93. Syllabus. ducing his customers to forsake him; and the claimant alleges that the plaintiff has been injured in his business by reason of what the defendants have done in pursuance of their unlawful combination against his business. The reso- lution is not a regulation of tlie conduct of the association or it members, and they were not minding their own business when they adopted it, but is an agreement on their part to assail the character of a man engaged in interstate commerce, for the purpose of crippling him as a competitor for trade. By annihilating a man of experience and skill in a par- ticular branch of commerce, the restraint upon commerce is quite as effectual as would be any contract binding him to abstain from competition. Demurrer to fourth cause of action overruled. [03] UNITED STATES EX REL. GEIGGS, ATTY. GEN., ET AL. ik CHESAPEAKE & O. FUEL CO. ET AL.« (Circuit Court, S. D. Ohio, W. D. August 31, 1900.) [105 Fed., oaj Monopolies — Contracts Affecting Interstate Commerce. — A con- tract by which a corporation agrees to take the entire product of a number of persons, firms, and corporations engaged in mining coal and malsing coke in a certain district, which is intended for " Western shipment," to sell the same at not less than a minimum price, to be fixed by an executive committee appointed by the pro- ducers, and to account for and pay over to such producers the entire proceeds above a fixed sum per ton, to be retained as " compensa- tion," — the stated purpose being " to enlarge the Western market," — and under which the shipments are made Into other states, is one affecting interstate commerce, and Is subject to the provision of the anti-trast law.* Same— Anti-Trust Law.— It is the declared policy of congress to pro- mote individual competition in relation to interstate commerce, and In prevent combinations which restrain such competition between their members ; and it is no defense to an action to dissolve such a • Afllrmed by Circuit Court of Appeals, Sixth Circuit (115 Fed., 010). See p. 151. » Syllabus copyrighted, 1901, by West Publishing Co. UKITED STATES V, CHESAPEAKE & 0. FUEL CO. Opinion of the Court. 35 combination as illegal under the anti-trust law that it has not in fact been productive of injury to the public, or even that it has been beneficial, by enabling the combination to compete for business in a wider field. Same — Combination in Restraint of Trade. — By a contract bet\veeu a fuel company and an association composed of 14 persons, firms, and coriwrations, engaged in producing coal and coke in a certain district, the company was to handle for a term of years the entire output of the mines intended for the Western market, aud bound itself not to sell the product of any competing mines. A minimum price at which the coal should be sold was to be fixed by the execu- tive committee of the association from time to time, and the com- pany agreed to pay such price, to obtain as large a profit as possible, and to account to the association for all of the sauie, above a fixed sum per ton, which it was to retain as compensation. The amount to be furnished by each member of the association was also to be fixed by the executive committee, and each was to receive payment at the same rate, to be based on the average price realized for the particular grade furnished during the current month. Held, that such provisions were in restraint of trade, and rendered the contract illegal, under the anti-trust act of July 2, 1890 (26 Stat. 209), in so far as it related to interstate commerce. In Equity. Suit to annul a contract and to dissolve a com- bination as illegal under the anti-trust law. Wm. E. Biindy, United States Attorney, and Sherman T. McPherson and Edward P. Moulinier^ Assistant United States Attorneys. Pawton df Warrington, Brown, Jackson & Knight, St. Clair, Walker (& Summerfield, and Richard P. Ernst, for defendants. Thompson, District Judge. This suit was brought by the United States district attor- ney for this district, by direction of the attorney general of the United States. The bill alleges that the defendants, other than the Chesapeake & Ohio Fuel Company, 14 in num- ber, are producers and shippers of coal, and that some of these are makers and shippers of coke in the counties of Fayette and Kanawha, in the state of West Virginia, in what is known as the " Kanawha District," and that they produce nearly if not all of the coal, and make nearly if not all 36 %I\K VWWVWnAT "1>W1>/V1>»1*WP tkA Opinion of tlie Conrt. of the coke, shipped from said district; that a [M] great portion of the coal and coke so produced and made is shipped for sale and consumption into the states of Ohio, Kentucky, Indiana, Illinois, Michigan, Minnesota, Montana, and the Dakotas; that prior to the 15th of Decem- ber, 1897, each of the defendants, other than the Fuel Com- panyy sold their product in the several states mentioned without any restriction other than the natural and necessary competition between themselves and others, but that on that day they entered into a contract and combination in the form of a trust and conspiracy in restraint of trade and commerce among the several states mentioned, in regard to the sale and production of coal and coke, of which the following is a copy : ft I Tills agreement, made this 15th day of December, 1897, between the C. & O. Fuel Company, a corporation created, organized, and existing under and pursuant to the laws of the state of West Virginia, and hereinafter caller the ' Fuel Company,' of the first part, and the St Clair Company, a cori>oration of West Virginia ; John Carver and Enoch Carver, partners in business under the firm name and stjle of Carver Brothers; W. R. Johnson, M. T. Davis, doing business as M. T. Davis & Co. ; John Carver and Enoch Carver, partners in busi- ness under the firm name and style of the Mecca Coal and Coke Com- pany ; S. H. Montgomery, doing business under the name of the Montgomery Coal Company; the Chesapeake Mining Company, a corporation of West Virginia; the Belmont Coal Company, a corpo- ration of West Virginia; the Kanawha Splint-Coal Company, a cor- poration of West Virginia ; the Robinson Coal Company, a corporation of West Virginia; Harry B. Smith, special receiver of the I^ns Creek Coal and Coke Company; Joseph Renshaw, special receiver of the Big Black Band Coal Company ; the Charlmore Coal Company, a corporation of West Virginia; and Robert Brabbin, Jr., and L. N. Perry, partners in business under the firm name and style of the Brabbin Coal Company; Jasper McCallister, Samuel Moore, and James Kelsoe, doing business as McCallister & Co., — and together constituting the C. & O. Coal Association, and hereinafter collectively mentioned as the 'Coal Association,' of the second part: Whereas, the members of the said Coal Association are all miners and ship- pers of coal, and part of them makers and shippers of coke, on the line of the Chesapeake & Ohio Railway, in Fayette or Kanawha counties. West Virginia, and have formed and organized said asso- ciation for the promotion of their common business interests in the mining of Kanawha coals and cokes; and whereas, the said Fuel Company has been incorporated and organized for the purpose of placing said Kanawha coals and cokes upon the Western market, Its prime object to promote the sale of, and enlarge the Western market for. said coals and cokes: Now, therefore, this agreement witnesseth: " (1) That the parties of the second part agree, in consideration of the covenants and agreements on the part of the party of the first part herein contained, each firm, individual, or corporation severally, for themselves, himself, or itself, and not for any other, and each of them doth hereby agree, to sell to the said Fuel Company exclusively the entire coal and coke output of the mine or mines operated by each of UNITED STATES V, CHESAPEAKE & O. FUEL CO. 37 Opinion of the Court. them respectively on said C. & O. Ry., or branches thereof, for West- ern shipment, for a period of not less than five years from and after the date of January, 1898, subject to all the provisions, terms, and conditions hereinafter contained, except as to such coal as may be sold by any member of said Coal Association to the Chesapeake & Ohio Railway Company for the consumption of said railway com- pany, which said coal such member shall have the right to sell to said railway company direct, it being understood that this contract applies only to the coal and coke to be sold west of the respective mmes of the members of said Coal Association, and shall not in any way apply to or interfere with the Eastern trade of the members of said association. "(2) The minimum price f. o. b. mines of all the various grades of coal and coke sold and to be shipped West by the members of said as- sociation, and embraced in this contract, shall be fixed by the executive committee of said Coal Association from time to time, as it shall see proper, after consultation with the executive committee of the Fuel Company. The said Fuel Company [95] covenants, agrees, and binds itself that it 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 prices to be fixed by such committee, and, further, that it will at all times endeavor to obtain the maximum price for such coal and coke. It is understood and agreed that the minimum prices hereinbefore mentioned are net prices f. o. b. mines, and not including any profit to the said Fuel Company, which is to get its profit over and above said prices. " (3) That the said Fuel Company shall make its sales direct, and shall not make any contract for the sale of coal and coke to a third party in the name of any member of the said Coal Association, and shall have no right by any contract to bind any member of said asso- ciation to any third party, except for river business, as hereinafter provided for. " (4) The executive committee of said Fuel Company, who shall administer and have charge of its affairs, shall be composed of three (3) persons, one of whom shall at all times be a member of or officer of a member of said Coal Association, and shall from time to time, according to the by-laws or articles of association of said association' be designated as a member of such executive committee, and shall thereupon be appointed such member of such executive committee by said Fuel Company in tlie place and stead of the member of or officer of a member of said Coal Association previouslv occupying such office. The executive committee of said Coal Association shall consist of three members of or officers of members of said Coal Asso- ciation, to be selected as such from time to time by the members of said Coal Association according to their by-laws or articles of asso- ciation. " (5) The said Fuel Company covenants, agrees, and binds itself to sell for shipment by rail via the said Chesapeake & Ohio Railway, and pay for to the members of said Coal Association as hereinafter agreed, not less than 600,000 tons per annum of coal and 75,000 tons per annum of coke; such sales and shipments to be disposed of in as nearly equal monthly quantities as possible. But in case said Fuel Company is unable for any time to make sales of coal or coke by reason of the failure or inability of the members of said asso- ciation to make prices sufficiently low to enable said Fuel Company to meet the prices in the market where said coal or coke is sought to be sold, and to compete with other sellers of coal or coke in such markets, then there shall be an abatement of the minimum amount of coal or coke hereinbefore agreed to be taken annually by said Fuel MO 105 FEDEBAL KEPOBTER, 95. Opinion of the Court. CoiupaiHy, bearing the same proportion to such minimum amount of coal or folve as such time during which such Inability to meet such market prices shall continue does to one year. The executive com- mittee of said Coal Association shall, not later than the 20th 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, which apiwrtionment so made shall be furnished the general manager of said Fuel Company not later than the 20th day of said first-mentioned month, and all orders received to be shipped by rail as aforesaid during such succeeding month shall be distributed between the members of said Coal Association by said general manager according to sueli apportionments : provided that, if any nieml)er of said Coal Association shall be unable or shall not desire to ship West the full amount of any kind or gi'ade of coal or coke apiwrtioned to such member for any month, the said Fuel Company shall distribute the order for the deficiency so caused among the other members of said association who are shippers of such grade of coal or coke, in the projwrtion as tetween such other members fixed I)y said com- mittee for such month: provided, further, that only actual inability shall excuf^e a member of said association from shipping so nuich of the apportionment for any month [as (?)] shall be required i>y the said Fuel Company for contribution to contracts previously taken by said Fuel Company. " (*>^ The said Fuel Company shall make and render to the mem- bers of the Coal Association accurate and complete reports of all coke and coal shipped by rail as aforesaid, as follows: (a) A daily report of all sales, showing the net prices of such sales, (b) A monthly report showing the toiuiage of the various kinds and grades of coal and coke shipped by members of said Coal Association and wdghed during tlie month, or weiglied during such month though shipped during a preceding month, together with the. average price [96] for each grade or kind of coal or coke so shipped and weighed, which average price shall be computed ui>on the basis of the actual price, less gross profits, if any. received for all coal or coke sold, and the minimuui i>rice, fixed as hereinafter provided, for such month for coal or coke not sold in such month; said roiwrt to be made not later than the 10th day of each month for all coal and coke weighed, or weighed dnring the pi*evious calendar month. The coal and coke shipped and weighed or weighed during such month sliall be paid for by said Fuel Company to the members of said Coal Association according to the average prices, detennined as aforesaid, and upon the sale after the end of each month of any coal or coke shipped and weighed, or welghepers of such coal. "(13) All settlements for coal or coke shipped by rail as aforesaid shall be made upon the scale weights of the Chesapeake & Ohio Railway Company, as ascertained at its weighing stations now estab- lished or that may hereafter be established. "(14) It is distinctly understood that nothing herein contained shall be construed to render the said members of said association liable as partnoi-s, in any way, manner, or form, either as between themselves or with the said P^iel Company ; each of said firms, corpo- rations, and individuals contracting herein for themselves, itself, or himself, and not ore for the other. "(15) The said Fuel Company further covenants, agrees, and bindo Itself that neither it nor any of its officers, employes, or servants will, with its knowledge, directly or indirectly, in aUy way, manner, or form, engage or become interested in the buying or selling of 40 105 FEDEBAL KEPOBTEB, 97. Opinion of the €kmrt Mtnminoiis coal or coke In competition with the coal or coke o' any of the members of said Coal Association, except under the terms and conditions of this agreement ® "(1*5) The members of said Coal Association above named each fnd^^,^',^';i'f fl *"' t^r^^T' "^"^^ "*** *>"« ^«r the other? ^^enant and agree that the said members of said association will not sell miosis'' e^!^n7,2w'**;r''f ^'"°*^ ^i* P°^"*-^ '''^^^ «^ th^'r respectfve mines, except under the terms and conditions of this agieement during the period covered by this agreement, and that th?re shall be no pretended sale or lease of the property of the members of the said association made to evade this contract; but It Is further under- stood and mutally agreed that this contract shall not be construed to prevent ;.ny bona flde sale, assignment or lease of the resnective proi>ertie^ operated by the members of said association, respectivelv or the interest therein of any member of said association. And In case of such sale, assignment, or lease, the memi>ers of said association are not to be held responsible under this contract for the sale and delivery of any coal from Rich properties after sueli sale, assignment or lease takes place. But in case the vendee, assignee, or lessee of «ny coal or coke property of any memiier of the Coal Association toires, he shall have the right to take the place of such member in this agreement. "^cmuci iu "(17) And whereas, some of the members of said association have contracts for the sale of coal or ct»ke, which cannot be completed until after this agreement goes into operation; and whereas, it is to the advantage both of such membera and of said Fuel Company that sue 1 contracts be filial through said Fuel Companv, it is further agreed tliat the members of said association having existing contracts to be completecl during the period of this agreement sliall on or before * ?,^i^'\^^f7 ""^ December, 1807, file with tiie general manager of said Buel Company a memorandum of each of said contracts and ;«5 "^^ «^}^ contracts as are uncompleted on the first dav of January. 1898, shall i)e completed througli said Fuel Companv; the Fuel Com- pany to make no charge for Its services in connection with such contract and collecting the proceeds of the same ; said Fuel Companv not to guaranty tiie colle<»tion of such prmeeils, or be responsible for same unless collected l>y It guch coal or coke so shipped on ex- isting contracts shall not be taken into account in any way as a part of the traHic hereinbefore i.rovided for in this contract, nor its prices taken into account in comimtlng the average price for anv month but such as shall be shipped by rail shall be considered part of the minimum tonnage mentioned in the fifth clause of this agreement for the year in which it is sliipi^ed. afereemeni "(18) The said Fuel Company shall keep at its own expense one or more inspectors to examine and Inspect from time to time as often as may be ntH'e^sary, the coal and coke produced, with a view of keeping up a proi>er standard of exwllence. Should said inspector find coal or coke badly or improperly prepared, he shall Immediately report all the facts In writing to tlie Fuel Companv and to the opera- tor preparing such coal or coke, and shipments fi-om mine or mines producing such alleged improi>erly prepared coal or coke may be suspended after five (5) days' notice in writing to such operator, at the discretion of tlie executive committee of the Fuel Company, until Buch time as such operator may prepare such coal or coke properlv In any case such [98] operator shall have the right to refer the Ques- tion whether such coal or coke is Iniproperlv prepared or not or if not so prepared, whether the same be so prepared at reasonable cost to arbitration, as herein provided, which decision as, to the preparation of such coal shall be final and binding on both parties; and in case UNITED STATES V, CHESAPEAKE & O. FUEL CO. Opinion of the Court 41 said arbitration shall find such coal or coke improperly prepared, and shall further find that it is impossible or impracticable for such opera- tor to remedy such faults at reasonable cost he shall have the right to withdraw from, and have this agreement annulled as to him. If said Fuel Company shall make default in payment for any coal or coke shipped under this agreement according to the terms hereof, and said default shall continue for the space of fifteen (15) days, unless payment shall be withheld by reason of attachment, suggestion, garnishment, or other legal process against the member of said Coal Association on wliose claim default is so made, such default shall, at the option of such member on whose claim such default it is so made, work an annulment of this contract as to such member: pro- vided such member shall within ten (10) days after the expiration of said fifteen (15) days give notice in writing to said Fuel Company of the election of such member to exercise such right of annulment; and a failure to exercise this right for any such default shall not prevent the exercise of the same for any subsequent default And a violation or failure to keep, observe, and perform any covenant or covenants herein contained by any party to this agreement shall, at the option of the party or parties thereby aggrieved, work an annulment of this agreement as to such party or parties on thirty (30) days' notice in writing. And no waiver of this right in case of any violation or failure to keep, observe, and perform anv covenant hereot shall prevent the exercise of the same for any subsequent violation ot or failure to keep, observe, and perform, the same, or any other covenant hereof; provided, that upon any notice for the annulment cf this agreement as hereinbefore provided b^ing given by any parties or party, tlie party or parties to whom it is so given, if desiring to contest the rights of the parties or party giving said notice to annul this agreement shall have the right to submit the question to arbitration, as herein provided, and the decision of such arbitrator shall be final and binding on all parties to such arbitration. Rut any withdrawal or annuhrent as tn any member or members under this, or clause No. 18 hereit shall not affect this contract as to the parties remaining, between themselves. " (19) Anv person, firm, or corporation now or hereafter producing coal to be shipped on the Chesapeake & Ohio Railway may become a party to this contract by signing the same, or an exact copy liereof. with the Fuel Company, or by an indorsement attached hereto may ac- cept the provisions hereof: and, upon becoming such party hereto, such person, firm, or corporation shall be entitled to all the rights and privileges, and be subject to all the duties and liabilities, hereunder, the san e as if he, it or they had been named in said contract as one of the parties of the second part, and had duly signed and executed it with the others named therein : provided, that said association shall agree to such person, firm, or corporation becoming a partv hereto by a majority vote of a quorum of its members. " (20) It is understood and hereby agreed that in any matter or thing connected with this agreement, where any party hereto shall assert, maintain, or set up any claim, right privilege, liability, or penalty in his, its or their favor, or against any other party or parties hereto, and thereby a controvei-sy shall arise hereunder, then and in that event either party or parties to such controversy shall have the right to submit the said controversy to arbitration* in the manner hereinafter set forth. There is hereby constituted and ap- pointed an arbitration committee, which shall be conqwsed of two per- sons and such third person as shall be by such two selected from time to time as any controversy may arise. Such two persons shall be selected as follows: Each and every year during the continuance 4a 105 FEDERAL REPORTER, 98. Opinion of tlie Court. to wll^ZnoJ-,**'\-?*^..^"^' Company shall appoint some person l^;TUi^? ^^'^ arbitration committee, and the parties of tlie second annointmi.? fLT^^'^l'n ''"^ **" ^^^]'^ "^'^^ '^^^^^ committee, of which appointment the Fuel Company and the association shall have notice, and the two persons so ai>pointed shall continue to serve until their successors shall be appointed in the same manner. Whenever a con- troversy shall arise hereunder, the party desiring to submit such controversy shall notify the other party or parties to sue coiitm t'hrfil atT.r.;^"/''! ^T't'"^' -'"^ ^'"^ d^i^n'nte'in suchToUc" the time and place when said two arbitrators shall meet to heir the matter in controversy, and he or they shall also notify ti^saW arbitrators to meet at said time and place. And at the time and place so desigiinted said two arbitrators shall meet, and thev shall select a third arbitrator, who, with the other tNvo shall coifsti ute the full arbitration committee to hear and determine the said cSn fiZTnn;l?l?nl7^'^•''T•'^^ ^° *'*" "^**"«'*« ^^ ^^^^' '^"d fact shall be taal, and shall be binding upon each and nil of the parties to that eontrovei-sy Such notice may be served as a legal notice is served offic^ ^dI.ifJ"'v^^? *** *'•" JI='^*^'^^' '"^ ^^ ««^'^^ «^ ^^'« ^»- their post office address. And any notice to any one or more of the parties of the second part may be served upon or sent by mail to the orest dent and secretary of said association. If at t'iie „e and plaJL said tvvo arbitrators are required to meet, either one or both of them should fail or refuse to attend or serve, then the Fuel Coi panv In- its agent or attorney, on the one side, may fill the v'lrVincv c^^^^ SL bv ?;fl?L'^'"^^ ;*^"*^^^l.«^' '^'^^ '- serve, and th7asS Ji1\k ^^/'^F' "-*^'** ^^ attorney, may fill the vacancv caused bv the absence of its arbitrator or his refusing to serve- and the arbl- afoiesaid shall select the third, which three shall, for that contro- versy. constitute the arbHration committee, and shall Imve tliP sime powers and their award shall be as final, as if the two ai^ trXrs erein first prmided for had attended and selected a third If „Z^ either party shall fail or refuse to attend, or shall fail or refuse to select an arbitrator when required hereunder so to do. he said associa ^J""- ' f I>resident, other officer or attorney, mav selec an nrbl snail fail or refuse to make such appointment, in that event the FhpI sew? ft lilr n^^^^ ''^^'^'\ ^V^^''''''}^^ in ^^ny of said modes shall f^tll: ; i i' : "^^ "^^ *'V*^ '''''^" institute the arbitration coniMiittee !,^'^f/"^,^.^/^^™\«e said controversy, whose award shall be final A notice to arbitrate hereunder shall not fix a time longer tt^infifieen (15) days nor less than five- (5) days from the time of giving ^a id no tice unless by loutnal consent. The place of such meeting of the ai^M trators shall be at Cincinnati. Ohio, or Charleston, T Va unless by mutua consent. Said arbitrators shall have the right to ad"" ,rn their sessiori from time to time or to such place or places as t ev may determine. And they shall make their award n not less than three days from the time the evidence is finallv taken befm-pir subinitted to them; such award to be valid if s gned bv two of the arbitrators. Every award shall be executed in dupliSite and a conv thereof fnrnisbwl to each of the executive commitee^ herein nZ tioned The failure of a regular arbitrator to attend at a time Tnd place designated in any notice to him. and the apjS „ent of ano^ier in his stead for any contr.>versy, shall not for that reason vacate bis general api>oinfcment as an arbitrator until his successor's apS» nt^ If the two arbitrators appointed as above provided shall at aS? time UNITED STATES V. CHESAPEAKE & 0. FUEL CO. Opinion of the Court. 4B fail or refuse for two days to appoint the third arbitrator, the latter shall be appointed by the judge of the circuit court of Kanawha county. West Virginia. " Witness the following signatures : " The C. & O. Fuel Co., Donald Macdonald, Pt. " Robinson Coal Co., by Neil Robinson. "W. R. Johnson. " The Kanawha Splint-Coal Company, by F. E. Lair. " Carver Bros. "Enoch Carver. " Jos. Renshaw, Special Receiver Big Black Band Coal Co. " Charlmore Coal Co., Herndon & Renshaw, Mgrs. " McCallister & Co., per James Kelsoe. " IVIecca Coal & Coke Co., by John Carver. * Chesapeake Mining Co., by J. B. Lewis. " Coalburg Colliery Co., l)y J. B. Lewis. " Montgomery Coal Co., by S. H. Montgomery. *' Belmont Coal Co., by T. E. Embleton, Pt. " Harris B. Smith, Spl. Receiver Lens Creek Coal & Coke Co." [100] That this contract went into effect on the 1st day of January, 1898, and that the defendants, acting thereunder, monopolized and controlled the amount of coal and coke produced in the Kanawha district, and only permitted such amount of coal to be mined and coke to be made as could be sold by the Fuel Company in accordance with the provisions of the contract, the producers being permitted to ship only such amounts as should be apf)ortioned among them by an executive committee of three selected by members of the association ; that the defendants, acting under said contract, not only controlled the amount of coal and coke shipped into the states mentioned from the Kanawha district, but wholly destroyed competition in the sale of the same. And it is alleged generally that the said contract, and the operations thereunder, constitute an unlawful combination, in the form of a trust, in restraint of trade and commerce among the said several states, and that said defendants have combined and conspired with one another to monopolize, and have at- tempted to monopolize, by reason of said contract, and their acts and operations thereunder, a part of the trade and com- merce in coal and coke among the said several states, all in violation of the act of congress of July 2, 1890. And the prayer of the bill is that the defendants be restrained from selling or shipping any coal or coke into any state, other than the state in which they reside, under said contract, and that they be restrained from continuing in any like combination or agreement, and from further agreeing and combining and ,Ajfl^ 105 FEDERAL EEPOBTER, 100. Opinion of tlie Court. actiBg in any manner as set out in said contract, and that the contract be declared void and illegal, and that said trust and combination be dissolved by decree of ^ the court. At the hearing no evidence was introduced by the com- plainant, but the case was submitted upon the bill and answer, and the evidence introduced by the defendants. The circumstances under which the contract was made, and the facts in relation to the operations of the defendants there- under, as shown by the allegations of the answer and the evi- dence, are, in substance, as follows: The defendants other than the Fuel Company are owners of coal mines and pro- ducers and shipi>ers of coal, and some of them are makers and shippers of coke. Their mines and coke plants are situated along the line of the Chesapeake & Ohio Railway, in the counties of Fayette and Kanawha, in the state of West Virginia, and in the territory known as the " Kanawha Dis- trict." The counties of Fayette and Kanawha embrace nearly all of the district. A part of Putnam county is within this district. Besides the mines of the defendants, there are in the same district, on the Chesapeake & Ohio Rail- way, or south side of the Kanawha river, the mines of the following companies, viz.: The Great Kanawha CoUiery Company, the Mt. Carbon Company, Limited, the Diamond Mine, the Forest Hill Coal Company, the East Bank Coal & Coke Company, the Polsue Coal Company, the Coalburg Colliery Company, the Stevens Coal Company, the Acme Mines, the Coal Yalley Mining Company, and the AVinifrede Coal Company,— and on the Kanawha & Michigan Railway, or north side of the river, the Boomer Mine, the Long- Acre 1101] Mine, the Harwood Mine, the Cannelton Coal Com- pany, the Kelly's Creek Coal Company, the Riverside Coal Company, the Peal Splint-Coal Company, the Marmet- Smith Company, the Plymouth Mines, and the Big Mountain Operating Company. The capacity of the mines of the de- fendants is about 4,800 tons of coal a day, and of the other mines on the same side of the river about 4,300 to 4,500 tons a day. The defendant coke producers make about 440 tons a day, and the other coke producers of the district about 300 tons a day. Some of the defendants operate mines on both sides of the Kanawha river, but none of the mines on UNITED STATES V. CHESAPEAKE & O. FUEL CO. Opinion of the Court. 45 the north side are covered by the contract in question. Mac- donald, the president of the Fuel Company, prior to the organization of that company and the making of the con- tract had been engaged in selling coal and coke in Cincinnati and its vicinity from mines along the Chesapeake & Ohio Railway; but the Fuel Company, under the contract, has been selling coal and coke in West Virginia, Kentucky, Ohio, Indiana, Illinois, Michigan, -Wisconsin, Missouri, Iowa, Nebraska, North Dakota, South Dakota, Arizona, and Missis- sippi. The extent and the places of the Western shipment by the defendants, other than the Fuel Company, prior to the making of the contract, are not shown; but the answer alleges that they " had no trade whatever in most of said states, and had very little in the others, except in Cincinnati, Ohio." The other districts and localities competing with the defendants in the Western market are: The New River fields, of West Virginia, with the capacity of about 2,000 tons of coke a day ; the Flat Top fields, of West Virginia, on the Norfolk & Western Railway; the fields along the Balti- more & Ohio Railway, the West Virginia & Pittsburg Rail- road, and the Ohio, West Virginia & Pittsburg Railroad, in West Virginia; the coal fields of Western Pennsylvania; the Hocking, Wellston, and Nelson ville coal fields, of Ohio; and the coal fields of Kentucky, Tennessee, Illinois, Iowa, and Missouri. The aggregate production of all these fields is said to be 115,000,000 tons of coal annually. The defend- ants' shipment West in 1897 was about 450,000 tons. In 1898 it was about 550,000 tons of coal and from 60,000 to 65,000 tons of coke. The twelfth clause of the contract, in relation to coke and coal shipped by river, was rescinded in June, 1898. Prior to the making of the contract there was a lack of uniformity in the preparation of coal and coke. Under the contract this has been remedied, and the quality of the product has been improved. The minimums of coal and coke which the Fuel Company was required to take and pay for, as provided in the fifth clause of the contract, was in excess of the production of the defendants' mines during the year preceding the making of the contract; the excess of coal being about 60,000 tons, and of coke about 30,000 tons. A man employed by the producers, the defendants 46 105 FEDERAL REPORTER, 101. Opinion of tlie Court other than the Fuel Company, and known as the " equalizer,'' makes the distribution of orders and cars to the shippers. About 3,000,000 tons of coal is shipped East over the Chesa- peake & Ohio Railway from the New River and Kanawha districts annually. What portion is shipped from the Ka- nawha district does not appear. The facilities for placing coal and coke on the Western [102] market have been in- creased by the operation of the contract, and the monthly payments by the Fuel Company have relieved the operators from losses by bad debts, and have furnished the means for promptly paying the men in their employ. River ship- ments from the whole Kanawha district are double the ship- ments of defendants by rail. Prior to making the contract, single operators were sometimes not able to take and fill large contracts. It does not appear that under the contract prices have been materially increased or diminished, but have been maintained. Two questions have been presented: (1) Does the con- tract in question relate to interstate commerce? (2) And, if so, will its performance restrain interstate commerce, with- in the meaning of the act of congress known as the "Anti- Trust Law ? " 1. If it be assumed that the Fuel Company was to become the purchaser of the coal produced by the other defendants, and not their agent for its sale to others, with an interest in the profits, yet by the terms of the contract the coal and coke are to be delivered to the Fuel Company for " Western ship- ment,"— to markets in states other than West Virginia,— there to be sold for not less than a minimum price to be fixed by the executive committee of the association; and the Fuel Company is required to account and pay over to the mem- bers of the association all profits made over and above 10 cents per ton, which it is to retain as " compensation " for the use of its capital and for its services. The contract, read in the light of the circumstances under which it was made, shows that it contemplates and provides for the sale of coal and coke in states other than West Virginia; and the evi- dence shows that, in the performance of the contract, coal and coke have been sold in the states mentioned in the bill. Indeed, the prime ohjeH of the contract, as repeatedly ex- XJNITED STATES V. CHESAPEAKE & 0. FUEL CO. 47 Opinion of the CJourt pressed therein, is " to enlarge the sale of, and extend the Western market for, Kanawha coal and coke." The con- tract, therefore, and the combination thereunder formed by the defendants, have direct relation to interstate trade and commerce, and in carrying out its purpose interstate com- merce has been directly affected. 2. This being so, the question is whether the provisions of the contract which give exclusive control of the output of the mines to the Fuel Company; which prohibit compe- tition between the members of the association; which pro- hibit the Fuel Company from handling competing coals and cokes; which authorize the executive committee of the association to apportion to its members the class, grade, and quantity of coal and coke to be shipped each month; which fix a mimimum price below w^hich the Fuel Company is prohibited from selling coals and cokes in the Western mar- ket; and which fix the settlement price between the Fuel Company and the association by a method of monthly aver- ages, — are lawful regulations for the conduct of the business of the defendants, or whether they are regulations in re- straint of interstate cotnmerce, as charged in the bill. It is claimed by the defendants "that restriction of competi- tion among only a small proportion of the coal and coke' operators or other producers of a particular state, which is ancillary to a main, lawful purpose, and which in fact results in [103] keener and larger competition and greater freedom and volume in interstate trade and commerce, vio- lates no provision of the federal " anti-trust act." The "main, lawful purpose" to which the noncompetitive fea- tures of the contract are ancillary, as claimed by the defend- ants, is "to enlarge the sale of, and extend the Western market for, Kanawha coal and coke." But, as is well said in the Addyston Case, " no conventional restraint of trade can be enforced unless the covenant embodying it is merely ancillary to the main purpose of a lawful contract, and nec- essary 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." U. S, V. Addyston Pipe c§ Steel Co.^ 29 C. C. A. 151, 85 Fed. 282, 46 L. R. A. 131. Here no relationship between 'IX'Cl 105 FEDERAL REPOBTER, 103. Opinion of the Court the parties to the contract exists which calls for the protec- tion of the Fuel Company against the association, by the enforcement of the noncompetitive clauses of the contract. The alleged main purpose of the contract is a provision mainly for the benefit of the association, and incidentally for the benefit of the Fuel Company, by enabling it to earn a commission on sales ; and the enforcement of the noncom- petitive clauses of the contract would benefit the parties accordingly, but would afford no counterbalancing benefits to the public. It is said, however, that the increase in the volume of trade, the competition in a larger field of opera- tions, the better condition of the product, and the main- tenance of reasonable prices, resulting from the performance of the contract, benefit the public, and justify the partial restraint of trade. But the policy of the law looks to com- petition, as the best and safest method of securing these benefits, and not to combinations which restrain trade. It is opposed to the methods of combination, 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 com- merce, and has prohibited " 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," and has declared that " every persons 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." Now, it is provided in the contract in question that the Fuel Company shall have exclusive control of "the entire coal and coke output of the mine or mines operated by each of them [members of the association], respectively, on said C. & O. Eailway, or branches thereof, for Western shipment, for a period of not less than five years, ♦ ♦ ♦ except as to such coal as may be sold by any member of said coal asso- ciation to the Chesapeake & Ohio Eailway Company for the UNITED STATES V. CHESAPEAKE & O. FUEL CO. Opinion of the Court. 49 consumption of said railway company; " and it is provided further " that the said members of said association will not sell or consign any coal or coke bound to points [104] west of their respective mines, except under the terms and conditions of this agreement, during the period covered by this agreement," and that the Fuel Company, " nor any of its officers, employes, or servants, will, with its knowledge, directly or indirectly, in any way, manner, or form, engage or become interested in the buying or selling of bituminous coal or coke in competition with the coal or coke of any of the members of said Coal Association, except under the terms and conditions of this agreement." And it is fur- ther provided that the minimum price shall be fixed by the executive committee of the association for " all the vari- ous grades of coal and coke sold and to be shipped West by the members of said association," and that the Fuel Com- pany " 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 Asociation and weighed during the month, or weighed during such month though shipped during a pi-eceding 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 provided, 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 21220— VOL 2—07 m 1 105 FEDERAL REPORTEK, 104. Opinion of the Court, the total prodmt of each class and grade of coal and coke which they deem best to be shipped bj each iiieiiiber of said association by rail as afoi-esaid during the succeeding month." Under thesi? provisions the extent of the produc- tion of the mines, the shipment and sale of the prochut, and the making and regulation of the prices thereof, are subject to the control of tlie executive ctimmittee of the association. All competition among the memlnn-s of the as.sociation in the pi-oduction, shipment, and sale of their i)r()du(t is elim- inated, and the coml)ination enters the Western markets clothed with powers which enal)h» it to exeicise a huge in- fluence in tliose markets in regulating the sup])Iv and the prices of coal and coke. These provisions niv in i-estraint 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 important (piestion is not wliether the perforim:nce of the contract so far has resulted in actual injury to trade, but whether the contract confers i>ower to regidate and restrain trade, upon those charged with its performance. The attempt to confer power to regulate and restrain interstate commerce by contract is II usurpation of the functions of congress, and [105] can- not he sustained upon the gi-ound that trade has not in fact been injured. It is for congress to determine what regula- tions of trade will best promote the public good. It is the policy of congiess to encourage and promote individual effort. It looks to individual competition, rather than to combinations, for the benefits which are to follow and flow from commerce between the states, and, in the exercise of its constitutional power, has prohibited all combinations wliich restrain trade. It is for congress to determine whether the i>olicy it has adopted shall \ye maintained as the one which will best promote the interests of the counti-y, or whether it shall abandon that policy and place the inter- state commerce of the country in the hands of combinations. But until congress takes that course, as long as this act re- mains upon the statute books, it is the duty of the courts to condemn every contract which necessarilv in its i)er- formance involves a restraint of trade, although it may no( extend to the point of a monopoly of all that trade. ^ The BISHOP V, AMERICAN PRESERVERS CO. 51 Syllabus. recent discussion of these questions in the cases of U. S. v. Trans-Missouri Freight Ass'n, 166 U. S. 290, 17 Sup. Ct. 540, 41 L. Ed. 1007; U. S. v. Joint-Traffic Ass'n, 171 U. S. 505, 19 Sup. Ct. 25, 43 L. Ed. 259; U. S. v. Addyston Pipe (& Steel Co,, 29 C. C. A. 141, 85 Fed. 271, 46 L. R. A. 122; Id., 175 U. S. 211, 20 Sup. Ct. 96, 44 L. Ed. 136, render their further discussion here unnecessary. The contract in ques- tion 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 per- formance 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 he dissolved. 1845] BISHOP r. AMERICAN PRESERVERS CO. ET AL.« (Circuit Conrt, N. D. Illinois, N. D. Octol»er 19, 1900.) [105 Fed., 845.] - Monopolies — Anti-Trust Law — Action for Damages. — Section 7 of the Jinti-trust act (2G Stat. 209), giving to any person injured by any otJier person or oori)oration by reason of anything forbidden in the act the riglit to recover treble damages, does not authorize an action against an alleged trust corix)ration. by one who was a party to its organization and a stoclvholder therein, to rcK'Over damages result- ing from the enforcement by defendant of rights given it by the alleged unlawful agreement* On Demurrer to Amended Declaration. Lynden Evans and Frederick Amd, for plaintiff. Moran, Mayer d- Meyer, for defendants. See also vol. 1, page 49 (51 Fed., 272). ft Syllabus copyrighted, 1901. by West Publishing Co. 52 105 FEDERAL REPORTER, 845. Opinion of the Court. KoHLSAAT, District Judge. This matter comes on to be heard upon demurrer to the declaration herein as amended. A demurrer was sustained to the original declaration in 1892 by Judge Blodgett (51 Fed. 272), and the suit seems to have remained dormant since that year, llie suit is for the purpose of recovering treble damages under section 7 of the Sherman act, the facts set forth in the declaration on which plaintiff seeks such re- covery being substantially as follows: That phiintiff was prior to the year 1888 engaged in the business of manufac- turing preserves, etc.; that in said year he entered into an agreement with certain of the defendants and others to form a trust or combination, which combination was subsequently formed, and to which he conveyed his said business; that defendant American Preservers Company was subsequently organized under the laws of the state of West Virginia for the purpose of acquiring title to the property controlled by said trust, and for the purpose of forming a channel through which said trust could purchase and control the business of plaintiff, and purchase and control the entire manufacture of preserves, etc., in the United States; that plaintiff was forced to execute a bill of sale of his said manufacturing plant and business to said American Preservers Company, but continued to conduct said business under the name and style of A. D. Bishop & Co.; that subsequently differences arose between him and the managers of said trust, and there- upon the said American Preservers Company brought a suit in replevin against plaintiff, and by means thereof obtained possession of plaintiff's entire plant, stock in trade, and busi- ness, and still retains the same. In the amended declaration it is averred that the products so controlled by said trust are products used in trade and commerce among the several states of the United States and with foreign nations, and that such products constitute articles of interstate commerce. It would seem that this case would come within the rules of law established by the Supreme Court in United States v. E. C. Knight Co., 156 U. S. 1, 15 Sup. a. 249, 39 L. Ed. 325, although it might be a debatable question as to whether or not the question could be determined on demurrer. How- ever, I am of the opinion that the demurrer should [846] be LOWRY V. TILE, MANTEL & GRATE ASSN. Syllabus. 53 sustained on the ground that the damage which plaintiff claims to have suffered is not of the nature contemplated in section 7 of the Sherman act, when considered in con- nection with the remaining sections thereof. Whatever damages plaintiff may have sustained in the premises are the result, not of the alleged unlawful combination, but of the exercise of the right, which every citizen possesses, to bring a lawsuit. There is another ground which might well be considered as placing plaintiff without the provision of said act, to wit, the fact that plaintiff was himself a party to the unlawful combination, and was injured by reason of his illegal connection therewith. The demurrer is sustained on the ground that the declaration as amended states no cause of action. [38] LOWKY ET AL. v, TILE, MANTEL & GEATE ASS'N OF CALIFORNIA ET AL.« (Circuit .Court, N. D. California. December 26, 1900.) [106 Fed., 38.] Monopolies — ^Anti-Tbust Act — Combination in Restbaint of Inter- state Commerce. — ^The Tile, Mantel & Grate Association of Cali- fornia was organized for the purpose, as declared in its constitu- tion and the preamble thereto, of uniting " all acceptable dealers " in tiles, fireplace fixtures, and mantels in San Francisco and vi- cinity (within a radius of 200 miles), and all American manufac- turers of tiles and fireplace fixtures. Its constitution and by- [39] laws provided that its active members should consist of dealers in such articles in San Francisco and vicinity, carrying a stock of a stated value, who should be elected to membership, each of whom should pay an entrance fee and annual dues, and the nonresident members should embrace all manufacturers throughout the United States who signed the constitution and paid the entrance fee. They provided that no dealer and active member should purchase from any manufacturer or his agent who was not a member of the association, nor sell any unset tiles to any person not a member for less than the list price, and that no manufacturer who was a mem- o Demurrer of defendants overruled (98 Fed., 817). See vol. 1, p. 995. Charge to the jury (106 Fed., 38). Judgment aflirmed by Cir- cuit Court of Appeals, Ninth Circuit. Case there and subsequently entitled Montague & Co. v. Lowry (115 Fed., 27). See p. 112. Aflirmed by the Supreme Court (193 U. S., 38). See p. 327. 106 FEDERAL REPORTER, 39. Chfti^ to the Jury. tier should sell his products to any dealer who was not a member. Held, that such association was Illegal and in violation of sections 1 and 2 of the antitrust act of July 2, 1890, being a combination hi restraint of trade and commerce among the states, by Imposing a tax on such commerce between its members, to the extent of the membership fees and dues, and an attempt to monopolize a part of the trade in the articles named between the manufacturers in other states and the dealers In San Francisco, which, in operation, did effect such monopoly, and that under section 7 of such act such association and its members were liable in treble damages to a ii?aler, not a member of the combination, whose business was In- jured thereby.o Action at Law to Kecover Treble Damages under the Anti-Trust Act, Campbell d* Metsmh, for plaintiffs. Walter H, Liitfotth and P. F, Diiiim^ for defendants. Morrow, Circuit Judge (charging jury). This is an action at law brought to recover damages al- leged to have been sustained by the plaintiffs by i-eason of injury to their business as dealers in tiles and fireplace fix- tures, caused by the fonning of an association by the defend- ants as dealers in such articles, and which association, the plaintiffs claim, is within the prohibitoiy provisions of the act of congi-ess of July 2, 1890, commonly known as the "Sherman xinti-Trust Act." That act provides, among other things, as follows : ** Section 1. Every t^ ntnirt, comlnnaticTii fn the f«»rni of trust or othen*is«\ or cimspinuy. In restraint of trade or tomnipree among tlie several states or with foreign nations, Is hereby dcn who shall monopolize or attemi>t to nionopo- Ilae or combine or iM.nsi»Ji-e with any otlier |»erson or iumsersun wlio shall lie injured in his business or property by any other iiem»n or corporation by reason of anything forbidden or declared to bi» unlawful by this act, may sue therefor in any circuit court of the I'liited States in the district in which the defendant re- sides or is found, without respect t(» the amount in controversy and shall recover thiw-fold the damages by him sustained, and the costs of suit inc-Iuding a reasonable attorney's fee." « Syllabus copyrighted, 1901, by West Publishing Co. LOWRY r. TILE, MANTEL & GRATE ASSN. 55 Charge to the Jury. Tou will observe that the things forbidden and declared to be unlawful by the act are : First, every contract, combina- tion in the form of trust or otherwise, or conspiracy in re- straint of trade or commerce among the several states; and, second, the act of monopolizing, or attempting to monopo- lize, or combining or conspiring to monopolize, any part of the trade or connnerce among the several states. The charge against the defendants, under these prohibitions, is the or- ganization of an association called the Tile, Mantel & Grate Association of California, under an agreement and combina- tion in restraint of trade and commerce. The printed docu- ment [40] introduced in evidence, and entitled, *' The Con- stitution and By-Laws of the Tile, Mantel & Grate Associa- tion of California," shows that this association was organ- ized on July 7, 1898, and that the constitution and by-laws were adopted on July 14, 1898. Under the title of " Pre- amble and Resolutions " the objects of the association are declared to be " to unite all acceptable dealers in tiles, fire- place fixtures, and mantels in San Francisco and vicinity (within a radius of two hundred miles), and all American manufacturers of tiles, and, by frequent interchange of ideas, advance the interests and promote the mutual welfare of its members." Article 1 of the constitution provides as follows concerning membership in the association: "Section 1. Any individual, crupdration. or firm engaged or contem- plating eiignging in the tile, mantel, and grate Imsiness in San Fran- cisco, or within a radius of two hundred miles thereof (not manu- fncturers). having an establislied Ijusiness. and currying not less than ^.'J.iMK) worth of stock, and having been i)roposed l)y a memlier in good standing, and elected, shall, after having signeil the constitution and by-laws governing sriid association, and uiion tlie payment of an en- trance feo as hereinafter provided, enjoy all the priviieges of member- ship. " Sec. 2. All associated and individual manufacturers of tiles and fireplace fixtures through the ITnited States may become nonresident meml>ers of this association upon the payment of an entrance fee as hereinafter provided, and after having signed the constitution and by- laws governing said associatitm," Article 2 provides as follows concerning fees and dues : " Section 1. The initiation fee of this association shall be. for active members twenty-five dollars, and for non-resident members ten dollars, which amounts nuist accompany each application for membership. " Sec. 2. Each active member of the association shall pay ten dollars I^er year as dues. payal>le in advance on the third Monday in August of each year. No dues shall be charged against nonresident members." 56 106 FEDEBAL BEPORTEB, 40. Charge to the Jurj. Article 6 makes provision for amendments to the constitu- tion, as follows : "All proposed alterations or amendments to this constitution shal! be submitted in writing at a regular meeting, and no action thereon shall be taken until the next succeeding regular meeting. Due notice of such alterations or amendments shall be mailed to each member at least one week prior to the meeting at which action is to be taken thereon, and such alterations or amendments nmst receive the c"r,proval of two-thirds of the active members of the association." The document introduced in evidence as the constitution and by-laws of the association contains the provisions which have been quoted, and there is no evidence in the document itself of any amendment thereof. But there is testimony to the effect that that part of article 1 of the constitution limit- ing the qualification of membership to those persons engaged in the tile, mantel, and grate business in San Francisco, hav- ing an established business, and carrying not less than $3,000 worth of stock, has not been enforced, as to the requirement that the member shall have a stock of goods of the value of $3,000. There is also testimony to the effect that the provi- sion of article 2 relating to the fees and dues, and fixing the initiation fee for active members at $25, has been changed to provide that the initiation fee for such membership shall be $10. The real purpose and object of the association appears to be declared in sections 7 and 8 of the by-laws. Section 7 pro- vides that: [41] "No dealer and active member of this association shall pur- chase directly or indirectly any tile or fireplace fixtiu-es from anv manufacturer, or resident or traveling agent of anv manufacturer, not a member of this association, neither shall they sell or dispose of. directly or indirectly, any uufet tile for less than list prices to anv person or persons not a member of this association, uiultr ]>enalty of expulsion from the asscciatitn." Section 8 provides as follows : "Manufacturers of tile l'ice fixtures, or rcsidenr or fviwoh Ing agents of manufacturers, spelling or disposing, directly or iiidi- rectly, their products or wju-es to any person or persons not niombei's of the Tile, Mantel & Grate Association of California, shall forfeit their membership in the association." The uncontroverted evidence in this case shows that the active members of the association consist of a number of dealers in tiles, mantels, and grates in San Francisco, and that they are not manufacturers of any of these articles; that LOWRY V. TILE, MANTEL & GRATE ASSN. 57 Charge to the Jury. the nonresident members of the association consist of a num- ber of manufacturers of tiles and fireplace fixtures situated in different parts of the United States outside of California. The plaintiffs were not members of the association, and have not been at any time during its existence. Is it the apparent purpose and the natural and direct consequence of this pro- vision of the constitution and by-laws of the Tile, Mantel & Grate Association to restain trade and commerce between the dealers in tiles, mantels, and grates in San Francisco and the manufacturers of such articles in the Eastern States? Or do these provisions operate in such a way that the mem- bers of the association have monopolized or have attempted to monopolize any part of the trade or commerce in these commodities between tjie manufacturers in the East and the dealers in San Francisco? The purpose of the organiza- tion, as declared in the preamble and in section 2 of article 1 of the constitution, was to embrace " all American manu- facturers " of tiles and fireplace fixtures, as nonresident members, and the '' acceptable dealers " in tiles, fireplace fixtures, and mantels in San Francisco and vicinity (within a radius of 200 miles) as the active resident members. It does not appear that the declared purpose of the association has actually been accomplished, in the completeness of its membership. Not all American manufacturers of tiles and fireplace fixtures have become nonresident members. AVhether all " acceptable dealers " in San Francisco have be- come members is not entirely clear, nor is it certain what constitutes an " acceptable member.'' But the natural effect and necessary consequence of the agreement and combination, so far as completed and actually enforced, is to limit the San Francisco dealer who is a member of the association in his purchase of tiles and fireplace fixtures to those manufactur- ers in the United States who are nonresident members of the association. The San Francisco dealer who has become a member of this association cannot purchase tiles and fire- place fixtures from any outside manufacturer except under penalty of forfeiting his membership in the association, and the manufacturer belonging to the association as a nonresi- dent member cannot sell to anv dealer in San Francisco Avho is not a member of the association, except under the same 58 106 FEDERAL REPORTER, 42. Charge to the Jury. penalty of forfeiting of meml>ership. If all the manufac- turers of tiles and fireplace fixtures in the United States should f 42] l>ec()ine menil>ers of the association, then no dealer in tiles or fireplace fixtures not a member of the as- soeiatiim could carry on his business in San Francisco, Ix*- cause there would he no manufacturer of those articles from whom he could purchase the goods; and as he could not purchase from another denier in San Francisco wlu), as a meml>er of the association, is entitled to buy from the Eastern manufacturer, except at list prict^s for unseat tiles, he could not compete with other dealers, these list prices l^eing so hi^h. He would thus be practically debarred from continuing hi^ business. On the other hand, if all the dealers in San Francisco should prove to be " acceptable members '' of the association, and not all the manufacturers of tiles and fire- place fixtures in the United States should become nonresident members, such manufacturers remaining out of the organiza- tion would be deprived of all customers in San Francisco, l:»ecaiise no dealer in San Francisco could purchase tiles from siich a manufacturer except under penalty of forfeiture of his membership in the association. In other words, the East- em manufacturer who becomes a member of this association is restricted in his selling market to members of the associ- ation in San Francisco, and the San Francisco dealer who is a member of the association is restricted in his purchasing market to manufacturers who are members of the association. But this is not all. The Eastern manufacturer who is not a meml)er of the a&sociation is also restricted in his selling market to the dealers in San Francisco who are not mem- bers of the a&sociation, and the dealers in San Francisco who are not members of the association are also restricted in their purchasing market to those manufacturers who are not memWrs of the a&sociation. It will be said, however, that all manufacturers of tiles and fireplace fixtures in the United States mif>' become members of the association. But upon what terms? The manufacturer must apply for and obtain membership in the association, and pay a fee of $10 and, in order that the San Francisco dealer may have the privil^je of purchasing tiles and fireplace fixtures from the manufacturers who are members of the association, he must LOWRY 'V. TILE, MANTEL & GRATE ASSN. 59 Charge to the Jury, first prove himself to be an '' acceptable member " to the other members of the association ; and, if he finds himself to be an '' acceptable member," he must pay a fee of $10, and thereafter must continue to pav annual dues in the sum of $10. It has been held that an ordinance of a municipal corpo- ration requiring i3ersons or firms soliciting orders on behalf of manufacturers of goods to take out a license and pay a tax is an exercise of the taxing power, and, when enforced against a person or firm soliciting orders for a manufac- turer of goods in another state, it imposes a tax upon and is a regulation of interstate commerce, in violation of the pro- visions of the constitution of tlie United States. In Rohhins v. Taxing DisL, 120 U. S. 489, 7 Sup. Ct. 51)2, 30 L. Ed. 694, a statute of Tennessee declared that all drum- mers and all persons not having a regularly licensed house of business in the taxing district, offering for sale or selling goods therein by sample, should be required to pay to the county trustee the sum of $10 per week, or $25 per month, for such privilege. Bobbins was engaged in soliciting in the city of Memphis, Tenn., the sale of goods for a Cincinnati [43] firm, exhibiting samples for the purpose of securing orders for the goods. He had no license, and was prose- cuted and convicted for a violation of the statute. The stat- ute made no discrimination between those who represented business houses out of the state and those who represented like houses within the state. There was, therefore, no ele- ment of discrimination in the case. But, notwithstanding this equality of the tax upon all dealers, the conviction was set aside by the supreme court of the United States on the groimd that, whatever the state might see fit to enact with reference to a license tax upon those who acted as drummers for houses within the state, it could not impose upon those who acted as drummers for houses outside of the state any bur- den by way of a license tax, for the reason that such persons were engaged in interstate commerce, which must be left free from any restrictions or impositions whatever. Nego- tiations in the conduct of interstate commerce could not be taxed by the state, or by a municipal corporation under its authority. 60 106 FEDERAL REPORTER, 43. Chai-ge to the Jury, In Corsm^ v. Manjiand, 120 U. S. 502, 7 Sup. Ct. 655, 30 L. Ed. 699, tlie same question arose with respect to a provi- sion of the Code of Maryland, and the same doctrine de- clared as in the preceding case. In Asker v. Texas, 128 U. S. 129, 9 Sup. Ct. 1, 32 L. Ed. 368, a statute of the state of Texas required any commercial trav- eler, drummer, salesman, or solicitor of trade, by sample or otherwise, to pay an annual occupation tax of $35. This statute was declared to be unconstitutional, and the case of Robhins v. Taxing Dist. was expressly affirmed, to meet the vigorous assault made by the court of appeals of Texas upon the doctrine of that case. In Stoutenhiirgh v. Hennick, 129 U. S. 141, 9 Sup. Ct. 256, 32 L. Ed. 637, an agent of a firm doing business in the city of Baltimore solicited orders in the District of Colum- bia without having taken out a license there as required by an act of the legislative assembly of that District. The supreme court held that this law was invalid, as construed to include the business of an agent soliciting orders for a busi- ness house located outside the District. In Brennan v. City of Titus vUle, 153 U. S. 289, 14 Sup. Ct. 829, 38 L. Ed. 719, an order of the city of Titusville pro- vided " that all persons canvassing or soliciting within said city orders for goods, books, paintings, wares or merchan- dise of any kind, or persons delivering such articles under orders so obtained or solicited, shall be required to procure from the mayor a license to transact said business, and shall pay to the said treasurer therefor the following sums, ac- cording to the time for which said license shall be granted," etc. The facts of the case were these : One Shephard was a manufacturer of picture frames and maker of portraits, re- siding in Chicago, in the state of Illinois, in which city he had his manufactory and place of business. The defendant, Brennan. was an agent of Shephard, employed by him to travel and solicit orders for said pictures and frames. Upon receiving orders for such goods, Brennan forwarded the same to Shephard, at Chicago, where the goods were made, and from there shipped to the purchasers, in Titusville, in the [44] state of Pennsylvania, by railroad, freight and ex- LOWRY V. TILE, MANTEL & GRATE ASSN. 61 Charge to the Jury. press; and the price of the goods was collected and for- warded to Shephard. sometimes by the express company, and at other times by the agent of Shephard. Brennan was engaged in conducting the business in the manner stated at the time of his arrest, without having obtained a license as required by the municipal ordinance. He was convicted, and sentenced to pay a fine of $25 and costs. From that judgment he api)ealed to the supreme court of the state, where the judgment was affirmed; the court holding that the ordinance was enacted in the exercise of the police power of the state. City of Titusville v. Brennan, 143 Pa. St. 642, 22 Atl. 893, 14 L. R. A. 100. Brennan thereupon sued out a writ of error to the supreme court of the United States. The whole question Avas again reviewed by that court, and all the previous cases in that court relating to the subject carefully considered. The court declared that commerce between the citizens of the several states must be absolutely free from restraint. The court said: " It must be considered, in view of a long line of decisions, that it Is settled that nothing which is a direct burden upon interstate com- merce can be imposed by the state without the assent of congress, and that the silence of congress in respect to any matter of interstate commerce is equivalent to a declaration on its part that it should be absolutely free." • In Leisy v. TIardiii, 135 U. S. 100, 10 Sup. Ct. 081, 34 L. Ed. 128, the supreme court held that a state statute pro- hibiting the sale of intoxicating liquors, except for certain purposes and under license from a county court, was uncon- stitutional and void when applied to a sale by an importer of liquors brought from another state in the original packages, because the operation of the law was repugnant to the power of congress to regulate commerce among the sev- eral states. The court, in passing upon the question, said : " The power vested in congress ' to regulate commerce with foreign nations and among the several states and with the Indian tribes ' is the power to prescribe the rule by which that commerce is to be governed, and is a power complete in itself, acknowledging no limita- tions other than those prescribed in the constitution. It is co- extensive with the subject on which it acts, and cannot be stopped at the external boundary of a state, but must enter its interior, and must be capable of authorizing the disposition of those articles which it introduces, so that they may become mingled with the common mass of property within the territory entered." 62 106 FEDERAL REPORTER, 44. Charge to the Jury. And fiii-ther, to make this limitation on state authority over interstate connnerce more clear, the court said: "It is only after the iiuportntiou is completetl. suid the i)roi>erty imported has miugled with and become a part of the general proi)erty of the state, that Its regulations can act ui)on it, except so far as may l>e ntn-essary to insure safety in the disi)osition of the imiwrt until thus mingleil." In the case of I'lt'ded Strifes v. Coffl Dealers' Am'n, (C. C.) 85 Fed. *i52, this court, referring to the case jujt quoted from, said : ** If a law of a state regulating the sale of intoxicating liquors, so :is to prohibit their sale exi*ept for certain i»uriM)ses and under license from a county court, is uuconstitutional and void when applied to ii sale by an importer of liquors brought from another state in the original packages, bei-ause the law in that relation is in restraint of trade and commerce ' among the several states,' what shall be said of the constitution and by-laws of the Coal Dealers' Asso- [45] elation, and the agi-eement of that ass(xiation with the wholesale dealers resiiecting the sale of iuqwrted coal in San Francisco under the anti- trust actV If one is in restraint of commerce, is not the other? " In Uiiifed SMes v. Addyston Pipe c§ Steel Co.. 29 C. C. A. 141, 85 Fed. 271, 54 U. 8. App. 723, 707, 4C L. R. A. 122, Judge Taft considered the effect of such state statutes in the same relation, and said : *' If. then, the soliciting of orders for. and the sale of, goods in one state, to be delivereil from another state, is interstate commerce in its strictest and highest sense. — such that the states are excluded by the federal constitution from a right to regulate or tax the same.— it seems clear that contracts in restraint of such solicitations, negotiations, and sales are contracts in restraint of interstate conmierce." Thest* observations appear to the court to Ix* applicable to the effect of the constitution and by-laws of the Tile, Man- tel & Cirate Association of California involved in this ca.se. If an ordinance of San Francisco imposing a tax of $10 upon a solicitor who should seek orders for tiles and fireplace fixtures for an Eastern manufacturer would be contrary to law, because a restriction upon interstate connnerce, then a like fee and the conditions of membership imposed by this organization upon Eastern manufacturers for the privilege of selling to San Francisco dealers who are members of the asso- ciation is also a restriction upon interstate commerce, and would for the same renson be cx)ntrarv to law. This brings us to the question as to llie effect this organi- zation had upon the price of tiles in this market. Mr. W. B. LOWRY V. TILE, MANTEL & GRATE ASSN. 63 Charge to the .lury. Webster, the secretary and treasurer of the Tile, Mantel & Grate Association of California, testified as follows, on cross- examination : the did Q. After the formation of the cori)oration, and the adoption of list price of the American Tile Company by your association, that um 1 ai^e the price of tile in this market, did it iiotV You can answer that easy. A. .\es, sir; it raised the price. The Eastern factories raised w.?.v^'''rv''''' "?" ".^- ^' '^^^^ ^^*^^^^"» factories raised the price on .^ou A. \es, sir: the price was raised twice since that time on us: t lat IS, not the list, but the discount for orders. Thev are less to-dav than they >yere at that time. Q. That is, the factories* from whom vou .. iV^ ^''' *""■' '"^'^ *'^^^^^' factories that notified us of the raise. ^11 . *^'"" ^^'*^*' ^** •^'""*' ^"""^t?! that the lu'ice had l>een practi- cauy the same for the same character of goods bv all the factories'' A. h roin the time of the society up to the present time. Q. Before the formation of the society up to the present time? A. Xo, sir. O You did not so state? A. I did not understand the question if I (lid l)e- cause It is a known fact that the prices have l)een raised three or four times. Q. The prices, then, since this formation, have been raiseil? As was said by the supreme court of the United States in Addyston Pipe d' Steel Co, v. United States. 175 U. 8 '^46 20 Sup. Ct. 96, 44 L. Ed. 149 : "Any combination among dealers in that kind of commodities, which in Its direct and iuimediate effect forecloses all comi>etition, and en- hances the purchase price for which snch conmioditv would otherwise be dehvered at its destination In another state, would be one in re- straint of trade or commerce among the states." Under these conditions, the dealing in tiles and fireplace fixtures between the manufacturing members of the associa- tion in the East and the dealers in San Francisco, also mem- bers of the association, [46| is in etfect a monopoly of at least a part of ihe trade and commerce between California and the Eastern states in those articles; and this monopoly, excluding as it does the outside manufacturer and the outside dealer, except upon conditions, is also in restraint of trade and commerce between the several states. The uncontro- verted testimony fully supports this practical operation of the agreement and combination, as disclosed by the constitution and by-laws of the association, in whatever light it may be considered. It follows, therefore, that the court is called upon to instruct you that, under the law, the members of this organization have, in violation of law, entered into a contract and combination in restraint of trade and commerce, and that tliey have attempted to monopolize and have monopolized a part of the trade and commerce between the manufacturers u 106 FEDERAL REPORTER, 46. CMrge to the Jury. in the East and the dealers in San Francisco in the article of Under these instructions, there is left for your considera- tion the single question of damages; and, under tlie pro- visions of the statute, if you find that the plaintiffs have been injured in their business by reason of this unlawful conibination and association of the defendants, you will find for the plaintiffs in such a sum as shall be equivalent to and represi*nt the actual damages sustained by the plain- tiffs. It is for the court, in executing the provisions of the statute in entering judgment upon the verdict (if you shall find for the plaintiffs), to treble the amount of the damages; that is to say, any verdict rendered by you, and upon which a judgment will l)e entered by tlie court, will be multiplied by three, and a judgment entered for such treble damages. Your verdict will, however, be limited to the actual damages which the evidence shows the plaintiffs have sustained by reason of the acts of the defendants in violation of the act of congress. The sole question, then, as to damages, in this case, relates to any injury which the plaintiffs mav have sustained in their business by reason of the association in question. It is not enough, in an action of this kind, which is one at law, for the plaintiffs to establish the existence of an association which comes within the inhibition of the act of congress. Plaintiffs must go still further, and the burden of proof is upon them to show some real and actual damage to their business bv reason of such an association. There is no duty imposed by the law upon the association, even if within the statute, to show that its acts have not worked in- jur}' to the business of plaintiffs. On the contrary, the duty and burden of proving damage to their business is imposed by law upon the plaintiffs, and, unless they prove this dam- age to their business by a preponderance of evidence, the verdict must be for the defendants. Mere speculation as to the possible profits of a mercantile business, in the absence of evidence directed to such conditions, cannot be indulged in by the jury for purposes of finding a verdict in damages. The damages which the law contemplates, and which the act of congress provides for, must be reasonable damages ascer- tainable ui3on the evidence presented in the case. There must LOWRY V. TILE, MANTEL & GRATE ASSN. Charge to the Jury. 65 be facts, transactions, actual evidence of some material and pertinent character, relating to a business from which the jury can ascertain with reasonable certainty that damage has actually been worked to such business, before any [47] ver- dict in damages can be returned, other than nominal damages. It is the duty of a party, under the law applicable in this case, to use all reasonable efforts to make any damage to his busi- ness as small as possible. The plaintiffs in an action of this kind are not permitted to claim damage to their business by reason of an association contrary to the statute, where it was within their own power, in the exercise of reasonable diligence, to avert any such damage, and to avoid any con- sequences of injury to their business; that is to say, a party claiming damages is bound, in the exercise of reasonable diligence, to safeguard himself against any aviodable con- sequence of the act of another as to which he claims a right to recover damages. It is not material in this case, so far as damages are concerned, that the Columbia Encaustic Tile Company, or some other nonresident member of the associa- tion, refused at any point of time to sell tiling to the plain- tiffs, if, as a matter of fact, the plaintiffs, by applying to other manufacturers of tile in the same market, whether members of the association or not, could have procured such tiles as may have been necessary in the transaction of their business at the same price. And, if there was a difference in price, the amount of the damages would be limited to such difference in price. If, therefore, you find from the evidence 4hat at any point of time when tiles were refused the plain- tiffs by the Columbia Encaustic Tile Company, or any other member of the association, there were in the market other manufacturers from whom at the same price and charges the plaintiffs could have procured such tiles as they needed, you must consider that it was their duty to apply to such manu- facturers for tiles; and if they failed to use reasonable dili- gence in making such application, and thereby failed to pro- vide themselves with the necessary tiles, they are not entitled to any damages by reason of the refusal of such tiles on the part of any member of the association. If the evidence in the case in the matter of damage to the business of the plain- 21220— VOL 2—07 m 5 * 66 107 FEDEKAL BEPOBTEB, 131. Syllabus. tiffs has not shown any real and substantial damage to their business by reason of the association, apart from conjecture or mere speculation, then they are not entitled to any sub- stantial compensation, and no verdict in damages should be rendered in their favor, except a verdict for nominal dam- ages; that is to say, a verdict in the sum of one dollar, or other trifling amount. If you believe from the evidence in this case that in the month of August, 1898, the plaintiffs ordered from the Cohimbia Encaustic Tile Company of Anderson, Ind., a certain lot of tiles, and said Columbia En- caustic Tile Company agreed to ship the same to them in accordance with the terms of prior agreements, and if you further believe from the evidence that, by reason of the said Columbia Encaustic Tile Company joining the Tile, Mantel & Grate Association of California, they failed and refused to ship said tiles to the plaintiffs, and broke their contract with them, you are instructed that the plaintiffs are entitled to recover, by reason of said breach of contract, the difference between what the tiles would cost them laid down in this mar- ket and the market value of the tiles in this market. And, if you find as above, you should find for the plaintiffs in whatever amount you find to be the difference between the cost of said [48] tiles here in San Francisco and the market value of the tiles in San Francisco. The jury returned a verdict in favor of the plaintiffs, fixing their damages in the sum of $500. ^ [1311 OTIS ELEVATOR CO. v. GEIGER ET, AL. (Circuit Court. D. Kentucky. March 30, 1901.) [107 Fed.. 131.] Patents— Infringement— Defense— Anti-Tbust Law.— In an action for the infringement of elevator patents, a private defendant was not entitled to urge as a defense that plaintiff was a corporation organ- iaed merely for the purpose of holding the legal title to various elc- vntor paitenta alleged to have been infringed, for the puri)ose of con- trolling sales and enhancing prices of elevators and apparatus, without itself engaging in the manufacture and sale of such appli- ances, in violation of the Sherman antitrust law (26 Stat 209). OTIS ELEVATOB CO. V. GEIGEB. 67 Opinion of the Court. since, until the United States has acted and sought to prosecute the plaintiff for violation of such act, an infringer of the plaintiff's pat- ent will not be permitted to raise such issue as a defense thereto.o . Same — Pleading — Indefiniteness. — In an action by a corporation for the infringement of elevator patents, an answer alleging as a defense that the plaintiff is an unlawful combination in restraint of trade and in violation of the Sherman anti-trust law (26 Stat. 209), but which falls to state who are in the combination in the agree- ment characterized as unlawful, and does not disclose fully and in detail that the combination was entered into after the act took effect, and all the facts necessary to show its illegal itj', is insuf- ficient for indefiniteness. Bill for infringement of patents. On exceptions to an- swer. Exceptions sustained. Brown c& Darby ^ for complainant. A, E, Willson and E, H, Hunter, for defendants. Evans, District Judge. The complainant, a corporation organized under the laws of New Jersey, in its bill charges that it is the owner, by mesne conveyances duly recorded, of certain letters patent, [132] which the defendants have infringed and will con- tinue to infringe ; and the usual prayer for an injunction and accounting of profits is contained in the bill. The defendant has filed an answer, the third paragraph of which is in this . language : "These defendants have no knowledge of the assignments alleged to have been made of the said letters patent, and therefore deny the same, and deny that any right or interest in the said letters patent has been acquired or is now possessed by the complainant ; but, upon information and belief, these defendants aver that the complainant, the Otis Elevator Company, is a corporation or association created by the owners of several distinct patents relating to the construction and operation of elevators, for the sole purpose of restraining manufac- ture, controlling sales, and enhancing prices of elevators and appara- tus used in connection therewith, — the Otis Elevator Company not Itself engaging in the manufacture and sale of such appliances, but being merely provided to hold the legal title to the said distinct and various letters patent while the original owners thereof are licensed thereunder, — and that by reason thereof no title enforceable in a court of equity has been or is now vested in the complainant." « Syllabus copyrighted, 1901, by West Publishing Co. 68 101 VEDWLMj BIPOBTEB, 132. Opinion of the Court. The complainant has filed exceptions to this paragraph, and the interesting question thereby raised is to be deter- mined. Possibly the act of congress approved July 2, 1890 (26 Stat. 209), and commonly known as the ^\Shermim Anti- Trust Law," is the only statute upon ivhich the courts of the United States, ordinarily speaking, could adjudge such an agiecment as the third paragraph of the answer describes to be void. Certainly I do not recall any other which would authorize the courts of the United States to declare a state corporation to be unlawful ab initio, as a prohibited combi- nation. We may probably assume that prior to July 2, 1890, there was no law of the United States which provided that such combinations should be invalid. But the act of that date, by its terms, is made to operate only through the penal- ties which are therein prescribed, or through the direct pro- ceedings which it authorizes the United States to institute to declares certain prohibited arrangements void, or by giving any person who is injured in his business the right to recover multiplied damages, though, in addition, while these statu- tory remedies, being the ways expressly prescribed for en- forcing the act, are otherwise exclusive, it may be quite true that the policy of the United States, as manifested by this legislation, would authorize the courts. of the United States, upon more general principles, to refuse to enforce, as be- tii^een the parties thereto, such combinations as are de- nounced by this legislation. But, as matter of pleading, it seems to the court that until the United States has acted it does not lie in the mouth of a mere infringer to urge any of these objections as matter of defense to a suit for infrinse- ment, and thus divert attention from his own wrongful acts by raising an independent and altogether collateral issue as to the manner in which the complainant acquired title to the patent alleged to have been infringed. If the paragraph showed that the United States, by a direct proceeding in its courts, had already caused the alleged agreement to be adjudged void, though the complainant possibly in that event could not recover for the infringement complained of, the real owner of the patent, whose assignment to the com- OTIS ELEVATOR CO. V. GEIGER. 69 Opinion of tlie Court. plainant might thus be shown to have been void, could do so. A judgment in this case in favor of this complainant [133] before such proceedings as have been referred to had taken place would, through the recorded deed of assignment, pro- tect the defendant against another suit by the assignor for the same cause of action, and it therefore seems to the court that the only legitimate issues pertinent to the charge of infringement are very different from the one sought to be raised in paragraph 3 of the ansAver. It might, indeed, be quite possible for the general objects of the alleged combina- tion to be unlawful, and such as could be enjoined at the suit of the United States, without necessarily affecting other spe- cial acts, such as a conveyance to the complainant of the pat- ent. And, as there is no doubt that the conveyance of this patent w^as in fact made and recorded, it seems to the court that the defendant, under those circumstances, and in an ac- tion of this character, cannot be allow^ed to question the title of the complainant to the patent upon this ground, and the weight of the authorities supports this view. The apparent conflict in the decisions may be somewhat reconciled by ascertaining Avhether the suits in which they were rendered grew out of contracts or out of torts, as in the former case they may approach nearer the line where the act of congress miglit operate upon them than in the latter. Chief upon one side of the question are the decisions in the cases of St?mt v, Harrow Co. (C. C.) 51 Fed. 819; Edison Electric Light Co. V. Sawyer-Man Electnc Co., 3 C. C. A. 605, 53 Fed. 598; Soda-Fountain Co. v. Green (C. C.) 69 Fed. 334; Saddle Co. V. Troxel (C. C.) 98 Fed. 620. And upon the other side are the cases of Harrow Co, v. Hench, 27 C. C. A. 349, 83 Fed. 36, 39 L. E. A. 299; Id. (C. C.) 76 Fed. 667; Harrow Co. v. Quick (C. C.) 67 Fed. 130. The first of the last three cases named, it will be observed, w^as one in wj^ch a portion of the contract was sought to be enforced by certain of the parties to the illegal combination, and the court doubtless thought (though it does not very clearly appear from the opinion precisely what relief had been invoked) that, as their con- tract was vicious, it would leave the parties as it found them, and decline to enforce the agreement. But it is conceived 70 107 FEDEBAL BEPOKTER, 133. Opittion of the Court that very different principles would apply to parties who sought to enforce portions of the vicious contract from those which would apply to a case like the one before us. But, whether these views of the court are correct or not, there are certain rules of pleading which apply to paragraph 3 of the answer which must control the action of the court upon the exceptions, because its allegations are too vague and inexplicit, even if another view should be taken of the main question argued upon the exceptions. The paragraph in no way states who are in the combination with the com- plainant in the agreement characterized as unlawful. Such a defense, if maintainable, should very explicitly and exactly show how the complainant is an unlawful association, giving all the necessary particulars, in order that the complainant can know precisely what it is to meet, and so that the court can determine whether all the rights of the complainant to protect its claim to a patent have been forfeited, ipso facto, the entering into such an association; and the averments of the answer should be made in such clear terms as to show that the defendants, under the kw and upon the facts they state, can thereby defeat an action against them which might otherwise be [IM] meritorious. The court should take nothing for gi-anted in such a case, and the pleading should disclose fully and in detail not only that the combination was made after July 2, 1890, but all the facts necessary to show the illegality of the association. And the fact that the complainant is a corporation organized under the laws of a state may make these requirements all the more exacting and emphatic. The initial statements in the paragi*aph, being mere deni- als, are sufficient ; but from either point of view the court is of opinion that the exceptions to the third paragraph of the answer should be allowed so far as they apply to those parts of the paragraph IRginning with the words, "But, upon information and belief, these defendants aver that the com- plainant, the Otis Elevator Company, is a corporation or association created by the owners of several distinct patents relating," etc., and continuing to the close of the paragraph. All order can be prepared accordingly. GIBBS v. m'nEELEY. 71 Opinion of the Court [210] GIBBS ET AL. v. McNEELEY ET AL.« (Circuit Court, D. Washington, W. D. March 15, 1901.) [107 Fed., 210.] Anti-Teust Law— RestRxUNt of Interstate Commerce.— A combina- tion controlling not only the manufacture of an article in the state, but also the sale of the manufactured article, is not one in restraint of interstate commerce, so as to give a right of action against it under the anti-trust law of July 2, 1890, to one injured by a resolu- tion passed and circulated by it denouncing him for cutting prices, its sales being within the state, and any transportation and sale of the article in other states being by other agencies.^ T. 0. Ahhott, for plaintiffs. C, 0. Bates^ Chas A, Murray^ and /. F. McDaniels^ for defendants. Bellinger, District Judge. This case is being tried on what is known as the " fourth cause of action." In this cause of action it is alleged, in effect, as follows: That the defendants, with the intent to injure and destroy the plaintiff's business, and to bring plain- tiff into public odium and discredit, and to provoke him to wrath, and to induce his patrons in the various states to withdraw their patronage from him, and to destrov his credit and business, did maliciously compose and declare a certain communication of and concerning plaintiff and his business, as follows: Said committee did adopt, and enter upon the records of the association, and did distribute and publish, certain resolutions, whereby it was falsely and maliciously alleged that plaintiff was endeavoring to injure the market for Washington red cedar shingles, and whereby it was fur- ther falsely and maliciously stated that plaintiff had no money invested in said business, and that he was without credit, and irresponsible, and was not an honorable and legitimate dealer in said shingles. That, thereafter the said o Demurrer overruled as to fourth cause of action (102 Fed., 594). See p. 25. Verdict for defendants in error directed (107 Fed., 210). Reversed by Circuit Court of Appeals, Ninth Circuit (118 Fed., 120). See p. 194. 6 Syllabus copyrighted, 1901. by West Publishing Co. n lot FEDERAL BEPOBTEB, 211. Opinion of tlie Conrt committee, by its officers, etc., with intent to induce all whole- sale and retail dealers in the states and foreign countries named to refuse to buy shingles of plaintiff and do business with him, and to induce the manufacturers to refuse to sell shingles to plaintiff, did publish said resolutions by print- [211] ing the same in circular form, and addressed the same to various wholesale and retail dealers throughout the state of Washington and other states, and to a large number of newspapers and trade journals in Washington and other states, etc. That by virtue of said conspiracy and of the advertising so done the defendants did bring the plaintiff into odium and discredit with said manufacturers, so that they refused to sell him Washington red cedar shingles, and did also bring him into odium and discredit with a large number of his patrons and clients, so that they refused t^) buy shingles of him, and did totally destroy plaintiff's business. In the case of 17. S. v. E. C, KnHjht 6V)., l^G IT. S. 1, 15 Sup. Ct. 240, e^9 L. Ed. 325, the supreme court held that, althoiigli the American Sugar-Kefining Compjun'. had ob- tained a practical monopoly of the business of iiiaiiiifactur- ing sugar, yet the act of congress did not touch the case, because the combination only related to manufacture, and not to commerce among the states or foreign countries; that a combination which directly related to manufacture oiilv was not brought within the purview of the act, althouirli. Ms an indirect and incidental result of such combinatioii, couuiierce among the states mijrht \m thereafter simiewhat affected. The court in that ca»e savs: II m Tlie fact that an artWe is iiifmiifnctun'd for cxiKirt to another state does not of itself iiialce it an article of interstate commerce, and the intent of tlie manufacturer does not determine the time when the article or product passes from tlie control of the state and helonjfs to commerce." In the more reciMit case of Addystmi Pipe y their terms, and their n»siile for use in violaticm of the contract eoutainee clearly susceptible of proof, and which, if successful, would not result in any practical bpneflt to complainant. Equity— Right to Invoke Jurisdiction— I»rotection of Conracts Arisinc Out of Unlawful Combination.— In a suit by a railroad company to enjoin the defendants, who were ticket brokers, from dealing in s|)ecial tickets issuwl by complainant on ac\x>unt of the Pan-Aineriean Exi)osition, which were by their terms nontrans- ferable, It appeared from the showing made on a motion for a pre- liminary injunction that complainant, was a niembtM- of a combina- tion known as the " Trunk Line AsstKlatlon,' formeil by a number f>f raironds ojierating In different states for the purpose of pre- venting romiietitlon ; that the passenger receipts of all such roads were iMMJied and divided on an agiwd basis; and that the special rates nuide on account of the Exposition were fixed, and the terms of the tickets which were the basis of the suit prescrilH^l. by such fflsscK'latlon through its passenger committee. Ueld, that such com- bination was illegal, as in violation [690] of the fetleral anti-trust law (2«1 Stat. 20il), and that complainant could not invoke the aid of a f«leral court of eed. DELAWARE, L. & W. R. CO. V. FRANK. Opinion of tlie Court. 87 They insist, howe\'er, that, as the ticket is property, a prohi- bition of its sale is equivalent to depriving its owner of ac- quired property; that he obtains by the purchase thereof an assignable right, and also the right to authorize another to indorse his name [693] on the ticket whenever it is re- quired by the contract of purchase. I cannot accept this view. No substantial reason presents itself why a purchaser of transportation from a common carrier in consideration of the reduction of fare from the ordinarv rate should not abide faithfullv bv reasonable restrictions and limitations contained in the contract of purchase. ^Miile a person may obtain an assignable right in a railroad ticket, yet, when the right obtained is curtailed or limited, the purchasing party, assenting to the limitation for a valuable consideration, must hold his obligation as inviolate as he has a right to hold that of the railroad company. In consideration of the price paid for the ticket the purchaser obtains the right of passage, and as well obligates the connnon carrier to other responsi- bilities. Where a right of passage is obtained by special contract and at a reduced rate of fare, carrying with it re- strictions and limitations, the purchaser receives a considera- tion which makes it obligatory on him to in good faith carry out his agreement. A violation of the contract of transpor- tation by the common carrier lays it oj)en to legal liabilities and consecjuent remedies. The contract is binding on both. If the time in which a return j)art of the ticket may be used has lapsed, the purchaser of the ticket has failed to accept a right guarantied him by the contract. Failure to use the return portion of the ticket by him must be deemed his own voluntary act or neglect. The common carrier is required to transport the purchaser on his return without additional compensation. It may be recpiired to provide for his use such comfort and conveniences as are usuallv allotted to the traveling j)ublic. This question was only recentl\^ before the Fourth department, appellate division of the supreme court of New York. People v. Caldwell^ 71 X. Y. Supp. 054. Justice McLennan, speaking for the court, said : " We tliinlv tlie decision in tlie case of People ex rel. Tj/roler v. Warden, 157 N. Y. IIG, 51 N. E. 1000, 43 L. R. A. 2G4, 68 Am. St Rep. 703. nmst be regarded as decisive of tlie proposition that it is not oonipetent for the legislature to jiroliibit the purchase and sale of 110 FEDERAL BEPORTER, 693. Opinion of tlie Court. ?k!^l!!./nf ^'** ''''^'" traiisiK>rtaition lines when racb sale is not in n^nZli?/«,fTlf2^T**^.^***^ **^« transportation companies upon tlie sale of such tickets by them." This was a case brought before the court on appeal from a final order in habeas corpus proceedings discharging the relator from arrest. The relator was arrested for violating an act of the legislature passed in 1901, which by its terms provided, in substance, that no person shall sell a passage ticket giving any right to a passage or conveyance upon any railroad train, unless it be an authorized ag^nt of the com- pany running such train, or unless he has received a certifi- cate of authority therefor, in writing, from such company. The court followed a decision of the court of appeals {Ty^ roler v. Warden, supra) holding such a penal statute uncon- stitutional. It will be seen that the appelate division limited its decision, and interpreted the decision of the court of appeals, to tickets issued over railroad lines whenever such sale is not in violation of contractual obligations. It is clear that a limitation upon the use of a ticket as to time and its use by another than the original purchaser may be restricted and limited to the fair and true intendment of the contract. When, therefore, a subsequent purchaser of a ticket from a broker, who pur- [6M] chased the ticket from the original purchaser, uses the same, he becomes liable to the railroad company wronged, in an action at law, for any damage sustained. No obligation exists on the railroad company to transport a passenger holding such a ticket. Mosher v. BaUway Co,, 127 U. S. 390, 8 Sup. Ct. 1324, 32 L. Ed. 249. It is equally clear that the interference of the ticket broker in inducing a person holding the return part of a ticket purchased by him from the railroad under special contract arrangements not to transfer or permit the use of such ticket by another person, in consideration of the sale of such ticket at a reduced rate of fare, in order to break the contract, is actionable. An(/le v. Railway Co., 151 U S 1 14 Sup. Ct. 240, 38 L. Ed. 55 ; Bailroad Co, v. McConnell, supra An examination of the authorities convinces me that it is quite well settled that jurisdiction may be retained over defendants as to whom a diversity of citizenship exists, and a dismissal of the complaint may, and in a proper case will, be permitted against defendants who are not found to be DELAWARE, L. & W, R. CO. V, FRANK. Opinion of tlie Court. 89 within the jurisdiction of the court, unless such defendants are indispensable to the entry of a decree against the remam- ing defendants, and when it may be done without prejudice. Horn V. Lochhart, 17 Wall. 570, 21 L. Ed. 657 ; Oxley Btame Go, V. Coopers'" International Union of North America (C. C.) 72 Fed. 695; Mason v. Dullagham, 27 C. C. A. 296, 82 Fed. 689; Grove v. Grove (C. C.)'93 Fed. 865; Smith v. Oil Co,, 30 C. C. A. 103; 86 Fed. 359. The contention of counsel for defendants that the bill imperfectly and defectively charges fraudulent and wrong- ful acts by 61 defendants, rendering it impossible to separate any one of them or dismiss the bill as to any of them with- out injury and prejudice to the remaining defendants, is untenable. The defendants who are not diverse citizens from the complainant are not indispensable. The question now arises, can this proceeding be main- tained against the remaining defendants, and by a single bill? These objections are removed by the language of Judge Clark in the McConnell Case, where the facts are simi- lar to the case at bar, at page 75, where he says : " I thinlc tlie defendants may properly be joined in one suit. Plain- tiffs' business is the subject-matter in each bill, and the right claimed is exactly the same against all the defendants. The injury com- plained of is the same, and is being inflicted by defendants in the same method and at tlie same time." The objection that the suit fails of jurisdiction because it is not shown that the defendants against whom the action may be continued have damaged complainant in a sum in excess of $2,000 is overruled. It has been frequently held that in a suit in equity, where an injunction is sought, the amount in dispute is not the amount in controversy , but the value of the object to be gained by the bill. In the case of Humes v. City of Ft. Smith (C.^ C.) 93 Fed. 862, where an objection was made to the jurisdiction of the court because the amount in controversy did not exceed the sum of $2,000, the court said : "Jurisdiction is not determined in that way. Jurisdiction is de- teruimed by the value of the right to be protected, or the extent of the injury to be prevented, by the injunction." [695] A court of equity will not require a pursuit of a legal remedy which foreshadows annoyance, accompanied 90 110 FEDEEAI. REPOBTER, 095. Opinion of the Court. by uncertain results and multiplicity of suits, to recover small sums from irresijonsible defendants, where, as in this case, the damages caused by the alleged wrongful acts are not clearly susceptible of proof, and where the legal remedy that is afforded falls short of being complete and efficient. Ra'dnHuJ Co, V. MeConnell, mpm; /n,sttnuir€ Co. v. Chfuie (C. C.) 88 Fed. U>7: SmJf^ v. Birem (C. C.) 50 Fed. 852 : aS//////// v. Amen, 169 U. S. 400, 18 Sup. Ct. 418, 42 L. P:d. 810; De Forest v. Thompson (C. C.) 40 Fed. 375. The complain- ant's irdpers, standing alone, disclose a proper case for the exercise of equitable relief. I now come to consider a groimd of objection to a prelim- inaiT injunction, not free from difficulty. I have given the subject most serious consideration, and am conscious of the great importance and far-reaching effect that its decision involves. Defendants contend that the complainant, in determining on the reduced rate of fare for a round-trip ticket on its road during the continuance of the Pan-Amer- ican Exposition at Buffalo, ending with October 31, 1901, in conjunction with other railroad lines having facilities for transportation of passengers over its road to Buffalo, vio- lated the provision of the act of congress of July 2, 1890, by which it is provided : " Ever.v wntnict, eoinl)iiiation in the form of trust or otherwise or conspiracy in restraint of trade or commerce among tlie several states or with foreign nations, is hereby declared to be illegal." 26 Stat' 20!). It appears from the affidavit of Mr. Lansing: That the complainant is a party to a combination which is engaged in pooling railroad rates and in fixing fares for railroad trans- portation in order to avoid competition between the several lines constituting the association known and distinguished as the " Trunk Line Association.'' This association has among its membership a constituted committee Imown as the " Trunk Line Committee." It is claimed that its member- ship consists of the complainant and eight other railroad corporations, citizens of different states, operating in the Middle states. The Trunk Line Association acts through a trunk line passenger committee, which is composed of the general passenger agents of the principal railroads operating in the territory reached by the several railroads which they DELAWAKE, L. & W. R. CO. V, FRANK. 91 Opinion of the Court. represent. That the special Pan-American tickets referred to in the bill of complaint have been issued pursuant to such combination and conspiracy. That the rates and conditions of the tickets were previously arranged, and are a product of this combination organized to stifle competition in rail- road rates. It further appears that the complainant and other railroads in combination are pooling the first and sec- ond class passenger business of their res])ective roads upon an agreed division of the receipts. The representative of the joint agency testified before the police court of the city of Buffalo in a proceeding brought against 'a ticket broker. It appears from his testimony, which is produced by the de- fendants, that the rates are fixed by the association, and that the complainant is a member thereof; that he is employed by this association in conjunction with the Central Passen- ger Association. The defendants' affidavits and exhibits have not been questioned or controverted on [696] the part of complainant. They stand admitted, therefore, upon this application for a continuance of the injunction. Defendants charge that the very ticket which is the ground of this appli- cation is the result and the evidence of an unlawful agree- ment between the different railroads composing the Trunk Line Association. This is not denied. The court cannot at this time pass upon the existence of this unlaw^f ul agreement, other than as it appears in the papers submitted. Were this at final hearing, when all the facts known to the com- plainant w^ere divulged, the court might not be bound to seemingly protect the defendants in the pursuit of their nefa- rious practices, for such they admittedly are. The defend- ants do not deny the charges of wrongdoing. A court of equity would therefore be bound to raise its arm in defense of a complainant suffering wrongs which could be properly righted by the exercise of its power. But can the aid of a federal tribunal be invoked to protect the complainant in the issuance of a ticket over its railroad, Avhich, as far as it appears to the court, is the culmination as w^ell as the evi- dence of an agreement between railroad corporations speci- fically forbidden by an act of congress which has been sus- tained by the supreme court of the United States ? U, S. v. Trm$-Missouri Freight Ass'n, 166 U. S. 290, 17 Sup. Ct. 540, 92 110 FEDERAL REPORTER, 698. Opinion of tlie C3oiirt. 41 L. Ed. 1007; U. S. v. Joint Traffic Ass'n, ITl U. S. 505, 19 Sup. Ct. 25, 43 L. Ed. 259. The complainant contends that this charge made by the defendants does not avail, as the wrongdoing, if any exists, does not relate to the subject- matter. I am not convinced as to the soundness of this con- tention. C«in the railroad complainant conspire unlawfully to G^K rates, and then come into a court of equity and invoke its aid to protect those rates which are represented by the ticket pi-esented to the court, and which is wrongfully used by the defendants? The evil practice which stands admitted by the papers is the very practice in which the court's protec- tion is invoked. As was well said in Insurance Co, v. €lunie (C. C.) 88 Fed. 170: •• The maxim tliat lie wlio comes into equity must come witli clean Iinnds lias its limitationa It does not apply to every miconscieu- tious act or inequitable conduct on the part of the complainants. The inequity which deprives a suitor of a right to justice in a court of equity is not general iniquitous conduct, unconnected with the act of the defendant which the complaining party states as his ground or cause of action, but it must be evil practice or wrong conduct in the particular matter or transaction in resjject to which judicial protec- tion or redress is sought." See, also, Beach, Mod. Eq. Jur. 14-16; Pom. Eq. Jur. 397, 398 ; Beck v. Real Estate Co,, 12 C. C. A. 497, 65 Fed. 30 ; Weiss V. Herlihy, 23 App. Div. 608, 49 N. Y. Supp. 81; Sinsheimer v. fratment Workers, 77 Hun, 215, 28 N. Y. Supp. 321. In the Sinsheimer Case an injunction was sought by plaintiffs, who were a combination of clothing manufac- turers formed for mutual protection from the demands for higher wages of their employes, who were also organized for protection and for advancing their wages. The court said : " Under the circumstances disclosetl by the papers in this case, if the defendants were guilty of any violation of law, the plaintiffs were certainly equally implicated, and under this condition of affairs it is difficult to see [6»7] how they would have a right to the intervention of a court of equity. In dealing with questions of this nature the court should be studious to see that the rights of all parties are pro- tected, and that the forms of law should not be permitted to be used on behalf of one party against another, when the party seeking the Intervention of the court has been endeavoring to secure his ends by means similar to thnse which he seeks to enjoin on the part of his antascnist." The wrongdoing of complainant, admitted by the papers. DELAWABB, L. & W. R. CO. V, FRANK. Opinion of the Court. 9d is not remote. It has given birth to the combination whose tickets have been wrongfully diverted by the defendants. This court has no sympathy with, nor would it lend its aid willingly to, those indulging in practices admitted by the defendants. But, sitting as a court of equity, it is bound by those rules which are the very foundation of that branch of our jurisprudence. The complainant does not come before the court with clean hands in the transaction comi^lained of. The court can, therefore, not grant it equitable relief upon the state of facts before it at tliis time. The complainant must therefore be relegated to its remedies at law, and the injunction vacated. Let an order be entered accordingly. ON REHEARING. (October 14, 1901.) Motion for reargument on notice to defendants was heard by me September 30, 1901. Affidavits were read m behalf of complainant, denying the charge of violation of the anti-trust act, the alleged pooling of business, and the apportionment or division of money received by various railroads for sale by them of reduced-rate Pan-American tickets. Defendants, in reply, read additional affidavits, corroborative of their charge of iniquitous conduct by the complainant with respect to the tickets in question. An- swers in behalf of 38 defendants were served and filed, denying the commission of the wrongful acts charged in the complaint. Important and difficult questions of law are involved in the determination of this motion. A disposition of it on the affidavits presented may fail of having the facts care- fully examined and deliberately heard. The original mo- tion for injunction was denied, for the reasons stated in the opinion of the court filed August 26, 1901. The Pan-Amer- ican Exposition, on account of which the reduced-rate ticket was issued by the complainant and other roads associated with it, will close its gates on October 31st, — within 17 days. It is doubtful whether the necessity for immediate protec- tion from alleged wrongful acts now exists. Inasmuch as the defendants have read additional affidavits and filed an Ill FEDERAL REPORTER, 98. Syllabus. answer corroborative of the charge of the existence of a combination in viohition of hiw, the issues now raised ought not at this time to be disposed of summarily. Motion for reargument denied as to defendants who have appeared and answered. Defendants who have not an- swered, of course, may l)e proceeded against in accordance with the ordinary rules of equity procedure. [%1 CENTRAL COAL & COKE CO. ET AL. r. HART> (Cirtiiit Couit of Appeals, Eighth Circuit. September .'50. 1901.) 1111 Fed., 96.] Monopolies— Combinations in Restraint of Trade— Da mages.— Ooly actual damages, established l)y the proof of facts from which they may l>e ratiomUly inferred with reasonable certaintj-. are recoverable [under the Sherman anti-trust law (2G Stat. 209)]. Speculative, remote, or contingent damages cannot form the basis of a lawful judgment Same— Spec ulative Damages — Evidence— Slj-ficienc v. The esti- mates, si)eculations, or conjectures of witnesses unfounded in the knowledge of actual facts from which the amount of the damages could have been inferred witli reasonable certainty will no more sustain a judgment than the conjectures of a jury. Same— Anticipated I'rofits— When Recoverable.— The general rule is that the anticipated profits of a commercial business are too remote, speculative, and dependent upon changing circumstances to warrant a judgment for their loss. There is an exception to [97] this rule that the loss of profits from the interruption of an established business may be recoveretl where the plaintiff makes It reasonably certain by competent proof what tlie anumnt of his actual loss was. Same— I»ROFiTS of Established Business— Evidence— Indispensable TO Recovery.— Proof of the expenses and of the inci)me of the busi- ness for a reasonable time anterior to and during the interruption ehargetl. or of facts of equivalent imi>ort, is indispensable to a lawful judgment for damages for the loss of the anticipated profits of an establisheil business. Same— Loss of I»rofits.— The plaintiff testified that the acts of the defendants had greatly diminished his business, prevented him from making contracts for future delivery of coal, and diminished his sales from 1.** to 20 carloads per month, on whicli he would liave made a profit of from |12 to |20 per car ; that he could not tell CENTRAL COAL & COKE CO. V. HARTMAX. Opinion of the Court. 95 what the volume of his business was before or after the acts com- plained of, and that he had no books or papers which would sliow this fact. He produced no evidence of the expenses or income of his business before or after the acts complained of. llchl, that the evidence was insufiicient to sustain a verdict for damages for the loss of anticipatetl profits. ( Syllabus by the Court. ) In Error to the Circuit Court of the United States for the Western District of Missouri. IF. C. Perry {Daniel B. Holmes^ Adiel Sherwood, and John O^ Grady ^ on the brief), for plaintiffs in error. Charles H, Nearing (J, S. Went and -/. B. Campbell on the brief), for defendant in error. Before Sanborn, Circuit Judge, and Adams and I^)rHREN, District Judges. Sanborn, Circuit Jutl-ofe. This was an action brouirht ])v Samuel Hartnian against the Central Coal & Coke Conij^any and several other corpora- tions for three times the damages which he claimed that the defendants had inflicted u])on his business by their violation of the inhibitions of the act to protect trade against unlaw- ful combinations and monopolies, commonly called the "Sherman Anti-Trust Law" (26 Stat. 209, *c. 647). His complamt was that he had been engaged in the sale of coal in Kansas City, in the state of Kansas, since 1803; that in September, 181)6, he and the defendants had formed a coal club to establish and control the prices at which coal should be sold in Kansas City, Kan., and Kansas City, :Mo., and to restrain commerce among the states: that they had ac- complished their purpose; that he withdrew from the club in 1897; that thereafter the defendants and their associates would not sell him Salt Fork coal or Cherokee coal at any other i)rices than those which they had established for the sale of coal at retail to consumers; that this action of the defendants caused him a loss of all his trade in Salt Fork coal, of a large portion of his business in Cherokee coal, and made it impossible for him to make contracts for the future m 111 FEDEBAL KEFOBTER, 98. Opinion of the Court. delivery of coal, because he was uncertain whether or not he could obtain it; so that he suffered damages in the sum of $2,500. The defendants denied these averments, and at the close of the trial the jury found that the plaintiff's een con- victed." And again: " We are clearly of opinion that no statute which leaves the party or witness subject to prosecution after he answers the criminating question put to him can have the effect of supplanting the privilege conferred by the constitution of the United States. Sec- tion 860 of the Revised Statutes does not supply a complete protection from all the perils against which the constitutional prohibition was designed to guard, and is not a full substitute for that prohibition. In view of the constitutional provision, a statutory enactment, to be valid, must afford absolute immunity against future prosecutions for 108 113 FEDERAL KEPORTER, 159. Opinion of the Court "Fro'^TUVr^lL^ T^e c«urt concluclod: and of an the anSeL*r^^^^^^^^^^ P^^^^^^on, the appellant was ent t ed toVJf^sen^LTA^''''^^ ""^ ^J^"'^" *^^* L. Ed. lliq, 1114-11^ IJ. fe. 54^ 5G4r-o85, 12 Sup. Ct. 195, 198-207, 35 MDoflkt' p^"^^^""^ J"^^^^t ^f the supreme court the appellant, Counselman, was discharged from custody. That case seems conclusive of the case at bar. But the Walker, 161 U. S 591, 16 Sup. Ct. 644, 40 L. Ed. 819, is vi J- tually a repeal of the case of Counselman v. Hitclicoch:^ Is that contention true? After the opinion in Counselman v. itr T^ ' f ' f^^ ^«^"nity to witnesses in certain ^ses. It provides, m brief, that no person shall be excused from testifying m interstate commerce actions, or from pro- ducing books, papers, contracts, etc., before the interstate commerce commission, or in any cause or proceeding, crimi- nal or otherwise, based upon or growing out of any alleged violation of the act of congress entitled "An act to re-ulate commerce," ap- [160] proved February 4, 1887 on the ground or for the reason that the testimony or evidence re- quired of him would tend to criminate him or subject him to a penalty or forfeiture, and that no person shall be prose- cuted or subjected to any penalty or forfeiture on account of any transaction, matter, or thing concerning which he may testify or produce evidence before said commission, or in SlT! \2 ^^!.f ^^P«^^^' «r i^ a«y such case or proceeding, f L /lu ;, ^ supreme court having decided that section 860 of the Eevised Statutes did not confer complete indem- mty on witnesses, this act was evidently passed to confer such indemnity m the cases to which it refers. The act has no application to the case at bar. It is confined by its terms to proceedings connected with "An act to regulate commerce » approved February 4, 1887, and amendments thereto. The petitioner in the case at bar was examined before the grand jury m reference to offenses under "An act to protect trade and commerce against unlawful restraints and monopolies " approved July 2, 1890 (26 Stat. 209; 1 Supp. Eev. St. p. 762). In the case of Brown v. Walker, 161 U. S 591 16 Sup. a. 644,. 40 L. Ed. 819, cited by the district attorney, FOOT v. BUCHANAN. 109 Opinion of the Court the court construed the act of February 11, 1893 (27 Stat. 443). The court held (four of the justices dissenting) that the act affords absolute immunity to the witness in the cases to which the act relates against prosecution, state or federal, for the offense about which the witness is examined, and deprives the witness of his constitutional right to refuse to answer. This act, as we have said, by its terms is confined to a certain class of cases, and has no application to the case at bar. There is no statute applicable to the case at bar which tends to protect the witness, except section 860 of the Revised Statutes, and that has been held by the supreme court not to afford the protection furnished by the constitu- tion. The principle established by the decision in Counsel- man V. Hitchcock, so far as it is applicable to the case at bar, is unaffected by the opinion of the court in Brown v. Walker, The result of the two cases is (1) that since the statute of February 11, 1893 (27 Stat. 443), parties or witnesses in cases or proceedings under the act of February 4, 1887 (24 Stat. 379), to regulate commerce, and amendments thereto, may be required to answer questions that tend to criminate the witness or party; but (2) witnesses or parties in other cases may not be required to answer criminating questions, because section 860 of the Revised Statutes does not afford complete indemnity to the witness or party. The first result is established by a bare majority in Brown v. Walker, The second proposition is established without dissent in Counsel- man V. Hitchcock. 2. It is true that the witness cannot avoid answering questions upon his mere statement that his answers to them Avill tend to criminate him. It is for the judge to decide whether his answer will reasonably have such tendency, or whether it will furnish an element or link in the chain of evidence necessary to convict him. In determining 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 determine whether or not there is reasonable ground to appre- fI61| hend danger to the witness from his being compelled to testify. If the fact that the witness is in danger appears, great latitude should then be allowed to him in judging for himself of the effect of any particular question. A question 110 113 FEDERAL REPOBTER, 161. Opinion of the Court ipMch might appear at first a very slight and innocent one might, by establishing a link in a chain of evidence, become the means of convicting the witness. Ex parte Irvine (C. C.) 74 Fed. 954. In the case at hmt it appears that the de- fendant was already indicted for the offense about which he was examined, and the questions tended to connect him with the offense for which he is indicted- There can be no doubt that under such circumstances, when the questions are such as seek to connect him with the crime under investi- gation, the court will not require him to answer them. S. It is set up in the answer filed by the district attorney that the petitioner, when carried before the court upon his failure to answer questions before the grand jury, was as- sured by the court that no information given by him in his answers to the questions would or could be used against him in any prosecution in any court of the United States. The petitioner could not be required to waive his constitutional privilege upon such an assurance by the court. He has a ^ right to stand upon his constitutional privilege, notwith- standing such assurance, and to remain silent whenever any question is asked, the answer to which may tend to criminate him. Temple v. Com,^ 75 Va. 892. 4, It is argued by the district attorney that some of the questions asked (we have not stated them all) could have been answered without endangering petitioner, and that, if any one of them did not call for a criminating answer, he is not entitled to relief. We can not accept that view. He was carried before the court, and the court required him to answer all of the questions. He is under commitment for refusal to answer all. It was one examination, relating to one subject, and the questions culminated in an effort to show the witness' connection with the misdemeanor charged. Where there is a series of questions, the examiner cannot " pick out one, and say, if that be put, the answer will not criminate him." If it is one step having a tendency to criminate him, he is not compelled to answer. People v. Mather^ 4 Wend. 230, 254; Paxton v. Douglas^ 16 Ves. 240, 243. The act to protect trade and commerce against unlawful restraints and monopolies is the law of the land, and should METC^VLF V, AMERICAN SCHOOL FURNITURE CO. Ill Statement of tbe Case. • be enforced. We would make no order that would tend to obstruct its proper enforcement. It confers jurisdiction on the United States courts, and provides a remedy in a civil action " by way of petition setting forth the case, and pray- ing that such violation shall be enjoined or otherwise pro- hibited." 26 Stat. 209, §4. This provision does not pre- vent the criminal prosecution of those guilty of its viola- tion. But the procedure against violators of the act must conform to law. The penalties of fine and imprisonment provided by the act may be imposed by the same procedure sustained by the same kind of evidence, either direct or cir- cumstantial, that is admissible in prosecutions for other misdemeanors, and it ought not to be necessary, and cer- tainly is [162] not permissible, to resort to methods in con- flict with the constitutional rights of the citizen. It is ordered that the petitioner, Lawrence Foot, be dis- charged from custody. Petitioner discharged. Pardee and McCormick, Circuit Judges, who were pres- ent at the hearing of this case, concur in this opinion. [1030 J METCALF v. AMERICAN SCHOOL FURNI- TURE CO. ET AL.« (Circuit Court of Appeals, Second Circuit. February 4, 1902.) [113 Fed., 1020.] Appeal from the Circuit Court of the United States for the- Western District of New York Frederick Seymour for appellant. Before Wallace, Lacombe, and Shipman, Circuit Judges. Per curiam. Decree affirmed in open court, with instruc- tions to allow plaintiff 30 days to amend, on payment of costs. For opinion below, see 108 Fed. 909.^ « Demurrers to bill as originally filed sustained by the Circuit Court (108 Fed., 909). See p. 75. Decree affirmed by the Circuit Court of Appeals, Second Circuit (113 Fed., 1020). Amended bill dismissed (122 Fed., 115). See p. 234. » Copyrighted, 1902, by West Publishing Co. 112 115 FEDEKAL BEPOBTEK, 27. Statement of the Case. [271 W. W. MONTAGUE & CO. ET AL. u. LOWRY ET AL.« (Circuit Court of Appeals, Nintli Circuit February 17, 1902.) [115 Fed., 27.) Monopolies — ^Anti-Trust Act — Combination in Restraint of Inter- STATE Commerce.— Tlie Tile, Mantel & Grate Association of Cali- fomia was organized by defendants, who were dealers in tiles and similar articles, for the declared purpose of uniting " all acceptable dealers" in tiles, fireplace fixtures, and mantels in San Francisco and vicinity (within a radius of 200 miles), and all American manufacturers of tiles and fireplace fixtures. The articles prescribed that other local dealers who had an established business and carried a stock of a stated value, and who were "acceptable," might, on motion of a member, be permitted to join, and that all manpfacturers of tilCs in the United States might become members by signing the constitution and paying an entrance fee. The local members were bound by the articles not to buy goods from any manufacturer who was not a member, nor to sell goods to other dealers not members, at less than list price, which was about double the market price, and the manufacturing members were bound not to sell to any dealer within the prescribed territory who was not a member. Held, that such association was a combina- tion in restraint of trade among the states, illegal under sec- tion 1 of the anti-trust act of July 2, 1890 (26 Stat. 209), and also an attempt to monopolize a part of the trade and commerce among the states, within the prohibition of section 2, by shutting out from such trade all local dealers who were not members, and that defendants were liable in damages, under section 7 of the act, to such a dealer to whom a manufacturer in another state refused to sell tiles, as it had previously done, on the sole ground that such dealer was not a member of the association.^ In Error to the Circuit Court of the United States for the Northern District of C«ilif ornia. See 106 Fed. 38. The writ of error in this case is brought to review the judgment of the circuit court rendered in an action which the defendants in error brought against the plaintiffs in error under the act of con- gress of July 2, 1890 (26 Stat. 209), commonly known as the " Sher- o Begun hi the Circuit Court for the Northern District of California, and there entitled Lowry v. Tile, Mantel d Grate Ass'n. of Cal. De- murrer overruled (98 Fed.. 817). See vol. 1, p. 995. Charge to jury (106 Fed., 38). See p. 53. Judgment affirmed by the Circuit Court of Appeals, Ninth Circuit (115 Fed., 27), where the title of the case was changed to Montague d Co. v. Lowry. Affirmed by Supremo Court (193 U. S., 38). See p. 327. » Syllabus copyrighted, 1902, by West Publishing Co. W. W. MONTAGUE & CO. V, LOWRY. Statement of the Case. 113 man Anti-Trust Act." The complaint alleged that the plaintiffs therein had been injured in their business by reason of the illegal combination between the defendants therein made under the name of the Tile, Mantel & Grate Association of California. The sub- stantial facts alleged in the complaint and proved on the trial were that for a number of years prior to the year 1898 the defendants in error had been engaged in the business of buying and selling and setting tiles, mantels, [28] and grates in the city of San Francisco, and that the tile which they used in their business was purchased from some of th3 various tile manufacturers in the states of Ohio, Indiana, Kentucky, New Jersey, and Pennsylvania, who subsequently entered into the association, there being no manufactures of tiles in the state of California; that by industry and attention thereto the defendants in error had established a profitable business; that in the year, 1898 the plaintiffs in error formed the association, the object of which, as declared in its articles, was "to unite all acceptable dealers in tiles, fireplace fixtures, and mantels in San FrancisL-o and vicinity (withm a radius of two hundred miles), and all American manufacturers of tiles, and by frequent interchange of ideas advance and promote the mutual welfare of its members." As to membership, it provided that any individual, corporation, or firm engaged in the tile, mantel, and grate business in San Francisco, or within a radius of 200 miles therefrom, having an established business, and carrying not less than $3,000 worth of stock, and having been proposed by a member in good standing and elected, and having signed the con- stitution and by-laws, and paid an entrance fee of $10, might become a member. It was also provided that all manufacturers of tiles and fireplace fixtures throughout the United States might become nonresident members upon the payment of an entrance fee and sign- ing the constitution and by-laws. Section 7 of the by-laws forbade members of the association to purchase goods from any manufac- turer unless the latter were a member of the association, and forbade them to " sell or dispose of, directly or indirectly, any unset tile for less than list prices to any person or persons not a member of this association, under penalty of expulsion from the association." It provided, further, that any manufacturer selling goods to others than members of the association should forfeit membership. It was shown that the list price referred to in section 7 was a nominal catalogue price of goods fixed by the manufacturers for convenience but that in selling to members of the association, and, prior to form- ing the association, in selling to the trade generally, the manufac- turers had allowed large discounts from the list prices amoimting to something more than 50 per cent, thereof. The defendants in error alleged in their complaint that it required the imanimous con- sent of the association to become a member thereof, and that by reason of certain business difficulties there were members of the association who were antagonistic to them, and who would not have permitted them to join if they had applied, and that they were not eligible to join the association for the further reason that they did not carry at all times stock of the value of $3,000. They also alleged that the association constituted a trust and conspiracy in restraint of interstate trade and commerce, and a monopoly of the grate, tile and mantel trade between the parties engaged therein. The' jury found damages for the defendants in error in the sum of $500 and for that amount judgment was rendered in their favor, and for the further sum of $750 for an attorney's fee, which was allowed bv the court. 21220— VOL 2—07 M 8 114 115 FEDERAL. BEPORTER, 28. Opinion of the Court P. F. Dunn and Linforth'(& Whitaker, for plaintiffs in error, /. C. Campbell, W. H. Mefson, and E. W, Campbell, for defendants in error. Before Gilbert and Koss, Circuit Judges, and Hawley, District Judge. Gilbert, Circuit Judge, after stating the case as above, delivered the opinion of the court. Two questions are presented upon the writ of error— First, did the association constitute a combination which was within the prohibition of the act of July 2, 1890? And, second, was the amount of the attorney's fee allowed by the court excessive? In answering the first question, we must first take into the account the declared purpose of the asso- ciatfon. It was formed to unite all acceptable dealers en- gaged in the tile, grate, and mantel business in San Fran- [29] Cisco, and within a radius of 200 miles therefrom, and all American manufacturers of tiles. In its scope it in- cluded upon the one hand every manufacturer of tiles wher- ever situate in the United States, and upon the other the six firms of local dealers who joined the association at its forma- tion, together with those who might be permitted thereafter to become members. The defendants in error were not in- vited to enter into the combination. The rules prescribed that others in the same line of business, who had an estab- lished business and carried stock of the value of $3,000, and who were " acceptable," might upon the proposition of one who was already a member, and upon the vote of the asso- ciation, be permitted to join the combination. The evidence shows that the defendants in error after the formation of the association made efforts to purchase tile from manufac- turers 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 manu- facturers 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 W. W. MONTAGUE & CO. V. LOWRY. 115 Opinion of the Court. than double the price which members of the association were required to pay. We think that, in the light of these facts, the association clearly comes within the prohibition of the act of congress. It has a direct tendency to restrain trade between the differ- ent states and to create a monopoly. In principle it would be the same if it were an association between all the manu- facturers of the United States in that line of goods and a single dealer in California, whereby all other resident deal- ers were shut out and all competition between local dealers extinguished. Section 1 of the act of July 2, 1890. provides 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 nations is hereby declared to be illegal ; " and it proceeds to denounce a penalty against any one who shall make any such contract or engage in any such combination or conspiracy. Interstate commerce " includes the purchase, sale and exchange of commodities" {Gloucester Ferry Co. v. Pemisylvania, 114 U. S. 203, 5 Sup. Ct. 828, 29 L. Ed. 158) ; and every agree- ment which has the tendency to restrain the purchase, sale, and exchange of commodities is brought within the prohibi- tion of the statute {Addyston Pipe c5 Steel Co. v. TJ. S., 175 U. S. 238, 20 Sup. Ct. 96, 44 L. Ed. 136) . The combination in the case before the court evidently tended to restrain trade. The defendants in error who had been regular pur- chasers of goods from the manufacturers were shut out from dealing with them from the time when the association was formed. Their orders to the manufacturers for goods were rejected for the express reason and for no other reason than that they were not members of the association. The tendency of the combination was also to create a monopoly in the hands of the local members thereof. Sec- tion 2 of the act includes within its prohibition " every per- son who shall monopolize or attempt to monopolize or con- spire with any. other person or persons to monopolize any part of trade or conmierce among the several states or with foreign nations." The combination in the case before the court [30] was not one such as might lawfully have been made between the residents of a single state for the purpose 116 115 FEDEBAL BEPOBTEB, 30. Opinion of the Court of regulating the me&ods of conducting their business or fix- ing the prices of goods or for other legitimate purposes, such m was sustained by the court in U. S, v. E. C, Knight Co,, 156 U. S. 1, 15 Sup. Ct 249, 39 L. Ed. 325, where it wus held that an agreement between manufacturers in a state bore no distinct relation to commerce between the states or with foreign nations, but it is one that brings within its scope not only local dealers, but all the wholesale dealers in the same kind of goods in all the states. Said the court in II, S. V. E, a. Knight Co,, 156 U. S. 16, 15 Sup. Ct. 255, S9 L. Ed. 325 : " It is not essential that the result of the com- bination be a complete monopoly. It is sufficient if it merely tends to that end and to deprive the public of the advantages which flow from competition." The local members were bound by the articles of the association not to sell goods to nonmembers except at prices which were more than double the prices which the members paid and which all dealers had paid before the association was formed, and the manu- facturers were bound not to sell to nonmembers at any price or under any conditions. The testimony indicated that the defendants in error had been in constant competition with the San Francisco firms which entered Into the association, and had bid against them on contracts for work. The for- mation of the association shut off all such competition. The defendants in error were powerless to compete with local firms which possessed such advantages over them. The necessary effect of the combination was to crowd out of business every local dealer who was not a member, and thereby to create a monopoly in the hands of those who were. It is argued that the defendants in error might have joined the association had they chosen to do so, and that thereby they might have availed themselves of the privileges of membership. To this it is sufficient to say that it does not appear that they would have been admitted to membership if they had applied. Under the by-laws they were not eligi- ble, for the reason that they did not at all times carry the requisite amount of stock, and if they had possessed the necessary amount of stock they had no assurance that they were " acceptable " to the members. On the contrary, the fact that they were not invited to enter the combination when W. W. MONTAGUE & CO. V. LOWRY. 117 Opinion of the Court. it was formed was a distinct intimation to them that they were not acceptable. But it is immaterial whether they would or would not have been admitted into the combination. To protect their business and secure their legal rights they were not obliged to submit an application for membership in such a combination with the possibility of its rejection, or to submit themselves to the rules and exactions of the association. It is clear, also, that the tendency of the com- bination was to prevent others from engaging in the business. No one could become a member who had not " an established business," and it is too evident to admit of denial that no one could establish a business in competition with the mem- bers of the association who possessed such advantage in dealing with the manufacturers. It is earnestly contended that the case in its principle comes within the doctrine of Hopkins v. U, jS., 171 U. S. 578, 19 Sup. Ct. 40, 43 L. Ed. 290, and Anderson v. Same, 171 U. S. 604, 19 Sup. Ct. 50, [31] 43 L. Ed. 300; but we think it is clearly distinguishable from those cases. In the Hop- kins Case the association, which was claimed to have been formed in violation of the act, was a local voluntary associa- tion of men whose business it was to receive at Kansas City consignments of cattle shipped from owners in various statas, and to feed, prepare for market, and sell (he same, and pay the owners their portion of the proceeds after de- ducting charges and expenses. The rules of the association forbade members to buy stock from one who was not a member or to transact business with any person who violated* its rules and regulations. The court h^ld that the business of the members of the association was not interstate com- merce, and that the agreements or contracts relating to their business were not in restraint of interstate trade, for the reason that trade between the states was not affected by the combination, which was a purely local one, comprising only members of the state in which it was formed. The Anderson Case was similar to the Hopkins Case, with the exception that the members of the association were pur- chasers of certain classes of live stock instead of agents for the sale thereof. There was no association or combination between such purchasers and the vendors of the stock, and 118 184 UNITED STATES REPORTS, 540. Syllabus. no monopoly was created or was intended to be thereby created. The association itself transacted no business. The court said: "Those who are members thereof compete among themselves and with others who are not members for the purchase of the cattle, while the association itself has nothing whatever to do with transportation nor with fixing the prices for which the cattle may be purchased or thereafter sold. ♦ * * A lessening of the amount of the trade is neither the necessary nor direct effect of its formation, and in truth the amount of that trade has greatly increased since the asso- ciation was formed, and there is not the slightest evidence that the market prices of cattle have been lowered by reason of its existence. There is no feature of monopoly in the whole transaction." The difference between those eases and the case at bar is apparent. The resident members of the Tile, Mantel & Grate Association, while they may compete with themselves, have no competition with those who are not members, for the latter are practically excluded from doing business within the portion of the state of California which is included in the prescribed area; and instead of being a combination be- tween purchaj-ers only, as was the fact in the Anderson Case, it is a combination between manufacturers and buyers of different states, which brings together on the one hand all the wholesale dealers in the United States in that line of goods, and on the other hand the chosen few who are per- mitted to obtain goods and supply the local demand. We find no ground for disturbing the finding of the circuit court concerning the amount of the attorney's fee to be allowed to the defendants in error. The judgment is affirmed. [540] CONNOLLY v. UNION SEWER PIPE COM- ERROR TO THE CIRCUIT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS. No. 46. Argued April 22, 23, 1901.— Decided March 10, 1902. [184 U. S., 540.] If a claim is made in the Circuit Ck)urt that a state enactment is Inralid under the Constitution of the United States, and that claim • Decision In the Circuit Court (99 Fed., 354). See p. 1. CONNOLLY V. UNION SEWER PIPE CO. 119 Syllabus. is sustained or rejected, this court may review the judgment, at the instance of the unsuccessful party. If the alleged combination in this case was illegal, it would not follow that they could, at common law, refuse to pay for pipes bought for them under special contracts. The contracts between the plaintiflf and the respective defendants were collateral to the agreement between the plaintiff and other corporations, etc., whereby an illegal combination was formed for the sale of sewer pipe. ^ The first special defence in this case, based alone upon the principles of the common law, was properly overruled. The special defence, based upon the act of Congress of July 2, 1890, 26 Stat 209, was also properly rejected. That act does not declare illegal or void any sale made by such combination or its agents of property acquired for the purpose of being sold, such property not being at the time in the course of transportation from one State to another, or to a foreign country ; and the buyer could not refuse to comply with his contract of purchase upon the gi'ound that tite seller was an illegal combination, which might be resti*ained or suppressed in tlie mode prescribed by the act of Congress.^ [46 L. ed., 679.] & [The illegality, at common law, of a combination formed by corpora- tions and persons in restraint of trade, does not preclude it from recovering the purchase price of goods sold in the course of busi- ness.] [A violation of the Sherman Anti-Trust Act of July 2, 1890 (26 Stat. L., 209, chap. 041), by the formation of a combination in restraint of trade, by which a penalty is incurred under the statute, does not preclude the company thus illegally formed from recovering on collateral contracts for the purchase price of goods.] [A recovery of the treble damages authorized by the Sherman Anti- Trust Act of July 2, 1890, § 7 (26 Stat. L., 209, chap. G47), in case of injury sustained by violation of the act, can be had only by direct action, and not by way of set-off in an action brought for the price of goods by a company illegally formed in violation of the act — especially when the State practice does not permit the set-off of unliquidated damages.] [A discrimination in favor of agricultural products or live stock in the hands of the producer or raiser made by the Illinois trust act oThe foregoing syllabus copyrighted, 1902, by the Banks Law Pub- lishing Co. & The following paragraphs inclosed in brackets are taken from the syllabus to this case in the United States Supreme Court Reports, Book 46, p. 679. Copyrighted, 1902, by The Lawyers' Co-Operative Publishing Co. 120 184 UNITED STATES REPORTS, 540. OplDlon of the Court. of June 20, 1893. exempting tbem from the provisions which pro- hibit a recovery of the price of articles sold by any trust or com- Wnation formed In restraint of trade or competition in violation ^ that act renders the act repugnant to the provisions of the V. S. Const, 14th Amend., in respect to equal protection of the laws.] [An elimination of the unconstitutional portion of the Illinois trust act of June 20. 1803, which exempts agriculturists and live-stock dealers from the provisions wWch prohibit combinations in re- straint of trade, can not be made without bringing these classes of persons within the prohibitions of the statute, in contravention of the legislative intent, and therefore the entire act must be held Invalid.] The case is stated in the opinion of the court. Mr. Henry D. Coghlan for plaintiffs in error. Mr. Joseph A. O^DonneU was on his brief, [Ml] Mr. fferhert Hamlin and Mr. Edwin Walker for defendant in error. Mr. Justice Harlan delivered the opinion of the court. The Union Sewer Pipe Company— a corporation organ- ized under the laws of Ohio and doing business in Illinois- brought its action against Thomas Connolly, a citizen of Il- linois, in the Circuit Court of the United States for the Northern District of Illinois, on two negotiable promissory notes both executed at Chicago by the defendant; one, dated December 15, 1894, the other dated January 15, 1805, and each payable to the order of the plaintiff corporation ninety days after date at the First National Bank of Chicago. These notes were given on account of the purchase by the defendant from the plaintiff of sewer pipe commonly known as standard Akron pipe, at prices agreed upon between the parties. The Pipe Company also brought an action in the same court against William E. Dee, a citizen of Illinois, upon an open account for $2389.26, the value at agreed prices of cer- tain pipe purchased by him from the plaintiff in June, 1896. The plaintiff supplied the pipe under a written contract ex- ecuted between it and the defendant in Illinois under date of August, 1895. CONNOLLY V. UNION SEWEB PIPE CO. Opinion of the Court 121 Each of the defendants filed a plea of the general issue, with notice of special defences and of set-off. The special defences in each case were substantially the same. The notice in the Connolly case was that the defend- ant on the trial of the action would rely on these special matters : " First. That the plaintiff is, and at all times since about the first day of January, 1893, has been a trust or combina- tion of the capital, skill and acts of divers persons and cor- porations carrying on a commercial business in the States of Ohio and Illinois and between said States and elsewhere in the United States of America, and organized for the ex- press purpose of unlawfully and contrary to the common law creating and carrying out restrictions in trade, to wit, in the trade of buying, selling and otherwise dealing in certain ar- ticles of merchandise, to wit, sewer and drainage pipes, and also for the express purpose of [543] unlawfully and con- trary to the common law limiting the production of said articles of merchandise and increasing the market price there- of ; and also for the express purpose of unlawfully and con- trary to the common law preventing competition in tlie man- ufacture, making, transportation, sale or purchase of said articles of commerce ; also for the express purpose of unlawful- ly and contrary to the common law fixing standards or figures whepeby the prices of said articles of merchandise intended for sale, use and consumption in this State should be con- trolled and established ; and also for the express purpose of unlawfully and contrary to the common law being a pre- tended agency whereby the sale of said articles of commerce should and might be covered up and made to appear to be for the original vendors thereof, and so as to enable the orig- inal vendors or manufacturers thereof to control the whole- sale and retail price of such articles of commerce after the title thereto had passed from such vendors or manufacturers ; and for the further express purpose of unlawfully and con- trary to the common law making and entering into and carry- ing out a certain contract or certain contracts by which the several persons or corporations forming the plaintiff, or being the pretended stockholders thereof, to wit, have bound 122 184 UNITED 8TAT1B BEPORTS, 542. Opinion of the Court. themselves not to sell, dispose of or transport said article of commerce below certain common standard figures or card or list prices in excess of the true market values thereof, and by which they have agreed to keep the prices of said articles of commerce at certain fixed or graduated figures, and by which they have established certain settled prices of said articles of commerce between themselves and others, so as to preclude a free and unrestricted competition among them- selves and others in the sale and transportation of said ar- tides of commerce, and by which they have agreed to pool, combine and unite any interests they may have in connec- tion with the sale and transportation of said articles of com- merce so that the prices thereof may effect advantageously to themselves; that all of the claims* of the plaintiff against the defendant in this action arise wholly out of and are in respect of sales of said articles of merchandise made be- tween the 1st day of January, A. D. 1893, and the 1st day of March, 1896, to this defendant by [543] the plaintiff in the ordinary course of its business as such a trust or combina- tion acting as aforesaid, and that this action is brought to recover the alleged price thereof and for no other purpose. " Secondly. That the plaintiff is and at all times since the 1st day of January, 1893, was a combination in the form of a trust, in restraint of trade and commerce among the several States, and doing business as such throughout the United States and l^etween the States of Ohio and Illinois, contrary to the provisions of an act of Congress of date of July 2, 1890, and entitled ^Vn act to protect trade and commerce against unlawful restraints and monopolies,' and that this action is brought solely to recover the price of articles of merchandise, to wit, sewer and drainage pipes, sold to the defendant by the plaintiff, then and there acting and doing business as such a combination, as aforesaid, in violation of the provisions of said act. " Thirdly. That the plaintiff is and at all times since the 1st of January, 1893, was a trust doing business as such in the State of Illinois and elsewhere, contrary to the provisions of an act of the legislature of the State of Illinois entitled 'An act to define trusts and conspiracies against trade, declaring CONNOLLY V, UNION SEWER PIPE CO. 123 Opinion of tlie Court. contracts in violation of this provision void, and making cer- tain acts and violations thereof misdemeanors, and prescrib- ing pmiishment thereof and matters connected therewith, approved June 20, 1893, in force July 1, 1893;' that this action is brought solely to recover the price of articles of mer- chandise, to wit, sewer and drainage pipes, sold to the defend- ant by the plaintiff, then and there acting and doing business in violation of the provisions of said act, and that the defend- ant hereby pleads said act in defence to this action and the whole thereof." The set-offs claimed by Connolly were : Treble the amount of the actual damages sustained and allowed by the act of Congress of July 2, 1890, c. G47, known as the Sherman anti- trust act, $56,970.44; actual damages sustained by reason of the violation by the plaintiff of the provisions of the Illinois statute of July 1, 1893, $17,323.48 ; and for money had and received by plaintiff of defendant contrary to law, $17,323.48. The set-offs claimed bv Dee were of like character but of larger amounts. [544] Both cases wel-e, by agreement, submitted to the same jury and were treated as one consolidated case. At the trial the defendants respectively asked leave to amend their notices of special defences, but leave was denied. . The Circuit Court disallowed lx)th the first and second of the above special defences, and in respect of the third its de- cision was that the Illinois Trust statute of 1893 was in viola- tion of the Constitution of the United States. It consequently directed the jury to find a verdict for the plaintiff in each case; in the Connolly case, for the amount of the two notes sued on; in the Dee case, for the amount of the plaintiff's open account against him. Verdicts having been returned as directed, and a motion for new trial in one case and motions for new trial and in arrest of judgment in the other, having been overruled, judgments were rendered on the verdicts. 1. The defendant in error insists that these cases should have gone to the Circuit Court of Appeals, and has moved on that ground that the writ of error be dismissed. The defence in each case was based in part on the Illinois statute of 1893. The plaintiff insisted at the trial that that statnte was in vio- 184 UNITED STATES REPORTS, 54. Opinion of tlie Court lation of the Constitution of the United States, and its posi- tion was sustained by the Circuit Court. There have been suits m which the Circuit Court upon the claim of the defend- ant has applied the Constitution of the United States to the case before it and put the plaintiff out of court. Here, the lilaintiff claimed that the state enactment upon which defend- ants relied was unconstitutional, and its position upon that point was sustained. In Loeh v. Colombia Township Tnis- t€€B, 179 U. S. 472, 477, this court said: "The Circuit Court of Appeals Act does not declare that the final judgment of a Circuit Court in a case in which there was a claim of the re- pugnancy of a state statute to the Constitution of the United States may be reviewed here only upon writ of error sued out by the party making the claim. In other words, if a claim is made. in the Circuit Court, no matter by which party, that a state enactment is invalid under the Constitution of the United States, and that claim is sustained or rejected, then it is consistent with the words of the act, and, we think, in har- mony with its object, that this court [545] review the judg- ment at the instance of the unsuccessful party, whether plain- tiff or defendant. It was the purpose of Congress to give opportunity to an unsuccessful litigant to come to this court directly from the Circtiit Court in every case in which a claim is made that a state statute is in contravention of the Consti- tution of the United States." Upon the authority of that case, the motion to dismiss is denied. 2. The defendant Connolly purchased Akron sewer pipe from the plaintiff and for the agreed price thereof gave the two promissory notes upon which he was sued. The defend- ant Dee also purchased Akron sewer pipe at an agreed price as shown by the account upon which he was sued. Each defendant disputed his liability to the plaintiff upon the ground that prior to the making of the contracts with the defendants respectively for pipe, the plaintiff corporation entered into a combination with certain firms, corporations and companies engaged in Ohio in the manufacture of Akron pipe ; which combination, it is alleged, was in illegal restraint of trade and therefore forbidden by the principles of the com- mon law as recognized and enforced both in Ohio and Illmois. CONNOLLY V, UNION SEWER PIPE CO. 125 Opinion of the Court. ■ The defence cannot be maintained. Assuming, as defend- ants contend, that the alleged combination was illegal if tested by the principles of the common law, still it would not follow that they could, at common law, refuse to pay for pipe bought by them under special contracts with the plaintiff. The illegality of such combination did not prevent the plain- tiff corporation from selling pipe that it obtained from its constituent companies or either of them. It could pass a title by a sale to any one desiring to buy, and the buyer could not justify a refusal to pay for what he bought and received by proving that the seller had previously, in the prosecution of its business, entered into an illegal combination with others in reference generally to the sale of Akron pipe. In Strait v. National Harrow Co,^ 51 Fed. Rep. 819, a suit in which the plaintiffs sought a permanent injunction restrain- ing the defendant from instituting or prosecuting any action against the plaintiffs for the infringement of letters patent owned by the defendant covering certain improvements in spring- tooth har- [546] rows, or from instituting or prose- cuting any such suits against any person using the spring- tooth harrows manufactured by the plaintiffs, the court said : " In substance, the complaint shows that the defendant has entered into a combination with various other manufacturers of spring-tooth harrows for the purpose of acquiring a monopoly in this country in the manufacture and sale of the same, and, as an incident thereto, has acquired all the rights of the other manufacturers for the exclusive sale and manu- facture of such harrows under patents, or interests in patents, owned by them respectively. Such a combination may be an odious and a wicked one, but the proposition that the plain- tiffs, while infringing the rights vested in the defendant under letters patent of the United States, is entitled to stop the defendant from bringing or prosecuting any suit therefor because the defendant is an obnoxious corporation, and is seeking to perpetuate the monopoly which is conferred upon it by its title to the letters 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 in- fringes, but against dealers and users of the patented article,' if he believes the patent is being infringed ; and the motive 126 1S4 UNITED STATES REPORTS, 540. Opinion of the C^nrt. which prompts him to sue is not open to judicial inquiry, because, having a legal right to sue, 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. ' The exer- cise of the legal right cannot be affected by the motive which controls it.' Kif v. Youmam, 86 N. Y. 329." In Xutional l^i'^tiUmg Co. v. Cream City Importing Co,^ 86 Wisconsin, 352. :i")5, which was an action to recover the price of goods sold and delivei-ed, one .of the defences was that the plaintiff was a member of an illegal trust or combination to interfere with the freedom of trade and commerce. The Su- preme Court of Wisconsin said : " The fii-st defence does not deny any allegation of the complaint, but the substance of it. is that the sale and delivery- of the goods in question to the de- fendant was void as against public policy, because the vendor was at the time a member of an unlawful trust or combi- nation, formed to unlawfully interfere with the freedom of trade and com- [5471 meree and in restraint thereof and to accomplish the ends therein set forth. . , . Conceding, for the purposes of this case, that the tnist or combination in question may be illegal and its members may be restrained from carrying out the purposes for which it Avas created by a court of equity in a suit on behalf of the public, or may be subject to indictment and punishment, there is, nevertheless, no allegation showing or tending to show that the contract of sale between the plaintiff and defendant was tainted with any illegality, or was contrary to public policy. The argument, if any the case admits of. is that, as the plaintiff was a mem- ber of the so-called ' trust,' or ' combination,' the defendant might voluntarily purchase the goods in question of it at any agreed price, and convert them to its own use, and be justified in a court of justice in its refusal to pay the plaintiff for them, because of the connection of the vendor with such trust or combination. The plaintiff's cause of action is in no legal sense dependent upon, or affected by the alleged illegality of the trust or combination, because the illegality, if any, is entirely collateral to the transaction in question, and the court is not called upon in this action to enforce any contract tainted with illegality, or contrary to public policy. The mere fact that the plaintiff is a member of a trust or combina- CONNOLLY V, UNION SEWER PIPE CO. 127 Opinion of the Court. tion, created with the intent and purposes set forth in the answer, will not disable or prevent it in law from selling goods within or affected by the provisions of such trust or combination, and recovering their price or value. It does not appear that it had stipulated to refrain from such transac- tions. A contrary doctrine would lead to most startling and • dangerous consequences." That case was cited with approval by the Circuit Court of Appeals for the Seventh Circuit in Dennehy v. McNvlta^ 86 Fed. Rep. 825, 827, 829. In that case the court said: " The mere fact that the corporation, as one of the contract- ing parties, may constitute an unjust monopoly, and that its general business is illegal — a status apparently held in Dis- tilling di Cattle Feeding Co. v. People^ 150 Illinois, 448 — cannot serve, ipso facto^ to create default or liability on its contracts generally ; nor can such fact be invoked collaterally to affect in any [548] manner its independent contract obli- gations." Again: " In the case of an injurious combination of the nature asserted here, the remedy is by well recognized and direct proceedings: but one who voluntarily and know- ingly deals with the parties so combined cannot, on the one hand, take the benefit of his bargain, and, on the other, have a right of action against the seller for the money paid, or any part of it, either upon the ground that the combination is illegal, or that its prices were unreasonable." It is undoubtedly the general rule that a contract made in violation of a statute is void, and no recovery can be had upon it; as in Embrey v. Jemison, 131 U. S. 336, 348. That was an action upon a promissory note given in execution of a con- tract for the purchase of " future delivery " cotton, neither the purchase or delivery of actual cotton being contemplated by the parties, but the settlement in respect to which was to be on the basis of the " difference " between the contract price and the market price of cotton futures, according to the fluc- tuations in the market. The contract was held to be a wager- ing contract, and therefore illegal and void. As there could be no recovery upon the original agreement without disclos- ing the fact that it was illegal and one that could not, for that reason, be enforced or made the basis of a judgment, it was held, that attention could not be withdraAvn from the ille- 128 184 UNITED STATES BEPOBTS^ 548. Opinion of the Court. gality of the contract by the device of taking notes for the amount claimed under that contract. So, in Miller v. Simmon. 145 F. S. 421, 427. That was an action to recover the value of 1125 gallons of wines sold in Chicago by one who had not obtained a license to sell liquors at all— an ordinance of that city expressly declaring that no person, firm, or corporation should sell or offer for sale " any spirituous or vinous liquors in quantities of one gallon or more at a time, within the city, without having first obtained a license therefor," under a penalty of not less than $50 or more than $200 for each offence. It was held that the action could not be maintained, because " an act done in disobedience to the law creates no right of action which a court of justice will enforce." In that case the sale from which it was attempted to imply the promise of the buyer to pay for what [549] he received, was itself expressly forbidden by law under a penalty. The action there was upon the sale, and there was a direct connec- tion between it and the purchase of the wines. So, again, in McMiillen v. Eofman, 174 U. S. 639, 654, after an extended review of the cases, American and English, the court said : " The authorities from the earliest time to the present unani- mously held that no court will lend its assistance in any way toward carrying out the terms ^f an illegal contract." In the present case other considerations must control. This is not an action to enforce or which involves the enforcement of the alleged arrangement or combination between the plain- tiff corporation and other corporations, firms and companies in relation to the sale of Akron pipe. As already suggested, the plaintiff, even if part of a combination illegal at common law, was not for that reason forbidden to sell property it ac- quired or held for sale. The purchases by the defendants had no necessary or direct connection with the alleged illegal combination ; for the contracts between the defendants and the plaintiff could have been proven without any reference to the arrangement whereby the latter became an illegal com- bination. If, according to the principles of the common law, the Union Sewer Pipe Company could not have sold or passed title to any pipe it received and held for sale, because of an illegal arrangement previously made with other corporations, firms or companies, a different question would be presented! CONNOLLY V. UNION SEWER PIPE CO. 129 Opinion of the Court. But we are aware of no decision to the effect that a sale sim- ilar to that made by the present plaintiff to the defendants respectively would in itself be illegal or void under the prin- ciples of the common law. The contracts between the plain- tiff and the respective defendants were, in every sense, collat- eral to the alleged agreement between the plaintiff and other corporations, firms or associations whereby an illegal combi- nation was formed for the sale of sewer pipe. We are of opinion that the first special defence, based alone upon the principles of the common law, was properly over- ruled. 3. The special defence based upon the act of Congress of July 2, 1890, c. 647, 26 Stat. 209, was also properly rejected. [550] That act declares illegal "every contract, combination in form of trust or otherwise, or conspiracy in restraint of trade or commerce among the several States, or with foreign nations " — every person making any such contract or engag- ing in any such conspiracy being subject to a fine not exceeding $5000, or to imprisonment not exceeding one year, or to both punishments in the discretion of the court. § 1 . So, every per- son monopolizing or attempting to monopolize, or combining or conspiring with any other person or persons to monopolize, any part of the trade or commerce among the several States or with foreign nations, is liable by that act to the like penal- ties in the discretion of the court. § 2. The several Circuit Courts of the United States are invested with jurisdiction to prevent and restrain violations of its provisions. § 4. Any property owned under any contract or by any combination or pursuant to any conspiracy (and being the subject thereof), and being in the course of transportation from one State to another, or to a foreign country, is subject to be forfeited, seized and condemned. § 6. By another section it is declared : "Any person who shall be injured in his business or property by any other person or corporation by reason of anything for- bidden or declared to be unlawful by this act, may sue there- for 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 21220— VOL 2—07 m- -9 130 ISI UNITED STATES REPORTS, 550. Opinion of the Conrt. damages by him sustained, and the cost of .suit, including a reasonable attorney's fee." § 7. Much of what has just been said in reference to the first special defence, based on the common law, is applicable to this part of the case. If the contract between the plaintiff cor- poration and the other named corporations, persons and com- panies, or the combination thereby formed, was illegal under the act of Congress, then all those, whether persons, corpora- tions or associations, directly connected therewith, became subject to the penalties prescribed by Congress. But the act does not declare illegal or void any sale made by such combi- nation, or by its agents, of property it acquired or which came into its possession for the purpose of being sold— such prop- erty not being at the [551] time in the course of transporta- tion from one State to another or to a foreign country. The buyer could not refuse to comply with his contract of pur- chase upon the ground that the seller was an illegal combina- tion which might be restrained or suppressed in the mode prescribed by the act of Congress ; for 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 So that there is no necessary legal connection here between the sale of pipe to the defendants by the plaintiff corporation and the alleged arrangement made by it with other corporations, companies and firms. The contracts un- der which the pipe in question was sold were, as already said, collateral to the arrangement for the combination referred to, and this is not an action to enforce the terms of such ar- rangement That combination may have been illegal, and yet the sale to the defendants was valid. In the case of The Charles E, Wisewall, 74 Fed. Rep. 802, which was a libel in rem by certain tug owners against a steam dredge to recover the value of certain services rendered by the tug in towing the dredges, it was sought to avoid pay- ment for the services thus rendered upon the ground that the tug owners were members of an association which was illegal and void under the Sherman act. The court, assuming that the agreement by which the tugs acted in unison was prohib- ited by that act, said : " He [the claimant] should not be per- CONNOLLY v. UXIOK SEWER PIPE CO. 131 Opinion of the Court. mitted to i-epudiate 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. . . . An agreement by the tug Mayflower to tow the dredge Wisewall, for a reasonable sum, from Albany to Troy, is not void because the Mayflower is associated Avith 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 j^rice because the vendor and other tailors of that city had combined to keep up prices." Nor can the defendants refuse to pay for what they bought upon the ground that the seventh section of the Sherman act [552] gives the right 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 the act, to sue and recover treble the damages sustained by him. We shall not now 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 authorizes must be a direct one, and the damages claimed cannot 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 be- tween the plaintiff and other corporations, firms or com- panies. Such damages cannot be said, as matter of law, to have directly grown out of that arrangement or combina- tion, and are, besides, unliquidated. Besides, it is well set- tled in Illinois that " unliquidated damages arising out of covenants, contracts or torts disconnected with plaintiff's claim cannot be set off under the statute." Robinson v. Hibhs. 48 111. 408, 409, 410 ; Hawks V. Lands, 3 Gilm. 227, 232 ; Hub- hard V. Rogers, 04 111. 434, 437; Evans v. Hughey, 76 111. 115. 120; Clause v. Bullock Printing Press Co,, 118 111. 612, 617; Dushane v. Benedict, 120 U. S. 630, 648. If the act of Con- gress expressly authorized one who purchased property from a combination organized in violation of its provisions to plead, in defence of a suit for the price, the illegal character of the combination, that would present an entirely different question. But the act contains no such provision. 132 184 UNITED STATES REPORTS, 552. Opinion of the Court 4. We come now to the consideration of the defence based upon the Trust statute of Illinois of 1893. As that statute is alleged to be repugnant to the Constitu- tion of the United States, and that its full scope may be seen, it is here given in full : " § 1. That a trust is a combination of capital, skill or acts by two or more persons, firms, corporations or associations of l>ersons, or of two or more of them for either, any or all of the following purposes: First— to create or carry out restrictions in trade. Second— to limit or reduce the production, or in- crease or reduce the price of merchandise or commodities. Third— to prevent competition in manufacture, making, transportation, sale or purchase of merchandise, produce or commodities. [553] Fourth— to fix at any standard or fig- ure whereby its price to the public shall be in any manner controlled or established upon any article or commodity of merchandise, produce or manufacture intended for sale, use or consmnption in tliis Stcite; or to establish any pretended agency whereby the «^ale of any such article or commodity shall be c^)vered up and made to Mppt'pr to b? for the original vendor, for a like purpose or purposes, and to enable such original vendor or manufacturer to control the Avholesale or retail price of any such article or commodity after the title to such article or commodity shall have passed from such vendor or manufacturer. Fifth— to nu^ke or enter into, or examine or carry out any contract, obligation or agreement of any kind or description by which they shall bind or have bound themselves not to sell, dispose of or transport any article or commodity, or article of trade, use, merchandise, commerce or consumption below a common standard figure, or card or list price, 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 man- ner establish or settle the price of any article or commodity or transportation between them or themselves and others to preclude a free and unrestricted competition among them- selves or others in the sale or transportation of any such arti- cle or commodity, or by which they shall agree to pool, com- bine or unite any interest they may have in connection with CONNOLLY V. UNION SEWER PIPE CO. 133 Opinion of the Court. the sale or transportation of any such article or commodity that its price might in any manner be affected. " § 2. That any corporation holding a charter under the laws of this State which shall violate any of the provisions of this act shall thereby forfeit its charter and franchise, and its corporate existence shall cease and determine. " § 3. For a violation of any of the provisions of this act by any corporation mentioned herein it shall be the duty of the Attorney General or prosecuting attorney, upon his own mo- tion, to institute suit or quo warranto proceedings, at any county in this State in which such corporation exists, does business or may have a domicile, for the forfeiture of its charter rights and franchise, and the dissolution of its cor- porate existence. [554] " § 4. Every foreign corporation violating any of the provisions of this act is hereby denied the right and pro- hibited from doing any business within this State, and it shall be the duty of the Attorney General to enforce this provision by injunction or other proper proceedings, in any county in which such foreign corporation does business, in the name of the State on his relation. " § 5. Any violation of either or all of the provisions of sec- tion 1 of this act shall be and is hereby declared to be a con- spiracy against trade, and a misdemeanor; and any person who may be or may become engaged in any such conspiracy or take part therein or aid or advise in its commission, or who shall, as principal, manager, director, agent, servant or em- ploye, or in any other capacity, knowingly carry out any of the stipulations, purposes, prices, rates, orders thereunder, or in pursuance thereof, shall be punished by fine not less than two thousand dollars nor more than five thousand dollars. " § 6. In any indictment or information for any offence named in this act, it is sufficient to state the purposes and effects of the trust or combination, and that the accused was a member of, acted with or in pursuance of it, without giving its name or description or how or where it was created. " § 7. In prosecutions under this act it shall be sufficient to prove that a trust or combination as defined herein exists, and that the defendant belonged to it or acted for or in con- xtjri: 184 UNITED STATES KEPORTS, 554. Opiulon of the Court. nection with it, without proving all the members belonging to it, or proving or producing any article of agreement or any written instrument on which it may have been based, or that it was evidenced by any written instrument at all. " § 8. That any contract or agreement in violation of the provisions of this act shall be absolutely void and not en- forcible either in law or equity. " § 9. The provisions of this act shall not apply to agri- mltural products or live stock while in. the hands of the pro- ducer or raiser. " § 10. Any purchaser of any article or commodity, from imy person, firm, corporation or association of persons, or of two or more of them, transacting business contrary to any provision of the preceding sections of this act, shall not be liable for the [5551 price or payment of such article or commodity and may plead this act as a defence to any suit for such price or payment." Laws, HI. 1893, p. 182, act of June 20, 1893; Hurd's Kev. Stat. HI. (1899), p. 618, tide ** Criminal Code." Some reference was made to the act of the legislature of Illinois approved June 10, 1897, amending an act approved June 11, 1891, in force July 1, 1891, relating to the punish- ment of persons, partnerships or corporations forming pools, trusts and combines, and prescribing the mode of procedure and rules of evidence in such eases. The act of 1897 amended section one of the act of 1891 so as to read : " If any cor])ora- tion organized under the laws of this or any other State or country for transacting or conducting any kind of business in this State, or any partnership or individual or other associa- tion of persons whosoever, sliall create, enter into, become a naember of or a party to any pool, trust, agi-eement, combina- tion, confederation or understanding with any other cor- poration, partnership, individual or any other person or asso- ciation of persons, to regulate or fix the price of any article of merchandise or commodity, or shall enter into, become a naember of, or party to any pcx)!, agreement, contract, com- bination, or confederation to fix or limit the amount or quantity of any article, commodity or merchandise to be manufactured, mined, produced or sold in this State, such corporation, partnership or individual or other association of CONNOLLY V, UNION SEWEfi PIPE CO. 136 Opinion of the Court. persons shall be deemed and adjudicated guilt}- of a con- spiracy to defraud, and be subject to indictment and punish- ment as provided in this act : provided, however, that in the mining, manufacture or production of articles of merchan- dise, the cost of which is mainly made up of wages, it shall not be unlawful for persons, firms or corporations doing business in this State to enter into joint arrangements of any sort, the principal object or effect of which is to maintain or increase wages." As this act of 1897 was passed after the date of the transactions here involved, it has nothing to do with the present case. Besides, the special defence was based on the act of 1893. The act of 1897 is referred to onlv as showing the exemption of another class from the operation of the general law relating to pools, trusts, combinations and confederations organ- [556] ized to regulate prices of arti- cles, commodities and merchandise. Laws, 111. 1897, c. 38, p. 153; Kurd's Revised Statutes of Illinois, pp. 615, 639. That the arrangement or combination made between the Union Sewer Pipe Company and other companies, corpora- tions and firms, created such a trust as the Illinois statute forbids is manifest from the evidence in the record. It is equally clear that if the plaintiff was an Illinois corporation, its charter could be forfeited and an end put to its corporate existence by proceedings instituted by the Attorney General of the State. §§ 1, 2 and 3. It is also clear that, if the stat- ute is not altogether invalid the defendants could plead non- liability for the pipe purchased by them upon the ground that the plaintiff was, under the statute of Illinois, an illegal combination and the contracts which it made with the de- fendants were void. §§ 8, 10. The statute expressly au- thorizes such a defence. In that particular, the defence based upon the statute of Illinois differs from the other special defences. The vital question, however, is whether the statute of Illinois of 1893 is not inconsistent with the Constitution of the United States, by reason of the fact that by the ninth section it declares that " the provisions of this act shall not apply to agricultural products or live stock while in the iiands of producer or raiser." The Circuit Court held this section to be repugnant to the Fourteenth Amendment of the 184 UNITED STATES REPOftTS, 556. Opinion of the Court. Constitution of the United States, and to be so connected and interwoven with other sections that its invalidity affected the entire act. Looking specially at its provisions, it wiU be seen that, so far as the statute is concerned, two or more agriculturalists or two or more live stock raisers may, in respect of their prod- ucts or live stock in hand, combine their capital, skill or acts for the purpose of creating or carrying out restrictions in the sale of such products or live stock; or limiting, increasing or reducing their price; or preventing competition in their sale or purchase ; or fixing a standard or figure whereby the price thereof to the public may be controlled; or making contracts whereby they would become boimd not to sell or dis- pose of such agricultural products or live stock below a com- mon standard figure [5571 or card or list price; or estab- Hshing the price of such products or stock in hand, so as to preclude free and unrestricted competition among themselves or others ; or by agreeing to pool, combine or unite any in- terest they may have in connection with the sale or transpor- tation of their products or live stock that the price might be affected. All this, so far as the statute is concerned, may be done by agriculturalists or live stock raisers in Illinois with- out subjecting them to the fine imposed by the statute. But exactly the same things, if done by two or more persons, firms, corporations or associations of persons, who shall have combined their capital, skill or acts, in respect of their property, merchandise or commodities held for sale or ex- change, is made by the statute a public offence, and every principal, manager, director, agent, servant or employe know- ingly carrying out the purposes, stipulations and orders of such combination is punishable by a fine of not less than two thousand nor more than five thousand dollars. Is not this such discrimination against those engaged in business (other than the sale of agricultural products and live stock in the bands of producers and raisers) as is forbidden by that clause of the Fourteenth Amendment which declares that " no State shall . . . deny to any person within its jurisdiction the equal protection of the laws!" ^ By section 26 of a statute of Illinois it is provided : " For- eign corporations, and the officers and agents thereof, doing CONNOLLY V. UNION SEWEB PIPE CO. 137 Opinion of the Court. business in this State shall be subjected to all the liabilities, restrictions and duties that are or may be imposed upon asso- ciations of like character organized under the general laws of this State, and shall have no other or greater powers." 1 Starr & Curtis, 619. The contracts upon which these suits are based were made in Illinois. The purpose of the above statute was " to produce uniformity in the powers, liabili- ties, duties and restrictions of foreign and domestic corpora- tions of like character and bring them all under the influence of the same law." Stevens v. Pratt^ 101 111. 206; Farmers*' Loan and Trust Co. v. Lake St. Elevated R. R. Co.^ 173 111. 439. These matters are called to our attention as showing — as undoubtedly they do — ^that the Union Sewer Pipe Com- pany, while doing business in Illinois, was subject to [558] the statute of Illinois concerning trusts or combina- tions, and which, in terms, applies to both domestic and for- eign corporations. But the question remains to be decided whether the statute is repugnant to the Constitution of the United States. If it be, then it is not law and cannot be applied for the purpose of defeating the plaintiff's claims in these actions. The question of constitutional law to which we have re- fered cannot be disposed of by saying that the statute in question may be referred to what are called the police powers of the State, which, as often stated by this court, were not included in the grants of power to the General Government, and therefore were reserved to the States when the Constitu- tion was ordained. But as the Constitution of iho: United States is the supreme law of the land, anything in the Consti- tution or statutes of the States to the contrary notwith- standing, a statute of a State, even when avowedly enacted in the exercise of its police powers, must yield to that law. No right granted or secured by the Constitution of the United States can be impaired or destroyed by a state enactment, whatever, may be the source from which the power to pass such enactment may have been derived. " The nullity of any act inconsistent with the Constitution is produced by the declaration that the Constitution is the supreme law." The State has undoubtedly the power, by appropriate legislation, to protect the public morals, the public health and the public X'jo 184 UNITED STATES REPORTS, 558. Opinion of the Court. safety, but if, by their necessary operation, its regulations looking to either of those ends amount to a denial to persons within its jurisdiction of the equal protection of the laws, they must be deemed unconstitutional and void. Gibhom v. Ogden, 9 Wlieat. 1, 210; Sinnot v. Davenport, 22 How. 227, 243; Missouri, Kansas df Texas Railway v. Baber^ 169 U. S. 613, 626. WTiat may be regarded as a denial of the equal protection of the laws is a question not always easily determined, as the decisions of this court and of the highest courts of the States will show. It is sometimes difficult to show that a state enactment, having its source in a power not controverted, infringes rights protected by the National Constitution. No rule can be formulated that will cover every case. But upon this general ques- [559] tion we have said that the guarantee of the equal protection of the laws means " that im person or class of persons shall be denied the same protection of the laws which is enjoyed by other pei-sons or other chisses in the same place and in like circumstances." Missouri v. Lewis, 101 U. S. 22, 31. We have also said : " The Fourteenth Amendment, in declaring that no State ' bhall deprive any jjerson of life, liberty or proi>erty, without due process of law, nor deny to any person within its jurisdiction the equal protection of the laws,' undoubtedly intended not only that there should be no arbitrary deprivation of life or liberty, or arbitrary spoliation of property, but that equal protection and security should be given to all under like circumstances in the ^enjoyment of their personal and civil rights: that all per- sons should be equally entitled to pursue their happiness and acquire and enjoy property ; that they should have like access to the courts of the country for the protection of their persons and pro|)erty, the prevention and redress of wrongs, and the enforcement of contracts; that no impediment should be interposed to the pursuits of any one except as applied to the same pursuits by others under like circumstances ; that no greater burdens should be laid upon one than are laid upon others in the same calling and condition, and that in the ad- ministration of criminal justice no different or higher punish- ment should be imposed upon one than such as is prescribed to all for like offences." Barhier v. Connolly, 113 IJ. S. 27, CONNOLLY V, UNION SEWER PIPE CO. 139 opinion of tlie Court. 31. This language was cited with appro v^al in Tick Wo v. Hopkins, 118 U. S. 356, 369, in which it was also said that " the equal protection of the laws is a pledge of the protection of equal laws." In Hayes v. Missouri, 120 U. S. 68, 71, we said that the Fourteenth Amendment required that all per- sons subject to legislation limited as to the objects to which it is directed, or by the territory within which it is to operate, " shall be treated alike, under like circumstances and consid- erations, both in the privileges conferred, and in the limita- tions imposed." " Duo process of law and the equal pro- tection of the laws," this court has said, " are secured, if the laws operate on all alike, and do not subject the individual to an arbitrary exercise of the [560] powers of government." Duncan v. Missouri, 152 U. S. 377, 382. Many other cases in this court are to the like effect. These principles, applied to the case before us, condemn the statute of Illinois. We have seen that under that statute all except producers of agricultural commodities and raisers of live stock, who combine their capital, skill or acts for any of the purposes named in the act, may be punished as crimi- nals, while agriculturalists and live stock raisers, in respect of their products or live stock in hand, are exempted from the operation of the statute, and may combine and do that which, if done by others, would be a crime against the State. The statute so provides notwithstanding persons engaged in trade or in the sale of merchandise and commodities, within the limits of a State, and agriculturalists and raisers of live stock, are all in the same general class, that is, they are all alike engaged in domestic trade, which is, of right, open to all, subject to such regulations, applicable alike to all in like conditions, as the State m^j legally prescribe. The difficulty is not met by saying that, generally speak- ing, the State when enacting laws may, in its discretion, make a classification of persons, firms, corporations and associations, in order to subserve public objects. For this court has held that classification "must always rest upon some difference which bears a reasonable and just relation to the act in respect to which the classification is proposed, and can never be made arbitrarily and without any such basis. ♦ * * But arbitrary selection can never be justified 140 184 UNITED SI AXES REPOBTS, 560. Opinion of tbe Court by calling it classification. The equal protection demanded by tbe Fourteenth Amendment forbids this. ♦ ♦ • No doty rests more imperatively upon the courts than the en- forcement of those constitutional provisions intended to se- cure that equality of rights which is the foundation of free government. * ^ * Ji jg apparent that the mere fact of classification is not sufficient to relieve a statute from the reach of the equality clause of the Fourteenth Amendment, and that in all cases it must appear not only that a classifica- tion has been made, but also that it is one based upon some reasonable ground — some difference which bears a just and proper relation to the attempted classification — and is not a mere ar- [561] bitrary selection." Gulf, Colorado and Emia Fe Railway v. Ellh, 165 U. S. 150, 155, 159, 160, 165. These principles were recognized and applied in Cotting v. Kansas City Stock Yards Co., 183 U. S. 79, in which it was unanimously agreed that a statute of Kansas regulating the charges of a particular stock yards company in the State, but which exempted certain stock yards from its operation, was repugnant to the Fourteenth Amendment in that it denied to that company the equal protection of the laws. Attention has been called to the cases of Magotin v. Illinois Trust and Savings Bank, 170 U. S. 283, and American Sugar Refining Co. v, Louisiana, 179 IJ. S. 89 ; and it is supposed that the grounds upon which the decision of the present case is placed are inconsistent with the principles announced in those cases. We do not think so. In Magonn v. Illinois Trust and Savings Bank we held that the progressive inheritance tax law of Illinois of June 15, 1895, was not in conflict with the Constitution of the United States by reason of the fact that the amount of the tax was determinable by valuation so that every person and corporation should pay in proportion to the value of his, her or its property inherited. The classification made by the statute was held'not to be arbitrary by reason of the fact that inheritances were classified according to amount, and each class taxed at a different rate ; for it was based upon princi- ples of equality between the members of each distinct class. Such classification was held not to be inconsistent with the Fourteenth Amendment. CONNOLLY V, UNTON SEWER PIPE CO. Opinion of the Ck)urt. 141 In American Sugar Refining Co, v. Louisiana, we held that a statute of Louisiana exempting from its operation planters and farmers grinding and refining their own sugar and molasses, but which imposed a license tax upon persons and corporations carrying on the business of refining sugar and molasses, did not deny the equal protection of the laws to such persons and corporations as were thus taxed. It was as if tlie statute had imposed a tax upon the business of re- fining sugar and molasses, and had declared, as reasonably it might have done, that those who only refined their own sugar and molasses should not be regarded as belonging to that class. We said in that case : [562] " The power of tax- ation under this provision was fully considered in HelVs Gap Railroad Co, v. Pennsylvania, 134 U. S. 232, in which it was said not to have been intended to prevent a State from changing its system of taxation in all proper and reasonable ways. It maj'^, if it chooses, exempt certain classes of prop- erty altogether; may impose different specific taxes upon different trades or professions; may vary the rates of excise upon various products; may tax real and personal estate in a different manner; may tax visible property only and not securities; may allow or not allow deductions for indebted- ness. 'All such regulations, and those of like character, so long as they proceed within reasonable limits and general usage, are within the discretion of the state legislature or the people of the State in framing their constitution.'" Again : " The discrimination is obviously intended as an en- couragement to agriculture, and does not deny to persons and corporations engaged in a general refining business the equal protection of the laws." The decision now rendered is not all in conflict with the views expressed in the two cases just cited. It is sufficient to say that those cases had reference to the taxing power of the State, and involved considerations that could not, in the nature of things, apply to a state enactment like the one in- volved in the present case. The power to tax persons and property is an incident of sovereignty, and the extent to which it may be exerted has been indicated in numerous cases. Taxing laws, it has been well said, furnish the meas- ure of every man's duty in support of the public burdens 142 184 UJ^'ITED STATES KEPORTS, 562. Opinion of the Court and the means of enforcing it. A tax may be imposed only upon certain callings and trades, for when the State exerts its power to tax, it is not boimd to tax all pursuits or all property that may be legitimately taxed for governmental purposes. It would be an intolerable burden if a State could not tax any property or calling unless, at the same time, it taxed all property of all callings. Its discretion in such matters is very great and should be exercised solely with reference to the general welfare as involved in the necessity of taxation for the support of the State. A State may in its wisdom classify property for purposes of taxation, and the exercise of its discretion is not to be questioned in a court of the [563] United States, so long as the classification does not in- vade rights secured by the Constitution of the United States. But different considerations control when the State, by legis- lation, seeks to regulate the enjoyment of rights and the pur- suit of callings connected with domestic trade. In prescrib- ing regulations for the conduct of trade, it cannot divide those engaged in trade into classes and make criminals of one class if they do certain forbidden things, while allowing another and favored class engaged in the same domestic trade to do the same things with impunity. It is one thing to exert the power of taxation so as to meet the expenses of government, and at the same time, indirectly, to build up or protect particular interests or industries. It is quite a dif- ferent thing for the State, under its general police power, to enter the domain of trade or commerce, and discriminate against some by declaring that particular classes within its jurisdiction shall be exempt from the operation of a general statute making it criminal to do certain things connected ivith domestic trade or commerce. Such a statute is not a legitimate exertion of the power of classification, rests upon no reasonable basis, is purely arbitrary, and plainly denies the equal protection of the laws to those against whom it discriminates. We must not be understood by what has been said as con- ceding that the question of a denial of the equal protection of the laws can never arise under the taxing statutes of a State. On the contrary, the power to tax is so far limited that it cannot be used to impair or destroy rights that are CONNOLLY V. UNION SEWEB PIPE CO. Opinion of the Court 143 given or secured by the supreme law^ of the land. We only need to say in this connection that the constitutional validity of the statute of Illinois now befoie us is not necessarily to be determined by the same principles that apply to taxing laws. Other cases have been cited, but they are equally inappli- cable in the present discussion, and only serve to show the extent to which the police powers of the States may be exerted without infringing the Federal Constitution. Returning to the particular case before us, and repeating or summarizing some thoughts already expressed, it may be observed that if combinations of capital, skill or acts, in respect [564] of the sale or purchase of goods, merchandise or commodities, whereby such combinations may, for their benefit exclusively, control or establish prices, are hurtful to the public interests and should be suppressed, it is impossible to perceive why like combinations in respect of agricultural products and live stock are not also hurtful. Two or more engaged in selling dry goods, or groceries, or meats, or fuel, or clothing, or medicines, are, under the statute, criminals, and subject to a fine, if the}^ combine their capital, skill or acts for the purpose of establishing, controlling, increasing or reducing prices, or of preventing free and unrestrained competition amongst themselves or others in the sale of their goods or merchandise; but their neighbors, who happen to be agriculturalists and live stock raisers, may make combina- tions of that character in reference to their grain or live stock without incurring the prescribed penalty. Under what rule of permissible classification can such legislation be sustained as consistent with the equal protection of the laws? It cannot be said that the. exemption made by the ninth sec- tion of the statute was of slight consequence, as affecting the general public interested in domestic trade and entitled to be protected against combinations formed to control prices for their own benefit; for it cannot be disputed that agri- cultural products and live stock in Illinois constitute a very large part of the wealth and property of that State. We conclude this part of the discussion by saying that to declare that some of the class engaged in domestic trade or commerce shall be deemed criminals if they violate the regu- 1 A A 184 UNITED STATES REPORTS, 564. Opinion of tlie Court. lations prescribed by the State for the purpose of protecting the public against illegal combinations formed to destroy competition and to control prices, and that others of the same class shall not be bound to regard those regulations, but may combine their capital, skill or acts to destroy competition and to control prices for their special benefit, is so manifestly a denial of the equal protection of the laws that further or extended arginiient to establish that position would seem to be iinnecessarv. We therefore hold that tlie act of 1893 is repugnant to the Constitution of the United State-;, unless its ninth section can be eliminated, leaving the rest of the act in ©[deration. 1565] The principles applicable to such a question are well settled by the adjudications of this court. The different sec- tion > of II statute are independent of each other, that which is unconstitntional may be disregarded, and valid sections may stand and be enforced. But if an obnoxious section is of such import tliat the other sections without it would cause results not contemplated or desired by the legislature, then the entire statute nuist be held inoperative. The first section of the act here in question embraces by its terms all persons, firms, cor- porations or associations of persons who combine their cap- ital, skill or acts for any of the purposes specified, while the ninth section declares that the statute shall not apply to agri- culturalists or live stock dealers in respect of their products or stock in hand. If the latter section be eliminated as un- constitutional, then the act, if it stands, will apply to agricul- turalists and live stock dealers. Those classes would in that way be reached and fined, when, evidently, the legislature intended that they should not be regarded as offending against the law even if they did combine their capital, skill or acts in respect of their products or stock in hand. Look- ing then at all the sections together, we must hold that the legislature would not have entered upon or continued the policy indicated by the statute unless agriculturalists and live stock dealers were excluded from its operation and thereby protected from prosecution. The result is that the statute must be regarded as an entirety, and in that view it must be adjudged to be unconstitutional as denying the equal CONNOLLY V, UNION SEWER PIPE CO. 145 Mr. Justice McKenna, dissenting. protection of the laws to those within its jurisdiction who are not embraced by the ninth section. Whether it is also within the prohibition against the depri- vation of property without due process of law, is a question which it is unnecessary to consider at this time. Perceiving no error in the record, the judgment in each case must be affirmed. A^i'mcd and it is so ordered, Mr. Justice McKena, dissenting. The trust statute of Illinois of 1893 is directed against com- [566] binations in trade made to affect prices of commodi- ties. The court holds that the statute is repugnant to the Constitution of the United States because of the ninth sec- tion, which excludes from the operation of the statute " agri- cultural products or live stock while in the hands of the producer or raiser." In other words, and to present the dis- criminations of the statute in its application to persons, it punishes as a criminal conspiracy the acts enumerated in sec- tion one, except when they are done by producers and raisers of agricultural products and live stock in respect thereto. The statute also takes away a right of action for the price of the commodities sold. One of the defences of the plaintiffs in error was based on that provision. The view of the court is that the legislation is purely dis- criminative and is not justified by any legal principle of classification. To su^ain the view the rule expressed in Gulf, Colorado <& Santa Fe Railway v. Ellis, 165 U. S. 150, is quoted. It was there said : " It is apparent that the mere fact of classification is not sufficient to relieve a statute from the reach of the equality clause of the Fourteenth Amend- ment, and that in all cases it must appear, not only that a classification has been made, but also that it is one based upon some reasonable ground — some difference which bears a just and proper relation to the attempted classification — and is not a mere arbitrary selection." Undoubtedly. Without the observance of that principle, there can be no classification at all in any proper sense. There will be arbitrary grouping 21220— VOL 2—07 m- -10 146 181 UNITED STATES BEPORTS, 566. Mr. Justice McKenna, dissenting. not association of persons or things on account of common properties or characters or relations. But dilferences are recognized in classification as well as resemblances, and this court has found it necessary to so state. In Atchison, Topeka €& Santa Fe Railroad v. Matthews, 174 U. S. 96, we said: " Indeed, the very idea of classification is that of inequality, so that it goes without saying that the fact of inequality in no manner determines the matter of constitutionality." It seems like a contradiction to say that a law having in- equality of operation may yet give equality of protection. Viewed rightly, however, the contradiction disappears; in- deed, need not even be expressed. There are very few exer- tions of [567] government which can be made applicable to all persons as such. Government is not a simple thing. It encounters and must deal with the problems which come from persons in an infinite variety of relations. Classification is the recognition of those relations, and in making it a legisla- ture must h^ allowed a wide latitude of discretion and judg- ment. This has been decided many times against contentions based on a variety of facts. I will content myself by citing the later cases and commenting upon them very briefly. The cases are Magoun v. Illinois T'mst (&c. Bank, 170 U. S. 283; Clark V. Kansas City, 176 U. S. 114; Gundling v. Chicago^ 177 U. S. 183 ; Petit v. Minnesota, 177 U. S. 164 ; Williams V. Fears, 170 TJ. S. 270; American Sugar Refining Company V. Louisiana, 179 U. S. 89. In these cases and the cases cited in them classifications were sustained which depended upon differences in the amounts of legacies ; on differences between corporations ; on differences between land dependent on its use for agriculture and other purposes in regard to the power of a city to annex it; on differences between fire insurance and other insur- ance; on the right of a legislature to declare as a matter of law that the work of a barber was not a work of necessity, while as to all other kinds of labor the fact was to be deter- mined by a jury; on the difference between hiring persons to labor in the State and hiring persons to labor out of the State; on differences between sugar refiners based entirely and only on the fact of the production or purchase of the sugar refined. CONNOLLY V, UNION SEWER PIPE CO. 147 Mr. Justice McKenna, dissenting. In American Sugar Refining Co. v. Louisiana, a license tax was imposed on those engaged in carrying on the business of refining sugar and molasses. It was provided, however, that the law should not apply to " planters and farmers grinding and refining their own sugar." Wherein did the Louisiana statute, which was held consti- tutional, differ from the Illinois statute, which is held to be unconstitutional? In the former case the distinction (in the opinion in the case it is called " discrimination ") was be- tween manufacturers of sugar and growers of it. In the case at bar the distinction is between traders in products and growers of them. Is not a parallel obvious? Can the cases be distinguished because [568] in one a tax was imposed and in the other conduct is regulated or penalized? Indeed, is not the distinction verbal, each being means to an end? Be- sides, what justification for the distinction is there under the Constitution? None, I submit, can be found in the words of that instrument. Any state legislation which denies the equal protection of the laws is prohibited. The prohibition is independent of form or means. It would be strange, in- deed, if the power of a State is limited and confined by the Constitution of the United States, when the State attempts by law to regulate conduct, and is unbounded in its discretion when it imposes taxes ; that in one case it may see a difference between manufacturers and planters, and in the other case may not see a difference between traders in commodities ac- quired for the purposes of sale and such property when held by farmers by whose labor they were produced. The reasoning of the cases is as strong and demonstrative as their instances. We have declared that we could not in- vestigate or condemn the impolicy of a state law, and that this court is not a refuge from the mere injustice and oppres- sion of state legislation. Many of the exercises of govern- ment, it has been pointed out, were addressed to persons, not absolutely or abstractly, but according to their relations, and that classification, based on those relations, need not be con- stituted by an exact or scientific exclusion or inclusion of persons or things. Therefore, it has been repeatedly declared that classification is justified, if it is not palpably arbitrary. The cases afford not only aflBrmative examples but also by 148 184 UNITED STATES REPORTS, 563. Mr. Justice McKenna, disseiitiD£. a negative deduction illustrate what is legal classification. Mr. Justice Bradley said in BeWs Gap Railroad v. Pennsyl- vania^ 134 U. S. 232: "Clear and hostile demonstrations against particular persons and classes, especially such as are of unusual character, unknown to the practice of our govern- ment, might be obnoxious to the constitutional prohibition." That is, the prohibition upon the States to deny to any citi- zen the equal protection of the laws. The thought of Mx. Justice Bradley was developed and illustrated by Mr. Jus- tice Brown, speaking for this court ip American Sugar Re- -fining Co. v. Louisiana, and tests of the unconstitutionality of the discriminations of a state law [569] were expressed, which were as ready as they were significant. Speaking of the Ijouisana act, which discriminated between refiners of sugar, Mr. Justice Brown said : " The act in question does undoubtedly discriminate in favor of a certain class of re- finers, but discrimination, if founded upon a reasonable dis- tinction in principle, is valid. Of course, if such discrimina- tion were purely arbitrary^ oppressive or capricious (the italics are mine), and made to depend upon differences of color, race, nativity, religious opinions, political affiliations, or other considerations having no possible connection with the duties of citizens as taxpayers, such exemption would be pure favoritism, and a denial of the equal protection of the laws to the less favored classes." Of course, the enumeration of some tests does not exclude others, but why the enumeration of the special kind? Did not the case require it ? What ingenuity can find a difference in the act and process of sugar refining when done by a pur- chaser of raw sugar and a raiser (planter) of it; what dif- ference in the product after it shall be refined, or in any element, thing or circumstance, which can affect its use or sale. The whole and 6nly distinction in the classes which the statute made was between the grower of sugar and the buyer of it— the exact and only distinction of the Illinois law now held to be void, and yet the Louisiana law was sus- tained as constitutional. I have already adverted to the distinction which may be claimed to exist between taxing laws and regulating laws, but a few words more may be justified. The opinion of the court CONNOLLY V, UNION SEWER PIPE CO. Mr. Justice McKenna, dissenting. 149 makes a great deal of the penal provisions of the trust law, and its discriminations are displayed and intensified more by the recitation and effect of those provisions than by the provision upon which the defence of plaintiffs in error was based, that is, the provision (sec. 10) which precludes recov- ery of the price of " any article or commodity sold " by an offender against the statute. The penal provisions of the statute are not before us for judgment. If they were, and the unconstitutionality of the statute could be attributed to them, they might be construed as separable and be discarded. But, not insisting on that, and consider- [570] ing the comments on those provisions to be more than incidental illustration of the character of the statute, it is very clear to me that they do not in any way affect the power of the State. In other words, the power of the State cannot be impugned or affected by the sanctions which the State may impose to secure obedience to its com- mands or prohibitions. It may be through a tax or it may be through penalties, and the question will always be, is the thing which is directed or forbidden within the power of the State? And when a statute is assailed as denying the equal protection of the laws its equal operation is only in- volved. The principle of classification, therefore, is not different in tax laws than in other laws. That principle, as I have said, necessarily implies discrimination between the persons com- posing the class and other persons. The equality prescribed by the Constitution is fulfilled if equality be observed be- tween the members of the class. It is violated if such equality be not observed, and the latter was the case in Catting v. Kansas City Stock Yards Co,, 183 U. S. 79. That case, there- fore, does not sustain the ruling now made. Any further remarks may be only repetition, but the appli- cation of the cases to the statute now before us should be pointed out. The equality of operation which the Constitution requires in state legislation cannot be construed, as we have seen, as demanding an absolute universality of operation, having no regard to the different capabilities, conditions and relations of men. Classification, therefore, is necessary, but what are 150 184 UNITED STATES BEPORTS, 570. Mr. Justice McKenna, dissenting. its limits t They are not easily defined, but the purview of the legislation should be regarded. A line must not be drawn which includes arbitrarily some persons who do and some persons who do not stand in the same relation to the purpose of the legislation. But a wide latitude of selection must be left to the legislature. It is only a palpable abuse of the power of selection which can be judicially reviewed, and the right of review is so delicate that even in its best exercises it may lead to challenge. At times, indeed, it must be exer- cised, but should always be exercised in view of the fimction and necessarily large powers of a legislature. [571] What was the purpose of the Illinois statute, and what were the relations of its classes to that purpose? The statute was the expression of the purpose of the State to suppress combinations to control the prices of commodities, not, however, in the hands of the producers, but in the hands of traders, persons or corporations. Shall we say that such suppression must be universal or not at all ? How can we ? What knowledge have we of the condition in Illinois which invoked the legislation, or in what form and extent the evil of combinations to control prices appeared in that State? Indeed, whether such combinations are evils or blessings, or to what extent either, is not a judicial inquiry. If we can assume them to be evil because the statute does so, can we go beyond the statute and determine for ourselves the local conditions and condemn the legislation dependent thereon? But are there not, between the classes which the statute makes, distinctions which the legislature had a right to con- sider ? Of whom are the classes composed ? The excluded class is composed of farmers and stock raisers while hold- ing the products or live stock produced or raised by them. The included class is composed of merchants, traders, manu- facturers, all engaged in commercial transactions. That is, one class is composed of persons who are scattered on farms; the other class is composed of persons congregated in cities and towns, not only of natural persons but of corporate or- ganizations. In the difference of these situations, and in other differences which will occur to any reflection, might not the legislature see difference in opportunities and powers between the classes in regard to the prohibited acts? That 1 CHESAPEAKE & O. FUEL CO. V. UNITED STATES. 151 Syllabus. differences exist cannot be denied. To describe and con- trast them might be invidious. To consider their effect would take us from legal problems to economic ones, and this demonstrates to my mind how essentially any judgment or action, based upon those differences, is legislative and cannot be reviewed by the judiciary. I am, therefore, constrained to dissent from the judgment of the court. Mr. Justice Gray took no part in the decision of this case. [610] CHESAPEAKE & O. FUEL CO. v, UNITED STATES." (Circuit Court of Appeals, Sixth Circuit April 8, 1902.) [115 Fed., 610.] Monopolies — Anti-Tbust Act — Contracts in Restraint of Inter- state Commerce. — By the anti- trust act of July 2, 1890 (26 Stat. 209), congress has, in the exercise of the power delegated to it by the constitution, declared all contracts and combinations illegal, if in restraint of trade or commerce among the states; and such act does not leave to the courts the consideration of the question whether the restraint is or is not unreasonable, and such as would have rendered the contract invalid at common law. The only question in each case where the validity of a contract or combina- tion under the law is involved is whether or not its necessary effect is to restrain interstate commerce.^ Same — Contracts Affecting Interstate Commerce. — A contract by which a corporation agrees to tal^e the entire product of a num- ber of inder^endent persons, firms, and corporations engaged in mining coal and malving colie in a certain district, which is intended for " Western shipment " over a leading route of transportation, to sell the same at not less than a minimum price, to be fixed by an executive committee appointed by the producers, and to ac- count for and pay over to such producers the entire proceeds, above a fixed sum per ton to be retained as " compensation," — the stated purpose being to " enlarge the Westerft marliet," — and under which the shipments are made into other states, is one affecting interstate commerce, and is subject to the provisions of the anti- trust law. o Combination dissolved by the Circuit Court (105 Fed., 93). See p. 34. 6 Syllabus copyrighted, 1902, by West Publishing Co. 152 115 FEDERAL REPORTER, 611. Statement of the Case. [611] Same— Combinations in Restraint of Trade.— By a contract between a fuel company and an association composed of 14 per- sons, firms, and corporations independently engaged in producing coal and coke in a certain district on a line of a railroad, the company was to handle for a term of years the entire output of the members of the association intended for the Western marlset, and shipped oyer such line of railroad, and bound itself not to sell the product of any competing mines. A minimum price at which the coal and coke should be sold was to be fixed by the executive committee of the association from time to time, and the company agreed to pay such price, to obtain as large a profit as possible, and to account to the association for all of the same, above a fixed sum per ton, which it was to retain as compensation. The amoimt to be furnished by each member of tha association was also to be fixed by the executive committee, and each was to re- ceive payment at the same rate, to be based on the average price realized for the particular grade furnished during the current month. It was also provided that any other producer of coal to be shipped on such line of railroad might become a party to the contract by a majority vote of the members of the association. Held, that such contract was illegal, under the antitrust law, as in restraint of interstate commerce, and as tending to create a monopoly. Same— Requisites of Illegal Combination— Preventing Individual Competition.— It is the declared policy of congress, which accords with the principles of the common law, to promote individual com- petition in relation to hiterstate commerce, and to prevent combi- nations which restrain such competition bet^veen their members, or between such members as individuals and outside competitors ' and it is no defense to a suit to dissolve such a combination as illegal, under the anti-trust law. that it has not been productive of injuiy to the public, or even that it has been beneficial, by en- abling the combmation to compete for business in a wider field. Appeal from the Circuit Court of the United States for the Southern District of Ohio. *Jh\'^^T "1!^^ ^"^"^ ^^"^ ^""^^ «^ *^ ^»J ^ the circuit court by *5**.^Kf*'K'^ attorney of the United States for the Southern d strict of Ohio, by direction of the attorney general, against the defendants to enjoin th«n from selling or shipping coal or coke into a^ state other than the one in which they reside, under or by virtue of a f wS" f greement set forth and attached to the bill. The complainants ask that the defendants be resti-ained from further consSg agr^ ing, combmmg and acting together in the manner set out in t^ agreement which it is prayed be declared null and void and the unlawful trust and combination thereunder be dLoh^ by decrel SonTsl flirow'sr"^^* "'^^' '' ^ ^"^^^^ evidences The'Li^S ♦h"T?^i"?r^^®?*'^™^^^ *^*s l^t^ ^ay of December, 1807, between the C. & O. Fuel Company, a corporation created, or^nized!^ CHESAPEAKE & O. FUEL CO. V, UNITED STATES. 153 Statement of the Case. existing under and pursuant to the laws of the state of West Vir- ginia, and hereinafter called the 'Fuel Company,' of the first part, and the St. Clair Company, a corporation of West Virginia; John Carver and Enoch Carver, partners in business under the firm name and style of Carver Brothers; W. R. Johnson, M. T. Davis, doing business as M. T. Davis & Co.; John Carver and Enoch Carver, partners in business under the firm name and style of the Mecca Coal and Coke Company; S. H. Montgomery, doing business imder the name of the Montgomery Coal Company; the Chesapeake Min- ing Company, a corporation of West Virginia; the Belmont Coal Company, a corporation of West Virginia; the Kanawha Splint Coal Company, a corporation of West Virginia; the Robinson Coal Com- pany, a corporation of West Virginia; Harry B. Smith, special re- ceiver of the Lens Creek Coal and Coak Company; Joseph Ren- shaw, special receiver of the Big Black Band Coal [612] Company; the Charlmore Coal Company, a corporation of West Virginia; and Robert Brabbin, Jr., and L. N. Perry, partners in business under the firm naiue and style of the Brabbin Coal Company; Jasper McCallister, Samuel Moore, and James Kelsoe, doing business as McCallister & Co.,— and together constituting the C. & O. Coal As- sociation, and hereinafter collectively mentioned as the 'Coal Asso- ciation,' of tlie second part. Whereas, the members of the said coal association are all miners and shippers of coal, and part of them makers and shippers of coke, on the line of the Chesapeake & Ohio Railway, in Fayette or Kanawha counties. West Virginia, and have formed and organized said association for the promotion of their common business interests in the mining of Kanawha coals and cokes; and whereas, the said fuel company has been im-orporated and organized for the purpose of placing said Kanawha coals and cokes upon the Western market,— its prime object to promote the sale of, and enlarge the Western market for, said coals and cokes: Now, therefore, this agreement wituesseth: "(1) That the parties of the second part agree, in consi its, or their favor, «)r against any other party or parties hereto, and thereby a cint some iwrson to serve upon said arbitration committee, and the parties of the second part simll also appoint one to serve upon said committee, of which appointment the fuel company and the association shall liave notice, and the two per- sons so appointed shall continue to serve imtil their successors shall be appointed in the same manner. Whenever a controversy shall arise hereunder, the party desiring to submit such controversy shall notify the other party or parties to such controversy of the same to writing, and shall designate in such notice the time and place when said two arbitrators shail meet to hear the matter in controversy wid he or they shall also notify the said arbitrators to meet at said time and place. And at the time and place so designated said two ai^ltrators shall meet, and they shall select a third arbitrator, who, with the other two, shall constitute the full arbitration committee to hear and determine the said controversy, and whose award in all matters of law and fact shall be final, and shall be binding upon each and ail of the parties to that controversy. Such notice may lie served as a legal notice is served, or it may be mailed to the party, to be served at his or their post-ofltce address. And any notice to any one or more of the parties of the second part may be served upon, or sent by mall to, the president and secretary of said association. If at the time and place said two arbitrators are required to meet, either one or both of them should fail or refuse to attend or serve, then the fuel company, by its agent or attorney, on the one side, may fill the va- cancy caused by its arbitrator being absent or [617]' refusing to serve, and the association, by its officer, agent, or attorney may fill the vacancy caused by the absence of its arbitrator, or his refushig to serve; and the arbitrator or arbitrators so selected by either or both of said parties as aforesaid shall select the third, which three shall for that controversy, constitute the arbitration committee, and shall have the same powers, and their award shall be as final, as if the two CHESAPEAKE & O. FUEL CO. V. UNITED STATES. 159 Statement of the Case. arbitrators herein first provided for had attended and selected a third. If, upon having notice to attend at a time and place to settle a controversy, either party shall fail or refuse to attend, or shall fail or refuse to select an arbitrator when reijuired hereunder so to do, the said association, by its president, other oflicer, or attorney, may select an arbitrator in the place or stead of the absent one; and, if such association shall fail or refuse to mal^e sUch appointment, in that event the fuel compan3% by its agent or attorney, may make such appointment or appointments, and the two, when so appointed in any of said modes, shall select a third, and the tliree shall constitute the arbitration committee to hear and determine said controversy, whose award shall be final. A notice to arbitrate hereunder shall not fix a time longer than fifteen (15) days, nor less than five (5) days, from the time of giving said notice, unless by mutual consent. The place of such meeting of the arbitrators siiali be at Cincinnati, Ohio, or Charleston, W. Va., unless by mutual consent. Said arbitrators shall have the right to adjourn their session from time to time, or to such place or places as they may determine. And they shall make their award in not less than three days from the time the evidence is finally taken before or submitted to them ; such award to be valid if signed by two of the arbitrators. Every award shall be executed in duplicate, and a copy thereof furnished to each of tlie executive com- mittees herein mentioned. The failure of a regular arbitrator to attend at a time and place designated in any notice to him, and the appointment of another in his stead for any controversy, shall not for that reason vacate his general appointment as an arbitrator until his successor is appointed. If the two arbitrators appointed as above provided shall at any time fail or refuse for two days to appoint the third arbitrator, the latter shall be appointed by the judge of the cir- cuit court of Kanawha coimty, West Virginia. " Witness the following signatures : " The C. & O. Fuel Co., "Donald McDonald, Pt. "Robinson Coal Co., " By Neil Robinson. "W. R. Johnson. "The Kanawha Splint Coal Company, " By F. E. Laib. " Cabver Bbos. " Enoch Cabver. " Jos Renshaw, ^'Special Receiver Big Black Band Coal Co, " Chablmobe Coal Co., " Hebndon & Renshaw, Mgrs. "McCallisteb & Co., " Per James Kelsoe. "Mecca Coal & Coke Co., " By John Cabver. "Chesapeake Mining Co., "By J. B. Lewis. " Coai^urg Courier y Co., " By J. B. Lewis. "Montgomery Coal Co., " By S. H. Montgomery. " Belmont Coal Co., " By T. E. Embleton, Pt. "Habbis B. Smith, ** 8pl. Receiver Lens Creek Coal d » Coke Co:* 160 115 FBDEKAL KEPOBTEE, 618. Statement of tlie Case. |§18] The (lefeudaiits answered, admitting the making of the con- tract, and takinjc; issue upon the other allegations of the bill, and seek- ing to justify the making of the agreement for lawful purposes, for reascms set f«»rtli in the answer, which are noticed in the opinion. The complainant offeree! no .testimony, but certain evidence was intro- duced by the defendants for the pui-pose of showing the legality of * the transaction, and did tend to establish certain facts.— among otliers, the folhiwing: The 14 parties to the agreement are carrying on trade and business in what is known as the " Kanawha district," in West Virginia. These parties are miners and shippers of coal and manufacturers of coke in that distrfct, and the mines covered by the contract are on the snuth side of the Kanawha river. They do not own all of the mines on that side of the river. One Donald McDonald hacl been the agent of the various coal companies in the sale of coal ami roke at Cincinnati, Ohio, prior to the formation of the Chesapeake & Ohio Fuel Company, which company is one of the parties to the agreement in controversy, and of which he became the president. His business, before the formation of the fuel company, was largely con- fined to local points west of the Chesapeake & Ohio Railroad, and to Cincinnati and vicinity. After the making of the contract, coal and coke were sold theremider in West Virginia. Kentucky, Ohio, Indiana, Illinois, Michigan. Wisconsin, Missuuri, Iowa. Nebraska, North Da- kota. South Dakota, Arizona, and small quantities in Mississippi. Of the parties to the agreement, which relates only to rail shipments west on the Chesapeake & Ohio Railroad, seven in number have river tipples for shipping eoal by the Great Kanawha river. Other miners, not par- ties to this agreement, also have tipples for shipping coal on this river. The mines embraced in the agreement have a capacity of about 5,000 tons a day, and the mines of the Kanawha district not parties to the agi-ee- ment have a capacity of about 11,000 tons a day. The coke ovens in this district represented by parties in this agreement are about 226 in number, with a daily capacity of about 450 tons, to abDut 347 in number, with a daily capacity of 525 tons owned by others than the parties to the agreement. Competition hi the Western market is keen with the coal mines shipped along the line of the Chesapeake & Ohio Railroad, in the Kanawha district. This competition comes from the Flat Top coal fields on the line of the Norfolk & Western Railroad, from the coal fields all along the line of the Baltimore & Ohio Rail- road. W^st Virginia & Pittsburg Railroad, and West Virginia Central Railroad; also competition by rail and water from all of the great coal fields of western Pennsylvania, the Hocking, Welston, and Nelson fields of Ohio, the coal fields of Kentucky and Tennessee, northern and southern Illinois, and the fields of Iowa, and some competition from .>lissouri. The aggregate of all these fields is about 115,000,000 tons annually. The competition in the Western market is severe, with the coke proiirt dom of interstate commerce, and may likewise prohibit individuals, by contract or otherwise, from impeding the free and untrammeled flow of such trade. In the exercise of this right, congress has seen fit to prohibit all contracts in restraint of trade. It has not left to the courts the con- sideration of the question whether such restraint is reason- able 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 question of this char- acter, but all contracts and combinations are declared illegal if in restraint of trade or commerce among the states. U, S, V. Trans-Missouri Freight Ass'n, 166 U. S. 290, 17 Sup. Ct. 540, 41 L. Ed. 1007; U, 8, v. Joint Traffic Ass^ 171 U. S. 505, 10 Sup. Ct. 25, 43 L. Ed. 259; Addyston Pipe <& Steel €o, V. U. S,, 175 U. S. 211, 20 Sup. Ct. 96, 44 L. Ed. 136. While this is the general rule to be deduced from the authorities cited, it is to be remembered that the supreme court has also declared : "All agreement entered into for the purpose of promoting the legit- imate business of an individual or corporation, with no purpose to thereby aft'ect or restrain interstate commerce, is not, as we think, covered by the act, although the agreement may indirectly and remotely affect commerce." U. 8. v. Joint Trafflc Ass'n, 171 U. S. 505, 568, 19 Sup. Ct 25, 43 L. Ed. 259. The question is, in each case, does the contract or com- bination have the necessary effect to restrain interstate com- merce? A contract or combination which interferes with the freedom of interstate commerce, [620] 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 refuse to enforce contracts which had the effect to suppress com- petition. It was believed and declared by those who built up that system of jurisprudence that the public interests 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 con- gress passed the act under consideration, which is aimed to maintain interstate commerce upon the basis of free com- petition, and contracts which have the necessary t-endency CHESAPEAKE & O. FUEL CO, 17. UNITE!' STATES. 163 Opinion of the Court- to restrain that freedom are within the condemnation of the law. The courts are not concerned with the ix)licy 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 con- trol and regulate commerce between the states. In the exer- cise of this right, it has declared for that policy which shall keep competition free, and leave interstate commerce open to all, without the right to any to fetter it by contracts or combinations which shall put it under restraint. Looking, then, to the contract in question, we find 14 of th^ coal producers of this district, whose aggregate production is .5,000 tons a day, 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. Examining its provisions, we find that these 14 independent operators, who theretofore were competing in the open market for the trade which is the subject of this contract, are now prevented from any independent action in fixing prices, but are obliged to sell at a price fixed by the executive committee, or not to sell at all. One of the witnesses introduced by the defendants said in the coui-se of his testimonv : •* I suppose before this contract went into effect the operators were not generally informed as to what each other were receiving, and that each received his own price." Undoubtedly the market price was generally controlling, but the price was not fixed by arbitrary agreement, and was left to the operation of the natural laws of open competi- tion. Under this agreement no member of the association is permitted to sell coal or coke bound to points west on the railroad except under the terms and conditions of the con- tract, and the fuel company cannot directly or indirectly become interested in the buying or selling of bituminous coal or coke of any members of the association, or coal or coke in competition with coal or coke of members of the associa- tion, except under the terms of the agreement. Monthly re- ports are to be made, showing the tonnage of the various hJ^IJ^-Iii!! 115 FEDBKAL REPORTER, 621. Opinion of tlie Court. kinds of coal and coke sMpped by the various members of the association, and weighed during the month, together with an average price of each grade of coal or coke so shipped and weighed, which average price is to be computed upon the basis of the actual 1621] price, less gross profits, if any, received for all coal and coke sold, and the minimum price as fixed by the contract for coal and coke not sold in such month, and settlement to be made with the members of the association according to the prices fixed. The fuel company is to receive a gross profit of not to exceed 10 cents a ton, and the amount realized each month in excess of said profit, over and above the minimum price, is to be paid to the members of the coal association. The executive committee of the coal association is required, not later than the 20th day of each month, to 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 the association under the terms of the contract. A consideration of these provisions, assuming that the contract relates to interstate commerce, would seem to make plain the violation of the statute of 1890. Here are 14 dealers who have neither formed a corporation nor a partner- ship, but have limited to the terms of this agreement their rights for five years in the mining and shipping of coal upon one of their main outlets to the market. They have re- stricted their right to produce coal for such shipment to fciie amount designated by the committee. They have restricted sales to this purchaser to a price to be fixed by the com- mittee. They have eliminated competition in the market among themselves. They have restricted the purchaser so that he may not buy from others in competition with them- selves. If we correctly interpret the decisions of the supreme court, these provisions clearly restrain the freedom of inter- state commerce, which it is the purpose of this statute to maintain unfettered by such contracts ahd combinations. While it is admitted that some restraint may result upon commerce by these provisions, it is strenuously argued by the learned counsel for the defendants that such restrictions among a portion of the coal dealers of a district are only ancillary to a main lawful purpose, resulting in larger com- CHESAPEAKE & O. FUEL CO. t;. UNITED STATES. 165 Opinion of the Court petition, and greater freedom and volume of interstate trade, and do not violate the act. In support of this contention, Judge Taft's opinion in the Addyston Pipe Co. Case, supra, is cited, in which, after summarizing the five instances in which the common law upheld covenants in partial restraint of trade, the learned judge said: " It would be stating it too strongly to say tliat these five classes of covenants m restraint of trade 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 conventional restraint of trade cnn be enforced unless the covenant embodying it is merely ancillary to the main puriwse of a lawful contract, and necessary to protect the covenantee in the en- joyment of the legitimate fiiiits of the contract, or to protect him from the dangers of an unjust use of those fruits by the other party." And the judge quotes from Chief Justice Tindal in Homer v. Graves, 7 Bing. 735, to the effect that in such cases it is to be considered whether the restraint imposed by the contract is only fair protection to the interests of the party in whose favor it is given, and not so large as to interfere with the interests of the public. If the unreasonable restraint, as at the common law, was the test of the validity of such contracts, we might inquire whether this agreement [62S] did not contain certain restrictions entirely unnecessary to the pro- tection of the fuel company in acquiring the coal from the association, which restrictions are inimical to the public in- terest. But it is to be remembered that the test of the com- mon law as to the reasonableness of the restraint of com- merce is not the test of the validity of such agreements, 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. Not that every case of incidental restraint makes a contract void, but the question is, is it the effect of the contract to directly restrain interstate commerce? Upon this question the supreme court has said (Joint Traffic Ass'n Case, 171 U. S. 567, 568, 19 Sup. Ct. 31, 43 L. Ed. 287) : " Nevertheless, we Difght 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 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, of two or more producers, of the same person to sell their goods on commission was a matter in any degree in restraint of trade. im 115 FEDERAL REPORTER, 622. Opinion of the Court "An agreement entered into for the pui-pose of promoting the legit- imate business of an individual or corporation, with no purpose to thereby affect or restrain interstate commerce, and which does not directly restrain such commerce, is not, as we think, covered by the act, although the agreement may indirectly and remotely affect that commerce. We also repeat what is said in the case above cited, that '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 upon interstate commerce, and possibly to restrain it.' " And in the Addyston Case^ 175 U. S. 245, 20 Sup. Ct. 109, 44 L. Ed. 149, the court says: "All the facts and circumstances are, however, to be considered in order to determine the fundamental question, whether the necessary effect of the combination is to restrain interstate commerce." And it is argued that the main purpose of this agreement being to increase the trade of the parties, to enhance compe- tition in a larger field, and improve the character of the product, these objects are beneficial to the public, as well as to the private parties, lawful in their scope and purpose, and justifying the indirect and partial restraint of trade involved in the execution of the agreement. The argument here advanced would be available to nearly every combina- tion of this kind. Wider markets and more trade may be the inducements to such agreements, but they are purposes which the act of congress does not permit to interfere with the free- dom of interstate traffic. It would, however, be closing our eyes to the situation and the terms of the contract not to perceive that the limiting of competition was a moving pur- pose in entering into this agreement. Not only are the 14 operators who signed the agreement limited in prices and trade and production to the governing action of the execu- tive committee, but in the nineteenth paragraph of the con- tract it is provided that any person, firm, or corporation now or hereafter producing coal to be shipped on the Chesa- peake & Ohio Eailroad may become a party to the contract by signing the same; such parties to be ad- [623] mitted, by a majority vote of the members, to full participation in the benefits and obligations of the contract. The parties mav well be concluded to have intended, in what thev did, to put an end to competition in the district in shipments to the Western market U> be reached by the Chesapeake & Ohio CHESAPEAKE & O. FUEL CO, V, UNITED STATES. 167 Opinion of the Court. Railroad, by getting all the operators into an agreement to sell for a single price, to be fixed by a committee of their number, and to limit competition among themselves in markets near and remote, within the scope of the agreement. It is to be remembered in this connection that it is the effect of the contract upon interstate commerce, not the intention of the parties in entering into it, which determines whether it falls within the prohibition of the statute. The Trans- Missouri Case, 166 U. S. 341, IT Sup. Ct. 540, 41 L. Ed. 1007; the Addyston Case, 175 U. S. 234, 20 Sup. Ct. 96, 44 L. Ed. 136. It is, moreover, contended that the effect of this agreement has been the reduction of prices to the con- sumer. In determining whether a combination restrains interstate commerce, it is not only the effect upon consumers which is to be considered, but, as well, the effect upon others in the business, who, from choice or necessity, are left outside of the organization. As is said in the Trans-Missouri Case, 166 U. S. 323, 17 Sup. Ct. 552, 41 L. Ed. 1021 : " In business or trading combinations, they may even temporarily, or perhaps permanently, reduce the price of the article traded in or manufactured, by reducing the expense inseparable from the running of many different companies for the same purpose. Trade or com- merce under those circumstances may nevertheless be badly and un- fortunately 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 the present case, if the scheme of this combination shall prevail, until nearly all of the operators in this district have availed themselves of the opportunity contained in the con- tract and become parties to it, the effect upon dealers who have not its large facilities, and may be unable to compete for the contracts and meet the prices fixed by the committee, cannot be otherwise than disastrous. And when the small dealer has been driven out, the combination is one step nearer to the power to control the market. It is further contended that the competition is such in the market for which this coal is intended, and the coal produced by the operators, parties to this agreement, is such a small fraction of the quantity sold, that it cannot affect 168 nS FEDERAl, BEPORTER, 623. Opinion of tlie Court prices materially. It is not required, in order to violate this statute, that a monopoly be created. It is sufficient if that be the necessary tendency of the agreement. In V. S. v. E, C. Knight Co,, 156 U. S. 1, 15 Sup. Ct. 249, 39 L. Ed. 325, Chief Justice Fuller said : " Again, all the authorities agree that, in order to vitiate a contract or combination, it is not essential that Its result be a complete monop- oly. It is sufficient if it really tends to that end, and to deprive the public of the advantages which flow from a free competition." Quoted f*^."?5£^^^^ *^ *^® ^ddyston Case, 175 U. S. 237, 20 Sup. Ct 96, 44 L. Ed. 136. [624] The statute is not limited to contracts or combina- tions which monopolize interstate commerce in any given 'commodity, but seeks to reach those which directly restrain or impair the freedom of interstate trade. The law reaches combinations which may fall short of complete control of a trade or business, and does not await the consolidation of many small combinations into the huge " trust " which shall control the production and sale of a commodity. Again, it is argued that the features of the contract which fix the minimum to be taken by the fuel company in excess of the former production of the mines, and i>ermit a propor- tionate reduction of the minimum quantity to be taken when the price is fixed so high that the fuel company cannot meet the market, are evidences that this is no more than an agree- ment to make the fuel company the common agent of the parties for the sale of the product of the mines at the market price. The answers to this position are obvidus. In the con- stitution of such an agency the restrictive features of this contract are unnecessary. Should the* fuel company be un- able in all cases to meet the price fixed, the parties are nevertheless prohibited, during the life of the contract, from dealing with others, or selling at a less price than the com- mittee has fixed, and the purchaser is not at liberty to deal with competitors for a supply of coal for this market. " It is the effect of the combination in limiting and restrict- ing 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." The Addystan Case, 175 U. S. 245, 20 Sup. Ct. 109, 44 L. Ed. 149. BEMENT V. NATIONAL HARROW CO. 169 Syllabus. We think this contract, within the meaning of the statute, is in restraint of interstate commerce, and tends to create monopoly. That the contract under consideration has relation to inter- state commerce, within the meaning of the act, we think not doubtful. The coal was contracted for to be sold in the Western market. It is declared to be a main purpose of the contract to extend that market. The coal was in fact shipped to a number of Western states. The payments were to be made for the coal upon the basis of a 10 per cent, profit to the fuel company, and the excess to go to the members of the coal association. These sales were made, as it was intended and stipulated that they should be, in the Western states. Upon this subject, speaking for the court in the Addyston Case, 175 U. S. 241, 20 Sup. Ct. 107, 44 L. Ed. 147, Mr. Jus- tice Peckham said: " If, therefore, an agreement or combination directly restrains not alone the manufacture, but the purchase, sale, or exchange of the aiauufactured commodity among the several states, it is brought within the provisions of the statute. The power to regulate such com- merce — that is, the power to prescribe the rules by which it shall be governed — is vested in congi*ess; 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 interstate commerce, by preventing or restricting its sale, etc., thereby regulates interstate commerce to that extent, and to the same extent intrenches upon the power of tlio national legislature and violates the statute." Within this principle, we think the contract and combina- tion under consideration have relation to interstate commerce. The judgment of the circuit court is affirmed. [70] BEMENT v. NATIONAL HARKOW COMPANY. ERROR TO THE SUPREME COURT OF THE STATE OF NEW YORK. No. 215. Argued April 9, 10, 1902. Decided May 19, 1902. [186 U. S., 70.] Any one sued upon a contract may set up, as a defence, that it is a violation of an act of Congress. The object of the patent 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, 170 186 UNITED STATES KEPORTS, 70. Syllabus. and agreed to by the licensee for the right to manufacture or use or sell the article, will be upheld by the courts ; and the fact that the conditions in the contracts keep up the monopoly, does not render them illegal. The prohibition was a reasonable prohibition for the defend- ant, who would thus be excluded from making such harrows as were made by others, who were engaged in manufacturing and sell- ing other machines under other patents; but it would be unreason- able to so construe the provision, as to prevent the defendant from using any letters patent legally obtained by It and not infringing patents owned by others. Upon the facts found, there was no error in the judgment of the Court of Appeals, and it is affirmed.* [46 L. ed., 1058.] » IThe defense that a contract is in violation of the act of Congress of July 2, 1890 (26 Stat. L., 209, chap. 647), to protect trade and commerce against unlawful restraints and monopolies, which makes Illegal every contract violative of its provisions, may be set up by a private individual when sued theron, and, if proved, constitutes a good defense to the action.] fConditions imposed by the patentee in a license of the riglit to manu^ facture or sell the patented article, which keep up the monopoly or fix prices, do not violate the act of Congress of July 2, 1890 (26 Stat L., 209. chap. 647), to protect trade and commerce against unlawful restraints or monopolies.] IReasonable and legal conditions imposed by the patentee in a license of the right to manufacture and sell the patented article, restrict- ing the terms upon which the article manufactured under such license may he used, and the price to be demanded therefor, do not constitute such a restraint on commerce as is forbidden by the act of Congress of July 2, 1890 (26 Stat. L., 209, chap. 647), to protect trade and commerce against unlawful restraints and monopolies.] IThe agreement of the licensee of a patent for improvements relating' to float spring tooth hari-ows, not to manufacture or sell any other such harrows than those which it had made under its patents be- fore assigning them to the licensor, or which it was licensed to manufacture and sell under the terms of the license, except such other style and construction as it may be licensed to manufacture and sell by such licensor, is not void as an unlawful restraint on trade or commerce forbidden by the act of Congress of July 2, 1890 (20 Stat L., 209, chap. 647), since the plain purpose of this provision is to prevent the licensee from infringing on the rights «The foregoing syllabus copyrighted, 1902, by The Banks Law Pub nshing O. »The following paragraphs Inclosed In brackets are taken from the ^Uabus to this case in the United States Supreme Court Reports, Book 46, p. 1058. Copyrighted, 1902, by The Lawyers' Co-Operativo Publishing Co. BEMENT V. NATIONAL HARROW CO. Statement of the Case. 171 of others under other patents, and not to stifle competition or pre- vent the licensee from attempting to make any improvement in harrows.] [An agreement by the licensor of a patent for improvements relating to harrows, not to license any other person than the licensee to manufacture or sell any harrow of the peculiar style and construc- tion then used or sold by such licensee, does not violate the act of Congress of July 2, 1890 (26 Stat L., 209, chap. 647), to protect trade and commerce against unlawful restraints and monopolies.] This was a writ of error to the Supreme Court of the State of New York, to which court the record had been remitted after a decision of the case by the Court of Appeals. The action was brought by the plaintiff below, the defendant in error here, [71] a corporation, to recover the amount of liqui- dated damages arising out of an alleged violation by the defendant below, the plaintiff in error here, also a corpora- tion, of certain contracts execuu^d between the parties, in re- lation to the manufacture and sale of what are termed in the contracts " float spring tooth harrows," their frames and at- tachments applicable thereto, under letters patent owned by the plaintiff. The action was also brought to restrain the future violation of such contracts, and to compel their specific performance by tlie defendant. The case was tried before a referee pursuant to the statute of New York providing there- for, and he ordered judgment in favor of the plaintiff for over twenty thousand dollars, besides enjoining the defend- ant from violating its contract w^ith the plaintiff, and direct- ing their specific performance as continuing contracts. Tliis judgment was reversed by the appellate division of the Su- preme Court and an order made granting a new trial, but on appeal from such order the Court of Appeals reversed it and affirmed the original judgment. The defendant brings the case here by writ of error. The particular charact>er of the action appears from the pleadings. The complaint, after alleging the incorporation of both parties to the action, the plaintiff in New Jersey and the defendant in Michigan, averred that about April 1, 1891, the plaintiff's assignor, a New York corporation, entered with the defendant into certain license contracts, called therein Exhibits A and B. The substance of contract A is as follows: '1 fJQ 186 UNITED STATES KEPOBTS, 71. Statement of tlie Case. It stated that the plaintiff was the owner of certain letters patent of the United States, which had been issued to other parties and were then owned by the plaintiff, for improve- ments relating to float spring tooth harrows, harrow frames and attachments applicable thereto, eighty-five of which pat- ents were enumerated, and that the defendant desired to acquire the right to use in its business of manufacturino^ at Lansing, (in the State of Michigan,) and to sell throughout the United States, under such patents or some one or more of them, and under all other patented rights owned or thereafter acquired by the plaintiff, which applied to and embraced the peculiar construction employed by the defendant, during the term of such patents or either or any [72] thereof, applicable to and embracing such construction. The plaintiff then, in and by such contract, gave and granted to the defendant the license and privilege of using the rights under those patents in Its business of manufacturing, marketing and vending to others to be used, float spring tooth harrows, float spring tooth harrow frames without teeth and attachments applica- ble thereto; a sample of the harrow frames and attachments the defendant was licensed to manufacture and sell, being (as stated) in the possession of the treasurer of the plaintiff, and marked and numbered as set forth in schedule A, which was made a part of the license. The license was granted upon the terms therein set forth, which were as follows : (1) The defendant was to pay a royalty of one dollar for tieach float spring tooth harrow or frame sold bv it pursuant to the license, to be paid to the plaintiff at its office in the city of Utica in the State of New York. (2) The defendant was to make verified reports of its busi- ness each month and mail them to the plaintiff, and the de- fendant agreed that it would not ship these harrows to any person, firm or corporation to be sold on commission, or allow any rebate or reduction from the price or prices fixed- in the license, except to settle with an insolvent debtor for harrows previously sold and delivered. (3) The defendant agreed that it would not during the continuance of the license sell its products manufactured under the license at a less price or on more favorable terms of payment and delivery to the purchasers than was set forth in BEMENT V. NATIONAL HARROW CO. Statement of the Case. 173 schedule B, which was made a part of the license, except as thereinafter provided. (4) The plaintiff reserved the right to decrease the selling price and to make the terms of payment and delivery more favorable to the purchasers, and it might reduce the royalty on the harrows manufactured under the license. (5) The plaintiff agreed to furnish license labels to the defendant, which were to be affixed to each article sold, and the amount of ten cents paid for each of such labels was to be credited and allowed on the royalty paid by the defendant at the time of such payment. [73] (6) The defendant agreed that it would not, during the continuance of the license, be directly or indirectly en- gaged in the manufacture or sale of any other float spring tooth harrows, etc., than those which it was licensed to man- ufacture and make under the terms of the license, except such as it might manufacture and furnish another licensee of the National Harrow Company, and then only such construc- tions thereof as such other licensee should be licensed by the plaintiff to manufacture and sell, except such other style and construction as it might be licensed to manufacture and sell by the plaintiff. (7) The defendant agreed to pay to the plaintiff for each and every of the articles sold contrary to the strict terms and provisions of the license, the sum of five dollars, which sum was thereby agreed upon and fixed as liquidated damages. (8) The defendant agreed not to directly or indirectly, in any way, contest the validity of any patent applicable to and embracing the construction which the defendant was licensed to manufacture, or which it might manufacture, for another licensee, which such other licensee was itself licensed to manufacture or sell, or the reissues thereof, and no act of either party should invalidate this admission. The defend- ant also agreed not to alter or change the construction of the float spring tooth harrows, float spring tooth harrow frames, without teeth or attachments applicable thereto, which it was authorized to manufacture and sell under the license, in any part or portions thereof which embody any of the inventions covered by the letters patent, or any of them, or any reissues thereof. 174 186 UNITED STATES REPORTS, 73. Statemeiit of the Cane. (9) The plaintiff agreed that after the license was de- livered it would not grant licenses or let to any other person the right to manufacture the articles named of the peculiar style and construction or embodying the peculiar features thereof used by the defendant, as illustrated and embodied in the sample harrow then placed in the possession of the treasurer of the plaintiff and referred to in schedule A of the license. (10) Nothing contained in the license was to authorize the defendant to manufacture or vend, directly or indirectly, any other or different style of harrow than duplicates of such sam- [74] pies as had been deposited by it with the plaintiff, and such as were embraced in the license. (11) xVny departure from the terms of the license might at the option of the plaintiff be treated as a breach of the license, and the licensee might be treated as an infringer, or the plaintiff might restrain the breach thereof in a suit brought for that purpose and obtain an injunction, the li- censee waiving any right of trial by jury; such remedy was to be in addition to the liquidated damages already provided for. (12) The termination of the license by the plaintiff was not to release the defendant from its obligation to pay for articles sold up to the termination of the license. (13) The plaintiff agreed to defend the defendant in any suit brought for an alleged infringement. (14) No royalties were to be paid for articles exported for use in a foreign country. (15) The license was personal to the licensee and not assignable, except to the successors of the defendant in the same place and business, without the written consent of the plaintiff, nor were the royalties or other sums specified to cease to be paid under any circumstances, except under the conditions named in the license during the continuance thereof. (16) The parties agreed that the license should continue during the term of the patent or patents applicable to the license and during the term of any reissues thereof. (17) The place of the performance of the agreement was the city of Utica, New York, and the agreement was to be BEJVtENT V. NATIONAL HARROW CO. Statement of the Case. 175 construed and the rights of the parties thereunder deter- mined according to the laws of New York. (18) The consideration of the contract or license was one dollar, paid by each of the parties to the other, and the cov- enants contained therein to be performed by the other, and it applied to and bound the parties thereto, their successors, heirs and assigns. Schedule A which followed contained a description of the particular kinds of harrow which the defendant was author- ized to make and sell under the license. Schedule B con- tained a statement of the prices and terms of sale under the license, and it was [75] therein stated that "A maximum dis- count of forty-two per cent may be allowed on sales of har- rows, frames and teeth in the following territory : All of the New England States, also States of New York, Pennsylvania, New Jersey, Delaware, Maryland, Virginia and West Vir- ginia. A maximum discount of forty-five per cent may be allowed on all sales in the territory throughout the United States not mentioned above." This contract or license was signed by the president of the National Harrow Company for the plaintiff, and A. O. Bement, president of the defendant corporation, for the defendant. The other license, called Exhibit B, was in substance the same as Exhibit A, excepting that the privilege of sale ior the articles manufactured was that portion of the territory embraced within the United States lying south, and west of Virginia, West Virginia and Pennsylvania, and there was some difference in the machines which the defendant was au- thorized to manufacture and sell under this license, and in regard to the prices to be charged for those machines not cov- ered by the former contract or license. These two agreements were, as stated, made parts of the plaintiff's complaint, and the plaintiff then set forth various alleged violations of the two agreements on the part of the de- fendant, and claimed a recovery of a large amount of dam- ages under the provisions of the contracts, and prayed for an injunction restraining future violations and for a specific performance of the contracts. The plaintiff also alleged that the plaintiff's assignor, the 176 180 UNITED STATES REPORTS, 75. Statement of the Case. New York corporation, duly assigned to the plaintiff all its rights and interests in regard to the subject-matter of the two contracts, and that the plaintiff, at the time of the commence- ment of the action, was the lawful owner of all such interests and rights, and was entitled to bring the action in its own name. To this complaint the defendant made answer, denying many of its allegations and setting up certain other agree- ments which it alleged had been made by the plaintiff and other parties, including defendant, and which, as averred, amounted to a combination of all the manufacturers and dealers in patent harrows, to regulate their manufacture and to provide for their sale and [76] the prices thereof through- out the United States. It was also in the answer averred that such contracts had been pronounced to be void by the Su- preme Court of New York, and the contracts now before the court were, as contended by defendant, but a continuation and a part of the other contracts already declared void, and that these contracts between the parties to this action were also void. It also alleged that all of the various contracts were in violation of the act of Congress, approved July 2, 1890, being chapter 647 of the first session of the Fifty-first Congress, (26 Stat. 209,) entitled "An act to protect trade and commerce against unlawful restraints and monopolies." The case was referred to a referee to hear and decide, who, after hearing the testimony, reported in favor of the plaintiff. * The material portions of his report are as follows : "That for some time prior to the month of September, 1890, the spring tooth harrow business was conducted by the following-named parti^: p. C. & H. C. Reed & Company, of Kalamazoo, Mich.; G. B. Olin & Company, Perry and Canandaigua, N. Y. ; Chase, Taylor & Company, W. S. Lawrence, doing business under the name of Law- mice & Chapin, both of Kalamazoo, Mich. ; J. M. Childs & Company, of Utica, N. Y. ; and A. W. Stevens & Son, of Auburn, N. Y., who began the harrow business in substantially the order named above. The first tvvo above-named firms conducted their business in sep- arate portions or territory of the United States, under the same United States letters patent, and the other fli^ns began their business in hostil- ity to the same letters patent. The first two firms began a number of patent lawsuits against the other firms and their customers for infringe- ment of patents. These suits were vgiorously prosecuted and the court finally decided the patents valid, and ordered an accounting of profits against the firm of Chase, Taylor & Company, and W. S. Law- rence. IF^J^l ^? September, 1890, the last four of the above-named firms settled their disputes over patents with the first two firms, and took BEMENT V. NATIONAL HAKROW CO. Statement of the Case. 177 licenses under their letters patent. Considerable sums of money were paid in settlement of these disputes and rights ; and prior to said date, September, 1890, there was no other relation between the first two firms named, and the other parties [77] than that of licensor and licensee under United States letters patent. " In the year 1890, and just prior thereto, other persons, firms and corporations began the spring tooth harrow business and other patent lawsuits followed : Suits were begun against the defendants herein, and against their customei-s purchasing their spring tooth harrows- and one ease had gone to final decree, in which the defendant was ordered to account for profits and damages; and an injunction had been granted in other suits. Proceedings were pending upon an appli- cation for rehearing in these cases. " In September, 1890, the six firms first above named decided to organize a corporation known as the National Harrow Company of New York, with a view to transferring various United States letters patent owned by the six firms respectively to said coi-poration. and for the purpose of conducting the manufacture of some part or portion of the material which entered into their spring tooth harrow business. " In the conduct of the spring tooth harrow business, the harrows came to be known in the market as ' fioat spring tooth harrows ; ' that name having been adopted to diflTerentiate the harrows from those known in the market as ' wheel harrows,' which had frame bars and curved spring teeth supported from an axle above, which axle had wheels at either end of the diameter above thirty inches. The two classes of harrows were differentiated, one being called a ' float ' and the otlier a ' wheel ' spring tooth harrow. The litigations had been wholly over the ' float ' spring tooth harrows. " The members comi>osing the first six firms, above named, in the harrow business in September, 1890, organized under the laws of the State of New York the ' National Harrow Company.' That corpora- tion was duly legally incoi-porated, and after its' incorporation it received from the said six firms the transfer of their separate United States letters patent, license contracts and privileges under patents The defendant's president, Arthur O. Bement, became and continued a director of this coiporation until its dissolution, which followed in a little over a year. [78] " This corporation entered into some contracts with spring tooth harrow manufacturers, which were decided by the Supreme Court of the State of New York to be illegal as against public policy, on account of restraints contained in the contracts, which extended beyond the lifetime of the patents. That case is reported in the New York Supplement, vol. 18, page 224. Strait et ah v. National Harrow Company et al. " Immediately following this decision, all of the contracts then in existence which were affected thereby were immediately cancelled by the parties to such contra,cts. " The defendant, E. Bement & Sons, in the fall of 1890, entered into a contract with the National Harrow Company, looking to the selling of its patents and rights under patents relating to the spring tooth harrow business; but this contract was abandoned, the conditions upon which it was executed not having been complied with, the con- tract became and was wholly void. "The defendant had no contract with the National Han*ow Com- pany until about June 16 or 17, 1891, at which time several contracts were entered into between the defendant and the National Harrow Company of New York. Among other contracts the defendant exe- cuted and delivered assignments in writing of several United States 21220— VOL 2—07 M ^12 178 180 UNITED STATES REPOKTS, 78. Statement of the Case. letters patent and license rights and privileges under United States letters patent, all of which related to the defendant's float spring tooth harrow business. Such contracts constituted an absolute sale of the property and privileges thereby transferred, and the defendant agreed to accept in i»aynient thereof the paid-up capital stock of the National Harrow Company of New York, and the value of the rights transferred were by agi-eenient between the parties fixed and determined by arbi- tration, under which arbitration the defendant was awarded and the value was fixed at upwards of $29,000. The defendant was dissatis- ied with the amount of the award, and sucli dissatisfaction and dif- ference was afterwards adjusted by an agreement to issue to the defendant and the defendant to accept an additional amount of 116,000 of said capital stock. That by agreement, in the place of the said capital stock of the New York company, the defendant accepted [7»] and agreed to take the stock of the plaintiff in this action, and there has been issued to the defendant and the defendant has received the capital stock of this plaintiff in an amount upwards of $45,000 in payment for the property and rights sold and transferred l)y the de- fendant to the National Harrow Company of New York. That said upwards of 145,000 of stock was issued to the president of the defend- ant for defendant's benefit, and on said stock defendant has received several cash dividends. "The transaction between the National Harrow Company of New York and this defendant bad, in June, 1891. was intended by the par- ties to be an absolute sale by the defendant to the National Harrow Company of New York of the United States letters patent and licenses under United States letters patent relating to the float spring tooth harrow business conducted by the defendant, and it was found on a good, valuable and adequate consideration moving between the parties. " That, as a part of such transaction, the National Harrow Company of New York granted, issued and delivered to the defendant the license contracts A and B, which are attached to the complaint in this action and made a part thereof. Upon the consunmiation of the transaction in June. 1891, the controversy over patents and infringe- ments existing between the first six firms named above, and the defendant and its customers, was settled. The pai;)ers which were executed in June, 1891. were all dated as of April 1, 1891, and were to take effect as of that date. At the date of the execution and delivery of the license contracts A and B, the National Harrow Company of New York was the owner by assignment and purchase of a large num- ber of United States letters patent, which it is claimed fully monopo- lized and covered the defendant's float spring tooth harrow business. " The sale by the defendant of its letters patent, and license rights and privileges to the National Harrow Company of New York, and the signing and delivering of license contracts A and B, were intended to and did. settle existing controversies with reference to the rights of the National Harrow Company of New York and the defendant [80] " I decide that the contract entered into in June, 1891, including the contracts A and B between the National Harrow Company of New York and this defendant were and are good and valid contracts, founded on adequate considerations and were reasonable in their provisions; contracts A and B imposing no restraints upon the de- fendant beyond those which the parties had a right, from the nature of the transaction, to impose and accept. ** In July, 1891, a corporation was organized under the laws of the State of New Jersey, known and designated as the National Harrow Company, which corporation is the plaintiff in this action. None of the parties organizing this corporation were in the spring tooth har- row business. The New Jersey corporation was duly and legally or- BEMENT V. NATIONAL HAKROW CO. 179 statement of the Case. ganlzed in conformity with the laws of that State, and was by those laws and its charter authorized to purchase United States letters patent and to grant licenses under United States letters patent and to conduct the manufacturing business, and had a variey of other rights and privileges under its charter and said statutes. That this corpora- tion, the plaintiff, still is a legal and valid corporation, entitled to hold and enjoy such of its property as it now or may hereafter own or acquire, and that it was not organized in hostility to any rule of pub- lic policy. " That the National Harrow Company of New Jersey, this plaintiff, through its duly constituted oflicers purchased from the National Har- row Company of New York all of its various United States letters patent, and all contracts, licenses and privileges which the National Harrow Company of New York then owned and possessed, and also purchased a part of its other property, rights and privileges. " That on the 9th of September, 1891, a formal transfer in writing was made from the National Harrow Company of New York to the National Harrow Company of New Jersey of the property and rights sold as aforesaid by the former company to the latter, which transfer was founded on a good, valuable and edequate consideration moving between the parties, and which transfer was sanctioned by the di- rectors and stockholders of the New York corporation, and by the officers and [81] directors of the National Harrow Company of New Jersey, this plaintiff, and separate assignments in writing were made of the various United States letters patent from the New York corpo- ration to the New Jersey corporation. " I decide that this transfer was in all respects legal and valid, being founded on a good and valual)le consideration, and that it vested in the plaintiff in this action all the rights, privileges and benefits accruing to the New York corporation under its contracts with the defendant, including contracts A and B, which contracts have been slightly modi- fled by the parties as to price and terms of sale. " The defendant's president, Arthur O. Bement, became a director and an active manager of the plaintiff, and continued as such down to September. 1893. " The defendant made monthly verifled reports to this plaintiff down to and including the 8th of September, 1893, of the harrows embraced in contracts A and B. by such reports stating the total harrows sold to be 13,900, on which defendant paid to the plaintiff a royalty of $13,900. "The National Harrow Company of New York and this plaintiff have performed all of the stipulations and provisions in the contracts entered into between the National Harrow Company of New York and this defendant, including all the provisions of contracts A and B, and the plaintiff is now ready, willing and able to perform all of the stipu- lations and agreements to be performed on its part, as assignee of the National Harrow Company of New York. " That the defendant, after having received and retained large pecu- niary benefits under the contracts, has failed, neglected and refused, and still fails, neglects and refuses to keep and perform its contracts entered into, including the stipulations and provisions contained in contracts A and B, and since September, 1893, it has wholly repudiated contracts A and B, and refused to perform any of the stipulations con- tained therein which it agreed to do and perform, and it has broken and violated all of the stipulations and agreements contained in con- tracts A and B which it agreed to do and perform." The referee then states with some detail the various viola - [82] tions of the license agreements by the defendant, and finds the defendant indebted to the plaintiff in the sum of 180 186 UNITED STATES BEPORTS, 82. Statement of tlie Case. over twenty thousand dollars. He then continues as fol- lows: "1 deeide that tbe plaintiff is a legal and valid coiiwration author- ized to enforce its rights in courts having jurisdiction, and that all of the contracts in evidence were and are legal, valid and binding con- tracts, such ais niiglit reasonably be made under the circumstances, foundtHl upon an adequate consideration, and that they embodied no illegal restraints, and aie not repugnant to anv rule of public policy T,."* ffffraint of trade, or tending to create a monopoly, trust or any other Illegal comlnnation : and that the contracts entered into between the defendant and the National Harrow ('omi)any of New York, includ- hig contracts A and B, are and were iutendetlto be continuing con- tracts, and sh-iild be enforced according to their true intent and mean- ing as hereby interpreted." The referee then held the plaintiff entitled to a judgment against the defendant, declaring the validity of the plaintiff corporation and its title to the contracts and their validity, and decreeing specific performance thereof and restraining fiiture violations of the contracts by the defendant. Judg- ment in accordance with the report was entered, from Avhich the defendant appealed to the appellate division of the Supreme Court. Some difficulties regarding the form in which the case was presented to that court arose upon the argiunent, and it was therefore suspended and the case sent back to the referee for a resettlement, which was subsequently agreed upon by coun- sel for the respective parties, who entered into a stipulation in regard to w^hat was to be reviewed by the courts above, and, among other things, it was agreed between counsel : " That the foregoing record, as amended and corrected in this stipu- lation, contains all of the evidence given and proceedings had before the referee material to the questions to be raised on this appeal by the appellant, which questions to be raised by the appellant on this appeal are to be only as follows." Those questions are eight in number, the fourth of which is: " Whether or not the contracts A and B are valid under the act of Congress approved July 2, 1890, chapter 647 of the first [83] session of the Fi%-first Congress." This is the only Federal question raised and appearing in the record The case .was thereupon argued before the appellate divi- sion, which reversed the judgment, and ordered a new trial, but it did not state in its order of reversal that the judgment was reversed on questions of fact as well as of law. The BEMENT V. NATIONAL HARROAV CO. 181 Opinion of the Court. plaintiff then appealed to the Court of Appeals from the order granting a new trial, and after argument it was held by that court that it had no jurisdiction to review the facts, and that upon the findings of the referee there had been no error of law committed, and consequently the Supreme Court was wrong in reversing the judgment. The court therefore reversed the judgment of the Supreme Court, and affirmed the judgment entered upon the report of the referee. Mr. Clark C. Wood, Mr, Edward Cahill and Mr. Henry /. Cookingham for plaintiff in error. Mr. Edioin H^Risley for defendant in error. Mr. Justice Peckham, after making the foregoing state- ment of facts, delivered the opinion of the court. In this court we are concluded by the findings of fact made in a state court in a suit in equity, as well as in an action at law. Dower v. Richards, 151 U. S. 658, 666; Israel v. Ar- thur, 152 U. S. 355; Egan v. Hart, 165 U. S. 188; Hedriek v. Atchison, Topeka (& Santa Fe Railroad Company, 167 U. S. 673, 677. The only Federal question raised in the record is as to the validity of contracts A and B, with regard to the act of Con- gress on the subject of trusts. Act of July 2, 1890, c. 647, 26 Stat. 209. That is a question of law, plainly raised in the record, and we are not precluded from its consideration by any action of the state courts. If, however, facts not found by the referee are necessary for the purpose of connecting those contracts with others not found in such report, we cannot supply the omission to find those facts. The conten- tion of the defendant is that [84] the two contracts A and B are in truth a part and continuation of the agreements set forth in the defendant's answer, and that taken together they prove a purpose and combination on the part of all the dealers in patented harrows to control their manufacture, sale and price in all portions of the United States, and defendant avers that such a contract or combination was and is void, not only as against public policy, but also because it is a violation of the Federal statute upon the sub- ject of trusts and illegal combinations. Those former al- im UNITED STATES REPORTS, 84. Opinion of the Court leged contracts are not mentioned in the report of the referee excepting, as he stated, they had been declared void as against public policy, and as being in restraint of trade because they extended beyond the life of the patents therein mentioned, and the referee found that following this decision all of the contracts then in existence, which were affected thereby, were inmiediately cancelled by the parties thereto. The referee made no finding of any fact connecting the contracts A and B with prior contracts of a like nature including other parties, as alleged in the answer of the de- fendant. The referee did find, however, that the defendant had no contract with the National Harrow Company until June 16 or 17, 1891, at which time several contracts were entered into between the plaintiff and the National Harrow Company of New York, and among other contracts the plaintiff executed and delivered assignments in writing of several United States letters patent and license rights and privileges under United States letters patent, all of which relate to the defendant's float spring tooth harrow business. He also found that such contracts constituted an absolute sale of the property and privileges thereby transferred, and that the defendant agreed to and did accept in payment thereof paid up capital stock of the plaintiff. He further found that the transaction between the assignor of the plaintiff and the defendant in June, 1891, was intended by the parties to be an absolute sale by »the defendant to such assignor of the United States letters patent and licenses under such patents relating to the float spring tooth harrow business conducted by the defendant, and that it was founded upon a good, valuable and adequate consideration between the parties; that as a part of such consider- [85] ation the assignor of the plaintiff granted and delivered to the de- fendant the license contracts A and B, heretofore spoken of. and that upon the consummation of the transaction the con- troversy over patents and infringements existing between the first six firms named in the referee's report and the de- fendant and its customers w^as settled. The report also decided " that the contract entered into in June, 1891, includ- ing the contracts A and B between the National Harrow Company of New York and this defendant were and are BBMENT V. KATIONAIi HARROW CO. Opinion of the Court isa good and valid contracts, founded on adequate considera- tions and were reasonable in their provisions; contracts A and B imposing no restraints upon the defendant beyond those which the parties had a right, from the nature of the transaction, to impose and accept." The omission of the referee to find from the evidence that the contracts A and B were a continuation of former con- tracts held to have been void, and that there were in fact other manufacturers of harrows who had entered into the same kind of contracts with plaintiff as those denominated A and B, and that there was a general combination among the dealers in patented harrows to regulate the sale and prices of such harrows, furnishes no ground for this court to assume such facts. The contracts A and B are to be judged by their own contents alone and construed accord- ingly. The referee also decided that the plaintiff was a legal and valid corporation, authorized to enforce its rights in courts having jurisdiction, and that all the contracts in evidence might reasonably be made under the circumstances, and were founded upon a good, valuable and adequate considera- tion, and were reasonable in their provisions, and that they were and are legal, valid and binding contracts, and such as embodied no illegal restraints, and were not repugnant to any rule of public policy as in restraint of trade, and were not intended to create a monopoly, trust or illegal combina- tion, and that the contracts entered into between the defend- ant and the National Harrow Company of New York, in- cluding the contracts A and B, are, and were, intended to be continuing contracts, and should be enforced according to their true intent and meaning as hereby interpreted. When he speaks of all the contracts in evidence, the referee [86] plainly means all the contracts in evidence between the parties to this action, for it was of such contracts only that he had been speaking. There were, in fact, other contracts than those designated A and B between these parties, and such other contracts had been put in evidence, and previ- ously referred to by the referee. He, therefore, must have included what is termed the escrow agreement in his finding, 186 UNITED STATES REPOBTS, 87. Opinion of the Court. that all the agreements made by defendant with the plain- * rU7^^/*"''- '^^"^ agreement is set forth in the margin.' [87 1 There is no finding by the referee that this agreement was ever signed by any one other than the parties to this ac- tion, or that any other person received the licenses from and made contracts with the plaintiflF similar to the ones entered into between these parties. All that the referee finds is, that all the contracts in evidence were legal, by which was meant, as already stated, all the contracts in evidence between the parties to the action, which wei« in existence and uncan- celled In the absence of any finding as to the escrow agree- ment having been signed by others, it must be regarded as unimportant, and we are brought back to the question « " Escrow Aprrement. "This memorancln of iigreement, made and entered Into this 1st day of April. A. D. 1891. by ami between the National Harrow Com- pany a c-or,>oration of Utka, in the State of New York, and Edward Norris of the same pla.-e; and E. Bement & Sons of Lansing, in the State of Michigan. **Wliereas, the eait! National Harrow Company is the owner of a large number of latters patent relating to float spring tooth harrows, and is desirous of gi-anting licenses thereunder to tlie following- named porsons. firms and corporations, to wit: Chas. H. Childs & Company, D. B. Smith & Company, A. W. Stevens & Son. Childs & Jones, S,T.Knse Chilled Plow Co.npany. Geo. W. Sweet & Company. Walker Manntnctnring Coinpany. Taylor & Henry, the Herndeen Manufacturing Company. I). C. & h. C. Reed & Company, L. C. Lull & Ccmipany Williams Manufacturing Company, W. S. Lawrence, McSherry Manufacturing Company. D. O. Everst & Company E ^ZL^r"',; "r^' * '''"'"'^"'^'' ''^""^^^' ^^^^"^^ Manufactu'ring Company, Eureka Mower Company. "And wherens. the said National Harrow Company has placed in the hands of said E. Xorris in escrow, duly executtnl by it in dupli- cate, a certain contract and license for each of said persons, firms and corporations hereintefore named, to be by the said E Norris Immediately presented to each of the above and foregoing named respective i>ersons. firms and corimrations, to l>e signed and executed Uy said resiiective persons, firms and corporations— "Now, therefore, it is hereby understood and agreed by and be tween the parties hereto, that as the said licenses and contracts are signed and executed by the said respective persons, firms and corpor- ations, they shall be held by said Norris. in escrow, for both parties until such time as all of said above-named persons, firms and cor- BEMENT V, NATIONAL HARROW CO. Opinion of the Court 185 whether these contracts or licenses, A and B, irrespective of any contracts not found by the referee as in any way con- nected with, or forming a part thereof, are void as a viola- tion of the act of Congress. The plaintiff contends in the first place that only the At- torney General of the United States can bring an action under the statute, excepting that by section 7 of the act any person injured in his business or property, as provided for therein, may himself sue in any Circuit Court of the United States, in the district in [88] which the defendant resides or is found. Assuming that the plaintiff is right so far as regards any suit brought under that act, we are nevertheless of opinion that any one sued upon a contract may set up as porations shall have signed, executed and delivered the same to said Norris, whereuix)n they shall become operative, and immediately thereafter the said Norris shall deliver one of the duplicates of each of said contracts and licenses to the said National Harrow Company and the other duplicate thereof to the respective licensees who have signed the same, in person or by mail. " But in case any of the above-named persons, firms and corjjora- tions shall neglect or refuse to sign, execute and deliver said respec- tive contracts and licenses on or before the 1st day of June next, then and in such case said E. NoiTis shall, provided he shall l>e so directed, by a resolution duly adopted by the board of trustees of said National Harrow Company, make delivery of such of said con- tracts and licenses as have been signed and executed as above pro- vided, at which time said contracts and licenses shall become opera- tive, and in case the said National Harrow Company shall conclude not to accept any less number than the whole of such respective con- tracts and licenses, then and in such case the said Norris shall cancel each of said contracts and licenses, and they shall be null and void. " Witness the signatures of the parties. "The National Harrow Co., By Chas. H. Childs, Pres't. " Edward Norris. "E. Bement & Sons, By A. O. Bement, Pres't. "Received of E. Bement & Sons a license and contract executed between the National Harrow Company and said E. Bement & Sons, which I agree to hold and deliver in accordance with an agreement between the said National Harrow Company and said E. Bement & Sons and myself, and hereto attached. " Dated this 1st day of April, 1891. Edward Norris." 186 186 UNITED STATES REPOBTS, 88. Opinion of the Court a defence that it is a violation of the act of Congress, and if found to be so, that fact will constitute a good defence to the action. The first section of the act provides that " every contract, combination in the form of trust, or otherwise, or conspir- acy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegaL" Every person making such a contract is deemed guilty of a misdemeanor, and on conviction is to be punished by fine or by hnprisonment, or both. As the statute makes the contract in itself illegal, no recovery can be had upon it when the defence of illegality is shown to the court. The act provides for the prevention of violations thereof, and makes it the duty of the several district attorneys, under the direction of the Attorney General, to institute proceedings in equity to prevent and restrain such violations, and it gives to any person injured in his business or property the right to sue, but that does 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 defence, and we think when proved it is a valid defence to any claim made under a con- tract thus denounced as illegaL This brings us to a consideration of the terms of the license contracts for the purpose of determining whether they violate the act of Congress. The first important and most material fact in considering this question is that the agreements concern articles protected by letters patent of the Government of the United States. The plaintiff, ac- cording to the finding of the referee, was at the time when these licenses were executed the absolute owner of the letters patent relating to the float spring tooth harrow business. It was, therefore, the owner of a monopoly recognized by the Constitution and by the statutes of Congress. An owner of a patent has the right to sell it or to keep it; to manufacture the article himself or to license others to manufacture it; to sell such article himself or to authorize f 89] others to sell it. As stated by Mr. Justice Nelson, in Wil- son V. Boi/sseau, 4 How. 646, 674, in speaking of a patent: " The law has thus impressed upon it all the qualities and charac- teristics of property for the specified period ; and has enabled him to BEMENT V. NATIONAL HARROW CO. 187 Opinion of the Court hold and deal with it the same as in the case of any other description of property belonging to him, and on his death it passes, with his per- sonal estate, to his legal representatives, and becomes part of the assets." Again, as stated by Mr. Chief Justice Marshall, in Grant v. Raymond, 6 Pet. 218, 241 : " To promote the progress of useful arts, is the interest and policy of every enlightened government. It entered into the views of the framers of our Constitution, and the power ' to promote the progress of science and useful arts, by securing for limited times to authors and inventors, the exclusive right to their respective writings and discover- ies,' is among those expressly given to Congress. This subject was among the first which followed the organization of our Government. It was taken up by the first Congress at its second session, and an act was passed authorizing a patent to be issued to the inventor of any useful art, etc., on his petition, ' granting to such petitioner, his heirs, administrators or assigns, for any term not exceeding fourteen years, the sole and exclusive right and liberty of making, using and vending to others to be used, the said invention or discovery.' The law further declares that the patent ' shall be good and available to the grantee or grantees 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 cannot 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 give effect to this purpose ought, we think, to be construed 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 : [90] if this can be done without transcending the intention of the statute, or countenancing acts which are fraudulent or may prove mis- chievous. The public yields nothing which it has not agreed to yield : it receives all which it has contracted to receive. The full benefit of the discovery, after its enjoyment by the discoverer for fourteen years, is preserved ; and for his exclusive enjoyment of it during that time the public faith is pledged." In Heaton- Peninsular Company v. Enreka Specialty Cortv- pany, 47 U. S. App. 146, 160, it is stated regarding a paten- tee: " If he sees fit, he may reserve to himself the exclusive use of his invention or discovery. If he will neither use his device nor permit others to use it, he has but suppressed his own. That the grant is made upon the reasonable expectation that he will either put his inven- tion 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 retained no other security to enforce such expectations. A suppression can endure but for the life of the patent, and the disclosure he has 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 prop- erty that he is neither bound to use his discovery himself nor permit others to use it. The dictum found in Hoe v. Knap, 17 Fed. Rep. 204, is not supported by reason or authority." J.OO 186 UNITED STATES EEPOBTS, 90. Opinion of the Court. Il is true that in certain circumstances the sale of articles manufactured under letters patent may be prevented wh«-u the use of such article may be subject, within the several States, to the control which they may respectively impose in the legitimate exercise of their powers over their purely domestic affairs, whether of internal commerce or of police regulation. Thus an improvement for burning oil, pro- tected by letters patent of the United States, was condemned by the state inspector of Kentucky as unsafe for illuminat ing purposes under the statute requiring an inspection and imposing a penalty for [»1] the violation of the statute, and it was held that the enforcement of the statute was within the proper police powers of the State, and that it interfered with no right conferred by the letters patent. Patterson v. Kentucky, 97 U. S. 501. There are decisions also in regard to telephone companies operating under licenses from patentees giving them the right to use their patents for the purpose of operating public tele- phone lines, but prohibiting companies from serving within such district any telephone company, and it has been held in the lower Federal courts that such a prohibition was of no force; that it was inconsistent with tlie grant, because a tele- phone company, being in the nature of a common carrier, was bound to render an equal stnviee to all who applied and ten- dered the compensation fixed by law for the service; that while the patentees were under no obligation to license the use of their inventions by any public telephone company, yet, having done so, they were not at liberty to place restraints upon such a public corporation which would disable it to dis- charge all the duties imposed upon companies (Migaged in the discharge of duties subject to regulation by law. It could not be a public telephone company and could not exercise the franchise of a common carrier of messages with such excep- tions to the grant. See Missouri ex rel Sc, v. Bell Telephone Cmnpamf. 23 Fed. Rep. 539: State ex rel. rfv. v. Delaware dic. Comimny, 47 Fed. Rep. 683; and Delaware <& Atlantic cfw. Company v. Delaware ex rel, i%c, 3 IT. S. App. 30. These ea.^^s are cited in the opinion of the court in the case of Ileaton-Peninsalar Company v. Eureka Speeialfy Com- pany, supra. Notwithstanding these exceptions, the general BEMENT V, NATIONAL HARKOW CO. 189 Opinion of the Court 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 anv conditions which are not in their verv nature illegal with regard to this kind of property, imposed by the patentee and agreed to by the lici?nsee for the right to manufacture or use or sell the article, will be upheld by the courts. The fact that the conditions in the contracts keep up the monopoly or ^x prices does not render them illegal. [92] The contention that they do not affect interstate com- merce, is not correct. We think the licenses do bv their terms and by their plain meaning refer to, include and provide for interstate as well as other commerce. The contract called Ex- hibit B provides for the manufacture at Lansing, Michigan, and for the sale of the articles there made in territory Iviner south and west of Virginia and West Virginia and Pennsyl- vania, and the referee finds that a number of harrows have been sold under that contract. The contracts plainly look to the sale, and they also determine the price of the article sold, throughout the United States, as well as to the manufacture in the State of Michigan. As these contract^ 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 articles is valid within the act of Congress. It is true that it has been held by this court that the act included any restraint of commerce, whether reasonable or unreasonable. United States v. Tram- Missouri Freight Association, 166 U. S. 290: United States V. Joint Traffic Association, 171 U. S. 505; Addy stone Pipe (&c. Company v. Ufiited States, 175 U. S. 211. But that statute clearly does not refer to that kind of a restraint of interstate commerce which may arise from reasonable and legal conditions imposed upon the assignee or licensee of a patent by the owner thereof, restricting the terms upon which the article may be used and the price to be demanded therefor. Such a construction of the act we have no doubt was never contemplated by its framers. Uiiited States v. E. C. Knight Company, 156 U. S. 1, does not bear upon the facts herein. That case related to a pur- chase of stock in manufacturing companies, by reason of 190 186 UNITED STATES BEPORTS, 92. Opinion of the Court. which the purchaser secured control of a large majority of the manufactories of refined sugar in the United States. It was held by this court that the Federal act relating to trusts and combinations affecting interstate commerce could not reach and suppress the creation of a monopoly in regard to the refining of sugar, and that the manufacturhig of a com- modity bore no direct relation to commence between the States or with foreign nations. It was saiti by Mr. Chief Justice Fuller, for the court, while |93] speaking of such manufac- ture: "Nevertheless it does not follow that an attempt to monopolize, or the actual monopoly of, the manufacture was an attempt, whether executory or consummated, to monopo- lize commerce, even though, in order to dispose of the prod- uct, the instrumentality of commerce was necessarily in- voked." In these contracts provision is expressly made, not alone for manufacture, but for the sale of the manufactured product throughout the United States, and at prices which are particularly stated, and which the seller is not at liberty to decrease without the assent of the licensor. Addystone Pipe cC- Steel Company v. United States^ 175 U. S. 211, 238. These contracts directly affected, not as a mere incident of manufacture, the sale of the implements all over the country, and the question arising is whether the contracts which thus affect such sales are void under the act of Congress. On looking through these licenses we have been unable to find any conditions contained therein rendering the agree- ment void because of a violation of that act. There had been. as the referee finds, a large amount of litigation between 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 prevent 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 provision in regard to the price at which the licensee would sell the article manufac- tured under the license was also an appropriate and reason- able condition. It tended to keep up the price of the im- plements manufactured and sold, but that was only recog- BEMENT V. NATIONAL HARROW CO. Opinion of the Court. 191 nizing the nature of the property dealt in, and providing for its value so far as possible. This the 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 condition that the assignee shall charge a certain amount for such article. It is also objected that the agreement of the defendant not [04] to manufacture or sell any other float spring tooth harrow, 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 de- fendant 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 pro- hibition for the defendant, who would thus be excluded from making such harrows as were made by others who were en- gaged in manufacturing and selling other machines under other patents. It would be unreasonable to so construe 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 agreement 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 provision in them, either taken separately or in connection with all the others 192 m FEDERAL BEPORTER, 925. Byllabus. therein contained, which would render the contracts between these parties void as in violation of the act of Congress. It mnst, however, be conceded that the escrow agreement above set fortli looks to the signing, by the parties mentioned therein, of contracts similar to those between the parties to this suit, designated A and B, and containing like conditions relating to the patents respectively, owned by such parties. But there is no finding by the referee that such contracts were in fact entei-ed into by those other parties nor that they con- 105] stituted a combination of most, if not all, of the persons or corj)orations engaged in the business concerning which the agreements between the parties to this suit were made. If such simihir agreements had been made, and if, when exe- cuted, they would have formed an illegal combination within the act of Congress, we cannot presume for the purpose of reversing this judgment, in the absence of any finding to that effect, that they were made and l>ecame effective as an illegal coml)ination. As between these parties, we hold that the agreements A and B actually entered into were not a violation of the act. We are not called upon to express an opinion upon a state of facts not found. Upon the facts found there is no error in the judgment of the Court of Appeals, and it must, therefore, be Mr. Justice IIari.an, Mr. Jusncis Gray and Mr. Justice White did not hear the argument and took no part in the decision of this case. [0«5] FIELD V. BARBER ASPHALT PAV. C0.-» (Circuit Court, W. D. Missouri. July 15, 1902.) [117 Fed., 925.] Cloud on Titm— Removal— Action in Equity— Possession of Plain- tiff.— A suit in equity may be maintained for the removal of a cloud on title under the Missouri statutes, though plaintiff is not In possession.* « See 194 U. S. 618 (p. 555). » Syllabus copyrighted, 1902, by West Publishing Co. FIELD t'. BAEBER ASPHALT PAV. CO. Syllabus. 193 United States Courts — ^Jubisdiction — Amount in Contboveesy. Where complainant sued to set aside special tax bills assessed against certain lots in a city, of which he owned the fee, and he was the equitable owner of other lots assessed, and the tax bills on all the lots amounted to over $2,000, the federal court had juris- diction. Municipal Corporations— Special Taxes— Tax Bills— Registration BY City Clerk.— The failure of a city clerk of a city to register tax bills for special assessments, as required by the Missouri stat- utes, is not a sufficient defense against the bills, the statute being directory merely. [926] Same — Street Grading — Assessment. — Where the evidence, in the action to restrain a special city assessment, showed that the grading, for which the city was not entitled to charge the abutting property, was not included, at least to any great extent, m the cost of paving, and no extra charge or expense for the grading was made, the fact that some grading was done was immaterial. Same — City Improvements — Protest — Statutes — Constitutional- ity — Review. — Where a nonresident property owner did not appear after notice and attempt to protest against a city street improve- ment, he cannot, in an action to restrain enforcement of tax bills agahist his property, obtain a review of the constitutionality of Laws Mo. 1895. §95, limiting the right to protest to resident owners. Contract for Improvement — Acts of Aldermen— Review. — The board of aldermen of a city, in procuring the improvement of streets and letting the contract therefor, do not act in a legislative ca- pacity, but act in an administrative or business capacity, and hence their acts are reviewable on the ground of fraud or corruption. Validity of Contract— Limitation as to Material— [Anti-Trust Laws].— Where the contract for the paving of a street with asphalt limited the Icind of asphalt to be used to Trinidad asphalt, such fact, and the further fact that such asphalt was controlled by a single corporation, [was not violative of the commerce clause of the constitution or of the Federal anti-trust statutes, and] did not affect the validity of the contract. [See p. 194.] Same — Evidence. — Evidence in an action to vacate special tax bills for municipal improvements reviewed, and held not sufficient to show corruption on the part of the city council. Same — Necessity of Improvement — Review. — Where one of the streets of a city, located in an extreme and thinly populated por- tion, had been well paved with macadam in 1892, and at the time the street was ordered paved with aphalt by the city council, in 1897, the macadam was not badly worn, and the street was in good condition, the subsequent improvement was unnecessary, and special assessments therefor void. 21220— VOL 2—07 m -13 194 118 FEDERAL EEPORTER, 120. Syllabus. [The only part of the opinion which has any bearing whatever upon the federal anti-trust law is as follows:] [929 1 " The evidence shows that the contracts called for *Lake Trinidad asphalt.' There is evidence tending to sliow 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 contended 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 violated. And this argument is emphasized by complainant's counsel, because, as he contends, the defendant has a monoply of Trinidad asphalt. The evidence does not show this to be so. But, if it does have the monoply, 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 show- ing that in fact something else was as good or better, or that the vendor had a monoply." • nm GIBBS V, McNEELEY ET AL.« (Circuit Court of Appeals, Nintli Circuit. October 13, 1902.) [318 Fed., 120.] Awti-Tbust Law— Combinations in Restraint of Interstate Com- aiERCE.— To render a combination unlawful under the anti-trust act of 1890 [U. S. Comp. St. 1901, p. 3200], it need not be one which by its terms refers to Intei-state commerce, but it is sufficient if its purpose and effect are necessarily to restrain interstate trade.6 Same. — ^An association of manufacturers of and dealers in red cedar shingles hi the state of Washington, formed for the purpose of con- trolling the production and the price of such shingles, which are made only in that state, but are principally sold and used in other states, and which, by its action in closing the mills of its members, Demurrer overruled by Circuit Court as to fourth cause of action (102 Fed., 594). See p. 25. Verdict for defendants m error directed (107 Fed., 210). See p. 71. Reversed by Circuit Court of Appeals (118 Fed., 120). » Syllabus and statement copyrighted, 1908, by West Publishing Co. GIBBS V. M NEELEY. 195 statement of the Case. has reduced the production, and has also arbitrarily increased the prices at which tlie product is sold, is a combination in restraint of interstate commerce, and unlawful under the anti-trust law of July 2 1890 [U. S. Comp. St. 1901, p. 3200] .« In Error to the Circuit Court of the United States for the Western Division of the District of Washington. The plaintiff in error brought an action to recover damages against the defendants in error under the act of congress known as the " Sherman Anti-Trust Act," of July 2, 1890 [U. S. Comp. St. 1901, p. 3200], and alleged in his complaint, as his first cause of action: That for more than 10 years he had [121] been a dealer in Washington red- cedar shingles at the city of Tacoma in the state of Washington, con- ducting a general business in such shingles, purchasing them of the various manufacturers thereof within the state of Washington, and selling them to purchasers in other states of the United States and in certain foreign countries: That his business was valuable; and that he was solely dependent upon it for his livelihood, and that he had acquired a wide clientage, and had transacted a business amounting to $100,000 a year, and had derived an annual profit therefrom of $8,000; that the said Washington red-cedar shingle is solely manu- factured in the state of Washington, and has become an article of prime necessity and indispensable use to the i)eople in the various states and countries named; and alleged that, during the first 10 months of the year 1899, 4,000,000,000 shingles were manufactured, of which 3,300,500,000 were manufactured for the puriK)se of selling and delivermg to purchasers outside the state of Washington, and were so sold and delivered. That the defendant the Washington Red- Cedar Shingle Manufacturers' Association was a voluntary associa- tion of the various manufacturers and dealers in said shingles in the state of Washington, comprising a total of 108; that the association has a constitution and by-laws: that membership is secured by pay- ing a certain initiation fee graded according to the number and character of shingle machines in use by the applicant for membership ; that its officers are president, vice president, secretary, treasurer, and a central committee; that the defendants specifically named in the complaint are respectively such officers; that the powers of the com- mittee were to hold meetings " and issue, from time to time, a mini- mum price below which all members agree not to sell shingles to dealers or wholesalers," "to establish a system of prices at which shingles must be sold to retail dealers," etc., "to order the closing down of all mills, and to take other necessary steps to curtail the output of Washington red-cedar shingles, when in their judgment the supply should exceed the demand." For a second cause of action, the plaintiff in error alleged, in addition to the facts above set forth, that on or about August 15, 1899, the central committee adopted a schedule of prices for shingles, whereby the members of said associa- tion were required- to and bound themselves to sell at the price so fixed, to wit: Extra A, $1..35 per 1,000, Clears, $1.50 per 1,000, which price the plaintiff alleged was above the market price ; the mar- ket price then being Extra A, $1.20 per 1,000, and Clears, $1.35 per 1,(XK). That by reason of the said increase in prices the plaintiff was unable to carry on his business and supply the natural and ordinary demand for such shingles, or to purchase shingles at any other than the price so fixed, and he was injured thereby in his business in the a See Monopolies, vol. 35, Cent. Dig. §§ 11, 13. 196 118 FEDEBAL BEPOKTER, 121. Opinion of the Court. mm of $1,200. For a third cause of action, tlie plaintiff, in addition to the facts above alleged, set forth that on November 11, 1899, for the pnri>08e of further increasing the price of said shingles, the associa- tion ordered its mills to close down for the period of 60 days, which order was obeyed, whereby the trade in shingles was interrupted, and he was unable to purchase shingles with which to fill his orders, to his damage in the sum of $1,000. For a fourth cause of action, in addition to the facts already set forth, the plaintiff alleged that the president, vice president, treasurer, and secretary, together witli the central conuiiittee, for the purjiose of destroying the plaintiff's busi- ness, published resolutions adopted at a meeting of the central com- mittee, chai-ging the plaintiff with endeavoring to injure the market for Washington red-cedar shingles, and with having no money in- Tested in his business, and as being without credit and irresponsible, and not an honorable and legitimate dealer in such shingles, and that for the purpose of inducing all wholesale and retail dealers in shingles in the states and foieign countries afores;iid to refuse to buy shingles of the plaintiff, and to induce the manufacturers of shingles to refuse to sell him shingles, they printed and circulatoil through the mails the said resolutions, and published them in newspapers. And the plaintiff in error set forth in the complaint the names of 253 persons to whom such circulars were sent. He alleged that the result of the conspiracy was to destroy his business, to his damage in the sum of $15,000. On February 2, 1900, the defendants in the action, by their atternevs, filed a general appt^arance with the clerk on behalf of all the de- fendants nametl in the complaint. The defendants McNeeley and Beckraan subsequently appeared separately, and [122] demurred to each cause of action in the complaint for want of jurisdiction of the persons of the defendants, want of jurisdiction of the subjeorted beyond the state in which they were made." &}m 118 FEDEBAL KBPOBTEE, 126. Opinion of the Coupt. The present case differs in important aspects from both the E. C. Knight Co. Case and the Addyston Pipe & Steel Co. Case. It occupies a ground intermediate between. The combination which it presents is more than a mere combi- nation to manufacture, such as was before the court in the E. C. Knight Co. Case, and it lacks some of the featui-es of the Addyston Pipe & Steel Co. Case, in that it contains no express provision for the transaction of business across state lines; it does not by its terms refer to the sale or delivery of shingles elsewhere than in the state of Washington. But can it be said that such sales and delivery were not within its contemplation, and are not directly affected by it? The defendants in enw were engaged in manufacturing a prod- uct of which, as they well knew, more than 80 |)er cent, was to be sold, delivered, and used in states other than that of its manufacture. They were in the business of selling and delivering shingles to purchasers in other states. In fixing a list of prices they fixed it not alone for domest ic trade, but for external commerce as well. The inevitable result of the combination is to enhance tlie price and restrain the trade of shingles in all the states. In the E. C. Knight Co. Case it was held that a monopoly to manufacture did not neces- sarily affect interstate commerce. The reason for so hold- ing is apparent. From the creation of a monopoly to manufacture, it does not necessarily follow that interstate commerce in the monopolized article will in any degree be interfered with. The total production of the manufactured article and its price may, notwithstanding the monopoly, re- main unaffected. In that case it was said, "There was nothing in the proofs to indicate any intention to put a re- straint upon trade or commerce." But this cannot be said of a combination of manufacturers in one state who agree to arbitrarily increase the price and diminish the total out- put of a manufactured product which is made only in that state, but which is principally bought and used in other states. ITie intention to put a restraint upon interstate com- merce in such a case is evident, and the restraint is not indi- rect, but direct, and it is the neceasary and inevitable result of the combination. GIBBS V, M NEELEY. 203 Opinion of the Court 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 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 the agreement professes, but what it accomplishes. This com- bination must be dealt with in view of the known facts which surrounded it when it was formed, and which still attend it. It is impossible that the parties to it had in view only domestic trade. They must have had in contemplation 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 im- material that all the parties to the agreement were resi- dents of the same state. It is not the place where the parties reside that dis- [127] tinguishes the combination, and lends to it the features of a combination in restraint of interstate trade. A case in point is Chesapeake c£' O. Fuel Co. v. U. S.^ 115 Fed. 610, recently decided by the circuit court of appeals for the Sixth circuit, in which the court held illegal under the anti-trust law, both as in restraint of interstate commerce and as tending to create a monopoly, a combina- tion between a fuel company, a corporation of the state of West Virginia, and 14 corporations, persons, and firms of that state, who were independently engaged in producing coal and coke in a district on the line of a railroad. The combination stipulated that the company was to handle for a term of years the entire output of the members of the association, which was to be shipped to the western market over said road, and that it should sell the product of no competing mines, and it provided that a minimum price for the sale of the coal and coke should be fixed from time to time by a committee of the association, which price the fuel company agreed to pay, and in addition thereto agreed to obtain as large a profit as possible, and to account to the association for all thereof above a fixed sum per ton, which it was to retain as its compensation. We have^ not over- U8 FEDERAL KEPORTER, 127. Opinion of the Court looked certain expressions of the court in the E. C. Knight Co. Case, where it was said that congress did not attempt, by the act of July 2, 1890, " to limit and restrict the rights of corporations created by the states, or the citizens of the states, in the acquisition, control, or disposition of prop- erty, or to regulate or prescribe the price or prices at which such property or the products thereof should be sold " ; and where it was further said that contracts " to raise or lower prices or wages might unquestionably tend to restrain external as well as domestic trade, but the restraint would be an indirect result, however inevitable and whatever its extent, and such result would not necessarily determine the object of the contract, combination, or conspiracy." We think the court, in using this language, had in view combi- nations to raise prices which might be made without special reference to interstate trade, and which would only indi- rectly affect it. 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 its price. These features, we think, deter- mine its object, and brmg it under the condemnation of the law. The plaintiff in error is in the business of buying the manufactured article in the state where it is manufactured, and sellmg it to purchasers in other states. The acts charged against the defendants 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 interstate commerce in which he is engaged. We think the complaint states a cause of action. We find no erfor in the ruling of the circuit court in denying the motion of the plaintiff in error for an order granting the default of all the defendants in error except E. J. McNeeley and Victor H. Beckman, [128] and granting Bates & Mur- ray leave to withdraw their general appearance entered on behalf of all of the defendants in error, and to so amend GENERAL ELECTRIC CO. V, WISE. Statement of tlie Case. 205 the same as to make said appearance for and on behalf of McNeeley and Beckman only. The judgment of the circuit court is reversed, and the cause remanded for further proceedings not inconsistent with the foregoing views. [922] GENEKAL ELECTKIC CO. v. WISE. (Circuit Court, N. D. New Yorlj. January 17, 1903.) [119 Fed., 922.] Patents — Injunction against Infringement — ^Defenses. — ^That a defendant is able to respond in damages is no defense to an appli- cation for an injunction against infringement of a patent. If the patent is valid, the owner has the absolute right to be protected in the exclusive use of the invention which the law secures to him during the term of the patent.^ & Same — Violation of Anti-Trust Law. — ^That a complainant is a member of a combination in violation of the anti-trust law of July 2, 1890 [U. S. Comp. St. 1901, p. 3200], does not give third persons the right to infringe a patent of which complainant is owner, nor preclude complainant from maintaining a suit in equity to enjoin such infringement. Same — Anticipation — Prior Unsuccessful Devices. — A patent for an invention which successfully accomplishes a useful result is not void, for anticipation or prior use, because of a prior device, how- ever similar in combination or close in resemblance to that of the patent, where such prior device was not operative, and failed to produce the result sought, and which is produced by the device of the patent. Same — Infringement — Incandescent Lamp Socket. — ^The device of the Tournier patent. No. 559232, for an incandescent lamp socket, was not anticipated by either the Weston socket or the Westing- house push button socket, both of which failed to accomplish the result sought, and attained by the device of the patent Claims 1, 2, 3, and 4 construed, and held valid and infringed, on a motion for a preliminary injunction. In Equity. This is a motion in the above-entitled cause for a preliminary injunction restraining the defendant, his agents and servants, from manufacturing and selling certain a See Patents, vol. 38, Cent. Dig. § 495. 6 Syllabus copyrighted, 1903. by West Publishing Co. 206 11» FEDERAL REPORTER, 922. Opinion of the Court. electrical apparatus (sockets for incandescent lamps) al- leged to be an infringement of the Tournier patent (letters patent No. 559232), particularly claims 1, 2, 3, and 4 there- of,--a structure or invention alleged to be indispensable in the art of electric lighting. Eamuel Owen EdmondSj ioT complainant Alfred Wilkinson (William Keman^ of counsel), for de- fendant. Eay, District Judge. The complainant's claim is: That prior to April 28, 1896, Julius C. Tournier, a citizen of the state of New York, re- siding at Schenectady, was the original, first, and sole in- ventor of certain new and useful improvements in sockets for incandescent lamps, fully described in the letters patent, No. 559232, and which had not been used by others in this country before his invention or discovery thereof, and which had not been abandoned or patented or described in any printed publication in this or any foreign country before his invention or discovery thereof, or more than two years prior to his application for said letters patent, and which were not, prior to his said application, in public use or on sale in this or any other country for more than two years. That all lawful conditions having been complied with, on the 28th day of April, 1896, letters patent, in due form, were duly issued therefor to the said Tournier ; [928] complainant. General Electric Company, being the a&signee of said Tournier. That by virtue of such patent and assignment the complain- ant became and is vested with and possessed of the full and entire right, title, and interest in and to said letters patent, and all rights thereunder, and was in the full possession and enjoyment of same up to February, 1899. That the com- plainant is a large manufacturing company, engaged in manufacturing and putting sockets for incandescent lamps, employing and containing such invention, on the market and in the trade, and that same are being generally used, and that such sockets so made, sold, and delivered have been duly marked " Patented," and that complainant has invested large capital in the business, and been to great expense and GENERAL ELECTRIC CO. D. WISE. Opinion of the Court. 207 trouble in establishing the business, and that such sockets are in great demand, and complainant will reap great bene- fits if the alleged infringement by the defendant is enjoined, and suffer great loss if an injunction is not granted. That in the spring of 1899, the Anchor Electric Company under- took to and did infringe said letters patent. That this complainant brought suit against said company for said in- fringement in the United States circuit court for the South- ern district of New York, and that an answer was filed al- leging the invalidity of said patent by reason of anticipa- tion in the i)rior art, and that the production of such structure did not involve the exercise of invention, and also denying that the sockets made and sold by said Anchor Elec- tric Company constituted an infringement. That proofs were taken, the action tried and duly submitted, and a decree duly made and entered fully establishing the validity of such patent. The final decree was made Januar}^ 24, 1902. Another suit and decree of similar or the same import against New England Electric Company are also alleged. It is then alleged that the defendant, well knowing all such facts, with- out license or allowance and against the will of the com- plainant, has made and sold, and is making and selling, or causing to be made, used, and sold, sockets for incandes- cent lamps, employing and containing the said invention, and particularly those set forth in claims 1, 2, 3, and 4 of said letters patent, and is threatening to continue such in- fringement; that said defendant has been notified of such infringement; and that his continuance of such acts en- courage others to infringe likewise. The defendant claims that this invention was old, — prior invention, — and relies on the Weston socket and the West- inghouse push button socket, and says he has not infringed, and that his block differs more from Tournier's than Tour- nier's does from Weston's. The defendant then alleges that the complainant does not come into court with " clean hands " ; that it and all other important socket manufactur- ers in the country organized an illegal association three or more years ago, by the terms of which they bound themselves to raise the price of sockets, and not to sell at a lower price than agreed, in direct opposition to the anti-trust law of July 208 119 FEDERAL REPORTER, 923. Opinion of the Court 2, 1890 (26 Stat. 209 [U. S. Comp. St. 1901, p. 3200]). By implication, rather than directly, it charges collusion be- tween the complainant and Anchor Electric Company in the action referred to, and finaUy says no injunction should be granted, because the defendant is a leading manufacturer of Watertown, N. Y., amply able to respond in damages, and that the com- [924] plainant should resort to that remedy even if this court finds an infringement. No time will be used in answering this suggestion, except to say that, if the complainant's letters patent are valid, it is entitled to protection by injunction against all the world. No other person or company can use its property of this description without its consent, and relegate it to an action for damages. If this patent is valid, the complainant has the absolute right, under the laws of our country, to the use of the patent, and to designate the parties upon whom it will confer the right to use it. Again, in such a case, an action for damages does not afford an ample or a full and complete remedy. Such a remedy is inadequate. In a sense, the granting of a patent confers a monopoly on the inventor 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 pat- ent, and is an encouragement to the development of invent- ive skill and genius. 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. Ultimately, these inventions are surrendered to the public, and it is only just that for a time the inventor reap the inwards of study and industry. Grant v. Raymond, 6 Pet. 218, 241, 8 L. Ed. 376 ; Bement v. Harroio Co,, 186 U. S. 88, 89, 22 Sup. Ct. 747, 46 L. Ed. 1058. The cry of monopoly' therefore, has no place in the discussion of the question of infringement or priority of invention. It is difficult to understand how or why a violation of the Sherman anti- trust law by this complainant, if there has been such a viola- tion, confers any right on the defendant to infringe this pat- ent. That act points out the penalties for its violation, and it is not understood that such law denies the grantees of pat- ents the protection of the law because they may be violating GENERAL ELECTRIC CO. V, WISE. 209 Opinion of the Court. some statute. However that may be the evidence falls far short of establishing such a violation by this complainant. The testimony on that subject is squarely contradicted. An individual cannot confiscate the property or property right of a corporation on the ground it has violated that act. Soda Fountain Co, v. Green (C. C.) 69 Fed. 333; Columbia Wire Co. v. Freeman Wire Co. (C. C.) 71 Fed. 302; Bement V. Harrow Co,, 186 U. S. 70, 88-91, 22 Sup. Ct. 747, 46 L. Ed. 1058. Harrow Co. v. Qnkk (C. C.) 67 Fed. 131, cannot be accepted as authority on this question. We come then to the consideration of the questions whether this Tournier patent, No. 559,232, issued April 28, 1896, is a new and valid invention, and whether the defend- ant has infringed and is infringing same. Claims 1, 2, 3, and 4 of the said patent, now particularly in question, are as follows: "(1) In an incandescent lamp socket, an insnlating block, circuit terminals, and a circuit-ccmtrolling key, with a metallic tip and oi)er- ating spring mounted thereon, in combination with a metallic socket mounted on the insulating block; the metallic tip of the controlling key being adapted to make contact with the shell and close the circuit "(2) In an incandescent lamp socket, as a new article of manufac- ture, an insulating block, formed with passages in its eilges for the circuit wires, a [925] transverse passageway for the insertion of a controlling circuit key shaft, its bearings, and a controlling spring, a cavity at one end for the location of a rotary metallic tip of the key shaft, and a cavity at the other end for the location of one of the binding screws and brackets, a cavitj' at one side of the block for the location of the other binding screw and bracket, ind a contact arm as herein set forth. "(3) In an incandescent lamp socket, an insulating block, formed with a transverse cavity, a rotary circuit-controlling key, and a spring and contact tip located in this cavity, binding screws located in cavities in the insulating block, one connected with the key shaft and the other with a metallic contact arm projecting over the top of the block, and a shell or socket mounted on the top of a block, and adapted to complete the circuit with a lamp by contact of the contact tip therewith. "(4) In a socket for incandescent lamps, the combination with the insulating base thereof and a key having a contact tip of a lamp- socket cylindrical shell mounted on one end of said base, and so arranged in relation to the key tip that the latter contacts with the lamp-socket cylindrical shell to close the c. 'cuit, as set forth." In General Electric Co. v. Anchor Electric Co. (and Henry G. Issertel as agent and manager of said company), reported (C. C.) 106 Fed. 503, the validity of this patent,— particularly of claims 1, 2, 3, and 4, above quoted, and also 21220— VOL 2—07 m- -14 210 119 FEDEBAL BEPORTER, 925. Opinion of the Court claim 9, was directly in issue; and it was held by Shipman, Circuit Judge, after full and careful consideration: "The Toiirnier patent No. 559232, for a socljet for incandescent lamps, the base of which consists of a substantial block of porcelain or other insulating material, in which the contact key and circuit terminals are incased, covers a device which, as a complete struc- ture, was not anticipated, and, in view of its immediate general adoption and commercial success, cannot be denied patentable inven- tion. Claims 1, 2, 3, and 4 construed, and held infringed. Claim 9, which is limited to an insulating ring, used between the outer shell and the socket held void for lack of invention, in view of the prior art" In that decision, as far as it covers the precise questions now presented, this court fully concurs. It is not necessary to travel over the same ground, and present the same facts and reasoning in different language. But the respondent here, James B. Wise, as he alleges, raises new questions, and presents new evidence, upon which this court is asked to find and hold that this invention, covered by the claims quoted, was anticipated and not patentable, and, failing here, claims the defendant's socket is as much or more a new invention as the complainant's, and that same is so widely different as not to constitute an infringement. The defend- ant says : " We oppose this motion on new evidence of the highest importance, and offer entirely new defenses: First. On the Weston socket hav- ing a cylindrical block of insulation, identical in every essential with Toumier's, for it has the transverse passageway, the outside cavities, and the wire grooves or passages in its edges. Second. On the West- inghouse push button socket in public use and on sale in 1893 and before, which shows a porcelain block of similar construction, hav- ing a transverse passageway to receive and to protect the switch mechanism." It is not discovered from the record that Judge Shipman had these two sockets, or a description of them, before him when he passed on the question of anticipation or prior in- vention and use. This alleged new evidence will be consid- ered on the theory that it was not presented to the court on the trial of the Anchor Electric Co. Case, and might have changed the result there, and may change the result here from [f)26] what it necessarily would be, should this court follow the decision of Judge Shipman. Two or more persons may use the same material, existing in precisely or substantially the same form, experimenting: and making combinations, and having in mi^d the constru^ GENEBAL ELECTEIC CO. V, WISE. Opinion of the Court 211 tion of a new and a useful invention that will produce a given result. The one or ones who fail invent nothing, but the one who succeeds may have invented a patentable thing; and, if a patent is granted, he is entitled to its protection and benefits. Those who failed, or others, cannot, by taking the same materials and making substantially the same combina- tions, varying the form or arrangement, or both, in nones- sentials, but aiming at and producing the same results, claim either priority of invention, prior use, or new invention. Such facts will not defend the charge of infringement. And even if in such experimentation certain imperfect results were obtained, that fact does not establish priority of inven- tion. " If the patented invention is not operative, it cannot be infringed by one that is." Royer v. Coupe (C. C.) 29 Fed. 358, 39 O. G. 239. It would seem to follow that how- ever close the resemblance between some prior alleged inven- tion, even when put in actual use, and the patented invention, if such alleged prior invention was not operative, and failed to produce the beneficial results sought and produced by the patent, it could not constitute prior invention. In such case the patented invention cannot be regarded as old. In General Electric Co, v. Anchor Electric Co.^ supra. Judge Shipman says: " The insulating block of the patent as constructed and arranged to become the receptacle of the various metallic parts, was a novelty, and in its peculiar characteristics it had no predecessor." It is now insisted that the Weston socket and the Westing- house push button socket are each substantially identical with the Tournier socket, and that therefore the Tournier insulating block had not one, but two, predecessors. A care- ful examination of both, and a comparison of the Tournier block with the Weston block, not only fail to disclose iden- tity, but even similarity, when we consider the purposes for which devised, and the ends to be accomplished. Both are, in general form. Cylindrical. Each has a transverse passage- way, but these are neither identical, nor, mechanically speak- ing, similar. The differences in the two are marked and well defined, and absolutely essential differences. They are so marked that it does not occur to the observer that the de- signer of the Tournier block had the Weston block before 212 119 FEDERAL BEFOBTEE, 926. Opinion of the Court. him, or in mind, when planning his. In the Tournier block the transverse passageway givas neither ingress on the one side, nor egress on the other, to its full depth. At one side this passageway is so widened as to form a chamber oil either side of tlie main passagew^^', while at the other side a part of the block is entirely cut away for about one-third the diameter of the block, and to a depth within one-eighth or one- fourth of an inch from the bottom of the transverse. passageway. Upon one side a recess is cut, which reaches to within about one-eighth of an inch of the passage referred to. There are other peculiarities, not necessary to describe, but all these peculiarities have their necessary uses in the assembled socket. In the Weston |927] block, which was of wood, the transverse passageway extends from circum- ference to circumference unbroken, is much wider, is of uni- form width from circumference to circumference and of uniform depth, giving ingress and egress to its full depth, and on one side is cut through to the bottom. Upon the out- side of the cylinder we find no less than eight grooves and recesses vertical and diagonal for the arrangement and ap- plication of the electrical appliances, none of which are found in the Tournier block. AYhen we come to consider the mode of using these blocks, the ideas of means of appli- cation and use, and the results, we find that the functions are not the same, the modes of operation are radically unlike, the results not the same, and the ideas of means for the ac- complishment of satisfactory results are radically different, or at least radically defective, in the assembled Weston socket. The Weston socket was not satisfactory or even safe. The Tournier device was carefully and skillfully wrought out by a change in the character of the insulating base, as well as by the modes of working the same, and also in many minor details and appliances, all brought into harmony and harmonious action, and producing satisfactory results, at which many had aimed, but which all had failed to accomp- lish. It is impossible to find that the Weston socket was, in a legal sense, as applied in these cases, the predecessor of the Tournier socket. Coming to the consideration of the Westinghouse push GENERAL ELECTRIC CO. V. WISE. 213 Opinion of the Court. button socket, we find far less resemblance and similarity. It is not necessary to go into detail. In both the Star and Weston sockets, the metallic switeh mechanism, which is in the circuit where the current of electricity is being fed to the lamp, is arranged in a cavity or a passageway on the underside of the block, and consequently there is no solid insulation between these electrified parts and the metallic supporting cap of the socket. The result of this, or one result, is the tendency to short-circuiting and burning out, and the resulting fire hazard. In the Tournier socket, the metallic switch mechanism is arranged in a passageway on the upper side of the block, and we have a solid wall of in- sulation interposed between these electrified parts and the supporting cap of the socket. Short-circuits and burning out are thus precluded between such parts and the cap. In the Tournier socket, we find the contact key and circuit ter- minals encased within the base, and accidental contact with the exterior metallic shell is thus prevented. In the AVeston socket, one of the terminals — one of the parallel contact strips on the block (and this corresponds to the screw shell ele- ment) — is always in the circuit and electrified, whether the lamp is in place and the current turned on or not. Here is found, again, the evil of short-circuiting, with outside metal- lic bodies, and also a liability to accidental shock when handling the socket and when replacing or removing the lamp. With the Tournier socket, all this is remedied, as the situation is the reverse. Again, in the Tournier struc- ture we find the threaded shell disconnected from the circuit except when the lamp is in place or the key closed. To bring about these results, necessary to the success of the art, re- quired inventive skill. The Tournier structure accomplished what all others had failed to bring about, by new ideas of means, by the use of new means, or, to some [928] extent, old appliances improved, applied, and combined in a new and an effective and beneficial way. We come, then, to consider the alleged infringement. Each and every essential element of the Tournier patent, as de- scribed or mentioned in the claims quoted, or its exact equiva- lent, is used by the defendant in what we will term the " Wise 214 119 FEDEKAL BEPOBTER, 928. OpiBion of the Court Socket." Placing the various appliances, making up the assembled sockets, side by side, and then taking the assem- bled sockets as a whole, we find that there is no substantial difference, except in the mere form of two or three of the parts. In short, the Wise socket is a copy of the Tournier. The compared sockets perform the same functions by the same modes of operation. The effects are the same; the modes of operation are the same, substantially ; and the same is true of the means employed. In some respects we find variations in size, shape, and arrangement, but these are evi- dently studied, not for the sake of improvement, but to avoid the charge of infringement. The socket of the Anchor Electric Co. held to be an infringement, and therefore en- joined (106 Fe(^. 503), differs but slightly from the Wise socket, here in question. The defendant here, in some re- spects, has varied from the Anchor Electric and New England infringements, but in so doing has made the simi- larity of his socket to the Tournier patent the more appar- ent. In some respects he has varied the form of the insu- lating block by changing the location, size, and shape of certain cavities and grooves ; but all these changes are imma- terial, as they do not change the principles of operation, the means, or the results, and the claims of the Tournier patent (referred to and here in question) do not confine the com- plainant to any precise form or size. The combinations in the assembled socket do not present any substantially differ- ent combination. As stated, the combinations are substan- tially identical. So far as there has been a substitution of elements, they were well-known equivalents. The defendant has produced this Wise socket extensively and secretly. He claims the right to continue its manufacture and sale. Un- less enjoined, he will do this, and most seriously injure the complainant. This injury cannot he measured satisfactorily by any judgment for damages, even if the defendant shail be found responsible at the end of the protracted litigations sure to foUow a denial of this application. The conclusion is that, until the trial and determination of this action, the defendant should be enjoined as prayed. It is so ordered. UNITED STATES V, NORTHERN SECURITIES CO. 215 Syllabus. [721] UNITED STATES v, NORTHERN SECURI- TIES CO. ET AL.« (Circuit Court, D. Minnesota, Third Division. April 9, 1903.) [120 Fed., 721.] Monopolies — Combination in Restraint of Intebstate Commerce — Construction of Anti-Tbust Law. — The generality of the language used in the anti-trust act of 1890 (Act July 2, 1890, 26 Stat 209, c. 647 [U. S. Comp. St. 1901, p. 3200]), declaring illegal "every contract, combination or conspiracy in restraint of trade or com- merce among the several states or with foreign nations," indicates the purpose of Congress to include in the prohibition every com- bination which directly and substantially restricts interstate com- merce, whatever its form.6 Same — Application of Act to Interstate Carriers. — The anti-trust act (Act July 2, 1890, 26 Stat. 209, c. 647 [U. S. Comp. St. 1901, p. 3200]) applies to interstate carriers of freight and passengers, and any contract or combination which directly and substantially re- stricts the right of such a carrier to fix its own rates, independently of its natural competitors, places a direct restraint upon interstate commerce, in that it tends to prevent competition, and is in viola- tion of the act, whether the rates actually fixed be reasonable or unreasonable. Same — Corporation to Acquire Stock of Competing Railroads — Legality. — The real control of a corporation is in its stockholders, who have the power to determine all important corporate acts and policies, and any contract or combination by which a majority of the stock of two railroad companies owning and operating parallel and competing interstate lines of road is transferred to a corpora- tion organized for the purpose of holding and voting the same, and receiving the dividends thereon, to be divided pro rata among the stockholders of the two companies so transferring their stock, di- rectly and substantially restricts interstate trade and commerce, and is in violation of the anti-trust act (Act July 2, 1890, 26 Stat 209, c. 647 [U. S. Comp. St 1901, p. 3200]), since it destroys any motive for competition between the two roads ; and it is immaterial that each company has its own board of directors, which nominally directs its operations and fixes its rates. Corporations — Powers — New Jersey Statutes. — ^The language of the New Jersey enabling act (Laws 1899, p. 473), authorizing the organization of corporations "for any lawful purpose," imposes a limitation upon the powers of any corporation organized there- under, however broad may be the terms of its articles of incorpora- tion. o Affirmed by Supreme Court (193 U. S., 197). See p. 338. » Syllabus copyrighted, 1903, by West Publishing Co. 216 120 FEDERAL HEPORTEB, 721. Statement of tlie Case. Same— Interstate Commebce.— A state cannot Invest a corporation organized under its laws with the power to do acts In the corporate name which wonld operate to restrain interstate commerce. COlfSTlTUTIONAL I^W—RlOHT OF PRIVATE CONTRACT— LIMITATION BY Interstate Commerce Clause.— The ccmstltutional guaranty of lib- erty to the Individual to enter into private cou tracts is limited to some extent by the commerce clause of the Constitution, and Con- gress may. in the exercise of the power conferred by such clause, prohibit private contracts which operate to directly and substan- tially restrain Interstate commerce*. Monopolies— Combination in Restraint of Interstate Commerce- Suit TO EN.IOIN.— The fact that the purpose of an Illegal combina- tion between stockholders of two railroad companies operating parallel and competing interstate lines, to secure unity of interest and control of such companies, and to prevent competition, has been accomplished by the formation of a corporation which has acquired the ownership of a majority of the stock of each of the companies, cannot be urged to defeat a suit by the United States to restrain the exercise of the power so illegally acquired [722] by the corporation through such combination, as imposing a restraint upon interstate commerce in violation of the anti-trust law (Act July 2, imo, 26 Stat. 200, c. 647 [U. S. Comp. St. 1901, p. 3200]). Same— Defenses— QiTESTioNs of Public Policy.— Where the effect of a combination is to directly prevent competition between two parallel and naturally competing lines of railroad engaged in inter- state business, it is in restraint of Interstate commerce, and a vio- lation of the anti-tniKt act (Act July 2, 18JM), 26 Stat 209, see 647 [U. S, Comp. St. 1901, p. 3200]). and the court, in a suit to enjoin It as such, cannot consider tlie question whether the combination may not be of greater benefit to the public than competition would be; that being a question of public policy, to he determined by Con- Ib Equity. Phlhmder C. Knox, Attorney General, D. T. Watson^ Special Counsel, James M. Beck and TF. A. Day. Assistant Attorneys General, and John M. Freemanj for the Fnited States. George B. Yomtg and John If. Griggs^ for the Northern Securities Coei})any. George B. Young, for James J. Hill, William P. Cloiigh, D. Willis James, John S. Kennedy, and George F. Baker. M. D. Groeer, for the Great Northern Railway Company, UNITED STATES V, NORTHERN SECURITIES CO. 217 ^ Opinion of the Court C. ^y. Bunn, for the Northern Pacific Railway Company. Francis Lynde Stetson and David Willcox, for defendants Morgan, Bacon, and Lamont. Before Caldwell, Sanborn, Thayer, and Vandevanter, Circuit Judges. Thayer, Circuit Judge. This is a bill, exhibited by the United States, to restrain the violation of an act of Congress approved July 2, 1890, 26 Stat. 209, c. 647 [U. S. Comp. St. 1901, p. 3200], entitled "An act to protect trade and commerce against unlawful restraints and monopolies," which is commonly termed the "Sherman Anti-Trust Act." The case was heard before a Circuit Court composed of the four Circuit Judges of the Eighth Circuit, pursuant to the provisions of a recent act of Congress, approved February 11, 1903, which requires such cases to be heard " before not less than three of the Circuit Judges" of the Circuit where the suit is brought, when the Attorney General files with the clerk of the court wherein the case is pending, a certificate that it is one of " general public importance." Such a certificate has been filed, and in accordance with the mandate of the statute the case "has been given precedence over others and in every way expedited." From admissions made by the pleadings, as well as from much oral testimony, we reach the following conclusions as respects matters of fact : Two of the defendants, namely, the Northern Pacific Rail- way Company and the Great Northern Railway Company, are the owners, respectiveh^, of lines of railroad which extend from the cities of Duluth, St. Paul, and Minneapolis, in the state of Minnesota; thence across the continent to Puget Sound. These roads are, and in public estimation have ever been regarded as, parallel and competing lines. For some years, at least, after they were built, they competed with each other actively for transcontinental and interstate traffic. [723] In the spring of the year 1901 they united in pur- chasing about 98 per cent, of the entire capital stock of the Chicago, Burlington & Quincy Railway Company, and be- 218 120 FEDEBAL BEPOBTBB, 723. Opinion of the Court came joint sureties for the payment of bonds of the last- named company, whereby the purchase was accomplished, which were to run 20 years, and bear 4 per cent, interest per annum. The amount of stock so acquired was of the par value of about $107,000,000, and, as it was purchased at the rate of $200 per share, the bonded indebtedness of the two companies was thus increased to the extent of $200,000,000. Subsequent to the acquisition of the stock of the Burling- ton Company, and in the summer of the year 1901, certain large and influential stockholders of the Northern Pacific and Great Northern Companies, who had practical control of the two roads, and who have been made parties defendant to the present bill, acting in concert with each other, con- ceived the design of placing a very large majority of the stock of both of the last-named companies in the hands of a single owner. To this end these stockholders arranged and agreed with each other to procure and cause the formation of a corporation under the laws of the state of New Jersey, which latter company, when organized, should buy all or at least the greater part of the stock of the Northern Pacific and Great Northern Companies. The individuals who con- ceived and promoted this plan agreed with each other to exchange their respective holdings of stock in the last-named railroad companies for the stock of the New Jersey company, when the same should be fully organized, and to use their influence to induce other stockholders in their respective companies to do likewise, to the end that the New Jersey company might become the sole owner of the whole, or at least a major portion, of the stock of both railroad compa- nies. In accordance with this plan the defendant the Northern Securities Company (hereafter termed the " Securities Com- pany ") was organized under the laws of the state of New Jersey on November 13, 1901, with a capital stock of $400,- 000,000, that sum being the exact amount required to pur- chase the total stock of the two railroad companies at the price agreed to be paid therefor. When the Securities Com- pany was organized, it assented to and became a party to the scheme that had been devised by its promoters before it be- came a legal entity. UNITED STATES V. NORTHERN SECURITIES CO. 219 7 J Opinion of the Court Very shortly after its organization the Securities Com- pany acquired a large majority of all the stock of the North- ern Pacific Company at the rate of $115 per share, paying therefor in its own stock at par. At the same time it ac- quired about 300,000 shares of the stock of the Great North- em Company from those stockholders of that company who had been instrumental in organizing the Securities Com- pany, paying therefor at the rate of $180 per share, and using its own stock at par to make the purchase. The Securities Company subsequently made further pur- - chases of stock of the Great Northern Company at the same rate, and in about three months had acquired stock of the latter company, amounting at par to about $95,000,000, using for that purpose its own stock to the amount of about $171,- 000,000. The Securities Company was enabled to make the subsequent purchase of stock from stocldiolders [724] of- the Great Northern Company not immediately concerned in the organization of the Securities Company by the advice, pro- curement, and persuasion of those stocldiolders of the Great Northern Compan}^ who had been instrumental in organ- izing the Securities Company, and had exchanged their own stock for stock in that company shortly after its organiza- tion. At the present time the Securities Company is the owner of about 96 per cent, of all the stock of the Northern Pacific Company, and the owner of about 76 per cent, of all the stock of the Great Northern Company. The scheme which was thus devised and consummated led inevitably to the following results : First, it placed the con- trol 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 companies; second, it destroyed every motive for competition between two roads engaged in interstate trafiic, which were natural competitors for business, by pooling the earnings of the two roads for the common benefit of the stockholders of both cx)mpanies ; 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 deliberately, we must conclude that those who conceived and executed the plan aforesaid in- tended, among other things, to accomplish these objects. y / i 120 FEDEBAL BEPORTER, 724. Opinion of tlie Court. Tlie general question of law arising upon this state of facts is whether such a combination of interests as that above described falls within the inhibition of the anti-trust act or is beyond its reach. The act brands as illegal " every con- tract, combination in the form of trust or otherwise, or con- spiracy in restraint of trade or commerce among the several states or with foreign nations." Learned counsel on both sides have commented on the general language of the act, doing so, of course, for a different purpose, and the general- ity of the language employed is, in our judgment, of gi^eat significance. It indicates, we think, that Congress, being unable to foresee and describe all the i^lans that might l)e formed and all the expedients that might be resorted to to place restraints on interstate trade or commerce, deliberately employed words of such general import as, in its opinion, would comprehend every scheme that might be devised t(» accomplish that end. ^Vliat is commonly termed a " trust " was a species of com- bination 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 fonned, was careful to declare that a combina- tion in any other form, if in restraint of intei^state trade or commerce— that is, if it directly occasioned or effected such restraint— should likewise be deemed illegal, :Moreover, in cases arising under the act, it has been held by the highest judicial authority in the nation, and its opinion has been reiterated in no uncertain tone, that the act applies to interstate carriers of freiglit and passengers as well as to all other ix*rsons, natural or artificial; that the words "in restraint of trade or conmierce" do not 1725] mean in unreasonable or partial restraint of trade or commerce, but any direct restraint thereof; that an agree- ment between competing railroads, which requires them to act in concert in fixing the rate for the carriage of passengers or freight over their respective lines from one state to another, and which, by that means, restricts temporarily the right of UNITED STATES V. NORTHERN SECURITIES CO. 221 J Opinion of the Court. any one of such carriers to name such rates for the carriage of such freight or passengers over its road as it pleases, is a contract in direct restraint of commerce within the meaning of the act, in that it tends to prevent competition; that it matters not whether, while acting under such a contract, the rate fixed is reasonable or unreasonable, the vice of such a contract or combination being that it confers the power to establish unreasonable rates, and directly restrains commerce by placing obstacles in the way of free and unrestricted com- petition between carriers who are natural rivals for patron- age; and, finally, that Congress has the power, under the grant of authority contained in the federal Constitution, to regidate commerce, to say that no contract or combination shall be legal which shall restrain interstate trade or com- merce by shutting off the operation of the general law of competition. United States v. Trans-Missouri Freight Ass''n^ ir>G U. S. 290. 17 Sup. Ct. 540. 41 L. Ed. 1007 : United States V. Joint Trafjie Ass'n. 171 IT. S. 505, 19 Sup. Ct. 25, 43 L. Ed. 259; Addyston Pipe di Steel Co. v. Umted States. 175 U. S. 211, 20 Sup. Ct. 96, 44 L. Ed. im. Taking the foregoing propositions for granted, because they have been decided by a court whose autliority is con- trolling, it is almost too plain for argument that the defend- ants would have violated the anti-trust act if they had done, through the agency of natural persons, what they have ac- complished through an artificial person of their own creation. That is to say, if the same individuals who promoted the Securities Company, in ])ursuance of a previous understand- ing 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 all the shareholders of the two companies who had transferred their stock — the result would have been a combination in direct restraint of interstate commerce, be- cause it would have placed in the hands of a small coterie of men the power to suppress competition between two com- / J 222 120 FEDERAL BEPORTEB, 725. Opinion of the Court. peting interstate carriers, whose lines are practically par- allel. It will not do to say that, so long as each railroad company has its own board of directors, they operate independently, and are not controlled by the owner of the majority of their stock. It is the common experience of mankind that the acts of corporations are dictated and that their policy is con- trolled by those who own the majority of their stock. In- deed, one of the favorite methods in these days, and about the only method, of obtaining control of a corporation, is to purchase the greater part of its stock. It was the method. pursued by the Northern Pacific and Great Northern Com- panies to obtain control of the Chicago, Burlington & Quincy Kailroad; and, so [726] long as directors are chosen by stockholders, 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 masttery and control of the corporation was distinctly recognized and declared in Pearmll 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 di Trust Co, V. New York <& Northern Railway Co,, 150 K Y. 410, 425, 44 N. E. 1043, 34 L. E. A. 76; People ex rel, V. Chicago Gas Trust Co., 130 111. 268, 22 N. E. 798, 802, 8 L. R. A. 497, 17 Am. St. Eep. 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 cannot be held applicable to cases arising under the anti-trust act, when the point in- volved is whether the ownership of all of the stock of two competing and parallel railroads vests the owner thereof with the power to suppress competition 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 own- ership. UNITED STATES V. NORTHERN SECURITIES CO. 223 Opinion of the Court What has been done through the organization of the Se- curities Company accomplishes 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 maintaining 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 if the two railroad compa- nies were consolidated under a single charter. / It is manifest, therefore, that the New Jersey charter is about the only shield which the defendants can interpose between themselves and the law. The reasoning which led to the acquisition of that charter would seem to have been that while, as individuals, the promoters could not, by agree- ment between themselves, place the majority of the stock of the two competing and parallel railroads in the hands of a single person or a few persons, giving him or them the power to operate the roads in harmony, and stifle compe- tition, yet that the same persons might create a purely fictitious person termed a corporation, which could neither think nor act except as they directed, and, by placing the same stock in the name of such artificial being, accomplish the same purpose. The manifest unreasonableness of such a proposition, and the grave consequences sure to follow from its approval, compel us to assume that it must be unsound, especially when we reflect that the law, as admin- istered by courts of equity, looks always at the substance of things — at the object accomplished, whether it be lawful or unlawful — rather than upon the particular devices or means by which it has been accomplished. [727] So far as the New Jersey charter is concerned, the question, broadly stated, which the court has to determine, is whether a charter granted by a state can be used to de- feat the will of the national legislature as expressed in a law relating to interstate trade and commerce over which Congress has absolute control. Presumptively, at least, no charter granted by a state is intended by the state to have that effect or to be used for such a purpose; and in the pres- 224 120 FEDERAL REPOKTER, 727. / Opinion of the Court. ent instance it is clear that the state of New Jersey did not intend to grant a charter under cover of which an object denounced by Congress as unlawful, namdy, a combination conferring the power to restrain interstate commerce might be formed and maintained because the enabling act under which the Securities Company was organized expressly de- clares that three or more persons may avail themselves of the provisions of the act and *' become a corporation for any lawful purpose." Laws N. J. 1899, p. 473. This language is not merely perfunctory. It means, obviously, that, what- ever powers the incorporators saw fit to assume, they must hold and exercise for the accomplishment of lawful objects. The words in question operate, therefore, as a limitation upon all the powers enumerated in the articles of associa- tion which were filed by the promoters of the Securities Company, so that, however extensive and comprehensive th('s(' powers may seem to be, the state of New Jersey has said, '' You shall not exercise them so as to set at defiance any statute lawfully enacted by the Congress of the United States, or anv statute lawfullv enacted bv anv state wherein you see fit to exercise your powers." But aside from this view of the subject, if the state of New Jersey had imdertaken to invest the incorporators of the Securities Company with the power to do acts in the corporate name which would operate to restrain interstate csommerce, and for that reason could not be done by them acting as an association of individuals, then we have no doubt that such a grant would have been void under the provisions of the anti-trust act, or at least that the charter could not be permitted to stand in the way of the enforce- ment of that act. The power of Congress over interstate commerce is su- preme, far-reaching, and acknowledges no limitations other than such as are prescribed in the Constitution itself. Gth- hons V. Ogden, 9 Wheat. 1, 197, 6 L. Ed. 23; Comity of Mobile V. EimhaU, 102 U. S. 691, 696, 697, 26 L. Ed. 238; Champion v. Ames (decided Feb. 23, 1903) 23 Sup. Ct. 321, 47 L. Bd. . No legislation on the part of a state can curtail or interfere with its exercise; and, in view of repeated decisions, no one can deny that it is a legitimate UNIIED STATES V, NORTHERN SECURITIES CO. 225 . Opinion of the Court / exercise of the power in question for Congress to say that neither natural nor artificial persons shall combine or con- . spire in any form whatever to place restraints on inter- state trade or commerce. United States v. Trans-Missouri Freight Association, 166 U. S. 290, 17 Sup. Ct. 540, 41 L. Ed. 1007; United States v. Joint Traffic Association, 171 U. S. 505, 19 Sup. Ct. 25, 43 L. Ed. 259; Addyston Pipe c& Steel Co, V. United States, 175 U. S. 211, 20 Sup. Ct. 96, 44 L. Ed. 136. It is urged, however, that such a combination of adverse interests as was formed, and has been heretofore described, was lawful, and not prohibited by the anti-trust act, be- cause such restraint upon interstate trade or commerce, if any, as it imposes, is indirect, collateral, [728] and remote, and hence that the combination is not one of that character which ih^ Congi-ess of the United States can lawfully for- bid. The following cases are relied upon to sustain the contention : United States v. E, C, Knight Co., 156 U. S. 1, 15 Sup. Ct. 249, 39 L. Ed. 325; Hopkins v. United States, 171 U. S. 578, 19 Sup. Ct. 40, 43 L. Ed. 290; Anderson v. United States, 171 U. S. 604, 19 Sup. Ct. 50, 43 L. Ed. 300. / It is pertinent, therefore, to inquire in what way the exist- ing combination that has been formed does affect interstate commerce. It affects it, we think, by giving to a single cor- porate entity, or, more accurately, to a few men acting in concert and in its name and under cover of its charter, the power to control all the means of transportation that are owned by two competing and parallel railroads engaged J in interstate commerce ; in other words, iho^ power to dictate every important act which the two companies may do, to compel them to act in harmony in establishing interstate rates for the carriage of freight and passengers, and gener- ally to prescribe the policy which they shall pursue. It matters not, we think, through how many hands the orders come by which these aims are accomplished, or through what channels. The power was not only acquired by the combination, but it is effectually exercised, and it operates directly on interstate commerce, notwithstanding the man- 21220— VOL 2—07 M 15 Ir^ 226 120 FEDEBAL REPORTEK, 728. Opinion of the Court ner of its exercise, by controlling the means of transporta- tion, to wit, the cars, engines, and railroads by which per- sons and commodities are carried, as well as by fixing the price to be charged for such carriage. . The cases cited above, and on which reliance is placed to sustain the view that the restraint imposed is merely indirect, remote, incidental, or collateral, are not relevant, for, as was fully explained in Addyston Pipe S Steel Co. v. United States, 175 U. S. 211, 238, 240, 243, 20 Sup. Ct. 96, 44 L. Ed. 136, one of these cases (United States v. E\ €. Knight Com- pany) dealt only with a combination within a state to obtain . a practical monopoly of the manufacture of sugar, and it was J held that the combination only related to manufacture, and not to commerce among the states or with foreign nations; that the fact that an article was manufactured for export to another state did not make it an article of interstate com- merce before transportation had been begim, or necessarily subject it to federal control ; and that the effect of the com- bination then under consideration on interstate commerce was at most only incidental and collateral. But while comment- ing on its previous decision in United States v. E. C. Knight Oo,j the court took occasion to say, in Addyston Pipe <& Steel €o. V. United States, 175 U. S. 246, 20 Sup. Ct. 96, 44 L. Ed. 136, that, when a contract is made for the sale and delivery of an article in another state, the transaction is one of inter- state commerce, although the vendor has also agreed to manufacture the article so sold, and that combinations to control and monopolize such transactions would be in re- straint of interstate commerce. In the other cases (Hopkins v. United States and Ander- son v. United States) it was held that the business of the members of the Kansas City Live Stock Exchange, which was undeF oonsideratioii by the court, was not interstate commerce and that tlie act did not affect them, and that, even if they were so affected, the particular agree- [729] ment which w^as involved did not operate as a restraint of inter- state commerce. We fail to find in either of these cases any suggestion that UNITED STATES V. NORTHERN SECURITIES CO. 227 / Opinion of the Court. a combination such as the one in hand, the object and neces- sary effect of which is .to give to a single person or to a coterie of persons full control of all the means of transportation owned by two competing and parallel lines of road engaged in interstate commerce, as well as the power to ^x the rate for the transportation of persons and property, does not directly and immediately affect interstate commerce. No combination, as it would seem, could more immediately affect it. Again, it is urged tentatively that, if the existing combina- tion which the government seeks to have dissolved is held to be one in violation of the anti-trust act and unlawful, then the act unduly restricts the right of the individual to make contracts, buy and sell property, and is invalid for that reason. With reference to this contention it might be sug gested (as it has been by the government) that, as the situs of the stock which the Securities Company has bought is in the states of AVisconsin and Minnesota, which respectively chartered the Northern Pacific and Great Northern Com- panies, and as the stock owes its being to the laws of those states, and as each state has forbidden the consolidation of competing and parallel lines of railroad therein, and has likewise prohibited any consolidation of the "stock and franchises " of such roads, the contention last mentioned is entitled to little consideration in the case at bar. But waiving and ignoring this suggestion, the argument advanced in behalf of the. defendants is met and answered, so far as this court is concerned, by the decision in Addyston Pipe <& Steel Co. v. United States, 175 U. S. 228, 229, 20 Sup. Ct. 96, 102, 44 L. Ed. 136, where it is said, inter alia : If 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 de- clare void and prohibit the performance of any contract between in- dividuals 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 assent to the correctness of the proposition that the constitutional guaranty of liberty to the individual to enter into private contracts, liuiits 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 confined to the AZo 120 FEDERAL REPORTER, 729. Opinion of the C!ourt UNITED STATES V. NORTHERN SECURITIES CO. 229 mere libeity of |»ersons. but included, among others, a right to pntei Into certain classes of contracts for the purpose of enabling the citizen to carry on his business. ♦ ♦ * ^ut it has never been, and In our opinion ought not to be held, that the word included the right of an individual to enter into private (tjntracts upon all subjects, no matter what their nature, and wholly irrespective, among other things, of the fact that they would, if i)erformed, result in the regu- lation of interstate commerce, and in violation of an act of Congress upon that subject. The provision of 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 coumierce among the states. On the contrarv we think the provision regarding the libertj^ 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 comi)rises the righ to enact a law prohiliiting the citizen iVom entering into those private contracts which directly and substautiallv, and not merely indirectly, remotely, incidentally, and collaterallv,* regulate [7301 to a greater or less degree conunerce among the states. We cannot so enlarge the scoije of the language of the Constitution regarding the liberty of the citizen as to hold that it includes, or that it was intended to include, a right to make n iHiitract which in fact restr-iined and regulated interstate commerce, notwithstanding Congress * nro- ceedmg under the constitutional provision giving to it the i>ower to regulate that commerce, had luohibited such contracts." These observations, as a matter of course, preclude further controversy over the power of Congress to limit to some ex- tent the right to make contracts when enacting laws for the regulation of commerce between the states. , Learned counsel for the defendants further contend as ^ follows: That the anti-trust act was not intended to include or prohibit combinations looking to the virtual consolidation of parallel and competing lines of railroad, although such a combination operates to stifle competition; that no relief can be granted to the government in this instance, because the combination or conspiracy of which it complains has accomplished its purpose, to wit, the organization of the Securities Company and the lodgment of the majority of the stock of the two railroads in its hands before the bill was filed; and, finally, that the combination proven was one *' formed in aid of commerce and not to restrain it;" in other words, that it was one formed to enlarge the volume of inter- state traffic and thus benefit the public. The court cannot assent to either of these propositions. The first, we think, is clearly untenable for the reasons already stated and fuUy disclosed in the decisions heretofore cited. Opinion of the Court V 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 possession of the power that it has acquired, with full freedom to exercise it. Obviously the act, when fairly interpreted, will bear no such construction. Congress aimed to destroy the power to place any direct restraint on interstate trade or com- merce, 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 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 Company made itself a party to a combination in restraint of interstate commerce, that antedated its organization, as soon as it came into ex- istence, doing so, of course, under the direction of the very individuals who promoted it. Relative to the third contention, which has been pressed with great zeal and ability, this may be said: It may be that such a virtual consolidation of parallel and competing lines of railroad as has been effected, taking a broad view of the situation, is beneficial to the public rather than harm- ful. It may be that the motives which inspired the combina- tion by which this end was accomplished were wholly laud- able and unselfish ; that the combination was formed by the individual defendants to protect great interests which had been committed to their charge; or it may be that the com- bination was the initial [731] and a necessary step in the accomplishment of great designs, which, if carried out as they were conceived, would prove to be of inestimable value to the communities which these roads serve and to the country at large. We shall neither affirm nor deny either of these proposi- tions, because they present issues which we are not called upon to determine, and some of them are issues which no 230 120 FEDERAL REPORTER, 731. ^ Opinion of the Court court is empowered to hear or decide, involving, as they do, questions of public policy which Congress must determine / It is our duty to ascertain whether the proof discloses a combination in direct restraint of interstate commerce ; that is to say, a combination whereby the power has been acquired to suppress competition between two or more competing and parallel lines of railroad engaged in interstate com- nierce. If it does disclose such a combination— and we have little hesitation in answering this question in the affirma- tive—then the anti-trust act, as it has been heretofore inter- preted by the court of last resort, has been violated, and the government is entitled to a decree. / A decree in favor of the United States will accordingly be entered to the following effect : Adjudging that the stock of the Northern Pacific and Great Northern Companies, now held by the Securities Company, was acquired in virtue of a combination among the defendants in restraint of trade and commerce among the several states, such as the anti-trust act denounces as illegal ; enjoining the Securities Company from acquiring or attempting to acquire further stock of either of said companies ; also enjoining it from voting such stock at any meeting of the stockholders of either of said railroad companies, or exercising or attempting to exercise any control, direction, supei-vision, or influence over the acts of said companies or either of them by virtue of its holding such stock; enjoining the Northern Pacific and Great Noi-thern Companies, respectively, their officers, direct- ors, and agents, from permitting such stock to be voted by the Northern Securities Company, or any of its agents or attorneys on its behalf, at any corporate election for directors or officers of either of said companies ; and likewise enjoining them from paying any dividends to the Securities Company on account of said stock, or permitting or suffering the Securities Company to exercise any control whatsoever over the corporate acts of said companies, or to direct the policy of either; and, finally, permitting the Securities Company to return and transfer to the stockholders of the Northeni Pacific and Great Northern Companies any and all shares of stock of those companies which it may have received from J UNITED STATES V. NORTHERN SECURITIES CO. 231 Opinion of tlie Court such stockholders in exchange for its own stock, or to make such transfer and assignment to such person or persons as are now the holders and owners of its own stock originally issued in exchange for the stock of said companies. THE DECREE. It was ordered, adjudged, and decreed as follows, to wit: That the defendants above named have heretofore entered into a combination or conspiracy in restraint of trade and commerce among the several states, such as an act of Con- gress, approved July 2, 1890, 26 Stat. 209, c. 647 [U. S. Comp. St. 1901, p. 3200], entitled "An act to protect trade and commerce against unlawful restraints and monop- 1733] olies," denounces as illegal; that all of the stock of the Northern Pacific Kailway Company and all the stock of the Great Northern Railway Company now claimed to be held and owned by the defendant the Northern Securities Company was acquired and is now held by it in virtue of such combination or conspiracy in restraint of trade and commerce among the several states; that the Northern Se- curities Company, its officers, agents, servants, and employes, be, and they are hereby, enjoined from acquiring or attempt- ing to acquire further stock of either of the aforesaid rail- way 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 meet- ing of the stockholders of either of the aforesaid railway companies, and from exercising or attempting to exercise any control, direction, supervision, or influence whatsoever over the acts and doings of said railway companies, or either of them, by virtue of its holding such stock therein ; that the Northern Pacific Eailway 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 attorneys or agents, at any corporate election for directors or officers of either of the aforesaid railway companies, and • that they, together with their officers, directors, servants, and 232 120 FEDERAL REPOBTER, 132. Opinion of the Court agents, be likewise enjoined and respectively restrained from paying any dividends to the Northern Securities Company on account of stock in either of the aforesaid railway com- panies which it now claims to own and hold ; and that the aforesaid railway companies, their officers, directors, serv- ants, and agents, be enjoined from permitting or suffering the Northern 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 construed as pro- hibiting the Northern Securities Company from returning and transferring to the stockholders of the Northern Pacific Railway Company and the Great Northern Railway Com- pany, respectively, any and all shares of stock in either of said railway companies which said the Northern Securities Company may have heretofore received from such stock- holders in exchange for its own stock; and nothing herein contained 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 now be the holders and owners of its own stock origi- nally issued in exchange or in payment for the stock claimed to have been acquired by it in the aforesaid railway com- panies. It is further ordered and adjudged that the United States recover of and from the defendants its costs herein ex- pended, the same to be taxed by the clerk of this court, and have execution therefor, Henry C. Caldwell, Presiding Judge, Walter H. Sanborn, Amos M. Thayer, Circuit Judges, BOARD OF TRADE V, CHRISTIE GRAIN & STOCK CO. 233 Opinion of the Court [608] BOAED OF TRADE OF CITY OF CHICAGO v, CHRISTIE GRAIN & STOCK CO. ET AL.« (Circuit Court, W. D. Missouri. Marcli 19, 1903.) [121 Fed., 608.] Exchanges — Contract for Distribution of Quotations — Legality OF Restrictions. — ^A contract betAveen a board of trade, having a property right in the quotations made on its exchange, and a tele- graph company, relating to the transmission and distribution of such quotations by the latter, is not in violation of the anti-trust act of 1890 (Act July 2, 1890, 26 Stat. 209 [U. S. Comp. St 1901, p. 3200]), as in restraint of trade and commerce, because of a provision that the quotations shall only be furnished to persons who sign an agree- ment to the effect that they shall not be used in the conduct of a bucket shop. 6 In Equity. On final hearing. For former opinion, see 116 Fed. 944. Hook, District Judge. The only question of consequence presented at the final hearing which was not fully argued at the preliminary hear- ing is whether the arrangement between the board of trade and the telegraph companies is violative of the provisions of the Sherman act (Act July 2, 1890, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200]). This proposition may be roughly stated as follows: The board of trade, having a property right in its quotations, contracted with the telegraph companies for their transmission and distribution by the latter; such trans- mission and distribution to be confined to persons who would sign an application embodying an agreement to the effect that the quotations should not be used in the conduct of an unlaw- ful business, to wit, a bucket shop. Is such an arrangement oAn injunction was granted by the Circuit Court July 5, 1902 (116 Fed., 944), but it was not based in any way upon the anti-trust law, and therefore the decision is not reprinted. On final hearing, March 19, 1903, the court considered the matter from the standpoint of the anti-trust law and adhered to its original conclusions (121 Fed., 608). See above. The decree was reversed by the Circuit Court of Appeals, Eighth Circuit (125 Fed., 161), but not upon any ground related to the anti-trust law. Decision not reprinted. The action of the Circuit Court of Appeals was reversed by the Supreme Court, and the in- junction allowed (198 U. S., 236). See p. 717. 6 Syllabus copyrighted, 1903, by West Publishing Co. 234 122 FEDERAL REPORTER, U5. Syllabus. an unlawful combination in restraint of trade and commerce, within the meaning of the act of July 2, 1890, popularly known as the '* Sherman Anti-Trust Act " ? I am of the opinion that it is not. Let a final decree be prepared in conformity with the above, and the conclusions heretofore announced in this case. [115] METCALF v, AMERICAN SCHOOL FURNI- TURE CO. ET AL.« (Circuit Court, W. D. New York. March 7, 1903.) ri22 Fed.. 115.] Equity— Plea— SETTiifG Down fob Hearing.— Where a plea has been set down for argument by complainant, the facts stated therein must be tal^en as true.6 CoRPOBATioNs— Action by Stock holdeb.— Where the action of a cor- poration in maljing a transfer of all of its property was illegal, and it is under the control of the directors who made such transfer, a stockholder may maintain a suit on behalf of the corporation to set aside the transfer. Same—Powers— Sale of All Its Property.- A corporation organ- ized under the laws of West Virginia has power, under Code W. Va. 1899, c. 53, § 56, to sell and transfer all of its property and discon- tinue its business by the action of the holders of a majority of the stock, taken at a general stockholders' meeting. Same— Ratification of Unauthobized Sale.— Where a corporation has power to transfer all of its property by a vote of a majority of its stock, such a transfer, made by its directors without actual fraud, may be validated by a subsequent ratification by the stockholders. Same— Rights of Minobity Stock holdebs -Effect of Statute.— Where the charter and by-laws of a corporation and the statutes of the state under which It is organized, vest in a majority of the stockholders the right to sell the property of the corporation and to discontinue its corporate existence, every stockholder takes his stock subject to such right; and a minority stockholder must sub mit to the action of the majority in exercising such power, in the absence of fraud. Same — Validity of Sale — Combination in Restbaint of Tbade. The sale and transfer by a corpomtion of its property and good will « Demurrer to bill as originally filed sustained by Circuit Court (108 Fed., 909). See p. 75. Decree affirmed by Circuit Court of Ap- peals, Second Circuit (113 Fed., 1020), memorandum decision (see p. Ill), and plaintiff allowed 30 days in which to amend. Amended bill dismissed (122 Fed., 115). » Syllabus copyrighted, 1903, by West Publishing Co. METCALF V, AMERICAN SCHOOL FURNITURE CO. 235 Opinion of the Court. to another corporation, where such sale was within its powers, cannot be repudiated on the ground that the purchaser acquired the property for the purpose of obtaining a monopoly of the business, and in pursuance of an illegal combination in restraint of trade.» [116] Same — Secbet Pbofit Obtained by Dibectoes. — The fact that directors of a corporation, on making a sale of its property by a secret agreement with tlie purchaser, obtained for themselves a portion of the consideration paid for the property, does not afford ground for a rescission of the sale at suit of the corporation or a stockholder; the remedy being by suit against the directors for an accounting. Same — Rescission — Executed Contbact. — A contract by a corpora- tion for the sale of. its property cannot be rescinded by the corpora- tion, or at suit of a stockholder suing in its right, on the ground that it was ultra vires, where it has been fully executed by a trans- fer of the property and the receipt of the price. Same — Payment fob Pbopebty Sold — Acceptance of Stock in An- otheb Cobpoeation. — Where a corporation is given by its charter the right to dispose of its property and to discontinue its corporate existence, it has the power to accept stock in another corporation in payment of the purchase price of its property, provided the trans- action is bona fide. Same — Constbuction of Statute. — The provisions of Code W. Va. 1899, c. 52, §§ 3, 4, which prohibit the purchase of stocks, bonds, or securities by a corporation, except when taken in payment of a debt, or as security therefor, apply only while the corporation is a going concern, engaged in carrying on the business for which it was created. I Same — Injunctive Relief — Anti-Tbust Law. — ^The only party en- titled to maintain a bill in equity for injunctive relief for violating the provisions of the anti-trust act is the United States attorney, at the instance of the Attorney-General.] In Equity. On demurrers and pleas. Seymour, Seymour <& Harmon, for complainant. Davies, Stone <& Auerhach (Br^ainard Tolles, of counsel), for defendants American School Furniture Co., Oakman, and Turnbull. Cox, Keman d; Kimball {Maulshy Kimball, of counsel), for defendants Buffalo School Furniture Co. et al. Hazel, District Judge. This cause was heretofore considered by this court (108 Fed. 909), and the demurrers then interposed were sustained « Validity of monopolistic contracts as affected by public iwlicy, see note to Cravens v. Carter-Crtime Co., 34 C. C. A. 486. Zoo 122 FEDEBAL BEFOBTEB, 116. Opinion of tbe Court on the ground of multifariousness. In the former bill of complaint, relief was sought in equity by complainant as a minority stockholder, suing for herself and in behalf of other stockholders of defendant Buffalo School Furniture Com- pany, and to recover treble damages, under the anti-trust act of July 2, 1890 (26 Stat. 209 [U. S. Comp. St. 1901, p. 3200]). It was held that such damages were only recover- able in an action at law by the complainant, and inured to her sole benefit, while the equitable relief sought by the bill was for the benefit of the corporation in whose behalf the suit was brought, and therefore inconsistent remedies were averred in the bill. The order sustaining the demurrers to the original bill recites that they are sustained solely and only upon the ground of multifariousness, although the pre- cise questions here involved were also then considered. The opinion of the court, however, merely indicated an impression that the bill, with the inferences deduced therefrom, suffi- ciently averred a conspiracy in restraint of trade and com- merce to enable the complainant to give evidence upon the trial in support of the charge. Subsequently the parties ap- peared before the court in settlement of the terms of the order, with the result that the restrictive order sustaining the demurrer because of multifariousness, only, was entered. On appeal the Circuit Court of Appeals affirmed the de- f 117] cree of the Circuit Court, with leave to amend the bill. 113 Fed. 1020. The precise questions now considered not having been determined on the former hearing, as appears by the order sustaining the demurrer because of multifari- ousness, the contention of the complainant that the defend- ants' demurrers were overruled upon every other ground therein stated cannot be maintained. The amended bill which is now before me has eliminated the demand for treble damages, but in all other respects the relief demanded is prac- tically similar to that of the original bill. All the defend- ants, except Oakman and Turnbull, have demurred to part, answered to part, and all the defendants have filed pleas in bar to part of the bOl now considered. The grounds of demurrers may be subdivided and briefly summarized into four general grounds, as follows: (1) Want of equity ; (2) complainant has no legal capacity to sue ; (3) UNITED STATES V, SWIFT & CO. 237 Syllabus. that the cause assigned for equitable relief does not entitle complainant to the character of the relief prayed for; (4) defect of parties plaintiff or defendant, in that there are in- terested stockholders, without whose presence relief ought not to be granted.** « * # « * [126] I* do not understand that it is claimed by com- plainant that this court has the power to take cognizance of the alleged illegal combination because of the provisions of the anti-trust act of 1890 (26 Stat. 209 [U. S. Comp. St. 1901, p. 3200]). It has been many times decided, and no longer admits of any question or doubt, that the only party entitled to maintain a bill in equity for injunctive relief for vio- lating the provisions of the anti-trust act is the United States* attorney, at the instance of the Attorney General. Pidcock v, Harrington (C. C.) 64 Fed. 821; Southe?^ Indiana Ex- press Co, V. U. S, Co. (C. C.) 88 Fed. 659; Connolly v. Union Seiver Pipe Co,^ supra^ * ♦ « He « It follows from the foregoing that the bill must be dis- missed, with costs, and the pleas of the various defendants allowed. The complainant, however, is entitled to take issue, if she shall see fit, upon the facts stated in the plea, by filing replication within thirty days from the entry of an order in accordance with this opinion. [529] UNITED STATES v. SWIFT & CO. ET AL,» (Circuit Court, N. D. Illinois, N. D. April 18, 1903.) [122 Fed., 529.] Intekstate Commebce Act — Commerce. — Commerce 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 inter- It is not deemed advisable .to reprint the entire opinion, as very little of it relates to the anti-trust law. This may be seen by consult- ing the syllabus, which is printed in full. 6 Decree modified and affirmed by Supreme Court (196 U. S., 375). See p. 641. 238 122 FEDERAL REPOBTEB, 629. Statement of the Case. vening acts, instrumentalities, and dealings— that directly bring about the sale or exchange. Same— Restbaixt of Trade.— Restraint of trade is not dependent upon any consideration of reasonableness or unreasonableness in the combination averred, nor is it to be tested by the prices that result from the combination. The statute has no concern with prices, but looks solely to competition and to the giving of com- petition full play by making illegal any effort at restriction upon competition. Same.— The agreement of the defendants to refrain from bidding against each other in the purchase of cattle is combination in restraint of trade; so also their agreement to bid up prices to stimulate shipments, intending to crease from biddmg when the ship- ments have arrived, and the same result follows from the combina- tion of defendants to fix prices upon and restrict the quantities of meat shipped to their agents or their customers. Bemg restric- tion upon competition, such agreements are combination in restraint of trade.a The defendants are seven corporations, one copartnership, and twenty-three other persons, and the petition is fairly summarized as follows : * Ist. "That at the time of its filing they had been and then were engaged m the business of buying live stock at divers points through- out the United States where sttx-kyards existed, and slaughtering the same at such places in different states and converting the same into fresh meats for human consumption. 2nd. " That they bad been and then were engaged In the business of selling such fresh meats at the places where prepared, to dealers and consumers in divers other states and territories of the United States and in foreign countries, and shipping the same when so sold from said places of preparation to such dealers and consumers, pursuant to such sales, and were thus engaged in trade and commerce among the several states and territories and with foreign nations. 3rd. "That they had been and then were engaged in the business of shipping such fresh meats from said points where so prepared by common carriers to the respective agents of the defendants located at and near the principal markets of such meats in other states and territories and in foreign countries for sale by those agents in those markets to dealers and consumers, which they there sold through their agents and were thus engaged in trade and conmierce among the several states and territories and with foreign nations 4th. *• That of the total volume of trade and commer^ among the said states and territories in fresh meats the said defendants to- gether controlled about sixty per cent. 5th. "That as to such trade and commerce among the several states and -territories and foreign nations in fresh meats, the said defendants should, and but for the acts herehiafter complained of would be and remain in competition with each other. «th. "That said defendants, in violation of the act of congress of July 2, 1890, c. 647, 2G Stat. 209 [U. S. Comp. St. 1901, p. 3200]' and « Syllabus copyrighted, 1903, by West Publishing Co. UNITED STATES V. SWIFT & CO. Statement of the Case. 239 in order to restrain competition among themselves as to the pur- chase of livestock necessary to the production of the meats produced by them, have engaged in, [530] and intended to eontmue an unlaw- ful combmatiun and conspiracy between themselves for directing and requiring their respective purchasing agents at the said several stock- yards and markets where they customarily purchase such livestock, which livestock is produced and owned principallv in other states and territories of the United States, and shipped by the owners thereof to such stockyards for competitive sale, to refrain from biddmg against each other when making purchases of sufh livestock and by these niivms inducing and compelling the o\>-ners of such Iivestoclv to sell the same at less prices than they would receive if such biddmg were competitive; which combination and conspiracy IS m restraint of trade and commerce among the several states etc 7th. "That said defendants, in further violation of said act, and in order to further restrain competition among themselves, which would otherwise exist, as to the purchase of livestock necessary to the production of the meats produced by them, have engaged in and intend to continue an unlawful combination and conspiracy among themselves for bidding up through their agents the prices of livestock for a few days at said stockyards, thereby inducing ship- pers from other states and territories to make large shipments of such ivestock to such stockyards, and then refrain from bidding no such livestock, and thereby obtaining such livestock at prices much less than it would bring in the regular way of trade. 8th. "That said defendants, in further violation of said act, and in order to restrain and destroy competition among themselves as to such trade and commerce and to monopolize the same, have en- gaged in and intend to continue an unlawful combination and con- spiracy to arbitrarily, from time to time, lower and fix prices, and maintain uniform prices at which they will sell, directlv or through their respective agents, such fresh meats to dealers and consumers throughout said states and territories and foreign countries. That the arbitrary raising, lowering, fixing, and maintaining of sfiid prices is effected through the action of divers of their agents in secretly holding periodical meetings, and there agreeing upon the prices to be adopted by said defendants respectivelv in such trade and commerce, which said prices are notified by letters and telegrams and are adhered to in their sales, which are made directlv, and among other ways ; and by collusively restricting and curtailing the quantities of such meats shipped by them in pursuance of such com- bination, and imposing against each other divers penalties for anv deviations from such prices, and establishing a uniform rule for the giving of credit to dealers throughout the said states and territories and foreign countries, and for the conduct of the business of such ^r.r^'^'TJ*^ penalties for violations thereof, by notifying each other of the delinquencies of said dealers, and keeping what is commonly knov.'u as a 'black list' of such delinquents, and refusing to ^11 meats to any of such delinquent dealers. f>.^^^* 'A^\ ^u® ^^^^ defendants, in violation of the provisions of ^mhh!?f ^ ' ^""^^ engaged in and intend to continue an unlawful ^ot?t« nl ^°'^ conspiracy, to direct and require their respective agents at and near many of the markets for such fresh meats throughout the United States and territories to arbitrarily make ?n.h ^rf . "^^^T* ''^^\^^^ ^'*'* ^^'"^^^^ ^^^ deliveiT, upon making such sales to dealers and cunsumers in those markets of the meats ffjr/^ ^ ^^S^- through said agents by the said defendants respec- fi^ll ™ }^^^'^ ^y^vtil points of preparation, thereby increas^g the charges for such meats to said dealers and consumers 240 122 FEDEKAL BEPOKTEB, 530. Statement of tlie Case. lOtli. " That notwithstanding the common carriers by railroad sub- ject to the provisions of the laws of the United States for the regu- lation of commerce, have established and publislied their schedule of rates, fares and charges for the transportation of livestock, and for the transiwrtation of meats, which are the onlv lawful rates for such transportation, the sjiid defendants, intending therebv to monopolize the commerce aforesaid, and prevent competition therein, have made and are making agreements and arrangements with divers officers and agents of such common carriers whereby the said defendants were to receive, and will continue to receive, by means of rebates and other devices, unlawful rates for such transportation less than the lawful rates, which rebates they divide, among themselves [iSl] and will continue to do so unless restrained by the injunction of this court, which is a scheme to monopolize, and also a combina- tion and conspiracy in restraint of trade and commerce among the several states and territories and with foreign nations. 11th. " That the said defendants now are, and for vears past have been in combination and conspiracy with each other and with the railroad companies and others to complainant unknown, to obtain a monoiioly of the supply and distribution of fresh meats throughout the United States and its territories and foreign countries, to that end the defendants do and will artificially restrain such commerce and put in force abnonnal, unreasonable and arbitrary regulations for the conduct of their own and each other's business, effecting the same from the shipment of the livestock from the plains to the final distribution of the meats to the consumer. All to the injury of the people and in defiance of law." To this petition five of the defendant corporations have filed joint and several demurrers, the grounds of which are as follows : " The bill of complaint does not allege any contract, combination or conspiracy in restraint of interstate or foreign trade or commerce within the meaning of said act of congress of July 2, 1890, c. 647. 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200]. , . ^i. ^o "The bill of complaint does not allege any acts of defendants monopolizing, or attempting to monopolize, or combining or con- spiring to monopolize any part of such trade or commerce within the meaning of said act. " If the act of congress in question should be given a constniction which would sustain this bill of complaint, such act would violate the provisions of the Constitution of the United States " Said bill is multifarious. "There is a misjoinder of causes of action and of persons in said bill, as alleged in said demurrers. " The said bill of complaint and the allegations and charges therein are not sufficiently definite or specific, but are too general and in- definite." The hearing is on these demurrers and on motion for an injunction. John K, Richards^ S. H, Bethea, and W. A. Day, for the United States. John S. Miller, and MerriU Starr, for defendants. UNITED STATES V. SWIFT & CO. 241 Opinion of the Court After the foregoing statement of facts, Grosscup, Circuit Judge, delivered the opinion : Commerce, briefly stated, is the sale or exchange of com- modities. 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 interven- ing 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. Brennan v. Titusville, 153 U. S. 289, 14 Sup. Ct. 829, 38 L. Ed. 719. The whole transaction from initiation to culmina- tion 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 to stat^— 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 consti- tutes the transaction interstate commerce. That is an ad- junct only, essential to commerce, but not the sole test. [632] The underlying test is that the transaction, as an en- tirety, including 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 is the center. With this definition in mind, let us see what the transaction made out in the petition is. For the purpose of clear exposition, the facts set forth in the petition should be separated into two groups— those that are intended to bring the transaction within ih^ body of interstate commerce; and those that are intended to fix upon such transaction the character of unlawful combination and conspiracy. Shorn of verbiage, and of immaterial accesso- ries, the first group may be stated as follows : The defend- ants controlling sixty per cent, of the trade and commerce in fresh meats in the United States, buy, in the course of 21220— VOL 2—07 M 16 242 122 FEDEBAL KEPORTEB, 532. Opinion of tlie Court. their business, livestock shipped from points throughout the United States; which, having been converted into fresh meats, is sold again by them at the places where prepared, to dealers and consumers in other states; or is sold through their agents, located in other states, to dealers and con- sumer in the states where the agents are located. The ship- ment in the first class of sales is made directly from the places where the meat is prepared to the dealers and consum- ers 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 two- fold. It reaches backward to the purchase of cattle that come to defendants from states other than those in which defend- ants manufacture; and it reaches forward to the sale of the m6ats, after conversion, to parties dealing with respect there- to from states other than the state of the defendants; fol- lowed by shipments into the other states. Each of these transactions constitute, in my judgment, interstate com- merce. The purchase of cattle shipped habitually from other states to the markets where defendants purchase, in the expectation that the purchase will be made by the slaughter companies, is an act of interstate commerce. Hopkins' Case, 171 U. S. 590, 19 Sup. Ct. 40, 43 L. Ed. 290. It is none the less interstate commerce merely because the local incidents or facilities for such purchase are to be re- garded as outside the interstate character 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 livestock 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 in- fluenced, and to a large extent brought about, by the char- acter of the purchase. UNITED STATES V. SWIFT & CO. Opinion of the Court. 243 [533] The purchase, the shipments, and the transporta- tion, 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 diflPerent states, they stamp the transaction — ^not all its incidents, but its essential body — as a transaction in interstate commerce. Coming, now, to the other branch of the transaction — the sales by the defendants — a like result follows. Unques- tionably it is interstate conmierce 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 trans- portation in furtherance of the exchange, includes a state other than the one from which defendants deal. I 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 j^rincipal at the place where the ex- change takes place; but the transaction, as a commercial en- tity, 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 condi- tions of this case were reversed, so that defendants were in- voking the shelter, instead of seeking to escape, the obliga- tions of the commerce clause, federal law would be found equal to the protection asked. I need not dwell on the contention of defendants that the fresh meats in the hands of the agents are subject to ordi- nary state taxation, or upon the cases cited in this connec- tion. It is enough to say that because a thing can be taxed by the state, it does not follow that it lies outside the body of interstate commerce ; for commerce, interstate as well as domestic, is subject to the police and taxing power of the state, so long as the exercise of such power does not interfere with the national government's exclusive right of regulation. Addyston Pipe & Steel Company v. United States, 175 U. S. 211, 20 Sup. Ct. 96, 44 L. Ed. 136 ; Austin v. Tennessee, 179 U. S. 349, 21 Sup. Ct. 132, 45 L. Ed. 224; Prentice and Egan 122 FEDERAIi REPORTER, 533. Opinion of the Court on the Commerce Clause of the Constitution, p. 27. Nor shall I differentiate the Knight Case, 155 U. S. 685, 15 Sup. Ct. 248, 39 L. Ed. 310 ; the Hopkins Case, and other cases urged upon me as applicable to the case under consid- eration. A study of these cases will show that they are not in conflict with the views already expressed. The next inquiiy is this: Do the facts set forth in the sec- ond grouping, fix upon the transaction, even though the transactions be within the body of interstate commerce, the character of unlawful combination. The averments of the petition in this respect may be summarized as follows : That the defendants are engaged in an unlawful combination and conspiracy under the Sherman act in (a) directing and re- quiring their purchasing agents at tlie markets wliere the livestock was customarily purchased, to refrain from bid- ding against each other when making such purchases; (b) in bidding up through their agents, tlie prices of livestock for a few days at a time, to induce |ofi4] large sliipments, and then ceasing from bids, to obtain livestock thus shipped at prices much less than it would bring in the regular way; (c) in agreeing at meetings between them ui>on 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 eliarges for cartage for delivery, thereby increasing to dealers and con- sumers the charges for such meats; and (e) in making agreements with the transportation companies for rebates and other discriminative rates. Ko one can doubt that these averments state a case of com- bination. Whether the combination be imlawful or not, de- pends on whether it is in restraint of trade. The general meaning of that term is no longer open to inquiry. It has been passed upon carefully by the Supreme Court in the Freight Association Case, 166 13. S. 290, 17 Sup. Ct. 540, 41 L. Ed. 1007, and in the Traffic Case, 171 U. S. 558, 19 Sup. Ct. 25, 43 L. Ed. 259, where the whole subject was a year later elaborately re-argued. I will not extend into this opinion oven a summary of these cases. It is clear from them that restraint of trade is not dependent upon any consideration of UNITED STATES V, SWIFT & CO. Opinion of the Court. 245 reasonableness or unreasonableness in the combination averred ; nor is it to be tested by the prices that result from the combination. Indeed, combination that leads directly to lower prices to the consumer may, within the doctrine of these cases, even as against the consumer, be restraint of trade; and combination that leads directly to higher prices, may, as against the producer be restraint of trade. The statute, thus interpreted, 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 competition. Whatever combination has the direct and nec- essary effect of restricting competition, is, within the meaning of the Sherman act as now interpreted, restraint of trade. Thus defined, there can be no doubt that the agreement of the defendants to refrain from bidding against each other in the purchase of cattle, is combination in restraint of trade ; so also their agreement to bid up prices to stimulate ship- ments, intending to cease from bidding when the shipments have arrived. 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 cus- tomers. Such agreements can be nothing less than restric- tion upon competition, and, therefore, combination in re- straint of trade; and thus viewed, the petition, as an entirety, makes out a case under the Sherman act. The demurrer challenges the petition for multifariousness and misjoinder of parties; and challenges each paragraph of the petition, standing separately, as insufficient to con- stitute a case under the Sherman act. But the paragraphs can not properly be looked upon as separate causes of action. They relate clearly to each other, thus constituting a whole that is the sum of the parts; and thus regarded, are free from the objections indicated. It may be true that the way of enforcing any decree under this petition is beset with difficulties, and that a literal en- forcement may result in vexatious interference with defend- ant's affairs. But in the inquiry [535] before me, I am not at liberty to stop before such considerations. The Sher- man act, as interpreted by the Supreme Court, is the law of 246 123 FEDERAL BEPORTER, 692. Syllabus. tb© land, and to the law as it stands both court and people must yield obedience. The demurrer is overruled, and the motion for preliminary injunction granted. [602] STATE OF MINNESOTA v, NORTHERN SE- CURITIES CO. ET AL.« (Circiiti Court, D. Minnesota, Third Division. August 1, 1903.) [123 Fed., 692.] Monopolies — Combinations in Restraint of Trade and Commerce — Minnesota Statute. — The anti-trust law of Minnesota (Laws 1899, p. 487, c. 350), making unlaw^ful any contract or combination in restraint of trade or commerce within the state, is in substantially the same language as the Sherman anti-trust law (Act July 2, 1890, c. 647, 26 Stat. 209 [U. S. Comp. St. 1<)01, p. 3200] ), and must receive a similar construction. Following the decisions of the United States Supreme Court construing the latter act, the Minnesota law applies to railroads, and any contract or arrangement between railroad companies for the purpose and having the effect of preventing com- petition by fixing rates to be maintained by the parties is in viola- tion of its provisions; but contracts or combinations which do not directly and necessarily affect transportation, or rates therefor, are not in restraint of trade or commerce, nor within the statute, even though they may remotely and indirectly appear to liavo some prob- able effect in that direction.^ Same — Railroads — Stock-Holding Corporation. — ^A holding corpora- tion organized by individual stockholders of two railroad companies, owning and operating substantially parallel and competing lines of railroad within the state of Minnesota, for the sole purpose of acquiring, by the exchange of its own stock therefor, stock of the two companies, and holding and voting the same, but having no power or franchise to operate a railroad, is not in violation of the Minnesota anti-trust law (Laws 1899, p. 487, c. 359), which provides that "any contract, agreement, arrangement, or conspiracy, or any combination in the form of a trust or otherwise ♦ * * which is in restraint of trade or commerce within this state, * ♦ ♦ is hereby prohibited and declared to be unlawful," where the purpose of its promoters was thereby to acquire and retain in the same hands a majority of the stock of one or both companies, to insure « Reversed by Supreme Court, with direction that the case be re- manded to the State court (194 U. S., 48). See p. 533. » Syllabus copyrighted, 1903, by West Publishing Co. MINNESOTA V, NORTHERN SECURITIES CO. Opinion of the Court 247 uniformity of policy and stability of management, although it in fact acquired the controlling interest in both, in the absence of any evidence that it ever exercised its power to prevent competition between the two roads, or to interfere in any manner with the fixing of rates by either company. Same — Enforcement of Stati:te — Jurisdiction of Equity. — ^The anti-trust law, of Minnesota (Laws 1899, p. 487, e. 359) imposes severe penalties for its violation, but contains no provision for restraining or enjoining violations, and without such statutory authority a court of equity has no jurisdiction to enjoin an act which constitutes a criminal offense. Railroads — Minnesota Statute against Consolidation — Stock- Holding Corporation. — The Minnesota statute prohibiting the con- solidation of parallel and competing lines of railroad (Laws 1874, p. 154, c. 29, and subsequent enactments of the same tenor), which provides that " no railroad corporation or the lessees, purchasers or managers of any railroad corporation shall consolidate the stock, property or franchise of such corporation [693] with, or lease or purchase the works or franchise of, or in any way control any other railroad corporation owning or having under its control a parallel or competing line," does not apply to a corporation organized by Individual stockholders of two companies, owning parallel and com- peting lines of railroad, for the sole purpose of acquiring, holding, and voting stock of the two companies, in the formation of which neither company had any part, and which has no powers or fran- chise as a railroad company. Such a corporation is merely an investing stockholder, and not a railroad corporation, nor a lessee, purchaser, or manager of a railroad corporation, within the terms of the statute ; and, although it may acquire and own a majority of the stock of both companies, it does not thereby effect a consolida- tion, where the companies still maintain their separate organiza- tions, with separate boards of directors and managing officers. In Equity. On final hearing. W, B, Douglas^ M. D, Mimn, and Geo. P, Wilson, for com- plainant. Young <& Lightner, for Northern Securities Co. and J. J. Hill. C. W. Bunn, for Northern Pacific Ry. Co. M. D. Grover, for Great Northern Ry. Co. LocHREN, District Judge. This cause came on for final hearing at St. Paul June 5, 1903, upon the bill, answers, and testimony taken and on file. 248 123 FEDERAL REPORTEB, 693. Opinion of the Court That the cause is one of equitable cognizance, and that this court has rightful jurisdiction of the same, was conceded by counsel The cause was fully argued, and upon full consid- eration the following facts appear and are established : First. The defendant the Great Northern Eailway Com- pany is a Minnesota corporation, which has, as stated in the bill, acquired the property rights and franchises, and the management and control, of various specified railway cor- porations. The defendant the Northern Pacific Kailway Company is a Wisconsin corporation, which filed its articles of incorporation in Minnesota, and in 1896 purchased and acquired all the railroad properties, railway lines, right of way, rolling stock, and franchises of the earlier Northern Pacific Kailroad Company, and has also, as stated in the bill, acquired the property rights and franchises and the manage- ment and control of other specified railway corporations. The said Great Northern and Northern Pacific Companies now, and for many years, severally own, operate, and main- tain a main line of railway extending from the cities of Duluth, St. Paul, and Minneapolis westward, across the states of Minnesota, North Dakota, Montana, Idaho, and Washington, to Puget Sound, with many branches along the route of each, and that said two systems of railroad are, as to each other, parallel and competing lines of railway, at least between cities and towns reached or traversed by the lines of both of said two railways, among which are Duluth, St. Paul, Minneapolis, Anoka, St. Cloud, Moorehead, East Grand Forks, and several other towns in the state of Minne- sota, and that a reasonable degree of competition for the traffic between places so situated on both said lines of railway has existed in the past yeai*s. Second. The state of Minnesota has heretofore made large grants of its swamp lands in aid of the construction of por- tions of the railways of each of said companies, and, in the support of its various state institutions-educational, elee- mosynary, and otherwise—transports an- [694] nually large quantities of goods, stores, and supplies upon said two rail- roads; and large quantities of wheat and other products owned and produced by citizens and inhabitants of Minne- sota are annually carried over said railroads from competi- MINNESOTA V. NORTHERN SECURITIES CO. Opinion of the Court. 249 tive places in the western part of the state to Duluth, St. Paul, and Minneapolis. Third. In 1874 the Legislature of the state of Minnesota enacted a statute known as chapter 29, p. 154, of the General Laws of 1874, as follows : "Section 1. No railroad corporation, or the lessees, purchaser or manager of any railroad corporation, shall consolidate the stock, property or franchise of such corporation with, or lease or purchase the works or franchise of, or in any way contol any other railroad corporation owning or having under its control a parallel or compet- ing line; nor shall any officer of such railroad corporation act as an officer of any other railroad corporation owning or having the control of a parallel or competing line, and the question whether railroads are parallel or competing lines shall, when demanded by the party complainant, be decided by a jury as in other civil cases." In 1881 the Legislature of Minnesota enacted a statute (Laws 1881, p. 109, c. 94) authorizing and empowering any railroad corporation, domestic or foreign, to consolidate its stock and franchises with, or lease or purchase or in any way become owner of or control the stock of any other rail- road corporation when their respective railroads can be connected and operated together so as to constitute a contimi- ous main line, with or without branches. But the same statute reiterated the prohibition against the consolidation of railroads having parallel and competing lines, and by a sub- sequent amendment of this statute (Laws 1899, p. 253, c. 229) the same prohibition was again enacted almost in the language of the act of 1874, above quoted. In 1899 the liCgislature of Minnesota also enacted a statute known as the "Anti-trust law " (Laws 1899, p. 487, c. 359) , which provided : " Section 1. Any contract, agreement, arrangement, or conspiracy, or any combination in the form of a trust or otherwise, hereafter entered into which is in restraint of trade or commerce within this state, or in restraint of trade or commerce between any of the people of this state and any of the people of any other state or country, * ♦ * is hereby prohibited and declared to be unlawful." Severe penalties are denounced against all who shall vio- late the act, including the forfeiture of the charter of any offending corporation. And it is made the duty of the At- torney General to institute, in the name of the state, proceed- ings in any court of competent jurisdiction to recover the penalties imposed, and also, in the case of offending corpo- rations, to enforce the forfeiture of their charters. Fourth. The railroads both of the Great Northern and 250 123 FEDERAL REPOBTER, 694. C^lnion of tlie CJonrt northern Pacific Companies between the Missouri river and l^uget Sound pass through long stretches of mountainous and unsettled or sparcely settled country, which supplies comparatively little traffic or business to these railroads. But the forests near Puget Sound produce a great supply of lumber, readily marketable east of the Missouri river, and in Iowa, Illinois, Nebraska, and Missouri. To transport it over these railroads (which in the direction of the principal markets for the lumber ended at St. Paul) at rates which would make the business practicable, it was necessary that west-bound freight should be se- [605] cured for the cars which would bring the lumber eastward. The Great Northern Company and Northern Pacific Company were alike interested in this business, and, acting in harmony, in the spring of 1<>01, purchased substantially all the shares of the Chicago, Burlington & Quincy Railway Company (each company buying and owning one-half), at $200 per share, amounting to $108,000,000, par value, the cost being about $216,000,000; paying for the same in the joint 4 per cent Imnds of the two purchasing companies. As the Burlington system so purchased has a railway extending from Minne- apolis and St. Paul to Chicago, and railways covering large portions of the states of Illinois, Towa, Missouri, and Nebraska, and connecting again with the Northern Pacific at Billings, in Montana, it, though still managed by its own directors and officers, affords to the two purchasing railroads the needed mutual extension to transport their trains of lum- l>er to desirable markets, and to bring return traffic, in coal, iron, steel, cotton, and other commodities, needed on the route of these two railroads and on the Pacific Coast, and in the trade growing up Iietween Pugot Sound and Alaska, China, and Japan. The IFnion Pacific Railway extends from Omaha to Ogden, and, by its connection with the Central or Southern Pacific, to San Francisco, with the branches and connections which reach points on the Great Northern and Northern Pacific in Montana and Washington. As the Burlington system connects with the Union Pacific at Omaha and elsewhere in Nebraska, and extends east, north, and south from Omaha, much of the freight gathered by it, bound for the Pacific MINNESOTA V. NORTHERN SECURITIES CO. 251 Opinion of the Court. Coast, passed over the Union Pacific. Hence the purchase of the Burlington system by the Great Northern and North- em Pacific, which was completed about April 1, 1901, led the managers of the Union Pacific Company to fear a diver- sion of this traffic from the railwav of the Union Pacific to the railways of the two purchasing companies ; and Edward H. Harriman, representing the Union Pacific Company, ap- plied to James J. Hill and J. Pierpont Morgan, who respec- tively represented the Great Northern and Northern Pacific Companies in such purchase, to permit the Union Pacific Com- pany to join and share with them in the purchase of the Bur- lington system, but his application was declined. There- upon the said Harriman and others acting in the interest of the Union Pacific Company began rapidly and quietly to purchase the stock of the Northern Pacific Company, intend- ing thus to acquire a majority of that stock, and the control of that company, with its half interest in the Burlington system. The common stock of the Northern Pacific Com- pany was $80,000,000, and it had issued and had outstanding preferred stock to the amount of $75,000,000, which had the same voting power as the common stock, but which the com- pany, by the action of its directors, might pay off at par, and thus retire, on the 1st dav of January. 190*2, or on the 1st day of any succeeding year. During the month of April and first week in May. 1901, the said Harriman and others acting with him in the interest of the Union Pacific Com- pany purchased and held a little more than $37,000,000 of the common stock, and a little more than $41,000,000 of the preferred stock, of the Northern Pacific Company; being more than $78,000,000 in all, and more than a majority of the aggregate [696] of the common and preferred stock of that company. But in the first week of May, 1901, J. P. Morgan & Co., becoming apprehensive, purchased $15,000,000 of the coftimoa stock of the Northern Pacific Company, which, with their previous holding of that stock, and those of Mr. Hill and other stockholders of the Northern Pacific Company, who in this matter acted with Mr. Morgan, gave the latter the control of more than $41,000,000 of such com- mon stock; being more than a majority of that stock. As it was known that Mr. Morgan and his associates would 252 123 FEDEBAL REPORTER, 696, Opinion of the Court. insist upon the payment and retirement of the preferred stock on January 1, 1902, and that the board of directors of the Northern Pacific Company would take action to that end, Mr. Harriman and his associates abandoned their at- tempt to obtain the control of that company. For many years, including the period of the construction of the Great Northern Company's railroad from the state of Minnesota to Puget Sound, and its branches and extensions in other directions, Mr. Hill, with the acquiescence of all the stockholders, had been the president and active manager of that company. The stock of that company aggregated $125,000,000, and he, with a small number of other holders of large amounts of that stock, had for some time considered the project of uniting their holdings of stock by transferring the same to some corporation to whom any others of the holders of such stock might transfer their holdings, and thus apsure permanency to the management and policy of the company. The attempt in the interest of the Union Pacific Company to purchase a majority of the stock of the Northern Pacific Company, and obtain the control of that company, and through it of the Burlington system, alarmed the managers and stockholders of the Northern Pacific Company, and led them to consider the feasibility of forming a holding com- pany which should purchase or secure in exchange for its own stock more than a majority of the stock of the Northern Pacific Company, and hold the same secure against any raid in the future in the interest of a rival or hostile railroad. Mr. Hill and the stockholders referred to of the Great North- em Company were likewise alarmed by such attempt in the interest of the Union Pacific Company to obtain control of the Northern Pacific, and through it of the Burlington sys- tem—a result which they apprehended would injuriously affect the property of the Great Northern Railroad, and the country traversed by it and by the Northern Pacific Rail- road ; and, in the project of establishing a holding company to purchase and hold a majority of the stock of the Northern Pacific Company, they joined for the purpose of selling to such holding company, and placing therein their own stock in the Great Northern Company, and permitting all other MINNESOTA V. NORTHERN SECURITIES CO. Opinion of the Court. 253 stockholders of the same company who might so choose to do likewise, and thus accomplish their purpose above stated of giving permanency to the management and policy of the Great Northern Company. The incorporation of the Northern Securities Company under the general laws of New Jersey", and with a capital of $400,000,000, was completed November 13, 1901. Neither the Great Northern Company nor the Northern Pacific Com- pany, by any act of its directors, or any [697] corporate act, had anything to do with the formation or subsequent action of the Northern Securities Company; but Mr. Morgan, Mr. Hill, and other stockholders of the Northern Pacific Company and Great Northern Company were individually the promoters who caused and procured the incorporation of the Northern Securities Company for the purposes above stated. The Northern Securities Company, when formed, offered and agreed to purchase and to pay for in its own stock at par ($100 per share) any stock of the Northern Pacific Company at the price of $115 per share, and any stock of the Great Northern Company at the price of $180 per share; and large amounts of the stock of said two rail- roads were, at such rates, and so paid for, purchased from said promoters and other stockholders of said two railroad companies by said Northern Securities Company. About the same time Mr. Harriman and his associates sold to J. P. Morgan & Co. all the Northern Pacific Company stock which they had purchased as aforesaid — ^both common and pre- ferred — amounting to more than $78,000,000, and said J. P. Morgan & Co. at the same time sold all the same stock to the Northern Securities Company, who paid the considera- tion therefor directly to Mr. Harriman and his associates; a part of such consideration being something more than $82,000,000 of the stock of said Northern Securities Company. That purchase was completed on November 18, 1901. On January 1, 1902, the Northern Pacific Company paid off and retired its preferred stock, having raised the money for that purpose by an issue of bonds, which were made convertible and were converted into common stock of that company. Other stockholders of each of said two railroad companies sold their stock to the Northern Securities Company, receiving 9^ 123 FEDER.4L BEPORTER, 697. Opinion of the Court in payment or exchange therefor, at the rates aforesaid, stock of the last-named company, so that by December 1, 1901, said Northern Securities Company had become the owner of considerable more than a majority of the stock of the Northern Pacific Company, and a large amount, but less than a majority, of the stock of the Great Northern Company. Similar purchases from stockholders continued, and at the time of the commencement of this suit the North- em Securities Company had become, and still is, the owner of about % per cent, of all the stock of the Northern Pacific Company, and of about 76 per cent, of all the stock of the Great Northern Company. CONCLUSIONS OF JJkW, 1. It is obvious from the foregoing facts that the Northern Securities Company was incorporated with the purpose and intent on the part of its promoters that it should acquire by purchase, by exchange for its stock, and should own and control, a considerable majority of all the stock of the North- ern Pacific Company, and thus secure that company against the danger of any future raid upon its stock which might place its management and the resulting control of the Bur- lington system in the power of any rival railroad corpora- tion, whose interests might be hostile to the development and property of the Northern Pacific and Great Northern Companies, and their seaboard terminals, and of the region of country traversed by their railroad systems. This was the avowed purpose of Mr. Morgan and his associates who [008] acted with him in this matter, including Mr. Hill and other large stockholders of the Great Northern Company, who also held large amounts of stock in the Northern Pacific Company, and were apprehensive that any hostile control of the Northern Pacific Company which might sacrifice its in- terests to a rival would be disastrous to the development and prosperity of the Great Northern Company. And at the very time when the Northern Securities Company was formed and incorporated, by means of the large holdings of Northern Pacific Company stock by himself and his associ- ates acting with him, and by the then purchase by J. P. Morgan & Co. of the Harriman holding of such stock, said MINNESOTA V, NORTHERN SECURITIES CO. 255 Opinion of the Court. J. P. Morgan was able at once to transfer and have trans- ferred to the Northern Securities Company a large and con- trolling majority of the stock of the Northern Pacific Com- pany, as was done; thereby accomplishing, as was believed, the purpose of securing that stock against hostile raids in the future. With respect to the stock of the Great Northern Company, the evidence shows that, when the Northern Securities Com- pany was incorporated, it was the purpose and intent of Mr. Hill and other large stockholders of the Great Northern Company who acted with him to sell and dispose of to the Northern Securities Company, for its stock, their several holdings of stock in the Great Northern Company, aggre- gating then about $35,000,000, to the end that such large amounts of Great Northern Company's stock should be kept together, and, as it was hoped, aid in giving permanency to the management and policy which had controlled and was controlling the railway and development of that company. And it was their purpose that all other stockholders of the Great Northern Company who might choose to do so should be permitted to sell or exchange their stock of that company for stock of the Northern Securities Company on the same terms, and it was hoped and expected that many would do so. But the said Hill and his associates had no power or control which could enable them to transfer or cause to be transferred to the Northern Securities Company so much as one-third of the stock of the Great Northern Company. The evidence therefore fails to show that the Northern Securities Company was formed for the purpose of acquiring and hold- ing a majority of the stock of the Great Northern Company, as well as that of the Northern Pacific Company, although that result followed soon after, and may have been desired and anticipated. 2. One question in this cause is w^hether the acquisition by the Northern Securities Company, in the manner above stated, of a majority of the capital stock of both the Great Northern and Northern Pacific Companies, which own and operate parallel and competing railroads across the state of Minnesota, and its ownership of such stock, is a violation of the Minnesota anti-trust law (Laws Minn. 1889, p. 487, c. 256 123 FEDERAL REPORTER, 698. MINNESOTA V. NORTHERN SECURITIES CO. 257 Opinion of the Court 359), which provides, as above stated, that "any contract, agreement, arrangement, or conspiracy, or any combination in the form of a trust or otherwise hereafter entered into which is in restraint of trade or commerce within this state * * • is hereby prohibited and declared to be unlawful." Language in the act extending these provisions to interstate commerce is here omitted and disregarded, and the act con- sidered valid as to trade and commerce within the state- |fe.M| that being a proper subject for state legislation, though carried on by the same instrumentalities used in interstate commerce. The language just quoted is evidently taken from the act of Congress of July 2, 1890, c. 647, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200], known as the Sherman anti-trust act, which has received consideration by the Supreme Court of the United States in several cases. In United States v. E. C. Knight Company, 156 U. S. 1, 15 Sup. Ct. 249, 39 L. Ed. 325, a New Jersey corporation^ already in control of most of the manufactories of refined sugar in the United States, purchased with shares of its owii stock the stock of four Philadelphia refineries, and ac- quired nearly complete control of that business in the coun- try. It was charged that the contracts under which these purchases were made constituted combinations in restraint of trade, and that by entering into them the defendants com- bined and conspired to restrain the trade and commerce m refined sugar among the several states and with foreign nations. Held, that though the contracts of purchase of these refineries would result in a monopoly in the manufac- ture of refined sugar, an article certain to enter into com- merce, yet the manufacture of the article was no part of commerce, and therefore the contract had no direct relation to commerce, even though to dispose of the product the in- strumentality of commerce would be necessarily invoked. The product would not enter into commerce till transporta- tion began, and the contracts had no reference to transpor- tation. In United States v. Trans-Missouri Freight Association 166 U. S. 290, 17 Sup. Ct. 540, 41 L. Ed. 1007, it was held that the Sherman anti-trust act applies to railroads, and prohibits all contracts in restraint of trade, whether reason- Opinion of the Court. able or unreasonable, and also that articles of agreement by which some 17 railroad companies formed that association, in which each railroad company had a representative, em- powering the association to fix reasonable rates for the transportation of freight on said railroads (many of whom were competitive), and change such rates on proper occasion, and binding the railroad companies, under penalties, to con- form their charges for transportation to the rates so to be established, was a contract in violation of that anti-trust act. Plainly, the direct and only object of this agreement was its provision for the fixing, controlling, and maintaining rates for the transportation of freight over these railroads. United States v. Joint Traffic Association, 171 U. S. 505, 19 Sup. Ct. 25, 43 L. Ed. 259, was like the case last cited. The association was formed between 31 railroad companies, engaged in transportation between Chicago and the Atlantic Coast. The association formed of representatives of the companies was given control over competitive transportation of freight and passengers, with power to fix rates, fares, and charges, and change the same from time to time; and to these rates the railroad companies bound themselves to conform. The principal difterence between this case and the one last mentioned was that by the terms of this agreement the association was to cooperate with the interstate com- merce commission, to secure stability and uniformity in the rates, fares, and charges established. It was held that this agreement also violated the an ti- trust act. [7001 In Hopkins v. United States, 171 U. S. 578, 19 Sup. Ct. 40, 43 L. Ed. 290, the 'members of the Kansas City Live Stock Exchange did business at the Kansas City Stockyards located partly in Kansas City, Kan., and partly in Kansas City, Mo., dealing on their own account, or as commission merchants in live stock shipped from surrounding states and territories, to the owners of which they often made advances before shipment. They were bound by articles of associa- tion and by-laws, which, among other things, fixed the mini- mum rates for commissions, forbade the giving of informa- tion of the condition of the market, except under specified circumstances, and forbade all dealing with any person who 21220— VOL 2—07 m 17 / 258 123 FEDERAL REPORTER, 700. Opinion of the Coui-t. violated the rules of the exchange, or with an expelled or suspended member. Held, that the business so trans- acted was not commerce, although it furnished aids and facilities to interstate commerce. The court said : "The coiitniet condemned by the statute is one whose direct and immetliate effect is a restraint upon tlmt kind of trade or commerce which is interstate. Chnr^'es for such facilities as we have already mentioned are not a restraint upon that trade, although the total cost of marketing a subject thereof may be thereby increased. Charges for facilities furnished have been held not a regulation of commerce, even when made for services rendered or as c»mi)ensation for bene- lits conferred. Sands v. Manistee River Improvement Company, 123 U. S. 288 [8 Sup. Ct 118, 31 L. Ed. 149] ; Monongahela Navigation Co, V. IJfiited States, 148 U. S. 312, 329, 330 [13 Sup. Ct. G22/37 L. M. 4ti3] ; Kentucky d Intfiana Bridge Co. v. Lomsville, etc.. Rail- rm4 (C. C.) 37 Fed. 5U7 12 L. R. A. 289]." In Andermn v. United States, ITl IJ. S. 604, 19 Sup. Ct. 50, 43 L, Ed. 300, the facts were similar to tliose in the Hop- kins Case, last cited. The holding of the court is expressed in the syllabus as follows: " That where tlie subje<'t-matter of the agreeminit does not directly relate to and act uiKin and embrace interstate commerce, and where the undisimteject" In Addystm Pipe c£' Steel Company v. United States, 175 U. S. 211, 20 Sup. Ct. %, 44 L. Ed. 136, six corporations en- gaged in the manufacture, sale, and transportation of iron pipe, and being located in the states of Ohio, Kentucky, Tennessee, and Alabama, entered into a detailed agreement, parceling among themselves the business of a large number of cities in Western and Southern states, with the purpose and intent of largely increasing the price at which iron pipe should lie furnished to such cities. When any such city sought competitive bids for iron pipe, the corporation entitled under this secret agreement to furnish such pipe would make its bid much above a fair market price, and the other companies would present still higher bids, to give the appearance of competition. The company intended would MINNESOTA V. NORTHERN SECURITIES CO. Opinion of the Court. 259 thus get the contract, but, under the same agreement, would have to pay a large bonus, to be divided among the other companies. Although these corporations were manufacturers of iron pipe, thij par- [701] ticular agreement had reference to the sale and delivery of such pipe to municipal customers, its intended and direct eifect being to exclude competition and raise the price of the conmiodity. The court said : " Where the contract is for the sale of the article and for its deliveiy in another state the transaction is one of interstate commerce, although the vendor may also have agreed to manufacture it in order to fulfill his contract of sale. In such case a combination of this character would be properly called a combination in restraint of interstate commerce, and not one relating only to manufacture." The proper construction of the Sherman anti-trust act, so far as it relates to railroad transportation, as deduced from these decisions of the Supreme Court appears to be this: (a) The act «pplies to railroads. And all contracts made between railroad companies for the purpose and having the effect of preventing competition by fixing rates, or empower- ing persons to fix them, and agreeing to conform to them when fixed, are in restraint of trade, and within the provisions of the statute, whether the rates so fixed are reasonable or unreasonable, (b) That contracts between divers manu- facturers of a commodity, respecting their sales of that com- modity, to be delivered by them outside the state, having the direct effect of stifling competition and raising the cost of the article to the purchaser, are also in restraint of trade, and within the statute, (c) That contracts which do not directly and necessarily affect transportation, or rates there- for, are not in restraint of trade, or within the statute, even though they may remotely and indirectly appear to have some probable effect in that direction. The state anti-trust act must have the same construction in respect to traffic on railroads within the state. Neither the Great Northern Company nor thy Northern Pacific Company were parties to, or in their corporate capac- ity had anything to do with, the formation of the Northern Securities Company, nor of any of the contracts or proceed- ings complained of in the bill. The Northern Securities Company is merely an invester in and owner of a majority of the stock of each of these two railroad campanies. It 260 123 FEDERAL REPORTEB, 70i. Opinion of the Court is not a railroad company, and has no franchise or power to manage or operate or direct the management or operation of either railroad in respect to rates or charges for transporta- tion, or otherwise; and there is no scintilla of evidence that it has sought to control or interfere in respect to any of these matters. It has therefore done no act and made no contract in restraint of trade or commerce. Owning now a majority of the stock of each of these railroad companies, it has the power, by voting its stock, to elect the board of directors— the governing body— of each of these railroad companies. But the board of directors of each is a different body from the board of directors of the other, as no director of the Great Northern Company can be a director of the Northern Pacific Company. The directors of each railroad company will appoint its managing and other officers, and control its business and policy. Presumably, they will seek, in lawful ways only, to increase the business and prosperity of the railroad which they, as directors, represent. The action of the defendant Hill in promoting the forma- tion of the Northern Securities Company, under the circum- stances and for the [702] purposes which the evidence discloses, and investing in its stock by the sale to it of his stock in the two railroad companies, involved no act or -contract in restraint of trade or commerce, or affecting trans- portation or rates, more than any ordinary transfer of rail- road stock from one person to another. That my judgment, after most careful consideration of the facts and the law applicable thereto, as construed by the highest court, leads me to the conclusion that none of the defendants have violated the Minnesota anti-trust act— a conclusion apparently contrary to that reached by the emi- nent judges who, in this court, recently decided the case of United States v. Northern Securities Company^ 120 Fed. 721 :and who will doubtless in another court review this cause upon appeal— has necessarily caused hesitation and careful examination. But the rights of litigants and my own sense of duty alike require that my own deliberate judgment, guided by my understanding of authoritative expositions of the law, be given in all causes tried before me. The decision of the case last cited, as I read it and under- MINNESOTA V. NORTHERN SECURITIES CO. Opinion of the Court. 2f^l \ stand it, docs not specif}^ or point out any contract, agi-ee- ment, or act on the part of the defendants, or any of them, which is directly in restraint of trade or commerce, or which has any direct reference to trade, commerce, transportation, or rates, nor even any threat or avowed purpose on the part of any defendant to do any such act, or enter into any such contract or agreement. But it is argued that, because the Northern Securities Company has become the owner of a large majority of the stock of each of the two railroad cor- porations, it will be for its interest to suppress competition between them, by causing the two boards of directors of these railroad corporations, Avhich it can fill by election, to enter into arrangements or agreements in restraint of trade, which will suppress competition; and as a corollary to this reason- ing (or conjecture) the decision holds that the formation of the Northern Securities Company, and purchase by it of a majority of the stock of each of these railroad companies, are acts or contracts in restraint of trade, though of them- selves, and without further action (not yet taken, and per- haps never to be taken) by the directors of the two railroad companies, the formation of the Northern Securities Com- pany and its holdings of stock has and can have nothing to do, directly or indirectly, with trade, commerce, transpor- tation, or rates. To epitomize this decision: It is held that it will be for the interest of the Northern Securities Company to restrain trade b}^ supj)ressing competition between these two railroad companies, and that by coercing or persuading the two boards of directors, whom it has the power to elect, it will certainly cause them to commit highly penal offenses, by entering into combinations, contracts, and arrangements in restraint of trade, in violation of the anti-trust act, and hence the North- ern Securities Company is already guilty of these offenses that have never been committed or thought of by its officers or promoters, so far as appears, and it must be suppressed and destroyed. I am compelled to reject the doctrine that any person can be held to have committed, or to be purposing and about to commit, a highly penal offense, merely because it can be shown that his pecuniary interests will be thereby advanced, and that he has the power, either directlv bv him- Zb:J 123 FEDERAL REPOBTER, 703. Opinion of the Court [70aj self, or indirectly through persuasion or coercion of his a£rents, to coniiiass the commission of the offense. Altliough the bill avers that the acts of the defendants complained of are in viohition of the act of Congi^ess of July 2, 1890, c. G47, 2iy Stat. 209 [IT. S. Comp. St. 1901, p. 3200]-^ the Sherman anti-trust act—the state of Minnesota has no authority to enforce that act by bill for injunction. Such a suit can only be instituted on behalf of the federal govern- ment by its attorney general, under the special provisions giving the United States Circuit Courts jurisdiction to pre- vent and restrain by injunction violations of that act. The state anti-trust act contains no provisions for restraining or enjoining violations of its provisions. As before stated,1t is a highly penal statute; and without special statutory au- thority a court of equity has no jurisdistion to restrain the commission of criminal offenses which involve no threatened destruction of property or property rights. 3. The charge in the bill that the acts of the defendants contravene the statutes of Minnesota prohibiting tlie con- solidation of parallel and competing lines of raHroad pre- sents a different question. Chapter 29, p. 154, Gen. Laws Minn. 1874, pmvides, as stated : "No railroad wrporation or the lessors, purchasers or niana-ers of any railroad eori>nratiou, shall consolidate the stock mi f^^^^^^^ f^nnlZ «'^/"'*"/-»'P«'-ation with, or lease or purchase tZZovL or franciiise of. or In any way control any other railroad corporation ownnig or having under its control a parallel or competing line/^ This is the only statute on that subject of consolidating parallel and competing railroads that need be considered, as it covei-s whatever is contained in any other. This statute is a valid exercise of the police iv-r^r of the state. Louisrille et€.,RaUrmid v. Kenfuclq/, 161 U. S. 677, 16 Sup. Ct. 714, 40 li. Ed. 849. The prohibition against consolidating applies: (1) To railroad corporations. The Northern Securities Company is not a railroad corporation, and neither the Great Northern Company nor the Northern Pacific Companv, in its corporate capacity, did any of the acts charged. (2) Lessees of rail- road corporations. There were none. (3) Purchasers of railroad corporations. Construing this term as applying to MINNESOTA V. NORTHERN SECURITIES CO. 263 Opinion of the Court. those who acquire by deed or decree, having capacity to hold and enjoy the franchises and operate the railroad, there were none in this case. (4) Managers of railroad corporations. A railroad manager is the person having the administration, charge, and oversight of the operation and business of the railroad. Among the parties concerned, Mr. Hill alone was a railroad manager. He did not effect any consolidation. He promoted the formation of the i>orthern Securities Com- pany, and sold to it stock of both railroad companies. But the complainant contends that when the Northern Securities Company had, about December 1, 1901, purchased and become the owner of a large and controlling majority of the stock of the Northern Pacific Company, it became the purchaser of that railroad corporation, within the meaning of that word as used in the act of 1874, and became thereby disabled from acquiring, as it afterwards did, a controlling majority of the stock of the Great Northern Company. And upon the subject of purchasing a railroad by buying all the stock, I am cited [704] to chapter 94, Gen. Laws Minn. 1881, which provides that any railroad corporation ma}^ lease or purchase or become the owner or control or hold stock of any other railroad, when their respective railroads can be con- nected together and form a continuous line, with or without branches. But in that case the purchase of the stock would be by a railroad corporation having capacity to operate the railroad, even aside from the authoritv to do so either ex- pressly or impliedly granted by this statute; and such pur- chaser could therefore rightfully assume the control, man- agement, and operation of the railroad, the stock of which it had so acquired. I am also cited to the case of Pearsall v. Great Northern Railway, 161 U. S. 646, 16 Sup. Ct. 705, 40 L. Ed. 838. Pearsall was the owner of 500 shares of the stock of the Great Northern Company, and filed the bill, in behalf of himself and other stockholders, to enjoin the Great North- ern Company from entering into and carrying out an agree- ment with bondholders under mortgages of the Northern Pacific Company, who were about to foreclose the mort- gages and reorganize the company, issuing new bonds to the 264 123 FEDERAL BEPORTER, 704. Opinion of the Court, amoimt of $100,000,000, to be guarantied by the Great JSorthem Company, also stock to a like amount, one-half of which was to be transferred to the stockholders of the (jreat Northern Company in consideration of such guaranty imd thereafter at all intersecting points traffic was to be ex- changed between the two companies, and the common earn- mgs therefrom divided on a mileage basis. The bill averred that the threatened contract, if carried out, would amount to a consolidation of the two railroaas, in violation of the said Minnesota statute of 1874, and endanger the value of complainant's Great Northern stock. The court held that ttie transfer of one-half of the capital stock of the Northern raciiic Company to the shareholders of the Great Northern Company, as a body, for a consideration coming from the toeat Northern Company as a corporation, was virtually a transfer of the stock to the Great Northern Company, who having thus acquired one-half of the stock of the Northern Pacific Company, would easily and certainly obtain the little^ more necessary to assure it the mastership of the Northern Pacific Company, and result in the probable amal- ^mation of the two companies in violation of the statute • thus endangering the value of the complainant's shares! Ihe relief sought by the complainant was therefore granted to protect his property interests against probable threatened danger. But there, again, the purport of the holding was that, if one railroad corporation acquired a controlling ma- jority of the stock of another railroad corporation, it could operate it, or control its operation, under its own ample franchises and powers to operate railroads. The case is far from sustaining the idea that if a single investor in rail road stocks, whether a natural person or a corporation with- out railroad franchises, should acquire by purchase a major ity or the whole of the stock of both the Northern Pacific Company and the Great Northern Company, that would work any consolidation of those two companies or that such purchaser would have any power to manage or operate the railroads of both or either of said railroad companies In the case under consideration the court is careful to note the difference in effect between the purchase of a controllino- majority of the stock of a rail- [705] road corporation MINNESOTA V, NORTHERN SECURITIES CO. Opinion of the Court. 265 by a rival railroad corporation, which might control, man- age and operate it, and a purchase of the same stock by an individual or individuals, though holding whatever amount of stock in the same rival railroad company. The court says: "Doubtless these stocliholders [of the Great Northern Company] could lawfully acquire by individual purchases a majority or even the whole of the stock of the reorganized [Northern Pacific] com- pany, and thus possibly obtain its ultuuate control ; but the com- panies would still remain separate corporations, with no interests, as such, in common." I am not able to agree with the suggestion that this ex- pression may be regarded as one not necessary to the deci- sion, and therefore perhaps not carefully considered. On the contrary, it seems to me to be a carefully considered and necessary limitation or explanation of general language elsewhere made use of in that decision. It follows that as the Northern Securities Company is merely an invester in the stocks of these railroad corpora- tions, not being itself a railroad corporation, and being without franchise, power, or authority to manage, control, or operate any railroad, its ownership of a majoritj^ of the stocks of these two railroad companies does not come within the prohibitive language of the statute of 1874. The two companies still remain separate corporations, with no inter- ests, as such, in common. The case would not be different if one natural person with abundant capital should invest in the majority of the stocks of one of these companies, and another like person should invest in the majority of the stocks of the other company. The interest of the two, if they chose to act in harmony, would be the same as the interest of one person OAvning the whole. But it is urged that the ownership by the Northern Se- curities Company of such a large majority of the stock of these two parallel railroads creates a monopoly, having a tendency to prevent competition between these railroads, and presents a case within the mischief intended to be remedied by the statute of 1874, and should be held, even if outside of the language of that statute, to be within the intention of the Legislature which enacted that statute; also that it is contrary to the public policy of the state, which seeks to promote competition between railroads as well as other com- £i\rx 123 FEDERAL REPORTER, 704. Opinion of the Court amount of $100,000,000, to be guarantied by the Great Northern Company, also stock to a like amount, one-half of which was to be transferred to the stockholders of the Great Northern Company in consideration of such guaranty, and thereafter at all intersecting points traffic was to be ex- changed between the two companies, and the common earn- ings therefrom divided on a mileage basis. The bill averred that the threatened contract, if carried out, would amount to a consolidation of the two railroads, in violation of the said Minnesota statute of 18T4, and endanger the value of complainant's Great Northern stock. The court held that the transfer of one-half of the capital stock of the Northern Pacific Company to the shareholders of the Great Northern Company, as a body, for a consideration coming from the Great Northern Company as a corporation, was virtually a transfer of the stock to the Great Northern Company, who, having thus acquired one-half of the stock of the Northern Pacific Company, would easily and certainly obtain the little more necessary to assure it the mastership of the Northern Pacific Company, and result in the probable amal- gamation of the two companies in violation of the statute; thus endangering the value of the complainant's shares. The relief sought by the complainant was therefore granted to protect his property interests against probable threatened danger. But there, again, the purport of the holding was that, if one railroad corporation acquired a controlling ma- jority of the stock of another railroad corporation, it could operate it, or control its operation, under its own ample franchises and powers to operate railroads. The case is far from sustaining the idea that if a single investor in rail- road stocks, whether a natural person or a corporation with- out railroad franchises, should acquire by purchase a major- ity or the whole of the stock of both the Northern Pacific Company and the Great Northern Company, that would work any consolidation of those two companies, or that such purchaser would have any power to manage or operate the railroads of both or either of said railroad companies. In the case under consideration the court is careful to note the difference in effect between the purchase of a controllino- majority of the stock of a rail- [705] road corporation MINNESOTA V. NORTHERN SECURITIES CO. 265 Opinion of the Court. by a rival railroad corporation, which might control, man- age and operate it, and a purchase of the same stock by an individual or individuals, though holding whatever amount of stock in the same rival railroad company. The court says: "Doubtless these stoclcholders [of the Great Northern Company] could lawfully acquire by individual purchases a majority or even the whole of the stock of the reorganized [Northern Pacific] com- pany, and thus possibly obtain its ultimate control; but the com- panies would still remain separate corporations, with no interests, as such, in common." I am not able to agree with the suggestion that this ex- pression may be regarded as one not necessary to the deci- sion, and therefore perhaps not carefully considered. On the contrary, it seems to me to be a carefully considered and necessary limitation or explanation of general language elsewhere made use of in that decision. It follows that as the Northern Securities Company is merely an invester in the stocks of these railroad corpora- tions, not being itself a railroad corporation, and being without franchise, power, or authority to manage, control, or operate any railroad, its ownership of a majority of the stocks of these two railroad companies does not come within the prohibitive language of the statute of 1874. The two companies still remain separate corporations, with no inter- ests, as such, in common. The case would not be different if one natural person with abundant capital should invest in the majority of the stocks of one of these companies, and another like person should invest in the majority of the stocks of the other company. The interest of the two, if they chose to act in harmony, would be the same as the interest of one person owning the whole. But it is urged that the ownership by the Northern Se- curities Company of such a large majority of the stock of these two parallel railroads creates a monopoly, having a tendency to prevent competition between these railroads, and presents a case within the mischief intended to be remedied bv the statute of 1874, and should be held, even if outside of the language of that statute, to be within the intention of the Legislature which enacted that statute; also that it is contrary to the public policy of the state, which seeks to promote competition between railroads as well as other com- 266 123 FEDERAfc REPORTER, 105. Opinion of tlie Court, mon carriers. The terms " monopolies and trusts " are per- haps, m cases like this, too often employed at the bar to all business enterprises requiring and employing great aggrega- tions of wealth, and in the vague sense in which, at L hustings they are use to arouse envy and jealousy, for- getting the manifast necessity of such aggregations of Vealth to produce the commodities, and their transportation, which our civilization and comfort retpiire. Every railroad corpo- ration is in one siMise a monopoly. It has franchises giving rights and powers not common to all citizens. It alone can operatejts own raihmd, though subject to reasonable regu- lation by the state. All monopolies, in a strict sense, Li upon some grant by the sovereign power of an exclusive franchise or privilege. And with modem facilities for trans- portation and communication, all the statutes and learning respecting "forestalling," "regrating," and "encrrossinc" have become archaic, and even the meaning of those terms th 'rift4'*''''.i^ recogiiized. [706] When, a statute like k t^iS V" ^"^^^'^'-^^ ^^esignates parties whom It prohibi s from doing specified acts, not otherwise unlaw- fill, to ask a court to extend that statute to parties not named, or to acts not so specified, on tlie ground that such extension may be conjectured to be within the intention of the Legislature, is an invitation to enter the domain of jii- dicial legislation. The policy of the state appeal^ in its S^S r; r r^ T^^'^ ^^^ ^^^ interpretation of any aoiii3tlul statute. It is clear from several statutes that the policy of thastate of Mbnesota is opposed to the consolida- tion of parallel railroads, and to the control by any railroad company of the operation and management of another com- pany s parallel and competing railroad. It is deemed ad- vantageous to the public that at least reasonable competition between such lines of railroad shall continue. Wliile acts of railroad corporations, leasees, purchasers, and managers contrary to this policy are prohibited, there is no statute dis- closing any policy as to what parties (other than competinff railroad corporations) shall own the stock of any railroad corporation, or of any number of such corporations or respecting the amount of such stock which any one party MINNESOTA V. NORTHERN SECURITIES CO. Opinion of the Court 267 may own. The bill truthfully states, in substance (para- graph 7), that it has been the settled policy of Minnesota, since its organization as a territory, to develop its resources by the encouragement of railroad building therein, and re- fers to the many grants of land in aid of railroad construc- tion. As showing the same policy, reference also might be made to very many donations for the like purpose by coun- ties, cities, and towns, under legislative authority. The policy of the stiite in respect to the operation and manage- ment of railroads is disclosed by its statutes; especially by sections 879 to 403, vol. i. General Statutes of Minnesota of 1894, under the heading of " Railroad and AYarehouse Com- mission," which closely follows the provisions of congres- sional legislation respecting interstate commerce, and, under clearly specified regulations, places the supervision, over- sight, and control of those matters — particular!}^ the rates for transportation — in the hands of the designated state officials. It is plain from these statutes, as construed by the Supreme Court of the state, that it is the policy of the state that the railroads, with their rolling stock and appliances, shall be kept in a high state of safety and efficiency, and that rates of transi)ortation, while kept ample to secure such result, shall always be fair, reasonable, stable, and uniform. Schedules of rates are to be kept publicly posted at every station, and no change or deviation from such jDublished rates is permitted, nor any rebates allowed or advantage to one shipper over another, and no change in such rates is permitted until after 10 days' previous published notice has been given. Under this system shippers can count accurately the cost of transjjortation as an expense in their business, with the assurance that others engaged in like business must incur exactly the like expense ; and untrammeled com- petition between rival railroads, resulting in rate wars, sporadic struggles for particular contracts or consignments. as well as all rebates, open or secret, all alike unfair oi ruinous to carriers and shippers, are prohibited, under pen- alties, and intended to be entirely eliminated and [707] done away with, leaving as the only bases of competition between rival carriers the furnishing of the better accommodations, and the greater safety and celerity of carriage. All com- Do 124 FEDEBAL BEPORTEB, 956. Syllaba& plaints that published rates are unreasonable are heard and determined by these state officials, who may fix rates binding on the railroads; thus necessarily making rates uniform as between rival railroads. As a result of this policy, and the absolute power of the state officials to fix rates, and keep them at the lowest reasonable figures, competition between rival railroads no longer reduces rates, as it did when rail- road companies alone controlled them. On the contrary, where two or more railroads divide the transportation be- tween two places, the necessity of considering greater fixed charges and greater cost of administration and operation may make the reasonable rate for transportation greater than if the whole business could be done, and was in fact done, by one railroad. However that may be, the Northern Securities Company is but an investing stockholder in these two railroad companies, without power to consolidate them or to interfere with the management or control of either. Because of its large holdings of these stocks, it may elect the board of directors of each, who must be composed of entirely different persons. Each board will appoint the officers and control the business and affairs of its own corpo- ration, and will naturally seek to increase its business and property. Neither has any power to control the other nor to contract with the other in restraint of trade. There is no presumption that either will disobey the law, or be guilty of the commission of penal offenses. Should they do these things, then the anti-trust act of Minnesota will be for the first time violated, and the railroad corporations and their offending officials will be amenable to punishment, and to appropriate legal or equitable proceedings. Decree will be entered dismissing the bill. 1056] ELLIS V. INMAN, POULSEN & CO. ET. AL.« (Circuit Court, D. Oregon. July 30, 1903.) [124 Fed., 956.] Monopolies— Anti-Tbust Law— Combination in Restraint of Inter- state Commerce.— A combination between all the lumber manufac- « Judgment reversed by Circuit Court of Appeals, Ninth Circuit (131 Fed., 182). See p. 577. ELLIS V, INMAN, POULSEN & CO. Opinion of the Court. 269 turors of a city to raise and maintain the price of lumber to local i'onsumei's, and to refuse to sell lumber to consumers who purchase any part of their supply from outside mills, some of such mills sup- plying the local market being situated in another state, is not io violation of the Sherman anti-trust law, as in restraint of interstate commerce, its effect on such commerce being indirect and inci- dental only.o At Law. On demurrer to complaint. [957] Veasie c% Freeman^ for plaintiff. Cake (& Cake, for defendant Inman, Poulsen & Co. Wm. D, Fenton, for other defendants. Bellinger, District Judge. The defendants, comprising all the lumber manufacturers of Portland, have entered into a combination to monopolize the local lumber market, and to advance the price of lumber sold for use within the city. There are a number of outside mills, including two mills at Vancouver, in the state of Washington, convenient to the Portland market, and capable of supplying that market with rough lumber, but without adequate facilities for supplying finished and kiln-dried lumber. In consequence of the high prices charged by the combination, the plaintiff, who is a contractor and builder in Portland, and others similarly situated, purchased rough lumber at the Vancouver mills, and, being under the neces- sity of having finished and dried lumber, applied to the defendants therefor. The defendants refuse to sell plaintiff lumber of this character unless he will agree to buy hereafter all the lumber required by him for use in the city of Portland of them, and will pay, in addition to their usual prices, the difference between the prices at which plaintiff purchased rough lumber at Vancouver and the prices charged for that kind of lumber by the defendants. The combination in this case is to advance the price of lumber to Portland consumers. It has no reference to the trade in lumber with Vancouver. If this is a wrong, it is a wrong done to such consumers, who are compelled to pay extortionate prices to the monopoly. a Syllabus copyrighted, 1903, by West Publishing Co. 124 FEDERAL REPORTER, 957. Opinion of the Court It is not contended that the advance of price in the local market^the thing for which the combination was formed- operates m restraint of the trade in lumber with Vancouver, buch advance has a contrary tendency so far as rough lum- her IS concerned. And it is not apparent why the defend- ante, having a particular kind of lumber not obtainable else- where, may not refuse to sell such lumber to those who patronize outside mills in the purchase of a part of their supplies, or why the defendants may not di^riminate in prices in favor of those who purchase exclusively from them. The tendency of this discrimination is to keep those who are compelled to have finished and dried lumber from purchasing rough lumber at outside mills. Assuming that this operates in restraint of the trade in rough Inmter be- tween Vancouver and Portland, it is not such a result as Mlows direcUy or immediately from the acts complained of. 1 he discrimination is against all outside mills. A relatively ^all number of these happen to be located at Vancouver. Ihe remainder are in Oregon, and convenient to the Port- land market. Among the Portland purchasers of ,ou<* lumber at these outside mills there ar« some who are con- sumers of finished and dried lumber. Some of those pur- chase.^ of rough lumber resort to the mills at Vancouver, «nd of these some require finished and dried lumber; and it so happeiis (but as to this the allegations of the complaint are not definite) that the outside mills, includin.. thL at Vancouver, cannot or do not furnish an adequate'supplV of 8uch lumber; and so we at length i«,ch a point where, ttrfo^r/h"**'''!:-'"" f .^P^'*' ""^^ ^^'^P^'-'-^ -edi- tions, 1958] the working of the combination tends indirectly fi^- k!^ i ,"•"**, "" ^^^ ^"^^ ^"y '^"ds to cmite a trade in hnished and dried lumber between these points, since there js no reason why the outside mills cannot, in a short time be prepared to supply the demand for finished and dried as well as rough lumber; and yet the combination cannot be ^h^n^oT "'v.*"' t-dency wuh being organized in furtherance of such a trada If the defendants should greaUy reduce the pnce of aU kinds of lumber to all pufchas ers, It would have a tendency to lessen, if it did not destroy WHITWELL V, CONTINENTAL TOBACCO CO. 271 Syllabus. the trade in lumber now carried on between Vancouver and Portland, yet they would not be accused in so doing of acting in restraint of that trade. No more can they be said to be so acting within the meaning of the act of congress when they raise the price of lumber to their Portland consumers, or discriminate in the sale of special kinds of lumber in favor of customers who buy exclusively from them. The demurrer is sustained. [464] WHITWELL v. CONTINENTAL TOBACCO CO. ETAL. (Circuit Court of Appeals, Eighth Circuit. November 12, 1903.) [125 Fed., 454.] A.NTI-TRUST Act — What Contracts, Combinations, or Conspiracies Violate. — Every contract, conil)iuatioii, or conspiracy, the necessary effect of which is to stifle or to directly and substantially restrict competition in commerce among the states, is in restraint of inter- state conmierce, and violates section 1 of the act of July 2, 1890, c. 047, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200]. Same — What Acts, Contracts, and Combinations do not Violate. — Acts, contracts, and combinations which promote, or only incident- ally or indirectly restrict, competition in commerce among the states, while their main puipose and chief effect are to foster the trade and increase the business of those who malvo and operate them, are not in restraint of interstate commerce, or violative of section 1 of the act of July 2, 1890, c. G47, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200] . [465] Same— Construction.— The anti-trust act should have a rea- sonable consti-uction— one which tends to advance the remedy it provides, and to abate the mischief at which it was leveled. Same — Attempts to Monopolize a Part of Interstate Commerce. — Every attempt to monoiwlize a part of interstate commerce, the necessary effect of which is to stitle or to directly and substantially restrict competition in conunerce among the states, violates section 2 of the act of July 2, 1890, c. 647, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200]. Same. — Attempts to monoiwlize a part of commerce among the states which promote, or only incidentally or indirectly restrict, compe- tition in interstate commerce, while their main purpose and chief effect are to increase the trade and foster the business of those who make them, were not intended to be, and were not, made illegal or 272 125 FEDEBAL REPOKTBB, 454. Opinion of the Court puDishable by section 2 of the antitrust act of July 2, 1890, c. 647, 20 Stat. 209 [U. S. Comp. St. 1901, p. 3200], because such attempts are indispensable to the existence of any competition in commerce among the states. Same— Restriction of Sales of Goods.— A manufacturer, a corjiora- tlon, and its employe restrained by their combination to conduct the trade of the tobacco company. The contract, combination, or conspirac)^ charged against them did not restrict comj^etition between them and the in- dependent manufacturers or dealers who, according to the complaint, were their competitors, because it left the latter free to select their purchasers and to fix the prices of their goods and the terms at which they would dispose of them to all intending purchasers. The tobacco company and its competitors were not dealing in articles of prime necessity, like corn and coal, nor were they rendering public or quasi public service, like railroad and gas corporations. 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 which it Avould dispose of them, and the terms upon which it would contract to sell them. Each of 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 GHce (C. C.) 79 Fed. 627, 644; l^Valsh V. D wight (Sup.) 58 N. Y. Supp. 91, 93; Broicn v. Iiounsavell, 78 111. 589; Coinmomvealth v. GHnstead (Ky.) (33 S. W. 427; Allgeyer v. Louisiana^ 165 U. S. 578, 589, 17 280 125 FEDERAL BEPORTER, 160. Opinion of the Court. Sup. a, 427, 41 L. Ed. 832. There is nothing in the act of July 2, 1890, c. 647, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3^00], which deprived any of these competitors of these rights. If there had been, the law itself would have destroyed competition more effectually than any contracts or combi- [461] nations of persons or of corporations couM possibly have stifled it The exercise of these undoubted rights is essential to the very existence of free competition, and so long as their exercise by any person or corporation in no way deprives competitors of the same rights, or restricts them in the use of these rights, it is difficult to perceive how their exercise can constitute any restriction upon competition or any restraint upon interstate trade. The acts of the defendant which are alleged by the com- plaint in this action to constitute an unlawful restraint upon interstate commerce are nothing more than the lawful ex- ercise of these unquestioned rights which are indispensable to the existence of competition or to the conduct of trade. The tobacco company and its employe fixed the prices of its commodities so high that the plaintiff could not profitably buy them. This was no restriction upon free competition, 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 employe had combined to refuse to sell any of its commodities 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 invest- ment by the plaintiff. The tobacco company and its employe sold its prod- ucts 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 purchasers than those who bought of the defend- ants, and free to compete for sales to the customers of the tobacco company by offering to them goods at lower prices or on better terms than they secured from that company. WHIT WELL V, CONTINENTAL TOBACCO CO. Opinion of the Court 281 The tobacco company and its employe 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 all intending purchasers at the same prices. They had the right to select their customers, to sell and to refuse to sell to whom- soever they chose, and to fix different prices for sales of the same commodities 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 cus- tomers, 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 di- rectly and substantially 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 exer- cise 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 respec- tive wills. It is contended, however, that this selection by the de- fendants of customers who refrained from selling the goods of their competitors violated section 2 of the anti-trust act, because it was an [462] " attempt to monopolize * * * part of the trade or commerce among the several states." It is admitted that the practice of the defendants was not only an attempt, but a successful attempt, to monopolize a part of this commerce. But is every attempt to monopolize any part of interstate commerce made unlawful and punish- able by section 2 of the act of July 2, 1890, c. 647, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200] ? If so, no interstate commerce has ever been lawfully conducted since that act became a law, because every sale and every trans^^ortation 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 interstate commerce is the very root of all competition therein. Eradi- cate it, and competition necessarily ceases — dies. Every person engaged in interstate commerce necessarily attempts f}Q€% tjOm 125 fEDEBAL BEPOBIEB, 461. Opinion of the CJourt 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 commerce among the states, and some single corporation or person must be permitted to receive and control it all in one huge monopoly. The purpose of the act of July 2, 1890, was, however, to prevent the stifling of competition, not to de- stroy it or to foster monopoly, and any construction of any of its provisions which would give it such an effect is un- reasonable and inconsistent with the object and spirit of the law. It is an interpretation which fastei-s 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, lie the true meaning of the second section of this law that every attempt to monopolize any part of inter- state commerce is illegal. The act must, as the Supreme Court has twice declared {Tlopldm v. U, S,. 171 U. S. 578, 600, 19 Sup. Ct. 40, 43 L. Ed. 290; L\ S. v. Joint Tmiftc Ass'n, 171 U. S. 505, 568, 19 Sup. Ct. 25, 43 L. Ed. 259), liave a reasonable construction. The purpose of the second section is the same as that of the first— to prevent the re- striction of competition— and the two sections ought to receive similar interpretations. The Supreme Court has de- clared that the true construction of the first section is that no contract, combination, or conspiracy is denounced by it unless its necessary effect is to directly and substantially restrict comi)etition in commerce among the states. By a parity of reasoning, the correct interpretation of the second section must l^ that no attempt to monopolize a part of commerce among the states is made illegal or punishable by the provisions of that section imless the necessary effect of that attempt is to directly and substantially restrict com- merce among the states. The acts of the defendants had no such effect. They evidenced nothing but the legitimate efforts of traders to secure for themselves as large a part of interetate 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 WHITWELL V. CONTINENTAIi TOBACCO CO. Opinion of the CJourt. 283 to prohibit or to punish the customary and universal at- tempts of all manufacturers, merchants. [463] and traders engaged in interstate commerce to monopolize a fair share of it in the necessary conduct 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 defendants were of this nature, and they did not violate the second section of the law. An attempt to mo- nopolize a part of interstate conmieree, the necessary effect of which is to stifle or to directly and substantially restrict competition in commerce among the states, violates the sec- ond section of this act. But an attempt to monopolize a part of interstate commerce which promotes, or but indi- rectly or incidentally restricts, competition 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 hy the second section of the act under consideration, because such attempts are indispensable to the existence of any competition in com- merce among the states. 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 l>laintiff 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 pei'son 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 that 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 contract with him. They were not caused by the 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 realize a profit by selling them again to others. The com- 284 125 FEDERAL BEPORTER, 593. Opinion of the Court, plaint therefore fails to show that any legal injury or ac- tionable damages were inflicted upon the plaintiff by the acts of the defendants and the judgment below is affirmed. [593] PHILLIPS V. lOLA PORTLAND CEMENT CO. (Circuit Court of Appeals, Eighth Circuit. November 12, 1903.) [125 Fed., 593.] Anti-Tbust Aciv-Test of Validity of Contract or CoMBiNAiroif UNDER.— The test of the violation of the anti-trust act of July 2 1890 (26 Stat. 209, c. 647 [U. S. Comp. St. 1901, p. 8200]), by a contract or combination, is its effect upon competition in commerce among the states. If its necessary effect is to stifle or to directly and substantially restrict interstate commerce, It falls under the ban of the law, but if it promotes, or only incidentally or indirectly restricts, competition, while its main purpose and chief effect are to promote the business and increase the trade of the maimers, it ia not denounced or avoided by that law. Same— Contract Restkicting Territory within Which Purchasers MAT Sell.— A contract of sale by a manufacturer to jobbers of some of its product, to be shipped across state lines to the latter, whereby the parties agree that the purchasers shall not sell, ship* or allow any of the product thus purchased to be shipped, outside of a certain state, is not in restraint of trade or illegal under the act of July 2, 1890. (Syllabus by the Court.) [5M] In Error to the Circuit Court of the United States for the Western District of Missouri. John Charles Harrm (Edward F, Harris^ on the brief), for plaintiff in error. Jarnes C. Williams, for defendant in error. Before Sanborn, Thayer, and Van Devanter, Circuit Judges. Sanborn, Circuit Judge. This is a writ of error to review a judgment for the plain- tiff below, the lola Portland Cement Company, a corpora- tion, against Thomas H. Phillips, in an action for damages PHILLIPS V. IOLA PORTLAND CEMENT CO. 285 Opinion of the Court for the breach of a contract of sale of cement. The com- pany was a manufacturer of cement in the state of Kansas. The defendant below, Phillips, was a member of the copart- nership of William Parr & Co., who were merchants engaged in business at Galveston, in the state of Texas. On January 24, 1901, Parr & Co. made a contract with the cement com- pany whereby they agreed to purchase of it, during the year 1901, 50,000 barrels of lola portland cement to be delivered free on board the cars at lola, in the state of Kansas, and to pay therefor $1.20 per barrel. They further agreed " not to sell said cement, ship same, or allow same to be shipped," outside of the state of Texas. Under this contract they ac- cepted and paid for 24,580 barrels of the cement, and refased to accept 25,420 barrels thereof. The cement company brought an action against them to recover the damages which it sustained by the failure of the purchasers to accept and pay for these 25,420 barrels, and Phillips, the only defendant served with process, answered that the contract was illegal and void under Act Cong. July 2, 1890, c. 647, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200], because it provided that Parr & Co. should not sell the cement, ship it, or allow it to be shipped, without the state of Texas. It is now settled by repeated decisions of the Supreme Court that 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 en- hance 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 con- tracts or combinations 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 combina- Zob 125 FEDERAL BEPORTER, 595. Opinion of tlie Court tioiis and devices do not necessarily have a dii-ect and sub- stantial effect to restrict competition in commerce among the states. HopMm v. U. ^,, 171 U. S. 578, 592, 19 Sup. Ct. 40, 43 L. Ed. 290; Andei'son v. [505] U. S., 171 U. S. 604, 616, 19 Slip. Ct. 50, 43 L. Ed. 300; U, S. v. Joint Traffic As8\ 171 U. S. 505, 568, 10 Sup. Ct. 25, 43 L. Ed. 259; Addyston Pipe i& Steel Co, v. l\ S., 175 U. S. 211, 245, 20 Sup. Ct. 96, 44 L. Ed. 136; U. S, v. Tmns-Mismun Freight Ass\ 166 U. 8. 290, 339, 340. 342, 17 Sup. Ct. 540, 41 L. Ed. 1007; r. S. V. Xorthem SecHtifies Co. (C. C.) 120 Fed. 721, 725. The application of this rule to the facts of the case in hand leaves no doubt that there was nothing in the contract before us obnoxious to the provisions of the anti-trust law of 1890. The lola Cement Company had no monopoly of the manu- facture or sale of cement in the United States. It was sur- rounded by competing manufacturers, and the contract which it made with Parr & Co., of Galveston, had no direct or substantial effect upon competition in trade among the states. It left the manufacturers who were comi^eting with the plaintiff for the trade of the country free to select their cus- tomei-s, to fix their priee<, and to dictate their terms for the sales of the commodities they offered, so that in this regard no restraint whatever was imposed. If it had the effect to restrain Parr & Co. from using the product which they pur- chased to cofnpete with other jobl>ers or manufacturers in the country beyond the limits of the state of Texas, this restriction was not the chief purpose or the main effect of the contract of sale, but a mere indirect and immaterial inci- dent of it. The agreement of sale imposed no direct restric- tion upon competition in commerce among the states, did not constitute a i-estraint of that commerce, and was not obnox- ious to the provisions of the act of July 2, 1890. For a more extended consideration of the principles upon which this decision is based, for a citation, review, and anal- ysis of the authorities which sustain them and which compel the ultimate conclusion which w-e have reached in this case, reference is made to the opinion of this court in WhitweU V. Continental Tohaceo Co, (which is filed herewith) 125 Fed. 454. A repetition of the citation and review of au- thorities, and of the more exhaustive discussion of princi- PHILLIPS V. lOLA PORTLAND CEMENT CO. Opinion of the Conrt. 287 pies there indulged in, would be useless here, and it is omitted. The evidence disclosed the fact that shortly after the ex- piration of the year within which the defendants had agreed to receive and pay for the cement the plaintiff sold the 25,420 barrels, which the defendants refused to take, for $1.10 per barrel. The president of the plaintiff testified that the cost of selling this cement was about 10 cents per barrel, that it did not cost any more to sell the cement which had been previously sold to Parr & Co. than it did to sell any other cement, but that the cost of selling any cement was about 10 cents per barrel. The court below instructed the jury that, if they believed that the cost of selling this cement was 10 cents per barrel, they might allow that amount as a part of the damages which the plaintiff was entitled to recover. This instruction is assigned as error. But it was manifestly right. The plaintiff had once incurred and paid the cost of selling the cement in question to Parr & Co., and had obtained a valid contract for its purchase price. Their failure to comply with this agreement imposed upon the plaintiff the necessary expense of making a second sale of that portion of the cement already sold which the defend- ants refused to accept. [596] It is assigned as error that the court below refused to admit in evidence a telegram from the president of the lola company to Parr & Co., dated January 24, 1901, the day of the date of the contract, to the effect that the plain- tiff would guaranty a rate of freight of fi\Q cents per him- dred less than Kansas City rates to all Texas points. But there was no error in this ruling. The telegram was not admissible to establish any agreement to guaranty this rate of freight, and a breach of that agreement as a defense to the action, because no such defense was pleaded. It was not admissible to modify or change the written contract of January 24, 1901, because if it was sent before or at the time that the contract was executed it was merged in that con- tract and became ineffective, and if it was sent after that contract was made it was not pleaded and had no place in the trial of this case. Another alleged error specified is that the court below Zoo 126 FEDEBAL BEPOBTER, 364. Syllabua. refused to admit in evidence a letter from thiB plaintiff to the defendants, dated February 10, 1902, in which they wrote that they had not done an agency business and re- quested a proposition. It is contended that this letter was competent to establish the fact that the relation between the plaintiff and the defendants under the contract in suit was that of vendor and vendee, and not that of principal and agent. Conceding that this letter had a tendency to estab- lish that fact, its rejection did not prejudice, and could not have prejudiced, the defendants, because the relation of vendor and vendee was proved by the contract, because the case was tried, and the court charged the jury, and this court has determined the case, upon that theory, and error without prejudice is no ground for reversal. The judgment below is affirmed. l^U] UNITED STATES CONSOLIDATED SEEDED RAISIN CO. V, GRIFFIN & SKELLEY CO. (Circuit Court of Appeals, Ninth Circuit. November 9, 1903.) [126 Fed.. 364.] MoifOPOLiEs— Legality op Contracts— Licenses undeb Patents.— Contracts by which a number of patents covering similar inventions are conveyed by the several owners to one of the parties, which grants licenses under all to the others, are not void as against public policy, or as in violation of the Sherman anti-trust law. because of provisions intended to protect and keep up the patent monopoly by requiring the licensor to prosecute all infringers, limit- ing the licenses to be granted to such licensees as shall be agreed on, and imposing conditions on each licensee as to the use and owner- ship of the patented machines, and prohibiting him from using any others.* 6 Patents — ^Rights of Patentee— Eoect of State LAws.^Rlghts ac- quired under the patent laws of the United States cannot be af- fected by a state statute. , Contracts— Efject of Illegal Provisions— Divisibility.— Stipula- tions in a contract which are invalid as in restraint of trade, if o Validity of monopolistic contracts as affected by public policy, see note to Cravens v. Carter-Orume Co,, 34 C. 0. A. 486. 6 Syllabus copyrighted, 1904, by West Publishing Co. U. S. CONSOL. S. R. CO. V. GRIFFIN & SKELLEY CO. 289 Statement of the Case. capable of being construed divisibly, do not affect the validity of other provisions. Same — Validity — When Question fob Jury. — Conceding that a con- tract legal in its terms and in its consideration may he rendered illegal as against public policy by reason of the intention of the par- ties to so use it as to commit civil injury to third persons, where the evidence as to such intention is conflicting the contract cannot l>e declared illegal by tbe court as matter of law. In Error to the Circuit Court of the United States for the Northern District of California. The plaintiff in error is a corporation created under the laws of New York. I»rior to .Tune 2<;, 19(i0, it was the owner of two certain patents for machines for seeding and i)ro(essing raisins. Other j>er- sons ami corporations at Fresno, Cal., engaged in the raisin-seeding business, owned certain other patents. Litigation had arisen between the owners of these patents. To end this litigation, and to avoid it in the future, an agreement was made on June 20, IfHX), between the plaintiff" in error, as the party of the first part, and the Forsvth Raisin Process Company, the Forsyth Seeded Kaisin Company, the Griffin & Skelley Company, the California Seeding Machine Companv, William M. Griffin, Thomas E. Langley, Cary S. Cox, and Lee L. Gray, as parties of the second pait. The agreement recites that tlie party of the first part is the owner of patents numbered r>4.38.*i3 and .^43834, and that the parties of the second part own patents numbered 011782 <>411).H8. 041039, 014178, 502131, 002008, 010008, and 07022.?, ami that it is deemed expedient and for the interest of all parties that all of said letters patent be combined f(n- mutual protection and assistance. It thereupon provides, in sul>stance, that the jiarties of tbe second part shall assign tlieir various patents to the party of the first part, and that the latter shall use every reasonable effort to defend and l>rotect tbe several inventions and letters patent in the interest of all, and that it shall grant licenses under said patents, institute and de- feud suits to protect said inventions and letters patent. Tbe agree- ment provides further that the royalties which shall be i-eceived on license contracts shall, after the deduction of exi^enses and other charges, as provided for in the agreement, be paid 40 i)er cent, to the plaintiff in error on [365] account of its patents, .30 i)er cent, to the Forsyth Kaisin Process Company on account of its patent, 20 per cent, to the present owners of letters patent 010008, per cent, to Thomas e! Langley and C. S. Cox, and 4 per cent, to the California Seeding Ma- chine Company. The agreement provides for an appointment of an advisory committee of four memliers, two to be elesignated by the I)artj' of the first part, and two by the parties of the second part*; said committee to have authority to determine to whom licenses shall be granted under the letters i>atent, the terms and conditions thereof; and it gives the committee power to employ a financial agent, whose duty it shall be to collect and distribute the royalties under such licenses. The agreement makes further provision for the payment of salaries of officers, taxes, and other expenses, makes reference to a suit then pending in the United States Circuit Court for the North- ern District of California by the Forsyth Raisin Process Company against A. L. Hobbs & Co. on letters patent 011782, and provides that the same shall be prosecuted without delay at the expense of the 21220— VOL 2—07 m- -19 Atji) 126 FEDEBAL REPORTEB, 366. Statement of the Case. plaintiff tlierein. The agreement proceeds to provide that, in case any of the said mentioned letters patent shall be judicially determined to be invalid by a court of last resort, then the share of royalties In the agreement apportioned to and on account of such letters patent shall thereafter not be paid. The licenses issued under this agreement were all In the one form. They recited that the plaintiff in error, the licensor, is the sole owner of the letters patent referred to in the agreement; and, first, that it grants to the licensee the right to use machines and processes embodied in and covered by said letters patent throughout the United States for the life of said patents; second, that the party of the second part shall pay therefor as license fee one-eighth of one cent for each pound of raisins seedetl or processed under said letters patent during the years 1900 and 11)01, and thereafter Due-fourtli of a cent per pound; third, that the llwnsor shall from time to time lease to tlie licensee raishi- see«ling macliines, processes, appliances, fittings, etc., as the same may be reiuired, ui>im payment of the actual cost of the same, title to such machines, hntract, and attorney in faet for the remainder of the parties of the second part in signing the contract of Jnne 20, 1900, testified [367] that in the negotiations leadiiiir np to tlie couh-act tlie plaintiff in error was ^ representee urgeil for tlie purpose of wearing them ont. or because they were infringers? A. Other patents, vou mean; lieople using the same machines? Q. Xo. sir: I mean those that were engaged in the business : these outside i»arties that you expe<-ted to close out, A. Both for the [jurpose of wearing tliem out and to stop them using the machint^s. Q. I inferred tliat. and I w.-mtcd to know whether that was a |>art of the combination. Tliat was a i>art of this crombination? A. Yes, sir." The witness proceeded to refer to litiga- tion i>ending at that time for infringements of i>atents held l»v the plaintift in error, after which he gave the following testin'ionv: •*Q. What was said, if anything, in regard to closing up anv other wnceru, and how did they propose to clost* them up? A. By liringing wilts against them. Q. Suits for what? A. For infringing of pat- ents." A. Gartenlanb, who was in the schhIciI raisin iuisiness at Fresno, and who refuses! to take a license from the plaintiff in error, testified to a conversation wliich he had witli .Iam«'s Williamson, as follows: *' Q. 'V^Tien l»e said b*' was g )ing to sue pe)i>lc wno eing so cxi>ensive that you could not defend .a suit for less tli tn %:^.m{\ or 110.000. that, if he kept on filing five or six suits, lie wou'd worr\ ft man out so that he would eitbei- close up or take out a license. (}. The suits were for infringement of the patents? A. ITi- did i)<»t expl:»in to me how he was going to file his suits." As opposed to tins testi- mony were the der>ositions of Williamson and Allen, taken in New York before the trial; taken, it is true, on the issues raided on the finsvver. yet referring in general terms to the nejrotiations which led up to the contract. Williamson, being asked whether anything was said as to the purpose or objects of the combination, j.nswered: "Nothing further than that the United States Consolidated Seeded Halsin Company was to become the owner of the patents, and. as the owner of the patents, license certain people." Charles F. Allen was asked the following questions: " Q. State whether or not all the rep- resentations made by the plaintiflf to the defendant— that is to say, such representations as were made to induce them to sign the con- tract—are contained in the license contract itself which was issued to them. A. Yes, sir. * * ♦ Q. Was it not one of the purposes of the combination that you should get a sufficient number of patents to control the raisin-seeding art? A. No, sir. Q. What was the object in getting together this considerable number of patents? A. Because those who gave their iratents did it to stop litigation that we had brought against them." Alfred Nichols, the president of the plaintiff in error, also deposed " that no representations or statements were made by the plaintiff to induce defendant to enter into this U. S. CONSOL. S. R. CO. V, GRIFFIN & SKELLEY CO. 293 Opinion of the Court. license contract other than such statements and representations and promises and agreements as were contained in the written document itself." As tending to contradict the testimony of Forsyth and Gar- tenlaub, other witnesses testified as to the representations made by the plaintiff in error to induce them to join the combination. T. E. Langley testified that Williamson said that they would prevent others who did not take out licenses from operating by bringing suits against them. " Q. What were they to sue them for? What was to be the basis of the suits? A. Infringement of the patents." A. L. Hobbs, who was asked to join the combination, testified that in the represen- tations made to him it was not said that the plaintiff in error would bring suits for anything except what they claimed was an infringe- ment. .John Bonner, who declined to join the combination, gave sim- ilar testimony. [368] John II. Miller^ for plaintiff in error. Piatt d' Bayne and //. //. Welsh,, for defendants in error. Before Gilbert and Ross, Circuit Judges, and Hawlev, District Judge. Gilbert, Circuit Judge, after stating the case as above, delivered the opinion of the court. The Circuit Court instructed the jury to return a verdict for the defendant in error, holding the contract void on three grounds : First, that it was contrary to public policy, in that it tends to create a monopoly; second, that it is pro- hibited by the provisions of .section 1673 of ih^ Civil Code of the State of California ; and, third, that it was contrary to public policy, for the reason that it provided for oppres- sive litigation. That such a contract is not void as against public policy, in that it tends to create a monopoly, has been decided by the Supreme Court in the case of Bement v. National Harvoic Co., 186 U. S. 70, 22 Sup. Ct. 747, 46 L. Ed. 1058. In that case a contract had been entered into between the National Harrow Company and various other corporations and firms engaged in manufacturing float spring tooth harrows, their frames and attachments, under various patents, 85 in number, which were assigned to the National Harrow Company. That corporation then entered into contracts with the other parties to the agreement, and gave to each a license very similar to the license in question in the present suit. The license provided that the licensee aIt'x im FEDERAL REPORTER, 368. Opinion of the Court. should pay a fixed royalty, should make verified reports of its business, and that it should not sell its products manu- factured under the license at a lower price or on more favor- able terms of payment than was set forth in a schedule which was made a part of the license, except that the licensor reserved the right to reduce the selling price and to reduce the royalty. The licensee agreed that it would not, during the continuance of the license, directly or indirectly engage in the manufacture or sale of any other float spring tooth harrows, etc., than those which it was licensed to manufac- ture and make under the terms of the license, except such as it might manufacture and furnish another licensee of the National Harrow Company, and then only such constructions thereof as such other licensee should be licensed by the Na- tional Harrow Company to manufacture and sell, except such other style and construction as it might be licensed to manufacture and sell by the National Harrow Company. Provision was made for the payment of fixed liquidated damages for breach of certain of the terms of the license, and the licensee agreed not to, directly or indirectly, in any way contest the validity of any patent under which it was licensed to manufacture, or which it might manufacture for another licensee; and it agreed also not to alter or change the construction of the float spring tooth harrow, the frames, etc., which it was authorized to manufacture under the license and under the patents. The licensor covenanted not to grant licenses to any other person or any right to manu- facture articles of the peculiar style and construction, or embodying the peculiar features thereof, used by the licensee. It was agreed that the license should continue during [369] the life of the patent or patents applicable thereto, and dur- ing the term of any reissue thereof. There were other pro- visions of the contract not necessary here to be considered. The licensee having violated the contract, suit was brought to recover damages and to restrain further breaches. The licensee, in defense thereof, answered that the license grew out of a combination of the National Harrow Company and other manufacturei-s and dealers, which amounted to a com- bination to regulate the manufacture and provide for the tJ. S. CONSOL. S. R. CO. V. GRIFFIN & SKELLBY CO. 295 Opinion of tlie Court sale of float spring tooth harrows at fixed prices throughout the United States, and that said combination was void, as in restraint of trade, and a monopoly prohibited by the Sherman act. In the opinion of the court Mr. Justice Peckham said of the patent laws of the United States : "The very object of these laws is monopoly, and the rule is, witli few exceptions, that any conditions which are not in their very nature illegal with regard to this kind of property, imwsed 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 conditions in the contracts keep up the monopoly or fix prices does not render them illegal." Concerning the application of the Shein.an act to the con- tract in question, the court said : " But that statute clearly does not refer to that kind of a restraint of interstate commerce whicli may arise from reasonable and legal conditions imposed upon the assignee or licensee of a i^ateut l^y the owner thereof, restricting the terms upon which the article may be used and the price to be demanded therefor. * * * The owner of a patented article can, of course, charge such price ns he may choose, and the owner of a patent may assign it or sell the right to manu- facture and sell the article patented upon the condition that the assignee shall charge a certain amount for sucli article. It is also objected that the agreement of the defendant not to manufacture or sell any other float spring tooth harrow, etc., than those wliich it had made under its patents before assigning them to the i»laintiff, or which it was licenced to manufacture and make under the t'^-rms 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 Avas to prevent the defendant from infringing uiwn tlie 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 punwse to prevent the licensee from attempting to make any improvement in harrows. It was a reasonable prohibition for the defendant, who v.ould thufc be excluded frorn making such h-.tr-ows as were made by others who were engaged in manufacturing :uid selling other iijMChlnes under other patents. It would be uniojisonnblc 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 i impose nor its meiming." We think the principles announced in that case must cim- trol our decision of the question which is here presented, and under its authority we hold that the contract in question in the present case is not void as against public policy, as tending to create a monopoh^, or as obnoxious to the pro- visions of the Sherman anti-trust act. The principles announced in the case just cited are appli- cable also to the question whether the contract was prohibited 296 126 FEDERAL BEPORTER, 370. Opinion of the Court. by section ]f>73 [370] of the Code of Civil Procedure of California. That section reads as follows : " Every c-ontnut by which one is restrained from exercising a law- I ! profession, trade, or business of any Icind otherwise than as pro- vided by the next two sections, is to that extent void." The next two sections refen-ed to have no relevancy to the questions involved in the present case, and need not be quoted. That the provisions of a state law cannot affect rights acquired under a patent of the United States, is too plain to require discussion. In Colnmhia Wire Co. v. Free- mmn Wire (Jo, (C. C.) 71 Fed. 302, 306, the court said : "The entire theorj- and purpose of our i>atent laws is to create a limited monopoly. In consideration tliat a patentee will give his in- vention to the imblie. with full drawings and specifications, so as to enable the public to freely use it at the expiration of 17 years a grant is made to htoi of an exclusive right to the monopoly of the patented device during that time. The rights so awiuired by the patentee under a grant from the United States are entirely inconsistent with the patentee's being made subject to the provisions of the anti- trust laws of the several states.' But, whatever may be the effect of the section of the Cali- fornia statute quoted as regards the contract in question, we hold that it can have no relevancy to any portion thereof except that covenant of the licensee embodied in the fourth provision of the license contract that it shall " neither sub- let any of said machines, nor allow any parties, except its own employes, to have possession or control of, or to use said machines; shall not use any other raisin-seeding ma- chines during the life of this contract than those furnished by the first party, or with their consent; and shall not buy, sell, nor deal in raisins seeded or treated by any other ma- chines or processes than those of the firet party." If that provision of the contract is, indeed, rendered void by the local statute, none of the questions presented in this case is thereby affected, as that provision is not involved in the liti- gation. The plaintiff in error sued on two covenants only of the license contract— the covenant to pay a royalty, and the covenant not to sublet the machines. These are valid and subsisting covenants, and are not affected by section 1673, which provides that the contract which contravenes that section is only " to that extent void." In Oregon Rail- way dt Navigation Co. v. Wimor, 20 Wall. 64, 70, 22 L. Ed. U. S. CONSOL. S. R. CO. V. GRIFFIN & SKELLEY CO. 297 Opinion of the Court. 315, the court affirmed the doctrine " that agreements in re- straint of trade, whether under seal or not, are divisible; and accordingly it has been held that, when such an agreement contains a stipulation which is capable of being construed divisibly, and one part thereof is void as being in restraint of trade, whilst the other is not, the court will give effect to the latter, and will not hold the agreement to be void altogether." It remains to be considered whether the original contract of June 26, 1900, is void, or so tainted with inequity that a court will not enforce its provisions, for the reason that it provides for oppressive litigation against third persons. The- contract itself contains in its terms no provision for oppressive litigation. It contains a covenant on the part of the plaintiff in error to " institute and defend suits based [371] ui)on or concerning the inventions and letters patent above specified, and such others as may hereafter be acquired by it under and by virtue of this agreement." The license contract contained a provision requiring the plaintiff in error to " vigorously prosecute infringers of said letters pat- ent, so as to prevent as far as possible all unlawful interfer- ence with the business and rights of said party of the second part under and by virtue of the contract." These are proper provisions, and they are not open to criticism. The ruling of the trial court was based upon certain oral testimony ad- duced upon the trial. There was no issue raised by the pleadings to which such testimony was applicable. The de- fendant in error had, it is true, alleged in its answer '' that the object of the said combination was not only the purpose aforesaid, but also for the purpose of forcing out of the seeded raisin business the individuals, companies, and corpo- rations who did not unite Avith the said plaintiff and join with it in its scheme and plan." That purpose, as pleaded in the answer, was not necessarily an illegal one. The answer did not aver that the said alleged purpose was ex- pressed in the terms of the contract of June 26, 1900, or that the contract itself ]>rovided in any way for unjust or op- pressive litigation. So far from making that allegation, the defendant in error set up in its answer as one of its groiuids of defense, and as a reason for rescinding the contract, that IM IfEDEBAL REPORTER, 371. Opinion of the C5oiirt. the plaintiff in error, having promised vigorous prosecution of infringers of said letters patent, failed to perform the promised service. The averment of the answer that one of the unexpressed purposes of the combination was to force out of the seeded raisin business those who did not take licenses thereunder is presumably true, when it is considered that the whole of the new art of seeding raisins by ma- chineiy was covered by the patents which were pooled in the combination. The natural result of such a combination would be to force out of business all who did not obtain licenses from the plaintiff in error, for they would neces- sarily be infringei-s. The oral evidence which prompted the action of the trial court in withdrawing the case from* the jury was the testimony of the president of the defendant in error, who had l)een an active agent in effecting the combi- nation, that it was the '' design of the organization or the un- derstanding," that litigation was to be instituted against those who refused to take licenses, " both for the purpose of wearing them out and because they wei-e infringers." The same witness testified later, however, that it was the purpose to close up such third parties by bringing suit against them " for infringing of patents." There was the testimony, also, of another, who said that Williamson, the secretary of the plaintiff in error, stated to the witness that he was going to close up and wear out of business all who did not take out a license. Admitting that a contract legal in its terms and in its consideration may be rendered illegal, as against public policy, by reason of the intention of the parties thereto at the time of entering into it to so use it as thereby to comuiit civil injury to third persons, it may nevertheless be doubted whether the mere existence in the minds of some of the con- tracting parties of such a purpose— a purpose different from the main purpose, and never in fact carried into execution- is, after the contract has been acted upon and acquiesced in inter partes [372J for eight months, ground sufficient to justify the denial of any remedy thereon. But, however that may be, we are clearly of the opinion that if, in view of the pleadings and the law applicable thereto, the question of the existence of such an illegal purpose was properly before the court as affecting the legality of the contract, it was, CITY OF ATLANTA V. CHATTANOOGA F. & P. WORKS. 299 Syllabus. under the evidence, a question of fact which should have been submitted to the jury for its decision. There was evi- dence before the court and jury tending to contradict the evidence that such a purpose existed. There was the testi- mony of three of the officers of the plaintiff in error taken upon depositions in New York upon the general issues raised by the answer, in which they deposed in substance that the contract itself embodied all of the representations made to induce its execution, and that its objects were fully ex- pressed in its terms. There was the testimony, also, of others who were asked to take out licenses under the con- tract, who stated that the officers of the plaintiff in error made no representation to them that suits would be brought against others, except on account of infringement of the patents. The judgment of the lower court is reversed, and the cause remanded for a new trial. 123] CITY OF ATLANTA v. CHATTANOOGA FOUN- DRY & PIPEWORKS ET AL.« (Circuit Court of Appeals, Sixtli Circuit. December 8, 1903.) [127 Fed., 23.] Monopolies — Anti-Trust Act — Action by City for Injury to Busi- ness. — A municipal corp{>ration engaged in operating water, light- ing, or similar plants, from which a revenue is derived, is, in relation to such matters, a business corporation, and may mamtain an action under section 7 of the anti-trust act of July 2, 1890, c. 647, 26 Stat. 210 [U. S. Comp. St. 1901, p. 3202], for injury to its "busi- ness " by reason of a combination or conspiracy in restraint of inter- state trade or commerce made unlawful by such act* Same — Liability of Members of Combination. — Every member of an illegal combination in restraint of interstate trade or commerce in violation of the anti-trust act is liable for the damages resulting to o Suit originally brought In the Circuit Court of the United States for the Eastern District of Tennessee, where it was entitled " City of Atlanta v. Chattanooga Foundry & Pipe Co." (101 Fed., 900). See p. 11. Judgment reversed by Circuit Court of Appeals, Sixth Circuit (127 Fed., 23). See above. Affirmed by Supreme Court December 3, 1906 (203 U. S., ). Not yet officially reported. 6 Syllabus and statement copyrighted, 1904, by West Publishing Co. 300 127 FEDERAL REPORTER, 23. Statement of the Case. the business or propeitj* of a plaintiff by reason of such combina- tion, and it is Immaterial that there were no direct contract rela- tions between plaintiff and defendant. Same— INJUBY to Business.— If the effect of an lll^al combination between maniifactnrers to prevent competition in the sale of n com- modity which Is a subject of interstate commerce be to enhance the price of such commodity to a purchaser, he is entitled to recover the difference between the price paid and the reasonable price under natural competitive conditions, as an injury to his business, whether such business Is interstate or not, provided the transaction by which the purchase was made was interstate. Same— Action fob Damaoes— Limitation.— An action under section 7 of the anti-trust law (Act July 2, 1890, c. 647. 2© Stat. 210 [U S Comp. St. 1901, p. 3202]), providing that "any person who shall be Injured in his business or property by any other person or corpora- tion by reason of anything forbidden or declared to be mihuvful by this act may sue therefor in any Circuit Court of the Unittni States ♦ • ♦ aud shall re*»ver three-fold the damages by him sus- tained," is not an action for a penalty or forfeiture, withhi Rev St S 1047 [U. S. Comp. St. 11*01, p. 727], prescribing a limitation of ive years for a " suit or prosecution for any penalty or forfeiture pecuniary or otherwise, accnitog under the laws of the United States," but one for the enforcement of a civil remedy given by statute for a private injury, compensatory in its purpose and effect* the recover^' permitted in excess of actual damages being in the nature of exemplary damages, which does not change the nature of the action, and such action is governed as to limitation by the stat- utes of the state in which it is brought. [24] Same-Ten XESSEE Statute.— An action under said section based on an allegwl excessive price plaintiff was comiielled to pay for a manufactured article by reason of a mmbination between defend- ants and others to prevent competition and enhance the price of such article in violation of the act Is not one for an Injury to per- sonal property, within Shannon's Code Tenn. § 4470, which pre- scribes a limitation of three years for "actions for injuries to personal or real pi-operty," but is one to enforce a statute liability and within stntion 447a which prescribes a limitation of ten years for c-ertain actions, and in "all other cases not expressly provided for. In Error to the Circuit Court of the United States for the Eastern District of Tennessee. See 101 Fed. 900. This was an action to recover damages under the seventh section cUtst l^l^nT^m**^ •'"'^' ^ l^^' ''' ^*' 26 Stat. 210 [US comp. St. 1901 p .1202]. Imown as the "Anti-Trust Act." The olain- tiflf is a municipal corporation of the state of Georgia. The defend- ants are two manufacturing cori>orations of the state of TennesTcS CITY OF ATLANTA V. CHATTANOOGA F. & P. WORKS. 301 Statement of the Case. engaged in the business of nialcing nnd selling cast-iron pii>e and fittings. The declaration averred that on or about the 28th of December, 1894, the said two companies entered Into an unlawful combination for the purpose of restraining interstate trade and commerce with four other corporations engaged in the same line of manufacture, to wit, tile Anniston Pipe & Foundry Company, and the lloward-IIar- rison Iron ('ompany, both corporations of tlie state of Alabama, and conducting business in tiuit state; tlie I>ennis, Long & Co., a ct)rpora- tion of tlic state of Kentuclvy, und carrying on its business in said state; aud the Addyston Pipe & Steel Company, a corporation of the state of Ohio, engaged iu business at Cincinnati, in tliat state. The illegal trust agreement <-omi»lained of is the ideutietitioii, and by the instrumentality of fictitious bids put in by tlie otlier i)arties to said association, s<.> arranged as to create the semblance of competition, and yet secure the contract for the Anniston Company at the price set by the combination as the ostensil»le lowest bidder. The plaintiff avers that, by reason of the formation of said illegal combination, interstate commerce in cast- in»n pipe was restrained, and plaintiff compelled to deal only with the said Anniston Comi»any, and to pay a price agreed upon by the mem- bers of tlie combination, which was unreasonable; that the bonus so paid out of the price [25] paid by plaintiff was paid into a common pocivet, aild divided among the conspirators in an agreed way ; and that the two Tennessee- corporations here sued received their due proportion of said bonus according to the terms and plans of the scheme. By ail of which the plaintiff avers that it was compelled to pay for the cast-iron pii3e so bought and used in its said waterworks ^15,000 more than would have been paid but for the said unlawful trust between the producers of such pipe, and it lays the damage to its business and property at triple the said excess price so paid and reasonable attorneys' fees. 302 127 FEDERAL BEPORTEB, 25. Opinion of the Court. The defendants plead the general issue of not guilty, and the Ten- nessee statutes of limitations of one and three years. Upon the conclusion of all of the evidence, the court instructed the Jury to find for the defendants. This has been assigned as error, and this writ sued out by the plaintiff below. George Westmoreland and 6'. F. Goree, for plaintiff in error. Fmnh Spurlock, for defendant in error. Before Lurton, Severens, and Eichards, Circuit Judges. LuRTON, Circuit Judge, after making the foregoing state- ment of the case, delirered the opinion of the court. The plaintiffs action is to recover damages incurred in its '* business or property " by reason of a combination forbidden by the act of July 2, 1890, c. 647, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200], known as the "Anti-Trust Act," and its right to a recovery depends wholly upon the seventh section of that law. It is true that plaintiff is a municipal corporation. Never- theless it w^as maintaining a system of waterworks, and fur- nished water to consumers, charging for same precisely as would a private corporation engaged in a like business. That a municipal corporation may be empowered to engage in the business of furnishing water or gas, or in the operation of street railways, as well as many other quasi public occupa- tions, must be conceded. That the profit resulting inures to the public does not alter the fact that when thus engaged it is pro hac vice a business corporation. If its " business " as a corporation engaged in the occupation of supplying water for a consideration has been injured by the unlaw^ful combi- nation complained of, it is just as mnch entitled to maintain this suit as a private corporation engaged in a like occupa- tion. That it was not engaged in an interstate water busi- ness is true. But if it has no standing to recover damages for an injury to its " buisness," it is not easy to see how it has any better standing to recover for an injury to its " property." That there was evidence tending to show that the plaintiff had been compelled to pay an unreasonable price for the pipe which it bought during the continuance of the unlawful com- bination complained of is not to be disputed. That its pur- chases were made exclusively from the Anniston Pipe Com- CITY OF ATLANTA V. CHAa:TANOOGA F. & P. WORKS. 803 Opinion of the Court. pany, a corporation doing business in Alabama, and that it is not suing that corporation, is of no vital significance. The Alabama company and the two Tennessee companies which are sued were members of an association which included practically every pipe manufacturing concern in a situation to compete for the business of the plaintiff. The evidence also tended to show that the object of the combination was to prevent any other producer of such pipe from competing with the Anniston Company for plaintiff's business, and that practices were adopted intended to compel [26] it to deal exclusively with the Alabama member of the association, and to pay a price settled by the combination in advance of any bidding. For this privilege the Alabama corporation agreed to pa}^ a large sum into the pool treasury, called a " bonus," w^hich was to be divided among the confederates in agreed proportions. An appearance of competition was to be main- tained by bids put in by the other associates, every such bid being higher than the bid to be made b}'^ the company to w^hom the contract had been assigned. There was to be no chance for any other person to secure a contract with the plaintiff than that membf^r of the combine selected in advance of the open biddings. Mr. Justice Peckham, in Addyston Pijye Co, v. United States, 175 U. S. 211, 243, 20 Sup. Ct. 96, 108, 44 L. Ed. 136, where this very combination was under consideration, speak- ing for the court of the results of the agreement between the corporations who were members of this trust, said : "The combination thus had a direct, immediate, and intended re- lation to, and effect upon, the subsequent contract to sell and deliver the pipe. It was to obtain that particular and specific result that the combination was formed, and but for the restriction the resulting high prices for the pipe would not have been obtained. It is useless for the defendants to say that they did not intend to regulate or affect inter- state commerce. They intended to make the very combination and agreement which they in fact did malje, and they must be held to have intended (if in such case intention is of the least importance) the necessary and direct result of their agreement." Undoubtedly it was not competent for the Congress to reg- ulate by legislation commerce which is purely intrastate, and this limitation was recognized in Addyston Pipe Co, v. United States, where the court said : " In regard to such of these defendants as might reside and carry on business in the same state where the pipe provided for in any particu- 304 m FEDERAIi BEtORTER, 26. Opinion of tl»e Court lar contract was to lie deliverer!, the sale, transportation, and deliverv of the pipe l)y them under that contract would lie a transaction wliolly within the state, and the statute would not be applicable to them in that case. They might malce any combination they chose with refer- ence to the proposed contract, although it should happen that some nonresident of the state eventually obtained it." Tlie (lim-t intention and effect of the combination was to limit and ixistriet the right of each of the several companies to eonii>ete for Inisiness with Athinta, as well as to enhance the price of the commodity wliich was the snhject of the agreement. We have, then, a direct acticm by this plaintiff against two of the meml)ers of this imlawfiil combine. That there was no i)iirchase made direct from cither of them is of no im- portance. Their guilt is as great as that of the Alabama corporation from whom the plaintiff did bny its pipe. If the agivement Ix-tween the defendjints and their associates was tmlawfnl and tortious, each is responsible for the torts com- mitted in the course of the illegal combination. These de- fendants have themselves jiarticipated in the benefits result- ing from the lionus paid by the Alabama memljer of the association, and have no ground to complain that they have Ijeen alone sued. Sforkfrdi v. F, .S., 1'] Wall 351, 20 L. Ed. 401; Vcm Horn v. Vmi Horn, ;>2 N. J. Law, 280, 20 Atl. 485, 10 L. K. A. 184: Iioherfso,) r. Parl'H. 70 Md. 118, 135, 24 r271 Replying to the argument that if the combination did not i)revent any particidar contract that it had not restrained trade. Justice Peckham, in AihhjHfon Pipe Co. v. United Sfatr,% 175 IT. 8. 245, 20 Sup. Ct, 109, 44 L. Ed. 136, said : *• It is not material that the combination did not prevent the letting of any particular contract. Such was not its pun»ose. On the con- trarj% tlie more cimtracts to l)e let. the l>etter for tlie i-ombination It was formed, not for tlie object of preventing the letting of contracts, but to restrain the parties to it from comiK^ting for contracts and t L3 Ll?ir*'T*/**r ^"^ ^"^ ***^ obtaine^l for the pipe dealt in by those parties. ♦ • • The question is as to the effect of such voni bination upon the trade in the article; and if that effect be to destroy «.mpetltion, and thus advance the price, the combination is one in re- straint of trade.*' "^ If, then, the price of a commodity which is the subject of an interstate contract be unlawfully enhanced by a combina- tion for the purpose of suppressing competition, shall the vendee thus compelled to pay this unlawfully enhanced price CITY OF ATLANTA V. CHATTANOOGA P. & P. WORKS. 305 Opinion of the Court. be without remedy against the combination because he may happen not to be engaged in the conduct of an interstate business ? If the effect of a combination to enhance the price of a commodity which is the subject of interstate commerce be to restrain such commerce, 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 enhanced price, in an interstate transaction, nmst be to correspondingly affect the volume or profit of that business. Thedifference between what he was thus com- pelled 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 profit, is the same whether that business be inter or intra state — whether he buy to extend his plant, or to sell again in 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 a 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 de- vitalize 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 for- bidden or declared to be unlawful by this act." If Con- gress had the power to declare imlawful a combination which was intended to restrain interstate commerce by en- 21220— VOL 2—07 m — -20 127 FEDEKAL BEPORTER, 28. Opinion of the Court hancing the value of a commodity when the subject of inter- state commerce, it had the power to give a [28] compensa- tory remedy to any person directly affected by the unlawful agreement. 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, to the case at bar. Undoubtedly the contract of purchase and sale of pipe was a contract wholly collateral to the un- lawful trust agreement between the makers of such pipe, and the vendor could make out a case for the purchase price without reliance upon the unlawful agreement between such makers. 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 partner in an illegal association. The court in that case did decide that the damages recoverable under the seventh sec- tion 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 construction of that section, but upon the general principle of law which forbids 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 anything decided in that case. This brings us to the question of the limitation applicable to the suit. Under the evidence, it was very plain that plain- tiff's right of action accrued more than three and less than five years before action commenced. The anti-trust act pro- vides no limitation, and, if any has been prescribed by fed- eral law, it is that found in section 1047, Rev. St. [U. S. Comp. St. 1901, p. 727], which provides that "no suit or prosecution for any penalty or forfeiture, pecuniary or otherwise, accruing under the laws of the United States," shall be maintained unless commenced within five years from accrual of penalty or forfeiture. If this is an action to re- cover a penalty, within tlie meaning of this statute, the suit was in time. The shorter statute of the state, limiting the time for the commencement of suits for statutory penalties to one year, would have no application to a suit for a pen- alty under an act of Congress. It is only when there is no CITY OF ATLANTA t\ CHATTANOOGA F. & P. WORKS. 307 Opinion of the Court. federal statute that the limitation prescribed by the law of the state is applicable. Campbell v. Haverhill, 155 U. S. 610, 614, 15 Sup. Ct. 217, 39 L. Ed. 280 ; Brady v. Daly, 175 U. S. 148, 20 Sup. Ct. 62, 44 L. Ed. 109. We find ourselves in agreement with the court below in holding that an action under the seventh section of the act of July 2, 1890, c. 647, 26 Stat. 210 [U. S. Comp. St. 1901, p. 3202], is not a penal action. The three first sections of the act are undoubtedly penal. They forbid certain contracts and combinations, and provide that persons doing any of the forbidden things shall be guilty of a misdemeanor, and subject to punishment by both fine and imprisonment. The fourth and fifth sections give jurisdiction to the Circuit Courts to prevent and restrain violations of the act, and deal with procedure under the restraining power thus granted. The sixth section provides for the forfeiture to the United States of property in course of transportation owned by any such unlawful combination, etc. The sev- enth section alone gives any remedy to one injured by sucli a [29] forbidden combination or contract, and that measures the relief by the " damages by him sustained," costs of suit, and his reasonable attorney's fees. The remedy is not given to the public, for no one may bring the action save the per- son " 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 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 compensation is not enough to constitute the action a penal action, within the meaning of section 1047, Eev. St. [U. S. Comp. St. 1901, p. 727]. Thus in Goodridge v. Rogers, 22 Pick. 495, and Adams v. Palmer, 6 Gray, 338, the action was for a tort for entering upon land and committing trespass, and was brought under a statute which gave to the plaintiff threefold damages. It was never- theless held not to be an action for a statute penalty, so as to 308 127 FEDERAL REPORTER, 29. Opinion of the Conrt bring it under a statute which barred all actions and suits for penalties and forfeitures within one year. In suits for the infringement of patents, judgment for threefold the actual damages may be rendered, but suits under the statute have never been regarded as penal actions. Campbell v. ffmerhill, 155 U. S. 610, 15 Sup. Ct. 217, 39 L. Ed. 280. In Woodward v. Alston, 12 Heisk. 581, an action against a clerk for fees illegally collected was held not to be a penal action, although called a " penalty " in the statute giving the particular remedy. In Brady v. Daly, 175 U. S. 148, 20 Sup. Ct. 62, 44 L. Ed. 109, the suit was under section 4966, Eev. St. [U. S. Comp. St. 1901, p. 3415], providing that one publicly presenting a copyrighted dramatic performance, without the owner's consent, shall be liable for all damages, " to be assessed at such sum, not less than one hundred and fifty dollars for the first, and fifty dollars for every subse- quent performance as to the court may seem just." The suit was held not to be a suit for the recovery of a penalty or forfeiture. The whole subject of penal and compensatory actions has been so thoroughly considered in Huntington v. Attrill, 146 U. S. 657, 13 Sup. Ct. 224, 36 L. Ed. 1123, and Brady v. Daly, 175 U. S. 148, 20 Sup. Ct. 62, 44 L. Ed. 109, as well as by the very full and able opinion of Judge Qark in the court- below in disposing of a demurrer to a plea, that we feel we can add nothing to the subject The limitation applied by the court below was that pre- scribed by section 4470, Shannon's Revision, Tenn. Code. Prior to the Tennessee Code of 1858 the statute of limitations operated upon the remedy, and applied to the form of action. By the Code then adopted, and its amendments, the limita- tion now applies to the cause of action. Kirkman v. PhUips' Heirs, 7 Heisk. 222; Callaway v. McMUlian, 11 Heisk. 557. The limitations of actions other than real are found in sec- tions 4466 to 4483 inclusive. Shannon's Code. Section 4466 provides that: " All civil actions, other than those far causes embraced in the fore- going article, shan be commenced after the cause of action has accrued, within the periods prescribed in this chapter, unless other wise expressly provided." uui«!.» oiner CITY OF ATLANTA V. CHATTANOOGA P. & P. WORKS. 309 Opinion of the Court. [30] Section 4469, among other things, prescribes that actions for " statute penalties " shall be brought within one year. Sections 4470, 4472, and 4473 must come under considera- tion, and are here below set out in full : " Sec. 4470. Actions for injuries to personal or real property ; actions for the detention or conversion of personal property within three years from the accruing of the cause of action." " Sec. 4472. Actions for the use and occupation of land and for rent; actions against the sureties of guardians, executors and admin- istrators, sheriffs, clerics and other public oflScers, for nonfeasance, misfeasance and malfeasance in office ; actions on contracts not other- wise expressly provided for, within six years after the cause of action accrued. " Sec. 4473. Actions against guardians, executors, administrators, sheriffs, clerlis, and other public officers on their bonds, actions on judgments and decress of courts of record of this or any other state or government, and all other cases not expressly provided for, within ten years after the cause of action accrued." The learned trial judge held this action to be one for an injury to property, within the meaning of section 4470, and therefore barred in three years. To this we cannot assent That section plainly applies only to causes of action arising out of some injury to property, as distinguished from its detention or conversion. Property, either personal or real, may be injured or damaged without its being either detained or converted. But whether the cause of action be an injury or damage to the property, or for its taking or detention, the suit must be brought within the same period. This dis- tinction between the two kinds of injury to tangible personal property is of very ancient origin. Sir William Blackstone (volume 3, 145, 153), in his chapter entitled "Of Injuries to Personal Property," says; "The rights of personal property in possession are liable to two species of injuries — the amotion or deprivation of that possession, and the abuse or damage of the chattels, while the possession con- tinues in the legal owner. The former, or deprivation of possession, is also divisible into two branches — the unjust and unlawful taking them away, and the unjust detaining them, though the original taliing might be lawful." Touching injuries to property, as distinguished from its taking or detention, the same author says: " As to the damage that may be offered to things personal while in the possession of the owner, as hunting a man's deer, shooting his dogs, poisoning his cattle, or in any wise talking from the value of any of his chattels, or malting them in a worse condition than l)efore, these are injuries too obvious to need explanation. I have only, 310 127 FEDERAL EEPORTER, 30. Opinion of the Court therefore, to mention tlie remedies given by tbe law to redress them, which are in two shapes : By action of trespass vl et armis, where the act is in itself immediately injurious to another's property, and therefore necessarily accompanied with some degree of force: and by special action on the case, wliere the act Is in itself indifferent, and the injury only consequential, and therefore arising without any breach of the peace In both of which suits the plaintiff shall recover damages in proportion to the injury which he proves that his property has sustained. And it is not material whether the damage l>e done by the defendant himself, or his servants by his direction, for the action will lie against the master as well as the servant And if a man keeps a dog or other brute animal used to do mischief, as by worrying sheep or the like, the owner must answer for the consecjuences, if he knows of such evil habit" We find in the very carefully selected verbiage of section 4470 a recognition of the two kinds of injury to which tangi- ble property is [31] susceptible— one by a damage which does not affect the possession, and the other by a taking or detention which does. While the precise question has not been decided by the Supreme Court of Tennessee, we do find an indisposition to give to the section any such broad and indeterminate mean- ing as would inchide a suit which does not involve any actual injury to property. Thus this section was held not to apply to a suit against an attorney for the negligent loss of a debt intrusted to him for collection. Bruce v. Baxter, 7 Lea, 477 • ErnmeyY. Temple, 3 Lea, 253. Nor to the suit of a stock- holder, in behalf of the corporation, against bank directors, for the negligent discharge of their duties, by which the corporation had sustained losses. Wallace v. Lincoln Sav- ings Bank, 89 Tenn. 631, 15 S. W. 448, 24 Am. St. Rep. 625. In Kirhman v. Philips^ Heirs, 7 Heisk. 222, 225, the court said : " The statute of limitations applicable depends upon the nature and character of the action, and not upon its form." In the same case it was held that, although the forms of action have been abolished by the Code, an owner of per- sonal property, whose right to sue for damages for its con- version was barred by the statute of three years, might waive the tort, and sue for the value upon the implied as- sumpsit, in which case his suit would not be barred in six years ; that being the time within which a suit upon a con- tract might be brought. See, also, Ahhrook v. Hathaway, 3 Sneed, 454. Actions on statute liabilities, not being a statute penalty, and not dependent upon any contract, ex- CITY OF ATLANTA V, CHATTANOOGA F. & P. WORKS. 311 Opinion of the Court press or implied, are actions not otherwise " expressly pro- vided for by any of the other sections of the chapter upon the limitations of actions other than real." Such an action is at the common law — one in the nature of an action upon a specialty — and is of a similar kind to those enumerated in section 4473, Shannon's Code. Under the statute of 21 James I, c. 16, all actions " upon the case," with certain ex- ceptions, and " all actions of debt grounded upon any lend- ing or contract without specialty," were barred unless com- menced within the time named in the statute. But an action of debt which was grounded upon a specialty was not within the statute. Specialties were not within the evil intended. Angell on Limitations, § 80 ; Jones v. Pope, 1 Saunders, 38 ; White V. Parkin, 12 East, 578 ; Browne on Actions at Law, 345 ; Bullard v. Bell, 1 Mason, 243, Fed. Cas. No. 2121 ; 4 Bacon, Abridgment, 471. But the statute of James operated upon the form of action. Thus all actions " upon the case," whatever the cause of action, were within the bar of the statute, and so were " all actions of debt grounded upon any lending or contract without specialty." In Carrol v. Chreen, 92 U. S. 509, 23 L. Ed. 738, it was held that a suit by creditors of a corporation to enforce their claims against stockholders under a clause of the charter rendering them individually liable was barred by the South Carolina statute; being, in substance, the act of 21 James I, c. 16. The reason given for this result was that the charter was a mere offer or proposal by the state, which the stock- holders could accept or reject, and that by taking stock they assented to the liability imposed, and that the assent thus given and promise implied was the ground of liability, and that the action of case would lie upon such an implied promise, which action was within [32] the bar of the statute. The court, however, went further, and held that the action or suit was not on the statute, and was therefore not an action on a specialty. "The statute," said the court, "was only inducement. The implied promise of the stockholders to fulfill its requirements was the agreement on their part, and it was without specialty." The distinctions made in the case are quite refined, and turn upon common-law forms of action. So far as the case goes upon the ground that 312 121 FEDEBAL BEPOBTER, 804. Syllabus. the charter involved a mere proposal, and that the liability of the shareholder was grounded upon his implied agree- ment, it is in accord with the great current of authority. The statute of James, as amended by Act N. C. 1715, c. 21, was in force in Tennessee until adoption of the Tennessee' Code of 1858. Act N. C. 1715, c. 31, Scott's Revisal, vol. 1; Pea V. Waggoner, 5 Hayw. 19; TisdcOe v. Munroe, 3 Yerg. 820. By the Code, the statutes no longer operate upon the form, but upon the cause, of action; and, by section 4473, every cause of action not otherwise expressly provided for is barred, without regard to whether it be upon a specialty or not. It is impossible, having any regard to the verity of things, to conceive how any action would lie, under the seventh sec- tion of the anti-trust act, upon any implied agreement of the defendants to compensate the plaintiff for the injury to its business and property. But if we could torture an implied agreement out of the transaction, the defendants would not be in better plight, for, if the cause of action be a contract, express or implied, the action would not be barred for six years. Shannon's Code, § 4472. We are, however, of opin- ion that this is an action on a statute liability, and that the cause of action does not arise out of any agreement, and that such an action is not barred for ten years. The third and fourth pleas were bad, and the demurrer to them should have been sustained. The direction to find a verdict for the defendants was also error. The judgment will be reversed, with directions to grant a new trial. [804] EOBmSON v. SUBURBAN BRICK CO. (Circnlt Court of Appeals, Fourth Circuit. February 2, 1904.) [127 Fed., 8013 Federal Coubts— Jurisdiction a— Aixbgation of Amount in Con- troversy.— It is not essential that a bill In a federal court should state the amount or value In controversy, if it appears to be within « Jurisdiction of Circuit Courts as determined by amount in contro- versy, see notes to Auer v. Lombard, 19 C. 0. A. 75; TennenUSmhUna Shoe Co. V. Roper, 36 C. C. A. 459. ROBINSON V. SUBURBAN BRICK CO. 313 Opinion of the Court the jurisdictional limit, from the allegations of the bill, or other- wise from the record, or from evidence taken in the case before the hearing of objections to the jurisdiction. Contracts in Partial Restraint of Trade — Validity a — Sale of Good Will. — ^A covenant in a contract by which the owners of brickmaking plants conveyed them to a corporation in exchange for its stock, binding the sellers not to engage in competing business within a radius of 50 miles from the place of business of the cor- poration for a term of 10 years, is valid, and may be enforced in a court of equity by a suit to enjoin its violation. Same — Law Governing. — Such a covenant is personal, and is not brought within the statutes of a state other than that in which the contract was made by the fact that the property sold was situ- ated in such state. Monopolies — Anti-Trust Act — Manofacturing Combination. — ^The anti-trust act (Act July 2, 1890, c. 647, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200] ) , does not apply to a contract or combination re- lating to the business of manufacturing within a state. Abatement & — Pendency of Action in State Court. — The pendency of a suit in a state court is not a bar to one on the same cause of action in a federal court.© Appeal from the Circuit Court of the United States for the Northern District of West Virginia, at Wheeling. Henry M, Russell and J, B. Driggs, for appellant. Nelson G. Huhhard {MuVbard <& Euhhard, on briefs), for appellee. Before Goff and Simon ton, Circuit Judges, and Mc- Dowell, District Judge. Simon ton, Circuit Judge. This case comes up on appeal from the Circuit Court of the United States for the Northern District of West Vir- ginia. It has been twice argued in this court. In the year 1898 George O. Robinson, the appellant here, was engaged in the business of manufacturing brick in the town of Bel- laire, in the state of Ohio. At the same time George K. Wheat was engaged in the same business in or near the city o Validity of monopolistic contracts, as affected by public policy, see notes to Chicago, M. & 8t. P. Ry. Co. v. Wahash, St. L. & P. Ry. Co., 9 C. C. A. 666 ; Cravens v. Carter-Crume Co., 34 C. C. A. 486. * See Abatement and Revival, vol. 1, Cent. Dig. § 87. Syllabus copyrighted, 1904, by West Publishing Co. 314 127 FEDERAL BEPORTEB, 805. Opinion of the Court of Wheeling, W. Va. The Belmont Brick & Tile Company had a manufactory at Martin's Ferry, in the state of Ohio. B. F. Hodgman was conducting the manufacture of brick at [805] Moundsville, W. Va. The owners of these factories entered into an agreement on 24th December, 1898, whereby they all agreed to sell and convey their several plants to a corporation to be organized under the laws of West Vir- ginia, which would have its principal place of business at Wheeling. They were each to receive, in payment for the plant, specified amounts of stock in the new company. The agreement contained the following stipulation: "It is mutually agreed bet>veen tiie parties liereto, and each for Miuself specifically promises and agrees, not to liereafter engage in ttie bnckmakmg business, or in any lines tliat may be manufactured Hereafter at any of the several plants to be operated by the corpo- ration whose creation is here contemplated, or to furnish means aid or adv ce to cithers seeking to do so in such a way as to come in competition with the said corporation within a territory which may be described as within a radius of 50 miles from the citv of Wheeling L?g;erm'nt"" '""^"^ ^' *^" ^^^^^ '''"^ ^^ ^'^^ '^' «^^-^ '' The agreement was carried out, and the property ex- changed for the stock in the new company called the Sub- urban 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 company. Very soon thereafter he became a stockholder in the Standard Brick & Stone Company, a corporation organised under the laws of Ohio, and engaged in manu- facturing brick substantially the same as that of the Sub- urban Brick Company, at Bellalre, Ohio, within 10 miles of Wheelmg. The bill in this case is filed by the Suburban Brick Com- pany against George O. Robinson in order to compel the specific performance of his contract as above set forth. It states the facts above set out, and prays that the defendant, George O. Robinson, be enjoined from prosecuting the busi- ness of brickmaking as manager or adviser of the Standard Brick & Stone Company, or of any others who may seek to engage in business within the said territory. The answer did not deny the execution of the agreement set out in the bill, nor the violation of it by the defendant. ROBINSON V. SUBURBAN BRICK CO. 315 Opinion of the Court It justifies the breach of the agreement; insisting that it was unlawful and invalid under the laws of the state of Ohio, under the trust laws of the United States, at common law, and against the principles of equity. The answer also set up the pendency of a suit between the same parties in a court of Ohio, involving the same question as is involved in this case. With this answer the defendant also filed a demurrer : ** (1) The said bill is defective, in that it does not allege facts showing that this court has jurisdiction of this cause, nor are such facts otherwise shown by the record. (2) The agreement set forth in the said bill is void, by reason of the laws of the state of Ohio, and also by reason of the acts of Congress of the United States; and, except by virtue of the said agreement, the plaintiff shows no right to relief. (3) The facts stated in the bill do not present a case in which a court of equity has jurisdiction, even if the agreement were valid, to award an injunction or to grant the relief prayed for. (4) The said bill is in other respects uncertain, informal, and erroneous." At tlie hearing, all the evidence having been taken and submitted, the court below overruled the demurrer. The second, third, and fourth grounds of demurrer are clearly superseded by the answer. The first [806] ground of demur- rer, based ui^on the failure of complainant to state in so many words that the matter in controversy exceeded $2,000, besides interest and costs, was overruled; the court holding that it may be determined from the evidence herein that the amount in controversy exceeds the required jurisdictional amount. The decree, on bill, answer, and evidence, granted complainant the relief asked, and ordered the injunction to issue, to remain in force until 24th December, 1908, the dat« fixed by the agreement in the record. Leave to appeal was granted the defendant, and the case is here on assignments of error as follows : " (1) The said decree is erroneous in overruling and refusing to sustain the defendant's demurrer to the bill in the said suit. (2) The said decree is erroneous in awarding the injunction against the said defendant which is thereby awarded and decreed. (3) The said decree is erroneous in granting the plaintiff the relief prayed for instead of refusing such relief and dismissing the plaintiff's bill." As to the demurrer: It is not essentially necessary that the bill should state the amount of the matter in controversy, if this fact is either manifest from the allegations of the bill, or it be made to appear in any part of the record. The 316 127 FEDEBAL KEPOBTEB, 806. Opinion of the Court courts go farther than this, and permit this jurisdictional fact to be established by affidavits, if it appears in no part of the record. Carr v. Fife, 156 U. S. 494, 15 Sup. Ct. 427, 89 L. Ed. 508; United States v. Trans-Missouri Freight Associatiofi, 166 U. S. 311, 17 Sup. Ct. 540, 41 L. Ed. 1007; Whiteside V. Easelton, 110 U. S. 296, 4 Sup. Ct. 1, 28 L. Ed' 152; WUson v. Blair, 119 U. S. 387, 7 Sup. Ct. 230, 30 L. Ed. 441 ; Bed River Cattle Co, v. Needham, 137 U. S 632 11 Sup. a. 208, 34 L. Ed. 799. And in Rect(yr v. Lipscomb, 141 U. S. 557, 12 Sup. Ct. 83, 35 L. Ed. 857, the court, not- withstanding allegations in the record, went into the tes- timony, and, under all the showing presented, held that the matter in controversy was not within the jurisdictional limit. In the case at bar the testimony showed that the threatened damage from the act of the defendant amounted to many thousands of dollars. As to the merits: It is charged that this contract sought to be enforced is in restramt of trade and void. Contracts of this character, whereby a party binds himself not to carry on a particular business within a limited territory and for a limited time, have always been sustained by courts, espe- cially if the contract accompanies, as a part of the consid- eration thereof, a sale by a vendor to a vendee. The rule IS clearly stated by Mr. Pomeroy in his Equity Jurispru- dence (volume 2, 443, 444) : "Contracts in partial restraint of trade are valid. To this end tltey must be partial with respect to the territory included- rea^n Ji^jL'^o^r^ltfK*'^"/™?^' r *^^^^^-^' th^ciV^cums'tan^^^^ rights of the party burdened, and the one benefited by the restric- tto^ and the number and interests of the public who^ freedom of trade is circumscribed; and made upon a valuable Ind suffiSpnt consideration. The Jurisdiction of eQudty is generally exerc^^^ respect to these contracts, for the Purpose of Tndirectirco^^^^^^ ^eir specific performance, by means of ^ injunction preveS theif violation. Such contracts are frequently made in connertion with o not ^rX^'a^'^r ^^^ n ^^"' *^^ vendTSipulXTtha? he will not <^rry on the same business within a specified distance from thi old place, or for a specified time, or will not solidt the o^^custSners for their trade, and the like. These khid of stipXions rsOTl I? reasonable as to territory and time, will be S4d against the vendor, often by an injunction." «"iurcea agamst the This seems to be the law of Ohio. « Kestraint of trade, founded on good consideration, reasonable, and not oppress- ive, is valid." Lan§e v. Werk, 2 Ohio St. 519; Grasselli v Lowden, 11 Ohio St. 349. "A restriction as to one city for ROBINSON V, SUBURBAN BRICK CO. 817 Opinion of the Court. five years is valid." Thomas v. Miles'' Adm'r, 3 Ohio St. 274. So in North Carolina. Kramer v. Old, 25 S. E. 813, 34 L. R. A. 389, 56 Am. St. Rep. 650 : " Good will is prop- erty which the owner has the right to sell to the full extent of the field from which he derives his profit, and for a rea- sonable time. Its market value is lessened if he cannot bind himself not to compete. The space limit may be enough to secure to the buyer the full benefit of the business he has bought." In the Federal courts the same principle prevails. Oregon S. Nav. Co, v. Winsor, 20 Wall. 69, 22 L. Ed. 315 : " Restraint is invalid at common law, except when it is ancillary to a lawful contract, involving relations of vendor and vendee, and necessary to protect the covenantee in the lawful fruits of his contract." U. S, v. Addyston Pipe Line Co., 85 Fed. 271, 29 C. C. A. 141, 46 L. R. A. 122; Hitchcock V. Anthony, 83 Fed. 779, 28 C C. A. 80. It is suggested that this contract is invalid under the laws of Ohio, especially as it involves the purchase of land in Ohio. But the question we are considering is not the validity or invalidity of the purchase of defendant's land. He no- where seeks a recission of that sale. Nor has he offered to return the consideration received by him on its purchase. On the contrary, he retains it. The question before us is a personal covenant b}^ defendant with complainant, made in West Virginia, to be construed and enforced according to the law of West Virginia. There is no question of its validity under the law of West Virginia. It is also urged that this transaction is void under the " act to protect trade and commerce against unlawful restraints and monopolies." Act July 2, 1890, c. 647, 26 Stat. p. 209 [U. S. Comp. St. 1901, p. 3200]. But this statute is in- tended to protect interstate trade and commerce, and does not relate to manufactories within a state. U. S, v. E. C, Knight Co., 156 U. S. 1, 15 Sup. Ct. 249, 39 L. Ed. 325; illustrated in Addyston Pipe dc Steel Co. v. TJ. S., 175 U. S. 237, 20 Sup. Ct. 96, 44 L. Ed. 136. The doctrine is well stated in Gibbs v. McNeeley, 107 Fed. 211 : "Manufacture within a state of an article of commerce is not within the purview of the act, although the manufacturing combina- tion constitutes a monopoly. ♦ ♦ * It makes no difference that the manufacturer intends his product for sale in other states and foreign 318 127 FEDEBAL BEPOBTER, 875. Sytlabufi. countries. • * ♦ It must go further, and provide for the sale and transportation to other states ; otherwise what is proposed cannot be said to lool£ to interstate commerce." The pendency of the suit in the court of Ohio cannot affect the suit in the Circuit Court of the United States. Gwdon Y. Gil foil, 99 U. S. 168, 25 L. Ed. 383; Stanton v. Embri/, 93 U. S. 548, 23 L. Ed. 983. See, also, Anderson v. U. S., 171 I J. S. C04, 19 Sup. Ct. 50, 43 L. Ed. 300. From a consideration of the whole case, we are satisfied with the conchision reached by the court below. The decree is affirmed. [875] A. BOOTH & CO. v, DAVIS ET AL.« (Circuit Court, B. D. Michigan. S. D. January 19, 1904.) [127 Fed., 875.] Monopolies— Anti-Teust Act— Scope.— The Anti-Trust Act (Act July 2, 1890, e. 647, 26 Stat. 209 [U. S. Comp. St. 1901. p. 3200] ) has no application to a contract hy which the stocliholders of a corporation engaged in dealing in fish at different places, in consideration of the purchase of the business and good will of the company by an- other, agreed not to enter into competition with him in such business for the term of 10 years.^ Same— Michigan Statute.— The Michigan act of June 23, 1899 (Ses& Laws, 1899, p. 409, No. 255), to 'prevent trusts and monopolies, is prospective only in its operation, and does not affect a contract made prior to Its passage which was valid when made. COHTBACT IN PaBTIAL ReSTBAINT OF TbADE C— VAUDITY— SALE OF BUSI- NESS AND Good Wm — ^A covenant by the stockholders of a corpora- tion which sold its property, business, and good will, that, in consideration of such sale and as an inducement thereto, they would not directly or indirectly engage in the same or like kind of business as that carried on by the company in the same territory or in the immediate vicinity of such territory for 10 years after the sale, rests upon a good consideration and is lawful, and the right of the » Affirmed by Circuit Court of Appeals, Sixth Circuit (131 Fed., 31). See p. 56a Petition for writ of certiorari denied by the Supreme Court (195 U. S., mQ). Memorandum decision. Not reprinted. » Syllabus copyrighted, 1904, by West Publishing Co. » Validity of monopolistic contracts as affected by public policy, see notes to Chicago, Jf. 4 8t, P. Rv. Oo. ▼. Waftash, St L, d P. Ry, Co,, 9 C. C. A. 666; Oravem v. Oarter-Crume Co., 34 C. C. A. 48a See CJontracts. vol. 11, Cent Dig. § 655. A. BOOTH & CO. V. DAVIS. Opinion of the Court. ai9 purchaser to enforce it cannot be affected by the question whether he has conducted the business lawfully since his purchase. Same — Suit to Enforce — Defenses. — In a suit to enjoin a defendant from violating a contract by which for a valuable consideration he covenanted not to engage In business for himself or another in com- petition with that of complainant for a term of years, and to enjoin a codefendant from employing his services in a competing business, it is no defense that his codefendant hired him in igno- rance of the contract, and will suffer damage if deprived of his services. In Equity. On motion for preliminary inj miction. Chas. jS. Thornton and Henry M. Du-ffield, for complainant, Fred A, Baker and E, E, Kane, for defendants. Swan, District Judge. In this cause the motion to vacate the restraining order issued herein and the motion for a preliminary order was continued until the further order of the court. The main defense to the bill presented, it was then thought, a question to be determined upon plenary proofs rather than upon affi- davits. In the expectation that the taking of proofs, then in progress, would obviate the labor of [876] digesting the many voluminous affidavits submitted upon the hearing of the motion for injunction, and reviewing upon the proofs and facts in issue, the formal disposition of that motion was postponed with that end in view. The taking of the testi- mony, however, has been extended by stipulations of the parties, and is not completed. The defendants now urge that their interests will suffer injury by deferring decision until the completion of the proofs. To avert that result, and to facilitate the review of this matter, the conclusions here reached are founded upon the affidavits filed, notwith- standing the unsatisfactory nature of such data compared with plenary proofs. The bill is filed to restrain the defendant Davis from a breach of his contract hereinafter set forth, which contract, it is claimed by complainant, was and is a part of the con- sideration for the purchase by complainant of the property and good will of the Davis Fresh & Salt Fish Company, a 320 127 FEDERAL REPORTER, 876. Opinion of the Court. corporation orgmnized under and by virtue of the laws of the state of Michigan, and transacting a general fish busi- ness, and also engaged in buying, catching, producing, and selling salt and fresh fish. The company had its principal office in the city of Detroit, in said state. It also carried on business at Cleveland, Columbus, and Dayton, Ohio; Louis- ville, Ky.; Nashville, Tenn.; St. Louis and Kansas City, Mo. ; Buffalo and New York City, in the state of New York; Grand Eapids, Jackson, East Saginaw, Lansing, Port Hu- ron, and Detroit, Mich. The bill also seeks to have the Wolverine Fish Company, Limited, restrained from aiding Davis "to violate his contract with complainant by employ- ing said Davis in its business. On August 14, 1898, in consideration of the sum of $17,- 473.14, the Davis Fresh & Salt Fish Company sold to Wil- liam Vernon Booth, of Chicago, with the consent of all of its officers and stockholders, all of the goods, chattels, and property of every kind, nature, and description to it belong- ing, or in which it had any interest at that time, and, as part thereof, the good will of the business conducted by it at Detroit, and gave said Booth a bill of sale, with warranty of title, signed by defendant Davis, its president, and James T. Donaldson, its secretary, appended to which was the follow- ing, signed by said Davis: ** For and in consideration of one dollar and other valuable consid- eration, which I acknowledge, I hereby agree to perform the cove- nants and agreements above made and to be performed by the Davis Fresh & Salt Fish Company. "Witness my hand and seal this 14th day of September, A. D. 1898." Said Davis was a stockholder and the principal officer and manager of the vendor corporation, and apparently very de- sirous that the contract of sale should be completed, and he and other stockholders of the Davis Fresh & Salt Fish Com- pany executed the following agreement: "This instrmnent witnesseth. That William Vernon Booth has pur- chased the plant, business and good will of the business of the Davis Fresh & Salt Fish CJompany, and has paid therefor the sum of $17,- 473.14; that in making said transfer, and as an inducement to said William Vernon Booth to purchase said plant, business and good will and pay the sum aforesaid for the same, we have each agreed that we would not, and we now do agree, each for himself. Jointly and severally with him, the said William Vernon Booth, his heirs and assigns, forever, A. BOOTH & 00. V, DAVIS. 821 Opinion of the Court. that we will not, during the next ten years, in the territory or the immediate vicinity of the territory dealt in by our company, or oper- ated in by ourselves or the agents or employes of the company, en- gage or in any [877] manner be interested in, either directly or indirectly, for ourselves or for others, the same or like kind or char- acter of business as that lieretofore conducted and now being carried on by said company, and that we will not, during the said period of ten (10) years, either directly or indirectly, be guiltj- of any act inter- fering with the business, its good will, its trade or its customers, or come in competition with the same ; and we will not, jointly or sever- ally, either in firms or cori^oratious, or as individuals, or in any other way, directly or indirectly interfere with the said trade or business or do any act prejudicial to the same or any part thereof, or interfere with the persons employed therein ; the meaning hereof being that the said William Vernon Booth is buying and paying for the good will of the business in the largest and fullest scope of the term ; and that we will not, and each agrees that he will not, do anything to interfere with or injure the said business, but will during said period, lend his aid and best influence to the promotion and advancement of the same. *• In witness wliereof we liave hereunto subscribed our names and affixed our seals, jointly and severally, this first day of August, A. D. 1898. " Edgar A. Davis. " Jamks T. Donaldson. " Belle R. Harper. "Ed. E. Kane. " Belle B. Davis." The consideration named in the instrument quoted above was paid on or about the 14th of Septeml)er, 1898, to the Davis Fresh & Salt Fish Company, and by it distributed among its stockholders, defendant Davis receiving his full share thereof. The purchase and agreement recited above were made by said Booth, as agent for complainant, and a formal transfer was made by Booth to his principal of all the property, rights, and contracts involved in the transaction. The propei-ty was duly delivered. The complainant has en- tered into the possession thereof, and, the bill claims, is con- tinuing such business in Detroit and the other places where the Davis Fresh & Salt Fish Company conducted its business before said sale. The bill seeks an injunction against Davis from violating his said agreement, and against the Wolverine Fish Company, Limited, and other defendants (except Ed- son, who was not served), from aiding and assisting Davis in the violation of his contract. The answer of the defend- ants, and the separate answer of defendant Davis, do not dis- pute the purchase of the property and good will of the Davis Frash & Salt Fish Company. The defense is, first, that the 21220— VOL 2-^7 M 21 322 127 FEDERAL REPORTER, 877. Opinion of tlie Court. contract is against public policy and in restraint of trade; that it is void under the provisions of the " Sherman Act," so-called (Act July 2, 1890, c. 647, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200]), and an act of the Legislature of the state of Michigan, entitled " An act to prevent trusts, monopolies and combinations of capital, skill and arts, and carrying out i-estraints in trade and commerce," etc., approved June 23, 1899 (Sess. Laws 1899, p. 409, No. 255). The Sherman act has no bearing upon this controversy. Its purpose and scope is to avoid all contracts and combinations in the form of trusts or otherwise, or conspiracy in restraint of trade and commerce among the several states and with foreign nations. United States v. E, C. Knight Co., 156 U. S. 1, 15 Sup. Ct. 249, 39 L. Ed. 325 ; United States v. Freight Assy, 166 U. S. 290, 17 Sup. Ct. 540, 41 L. Ed. 1007. The business of the complainant is lawfully conducted by the sale of its commodities at the different points where the busi- ness acquired from the Davis Fresh & Salt Fish Company was carried on. It had noth- {878] ing to do with the inter- state or foreign trade or commerce subject to congi-essional legislation. It produced and sold its goods at the several places where it did business, just as its vendor had and as any individual or corporation might do, and it had the same right to engage in such business on complying with the laws in the states in which it was carried on. The statute of Michigan which defendants have invoked as invalidating the contracts and business of the complainant acquired from the Davis Fresh & Salt Fisli Company was not passed until a year after the purchase by complainant of that company's property and good will. It is in terms prospective, and can- not be invoked to defeat a contract lawful when made. Its first section defines a trust as — " A combination of capital, skill or arts by two or more persons firms, partnerships, coriwrations or associations of persons, or of any two or more of tliem, for either, any or all of the following purposes • ^ (1) To create and carry out restrictions in trade or commerce ' (2) To limit or reduce the production, or increase or reduce the price of merchandise or any commodity. " (3) To prevent competition in manufacturing, making, transpor- tation, sale or purchase of merchandise, produce or anv commodity ** (4) To fix at any standard or figure wliereby its price to the' pub- lic or consumer shall be in any manner controlled or established any A. BOOTH & CO. V. DAVIS. Opinion of the Court 323 article or commodity of merchandise, produce or commerce Intended for siile, barter, use or consumption in this state." Examination of Ihe provisions of this act is convincing that it is directed only against combinations of persons, firms, partnerships, corporations, or associations of persons conspiring to co-operate in violation of its provisions, and that it contains nothing prohibitive of the acquisition by a person, persons, corporation, or association of the business or property of any person or association, natural or artificial. All such persons or associations may acquire property and carry on business at as many different places as their capital will warrant, and fix their own prices for their commodities, providing they do not, for that purpose and in its accom- plishment, combine with other persons, firms, or organiza- tions to effect any of the ends denounced by the statute. The prior Michigan statute of 1889, in existence at the time of the execution of the contracts under which complainant claims, was repealed by an act of 1899. There is grave ques- tion as to its validity, and that doubt probably prompted the act of 1899. The transaction by which the complainant ac- quired the title and interest for which it seeks protection in this cause was an out and out purchase of the vendor cor- poration's property and good will, and of the ancillary agreement of its stocldiolders, the breach of which agreement is the gravamen of the complainant's case. That such a transaction is lawful seems clear. In United States v. Ad- dyston Pipe (& Steel Co., 85 Fed. 271-281 et seq., 29 C. C. A. 141, 46 L. R. A. 122, Judge Taft considers the question here involved, and in a forcible opinion demonstrates that agree- ments by the seller of property or business not to compete with the buyer in such a way as to impair the business sold are perfectly valid. The opinion has so carefully and fully reviewed the authorities in support of this proposition as to exhaust the subject. The judgment of the Court of Appeals (except in a minor part having [879] no concern with the main question) was affirmed by the Supreme Court of the United States. 175 U. S. 211, 20 Sup. Ct. 96, 44 L. Ed. 136. It is therefore a matter of no concern whether or not the complainant is conducting its business in such a way as to reduce the cost of its commodity, and to increase its profits in m FEDEKAI^ BEPORTBK, 819. Opinion of the CJourt that way, or by raising the price otherwise. The contract of purchase which it made with the Davis Fresh & Salt Fish Company, and its agi-eement with the defendant Davis and. the other stockholders, by which they engage not to conijjete, individually or otherwise, directlv or indirectlv, witli the complainant, w^as a contract wholly collateral to the scheme and method of its business and its rights and equities tinder the contract of sale; and the agi-eement witli Davis and the other stockholders can \m enforced with as much propriety as any other hiwful contract or agreement into which it might enter. Athntta v. ChatfatuHHja F. d- P, }YorkH (C. C. A., Sixth Circuit, decided Dec. 8, 1903) 127 Fed. !>3. It is well settled that an agreement which o[)erates merely iis a partial restraint of trade is gcx)d. provided it be not unrea- sonable and there be a consideration to support it. In Ore- gon Steamship Jarigation Co. v. Whiyor, '20 AVall. f»7, 22 L. Ed, 315, Mr. Justice Bradley says: *'In order that It may not l>e iiuivasouable, tlip restraint iini)08ecl must not be larger than is requlreil for tlio protect ierated in by ourselves or the agents or employes of the company.-' Its validity is fully sanctioned by the case of the Oregon Steam- ship Namgation Company v. Winaor^ 20 Wall. 67, 22 L. Ed. 315. The execution of the contract is admitted by the de- fendants. It is no answer to its enforcement against Davis that he did not get the consideration he expected from the sale, because, as he alleges, complainant did not carry out an understanding subsequently made with him. The de- fense that the Davis Fresh & Salt Fish Company had no business and no good will, but its business at the time of the contract was carried on by Davis as trustee for the com- pany, is unconscionable and without merit. The objection A. BOOTH & CO. V. DAVIS. Opinion of the Court 325 that the complainant is a trust and a monopoly is answered by the view taken of the statute of Michigan of 1899, and it is shown by the affidavits that the complainant's business in this line is but a small fraction of that done by other dealers in the same commodities in the territory covered by its operations, and that it is but one of several hundred dealers in that territory. It is further claimed that the bill does not aver that the complainant has complied with the statute with regard to foreign corporations. The affidavits submitted by complain- ant completely negative this objection. It is urged that the agreement with Davis and the other stockholders is not supported by any consideration. There is no force in this position. [880] It recites that the signers do agi*ee, " as an inducement to said William Ver- non Booth to purchase said plant, business and good will and pay the sum aforesaid ($17,473 14) for the same, we each have agreed that we would not, and we now do agree, each for himself, jointly and severally * * * that we will not during the next ten (10) years, in the territory or the immediate vicinity of the territory dealt in by our company, or operated in by ourselves or the agents or em- ployes of the company, engage or in any manner be inter- ested in, either directly or indirectly, for ourselves or for others, the same or like kind or character of business as that heretofore conducted and now being carried on by said company, its officers, agents, employes or assigns," etc. The signers of this instrument are estopped from denying want of consideration for its provisions. Their express acknowl- edgment in the instrument is that an inducement to the purchase at the time was their several contracts not to com- pete, directly or indirectly, as individuals or otherwise, with their vendee during the time and in the territory desig- nated. The effect of such competition, it is obvious, would be to impair the value of the property and good will pur- chased, and, as has been said, a contract which would in- sure against this is not in restraint of trade, but valid. In Hendrick v. Lindsay, 93 U. S. 148, 23 L. Ed. 855, it is said : "Damage to the promisee constitutes as good a consideration as benefit to the promisor. In PiUan v. Van Mierop, 3 Burr. 1663, the court say : 'Any damage or suspension of a right, or possibilit\' of a 326 127 FEDERAL REPORTER, 880. Opinion of the CJourt loss, occasioned to the plaiutiflf by the promise of another, is a suffi- cient consideration for such promise, and will make it binding, although no actual benefit accrued to the party promishig.' This rule Is sustained by a long list of adjudged cases." The restraint upon the defendants secured by this con- tract, it is clear beyond question from the terms of the contract itself, was regarded by both parties thereto as con- sideration. It does not lie in the mouth of Davis, when he has deliberately and for the purpose of inducing the com- plainant to pay the large sum of $17,473.14: for the business, which he now states was worthless, to deny that there was any consideration for his ag^eeme^t. In fact, the denial of want of consideration, and Davis' objections to the contract that the Davis Fresh & Salt Fish Company had no business or good will at the time of the sale, are inconsistent in them- selves, and compel the conclusion that, if the vendor cor- poration had no business, the sale of its property and the inventory upon which it was made was a fraud upon the purchaser, which discredits the claim of Davis that the agreement of himself and fellow stockholders was an inde- pendent transaction. In behalf of the Wolverine Fish Company, Limited, it is urged that it had no knowledge of the agreement entered into by Davis to refrain, directly or indirectly, from engag- ing in the fish business for himself or others, and that to deprive it of his services and experience is a hardship. The equities of the case in favor of the complainant, in view of the facts, are nuich stronger than the consideration urged by the Wolverine Company against being enjoined from the employment of Davis in violation of his contract with com- plainant. Whatever injury results to the Wolverine Fish Company, Limited, from the enforcement of Davis' con- tract with complainant, is chargeable, not to the latter, but to Davis himself. If that company is injured, it is because [881] of Davis' willful breach of his contract with the com- plainant, and not by reason of any act or omission of the complainant. It is no answer to the enforcement of com- plainant's contract that Davis has broken it and entered into relations with others whereby the benefit of his experi- ence and services will operate inevitably to the detriment of the complainant, although Davis' employer did not know MONTAGUE & CO. V. LOWRY. Syllabus. 327 of his self-imposed disability. To hold otherwise would sanction the doctrine that one entering into a like contract to that executed by Davis to the complainant might be ab- solved from his obligations under the contract by hiring his services to one ignorant of his disability. Such a construc- tion of the letter and spirit of like engagements would make them entirely nugatory, and would be grossly unjust to the party who had paid in good faith a valuable consideration for the property and good will of a business which his vendors collectively and individually have covenanted not to impair or invade. It results from these views that the complainant is en- titled to the injunction restraining Davis from a breach of his contract with the complainant, and restraining the Wol- verine Fish Company, Limited, from benefiting in any way by his services and experience in the fish business, as defined in the contract between complainant and Davis, and an in- junction will be issued, according to the prayer of the bill, against Davis and the AVolverine Fish Company, Limited. [38] MONTAGUE & COMPANY v. LOWRY.« ERROR IX) THE CIRCUIT COURT OF APPEALS FOR THE NINTH CIRCUIT. No. 46. Submitted October 27, 1903.— Decided February 23, 1904. [193 U. S. 38.] An association was formed in California by manufacturers of, and dealers in, tiles, mantels and grates ; the dealers agreed not to pur- chase materials from manufacturers who were not members and not to sell unset tiles to any one other than members for less than list prices which were fifty per cent higher than the prices to mem- bers ; the manufacturers, who were residents of States other than California agreed not to sell to any one other than members ; viola- o Begun in the Circuit Court for the Northern District of California, and there entitled Lowry v. Tile, Mantel and Grate Ass'n. of Gal, Demurrer overruled (98 Fed., 817). See vol. 1, p. 995. Charge to jury (106 Fed., 38). See p. 53. Judgment affirmed by Circuit Court of Appeals, Ninth Circuit. (115 iTed., 27). See p. 112. Case then and subsequently entitled Montague & Co. v. Lowry, Affirmed by Supreme Court (193 U. S. 38.) tjJo IWa UNITED STATES EEPOBTS^ 38. Syllabus. tlons of tlie agreemeot rendered the member subject to forfeiture of membersbip. Membership in the association was prescribed by rules and dependent on conditions, one of which was the carrying of at feast |3,000 worth of stock, and whether applicants were ad- mitted was a matter for the arbitrary decision of the association. In an action by a firm of dealers in tiles, mantels and grates, In San Francisco, whose members had never been aslsed to join the association and who had never applied for admission therein, and which did not always carry $3,000 worth of stoclc, to recover damages under § 7 of the Anti-Trust Act of July 2, 1890— Held that although the sales of unset tiles were within the State of California and although such sales constituted a very small portion of the trade Involved, agreement of manufacturers without the State not to sell to any one but members was part of a scheme which in- cluded 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 inseparable and became a part of a purpose .which when carried out amounted to, and was, a combination in restraint of interstate trade and [39] commerce. AMtfston Pipe d Steel Co. v. United States, 175 U. S. 211, followed; Hopkins V. United States, 171 U. S. 578 ; Anderson v. United States, 171 U. S. 604, distinguished. Held that the association constituted and amounted to an agreement or combination in restraint of trade within the meaning of the act of July 2, 1890, and that the parties aggrieved were entitled to recover threefold the damages found by the jury. Held that the amount of attorney's fees allowed as costs under the act Is within the discretion of the trial court and as such discretion Is reasonably exercised thin court will not disturb the amount awai-ded." [48 h. ed., 608.] » [An association of wholesale dealers in tiles, mantels, and grates in San Francisco and vicinity, and nonresident manufacturers of tiles and fireplace fixtures, In which the dealers agree not to purchase from manufacturere not members of the association, and not to s»l] unset tiles to nonmembers for less than list prices, which are more than fifty per cent higher than prices to members, while the manufat^urei-s agree not to sell their products or wares to non- members at any price, under penalty of forfeiture of membership, is an agreement or combination in restraint of trade within the meaning of the Anti-Trust Act of July 2, 1890 (26 Stat. L. 209, chap. 647, U. S. C!omp. Stat. 1901, p. 3202).] oThe foregoing syllabus and the abstract of argument copvrighted 1904, by The Banks Law Publishing Ck>. » The following paragraphs inclosed in brackets comprise the sylla- bus to this case in the U. S. Supreme Court Reports, Book 48, p. 608. Copyrighted. 1908, 1904, by the liawyers* Co-Operatlve Publishing Co. MONTAGUE & CO. V. LOWBY. 329 statement of the Case. [Tlie discretion of the trial court under the Anti-Trust Act of July 2, 1890 (26 Stat. L. 209, chap. 647, U. S. Comp. Stat. 1901, p. 3202). § 7, to allow a reasonable attorney's fee to the successful plaintiff in an action brought under that section to recover damages for a violation of the provisions of that act against combinations in restraint of trade, is not abused by an allowance of $750, although the verdict was for but $500, where the trial took five days, and from the proof offered it appeared that from $750 to $1,000 would be a reasonable sum.] This action was brought under section 7 of the act of July 2, 1890, 26 Stat. 209; 3 Comp. Stat. 3202, commonly called the Anti-Trust Act. The section reads as follows : " 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." Plaintiffs in error (defendants below) seek to review^ the judgment of the Circuit Court of Appeals for the Ninth Cir- cuit, 115 Fed. Rep. 27, affirming a judgment for plaintiffs, entered in the Circuit Court for the Northern District of California, upon a verdict of a jury. 106 Fed. Eep. 38. It appeared in evidence on the trial in the United States Circuit Court that the plaintiff's for many years prior to the commencement of this action had been copartners, doing business as such in the citv of San Francisco in the State of California, and dealing in tiles, mantels and grates, and that The Tile, Mantel and Grate Association of California, and the officers and members thereof, had since, on or about the — dav of Januarv, 1898, constituted under that name an unin- corporated organization composed of Avholesale dealers in tiiles, mantels and grates, who were citizens and i-esidents of the city and county of San Francisco, or the city of Sacra- mento, or the city of San Jose in the State of California, and such organization was also composed of the manufac- turers of tiles, mantels [40] and grates, who were residents of other States, and engaged in the sale of their manufactured articles (among others) to the various other defendants in the State of California. There were no manufacturers of tiles within the State of California, and all the defendants ooU 183 UNITED STATES BEPORTS, m. Statement of the Case. Who were residents of tliat State and who were also dealers m tiles, m the prosecution of their business, procured the tiles from outside the State of California and from among those manufacturers who were made defendants herein. The man- Bfacturei^ and dealers were thus engaged in the prosecution of a business which, with reference to the sales of tiles, amounted to commerce between the States. Under these cir cumstances the dealers in tiles, living in San Francisco, or withm a radius of 200 miles thereof, and being some of the defendants m this action, together with the Eastern manufac- turers of tiles, who are named as defendants heroin, formed an association called The Tile, Mantel and Grate Association of California. The objects of the association, as stated in the ^constitution thereof, were to unite all acceptable dealers m tiles, fireplace fixtures and mantels in San Francisco and vicmity, (withm a radius of 200 miles,) and all American manufacturers of tiles, and by frequent interchange of ideas advance the interests and promote the mutual welfare of its members. By its constitution, article I, section 1, it was provided that any individual, corporation or firm engaged in or contem- plating engaging in the tile, mantel or grate business in San Francisco, or within a radius of 200 miles thereof, (not man- ufacturers,) having an established business and carryincr not less than $3,000 worth of stock, and having been proposed bv a member m good standing and elected, should, after having signed the constitution and by-laws governing the associa tion, and upon the payment of an entrance fee as provided enjoy all the privileges of membership. It was provided in the second section of the same article that all associated and individual manufacturers of tiles and fireplace fixtures throughout the United States might become non-resident members of the association upon the payment of an entrance fee as provided, and after having signed the constitution and by-laws govern- [41 J ing the association. The initiation fee was, for active members, $25, and for non-resident members HO, and each active member of the association was to pay $10 SdeX *"' "^"^'^ ^"* '''' "^""^ """"^ ^"^""'^"^ against non- An executive committee was to be appointed, whose duty MONTAGUE & CO. V, LOWRY. 331 Statement of the Case. it was to examine all applications for membership in the association and report on the same to the association. It does not appear what vote was necessary to elect a member, but it is alleged in the complaint that it required the unanimous consent of the association to become a member thereof, and it was further alleged that by reason of certain business diffi- culties there were members of the association who were antagonistic to plaintiffs, and who would not have permitted them to join, if they had applied, and that plaintiffs were not eligible to join the association for the further reason that they did not carry at all times stock of the value of $3,000. The by-laws, after providing for the settlement of disputes between the members and their customers, by reason of liens, foreclosure proceedings, etc., enacted as follows, in article III : " Sec. 7. No dealer and active member of tbis association shaU pur- chase, directly w indirectly, any tile or fireplace fixtures from any manufacturer or resident or traveling agent of any manufacturer not a member nf this association, neither shall they sell or dispose of, directly or indirectly, any unset tile for less than list prices to any person or i)ersons not a member of this association, under penalty of expulsion from the association. " Sec. 8. Manufacturers of tile or fireplace fixtures or resident or traveling agents or manufacturei-s selling or disposing, directly or indirectly, their products or wares to any person or persons not mem- bers of the Tile, Mantel and Grate Association of California, shall for- feit their membership in the association." The term " list prices," referred to in the seventh section, was a list of prices adopted by the association, and when what are called " unset " tiles were sold by a member to Buy one not a member, they were sold at the list prices so adopted, which [42] were more than fifty pe.r cent higher than when sold to a member of the association. The plaintiffs had established a profitable business and were competing with all the defendants, who were dealers and engaged in the business of purchasing and selling tiles, grates and mantels in San Francisco prior to the formation of this association. The plaintiffs had also before that time been accustomed to purchase all their tiles from tile manu- facturers in Eastern States, (who were also named as parties defendants in this action,) and all of those manufacturers subsequently joined the association. The plaintiffs -were not members of the association and had never been, and had aa2 tm UNITED STATES REPORTS, 42. Argument for Plaintiflfs in Error. never applied for membership therein and had never been invited to join the same. The proof shows that by reason of the formation of this association the plaintiffs have been injured in their business because they were unable to procure tiles from the manufac-' tiirere at any price, or from the dealers in San Francisco, at less than the price set forth in the price list mentioned in the seventh section of the by-laws, supra, which was more than fifty per cent over the price at which members of the associa- tion could purchase the same. Before the fonnation of the association the plaintiffs could and did procure their tiles from the manufacturers at much less cost than it was pos- sible for them to do from the dealers in San Francisco after its formation. There was proof on the part of the defendants below that the condition of carrying $3,000 worth of stock, as mentioned in the constitution, had not always been enforced, but there was no averment or proof that the article of the constitution on that subject had ever been altered or repealed. The jury rendered a verdict for $500 for the plaintiffs, and pursuant to the provisions of the seventh section of the act judgment for treble that sum, together with what the trial TOurt decided to be a reasonable attoniey's fee, was entered for the plaintiffs. Mr. Wmiam M. Piersm for plaintiffs in error: The association is not obnoxious to the provisions of the Sherman Anti-Trust Act. [43] This case can be distinguished from the Trans-Mis- souri ease, 160 II. S. 290, and the Joint Traffic Case, 171 U. S. 505. So far as the transactions between the dealers and the manufacturers are concerned, the association fixes no tariff or pnces whatever; and it must be observed generaUy that the association itself does no business. It is lawful for a man to decline to work for another man or class of men or to do business with another man or class of men, as he ^ fit; and what is lawful for one man to do in this regard sev- eral men may agree to act jointly in doing, and may make express and simultaneous declaration of their purpose. The lawfulness of a provision as between dealers and manufac- MONTAGUE & CO. V, LOWRY. 333 Argument for Plaintiflfs in Error. turers, such as is contained in the constitution and by-laws of the plaintiff's in error, is impliedly recognized in the Hop- kins Case, 171 U. S. 578, and is aptly recognized and ap- proved in the Anderson Case, 171 U. S. 604. See also U. S, V. Greenhft, 51 Fed. 'Rep. 205; In re Greene, 52 Fed. Rep. 104; U, S. V. Nelson, 52 Fed. Rep. 646; Dueber Mfg. Co, v. Howard Co,, 55 Fed. Rep. 851; S. C, 14 C. C. A. 14; Gihhs V. McNealy, 102 Fed. Rep. 594; Steamship Co. v. McGregor^ L. R. 23 Q. P,. 598: Mohn v. Hollis, 54 Minnesota, 223. Witliin these authorities and on a view of the constitution and by-laws of the association in question, it will appear that the provisions touching transactions between dealers and manufacturers are not obnoxious to the act of Congress, and it will appear further that the association in question has none of the elements of a monopoly. Indeed, the object of the association is said to be to unite all acceptable dealers and all American manufacturers. An association cannot be in restraint of trade when its doors are o]>en to all in the trade, and it fixes no price what- ever. The only limitation was to haA^e established homes with $3,000 worth of stock. The transactions in unset tiles at list prices are local trans- actions, intra-state transactions, in no respect taking on the quality of interstate commerce and being purely local, are not within the jiurview of the act. Addyston Pipe rf? Steel Co. V. U. S., 175 U. 8. 211. Assuming, however, for argu- [44] ment, the transactions in unset tiles to be along the line of interstate commerce, — they are so trifling, incidental and remote in their bearing upon interstate trade and commerce as to be what mathematicians call negligible quantities which may be left out of consideration without impairing the general result. Trans-Missonri case, the Joint Traffic case, and Hopkins case, supra. The attorney fee allowed was excessive. Plaintiffs below asked for $10,000 damages and were only allowed $500 and the fee is out of proportion. Mr, J. C. Campbell for defendant in error: The Tile, Mantel and Grate Association of California is a combination declared to be illegal by the act of July 2, 1890, m UNITED STATES REPOBTS, 44. Opinion of the Court. for it is in restraint of trade or commerce among the several States, and was formed to and does monopolize such trade or commerce. Um'ted States v. Freight Association, 166 U. S. 290, 323 ; Addyston Pipe d: Steel Co, v. United States, 176 IT. S. 211, 241, 244 ; United States v. E. 0. Knight Co,, 156 U. S. 1, 16; United States v. Coal Dealers Association, 85 Fed. Eep. 252 ; Hopkins v. United States, 171 U. S. 578, and see p, 597; Anderson v. United States, 171 U. S. 604, distin- . guished. The counsel fee was fair and reasonable. Ml. Justice I'eckham, after making the foregoing state- ment, delivered the opinion of the court. The question raised by the plaintiffs in error in this case is, whether this association, described in the foregoing state- ment of facts, constituted or amounted to an agreement or combination in restraint of trade within the meaning of the so-called Anti-Trust Act of July 2, 1890? The result of the agreement when carried out was to pre- vent the 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 been accustomed to sell to the plaintiffs were members. The non- [45] 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 manufacturers 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-member as already stated. The plaintiffs endeavored in vain to procure tiles 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 manufacturers of an article of commerce between the several MONTAGUE & CO. V. LOWBY. Opinion of the Court. 385 States refusing to sell to certain other persons. The agree- ment is between manufacturers and dealers belonging to an association in which tlie dealers agree not to purchase from manufacturers not members of the association, and not to sell unset 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 a violation of the agreement they were subject to forfeiting their member- ship. B}^ reason of this agreement, therefore, the market for tiles is, as we have said, not only narrowed but the prices charged by the San Francisco dealers for the unset tiles to those not members of the association are more than doubled. It is urged that the sale of unset tiles, provided for in the seventh section of the by-law s, 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 be- tween 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 construed as [46] one piece, in which the manufac- turers 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 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 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 interstate trade or commerce. Again, it is contended the sale of unset tiles is so small in San Francisco as to be a negligible quantity; that it does not amount to one per cent of the business of the dealers in tiles in that city. The amount of trade in the commodity is not very material, but even though such dealing heretofore has been small, it would probably largely increase when those who formerly purchased tiles from the manufacturers are 336 1S»3 UNITEB STATES REPOKTS, 4t}. Opinion of the Court shut out by rmmn of the association and their non-member- ship therein from purchasing their tiles from those manu- facturers, and are compelled to purclia,se them from the San Francisco dealers. Either the extent of the trade in unset tiles would increase between the members of the association and outsiders, or else the latter would have to go out of business, because unable to longer compete with their rivals who were members. In either event, the combination, if carried out, directly effects a restraint of interstate conuuerce. It is also contended that, as the expressed object of the as- sociation was to unite therein all the dealers in San Francisco and vicinity, the plaintiffs had nothing more to do than j5in the association, pay their fees and dues and become like one of the other members. It was not, however, a matter of course to permit any dealer to join. The constitution only provided for "all acceptable dealers'' joining the associa- tion. As plaintiffs were not invited to be among its found- ers, it would look as if they were not regarded as acceptable. However that may be, they never subsequently to its forma- tion applied for admission. It is plain that the question of their admission, if they had so applied, was one to be arbi- [47 J trarily determined by the aasociation. The constitu- tion provided for the appointment of an executive commit- tee, whose duty it was to examine all applications for mem- bership in and to report on the same to the association, after which it was to decide whether the applicants should be ad- mitted 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 appears that plaintiffs were not eligible under the constitution, because they did not always carry stock worth $3,000, which by section 1 of article I, was made a condition of eligibility to membership. True, it was stated in evidence that this provision 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 an application was made by any one who would not come up to the condition. The case stands, therefore, MONTAGUE & CO. V, LOWBY. 337 Opinion of the CJourt that the plaintiffs had not been asked to join the association at its formation; that they did not fill the condition pro- vided for in its constitution as to eligibility, and that if they had applied their application was subject to arbitrary re- jection. The plaintiffs, however, could not, by virtue of any agree- ment contained in such association, be legally put under ob- ligation to become members in order to enable them to transact their business as they had theretofore done, and to purchase tiles as they had been accustomed to do before the association was formed. The consequences of non-membership were grave, if not disastrous, to the plaintiffs. It has already been shown how the prices of tiles were enhanced so far as plaintiffs were concerned, and how by means of this combination interstate commerce was affected. The purchase and sale of tiles between the manufacturers in one State and dealers therein in California was interstate commerce within the Add^ston Pipe case, 175 U. S. 211. It was not a combination or monopoly among manufacturers simply, but one between them and dealers in the manufac- tured article, [48] which was an article of commerce be- tween the States. United States v. E, O, Knight Company^ 166 U. S. 1, did not therefore cover it. It is not brought within either Hopkins v. United States, 171 U. S. 578, or Anderson v. United States, 171 U. S. 604. In the first case it was held that the occupation of the members of the asso- ciation was not interstate commerce, and in the other that the subject matter of the agreement did not directly relate to, embrace or act upon interstate commerce, for the reasons which are therein stated at length. Upon examination we think it is entirely clear that the facts in the case at bar bear no resemblance to the facts set forth in either of the above cases and are not within the reasoning of either. The agree- ment directly affected and restrained interstate commerce. The case we regard as a plain one and it is unnecessary to further enlarge upon it. There is one other question which, although of secondary importance, is raised by the plaintiffs in error. After the 21220— VOL 2—07 M ^22 338 193 UNITED STATES REPORTS, 197. Syllabus. rendition of the verdict the plaintiffs below claimed a rea- sonable attorney's fee under the seventh section of the act, and made proof of what would be a reasonable sum therefor, from which it appeared that it would be from $750 to $1,000. The trial court awarded to the plaintiffs $750. The verdict being only for $500, the plaintiffs in error claimed that the allowance was an improper and unreasonable one. The trial took some five days. The judgment in effect pro- nounced the association illegal. The amount of the attor- ney's fee was within the discretion of the trial court, rea- sonably exercised, and we do not think that in this case such discretion was abused. The judgment is Aiftrmed, 1197] NORTHERN SECURITIES COMPANY v, UNITED STATES." APPEAL FROM THE CIRCUIT COURT OF THE UNITED STATES FOR THE DISTRICT OF MINNESOTA. 1193 U. S. 197.] No. 277. Argued December 14, 15, 1»03. — ^Declded March 14, 1904. Stockholders of the Great Northern and Northern Pacific Railway companies— corporations having competing and substantially parallel lines from the Great Lakes and the Mississippi River to the Pacific Ocean at Puget Sound — combined and conceived the scheme of or- ganizing a corporation, under the laws of New Jersey, which should hold the shares of the stock of the constituent companies, such share- holders, in lieu of their shares in those companies, to receive, upon an agreed basis of value, shares in* the holding corporation. Pur- suant to such combination the Northern Securities Company was organized as the holding corporation through which that scheme should be executed ; and under that scheme such holding corporation became the holder— more properly speaking, the custodian — of more than nine-tenths of the stock of the Northern Pacific, and more than three-fourths of the stock of the Great Northern, the sockholders of the companies, who delivered their stock, receiving, upon the agreed basis, shares of stock in the holding corporation.^ « Decree of the Circuit Court (120 Fed., 721, 731). See pp. 215, 231. » Syllabus and extracts of briefs, arguments, etc, copyrighted, 1904, by The Banks Law Publishing Co. NORTHERN SECURITIES CO. V. UNITED STATES. 339 Syllabus. Veld, that, necessarily, the constituent companies ceased, under this arrangement, to be in active competition for trade and commerce along their respective lines, and became, practically, one powerful consolidated corporation, 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. Held, that the arrangement was an illegal combination in restraint of interstate commerce and fell within the prohibitions and pro- visions of the act of July 2, 1890, and it was within the power of the Circuit Court, in an action, brought by the Attorney General of the United States after the completion of the transfer of such stock to it, to enjoin the holding company, from voting Such stock and from exercising any control whatever over the acts and doings of the railroad companies, and also to enjoin the railroad companies from paying any dividends to the holding corporation on any of their stock held by it. Held, that although cases should not be brought within a statute con- taining criminal provisions that are not clearly embraced by it, the court should not by narrow, technical or forced construction of words exclude cases from it that are obviously within its provisions and while tlie act of July 2, 1890, contains criminal provisions, the Federal court has power under § 4 of the act in a suit in equity to prevent and restrain violations [198] of the act, and may mould its decree so as to accomplish practical results such as law and justice demand. Harlan, Brown, McKenna and Day, JJ.o * The combination is, within the meaning of the act of Congress of July 2, 1890, known as the Anti-Trust 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 From prior cases in this court, the following propositions are dedu- cible and embrace this case : Although the act of Congress known as the Anti-Trust Act has no refer- ence to the mere manufacture or production of articles or commodi- ties within the limits of the several States, it embraces and declares to be illegal every contract, combination or conspiracy, in whatever form, of whatever nature, and whoever may be parties to it, which o Mr. Justice Harlan announced the affirmance of the decree of the Circuit Court and delivered an opinion in which Brown, McKenna and Day, JJ., concurred. Mr. Justice Brewer delivered a separate opinion in which he concurred in affirming the decree of the Circuit Court. Mr. Justice White delivered a dissenting opinion in which the Chief Justice and Peckham and Holmes, JJ., concurred; Mr. Justice Holmes delivered a dissenting opinion in which the Chief Justice and White and Peckham, JJ., concurred. 340 193 UNITED STATES REPORTS, 198. Syllabus. directly or necessarily operates in restraint of trade or commerce among the several States or with foreign nations. The act is not limited to restraints of interstate and international trade or commerce that are unreasonable in their nature, but em- braces all direct restraints, reasonable or unreasonable, imposed by any combination, conspiracy, or monopoly upon such trade or commerce. Railroad carriers engaged in Interstate or international trade or com- merce are embraced by the act. Combinations, even among private manufacturers or dealers, where- by interstate or international commerce is restrained, are equally embraced by the act Congress has the power to establish niles by which interstate and inter- national commerce shall be governed, and by the Anti-Trust Act has prescribed the rule of free couii>etition among those engaged in such commerce. Erery combination or conspiracy which would extinguish competition between otherwise 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. The natural effect of competition is to increase eonmierce, and an agreement whose direct effect is to prevent this play of competition restrains instead of promotes trade and commerce. To vitiate a combination, such as the act of Congress condemns, it need not [199] be shown that such 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 eonmierce, and to de- prive the public of the advantages that flow from free competition. The constitutional guarantee of liberty of contract does not prevent Congress from prescribing the rule of free competition for those engaged in interstate and international commerce. Under its powers to regulate commerce among the several States and with foreign nations, Congress had authority to enact the statute in question. United Btateg v. E. 0. 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. 505; Hopkins v. United States, 171 U. S. 578; Anderson v. United States, 171 U. S. 604; Addyston Pipe d Steel Co, v. United States, 175 U. S. 211; Mon- tague d Co. V. Lowry, 193 U. S. 38. Congress may protect the freedom of interstate commerce by any means that are appropriate and that are lawful and not prohibited by the Constitution. If in the judgment of Congress the public convenience or the general welfare will be best subserved when the natural laws of competition are left undisturbed by those engaged in interstate commerce, that must be, for all, the end of the matter, If this is to remain a gov- ernment of laws, and not of men. NORTHERN SECURITIES CO. V, UNITED STATES. 341 Syllabus. When Congress declared contracts, combinations and conspiracies In . restraint of trade or commerce to be illegal, it did nothing more than apply to interstate commerce a rule that had been long ap- plied by the several States when dealing with combinations that were in restraint of their domestic commerce. Subject to such restrictions as are imposed by the Constitution upon the exercise of all power, the power of Congress over interstate and international commerce is as full and complete as is the power of any State over its domestic commerce. No State can, by merely creating a corporation, or in any other mode, project its authority into other States, so as to prevent Congress from exerting the power it possesses under the Constitution over interstate and international commerce, or so as to exempt its cor- poration engaged in interstate commerce from obedience to any rule lawfully established by Cogress for such commerce; nor can any State give a corporation created under its laws authority to restrain interstate or international commerce against the will of the nation as lawfully expressed by Congress. Every corporation created by a State is necessarily subject to the supreme law of the land. 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 lawfully established by Congress. [200] By Mb. Justice Bbewer. The act of July 2, 1890, was leveled, as appears by its title, 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 decisions at common law had affirmed were reasonable and ought to be upheld. The general language of the act is limited by the power which each individual has to manage his own property and determine the place and manner of its investment. Freedom of action in these respects is among the inalienable rights of every citizen. A corporation, while by fiction of law recognized for some purposes as a person and for purposes of jurisdiction as a citizen, is not endowed with the inalienable rights of a natural person, but it is an artificial person, created and existing only for the convenient transaction of business. Where, however, no individual investment is involved, but there is a combination by several individuals separately owning stock in two competing railroad companies engaged in interstate commerce, to place the control of both in a single corporation, which is organized for that purpose expressly and as a mere instrumentality by which the competing railroads can be combined, the resulting combination is a direct restraint of trade by destroying competition, and is illegal within the meaning of the act of July 2, 1890. 342 193 UNITED STATES REPORTS, 200. Syllabus. A suit brought by the Attorney General of the United States to declare this combination Illegal under the act of July 2, 1890, Is not an interference with the control of the States under which the rail- road companies and the holding company were, respectively, or- ganlzed.a [48 L. ed., 079.T » [A combination by stockholders in two competing interstate railway companies to fonn a stock-holding corporation which should ac- quire, In exchange for its own capital stock, a controlling interest In the capital stook of each of such railway companies, violates the Anti-Trast Act of July 2, 1890 (26 Stat. L. 209, chap. 647, U. S. Comp. Stat. 1901, p. 3200), which declares illegal every combination or conspiracy in resti-alnt of interstate commerce, and forbids attempts to monopolize sueli commerce or any part of it.] [Congress did not exceed its power under the commerce clause of the Federal Constitution in enacting the Anti-Trust Act of July 2, 1890 (26 Stat. L. 209, chap. 647, U. S. Comp. Stat. 1901, p. 3200), declar- ing illegal every combination or conspiracy in restraint of interstate commerce, and forbidding attempts to monopclize such commerce or any part of it, although such statute is construed to embrace a combination of stockholders of two competing interstate railway companies to form a stock-holding corporation wliich should acquire. In exchange for its own capital stock, a controlling interest !n the capital stock of each of such railway companies.] [The enforcement of the provisions of the Antl-Tnist Act of July 2, 1890 (26 Stat. L. 200, chap. 647, U. S. Comp. Stat. 1901, p. 3200), by a Federal court decree enjoining a corporation organized in pursuance of a combination of stockholders in two competing interstate rail- way companies for the purpose of acquiring a txmtrolling interest in the capital stock of such companies, from exercising the iwwer acquired by such corporation by virtue of its acquisition of such stock, does not amount to an invasion by the Federal Government of the reserved rights of the States creating the several corporations.} [The constitutional guaranty of liberty of contract is not infringed by the enforcement of the provisions of the Anti-Trust Act of July 2. 1890 (26 Stat. L. 20l>, chap. 647. U. S. Comp. Stat. 1901, p. 3200), by a Federal court decree enjoining a corporation formed in pursuance of a combination of stockholders In two competing interstate railway companies for the purpose of acquiring a controlling interest in the capital stock of such companies, from exercising the powers ac- quired by such corporation by virtue of its acquisition of such stock.] [A Federal court, by its decree in a suit instituted under the authority • The foregoing syllabus and the abstracts of briefs and arguments, etc., copyrighted, 1904. by The Banks Law Publishing Co. » The following paragraphs Inclosed in brackets comprise the sylla- bus to this case in the U. S. Supreme Court Reports, Book 48, p. 679. Copyrighted, 1903, 1904, by the Lawyers' Co-Operative Publishing Co. NORTHERN SECURITIES CO. V. UNITED STATES. 348 Bill in Equity. of the Anti-Trust Act of July 2, 1890 (26 Stat. L. 209, chap. 647, U. S. Comp. Stat. 1901, p. 3200), § 4, to prevent and restrain viola- tions of the act. may properly enjoin a corporation organized in pursuance of a combination of stockholders of two competing inter- state railway companies for the purpose of acquiring a controlling interest in the capital stock of such companies, from acquiring any further stock therein, from voting such stock as it then holds or may subsequently acquire, and from exercising any control over the rail- way companies by virtue of its holdings, and may restrain the rail- way companies from permitting or suffering any such action on the part of the stock-holding corporation, and from paying any divi- dends on account of the stock held by it] The pleadings in this action and the decree of the Circuit Court are as follows : PETITION.* To the judges of the Circuit Court of the United States for the District of Minnesota: Now comes the United States of America, by Milton D. [201] Purdy, the United States attorney for the District of Minnesota, acting under direction of the Attorney-General of o Bill in equity of United States, this page, supra. Exhibit: Certificate of Incorporation of Northern Securities Com- pany, page 216, post. Answer of Northern Securities Company, page 221, post. Answer of Hill and other defendants, page 241, post. Answer of Great Northern Railway Company, page 241, post. Answer of Northern Pacific Railway Company, page 242, post. Answer of Morgan and other defendants, page 247, post. Answer of Lament, defendant, page 255, post. Decree of the Circuit Court, page 255, post. Summary of facts from argument and brief of Mr. George B. Young for appellants, page 257, post. Abstract of argument of Mr. John G. Johnson for appellant Northern Securities Company, page 268, post. Abstract of argument of Mr. Charles W. Bunn for appellant North- em Pacific Railway Company, page 273, post. Abstract of brief submitted by Mr. John W. Griggs for appellant Northern Securities Company, page 276, post. Abstract of brief submitted by Mr. M. D. Grover for appellant Great Northern Railway Company, page 280, post. Abstract of brief submitted by Mr. Francis Lynde Stetson and Mr. David Willcox for appellants Morgan, Bacon and Lament, page 290, post. Abstract of argument and brief of Mr. Attorney General Knox and 344 193 UNITEB STATES BEPOBTS, 201. Bill in Equity. the United States, and brings this its proceeding by way of petition against the Northern Securities Company, a corpo- ration organized and existing under the laws of the State of New Jersey ; the Great Northern Kailway Company, a cor- poration organized and existing under the laws of the State of Minnesota; the Northern Pacific Kailway Company, a corporation organized and existing under the laws of the Stat« of Wisconsin ; James J. Hill, a citizen of the State of Minnesota and a resident of St. Paul, and William P. Clough, D. Willis James, John S. Kennedy, J. Pierpont Morgan, Robert Bacon, George F. Baker, and Daniel La- mont, citizens of the State of New York and residents of New York City, and, on information and belief, complains and says : I. The defendants, the Northern Pacific Railway Company and the Great Northern Railway Company, were, at the times hereinafter mentioned, and now are, common carriers, em- ployed in the transportation of freight and passengers among the several States of the United States and between such States [202] and foreign nations, and, as such carriers so em- ployed, were and are engaged in trade and commerce among the several States and with foreign nations. II. On and prior to the 13th day of November, 1901, the defendants, James J. Hill, William P. Clough, D. WilUs James, and John S. Kennedy, and certain other persons whose names are unknown to the complainant, but whom it prays to have made parties to this action when ascertained (hereinafter referred to as James J. Hill and his associate st9ckholders) , owned or controlled a majority of the capital stock of the defendant, the Great Northern Railway Com- pany, and the defendants, J. Pierpont Morgan and Robert Bacon (members of and representing the banking firm of J. P. Morgan & Co., of New York City), George F. Baker and Daniel S. Lamont, and certain other persons whose names are unknown to the complainant, but whom it prays to have Hr. William A. Day, assistant to Attorney General, for the United States, appellee, page 297, post. Opinion of Mb. Justice Hablan, page 317, post. Opinion of Mb. Justice Bbeweb, page 360, post. Opinion of Mb. Justice White, page 364, post. Opinion of Mb. Justice Holmes, page 400, post. NORTHEKN . SECURITIES CO. V. UNITED STATES. 345 Bill in Equity. made parties to this action when ascertained (hereinafter re- ferred to as J. Pierpont Morgan and his associate stockhold- ers), owned or controlled a majority of the capital stock of the defendant, the Northern Pacific Railway Company. Til. The Northern Pacific Railway Company and the Great Northern Railway Company, at and prior to the doing of the acts hereinafter complained of, owned or controlled and operated two separate, independent, parallel, and compet- ing lines of railway running east and west into or across the States of Wisconsin, Mimiesota, North Dakota, Montana, Idaho, Washington, and Oregon, the Northern Pacific system, extending from Ashland, in the State of Wisconsin, and from Duluth and St. Paul, in the State of Minnesota, through Helena, in the State of Montana, and Spokane, in the State of Washington, to Seattle and Tacoma, in the State of Wash- ington, and Portland, in the State of Oregon, and the Great Northern system, extending from Superior, in the State of Wisconsin, and from Duluth and St. Paul, in the State of Minnesota, through Spokane, in the State of Washington, to Everett and Seattle, in the State of Washington, and to Port- land, in the State of Oregon, with a branch line to Helena, in the State of Montana, thus furnishing [203] to the public two parallel and competing transcontinental lines connecting the Great Lakes and the Mississippi River with Puget Sound and the Pacific Ocean. At the times mentioned, these two railway systems, which will hereafter be referred to respec- tively as the Northern Pacific system and the Great Northern system, each of which, with its leased and controlled lines, main and branch, aggregates over 5,500 miles in length, were the only transcontinental lines of railway extending across the northern tier of States west of the Great Lakes, from the Great Lakes and the Mississippi River to the Pacific Ocean, and were then engaged in active competition with one another for freight and passenger traffic among the several States of the United States and between such States and foreign coun- tries, each system connecting at its eastern terminals, not only with lines of railway, but with lake and river steamers to other States and to foreign countries, and at its western ter- minals with sea-going vessels to other States, Territories, and possessions of the United States and to foreign countries. 346 193 UNITED STATES EEPOBTS, 203. Bill in Equity. IV. Prior to the year 1893 the Northern Pacific system was owned or controlled and operated by the Northern Pacific Eailroad Company, a corporation organized and existing under certain acts and resolutions of Congress. During that year the company became insolvent, and the line was placed in the hands of receivers by the proper courts of the United States. While in this condition, awaiting foreclosure and sale, an arrangement was entered into between a majority of the bondholders of the Northern Pacific Eailroad Company and the defendant, the Great Northern Kailway Company, for a virtual consolidation of the Northern Pacific and Great Northern systems and the placing of the practical control of the Northern Pacific system in the hands of the defendant, the Great Northern Eailway Company. This arrangement contemplated the sale, under foreclosure, of the property and franchises of the Northern Pacific Eailroad Company to a committee of the bondholders, who should organize a new corporation, to be known as the Northern Pacific Eailway Company, which was to become the [204] successor of the Northern Pacific Eailroad Company; one-half of the capital stock of the new company was to be turned over to the share- holders of the defendant, the Great Northern Eailway Com- pany, which in turn was to guarantee the payment of the bonds of the Northern Pacific Eailway Company. An agreement was to be entered into for the exchange of traffic at intersecting and connecting points and for the division of earnings therefrom. The carrying out of this arrangement was defeated by the decision of the Supreme Court of the United States in the case of Pearsall v. The Great Northern Eailway Company (which was decided March 30, 1896, and is reported in the one hundred and sixty-first volume of the reports of said court, beginning on page 646, to which ref- erence is made), in which it was held that the practical effect would be the consolidation of two parallel and competing lines of railway, and the giving to the defendant, the Great Northern Eailway Company, a monopoly of all traffic in the northern half of the State of Minnesota, as well as of all transcontinental traffic north of the line of the Union Pacific, to the detriment of the public and in violation of the laws of the State of Minnesota. NORTHEKN SECURITIES CO. V. UNITED STATES. Bill in Equity. 347 V. Early in the year 1901 the defendants, the Great Northern and Northern Pacific Eailway companies, acting for the purpose of promoting their joint interests, and in contemplation of the ultimate placing of the Great Northern and Northern Pacific systems under a common source of contml, united in the purchase of the total capital stock of the Chicago, Burlington and Quincy Eailway Company, of Illinois, giving the joint bonds of the Great Northern and Northern Pacific Eailway companies, payable in twenty years from date, with interest at 4 per cent per annum, for such stock, at the rate of $200 in bonds in exchange for each $100 in stock, and in this manner purchased and acquired about $107,000,000 of the $112,000,000 total capital stock of the Chicago, Burlington and Quincy Eailway Company, or about 98 per cent thereof. In this manner, at the time stated, the defendants, the Great Northern and Northern Pacific Eailway companies, secured control of the vast system of rail- [205 1 \\a.y lines known as the Burlington system, about 8,000 miles in length, extending from St. Paul, in the State of Minnesota, where it connects with the Great Northern and Northern Pacific Eailway systems, through the States of Minnesota, Wisconsin, and Illinois, to Chicago, in the State of Illinois, and from these two cities through said States and through the States of Iowa, Missouri, Nebraska, Colorado, South Dakota, Wyoming, and Montana, to Quincy, in the State of Illinois; to Burlington and Des Moines, in the State of Iowa ; to St. Louis, Kansas City, and St. Joseph, in the State of Missouri ; to Omaha and Lincoln, in the State of Nebraska ; to Denver, in the State of Colorado ; to Chey- enne, in the State of Wyoming, and to Billings, in the State of Montana, where it again connects with the Northern Pacific Eailway system, these States lying west of Chicago and south of the States crossed by the Great Northern and Northern Pacific systems, and constituting the territory oc- cupied in part by what is known as the Union Pacific Eail- way system, which has been and is a parallel and competing system within said territory with the said Burlington system. VI. The attempt to turn over a controlling interest in the stock of the Northern Pacific Eailway Company to the Great Northern Eailway Company and thus effect a virtual con- 348 193 UNITED STATES BEPOBTS, 205. Bill in Equity. solidation of the two railway systems, having thus, in the year 1896, been defeated by a decision of the Supreme Coui t of the United States, the defendants James J. Hill and his associate stockholders of the defendant, the Great Northern Eailway Company, owning or controlling a majority of the stock of that corporation, and the defendants J. Pierpont Morgan and his associate stockholders of the defendanl, tho Northern Pacific Eailway Company, owning or controlling a majority of the stock of that corporation, acting for them- selves as such stockholders and on behalf of the said railway companies in which they owned or held a controlling in- terest, on and prior to the 13th day of November, 1901, con- triving and intending unlawfully to restrain the trade or commerce among the several States [206] and between said States and foreign countries carried on by the Northern Pa- cific and Great Northern systems, and contriving and In- tending unlawfully to monopolize or attempt to monopolize such trade or commerce, and contriving and intending un- lawfully to restrain and prevent competition among said railway systems in respect to such interstate and foreign trade or commerce, and contriving and intending unlawfully to deprive the public of the facilities and advantages in the carrying on of such interstate and foreign trade or commerce theretofore enjoyed through the independent competition of said railway systems, entered into an unlawful combination or conspiracy to effect a virtual consolidation of the North- em Pacific and Great Northern systems, and to place re- straint upon all competitive interstate and foreign trade or commerce carried on by them, and to monopolize or attempt to monopolize the same, and to suppress the competition theretofore existing between said railway systems in said interstate and foreign trade or commerce, through the in- strumentality and by the means following, to wit : A holding corporation, to be called the Northern Securities Company, was to be formed under the laws of New Jersey, with a capital stock of $400,000,000, to which, in exchange for its own capital stock upon a certain basis and at a certain rate, was to be turned over and transferred the capital stock, or a controlling interest in the capital stock, of each of the de- fendant railway companies, with power in the holding cor- NOBTHEBN SECUBITIES CO. V. UNITED STATES. 349 Bill in Equity. poration to vote such stock and in all respects to act as the owner thereof, and to do whatever it might deem necessary to aid in any manner such railway companies or enhance the value of their stocks. In this manner, the individual stockholders of these two independent and competing railway companies were to be eliminated and a single common stock- holder, the Northern Securities Company, was to be sub- stituted; the interest of the individual stockholders in the property and franchises of the two railway companies was to terminate, being thus converted into an interest in the property and franchises of the Northern Securities company. The individual stockholders of the [207] Northern Pacific Railway Company were no longer to hold an interest in the property or draw their dividends from the earnings of the Northern Pacific system, and the individual stockholders of the Great Northern Railway Company were no longer to hold an interest in the property or draw their dividends from the earnings of the Great Northern system, but having ceased to be stockholders in the railway companies and having become stockholders in the holding corporation, both were to draw their dividends from the earnings of both systems, collected and distributed by the holding corporation. In this manner, by making the stockholders of each system jointly interested in both systems, and by practically pooling the earnings of both systems for the benefit of the former stockholders of each, and by vesting the selection of the di- rectors and officers of each system in a common body, to wit, the holding corporation, with not only the power but the duty to pursue a policy which would promote the interests, not of one system at the expense of the other, but of both at the expense of the public, all inducement for competition be- tween the two systems was to be removed, a virtual consoli- dation effected, and a monopoly of the interstate and foreign commerce formerly carried on by the two systems as inde- pendent competitors established. VII. In pursuance of the unlawful combination or con- spiracy aforesaid, and solely as an instrumentality through which to effect the purposes thereof, on the 13th day of No- vember, 1901, the defendant, the Northern Securities Com- pany, was organized under the general laws of the State of 350 193 UNITED STATES REPORTS, 207. Bill in Equity. New Jersey , with its principal office in Hoboken, in said State, and with an authorized capital stock of $400,000,000. A copy of the articles of incorporation of such company is at- tached to and made a part of this petition. Among the pur- poses and powers designedly inserted in said articles is the purpose and power, not only to "purchase" and "hold" " shares of the capital stock of any other corporation or cor- porations," under which said company wrongfully claims and is exercising the power to acquire by exchange [208] and hold the stock of the Northern Pacific and the Great North- em railway companies, but the purpose and power, while owner thereof, " to exercise all the rights, powers, and privi- leges of ownership ;" that is, to vote such stock, collect the dividends thereon, and in all respects act as a stockholder of such railway companies; and the purpose and power " to aid in any manner any corporation * * * of which any bonds * ♦ * or stock are held, * ♦ ♦ and to do any acts or things designed to protect, preserve, improve, or enhance the value of any such bonds * * * or stock," meaning thereby to do whatever it may deem necessary to aid in any manner the Northern Pacific and the Great Northern Railway com- panies, or to preserve or enhance the value of their stocks or bonds. VIII. In further pursuance of the unlawful combination or conspiracy aforesaid, and solely as an instrumentality through which to effect the purposes thereof, on or about the 14th day of November, 1901, the defendant the Northern Securities Company was organized by the election of a board of directors and the selection of a president and other officers, the defend- ant James J. Hill, the president and controlling power in the management of the defendant the Great Northern Railway Company, being chosen a director and president thereof; and thereupon, in further pursuance of the unlawful combination or conspiracy aforesaid, the defendants James J. Hill and his associate stockholders of the defendant the Great Northern Railway Company assigned and transferred to the defendant the Northern Securities Company, a large amount of the capi- tal stock of the Great Northern Railway Company, the exact amount being unknown to complainant, but constituting a controlling interest therein, and complainant believes a ma- NORTHERN SECURITIES CO. 17. UNITED STATES. 351 Bill in Equity. jority thereof, upon the agreed basis of exchange of $180, par value, of the capital stock of the said Northern Securities Company for each share of the capital stock of the Great Northern Railway Company ; and the defendants J. Pierpont Morgan and his associate stockholders of the Northern Pacific Railway Company assigned and transferred to the defendant the Northern Securities Company a [209] large majority of the capital stock of the defendant the Northern Pacific Rail- way Company, the exact amount being unknown to complain- ant, upon the agreed basis of exchange of $115, par value, of the capital stock of the said Northern Securities Company for each share of the capital stock of the Northern Pacific Railway Company; and thereafter, in further pursuance of the unlawful combination or conspiracy aforesaid, the defend- ant, the Northern Securities Company, oft'ered to the stock- holders of the defendant railway companies to issue and ex- change its capital stock for the capital stock of such railway companies, upon the basis of exchange aforesaid, no other consideration being required. In further pursuance of the imlawful combination or conspiracy aforesaid the defendant the Northern Securities Company has acquired an additional amount of the stock of the defendant railway companies, issu- ing in lieu thereof its own stock upon the basis of exchange aforesaid, and is now holding, as owner and proprietor, sub- stantially all of the capital stock of the Northern Pacific Rail- way Company and, as claimant believes and charges, a major- ity of the capital stock of the Great Northern Railway Com- pany, but if not a majority, at least a controlling interest therein, and is voting the same and is collecting the dividends thereon, and in all respects is acting as the owner thereof in the organization, management, and operation of said railway companies, and in the receipt and control of their earnings, and will continue to do so, unless restrained bv the order of this court. By reason whereof a virtual consolidation under one ownership and source of control of the Great Northern and Northern Pacific Railway systems has been affected, a combination or conspiracy in restraint of the trade or com- merce among the several States and with foreign nations for- merly carried on by the defendant railway companies inde- pendently and in free competition one with the other has been 352 193 UNITED STATES BBPOBTS, 210. Bill in Equity. formed and is in operation, and the defendants are thereby attempting to monopolize, and have monopolized, such inter- state and foreign trade or commerce, to the great and irrep- arable damage of the people of the United [210] States, in derogation of their common rights, and in violation of the act of Congress of July 2, 1890, entitled "An act to protect trade and commerce against unlawful restraints and monopolies." IX. If the defendant the Northern Securities Company has not acquired a large majority of the capital stock of the de- fendant the Great Northern Railway Company, it is because the individual defendants named, and their associates in the combination or conspiracy charged in this petition, or some of them, since it became apparent that the legality of their cor- porate device for the merger of the stock of competing rail- way companies, through the instrumentality of a central or holding corporation, would be assailed in the courts, have pur- posely withheld, or caused to be withheld, a large amount of the capital stock of said railway company from transfer for the stock of the Northern Securities Company, and have pur- posely discouraged and prevented the transfer and exchange of such stock for the stock of the Northern Securities Com- pany, all for the purpose of concealing the real scope and ob- ject of the unlawful combination or conspiracy aforesaid, and of deceiving and misleading the state and Federal authori- ties, and of furnishing a ground for the defence that the Northern Securities Company does not hold a clear majority of the stock of the Great Northern Railway Company. The complainant avers that such stock, so withheld or not trans- ferred to the Northern Securities Company, is now in the hands of some person or persons (unknown to the complain- ant) friendly to and under the influence of the individual defendants named and their associates aforesaid, or some of them, and will either not be voted, or be voted in harmony with the Great Northern stock held by the Northern Securities Company, until the question of the legality of this corporate d«vice for merging competing raOway lines shall be finally and judicially determined, when such stock will either be turned over to the Northern Securities Company or continue to be held and voted outside said company but in harmony with the KOBTHEBN SECURITIES CO. V. UNITED STATES. 358 Bill in Equity. Great Northern [211] stock held and voted by it, as may at the time ^em advisable. X. In further pursuance of the unlawful combination or conspiracy aforesaid, the Northern Securities Company (sub- ject, it may be, to the condition stated in the next preceding paragraph) is about to and will, unless restrained by the order of this court, receive and acquire, and hereafter hold and control as owner and proprietor, substantially all of the cap- ital stock of the defendant railway companies, issuing in lieu thereof its own capital stock to the full extent of the author- ized issue, of which, upon the basis of exchange aforesaid, the former stockholders of the Great Northern Railway Com- pany have received or will receive and hold about 55 per cent thereof, the balance going to the former stockholders of the Northern Pacific Railway Company. XI. No consideration whatever has existed, or will exist, for the transfer as aforesaid of the stock of the defendant railway companies from their stockholders to the Northern Securities Company, other than the issue of the stock of the Northern Securities Company to them in exchange therefor, for the purpose, after the manner, and upon the basis aforesaid. The defendant, the Northern Securities Company, was not organized in good faith to purchase and pay for the stocks of the Great Northern and the Northern Pacific Railway companies. It was organized solely to incorporate the pool- ing of the stocks of said companies and to carry into efl'ect the unlawful combination or conspiracy aforesaid. The North- ern Securities Company is a mere depositary, custodian, holder, and trustee of the stocks of the Great Northern and the Northern Pacific Railway companies, and its shares of stock are but beneficial certificates issued against said rail- road stocks to designate the interest of the holders in the pool. The Northern Securities Company does not have and never had any capital sufficient to warrant such a stupendous oper- ation. Its subscribed capital was but $30,000, and its author- ized capital stock of $400,000,000 is just sufficient, when all issued, to [212] represent and cover the exchange value of 21220— VOL 2—07 m- -23 S54 IttS UNITED STATES HEPORTS, 212. Bill in Equity. substantially the entire stock of the Great Northern and Northern Pacific Eailway companies, upon the basis and at the rate agreed upon, which is about $122,000,000 in excess of the combined capital stock of the two railway companies takmi at par. XII. If the Government fails to prevent the carrying out of the combination or conspiracy aforesaid, and the defend- ant, the Northern Securities Company, is permitted to receive and hold and act as owner of the stock of the Northern Pacific and Great Northern Railway companies as aforesaid, not only will a virtual consolidation of two competing trans- continental lines, with the practical pooling of their earnings, be effected, and a monopoly of the interstate and foreign com- merce formerly carried on by them as competitors be created, and all effective competition between such lines in the carry- ing of interstate and foreign traffic be destroyed, but there- after, to all desiring to use it, an available method will be presented, whereby, through the corporate scheme or device aforesaid, the act of Congress of July 2, 1890, entitled "An act to protect trade and commerce against unlawful re- straints and monopolies,'' may be circumvented and set at naught, and all transcontinental lines, indeed the entire rail- way systems of the country, may be absorbed, merged, and consolidated, thus placing the public at the absolute mercy of the holding corporation. XIII. In furtherance of the purpose and object of the unlawful combination or conspiracy aforesaid to monopolize or attempt to monopolize the trade or commerce among the several States, and between such States and foreign countries, formerly carried on in free competition by the defendants, the Northern Pacific and Great Northern Railway com- panies, and to place a restraint thereon, the individual de- fendants named and their associate stockholders of the defendant railway companies, have combined or conspired with one another and with other persons (whose names are unknown to the complainant, but whom it prays to have made parties to this action when ascertained) to use and em- ploy, in addition to the corporate scheme [213] or device aforesaid, and in aid thereof, various other schemes, devices, and instrumentalities, the precise details of which are at NORTHERN SECURITIES CO. V. UNITED STATES. 355 Bill in Equity. present unknown to the complainant but will be laid before the court when ascertained, by means of which, unless pre- vented by the order of this court, the object and purpose of the unlawful combination or conspiracy aforesaid may and will be accomplished. ■ PRAYER. In consideration whereof, and inasmuch as adequate relief in the premises can only be obtained in this court, the United States of America prays your honors to order, adjudge, and decree that the combination or conspiracy hereinbefore de- scribed is unlawful, and that all acts done or to be done in carrying it out are in derogation of the common rights of all the people of the United States and in violation of the act of Congress of July 2, 1890, entitled "An act to protect trade and commerce against unlawful restraints and monopolies," and that the defendants and each and every one of them, and their officers, directors, stockholders, agents, and servants, and each and every one of them, be perpetually enjoined from doing any act in pursuance of or for the purpose of carrying out the same, and, in addition, that the several defendants be respectively enjoined as follows : First. That the defendant, the Northern Securities Com- pany, its stockholders, officers, directors, executive committee, and its agents and servants, and each and every one of them, be perpetually enjoined from purchasing, acquiring, receiv- ing, holding, voting (whether by proxy or otherwise), or in any manner acting as the owner of any of the shares of the capital stock of either the Northern Pacific Railway Com- pany or the Great Northern Railway Company; and that a mandatory injunction may issue requiring the Northern Se- curities Company to recall and cancel any certificates of stock issued by it in purchase of or in exchange for any of the shares of the capital stock of [214] either of said railway companies, surrendering in return therefor to the holders thereof the certificates of stock in the respective railway com- panies in lieu of which they were issued. Second. That the defendant, the Northern Pacific Rail- way Company, its stockholders, officers, directors, agents, and servants, and each and every one of them, be perpetually 35li li*;i UNITED STATES REPORTS, 214. Bill in Equity. enjoined from in any manner recognizing or accepting the Northern Securities Company as the owner or holder of any shares of its capital stock, and from permitting such com- pany to vote such stock, whether by proxy or otherwise, and from paying any dividends upon such stock to said company or its assigns, miless authorized by this court, and from recog- nizing as valid any transfer, mortgage, pledge, or assignment by such company of such stock, unless authorized by this court. Third. That the defendant, the Great Northern Railway Company, its stockholders, officers, directors, agents, and servants, and each and every one of them, be perpetually en- joined from in any manner recognizing or accepting the Northern Securities Company as the owner or holder of any shares of its capital stock, and from permitting such company to vote such stock, whether by proxy or otherwise, and from paying any dividends upon such stock to said com- pany or its assigns, unless authorized by this court, and from recognizing as valid any transfer, mortgage, i)ledgo, or assignment by such company of such stock udIcms authorized by this court. Fourth. That the individual defendants iianieJ. and their associate stockholders, and each and every stockholder of either of said railway companies who has exchanged his stock therein for the stock of the Northern Securities Company, be each, respectively, perpetually enjoined from in any manner holding, voting, or acting as the owner of any of the stock of the Northern Securities Company, issued in exchange for the stock of either of the said railway companies, unless au- thorized by this court; and that a mandatory injunction may issue requiring each of the said defendants to surrender any stock of the Northern Securities Company so acquired and held by him, and accept [216] therefor the stock of the defendant railway company in exchange for which the same was issued. Fifth. That the individual defendants named, and their associate stockholders, and each and every person combin- ing or conspiring with them, as charged in Paragraph XIII hereof, and their trustees, agents, and assigns, pres- ent or future, and each and every one of them, be perpetu- NORTHERN SECURITIES CO. V, UNITED STATES. 357 Bill in equity. ally enjoined from doing any and every act or thing men- tioned in said paragraph, or in furtherance of the combi- nation or conspiracy described therein, or intended or tend- ing to place the capital stock of the defendant railway companies, or the competing railway systems operated by them, or the competitive interstate or foreign trade or com- merce carried on by them, under the control, legal or prac- tical, of the defendant, the Northern Securities Company, or of any person or persons, or association or corporation, acting for or in lieu of said company, in the carrying out of the unlawful combination or conspiracy described in said paragraph. The United States prays for such other and further relief as the nature of the case may require and the court may deem proper in the premises. To the end, therefore, that the United States of America may obtain the relief to which it is justly entitled in the premises, may it please your honors to grant unto it writs of subpoena directed to the said defendants, the Northern Securities Company, the Northern Pacific Railway Com- pany, the Great Northern Railway Company, James J. Hill, William P. Clough, D. Willis James, and John S. Kennedy, and their associate stockholders of the Great Northern Rail- way Company, as their names may become known to com- plainant and the court be advised thereof, J. Pierpont Mor- gan, Robert Bacon, George F. Baker, and Daniel S. Lamont, and their associate stockholders of the Northern Pacific Railway Company, as their names may become known to complainant and the court be advised thereof, and the per- sons referred to in Paragraph XIII hereof, as their names may become known to complainant and the court be advised thereof, and to each of them, commanding them, and [216] each of them, to appear herein and answer (but not under oath) the allegations contained in the foregoing petition, and abide by and perform such order or decree as the court may make in the premises; and that, pending the final hearing of this case, a temporary restraining order may issue enjoining the defendants and their associates, and each of them, and their stockholders, directors, officers, agents, and servants as hereinbefore prayed. 358 1B3 UNITED STATES EEPORTS, 2l(i. Bill In Equity; exhibit The petition was signed and verified by Milton D. Purdy, Attorney of the United States for the District of Minne- sota, and also signed by Philander C. Knox, Attorney- General of the United States, and John K. Richards, Solicitor-General of the United States. Annexed to the petition as an exhibit was the charter of the Northern Securities Company, as follows: GEHflFICAlK y certify as follows: First The name of the corporation is Ncrtliern Seiinities Company. Second. Tlie location of its principal tittice in the State of New Jer- my is at No. 51 Newarlv street, in the eitj- of Hoboken, (-ountv of Hudson. The name of tlie agent tlierein, and in charge thereof, upon whom pi-oee^s against the corpoiation may he served, is Hudson Trust Company. Such office is to be the registered cHice of the coriK>ration. Third. The objects for which the coriwratlon is formed are : (1) To acquire by purchase, subscription, or otherwise, and to hold as inYCStment. any licnds or other securities or evidemes of [217] In- debtedness, (iv any shares of capital st(Kk crejued or issued by any other cortHtration or corporations, assticiation or assiu iations. of the State of New Jersey, or of any other State, Territory, or country. (2) To purchase, hold, sell, assign, transfer, mortgage, pledge, or otherwise dispose of any bonds or other securities or evidences of Indebtedness created or issued by any other ct)rporation or corpora- tions, association or associations, of the State of New Jersey, or of any other State, Territory, or country, and while owner thereof to exercise all the rights, powei-s. and privileges of ownership. (3) To purchase, hold, sell, assign, transfer, mortgage, pledge, or otherwise dispose of shares of the capital stock of any other corpora- tion or corporations, nsscciation or ;;ssociations, of the State of New Jersey, or of any other State, Terr itory. or country, and while owner of such stock to exercise all the rights, powers, and privileges of owners ship, including the right to vote thereon. (4) To aid in any manner any coriwration or association of which any bonds or other securities or evidences of indebtedness or stock are held by the corporation, and to do any acts or things designed to pro- tect, preserve, improve, or enhance the ralue of any such bonds or other securities or OTldences of indebtedness or stock. (5) To acquire, own, and hold such real and personal property as may be necessary or convenient for the transaction of its business. The business or puipose of the coiporation is from time to time to do any one or more of the acts and things herein set forth. The corporation shall have power to conduct its business in other States and in foreign countries, and to have one or more offices out of this State, and to hold, purchase, mortgage, and convey real and per- sonal property out of this State. Fourth, The total authorized capital stock of the corporation Is four NORTHERN SECURITIES CO. V. UNITED STATES. 359 Bill in Equity ; exhibit. hundred million dollars ($400,000,000), divided into [218] four mil- lion (4,000,000) shares of the par value of one hundred dollars ($100> each. The amount of the capital stock with which the corporation will commence business is thirty thousand dollars. P^ifth. The names and post-office addresses of the incorporators, and the number of shares of stock subscribed for by each (the aggregate of such subscriptions being the amount of capital stock with which this company will commence business), are as follows: Name and post-office address. Number of shares. ileorge F. Baker, jr., 258 Madison avenue, New York, N. Y. Abram M. Hyatt, 21^ Allen avenue, Allenluirst, N. J Richard Trimble, 53 East Twenty-fifth street, New York, N. Y. 100 100 100 Sixth. The duration of the corporation shall be perpetual. Seventh. The number of directors of the corporation shall be fixed from time to time by the by-laws; but the number, if fixed at more than three, shall be some multiple of three. The directors shall be classified with respect to the time for which they shall severally hold office by dividing them into three classes, each consisting of one-third of the whole number of the board of directors. The directors of the first class shall be elected for a term of one year, the directors of the second class for a term of two years, and the directors of the third class for a term of three years ; and at each annual election the suc- cessors to the class of directors whose term shall expire in that year shall be elected to hold office for the term of three years, so that the term of office of one class of directors shall expire in each year. In case of any increase of the number of the directors the additional directors shall be elected as nmy be provided in the by-laws, by th',* directors or by the stockholdei*s at an annual or special meeting, and one-third of their number shall be elected for the then unexpired por- tion of the term of the directors of the first class, one-third of their number for the unexpired portion [219] of the term of the directors of the second class, and one-third of their number for the unexpired portion of the term of the directors of the third class, so that each class of directors shall be increased equally. In case of any vacancy in any class of directors through death, resig- nation, disqualification, or other cause, the remaining directors, by affirmative vote of a majority of the board of directors, may elect a successor to hold office for the unexpired portion of the term of the director whose place shall be vacant, and until the election of a suc- cessor. The l)oard of directors shall have power to hold their meetings out- side the State of New Jersey at such places as from time to time may be designated by the by-laws, or by resolution of the board. The by- laws may prescribe the number of directors necessary to constitute a quorum of the board of directors, which number may be less than a majority of the whole number of the directors. As authorized by the act of the legislature of the State of New" Jersey passed March 22, 1901. amending the seventeenth section of the act concerning corporations (revision of 1896), any action which there- tofore required the consent of the holders of two-thirds of the stock at any meeting after notice to them given, or required their consent 193 UNITED STATES BEPORTS, 219. Answer of Northern SecuriUes Company. to jriting to be filed may be taken upon the consent of, and the con- sent given and filed by, the holders of two-thirds of the stock of each class represented at such meeting in person or by proxy. r^mnvJ^f elected or appointed by the board of directors may be hTrd^f dir^nr^ A^ the affirmative vote of a majority of the whole Hoard of directors. Any other officer or employ^ of the corDoration may be removed at any time by vote of the £>ard of director or b? any committee or superior officer upon whom such ^wer of removal may be conferred by the by-laws or by vote of the boa^d of diritTs The board of directors, by the affirmative vote of a majority of the whole board, may appoint from the directors an execuUve committ^ of which a majority shall constitute a quorum, [22^ and to S ex- tent as shall be provided in the by-laws such committL shall have and may exercise all or any of the powers of board of directors including SJaTmay r»l "^' "' '''" ^corporation to be affix^^'^aH Ta^"rf The board of directors may appoint one or more vice-presidents one «L^Th''''^'?^! treasurers, and one or more assistant s«^^ta^^^^^^ respectively, shall have and may exercise all the powers of the presl- *^*St *"! "'^ treasurer, and of the secretary, respectively The board of directors shall have power from time to time to fix and determine aiid to vary the amount of the working capital of the corporation; to determine whether any. and if any. what part of any accumu ated profits shall be declared in dividends and paid to the stockholders ; to determine the time or times for the declaration nnri payment of dividends, and to direct and to determine the use and X S^i* ?«."*' "ify, «".yl"f «»- °ft profits over and above the capital stork paid In; and in its discretion the board of directors may use and apply any such surplus or accumulated profits in purchasing or ac quiring its bonds or other obligations, or shares of the capital stcxi of the coi-i>oration to such extent and in such manner and upon such terms as the board of directors shall deem expedient but C res of such capital stock so purchased or acquired ^y be rSold inless such shares shall have been retired for the purpose of d^reasing thi capital stock of the corporation to the extent authorized bv law ^ ««^ f ?5*! **' directors, from time to time shall determine whether and to what extent, and at what times and places and unde^ what conditions and regulations, the accounts and bJoks of the corporaTion or any of them shall be open to the inspection of the sSolders' and no stockholders shall have any right to inspect anyVccount or S1;r<5flr'TM *'^ l^"" «on>oration except as conferred bvTtatute of the State of New Jersey, or authorized by the board of directors or by a resolution of the stockholders. uireciors «i?il'^^?**^^^^ of directors may make by-laws, and from time to time may alter amend, or repeal any by-laws; but any by-laws made by the board of direc tors may be altered or repealed by the stockhoWers at any anminl meeting or at any special meeting, provided notice of m^tinr^^^"^ alteration or repeal be included in the notice of the im^li^rk'Sr, m^^^^^^ ''^^^"*" ''' '""^ ^^"^« ^"^ ««^»« *^- eyifrfndTictrrTrlm^^^^^^^ '^ ^"^- ^* ^^''''^ '^'^ ^^^«- ^' The answer of the Northern Securities Company to the pe- tition of the United States of America, was as follows : I. This defendant admits and avers that the defendant NORTHERN SECURITIES CO. V, UNITED STATES. 361 Answer of Northern Securities Company. railway companies were, at the time mentioned in the peti- tion, and are now common carriers employed in transporta- tion of freight and passengers within and among those States of the United States in which the railways operated by them are situated, and not further or otherwise, but were and are engaged in commerce among the several States and with for- eign nations. II. This defendant admits that, on and prior to November 13, 1901, the capital stock of the defendant railway companies was owned and controlled by their respective shareholders, and it avers, on information and belief, that the outstanding capital stock of the Great Northern Railway Company was owned by more than eighteen hundred (1,800) separate own- ers, and the outstanding capital stock of the Northern Pacific Railway Company was owned by more than thirty-five hun- dred (3,500) separate owners; and that among the sharehold- ers of the Great Northern Railway Company^ (hereinafter caUed the Great Northern Company) were the defendants Hill, Clough, James, Morgan, and Kennedy ; and that among the shareholders of the Northern Pacific Railway Company (hereinafter called the Northern Pacific Company) were the defendants Morgan, Bacon, Baker, Hill, Kennedy, James, and Lamont. It avers that the persons named and meant to be designated in the peti- [222] tion as owning, control- ling, or as being associated in the ownership and control of a majority of the stock of the Great Northern Company, did not at any time, nor in any manner, own or control a major- ity of said stock, nor as much as one-third (^) part thereof. Their holdings in said stock were at all times separate and individual, and not in association with each other, or with any other person or persons, and neither of them was under any obligation or promise to any of the others, or to any other person, to hold, use, or vote his stock otherwise than as he should, from time to time, determine to be best for his own individual interest. The persons named and meant to be des- ignated in the petition as owning, controlling, or as being associated in the ownership and control of a majority of the stock of the Northern Pacific Company, did not, at the date named, nor at any time, or in any manner, own or control a majority of such stock, nor as much as one-third (i) part mt tm UNITED STATES REPORTS, 222. Answer of Northern Securities Company. thereof. Their holdings in said stock were at all times sepa- rate and individual, and neither of them had any control of the holdings of the other, or of any other person or persons, and neither of them was under any promise of obligation to the other, or to any person, to hold, use or vote his stock otherwise than as he should, from time to time, determine to be best for his own individual interest. Except as herein admitted and averred, this defendant de- nies each and every allegation of subdivision II of the petition. III. This defendant admits that the Northern Pacific Company owned and operated a railway from Ashland, in Wisconsin, via Duhith, and from St. Paul, across Minnesota, North Dakota, Montana, Idaho, and Washington, and into Oregon, passing through Helena, in the State of Montana, and Spokane, in the State of Washington, and extending to Tacoma and Seattle in Washington, and to Portland in Ore- gon; and that the Great Northern Company operated lines of railway extending from St. Paul, in the State of Minne- sota, across said State and North Dakota, Montana, Idaho, and Washington to Everett and Seattle in Washington, pass- ing through Spokane in that State. [223] It admits that the said lines, so operated by said companies connected with other railway lines, and that, either directly or by means of such other railway lines, they connected with lines of steamships on the Great Lakes and the ocean ; and that the mileage operated by said companies aggregated about fifty-five hundred (5,500) miles for the Northern Pacific Company and about forty-one hundred and twenty-eight (4,128) miles for the Great Northern Company. It denies that the lines operated by said companies are par- allel or competing, except for the short distances and to the limited extent hereinafter mentioned, and denies that said companies were engaged in active competition with each other, except in the manner and to the extent hereinafter SLaxeci • Except as hereinabove and hereinafter stated, it denies each and every allegation in subdivision III of said petition, IV. This defendant admits and avers that prior to 1893 those portions, and those portions only, of the lines of the NORTHERN SECURITIES CO. V. UNITED STATES. 863 Answer of Northern Securities Company. Northern Pacific Company which had been built and were operated by virtue of the act of Congress incorporating the Northern Pacific Eailroad Company, approved July 2, 1864, were owned and operated by the last-named company, and that in the year 1893 that company became insolvent and its lines passed into the hands of receivers appointed by various Federal courts. It admits that while in this condition a contract was made, as set forth in the report of the Pearsall case, referred to in the petition. It avers that said contract was made under and in conformity with the provisions of the act of incorporation of the Great Northern Company, and that the only objection made to the validity of the contract was that the provisions in said charter under which it was made had been repealed by subsequent general laws of the State. It denies that the case, or that the decision therein, is correctly stated in the petition. And it avers that neither the said contract nor the issues raised and decided in the said case have anv rele- vancv to the matters in controversv in this case. V. This defendant admits and avers that in the winter and [224] spring of 1901 the defendant railway companies, for the purpose of promoting their several interests and the in- terests of the country traversed bv their lines and bv those of the Chicago, Burlington and Quincy Railroad Company, purchased in equal parts the stock of the last-named com- pany to the amount and at the price and upon the terms of payment stated in the petition. It admits that the lines operated by the Chicago, Burlington and Quincy Railroad Company and its connections are substantially as stated in the petition. It denies that what is called in the petition the Burlington system was or is parallel to or competing with what is therein called the Union Pacific system, but admits that some of the lines of each system compete with some lines of the other. It denies that said purchase of stock was made in contem- plation of the ultimate placing of the Great Northern and Northern Pacific systems under a common source of control, or that it was made for any other motive or with any other purpose than as hereinafter stated. 364 l«J UNITED STATES BEPOBTS, 224. Answer of Northern Securities Ck>mpany. Except as herein admitted, it denies each and every allega> tion in subdivision V of the petition. VI. This defendant denies that prior to its organization the defendants James J. Hill or J. Pierpont Morgan, or said Hill and Morgan, or any persons associated with them, or either of them, owned or controlled a majority of, or held a controlling interest in, the stock of either of said railway companies. It denies that said persons, or that any of the persons con- cerned in its organization, contrived or intended any of the things alleged in subdivision VI of the petition or entered into any agreement or conspiracy to do any of the things charged in said subdivision. It admits and avers that said James J. Hill and other holders (not exceeding ten in number) of the stock of the Great Northern Company, but not including the defendants Morgan, Bacon, or Lamont, did plan its organization with an authorized capital of four hundred million dollars ($400,- 000,000) for the purposes, and those only, set forth in its certificate of incorporation. [225] It denies that James J. Hill and J. P. Morgan agreed between themselves, or with other stockholders of either of the defendant railway com- panies, or with either of said railway companies, or with any- one whomsoever, that a controlling interest of the stock of either of said railway companies should be turned over or transferred to this defendant, whether in exchange for its stock or otherwise. It denies that any of the matters stated in said subdivision VI of the petition were contemplated or intended, or have resulted, or will result, from its formation and operation. And it denies the allegation that it is the duty of the directors of said railway companies to pursue a policy which will pro- mote the interest of both systems at the expense of the public. It alleges that the motives and intentions of the persons so forming this defendant were and are such, and such only, as are in this answer stated, and it denies each and every alle- gation in subdivision VI of the petition not herein expressly admitted or specifically denied. VII. This defendant admits its formation under the laws of New Jersey, with the articles, a copy of which is attached NOBTHEBN SECUBITIES CO. V, UNITED STATES. 365 Answer of Northern Securities (Company. to the petition, and that the provisions of said articles were designedly inserted therein and were fully authorized by the general corporation laws of that State. And it says that the exercise of the powers of a stockholder provided for in said articles was not, as wrongly stated in the petition, confined to the stock of the defendant railwa}^ companies which this de- fendant might hold. It avers that the clause in said articles, partially quoted in paragraph VII of the petition,' was not intended to, and does not, enlarge its powers, as the same are set forth in the preceding clauses of said articles, but makes clear its power to do such acts as making or procuring ad- vances of money to any corporation whose securities are held by it, the indorsement or guaranty by it of the obligations of such corporation, becoming surety therefor, or in any lawful manner using its name or resources in aid of such corporation. VIII. This defendant admits and avers that on or about the [22^] 14th day of November, 1901, its directors and offi- cers were elected, and among them the defendant James J. Hill as a director and president, but denies that he was or is the controlling power in the management of the Great Northern Company. It admits and avers that thereafter the defendant James J. Hill and other stockholders of the Great Northern Company, severally and each acting for himself alone, and without any agreement to that effect with any other stockholder, sold to this defendant a large amount of Great Northern stock at one hundred and eighty dollars ($180) per share in exchange for stock of this defendant at par, but it avers that the stock so sold was not within twenty-six million dollars ($26,000,000) of a majority of the stock of the Great Northern Company. It admits and avers that thereafter and about November 22, 1901, it offered like terms of purchase to the other share- holders of the Great Northern Company, the offer to hold good for sixty days from its date, and that many of the share- holders of that company, each acting for himself alone, accepted such offer and made such sale. It admits and avers that the defendant J. P. Morgan and other shareholders of the Northern Pacific Company sold to the defendant a majority of the stock of the Northern Pacific Company; and that this defendant has received such divi- s%^ im UNITED STATES REPORTS, 226. Answer of Northern Securities Company. deiids as liave been paid on the shares held by it, in the same maimer and at the same rate as other shareholders; but it denies that it has acted, whether as owner of stock or other- wise, in the management or direction of either of said railway companies or in receipt or control of the earnings of either of them, and it avers that no change whatever has taken place in the management of the said railway companies, or either of them, and that each of them is managed by the same board of directors and officers as existed before the organization of this defendant. It denies that any of the things done by the defendants James J. Hill and J. Pierpont Morgan, or by either of them, or by this defendant or its promoters, directors, officers, or stockholders, or any of them, were done in pursuance of the pre- f227] tended combinatioaor conspiracy alleged in sub- division VIII of the petition, or as an instrumentality to effect the purposes thereof, and it denies that by reason of the matters or any of them in the petition alleged a virtual or any coiiwlidation of said defendant railway companies or their business has been effected or intended; and it denies any conspiracy or combination in restraint of trade or com- merce among the States, or with foreign nations, or that the defendants or imy of them are attempting or intending to monopolize or restrain any such trade or commerce. IX. It denies each and ©very allegation in subdivision IX of the petition. X. This defendant says that it does not know and cannot set forth how much additional stock of either defendant railway company it is likely to acquire, since each acquisi- tion of shares by it depends, among other contingencies, on the willingness of the holders of the said stock to sell it upon terms which this defendant may be willing to accept. XI. This defendant says it has bought and paid for and has caused to be transferred to it upon the records of the Great Northern Company, in accordance with the by-laws of that company, about five-twelfths {^ ) of the shares of that company's stock; and has also negotiated for, but has not yet caused to be presented to the Great Northern Company for transfer upon its records, other shares of the stock of that company aggregating about four-twelfths (f%) of the total NORTHERN SECURITIES CO. V, UNITED STATES. 367 Answer of Northern Securities Company. amount of its stock, but has not acquired a right to vote as stockholder of the Great Northern Company on stock not so transferred. This defendant, in acquiring shares of the Great Northern Company and of the Northern Pacific Company, dealt solely with the sej^arate owners of the said shares in their respective individual capacities. It has no knowledge of any agreement, promise, or understanding between any of the holders of said stock concerning the sale thereof to it, and it denies that any such agreement, promise, or understanding was ever made. All the sales and transfers of the said stock to this defendant [228] were absolute and without any reservation of any right or interest in any share thereof to the seller or to any other person. This defendant has not paid for all the stock of the Great Northern Company and of the Northern Pacific Company acquired by it in shares of its own stock, but, on the contrary, has expended upward of forty million dollars ($40,000,000) cash in the making of such purchases. Every share of the Great Northern Company and the Northern Pacific Com- pany acquired by this defendant has been, and so long as it remains the property of this defendant will continue to be, held and owned by it in its own right, and not under any agreement, promise, or understanding on its part, or on the part of its stockholders or officers, that the same shall be held, owned, or kept by it for any period of time whatever, or under any agreement that in any manner restricts its right and power immediately to sell or otherwise dispose of the same, or that restricts or controls to any extent any use of the same, which might lawfully be exercised by any other owner of said stocks. There has been and is no agreement, promise, or understanding between any of the holders of said stock so acquired by this defendant, or between any of them and any other person or corporation, that any of said shares should at any tune be held, used, or voted by this defendant for the purpose of combining or consolidating or placing under one common management or control the railways of the Great Northern Company and of the Northern Pacific Company, or the business thereof, or for the purpose of monopolizing or restraining traffic or competition between the said railways. Many OOO 193 imiTED STATES BEPOBTS, 228. Answer of Northern Seoirities Ck)mpany. stockholders of the said companies have not sold, and may never sell, their shares to this defendant; and the said rail- way companies have not nor have any of the directors of either of them, by any act, formal or informal, or by sug- gestion, ever solicited any of their respective shareholders to sell their shares to this defendant. This defendant was organized in good faith, and it denies all the allegations in subdivision XI of the petition. [229] XIL This defendant denies each and every allega- tion in subdivision XTI of the petition. XTII. This defendant denies each and every allegation in subdivision XIII of the petition. Second. Further answering the petition, this defendant, upon infor- mation and belief, says that the facts as to the purchase of the shares of the Chicago, Burlington and Quincv Railroad Com- pany (hereinafter called the Burlington Company) and the planning and forming of this defendant and the motives, intentions, and purposes of the persons and corporations con- cerned in these enterprises, or either of them, were not as erroneously stated in the petition, but were and are as follows : I. When projecting the line of the Great Northern Com- pany to the Pacific coast, that company and its directors con- templated the necessity of creating for the line not merely State and interstate, but an international commerce. Nearly all the country traversed or reached by the line was then but sparsely settled or not settled at all. It was principally agri- cultural, grazing, or timber land, with mineral deposits in the mountain ranges believed to be large and valuable, but not developed or explored. Whatever commodities the region might furnish for carriage would be raw material, of great weight and bulk in proportion to its value, which would not bear transportation to market except at a low mileage rate, such as could be made possible only by every practical reduc- tion in the cost of transportation. The available market for all such products was far from the places of production. In Washington and Oregon are the largest and finest bodies of standing timber in the United States, the best market for NORTHEBN SECUBITIES CO. V, UNITED STATES. 369 Answer of Northern Securities Company. which is in the prairie States of the Mississippi Valley east of the Rocky Mountains ; but the lumber and shingles from the Pacific coast would not bear the cost of transportation to those States if the cars carrying them had to be hauled back empty, or nearly so, for a distance of from 1,500 to 2,000 miles. And [230] the same is true of the other products. On the other hand, the unoccupied or sparsely populated country along the line, or reached by it, could not furnish a market for commodities enough to load the returning cars; the result being that unless the company could secure traffic for carriage beyond the Pacific coast no great traffic either way could exist or be created. To meet these conditions the Great Northern Company not only went to great additional expense in the construction of its line to obtain gradients loAver than those of any other line to the Pacific coast, but also made great efforts to create and increase in the countries of eastern Asia a demand for the products of this country ; and soon after the completion of its railway in 1893 it induced a Japanese company to run a line of steamships, connecting with its railway, on the route be- tween Seattle and ports of Japan, China, and Russian Siberia, and succeeded in creating and has since been actively engaged in building up a commerce in which the flour manufactured along its line, cotton (both raw and manufactured), iron and steel (especially steel rails and plates), machinery, and such other manufactures of this country as a market could be found or made for in eastern Asia, have been carried to orien- tal ports, and return cargoes of such oriental products as are consumed in this country have been brought back. A large west-bound, as well as an increased east-bound, traffic has thus been secured by the company, enabling it to make such rates on lumber and other products of the country served by it as permit them to be shipped to Eastern mhrkets with a profit to the shippers. One year before the Burlington purchase, this oriental traffic had reached such proportions that the Great Northern Company caused to be begun the construction of steamships to run from Seattle to ports in Japan, China, and the Philip- pines, which, from their great carrying capacity (being the 21220~voL 2—07 M- — ^24 370 193 UNITED STATES REPOBTS, 231. Answer of Northern Securities Company, largest in tlie world), will be able to carry at very low rates (if full cargoes can be secured), and thus enable the company to move the largest volume of west-bound traffic (and also of east-bound traffic) at the lowest cost. [S31] In the interstate and international commerce which the Great Northern Company has thus built up, it competes both in this country and on the ocean with the other transcon- tinental lines (including the Canadian Pacific), and at tlie oriental ports it competes for commerce of the world. Its rates are and must be made in competition with the rates of ocean carriers and by way of the Suez Canal. The policy thus followed by the Great Northern Company in building up an international, and thereby interstate, com- merce has been followed by the Northern Pacific Company since its reorganization in 1896. In creating and maintaining this competitive interstate and international commerce both the Great Northern Com- pany and the Northern Pacific Company were hampered and placed at a disadvantage with the other transcontinental railways, as well as with European competitors, by the want of sufficient direct connection with the territory offering the best markets for the products of the country along their lines, and with the places of production and great centers of distribution from which their traffic must be supplied. For many months before the purchase of the Burlington shares they had considered the best means of getting closer to such markets and sources of supply. The lines of the Burling- ton, better than those of any other company, fulfilled the re- quirements of both the Great Northern Company and the Northern Pacific Company in respect of markets for east- bound and freight for west-bound traffic. The Burlington* lines traverse the treeless States of Illinois, Iowa, Missouri, Nebraska, Wyoming, Kansas, and Colorado, which afford the best markets for the lumber of the Pacific coast. They reach Denver, Kansas City, Omaha, and Aurora, where are located the principal smelters of silver-lead ores, such as are mined near the lines of the defendant railway companies. They reach Omaha, Kansas City, and Chicago, where are the great packing houses and the great markets for the cattle NORTHERN SECURITIES CO. V, UNITED STATES. 371 Answer of Northern Securities Company. and sheep of the ranges of North Dakota, Montana, Wyo- ming, Idaho, Oregon, and Washington. [233] They reach St. Louis and Kansas City, connecting there with lines traversing the cotton States, from which come raw and manufactured cotton required for shipment to China and Japan. At Chicago and St. Louis they connect w^ith the lines Avhich reach the points of supply of manufactured iron, steel, machinery, and other manufactured articles that find a mar- ket in Japan and China. The Burlington line southward from Minneapolis and St. Paul along the Mississippi River reaches the great coal de- posits of southern Illinois, the largest west of Pennsylvania and West Virginia; and its light gradients and consequent low cost of transportation make it possible to supply such coal to points on the lines of each defendant railway com- pany east of the Mississippi River, relieving the people and the railways of that territory from entire dependence upon the Pennsylvania and West Virginia mines, the supply from which is yearly becoming more costly and less certain. The price paid for said Burlington stock was lower per mile of main track covered by the stock than that for which the stock of any other large and well established system in the same general territory could have been bought. The purchase of the Burlington stock by the Northern Pa- cific and Great Northern companies in equal parts served each company as well as if it were the sole owner of such stock, while such purchase might have been beyond the finan- cial means of either company by itself. The Great Northern and Northern Pacific companies there- fore each purchased an equal number of shares of the Bur- lington stock as the best means and for the sole purpose of reaching the best markets for the products of the territory along their lines, and of securing connections which would furnish the largest amount of traffic for their respective roads, increase the trade and interchange of commodities between the regions traversed by the Burlington lines and their connections and the regions traversed or reached by the Great Northern and Northern Pacific lines, and by their con- necting lines of shipping on [233] the Pacific coast. These 872 193 UNITEB STATES BEPORTS, 233. Answer of Northern Securities Company. connections and such interchange of traffic were deemed to be and are indispensable to the maintenance of their business, local as well as interstate, and to the development of the country served by their respective lines, and of like advan- tage to the Burlington lines and the country served by them, and strengthen each company in the comi)etition with the more southerly lines to the Pacific coast, with the Canadian Pacific Railway, and with European carriers, for the trade and commerce of the Orient. In such purchase there was no purpose to lessen any competition of the Burlington lines with those of either of the purchasers, for they are not competitive, or to lessen any competition between the purchasers. Such purchase was not intended to have, and it cannot have, any such effect. The purchase of the Burlington stock was not made in view of the fonnation of this defendant, but solelv from the motives and with the purposes already stated. 11. The project of forming a holding company of any kind was not the result, in any way, of the failure of the plan which was defeated by the decision of the Supreme Court in the PearsrtU case. There was no connection what- ever between the two. The project of a holding company which finally de- veloped into the formation of this defendant had its in- ception years before that date, among several gentlemen, not exceeding ten in number, who had been large shai-e- holders in the Great Northern Company and its predecessor, the St. Paul, Minneapolis and Manitoba Railway Company; some of them from the original organization of the latter •company in 1879, and others from dates not long after that time. They have never held a majority of the stock of the Great Northern Company, but have taken an active interest in its policy and administration ; have aided it when neces- rsary in financing its operations; have acted together in l)romoting its interests; have, with some exceptions, served from time to time as directors and officers (Mr. Hill having been president of the successive companies since 1882) ; and by reason of their active interest in the company and serv- [SS4] ices to it have influenced to a large degree its policy and management As far back as 1893, most of these gen- NORTHERN SECURITIES CO. V, UNITED STATES. 373 Answer of Northern Securities Company. tlemen being well advanced and some far advanced in years, they began to discuss together what would be the effect upon the policy which under their influence the company had pursued with great benefit to its shareholders and the public, should their holdings by death or otherwise be- come scattered, and by what means their holdings could be kept together, so as to secure the continuance of such policy in the management of the company. It was considered that if a company should be formed to which they might transfer their individual holdings, their shares were likely to be held together, so long as the majority in the holding company should so wish, and this would tend to give sta- bility to the policy of the Great Northern Company, be of aid to it in financial operations, and maintain the value of their investments. These conclusions were the result of various consultations among the persons mentioned, or some of them, but no definite agreement was made for forming such a company or binding anyone to transfer his shares to it if formed. From time to time, beginning with the reorganization of the Northern Pacific Company in 1896, Mr. Hill and said other Great Northern shareholders who had discussed with him the plan of forming a holding company, had made large purchases of Northern Pacific shares, individually, each for himself, without any concerted action, and solely as investments. About May 1, 1901, their aggregate hold- ings of the common stock of the Northern Pacific Company amounted to nearly twenty million dollars ($20,000,000) of the eighty million dollars ($80,000,000) common stock of the company, which also had a preferred stock, amounting to seventy-five million dollars ($75,000,000), with the same voting power as the common stock. At this time the firm of J. P. Morgan & Co. held about six million dollars ($6,000,000) of the common stock. In the fall of 1900 Mr. Hill and said Great Northern shareholders discussed the question of putting their holdings of Northern [335] Pacific stock into the proposed holding company, as well as the suggestion that all the other stockholders of the Great Northern Company should be given the opportunity of sell- ing and transferring their shares to the holding company, 374 193 UNITED STATES BEPORTS, 235. Answer of Northern Securities Company, and that its capital stock should be made large enough to enable it to buy such holdings, though it was not known that the holders of any considerable amount of Great Northern stock, other than those above named, would desire to make such transfer. At the time of the purchase of the Burlington shares it was not contemplated by either purchasing company or its shareholders that any alliance between the purchasing com- panies, or among their shareholders, was needed to preserve to each company its fair share of the advantages secured by the purchase. It was thought that the manifest interest of each company rendered any further guaranty or security needless. But pending or just, after the conclusion of the negotiations for the Burlington stock, parties acting in the interest of the Union Pacific Railway system did purchase Northern Pacific shares, both conmion and preferred, to the amount of about seventy-eight million dollars ($78,000,000), being a clear majority of the entire capital stock of that company. The apparent intent of such purchase was to de- feat and, if successful, it would have defeated, the carrying out of the purposes for which the Burlington shares had been bought by the Great Northern and Northern Pacific com- panies, and the development of the interstate and interna- tional commerce of each of them, and would have subordi- nated the policy of each to an interest adverse to both the Great Northern and Northern Pacific companies, and to the public served by their lines. To protect the interests of the shareholders of the North- em Pacific Company, J. P. Morgan & Co. made additional purchases of Northern Pacific common stock, which, with the holdings in said stock of Mr. Hill and other Great Northern shareholders who had discussed with him the plan of forming a holding company, constituted about forty-two million dollars ($42,000,000) , being a majority of the common stock. In [236] view of the injury apprehended to both companies, and to their shareholders, and the better to pro- tect their interests in the future, the Great Northern share- holders holding Northern Pacific shares, deemed it advisable that the projected holding company should have power to purchase not only their own Great Northern and Northern NORTHERN SECURITIES CO. V. UNITED STATES. 375 Answer of Northern Securities Company. Pacific shares, but also the shares of such other Great North- ern and Northern Pacific shareholders as might wish to sell their stock to said holding company, and the shares of com- panies already formed, and others that might be formed, for the purpose of aiding the traffic or operations of the Great Northern and Northern Pacific companies, respectively. At this time it was not expected by any of the persons concerned that any Northern Pacific shares except the said forty-two million dollars ($42,000,000) would be acquired by the pro- posed holding company. The organization of such company was not dependent on any agreement that it should acquire a majority of the shares of either defendant railway company. It would have been organized if the Burlington purchase had not been made, and if its promoters had had no other shares to transfer to it than the thirty-four million dollars ($34,000,000) Great Northern stock and the twenty million dollaj^s ($20,000,000) Northern Pacific stock held by them on May 1, 1901. It was not known that all or how many of the shareholders of either of the railway companies would be likely to transfer their shares to this defendant when formed. After its organization this defendant bought and still holds about one hundred and fifty million dollars ($150,000,000) of the stock of the Northern Pacific Company; and it has also purchased and negotiated for the purchase of the stock of the Great Northern Company, as hereinbefore stated. Neither the said persons who were concerned in the formation of this defendant, nor the said persons from whom it has acquired the stocks of said railway companies, nor this defendant itself since its formation, nor its stockholders, directors, or officers, have planned or intended that the stock of said rail- way companies acquired by this defendant, or any part thereof, should be held, used, or voted by [237] it, or by its officers, agents or proxies, for the purpose of combining, con- solidating or placing under one common management or control the railways of the Great Northern and Northern Pacific companies, or the business thereof; or for the pur- pose of monopolizing or restraining competition between the said railway companies; or for any other purpose than the election by each of said railway companies of a competent and distinct board of directors, able and intending to manage 876 lai UNITED STATES BEPORTS, 237. Answer of Northern Securities Company. each of them independently of the other, and for tlie benefit of their shareholders and of the public. By the acts of the legislature of the Stete of Minnesota incorporating the Great Northern Eailway Company, and by the acts of the legisla- hire of the State of Wisconsin incorporating the Northern Pacific Eailway Company, it is, in substance, provided that the business and affairs of each railway company shall bp managed by a board of directors to be elected by the stock- holders, and that all the powers of each corporation relating to said matters shall be Vested in such board. • Every share of stock issued by this defendant has been issued to the persons and corporations receiving the same m good faith, for full value paid to it, either in cash or its equivalent, and in accordance with the provisions of its articles of incorporation and with the laws of the State of New Jersey. No agreement, promise, or understanding has been made between this defendant and any of its stock- holders, or between its stockholders themselves or any of them, or between said stockholders or any other persons or corporations, that the stock of this defendant should be held, used, or voted other than by each stockholder, sepa- rately and individually, and in such way as he should see fit; and there has been no agi-eement, promise, or understaiidinir between said stockholders themselves, or any of them, or between said stockholders and any other person or corpora- tion, that they or any of them should use, hold, or vote their stock in this defendant in association or for any common purpose or object. The owners and holders of stock of this defendant are more than thirteen hundred (1,300) in num- ber, and the owner- [238] ship of the stock is being changed from day to day by sales and transfei-s in the usual course of dealing. The said persons who formed or were otherwise concerned in the formation of this defendant have never, all together, held, owned or otherwise controlled an amount of stock of the said company equal to so much as one-third of the whole amount thereof now outstanding. This de- fendant has no contract or obligation to purchase or acquire any shares whatever in either railway company, in addition to those which it has purchased or negotiated to purchase, as above stated. Its authorized capital was fixed by per' NOBTHERN SECURITIES CO. V. UNITED STATES. 377 Answer of Northern Securities Company. sons who planned its organization to enable it to give to each stockholder in each of the defendant railway com- panies an opportunity to sell his stock to it, should he see fit to do so, and should this defendant desire to acquire it. The sum fixed was deemed ample by those who planned the formation of this defendant to furnish the means to pay for all such shares as would likely be acquired by it, and to leave remaining a large amount to be used for the purchase of stock in other corporations, not common carriers, which this defendant might consider beneficial to acquire. This defendant was not formed as a scheme or a device to evade the act of Congress known as the "Anti-Trust Act," or any other law whatever, but solely for the purposes hereinbefore stated. III. This defendant was not formed, nor did any of those concerned in its formation, nor any of those who sold their shares of stock to it, have any purpose or intention, to re- strain trade or commerce, or to lessen competition between said railway companies, or to monopolize traffic in any man- ner whatever; nor can any such results follow from the formation or operation of this defendant. In point of fact, since the organization of this defendant rates on the de- fendant railway companies' lines, including rates to and from points common to both, have voluntarily been so re- duced as to decrease their earnings by upwards of a million of dollars annually. For all interstate commerce on the lines of either the defendant railway companies, except traffic beginning and ending on their own lines [239] respectively, the rates are fixed by joint tariffs with connecting lines. In respect to all such traffic neither of the defendant companies has ever had, or can have, any independent rate-making power or control of traffic or rates. All joint tariffs with other companies to or from points common to the lines of the defendant railway companies have always been, and necessarily must be, the same, whether the traffic is carried by one or the other of said companies. The total amount of all other interstate traffic, that is, traffic between common points on the two roads, which is not competitive both as to rates and quality of service with other carriers having equal S78 193 UNITED STATES BEPORTS, 239. Answer of Northern Securities Company. rate-making power with them, is less than 2 per cent of the total interstate traffic of the two companies. IV. The sale and transfer of property, whether in the form of shares of corporate stock or otherwise, has never been adjudged to be, and is not, in violation of the act of Confess of July 2, 1890, known as the "Anti-Trust Act." This defendant is not a railroad company, and it has no power to operate or manage railways or make or control rates of transportation, nor to monopolize or restrain traffic of any kind. So far from intending to violate any provision of said act of Congress, the j^ersons who were concerned in organiz- ing this defendant and those who have sold their shares to it had GYery reason to believe and did believe that such sales were not in any way in contravention of that act. In com- mon with the general public, they were aware that during the eleven years since the passage of that act in many instances the stock of a competing railway company has been acquired by its competitor or the shareholders thereof, such acquisi- tion including many of the principal railways doing business throughout the country. This has been done without objec- tion from any branch of the Government of the United States, and has invariably proven beneficial to the railway com- panies concerned and to the public, and those making sales of stocks to this defendant had no reason to believe that such sales were open to any legal objection or question whatever. [240] V. This defendant was not organized for the pur- pose of acquiring a majority of the stock of either the Great Northern or the Northern Pacific Company, but merely to purchase the stock of those who wished to sell, as above stated, and was not organized for the purpose of controlling railway rates in the slightest degree, and has not had and cannot have any such effect. The transactions referred to in the petition have consisted in the organization of a lawful corporation and the purchase of property by it. All acts done in relation to the organization of this defendant and in the conduct of its business have been expressly authorized by law, and have had no effect whatever to restrain trade or commerce among the several States or with foreign nations. If these lawful transactions should hereafter have any effect to restrain trade or commerce among the several States or NORTHERN SECURITIES CO. V. UNITED STATES. 379 Answer of Northern Securities Company. with foreign nations (which is hereby denied), that effect would be merely indirect, remote, incidental, and collateral, and not intended, and as nothing compared with the great expansion of the volume of interstate and international com- merce which was intended, and which this defendant believes is destined to result from the enterprise of the two railway companies, that culminated in the purchase of the Burlington stock. And this defendant says: 1. The "Anti-Trust Act " was not intended to prevent or defeat an enterprise in aid of a great competitive interstate and international commerce merely because such enterprise may carry with it the possibility of incidental restraint upon some commerce, trifling both as respects territory and volume. 2. Nor w as the act intended to limit the power of the sev- eral States to create corporations, define their purposes, fix the amount of their capital, and determine who may buy, own, and sell their stock. 3. Otherwise construed, the act would be unconstitutional, because : The power to regulate commerce with foreign nations and [241] among the States does not give Congress the power to regulate any of the matters above mentioned in respect to corporations created by the States ; and because Persons may not be deprived of their property without due process of law, by taking from them the right to sell it as their interest may suggest. VI. There is a defect of necessary parties defendant, be- cause, as already set forth, the persons who made sales of stock of the said railway companies to this defendant were numerous, exceeding more than 1,300 in number, and few of them had any connection whatever in the planning or form- ing of this defendant, and in their absence from this litiga- tion no decree can be made affecting their rights in the premises. VII. And this defendant denies all and all manner of unlawful combination and confederacy wherewith it is by the said petition charged, without this, that if there is any other matter, cause, or thing in the petition contained mate- 380 IW UNITED STATES REPOBTS, 241. Answer of Nortbern Pacific Railway Company. Fial or necessary for this defendant to make answer unto, and not herein or hereby well and sufficiently answered, con- fessed, traversed, and avoided or denied, the same is not true to the knowledge or belief of this defendant; all of which matters and things this defendant is ready and willing to aver, maintain, and prove as this honorable court shall direct, and humbly prays to be hence dismissed, with its reasonable costs and charges in this behalf most wrongfully sustained. Signed (no verification) for the Northern Securities Com- pany, by John W. Griggs and Geo. B. Young, solicitors and counsel. A separate answer was filed by the defendants James J. Hill, William P. Clough, D. Willis James, John S. Kennedy, and George F. Baker, which was substantially the same as the answer of the defendant Northern Securities Company. The answer of the Great Northern Railway Company was substantially the same as that of the Northern Securities Com- [242] pany with the omission of Paragraph II of the second statement of defence. The answer of the defendant the Northern Pacific Railway Company was as follows : I. This defendant admits the allegations of Paragraph I of the petition that this defendant and the Great Northern Railway Company were at the times mentioned in said peti- tion and now are common carriers employed in the transpor- tation of freight and passengers among the several States of the United States within which the railways operated by them are situated. This defendant denies each and every other allegation of paragraph I of the petition. II. This defendant admits the allegations of Paragraph II of the petition that prior to November 13, 1901, the stock of this defendant was owned and controlled by its shareholders, and that among them were the parties in that behalf alleged! This defendant denies any knowledge or information suffi! cient to fonn a belief of each and every other allegation of Paragraph II of the petition. III. This defendant admits the allegations of Paragraph III of the petition that this defendant at the times men- NORTHERN SECURITIES CO. V. UNITED STATES. 881 Answer of Northern Pacific Railway Company. •tioned owned and operated a railway extending from Ash- land in Wisconsin via Duluth, Minnesota, and from St. Paul, Minnesota, across Minnesota, North Dakota, Montana, Idaho, and Washington, passing through Helena, in the State of Montana, and Spokane, in the State of Washington, and extending to Tacoma and Seattle, in Washington, and to Portland, in Oregon; that the Great Northern Company operated lines of railway extending from St. Paul aforesaid across Minnesota, North Dakota, Montana, Idaho, and Wash- ington, passing through Spokane and extending to Everett and Seattle, in the State last aforesaid; that the said lines connected with other railway lines, and either directly or by means of such other railway lines connected with lines of steamships on the Great Lakes and the ocean, and that the mileage operated by said companies aggregated about five thousand five hundred miles for this defendant [243] and about four thousand one hundred and twenty-eight miles for the Great Northern Company. This defendant denies each and every other allegation i>f Paragraph III of the petition. IV. This defendant admits the allegations of Paragraph IV of the petition that, prior to the year 1893, a corporation known as the Northern Pacific Railroad Company, organized and existing under certain acts and resolutions of Congress, and which then operated some parts of the lines of this de- fendant, became insolvent and was placed in the hands of receivers appointed by various courts of the United States; that, while in this condition, a plan of reoriranization was entered into by the bondholders of said company, an(J that an arrangement was proposed between the said bondholders and the Great Northern Company which was never carried out. This defendant admits that a case entitled Pearsall agaiiist the Great Northern Railway Company was decided by the Supreme Court of the United States on March 30, 1896, and is reported in volume 161 of the reports of said court, begin- ning on page 696. This defendant denies any knowledge or information suffi- cient to form a belief of each and every other allegation of Paragraph IV of the petition. It is informed and believed X 382 ISO UNITED STATES KBPOBTS, 241. Answer of Northern Pacific Railway Company. that said paragraph is wholly irrelevant to the cause of ac- tion, if any, stated in the petition. V. This defendant admits the allegations in Paragraph V of the petition that early in the year 1901 this defemiani and the Great Northern Conipany, acting for the purpose of pro- moting their several interests, each purchased shares of stock of the Chicago, Burlington and Quincy Railroad Comi)any of Illinois, paying therefor with the joint bonds of the Great Northern Company and the Northern Pacific Company, pay- able in twenty years from date, with interest at 4 per cent per annum, at the rate of $200 in bonds for each $100 in stock, and in this manner the said companies severally pur- chased and acquired each about 49 per cent of said stock; that the lines operated by said [244] Burlington Company and its connections were geographically as stated in the peti- tion, and that some of said lines compete with some linos of what is called in the petition the Union Pacific system. This purchase was made by these defendants primarily in order to secure a terminus in Chicago and permanent connec- tion with the eastern and southeastern niarlv(ts, which are especially valuable to the agricultural and mineral products of the northwest, and also because the Burlington system serves a large and growing territory, and the purchase was deemed desirable and profitable in itself. It had no connec- tion with the future formation of any company whatsoever and was not made with intent to violate the statute or com- mon law of any State or of the United States, and was not in violation of any such law. This defendant denies each and every other allegation of Paragraph V of the petition. It is informed and^ believes that said paragraph is wholly irrelevant to the cause of ac- tion, if" any, stated in the petition. VI. This defendant denies any knowledge or information sufficient to form a belief of each and every allegation of Paragraph VI of the petition. VII. This defendant admits the allegation of Paragraph VII of the petition, that the defendant Northern Securities Company was heretofore organized, as it is informed and believes, under the general laws of the State of New Jersey. This defendant denies any knowledge or information suffi- NORTHERN SECDTtlTIES CO. V, UNITED STATES. 383 Answer of Northern Pacific Railway Company. cient to form a belief of each and every other allegation of Paragraph VII of the petition. VIII. This defendant admits the allegations of Paragraph VIII of the petition that the defendant, Northern Securities Company, has purchased and now holds and owns a large majority of the capital stock of this defendant, and that the Securities Company has received such dividends as have been paid on any shares held by it. This defendant denies any knowledge or information suffi- [245] cient to form a belief of each and every other allega- tion of Paragraph VIII of the petition. IX. This defendant denies anv knowledge or information sufficient to form a belief of each and e\tM\ alloization of Paragraph IX of the petition. X. This defendant denies any knowledge or information sufficient to foym a belief of each and every allegation of Paragraph X of the petition. XI. This defendant denies each and every allegation of Paragraph XI of the petition. XII. This defendant denies each and every allegation of Paragraph XII of the petition. It is informed and believes that said paragi'aph consists merely of expressions of opinion, and is, therefore, without Aveight in support of any cause of action. XIII. This defendant denies any knowledge or informa- tion sufficient to form a belief of each and every allegation of Paragraph XIII of the petition. XIV. As this defendant is informed and believes, the pur- chase by the Northern Securities Company of shares of stock of this defendant and the sale thereof by the owners have been expressly authorized by law. They have had no effect whatever, in law or in fact, in restraint or monopoly of trade or commerce among the several States or with foreign nations. The petition does not allege that at any place within the juris- diction of this court or elsewhere any such restraint or mo- nopoly has been effected. If these lawful transactions, consisting merely of the pur- chase and sale of property, should hereafter have any effect in restraint or monopoly of trade or commerce among the sev- eral States or with foreign nations, that would not be their 384 193 UNITED STATES REPOBTS, 245. Answer of Northern Pacific Railway Company. direct effect, but would be merely indirect, remote, incidental, and collateral, and would, therefore, not bring said transac- tions within said act of Congress above mentioned. Any other construction would render the statute unconstitutional, as beyond the power of Congress, and as depriving the sellers of the stock thus sold and also the stockholders of this defend- ant who have not sold [246] their shares to the Securities Company, of liberty and property without due |)n)cess of law, because, thus construed, it would be an inhibition upon their right to sell their property. If complainant's contention be sustained, the right of the owner of property to sell the same will be dependent upon what the courts at any future tune may hold to have been the intention of the purchaser in buy- ing such property. This result would seriously impair the liberty of the owner and the value of his property, and is con- trary to the constitutional guaranties thereof. These transactions are, therefore, not within the act of Con- gress above mentioned ; nor has Congress any constitutional power to annul or prohibit action thus expressly authorized by state statutes under which the same has been or may here- after be taken. Xy. There is a defect of necessary parties defendant herein, because in this suit it is sought to annul all sales of shares made by shareholders of this defendant to the North- ern Securities Company and to cancel all certificates of stock of the latter company issued in purchase of the same. The parties making such sales are numerous, and many of them >ad no connection with the matter save to sell their shares to the Securities Company after its organization. It is obvious that in their absence no adjudication can be made annulling such sales to the Securities Company. A decree to such effect as prayed for by the petition necessarily would deprive such original sellers of their property without due process of law. AH persons who sold shares in this defendant to the Securi- ties Company are, therefore, necessary parties, and the peti- tion is bad by reason of their absence. XVI. And this defendant denies all and all manner of un- lawful combination and confederacy wherewith it is by the said petition charged, without this, that if there is any other matter, cause, or thing in the petition contained material or NOBTHEBN SECURITIES CO. V, UNITED STATES. 385 Answer of Morgan and other defendants. necessary for this defendant to make answer unto, and not herein or hereby well and sufficiently answered, confessed, traversed, and [247] avoided or denied, the same is not true to the knowledge or belief of this defendant; all of which matters and things this defendant is ready and willing to aver, maintain, and prove as this honorable court shall direct, and humbly prays to be hence dismissed with its reasonable costs and charges in this behalf most wrongfully sustained. The first five paragraphs of the answer of the defendants, J. Pierpont Morgan and Robert Bacon, were substantially the same as the same paragraphs of the answer of the Northern Pacific Railway and the remainder of the answer of such defendants was as follows: VI. These defendants admit that the defendant James J. Hill and certain other persons decided upon the formation of a securities company for the purposes set forth in the certificate of incorporation of the Northern Securities Com- pany attached to the petition and in all respects as therein stated. These defendants deny each and every other allegation of Paragraph VI of the petition. VII. These defendants admit the allegations of Paragraph VII of the petition that on November 13, 1901, the defendant Northern Securities Company was organized under the gen- eral laws of the State of New Jersey, with its principal office in Hoboken, in said State, and with an authorized capital stock of $400,000,000, and that a copy of the articles of in- corporation of said company correctly stating its powers is attached to the petition. These defendants deny each and every other allegation of Paragraph VII of the petition. VIII. These defendants admit the allegations of Para- graph VIII of the petition that on or about November 14, 1901, the defendant Northern Securities Company was or- ganized by the election of directors and officers; that the defendant James J. Hill was chosen a director and president thereof; that thereupon the said James J. Hill and other stockholders of the Great Northern Company, each individu- 21220— VOL 2—07 m 26 dob l«l UNITED STATES REPORTS, 2-»8. Answer of Morgan and other defendants. ally and separately [248] from tlie others, sold to the Se- curitias Company a large amount of the capital stock of the Great Northern Company for the price of $180 par value of the capital stock of the Securities Company for each share of the capital stock of the Great Northern Company; that these defendants and other stockholders of the Northem Pacific Company, each individually and separately from the others, sold to the Securities Company a large amount of the capital stock of the Northern Pacific Company; that the Securities Company also offered, for a limited period, like terms of purchase to the other shareholders of the (Jreat Northern Company; that the Securities Comi^any now holds and owns a large majority of the capital stock of the North- ern Pacific Eailway Company, and a large amount, though less than a controlling interest, of the stock of the Great Northern Company, and has negotiated for the purchase of additional shares of that company, and that the Securities Company has received such dividends as have been paid on any shares held by it. These defendants deny each and every other allegation of Paragraph VIII of the petition. IX. These defendants deny each and every allegation of Paragraph IX of the petition. X. These defendants deny any knowledge or information sufficient to form a belief of each and every allegation of Paragraph X of the petition. XI. These defendants deny each and every allegation of Paragraph XI of tl\e petition. XII. These defendants deny each and every allegation of Paragraph XII of the petition. They are informed and be- lieve that said paragraph consists merely of expressions of opinion, and is, therefore, without weight in support of any cause of action. XIII. Ther?e defendants deny each and every allegation of Paragraph XIII of the petition. XIV. In July, 18%, the capital stock of the Northern Pa- cific Railway Company was fixed at $155,000,000, of which \2i9] $75,000,000 were preferred and $80,000,000 common stock. The prefeiTed stock of the company was issued in exchange for various obligations of the former Northern NORTHERN SECURITIES CO. V. UNITED STATES. 387 Answer of Morgan and other defendants. Pacific Railroad Company because the holders thereof would not accept new common stock therefor. At the same time it was contemplated that the time would arrive when said preferred stock should properly be retired, and it was, ac- cordingly, then provided that the preferred stock might be retired in whole or in part at par on any first day of January, up to and including January 1, 1917. Both classes of stock wore made subject to a voting trust in this defendant Morgan and others, continuing until November 1, 1901. but termi- nable by the trustees in their discretion at an earlier date. The Northern Pacific Company shared in the recent pros- l)erity of the country, and its common stock appreciated in value until it was deemed practicable to carry out the original intention of retiring the preferred stock and also to terminate the voting trust. Accordingly said trust was terminated by the trustees upon January 1, 1901, and the preferred stock was retired. Although the latter action was in contemplation and was practically decided upon some time before the termi- nation of the voting trust, it was not made the subject of formal action by the board of directors until November 13, 1901, and was completed upon January 1, 1902. XV. As hereinbefore stated, early in 1901, the Northern Pacific Company, and the Great Northern Company, each purchased about 49 per cent of the capital stock of the Chi- cago, Burlington and Quincy Railroad Company. This l)urchase was made by the Northern Pacific Company pri- marily in order to secure a terminus at Chicago and perma- nent connection with the eastern and southeastern markets, Mhich are especially valuable for the agricultural and mineral products of the northwest, but also because the Bur- lington system serves a large and growing territory, and the purchase was deemed desirable and j^rofitable in itself. These purchases Avere not made, as the petition alleges, " in [250 1 contemplation of the ultimate placing of the Great Northern and Northern Pacific system under a common source of control." They had no connection whatever with the future formation of the Northern Securities Company, or any other company whatsoever, and had no conne<;tion with the fact alleged in the petition that the Union Pacific Kail- doo 193 UNITED STATES REPORTS, 250. Answer of Morgan and other defendants. way system is to some extent a competing system Avith the Burlington system. The said purchases were not made with intent to violate the statute or common law of any State or of the United States ; were not in violation of any such law, and are not charged in the petition to have been in any respect unlawful. XVI. During the reorganization of the Northern Pacific system the firm of J. P. Morgan & Co., of which these defend- ants are members, acted as reorganization managers, and ever since the reorganization of the Northern Pacific Company has been its fiscal agent. Said firm has accordingly at all times desired to further the best interests of the company and all its stockholders, and especially to aid in steadily developing the business of the company and the prosperity of the country which it serves. Said firm considered that these results were accomplished, so far as possible, by the policy of the company during the existence of the voting trust, as above stated. Not long after the termination of the voting trust, however, and very early in May, 1901, said firm became aware that unusu- ally large purchases of both classes of stock were in progress in the stock market, apparently in a single interest. Said firm was apprehensive that these purchases were for the pur- pose of securing control of the direction of the Northern Pacific Company and thus managing it, not for what said firm conceived to be the best interest of the company, but for some ulterior purpose of which said firm was not informed. Accordingly said firm, prior to May T, 1901, purchased common stock of the Northern Pacific Company in consid- able amounts, and their holdings upon that day amounted to about two hundred thousand shares. In making these pur- chases said [261] firm acted on its own account and in behalf of no other person whomsoever, and was actuated by no motive save those above stated. The said purchases were not made with intent to violate the statute or common law of any State or of the United States, and were not in violation of any such law. XVU. For some years the defendant Hill and others who were interested in the Great Northern Company, but not in- cluding these defendants, had in contemplation the formation of a corporation for the purpose of purchasing their separate NORTHERN SECURITIES CO. V, UNITED STATES. 389 Answer of Morgan and other defendants. interests in that company, with the general object that said interests should be held together and the policy and course of business of the Great Northern Company should be continu- ous in developing the company's system and the territory served by it, and not subject to radical change and possible inconsistency from time to time. In or about August, 1901, as this plan was approaching maturity, said parties for simi- lar reasons determined that they would also sell to the new company, when formed, their interests in the Northern Pa- cific Company, which were considerable in amount, and that the capital of the new company should be made sufficiently large to enable it to purchase all shares of the Great Northern and Northern Pacific companies which the holders might desire to sell and anj^ other shares which the new com- pany might deem it advisable to acquire. By this time it had become known that the purchases in the market of shares of the Northern Pacific Company, to which reference is made above, had been made in behalf of a corpo- ration known as the Oregon Short Line Railroad Company, controlled by the Union Pacific Railroad Company; that there were held in that interest shares of the Northern Pacific Company to about the amount of $41,000,000 of preferred stock, which, however, was to be retired on January 1, 1902, and $37,000,000 of common stock, together making 780,000 shares and constituting an absolute majority of the total capi- tal stock of the Northern Pacific Company. Thereupon and therefore, [252] with the view and for the purpose of pro- tecting the Northern Pacific Company and the holders of its common stock against the possible control of the direction of said company in an adverse interest, these defendants deter- mined and also advised their fi'iends to sell their Northern Pacific stock to the new company. As set forth in the petition, the Northern Securities Com- pany was duly organized pursuant to the laws of New Jersey upon November 13, 1901 . It was organized according to law, and possesses all the powers set forth in its certificate of in- corporation, and has full power to do every act which it has in fact done, and the petition does not allege the contrary. It having become known that the Oregon Short Line Com- pany was not disinclined upon satisfactory terms to sell its nm 193 UNITED STATES KEPORTS, 252. Answer of Morgan and other defendants, holdings of the major part of the Northern Pacific stock, the firm of J. P. Morgan & Company, deeming such action for the best interest of the Northern Pacific Company, purchased from said Oregon Short Line Company all its holdings of the capital stock of the Northern Pacific Company. After its organization the Northern Securities Company duly purchased all the shares of the Northern Pacific Com- pany and of the Great Northern Company hereinbefore men- tioned, including those purchased by the firm of J. P. Morgan & Company from the Oregon Short Line Company, for which It paid partly in cash and partly in its own shares. It also was willing to purchase the shares of any other share- holders of the Great Northern Company, who desired to sell the same, for the price of one hundred and eighty dollars for each share of the Great Northern Company, payable in its own shares, and did actually purchase and pay for considerable amounts of said stock at such price. None of ther^ purchases by the Northern Securities Com- pany were made with intent to violate the statute or common law of any State or of the United States, or were in violation of any such law. XVIIL The foregoing is a correct statement of all the mat- [253] ters mentioned in the petition, omitting its many irrelevant adjectives, adverbs, and conclusions, and of some other facts in addition thereto. The transactions prior to the formation of the Northern Securities Company had no con- nection whatever with the formation thereof, save as abov ^ stated. That company was organized, not for the purpose of acquiring a majority of the stock of either the Great North- ern or the Northern Pacific Company, but as above set forth It was not organized for the purpose of affecting railway rates or competition in the slightest degree, and has not had any such effect. In the transactions above stated these de- fendants and, so far as they are aware, the other parties who have been engaged therein have never sought or intended to violate the act of Congress of July 2, 1890, entitled "An act to protect trade and commerce against unlawful restraints and monopolies " (26 Stat. 209, c. 647), or to enter into any contract, combination in the foim of trust or otherwise, or conspiracy in restraint of trade or commerce among the ^v- NORTHERN SECURITIES CO. V, UNITED STATES. 391 Answer of Morgan and other defendants. eral States or with foreign nations, or to monopolize or at- tempt 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. The transactions have consisted merel}^ in the organization of a lawful corporation of New Jersey and the sale to and purchase by it of property lawfully salable. All acts done in relation to the organization of the Securities Company and the purchase by it of shares of stock of the railway companies and the sale thereof hy the owners have been expressly authorized by law. They have had no effect whatever, in law or in fact, in restraint or monopoly of trade or commerce among the several States or with foreign nations. The pe- tition does not allege that at any place within the jurisdiction of this court or elsewhere any such restraint or monopoly has been effected. If these lawful transactions, consisting merely of the pur chase and sale of property, should hereafter have any effect in restraint or monopoly of trade or commerce among the several States or with foreign nations, such effect would not be their [254] direct effect, but would be merely indirect, remote, incidental, and collateral, and aside from any in- tention of the parties, and therefore would not bring said transactions within said act of Congress. Any other con- struction would render the statute unconstitutional as be- yond the power of Congress, and as depriving these defend- ants and the sellers generally of the stock thus sold, of liberty and property without due process of law, because, thus con- strued, it would be an inhibition upon their right to sell their propert}^ If complainant's contention be sustained, the right of the owner of property to sell the same will be de- pendent upon what the courts at any future time may hold to have been the intention of the purchaser in buying su(;h property. Such a result Avould seriously impair the liberty of the owner and the value of his property, and is contrary to the constitutional guaranties thereof. These transactions are, therefore, not within the act of Con- gress above mentioned ; nor has Congress any constitutional power to annul or prohibit action thus expressly authorized by state statutes under which the same has been taken. im UNITED STATES BEPOBTS, 254. Decree of the Circuit CJourt. XIX There is a defect of necessary parties defendant herein because in this suit it is sought to annul all sales of shares made by shareholders of the Great Northern Company and the Northern Pacific Company to the Northern Securities Company, and to cancel all certificates of stock of the latter company issued in purchase of the same. As already set forth, the parties making such sales are numerous, and many of them had no connection with the matter save to sell their shares in the railway companies to the Securities Company after its organization. It is obvious that in their absence no adjudication can be made annulling such sales to the Securi- ties Company. A decree to such effect as prayed for by the petition necessarily would deprive such original seller? of their. property without due process of law. All personj-j who sold shares in the railway companies to the Securities Company are, therefore, necessary parties, and the petition is bad by reason of their absence. AA. And these defendants deny all and all manner of [255] unlawful combination and confederacy wherewith they are by the said petition charged, without this, that if there is any other matter, cause, or thing in the petition con- tamed material or necessary for these defendants to make answer unto, and not herein or hereby well and sufficiently answered, confessed, traversed, and avoided or denied, the same is not true to the knowledge or belief of these defend- ants; all of which matters and things these defendants are ready and willing to aver, maintain, and prove as this honorable court shall direct, and humbly pray to be hence dismissed with their reasonable costs and charges in this behalf most wrongfully sustained. The answer of the defendant Daniel S. Lamont was sub- stantially the same as that of defendants Morgan and Bacon except that certain allegations as to the actions of J. P. Mor- gan & Co. in Paragraphs XVI and XVII were omitted^ On April 9, 1903, after the case had been tried before a Cir- cuit Court consisting of Circuit Judges Caldwell, Sanborn, Thayer and Vandevanter (for opinion of Judge Thayer, see 120 Fed. Kep. T20), the following decree was entered: "Sr^®^^' ^<^^»<^^^ and decreed as follows, to wit- ^rJ!'^\,^^^ defendants above named have heretofore entered into a combination or conspiracy in restraint of trade and commerce among NORTHEBN SECURITIES CO. V. UNITED STATES. 893 Argument of Mr. Young for appellants. the several States, such as an act of Congress, approved July 2, 1890, entitled 'An act to protect trade and commerce against unlawful restraints and monopolies ' denounces as illegal. " That all the stocks of the Northern Pacific Railway Company and all the stock of the Great Northern Railway Company, now claimed to be owned and held by the defendant, the Northern Securities Com- pany, was acquired and is now held by it in virtue of such combina- tion or conspiracy in restraint of trade and commerce among the several States. "That the Northern Securities Company, its officers, agents, serv- ants and employes be and they are hereby enjoined from [256] ac- quiring, or attempting to acquire further stock of either the aforesaid railway companies. "That the Northern Securities Company be enjoined from voting the aforesaid stoclc which it now holds or may acquire and from attempting to vote it, at any meeting of the stockholders of either of the aforesaid railway companies and from exercising or attempting to exercise any control, direction, supervision or influence whatsoever over the acts and doings of said railway companies or either of them by virtue of its holding such stock therein. " That the Northern Pacific Railway Company and the Great North- ern 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 attorneys or agents at any corporate election for directors or officers of either of the aforesaid railway companies. "And that they, together with their officers, directors, servants and agents, be likewise enjoined and respectively restrained from paying any dividends to the Northern Securities Company on account 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 Northern Securities Company or any of its officers or agents, as such officers or agents, to exercise any control whatsoever over the cor- porate acts of either of the aforesaid railway companies. " But nothing herein contained shall be construed as prohibiting the Northern Securities Company from returning and transferring to the Northern Pacific Railway Company and the Great Northern Railway Company, respectively, any and all shares of stock in either of said railway companies which said. The Northern Securities Com- pany, may have heretofore received from such stockholders in ex- change for its own stock ; and nothing herein contained shall be con- strued as prohibiting [257] the Northern Securities Company from making such transfer and assignments of the stock aforesaid to such person or persons as may now 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. " It is further ordered and adjudged that the United States recover from the defendants its costs herein expended, the same to be taxed by the clerk of this court, and have execution therefor." # 3fr. George B. Young for appellants argued and pre- sented in a brief the following summary of the facts : 1. For some years prior to 1901 the two railway com- nu 193 UNITED STATES REPORTS, 257. Argiiiiieiit of Mr. Young for appellants. panies had been engaged in an enterprise of building up a great interstate and Oriental commerce. 2. In April, 1901, they purchased nearly all the Burling- ton shares at a cost of over $200,000,000, paying for them with their joint bonds, and not with the bonds of the Bur- lington as stated in the decision of the lower court. They made the purchase not with any view of placing the two eomi^anies, their shares or their commerce, under a sin<^le control. ^ 3. Immediately after this purchase, persons interested in the Union Pacific attemi)ted to obtain the stock control of the Northern Pacific, their object being to prevent the car- rying out of the enterprise of the defendant railway com- panies, and especially to prevent the use of the Burlington road in carrying out that enterprise. 4. This " raid " (as it is called) on the Northern Pacific stock failed, the failure being largely due to an error of the raidei-s in buying common instead of preferred stock. But there was imminent danger that another like attempt might be made and be successful. 5. Such a raid, if successful, would destroy the commerce the railway companies were building up, "^and in aid of which they had bought the Burlington shares. [258] 6. For .some years prior to 1901, Mr. Hill and ten other shareholders in the Great Northern Co., holding less than 30 per cent of its stock had contemplated the forma- tion of a company to which they should make absolute transfers of their shares in consideration of the shares of such new company. Their purpose was that the shares should be voted alike in the future as they had been in the pasi, and that they should fare alike in any sale of them that might be made. T. In June, 1901, after the defeat of the raid, it was first suggested that the proposed company should be en larged so as to include the Northern Pacific common stock (about $21,000,000) held by the same persons, and later the plan was still further widened so as to include the Northern Pacific common stock (about $20,000,000) held by J. P. Morgan & Co. should they desire to make such dis- position of the stock held by them. i NORTHERN SECURITIES CO. V, UNITED STATES. 395 Argument of Mr. Young for appellants. 8. It had all along been the purpose of Mr. Hill and his ten associates that every shareholder in the Great Northern Co. should be given an opportunity to join the company as originally planned, — this not because they needed or de- sired the accession of such other shareholders, but to avoid any complaint of unfair treatment on their part. 9. This purpose was carried into the enlarged project, and at the instance of Mr. Morgan, the same opportunity was to be given to holders of Northern Pacific stock. And like the company originally projected, the enlarged com- pany was to be authorized and was expected to acquire shares in coal mines and in industrial enterprises of utility to the railways, but whose stock the railway companies could not hold, and also to be a financial as well as an investment company, with power in that capacity to aid the operations of the railway companies, or of any other companies whose shares or securities it might hold. 10. The amount of Great Northern stock held by Mr. Hill and his ten associates was from 33 to 35 millions out of a total capital of $125,000,000. In 1896, they had severally [259] acquired $29,000,000 of Northern Pacific common stock, which amount had, on May 1, 1901, been reduced by sales to $20,000,000. . 11. In forming the Northern Securities Co. it was the intention of its promoters that it should acquire, if it could, a majority of Northern Pacific stock, thereby protecting such stock from future raids, and protecting the conmiarce of the railways from the ruin that would result from a successful raid. They did not desire or expect that the Securities Co. should acquire a majority of Great Northern shares. Such acquisi- tion was not deemed necessary for the protection of the stock of that .company or of the commerce of the roads. 12. \A^ile the capitalization of the Securities Co. is nearly, it is not (as stated in the opinion) the exact amount required to pay for all the shares of the two railway companies at the prices ($180 for Great Northern and $115 for Northern Pa- cific) fixed for such exchanges. 13. Mr. Hill and his ten associates who promoted the Securities Co. did not agree or bind themselves even to trans- 396 193 UNITEB STATES BEPOETS^ 259. Argument of Mr. Young for appellants. fer their dwn shares to the Securities Co. Each of them was left to decide for himself. Mr. Hill retained between two and three millions of his shares. And neither they, nor any one concerned in promoting the Securities Co., nor J. P. Morgan & Co. ever agreed in any manner that upon the organization of the Securities Co. they would *' use their influence to induce other stockholders ha their respective companies to do likewise," as erroneously stated in the decision of the lower court. 14. The Securities Co. is not a railway company and has no power to build or operate railways. Its powers are limited to buying, selling and holding stocks, bonds and other securities, with power to aid in any manner any company whose stock or bonds it may hold, and to do all acts designed to aid any company whose shares or securities it may hold, and protect or enhance the value of its investment; also to hold any real or personal property recjuired for the transac- tion of its business. [260] In short, it is at once an invest- ment and a financial company. 15. Soon after its organization, and on November 18, 1901, the Securities Co. purchased the Northern Pacific shares that had been acquired by those concerned in the raid, known as the Harriman shares. Those had been purchased from them by J. P. Morgan & Co. The purchase comprised $^7,023,000 of common stock and $41,085,000 of preferred stock, at a lump price of $1)1,401,500, payable (and paid) $8,915,029 in cash, and $82,491,871 in shares of the Securities Co. at par. About the same time it received from its promoters and J. P. Morgan & Co., the Northern Pacific common stock (about $42,000,000) held by them. It availed itself of its right as a common stockholder of the Northern Pacific to purchase at par for cash, the new common stock (issued to replace the $75,000,000 preferred stock retired) to the amount of 75-80 of the amount of common stock held by it As a result of these purchases, the Securities Co., at the beginning of the year 1902, and before this suit was begun (in March, 1902) held about $152,000,000 of the total $155,000,000 stock of the Northern Pacific. 16. Soon after its organization, Mr. Hill and the other promoters of the Securities Co. transferred to it about 30 NORTHERN SECURITIES CO. V. UNITED STATES. 397 Argument of Mr. Young for appellants. millions of Great Northern shares at $180 in exchange for Securities shares at par, and within three months from its organization, (and before the commencement of this suit,) the Securities Co. had acquired, on the same terms and from other holders, about 65 millions of Great Northern shares, making its total holdings 95 millions of the total capital of 125 millions. 17. It is not the fact, as stated in the decision that the Securities Co. was enabled to make the purchase of 65 mil- lions of stock bought from non-promoters, or of any of it, by the advice, procurement or persuasion of the Great North ern shareholders who had been instrumental in organizing the Securities Co. There is not any evidence in support of this finding, and the evidence is conclusive against it. The facts proved beyond question are that each purchase [261] was an independent transaction between the seller of stock, and the Securities Co., without solicitation, persua- sion or other influence by the Securities Co., or any one else. 18. At the time of the formation of the Securities Co., the Great Northern shareholders were 1,800 in number. Of them about 1,200 transferred their shares to the Securities Co. When this suit was begun, in April, 1902, the shareholders of the Securities Co. were more than 1,300; in October, 1902, they were about 1,800. 19. The Securities Co. is the absolute owner of the shares acquired by it and of the dividends thereon. The shares are not pooled or consolidated, nor are the earnings of the two roads pooled. It is in no sense a " trust."' 20. The promoters of the Securities Co. — Mr. Hill and his ten associates — do not, all of them together hold, nor have they ever held more than one-third of the $360,000,000 stock of the Securities Co. that has been issued and is outstanding, and these gentlemen and J. P. Morgan & Co. have never held more than $140,000,000. 21. By the charter of each railway company, its commerce is controlled and directed wholly by a board of directors, the members of which are chosen for prescribed terms and cannot be removed during their terms. And by the laws of Minne- sota and Wisconsin no person who is a director in one com- pany can be a director in the other. 398 193 UNITED STATES BEPORTS, 261. Arguiiieut of Mr. Young for appellants. 22. The Securities Co. has not attempted to control or med- dle with the commerce or the management of either railway, nor is there ant evidence that it purposes doing cither. Ever since its formation such commerce has been conducted by the two boards of directors in complete independence of each other. 23. There has been no agreement to suppress and no sup- pression of competition between the two railway companies, which is as active as it was before the Securities Co. was formed. 24. The entire interstate commerce of the two railways, the rates on which can be controlled by those companies without other competition or consent of connecting lines, falls short [262] of three per cent of their total interstate commerce: and any restraint that could be in any event imposed by the Securities Co. on their interstate commerce could only affect this three per cent. All the interstate commerce of each railroad (including the competitive three per cent) has been largely increased since the organization of the Securities Co., owing to the great ad- vantages of the Burlington connection, and to the protection afforded to all the commerce of the roads by placing a major- ity of Northern Pacific shares beyond the reach of raids, in the ownership of the Securities Co. And during such period rates have l^een reduced to such an extent as to reduce net earnings by upwards of $1,000,000. 25. There has been no increase of capitalization of either railway company, nor any watering of that of the railway companies or of the Northern Securities Co. The capital of each railway remains unchanged. If the Securities Co. had issued its shares at par for cash, and used the money to buy the railway shares for cash in the market at their market value, its outstanding shares would be more than at present. It would have had to issue and sell at least 190 of its shares, to be able to buy for cash each 100 shares of Great Northern which it has obtained by exchange of only 180 of its own shares. And it would have had to pay more than $115 for Northern Pacific. The course pursued, instead of watering in any way tlie Securities Co.'s stock, has furnished that com- pany with properties of a market and intrinsic value consid- NORTHEKN SECURITIES CO. V. UNITED STATES. 899 Argunient of Mr. Young for appellants. erably in excess of the par value of the shares issued by it in payment for them. Appellants contend as to the Anti-Trust Act and its meaning : 1. The act is wholly a criminal law, directed to the pun- ishment and prevention of crime. The remedy by injunction, etc., given by the fou.rth section is not to protect property in- terests, but solely to prevent '' violations of this Act '' (i. e. crime-, for every vii)lation of the act is a crime, and, without this section, would not be within the comjietence of a court of equity to restrain by injunction). [263] 2. Being a criminal statute, the act is not to be en- larged by construction. The first section cannot be stretched so as to make criminal (and whatever the section declares unlaAvful, it makes criminal, and makes nothing criminal it has not declared unlawful) every agreement, combination or conspiracy that merely tends to re.strain commerce among the States, or that confers on the parties to it or anv one else the power to restrain trade. 3. The act makes unlawful and criminal every contract, combination or conspiracy in direct restraint of interstate trade or commerce. The gist of the crime is the contract, combination or con- spiracy, and the offense is complete on the making of such contract, or the formation of such combination or conspiracy, though nothing be done to carry it out, and though trade be not in fact restrained. But to constitute a combination or conspiracy in restraint of interstate trade or commerce, the parties must combine or conspire to do acts, which, if performed, will of themselves restrain such trade or commerce, and will directly restrain it — that is, acts which operate directly on such commerce. If the acts which the parties combine or conspire to do fall short of this, if they are not such as operate directly on the connnerce, and by such operation directly restrain it, then the combination or conspiracy is not within the act. 4. The act makes criminal those contracts, combinations and conspiracies only which directly and immediately re- strain interstate trade or commerce — that is by acting directly 400 193 UNITED STATES REPORTS, 263. Argument of Mr. Young for appellants. and immediately upon such trade or commerce. 171 U. S. 668, 592 ; 175 U. S, 2M, 245. 5. As the crime consists in contracting, combining or con- spiring to do acts which by their own operation will directly and immediately restrain interstate commerce, it necessarily follows that if the acts which the parties contract or combine to do are of that description, they violate the law, though they had no conscious purpose or " specific intent " to restrain interstate [264] commerce by the means of such acts or at all. 156 U. S. 341. On the other hand, if the acts to be done are not such as by their own operation on interstate commerce directly restrain it, the contract, combination or conspiracy to do those acts is not a crime under the Anti-Trust Act. 175 U. S. 234. 6. The act makes criminal every contract, etc., in direct restraint of commerce, without respect of persons. A contract or combination or conspiracy that would be criminal as in restraint of interstate commerce or trade if made between two or more railway companies, is equally a crime if made between two or more interstate carriers by wagon or stagecoach or ferry, or between two or more inter- state traders wholesale or retail. 166 U. S. 312. 7. Any restraint of interstate conmierce, or power to re- strain it, directly consequent upon the acquisition of property and incident to its ownership, is not, nor is the agreement for such acquisition made criminal by, this act. 156 U. S. 16. Hence, where competitors in interstate trade or commerce agree to and do form a partnership or a corporation, or where one of them buys out the other, or a third person or associa- tion of persons buys out both, whatever suppression of com- petition or power to suppress competition may follow is not, nor is the agreement to form such corporation, partnership or association for such purchase, made criminal by the act. 171 U. S. 505, 567. 8. So where a combination is formed to acquire, and which does acquire, nearly all of an article in common use through- out the country and shipper in large quantities among the States, such ownership, though it gives the power to control the interstate trade and commerce in such article, and to sup- press such trade and commerce altogether, is not, nor is such NORTHERN SECURITIES CO. V. UNITED STATES. 401 Argument of Mr. Young for appellants. combination, a restraint of commerce prohibited by the Anti- Trust Act, the power being an incident of ownership. 156 U. S. 1-, 16. 9. By this act Congress regulates commerce by punishing [265] the making of certain contracts by fine and imprison- ment. The regulation is and must be uniform throughout the United States, for an act made criminal when done in Minnesota cannot be innocent when done in Massachusetts. The matters embraced in the act, thus requiring a uniform regulation throughout the country, are matters within the exclusive ]\XT\^diici\on of Congress, and no matters that are not within such exclusive jurisdiction are within the act. If it appears that the States have jurisdiction of any mat- ter (e. g., the ownership of stock in or the consolidation of railway companies doing an interstate business) claimed to be within this act, the existence of jurisdiction in the States in conclusive that such matter is not within the act. The appellants, therefore, maintain the following proposi- tions : 1. The Government is not entitled to maintain this pro- ceeding under sections 1 and 4 of the Anti-Trust Act, nor had the Circuit Court jurisdiction of it imder those sections, for the conspiracy or combination charged in the petition and found by the Circuit Court, if it ever existed, had done all it was formed to do, and had come to an end, before the proceeding was instituted. 2. The only combination of which there is any evidence is a combination formed in aid of commerce, to liberate, pro- tect and enlarge and not to restrain it, and which has liber- ated, protected, aided and enlarged it, and has not restrained and does not threaten to restrain it. 3. There is no evidence of the combination or conspiracy charged in the petition, or of the combination or conspiracy found by the Circuit Court. 4. The conspiracy or combination in question whether as alleged in the petition or as found by the Circuit Court, was not a combination or conspiracy in restraint of interstate conmierce, for the only things which the parties thereto com- bined or conspired to do or procure to be done were (1) the 21220— VOL 2—07 M ^26 402 im UNITED STATES REPORTS, 265. Argument of Mr. Young for appellants, organization of the Securities Co., and (2) the acquisition by the Se- [266] curities Co., with their help, of a large ma- jority of the shares of each of the defendant railway com- panies in exchange for its own shares. The things so to be done or procured to be done (whether taken separately or together) are such as do not and cannot m any wise restrain interstate commerce, and hence a combi- nation or conspiracy to do them or procure them to be done is not in restraint of interstate commerce. The Circuit Court erred in holding (1) that the Securities Co., having acquired such majority of shares, has power to suppress competition between the railway companies. In fact, the Securities Co. is without power to suppress com- petition. It is a mere shareholder and not a director. The office of director is created by the State and not by the share- holder. As to power of directors being distinct from those of shareholders, see Hoyt v. Thompson, 19 N. Y. 207, 216; BurriU v. Nahant Bank, 2 Mete. 163 ; Pullman Car Co. v! Missovri Pac, Ry, Co,, 115 U. S. 587. The charter of each railway company gives to the board of directors all the pow- ers attributed to it in the foregoing decisions. Rev. Stat. Wisconsin, 1878, c. 87, § 1804; Gen. Stat. Minnesota, 1894, § 2717; (2) that it obtained and holds such power by means of and as a party to the combination or conspiracy and not as an incident of its ownership of the shares; (3) that the pos- session of such power to suppress competition is of itself and irrespective of its exercise, a restraint of interstate com-' merce; and therefore (4) the combination or conspiracy in question was in restraint of such commerce. 6. The petition does not allege nor do the proofs disclose any facts showing a monopoly or a conspiracy or attempt to monopolize any interstate or foreign commerce. For defi- nition of monopoly, see Texas Pacific v. Interstate Com. Com., 162 U. S. 197, 210; United States v. Freight Associa- tion, 166 U. S. 290; Pearsall v. Cheat Northern, 161 U. S 646, 676; United States v. E. C. Knight Co., 156 U. S. 1, 10; In re Coming, 51 Fed. Rep. 205, 211. [267] 6. The case is not within the Anti-Trust Act, for in any view of the matters complained of, their effect upon commerce—whether much or little, for good or for ill-r-is NORTHERN SECURITIES CO. V. UNITED STATES. 403 Argument of Mr. Young for appellants. indirect and remote. The Anti-Trust Act and the regulative power of Congress under the commerce clause of the Consti- tution, are alike strictly limited to matters which directly and immediately affect interstate or foreign commerce. In determining what is a combination in direct restraint of commerce the distinction between direct and indirect regula- tions of commerce becomes important, see Fargo v. Michigan, 121 U. S. 230 ; Phila. S. S. Co. v. Pennsylvania, 122 U. S. 326, 328; N. Y., L. Erie <&c. R. Co. v. Pennsylvania, 158 U. S. 431; Maine v. Grand Trunk Railway Co., 142 U. S. 217; PicJcard v. Pullman Co., 117 U. S. 34 ; Pullman Co. v. Pennsylvania, 141 U. S. 18, 25. In the declarations of the limitations of the act and of the power of Congress, the court has merely repeated its settled doctrine. Hooper v. California, 155 U. S. 648, 655; Williams v. Fears, 179 U. S. 270, 278. Where subjects for commercial regulation are of a nature to require or admit of one uniform system or plan of regula- tion, the power to regulate them is exclusively in Congress, and any attempted regulation by a State whether to enlarge or restrain, is j-imply idtra vires, for it is a usurpation of a power vested exclusively in Congress. Wabash Raikcay Co. V. Illinois, 118 U. S. 557, 574; Rohhins v. Shelby Taxing DistHct, 120 U. S. 489, 492 ; Philadelphia S. S. Co. v. Penn- sylvania, 122 U. S. 326, 336 ; Bowman v. Chicago, etc., R. R, Co., 125 U. S. 465, 480. Anything, therefore, not exclu- sively within the jurisdiction of Congress is not within the act. 7. The very general language of the Anti-Trust Act was not intended to include combinations to purchase railways or railway shares, competing or non-competing, nor consolida- tions actual or " virtual " of railways or railway companies. Congress, when passing the act did so with full knowledge of the situation. Ches. <& O. Tel. Co. v. Manning, 186 U. S. 238, 245. It knew that the railway systems of the country [268] rested on such combinations authorized by state laws, some of them having existed many years. These are matters of public history and within the knowl- edge of the court. Ohio L. & T. Co. v. Debold, 16 How. 416, 435; R. R. Co. v. Maryland, 21 Wall. 456, 469; Brown v. 41^% 193 UNITED STATES BEPOBTS, 268. Argument of Mr. Johnson for Northern Securities Company. Piper, 91 U. S. 37, 42 ; Phillips v. Detroit, 111 U. S. 604, 606 ; Lehigh Valley v. Pennsylvania, 145 U. S. 192, 201 ; Louisville €& Nashville v. Kentucky, 161 U. S. 677, 699; Preston v. Browder, 1 Wheat. 115, 121 ; United States v. Union Pacific, 91 U. S. 72, 79; Piatt v. Union Pacific, 99 U. S. 48, 55. If Congress had meant to declare such consolidations and stock purchases of competing companies to be illegal, the se- curities issued by them void and state legislation unconstitu- tional, it would have said so in plain, specific and apt language. The construction put on the act by all branches of the gov- ernment and by everybody down to the commencement of this proceeding, has been in full accord with our position that the act has nothing to do with combinations to own rail- ways or railway shares. The following consolidations of competing railroad lines existed at the time of the passage of the act or have been effected since that time: Boston .^ Maine Hailroad Company and competing lines; New York, New Haven & Hartford Eailroad Co., and New P:ngland Railroad Co. and other roads; New York Central Railroad and the West Shore and Rome, Watertown and Ogdensburg and other railroad companies; Pennsylvania Railroad Company and Baltimore and Ohio and other companies; the Reading Company. 8. Even though the Government were entitled to any in- junction, the decree goes far beyond what the Government was entitled to receive, or the Circuit Court authorized to grant. Mr, John G. Johnson, for appellant, Northern Securities Company, argued: The facts found by the court below cannot be deduced from the testimony and the substratum of the bill filed, of the ar- [269] guments below in its support, and of the deci- sion of the lower court was the assertion of a conspiracy which never existed. It is conceded that the Securities Cora- pany did acquire a majority of stock of both railroad com- panies and such acquisition was t)ecause of its intent to acquire. The company is chargeable with all the legal con- sequences of an intentional acquisition of such shares. It is NORTHERN SECURITIES CO. V. UNITED STATES. 405 Argument of Mr. Johnson for Northern Securities Company. denied, however, that any individuals or corporations con- spired to do anything except to form a corporation and acquire shares of the Northern Pacific Railway Company belonging to them, and about twenty-seven per cent of the stock of the Great Northern Railway Company. The sub- sequent acquisition of an additional fifty per cent of the Great Northern stock was for third persons over whom the defendants had no control but who simply accepted an invi- tation to sell their stock issued by the Securities Company after its formation. The authorized capital of that com- pany was made sufficiently large to enable it to acquire all the stock of both roads but this was not in pursuance of any combination, conspiracy or contract but of the policy of the appellants to let every co-shareholder of the railroad com- panies have the benefit of every advantage obtained for themselves. Everything of which the Government complains was done with the intention of working out with permanent results the problem of interstate and international commerce. In order to effect permanent arrangements and to promote a great public end through a greatly increased commerce, at low rates, the two railway companies purchased the shares of the Burlington road for over $200,000,000, paid by their joint and several bonds, thus being able to give assurances of per- manency of low rates and do such other things as were nec- essary in building up and enlarging this great commerce. This resulted in demands by the Union Pacific for a part of the traffic and on their being refused the Oregon Short Line acting for the Union Pacific acquired a large amount, almost a controlling interest, in the stock of the Northern Pacific. The situation was critical and the organization of the Securi- ties Com- [270] pany and all that followed was for the pur- pose of preventing a raid on the stock similar to that which had so nearly succeeded and was done solely with the attempt to secure the maintenance of the benefit to commerce, which had resulted, and which, still more in the future, would result from the acquisition of the Burlington shares. Such alliances as that of the Burlington with the Northern Pacific and Great Northern are valuable because they give an opportunity of securing a large number of markets in a great ^!VD 193 UNITED STATES REPORTS, 270. Argmnent of Mr. JoliDson tor Northern Securities Oompany. and rich territory under a fairly permanent transportation policy. They are of enormous value to the people along the lines of the railroads, to the country generally and to the world. To transact business, large investments must be made and the condition prerequisite thereto is reasonable assurance of continuance. When the Government seeks to condemn an arrangement which promotes the interest of the whole nation by pretending that; it was intended to restrain trade, it must establish convincingly the existence of the illegal intent aUeged. The sole, question of law to be determined is whether or not the acquisition by a corporation of a controlling interest in the shares of two competitive railway companies, violates the Sherman Act. It is not illegal for an existing corpora- tion to acquire such controlling interest; it is not illegal for persons holding a sufficient number of shares to enter into an agreement that will form a company to acquire such control. An agreement to do what is legal cannot be an illegal con- spiracy, combination or contract. The Sherman Act is a penal one, defining a criminal of- fense, for which it provides a punishment. It is an indis- pensable prerequisite to a conviction for a criminal misde- meanor, especially if thei-e be no criminal intent, and such does not exist in the present case, that the offense condemned shall be clearly defined, and it is well settled that penal laws are to be strictly construed. United States v. WUlherger, 5 Wheat. 76 ; United States v. Whittier, 5 Dillon, 35, citing United States v. J/orm, 14: Pet. 464; United States v. Shel- don, 2 Wheat. 119; United fS71] States v. CUyton, 2 Dillon, 219; Bishop on Statutory Crimes, sec. 41; Andrews v. United States, 2 Story, 213; United States v. Hartwell, 6 Wall. 385, 396; Swearingen v. United States, 161 U. S. 446, 451; France v. United States, 164 U. S. 676, 682; Schooner Paulina's Cargo v. United States, 7 Cr. 52, 61 ; United States V. Reese, 92 U. S. 214, 219; United States v. Comerford, 25 Fed. Kep. 902; United States v. Chase, 135 U. S. 255, 261; United States v. Goldenberg, 168 U. S. 95, 102; Sarlls V. United States, 152 U. S. 570, 575. This court will not legislate but will merely discharge its NORTHERN SECURITIES CO. V, UNITED STATES. 407 Argument of Mr. Johnson for Northern Securities Company. duty of construction. If the legislation is incomplete a crime cannot be fastened upon one who has done innocently something not defined as criminal. An act not made criminal caimot be condemned because it may seem equally, or even more, evil than the one made criminal. That Congress had no clearly defined understanding of the nature of the mis- demeanor at which it struck, is evidenced by the final debates in the House of Representatives. The purchase by a person or corjDoration, of a majority of the shares of two competing railway companies, is not " a contract, combination in the form of a trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States." The Sherman Act prohibits, not a contract tending to restrain trade, but one actually in restraint thereof. The meaning of " restraint of trade " was well understood when the Sherman Act was passed. United States v. Freight Association, 166 U. S. 290, 328. In the Addyston Case, 175 U. S. 211, the contract was actually in restraint of trade. The holding by a person or corporation as owner of a ma- jority of the shares of two competing railway companies, is not " a contract or combination or conspiracy in restraint of trade " within the meaning of the act. A corporation, though incorporated for the purpose of holding, and actually holding, a majority of the shares of two competing railway companies is not such a combination or conspiracy. See the Pearsall Case, 161 U. S. 646 ; United States [272] v. Joint TrafjiG Association, 171 U. S. 505, 567. A person or corporation, by purchasing a majority of jthe shares of two competing railway companies does not mo- nopolize, or attempt to monopolize, " any part of the trade or commerce among the several States." As to what a monopoly is, see In re Green, 52 Fed. Rep. 104; dissenting opinion of Story, J., in Charles River Bridge v. Warden Bridge, 11 Pet. 420, 606; 20 Am. & Eng. Ency. of Law, 846; 2 Rawle's Bouvier's Dictionary, 435, and cases cited; Blackstone, Bk. IV, 159; Century Dictionary. The purchase by one person, of the property of his rival, with the intention thereby to destroy his competition, is not illegal, although by the purchase he will acquire the power to 408 193 UNITED STATES BEPORTS, 272. Argument of Mr. Johnson for Northern Securities Company, prevent the same. Oregon Coal Co. v. Winsor, 20 Wall. 64. A person or corporation, by holding, as owner, the majority of the shares of two competing railway companies, does not monopolize, or attempt to monopolize " any part of the trade or commerce among the several States." The power of Congress to regulate commerce does not con- fer upon it a right to prescribe the persons who may engage therein, or to regulate, or to control, the ownership of shares of stock of corporations engaging therein. United States v. Kmght, 156 U. S. 1 ; Louisville <& NashvUU v. Kentucky, 161 U. S. 677, 693. * The States create railroad corporations and may prescribe the manner of issuance of their shares, and the method of transfer of title thereto. In the use and operation of rail- roads engaged in interstate commerce, the corporations own- ing the same must submit to Federal jurisdiction but this does not involve any right on the part of the United States to con- trol the transfer of shares by the shareholders, even though as a result of said transfers the controlling interest may be transferred. It is not within the power of the Federal government to destroy the title to property created by the State. Congress has unrestricted power to prevent restraint or monopolization of interstate commerce, as the authorities de- [2731 fine those words, but not as the United States now daims. Properly interpreted, the Sherman Act is constitu- tional but the United States is now endeavoring to have its provisions interpreted so as to be violative of States' rights. Such a construction should not be adopted, if there is one which harmonizes with the Constitution. Grenada County V, Brogden, 112 U. S. 261 ; Hawaii v. ManJcickL 190 U. S. 197. The mere ownership of property cannot be an illegal re- straint of trade. As to the power of the State over railroad corporations, see Railroad Co, v. Maryland, 21 Wall. 456; Ashley V. Ryan, 153 U. S. 436. The relief decreed by the lower court was improper under any aspect of the case. United States v. Knight, 156 U. S. 1,17. NORTHEBN SECURITIES CO. V. UNITED STATES. 409 Argument of Mr. Bunn for Northern Pacific Railway. Mr, Charles W, Bunn for appellant, Northern Pacific Rail- way Company, argued : The Sherman Act only declares those contracts illegal which are in restraint of trade. The government cannot rest on proof of combination and conspiracy but must estab- lish restraint of commerce and to do this must prove that the ownership by one person of the stocks of two competing roads is per se such restraint. The statute must be interpreted so as to fall within the con- stitutional powers of Congress which do not extend to de- termine the ownership of stock in corporations or to the regulation of consolidations of railroad companies chartered by the States. This power belongs to the States; Congress only has the power to regulate the use of such property in commerce be- tween the States. See definition of commerce in Gihhons v. Ogden, 9 Wheat. 1, 189, 196, as repeated by this court in Pas- senger Cases, 7 How. 283, 394, 462 ; Henderson v. Mayor, 92 U. S. 259, 270; Lottery Case, 188 U. S. 321, 346. Congress has power only under § 8, Art. I, of the Constitution, and by Amendment X all power not thus granted is reserved to the States. Under the guise of regulating commerce Congress [274] cannot prescribe general rules as to transfer of real or personal property or prohibit the purchase of stock and bonds because when bought they may be used in a business carried on with intent to monopolize or restrict interstate commerce. In re Greene, 52 Fed. Rep. 104, 113, citing County of Mobile V. Kimhall, 102 U. S. 691, 702; Gloucester Ferry Co, v. Pennsylvania, 114 U. S. 196, 203; United States v. E, C, Knight Co,, 156 U. S. 1. The power of Congress extends only to those things that directly and immediately pertain to commerce ; the powers of the States include many things which operate indirectly though importantly on commerce. Gihhons v. Ogden, 9 Wlieat. 1, 203. For cases involving this demarkation between national and state powers, see United States v. Joint Traffic Association, 171 U. S. 505 ; Addyston Pipe Co, V. United States, 175 U. S. 211, 228; Hopkins v. United States, 171 U. S. 578, 592 ; Anderson v. UniUd States, 171 U. S. 604, 615; Sherlock v. Ailing, 93 U. S. 99; Louis- vUle (& Nashville v. Kentucky, 161 U. S. 677, 701. In the 410 193 UNITED STATES KEPOBTS, 274. Arguinent of Mr. Bunn for NoiHieni Puctfic Eailway. last case this court cites decisioos in which state statutes pro- hibiting or pennitting consolidation were enforced. This would have been erroneous if the things complained of fell within the power of Congress, for that power if it exists is exclusive of all state action, and must be so in order that it be uniform. As to matters in regard to which the States may act until Congress acts, see CooUy v. Board of Port Wardens^ 12 How. 299; The James Gray v. The John Fraser, 21 How. 184; Pound v. Turek, 95 U. S. 450; Rohhim v. Shelby Taxing District^ 120 U. S. 489, 402 ; and cases cited mpra. No rule of law is introduced by the Sherman xVct; what was restraint of commerce is the same now ; the only feature of the act is making the preliminary conspiracy a crime. The Constitution itself forbade restraint of inter- state commei-ce. In re Dehs, 158 U. S. 564. A combination that is restraint of trade now was restraint of trade before the act of leasing, buying and consolidation of competing railroads has gone on for fifty years both before and since the act of 1890. [275] If a thing restrains interstate commerce it is im- material how innocent the intent may be, and if it does not restrain it, it is immaterial how evil the intent may be. The question is does the agreement restrain trade or commerce. United States v. Freight Association, 166 U. S. 290, 341; Addyston Case, supra. If an action be lawful its purpose is immaterial. This is elementary. Phelps v. Nowlen, 72 N. Y. 39. 45 ; Kiif v. Youmans, 86 N. Y. 324, 329 ; Wood v. Amory, 105 N. Y. 278, 281 ; Lough v. Onterhridge, 143 N. Y. 271, 282; Adler v. Fenton, 24 How. 407, 410; Vmted States V. Greenhnt, 51 Fed. Rep. 205, 211; In re Greene, 52 Fed. Rep. 104, 111; Randall v. Eazleton, 12 Allen, 412, 418; Braekett v. Griswold, 112 N. Y. 454; United States v. Isham, 17 Wall. 496; Dkkerman v. Northern Trust Co,, 176 U. S. 181 ; Fahm£y v. Kelly, 102 Fed Rep. 403 ; Mogul S, S. Co. V. McGregor, App. Cas. (1802) 25, 41; AUen v. Flood, L. R. App. Cas. (1808) 1; Bohn Mfg. Co. v. HoUis, 54 Minnesota, 223, 234. The opinion of the court below proceeds upon the proposition that a combination of two competitors is a re- straint of trade because it lessens competition. This is error. The Trans-Missouri, Joint Traffic and Addyston cases prove NORTHERN SECURITIES CO. V. UNITED STATES. 411 Brief of Mr. Griggs for Nortliern Securities Company. only that a contract restraining rival companies from com- peting is a restraint of trade. No such agreement exists in this case. The law does not require competition. The busi- ness of a rival may be purchased for the purpose of being rid of his competition. Gamble v. Queens County Water Co., 123 N. Y. 91, 104; Diamond Match Co. v. Roeher, lOG N. Y. 473 ; Rafferty v. Buffalo City Gas Co., 37 N. Y. App. Div. 618, 621; Trenton Potteries Co. v. Olyphant, 56 N. J. Eq. 680 ; Oakdale Co. v. Garst, 18 R. I. 484. The Securities Company is neither alleged nor proved to have done or omitted anything which can be construed as a violation of the Anti-Trust Act. If it has the power to sup- press or diminish competition it has not used it and if the act has been violated at all it must be due to the mere exist- ence of the Securities Company, to its powers as applicable to railway com- [276] panics or to something illegal in its origin. The illegality can not be sustained under the deci- sions of this court. Mr. John W. Griggs for appellant, Northern Securities Company, submitted a brief : The acts of the defendants do not constitute a contract, combination, or conspiracy in restraint of interstate trade or commerce within the meaning and prohibition of the Sher- 1 man Act. The United ^States rests its case upon two alle- gations : First. That the Northern Securities Company has been formed and has taken over a majority of the shares of the two railroad companies in the manner indicated by the plead- ings and proofs. Second. That the intended and the necessary effect of those acts is to destroy competition between the two railroad com- panies. The answer of the defendants is : / First. That the formation of the Northern Securities Com- pany and the acquirement by it of stock of the two railroad companies was a lawful transaction, governed solely by local state laws, and not in contravention of any pro^asion of the J^ederal Constitution or statutes. Second. That the acts of the defendants were all done in 412 193 UNITED STATES REPORTS, 276. Brief of Mr. Griggs for Northern Securities Company. good faith, without any purpose to destroy competition or re- / strain trade. To put it more concisely: The defendants contend that what they have done is lawful, has no direct effect in restraint of competition, and was not intended to restrain competition. The creation of railway corporations; the form of their corporate organization ; the character and qualities of their corporate stock; the routes which their roads shall take, whether they may connect with other roads running in the same general direction, whether they may or may not con- solidate with parallel lines, or operate parallel lines through different portions of a State— all these matters are, and always have been, subjects of state jurisdiction. Louisville <§ Nashville R, Co. v. [277] Kentucky, 161 U. S. 677, 702; PearsaU v. Great Northern, 161 U. S. 646; Lake Shore d Mich. Southern v. Ohio, 173 U. S. 285 ; Missouri, Kansas c5 Texas v. Haber, 169 U. S. 613 ; Cleveland c&c. Railway v. Illinois, 177 U. S. 514. The lower court did not find as matter of fact that the defendants had in any way restrained trade or commerce; or I that they had attempted so to do; or that they had con- 4 tracted or combined so to do. What the court did find and decide was, that the defendants had done certain things whereby they had obtained the power to suppress competition between two interstate carriers who own and operate com- , peting and parallel lines of railroad. This idea is repeated J agam and again throughout the opinion. It speaks of " a direct restraint of interstate conmierce because it would have placed in the hands of a small coterie of men the power to suppress competition between two competing interstate carriers." To say that one person, or several persons, cannot acquire or own a majority of the stock of two competing railroad corporations because they are thereby occupying a vantage ground from which they can, if they choose, effect an agree- I ment or understanding between the two companies in re- ^ straint of competition, is to say that the power to commit a crime is equivalent to its actual commission. ^ The acts of the defendants being prima facie lawful, the burden of proof is upon the Government to show that they NORTHERN SECURITIES CO. V. UNITED STATES. 413 Brief of Mr. Griggs for Nortliern Securities Company. , were, as the Attorney General charges, not bona fide, but a mere formal device intended to defeat the provisions of the Sherman Act. Joint Traffic, Trans-Missouri, Addyston Pipe Cases; United States v. Hopkins, 171 U. S. 578; United States V. Workingmen^s Amalgamated Council, 54 Fed. Rep. 994; State v. Shippers Compress c& Warehouse Co., 67 S. W. Rep. (Texas) 1049; S. C, affirmed, 69 S. W. Rep. 58. / Any restraint of trade or commerce which may result from the acts done by the defendants is indirect and incidental only, and not covered by the act. In every instance where this court has had occasion to pass upon the meaning of the act [278] it has carefully distinguished between acts which directly restrain commerce, and acts which only indirectly or incidentally have that effect. United States v. E. C. Knight Co., 156 U. S. 1, 12, 16; Joint Traffic Case, 171 U. S. 505, 566 ; United States v. Ches. <& Ohio Fuel Co., 105 Fed. Rep. 93 ; .S'. C, affirmed, 115 Fed. Rep. 610. If the Sherman Act can be so construed as to forbid the V sale of stock in two competing railroad corporations to one purchaser, then that act is an attempted interference on the part of Congress with transactions which are wholly within the control of the States of the Union, and in that respect the act is unconstitutional. As to the extent of state legislative power over the instru- mentalities of interstate commerce, see Louisville (& Nashville Case, 161 U. S. 677, 702; C. <& C. Bridge Co. v. Kentucky, 154 U. S. 204. Regulation of commerce, to be constitutional, must be confined to commerce itself, and cannot reach out to those things which not being designed as agencies of such commerce, or not being actually enjoined therein, may yet have an indirect or ultimate relation thereto. Such a construction of the Constitution would vest in Con- gress the regulation of all branches of productive business from their first beginnings. License Tax Cases, 5 Wall. 462. The fact that an article was manufactured for export to another State does not make it an article of interstate com- merce. Coe V. Errolj 116 U. S. 517; Kidd v. Pearson. 128 U. S. 1. The creation of state corporations and the regulation of the sales of corporation shares belong to the class of business -.,:j 414 193 UNITED STATES REPORTS, 278. Brief of Mr. Griggs for Nortliern Securities Company. afairs over which the States have exclusive jurisdictian. United States v. Boyer, 82 Fed. Eep. 425 ; Clark v. Central E, R. <& Banking Co. of Georgia^ Jackson, J., June 30, 1893, U. S. Circuit Court, Savannah; In re Greene^ 52 Fed. Rep. 104, 112; Pearsall v. Great Northern, 161 U. S. 646, 671; Rogers v. NashviUe d;c, Ry, Co,, 92 Fed. Rep. 312. But assuming that Congress may, under the commerce clause of the Constitution and as a regulation of commerce, / restrain [279] the States in the exercise of their prerogatives from permitting two or more corporations to which the States have given life from merging, yet such a purpose on the part of the Government ought to be clearly and distinctly expressed, and not be found in the judicial interpretation of doubtful language contained in a penal statute. J So that, if it be argued that Congress may forbid the sale of one railroad to another, it is enough to reply that it has never done so; that the Sherman Act does not expressly, or by any just interpretation, do so. The Sherman Act is a penal statute ; every act which may be prevented by injunctive order would, if committed and proven, subject the parties to criminal prosecution. The rule of strict construction must be therefore applied. United States V. Whittier, 5 Dillon, 35; United States v. Sheldon, 2 Wlieat 119 ; United States v. Harttoell, 6 Wall. 385 ; United States V. Shack ford, 5 Mason, 445 ; United States v. Clayton, 2 Dillon, 219; United States v. Garretson, 42 Fed. Rep. 22; Dwarris' Stat. 641 ; Euhhard v. Johnstone, 3. Taunt. 177. y Acquiescence by the Government for more than eleven years in the actual merger and consolidation of many im- portant parallel and competing lines of railroads and steam- ships engaged in interstate and international commerce, has given a practical construction to the act of July 2, 1890, to the effect that it was not intended to forbid, and does not forbid, the natural processes of unification which are brought about under modem methods of lease, consolidation, merger, com- munity of interest, or ownership of stock. As held in 1803, in Stuart v. Laird, 1 Cranch, 299, where the right of a justice of the Supreme Court to sit as a Circuit Judge was chal- lenged, upon the ground that, not having been appointed as such, and not having been distinctly commissioned as such, NORTHERN SECURITIES CO. V. UNITED STATES. 415 Brief of Mr. Grover for Great Nortliern Railway. the act of Congress of 1789, under which the Circuit Court was originally instituted, was unconstitutional. " Practice and acquiescence for a period of several years, commencing with the organization of the judicial system, [280] affords an irresistible answer, and has indeed fixed the construction. It is a contemporary interpretation of the most forcible nature. This practical exposition is too strong and obstinate to be shaken or controlled. Of course, the question is at rest, and ought not to be disturbed." This is a just principle of jurisprudence, founded upon the very highest considerations of public equity. It has frequently been invoked and enforced in order to prevent the disturbance and uns(»ttlement of important affairs which have been transacted in reliance upon a general public ;ind private belief that the law did not include them in its terms of condemnation. ^ But we venture the assertion that no case has ever arisen in which a disregard of that salutary rule of construction would result in such widespread and irremediable injury to vested interests as this. Not that any decree which this court could make against these defendants would particularly or radically affect their property interests, but because the de- cision once made that the Sherman Act applies to such trans- actions as the purchase, lease, merger or consolidation of parallel lines of transportation, would render every such transaction for the last thirteen years unlawful, and require the Attomev General, in the due discharo:e of his dutv, to i bring suit for dissolution and injunction. Unnumbered mil- ^ lions of dollars of capital stock and bonds issued upon rail- road mergers and consolidations would be tainted with ille- gality, or affected in value by the withdrawal of the property against which they were issued. Purchases of stock in underlying roads long ago made and paid for would be un- settled, and financial chaos would result. Mr, M. D, Grover for appellant, Great Northern Railway Company, submitted a brief : The findings of fact upon which the decree rests are con- trary to the evidence. This is made clear by separating the findings and considering the evidence bearing on eadi v/ 416 193 UNITED STATES BEPOBTS^ 281. Brief of ^rr. Grover for Great Northern Railway. [281 1 separately. There was no desire or intent to evade the Anti-Trust Act, to restrain competition, to monopolize trade, to inflate securities, water stock, or create fictitious capital. J I. It is not denied that the Northern Securities Company is a corporation lawfully organized under the laws of the State of New Jersey, with charter power to purchase and sell securities of all kinds, and to purchase, hold, vote and sell all the shares of stock of any single corporation or of Ifion-competing corporations. Its right to purchase, hold, vote and sell all the stock of the Great Northern Railway Company alone, or the Northern Pacific Railway Company alone, is not denied. II. The organization of the Company was the result of a plan to form an investment or holding company, which had its inception years before its articles were filed, among not exceeding ten large holders of Great Northern stock, who had taken an active interest in the policy of the company and its administration, but who never had held in the aggregate f to exceed one-fourth of its outstanding stock. It was thought ' that if a company were formed to which they might sell their individual holdings, their shares would be likely to be held together, so long as a majority of the holding company should wish, and that this would tend to give stability to the policy of the company, be of aid to it in its financial opera- tions, and maintain the value of its investments. III. The Burlington purchase was made to enlarge trade, not to restrain it; to increase competition, not to suppress it. At the time of the purchase it was not contemplated by either purchasing company or its shareholders that any alli- ance between the purchasing company or its shareholders was needed to preserve to each company its fair share of the ad- vantages secured by the purchase. J IV. At the time of the organization of the Securities Com- pany the Great Northern shareholders referred to owned about $30,000,000 of Great Northern stock, and $35,000,000 [282] of Northern Pacific common stock, having increased their holdings of the latter by purchases from J. P. Morgan & Oo. They did not control a majority of the shares of ^_ either of the defendant railway companies. In view of the fMp. NOBTHEBN SECUBITIES CO. V. UNITED STATES. 417 Brief of Mr. Grover for Great Northern Railway. injury apprehended to both companies, and their sharehold- ers, and the better to protect their interests in the future, against raids of adverse interests, the Great Northern share- holders referred to deemed it advisable that the holding company which they had considered should be organized, should have power to purchase, not only their own Great Northern and Northern Pacific shares, but also the shares of such other Great Northern and Northern Pacific share- ' holders as might wish to sell their stock to it, and also the shares of compaines already formed, and others that might be formed, for the purpose of aiding the traific operations of the Great Northern and Northern Pacific companies. V. At this time it was not expected by any of the persons concerned, that any Northern Pacific shares, except the $42,000,000 owned by them and by J. P. Morgan & Co. would be acquired by the proposed holding company. The organization of the company was not dependent on any agreement that it should acquire, nor upon the question of, a majority of the shares of either of the defendant railway companies. There was no agreement or understanding be- tween the Great Northern shareholders referred to, that they or either of them would undertake to influence any one of the other 1,800 Great Northern shareholders, or of the other 3,600 Northern Pacific shareholders, to sell their shares to the company. VI. The Great Northern shareholders referred to, upon the organization of the Northern Securities Company and the sale of their shares to it, parted with such stock control as they had in the Great Northern and Northern Pacific companies. They do not own to exceed one-third of the out- standing capital stock of the Securities Company. At the time of the trial the stock of the Securities Company was held by 1,800 [283] separate owners. The stock control of the Securities Company is, therefore, not in the eight or ten Great Northern shareholders referred to, but in the 1,790 other shareholders of the Securities Company, owning at least two-thirds of its outstanding shares. VII. Nothing has been done except the purchase by the 21220— VOL 2--07 M ^27 TcJ.O 193 UNITED STATES REPORTS, 283. Brief Of Mr. Grover f6r Great Northern Railway. Securities Company of a majority of the stock of the Great Northern and Northern Pacific companies. VIII. The Securities Company as owner of the stock so purchased may sell it or pledge it. It has made no agree- ment as to what it will do with it, or how it will vote it, or how it will dispose of the dividends received upon it. It is not a trustee of those from whom it received such shares, and owes them no duty or obligation respecting the shares, since they have no further interest in them. IX. It is not claimed or pretended that the defendant rail- way companies have entered into any contract or combina- tion in restraint of trade, or that either of them has done any- thing to restrain trade or in violation of law. It is not claimed that the Securities Company can restrain trade, ex- cept through the exercise of its right, as owner of the shares It purchased, to vote them at stockholders' meetings, in the election of a separate board of directors for each of the de- fendant railway companies; for the boards must be separate under the laws of the States of Minnesota and Wisconsin. / X. This suit was not brought to prevent or restrain the execution of a contract, or the forming of a combination, in restraint of trade, but to restrain the Securities Company from voting the stock it owns at stockholders' meetings, and from receiving dividends, thereon, thereby preventing 'pay- ment of dividends upon its own shares issued in payment for the shares it purchased, upon the ground that mere posses- sion of the votmg power of the shares, is an unlawful re- stramt and regulation of the interstate commerce of the defendant railway companies. ra?/i ^^® C^overnment has no financial interest in this suit. 12m] The only way in which the Securities Company could restrain the commerce of the two railway companies, is through the voting power of the shares it owns. If it had purchased the shares of only one of the companies, its right to vote such shares would not be questioned. Trade could not, within the contention of the Government, or the ruling of the court, be restrained by the Securities Company, should its voting powers be limited to the shares of one of the com- panies. The decree enjoins it from voting the shares of either company and from receiving dividends from either. '.. NORTHERN SECURITIES CO. V. UNITED STATES. 419 Brief of Mr. Groyer for Great Northern Railwaj. JThe effect of the decree is to deprive it of the means to pay {dividends upon its own stock whether issued in payment for /the stock it purchased, or issued for cash. Thus the decree /destroys the earning power of the stock of the Securities Company, a large majority of which is now held by over eighteen hundred bona fide holders in the usual course of business not parties to the suit. r The important questions are : 1. Does the commerce clause /of the Constitution of the United States confer upon Con- /gress jurisdiction to regulate the issue, sale and ownership of / the capital stock of corporations organized under the laws / of any one of the several States, or to inquire into the motives (^ of incorporators, or of the buyers or sellers of their shares? 2. Has Congress, under the commerce clause of the Con- stitution of the United States, power to forbid or regulate . the purchase or lease, by one railway company engaged in interstate commerce, of the railway of its competitor, or the purchase or lease by the owner of one ferryboat, stage coach or river steamboat, engaged in interstate trade, of the ferry- boat, stage coach or river steamboat, of a competitor, on the ground Ihat through such purchase or lease competition may be restrained, and commerce regulated ? 3. Is the unity of ownerehip through purchase, partner- ship, consolidation or lease, of a majority of the shares of competing corporations, engaged in interstate trade, a con- tract or combination in the form of trust or otherwise, for- bidden by the Anti-Trust Act, as in restraint of trade? / [285] 4. Is there anything in connection with the organ- ization of the Northern Securities Company, or its purchasers of stock, that in any way distinguishes its right to vote and receive dividends upon such stock from the right of any sin- gle interest, individual or corporate, to vote and receive divi- dends upon shares of competing corporations engaged in interstate trade, purchased in the ordinary course of business, or acquired by gift or inheritance ? . 5. This suit was brought under section 4 of the Anti-Trust Act, which gives the court jurisdiction to prevent and restrain violations of the act. Every violation of the act is criminal. The court is, therefore, given jurisdiction to pre- vent and restrain the commission of a crime. Months before \ i 420 193 UNITBB 8TATB8 KEPOBTS, 285. Brief of Mr. Orover for Great Northern Railway. J the suit was l^egim, the Securities Company had acquired a large majority of the shares of the defendant railway com- panies, from time to time, from hundreds of individual shareholders, who sold their holdings in good faith, and much of the stock so taken in payment therefor has since been sold and exchanged, and pa&sed through many hands, in the usual course of business. Does the Anti-Trust Act give the court jurisdiction to annul the purchases made by the Northern Se- curities Company, and compel a return of the shares it pur- chased! Payment for the shares it bought was made in^ts own stock in part only. It paid cash to the amount of over $40,000,000. The owners of such shares are changing from yday to day ; they are not before the court. The decree does not restrain a contract or combination in restraint of trade. It destroys or impairs the value of millions of dollars worth of property, owned by many hundreds of people who ac- quired their title in good faith and who are not parties to this suit. First. The commerce clause of the Constitution of the United States does not take away from the severjil States the right to authorize the formation of corporations, define their business, fix the amount of their capital or purchasing power, and regulate the issue, sale and ownership of their capital stock. As respects the purchase by one corporation of the shares [286] of another, the matter rests with the States which have created the corporations. Should unification of owner- ship of property in corporations proceed to such an extent as to be thought against public policy, it may be prevented by the several States, through limiting the power of corpora- tions, and restraining their right to engage in business. It has beeli the practice, since the infancy of railroads in this country, for one railroad company to purchase or lease the railroad of a competing company, or to acquire a majority of the shares of a competing company, or of two companies competing with each other, or to effect the consolidation of competing companies. This has been done without objection from anv branch of the Federal Government, and has invari- ably proven beneficial to the railway companies concerned, to their shareholders, and to the public. The extent to which this has been done appears in the record, and is shown by NOBTHERN SECURITIES CO. V. UNITED STATES. 421 Brief of Mr. Grover for Great Northern Railway. extracts from Poor's Manual and from the annual reports made by the Interstate Commerce Commission to Congress, from 1889 to 1900. And see the brief of Judge Young where this subject is discussed at length with proper reference to the record. Second. Unity of ownership of shares of competing cor- porations, engaged in interstate trade, does not restrain such trade, and is not forbidden by the Anti-Trust Act, nor is such unity of ownership a regulation of interstate commerce, and thus subject to exclusive Federal jurisdiction under the commerce clause of the Constitution. Joint Traffic, Trans- Missouri and Addyston Pipe Co. cases. There is a distinct difference between an agreement be- tween the owners of competing concerns, to divide territory, to restrain output, or to maintain prices, and the uncondi- tional sale of the property or business of one of them to the other, or of the property of business of both to another per- son. In the former case, the agreement in terms restrains competition in trade operations, between separate owners or establishments, or instrumentalities engaged in such opera- tions. The agree- [287] ment relates to the manner in which competitors shall conduct their business. If one com- peting concern buys the plant or business of its competitor, competition is not thereby directly restrained. The restraint in such case, if any, is merely an incident to the ownership of property, and the fact that there may be such a restraint does not forbid the acquiring of such ownership. By unity of interest output is not necessarily limited, prices are not necessarily increased. On the contrary, the public may be benefited, prices may be less by reason of greatly increased volume of business and less cost per unit of production. Third. The Anti-Trust Act is a penal statute and, as con- strued by the court below, it makes unity of ownership of a majority of the shares of competing corporations engaged in interstate trade, no matter how such ownership is acquired, criminal, because such ownership gives power to commit crime. It is conceded that such ownership, so far as it may control the policy of the corporations, can be exercised for a lawful 422 193 UNITED STATES REPOBTS, 287. Brief of Mr. Greyer for Great Northern Railway. purpose, for building up trade, increasing competition and re- ducing prices. It is not claimed or pretended that in the case under review trade has been restrained, yet the court below held that unity of ownership of a majority of the stock of the defendant rail- way companies was unlawful, and, therefore, criminal, be- cause such ownership has necessarily caused the doing of something that has not been done ; has necessarily restrained trade, though trade has not been restrained. Stated in another way, the court below decided that owner- ship by the Securities Company of a majority of stock of the defendant railway companies regulates the commerce of the companies, and though such commerce has in fact been so reg- ulated as to build up trade, increase competition and reduce prices, in law it has necessarily been so regulated as to re- strain trade, suppress competition and increase prices because through unity of ownerhip motive to compete has been de- stroyed. Tozer v. Vnited States, 4 I, C. C. Rep. 24G ; R. R, Co, V. Dey, [288] 2 I. C. C. Rep. 325; Schooner Paulina's Cargo v. Vnited States, 7 Cranch, 52, 61 ; United States v. Reese, 92 U. S. 214. Fourth. Trade has not been restrained through the exercise of the voting power of these stocks. The ruling that trade has been restrained, is contrary to the facts, and charges the individuals engaged in this transaction with a crime, that has not been committed nor intended. When this suit was begim, the shares of the Northern Se- curities Company were held by over eighteen hundred sepa- rate owners who had purchased them in good faith, in the usual course of business. The shareholders of the defendant railway companies, who were instrumental in organizing the Securities Company, have never owned to exceed one-third of its stock. The control of the Securities Company, so far as stock ownership can control it through the election of a board of directors, is not in the eight Great Northern shareholders who were concerned in the organization of the company, but in the seventeen hundred and ninety shareholders owners of more than two-thirds of its stock. The combination of which the court convicted the eight individual defendants, was not one by which they were to acquire control over the two rail- NOKTHEBN SECURITIES CO. V, UNITED STATES. 423 Brief of Mr. Grover for Great Northern Railway, way companies, for themselves, but one through which such control would necessarily be conferred upon the seventeen hundred and ninety other stockholders of the Securities Company. The ruling of the court that the possession of the voting power of a majority of the shares of the defendant railway companies by the Securities Company, necessarily restrains trade through suppressing competition, finds no support in facts. The boards of directors of both railway companies may be elected by the Securities Company. The executive officers of the two companies will be elected by these boards, and the ruling of the courts rests upon the proposition, that such boards and officers will be influenced, persuaded or coerced in such way, that they will lack their former incen- tive to compete for traffic, to obtain it from each other, and to underbid each other for the purpose of getting it; that they will enter [289] into contracts or in some way through con- cert of action, maintain higher rates than ought to be main- tained; in other words, that they will charge unreasonable rates, will not provide adequate facilities, nor extend con- struction of lines. The Northern Securities Company has no power or motive to restrain trade which any single owner of a majority of the shares of defendant railway companies would not have, and which the individual owners of the shares did not have, by lawful conference and concert of action, before they trans- ferred their shares to it. The defendant railway companies were hampered and placed at disadvantage with other transcontinental railways, as well as with ocean competitors by the want of sufficient direct connection with traffic centers offering the best markets for the products of the country along their lines, and with places of production and distribution from which their traffic must be supplied. Through the Burlington purchase they acquired permanent access to markets and sources of supply? instead of a temporary one resting upon joint rates subject to change at any time without regard to their interest. Having made the purchase and assumed the resulting joint and several obligations, it became a matter of the highest importance to each company that the burdens should be 4 424 193 UNITED STATES REPORTS, 280. Brief of Mr. Stetson and Mr. Willcox for Morgan and others, equally bome and the advantages equally shared. Through placing the ownership of a majority of the shares of both companies in the hands of a single owner, the benefits of the Burlington purchase became better assured than would be the case if the shares were held in many hands, and liable at any time to be sold to an intersst adverse to the building up of the business of the defendant railway companies and the country which their lines traverse. It has not been shown that the power of the defendant railway companies to restrain competition can affect more than three or four per cent of their intestate traffic, or that it has affected or can affect constructioii or extension of their I lines, or the amount or quality of their equipment. Through their [2901 ownership of Burlington shares, and by reason of the obligation assumed in paying for the shares, they have a common interest in building up the traffic of eacli in connec- tion with the Burlington Company. This connection became necessary to their prosperity, to the welfare of their patrons, and to the successful meeting of a worid-wide competition. What has been done was done, not to restrain competition, but to enlarge it. The unity of ownership of their shares has not restrained the commerce of either, and the extent to which such unity can restrain it, is as nothing compared with the great in- crease in volume of interstate and international commerce which was intended, and which will result from the carrying out of the enterprise of the two companies in the purchase of the Buriington stock, and the preservation of the pur- chase, and its benefits, by placing the stock of the railroad companies where it is less likely to become scattered and to pass under control of adverse interests, than it would be if held by many owners. Mr. Frands Lynde Stetson and Mr. David Willcox for ap- pellants, Morgan, Bacon and Lamont, submitted a brief : The transactions alleged are entirely lawful in their char- acter. They consisted merely in the organization of a lawful corporation of Xew Jersey, and in the sale to, and purchase by, it of property lawfully salable. All the acts were expressly authorized by law. The legal effect of the transaction has been that the owner of stock in one of the railway companies i NORTHERN SECURITIES CO. V. UNITED STATES. 425 Brief of Mr. Stetson and Mr. Willcox for Morgan and others. has sold the same to the Securities Company, and has re- ceived therefor stock of the Securities Company, which com- pany owns the stock not merely of one of the railway com- panies, but the stock of both. So that each individual who has transferred his property to the Securities Company has obtained therefor something entirely different — ^namely, an interest in a company holding stock of the other railway company as well. It is manifest that in the fullest possible sense this constituted a sale of the property. Berger v. U. S, Steel [291] Corp., 53 Atl. Rep. (N. J.) 68. The title passed for valuable consideration to a purchaser authorized to hold the property. Aside from the corporate form of the trans- action, the effect, too, was that each stockholder in one of the railway companies transferred an interest in his holdings to every other such stockholder. These transactions being lawful are not affected by allega- tions as to the motive which actuated them. As the means employed were lawful, the only question must be whether the result accomplished was unlawful. Pettihone v. United States, 148 U. S. 197, 203 ; United States v. I sham, 17 Wall. 496; Adler v. Fenton, 24 How. 407, 410; Kiif v. Youmans, 86 N. Y. 324, 329; cited with approval in Connolly v. Union Seiver Pipe Co,, 184 U. S. 540, 546; Randall v. Hazleton, 12 Allen, 412, 418 ; Dickerman v. Northern Trust Co,, 176 U. S. 181, 190; Strait v. National Harrow Co., 51 Fed. Rep. 819; Phelps V. Nowlen, 72 N. Y. 39, 45 ; Wood v. Amory, 105 K y! 278, 281 ; Loiigh v. Outerhridge, 143 N. Y. 271, 282 ; National Assn. V. Cnmming, 170 X. Y. 315, 326, 340; Mogid Steamship Co. V. McGregor, App. Cas. 1892, pp. 25, 41, 42; Allen v. Flood, L. R. App. Cas. 1898, p. 1; Pender v. Lushinqton, L. R. 6 Ch. Div. 70, 75. An intent to violate the Anti-Trust Act, and therefore to commit a crime, could not in any case be inferred, but must be actually proved. No indirect or remote effect of these lawful transactions upon competition between the railway companies could bring them within the Federal Anti-Trust Act. The mere fact that a contract has the effect of restraining trade or suppressing competition in some degree does not render it injurious to the public welfare and thus bring it I 426 193 UNITED STATES REPORTS, 291. Brief of Mr. Stetson and Mr. Willcox for Morgan and others. within the police power. Oregon Co. v. Wimor^ 20 Wall. 64; Gihhs V. Gas Co,^ 130 U. S. 396 ; Hyer v. Richmond Co,, 168 U. S. 471, 477, affirming, 80 Fed. Rep. 839; Contimntal Ins. Co. V. BoQTd, 67 Fed. Rep. 310; Diamond Match Co. v. Roe- ler, 106 N. Y. 473; Hodge v. Sloan, 107 N. Y. 241; Leslie v. LoriUard, 110 N. Y. 519; Tode v. Gross, 127 N. Y. 480; Mat- thews V. Associated Press, 136 [292] N. Y. 333; Lough v. Ovterhridge, 143 N. Y. 271, 145 N. Y. 601 ; Oakes v. Catta- raugus Co., 143 N. Y. 430; Curran v. (7a^w, 152 N. Y. 33, 36; Watertown Co. v. Pool, 51 Hun, 157, affirmed 127 N. Y. 485 ; Central Shade Roller Co. v. Cushman, 143 Massachusetts, 353. In United States v. E. C. Knight Co., 156 U. S. 1 ; Hopkins V. United States, 171 U. S. 578 ; Anderson v. United States, 171 U. S. 604, and Addyston Pipe S Steel Co. v. United States, 175 U. S. 211, 246, the Anti-Trust Act concerns only those agreements of which the direct and immediate effect is to restrain commerce. The transaction now under review was lawful, and, however considered, was not prohibited by the Anti-Trust Act, because such restraint upon interstate trade or commerce, if any, as it might impose, would be indirect, collateral and remote. This act is a criminal statute pure and simple and its mean- ing and effect as now determined must also be its meaning and effect wlien made the basis of a criminal proceeding. Con- versely, the act should not receive such construction only as it would receive upon the trial of those indicted for violating its j)rovision. Criminal intent is essential to constitute a crime, and the testimony bearing thereon is always a question for the jury. People v. Wiman, 148 X. Y. 29, 3?,: People v. Flack, 125 ^.Y.^M,ZU. Regardless of all other considerations presented on this argument, the judgment under review must be reversed unless it is to be established as matter of law that the mere possession of the power to control all the means of transpor- tation of two competing interstate commerce carriers oper- ates as the effectual exercise of such power and directly affects interstate commerce, notwithstanding the fact that such power has never been exercised by its possessors, and the further fact that it is perfectly practicable for them to exer- KOBTHEBN SECUBITIES 00. V. UNITED STATES. 427 Brief of Mr. Stetson and Mr. Willcox for Morgan and others. cise it in a perfectly proper way. Support for the proposi- tion now under review was sought below in the Pearsall case, 161 U. S. 646, 674, the Joint Trafjlc case, the Trans-Missouri case and the Addyston [293] Pipe case. The proposition, however, can be deduced from these cases only by what to us seems violent distortion. As to the case first cited, see Minne- sota V. Northern Securities Co., 123 Fed. Kep. 692, 705. In the other cases and also in cases decided by the Circuit Court and Court of Appeals, the combinations had been formed by corporations or individuals engaged in business independently of one another and they had agreed to regulate their prices or mode of carrying on their business by the rules of the combination. United States v. Jellico Coal Co., 46 Fed. Rep. 432 ; United States v. California. Coal Dealers Association^ 85 Fed. Rep. 252; Chesapeake Fuel Co. v. United States, 115 Fed. Rep. 610; Gihhs v. McNeeler, 118 Fed. Rep. 120. It has been held repeatedly that such restraints as result from the sale or the purchase of property are not within the provisions of anti-trust statutes. Indeed, it is the settled law that the transfer of a business is not illegal because it restrains trade, even by an express covenant. Oregon Co. v. Winson, 20 Wall. 64; Union Co. v. Connolly. 99 Fed. Rep. 354, aff'd 184 U. S. 540; Fisheries Co. v. Lennen, 116 Fed. Rep. 217; Harrison v. Glucose Co., 116 Fed. Rep. 304; Hodge v. Sloan, 107 N. Y. 244; Leslie v. Loril- lard, 110 N. Y. 519; Tode v. Gross, 127 N. Y. 480; Oakes v. Cattaraugus Co., 143 N. Y. 430; Watertown Co. V. Pool, 51 Hun, 157, approved 127 N. Y. 485; Wood v. Whitehead Co., 165 N. Y. 545 ; Walsh v. Dwight, 40 App. Div. (N. Y.) 513; Park (& Sons Co. v. Druggists^ Asso- ciation, 54 App. Div. (N. Y) 223; S. C, 175 N. Y. 1; Diamond Match Co. v. Roeher, 106 N. Y. 473. So, too, it has been ruled precisely that the formation of associations or corporations is not illegal, because the result will be to restrain competition. Hopkins v. United States, 171 U. S. 578; Anderson v. United States, 171 U. S. 604 United States Vinegar Co. v. Foehrenhach, 148 N. Y. 58 Rafferty v. Buffalo City Gas Co., 37 App. Div. (N. Y.) 618 Gamble v. Queens County Water Co., 123 N. Y. 91, 104; In 428 193 UNITED STATES REPOBTS, 293. Brief of Mr. Stetson and Mr. Willcox for Morgan and others. ' re Greme^ 52 Fed. Kep. 104; United States v. Greenhut^ 51 Fed. Eep. 205; In re Terrell, 51 Fed. [294] Rep. 213; Trenton Potteries Co. v. Olyphant, 58 N. J. Eq. 507 ; Mogul S, S. Co, V. McGregor, App. Cas. (1892) 25; Lough v. Outerhndge, 143 N. Y. 283; State v. Continental Tobacco Co,, 75 S. W. Rep. (Mo.) 737. It is YQYj doubtful whether in any case the second section of the act applies to railroads. Prof. Langdell, 16 Harvard Law Review, 545, June, 1903; Mr. Thorndike, Pamphlet, 1903, The Merger Case, p. 32. In the Joint Traifie cases the court did not specifically define " monopoly," but said that it had the meaning given to it in the body of the Anti-Trust Act, which was not in- volved in the Pearsall case, and the decision there cannot now be urged upon this court as a limitation upon its free- dom of construction of the statute. See Laredo v. Inter- national Bridge Co., 66 Fed. Rep. 246. Obviously, a consolidation of two railroads authorized by the laws of every State which they enter would not be condemned as constituting a monopoly; nor would a pur- chase of all the stock of one road by a competing road similarly authorized be so condemned; nor would a com- bination to induce the legislatures of the several States to authorise such a consolidation or such a purchase. It cannot be that, in prohibiting monopolies, the Congress intended to forbid these familiar processes of railroad amalgamation, and if, when authorized by state law, the consummated act is not a monopoly, it would not be such merely because it has not been so authorized. The construction claimed would make the statute uncon- stitutional because it would deprive the Securities Company of its property without due proceas of law. Corporations are entitled to the same constitutional protection of their property rights as natural persons. Minneapolis Railway Go. V. Beckwith, 129 U. S. 26; Carrington Turnpike Co. Y. Sanford 164 U. S. 578, 592; Gulf Co. v. Ellis, 165 U. S. 150, 154; Lake Shore Co. v. Smith, 173 U. S. 684, 690; County of Santa Clara v. Southern Pacific R. R. Co., 18 Fed. Rap. 385, 404; County [295] of San Mateo v. South- ern Pacific R. R. Co., 13 Fed. Rep. 722, 745, 760. NOKTHERN SECURITIES CO. V. UNITED STATES. 429 Brief of Mr. Stetson and Mr. Willcox for Morgan and others. This constitutional provision protects the right to acquire property — equally with the right — to hold the same after it has been acquired. Holden v. Hardy, 169 U. S. 366, 391: State V. Goodwill, 33 W. Va. 179 ; State v. Juloic, 129 Mis- souri, 163, 173; Knight Case, 156 U. S. 1. The Pearsall Case, 161 U. S. 646, distinctly recognizes that a natural person would be entirely at liberty to buy all the shares which his means permitted of the stock of the North- ern Pacific Railway Company and the Great Northern Rail- way Company. The State creating a corporation might limit its power in this respect, but Congress had no such gen- eral authority to cut down the powers granted by the States to their corporations, merely because they are artificial in- stead of natural persons. Therefore, it is obvious that a cor- poration having authority by its charter to make such pur- chases cannot, merely because it is a corporation, be pre- vented from so doing without depriving it of that right without due process of law. As construed and applied by the Circuit Court the Anti- Trust Act is unconstitutional, in that it discriminates be- tween persons in the matter of property rights and privileges on grounds that are purely arbitrary and are without justi- fication in reason. The power to suppress competition between two competing interstate railroad companies being always existent and under the theory of the Circuit Court always attaching to a majority of the shares of both, whether owned by one person or by several, the Anti-Trust Act, if understood as intended to do away with such power, should be enforced so as to pre- vent any one person, as much as any two or more persons, from acquiring stock in both of such competing companies. If as construed by the court below, the Anti-Trust Act arbitrarily and without reason discriminates between persons in the matter of their property, rights and privileges, the act [296] is beyond the power of Congress as clearly as it would be beyond the power of any state legislature. " Liberty," as used in the Fifth Amendment to the Consti- tution means not merely bodily liberty— freedom from phys- ical duress, but in effect comprehends substantially all those personal and civil rights of the citizen which it is meant to *k^J im UNITED STATES REPOBTS, 296. Brief of Mr. Stetson and Mr. WIllcox for Morgiin and others. place beyond the power of the general government to destroy or impair. Slmightei' Emise Oases, 16 Wall. 36, 122, 127 ; Mmin V. lUinmSj 94 U. S. 113, 142; People v. Walsh, 117 N. y. 60; Butchers' Union Co, v. Crescent Co. Ill U. S. 746; AUgeyer v. Louisiana, 165 U. 8. 578 ; United States v. Joint Traffic Association, 171 U. S. 505, 572; Addyston Pipe d' Steel Co, V. United States, 175 U. S. 211, 228; Bertholf v. O'ReUly, 74 N. Y. im ; In re Jacobs, 98 N. Y. 98 ; People v, GUlson, 109 N. Y. 389; People v. King, 110 N. Y. 418; God- vharles v. Wigeman, 113 Pa. St. 431. And see Eegina v. Druitt, 10 Cox C. C. 592, 600. It follows that, as used in the Fifth Constitutional Amend- ment, *' liberty " includes equality of rights under the law and secures citizens similarly situated against discriminations between them which are arbitrary and without foundation in reason. United States v. Criiikshank, 92 U. S. 542, 554 ; Yick Wo V. Hopkins, 118 U. S. 356, 369; Gnlf, Colorado <& Santa Fe Ry. Co, v. EUis, 165 U. S. 150, 160. Hence, the principles affirmed and acted upon by this court in applying the Fourteenth Amendment to state legislation, are equally applicable to legislation by Congress, and, as con- strued by the court below, the Anti-Trust Act is invalid as trespassing upon the " liberty " of citizens, by denying them equality of rights and discriminating between them in the matter of their property rights, arbitrarily and without rea- son. Cotting v. Kansas City Stock Yards, 183 U. S. 106; Connolly v. Union Sewer Co., 184 U. S. 540; Earlier v. Con- nolly, 113 U. S. 27, 31. As construed and applied by the Circuit Court, the statute is unconstitutional because without due process of law, it [207] would deprive these defendants and all others who sold to the Securities Company of their property. If there were any prohibitions on the companies it would not apply to their stockholders. A corporation and its stockholders are different entities. Pnllman Co, v. Missouri Pacific, 115 U. S. 587; Watson v. Bonfils, 116 Fed. Kep. 157; American Pre- serves Co, v. Morris, 43 Fed. Rep. 711; Electric Co, v. Jamaica Co, 61 Fed. Rep. 655, 678. Any effort to limit the right to sell necessarily would de- prive these defendants of their property without due process NORTHEBN SECURITIES CO. V, UNITED STATES. 481 Argument of Attorney-General for United States. of law. Cleveland Co. v. Backus, 154 U. S. 439, 445; People ex rel, Manhattan Co. v. Barker, 146 N. Y. 304, 312 ; People ex rel. Manhattan Institution v. Otis, 90 N. Y. 48, 52; H olden V. Hardy, 169 U. S. 366, 391 ; People v. Marx, 99 N. Y. 377, 386 ; People v. Gillson, 109 N. Y. 389 ; Forster v. Scott, 136 N. Y. 577; Ingersoll v. Nassau Co., 157 N. Y. 453, 463; Purdy V. Erie R. R. Co., 162 N. Y. 42, 49 ; City v. Collins Baking Co.. 39 Ajjp. Div. (N. Y.) 432; Rochester Turnpike Co. v. Joel, 41 App. Div. (N. Y.) 43; People v. Meyer, 44 App. Div. (N. Y.) 1; Ingraham v. National Salt Co., 72 App. Div. (N. Y.) 582; Janesville v. Carpenter, 77 Wisconsin, 288, 301. If complainant's contention should be sustained, the right of an owner of property to sell the same would be dependent upon what the courts at any future time might hold to be the intention of the purchaser in buying the property. Such a result would seriouslj^ impair the liberty of the owner, and the value of his property. Wliatever view be taken of the character of the transaction the decree of the Circuit Court transcended the authority of the court under the statute, which was the sole ground and source of its jurisdiction. Mr. Attorney General Knox, with whom Mr. William A, Day, Assistant to the Attorney General, was on the brief, for the United States, appellee: The bill was filed by the United States to restrain a viola- tion [298] of the Anti-Trust Act of July 2, 1890, 26 Stat. 209; the defendant. Northern Securities Company, is a cor- poration organized under the general laws of New Jersey: the two raihvay companies are common carriers engaged in freight and passenger traffic among the several States and with foreign nations; the Great Northern was chartered by the State of Minnesota and the Northern Pacific Railway Company operates under a Federal franchise originally granted to the Northern Pacific Railroad Company, and in taking over that franchise it not only became invested with the rights and privileges incident thereto, but also became charged with the duties, obligations and conditions which Congress attached to the granting thereof. The Northern Pacific Railroad Company was the constant concern of Con- 432 193 UNITED STATES REPORTS, 298. Argument of Attorney-General for United States, gress. See Act of July 2, 1864, Res. May T, 1866, extending time for completion ; Act of June 25, 1868, relative to filing reports ; Joint Resolution, July 1, 1868, extending time for completion; Joint resolution of March 1, 1869, allowing issue of bonds; Joint Resolution, April 10, 1869, granting right of way; Resolution of May 31, 1870, authorizing issue of bonds; act of September 29, 1890, forfeiting certain granted lands; act of February 26, 1895, providing for classification of mineral lands; act of July 1, 1898, granting lands in lieu of those taken by settlers. The individual defendants were, prior to November 13, 1901, large and influential holders of the stock, some of one raihvay company and some of both companies. The two rail- roads are practically parallel for their entire length; each system runs east and west through Minnesota, North Dakota, Montana, Idaho and Washington ; each connects with steam- ers on Lake Superior running to Bulfalo and other eastern points and at Seattle with lines of the steamships engaged in trade with the Orient. The lower court found that the roads " are, and in public estimation have ever been regarded as, parallel and competing." The testimony in this case estab- lishes that fact which is also res judicata, Pearsall v. Great Nortliem Railway Co,, 161 U. S. 646, and even if the roads only competed for [29d] three per cent of their interstate business they w^ould be competing lines. It has been the ever present aim of those dominating the policy of the Great Northern and the Northern Pacific, during the past few years, to bring about a community of interest or some closer form of union to the end that the motive from which competition springs might be extin- guished. On at least three prior occasions Mr. Hill and Mr. Morgan and their associates acted in concert in trans- actions affecting both roads: the attempted transfer of half the stock of the Northern Pacific to the Great North- ern in exchange for a guarantee of the bonds of the North- ern Pacific which was held to be violative of the laws of Minnesota, Pearsall v. Great Northern Ry. Co,, 161 U. S. 646; the joint purchase of the Burlington in 1901; in the events leading up to the panic of May, 1901. After the refusal to admit the Union Pacific to an interest in the NORTHERN SECURITIES CO. V. UNITED STATES. 433 Argument of Attorney-General for United States. Burlington purchase, those in control of the Union Pacific attempted to acquire control of the Northern Pacific and as soon as Mr. Hill and Mr. Morgan heard of this attempt they reached an understanding to oppose it in concert, and this resulted in the threat to retire the preferred stock of the Northern Pacific, and the subsequent conference at which the plan announced in the statement of June 1, in the Wall Street Summary, was arranged. The testimony of defendants shows that the incorporation of the Securities Company, and its acquisition of a large majority of the stock of both railway companies were the designed results of a plan or understanding between the defendants Hill and Morgan and their associates, which was carried out to the letter by the parties thereto. The facts, as the Gov- ernment asserts them, are recapitulated in the opinion of the Circuit Court. On the facts as proved the Government maintains that a combination has l)een accomplished by means of the Securities Company which is in violation of § 1 of the act of July 2, 1890; that the defendants have monopolized or attempted to monopolize a part of the interstate or for- eign conmierce of the United [300] States and that if either result has been accomplished, the relief granted by the Cir- cuit Court was authorized by law. The contention as to whether the Anti-Trust Act is or is not a crimainl statute is not material. Nor was it in the Joint Traffic Case, 171 U. S. 505. The primary aim of Congress in passing the act was not to create new offenses but to pronounce and declare a rule of public policy to cover a field wherein t\\Q Federal government has supreme and exchisive jurisdic- tion. As the United States has no common law, contracts in restraint of trade would not be repugnant to any law or rule of policy of the United States in the absence of a statute, and the controlling purpose of the act was to de- clare that the public policy of the nation forbade contracts, combinations, conspiracies, and monopolies in restraint of interstate and international trade and commerce, and the jurisdiction conferred upon courts of equity to restrain violations of the act was intended as a means to uphold 21220— VOL 2—07 M 2& 434 193 UNITED STATES KEPORTS, mO, Argument of Attorney-General for United States. and enforce' the principle of public policy therein asserted, not as a means to prevent the commission of crimes. United States V. Tram-Mo. Freight Assn., 166 U. S. 290, 342. If the Anti-Trust Act is a criminal statute, it is also in . the highest degree a remedial statute; as such it is invoked in the case at bar, and as such it ought to be construed liberally and given the widest effect consistent with the language employed. It ought not to be frittered away by the refinements of criticism. Broom's Legal Maxims, 5th Am. ed., 3d London ed., 80; Potter's Dwarris on Stat.' and Const. 231, 234; Pierce and Hopper, Str. 253. It makes no difference in the application of these rules that the statutes have a penal as well as a remedial side. Ch. Prac. 215. A statute may be penal in one part and remedial in an- other part. But in the same act a strict construction may be put on a penal clause and a libsral construction on a remedial clause. Sedgwick on Construction of Statutory and Constitutional Law, (2d ed.) 309, 310; Dwarris on Statutes, 653, 655 ; H7/de v. Oogan, 2 Doug. 702. [301] The Anti-Trust Act was purposely framed in broad and general language in order to defeat subterfuges de- signed to evade it. It is framed in sweeping and compre- hensive language which includes every combination, regard- less of its form or structure, in restraint of trade or commerce among the several States or with foreign nations, and every person, natural or artificial, monopolizing, attempting to monopolize, or combining with any other person to monopo- lize any part of such trade or commerce. The form or framework is immaterial. Congress, no doubt, anticipated that attempts would be made to defeat its will through the " contrivances of powerful and ingenious minds," and to meet these it used the broad and all-embracing language found in the act; and it is in this light that that language is to be construed. And the device of a holding corporation for the purpose of circumventing the law can be no more effectual than any other means. Noyes on Inter- corporate Eelations, § 393. This court has decided that this act applies to common carriers by railroad, as well as all other persons, natural or NORTHERN SECURITIES CO. V. UNITED STATES. 485 Argument of Attorney-General for United States. ailificial. Trans-Missouri Case^ 166 U. S. 290. The words in restraint of trade as used in the act extend to any and all restraints whether reasonable or unreasonable, partial or total, and there are peculiar reasons why this applies to rail- road corporations. In exercising its powers over commerce Congi-ess may to some extent limit the right of private contract, the right to buy and sell property, without violating the Fifth Amend- ment. It may declare that no contract, combination, or monopoly which restrains trade or commerce by shutting out the operation of the general law of competition shall be legal. Trans-Missoim Case, supra: Joint Traffic Case, su- pra; Addyston Pipe Co. Case, 175 U. S. 211. When its natural effect is to stifle, smother, destroy, pre- vent, or shut out competition, the agreement or combination is in restraint of trade or conmierce and illegal under sec- tion 1 of [302] the act if in interstate or international trade or commerce. Trans-Missouri Case, supra. "To prevent or suppress competition" and "to restrain trade" are, in fact, often used by judges as convertible terms to express one and the same thought. Mogul S. S. Co. V. McGregor, L. K. App. Cas. (1892), 25, was decided upon common law principles, there being no statute, such as the Federal Anti-Trust Act, making it un- lawful and criminal to enter into agreements or combina- tions in restraint of trade. Both the Court of Appeal and House of Lords held that the action could not be maintained because, even if it were in restraint of trade, an agreement in restraint of trade was not unlawful at common law in the sense that it furnished cause for a civil action by one damaged by it, but only in the sense that it was void and unenforceable if sued on. The Government does not claim that ordinary corporations and partnerships formed in good faith in ordinary course of business come within the prohibitions of the act because incidentally they may to some extent restrict competition, but those where the corporation or partnership is formed for the purpose of combining competing businesses. The act embraces not only monopolies but attempts to monopolize. The term monopoly as used by modern legislators and judo-es mi UNITED STATES BEPORTS, 302. Argument of Attorney-General for United States. signifies the combining or bringing together in the hands of one person or set of persons the control, or the power of con- trol, over a particular business or employment, so that com- petition therein may be suppressed. People v. Chicago Gas Trust Company, 130 Illinois, 294; People v. North River Sugar Refving Co.. 54 Hun (N. Y.), 377; United States v. E, C. Knight Co., 156 U. S. 1. And as to railroads, see Pear- sail V. Great Northern Railway, 161 U. S. 646, 677 ; Louis- vtlle S Nash ville R. R. Co. v. Kentucky, 161 U. S. 677. A combination or monopoly exists within the meaning of the act even if the immediate effect of the acts complained of is not to suppress competition or to create a complete monop- oly. [303] It is sufficient to show that they tend to bring about those results. Cases cited supra, and Salt Co. v. Guth- rie, 35 Ohio St. 672. It is not essential to show that the person or persons charged with monopolizing or combining have actually raised prices or suppressed competition, or restrained or monopolized trade or commerce in order to bring them within the condemnation of the act. It is enough that the necessary effect of the combination or monopoly is to give them the power to do those things. The decisive question is whether the power exists, not whether it has been exercised. In the Trau.^-Mis.^Of'n\ Joint Trafjie. Pearsall and Addystoa Cases, supra, this court held that it was immaterial that trade or commerce had not actually been restrained— that it made no difference, even, that rates and prices had been lowered, it being enough to bring the combination within the condemna- tion of the act that it had the power to restrain trade or com- merce. The very existence of the power, under these rulings, constitutes a restraint. It is not necessary in order to bring a combination or con- spiracy within the operation of the act that the members hind themselves each with the other to do the acts alleged to be in restraint of trade. It is enough that they act together in pursuance of a common object, and while, of course, this pre- supposes agreement between them in a broad sense, an agree- ment or contract in the technical sense is not at all essential. Reg. v. Mnrphy, 8 C. & P. 397. A combination or a monopoly, the necessary effect of which NORTHEEN SECURITIES CO. /;. UNITED STATES. 437 Argument of Attorney-General for United States. is to restrain trade or commerce, is a violation of the act, and the aim, motive, intention, or design with which the combina- tion is entered into or the monopoly created is wholly imma- terial and outside the question. It may have been to aid and further commerce rather than to restrain it ; but if in point of law the effect or the tendency of the combination is to re- strain trade or commerce the combination is unlawful, and the motive behind it, however beneficent, does not alter that fact in the [304] slightest degree. Trans-Missoun Case, 166 U. S. 290, 341; C. di O. Fuel Co. v. Umtower to prevent restraint upon such commerce. To restrain commerce is to regulate it. Therefore any law of any State which restrains interstate commerce is invalid; and any contract between individuals or corporations, or any combination in any form which re- strains sucli commerce is invalid. The supreme power extends to the whole subject. Under ^his plenarA^ power Congress has supervised interstate com- merce from the granting of franchises to engage therein, to the most minute directions as to its operation. For this purpose it possesses all powers which existed in the States before the adoption of the National Constitution, and which have always existed in the Parliament of England In re Behs, 158 U. S. 586; GiMan v. PhUadelphia, 3 Wall. 725 If the arrangement accomplishes that which the law pro- hibits, through the means which the law prohibits it is cer- tainly within the prohibition of the law, and if this were a consolidation under state authority instead of being a com- NOBTHERN SECURITIES CO. V. UNITED STATES. 445 Argument of Attorney-General for United States. bination which effects that which defies the law of every foot of land which these railroads occupy, there should be no hesi- tation in saying that it violated the Federal statute, if it accomplished a restraint upon interstate commerce. To hold otherwise would be to read into the law a proviso to the effect that the act should not apply when the combination took the form of a railroad consolidation under authority of state legislation. Fictions of law, invented to promote justice, can never be invoked to accomplish its defeat. " In fctione juris semper cpquitas exist it ^ Most mi v. Fahriges^ Cowper, 177; Morris V. Pugh, 3 Burr. 1243; Morawetz, §g 1, 227; Taylor on Cor- porations, § 50; Clark and Marshall on Private Corpora- tions, 17, 22; State v. Standard Oil Co., 41). Ohio St. 137; Ford V. Milk Shippers^ sujrra^ and other cases cited supra. Th4(), to be ille- gal under the statutes of Minnesota which forbade any rail- road corporation or the purchasers or managers of any cor- poration, to consolidate the stock, property or franchises of such corjioration, or to lease or purchase the works or fran- chises of, or in any way control, other railroad corporations owning or having under their control parallel or competing lines. Gen. Laws, Minn. 1874, c. 2J>; ch. 1881. Early in 1901 the Great Nortliern and Northern Pacific Railway companies, having in view the ultimate placing of their two systems under a common control, united in the pur- chase of the capital stock of the Chicago, Burlington and Quincy Railway Company, giving in payment, upon an agreed basis of ^xchan^, the joint Lds of the Great North- em and Northern Pacific Railway companies, payable in twenty years from date, with interest at 4 per ^ent ix,r annum. In this manner the two purchasing companies be- came the owners of $107,000,000 of the $112,000,000 total capital stock of the Chicago, Burlington and Quincy Rail- way Company, whose lines aggregated about 8,000 miles, and extended from St. Paul to Chicago and from St. Paul and Chicago to Quincy, Burlington, Des Moines, St. Ix)uis, Kan- sas City, St. Joseph, Omaha, Lincoln, Denver, Cheyenne and Billings, where it connected with the Northern Pacific rail- road. By this purchase of stock the Great Northern and Northern Pacific acquired full control of the Chicago, Bur- lington and Quincy main line and branches. Prior to November 13, 1901, defendant Hill and associate stockholders of the Great Northern Railway Company, and defendant Morgan and associate stockholders of the North- em Pacific Railway Company, entered into a combination to form, [322] under the laws of New Jersey, a holding cor- poration, to be called the Northern Securities Company, with NORTHERN SECURITIES CO. V. UNITED STATES. 453 Opinion of the Court, by Harlan, J., affirming decree. a capital 3k>ck of $400,000,000, and to which company, in exchange for its own capital stock upon a certain basis and at a certain rate, was to be turned over the capital stock, or a controlling interest in the capital stock, of each of the constit- uent railway companies, with power in the holding corpora- tion to vote such stock and in all respects to act as the owner thereof, and to do whatever it might deem necessary in aid of such railway companies to enhance the value of their stocks. In this manner the interests of individual stockholders in the property and franchises of the two independent and compet- ing railway companies were to be converted into an interest in the property and franchises of the holding corporation. Thus, as stated in Article VI of the bill, "by making the stockholders of each system jointly interested in both sys- tems, and by practically pooling the earnings of both for the benefit of the former stockholders of each, and by vesting the selection of the directors and officers of each system in a com- mon body, to wit, the holding corporation, with not only the power but the duty to pursue a policy which would promote the interests, not of one system at the expense of the other, but of both at the expense of the public, all inducement for competition between the two systems was to be removed, a virtual consolidation effected, and a monopoly of the inter- state and foreign commerce formerly carried on hj the two systems as independent competitors established." In pursuance of this combination and to effect its objects, the defendant, the Northern Securities Company, was organ- ized November 13, 1901, under the laws of New Jersey. Its certificate of incorporation stated that the objects for which the company was formed were : " 1. To acquire by purchase, subscription or otherwise, and to hold as invest- ment, any bonds or other securities or evidences of indebted- ness, or any shares of capital stock created or issued by any other corporation or corporations, association or associations, of the [323] State of New Jersey, or of any other State, Ter- • ritory or country. 2. To purchase, hold, sell, assign, trans- fer, mortgage, pledge or otherwise dispose of any bonds or other securities or evidences of indebtedness created or issued by any other corporation or corporations, association or asso- ciations, of the State of New Jersey, or of any other State, 4.^ IM UNirED STATES BEPOBTS, 323. Opinion of the Court, by Harlan, X, affirming decree. Territory or country, and while owner thereof to^exercise all the rights, powers and privileges of ownership. B. To pur- chase, hold, sell, assign, transfer, mortgage, pledge or other- wise dispose of shares of the capital stock of any other cor- poration or corporations, association or associations, of the State of New Jersey, or of any other State, Territory or coun- try, and while owner of such stock to exercise all the rights, powers and privileges of ownership, including the right to vote thereon. 4. To aid in any manner any corporation or association of which any bonds or other securities or evi- dences of indebtedness or stock are held by the corporation, and to do any acts or things designed to protect, preserve, improve or enhance the value of any such bonds or other securities or evidences of indebtedness or stock. 5. To ac- quire, own and hold such real and personal property as may be necessary or convenient for the transaction of its business. It was declared in the certificate that the business or pur- pose of the corporation was from time to time to do any one or more of such acts and things, and that the corporation should have power to conduct its business in other States and in foreign countries, and to have one or more offices, and hold, purchase, mortgage and convey real and personal prop- erty, out of New Jersey. The total authorized capital stock of the corporation was fixed at $400,000,000, divided into 4,000,000 shares of the par value of $100 each. The amount of the capital stock with which the corporation should commence business was fixed at $30,000. The duration of the corporation was to be perpetuaL This charter having been obtained, Hill and his associate stockholders of the Great Northern Kailway Company, and [324] Morgan and associate stockholders of the Northern Pacific Eailway Company, assigned to the Securities Com- pany a controlling amount of the capital stock of the re- spective constituent companies upon an agreed basis of ex- change of the capital stock of the Securities Company for each share of the capital stock of the other companies. In further pursuance of the combination, the Securities Company acquired additional stoclc of the defendant rail- ' NOBTHEBN SECUBITIES CO. V, UNITED STATES. 455 Opinion of the Court, by Harlan, J., affirming decree. way companies, issuing in lieu thereof its own stock upon the above basis, and, at the time of the bringing of this suit, held, as owner and proprietor, substantially all the capital stock of the Northern Pacific Eailway Company, and, it is alleged, a controlling interest in the stock of the Great Northern Railway Company, " and is voting the same and is collecting the dividends thereon, and in all respects is acting as the owner thereof, in the organization, management and operation of said railway companies and in the receipt and control of their earnings." No consideration whatever, the bill alleges, has existed or will exist, for the transfer of the stock of the defendant rail- way companies to the Northern Securities Company, other than the issue of the stock of the latter company for the purpose, after the manner, and upon the basis stated. The Securities Company, the bill also alleges, was not organized in good faith to purchase and pay for the stocks of the Great Northern and Northern Pacific Railway com- panies, but solely " to incorporate the pooling of the^ stocks of said companies," and carry into effect the above combina- tion; that it is a mere depositary, custodian, holder or trus- tee of the stocks of the Great Northern and Northern Pacific Railway companies; that its shares of stock are but bene- ficial certificates against said railroad stocks to designate the interest of the holders in the pool ; that it does not have and never had any capital to warrant such an operation; that its subscribed capital was but $30,000, and its authorized capital stock of $400,000,000 was just sufficient, when all issued, to represent [325] and cover the exchange value of substantially the entire stock of the Great Northern and Northern Pacific Railway companies, upon the basis and at the rate agreed upon, which was about $122,000,000 in excess of the combined capital stock of the two railway companies taken at par; and that, unless prevented, the Securities Com- pany would acquire as owner and proprietor substantially all the capital stock of the Great Northern and Northern Pacific Railway companies, issuing in lieu thereof its own capital stock to the full extent of its authorized issue, of which, upon the agreed basis of exchange, the former stock- holders of the Great Northern Railway Company have re- 456 193 UNITED STATES REPORTS, 325. Opinion of the Court, by Harlan, J., affirming decree. ceived or would receive and hold about fifty-five per cent, the balance going to the former stockholders of the Northern Pacific Railway Company. The Government charges that if the combination was held not to be in violation of the act of Congress, then all efforts of the National Government to preserve to the people the benefits of free competition among carriers engaged in inter- state commerce will be wholly unavailing, and all transcon- tinental lines, indeed the entire railway systems of the coun- try, may be absorbed, merged and consolidated, thus placing the public at the absolute mercy of the holding corporation. The several defendants denied all the allegations of the bill imputing to them a purpose to evade the provisions of the act of Congress, or to form a combination or conspiracy having for its object either to restrain or to monopolize commerce or trade among the States or with foreign nations. They de- nied that any combination or conspiracy was formed in vio- lation of the act. 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 combination or conspiracy in restraint of commerce among the several States and with foreign nations, and forbids attempts to monopo- lize such commerce or any part of it. Summarizing the principal facts, it is indisputable upon this [326] record that under the leadership of the defendants Hill and Morgan the stockholders of the Great Northern and Northern Pacific Railway corporations, having com])otii\g and substantially parallel lines from the Great Lakes and the Mississippi River to the Pacific Ocean at Puget Sound com- bined and conceived the scheme of organizing a corporation under the laws of New Jersey, which should hold the shares of the stock of the constituent companies, such shareholders, in lieu of their shares in 'those companies, to receive, Tipon an •greed basis of value, shares in the holding corporation ; that pursuant to such combination the Northern Securities Com- pany was organized as the holding corporation through which the scheme should be executed; and under that scheme such holding corporation has become the holder- more prop- tjrly speaking, the custodian — of more than nine-tenths of NORTHERN SECURITIES CO. V. UNITED STATES. 457 Opinion of the Court, by Harlan, J., affirming decree. the stock of the Northern Pacific, and more than three-fourths of the stock of the Great Northern, the stockholders of the companies who delivered their stock receiving upon the agreed basis shares of stock in the holding corporation. The stockholders of these two competing companies disappeared, as such, for the moment, but immediately reappeared as stockholders of the holding company which was thereafter to guard the interests of both sets of stockholders as a unit, and to manage, or cause to be managed, both lines of railroad as if held in one ownership. Necessarily by this combination or arrangement the holding company in the fullest sense dominates the situation in the interest 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, undci such a combi- nation, to be in active competition for trade and commerce along their respective lines, and have become, practically, one powerful consolidated corporation, by the name of a holding corporation the principal, if not the sole, object for the for- mation of which was to carry out the purpose of the original [327] combination under which competition between the constituent companies would cease. Those who were stock- holders of the Great Northern and Northern Pacific and be- came stockholders in the holding company are now inter- ested in preventing all competition between the two lines, and as owners of stock or of certificates of stock in the hold- ing company, they will see to it that no competition is tol- erated. They will take care that no persons are chosen direct- ors of the holding company who will permit competition between the constituent companies. The result of the com- bination 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 earn- ings of the respective constituent companies, each acting ex- clusively in its own interest, but upon the basis of the cer- tificates 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 458 193 UNITED STATES BEPOBTS, 327. Opinion of tlie Cdurt, by Harlan, X, affirming decree. • • * in restraint of commerce among the several States or with foreign nations,"— or could more effectively and cer- tainly suppress free competition between the constituent com- 1>&nies. This combination is, within the meaning of the act, a " trust; " but if not, it is a combination in restraint of in- terstate and intematianal commerce; and that is' enough to bring it under the condemnation of the act The mere exist- ence of such a combination and the power acquired by the holding company as its trustee, constitute a menace to, and m 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 de- stroyed, all the advantages that would naturally come to the public under the operation of the general laws of competi- tion, as between the Great Northern and Northern Pacific Eailway 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 cor- [328] poration, organized in a State distant from the people of that territory. The Circuit Court was undoubtedly right when it said- all the Judges of that court concurring— that the combina- tion referred to "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 companies; second, it destroyed every motive for com- petition between two roads engaged in interstate traffic, which were natural competitors for business, by pooling the earnings of the two roads for the common benefit of the stockholders of both companies." 120 Fed. Ren. 721. 724. ^ ' Such being the case made by the record, what are the principles that must control the decision of the present case! Do former adjudications determine the controlling questions raised by the pleadings and proofs? The contention of the Government is that, if regard be had to former adjudications, the present case must be de- termined in its favor. That view is contested and the 2SI0BTHEEN SECUBITIES CO. V, UNITED STATES. 459 Opinion of the Court, by Harlan, J., affirming decree. defendants iasist that a decision in their favor will not be inconsistent with anything heretofore decided and would be in harmony with the act of Congress. Is the act to be construed as forbidding every combina- tion 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 a forbidden combination or con- spiracy was formed at all material when it appears that the necessary tendency of the particular combination or conspiracy in question is to restrict or suppress free com- petition 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 inter- fered with by any contract, combination or [329] conspir- acy? How far may Congress go in regulating the af- fairs or conduct of state corporations engaged as carriers in commerce among the States or of state corporations which, although not directly engaged themselves in such conunerce, yet have control of the business of interstate carriers? If state corporations, or their stockholders, are foimd to be parties to a combination, in the form of a trust or otherwise, which restrains interstate or interna- tional commerce, may they not be compelled to respect any rule for such commerce that may be lawfully prescribed by Congress ? These questions were earnestly discussed at the bar by able counsel, and have received the full consideration which their importance demands. The first case in this court arising under the Anti-Trust Act was United States v. E, C, Knight Co., 150 IJ. S. 1. The next case was that of United States v. Trans-MissouH Freight Association, 166 U. S. 290. That was followed by United States v. Joint Trafftc Association, 171 U. S. 505, HopJcins V. United States, 171 U. S. 578, Anderson v. United States, 171 U. S. 604, Addyston Pipe (& Steel Co. v. United States, 175 U. S. 211, and Montague (& Co. v. Lowry, 193 U.S. 38. To these may be added Pearsall v. Great korth- 460 193 UNITED STATES REPORTS, 329. Opinion of the Court, by Harlan, J., affirming decree. em Railway, 161 U. S. 646, wMch, although not arising under the Anti-Trust Act, involved an agreement under which the Great Northern and Northern Pacific Railway companies should be consolidated and by ivhich competi- tion between those companies was to cease. In United States V. E. C. Knight Co., it was held that the agreement or arrangement tliere involved had reference onlv to the manufacture or production of sugar by those engaged in the alleged combination, but if it had directly embraced interstate or international commerce, it would then liave been covered by the Anti-Trust Act and would have been illegal; in United States v. Trans-Missouri Freight Asso- ciation, that an agi'eement between certain railroad com- panies providing for establishing and maintaining, for their mutual protection, reasonable rates, rules and regu- lations in respect [330] of freight traffic, through and local, and by which free competition aniong those companies was restricted, was, by reason of such restriction, illegal under the Anti-Trust Act; in United States v. Joint Traffic Asso- ciation, that an arrangement between certain railroad com- panies in reference to railroad traffic among the^ States, by which the railroads involved were not subject to competition among themselves, was also forbidden by the act ; in Hop- kins V. United States and Anderson v. United States, that the act embraced only agreements that had direct connec- tion with interstate commerce, and that such commerce comprehended intercourse for all the purposes of trade, in any and all its forms, including the transportation, pur- chase, sale and exchange of commodities between citizens of different States, and the power to regulate it embraced all the instrumentalities by which such commerce is con- ducted; in Addyston Pipe S Steel Co. v. United States, all the members of the court concurring, that the act of Congress made illegal an agreement between certain pri- vate companies or corporations engaged in different States in the manufacture, sale and transportation of iron pipe, whereby competition among them was avoided, was cov- ered by the Anti-Trust Act; and in Montague v. Lowry^ all the members of the court again concurring, that a com- bination created by an agreement between certain private NORTHERN SECURITIES CO. V. UNITED STATES. 461 Opinion of the Court, by Harlan, J., affirming decree. manufacturers and dealers in tiles, grates and mantels, in different States, whereby they controlled or sought to con- trol the price of such articles in those States, was con- demned by the act of Congress. In Pear sail v. Great Northern Railway, which, as already stated, involved the consolidation of the Great Northern and Northern Pacific Kailway companies, the court said : " The cons^olidation of these two great cor]:)orations will unavoidably result in giving to the defendant [the Great Northern] a monopoly of all traffic in the northern half of the 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 a feeble protection. The acts of the Minnesota Legislature of 1874 and 1881 undoubtedly [331] reflected the general sentunent of the public, that their best security is in competition." We will not incumber this opinion by extended extracts from the former opinions of this court. It is sufficient to say that from the decisions in the above cases certain proposi- tions are plainly deducible and embrace the present case. Those propositions are : That although the act of Congress known as the Anti-Trust Act has no reference to the mere manufacture or production of articles or commodities within the limits of the several States, it does embrace and declare to be illegal every con- tract, combination or conspiracy, in whatever form, of what- ever nature, and whoever may be parties to it, which directly or necessarily operates in restraint of trade or com- merce among the several States or with foreign nations; That the act is not limited to restraints of interstate ^nd 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 railroad carriers engaged in interstate or interna- tional trade or commerce are embraced bv the act: That combinations even among private manufacturers oi dealers whereby interstate or international commerce is re- strained are equally embraced by the act; That Congress has the power to establish rules by which 462 193 UNITED STATES BEPOBTS, 331. Opinion of the Court, by Barlan, J., affirming decree. interntate and international commerce shall be governed, and, by the Anti-Trust Act, has prescribed the rule of free compe- tition among those engaged in such commerce ; That every combination or conspiracy which would extin- guish competition between otherwise competing railroads en- gaged in interstate trade or commerce, and which would m l^# way restrain such trade or commerce, is made illegal by the act; That the natural effect of competition is to increase com- merce, and an agreement whose direct effect is to prevent this play of competition restrains instead of promotes trade and commerce ; [332] That to vitiate a combination, such as the act of Congress condemns, it need not be shown that the combina- tion, 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 inter- state or international trade or commerce or tends to create a monopoly in such trade or commerce and to deprive the pub- He of the advantages that flow from free competition; That the constitutional guarantee of liberty of contract does not prevent Congress from prescribing the rule of free competition for those engaged in interstate and international commerce; and, That under its power to regulate commerce among the several States and with foreign nations. Congress had author- ity to enact the statute in question. No one, we assume, will deny that these propositions were distmctly announced in the former decisions of this court. They cannot be ignored or their effect avoided by the intima^ tion that the court indulged in obiter dicta. What was said in those cases was within the limits of the issues made by the parties. In our opinion, the recognition of the principles an- nounced in former cases must, under the conceded facts, lead to an affirmance of the decree below, unless the special objec- tions, or some of them, which have been made to the applica- tion of the act of Congress to the present case are of a sub- stantial character. We will now consider those objections. Underlying the argument in behalf of the dc.f eudants is the idea that as the Northern Securities Companv is a state cor- NOBTHEBN SECUBITIES CO. V. UNITED STATES. 463 .Opinion of tbe Court, by Harlan, J., affirming decree. poration, and as its acquisition of the stock of the Great Northern and Northern Pacific Railway companies is not in- consistent with the powers conferred by its charter, the en- forcement of the act of Congress, as against those corpora- tions, will be an unauthorized interference by the national government with the internal commerce of the States creat- ing those corporations. This suggestion does not at all im- press us. There is no reason to suppose that Congress had any purpose [333] to interfere with the internal affairs of the States, nor, in our opinion, is there any ground whatever for the contention that the Anti-Trust Act regulates their domestic commerce. By its very terms the act regulates only commerce among the States and with foreign states. Viewed in that light, the act, if within the powers of Congress, must be respected ; for, by the explicit words of the Constitution, that instrument and the laws enacted by Congress in pur- suance of its provisions, are the supreme law of the land, " anything in the constitution or laws of any State to the con- trary notwithstanding "—supreme over the States, over the courts, and even over the people of the United States, the source of all power under our governmental system in respect of the objects for which the National Government was or- dained. An act of Congress constitutionally passed under its power to regulate commerce among the States and with foreign nations is binding upon all ; as much so as if it were embodied, in terms, in the Constitution itself. Every judi- cial officer, whether of a national or a state court, is under the obligation of an oath so to regard a lawful enactment of Congress. Not even a State, still less one of its artificial creatures, can stand in the way of its enforcement. If it were otherwise, the Government and its laws might be pros- trated at the feet of local authority. Cohens v. Virginia, 6 Wheat. 264, 385, 414. These views have been often expressed by this court. It is said that whatever may be the power of a State over such subjects Congress cannot forbid single individuals from disposing of their stock in a state corporation, even if such corporation be engaged in interstate and international com- merce ; that the holding or purchase by a state corporation, or the purchase by individuals, of the stock of another corpo- im UNITED STATES REPORTS, 333. Opinion of the Court by Harlan. J., affirming decree. ration, for whatever purpose, are matters in respect of which Congress has no authority under the Constitution ; that, so far as the power of Congress is concerned, citizens or state corporations may dispose of their property and invest their mone^r in any way they choose; and that in regard to all |SM| such matters, citizens and state corporations are sub- ject, if to any authority, only to the lawful authority of the State in which such citizens reside, or under whose laws such corporations are organized. It is unnecessary in this case to consider such abstract, general questions. The court need not now concern itself with them. They are not here to be examined and determined, and may well be left for considera- tion in some case necessarily involving their determination. In this connection, it is suggested that the contention of the Government is that the acquisition and ownership of stock in a state railroad corporation is itself interstate commerce, if that corporation l>e engaged in interstate commerce. This suggestion is made in different ways, sometimes in express words, at other times by implication. For instance, it is said that the question here is whether the power of Congress over interstate commerce extends to the regulation of the ownership of the stock in state railroad companies, by rea- son of their being engaged in such commerce. Again, it is said that the only issue in this case is whether the Northern Securities Company can acquire and hold stock in other state corporations. Still further, it is asked, generally, whether the organization or ownership of railroads is not under the control of the States under whose laws they came into ex- istence? Such statements as to the issues in this case are, w^e think, wholly unwarranted and are very w^ide of the mark ; it is the setting up of mere men of straw to be easily stricken down. We do not understand that the Government makes any such contentions or takes any such positions as those statements imply. It does not contend that Congress may control the mere acquisition or the mere ownership of stock in a state corporation engaged in interstate commerce. Nor does it contend that Congress can control the organization of state corporations authorized by their charters to engage in interstate and international commerce. But it does con- tend that Congress may protect the freedom of interstate NORTHERN SECURITIES CO. V. UNITED STATES. 465 Opinion of tbe Court, by Harlan, J., affirming decree. commerce by any means that are appropriate and that are lawful and not prohibited [335] by the Constitution. It does contend that no state corporation can stand in the way of the enforcement of the national will, legally expressed. Wliat the Government particularly complains of, indeed, all that it complains of here, is the existence of a combination among the stockholders of competing railroad comi)anies which in violation of the act of Congress restrains interstate and international connnerce through the agency of a common corporate trustee designated to act for both companies in repressing free competition between them. Independently of any question of the mere ownership of stock or of the organization of a state corporation, can it in reason be said that such a combination is not embraced bv the verv terms of the Anti-Trust Act? May not Congress declare that combinafion to be illegal ? If Congress legislates for the pro- tection of the public, may it not proceed on the ground that wrongs when effected by a powerful combination are more dangerous and require more stringent supervision than when they are to be effected by a single person ? Callan v. Wnson, 127 U. S. 540, 556. How far may the courts go in order to give effect to the act of Congress, and remedy the evils it was designed by that act to suppress? These are confessedly questions of great moment, and they will now be considered. By the express words of the Constitution, Congress has power to " regulate commerce with foreign nations and among the several States, and with the Indian tribes." In view of the numerous decisions of this court there ought not, at this day, to be any doubt as to the general scope of such power. In some circumstances regidation may properly take the form and have the effect of prohibition. In re Rahrer^ 140 U. S. 545; Lottery Case 188 U. S. 321, 355, and authori- ties there cited. Again and again this court has reaffirmed the doctrine announced in the great judgment 'rendered by Chief Justice Marshall for the court in Gibbons v. Ogden^ b Wheat. 1, 196, 197, that the power of Congress to regulate commerce among the States and with foreign nations is the power " to prescribe the imle by which commerce is to be governed; " that such power " is complete [336] in itself, 21220— VOL 2—07 m 30 466 193 UNITED STATES BEPORTS, 336. Opinion of tlie Court, by Harlan, J., affirming decree. may be exercised to its utmost extent, and acknowledges no limitations other than are prescribed in the Constitution;" that " if, as has always been understood, the sovereignty of Congress, though limited to specified objects, is plenary as to those objects, the power over commerce with foreign na- tions and among the several States, is vested in Congress as absolutely as it would he in a single government having in its constitution the same restrictions on the exercise of the poioer as are found in the Constitution of the United States; " that 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 en- able that body to perform the high duties assigned to it, in the manner most beneficial to the people; " and that if the end to be accomplished is within the scope of the Constitu- tion, " all means which are appropriate, which are plainly adapted to that end and which are not prohibited, are con- stitutional." Brown v. Maryland, 12 Wheat. 419 ; Sinnot v. Davenport, 22 How. 227, 238 ; Henderson v. The Mayor, 92 U. S. 259 ; Railroad Company v. Eusen, 95 U. S. 465, 472 ; County of MohUe v. Kimball, 102 U. S. G91 ; M., K. di Texas Ry. Co, V. Haher, 169 U. S. 613, 626; The Lottery Case, 188 U. S. 321, 348. In Cohere v. Virginia, 6 Wheat 264, 413, this court said that the United States were for many im- portant purposes " a single nation," and that " in all commer- cial regulations we -are one and the same people;" and it has since frequently declared that commerce among the several States was a imit, and subject to national control. Previously, in McCtdloch v. Maryland, 4 Wheat. 316, 405, the court had said that the Government ordained and estab- lished by the Constitution was, within the limits of the powers granted to it, " the Government of all ; its powers are delegated by all ; it represents all, and acts for all," and was " supreme within its sphere of action." As late as the case of In re Debs, 158 U. S. 564, 582, this court, every mem- ber of it csoncurring, said: "The entire strength of the Nation may be used to enforce in any part of the land the [337] full and free exercise of all National powers and the security of all rights entrusted by the Constitution to its cam The strong arm of the National Government may be NORTHERN SECURITIES CO. V. UNITED STATES. 467 Opinion of the Court, by Harlan, J., affirming decree. put forth to brush away all obstructions 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 means employed in respect of the combinations for- bidden 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 commerce, (not for domestic commerce,) that it should not be vexed by com- binations, conspiracies or monopolies which restrain com- merce 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 con- strued as forbidding any combination which by its neces- sary operation destroys or restricts 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. Now, can this court say that such a rule is prohibited by the Constitution or is not one that Congress could appropriately prescribe when ex- erting its power under the commerce clause of the Con- stitution? Whether the free operation of the normal laws of competition 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 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 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 combi- nation or conspiracy in restraint of interstate and interna- tional commerce. As in the judgment of Congress the public convenience and the general welfare [338] 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 468 193 UNITED STATES KEPORTS, 338. Opinion of the Court, by Harlan, J., affirming decree. must be, for all, tlie end of the matter, if this is to remain a government of laws, and not of men. It is said that railroad corporations created under the laws of a State can only be consolidated with the authority of the State. Why that suggestion is made in this case we cannot understand, for there is no pretense that the com- bination here in question was under the authority of the States under whose laws these railroad cori)orations were created. But eyen if the State allowed consolidation it would not follow that the stockholders of two or more state railroad corporations, having emnpeting lines and engaged in hderstiife aymtnerfe^ could lawfully combine and form a distinct corporation to hold the stock of the constituent cor- porations, and, by destroying competition between them, in violation of the act of Congress, restrain conniiorce among the States and with foreign nations. The rule of competition, prescribed by Congress, was not at all new in trade and commerce. And we camiot l^e in any donbt as to the reason that moved Congress to the in- corporation of that rule into a statute. That reason was thns stated in United States v. Joint Trafpe Association: •^ Has not Congress with regard to interstate commerce and in the course of regulating it, in the case of railroad cor- porations, the i)ower 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 competi- tion? We think it has. . . . 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 m 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 epenttes upon and restrmns interstate commerce^ Congress has power to legislate and to prohibit." (pp. 569, 571.) That such a rule was applied to interstate commerce [339] should not have surprised any one. Indeed, when Congress declared contracts, combinations and conspiracies in restraint of trade or commerce to be illegal, it did nothing more than apply to interstate commerce a rule that had been long applied by the several States when dealing with NORTHERN SECURITIES CO. V, UNITED STATES. 469 Opinion of the Court, by Harlan, J., affirming decree, combinations that were in restraint of their domestic com- merce. The decisions in state courts upon this general subject are not only numerous and instructive but they show the circumstances under which the Anti-Trust Act was passed. It may well be assumed that Congress, when enacting that statute, shared the general apprehension that a few povverful corporations or combinations sought to obtain, and, unless restrained, Avould obtain such absolute control of the entire trade and commerce of the country as would be detrimental to the general welfare. In Morris Run Coal Co, v. Barclay Coal Co., 68 Pa. St. 173, 180, the Supreme Court of Pennsylvania dealt with a com- bination of coal companies seeking the control within a large territory of the entire market for bituminous coal. The court, observing that the combination was wide in its scope, general in its influence, and injurious in its effects, said: " Wlien competition is left froe, individual error or folly will gen- erjilly find a correction in the conduct of others. But here is a com- bination of all the companies operating in the Blosshurg and Barclay mining regions, and controlling their entire productions. They have combined together to govern the supply and the price of coal in all the markets from the Hudson to the Mississippi rivers, and from Penn- sylvania to the Lakes. This combination has a power in its confed- erated form which no individual action can confer. The pul)lic inter- est nnist succumb to it. for it has left no competition free to correct its baleful influence. When the supply of coal is susjiended the de- mand for it l)ecomes importunate, and jn-ices nnist rise. Or if the s"PI>lv goes forward, the in-ices fixed by the confederates nnist accom- pany it. The domestic hearth, the furnaces of the iron master and the fires of the manufacturer all feel the restraint, while many dependent hands are [340] i)aralyzed and hungry mouths are stinted. The infiuence of a lack of supply or a rise in the price of an article of such prime necessity cannot be measured. It permeates the entire mass of the connnunity. and leaves few of its members untouched by its withering l)light. Such a combination is more than a contract; it is an offense. ♦ * * jn all such combinations where the purpose is injurious or unlawful, the gist of the offense is the conspiracy. Men can often do by the comhinution of many what severally no one could accomplish, and even what when done by one would l)e inno- cent. * ♦ * There is a pofencff in innnhrrs irhoi comhincd, which the law cannot overlook, where injury is the consequence." The same principles were applied in Arnot v. Pittston d' Elmira Coal Co., 68 N. Y. 558, 505, which was the case of a combination of two coal companies, in order to give one of them a monopoly of coal in a particular region, the Court of Appeals of New York holding that "A combination to effect such a purpose is inimical to the interests of the public, and that all contracts designed to effect such an end are contrary to public policy, and therefore illegal." ^§4 470 193 UNITED STATES REPORTS, 340. Opinion of the Court, by Harlan, J., affinning decree. They were also applied by the Supreme Court in Ohio in Cmtral Ohio Salt Co. v. Guthrie, 35 Ohio St. 666, 672, which was the case of a combination among manufacturers of salt in a large salt-producing territory, the court saying : ** It is no ans^i^er to say that competition in the salt trade was not In fact destroyed, or that the price of the commodity was not unreason- ably advanced. Courts will not atop to enquire as to the degree of injury inflicted upon the public; it is enough to know that the inevita- ble tendency of ««"/< contracts is injurious to the public.'' So, in Craft v. McConoughy, 79 Illinois, 346, 350, which was the case of a combination among grain dealers by which competition was stifled, the court saying: " So long as competition was free, the interest of the public was safe. The laws of trade, in connection with the rigor of competition, was all the guaranty the public required, but the secret combination created by the contract destroyed all competition and created a monopoly £341] against which the public interest had no protection." Again, in People v. Chicago Gas Trust Co.^ 180 Illinois, 268, 297, which involved the validity of the organization of a gas corporation which obtained a monopoly in the business of furnishing illuminating gas in the city of Chicago by buy- ing the stock of four other gas companies, it was said : "Of what ayail is it that any number of gas companies may be formed under the general incorporation law, if a giant trust company can be clothed with the power of buying up and holding the stock and property of such companies, and, through the control thereby attained, can direct all their oiierations and weld them into one huge com- bination?" To the same effect are cases almost too numerous to be cited. But among them we refer to Richardson v. Buhl, 77 Michigan, 632, which was the case of the organization of a corporation in Connecticut to unite in one corporation all the match manufacturers in the United States, and thus to obtain control of the business of manufacturing matches; Santa Clara Mill c§ Lumber Co. v. Hayes, 76 California, 387, 390, which was the case of a combination among manufacturers of lumber, by which it could control the business in certain local- ities; and India Bagging Association v. Kock, 14 La. Ann. 168, which was the case of a combination among various com- mercial firms to control the prices of bagging used by cotton planters. The cases, just cited, it is true, relate to the domestic com- merce of the States. But they serve to show the authority NORTHERK SECURITIES CO. V, UNITED STATES. 471 Opinion of the Court, by Harlan, J., affirming decree. which the States possess to guard the public against combi- nations that repress individual enterprise and interfere with the operation of the natural laws of competition among those engaged in trade within their limits. They serve also to give point to the declaration of this court in Gibbons v. Ogden, 9 Wheat. 1, 197 — a principle never modified by any subsequent decision — that, subject to the limitations imposed by the Con- stitution upon the exercise of the powers granted by that in- strument," the power over commerce with foreign nations and among the several States is vested in Congress as absolutely [342 1 as it would be in a single government having in its constitution the same restrictions on the exercise of power as are found in the Constitution of the United States." Is there, then, any escape from the conclusion that, subject only to such restrictions, the power of Congress over inter- state and international commerce is as full and complete as is the power of any State over its domestic commerce? If a State may strike down combinations that restrain its domestic commerce by destroying free competition among those engaged in such commerce, what power, except that of Congress, is competent to protect the freedom of interstate and international commerce when assailed by a combination that restrains such commerce by stifling competition among those engaged in it ? Now, the court is asked to adjudge that, if held to em- brace 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 de- cisions 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 cor- porations 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 Montagus 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 franchises, and engaged in such commerce. We cannot agree that Con- 193 UHITED STATES BEPORTS, 342. Opinion of the Cowrt, by Harlan, X, affirming decree. gress may strike down combinations among manufacturers and dealers in iron pipe, tiles, grates and mantles that re- strain commerce among the States in such articles, but may not strike down combinations among stockholders of com- peting railroad carriers, which restrain commerce as in- volveil in the trans{)ortation of passengers and property among tlie several States. If private parties may not, by conihination among themselves, restrain interstate [3431 «"cl international commerce in violation of an act of Congress, much less can such restraint be tolerated when imposed or attempted to be imposed ujwn conunerce as carried on over public hitrhways. Indeed, if the contentions of the defend- ants are sound why may not (til the railway companies in the United States, that are engaged, under state charters, in interstate and international commeive, enter into a combi- nation such as the one hen* in <|uestion, and l>y the device of a holding corporation obtain the alisolute c(mtrol throughout the entire countiy of rates for passengers and freight, l)eyond the power of Congi'ess to iirotect the public against their ex- actions? Tlie argument in liehalf of the defendants neces- sarily leads to such results, and places Congress, although invested by the people of the United States with full authority to regulate interstate and international conunerce, in a condition of utter helplessness, so far as the protection of the j)ublic against such coml)inations is concerned Will it 1m* said that Congress can m€»et such emergencies by prescril>ing the rates by which uiterstate carriers shall be governed in the transjMirtation (»f freight and passengers? If Congress luis the [)ower to fix such rates — and upon that qnestioii we exiii-ess no opinion — it dews not choose to exer- cise its power in that way or to that extent. It has, all will agree, a large discretion as to the means to l)e employed in the exercise of any [jower granted to it. For the present, it has determined to go no farther than to protect the free- dom of commerce among the States and with foreign states by declaring illegal all contracts, combinations, conspiracies or monoi)olies in i-estraint of such commerce, and make it a public offence to violate the rule thus prescribed. How much further it may go, we do not now say. We need only NORTHERN SECURITIES CO. V, UNITED STATES. 473 Opinion of the Court, by Harlan, J., affirming decree. at this time consider whether it has exceeded its powers in enacting the statute here in question. Assuming, without further discussion, that the case before us is within the terms of the act, and that the act is not in excess of the powers of Congress, we recur to the question, how far may the courts go in reaching and suppressing the combination [344] described in the bill? All will agree that if the Anti-Trust Act be constitutional, and if the combina- tion in question he in violation of its provisions, the courts may enforce the provisions of the statute by such orders and decrees as are necessary or appropriate to that end and as may be consistent with the fundamental rules of legal procedure. And all, we take it, will agree, as established firmly by the decisions of this court, that the power of Congress over com- merce extends to all the instrumentalities of such commerce, and to every device that may be employed to interfere with the freedom of conmierce among the States and with foreign nations. Equally, we assume, all will agree that the Consti- tution and the legal enactments of Congress are, by express words of the Constitution, the supreme law of the land, any- thing in the constitution and laws of any State to the contrary notwithstanding. Nevertheless, the defendants, strangely enough, invoke in their behalf the Tenth Amend- ment of the Constitution which declares that ''the powers not delegated to the United States by the Constitution, nor prohibited by it to the- States, are reserved to the States respectively or to the People; '' and we are confronted with the suggestion that any order or decree of the Federal court which will prevent the Northern Securities Company from exercising the ])ower it acquired in becoming the holder of the stocks of the (Ireat Northern and Northern Pacific Rail- way companies will be an invasion of the rights of the State under which the Securities Company was chartered, as well as of the rights of the States creating the other companies. In other words, if the State of New Jersey gives a charter to a corjioration, and even if the obtaining of such charter is in fact pursuant to a combination under which it becomes the holder of the stocks of shareholders in two competing, parallel railroad companies engaged in interstate commerce in other States, whereby competition between the respective 474 193 UNITED STATES BEPOHTS, 344. Opinion of the Court, by Harlan, J., affirming decree, roads of those companies is to be destroyed and the enormous commerce carried on over them restrained by suppressing competition, Congress must stay its hands and allow [345] such restraint to continue to the detriment of the pubHc because, forsooth, the corporations concerned or some of them are state corporations. We cannot conceive how it is possible for any one to seriously contend for such a proposition. It means nothing less than that Congress, in regulating inter- state commerce, must act in subordination to the will of the States when exerting their power to create corporations, ^o such view can be entertained for a moment. It is proper to say in passing that nothing in the record tends to show that the State of New Jersey had anv reason to suspect that those who took advantage of its liberal incor- poration laws had in view, when organizing the Securities Company, to destroy competition between two great railway carriers engaged in interstate commerce in distant Stales of the Union. The purpose of the combination was concealed under very general words that gave no clue whatever to the real purposes of those who brought about the organization of the Securities Company. If the certificate of the incorpora- tion of that company had expressly stated that the object of the company was to destroy competition between competing, parallel lines of interstate carriers, all would have seen, at the outset, that the scheme was in hostility to the national authority, and that there was a purpose to violate or evade the act of Congress. We reject any such view of the relations of the National Government and tlie States c6mposing the Union, as that for which the defendants contend. Such a view cannot be main- tained without destroying the just authority of the United States. It IS inconsistent with all the decisions of this court as to the powers of the National Government over matters committed to it. No State can, by merely creating a corpo- ration, or in any other mode, project its authority into other States, and across the continent, so as to prevent Congress from exerting the power it possesses under the Constitution over interstate and international commerce, or so as to ex- empt its corporation engaged in interstate commerce from obedience to any rule lawfully established by Congress for NORTHERN SECURITIES CO. V, UNITED STATES. 475 Opinion of the Ck)urt, by Harlan, J., affirming decree. such com- [346] merce. It cannot be said that any State may give a corporation, created under its laws, authority to restrain interstate or international commerce against the will of the nation as lawfully expressed by Congress. Every cor- poration created by a State is necessarily subject to the su- preme 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 of 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 Company; it may not declare how its shares of stock mav be transferred on its books, nor prohibit it from acquiring real estate, nor diminish or in- crease 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 ex- pressed. Congress may prevent that company, 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 la}^ hands upon that company and pre- vent it from doing that which, if done, will defeat the act of Congress. UjDon like grounds the court can, by appropriate orders, prevent the two competing railroad companies here involved from cooperating with the Securities Company in restraining commerce among the States. In short, the court may make any order necessary to bring about the dissolution or suppression of an illegal combination that restrains inter- state 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 combination, however powerful, is stronger than the law or will be permitted to avail itself of the pretext that to pre- vent it doing that which, if done, would defeat a legal enact- ment of Congress, is to attack the reserved rights of the States. It [34:7] 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 476 193 UNITED STATES REPORTS, 347. Opinion of the Court, by Harlan, J., affirming decree. 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 law of the land, if such device or combination by its operation dii-ectly restrains connnerce among the States or with foreign nations in violation of the act of Congress. The defendants rely, with some confidence, upon the case of Railroad Company v. Maryland, 21 Wall. 45G, 473. But nothing we have said is inconsistent with any principle an- nounced in that case. The court there recognized the prin- ciple that a State has plenary powers " over its own territory, its highways, its franchises, and its corporations,-' and ob- served that *'we are bound to sustain the constitutional powers and prerogatives of the States, as well as those of the United States, whenever they are brought l>efore us for adju- dication, no matter what may lie the consequences." 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 pre- vent or embarrass the exercise by Congress of any power with which it is invested by the Constitution ? In the case just referred to tlie court does not say, and it is not to be sup posed that it will ever say, tliat any power exists in a State to prevent the enforcement of a lawful enactment of Con- gress, or to invest any of its corporations, in whatever busi- ness 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 enactmeut, even if passed in the exercise of its acknowledged powers, must yield, in case of conflic?t, to the supremacy of the Constitution of the Unitecl States and the acts of Congress enacted in pursuance of its provisions. This residts, the court has said, as well from the nature of the Gov- [348] ernment as from the words of the Constitution. Gibbons v. Ogden, 9 Wheat. 1, 210 • Shwot V. Daren/m% 22 How. 227, 24S; In re Dehs, 158 U. s! 564; Missmitij Kansas <& Texas Railway v. Ilaher, 169 U. S. 6ia, 626, 627. In Texas v. White, 7 Wall. 700, 725, the court remarked ** that ' the people of each State compose a State, having its own government, and endowed with all the fimc- NORTHEItN SECURITIES CO. V. UNITED STATES. 477 Opinion of the Court, by Harlan, J., affirming decree. tions essential to separate and independent existence,' and that 'without the States in union, there could be no such political body as the United States.' County of Lane v. Oregon^ 7 Wall. 76. Not only, therefore, can there be no loss of separate and independent autonomy to tlie States, through their union under the Constitution, but it may be not unrea- sonably said that the preservation of the States, and the main- tenance of their governuients, are as much within the design and care of the Constitution as the preservation of the Union and the maintenance of the National Government." These doctrines are at the basis of our Constitutional Government, and cannot be disregarded w4th safety. The defendants also rely on Louisville & Nashville Rail- road V. Kentucky, 161 U. S. 677, 702. In that case it Avas contended by the railroad company that the assumption of the State to forbid the consolidation of parallel and com- peting lines was an interference with the power of Congress over interstate commerce. The court observed that but little need be said in answer to such a proposition, for " it has never been supposed that the dominant power of Congress over interstate commerce took from the States the power of legislation with respect to the instruments of such commerce, so far as the legislation was within its ordinary police powers." But that case distinctly recognized that there was a division of power between Congress and the States in respect to interstate railways, and that Congress had the superior right to control that commerce and forbid inter- ference therewith, while to the States remained the power to create and to regulate the instruments of such commerce, so far as necessary to the conservation of the public interests. If there is anything in that case which [349] even intimates that a State or a state corporation may in any way directly restrain interstate commerce, over which Congress has, by the Constitution, complete control, we have been unable to find it. The question of the relations of the General Government with the States is again presented by the specific contention of each defendant 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 determme 478 193 UNITED STATES KEP0HT8, 349. Opinion of the Court, by Harian, J., affirming decree. who may buy, own and sell their stock." All that is true, generally speaking, but the contention falls far short of meeting the controlling questions in this case. To meet this contention we must repeat some things already said in this opinion. But if what we have said be sound, repetition will do no harm. So far as the Constitution of the United States is concerned, a State may, indeed, create a corporation, de- fine 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 regulation 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 interfere with the operations of the General Government, or any legal en- actment 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 corpora- tion nor its stockholders can, by reason of the non-action of the State or by means of any combination among such stockholders, interfere with the complete 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 international commerce is by the Constitution under the control of Congress, and it be- longs to the legislative department of the Government to prescribe rules for the conduct of that commerce. If it were otherwise, the declaration in the Constitu- [350] tion of its supremacy, and of the supremacy as well of the laws made in pursuance of its provisions, was a waste of words. 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 corporate person can ex- cuse 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 authority it came into existence. We repeat that no State can endow anv of its corporations, or any combination of its citizens, with NORTHERN SECURITIES CO. V. UNITED STATES. 479 Opinion of the Court, by Haiian, J., affirming decree. 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, infring- ing no 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 can come from the failure of the courts to recognize this fundamental principle of constitutional con- struction. 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 Consti- tution 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 foundation rock upon which our institutions rest. The law, this court said in United States v. Lee, 106 U. S. 196, 220, is the only supreme power in our system of government. And no higher duty rests upon this court than to enforce, by its decrees, the will of the legislative department of the Government, as expressed in a statute, unless such statute be plainly and unmistakably in violation of the Constitution. If the statute is beyond the constitutional power of Congress, the court would fail in the performance of a solenm duty if it (351] did not so declare. But if nothing more can be said than that Congress has erred — and the court must not be understood as saying that it has or has not erred — the remedy for the error and the attendant mischief is the selection of new Senators and Representatives, who, by legislation, will make such changes in existing statutes, or adopt such new statutes, as may be demanded by their constituents and be consistent with law. Many suggestions were made in argument based upon the thought that the Anti-Trust Act would in the end prove to be mischievous in its consequences. Disaster to business and wide-spread financial ruin, it has been intimated, will follow the execution of its provisions. Such predictions were made in all the cases heretofore arising under that act. But they have not been verified. It is the history of monopolies in this 480 193 UNITED STATES REPORTS, 351. Opiuiou of the Court, by Harlan, J., afflrmiug decree. country and in England that predictions of ruin are habitu- ally made by them when it is attempted, by legislation, to re- strain their operations and to protect the public against their exactions. In this, as in former cases, they seek shelter be- hind 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 liberty of con- tract did not involve a right to deprive the public of the ad- vantages of free comi>etition in trade and commerce. Lib- erty of contract does not imply liberty in a corporation or individuals to defy the national will, when legally expressed. Nor does the enforcement of a legal enactment of Congress 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 subordination to the law. But even if the court shared the gloomy forebodings in which the defendants indulge, it could not refuse to respect the action of the legislative 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 [352] in the zeal of parties who are opposed to the policy underlying the act of Congre&s or are interested in the result of this particular case ; at any rate, the sugges- tions 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 w^ise in prescribing as a rule by which the conduct of interstate and international commerce is to be gov- erned, that every combination, Avhatever its form, in restraint of such commerce 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 an- other department, and this court has no function to supervise 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 interpreted in prior cases, has, in effect declared, that the freedom of interstate and inter- national commerce shall not be obstructed or disturbed by any combination, conspiracy or monopoly that will restrain such commerce, by preventing the free operation of competi- NORTHERN SECURITIES CO. V, UNITED STATES. 481 Opinion of the Court, by Harlan, J., affirming decree. tion among interstate carriers engaged in the transportation of passengers and freight. This court cannot disregard that declaration unless Congress, in passing the statute in ques- tion, be held to have transgressed the limits prescribed for its action by the Constitution. But, as already indicated, it can- not be so held consistently with the provisions of that instru- ment. The combination here in question may have been for the pecuniary benefit of those who formed or caused it to be formed. But the interests of private persons and corpora- tions cannot be made paramount to the interests of the gen- eral public. Under the Articles of Confederation commerce among the original States was subject to vexatious and local regulations that took no account of the general welfare. But it was for the protection of the general interests, as involved in interstate and international commerce, that Congress, rep- resenting the whole country, was given by the Constitution full power to regulate commerce among the States and with foreign [353] nations. In Brown v. Maryland^ 12 Wheat. "4:19, 446, it was said : " Those v:lio felt tlie injury arising from this state of things, and those who were caiiable of estimating the influence of commerce on the prosperity of nations, perceived the necessity of giving the control over this important subject to a single government. It may be doubted whether any of the evils proceeding from the feebleness of the Federal Government contributed more to that great revolution which intro- duced the present system than the deep and general conviction thai connnerce ought to be regulated by Congress." Railroad companies, we said in the Traiu-Missouri Freight Associatio7i case, " are instruments of commerce, and their business is commerce itself." And such companies, it must be remembered, operate " public highways, established pri- marily for the convenience of the people, and therefore are subject to governmental control and regulation.'' Cherokee Nation v. Kansas Railway Co.^ 135 U. S. 641, 657; Chicago (&c. R. R. Co, V. Pulhnan Car Co.^ 139 U. S. 79, 90 : Interstate Commeree Commission v. Brimson, 154 U. S. 447,. 475 ; United States v. Trans-Missouri Freight Association^ 166 U. S. 290, 332; Smyth v. Ames, 169 U. S. 466, 544; Lake Shore dec. Ry, Co, v. Ohio, 173 U. S. 285, 301. When such 21220— VOL 2—07 m 31 iSklLJmm m VmiTED STATES REPOBTS, 353. Opinion of the Court, by Harlan, J., affirming decree. carriers, in the exercise of public franchises, engage in the transportation of passengers and freight among the States they become— even if they be state corporations— subject to such rules as Congress may lawfully establisli for the conduct of interstate commerce. It was said in argument that the circumstances under which the Northern Securities Company obtained the stock of the constituent companies imported simply an investment in the stock of other corporations, a purchase* of that stock; which investment or purchase, it is contended, was not for- bidden by the charter of the company and could not bo made illegal by any act of Congress. This view is ^liolly falla- cious, and doe^ not comport with the actual transaction. There was no actual investment, in any substantial sense, by the Northern Securities Company in the stock of (he two con- stituent com- (•KMl panies. If it was, in form, such a trans- action, it was not, in fact, one of that kind. However that company may have acquired for itself any stock in the Great Northern and Northern Pacific Railway companies, no matter how it obtained the means to do so, all the stock it held or tc»quired in the constituent companies was acquired and held to be used in suppressing com|>etition between those com- panies. It came into existence only for that purpose. If any one had full knowledge of what was designed to \ye accom- plished, and as to what was actually 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 mstodian, because it had no other alliances." That disclosed the actual nature of the transac- tion, which was only to organize the Northern Securities Company as a holding company, in whose hands, not as a real purchaser or absolute owner, but simply as custodian, were to he placed the stocks of the constituent companies— such custo- dian to represent the combination formed between the share- holders of the constituent companies, the direct and neces- sary effect of such combination being, as already indicated, to restrain and monopolize interstate commerce by suppress- ing or (to use the words of this court in United States v. NORTHERN SECURITIES CO. V. UNITED STATES. 483 Opinion of the Court, by Harlan, J., affirming decree. Joint Trafilc Association)" smothering '* competition between the lines of two railway carriers. We will now inquire as to the nature and extent of the relief granted to the Government by the decree below. By the decree in the Circuit Court it was found and ad- judged that the defendants had entered into a combination or ^conspiracy in restraint of trade or commerce among the sev- eral States, such as the act of Congress denounced as illegal ; and that all of the stocks of the Northern Pacific Eailway Company and all the stock of the Great Northern Railway Company, claimed to be owned and held by the Northern Securities Company, was acquired, and is by it held, in virtue of such com- [355] bination or conspiracy, in restraint of trade and commerce among the several States. It was thet'e- fore decreed as follows: " That ihe Northern Securities Company, its officers, agents, servants and employes, he and they are hereby enjoined from acquiring, or atten)i)tino' to acquire, further stoclv 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 stockholders of either of the aforesaid railway companies and from exercising or attempting to exercise any control, direction, supervision or influence whatsoever over the acts and doings of said railway companies, or either of them, by virtue of its holding such stock therein ; that the Northern Pacific Railway Company and the Great Northern Railway Company, their officers, directors, servants and agents, be and they are hereby respect- ively and collectively enjoined from permitting the stock aforesaid to be voted by the Northern Securities Company, or in its behalf, by its attorneys 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 any dividends to the Northern Securities Company on account of stock in either of the aforesaid rail- way 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 Northern 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 construed as prohibiting the Northern Securities Companv from return- ing and transferring to the Northern Pacific Railway Company and the Great Northern Railway Company, respectively, any and all shares of stock in either of said railway companies which said. The Northern Securities Company, may have heretofore received from such stock [356] holders in exchange for Its own stock : and nothing herein con- tained shall be construed as prohibiting the Northern Securities Com- pany from making such transfer and assignments of the stock afore- said to such person or persons as may now be the holders and owner*? of Its own stock originally issued in exchange or in payment for the stock claimed to have been acquired by it in the aforesaid railwav companies." ^ 484 193 UXITED states' REPORTS, 356. Opinion of the Court, by Harlan, J., affirming decree. Subsequently, and before the appeal to this court was per- fected, an order was made in the Circuit Court to this effect : ** Tliat upon tlie giving of an approved bond to the United States by or on behalf of the defendants in the sum of fifty thousand dollars conditioned to prosecute their appeal with effect and to pay all dam- ages which may result to the United States from this order, that por- tion of the injunction contained in the final decree herein which forbids the Northern Pacific Railway Company and the Great Northern Rail- way Company, their oflicers, directors, servants and agents, from paying dividends to the Northern Securities Company on account of stock in either of the railway companies which the Securities Companv* claims to own and hold, is suspended during the pendency of the appeal allowed herein this day. All other portions of the decree and of the injunction it contains remain in force and are unaffected by this order." ^o valid objection can be made to the decree below, in form '©r in substance. If there was a combination or conspiracy in violation of the act of Congress, between the stockholders of the Great Northern and the Northern Pacific Railway com- panies, whereby the Northern Securities Company was formed as a holding corporation, and whereby interstate commerce over the lines of the constituent companies was restrained, ir must follow that the court, in execution of that act, and to defeat the efforts to evade it, could prohibit the parties to the combination from doing the specific things which being done would affect the result denounced by the act. To say that the Kjourt could not go so far is to say that it is powerless to en- force the act or to suppress the illegal combination, and pow- erless [357] to protect the rights of the public as against that combination. It is here suggested that the alleged combination had ac- complished its object before the commencement of this suit, in that the Securities Company had then organized, and had actually received a majority of the stock of the two constitu- ent companies; therefore^ it is argued, no effective relief can now be granted to the Government. This same view was pressed upon the Circuit Court, and was rejected. It was 4;ompleteIy answered by that court when it 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 th? power which it had no right to acquire, namely, to restrain commerce by suppressing competition, and is proceeding to use it and executt* the purpose for which the combination was formed, it must be left iu possession of the power that it has acquired, with full freedom to exercise it. Obviously the act, when fairly interpreted, will bear no NORTHEEN SECURITIES CO. V. UNITED STATES. 485 Opinion of the Court, by Harlan, J., affirming decree. such construction. Congress aimed to destroy the power to place any direct restraint on interstate trade or commerce, when by any com- bination or conspiracy, formed by either natural or artificial persons, such a power had been acquired ; and the Government may intervene 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 Company made itself a party to a combina- tion in restraint of interstate commerce that antedated its organiza- tion, as soon as it came into existence, doing so, of course, under the direction of the very individuals who promoted it." 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 les^ 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 [358] the power of the holding corporation 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 ques- tion will be valueless for any practical purpose. It is said that this statute contains criminal provisions and must therefore be strictly construed. The rule upon that sub- ject is a very ancient and salutary one. It means only that we must not bring cases within the provisions of such a statute that are not clearly embraced by it, nor by narrow, technical or 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 intention as dis- closed bv the words used. As early as the case of King v. Inhahitants of Hodnett^ 1 T. E. 96, 101, Mr. Justice Buller said : " It is not true that the courts in the exposition of penal statutes are to narrow the construction." In United States v. Wiltherger, 5 A^Tieat. 76, 95, Chief Jus- tice Marshall, delivering the judgment of this court and re- ferring to the rule that penal statutes are to be construed strictly, said: * " It is a modification of the ancient maxim, and amounts to this, that though penal laws are to be construed strictly, they are not to be 486 im ITNTTED STATES BEPORTS, 358. Opinion of the Court, by Harlan, J., affirming decree. construi^ 8o itrfetly as to defent the obvious inteirtion of tlie legisla- tSe ;t J,?t. rf/'" *' r- ^^^ ^ ^ «PP"^ «« *« »«»-ro^ the words of S^^^f rrl^nfi^iin'' ^''^•- "«]?»,*>f «»8es which those words, in their ordi- naij JK captation, or in that sense in which the legislature has obvi- ?8 to rf^ imVT!^ <^«mprehe„d The intentio^of tL leglslatr; 1® I? ., wllected trom the words they employ. Where there is no ambiguity in the words, there is no room for construction " In Uniied States v. Morris, 14 Pet. 464, 475, this court speaking by Chief Justice Taney, said : lt*b^yond7SL^i*"tU.^-"' ^***^^* ^ ^^"'^ certainly will not extend So, in The Schoorwr Industry, 1 Gall. 114, 117, Mr. Justice otory said: ...ui^LT ^'i<^*»"*>t€<*»y i««nd to constnie penal statutes strictly Lr la tit!" n.?iifl Z"''**^ *]^"i*' i''^ "^^ *^"»*^ to intei-pret them accord- Z wi« fn ihl ^ T'^"''''\ *"! ***® '''*^''*^**' ^'^^^ to hold all cases which «re uithin the words and the mischiefs to be within the remX-.l influence of the statute.* »>iiiini lue remeai.a In another case the same eminent jurist said : JLli^^}^ ***** ^^^ *" *t8 true and sober sense; and that is that c^ses tT'ZZlT' }l^ ^^'^"^ ""' Impllcatiin or extended to rS f t j^bviously within their words and punK>rt. ♦ • ♦ in short, it apiiears to me that the proper wurse in all the«e ca^es is to search out and follow the true intent of the legislature .fnd to ado^t that sense of the words which harmonizes the best \wth the «)nteTt Tl**?Tt^ *" the fullest manner the nm"arent WiUy and ohiStl' of the legislature/' lni,e4 mutes v. Wimjl t^n^% 21?, 2?i In People v. Bariow, 6 Cowen, 290, the highest court of Mew York said : nJ^t**T^^ * ^1!^ **^*^^"^^ ^'^ ♦*> ^ construed strictly, the court are Sinl li'ir^ln «"^f,J:'l".*'"*^"^ ''^ '^"^ legislature^ Anumg otSer Z miidl ouZ l^f 1^^^^^^ *« ™^^^ ^o^ thelood oJ sSTuS." "Jthough it be penal, to receive an equitable con- ^^f'lJ''. ^^^w^/**r.>^.^fA V. Martin, 17 Massachusetts, 350, 4U2, the highest court of Massachusetts said : '•If a statute, creating or increasing a penam-. be canahle of two constructions, undoubtedly that construction wS?eho,>e^^^^^^^^^^^ moiL tSIn" n'^fn*" \^**^ "*^**^^'^'^' »*"^ *^ *« »«t justlfiK hi this an^ wi? f*®" 1" *'?/ ^^^^** *^««^' to imagine ambiguities, merely that n knient constnict on may be adopted. If such were tLprhi lege o^ « sZuie^lmuTe^^. "T^^^^^^^ '"f ^"'•"^ wlllS^n 'almcLTever? »mrate enatted , for it rarely happens tliat one is so nrenisA nnd ova^f ^JS *''i;:^';?f '" '""J preelndV tho exmise of J^gSty iu raising doubts about Its eonstmctlon." "seimiiy lu raising NORTHERN SECURITIES CO. V, UNITED STATES. 487 Mr. Justice Brewer, concurring. Tiieie are cases almost without number in this country and in England to the same effect. Guided by these long-established rules of construction, it is manifest that if the Anti-Trust Act is held not to embrace a case such as is now before us, the plain intention of the leg- islative branch of the Government will be defeated. If Con- gress has not, by the words used in the act, described this and like cases, it would, we apprehend, be impossible to find words that would describe them. This, it must be remembered, is a suit in equity, instituted by authority of Congress " to pre- vent and restrain violations of the act," § 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 de- fendants have no just cause to complain of the decree, in matter of law, and it should be affirmed. The judgment of the court is that the decree below be and hereby is affirmed, with liberty to the Circuit Court to pro- ceed in the execution of its decree as the circumstances may require. Mr. Justice Brewer, concurring. I cannot assent to all that is said in the opinion just an- nounced, and believe that the importance of the case and the questions involved justify a brief statement of my views. Fir.st, let me say that while I was with the majority of the court in the decision in United States v. Freight Association^ 166 U. S. 290, followed by the cases of United States v. Joint Traffic Association, 171 U. S. 505, Addyston Pipe di Steel Company v. United States, 175 U. S. 211, and Montague <& Co, V. Lowin/, 193 U. S. 38, decided at the present term, and while a further examination (which has been induced by the able and exhaustive arguments of counsel in the present case) has not disturbed the conviction that those cases were rightly decided, [361] I think that in some respects the reasons given for the judgments cannot be sustained. Instead of holding that the Anti-Trust Act included all contracts, reasonable or unreasonable, in restraint of interstate trade, the ruling should have been that the contracts there presented were un- r 488 193 UNITED STATES REPORTS, 361. Mr. Justice Brewer, concurring. reasonable restraints of interstate trade, and as such within the scope of the act. That act, as appears from its title, was leveled at only " unlawful restraints and monopolies." Con- gress did not intend to reach and destroy those minor con- tracts in partial restraint of trade which the long course of decisions at conunon 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 de- parture 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. Further, the general language of the act is also limited by the power which each individual has to manage his own property and determine the place and manner of its invest- ment Freedom of action in these respects is among the inalienable rights of every citizen. If, applying this thought to the present case, it appeared that Mr. Hill was the owner of a majority of the stock in the Great Northern Railway Com- pany he could not by any act of Congress be deprived of the nght of investing his surplus means in the purchase of stock of the Northern Pacific Eailway Company, although such purchase might tend to vest in him through that ownership a control over both companies. In other words, the right, which all other citizens had, of purchasing Northern Pacific stock could not be denied to him by Congress because of his ownership of stock in the Great Northern Company. Such was the ruling in Pearsall v. Great Northern Railway, 161 U. S. 646, m which this court said (p. 671), in reference to the nght of the stockholders of the Great Northern Company to purchase the stock of the [362] Northern Pacific Railway Company : "Doubtless these stockholders could lawfully acquire bv individini purchases a majority, or even the whole of the stock of the reorSn ^ company, and thus possibly obtain its ultimate controf: bul the companies would still remain separate corporations with no nterests as such, m common." luieithis, But no such investment by a single individual of his means IS here presented. There was a combination by several indi- // r t NORTHERN SECURITIES CO. V. UNITED STATES. 489 Mr. Justice Brewer, concurring. viduals separately owning stock in two competing railroad companies to place the control of both in a single corporation. The purpose to combine and by combination destroy com- petition existed before the organization of the corporation, the Securities Company. That corporation, though nomi- nally having a capital stock of $400,000,000, had no means of its own ; $30,000 in cash was put into its treasury, but simply for the expenses of organization. The organizers might just as well have made the nominal stock a thousand millions as four hundred, and the corporation would have been no richer or poorer. A corporation, while by fiction of law recognized for some purposes as a person and for purposes of jurisdic- tion as a citizen, is not endowed with the inalienable rights of a natural person. It is an artificial person, created and existing only for the convenient transaction of business. In this case it was a mere instrumentality by which separate railroad properties were combined under one control. That combination is as direct a restraint of trade by destroying competition as the appointment of a committee to regulate rates. The prohibition of such a combination is not at all inconsistent with the right of an individual to purchase stock. The transfer of stock to the Securities Company was a mere incident, the manner in which the combination to destroy competition and thus unlawfully restrain trade was carried out. 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 con- ceded on the argument by one of the counsel for the appel- lants, could [363] the control of all the railroad companies in the country be placed in a single corporation. Nor need this arrangement for control stop with what has already been done. The holders of $201,000,000 of stock in the Northern Securities Company might organize another corporation to hold their stock in that company, and the new corporation holding the majority of the stock in the Northern Securities Company and acting in obedience to the wishes of a majority of its stockholders would control the action of the Securities Comjjany and through it the action of the two railroad com- panies, and this process might be extended until a single cor- 490 193 UNITED STATES REPORTS, 363. White, J., The Chief Justice, Pei-Iihaiii, Holmes, JJ., dissenting. poration 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 transportation system of the country. I cannot believe that to be a reasonable or lawful restraint of trade. Again, there is by this suit no interference with state control. It is a recognition rather than a disregard of its action. This merging of control and destruction of com- petition was not authorized, but specifically prohibited by Ihe State which created one of the railroad companies, and within whose boundaries the lines of both were largely located and much of their business transacted. The purpose and policy of the State are therefore enforced by the decree. So far as the work of the two railroad companies was inter- state conmierce, it was subject to the control of Congress, and its purpose and policy were expressed in the act under which this suit was brought. It must also be remembered that under present condi- tions a single railroad is, if not a legal, largely a practical, monopoly, and the arrangement by which the control of these two comi>eting roads was merged in a single corpora- tion broadens and extends such monopoly. I cannot look upon it as other than an unreasonable combination in re- straint of interstate commerce — one in conflict with state law and within the letter and spirit of the statute and the power of Congress. Therefore I concur in the judgment of affirmance. [364] I have felt constrained to make these observations for fear that the broad and sweeping language of the opin- ion of the court might tend to unsettle legitimate business enterprises, stifle or retard wholesome business activities, encourage improper disregard of reasonable contracts and invite unnecessary litigation. Mr. JiTSTi€E White, with whom concurred Mr. Chief Justice Fuller, Mr. Justice Peckham, and Mr. Justice HoL M E8, dissenting. The Northern Securities Company is a New Jersey cor- poration; the Great Northern Railway Company, a Min- nesota one: and the Northern Pacific Railway Company, northern securities CO. V, united states. 491 White, J., Tlie Chief Justice, Peclvham, Holmes, JJ., dissenting. a AVisconsin corporation. Whilst in the argument at bar the Government referred to the subject, nevertheless it expressly disclaimed predicating any claim .for relief upon the fact that the predecessor in title of the Northern Pacific Railway Company was a corporation created by act of Congress. That fact, therefore, may be eliminated. The facts essential to be borne in mind to understand my point of view, without going into details, are as follows : The lines of the Northern Pacific and the Great Northern Railway companies are both transcontinental, that is, trunk lines to the Pacific Ocean, and in some aspects are conceded to be competing. Mr. Morgan and Mr. Hill and a few persons immediately associated with them separately ac- quired and owned capital stock of the Northern Pacific Rail- way Company, aggregating a majority thereof. Mr. Hill and others associated with him owned, in the same manner, about one-third of the capital stock of the Great Northern Railway Company, the balance of the stock being distrib- uted among about eighteen hundred stockholders. Although Mr. Hill and his immediate associates owned only one-third of the stock, the confidence reposed in Mr. Hill was such that, through proxies, his influence was dominant in the affairs of that company. [3651 Under these circumstances Mr. Morgan and Mr. Hill organized under the laws of New Jersey the Northern Securities Company. The pur- pose was that the company should become the holder of the stock ot the two railroads. This was to be effected by having the Northern Securities Company give its stock iii exchange for that of the two railroad companies. Whilst the purpose of the promoters was mainly to exchange the stock held by them in the two railroads for the Northern Securities Company stock, nevertheless the right of stock- holders generally in the two railroads to make a similar exchange or to sell their stock to the Securities Company was provided for. Under the arrangement the Northern Securities Company came to be the registered holder of a majority of the stock of both the railroads. It is not denied that the charter, and the acts done under it, of the Northern Securities Company, were authorized by the laws of New Jersey, and, therefore, in so far as those laws were com- 492 mi UNITED STATES BEPORTS, 365, White, J., Tlie CMef Justice, Peckliam, Holmes, JJ., dissenting. petent to sanction the transaction, the corporation held the stock in the two railroads secured by the law of the State of its domicil. The government by its bill challenges the right of the Northern Securities Company to hold and own the stock in the two railroads. The grounds upon which the relief sought was based were, generally speaking, as follows: That as the two railroads were competing lines engaged in part in interstate commerce, the creation of the Northern Securities Company and the acquisition by it of a majority of the stock of both roads was contrary to the act of Con- gress iaiown as the Anti-Trust Act. 26 Stat. 209. The clauses of the act which it was charged were violated were the first section, declaring illegal "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;" and the provisions of the second section making it a misdemeanor for any person to " mo- nopolize, 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 [366] States or with foreign nations." The court below sustained the con- tentions of the government. It, therefore, enjoined the two railroad companies from allowing the Northern Securities Company to vote the stock standing in its name or to pay to that company any dividends upon the stock by it held. On the giving, however, of a bond fixed by the court below the •decree relating to the payment of dividends was suspended pending the appeal to this court. The court recognized, however, the right of the Northern Se(!urities Company to retransfer the stock in both railroads to the persons from whom it had been acquired. The cor- rectness of the decree below is the question presented for decision. Two questions arise. Does the Anti-Trust Act, when rightly interpreted, apply to the acquisition and owner- ship by the Northern Securities Company of the stock in the two railroads, and, second, if it does, had Congress the power to regulate or control such acquisition and owner- ship ? As the question of power lies at the root of the case, NORTHERN SECURITIES CO. V. UNITED STATES. 493 White, X, The Chief Justice, Peckhain, Holmes, JJ., dissenting. I come at once to consider that subject. Before doing so, liowever, in order to avoid being misled by false or irrele- vant issues, it is essential to briefly consider two questions of fact. It is said, first, that the mere exchange by the Northern Securities Company of its stock for stock in the rail- roads did not make the Northern Securities Company the real owner of the stock in the railroads, since the effect of the transaction was to cause the Securities Company to become merely the custodian or trustee of the stock in the railroads ; second, that as the two railroads were both over-capitalized, stock in them furnished no sufficient consideration for the issue of the stock of the Northern Securities Company. It would suffice to point out, «, that the proof shows that nearly nine million dollars were paid by the Securities Company for a portion of the stock acquired by it, and that, moreover, nearly thirty-five million dollars were expended by the Securities Company in the purchase of bonds of the Northern Pacific Company, which have been converted by the Securities Company into the stock of that railroad, [367] which the Securities Company noAv holds; and, b, that the market value of the railroad stocks is, moreover, -indis- putably shown by the proof to have been equal to the value fixed on them for the purpose of the exchange or purchase of such stock by the Northern Securities Company. Be this as it may, it is manifest that these considerations can have no possible influence on the question of the power of Congress in the premises ; and therefore the suggestions can serve only to obscure the controversy. If the power was in Congress to legislate on the subject it becomes wholly inmaaterial what was the nature of the consideration paid by the company for the stock by it acquired and held if such acquisition and ownership, even if real, violated the act of Congress. If on the contrary the authority of Congress could not embrace the right of the Northern Securities Company to acquire and own the stock, the question of what consideration the Northern Securities Company paid for the stock or the method by which it was transferred must necessarily be beyond the scope of the act of Congress. In testing the power of Congress I shall proceed upon the assumption that the act of Congress forbids the acquisition of \ 193 UNTTED STATES KEPOBTS, 367. White, J., The Chief Justice, Peckham, Holmes. JJ., disseutiug. a majority of the stock of two competing railroads engaged in part in interstate commerce by a corporation or any combina- tion of persons. The authority of Congress, it is conceded by all, must rest upon the power delegated by the eighth section of the first article of the Constitution, " to regulate Commerce with for- eign Nations, and among the several States and with the Indian tribes." The proposition upon which the case for the government depends then is that the ownership of stock in railroad corporations created by a State is interstate commerce, wherever the railroads engage in interstate com- merce. At the outset, the absolute correctness is admitted of the declaration of Mr. Chief Justice Marshall in Gibbons v. Og- den, that the power of Congress to regulate commerce among the [368] States and with foreign nations " is complete in itself and may bt* exercised to its utmost extent, and ac- knowledges no limitations other than are prescrib?d in the Constitution ; " and that if the end to be accomplished is 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." The plenary authority of Congres over interstate com- merce, its right to regulate it to the fullest extent, to fix the rates to be charged for the movement of interstate com- merce, to legislate concerning the ways and vehicles actually engaged in such traffic, and to exert any and every other power over such commerce which flows from the authority conferred by the Constitution, is thus conceded. But the concessions thus made do not concern the question in this case, which is not the scope of the power of Congress to reg- ulate (»oinmerce. but whether the i>ower extends to regulate the ownership of stock in railroads, which is not commerce at all. The confusion which results from failing to observe this distinction will appear from an accurate analysis of Gibbons v. Ogtlen^ for in tliat case the great Chief Justice was careful to define the commerce, the power to regulate which was conferred upon Congress, and in the pas«ag the same. Besides, if the principle be acceded to, it must in reason b,- held to embrace every consolidation of state railroads which may do in part an interstate commerce business, even al- though sucli consolidation mav have been expresslv author- imd by the laws of the States creating the corporations. It would likewise overthrow every state law forbidding such consolidations, for if the ownership of stock in state cor porations be within the regulating power of Congress under the commerce clause and can be prohibited by Congress, it would be within the power of that body to permit that which it had the right to prohibit. But the principle that the ownership of property is em- braced within the power of Congress to regulate commerce, whenever that body deems that a particular character of ownership, if allowed to continue, may restrain commerce between the States or create a monopoly thereof, is in my opinion in conflict with the most elementary conceptions of rights of property. For it would follow if Congress deemed NORTHERN SECURITIES CO. V. UNITED STATES. 497 White, J., The Chief Justice, Peclvham, Holmes, JJ., dissenting. that the acquii-^ition by one or more individuals engaged in interstate commerce of more than a certain amount of prop- erty would be prejudicial to interstate commerce, the amount of property held or the amount which could be employed in interstate commerce could be regulated. [371] In the argument at bar many of the consequences above indicated as necessarily resulting from the contention made were frankly admitted, since it was conceded that, even although the holding of the stock in the two railroads by the Northern Securities Company which is here assailed, was expressly authorized by the laws of both the States by which the railroad corporations were created, as it was by the law of the State of New Jersey, nevertheless as such au- thority, if exerted by the States, would be a regulation of interstate commerce, it would be repugnant to the Constitu- tion as an attempt on the part of the States to interfere with the paramount authority of Congress on that subject. True, this assertion, made in the oral argument, in the printed ar- gument is qualified by an intimation that the rule would not apply to state action taken before the adoption of the Anti- Trust Act, since up to that time, in consequence of the in- action of Congress on the subject, the States were free to legislate as they pleased regarding the matter. But this suggestion is without foundation to rest on. It has long since been determined by this court that where a particular subject matter is national in its character and requires uni- form regulation, the absence of legislation by Congress on the subject indicates the will of Congress that the subject should be free from state control. County of Mobile v. Kim- ball, 102 U. S. 691 ; Bobbins v. Shelby Taxing DistHct, 120 U. S. 489, 493 ; United States v. E. €, Kniqht Company, 156 •U.S.I. It is said, moreover, that the decision of this case does not involve the consequences above pointed out, since the only issue in this case is the right of the Northern Securities Com- pany to acquire and own the stock. The right of that com- pany to do so, it is argued, is one thing; the power of indi- viduals or corporations, when not merely organized to hold stock, an entirely different thing. My mind fails to seize 21220--VOL 2—07 M 32 498 193 UNITED STATES REPORTS, 371. White, J., The Chief Justice, Peckham, Holmes, JJ., dissenting. the distinction. The only premise by which the power of Congress can be extended to the subject matter of the right of the Securities Company to own the stock must be the proposition that such [372] ownership is within the legis- lative power of Congress, and if that proposition be admitted it is not perceived by what process of reasoning the power of Congress over the subject matter of ownership is to be lim- ited to ownership by particular classes of corporations or per- sons. If the power embraces ownership, then the authority of Congress over all ownership which in its judgment may affect interstate commerce necessarily exists. In other words the logical result of the asserted distinction amounts to one of two things. Either that nothing is decided or that a decree is to be entered having no foundation upon which to rest. This is said because if the control of the ownership of stock in competing roads by one and the same corporation is within the power of Congress, and creates a restraint of trade or monopoly forbidden by Congress, it is not conceivable to me how exactly similar ownership by one or more individu- als would not create the same restraint or monopoly, and be equally within the prohibition which it is decided Congress has imposed. Besides the incongruity of the conclusion re- sulting from the alleged distinction, to admit it would do violence to both the letter and spirit of the Constitution, since it would in effect hold that, although a particular act was a burden upon interstate commerce or a monopoly thereof, individuals could lawfully do the act, provided only they did not use the instrumentality of a corporation. But this court long since declared that the power to regulate com- merce, conferred upon Congress, was " general and includes alike commerce by individuals, partnerships, associations and corporations." Paul v. Virginia^ 8 Wall. 168, 183. Indeed, the natural reluctance of the mind to follow an erroneous principle to its necessary conclusion, and thus to give effect to a grievous wrong arising from the erroneous principle, is an admonition that the principle itself is wrong. That admonition, I submit, is conclusivelv afforded by the decree which is now affirmed. Without stopping to point out what seems to me to be the conclusion, contradiction and denial of rights of property which the decree exemplifies, NORTHERN SECURITIES CO. V, UNITED STATES. 499 White, J., The Chief Justice, Peckham, Holmes, JJ., dissenting. let me see [373] if in effect it is not at war with itself and in conflict with the principle upon which it is assumed to be based. Fundamentally considered, the evil sought to be remedied is the restraint of interstate commerce and the monopoly thereof, alleged to have been brought about, through the acquisition by Mr. Morgan and Mr. Hill and their friends and associates, of a controlling interest in the stock of both the roads. And yet the decree, whilst forbidding the use of the stock by the Northern Securities Company, authorizes its return to the alleged conspirators, and does not restrain them from exercising the control resulting from the owner- ship. If the conspiracy and combination existed and was illegal, my mind fails to perceive why it should be left to produce its full force and effect in the hands of the indi- viduals by whom it was charged the conspiracy was entered into. It may, however, be said that even if the results which I have indicated be held necessarily to arise from the principles contended for by the government, it does not follow that such power would ever be exerted by Congress, or, if exerted, would be enforced to the detriment of charters granted by the States to railroads or consolidations thereof, effected under state authority, or the ownership of stock in such rail- roads by individuals, or the rights of individuals to acquire property by purchase, lease or otherwise, and to make any and all contracts concerning property which may thereafter become the subject matter of interstate commerce. The first suggestion is at once met by the consideration that it has been decided by this court that, as the Anti-Trust Act for- bids any restraint, it therefore embraces even reasonable contracts or agreements. If, then, the ownership of the stock of the two railroads by the Northern Securities Company is repugnant to the act it follows that ownership, whether by the individual or another corporation, would be equally within the prohibitions of the act. As to the second, true it is that by the terms of the Anti-Trust Act the power to put its provisions in motion is, as to many particulars, con- fided to the highest law officer of the govern- [374] ment, and if that officer did not invoke the aid of the courts to 500 im UNITED STATES BEPOBTS, 374. Wliite, J., The Chief Justice, Peckham, Holmes, JJ., dissenting. restrain the rights of the railroads previously chartered by the States to enjoy the benefits conferred upon them by state legislation, or to prevent individuals from exercising their right of ownership and contract, the law in these respects would remain a dead letter. But to indulge in this assump tion would be but to say that the law would not be enforced by the highest law officer of the government, a conchision which, of coui-se, could not be indulged in for a moment. In any view, such suggestion but involves the proposition that vast rights of property, instead of resting upon constitu- tional and legal sanction, must alone depend upon whether an executive officer might elect to enforce the law — a con- clusion repugnant to every principle of liberty and justice. Having thus by the light of reason sought to show the un- soundness of the proposition that the power of Congress to regulate commerce extends to controlling the acquisition and ownership of stock in state corporations, railroad or other- wise, because they may be doing an interstate commerce busi- ness, or to the consolidation of such companies under the sanction of state legislation, or to the right of the citizen to enjoy his freedom of contract and ownership, let me now en- deavor to show, by a review of the practices of the govern- ments, both state and national, from the beginning and the adjudications of this court, how wanting in merit is the proposition contended for. It may not be doubted that from the foundation of the government, at all events to the time of the adoption of the xinti-Trust Act of 1890, there was an entire absence of any legislation by Congress even suggest- ing that it was deemed by any one that power was possessed by Congress to control the ownership of stock in railroad or other corporations, because such corporations engaged in interstate commerce. On the contrary, when Congress came to exert its authority to regulate interstate commerce as carried on by railroads, manifested by tlie adoption of the interstate conmierce act, 24 Stat. S79, it sedulously confined the provisions of that act to the [375] carrying on of inter- state commerce itself, including the reasonableness of the ratas to be charged for carrying on such commerce and other matters undeniably concerning the fact of interstate com- merce. The same conception was manifested subsequently NORTHERN SECURITIES CO. V. UNITED STATES. 501 White, J., The Chief Justice, Peckham, Holmes, JJ., dissenting. in legislation concerning safety appliances to be used by railroads, since the provisions of the act were confined to such appliances when actually employed in the business of interstate commerce. 27 Stat. 531. It also mav not be doubted that fron) the beginning the various States of the Union have treated the incorporation and organization of railroad companies and the ownership of stock therein as matters within their exclusive authority. Under this con- ception of power in the States, universally prevailing and always acted upon, the entire railroad system of the United States has been built up. Charters, leases and consolidations under the sanction of state laws lie at the basis of that enor- mous sum of property and those vast interests represented by the railroads of the United States. Extracts from the reports of the Interstate Commerce Commission and from a standard authority on the subject, which were received in evidence, demonstrate that in effect nearly every great rail- road system in the United States is the result of the consoli- dation and unification of various roads, often competitive, such consolidation or unification of management having been brought about in every conceivable form, sometimes by lease under state authority, sometimes by such leases made where there was no prohibition against them, and by stock aqui- sitions made by persons or corporations in order to acquire a controlling interest in both roads. Without stopping to recite details on the subject, I content myself with merely mentioning a few of the instances where great systems of railroad have been formed by the unification of the manage- ment of competitive roads, by consolidation or otherwise, often by statutory authority. These instances embrace the Boston and Maine system, the Kew York, New Haven and Hartford, the New York Central, the Reading, and the Pennsylvania systems. [376] One of the illustrations— as to the New York Central system— is the case of the Hudson River Railroad on one side of the Hudson River and the West Shore Railroad on the other, both parallel roads and directly competitive, and both united in one management by authority of a legislative act. It is indeed remarkable, if the whole subject was within the paramount power of Congress and not within the authority of the States, that 'tMi^ 193 UNITED STATES KEPORTS, 376. White, J., The Chief Justice. Pecltham, Holmes, JJ., dissenting. there should have been a universal understanding to the con- trary from the beginning. When it is bome in mind that such universal action related to interests of the most vital character, involving property of enormous amount concern- ing the welfare of the whole people, it is impossible in rea- son to deny the soundness of the assumption that it was the universal conviction that the States, and not Congress, had control of the subject matter of the organization and owner- ship of railroads created by the States. And the same in- ference is applicable to the condition of things which has existed since the adoption of the Anti-Trust Act in 1890. Who can deny that from that date to this consolidations and unilication of management, by means of leases, stock owner- ship by individuals or corporations, have been carried on, when not prohibited by state laws, to a vast extent, and that during all this time, despite the energy of the government in invoking the Anti-Trust Law, that no assertion of power in Congress under that act to control the ownership of stock was ever knowingly made until first asserted in this cause. Quite recently Congress has amended the interstate commerce act by provisions deemed essential to make its prohibitions more practically operative, and jet no one of such provisions lends itself even to the inference that it was deemed by any one that the power of Congress extended to the control of stock ownership. Certainly the States have not so con- sidered it. As a matter of public history it is to be observed that not long since, by authority of the legislature of the State of Massachusetts, a controlling interest by lease of the Boston and Albany road passed to the New York Central system. [377] The decisions of this court to my mind leave no room for doubt on the subject. As I have already shown, the very definition of the power to regulate commerce, as announced in Gibhom v. Ogden^ excludes the conception that it extends to stock ownership. I shall not stop to review a multitude of decisions of this court concerning interstate commerce, which, whilst upholding the paramount authority of Congress over that subject, at the same time treated it as elementary, that the effect of the power over commerce between the States was not to deprive the States of their right to legislate con- NORTHEBTsT SECURITIES CO. V. UNITED STATES. 503 White, J., The Chief Justice, Peclfham, Holmes, JJ., dissenting. cerning the ownership of property of every character or to create railroad corporations and to endow them with such powers as were deemed appropriate, or to deprive the indi- vidual of his freedom to acquire, own and enjoy property by descent, contract or otherwise, because railroads or other property might become the subject of interstate commerce. In Paul V. Virginia^ 8 Wall. 168, the question was as to the power of the State of Virginia to license a foreign insurance company, and one of the contentions considered was whether the contract of insurance, since it was related to commerce, was within the regulating power of Congress and not of the State of Virginia. The proposition was disposed of in the following language (p. 183) : "Issuing a policy of insurance is not a transaction of commerce. The policies are simply contracts of indemnity against loss by fire, entered into between the corporations and the assured, for a consider- ation paid by the latter. These contracts are not articles of commerce in any proi^er meaning of the word. They are not subjects of trade and barter offered in the market as something having an existence and value independent of the parties to them. They are not commodi ties to be shipped or forwarded from one State to another, and then put up for sale. They are like other personal contracts between par- ties which are completed by their . signature and the transfer of the consideration. Such contracts are not interstate transactions, though the parties may be domiciled [378] in different States. The policies do not take effect — are not executed contracts — until delivered by the agent in Virginia. They are, then, local transactions, and are governed by the local law. They do not constitute a part of the com- merce between the States any more than a contract for the purchase and sale of goods in Virginia by a citizen of New York whilst in Virginia would constitute a portion of such commerce." In other words, the court plainly pointed out the distinc- tion between interstate commerce as such and the contracts concerning, or the ownership of property which might become the subjects of interstate commerce. And the authority of Paul V. Virginia has been repeatedly approved in subsequent cases, which are so familiar as not to require citation. In Railroad Go, v. Maryland^ 21 Wall. 456, the question was this: The State of Maryland had chartered the Baltimore and Ohio Railroad Company, and in the charter had imposed upon it the duty of paying to the State a certain proportion of all its receipts from freight, which applied as well to- inter- state as domestic freight. The argument was that these pro- visions were repugnant to the commerce clause, because they necessarily increased the sum which the railroad would have 504 193 UNITED STATES REPORTS, 378. White, J., Tlie Chief Justice, Pecliham. Holmes, JX, dissenting. to charge, and thereby constituted a regulation of commerce. The court held the law not to be repugnant to the Constitu- tion, and in the course of the opinion said (p. 473) : alwiv^ t!^,; ^irr^r^ f *l!^ '^^''^ ^'^^J''''^ P*^'^^'^ ^^»<^b a state has always been conceded to have over its own territory, its highways ts franchises and its corporations, we cannot regard the stipulation m question as amounting to either of these unconstitutional acts." True it is that some of the expressions used in the opinion io the case just cited, giving rise to the inference that there was power in the State to regulate the rates of freight on interstate conmierce, may be considered as having been over- ruled by Wabash Railroad Company v. Illinois, 118 U. S. 557. But that case also in the fullest manner pointed out the fact that the power to regulate commerce, conferred on Congress by the [370] Constitution, related not to the mere ownership of property or to contracts concerning property, because such property might subsequently be used in interstate commerce or become the subject of it. For instance, the definition given of interstate conmierce in Gibbons v. Ogdm, previously re- ferred to, was reiterated and in addition the definition ex- pounded in County of Mobile v. Kimball, 102 U. S. 091, was approvingly quoted. That definition was as follows (p. 574) : r.onJt^?TZ!i'T**^ ^?f^ eoontries and among the States, strictly construed, consists in intercourse and traffic, including in these terms navigation and the transportation and transit of persons and pronerSr as well as the purchase, sale and exchange of commodities For the S?^leratnrXft^^^^^ ^^«L^^ '^'^^ '-- b- onfroi/system 01 rules, applicable alike to the whole country; and the authority which can act for the whole country can alone adopt such a systeS Action upon It by sei^arate States is not. therefore, permissible Lan guage afhrming the exclusiveness of the grant of power over commence m h us defined may not be inaccurate, when it would be so if annUed to legwluUm upm mbfccts which are merely auxiliary to commerce: " In Ashley v. Byan, 153 U. S. 436, this was the question : The property of various railroad corporations operating in the States of Ohio, Michigan, Indiana, Illinois and Missouri had been sold under decrees of foreclosure. The purchasers of the respective lines availed themselves of the Ohio statutes, and consolidated all the corporations into one so as to form a single system, the Wabash. On presenting the articles of consolidation to the Secretary of State of Ohio, that officer demanded a fee imposed by the Ohio statutes, predicated epon the sum total of the capital stock of the consolidated NORTHERN SECURITIES CO. V. UNITED STATES. '505 White, J., The Chief Justice, Peckham, Hohnes, JJ., dissenting. company. This was refused on the ground that the State of Ohio had no right to make the charge, and that its doing so was repugnant to the commerce clause of the Constitution of the United States and to the Fourteenth Amendment. This court decided against this contention. It held that, as the right to consolidate could [380] alone arise frOm the Ohio law, the corporation could not avail of that law and avoid the condition which the law imposed. Speaking of the consoli- dation, the court said (p. 440) : " The rights thus sought could only be acquired by the grant of the State of Ohio, and depended for their existence upon the provisions of its laws. Without that State's consent they could not have been procured." And, after a copious review of the authorities concerning the power of the State over the consolidation, the case was suDMned up by the court in the following passage (p. 446) : " Considering, as we do, that the payment of the charge was a condi- tion imposed by the State of Ohio upon the taking of corporate being or the exercise of corporate franchises, the rignt to which depended solely on the tvlll of that State," (italics mine,) "and hence that liability for the charge was entirely optional, we conclude that the exaction constituted no tax upon interstate commerce, or the right to carry on the same, or the instruments thereof, and that its enforcement involved no attempt on the part of the State to extend its taxing power beyond its territorial limits." How a right which was thus decided to depend solely upon the authority of the States can now be said to depend solely upon the will of Congress, I do not perceive. In United States v. E, C. Knight Co., 156 U. S. 1, the facts and the relief based on them were thus stated by Mr. Chief Justice Fuller, delivering the opinion of the court (p. 9) : " By the purchase of the stock of the four Philadelphia refineries, with shares of its own stock, the American Sugar Refining Company acquired nearly complete control of the manufacture of refined sugar within the United States. The bill charged that the contracts under which these purchases were made constituted combinations in re- straint of trade, and that in entering into them the defendants com- bined and conspired to restrain the trade and commerce in refined sugar among the several States and with foreign nations, contrary to the act of Congress of July 2, 1890." [381] After referring, in a general way, to what consti- tuted a monopoly or restraint of trade at common law, the question for decision was thus stated (p. 11) : " The fundamental question is, whether conceding that the existence of a monopoly in manufacture is established by the evidence, that monopoly can be directly suppressed under the act of Congress in the mode attempted by this bill." 506 im UNITED STATES REPORTS, 381. WMte, J., The Chief Justice, Peckham, Holmes, JJ., dissenting. Examinmg this question as to the power of Congress, it was observed (p. 11) : "It cannot be denied that the power of a State to protect the lives, health and projierty of its citizens, and to preserve good order and the pjWIc 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 rMtnlmd hy the Oonstitntion of the United States, and essen- tially exclusive." Next, pointing out that the power of Congress over inter- state commerce and the fact that its failure to legislate over subjects requiring uniform legislation expressed the will of Congress that the State should be without power to act on that subject, the court came to consider whether the power of Congress to regulate commerce embraced the authority to regulate and control the ownership of stock in the state sugar refining companies, because the products of such companies when manufactured might become the subject of interstate commerce. Elaborately passing upon that question and re- affirming the definition of Chief Justice Marshall of com- merce, in the constitutional sense, it was held that, whilst the power of Congress extended to commerce as thus defined, it did not embrace the ownership of stock in state corpora- tions, because the products of such manufacture might subse- quently become the subject of interstate commerce. The parallel between the two cases is complete. The one corporation acquired the stock of other and competing cori^orations by exchange for its own. It was conceded, for the [382] purposes of the case, that in doing so monopoly had been brought about in the refining of sugar, that the • sugar to be produced was likely to become the subject of inter- state commerce, and indeed that part of it would certainly become so. But the power of Congress was decided not to extend to the subject, because the ownership of the stock in the corporations was not itself commerce. In Pearsall v. The Great Northern Railway Company ^ 161 U. S. 646, the question was whether the acquisition by the Great Northern road of a controlling interest in the stock of the Northern Pacific Railway Company was a violation of a Minnesota statute prohibiting the consolidation of competing lines. It is at once evident that if the subject of consolidation NORTHEBN SECURITIES CO. V, UNITED STATES. 507 White, J., The Chief Jnstiee, Peckham, Holmes, JJ., dissenting. was within the authorit}^ of Congress, as Congress had not expressed its will upon the subject, the act of the legislature of Minnesota was void because repugnant to the Constitution of the United States. But the possibility of such a contention was not thought of by either party to the cause or by the court itself. Treating the power of the State as undoubted, the court, speaking through Mr. Justice Brown, decided that the Minnesota law should be enforced. It was pointed out in the opinion that, as the charter was one granted by the State, the railroad company and the ownership of stock therein was sub- ject to the state law, and this was made the basis of the de- cision. Whilst, however, resting its conclusion upon the power of the State over the corporation by it created, the court was careful to recognize that the authority in the State was so complete, as the company was a state corporation, that the State had the right, if it chose to do so, to authorise the consolidation^ even although the lines were competing. In Louisville <& Nashville Railroad v. Kentucky, 161 U. S. 677, the power of the State to pass a law forbidding the con- solidation of competing state railroad corporations doing in part an interstate commerce business was again considered, and a state statute in which the power was exercised was up- held. Here, again, it is to be observed that if the consolida- tion of [383] state railroad corporations, because they did in part an interstate commerce business, was within the para- mount authority of Congress, that authority was exclusive and the state regulation which the court upheld was void. And this question, vital to the consideration of the case, and without passing upon which it could not have been decided did not escape observation, since it was explicitly pressed upon the court and was directly determined. The court, speaking through Mr. Justice Brown, said (pp. 701, 702) : "But little need be said in answer to the final contention of the plaintiff in error, that the assumption of a right to forbid the consoli- dation of parallel and competing lines is an interference with the power of Congress over interstate commerce. The same remarlc may be made with respect to all police regulations of interstate railways. * * ♦ * * " It has never been supposed that the dominant power of Congress over interstate commerce took from the States the power of legisla- tion with respect to the instruments of such commerce, so far as the legislation was within its ordinary police powers. Nearly all the railways in the country have been constructed under state authority, 508 193 UNITED STATES REPOBTS, 383. White, J.. The Chief Justice, Pecl^ham, Holmes, JJ., dissenting, ovl'lhrf""^ *"*" suDiwsed that they intended to abandon their power their oneratfon ^fr '''/^^ ^T? ^^ '"^^"^'^ ^"^'^ rej,nilations upon ^m Jifrln ?it 1 ■ ^T^ ?^*"*'^ ^**'* "*^ interests of the public may seen to render desirable. In the division of authority with vem^nf to iiiterstate railways Congress reserves to itself thrsupoHor rillif to control their cwunerce and forbid interference thereAvUhTwhU^^ the States remains the power to create and to regulate the instruments ?4e?^teT"^''''' '' ''' "' ^'^^^"'•^ *? *^^ cons^rvalioSVfTe"^ How one case could be more completely decisive of another than the ruling in the case just quoted is of this, I am unable to perceive. [384] The subject was considered at circuit in In re Greene, 52 Fed. Kep. 104. The case was this : A person was indicated m one State for creating a monopoly in violation of the Anti-Trust Act of Congress and was held in another State for extradition. The writ of hahem corpus was in- voked, upon the contention that the face of the indictment did not state an offense against the United States, since the matters charged did not involve intei-state commerce The case is referred to, although it arose at circuit and was de- termined before the decisions of this court in the Pearsall and LmisviUe and NashvUIe cases, because it was decided by Mr. Justice Jackson, then a Circuit Judge, who subsequentlV be- came a member of this court. The opinion manifests that the case was considered by Judge Jackson with that care which was his conceded characteristic and was stated by him With that lucidity which was his wont. In disdiari^ing the accused on the grounds stated in the application for the writ Judge Jackson said (p. 112) : * " Congress may place restrictions and limitations upon the ri'ht of rurdfwe orBrteHv ^Tr^^^ T*'^^ ''' authorirto acQuVr'^^ u^' Smit ^f^fn,^,.^ilT-!?- ^} "^^^ *^^^** '°'P«^« s"<^»> restrictions and il^ li # "^'.^ ^^^ ^i^^""^" ^^ tmvect to the exercise of a public privi l!!^!'*^""'*^^!? conferred by the United States. But Congress clr- tamly has not the power or authority under the commVrce clause or any other provision of (he Constitution, to JiniifaXTirict the riehl ?L'nrf 1^"' ''^f "^ ^^ '^^ ^^^^^^ «^ *be citizens of tlfstate^^ the acquis tion, control and disposition of property. Neither can Con gress regulate or prescribe the price or prices at which such p?one^^^^^ m products thoreof. shall be sold by the owner or ovvners whetbe; jorporat ions or individuals. It is e< ually clear that Coa^ress has no jurisdiefon over, and cannot make criminal, the aims pmT^^ses anS intentions of i»ersons in the ae^iuisition and (control of prii^rtv which the States of their residence or creation sanction and pSt' It la Dot material that such property, or the products thereof nTybeime the [385] subject of trade or commerce among the several Stat^ or l^ORTHERN SECURITIES CO. V. UNITED STATES. 509 White, J., The Chief Justice, Peckham, Holmes, JJ., dissenting. with foreign nations. Commerce among the States, within the exclu- sive regulating i)3wer of Congress, 'consists of intercourse and traffic between their citizens, and includes the transportation of persons and property, as well as the purchase, sale and exchange of commodities.* Count }f of Mobile v. Kimhalh, 102 U. S. 691, 702 ; Qlonccster Ferry Co. v. Pennsylvania, 114 U. S. 203. In the application of this comprehensive definition, it is settled by the decision of the Supreme Court that such commerce includes, not only the actual transportation of commodities and persons between the States, but also the instrumentalities and processes of such transportation. *****♦*♦ "That neither the production or manufacture of articles or com- modities which constitute subjects of commerce, and which are intended for trade and traffic with citizens of other States, nor the preparation for their transportation from the State where produced or manufac- tured, prior to the commencement of the actual transfer, or transmis- sion thereof to another State, constitutes that interstate conmierce which comes witliin the regulating power of Congress; and, further, that after the termination of the transportation of commodities or arti- cles of traffic from one State to another, and the mingling or merging thereof in the general mass of property in the State of destination, the sale, distribution and consumption thereof in the latter State forms no part of interstate commerce." If this opinion had been written in the case now considered it could not more completely than its reasoning does have dis- posed of the contention that the ownership of stock by a cor- poration in competing railroads was commerce. United States v. Freight Association^ 166 U. S. 290, was this : A large number of railway companies, who were made defendants in the cause, had formed themselves into an asso- ciation, known as the Trans-Missouri Freight Association, and the companies had bound themselves by the provisions contained in the articles of agreement. Many stipulations relating to [3^6] the carrying on of interstate commerce over the roads which were parties to the agreement were contained in it, and section 3 provided as follows : " A committee shall be appointetl to establish rates, rules and regula- tions on the traffic subject to this association, 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 r»e referrefl to the managers of the lines parlies hereto ; and if they disagree it shall be arbitrated in the manner provided in article VII." The government sought to dissolve the association on the ground that the agreement restrained commerce between the States, and therefore was in violation of the Anti-Trust Act. On the hearing in this court, as the agreement directly related in many particulars to interstate transportation and the charge, to be made therefor, it was conceded on all hands that 510 193 UNITED STATUS BIPOBTS, 386. WWte, J., The Chief Justice. Peckhmn, Holmes, JX, diiweiiting. it embraced subjects which came within the power of Con- gress to regulate commerce. The contentions on behalf of the association were these : First. That the movement of in- terstate commerce bj railroads was not within the Anti-Trust Act, since Congress had regulated that subject by the inter- state commerce act. and did not intend to amplify its provi- sions in any respect by the subsequent enactment of the Anti- Trust Law. Second. That even if this were not the case, and the movement of interstate commerce by railroads was affected by the Anti-Trust Statute, the particular agreement in question did not violate the act, because the agreement dierty if acquired may he so used as to burden commerce, therefore to acquire and own is to burden. This, however, would be but to declare that that which was in its very nature and essence indirect is direct. S. But, it is said, it may not be denied that the common .ownership of stock in competing railroads endows the holdei's of the majority of the stock with a common interest in both railroads and with the authority, if they choose to exert it, to so unify the management of the roads as to suppress competi- tion between them. This power, it is insisted, is within the regulating authority of Congress over interstate commerce. In other words, the contention broadly is that Congress has NOBTHEBN SECUBITIES CO. V, UNITED STATES. 519 White, J,, The Chief Justice, Pecltham, Holmes, JJ., dissenting. not only the authority to regulate the exercise of interstate commerce, but under that power has the right to regulate the ownership and possession of property, if the enjoyment of such rights would enable those who possessed them if they engaged in interstate commerce to exert a power over the same. But this proposition only asserts in another form that the right to acquire the stock was interstate commerce, and therefore was within the authority of Congress, and is refuted by the reasons and authorities already advanced. That the proposition, if adopted, would extend the power of Congress to all subjects essentially local, as already stated in considering the previous proposition, is to my mind manifest. So clearly is this the result of the particular proposition now being considered, that, [397] at the risk of repetition, I again illustrate the subject. Under this doctrine the sum of prop- erty to be acquired by individuals or by corporations, the contracts which they may make, would be within the regulat- ing power of Congress. If it were judged by Congress that the farmer in sowing his crops should be limited to a certain production because overproduction would give power to affect commerce, Congress could regulate that subject. If the acquisition of a large amount of property by an individ- ual was deemed by Congress to confer upon him the power to affect interstate commerce if he engaged in it. Congress could regulate that subject. If the wage-earner organized to better his condition and Congress believed that the existence of such organization would give power, if it were exerted, to affect interstate commerce, Congress could forbid the organization of all labor associations. Indeed, the doctrine must in reason lead to a concession of the right in Congress to regulate concerning the aptitude, the character and capacity of persons. If individuals were deemed by Congress to be possessed of such ability that participation in the manage- ment of two great competing railroad enterprises would endow them with the power to injuriously affect interstate commerce, Congress could forbid such participation. If the principle were adopted, and the power which would arise from so doing were exercised, the result would be not only to destroy the state and Federal governments, but by the implication of authority, from which the destruction would be brought 520 193 UNITED STATES REPOBTS, 397. White, J., The Chief Justice. Peckhani, Holmes. JX. dissenting, about, there would be ei^ted upon the ruins of both a gov- ernment endowed with the arbitrary power to disregard the great guaranty of life, liberty and property and every other safeguard upon which organized civil society depends. I say the guaranty, because in my opinion the three are indis- solubly united, and one cannot be destroyed without the other. Of course, to push propositions to the extreme to which they naturally lead is often an unsafe guide. But at the same time the conviction cannot be escaped by me that principles and conduct bear a relation one to the other, especially in matters of public concern. The fathers [398] founded our government upon an enduring basis of right, principle and of limitation of power. Destroy the principles and the limi- tations which they impose, and I am unable to say that con- duct may not, when unrestrained, give rise to action doing violence to the great truths which the destroyed principles embodied. The fallacy of all the contentions of the Government is, to mj mind, illustrated by the summing up of the case for the Government made in the argument at bar. The right to ac- quire and own the stock of competing railroads involves, says that summing up, the power of an individual " to do " (italics mine) absolutely as he pleases with his own, whilst the claim of the Government is that the right of the owner of prop- erty " to do " (italics mine) as he pleases with his own may be controlled in the public interest by legitimate legislation. But the case mvolves the right to acfidre and own, not the light " to do " (italics mine). Confusing the two givas rise to the errors which it has been my endeavor to point out Undoubtedly the States possess power over corporations, created by them, to permit or forbid consolidation, whether accomplished by stock ownership or otherwise, to forbid on© corporation from holding stock in another, and to impose on this or other subjects such regulations as may be deemed best. Generally speaking, however, the right to do these things springs alone from the fact that the corporation is created by the States, and holds its rights subject to the conditions at- tached to the grant, or to such regulations as the creator, the State, may lawfully impose upon its creature, the corporation. Moreover, irrespective of the relation of creator and crea- NOBTHERN SECURITIES CO. V. UNITED STATES. 521 ii'. % White, J., The Chief Justice, Peckham, Holmes, JJ., dissenting. ture, it is, of course, true in a general sense that government possesses the authority to regulate, within certain just limits, what an owner may do with his property. But the first power which arises from the authority of a grantor to exact conditions in making a grant or to regulate the conduct of the grantee gives no sanction to the proposition that a gov- ernment, irrespective of its power to grant, has the general authority to [399] limit the character and quantity of prop- erty which may be acquired and owned. And the second power, the general governmental one, to reasonably control the use of property, affords no foundation for the proposi- tion that there exists in government a power to limit the quantity and character of property which may be acquired and owned. The difference between the two is that which exists between a free and constitutional government re- strained by law and an absolute government unrestrained by any of the principles which are necessary for the perpetu- ation of society and the protection of life, liberty and property. It cannot be denied that the sum of all just governmental power was enjoyed by the States and the people before the Constitution of the United States was formed. None of that power was abridged by that instrument except as restrained by constitutional safeguards, and hence none was lost by the adoption of the Constitution. The Constitution, whilst dis- tributing the preexisting authority, preserved it all. With the full power of the States over corporations created by them and with their authority in respect to local legislation, and with power in Congress over interstate conmierce carried to its fullest degree, I cannot conceive that if these powers, admittedly possessed by both, be fully exerted a remedy can- not be provided fully adequate to suppress evils which may arise from combinations deemed to be injurious. This must be true unless it be concluded that by the effect of the mere distribution of power made by the Constitution partial im- potency of governmental authority has resulted. But if this be conceded, arguendo, the Constitution itself has pointed out the method by which, if changes are needed, they may be brought about. No remedy, in my opinion, for any supposed or real infirmity can be afforded by disregarding the Con- 522 193 UNITED STATES BEPOKTS, 399. White. J.. Tlie Chief Justice, Peckham, Holmes, JJ., dissenting, stitution, by destroying the lines which separate state and Federal anthority, and by implying the existence of a power which is repugnant to all those fundamental rights of life, . liberty and property, upon which just government must rest. [400] If, however, the question of the power of Congress be conceded, and the assumption as to the meaning of the Anti-Trust Act which has been indulged in for the purpose of considering that power be put out of view, it would yet remain to be determined whether the Anti-Trust Act em- braced the acquisition and ownership of the stock in ques- tion by the Northern Securities Company. It is unnecessary for me, however, to state the reasons which have led me to the conclusion that the act, when properly interpreted, does not embrace the acquisition and ownership of such stock, since that subject is considered in an opinion of Mr. Justice Holmes, which explains the true interpretation of the statute, as it IS understood by me, more clearly that I would be able to do. ^ Being of the opinion, for the reasons heretofore given, that Congress was without power to regulate the acquisition and ownership of the stock in question by the Northern Securities Comijany, and because I think even if there were such power in Congress, it has not been exercised bv the .Inti-Trust Act as is shown in the opinion of Mr. Justice Holmes, I dissent! I am authorized to say that the Chief Justice, Mr. Jus- tice Peckham and Mr. Justice Holmes, concur in this dissent. Mr. Justice Holmes, with whom concurred the Chiei' Justice, Mr. Justice White, and Mr. Justice Peckham, dissenting. ' I am unable to agree with the judgment of the majority of the court, and although I think it useless and undesirable, as a rule, to express dissent, I feel bound to do so in this case and to give my reasons for it. Great cases like hard cases make bad law. For great cases are called great, not by reason of their real importance in shaping the law of the future, but because of some accident of immediate overwhelming interest which appeals to the feel- NOBTHEBN SECURITIES CO. V. UNITED STATES. 523 White, J., The Chief Justice, Peckham, Holmes, JJ., dissenting. ings and distorts the judgment. These immediate interests [401] exercise a kind of hydraulic pressure which makes what previously was clear seem doubtful, and before which even well settled principles of law will bend. What we have to do in this case is to find the meaning of some not very difficult words. We must try, I have tried, to do it with the same freedom of natural and spontaneous interpretation that one would be sure of if the same question arose upon an indictment for a similar act which excited no public atten- tion, and was of importance only to a prisoner before the court. Furthermore, while at times judges need for their work the training of economists or statesmen, and must act in view of their foresight of consequences, yet when their task is to interpret and apply the words of a statute, their function is merely academic to begin with — to read English intelligently — and a consideration of consequences comes into play, if at all, only when the meaning of the words used is open to reasonable doubt. The question to be decided is whether, under the act of July 2, 1890, c. 047, 26 Stat. 209, it is unlawful, at any stage of the process, if several men unite to form a corporation for the purpose of buying more than half the stock of each of two competing interstate railroad companies, if they form the corporation, and the corporation buys the stock. I will suppose further that every step is taken, from the beginning, with the single intent of ending competition between the companies. I make this addition not because it may not be and is not disputed but be<;ause, as I shall try to show, it is totally unimportant under any part of the statute with which we have to deal The statute of which we have to find the meaning is a criminal statute. The two sections on which the Govern- ment relies both make certain acts crimes. That is their immediate purpose and that is what they say. It is vain to insist that this is not a criminal proceeding. The words cannot be read one way in a suit which is to end in fine and imprisonment and another way in one which seeks an in- junction. The construction which is adopted in this case must be adopted in one [402] of the other sort. I am no friend of artificial interpretations because a statute is of one 524 193 UNITED STATES BEPORTS, 402. Wbite, J., The Chief Justice. Peckham, Hohnes, JJ.. dissenting, kind rather than another, but all agree that before a statute IS to be taken to punish that which always has been lawful it must express its intent in clear words. So I say we must read the words before us as if the question were whether two small exporting grocers should go to jail. Again the statute is of a very sweeping and general char- acter. It hits " every " contract or combination of the pro- hibited sort, great or small, and " every " person who shall monopolize or attempt to monopolize, in the sense of the act, **any part" of the trade or commerce among the several States. There is a natural inclination to assume that it was directed against certain great combinations and to read it in that light. It does not say so. On the contrary, it says *' every," and " any part." Still less was it directed speciaUy agamst railroads. There even was a reasonable doubt whether it included railroads until the point was decided by this court. Finally, the statute must be construed in such a way as not merely to save its constitutionality but, so far as is con- sistent with a fair interpretation, not to raise grave doubts on that score. I assume, for the purposes of discussion, although it would be a great and serious step to take, that in some case that seemed to it to need heroic measures, Congreas might regulate not only commerce, but instruments of com- merce or contracts the bearing of which upon commerce would be only indirect. But it is clear that the mere fact of an indirect effect upon commerce not shown to be certain and wry gi-eat, would not justify such a law. The point decided in United States v. E. C, Knight Co,, 156 U. S. 1, 17, was that " the fact that trade or commerce might be indirectly affected was not enough to entitle complainants to a decree." Commerce depends upon population, but Congress could not, on that ground, undertake to regulate marriage and divorce. If the act before us is to be carried out according to what seems to me the logic of the argument for the Government, which I do [403] not believe that it will be, I can see no part of the conduct of life with which on shnilar principles Congress might not interfere. This act is construed by the Government to affect the pur- chasers of shares in two railroad companies because of the NORTHERN SECURITIES CO. V. UNITED STATES. 525 White, J., The Chief Justice, Peckham, Holmes, JJ., dissenting. effect it may have, or, if you like, is certain to have, upon the competition of these roads. If such a remote result of the exercise of an ordinary incident of property and personal freedom is enough to make that exercise unlawful, there is hardly any transaction concerning commerce between the States that may not be made a crime by the finding of a jury or a court. The personal ascendency of one man may be such that it would give to his advice the effect of a command, if he owned but a single share in each road. The tendency of his presence in the stockholdersV meetings might t>e certain to prevent competition, and thus his advice, if not his mere existence, become a crime. I state these general considerations as matters which I should have to take into account before I could agree to affirm the decree appealed from, but I do not need them for my own opinion, because when I read the act I cannot feel sufficient doubt as to the meaning of the words to need to for- tify jny conclusion by any generalities. Their meaning seems to me plain on their face. The first section makes " 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" a misdemeanor, punishable by fine, imprisonment or both. Much trouble is made by substituting other phrases assumed to be equivalent, which then are reasoned from as if they were in. the act. The court below argued as if main- taining competition were the expressed object of the act. The act says nothing about competition. I stick to the exact words used. The words hit two classes of cases, and only two— Contracts in restraint of trade and combinations or conspiracies in restraint of trade, and we have to consider what [404] these respectively are. Contracts in restraint of trade are dealt with and defined by the common law. They are contracts with a stranger to the contractor's busi- ness, (although in some cases carrying on a similar one,) which wholly or partially restrict the freedom of the con- tractor in carrying on that business as otherwise he would. The objection of the common law to them was primarily on the contractor's own account. The notion of monopoly did 526 193 UKITED STATES BEPOKTS, 401. White, J., The Chief Justice. Pedtham, Holmes, JJ., dissenting. not come in unless the contract covered the whole of Eng- land. Mitchel V. Reynolds, 1 P. Wms. 181. Of course this objection did not apply to partnerships or other forms, if there were any, of substituting a community of interest where there had been competition. There was no objection to such combinations merely as in restraint of trade, or otherwise unless they amounted to a monopoly. Contracts in restraint of trade, I repeat, were contracts with strangers to the contractor's business, and the trade restrained was the contractor's own. Combinations or conspiracies in restraint of trade, on the other hand, were combinations to keep strangers to the agree- ment out of the business. The objection to them was not an objection to their effect upon the parties making the con- tract, the members of the combination or firm, but an objec- tion to their intended effect upon strangers to the firm and their supposed consequent effect upon the public at large. In other words, they were regarded as contrary to public policy because they monopolized or attempted to monopolize some portion of the trade or commerce of the realm. See United States v. E, C. Knight Co,, 156 U. S. 1. All that is added to the first section by § 2 is that like penalties are im- posed upon every single person who, without combination, monopolizes or attempts to monopolize commerce among the States; and that the liability is extended to attempting to monopolize any part of such trade or commerce. It is more important as an aid to the construction of § 1 than it is on its owm account. It shows that whatever is criminal when done by Way of combination is equally criminal if done by a single man. That I am right in my interpreta- tion [405] of the words of § 1 is shown by the words " in the form of trust or otherwise." The prohibition was sug- gested by the trusts, the objection to which, as every one knows, was not the union of former competitors, but the sinister power exercised or supposed to be exercised by the combination in keeping rivals out of the business and ruin- ing those who already were in. It was the ferocious extreme of competition with others, not the cessation of competition among the partners, that was the evil feared. Further proof NOBTHEBN SECUBITIES CO. V, UNITED STATES. 527 White, J., The Chief Justice, Peclvham, Holmes, JJ., dissenting. is to be found in § 7, giving an action to any person injured in his business or property by the forbidden conduct. This cannot refer to the parties to the agreement and plainly means that outsiders who are injured in their attempt to compete with a trust or other similar combination may re- cover for it. Montague & Co, v. Low^y, 193 U. S. 38. How effective the section may be or how far it goes, is not material to my point. My general summary of the two classes of cases which the act affects is confirmed by the title, which is " An Act to protect Trade and Commerce against unlawful Restraints and Monopolies." What I now ask is under which of the foregoing classes this case is supposed to come, and that question must be answered as definitely and precisely as if we were dealing with the indictments which logically ought to follow this decision. The provision of the statute against contracts in restraint of trade has been held to apply to contracts be- tween railroads, otherwise remaining independent, by which they restricted their respective freedom as to rates. This restriction by contract with a stranger to the contractor's business is the ground of the decision in United States v. Joint Trafjic Association, 171 U. S. 505, following and affirm- ing United States v. Trans-Missouri Freight Association, 166 U. S. 290. I accept those decisions absolutely, not only as binding upon me, but as decisions which I have no desire to criticise or abridge. But the provision has not been de- cided, and, it seems to me, could not be decided without per- version of plain language, to apply to an arrangement by which competition is ended through com- [406] munity of interest— an arrangement which leaves the parties without external restriction. That provision, taken alone, does not require that all existing competitions shall be maintained. It does not look primarily, if at all, to competition. It simply requires that a party's freedom in trade between the States shall not be cut down by contract with a stranger. So far as that phrase goes, it is lawful to abolish competition by any form of union. It would seem to me impossible to say that the words " every contract in restraint of trade is a crime punishable with imprisonment," would send the mem- 528 193 UNITED STATES REPORTS, 406. White, J., The Chief Justice, Peckham, Holmes, JJ., dissenting. bers of a partnership between, or a consolidation of, two trading corporations to prison— still more impossible to say that it forbade one man or corporation to purchase as much stock as he liked in both. Yet those words would have that effect if this clause of § 1 applies to the defendants here. For it cannot be too carefully remembered that that clause applies to " every " contract of the forbidden kind — a con- sideration which was the turning point of the Trans-Missouri Freight Association's case. If the statute applies to this case it must be because the parties, or some of them, have formed, or because the North- ern Securities Company is, a combination in restraint of trade among the States, or, what comes to the same thing in my opinion, because the defendants, or some or one of them, ire monopolizing or attempting to monopolize some part of the commerce between the States. But the mere reading of those words shows that they are used in a limited and accurate sense. According to popular speech, every concern monopolizes whatever business it does, and if that business is trade between two States it monopolizes a part of the trade among the States. Of course the statute does not forbid that. It does not mean that all business must cease. A single rail- road down a narrow valley or through a mountain gorge mo- nopolizes all the railroad transportation through that valley or gorge. Indeed every railroad monopolizes, in a popular sense, the trade of some area. Yet I suppose no one would say that [407] the statute forbids a combination of men into a corporation to build and run such a railroad between the States. I assume that the Minnesota charter of the Great Northern and the Wisconsin charter of the Northern Pacific both are valid. Suppose that, before either road was built, Minnesota, as part of a system of transportation between the States, had created a railroad company authorized singly to build all the lines in the States now actually built, owned or controlled by either of the two existing companie& I take it that that charter would have been just as good as the present one, even if the statutes which we are considering had been in force. In whatever sense it would hive areated a monopoly the pres- NORTHERN Sl!.CURITIES CO. V. UNITED STATES. 529 White, J., The Chief Justice, Peclcham, Holmes, JJ., dissenting. ent charter does. It would have been a large one, but the act of Congress makes no discrimination according to size. Size has nothing to do with the matter. A monopoly of " any part " of commerce among the States is unlawful. The sup- posed company would have owned lines that might have been competing— probably the present one does. But the act of Congress will not be construed to mean the universal disinte- gration of society into single men, each at war with all the rest, or even the prevention of all further combinations for a common end. There is a natural feeling that somehow or other the statute meant to strike at combinations great enough to cause just anxiety on the part of those who love their country more than money, while it viewed such little ones as I have supposed with just indifference. This notion, it may be said, somehow breathes from the pores of the act, although it seems to be contradicted in every way by the words in detail. And it has occurred to me that it might be that when a combination reached a certain size it might have attributed to it more of the character of a monopoly merely by virtue of its size than would be attributed to a smaller one. I am quite clear that it is only in connection with monopolies that size could play any part. But my answer has been indicated already. In the first place size in the case of railroads is an inevitable incident and if it were an [408] objection under the act, the Great Northern and the Northern Pacific already were too great and encountered the law. In the next place in the case of railroads it is evident that the size of the combination is reached for other ends than those which would make them monopolies. The combinations are not formed for the pur- pose of excluding others from the field. Finally, even a small railroad will have the same tendency to exclude others from its narrow area that great ones have to exclude others from a greater one, and the statute attacks the small monopo- lies as well as the great. The very words of the act make such a distinction impossible in this case and it has not been attempted in express terms. If the charter which I have imagined above would have 21220— VOL 2—07 M 34 530 11)3 UNITED STATES REPORTS, 408. White, J., The Chief Justice, Peckham, HolmeB, JJ., dissentlug. been good notwithstanding the monopoly, in a popular sense, which it created, one next is led to ask whether and why a combination or consolidation of existing roads, although in actual competition, into one company of exactly the same powers and extent, would be any more obnoxious to the law. Although it was decided in LouumlU c§ Nashville Railroad Co. V. Kentucky^ 161 U. S. 677, 701, that since the statute, as before, the States have the power to regulate the matter, it was said, in the argimient, that such a consolidation would be unlawful, and it seems to me that the Attorney Genenil was compelled to say so in order to maintain his case. But I think that logic would not let him stop there, or short of de- nying the power of a State at the present time to authorize one company to construct and own two parallel lines that might compete. The monopoly would be the same as if the roads were consolidated after they had begun to compete — and it is on the footing of monopoly that I now am supposing the objection made. But to meet the objection to the preven- tion of competition at the same time, I will suppose that three parties apply to a State for charters ; one for each of two new and possibly competing lines respectively, and one for both of these lines, and that the charter is granted to the last. I think that charter would be good, and I think the whole argument to the contrary rests [409] on a popular instead of an accurate and legal conception of what the word " monopo- lize" in the statute means. I repeat, that in my opinion there is no attempt to monopolize, and what, as I have said, in my judgment amounts to the same thing, that there is no combination in restraint of trade, until something is done with the intent to exclude strangers to the combination from competing with it in some part of the business which it car- ries on. Unless I am entirely wrong in my understanding of what a " combination in restraint of trade " means, then the same monopoly may be attempted and effected by an individual, and is made equally illegal in that case by § 2. But I do not expect to hear it maintained that Mr. Morgan could be sent to prison for buying as many shares as he liked of the Great Northern and the Northern Pacific, even if he bought them NORTHERN SECURITIES CO. V. UNITED STATES. 531 White, J., The Chief Justice, Peckham, Holmes, JJ., dissenting. both at the same time and got more than half the stock of each road. There is much that was mentioned in argument which I pass by. But in view of the great importance attached by both sides to the supposed attempt to suppress competition, I must say a word more about that. I said at ih^ outset that T should assume, and I do assume, that one purpose of the pur- chase was to suppress competition between the two roads. I appreciate the force of the argument that there are independ- ent stockholders in each ; that it cannot be presumed that the respective boards of directors will propose any illegal act; that if they should they could be restrained, and that all that has been done as yet is too remote from the illegal result to be classed even as an attempt. Not every act done in further- ance of an unlawful end is an attempt or contrary to the law. There must be a certain nearness to the result. It is a ques- tion of proximity and degree. Commonwealth v, Peaslee, 177 Massachusetts, 267, 272. So, as I have said, is the amena- bility of acts in furtherance of interference with commerce among the States to legislation by Congress. So, according to the intimation of this court, is the question of liability under the present stat- [410] ute. Hopkins v. United States, 171 U. S. 578; Anderson v. United States^ 171, U. S. 604. But I assume further, for the purposes of discussion, that what has been done is near enough to the result to fall under the law, if the law prohibits that result, although that as- sumption very nearly if not quite contradicts the decision in United States v. E\ C, Knight Co., 156 U, S. 1. But I say that the law does not prohibit the result. If it does it must be because there is some further mining than I have yet dis- covered in the words " combinations in restraint of trade." I think that I have exhausted the meaning of those words in what I already have said. But they certainly do not re- quire all existing competitions to be\ept on foot, and, on the principle of the Trans-Missouri Freight Association's case, invalidate the continuance of old contracts by which former competitors united in the past. A partnership is not a contract or combination in restraint of trade between the partners unless the well known words tioZ 193 UNITED STATES REPOETS, 410. Wliite, J., The Chief Justic-e, Peckham, Holmes, JJ., disseuting. are to be given a new meaning invented for the purposes of this act. It is true that the suppression of competition was referred to in United States v. Trans- Missouri Freight As- sociatioit, 166 U. S. 290, but, as I have said, that was in con- nection with a contract with a stranger to the defendant's business — a true contract in restraint of trade. To suppress competition in that way is one thing, to suppress it by fusion is another. The law, I repeat, says nothing about competi- tion, and only prevents its suppression by contracts or combi- nations in restraint of trade, and such contracts or combina- tions derive their character as restraining trade from other features than the suppression of competition alone. To see whether I am wrong, the illustrations put in the argument are of use. If I am, then a partnership between two stage drivers who had been competitors in driving across a state line, or two merchants once engaged in rival commerce among the States whether made after or before the act, if now con- tinued, is a crime. For, again I repeat, if the restraint on the freedom of the members of a combination caused bv their entering into partnership is a restraint of [411] trade, every such combination, as well the small as the great, is within the act. In view of my interpretation of the statute I do not go fur- ther into the question of the power of Congress. That has been dealt with by my brother White and I concur in the main with his views. I am happy to know that only a minority of my brethren adopt an interpretation of the law which in my opinion would make eternal the helium omnium emdra omnes and disintegrate society so far as it could into individual atoms. If that were its intent I should regard calling such a llfw a regulation of commerce as a mere pretense. It would be an attempt to reconstruct society. I am not concerned with the wisdom of such an attempt, but I believe that Congress w^as not entrusted by the Constitution with the power to make it and I am deeply persuaded that it has not tried. I am authorized to sav that the Chief Justice, Mr. Jus- tice White and Mr. Justice Peckham concur in this dissent. MINNESOTA V. NORTHERN SECURITIES CO. 533 Syllabus. [48] MINNESOTA v, NOKTHERN SECURITIES COMPANY." appeal from the circuit court of the united states for THE district OF MINNESOTA. No. 433. Argued January 7, 8, 1904. — Decided April 11, 1904. [194 U. S., 48.] Consent of parties can never confer jurisdiction upon a Federal court. If the record does not affirmatively show jurisdiction in the Cir- cuit Court, this court niust, upon its own motion, so declare, and make such order as will prevent the Circuit Court from exercising an authority not conferred upon it by statute.* A State is not a citizen within the meaning of the provisions of the Constitution or acts of Congress regulating the jurisdiction of the Federal courts. Under existing statutes regulating the jurisdiction of the courts of the United States, a case cannot be removed from a state court, as one arising under the Constitution or laws of the United States unless the plaintiff's complaint, bill or declaration shows it to be a case of that character. While an allegation in a complaint filed in a Circuit Court of the United States may confer jurisdiction to determine whether the case is of the class of which the court may properly take cogni- zance for purposes of a final decree on the merits, if, notwithstand- ing such allegation, the court finds, at any time, that the case does not really and substantially involve a dispute or controversy within its jurisdiction then, by the express command of the act of 1875, its duty is to proceed no further. And if the suit, as disclosed by the complaint could not have been brought by plaintiff originally in the Circuit Court, then, under the act of 1887-1888 it should not have been removed from the state court and should be remanded. The intention of the Anti-Trust Act of July 2, 1890, 26 Stat. 209, was to limit direct proceedings in equity to prevent and restrain such violations of the Anti-Trust Act as cause injury to the general pub- lie, or to all alike, merely from the suppression of competition in trade and commerce among the several States and with foreign na- tions, to those instituted in the name of the United States, under § 4 of the act, by District Attorneys of the United States, acting un- der the direction of the Attorney General ; thus securing the enforce- ment of the act, so far as such direct proceedings in equity are con- cerned, according to some uniform plan, operative throughout the entire country. o Decree in the Circuit Court (123 Fed., 692). See p. 246. 6 Syllabus and abstracts of arguments copyrighted, 1904, by The Banks Law Publishing Co. 534 l»l UNITED STATES BEPORTS, 48. Arpuneot for appellant A State eaiiiiot maintain an action in equity to restrain a corporation from violating the provisions of the act of July 2, 1890. on tlie ground that such violations hy decreasing competition would depre- ciate the value of its public lands and enhance the cost of maintain- ing its public Institutions, the damages resulting from such vio- lations being remote and indirect and not such direct actual injury as is provided for In | 7 of the act. [iJI] Article IV of the Constitution of the United States only pre- scribes a rule by which courts, Federal and state, are to be guided when a question arises in the progress of a pending suit as to the faith and credit to be given by the court to the public acts, records, and judicial proceedings of a State, other than that in which the court is sitting. It has nothing to do with the conduct of individuals or corporations^ The facts are stated in the opinion of the court Mr, Tf . B. Douglas^ Attorney General of the State of Min- nesota, and Mr, M, D, Munn, with whom Mr, (reorge P, WU- son was on the brief, for appellant : As to removal to and jurisdiction of the Circuit Court: The action was removed on the joint petition of all the de- fendants, on the ground that it arose under the Constitution and laws of the United States, and that the right upon which it was based and on which a recovery by plaintiff depended, would be defeated by one construction of the Constitution or said laws, and sustained by an opposite construction. Di- verse citizenship did not form a basis for such removal, Pas- M Telegraph Cable Go, v. Alabama, 155 U. S. 482, and could not rightfully be presented as a ground therefor. As to the doing of business by the Northern Securities Company within Minnesota and attempt to vacate service of summons, see Goldey v. Morning News Co,, 156 U. S. 518; Wabash Wesiem Railway v. Brow, 164 U. S. 271. The Circuit Court has jurisdiction of all civil actions in part arising under or depending upon the construction of the Constitution, laws or treaties of the United States. 24 Stat. 552; 25 Stat. 433; Postal Tel, Cable Co, v. Alabama. 165 U. S- 482; Ames v. Kansas, 111 U. S. 462; GoUAVash- ing and Water Co, v. Keyes, 96 U. S. 203 ; Shoshone Mining Co, V. Rtitter, 177 U. S. 507; Cummings v. Chicago, 188 U. S. 410. MINNESOTA V. NORTHERN* SECURITIES CO. Argument for appellant. 535 Read in the light of section 5 of the Court of Appeals Act — chap. 517 of the laws of 1891 — it is equally clear that jurisdiction is assumed to exist in the Circuit Courts and an appeal authorized " in any case that involves the construction or application of the Constitution of the United States." [50] The Supreme Court of the United States is without original jurisdiction of this controversy. Minnesota v. Northern. Securities Co., 184 U. S. 199. Assuming the facts to be as stated in the affidavit of the president of the Securities Company, above referred to, to the effect that the Securities Companj^ is not the owner of any property situated in Minnesota and never transacted any business therein, the courts of Minnesota cannot acquire juris- diction to hear and determine the issues involved herein, a jurisdiction over the person of the Securities Company can- not be obtained. Pennoyer v. Neff, 95 U. S. 714; St, Clair V. Cox, 106 U. S. 350; Goldey v. Morning News Co., 156 U. S. 518; Barrow Steamship Co. v. Kane, 170 U. S. 100; Cahanne v. Graf, 87 Minnesota, 510; Conley v. Matlieson Alkely Works, 190 U. S. 406. The Northern Pacific and Great Northern Railway com- panies are necessary parties with the Securities Company, and being residents of different States and not engaged in doing business in any single State, jurisdiction of the person of all the defendants cannot be obtained elsewhere than in this court, in which the Securities Company has voluntarily appeared. Minnesota v. Northern Securities Company, supra. Under California v. Southeim Pacific Ry. Co., 157 U. S. 270, and Minnesota v. Northern Securities Co., unless a Fed- eral question is deemed to exist in this record which gives to the Circuit Court, jurisdiction over the subject matter of the action, under our dual form of government, a State will be deprived of the right to invoke the jurisdiction of any court in the land for the purpose of enforcing its laws or protecting its proprietary interests from unlawful acts done in violation of the laws of the State or Nation. Two Federal questions are clearly set forth in appellant's bill of complaint. Whether the State to protect its pro- prietary interests had a cause of action against the defend- 536 194 uniteA states reports, 50. Argument for appellant. ants arising in part under the Federal Anti-Trust Act; and whether the state Anti-Consolidation and Anti-Trust acts (rightly con- [51] strued) had been violated. This pre- sents a controversy between the appellant and the defendants, the correct determination of which involves or depends upon the construction and the application of the commerce clause as well as Article IV of the Constitution of the United States. An issue was tendered in which the appellant alleged the commission of certain acts by the defendants which were specifically asserted to be not only seriously injurious to its proprietary interest, but in violation of the Federal Anti- Trust Act, and the learned trial court in its decision actually construed the act adversely to one contention of appellant and this construction rendered it unnecessary for the court to construe the act with reference to the other questions sub- mitted. In this portion of the decree the court construed the act as excluding the appellant from invoking equity juris- diction for its enforcement. Again, upon the argument in this court appellant's contentions upon both propositions were strenuously opposed by counsel for appellees. It is therefore submitted that the pending controversy is one in part " arising under and depending upon the construc- tion of the laws of the United States." Cases cited supra, and Cummings v. Chicago, 188 U. S. 410; Defance Water Co. V. Defiance, 191 U. S. 184; N. P. Railway Co. v. Towmend, 190 U.S. 270. The test as to jurisdiction of the Circuit Court is clearly stated in the opinion of the court in Gold-Washing <& Water Co, y. Keyes, supra, and affirmed in the case of Shoshone Mining Co. v. Rntter, supra, see p. 507 ; Railroad Compamj v. Mississippi, 102 U. S. 141 ; Chapman v. Goodnow, 123 U. S. 540; Kankatma Co. v. Green Bay i& Canal Co., 142 U. S. 254, and cases cited ; O'Neil v. Vermont, 144 U. S. 323. If this construction of the act of Congress obtains in the application of the rule invoked, it is clear from the record that the State has suffered, and will continue from year to year to suffer, damages to its proprietary interests which will be difficult, if not impossible, to measure, running into mil- [521 lions of dollars. Parker v. W. L. C. (& W. Co., 2 Black, MINNESOTA V. NORTHERN SECURITIES CO. 537 Argument for appellant. 551, and cases cited; Clark y. Smith, 13 How. 194; Pennsyl- vania V. Wheeling Bridge Co., 13 How. 518. Upon the proposition that a State may sue to redress in- juries which are strictly analogous to those suffered by pri- vate individuals, see United States v. San Jacinto Tin Co.^ 125 U. S. 273 ; United States v. Am. Bell Tel. Co., 128 U. S. 315, 317 ; Missouri v. Illinois, 180 U. S. 240 ; Kansas v. Colo- rado, 185 U. S. 125. The violation of the Minnesota Anti-Consolidation and Anti-Trust Act, rightfully construed, involves, as applied to this controversy, the construction and the application, of Article IV of the. Federal Constitution, as well as the com^ merce clause. For history of the clause, see Elliott's De- bates, vol. 4, 123, vol. 5, 487, 504. The gravamen of the charge in appellant's complaint is that the defendants created a corporate device in New Jersey and used it for the purpose and with the result that property rights in Minnesota were affected, in violation of its laws. Our contention is that Article IV must be so construed as to make the constitutional enactments of Minnesota effective throughout the United States, so far as they apply to and affect property rights within the State. Otherwise the pol- icy and laws of any State may be easily evaded. The test of jurisdiction must necessarily be determined by a correct answer to the question: What issues were fairly tendered for determination by the bill of complaint? If this be not the test, the trial court, by misconstruing a statute, has the power to eliminate from the record a jurisdictional question and deprive a party of the right of appeal. The question of whether or not the case was properly re- moved from the state to the Federal court, is in itself a Fed- eral question. Railroad Company v. Koontz, 104 U. S. 15. The determination of this question in itself gives the right of appeal to this court direct. The case having been appealed to this court, and this court, [63] on its own motion, having questioned the cor- rectness of the removal from the state to the Federal court, that establishes the jurisdiction of this court on appeal over the entire case should this court determine that the OtJO 194 UNITED STATES REPORTS, 53. Argument for appellees. case was properly removed from the state to the Federal court. Oahley v. Goodnow, 118 U. S. 44 ; Scott v. Goodnow, 165 U. S. 58 ; Garter v. Texas, 177 F. S. 442. Mr. John G. Johnson, and Mr, George B, Young, with whom Mr. M. D. Grover and Mr. C. W. Bunn were on the brief, for appellees; On the question of removal to and jurisdiction of the Cir- cuit Court: The cause was properly removed to the Circuit Court, and upon such removal that court acquired jurisdiction of it as a " suit arising under the Constitution a^ laws of the United States.^ As to the test of such a suit as determined by Chief Justice Marshall, see Oshom v. Bank, 9 Wheat 738, 822, in which it was held that a cause may depend upon several questions of fact and law. Some of these may depend on the construction of a law of the United States, others on principles uncon- nected with that law. If it be a sufficient foundation for jurisdiction that the title or right set up by the party may lie defeated by one construction of the Constitution or laws of the United States and sustained by the opposite construction provided the facts necessary to support the action be made out, ihm all the other questions must be decided as incidental to this which gives that jurisdiction. Under this construc- tion, the judicial power of the United States extends effect- ively and beneficially to that most important class of cases which depends on the character of the cause. See also Cohens V. Virginia, 6 IrAlieat. 264, 379. The following cases were decided under the act of 1875 : G(M-W ashing Co. v. Keyes, 96 U. S. 199, 201; Tennessee v. Davis, 100 U. S. 257, 264; Railroad Co. v. Mississippi, 102 U. S. 135, 140; Ames v. Kansas, 111 U. S. 449, 462; Kansas [M] Pacific V. Atchison R. R., 112 U. S. 414; Pacific Rail- road Removal Cases, 115 U. S. 1; Starin v. New York, 115 U. S. 248, 257; Southern Pacific R. Co. v. Calif ornhi, 118 U. S. 109, 112; Metcalf v. Watertown, 128 U. S. 5SQ;Shreve- port V. CoU, 129 U. S. 36, 41 ; Beck v. Perkins, 139 U. S. 628. In the act of 1887-8, Congress used the same terms as in the MINNESOTA V. NORTHERN SECURITIES €0. 539 Argument for appellees. act of 1875, in the same sense and reenacted them as thus construed. And this court has never intimated that the criterion de- clared by Chief Justice Marshall and adopted and applied by itself in so manv cases was erroneous in itself or had been rendered inapplicable to any class of cases by the amending act of 1887-8. The following cases originated after the latter act: Cooke v. Avery, 147 U. S. 375, 384; Colorado Central Mining Co. v. Turck, 150 U. S. 138, 143 ; Blackhiirn v. Port- land, Gold Mining Co., 175 U. S. 571, 580; Patton v. Brady, 184 U. S. G08, 611 ; Sicaiford v. Templeton, 185 U. 8. 487, 494 ; Northern Pacific Ry. Co. v. Soderherg, 188 U. S. 526. As it is the proper function of the plaintiff's pleading to state his own case and not that of the defendant, to give juris- diction the Federal question must appear in plaintiff's state- ment of his own case, or of his own claim, and that is all that is required. In a few cases there are expressions^-inadvertent, no doubt — to the effect that the plaintiff's declaration must show that he asserts a right under the Constitution or some law of the United States, — as if only such suits were suits arising under the United States Constitution or laws. But this is directly opposed to the cases already cited and others that will be cited. If such a requirement were essential to jurisdiction, one whose property was wrongfully seized by a United States marshal or revenue collector, or whose property was taken or his person or property injured by a Federal r«nilway cor- poration, could have no redress in the Federal courts. His right of property or of personal security is not derived from the United States Constitution or laws, and when he asserts either [55] in a declaration he is not asserting a right under the United States Constitution or laws. For trespass against a marshal, see Bock v. Perkins, 139 U. S. 628 ; Sonnentheil v. Brewing Co., 172 U. S. 401. And compare Walker v. Collins, 167 U. g. 57. Against an internal revenue collector, see Venahle v. Richards, 105 U. S. 636; Harding v. Woodcock, 137 U. S. 43. The bill presents Federal questions both in its aspect of a bill by the State as a sovereign to enforce its local statutes, 540 194 UNITED STATES REPOBTS, 65. Argument for appellees, and as a landowner and shipper for relief under those stat- utes, xlnd these questions are the same whether the State sues as sovereign or as property owner and shij^per or in both of these capacities. For cases analogous to tlie one at bar, see South CaroUna v. Coosaw Mining Co., 45 Fed. Rep. 804; 47 Fed. Rep. 225; 144 U. S. 550, cited with approval in In re Dehs, 158 U. S. 564; Ames V. Komm, 111 U. S. 449; Ilardmg v. Woodcodc, 187 U. 8. 4S : South Carolina v. Fm4 Royal d?e. Ry. Co., 50 Fed. Rep. ZU ; People v. Rock Island (§c. Ry, Co., 71 Fed Rep. 753; Minnesota v. Duluth <&c. Ry. Co,, 87 Fed. Rep. 497; Tennemee v. Union Bank, 152 U. S. 454. The cause was properly removed because of tlie plaintiff's assertion of right and claim of relief under the Constitution and laws of the United States. Besides the claims of the State under the full faith and credit clause of Article IV of the Constitution, and its claim under the swamp land granting acts of Congress, the State asserts a right as a property owner and as engaged in inter- state commerce to carry on that cx)mmerce free from obstruc- tion by combinarions in restraint of commerce or by monopo- lies of such commerce— substantially the same right as that asserted by the United States in the Dehs Case, 158 U. S. 564, 583. A citizen's riglit to carry on interstate commerce is a constitutional right. Crutcher v. Kentucky, 141 U. S. 47, 57 ; Reid v, Colorado, 187 U. S. 137. And there can be n^ doubt that a State has the same right as a citizen. [56] The bill plainly asserts a right under the Constitution as well as under the Anti-Trust Act, and this gives jurisdic- tion. Whether the bill sufficiently alleges continuous or threatened injury to that right to make a case for the relief prayed or for any equitable relief is not a question of juris- diction, but a question for the court to decide in the exercise of jurisdiction. Swafford v. Templeton, 185 U. S. 487, 493; Southern Pactfic R. Co. v. California, 118 U. S. 112; Hax v. Caspar, 31 Fed. Rep. 4Q^;Lowry v. Chicago, B. (& Q. R, Coi 46 Fed. Rep. 83. The Circuit Court in a case like this, upon acquiring juris- diction of the cause by reason of the Federal questions pre- sented by.the bill on the constitutionality of the state legisla- MINNESOTA V, NORTHERN SECURITIES CO. 541 Opinion of the Court. tion and on the claim of rights under the Constitution and laws, has jurisdiction to decide, not only these Federal ques- tions, but every question. Federal or non-Federal, that may be presented by the bill or arise upon the other pleadings or the evidence. shorn v. Bank of United States, supra. It may decide the cause on these non-Federal grounds, without deciding or even considering the Federal questions presented by the bill. And this is the proper course where the Federal questions are constitutional questions. Santa Clara Co. v. Southern Pacific R, R., 118 U. S. 394, 410. Its jurisdiction remains the same although the plaintiff should fail to estab- lish by proofs the facts alleged as showing a right under the Constitution or laws or otherwise raising a Federal question, for the jurisdiction is determined by the averments of the bill. Southern Paciftc R. Co. v. California, 118 U. S. 109, 112; City Ry. Co, v. Citizens R. R. Co., 166 U. S. 537, 562. And the fact that the Federal questions may receive little or no attention in the argument in this court, or even in the Circuit Court, does not affect the jurisdiction of either court. It may pass by the questions argued and decide the Federal questions. Mr. Justice Harlan delivered the opinion of the court. By a statute of Minnesota passed March 9, 1874, it was pro- [67] vided that no railroad corporation or the lessees, pur- chasers or managers thereof should consolidate the stock, property or franchises of such corporation with, or lease or purchase the works or franchises of, or in any waj^ control, any other railroad corporation owning or having under its control a parallel or competing line; nor should any officer of such corporation act as an officer of any other railroad cor- poration owning or having the control of a parallel or com- peting line ; and the question whether railroads were parallel or competing lines should, when demanded by the party com- plainant, be decided by a jury as in other civil issues. Laws, Miimesota, 1874, p. 154. A subsequent statute, passed March 3, 1881, provided that any railroad corporation, either domestic or foreign, whether organized under a general law or by virtue of a special char- ter, might lease or purchase, or become owner of or control, 542 194 UNITED STATES KEPORTS, 57. Opinion of the Court. or hold the stock of, any other railroad corporation, when the respective railroads could be lawfully connected and operated together " so as to constitute one continuous main line, with or without branches," § 1 ; and that any railroad corporation, whose lines of railroad, within or without the State, might be lawfully connected and operated together to constitute one continuous main line, so as to admit of the passage of trains over them without break or interruption, " could consolidate their stock and franchises so as to become one corporation." § 2. But by the same statute it was provided that no railroad corporation should consolidate with, lease or purchase, or in any way become owner of, or control any other railroad cor- poration, or any stock, franchises, rights of property thereof, which owned or controlled " a parallel or competing line." § 3. Laws of Minnesota, 1881, p. 109. At a later date, 1899, the Legislature of Minnesota passed another statute relating principally to such restraints upon trade and commerce as interfered with competition among those engaged therein. That statute contained these provi- sions: [58] '* Sec. 1. Any contract, agreement, arrangement, or conspiracy, or any combination in tbe form of a trust, or otlierwise. Iiereafter en- tered into wliich is in restraint of trade or commerce within this State, or in restraint of trade or commerce l>etween any of the people of this State and any of the people of any other State or country, or which limits or tends to limit or control the supply of any article, com- modity or utility, or the articles which enter into the manufacture of any article [or] utility, or which regulates, limits or controls or raises or tends to regulate, limit, control or raise the marlvet price of any article, wmimodity or utility, or tends to limit or regulate the production «»f any such article, conmiodity or utility, or in any manner destroys, limits or interferes with open and free competition In either the production, purchase or siile of anv conmiodity, article or utility, is hereby prohibited and declared to be unlawful. "That when any coriwration heretofore or hereafter created, or- ganized or existine: under the laws of this State, whether general or special, hereafter unites in amy manner with any other corjwration wheresoever created, or with any Individual, whereby such corpora- tion surrenders or transfers, by sale or otherwise. In whole, or in part, its franchise, rights or privileges or the control or manage- ment of its business to anv other corporation or individual, or whereby the business or the management or control of the business of such corporation is limited, changed or in anv manner affected, and the pnn>ose or effect of such union or combination is to limit control or destroy competition in the manufacture or sale of any article or commodity, or is to limit or control the production of any article or commodity, or is to control or fix the price or marljet value of any article or conmiodity, or the price or market value of the material entering into the production of any article or commodity, ©r in case the purr>ose or effect of such union or combination MINNESOTA V, NORTHERN SECURITIES CO. Opinion of the Court 543 is to contrjl or monopolize in any manner the trade or commerce, or any part tliereof. of this State or of the several States, such union, combination, agreement, arrange- [59] ment or contract is hereby prohibited and declared to be unlawful. * * * " Sec 3. Any corporation heretofore or hereafter created, organized or existing under the laws of this State, which shall hereafter either directly or indirectly make any contract, agreement or arr.nigenient, or enter into any combination, conspiracy or trust, as defined in section one of this act, shall, in addition to the penalty prescribed in section two of this act, forfeit its charter, rights and franchises, and it shall thereafter be unlawful for such coriwration to engage in business, either as a corporation or as a part of anv combination, trust or monopoly, except as to the final disposition of its property under the laws of this State. * * * " Sec. 6. That for the pnrpof-e of carrying out the provisions of this act any citizen of this State may, and it is hereby declared to be the duty of the Attorney General, to institute, in the name of the State, proceedings in any court of competent jurisdiction against any person, partnership, association or corporation who may be guilty of violating any of the provisions of section one of this act, for the purpose of imposing the penalties imposed by this act, or securing the enforce- ment of section three hereof." Gen. Laws, Minnesota, 1899, c. 359. These statutes being in force, the State of Minnesota in- stituted this suit in one of its own courts against the North- ern Securities Company, a corporation of New Jersey; the Great Northern Railway Company, a corporation of Minne- sota ; the Northern Pacific Railway Company, a corporation of Wisconsin, which, having filed its articles of incorporation with the Secretary of State of Minnesota, became subject to the laws of that State relating to railroad corporations; and James J. Hill, as President of the Northern Securities Com- pany, and individually. What is the nature of the case as disclosed by the complaint filed in the state court ? The complaint alleged — That the Great Northern Railway Company and the North- [60] ern Pacific Railway Company each owned or controlled and maintained a system of railways connecting the Great Lakes and the Pacific Ocean, their main roads constituting, substantially, parallel and competing lines ; That pursuant to an agreement between the defendant Hill and other stockholders of the Great Northern Railway Company frepresenting a controlling interest in the stock of that company) and J. Pierpont Morgan and other stock- holders of the Northern Pacific Railway Company (repre- senting a controlling interest in the stock of that company) the Northern Securities Company was incorporated solely as 194 UNITED STATES BEPORTS, 60. Opinion of the Court an instnimentality through which the stock, property and franchises of the Great Northern and Northern Pacific Railway companies should be consolidated in effect, if not in form, and th(» management and control of their business affairs, respectively, including the fixing of rates and charges for the transportation of passengers and freight over any and all the lines of railway of each of those companies, as well within as without the State, be vested in and controlled by the Securities Company, and all competition in freight and passenger traffic between the two systems of railway, within and without the State, to be suppressed and removed; that by means of such arrangement it was sought and in- tended to ignore, evade and violate the laws of the State proliibiting as well the consolidation of the stock, property or franchise of parallel or competing lines of railway therein, and the control or management thereof, as all com- binations in restraint of trade or commerce within the State, and between the peoi)le of Minnesota and the people of other States and countries; and, that if the Securities. Compjtny was allowed to hold and control the stocks of the constituent railway companies and to carry out the purpose and object of its incorporators, as well as its own, " full faith and credit will not be given to the public acts of this complainant and it will be deprived of a further right guaranteed to it by the Constitution of the United States;" That the said scheme had been consunmiated, and said two [61 1 railway systems were now under the absolute manage- ment and control of the Securities Company, and " by reason thereof all competition between said lines has been destroyed and a monopoly in railway traffic in Minnesota (as well as without said State) has been created, to the great and per- manent and irreparable damage of the State of Minnesota, and to the people thereof, and in violation of its laws, and of the laws of the United States in such case made and pro- vided, viz : The act of Congress approved July 2, 1890, en- titled 'An act to protect trade and commerce against unlaw- ful restraints and monopolies ;' " and That the carrying out the above agreements and plan of consolidation and monopoly, and in every step taken to con- summate it, the officers and directors of each of said railway MINNESOTA V. NORTHERN SECURITIES CO. 545 Opinion of the Court. <'onipanies were severally fully advised and consented thereto, and, unless restrained by this court, the Securities C\)mpany would continue to manage and control the business and affairs of the Great Northern and Northern Pacific Rail- way companies, and to suppress all competition between them for freight and passenger traffic, as well as to monopo- lize railway traffic in that State, to the irreparable damage of the State and the people thereof. The substantial ix^lief asked was a decree declaring, among other things, the alleged agreement and combination to be unlawful, and alF acts done and to be done in pursuance theredf contrary to and in violation of the laws of ]\Iinnesota and of the United States; prohibiting the Securities Com- pany, its agents and officers, from acquiring, receiving, hold- ing, voting or in any manner acting as the owner of any of the shares of the capital stock of either the Northern Pacific or the Great Northern Railway Company, or from exercising any management, direction or control over the constituen't companies; and enjoining those railway com|..anies from •recognizing or accei^ting the Northern SecuriticN Company as the holder or owner of any shares of the capital stock of either of those companies, or from ^fecting any combination or agreement [621 that would disturb their independent integrity, management and control, respect ivf ^ly, or that would directly or indirectly destroy free and unlimited com- petition between them by interchange of traffic, poolings of earnings, division of property or otherwise. The Securities Company, appearing specially for that pur- pose, filed its petition for the removal of the case into the Circuit Court of the United States upon the ground that the suit was of a civil nature, in equity, involved, exclusive of costs, the sum of two thousand dollars, and Avas one arising under th£ Constitntion and laws of the United States, The state court approved the required statutory bond for removal, and made an order, reciting that the case was re- moved to the Federal court. The Northern Securities Company, appearing specially for that purpose, gave notice of a motion to have the service of summons upon it vacated. Notice was also given of a like 21220— VOL 2—07 M ^35 546 194 UNITED STATES REPORTS, 62. Opinion of the Court motion as to the service of summons upon defendant Hill in his capacity as President of that company. Subsequently, the company, and defendant Hill as its President, gave notice that the above notices were witlidrawn, and they accordingly entered their appearance in the cause. xit a later date the defendants severally ansAvered, and the State filed its replication to each answer. Proofs were taken, and the cause having been heard, the ])ill was dismissed upon the merits. 123 Fed. Kep. 692. After the caune was argued here the i)arties were invited to submit briefs upon the question Avhether the Circuit Court of the United States could take cognizance of the case upon removal from the state court. From the briefs filed in re- sponse to that invitation it appeared that both sides deemed the case a removable one and insist that this court should consider the merits as disclosed by the pleadings and evidence. But consent of parties can never confer jurisdiction upon a Federal court. If the record does not affirmativelv show jurisdiction in the Circuit Court, we must, upon our own [63] motion, so declare, and make such order as will prevent that court from exercising an authonty not conferred upon it by statute. Mans-field Q, <& L, M, Raihcay Co. v. Simn. Ill U. S. 379, 382 ; Rohertsoji v. Cease, 97 U. S. 040 ; Kinf/ Bridr/e Co. V. Otof^ County, 120 IT. S. 225 ; Parker v. Ormshj,Ul U. S. 81; 3fatthir/Iy v. Northwestern Va. R. /?., 158 U. S. 53, 57; (rreat Softhern Fire Proof Hotel Co. v. Jones, 177 U. S. 449, 453; Confhienfal National Bank v. Bvford, 191 U. S. 119; Defiance Water Co. v. Defiance, 191 IT. S. 184. 194. We proceed, therefore, to inquire whether the Circuit Court could take cognizance of this case upon removal from the state court and make a final decree upon the merits. Of course, the Circuit Court could not take cognizance of the case as one presenting a controversy between citizens of different States; for the State of Minnesota is not a citizen within the meaning of the Constitution or the acts of Con- gress. Postal Tel. Cable Co. v. Alahama, 155 IT. S. 482, 487. But the first section of the Judiciary Act of 1887-8, 24 Stat. 552, c. 373 ; 25 Stat. 433, c. 806, provides, among other things, that the Circuit Courts of the United States may take original cognizance of all suits of a civil nature at law or in equity, arising under the Constitution or laws of the United States, MINNESOTA V. NORTHERN SECURITIES CO. 547 Opinion of the Court where the matter in dispute, exclusive of costs, exceeds in value the sum of two thousand dollars. And the second sec- tion provides for the removal from a state court of " any suit of a civil nature, at law or in equity, arising under the Consti- tution or laws of the United States * * * of which the Circuit Courts of the United States are given original juris- diction by the preceding section." In Tennessee v. Union cf' Planters'" Bank, 152 U. S. 454, 461, which involved the scope and meaning of the acts of 1887-8, in respect of cases arising under the Constitution or laws of the United States, this court, after referring to sec- tion one, said : '* But the corresponding clause in section 2 allows removals from a state court to be made only by de- fendants, and of suits ' of which the Circuit Courts of the United States are given [64] original jurisdiction by the preceding section.' thus limiting the jurisdiction of a Cir- cuit Court of the United States on removal bv the defendant under this section to such suits as might have been brought in that court by the plaintiff under the first section. 24 Stat. 553; 25 Stat. 434. The change is in accordance with the general policy of these acts, manifest upon their face, and often recognized by this court, to contract the jurisdic- tion of the Circuit Courts of the United States." Mexican Nat. Railroad v. Davidson, 157 U. S. 201, 208; Metcalf v. Watertown, 128 U. S. 586. And in Chappell v. Walerworth, 155 U. S. 102, 107, the court, referring to Tennessee v. Union (& Planters^ Bank, said that it was there adjudged, upon full consideration, that, under the act of 1887-8, " a case (not depending on the citizenship of the parties, nor otherwise specially provided for,) cannot be removed from a state court into the Circuit Court of the United States, as one arising under the Constitution, laws or treaties of the United States, unless that appears by the plaintiff's statement of his owji claim ; and that, if it does not so appear, the want can- not be supplied by any statement in the petition for removal, or, in the subsequent pleadings." To the same effect are Postal Tel. Cable Co. v. Alabama, 155 U. S. 482, 487; United States V. American Bell Tel. Co., 159 U. S. 548, 553 ; Oregon Short Line v. Skottowe, 162 U. S. 490, 494 ; Texas <& Pacific Railway Co. v. Cody, 166 U. S. 606, 608 ; Pratt v. Paris Gas Light ct> Coke Co., 168 U. S. 255, 258; Walker v. Collins. 548 194 UNITED STATES REPOBTS, 64. Opinion of the Court. 167 U. S. 57, 59; Arkiinsas v. liffusas ((• Texas Coal Co., 183 U. S. 185; Winfem Union Tel. Co, v. .1/*/^ Arbor Railroad Co., 178 TJ. S. 239. These cases establiijli, beyond further question in this court, the rule that, under existing statutes reguhiting the jurisdiction of the courts of the United States, a cas<3 cannot l)e removed from a state court, as one arising iinder the Constitution or hiws of tlie United States, iinhs^ the phuntitrs comphiint, liill or declaration shows it to l>e a case of that character. " If it does not appear at the out- set,*' this court iias (|uite recently said, '* that the suit is one of whicli the Circuit Court at tlie time its jurisdiction [(lol is invoked conk! properly take cogniziuice, the suit iiinst Ix^ dismissed." Third St cC' Stflnahnn Ry. v. Letew, 173 U. S. 457, 4(>0. We must then inquire whether the comphiint presents a case arising nnder the Constitution or laws of the United States, in respect of whicli the original jurisdiction of the Circuit Court could. have been invoked by the state. The real purpose of the suit was to annul the agreement and suppress the conil)ination alleged to exist between the defendant corporations upon the ground thjit such agre^Miient and combination were in violation, Hr.-t, of the laws of ^lin- nesota, and, second, of the Anii-Trusf Aef of Cottf/ress, If relief had been asked upon the ground alone tliat what the defendant corporations had done and would, unless re- strained, continue to do, was forbidden by the statutes of Minnesota, the Circuit Court of the United States could not have taken cognizance of tlie case: for confessedly such a controversy would not have l)een one lietween citizens of dif- ferent States, nor could snch a suit have l^een deemed one arising imder the Constitution or laws of the United States. The contention, liowevcr, is that a case aiising nnder the laws of the United States was presented by the allegation in the complaint that the combination and consolidation.be- twwn the Great Northern and Northern Pacific Railway Companies and their control of their affairs and operations by the Northern Securities Company, were also in violation of the Anti-Trust Act of Congress of July 2, 1890. An alle- gation in a complaint filed in a Circuit Court of the United States may, indeed, in a sense, confer jurisdiction to deter- mine whether the case is of the class of which the court may MINNESOTA V. NORTHERN SECURITIES CO. 549 Opinion of the Court. properly take cognizance for purposes of a final decree on the merits. Newbury jwrt Water Co. v. Newbury port ^ 193 U. S. 5G1, and Paiific Electric Ry. Co. v. Los Angeles^ post, page 112, decided at present term. But if, notwithstanding such an allegation, the court finds, at any time, that the case does not really and substantially involve a dispute or contro- versy within its jurisdiction then, by the [66] express com- mand of the act of 1875, its duty is to proceed no further. That is manifest from the fifth section of that act, which provides ^' That if, in any suit commenced in a Circuit Court or removed from a state court to a Circuit Court of the United States, it shall appear to the satisfaction of said Cir- cuit Court, at am^ time after such suit has been brought or remored thereto, that such suit does not really and substan- tially involve a dispute or controversy properly Avithin the jurisdiction of said Circuit Court, or that the parties to said suit have been improperly or collusively made or joined, either as plaintiffs or defendants, for the purpose of creating a case cognizable or removable under this act, the said Circuit Court shall proceed no further therein, but shall dismiss the suit or remand if to the court from ichich it icas remored as justice ma}^ require, and shall make such order as to costs as shall be just.*' 18 Stat., 4:70. That provision has not been superseded by any subsequent legislation. Does the present suit really and substantially involve a dispute or controversy properly within the jurisdiction of the Circuit Court? That is to say, could the suit, as dis- closed by the complaint, have been brought by the State originally in that court ? If it could not, then, under the act of 1887-8 and the adjudged cases, it should not have been removed from the state court and should be remanded. Bv the first section of the Anti-Trust Act everv contract, combination in the form of a trust or otherwise, or con- spiracy, in restraint of trade or commerce among the several States, is declared to be illegal. The second section con- demns the monopolizing or attempting to monopolize, or combining or conspiring to monopolize, any part of such trade or commerce. By the third section, every contract, combina- tion in the form of trust or otherwise, or conspiracy in re- straint of commerce in any Territory of the United States 550 194 UNITED STATES REPOETS, 66. Opinioo of the Court. or the District of Columbia, or in restraint of trade or com- merce between any such Territory and another, or between any such Territory or Territories and any State or States or the District of Columbia, or [67] with any foreign States, or between the District of Columbia and any State or States or foreign nations, is declared to be illegal. A violation of the provisions of each section is made a misdemeanor, punish- able by a fine not exceeding five thousand dollars or by im- prisonment not exceeding one year, or by both said punish- ments, in the discretion of the court. Of course, a criminal prosecution under the act must be in the name of the United States and in a court of the United States— the District Attorney who conducts the prosecution being subject to the direction of the Attorney General as to the manner in which his duties shall be discharged. Kev. Stat. 3()2. The fourth, sixth, seventh and eighth sections of the act are as follows : •* Sec. 4. The several Circuit Courts of the United States are hereby Invested with jurisdictioo to prevent and restrain violations of this act ; and it shall he the duty of the several District Attornevs 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 peti- tion 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 l>efore final decree, the court may at any time malve such temporary restraining order or prohibition as shall be deemeeing the subject thereof) mentioned in section one of this act, and being in the course of trans- portation from one State to another, or to a foreign countrv, 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 con- trary to law. [68] " 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 de- fendant resides or is found, without respect to the amount in contro- versy, and shall recover threefold the damages by him sustained, and the costs of suit, including a reasonable attorney's fee. **Sec. 8. That the word ' i>erson,' 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 209. MINNESOTA V. NORTHERN SECURITIES CO. 551 Opinion of the Court. It thus appears that the act specifies four modes in which effect may be given to its provisions. It is clear that the present suit does not belong to either of those classes. It is not a criminal proceeding, (§§ 1, 2, 3,) nor a suit in equity in the name of the United States to restrain violations of the Anti-Trust Act, (§ 4,) nor a proceeding in the name of the United States for the forfeiture of property being in the course of transportation, (§ 6,) nor an action by any person or corporation for the recovery of threefold damages for injury done to business or property by some other person or corporation. (§§ 7, 8.) But it is said that as the act of Congress was for the benefit of all the States and all the people, this case is to be deemed one arising under the laws of the United States, and, therefore, cognizable by the Circuit Court, because one of the objects of the State of Minnesota by its suit is to protect cer- tain of its proprietary interests, which, it is alleged, would be injured by violations, on the part of the defendants, of the act of Congress. Let us see what, in that view, is the case as presented by the complaint. The complaint alleged that the State is the owner of more than three million acres of land, of the value of more than fifteen millions of dollars, obtained, by donation, from the United States, and that " the value of said lands, and the [69] salability thereof, depends, in very large measure, upon having free, uninterrupted and open competition in passen- ger and freight rates over the lines of railway owned and operated by said Great Northern and Northern Pacific Rail- way companies." The bill also alleges " that many of said lands are vacant and unsettled and located in regions not at present reached by railway lines, and depend for settlement upon the con- struction of lines in the future; that it has heretofore been the practice of said Great Northern and Northern Pacific Kailway companies, respectively, to extend spur lines into territory adjacent to each of said roads, as well as into new territory, for the purpose of developing such territory, as well as to obtain traffic thereform; that such new lines have been built in the past very largely by reason of the rivalry heretofore existing between said companies for exist- 194 UNITED STATES REPORTS, 69. Opinion of the Court ing, as well as new, biisineas; that tinder the consolidation and unity of control hereinafter set forth siicli rivalry will cease, and many of the lands now owned by the State of Minnesota will not be readied l>y railroads foi- years to come, If at all, owing to such coni!)ination and consolidation remov- ing all rivalry and competition between said companies- that the settlement and occupation of said lands will add very much to their value, and such occupation will dei)end entirely upon the accessibility of railway lines and trans- portation facilities for marketing the products raised there- on; that if said lands are sold and become occupied, thev will add very largely to tlie taxable value of the property of the State, and that said lands cannot be so sold, or the inJonie of the State increased therel)y. without the construction of railroad lines to or adjacent to the same/' It was further alleged that the State is the owner of, and has maintained at large expense, a state imiversity' hospitals for tlie insane, normal schools for teachers, a train- ing school for lx>ys and girls, schools for deaf, dumb, blind, and feeble-minded persons, a state school for indigent and homeless children, and a state penitentiary: that a great jyor- tion of the supplies of every kind for such institutions must, of necessity, be shipped |70| over the different lines of rail- way owned and operated by the Northern Pacific and (Jreat Northern Railway companies; that tlie amount of taxes whicli the State must collect, and the successful mainte- nance of its public institutions, as well as the i)erformance of its governmental functions and affairs, depend largely upon tlie value of the real and per.sonal iJoi)erty situated within the State and the general prosperity and business succe s (.f its citizens; and that such prosi)erity and business depend very largely upon maintaining in tlie State free, open and unrestricted competition between the railway lines of those two companies. The in j ury on account of which the present suit was brought is at most only remote and indirect ; such an injury as would come alike, although in different degrees, to every individual owner of projx^rty in a State by reason of the suppression, in violation of the act of Congress, of free competition between interstate carriers engaged in business in such State; not MINNESOTA V. NORTHERN SECURITIES CO. 553 Opinion of the Court. such a direct, actual injury as that provided for in the sev- enth section of the statute. If Minnesota may, by an original suit, in its name, invoke the jurisdiction of the Circuit Court, because alone of the alleged remote and indirect injury to its proprietary interests arising from the mere absence of free competition in trade and commerce as carried on by interstate carriers within its limits, then every State upon like grounds may maintain, in its name, in a Circuit Court of the United States, a suit against interstate carriers engaged in business 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, irrespective 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 contemplated any such methods for the enforcement of the Anti-Trust Act. We cannot suppose it w^as intended that the enforcement of the act should depend in any degree upon original suits in equity instituted by the States or by [71] individuals to prevent violations of its provisions. On the contrary, taking all the sections of that act together, we think that its intention was to limit direct proceedings in equity to prevent and restrain such violations of the Anti-Trust Act as cause injury to the general public, or to all alike, merely from the suppression of competition in trade and commerce among the several States and with for- eign nations, to those instituted in the name of the United States, under the fourth section of the act, by District At- torneys of the United States, acting under the direction of the Attorney General; thus. securing the enforcement of the act, so far as direct proceedings in equity are concerned, ac- cording to some uniform plan, operative throughout the en- tire country. Possibly the thought of Congi-ess was that by such a limitation upon suits in equity of a general nature to restrain violations of the act, irrespective of any direct injury sustained by particular persons or corporations, interstate and international trade and commerce and those carrying on such trade and commerce, as well as the general business of the country, would not be needlessly disturbed by suits brought, on all sides and in every direction, to accomplish t/'tWc IfM UNITED STATES KEPORTS, 11. Opinion of the Court. improper or speciiliitive purposes. At any rate, the interpre- tation we have given of the act is a more reasonable one. It is a safe and conservative interpretation, in view as well of the broad and exclusive power of Congress over interstate and international commerce as of the fact that, so far as such commerce is coiiceriied, Congress has prescribed a specific mode for preventing restraints upon it, namely, suits in equity under the direction of the Attorney General. Of the present suit the Attorney General has no control, and is with- out any responsibility for the manner in which it is con- ducted, altliough, in its essential features, it is just such a suit us would be lirouglit l>y liis direction when proceeding under the fourth section of the Anti-Trust Act. The Stale presents still anotluer view of the question of jurisdiction. Its complaint alleges that if the Securities Company l>e allowed to hold and control tlie stocks of the Great Northern [72] and Northern Pacific Railway compa- nies and to carry out the purpose and object of its incorpora- tion, full faith and credit will not be given to the i)ublic acts of tlie State. This, it is eontended, presents ,i ease arising under Article I\' of the Constitution, providing that '^ f nil faith and cretlit shall bt> given in each State to the public acts, records ami judicial proceedings of every other State." It is said by the state's counsel that the " gravamen of the charge in appellant^ complaint is that the defendants created a eor[)oration device in New Jersey and used it for the purpose and with the result that property rights in Min- nesota were atlVetctl, in violation of its laws. Our conten- tion is that Artirle IV must be so construed as to make the constitutional enactment of Minnesota effective throughout the United States, so far as tliey apply to and affect property rights within the State. Otherwise the policy and laws of any State may be easily evaded." We do not think that the rights within the State. Otherwise the policy and laws of any State may be easily evaded." We do not think that the clause of the Constitution above quoted has any bearing whatever upon the question under consideration. It only prescribes a rale by which courts, Federal and State, are to be guided when a question arises in the progress of a pending suit as to the faith and credit to lie given by the court to the public acts, FIELD V. ASPHALT CO. 555 Syllabus. records and judicial proceedings of a State other than that in which the court is sitting. Even if it be assumed that the word " acts " includes " statutes," the clause has nothing to do with the conduct of individuals or corporations; and to invoke the rule which it prescribes does not make a case aris- ing under the Constitution or laws of the United States. What was the duty of the Circuit Court when it ascer- tained that the suit was not one of Avhich it could take cogni- zance ? The answer is indicated by the clause of the Judici- ary Act of March 3, 1875, to Avhich we have adverted. For the reasons stated, we are of opinion that the suit does not — to use the words of the act of 1875 — really and substan- tially involve a dispute or controversy within the jurisdiction of the Circuit Court for the purposes of a final decree. Went- em Union Tel Co. v. Ann Arbor R. R. Co.. 178 U. S. 239, 243. [73] That being the case, the Circuit Court, following the mandate of the statute, shotild not have proceeded therein, but should have remanded the cause to the state court. 77/6' decree of the Circuit Court is n rersed and the case is sent hack with directions that It he remanded to the state court. [618] FIELD V. BARBER ASPHALT PAVING COM- PAXY.« BARBER ASPHALT PAVING COMPANY v. FIELD. APPEALS FROM THE CIRCUIT COURT OF THE UNITED STATIiS FOR THE WESTERN DISTRICT OF MISSOURI. Nos. 201, 202. Argued April 11, 1904.— Decided May 31. 1904. [194 U. S., 018.] Where there are allegations of diverse citizenship in the bill, but the jurisdiction of the Circuit Court is also invoked on constitutional gi-ounds the case is appealable directly to this court under § 5 of the act of March 3, 1891, as one involving the construction or applica- tion of the Constitution of the United States, and where both parties have appealed the entire case comes to this court, and the respond- ent's appeal does not have to go to the Circuit Court of Appeals.^ « Decision in the Circuit Court (117 Fed., 925). See p. 192. b Syllabus copyrighted, 1904, by The Banks Law Publishing Co. tJtJd 194 UNITED STATES REPORTS, 618. Statonieiit of the Caw. It is not the purpose of the Fourteenth AnieiKhiieiit to prevent the States from elassifyins the subjects of legislation and making dif- ferent reguUitions as to the property of different individuals differ- ently situated. The provision of the Federal Constitution is satis- fled if all persons similarly situated are treatetl alike in privileges conferred or liabilities imi>osed. The r»rovision in § 5080, Rev. Stat, of Missouri, that certain improve- ments are not to he made if a majority of resident owners of prop- erty lialde to tnxation protest, is not unconstitutional because it gives the itrivikge of i>rotesting to them and not to non-resident owners. Only such acts as directly interfere with the freedom of interstate com- nien* are prohibited to the States by the constitution, and the Sher- nnin Act of July 2, 189(>, is not intended to affect contracts which have only n remote and indirect bearing on connnerce between the States. The specification in an ordinance, not invalid under the laws of the State, that a [)arti«ular kind of asphalt protluced oiUy in II foreign country does not vicdate any Federal right. Although the agent of the comitany obtaining a paving contract may have been active and influential in obtaining signatures to the peti- tion, in the al)sence of proof of fraud and corruption, the levi<\s will not be set -.Kule after the improvement has been comi»leted. The nwessity for an imin-ovement of streets is a matter of which the proper municipal authorities are the exclusive judges and their judgment is not to be interfered with except in cases of fraud or gross abuse of innver. [The Slid iticat ion in an ordinance by a municipal council that Trini- dad Lake asphalt shall be useil for street imi»rovement, does not violate the connnerce clause of the Federal Constitution or the Sherman Anti-Trust Act of July 2. 189() (26 Stat. 2!X)). notwith- ■ standing this i»articular kind of asi>halt is the iiroduct of a foreign conntiy and competitive bidding was thereby rendered iniiiossible.] These cases are appeals from the deci'ee of the Circuit Court of the United States for the Western District of Mis- souri. [610] Richard H. Field, as owner of certain lands abutting on Main street, Baltimore avenue and Wyandotte street in Westport, Missouri, which city was then a suburb, and has since become a part, of Kansas City, filed a bill of complaint against the paving company. The relief sought was against certain tax bills, issued to pay for the paving of the above-named streets, held by the defendant company, and to have the same declared void because (1) the act under which they were assessed violated the Fourteenth Amend- ment to the Constitution of the United States; (2) that the FIELD V. ASPHALT CO. Opinion of the Court. 557 paving in question was unnecessary and the contract for the same was the result of undue and illegal influence on the part of the agents of the defendant company exercised upon the board of aldermen of the city of Westport; (3) that the contracts for the paving required the same to be constructed of Trinidad Lake asphalt, thereby cutting off competition with other kinds of asphalt suitable for street paving; (4) that the proceedings and agreements by which such asphalt was designated in the resolutions, ordinances and rules for the construction of said paAements were in violation of the interstate commerce clause of the Constitution of the United States (Art. 1, sec. 8); and (5) that the said resolutions, ordinances and contracts and the action of the defendant company in securing the same were in violation of tlie Fed- eral Anti-Trust Act of Julv 2, 1890. Upon the trial, the Circuit Court held against the prayer of the complainant for relief upon the Federal grounds al- leged, but, holding that the paving of Wyandotte street was unnecessary, granted the prayer of the bill as to the tax bills issued for work done on that street, and dismissed the bill as to the other two streets. From so much of the decree as held the tax bills for the work done on Wyandotte street invalid the paving company also appealed. (Case Xo. 202.) J/r. Richard H. Field, attorney in person, for api>ellant in Ko. 201, and appellee in Xo. 202. [620] Mr. William C, Scarritt, with whom Mr. John K. Griffith, Mr. Elliott H. Jones and Mr. Edward L. Searritt were on the brief, for appellee in No. 201, and appellant in No. 202. Mr. Justice Day, after making the foregoing statement, delivered the opinion of the court. A motion was filed by the appellant to dismiss the appeal of the paving company, which was postponed to the hearing of these appeals upon the merits. An examination of the mo- tion and a consideration of the briefs filed and arguments made in support of and in opposition to the same leads us to the conclusion that it cannot be sustained. The appellant IW I'XITED STATES REPORTS, 620. Opinion of tlie Court appealed directly to this court; for while there was an alle- gation of diverse citizenship in the bill, jurisdiction was also invoked on the constitutional grounds above stated. This made the case appealable directly to this court under section 5 of the act of March 3, 1891, 1 Comp. Stat U. S. 549, m one which " involves the construction or application of the Constitution of the United States." The contention is that the prayer of the complainant on the constitutional grounds having been denied, the appeal of the respondent should have been to the Circuit Court of Appeals. But we cannot agree to this view. There was no cross bill filed in tlie case and none was required. The bill of complaint contained allegations sufficient to make a case of alleged violation of constitutional rights. It is well settled that in such cases the entire case may be brought to this court by the appeal. In IJoIder v. Aultman, 169 IJ. S. 81, 88, dis- cussing the act of ^larch, 1891, Mr. Justice dray said: "TJiMm siirh it writ of error, differing in these respetts from a writ of erriirju tlie liighest i-oiirt of a State, the jurisdiction of this court does not depend upon the question whether the right claimed under the < oiistitntion of the United States has been upheld or denied in the court below: and the jurisdiction of this court is not limited to the oonstitutional question, but [621] includes the whole case. Whitten v TmilmsoiK l«X» U. S. 231. 2?.S; Penn. Im. Co, v. Austhu 168 U. S. 685."' I^oeft V C77. If, therefore, the whole case can come to this court by di- rect appeal under the allegations of this bill, and if all the questions. Federal or otherwise, may come up on such appeal, it must follow that either party aggrieved by the decision may appeal, and in this case the complainant appealing, a cross appeal may be sued out by the defendant as to the mat- ters decided in the same case against him. If he fails to take such appeal the correctness of the decision as against him will be presumed. Ma;? Conrpany v. Flanders, 12 Wall. 130; Chittenden v. Bretmter, 2 Wall. 191, 196. The motion to dismiss the cross appeal must be denied. Coming to the merits of the case, the grounds of Federal relief will first be considered. It is claimed that certain sec- tions of the act of the general assembly of Missouri, which make the tax bills levied to pay the contract price for the paving a lien upon the complainant's real estate, deprive him FIELD V. ASPHALfT CO. 559 Opinion of the Court. of his property without due process of law, and deny to him the equal protection of the laws. This argument is predi- cated on section 5989 of the Revised Statutes of Missouri. The exact point of objection is that the improvement is not to be made if a majority of the resident owners of the prop- erty liable to taxation therefor shall file with iha city clerk a protest against such improvement, which privilege of pro- test is not given to non-resident owners, tliereby discriminat- ing against them. It is well settled, however, that not everv discrimination of this character violates constitutional rights. It is not the purpose of the Fourteenth Amendment, as has been frequently held, to prevent the States from classifying the subjects of legislation and making different regulations as to the property of different individuals differently situ- ated. The provision of the Federal Constitution is satisfied if all [622] persons similarly situated are treated alike in privileges conferred or liabilities imposed. Kcntuck}/ Rail- road Tax Cascfi, 115 IT. S. 321; Hayes v. MixsoHrl, 120 U. S. 68; Magoun v. Illinois Trust c& Savings Banl\ ITO U. S. 283; Gulf, Colorado d; Santa Fe Railroad v. Ellis, 165 U. S. 150. The alleged discrimination is certainly not an arbitrar^^ one ; the presence within the city of the resident property owners, their direct interest in the subject matter and their ability to protest promptly if the means employed are objectionable, place them on a distinct footing from the non-residents whom it may be difficult to reach. Furthermore, there is no dis- crimination among property owners in taxing for the im- provement. Wlien the assessment is made it operates upon all> alike. It has been held to be within the power of the leg- islature of Missouri to authorize the council to order the im- provement to be made without consulting j)roperty owners. Buchan v. Broadwell, 88 Missouri, 31. If the legislature saw fit to give to those most directly interested and whose consent could be most readily obtained, the right to protest, such ac- tion did not deprive other persons of rights guaranteed by the Constitution. Further objection on Federal grounds is urged, in that the specification of Trinidad Lake asphalt for this improvement is in violation of the interstate commerce clause of the Con- stitution of the United States, and of the so-called Sherman 194 UNITED STATES KEPORTS, 622. Opinion of the Court. Act of July, 1890. The right to provide for this paving was vested by the Missouri statute in the board of aklernien. 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 riglit so to do, inider the charter powers of such cities as AWstport, notwithstanding competitive bidding is thereby rendered impossible, has been sustained by the Su- preme Court of Mi'^souri. Barber Asphalt Parhn/ Co. v. Hunt, 100 ^fissoiiri, ±1: WirrrcH v. Pifr'nu/ Co., 115 Missouri, 57*2: Verdht v. Sf. Louis, IHl Missouri, 2(\. With the wisdom of this choice the courts.have nothing to do, and in this case we are only concerned to inquire as to the alleged violation of Federal rights [623] in such selection. The argument is that Trinidad Lake asphalt, being a product of a foreign country and brought into Missouri, and there being other de- posits in other States within the United States from which suitable asphalt could be had, the specification of this kind of asphalt is an interference with and a regulation of inter- state conunerce, in violation of the exclusive right of Con- gress conferred by the Constitution. It is inmecessary to cite largely from cases in this court, which hold that onlv such acts as dir.»ctly interfere with the freedom of interstate commerce are prohibited to the States, Kkid v. Pearson, 128 IT. S. 1, in which case, Mr. Justice Lamar, speaking for the court, said (p. 28) : "As Ims Iteeii ofttMi said lesislntioii r^\v a Stato] may in a j?reat variety of ways afilVct ({niiiuorce and persons ciijirajjed ill it. witlioiit eonstitntiiiir a rcju^.iiation of it witliiii the meaning; of tiie ("oiistitii- tioii." /'cmisitfrunia h\ h\ Co. v. fluf/hcH, 101 U. S. 477. and cases cited in tiie opiidon. Fhe right of a State in the exercise of the police power to make regulations which indirectly affect interstate com- merce has been frequently sustained. In the i)resent case it may Im that the use of this kiiul of asphalt, under nnmici- pal authoritv conferred bv the State, will in a limited deorree affect interstate commerce, but it certainly is not one of those direct interfeiences with the power over and express con- trol of the subject given bv the Constitution to Conofress. In this day of midtiplied means of intercourse between the States there is scarcely any contract which cannot in a limited or remote degree Ix^ said to affect interstate conunerce. But FIELD V. ASPHALT CO. 561 Opinion of the Court it is only direct interferences with the freedom of such com- merce that bring the case within the exclusive domain of Federal legislation. The attempt to invoke the provisions of the Sherman Act m this case is equally unavailing. That act has been recently considered in the Northern Securities cases, decided at this term, and its construction and the nature of the remedies under it determined. It is not intended to affect contracts which have a remote and indirect bearing upon commerce 16241 between the States. Hopkins v. United States, 171 U. S. 578; AddystonPipe Co, v. United States, 175 U. S., 211. In addition to the ground by which Federal jurisdiction was established in the courts below, it is alleged that the tax bills should be held void because they were obtained by un- due influence of the agents of the paving company, im- properly exercised to obtain the needed municipal action. The court below held, and an examination of the testimony has brought us to the same conclusion, that there was nothing in the case to establish the charges of fraud and corruption, although the record does show that an agent of the defend- ant company was active and perhaps influential in obtaining signatures to the petition which specified Trinidad Lake asphalt for this improvement; yet in the absence of proof of fraud or corruption we do not think the contract and re- sulting levies can be set aside for this reason. It is one thing to disapprove of such measures as a matter of propriety of action, but quite another to set aside a contract, especially after the full performance of its terms. Upon the cross appeal, the learned judge in the court be- low held that the Wyandott(i street tax bills were void be- cause that street had been previously paved with macadam in the years 1892-1893, four or five years before the asphalt paving was laid, which macadam he found to be in good con- dition and but little worn. The effect of this decree was while findmg against complainant as to the allegations of fraud and collusion in obtaining the contract, to hold that, m the opinion of the trial judge, the repaving of Wyandotte street was unnecessary. We think this conclusion overlooks the tact that the power to construct, improve and pave streets 21220— VOL 2—07 m 36 562 ItM UKITED STATES BEPORTS, 624. Opinion of the Court. was vested by the law of Missouri, as it generally is, in the board of aldermen. (Laws of Missouri, 1895, 65, § 85 to §95, inclusive.) The necessity of such improvements is a matter of which they are the exclusive judges, and their judgment is not to be interfered with by the courts, except in cases of fraud or gross abuse of power. This power of the city board is a continuing [625] one, and the mere fact that a pavement has been once laid does not require the inter- ference of the courts when the governing body of the city, in the exercise of its judgment, has determined that the neces- sity for repaving has arisen. The law has vested tliis power in the representatives of the city and the courts are not at lib- erty to determine whether the judgment is exercised wisely or unwisely. If this wei-e not so, a contractor, who acts under the direction and because of the action of the city authorities in determining the necessity of an improvement, must lose his compensation, if, upon the suit of a property owner, the courts shall take a different view of the necessity of the im- provement. In other words, the contractor, though acting in good faith and complying in all respects with his agree- ment, lawfully made, must abide the judgment of the courts as upon appeal from the tribunal solely empowered by law to pass upon the necessity of the improvement, and to make the necessary contracts to carry it out. As we have said, there may be cases of fraud or arbitrary abuse of power, when the courts will intervene. Under other circumstances the municipality and property owners inter- ested are bound by the acts of their agents. The authorities amply sustain this view. 2 Dillon Mun. Corp. (4th ed.) § 686 ; Wabash E. R, Co. v. Defiance, 167 U. S. 88 ; Skinker v. Heman^ 148 Missouri, 349; Warrm, v. Paving Co., 115 Missouri, 572, 580. Applying the principles settled by the authorities to the facts disclosed in this case, we do not find such evidence of fraud or gross abuse of power as would warrant the setting «ride of L tax biUs for this improvement The testimony tends to show that the macadam was considerably worn; its replacement, to the extent of laying an asphalt pavement on top of it, was deemed necessary by the city authorities. It does not appear that any protest or objection was made dur- D. E. LOEWE & CO. V, LAWLOE. 563 Syllabus. ing the progress of the work. A majority of the resident owners of lots abutting upon the part of the street to be im- proved had petitioned for the asphalt pavement. There is considerable [626] testimony tending to show that the value of abutting property was enhanced by the improvement. These and kindred matters were before the board. It is not our province to review their judgment, and we do not think the courts are authorized to interfere with the dis- cretion vested in them in making the improvement under the circumstances shown. To hold otherwise would be, as we have said, to substitute the judgment of the court as to the expediency or necessity of making such improvement for that of the body delegated by law with the power and re- sponsibility of action in the premises. The court below, having properly held that the case alleged must fail on the other grounds, shoiild have regarded the judgment of the board of aldermen as to the necessity of re- paving Wyandotte street as conclusive upon it. The con- clusion reached renders it unnecessary to consider whether the complainant, having failed to protest or object to the work before it was begim or during its progress, can be heard in a court of equity to object to the tax bills assessed for the benefit of the contractor after the work is completed in com- pliance with the contract. We think the court below erred in adjudging the tax bills on Wyandotte street to be void, and so much of thp decree is reversed with costs, the decree as to the other streets is affirmed, and the case remanded to the court below with in- structions to dismiss the bill. [633] D. E. LOEWE & CO. ^. LAWLOR ET AL.« (Circuit Ck)urt, D. Connecticut June 9, 1904.) [130 Fed., 633.] Abatement— Pendency op Action in State Coubt »— Indemnity.— The pendency of a suit In a state court cannot be pleaded In almte- « Motion to correct complaint denied (142 Fed., 216). See p. 854. 6 Pendency of action in state or federal court as ground for abate- ment of action in the other, see note to Bunker Hill d Sullivan Mining S Concentrating Co. v. Shoshone Min. Co., 47 C. C. A. 205. 564 130 FEDEBAL KEPORTER, 633. Opinion of tlie Court D. E. LOEWE & CO. V, LAWLOR. 566 ment of an action in a Circuit Court of the United States to recover treble damages under section 7 of the anti-trust act (Act July 2, 1880, c. 647, 26 Stat. 210 [U. S. Comp. St 1901, p. 3202]) since the state court is without jurisdiction to enforce the remedy given by said section, and therefore the same case cannot be depending in both courts.0 Attachment — Gbounds fob Dissolution — Pbiob Attachment ih State Court. — Where the state statute provides for successive at- tachments of the same property, a prior attachment in a state court affords no ground for the discharge of an attachment in a federal court. At Law. On demurrer to plea in abatement, setting up lis pendens in state court, and on motion to vacate attach- ments. Davenport c^ Banks, for plaintiff. Bristol, Stoddard, Beach d* Fisher , De Forest cf* Klein, and Howard Tf . Taylor, for defendants. Platt, District Judge. It appears to be conceded that when suits are pending be- tween the same parties for the same cause of action, and demanding the same relief, in the state and federal courts, which have concurrent jurisdiction in the same territory, and the federal jurisdiction is based upon diversity of citizenship, a plea in abatement alleging the pendency of one will be futile as against the other, upon the authority of Gordon v. Guilfoil, 99 U. S. 168, 25 L. Ed. 383, and many cases in line therewith in the lower courts. The point is made in argument upon the plea herein that when diversity of citizenship is absent the reason for the rule departs. To maintain in the case at bar that the state and federal courts are " in a sense " foreign to each other would require careful and conscientious study. The step from foreign re- lations to hostility is so easy to be taken, and the desire of the federal authority to promote and insure friendship and tranquillity by all honorable means is so great, that mn unnecessary assertion of the inherent distinctions at- « Syllabus copyrighted, 1904, by West Publishing CJo. Opinion of the Court [634] taching to its source of power should be declared only • in the last instance. Fortunately, the case in hand does not, from the court's point of view, demand such exhaustive examination. In the Sherman act (Act July 2, 1890, c. 647, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200]) the Congress has established a new method of obtaining redress in a matter relating to inter- state trade, over which its jurisdiction is plenary. It has directed the parties to the Circuit Court for the vindication of their rights. Before sustaining the defendants' plea, it is obviously nec- essary to accept their preliminary contention that the state coiirt can, in the trial of the cause therein pending, invoke section 7 of the anti-trust act (Act July 2, 1890, c. 647, 26 Stat. 210 [U. S. Comp. St. 1901, p. 3202]), and under its authority assess treble damages. It is not believed that such power exists in the state court. Congress was dealing with a delicate problem when it gave us the Sherman act, and it would seem to have been the thought that since a subject was up over which the federal jurisdiction was absolute it would be well to intrust its exploitation to the federal judiciary. The care exercised is plainly exhibited when equitable relief was provided for in section 4 (26 Stat. 209 [U. S. Comp. St. 1901, p. 3201]), since such relief is further hedged about by the discretionary power afforded to the Attorney General. The conclusion is easily reached." The same case is not de-* pending in both courts. Watson v. Jones, 13 Wall 679 20 L. Ed. 666. ' Having gone to this point, it is unnecessary to take up in detail the question of attachments. The rule of comity can- not be invoked unless the situation here will lead to conflict with the state court. No trouble about the res can arise. The attachment liens will be governed by the rules applicable to successive attachments under the state statutes, which fur- nish the rule of action for this court, since no federal statute governs the matter. The demurrer to the plea in abatement is sustained, and the motion to vacate attachments is denied, at defendants' costs in each event. 566 131 FEDERAL REPOBTEB, 31. Syllabus. [81] DAVIS ET AL. v. A. BOOTH & CO.- (Circuit Court of Appeals, Sixth Circuit August 2, 1904.) [131 Fed., 31.] Sales — Good Will — Equity — Jubisoiction — Multtplioity of Suits. — Equity lias jurisdiction to restrain the violation of an agreement entered into as a part of the sale of a business, by which the per- sons interested therein agreed not to again engage in business in certain localities for a definite time, because of the difficulty In estimating the damages accruing, and to prevent a multiplicity of suits.^ Same — Validity of Contract — Public Policy. — An agreement by • which the stockholders of a corporation, on selling its assets to complainant's assignor, agreed not to again engage in a similar business in specified localities for a i)erIod of 10 years, or do any act tending to impair the good will of the business sold, was not contrai-y to public policy. Same — Anti-Trust Act. — ^Where a corporation engaged in the busl» ness of buying and selling fish sold out its assets and good will to plaintifiTs assignor, and the seller no longer retained any interest In the property, so that the sale was not a mere combination of owners and properties under one management, the sale was not in violation of the federal anti-trust act of July 2, 1890, c. 647, 26 Stat 209 [U. S. Comp. St. 1901, p. 3200], prohibithig contracts in restraint of trade, though the contract might incidentally or in some remote degree injuriously affect interstate commerce. Same — State Statutes — Construction. — 3 How. Ann. St. § 9354 j, de- nominated an act prohibiting certain trust combinations, and pro- viding that all contracts, the purpose or intent of which shall be in * any manner to prevent or restrict free competition in the sale of any article or commodity, or in any other branch of business or labor, shall be utterly illegal and void, provided that It shall not invalidate or affect contracts for the sale of the good will of a trade or business, does not prohibit a contract for the sale of a business where It was not intended that the seller should there- after have any interest in the property, or an agreement by which the seller's stockholders contracted not to again engage in a similar business In competition with the buyer in certain places for a speci- fied time. Same — ^Restraint of Competition. — An agreement ancillary to a sale of a corporation's business, by which the stockholders, who re- • Injunction granted (127 Fed., 875). See p. 318. Modified and afiSrmed by Circuit Court of Appeals, Sixth Ch-cuit (131 F., 31). Peti- tion for writ of certiorari denied by Supreme Court (195 U. S., 636). A memorandum decision. Not reprinted. ft See Injunction, vol. 27, Cent. Dig. § 121. DAVIS V, A. BOOTH & CO. Opinion of the Court 567 celved the purchase price, agreed that, hi order to protect the good will of the business so sold, they would not either directly or indi- rectly engage in the same business within certain distinct limits for a period of 10 years, was not void, as an unreasonable restraint of competition in trade, at common law. Same— Construction.— Where a contract ancillary to the sale of a business provided that the stockholders of the seller would not again engage in a similar business [32] for a period of 10 years in the territory, or the immediate vicinity of the territory, dealt in by the corporation, or operated in by it or its agents, or the immediate vicinity of such territory, the localities guarded against were re- stricted to those in which the selling company had establishments for doing business, and the immediate vicinity thereof, and did not include all parts or every one of the United States in which a former customer resided, or into which the corporation's corre- spondence had extended, or through which an agent of the com- pany had traveled.0 Appeal from the Circuit Court of tlie United States for the Eastern District of Michigan. For opinion below, see 127 Fed. 875. Edward E, Kane, and Fred A. Baker, for appellants. Ee7iry M. Duffield and Charles S. Thornton, for appellee. Before Lurton, Severens, and Richards, Circuit Judges. Severens, Circuit Judge. The object of this bill filed in the Circuit Court by the appellee, A. Booth & Co., was to obtain an injunction against the appellants to restrain them from violating an agreement made by them with William Vernon Booth, to the benefits of which the appellee claimed to be entitled. It states : That the complainant is a corporation organized under the laws of Illinois on August 1, 1898, with a capital of $5,500,000, for the purpose of buying, catching, and selling fish, and having its general office at Chicago. That the Davis Fresh & Salt Fish Company was a corporation organized under the laws of Michigan for a similar business, with headquarters at Detroit. That on or about August 14, 1898, the last- named company, for the consideration of $17,473.14, sold all its properties, including the good will of its business con- « Syllabus copyrighted, 1904, by West Publishing Co. 568 131 FEDERAL BEPOBTEB, 32. Opinion of the CJonrt ducted at Detroit, and gave a bill of sale, with warranty of title, to William Vernon Booth, on September 14, 1898, and Davis gave a personal guaranty of the contract of sale. That, as an inducement to the sale, Davis and the other stock- holders of the selling company entered into the following agreement: "This instrument witnessetli, tMt William Vernon Booth has pur- chased the plant, business and good will of the business of the Davis Fresh & Salt Fish Co., and has paid therefor the sum of $17,473.14; that in making said transfer, and as an mducenient to said William Vernon Booth to purchase said plant, business and good will and pay the sum aforesaid for the same, we each have agreed that we would not, and we now do agree, each for himself, jointly and severally with him. the said William Vernon Booth, his heirs and assigns, forever, that we will not. during the next ten years, iu the territorv or the Immediate vicinity of the territory dealt in by our company, or operated in by ourselves or the agents or employees of the company engage or In any manner be interested iu, either directlv or indirectly. for ourselves or for others, the same or like kind or character of busi- ness as that heretofore conducted and now being carried on by said company, its officers, agents, employees and assigns, and that we will not, during the said period of ten (10) years, either directlv or Indi- rectly, be guilty of any act Interfering with the business, its good will, its trade or its customers, or come In comi^etition with the same; and we will not. Jointly or severally either In firms or coriioratlons, or as individuals or in any other way, directly or Indirectly Interfere with the said trade or business, or do any act prejudicial to the same or any part thereof, or interfere with the persons employed therein; the meaning hereof being that the said William Vernon Booth is buy- ing and paying for the good will of the business In the largest and fullest scope of the term ; and that we will not, and each agrees that lie will not, do anything to interfere [88] with or injure the said busi- ness, but will, during said period, lend his aid and best Influence to the promotion and advancement of the same. •*In witness whereof, we hereunto subscribe our names and affix mr seals, jointly and severally, this first day of August, A. D. 1898. ** Edgar A. Davis. "James T. Donaldson. *• Belle R. Harper. " Ed. E. Kane. "Belle B. Davis." Which agreement was delivered and the consideration of $17,473.14 paid on September 14, 1898, and said considera- tion was then distributed among the stockholders of the sell- ing company. That on September 27, 1898, said William Vernon Booth, for a valuable consideration, sold to the com- plainant all the properties so purchased of the Davis Fresh & Salt Fish Company, including the good will of the business, and assigned to said complainant the above-quoted agreement of the stockholders of said last-mentioned company. That at the time of its sale to William Vernon Booth the Davis Fresh DAVIS V. A. BOOTH & CO. Opinion of the Court 569 & Salt Fish Company was conducting its business not only at Detroit, but in the following named places — either selling to regular customers, or having established agencies there — namely : " Cincinatti, Cleveland, Columbus, and Dayton, in the state of Ohio ; Louisville, Kentucky.; Nashville, Tennes- see ; St. Louis and Kansas City, Missouri ; Buffalo and New York City, in the state of New York; Grand Kapids, Jack- son, East Saginaw, Battle Creek, Lansing, and Port Huron, in the state of Michigan." That Davis became an employe of the complainant, but after a time withdrew, and with Delos Cook, Michael J. Dee, and Alva M. Himgerford or- ganized a limited partnership under the laws of Michigan, and filed a certificate thereof in the office of the clerk of the county of Wayne, in that state. That on August 26, 1898, the complainant made a similar purchase of the E. A. Edson Company, an Ohio corporation doing a sunilar business at Cleveland, and also at Detroit, and that Edson, its president, made a similar agreement with that of the stockholders of the Davis Fresh & Salt Fish Company, and that it made a like purchase of the Buffalo Fish Company, a New York corporation, and obtained a similar agreement from its stock- holders. That Davis, after leaving complainant, organized the Gopher Fish Company in opposition to complainant, at St. Paul, Minn., and induced Donaldson, who was one of the signers of the agreement of the Davis Fresh & Salt Fish Company stockholders, who was subsequently in the employ- ment of the complainant, to take charge of the said Gopher Fish Company, and also induced Hutigerford, another of said signers, to leave complainant and become bookkeeper of the Wolverine Fish Company. That Davis and Edson made public announcement that they intended to " fight complain- ant in a business wa3\" and intended to organize corpora- tions in Detroit, Cleveland, New York and other places, which should be under one control, and act together in busi- ness policy, and fix prices for the purchase and sale of fish, whereby they could better promote the interests of the public, and that they caused to be published in leading journals articles (which are copied into the bill) indicating that they intended to carry on, or cause to be carried on, a strong com- petition with the complainant in [34] the fish business. 570 131 FEDERAL REPORTER, 34. Opinion of the Ctourt. That they characterized the complainant as a " trust," the contrary of which the complainant avers to be the fact, and it vouches a decision of the Supreme Cpurt of New York to that effect. That Davis, Edson, and another have entered actively into the fish business in the territory, and the vicin- ity of the territory, dealt in by their respective corporations, in violation of their agreements, and organized companies to prosecute said business at New York, Cleveland, and Detroit. That the Wolverine Fish Company was organized by Davis to more conveniently violate his agreement, and has been and now is conducting and threatens to conduct its business in a manner calculated to injure the complainant, and render the good will purchased of his company valueless That he interferes with its business, trade, and customers. That he solicits consignments of fish and makes purchases thereof from the former customers of his company, and has in many instances drawn away such customers to the Wol- verine Fish Company, and that Edson, Hungerford, and Dee are assisting him. That Davis is sending out to the former customers of his company false statements injurious to the complainant's reputation for honesty and fair dealing, which tend to the loss of complainant's business, and that Davis is insolvent, and a judgment against him would be uncollecti- ble; and a considerable number of the statements referred to are set out, the truth of which is denied. And the complain- ant says it has been greatly injured by this conduct 'of the defendants, and has sustained already the loss of more than $100,000, and will continue to suffer further irreparable loss unless the defendants are enjoined, etc. The prayer is that the defendant Davis be compelled to perform his agreement made with William Vernon Booth, and that he "And his agents and employes be enjoined duing the full term of ^?Jf*l2,^''r t"^st 1' !898, from engaging or in any manner being interested, directly or indirectly, for themselves or for others, in the city of Detroit, or in the immediate vicinity of any territory dealt « Jf x?-^tP^^^ *** August 1. 18.98, or operated by the said Davis Fresh & fi?ir^ Company, or the defendant Davis, or the agents or employes of the Davis Fresh & Salt Fish Company, In catching, buying, selling, handlmg, or dealing in any kind of flsh or other salt or fresh water food products, in the storage thereof, the manufacture of, or dealing In any manner in flsh products, and from engaging in or in any manner being interested in, in the territory aforesaid, any other kind or char- DAVIS V, A. BOOTH & CO. Opinion of the CJourt 571 acter of business, the same as or like that conducted and carried on by the Davis Fresh & Salt Fish Company on and prior to August 1, 1898, or by its officers, agents, employes, or assigns, and from soliciting or inviting, in the territory aforesaid, other persons to buy from or sell to or otherwise deal with them, or either of them, in said busi- ness aforesaid, and from interfering with the business formerly transacted by the Davis Fresh & Salt Fish Company, and by it sold, assigned, and transferred to William Vernon Booth, its good will, Its trade, or its customers, and from coming into competition with this complainant's business in the city of Detroit and vicinity, and wherever the business of the Davis Fresh & Salt Fish Company ex- tended at the time of its sale to and contract with said Booth, and from interfering in any way, directly or indirectly, with the said trade or business, and from doing any act prejudicial to the same, or any part thereof, and from interfering with the persons employed in the service of this complainant, and from using their aid or influence In regard to this complainant's trade or business, otherwise than for the promotion and advancement of the same, and that the said de- fendants Eugene R. Edson, Alva M. Hungerford, Michael J. Dee, and Wolverine Fish Company, Limited, their agents, servants, and em- ployes, be enjoined during the full period of ten years from August 1, 1898, from aiding the said Edgar [35] A. Davis or participating with said Davis in and otherwise, directly or indirectly, interfering with the business of the complainant, or with the persons employed therein, and from using their aid and influence in connection with the said Davis, otherwise in regard to complainant's trade or business, other- wise than for the promotion and advancement of the same, and that the said Edgar A. Davis, Eugene R. Edson, Alva M. Hungerford, Michael J. Dee, and the Wolverine Fish Company, Limited, be so en- joined and restrained during the pendency of this action; and that this complainant recover from the said defendants such sum as, upon a proper accounting, the complainant may show it has been damaged by reason of the wrongful action of the said defendants, and for such other and further relief as to the court may seem fit." Manv affidavits and exhibits were attached to the bill in support thereof. We have stated the contents of the bill with considerable fullness, in order to show the scope of the controversv. The complainant moved for a preliminary ini unction. All the defendants except Edson, who was not served or did not appear, answered the bill, and filed a large number of affidavits of other persons in opposition to the motion — so many that we cannot take space to array them. It is suffi- cient to say that the answers and affidavits raise a conflict of proof in reference to several of the matters stated in the hill and the affidavits accompanying it. The arguments made here, in the main, proceeded upon the broador aspects of the controversy. Besides, having regard to the practice which obtains in this class of appellate proceedings, we should not go into a nice balancing of proof or estimate of particulars. This being an appeal from an order granting 572 131 FEDEKAL BEPOBTBR, 35. Opinion of the Ctourt a prehrainaiy injunction, unless we should see that the court below had faUen into a positive mistake in regard to some important fact, we should not disturb its findings, and it is not claimed that such a mistake has happened. The court below granted this preliminary injunction by the order following : iiJl!?T* ***®^^^'«' ^'e strictly command And enjoin you the said Bdgar A. Davis, your attorneys, solicitors, clerks, servants and aee?^ raider the penalties that may follow on you in ^se of di^obPdfpn^' toat you forthwith, and until the furtheforder^f this ^iSrt dS from engaging or in any manner being interest^, direc^^or Inm^ r^^^I^,'?^ ^?"^'^^' "^^ ^*»'- ^^^^^ to the city of betrSt oi^in the ^mediate vicinity- of any territory on or prior trl^guk 1 1^ ^^11]°,*'''^'^^''^*^ ^^ ^^^ I>*^vis Fresh & Salt Fish Compaiiy de^ r*^iln^« n"\?' *^'^^,'^*]?5 *^ ^^*« ^"«*^' ^' the defendan? Dkvit w the agents or the employ^ of the said Davis Fresh & Salt Fish S!S^f"^' I,*'' "^'l^,^*'^^' ^"y^"^' ««"tog, handling, or deaUng in any JS1?# t^' ^"^ other salt or fresh water food products. In thi s^ora^ ^^^mln^^^^^'in^^ ""^ ^" *^"^""^ *" «°^ ^«"«^^ to fish prXS WriwJ?^ engaging in, or in any manner being interested in, in the It i^nl*'lK''?^**^'i*"^ ^^^^^ ^tod or character of business, the same as or like that conducted and carried on by the Davis Fr^sh & Salt Fish Company on and prior to August 1, 1898. or by its office^s^ f^^^J'^f''^\.''\ir'^^' «°** ^^^"^ «o"«iting or inviting, in tS ^? With voH *!^^^ ^^'^ «^^" ^o ^^ other^^^ t^LllJ^AK^^^ Wolverine ilsh Company, Limited, or either of tfiem in said business aforesaid, and from interfering with the busl- rrbfrS^/''''f"!^^ ^^J^'^ ^^^^ ^'^^ & Salt^ish (impany, S J^ Im **^V ^f ^^"^' ""^^ transferred to William Vernon Booth its good will, Its trade, or its customers, and from coming into com petition with this complainant's business in the city of Detroit aSd vicmity, and wherever the business of the Davis Fiesh &S^t Fish Company extended at the time of its sale to and contract with said 2.?l«',a"f ^*''" toterfering in any way, directly or InmrecTly wUh ^e said trade or business, and from doing any act prejudicial to the same or any part thereof, and from interfering with the iwsous em poyed in the .service of this complainant, and [86] f^-oL'TisSg you^ aid or influence in regard to this complainant's trade or bulile^ otherwise than for the promotion and advancement of the same Cd Sl'i^^rf MiT «t^»5tly «>«^»«and and enjoin you, the said llvaM Btoigerford,^Michael J. Dee, and the Wolverine Fish Company Lim^ ited, your attorneys, solicitors, clerks, servants, and agents under the SS?h'^J^''^n ?K 'f Tk ^" ^^^ *^^ disobedience, fhaf you are forth with and until the further order of this court to desist from aidimr the said Edgar A. Davis, or participating with said DaC in ^? rwiril"***^'*^'^' interfering with the biTsiness of the cSmplafna^t^ or with the persons employed therein, and from ushig your aid and tafluence in connection with the said Davis or otherwise in r^ard to compla nant's trade or business acquired under the said ^ntrai? otherwise than for the promotion and advancement of the mime.'' The defendants appeal from this order. 1. It is assigned as error that the court held the biU of conaplaint to state a case entitling the complainant to relief by injunction; and it is argued that the pro|)er remedy is by DAVIS V. A. BOOTH & CO. 573 Opinion of the Court. an action at law, and further that public policy is opposed to the enforcement of such contracts. With regard to the objec- tion that there is a remedy at law, it is quite clear that the difficulty in estimating the damages in such a case, and the succession of causes of action and the multiplicity of suits likely to ensue, furnish ample reasons for the exercise by a court of equity of its power to restrain the continuance of the supposed wrongdoing. And if the contract is not one ♦which should be held by the court unlawful as opposed to public policy, there is no sufficient reason for withholding relief. We are referred to the case of Bensley v. Texas <& Pac, Ry. Co., 191 U. S. 492, 24 Sup. Ct. 164, 48 L. Ed. 274, as conclusive of the validity of this objection. A railroad com- pany had entered into a contract that it would not establish another depot w itliin three miles of one agreed to be built upon the plaintiff's land. Upon a bill filed to restrain the company from establishing a depot within that distance, as ordered bv the State Railroad Commission, it was held that the injunction should not be allowed. The decision was rested upon the ground that the railroad company was by reason of its charter bound by a public duty in regard to the location of its depots, which it ought not to be permitted to disable itself from performing. In the present case the parties to the contract were private parties, upon whom no public duty was imposed, other than such as rest upon all pri- vate individuals. The ground upon which the decision cited was based is wholly absent here. In the case of Norcross v. James, 140 Mass. 188, 2 N. E. 946, the contract sought to be enforced was a merely personal covenant, and did not run with the land subsequently conveyed to the defendant. Whether the contract in question is void in law, upon the ground that it is in restraint of trade or competition in trade, is a question which will be discussed further on. 2. One of the principal grounds upon which it is urged for the appellants that the agreement in question is void is that it was an agreement in restraint of trade, in violation of the anti-trust act of July 2, 1890, c. 647, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200]. But that act, as was held in United States V. E. G. Knight Go,, 156 U. S. 1, 15 Sup. Ct. 249, 39 L. Ed. 325, is leveled against contracts which have a direct rela- 574 131 FEDERAL KEPORTEB, 30. Opinion of the Court. tion to interstate commerce, and does not extend to contracts which may incidentally or in some remote way come into relation with, or become the source of, interstate traffic. In that case a New Jersey [37] corporation, being already in control of a large majority of the sugar refineries in the United States, acquired the control, by a purchase of their stock, of four Philadelphia refineries, and the question was whether such an acquisition was a violation of the anti-trust act. It was not doubted that the sugar refined there wouldf to a large extent, at least, become the subject of interstate traffic, but such traffic was not the subject directly involved. We think there is nothing in the anti-trust act which ren- dered 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 invalid the agreement of the stockholders of the latter com- pany, which was ancillary to the contract of sale. Nor can this conclusion be affected by the fact that A. Booth & Co. also purchased other plants and stocks to an extent that tended to create a power to monopolize the fish market. There is a clear distinction, which seems to be lost sight of in the argument here, 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 continued in the combination. To this latter class belongs the case of Merz Capsule Co. v. United Slates Capsule Co, (C. C.) 67 Fed. 414, affirmed in 71 Fed. 787. It may be that the prac- tice of acquiring by a single corporation, through purchase of a great number of single plants in several states, of power to control the market of a given commodity in a wide area of territory, may become injurious to the public; but, if so, it would seem that the limitations and the means for the restriction and correction required must be supplied by the lawmaking power, since the old law against forestalling the market has become obsolete. It is possible that it may be developed at the final hearing that interstate traffic may be directly involved in this agreement. But if so, it will be prudent to postpone final decision in respect to the conse- quences thereof upon the validity of the agreement until the DAVIS V. A. BOOTH & CO. 575 Opinion of the Court. case is presented upon full proof, rather than by ex parte affidavits as now. 3. It is further contended that the contract was rendered void by the statute of Michigan of 1889, which enacted that : "All contracts ♦ * * the purpose, object or intent of which shall be * * * in any manner to prevent or restrict free compe- tition in the sale of any article or commodity produced by mining, manufacture, agriculture or any other branch of business or labor, shall be utterly illegal and void * * ♦ provided, however, that this section shall m no manner invalidate or affect contracts for what is known and recognized at common law and in equity as con- tracts for the good will of a trade or business." But that act contained a proviso excepting certain classes and subjects which rendered it of doubtful constitutionality. Such legislation was held void in Connolly v. Union Sewer Pipe Co., 184 U. S. 540, 22 Sup. Ct. 431, 46 L. Ed. 679, and the Michigan statute was amended in 1899, which was after this transaction, so as to remove the objection. The act of 1889 is denominated in 3 How. Ann. St. § 9354j, as one pro- hibiting " certain trust combinations," and we have no doubt it was intended for such cases. We think that the intent which made the contract or combination unlawful was one in which both parties participated, and that the act was not intended to comprise a case where there was a sale [38] and purchase of property, after which the seller should have no interest in the property, and therefore would have no intent as to its further use. The act of 1899 is subject to the same construction, but, as it would not render unlaw- ful a contract which had been lawfully made, we need not consider it further. 4. But finally it is insisted that the stipulation in question contained in the agreement of date August 1, 1898, is void at common law, for the reason that it is an unreasonable restraint of competition in trade. The agreement was an- cillary to the contract of sale made by the Davis Fresh & Salt Fish Company, in which these stockholders had the entire interest, and of the fruits of which sale they were the beneficiaries. That contract expressly included the good will of the business of the seller, and the stipulation of the stockholders was made, as it recites, to induce the sale; and it was for the protection of the vendee in the enjoyment of it, and, as it seems to us, would pass by the transfer of the 576 131 FEDERAL REPORTER, 38. OplEiQn of the Court, property, business, and good will to William Vernon Booth's vendee, to whom the agreement was also assigned. The question of the reasonableness of such a stipulation is one which was elaborately discussed by Judge Taft in deliver- ing the opinion of this court in United States v. Addyston Pipe i& Steel Co., 85 Fed. 2.71, 29 C, C. A. Ml, 46 L. R. A. 122. It would be useless to reiterate the grounds and reasons upon which It was held that such a stipulation is valid if it goes no farther than to support and protect the interests trans- ferred by the contract of sale. If tested by this rule alone, we think this stipulation should be held valid and obligatory! But referring again to the distinction already alluded to between an aggregation effected by purchase, and a combi- nation of several owners to pool their business and eliminate competition, it is to be observed that in the present mstance It appears that the purchase price paid to the Davis Fresh & Salt Fish Company consisted partly of cash and partly of stock m the corporation or A. Booth & Co., and that there- fore the transaction was of a mixed character. This is an aspect of the case which has given us most concern, and in respect of which we are not aware of any decision precisely in point. We are unwilling to decide a matter of so much importance at this preliminary stage of the case, and espe- ciMly so because no particular attention has been given to It in the briefs and argument of counsel. We purpose, therefore, to give such directions in regard to the continu- ance of the injunction as will preserve the rights of parties from serious impairment in the interim, and reserve this and iino&er question i-eserved in another part of this opinion until final hearing. There are no other questions which seem to require inde- pendent discussion, except one which relates to the scope of the mjunction awarded by the court below. We are of opin- ion that the proper construction of the agreement given by the stockholders of the Davis Fresh & SaJt Fish Company requires that the description of the localities in which their stipulations should be operative, stated in the writing at the beginning of said stipulations, extends to and qualifies all of them, and that such localities are restricted to those in which the company had establishments for doing business ELLIS V. INMAN, POULSEN & CO. Opinion of the Court. 577 and the immediate vicinity thereof. It could not mean all parts or every one of tlie United States in [39] which a former customer resided, or into which its correspondence had extended, or through which some agent of the company had traveled. No definite or reasonable bounds are indi- cated by the contract, other than those which we have indi- cated. Besides, the inclusion made by the words " or the immediate vicinity of the territory," etc., implies some place from which the " immediate vicinity " is to be estimated, and excludes the idea of reckoning from some indefinite point. The ordering part of the injunction directed to the Wolver- ine Fish Company is also too broad, when, in addition to forbidding certain conduct in conjunction with Davis, it proceeds to forbid that company from doing such things " otherwise." The Wolverine Fish Company was a stran- ger to the Davis agreement, and, as to anything in which he should not participate, it was not affected thereby. The injunction should be modified accordingly. We think, also, that the complainant should be required to give bond to indemnify the defendants from damages arising from the issuance of the writ, in case the bill should not be finally sustained, as a condition to the continuance of the injunc- tion. With these modifications, the order of the Circuit Court is affirmed. The costs of this appeal will be divided. [182] ELLIS V, INMAN, POULSEN & CO. ET AL. (Circuit Court of Appeals, Ninth Circuit June 6, 1904.) L131 Fed., 182.] Monopolies — Anti-Trust Law — Combination in Restraint of Inter- state Commerce. — In determining whether or not a combination is in violation of the federal anti-trust law, as in restraint of interstate commerce, it is immaterial that such is not its ultimate object, which is in most cases to increase the trade and profits of the par- ties to such combination ; nor is it material to ascertain what pro- portion the resulting restraint of interstate commerce bears to other results. The true inquiry is whether it tends directly to appreciably restrain interstate trade, and, if it does, it is within the statute, although such effect may not be so considerable as its other effects. 21220— VOL 2—07 m ^37 578 131 FEDERAL BEPORTEB, 182, Statement of tlie Case. Same.— A eoiuplahit alleged that plaintiff was a builder doing busi- ness in I»ortlaud, Or. ; that in such business he purchased large quantities of rough lunil>er from mills located at Vancouver, Wash., which was seven miles from Portland, but that such mills did not manufacture finished or kiln-dried lumber; that defendants, who comprised all the ummifaeturers and dealers in Portland, combined to fix exorbitant prices on all lumlR-r sold by them, and to c«ompel all consumers iu Portland to pay such priws by refusing to sell any finished lumber at any price to such consumers as bought lumber of any kind from other dealers, except on condition that such con- sumer pays to defendants the difference lietween the price he paid for lumi»er so liought from others and the price charged therefor l>y defendants and promises to buy all his iumljer thereafter from defendants; that the purpose and effect of 8oer at Washington mills, and to oirtain a monoiK)ly of the trade in Port- land at unreasonable and exorbitant prices. Beld. that the com- bination charged constituted a violation of the federal anti-trust act, its effect l>eiug to direi'tly restrain interstjiti* rommerce. and that the complaint stated a cause of action thereunder for tlie recovery of damages alleged to have resulted to plaintiff." In Error to the Circuit Court of the United States for the District of Oregon. For opinion below, see 124 Fed. 956.6 [188] The plaintiff in error brought an action against the defend- ?2^ ^I^^ «!?^*^*' ^^^ provisions of the act of Congress of Julv 2 im e 647, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200], enmied An act to protect trade and commerce against unlawful restraints and monopolies, to recover damages resulting from a combination of Xl ^H^^'^fT ^"^ ^""^^^ *!* Prevent him from purchasing liunber in the tlty of Vancouver, Wash., to be used in the citv of Portland ?Ji;tTh!..^!^1f^*?"* averments of the complaint are as follows:' K^l PJamtiff in error is engaged in the business of constructing houses and other buildings in the city of Portland and selling thi ZwTsShiri ? '^' ^".f^^^? *'' constructing such buildin|s on contracts with his customers ; that the defendants in error are engaged LJ^nJ^"'i^v^l**^'^*fY*'*^?'*^« *"^ ^'"^S both rough lumber IZ seasoned or kiln-dried lumber at Portland, Or., and that thev are l^hn^^IiT /"^^^^^-^l^^^-^^P «f «"<^h lumber in or adjacent to safd cUy who sell lumlKjr therein; that there are persons engaged in the bus^ ness of manufacturing and selling rough lumber at the cUy of Van- eouyer and at other points in the state of Washington and that until interfered with by the acts and combination of the defendants in error, the plaintiff in error could and did purchai at and im^rt from the city of Vancouver large quantities of lumber for i [n his business at Portland; that, in order to carry on his said business it is necessary for him to purchase and use large quantities both of a Syllabus copyrighted, 1904, by West Publishing Co. " see p. jbOSt ELLIS V. INMAN, POULSEN^ & CO. Statement of the Case. 579 rough Imnber and of seasoned or kiln-dried lumber; that the mills at Vancouver produce only rough lumber, and that the seasoned or kiln-dried lumber required by the plaintiff in his business can only be procured from the defendants in error, and he is absolutely dependent upon them for his supply thereof; that on July 2. 1902, the other defendants in error organized the defendant City Retail Lumber Company, and for the purpose and with the intent of creating a monopoly of the manufacture and sale of lumber for local use in the markets of the city of Portland, and of controlling and restrict- ing tlie output of lumber from defendants' said mills, and fixhig and controlling the price of lumber in said Portland market, and arbi- trarily advancing said price and demanding and receiving excessive and unreasonable prices for the lumber manufactured and sold by them, and preventing the shipment of lumber by the said manufac- turers in the state of Washington from said state to the city of Portland, and preventing the sale in the city of Portland of lumber manufactured in the state of Washington, and preventing the plahitiff in error and all other contractors and builders in Portland from purchasing lumber from any dealers other than the defendants, and particularly from said manufacturers in the state of Washington, did conspire, confederate, and agree together that they would sell lumber in the Portland market only through said City Retail Lum- ber Company at prices to be fixed by it and to persons to be desig- nated and approved by it; that thereafter the entire sales of lumber in the Portland market from all the defendants in error were placed in the control of said City Retail Lumber Company for the purpose and with the intent of preventing the plaintitl in error and other con- tractors and builders in Portland from purchasing lumber from said manufacturers in the state of Washington, and that the defendants in error further conspired and agreed to adopt such means and pre- scribe and enforce such burdens and penalties as might be necessary to carry out said purpose, and thereby enable them to fix a price on lumber in the city of Portland, and control the output and sales of lumber therein; that to carry out said purposes the defendants in error have employed agents to watch the construction of all build- ings in the city of Portland, and ascertain the sources from which lumber used therein is procured, and to report to the City Retail Lum- l)er Company all buildings for the construction of which any lumber was procured from said manufacturers in the state of Washington, and that upon such report the defendants in error would refuse to supply any lumber upon any terms to such contractor, builder, or other consumer who purchased any lumber for use in Portland from said manufacturers in the state of Washington, and have refused to sell any lumber to such contractor, builder, or other consumer, except upon the condition that he pay them, in addition to the price charged by them for lumber required from them, the difference be- tween the price he paid for the lumber so purchased in the state of Washington and the price then charged by them [184] for the same quantity of similar lumber, and the further condition that he promise them to purchase no more lumber from said manufacturers in the state of Washington, and that in all cases where the contractor, builder, or other consumer had procured a sufficient supply of rough lumber from manufacturers other than the defendants in error, and bought from manufacturers in the state of Washington, the defend- ants in error have refused to sell any finished, seasoned, or kiln- dried lumber to such contractor, builder, or other consumer, except upon his making such payment and such promise; that by these means the defendants in error have compelled all contractors and builders in Portland to cease buying lumber from the mills in the state of Washington, and have been enabled to and do control the 580 131 FEDERAL KEPORTER, 184. Statement of the Case. output of lumber sold in the market in Portland, and have fixed extortionate prices therefor; that in March, 1903, in the course of his business, the plaintiff in error purchased from a manufacturer la Vancouver, Wash., and had shipped to and delivered to him at Portland, a large quantity of rough lumber at a price of $250 less than vras then charged by the defendants in error for the same quantity of like lumber in Portland, and the plaintiff used the same in the construction of buildhigs ,* that on March 20, 1903, he required for use in the construction of said buildings large quantities of finished and seasoned or kiln-dried lumber, and was and has been nnable to procure the same from any manufacturer or dealer other than the defendants in error, and that on or about that date he ap- plied to the defendants in error to purchase such lumber, to wit about 7,000 feet of flooring, about 7,000 feet of ceiling, and about 9,000 feet of rustic, which lumber was so needed by him in his busi- ness, and offered to pay them therefor the regular price charged by them for the same, but that because of his purchase of lumber at Vancouver, Wash., the defendants in error refused to sell him said or any lumber upon any terms, and so refuseo8e for which it was formed, and where the effect of its formation and enforcement upon interstate trade or commerce is In any event but indirect and Incidental, and not Its purpose or object • » » if an agreement of that nature, while apt and proper for the purpose thus intended, should possibly, though only indirectly and unintentionally, affect interstate trade or commerce. In that event we think the agreement would be good; othei-wise there is scarcely any agreement among men which has intersliite or foreign commerce for its subject that may not remotely be said to in some obscure way affect that com- Merce, and to be therefore void." Also, ill United States v. J&ifd Traffle Assoi-iation, 171 U. S. 568, 19 Sup. Ct. 31, 43 L. Ed. 259, where it was said : "The eft'ec't upon interstate commerce must not be indirect or inci- dentol only. An agreement entered into for the puriK)Pe of promot- ing the legitimate [188] business of an individual or corporation, with no purpose to thereby affect or restrain interstate commerce, and mnich does not direi'tly restrain sucli commerce, is not, as we think covered hy the act. altlunigh the agreement may indirectly and re^ moteiy affect that wmmerce.*' Does the combination which is set forth in the complaint in the present case tend directly to restrain interstate com- merce? The complaint alleges that such was its purpose, and that such is its effect. Notwithstanding these allega- tions, however, it is clear that, if it can be seen from the facts set forth that the restraint is only indirect and inci- dental, no cause of action is stated within the intendment of the act. But it is eear that when the questions involved in the opinions of the Supreme Court in the two cases last above quoted shall again come before that court for consideration the majority of the members of the court may hold that the rulings in those cases should have gone no further than to decide that the contracts there presented were unreasonable restraint of interstate trade, and were, as such, within the scope of the act. But if we adopt that view of the law, and assume that the purpose of the act was to place a statutory prohibi- tion only on those combinations which are unreasonable and against public policy, as well as in direct restraint of inter- state trade, the present combination, as it is set forth in the coniplaint, clearly comes within the prohibition. The com- plaint alleges that the prices placed upon all lumber by the defendants in error are excessive and unreasonable, and that for unfinished luml>er their price is double the price of Vpi- couver lumber of the same kind. The combination, as it is stated in the complaint, is more than a mere agreement to raise prices. It includes also an agreement to coerce pur- chasers of lumber by other means, and to compel them to desist from the interstate trade. Taking together all the allegations of the complaint, it appears that an active trade in lumber between the Vancouver mills and the Portland consumers of lumber has been restrained by the hcts of the defendants in error. By combining as tliey did they wielded a power that no individual action could possess. They possessed the power to \IH^ ruin the business of any Port- land 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 allegations of the complaint be true, the defendants in error have violated the prohibition of the act, and are answerable to the plaintiff in error in damages. HAERIMAN IK NORTHERN SECURITIES CO. 587 Syllabus. The judgment of the Circuit Court is reversed, and the cause remanded for further proceedings not inconsistent with these views. [464] HARRIMAN ET AI.. v. NORTHERN SECURI- TIES CO. ET AL.« (Circuit Court, D. New Jersey. July 15, 1904.) [132 Fed., 464.1 Injunction— Allowance.— Wliere, in a doubtful case, tlie denial of a preliminary injunction would, on the assumption that the complain- ant ultimately will prevail, 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. Same. — ^The balance of convenience or hardship ordinarily is a factor of controlliug importance in cases of substantial doubt existing at the time of granting or refusing the preliminary injunction. Same. — Such doubt may relate either to the facts or to the law of the case, or to both. It may eiiually attach to, or widely vary in degree as between, the showing of the complainant and of tlie defendant, without necessarily bcung determinative of the propriety of allowing or d^n^'ing the injimction. Same- Preservation of Fund. — Where the sole object for which an injunction Is sought is the preservation of a fund in controversy, or the maintenance of the status quo, until the question of right be- tween the parties can be decided on final hearing the injunction properly may be allowed, although there may b? serious doubt of the ultimate success of the complainant. Same. — While tlie consideration that an app?al does not lie from an in- terlocutory decree denying a preliminary injunction is entitled to no weight where, on the application, it clearly appears that the com- plainant cannot prevail on the final hearing, it is often of conti-ol- ling importance where, on such application, there is room for rea- sonable doubt as to the ultimate result. Same— Novel Questions of Law. — In accordance with the foregoing principles, held, that a preliminary injunction should issue in a case involving grave, novel and delicate questions of law and a • controversy as to material facts bearing upon the equities, regard being had to the comparative hardship or convenience to the re- spective parties resulting from the awardmg or denial of the in- junction. (Syllabus by the Court.) o Reversed by the Circuit Court of Appeals, Third Circuit (1.^ Fed., 331). See p. 618. Decree of C. C. A. affirmed bv the Supreme Court (197 U. S., 244). See p. 669. ^88 132 FEDERAL REPOKTEB, 464. Opinion of the Court. In Equity. E, V, Lindahury, Wm, D. Guthrie^ and E. S. Lovett, for complainants. Elihu Eoot^ John G. Johnson, John W, Griggs, Francis L. Stetson, and W. P, Clough, for defendants. Bradford, District Judge. Application has been made on bill, affidavits and exhibits, for a preliminary injunction in a suit brought by Edward H. Harriman, Winslow S. Pierce, the Oregon Short Line Rail- road Company and The Equitable Trust Company of New York against the Northern Securities Company and the Northern Pacific Railway Company. The present contro- versy grows out of a situation created by the final decree of the circuit court of the United States for the district of Minnesota in United States v. Northern Securities Co, et ak (C. C.) 120 Fed. 721, and the affirmatory decree of the Supreme [465] Court of the United States in the same case. 193 U. S. 197, 24 Sup. Ct. 436, 48 L. Ed. 679. That^was a suit in equity brought by the United States against the Northern Securities Company, the Northern Pacific Railway Company, the Great Northern Railway Company, James J. Hill, William P. Clough, D. Willis James, John S. Kennedy, J. Pierpont Morgan, Robert Bacon, George F. Baker and Daniel S. Lamont. Its object was to enforce the provisions of the act of Congress of July 2, 1890, entitled "An act to protect trade and commerce against unlawful restraints and n^onopolies," commonly known as the Anti-Trust Act. Act July 2, 1890, c. 647, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200]. Section 1 declares illegal *^ every contract, combina- tion in the form of trust or otherwise, or conspiracy, in re- straint of trade or commerce among the several States or with foreign nations," and provides that " every person whtf shall make any such contract or engage in any such combina- tion 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 dis- cretion of the court." Section 2 provides that " every per- HARRIMAN V. NORTHERN SECURITIES CO. Opinion of the Court. 589 son who shall monopolize, or attempt to monopolize, or com- bine or conspire with any other person or persons, to monopo- lize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor," punishable in like manner and to the like extent as offences under the first section. Section 3 [U. S. Comp. St. 1901, p. 3201] declares illegal "every contract, combination in form of trust or otherwise, or conspiracy, 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 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," and declares that "every person who shall make any such contract or engage in any such combina- :;ion or conspiracy, shall be deemed guilty of a misde- meanor," punishable in like manner and to the like extent as offences under the preceding sections. Section 4 provides, among other things, that the several circuit courts of the United States shall have "jurisdiction to prevent and re- strain violations of this act," and that proceedings under the act " may be by way of petition." The petition or biD of complaint in the Minnesota suit referred to set forth in substance, among other things, that the Northern Pacific Railway Company and the Great Northern Eailway Com- pany were common carriers of freight and passengers and, as such carriers, were engaged in trade and commerce among the several states of the United States and with foreign nations; that on and prior to November 13, 1901, the de- fendants. Hill, Clough, James and Kennedy, and certain other persons whose names were unknown to the complain- ant, thereinafter referred to as James J. Hill and his asso- ciate stockholders, owned or controlled a majority of the capital stock of the Great Northern Railway Company, and the defendants, Morgan, Bacon, Baker and Lamont, and certain other persons whose names were unknown to the complainant, thereinafter referred to as J. Pierpont Mor- gan and his associate stockholders, owned [466] or con- trolled a majority of the capital stock of the Northern 590 132 FEDERAL REPOKTER, 466. Opinion of the Court HAREIMAN V, NORTHERN SECURITIES CO. 591 Pacific Railway Company; that these two railway com- panies at and prior to the doing of the acts thereinafter com- plained of, owned or controlled and operated two separate, independent, parallel and competing lines of railway, run- ning east and west, forming the Northern Pacific system and the Great Northern system, connecting the Great Lakes and the Mississippi River with Puget Sound and the Pacific ocean; that Hill and his associate stockholders, and Morgan and his associate stockholders, acting for themselves as such stockholders and on behalf of the two railway companies respectively in which they owned or held a controlling inter- est, on and prior to November 13, 1901, entered into an unlawful combination and conspiracy " to effect a virtual consolidation of the Northern Pacific and Great Northern systems, and to place restraint upon all competitive inter- state and foreign trade or commerce carried on by them, and to monopolize or attempt to monopolize the same, and to suppress the comi^etition theretofore existing between said railway systems in said interstate and foreign trade or com- merce," through the instrumentality of a holding company to be created under the laws of New Jersey and to be called the Northern Securities Company, with a capital stock of $400,000,000, to which, in exchange for its own capital stock upon a certain basis and at a certain rate was to be trans- ferred the capital stock or a controlling interest in the capital stock of each of the two railway companies, with power in the holding corporation to vote such stock and act as the owner thereof, and do whatever it might deem necessary to aid in any manner such railway companies or enhance the value of their stock; that thus the individual stockholders of the two competing railway companies were to be elimi- nated, and the Northern Securities Company, substituted as a single common stockholder, the interest of such indi- vidual stockholders in the property and franchises of the railway companies being converted into an interest in the property and franchises of the holding company; that in pursuance of such unlawful combination or conspiracy, and solely as an instrumentality for effecting the purposes there- of, the Northern Securities Company was, November 13, 1901, created under the laws of New Jersey, with an author- Opinion of tbe Court ized capital stock of $400,000,000, and on or about the next following day was organized by the election of a board of directors and the selection of a president and other officers; that thereupon Hill and his associate stockholders assigned and transferred to that company a controlling interest in the capital stock of the Great Northern Railway Company, upon an agreed basis of exchange of $180 par value of the capital stock of the Northern Securities Company for each share of the capital stock of the Great Northern Railway Company, and Morgan and his associate stockholders as- signed and transferred to the Northern Securities Company ^ majority of the capital stock of the Northern Pacific Rail- way Company upon an agreed basis of exchange of $115 par value of the capital stock of the Northern Securities Com- pany for each share of the capital stock of the Northern Pacific Railway Company; that in further pursuance of such unlawful combination or conspiracy the Northern Se- curities Company offered to the stockholders of the two rail- way companies to issue and exchange its capital stock for the capital stock of those companies [467] upon the above mentioned basis of exchange, no other consideration being required; that in further pursuance of such unlawful com- bination or conspiracy the Northern Securities Company had acquired an additional amount of the stock of the two rail- way companies, issuing therefor its own stock upon the same basis of exchange, and was then holding as owner substan- tially all of the capital stock of the Northern Pacific Rail- way Company and a majority of or controlling interest in the capital stock of the Great Northern Railway Company, and was voting the same, collecting the dividends thereon^ and in all respects acting as owner thereof in the organiza- tion, management and operation of such railway companies, and in receipt and control of their earnings; that thus a virtual consolidation under one ownership and source of control of the Great Northern and Northern Pacific railway systems had been effected, a combination or conspiracy in restraint of the trade or commerce among the several states and with foreign nations, formerly carried on by the two railway companies independently and in free competition one with the other, had been formed and was in operation. 592 132 FEDERAL, REPORTEB, 467. Opinion of the Ck>urt HARRIMAN V. NORTHERN SECURTTTES CO. Opinion of the Court. 593 and the defendants were thereby attempting to monopolize, and had monopolized, such interstate and foreign trade and commerce, in violation of the act of Congress of July 2, 1890, c. 647, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200], above i-ef erred to; that no consideration whatever had existed, or would exist, for the above mentioned transfer of the stock of the railway companies by their stockholders to the North- era Securities Company other than tlie issue of the stock of the latter company to them in exchange therefor, for the purpose, in the manner, and upon the basis above stated; that the Northern Securities Company was not organized in good faith to purchase and pay for the stock of fhe two railway ccnnpanies, but solely to incorporate the pooling of the stock of said companies and to carry into effect such unlawful combination or conspiracy; that the Northern Securities Company was a mere depositary, custodian, holder and trustee of the stock of the railway companies, and its shares of stock were but beneficial certificates issued against such railway stock to designate the interest of the holders in the pool; and that its scribed capital was but $30,000, and its authorized capital stock of $400,000,000 was just sufficient, when all issued, to cover the exchange value of substantially the entire stock of the two railwav com- panics, upon the basis and at the rate agreed upon, such exchange value being about $122,000,000 in excess of the combined capital stock of such railway companies taken at par. Answers and replications were duly filed, evidence was taken and such procedings were thereafter had in the case that a decree was entered in the circuit court April 9, 1903, pursuant to the prayers of the petition or bill, but not includ- ing all the relief therein asked. In that decree it was de- clared that the defendants, in violation of the Anti-Trust Act, had entered into a combination or conspiracy in re- straint of trade and commerce among the several states, and that all of the stock of the Northern Pacific Railway Com- pany and of the Great Northern Railway Company " now claimed to be owned and held by the defendant. The North- em Securities Company, was acquired and is now held by it in virtue of such combination or conspiracy in restraint of trade and commerce among the several States," [468] and a perpetual injunction was granted restraining the Northern Securities Company from " acquiring or attempting to ac- quire further stock of either of the aforesaid railway com- panies," or " voting the aforesaid stock which it now holds or may acquire," or " attempting to vote it, at any meeting of the stockholders of either of the aforesaid railwav com- panics, or " exercising or attempting to exercise any control, direction, suj^ervision or influence whatsoever over the acts and doings of said railway companies or either of them by virtue of its holding such stock therein ; " and restraining the Northern Pacific Railway Company and the Great Nortliern Railway Company respectively and collectively from "permitting the stock aforesaid to be voted by the Northern Securities Company, or in its behalf, by its attor- neys or agents at any corporate election for directors or officers of either of the aforesaid railway companies," or " paying any dividends to the Northern Securities Company on account of stock in either of the aforesaid railway com- panies which it now claims to own and hold," or " permit- ting or suffering the Northern 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." Immediately after the injunctive portion of the decree is the following clause: But nothing herein contained shall be construed as prohibiting the Northern Securities Company from returning and transferring to the Northern Pacific Railway Company and the Great Northern Railway Company, respectively, any and all shares of stock in either of said railway companies which said, the Northern Securities Com- pany, may have heretofore received from such stockholders in ex- change for Its own stock; and nothing herein contained shall be construed as prohibiting the Northern Securities Company from making such transfer and assignments of the stock aforesaid to such person or persons as may now 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." ^ It may not be without significance, although it is unneces- sary now to discuss the point, that the relief prayed in the petition or bill of the United States was in some particulars broader than that granted in the final decree. This decree was in all respects affirmed by the Supreme Court of the 21220— VOL 2—07 M 38 594 132 FEDERAL KEPORTER, 468. Opinion of the Court United States March 14, 1904, " with liberty to the Circuit Court to proceed in the execution of its decree as the circum- stances may require." Mr. Justice Harlan in his opinion affirmatory of the decree of the court below, among other things, said: "No valid objection can be made to the decree below, in form or In substance. • ♦ ♦ 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 stocljholders of the constituent companies, but the power of the holdiug corporation as the instru- ment of an illegal combination of which it was the master spirit, to do that which, if done, would restrain interstatfe and international commerce. The exercise of that power being restrained, the object of Congress will be accomplished ; left undisturbed, the act in ques- tion will be valueless for any practical purpose." No opinion is now expressed or intimated as to the force or effect of the above utterance. [469] Thereafter the board of directors of the Northern Securities Company adopted March 22, 1904, certain pre- ambles and resolutions, reciting that the company "has acquired and now holds 1,537,594 shares in the capital stock of the Northern Pacific Eailway Company; and 1,181,242 shares in the capital stock of the Great Northern Railway Company," and " has been enjoined from voting upon the shares of either of the said railway companies, and each of the said railway companies has been enjoined from pay- ing to this company any dividends upon any of the shares of such railway company held by this company," and that " there are now outstanding 3,954,000 shares of its own capi- tal stock," and that it " desires and intends to comply with the decree in the said suit, fully and unreservedly, and with- out delay," and declaring it " necessary and desirable for this company so to reduce its present capital stock as will enable it, without delay, in connection with such reduction, to distribute among its shareholders, the shares of capital stock of said railroad companies held by it," and advisable that the fourth article of its certificate of incorporation should be so amended as to read as follows: " Fourth. The capital stock of this company Is hereby reduced to three million nine hundred fifty-four thousand dollars ($3,954,000), and shall hereafter be three million nine hundred and fifty-four [thousand] dol- HAKRIMAN l\ ISTORTHERN SECURITIES CO. Opinion of the Court 595 lars ($3,954,000), divided into thirty-nine thousand five hundred and forty (39,540) shares of one hundred dollars ($100) each. Such reduction of capital stocli shall be accomplished by each holder of outstanding shares of this company's stock surrendering to the com- pany, for retirement, ninety-nine per centum of the shares held by him. Upon the surrender to this company, by any shareholder, of the entire number of shares, and parts of shares, of this company's stocli, which he is hereby required to surrender, this company will assign to him, for each share so surrendered, thirty-nine dollars and twenty-seven cents ($39.27) of the stock of the Northern Pacific Rail- way Company, and thirty dollars and seventeen cents ($30.17) of the preferred stock of the Great Northern Railway Company, and proportional amounts thereof for fractional shares of the stock of this company." The resolutions also called for « meeting of the stock- holders of the Northern Securities Company, to be held April 21, 1904, for the purpose of taking action upon the proposed alteration of its certificate of incorporation. The bill in the present suit sets forth in substance, among other things, that the total authorized capital stock of the Northern Pacific Railway Company in November, 1901, amounted to $155,000,000 par value, consisting of $75,000,000 par value of preferred stock and $80,000,000 par value of common stock; that such proceedings were had in November and December, 1901, that such preferred stock was converted into common stock, so as to make the entire issue of stock of the Northern Pacific Eailway Company consist of common stock to the amount of $155,000,000 par value, and such is the authorized amount of its capital stock issued and now outstanding; that the authorized capital stock of the Great Northern Eailway Company in Novem- ber, 1901, was and still is about $125,000,000 par value, of which abput $123,000,000 par value has been issued and was then and is now outstanding; that the Northern Pacific and Great Northern railway systems are substantially par- allel and in a position to compete with each other in the transaction of interstate and foreign commerce carried on by them; that the North- [470] ern Securities Company, although incorporated and organized in form according to and nominally for objects authorized by the laws of New Jersey, in reality was incorporated and organized in pur- suance of a combination in restraint of trade and commerce among the several states and for objects prohibited by the Anti-Trust Act; that prior to November 13, 1901, Hill 596 132 FEDERAL BEPORTER, #70. Opinion of tbe Court Morgan, Clough, James, Kennedy, Bacon, Baker, and La- mont, and their a&sociates, owning or controlling a majority of the capital stock of the Great Northern Railway Com- pany and a majority of the common capital stock of the Northern l*acific Railway Company, agreed to organize a holding company under the laws of New Jei'sey, and that such holding company should acquire and permanently hold a majority of the shares of the capital stock of those rail- way companies respectively and control the oi^ration and management thereof in perpetuity, and that the then exist- ing holdere of such railway shares should deposit the same with such holding company and receive in lieu thereof share certificates of the holding company upon the basis of $180 par value of its stock for each share of the Great Northern Railway stock, and $115 par value of its stock for each share of the Northern Pacific Railway stock, and that the hold- ing company should act as custodian, deiiositary or trust^^ of such railway shares on Ijehalf of the existing shai-ehold- ers of the two railway companies and tlieir associates; that thereuiKin in pui-suanee of such agreement the Northern Securities Company was created and organized under the laws of New Jersey, for the object of acquiring and holding shares of the capital stock of other corporations, and with an authorized capital stock of ijUOCOOO.OOO, divided into four million shares of the par value of $100 each, and forthwith agreed to acquire and hold the shares of stock of the two railway companies as custodian, depositary or trustee, and to issue in exchange therefor its own share certificates upon the above mentioned basis; that prior to April 0, 1903, about $176,822,900 par value of the stock of the Northern Securi- ties Company w-as issued in exchange for about $153,759,400 par value of the stock of the Northern Pacific Railway Com- pany, and about $211,057,600 par value of the stock of the former company w^as issued in exchange for about $118,124,- 200 par value of the stock of the Great Northern Railway Company, and about $7,522,000 par value of the stock of the Northern Securities Company was issued for cash used for the purchase of other property and for corporate pur- poses; that the Northern Securities Company caused the certificates for such railway shares to be transferred to HARRIMAN V. NORTHERN SECURITIES CO. 597 Opinion of the Conrt and registered in its own name or the names of its agents and ever since has held and now holds the same so registered ; that such issue of capital stock of the Northern Securities Company for the stock of the two railway companies was to the then existing holders of stock in such railway companies in exchange for certificates for such railway stock and for the purpose of effectuating the above men- tioned scheme or combination whereby the Northern Securi- ties Company, holding a majority of the shares of stock of the two railway companies, would be enabled to con- trol the operation and management of the same; that all the persons to whom stock of the Northern Securities Conipany was issued for shares of either of the railway com- panies or for cash had full knowledge of the purposes for which it was organized, and of the fact that a [471] major- ity of the capital stock of each of the railway companies had been or was to be deposited with it as custodian or depositary in pursuance of the above mentioned agreement; that prior to the time of the incorporation and organiza- tion of the Northern Securities Company, the Oregon Short Line Railroad Company had acquired and at that time owned $37,023,000 par value of the common stock, and $41,085,000 par value of the preferred stock of the Northern Pacific Railway Company, represented by certificates issued to and registered in the names of the complainants Harri- man and Pierce; that after the incorporation of the North- ern Securities Company had been resolved upon Harriman, Pierce and the Oregon Short Line Railroad Company agreed with the promoters and incorporators of the former '^com- pany to transfer to and deposit with it under the terms and conditions before stated, the shares of the Northern Pacific Railway Company of the aggregate par value of $78,108,000 owned by the Oregon Short Line Railroad Company, and to receive m exchange therefor certificates of the Northern Securities Company representing an interest therein of $82,491,871 par value, and $8,915,629 in cash, and in pursu- ance of such agreement Harriman and Pierce, acting for the Oregon Short Line Railroad Company, did, on or about November 18, 1901, transfer and deliver to the Northern , Securities Company certificates for $37,023,000 par value of 598 132 FEDERAL REPOKTER, 471. Opinion of the Court. the common stock and $41,085,000 par value of the preferred stock of the Northern Pacific Eailway company, owned by the Oregon Short Line Eailroad Company, and received in exchange therefor certificates of the Northern Securities Company representing an interest of $82,491,871 par value, and the above mentioned sum of $8,915,629 in cash; that Harriman and Pierce are now, and ever since November 18, 1901, have been, the registered owners and holders of the $82,491,871 par value of the shares of the Northern Se- curities Company, and such holding of stock is and at all times has been by them as trustees for the use and benefit of the Oregon Shoi-t Line Eailroad Company, which is the beneficial owner thereof; that the $82,491,871 par value of the stock of the Northern Securities Company so standing in the names of Harriman and Pierce, was pail of the original issue of stock by that company; that the above mentioned exchange was made by Harriman and Pierce and the Ore- gon Short Line Eailroad Company in good faith and in the belief that the organization of the Northern Securities Com- pany was not, and the acquisition and holding by it of the stock of the two railways as stated would not be, in viola- tion of any statute of the United States, and it was owing to such belief that the complainants did not, pending the final determination of the suit brought by the United States in Minnesota, take any steps or institute any proceedings for the protection of their rights in the premises ; that the Oregon Short Line Eailroad Company by indenture dated July 17, 1902, duly pledged $82,491,000 ^ar value of the st«ck of the Northern Securities Company with The Equita- ble Trust Company of New York, as trustee, for an issue of bonds of that railroad company, of which bonds $82,491,000 face value have been certified and issued and are now out- standing ; that the stock of the Northern Securities Company, so issued to Harriman and Pierce November 18, 1901, is still registered in their names and the certificates therefor duly endorsed are now in the actual cus- [472] tody of The Equitable Trust Company of New York as pledgee, and are available for tender, return or restoration to the Northern Securities Company; that at the time of such exchange, on or about November 18, 1901, it was agreed between Harri- HARRIMAN V, NORTHERN SECURITIES CO. 599 Opinion of the Court. man and Pierce and the Northern Securities Company that the $41,085,000 par value of the preferred stock of the Northern Pacific Eailway Company should be converted into common stock of that railway company, and such preferred stock was subsequently, in or about December, 1901, con- verted by the Northern Securities Company into such com- mon stock of the same par value; that certificates for $34,- 709,062 par value of such common stock registered in the name of the Northern Securities Company on the books of the railway company were substituted in lieu of the cer- tificates for such preferred stock; that the Northern Securi- ties Company caused such original common stock to be trans- ferred to it upon the books of the railway company, and now holds within the jurisdiction of this court certificates regis- tered in its name on the books of the railway company, namely, the Northern Pacific Eailway Company, for such common stock so originally received from Harriman and Pierce, and for the common stock into which such preferred stock was so converted and certificates substituted as above mentioned. The bill then sets forth in substance the pro- ceedings in United States v. Northern Securities Company et al. (C. C.) 120 Fed. 721, and the final decree therem of the circuit court and the decree of the Supreme Court of the United States on appeal. The bill further alleges in substance that the complainants were represented in that suit by the Northern Securities Company and the Northern Pacific Eailway Company as well as by the individual defendants, Morgan, Bacon, Baker and La- mont, who were named as the representatives of original holders and owners of the stock of the Northern Pacific Eailway Company acquired and held by the Northern Se- curities Company; that the effect of the decree of the cir- cuit court as affirmed by the Supreme Court of the United States was to adjudge that the Northern Securities Com- pany was not a purchaser or owner, but simply a custodian, of the shares of stock of the two railway companies acquired and held by it ; that it acquired and held possession thereof in violation of the Anti-Trust Act July 2, 1890, c. 647, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200] ; that it acquired no title thereto and cannot transfer any riglits in respect 600 132 FEDERAL REPORTEK, 472. Opinion of the Court, thereof; that the legal and equitable owners thereof were and are the several parties who originally exchanged the same for stock of the Northern Securities Company, or their assigns; that immediately upon the rendition of the deci- sion of the Supreme Court of the United States the North- ern Securities Company, through its board of directors, determined fully and unreservedly to abandon and terminate' the above mentioned combination and its holding of such railway stock, and to that end to reduce the capital stock of the company by ninety-nine per cent thereof, or to $3,954,000 par value, and to distribute and divide the stock of the two railway companies held by it, pro rata among its own stockholders, but not to return and retransfer to the stockholders of those railway companies, resjiectively, or their assigns, any of the shares of stock in either of them which it, the Northern Securities Company, originally re- ceived from such stockholders in exchange for its own stock ; that in order to consummate such purposes [473] the board of directoi-s of the Northern Securities Company on or about March 22, 1904, adopted the preambles and resolu- tions hereinbefore referred to; that thereupon a circular or notice was issued by and on behalf of that companv to its stockholders, notifying them of a special meeting for the purpose of voting upon the proposition submitted by the directors in the resolutions adopted; that such meeting of stockholders was held April 21, 1904, and at it the stock of the Northern Securities Company was reduced ninety- nine per cent by a vote of more than seventy-five jjer cent, in interest of its stockholders, and by a like vote the proposed plan of pro rata distril)ution was assented to, but tlie com- plainants then and there duly protested that such plan of distribution was illegal and in violation of their rights; that such plan is unauthorized by law, illegal and ultra vires the Northern Securities Company, in violation of the rights and equities of the complainants, and of the laws of the United States and of New Jersey; that such plan has never been assented to by the complainants and is not bind- ing upon them; that the books and records of the Northern Securities Company show for what purpose or considera- tion each outstanding certificate of stock was originally is- HARRTMAJSr V, NORTHERN SECURITIES CO. Opinion of tbe Court. 601 sued, whether for cash or for stock of the Northern Pacific Eailway Company or of the Great Northern Eailway Com- pany, and will disclose that a large part of the stock of the Northern Securities Company, issued originally in exchange for stock of those railway companies, is now held in the name or on behalf of original holders who exchanged the same for stock of the railway companies, and, wherever there have been transfers of certificates to third parties, the origin of each and every outstanding certificate of stock of the Northern Securities Company so transferred to third parties can be so traced and shown in and by such books and records that the assignees of the original holders can be identified and the stock of either railway company originally exchanged by the assignors can be delivered to such as- signees in exchange for their present holdings of stock of the Northern Securities Company; that the Northern Se- curities Company threatens and intends immediately to dis- tribute the shares of stock of each of the two railway com- panies pro rata among its, the Northern Securities Com- pany's, stockholders in disregard of the rights of the complainants, and unless enjoined by this court from so doing, will forthwith make such distribution, whereby stock of the Northern Pacific Eailway Company belonging to the complainants, and to which they are entitled will be lost by them, and they will thereby suffer injury which cannot be compensated in damages, in that the shares* of stock of that railway company to which they are so entitled are registered on the books of the railway company in the name of the Northern Securities Company, and those rail- way company shares or any like amount of such shares cannot be purchased in any market or from any persons; that the proposed distribution pro rata in lieu of the return and restitution of the stock of the railway companies would involve a loss of annual income to the complainants amount- ing to over $1,000,000, the dividends at the rate now paid upon the stock of the Northern Pacific Eailway Company to which they are en- [474] titled exceeding by more than $1,000,000 per annum the dividends upon the stock of the Great Northern Eailway Company and Northern Pacific Eailway Company which they would receive upon such 602 132 FEDEEAL EKPOBTEB, 474. Opinion of the Cionrt. pro rata distribution; that the value of the stock of the Northern Pacific Kailway Company to which the complain- ants are entitled now exceeds and at all times mentioned in the bill exceeded by more than $10,000,000 the aggregate value of the pro rata share of the stock of the two railway companies which they would receive upon such pro rata dKtnbution which would be $32,070,612 par value of stock of the Northern Pacific Kailway Company and $24,638 919 par raluB of stock of the Great Northern Railway Company, instead of $78,108,000 par value of stock of the former company; that the complainants are ready, able and willing, and oflFer, to return and deliver, or cause to be returned and delivered, and they tender, to the Northern becunties Company all the certificates for the shares of Its capital stoc^ so received by them, and such part of the above mentioned sum of $8,915,629 in cash, paid to them by or on behalf of that company, as may be just, or such further or other sum as the court shall fix in exchange for and upon the return of the common stock of the Northern Pacific Railway Company, delivered and exchan^d by them as above stated, and the common stock of such railway company into which the preferred stock so exchanged was converted, and they offer to bring mto court such stock of the Northern Securities Company and such moneys whenever the court shall direct, and in aU r^pects to do equity and right in the premises; and that, after the return and restoration of the original depositors or their assigns of all the shares of stock of the railway companies, acquired and held by the Northern Securiti^ Company, as above stated, there will remain in the treasury of that company assets and funds sufficient to pay and re- deem all of the $7,522,000 par value of its stock issued for cash, or to fully compensate any holders thereof if compen- sation be adjudged. The complainants pray that it may be decreed that the proposed plan of distribution is iUe- gil and in violation of their rights and equities, and that they are entitled to the return and transfer to them by the Northern Securities Company of the shares of common stock of the Northern Pacific Railway Company, which were so delivered by Harriman and Pierce, and the shares of HAHKIMAN V. NORTHERN SECURITIES CO. Opinion of the Court fi03 common stock into which the preferred stock of that rail- way company delivered by them were converted, in exchange for the certificates of stock of the Northern Securities Com- pany so issued to and now held by the complainants, and such sum in cash as may be just; that the Northern Securi- ties Company may be ordered and directed to endorse the certificates now held by it for such stock of the Northern Pacific Railway Company to the Oregon Short Line Rail- road Company, or in blank, and deliver the same to The Equitable Trust Company of New York in exchange for the stock of the Northern Securities Company now held by such trust company, to be subject to its rights and lien as trustee; that the Northern Securities Company be perpetu- ally enjoined and restrained from parting with, disposing of, transferring, assigning or distributing any part of the stock of [475] the Northern Pacific Railway Company re- ceived from Harriman and Pierce, or anv common stock into which the preferred stock received from them may have been converted, or the certificates now representing the same or any part thereof, except to return the same to the complainants in exchange for its own stock issued as above stated and the cash now tendered bv them: that the complainants have such other or further relief as shall be proper under the circumstances; and that the Northern Securities Company may be enjoined and restrained from parting with, disposing of, transferring, assigning or dis- tributing the stock of the Northern Pacific Railway Com- pany in question, or any part thereof, or any certificates now representing the same during the pendency of this suit. The defense controverts material allegations in the bill, some of which embody averments of fact, and others aver- ments of law. With respect to some of the alleged facts, important in their bearing upon the equities of the case, the affidavits and exhibits. are conflicting on substantial points. On the face of the bill it is evident that the final decision necessarily will involve the consideration of grave, novel and delicate questions of law. On the presentation of their arguments for and against the awarding of a preliminary injunction counsel on both sides have with strong insist- ence urged, and with elaboration and signal ability dis- 604 132 FEDERAL REPORTER, 475. Opinion of the Court, cussed, a nuinber of legal propositions, important and far^ reaching m their scope, and by no means free from doubt Whether or not a final decision will require a determination of all these propositions, the fact remains that the eminent counsel advancing them have during a hearing of nearly three days pressed them with zeal and in manifest relianci upon their soundness and materiality. The briefs of argu- ment and authorities, containing nearly 800 printed pages and principally devoted to the discussion of the principles of law and equity deemed applicable to the case, fairly may be accepted as evidence that much may seriously be said on each side about the hiw, if not the facts, involved The case not being ripe for a final decision, the present applica- tmn IS for a preliminary injunction. The granting or re- fusal of a preliniinary injunction, whether mandatory or preventive, calls for the exercise of a sound judicial dis- cretion in view of all the circumstances of the particular case. Regard should be had to the nature of the contro- verey, the object for which the injunction is sought, and the comparative hardship or convenience t« the respective parties involved in the awarding or denial of the injunction The legitimate object of a preliminaiy injunction, pre- ventive m its nature, is the preservation of the property or right^ m 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 provisional. 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 prevail, cause greater detriment to him than would on the contrary a&sumption, be suffered by the complainant' ^rough ite refusal, [476] the injunction usually should be' denied. But where, in a doubtful case, the denial of the mjunction would, on the assumption that the complainant ultimately will prevail, result in greater detriment to him than would, on the contrary assumption, be sustained by the defendant tlirough its allowance, the injunction usually should be granted. The balance of convenience or hardship HARRIMAN V, NORTHERN SECURITIES CO. 605 Opinion of the Court. ordinarily is a factor of controlling importance in cases of substantial doubt existing at the time of granting or re- fusing the preliminary injunction. 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 complainant and that of the defendant, without necessarily being determinative of the propriety of allowing or denying the injunction. AVhere, for instance, the effect of the injunction would be disastrous to an estab- lished and legitimate business 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, however, the sole object for which an injunction is sought, is the preservation of a fund in controversy, or the maintenance of the status quo, until the question of right between parties can be decided on final hearing, the injunction properly may be allowed, although there may be serious doubt of the ultimate suc- cess 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 complain- ant. These views are supported by abundant authority to which, were it not for the importance of the case, I should refrain from adverting. In Rnssell v. Farley, 105 U. S. 433, 438, 26 L. Ed. 1060, the court through Mr. Justice Bradley said: "It is a settled rule of the Court of Chancery, in actinj; on appli- cations for injunctions, to regard the comparative injury which would be sustained by the defendant, if an injunction were granted and by the complainant, if it were refused. Kerr on Injunctions' 209, 210. And if the legal right is doubtful, either in point of law or of fact, the court is always reluctant to take a course which may result in material injury to either party." In City of Newton v. Levis, 79 Fed. 715, 25 C. C. A. 161, the circuit court of appeals for the eighth circuit through Judge Sanborn said: "The granting or withholding of a preliminary injunction rests in the sound judicial discretion of the court, and the only question pre- sented by this appeal is whether or not the court below erred in the exercise of that discretion, under the established legal principles which should have guided it The propriety of its action must be considered from the standpoint of that court. * * ♦ The con- trolling reason for the existence of the right to issue a preliminary 132 FEDERAL KEPOBTEB, 476. Opinion of the Court injunction is that the court may thereby prevent such a change of the conditions and relations of persons and property during the litigation as may result in irremediable injury to some of the parties before their claims can be investigated and adjudicated. When the questions? to be ultimately decided are serious and doubtful, the legal discretion of the judge in granting the writ should be influenced lai^ely by the consideration that the injury to the moving party will be certain, great and irreparable if the motion is denied, while the mctmvenience and loss to the opposing partv will be inconsiderable and may well be Indemnified by a proper bond if the hijunction is grantwl. A preliminai-y injunction maintaining the status quo may properly issue when- [477] ever the questions of law or fact to be ultimately determined in a suit are grave and difficult, and injury to the moving partj' will be immediate, certain, and great if it is denied, while the loss or inconvenience to the opposing party will be compiiratively small and insignificant if It is granted. ♦ * ♦ The arguments and brief of counsel invite us to a consideration of the questions of law which must be finally determined upm a demurrer to the bill, or upon a final hearing of this case after answer We have, however, found it unnecessary to decide these questions on this appeal, and we express no opinion upan them. They are of suf- ficient importiince and difliculty to demand careful examination and deliberate consideration," etc. In Glmcott v. Lang, 3 Myl. & C. 451, 455, Lord Chancel- lor Cottenham said : " In looking through the pleadings and the evidence, for the pur- pose of an injuuetion, it is not necessary that the court should find a case which would entitle the plaintiff to relief at all events. It is quite suflicient if the court finds, uixai the pleadings, and upon the evidence, a case which malies the transaction a proper subject of Investigation in a court of equity.'* In Madden v. Doohy, 74 Fed. 429, 431, 20 C. C. A. 494, the circuit court of appeals for the second circuit through Judge Shipman said: "When the questions which naturally arise upon the transactions make them a proper subject for deliberate examination, if a stay of proceedings will not result in too great injury to the defendants, it Is proper * to preserve the existing state of things until the rights of the parties can be fairly and fully investigated and determined ' by evidence and proofs which have the merit of accuracy." In Great We%tem R. Go, v. Birmingham, etc, R. Go,, 2 Phil. Ch. 597, Lord Chancellor Cottenham said : " It is certain that the court will in many cases interfere and pre- serve property in statu quo during the pendency of a suit, in which the rights to It are to be decided, and that without expressmg, and often without having the means of forming, any opinion as to such rights. It is true that no purchaser pendente lite would gain a title- but it would embarrass the original purchaser in his suit against the vendor which the court prevents by its injunction. * ♦ • It is true that the court will not so hiterfere, if it thinks that there is no real question between the parties; but seeing that there is a sub- stantial question to be decided, it will preserve the property until such question can be regularly disposed of. In order to support an injunction for such purpose, it is not necessary for the court to de- HABEIMAN V, NORTHERN SECURITIES CO. Opinion of the Court. 607 cide upon the merits in favor of the plaintiff. If, then, this bill states a substantial question between the parties, the title to the injunction may be good, although the title to the relief prayed may ultimaiely fail. Is, then, the case stated by the bill so clear in favor of the defendants, and so inadequate to support the relief prayed by the bill, as to justify the court in permitting it to be disposed of, and new titles or interests to be introduced, before any decision can l)e ob- tained upon the case so made?" In Shrewsbury <& Chester R, Go, v. Shrewsbury R. Go,, 1 Sim. N. S. *410, *426, *427, *432, the Vice-ChanceUor, Lord Cran worth, said : "When the court is called on to interefere to perserve property pendente lite, there are, I apprehend, two points on which the court must satisfy itself. First, it must satisfy itself, not that the plaintiff has, certainly, a right, but that he has a fair question to raise as to the existence of such a right. * * ♦ Where it is made out that there is a point to be decided which the plaintiff is fairly raising, still, there is a further question, namely, whether interim inter- ference, on a balance of convenience and inconvenience to the one party and to the other, is or is not expedient. Where the alternative is interference or [478] probable destruction of the property, there, of course, the court will be very ready to lend its immediate as- sistance, even at considerable risk that it may be encroaching on what may eventually turn out to be a legal right of the defendant But where, on the other hand, the only evil to result from non-inter- ference is, that the plaintiff may, by the contracts or deeds of the defendant, be retarded or embarrassed in his litigation, there the court will be far more ready to listen to any suggestion of the defendant showing that interference during litigation will prejudice his rights. * * ♦ Although I am perfectly satisfied of the authority of this court to issue an injimction, not merely to restrain parties from doing acts, but also from entering into contracts pending litigation that may embarrass the plaintiff in his suit, and that the court is entitled to do so whenever it sees there is a fair ground for litigation raised by the plaintiff, yet that right of the court must be guided by a discretion not to exercise it where it sees that on the balance of convenience and inconvenience between interim interference and non-interim interference the balance greatly preponderates in favor of the defendant and against the plaintiff." In the above case a preliminary injunction was refused on the ground of the "enormous preponderance of incon- venience in granting the injunction over any possible incon- venience in refusing it." The doctrine of the foregoing cases is contained in many others from which there is no occasion to quote. Denver (& R. G, R, Go, v. Vnited States, 124 Fed. 156, 59 C. C. A. 579; Allison v. Gorson, 88 Fed. 581, 32 C. C. A. 12; Buskirk v. King, 72 Fed. 22, 18 C. C. A. 418 ; Sanitary Reduction Works v. Galifomia Reduction Go, (C.C.) 94 Fed. 693; Southern Pac, Go. v. Earl, 82 Fed. 690, 27 C. a A. 185 ; New Memphis Gas <& Light Go, v. Mem- phis (C. C.) 72 Fed. 952; Indianapolis Gas Go, v. Indian- 608 132 FEDERAL REPORTEE, 178. Opinion of the Court. apolu (C. C.) 82 Fed. 245; Georgia v. Bm'dsford, 2 Dall. 402, 1 L. Ed. 433. It does not api>eai% nor has it been claimed or intimated, that the granting of the preliminary injunction asked for would interfere with the operation of the Northern Pacific Kailway Company and the Great Northern Railway Com- pany, or either of them, or otherwise prove detrimental to the interests of the public. It undoubtedly would, during the continuance in force of the injunction, preclude the stockholders of the Noithern Securities Company, or a con- siderable proportion of them, from directly or indirectly receiving dividends on the stock of either of the railway companies, unless under and by virtue of some voluntary extrajudicial arrangement. But this court has power to require of the complainants as a condition precedent to the issuing of the injunction, a bond in such form and amount as fully to indemnify all persons, wlio may ulti- mately be found entitled to such dividends against all loss or damage resulting from the suspension of their payment. On the other hand, the denial of a preliminary injunction would, if the complainants should ultimately prevail, render barren their victory so far as relief in this suit is concerned. The stock of the two railway companies would be distributed pro rata among the stockholders of the Northern Securities Company in accordance with the plan of distribution adopted by the latter company. The complainants would receive, in- stead of stock of the Northern Pacific Railway Company of the par value of $71,732,062 claimed by them, stock of that company amounting at par to only $32,070,612, and stock of the Great Northern Railway Company of the par value of [479] $24,638,919. The difference in the par value between the stock of the Northern Pacific Railway Company claimed by the complainants and the stock of that company which they would receive under the proposed plan is $39,661,450. If the complainants be sustained in their contention here made as to their ownership and right to recover stock, such right would not extend to stock of the Great Northern Rail- way Company, but only to stock of the Northern Pacific Railway Company. A pro rata distribution under the pro- posed plan of ihe^ $39,661,450 par value of stock of the latter HARRIMAN V. KORTHERN SECURITIES CO. 609 Opinion of the Court, company, included in the amount now sued for, among the stockholders of the Northern Securities Company, other than the complainants, would not only debar the latter from any relief to which they may be entitled under their present bUl, but to a moral certainty entail upon them a burdensome mul- tipLcity of suits attended with great labor and expense. It would also obviously be calculated to hinder, embarrass and probably or possibly defeat them in their effort to recover large quantities of such stock from persons purchasing the same in good faith and for full consideration, directly or indirectly, from the stockholders of the Northern Securities Company participating in such pro rata distribution, through the creation of new equities on the part of such pur- chasers. In view of the character of the questions involved m this case it would be highly inequitable that the complain- ants should, in advance of any final decision on the merits, be put in such a position as to be precluded, either wholly or m large measure, from the realization and enjoyment of the fruits which should be theirs through the immediate result of a final decree in the present case, should it ultimately be determined in their favor. It appears from the bill, affidavits and exhibits, that, aside from any question of right between the parties to one kind of stock in contradistinction to another, the real ^'alue in dispute is of great magnitude. For $37,023,000 par value of common stock and $41,085,000 par value of preferred stock of the Northern Pacific Railway Company turned over by Harriman and Pierce to the Northern Securities Comi^any November 18, 1901, the latter company issued to them $82 - 491,871 par value of its stock and also paid them $8,915,629 m cash. All of the common and preferred stock so turned over by Harriman and Pierce, aggregating $78,108,000 par value was taken by the Northern Securities Companv at an agreed real valution of $115 for each $100 at par without distinction between common and preferred stock The plan of pro rata distribution of the Northern Securities Company contemplates the transfer and assignment to all stockholders of that company of both preferred stock of the Great North- ern Railway Company and common stock of the Northern 21220— VOL 2—07 m 39 610 132 FEDEEAL KEPORTEB, 479. Opinion of the Coort HARRIMAN V. NORTHERN SECURITIES CO. 611 Pacific Railway CompaEy, in such manner that each and every holder of stock of the Northern Securities Company will, on the basis of the surrender to it for cancellation of 1)9 per cent, of such stock, receive for each $100 par value of such surrendered stock $30.17 par value of the preferred stock of the Great Northern Railway Company and $39.27 par value of the common stock of the Northern Pacific Railway Com- pany. Under the proposed plan [480] the holders of the re- maining one hundredth of the stock of the Northern Securi- ties Company would also be entitled to share in the residue of property in the treasury of that company remaining after the reduction of its stock by 99 per cent. The complainants hold $82,491,871 par value of the stock of the Northern Securities Company, and, as before stated, would receive $24,638,919 par value of the preferred stock of the Great Northern Railway Company and $32,070,612 par value of the common stock of the Northern Pacific Railway Company. The present real or market value of the preferred stock of the former company is about, and is admitted to be, $170 for each $100 par value, while that of the conunon stock of the Northern Pacific Railway Company is $135 for each $100 par value. Under the proposed plan the real value which the complainants would receive in stock of the Great Northern Railway Company would be $41,886,162, and the real value which they would receive in stock of the Northern Pacific Railway Company would be $41,295,326, making a total of $83,181,488, aside from any interest they might have in any undisposed of residue of property remaining in the treasury of the Northern Securities Company. Reference will later be made to such undisposed of residue. It appears from the affidavits and exhibits that in November, 1901, the Northern Pacific Railway Company adopted a plan for the conversion of all its preferred stock into common stock; the preferred stock then amounting to $75,000,000 par value, and the com- mon stock to $80,000,000 par value. Under this plan the Northern Securities Company, as the holder of $37,023,000 par value of the common stock became entitled to surrender preferred stock of the Northern Pacific Railway Company and receive therefor seventy hve eightieths of its par value in the new common stock. There is evidence furnished by Opinion of the Court. the affidavits and exhibits that the Northern Securities Com- pany exercised this right and received of such new common stock $34,709,062 at par. If such be the fact, the latter com- pany thereupon became the holder of $71,732,062 par value of common stock, the real value of which at $135 for $100 par value is $96,838,283. The deduction fi'om tlte $41,085,000 par value of the preferred stock of the Northern Pacific Rail- way Company of the $37,023,000 par value of such stock, the surrender of which to that company for cancellation was necessary for the acquisition of the $34,709,062 of its new common stock, left a balance of $4,062,000 par value of its preferred stock. If this balance was sold or disposed of at par, — and it may reasonably be inferred from the affidavits and exhibits that it was not sold or disposed of for less, — its proceeds. $4,062,000 fairly may be treated as an offset to the cash payment of $8,915,629, originally made by the Northern Securities Company to Harriman and Pierce. On this theory the balance of the $8,915,629 over the $4,062,000, amounting to $4,853,629, when deducted from $96,838,283, the present real value of the $71,732,062 par value of the common stock of the Northern Pacific Railway Company, leaves a balance of $91,984,654. From this balance would be deducted $83,181,488 which the complainants would receive under the pro rata plan, leaving $8,803,166 in their fa^or, less the amount of their share of [481] the above mentioned resi- due in the treasury of the Northern Securities Company and a just allowance of interest on the cash balance. The above mentioned sum of $8,915,629, paid by the Northern Securi- ties Company to Harriman and Pierce November 18, 1901, had been loaned to that company by the firm of J. P. Morgan & Company. On or about January 1, 1902, $6,375,938 par value of the $41,085,000 par value of preferred stock of the Northern Pacific Railway Company originally transferred by Harriman and Pierce to the Northern Seourities Com- pany, having previously been surrendered to the Northern Pacific Railway Company and retired, its proceeds, amount- ing to its par value, were paid by the Northern Securities Company to J. P. Morgan & Company in partial liquida- tion of the cash loan of $8,915,629 made by that firm to tlie ^12 132 FEDERAL REPORTER, 481. Opiiiioii of the Court. latter conipany. The affidavits and exhibits furnish evi- dence of some weight that the above mentioned par value of $6,375,938 of preferred stock of. the Northern Pacific Rail- way Company was deducted by the Northern Securities Com- pany from the $41,085,000 par value of preferred stock of that railway company, thereby reducing the latter amount to $34,709,062 at par, and that the remaining preferred stock, namely, $34,709,062 par vahie was, through the in- strumentality of convertible certificates issued by the North- ern Pacific Railway Company converted into new common stock of equal par value. If such be the case, the claim of the complainants would extend to the $37,023,000 par value of the old common stock, and the $34,709,062 par value of the new common stock, aggregating $71,732,062 par value of common stock, having a real value of $96,838,283. The deduction from this amount of $2,539,691, representing the difference between the original cash payment of $8,915,629 and $6,375,938, proceeds of preferred stock retired, should be deducted from the total amount leaving a balance amoimt- ing in real value to $94,298,592. Deducting from this amount $83,181,488, which the complainants would receive under the proposed distribution, leaves $11,117,104 in their favor, less the amount of their share of the residue in the treasury of the Northern Securities Company after the pro- posed distribution. There should also be a further deduc- tion of such sum by way of interest on cash received as above stated by Harriman and Pierce from the Northern Securi- ties Company as may be just. This item, however, would be of comparative insignificance in its relation to the other values involved in the suit. In a journal of the Northern Securities Company is the following entry : " 1901. Novbr. 18th. Investment Account No. 1. ^ s^^ «^^ . "^^ Capital Stock a/c. For 410,850 shs. N. P. Pfd. stock bought from E. H. Harri- man and Winslow S. Pierce for «4i 085 000 I^ess paid in cash as per entry in casb book this day 8,' 935] 629 Balance paid in stock $32, 169, 371 say 321,693 shs. & |71 scrip issued as fully paid up stock @ par," HARRIMAN V, NORTHERN SECURITIES CO. 613 Opinion of the Court. [482] Whatever may be the merit of this entry as viewed from the standpoint of scientific bookkeeping, the words and figures " Balance paid in stock $32,169,371," are, when considered in connection with other exhibits and the affi- davits, confusing and misleading in their bearing upon the conversion, whether directly or indirectly, of preferred stock of the Northern Pacific Railway Company originally turned over by Harriman and Pierce to the Northern Securi- ties Company into new common stock of the former com- pany. Any assumption that the above mentioned balance of $32,169,371 par value of preferred stock of the Northern Pacific Railway Company was not converted, either at par or on the seventy five eightieths basis, into new common stock of that company, by the Northern Securities Company, appears irreconcilable with controlling evidence touching the conversion of preferred into common stock, furnished by the affidavits and exhibits considered as a whole. A fact, which on the present showing seems indisputable, is that the Northern Securities Company, in addition to the $37,023,000 par value of the common stock of the Northern Pacific Rail- way Company originally turned over to the former com- pany by Harriman and Pierce, acquired through the instru- mentality of convertible certificates issued by the railway company new common stock of the par value of $34,709,062. It is unimportant, so far as the point under immediate dis- cussion is concerned, whether that amount of new common stock was secured, on the one hand by a surrender to the railway company of $37,023,000 par value of its preferred stock on the seventy five eightieths basis, or, on the other, by a surrender to the railway company of its preferred stock of the par value of $34,709,062 for its new common stock of the same par value. It is not claimed or suggested that the balance of $32,169,371 par value of preferred stock, mentioned in the journal entry, was sold by the Northern Securities Company absolutely for cash and without in- tention on its part, directly or indirectly, to convert such balance of preferred stock into the new common stock of the Northern Pacific Railway Company. Any such con- tention would, on the present showing, be wholly inadmis- sible. The affidavits and exhibits fail to disclose, and coun- 614 132 FEDERAL REPORTER, 482. H Opliiioii of the Court. sel have not attempted to explain, how that balance of pre- ferred stock was, or, on any basis or theory justified by the evidence, conld have been, converted intJ $34,709,062 par value of the new common stock of the Northern Pacific Kailwa}' Company. Yet, if, notwithstanding the foregoing considerations, it be assumed that only $32,169,371 par value of the original $41,085,000 par value of preferred stock of that railway company, transferred by Harriman and Pierce to the Xorthem Securities Company was converted into the new common stock of the railway company of an equal par value, the old and new common stock would aggregate $69,172,371 par value or a real present value of $93,409,701. The deduction from the latter amount of the $83,181,488 which the complainants would receive under the proposed pro rata distribution would leave a balance of $10,228,213 of real value in their favor, less the amount of their participa- tion in the residue of the property remaining in the treasury of the Northern [483] Securities Company. Or, further, if it lie assumed that the $32,169,371 par value of preferred stock of the Northern Pacific Railway Company was con- verted into new common stock of that company on the basis of seventy live eightieths, it would represent $30,158,785 par value of new common stock, the real value of which is $40,714,360. This latter sum added to $49,981,050, repre- senting the real value of $37,023,000 par value, of the old common stock would aggregate $90,695,410, and the deduc- tion from this sum of the $83,181,488 which the complain- ants would receive under the proposed distribution, would leave a balance of $7,513,922 of real value in their favor, less their share of the residue of the property in the treasury of the Northern Securities Company. The stock of the Northern Securities Company outstand- ing April 21, 1904, and presumably now outstanding, is of the par value of $395,400,000, divided into 3,954,000 shares of the par value of $100 eacli. That company now holds 1,537,594 shares of the stock of the Northern Pacific Rail- way Company and 1,181,242 shares of stock of -the Great Northern Railway Company, of the par value of $100 each. The proposed pro rata plan of distribution contemplates the reduction of the total outstanding stock of the Northern Se- HARRIMAN V, NORTHERN SECURITIES CO. Opinion of the Court 615 curities Company by 99 per cent. To accomplish this result the Northern Securities Company offers, on the surrender to it of that proportion of its stock, amounting at par to $391,446,000, to deliver or pay for each $100 par value thereof surrendered $39.27 par value of stock of the North- ern Pacific Railway Company, and $30.17 par value of stock of the Great Northern Railway Company, and "propor- tional amounts thereof for fractional shares of the stock of this company." $39.27 on each $100 of $391,446,000 so closely approximates to the par value of the 1,537,594 shares of stock of the Northern Pacific Railway Company that for any practical purpose on the present application it may be considered equal to it. And $30.17 on each $100 of $391,- 446,000 so closely approximates to the par value of the 1,181,- 242 shares of stock of the Great Northern Railway Company that for any such purpose it may be considered equal to it. Thus, the surrender of ninety nine one hundredths of the outstanding stock of the Northern Securities Company would necessarily involve the transfer and alienation by it of prac- tically all the stock of the Northern Pacific Railway Com- pany and Great Northern Railway Company now held by it. Whatever of real value the remaining one hundredth of the par value of the outstanding stock of the Northern Securi- ties Company, $3,954,000, might represent, would consist wholly, or practically wholly, of property other than stock of both or either of the two railway companies. It does not appear from the affidavits and exhibits what amount of property would remain in the treasury of the Northern Se- curities Company after the distribution of the railway stock referred to. Nor does it appear whether the company is or is not indebted, nor whether there are or are not other charges or expenses paramount to the claims of the holders of the remaining one hundredth of its stock. As between the complainants applying for a preliminary injunction, and the Northern Securities Company resisting the application 1484] partly on the ground that the real value in dispute is not sufficient to warrant an exercise of the injunctive power, the burden of showing the amount of property in which the complainants would share under the proposed plan, clearly, in view of the fact that the company is chargeable with full 616 132 FEDEBAL KEPOKTEB, 484. Opinion of the Court, knowledge of the character, amount and condition of its own property and finances, rested upon it. It must be presumed to have been able to make such a showing. Its failure so to do gives rise to an unfavorable inference. But even if it be assumed that the real value of the residue of the property would be $3,954,000, the par value of the remaining stock, the complainants would under (he proposed plan, in the ab- sence of any reduction or obliteration of the fund through possible indebtedness or other charges or expenses, receive as their share approximately $824,919. This sum, though a large amount, is but a small proportion of the real value which the complainants would receive, if entitled to recover. It is less than one twelfth of $11,117,104; less than one elev- enth of $10,228,213; less than one ninth of $8,803,166; and less than one eighth of $7,513,922. It is unnecessary, and would be tedious, to discuss in this connection and on the present application the subject of interest, as at most it is a matter of comparative insignificance. In leaving the dis- cussion of real values involved in this suit it should be borne m mind that the right of the complainants to recover, if it exists, extends to stock of the Northern Pacific Railway Company, amounting on the present showing to from $69,000,000 to $71,000,000 approximately at its par value, and to a much larger sum at its real value, and that they dis- claim all right to the stock of the Gi-eat Northeni Railway Company which the Northern Securities Company insists should be taken by them, instead of the larger amount of the stock of the Northeni Pacific Railway Company claimed by them. From this point of view there possibly may be some doubt of the pertinency of the foregoing discussion of bal- ances of real values to the consideration of the propriety of granting or withholding the injunction. On this point no opinion is expressed. It was urged by the defense at the hearing that the granting of the relief sought by the com- plainants would be injurious to many stockholders of the Northern Securities Company, other than the complainants, who acquired their stock in good faith and for full consid- eration, for the reason that in many instances and to a large amount stock of that company had been so issued or trans- ferred as to render it impossible to trace or identify the con- HARBIMAN V. NORTHERN SECURITIES CO. Opinion of the Court 617 sideration of such issue or transfer. It appears that prior to April 9, 1903, stock of the Northern Securities Company of the par value of $7,522,000 was issued for cash used in the purchase of stock of the Great Northern Railway Company and other stocks held by the Northern Securities Company, and also that its stock to a large amount has been transferred from time to time among and is now held by a large number of persons. The bill avers that those becoming stockholders of the Northern Securities Company, whether for shares of the Northern Pacific Railway Company or the Great Northern Railway Company or for cash, had full knowledge and information of the purposes for which the [485] first- named company was organized, and the aifidavits are con- flicting on the question whether or not the nature and amount of the consideration for the issue or transfer of stock of that company can be traced and identified on its books or otherwise. It is manifestly improper that these matters should be decided on the fragmentary and inconclusive evi- dence now before the court. They require deliberate investi- . gation in the accustomed mode on evidence taken in due course and in the light of an examination of books and papers produced before a master. It should also be borne in mind that this court, as a court of equity, has power so to mold its decrees and impose such terms as may be necessary to protect the equities of persons who may be affected by its action. Language justly applicable to the present case was em- ployed by Judge Sanborn in Denver c§ R. G. R. Co. v. United States, 124 Fed. 156, 161, 59 C. C. A. 579, 584, as follows : " The case falls well within the established rule that a preliminary injunction maintaining the status quo may properly issue wheneveV the questions of law or of fact to be ultimately determined are grave and difficult, and injury to the moving party will be immediate, cer- tain, and great if it is denied, while the loss or inconvenience to the opposing party will be comparatively small if it is granted." An appeal does not lie from an interlocutory decree of this court denying a preliminary injunction. While this consideration is entitled to no weight where, on the applica- tion for an injunction, it clearly appears that the complain- ant cannot prevail on the final hearing, it is often of con- 618 134 FEDERAL REPORTEE, 331. Syllabus. trolling importance where, on such application, there is room for reasonable doubt as to the ultimate result. Under the circumstances, this court would not be justified in refusing the injunction sought. Such refusal would not be an exer- cise of sound judicial discretion. It would not only be improvident in the extreme, but betray peculiar insensi- bility to the fallibility of human judgment so often accen- tuated by differences of opinion in even the highest judicial tribunals. An interlocutory decree for a preliminary injunction may be prepared and submitted. mi] NOKTHERN SECURITIES CO. v. HARRIMAN ET AL.« (Circuit Court of Appeals, Third Circuit. January 3, 1905.) [134 Fed., 331.] • Appeal — Order Granting Preliminary Injunction — Review.— Where the opinion of a Circuit Court in granting a preliminarj^ in- junction shows that the judge regarded as of dontrolling Impor- tance the fact that an order denying the injunction would not be i-eviewable by apperfl, the rule that the appellate court will not interfere with the exercise of the discretionary power of the court of first instance unless there is strong reason for it does not apply, and the question of the right to the injunction will be determined on the merits. 6 Corporations— Purchase of Stocks— Construction of Contract.— A contract by which defendant, the Northern Securities Company, aciinired from complainants certain shares of stocls of the North- ern Pacific Railway Coippany. held, under the evidence, to have l>een one of puivhaRe and sale, by which defendant, on payment of the agreed price, became the absolute owner of the shares, free from any trust in favor of the complainants, and free to distribute the same pro rata among all its stockholders upon the entry of a decree declaring it to be an illegal combination, and prohibiting It from voting or receiving dividends on such stock. o Circuit Court awarded a preliminary Injunction restraining the Northern Securities Company from disposing of certain shares of the common stock of the Northern Pacific Railway Company (132 Fed., 464. See p. 587. Reversed by the Circuit Court of Appeals, Third Circuit (134 Fed., 331), which action was affirmed by the Supreme Court im U. a, 244). See p. 669. 6 Syllabus copyrighted, 1905, by West Publishing Co. NORTHERN SECURITIES CO. V, HARRIMAN. Opinion of the Court. 619 Same— Manner of Distributing Assets.— Defendant corporation hav- ing been adjudged an illegal combination in restraint of inter- state commerce, and enjoined from voting or receiving dividends on certain railroad stock which it owned, but permitted to transfer the same to its stockholders, a plan adopted by its directoi*s and stockholders to distribute the same pro rata among all its stock- holders was equitable, and its execution should not be enjoined. Appeal— Order Granting Preliminary Injunction— Review.— It is a proper exercise of discretion for a court to grant a preliminary in- junction where the bill and evidence present a prima facie case and raise important and doubtful questions of law and fact, and, unless the injunction is granted to preserve the status quo until the liearing, the suit would be ineffective; and an order for an injunc- tion, granted on such grouads after the court has given due con- sideration to the balance of inconvenience and injury which may result to one party or the other, should not l>e reversed by an ap- pellate court before the case has been finally heard and determined by the court below on full proofs. Per Gray, Circuit Judge, dissenting. Appeal from the Circuit Court of the United States for the District of New Jersey. Elihu Root and John G. Johnson^ for appelhuit. D. T. Watson and TFm. D. Gtithne^ for appellees. Before Aciieson, Dallas, and Gray, Circuit Judges. Dallas, Circuit Judge. This is an appeal by the Northern Securities Company from a decree of the Circuit Court for the District of New Jersey awarding a preliminary injunction, by which that company was restrained from disposing of 717.320 shares of the common stock of the Northern Pacific llailway Company. It appears from the opinion of the learned judge of the court below that in granting this injunction he was materially influenced by the consideration that the questions involved were, as he viewed them, serious and doubtful, and that a de- cision by him denying the injunction would, if made, not be reviewable upon appeal. We think that upon this ground he was justi- [332] fied in requiring that the status quo should be preserved, and the subject-matter of the controversy be withheld from dissipation until the judgment of this court could be obtained. But now the substantial rights of the 620 134 FEDEKAI. BEPOBTEB, 332. Opinion of the Court, parties only need be considered, and whether the injunction should stand or be dissolved ought, in our judgment, to be determined upon the merits, and without further delay. Western Union Telegraph Company v. Pennsylvania RaU- rmd Company, 123 Fed. 33-36, 59 C. C. A. 113. There have been cases, it is true, in which it has been held that, where thi^ court of first instance has unreservedly exercised Its discretion in granting or refusing a preliminary injunc- tion, its action ought not to be interfered with by an ap- pellate court, '* unless there is some strong reason for it" 3imsie V. Buck. 128 Fed. 31, f>2 C. C. A. 535. But to the circumstances of this case those rulings are inapposite. At- tentive reading of the opinion of the learned judge of the Circuit Court has satisfied us that he regarded the fact that an appeal would not lie from a denial of the injunction as " of controlling importance," and that his decision was made with the understanding that the defendant below would be entitled to invoke a complete adjudication of the entire con- troversy by this court; and we think that reason and justice demand that such an adjudication shall not be further post- poned. The injunction complained of precludes the enjoy- ment of rights of ownership in property of great value. The facts upon which the propriety of upholding it depends are unquestionably disclosed in the record before us, and the prmciples by which the legality of the order awarding it must be tested are indubitable, and may be as readily ap- plied now as at any time hereafter. The only substantial question is as to whether the decree below was accordant with law, and that question this court could not refuse to determine without, in effect, renouncing the appellate juris- diction which Congress has expressly conferred upon it In November, 1901. the Northern Securities Company was incorporated under the laws of the state of New Jersey. Its total authorized capital stock was $400,000,000, divided into 4,000,000 shares of the par value of $100 each The amount of the capital stock with which the corporation could commence business was fixed at $30,000. Its duration was to be perpetual, and its objects were certified to be, inter alia as follows: ' «."in!p.t^*.nr«n^ kL'^"'"'"*''^' ''"''^^^'•'p"*^" «r otherwise, and to hold as nnestinent, any bonds or other securities cr evidences of indebted- NORTHEBN SECURITIES CO. V. HARRIMAN. 621 Opinion of the Court. ness, or any shares of capital stoclv created or issued by any other cor- poration cr corporations, association or associations, of the state of New Jersey or of any other state, territory or country. *' (2) To purchase, hold, sell, assign, transfer, mortgage, pledge, or otherwise dispose of, any bonds or other securities or evidences of indebtedne^rs created or issued by any other corporation or corpora- tions, association or associations, of the state of New Jersey, or of any other state, territory or country, and, while owner tliereof,* to exercise all the rights, powers and privileges of ownership. " (3) To purchase, hold, sell, assign, transfer, mortgage, pledge or otller\vi^e dispose of shares of the capital stock of any other corpora- tion or corporations, association or associations, of the state of New Jersey, or of any other state, territory or country ; and. while owner of such stock, to exercise all the rights, powers and privileges of ownership, including the right to vote thereon." [333] The Securities Company was promptly organized in pursuance of its certificate of incorporation, from which the foregoing clauses have been extracted, and very shortly thereafter the associate stockholders of the Great Northern Railway Company transferred to the Securities Company a controlling interest in the capital stock of the Great North- em Eailway Company upon an agreed basis of exchange of $180 par value of the capital stock of the Northern Securities Company for each share of the capital stock of the Great Northern Railway Company, and the associate stock- holders of the Northern Pacific Railway Company assigned and transferred to the Northern Securities Company a ma- jority of the capital stock of the Northern Pacific Railway Company upon an agreed basis of exchange of $115 par value of the capital stock of the Northern Securities Company for each share of the capital stock of the Northern Pacific Railway Company. For the stock of these railway com- panies, whether transferred as above stated, or subsequently acquired upon the same basis, and also for about $7,522,000 paid to it in cash, the Securities Company issued its stock certificates in the following form: Authorized Capital Stock, $400,000,000. No. , Shares Northern Securities Company. Incorporated and Registered Under the Laws of the State of New Jersev. This Certifies that is the registered holder of Shares of the Capital stock of the Northern Securities Company of One hundred dollars each, transferable only on the books of the company by the holder hereof, in person or by duly authorized attorney, upon surrender of this certificate. 622 134 FEDERAL BEPORTER, 333. Opiniou of the Court. This certificate shall not become valid until countersigned by the transfer agent and also bj^ the registrar of transfers. In testimony whereof, the said company has caused this certificate to l>e signed by its President and Treasurer this day of , A* IX 190—. TretfSHrcr. Cinintersigned this President. day of "■f JnL* j_^» -L«Ji.r~"« Countersigned and Registered this Transfer Agent. day of , A. D. 190-. Shares, |100 each. By Manhattan Trust Company, Registrar of Transfers. Secretary. In March, 1902, a bill was exhibited by the United States, in the Circuit Court for the District of Minnesota, against the Nortliern Securities Company, the Northern Pacific Railway Company, the Great Northern Eailway Company, James J. Hill, William P. Clough, D. Willis James, John S. Kennedy, J. Pierpont Morgan, Robert Bacon, George F. Baker, and Daniel Lamont The object of this bill was to restrain the violation of the act of Congress of July 2, 1890, c. 647, § 1, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200], en- titled "An act to protect trade and commerce against unlaw- ful restraints and monopolies," and the suit which it origi- nated was so proceeded with that in April, 1903, the said Circuit Court adjudged and decreed : " That the defendants above named have heretofore entered into a combination or conspiracy in restraint of trade and commerce among the several states, such as an act of Congress approved July 2. 1890, entitled 'An act to [334] protect trade and commerce against unlawful restraints and monoix)lies,' denounces as illegal ; that all the stock of the Northern Pacific Railway Company and all the stock of the Great Northern Railway Company now claimed to be held and owned by the defendant the Northern Securities Company was acquired and is now held by it In virtue of such combination or conspiracy in restraint of trade and commerce among the several states; that the Northern Securities Company, Its officers, agents, servants, and em- ployes, be, and they are hereby, enjoined 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 voting at any meeting of the stockliolders of either of the aforesaid railway companies, and from exercising or attempting to exercise any control, direction, suix^rvision, or influence whatsoever over the acts and doings of said railway companies, or either of them, by virtue of its holding such stock therein ; that the Northern Pacific Railway Com- jiany and the Great Northern Railway Company, their officers, direct- ors, servants, and agents, be, and they are hereby, respectively an- NORTHERN SECURITIES CO. V. HAKRIMAN. 623 Op'Dion of the Court. collectively enjoined from permitting the stock aforesaid to be voted by the Northern Securities Compauy, or in its behalf by its attorneys or agents, at any corporate election for directors or officers of either of the aforesaid railway companies, and that they, together with their officers, directors, servants, and agents, be likewise enjoined and respectively restrained from paying any dividends to the Northern Securities Company on account 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 Northern 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. ♦ * ♦ » Upon March 14, 1904, this decree was affirmed by the Supreme Court of the United States (193 U. S. 197, 24 Sup. Ct. 436, 48 L. Ed. 679), and thereupon, viz., on March 22, 1904, the board of directors of the Securities Company adopted the following preambles and resolutions: " Whereas, in the course of its business, this company has acquired and now holds 1,537,594 shares in the capital stock of the Northern Pacific Railway Company, and 1,181,242 shares in the capital stock of the Great Northern Railway Company ; and " Whereas, in a suit brought by the United States against this company, the said railway companies, and others, this company has been enjoined from voting upon the shares of either of the said rail- way companies, and each of the said railway companies has been en- joined from paying to this company any dividends upon any of the shares of such railway company, held by this company ; and " Whereas, this company has issued, and there are now outstanding, 3,954,000 shares of its own capital stock ; and " Whereas, this company desires and intends to comply with the decree in the said suit fully and unreservedly, and without delay: " Resolved, In consideration of the premises, it is declared necessary and desirable for this company so to reduce its present stock as will enable it, without delay, in connection with such reduction, to dis- tribute among its shareholders the shares of capital stock of said railway companies held by it. " Resolved, That the board of directors of this company hereby declares it advisable that article (4th) of this company's certificate of incorporation be amended, so as to read as follows : "'Fourth. — ^The capital stock of this company is hereby reduced to three million nine hundred fifty-four thousand dollars ($3,954,000). and shall hereafter be three million nine hundred and fifty-four thousand dollars ($3,954,000), divided into thirty-nine thousand five hundred forty (39,540) shares of one hundred dollars ($100) each. Such reduction of capital stock shall be accomplished by each holder of outstanding shares of this company's stock surrendering to the company, for retirement, ninety-nine (99) per centum of the [835] shares held by him. Upon the surrender to this company, by any shareholder, of the entire number of shares, and parts of shares of this company's stock, which he is hereby required to surrender, this company will assign to him, for each share so surrendered, thirty-nine dollars and twenty-seven cents ($39.27) of the stock of the Northern Pacific Railway Company, and thirty dollars and seventeen cents ($30.17) of the preferred stock of the Great Northern Railway Company, and proportional amounts thereof for fractional shares of 624 131 FEDERAL KEPORTER, 335. Opinion of tlie Court tlie stock of tliis company. The board of directors or executive committee from time to time sliall make sucli rules and regulations as It shall deem nec^e^sary or convenient for carrying out the pro- visions hereof, and all matters pertaining to the surrender and retire- ment (if the stock of this company, or to the assignment and transfer of the stocks of the said railway companies, hereby contemplated, shall l>e under me direction of the board. For the purposes hereof, the stockholders of this company, and the number of shares held by them, respectively, shall be determined from the stock transfer books of the company, which, for such determination, shall be closed at a day and hour to be determined by resolution of the board ' ** RegQlved, That a meeting of the stockholders of this companv for the i>ur|M)ge of taking action upon the said alteration of the certificate of incorporation of this company, and also upon such other business as may come before the meeting, be, and is hereby, called, to be held at the general offices of this company in the city of Hoboken, county of Hudson, and state of New Jersey, at 11 o'clock a. m. on April 21. Notice of a meeting of the stockholders of the Securities Company was accordingly given, and such meeting was duly held upon April 21, 1904. At that meeting the stock of the company was reduced 99 per centum, and the proposed pro rata distribution of the stock of the Northern Pacific Railway Company and of the preferred stock of the Great Northern Railway Company to and amongst the shareholders of the Securities Company was assented to. This was followed by the institution of the present suit, wherein the complainants alleged " that the defendant Northern Securities Company threatens and intends to distribute the shares of stock of each of said Great Northern and Northern Pacific Railway com- panies pro rata amongst its stockholders in disregard of the rights of your orators, and that, if said defendant Northern Securities Company be not enjoined from so doing by this court, such distribution will be forthwith made, and the stock of the Northern Pacific Railway Company belonging to your orators, and to which they are entitled, will be lost to your orators. » ♦ ♦ » The biU accordingly prayed for an injunction, and thereupon, and on affidavits and exhibits, the injunction now in question was awarded. The appellees averred in their bill, and their counsel have contended in argument, that the shares of railway stock in question were acquired by the Securities Company under and subject to an alleged agreement (which will be presently more particularly referred to) that it would hold them " as custodian, depositary, or trustee," and that the " legal and equitable owners of said shares of stock of said railway com- NOKTHEEN SECUBITIES CO. V. HARRIMAN. 625 Opinion of the Court. panics were and are the several parties who originally ex- changed the same for stock of the Northern Securities Com- pany, or their assigns." On the other hand, the appellant, the Securities Company, insists that it acquired the railway shares referred to by absolute purchase thereof, and that con- sequently it became and now is vested with the equitable as well as the legal title thereto. The issue thus presented is of primary importance, and the proofs leave us in no doubt as to the facts upon which it must be determined. That the transaction, at least in [336] form, and prima facie in sub- stance, was one of purchase and sale, is manifest. The reso- lution which authorized the acquisition of the railway stock on behalf of the Securities Company was adopted by its board of directors at a meeting at which Mr. Harriman was present as a member of the board, and the only authority it conferred was " to purchase said stock * * * at an ag- gregate price of $91,407,500, payable, as to $82,491,871 thereof, in the fully paid-up and nonassessable shares of the capital stock of this company at par, and as to $8,915,629 in cash." It is obvious that this resolution contemplated a " purchase," and not a bailment or trust ; and that it accuratelv stated the nature and terms of the contract which was actually made by and with the Securities Company is unequivocally shown by what was done in pursuance of it. The railway shares were unconditionally assigned to that company. The price speci- fied in the resolution was paid by it, and this payment was made partly in cash and partly in shares of its own stock, for which corporate certificates in the ordinary form were delivered and accepted. The cash so paid, which amounted to about $7,522,000, was (as is stated in the bill) " used for the purchase of other property and for corporate purposes." The complainants received dividends upon the stock that was issued to them, which were paid out of the general fimds of the Securities Company; and by its indenture to the Equita- ble Trust Company of New -York the Oregon Short Line Railroad Company irrefutably asserted its ownership of the Securities Company stock which it thereby pledged. It is claimed, however, that notwithstanding these facts the bene- ficial interest in the railwav stock was not transferred to the 21220— VOL 2—07 m- ■40 626 134 FEDERMi BEPOBTEB, 336. Opinion of the Court. Securities Company, because, as the appellees allege, the transfer was made under the terms of an agreement which they say was made by James J. Hill, J. Pierpont Morgan, and others, owning or controlling a majority of the capital stock of the Great Northern Railway Company, and a majority of the common capital stock of the Northern Pacific Railway Company, " to organize a holding company, * ♦ ♦ and that said holding company should acquire and permanently hold a majority of the shares of the capital stock of said Great Northern and Northern Pacific Companies, and control the operations and management thereof in perpetuity, and that the then existing holders of such railway shares should deposit the same with said holding company;" and that "in pursuance of said agreement said Northern Securities Com- pany was organized, ♦ * * and forthwith agreed to ac- quire and hold the shares of said railway stocks, as aforesaid, as custodian, depositary, or trustee, and to issue in exchange therefor its own share certificates upon said agreed basis." The agreement thus set up is not in accord with the docu- mentary evidence which has been referred to, and to establish its existence a clear preponderance of proof should at least be required, whereas, in our opinion, it conclusively appears that no such agreement was ever made. Mr. Harriman him- self has distinctly testified that the Northern Pacific stock in question was sold ; that the transaction was not an exchange ; . that he, principally, negotiated the sale; and that there was not attached to the negotiations any condition except as to price. And to the same effect is his affidavit in this case, in which he deposed that he was urged by Messrs. Morgan & Co. to dispose of the Northern Pacific stock held by [337] the Oregon Short Line Company, and that " they further stated that, upon the organization of the proposed holding com- pany," not that it would take as custodian or trustee, but that " they would be prepared to purchase the holdings of stock of the Northern Pacific owned by the Oregon Short Line, and pay therefor in the stock of the holding company." These statements of that one of the complainants having most knowledge of the subject, confirmed, as they are, by the other evidence, make it quite impossible to believe that the railway stock was received by the Securities Company merely as a NORTHERN SECURITIES CO. V. HARRIMAN. Opinion of tbe Court 627 custodian or depositary. The only agreement upon which it was transferred was an unqualified agreement of sale, and the fact that the design with which the Securities Company was organized has been compulsorily abandoned has not divested or in any way affected the absolute title which, by executed contract of purchase, it acquired. Undoubtedly, it was an- ticipated by the complainants, as by all concerned, that the rights ordinarily incident to the ownership of stock, includ- ing the right to vote and to receive dividends, would be exer- cisable as to this stock by the Securities Company. But expectation is not contract, and therefore the frustration of this anticipation cannot be said to have occasioned a failure of consideration. The only consideration agreed upon was pay- ment of the price, and admittedly that payment was made. The situation, then, is this: The Northern Securities Com- pany is the owner of 1,537,594 shares of the stock of the Northern Pacific Railway Company, and 1,181,242 shares of the stock of the Great Northern Railway Company, which it has been restrained, at the suit of the United States, from voting or receiving dividends upon, and in view of this re- straint all parties agree that it should not continue to hold them. It accordingly proposes to assign them pro rata to its shareholders, including not less than 2,500 persons, whose shares were unquestionably acquired by purchase, and who are not parties to this suit; and as such disposition of them would effect a ratable, and therefore equitable, division of them amongst all who are entitled to participate in a distri- bution of the corporate assets, we are of opinion that the injunction which prohibited it should no longer remain in force. If the question before us had been involved and decided in the suit of the United States v. The Northern Securities Company^ or if it had been passed upon, though but inci- dentally, by the Supreme Court of the United States in dis- posing of the appeal in that case, we, of course, would not regard it as an open one. But it was neither decided nor considered at any stage of that litigation. The petition or bill of the United States did pray, inter alia, that the stock- holders of the railroad companies who had exchanged their stock therein for stock of the Northern Securities Company 628 134 FEDERAL RBPORTEB, 337. Opinion of the Court- should be required to surrender any stock of the Northern Securities Company so acquired and held by them, and to accept therefor the railway stock " in exchange for which the same was issued;" but the decree, in so far as it was man- datory, went no further than to prohibit the doing of " the specific things which, being done, would effect the result de- nounced by the act." 193 U. S. 356, 24 Sup. Ct. 466, 48 L. Ed. 679. This was all that was requisite, and it was accom- plished by that part of the decree which has been already quoted; and the added clause, though apparently suggested [338] by the prayer of the bill to which we have referred, was obviously not intended to have any obligatory effect. It was permissive merely, and this so plainly appears from its terms that it is necessary only to direct attention to them. They are: "But nothing herein contained shall be con- strued as prohibiting the Northern Securities Company from returning and transferring to the stockholders of the North- em Pacific Eailway Company and the Great Northern Eail- way Company, respectively, any and all shares of stock in either of said railway companies which said the Northern Securities Company may have heretofore received from such stockholders in exchange for its own stock; and nothing herein contained shall be construed as prohibiting the North- em Securities Company from making such transfer and assignment of the stock aforesaid to such person or persons as may now be the holders and owners of its own stock origi- nally issued in exchange or in payment for the stock claimed to have been acquired by it in the aforesaid railway com- panies." This decree was affirmed in its entirety, and with- out modification, and thereafter the three principal com- plainants in the present case applied to the Circuit Court for the District of Minnesota for leave to intervene in the suit in which it had been made. The ground of that application was substantially the same as that upon which this bill is founded ; but in denying it the court said : ••The decree was wholly prohibitory. It enjoined the doing of certain threatened acts, and so long as these acts are not done it en- forces itself, and no further action looking to its enforcement is deemed essential. In its bill of complaint the United States prayed, among other things, for a mandatory injunction against the Securities Company requiring it to recall and cancel the certificates of stock which it bad issued and to surrender the stock of the two railway com- NORTHERN SECURITIES CO. V, HARRIMAN. Opinion of the Court. 629 panics in exchange for which its stock had been issued. This prayer for relief was denied. The court doubted its ix>wer to command stockholders of the Securities Company, who had not been served with process, and were not before the court otherwise than by representa- tion (if, indeed, they were present by representation), to surrender stock which was in their possession and to take other stock in lieu thereof. It accordingly contented itself with an order which rendered the stuck of the two railway companies, so long as it was in the hands of the Securities Company, valueless for the purpose of carrying out the objects of the unlawful combination in restraint of interstate trade. The government was satisfied with the relief which it ob- tained, and expresses itself as fully satisfied therewith at the present time. ♦ * * It is true that the decree contained a provision, in substance, that nothing therein contained should be construed as pro- hibiting the Securities Company from returning to the stockholders of the Northern Pacific Railway Company and the Great Northern Railway Company any and all shares of stock in either of said rail- way companies which the Northern Securities Company had acquired in exchange for its own stock, and that nothing therein contained should be construed as prohibiting the Securities Company from mak- ing such transfer of the stock aforesaid to such person or persons as had become the owners of its own stock originally issued in exchange for stock in the two railway companies. But this provision was merely permissive. It did not command that the stock should be returned, or exclude other methods of disposing of it that, in view of all the circumstances, might appear to be more equitable. The fact that the directors of the Securities Company have proposed to its stockholders a plan of distributing the stock of the two railway com- panies in a manner somewhat different from that which was tenta- tively suggested by the decree, but not commanded, cannot be regarded as a failure to obey the decree. It was said in argument that one purpose of the intervention is to have that clause of the decree which is now merely permissive made mandatory. But this would be to modify the provisions of a decree which has now become final by aflirmance, and make an order which we ex- [SSg] pressly. and on full consideration, declined to make when the decree was entered. This we must decline to do." The facts which have been mentioned negative the con- tention that the question here in dispute was adjudicated in the government suit, and the further contention that it was at least authoritatively dealt with in the principal opinion rendered upon the appeal in that case is, we think, likewise fallacious. Some phrases in that opinion, if considered separately, and without reference to the precise subject which was under investigation, may seem to sanction the interpreta- tion which the appellees have sought to put upon it; but when it is read as a whole it becomes quite evident that it was not intended to resolve any question other than that which was before the court. The decree that was under re- view had enjoined the Securities Company from using the railway shares in furtherance of the scheme declared to be 630 134 FEDERAL REPOBTEB, 339. Opinion of the Court unlawful, but, as we have seen, the right of property in those shares was not at all affected by that decree. •*The Circuit Court bas done only what the actual situation de- manded. Its decree has done nothing more than to meet the re- quirements of the statute. It could not have done less without de- claring its Imporency 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 corporation, as the instrument of an illegal combina- tion of which it was the master spirit, to do that which, if done would restrain interstate and international commerce. The exer- cise of that power being restrained, the object of Congress will be accomplished; left undisturbed, the act in question will be valueless for any practical purpose." 11)3 U. S. 357, 21 Sup. Ct. 405, 48 L. Ed. 679. We have been asked to infer from this statement in the opinion that the learned justice who made it intended to af- firm that the property interests of the original holders of the railway shares had not been transmuted by their assignment; but no such inference would be warranted. He was not dealing with conflicting claims of title, but with the decree of the Circuit Court; and the plain and natural meaning of the language used is that by that decree no property interests had been disturbed. As was said by the learned judges who made it : " When the decree was entered it was assumed by the court that when the stock was thus rendered valueless in the hands of th* Securities Company the stockholders of that companv would be able, and likewise disposed, to make some disposition of the stock which under all the circtunstances of the case, would be fair and just, and would restore it to the markets of the world, where it would have some value, instead of being n worthless commodity. It was thought that the duty of thus disposing of it could be safelv left to the stockholders of the Securities Company, and that, if any controversy arose in the discharge of this function, in view of the situation that had been created by the decree, it would be a controversv that would proi)erly form the subject-matter of an independent siiit l)e- tween the parties immediately interested." The present suit is an independent one, and, as its subject- matter is distinctly different from that of the suit in which the United States was complainant, the duty of this court to independently consider it has seemed to us to be both plain and imperative. The conclusions reached upon the questions we have dis- cussed render it unnecessary for us to express any opinion upon the other points argued by counsel. From what has been said it follows that the decree of the Circuit Court must be reversed, and therefore it is so ordered. NORTHEBN SECURITIES CO. V. HARRIMAN. 631 Gray, J., dissenting. [340] Gray, Circuit Judge (dissenting). I am constrained to dissent from the judgment of the majority of the court. I do not think the learned judge of the court below exercised other than a sound judicial discre- tion in granting the motion for a special injunction, pen- dente lite. He has stated in his opinion that important and doubtful questions of law and fact had been raised by the pleadings and affidavits, and I cannot agree that these questions should have been so determined by him on a motion for a preliminary injunction, as to make necessary the dismissal of the bill. I say, to make necessary the dismissal of the bill, because it is apparent that, to have denied the in- junction pendente lite, and thus to have permitted the dis- tribution of the stocks of the Northern Pacific and Great Northern, in the custody and control of the defendant com- pany, according to the plan proposed, would have practically frustrated the object of the suit, and have rendered unavail- ing a decree, as prayed for, in favor of complainants. Noth- ing but a clear conviction that complainant's bill was with- out equity, and should therefore be dismissed without further hearing, would have justified the court below in refusing the preliminary injunction. On the other hand, if the court were satisfied that a prima facie case had been presented by complainants, and that the balance of advantage or disad- vantage to result to the parties respectively from the granting or withholding an injunction was such as to sanction such action, it was the exercise of a sound judicial discretion to grant the injunction and preserve the status quo, until there was opportunity, after full hearing, in the orderly progress of the suit, to consider, with the deliberation they demanded, the questions of law and fact raised by the pleadings and evidence in the case. The responsibility for the exercise of this power and duty rested upon the court below. Upon appeal from an order granting a preliminary in- junction, a reviewing court is not called upon, ordinarily, to enter into and decide the merits of the case, and unless the court below, in granting the preliminary injunction, has .violated some rule of equity or abused its discretion, or acted iinprovidently, this court should not interfere with 632 134 FEDERAL BEPORTER, 340. Gray, J., dissenting. its discharge of the responsibility and duty imposed upon it. "The right to exercise this discretion has been vei?ted in the trial courts. It has not been granted to the appellate courts, and the question for them to determine is, not how they xvould have exercised this discretion, but whether or not the courts below have exercised it so carelessly or un- reasonably that they have passed, l^yond the wide latitude permitted them, and violated the rules of law which should have guided their action." That there was no such abuse of discretion in this case by the learned judge of the court below, will, I think, be apparent from his own statement, and from the admission made to that effect by the majority of the court. It seems to me clear that he should be afforded the untrammeled opportunity he sought, for a full hearing and deliberate investigation of what he has stated to be the important and doubtful questions of law and fact pre- sented by this record. Such a course would be consonant with the genius of our judicial system, by not depriving the parties, or a reviewing court, of the benefit to result from the examination and judgment of a court of first instance. This salutary feature of our system would be measurably lost, if the right to appeal from an interlocutory [Ul] de- cree for a special injunction, given by the act of Congress, should l>e so construed as to allow courts of first instance to refer, and the api>ellate opurts to assume, the determina- tion of questions arising on motions for such injunctions. I cannot accept the view, that it is our duty in the case at bar to do more than merely determine whether the sound judicial discretion of the court below has or has not been abused, declining to consider what ought to be the decision on the merits at final hearing. I do not think that the es- tablished general rule of appellate courts requires more than this, and I think we can conform to this general rule " without in effect renouncing the appellate jurisdiction con- ferred upon us by Congress." As I am clearly of the opinion that the court below, in granting the special injunction, pendente lite, has given due consideration and effect to the balance of inconvenience and injury which may result to one party or the other, and that the prima facie case was sufficiently established at the hearing RICE V, STANDARD OIL CO. 633 Opinion of the Court to entitle the complainants to the protection of such an in- junction, I am in favor of affirming the interlocutory de- cree* [464] EICE V. STANDAED OIL CO. (Circuit Court, D. New Jersey. January 6, 1905.) L134 Fed., 464.] Monopolies — Action for Violation of Anti-Tbust Act — ^Pleading. — Section 1 of tlie Slierman anti-trust act (Act July 2, 1890, c. 647, 26 Stat 209 [U. S. Comp. St 1901, p. 3200]), which declares illegal "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," makes a distinction between a contract and a combination or conspiracy in restraint of trade, and a declaration in a suit based on section 7 (26 §tat 210 [U. S. Comp. *St. 1901, p. 3202] ) to recover damages resulting to plaintiff from a violation of such provision, which alleges in a single count that defendant entered into a "contract, combination, and con- spiracy " in restraint of trade, is bad for duplicity.^ [465] Same. — A declaration in an action brought under section 7 of the Sherman anti- trust act (Act July 2, 1890, c. 647, 26 Stat 210 [U. S. Comp. St 1901, p. 3202] ) to recover damages for a violation of section 1 of the act, construed, and held bad for indefinitenesa and uncertainty in describing the alleged combination and con- spiracy entered into by defendant and the acts done which resulted in damage to plaintiff. At Law. On motion to strike out declaration. Charles W, Fuller and R, V, Lindabury^ for the motion. Charles E, Hendrickson^ Jr.^ and John Griifln^ opposed. Lanning, District Judge. This matter comes before the court on a motion to strike out the plaintiff's declaration on the ground that it is irregu- lar and defective, and so framed as to prejudice, embarrass, and delay a fair trial of the action. Such procedure is war- ranted by section 110 of the New Jersey practice act (P. L. 1903, p. 569). The cause of action set forth in the declara- « Syllabus copyrighted, 1905, by West Publishing Co. 634 134 FEDEBAL BEPORTEB, 465. Opiniou of the Court. tion is supposed to be created by section 7 of the Sherman anti-trust act, entitled "An act to protect trade and commerce against unlawful restraints and monopolies," approved July 2, ISm Act July 2, 1890, c. 647, 26 Stat. 210 [U. S. Comp. St. 1901, p. 3202]. That section is as follows: "Any person who shall be injnreil 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 re- sides 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." Amongst the things by the act declared to be unlawful are those mentioned in its first section (26 Stat. 209 [U. S. Comp. St. 1901, p. 3200] )j which is as follows : ** Every contract, combhiation 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 com- bination 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." It is apparent that mere proof that the defendant has entered into a contract or engaged in a combination or con- spiracy in restraint of trade or commerce among the several states 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 has, by reason thereof, sustained damage. In his declaration, therefore, the plaintiff • must aver not only facts showing such a contract or combination or conspiracy as is declared by the act to be unlawful, but facts showing that by reason of such unlawful thing he has been injured in his business or property. It is further apparent that the act makes a distinction be- tween a contract and a combination or conspiracy. In his dissenting opinion in Northern Securities Co. v. United States, 193 U. S. 197, Mr. Justice Holmes, after quoting the words of the first section of the act, at page [466] 403, 24 Sup. Ct. 436, page 469, 48 L. Ed. 679, said : " The words hit two classes of cases, and only two — contracts in restraint of trade, and combinations or conspiracies in restraint of trade." Each of these things the act condemns as an unlaw- BICE V. STANDASO OIL CO. 685 Opinion of the Court. ful thing. They are not confused in the act, but are men- tioned as distinct offenses. Good pleading, whether it be in an indictment in a criminal proceeding or in a declaration in a civil suit, requires the same distinction to be observed. If in a single count in an indictment 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. Compare United States v. Cadwallader (D. C.) 59 Fed. 677. So, in a declaration in a civil suit the confusion of the two con- demned things in one count must likewise be irregular and defective for duplicity. In one count there may be a charge of an unlawful contract, and in another a charge of an un- lawful combination or conspiracy, but the two unlawful things cannot be declared upon as synonymous terms and charged in a single count. In the declaration now before me the plaintiff sets forth by way of inducement that from 1876 to 1904 he was a refiner of crude petroleum, and a manufacturer of the re- fined products of crude petroleum ; was engaged in trade and commerce among the several states of the United States, sell- ing his manufactured products refined by him from crude petroleum to tlie citizens of Mississippi and Louisiana, and a large number of other states specifically named, at prices profitable to him, and shipping the same to his customers m those states from his refinery at Marietta, Ohio, by certain common carriers, namely, the Cincinnati, Washington & Bal- timore Eailroad Company, and a large number of other railroad companies specifically named, and was lawfully en- titled to ship and deliver his products to his customers over the railroads of these common carriers for a reasonable fee or reward to be paid by him or his customers to these com- mon carriers ; that More, Cox & Lee, of Columbus, Miss., and Richard M. Ong, of New Orleans, La., and 4.000 other per- sons in the various states named, became and were his cus- tomers of products shipped over the railroads of the com- mon carriers specifically named, and that he had made con- tracts with his customers yielding him a profit of $50,000 per year, which they would have continued except for the 636 134 FEDERAL BEPORTER, 466. Opinion of the Court. wrongful acts and misconduct of the defendant and its asso- ciatas; that he was possessed of a plant, refinery, and busi- ness of the value of seven hundred and 6% thousand dol- lars; that on January 2, 1882, the individuals, firms, and cor- porations mentioned in a certain written contract annexed to the declaration, and forming part thereof, and marked " Schedule A," were engaged in lawful competition with the plaintiff and among themselves in the same line of business as that carried on by the plaintiff; that, in order that a com- bination of these individuals, firms, and corporations might be fonned to put an end to competition and injure and destroy the plaintiff's business and the business of others engaged in the same line throughout the United States, and drive the plaintiff and others out of competition with them, and unlawfully secure for themselves the customers who theretofore had traded or might thereafter trade with the plaintiff and others, those individuals, firms, and corporations en- [467] tered into the above-mentioned contract; and that on January 4, 1882, they entered into a further written con- tract supplemental to the contract of January 2, 1882, which supplemental contract is also annexed to the declaration as a part thereof, and marked " Schedule B." The plaintiff then avers that in pursuance of these two contracts, and as a part of the scheme of the individuals, firais, and corporations mentioned in them, the defendant, on August 1, 1882, was incorporated under the laws of the state of New Jersey with a capital of $3,000,000, under the name " Standard Oil Com- pany of New Jersey ;" that on June 14, 1889, the name of the company was changed to " Standard Oil Company," and its capital stock increased to $110,000,000 ; and that the defend- ant, from the date of its said incorporation down to the time of the commencement of this suit, joined and co-operated with the several individuals, firms, and corporations men- tioned in the two contracts in a general plan or scheme to destroy the plaintiff's business, to render his plant worthless, to secure for themselves his customers, and to destroy compe- tition and create a monopoly " by the actings and doings and in manner and form as hereinafter stated." The first series of averments concerning these "actings BICE V. STANDARD OIL CO. Opinion of the Court. 637 and doings," which, for convenience of reference, I have designated by numbers, is as follows: "(1) On tlie 4th day of August, 1882, at Trenton, in said district, the defendant entered into and became a party to said two con- tracts aforesaid, which said contracts were and are in restraint of trade and commerce among the several states of the United States; and (2) likewise, to wit, on the day and year last aforesaid, at Trenton, aforesaid, entered into a combination in the form of a trust and conspiracy in restraint of trade and commerce among the sev- eral states of the United States with respect to business of the char- acter of the plaintiff's aforesaid; and (3) pursuant to the true intent and purpose of said contracts, combination and conspiracy, together with the other persons, parties to said agreement, from the day and year last aforesaid, continuously, day by day, down to the day of the commencement of this suit, did, together with other persons, par- ties to said agreements hereto annexed as ScI: Jules A and B, con- spire with, coerce, intimidate, and induce the above-named common carriers (4) to discriminate against the plaintiff in the matter of freight or carriage charges, (5) and to charge the said plaintiff and his customers unreasonable, excessive, and exorbitant sums of money as fee or reward for the carriage and delivery of the plaintiff's prod- ucts aforesaid to the customers of the plaintiff aforesaid, to wit, from fifty per cent, to three hundred and thirty-three per cent, more than reasonable fee or reward for such carriage and delivery, and to discriminate in favor of defendant and its associates aforesaid by charging said defendant and associates for like carriage and delivery unreasonably small sums, considerably less than proper charges as fees or rewards to be paid in that behalf by the said defendant and its associates aforesaid to the common carriers aforesaid. (6) and to charge the said plaintiff from fifty per cent, to three hundred and thirty-three per cent, more for freight or carriage charges for trans- porting the same amount of the plaintiff's refined oils the same dis- tance to the same points and under the same conditions as charged the said defendant and its associates aforesaid; and (7) in many cases causing and compelling [grammatically, the language should evidently be "to cause- and compel "] said common carriers to pay to said defendant and its associates aforesaid the excess of freight charges charged the plaintiff over and above the rate charged the defendant and associates aforesaid, or some part thereof, thereby tak- ing from the plaintiff his money to enable said defendant to oppress and injure the plaintiff in other ways, and to enable the said defend- ant and its associates aforesaid to recoup the losses, or some part thereof, sustained by it and them by reason of its and their selling oil like the [468] plaintiff's at prices netting a loss for the purpose of destroying the plaintiff's market for his oils and the value of oil in the plaintiff's market as hereinafter stated." These averments, in my judgment, are bad for duplicity and uncertainty. The first clause relates exclusively to the two contracts, copies of which are annexed to the declaration. The second clause relates to what is called " a combination in the form of a trust and conspiracy." In the third clause it is averred that " pursuant to the true intent and purpose of said contracts, combination, and conspiracy " the defend- ant did certain things to the injury of the plaintiff. Here 638 134 FEDERAL KEPORTER, 468. Opinion of the Court RICE V, STANDARD OIL CO. 639 the pleader makes the two distinct offenses condemned by the act the basis of his complaint. This contravenes the rule which forbids duplicity in pleading. But the averments are also bad for indefiniteness and uncertainty. The third clause, particularly, is badly framed. It avers that the de- fendant, with other persons, did " conspire with, coerce, in- timidate, and induce the above-named conmion carriers " to do the acts mentioned in the fourth, fifth, sixth, and seventh clauses. As the conspiracy, coercion, intimidation, and in-: ducement are declai-ed to have been pursuant to the true intent and purpose of the contracts, combination, and con- spiracy mentioned in the first and second clauses, the fourth, fifth, sixth, and seventh clauses must be held to relate, not to an additional conspiracy, but to acts done to give effect to the contracts, combination, and conspiracy mentioned in the first and second clauses, and thus to injure the plain- tiff in his business or property. When so read, we find that we have no information concerning the combination and conspiracy mentioned in the second clause, except that the combination is in the form of a trust, and that the combina- tion and conspiracy are in restraint of trade. When they were formed, or how, or by whom, or for what purpose, is not stated. The defendant cannot be required to plead to m¥erments that are so general and indefinite. The fourth clause is to the effect that one of the acts done was " to dis- criminate against the plaintiff in the matter of freight or carriage charges." This also is too general and indefinite to comply with the rules of good pleading. The fifth clause, which relates to alleged unreasonable freight rates charged against the plaintiff and his customers, is necessarilv defect- ive because of its connection with the preceding^ clauses. Whether it is further defective because it states none of the customers of the plaintiff against whom unreasonable charges were made, or because no facts are stated tending to show what would be reasonable rates, are questions that need not now be considered. The great difficulty, if not impossibility, of formulating a rule which shall govern in the matter of determining what are reasonable mtes for transportation was conmiented on in United States v. Freight Association^ 166 U. S., at pages 331 and 332, 17 Sup. Ct. 540, 41 L. Ed. 1007. Opinion of the Court Possibly, the sixth clause might stand if the clauses with which it is connected were not defective. The seventh clause is too indefinite, because it relates to " many cases " in which it is said that conunon carriers were compelled to pay to the defendant and its associates the excess of freight charges collected from the plaintiff, without the averment of any fact tending to show when, where, with whom, or in what circumstances any such case arose. The next averment in the declaration is as follows: [469] "And the said defendant and its associates aforesaid did also conspire with, cause and compel the railroads and other common car- riers aforesaid and their employes to harass the plaintiff in his busi- ness by delaying to furnish cars and to promptly ship the plaintiff's oil sold by the plaintiff to his customers." This averment deals with a conspiracy separate and dis- tinct from that alleged in the preceding averment,^. There is no mention of any time when the alleged conspiracy was entered into, or when the alleged acts were done. The de- fendant's counsel have argued that it should be read in con- nection with the preceding averments, and that it must be understood to relate to the time which in the preceding aver- ment is said to have been " from the day and year last afore- said continuously, day by day, down to the day of the com- mencement of this suit." But the language employed will not permit such a reading. The same thing is true of each of the succeeding averments concerning alleged conspiracies. Other defects appear in the conspiracy averments. For ex- ample, it is said that the defendant conspired with the other persons, parties to the two agreements above mentioned, to cause the plaintiff's customers to cease purchasing his oil by furnishing oil like the plaintiff's product "to other dealers in localities where the plaintiff was selling oil to his customers at prices netting a loss to said defendant and its associates." But no dealer or locality is named where oil was thus supplied by the defendant, notwithstanding, if the averment be true, the plaintiff must have knowledge as to who the dealers were and as to the localities in which those dealers carried on their business. Another averment is that : " The said defendant and its associates aforesaid also, in pursuance of said conspiracy, sought out and sold oil to the plaintiff's customers 640 134 FEDEBAL REPOKTEB, 469. Opinion of tlie Oonrt at prices less than cost, while keeping the price of oil to the defend- ant's and its said associates' customers in the same localities up to prices showing large net profits on sales, which facts were unknown to the customers of defendant and its associates aforesaid, thereby causing the plaintlfTs customers to leave the plaintiff, and trade with the defendant and its associates aforesaid." But the plaintiff fails to name any of his customers who were thus sought out or to whom oil was sold at prices less than cost. Another averment is that in further i)ursuance of the alleged conspiracy the defendant did " intimidate the customers of the plaintiff by threatening to boycott them in their business if they purchased oil of the plaintiff." But the plaintiff fails to name any of his customers who were thus intimidated. The next two averments are to the effect that the defendant and its associates " did also operate retail stores for the sale of groceries, oil, and other commodities in localities where retailers banded together and agreed to purchase and did purchase oil of the plaintiff, for the pur- pose of injuring such retailers and customers of the plaintiff by destroying their grocery or other business so long as they should buy oil of the plaintiff," and that they also sold gro- ceries and merchandise " to the customers of the plaintiff's customers at such ruinous prices as to threaten ruin and loss to the plaintiff's customers." But the plaintiff fails to name any of his customers who were thus affected. Another aver- ment is that the defendant and its associates " bribed and bought out the plaintiff's sales agents, and caused the plain- tiff's agents [470] and employes to betray the trust confided to them by the plaintiff in his said business, and to wrong- fully abandon the plaintiff's service and disregard their duty to the plaintiff in the course of his business." But none of the plaintiff's agents thus alleged to have been bribed or to have betrayed their trust is named. The next averment is that the "defendant and its associates intimidated mer- chants and others engaged in the business of selling oil in various markets, and thus prevented such merchants and others from purchasing and dealing in oil manufactured by the plaintiff." The plaintiff has failed to name any mer- chant or other person thus intimidated, or what the acts of intimidation were, or any of the markets in which such prac- tice was carried on. The last averment is that the defendant SWIFT AND COMPANY V. UNITED STATES. 641 Syllabus. and its associates "hampered the plaintiff in getting ih^ necessary supplies of crude oil, and made the said crude oil more expensive to the plaintiff, and hampered, delayed, and made more expensive ih^ work of the plaintiff in the con- struction of the pipe line for his use." But there is no averment as to the manner in which the defendant and its associates thus hampered, delayed, or injured the plaintiff. It seems to me clear that the averments in the declaration are too vague to give to the defendant the information to which it is entitled before being required to plead. A decla- ration which was much less indefinite than the one Defore me was, in the ease of Minnuci v. Philadelphia dj Reading R, R. Co,, 68 N. J. Law, 432, 53 Atl. 229, declared to be one which would have been stricken out on motion for that pur- pose. The same thing was true of the declaration in the case of Race v. Easton ct' Amhoy R. R. Co,. 62 N. J. Law, 536, 41 Atl. 710. See, also, Ackeimian v. Shelp, 8 N. J. Law, 125; Stephens d; Condit Trans p. Co, v. Central R. R. Co,, 34 n! J. Law, 280. In my opinion, the motion to strike out the declaration must be granted, and an order to that effect will be signed. [376] SWIFT AND COMPANY v, UNITED STATES.- APPEAL FROM THE CIRCUIT COURT OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS. No. 103. Argued January 6, 7, 1905.— Decided January 30, 1905. [39G U. S., 375.] A combination of a dominant proportion of the dealers in fresh meat throughout the United States, not to bid against, or only in con- junction ^^ ith, each other in order to regulate prices in and induce shipments to the live stock markets in other States, to restrict ship- ments, establish uniform rules of credit, make uniform and im- proper rules of cartage, and to get less than lawful rates from rail- roads to the exclusion of competitors with intent to monopolize commerce among the States, Is an illegal combination within the meaning and prohibition of the act of July 2, 1890, 26 Stat. 209, and can be restrained and en joined in an action by the United States! a Demurrer overruled and preliminary injunction" ^^ted by the Circuit Court (122 Fed., 529). See p. 237. 21220— VOL 2—07 m 41 196 UI^ITED STATES BEPORTS, 375. SylKibus. It does not matter that a eombiDation of this nature embraces re- straint and monopoly of trade within a single State if it also em- braces and is directed against commerce among the States. More- over the effect of such a combination upon interstate commerce Is direct and not accidental, secondary or remote as in United States V. E. C. Knight Co., 156 U. S. 1. Even if the separate elements of such a scheme are lawful, when they are bound together by a common intent as parts of an unlaw- ful scheme to monopolize interstate commerce the plan may make the parts unlawful. When cattle are sent for sale from a place in one State, with the expectation [876] they will end their transit, after purchase, in another State, and when in effect they do so, with only the interrup- tion necessary to find a purchaser at the stock yards, and when this is a constantly recurring course, it constitutes Interstate commerce and the purchase of the cattle is an incident of such commerce. A bill in equity, and the demurrer thereto, are neither of them to be read and constnied strictly as an indictment but are to be taken to mean what they fairly convey to a dispassionate reader by a fairly exact use of English speech.« [49 L. ed., 518.] 6 [A general allegation of intent may color and apply to all the spe- cific charges of a bill which seeks relief against alleged violations of the act of July 2, 1890 (26 Stat L., 209, chap. 647, U. S. Comp. Stat, 1901, p. 3200), to protect trade and commerce against unlaw- ful restraints and monopolies.] [A bill charges a violation of the act of July 2, 1890 (26 Stat L., 209, chap. 64T, TJ. S. Comp. Stat, 1901, p. 3200), to protect trade and commerce against unlawful restraints and monopolies, as against the objections of want of equity, multifariousness, and failure to set forth sufficient definite or specific facts, where it avers the ex- istence of a combination of a dominant proportion of the dealers in fresh meat throughout the United States not to bid against each other In the live-stock markets of the different states, to bid upP prices for a few days in order to Induce shipments to the stock yards, to fix selling prices, and to that end to restrict shipments of meat when necessary, to establish a uniform rule of credit to dealers, and to keep a black list, to make uniform and improper charges for cartage, and to secure less than lawful freight rates, to the exclusion of competitors.] ffl The foregoing syllabus and the abstracts of arguments copyrighted, 1905, by The Banks Law Publishing Ck>. z>The following paragraphs inclosed In brackets comprise the sylla- bus to this case in the U. S. Supreme Court Reports, Book 49, p. 518. Copyrighted, 1904, 1905, by The Lawyers* Oo-Operatlve Publishing Co. SWIFT AND COMPANY V, UNITED STATES. 643 Syllabus. [A combination of independent meat dealers. In aid of an attempt to monopolize commerce in fresh meat among the states, to restrict the competition of their respective agents when purchasing stock for them in the stock yards, is an interference with interstate com- merce, forbidden by the act of July 2, 1890 (26 Stat L., 209, chap. 647, U. S. Comp. Stat, 1901, p. 3200), to protect trade and com- merce against unlawful restraints and monopolies, where such deal- ers and their slaughtering establishments are largely in different states from those of the stock yards, and the sellers of the cattie largely in different states from either.] [Trade in fresh meat is sufficiently shown to be commerce among the states, protected from restraint by the act of July 2, 1890 (26 Stat L., 209, chap. 647, U. S. Comp. Stat, 1901, p. 3200), by allegations in a bill charging meat dealers with violations of that act which, even if they import a technical passage of title at the slaughtering places in cases of sales, also import that the sales are to persons in other states, and that the shipments to other states are pursuant to such sales, and by allegations charging sales of such meat by their agents in other states, which indicate that some, at least of the sales were in the original packages.] [Vagueness can not be asserted of a charge in a bill seeking relief against an attempt to monopolize commerce in fresh meat among the states, in violation of the act of July 2, 1890 (26 Stat L., 209, chap. 647, U. S. Comp. Stat, 1901, p. 3200), that a combination ex- ists among independent meat dealers to restrain their respective agents from bidding against each other when purchasing live stock for them in the stock yards.] [Interstate commerce is unlawfully restrained, in violation of the act of July 2, 1890 (26 Stat L., 209, chap. 647, U. S. Comp. Stat, 1901, p. 3200), by a combination of independent meat dealers, in aid of an attempt to monopolize commerce in fresh meat among the states to bid up prices for live stock for a few days at a time, in order to Induce cattle men in other states to make large shipments to the stock yards, or by a combination for the same purpose to fix the selling price of fresh meat, and to that end to restrict shipments when necessary, to establish a uniform rule of credit to dealers and to keep a black list, or by a combination in aid of such purpose to make uniform and improper charges for cartage for the delivery of meat sold to be shipped to dealers and consumers in the several states.] [A combination to secure less than lawful freight rates, entered Into by independent meat dealers with the intent to monopolize com- merce in fresh meat among the several states, is forbidden by the act of July 2, 1890 (26 Stat L., 209, chap. 647, U. S. Comp. Stat, 1901, p. 3200), to protect trade and commerce against unlawful restraints and monopolies.] 644 196 UNITED STATES BEPORTS, 376. Ai'pinient for :ii>iiel hints. The facts are stated in the opinion. Mr. John S. Miller^ with whom Mr. Merritt Starr was on the brief, for appellants: The charges in each of the paragraphs or counts of the bill or petition of alleged violations of the Sherman Act are, respectively, mere statements of legal conclusions. Each is bad on demuri-er for that reason. These charges would be bad on that ground, even in an indictment under this act. In re Greene, 52 Fed. Kep. 104; United States v. Crmksh(nil\ 02 U. S. 542, 503; United States V. Shnmons, JKi (T. S. m>0; Uiut(ul Sfatrs v. rarIL 105 U. S. fill; Unitrd States v. BrittoiK 107 U. 8. 655; Hazard v. Gnswold, 21 Fed. Eep. 178. And a fortiori are tl\ey bad in a bill or petition in equity, wliich is required to state the facts essential to the cause of action. Lawson v. Hewell, 118 California, (US: WHgM v. Dame, 22 Pick. 59: Atnhler V. Choteau, 107 U. S. 58(i: Van WeeJ v. Winston, 115 U. S. 228, 237 ; 1 Foster Fed. Prnc. § 67. The farts alleged are looked at and not adjectives or ad- verbs or epithets. Magniaf v. Thompson. 2 Wall. Jr. 209; Priee v. Voleman, 21 Fed. Rep. 357; Van WrcJ \. Winsfon, and Ambler v. Choteau^ supra. The importance of applying this rule with strictness here is more marked because answer by the defendants under oath is called for. Tliis point is pro^^erly raised by demurrer. 1 Daniel Ch. Pr. 372. It was so raised in Van Weel v. Winstom^ supm. The decree complained of, which is merely one of in- junction, is erroneous on like grounds of indefiniteness. Laurie v. [377] Laarie, 9 Paige, 234, 235; Robinson v. Clapp, 65 Connecticut, 365; Whipple v. Hutchinson, 4 Blatchf. 190. It makes clear the misconception of the Sherman Act and of Federal power to regulate commerce upon which the bill and decree proceed. They appear to go upon the theory that under the act of Congress the Federal courts are to regulate commerce, and the decree enjoins, not specific acts, but viola- tions of the statute in terms as general as the act of Congress itself. A defendant cannot know from its terms what he SWIFT AND COMPANY V. UNITED STATES. Argument for apimllants. 645 may or may not do without making himself liable as in contempt. This makes the insufficiency of the bill more obvious, as no valid decree could have been entered upon its allegations. The provisions of the Sherman Act do not contemplate such a general proceeding or decree to interfere in advance with future dealings, as interstate commerce, which may be interstate trade or may be domestic trade according to the future and changeable intention of the dealers. United States V. E. C, Knight Co., 156 U. S. 1, 15. The business of defendants of purchasing live stock and of selling fresh meats produced therefrom, as described in the bill, is not, upon the allegations of fact in the bill, interstate or foreign commerce. The purchase of cattle as alleged and described in the first paragraph of the bill is not alleged or shown to be interstate commerce. The business of defendants of selling such fresh meats, at the several places where they are so prepared, as described in the second paragraph, is not, under the facts there alleged, in- terstate trade or commerce. The sales and deliveries, al- though to dealers in other States and Territories, are there alleged to be made at the places where the meats are prepared by defendants, and are domestic sales. The deliveries by defendants to the carriers, who are agents of the purchasers in that respect, under the allegations of ihe^ bill, are deliveries to the purchasers in the State where the sale is made ; and the sales and deliveries are there fully completed. [378] Merchant v. Chapman, 4 Allen, 362; Or- cutt V. Nelson, 1 Gray, 543 ; Waldron v. Romaine, 22 N. Y. 368 ; Ramsey (& Gore Co, v. Kelsea, 55 N. J. L. 320 ; Cotte v. Harden, 4 East. 211 ; Brown v. Hodgson, 2 Camp. 86 ; Gron- ing V. Needham, 5 Maule & S. 189 ; 2 Kent. Com. 499 ; Cross- ^ man v. Lvrman, 192 U. S. 189, 198. The sellers' act in delivering the merchandise to the com- mon carrier, or carrying the merchandise to the carrier's depot (if that is taken to be in effect alleged), is not any part of the interstate transportation, and does not make the goods the subject of interstate commerce. Coe v. Erroh 116 U S 517, 528. 040 196 UNITED STATES BEPOBTS, 378. Argument for appellants. The fact that the sale is made with a view to the goods being transported by the buyer's agent to another State after the sale and delivery is fully completed, does not make the sale interstate commerce. The sales alleged in the third paragraph of the bill, by agents of the owners in other States and Territories to whom the owners of the fresh meats have shipped the same for sale there by such agents on the ground, are not incidents of inter- state commerce. Goe v. EttoI, 116 U. S. 517, 525; Kidd v. Pearson, 128 U. S. 1, 23 ; United States v. E, C. Knight Co., 156 U. S. 1, 13, 17; Austin v. Tennessee, 179 U. S. 343; Cross- man V. Lumian, 192 U. S. 189, 198; Am. Harrow Co. v. Shaffer, 68 Fed. Kep. 750; Stevem v. Ohio, 93 Fed. Rep. 793. Under the allegations here in question, it is to be taken that the meats, before the sales here referred to are made, have come to their place of rest and are at rest for an indefi- nite time awaiting sale at their place of destination, and are a commodity in the market where the sales are made; and that the sales are not in the " original packages " ; and that the meats, at the time of the sales, have become a part of the general property in the State where sold, and are there handled and sold as such. Southern Coal Co. v. Bates, 156 U. S. 577, 588; Brown v. Houston, 114 U. S. 623, 632; Emert V. Missouri, 156 U. S. 296. 310; Singer Mfg. Co. v. WHghty 97 Georgia, 123. The point here made is entirely consistent with the rulings [879] in many cases, that the owner of merchandise, who transports it from one State to another for sale, has a right (which cannot be interfered with by state or municipal laws) to sell it as an article of interstate commerce, rfe also has a right to make such article part of the general property of the State into which it is taken, and he then has the right to sell and others have the right to purchase it as an article of domestic commerce, which cannot be interfered with by Federal law. The Sherman Act does not seek to and could not interfere with that right. United States v. E. C. Knight Co,, 156 U. S. 1, 15, and Kidd v. Pearson and Veazie v. Moor^ there cited. But this bill here does seek to interfere with that right. Again, the point here made is not touched by the line of decisions holding that state or municipal laws are SWIFT AND COMPANY V. UNITED STATES. Argument for appellants. 647 invalid, which, by taxation or other regulations, discriminate against merchandise brought from another State, or seek to prevent interstate commerce therein,— such as Welton v. Mis^ souri, 91 U. S. 465; Walling v. Michigan, 116 U. S. 446; Minnesota v. Barber, 136 U. S. 313; Brimmer v. Rehman, 138 U. S. 78, and Schollenherger v. Pennsylvania, 171 U. S. 1, 24,25. ' The bill of complaint does not show any contract, combina- tion or conspiracy in restraint of interstate trade or com- merce within the meaning of the Sherman Act. It does not allege any acts of defendants monopolizing or attempting to monopolize or combining or conspiring to monopolize such trade or commerce. If the act in question be given a construction which would sustain this bill of complaint, the statute would be uncon- stitutional. The alleged offenses complained of are set forth in the sixth, seventh, eighth, ninth, tenth and eleventh paragraphs of the bill. As to the sixth and seventh paragraphs we maintain: The allegations of combination and conspiracy here are of mere legal conclusions. That the purchases of live stock referred to in the sixth and seventh paragraphs, as therein alleged, are not interstate commerce. [380] The first paragraph of the bill in which the busi- ness of purchasing live stock for slaughter is set forth and described, does not allege or show that the business is inter- state commerce. The description of the live stock in the sixth paragraph, as live stock produced and owned principally in other States and Territories, and shipped by the owners to the places where sold, for sale to persons engaged in producing and dealing in fresh meat, does not show that the sales of the live stock are interstate commerce. The live stock, when offered for sale in the pens of the stock yards, are, under the allegations of fact in the bill, to be considered as having become part of the general mass of property of the State where offered for sale. The defendants purchasing the live stock have the right so to treat and deal therewith. Brown v. Houston, 114 U. S. 622. 632 ; Pittsburgh Coal Co. v. Bates, 156 U. S. 577, 588, 589 ; Emert v. Missouri., 120 U. S. 489, 497. When purchased, 1»> UNITKD STATES REPOETS, M). Argument for appellants. the live stock is, under the allegations of this bill, at rest for an indefinite time, awaiting sale at its place of destination. Diamond Match Oo. v. Ontonagon, 188 U. S. 82, 92. The defendants have as much right, then, to treat and deal with and purchase such live stock as an article of domestic commerce as the State has so to treat it for the purposes of taxation or regulation. This bill seeks to interfere with that right under the Sherman Act. If the sworn allegations of the bill in this respect were to be supplemented by other facts, as matters of common knowl- edge, with respect to the situation of the live stock when sold, such as appeared in the Hftpkins and Anderson cases, the case of the Government would be no better. It would then appear that the cattle and other live stock are shipped to commission merchants at the stock yards ; are then placed in the pens of the stock yards companies, and there held, cared for and fed by the stock yards company for the account of the commission merchants, and under the allegations here it must be taken that their bulk is broken up; they are divided into lots and sold and delivered by the commission merchant as the principal or [381] owner thereof, and so are not pur- chased as articles of interstate commerce. But if these purchases of live stock are interstate commerce, the acts alleged in the sixth and seventh paragraphs are not violations of the Sherman Act. HopMns v. United States, 171 IT. S. 591; Andermn t. United States^ 171 U. S. 604. They are the exercise of a constit^itional right of defendants to control their own business. There is nothing in the bill to show the proportion of the entire number of head of live stock offered for sale at the markets in question, which is bought by the defendants for the purposes of the production of fresh meat ; and so there is nothing to show anything like monopoly or attempt at mo- nopoly of the live stock purchases by the defendants. There is nothing in the bill to show any attempt on the part of the defendants to control or affect the purchases or busi- ness in the purchases of live stock of any other persons than themselves. Tlie alleged combinations by defendants in the sixth and seventh paragraphs charged have to do merely with their own business conduct in themselves baying live stock. SWIFT AND COMPANY V. UNITED STATES. 649 Argument for appellants. or determining how much they shall buy, at private sale for consumption in their own private business. The combination charged in the sixth paragraph, for di- recting their respective purchasing agents " to refrain from bidding against each other, except perfunctorily, and with- out good faith," does not allege a combination to restrain trade; or even a combination to refrain from bidding. A perfunctory bid, made without good faith, is one which the seller could accept and enforce. The alleged combination in the seventh paragraph, " for bidding up, through their respective purchasing agents, the prices of live stock for a few days at a time at the said stock yards and open markets," does not charge a combination to restrain trade. These alleged combinations do not have the direct and im- mediate effect of restraining interstate commerce, but their [382] effect, if any, upon interstate trade in live stock is in- direct and incidental, within the meaning of the decisions of this court. The effect is not near so direct or immediate as the mutual agreement of the traders who were members of the Traders' Exchange in the Anderson case. Obviously the supply of live stock for fresh meat greatly varies in the market at different seasons and times, while the demand for fresh meats for human consumption, for which defendants purchase such live stock, is comparatively con- stant and uniform. It is a public benefit and not a public evil that defendants should always be able to supply such constant demand for their fresh meats, and that at the same time they shoidd not overstock the market with their perishable meats. This makes it proper that they should act with some concert and common understanding in their purchases of live stock for that purpose. As to the eighth paragraph we contend: The allegation of combination and conspiracy is of a mere legal conclusion, and insufficient. The sales of fresh meats by agents of de- fendants, as there described, under the facts alleged, are not interstate conmierce. But if it be interstate commerce, no violation of the Sherman Act is thereby shown. No criminal conspiracy is alleged. The charge there is not 650 196 UNITED STATES BEPOBTS, 382. Argument for appellants. of a combination or conspiracy to restrain trade (which the statute forbids), but is of a combination or con^iracy to do a lawful act, the exercise of a constitutional right, viz : to raise, lower, fix and maintain their own prices, for their own property, in private sales thereof by themselves. The doing that is not prohibited or made criminal by the Act of Congress. A criminal conspiracy is an agreement of two or more, either to do an act criminal or unlawful in itself, or to do a lawful act by means which are criminal or unlawful. Pettihom V. United States, 148 U. S. 203 ; Commonwealth V. Shedd, 7 Cush. 514. Here neither the act nor the means alleged are criminal or unlawful. The allegation of intent is immaterial. Stevenson v. Newham, 13 C. B. 285; Allen V. Flood, App. Cas. 1. [383] Again, this point is settled by the ruling in the Knight Case, 156 U. S. 1, 16, that the restraint of trade, if any, which a combination by defendants to raise or lower their own prices would tend to effect would be an indirect result, and such result would not necessarily determine the object of the contract, combination or conspiracy. As to the ninth paragraph we contend : The allegation is of a conclusion of law. The cartage as there described is not, under the allegations of the bill, interstate commerce. State V. Kniffhi, 192 U. S. 1, 21 ; Detroit d'c. Ry. v. Interstate Comm. Com.,, 74 Fed. Rep. 803, 808; Hopkins v. United States, 171 U. S. 578, 592. The charge is not of a conspir- acy either to do a criminal or unlawful act, or to do by un- lawful means the lawful act of fixing their own charges for cartage. Nothing here charged has the direct, immediate or necessary effect to restrain interstate commerce. As to the tenth paragraph we maintain: The allegation is of a legal conclusion. It also is too indefinite and general. Sufficient facts are not alleged. United States v. Eanley 71 Fed. Eep. G72. A contract or combination among manufacturers or pro- ducers of an article which is intended to become the subject of interstate commerce, to raise, lower and fix prices of such article, is not necessarily a contract, combination or conspir- acy in restraint of interstate trade or an attempt to monop- SWIFT AND COMPANY V. UNITED STATES. 651 Argument for appellants. olize that trade under the Sherman Act. United States v. Nelson, 62 Fed. Eep. 646; In re Greene, 52 Fed. Rep. 104; United States v. E, C. Knight Co., 156 U. S. 1, 16; Gihhs v. McNeeley, 102 Fed. Rep. 504. See also Distillery Co. v. People, 156 Illinois, 468; Glucose Company v. Harding, 182 Illinois, 551. There was no jurisdiction herein of this charge. No com- mon contract, combination or conspiracy of the defendants with e^ch other is alleged. The allegation that "all and each " have made agreements for less than lawful transpor- tation rates is that they did so acting separately. That was not unlawful on [384] the part of the defendants; much less was it any violation of the Sherman Anti Trust Act. There is here no sufficient showing of an attempt to monopo- lize either the interstate transportation of live stock or fresh meats or interstate trade in live stock or fresh meats. The paragraph is multifarious, and there is therein a misjoinder of causes and parties. As to the eleventh paragraph we submit that it is too gen- eral and insufficient to require argument. It is disposed of by what has been urged as to previous paragraphs.^ Prior rulings by/this court in cases arising under the Sher- man Act do not sustain the Government's case here. With respect to the supposed limitations of the Sherman Act upon the right of private contract, that act is to be in- terpreted in the light of the principles of the common law. United States v.Wong Kim A^^k, 169 U. S. 649; :\foore v. United States, 91 U. S. 270, 274; iVinor v. Happersett, 21 Wall. 162; Ex parte WUson, 114 U. S. 417, 422; Boyd v. United States, 116 U. S. 616, 624; S7nith v. Alabama, 124 U. S. 465. The bill of complaint is multifarious; and there is therein a misjoinder of causes and of parties. Walker v. Powers, 104 U. S. 251; B^^own v. Guarantee Trust Company, 128 U. S. 403 ; Zeigler v. Lake Street Railway, 76 Fed. Rep. 662. The bill is too general and indefinite to require answer. It does not sufficiently set forth definite or specific facts. The demurrers to so much of the bill as prays for answer under oath, and to so much thereof as prays discovery of de- fendants' books, papers, etc., are well taken. 652 196 UNITED STATES REPORTS, 384. Argiinieiit for the United States. Eights protected by the Fourth and Fifth Amendments are thereby infringed. United States v. Saline Bank, 1 Pet. 100; Boijd V. United States, 116 U. S. 616; Counselmnn v, Eiteheock, 142 U. 8. 547; Livingston v. TmnpMns, 4 Johns. Ch. 415, 432; Entick v. Carrington, 19 Howell's St. Tr. 1029; S. €., 2 Wils. 275; Huckle v. 3Ianey, 2 Wils. 206; Mitford & Tyler's Eq. Pldg. 289. Mr, Attorney General Moody, with whom Mr, William A, [385] />(///. Assisfa/tt to the Attorney General, was on the brief, for the United States : The facts show a combination which restrains or monopo- lizes trade or commerce and operates upon and directly affects interstate or foreign trade or commerce. The combination or conspiracy which the Government is seeking to destroy and which it was the aim of the petition in this case to set forth is one between all the principal American producers or packers of fresh meats for the pur- pose of jointly controlling the market for those products throughout the entire United States so as to maintain uni- form prices therefor and destroy competition in the sale thereof to dealers and consumers. The combination set forth in the bill is in restraint of trade, for if in the entire field of the law concerning mo- nopolies and restraints of trade' there is a single proposition to which all courts now yield assent, it is that a combina- tion, conspiracy, or agreement between independent manufac- turers or producers of a necessary of life to fix and maintain uniforin prices for their products, or otherwise to suppress competition with each other, is an unlawful restraint upon trade. United States v. E, C. Knight Co,, 156 U. S. 1, 16; United States v. Trans- Missouri Freight Association, 166 V, S. 290; United States v. Joint Traffic Association, 171 U. S. 50^; Addyston Pipe <& Steel Co, v. United States, 175 U. S. 211; Northern Securities Co. v. United States, 193 U. S. 197; Chesapeake d; Ohio Fuel Co. v. United States, 115 Fed. Eep. 610; judgments of Lord Bramwell and Lord Han- nen in Mogul S, S, Co, v. McGregor, L. R. App. Cas. (1892) 46, 58 ; Morris Eun Coal Co, v. Barclay Coal Co,, 68 Pa. St 155, 173; Nester et al, v. Continental Brewing Co,, 161 Pa. St 473; Salt Co, v. Guthrie, 35 Ohio St 166; People v. SWIFT AND COMPANY V, UNITED STATES. 653 Argument for the United States. Sheldon, 139 N. Y. 251; Cvmmings v. Union Blue Stone Co,, 164 N. Y. 405 ; Trenton Potteries Co. v. Olyphant, 58 N. J. Eq. 507; Craft v. McConoughhy, 79 Illinois, 346; Noyes on Intercorporate Relations, p. 513, note 1, and see the cases collected; and necessarily the means agreed upon to effect the unlawful object of the com- [386] bination of conspiracy are inseparable parts of the combination or con- spiracy itself, and along with it fall within the condemna- tion of the law. The combination or conspirac^^ in controversj^ operates upon intei'^tate or foreign commerce, and its operations are not confined to commerce carried on wholly within state lines. The sales of live stock to the defendants and the sales by them of the prepared meats are interstate and not intra- state transactions. As to what is interstate commerce, see Gibbons v. Ogden, 9 Wheat. 1, 194; Northern Secunties Co. v. United States.^ 193 U. S. 197, 337. If interstate commerce is commerce which concerns more States than one, and if a combination of independent producers to suppress competition between its members is a restraint upon commerce, it must follow that a combination of independent producers to fix and control prices and suppress competition between each other in an area covering more States than one is in restraint of int(T- state commerce and the petition in this case discloses such a combination. It is impossible to say with even a color of reason that the facts stated in the bill, which cannot be denied, do not show a combination between the defendants to suppress competition between themselves in an area embracing more States than one and it is immaterial to inquire whether the particular purchases and sales made by the defendants are, technically, interstate or intrastate transactions. There is nothing unreasonable or novel in the conclusion that a com- bination may restrain interstate commerce, although the individual transactions of its members might, standing alone and viewed separate and apart from the purpose and nec- essary effect of the whole combination, be intrastate in char- acter. Montague <& Co. v. Lowry, 193 U. S. 38. The char- 196 UNITED STATES BEPOBTS, 396. Argument for the United States. acter of a combination— that is, whether or not it is inter- state in its operation — is decided, not by the nature of the particular transactions of its individual members, but by the extent of the territory in which it operates— in which it con- trols prices and sales and [387] suppresses competition. If that territory embraces more States than one the combina- tion restrains interstate commerce. Addyston Pipe <& Steel Co, V. United States, 175 U. S. 211, 240. Whether a combination in restraint of trade operates upon interstate or only intrastate conmierce does not depend upon whether the individual transactions of its members, standing alone and viewed separate and apart from the purpose and necessary effect of the whole combination, are interstate or Intrastate in character, and the petition here discloses a com- bination which operates upon interstate conmierce; for what- ever may be the character of the individual transactions of its several members, it is also true in this case that the individual transactions of the members of the combination do fall within the jurisdiction conferred upon Congress by the commerce clause of the Constitution. These transactions consist of the defendants' purchases of live stock ; the sales and shipments of fresh meats made directly by the defendants to dealers and consumers in the several States, and the sales of fresh meats to dealers and consumei-s in the several States by agents of the defendants located in those States. From all over the stock-raising section, embracing many different States, cattle, sheep and hogs are habitually shipped to the great live-stock markets at Chicago, Omaha, Sioux City, St. Joseph, Kansas City, East St. Louis and St. Paul for sale, to those, the defendants chief among them, engaged in the business of converting live stock into fresh meats for human consumption. The shipments are made with the express and sole purpose of sale as soon as market conditions will permit, and the sales are made while the cattle yet remain in first hands, that is, in the hands of the owners or their agents, and in the ordinary form or condition in which cattle are shipped from one country or State to another, which is analogous to the form or condition of the original package in the case of merchandise. Austin v. Tennessee^ 179 U. S. 343, 359. [388] The cattle are not dealt with in a commercial way SWIFT AND COMPANY IK UNITED STATES. 655 Argument for the United States. from the time of their arrival until their sale to the defendants and others, but are simply fed and cared for. No act is done with reference to them that would cause them to become mixed with the general mass of local property. Now, it may be that a distinction should be made between what may be called an interstate sale proper and in the full sense of the term— that is, a sale between persons negotiating and dealing from two or more different States, and a sale, at its destination and while it still remains in the original state or package, of an article of commerce sent from another State. But so far as the result in this instance is concerned it is a distinction without a dif- ference. If the sales of live stock set forth in the petition do not fall within the first of these classes they certainly fall within the second, and that brings them within the protection of the Federal power over commerce and therefore within the protection of the Anti Trust Act; for the right to transport articles of commerce from one State to another includes the right of the owner or consignee to sell them in the latter free from any burden or restraint that the States might attempt to impose. Brown v. Maryland, 12 Wheat. 419; Bowman v. Chicago and Northwestern Railway Co,, 125 U. S. 465 ; Leisy V. Hardin, 135 U. S. 100 ; Rhodes v. Iowa, 170 U. S. 412, and, a fortiori, free from any burden or restraint that a combina- tion of individuals might attempt to impose. In re Debs, 158 U. S. 564, 581 ; Hopkins v. United States, 171 U. S. 578, 590. Paragraph 2 of the bill contains matter of description and inducement, and must be read in conjunction with the stating part of the petition, which alleges, inter alia, that " in order to restrain and destroy competition among themselves" the defendants have engaged in a " combination- and conspiracy to arbitrarily from time to time raise, lower, and fix prices, and to maintain uniform prices at which they will sell, di- rectly or through their respective agents, such fresh meats to •dealers and consumers throughout the said States and Terri- tories and the District of Columbia and foreign countries." [389] As the sales made directly by the defendants to dealers and consumers throughout the United States are in- terstate sales, and as decisions of this court have settled that a combination to control and suppress competition in such sales is a combination in restraint of interstate commerce, 656 196 UNITED STATES REPORTS, 389. Argument for the United States. the petition in this case, having shown that much, cannot in any event be dismissed, even should it be held to have failed in all other respects. Paragraph 3 of the petition states that the defendants are engaged in shipping fresh meats from their plants in certain States to their respective agents at and near the principal maitets in other States and Territories for sale by such agents to dealers and consumers in those States and Terri- tories. Upon the question whether or not the sales made by these agents under the circumstances set forth are within the body of interstate commerce, there is nothing to add to the cogent argument in the opinion of the circuit judge. The bill is not multifarious and does not disclose a mis- joinder of parties. 14 Ency. of PL and Pr. 198; 1 Bates Fed. Eq. Pro. §§ 135, 195. The Circuit Court did not err in sustaining the demurrers to the bill in its aspect as a bill of discovery. The demurrers are demurrers to the whole bill. Livingstone v. Story, 9 Pet. 632, 654. The well-settled rule of equity pleading is that a demurrer to a whole bill cannot be sustained as to part of the bill and overruled as to part, but must be overruled as to the whole if any part of the bill is good and entitles the complainant, to any relief. Fletcher, Eq. PL §§ 203, 204 ; Story, Eq. PL, 10th ed., §§ 443, 444; Parker v. Simpson, 62 N. E. Eep. (Mass.) 401; Metler's Admn's, v. 3Ietler, 18 N. J. Eq. 270, 2T3. When the defendants leveled their demurrers at the relief as well as the discovery, instead of answering as to the relief and demurring as to the discovery they did so at their peril. DanielFs Chan. Prac, 3d Am. ed., 568-608 ; see also Acts of Congress of February 25, 1903, 32 Stat. 903 ; of Feb- ruary 11, 1893, 27 Stat.. 443, and Interstate Comm. Com. v Baird, 194 U. S. 25, 44, [390] citing Brotvn v. Walker, 161 IT. S. 591; Boyd v. United States, 116 U. S. 616. Judges have differed as to the validity of aggi^egations of capital effected by some form of organic union between sev- eral smaller and competing corporations, and economists are far from agreeing that such aggregations, within limitations, are hurtful. So too, associations of manufacturers to regu- late competition within a restricted area have not always been condemned by courts and have sometimes been ap- SWIFT AND COMPANY V. UNITED STATES. Opinion of the Court 657 proved by publicists. But as yet no responsible voice has been heard to justify, legally or economically, a conspiracy or agreement between nearly all the producers of a com- modity necessary to life by which the confederates acquire absolute control and dominion over the production, sale and distribution of that commodity throughout the entire terri- tory of a nation, with the power, at will, to raise prices to the consumer of the finished product and lower prices to the producer of the raw material. Yet such is that now at the bar of this court. That there is a conspiracy to control the market of the nation for fresh meats, that it does control it, aiid that its control is merciless and oppressive, are facts known of all men. The broad question here is,'Does the Government's petition, with its statements of fact standing unchallenged, discover that conspiracy to the court? We submit that it does and that the decree of the Circuit Court fhould in all things be affirmed. Mr. Justice Holmes delivered the opinion of the court. This is an appeal from a decree of the Circuit Court, on demurrer, granting an injunction against the appellants' commission of alleged violations of the act of July 2, 1890, c. 647, 26 Stat. 209, " to protect trade and commerce against unlawful restraints and monopolies." It will be necessary lo consider both the bill and the decree. The bill is brought against a number of corporations, firms and individuals of different States and makes the following allegations : 1. The defend- [391] ants (appellants) are engaged in the business of buying live stock at the stock yards in Chicago, Omaha, St. Joseph, Kansas City, East St. Louis and St. Paul, and slaughtering such live stock at their respective plants in places named, in different States, and converting the live stock into fresh meat for human consumption. 2. The de- fendants " are also engaged in the business of selling such fresh meats, at the several places where they are so prepared, to dealers and consumers in divers States and Territories of the said United States other than those wherein the said meats are so prepared and sold as aforesaid, and in the Dis- trict of Columbia, and in foreign countries, and shipping the 21220— VOL 2—07 m 42 658 IW UHITED STATES EEPOBTS, 391. Opinion of the Court. same meats, when so sold from the said places of their prepa- ration, over the several lines of transportation of the several railroad companies serving the same as common carriers, to such dealers and consumers, pursuant to such sales." 3. The defendants also are engaged in the business of shipping such fresh meats to their respective agents at the principal markets in other States, etc., for sale by those agents in those markets to dealers and consumers. 4. The defendants together con- trol about six-tenths of the whole trade and commerce in fresh meats among the States, Territories and District of Columbia, and, 5, but for the acts charged would be in free competition with one another. 6. In order to restrain competition among themselves as to the purchase of live stock, defendants have engaged in, and intend to continue, a combination for requiring and do and will require their respective purchasing agents at the stock yards mentioned, where defendants buy their live stock (the same being stock produced and owned principally in other States and shipped to the yards for sale), to refrain from bidding against each other, " except perfunctorily and with- out good faith," and by this means compelling the owners of such stock to sell at less prices than they would receive if the bidding really was competitive. 7. For the same purposes the defendants combine to bid up, through their agents, the prices of live stock for a few days at [i92] a time, " so that the market reports will show prices much higher than the state of the trade will warrant," thereby inducing stock owners in other States to make large ship- ments to the stock yards to their disadvantage. 8. For the same purposes, and to monopolize the commerce protected by the statute, the defendants combine "to ar- bitrarily, from time to time raise, lower, and fix prices, and to maintain uniform prices at which they will sell " to dealers throughout the States. This is effected by secret periodical meetings, where are fixed prices to be enforced until changed at a subsequent meeting. The prices are maintained directly, and by coUusively restricting the meat shipped by the defend- ants, whenever conducive to the result, by imposing pen- alties for deviations, by establishing a uniform rule for the giving of credit to dealers, etc., and by notifying one another SWIFT AND COMPANY V. UNITED STATES. Oi)iiiion of the Court. 659 of the delinquencies of such dealers and keeping a black list of delinquents, and refusing to sell meats to them. 9. The defendants also combine to make uniform charges for cartage for the delivery of meats sold to dealers and con- sumers in the markets throughout the States, etc., shipped to them by the defendants through the defendants' agents at the markets, when no charges would have been made but for the combination. 10. Intending to monopolize the said commerce and to pre- vent competition therein, the defendants " have all and each engaged in and will continue " arrangements with the rail- roads whereby the defendants received, by means of rebates and other devices, rates less than the lawful rates for trans- portation, and were exclusively to enjoy and share this unlaw- ful advantage to the exclusion of competition and the public. By force of the consequent inability of competitors to engage or continue in such commerce, the defendants are attempting to monopolize, have monopolized, and will monopolize the commerce in live stock and fresh meats among the States and Territories, and with foreign countries, and, 11, the defend- ants are and have been in conspiracy with each other, with [393] the railroad companies and others unknown, to obtain a monopoly of the supply and distribution of fresh meats throughout the United States, etc. And to that end defend- ants artificially restrain the commerce and put arbitrary reg- ulations in force affecting the same from the shipment of the live stock from the plains to the final* distribution of the meats to the consumers. There is a prayer for an injunction of the most comprehensive sort, against all the foregoing pro- ceedings and others, for discovery of books and papers re- lating directly or indirectly to the purchase or shipment of live stock, and the sale or shipment of fresh meat, and for an answer under oath. The injunction issued is appended in a note.** "And now. upon motion of the said attorney, the court doth order that tlie preliminary injunction heretofore awarded in this cause, to restrain the said defendants and each of them, their respective agents and attorneys, and all other persons acting in their behalf, or in behalf of either of them, or claiming so to act, from entering into, taking part in, or performing any contract, combination or conspiracy, the purpose mo im UNITED STATES REPOBTS, .m. Opinion of the Court [8M] To sum up the bill more shortly, it charges a combi- nation of a dominant proportion of the dealers in fresh meat throughout the United States not to bid against each other in the live stock markets of the different States, to bid up prices for a few days in order to induce the cattle men to send their stock to the stock yards, to fix prices at which they will sell, and to that end to restrict shipments of meat when necessary, to establish a uniform rule of credit to dealers and to keep a black list, to make uniform and improper charges for cart- age, and finally, to get less than lawful rates from the rail- roads to the exclusion of competitors. It is true that the last charge is not clearly stated to be a part of the combination. But as it is alleged that the defendants have each and all made arrangements with the railroads, that they were exclu- sively to enjoy the unlawful advantage, and that their intent in what they did was to monopolize the commerce and to pre- vent competition, and in view of the general allegation to or effect of which will l>e, as to trade and coumierce iii fresh meats between the several States and Territories and the District of Colum- bia, a restraint of trade, in violation of the provisions of the act of Congress approved July 2, 1890, entitled 'An act to protect trade and commerce against unlawful restraints and monopolies,' either by directing or requiring their respective agents to refrain from bidding against each other In the purchase of live stocis ; or collusively and by agreement to refrain from bidding against each other at the sales of live stock; or by combination, conspiracy or contract raising or lowering prices or fixing uniform prices at which the said meats will be sold, either directly -or through their respective agents; or by cur- tailing the quantity of such meats shipped to such markets and agents • or by establishing and maintaining rules for the giving of credit to dealers in such meats, the effect of which rules will be to restrict com- petition ; or by imposing unifoi-m charges for cartage and delivery of such meats to dealers and consumers, the effect of which will be to restrict competition ; or by any other method or device, the purpo*.e and effect of which is to restrain commerce as aforesaid ; and also from violating the provisions of the act of Congress approved July 2, 1890, entitled 'An act to protect trade and commerce against unlaw- ful restraints and monopolies,* by combining or conspiring together or with each other and others, to monopolize or attempt to monoix)lizJ any part of the trade and commerce in fresh meats among tlie several States and Territories and the District of Columbia, bv demanding obtaining, or, with or without the connivance of the officers or agents thereof, or of any of them, receiving from railroad companies or other SWIFT AND COMPANY V. UNITED STATES. 66n Opinion of the Court. which we [396] shall refer, we think that we have stated correctly the purport of the bill. It will be noticed further that the intent to monopolize is alleged for the first time in the eighth section of the bill as to raising, lowering and fix- ing prices. In the earlier sections, the intent alleged is to restrain competition among themselves. But after all the specific charges there is a general allegation that the defend- ants are conspiring with one another, the railroads and others, to monopolize the supply and distribution of fresh meats throughout the United States, etc., as has been stated above, and it seems to us that this general allegation of in- tent colors and applies to all the specific charges of the bill. Whatever may be thought concerning the proper construc- tion of the statute, a bill in equity is not to be read and con- strued as an indictment would have been read and construed a hundred years ago. but it is to be taken to mean what it farily conveys to a dispassionate reader by a fairly exact use common carriers transporting such fresh meats in such trade and com- merce, either directly or by means of rebates, or by any other device, transportation of or for such means, from the points of the prepara- tion and production of the same from live stock or elsewhere, to the markets for the sale of the same to dealers and consumers in other Statics and Territories than those wherein the same are so prepared, or the District of Columbia, at less than the regular rates which may be established or in force on their several lines of transportation, under the provisions in that behalf of the laws of the said United States for the regulation of commerce, be and the same is hereby made perpetual. " But nothing herein shall be construed to prohibit the said defend- ants from agreeing upon charges for cartage and delivery, and other incidents connected with local sales, where such charges are not cal- culated to have any effect upon competition in the sales and delivei-y of meats ; nor from establishing and maintaining rules for the giving of credit to dealers where such rules in good faith are calculated solely to protect the defendants against dishonest or irresponsible dealers, nor from curtailing the quantiy of meats shipped to a given market where the purpose of such arrangement in good faith is to prevent the over-accumulation of meats as perishable articles in such ma rivets. "Nor shall anything herein contained be construed to restrain or interfere with the action of any single company or firm, by its or their officers or agents (whether such officers or agents are themselves per- sonally made parties defendant hereto or not) acting with respect to its or their own corporate or firm business, property or affairs." 662 196 UNITED STATES REPORTS, 395. Opinion of the Court of English speech. Thus read this bill seems to us intended to allege successive elements of a single connected scheme. We read the demurrer with the same liberality. There- fore we take it as applying to the bill generally for multi- fariousness and want of equity, and also to each section of it which makes a charge and to the discovery. The de- murrer to the discovery will not need discussion in the view which we take concerning the relief, and therefore we turn at once to that. 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 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 con- spicuous, and yet the same thing makes it impossible to fasten the principal fact to a certain time and place. The elements, too, are so numerous and shifting, even the constituent parts alleged are and from their nature must be so extensive in time [S96] and space, that something of the same impossibility applies to them. The law has been unheld, and therefore we are bound to enforce it notwithstanding these difficulties. On the other hand, we equally are l>ound by the first prin- ciples 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 tor contempt. We cannot issue a general injunc- tion against all ix)ssible breaches of the law. We must steer between these opposite difficulties as best we can. The scheme as a whole seems to us to be within reach of the law. The constituent elements, as we have stated them, are enough to give to the scheme a body and, for all that we can say, to accomplish it. Moreover, whatever we may think of them separately when we take them up as distinct charges, they are alleged sufficiently as elements of the scheme. It is suggested that the several acts charged are lawful and that intent can make no difference. But they are bound together as the parts of a single plan. The plan may make the parts unlawful. Aikem v. Wiscansin, 195 U. S. 194, 206. The statute gives this proceeding against combinations in SWIFT AKD COMPANY V. UNITED STATES. 663 Opinion of tbe Court restraint of commerce among the States and against attempts 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 result 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 dangerous probability that it will hapen. Commonwealth v. Peaslee, 177 Massachusetts, 267, 272. But when that intent and the consequent danger- ous probability exist, this statute, like many others and like the common law in some cases, directs itself against that dan- gerous probability as well as against the completed result. What we have said disposes incidentally of the objection to the bill as multifarious. The unit}^ of the plan embraces all the parts. One further observation should be made. Although the [397] 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. See Leloup v. Port of Mobile, 127 U. S. 640, 647 ; Crutcher v. Kentucky, 141 U. S. 47, 59; Allen v. Pullman Co,, 191 U. S. 171, 179, 180. 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 subject matter of the combination was manufacture and the direct object monopoly of manufacture within a State. However likely monopoly of conunerce among the States in the article manufactured was to follow from the agreement it was not a necessarj^ con- sequence 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. Loiory. 193 U. S. 38. 664 196 UNITED STATES KEPORTS, 391 Opinion of the Court So, again, the line is distinct between this case and Eop^ Mm V. United States, 171 U. S. 578. 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 seDers. They only furnished certain facilities for the sales. Therefore, there again the effects of the com- bination of brokers upon the commerce was only indirect and not within the act. Whether the case would have been dif- ferent if the combination had resulted in exorbitant charges, was left open. In Anderson v. United States, 171 U. S. 604^ the defendants were buyers and sellers at the stock yards, but their agreement was merely not to employ brokers, or to f3981 recognize yard-traders, who were not memberFof their association. Any yard-trader could become a member of the association on complying with the conditions, and there was said to be no feature of monopoly in the case. It was held that the combination did not directly regulate commerce between the States, and, being formed with a different in- tent, was not within the act. The present case is more likf» Montagne & Co, v. Lowry, 193 U. S. 38. For the foregoing reasons we are of opinion that the carry- ing out of the scheme alleged, by the means set forth, prop- erly may be enjoined, and that the bill cannot be dismissed. So far it has not been necessary to consider whether the facts charged in any single paragraph constitute commerce among the States or show an interference with it. There can be no doubt, we apprehend, as to the collective effect of all the facts, if true, and if the defendants entertain the intent alleged. We pass now to the particulars, and will consider the corresponding parts of the injunction at the same time. The first question arises on the sixth .section. That charges a combination of independent dealers to restrict the competi- tion of their agents when purchasing stock for them in the stock yards. The purchasers and their slaughtering estab- lishments are largely in different States from those' of the stock yards, and the sellers of the cattle, perhaps it is not too much to assume, largely in different States from either. The SWIFT AND COMPANY V, UNITED STATES. 665 ^Opinion of the Court intent of the combination is not merely to restrict competi- tion among the parties, but, as we have said, by force of the general allegation at the end of the bill, to aid in an attempt to monopolize commerce among the States. It is said that this charge is too vague and that it does not set forth a case of commerce among the States. Taking up the latter objection first, commerce among the States is not a technical legal conception, but a practical one, drawn from the course of business. 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 [399] they do so, with only the interruption necessary to find a purchaser at the stock yards, and when this is a typ- ical, 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. And we need not trouble ourselves at this time as to whether the statute could be escaped by any arrangement as to the place where the sale in point of law is consummated. See Norfolk i& Western Ry. v. Sims, 191 U. S. 441. But the sixth sec- tion of the bill charges an interference with such sales, a restraint of the parties by mutual contract and a combination not to compete in order to monopolize. It is immaterial if the section also embraces domestic transactions. It should be added that the cattle in the stock yard are not at rest even to the extent that was held sufficient to warrant taxation in American Steel d; Wire Co, v. Speed, 192 U. S. 500. But it may be that the question of taxation does not depend upon whether the article taxed mav or mav not be said to ba in the course of commerce between the States, but depends upon whether the tax so far affects that commerce as to amount to a regulation of it. The injunction against taking part in a combination, the effect of which will be a restraint of trade among the States by directing the defend- ants' agents to refrain from bidding against one another at the sales of live stock, is justified so far as the subject matter is concerned. nm 196 UNITED STAIES REPORTS, 39». Opinion of the Court The injunction, however, refers not to trade among the States in cattle, concerning which there can be no question of original packages, but to trade in fresh meats, as the trade forbidden to be restrained, and it is objected that the trade in fresh meats described in the second and third sections of the bill is not commerce among the States, because the meat is sold at the slaughtering places, or when sold elsewhere may be sold in less than the original packages. But the allega- tions of the second section, even if they import a technical passing [400] of title at the slaughtering places, also import that the sales are to persons in other States, and that the ship- ments to other States are part of the transaction — "pur- suant to such sales "—and the third section imports that the same things which are sent to agents are sold by them, and sufficiently indicates that some at least of the sales are of the original packages. Moreover, the sales are by j>ersons in one State to persons in another. But we do not mean to imply that the rule which marks the point at which state taxation or regulation becomes permissible necessarily is beyond the scope of interference by Congress in cases where such intorference is deemed necessary for the protection of commerce among the States. Nor do we mean to intimate that the sUitute under consideration is limited to that point. lieyond what we have said above, we leave those questions as we find them. They were touched upon in the Northern Seeimties Com- pany's Case, 193 U. S. 197. We are of opinion, further, that the cliarge in the sixth sec- tion is not too vague. The charge is not of a single agree- ment but of a course of conduct intended to be continued. Under the act it is the duty of the court, when applied to, to stop the conduct. The thing done and intended to be done is perfectly definite: with the purpose mentioned, directing the defendants' agents and inducing each other to refrain from competition in bids. The defendants cannot be ordered to compete, but they properly can be forbidden to give direc- tions or to make agreements not to compete. See Addyston Pipe cC- Steel Co. v. United States, 175 U. S. 211. The in- junction follows the charge. No objection was made on the gi'ound that it is not confined to the places specified in tlie SWIFT AND COMPANY V. UNITED STATES. 667 Opinion of the C> objected to the pro rata distribution and insisted that the Northern Pacific stock they had delivered 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 adjudicated 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 and the Circuit Court of Appeals reversed the order and practically disposed of the entire case adversely to complain- ants. This court granted a writ of certiorari. Held, that : Where the decree of the Circuit Court of Appeals in an action in equity only reverses an order of the Circuit Court granting an in- junction, but the court, the record presenting the whole case, prac- tically disposes of the entire controversy on the merits, certiorari may issue from this court and this court may finally dispose of it bv its direction to the Circuit Court. The decree of the Circuit Court in the Northern Securities case affirmed by this court, 193 U. S. 197, did not determine the quality of the transfer as between the defendants, and the provisions therein as to 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 railway shares. « Circuit Court awarded a preliminary injunction restraining the Northern Securities Company from disposing of certain shares of the common stock of the Northern Pacific Railway Company (132 Fed 404). See p. 587. Reversed by the Circuit Court of Appeals, Third Circuit (134 Fed., 331). See p. 618. Decree of C. C. A. affirmed bv the Supreme Court (197 U. S., 244). 6 Syllabus and abstracts of arginnents and briefs copvrighted 1905 by The Banks Law Publishing Co. . , , 670 197 UNITED STATES REPORTS, 244. Syllabus. The judgment of this court affirming the decree of the Circuit Court In the Northern Securities case went no further than the decree itself, and while it leaves the Circuit Court at liberty to proceed in the execution of its decree as circumstances may require, it does not operate to change the decree or import a power to do so not otherwise possessed. General expressions in an opinion which are not essential to dispose of a case are not permitted to control the judgment in subsequent suits. Nothing in the judgment or opinion of this court in the Northern Securities [245] case, 193 U. S. 197, enlarged the scope of the decree Of the Circuit Court so as to make it an adjudication that any of the vendors of railway stoclvs were entitled to judicial restitution of the stocks transferred by them to the Securities Company, or that the Securtities Company could not distribute the shares of niilway stock held by it pro rata between its own shareholders. The transaction between complainants and the Northern Securities Company was one of purchase and sale of Northern Pacific Railway Company stock for shares of stock of the Securities Company and caFh and not a bailment or trust. When a vendor testifies that the transaction was an unconditional sale and that he attached to his negotiations no other conditions than that of price, he is estopped from afterwards denying that this is a statement of fact and claiming that he only swore to a con- clusion of law. Property delivered under an executed illegal contract cannot i>e re- covered back by any party in pari delicto, and the courts cannot relax the rigor of this nile where the record discloses no special considerations of equity, justice or public policy. The fact that the complainants in this case acted in good faith and without intention to violate the law does not exempt them from the doctrine of in pari delicto. All the parties having supposed the statute would not be held applicable to the transaction neither can plead ignorance of tlie law as against the other and the defendant secured no unfair advantage in retaining the consideration volun- tarily delivered for the price agreed. Where a vendor after transferring shares of railway stock to a cor- poration in exchange for its shares becomes a director of the pur- chasing corporation and participates in acts consistent only with absolute ownership by it of the railway stocks, and does so after an- action has been brought to declare the transaction illegal, his right to rescind tlie contract and compel restitution of his original rail- way shares, if it ever existed, is lost by acquiescence and laches. The Northern Facifif system taken in connection with the Burlington system is competitive with the Union Pacific system, and, the entire recoM considered, to deliver to the complainants, the Northern Pacific stock claimed by them and distribute the balance of the stock ratably between the other Securities Company stockholders, would HARRIMAN V. NORTHERN SECURITIES CO. Statement of the Case. 671 not only be inequitable but would tend to smother competition and thus contravene the object of the Sherman law and the pui-poses of the suit brought by the Government against the Northern Securities Company. It was the duty of the Securities Company under the decree in the Government suit to end a situation which had been adjudged un- lawful, and as this could be effected by sale and distribution in cash, or by distribution in kind, the company was justified in adopting the ^atter method and avoiding the forced sale of several hundred million dollars of stock which would have involved disastrous results. Edward H. Harriman, Winslow S. Pierce, Oregon Short [246 J Line Eailroad Company and The Equitable Trust Company of New York exhibited their bill against the North- ern Securities Company in the Circuit Court of the United States for the District of New Jersey, April 20, 1904, on which, with accompanying affidavits and exhibits, a restrain- ing order was issued, pending an application for an in- junction as prayed in the bill. April 26 an amended bill was filed, and the application for a preliminary injunction was heard May 20, 21 and 23 by Bradford, J., holding the Circuit Court. On the fourth day of June a second amended bill was filed, and on July 15, 1904, Judge Bradford delivered an opinion sustaining the application. 132 Fed. Rep. 464. The order for injunction was entered August 18, 1904, and an appeal therefrom was prosecuted to the Circuit Court of Appeals for the Third Circuit, which, on January 3, 1905, reversed the order. 134 Fed. Rep. 331. Thereupon complainants applied to this court for the writ of certiorari, which was granted January 30, and the matter advanced for hearing, and heard March 1 and 2. The affirm- ance of the decree of the Circuit Court of Appeals was an- nounced March 6, it being added that an opinion would be filed afterwards. The Northern Pacific Railway Company was the successor through reorganization of the Northern Pacific Railroad Company, and by its charter it was provided that its capital stock might be increased from time to time by a vote of a majority of the stockholders, and that the company might, by a like vote, classify its stock into common and preferred, and might " make such preferred stock convertible into com- m UNITKD STATES BEPORTS, 246, Statement of tlie Case. nion stock upon such terms and conditions as may be fixed by the board of directors." On July 1, 1896, by the unani- mous vote of its then stockliolders, the capital stock was in- creased to one hundred and fifty-five million dollars, divided into eighty millions of common stock and seventy-five mil- lions of preferred stock, and it was resolved " that such pre- ferred stock shall be issued upon the condition that at its option the com- [247] pany may retire the same, in whole or in part, at par, from time to time, on any first day of January prior to 1917." Tlie plan of reorganization which was adopted provided that as to tlie new company which it was contemplated should acquire the properties and franchises of the Northern Pacific Eaiiroad Company, and the issue of preferred stock by it, '' the right will be reserved by the new company to retire this stoi^k, in whole or in part, at par, from time to time, upon any first day of January during the next twenty years." All the certificates of stock, whether common or preferred, at that time or subsequently issued, contained this clause: " The company shall have the right at its option, and in such manner as it shall determine, to retire the preferred stock, in whole or in part, at par, from time to time, upon any first day of January prior to 1917." The reorganization had been managed by J. P. Morgan & Co., and the directory of the Northern Pacific Kailway Com- pany were friendly to that firm. During the same period the president of the (Jreat Northern Railway Company was James J. Hill, and its directors were friendly to him. The two companies were friendly to each other, and in April, 1901, acquired the shares of the Chicago, Burlington and Quincy Eaiiroad Company. At this time the Union Pacific Railway system included the Union Pacific Railway, the railroad of the Oregon Short Line Railroad Company, and the railroad of the Oregon Railroad and Navigation Company. The Union Pacific Company was practically the owner of the entire capital stock of the Oi-egon Short Line Railroad C^ompany, and the latter company was the owner of practically the entire capi- tal stock of the Oregon Railway and Navigation Company. The interests in control of the Union Pacific system might HARBIMAN V. NORTHERN SECURITIES CO. Statement of the Case. 673 'P» properly be called the Harriman interests. Shortly there- after, at the instance of the Union Pacific Railway Company and with money furnished by that company, the Oregon Short Line Company purchased Northern Pacific preferred stock to the amount of $^1,085,000, [248] and common stock to the amount of $37,023,000, aggregating $78,100,000 of stock, being a majority of the $155,000,000, total capital stock of the Northern Pacific Company as then outstanding. But the preferred stock was subject to retirement at par at the option of the company, and the 370,230 shares of common stock was less than a majority of the total common stock, which majority was held by the Morgan-Hill party. In October, 1901, complainant Harriman was elected a member of the board of directors of the Northern Pacific Railway Company and James Stillman was reelected. They were also directors of the Union Pacific Railway Company. They both attended a meeting of the Northern Pacific board on November 13, 1901, and Harriman was chosen a member of the executive committee. At this meeting resolutions were adopted providing for and resulting in the retirement of the preferred stock on January 1, 1902, by the payment of $100 cash for each and every share to each and every holder of record on that day. These resolutions declared that the company thereby de- termined to exercise its right to retire the preferred stock; provided that for the purpose of raising the funds necessary to do so, the company should issue its negotiable bonds for $75,000,000, convertible at par into shares of the common stock of the company at par; authorized the making of a contract for the sale of all of such bonds at par and accrued interest, the contract to contain a provision giving to the holder of every share of the common stock the opportunity to receive from the contract purchaser, at par and interest, such bonds to an amount equal to seventy-five eightieths of the par amount of said common stock at such time owned by such holder, and arranged for the retirement from and after December 31, 1901, of the $75,000,000 preferred stock, by the payment to each and every holder of record thereof on January 1, 1902, of $100 cash for each and every share. 21220— VOL 2—07 M 13 674 1!>7 UNITED STATES BEPOfiTS, 249. Statement of the Case. On November 15, the executive committee of the Northern [249] Pacific Company authorized the execution of a con- tract with the Standard Trust Company of New York for the sale and delivery of the convertible certificates for $75,- 000,000 provided for in the resolutions. The preferred stock was subsequently taken up in accord- ance with the plan resolved upon. The Northern Securities Company was incorporated under the laws of New Jersey in November, IDOl, its articles of association having been filed at Trenton on the thirteenth day of that month, with a capital stock of $400,000,000, divided into 4,000.000 shares of the par value of $100 each, and its objects being certified to be: «• I (1.) To acquire by purchase, subscription or otherwise, and to hold as investments anj- bonds or other securities or evidences of indebted- ness, or any shares of capital stocli created or issued by any other corporation or corporations, association or associations, of the State of New Jersey or of any other State, Territory or country. - "(2.) To purchase, hold, sell, assign, transfer, mortgage, pledge, or otherwise dispose of, any bonds or other securities or evidences of indebtedues-s ereateti or issued by any other corporation or corpora- tions, association or associations, of the State of New .Jersey, or of any other State, Territory or country, and. while owner thereof, to exercise all the rights, powers and privileges of ownership. "(3.) To purchase, hold, sell, assign, transfer, mortgage, pledge or otherwise dispose of shares of the capital stocls of any other corpora- tion or corporations, association or associations, of the State of New Jersey, or of any other State, Territory or country ; and. while owner of such stock, to exercise all the rights, powers and privileges of ownership, including the right to vote thereon. "(4.) To aid in any manner any corporation or association of which any bonds or other securities or evidences of indebtedness or stocl; are held by the corporation ; and to do any acts or things designed to protect, preserve, improve or en- [250] hance the value of any such bonds or other securities or evidences of indebtedness or stoclc. "(5.) To acquire, own and hold such real and personal property as may be necessary or convenient for the transaction of its business. *' The business or purpose of the coi-poration is from time to time to do any one or more of the acts and things herein set forth. " The corporation shall have power to conduct its business in other States and in foreign countries, and to have one or more offices out of this State, and to hold, purchase, mortgage and convey real and personal property out of this State." On the fourteenth day of November, 1901, fifteen gentle- men, including complainant Harriman and two other directors of the Union Pacific, James J. Hill, president of the Great Northern, and two members of J. P. Morgan & Co., were elected directors of the Northern Securities Company. Complainant Harriman took his seat at the board and an HAKRIMAN V, NORTHERN SECURITIES CO. Statement of the Case. 675 executive committee of five was elected, of which he was one. _ November 15 resolutions were passed authorizing the pur- chase of the Northern Pacific stock held by Harriman and Pierce, as follows: "The president stated that he now had an opportunity of acquir- ing $37,023,000 par value of the common stoclj, and $41,085,000 par value of the preferred stock, of the Northern Pacific Railway Com- pany, at an aggregate price of $91,407,500, payable, as to $82,491,871, m the fully paid-up and non-assessable shares of this company at par, and, as to the remaining $8,915,629, in cash. " On motion, and by affirmative vote of all the directors present it was — * ''Resolved, That the president be, and hereby he is, authorized in behalf of this company, to purchase said stocli— namely $37,023,000 par value of the common stocli, and $41,085,000 par value of the preferred stock of the Northern Pacific Railway Companv, at an aggre gate price of $91,407,500, [251] payable as to $82,491,871 thereof in the fully paid-up and non-assessable shares of the capital stock of this company at par, and as to $8,915,029 in cash; and that the officers of this cojnpany be, and herel)y they are, authorized to issue fully paid-up and non-assessable shares of stock of this company to the amount of $82,491,871, and to pay $8,915,629 in cash, in con- sideration of such $37,023,000 of the connnon stock and $41,085,000 of the preferred stock of the Northern Pacific Railway Company. "Resolved, That the president be, and hereby he is, authorized at any time to retire at par, for cash, any and all preferred stock of the Northern Pacific Railway Company that may be acquired by this company, and in case such retirement shall be effected prior to Jan- uary 1, 3902, to allow interest up to January 1, 1902, at the rate of four per cent per annum, on the sum receivable for such preferred stock. ''Resolved, That the president be, and hereby he is, authorized in behalf of this company to purchase at their par value an amount of the convertible certificates of the Northern Pacific Railway Company, to be issued pursuant to the resolutions of the board of directors of the Northern Pacific Railway Company, passed November 13, 1901, equal to seventy-five eiglitieths of the par amount of any and all common stock of the Northern Pacific Railway Company that shall have been acquired by this company. " Resolved, That the president be, and hereby he is, authorized in case of the purchase by this company of any of the convertible certifi- cates of the Northern Pacific Railway Company, to convert the same into common stock of the Northern Pacific Railway Company whenever such conversion may be effected. " Resolved, That the president be, and hereby he is, authorized to borrow, on such terms as he may arrange, any moneys required for the purpose of carrying out the foregoing resolutions, and to make all financial arrangements, [252] and to do all acts and things which he may deem needful in the premises." Complainant Harriman and his co-directors of the Union Pacific were not present at this meeting, but were present at the next meeting of the board on November 19, at which the minutes of the meeting of November 15 were read and on motion were approved. 676 197 UNITED STATES KEPORTS, 252. Statement of the Case. At a subsequent meeting of the executive committee, in which Mr. Harriman participated, the form of the company's permanent stock certificate, being the usual fonn, was unani- mously approved. In the meantime, and on November 18, Harriman and Pierce had delivered their Northern Pacifia stock to the Northern Securities Company and that company had deliv- ered to them the 824,000 shares of its stock and $8,915,629 in casu* The Northei-n Pacific stock certificates received from Har- riman and Pierce were surrendered by the Securities Com- pany to the Northern Pacific Eailway Company. The cer- tificates for the 370,230 shares of common stock were exchanged for 370,230 shares of common stock issued in the name of the Northern Securities Company. The certificates for the 410,580 shares of preferred stock were surrendered to the Northern Pacific Kailway Company for retirement, and paid for and retired as provided, the transaction result- ing in the receipt by the Northern Securities Company of certificates for 347,090 shares of new common stock. This made 717,320 shares, and the Securities Company also ac- quired 820,270 shares, from a large number of separate indi- vidual owners. And from a large number of stockholders of the Great Northern 1,181,242 shares of the stock of the latter company. At a meeting of the board of directors of the Northern Securities Company on January 22, 1903, at which complain- ant Harriman was present, the sale by the company of 75,000 shares 4)f its own stock for cash was approved. The second amended bill says $7,522,000 " was issued for cash used for the purchase of other property and for corporate purposes." [2531 From the organization of the Securities Company until the affirmance of the decree in the Govenunent suit, hereafter mentioned, complainants continued to exercise the right of holders of 824,000 shares of stock in the Securities Company; received their share of dividends, and gave their proxy to vote at the annual meetings of 1902 and 1903, July 17, 1902, Harriman and Pierce and the Oregon Short Line Company pledged the 824,000 shares of Northern Se- curities Company stock to the Equitable Trust Company, ' f HAEBIMAN V. NORTHERN SECURITIES CO. Statement of the Case. 677 the Short Line Company executing a trust indenture, which contained this clause: " The deposit and pledge hereunder of said shares of stoclt , or of any other securities which shall become subject to this indenture, shall not prevent the consolidation, union or merger with any other Si'^hlil?'' ""-S *^^ Se^^^^ies Company, or of any other corporation by which said securities shall have been issued, or the salVof its property or the distribution of its assets. In any such case the trustees shall receive such amounts of stock, bonds or other securi- ties, or money, or of either or all of them, as the holders of the pledged shares of stock of the Securities Company or other pledged securi- ties, as the case may be, shall be entitled to receive and upon receipt thereof shall surrender the deposited stock certificates or other securities." March 10, 1902, a bill was exhibited in the Circuit Court of the United States for the District of Minnesota by the United States against the Northern Securities Company, the North- ern Pacific Railway Company, the Great Northern Railway Company, James J. Hill, William P. Clough, D. Willis James, John S. Kennedy, J. Pierpont Morgan, Robert Bacon, George F. Baker and Daniel S. Lamont, to restrain the vio- hition of the act of Congress of July 2, 1890, 26 Stat. 209, c. 647, entitled "An act to protect trade and commerce against unlawful restraints and monopolies," which resulted April 9, 1903, in a decision in favor of complainants, 120 Fed. Rep. 721, and a decree as follows : "That the defendants above named have heretofore entered [254] into a combination or conspiracy in restraint of trade and commerce ?SS"^ *^^ several States, such as an act of Congress, approved .July I*, 1890, entitled 'An act to protect trade and commerce against unlawful' restraints and monopolies,^ denounces as illegal ; that all of the stock ^I the Northern Pacific Railway Company and all the stock of the Great Northern Railway Company, now claimed to be held and owned by the defendant, the Northern Securities Companv, was acquired and is now held by it in virtue of such combination or con- spiracy m restraint of trade and commerce among the several States • that the Northern Securities Company, its officers, agents, servants', and employes, be, and they are hereby, enjoined from acquiring or attemptmg to acquire further stock of either of the aforesaid railway companies; that the Northern Securities Company be enioinAd from voting the aforesaid stock which it now holds or may acquire and from attempting to vote it, at any meeting of the stockholders of either of the aforesaid railway companies, and from exercising or attempting to exercise any control, direction, supervision, or influence whatsoever over the acts and doings of said railway companies, or either of them, by virtue of its holding such stock therein ; that the Northern Pacific Railway Company and the Great Northern Railway Company, their officers, directors, servants, and agents, be, and they are hereby, respectively and collectively enjoined from peniiitting the stock aforesaid to be voted by the Northern Securities Company or in Its behalf, by its attorneys or agents, at any corporate election 678 197 UHITED STATES KEPOETS, 2oi. Statement of the Case. for directors or officers of either of the aforesaid railway comDaiiies. and that they, together with their officers, directors, servants, and agents, be lilcewise enjoined and respectively restrained from paving any dividends to the Nortliern Secnrities Comi>any on accc^nt of stoclc 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 per- mitting or suffering the Northern Securities Company, or [255] any of its officers or agents, as such officers or agents, to exercise any con- trol whatsoever over tte wrporate acts of either of the aforesaid rail- way companies. " But nothing herein contained shall be construed as prohibiting the Northern Securities Company from returning and transferring to the stocklmlders of the Northern Pacific Railway Company and the Great Northern Railway Company, respectively, any and all shares of stock in eitlier of said railway companies which the said Northern Securities Company may have heretofore received from such stocliholders in ex- change for its own stock ; and nothing lierein contained shall be con- sti-ued m prohibiting the Northern Securities Company from making such transfer and assignments of the stock aforesaid to such person or persons as may now be the holders and owners of its own stock orig- inally Issued in exchange or in payment for the stock claimed to have been acquired by it in the aforesaid railway companies." Th© case was brought to this court, and March 14, 1904, the decree was affirmed. 193 U. S. 197. March 22, 1904, the board of directors of the Northern Securities Company adopted the following preamble and resolutions : " Whereas. In the course of Its business, this company has acquired and now holds l,5a7,5{M shares in the capital stock of the Northern Pacific Railway Company; and 1,181,242 shares in the capital stock of the Great Northern Railway Company ; and ** Whereas, In a suit brought by the United States against this com- pany, the said railway companies and others, this company has been enjoined from voting uix)n tlie shares of either of the said railway com- panies, and each of the said railway comi»anies has been enjoined from paymg to this company any dividends upon any of the shares of such railway company held by this company : and « r^^^?.^^"*^' '^^^^ cominuiy has issued, and there are now outstandine 0,954,000 shares of its own capital stock ; and [256] "Whereas, This company desires and intends to complv with the decree in the said suit, fully and unreservedly, and without delav • Resolved, In consideration of the premises, it is declared necessary and desirable for this company so to reduce its present stock as will onahle it, without delay, In connection with such reduction, to distrib- ute among its shareliolders, the shares of capital stock of said rail- road companies held by it. "Resolved, That the' Iward of directors of this company hereby de- clares It advisable that article (Fourth) of this company's certificate of incorporation be amended, so as to read as follows : " Fourth. The capital stock of this company is herebv reduced to three million nine hundred and fifty-four thousand dollars* ($.3,954 000) and shall hereafter be three million nine hundred and fifty -four thou- sand dollars ($3,954,000), divided into thirty-nine thousand five hun- dred forty (39,540) shares of one hundred dollars ($100) each Such reduction of capital stock shall be accomplished by each holder of HAllRIMAN V. NORTHERN -SECURITIES CO. Statement of the Case. 679 outstanding shares of this company's stock surrendering to the com- pany, for retirement, ninety-nine (99) per centum of the shares held by him. "Upon the surrender to this company, by any shareholder, of the entire number of shares, and parts of shares, of this company's stock, which he is hereby required to surrender, this company will assign to him, for each share so surrendered, thirty-nine dollars and twenty- seven cents ($39.27) of the stock of the Northern Pacific Railway Company, and thirty dollars and seventeen cents ($30.17) of the pre- ferred stock of the Great Northern Railway Company, and propor- tional amounts thereof for fractional shares of the stock of this company. "The board of directors or executive committee from time to time shall make such rules and regulations as it shall deem necessary or convenient for carrying out the provisions hereof and all matters per- taining to the surrender and retirement [257] of the stock of this com- pany, or to the assignment and transfer of the stocks of the said rail- way companies, hereby contemplated, shall be under the direction of the board. For the purposes hereof, the stockholders of this company, and the number of shares held by them, respectivelv, shall be deter- mmed from the stock transfer books of the company, which for such determination, shall be closed at a day and hour to' be determined bv resolution of the board. " Resolved, That a meeting of the stockholders of this company for the purpose of taking action upon the said alteration of the certifi- cate of incorporation of this company and also upon such other busi- ness as may come before the meeting, be, and is hereby called, to be held at the general offices of this company in the city of Hoboken county of Hudson, and State of New Jersey, at 11 o'clock a. m., on April 21, A. D. 1904." Notice was accordingly given that the meeting of the stock- holders would be held on April 21, and a copy of the resolu- tions and an explanatory letter were sent to the Attorney General of the United States. Early in April the three prin- cipal complainants in the present suit presented to the Cir- cuit Court for the District of Minnesota their petition for leave' to intervene in the suit of the United States against the Northern Securities Company, setting up substantially the same grounds as in this suit, and seeking similar relief. This application was heard at St. Paul, April 12 and 13. The Government appeared by the Attorney General, and filed a declaration that it was satisfied with the relief granted. April 19, 1904, the court rendered its decision, denying leave to intervene. 128 Fed. Rep. 808. Up to April 18, 1904, the Securities Company had issued 86,945 certificates of stock and there had been 16,000 trans- fers registered on the books of the company. At the closing of the transfer books on that day there were 3,953,971 shares of stock outstanding in the hands of 2,531 separate holders. 1 1 680 197 UNITED STATES REPOBTS, 268. Statement of tlie Case. [258| The meeting of the stockholders of the Northern Securities CJompany was duly held April 21, 1904 ; and at that meeting the stock of the company was reduced ninety- nine per centum, and the proposed pro rata distribution of the stock of the Northern Pacific Eailway Company and of the preferred stock of the Great Northern Railway Com- pany, to and amongst the shareholders of the Northern Securities Company, was assented to. Two million nine hundred and forty-four thousand seven hundred and forty shares were represented and all voted for the plan adopted by the directors. As has been stated, the second amended bill was filed after the hearing on the application for the preliminary injunction, and it was therein alleged, among other things, that the Northern Securities Company was incorporated and organ- ized in pursuance of a combination in restraint of trade and commerce among the several States ; that the said company was to " acquire and permanently hold a majority of the shares of the capital stock of said Great Northern and North- em Pacific Companies and control the operation and manage- ment thereof in perpetuity, and that the then existing hold- ers of such railway shares should deposit the same with said holding company and receive in lieu thereof share certifi- cates of said holding company upon the basis of $180 par value of its stock for each share of Great Northern stock and $115 par value of its stock for each share of Northern Pacific stock, and that said holding company should act as custodian, depositary, or trustee of said railway shares on behalf of the existing stockholders of said railway compa- nies and their assigns." " That prior to the incorporation of said Northern Se- curities Company your orator Oregon Short Line Railroad Company, had acquired and at the time of the incorpora- tion and organization of said Securities Company owned $37,023,000 par value of the common stock and $41,085,000 par value of the preferred stock of the defendant Northern Pacific Railway Company represented by certificates issued to and registered in the name of your orators Harriman and Pierce; and that after [25d] the incorporation of the said Northern Securities Company had been resolved upon as HAEBIMAN V, NOETHERK SECURITIES CO. Statement of the Case. 681 aforesaid, your orators Harriman, Pierce and Oregon Short line Railroad Company agreed with the promoters and in- corporators of said Northern Securities Company to trans- fer to and deposit with said Northern Securities Company, under the terms and conditions aforesaid, the said shares of said Northern Pacific Railway Company of the aggre- gate par value of $78,108,000 owned by said Oregon Short Line Railroad Company as aforesaid, and to receive in ex- change therefor certificates of said Northern Securities Com- pany representing an interest therein of $82,491,871 par value and $8,915,629 in cash, and in pursuance of said agree- ment your orators Harriman and Pierce, acting for your orator Oregon Short Line Railroad Company did, on or about the eighteenth day of November, 1901, transfer and deliver to said Northern Securities Company certificates for $37,023,000 par value of the common stock and $41,085,000 par value of the preferred stock of said Northern Pacific Railway Company owned by your said orator as aforesaid and re- ceived in exchange therefor certificates of said Northern Securities Company representing an interest in $82,491,871 par value and said cash. * * * " That at the time of such exchange, on said eighteenth of November, 1901, it was agreed between said Harriman and Pierce and said defendant Northern Securities Company that the said $41,085,000 par value of said preferred stock of the said Northern Pacific Railway Company should be con- verted into common stock of said Northern I*acific Railway Company; that said preferred stock was subsequently and in or about the month of December, 1901, converted by said defendant Northern Securities Company into common stock of said Northern Pacific Railway Company of the same par value ; that certificates for $34,709,062 par value of such com- mon stock registered in its name on the books of said rail- way company were substituted in lieu and place of the cer- tificates for said preferred stock; that said Northern Securi- ties Company [260] caused said original common stock to be transferred into its name upon the books of said railway com- pany, and that said Northern Securities Company now holds within the jurisdiction of this court certificates registered in its name on the books of the Northern Pacific Company for 682 191 UNITED STATES BEPOKTS, 260. Statement of the Case. said common- stock so originally received from your orators Harriman and Pierce and for said common stock into which said preferred stock was so converted and certificates substi- tuted as aforesaid." " Your orators are advised by counsel and, therefore, aver that the effect of said decree of April 9, 1903, as affirmed by the Supreme Court of the United States, was to adjudge that the Northern Securities Company was not a purchaser or owner but simply a custodian of the shares of stock of said railway company acquired and held by it as aforesaid, that it acquired and held possession thereof in violation of said anti- trust act, that it acquired no title thereto and cannot transfer any rights in respect thereof, and that the legal and equitable owners of said shares of the stock of said railway companies were and are the several parties who originally exchanged the same for stock of the Northern Securities Company or their assigns." The prayer of the bill was " that it be decreed that said pro- posed plan of distribution is illegal and contrary to law and in violation of the rights and equities of your orators, and that the complainants are entitled to the return and transfer to them by the defendant Northern Securities Company of the shares of common stock of said Northern Pacific Kailway Company which were so delivered by said Harriman and Pierce and the shares of common stock into which the pre- ferred stock of the Northern Pacific Railway Companv deliv- ered by them were converted, in exchange for the certificates of stock of the Northern Securities Company so issued to and now held by your orators and such sum in cash as may be just ; and that the said defendant, Northern Securities Com- pany, its directors, officers and agents, may be ordered and directed to endorse [261] the certificates now held by it for said stock of the Northern Pacific Railway Company \o your said orator Oregon Short Line Railroad Company or in blank, and deliver the same to your orator The Equitable Trust Company of New York in exchange for the stock of the Northern Securities Company now held by it to be held subject to its rights and lien as trustee aforesaid ; and that the defendant Northern Securities Company, its directors, officers, agents and employes be perpetually enjoined and HARRIMAN V. NORTHERN SECURITIES CO. 683 Argument for petitioners. restrained from in any manner parting with, disposing of, transferring, assigning or distributing any part of said stock of the Northern Pacific Railway Company so received from your orators Harriman and Pierce as aforesaid, or any com- mon stock into which the preferred stock received from them may have been converted, or the certificates now representing the same or any part thereof, except to return the same to your orators in exchange for its own stock so issued as aforesaid and said cash ; and that vour orators have such other or fur- ther or general relief against said Northern Securities Com- pany as shall be proper and just under the circumstances of the case. " Your orators further j^ray that the defendant Northern Securities Company may be enjoined and restrained from parting with, disposing of, transferring, assigning or dis- tributing said stock of the Northern Pacific Railway Com- pany- or any part thereof during the pendency of this suit or an}^ certificates now representing the same." The proofs embraced the pleadings and decrees in the suit of United States v. Nortliern SecKfiiies Company; the eoi parte affidavits of Harriman, Hill, and others; the deposi- tion of Harriman taken before the Interstate Commerce Commission at Chicago in January, 1902; the deposition of Harriman taken in the suit of Minnesota v. Northern Securi- ties Company in December, 1902 ; extracts from the minutes of proceedings of the board of directors of the Northern Pa- cific Railway Company, and of the executive committee and board of directors of the Northern Securities Company. [262] Mr. William D, Guthrie, with whom Mr, D. 1\ Watson, Mr. R. S. Lovett, Mr. Maxwell Evarts, Mr. John F, Dillon, Mr. R, F. Lindabury and Mr. Bainhridge Colby were on the brief, for petitioners: As to the power of the court to enter final judgment; this case does not fall under Smith v. Vulcan Iron Works, 165 U. S. 518, but under the exceptions in Mast, Foos Co. v. Stomr Mfg. Co., 177 U. S. 485, 494, and see BHll v. Peckhum Motor Truck Co., 189 U. S. 57, 63. The Northern Securities Company, having been organized for an illegal purpose and having obtained possession of the 684 197 UKITED STATES BEPOBTS, 262. Argument for petitioners. railway stocks in pursuance of such purpose, could not thereby acquire the title to and ownership of the stocks. The whole transaction was illegal, ultra vires and void from the beginning to the end. It was, legally speaking, a nulhty— "an aggregate of nothings." jScovUI v. Thayer, 105 U.S. 150; Ashbtiry %. Carriage <& Iron Co. v. Riche, Li. K. 7 H. L. 653 ; Thomas v. Railroad Co,, 101 U. S. 71 ; Oregon Ry. Co, v. Oregonian Ry, Co., 130 U. S. 1, 22; Penna. Co. v. 8t Z., A. dc, R, R. Co,, 118 U. S. 290. ' The contract is void; the objection is not only that the corporation ought not to have made it, but that it could not make it, that the contract cannot be ratified or confirmed by the .stockholders, because it could not have been authorized by them, and that no performance can give the unlawful agreement any validity by way of estoppel or otherwise, or be the foundation of any right. Central Transp, Co, v. Pull- man's Car Co,, 139 U. S. 24, 60; McCormich v. Market Bank, 165 U. S. 538. 550 ; California Bank v. Kennedy, 167 U. S. 362, 368; Pullman's (Jar Co, v. Transportation Co,, 171 U. s! 138. In fact any contract made in violation of a statute is Toid, Gihhs v. Baltimore Gas Co., 130 U. S. 396, 410- Miller Y Ammov, 145 U. S. 421, 426; Connolly v. Uni^k Sewer Ptpe Co,, 184 U. S. 540, 548, and it is vain to contend that any right can be acquired under such a contract. Montgom- ery V. United States. 15 Wall. 395, 399; Desmare v. United mates, 93 U. S. [263] 605, 612; Sprott v. United States, 20 Wall. 459, 461 ; United States v. Lapene, 17 Wall. 601, 602, 603; United States v. Grossniayer, 9 Wall 72 76*' The Onachita Cotton, 6 Wall. 521, 532; and cases 'cited in Bank of the United States v. Owem, 2 Pet, 527, 541. Where the purpose and consideration of a contract have failed by reason of illegality resulting in corporate disabiUty to perform, the vendor may rescind and is entitled to restitu- tion of his title. Chapman v. Douglas County, 107 U. S 848; Am, TahU Works v. Boston Machine Co,, 139 Ma^a- chusetts, 5. When property is transferred for an iUegal pur- pose which has been terminated, prevented or abandoned the^older must return the property on demand. Louisiana V. Wood, 102 U. S. 294; Parkershurg v. Brown, 106 U S 487, 503. To deny a remedy to reclaim it, is to give effect Ui HABBIMAN V, NORTHERN SECURITIES CO. 685 Argument for petitioners. the illegal contract. Davis v. Old Colony Railroad, 131 Massachusetts, 258, 275 ; White v. Franklin Bank, 22 Pick. (Mass.) 181; La Caussade v. White, 7 D. & E. 535; Nat. Bank & Loan Co, v. Petrie, 189 U. S. 423 ; Sittel v. Wright^ 122 Fed. Rep. 434 ; Railroad Co, v. Railroad Co,, 66 N. H. 100. The contract having been declared invalid no rights were acquired thereunder. Cases supra and Jacksonville &c. Ry,Co, V. Hooper, 160 U. S. 514, 524; D wight V. Brewster^ 1 Pick. 50, 55. As to invalidity of contracts entered into in violation of statutes see Langdon v. Branch, 37 Fed. Rep. 449, 463; State v. Standard Oil Co., 49 Ohio St. 137, 183; People V. Chicago Gas Trust Co,, 130 Illinois, 268 ; People v. N. R. S, R, Co,, 121 N. Y. 582; Cameron v. Havemeyer, 25 Abb. N. C. 438, 446 ; Unckles v. Colgate, 148 N. Y. 529 ; State v. Distilling Co,, 29 Nebraska, 700. The question of ownership of stock was involved and de- cided in the Government suit. * 193 U. S. 197, 227 ; 307, 325, 353, 362. The decree authorized the return of the stock, and as it also decided that the combination was illegal it is vain to contend that any rights were acquired under the contract Montgomery v. United States, 15 Wall. 39^. The extent and effect of the decision of any court, as res [264] ad judicata or as a judicial precedent, must be ascer-^ tained, not merely from the decree or mandate, but also from the pleadings and the opinions delivered by the court. It is likewise proper to refer to the evidence before the court and to the arguments of counsel whenever necessary in order to determine exactly what points the court has ruled upon. The court is always at liberty to refer to its own records. Dim- mick V. Tompkins, 194 U. S. 540, 548 ; Bienville Water Sup- ply Co, V. Mobile, 186 U. S. 212, 217 ; Butler v. Eaton, 141 U. S. 240. Every question directly presented by the issues and discussed and passed upon in the opinions is as much a part of the decision and judgment of the court as if it had been expressly recited in its decree or mandate. So, the man- date of this court is always to be read in the light of its opinion, and it has never been the practice to recite in the mandate any of the points decided, but sunply to declare the ultimate conclusion of affirmance, reversal, dismissal or qualification of the decree below. Last Chance Min, Co, v. 686 197 UNITED STATES KEPOBTS, 264. Argument for petitioners. TyUr Min. Co,, 157 U. S. 683, 690; In re Sanford Fork <& Tool Co., 160 U. S. 247, 256 ; In re Potts, 166 U. S. 263 ; Baker v. Cummings\ 181 U. S. 117, 126; Nat, Foundry (&c, €o. V. Oconto Water Supply Co., 183 U. S. 216, 234; North- ern Securities Co, v. United States, 193 U. S. 332 ; Railroad Companies v. Schutte, 103 U. S. 118, 143. As stockholders, the complainants were clearly not stran- gers to a litigation which involved the right of the corpora- tion to carry out the objects for which it was organized and which aifected the title to all its property, received from them. As depositors, they were represented by their custo- dian, agent or trustee as to its right to hold and the legality of its custodianship. All identified in interest and in privity with one of the litigating parties are concluded by a judg- ment and entitled to invoke its effect. New Orleans v. Citi- zens' Bank, 167 U. S. 371, 396. Even if the decision in the Government suit does not constitute res adjudicata in the strict technical sense, it undoubtedly should have been re- garded as a controlling judi- [265] cial precedent on the same facts sufficient to establish prima facie all that the com- plainants were called upon to show on the motion for a pre- ' liminary injunction. Brill v. Peckham Motor Truck Co.^ 189 U. S. 57, 59-63; American Bell Telephone Co. v. Na- tional Imp. Telephone Co,, 27 Fed. Rep. 663, 664; Kerr v. New Orleans, 126 Fed. Rep. 920, 924. A stockholder is so far an integral part of the corporation that he is considered privy to any legal proceedings touching its status and powers. Sanger v. Upton, 91 U. S. 56. See also, Hawkins v. Clewn, 131 U. S. 319, 329 ; Glenn v. Liggett, 135 U. S. 533, 444; Great Western Telegraph Co. v. Purdy, 162 U. S. 329, 337 ; 3 Cook on Corporations, 5th ed. § 750 ; Herman on Estoppel and Res Judicata, 154, 165; Hale v. Hardon, 95 Fed. Rep. 747, 759 ; Hendrickson v. Bradley, 85 Fed. Rep. 508, 516 ; Wilson v. Seymour, 76 Fed. Rep. 678, 681; National Foundry <& Pipe Works v. Oconto Water Co., 68 Fed. Rep. 1006 ; Secor v. Singleton, 41 Fed. Rep. 725. As the Securities Company was the custodian or trustee of the railway shares deposited with it, it represented the com- plainants as its cestui que trustent and they are bound by HARRIMAN V. NORTHERN SECURITIES CO. Argument for petitioners. 687 1 the decree. Kerrison v. Stewart, 93 U. S. 155, 160; GraJiam V. Boston, Hartford <& Erie R. R. Co., 118 U. S. 161, 179; McCamphell v. Mason, 151 Illinois, 500, 508; McElrath v. Pittsburg and Steuhenville Railroad Co., 68 Pa. St. 37, 40, 41. In the Govenmient suit certain stockholders of different railroad companies were made defendants as of their re- spective classes. The judgment therefore bound the whole. Smith V. Swormstedt, 16 How. 288, 303. The court below was in error in holding that the form and nof the legal effect of the transaction was controlling. The assertion of a legal conclusion under such circum- stances never operates to estop a party from showing the real facts. Sturm v. Boker, 150 U. S. 312, 336 ; Mutual Life Ins. Co. V. Phinney, 178 U. S. 327, 342 ; Towle v. White, 29 L. T. N. S. 78; Heryford w. Davis, 102 U. S. 235, 243, 244, 246; Chicago Railway Go. v. Merchants' Bank, 136 U. S. 268, 280; McGourkey [266] v. Toledo <& Ohio Railway, 146 U. S. 536, 569; McNamara v. Culver, 22 Kansas, 661, 668; Pugh v. Davis, 96 U. S. 332, 336. The bill and proofs in the Government suit were all to effect that the Northern Securities Company was organized to effectuate an illegal holding corporation. In the case of an illegal trust and combination entered into and adjudged to be in violation of an act of Congress, par- ticularly where, at the very inception of any such scheme, its legality is at once publicly challenged by the National Gov- ernment, justice and sound public policy will be promoted by decreeing the restoration of the status quo, and not permit- ting distribution on the basis of alleged rights acquired under and by virtue of the illegal contract and in disregard and defiance of the pending litigation. If Mr. Hill and his associates are to be judged as other men are judged and are to be presumed to have contemplated and intended the consequences of their own acts, there can be no escape for them from the conclusion that the present pro- posed plan of distribution is a willful and deliberate attempt to circumvent the decree in the Government suit, and was, in fact, all along, the alternative intended as part of their orig- inal unlawful scheme. 688 197 UNITED STATES REPORTS, 266. Argument for petitioners. The Circuit Court in Minnesota did not intend to pass Upon or to prejudice or prejudge the merits of a controversy which it declined to consider or decide. There has been no equitable estoppel created for the benefit of the Northern Securities Company by what the company did or continued to do during the pendency of the Govern- ment suit and in defiance of the serious claim therein made, either as to sale of stock, all of the purchasers having nbtice of the situation, or by the receipt of dividends on the North- em Securities stock by the complainants. Z. c6 N. Railroad Co, V. Kentucky, 161 U. S. 677, 691; ScoviUe Y.Thayer, 105 U, S. 143, 151; Central Transportation Co, v. Pullman Car Co., 189 U. S. 24, 60; Tieton v. Cofleld, 93 U. S. 163. Illegal acts cannot be given validity by assenting to them or acting under [267] them. If so, a statute could be abrogated by simply contracting to do the prohibited act. Cases supra and Thomm v. Railroad Co,, 101 U. S. 71, 86; Veeder v. Mudgett, 95 N. Y. 295, 310. The Northern Securities Company claims that because it now holds possession by virtue of an illegal contract between parties in pari delicto, the complainants and all other deposi- tors can be allowed no standing in any court of law or equity to reclaim their property. This contention cannot be sustained. Its result obviously would be that the com- pany might dispose of and distribute at will all the property it held without legal accountability to any one. Yarmouth V. France, 19 Q. B. D. 647, 653 ; Northrup v. Graves, 19 Con- necticut, 548, 554; 2 Stephen Cr. Law, 4; McMullen v. Hoffman, 174 U. S. 639, 669. Complainants acted in good faith and belief that the Northern Securities Company was not an illegal combination. As to what Congress itself contemplated by the statute is uncertain. See Cong. Rec, 51st Cong., 1st Sess., vol. 21, Pt. 3, pp. 2460, 3146, 4089. Where the illegal purpose cannot be continued and must necessarily be abandoned, the innocent owner of property Iransferred does not forfeit his legal rights so that he has become outlawed, and cannot maintain an action to recover his property, and the other party may retain the property free from accountability and convert it to his own use or dis- pose of it as he sees fit, and the one in possession is pro- HARRIMAN V, NORTHERN SECURITIES CO. 689 Argument for petitioners. tected in appropriating the property by a maxim of equity. . Nat, Bank <& Loan Co. v. Petrie, 189 U. S. 423. The rule as to parties in pari delicto contemplates the exist- •ence of a delictum, that is, a wrongful act knowingly done, an intentional " transgression against positive law." Parties are not in pari delicto when there is concededly no intentional wrongdoing or crime. Even in criminal cases, satisfactory proof of a mistake of the law, honestly held in consequence of a reasonable, but erroneous, construction of a doubtful statute, often operates to prevent a conviction. Queen v. {268] Tolson, 23 Q. B. D. 168, 171; Taylor v. Newman, 4 Best & S. 89; Regina v. Allday, 8 C. & P. 136; Rex v. Twose, 14 Cox C. C. 327; Reg. v. SUep, 8 Cox C. C. 472; Regina v. Tinkler, 1 F. & F. 513 ; Rider v. Wood, 2 E. & E. Z^%', Buckmaster v. Reynolds, 13 C. B. (N. S.) 62; United States V. Conner, 3 McLean, 573 ; United States v. Pearce, 2 McLean, 14; Hoisted v. State, 41 N. J. L. 552, 591; Cutter V. State, 36 N. J. L. 125; Stone v. United States, 167 U. S. 178, 188; Hedden v. Iselin, 31 Fed. Rep. 266; Iowa V. Sheeley, 15 Iowa, 404; Commonwealth v. Bradford, 9 Mete. (Mass.) 268; State v. Hause, 71 N. Car. 518; Dot- son V. State, 6 Coldw. (Tenn.) 545. As to whether the rule applicable to parties in pari delicto applies where the parties have acted in good faith and under a mutual mistake as to the law, see SpHng Co. v. Knowlton, 103 U. S. 49 ; St. Louis Railroad v. Terre Haute Railroad, 145 U. S. 393 ; City of Detroit v. Detroit City Ry. Co., 60 Fed. Eep. 161, and Pullman Palace Car Co, v. Central Transp. Co., 65 Fed. Rep. 158. Relief will be granted from the consequences of a mistake of law, whenever the mistake is clearly proved or admitted and, by reason of such mistake, the party against whom relief is sought would otherwise secure an unfair advantage. Moses V. Macferlan, 2 Burrows, 1005, 1012; Farmer v. Arundel, 2 W. Bl. 824 ; Bingham v. Bingham, 1 Ves. Sen. 126; Belt's Supp. 79; Bize v. Dickason, 1 D. & E. 285; Earl of Beauchamp v. Winn, L. R. 6 H. L. 223 ; Re Saxon Life Assurance Society, 2 J. & H. 408; Jones v. Clifford, L. R. 3 Ch. D. 779 ; Allcard v. Walker [1896], 2 Ch. 369, 381 ; 21220— VOL 2—07 u i4 690 197 UNITED STATES KEPORTS," 268. Argument for petitioners. Gruwold V. Hazardy 141 U. S. 260, 284; Spring Co. v. Knowlton, 103 U. S. 49, 60; S^iell v. Insurance Co,, 98 U. S. 85 ; Htmt v. Eousmanier, 8 Wheat. 174, 215 ; S. C, 1 Pet. 1, 17; State v. Paup, 13 Arkansas, 129, 138; Griffith v. Sahas- ttan County, 49 Arkansas, 24, 34; Northrop v. Graves, 19 Connecticut, 548, 554; StedweU v. Anderson, 21 Connec- ticut, 139, 144; Cnlbreath v. Culhreath, 7 Georgia, 64; Un- dencood v. Brochman, 4 Dana (Ky.), 309, 317; Ray & Thornton v. Bank, 3 B. Mon. (Ky.) 510; Stockhridge Iron Com- [269] pany v. Hudson Iron Company, 102 Massachu- setts, 45; Lowndes v. Chisholm, 2 McCord Ch. (S. C.) 455; Mortimer v. Pritchard, Bailey Eq. (S. C.) 505; Hopkins V. Masyck, 1 Hill Ch. (S. C.) 242; 250; MacKay v. ^miYA, 27 Washington, 442. When an illegal contract is sought to be specifically en- forced or when damages are claimed for its breach, un- doubtedly the sound rule is that the difference between malum prohihitum and malum in se is immaterial. Gihhs v. Baltimore Gas Co,, 130 U. S. 396, 412. But the distinction between malum prohihitum and maluin in se has been often recognized by the courts when consider- ing the right to recover property transferred under an illegal contract, upon disaflSrmance or termination of the illegal transaction, under circumstances which result in a failure of consideration. Where the transaction involves moral turpitude, such as the giving of a bribe, or facilitating the commission of an immoral act or a heinous crime, the party is so clearly culpable and deserving of punishment that the courts will refuse to lend him any assistance against another party to the immoral transaction, but will leave both parties where their own immoral conduct has placed them. Where, however, the act involves no moral turpitude, but is merely malum prohibitum as distinguished from malum in se, re- lief has often been granted by restoring the status quo so far as practicable. Pratt v. Short, 79 N. Y. 437, 445. For dis- tinction between malum prohihitum and malum in se see Stock Yards v. Railroad Co,, 196 U. S. 217; Spring Co, v. Knmdton, 103 U. S. 49 ; McCutchemi v. ^Merz Co,, 71 Fed. Eep. 787, 789; Parkershurg v. Brown, 106 U. S. 487; Bank V. Townsend, 139 U. S. 67, 75. HARRIMAN V, NORTHERN SECURITIES CO. 691 Argument for petitioners. In this case the transaction was not malum in se all the parties believed they were not violating the law. The trans- action was not forbidden bv the common law. In re Greene, 52 Fed. Rep. 104, 111; Mogul Steamship Company v. Mc- Gregor, Gow <& Co., 23 Q. B. D. 598, 619, 626; [1892] A. C. 25 ; United States v. Freight Association, 166 U. S. 290, 334 ; United States v. Joint Traffic Association, 171 U. S. 505, 572. It was [270] also apparently legal according to the law of New Jersey where it occurred. New Jersey Corporation Act, revision of 1896, §§ 49, 51; Dill, on Corp. 88, 03; Tren- ton Potteries Co, v. Oliphant, 58 N. J. Eq. 507, 524; Anshoro V. United States, 159 U. S. 695. The transaction was at most malum prohihitum, Tappenden v. Randall, 2 B. & P. 467, 470; Ex parte Bulmer, 13 Vesey, 313; White v. Franklin Bank, 22 Pick. (Mass.) 181; Lowell v. Boston and JjOwell Railroad Corporation, 23 Pick. (Mass.) 24, 32; Washington Gas Co, V. Uist. of Columhia, 161 U. S. 316, 327 ; Hanauer v. Doane, 12 Wall. 342; Douglass v. Kavanaugh, 90 Fed. Rep. 373. Where money or property has been deposited with a trustee or stakeholder the doctrine of in pari delicto does not apply. A mere custodian as was the Securities Company cannot take advantage of the illegality of the transaction but must return the i^roperty to the owners. Brooks v. Martin, 2 Wall. 70, 80; Planters' Bank v. Union Bank, 16 Wall. 483, 500; Block V. Darling, 140 U. S. 234 ; Pointer v. Smith, 7 Heisk. (Tenn.) 137, 144 ; Railroad v. Railroad, 66 N. H. 100, 131 ; Newhold V. Sims, 2 S. & R. (Pa.) 317; Jeffrey v. Ficklin and Bennett, 3 Arkansas, 227, 236; Barrett v. iVez'Z, Wright (Ohio), 472; Skinner v. Henderson, 10 Missouri, 205 ; Walker v. Chapman,, Lofft, 342 ; Wassermann v. Sloss, 117 California, 425 ; Morgan V. Groff, 4 Barb. (N. Y.) 524; Barnard v. Taylor, 23 Oregon, 416, 422 ; S, C, 18 L. R. A. 859 ; Kiewert v. Rindskopf, 46 Wisconsin, 481; Douville v. Merrick, 25 Wisconsin, 688; Bone V. Ekless, 5 H. «& N. 925 ; Wright v. Stewart, 130 Fed. Rep. 905, 921 ; Dauler v. Hartley, 178 Pa. St. 23 ; Mallory v. Oil Works, 86 Tennessee, 598, 606; Dwight v. Brewster, 1 Pick. (Mass.) 50, 55; Sampson v. Shaw, Executor, 101 Massachusetts, 145, 151 ; Morgan v. Beaumont, 121 Massachu- setts, 7 ; Clarke, Harrison (& Company v. Brown, 77 Georgia, 692 Wt UliTITED STATES BEPOBTS, 270. Airgnmeit for petitioners. HABEIMAN t\ NORTHERN SECURITIES CO. 69a 606; Shannon v. Baumer^ 10 Iowa, 210; Taylor v. Bowers. 1 Q. B. D. 291 ; In re Crmimire^ ex parte Waud [1898], 2 Q. B. 383 ; Kinsman v. Parklmrst, 18 How. 289. The q|>ntention of the Northern Securities Company that the illegal contract had been executed, and that this precluded [271] any relief to the complainants, is fallacious and can- not be sustained. Northern Sectmties Co, v. United States ^ 193 U. 8. 197, 357. A universally recognized exception to the rule concerning parties in pan delicto is that the courts will permit the re- covery of property deUvered and held under an illegal con- tract which has been terminated in fieri, when the public interests will be advanced thereby. Starke^s Exrs. v. Little- page, 4 Rand. (Va.) 368; O^Conner v. Ward, 60 Mississippi, 1025, 1037 ; 5 Thompson on Corp. § 6410 ; 2 Pomeroy's Eq, §941; Story's Eq. Jur. § 298. These complainants can follow the common Northern Pa- cific stock obtained by the Northern Securities Company by the conversion of the preferred stock. Where specific prop- erty belonging to another is changed by a custodian, bailee, trustee or agent into other property or funds, the original owner is entitled to follow it as long as it can be ascertained to be such, and the right only ceases when the means of ascertainment fail. National Bank v. Insurance Co,, 104 U. S. 54, 68. See also Silshury v. McCoon, 3 ]^. Y. 379, 390; McLarren v. Brewer, 51 Maine, 402, 404. The real nature of the transaction was not changed by the conversion of stock. It was not an independent subscription for bonds. The issue of the convertible certificates, the retirement of the preferred stock, and the conversion of the convertible certificates into common stock, are shown to have taken place all on the same day as part of one transaction and the securities are traceable. This was the only way it could bo done under the laws of Wisconsin and the corporate powers of the Northern Pacific Railway Company. Weidenfeld v. Northern Pacific By, Go,, 129 Fed. Rep. 305; Laws Wiscon- sin, 1895, ch. 244, § 10; Scovill v. Thayer, 105 U. S. 143; Hamor v. Taylor-Rice Engineering Co,, 84 Fed. Rep. 392: Trevor v. Whitworth, L. R. 12 App. Cas. 409, 416. I Argument for petitioners. There is no merit in the fierce attack made on behalf of the [272] Securities Company upon the motives of the com- plainants in instituting this suit and the announcement that if complainants prevailed and recovered their property, the so-called Union Pacific Railroad System would secure control of the Northern Pacific Railway Company nor should this consideration influence the court, change the rules of law, and produce a different result than if this feature did not exist This court will not consider the motives of parties in in- stituting legal proceedings to protect their alleged legal or equitable rights. Dickerman v. Trust Co., 176 U. S. 181, 190; South Dakota v. North Carolina, 192 U. S. 286, 311. There is an uncontradicted statement in the record that the roads are not parallel and competitive. And see also Louis- ville and Nashville v. Kentucky, 161 U. S. 677, 698. The real competitive lines are the Great Northern and the North- ern Pacific and it has been the motive of those in control of the Great Northern to stifle competition. If the railway shares deposited are not to be returned but to be regarded as assets of the Securities Company then the corporation should sell the stocks and make the distribution in cash. Mason v. Pewahic Mining Co,, 133 U. S. 50, 63; Kean v. Johnson, 9 N. J. Eq. 401, 408, 409 ; Coler v. Tacoma Railway and Power Co,, 64 N. J. Eq. 117, 125; S, C, 54 Atl. Rep. 413. It is so in the case of a partnership. Lindley on Part., 555, and much stronger are the reasons for such course in the case of a corporation. 4 Thompson on Corp. § 4548; 2 Cook on Corp. § 671. As to § .54, Corporation Act of New Jersey, Revision of 1896, see Reals v. Hale, 4 How. 37, 54. Mr, D, T, Watson also for petitioners : This court, in the Government case decided that the Secu- rities Company was not the lawful purchaser or absolute owner of the capital stock of the Northern Pacific Railway Company assigned to it by appellants, but held it as custo- dian for the appellants. 193 U. S. 325, 334, 346, 353, 361, 365, 300, 400. The decree authorized the return of the stock to the original [273] stockholders of the constituent com- panies. The Securities Company cannot hold the railway 694 197 UNITED STATES REPORTS, 273. HARRTMAN V, NORTHERN SECURITIES CO. 695 Argument for petitioners. stock and prevent giving relief to complainants imder the doctrine of in pod delicto. By the affirmance of this court the decree of the Circuit Court became the decree of this court and binding upon all parties and privies and other courts. In re Potts, 166 U. S. 265 ; Durant v. Essex County, 101 U. S. 555 ; Sandford c&c. €o.j Petitioner, 160 U. S. 247. The opinion of this court is part of the record and may be freely resorted to to determine what this court has decided. Foundry Co. v. Water Co., 183 IT. S. 217; Baker v. Cummings, 181 U. S. 124; Mining Co. v. Mining Co., 157 U. S. 683, 690 ; So. Pac. Co. v. United States, 183 IT. S. 519, 532; United States v. Norfolk Railway Co., 114 Fed. Eep. 686; Emsell v. Russell, 129 Fed. Rep. 434; West V. Brashmr, 14 Pet. 342 ; DeSollar v. Hanscome, 158 U. S. 221; Cromwell v. County of Sac, 94 U. S. U9', Strong V. Grant, 2 Sup. Ct. D. C. 222 ; Fulton v. Pomeroy, 111 Wis- consin, 668 ; Barton's Suit in Equity, 150 ; Equity Rule, 86 ; Putnam v. Day, 22 Wall. 66. As parties by representation in the Government case, com- plainants are entitled in their own right to plead or give in evidence against, and as binding upon, the Securities Com- pany, the conclusions in that case on the same questions which arise in this — even if the cause of action, parties, testi- mony and measure of relief in the two suits are different. Cromwell v. County of Sac, 94 IT. S. 352; Lumber Co. v. Buchtel, 101 U. S. 638 ; So. Pac. R. R. Co. v. United States, 168 U. S. 48; Black on Judgments, 609, 614; Burlen v. Shannon, 99 Massachusetts, 202 ; Railway Co. v. Schntte, 103 U. S. 143; Duchess of Kingston Case, 20 Howell's State Trials, 355. The appellants, as parties by representation in the Govern- ment case, are entitled in their own right to set up and assert the decree in that case as against the Northern Securities Company in this case. Story Eq. PL § 372 ; 2 Daniel's Ch. PL & Pr. 1539; Wilton's Appeal, 97 Pa. 393; Grifpn v. Spence, 69 Georgia', 397. [274] It is not necessary that all the parties to the Govern- ment suit should be the same in the subsequent litigation. Thompson v. Roberts, 24 How. 240; Smith v. Kemochen, 7 How. 217; Wilson v. Buell, 117 Indiana, 315, 318; Wells on Argument for petitioners. Res Adjudicata, § 35; Lawr^nee v. Hunt, 10 Wend. 80; Freeman on Judgments, § 154; 1 Greenleaf, § 523; Green v. Bogue, 158 U. S. 478, 502. Where there are several grounds of recovery or defense on which the decree may have been rested, it will be conclusive on the specific findings, which led up to the proposition, on which the court decided the case, and what that ground was may be determined by evidence aliunde where the decree itself is silent on it. Russell v. Place, 94 U. S. 606 ; DeSollar V. Hanscome, 158 U. S. 216; Flint Nat. Bk. v. Covington, 129 Fed. Rep. 798 ; Hawes v. Water Co., 5 Sawyer, 287 ; Cor- coran V. Ches. Canal Co., 94 U. S. 741. The former opinion and decree of this court is conclusive even on this court when the same case comes back here, and certainly so where that former opinion and decree is set up as conclusive in another litigation where the parties are not all the same, and where the complainant in the former case, the United States, is not a party to the second. Roberts v. Cooper, 20 How. 467, 481 ; Barney v. Winona c&c. R. R. Co., 117 U. S. 231; United States v. Camon, 184 U. S. 574; Thompson v. Maxwell c&c. Co., 168 U. S. 456 ; Yazoo d;c. Ry. Co. V. Adams, 180 U. S. 7; Great Western Tile Co. v. Buma- ham, 162 U. S. 343; Cha^n v. Taylor, 116 U. S. 567; Clark V. Keith, 106 U. S. 464; Supervisors v. Kenniott, 94 U. S. 498 ; Tyler v. Maguire, 17 Wall. 283. The appellants were by representation parties and privies in the Government case, as stockholders of the Securities Company, as of class represented by Morgan, Hill and others, as cestuis que trust, and as stockholders of the Northern Pacific Railway they are therefore in their own right entitled to set up the findings and conclusions of this court in that case as res adjudicafa in any subsequent litigation between them- [275] selves and the Northern Securities Company so far as regards the issues raised and decided in that case. 3 Cook on Corp. § 750 ; Hendrickson v. Bradley, 85 Fed. Rep. 516; Foundry Co. v. Water Co., 68 Fed. Rep. 1007; Wilson V. Seymour, 76 Fed. Rep. 681; Herman on Estoppel, 154- 165 ; Secor v. Singleton, 41 Fed. Rep. 725 ; Gt. West. Tel. Co. V. Purdy, 162 U. S. 329; Hawkins v. Glenn, 131 U. S. 319; Glenn v. Williams, 60 Maryland, 93, 116; Hancock 696 m UNITED STATES REPOBTS, 275. Argument for petitioners. Bank v. Farmers, 176 U. S. 640; Sanger v. Upton, 91 U. S. 66; Whitman v. Bank, 176 U. S. 560; Flash v. Conn, 109 U. S. a7l ; HaM v. Hardon, 95 Fed. Eep. 759 ; Fruit Co, v. RaUroad Co., 89 Fed. Eep. 24; McElrath v. P. :etts, 366; Bagg v. Jerome, 7 Michijsran, 145; White V. Hunter, 23 N. H. 128 ; EUicott v. Chamberlin, 38 N. J. Eq. 604; Markley v. Village, 51 N. E. Rep. 28; Moore V. Kendall, 52 Am. Dec. 145; Equitable Life Assurance So- eieiy v. WetheriU, 127 Fed. Rep. 946. In all such cases the defendant's possession is a sufficient answer to the plaintiff's demand ; both because such posses- sion stands as the equivalent of a title in the defendant, and because to discourage such transactions, courts will be deaf HARRIMAN V. NORTHERN SECURITIES CO. Argument for respondent. 701 to the clamor of a complainant in pari delicto. Myers v. Meinrath, 101 Massachus(Btts, 366 ; Horton v. Bufflngton, 105 Massachusetts, 399; Bagg v. Jerome, 7 Michigan 145; Smith V. Bean, 15 N. H. 577; Watkins v. Nugen, 45 S. E. Rep. 262; Mcintosh V. Wilson, 81 Iowa, 339; Traders* National Bank V. Steere, 165 Massachusetts, 389; Harris, Sunday Laws, § 169. The condition of the possessor is so much better than that even of the original owner, that the possessor can recover the property not only from a stranger but from such original owner, if by chance the latter has been able to repossess him- self of the property. Kinney v. McDermntt, 55 Iowa, 674; Smith V. Bean, 17 N. H. 577; Thompson v. Williams, 58 N. H. 248 ; Cohn v. Heimbauch, 86 Wisconsin, 176. [381] The distinction between mala in se, and mala pro- hibita has been abandoned, but were this otherwise, there is authority for regarding as malum in se any act contraven- ing public policy and a penal statute. Irwin v. Curie, 171 N. Y. 409, 415 ; Gibbs v. Gas Co., 130 U. S. 396 ; McMullen v. Hoffman, 174 U. S. 639; Equitable Society v. WetheriU, 127 Fed. Rep. 946. The doctrine of locus pcenitentice is available only to those who seasonably seek to make restitution and to withdraw from their illegal executory contract. Laches is a fatal vice. Vandalia case, 145 U. S. 393; Union T. Co. v. Illinois Co., 117 U. S. 434; In re Great Berlin S. Co., 26 Ch. D. 616; Hardwood v. Railroad Co., 17 Wall. 80 ; Twin Lick OH, Co. V. Marbury, 91 U. S. 587; Grimes v. Sanders, 93 U. S. 55, 62; Hayicood v. Nat. Bank, 96 U. S. 611, 617; McLean v. Clapp, 141 U. S. 429, 432; Hoyt v. Latham, 143 U. S. 553, 567; Townsend v. Vanderworker, 160 U. S. 171; Ward v. Sherman, 192 U. S. 168 ; Rugan v, Sdbin, 53 Fed. Rep. 415, 418; Kinney v. Welb, 54 Fed. Rep. 34; Boston R. R, v. New York R. R., 13 R. I. 264; Kitchen v. St. Louis Ry. Co., 69 Missouri, 224 ; Peabody et al. v. Flint, 6 Allen, 56 ; Dun- phy V. Travelers' Assn., 16 N. E. Rep. 426 ; Graham v. Birk- enhead, 2 McN. & G. 156. The rigor of the rule against the complainant is never re- laxed out of consideration for him, but only when neces- 702 197 UNITED STATES BEPORTS, 281. Argiuuent for respondent. sary to promote equity and justice. Pullman Co. v. Central Co.^ 171 XT. S. 138 ; Spring Co, v. KMowlton^ 103 U. S. 49. In cases presenting no such si>ecial considerations of equity, justice or public policy, a party even to an unexecuted il- legal contract cannot recover back money paid or property delivered thereunder. Scott v. Brown, L. K. [1892] 2 Q. B. 724 ; In re Great Berlin S, Co., 26 Ch. D. 616 ; Mcintosh V. Wilson, 81 Iowa, 3.^9; Bruer v. Kansas Ins Co,, 100 Mo. App. 540; Thompson v. Williams, 58 N. H. 248; Markley v. ViUage, 51 ¥. E. Eep. 28; Stor^e v. Finkelstein. 46 Ne- braska, 477. As to Northern Pacific preferred stock retirement see Hachett v. Northern Pacific Ry. Co., 36 Misc. 583. [282] Mr, John G. Johnson, with whom Mr. John W, Griggs and Mr. W. P, Clovgh were on the brief, also for respondent : On appeal from an interlocutory decree granting a special injunction in a suit for establishing title to property, if the record fully and fairly discloses the case on the point of title, the Appellate Court not only may, but rightfully should, determine the question of the injunction upon the merits of plaintiff's claim. The action of the Circuit Court of Ap- peals in this case was controlled by that rule, and proceeded upon it. 1 High on Injunction, 3d ed. §7; Knoxville v. Africa^ 47 U. S. App. 74; Bissell Co. v. Goshen Co.y 43 C. C A. 47; Shinhle v. Louisville (& NashviUe, 62 Fed. Hep. 690; Mast, Foos d& Co, v. Stover Mfg. Co., 177 U. S. 485. If, up to the time of argument of the appeal in the Circuit Court of Appeals, plaintiffs had been entitled to a stay of the pro rata plan of distribution, until opportunity could be given for fair argimient and advisement upon the law points involved in their claim, such right was exhausted by their opportunity to be heard in the Circuit Court of Appeals. In the Circuit Court of Appeals, therefore, the whole case for an injunction, pendente lite, was thrown back upon "the first ground of the Circuit Court, viz., " grave and diflScult " questions of fact, for ultimate determination. The bill claims two distinct parcels of stock, one of which complainants never owned. HAHRIMAN V. NORTHERN SECURITIES CO. Argument for respondent. 703 Plaintiffs' claims are self-contradictory and can be estab- lished, if at all, only under rules of common law. Equity rules cannot be invoked in their support. The facts constituting title to the stock in controversy liecessarily consist of, and are limited to, the things said and done, and mutually intended, by Harriman and Pierce on the one part, and the Securities Company on the other. As all material facts in regard to those sayings, doings and mutual intentions appear in this record, the entire case, on both sides, relating to title, must be here and can be disposed of. [283] The Union Pacific owns the Oregon Short Line. The latter owns the Oregon Railwaj^ and Navigation Company. As to effect of acquisition of control of the stock of a com- peting road made by a railway company, and by the stock- holders of a railway company see the Pearsall case, 161 U. S. 646 ; Kentucky v. Louisville i& Nashville, 161 U. S. 676. Plaintiffs in effect ask the court to place control of the Northern Pacific system of railways in the hands of the Union Pacific Railroad Company. Of the relative geo- graphical positions of the Union Pacific and the Northern Pacific Railway systems, and of the public laws of the sev- eral States on the subject of railway combinations, as well as of the Federal laws on the same subject, the court will take notice without proofs. The burden of proof is on plaintiffs to show, by proper evidence, that the sale to Securities Company was different from what, on its face, it appears to have been. No such proof was tendered. Plaintiffs really found their claims on what they assert to have been adjudicated in the Government suit, and not on what was actually done and intended by the parties. The plaintiffs were strangers to that suit. For the assumed adjudication in their favor, plaintiffs rely not on the decree, but upon the opinion of Mr. Justice Harlan which does not, however, mean what plaintiffs claim, and their alternate theory, that the title of Securities Company was subject to a condition, since broken, is unsupported by fact, law or adjudication. Where there has been a transfer of property, illegal from 704 107 UNITED STATES BEPORTS, 283. Argumeut for respondent. any cause, and possession has been delivered to the person to whom the title under the transfer was intended ultimately to go, the transaction has become executed on the part of the transferrer, and he cannot thereafter repudiate it and reclaim the property because of the illegality. This rule governs under all forms of illegality ; whether in doing something which the laws positively prohibit, or some- thing which they merely omit to allow. Thomas v. Railroad [284] Co,, 101 U. S. 71, 83 ; Vandalia case, 145 U. S. 393, 390, 408 ; Central Co, v. Pullman Co,, 139 U. S. 24. When complainants had transferred the Northern Pacific shares to the Securities Company, and the latter had made payment of the price therefor by handing over to them the cash and the certificates for its own stock, coming to them, nothing remained executory between the parties save the implied mutual obligations concerning the Northern Securi- ties stock resulting from the relation of corporation and stockholder, thus created. Mr. ThoTrms T hacker also submitted a brief for respondent : The injunction pendente lite can be justified only upon the theory that it is a necessary incident to the granting of such final' relief as the complainants appear to be entitled to. The right to such final relief must appear; if not, the injunction was error. If such right did not appear, the question of granting or denying the injunction was not addressed to the discretion of the court. If, upon the record, it does not ap- pear that the complainants are entitled to recover this stock the order appealed from was erroneous and should be re- versed. Brooklyn Club v. McGuire, 116 Fed. Rep. 783; Home Ins, Co, v. Nobles, 63 Fed. Rep. 643; Central Stock Yards Co, v. L, cfe N, R. R. Co,, 112 Fed. Rep. 823 ; Stevens V. M., K. db T, Ry, Co,, 106 Fed. Rep. 771 ; Amelm Milling Co, V. Tennessee C, I. cfe R, Co,, 123 Fed. Rep. 811. In some cases " a probable right " is deemed enough. New Memphis Oo» Co, v. Memphh, 72 Fed. Rep. 952 ; Indianap- olis Gas Co, V. Indianapolis, 82 Fed. Rep. 245; Reduction Works V. Calif omia Co., 94 Fed. Rep. 694; Georgia v. BraUsford, 2 Dallas, 402 ; or a " prima facie right " Charles V. Marion, 98 Fed. Rep. 166; Cosmos Exploration Co, v. HAKRIMAN V, NORTHERN SECURITIES CO. Argument for respondent 705 Grey Eagle Oil Co,, 104 Fed. Rep. 20; Utah N. d- C R R Co. V. Utah N, c& C. Ry. Co., 110 Fed. Rep. 870. As to preservation of status quo see Allison v. Corson, 88 Fed Rep. 581 ; Denver c& R. G. R. R, Co. v. Uwited States, 124 Fed. Rep. 156; H addon v. Dooley, [285] 74 Fed. Rep. 429; Carter sviUe Light Go. v. Carters ville, 114 Fed. Rep. 699,' Cohen V. Delavlna, 104 Fed. Rep. 946; Newton v. Levis, 79 Fed. Rep. 715; West. U, Tel. Co. v. Pennsylvania R. R. Co 123 Fed. Rep. 33. On appeals from injunction orders the court will not only consider the merits but dismiss the bill, if it can see that the complainant is not entitled to final decree. Smith v. Vulean Iron Works, 165 U. S. 518 ; Mast, Fooz d; Co. case, 177 U. S. 485; Castner v. Co f man, 178 U. S. 168; KnoxvilU v. AfHca, 77 Fed. Rep. 501 ; Bissell Co. v. Goshen Co., 72 Fed, Rep. 545. If the argument of the complainants, therefore, still rests upon the theory of res adjudicata, that is upon the effect of the decrees in the Government suit, or upon any other theory concerning which the facts are substantially undisputed, this court, finding such theory unsound, will not simply reverse ihQ injunction order, but dismiss the bill. It was not the legal effect of the decree in the Government suit that title to the stocks of the Northern Pacific Railway Company and the Great Northern Railway Company, which the Securities Company now holds, never passed to the last- named company. See opinions 193 U. S. 197, 321, 324, 397 334,344,357. , , , -i, It does not foUow as matter of law, from the facts shown by the record, including the decree, that title to these stocks did not pass to the Securities Company. The transaction was not void because illegal. Harris v. Runnels. 12 How. 79 ; Mining Co. v. National Bank, 96 U. S. 641 ; National Bank V. Mathews, 98 U. S. 621 ; National Bank v. Whitney, 103 U. S. 99 ; Logan County Bank v. Townsend, 139 U. S. 67,' 76 ; Thompson v. St. Nicholas Nat. Bank, 146 U. S. 240, 251 • Scott V. Deweese, 181 U. S. 202, 211 ; Burck v. Taylor^ 1^2 U. S. 634, 648 ; Frits v. Palmer, 132 U. S. 282 ; McBroom v Investment Co., 153 U. S. 318; Jarvis Trust Company v. 21220— VOL 2—07 M 16 706 1!>T UNITED STATES REPORTS, 285, Opinion of the Couit. WilUtoit, 84 Fed. Rep. 514; Omtral Trust Co. v. Columhm %. Co., 87 Fed. Rep. 815; Termifml Co, v. Trmt Co., 82 Fed. Rep. IM; Chattanooga S. R. Co. v. Eimm, 66 Fed. Rep. 809, 815. [286] The Sherman Anti-Trii.st Act expressly contem- plates that contracts may be made in violation of the statute under which property will be owned. Nor was the transaction void because ultra rires. The law of New Jersey as declared by its courts is that an executed ultra rires transaction is not void. Cam. (£• Atl E. E. Co. V. 3Iafs Landing dte. E. E. Co., 48 N. J. L. 530, 567. The place of the transaction in this case was New York, and the New York law is to the same effect as that of New Jersey — ^that an executed ultra vires transaction stands as valid. Whitney Arms Co. v. Barlow, 63 N. Y. 62 ; Woodruf V. Erie Ey. Co., 93 N. Y. 609 ; Eider Life Eaft Co. v. Eoaeh, .97 N. Y. 378; Bath Gas Light Co. v. Clafy, 151 N. Y. 24; V ought V. Eastern Bldg. i&c. Assoc., 172 N. Y. 508. In the Federal courts, with respect to the i)assing of title, the law is the same. See National Bank eases above re- ferretl to. Even if the transaction in which the Oregon Short Line Railroad Company parted with the stock was void because illegal or ultra vires, nevertheless the complainants could not recover. EqtiitaUe Life Assurance Society v. Wetheinll, 127 Fed. Rep. 947 ; Smith v. Bean, 15 N. H. 577 ; Myers v. Mein- rath, 101 Massachusetts, 366 ; Vandalia case, 145 IT. S. 393 ; Higgins v. McCrea, 116 U. S. 671; White v. Barber, 123 U. S. 392 ; Horton v. Buffington, 105 Massachusetts, 399. The transaction has never been abandoned. The Securities Company claims the ownership which was thus acquired and proposes to exercise the rights of such ownership by dis- tributing the stocks as surplus assets among its stockholders. Mb. Chief Justice Fuller, after making the foregoing statement, delivered the opinion of the court. In applying to this court for the writ of certiorari counsel for complainants insisted that the Circuit Court of Appeals had practically disposed of the entire controversv on the HARRIMAN V. NORTHERN^ SECURITIES CO. Opinion of the Court'. 7(17 [287]merits, although its decree only reversed the order of the Circuit Court granting the preliminary injunction. We accepted that view and granted the writ, in the circum- stances, notwithstanding the decree was not final. In. our opinion the record presented the whole case to that court, in such wise, that it might properly have been finally disposed of in terms by its decree, in accordance with the well settled rule upon that subject. Mast, Foos <& Go. v. Stover Manu- facturing Co., 177 U. S. 485, 495 ; Castner v. C off man, 178 U. S. 168, 183; Mayor c&c. of Knox mile v. Africa, 77 Fed. Rep. 501. In Western Union Telegraph Comjyany v. Pennsylvania Railroad Company et al., 195 U. S. 540, 547, the Circuit Court had granted a preliminary injunction, 120 Fed. Rep. 981, which was reversed by the Circuit Court of Appeals. 123 Fed. Rep. 33. The telegraph company moved that the decree be modified so as to direct the dismissal of the bill. The motion was denied, and the telegraph company took an appeal to this court. Subsequently the Circuit Court sua sponte entered an order dismissing the bill, and the telegraph company appealed therefrom to the Circuit Court of Ap- peals. 195 U. S. 547. We then granted a certiorari, and, considering both appeals t>9gether, affirmed the decree of dis- missal. In the present case we granted the certiorari, at the in- stance of complainants, before the case had gone back to the Circuit Court, and shall do what the Circuit Court of Ap- peals might have done, that is, finally dispose of the case by our direction to the Circuit Court. Complainants deny that the Securities Company became the owner of the Northern Pacific Railway shares, and assert to the contrary that the company held the shares as a trustee or a bailee for complainants. And the principal ground on which this contention is rested is that it was so adjudicated by the Circuit Court for the District of Minnesota in the Government suit, by the de- cree of April 9, 1903, affirmed by this court. It may be said in passing that complainants were not par- ties [288] of record to that suit, and that they were not par- ties by representation, if the effect of the transfers as between 708 197 UNITED STATES REPORTS, 288. Opinion of the Court. the parties thereto had been in issue and the vital conflict between complainants and the corporation, now set up, then existed, which would destroy the community of interest on which the rule of representation is founded. And, on the other hand, in that suit the Northern Securities Company, at a time when complainant Harriman was a director, answered that : " Every share of the Great Northern Company and the Northern Pacific Company acquired by this defendant has been, and, so long as it remains the property of the defendant, will continue to be, held and owned by it in its own right, and not under any agreement, promise, or understanding on its part, or on the part of its stockholders and officers, that the same shall be held, owned, or kept by it for any period of time whatever, or under any agreement that in any manner restricts or controls to any extent any use of the same which might lawfully be exercised by any other owner of said stocks." But we are of opinion that the Circuit Court did not deter- mine the quality of the transfer as between the defendants themselves, nor was that the purpose of the Government proceedings. The decree of April 9, 1903, adjudged that defendants had theretofore entered into a combination or conspiracy in re- straint of trade and commerce ; that all stock of either of the railway companies then held or owned by the Securities Com- pany was acquired and held in virtue of such combination ; and enjoined the Securities Company and the two railway companies from receiving, or permitting the exercise of, any control by the Securities Company over either railway, or any exercise of the voting power of the railway shares, and the payment or reception of dividends upon the railway shares held by the Securities Company; and the Securities Company was forbidden from acquiring further stock of either of the railway companies. And it was provided that nothing should be construed as fBii] prohibiting the Securities Company from returning and transferring the railway shares to the original railway stockholders who had delivered their shares to the Securities Company for shares of its stock ; or to such person or persons as might be the holders and owners of its own stock origin- HARRTMAN^ V, 25^0RTHERN SECURTTTES CO. Opinion of the Court. 709 ally issued in exchange or in payment for the stock claimed to have been acquired by it in the railway companies. This did not involve a decision tliat any original vendor of the railway shares was entitled to a judicial restitution thereof, and such was the view of the Circuit Court itself, for in its opinion of April 19, 1904, the court said : fo " ^.^^ ^f ^'^^. ^'^^ ^""^^"y prohibitory. It enjoined the doing of cer- l«r,f ^o^^i^^'^^^i^'^l^^ ^""^ ^^ l^^S as these acts are not done it enforces essential'' ""^ ''''"'''' ^''''^''"^ ^"^ '^'^ enforcement is deemed fhinl^ '? ^'" ^^ complaint the United States prayed, among other thmgs, for a mandatory mjunction against the Securities Company requirmg it to recall and cancel the certificates of stock which it had issued, and to surrender the stock of the t>vo railway companies in exchange for which its stock had been issued. This prayer for relief was denied The court doubted its power to compel stockholders of the Securities Company, who had not been served with process, and were not before the court otherwise than by representation (if, indeed they were present by representation), to surrender stock which was in their possession, and to take other stock in lieu thereof. It accord- ingly contented itself with an order which rendered the stock of the two railway companies, so long as it was in the hands of the Securities Company, valueless for the purpose of carrying out the objects of the unlawful combination in restraint of interstate trade " The Government was satisfied with the relief obtained, and ex- presses itself as fully satisfied therewith at the present time. When the decree was entered it was assumed by the court that when the stock was thus rendered valueless in the hands of the Securities Com- pany the stockholders of that [290] company would be able, and like- wise disiw)sed, to make a disposition of the stock which, under all the circumstances of the case, would be fair and just, and would restore it to the markets of the world, where it would have some value, in- f^u ^^J^^^^S. a worthless commodity. It was thought that the duty of thus disposing of it could be safely left to the stockholders of the Securities Company, and that, if any controversy arose in the dis- charge of this function, iu view of the situation that had been created by the decree, it would be a controversy that would properly form the fnterest^^ ^"^ independent suit between the parties immediately , JJ-* ^^*^"^.t^^t the decree contained a provision, in substance, that nothing therein contained should be construed as prohibiting the Secu- rities Company from returning to the stockholders of the Northern Pacific Railway Company and the Great Northern Railway Comoanv ^^^ i"^l?" ^^'^^^ "^^ ^*^^*^ *^ ^^t^er of said railway companies which the Northern Securities Company had acquired iu SSiangffor fts own stock and that nothing therein contained should be construed as prohibiting the Securities Company from making such transfer of the stock aforesaid to such person or persons as had become owners of its own stock originally issued in exchange for the stock in the two railway companies ; but this provision was purely permissive It did not command that the stock should be so returned, or exclude other methods of disposition of it that, in view of all the circumstance^ might appear to be more equitable. The fact that the directors of the Securities Company have proposed to its stockholders a plan of ^^^*^.^*^^?^i°^ *^® ^^^^^^ ^^ t^® *w<* railway companies in a manner some- what different from that which was tentatively suggested by the 710 Wl Ul^ITED STATES EEPORTS, 290. Opiuion of the Court. decree, but not comma ndetl, cannot be regarded as a failure to obey the decree. It was said in argniment that one purpose of the interven- tion Is to hare that clause of the decree which is now merely permis- sive made mandatoi^. But this would be to modify the provisions of a decree which had become final by affirmance, and make an [291] order wiiich we expressly and on full consideration declined to make when the decree was entered. This we must decline to do." The decree of April 9, 1903, was affirmed by the judgment of this court, which, of course, went no further tlian the decree itself. We did, indeed, by our judgment leave the Circuit Court at liberty " to proceed in the execution of its decree as the circumstances nuiy require," but this did not operate to change the decree or import a power to do so not otherwise possessed. Counsel argue, howevei*. that certain expressions in the opinion of ^fr. Justice Harlan so eidarged the scope of the decree as to give it the effect now attributed to it by com- plainants. This suggestion is inconsistent with the settled rule that general expressions in an opinion, which are not essential to dispose of a ca>^e, are not i)ermitted to control the judgment in subsequent suits. Cohens v. Tfrf/inm, 6 Wheat. 2G4, 399; CaroU V. CaroWn Lessees, 10 How. 275. But we do not think that the opinion of ^Ir. Justice Harlan is open to the construction put upon it. In speaking of the situation as between the Government and the defendants, the Securities Company is sometimes referred to as the custodian of the shares and sometiun'> as the absolute owner, but in the sense that in either view the combination was illegal. For the purpos*^s of that suit it was enough that in any capacity the Securities Company had the power to vote the railway shares and to recinve the dividends thereon. The objection was that the exercise of its powers, whether those of owner or of trustee, would tend to prevent competition, and thus to restrain conunerce. Some of our numl>er thought that as the Securities Com- pany owned the stock the relief sought could not be granted, but the conclusion was that the possession of the power, which, if exercised, would prevent competition, brought the case within the statute, no matter what the tenure of title was, [292] Treating the question as an open one, it seems to HARRIMAN V. NORTHERN SECURITIES CO. Opinion of the Court 711 us indisputable that, as between these parties, the transaction was one of purchase and sale. The situation is thus well put by Dallas, J. : " The resolution which authorized the acquisition of the railway stock on behalf of the Securities Company was adopted by its board of directors at a meeting at which Mr. Harriman Avas present as a member of the board, and the only authority it conferred was • to purchase said stock * ♦ * at an aggregate price of ^01,407.500, payable, as to $82,4.01,871 thereof, in the fully paid-up and non- assessable shares of the capital stock of this company at par, and as to $8,91o,«20, in cash.' It is obvious that this resolution con- templated a * purchai-e.' and not a bailment or trust ; and that it accurately stated the nature and terms of the contract which was actually made by and with the Securities Company is unequivocally sliown l)y what was done in pursuance of it. Tlie railway shares were unconditionally assigned to that company. The price si»ecitied in the resolution was paid by it. and this payment was made partly in cash and partly in shares of its own stock, for which corporate certificates in the ordinary form were'delivered and accepted. * * ♦ The complainants received dividends uixm tlie stock that was issued to them, which were paid out of tlie general funds of the Securities Company ; and bv its indenture to the Equitable Trust Company of New York the Oregon Short Line Railroad Company irrefutably asserted its ownership of the Securities Company stock which it tliereby i)leilged." And the Securities Company sold 75,000 shares of its stock for $7,522,000 cash, " used," as stated in the bill, '' for the purchase of other property and for corporate purposes." But assuming that the transaction was in form, and at least prima facie in substance, one of purchase and sale, it is denied that the equitable title vested because, as alleged in the second amended bill, there was an agreement by the promoters of the Securities Company, carried out by that [293] comi)any, that the latter should " acquire and hold the shares of said raflway stocks, as aforesaid, as custodian, depositary, or trustee, and to issue in exchange therefor its own share certificates upon said agreed basis." And here again we concur in the views of the Circuit Court of Appeals as expressed by Judge Dallas. " The agreement thus set up is not in accord with the documentary evidence which has been referred to, and to establish its existence a cle ir preponderance of proof should at least be required, whereas, in our opinion, it conclusively appears that no such agreement was ever made. Mr. Harriman himself has distinctly testified that the North- ern Pacific stock in question was sold; that the transaction was not an exchange; that he, principally, negotiated the sale; and that there was not attached to the negotiations any condition except as to price. And to the same effect is his affidavit in this case, in which he de- posed that he was urged by Messrs. Morgan & Co. to dispose of the 712 B7 UNITED STATES BEPORTS, 293. Opinion of the CJonrt Nortlieni Pacific stoclj heid by the Oregon Short Line Company, and that they further stated that, npon the organization of the proposed holding company,' not that it would take as custodian or trustee, ^\i ir 5!^^ ^2?^^ ^ prepared to purchase the holdings of stoclc of the Nortliem Pacific owned by the Oregon Short Line, and pay therefor in the stock of the holding company.' These statements of tbat one of the complainants having most knowledge of the sublect confirmed, as they are, by other evidence, make it quite impossible to believe that the railway stock was received by the Securities Company merely as a custodian or depositary. The only agreement upon which iL^TK*'"Tf^"*®1.,'^**® *^" unqualified agreement of sale, and the fact £^n ^J^Zi7^'\''''^''^'l''l Securities Company was organiz^ hal been compiilsorily abandoned has not divested or in anv wnv affected tte absolute title which, by executed contract of purchase, it* acquired Undoubtedly, it was anticipated by the complainants, as bv all c^I ceraed, that the rights ordinarily incident to the ownership of stock Inclnding the right to vote and [894] to receive dividends, would be exercisable as to this stock by the Securities Company. But expecta- tion IS not contract, and therefore the frustration of this anticioa- Mon cannot he said to have occasioned a failure of consideration, i^ .?. I consideration agreed upon was payment of the price, and admittedly that payment was made." Complainants' counsel say, in respect of Mr. Harriman's testimony that the transaction was an unconditional purchase and sale, that he only swore to his opinion on a question of law. This will hardly do when applied to testimony as to what was said and done in conference with the alleged pro- moters of the Securities Company. When Mr. Harriman testified that he attached to his negotiations in the sale of Northern Pacific stock no other condition than that of the price, and that the transaction was completed, how can com- plainants be permitted to deny that this was a statement of fact? And how can the establishment of the contract and its terms as embodied in the resolutions of November 16, 1901, approved at the succeeding meeting by the vote of Mr. Harriman, and which appeared to be, and were testified to by Mr. Hill, President of the Securities Company, as con- stituting the only contract which was made and authorized, be overthrown in the absence of any evidence to the contrary ? The consideration received by complainants consisted of money and Northern Securities stock certificates. Those certificates were in common form, and each was a muniment of the holder's title to a proportionate interest in the corpo- rate estate vested in the corporation. By the provisions of the corporation act of New Jersey, and its certificate of in- corporation and distribute its assets. Complainants sub- and to hold, and at any time to sell, the shares of other corpo- HABKIMAN V, NOKTHERN SECURITIES CO. 718 Opinion of the Court. rations. And under that act it had power, in the discretion of its directors and of the holders of two-thirds of its capital stock, at any time, on notice, to dissolve and to wind up the corporation and distribute its assests. Complainants sub- jected themselves to this power in accepting the shares of the [295] Northern Securities Company, and their unqualified transfer of their railway stock was inconsistent with any obligation of the Securities Company to retain the railway shares for any particular period. In acquiring the Securities stock, complainants acquired the ordinary rights of stockholders in New Jersey business corporations, including the right to receive dividends, and to share in the distribution of the assets of the corporation on its dissolution, or of any surplus of assets on reduction of its capital stock. In view of the decree of the Circuit Court for the District of Minnesota in the Government's suit the continued ownership of the railway shares became useless to the stockholders of the Securities Company, and accordingly the directors decided to reduce the capital stock and dis- tribute the surplus of assets created by that reduction, and the resolutions to that end were ratified by a vole of iuore than two-thirds of the Securities shares. By the transfer of the Northern Pacific shares and the pay- ment therefor as agreed the contract was executed, and the implied obligations resulting from the relation of corpora- tion and stockholder alone remained executory. And when the Securities Company resolved to distribute these railway shares ratably among all its stockholders, it did this in per- formance of its contract with them and not in repudiation of it. It is the complainants who are seeking the determi- nation and repudiation of the contract. Their final con- tention in that regard is that they are entitled to a decree rescinding the contract of purchase and sale, and directing the return of the railway shares parted with by them thore- under, because of the illegality of the transaction as ad- judged in the Federal courts. And this in defiance of the settled rule (hat property delivered under an illegal contract cannot be recovered back by any party in pari delicto. "The general rule, in equity, as at law," said Mr. Justice Gray in St Louis, Vandalia k- 714 197 UNITED STATES KEPORTS, 295. HARRTMAN V. NORTHERN SECURITIES CO. 715 Opinion of the Court Terre Hmtte Rmlroad Company v. Terre Eante dh Indian- upolis [2%] Railroad Cmipany, 145 U. S. 393, '• is In paH delicto potior est conditio defendentis; and therefore neither party to an illegal contract will be aided by the court, whether to enforce it or to set it aside. If the contract is illegal affirmative relief against it will not be granted, at law or in equity, unless the contract remains executory, or unless the parties are considered not in equal fault, as where the law violated is intended for the coercion of the one party, and the protection of the other, or where there has been fraud or oppression on the part of the defendant. Thomas v. Eichmond, 12 Wall. 349, 355; Spring Co. v. Enowlton, 103 U. S. 49 ; Story Eq. Jur. § 298. ♦ * * " When the parties are in pan delicto, and the contract has hjen fully executed on the part of the plaintiff, by the conveyance of property, or hy the payment of money, and has not been repudiated by the defendant, it is now equally well settled that neither a court of law nor a court of equity will assist the plaintiff to recover back the property con- veyed or money paid under the contract. Thomns v. Rich- mondj sypra: AyerH v. JenHns, L. K. 16 Eq. 275, 284." That Avas a suit in equity by the maker of mi unauthorized lease of a railway and franchises, against the lessee, to enforce an attempted repudiation of the lease by the former, on the ground of the illegality. The lease was for nine hundred and ninety-nine years, of Avhich but a few years had elapsed at the date of the attempted rescission. The illegality of the lease and the consequent breach of public duty were manifest, but the right of the lessor, there- fore, to maintain the suit was denied bv this court. In the present case complainants seek the return of prop- erty delivered to the Securities Company pursuant to an executed contract of sale on the ground of the illegality of that contract, l)ut the record discloses no special consider- ations of equity, justice or public policy, Avhich would justify the courts in relaxing the rigor of the rule which bars a recoverv. The Circuit Court decrees put at rest any question that the f297l ratable distribution resolved upon was in violation of public policy. Opinion of the Court. And it is clear enough that the delivery to complainants of a majority of the total Northern Pacific stock and a ratable distribution of the remaining assets to the other Securities stockholders would not only be in itself inequitable, but would directly contravene the object of the Sherman Law and the purposes of the Government suit. The Northern Pacific system, taken in connection with the Burlington system, is competitive with the Union Pacific system, and it seems obvious to us, the entire record consid- ered, that the decree sought by complainants would tend to smother that competition. While the superior equities, as against complainants' pres- ent claim, of the many holders of Securities shares who pur- chased in reliance on the belief that they thereby acquired a ratable interest in all of the assets of the Securities Company, are too plain to be ignored. The illegal contract could not be made legal by estoppel, but the ownership of the assets, unaffected by a special in- terest in complainants, could be placed beyond dispute on their part by their conduct in holding the Securities Com- pany out to the world as unconditional owner. And, without repeating in detail what has been already set out, it is plain that right of rescission of the executed contract of November 18, 1901, even if rescission could have otherwise been sustained, had been lost by acquiescence and laches at the time this bill was filed. Since the transfer of that date Securities stock had passed into the hands of more than 2,500 holders, manv of them in Great Britain, France and other parts of Europe: nearly a year after the filing of the Government bill 75,000 shares were sold for cash, complainant Harriman concurring; some months after, Harriman and Pierce and the Oresron Short Line Company pledged their 824,000 shares to the Equitable Trust Company; notwithstanding the decree of April 9, 1903, they [298] stood upon their rights as shareholdei-s ; and it was not until after March 22, 1904, when defendant's board of directors resolved upon a ratable distribution that complainants undertook to change an election already so pronounced as to be irrevocable in itself in view of the rights of others. 716 191 UNITED STATES REPORTS, 298. Opinion of tlie Court We regard the contention that complainants are exempt from the doctrine in pari delicto because the parties acted in good faith and without intention to violate the law as with- out merit With knowledge of the facts and of the statute, the parties turned out to be mistaken in supposing that the statute would not be held applicable to the facts. Neither can plead ignorance of the law as against the other, and de- fendant secured no unfair advantage in retaining the consid- eration voluntarily delivered for the price agreed. Perhaps it should be noticed that the bill sought the return of two parcels of Northern Pacific common stock, the 370,230 shares delivered to the Securities Company, November 18, 1001, and the 347,090 shares received December 27, 1901, from the Northern Pacific Company on the retirement of pre- ferred stock. Early in 1901 the Hill-Morgan party held a majority of the common stock, and had asserted the intention to retire the preferred stock, " without," as Mr. Harriman testified, " af- fording the holders of the preferred stock the right to par- ticipate in any new securities that might be issued." With full knowledge of that intention the proceedings of the two companies followed in November, 1901, and the abso- lute and unconditional sale and purchase, as we hold the transaction to have been. We find no evidence of any express agreement that com- plainants should be entitled to the new common stock, and it was certainly not the natural increase of the old stock, but the result of the exercise of the right of subscription. The purchase by the Securities Company was on its own account and not in trust, and cannot be disturbed because of illegal purpose at the clamor of parties in pari delicto. And there is [2901 here no offer of the restoration of the status quo, if that were practicable. Doubtless it became the duty of the Securities Company to end a situation that had been adjudged unlawful, and this could be effected by sale and distribution in cash, or by dis- tribution in kind, and the latter method was adopted, and wisely adopted, as we think, for the forced sale of several hundred millions of stock would have manifestly involved disastrous results. BOARD OF TRADE V. CHRISTIE GRAIN & STOCK CO. 71 7 Syllabus. In fine, the title to these stocks having intentionally been passed, the former owners or part of them cannot reclaim the specific shares and must be content with their ratable propor- tion of the corporate assets. Decree affirmed; cause remanded to Circuit Court with a direction to dismiss the hill. \2U] BOARD OF TRADE OF THE CITY OF CHI- CAGO V. CHRISTIE GRAIN AND STOCK COM- PANY.« CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE EIGHTH CIRCUIT. L. A. KINSEY COMPANY v. BOARD OF TRADE OF THE CITY OF CHICAGO.^ CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE SE^^NTH CIRCUIT. Nos. 224, 280. Argued April 20, 24, 25, 1905.— Decided May 8, 1905. 1.198 U. S., 236.] The Chicago Board of Trade collects at its own expense quotations of prices offered and accepted for wheat, corn and pro\ isions in its exchange and distributes them under contract to persons approved by it and under certain conditions. In a suit brought by it to restrain parties from using the quotations obtained and used with- oln the Christie case an injunction was granted by the Circuit Court of the United States for the Western District of Missouri, July 5, 1902 (116 Fed., 944), but it was not based in any way upon the anti-trust law, and therefore the decision is not reprinted. On final hearing, March 19, 1903, the court considered the matter from the standpoint of the anti-trust law and adhered to its original con- clusions (121 Fed., 608). See p. 233. The decree was reversed by the Circuit Court of Appeals, Eighth Circuit (125 Fed., 161) but not upon any ground related to the antitrust law. That decision not reprinted. The action of the Circuit Court of Appeals was reversed by the Supreme Court, and the injunction was allowed (198 U. S., 236). & In the Kinsey case an injunction was denied the board of trade by the Circuit Court for the District of Indiana, July 14, 1903 (125 Fed., 72). The decree was reversed by the Circuit Court of Appeals Seventh Circuit, April 12, 1904, with direction to eater a decree in appellant's favor (130 Fed., 507). Antitrust law not discussed by either court. Those decisions not reprinted. Affirmed by the Supreme Court (198 U. S., 236). 718 198 UNITED STATES BEPOBTS, 236. Argument for Board of Trade. out authority of th.3 Board, defeudauts contended that as the Board of Trade pennitted, and the quotations related to. transactions for tlie preteudeil Imyhig of grain without any intention of actually receiving, delivering or iiaying for the same, that the Board vio- lated 'the Illinois bucket shop statute and there were no property rights in the quotations which the court could protect, and tliat the giving out of the quotations to certain persons makes them free to all. TfvhL that Even if such pretended huying and selling is permitted hy the Buard of Trade it is entitled to have its collection of quotations protected by the law, and to keep the work which it has done to itself, nor does it lose its property rights in the (piotations by connnunicating them to ceitain i)ersons, even though many, in confidential and contractual relations [237] to itself, and strangers to tlie trust may be restrained from ol)taining and using the quotations by including a l»reach of the trust." A collection of information, otherwise entitled to protection, does not cease to he so l)ecause it concerns illegal acts, and statistics of crime are iiroiierty to the same extent as other statistics, even if collecrted by a criminal who furnishes some of the data. Contracts under which the Board of Trade furnishes telegraph com- panies with its quotations, which it could refrain from connnuni- cating at all, on condition that they will only be distributed to persons in contractual relations with, and approved by, the Board, and not to what are known as bucket shops, are not void and against public policy as being in restraint of trade either at eonnnon law or under the Anti Trust Act of July 2. 1890. The facts are stated in the opinion. Mr. Ilenn/ aS. Rohhinft for jyetitioner in Xo. 224 and re- spondent in Xo. 280 : It is not a good defense to these suits that most of the transactions, out of which the quotations arise are gambling transactions. The viohition by a plaintiff of a criminal statute of one State does not debar him from maintaining suits to protect his property in a Federal court in another State. Penal laws do not reach, in their effect, beyond the jurisdiction of where they were established. Commomvealth V. Green J 7 Massachusetts, 50, 674; Logan v. United States, 144 IJ. S. 263, 303; State v. Pelican Ins. Co., 127 U. S. 265, 289 ; The Antelope, 10 Wheat. 66, 123 ; FolUott v. Ogden, 1 H. Blacks. 123, 135: FMer v. Eerger, 120 Fed. Rep. 274. And see also City of Chicago v. Stock Yards, 164 Illinois, 224, 238; Eateman v. Fargason, 4 Fed. Rep. 32; AnfJeg v. WU- a Syllabus copyrighted, 1905, by The Banks Law Publisliing Co. BOARD OF TRADE V. CHRISTIE GRAIN & STOCK CO. 719 Argument for Board of Trade. son, 50 Georgia, 121; Langdon v. Templeton, 06 Vermont, 173; 1 Pom. Eq. § 399. Petitioner's misconduct, if any, respecting the transactions upon its exchange, prejudicially affects these respondents only as it does the public at large. The general dissemination of these quotations is conceded to be highly beneficial to legitimate commerce. Respond- ents' answer so admits. So the Illinois Supreme Court has also held. AStoc/.' Exehaiige v. Board of Trade, 127 Illinois 153. 1 238] The Board of Trade's conduct with respect to the quotations, is not at all reprehensible. It gives them to all persons desiring them for lawful purposes, and only with- holds them, as it lawfully may, from bucket shops. As to the Illinois bucket shop law, see Sohy v. People, 134 Illinois, 66. It does not apply to exchanges. Market news, whose dissemination is helpful to commerce, is not to be deemed infected with illegality or beyond judi- cial protection, because the owner of this news maintains an exchange, where parties to most of the tra?isactions it records do not contemplate actual delivery. The existence of a prop- erty right in news depends upon its source, rather than the character or utility of the news itself. Brooks v. Martin, 2 Wall. 79; Planters' Bank v. Uiiion Bank, 16 Wall. 483, 499. As matter of fact it is not true that most of the trades, Avhose prices these quotations record, are gambling trans- actions. As to the principle and legality of the systems of offset- ting or elimination of trades which will be found in most commercial exchanges, see Clevs v. Jamieson. 182 U. S. 461; Lehman v. Feld, 37 Fed. Rep. 852; Irwin y. Wilbur, 110 U. S. 499; Blhh v. Allen, 110 U. S. 500. The Board of Trade should not be held responsible for what gambling there is upon its exchange, and on that ac- count be deprived of its right to sue to protect its property in its quotations. There is a property right in the quotations which equity will protect by injunction. Both in England and this country market news thus dis- tributed as are these quotations, is a species of property. 720 198 UNITED STATES BEPORTS, 238. Argument for Board of Trade. which a court of equity will protect by injunction. Ex- change Tel. Co. v. Gregory, L. E. (1896), 1 Q. B. 147; Dodge^ Co, V. Construction Co,, 183 Massachusetts, 62; Kieman v. Manhattan Tel, Co,, 50 How. Pr. 194 ; Nat. Tel. News Co. V. West. Un, Tel. Co., 119 Fed. Eep. 294 ; Illinois Com. Co. v. Cleveland Tel. Co., 119 Fed. Rep. SOI ; Cleveland Tel, Co, v. Stone, 105 [230] Fed. Rep. 594; Board of Trade v. Hadden- Kf^U Co., 103 Fed. Rep. 902 ; S. C, 109 Fed. Rep. 705 ; this case below 116 Fed. Rep. 944. Board of Trade quotations are a species of property. Stock Exchange v. Board of Trade, 127 Illinois, 153. That this market news is too evanescent to derive any protection from the Copyright Act, a perusal of that statute will show. Nat. Tel. News Co. v. West. Un. Tel. Co,, supra; Clayton v. Stone, 2 Payne, 382 ; S. C, Fed. Cas. 2872. As to the protection of literary property, apart from the statutory provisions of copyright law, see Millar v. Taylor, 4 Burr, 2303 ; Donaldson v. Becket, 4 Burr, 2408 ; Wheaton V. Peters, 8 Pet. 591 ; Holmes v. Hurst, 174 U. S. 82; Tomp- kins V. Halleck, 133 Massachusetts, 32 ; Palmer v. DeWitt, 47 N. Y. 532. See other cases applying the same principle to dramas, exhibition of paintings, etc. MacMin v. Richardson, Ambl. 694 ; Crowe v. Aiken, 2 Biss. 208 ; S. C, Fed. Cas. No. 3441 ; Albert v. Strange, 2 DeG. S. &. M. 652 ; Turner v. Roh- inson, 10 Irish Ch. 121, And in the case of lectures. Aher- mihy V. Hutchinson, 1 Hall. & Tw. 28 ; Caird v. Simes, L. R, (1887) 12 H. L. 326. See also Barthtte v. Chittenden, 4 McLean, 300; S. C, Fed. Cas. No. 1082. The contracts between the Board of Trade and the tele- graph companies are not illegal and are not in restraint of trade under the common law or any state or Federal statute, and as to duty of the Board to give out the quotations see Stock Exchange v. Board of Trade, 127 Illinois, 153; and cmtra, Ladd v. 7=^. C, P. <& M, Co., 53 Texas, 172 ; Delaware R. R. Co. V. Central Co., 45 N. J. Eq. 50; StaU v. Ass'^d Press, 159 Missouri, 424 ; Re Renville, 46 App. Div. N. Y. 37 ; Central Exch. v. Board of Trade, 196 Illinois, 396 ; Smith v. West. Un, Tel, Co., 84 Kentucky, 664 ; Bryant v. West. Un. Tel Co., 17 Fed. Rep. 825 ; Bradley v. West. Un, Tel. Co., 9 Con. Law Bull. 223 ; 27 Am, & Eng. Ency. of Law, 2d ed., BOARD OF TRADE V. CHRISTIE GRAIN & STOCK CO. 721 Argument for Board of Trade. 1039, 1094; Gray on Telegraphs, 19; Rev. Stat. Missouri, 1889, § 2338; Bucket Shop Statute of Illinois; State v. Bell Tel. Co., 23 Fed. Rep. [240] 539 ; Am. Tel, Co,, v. Conn, Tel. Co,, 49 Connecticut, 352; Sullivan v. Post. Tel, Co., 123 Fed. Rep. 411 ; Wilson v. N, Y, Comm, Tel. Co., 3 N. Y. Supp. 633. Nor is it a violation of the Sherman Act, or illegal at common law to impose restrictions as to use of quo- tations. Whitwell V. Continental Tolacco Co., 125 Fed. Rep. 454; Mitchell v. Reynolds, 1 Poere Williams, 181; Elliman V. Carrington, L. R. 1901, 2 Ch. Div. 275 ; Fowle v. Park, 131 U. S. 88; Bement v. Nat. Hankow Co., 186 U. S. 70; United States V. E. C. Knight Co., 156 U. S. 1, 16; Northern Secu- rities Co. V. United States, 193 U. S. 197, 338 ; Hopkins v. United States, 171 U. S. 578, 600; Anderson v. United States, 171 U. S. 604, 615 ; United States v. Joint Traffic Associa- tion, 171 U. S. 558 : Alexander v. State, 86 Georgia, 246. The anti-bucket shop acts were in force when the Sherman Act was passed. They promote public welfare. They were passed in the exercise of the State's police power. Doubt- less that power must yield, when necessary, to the paramount power of Congress to regulate commerce; but this court' should not, in the absence of clear language, assume that Con- gress intended by this act to nullify these state statutes, if indeed it lawfully might do so. Sherlock v. Ailing, 93 U. S. 99 ; Plumley v. Massachusetts, 155 U. S. 461 ; Patterson v. Kentucky, 97 U. S. 501 ; Nashville Ry. v. Alabama, 128 U. S. 96 ; Hennington v. Georgia, 163 U. S. 299. Is it not a more reasonable construction of this act that Congress did not intend to cover this subject or invade this field at all, and that States may still, under their police power, prevent the transmission of quotations into a State for use there in a bucket shop ? Mr. James H. Harkless and Mr. W. H. Rossington, with whom Mr. Chester H. Crum, Mr. Charles S. Crysler, Mr. Clifford Hinted, Mr. Charles Blood Smith and Mr. J. S. West were on the brief, for respondent in No. 244. Mr. Lloyd Charles Whitman and Mr. E. D. Crumpacker, with whom Mr. Jacob J. Kern, Mr. John A. Brown and 21220— VOL 2—07 M i6 799 198 UNITE© STATES REPORTS, 241. Argument for Christie and Kinsey companies. [241] Mr, Peter Crumpacker were on the brief, for the peti- tioner in No. 280 : The quotations are not property and cannot be impressed with a right of property by the Board of Trade. Sayre v. Moorej 1 East. Kep. S61 ; Jefferys v. Boosey, 4 H. L. Cas. 815 ; Crowe V. Aiken^ 2 Bissell, 214; Thompson v. Hiibhard^ 131 U. S. 151; lolantlie Cmey 15 Fed. Kep. 442; West, Pub, Co. V. Lawyers Coop. Co., 64 Fed. Eep. 364 ; Stowe v. Thomas, Fed. Cas. No. 13514, and cases cited bv counsel for Board of Trade. The Board of Trade has no property right or interest in or to the knowledge of the quotations, as they arise from the transactions of its members on the exchange. Cases cited supra and Kerns v. Wheatley, Fed. Cas. No. 7644. The right of property to mental or literary effort rests fundamentally upon the creative faculty which must- have been exercised by the claimant or one through whom his title is derived. Nothing can be the object of property which has not a corporeal substance. Wheaton v. Peters', 8 Pet. 591 ; nor be the object of property which is not capable of sole and ex- clusive enjoyment. Millar v. Taylor, 4 Burr, 2361 ; 2 Kent's Com. 320; Webster; Bouvier, sub. "Property"; Sliouler's Personal Property, § 2; 1 Blackstone, 138; Jones v. Van Zandts, 4 McLean, 603. To be property it must be capable of distinguishable proprietary marks. Jeferys v. Boosey, 4 H. L. Cas. 869. The Board of Trade cannot alter the essen- tial nature of the quotations. Its sole right of property is confined to the records themselves. It has no property interest in quotations made up of trans- actions on its floor when the transactions are not based upon bona fide contracts of purchase and sale of the commodity dealt in. The cases in 127 Illinois and 103, 109 and 119 Fed. Rep., cited by counsel for the Board, are not determinative of this case. The transactions on which the quotations are based are so [S4:2] tainted with illegality that the Board cannot have a property right in them. As to the illegality of transactions, where there is no inten- IfOARD OF TRADE V. CHRISTIE GRAIN & STOCK CO. 723 Argument for Christie and Kinsey companies. tion of delivery of the commodity bought and sold, see Coun- selman v. Reichert, 103 Iowa, 430 ; First Nat. Bank v. Oska- loosa Co., 66 Iowa, 41. As to methods of the Board of Trade see Central Stock Exchange v. Board of Trade, 196 Illinois, 396 ; Higgins v. McCrea, 116 U. S. 671. The testimony shows that no deliveries are intended in ninety-five per cent of the transactions. The members of the Board occupy the relation of bucket shops to their customers and the Board is a bucket shop to the non-members. As to substitution of trade see Cleios V. Jamieson, 182 U. S. 461, 471. As to how transactions between members are to be deter- mined as to the element of wager see Irwin v. Williar, 110 U. S. 499; Melchert v. Am. Union Tel. Co., 11 Fed. Rep. 193; Bernard v. Backhaus, 9 N. W. Rep. 585, 596 ; Dows v. Glas- pel, 60 N. W. Rep. 60; Whitesides v. Hunt, 97 Indiana, 191; Edwards v. Hoeffinghoff, 38 Fed. Rep. 639; Enibrey v. Jamieson, 131 U. S. 336; Mohr v. Miseni, 49 N. \^^ Rep. 862; Pickering v. Chase, 79 Illinois, 328. The Board of Trade does not come into court with clean hands. It is violating the Illinois anti-bucket sliop act of 1887. 1 Starr & Curtis Ann. Stat. 1304. That act was con- strued in Sohy v. People, 134 Illinois, 68; Weare Commission Company v. People, 111 111. App. 116, affirmed 209 Illinois, 528. And see as to the protection of gambling transactions. Beard v. Milmine, 88 Fed. Rep. 868 ; Schultze v. Holtz, 82 Fed. Rep. 448. The court will not protect trade-marks used to deceive the public or if the owner cannot otherwise come into court with clean hands. Lawrence Co. v. Tennessee Co., 31 Fed. Rep. 776, 784; Krauss v. Peebles, 58 Fed. Rep. 585, 594; Shnonds v. Jones, 82 Maine, 302; Joseph v. Macowsky, 96 California, 518 ; Holman v. Johnson, Cowp. 341 ; Fetridge v. Wells, 4 Abb. Pr. 144 ; Hall v. Coppell, 7 Wall. 542, 599. [243] The Board cannot restrict the publication; if it publishes the quotations it must publish for all. Ladd v. Oxnard, 75 Fed. Rept. 703; Gottsberger v. Aldine Book Co.y 33 Fed. Rep. 381 ; Keene v. Wheatley, Fed. Cas. No. 7644. The Board realizes the full avails of its property when it sells the quotations to the telegraph companies and the de- 724 J9fc UKITED STATES REPORTS, 243. .Ar.i;nnient for Christie and Kinsey companies. livery to those companies is necessarily a publication to the world. Bryant v. West Un, Tel. Co., 17 Fed. Eep. 825, is not applicable ; the distinction between restricted and general publication does not extend to matter of this kind. Pierce S Bushnell v. Werckmeister, 18 C. C. A. 431; Tribune v. Ass^d Press, 116 Fed. Kep. 126. Assuming there ever was a right of property in the Board to these quotations they have by usage become impressed with a public use and the Board is estopped from discrim- inating with reference to such use. Exchange v. Board of Trade, 127 Illinois, 153 ; Commission Co. v. Live Stock Ex- change, 143 Illinois, 239; Board of Trade v. Central Ex- change, 196 Illinois, 396; Munn v. Illinois, 94 U. S. 126, and Rose's notes thereto; State v. Gas Co., 34 Ohio St. 572; Lind- sey V. Anniston, 104 Alabama, 261; People v. King, 110 N. Y. 418; Eushville v. Gas Co., 132 Indiana, 575; Zanesville V. Gas Co., 47 Ohio St. 1 ; White v. Canal Co., 22 Colorado, 198; Water Works Co. v. Schotter, 110 U. S. 347; Railroad Oo. V. Wilson, 132 Indiana, 517; B. d: O. Tel. Co. v. Bell Telephone Co., 23 Fed. Rep. 539 ; Cotting v. Stock Yards Co., 183 U. S. 79. The conditions exacted of the public in the contract with the telegraph companies are unreasonable and tend to create a monopoly. Kalamazoo Sc. Co. v. Sootsnm, 84 Michigan, 194; Railroad Co. v. Langlois, 24 Pac. Rep. 209; Lindsey v. Anniston, 104 Alabama^ 261; Lough v. Outer- bridge, 143 N. Y. 277; Railroad Co. v. Bowling Green, 57 Ohio St. 345. Such contracts also violate the Sherman Anti-Trust Act. Carter-Crume Co. v. Peurrung, 86 Fed. Rep. 439. The business of telegraphing these quotations is inter- state commerce. Pensacola Tel. Co. v. West. Un. Tel. Co., m U. S. 1; West. Un. Tel. Co. v. Texas, [244] 105 U. S. 460; West. Un. Tel. Co. v. Pendleton, 122 U. 8. 347; Addyston Pipe Case, 175 U. S. 241; Gibjfons v. Ogden, 9 Wheat. 1, 189, 210; Brown v. Maryland, 12 Wheat. 447; Mobile v. Kim- MU, 102 U. S. 691 ; Bowman v. Chicago R. R. Co., 125 U. S. 490; Ferrf/ Co. v. Pennsylvania, 114 U. S. 203; Hopkins v. United States, 171 U. S. 578, 590. Mr. Jtdien T. Davies, Mr. Abram L Elkus and Mr. Gar- rard Glenn by leave of the court, submitted a brief in behalf BOARD OF TRADE V. CHRISTIE GRAIN & STOCK CO. 725 • Argument for Edwin Hawley and Frank H. Ray. of Edwin Hawley and Frank H. Ray, solely on the nature of a wagering contract. Contracts for purchase and sale of a commodity, not to be delivered but only to be performed by advancing and paying differences, are void at common law in the absence of statute. Irwin V. Williar, 110 U. S. 499 ; Ball v. Davis, 1 N. Y. St Rep. 517; Flagg v. Gilpin, 17 R. L. Ired. 1, 10; Rumsey v. Berry, 65 Maine, 575; Gregory v. Wendell, 39 Michigan, 337; Mohr v. Meisen, 47 Minnesota, 228; Brua^s Appeal, 55 Pa. St. 294 ; Cunningham v. Bank, 71 Georgia, 400 ; Cothran V. Ellis, 125 Illinois, 496. The form of the contract is immaterial and the test is the actual intent of the parties at the time of making the con- tract. Irwin V. Williar, 110 U. S. 499 ; Biggins v. McCrea, 116 U.- S. 671 ; Embrey v. Jemison, 131 U. S. 336 ; Pierce v. Rice, 142 U. S. 28 ; Story v. Salomon, 71 N. Y. 420 ; Peck v. Doran-Wright Co., 57 Hun. 343; Kenyon v. Luther, 4 N. Y. Supp. 498 ; Cover v. Smith, 82 Maryland, 586 ; Lester v. Bv^l, 49 Ohio St. 240; Rumsey v. Berry, 65 Maine, 570; Gregory v. Wendell, 39 Michigan, 337 ; Flagg v. Baldwin, 38 N. J. Eq. 219 ; Sharp v. Stalker, 63 N. J. Eq. 596. This intent may be proven by the circumstances surround- ing the transactions and such proof is received with great liberality. Kenyon v. Luther, 4. N. Y. Supp. 498; Ball v. Davis, 1 N. Y. St. Rep. 517; Dwight v. Badgely, 60 Hun, 144; Peck V. Doran-Wright Co., 57 Hun, 343; Yerkes v. Salomon, 11 Hun, 471 ; Mackey v. Rausch, 39 N. Y. St. Rep. 232 ; In re [245] Green, Fed. Gas. No. 5751; Cobb v. Prell, 15 Fed. Rep. 774 ; In re Chandler, Fed. Gas. No. 2590 ; Mohr. v. Meisen, 47 Minnesota, 228 ; Kirkpatrick v. Bonsall, 57 Pa. St. 155 ; Low- rey v. Dillmann, 59 Wisconsin, 197; Carroll v. Holmes, 24 111. App. 453 ; Hill v. Johnson, 38 Mo. App. 383 ; Croner v. Spencer, 92 Missouri, 499 ; Cothran v. Ellis, 125 Illinois, 496. Mr. Justice Holmes delivered the opinion of the court. These are two bills in equity brought by the Ghicago Board of Trade to enjoin the principal defendants from using and distributing the continuous quotations of prices on sales of grain and provisions for future delivery, which are collected 726 198 UNITED STATES REPORTS, 245. Opinion of the Court by the plaintiff and which cannot be obtained by the de- fendants except through a known breach of the confidential terms on which the plaintiff communicates them. It is suf- ficient for the purposes of decision to state the facts without reciting the pleadings in detail. The plaintiff was incorpo- rated by special charter of the State of Illinois on February 18, 1859. The charter incorporated an existing board of trade, and there seems to be no reason to doubt, as indeed is alleged by the Christie Grain and Stock. C!ompany, that it then managed its Chamber of Commerce substantially as it has since. The main feature of its management is that it maintains an exchange hall for the exchisive use of its members, which now has become one of the gi-eat grain and provision markets of the world. Three separate portions of this hall are known respectively as the Wlieat Pit, the Corn Pit, and the Provision Pit. In these pits the members make sales and purchases exclusively for future delivery, the mem- bers dealing always as principals between themselves, and being bound practically, at least, as principals to those who employ them when they are not acting on their own behalf. The quotation of the prices continuously offered and ac- cepted in these pits during business hours are collected at the plaintiff's expense and handed to the telegraph com- [246] panics, which have their instruments close at hand, and by the latter are sent to a great number of offices. The telegraph companios all receive the quotations under a con- tract not to furnish them to any bucket shop or place where they are used as a baFis for bets or illegal contracts. To that end they agree to submit applications to the Board of Trade for investigation, and to require the applicant, if satisfactory, to make a contract with the telegraph company and the Board of Trade, which, if observed, confines the information within a circle of persons all contracting with the Board of Trade. The principal defendants get and publish these quotations in some way not disclosed It is said not to be proved that they get them wrongfully, even if the plaintiff has the rights which it claims. But as the defendants do not get them from the telegraph companies authorized to distribute them, have declined to sign the above-mentioned contracts, and deny the plaintiff's rights BOARD OF TRADE V. CHRISTIE GRAIN & STOCK CO. 727 Opinion of the Court altogether, it is a reasonable conclusion that they get, and in- tend to get, their knowledge in a way which is wrongful unless their contention is maintained. It is alleged in the bills that the principal defendants keep bucket shops, and the plaintiff's proof on that point fails, exciept so far as their refusal to sign the usual contracts may lead to an inference, but if the plaintiff has the rights which it alleges the failure is immaterial. The main defense is this. It is said that the plaintiff itself keeps the greatest of bucket shops, in the sense of an Illinois statute of June 6, 1887, that is, places wherein is permitted the pretended buy- ing and selling of grain, etc., without any intention of re- ceiving and paying for the property so bought, or of deliv- ering the property so sold. On this ground it is contended that if under other circumstances there could be property in the quotations, which haYdly is admitted, the subject matter is so infected with the plaintiff's own illegal conduct that it is capift lupimim, and may be carried off by any one at will. It appears that in not less than three-quarters of the trans- actions in the grain pit there is no physical handing over of [247] any gi^ain, but that there is a settlement, either by the direct method, so called, or by what is known as ringing up. The direct method consists simply in setting off con- tracts to buy wheat of a certain amount at a certain time, against contracts to sell a like amount at the same time, and paying the difference of price in cash, at the end of the busi- ness day. The ring settlement is reached by a comparison of books among the clerks of the members buying and selling in the pit, and picking out a series of transactions which be- gins and ends with dealings which can be set against each other by eliminating those between— as, if A has sold to B hvQ thousand bushels of May wheat, and B has sold the same amount to C, and C to D and D to A. Substituting D for B by novation, A's sale can be set against his purchase, on simply paying the difference in price. The Circuit Court of Appeals for the Eighth Circuit took the defendant's view of these facts and ordered the bill to be dismissed. 125 Fed. Rep. 161. The Circuit Court of Appeals for the Seventh Circuit declined to follow this decision and granted an in- junction as prayed. 130 Fed. Rep. 507. Thereupon writs 728 198 UNITED STATES REPORTS, 247. Opinion of the Court. of certiorari were granted by this Court and both easas are here. As has appeared, the plaintiff's chamber of commerce is, in the first place, a great market, where, through its eighteen hundred members, is transacted a large part of the grain and provision business of the world. Of course, in a modern market contracts are not confined to sales for immediate delivery. People will endeavor to forecast the future and to make agreements according to their prophecy. Speculation of this kind by competent men is the self -adjustment of so- ciety to the probable. Its value is well known as a means of avoiding or mitigating catastrophes, equalizing prices and providing for periods of want. It is true that the suc- cess of the strong induces imitation by the weak, and that incompetent persons bring themselves to ruin by undertaking to speculate in their turn. But legislatures and courts generally have recognized that the natural evolutions of a complex society are to be [248] touched only with a very cautious hand, and that such coarse attempts at a remedy for the waste incident to every social function as a simple prohibition and laws to stop its being, are harmful and vain. This court has upheld sales of stock for future de- livery and the substitution of parties provided for by the rules of the Chicago Stock Exchange. Clews v. Jamieson^ 182 U.S. 461. When the Chicago Board of Trade was incorporated we cannot doubt that it was expected to afford a market for future as well as present sales, with the necessary incidents of such a market, and while the State of Illinois allows that charter to stand, we cannot believe that the pits, merely as places where future sales are made, are forbidden by the law. But again, the contracts made in the pits are contracts be- tween the members. We must suppose that from the begin- ning as now, if a member had a contract with another mem- ber to buy a certain amount of wheat at a ceiiain time and another to sell the same amount at the same time, it would be deemed unnecessary to exchange warehouse receipts. We must suppose that then as now, a settlement would be made by the payment of differences, after the analogy of a clear- ing house. This naturally would take place no less that the BOARD OF TRADE V. CHRISTIE GRAIN & STOCK CO. 729 Opinion of the Court. contracts were made in good faith for actual delivery, since the result of actual delivery would be to leave the parties just where they Were before. Set-off has all the effects of delivery. The ring settlement is simply a more complex case of the same kind. These settlements would be frequent, as the number of persons buying and selling was compar- atively small. The fact that contracts are satisfied in this way by set-off and the payment of differences detracts in no degree from the good faith of the parties, and if the parties know when they make such contracts that they are very likely to have a chance to satisfy them in that way and intend to make use of it, that fact is perfectly consistent with a serious business purpose and an intent that the contract shall mean what it says. There is no doubt, from the rules of the Board of Trade or the evidence, [249] that the contracts made between the members are intended and supposed to be binding in manner and form as they are made. There is no doubt that a large part of those contracts is made for serious business purposes. Hedging, for instance, as it is called, is a means by which collectors and exporters of grain or other products, and manufacturers who make contracts in advance for the sale of their goods, secure themselves against the fluctuations of the market by counter contracts for the purchase or sale, as the case may be, of an equal quantity of the product, or of the material of manufacture. It is none the less a serious business contract for a legitimate and useful purpose that it may be offset before the time of delivery in case delivery should not be needed or desired. Purchases made with the understanding that the contract will be settled by paying the difference between the contract and the market price at a certain time, Embrey v. Jemison, 131 U. S. 336, Weave Commission Co, v. People^ 209 Illinois, 528, stand on different ground from purchases made merely with the expectation that they will be satisfied by set-off. If the latter might fall within the statute of Illinois, we would not be the first to decide that they did when the object was self -protection in business and not merely a speculation entered into for its own sake. It seems to us an extraordi- nary and unlikely proposition that the dealings which give 730 198 UNITED STATES KEPOKTS, 249. Opinion of the Court its character to the great market for future sales in this coun- try are to be regarded as mere wagers or as " pretended " buying or selling, without any intention of receiving and pay- ing for the property bought, or of delivering the property sold, within the meaning of the Illinois act. Such a view seems to us hardly consistent with the admitted fact that the quotations of prices from the market are of the utmost im- portance to the business world, and not least to the farmers ; so important indeed, that it is argued here and has been held in Illinois that the quotations are clothed with a public use. It seems to us hardly consistent with the obvious purposes of the plaintiff's charter, or indeed with the words of the statute invoked. The [250] sales in the pits are not pre- tended, but, as we have said, are meant and supposed to be binding. A set-off is in legal effect a delivery. We speak only of the contracts made in the pits, because in them the members are principals. The subsidiary rights of their employers where the members buy as brokers we think it unnecessary to discuss. In the view which we take, tlie proportion of the dealings in the pit which are settled in this way throws no light on the question of the proportion of serious dealings for legitimate business purposes to those which fairly can be classed as wagers or pretended contracts.. No more does the fact that the contracts thus disposed of call for many times the total receipts of grain in Chicago. The fact that they can b^ and are set-off sufficiently explains the possibility, which is no moi-e wonderful than the enormous disproportion between the currency of the country and contracts for the payment of money, many of which in like manner are set off in clear- ing houses without any one dreaming that they are not paid, and for the rest of which the same money suffices in succes- sion, the less being needed the more rapid the circulation is. But suppose that the Board of Trade does keep a plaa*- where pretended and unlawful buying and selling are per- mitted, which as yet the Supreme Court of Illinois, we believe, has been careful not to intimate, it does not follow that it should not be protected in this suit. The question whether it should be involved several elements which we shall take up in turn. BOABD OF TRADE V. CHRISTIE GRAIN & STOCK CO. 731 Opinion of the Court In the first place, apart from special objections, the plain- tiff's collection of quotations is entitled to the protection of the law. It stands like a 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 Lithographing Co.^ 188 U. S. 239, 249, 250. The plaintiff does not lose its rights by communi- cating the results to persons, even if many, in confidential relations [251] to itself, under a contract not to make it pub- lic, and strangers to the trust will be restrained from getting at the knowledge by inducing a breach of trust and using knowledge obtained by such a breach. Exchange Telegraph Co. V. Gregory <& Co., [1896] 1 Q. B. D. 147; F, W. Dddge Co, V. Construction Information Co.^ 183 Massachusetts, 62; Board of Trade v. C. B. Thomson Commission Co,, 103 Fed. Rep. 902 ; Board of Trade v. Hadden-KruU Co., J09 Fed. Rep. 705 ; National Tel. News Co. v. Western Union Tel. Co.^ 119 Fed. Rep. 294; Illinois Commission Co. v. Cleveland Tel. Co., 119 Fed. Rep. 301. The publications insisted on in some of the arguments were publications 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 information will not become public property 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 other- wise entitled to protection, it does not cease to be so, even if it is information concerning illegal acts. The statistics of crime are property to the same extent as any other statistics, even if collected by a criminal who furnishes some of the data. The Supreme Court of Illinois 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 before it, as to which we cannot 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 unmeritorious that it held it clothed with a public use. 732 198 UNITED STATES BEPOBTS, 251. Opinion of the Court New York di Chicago Grain dh Stock Exchange v. Board of Trade, 127 Illinois, 153. The defendants lay hold of the declaration in the case last cited and say, with doubtful consistency, that this informa- tion is of such importance that it is clothed Avith a public use, and that, therefore, they are entitled to get and use it. In the case referred to it was held that the plaintiif, which Iiad l»een re- [2^2] ceiving the continuous quotations, was entitled still to receive them on paying for them and sub- mitting to all reasonable requirements in relation to the same. Perhaps the right of the plaintiff would have been more obvious if it had demanded an opportunity on reasonable conditions of collecting the information for itself, especially if the legislature had seen jBt to provide by law for its doing so. But it is not necessary to consider whether we are bound by that decision, or, if not, should follow it, since in these cases the claim is not qualified by submission to reasonable rules or an offer of payment. It is a claim of independent rights and a denial that the plaintiff has any right at all. The Supreme Court of Illinois gave no sanction to such a claim as that. Finally it is urged that the contracts with the telegraph companies \aolate the act of July 2, 1890, c. 647, 26 Stat. 209. 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 communication, 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 at- tempt at monopoly, and no contract in restraint of trade, either under the statute or at common law. Bement v. National Hairow Co,, 186 U. S. 70; Fowle v. Park, 131 U. S. 88; Elltman v. Carrington, [1901] 2 Ch. 275. It was argued that the true purpose is to exclude all persons who do not deal through members of the Board of Trade. Whether there is anything in the law to hinder these regulations being made with that intent we shall not consider, as we do not regard such a general scheme as shown by the contracts or proved. A scheme to exclude bucket shops is shown and TIFT V. SOUTHERN BY. CO. 783 Syllabus. proclaimed, no doubt— and the defendants, with their con- tention as to the plaintiff, call this an attempt at a monopoly in bucket shops. But it is simply a restraint on the acquisi- tion for illegal purposes of the fruits of the plaintiff's work. Central Stock d; Grain Exchange v. [253] Board of Trade, 196 Illinois, 396. We are of opinion that the plaintiff is entitled to an injunction as praj^ed. Decree in No, 224 reversed. Decree in No, 280 affirmed, Mr. Justice Harlan, Mr. Justice Brewer and Mb. Justice Day dissent. [753] TIFT ET AL. v. SOUTHERN RY. CO. ET AL. (Circuit Court, W. D. Georgia, S. D. June 28, 1905.) [laS Fed., 753.] Carbieks— Freight Charges.— The general rule is that, the greater the tonnage of the commodity transported, the lo\yer should be the rate of freight charges for such transportation. Interstate Commerce Commission— Conclusiveness of Findings.— Explicit law, the settled policy of the government, the practical principles of reason and justice require that, save for controlling reasons of law or fact, tho national courts should not discredit or disparage the conclusions ot the interstate commerce commission. FEd. Note.— Fcr cases in pjint, pee vol. 10. Cent. Dig. Commerce §§ 138-145.] Same— Findings of Fact.— The findings of fact set forth in the re- port of the commission are in all judicial proceedings deemed prima facie evidence as to each and every fact found. [Ed. Note.— For cases in point, see vol. 10, Cent. Dig. Commerce, §§ 138-145.] Prima Facie Evidence.— Prima facie evidence of a tact is such as, in judgment of law, is sufficient to establish the fact, and, if not re- butted, remains sufficient for the purpose. Mr. Justice Story, in Kelly V. Jackson, 6 Pet. 631, 8 L. Ed. 523. Interstate Commerce Commission— Report— Presumptions— Burden OF Proof.— The act to regulate commerce creates a rule of pre- sumption in favor of the commission's report, which on its introduc- tion in evidence changes the burden of proof, and casts it upon that party against whom the report is made. Rules of Evidence— Legislative Control.— The Legislature, subject only to the limitations of evidence expressly enshrined in the Consti- tution, has entire control over the rules of evidence, and by statutory enactments may alter, change, or create them anew. 734 138 FEDERAL BEPORTER, 763. Syllabus. Cabeiebs— ITbeioht Ghabges. — ^The reasonableness of a rate of charge for transportation is eminently a question for judicial investigation. Justice Biatchford, in Chicago, M. & St. Paul R. R. v. Minnesota, 10 Sup. Ct. 702, 134 U. S. 418. 33 L. Ed. 970. Same — ^IIeasonableness. — It is no longer open to question that the interstate commerce commission is an expert tribunal empowered by law to determine in the first instance the reasonable or unrea- sonable character of the rate charged for transportation in inter- state commerce. Same — Rate Association. — ^The character of the Southeastern Freight Association, the effect of its concert of action and agree- ments as to freight rates in the territory to which it extends, con- sidered and discussed. Same— Advance of Rates— [Aobeements in Restbaint of Tbade.1— When a number of railroads, acting under articles of organization, by concert of agreement and action advance the rates upon ship- ments of a particular class throughout all the territory to which their organization and influence with similar organizations extend, and when they actually advance such rates and exact the same of shippers, it is of no consequence that they have a stipulation in such articles that each and all members can at will and at any time withdraw from the agreement. [Such a combination is In restraint of trade. See pp. 746, 747.] [754] Same — Reasonabix (Compensation. — Reasonable compensation for the service actually rendered is all that a common carrier is IMjrmitted to exact. Justice Brewer, for the Circuit Court of Ap- peals of the Eighth Circuit, in Chicago d 2i, W. R. R. Co, v. Osbtmte, 3 C. C. A. 347, 52 Fed. 014; Smuth v. Afms, IS Sup. Ct 4ia 109 U. S. 4C0, 42 L. Ed. 819. Same — Unbeasonable Incbease.— Where a vast increase of lumber tnittlc had resulted in large increase of net revenue to the carrier, the service was inexpensive, nniuired neither rapidity of uiovement ut)r specially equipped cars, shippers were obliged to furnish and l>ay for eiiuipment, railroads were neither to load nor unload, the couiuiodity was neither fragile nor perishable, the risk of damage was inappreciable, the industry affords a tonna^^e second in mag- nitude to only one other transported by the carrier, an arbitrary in- crease to points of principal destination of two cents u hundred pounds is unreasonable and unlawful. This is especially clear where the particular traffic la practically destroyed immediately lifter the advance is made. Same — Regulation of Cuabges. — Railroads have no legal right to graduate their charges in proportion to the prosperity which at- tends Industries whose products they transport. Same — Injunction — Repayment of Unlawful Exactions. — In this case the conclusions of the court agree with the conclusions of the Interstate commerce commission. The enforcement of the advance will be enjoined, and, general counsel for respondents having stipu- TTFT V. SOUTHERN RY. CO. 735 Opinion of the Court ated in judicio they would repay to the shippers the sum total of the increased exactions in case such increase should be held illegal, a reference will be had to ascertain the amount thus due the r-om- plainants respectively, and decree will be rendered therefor. (Syllabus by the Court) In Equity. Ellis, Wimhish di Ellis, for complainants. Ed. Baxter, for respondents. John I. Hall, for Georgia Southern & F. Ky. Co. Dorsey, Breivsfer cI- Howell, Dessau, Harris d^ Harris, C. B. Northrop, and Menel P. Callaway, for Southern Rv Co. ' . • J'- Lawton d Cunningham, for Central of Georgia %. Co: Kay, Bennett di Conyers, for Atlantic Coast Line Ry. Co. Louis F. Garrard, for Macon & Birmingham Ry. Co. King, Spalding di Little, for Louisville & Nashville R. Co. Brown d Randolph, for Seaboard Air Line Ry. Claude Walker, for Nashville, C. & St. L. Ry. Co. Mason, Hill d McGill, for Southeastern Freight Ass'n. Speer, District Judge. An adequate statement of the issues in this case is given in the report of ihe^ interstate commerce commission which a,ppears in the record. The Southeastern Freight Associa- tion is a combination of common carriers. In the preamble of its organic agreement it is stated that its purposes are set forth in the " following articles." A critical scrutiny of the articles will disclose its machinery, but we fail to discover any express statement of its purpose. It is, however, plainly enough to fix and control the rates to be charged by each and all of its members for the railway transportation of freight. Most of the railways constituting its membership are actively engaged in interstate commerce, and all of them may be. The territory to which this association extends 1756] its dominating control comprehends the states of Vir- ginia, North Carolina, South Carolina, Georgia, Florida, and those portions of Tennessee and Alabama east of a line extending from Chattanooga via Birmingham, Selma and 736 138 FEDERAL REPORTER, 755. Opinion of the Court Montgomery to Pensacola. In that territory, with all of its varied products, with an area and population vaster than many empires of which we have an account, as regards every interest dependent upon the transportation of commodities, the action of the association is more authoritative than the firman of the Sultan or the ukase of the Czar. A most important industry of this association's dominion is the manufacture of lumber. The tonnage of this product is enormous. The cotton plant is indigenous to much of this territory, but while in the year 1903 the railroads whose rates are arranged through the Southeastern Freight Asso- ciation transported 1,274,727 tons of cotton, in the same year, of lumber, they moved 9,808,403 tons, or nearly eight times as much. Indeed, in tonnage thus transported lumber was not approached by any other product, and was only ex- ceeded by bituminous coal. This tonnage has been steadily increasing. In 1901 it had been little more than six and a half miUions, and two years later, as we have seen, it was nearly ten millions of tons. The vast income from moving this tonnage, an immense proportion of which was the product of the forests and mills of Georgia, poured into the treasuries of the defendant companies. That it was re- munerative i% not in dispute. It is charged in the bill that it was very profitable. In the answer it is admitted that it was profitable. The remunerative rates for which this product was transported could scarcely have been denied in view of the fact that the rates themselves had been ad- vanced pari passu with the increase of tonnage. For their convenience, the rate makers have divided their territory into what are termed " groups." From group 2 of the Southern Railway there has been an increase of 3 cents a hundred pounds on lumber since May, 1894, 2 cents since September, 1899. From May, 1894, to September, 1899, the rate to Cairo from that group was 13 cents. This was increased to 14 cents from September, 1899, to June, 1903. From other groups, generally speaking, since 1894, the increase has amounted to four cents a hundred pounds. From all the groups the present rates to Cincinnati, Louisville, and Evansville are greater than they have been since 1891. The rate to Cincinnati from most of the groups is now four TIFT V. SOUTHERN RY. CO. 737 Opinion of the Court cents higher than it was in 1892, and from the Georgia group on the Southern Railway, to Cincinnati, LouisviUe and Evansville and all Ohio river points the rates are three cents higher than they have been since 1891. This steady and marked increase of rates for the transportation of this freight, coincident with the phenomenal increase of the ton- nage carried, seems abnormal. " The general rule," said the mterstate commerce commission in its valuable report in this case," IS this: The greater the tonnage of an article trans- ported, the lower should be the rate. No rule is more firmly grounded in reason or more universally recognized by car- riers." While these conditions were existing, while the re- spondent railroads were engaged in the transportation of the largest annual ton- [756] nage of lumber theretofore known m April, 1903, the Southeastern Freight Association and other similar associations having conferred upon the subject, the defendant companies, acting in concert, announced that they would forthwith put into effect an increase of two cents a hundred pounds in the rate on lumber to points on the Ohio river and beyond. This announcement brought the intelligence of this additional levy upon their products to the owners of every mill in Georgia, in Florida, in Ala- bama, m Mississippi, in Louisiana, and in Arkansas. On the lumbermen at work in the immediate domain of the Southeastern Freight Association estimated on the tonnage of that year the assessment amounted to $132,000. It is per- haps not surprising that these men immediately sought pro- tection through the courts. On the 17th of April, 1903, the original bill was filed. The complainants are H. H. Tift,, W. S. West, J. Lee En- sign, J. S. Betts & Co., Garbutt Lumber Company, Alapaha Lumber Company, Southern Pine Company, and all other members of the Georgia Sawmill Association (a voluntarv association, not a party). The averments, in brief, are that the defendant companies had published, and were to immediately put into effect, an increase of two cents a hun- dred pounds in the rate on lumber from Georgia points to points of delivery on the Ohio river and beyond; that the threatened advance was unjust and excessive, and would re- 21220— VOL a— 07 M i7 738 138 FEDERAL REPORTER, 758. Opinion of the Court TTFT V. SOUTHERN RY. CO. Opinion of the Court. 739 suit in irreparable injury. An injunction was sought upon the ground that the contemplated action of defendants was in violation of the act of Congress to regulate connuerce. A temporary restraining order was issued, with the usual rule calling upon the respondents to show cause why the injunction sought by the bill should not be granted. A gen- eral demurrer denying the jurisdiction of the Circuit Court of the United States as such, and as a court of equity, was interposed. Respondents also filed a response to the rule. A hearing was had upon the demurrer, and also upon the evidence submitted by both parties. By interlocutory de- cree entered on the 16th day of May, 1903, it was held that the court had jurisdiction to gi*ant the relief sought, if finally satisfied of the righteousness of complainants' de- mand; that the demurrer be overruled; that the bill, with amendments, be retained in the files of the court; and that the temporary injunction be dissolved. The reasons which moved the court to take this action Avere stated in the opinion that day filed. Among them was the statement that the increase of rates had not been actually imposed. The de- cree concluded with the following clause: "In case the respondents shall enforce the rates complained of and the complainants shall nmlve proper applic-ation to the interstate com- merce commission to redress their alleged grievances, the court will entertain a renewed application on the record as made, and such appropriate additions thereto as may be proposed by either party for enjoining the enforcement of .such rates pending the investigation by the commission, unless otherwise dissolved, and on presentation to the court of the report of the commission such other action be taken as will be conformable to law and the principles of equity." Upon the dissolution of the restraining order, to wit, on the 22d of June, 1903, the respondents at once made the advanced rates effective. On the day following the com- plainants presented to the [757] interstate commerce com- mission their complaint and their prayer that the advance be declared to be excessive, unjust, and unreasonable. Sub- sequently complainants again sought from this court an in- junction to restrain the enforcement of the rates pending the action of the commission. Upon this application a f idl re- hearing of the controversy was had. This involved an ex- haustive discussion of the jurisdictional questions and the facts as well. The conclusions of the court may be found m in 123 Fed. 789-796. Action upon the application of com- plainants was withheld. The reasons for this course, as stated on page 796 of the opinion, are as follows : i^lje complainants, it appears, have appealed to the commission. The respondents are all solvent— probablv all of them highly prospei;ou&— railway cx)nx)rations. It will be easilv competent for the complauiants to keep careful account of all the charges claimed to be unreasonable and excessive exacted by the defendants on shipments ot lunil)er to the territory described in the bill. If their contention shall be mamtained, it will be competent for the court iu its final decree to direct the respondents, or either of them, to make restitution ot the sums thus exacted. Indeed, the learned spec-ial counsel for the respondents, by his statement made in judicio, binds his clients to promptly repay to the complainants all such sums iu case thev shall finally prevail. Nor is it likely that in the interval which sliall re- mam before the commission will act there will ensue anv serious impairment of the business of complainants, or either of them It IS easily conceivable that a case or cases of this general character might be presented on which it would seem obligatory on the court to graut an immediate injunction. Such in junctions. * however, should not be granted save in cases of grave and compelling exigencv. Judi- cial action should be conservative, and rarelv is such conservatism more plainly required than when vast commercial operations involved m interstate transportation will be arrested or disturbed bv incau- tious onlers. Iu this case the duty to grant the extraordiua'rv order sought does not now seem imperative. The court, therefore, in view of the record and of the considerations mentioned, will withhold further judicial action upon the application until properlv apprised of the action of the interstate commerce commission. When we shall have received the valuable assistance in the performance of the grave duty betore us which must be expected from the conclusions of that authoritative and eminent body, such other and further action will be taken on this application as the law and the principles of eciuitv will seem to direct." It will thus be seen that the court did not deny the injunc- tion prayed for. It merely withheld action to await the report of the commission. This has now been submitted. After hearing and considering the voluminous evidence, that body, on February 7, 1905, made its report. The report sustains in toto the contentions of the complainants, and declares that the advance in rates complained of was unreasonable, unjust, and violative of the act to regulate commerce. The report was, however, not unanimous.*' The honorable chairman, Mr. Knapp, and Commissioner Fifer expressed their dissent as follows : "In the view we take of this case, the conclusions of our associates are not justified by the facts and circumstances appearing in the record, or otherwise entitled to consideration. Holding that the rates complained of have not been shown to be in violation of law we respectfully dissent from the foregoing report and opinion " 740 13** FEDERAL EEPORTER, 757. Opinion of the Cioiirt It iis regrettable that the dissenting commissioners did not more fully record the grounds of their dissent. It might then be possible for the court to inquire to what extent the dissent was supported by [758] " facts and circumstances appearing in the record," or by facts and circumstances not so apix^ai'ing, and which, therefore, do not appear to the court. The order of the commission seeking to make effect- ive their conclusions declares the rates and charges com- plained of to l>e excessive, unreasonable, unjust, and in vio- lation of the provisions of the act to regulate commerce. "It is further ordered that the defendants, the Southern Railway Company, Atlantic Coast Line Railway Company, liouisville & Nashville Railroad Company, Nashville, Chat- tanooga & St. Louis Railroad Company, Seaboard Air Line Railway, Central of Georgia Railway Company, Georgia Southern & Florida Railway Company, and the Macon & Birmingham Railway Company, be, and each of them is hereby, notified and required to cease and desist on or be- fore the 1st day of April, 1905, from further maintaining or enforcing said unlawful advance of two cents per one hun- dred pounds, and the said unlawful rates and charges re- sulting therefrom, for the transportation of lumber as aforesaid." A certified copy of the opinion and order of the commis- sion has been duly filed. This is accompanied by an appli- cation for an injunction pendente lite and for final decree granting the relief prayed in the original bill. Counsel for the respective parties, with meritorious purpose to avoid delay and to obtain a speedy hearing on the merits, entered into a stipulation that the evidence taken before the inter- state commerce conmaission shall stand as the evidence in this court, subject, however, to the right of either party to apply to the court for leave to introduce such additional evidence as the court may think proper for a just decision of the case. On the hearing additional evidence, mainly in the form of affidavits, was submitted by the respective par- ties. It is agreed that the testimony thus submitted shall have the same force and effect as if it had been regularly taken in accordance with the rules in equity. With equally meritorious purpose counsel for the respective parties agreed TIFT V. SOUTHERN RY. CO. 741 Opinion of the CJourt. that this should stand for and be the hearing for final decree in equity. Counsel for the respective parties have been fully heard. The hearing was concluded on the 22d inst. On account of the gravity of the questions involved and the tremendous record, we have taken time for consideration. The effect of the commission's report was strongly contro- verted in the argument. Counsel for the complainants in- sisted that it must be accepted by the court as true, unless it was wholly without evidence to support it. On the other hand, it was insisted that it was only prima facie correct, and "tipped the judicial scale only by a hair's breadth.'' Our view is that it would be violative of explicit law, the settled policy of government, and the most practical prin- ciples of reason and justice for the courts of the nation, save for controlling reasons of law or fact, to discredit or dis- parage the conclusions of the interstate commerce commis- sion. The act to regulate commerce (paragraph 14), declares that the " findings of fact set forth in the report of the com- mission shall in all judicial proceedings be deemed prima facie evidence as to each and every fact found." In para- graph 16 this provision is distinctly reiterated. [759] Nor are we in any doubt as to the import of the expression " prima facie evidence." In Kelly v. Jackson, 6 Pet. 631, 8 L. Ed. 523, Mr. Justice Story declares that '' prima facie evidence of a fact is such as, in judgment of law, is suffi- cient to establish the fact; and, if not rebutted, remains sufficient for the purpose." The authority of this case has been uniformly recognized. Rose's Notes on U. S. Reports, vol. 3, p. 301. It follows that the report of the commission declaring these advanced rates to be excessive and violative of the act to regulate commerce has such evidential effect that, had complainants been content to introduce the report and to rest their case without further evidence, it would have entitled them to the decree unless the respondents by prepon- derant and controlling evidence should rebut and disprove its findings. LilienthaVs Tobacco v. United States, 97 U. S. 268, 24 L. Ed. 901. In other words, the act of Congress creates a rule of presumption in favor of the coumiission's report, which, on its introduction, changes the burden of proof, as in this case, from the complainants to the respond- 742 138 FEDERAL REPORTER, 759. Opinion of the Court ents. "There is not the least doubt, on principle," says the author of the recent work Wigmore on Evidence, " that the Legishiture has entire control over such rules, as it has over all other rules of procedure in general, and evidence in particular, subject only to the limitations of evidence ex- pressly enshrined in the Constitution." 2 Wigmore on Evi- dence, par. 1354, cl. S. Elsewhere in the same compre- hensive and valuable work, vol. 1, par. 7, it is stated: "Apart from the constitutional niles to protect against statutory changes the Legislature has the power to alter or create any rule of evidence.'' The wisdom of according to the report of the commission this important effect is as little open to question. The ad- ministration of justice, says Webster, " is the chiefest con- cern of man upon earth." Within the scope of that function of government there is, perhaps, no single topic of greater magnitude or moment than controversies which arise in trade and commerce. Said Sir Walter Raleigh, " Whosoever com- mands the trade of the world commands the riches of the world, and consequently the world itself." Tn a material sense, and in our astonishing civilization, nothing is more important than the transportation of commodities sold or interchanged, and in transportation the stability and rea- sonable character of the rates charged therefor is scarcely less important than transportation itself. The three grand departments of government, legislative, executive, and ju- dicial, are with steady and swerveless purpose enacting or enforcing laws to safeguard the rights of the general public, and as well as that portion engaged in the business of transportation. The shippers are appealing to government to protect them against imwarrantable exactions by the carriers. Appeal may be made by the carriers to protect their interests from unremunerative rates to which they may be restricted bv state or other local authorities. In either ft' ease complaint is lieard and redress is given. Reagan v. Farmers'" Loan c£* Trmt Co., 154 IT. S. 362, 14 Sup. Ct. 1047, 38 L. Ed. 1014: Chicago, etc., Ry. v. Mhiucsota, 134 U. S. 418, 10 Sup. Ct. 462, 33 L. Ed. 970; Rose's Notes on U. S. Re- [760] ports, vol. 11, p. 946 et seq. It is no longer doubtful that " the question of the reasonableness of a rate of charge TIFT V. SOUTHERN RY. CO. Opinion of the Court. for transportation is eminentl}^ a question for judicial in- vestigation." Justice Blatchford, in Chicago <& St. Paul Ry. V- Minnesota, 134 U. S. 418, 10 Sup. Ct. 462, 33 L. Ed. 970. To this end, in part, the government has created the inter- state commerce commission. It is a tribunal to hear, investi- gate, and report on the reasonableness of rates, and to attempt the correction of inequalities and injustice therein. Said the Supreme Court in Louis mile c& Nashville R. R. Co. v. Behlmer, 175 U. S. 675, 20 Sup. Ct. 219, 44 L. Ed. 309, " That body, in the nature of its organization and the duties im- posed upon it by the statute, is peculiarly competent to pass upon the questions of fact of the character here arising." In view of these considerations and precedents, it can, we think, be no longer open to question that the interstate commerce commission is the expert tribunal empowered by law to determine, in the first instance, the reasonable or un- reasonable character of the rates charged for transportation in interstate commerce. Said Judge Taft, for the Circuit Court of Appeals, in East Tennessee, V. d; G. R. R. Co. v. Interstate Commerce Commission, 99 Fed. 64, 39 C. C. A. 425 : "It has been suggested that the traffic managers are much better able by reason of their knowledge and exi>erienoe to fix rates and to decide what discriminations are justified by the circumstances than the courts. This cannot be conceded so far as it relates to the inter- state commerce conunission, which, by reason of the experience of its members in this kind of controversy, and their great opportunity for full informaton, is in a sense an expert tribunal." We may repeat what was stated by this court in Com- mission V. Louisville d* Nashville R. R. Co., 118 Fed. 626: "The righteous orders of the great commission which has lieen primarily intrusted by Congress with the tremendous duty should in all proper cases be respected and enforced by the courts of the country. While, on occasion, the railway or other corporation may suffer a temporai-y diminution of revenues from an order of this character, the interest of the public, and in the end the interest of the corpora- tion itself, is conserved. In all such cases the general welfare must control. * Salus ix)puli est suprema lex.' " It is proper to observe, however, that the court has con- sidered the entire record, and has formed its conclusions not only from the report of the commission, but from all the evidence submitted to that body and stipulated into the case here, and from the additional evidence submitted de novo on this hearing. 744 138 FEDEBAl. BEPOETEB, 760. TIFT V, SOUTHERN RY. CO. 745 Opinion of tlie Court. • A highly significant feature of this case is the fact that the rates complained of are the result of concert of action on the part of the members of the Southeastern Freight Asso- ciation. This organization, as we have seen, embraces as members all of the defendants except the Nashville, Chat- tanooga & St. Louis Kailroad and the Louisville & Nashville Eailroad Company. But the latter, as colessee of the Georgia Eailroad, while not nominally, is also essentially, a member. The association was a proper, thougli perhaps not a necessary, party. It might well desire to be heard with re- gard to the relating charges against its character and conduct. While in the original bill there was a prayer that this asso- ciation should be declared an illegal combination in restrain! of interstate trade, [7611 and that the defendant railway companies be enjoined from prosecuting the purposes of such illegal combination through the medium of the freight association, counsel for the complainant? in argument properly abandon that prayer. While this is true, it is also true that the methods of the association, and the conduct of its members in this particular case, were placed before the commission, and are fully before the court. In reply to the contention on the part of the respondents that they acted independently each for itself, and not through the agencv of the Southeastern Freight Association, the commission finds: " Tlie proof shows conclusively tliat the advance was the outcome of concert of action and previous understanding between the companies. Throui?h their authorized official representatives, tbev conferred with each other repeatedly as to the malving of the advance; recognized the fact that, because of competition in common markets between the lumber producing districts served by them, the advance should be from all those districts or none ; and, finally, they all promulgated the advance to take effect at exactly the same date and for exactly the same amount This concurrence of action was not only between the railway companies, parties defendant in this ca^e, and* in relation to rates from Georgia shipping points, but was participated in by the lumber-liauling roads serving the territories l»oth west and east of the Mississippi in Arkansas, Louisiana, Mississippi, Alabama, and Florida," The commission concludes that it is its duty to consider this joint, or concert of, action of the defendants as bearing upon the reasonableness and validity of the advanced rate which results. It holds that the element of competition is elimi- nated. In the absence of legitimate competition, destroyed, as we shall pfesently see, by methods obviously illegal, the Opinion of the Court. commission presumes that the advance rates are higher than legitimate competition would produce. In other words, the marked increase of. charges for transportation of that com- modity which, save one other, affords the largest tonnage of freight to the respondent roads, did not originate from a normal or reasonable exigency of the respondents' business. On the contrary, it was an arbitrary exaction, imposed by a combination of railroad agents made in restraint of the natural movement of the product in the lumber trade. This combination or concert of action on the part of the respondent railroads is plainly violative of that provision of the inter- state commerce law which forbids pooling. This was en- acted, among other things, for the purpose of securing com- petition. Pooling niay be as well effected by a concert in fixing in advance the rates which in the aggregate would accumulate the earnings of naturally competing lines, as by depositing all of such earnings to a common account and dis- tributing them afterwards. That such an association and concert of action between agents of naturally competing lines is destructive of competition is equally unanswerable. To entertain any other view is to ignoiv reiterated decisions of the Supreme Court of the United States and many rulings of the Circuit Courts and of the state courts. Perhaps the leading cases on this subject are United States v. Freight Association, 166 U. S. 341, 17 Sup. Ct. 640, 41 L. Ed. 1007: Joint Traffic Association Case, 171 U. S. 505, 19 Sup. Ct. 25, 43 L. Ed. 259. In the first case the court had under con- sidera- [762] tion the legality of the Trans-Missouri P\-eight Association. The agreement of that body may differ in form, but its substantial purpose was the same as that of the Southeastern Freight Association. It avowedly was the " mutual protection to the railroads by establishing and maintaining reasonable rates, rules, and regulations on all freight traffic, both through and local." After argument by many of the most eminent counsel in the country, and after exhaustive consideration, the court held that the anti-trust law prohibiting contracts, combinations, and conspiracies in restraint of trade or commerce among the several states or with foreign countries apply to and cover common carriers by r.ulroad, and a contract between them in restraint of such 746 138 FEDERAL REPORTER, 762. OpiBion of the Court. trade or commerce is prohibited even though the contract is entered into between competing railroads only for the pur- pose of thereby effecting traffic rates for the transportation of persons and property. It was further held that, in order to maintain such a contention the complainant is not obliged to show that the agreement in question was entered into for the purpose of restraining trade or commerce if such re- straint is the necessary eft'ect, and concluded that the anti- trust act applies to railroads, and that it renders illegal all agreements which are in restraint of trade or connnerce. The coiH't then proceeds to declare that the agreement of the association does in fact constitute such a restraint in viola- tion of the law. It is proper to state that four judges, three of whom are not now on the bench of the court, dis- sented from this conclusion ; but the opinion of the majority is, of course, controlling. In the subs(^quent case of V mted States V. Joint Traffle Association^^ 171 U. S. 505, 10 Sup. Ct. 25, 43 L. Ed. 259, the court, after full consideration, re- affirmed its holding in the Trans-Missouri Case. It further declares that Congress, with regard to interstate connnerce, and in the course of regulating it in the case of railway cor- porations, has power to say that no contract or combination shall be legal whicli shall restrain trade and connnerce by shutting out the operation of the general law of competition. The tremendous significance of these findings is shown by the multitude of cases in which the doctrines announced have been utilized and reaffirmed. See Rose's Notes on U. S. Reports, vol. 12, p. 1)58 et seq.; also supplement to same i)ub- lication, vol. B, p. 795. Perhaps the most noted case on this subject is that of the Northern Seenrifies Com pa m/ v. United Staff. ^, \m V. S. 11)7. 24 Sup. Ct. 436, 48 L. Ed. 079. There it was held that a contract l)y which a majority of stock of two companies who owned i){irallel interstate railroads is transferred to a corporation organized for the purpose of holding and voting the same and receiving dividends and dividing the same pro rata among the stockholders of the two companies, violates the anti-trust law. Such is the super- abundance of authority upon this subject that further cita- tion will be superfluous. It may be pardonable to recall that one of the pioneer cases on this important topic was that of TIFT V, SOUTHERN RY. CO. Opinion of the Court. /4< Rowena Clarke v. Central R. R. (& Banking Company of Georgia (C. C.) 50 Fed. 338, 15 L. R. A. 683 et seq., heard in this district. This case was decided in 1892. Commenting upon similar conditions, it was there observed : [763] '* It is not difficult to perceive that a combination of corpora- tions wliicli produces a condition so inequitable cannot be sanctioned by the law. We believe 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. 047, 26 Stat. 209 lU. S. Comp. St. 1901, p. 3200]). It is certainly, as we have seen, obnoxious to the law of Georgia, and it was certainlv as obnoxious to the common law." This decision was made 13 years ago. The principles then announced, which were challenged in many influential quar- ters, are now imbedded in the country's jurisprudence and in the legislation of the national Congress. It was insisted with great earnestness by the learned special counsel for the respondents that because the various members of the asso- ciation expressly stipulated in the articles of organization that each and all members could Ht will and at any time withdraw from the agreement to fix rates, it was not a combination in restraint of trade. This view seems whoUv untenable. That is merely a recitation of a privilege which any party to an unlawful enterprise inherently enjoys. Con-e federates or conspirators who unite to do an unlawful act or to do a laAvfnl act in an unlawful wav mav iointlv or severjilly abandon the project. The law aliords them the locus -p(enitentia\ 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. Besides, it is indisputable that the agreements of the association were made to be kept, and not to be broken, (lood faith between the members, not to mention a powerful compulsory force behind them, obliged that the agreements be kept, and the fact is, as the commission finds, they were kept. The cardinal error to which the railroads have been com- mitted in this important controversy is the apparent belief that they have the right, by abitrarily increasing freight rates, to divert at any time to their own treasuries a share of the profits of successfid industries or occupations. It 748 138 FEDEKAL BEPORTER, 763. Opinion of the CJourt. was not contended that the antecedent rates were unremu- nerative. As before stated, they were conceded to be profit- able. That additional revenue was needed to meet increased expenses was the motive of the advance was testified by Vice President Culp of the Southern Railway Company. To quote his language : They " looked about to see where " they could best, but without injury, get that additional revenue, and one of the commodities which they thought would " bear an advance " was lumber. But the courts have more than once decisively corrected this assumption on the part of rail- way officials. It is true that the business of railway trans- portation is usually carried on by private capital invested ill corporations. It is, however, business of a quasi public nature. As we have seen, there is no doubt that within the limitations of the Constitution it is subject to govenmiental control. These facts prohibit the agents of the railway from charging, like the owners of other property, any price they may choose to exact for the use of the railroad. The law does not fail to regard the enormous franchises which have been granted to the railroads by the public, their corporate powers, the right to avail themselves of [764] the right of eminent domain, the right to protection against exorbitant restrictions or exactions from local authority, and other similar considerations. These views are very plainly set forth in the opinion of Justice Brewer sitting with the Circuit Court of Appeals of the Eighth Circuit in the case of Chicago c§ N, W, R. R, Co. v. Oahome, 52 Fed. 914, 3 C. C. A. 347. The conclusion of the learned justice is that rea- sonable compensation for the service actually rendered is all that the railroad is permitted to exact. Five years after the decision just cited was made the Supreme Court of the United States had before it the same question. This was in the case of Smyth v. Ames, 169 U. S. 466, 18 Sup. Ct 418, 42 L. Ed. 819. This was a case of great importance. The opinion was happily unanimous. It was argued for the appellant by Mr. John L. Webster and by Mr. Churchill, Attorney General of the state of Nebraska, and with them appears the famous name of William J. Bryan. For the appellees there appeared J. M. Woolworth and that re- nowned leader of the American bar, the late Mr. James C. TIFT V. SOUTHERN RY. CO. 749 opinion of the Court. Carter. The case would be additional authority for the jurisdiction of this court in equity to prevent a multiplicity of suits, if such additional authority was needed; but the great duty which fell upon the court was to determine the rule for fixing the reasonableness or unreasonableness of transportation rates. The state of Nebraska had attempted to determine this by fixing an arbitrary maximum for the transportation of interstate commerce. This the court held it could not do. But in holding this it announced certain princi- ples which the controlling officerrs of railroads, charged as they are with such vital duties to the commerce and welfare of the country, might well take to heart. " The railroad," said the court, " is a public highway, none the less so because constructed and maintained through the agency of a corpora- tion deriving its existence and powers from the state. Such corporation was created for public purposes. It performs a function of the state. Its authority to exercise the right of eminent domain and to charge tolls was given primarily for the benefit of the public. It is under governmental control, though such control must be exercised with due regard to the guaranties for the protection of its property." It may not " fix its rates with a view solely to its own inter- ests, and ignore the rights of the public. But the rights of the public would be ignored if rates for the transportation of persons or property on a railroad are exacted without reference to the fair value of the property used for the pub- lic, or the fair value of the ser\4ce rendered, but in order simply that the corporation may meet operating expenses, pay the interest on its obligations, and declare a dividend to stockholders." After careful consideration of the extensive record, there seems to have been an utter absence of excuse or justifica- tion for the concerted action of the railroads which advanced the rates on lumber throughout the South. The vast in- crease of the lumber traffic had resulted in large increase of net revenue for those roads. The service was inexpensive. It required neither rapidity of movement nor specially equipped cars, and such simple equipment as was needed the shippers were obliged to furnish and pay for. The railroads [766] were required neither to load nor unload the cars. 750 138 FEDERAL REPORTER, 765. Oiiiiiioii of the Court. Xliis was done by the consignor and consignee. The lumber carried was neither fragile nor perishable, and the risk there- fore from loss or damage was inappreciable. Mr. Tift, the principal witness for the complainants, and one of the largest lumber men of the state, testified that for 30 years he had not been compelled to present a claim for damage on lumber shipped fi-om his mill. Nor were there any ex- igencies in the financial condition of the principal defendants which called for so vast a coniribution to their treasuries from an industry whose product forms such a large part of their tonnage, and which is so indispensable to the public welfare. On this subject we may, perhaps, with propriety quote literally the figures and findings of the commission. On page 573 of the report it is said : *• The financial eonditlun of the prhicipal defendants appears to Mve steadily improved for a number of years up to and including the year VMi, in which the advance in rates complained of was made. They were comparatively pro8i>erous at the date of and for years prior to the advance. "The Southern Railway C«>mpany has declared dividends for each year from 1807 to 1903, both inclusive, ranging from $543,000 ♦ ♦ • in 1807, up to $4,500,000 (7^ per cent, on $00,000,000 of preferred ?loe 1 ^*o^;^o^?**^^;^2^ **^**^ reports surpluses of from $404,013 in 18!)8 to f 2, 100,80 ( m 1902. "The Louisville & Nashville Railroad Corapanv has declared divi- SJ'i^oJ^ ^^^^ ^'^^^ ^**^*"^ ^^^ ^^ 1^^- *>o^li inclusive, ranging from J1^,000 (about 3i per cent, on $54,912,520 of common stock) in i^' "S,^** $3,000,000 (5 per cent on $60,000,000 of common stock) in lJO,i. That road also reports surpluses of from $40,204 in 1899 to $2,987,195 in 1903. ^ y ^o,-i« m loyy to "The Atlantic Coast Line Railroad Company has declared divi- dends for each year (except year 1900) from 1804 to 1903. both in- clusive, ranging from $318,390 in 1894 (5i per cent, on $7,021,950 of comnion stock), up to $1,714,075 (5 per cent, on $1,744,100 of pre- ferred stock and 5 per cent, on $36,650,000 of common stock) in 1903 ;j>i,^j.i,9M m 1903. In 1900 no dividend was declared, but there was a surplus reported of $2,152,406. /* '^i^*l ^**^*^^'"**^' Chattanooga & St. Louis Railway Companv de- •tA^'^^Jii!*^^?*^'' ranging from $100,000 in laoo (being 1 per cent, on filo^'*^ o/ common stock) to $400,000 in 1895, 1896, 1897, and 1898, being 4 per cent, on $10,000,000 of common stock. For each |I^,9?"1L 1^ S $^1,48^^^^ ^'^'•^^"^^ ^""^'^^ ^^^- "The Georgia Southern & Florida Railway Company declared divi- dends for each year from 1897 to 1903 ranging from $27,360 (beinc ?nS?^f^?^- ?" $*584,000 of preferred stock) in 1897 up to .$99,240 in 1901 (being 5 per cent, on $684,000 of preferred stock and oer cent on $1,0^4,000 of preferred stock) in 1903. For each of the years 1902 and 1903 it declared a dividend of $77,560. The suroluses re- ported from 1896 to 1903 range from $9,657 to $107,060 m 1896 The surplus for 1901 was $24,105, for 1902 $41,448, and for 1903 $77*968 TIFT V. SOUTHERN BY. CO. Opinion of the Court. 751 "The Seaboard Air Line Railway Company has der^lared no divi- dends, but reports surplus of $252,070 for 1901, $709,331 for 1902, and $754,431 for 1903. The Central of Georgia Railway Company de- clared no dividends, but reports surpluses for each of the years 1899 to 1903, both inclusive, ranging from $58,888 in 1899 to $203,506 in 1903. The Macon & Birmingham Railway Company has declared no dividends, and reports a deficit for each of the years from 1894 to 1903, both inolusive, ranging from $20,0.99 in 1002^ to $03,715 in 1804. The deficit reported for 1901 was $34,313, for 1902 .$29,099, and for 1903 $45,949." It is true, as insisted, that the operating expenses of the raih-oads have grown hirger, and the percentage of operat- ing expenses to gross earnings has increased. But it is also true that both gross [766] and net earnings have steadily increased. The statement made in argument that the gross earnings of the Southern Railway have increased from $25,353,686 in 1899 to $42,313,248 in 1903 does not seem to have been challenged. In the same j^ear the net earnings, it seems, had increased from more than eight millions to more than twelve and a half millions, and the net earnings per mile have increased more than one thousand dollars. While these figures are most encouraging, and will afford gratifi- cation to all those who are broad-minded enough to rejoice in the prosperity of the railroads, which do so much for the Avelfare of the country and the advancement of its civiliza- tion, it is also true that this is probably an understatement of the real earnings of this great corporation. It was in- sisted by Mr. Baxter in his very able argument for the respondents that every expenditure of a railway, no matter how permanent the improvement, must be charged to the expense account of operation. This accomplished lawyer is accustomed to speak authoritatively with regard to the mat- ters intrusted to his care. His statement in judicio may be regarded as binding upon all of the respondent companies, and, if accepted, when we consider tlie vast material im- provements which have been made in the southern railways it will be difficult to estimate the marvelous prosperity which they now enjoy. It is true counsel for the railroads insist that their net revenue did not increase in proportion to their gross earnings, but, in the nature of things, this is not to be expected in any business. A manufacturing enter- prise of extensive character may make 10 per cent, by the product of its mill. It may double its capacity and double 138 FEDEBAL REPORTER, 766. Opinion of the Court. its output, but it may look in vain for a double increase in net earnings. How needless, then, was the exaction upon the great lumber industry of the South, which has occa- sioned this costly litigation with all of its lamentable con- sequences. The hardship upon the complainants was incon- testable. The findings of the commission show that under the old rates they had built up a prosperous trade in the Northwest. Under the new rates this practically ceased. When the court, with what was thought to be caution con- servative of the rights of all parties, retained the bill, but declined to continue the injunction, and gave complainants the opportunity to avail themselves of their right to appeal to the commission, this business was practically prostrate. Unhappily, but no doubt necessarily, there was a delay of 19 months before the commission made its finding. In the meantime, for well-known causes of a political nature, there had been a gi-eat and enthusiastic revival in the business, enterprise, and confidence of the country. A great demand for yellow pine lumber had grown up in all sections. Builders felt themselves obliged to have it, whatever the price, and whatever the rate, and large shipments were made on the advance rates. This is plainly enough shown by the numerous supplemental affidavits offered by the com- plainants and received as evidence. This, however, was in no sense ascribable to the action of the Southeastern Freight Association in imposing this rate, but was despite that action. It in no sense relates to the reasonableness or un- reasonableness of the rate. And it should not be [767] for- gotten that while the business of the lumbermen was re- cuperating the treasuries of the railroads were all the while receiving a proportionate increment from the unreasonable increase of rates which they had imposed. They have no right to graduate their charges in proportion to the pros- perity which comes to industries whose products they trans- port. With equal reason they might demand an increase of rates for the transportation of cotton with every increase in the value of our great staple. Indeed, to concede the principle for the fixation of rates upon which the railroads through the medium of the Southeastern Freight Associa- tion have acted in this case would concede their power to TIFT V. SOUTHERN RY. CO. 753 Opinion of the Court, levy for no better service augmentation of tolls for every in- crease of profit in every line of endeavor won by the enter- prise, sagacity, and industry of the American people. It is superfluous to add that a government of laws, and not ot men, will never tolerate such domination and control of the trade, manufactures, and commerce of the people. These views relate exclusively to the facts before the court in this case as proven incontestably by the evidence and as tound by the interstate commerce commission. Here is no attempt to discredit the incalculable services which are hourly rendered the country by the railways. In nothing do we share the animus or purposes of that sinister, sefish, and insincere agitation which would excite, if it could the masses of the people to hatred and injustice toward corpo- rations. Such a propaganda provokes in the justly bal- anced mmd, and particularly in the mind trained for the administration of law, and for the protection of propertv and personal rights, disapprobation, and, indeed, abhor- rence With sincere enthusiasm the judge of this court has elsewhere testified to the wonderful material blessings be- stowed upon our once prostrate Southland bv our orreat railway systems in "economies of operation, in constant, if gradual, reduction of rates, in increased facilities and more expensive accommodations, in more uniform service for longer distances without change of cars, in abolition of short disjomted hues under different management, in augmenta- tion of shipping facilities, in physical perfection of the properties and consequent safety to the public, in the steadv increase in value of all the securities of these great hi^h- lu ri.J f "" 'T"""'''- * * * And with what re- sult? \Vhere formerly asthmatic engines attached to unsafe and noisome trams through the solitudes of an impoverished country like a wounded snake dragged their slow length along, now we behold on massive rails of gleaming steel, on roadbeds of granitic ballast, successive sections of long freight trams sturdily steaming through a prosperous land smiling with luxuriant crops, beautiful with neat and happv homes, the chimneys of great factories giving employment to thousands, almost marking the miles; or the admiration 21220— VOL 2—07 m i8 754 138 FEDERAL REPOETER, 767. Opiuion of the Court. kindles and the pulse leaps as the limited express laden with its human freight glances by on its mission of progress and civilization/' In nothing do we abate that enthusiastic ap- proval of the services of the railways to the people; but not moi-e tlian any other human agency is raih-oad manage- ment infallible. The patriotic and proper solution of every controversy involving the vast ques- [768] tions of trans- portation is simply the trial of each case on its particular facts, and with an eye single to the merits of the one party or the other. In interstate commerce this is exclusively a duty of the national tribunals, and the laws regulating such commerce are within the exclusive power of Congress. Innumerable ai-e the cases in which the railroads them- selves successfully invoke the identical principles here an- nounced for their own protection against intemperate and injurious local legislation restrictive of their just powers and destructive of the just rights of their stockliolders. Such was the case of Smyth v. Ames, mpra. Such was the case of OMeagOj etc., Ry. v. Minnesota, 134 U. S. 418, 10 Sup. Ct. 462, 33 L. Ed. 970. See, also, Central E. i?. v. Macon (C. C.) 110 Fed. 871; Iron Mountain R, E. v. il/em- phis, 96 Fed. 122, 37 C. C. A. 410; Milwaukee, etc, Co. v. Milwaukee (C. C.) 87 Fed. 577; BaU v. Eutland (C. C.) 93 Fed. 516; Cleveland City Ey. v. Cleveland (C. C.) 94 Fed. 401) ; Chicago, M.. d: St, P, Ey. v. Tompkins, 176 U. S. 173, 20 Sup. Ct. 336, 44 L. Ed.'' 417 ; Louisville, etc., v. McChord (C. C.) 103 Fed. 220. In all of these cases and many others of pertinent character which might be cited, corporations found themselves obliged to resort to the courts to obtain protection against rates which were unreasonably low. The courts of the country will be found prompt to protect them in the righteous exercise of righteous powers. They will be equally prompt in proper cases to protect the public or any individual from unrighteous exactions, particularly when invoked through the agency of unlawful combma tions or associations in restraint of trade and commerce, affecting not onlv the welfare and happiness of the individual, but the thrift and prosperity of entire communities and great commonwealths. In this case the conclusions of the court as to the issues BOBBS-MERRILL CO. V. STRAUS. 756 Syllabus. involved agree with the conclusions of the interstate com- merce commission as expressed by their report. A decree enjoining all the respondents against further enforcement of the rates complained of will be at once entered. Order will be taken referring to the standing master the pleadings and evidence, with instruction to ascertain the sum total of the increased rate paid by each of the complainants to either or all of the defendant companies since the rate went into effect and to the end of this litigation, and report such amount to the court, in order that, pursuant to the stipula- tion made by the respondents in open court, in case the com- plainants prevail, decree of restitution shall be made. Be- cause of the vast extent of the lumbermen's business, and the great expense and inconvenience which might result to them, to the lumber trade, and the railways from the in- stantaneous enforcement of this injunction, when respond- ents may have purpose to appeal from this action, it will be ordered further that the decree now granted shall not take effect until 10 days from this date have elapsed, in order that the respondents or either of them, if they so desire, may seek supersedeas. [156] BOBBS-MERRILL CO. v. STRAUS ET AL. (Circuit Court, S. D. New York, July 11, 1905.) [139 Fed., 155.] Copyrights— Sales— Restriction— Notice— Effect.— Where the pub- lishers of a copyrighted book printed a notice on the page following . the fly leaf that the price of the book at retail was $1 net and that no dealer was licensed to sell it at a less price, and the sale at a less price would be treated as an infringement of the copyright such notice did not purport to reserve to the publisher any interest in the book, or any right to control it or the action of its owner In the use and disposition thereof, and was insufficient to constitute a license agreement or contract restricting or modifying the abso- lute title acquired by purchasers.a [156] Same— Infringement— Where a publisher of copyrighted books voluntarily parted with all control over them by selling the books to purchasers, such purchasers were neither licensees nor agents of « Syllabus copyrighted, 1905, by West Publishing^. 756 139 FEDERAL KEPORTEB, 156. Statement of the Case. the publisher, though buying the l)ooks for resale, and hence such resale did not c(jns«titute au iufriugemeut of the copyright, under Rev. St § 4964 [U. S. Conip. St, 1901, p. 3413], declaring that it is an infringement of a copyright to print or publish a copyrighted book without the consent of the proprietor given in writing, or know- ingly to sell or expose for sale a copy or copies of such copyrighted book "when unlawfully printed or imported," though the books so sold each contained a notice that no dealer was licensed to sell It at a less price than that fixed by the publisher, and that a sale at a less price would be treated as an infringement of the copyright. [Bd. Note.— For cases In point, see vol. 11, Cent. Dig. Copyrights, §§ 41, 47.} Same.— The act of a publisher of a copyrighted book in putting it on the market and selling it does not constitute a license to the pur- chaser to use and sell the same, which the publisher is entitled to restrict by a notice brought to the attention of the purchaser that the sale of the book at retail for less than the price fixed by the publisher shall be considered an infringement of the copyright. Same— Combinations in Restraint of Trade— Interstate Com- merce. — ^Where the publishers and booksellers of the Unitetl States organized tMo membership associations, one known as the "Ameri- can Publishers' Association," and the other as the "American Book- sellers' Association," and together controlled the publication and sale of at least 90 per cent, of all copyrighted books, the objects of which were to compel owners and dealers of such books to pur- chase them of the members of the combination at au arbitrary price fixed by it, regardless of the actual value of the books as determined by a demand in an open market, or the condition of the books, and to compel all publishers and dealers of such books to come into the combination, be controlled by it, and sell Iwoks at prices fixed by it, regardless of the value of the books 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 through a system of blacklisting, etc., the eflfect of which would be to cripple the business of any publisher or bookseller outside of the combina- tion, such agreement was a violation of the Sherman anti-trust law (Act Cong. July 2. 1890, c. 647, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200]), declaring that every contract, combination in the form of a trust or otherwise, or conspiracy in restraint of trade or commerce among the several states Is illegal. [Ed. Note.— For cases in point, see vol. 35, Cent. Dig. Monopolies, In Equity. Suit to enjoin the sale at retail of books containing a copyright novel, " The Castaway," at a price less than $1 for each copy of the book. Such sales of such book are alleged to be in violation of the terms of a notice printed in each copy thereof upon the page imme- BOBBS-MERRILL CO. V. STRAUS. Opinion of the Court. 757 diately following the title-page and immediately below the statu- tory copyright notice. Defendants insist that the books containing such novel have been lawfully printed for sale to the general public and to be read by the general public, and put upon the market and sold, and that the right of the owners of such books to sell same at such price as they severally may see fit to ask cannot be and is not limited or affected by the notice. They also insist that this suit is to enforce an unlawful combination and agreement, and press other cieienses. Boardman, Piatt <& Soley (TF. //. H, Miller, Albert B. Boardman, and Henry IF. Clark, of counsel), for com- plainant. Spiegelherg c§ Wise {John G. Carlisle and Edmond E. Wise, of counsel) , for defendants. [157] Eay, District Judge (after stating the facts as above). The main facts in this case are not disputed. The}^ may be stated as follows : (1) The Bobbs-Merrill Company, the complainant, is, and at all times mentioned in the bill of complaint was, a cor- poration duly organized and existing under the laws of the state of Indiana, engaged in the business of publishing and selling books, and having its principal office in the city of Indianapolis, in the state of Indiana. (2) The complainant is, and at all times mentioned in the bill of complaint was, the owner and proprietor of a book or novel in one volume, entitled '' The Castaway," written by Hallie Erminie Eives. (3) The allegations contained in paragraphs of the bill of complaint numbered III to VI, inclusive, relating to the complainant's compliance with the copyright laws of the United States, are true. Such paragraphs read as follows : '* III. That your orator is the proprietor of a copyright book or novel in one vo ume, entitled and known as ' The Castaway.' That n^fhnnn?!^'' ^^/^^^^d book was Hallie Erminie Rives. That prior to the publication of said book, and prior to the month of May, 1904 the author thereof, said Hallie Erminie Rives, duly sold, assigned ' and transferred to your orator all her right, titl^, intLst, and pfopeV^n and to said l)ook, and your orator thereupon became, and at all times since said sale has been, and still is, the sole and exclusive proprietor and owner thereof. ^ ;* IV. That your orator, being then proprietor of said book as afore- said and desiring to secure a copyright thereof, before the day of publication of said book duly deposited in the mall within the United 758 139 FEDEBAL BEPOBTER, 157. Opinion of the Court States, to wit, in tlie city of Indianapolis, in the state of Indiana, addressed to the Librarian of Congress, at Washington, District of Columbia, a printed copy of the title of said book, and duly paid to said Librarian of Congress the fees required by law, to wit, fif^ cents, for recording said title, and your orator did also, not later than the day of publication of said book in this or any foreign coun- try, to wit, on the 24th day of May, 1904, deposit in the mail within the United States, to wit, in the city of Indianapolis, in the state of Indiana, addressed to the Librarian of Congress, at Washington, Dis- trict of Columbia, two copies of said book printed from type set Within the limits of the United States. " "V. Your orator is informed and yerily believes, and therefore avers, that the Librarian of (ingress on the 18th day of May, 1904, duly recorded the name and title of said copyright book in pursuance of the statute in such case made and provided. " VI. That your orator has given due notice and information of Its said copyright by inserting and printing in each and every copy of said book published, upon the page immediately following the title- page thereof, the words and figures: 'Copyright 1904. The Bobbs- Merrill Company. May.' " (4) No copies of '' The Castaway " were sold or otherwise issued prior to securing the copyright tliereon. (5) Each and every copy of '*The Castaway" printed, published, or issued by complainant contained at the time of such publication and issue the following notice, printed upon the page of the book immediately following the title-page, and just below the statutory copyright notice: "The price of this book at retal is one dollar 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 Dobbs-Mebrill Company." [Ili8] (6) The defendants in the course of their business procured copies of said book before the commencement of this suit for the purpose of sale at retail. The defendants purchased 90 per cent, of said copies from dealers at whole- sale at a reduction from said specified retail price of about 40 per cent., and 10 per cent, of said copies tliey purchased at retail, paying the full retail price therefor. (7) Defendants at the time of their purchase of copies of . said book knew that said book was a copyright book, and were familiar with the terms of the notice printed in each copy thereof, as described in paragraph 5 of this statement, and knew that this notice was printed in every copy of said book purchased by them. (8) The wholesale dealers, from whom defendants pur- chased copies of said book, obtained the same either directly BOBBS-MERRILL CO. V. STRAUS. 759 Opinion of the Court. from the complainant or from other wholesale dealers at a discount from the net retail price, and at the time of their purchase knew that said book was a copyright book, and were familiar with the terms of the notice printed in each copy thereof, as described in paragraph 5 of this statement, and such knowledge was in all wholesale dealers through whom the books passed from the complainant to defendants. But said wholesale dealers were under no agreement or obligation to enforce the observance of the terms of said notice by retail dealers or to restrict their sales to retail dealers who would agree to observe said terms. (9) The defendants have sold copies of said book at retail at the unifonn price of 89 cents a copy, and are still selling, exposing for sale, and offering copies of said book at retail at said price of 89 cents per copy, without the consent of the complainant. (10) That during the year 1900 a large number of pub- lishers in the state of New York and throughout the states of the United States entered into an agreement for the pur- pose of maintaining the net retail price of copyrighted books published by any of them as designated by the publisher of each book, and to prevent the sale at retail of any such copyrighted books by any dealer at retail at less than said fixed net retail price. That pursuant to that agreement a membership corporation was formed under the laws of the state of New York under the name of the "American Pub- lishers' Association," which included among its members the complainant herein and a large majority of the publishers of all books, copyrighted or uncopyrighted, in the state of New York and throughout the United States. (11) That immediately after the incorporation of said American Publishers' Association a resolution was adopted and its members entered into agreements with each other and with the American Publishers' Association, a copy of which is as follows : Exhibit A. " The American Publishers' Association, 15G Fifth Avenue, New York. 'f The following plan to correct some of the evils connected with the euttmg of prices on copyright books was adopted at the meeting «« -^^erican Publishers' Association held February 13 1901 • I. That the members of the American Publishers' Association 760 139 FEDERAL REPORTER, 158. Opinion of the Court virl^.n it"r?2gr*^K^fl^r^' ^'•^* '^""^ ^y them after May 1. ik^h t. ^ ^\^V P^^'^sl^ed at net prices, wliicli it is recommended shall be reduced from the prices at which similar books have been issued heretofore: Provided, however, that there shall l^ exempt from his agreement all school books, such works of fiction (not jmeniles) and new editions as the individual publisher may desire b€K>k8 published by snbscriptiou and not through the trade, and such other books as are not sold through the trade *Nlt"'ii*nWnf r""''''''*'*^ **"*"* *^^ ''^t*'" P^**^ *^^ a net book, marked .fiVr^^Jf "*t^** **" ^ P**P^** wrapper covering the book. . V?'!**^ ***^ members of the association agree that such net copyrighted books and all other of their books shall be sold by them to those booksellers only who will maintain the retail price of sue™ net copyrighted lKK)k8 for one year, and to tht.se booksellers and job- bers only who will sell their books further to no one known to them to cut such net prices, or whose name has been given to them by the aasoeiation as one who cuts such prices, or who fails to abide bv such wI/« »•*■ «f ««»>•«? niles and regulations as may be established by local associatuius as hereinafter provided. A dealer or bookseller may be deflnejl as one who makes it a regular part of his business to sell books and carries stock of them for public siile "»s'"ebs lo " IV. That the only exception to the rule of maintaining the retail price shall be m the case of libraries, which mav be allowed a dis- count of not more than 10 per cent. Libraries entitled to this dis- count may be defined as those libraries to which access is either free dlscounr""'^^ subscription. Book clubs are not to be entitled to "V. That the association suggests a discount on net copyrighted books of twenty-five per cent, to dealers as a general discount, lea v- "1)lish r*^"^ *^ **' (iiscount, however, entirely to the individual *• VL That after the expiration of a year from the publication of any such net copyrighted book dealers shall not be held to the above restrix^tions, and may sell such book at a cut price ; but if, on learn ing of such action, the publisher shall desire to buv back at purchase price the cxjpies then remaining in the dealers' hands, thev must be so resold to him on demand. * ,J27Vi '^*''*^ when the publisher sells at retail a book published cost of postage or expressage on all books sent out of the citv In which the publisher does business. ^ mUF^' ^}^tl **^^' t***' Pnipose of carrying out the above plan the directors of the association be authorized to establish an office and engage a suitable person as manager, and emli-avor to secure from all dealers m books assent to the above conditions of sale Under thP direction of the board the manager shall investigate all cases of cut- ting reported, and when directed shall send out notices to the associa- tion, jobbers, and the trade of any persons violating the above provisions. " IX. That it shall be the duty of all members of the association to report immediately to the said office all cases of the cutting of prices which may come to their knowledge. " X. That the association, through its agents and membc-rs, aid in the formation of booksellers' associations in the important centers and cities in the United States, the object of which association shall be to assist the Publishers' Association in maintaining prices on net books as aforesaid, and to establish such lawful rules and regula- tions respecting the conduct of business in their locality as will tend to secure fair, honorable, and uniform methods of business in each important center or section of the country. That the association BOBBS-MERRILL CO. V, STRAUS. Opinion of the Court 761 pledge itself to support such local associations by every means in its power in maintaining such lawful rules and regulations as may in this way be agreed to. " XI. That the report, when adopted by the board of directors, be submitted to the association and voted upon in accordance with the association's rules, article II, section 1." (12) That thereafter a voluntary association, called the "American Booksellers' Association," was formed, which was intended to and did include a large majority, to wit, about 90 per cent., [160] both in number and extent of business, of all wholesale and retail book dealers throughout the state of New York and the United States. That the avowed purpose of this association was to cooperate with and assist the American Publishers' Association and its members in the maintenance of the so-called net price or restricted price system for the sale of books at retail, and to supply the American Publishers' Association with the names of book- sellers who cut the prices of net price or restricted books at retail, and to refrain from selling such price-cutters, or any individuals, firms, or dealers believed to be price-cutters, any books of any kind, whether copyrighted or uncopy righted, at Avholesale or at retail prices. That said American Book- sellers' Association thereafter at its annual convention in June, 1901, adopted the following resolution : Exhibit B. "Reform Resolution No. 1. " Whereas, the American Publishers' Association has adopteciation. and all members of this association shall then and tliereafter be restrained from supplying any books to such expelled member at a discount from the usual retail price. "(5) Furthernnire. be it resolved, that all members of this asso- ciation shall be restrained from furnishing any books at less than the net or usual retail price to any denier who shall have been denounced by the Publishers' Association for cutting the price of net books, or for otherwise violating the net price system, and who shall have been therefor cut off by the members of the Publishers' Association from the supply of their books. **(«»> Furthermore, be it resolved, that all members of this associa- tion shall endeavor to keep in stock and push the sale of net books so long as they are reasonably in demand, provided such discount is al- lowed by the publishers to the dealers as will yield them a living profit: and they shall maintain [1611 the net prices of the same in accordance with the terms of the publishers' agreement for the main- tenance of the net price system. *• 1 [or we J vote for the adi)ption of Reform Resolution No. 1 as above stateil. ** [Signed] Name ■ "Address " (13) That thereafter anurchase price tlu' copies then remaining in the deal- ers* hands, they must l»e so resold to him on demand. "VIII. That when the publisher sells at retail a net boftk published under the rules, it shall be at the retail price, and he shall add the cost of postage or expressage on all books sent out of the city in which the publisher does business. " IX, That for the purpose of carrying out the above plan the dl- BOBBS-MERRILL CO. V. STRAUS. Opinion of the Court. 765 rectors of the association be authorized to establish an office and en- gage a suitable [163] person as manager, and endeavor to secure from all dealers in books assent to the above conditions of sale. Under the direction of the board tlie manager shall investigate all cases of cutting reported, and when directed shall send out notices to the asso- ciation, jobbers, and the trade of any persons violating the above provisions. "X. That it shall be the duty of all members of the association to report immediately to the said office all cases of the cutting of prices which may come to their knowledge. "XI. That the association, through its agents and members, aid in the formation of booksellers' associations in the important centers and cities in the United States, the object of which associations shall be to assist the Publishers' Association in maintaining prices on net books as aforesaid, and to establish such lawful rules and regulations respecting the conduct of business in their locality as will tend to secure fair, honorable, and uniform methods of business in each im- portant center or section of the country. That the association pledge itself to support such local associations by every means in its power in maintaining such lawful rules and regulations as may in this way be agreed to." Exhibit D. 4< The American Publishers' Association, 15G Fifth Avenue, New York. " The following plan to correct evils connected with the cutting of prices on copyright books was adopted at a meeting of the American Publishers' Association held February 13, 1901 : "Amendments referring to fiction were adopted at meetings held January 8, 1902, and May 27, 1902. "I. That the members of the American Publishers' Association agree that all copyrighted books first issued by them after May 1. 1901, shall be published at net prices, which it is recommended shall be reduced from the prices at which similar books have been issued heretofore: Provided, however, that there shall be exempt from this agreement all school books, such works of fiction (not juveniles) and new editions as the individual publisher may desire, books published by subscription and not through the trade, and such other books as are not sold through the trade. " II. It is recommended that the retail price of a net book, marked * Net,' be printed on a paper wrapper covering the book. "III. That the members of the association agree that such net copyrighted books and all others of their books shall l>e sold by them to those booksellers only who will maintain the retail price of such net copyrighted books for one year, and to those booksellers and jol)- bers only who will sell their books further to no one known to them to cut such net prices, or whose name has been given to them by the asso- ciation as one who cuts such prices, or who fails to abide by such fair and reasonable rules and regulations as may be established by local associations as hereinafter i)rovided. A dealer or bookseller may be defined as one who makes it a regular part of his business to sell books and carries stock of them for public sale. " IV. That the members ^of the association agree that on all copy- righted works of fiction (not net) published by them after February 1st, 1902, the greatest discount allowed at retail for one year after publication shall be 28 per cent; and all the rules for the protection of net books shall apply to the protection of fiction to this extent The conditions governing the sale of fiction are such that the asso- ciation does not attempt to fix a uniform price at which works of fiction (not net) shall be sold, but only to name a maximum discount, which, however, it is hoped will rarely be given. 766 139 FEDERAL REPORTER, 163. Opinion of tiie Court. " Wlieii a work of fiction published under this rule is sent postpaid, the price to the purchaser shall be not less that the miniiuiun price plus the postaj^e. " y. The only exceptions to the foregoing rules shall be in the case of libraries, which may be allowed a discount of not more than 10 per cent, on net books and 33^^ per cent, on fiction. Libraries entitled to these discounts may be defined as those libraries to which access Is either free or l)y annual subscription. Book clubs are not to be entitled to discount on net books, nor to any special discount on fiction [164] " VI. That the association suggests a discount on net copy- righted books of 25 per cent to dealers as a general discount, leaving the question of discount, however, entirely to the individual publisher. " VII. That after the expiration of a year from the publication of any copyrighted book issued under these regulations, dealers shall not be held to the above restrictions, and may sell such book at a cut price; but if, on learning of such action, the publisher shall desire to buy back at purchase price the copies then remaining in the dealers' hands, they must be resold to him on demand. " VIII. That when the publisher sells at retail a net book published under the rules, it shall be at the retail price, and he shall add the cost of postage or expressage on all books sent out of the city in which the publisher does business. "IX. That for the purpose of carrying out the above plan the directors of the association be authorized to establish an ofllce and engage a suitable person as manager, and endeavor to secure from all dealers in books assent to the above conditions of sale. Under the direction of the board the manager shall investigate all cases of cutting reported, and when directed shall send out notices to the association, jobbers, and the trade of any persons violating the above provisions. " X. That it shall be the duty of all members of the association to report immediately to the said oflice all cases of the cutting of prices which may come to their knowledge. "XL That the association, through its agents and members, aid in the formation of booksellers' associations in the important centers and cities in the United States, the object of which associations shall be to assist the Publishers' Association In maintaining prices on net books as aforesaid, and to establish such lawful rules and regulations respecting the conduct of business in their localitv as will tend to secure fair, honorable, and uniform methods of business in each important center or section of the country. That the association pledge itself to support such local associations by every means in its power in maintaining such lawful rules and regulations as may in this way be agreed to." Exhibit E. " The American Publishers' Association, 156 Fifth Avenue, New York. " The following plan to correct evils connected with the cutting of prices^on copyright books was adopted at a meeting of the American Publishers' Association held February 13, 1901 : "Amendments referring to fiction were adopted at meeting held Januaiy 15, 1903. "I. That the members of the American Publishers' Association agree that all copyrighted books first issued by them after May 1, 1901, shall be published at net prices, which it is recommended shall be reduced from the prices at which similar books have been issued heretofore: Provideil. however, that there shall be exempt from this agreement all school books, such works of fiction (not juveniles) and new editions as the individual publisher may desire, books published BOBBS-MERRILL CO. V. STRAUS. 767 Opinion of the Court. by subscription and not through the trade, and such other books as are not sold through the trade. . XT* V,'J^ K recommended that the retail price of a net book, marked Net, be prmted on a paper wrapper covering the book. " III. That the members of the association agree that such net copyrighted books and all others of their books shall be sold by them to those booksellers only who will maintain the retail price of such net copyrighted books for one year, and to those booksellers and jobbers only who will sell their books further to no one known to thena to cut such net prices, or whose name has been given to them by the association as one who cuts such prices, or who fails to abide by such fair and reasonable rules and regulations as may be estab- lished by local associations as hereinafter provided. A* dealer or bookseller may be defined as one who makes it a regular part of his business to sell books and carries stock of them for public sale. "It is further agreed by the members of the association that they will not themselves offer, nor sell their books to any one w-ho offers, protected [165] books in cuiul)ination with a periodical at less than the trade subscription price of such periodical, plus the net or minimum retail price of the book. " IV. That the members of the association agree that on all copy- righted works of fiction (not net) published by them after February 3 St, 1902, the greatest discount allowed at retail for one ye.ir after publication shall be 28 per cent. ; and all the rules for the protection of net books shall apply to the protection of fiction to this extent. The conditions governing the sale of fiction are such that the associa- tion does not attempt to fix a uniform price at which works of fiction (not net) shall be sold, but only to name a maximum discount, which, however, it is hoped will rarely be given. When a work of fiction published under this rule is sent postpaid, the price to the purchaser shall be not less than the minimum price plus the postair<\ " V. The only exceptions to the foregoing rules shall be in the case of libraries, which may be allowed a discount of not more than 10 per cent, on net books and 33* per cent, on fiction. Libraries en- titled to these discounts may be defined as those libraries to which access is either free or by annual subscription. Book clubs are not to be entitled to discount on net books, nor to any si>ecial discount on fiction. " VI. That the association suggests a discount on net copyrighted books of 25 per cent, to dealers as a general discount, leaving the question of discount, however, entirely to the individual publisher. "VII. That after the expiration' of a year from the publication of any copyrighted book issued under these regulations, dealers shall not be held to the above restrictions, and may sell such book at a cut price ; but if, on learning of such action, the publisher shall desire to buy back at purchase price the copies then remaining in the dealers' hands, they must be so resold to him on demand. "VIII. That when the publisher sells at retail a net book pub- lished under the rules, it shall be at the retail price, and he shall -idd the cost of postage or expressage on all books sent out of the citv in which the publisher does business. " IX. That for the purpose of carrying out the above plan the direc- tors of the association be autliorized to establish an office and engage a suitable person as manager, and endeavor to secure from all dealers^ In books assent to the above conditions of sale. Under the direction of the board the manager shall investigate all. cases of cuttin*' re- ported, and when directed shall send out notices to the association jobbers, and the trade of any persons violating the above provisions' . " X. That is shall be the duty of all members of the association to 768 139 FEDERAL BEPOBTEK, 165. Oplniou of the Court reiiort imiBediately to the said office all cases of the cutting of prices which may come to their knowledge. "XI. That the association, through Its agents and membei-s. aid in the formation of booksellei-s' associations in the important centers and cities in the United States, the object of which associations sliall be to assist the I'ublishers' Association in maintaining prices on net books as aforesaid, and to establish such lawful rules and regulations respecting the conduct of business in their locality as will tend to secure fair, honorable, and uniform methods of business in each important center or section of the country. That the association pletlge itself to supiKut such local associations bv every means in Its power in maintaining such lawful niles and regulations as may In this way be agreed to. **XII. That in making sales and contracts of sales of their books involving future dellver>% members shall stipulate that such delivery Is contingent on the obseiTance by the purchaser of the rules of the association.'' Exhibit F. " Tlie American Publishers' Aasociatlon, lot} Fifth Avenue, New Yoilc. ''PIm m Amended to March 4th, 190S. " The following plan to correct evils connected with the cutting of prices on coiiyright books was adopted at a meeting of the American Publisliers' Association held February 23, 1901 : "Amendinents referring to fiction, juveniles, and other matters were adopted* at later meetings. [leej - Special attention is called to changes in the following sec- tions: 1, 3 (last i»aragraph), 4, 5, and 12. *'I. That the members of the American Publishers* Association agree that all copyrighted books first issued by them after May 1, 1901, shall be published at net prices, which it is recommended shall be reduced from the prices at which similar books have been issued heretofore : Provided, however, that there shall be exempt from this apeement all school books, books published by subscription and not through the trade, such other books as are not sold through the trade; also, at the desire of the individual publisher, any new edi- tions, any work of fiction (not juveniles), or any juvenPes of the class that may be described as board books, flat picture books, or toy HOOKS. * J* II' J^ ^^, reconunended that the retail price of a net book, marked Net, be printed on a paper wrapiier covering the book. "III. That the members of the association agree that such net copyrighted books and all others of their books shall be sold by them to those booksellers only who will maintain the retail price of such net copyrighted books for one year, and to those booksellers and Jobbers only who will sell their books further to no one known to them to cut such net prices, or whose name has been given to them bj the association as one who cuts such prices, or who fails to abide by such fair and reasonable rules and regulations as may be estab- lished by local associations as hereafter provided. A dealer or book- seller may be defined as one who makes it a regular part of his business to sell books and carries stock of them for public sale " It is further agreed by the members of the association that thev will not themselves offer, nor sell their books to any one who offers protected books in combination with a periodical at less than the trade subscription price of such periodical, plus the net or minimum retail price of the book. BOBBS-MERRTLL CO. V, STRAUS. tr M* 76y Opinion of the CJourt "IV That the members of the association agree that on all ronv- 1st m2" and on «n^"" ^"^,' ^^ P"^"«^^^ by^hem after FebiX 1st, 19()2, and on all .luvenile board books, flat picture books or tov books (not net), published after March Ist, 1903 the greatest^ S aiTa^fl tb^'i" 'T T. ^'^' ^"^^ Publicadon shaTbe 28 Tr to this extPnl tn fhJ"^^'/''; the protection of net books shall ap^ly to this extent to the protection of fiction and juvenile books nublishpS on the same basis as fiction. The conditionrgoverning ^h^^^^^^^ fiction are such that the association does not attempt to fix a uniform be given. """"^ ''''"°*' ''^^^^^' ^^^^^^^^' ** ^« ^^^ ^^'^» ^^^ely SiZ' '^^^ ^"1^. exceptions to the foregoing rules shall be In the case of libraries which may be allowed a discount of not more than 10^ Zl/S ft.b^^'^^^'^d 33J per cent, on fiction and Tnvemie M ^^fii ^^i. P^^ture books, or toy books (not net). Libraries entitted to these discounts may be defined as those libraries to which accSs inm pf tn'!f- ^' ""l ^"°"^l ^"bscription. Book clubs are not to be fiction """ net books, nor to any special discount on hZJJ' 7?^* l^% association suggests a discount on net copyrighted books of twenty-five per cent, to dealers as a general discount leaving *^" ^if X?'a?;r?h i' ^"^'T' ^°*;^^^y *^ ^^^ indivira! puilxsher^ vii. mat atter the expiration of a year from the Dublioatinn nf ^'Vp^ft^^t^^ ^r'^ •'^"^^. ^^^^^' tbese VegulatioVdea'ier^shlK ^Ir^ . hnf if^ ^^''''^ restrictions, and may sell such book at a cut price , but If. on learning of such action, the publisher shall desire to ITJ.^'^^ ^* ^"''''r^ P"'"^ *^^ ^"P^^« the^ remaining in the dealer^ .^^r^T-xi^^J."'"^' ^"^ ^^ ^*^««'^ to him on demand. VIII. That when the publisher sells at retail a net book nubli«;hP^ Zt'nf *:? ?'"'' ^* '^'"^^ ^' ^* *^^ ^^^^^^ P^i^^' and he shalFadd tS K, u .J'''^*^^^ '*'* expressage on all books sent out of the citv in which the publisher does business. ^ ^ Jl nJVhi^'f *'''' V?^ purpose of carrying out the above plan the direct- « fn?fnh?r ^^''^^'^t^^^ ^« authorized to establish an office and engage fn hi^*"^^ person as manager, and endeavor to secure from all dealera in books ass^ent to the above conditions of sale. Under The dir^tion of the board the manager shall investigate all cases of cuS r^ Zlfrk and theZd^T"' ^'^" ^^"^-^"^ noticesTthe' /sTocra^tiot 11671 " Y Thir ff^ f n"l P?.^"*"^ violating the above provisions. [167] X. That it shall be the duty of all members of the asao T^Zi^ 'Ty' *"^°^e<^'^tely to the said office a^c^of the cu?t?ng of prices which may come to their knowledge suiting *u V ^?.*^* the association through its agents and members nid in cines m tne United States, the object of which associations «hnii ha to assist the Publishers' Association in maintain?nrpSr net b(^k^ as aforesaid, and to establish such lawful rules and reguMo^^^^ Ing the conduct of business in their locality as will S to s^ure fa?r" honorable, and uniform methods of business in Aanh i^J:^J * ^ ' or section Of the country. That the asTocTatlon^l^dge S?o sim^^ such local associations bj. every means in its powfr in maUa?^^^^ '".^VtTS?^ ?^.^' ^°^ regulations as may in this wly ^ a^^^^ XII. That in making sales and contracts of sal^ of tfelrbr^iks nvolving future delivery, members shall stipulatrthlt such deH^^ assodaS"' " *'' "'^'^"'"^^ '^ ^^^ PurcKr of the ru^^^^^^^^ " Dated March, 1903." 21220— VOL 2—07 M- -49 770 13© FEDERAL REPORTER, 167. Ol>iiiioii of the CJourt Exhibit G. " The American Fublisliers* Association, 156 Fiftli Avenue, New Yorlc. II Fliiii as Ameii4e4 to Jmuarif Uth, 1904, The following plan to correct evils connceted with the cutting of prices on copyright Iwoks was adopted at a meeting of the American Publishers' Association held February 13, 1901 : " Amendments referring to Action, juveniles, and other matters were adopted at later meetings. "Special attention is called to changes In the following sections: 1, 3 (last paragraph), 4, 5, and 12. " I. That the members of the American Publishers' Association agree that all copyrighted books first issued.by them after May 1, 1901, shall be published at net prices, which it is recommended shall be reduced from the prices at which similar books have been issued heretofore: Provided, however, that there shall be exempt from this agreement all school books, books published by subscription and not through the trade, such other books as are not sold through the trade ; also, at the desire of the individual publisher, any new editions, any work of fiction, or any juvenile. " II. It is recommended that the retail price of a net book, marked • Net,' be printed on a paper wrapper covering tlie book. *• III. That the members of the association agree that such net copy- righted books and all others of their books shall be sold by them to those booksellers only who will maintain the retail price of such net copyrighted books for one year, and to those booksellers and jobbers only who will sell their books further to no one known to them to cut such net prices, or whose name has Ijeen given to them by the associa- tion as one who cuts such prices, or who fails to abide by such fair and reasonable rules and regulations as may be established by local asso- ciations as hereinafter provided. A dealer or bookseller may be defined as one who makes it a regular part of his business to sell books and carries stock of them for public sale. " It is further agreed by the members of the association that they will not themselves offer, nor sell their books to any one who offers, protected books in combination with a periodical at less than the trade subscription price of such periodical, plus the net or minimum retail price of the book. " IV. That the members of the association agree that on all copy- righted works of fiction (not net) published by them after February 1st, 1902, and on all juvenile books (not net), published after April 1st, 1904, the greatest discount allowed at retail for one year after publi- cation shall be 28 per cent. ; and all the rules for the protection of net books shall apply to this extent to the protection of fiction and juve- nile books published on the same basis as fiction. The conditions gov- erning the sale of fiction are such that the association does not at- tempt to fix a miiform price at which works of fiction (not net) shall be sold, but only to name a maximum discount, which, however, it is hoped, will rarely be given. [168] "V. The only exceptions to the foregoing rules shall be in the cases of libraries, which may be allowod a discount of not more than 10 per cent, on net books and 33^ per cent on fiction and juve- nile books (not net). Libraries entitled to these discounts may be defined as those libraries to which access is either free or by annual subscription. Book clubs are not to be entitled to discounts on net books, nor to any special discount on fiction or juvenile books. " VI. That the association suggests a discount on net copyrighted books of twenty-five per cent, to dealers as a general discount, leaving the question of discount, however, entirely to the individual publisher. BOBRS-MERRILL CO. V. STRAUS. Opinion of the CJourt. 771 " VII. That after the expiration of a year from the Dubllcation nf nof br,L7f^li'n ^^^"^^ ^^^^ *^^^^ regZionI,Ta,ers7^^^^^ cut nr1.P h„t^/^^ f ^"^^ restrictions, and may sell such book at a ?n hnv h^'n^oV ' ^^^^^^'^^^g «f such actiou, the publisher shall desire ir«^hL/ .if * P"^^^';«« P^'»^ tlie copies then remaining in the deal- ^""l vfr'V^^J^^y "'"^t '^e so resold to him on demand. 1- kV /^l^'^^^ *^^^ publisher sells at retail a net book oub- add'^ir^tt i^/ '"I"'' '' ^^^" ^^ ^* '""^ ''^"^'^ price; and he shall eft. in wh^S. thi'^' K.^^ '''* expressage on all books sent out of the eitj m ..hich the publisher does business. "IX. That for the pui-pose of carrying out the above plan the e^^ltZ llShi^'"""^"*^^^ ^ authorized to establish an office and engage a suitable person as manager, and endeavor to secure from all dealers m books assent to the above conditions of sale UndS the du^ction of the board, the manager shall investigate all casis of cuttng reported, and when directed shall send out notices to tl^l provSnT' ' ' ^"*' *^' *'^^" ^' ^'^^^ P^^^^^« violating The above "X That it shall be the duty of all members of the association to rep.n"t immediately to the said office all cases of the cuttinTif pHces which may come to their knowledge. ^ " XI. That the association through its agents and members aid in the foiwtion of booksellers' associations in the importanrc^ntere and cities m he United States, the object of which asso^iationTshaU be to assist the Publishers' Association in maintaining prices on ne" b^oks as aforesaid, and to establish such lawful rules and i^eguU- tions respecting the conduct of business in their locality as will tTd to secure fair honorable, and uniform methods of business to ^h important center or section of the countrv. That the assodatton pledge itself to support such local associations by every means m ts power m maintaining such lawful rules and regnlations Ts may in this way be agreed to. ^ " Xll. That in making sales and contracts of sales of their books r.nnih^ ^*"'' .t'^T^' ^^^"^^^^^ «^''^" ^^P^J^-^te that such deli^^ issSS^' ""'' observance by the purchaser of the rules of ?h^ (15) That thereafter, and during the month of February, 1904, in an action brought in the Supreme Court of the state of New York, it being a court of competent jurisdiction, wherein the defendants in this action were plaintiffs and the American Publishers' Association and the American Booksellers' Association and such of their respective mem- bers as were within the jurisdiction of the said court were made parties defendant, the New York Court of Appeals be- ing the highest appellate court in the said state, rendered its decision that the combinations and agreements described m paragraphs 10, 11, 12, and 14 of this statement were un- lawful and void, and contrary to the statute law and public policy of the state of New York, and more especially of the statute law of said state known as chapter 690, p. 1514 of the Laws of 1899, which said law, for the purposes of this 772 * 139 FEDERAL. REPORTER, 168. Opinion of the Court. statement, is made part of the record. The prevailing opin- ion of the court, to' which reference is hereby made for the [169] true construction of said decision, reported 177 N. Y. 473, 69 N. E. 1107, 64 L. R. A. 701, 101 Am. St. Rep. 819, is as follows : ^'Isidore Straus et aL, Composing the Firm of R. H. Macy d Company, Respondents, v. American Publishers' Association et ah, Appellants. " Monopolies— An agreement Which in Eflfect Prevents the Sale of Uncoprighted Books in the State is Illegal under the Anti-Monopoly Act (Laws 1899, c. 690). An agreement between publishers repre- senting ninety-five per cent of the boolis published in the United States, and ninety per cent of the business done in the book trade, that all copyrighted books published by any of them after a specified date should be published and sold at retail at net prices ; that such net copyrighted books, and all other books, whether copyrighted or not, or whether published by them or not, should be sold by them to those booksellers and jobbers only who would maintain the retail net price of such net copyrighted books for one year, and to those booksellers and jobbers only who would furthermore sell books at wholesale to no one known to them to cut or sell at a lower figure than such net retail price, or whose name would be given to them by the association as one who cut such prices ; and that evidence shall not be required by the bookseller or jobber in order to restrain him from selling to one who has been blacklisted, but that all that shall be re- quired to govern his action and to prevent him from selling to such persons shall be that the name has been given to hiui by the associa- tion as one who cuts such net prices— is an agreement which, while purporting to secure to the owner and publislier of copyrighted books the monopoly permitted by federal law, may, and as practicallv con- strued by the parties does, operate in fact so as to prevent the sale of books of any kind or at any price to any dealer who resells, or is suspected of reselling, copyrighted books at less than the arbitrary net price, whether such dealer be a member of the association or not. Such an agreement undertakes to Interfere with the free pursuit in this state of a lawful business in which a monopoly is not secured by the federal statute, viz., that of dealing in books which are not pro- tected by copyright It is, therefore, in violation of chapter GOO, p. 1514, of the Laws of 1899, enacted to prevent monopolies in articles or commodities of common use, and to prohibit restraint of trade and commerce. " Btraus v. AmeHmn PuhlUhers' Ass'n, 85 App. Div. 446, 83 N. Y. Supp. 271, affirmed. "(Argued January 19, 1904; decided February 23, 1904.) "Appeal, by permission, from an order of the Appellate Division of the Supreme Court In the First Judicial Department, entered July 30, 1903, which reversed an interlocutory judgment of Special Term sus- taining demurrer to the complaint. " Stephen H. Olin and Tbaddeus D. Kenneson, for appellants. John G. Carlisle and Edmond E. Wise, for respondents. "Parker, C. J. Chief Justice Marshall said long ago. In Orant v. Raymond, 6 Pet 217, 241, 8 L. Ed. 376 : * To promote the progress of useful arts is the interest and policy of every enlightened government- It entered into the views of the framers of our Constitution, and the power " to promote the progress of science and useful arts, by securing for limited times to authors and fnyentors, the exclusive right to their BOBBS-MERRILL CO. V. STRAUS. Opinion of the Court. 773 respective writings and discoveries," is among those expressly given to Congress. * * ♦ It is the reward stipulated for the advantages derived by the public from the exertions of the individual, and is intended as a stimulus to those exertions. The laws which are passed to give effect to this purpose ought, we think, to be construed In the spirit in which they have been made, and to execute the con- tract fairly on the part of the United States, where the full benefit has been actually received, if this can be done without transcending the intention of the statute or countenancing acts which are fraud- ulent or may prove mischievous. The public yields nothing which It has not agreed to yield. It receives all which it has contracted to receive. The full benefit of the discovery after its enjoyment by the discoverer for 14 years is preserved, and for his exclusive enjoyment of it during that time the public faith is pledged.' That case and many [170] others were considered recently by the United States Supreme Court in Bement v. National Harrow Co., 186 U. S. 70, 22 Sup. Ct 747, 46 L. Ed. 1058, Mr. Justice Peckham writing. After an examination of the cases which may be said to restrict the exceptions which grow out of a proper exercise of the police power of the state, of which Patterson v. Kentucky, 97 U. S. 501, 24 L. Ed. 1115, is an illustration, he says (186 U. S. 91, 22 Sup. Ct 755, 46 L. Ed. 1058) : Notwitnstanding these exceptions, the general rule is absolute free- dom 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 conditions in the contracts keep up the monopoly or fix prices does not render them illegal.' That reasoning is employed as to patent rights. It is equally applicable to copyrights, the protection of which was perhaps the leading object of the association and agreement attacked in this action. And it points to the principle underlying the decision in the Park d Sons Co. Case, 175 N Y 1 67 N. E. 136, 62 L. R. A. 632, 96 xYm. St Rep. 578, upon which defendants apparently rest their claim that the judgment of the Appellate Division should be reversed. But there is a feature in this case not to be found in that one, and which requires a different judgment' than the one rendered therein, which will now be pointed out. " While the leading object of this association and agreement pur- ports to be to secure to the owner and publisher of copyrighted books that protection which the federal government permits them to eniov for the reasons stated by Chief Justice Marshall (supra), it does not stop there. It also affects the right of a dealer to sell books not cony. ^^fi!5^v,^* *?® P^^*-'® ^^ chooses, or to sell at all, if he fails to comply with the rules of the association. A combination creating a monop- oly of the sale of books not protected by copyright offends against the law of this state as much as if it related to bluestone (Cummin as v. Stone Co 164 N Y. 401, 58 N. E. 525, 52 L. R. A. 262, 79 Am. St Rep! 655), or to envelopes (Cohen v. Envelope Co., 166 N. Y. 292, 59 N E 906) ; and according to this complaint which must be accepted as true on this review such an outcome is not only possible, but probable. But It IS not of moment whether such a result is probable or not ; for the test to be applied is, what may be done under the agreement' Reference to the complaint makes it clear that the association has undertaken to provide for the practical exclusion from the business of selling books not protected by copyright all who refuse to be bound by the rules of the association; and it appears from the complaint that the practical construction given to this agreement by those operating 774 * 139 FEDERAL BEPORTEE, 170. Opinion of the Court, together under it is tliat, if a dealer is suspected of selling copyrighted books at less than the arbitrary net price, it is quite sufficient to exclude him from selling books altogether. The agreement nowhere suggests that it is the object of the association to control the sale of books not protected by copyright. Indeed, the object of the associa- tion seems to be merely to protect the copyrighted books. But while the other part of the scheme is apparently sought to be hidden, it is after all uncovered by the clauses authorizing the exclusion of any members of the association, or those who refuse to be bound by its rules, from selling books to dealers who sell books of any kind to one who retails ed bv those who invented it ; for, if it be the fact that the combination which agrees to exclude others from an unprotected business violates the statute, then it matters not what excuse may be olTered for it. It is the excuse, not the statute, which must give way. The eighteenth para- graph of the complaint contains what purports to be a practical construction given to this agreement by the members of the associa- tion. It states: 'That in pursuance of said unlawful combination and agreement said American Booksellers' Association and its members have continuously co-operated with and assisted the American Pub- BOBBS-MERRTLL CO. V., STRAUS. Opinion of the Com-t 775 lishers' Association and the members thereof in establishing and maintaining prices of such books, and preventing competition in the supply and sale of the same, and still contmue so to do ; and plaintiffs say that in compliance with said agreement neither said associations nor any of the members thereof will sell or supply books at any price to any dealer, whether a member of said association or not, and whether such books are copyrighted or not, or are not published by said American Book Publishers' Association or its members, who resells, or is suspected of reselling, such copyrighted books at less than the arbitrary net price fixed by said unlawful combination, nor will the said association nor any of their members sell or supply any books whatever to any one who resells, or is suspected of reselling, such copyrighted books to any dealer who thereafter sells the same at less than such arbitrary net price.' Here, then, we have a practical construction of the agreement, one put upon it by the parties to it; and it is such a construction as the language employed calls for. And it discloses that the parties who are acting under the agreement assume it to be their right and their duty by virtue of it not to sell or permit to be sold books of any kind or at any price to any dealer ' who re- sells or is suspected of reselling copyrighted books at less than the arbitrary net price,' whether such dealer be a member of the associa- tion or not. The intended effect of this is to prevent any dealer who is even suspected of reselling copyrighted books at less than the net price from obtaining books at any price or on any terms, whether copyrighted or not. And it does not stop there, for the members of the association agree not to supply him any books at any price, whether he resells copyrighted books or not at less than the arbitrary net price, provided he is suspected of selling to any dealer who thereafter sells the same at less than such arbitrary net price. And this means, inas- much as the members represent 95 per cent, of the publishers and 90 per cent, of the business done in the book trade, that he may be practically driven out of the business if any one chooses to suspect [172] that a dealer to whom he has sold books has resold them at less than the price fixed. The members of the association, therefore have entered into an agreement which by its terms— as we read it, and as they have construed it in fheir evervdav working under it undertakes to interfere with the free pursuit' in this state of a lawful business in Avhich any member of the community has a right to en- gage, a business in which a monopoly is not secured by the federal statutes, namely, that of dealing in books which are not protected by copyrights ; and hence it is in violation of chapter 690, p. 1.514, Laws 1899, which provides: 'Every contract, agreement, arrangement or combination whereby a monopoly in the manufacture, production or sale in this state of any article or commodity of common use is or may be created, established or maintained, or whereby competition in this state in the supply or price of any such article or commodity is or may be restrained or prevented, or whereby for tlie purpose of creating establishing or maintaining a monopoly within this state of the manu- facture, production or sale of any such article or commodity, the free pursuit in this state of any lawful business, trade or occupation is or may be restricted or prevented, is hereby declared to be against oublic lK)licy, illegal and void.' ^ "The order should be affirmed, with costs. " Haight, Martin. Vann, and Werner, JJ., concur with Parker C J Oray and Barrett, J.T., read dissenting opinions. ' * ' " Order affirmed." That the judgment upon this decision was duly adopted by the New York Supreme Court and entered on its records. 776 139 FEDERAL BEPOBTEE, 172. Opinion of tbe CJourt. (16) That thereafter, and on or about the 13th day of March, 1904, the said resolutions or agreements were amended as to article 3 so as to cover copyrighted books only, and so as to provide for the placing of the seller's name on the cut- off list of the association only under certain changed con- ditions. A copy of such resolutions as amended, with the words stricken out by said amendment indicated by brackets, and the words thereby added in italics, are hereto annexed and marked " Exhibit H." Exhibit H. " The American Publisliers' Association, 156 Fifth Avenue, New York. "Plm a« Amended to April Jal, 1904. *• The following plan to correct evils connected with the cutting of ^ices on copyright books was adopted at a meeting of the American Publishers' Association held B'ebniary 13, 1901 : "Amendments referring to fiction, juveniles, and other matters were adopted at later meetings. "Special attention is called to clianges in the following sections: 1, 3, 4, 5, 9, and 12. "I. That the meml>ers of the American Publishers' Association agree that all copyrighted books first issued by them after May 1, 1901, shall be published at net prices, which it is recommended shall be reduced from the prices at which similar books have been issued heretofore : Provided, however, that there shall be exempt from this agreement all school books, books published by subscription and not through the trade, such other books as are not sold through the trade • also, at the desire of the individual publisher, any new editions, any work of fiction, or any juvenile. . J*^! J* ^^ recommended that the retail price of a net book, marked Net, be printed on a paper wrapper covering the book. "III. That the members of the association agree that [such net] copyrighted books [and all others of their books] shall be sold by them to those booksellei-s only who will maintain the retail price of such net copyrighted books for one year, and to those l>ooksellers and jobbers only who will sell their copyrighted books except at retail [farther] to no one who [known to them to] cuts such [173] net prices [or whose name has been given to them bv the association as one who cuts such prices, or who fails to abide by such fair and reasonable rules and regulations as may be established bv local associations as hereinafter provided]. A dealer or bookseller may be defined as one who makes it a regular part of his business to sell books and carries stock of them for public sale. It is further agreed by the members of the association that they will not themselves' offer, nor sell their copyriffhted books to any one who offers, protected books in combination with a periodical at less than the trade sub- scription price of such periodical, plus the net or minimum retail price of the book. " IV. That the members of the association agree that on all copy- righted works of fiction (not net) published by them after February 1st, 1902, and on all juvenile books (not net) published after April 1st, 1904, the greatest discount allowed at retail for one year after BOBBS-MERRILL CO. V, STRAUS. 777 Opinion of the CJourt publication shall be 28 per cent. ; and all the rules for the protection of net books shall apply to this extent to the protection of copyrighted fiction and copyrighted juvenile books published on the same basis as fiction. The conditions governing the sale of fiction are such that the association does not attempt to fix a uniform price at which works of fiction (not net) shall be sold, but only to name a maximum discount, which, however, it is hoped will rarely be given. " V. The only exceptions to the foregoing rules shall be in cases of libraries, which may be allowed a discount of not more than 10 per cent on net books and 33i per cent, on fiction and juvenile books (not net). Libraries entitled to these discounts may be defined as those libraries to which access is either free or by annual subscrip- tion. Book clubs are not to be entitled to discount on net books, nor to any special discount on fiction or juvenile books. " VI. That the association suggests a discount on net copyrighted books of 25 per cent to dealers as a general discount, leaving the question of discount however, entirely to the individual publisher. " VII. That after the expiration of a year from the publication of any copyrighted book issued under these regulations dealers shall not be held to the above restrictions, and may sell such book at a cut price ; but If, on learning of such action, the publisher shall desire to buy back at purchase price the copies then remaining in the dealers' hands, they must be so resold to him on demand. " VIII. That when the publisher sells at retail a net book published under the rules, it shall be at the retail price, and he shall add the cost of postage or expressage on all books sent out of the city in which the publisher does business. " IX. That for the purpose of carrying out the above plan the direc- tors of the association be authorized to establish an office and engage a suitable person as manager, and endeavor to secure from all dealers in books assent to the above conditions of sale. Under the direction of the board, the manager shall Investigate all cases of cutting re- ported, and when directed shall send out notices to the association, jobbers, and the trade of any persons violating the above provisions, after giving the person accused of such violation an opportunity to explain his action. " X. That it shall be the duty of all members of the association to report immediately to the said office all cases of the cutting of prices which may come to their knowledge. ** XI. That the association, through its agents and members, aid in the formation of booksellers' associations in the important centers and cities in the United States, the object of which associations shall be to assist the Publishers' Association in maintaining prices on net books as aforesaid, and to establish such lawful rules and regulations respecting the conduct of business in their locality as will tend to secure fair, honorable, and uniform methods of business in each important center or section of the country. That the association pledge itself to support such local associations by every means in its power in maintaining such lawful rules and regulations as may In this way be agreed to. "XII. That in making sales and contracts of sales of their books involving future delivery, members shall stipulate that such delivery is contingent on the observance by the purchaser of the rules of the association." [174] That thereafter the American Booksellers' Associa- tion passed a so-called Reform Resolution No. 2 in April, 1904, which said resolution is as follows : '"^ 139 FEDEBAJL BEPORTEK, 174. Opinion of the CJourt Exhibit I. "Ueform ResolnUm Mo. 2. "Wtiereas, tlie American Publisiiers' Asaooiatimi hfl« n^r^^t^^A .U tteir copyrighted lx>oks to anT^ekler who faIN to maiS^h"^ "^liX^L^J^'** 'leras-'^a^tJ'rB^r. %T"'^'''^ «''""' dial support; and^tat lo S lat^XZJtLyZ^T."''- 18 applicable and m force w tb refei-enci* tn miv »i,,m!.i!„ , " .'J have made it manifest that he is imuHnin*. f^^ publisher who shall association, and with th; men^^^^^^ Tthe /nbLlie^^^^^ '^'^ the maintenance of the net price sv"teui "^"**^*^^^ Association, in ratifiJt h^wrfiTti ^, ^*. resolved, that this resolution, on beinir fom!f bn^lit t^^^^^^^^^ ""^ 1?! T'"'^^''' «*' ^^''^ association. ^^ ing bj^ lormai ballot shall immediatelr liecome a law ti» •.nh «n.i «ii J.?*u SlutTal-'n' «--'«"""= <"><^ 'f it «tan aPI^ar n^Hhe VeJnt* meut of any thrcje members of thk assocfiifinn thnf « ... i^eseni;- publisher who baa been formally deiioniH-ed luU, inoi„hp,.^i,,!i? i^ expelled from memlK-rship h, this ass^ia^ n.r « d all uen^^rl ^ this association shall then and thereafter be restraint fZ smfniv tjoi/^LIIt'S'ni'Jti^f^^.r;;"^;^^^ than the net or nsnal retail prk^ to any dealer wtiS«iMhfv2i^^ denounced by the Publishers' Asi>ciation fo? cut In^ fhfL^^V^'l oopyrighted books, or for otherwise vIolatinrthfnfniM^^ system ani who shall haye Ijeen thoivfor cut off by the mZin^rs of H,/n?.Kn^ '^Z^'i^^^^ ^he supply of th^!;!^,^^^;^^ *'*^ Publishers' tk*n «i„ii"^*'""'^***''J**^ ^* resolved, that all momlx'rs of this associa- tion shall endeavor to keep in stock and push the sale of net^nv- ^^ufi.^^l.^}T^ *** ^^""y ^^^ reasonably In demand DroWd^ Z^**iT-"^ ^'^ "^i?'''^ ^y ^^^ publishers to the dealers a8\vllvieM them a livnig profit; and they sMll maintain the net prk^V of the STli?.?'^"^*'"?.?'*^*^ **^^ ^'""^ «f the publishers' agr^nent fo? the maintenance of the net price system. «feictfuitnT lor «-ili o*"/*"^ hereby vote to rescind Reform Resolution No 1 and to adopt Reform Resolution No. 2. ^ ™ "[Signed] Name "Address ....]'.*.*] •* Bated March 10, 1904." * ' ' BOBBS-MEERIIiL CO. V, STRAUS. 779 Opinion of the Court. (17) That since May, 1901, the date that the first resolu- tions and agreements of the American Publishers' Associa- tion and the American Booksellers' Association and their re- spective members went into effect, and until April, 1904, a large majority of all the publishers, in numbers and extent of business, including the complainant here- [175] in, and a large majority of all the booksellers throughout the United States, consisting of about 90 per cent, both in numbers and in extent of business, have obeyed the rules and regulations of the two associations as from time to time amended. They and each of them refused to sell or sanction the sale of any books of any kind, whether copyrighted or uncopyrighted, whether published by any member of the American Publish- ers' Association or not, to any dealer throughout the United States who did not maintain at retail the net or restricted price at which each copyrighted bqok was imblished under the net price or restricted price system, nor would they sell or sanction the sale of any books of any kind to any one who was known or believed to sell such net or restricted copy- righted books at retail at less than the net or restricted price, nor would they sell or sanction the sale of any books of any kind to any one who sold books of any kind to a price-cutter on copyrighted books, or who was loiown or believed to sup- ply a price-cutter with any books of any kind ; and when any dealer or person sold any net price books or restricted price books at less than the net or restricted price, or any jobber or wholesaler supplied a price-cutter with any books of any kind, or was known or believed to so su^^ply him, the two associations circulated and published notices warning all persons in the trade, whether members of either of such associations or not, that the book supply of such persons had been cut off pursuant to the rules of the two associations. (18) That since April, 1904, any dealer Avho does not maintain the net or restricted price at retail of any copy- righted book published by any member of the Publishers' Association under the net price or restricted price system cannot purchase any copyrighted books of any kind fi'om any of the members of either of the associations at less than the retail price, whether such copyrighted book is published by any of the members of the associations or not, and whether 780 139 FEDERAL BEPORTEK, 175. Opinion of the CJourt. such copyrighted book was published under the net price system or not, or prior thereto. (W) That the defendants were placed on the cut-off list in May, 1901, because they refused to maintain the net retail price of $1.40 on the copyrighted book " Tarry Thou Till I Come," published by Funk & Wagnalls, but uniformly sold the same at retail at $1.24; and since said time their name has been circulated monthly upon the list of dealers whose supplies have been cut off under the rules of the two asso- ciations, and against whom the trade at large was warned as price-cutters and as coming under the rules of the two asso- ciations as dealers to whom books should not be sold, and, furthermore, that books should not be sold to any one who in turn was known or believed to resell the same to these de- fendants. That since March, 1904, the rules have been amended and relaxed as above set forth, so as to permit deal- ings with the defendants in uncopyrighted books only. That as to all copyrighted books of any and all kinds the members of said associations are not permitted under the rules to sell to the defendants, nor to sell to any one who resells or is believed to resell to the defendants ; and the cut-off lists or blacklists have been published against these defendants and [176] against such other dealers as have been cut off from their supply of books, copyrighted or otherwise, witheut any interruption or intermission from the time they were first included in the list of dealers whose supplies were cut off until the present time, without any change in the method em- ployed prior to the passage of the last amendment, which eliminated uncopyrighted books from the rules. (20) That such combination and agreement as hereinbe- fore described are now in force, and that it is intended by the members of the two associations and the two associations to continue them in force. (21) That the complainant was, since May, 1901, a mem- ber of the American Publishers' Association, and a party to all the agreements of said association hereinbefore set forth, and obeyed and lived up to all the rules and regula- tions of the American Publishers' Association hereinbefore set forth, and published all its books, including " The Cast- BOBBS-MERRILL CO. V, STRAUS. 781 Opinion of the Court. away," in acordance with the rules and regulations of the association above set forth. (22) That the members of the said two associations, in- cluding the complainant herein, do now, and at all the times herein mentioned have, resided and carried on their business of selling books in many different states, and, in the conduct of their respective business as publishers and wholesale and re- tail dealers in books, the members of the said two associa- tions, including the complainant, were and now are engaged in the business of purchasing books, copyrighted and un- copyrighted, from each other and from other persons, in many states other than the states in which the purchasers resided, or now reside, and do business; and all such books were and have been transported, in compliance with the contract of purchase, from the state where such books were purchased to the purchaser, and delivered to the purchaser in the state where he resided, or now resides in and conducts his business, and members of both of such associations, in- cluding the complainant herein, also sell and have sold books to many persons who are not members of the said associa- tions, in states other than the ones in which the sellers re- side and conduct their business, and all such books were and have been transported, in compliance with the contract of purchase, from one state to another, and then delivered to the i^urchaser, and all the rules, regulations, and agreements made by the said two associations and its members, includ- ing the complainant, as hereinbefore set forth, were intended to be applied and be enforced, and have been and are now applied to and enforced, against all publishers and dealers in books throughout all the states of the United States, whether such publishers and dealers were or were not mem- bers of either of such associations, and whether they pur- chased books in one state for transportation and delivery in another, or for delivery in the state where purchased. (23) That the members of the said two associations, in- cluding the complainant herein, have heretofore produced, distributed, and sold, and still produce, distribute, and sell, the majority of all books purchased and dealt in throughout the state of New York and all other states and territories of the United States. 782 1» FEDERAL REPORTER, 177. Opinion of the Court [177] From these facts, which are conceded, it appears that the original purpose of the combination and agreement of the association of publishers, including the complainant, was (1) to maintain the net retail price of all copyrighted books published by the members of such association, or any of them, at such price per book as might be fixed by the publisher of that book, and (2) to prevent the sale at retail of any one or more of such copyrighted books by any dealer in books at retail at a less price per copy than that so fixed. (See finding 10.) Thereupon the persons, firms, and corporations m the combination, including the complainant, formed a corporation under the name ''American Publishers' Association." This corporation included a large majority of all the publishers of all books, both copyrighted and un- wpyrighted, in the United States. This corporation, imme- diately on its organization, adopted the resolution (Exhibit A), and it and its members entered into an agi-eement with each other, and combined together to do the acts and things and refrain from doing the acts and things, mentioned in such resolution (Exhibit A). That subdivision or para- graph III thereof was illegal and in restraint of interstate commerce is perfectly plain. (See finding 22.) In fact the effect of the decision of the Court of Appeals of the state of New York, quoted in the findings (finding 15), IS so to declare. By paragraph or subdivision X of such resolution the combination to keep up the price of books and limit and restrain interstate commerce was to be further extended. Thereupon the American Booksellers' Associa- tion was formed. (See finding 12.) That the object and purpose as there set forth was illegal cannot be doubted. We now have the combination extended to at least 90 per cent of the booksellers of the United States, and including, not only 90 per cent, of all booksellers, but 90 per cent, of aU publishers of books. The combination as existing under those resolutions, etc., is not confined to publishers and sellers of copyright books, but includes the publishers and seUers of all books. The declared object and purpose of this combination is (1) to fix the retail price of books- (2) to maintain such retail price; (3) to refuse to furnish or sell any books to any dealer in books who does not main- BOBBS-MERRILL CO. V. STRAUS. 788 Opinion of the Court, tain such prices— that is, who sells a book at less than the fixed price; (4) to compel all publishers and dealers in books, in practical effect at least, to come into the combina- tion and enforce and maintain these prices, or be blacklisted and driven from the business; (5) to drive out of the busi- ness of general publishing and bookselling all who refuse or neglect to maintain these prices. The freedom of the owner of a book— any book, except those specially excepted— duly purchased and paid for to sell the same, soiled or injured, or read and no longer desired, was thus attempted to be destroyed. The right of a retail bookseller to sell to the purchaser of 50 books for his library at a less price than to the purchaser of one book must not be exercised under the pain and penalty of having his supply of books cut off and of bemg driven from the business and financially ruined (See Exhibit B, finding 12.) As to what was done in re- straint of interstate commerce, see finding 13. [178] An attempt was then made by the American Pub- lishers' Association to eliminate the vicious provision of th*^ written agreements and ^solutions adopted by the combina- tion by the substitution of article or subdivision III of Exhibit H. (See finding 16.) This must be read with the words included in brackets left out. The American Book- sellers' Association followed, with the adoption of Exhibit I, or " Beform Kesolution No. 2." In finding 17 is set out what was done up to April, 1904. What has been done by the combination since April, 1904, is set out in findin^^^t^l\t^^^^ T^ ^y t^e Neostyie Com- it is licenced to be uLHnlf wTth J^! .f ^""^^^ understanding that Which are Patented );rdeT^hr^^eo^^^^^^^^^^^ When the purchaser took this machine he assented to this condition and became bound by it, and became a license!! He IS told that he is licensed to use the machine in a certain li^L )^:":'"'" "7^^''' ""^^- ^^^ ^' ^--- licensed 1 1 7^^-*^.* ^«' «^^d^ ^n agent to sell-and empowered tW L'i I '"' w ^A' ^"" ^"^^' '' '' unquestionably true that, had he violated the agreement by selling at a lower or even a higher, price, he could have been enjoined Ha^ mg the so e power to vend his patented articles, he would undoubtedly have the right to fix the price at ;hich £y should be sold, and stop sales made by his a^ente a^d licensees .n violation of the authority co'^iferredr This t Zri'TT''.\^^'^^'^^^*- ^^---^ y^ National ffar^ row Co., 186 U. S. 70, 88, 92, 93, 22 Sup. Ct. 747, 46 L. eI 21220--VOL 2—07 M 50 786 139 FEDERAL REPORTEK, 179. Opioioii of the Court. 1058. In the opinion in that case (pages 92-93, 186 U. S., page 755, 22 Sup. Ct.,46 L. Ed. 1058), we find the following: "The contracts plainly look to the sale, and they also determine the price of the article sold, throughout the United States, as well as to the manufacture in the state of Michigan. As these contracts do, therefore, include interstate commerce within their provisions, we are brought back to the question whether the agreement between these parties with relation to these patented articles is valid within the act of Congress.. It is true that it has been held by this court that the act included any restraint of commerce, whether reasonable or unreasonable. United States v. Trmis-Missouri Freight Associa- tion, 166 U. S. 290, 17 Sup. Ct. 540, 41 L. Ed. 1007 ; United States v. Joint Traffic Association, 171 U. S. 505, 19 Sup. Ct. 25, 43 L. Ed. 259; Addy8tone [180] Pipe, etc. Company, v. United States, 175 U. S. 211. 20 Sup. Ct. 96, 44 L. Ed. 136. But that statute clearly does not refer to that kind of a restraint of interstate commerce which may arise from reasonable and legal conditions, imposed upon the assignee or licensee of a patent by the owner thereof, restricting, the terms upon which the article may be used and the price to be demanded therefor. • • ♦ The provision in regard to the price at which the licensee would st'll 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 recog- nizing the nature of the proi)erty dealt in, and providing for its value so far as possible. This the 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 condition that the assignee shall charge a certain amount for such article. In Victor Tulking Machine et al, v. The Fair^ 123 Fed. 424, 61 C. C. A. 58, the syllabus reads : " The owner of a patent, who manufactures and sells the patented article, may reserve to himself, as an ungranted part of his monopoly, the right to fix and control the pric*es at which jobbers or dealers buy- ing from him may sell to the public, and a dealer, who buys from a jobber with knowledge of such reservation and resells in violation of it, is an infringer of the patent." And in the opinion, after stating that the grant of a pat- ent by its terms covers three separate or separable fields, the learned judge giving the opinion says: "The field of sale is as much within the monopoly as the others, and so it has been decided. Bement v. National Harrow Co., 186 U. S. 70, 22 Sup. Ct. 747, 46 L. Ed. 1058. And in Edison Phonograph €o. V. Kaufman n (C. C.) 105 Fed. 960, and Same v. Pike (C. C.) 116 Fed. 863, the holdings were that a patentee may reserve to himself, as an ungranted part of his monopoly of sale, the right to fix and con- trol the prices at which jobbers and dealers may sell the patented article to the public, and that whoever without permission enters the reserved portion is an infringer." In the Victor Talking Machine Case, supra, the notice affixed to the machine read: "Notice. — ^Thls machine, which is registered in oar books No. , is licensed by us for sale and use only when sold to the public at a BOBBS-MEKRILL CO. /'. STRAUS. 787 Opinion of the Court. price not less than $- 1- , , - • ^^ license is granted to ust» thW innr>iiinA " ^'iCTOR Talking Machine Co.*' In the Edison Phonograph Company Oases, cited (see supra) by Judge Baker in the Victor Talking Machme Case, supra, there was a restrictive contract, and this was referred to m the following language by a notice on the box contain- ing the instrument when sold, viz. : Z^^^^'^'^'^^ "-^- ^^^ -"- - -r^^n^^^ige^f A reference to the case in 116 Fed. 868, will show that the restriction was very clear and explicit. The notice in " The Castaway " does not suggest a restriction upon the title to the book, or that the person or persons taking the book for sale are obtaining anything short of an absolute title, and no one would suppose that the [181] publisher of the book would attempt or assume to fix the price at which dealers should sell after obtaining absolute title to the book from such publisher. The words, " No dealer is licensed to seU It at a less price," are notice that licensees, not absolute own- ers, are so restricted. The words, " and a sale at a less price Will be treated as an infringement of the copyright," clearly do not even tend to make such a sale by an absolute owner of such books an infringement of the copyright. It is a close question whether a copyright may be infringed by selling in violation of express and explicit restrictions placed on the dealer, expressly made an agent or licensee only, as to the mode of sale or the price at which same is to be sold. Act March 3, 1891, c. 565, 26 Stat. 1106 TU S Coinp. St. 1901, p. 3406], entitled "An act to amend title sixty, chapter three, of the Revised Statutes of the United States, relating to copyrights," amends section 4952 so as to read : " The author ♦ ♦ • or proprietor of any book * * ♦ shflli SK^J^T^^V'?, ^**^ *^^ provisions of this chapfer have the ^le liberty of printing, reprinting, publishing, completing, (Spying ^l cuting, finishing, and vending the same." a''*^""^' copymg, exe- Section 7 of that act (26 Stat. 1109 [U. S. Comp. St. 1901, 788 139 FEDERAL REPORTER, 181. • Opinion of tlie Court p. 3413] ) amends section 4964 of the Eevised Statutes so as to read as follows: '• Every person, who after the recording of the title of any book and the depositing of two copies of such book, as provided by this act, shall, contrary to the provisions of this act, within the term limited, and without the consent of the proprietor of the copyright first obtained In writing, signed in the presence of two or more witnesses, print, publish, dramatize, translate, or import, or knowing the same to be so printed, published, dramatized, translated, or imported, sliall sell or expose to sale any copy of such book, shall forfeit every copy thereof to such proprietor, and shall also forfeit and pay such damiTges as may be recovered in a civil action by such proprietor In any court of competent Jurisdiction." This section declares what acts constitute a violation of the copyright of a book. It declares that, to constitute a viola- tion of the copyright, the oflfender must have, within the term limited — that is, the life of the copyright — and without the consent of the proprietor thereof, first obtained in writ- ing and executed in the presence of two or more witnesses, printed or published or imported, contrary to the provisions of the act, such copyrighted book, or contrary to the pro- visions of the act, within such time and without such con- sent, must have sold or exposed to sale a copy of such copy- righted book, knowii to have been illegally printed. In sub- stance 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 hnport 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 unlawfully 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 [182] 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 copyright of a book to sell a copy or copies thereof lawfully printed, as in this case, in violation of a mere condition imposed 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 thereof, or even BOBBS-MERRILL CO. V, STRAUS. 781) Opinion of thefiaiiit in cases where the absolute title had not passed to the dealer. If the publisher of the book, being the proprietor of the copyright, parts with the title to such book, either a single copy or a number 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 property therein, and the absolute ownership of an article of personal property carries with it the right to give away or sell for such con- sideration as the owner sees fit to impose, prescribe, or de- . mand so long as he violates no law. This view of the copy, right laws of the United States, as amended by the act of March 3, 1891, seems to be taken by Macgillivray in his work on the Law of Copyright, p. 287, c. 4, § 2. He there says : ''Prohibited Acts and Remedies.— It is an infringement snhiArt f« ?L pSfo^^'InTH^ln.^ *^' T". "l^^^^' ^^t^^^t the consloHf (1^ tHrint or nuS ^^ '^ ^^S P'^"^'^"^ ^^ ^'« witnesses rxt^U. tA\ \ P"i>lish, (2) to dramatize or translate- (3^ to im made c^tpoS'^^ '" ^" "' '^^^ ">' ««'« «>P'- unlawfuHy We find no suggestion that it is an infringement of the copyright of a book for the owner of the book to sell copies at a price which violates a valid contract between the pub- isher of the book and the dealer, and which was made at the time such dealer became the owner. In Harrison v. Maynard, Men-ill d- Co., 26 U S Add W CI Fed. 689 10 C. C. A. 17, the compldnante, pubShS of books and the owners of a copyrighted book, sent a quan- tity of the printed and unbound sheets of such book to the bindery of one Alexander for binding, and such sheets were to be stored until complainants should order bound copies Sometimes they bound copies in advance. A fire occurred in the bmdeiy, and both complainants and Alexander sup- posed the commercial value as books of all such bound or unbound sheets of such books in such bindery was de- stroyed. On examination complainants' agent so reported. Thereupon Alexander, without objection from complainants, sold he entire debris to one Fitzgerald, who, without mov- ing It, sold same to some dealers in old paper. Alexander imposed no restriction or condition when he sold Fitz 790 139 FEDEKAL REPOKTER, 182. Opinion of the Court gerald, who had become the owner of the debris, including the printed sheets and bound volumes, put this condition and restriction in the bill of sale : " It is understood tliat all paper taken out of the building is to be utilissed as paper stoc'li, and all books to be sold as paper stock only, and not plaeed on the market as anything else." [183] Harrison, a dealer in books, visited the place and purchased of these dealers in old paper some of the volumes of the copyrighted book not destroyed, and put them on the market. He had no notice of the restriction or condition put in the bill of sale given by Fitzgerald. Complainants, owners of the copyright, brought suit to enjoin such sale by Harrison. On these facts the court (Wallace, Lacorabe, and Shipman, Circuit Judges) held that, so long as the owner of a copyright retains the title to the copies of the book which he has the exclusive right to vend by virtue of the copyright, he can impose restrictions upon the manner in which and upon the persons to whom the copies are to be sold. They also held that if the agents of the owner of the copyright, intrusted with the possession of such books, violates his instructions and fraudulently sells to a person who has knowledge of the restrictions, such sale by the agent con- stitutes a fraud upon the owner of the copyright, and that such fraud constitutes an infringement of the copyright, with which the owner has never parted, and that such fraud — ■ meaning, of course, such sales — can be restrained by virtue of the statutes applicable thereto. The court statea that this right to enjoy the benefit of the copyright statutes results from the fact that the owner has never parted with the title to the book or the copyright, although he may have parted with the possession of the book. The court also holds that the right to restrain the sale of a particular copy of the book by virtue of such statutes has gone when the owner of the copyright and of that copy has parted with all his title to it, and has conferred an absolute title to the copy upon a purchaser, although with an agreement for a re- stricted use. If this is true of one particular book, it is also true of a large number of copies. The court also says, in substance, that the new purchaser cannot reprint the copy, but that, the copy having been absolutely sold to him, the BOBBS-MERRTLL CO. V. STRAUS. Opinion of the Court. 791 ordinary incidents of ownership in personal property, among which is the right of alienation, attaches to it. The court further says : " If he has agreed that he will not sell it for certain pun^oses or to certain persons, and violates his agreement and sells to an innocent purchaser, he can be punished for a violation of his agreement ; but neither is guilty under the copyright statutes of an infringement. If the new purchaser participates in the fraud, he mav also share in the punishment." The court cites in support of these statements Clemens v. . Estes, 22 Fed. 899. If this be a correct statement of the law, and this court does not doubt that it is, we recur to the simple proposition whether or not the complainant in the case now under consideration, the Bobbs-Merrill Company, retained any title in the books in question by printing on the page following the title-page the statement, " Copyright 904. The Bobbs-Merrill Company. May." And thereunder the statement : The price of this book at retail is one dollar 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 Bobbs-Mebrill Company.'* The defendants in this case purchased 90 per cent, of its copies of this book from dealers at wholesale at a reduction of 40 per cent, from said mentioned retail price. The other 10 per cent, of their [184] copies they purchased at retail, paying the full retail price therefor. The defendants knew of the statement printed in said books above quoted, and knew that it was printed in each copy of the book. The wholesale dealers from whom the defendants purchased their copies ob- tained such copies either from complainants direct or from other wholesale dealers at a discount from the above-mentioned retail price. Such wholesale dealers knew that the book was copyrighted, and were familiar with the said statement printed in each copy thereof. The books that came to the defendants prior to reaching them did not pass through the hands of any person or persons who were ignorant of the said notice printed therein. It is expressly found, how- ever, and conceded, that these wholesale dealers from whom the defendants here obtained their copies were under no agreement or obligation to enforce the observance of the 792 139 FEDEBAL BEPORTER, 184. Opinion of tbe Ck>iirt terms of said notice by retail dealers, or to restrict their sales of copies of such book to retail dealers who would agree to observe the said notice. As has been stated, the notice contains no suggestion that the title of the purchaser to the book is in any way limited. The notice is that the price of the book at retail is one dollar net; and, if the words "no dealer" are to be construed as referring solely to retail dealers, then the notice is that the Bobbs-Merrill Company has not licensed any retail dealer to sell the book at retail for less than one dollar per copy.. The fair meaning of this is that, in cases where the Bobbs- Merrill Company has granted a license to some retail dealer or dealers to sell the book, such licensee or licensees are limited and restricted in his or their authority ; but the notice is not a suggestion or an intimation to any person that those who buy and pay for the book in the open market, or even of the Bobbs-Merrill Company, without entering into an express license agreement different from that suggested by this notice, are bound or obligated in any way to demand one dollar per copy for such book. It well may be that the Bobbs-Merrill Company has licensed or will license certain dealers to sell this book, and when it grants a license it has the right to impose conditions on its licensees; but this notice does not state or suggest that every purchaser of one of these books containing this notice becomes a licensee with a limited title, or, in fact, no title, to the book. A person cannot be both licensee and absolute owner. Again, it is contended that the woi-ds " the price of this book" refer to the particular copy containing the notice, and that the words " no dealer is licensed to sell it " refer to the particular copy containing the notice. It is further con- tended that the court is bound to give this construction to this language, and that therefore the defendants, having knowledge of the notice, assented to the proposition and in effect entered into a contract or agreemeilt with the Bobbs- Merrill Company whereby they became its agents to sell the copies at one dollar per volume, and no less, or its licensee with power to sell such books, for which it had paid the wholesale dealer the price demanded, at one dollar per copy only. This court refuses to give that construction to this notice. This BOBBS-MERRILL CO. V. STRAUS. Opinion of the Court 793 court declines to hold [185] that the words in such notice " this book " and " it " refer to the particular copy of the book in which the notice is found. The language of the notice is a general statement, referring to the book known as " The Castaway " generally, and not to any particular copy or copies thereof, and, at best, is but a notice that licensees of the publishers are only at liberty to sell such book at one dollar per copy. The notice forms no part of a contract be- tween the purchaser from the j)ublisher and such publisher, nor does it limit or restrict the title of the purchaser. And this court will say here that it would be lending itself to the perpetration of a fraud upon the public should it hold differently. If the Bobbs-Merrill Company, in putting its books upon the market, desires to say to wholesalers and to retailers that it is not selling the entire title to the copies put upon the market, let it say so in plain and unambiguous terms. Let it say in its notice that the purchaser of copies of the boolc from either the publisher or any wholesale or retail dealer is obtaining but a limited or qualified title in the copies purchased, or that in purchasing one or more copies such purchaser becomes but a mere licensee of the publisher, without title to the copies, and with power to dis- pose of the same only on receiving a specified sum of money. The Circuit Court of Appeals, in Harrison v. Maynard, Mer- rill (& Co.^ supra^ also quotes with approval the language of Judge Hammond in Henry Bill Publishing Co, v. Smythe (C. C.) 27 Fed. 914-925, viz. : * " Tlie owner of tlie copyright may not be able to transfer the entire proi)erty in one of his copies and retain for himself an incidental power to authorize a sale of that copy, or, rather, the power of pro- hibition 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 ownership of a particular copy for himself, to find abundant protec- tion under the copyright statute for his then incidental power of con- trolling its sale. This copyright incident of control over the sale, if I may call it so, as contradistinguished from the power of sale inci- dent to ownership in all property— copyrighted articles, like anv other— is a thing that belongs alone to the owner of the copyright itself, and as to him only so long as and to the extent that he owns the particular copies involved. Whenever he parts with that owner- ship, the ordinary incident of alienation attaches to the particular copy parted with in favor of the transferee, and he cannot be de- prived of it. This latter incident supersedes the other — swallows It up, so to speak— and the two cannot coexist in any owner of the 794 139 FEDERAL BEPORTER, 185. Opinion of the Court. copy, except he he the owner at the same time of the copyriifht • and in the nature of the thin^, they cannot be separated, so thai one m" y i^thTnVrVTuJ''' **^ tbe copyright as a limitation upon or denial or the other m the o^vner of the copy." In Garst v. Ball <& Lyon Co,, 179 Mass. 588, 61 N. E. 219, 55 L. R. A. 631, decided October 17, 1901, without dissent, the court, speaking of copyrights, said : lills^hnr.i.fnT^'f*'* !**^ ^^""^ privileges to authors and pub- Hshers that do not pertain to property which anybody may make and m\\ If he can; but even under the law of copyright, when the owner of a ctwnght and of a particular copy of a book to which it per- ihlnlnt^ff'^f ^^ ^" ^'^ ^^^^^ *" ^^^ »>^^' ^-^"^ ^^^ conferred an aDsolute title to it upon a purcluiser. he cannot restrict the rieht of ^l?Z^T' Tt^^''^ '' **''^/'*' ^^^ incidents of ownership in personal property. Harnmn v. Maynard, 61 Fed. 681). 10 C O \ 17 Spp m^U^Tu^' F''iS..^^i?\f /*^.1^.'^i ''^'''" v./^.^e.,- 164' Mass: The same doctrine is plainly expressed in Keeler v. Stand- ard Folding Bed Company, 157 U. S. 659, 15 Sup. Ct. 738, 39 L. Ed. 848. In that case it was held that one who pur- chases patented articles of manufacture from one author- ized to sell them at the place where sold becomes possessed of an absolute property in such articles, unrestricted in time or place. In that case the complainants were the as- signees for the state of Massachusetts ol certain letters pat- ent granted to one Welch. This assigmnent as matter of course gave to the complainants the rights of the patentee in and for the state of Massachusetts, viz., the sole right to make, use, and sell the patented article in that state. The Welch Folding Bed Comimny owned the patent rights for the state of Michigan, and it of course had the same right to make, use, and vend the patented article in that state. The defendants purchased a car load of the patented articles from the Welch Folding Bed Company at Grand Rapids in the state of Michigan. It proposed to sell these articles in the state of Maasachusetfc^, and thereafter did sell some of such articles in the state of Massachusetts, and was en- gaged in selling the remainder in that state at the city of Boston when the bill of complaint was filed. The Supreme Court held that the defendants, having purchased the pat- ented articles in Michigan from the assignee of the patent for the territory included within the boundaries of the state of Michigan, had the right to sell them anywhere within the BOBBS-MERRTLL. CO. l'. STRAUS. 795 Opinion of the Court. United States, including the state of Massachusetts, not- withstanding the fact that all the patent rights for the state of Massachusetts had been assigned to another person, to wit; to the complainants. The decision is based upon the proposition that where the patentee, not having parted with his rights granted by the patent, makes and vends a patented article, the purchaser can use the article in any part of the United States, and, unless restrained by contract with the patentee, can sell or dispose of the same in any part of the United States. The court says: " It has passed outside of the nionoiwly, and is no longer under the peculiar protection granted to patented rights." The court approves the language of Mr. Justice Clifford in Goodyear v. Beverly Rubber Co., 1 Cliff. 348-354, Fed. Cas. No. 5557, wherein he states, in substance, that, the patentee having manufactured the article and sold it for a satisfactory compensation, the patentee, so far as that quantity of the product of his invention is concerned, has enjoyed all the rights secured to him by his letters patent, and the manufactured article, and the material of which it is composed, go to the purchaser for a valuable considera- tion, discharged of all the rights of the patentee previously attached to or impressed upon it by the law under which the patent was granted. The court further says: " If, as is often the case, the patentee has divided the territory of the ITnited States into 20 or more specified parts, must a pers(»n who has bought and paid for the patented article in one part, from a vendor having an exclusive right to make and- vend therein, on re- moving from one part of the country [187"| to another, pay to the local assignee for the privilege of using and selling his proiierty, or else be subjected to an action for damages as a wrongdoer? And is there any solid distinction to be made in such a case between the right to use and the right to sell ? " The court then cites with approval several cases, and es- pecially the language of Mr. Justice Clifford in Mitchell v. Hawley, 16 Wall. 544, 546, 547, 21 L. Ed. 322, as follows: " Patentees acquire by their letters patent the exclusive right to make and use their patented inventions, and to vend to others to be used, for the period of time specified in the patent : but when they have made one or more of the things patented, and have vended the same to others to be used, they have parted to that extent with their exclusive right, as they are never entitled to but one royalty for a patented machine, and consequently a patentee, when he has himself constructed a machine and sold it without any conditions, or an- 796 139 FEDERAL REPORTEB, 187. Opinion of the Court. ^d n^r«?f H^"^ to construct, sell, and deliver it, or to construct, use. b^ n^id t i*in7J*^*?H Z^ coiiditions. and the consideration has ^ fhi nn?o^!^ ^*''' J^t **'^''f P*t««^ted. the rule is well established with i^f f ?*^^*^ ^«8* .»>? understood to have parted to that extent with all his exclusive right, and that he ceases to have any interest whatever m the patented machine so sold and delivered or authoS the owner of the machine, whether he built it or purchased it if he Ms also acquired the right to use and operate it during tl!e lifetime of the patent, may coutinue to use it until it Is worn oi^ in spite o?lnv asslg^I""^ ^''^**°''**" subsequently obtained by the pSen^t^ or Ws At page 666, 16 Wall., 21 L. Ed. 322, the court calls atten- tion to the case of Wilson v. Boussvau, 4 How. 646, 11 L. Ed. 1141, and says that it was there held that : **A8 between the owner of a patent on the one side, and a ourchaser 2f.!lf''*^^'^ made under the patent on the other, the payment of a royalty once, or, what is the same thing, the purchase of the articlP ^m one authorized by the patentee to sell it emancipates si^^^^ ml'^y:^'' **? ^r^^""' subjection to the patent tlinfuXm thf entke ^tml^l^Cn^hC? ^^ *^t Jftter should be by law subs^uenUy ^SofiAh K ^^^^^"^ existing at the time of the sale; and in respect of the tmie of enjoyment, by those decisions the right of the purchaser, his assigns, or legal representatives is clearly established s^/?'"'"^'' ''"" '^''' "°^ '"^^^^ ^*^*™ ^' t^« patent^ or any at The court then says : " Upon the doctrine of these cases we think It follows that oha whn buys patented articles of manufacture from one Sorl^ to ^U JLTictrHirr^o ^' "?vf 2J^"*" P^^P^^^ ^^ «"^»» ^^^Jes, u" restricted in time or place. Whether a patentee may protect himself and his assignees by special contracts brought home to the DurcSrs is not a question before us. and upon which we exp^^s no op^S It is, however, obvious that such a question would arise as a aSiZ' In the case now before this court it appears that the pub- lisher of the book " The Castaway " printed and sold these copies. It put them upon the market. It received its price therefor, and reserved no right to demand any further com- pensation. The defendants purchased in the open market and paid the price demanded. It is conceded that the whole- salers of whom the defendants purchased were under no con- tract or obligation to impose any condition upon the defend- ants, and they did not. There is no privity of contract be- tween the defendants and the complainants. There is no sag- [188] gestion in the notice that the retail dealer who buys the copies of the book in the open market enters mto BOBBS-MERRILL CO. V. STRAUS. 797 Opinion of the Court. any contractual relation with the publishers. It is not stated that the copy of the book is sold on condition that the pur- chaser will abide by and enforce the price arrangement. The notice is assertive in its terms. It is a dictum. It says that the price of the book at retail is one dollar net. The plain meaning of this language is that if the signer of the notice sells a copy of the book, or the book in question, containing the notice, at retail, the price is one dollar. The notice also asserts that the Bobbs-Merrill Company has not licensed any retail dealer to sell at a less price. It does not say or suggest that the Bobbs-Merrill Company has not sold millions of copies of the book for the trade, parting with the title abso- lutely and unconditionally. This court is aAvare that the Keeler Case, cited above, is a patent, and not a copyright case ; but the principle is the same. In a supplemental brief filed by the counsel for the com- plainant, he states that he does not consider the notice pub- lished in the book as in the nature of a license. He says: " In my opiuion, the putting of the book upon the market and selling it 1».\ tlie ownor of the copyright constitutes the license; and this notice publisJied in tlie book is a limitation and qualification of that license. If the book is put out without any notice, the license is un- qualified, and the sale is absolute; but my contention is that the owner of the copyright has the authority to restrict the license, and, being published in this way, the restriction attaches to the property, and is a charge and limitation upon the rights of all parties pur- chasing tlie book for resale." This is a claim that the owner of a copyright for a book, wlio prints the book and sells it for a consideration, gives to the purchaser a license, and does not sell and convey a piece of personal property absolutely. The contention here is that any notice printed in a book and brought to the attention of the purchaser is a restriction of that license to that ex- tent, and may be enforced, and that a violation of the obliga- tion imposed by the notice is an infringement of the copy- right which may be restrained by the federal courts. This doctrine, it seems to this court, is contrary to the adjudicated cases. I do not think this contention can be sustained upon principle. Clearly it is opposed to public policy. The pur- chaser of an article not patented may duplicate it if he can. The purchaser of an article made under a patent right may not duplicate it, but he may use the article purchased and 798 139 FEDERAL BEPOKTEB, 188. BOBBS-MERRILL CO. V. STRAUS. 799 Opinion of tbe Court sell the same as his own in any way or for any price he sees fit. The purchaser of a book not copyrighted' may duplicate it— make copies or a reprint. The purchaser of a copy- righted book may not make or print or publish a copy, as this would be an infringement of the copyright; but this restriction in no way interferes with the absolute ownership of the particular copy of the book. The owner of an article made under a patent right or of a book printed under a copyright is in no sense a licensee of the patentee or of the owner of the copyright. " License," with reference to real estate, is a permission or authority to do a particular act or a series of acts on the land of another without possessing any estate therein. So, with reference [189] to personal property, '* license " implies and carries the power to do some act upon or in reference to or to do something with the property of another. Herein it dif- fers from an easement. The word " easement " always im- plies an interest in the land. See Words & Phrases, vol. 5, tit. " License." What is the Present Combination and Its Object, or Purpose? 1. The American Piiblishers' Association has adoi)ted a net price system for all copyright 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 copyrighted books to any dealer who fails to maintahi the net price of such books as fixed by such association, or, what is the same thing, by its members. Li short, this combination fixes the price of copyrighted books published by its members, and the price at which such books are to be sold, both at whole- sale 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 lixed. 2. Another association, the American Booksellers' Associa- tion, 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 Opinion of tlie Court 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 members 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 supplying books, etc. (See subdivisions 4 and 5 of Exhibit I.) 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 cfent. of all publishers and dealers in copy- righted 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 combina- tion, 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, interstate commerce is neces- sarily restrained. A judgment for the complainants in this action will restrain interstate commerce. If this suit . is one to restrain the infringement of a copy- right, granted to the complainant and now owned by it, by the doing of any act that constitutes infringement of that right, and defendant has infringed, it is entirely immaterial that the combination [ 190] described exists, or that complain- ant is a member thereof, or that its objects are those described. It is no defense to such a trespass upon the complainant's rights that it has violated and is violating the Sherman anti- trust law (Act July 2, 1890, c. 647, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200]), or some statute of the state of New York. In General Electiic Co. v. Wise^ 119 Fed. 922-924, this court so held, citing cases. This court there said : " It is difficult to understand how or why a violation of the Sher- man anti-trust law l>y this conii)lainant, if there has been such a 800 139 FEDERAL REPORTER, 190. Opinion of the Ourt vlolHtion, confers any right on the defendant to infringe this patent. That act points out the penalties for its violation, and it is not under- stood that such law denies the grantees of patents the protection of the law because they may be violating some statute. However that may be, the evidence falls far short of establishing such a violation by this complainant. The testimony on that subject is squarely contradicted. An individual cannot confiscate the property or property right of a corporation on the ground it has violated that act. ^oda Fountain Co, V. Cfreen (C. C.) 69 Fed. 333; Columbia Wire Co, v. Freemm Wire Co. (C. C.) 71 Fed. 302; Bement v. Harrow Co., 186 U. S. 70, 88-91, 22 Sup. Ct. 747, 46 L. Ed. 1058. Harrotv Co. v. Quick (C. C.) 67 Fed. 131, cannot be accepted as authority on this question." See. also, Strait v. National Harroto Co. (C. C.) 51 Fed. 819. But if the complainant has turned over to the combination the fixing of prices, and has entered into the combination described, and becomes a party to the agreement for the pur- pose described, and is now, through this suit, attempting, as this court holds it is, to enforce such combination agreement in whole or in part, and such agreement is unlawful, because 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 il- legal, have a standing in a court of equity to enforce any part of it, directly or indirectly. When a complainant 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 those who are thus violating the law, in per- petrating such violation, at the hands of one who is lawfully resisting such attempted injury, he or it cannot, while con- tinuing the illegal acts, have an injunction to enjoin the re- sisting acts resulting in such injury. Each owner of the copyright of a book has a monopoly of that particular book. Copyrights, like patents, are assignable, 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 business of publishing and selling copyrighted books. In such case such person or corporation BOBBS-MERRILL CO. V. STRAUS. 801 Opinion of the Court. would hold and control all the monopolies for such copy- rights 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 1191] license one or more persons to sell, and prescribe the terms and conditions 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 combination 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 copy- righted book, provided they actually sell their copyrights. If the agreement be a mere pretense, however, a mere cover for a combination to violate some statute, then such agree- ment 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, in- terfere with and limit interstate commerce, drive all other dealers and owners of similar property who will not join them in their purposes 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 a con- spiracy can enforce in a court of equity any contract or agreement made in execution, in whole or part, of such a conspiracy. It is evident that one may do, in fixing and en- forcing prices, and in exacting tribute from the people and restraining interstate commerce, what two or more cannot do 21220— VOL 2—07 m 51 802 139 FEDERAL REPORTER, 191. Opinion of the Court in pursuance of an agi-eement or combination. A corpora- tion, 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 n>ight 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 copyrights, each having a monopoly of his particular copy- right, 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 [102] and conspire is not. In any event the so-called Sher- man law forbids any and all combinations in restraint of such commerce. 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, etc., the readers of books 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 because of the new monopoly (the conspiracy of monopo- lists), created by the agreement and combination of these BOBBS-MKRRILL CO. l\ STRAUS. 803 Opinion of the Court monopolists— one that is forbidden and denounced by Act July 2, 1890, c. 647, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200], entitled "An act to protect trade and commerce against unlawful restraints and monopolies." Section 1 of that act reads : " Every contract, combination in the form of a trust or otherwise, or conspiracy, in restraint of trade or commerce amongst the several states, or with foreign nations, is hereby declared to be illegal." It is not necessary that the effect necessarily be to restrain trade or commerce. It is sufficient if the combination may have that effect. It seems to this court impossible to hold that this section of the act does not apply to a combination of patentees to restrain trade and commerce in patented articles made under their patents as much as to such a com- bination made by dealers in other articles of connnerce. In 1 Page on Contracts, p. 698, § 445, after a statement regarding the law as to "Monopoly Contracts concerning Patents," it is said: " But if the owners of distinct patents combine to prevent compe- tition in business, and to control the prices of the patented article, such combinations and all contracts for such purposes are as invalid as if the articles were not patented." The following cases are cited to sustain the statement; National Hafrrow Co, v. Hencli, 83 Fed. 36, 27 C. C. A. 349. 55 U. S. App. 53, 39 L. R. A. 299; National Hankow Co v. Quick (C. C.) 67 Fed. 130; Vulcan Powder Co. v. Powder Co.. 96 Cal. 510, 30 Pac. 1113, 31 Am. St. Rep. 242; Game- well, etc., Co. V. Crane, 160 Mass. 50, 35 X. E. 99, 22 L. R. A. 673, 39 Am. St. Rep. 458. In 1 State and Federal Control of Persons and Property (Tiedeman) 412-413, it is said : "But the mere fact that the subject-matter of the monopolistic combination may be patent rights, covering machines employed in the same art or industry, will not protect the combination from' the penal provisions of the anti-trust laws. If a corporation or association is formetl among manufacturers and patentees of certain articles of kindred charactiBr, in order to control the trade and prices of such articles, the combination is nevertheless illegal, although the exclusive manufacture of the goods is guarantied by letters patent from the United States government." At the time of that writing (1900) the author was not aware of the decision in Bement v. National Hankow Co., 186 U. S. 70, 22 [193] Sup. Ct. 747, 46 L. Ed. 1058, which modifies B04 139 FEDERAL REPORTER, 496. Syllabus. some of the cases cited by him, but not in respect to the ICeneral doctrine stated. In Bement v. Harrow Co.^ supra, the court, at page 94, 186 U. S., page 756, 22 Sup. Ct. (46 L. Ed. 1058), plainly intimates that the several owners of several patents may not combine to restrain commerce in their patented articles It is unnecessary to cite many cases. If Montague <& Co, v. Lowry, 193 U. S. 38, 24 Sup. Ct. 307, 48 L. Ed. 608, and Northern Securities Company v. United States^ 193 U. S. 197, 24 Sup. Ct. 436, 48 L. Ed. 679, are to be respected as law anti followed in cases where there is no hue and cry against rail roads, this combination is illegal as in restraint of interstate commerce. If anything can be found in the prevailing opin- ion in John D. Park cfe Sons Co. v. Wholesale Druggists- Association et al, 175 N. Y. 1, 67 N. E. 136, 62 L. K. A. 632, 96 Am. St. Eep. 578, supporting the contention of the com- plainant here, it is sufficient to say that this court does not agree with the prevailing opinion or decision in that case, but does agree with the dissenting opinions of Martin, J., and CuUen, C. J., with whom Vann, J., concurred. The defendants have not infringed and are not threaten- ing to infringe complainant's copyright, nor have they vio- lated any contract. The complainant is seeking to enforce against defendants an unlawful combination agreement, to which such defendants are not parties, and by which they have not consented to be bound to prevent defendants selling books of which they are the absolute owners. The same re- sult on a similar state of facts as to the effect of such notice was reached by the court in Bohhs-Merrill Co, v. Snellenburg, 131 Fed. 530. The defendants are entitled to a decree dismissina: the com- plaint, with costs. I4M1 IN HE HALE.- (Circuit Court, S. D. New York. June 8, 1905.) 11S9 Fed., 49&] Oband Jury— Powebs— Witnesses — Refusal to Testify.— Where, after a witness had refused to testify before a grand Jury consider- aAffirmed by Supreme Court (201 U. S., 43). See pw 874. IN BE HALE. Opinion of the Court 805 Ing supposed infractions of the anti-trust law, the grand jury made a presentment to the court charging the witness with contempt, and the court, after hearing, ordered the witness to answer the ques- tions, and to forthwith produce the papers required, the court's action was equivalent to an express instruction to the grand jury to Investigate the matter referred to in the presentment, and hence the fact that the grand jury had been previously acting beyond its power was harmless. Witnesses— Privilege— Anti-Tbust Act— Inquisitions.— An inquisi- tion before a grand jury to determine the existence of supposed vio- lations of the anti-trust act was a " proceeding " within Act Cong, Feb. 19, 1903, c. 708, 32 Stat. 848 [U. S. Comp. St. Supp. 1903, p. 365], providing that no person shall be prosecuted or subjected to any penalty for or on account of any transaction, matter, or thmg concerning which he may testify or produce evidence in any " pro- ceeding " under several statutes mentioned, including such anti-trust act. Unreasonable Searches — Rights of Agent — Subp(ena Duces Tecum. — A subpcena duces tecum commanding the secretary and treasurer of a corporation supposed to have violated the anti-trust act to testify and give evidence before the grand jury, and to bring with him and produce numerous agreements, letters, telegrams, re- ports, and other writings, described generically, in effect including all the correspondence and documents of his corporation originating since the date of its organization, to which 19 other named corpora- tions or persons were parties, for the purpose of enabling the district attorney to establish a violation of such act on the part of the wit- ness' principal, constituted an unreasonable search and seizure of papers, prohibited by Const. U. S. Amend. 4. Habeas .Corpus— Circuit Courts— Judges — Co-ordinate Jurisdic- tion.— Where a subpoena duces tecum was directed to be issued by a circuit judge, and the witness was committed for contempt for failure to obey the same, he would not be discharged on habeas corpus 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.^ Henry W. Taft, for complainant. Elihu Boot and De Lancey Nicoll, for defendant. Wallace, Circuit Judge. This is a proceeding in habeas corpus to test the legality of the imprisonment of the petitioner, pursuant to an order of the Circuit Court, adjudging him guilty of contempt in o Syllabus copyrighted. 1905, by West Publishing Co. 806 139 FEDERAL REPORTER, 496. Opinion of the Court. refusing to produce certain documents and writings and answer certain questions as a witness before the gi'and jury impaneled in that court. The petitioner was the secretary and treasurer, and also a director, of McAndrews c^ Forbes Company, a New Jersey corporation, and had been served with a subjxena duces tecum issued out of that court com- manding him to testify and give evidence before the grand jury upon the part of the United States of America "in a certain action now pending and undetermined '" in that court between the United States of America and the Ameri- can Tobacco Company and the McAndrews & Forbes [497] Company, and to bring with him and produce numerous agreements, letters, telegrams, reports, and other writings, all of whicli were descril:»ed generically, and may for the present purposes he described as including all the correspond- ence and documents of his corporation originating since the date of its organization, to which 11) other named cor- porations or persons were parties. He appeared before the grand jury pursuant to the subpcena, and was then asked several questions bearing upon the general inquiry whether there was any agreement, arrangement, or understanding between his corporation and the American Tobacco Company in relation to the trade in licorice aifecting the business be- tween several states of the ITnited States, lie declined to produce the pai)eis or to answer the questions, stating to the grand jury as a reason for so doing that he liad l)een advised by counsel that he was under no legal obligation to produce the writings, and that the production of the papers or the answers to the questions would tend to crim- inate him. Thereupon he was informed by the United States attorney that the proceeding was one under the act of Congress to protect trade and commerce against unlawful restraints and monopolies, and it was not projjosed to prose- cute him or subject him to any penalty or forfeiture on ac- count of anything to which he should testify, or as to which he should produce documentary or other evidence, and that he (the district attorney) offered and assured to him im- munity and exemption from any such testimony. The peti- tioner again declined to answer, for the reasons previously stated. Subsequently the grand jury made a presentment to IN RE HALE. 807 Opinion of the Court. the court charging the petitioner with contempt because of his refusal to produce the writings and give the testimony required, and setting forth fully the facts relating thereto. When this presentment was submitted to the court, the peti- tioner being present, the court made an order directing him to answer the questions as propounded by the grand jury, and to forthwith produce the papers. Upon his refusal to comply, further proceedings Avere taken, which resulted in an order by the court adjudging him in contempt, and com- mitting him to the custody of the marshal until he should comply with its previous order. It is insisted by the petitioner that his imprisonment and restraint are without lawful . authority for reasons which may be summaiized as follows: (1) That the grand jury could only investigate specific charges against particular persons, and, as there was not any proceeding of that nature before them, and no cause or action of anv kind whatever pending in the court, they were not in the exercise of proj^er authority in prosecuting the investigation when petitioner was before them, and consequently he could not be lawfully required to testify or give evidence; (2) that petitioner was within the protection of the fifth amendment of the Consti- tution in refusing to testify or produce incriminating evi- dence against himself; and (3) that the order of the court directing him to produce the papers contravened the fourth amendment of the Constitution, and in fact deprived him of his right to be secure against unreasonable search and seizure of his papers, and was equivalent to a [A98] Avar- rant not issued upon probable cause or particularly describ- ing the things to be seized. It is manifest from the facts recited in the presentment made by the grand jury that the investigation which they were pjirsuing Avas not based upon any specific charge Avhich had been formulated and laid before them by the United States attorney, and that it Avas not founded upon their oAvn knowledge, or upon information derived from any source that a specific offense had been committed by either of the tAvo corporations named in the subpcena. It appears to ha\^e been one Avhich they Avere pursuing, Avith the as- sistance of the United States attornev, directed to the dis- 808 139 FEDERAL REPOBTEB, 498. Opinion of the C!ourt. covery of some infraction by one or both of these corpora- tions of the law of Congress of July 2, 1890, " to protect trade and commerce against unlawful restraints and mo- nopolies," known as the "Anti-Trust Law" (Act July 2, 1890, c. 647, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200]). Consequently the first contention for the petitioner presents the question whether it is within the competency of the grand jury to institute and pursue such an investigation in the exercise of its inquisitorial power. The authority and functions of a grand jury in the courts of the United States in investigating criminal offenses are not prescribed by statute, but are such as inhere in that body by the general sanction of the common-law courts. That a grand jury is not confined to the investigation of an alleged offense to which their attention has been called by the court, or which has been laid before them in an indictment, or an information by the prosecuting attorney of the court, or which is within the personal knowledge of some of the mem- bers, is the generally accepted opinion of the courts of this country, unless in some of the states where there may be statutory restrictions to the contrary. As said by Mr. Jus- tice Brewer in Frkhie v. The United States^ 157 U. S. 160, 15 Sup. Ct 586, 39 L. Ed. 657 : " In this country the common practice is for the grand Jnry to In- vestigate any alleged crime, no matter how or by whom suggested to tliem, and, after determining that the evidence is sufficient to justi^j' putting the party suspected to trial, to direct the preparation of the formal charge or indictment." That they may investigate into offeiises which may come to their knowledge, other than those to which their atten- tion has been called by the court, or which have been sub- mitted to their consideration by the district attorney, is shown by the observations of Mr. Justice Field in a carefully considered charge to the grand jury in the United States Circuit Court for the District of California. 2 Saw v. 667, Fed. Cas. No. 18255. That a grand jury has certain in- quisitorial powers — and by this is meant the power of insti- tuting an investigation to discover whether a particular crime has been committed — is also a proposition which has been frequently affirmed by the courts of this country; but as to the extent and limitation of this power there is IN BE HALE. Opinion of the C5ourt 809 pronounced divergence of opinion. It will suffice to refer to a few of the many citations which counsel have with great industry collated. [499] In Blaney v. The State of Maryland, 74 Md. 153, 21 Atl. 547, the court said: " However restricted the functions of grand juries may be elsewhere, we hold that in this state they have plenary inquisitorial powers, and may lawfully press, and upon their own motion originate, charges against offenders, though no preliminary proceeding has been had be- fore a magistrate, and though neither the court nor the state's attor- ney has laid the matter before them. * ♦ ♦ Though far-reaching and seemingly arbitrary, this power is at all times subordinate to the law, and experience has taught that it is one of the best means to pre- serve the good order of the commonwealth and to bring the guilty to punishment." In Re Lester, 77 Ga. 143, the Supreme Court, after stating in its opinion that it was undeniable that the powers of the grand jury are to a certain extent inquisitorial, but are to be exercised within well-defined limits, said : "Anything they can find out upon inquiry and observation is legiti- mate and praiseworthy, but they have no authority to force private persons or the officers of other courts to disclose to them who have violated the public laws, and the names of persons by whom such in- fractions can be established ; in short, to make any man the spy upon the conduct of his neighbors and associates, and compel him to violate the confidence implied in holding social intercourse with his fellows by forcing him to become a public informer." Such an exercise of power, the court said, would be in dero- gation of " rights regarded as sacred and paramount in the intercourse between man and man; and these rights have been carefully guarded, not only by the spirit of our law, but by its express enactment." In the United States Circuit Court for the District of Ten- nessee (reported in Wharton on Criminal Pleading, p. 224) Mr. Justice Catron compelled witnesses to answer who had been summoned by the grand jury, when it did not appear that there was any specific charge made against any partic- ular person, and when the questions were whether the wit- nesses knew of any person or persons in the city of Nashville who had begun, or set on foot, or provided means for a mili- tary expedition to the Island of Cuba. He said : "As all these questions tend fairly and directly to establish some of the offenses made indictable by the act of 1818, and are pertinent to the charge delivered to the grand jury, they may be properly pro- pounded, unless the answers would tend to establish that the witness was himself guilty." 810 139 FEDERAL REPORTER, 499. Opinion of tbe Court In United States v. Kilpatriek (D. C.) 16 Fed. 765, the court, after proving the practice of the state courts in North Carolina, said: " Grand jnries cannot make inquisitions into the general conduct or prlYate business of their fellow citizens, and hunt up offenses by send- ing fon sus- picions and indetinlte rumors." He adds : ** Tlie rights of society, as well as the nature of our free institu- tions, forbids such a dangerous mode of inquisition." In Thompson & Merriam on Juries, § 615, it is said, refer- ring to authorities cited : [500] "These expressions of opinion bristle with evidence of the inquisitorial i)ower of the grand jury to inquire of their own motion into offenses of every character punishable by the court, of which it is a component part." The subject is summed up in vokmie 17, Am. & Eng. Enc. of Law (2d Ed.) p. 1279, as folloAvs: ^'Although it has been sometimes asserted that at connnon law the grand jury was charged with inquisitorial duties, and was empowered to institute iuipiiries and investigations into criminal offenses, accord- ing to the weight of authority the power of the grand jury to originate criminal prosecutitms otherwise^ than by a presentment based upcm the personal knowledge or observation of the members of that body is oniinarily limited to cases in wliich individuals have been charged with spwitic crimes before a magistrate, in which cases the accused has a reHi>onsible prosecutor upon the record, who may. if he swear falsely, be indicted for perjury, or to cases whiss*»s for the puri>ose of obtaining information upon which to base a presentment of a supposed offender." The result of the authorities seems to be fairly summar- ized in the last citation. The question wliether an impioi^er exercise of the inquisi- torial i>ower subverts the jurisdiction of the court, or is sim- ply such an irregularity as to enable the accused or a witness to invoke the intervention of the court, or as may vitiate an indictment, has never lieen decided. Were it not for the im- plication arising from the treatment of the subject in Coun- selNHiH X. IIitrhrovk\ 142 U. S. 547, 12 Sup. Ct. 195, 35 L. Ed. 1110, it would seem quite clear that it could not affect the jurisdiction of the court. The grand jury is a part of the court in the exercise of criminal jurisdiction, and their proceedings are always subject to the control of the court. IN RE HALfi. 811 Opinion of the Court. The court can at any time direct the grand jury to consider a particular accusation, or to investigate a supposed viola- tion of the •criminal law; and whether it does this by direct instructions or by directing the prosecuting officer to present the matter for the consideration of the grand jury is of no consequence. If, in the absence of such instructions, the grand jury proceeds of its own motion, and is guilty of any abuse of its powers, the court can at any time interv^ene, and correct or suppress the proceedings. If the conduct of the grand jury is called to its attention, and the court approves or disapproves, whether its judgment may be correct or wrong, it is in the exercise of its undoubted jurisdiction; and, though it is erroneous, it is not void or illegal, and cannot be reviwed by habeas corpus. Of course, this is not true in cases where the court transcends its authority. In the Counselman Case, Avhich was a habeas corpus case, the court adverted to the contention that the jury in the par- ticular case had not been 'Mn vest iga ting specific charges against particular persons,'' but said that it was not neces- sary to intimate any opinion as to the validity of the con- tention, and placed its decision upon another ground. The circumstance that the point was adverted to is hardly enough to suggest that the court considered it to be a valid one. [o01| In the i)resent case it does not appear that the in- vestigation was initiated sua sponte by the grand jury, and it may be inferred from the participation of the United States attorney in the proceeding that it originated in his formal presentation of the charge to them. The subpoena duces tecum was the process of the court. As it commanded the witnesses to appear l)efore the grand jury, it is manifest that the recital about the pending ^^ action '' could only have referred to a proceeding between the United States and the two corporations of the only kind which a grand jury can entertain, viz., a preliminary investigation to ascertain whether there was sufficient cause for an indictment. When, after the presentment of the alleged contumacy of the wit- ness by the grand jury to the court, he was ordered by the court to answer questions and produce the documents, the action of the court was equivalent to an express instruction to the grand jury to investigate the proceedings mentioned 812 Opinion of the CJourt. in the presentment While the investigation was not di- rected to a specific offense, it was directed to the inquiry whether one of the laws of the United States — ^the so-called Anti-Trust Law — had been violated by either or both of the two corporations mentioned. Without this intervention by the court the investigation would have been one upon the border line between the legitimate exercise and the abuse of the inquisitorial power of the grand juiy, but not one which can be safely held to have been an ultra judicial proceedinff. After the Lrvention of the court the origina' abuse !i power, if there was any, became innocuous. The contention for the petitioner that the order of the court violates the constitutional prohibition against com- pelling a pei-son to give evidence against himself in a crimi- nal case would be clearly sound were it not for the effect of the immunity act of Congress of February 19, 1903, c. 708, 32 Stat. 848 [U. S. Comp. St. Supp. 1903, p. 365]. In view of his official relations with the corporation, it fairly may be assumed that the petitioner had participated personally in some of the acts or transactions which were the alleged offenses of the corporation, and was therefore originally responsible himself. It is not for this court to question the soundness of the judgment in Brown v. Walker, 161 U. S. 591, 16 Sup. Ct. 644, 40 L. Ed. 819, or to weigh the value of the dissenting opinions. That judgment is authoritative that such an exemption from liability to prosecution or pen- alty as was secured to the witness by the immunity act of February 19, 1903, if it extends to testimony given or compelled before a grand jury, deflects the application of the fifth amendment to the Constitution so that the prohibi- tion against compelling a person to be a witness against him- self in a criminal case does not protect him. The peti- tioner's counsel do not argue otherwise, and their argument is that the immunity given by this act does not extend to testimony given by a witness before a grand jury. The pro- vision is that no person shall be prosecuted or subjected to any penalty 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 " [503] under the several statutes mentioned, IN RE HALE. 813 Opinion of the Court. including the anti-trust act. The argument that a proceed- ing before a grand jury is not such a proceeding as is meant by the provision has been ingeniously presented, and is not without plausibility. But the word " proceed- ing" is a broad term, and was apparently intended to include some form of judicial inquiry other than a " suit or prosecution." In one sense it is true a criminal proceeding is not instituted against an accused person until a formal charge is made against him by indictment or information, or a complaint before a magistrate; and proceedings before a grand jury are not, in that sense, a criminal proceeding against an accused. Post v. United States, 161 U. S. 583, 16 Sup. Ct. 611, 40 L. Ed. 816. But in another sense any initial step before a judicial tribunal preliminary to the commence- ment of a civil suit or a criminal prosecution is a proceeding. As used in this statute, inasmuch as testimony given in a suit or prosecution embraces that given not only at the trial, but upon all occasions incident to the controversy, the term " proceeding," if limited to some step in the progress of a civil suit or a criminal prosecution which has been previ- ously instituted, is mere tautology. A rational construc- tion seems to require it to include any preliminary step which is incident to the institution of a civil suit or a crimi- nal prosecution. The contention that the order requiring the petitioner to produce papers called for by the subpoena duces tecum was made in violation of the petitioner's rights under the fifth amendment to the Constitution, raises the question whether such a general inquisition into his private papers as is per- mitted by the terms of the subpoena was not such an abuse of judicial process as to amount to an unreasonable search and seizure. As Judge Cooley says in his work on Constitu- tional Limitations : "Near in importance to exemptions from an arbitrary control of the person is that maxim of the common law which secures to the citizen immunity in his home against the prying eyes of the govern- ment, and protection m person, property, and papers against even the process of the law, except in a few specified cases." In Boyd V. U. S., 116 U. S. 616, 6 Sup. Ct. 524, 29 L. Ed. 746, it was decided that the law of Congress which author- ized a court of the United States in revenue cases on motion 814 im FEDERAL REPORTER, 'M, Oiiiuioii of the Court. of tlie govermnent attoniey to require a defendant to pro- duce in court his private books, invoices, and papers, and per- mit the attomev, under the direction of the court, to make examination of tlie same, and which provided that, if the defendant refused to produce the same, the allegations of the attorney as to their contents specified in his written motion should be taken as confessed, was unconstitutional and void, as being repugnant to the fourth and fifth amendments to the Constitution. The court said : " It is our opinion, therefore, that a conujulsory proiUiction of a man's private i»apei-s, to establish a criminal charge against him, or to forfeit hin proi>ert.T. is within the scope of the fourth amendment to the Constitution, in all cases in which a search or seizure would be, because it is a material ingredient and affects the sole object and purpose of search and seizure." [50S] And the court concluded: ** We think that the notice to produce the invoice in this case, the order by virtue of which it was issued, and the law which authorized the order, were unconstitutional and void, and that the inspection of the district attorney of said invoice, when produced in obetlience to said notice, and its admission in evidence by the court, were erroneous and unconstitutional proceedings." It will be observed that the statute in that case did not deprive the party of the custody of the books and papers which he was required to produce, and authorized only such an inspection of them as the court might direct. This judg- ment concludes an inquiry by this court as to the validity of two propositions, and it settles, first, that a subpoena or an order of the court may be the equivalent of a search and seizure within the constitutional provision; and, second, that any search or seizure for the purpose of obtaining in- criminating evidence against the party, is an unreasonable one within the meaning of the provision. The judgment would have controlled this case, and would have entitled the petitioner to be discharged, if the evidence sought to be procured could have been used to incriminate the petitioner. Is a search and seizure any the less unreasonable when it compels the official custodian of all the papers of his prin- cipal, whose duty it is to keep their privacy inviolable, to produce them in order to incriminate his principal ? It may be conceded that his duty to the state and courts is para- mount; but is this true when the evidence is not to be used IN RE HALE. Opinion of the Court. 815 against a principal who is under any criminal accusation, or against whom any civil suit is pending, and is only to be used to discover if possibly any ground of accusation can be found against him ? If the petitioner had been ordered to produce a single document or numerous documents in his possession, which were adequately described to enable him to find them, for use as evidence in a pending action, civil or criminal, it seems plain that the order would have been unobjectionable, and such as the courts are daily making. Such was the case of Interstate Commerce Commission v. Baird, 194 U. S. 25, 24 Sup. Ct. 563, 48 L. Ed. 860, where the observation was made by the court upon which the government relies. The petitioner was required to produce a numerous array of documents and papers for the purpose of ascertaining whether they contained anything which would tend to es- tablish the commission of an offense by either of the two corporations; and it is apparent that the object was to en- able the government, by inspecting this mass of the private papers and documents of the petitioner's corporation, to find something which might induce the grand jury to find an in- dictment against his corporation. It is this which gives to the proceeding, its color of oppression and the attributes of an unreasonable search and seizure. The legality of search warrants has been sanctioned on the ground of public necessity, because without them felons and other malefactors would escape detection. But a search warrant for the papers of a suspected party, to be used as evidence against him, was illegal at common law. Archbold, Criminal Law (7th Ed.) 141. [504] Because of the ob- noxious character of the process, very great particularity is required in designating the articles to be searched for before the officers of the law are permitted to invade the premises where the articles sought are supposed to be. A designation of goods to be searched for as " goods, wares, and merchan- dise," without more particular description, has been re- garded as insufficient, even in the case of goods supposed to be smuggled, where there is usually greater difficulty in giv- ing description, and consequently more latitude should be permitted, than in the case of property stolen. Sandford v. 816 139 PEDEKAL. REPOBTEB, 504. Opinion of the CJonrt. NwhoUy 133 Mass. 286, T Am. Dec 151. Lord Camden, speaking of a warrant not specifying the particular papers, but authorizing the seizure of aU the papers of the person named in it, described it as " an execution upon all the party's papers," and said : ** To enter a man's house by virtue of a nameless warrant. In order to produce evidence, is worse than the Spanish inquisition — ^a law tinder which no Englishman would care to live an hour.'* Entinck V. €arrinffton, 19 State Trials, 1029. Any process which is issued to perform the office of a search warrant should conform in some remote degree, at least, in certainty and specific description, to the require- ments of a valid search warrant. The subpoena issued in this case may possibly meet these requirements, but it is not too much to say that it resembles more nearly a general war- rant to search aU the private papers of a witnL. It fall, but little short of being in substance and effect a roving commission, devised by the government to compel a witness to bring before the grand jury a general mass of the private papers of his principal, in order that the prosecuting officer might discover whether at any time during its corporate life the principal had been a party to any act which could afford the basis of a criminal acpusation. This was a wanton as- sault upon the right of privacy, and in my judgment the process, in view of the circumstances under which and the purposes for which it was issued, authorized an unreason- able search and seizui. of papers withm the spirit and meaning of the fourth amendment. The conclusions thus indicated would ordinarily lead to an order for the petitioner's discharge, but the order compelling him to produce the papers alluded to in the subpoena was made by one of the judges of this court, and although it was not made under circumstances which afforded an oppor- tunity for deliberate consideration, the manifest impro- priety of reversing it indirectly in the same court, held by a different judge, is so great that it ought not to be done if the only result will be to shift the burden of preparing a record for a review by a higher tribunal from the one party to the other. Whether the present decision is in favor of the peti- tioner or against him, it is understood that it will be taken camors-m'connell CO. V. m'connell. 817 SyllabuB. for review to the Supreme Court, and pending that review the petitioner will not be confined. Under these circumstances an order will be entered refus- ing the discharge of the petitioner. 1412] CAMORS-McCONNELL COMPANY v, McCON- NELL.» (Circuit Court, S. D. Alabama. August 31, 1905.) [140 Fed., 412.] Contracts— Legality— Restbaint of Trade.— An agreement, as inci- dental to the sale of property as a business, that the seller will not enter into a competing business, is valid and enforceable, not- withstanding it is in partial restraint of trade.* [Ed. Note.— For cases in point, see vol. 11, Cent. Dig. Contracts, §§ 542-545, 555.] Same— Illegal Purpose of Covenantee.— A contract by which a person sells his property and business good will to another can- not be repudiated on the ground that the purchaser acquired the property for the purpose of obtaining a monopoly of the business and in pursuance of an illegal combination in restraint of trade. [Ed. Note.— For cases in point, see vol. 11, Cent. Dig. Contracts. §§ 462-464, 547.] Same.— In order to defeat a suit to enforce a contract on the ground that its enforcement is sought to aid and facilitate the carrying out of an illegal combination in restraint of trade, it must appear that the contract is directly connected with such unlawful pur- pose, and not merely collateral thereto. Equity— Maxims— Coming into Court with Clean Hands.— The maxim that one coming into a court of equity must come with clean hands applies only in case of fraud or misconduct on the part of [413] complamant in regard to the transaction which is the subject of controversy. [Ed. Note.— For cases in point, see vol. 19, Cent Dig. Equity. §§ 185-187.] Specifio Performance— Sale of Business-^Enjoining Violation — A court of equity will enjoin a defendant from violating a contract clearly shown, by which he deliberately obligated himself for a valuable consideration not to engage in a certain business S^^sS^ ^^ ^*^^'* ^"^"^ ^^ Appeals, Fifth Circuit (140 Fed., 987). » Syllabus copyrighted, 1906, by West Publishing Co. 21220 — ^vol 2 — 07 m- -52 818 140 FE1>EBAL KEPORTER, 413. Opinion of the Court. In Equity. On motion for preliminary injunction. Howe, Spencer d; Ooeke and B. H, <& N, R. Clarke, for complainant. Gregory L, <& H. T. Smith, for defendant. TouLMiN, District Judge. The averments as to the facts of tliis case, as set out in the bill of complaint are substantially admitted by the de- fendant, with the exception that he denies that the contract of January 27, 1900 (Exhibit III to the answer), was made upon the terms set out in the contract of December 8, 1899 (Exhibit A to the bill), or that it had any reference to the provisions of said last-named contract, and that the provi- sions of article 5 therein were for the use, benefit, and pro- tection of the complainant. And defendant avers that at the time the contract of December 8, 1899, was made it was understood that the United Fruit Company was the real party interested in said contract, and that the provisions of article 5 therein were made for its benefit and protection. It does not appear from anything now before the court that the United Fruit Company has ever availed itself of the provisions of article 5, referred to, that any consideration therefor ever passed or was intended to pass from it to the defendant, or that said company ever complained of the ^nolations of said contract by the defendant. The United Fruit Company is not a party to this suit, but it appears that it is a stockholder of the Camors-McConnell Company. I think that on the bill, answer, and evidence, as now pre- sented, there can be no doubt that the contract of December 8, 1899, was made in contemplation of the formation of the corporation of Camors-McConnell Company, and of its adop- tion by such corporation when organized, and that it was adopted by said corporation, and that the contract of Janu- ary 27, 1900, transferring the property, effects, business, and good will of Camors, McConnell & Co., was made in pur- suance of, and upon the terms set out in, said contract of December 8, 1899, and that the Camors-McConnell Company has performed the obligations thereby assumed by it, and is entitled to all the benefits accruing under said contracts. CAMORS-M 'con NELL CO. V. m'cONNELL. 819 Opinion of the Court. But the defendant contends that the real purpose of the transaction in question was to suppress existing competition between the business conducted by the copartnership of Camors, McConnell & Co. and the United Fruit Company, and to combine said business with corporations and com- panies confederated together to monopolize and control the business of buying, importing, and selling fruit throughout the United States, and that the contract sought to be enforced is therefore illegal and void. The defendant further con- tends that the com- [414] plainant and the United Fruit Company are conducting their business in violation of the laws of the United States, and that at the time the contract involved in this suit was made and entered into it was for the purpose of aiding and facilitating the United Fruit Com- pany and the Camors-McConnell Company and other com- panies in combination with them in conducting their business in violation of the laws of the United States, and that said contract was made in restraint of trade and commerce among the several states and with foreign nations, and for the purpose of forming and maintaining a combination in the form of a trust, and for that reason it is illegal and not enforceable. The covenant here sought to be enforced is that wherein the defendant agreed that he would not, " either individually or by or through a corporation, jointly or severally, directly or indirectly, engage in the growing or importing or selling of tropical fruits, or any other business, directly or indirectly, in competition with the new corpora tion," the Camors-McConnell Company. The test of the legality and validity of this covenant is whether the main contract is legal. If the contract is illegal, affirmative relief against it will not be granted. No court will lend its assist- ance in any way towards carrying out the terms of an illegal contract. Spri^igr Co. v. Knotclton, 103 U. S. 49, 26 L. Ed. 347; McMuUen v. Hoffman, 174 U. S. 639, 19 Sup. Ct. 839. 43 L. Ed. 1117; Harriman v. Northern Secimties Co 197 U. S. 244, 25 Sup. Ct. 493, 49 L. Ed. 739. A contract may, in a variety of ways, affect interstate com- merce, and yet be entirely valid, because the interference pro- duced by the contract is not direct. The fact Ojat trade and commerce might be indirectly affected is not sufficient. The oZU 140 FEDERAL REPORTER, 414. Opinion of the Court. effect must be direct and proximate. Hopkins v. U. S., 171 U. S. 578, 19 Sup. Ct. 40, 43 L. Ed. 290; U, S. v. E. G. Knight Co., 156 U. S. 1, 15 Sup. Ct. 249, 39 L. Ed. 325; Northern Securities Co. v. U. S,, 193 U. S. 198, 24 Sup. Ct 436, 48 L. Ed. 679. The indirect 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 con- cern, with the good will attached, where, as ancillary and incident 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, although such covenant may be in partial restraint of trade, it should be upheld and enforced. Harrison v. Glucose Svgar Re- fning Co., 116 Fed. 307, 53 C. C. A. 484, 58 L. E. A. 915 ; Nat. Enameling & Stamping Co. v. Haherman (C. C.) 120 Fed. 415. In U. S. v. Addyston P. €& S. Co., 85 Fed. 281, 29 C. C. A. 141, 46 L. E. A. 122, the court said : "Covenants In partial restraint of trade are generally uplield as valid when they are agreements by tlie seller of proi)erty or business not to compete with the buyer in such way as to der«)gate from the value of the property or business sold.'* An agreement, as incidental to a sale of property as a busi- ness, that the seller would not enter into a competing busi- ness, is valid, notwith- [415] standing it is in restraint of trade to that extent. A. Booth cC* Co. v. Davis (C. C.) 127 Fed. 875; S, Jarvis Adams Co. v. Knapp, 121 Fed. 34, 58 C C. A. 1 ; U, S, V. Addyston P. <& S. Co., supra; Id., 175 TJ. S. 211, 20 Sup. Ct 96, 44 L. Ed. 136. The sale and trans- fer by a person of his property and good will to another cannot be repudiated on the ground that the purchaser ac- quired the property for the purpose of obtaining a monopoly of the business, and in pursuance of an illegal combination in restraint of trade. Metcalf v. Am, School Furniture Co. (C. C.) 122 Fed. 115. In Diamond Match Co. v. Roeher^ 106 N. Y. 473, 13 N. E. 419, 60 Am. Eep. 464, the court said : "We are not aware of any role of law which makes the motive of the coveiTOtee the test of the validity of such a contract. On the contrary, we suppose a party may legally purchase the trad© camors-m'connell CO. V, m'connell. Opinion of the Court 821 and business of another for the very purpose of preventing competi- tion, and the validity of the contract, if supported by a consideration, will depend upon its reasonableness as between the parties." Con- nolly V. Union Sewer Pipe Co., 184 U. S. 547, 22 Sup. Ct. 431, 46 L. Ed. r>79; Knapp v. S. Jarvis Adams Co. (CCA.) 135 Fed. 1008. In the case of an unlawful combination of the nature asserted here, the remedy is by well-recognized and direct proceedings. The fact, if it be a fact, that the complainant is one of an association or combination of corporations, which constitutes a monopoly, and that its general business is illegal, as one in restraint of trade, cannot be invoked collaterally to affect in any manner its independent contract obligations or rights. Yarhorough's Adm^r v. Avant, 66 Ala. 526; Ware v. Curry, 07 Ala. 274; Johnston v. Smith's Adm\ 70 Ala. 108. It is held that one who voluntarily and knowingly deals with the parties so combined cannot, on the one hand, take the benefit of his bargain, and, on the other, defend against the contract on the ground of the illegality of the combination. Harrison v. Glucose Sugar Refining Co., supra; Dennehy v. McNulta, 86 Fed. 825, 30 C. C. A. 422, 41 L. R. A. 609. On the case as now presented, and assuming that there was a combination or agreement between the complainant and other corporations, which was prohibited by law as being in restraint of trade, I think that the contract in controversy between complainant and defendant was col- lateral to the said unlawful agreement or combination. More- over, I do not think that the direct or necessary operation of said contract tends to restrain interstate or international trade or commerce, or to create a monopoly therein. My opinion, therefore, is that there is nothing illegal in the consideration and performance of said contract, and that the defendant should not be permitted to repudiate it because the association of complainant with other corporations is illegal. But it is urged on the part of the defendant that, even if the contract m controversy was, as a separate and independ- ent contract, a lawful one, it was a part of an unlawful scheme to monopolize interstate trade and commerce in tropical fruit, and it thereby became unlawful. It is true there are some cases in which courts have held that even the Q99 140 FEDERAL REPORTER, 415. Optnfon of tbe Court. fact that a contriiet is ooe for the sale of property or of busi- ness and good will has not saved its validity, if it was shown that it [416] was only a part of a plan to acquire all the property used in a business by one management with a view to establishing a monopoly. It was held that in those cases the actual intent to monopolize must appear. It is not deemed enough that the mere tendency of the provisions of the contract should be to restrain competition. JJ. 8. v. Addyston P. S 8* Co., m/pra. I think it will be found that the cases referred to were direct proceedings against the al- leged monopolies wherein it was sought to enjoin them. There are no provisions in the contract here sought to be en- forced which refer to the restrictions of trade, or to the regu- lation of the importation, sale, and prices of fruit, evidencing an intent to establish a monopoly in such trade. In the case of Sioift c£* Co. v. U. S., 196 U. S. 3T5, 25 Sup. Ct. 276, 49 L. Ed. 51. S, a bill was filed by the United States to enjoin the defendants' conunission of alleged violations of the law " to protect trade and commerce against unlawful i^estraint and monopolies.'' It charged a combination of a dominant proportion of the dealers in fresh meats through- out the United States to do and not to do certain specified "things, with tlie intent to restrain competition among them- selves, and to monopoh'ze the supply and distribution of fresh meats throughout the United States. The case was sub- mitted on bill and demurrer thereto. The court said it seemed to them '' that this allegation of intent colored and applied to all the specific charges of the bill, and intended to allege successive elements of a single connected scheme." In the course of the opinion the court further said : **Tlie constituent elements are enough to give to the scheme a body. ♦ ♦ * Moreover, whatever we may think of them separately, when we take them a.s distinct charges, they are sufficient as elements of a scheme. It is suggested that the several acts charged are lawful, and that intent can make no difference. Bitt they are bound together as the parts of a single plan. The plan may make the parts unlawful. The statute gives this proceeding against combinations in restraint of commerce ainong the states and against attempts to monopolize the same. Intent is almost essential to such combination, and is essential to such an attempt. Where acts are not sufficient in themselves to produce a result which the law seeks to prevent, for instance, the monopoly, ♦ ♦ ♦ an intent to bring it to pass is necessary in order to produce a dangerous probability that will happen. But. when that camors-m'connell CO. V. m'connell. Opinion of the Court. 823 intent and the consequent dangerous probability exist, the statute * * ♦ directs itself against the dangerous probability, as well as against the completed result. The charge is not of a single agreement, but a course of conduct intended to be continued. Under the act it is the duty of the court, when applied to, to stop the conduct. ♦ * * The most innocent and constitutionally protected of acts or omissions may be a step in a criminal plot, and, if it is a step in a plot, neither its innocence nor the Constitution is sufficient to prevent the punish- ment of the plot by law." 196 U. S. 375, 25 Sup. Ct. 27G, 49 L. Ed. 518. As I understand these expressions of the court, they amount simply to a declaration that conduct agreed upon to effect an unlawful object may be unlawful, and that the court, when applied to in a direct proceeding therefor, will stop such conduct by injunction, as well as punish, in proper criminal proceedings, the unlawful act when completed, not- withstanding it may have been accomplished by separate acts ever so innocent in themselves. Being steps in a criminal plot or scheme, bound together by a common intent, their innocence [417] is not sufficient to prevent the punishment of the completed act. I do not think the decision in the Swift Case has any application to this proceeding. The defendant further claims that the complainant has entered into a combination with various other importers of fruit for the purpose of acquiring a monopoly in the importa- tion and sale of the same, and that the contract in question was to aid and facilitate that purpose, and he insist? that the court should for that reason refuse to enforce sucli contract, and he invokes the maxim that he who comes into a court of equity nuist do so with clean hands. The combination referred to may be an unlawful one, but the proposition that the defendant, while violating a contract made with the complainant, is entitled to defeat a suit brought to enforce such contract, because the complainant is carrying on its business in an unlawful manner as a monopoly, seems to me to be unwarranted. If the complainant had brought suit against the defendant for a breach of contract, or violation of its alleged rights founded upon the combination, then it niight be pertinent to inquire into the character of the com- bination, and ascertain whether the court would enforce any rights growing out of it. Strait v. Harrow Co. (C. C.) 51 Fed. 819; Edison ElectHc Light Co. v. Sawyer-Man Electric Co., 53 Fed. 598, 3 C. C. A. 605. Wlienever it is 824 140 FEDERAL REPOBTER, 417. Opinion of the Court necessaiy for the plaintiff to prove an unlawful combination or agreement in order to recover, no reeoverj^ or relief can be had. A contract connected with and growing out of an illegal act cannot be enforced. McMullan v. Uoifmati (C. C.) 69 Fed. 615. Such, in my opinion, is not tlie case at bar as now presented. " The rule that one coming into a court of equity must come with clean hands is confined to the conduct of the party in the matter before the court, and not to matters aliunde. Courts will not refuse redress to the suitor because his conduct in other matters, not then before the court, inay not be blameless. It is enoiigli, if the suitor shows he has acted justly, fairly, and legally in the subject- matter of the suit." '' The iniquity must have been done in regard to the defendant himself, and must have been done in regard to the matter in litigation." Bonsack-Mach, Co. v. Smith (C. C.) 70 Fed. 386, and authorities therein cited; Liverpool di L. ds G, Ins, Co, v. Clunie (C. C.) 88 Fed. 160; Knapp V. S. Jarvis Adams Co. (C. C. A.) 135 Fed. 1008. The maxim of ecuiity to which defendant rcfei-s contem- plates some fraud or misconduct on the pan of complainant in regard to the transaction which is the subject of contro- versy. '• It must be evil practice or wroii^r conduct in the par- ticular matter or transaction in respect to which judicial pro- tection or redress is sought." Authorities sttpra; 1 Pom. Eq. Jur. 399. "It is well settled that the granting of a provisional injunction rests in the sound discretion of the trial court, and that it is not necessary that the court should, before granting it, be satisfied from the evidence before it that the plaintiff wiU certainly prevail upon the final hear- ing of the cause. On the contrary, ' a probable right and a probable danger that such right will be defeated, without the special interposition of the court,' is all that need be shown as a [418] basis for such an order." Sanitary Re- dnetion Works v. California Reduction Co. (C. C.) 94 Fed. 693; Georgia v. Brails ford, 2 Dall. 402, 1 L. Ed. 433; 1 High on Inj. p. 4. " If there is one thing more than fcnother which is essential to the trade and commerce of this country, it is the inviolability of contracts deliberately en- tered into, and to allow a person of mature age, and not im- posed upon, to enter into a contract, to obtain the benefit m'cONNELL v. CAMORS-m'cONNELL CO. 825 Opinion of the Coui*t of it, and then to repudiate it and the obligation which he has undertaken, is prima facie, at all events, contrary to the interests of any and every country." " In all such cases " as that now before the court " courts have uniformly en- joined the delinquent party from engaging in the business from which he has agreed to refrain, and from disclosing the secrets of the business which, he has thus acquired." Harrison v. Glucose Sugar Refining Co., 116 Fed. 310, 63 C. C. A. 484, 58 L. R. A. 915, and authorities therem cited. I am of opinion that the complainant is entitled to the injunction restraining H. L. McConnell from a breach of his contract with the complainant as set out in the bill of complaint, and an injunction will be issued in accordance with the prayer of said bill, except as to so much thereof as prays that defendant be enjoined from becoming or re- maining a stockholder of the American Banana Company, as to which an injunction is now denied. Let a decree be entered and a preliminary injunction issue in accordance with the foregoing opinion, on com- plainant's giving a good and sufficient bond in the sum of $1,000, conditioned as required by law and rules of court [9871 McCONNELL tJ. CAMORS-McCONNELL CO. (Circuit Court of Appeals Fifth Circuit October 30, 1905. On Re- hearing, February 6, 1906.) [140 Fed., 987.] Appeal from the Circuit Court of the United States for the Southern District of Alabama. For opinion below, see 140 Fed. 412. [See p. 817.] Gregory L. Smith and Ha'i-ry T. Smith, for appellant. W. B. Spencer and R. H. Clarke, for appellee. Before Pardee and Shelby, Circuit Judges, and Maxey, District Judge. Per Curiam. Without examining this case now as to its merits, the court has concluded that it is not advisable or 826 141 FEDERAL REPORTER, 922. Sta lenient of the Case. ^ proper to interfere with the discretion of the trial court in the granting of the temporary injunction. Adhering to the construction we have heretofore given the act allowing ap- peals in such cases, we affirm the judgment of the Circuit Court. Lehman v. Graham, 135 Fed. 39, 67 C. C. A. 513 ; Eailroad Comm, v. Bosenbaumj 130 Fed. 110, 64 C. C. A. 444; Kerr v. New Orleans, 126 Fed. 920, 61 C. C. A. 450; Massie v. Buck, 128 Fed. 27, 62 C. C. A. 535. ON PETITION FOR REHEARING. The judges who concurred in our former decree are still satisfied therewith, and the i3etition for rehearing is denied. (tBSl AMERICAN BRAKE BEAM CO. v. PUNGS. (Circuit Court of Appeals, Seventli Circuit Jamiary 20, 1905.) [141 Fed. 923.] Contracts — Legality — Restbaint of Trade. — A contract recited that plaintiff, who was the patentee of an invention relating to brakt? beams, for the consideration of |10,000 to be paid him, had assigned to defendant, which was a corporation engaged in the manufacture of brake-beams, a certain patent and a pcndiiijr application for a second and provided that plaintiff during the life of the patent should not become connected with any company manufacturing or selling brake-beams in the United States either as officer, employ^ or shareholder but reserved to him the right to terminate such part of the contract at any time by refunding the consideration paid him by defendant. Held, that such agreement to remain out of the brake-beam business did not render the contract unlawful as one in restraint of trade and competition or creating a monopoly and that plaintiff could maintain an action thereon to recover the stipulated consideration. [Ed. Note. — For cases in ijoint see vol. 11, Cent. Dig. Contracts, |§ 550-553.] In Error to the Circuit Court of the United States for the Northern Division of the District of Illinois. The action in the Circuit Court was on a written agreement between Pungs and the Brake Beam Company, wherein the Brake Beam Com- AMERTCAN BRAKE BEAM CO. V, PUXGS. 827 Statement of the Case. pany, for certain considerations therein named, agreed to pay Pungs the sum of ten thousand dollars, credit being given for two thousand five hundred dollars already paid. The defense was* the general issue, with notice of special defenses. At the trial, on motion of the plaintiff, a verdict for the plaintiff for the sum of nine thousand, one hundred and thirty-five dollars, and forty-one cents was returned; and on this verdict, after motion for new trial was os^erruled, judgment was entered. Upon the refusal of the court to grant a new trial; upon the court's direction to the Jury to return a verdict for the plaintiff ; and uiK)n the exclusion of certain evidence offered on the trial by defendant, tlie principal errors com- plained of are assigned. The evidence showed, that beginning in 1886 as an inventor, and 1887 as a manufacturer, Pungs was in the metallic brake-beam busi- ness until 1892, when with others, he organized the American Brake Beam Company, which took over, along with other companies, his pre- vious company. Of the American Brake Beam Company, Pungs was a stockholder and the manager until 1894, when selling his stock to Henry D. Laughlin, the latter became general manager of the com- pany. Until 1897, however, Pungs remained in the employ of the com- pany, superintending its business at Detroit, Michigan. On this latter date he was discliarged. January 19th, 1899, one of the contracts sued upon was executed in writing jis follows : " An agreement between Wm. A. Pungs of the city of Detroit, in the state of Michigan, and the American Brake Beam Co., a corjioration under the laws of the state of Illinois, whose chief or home oflice is in the city of Waukegan, in said state. [924] Witnesseth: In consideration of the mutual agreements of the parties, as herein expressed, they agree as follows : •'1st : Under the date of .Tune 28th, 1898, letters patent No. 606,298 were issued from tlie patent office of the United States to said Pungs. covering the brake beam therein described. His application for a patent on another brake beam has been allowed by the patent office, as per notice to hiin from Tliomas S. Sprague & Son, dated Nov. 12th, 1898, and hereto attached. This latter patent, Pungs will cause to be issued to himself or the Brake Beam (^o., as his assignee, as may be iigreed. " 2nd : Both these patents said Pungs sells to said Company, and he will assign them in due form, and also will assign to the Company all such letters patent as may be hereafter granted to him on any metallic brake l)eam or any ]mvt relating to a l)rake hemii, and will enter into a written contract witli the Company not to engage in a l)rake beam busi- ness in any way, shape or form, and not to be connected with any company manufacturing or selling brake beams, either as officer employ^ or shareholder (the Chicago Railway Equipment Company alone excepted), all for the price and sum of Ten Thousand Dollars ($10,000.00) to be paid to him by said Brake Beam Company in four 828 141 FEDERAL REPORTER, 924. Statement of the Case. equal installments of $2,500.00 each, the first payable three mouths after the date hereof, the second in six months, the third in nine months, and the fourth in twelve months after said date ; such stay-out contract to cover the period covered by said letters patent No. 606,298, and to be coextensive with the country. But he shall be given the right In said contract to at any time terminate it by refunding to said Brake Beam CJompany, its successors or assigns, said sum of Ten Thousand Dollars ($10,000.00). " 3rd : In the event said Pungs at any thne prior to the expiration of the term covered by said letters patent, that is to say, at any time prior to June 28th, 1915, becomes an officer, agent or shareholder In any company or corporation manufacturing or selling metallic brake beams of any type whatever, or engages in the business himself, that In that case his so doing shall be construed as an election on his part to reftind to said Brake Beam Company the said sum of Ten Thousand Dollars ($10,000.00), forthwith, and he covenants and agrees so to do. "4th: This contract is in no way to affect the representative claims of the parties against each other and shall not be so treated, the deal covered by it being independent and alone. " March 22nd, 1899, a supplemental contract In writing was executed as follows : " An agreement between William A. Pungs of the city of Detroit, the state of Michigan, and the American Brake Beam CJompany, a corpora- tion under the laws of the state of Illinois, whose chief olfice is in the city of Waukegan in said state. Witnesseth : " In consideration of the mutual agreements of the parties as herein expressed, they agree as follows : " 1st : Since the execution of the contract between the parties, dated January 19th, 1899, said Pungs has transferred to said Brake Beam Company letters patent of the United States No. 006,298 referred to in the Ist paragraph of said contract, and has also executed an assign- ment to said Brake Beam Company of his pending application for another patent on brake beams, which is also referred to in said Ist paragraph, and will without delay, cause the letters patent covering his said application to be forthwith issued to said Brake Beam (Com- pany, as assignee of himself, and to be duly delivered to the Company. " 2nd. As contemplated in the said second paragraph of said contract of Jauuai-y 19, said Pungs now enters into this written contract with said Company, and by it covenants and agrees that he will not engage in the brake beam business in any way, shape or form at any placo within the Unitiid States of America, its territories, or the District of Columbia and that he will not be connected with any company manu- facturing or selling brake beams in the United States, either as officer, employe, or shareholder (the Chicago Railway Equipment Company alone excepted), at any time during the period covered by said letters patent No. 606,298. Said Pungs reserves the right, how- ever, to at any time terminate this contract, and thus to relieve him- AMERICAN BRAKE BEAM CO. V. PUNGS. 829 Opinion of the Court. self of his stay-out [925] obligation, by refunding to said Brake Beam Company, its successoi-s or assigns, the sum of Ten Thousand Dollars ($10,000,000), which is the price to be paid him by said company for said letters patent, and his stay-out obligations, as hereinafter more clearly expressed. 3rd : For the letters patent as aforesaid and the stay-out obligation aforesaid, said Brake Beam Company covenants and agrees to pay to said Pungs the sum of Ten Thousand Dollars ($10,000) in four equal installments of twenty-five hundred dollars ($2,500) each, the first installment to be payable on the 19th day of April A. D. 1899 ; the second on the 19th day of July, the "third on the 19th day of October, 1899, and the fourth and last on the 19th day of January, 1900. 4th : In the event said Pungs at any time prior to the expiration of the term covered by said letters patent, that is to say, at any time prior to June 28, 1915, becomes an officer, agent or shareholder m any company or corporation manufacturing or selling metallic brake beams of any type whatever, or engages in the business himself, then and in that case his fo doing shall be construed as an election on his part to refund to said Brake Beam Company said sum of Ten Thousand Dol- lars ($10,000) forthwith, and he covenants and agrees so to do. On these contracts, twenty-five hundred dollars, and no more, have been paid. The suit was for the balance. Further facts are stated in the opinion. Harry P. Weher, for plaintiff in error. B wight C. Rexford^ for defendant in error. Grosscup, Circuit Judge, after stating the facts, delivered the opinion of the court. The contract, upon which suit was brought, obligated the Brake Beam Company to pay an indivisible sum, ten thousand dollars. The consideration was the conveyance to the Brake Beam Company of certain inventions patented and to be patented ; as also an agreement, that during the period to be covered by certain of the letters patent, Pungs would not engage in the brake beam business in any place within the United States, or be connected with any company engaged in such business. The contract does not disclose how much of the consideration was for the patents, or how much for the agreement to remain out of busi- ness. On the face of the contract, either consideration, assuming that they were both lawful, would sustain the con- tract, and entitle Pungs to a recovery. It is not argued that the consideration, so far as it is embodied in the inventions transferred, is not lawful. • Par- 830 111 FEDERAL KEPOKTER, 925. Opinion of the Court ties may lawfully assign inventions not yet patented, and even future inventions, so far as such future inventions are tribu- tary to the inventions assi|j^ied. But it was insisted that the agreement embodied in the contract to remain out of the brake beam business within the United States for the time named, was an attempt to illegally restrain trade, to illegally restrict competition, and to create a monopoly ; and was, therefore, an unlaw fid consideration ; and evidence was offered tending to show that though the assignment of the in\"entions was stated to be a part of the consideration, the sole real consideration, as understood between the parties at the time, was this agreement to remain out of tlie brake beam business. This evidence was excluded. Evidence, also, was offered tending to show that the inven- tioES were without commercial or practical value. But independently of its probative weight on the issue whether the agreement to remain out of business was or was not the cat sole real consideration, such evidence dearly would have been immaterial. [026] The first question thus presented is this: Is the agi-eement to remain out a consideration that invalidates the contract? If the contract is not thus invalidated, the entire case made by plaintiff in error fails. It will \ye noted that Fungs actually transferred the pat- ents, so that the contract in this respect was already executed ; also, that the j>eriod he w^as to remain out of the brake beam business was just the period the transferee wps to have the benefit of the patents transferred; and, further, that Pungs was at liberty, at any time during the period named, to return to the brake beam business upon refunding the ten thousand dollars paid him. 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 consideration received by him for the patents transfen-ed. Pungs, personally, 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 may be considered as an UNITED STATES V. ATCHISON, T. & S. F. BY. CO. 831 Syllabus. incident, only, to the connuercialization of his invention. Even in this he has put no mortgage on his inventive facul- ties. He has merely put himself where, without putting any binding restraint on his inventive faculties, or for that mat- ter, upon his liberty as a manufacturer, he will realize, for the time being, on what he has already invented, the largest commercial return. This is not, in our judgment, restraint of trade. The question whether a given contract is restraint of trade depends as much upon the nature of the business said to be restrained as upon the more conunonly mentioned elements of time and place. Hamson v. Glucose Re-fining Company, 116 Fed. 304, 53 C. C. A. 484, 58 L. E. A. 915. The nature of the contract under consideration comes plamly within the principles of that case, and of Morse, etc., Company v. Morse, 103 Mass. 73, 4 Am. Rep. 513, and other cases. In the view thus taken of this question, the other questions raised and discussed become immaterial. The judgment of the Circuit Court is affirmed. 1176] UNITP:D states V, ATCHISOX, T. & S F EY. CO. (Circuit Court, W. D. Missouri, W. D. December 4, 190.5.) [142 Fed., 176.] Injunction— Violation— Contempt— Information.— An information for contempt at the relation of the United States against a railroad company for violation of a temporary injunction restraining it from granting rebates is criminal in character. In such proceeding the defendant is entitled to every reasonable doubt as to the obligatory force of the mandate, and whether Its disobedience was willful. [Ed. Note.— For cases in point, see vol. 27, Cent. Dig. Injunction § 514.] Same.— If the court issuing the injunction alleged to have been vio- lated had no jurisdiction of the subject-matter of relief prayed for in the bill, the restraining order was void, and no contempt could be predicated of its disregard. [Ed Note.-I'or cases in point, see vol. 27, Cent. Dig. Injunction, § 439.] Oabbiebs—Jubisdiction— Enjoining Gbant op Rebates.— Prior to the enactment by Congress of the Elkins act (Act Feb. 19, 1903, c. 708, 832 142 FEDERAL REPORTER, 176. Syllabus. 82 Stat 847 [U. S. Camp. St Supp. 1905, p. 509]), a United States Circuit Court had no jurisdiction in equity over a suit instituted by direction of the Attorney General of the United States to enjoin a railroad company from granting rebates under the interstate com- merce law, especially where no order had hitherto been made by the interstate commerce commission on the railroad company to discon- tinue the forbidden act. Sams. — ^The interstate commerce act and the act known as the " Sher- man Anti-Trust Law " are separate and independent acts, not ger- mane in character and purpose; and therefore jurisdiction in the Circuit Court of the [177] United States over a bill in equity to enjoin a railroad company from granting rebates to favored shippers cannot be maintained upon the ground that such act of the railroad company is a monoijoly within the meaning of the second section of said anti-trust act (Act July 2, 1890, c. 647, 26 Stat 209 [U. S. Comp. St 1901, p. 3200]). Statutes — Constbuctive Pbospective Operation. — Statutes are pre- sumed to be prospective in operation, and the courts refuse to give a retroactive effect to statutes, unless the intention is so clear and positive as by no reasonable possibility to admit of other construc- tion. |Bd. Note. — For cases in point, see vol. 44, Cent Dig. Statutes, § 344.] Same. — ^The doctrine of relation, like every other fiction of the law, has Its limitations. It can never be applied where its root was not planted in an antecedent lawful right. Injunction — Enjoining Grant of Rebates — Violation — Void Ob- BEB — Contempt. — A suit in equity instituted by the Attorney General of the United States to enjoin a railroad company from granting rebates, and a restraining order made thereon in March, 1902, were not validated by the enactment of the Elkins acft in February, 1903 (Act Feb. 19, 1903, c. 708, 32 Stat 847 [U. S. CJomp. St Supp. 1905. p. 599]). Held, further, that If the suit could have been continued under the Elkins act, where the antecedent offense of the railroad company was being continued after February 19, 1903, an action by the United States attorn^ In the summary method authorized by the latter act would have presented an issue of fact entitling the de- fendant to a hearing thereon; and any injunction granted would be as to violations of law then being committed, but would not have the effect to vitalize an antecedent Injunctive order granted by the court when it had no jurisdiction to make It Held, further, that where no such action was taken by the United States attorney after the passage of the Elkins act, an Information for contempt filed by him, based on a violation of such void order, has not the effect to bring It within the operation of the Elkins act. Same — CtoNSTBUcnoN or Order— (>)NTEMFr. — ^Where the bill for an injunction against a railroad company, at the relation of the United States attorney, for granting rebates, In Its specifications describes UNITED STATES V, ATCHISON, T. & S. F. RY. CO. 833 Motion to quash information, only grain and packing-house products of meat on which rebates were being granted, followed by a general allegation that the de- fendant was likewise granting rebates on other necessities of life, the subjects of interstate traffic, etc., and the injunctive order spe^ cifically enjoined the granting of rebates on the specified articles of traffic " or any other interstate traffic," held, that the latter general term, on the rule of " ejusdem generis " and " noscitur a sociis." is controlled by the antecedent particularization, and is limited to objects of like kind with those specified ; and therefore an informa- tion for contempt, predicated of alleged rebates granted by the de- fendant a year or so afterwards in another jurisdiction on the com- modities of salt and coal, could not be sustained under such limited restraining order. Carriers— Rebates— Traffic Rates— Division.— Where a short Ime railroad, chartered by the state, authorized to haul freights for hire, is owned by stockholders common to said short road and the shipper, and a long distance railroad connecting therewith enters into a joint traffic arrangement with it for the transportation of interstate traffic, and the two roads file and publish such joint rates, as required by the interstate commerce law, and live up to the same— Quaere : Can an information by the United States attor- ney against the interstate carrier [178] for granting rebates to such shipper be sustained on evidence tendhig to show that the division of the through rate is grossly disproportioned to the haul over such short line? (Syllabus by the Court) Motion to Quash Information. This is a proceeding for contempt, growing out of a temporarv restraining order made by this court on March 25, 1902 The restrain- ing order was predicated upon a bill of complaint in equitv filed fSl Aff^'^'^^'^r.^^*'^*^! attorney for this district, under direction of the Attorney General of the United States, against the detUdant railroad company The bill recited that the Action was taken on Iti- ^T^'^K ""^^ ^^'f Interstate Commerce Commission. It charged that the defendant railroad company, a corporation of the state of Kansas, was engaged in the transpartation of interstate commerce • that m conformity to the requirements of the interstate Tmne^e act of congress it had filed with the Interstate CommercrCommils on at \\ashmgton City a copy of schedule of rates and charges estat^ lished and published by it for the transportation of fre^ht traffic among other things on cured meats, known as " packingXuse nmd' nets," and also on dressed meats, for transporting thf ^me from Kansas City, Mo and Kansas City, Kan., across the states of MiS souri, Iowa and Illinois, to the city of Chicago, 111., and other Dointe fnlT.'i.tM?^"^^^ 'r°^^^ P"^^*«"' ^'^^t the'se we?e the only Tw- ful rates for transporting such commodities between said pomts Drior to January 1902, to the time of the institution of the suU Tl^at notiNithstanding its duty to ship at no greater or le^rl^e in that regard the defendant, combining and confederating wUh certam per- sons, to the orator unknown, to create a monopoly in the trans^or- 21220— VOL 2—07 m ^53 -834 142 FEDEKAL Bi; PORTER, 178. Motion to quash informatioiu t.itidii of said ('(inimodities cii clefeiKlant's line of railway between the p lints aforesaid, early in the year 1001. entered into an agree- ment or agreenv'iits with the i)ers'ins nnknawu to transport snch eonnnodities between snch paints at rates nuieli less than the pub- lished, established rates mi said commodities. It is then charged that in pursuance nf said combination the defendant transported such pack ing-h oust* prixlu ts from Kansas City. Mo., to Chicago and Chi- cago common ponits. billing the same at the established rate therefor, but in pursuaii V of said imlawful agrei*ment rebating to such un- known pers ns the difference between the rate agreed upon and the established rate, aiitl transported such traffic at less than schetiule rates. In iwirnicrniihs 5 and th3 bill charges that prior to the 1st day of Jaiuiarv. 1901, the defendant filed with the Interstate Com- merce Connuissiun its schedule of rates established jointly with connecting railways, for the transportation of grain from Mississippi river points tt) New York and New York common points, and from Kansas City. Mo., to the Mississippi river points aforesaid, and to Chicago and Chiiai: » common punts. The:5v» paragraphs refer extHu- sively to grain and its transportation between the points specified. The seventh i)aragraph then charges that the defendant granteetween the 1st day of August, 1902, and the 1st day of January, 1904, the defendant, from time to time, carried and transiKjrted for said salt company as aforesaid, for use in the manufacture of packing-house products at the points aforesaid, and as such business was performed made settlements witli the Hutchinson-Kansas Salt Company, in which the defendant paid to the salt company 25 per cent, of said joint tariff rate on all salt so trans- IJorted, to the extent of many thousands of dollars; all of which, the Information charges, appears from evidence taken before the Intei-state Commerce Commission at hearings in Hutchinson. Kan., and Chicago, 111., on the 5th and 22d days of December, 190.3, whicli evidence is filed as an exhibit witli the information. The information further charges that between tlie 1st day of August, 1902, and the 1st day of January, 1904, there were, in the city of Hutchinson and its immediate ▼ieinity, other persons, whose names are unknown, engaged in the business of manufacturing salt, .and selling and siiipping the same to Missouri river points over the line of the defendant; that such MTSons were compelled and required by the defendant to pay the full freight rates and charges named in the published and established schedules, whereby the defendant unlawfully discriminated against such other persons in favor of the Hutchinson-Kansas Salt Company. On September 16, 1905, the defendant filed motion to quash th« information upon tlie ground that the bill of complaint, on which the restraining order was Issued, which complained only of alleged violations of the interstate commerce law, in respect of the transporta- tion of certain commodities prior to the filing of the bill, was not UNITED STATES V. ATCHISON, T. & S. F. RY. CO. 837 Opinion of the Court. predicated upon any lawful order or requirement of the interstntP commerce commission ; that at the time of filing the <^m- [181 j plaint inH Jw- '''"^''^ ?f *?^ restraining order this ^^T was li'^^lont Sn nl'^'order^'il^^^^^^ '^ '°!f'^^" ^^^^ ^^"' ^^ '^ ^^^^ «^~ straining order; that no amendment to said bill was filed bv th^ rt^he^provisTuf ^^^ ^''T^Tl ^''"^^^"^ ^^^ «bowrng\nfviofatIon resect t^InT «n.L H ^^^^^^^^^ commerce law by defendant in l^t^ } ^"^ a^eged departures from its published tariff rates in favor of any shippers after the passage of an amendment to said interstate commerce law known as the " Elkins aS " a^DroV^ le^ sSr '^n ^^^^?V\ ''"% '' ''^' ^2 «*^' S^^Su'Tcomp'^lt fcupp. 1905, p. o99]), which said act for the first time crave this court junsdiction to entertain bills of complaint on SSialf of thl ITlfJli'^' ^^^'""'^ '^"^^y companies to restrain tSem from givlSg «^!!r*if ' ^J^t^^i' tliat the court was without jurisdiction after the passage of the said Elkins act to issue any injuncdon cover" ing the acts complained of in the information filll iS for The reason that under said act and section 16 of the interstate ^mmercl ^ir^ wh!t /' i^J' ^•,'^' ^ «^«t- ^ tU. S. Comp St mrp ol65]) the defendant could be proceeded against in equity onlv in the Jur sdiction where it had its principal oflici, or in which the act com h n fitn'^'h'""" ^«^°^^tt«d' a°d there is no ' allegation 'n the orig^^l bill filed herein, or in the information, that the defendant had its principal office within this judicial district, or that the act comP^^^^^^^ of was committed either in whole or in part within said distrTct bi^ ™ora«of ^f iht ^l"/'^^. V^^formation allege that the defendants a corpoiation of the state of Kansas, and the information avers that the act complained of was committed wholly within said stlte ^d hence not within this judicial district And^further, that !n th^ Wll of complaint the only specific charge made against the defendant f«r cH?^''"^ ^"^ departure from its published ratel in favor of plS- lar shippers, was in respect to rates concerning the transnortation of grain and packing-house products over its lines ; and noTharg^^^ made concerning the transportation of salt, or a deparSire from thl pub ished rates thereon; that said bill was Whol^SSt to war rant the issuing of a restraining order in respect of rates ^ncernfng the transportation of salt ; and that the restraining order kT res^ of any other commodities than grain or packing-house products^ unwarranted. And further, that it does not appear from the infol- mation that m the transportation of salt from HutchinZ, kL the defendant violated the terms of said restraining order! but on the fS^^'^F '^ ^Prr-^ V"^^ *^^ *^^ffl^ mentioned was transported und^ l^^ ""^KT^'^^^'V^^ published tariffs or on joint published t^nfff «n7alo5 ^^-ll^K^^T^^.^* ^^" ^ P^^' ^^d ^hich were duly published and filed with the Interstate Commerce Commission and that th^ in formation is otherwise insufficient and uncertain Gardiner Lathrop, for the motion. M. Z>. Purdy, Assistant Attorney General, and^. aS Van Valkenhurgh, United States District Attorney, opposed. Philips, District Judge (after stating the facts). The United States having no pecuniary interest in the subject-matter of the original biU of complaint, acting only pro bono publico, the alleged contempt belongs essentially ooo 142 FEBERAL REPORTER, 181. Opioion of the Court. to what is termed "criminal contempts," to vindicate the dignity of the court. In re Nevitt, 117 Fed. 448, 458, 54 CCA. 622, 632; Bessette v. Vonkey Company^ 194 U. S. 324, 24 Sup. Ct. 665, 48 L. Ed. 997. As such the proceed- ing is to be strictly construed in favor of the personal liberty of the defendant. As it is to vindicate the dignity of the court in compelling respect for its mandate, a judge may best demonstrate his title to respect by according to the accused the benefit of any reasonable doubt in his own mind as to the obligatory force of his command, and whether or not its disobedience was willful. In re Watts et al.^ 190 U. S. 32, 23 Sup. [182] Ct. 718, 47 L. Ed. 933. If the court issuing the temporary restraining order had no juris- diction to make it under the bill of complaint, because it was without tlie power to proceed to final adjudication of the matters embraced in the bill, the order was one which the defendant was under no legal obligation to observe, and could not, therefore, be adjudged in contempt for disre- garding it. In Re Sawyer et ah, 124 U. S. 200, 8 Sup. Ct. 482, 31 L. Ed. 402, one Parsons, who claimed to have been elected police judge of Lincoln, Keb., filed a bill in equity in the United States Circuit Court, praying for an injunction to restrain the mayor and councilmen of the city from proceeding fur- ther with certain charges against him, or taking any vote on the report of the committee declaring the office of police judge vacrnt, or apixiinting any person to fill that office. A temporary restraining order was issued accordingly which the mayor and council failed to obev. Thev were cited for contempt, found guilty and adjudged to pay a fine, and in default to stand committed to the custody of the marshal. On writ of habeas corpus the jurisdiction of the Circuit Court over the subject-matter was challenged, and conse- quently its right to issue the injunction. The Supreme Court held that the Circuit Court iras without jurisdiction - to entertain the bill in equity for an injunction. Mr. Justice Gray quoted from Elliott v. Peirsoh 1 Pet. 328, 340, 7 L. Ed. 164, the following : " Where a eoort has jurisdiction, it has a right to decide every ques- tion which occui*s in the cause; and whether Its decision be correct UNITED STATES V. ATCHISON, T. & S. F. RY. CO. 839 Opinion of the Court. or otherwise its judgment, until reversed, is regarded as binding in every other court. But, if it act without authority, its judgment and orders are regarded as nullities. They are not voidable, but simply void." Further on he said : "The Circuit Court being without jurisdiction to entertain the bill m equity for an injunction, all its proceedings in the exercise of the jurisdiction which it assumed are null and void. The restraining order, in the nature of an injunction, it had no pawer to make. The adjudication that the defendants were guilty of a contempt in dis- regarding that order is equally void ; their detention by the marshal under that adjudication is without authority of law, and thev avo entitled to be discharged." To the same effect are the following authorities: Ex parte Rowland, 104 U. S. 604, 26 L. Ed. 861; In re Ayers, 123 U. S. 443, 8 Sup: Ct. 164, 31 L. Ed. 216 ; Worden v. Searls, 121 U. 8. 26, 7 Sup. Ct. 814, 30 L. Ed. 853 ; Ea; parte Terry, 128 U. S. 289, 9 Slip. Ct. 77, 32 L. Ed. 405 ; Ex parte Fisk, 113 U. S. 713, 5 Sup. Ct. 724, 28 L. Ed. 1117; Ex parte Bus- kirk, 72 Fed. 14, 18 C. C. A. 410, 25 U. S. App. 613. So in St. Louis, etc., Railroad Company v. Wear, 135 Mo. 230, 265, 36 S. W. 357, 366, 33 L. R. A. 341, the court said : "It is always permissible to show, upan process for contempt, that the order disobeyed was beyond the jurisdiction of the authority from which it emanated. If that showing is successfuly made no punishable contempt has been committed." Growing out of this established rule is the further prin- ciple : The order alleged to have been violated must not only come clearly within the competency of the court to make, but the thing or act enjoined [183] must be clearly and definitely defined, so as to leave the party enjoined in no reasonable doubt or uncertainty as to Avhat specific thing or act is prohibited. Eapal je on Contempt, p. 20 ; Weeks v. Smith, 3 Abb. Prac. 211-214; In re Vary, (D. C.) 10 Fed. 622, note. Did the court have jurisdiction to maintain and enforce in equity the relief prayed for in the bill of com- plaint? It was filed at the instance of the Attorney General" of the United States on behalf of the United States, to en- join the defendant railroad company from violating the in- terstate commerce law inhibiting the granting of rebates by the defendant carrier to favored shippers engaged in the shipping of grain and packing-house products from Mis- souri river points to Chicago, 111., and common points of dis- tribution there. '^ 'OSv 142 FEDERAL REPORTER, 183. Opinion of the Court It is true that allegations of a general character were in- serted in the bill, with the evident purpose of giving a semblance of jurisdiction to the United States Circuit Court in equity as conferred by what is known as the " Sherman Anti-Trust Law." Act July 2, 1890, c. 647, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200]. There is a general charge in the bill that the defendant combined and confederated with certain persons, unknown, to create a monopoly in the transportation of said commodities on defendant's line of railway between the points aforesaid, "to transport such commodities between said points at rates much less than the published, established rates on such commodities at that time filed with said commission and in lawful force on de- fendant's line." This charge is confined to packing-house products and dressed meats ; and the transportation involved was only between the specified points, and the monopoly was to be accomplished by giving to certain persons rates less than the schedule rates. It is not charged that such persons were favored over other shippers, or that these rates were not given to all shippers. This is immediately followed by the allegation that in pursuance of said combi- nation the defendant transported " such packing-house prod- ucts" from Omaha and Missouri river common points to Chicago and Chicago common points, billing the same at the established rates, but secretly transported such traffic at less than scheduled rates. Section 2 of said anti-trust 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 *^^l^*^i*?? thereof, shall be punished by fine not exceeding five thou- sand dollars, or by imprisonment not exceeding one year, or by both said punishments in the discretion of the court" • In The United States v. Joint Tmifle Association^ 171 U. S. 505, 568, 19 Sup. Ct. 25, 31, 43 L. Ed. 259, the court said: "In HopkUs V. VnUed States (decided at this term) 171 U S 578, 19 Sup. Ct. 40, 43 L. Ed. 290, we say that the statute applies only to those contracts whose direct and immediate effect is a re- straint upon Interstate commerce and, that to treat the act as con- demning all agreements under which, as a result, the cost of con- UNITED STATES V. ATCHISON, T. & S. F. RY. CO. 841 Opinion of the Court. ducting an interstate commercial business may be increased, would enlarge the application of the act far beyond the fair meaning of the language used. The efiect upon interstate commerce must not be mdirect or mcidental only. An agreement entered into for the our- pose of promoting the legitimate business of an individual or cor- poration, [184] with no purpose to thereby affect or restrain inter- state commerce, and which does not directly restrain such commerce, iLi^v '.f we thmk, covered by the act, although the agreement mav indirectly and remotely affect that commerce. We also repeat what IS said m the case above cited, that 'the act of Congress must have a reasonable construction, or else there would scarcely be an agree- ment or contract among business men that could not be said to have indirectly or remotely, some bearing upon interstate commerce, and possibly to restrain it' " . « « Wliile the bill under review does not allege an unlawful restraint, but a monopoly, the language and thought of the Supreme Court used in respect of the construction of the act as it touches contracts in restraint of trade, apply with equal force to an alleged monopoly. The statute, by no expression or implication, interdicts the increase of a rail- road's busmess by any competition, however energetic, eager or grasping. The essence of the charge in the bill of com- plaint is that the defendant, by carrying in fact at a rate below that established and published, tried to get all the transportation it could of the designated products. In the Trans-Missouri Joint Traffic Association Cases the reason- ing of the court was that the agreement there involved directly tended to obstruct free competition. By the por- tion of the bill here touching the Sherman act, it seeks to enjoin the defendant from doing the very act which, in the Trans-Missouri Joint Traffic Case, the court held to be un- lawful in repressing. The truth is that, as the Department of Justice at Washington was somewhat in nubibus in its experiment with the resort to equity in order to escape the embarrassmg question of the jurisdiction of the court, gen- eral allegations of a monopoly under the anti-trust act were thrown out as a possible life-preserver. If, as contended by the United States attorney in his oral argument and brief, the bill of complaint is to be sustained on the ground of an allegation respecting monopoly under the Sherman act, how is this contempt proceeding to be sus- tamed on that basis? The Sherman anti-trust act is an mdependent statute. It cannot be eked out or. assisted by the interstate commerce act to create an offense under it. 142 FEDERAL REPORTER, 184. Opinion of the Court As the monopoly charged was a " combining and confeder- ating with certain persons who are to the orator unknown, to create a monopoly in the transportation of said commodi- ties (packing- house products) on defendant's line," how is the information for contempt to be sustained on the ground that, between the 1st day of August, 1903, and the 1st day of January, 1904, the defendant violated the injunction by a device whereby it gi^anted rebates to a favored shipper of salt at Hutchinson, Kan J The only charge of a monoj)oly predicated in the bill of complaint was in respect of pack- ing-house products from Missouri river points east. The prayer of the bill in that part known as " the omnibus prayer for relief " is that the defendant, its officers, etc., be restrained " from paying any rebate or making any conces- sion whatever, either by direct or indirect ii;ieans, whereby any traffic transported by said defendant over its railroad^ or in respect to any traffic in the transportation of which said defendant may participate shall be carried by it at any rate different from the lawfully published rate then estab- lished, etc." And so was the restraining order limited. The [185] information does not contain any allegation that the- act in transporting salt constituted a monopoly. And yet, it is seriously contended that the jurisdiction of the court can be maintained on the ground of a monopoly interdicted by the anti-trust act, and of consequence the defendant can be charged with contempt on the ground of monopoly for hav- ing granted a rebate. The position is obviously untenable. The bill of complaint must stand alone upon the interstate commerce act. The bill, as framed, and the argument made in support thereof at the hearing on the demurrer, were all based upon the broad proposition that, at common law, at the instance of the Attorney General of the United States, the United States had the right, in execution of the declared public policy of the general government in respect of the regulation of interstate commerce, to appeal to the equity side of its own courts for an injunction; that as by its legis- lation it was declared to be unlawful for anv railroad, en- gaged in the carriage of interstate commerce, to make dis- criminations by the method of granting rebates to favored Ul^ITED STATES V. ATCHISOK, T. & S. F. RY. CO. 843 Opinion of the Court shippers, it could invoke the jurisdiction of this court to enjoin the offending railroad from doing such forbidden act. But after argument and submission of the demurrer to the bill the Supreme Court in Missouri Pacific Railway Com- pany V. United States, 189 U. S. 274, 23 Sup. Ct. 507, 47 L. Ed. 811, held, as expressed in the syllabus, that prior to the passage of the act of Congress " to further regulate com- merce with foreign nations and among the states," approved February 19, 1903 (Act Feb. 19, 1903, c. 708, 32 Stat. 847 [U. S. Comp. St. Supp. 1905, p. 599] ) , a District Attorney of the United States under the direction of the Attorney General of the United States in pursuance of a request by the Interstate Commerce Commission was without power to commence a proceeding in equity against a railroad corpora- tion to restrain it from discriminating in its rates between different localities. And, therefore, there was error com- mitted below in refusing to sustain a demurrer of the de- fendant railroad company to a bill filed by a District At- torney of the United States under the circumstances stated. The third section of the act of February 19, 1903 {Z2 Stat. 848, c. 708 [U. S. Comp. St. Supp. 1905, p. 600] ) , known as the " Elkins Act," is as follows : "Tliat whenever the Interstate Commerce Commission shall have reas'onable gronnd for belief that any connnon carrier is engased in the carnage of passengers or freight traffic between given iwints at less than the published rates on file, or is committing anv discrimina- tion forbidden by law, a petition may be presented alleging such facts to the Circuit Court of the United States sitting in enuitv having jnrisdH tion : and when the act coin]>lained of is alleged to have been committed or is being committed in part in more than one judicial district or state, it may be dealt with, inquired of, tried, and de- termined in either such judicial district or state, whereupon it shall be the duty of the court summarily to inquire into the circumstances upan such notice and in such manner as the court shall direct and without the formal pleadings and proceedings applicable to ordinarv suits in ejuity * * * and upon being satisfied of the truth of the allegations nf said petition said court shall enforce an observance «Li. r^" '^^I*. ^•'"l"'^^ ^'' '^'"'^''^ ""''^ ^^^"'i-e ^ discontinuance of Buch discrimination by proper orders. * * * it shall be the dutv of the several district attorneys of the United States, whenever the Attorney General [186] shall direct, either of his own moJion or upon the re.iuest of the Interstate Commerce Commission, to insti- f!Ii^f'l^^'■T''V*^,/"'l^' proceedings, and the proceedings provided for by this act shall not preclude the bringing of suit for recovery of damages by any party injured, or any other action provided by said act approved February fourth, eighteen hundred and eightv-seven. en- titled An act to regulate commerce and the acts amendatory thereof " 1 142 FEDEKAL BEPOKTER, 180. Opinion of the Court Mr. Justice White, in the opinion in Missouri Pacific Rait- way Company v. United States, supra, said : "Altbough by tbe fonrtb sectioo of the act (Act Feb. 19, 1903, c. 708, 32 Stat. 849 [U. S, Comp. St. Supp. 1905, p. 601]), conflicting laws are repealed, It is provided * but such repeal shall not affect causes now pending, nor rights which have already accrued, but such causes shall be prosecuted to a conclusion, and such rights enforced in a manner heretofore pmvided by law, and as modified by the pro- visions of this act* We think the purpose of the latter provision was to cause the new remedies which the statute created to be applicable as far as possible to pending and undetermined proceedings brought, prior to the passage of tiie act, to enforce the provisions of the act to regulate commerce. In the nature of things it cannot be ascer- tained, from the recoi-d whether the railroad company now exacts the rates complained of as being discriminatory and which it was the purpose of the suit to correct ; but if it does, of course the power to question the legality of such rates by a suit in equitv, brought like the one now here, clearly exists. Under these circumstances we think the ends of justice will best be served by reversing the decree below and remanding the cause to the Circuit Court for such further pro- ceedings as may be consistent with the act to regulate connnerce as originally enacted and as subsequently amended, especially with ref- erence to the powers conferred and duties imposed bv the act of Con- gress approved February 19, 1903, heretofore referred to." While it must be confessed that the paragraph above quoted is not very perspicuous, there is in my mind no doubt that it was the thought and purpose of the court that when the cause went back to the Circuit Court, if the defendant railroad company was then continuing to " exact the rates complained of " in the original bill, instead of putting the Government entirely out of court by dismissing the bill, it might amend informally— perhaps by motion— pursuant to said section of the Elkins act, by showing that the railroad company was continuing in the given particular, the viola- tion of the interstate commerce act, to avoid the reinstitu- tion of like complaint. In the very nature of the law, the injunction to be granted would apply to and operate alone upon acts then being done by the railroad company. It is inconceivable that the court could have intended to say that under the Elkins act an injunction could be had for a past violation of the interstate commerce law, not being repeated at the time of granting the injunction under the Elkins act. Otherwise it would be violative of rules of law deeply rooted in the jurisprudence of the country. An injunction never goes to restrain a past act, already accomplished. It acts alone upon a wrong in fieri. Again, aU legislative enact- UNITED STATES V. ATCHISON, T. & S. F. RY. CO. 845 Opinion of the Court ments are presumed to be prospective in their operation, un- less the contrary is expressly declared. " Courts refuse to give statutes retroactive construction unless the intention is so clear and positive as by no possibility to admit of any other construction." Sedgwick's Construction of Statutes, etc., 166. Mr. Justice Cooley, in his work on Constitutional Limita- tions (page [187] 76), says in respect of the rule that legis- lative acts are presumed to be prospective in their operation, that: "It is one of such obviaus convenience and justice that it must always be adhered to in the construction of statutes, unless in cases where there is something on the face of the enactment putting it beyond doubt that the Legislature meant it to operate retrospectivelv * * Retrospective legislation is ♦ * * commonlv objection- able m prniciple and apt to result in injustice; and it is a sr.und rule of construction which refuses lightly to imply an intent to enact it" In Fi7iney v. Acketman, 21 Wis. 271, the court, speak- ing of the language used in the law of 1865, which in its broad sense might perhaps be held to apply to tax deeds previously executed, said: " This language must, however, be construed as applving to deeds fh^rif . 'l"^"* *^^ P.^f ^P ^^ *^^ ^^^'- 1'^^ the rule is wSll settled, that statutes are not to be construed as having a retrospective effect unless the mtention of the Legislature is clearly expressed that thev shall so operate. Scamans v. Carter, 15 Wis. 548, 82 Am. Dec. 696. that mtentit.n is not to be assumed from the mere fact that general language IS used which might include past transactions as well as future Statutes are frequently drawn in such a manner. Yet such general language is held to have been used in view of the established aMmlt'toTmst'^'' ^'"^ construed as relating to future transactions, See full discussion of this question in State v. Grant, 79 Mo. 113, 49 Am. Rep. 218; Leete v. State Bank of St. Louis. 115 Mo. 184, 21 S. W. 788. The doctrine of relation, like every other fiction of the law, has its limitations. It can never be made to bear fruit where its root was not planted in some antecedent, lawful right. This principle is aptly illustrated by the opinion of Judge Adams in Powers v. Hurmert, 51 Mo. 136-138 : afil!?!?^^*''!'^!,'^ sometimes allowed to prevent injustice, as when an attachment has been issued and levied without sufficient affidavit and an amended affidavit is afterwards made it will relate back so as to uphold the attachment and uphold the previous levv^ But in that case, the right to the attachment and its levy existed at the tine and only lacked the formality of a sufficient affidavit" 846 142 FEDERAI. REPORTER, 187. Opiiiioii of tlie Court. When the original bill was filed and the I'estraining older was made, there was no pre-existing equity in favor of the United States, sua sponte, at the request of the Interstate Commerce Commission, to institute such a proceeding for an injunction. The right to maintain it at the relation of the Government at common law did not exist. It did not attach under the interstate commerce statute for the all- sufficient reason that under Act Feb. 4, 1887, c. 104, § 16, 24 Stat. 384, as amended by Act March 2, 1889, c. 382, § 5, 25 Stat. 859 [U. S. Comp. St. 1901, p. 3165], it is provided : "That whenever any common carrier ♦ ♦ * shall violate, or refuse or neglect to obey or perform any luwiul order or retiuirement of the ccjmmission * • ♦ ft shall be lawful for the commission or for any company or person interested in such order or require- ment to apply in a summary way, by petition, to the Circuit Court of the United States sitting in equity in the judicial district in which the common carrier coniplainetl of has its principal office, or in which the violation or disobedience of such order or reiiuirement shall hap- pen, alleging such violation or disobedience, as the case may be; and [188] the said court shall have power to hear and determine the mat- ter ♦ * * and if it be made to appear to such court, t)n such hearing ♦ * * that the lawful order or reiiuirement of said com- missitju drawn in question hae been violated or disobeyed, it shall be lawful f«»r such court to issue a writ of injunction, etc.. « ♦ ♦ atid in case of any disobedience of any such writ of injunction * * * it shall be lawful for such court .to issue writs of attach- ment, or any other process of said court incident or applicable to writs of injunction or other proper process, mandatory or otherwise, against such common carrier, etc." Neither the bill of complaint nor the information herein alleges that any such order had ever been issued bv the com- mission, and it is not claimed on behalf of the government that the commission ever proceeded beyond a preliminary inquiry. The jurisdiction of the United States Circuit Court to gi-ant such injunction was conditioned upon the ante- cedent order of the commission, and failure of the defendant to comply therewith. Interstate Commerce Commission v. Western, N. F. cj& P. E, R. Co, (C. C.) 82 Fed. 192, 196; Farmers'' Loan d? Trust Company v. Northern Pacific Rail- way Company (C. C.) 83 Fed. 249, 267; Sheldon et al. v. Wahash Railway Company et al. (C. C.) 105 Fed. 785; In- terstate Commerce Commission v. Lake Shore db M. S, Rail- way et al, (C. C.) 134 Fed. 942, 946; Interstate Commerce Commission v. Louisville <& N, R. R, Co. (C. C.) 73 Fed. 409; Ce^itral Stock Yards Company v. Louisville di N, R, UNITED STATES V. ATCHISON, T. & S. F. RY. CO. 847 Opinion of the Court. Co. (C. C.) 112 Fed. 823, 827, 828. The Supreme court has recognized the correctness of this construction of the law, in East Tennessee, V. <& G. Railway Company v. Inter- state Commerce Commission, 181 U. S. 1, 27, 21 Sup. Ct. 516, 525, 45 L. Ed. 719, the court said : " Whilst the court has, in the discharge of its duties, been at times constrained to correct erroneous constructions which have been put by the commission upon the statute, it has steadily r.^fused, because of the fact just stated, tt) assume to exert its orij^inal judgment on the facts, where under the statute, it was entitled, iiefore api)roaching the facts, to the aid which must necessarily ba afforded by the pre- vi(ms enlightened judgment of the conunission upon such subjects." So, in Interstate Commerce Commission v. Clyde Steam- ship Company, 181 U. S. 29-33, 21 Sup. Ct. 512, 45 L. Ed. 729, the court again declined to go into an original investiga- tion, saying that that duty was laid upon the commission by the interstate commerce act in the first instance. This being conceded as correct law, as it must be, there was no jurisdiction in this court to make the injunction order in question. It challenges all our conception of law and precedent that that which was dead at common law can be regalvanized and made alive by a post facto .statute law. It would contradict the positive conclusion reached after most thorough investigation and discussion by Mr. Justice TMiite in the case of Union Pacific Rdilway Company v. ^Yyler, 158 U. S. 285, 15 Sup. Ct. 877, 39 L. Ed, 983, to attribute to his ruling in Missouri Pacific Railway Company v. United States, supra, the purpose to liold that the original bill in this case, predicated alone of a common-law right to relief in equity, could be so amended as to rest for its support upon the statute law enacted nearly a year after the restraining order was made under the common-law suit, so as to give life to such [189 J antecedent order, and subject the defendant to prosecution for contempt for violating an order that was coram non judice when made. It was expressly held in Union Pacific Railway Company v. ^Yyler, supra, that a cause of action based on a common-law right could not be amended so as to predicate a further proceeding thereunder based on a statutory right, for the reason that it was not a continuation of the original cause of action, but a sub- stituted cause. 848 142 FEDEKAl. BEPORTER, 189. Opinion of the Court. The repealing section of the Elkins act, saving the rights of causes then pending and rights which had already accrued, only declared that: " Such causes shall be prosecuted to a conclusion and such rights enforced in a manner heretofore provided by law and as modified by the provisions of this act." As there was no manner provided by law, prior to the Elkins act, enabling the United States to maintain such a bill in equity as the one under consideration, it had no rights in the proceeding to be saved. The words " as modified by the provisions of this act," being subjective rather than active in terminology, by no permissible liberality of construction can operate to make the Elkins act relate backward, so as to vitalize an order which was a dead letter when made. As already suggested the only comprehensible thought in the mind of the court in the Missouri Pacific Railway Case, supra, in reversing the decree of the Circuit Court, and send- ing the case back, was to allow the United States attorney to proceed therein in the summary, informal manner provided by section 3 of the Elkins act, by showing that the railroad company was then continuing to do the act complained of in violation of the interstate commerce law. If, after the pas- sage of the Elkins act, the United States attorney might have appeared in this case, by motion, or otherwise, alleging that the defendant was continuing its alleged violation of the in- terstate commerce law, it must be conceded that he would thereby have presented an issuable fact on which the defend- ant would be entitled to have a hearing; for, if the essential fact did not exist, there could be no predicate for continuing the proceeding under the Elkins act. No such movement has ever been made by the United States attorney. This con- tempt proceeding, therefore, rests for its sole support upon an injunctive order the court had no jurisdiction to make when issued. The only answer made to this in argument is that, after the passage of the Elkins act, the court by order continued in force the restraining order of March 25, 1902. The eflect of this, however, was not to issue any new injunc- tion, but only to continue the original order. The continu- ing order was bottomed alone upon the original bill of com- plaint. If the original order made thereon had no force UNITED STATES V, ATCHISON, T. & S. F. UY. CO. 849 Opinion of the Court. and effect in law Avhen first made, the court, by no post mortem act, could vitalize it. If the position of the government's counsel be well taken, it must obtain that if, in 1910, the Interstate Commerce Com- mission should, on investigation, ascertain that the defendant railway company, out on the Pacific Coast wliere its lines extend, was granting rebates on carloads of cattle or Califor- nia fruits, or at Chicago, 111., was granting rebates on agri- cultural implements, furniture, or dry goods and groceries, instead of the United States attorney for California or [190] Illinois instituting proceedings in that jurisdiction, as the Elkins act contemplates and provides, the United States attoruey for the Western District of Missouri could move against the raih-oad company in this court for contempt of the restraining order made in March, 1902, based upon alle- gations that at that time the defendant was granting rebates on grain and packing-house products in this jurisdiction. If the restraining order of 1902 is not itself restrained by the rule ejusdem generis, then as to all the railroads, to Avit, the Atchison, Topeka & Santa Fe Railway Company, the Chi- cago, Rock Island & Pacific Railroad Company, the Chicago & Alton Railroad Company, the Missouri Pacific Railway Company, the Chicago, Burlington & Quincy Railroad Com- pany, and the Chicago, Milwaukee & St. Paul Railway Com- pany, which were enjoined under a like bill and under a like order at the same time, there need never be anv order made on them by the Interstate Commerce Connnission to desist from granting rebates at any place or at any time, on any kind of commodity shipped by them, or any action taken against them by the United States District Attorney in the jurisdiction where the offense should be committed. But no matter when, where or how, or on what subject-matter of interstate traffic either of said roads may grant rebates, a resort in this court to a contempt proceeding against the company, under the order issued in March, 1902, predicated of a suit in equity of which this court had no jurisdiction, would hit the blot. It must be conceded, beyond tolerant cavil, that a bill praying for an injunction must be predicated of some specific 21220— VOL 2—07 M 54 850 142 FEDERAL REPfmTER, 190: Opinion of the Court. wrong then being done by the defendant to the complainant. The only violations of the provisions of the interstate com- merce act specified in the bill as being committed at the time consisted in the granting of forbidden rebates on grain and packing-honse p;>dncts'shipped from within thif district. The eighth paragraph of the bill contained a broad, general averment based on information and belief, that on many other principal commodities, constituting the bulk of rail- road traffic between the states, comprising the ordinary necessities of life, the said defendant grants unlawful rebates, etc., between the states and between the states and territories; to certain other favored shippers whose names arte to the orator unknown. No venue is laid in this sweeping " omnium gatherum " charge; and no particular specification. It re- quires no citation of authorities to maintain that such indefi- nite, general allegation without place, whether in Illinois, MisL>Si, Kansas! Colorado, Califoolia, New Mexico, o^ Arizona, through which the defendant's lines extend, would not authorize the court to grant an injunction predicated thereon. The restraining order enjoined the clefendant « from further acting under and enforcing or executing in any manner whatever any agreement to tlnsport over de- fen'dant's railroad, or any paTthereof, betwee'n the states, any packing-house products, dressed meats, grain, or the products of grain, or any other interstate traffic, at any greater or less rate than the rates named for such services in defendant's established schedule, etc." The authorities are all agreed that the general words " or any other interstate traffic," used in such connection, on the rule of noscitur a sociis and ejusdem generis, are con- [191] trolled by the ante- cedent specification, and are limited to objects " of like kind with those specified." United States v. Bevons, 3 ^Vheat. 336, 4 L. Ed. 404; St, Joseph v. Porter, 29 Mo. App. 605; State V. Bryant, 90 Mo. 534, 2 S. W. 836 ; Ftichs v. St. Louis, 167 Mo. 620, 67 S. W. 610, 57 L. K. A. 136 ; City of St. Louis V. Laughlin, 49 Mo. 559 ; Ex parte Neet, 157 Mo. 527, 57 S. W. 1025 ; State v. Schuchmann, 133 Mo. Ill, 33 S. W. 35, 34 S. W. 842 ; Boatmen^s Bank v. FritzUn, 135 Fed. 650, 68 vy. xj, JV. i&oo* , ITNTTED STATES V. ATCHISON, T. & S. F. RY. CO. 861 Opinion of the Court. True it is that the general evil struck at by the interstate commerce act was unjust discriminations and rebates; yet, the specific subject-matter predicated in the bill of com- plaint was rebates being granted on grain and prepared meats and their products, being shipped from this jurisdic- tion. Allied products of those specified commodities would alone come within the requirements of the rule of ejusdem eadem. In the case of Swift v. United States. 196 U. S. 375, 396, 25 Sup. Ct. 276, 279, 49 L. Ed. 518, there was an in- junction against the defendants, restraining them from using certain specific devices in violation of the anti-trust act, followed by a general clause, not dissimilar in its im- port to the general clause in the restraining order herein. When this general clause was attacked as vicious, in argu- ment before the Supreme Court, the Attorney General of the United States said in reply : "It is not true that this injunction broadly enjoins them against violations of the law. It enjoins them against certain specific con- spiracies, well pleaded in the petition, well stated in the injunction, capable of being understood by one who desires to understand them. The particular paragraph of which my friend so much complains — the language or by any other method or device, the purpose or eflfect of which is to restrain commerce as aforesaid — is not open to the objection which he urges against it. There are specific devices set forth in the injunction and prohibited, and there is a general pro- hibition in the clause against any combination to restrain commerce as aforesaid; that is, according to the specific restraints which precede Immediately this paragraph of the injunction." In the opinion delivered by Mr. Justice Holmes, he says: " We are bound, by the first principles of justice, not to sanction a decree so vague as to put the whole conduct of the defendants' busi- ness at the peril of the smnmons for contempt. We cannot issue a general injunction against all possible breaches of the law. * * * The general words of the injunction ' or by any other method or de- vice, the purpose and eflfect of which is to restrain commerce as aforesaid,' should be stricken out. The defendants ought to be in- formed, as accurately as the case permits, what thev are forbidden to do. Specific devices are mentioned in the bill, and they stand prohibited. The words quoted are a sweeping injunction to obey the law, and are open to the objection which we stated at the beginning that it was our duty to avoid." Comment : This proceeding by contempt against the rail- road company does not commend itself to my sense of fair play and "a square deal." The Hutchinson & Arkansas River Railroad Company is a railfoad corporation, char- tered by the state of Kansas. As such, it is presumptively 852 142 FEDERAL REPORTEH, 191. Opinion of the Conrt. invested with the power to exercise the right of eminent do- main; and is presumptively a public carrier, authorized t«) carry freights for hire, although it may confine its oper- sations to the transportation of the output of particular salt mills. No railroad [192] company connecting with or re- ceiving freights from it has a right to demand or expect that it should carry and deliver to it freight free of charge. Whether its rates exacted are excessive and forbidden depends upon whether or not the creative act from the state or the state authority has fixed a maximum. If that be exceeded, it rests for correction in the right of visitation and interference on the part of the state. Congress has not undertaken to regidate the matter of an equitable division of rates on a joint tariff l>etween two railroads. Under existing law, that is entirely a matter of private contract lietween the railroads, and if the joint through rate be less than the aggregate of the local rates fixed under the existing local laws, it is a matter of no concern to the government. The interstate commerce act only requires that the established schedule shall be filed with the commission, duly published; and that it shall then be adhered to by the joint parties. Any rail- road company touching at Hutchinson, Kan., desiring to do business in carrying salt, finds the shipper entrenched behind a chartered railroad connected with the plant or plants of the salt manufacturer, which carries the entire output to the connecting roads. The shipper says to the railroad soliciting its business : We w ill ship over our short line and deliver to you on condition that you will make a joint through rate agreement with us, or for terminal facilities, giving us the lion's share of the income or charge, which may be an exorbitant exaction. The soliciting railroad must submit to the exaction or do no business with the large shipper. ^Ylien thus coerced, some other shipper of salt at Hutchison, who does not own any connecting short line road, becomes jealous of his competitor in business, and com- plains to the Interstate Conmierce Commission, charging that the short railroad thus used is but a device by which such shippers obtain a rebate. Instead of the government in- voking all of the prohibitory and penalizing provisions of the statutes against the real offender— the shipper— in such UNITED STATES V. ATCHISON, T. & S. F. RY. CO. 853 Opinion of the Court, transactions, by directly proceeding against him in the United States Circuit Court of Kansas, where the offense was committed, it resorts to a prosecution for contempt, un- der an order SJ years old, made in this jurisdiction, predi- cated of an entirely distinct subject-matter of traffic, and asks that the interstate railroad company alone be punished. And this court, in this ex parte proceeding against the rail- road company, is asked to enter into an investigation of the character of the railroad at Hutchinson, as to who are its stockholders and operators, and the exact relation between it and the Hutchinson-Kansas Salt Company, and how the contract for through traffic rates l)etween the parties was brought about. When the government shall pursue and pun- ish such shippers, if guilty, it will strike at the verv root of the rebate evil. And as I doubt not the railroad companies would profit by the result, they can best bring about the desired consummation by opening instead of closing the mouths of the men under their control when their e^ddence is sought. There is a second like information against the defendant railway company, growing out of the rebates alleged to have been conceded to the Colorado Fuel & Iron Company, a cor- poration of Colorado, on shipments of coal from Trinidad, Colo., and Gallup in the territory [193] of Xew Mexico, to points in the territory of Arizona, El Paso, Tex., and to points in the republic of Mexico. Tliese shipments were made in 1903-1904. This instance has attracted considerable public attention, because of the sensational association of the names of Mr. Ripley and Paul Morton, then president and vice president, respectively, of the defendant company, with the transaction. The record in the case, however, con- sisting of the pleadings and the exhibits of evidence taken before the Interstate Commerce Commission, fails to fur- nish any foundation for imputing to those gentlemen any personal responsibility for the alleged violation of the inter- state commerce law. Such matter, however, is extraneous. For the reasons assigned in the foregoing discussion, this court cannot proceed to sentence in this contempt proceeding. However reprehensible the conduct of the defendant rail- road company, if it be as alleged in these transactions, may 854 142 FEDERAL REPORTER, 216. Opinion of the Court have been, or however much disposed this court be to compel obedience to its lawful mandates, it is persuaded that it is without authority in this proceeding to draw to it the ques- tions involved, rightfully belonging to the jurisdiction of the United States Circuit Court for the Districts of Kansas and Colorado. " Thus saith the law " is a perpetual injunction upon the judge, when called upon to exert judicial power, which he may not disregard without standing in contempt of his own conscience. It results that the motions to quash the informations are sustained. [216] LOEWE ET AL. v, LAWLOR ET AL. (Circuit Court. D. Connecticut December 13, 1905.) [142 Fed„ 210.] PLEADIRG — SUiTItlEXCY OF COMPLAINT — ACTION UNDKB AnTI-TbUST Act. — The complaint, in an action to recover damages mider section 7 of the anti-trust act (Act Juiy 2, 1890, c. 647, 26 Stat. 210 [U. 8. Comp. St. 1901, p. 3202] ) , heM sufficient on a motion for cx)rrectlon of the same.*" At Law. On motion for correction of complaint. See ISO Fed. 633.^ Damn-port S Banks^ for plaintiffs. B'ristol, Stoddard, Beach cfe Fisher^ De Forest d^ Klein, and Howard IF, Taylor, for defendants. Platt. District Judge. The dispute herein has not yet reached that critical period which warrants a recital of the elaborate complaint which the motion attacks. It is enough to say that the gist of it is somewhat as follows, viz. : For many years the plaintiffs had been opposed to the closed-shop policy, and had consistently refused to take any action tending to establish that policy, and the defendants knew it. On July 25, 1902, the plaintiffs had a large and profitable interstate trade in hats. The de- Syllabus copyrighted, 1906, by West Publishing Go. 6 See p. 563. RUBBER TIRE WHEEL CO, V, MIL. R. W. CO. 855 Syllabus. fendants, with others (see paragraphs 9-18, inclusive), had a way of making people come to terms on the disputed issue, which way is described carefully and minutely. They had been instrumental in using the described way effectively upon many individuals, firms, and corporations, and had boasted of their success, so as to affect the plaintiffs when they should come at them. In 1901 they told the plaintiffs that, if they did not yield on the disputed issue, they would treat them as they had the others and force them to do so, but plaintiffs refused to yield. Thereupon and therefore, on July 25, 1902, defendants put into operation the machinery before described, with attachments thereto and refinements thereof, and so inflicted serious injuries upon plaintiffs in violation of the Sherman act (Act July 2, 1890, c. 647, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200]), under which and by virtue whereof this suit has been brought. [217] It is not understood to be one of the functions of the court, on such a motion as this, to compel the plaintiffs to state their case in the way most satisfactory to the de- fendants. Indeed, it is not easy to conceive how such a complicated situation, covering, as it does, such an important and serious question, could have been otherwise set forth. At any rate a close scrutiny of the complaint discloses nothing which is so obviously wrong that it ought to be ex- punged on motion. Motion denied. [631] KUBBER TIRE WHEEL CO. v. MILWAUKEE RUBBER WORKS CO. Cirqnit Court, E. D. Wisconsin. January 23, 1906.) [142 Fed., 531.] Patents— Licenses— Right to Attach Conditions.— It is within tiif* rights of the owner of a patent to grant licenses conditioned that the licensees shall sell the patented article only at prices fixed by the agreement and also restricting the production of a licensee, and such agreements, if made in good faith and for the purpose of pro- tecting the patent monopoly, are not illegal as in restraint of trade and commerce, and such good faith is not impeached by the fact 856 142 FEDERAL REPORTER, 531. Opinion of the Court that the patent has been held invalid by the federal courts In some cirenits. where it has been sustained In others. [Ed. Note. — Power of patentee to control his invention, see note to Eeuton-Peninsular Button Fastener €o, v. Eureka Specialty Co.. 25 C. C. A. 280.1 Patents— Licenses— Validity of Pbovisions- Restraint of Trade. — Complainant, owner of a patent for a rubber tire which had been adjudged invalid by the Circuit Court of Appeals for the Sixth Cir- cuit, entered into license contracts with all of the large manufac- turers of tires in the United States, all of whom were engaged in Interstate commerce. Such contracts were unlfonii. and each made a part thereof collateral contracts made at the same time, one of which was between complainant on one part and iill of tlie licensees on the other. As a whole the contracts provideil for tlie payment of a royalty equal to 4 per cent, of the net selling price of tlie tires made theieunder. fixed the prices at wliich the tires .should be sold at a substantial advance over the then marlvet price, and also lim- ited the production of each licensee to a certain i)er cent, of the pro- duction of all, providing that if the licensee madv less than his " quota " he should l>e paid a rebate of 20 per cent, on the value of the shortage, and if he made more he should pay a rovalty of 20 per cent on the excess. The contracts also provided for a board to supervise the oijerations of the licensees to which one-half the roy- alties should be paid and which should have power, with the consent of a majority of the licensees, to pur<-hase tires from any of them and resell at such prices as it deemetl for the interest of all. Held, that such contracts went beyond the rights of complainant under its patent monopoly in raisii:g and maintaining prices in the states com- posing the Sixth federal circuit, in which the monoiK)ly had no prac- tical existence, and in creating a fund to l)e nseo^yer at all, no dominion of market, no monopoly. It can not, from a practical standpoint, accomplish a single one of the things mentioned which flow from its monopoly, simply because no remedy there exists. " Ubi jus, ibi reme- (1 i u ui , et vice versa . "' What the effect of a deirision avoiding a patent for lack of novelty has upon the nine lives of a patent is a practical ques- tion, not a theoretical one. Suppose the same thing had hap- pened to this patent as [587] occurred in the Driven Well Cases, 122 IT. S. 40, 7 Sup. Ct. 1073, 30 L. Ed. 10(14, and 123 U. S. 267, 8 Sup. Ct. 101. 31 L. Ed. 160: the patent being held void in one and valid in the other. If the Supreme Court in one case should hold the device anticipated, and in the other, for lack of evidence, sustain the patent, the effect would lie to destroy the monopoly. True, the patent would still he presumptively good. Hie decision of the Supreme Court would not even be evidence against it. Pleading and proof would still have to show the j^rior art: and the patent might in a particular case he still sustained, even by the same high court which formerly avoided it. But from the prac- tical standpoint the patent would be worthless. The owner would not have the presumption to attempt its enforcement. No Circuit Court in the country would afford him a particle of real protection. He would be helpless, the patent lifeless •and despised, dead beyond the power of resurrection, no mat- ter how useful the machines or devices made under it. Any attempt to revive such a patent and give it vitality would not only be futile, but would bring it and its proprietor into fur- ther contempt. But in the rest of the United States the Grant patent stands on different grounds. The Sixth circuit de- RUBBER TIRE WHEEL CO. V. MIL. R. W. CO. 865 Opinion of the Ck)^!. v cision would not afford the slightest evidence of its invalidity, however persuasive upon the court it might be. Not only this, but plaintiff believed it valid. Nor is there any evi- dence to show that the decision of the Sixth Circuit Court of Appeals was the inducing cause of the combination. I think it was due to the belief of all the parties that such a combina- tion was within the riglits of the plaintiff as owner of the patent. I do not find any evidence of bad faith on the part of either of the partias to this suit, or any of the licensees. But the vital question, upon which I have had much diffi- culty, is whether the combination goes so much beyond the limits of the patent monopoly, and secures results so unne- cessary to the patentee's rights, as to render the license agree- ments void. Do the restrictions of the license asrreements add to the patent monopoly, or do they only keep up or con- tinue the monopoly secured by the patent? The patentee having by his invention brought into existence the patented devices, they are not, in the usual sense, the subjects of monopoly. "A patent is that which brings out from the realm of mind something which never existed before and gives it to the country." Singer v. Walmsley, 1 Fish. Pat. Cas. 558, 22 Fed. Cas. 207. Monopoly restrains trade or commerce in articles which before were the subjects of trade or commerce. Patented articles were not so, for thev did not exist before. Hence they cannot be the subjects of prohib- ited monopoly, unless the restriction be extended beyond what the patentee secures. In re Greene, (C. C.) 52 Fed. 194 ; Bement v. Harrow Co,^ 186 U. S. 70, 22 Sup. Ct 747, 46 L. Ed. 1058 ; U. S. Cons, Seeded Raisin Co. v. GriHin <& Shelley Co,, 126 Fed. 365, 61 C. C A. 334 ; National Phono- graph Co, V. Schlegel, 128 Fed. 733, 64 C. C. A. 594. What, then, does the patent secure? What are the true limits of the lawful patent monopoly ? Are the license agreements in their very nature illegal, because going beyond the patent domain, and employing restrictions not essential to fortify or sustain the patent right? As stated be- [538] fore, the pat- entee has the right of exclusion or inhibition against all oth- ers, in the making, use, and sale of the new devices he has in- vented and newly produced, and within this field his rights 21220— VOL 2—07 m 55 866 142 FEDERAL REPOBTEK, 538. Opinion of the Court. are unlimited. The license agreements do not attempt to limit total production, nor, apparently, the field of production or territory of sale. They do not restrict competition between the various licensees. They fix and control prices, and the quota of each manufacturer — provisions entirely lawful, and within the patent monopoly. They regulate the kinds of tires to be made, also permissible. Thev create a board of arbitration or administration, to enforce the i^erformance by all the parties of the terms of their agreements, which would not be subject to criticism, unle&s designed to reach beyond the patent field and secure results not granted by the patent laws. But in two important ways the provisions of these con- tracts attempt to secure i*esults not contained within or flow- ing from the lawful monopoly of the patent. First, they raise and maintain prices, and restrict trade and interstate commerce, in Michigan, Ohio, Kentucky, and Tennessee, where the patent monopoly has no practical existence; sec- ond, they create a fund for crushing comi)etition in interstate commerce throughout the whole country, as avoH in the Sixth circuit as elsewhere, and not only competition in the Grant tires between outside manufacturers and those who are in the combination, but competition of all other rubber tires against the Grant tires. The arbitrators may, with the written con- sent of a majority of the licensees, purchase tires from them and sell at any price. They could thus, by selling at less than cost, stamp out and destroy competition against the licensees by independent makers of any kind of rubber tires. In these two ways the contracts do, in my opinion, secure illegitimate results, in their nature unhnvful, neither contained within nor essential to the patent monopoly. It is true, as the Su- preme Court has decided, that agreements made to promote legitimate business under a patent, with no purpose to thereby restrain interstate commerce, are not within the anti-trust act, even if they do indirectly and remotely affect such com- merce. United States v. Joint Tra-ffic Ass^n, 171 U. S. 505, 568, 19 Sup. Ct. 25, 43 L. Ed. 259. Although I do not find in this case express unlawful intent, yet the necessary result being the restraint of interstate commerce in a prohib- ited field, not indirectly or remotely, but directly and substan- CINCINNATI PACKET CO. V. BAY. 867 Opinion of the Court. tially, it necessarily follows that the contracts were invalid, and that the suit must fail. Within the proper domain of his monopoly the patentee may combine and conspire and restrict as much as he pleases. But I cannot conceive that enlightened courts, under a gov- ernment of law, will find it consonant with just notions of duty to permit a patentee, however worthy his invention or large and extensive his rights, by means of his royalties to create a fund for crushing lawful opposition, destroying legitimate and proper competition, and restraining trade and commerce, not only in the patented articles themselves, but all others competing with them. Even in territory lawfully subject to his monopoly, I cannot believe this possible ; still less in a broad do- [539] main covering four populous states in which the patent has become practically worthless— a ter- ritory greater in extent than that of the British Isles. In view of the conclusion reached it is unnecessary to con- sider the effect of the trust act of Wisconsin. See, however, U, S. Consolidated Seeded Raisin Co, v. Gin^n dt Shelley Co,, 126 Fed. 364, CI C. C. A. 334; Columbia Wire Co, v. Freeman Wire Co. (C. C.) 71 Fed. 302. Defendant's attorneys will prepare findings conforming to this opinion, and directing judgment dismissing the com- plaint, with costs. [179] CINCINNATI, PORTSMOUTH, BIG S\NDY AND POMEROY PACKET COMPANY /•. BAY^ ERROR TO THE SUPREME COURT OF THE STATE OF OHIO. No. 174. Argued December 15, 1905.— Decided January 2, 1906. [200 U. S., 179.] Where it appears from the record of a case in a state court that a Federal question was raised, and, in the absence of an opinion it appears from a certificate made part of the record that it was not raised too late under the local procedure, and that it was necessarily considered and decided by the highest court of the State, this court has jurisdiction to review the judgment on writ of error. A contract is not to be assumed to contemplate unlawful results unle.ss a fair construction rcHjuires it ; and where a contract relates to com- merce between points within a State, both on a boundary river it 868 200 UNITED STATES KEPORTS, 179. Argument for plaintiffs in error. will not be construed as falling within the prohibitions of the Sher- man act l»ecause the vessels affected by the contract sail over soil belonpiig to the other State while passing between the intrastate points. Even If there is some interference with interstate commerce, a con- tract is not necessarily void under the Sherman act if such inter- ference is insignificant and merely incidental and not the dominant puriMwe; the c*on1ract will be construed as a domestic contract and its validity determhied by the local law. A contract for sale of vessels, even if they arc engaged in interstate commerces is not necessarily void because the vendors agree, as is ordinary in case of sale of a business and its good will, to with- draw from business for a specified period.* [A purchaser of river craft cannot invoke the antitrust act of July 2, 1890 (26 Stat. L. 209, chap. 647, U. S. Comp. Stat. 1901, p. 3200), to relieve him from his obligation to pay j:he purchase price, because of his covenant to maintain the present traffic rates, which is not declared by the contract to enter into the consideration of the sale— especially where the rates referred to primarily, if not exclusively, relate to domestic, and not to interstate, business.]* The facts are stated in tM opinion. Mr. Ledyard Lincoln^ with whom Mr. Jitlim L. Anderson was on the brief, for plaintiff in error : The contract is void under the Sherman act. Repeated attempts have been made to restrict the broad and ffeneral language of the statute, but the Federal courts and especially this court have uniformly held that the act means just what it says and cannot be confined to unreason- able restraints nor such as were condemned by the common [180] law before its passage. United States v. Freight Assn., 166 U. S. 290, 312, 340 ; United States v. Joint Traffic Assn.^ 171 U. S. 505, 573, 575; United States v. Addyston Pipe di Steel Co., 85 Fed. Rep. 271; S. C, 175 U. S, 211; Northern Securities Co. v. United States, 193 U. S. 197, 331, 402; Ches. cfe Ohi^ Fuel Co. v. United States, 115 Fed. Rep. 610, 619. The commerce restrained was interstate. Both the Ports- mouth Company and the Bays were engaged in steamboat- « The foregoing syllabus and the abstracts of arguments copyrighted, 1906. by The Banks Law Publishing Co. » This paragraph taken from the U. S. Supreme Court Reports, Book SO, p. 428. Copyrighted, 1906, by the Lawyers' Co-Operative Publish- ing Co. CINCINNATI PACKET CO. V. BAY. Argument for plaintiffs in error. 869 ing between ports in Pennsylvania, West Virginia, Ohio and Kentucky. Nor was the element of restraint merely ancil- lary. Tuscaloosa v. Williams, 127 Alabama, 110, 119. It cannot be questioned that the transportation of persons and property from one State to another is interstate com- merce. Gloucester Ferry Co. v. Pennsylvania, 114 U. S. 196; Lottery Case, 188 U. S. 321, 345. The transportation of goods on a through bill of lading from one point in a given State to another in the same State by way of an adjoining State or Territory is interstate com- merce, llanley v. Kansas, 187 U. S. 617. The States of Kentucky and West Virginia extend to low water mark on the Ohio side, so that even boats plying directly from Syracuse to Cincinnati without stopping at intermediate points would necessarily at ordinary stages of the river pass through parts of West Virginia and Kentucky. Indiana v. Kentucky, 136 U. S. 479 ; Hanley v. Anthony, 5 Wheat. 374; Booth v. Huhhard, 8 Ohio St. 243; McFall v. Commonwealth, 2 Metcalf (Ky.), 394. Contracts not relating directly to interstate commerce, but local in their nature, have been held not within the pro- hibition of the Sherman act, although the parties contract- ing in fact sold commodities or solicited business bej^ond the state line, as tlie contract must affect interstate commerce directly and not remotely or incidentally. United States v. E. C. Knight Co., 156 U. S. 1 ; Hopkins v. United States. 171 U. S. 578; Anderson v. United States, 171 U. S. 604. But see United States v. Freight Assn., 166 U. S. 290, 325; Lufkin V. F ring ell, [181] 57 Ohio St. 596; MonongaheU Co. V. Jutte, 210 Pa. St. 288, and cases cited in note; 74 Am, St. Rep. 235, 273; Bement v. Harrow Co., 186 U. S. 92. The Sherman act prohibits any contract in restraint of trade which would be illegal at common law. As to what would be illegal see Homer v. Graves, 7 Bingham, 735, 743 ; 24 Am. & Eng. Ency. of Law, 850, and as to rule in the State of Ohio see Lange v. Work, 2 Ohio St. 519, 528. See also United States v. Addyston Pipe Co., 85 Fed. Rep. 271, and cases cited, p. 290 ; Texas v. Southern (&c. Co.. 6 So. Rep. 888; Salt Co. v. Guthrie, 35 Ohio St. 666; Emen/ v. Candle Co., 47 Ohio S. 320; State y. Standard Oil Co., 49 Ohio St. 2W IGNITED STATES REPORTS, 181. Opinion of tlie Court 137; Soffth Chkago v. Calumet, 171 Illinois, 391 ; Anderson T. Jett, 80 Keiitiicky, 875 (a case of competing steamboat lines). Tlie two packet companies who signed the contract were not engaged in private, but in quasi-public business, and therefore any restraint upon such business would be preju- dicial to the public interest and cannot be sustained. United States V. Freight Amsh., ir>r> U. S. 338; Oihhs v. BMimore, 130 U. S. 396. The Federal question was raised properly and in time. If the Federal or jurisdictional question be raised for the first time, in the assignments of errors in the Supreme Court of the State, the question is presented in time. Farmers'' Ins, Co, V. Dohney, 18l) U. S. 301 ; Land cC? Water Co. v. San Jose^ 189 D. S. 179; C. B. d; Q. R, R, v. ('hirago, im U. S. 226, 281 : RothsehiM v. Knight, 184 U. S. 334, 339 ; Fnrman V. Niehoh 8 Wall. 44, 56, Mr. Lawrence Maxwell, Jr,, and 3fr. Joseph aS'. (hay don for defendants In error : No Federal question is presented or was properly raised. The vessels affected' by the contract were not engaged in interstate commerce. Hanley v. Kansas City Railway, 187 U. S. 617, does not apply. See Lehigh Valley v. Penn.sylna- nia, 145 U. S. 192. The court will not assume facts to make the contract illegal. Herpolsheimer v. Fanke, 95 N. W. Rep. 687; [1821 Jeicett Puhlishing Co. v. Butler ^ 159 Massachu- setts, 517; Mills v. Dunham, 1 Ch. 1891, 576, 586. Mr. Ji STicE Holmes delivered the opinion of the court. This is an action upon a contract, brought by the defend- ants in error to recover an instalment of money due by its terms. A judgment in their favor was sustained bv the Supreme Court of the State, although the petition in error to that eoiii't set up that the contract was illegal under the act of Congress of July 2, 1890, c. 647, 26 Stat. 209. No opinion was delivered, but a certificate that this objection was relied upon and that it necessarily was considered was made part of the record by that court. Therefore the present writ of error properly was allowed. The record shows that the question CINCINNATI PACKET CO. V. BAY. 871 Opinion of the Court. was raised and the certificate shows that it was not treated as having been raised too late under the local procedure, a point upon which the state court is the judge. It is enough that the Federal question was raised and necessarily decided by the highast court of the State. Farmers' d' Merchants' Insurance Co. v. Dobney, 189 U. S. 301. The contract was an indenture between the Portsmouth and Pomeroy Packet Company, George W. and William Bay, of the first part, and the Cincinnati, Portsmouth, Big Sandy and Pomeroy Packet Company, of the second part. By this instrument the parties of the first part sell to the latter two steamers, two deck barges, two coal flats and five hundred dollars in the stock of the Coney Island T\Tiarf Boat Company, for $30,500, to be paid as therein provided. The party of the second part also agrees to pay to the Bays $3,600 annually in advance for five years, provided, how- ever, that in case of opposition to its boats by other boats run- ning from Cincinnati to Portsmouth, Ohio, or to points above Portsmouth, not including points above Syracuse, Ohio, caus- ing it to carry freight and passengers at certain exceedingly low rates, the time of payment of the instalments shall be postponed until the opposition has ceased. It is [183] fur- ther agreed that if the opposition continues for two years without interruption, and no annual payment be made, the Bays may cancel the agreement. " It is also agreed as a part of the consideration of this agreement " that for five years the parties of the first part, or either of them, shall not be " engaged in running or in operating, or in any way be interested in any freight and passenger j^acket or business, or either of theni. at and from Cincinnati, Ohio, to Portsmouth, Ohio, and intermediate points; nor at and from Portsmouth, Ohio, to Cincinnati, Ohio, and intermediate points; nor at and from Syracuse Ohio, or points between Syracuse and Portsmouth, Ohio, to or for points below Portsmouth, Ohio," with a qualification as to the towing and barge business, so long as it does not interfere with the other party's freight and passenger busi- ness from Portsmouth to Cincinnati. " It is also understood in this agreement that the party of the second part will main- tain the rates charged by the parties of the first part on busi- 872 200 UNITED STATES REPORTS, 183. Opinion of the Court ness above Portsmouth, Ohio, said rates, however, never to exceed railroad rates between said points." The last men- tioned covenants, set forth in this paragraph, are especially relied upon as making the contract illegal as in restraint of trade. , The previously mentioned suspension of instalments in case of opposition rising to a certain height also is referred to as a combination to aid the purchaser in getting a monop- oly of river trade between Portsmouth and Cincinnati, in- cluding, it is said, some Kentucky ports. It might be enough, perhaps, to answer the whole conten- tion, that it does not appear on the record that the contract necessarily contemplated commerce between the States. It would be an extra \agant consequence to draw from Hanley V. Kansm City Southern By,, 187 U. S. 617, a case of a State attempting to fix rates over a railroad route passing outside its limits, that the contract was within the Sherman act because the boats referred to might sail over soil belonging to Kentucky in passing between two Ohio points. It may be noticed further that Ohio equally has jurisdiction on the river. Wedding v. Meyler, 192 [184] U. S. 573. A con- tract is not to be assumed to contemplate unlawful results unless a fair construction requires it upon the established facts. Technically, perhaps, there might be some trouble in saying that the Supreme Court of Ohio did not decide the case on the ground that the illegality was not made out as matter of fact. But we do not like to put our decision upon technical rea- soning where there is at least a fair surmise that such reason- ing does not meet the realities of the case. We will suppose then that the contract does not leave conunerce among the States untouched. But even on this supposition it is mani- fest that interference with such commerce is insignificant •nd incidental, and not the dominant purpose of the con- tract, if it actually was thought of at all. The route men- tioned is between Ohio ports. The contract, in what it espe- cially contemplates, is a domastic contract and, so far as it is so, is shown to be valid under the local law by the decision of the Ohio court. The chief and visible object of its pro- visions has nothing to do with commerce among the States. That which suspends payment of instalments in case of very CINCINNATI PACKET CO. V. BAY. Opinion of the Court. 873 serious opposition is security against a losing bargain, not a combination to gain a monopoly. The withdrawal of the vendors from opposition for five years is the ordinary inci- dent of the sale of a business and good will. It is argued, to be sure, that the last mentioned covenant is independent and not connected with the sale of the vessels. The contrary is manifest as a matter of good sense, and is proved even technically by the words " it is also agreed as a part of the consideration of this agreement." By these words the covenant not to do business between Cincinnati and Portsmouth for five years is imported into the sale of the ships, and made one of the conventional inducements of the purchase. The price is paid not for the vessels alone but for the vessels with the covenant. So, still more clearlv, the parallel instalments for Hve years are paid for the covenant, at least in part. It is said that there is no sale of good will. But the covenant makes the sale. Presumably all that there was to sell, beside 1 185] certain instruments of competition, was the competition itself, and the purchasers did not want the vendors' names. This being our view of the covenant in question, whatever 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 rs part of the sale of a business and not as a device to control com- merce, 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. United States v. Trans- Missoun Freight Association, 166 U. S. 290, 329, United States v. Joint Traific Association, 171 U. S. 505, 568, and it was so decided in the case of a patent. Bement v. National Harrow Co., 186 U. S. 70, 92. It would accomplish no public purpose, but sim- ply would provide a loophole of escape to persons inclined to elude performance of their undertakings, if the sale of a business and temporary withdrawal of the seller necessary in order to give the sale effect were to be declared illegal in every case where a nice scrutiny could discover that Xh^ cov- enant possibly might reach beyond the state line. We are of opinion that the agreement before us is not made illegal by either of the provisions thus far discussed. »1 UNITED STATES REPOBTS^ 43. Syllabiia It only remains to say a word as to the agreement to main- tain rates. This is a covenant by the purchaser, the plaintiff in error. It is not the covenant sued upon. It is not de- clared to enter into the consideration of the sale. If neces- sary, we should be astute to avoid allowing a party to escape from his just and substantially legal undertaking on such ground. The argument on the other side requires us to im- port a subordinate undertaking of the buyer into considera- tion for that which was the consideration of his debt and, in that roundabout way, to make the debt unlawful. We shall not go into such niceties beyond noticing that they are not encouraged by the cases. Oregon Steam Navigation Co. v. Wimor. 20 Wall. 64; Bank of Amtralama v. Breillat, f» Moore, P. C. 152, 201 ; Pigofs Case, 11 Co. Rep. 2r>7>, 27h, The plaintiff in error did business between [18(>| Cincinnati and Syracuse, Ohio, and the rates referred to nuist he as- sumed to be rates within those points. If the covenant had an}' indirect bearing on commerce with another State, what we have said sufficiently explains why we deem it insufficient to make the whole agreement void. Jadgment affirmed. [43] HALE /'. HENKEL. APPEAL FROM THE CIRCITIT COURT OF THE IMTIID STATES FOR THE SOUTHERN DISTRICT OF NEW YORK." No. 34(1. Argued .lanwaiy 4. 5, 1006.— Iieclded March 12, 1906. r201 U. S.. 43.1 Under the practice in this country the examination of witnesses by a Federal grand Jnrj- need not be pretedcd Ijy a iiresentnient or formal indictment, but tlie grand jury may proceed, cither upon tlieir own knowledge or ui>on examination ot witnesses, to inquire wliether a crime cognizable l\v the court has been committed, and if so they may indict upon such evidence. In summoning witnesses it is suf ficient to apprise them of the names of the parties with respect to whom they will be called to testify witliout indicating the nature of the charge against them, or laying a basis by a fonnal indictment. The examination of a witness liefore a grand jury is a " proceeding *' within the meaning of the proviso to the general appropriation act «Writ of habeas eurpus dismissed liy tlie ( inuit Court (139 Fed. 4m). See p. ai4. HALE V. HENKEL. 875 Syllabus. of 1903, that no person shall be prosecuted on account of anything which he may testify in any proceeding under the Anti-trust Law. The word should receive as wide a construction as is necessary to protect the witness in his disclosmes. The interdiction of the Fifth Amendment operates only where a wit- ness is aslved to incriminate himself, and does not apply if the crimi- nality is talien away. 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. The law talies no ac-count of the practical difficulty which a party may have in procuring his testimony. A witness cannot refuse to testify before a Federal grand jury in face of a Federal statute granting immunity from prosecution as to mat- ters sworn to, because the immunity does not extend to prosecu- tions 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. The benefits of the Fifth Amendment are exclusively for a witness compelled to testify against himself in a criminal case, and he can- not set them up on behalf of any other person or individual, or of a coriKJration of wliicli he is an officer or employ^. [44] A witness who cannot avail himself of the Fifth Amendment as to oral testimony, because of a statute granting him inununity from prosecution, cannot set it up as against the production of Iiooks and papers, as the same statute would equally grant him imumnitj- in respect to matters proved thereby. The search and Kei^ure clause of the Fourth Amendment was not in- tended to interfere with the jmwer of courts to compel the produc- tion uiK)n a trial of documentary evidence through a snhpfrna (luces tecum. While an individual may lawfully refuse to answer incriminating questions unless protecteroeeeding" within the meaning of the proviso to the act of February 25, 1908 (32 Stat L., 854-903, chap. 755, U. S. 'Comp. Stat Supp. 1906, p. 366), that no person shall be prosecuted or be subjerted to any penalty or forfeiture for. or on account of, any transaction, matter, or thing concerning which he may testify or produce evidence in any proceeding, suit or prosecution under certain named statutes, of which the antitrust act is one.] [The right of a witness to claim his privilege against self-incrimina- tion, afforded by U. S. Const., 5th Amend., when examined concern- ing an alleged violation of the antitrust act of July 2, 1890, Is taken away by the proviso to the act of February 25, 1903, that no person shall l>e prosecuted or be subjected to any penalty or for- feiture for. or on account of, any transaction, matter, or thing con- cerning which he may testify or produce evidence in any proceeding, suit or prosecution under certain named statutes, of which the antitrust act is one, which furnishes a sufficient immunity from prosecution to satisfy the constitutional guaranty, although it may « The foregoing syllabus and the abstracts of arginnents copyrighted, 1906, by The Bamks Law Publishing Co. »The following paragraphs inclosed in brackets comprise the syl- labus to this case in the U. S. Supreme C^ourt Reporter, Book 50, p. 652, copyrighted, 1906, by the Ijawyers' Co-Operative Publishing Co. HALE V, HENKEL. Statement of the Case. 877 not afford innnunity from prosecution in the state courts for the offense disclosed.] [The difficulty, if any, of procuring the testimony which a person has given on his examination before a grand jury concerning an alleged violation of the antitrust act of July 2, 1890, does not render the imnmnity from prosecution or forfeiture, given by the proviso to the act of February 25, 1903, insufficient to satisfy the guarantj' of U. S. Const, 5th Amend., against self-incrimination.] [The privilege against self-incrimination afforded by U. S. Const, 5th Amend., is purely personal to the witness, and he cannot claim the privilege of another person, or of the corporation of wliieli he is an officer or employee.] [The protection against unreasonable searches and seizures afforded by U. C. Const, 4th Amend., cannot ordinarily be invoke*! to justify the refusal of an officer of a corporation to produce its books and papcis in ol>edience to a siihpana duces tecum, issued in aid of an investigation by a grand jury of an alleged violation of the anti- trust act of July 2, 1890, by such corporation.] [A corporation charged with a violation of the antitrust act of July 2, 1890, is entitled to immunity under U. S. Const, 4th Amend., from such an unreasonable search and seizure as the compulsory production before a grand jury, under a subpoena duces tecum, of all understandings, contracts, or correspondence between such coriwra- tion and six other companies, together with all reports and accounts rendered by such companies from the date of the organization of the corporation, as well as all letters received by that coiiDoration since its organization, from more than one dozen different compa- nies, situated in seven different states.] This was an appeal from a final order of the Circuit Court made June 18, 1905, dismissing a writ of habeas corpus and remanding the petitioner Hale to the custody of the marshal. The proceeding originated in a subpoena duces tecum, is- sued April 28, 1905, commanding Hale to appear before the grand jury at a time and place named, to " testify and give evidence [45] in a certain action now pending ... in the Circuit Court of the United States for the Southern District of New York, between the United States of America and the American Tobacco Company and MacAndrews & Forbes Company on the part of the United States, and that you bring with you and produce at the time and place aforesaid " : 1. All understandings, agreements, arrangements, or con- o^o 201 UNITED STATES REPORTS, 45. SMateiiieiit of the Cane. tracts, whether evidenced by correspondence, nienioninda, formal agreements, or other writings, between MacAndrews & Forbes Company apd six other firms and corporations named, from the date of the organization of the said Macx\ji- drews & Forbes Company. 2. AH correspondence by letter or telegram between Mac- Andrews & Fortes Company and six other firms and cor- porations. 3. All reports made or accounts rendered by these six com|Muiies or corporations to the principal compaiiy. 4. Any agreements or contracts or arrangements, however evidenced, between MacAndrews & Forbes Company and the Amsterdam Supply Company or the American Tobacco Com- pany or the Continental Company or the Consolidated Tobacco Company. 5. All letters received by the MacAndrews & Forbes Com- pany since the date of its organization from thirteen other companies named, located in different parts of the United States and also copies of all corres[K)ndence with such companies. Petitioner appeared before the grand jury in obedience to the subpoena, and before being sworn asked to be advised of the nature of the investigation in which he had been sum- moned; whether under any statute of the United States, and the specific charge, if any had been made, in order that he might learn whether or not the grand jury had any lawful right to make the inquiry, and also that he be furnished with a copy of the complaint, infonnation or proposed indictment upon which they were acting; that he had been informed that there was no action pending in the Circuit Court as stated in the subpoena, and that the grand jury was investi- gating no specific charge against [46 J any one, and he there- fore declined to answer: First, because there was no legal irarrant for his examination, and, second, because his answers » might tend to incriminate him. After stating his name, residence and the fact that he was secretary and treasurer of the MacAndrews & Forbes Com- pany, he declined to answer all other questions in regard to the business of the company, itvS officers, the location of its office, or its agreement or arrangements with other compa- HALE i'. HENKEL. 879 Argiimeiit for apijellaut. nies. lie was theieupon advised by the Assistant District Attorney that this was a proceeding under the Sherman Act to protect trade and commerce against unlawful restraint and monopolies; that under the act of 1903. amendatorv thereof, no person could be prosecuted or subjected to any penalty or forfeiture on account of any matter or thing concerning which he might testify or produce documentary evidence in any prosecution under said act, and that he thereby offered and assured appellant immunity from punishment. The witness still persisted in his refusal to answer all questions. He also declined to produce the papers and documents called for in the subprena: First.^Because it would have been a physical impossibility to have gotten them together within the time allowed. Second. Because he was advised by counsel that he was imder no legal obligations to produce anything called for by the subpoena. Third. Because they might tend to incriminate him. Whereupon the grand jury reported the matter to the court, and made a presentment that Hale was in contempt, and that the proper proceedings should be taken. Thereupon all the parties apj^eared before the Circuit judge, who directed the witness to answer the questions and produce the papers. Ap- pellant still persisting in his refusal, the Circuit judge held him to be in contempt, and conunitted him to the custody of the marshal imtil he should answer the questions and pro- duce the papers. A writ of habem- corpus was thereupon sued out, and a hearing had before another judge of the same court, who discharged the writ and remanded the petitioner. [47] 3Ir. De Lancey Nicoll^ with whom Mr, Junius Parker and Mr. John D. Lindsay were on the brief, for appellant in this case and in No. 341 argued simultaneously herewith." There were no facts authorizing the Circuit Court to enter- tain any charge against appellant. Unless the grand jury in prosecuting the investigation acted within its jurisdiction, the court had no authority to punish the witness for his supposed contumacy in refusing to answer questions. People v. Cas- seU, 5 Hill, 164; Ex parte Fisk, 113 U. S. 713 ; Scott v. « McAlister v. Heiikel. post. p. 90. 880 201 UNITED STATES REPORTS, 47. Argument for appellant. McNeal^ 154 U. S. 34; Cooley, Const Lim. 7th ed. p. 575; United States v. Terry, 39 Fed Rep. 355. No judicial matter was pending in the Circuit Court when appellant was required to attend before the grand jury, or when the orders of May 5 and May 8 were made, in or upon which he could lawfully be required to testify or produce evidence. Notwithstanding the subpmna said " in a certain action," no action was pending; there can be no action, prosecution or criminal pro^din^, until after someone has been formally accused of a'cts constitting a criminal offense by indictmen' or by information. Post v. United States, 161 U. S. 583, 587. Nor was there any particular charge against the corpora- tions named in the suhpcena duces tecum, or under investiga- tion. The grand jury was merely engaged in an effort to find out whether they had or had not transgressed the Sher- man Act. An ex parte investigation, based upon mere suspicion, without any complaint or charge, and that may be without result, is not a " case " or « controversy " within the meaning of the Constitution. Pacific Railway Commission v. Stan- ford, 32 Fed. Rep. 241; Kilboum v. Thompson, 103 U. S. 168; Interstate Commerce Commission v. Brimson, 154 U. S. 447. The grand jury was not in the exercise of its proper and legitimate authority in prosecuting the alleged investigation ; consequently its requirement, and the orders of the court, based upon it and the witness's refusal, were coram non judice and void. [48] At common law the powers of grand juries were re- stricted to indictments returned after the examination of witnesses, and presentments made upon their own knowledge orobserv;tion The former was a written accusation of one or more per- sons of a crime or misdemeanor, preferred to, and presented upon oath by the grand jury. Blackstone, Bk. IV, c. 23. The grand jury was continued as a part of our Federal in- stitutions by the Fifth Amendment; but its powers and duties, not being defined by the Constitution or any Federal statute, are only such as grand juries possessed at common HALE V. HENKEL. 881 Argument for appellant, law, namely, of considering and acting upon indictments pre- viously framed and laid before them by a known prosecutor, and of presenting facts within their own knowledge! United States v. Mvndell Iredell, J., 1795, 8 Virdnia ^6 Call), 245, 247. ' ' ^ V No Federal statute authorizes a grand jury to inquire into matters called to their attention by the court or prosecuting attorney, where there is no specific charge against one or more individuals. Such a statute would be unconstitutional, and the idea that a grand jury has practically unlimited in- quisitorial power rests, upon various loose and ill-considered utterances in reported cases. 17 Am. & Eng. Ency 2d ed 1279. No case in this country holds that there can be a legitimate inquiry without a previous charge; and except in Tennessee, where there is legislative authority in respect to certain of- fenses, the idea of general inquisitorial power is repudiated. Re Lester, 77 Georgia, 143; Lewis v. Commissioners, 74 N. Car. 194 ; Ward v. State, 2 Missouri, 120. See also Frishie v. United States, 157 U. S. 160; People v. Kelly, 24 N. Y 74- O'Hair V. People, 32 111. App. 277; ^yehster's Case, 5 Green- leaf, 432; Post V. United States, 161 U. S. 585; Beavers v. Henkel, 194 U. S. 73, 84. Although a grand jury may send for witnesses before in- dictment actually framed, some specific charge must be pending before them directed against a particular person or persons. Covnselman v. Hitchcock, 142 U. S. 547 • United States V. laipatrick, 16 Fed. Kep. 765; Lloyd v. Carpenter, 3 X a. li. J. 188. [49] A grand jury does not possess, and cannot, under the constitution of this State exercise, purely inquisitorial power, because such power is no sense a judicial one The greatest evil incident to the Star Chamber was its inquisitorial procedure. Upon suggestion or suspicion citi- ;^ns were subpcenaed and subjected to examination under the ex oficto oath. See preamble of act for the abolition of that court (July 5, 1641 ; 16 Charles I, c. 10; 5 S. E., 110) reciting the violation of the statute of 25 Edw. III. To exercise judicial power there must be parties to the 21220— VOL 2—07 m 56 ooZ 201 UNITED STATES REPORTS, 49. Argument for appellant. l.roceiH!iii|i:, a matter in controversy, an assertion and a de- nial; in short, a distinct issue to be determined. Cooley, Const. I Am, 132; Matter of Pacific Railway Commission v. Stanford, 32 Fed. Rep. 241 : Interstate Com. Com. v. Brimr- son, 154 IJ. S. 447. The theory of our criminal proceeding, like that of Great Britain, is accusatory and not inquisitorial. United States V. James, 60 Fed. Rep. 257. See opinion of Chief Justice Marshall in United States v. Hill, 1 Brock. C. C. 159. Section 1 of the act of February 25, 1903, does not give the petitioner immunity from prosecution, on account of the transactions concerning which he was directed to testify and produce evidence lief ore the grand jury, the investiga- tion before that lx>dy not being a '' proceeding, suit or prose- cation " under either of the acts referred to in the act of February 25, 11103; consequently the petitioner was within (he legitimate exercise of his right under the Fifth Amend- ment of the Constitution, when he refused to testify or pro- duce evidence liefore the grand jury on the ground that by so doing he might have criminated himself. The legislative guaranty must have a broad construction in favor of the right which it is intended to secure. Counsel- man V. Hitch eoch. sttpra. See also as to similar language in the act of February 11, 1893, Brown v. Walker, 161 U. S. 591 ; but the immunity is worthless here unless the language subsequently used, " pro- ceeding, suit, or prosecution," embraces a grand jury investi- gation. If it does not, the witness is deprived of his con- stitu- [»0] tional rights; any reasonable doubt on this head should be. resolved in his favor. A witness hereafter pleading the inununity afforded by this act as a bar to criminal prosecution will be held to strict pi-oof, especially if he seeks to plead this Federal statute as a bar to a state prosecution. See Jack v. Kansas, 199 U. S. An inquiry liefore a grand jury is not a '^suit" nor a •* prosecution." Post v. United States, mipra; Paid v. Vir- f/inia, 148 U. S. 107; State v. Woleott, 21 Connecticut, 279; Constitution, Fifth Amendment. The act of February 25, 1903, is unconstitutional in that HALE V. HENKEL. 883 Argument for appellant, it undertakes to deprive the various States of their right and power to prosecute persons concerned in transactions, which violate their own laws, thus infringing upon the pro vision of the Tenth Amendment. Brown v. Walker, supra, is against this proposition, but see Jack v. Kansas. 199 U. s! 372, where it is in effect limited by the improbability only of state prosecution rather than the right of the State to proceed. The order of May 5 requiring appellant to produce the papers called for in the suhpmna duces tecum was void under the Fourth Amendment. Its enforcement would amount to the ancient seizure and search which continued by usage in England until the decision of Lord Camden in Entick v. Carrinr/ton, 19 How. St. Tr. 1029. See also Boyd v. United States, 116 U. S. 616, 626; Hartranft's Appeal, 85 Pa. St. 433; Ex parte Broum, 72 Missouri, 83; In re Lester, 77 Georgia, 143; In re Morer, 101 N. W. Rep. 588. The writ must also particularly describe the papers desired. Ex parte Brown, supra; Sand. ford v. Nichols, 13 Massachu- setts, 286. A corporation is entitled to the same immunities as an individual. It cannot be compelled to incriminate itself. Wigmore on Evidence, § 2259 ; Logan v. Penna. B. R. Co., 132 Pa. St. 403; Santa Clara County v. Railroad Company, 118 U. S. 394; King of Sicilies v. Willcox, 7 St. Tr. (N S ) 1049. By the express provisions of the Sherman Act corpora- tions [51] are deemed to be persons. Section 8. A corpo- ration can only be examined through its officers, directors or agents. In the present case the Government undertook deliberately by that method to compel the corporation to submit to examination, not as a witness, but by forcing one of its oflicers and directors to produce its books and papers for the sole purpose of ascertaining whether or not the corpo- ration had connnitted a crime under the Sherman Act. The rule that the protection of the Fourth and Fifth Amendments is the personal privilege of the witness and can- not be claimed for the benefit of another has no possible ap- plication to the case of an officer, director or agent of a corporation who seeks to secure to the corporation its con- 201 UNITED STATES REPOKTS, 51. Arguineiit for tlie United States. sfcitutional rights and immunities; for these rights can only be asserted through its officers, directors and agents. In this view the witness is not seeking to invoke the priv- ilege of another, but the corporation itself invokes its own privilege in the only manner and by the only means it can employ for that purpose. If, under these circumstances, it could be said that the cor- poration was a witness, and, therefore, entitled to the immu- nity afforded by the statute, this might, perhaps, meet our present contention. But the position of the Government is that the corporation is not protected by the statute. Its avowed purpose is to use the papers as the basis of an indict- ment against the corporation. See Davtes v. Lincoln Na- tional Bank, 4 N. Y. Suppl. 373; Rex v. Puimell, Wilson, 239 ; In re Morse^ 101 N. W. Eep. 588. Mr. Henry If. Taft, Special Assistant to The Attorney General, with whom The Attorney General and Mr. Felix H. Levy, Special Assistant to The Attorney General, were on the brief, for the United States in this case and in No. 341 : The procedure of a grand jury in this country at the time of the enactment of the Fifth Amendment was, and, with unimportant exceptions, has remained quite different from that of [52] the similar body in England. Under this pro- cedure the grand jury proceeds, before a bill of indictment is framed, to investigate, at the instance of the court or of their own body or of the district attorney, a suspected or alleged crime and to determine whether it has been committed, and, if so, who conunitted it. In so doing they exercise broad in- quisitorial powers. The administration of the criminal law m this country necessitates this procedure, and this was clearly within the common law powers of a grand jury in 1791 when the Fifth Amendment was adopted however dif- ferent the usual practice in England may have been at that time. The power of a grand jury extends to the broadest kind of an inquisitorial proceeding. Counsel for appellant have mis- taken a radical change of mere procedure for an attempted enlargement of power. Or if it is a question of power, long before 1791 the American idea prevailed that the State and HALE V. HENKEL. 885 Argument for the UDited States. not the individual is the agency which should start a criminal prosecution; that this was vitally different from the English idea and necessarily involved radical changes in the grand jury system and the extension of its powers; and that it was with reference to such a system and such powers that the Fifth Amendment was adopted. During the first hundred years of our independence pre<;e- dents are not numerous and authority for grand jury pro- cedure rests not so much upon adjudications of the courts, as upon practice sanctioned by long usage and general recog- nition. As to power of grand jury to find indictments on its own investigations, see lectures delivered by Judge Wilson in 1791 and 1792, Works James Wilson, ed. 1896, p. 213, and charge of Judge Addison, 1791, Common Pleas Court, Fifth Circutt, Addison's Pa. Eep. Appx. 38; but see Lloyd v. Carpenter] 1845, 5 Penn. L. Jour. 55 and State v. Smith, 1838, Meigs, 99. United States v. Mundel (1795), 8 Virginia (6 Call.), 245, does not support appellant's contention. Its tendency is the other way. See also Ward v. State (1829), 2 Missouri, 120- Stat^ V. Freeman (1842) , 13 N. H. 488. ' ' [53] It thus appears that at the date of the adoption of the Fifth Amendment and for fifty years thereafter under the procedure sanctioned by usage and precedent, an Ameri- can grand jury (1) could proceed in cases other than those in which a private prosecutor presented a duly engrossed indictment, and (2) on its own motion or at the instance of the court or the prosecuting attorney, could (and necessarily by an inquisitorial method) investigate an alleged or sus- pected crime and after the investigation direct an indictment to be drawn. The legality of the grand jury, without the agency of the district attorney, calling witnesses, whom they interrogated as to their knowledge concerning a Cuban expeditionr was sustained, and the broad inquisitorial powers of grand juries was recognized. See report in note to § 337, Wharton's Cnm. PI. & Pr. 8th ed., and see also the charge delivered by Justice Field to a grand jury in California. 30 Fed Cas. 994; 2 Sawyer, 667. The limitations placed by Mr. Justice Field upon the in- 886 201 UNITED STATES KEPOKTS, 53. Argament for the United States. quisitorial powers of the grand jury do not relate 1o matters brought to their attention either by the court or by the dis- trict attorney, and that they permit a general investigation of a crime upon the " personal knowledge " of a juror, where such knowledge goes no further than to include " facts which tend to show " that a crime has been committed, which, of course, implies the power to call witnesses other than the grand juror having such knowledge. See also United States V. KimbaUy 117 Fed. Rep. 156; Frishie v. United /States, 157 U. S. 160; United States v. Reed, 27 Fed. Cas. 737; United States V, Terry, 39 Fed. Rep. 355 ; United States v. McA voy^ 18 How. Pr. 3*80. In the state courts see State v. Terry, 30 Missouri, 368; Ex parte Brown, 72 Missouri, 83; Commonwealth v. Smyth, 11 Cush. 473; State v. Wolcott, 21 Connecticut, 272; State V. Magrath, 44 N. J. L. 227; Blaney v. State, 74 Maryland, 153; People v. Northey, 77 California, 618; Meddlough v. Oommonicealthj 67 Pa. St. 30; Rotvland v. Commonwealth, 82 Pa. St. 405; Thompson and Merriam on Juries, §§ 612, 615; Wliartou's Crim. PL & Pr. 8th ed. g 338. OVJair v. People, 32 111. App. 277; State [54] v. Smith, Meigs, 99; Lewis v. Board of Conun'tssioners, 74 N. Car. 194, and United States V. Kilpati'ick, 16 Fed. Rep. 765, distinguished. A specific charge against a particular person is not neces- sary to give the grand jury jurisdiction. The English prac- tice of private prosecutors has never prevailed. The grand jury acts on information of the district attorney or from its own knowledge or information otherwise obtained. Thomp- son and Merriam on Juries, g 609; 1 Bishop's Crim. Pr. § 278; charge of Mr. Justice Field, 30 Fed. Cas. 994; The King v. John Lnkens, 1 Dallas, 7. In its beginnings the grand jury seems to have been de- vised as a convenient method to assist itinerant justices in England in detecting crime and punishing it. They seem clearly to have been expected to investigate, and originally they indicted frequentl}^ on mere rumor. See Pollock & Maitland^s History of the English Law, vol. 2, pp. 622, 639, for description of the grand jury before tlie time of, Edward I, founded on Bracton and Britton; Bracton, " De Corona," Twiss' ed. vol. 2, c. 22, fol. 143, p. 451; Reeves' History HAIiE V. HENKEL. 887 Argument for the United States. English Law, vol. 1, p. 457; Stephens' History Crim. Law, vol. 1, p. 253; Stubbs' Constitutional History of England, vol. 1, p. 661 et seq.; Earl of Macdesfield v. Starkey (1684). 10 Howell's State Trials, 1330. A specific charge involves definiteness. Date and circum- stances and the technical accuracy characteristic of an indict- ment are not necessary to the exercise of jurisdiction by the grand jury. A witness could object to answering a question because the proceeding Avas not properly inaugurated, demand a ruling by the court as to whether under the charge presented the question was admissible; and thus an investigation begun before the grand jury would soon assume the asi)ect of a trial in court, subverting the whole purpose of the grand jury system and seriously affecting the administration of justice. If appellant's claim be conceded that a charge be necessary, it must follow that he can object to the admissibility of evidence [55] on the ground that it is not competent under the charge. But the granting of such a right would neces- sarily result in a violation of the secrecy of the proceedings of the grand jury and of the rule that a witness has no right to question the regularity of the proceedings of a grand jury. United States v. Brown, 1 Sawy. 533, I ed. Cas. 14671; McGregor v. United States, 134 Fed. Rep. 187; United States v. Cohhan, 127 Fed. Rep. 713; United States V. Farrmgton, 5 Fed. Rep. 343; United States v. Ambrose, 3 Fed. Rep. 283. The court will assume that the district attornev and the grand jury proceeded in accordance with their sworn duties and in accordance with law. United States v. Terty, 39 Fed. Rep. 355; United States v. Hunter, 15 Fed. Rep. 712; United States v. Reed, 2 Blatchf. 435. A witness before a grand jury has no right to raise ob- jections as to the constitution of that body, unless his con- stitutional rights are clearly in danger. Ex parte Haymond. 91 California, 545. No inconvenient or imjust results can attend the adoption of the rule the Government contends for, and sound public 201 UNITED STATES REPORTS, 55. Argument for the United States. policy demands that it be held that the action was properly set in motion in this case. It was contended below that to concede inquisitorial pow- ers to a grand jury without in every case requiring a specific charge against a particular person would open up under the guise of the administration of justice possibiHties of wrong and oppression *' beyond conception." In the many jurisdictions where broader inquisitorial powers exist and have been exercised by grand juries, they have not been used as an engine of oppression. The system is surrounded with such safeguards that the danger of abuses is very remote. Tlie scope of the powers of a grand jury is limited by the jurisdiction of tlie court of which it is an ap})endage. United States V. Hillj 1 Brock. 156. It is also subject to the direc- tion of the court and cannot effectually exercise some of its most [561 important functions without the interposition of the court. It must resort to the court to enforce by suhpce^m the attendance of witnesses, and it is only through the order of the court that witnesses may be punished for contumacy. Commonwealth v. Bannon, 9T Massachusetts, 214; Heard v. Pierce^ 8 Cush. 3S8. The court may inquire whether the grand jury has exceeded its powers, People v. Xaughton^ 7 Abb. U. S. 421, 426; Denning v. The State, 22 Arkansas, 131, 132, and may punish the entire jury or any of its mem- bers. Tm-k V. State, 7 Ohio Pt. II.* 240, 243 ; State v. Cowan, 1 Head, 280; lie EUu, Hemp. 10. Thus, while the grand jury is an independent body, its indei>endence is confined within well-defined limits. Whether a cause or action under the title mentioned in the subpojna was pending is unimportant. The proceeding might have proceeded without a title. Titles of proceedings before a grand jury are invariably fictitious. United States V, Reed, 27 Fed. Cas. 737; Appeal of flartranft. 85 Pa. St. 433. The Fourth Amendment does not relate to the compulsory production of papers for use as evidence. Summers v. Moseh'tj. i> Cr. & M. 477; Wertheim v. Continental R. c& T, Co., 15 Fed. Rep. 718; Adams v. United States, 192 U. S. 585 ; Interstate Com., Com, v. Baird, 194 U. S. 25 ; In re Moser, HALE V. HENKEL. Argument for the United States. 889 101 N. W. Eep. 591; 1 Greenleaf, Evidence, 16th ed. § 469a; Boyd V. United States, 116 U. S. 616. Unreasonableness under the Fourth Amendment cannot be predicated upon either the indefiniteness of the description of the books and papers called for in the subpoena or upon the volume of evidence and the inconvenience in producing it. United States v. Bahcock, 3 Dillon, 567; In re Storror, 63 Fed. Rep. 564 ; United States v. Tilden, 10 Ben. 566 ; In re Mitchell, 12 Abb. Pr. 249. It was not for the witness to determine whether the de- scription of the papers was sufficiently definite or the papers themselves material to the inquiry, or whether the produc- tion of such a volume of papers was oppressive. He must comply, so far as it was possible, with the terms of the writ and produce the [57] papers submitting, as he might be advised, any objection to their use in evidence. See note by John D. Lawson, 15 Fed. Rep. 723; see also Doe v. Kelly, 4 Dowl. 273 ; Key v. Russell, 7 Dowl. 693 ; Amey v. Long, 9 East, 483; Holtz v. Schmidt, 2 Jones & Sp. 28; Bull v. Love- land, 10 Pick. 9; Chaplain v. Briscoe, 5 Sm. & M. 198; Corsen v. Dubois, 1 Holt, 239 ; Field v. Beaumont, 1 Swanst. 209 ; Mitchell's Case, 12 Abb. Pr. 249 ; Doe v. Clifford, 2 C. & K. 448; In re O'Toole, 1 Tuck. 39. See also Wigmore on Evidence, § 2200, at page 2979. Every person subject to the jurisdiction of a competent tribunal is bound to give testimony. This is a " solemn and important duty that every citizen owes to his country." Ward Y. State, supra. He is privileged to decline only in case his answers may tend to criminate him. Our system of jurisprudence does not permit a witness to refuse to answer because he prefers not to or even because his answer will tend to degrade him, except, only, where degrading testimony is interposed solely to affect his credibility. 1 Greenl. on Ev. §§ 454, 455. See cases cited. A^liere the reason of the privi- lege ceases the privilege also ceases. Broom's Legal Maxims, 654; Brown v.Walker, 161 U. S. 597, 599. The protection of the Fourth and Fifth Amendments is based alone upon the personal privilege of the witness. The objections urged by the witness cannot be relied upon for the benefit of the corporation of which he is an officer, and if oiHi 201 UNITED STATES REPORTS, 57. Opinion of the Court. the privilege cannot be asserted in Ijehalf of a corporation under the Fifth Amendment it is plain that it may not be so availed under the Fourth Amendment. Where the question of criminality is not involved, an officer of a corporation having the books of the company in his custody is bound to produce them in obedience to a 8%ib- pmna duces tecum, Werthetm v. Continental Wy & Trust Co.^ 15 Fed. Eep. 718. The same rule applies, even though the production of the evidence may tend to incriminate the corporation; one of its officers may not assert in its behalf the privilege secured to persons by the Fifth Amendment of the Constitution. See [58] United States v. Amedy, 11 Wheat. 412 ; Beaston v. The Fai^mers'' Bank of Delaroare^ 12 Pet. 134. That word in the Fifth Amendment does not include corporations, as the mischief intended to be reached did not apply to corporations. The privilege embodied in the Amendment is upheld on grounds which vary to some extent; but the privilege is personal and is based upon the consideration of the law for the individual in his capacity as a witness. Brown v. Walh- er, 161 U. S. 5%; Best on Evidence, 9th ed. p. 113; 3 Taylor ^ on Evidence, § 1453; 1 Greenleaf on Evidence, 16th ed. § 469c?, and cases cited in notes; Commonwealth v. Shaw, 4 Cush. 594; Phillipps on Evidence. 4th Am. ed. p. 935; Starkie on Evidence, 10th Am. ed. 4; Wigmore on Evidence. § 2263; State v. Wentworth, 65 Maine, 234, Ml; Reynolds v. Reynolds, 15 Cox Cr. cases, 108, 115; Bartlett v. Lewis, 12 C. B. ("N. S.) 249, 265. While sporadic cases look in a different direction, there have been many decisions, both in this country and. in Eng- land, in which the courts have refused to permit the privileg«; to be asserted by an officer or employe in behalf of a corpora- tion of which he is the representative. New York Life Ins. Co. V. People, 195 Illinois, 430 ; In re Moser, 101 N. W. Rep. 591 ; In re Peasley, 44 Fed. Rep. 271 ; Gihhons v. Waterloo Bridge, 5 Price, 491 ; Rex v. Purnell, Wilson, 239. Mb. Justice Brown, after making the foregoing state- ment, delivered the opinion of the court. Two issues are presented by the record in this case, which are so far distinct as to require separate consideration. They HALE V. HENKEL. 891 Opinion of the CJourt. depend upon the applicability of different provisions of the Constitution, and, in determining the question of affirmance or reversal, should not be confounded. The first of these involves the immunity of the witness from oral examination ; the second, the legality of his action in refusing to produce the documents called for by the subpoena duces tecum. 1. The appellant justifies his action in refusing to answer the [59] questions projiounded to him, 1st, upon the ground that there was no specific " charge " pending before the grand jury against any particular person; 2d, that the an- swers would tend to criminate him. The first objection requires a definition of the word " charge " as used in this connection, which it is not easy to furnish. An accused person is usually charged with crime by a complaint made before a committing magistrate, which has fully performed its office when the party is committed or held to bail, and it is quite unnecessary to the finding of an indictment by a grand jury; or by an information of the district attorney, which is of no legal value in prosecutions for felony ; or by a presentment usually made, as in this case, for an offense committed in the presence of the jury; or by an indictment which, as often as not, is drawn after the grand jury has acted upon the testimony. If another kind of charge be contemplated, when and by whom must it be preferred ? Must it be in writing, and if so, in what form ? Or may it be oral ? The suggestion of the witness that he should be furnished with a copy of such charge, if applicable to him is applicable to other witnesses summoned before the grand jury. Indeed, it is a novelty in criminal procedure with which we are wholly unacquainted, and one which might involve a betrayal of the secrets of the gi^and jury room. Under the ancient English system, criminal prosecutions were instituted at the suit of private prosecutors, to which the King lent his name in the interest of the public peace and good order of society. In such cases the usual practice was to prepare the proposed indictment and lay it before the grand jury for their consideration. There was much propriety in this, as the most valuable function of the grand jury was not only to examine into the commission of crimes. 892 201 UNITED STATES KEPORTS, 59. Opinion of the Court. but to stand between the prosecutor and the accused, and to determine whether the charge was founded upon credible testimony or was dictated by malice or personal ill will. We are pointed to no case, however, holding that a grand jury [60] cannot proceed without the formality of a written charge. Indeed, the oath administered to the foreman, which has come down to us from the most ancient times, and is found in Rex v. Shaftsbmy, 8 Howell's State Trials, 759, indicates that the grand jury was competent to act solely on its own volition. This oath was that " you shall diligently inquire and true presentments make of all such maters, ar- ticles, and things as shall be given to you in charge, as of all other matters^ and things as shall come to your own knowl- edge touch'mg this present service," etc.* This oath has remained substantially unchanged to the present day. There was a difference, too, in the nomenclature of the two cases of accusations by private persons and upon their own knowl- edge. In the former case their action was embodied in an indictment formally laid before them for their consideration ; in the latter case, in the- form of a presentmen|:. Says Blackstone in his Commentaries, Book IV. page 301 : "A presentiiipnt properly speakini?, is a notice talcen bv a grancl Jury of any offense from tlieir own knowledge or observation, without any bill of indictment laid before them at the suit of the Kinj? as the premitnient of a nuisance, a libel, and the like; upon which the officer of the court nnist afterwards frame an indictment, before the party presented can be put to answer it." Substantially the same language is used in 1 Chitty Crim. Ijaw, 162. In United States v. fliU, 1 Brock. 156, it was indicated by Chief Justice Marshall that a presentment and indict- ment are to be considered as one act, the second to be con- sidered only as an amendment to the first, and that the usage of this country has been to pass over, unnoticed, presentments on which the attorney does not think it proper to institute proceedings. In a case arising in Tennessee the grand jury, without the agency of the district attorney, had called witnesses before them, whom they interrogated as to their knowledge concern- ing the then late Cuban expedition. Mr. Justice Catron sus- tained the legality of the proceeding and compelled the wit- HALE V. HENKEL. Opinion of the Court. 893 [61 J nesses to answer. His opinion is reported in AVliar- ton's Criminal Pleading and Practice, 8th ed. § 337. He says: "The grand jury have the undoubted right to send for witnesses and have them sworn to give evidence gen- erally, and to found presentments on the evidence of such witnesses; and the question here is, whether a witness thus introduced is legally boiind to disclose whether a crime has been committed, and also who committed the crime." His charge contains a thorough discussion of the whole subject. While presentments have largely fallen into disuse in this country, the practice of grand juries acting upon notice, either of their own knowledge or upon information obtained by them, and incorporating their findings in an indictment, still largely obtains. Whatever doubts there may be with regard to the early English procedure, the practice in this country, under the system of public prosecutions carried on by officers of the State appointed for thai purpose, has been entirely settled since the adoption of the Constitution. In a lecture delivered by Mr. Justice Wilson of this court, who may be assumed to have known the current practice, before the stu- dents of the University of Pennsylvania, he says (Wilson's Works, vol. II, page 213) : " It has been alleged, that grand juries are confined, in their in- quiries, to the bills offered to them, to the crimes given them in charge, and to the evidence brought before them by the prosecutor. But these conceptions are much too contracted; they present but a very im- perfect and unsatisfactory view of the duty required from grand jurors, and of the trust reposed in them. They are not appointed for the prosecutor or for the court; they are appointed for the govern- ment and for the people ; and of both the government and people it is surely the concernment that, on one hand, all crimes, whether given or not given in charge, whether described or not described with pro- fessional skill, should receive the punishment, which the law de- nounces; and that, on the other hand, innocence, however strongly assailed by accusations drawn up in regular form, and [62] by accusers, marshalled in legal array, should, on full investigation, be secure in that protection, which the law engages that she shall enjoy inviolate. "The oath of a grand juryman — and his oath is the commission under which he acts — assigns no limits, except those marked by dili- gence itself, to the course of his inquiries : Why, then, should' it be circumscribed by more contracted boundaries? Shall diligent inquiry be enjoined? And shall the means and opportimities of inquiry be prohibited or restrained ? " Similar language was used by Judge Addison, President of the Court of Common Pleas, in charging the grand jury an UNITED STATES KEPORTS, 62. Oiiiiiiou of the Court. lit the session of the Common Pleas Court in 1791 (Addison's Pa. Rep. Appx. p. 38) : *' If the graiMl jury, of their o^tm knmcledgc, or the knowledge of any of them, or frooi the extimination of witnesses, know of any offense committed in the county, for which no indictment is preferred to them, it is their duty, either to inform the officer, who prosecutes for the State, of the nature of the offense, and desire that an indictment for it be laid before tliem ; or, if they do not, or if no such indictment he given them, it is their duty to give such information of it to tlie court; stating, without any particular form, the facts and circumstances which constitute the offense. This is called a present- ment" The practice then prevailing, with regard to the duty of grand juries, shows that a presentment may be based not only upon their own personal knowledge, but from the exam- ination of witnesses. Wliil© no case has arisen in this court in which the question has been distinctly presented, the authorities in the state courts largely preponderate in favor of the theory that the grand jury may act upon information received by them from the examination of witiicshos without a formal indictment, or other charge previously laid before them. An analysis of cases approving of this method of procedure would unduly burden this opinion, but the following are the leading ones upon the subject: Ward v. State, 2 Missouri, 120; State v. 7'en*3^, 30 Missouri, 368 ; Ew [68] parte Brown, 72 Mni^^onri, 83; Commonwealth v. Smyth, 11 Cushing, 473; State v. Wolcott, 21 Connecticut, 272, 280 ; State v. Magrath, 44 N. J. L. 227; Thompson & Merriam on Juries, §§ 615-617. In Blmiey v. Maryland. 74 Maryland, li53, the court said: " However restricted the functions of the grand juries may be elsewhere, we hold that in this State they have plenary inquisitorial powers, and may lawfully themselves, and upon their own motion, originate charges against offenders though no preliminary proceedings have been had before a magistrate, and though neither the court not the state's attorney has laid the matter before them." The rulings of the inferior Federal courts are to the same effect. Mr. Justice Field, in charging a grand jury in Cali- fornia (2 Sawy. 667), said to the grand jury acting. upon their own knowledge : "Not by rumors or reports, but by knowledge acquired from the evidence before you, and from your own observations. Whilst you are inquiring as to one offense, another and a different offense may be proved, or witnesses before you may, in testifying, commit the crime of perjury." HALE V. HENKEL. 895 Opinion of the Court. Similar language was used in United States v. KimhalL 117 Fed. Rep. 156, 161; United States v. Reed, 2 Blatch. 435^ 449; United States v. Terry, 39 Fed. Rep. 355. And in Frishie v. United States, 157 IJ. 8. 160, it is said by Mr. Justice Brewer: "But in this country it is for the grand jury to investigate any aneged crime, no matter how or by whom suggested to them and after determining that the evidence is sufficient to justify putting the suspected party on trial, to direct the preparation of the formal charge or Indictment." There are doubtless a few cases in the state courts which take a contrary view, but they are generally such as deal with the abuses of the system, as the indiscriminate sunnnon- iiig of witnesses with no definite object in view and in a spirit of meddlesome inquiry. In the most pertinent of these cases. In re Lester, Ti Georgia, 143, the Mayor of Savannah, who was also ex [64] olficio the presiding judge of a court of record, was called upon to bring into the Superior Court the " Information Docket " of his court, to be used as evidence by the State in certain cases pending before the grand jury. It was held "that the powers of the body are inquisitorial to a certain extent is undeniable; yet they have to be exercised within well defined limits. ♦ * * rpj^g grand jury can find no bill nor make any pre- sentment except upon the testimony of witnesses sworn in a particular case, where the party is charged with a specified offense." This case is readily distinguishable from the one under consideration, in the fact that the subpoena in this case did specify the action as one between the United States and the American Tobacco Company and the Mac Andrews-Forbes Company; and that the Georgia Penal Code prescribed a form of oath for the grand jury, "that the evidence you shall give the grand jury on this bill of indictment (or pre- sentment, as the case may be, here state the case), shall be the truth," etc. This seems to confine the witness to a charge already laid before the jury. In Lewis v. Board of Commissione7^s, 74 N. Car. 194, the English practice, which requires a preliminary inv( stigation whei-e the accused can confront the accuser and witnesses with testimony, was adopted as more consonant to principles 896 201 UNITED STATES REPORTS, 64. Opinion of the Conrt. of justice and personal liberty. It was further said that none but witnesses have any business before the gi-and jury, and that the solicitor may not be present, even to examine them. The practice in this particular in the Federal courts has been quite the contrarv. Other cases lay down the principle that it must be made to iCppear to the grand jury that there is reason to believe that a crime has been committed, and that they have not the power to institute or prosecute an inquiry on the chance that some crime may be discovered. In Matter of Morse, 18 N. Y. Criminal Eep. 312; State v. Adams, 70 Tennessee, 647 (an unimportant case, turning upon a local statute). In Penn- sylvania grand juries are somewhat more restricted in their powers than is usual in other States, McCnllongh v. Com- monwealth, 67 Pa. St. [65] 30; Rowand v. Commonwealth, 82 Pa. St. 405; Commonwecdth v. Green, 126 Pa. St. 531, and in Tennessee inquisitorial powers are granted in certain cases and withheld in others. State v. Adams, supra; State v. Smith, Meigs, 99. We deem it entirely clear that under the practice in this country, at least, the examination of witnesses need not be preceded by a presentment or indictment formally drawn up, but that the grand jury may proceed, either upon their own knowledge or upon the examination of witnesses, to inquire for themselves whether a crime co^izable by the court has been committed ; that the result of their investigations may be subsequently embodied in an indictment, and that in summoning witnesses it is quite sufficient to apprise them of the names of the parties with respect to whom they will be called to testify, without indicating the nature of the charge against them. So valuable is this inquisitorial power of the grand jury that, in States where felonies may be prosecuted by information as well as indictment, the power is ordinarily reserved to courts of impanelling grand juries for the investi- gation of riots, frauds and nuisances, and other cases where it is impracticable to ascertain in advance the names of the persons implicated. It is impossible to conceive that in such cases the examination of witnesses must be stopped until a basis is laid by an indictment formally preferred, when the very object of the examination is to ascertain who shall HALE V. HENKEL. 897 Opinion of the Court. be indicted. As criminal prosecutions are instituted by the State through an officer selected for that purpose, he is vested with a certain discretion with respect to the cases he will call to their attention, the number and character of the witnesses, the form in which the indictment shall be drawn, and other details of the proceedings. Doubtless abuses of this power may be imagined, as if the object of the inquiry were merely to pry into the details of domestic or business life. But were such abuses called to the attention of the court, it would doubtless be alert to repress them. While the grand jury may not indict upon current rumors or unveri- hed reports, they may act upon knowledge acquired' either from their own obser- [66] vations or upon the evidence of witnesses given before them. 2. Appellant also invokes the protection of the Fifth Amendment to the Constitution, which declares that no person "shall be compelled in any criminal case to be a wit- ness against himself," and in reply to various questions put to him he declined to answer, on the ground that he would thereby incriminate himself. The answer to this is found in a proviso to the General Appropriation Act of February 25, 1903, 32 Stat. 854, 904, that " no person shall be prosecuted or be subjected to any l)enalty 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 upder said acts," of which the Anti Trust Law is one, providing, however, that " no person so testify- ing shall be exempt from prosecution or punislmient for perjury committed in so testifying." While there may be some doubt whether the examination of witnesses before a grand jury is a suit or prosecution, Me have no doubt that it is a " proceeding " within the meaning of this proviso. The word should receive as wide a construc- tion as is necessary to protect the witness in his disclosures, whenever such disclosures are made in pursuance of a judi- cial inquiry, whether such inquiry be instituted by a grand jury, or upon the trial of an indictment found by them. The word " proceeding " is not a technical one, and is aptly used 21220— VOL 2—07 m ^57 OiFO 201 UNITED STATES BEPOKTS, 66. Opiuion of the Court. by courts to designate an inquiry before a grand jury. It lias received this interpretation in a number of cases. Yates V. The Q}f€€n, 14 Q. B. D. 648; Hogan v. State, 30 Wiscon- sin, 4^». The object of the aniendnient is to establish in express language and upon a firm basis the general principle of English and American jurisprudence, that no one shall be compelled to give testimony which may expose him to prose- cution for crime. It is not declared that he may not be com- pelled 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 ex- [67] pose him to prosecu- cntion. If the testimony relate to criminal acts long since past, and against the prosecution of which the statute of limi- tations has run, or for which he has already received a par- don or is guarantec*d an immunity, the amendment does not apply. The interdiction of the Fifth iimendment operates only where a witness is asked to incriminate himself— in other words, to give testimony which may possibly expose him to m criminal charge. But if the criminality has already been taken away, the Amendment ceases to apply. The crimi- nality 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 Ms 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. The extent of this immu- nity was fully considered by this court in Counselman v. Hitchcock, 142 U. S. 547, in which the immunity offered by Kev. Stat, section 860, was declared to be insufficient. In consequence of this decision an act was passed applicable to testimony before the Interstate Commerce Commission in al- most the exact language of the act of February 25, 1903, above quoted. This act was declared by this court in Broion V. Wdlher, 161 U. S. 591, to afford absolute immunity against prosecution for the offense to which the question related, and HALE V. HENKEL. 899 Opinion of the Court. deprived the witness of his constitutional right to refuse to answer. Indeed, the act was passed apparently to meet the declaration in Counselman v. Hitchcock, p. 586, that "a statutory enactment, to be valid, must afford absolute immu- nity against future prosecution for the offense to which the question relates." If the constitutional Amendment were unaffected by the immunity statute, it would put it within the power of the witness to be his own judge as to what would tend to incriminate him, and would justify him in re- fusing to answer almost [68] any question in a criminal case, unless it clearly appeared that the immunity was not set up in good faith. We need not restate the reasons given in Brown v. Walkei' both in the opinion of the court, and in the dissenting opin- ion, wherein all the prior authorities were reviewed, and a conclusion reached by a majority of the court, which fully covers the case under consideration. The suggestion that a person who has testified compulso- rily before a grand jury may not be able, if subsequently in- dicted for some matter concerning which he testified, to pro- cure the evidence necessary to maintain his plea, is more fanciful than real. He would have not only his own oath in support of his immunity, but the notes often, though not always, taken of the testimony before the grand jury, as well as the testimony of the prosecuting officer, and of every mem- ber of the jury present. It is scarcely possible that all of them would have forgotten the general nature of his incrimi- nating testimony or that any serious conflict would arise therefrom. In any event, it is a question relating to the weight of the testimony, which could scarcely be considered in determining the effect of the immunity statute. The dif- ficulty of maintaining a case upon the available evidence is a danger which the law does not recognize. In prosecuting a case, or in setting up a defense, the law takes no account of the practical difficulty which either party may have in pro- curing his testimony. It judges of the law by the facts which each party claims, and not by what he may ultimately establish. The further suggestion that the statute offers no immunity from prosecution in the state courts was also fully considered 900 201 UNITED STATES REPOKTS, 68. OpinioB of the Court. in Brown v. Walker and held to be no answer. The converse of this was also decided in Jack v. Kansas, 199 U. S. 372, namely, that the fact that an immunity granted to a witness under a state statute would not prevent a prosecution of such witness for a violation of a Federal statute, did not invalidate such statute under the Fourteenth Amendment. It was held both by this court and by the Supreme Court of Kansas that l%%\ the possibilty that information given by the witness might be used under the Federal act did not operate as a rea- son for permitting the witness to refuse to answer, and that a danger so unsubstantial and remote did not impair the legal immunity. Indeed, if the argument were a sound one it might be carried still further and held to apply not only to state prosecutions within the same jurisdiction, but to prosecutions under the criminal laws of other States to which the witness might have subjected himself. The question has been fully considered in England, and the conclusion reached by the courts of that country that the only danger to be con- sidered is one arising within the same jurisdiction and under the same sovereignty. Queen v. Boyes, 1 B. & S. 311 ; King of the Two Sicilies v. Willcox, 7 State Trials (N. S.), 1049, 1068; State v. March, 1 Jones (N. Car.), 526; State v. Thomas, 98 N. Car. 599. The case of U^iited States v. Saline Bank, 1 Pet. 100, is not in conflict with this. That was a bill for discovery, filed by the United States against the cashier of the Saline Bank, in the District Court of the Virginia District, who pleaded that the emission of certain unlawful bills took place, within the State of Virginia, by the law whereof penalities were in- flicted for such emissions. It was held that defendants wero not bound to answer and subject themselves to those penal- ties. It is sufficient to say that the prosecution was under a state law which imposed the penalty, and that the Federal court was simply administering the state law, and no ques- tion arose as to a prosecution under another jurisdiction. But it is further insisted that while the immunity statute may protect individual witnesses it would not protect the corporation of which appellant was the agent and repre- sentative. This is true, but the answer is that it was not designed to do so. The right of a person under the Fifth HALE V. HENKEL. Opinion of the Court. 1)01 iVmendment to refuse to incriminate himself is purely a per- sonal privilege of the witness. It was never intended to permit him to plead the fact that some third person might be incriminated by his testimony, even [70] though he were the agent of such person. A privilege so extensive might be used to put a stop to the examination of every witness who was called upon to testify before the grand jury with regard to the doings or business of his principal, whether such prin- cipal were an indivddual or a corporation. The question whether a corporation is a " person " within the meaning of this Amendment really does not arise, except perhaps where a corporation is called upon to answer a bill of discovery, since it can only be heard by oral evidence in the person of some one of its agents or employes. The Amendment is limited to a person who shall be compelled in any criminal case to be a witness against himself, and if he cannot set up the privilege of a third person, he certainly cannot set up the privilege of a corporation. As the combination or conspiracies pro- vided against by the Sherman Anti Trust Act can ordinarily f>e proved only by the testimony of parties thereto, in the person of their agents or employes, the privilege claimed would practically nullify the whole act of Congress. Of what use would it be for the legislature to declare these com- binations unlawful if the judicial power may close the door of access to every available source of information upon the subject? Indeed, so strict is the rule that the privilege is a personal one that it has been held in some cases that counsel will not be allowed to make the objection. We hold that the questions should have been answered. 3. The second branch of the case relates to the non-pro- duction by the witness of the books and papers called for by the suhpmna duces tecum. The witness put his refusal on the ground, first, that it was impossible for him to collect them within the time allowed ; second, because he was advised by counsel that under the circumstances he was under no obli- gation to produce them; and, finally, because they might tend to incriminate him. Had the witness relied solely upon the first ground, doubt- less the court would have given him the necessary time. The last ground we have already held untenable. While the 902 201 UHITED STATES REPORTS, 71, Opinion of the Court. second ground does not set forth with technical accuracy the real rea- [71] son for declining to produce them, the wit- ness could not be expected to speak with legal exactness, and we think is entitled to assert that the subpoena was an in- fringement upon the Fourth Amendment to the Constitu- tion, which declares that " the right of the people to be secure in their persons, houses, papers and effects, against unrea- sonable searches and seizures, shall not be violated, and no warrants shall issue but upon probable cause, supported by oath or affirmation, and particularly describing the place txi be searched, and the persons or things to be seized. The construction of this amendment was exhaustively con- sidered in the case of Boyd v. United States, 116 U. S. 616, which was an information in rem against certain cases of plate glass, alleged to have tieen imported in fraud of the revenue acts. On the trial it became important to show the quantity and value of the glass contained in a niunber of cases previously imported; and the district judge, under section 5 of the act of June 22, 18T4, directed a notice to be given to the claimants, requiring them to produce the invoice of these cases under penalty that the allegations respecting their contents should be taken as confessed. We held (p. 622) "that a compulsory production of a man's private papers to establish a crindnal charge against him, or to forfeit his property, is within the scope of the Fourth Amendment to the Constitution, in all cases in which a search and seizure would be," and that the order in (piestion was an unreasonable search and seizure within that Amend- ment. The history of this provision of the Constitutioii and its connection with the former practice of general w^Miants, or writs of assistance, was given at great length, and the con- clusion reached that the compidsory extortion of a man's own testimony, or of his private papers, to connect him with a crime or a forfeiture of his goods, is illegal (p. 634). " is compelling him to be a witness against liimself, within the meaning of the Fifth Amendment to the Constitution, and is the equivalent of a search and seizure — and an unreason- able search and seizure— within the Fourth Amendment. [72] Subsequent cases treat the Fourth and Fifth Amend- ments as quite distinct, having different histories, and per- HALE V. HENKEL. 903 Opinion of tlie Court. forming separate functions. Thus in the case of Interstate Commerce Commission v. Brimson, 154 U. S. 447, the con- stitutionality of the Interstate Commerce Act, so far as it authorized the Circuit Courts to use their processes in aid of inquiries before the Commission, was sustained, the court observing in that connection : " It was clearly competent for Congress, to that end, to Invest the Commission with authority to require the attendance and testimony of witnesses, and the production of booljs, papers, tariffs, contracts, agreements and documents relating to any matter legally c-ommitted to that body for investigation. We do not understand that any of these propositions are disputed in this case." The case of Adams v. New York, 192 U. S. 585, which was a writ of error to the Supreme Court of the State of New York, involving the seizure of certain gambling parapher- nalia, was treated as involving the construction of the Fourth and Fifth Amendments to the Federal Constitution. It was held, in substance, that the fact that papers pertinent to the issue may have been illegally taken from the possession of the party against whom they are offered, was not a valid objection to their admissibility; that the admission, as evi- dence in a criminal trial of papers found in the execution of a valid search warrant prior to the indictment, was not an infringement of the Fifth Amendment, and that by the introduction of such evidence defendant was not compelled to incriminate himself. The substance of the opinion is contained in the following paragraph. It was contended that " if a search warrant is issued for stolen property and burglars' tools be discovered and seized, they are to be ex- cluded from testimony by force of these Amendments. We think they were never intended to have that effect, but are rather designed to protect against compulsory testimony from a defendant against himself in a criminal trial, and to punish wrongful invasion of the house of the citizen or the unwarranted seizure of his papers and property, and to [73] render invalid legislation or judicial procedure having such effect." The Boyd case must also be read in connection with the still later case of Interstate Commerce Commission v. Baird, 194 U. S. 25, which arose upon the petition of the Commis- sion for orders requiring the testimony of witnesses and •nrx 201 UNITED STATES REPORTS, 73. Opinion of tbe Court the production of certain books, papers and documents. The case grew out of a complaint against certain railway companies that they charged unreasonable and unjust rates for the transportation of anthracite coal. Objection was made to the production of certain contracts between these companies upon the ground that it would compel the wit- nesses to furnish evidence against themselves in violation of the Fifth Amendment, and would also subject the parties to unreasonable searches and seizures. It was held that the Circuit Court erred in holding the contracts to be irrelevant, and in refusing to order their production as evidence by the witnesses who were parties to the appeal. In delivering the opinion of the court the Boyd case was again considered in connection with the Fourth and Fifth Amendments, and the remark made by Mr. Justice Day that the immunity statute of 1893 " protects the witness from such use of the testimony given as will result in his punishment for crime or the for- feiture of his estate." Having already held that by reason of the immunity act of 1903, the witness could not avail himself of the Fifth Amendment, it follows that he cannot set up that Amendment as against the production of the books and papers, since in respect to these he would also be protected by the immunity act We think it quite clear that the search and seizure clause of the Fourth Amendment was not intended to in- terfere with the power of courts to compel, through a mhpcPMa duces tecum^ the production, upon a trial in court, of documentary evidence. As remarked in Snmmers v. Moseley, 2 Cr. & M. 477, it would be " utterly impossible to carry on the administration of justice " without this writ. The following authorities are conclusive upon this question : Amey v. Long, 9 East, 478; Bull v. Love- [74] land, 10 Pick. 9; U, S. Express Co. v. Henderson, 69 Iowa, 40; Green- leaf on Evidence, 469a. If, whenever an officer or employe of a corporation were summoned before a grand jury as a witness he could refuse to produce the books and documents of such corporation, upon the ground that they would incriminate the corporation it- self, it would result in the failure of a large number of cases where the illegal combination was determinable only upon the examination of such papers. Conceding that the witness HALE V. HENKEL. 905 Opinion of the Court. was an offi^cer of the corporation under investigation, and that he was entitled to assert the rights of the corporation with respect to the production of its books and papers, we are of the opinion that there is a clear distinction in this particular between an individual and a corporation, and that the latter has no right to refuse to submit its books and papers for an examination at the suit of the State. The individrial may stand upon his constitutional rights as a citizen. He is entitled to carry on his private business in his own way. His power to contract is unlimited. He owes no duty to the State or to his neighbors to divulge his business, or to open his doors to an investigation, so far as it may tend to criminate him. He owes no such duty to the State, since he receives nothing therefrom, beyond the pro- tection of his life and property. His rights are such as ex- isted by the law of the land long antecedent to the organiza- tion of the State, and can only be taken from him by due process of law, and in accordance with the Constitution. Among his rights are a refusal to incriminate himself, and the immunity of himself and his property from arrest or seizure except under a warrant of the law. He owes nothing to the public so long as he does not trespass upon their rights. Upon the other hand, the corporation is a creature of the State. It is presumed to be incorporated for the benefit of the public. It receives certain special privileges and fran- chises, and holds them subject to the laws of the State and the limitations of its charter. Its powers are limited by law. It can make no contract not authorized by its charter. Its rights to [75] act as a corporation are only preserved to it so long as it obeys the laws of its creation. There is a reserved right in the legislature to investigate its contracts and find out whether it has exceeded its powers. It would be a strange anomaly to hold that a State, having chartered a corporation to make use of certain franchises, could not in the exercise of its sovereignty inquire how these franchises had been employed, and whether they had been abused, and demand the production of the corporate books and papers for that purpose. The defense amounts to this: That an officer of a corporation, which is charged with a criminal violation of the statute, may plead the criminality of such corporation as a refusal to produce its books. To state this proposi- me 201 UNITEB STATES BEPORTS, 75. Opinion of the Court tion is to answer it. While an individual may lawfully re- fuse to answer incriminating questions unless protected by an inmiunity statute, it does not follow that a corporation, rested with special privileges and franchises, may refuse to 4iow its hand when charged with an abuse of such privileges. It is true that the corporation in this case was chartered under the laws of New Jersey, and that it receives its fran- chise from the legislature of that State ; but such franchises, so far as they involve questions of interstate commerce, must also be exercised in subordination to the power of Congress to regulate such commerce, and in respect to this the General Government may also assert a sovereign authority to ascertain whether such franchises have been exercised in a lawful manner, with a due regard to its own laws. Being subject to this dual sovereignty, the General Government possesses the same right to see that its own laws are respected as the St^te would have with respect to the special franchises vested in it by the laws of the State. The powers of the Gen- eral Government in this particular in the vindication of its own laws, are the same as if the corporation had been created by an act of Congress. It is not intended to intimate, how- ever, that it has a general visitatorial power over state corporations. 4. Although, for the reasons above stated, we are of the [76] opinion that an officer of a corporation which is charged with a violation of a statute of the State of its creation, or of an act of Congress passed in the exercise of its constitu- tional powers, cannot refuse to produce the books and papers of such corporation, we do not wish to be understood as holding that a corporation is not entitled to immunity, under the Fourth Amendment, against unremonahle searches and seizures. A corporation is, after all, but an association of in- dividuals under an assumed' name and with a distinct legal entity. In organizing itself as a collective body it waives no constitutional immunities appropriate to such body. Its property cannot be taken without compensation. It can only be proceeded against by due process of law, and is pro- tected, under the Fourteenth Amendment, against unlawful discrimination. Gulf dsc. Railroad Company v. Ellis^ 165 U. S. 150, 154, and cases cited. Corporations are a necessary HALE V, HENKEL. 907 Opinion of the Court feature of modern business activity, and their aggregated capital has become the source of nearly all great enterprises. We are also of opinion that an order for the production of books and papers may constitute an unreasonable search and seizure within the Fourth Amendment. While a search ordinarily implies a quest by an officer of the law, and a seizure contemplates a forcible dispossession of the owner, still, as was held in the Boyd case, the substance of the offense is the compulsory production of private papers, whether under a search warrant or a suhpmna duces tecum^ against which the person, be he individual or corporation, is enti- tled to protection. Applying the test of reasonableness to the present case, we think the suhpwna duces tecum is far too sweeping in its terms to be regarded as reasonable. It does not require the production of a single contract, or of contracts with a particular corporation, or a limited number of docu- ments, but all understandings, contracts or correspondence between the MacAndrews & Forbes Company, and no less than six different companies, as well as all reports made, and accounts rendered by such companies from the date of the organization of the MacAndrews & Forbes Com- [77] pany, as well as all letters received by that company since its organization from more than a dozen different com- panies, situated in seven different States in the Union. If the writ had required the production of all the books, papers and documents found in the office of the MacAndrews & Forbes Company, it would scarely be more universal in its operation, or more completely put a stop to the business of that company. Indeed, it is difficult to say how its business could be caried on after it had been denuded of this mass of material, which is not shown to be necessary in the prosecu- tion of this case, and is clearly in violation of the general principle of law with regard to the particularity required in the description of documents necessary to a search war- rant or subpcpna. Doubtless many, if not all, of these docu- ments may ultimately be required, but some necessity should be shown, either from an examination of the witnesses orally, or from the known transactions of these companies with the other companies implicated, or some evidence of their ma- teriality produced, to justify an order for the production of 201 UFITEB STATES REPOKTS, i /. Haiiaii, J., eoncwrring. mch a mass of papers. A general subpoena of this descrip- tion is equally indefensible as a search warrant would be if couched in similar terms. Ex parte Brovm, 72 Missouri, 83 ; BMfUhury v. Arrowsmithi 4 Ves. 66; Lee v. Angas^ L. R. 2 Eq. 59. Of course, in view of the power of Congress over inter- state commerce to which we have adverted, we do not wish to be understood as holding that an examination of the books of a corporation, if duly authorized by act of Congress, would constitute an unreasonable search and seizure within the Fourth Amendment. But this objection to the subpcena does not go to the valid- ity of the order remanding the petitioner, which is, therefore, Affirmed, Mb. Justice Harlan, concurring. I concur entirely in what is said in the opinion of the court [78] in reference to the powers and functions of the grand jury and as to the scope of the Fifth Amendment to the Con- stitution. I concur also in the affirmance of the judgment, but must withhold my assent to some of the views expressed in the opinion. It seems to me that the witness was not en- titled to assert, as a reason for not obeying the order of the court, that the suhpmna duces tecum was an infringement of the Fourth Amendment, which declares that " the right of the People to be secure in their persons^ houses, papers and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue but upon probable cause, supported by oath or affirmation, and particularly de- scribing the place to be searched, and the persons or things to be seized." It may be, I am inclined to think as a matter of procedure and practice, that the suhpmna duces tecum was too broad and indefinite. But the action of the court in that re- gard was, at the utmost, only error, and that error did not af- fect its jurisdiction to make the order, nor authorize the wit- ness — whose personal rights, let it be observed, were in no wise involved in the pending inquiry — to refuse compliance with the subpcena, upon the ground that it involved an unrea- sonable search and seizure of the books, papers and records of the corporation whose conduct, so far as it related to the Sher- man Anti Trust Act, was the subject of examination. It was HALE V. HENKEL. 909 McKenna, J., concurring. not his privilege to stand between the corporation and the Government in the investigation before the grand jury. In my opinion, a corporation— " an artificial being, invisible, intangible and existing only in contemplation of law "— cannot claim the immunity given by the Fourth Amend- ment; for, it is not'a part of the " People," within the mean- ing of that Amendment. Nor is it embraced by the word '* persons " in the Amendment. If a contrary view obtains, the power of the Government by its representatives to look into the books, records and papers of a corporation of its own creation, to ascertain whether that corporation has obeyed or is defying the law, will be greatly curtailed, if not destroyed. If a corporation, when its affairs are under examination by a grand jury [79] proceeding in its work under the orders of the court, can plead the immunity given by the Fourth Amendment against unreasonable searches and seizures, may it not equally rely upon that Amendment to protect it even against a statute authorizing or directing the examination by the agents of the Government creating it, of its papers, docu- /nents and records, unless they specify the particular papers, documents and records to be examined ? If the order of the court below is to be deemed invalid as an unreasonable search and seizure of the papers, books and records of the corporation, could it be deemed valid if made under the express authority of an act of Congress? Congi-ess could not, any more than a court, authorize an unreasonable seiz- ure or search in violation of the Fourth Amendment. In my judgment when a grand jury seeking, in the discharge of its public duties, to ascertain whether a corporation has vio- lated the law in any particular, requires the production of the books, papers and records of such corporation, no officer of that corporation can rightfully refuse, when ordered to do so by the court, to produce such books, papers and records in his official custody, upon the ground simply that the order was, as to the corporation, an unreasonable search and seizure within the meaning of the Fourth Amendment. Mr. Justice McKenna, also concurring. I concur in the judgment but not in all the propositions declared by the court. I think the subpoena is sufficiently 910 201 UNITED STATES REPORTS, 79. McKenna, J., concurring. definite. The charge pending was a violation of the xlnti Trust Act of 1890. The documents and papers sought were the understandings and agreements of the accused companies. That the documents commanded were many or evidenced transactions occurring through a period of time are not cir- cumstances fatal to the validity of the subpoena. If there was a violation of the Aiiti Trust Act, that is, combinations in restraint of trade, it would be probably evidenced by formal agreements, but it might also be evidenced or its transactions alluded to in tele- [80] grams and letters sent during the time the combination operated. Each telegram, each letter, would contribute proof, and therefore material testimony. Why then should they not be produced ? What answer is given? It is said the subpcena is tantamount to requiring all the books, papers and documents found in the office of the MacAndrews & Forbes Company, and an em- barrassment is conjectured as a result to its business. These, then, I assume, are the detrimental consequences that will be produced by obedience to the subpoena. If such conse- quences could be granted they are not fatal to the subpoena. But they may be denied. There can be at most but a tempo- rary use of the books, and this can be accommodated to the convenience of parties. It is matter for the court, and we cannot assume that the court will fail'of consideration for the interest of parties or subject them to more inconvenience than the demands of justice may require. I cannot think that the consequences mentioned are impor- tant or necessary to the argument. A more serious matter is the application of the Fourth Amendment of the Constitu- tion of the United States. It is said " a search implies a quest by an officer of the law ; a seizure contemplates a forcible dispossession of the owner." Nothing can be more direct and plain; nothing more ex- pressive to distinguish a subpoena from a search warrant. Can a subpoena lose this essential distinction from a search warrant by the generality or speciality of its terms? I think not. The distinction is based upon what is authorized or directed to be done— not upon the form of words by which the authority or command is given. "The quest of an officer " acts upon the things themselves— may be secret, in- HALE V, HENKEL. 911 McKenna, J., concurring. trusive, accompanied by force. The service of a subpoena is but the delivery of a paper to a party— is open and above- board. There is no element of trespass or force in it. It does not disturb the possession of property. It cannot be finally enforced except after challenge, and a judgment of the court upon the challenge. This is a safeguard against abuse the same as it is of other processes of the [81] law, and It is all that can be allowed without serious embarrass- ment to the administration of justice. Of course, it con- strains the will of parties, subjects their property to the uses of proof. But we are surely not prepared to say that such uses are unreasonable or are sacrifices which the law may not demand. However, I may apprehend consequences that the opinion does not intend. It seems to be admitted that many, if not all, of the documents may ultimately be required, but it is said " some necessity should be shown, either from an exam- mation of the witnesses orally, or from the known transac- tions of these companies with the other companies implicated, or some evidence of their materiality produced, to justify an order for their production." This intimates a different objection to the order of the court than the generality of the subpoena, and, if good at all, would be good even though few instead of many documents had been required or described ever so specifically. I am constrained to dissent from it. The materiality of his testimony is not open to a witness to determine, and the order of proof is for the court. Be- sides, if a grand jury may investigate without specific charge, may investigate upon the suggestion of one of its members, must it demonstrate the materiality of every piece of testi- mony it calls for before it can require the testimony? So limit the power of a grand jury and you may make it impo- tent in cases where it needs power most and in which its function can best be exercised. But what does the record show ? It shows that Hale re- fused to give the testimony that, this court says, should have preceded the order under review. He refused to answer what the business of the MacAndrew & Forbes Company was or where its office was, or whether there was an agreement with the company and the American Tobacco Company in regard ower of supervision and inspec- tion of the inside workings of a corporation, but that belongs to the creator of the corporation. If a State has chartered it, the power is lodged in the State. If the Xation, then in the Nation, and it cannot be exercised by anv other author- ity. It is in the nature of the power of visitation. In Angeil & Ames on Corporations, \nh ed. c. 19, §§ 684, 685, the authors say : ** To render tlie charters or constitutions, ordinances and by laws of corporations of perfect obligation, and jjtnierally to nuiiutaiii tlieif l)eaee and good government these iMxlies are subject to visitation ; op. In other words, to tlie inspection and control of tribunals recognlzetl by the laws of the land. Civil coriwratlons are visittnl by the Government itself, through the medium of the courts of justice; but the internal affairs of ecclesiastical and eleemosynarj- c-oritorations are. In general, inspected and controlled Ijy a private visitor. [87] **In this country, where there is no individual founder or donor, the legislature are the visitors of all corporations founded by them for public purposes, and may direct judicial proceedings against them for abuse or neglects which at common law would cause a for- feiture of their charters." The matter is discussed in Blackstone's Commentaries, in par. 3, chap. 18, Book I, and he says: ••I proceed, therefore, next to Inquire how these corporations may be visited. For corporations, being composed of individuals, subject to human frailties, are liable, as weU as private persons, to deviate from the end of their institution. And for that reason the law has provided proper persons to visit, inquire into, and correct all irregu- larities that arise in such corporations, either sole or aggregate, and whether ecclesiastical, civil or eleemosynary." And in respect to civil corporations he adds, same para- graph and chapter (*782) : •• I The law Imving by immemorial usage appointed them to be visited and Inspected by tlie King, their founder, in His Majesty's Court of King's Bench, according to the rules of the common law, they ought 30t to be visited elsewhere, or by any other authority." m ^-i* HALE V. HENKEL. Brewer, J., and the Chief .Justice, dissenting. In 2 Kent, *300, the author says : 917 th;7u^^ IIT^:^^^\?^ ^S^^Z^ t^« <>overnment itself, In Amherst Academy v. Oowls, 6 Pick. 427, 433. it was neld that: abuses or nerippto whi^i, L Jnalelal process against tbem for of Sr charter^" ^ ~""°° '""^ "'°"'<' <=««^ « forfeiture The right of visitation is for the purpose of control and t« se« that the corporation keeps within the limits of its powers It would be strange if a corporation doing business in a dozen States was subject to the visitation of each of those btates, and [88] compelled to regulate its actions according to the judgments— perhaps the conflicting judgments— of the several legislatures. The fact that a state corporation may engage in business which is within the general regulat- mg power of the National Government does not give to Congress any right of visitation or any power to dispense with the immunities and protection of the Fourth and Fifth ^Vmendments. The National Government has jurisdiction over crimes committed within its special territorial limits Can It dispense in such cases with these immunities and pro- tections? No more can it do so in respect to the acts and conduct of individuals coming within its regulating power. It has the same control over commerce with foreiooks. The questions are the same as those involved in the Hale case, without the objectionable feature of the subpoena, and the order of the Circuit Court is, therefore, Afflrmed. I if M J NELSON V. UNITED STATES. BOSSAED V, SAME. McNAIR V. SAME. BMKOR TO THE CIRCUIT COURT OF THE UNITED STATES FOR THE DISTRICT OF MINNESOTA. Nob. 400. 401. 402. Argued January 5, 8, IDOC— Decided March 12, 1900. 1201 U. a. 92.] IM II suit In tbe CImilt Court of the United States brought by the r^nitecl States against coi-porations for violations of tbe Antitrust NELSON V. UNITED STATES. 921 Syllabus. Law of July 2, 1890, a witness refused to answer questions or sub- mit boolvs to iuFpectiou before an examiner appointea by tbe court on tbe ground of innnateriality, also pleading tbe Fifth Amendment; after tbe court bad overruled tbe objections and directed him to answer be again refused and judgment in contempt was entered against him. On appeal to this court held, that: Questions under tbe Constitution of tbe United States were involved and this court has jurisdiction of an appeal direct from tbe Circuit Court. In such an action tbe boolcs of the various defendants both before and after tbe alleged combination, and tbe contracts between them, as well as other papers referred to in tlie opinion, are all matters of material proof, but whether material or not tbe testimony nmst he talcen and exceptions can be noted by the examiner and the mate- riality of tbe evidence passed on by tbe court. Witnesses cannot take objections to materiality of evidence in order to be relieved from testifying. Tbe tendency or effect of tbe testi- mony on tbe issues between the parties is no concern of theirs. Documentary evidence in tbe shape of books and papers of corpora- tions are in tbe i^ossession of tbe oriicers thereof, who cannot refuse to produce them on the gi-ound that they are not in their possession or under their control. Male V. Henlcel, ante, p. 874, followed to tbe effect that officers and em- ployes of corporations cannot, under tbe Fourth and Fifth Amend- ments, refuse to testify or produce books of corporations in suits against the coriwrations for violations of tbe Anti-trust Law of July 2. 1890, in view of tbe immunity given by tbe act of February 25 1903.O [50 L. ed., 073.] 6 [Evidence, Avbetber documentary or oral, sought to be elicited from witnesses summoned in an action brought by tbe United States to enjoin an alleged conspiracy by manufacturers of pnper to snppres.*? competition, in violation of tbe act of Jnly 2, 1890 (20 Stat. L., 200, chap. 047, U. S. Comp. Stat., 1901. p. 3200), by creating a gen- eral selling and distributing agent, is material, where it would tend to establish the manner in which such agent executed its func- tions.] ITbe immateriality of tbe evidence souglit to be elicited can not jus- tify tbe refusal of witnesFes to obey tbe orders of the Federal cir- cuit court, reipiiring them to answer tlie questions put to tlieni, and to produce written evidence in their possession, on their exam- ination before a special examiner. oTbe foregoing syllabus and the abstracts of arguments copyrighted, 1900. by Tlie Banks Law rublisbing Co. 6 Tbe following paragraphs inclosed in brackets comprise tbe syl- labus to this case in the U. S. Supreme Court Reports. Rook 50, p. 073. Copyrighted, 1900, by the Lawyers' Co-Operative Publishing Co. 922 mi UNITED STATES KEPOKTS, 92. Statement of the Ca*\ (Objections to the materiality of the testimony are not open to con- sideration on a writ of error sued out by witnesses to review a judgment for contempt, entered against them for disobeying an order to testify.] [The refusal of corporate officers to obey orders of a Federal circuit court, requiring them to produce certain documentary evidence, on their examination before a special examiner, can not be justified on the theory that such evidence was not in their possession or under their control, because their possession was not personal, but was that of the corporations,] [The right of a witness to claim his privilege against self-incrimina- tion, afforded by U. S. Const, fith Amend., when examined con- cerning an alleged violation of the antiti-ust act of July 2, 1800 (20 Stat. L., 200, chap. G47, U. S. Comp. Stat, 1901, p. 3200), Is taken away by the proviso to the act of February 25, 1903 (32 Stat L., 904, chap. 755, U. S. Omp. Stat Supp., 1003, pp. 300. 307), 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 in any proceeding, suit, or prosecution under certain named statutes, of which the antitrust act Is one, which furnishes a sufficient im- munity from prosecution to satisfy the constitutional gauranty, although it may not afford immunity from prosecution In the state couits for the offense disclosed.] These writs of error submit for review a judgment in con- tempt entered in the case of United States v. General Paper Company^ described in Alexander v. United States^ post^ p. 117. The judgment was based upon the disobedience by the plaintiffs in error to orders of the court requiring them to answer certain [»3] questions and to produce certain books, documents and papers in their examination before the special examiner in pursuance to a suhpmna duces tecum duly issued and served. The orders requiring the plaintiffs to answer were made upon petition of the United States, which exhib- ited the issues in the suit of United States v. General Paper Company et aL, stated the questions asked plaintiffs in error, and the books, documents aiid papers required of them. Plaintiffs in error refused to obey the orders, and the ex- aminer reported their disobedience to the court " for such ac- tion as the court might take for the further enforcement of its orders." In defense plaintiffs in error filed separate an- swers, which respectively alleged that Nelson was the presi- dent and manager of the Hennepin Paper Company; Bros- NELSON V. UNITED STATES. 923 statement of the Case. sard, manager and treasurer of the Itasca Company, and McNair, a director and general manager of the Northwest Paper Company. In other particulars the answers are identical except so far as the relations of plaintiffs in error to their respective corporations made a difference. Plaintiffs in error are also directors of the General Paper Company. We insert the answer of Nelson in the margin.^ «Now comes Benjamin F. Nelson and answering the order to show cause made in the above-entitled matter on the 15th day of September, A. D. 1905, and the petition heretofore filed in said matter by said complainant upon which said order to show cause was made, alleges and shows unto the court as follows : That this respondent is a director and the president of Hennepin Paper Company, one of the defendants in the above-entitled raatter, and is also the owner and holder of stoclv in said company of the par value of forty-nine thousand ($49,000.00) dollars, and that the books and papers referred to in said order to show cause and in the petition and schedules thereto attached, upon which said order to show cause was made, are the boolvs and papers of said Hennepin Paper Company and not of this respondent, and are subject to the control of said Hennepin Paper Company and not of this respondent; that this re- spondent is also a director of General Paper Company, another of the defendants in tlie above entitled matter, and the owner and liolder of stock in said General Paper Company of the par value of two thousand two hundred and fifty dollars; that said Hennepin Paper Company and said General Paper Company have objected and do object, and this respondent has objected and does object, to the pro- duction of said books and papers for inspection by counsel fur said complainant for the purpose of being offered in evidence in said cause. Said objections are based upon the following i-easons : 1. That the materiality of said books and papers in the case men- tioned in said order to show cause now pending in said court has not been established so as to authorize a court of equity to order their inspection, production and introduction in evidence, and that the same are not material, relevant or competent evidence in said cause; that said books and papers contain matters of importance relating to the business of said Hennepin Paper Company and said General Paper Company in no way bearing upon or touching the issues in said cause, which it would be highly injurious to the business interests of both of said companies to make public, and this respondent submits that he ought not to be required to disclose any portions of said l)ooks or papers except on a proper showing that the same are material to said cause to establish some issue therein, and a showing that the same are not privileged for the protection of the defendants above named. 2. That one of the purposes of said complainant in institutin-^ said v^^ 201 UNITED STATteS REPORTS, 94. Statement of the Case. [M] The court required the questions to be answered and in© books and documents to be produced and, being of opin- ion that the order did not constitute a final decision, refused Z^^ ^^ *Weal «n^thej)art of either of the plaintiffs in cause and in making the requests mentbneTiE^ said order to show cause for the inspection, production and introduction as evidence of said books and papers, is to establish and to compel said Hennepin Paper Company and said General Paper Company, and this respondent as such director or officer of each of said defendants, to furnish to said complainant evidence tending to establish that said Hennepin Paper Company and said General Paper Company have been -njitv of certain violations of the act of Congress entitled "An act to" prJ tect trade and commerce against unlawful restraints and monopolies " approved July 2, 1890, and the acts amendatory thereof or supple mental thereto, and to subject said Hennepin Paper Company and said General Paper Company to the penalties for such violations im- posed by said act, and that to compel the production bv said Henne- p^ Paper Company or said General Paper Company, throngh th.nr officers or otherwise, of said books and papers for inspection and Introduction as evidence in said cause, would be contrary to the pro visions of the Fifth Amendment to the Constitution of the United States, which provides that no person shall be compelled in uny CTimmal case to be a witness against himself, and also contrary to the provisions of the Fourth Amendment to the Constitution of the United States, which provides that the right of the people to be secure in their persons, houses, papers and effects against unreason- able searches and seizures shall not be violated. 3. That the alleged acts of said Hennepin ' Paper Compnnv com- plained of by said complainant in its said original petition or' bill of complaint in said cause, and which said complainant is endeavoring to establish in said cause, would, if committed by said Hennepin Paper Company, be violations of the laws of the State of Minnesota and would subject said Hennepin Paper Company to forfeiture of its charter and other penalities under said laws; that to compel said Hennepm Paper Company, through this respondent as one of its officers or otherwise, to produce said books and paijers for inspection and introduction as evidence in said cause would be to compel it to fornish evidence tending to establish that it has l)een guilty of such acts and subject it to the forfeiture of its charter and other penalties aforesaid, wntrary to the provisions hereinbefore mentioned of the Fourth and Fifth Amendments to the Constitution of the United States. 4. That in addition to the matters above set forth, the purpose of the complainant in instituting said cause and in making the requests mentioned in said order to show cause is to obtain from said court a decree enjoining said General Paper Company from carrying on the business for which It was incorporated, and to enjoin the carrying NELSON V, UNITED STATES. 925 Statement of the Cas«>. error or either of [95] the defendants in the suit or on the part of all of them jointly. Plaintiffs in error refused to obey the order of the court, and upon the report of the examiner the judgment under re- out of and operation under certain agency contracts and agreements existing between it and said Hennepin Paper Company, on the al- leged ground that said contracts and agreements were made and are in violation of the provisions of said act of Congress; that said con- tracts and agreements are of great value, not only to said Genenil Pa- per Company whose entire business practically rests uiwn them, but are also of great value to and constitute valuable property rights in each of the defendants respectively parties thereto, including the said Hennepin Paper Company, and that such injunction from carrying out said contracts and agreements and their virtual annulment tliei-eby occasioned would result in great injury, damage or loss, not only to said General Paper Company but also to said Hennepin Paper Com- pany and to this respondent as a stockholder in each of said compa- nies ; and that to compel the production by said Hennepin Paper Com- pany or said General Paper Company, or either of them, through this respondent as such director or officer or otherwise, of said t>ooks and papers for inspection and introduction as evidence in said cause for the purpose aforesaid, would be contrary not only to the provisions of said Fourth and Fifth Amendments to the Constitution of the United States, but also contrary to the well establislied rule of the common law, as well as of equity jurisprudence, that no person will be compelled to discover any fact, either by producing documents or answering questions, which may subject him, either directly or eventu- ally, to prosecution for a crime or to a forfeiture or penalty, or any- thing in the nature of a forfeiture or penalty. Further answering, this respondent alleges and shows unto this court that all the matters concerning which the questions referred to in said petition and schedules thereto annexed were asked, and which this respondent refused to answer, as stated in said petition, came to this respondent's knowledge exclusively as president and a di- rector of said Hennepin Paper Company, or as a director of said Gen- eral Paper Company, in the conduct of matters entrusted to him as such director or president, and which said companies, from the na- ture of the case, were compelled to entrust to this respondent as such director or officer, and that said Hennepin Paper Company and said General Paper Company have objected and do object, and this respondent has objected and does object, to said questions and to his being required to answer the same, for reasons similar to those already set forth in respect to the production, inspection and intro- duction in evidence of the books and papers above mentioned, that is to say : 1. That the materiality of said questions in the cause above men- tioned has not been established so as to authorize a court of equity 926 201 UNITED STATES REPORTS, 96. Statement of the Case. view was [96] entered, fining plaintiffs in error severally $100 "for their said disobedience of the said order, said fines to be paid to the clerk of this court for the use of the United States, as punishment for such contempt," and sen- to order them to be answered, and that the same are not material, relevant or competent evidence in said canse. 2. That the parpose of Baid complainant in instituting said cause and in Asking said questions is to establish and to compel said Henne- pin Paper Company and said General Paper Company, through this re- ^londent as such director or officer, to furnish to said complainant" evidence tending to establish that said Hennepin Paper Company and said General Paper Company have been guilty of certain violations of the acts of Congress above referred to, and to subject them to the penalties for such violations imposed by said acts, and that to compel said defendants hereinbefore named, or either of them, through this respondent to answer said questions would be contrary to the pro- visions hereinbefore referred to of said Fourth and Fifth Amend- ments to the Constitution of the United States. 3. That the alleged acts of said Hennepin Paper Company com- plained of by said complainants in its original petition or bill of complaint in said cause, and which said complainant is endeavoring to establish in said cause, would, if committed by it. be violations of the laws of the State of Minnesota, and would subject It to forfeiture of its charter and other penalties under said laws; that to compel it through this respondent to answer the questions aforesaid would be to compel It to furnish evidence tending to establish that it has been guilty of such acts and subject It to the forfeiture of its charter and other penalties aforesaid, contrary to the provisions hereinbefore referred to of said Fourth and Fifth Amendments to the Constitution of the United States. 4. That In addition to the matters above set forth, the purpose of the complainant in instituting said cause and In asking the questions men- tioned in said order to show cause is to obtain a decree enjoining said General Paper Company from carrying on the business for which it was incorporated and to enjoin the carrying out of and operation under certain agency contracts and agreements existing between it and said Hennepin Paper Company, on the alleged ground that said contracts anil agreements were made and are In violation of the provisions of said acts of Congress; that said contracts and agreements are of great value not only to said General Paper Company, whose entire business practically rests upon him. but are also of great value to and consti- tute valuable property rights in each of the defendants respectively parties thereto, including the Hennepin Paper Company, and that such injunction from carrying out said contracts and agreements and their virtual annulment thereby occasioned would result in great injury, damage and loss, not only to said Hennepin Paper Company or said NELSON V. UNITED STATES. 927 Statement of the Case. tencing them to be imprisoned until [97] the order of the court requiring them to testify should be complied with. The questions on the merits in these cases are the same as those on ih&me,vit2>m Alexander y. United States, post ^p, 117, General Paper Company, and that to compel said Hennepin Paper Company or said General Paper Company, through this respondent, to answer the questions aforesaid in aid of the purposes aforesaid would be contrary not only to the provisions hereinbefore referred to of said Fourth and Fifth Amendments to the Constitution of the United States, but also contrary to the well established rule of the common law as well as of equity jurisprudence, that no person will be compelled to discover any fact, either by producing documents or answering questions, which may subject him, either directly or indi- rectly, to prosecution for a crime or to a forfeiture or penalty or any- thing in the nature of a forfeiture or penalty. Further answering this respondent alleges that he ought not to be re- quired to answer the questions or comply with the requests, or pro- duce for inspection by counsel for the complainant or for the purpose of being offered in evidence the cause above referred to, the books and papers referred to in said order to show cause and in the petition and schedules thereto annexed, upon which said order to show cause was made, not only for tlie reasons hereinabove set forth, but also for the following reasons, that is to say : 1. That ope of the purposes of said complainant in instituting said cause and in seeking to require this respondent to answer the questions and comply with the requests and produce for inspection by counsel for the complainant, and for the purpose of being offered in evidence In said cause the books and papers aforesaid, is to establish and to compel this respondent to furnish to said complainant evidence tending to establish that he has been guilty of certain violations of the acts of Congress hereinbefore mentioned and referred to, and to subject him to the penalties for such violations imposed by said acts, and that to compel him to answer said questions or comply with said requests or to produce for inspection or for the purpose of being offered in evidence In said cause the said books and papers would be contrary to the pro- visions hereinbefore referred to of said Fourth and Fifth Amendments to the Constitution of the United States. 2. That the alleged acts of said Hennepin Paper Company and of said General Paper Company complained of by the complainant in its said original petition or bill of complaint in said cause, and which said complainant is endeavoring to establish in said cause, would, if com- mitted by said defendant companies, involve certain violations of the laws of the State of Minnesota by this respondent, and would subject him to penalties and forfeiture under said laws, and that to compel him to answer the questions or comply with the requirements aforesaid, or to produce for Inspection, or for the purpose of being offered in evi- 928 201 UNITED STATES REPORTS, 98. Statement of the Case. [981 decided this day. In those cases, however, this court had no jurisdiction and the appeals were dismissed. In the present ca ses we have jurisdiction, Bessette v. W, B, Conkey dence in said cause, tbe said books and papers, wouwTbe to compel liim to furnish evidence tending to establisli that he has been guilty of such violations of tlie laws of the State of Minnesota and to subject him to the penalties and forfeitures aforesaid, contrary to the provi- sions hereinbefore referred to of said Fourth and Fifth Amendments to the Constitution of the United States. 3. That one of the purposes of said complainant in instituting said cause and in seekin;; to require this respondent to answer the questions and comiily with tiie requests, and produce for inspection by counsel for the complainant and for the purpose of being offered in evidence in said cause, the books and papers above referred to, is to establish and compel this respondent to furnish to said complainant evidence tending to establish the allegations of the original petition or bill of complaint in said cause, which, if established, will result in subjecting this respondent to loss or detriment in the nature of a penalty or forfeiture, in that the said Hennepin Paper Company, of which this respondent is a stockholder as aforesaid, will be subjected under the laws of the State of Minnesota to the forfeiture of its charter, resulting in the virtual forfeiture of the stock of this respondent in said de- fendant company, and to be the loss and forfeiture to a large extent of the value of the interest of this respondent in said corporation, and in that the contracts made through said General Paper Company as its sales agent by said Hennepin Paper Company under and pursuant to the agency contracts herein referred to between said Hennepin Paper Company and said General Paper Company will be virtually annulled and the property rights of said Hennepin Paper Company in paid contracts destroyed ; that there are a large number of such con- tracts outstanding under which large sums of money are due to said Hennepin Paper Company, all of which, as this respondent is advised and believes, will be or may be forfeited and lost to said defendant and to this respondent as a stoclsholder therein in case the illegal com- bination alleged in said original petition or bill of complaint is estab- lished by the decree or judgment in said cause; and this respondent alleges that to compel him to answer the questions and comply with the requests and produce for inspection and for purpose of being offered in evidence the books and papers referred to in said order to show cause and the petition and schedules aforesaid, and which he has declined to answer and comply with or produce, if material to said cause, would be contrary to the provisions of said Fourth and Fifth Amendments to the Constitution of the United States, and also contrary to the well established rule of the common law and of equity jurisprudence, that no person will be compelled to discover any fact or matter which may subject him to forfeiture or penalty or anything in the nature of a forfeiture or penalty. NELSON V. UNITED STATES. Statement of the Case. 929 Co., 194 U. S. 324, and direc'tly from the Circuit Court, as questions under the Constitution of the United States are involved. [99] In the pleadings in the original suit brought in the Circuit Court of the United States for the District of Minne- sota it is respectively alleged and denied that the defendant corporations, of which plaintiffs in error are officers, had entered into an agreement, combination and conspiracy to con- trol, regulate and monopolize not only the manufacture of newsprint and other papers, but the distribution and ship- ment thereof through the Middle, Southern and Western States, in violation of the Anti Trust Act of July 2, 1890. The Ignited States sought to establish by plaintiffs in error the truth of the charge, and the subpoena served upon them was explicit as to what was required of them. The subpamas required plaintiffs in error to produce the account books, including the journals, ledgers and other books kept by or under the control of the companies re- spectively, of which plaintiffs in error were respectively officers, {a) showing the amounts, kinds and grades of paper manufactured by the respective companies and sold by or through the General Paper Company, and were shipped since the fifth of July, 1900: {h) the prices, amounts or credits received for such paper from the paper company between the fifth of July and the present time, including entries, showing the manner in which the prices and amounts re- ceived by the respective companies for any and all [100] of its products so sold have been equalized Avith the prices and amounts received or realized of any and all of the other de- fendant companies for which the paper company is or has been the exclusive agent; {c) the amounts and proportions of earnings or profits of the paper company re<;eived by the respective companies from and through the paper company, either in the form of rebates, credits or otherwise. Second. All contracts, agreements, writings and account books, including journals, ledgers and other books, kept by or under iho^ control of the respective companies, showing the agreement, arrangement or understanding under and pur- suant to each, and the manner in which the prices and 21220- VOL 2—07 m .59 930 201 UNITED STATES KEPORTS, 100. Statement of the Case. amoiirits realized by the respective companies upon the vari- ous kinds and grades of paper manufactured by it and sold by and through the paper company, are and have been, since July 5, 1900, equalized, or the profits arising from the sale of such paper distributed or apportioned, as between the re- spective companies and other defendants manufacturing and selling through the paper company similar kinds or grades of paper, or among all of the defendants manufacturing similar kinds or grades of paper, and then and there to testify and the truth to say, in a certain matter in controversy in said court, l)etween the United Stat-es as complainant against the General Paper Company et al.j defendants, on the part of the complainant. There is no uncertainty, therefore, either in the issue or Uie means of proof. In other words, the United States charges a conspiracy upon the part of the defendant corpora- tions for the cessation of competition between the manu- facturing defendants by creating a general selling and dis- tributing agent, the General Paper Company, which restricts the output of the mills, fixes the prices of their products, determines to whom, and the terms and conditions upon which, such products shall be sold, into what States and places they shall be shipped, and what publishers and cus- Lers each mill shall supply. The means of proof of the charge are obviously the conditions of the companies before and after the formation of the paper company, [101] its organization and the purpose of its organization, the means of its operation, how and by what means it ecjualizes the output and price of products, and the distribution of the proceeds of their sale, and the relations and accounts between it and the other defendant companies, and their books, ac- counts and minutes of proceedings. The questions were 'directed "L these ends. They wen, directed to ascertain whether the prices received for the vari- ous paper materials were equalized, and whether during the time the General Paper Company was the selling agent of the materials there was in existence an arrangement whereby the prices received through the paper company were equalized between the other defendant companies. The questions were put in various ways to show such equalization and the ar- NELSON V, UNITED STATES. 931 Argiinieiit for plaintiffs in error. rangemeiits to equalize, and to show the allowances to each mill, the fixing of definite prices, and the distribution of the balances received among the companies on the basis of their average daily output of the grade of paper inquired about. And there were also questions asked as to whether the board of directors or the executive committee of the paper company fixed the prices of paper to be paid to each of the mills by or through the paper company, and the compensation to be paid to the mills making butchers' fibre paper, because it was less profitable, and other questions as to conversations between gentlemen representing the different mills in regard to the organization of a corporation to act as general selling agent in order to eliminate competition. There were also questions as to whether the books showed the things expressed in the other questions. The objection made to each of the questions before the examiner was that the testimony sought was irrelevant, incompetent and immaterial, and counsel advised the witnesses not to answer. As to the books and papers the following is a sample of the proceedings : " Q. Do the boolis, journals or ledgers of the Hennepin Paper Com- pany show any agreement or arrangement or imderstanding under and pursuant to which and the manner in which the prices and amounts realized by the Heimepin Paper Company [102] upon various grades of paper manufactured by it and sold by or through the defendant the General Paper Company, are and have been, since the 5th day of July, 1900, equalized or the profits arising from the sale of such paper dis^ tributed or apportioned as between the defendants? " Mb. Flaindebs : All objections renewed, and I give the witness the same advice. " (No answer.) " Q. Do you refuse, Mr. Nelson, to produce the books? " Mb. Fi^ndebs : As I said before, you may assume for the purposes of these questions that the books and all the papers called for are present in court, but on behalf of the Hennepin Paper Company and the witness and the General Paper Company I decline to submit those to the inspection of the Government counsel. " Mb. Kellogg : Or to allow them or any part of them to be nut In evidence, Mr. Flanders? "Mb. Flandebs: Yes." Other facts will appear in the opinion. Mr. James G. Flanders, with whom Mr. Charles F. Faw- sett and Mr. William Bruce were on the brief, for plaintiffs in error in these cases and for appellants in Nos. 381, 382, 383, 384 and 385 argued simultaneously herewith.'' aiiy or some other of the defendant corporations. The proceeding, thei-efore, is a method of comijelling the prTl), 580: AV^igram's Law of Discovery. 1st Am. ed. la; Story's Kti. PL JjJ^ .*>(»."), 568. The plaintiff must show by clear averment the materiality of the documents sought to be disclosed. This rule ai)plies to proceedings under a statute to compel production upon or in preparation for trial. 23 Am. & Eng. Ency. of Law, ITO; Owhyee Z. <& I. Co, v. Tautpham, 109 Fed. Rep. .HT: Condict V. Wood, 25 X. J. L. 319; Bank v. MansfiM. 48 Illinois, 494; Lester v. People^ 150 Illinois, 408; Bvnth'i/ v. P<'i>ph\ 104 111. App. 353; ^Yynn v. Taylor, 109 111. App. fi03; Walsh v. Prex>< Co., 48 App.Div. N. Y. 333; S, F, Copprr M. d- R. Co. v. Hvmphreyn 111 Fed. Rep. 772; Eschhaeh v. IJf/fifner, 34 Maryland, 528, 533; JenJdns v. Bennett, 40 S. Car. 393, 400: Berry v. Matthews, 7 Georgia, 457, 462, 463. A plaintiff's right to any compulsory production of books is strictly limited to such documents as contain evidence rele- vant to his case. His right to inspect is never larger than his right to read in evidence. The defendant is not compelled to discover his evidence if it cannot tend to establish affirma- tively the case of the plaintiff. Hare on Discovery, 187, 198; Compton v. Earl Gray, 1 Y. & J. 154; Bolton v. Liver- pool, 3 Sim. 489 ',S,C.,1 My. & K. ; Harris v. Harris^ 3 Hare, 450; Van Kleeck v. Ref. Dutch Ch., 6 Paige, 600; /S'. C, 20 Wend. 458. NELSON V, UNITED STATES. 983 Argument for plaintiffs in error. Before the plaintiff is entitled to the production of a given document he must show aliunde that its contents are such as to entitle him to read it in evidence. He cannot compel production in order to prove that he is entitled to produc- tion. Wigram's Law of Discovery, § 293 ; &tory v. Lennox, 1 Myl. &. Cr. 534 ; Langdell on Eq. PL § 164 ; Bligh v. Benson, 7 Price, 205 ; Stroud v. Deacon, 1 Vesev, 27 ; Barnett v. NoUe. 1 Jacob & W. 227. Any party who is required to produce his books of account or other documents, may seal such portions thereof as he swears [104] contain nothing relating to the purposes of the discovery sought, and his affidavit that the parts so sealed do not relate to the matters in litigation is sufficient protec- tion. 23 Am. & Eng. Ency. of Law, 182; 2 Wait's Pr. 548; Titus V. Cortelyou, 1 Barb. 444; Rohhins v. Davis, 1 Blatch. 238, 242; Campbell v. French, 2 Cox Ch. Cas. 28G; Girard v. Penswick, 1 Wilson Ch. '121', Pynchon v. Day, 118 Illinois, 9. Under Rev. Stat. § 724 it has been held that production will only be ordered where a discovery would be decreed under the same circmnstances in chancery. Jaiques v. Collins, 2 Blatch. 23. See Caspary v. Carter, 84 Fed. Eep. 416; Blrch- offsheim v. Brown, 29 Fed. Rep. 341; Ryder v. Bateman, 93 Fed. Rep. 31 ; Bloede Co, v. Bancroft d; Sons Co., 98 Fed. Rep. 175; Boyd v. United States, 116 U. S. 616. The doctrine is not confined to documentarv evidence. It applies also to the case of oral testimony. The materiality of any question must be made to appear before a witness can be required to answer it and before he can be adjudged guilty of a contempt of court for a refusal to answer. The leading case is Ln re William Judson, 3 Blatch. 148. Se^ also In re Allis, 44 Fed. Rep. 216; Interstate Commerce Cmnrnission v. Brimson, 154 U. S. 447. The evidence, documentary and oral, required to be pro- duced, if material to the plaintiff's case, is in the nature of incriminating evidence which the witnesses and the defend- ants are privileged from furnishing to the plaintiff under the Fourth and Fifth Amendments of the Federal Constitu- tion and the well recognized principles of equity procedure. The discovery which by the orders appealed from the wit- nesses are required to make, might also tend to subject them J/Otc 201 UNITED STATES KEPORTS, 104, Argnnient for plaintiffs in error. to penalties and forfeitures under the laws of the State of Wisconsin. Wisconsin Statutes (1898), §§ 1747e, 1747A-/ Counselman v. Hitchcock^ 142 U. S. 647; United States v. 8(dine Bank, 1 Pet. 100. It is not within the province of Congress to suspend the operation of these state statutes or to interfere with their enforce- [106] ment in their relation to trade Avithin the State, and therefore the immunity clause would be inef- fectual to relieve the appellants against liability under the state law. The jurisdiction of state authority over trade within the State is as exclusive and unqualified as the jurisdiction of Congress over trade between the States. Addyston Pipe Go V. United States, 175 U. S. 211 (where injunction pre- viously issued was modified to make it conform to this rule) ; Allen V. Pullman Co., 191 U. S. 171 ; National Cotton Oil Co, V. Texas, 197 U. S. 115. It is the settled law of this court that the Fifth Amend- ment has no application to state courts and their proceedings under state laws. Pumpelly v. Cheen Bay Co,, 13 Wall. 166; Brown v. Walker, 161 U. S. 591, distinguished. These Amendments to the Constitution were merely de- claratory of the equity and common law rules of evidence, and it was firmly settled by them at the time of the adoption of the Amendments that no person could be compelled to discover any fact, either by producing documents or answer- ing questions, which might subject him either directly or eventually to liability to a penalty or forfeiture, or anything in the nature of a penalty or forfeiture. 1 Daniell's Chan- cery Pleading & Practice, 5th Am. ed. *562, 563 ; 2 Story's Eq. Jur. § 1494; 1 Pomeroy's Eq. Jur. 202; Limngston v. Harris, 3 Paige, 527; aff'd 11 Wend. 329; Northrop v. Hateh, 6 Connecticut, 361, 363; Livingston v. Tompkins, 4 Johns. Ch. 432, and cases there cited; Vanderveer v. Hoi- comb, 17 N. J. Eq. 91; United States v. National Lead Co,, 75 Fed. Kep. 94 ; Newgold v. American Electrical (&c. Co., 108 Fed. Rep. 341 ; United States v. Boyd, 116 U. S. 631. The consequences which must result to the appellants from the passing of the decree prayed for in the complaint are in the nature of a forfeiture. They should not be required to KELSON V. UNITED STATES. 935 Argument for plaintiffs in error. furnish the evidence to subject them to such forfeiture. 13 Am. & Eng. Ency. of Law, 54. The witnesses were entitled to decline to answer not only on [106] the grotind of personal privilege, but also on the ground that their answers would be the answers of the Gen- eral Paper Company and the other defendants whose officers and directors they were, and might tend to subject said de- fendants to fines, penalties and forfeitures and to loss or damage in the nature of a forfeiture. A corporation is a person and as such entitled to the privileges and immunities of persons. Covington Turnpike Co. v. Sanford, 164 U. S. 578. It performs its functions only through its officers and agents and they cannot be compelled to testify. State v. Simmons Hardware Co., 15 L. R. A. 676 ; Davis v. Lincoln Natl. Bank, 4 N. Y. Supp. 373 ; Bank of Oldtown v. Houlton, 21 Maine, 502. The orders are appealable under the judiciary act of March 3, 1891, and under the act of February 11, 1903, to expedite the determination of suits in equity under the Anti Trust Act and the Interstate Conunerce Act. In appealing from the order of the Circuit Court appel- lants have followed the practice indicated in the two cases of Interstate Commerce Commission v. Brimson, 154 U. S. 447, and Interstate Commerce Commission v. Baird, 194 U. S. 25. In each case it was held that the application by the Interstate Commerce Conmiission made a " case " and that the order denying the application was a final order and therefore appealable. The two cases cited differ from the present ones only ia this: that no action was there pending in any Circuit Court to which the proceedings to compel the testimony of wit- nesses and the production of books and papers could be said to be ancillary. Otherwise, however, the proceeding itself was in every substantial respect the same as that adopted in the present cases. The words " final decree " have been given a liberal and reasonable construction as respects the right of appeal. Eau Claire v. Payson, 107 Fed. Rep. 552. There may he more than one final order and more than one appeal in the same suit. Trustees v. Greenough, 105 936 201 UNITED STATES BEPORTS, 106. Arpunent for plaintiffs in error. U. S. 527; TtittU v. Claflm, 88 Fed. Rep. 122; Rouse v. Letcher, 156 U. S. 47. [107] These proceedings are not properly incidental, but collateral, having a distinct and independent character. They belong to the class known as ancillary, in which the form is determined by the circumstances of each case. So far as the question of appealability goes, they are subject to the same rules as original and independent actions. Krip- ■pendorf v. Hyde, 110 IJ. S. 276, 280, 287; Freeman v. Howe^ 24 How. 450, 460; Ohrktmas v. Ru,ssell, 14 Wall. 69, 80; Romm V. L(4e!ter, 156 IJ. S. 47. 50; Stewfirt v. fhrnham^ 115 U. S. 61, (U; Carey v. Houston d^c. Ry, Co., 161 U. S. 115, 126; Popr V. LonisrUle d'c, Ry, Co,, 178 U. S. 573. The present j)roceedings have all the distinguishing char- acteristics of any suit in equity or action at law. The test of finality as to any j^articular order, under the decisions of this court, is this: An order, to be appealable, or final for the purposes of ai)peal, must be conclusive upon the merits and must leave the matter in controversv in such a condition that if there be an affirmance here the court will have nothing to do but to execute the order it has already entered. Bontwich v. Brinkerhoif ^ 106 IJ. S. 3; St. L. <&c. R. Co. V. Smitliem Expr. Co., 108 V. S. 24; Winthrop I. Co. Y. Meeker, 109 IJ. S. 180; Motrer v. FJetrher, 114 V. S. 127; Trustees v. Cheenmigh^ 105 U. S. 527. It has been held that the final order or decree in ancillary proceedings is governed by the same rules, in respect of ^appeals to the Supreme Court, as the decree in the principal *suit. Pope V. LouUrille cfr. Ry. Co.y 173 U. S. 573; Carey V. Hmiston d'e. Ry. Co., 161 IT. S. 115; Roime v. Letrher, 156 U. S. 47. If , however, there is any question whether the act of Febru- ary 11, 1903, applies to appeals in such cases as the i)resent, there can be no doubt of the right of appellants to obtain a review of the ordei-s apj^ealed from by direct appeal to the Supreme Court under the provisions of section 5 of the act of March 3, 1891. Loeh v. Towmhip Trustees. 179 I^. S. 472 ; W. U. Tel Co. V. .1. A. R. R. Co., 178 U. S. 239: P^^,ui. MuL L, Im. Co. V. Austin, 168 U. S. 685. , NELSON v. UNITED STATES. 937 Argument for the United States. t [108 J Mr. Frank B. Kellogg and J/n James M. Beck, Special Assistants to the Attorney General, with whom The Attorney General was on the brief, for the United States in these cases and in Nos. 381, 382, 383, 384 and 385: Whether finally admissible or not, the evidence should be given and received before the examiner, inasmuch as all ques- tions of materiality, relevancy and competency must be left primarily for determination upon final hearing by the United States Circuit Court for the District of Minnesota Avhere the cause is pending, and ultimately for decision by this court when the suit shall b(» considered here on appeal. Bleasr v. GarHngton, 92 U. S. 1. Had the witnesses, instead of appealing from the order and taking a writ of error from the judgment of contempt, sued out a writ of haheas corpus, this court would have had jurisdiction on appeal from a judgment dischaiging the writ. Ekiu v. United States, 142 U. S. 651; Horner y. United States. 146 U. S. 120. And it is only the question of the validity of the judgment overruling their plea under the Constitution that can be considered. In re Tyler, 149 U. S. 164; In re Letinon, 166 U. S. 552. A writ of error from the judgment of contemj)t will bring up no other question. Bessette v. Couh-y Co., 194 U. S. 324. The rule in Blase v. GarUngton has been followed in numerous cases, lu re All is. 44 Fed. Rep. 216, rontra. is not in i)oint, and it does not appear that Blease v. GarUngton was called to the attention of the judge deciding the case. The evidence was material and admissible. AVhere the ex- istence of the books and papers desired is established, the abil- ity to produce them is shown, and the books and papers are apparently impoi-tant and material to the case of the moving party, their production will l)e required. It is obviously im- possible in applications of this character to determine the materiality of all of the contents of the books and papers in advance. United States v. Bahcock, Fed. Cas. No. 14484; Coit V. North Carolina. Gold dc. Co.,,^ Fed. Rep. 577. There is no doubt that as a witness a party can be com- pelled 1109] by a suh poena duces tecum to produce books, documents and papers in his possession in the same manner as any other witness. Bischoifsluim v. Brown, 29 Fed. Rep. 938 201 UNITED STATES REPORTS, 109. Argument for the Unlteti States. 341, 343. And the officers of a corporation may be required as witnesses to produce its books when the books are neces- sary evidence. Wertheim v. Continental Ry. di Trust Co.^ 15 Fed. Kep. 716; Johnson Steel Street-rail Co, v. North Branch Steel Co., 48 Fed. Eep. 196 ; Edison Electric Light Co. V. U, S. Electric Ltg, Co., 44 Fed. Rep. 294; S. C, 45 Fed. Rep. 55; Johnson Co. v. North Branch Co., 48 Fed. Rep. 191. Under issues of the character raised in this cause, the en- tire manner of conducting the business of the General Paper Company is competent and material evidence. Interstate Commerce Commission v. Baird, 194 IT. S. 25. The claim of privilege is solely a personal one. Wigmore on Evidence, §§ 2195-2210; Brown v. Walker, 161 U. S. 597. These witnesses cannot claim the privilege of silence either under the general principles of common law and equity juris- prudence and procedure, or under the Fourth and Fifth Amendments. It is true that under the ancient practice in actions at com- mon law a party might not compel his opponent to furnish evidence as a witness. His only remedy was by way of a bill of discovery in equity. Wigmore on Evidence, §§ 2217, 2218. This limitation, however, never existed in equity. 1 Greenleaf on Evidence, 15th ed. § 361 ; 1 Daniells on Ch. Prac. 5th ed. 885, note 6; Adams on Equity, 7th ed. 36; Wigmore on Evidence, §§2218, 2219, pp. 3012, 3014-3016. A party will be compelled to make a disclosure of all facts within his knowledge, or books and documents in his posses- sion, which tend either to establish his opponent's case or to refute the position which he him^lf takes. Bustros v. White, Eng. Law Rep. Q. B. Div. 423; Atty, Gen. v. Emer- son and another, Law Rep. 10 Q. B. Div. 191; Arnold v. Pawtuxet Y alley Water Co., 18 R. I. 189. Modern legislation has made the bill of discovery an un- nec- [110] essary adjunct even in actions at law. Material evidence may now be required of a party in such actions, without resorting to this cumbersome proceeding. 1 Pom- eroy on Eq. Jur. 2d ed. § 193 ; Wigmore on Evidence, § 2219 ; 14 and 15 Victoria, c. 99, § 6 ; Rev. Stat, of Wisconsin (1898) , § 4183, as amended by c. 244, Laws of 1901 ; Rev. Stat. § 858. NELSON V. UNITED STATES. Opinion of tlie Court. 939 The guaranty of the Fifth Amendment that no person shall be compelled in a criminal case to be a witness against him- self does not protect corporations. Brown v. Walker, 161 U. S. 591; Interstate Com. Com. v. Baird, 194 U. S. 25; Morgan v. Halberstadt, 60 Fed. Rep. 592; N. Y. Life Ins. Co. Y. People, 195 Illinois, 430; State v. Jack, 69 Kansas, 387. In so far as the penalty or forfeiture may be criminal in its character the guaranty of the Fifth Amendment applies, and is entirely saved by the immunity statute; in so far as the penalty or forfeiture is other than criminal, in so far as it involves the loss or forfeiture of the claim to a continued violation of the laws of the land, there is no principle either of constitutional law or of equity jurisprudence which may be invoked to relieve against it. It was settled at an early date that pecuniary loss to the witness was not one of the penalties or forfeitures intended to be protected against by the Constitution. See opinion of Chief Justice Shaw in Btdl v. Loveland, 10 Pick. 9, which has been followed uniformly by all of the courts in the United States. 1 Greenleaf on Evidence, 15th ed. §452; Lowney V. Perham, 20 Maine, 240; Ward v. Sharp, 15 Vermont, 115; Harper v. Borough, 6 Ired. 30; Robinson v. Neal, 21 Ken- tucky, 212. ' It is also held that a penalty of forfeiture must be penal in its nature, as distinguished from pecuniary loss suffered as a consequence of civil liability. Boyd v. United States. 116 U. S. 616; Lees v. United States, 150 U. S. 476; Hunting- ton V. A ttrill, 146 U. S. 657 ; Brady v. Daly, 175 U. S. 148 ; City of Atlanta v. Chattanooga Foundry c^ Pipe Co., 101 Fed. Rep. 900 ; State v. Jack, 69 Kansas, 387 ; State v. Stand- ard Oil Co., 61 Nebraska, 28; Southern Ry. Co. v. Bush, 122 Alabama, 470; Levy v. Supe- [111] rior Court, 105 Cali- fornia, 600; Ames v. Kansas, 111 U. S. 449; 3 Wigmore on Evidence, § 256 ; 2 Beach on Private Corporations, § 840. Mr. Justice McKenna, after stating thQ> case as above, de- livered the opinion of the court Plaintiffs in error urge three main contentions, which we will consider in their order. \ tFjt\F 201 FNTTED STATES REPORTS, 111. Opinion of the Court I. That the evidence, documentary and oral, which the witnesses were required to produce, was not shown to be material to plaintiff's case. 1. There are three answers to this contention. (1) The evidence is clearly material. The charge of the bill is that the defendant manufacturing corporations entered into a conspiracy and combination in violation of the act of July 2, 18W), to suppress competition between themselves, and that they accomplished this purpose by organizing the General Paper Company, and gave it certain controlling powers over the output of the mills and the prices and distribution of their products. Before the application to the court for the orders under review there were certain facts established. It was estab- lished that in the fall of 1889 and t^e spring of 1900 there were preliminary meetings of the parties to ultimately form the paper company, and that it was subsequently formed by th(^ representing the manufacturing companies, who sub- scribed for the stock. In July, 1900, the corporations as represented in the paper company, fourteen in all, entered into contracts with it, making it their exclusive selling agent; that each constituent manufacturing company was represented by one of its principal officers upon the board of directors of the paper company, and the number of direct- ors have been increased as other corporations have made the paper company their selling agent. A table of the con- stituent companies was given and the times the companies became members of the paper company. And it was estab- lished that there was an executive committee, comprised (112| substantially of the same persons who constituted the board of directors, and that the paper company had books and records contaiining the minutes of the meetings of stock- holders, directors and the executive committee, and that the treasurers and sales agents had presented reports to the stocyiolders, directors and executive committee. It was stipulated that all the subscriptions to stock of the paper company were for the benefit of some paper manufacturing company and in its name, that it was the beneficial owner thereof, and that the dividends declared thereon were its property; that said stock was from time to time allotted to NELSON /". U^'^rED STATES. Opinion of tlie Coni-t. 941 such corporations as made contracts with the paper com- pany, making it their exclusive selling agent upon the basis of estimated relative productions of paper. A list of the in- dividuals to whom stock was issued, the names of the corpora- tions represented by them, and the days of the issuances of the stock were given. The questions were framed to prove the combination charged in the bill, and the powers and operation of the Gen- eral Paper Company and the relations of the other compa- nies to it. What the answers will show we do not know, nor what the books and documents will disclose. The orffaniza- tion of the paper company had a purpose, and whether it was a legal or illegal instrument for competing companies to use we do not have now to determine. Bv the admissions of the answers the paper company entered into contracts with those companies, became their selling agent, and was entitled to a certain percentage of the sales. Presumably it exercised its powers, made sales and received profits. In all that it did the manufacturing corporations were interested; they owned its stock, were entitled to its dividends. This we may admit for argument's sake, not prejudging in any way, may he -consistent with continued competition between the companies, but it may be otherwise. At anv rate, the man- ner in which the paper company executed its functions may be links in the evidence adduced by the United States, and this is enough to establish the materiality of the evidence. It nmst not be overlooked that not only an inspection of the [113] books was refused, but questions directed to ascer- tain the contents of the books were objected to, not answered. We have given one illustration; we will give another. Counsel for defendant corporations stated at the examina- tion: "That for the purpose of any question the Govern- ment counsel see fit to ask it may be assumed that all the books, papers and documents" describexi in the subpoena " are present here in court, and we decline to submit them to the inspection of the Government counsel." The following then took place : •• Q. state whetlier tliose boolcs show the anionnts, Ivinds or ijrades of paper niannfaetnred by tlie defendant Northwest Paper Company and sold by or throngh the defendant General Paper Company as the ex- Q4.9 i 201 UNITED STATES KEPORTS, 113. Opinion of the C!ourt. NELSON V. UNTTED STATES. 943 elusive sales agent of tlie defendant Northwest Paper Compan\ since the 8th day of April, 1902, or since about the Ist of Mav, 1902, if that Is the date the business commenced. " Same objections by defendants, and the witness given the same advice. •• Q. You decline to answer? '*A. I decline on advice of attorney. ** Q. Do the boolss also show where the said paper so manufactured was sold and into what States and Territories it was shipped since the 8th day of April, 1902, or the 1st day of May, 1902? *• Mb. Flandebs : I wish to make the same objections, and I give the witness the same advice. " A. Same answer." And counsel for the United States, not only as to the matters expressed in the foregoing questions, but as to other matters which the bill charged against the companies, and which had been inquired about, said, that he desired to use the books and offer them in evidence to show such matters. An inspection of the books was refused, and all evidence of their contents withheld. Necessarily the books contained the information. The paper company was the selling agent of the Northwest Paper Com- [114] pany and must have kept an account of its sales and into what States the paper of the company was shipped and sold. Such accounts are material and relevant to com- plainant's case. They may or may not, in connection with other evidence, sustain the charge of the United States, but they are elements in the proof, having tendency enough to sustain the charge to be considered material. 2. The claim of immateriality of the testimony cannot avail plaintiffs against the orders of the Circuit Court. The procedure before an examiner and his powers are explained in Bleme v. Garlington^ 92 U. S. 1. It is there said : " The examiner before whom the witnesses are orally examined is required to note exceptions ; but he cannot decide upon their validity. He must take down all the examination in writ- ing, and send it to the court with the objections noted. So, too, when depositions are taken according to the acts of Con- gress or otherwise, under the rules, exceptions to the testi- mony may be noted by the officer taking the deposition, but he is not permitted to decide upon them; and when the tes- timony, as reduced to writing by the examiner, or the deposi- tion, is filed in court, further exceptions may be there taken. Opinion of the CJourt Thus both the exceptions and the testimony objected to are all before the court below, and come here upon the appeal as part of the record and proceedings there." And an application to a court to compel the delivery of testimony in aid of the examination does not change the rule. The testimony is taken to be submitted to the court where the suit is pending and all questions upon the evi- dence, its materiality and sufficiency, 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 BUa^e V. Garlington, the testimony must be taken " down or its substance 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 objec- [115] tion, or the ruling will not be considered by us." Blease v. Garlington has been applied at Circuit in a numl>er of cases.« 3. These writs of error are not prosecuted by the parties in the original suit, but by witnesses, to review a judgment of contempt against them for disobeying orders to testify. Being witnesses merely, it is not open to them to make ob- jections to the testimony. The tendency or effect of the tes- tunony on the issues between the parties is no concern of theirs. The basis of their privilege is different from that and entirely personal, as we shall presently see. II. That the documentary evidence called for was not shown to be in the possession or under the control of the witnesses. This contention is untenable. The ground of it is that the possession of the witnesses was not personal, but was that of the respective corporations of which they were (^Thomson-Houston Elec. Co. v. Jeffrev Mfg. Co., 83 Fed. R^ 614 ; Maxim-Nordenfelt Guns d Am. Co., Ltd., v. ColVs Patent Fire- (irms Mfg. Co., 103 Fed. Rep. 39; Parisian Comb Co. v. Eschwege, 92 Fed. Rep. 721 ; Fayerweatlier v. Ritch, 89 Fed. Rep. 529 ; Appleton v Ecauhert, 45 Fed. Rep. 281; Edison Elec. Lt. Co. v. U. 8. 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 v. Worster, 113 Fed. Rep. 20 ; MacWilliam v. Conn. Web. Co., 119 Fed. Rep. 509 ; Whitehead d Hoag Co. v. O'Callahan, 139 Fed. Rep. 243. 201 UNITED STATES KEPOKTS, 115. Opinion of the Court. officers. Granting this to be so and that the witnesses could have set up whatever privileges the corporations had, never- theless they had the custody (actual possession) of the books and were summoned from necessity as representing the corporations. It is hardly necessary to observe that the wit- nesses had all the possession human beings could have had or can have, and if the objection is to prevail the books of a corporation can be withdrawn from the reach of compulsory process. It is as useless as attempting to demonstrate that twice two make four, to say that a corporation can have possession of nothing except by the human beings who are its officers, and it is to them, not the intangible being they represent and act for, [116] that the law directs its process of subpoena and must procure its evidence. III. That the evidence, documentary and oral, required to be produced, was in the nature of incriminating evidence which t^e witnesses and the defendants are privileged from furnishing to the plaintiff under the provisions of the Fed- eral Constitution and the well recognized principles of equity procedure. This contention asserts rights personal to the plaintiffs and rights of the corporation defendants in the suit. The basis of both rights is the protection of the Fourth and Fifth Amendments to the Constitution of the United States. The argimient submitted is substantially the same as that made by appellants in Hale v. Eenkefand McAlister v. HpvM. It is insisted that the immunity " given by the act of Febniary 25, 1903, is not as broad as the penalties and forfeitures to which the plaintiffs in error or the corpora- tions of which they are officers will be subjected. If the immunity, it is urged, protects from the penalties of the Anti Trust Act of 1890 it does not protect, nor has Congress u Provided, that no person shaill lie prosecuted or lie subjected to Jiny itenalty or forfeitiu-e for or on acTOunt of any transnction, mat- ter, or thing oonc*erning which he may testify or produce evidence, documentary or otherwise, in any proceeding, suit or prosecution under said acts: Provided further, that no person so testifying shall \m exempt from prosecution or punishment for perjurj- committed in so testlftring.'* Act February 25, lOaS; Comp. Stats!, Sup. 1903, pp. 366, 367. ALEXANDEB V, UNITED STATES. 945 Syllabus, the power to protect, from the penalties of the Minnesota laws, which make criminal a combination and conspiracy in restramt of trade and subject to forfeiture the charters of corporations who become parties to such combination and conspiracy. Sections 6955, 6956, 5962, Statutes of Minne- sota, 1894. The extent of the immunity and its application to corpora- tions was considered in HaU v. Henkel and McAlister v. Henkel, and decided adversely to the contention of plaintiffs m error. Judgment affirmed. [117J ALEXANDEE v. UNITED STATES. WHITING V, SAME. STUAKT V, SAME. GENERAL PAPER COMPANY v, SAME. HARMON AND GENERAL PAPER COMPANY v SAME. APPEALS FROM THE CIRCUIT COURT OF THE UNITED STATES FOR THE EASTERN DISTRICT OF WISCONSIN. NOB. 381, 382. 383, 384, 385. Argued January 5, 8, 190e.-DecIded March 12 1906. * [201 U. S., 117.] Vi.'",'*.^/ ^*'''"'* "^^""^ ^^ *^^ ^''^^^^ States brought by the United States against corporations for violations of the Anti Trust Law of July 2, 1890, a witness refused to answer questions or pro- duce books before the examiner on the ground of immateriality also peading the privileges of the Fifth Amendment; the court overruled the objections and ordered the witness to answer the Trr^rthr"" ^'^ '"'"- ^^ ^-^^^^^^ ^-^^ ^^- *^ *^^« While such an order might leave the witness no alternative except to obey or be punished for contempt it is interlocutory in the prin- cipal suit and not a final order, nor does it constitute a practiLry independent proceeding amounting to a final judgment and an appeal will not lie therefrom to this court. 21220— VOL 2—07 m 60 ijrTSt'LP 201 UMITED STATES KEPOKTS, 117. Opinion of the CJourt If tlie witness refus€»8 to obey and the court goes further and punishes him for contempt there is a right of review, and this is adequate for his protection without unduly Impeding the process of the case.^ 15^) L. ed., ti86.] » [Orders of a Federal circuit court directing witnesses to answer the questions put to them, and produce written evidence in their pos- session, on their examination before a special examiner appointed in a suit brought by the United States to enjoin an alleged violation of the antitrust act of July 2, 1890 (20 Stat. L., 209, chap. 647, U. S. Comp. Stat. 1901, p. 3200) lacic the finality requisite to sus- tain an appeal to the Supreme Court.] The facts are stated in the opinion. Mr, J If Hits G. Flanders^ with whom Mr. Charles F, Faw- sett and Mr, William Brace were on the brief, for appel- knts.« « .¥n Frank B. Kellogg and Mr. James M. Beck^ Special Assistants to the Attorney General, for the United States." [118] Mr. Ji sTicE McKenxa delivered the opinion of the court. At the very beginning we encounter a quesion of jurisdic- tion. Are the orders of which the appellants complain ap- pealable? The orders direct the appellants respectively to appear before Eobert F. Taylor, special examiner in the case, at the time and place to be designated, and directs each of them to " ansAver each and every question put to them respectively by the counsel for the complainant, the United States of America," and to produce before such commis- sioner certain books, papers, records, documents, reports and contracts, " for the purpose of their respective examination in said cause, and for use in evidence of the complaint of the United States of America in said examination." And a The foregoing syllabus copyrighted, 1906, by The Banks Law Pub- lishing Co. 6 The following paragi-aph comprises the syllabus to this case in the U. S. Supreme Court Reports, Book 50, p. 686. Copyrighted, 1906, by The Lawyers' Co-Operative Publishing Co. cFor abstracts of arguments see abstracts in NeUon v. United States, dJile, p. 920, argued simultaneously herewith. ALEXANDER V. UNITED STATES. H47 Opinion of the Court. it is ordered that the complainant's counsel shall have the right to inspect the said books, etc., and to introduce them or any of them in evidence; but, except as necessary for such purposes, the books, etc., to remain in the custody of the appellants. A brief statement of the proceedings is all that is neces- sary The United States by its propei* officers brought suit in the Circuit Court of the United States for the District of Minnesota against the General Paper Company and twenty-three other corporations, defendants, under and pur- suant to the provisions of the act of Congress of July 2 1890, entitled "An act to protect trade and commerce against un awful restraints and monopolies." It is alleged in the bill that the defendants, other than the General Paper Com- pany and the Manufacturers' Paper Companv, were engaged m the manufacture of manilla and fibre papers in active competition with one another, and that they entered into an agreement, combination and conspiracy to control, regu- late and monopolize, not only the manufacture of news print manilla, fibre and other papers, but also the distribution and shipment thereof among and throughout the Middle Southern and Western States. The General Paper Com- pany was the means employed to execute the combination and conspiracy. That company is a corporation organized, the bill alleges, by [119] the other defendants, under the iioo nnJ '•'•!'.''' ^^ Wisconsin, with a capital stock of ^100,000, divided into one thousand shares, which were dis- tributed among and owned and held by the other defendants m proportions based upon the average daily output of the mills of each defendant. It is authorized to become at its principal place of business the sales agent of the products of the defendants' mills in the Stat^ of Wisconsin and else- where. Absolute power is conferred upon it to control and restrict the output of the mills, fix the price of their prod ucts, and determine to whom and the terms and conditions upon which such products shall be sold, into what States and places they shall be shipped, and what publishers and customers each mill shall supply. The Manufacturers' Paper Company, it is alleged, is a New York corporation, with its principal place of business in / f 948 201 UNITED STATES BEPORTS, 110. Opinion of the CJourt. Chicago, and from about the year 1897 to 1902, acted as the sales agent of various manufacturers of paper for the sale of newsprint and other papers; that in 1902 it became a party to the combination and conspiracy alleged in the bill and agreed with the General Paper Company not to compete with it in certain territories. It is admitted that, prior to the formation of the General Paper Company, the other defendants except the Manufac- turers' Paper Company, were in active competition. The formation of the General Paper Company is also admitted and that it became, by contract with the defendants who manufacture paper, their selling agent. The defendants deny, however, a purpose to violate the act of July 2, 1890. The violation of that law is the issue in the case, and the bill prays an injunction against the defendants and their officers from doing the acts or executing the purpose charged against them. In trial of the issue thus made the Circuit Court appointed Robert S. Taylor special examiner, with authority to hear and take testimony within and without the District of Minne- sota, and made an order fixing the time to take the testimony for the United States the sixteenth dav May. 1905. at the city of Mil- [120] waukee. State of Wisconsin. The order was duly served on the counsel of the respective parties. Thereupon the United States petitioned the Circuit Court for an order directing the clerk of the Circuit Court to issue a mthpcena duces tecum. The subpoena was duly issued and served on the appellants as individuals and as officers of cer- tain of the defendant companies. They appeared before the examiner in obedience to the subpoena, but, under the advice of counsel, they refused to permit the use of books or certain parts of them, and refused to answer certain questions put to them, the ground of this action being the immateriality and irrelevancy of the evidence sought to be adduced. The United States then presented a petition to the United States Circuit Court for the District of Wisconsin, which recited the issues in the case and the statement of the questions asked and the parte of the books and documents sought to be used. To this petition the appellants filed separate answers. The answers may be regarded for our present purpose as ALEXANDER V. UNITED STATES. Opinion of tbe Court 949 identical. They allege the immateriality of the evidence and that Its materiality should be established as a condition pre- cedent to Its production; that they are officers of the com- panies, and as such officers, the custodians of the books, papers and documents, and that the same are of interest and value to the company in its business, and the company for- bids their production; that the United States seeks evi- dence to convict the company and the individual appellants of violations of the act of July 2, 1890, to annul the contracts and agreements of the company, and subject it and the other appellants to the penalties prescribed in that act, and to com- pel the company and the other appellants to furnish evidence against themselves, contrary to the provisions of the Fifth -Ajnendment to the Constitution of the United States, which provides that no person shall be a witness against himself • also contrary to the Fourth Amendment of the Constitution of the United States, which provides that the right of the people to be secure in their persons, houses, papers and effects against unreasonable searches and seizures shall not be vio- lated. It is also said that the alleged acts of the [121] pa- per company complained of in the original petition of the United States and which the United States is endeavoring to estabhsh would, if committed by the company, be violations of the laws of Wisconsin, and would subject the company to forfeiture of its charter and other penalties under said laws and to compel it through its officers to produce the books and documents sought would be to compel it to furnish evidence tending to establish that it has violated the law of the State and such purpose is contrary to the provisions of the Fourth and Fifth Amendments of the Constitution of the United States. As we have said, the court entered orders requirmg the ap- pellants to answer the questions put to them and to produce the books, papers and documents requested. Appeals were allowed to this court. To justify the appeals, appellants con- tend that the orders of the Circuit Court constitute practically independent proceedings and amount to final judgments To sustain the contention, Interstate Commerce Commission v Bnmson, 154 U. S. 447, and Interstate Commerce Commis- sion V. BaiTd, 194 U. S. 25, are cited. f iPOU 201 UNITED STATES KEPORTS, 121. Opinion of the Court. Those cases rested on statutory provisions which do not ap- ply to the proceedings at bar, and, while there may be resem- blances to the latter, there are also differences. In a certain sense finality can be asserted of the orders under review, so, in a certain sense, finality can be asserted of any order of a court. And such an order may coerce a witness, leaving to him no alternative but to obey or be punished. It may have the effect and the same characteristic of finality as the orders under re- view, but from such a ruling it will not be contended there is an appeal. I^et the court go further and punish the witness for contempt of its order, then arrives a right of revit^w. and that is adequate for his protection without unduly impeding the progress of the case. "Why should gi-eater rights be given a witness to justify his contumacy when summoned before an examiner than when summoned before a court ? Testimony, at times, must be taken out of court. In instances like those in the case at bar the officer who takes the testimony, having no power to [122] issue process, is given the aid of the clerk of a court of the United States; having no power to enforce obe- dience to the process or to command testimony, he is given the aid of the judge of the court whose clerk issued the proc- e&s, and if there be disobedience of the process, or refusal to testify or to produce documents, such judge may " proceed to enforce obedience ... or punish the disobedience in like manner as any court of the United States may proceed in case of disobedience to like process issued by such court." Sections 868, 869, Revised Statutes. This power to punish being exer- cised the matter becomes personal to the witness and a judg- ment as to him. Prior to that the proceedings are interlocu- tory in the original suit. This is clearly pointed out by Cir- cuit Judge Van Deventer, disallowing an appeal from an order like those under review, in the case of Nelson v. United States (No. 490), in error to the Circuit Court of the United States for the District of Minnesota. The learned judge said : " I am of opinion that the mere direction of the court to the witnesses to answer the questions put to them and to produce the w^iitten evidence in their possession is not a final decision ; that it more appropriately is an interlocutory ruling or order in the principal suit, and that if the witnesses refuse to com- ply with it and the court then exercises its authoritv either to UNITED STATES V, ARMOUR & CO. Syllabus. 951 punish them or to coerce them into compliance that will give rise to another case or cases to which the witnesses will be parties on the one hand and the Government, as a sovereign vindicating the dignity and authority of one of its courts, will be a party on the other hand. I have no doubt that a judgment adverse to the witnesses in that proceeding or case will be a final decision and will be subject to review by writ of error, but not by appeal. My opinion is also that the parties to the principal suit cannot appeal or obtain a writ of error from that decision," See also Logan v. Penn, R. E, Co., 132 Pa. St. 403, 410. This court having no jurisdiction, the appeals must be dis- missed, and It is so ordered. [808] UNITED STATES r. ARMOUR & CO. ET AL. (District Court; N. D. lUiuois. March 21, 11)00.) [142 Fed., 808.] Criminal Law— Immunity to One FurnishixNg Evidence or Infob- MATiON— Statutes— Corporations.— A corporation, whether state or federal, canDot claim immunity from prosecution for violation of the interstate connnerce or anti-trust laws of the United States be- cause of testimony given or evidence produced by its officers or agents before the Interstate Commerce Commission or the Commis- sioner of Corporations, or in any proceeding, suit, or prosecution under such laws ; the right to immunity on account of evidence so given in the several cases granted by Act Feb. 11, 1893, c. 83, 27 Stat. 443 [U. S. Comp. St. 1901, p. 3173], and Acts Feb. 14, and Feb. 25, 1903, cc. 552, 755, 32 Stat. 827, 904 [XT. S. Comp. St. Supp 1905, pp. G8, 602], being limited to individuals who as witnesses give testimony or produce evidence. C809] United States— Executive Departments— Commerce and Labor— Creation-Statutes— Construction.— The primary' purpose of Commerce and Labor Act February 14, 1903, c. 552, 32 Stat. 825 [U. S. Comp. St. Supp. 1905, p. 63], was legislative, to enable Con- gress by information secured through the work of officers charged with the execution of that law to pass such remedial legislation as might be found necessary, and the act must be construed in view of such purpose. Criminal Law— Immunity to One Furnishing Evidence or Infob- mation— Statutes— Hearings before Commissioner of Corpora- 952 142 FEDEEAL KEPORTEK, 809. Syllabus. TiONS. — Section 6 of the act creating the Department of Commerce and Labor (Act Feb. 14, 1903, c. 552, 32 Stat. 827 [U. S. CJomp. St Supp. 1905, p. 68] ) , defining the powers and duties of the Commis- sioner of Corporations, requiring him to make investigation into the organization, conduct, and management of the business of all cor- porations or combinations engaged in interstate or foreign com- merce, other than common carriers, and giving him the same powers In that respect as is conferred on the Interstate Commerce Com- mission with respect to carriers, including the power to subpoena , and compel the attendance of witnesses, and to administer oaths and require the production of documentary evidence, contemplates that he shall proceed by private hearings ; and, having such powers, a person who appears before him on his demand or by his request, and gives testiuMmy or produces documents, although not sworn, is entitled to the same privileges and immunities as though his at- tendance was compelled by subpceua and his testimony given under oath. Same.— Act Feb. 14, 1903, c. 552, creating the Department of Com- merce and Labor (32 Stat. 827 [U. S. Comp. St. Supp. 1905, p. G8]) by section 6 requires the Commissioner of Corporations to investi- gate all corporations and combinations engaged in interstate or foreign commerce, except common carriers, and provides that "all the requirements, obligations, liabilities, and immunities imposed or conferred by said 'Act to regulate commerce ' and by 'An act In relation to testimony before the Interstate Commerce Commission ' • ♦ * shall also apply to all persons who may be subpoenaed to testify as witnesses or to produce documentary evidence in pursu- ance of the authority conferred by this section." The act last men- tioned (Act Feb. 11, 1893, c. 83, 27 Stat. 443 [U. S. Comp. St. 1901, p. 3173]), which is supplementary to the interstate conmierce act, provides that **no iierson 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 or produce evidence, documentary or otherwise before said commission or in obedience to its subpoena * ♦ * or in any such case or proceeding." Ap- propriation Act Feb. 25, 1903, c. 755, 32 Stat. 904 [U. S. Comp. St. Supp. 1905, p. 002], making provision for the enforcement of the Interstate commerce and anti-trust laws, contains a similar immu- nity provision relating to persons giving testimony or producing evidence in any proceeding, suit, or prosecution under said acts. By a resolution of the House of Representatives of March 7, 1904, the Commissioner of Corporations was directed to investigate the so-called "Beef Trust," and while proceeding thereunder certain persons by his request, but without being subpoenaed or sworn, fur- nished testimony and documentary evidence on which he based his report. Held, that the Immunity provisions of the statutes set out and applicable to such investigation, to be valid, must be construed as being as broad as the privilege given by the fifth constitutional UNITED STATES V. ARMOUR & CO. Statement of the Case. 953 amendment, and that the persons so furnishing evidence could not be prosecuted for violation of the anti-trust law, on account of the transactions, matters, or things to which such evidence related.^* Criminal Prosecution. On motion by defendants and cross-motion by the United States to direct a verdict on trial of pleas in bar. On the 1st day of July, 1905, an Indictment was returned by the grand jury of the Northeni division of the Northern district of Illi- nois against the de- [810] fendants, charging them with conspiring in restraint of trade and commerce among the states and with foreign nations, and with an attempt to monopolize such trade and commerce, in violation of the Sherman anti-trust act. Pleas in abatement were filed attacking the organization of the grand jury, and the procedure In general, from the time the grand jury was impaneled until it returned the indictment. A demurrer was interposed to these pleas, and on argument was sustained as to all of them. A demurrer was then interposed to the indictment itself, and after full argument it wfis overruled as to the conspiracy counts and sustained as to the counts charging monopoly. Later, on the 23d day of October, 1905, special pleas in bar were filed, setting up that by virtue of a resolu- tion of the House of Representatives, adopted March 7, 1904, and known as the " Martin Resolution," and also by virtue of the law creating the Bureau of Coi-porations, James R. Garfield, Commis- sioner of Corporations, had made an investigation into the business of the defendants and into the matters and things alleged in the indictment, and that the defendants upon the lawful requirement of the Commissioner of Corporations had furnished evidence, documen- tary and othervA ise, of and concerning the matters charged in the indictment The pleas are numerous, and are varied in form, but the above is the substance of them. Replications were filed by the United States, traversing the averments of the pleas. A jury was impaneled, and the taking of testimony was commenced on the 29th dav of Janu- ary, 1906. The resolution of the House of Representatives was as follows: " Resolved, that the Secretary of Commerce and Labor be, and he is hereby, requested to investigate the causes of the low prices of beef cattle in the United States since July first, nineteen hundred and three, and the unusually large margins bet^veen the prices of beef cattle and the selling prices of fresh beef, and whether the said con- ditions have resulted in whole or in part from any contract, combi- nation, in the form of trust or otherwise, or conspiracy, in restraint of commerce among the several states and territories or with for- eign countries; also, whether said prices have been controlled in whole or in part by any corporation, joint stock company, or corpo- rate combination engaged in commerce among the several states or with foreign nations ; and if so, to investigate the organization, capi- talization, profits, conduct, and management of the business of such corporations, companies, and corporate combinations, and to make early report of his findings according to law." For the act estab- lishing the Department of Commerce and Labor, passed February 14, 1903, see U. S. Comp. St. Supp. 1905, p. 63 (32 Stat. 825, c. 552). For the interstate commerce act and amendments thereto, portions of which are adopted and made part of the said act of commerce and o Syllabus and statement of the case copyrighted, 1906, by West Publishing Co. 954 142 FEDEKAL KEPORTEB, 810. Statement of tlie Case. l^mfo^^l fV}h,f' ^™P- ®*- 1^^- »^- ^^^ ' Act March 2, 1889, c. 382. 25 Stat 8G1 [U. S. (Jump. St. 1901, p. 31C8]). For tlie act in relation to testimony, etc., being an act supplemental to the inter- state eoffimerce acts, passed February 11. 1898, see Fed. St. .\im. vol. 4, p. 855 (27 Stat. L. 443, e. 83 [U. S. Comp. St. 1901. p. 3173]). For the Sherman anti-trust act, being the act under which the ind ctment r26\staTlSh?'Sf lU^^^^^ ^^/^""- A ' ~« ijljr^priiting' iWoo ibr enSm^ent^^^'the Stiust^and'hiter* state c^nuneree Fel>ruary 25. 1903, see 32 Stat W4 [U. S. ( omp. St. Supp. 1JXJ5, p. (i02]. 1 he resolution of the Houses of Representatives, set forth above, which IS kmn.!, as the "Martin KesohUiou," was passed MarcT? ^\JI^ Pa^««S«^^ and the terms thereof, and the fact that the Com- missioner of Corporatii.ns, Mr. James R. Garfleld, was going to Chi- cago to make the investigation of their business theivliv called for were known to defendants from the public press. Their resnivtive counsel thereopon investigated the law as to the powers and autht,r- ity of the Commissioner of Corporations, under section i\ of the act creating that bureau (Act Feb. 14, 1903, c. 552. .{2 Stat. 827 riT 8 Comp St Supp. 1905. p. 08] ). to make such investigation and to com- pel the testimony of witnesses and the production of the books and J^ilV •?!? ^*^^^»^f»t^ f*»' the purposes thereof, and advls^l de fendants with respect thereti». Afterwards, on .Vpril 13, 1904 the Commissioner of Corporations arrived in Chicago for that pnrp.^ He called upon Charles G. Dawes, president of tlie Central Trust Company of Chicago, and told him he had come [811] to Chicaeo to mej?t representatives of the packers and discuss with them this investigation and stated his purpose in coming to Chicago to meet the representatives of the packing industries, and askeinpanies. and Mr. Dawes, wer^ pTesen? r tii :« '*^^i "* "i Vi?^ "*''"''*^'' «^*i'»»g*^»- and the Commissioner late^ on the same day held, separate meetings and interviews with Edward Swift vit^e president .»f Swift & Co.. with F^dward Aforr s, vice nres^ dent of the Faiiil»auk Camiing Company, and with Jes4 P r>nmn president of the National Packing (Vmpanv J-.^nmn, At these inteniews Mr. Gartield informni the defendants and their representatives whom lie met that he was engaged in making' ^t^ Imes igat on as Commissioner of Corporations lie calH to the ? attention the law creating his bureau and the powers therebv vested In him and the Martin restdution of the House of RepresentatTves and mforined them that he had come to Chicago to get fron the de^ fendants the information possessed by them, and access to their books and reccmls, and called upon them to give him and his an hori?S agents such information and access. The Commiasioner te^{ fi^ 1^ Lr^MeT Jr/h **!\^T^"^*^"*' "^«* ^^ ^""^ substantially thelime toten lew with each of these persons: the interviews with Mr Swift Mr.* KraJhoff '* ^^"'*'" ^^"^' *'*'''''^*'''' ^''**^*^" *^«" thht with ^J^\^f ??^®*2?*^ ***' ***® interviews on April IX 1904. were stated bv the United States Attorney in his argument to the <<.urt upc^ tlie^ UNITED STATES V. ARMOUR & CO. 955 Statement of the Case. motions, as follows: "The Commissioner secured an introduction to them through their banker and through their mutual friend, Mr. Dawes and Mr. Eckels. He took the matter up with them as a busi- ness proposition, and said to them : ' I have come liere now as Com- missioner, and I wish to make an investigation, and I want you to co- operate with me. I want you to turn over this evidence. You know what my powers are, what my duties are. You know all alwut it' * Yes,' Mr. Krauthoff says, ' we are thoroughly posted on that' He took or started to take the law from his pocket and hand it to them. Mr. Krauthoff says : ' We understand all abaut the law. * * ♦ We know exactly what our rights are and we know what your rights are. * ♦ * You need not discuss tliat Mr. Garfield. * * * ji^t us know what you want here.' Mr. Garfield said to him, and to tlie other gentlemen : ' I want to maiie an investigation. That means that I must go to your books and papers and find out what you have, and in order to make it thorough I must verify wiiat is given to me by the books themselves.' He called for a complete investigation and examination of their affairs." In these interviews, Mr. Garfield called tlieir attention to the Mar- tin resolution calling for the investigation, as well as to the act of Congress creating his bureau and the powers thereby conferred upon him, and produced the law, intending thereby to show what the powers of the bureau were, but was informed that tlie defendants were aware of the provisions of the law. He stated in the interview that by this Martin resolution the House of Representatives had indi- cated certain si^ecific lines of inquiry that it desired made, and in connection with tlie general investigation he was taiving up tlie Martin resolution in detail; and he stated that witliout the information to be obtained from the defendants and from tlieir books and records liis report would be incomplete. He stated that detective methods would not l^e used, but said he came and would ciune directly to headquar- ters for such information as he wished, and for that i)urp:)se liad met these men. Mr. Krauthoff stated to him that the Department of Justice of the government had obtained an injunction against the defendant packers, enjoining them from violation of the Sherman anti-trust act; and Mr. Garfield^testified that he stated in that con- ne<*tion that his department and bureau were not coiiiie<*ted with the Department of .Justice; that eacli department was operating sepa- rately, and that the work of the Bureau of Corporations was within its own de- [812] partment; that he was not acting with or for the Department of .Justice. He testified that he stated practically to the effect that the purpose of Congress in creating his department was not to disclose violatirt to him their conclusion. This was done, and the defendants thereupon consulted their respective counsel as to their legal duty and obligation to comply with the call of the Commissioner of Cor- porations so made for the disclosure as to their business and for the production of their books and records to the Commissioner and his agents, and were advised by their counsel with respect thereto, and acting upon such advice they reported to the Commissioner that they would comply therewith, and in furnishing information and access to their books and records they acted in accordance with that advice. On the 14th or 15th of April, 1904, the Commissioner brought to the offices of the respective defendants at the Union Stockyards in Chicago, Mr. Durand, a special agent of the Bureau of Corporations, and introduce*! him to certain of the defendants, officers of the de- fendant corporations, and stated that Mr. Durand would be in charge of the investigation in Chicago with the authority of the Commis- sioner to represent him. Thereupon, a few days afterwards, Mr. Durand, with the authority of the Commissioner, presented to the officers of Armour & Co., Swift & Co., and the Fairbank Canning Company written memoranda of the information which he desired from the defendants and from their books and records at that time. These memoranda were first presented to officers of Armour & Co! and to officers of Swift & Co., and were taken up, respectively, by the officers of these companies among themselves and with Mr. Durand, and by an officer of Armour & Co. with Mr. Garfield at Washington upon certain questions as to the scope of the inquiries and as to whether certain specific parts of the information called for was within and pertinent to the investigation; and, these questions being deter- «7t/CJ 142 FEDERAL REPOBTER, 813. Statement of the Case. mined, spei-ial agents of the Bureau of Corporations were given access to the books and records of those companies containing such informa- tion, and a few days later, upon [814] presentation of similar memo- randa to the officers of the Fairbank Canning Company, the agents of the bureau also commenced the investigation of the books and records of that company and were given like access thereto. A little later Mr. Kobertson, a special agent of the bureau, by the direction of the Commissioner, went to Omaha and applied to the defendant officer of the Cudahy Packing Company and called for access to the books and records of that company for similar information, and this call or re- quest was complied with by Mr. Cudahy; and also by like direction and authority said Kobertson went to the office of the Armour Pack- ing Company in Kansas (^ity. and made a similar call or request of that company, and this call was complied with, and access to the books and records of that company given by the direction and authority of Mr. Charles W. x\.rn;our. president of that company and vice presi- dent of Armour & Co. The investigation continued in the offices of the defendants at Chicago until January 28, 1905, and from time to time at intervals afterwards during the spring and early summer of 1905. In the meantime other communications in writing, signed by the Commissioner, for additional information according to memo- randa thei-eof accompanying the letters, were presented to the de- fendants, and (after the disposition of objections by certain of the defendants to [wrtions of the information) the information was fur- nished by the defendants so far as retpiired by the Commissioner. This information was of the facts of costs, expenses, selling prices, and proceeds, and other facts and data from which the Commissioner aiid his experts were enabled to determine the costs, expenses, selling prices, and margin of profits of the respective defendants in the dressed- beef business, and also information as to the organization, conduct, and management of their business, and much information as to the otlier branches and departments of their business. The agents of the bureau also investigated the books of divers sub- sidiary coriK)rations of the National Packing Company, in compliance with tlie interview and call of the Commissioner of Corporations therefor with and upon the president of that company, Mr. Lyman, on April 13, IJMH, and by and with the authority and direction of the board of directors of that company acting under advice of counsel; and the counsel of that company, at the request of the Commissioner addressed to that company, made a statement of information as to the orgiiuization of that company. On January 28, 1005. the Commis- sioner addressed eonununications to Armour & Co.. Swift & Co and the Fairbank Canning Company (or Morris & Co., the owners of the Fairbank Canning Company), in which he requested further informa- tion " which can best be secured in the form of a written statement to be drawn up on the basis of oral interrogatories of an informal character," and stated that Si>ecial Examiner Durand was authorized to address to the proper representatives of those companies questions covering the subjwts mentioned in the letter, which were: History ownership, and organization of the National Packing Company ; own- ership of the securities of the defendant companies whose representa- tives should be examined; relation of those companies and stock- holders to subsidiary corporations and other corporations connected with the packing business or cattle industry ; methods of competition in the purchase of cattle and the sale of meat products ; control of the large packers over the prices of live stock and of meat products- re- lation of the prices of cattle and the prices of beef, and the causes affecting them; €-ost of killing cattle and of handling the products thereof; capital stock, bonds, total sales, earnings, and dividends of UNITED STATES V. ARMOUR & CO. Statement of the Case. 959 % the companies whose representatives should be examined ; names of private car lines controlled by those companies or their stockholders- the number of cars owned or operated, the mileage made and the cost of operation. And the letter of the Commissioner stated that state- ments m reply to such interrogatories would be taken down by a stenographer and recast in systematic form by Mr. Durand and sub- niitted to the representatives of the defendant companies for revision signature, and authentication by oath or affirmation : and if it should then be found ijecessaiy to supplement the affidavit in anv way Mr Durand would address inquiries to other representatives in the same manner. Upon Mr. Durand taking up this matter separatelv with representatives of the diuerent ** of his employer, was that four of the names upon this list were given by him to Mr. Carroll, one of the special agents of the Bureau of Corporations engaged in such investigation at the re- ^^^^^^J^""' fa*"*-**"- Mr. Garfield also testified that in January 1905. he turned over to the United States Attorney for said district a similar list of names of persons as witnesses who claimed thev knew of alleged facts regarding a combination among the defendants' which list was obtained in the same manner from the agents of the Bureau Upon the conclusion of the testimony a motion was entered on be^ UNITED STATES V. ARMOUR & CO. Charge to the Jury. 961 #' half of the defendants that the court direct the jury peremptorily to find the issues for the defendants. A cross-motion was also entered on behalf of the United States that the court direct a verdict for the government. William H, Moody^ Attorney General, and Charles B. Morrison, United States Attorne}^, and Assistant United States Attorneys Hanchett and Godman. John S, Miller and A. R. Urion, for defendants Armour & Co., Armour Packing Co., J. Ogden Armour, Patrick A. Valentine, Arthur Meeker, Thomas J. Connors, Samuel McRoberts, and Charles W. Armour. William J. Haynes and Louis C. Ehle, for defendants Swift & Co., Louis F. Swift, Edward F. Swift, Charles H. Swift, Lawrence A. Carton, D. Edwin Hartwell, Albert H. Veeder, Rol>ert C. MciVIanus, and Arthur F. Evans. John C. Cowin, Erode Davis, and Moritz Rosenthal, for defendants Cudahy Packing Co. and Edward A. Cudahy. George W. Brown and M. W. Borders, for defendants Fairbank Canning Co., Edward Morris, and Ira N. Morris. Hu3iPHREY,^District Judge (orally). A number of acts of Congress are involved in the case, and have been discussed upon the arguments on the motion and cross-motion to direct a verdict — the Cullom act, the original interstate commerce act of February 4, 1887 (24 Stat. 379, c. 104), and amendments of March 2, 1889 (25 Stat. 855, c. 382), and February 10, 1891 (26 Stat. 743, c. 128, [U. S. Comp. St. 1901, p. 3154] ) ; the act with regard to testimony of February 11, 1893 (27 Stat. 443, c. 83 [U. S. Comp. 1901, p. 3173]), being supplemental to the Cullom act; the act establishing the Department of [817] Commerce and Labor of 1903 (Act Feb. 14, 1903, c. 552, 32 Stat. 825 [U. S. Comp. St. Supp. 1905, p. 63]), and by its terms adopting certain portions of the two first-named acts ; the Sherman act (the anti-trust law of 1890) ; and Appropriation Act Feb. 25, 1903, c. 755, 32 Stat. 904 [U. S. Comp. St. Supp. 1905, p. 602]. The defendants are indicted under the Sherman act 21220— VOL 2—07 m 61 962 lit FEDERAL REPOKTER, 817. Charge to the Jury. (the anti-trust act), charged with a conspiiacy in restraint of trade. They have pleaded that as to them that act is sus- pended and inoperative and does not exist, because they were compelled to furnish evidence of and concerning the matters contained in the indictment, and that under the law such furnishing of evidence gives them immunity. The question of guilt or innocence is not involved. As to the corporations, the artificial persons named as de- fendants, the pleas cannot avail I regard that contention as having been met and overruled by the late decision of the Supreme Court in the case of Efhrhi F. Ihde v. \ymiaw Henh'U United States Marshal. 2(i Sup. Ct. :?70, ."lO L. Ed. , decided March 12, 1900, and not yet officially re- ported. In the typewritten decision of that case forwarded to the Attorney General and by him presented to the court I tind the following language : "But it is further insisted that, while the imimuiitv stntute may liroUH-t iiHliyianai witue.v.os, it would not protect the eoriK)ration ot wlu(!li aiipellaiit wns tlie asenc and representative. Tliis is true but the answer is tlmt it was not de.sij^ned to do s<». The right of a person uii(h?r tlie ftfrli anienihiient to refuse to intriminatf himself is nurelv a personal i>rivile^e of the witness. It w.ss never intended to permit hnn to plead the fact tliat some third person might he in( riminated Dy his testimony, even though he were the ageut of such pers ju A privilege ^o extensive might lie U!=ed to put a stop to the examina'tion of eveo witness who was calkHl uiK>n to testifv before the grand jury wiih regard to the doings or business of his principal, whether such principal were an individual or a corporation. The ouestioii whether a corporation is a "person" within the meaning of this amendiiient really does not arise, except, perhaps, where a corr)oratioii IS called upon to answer a bill of discovery, since it can only be heard by oral tnidence in the person of some one of its agents or employes the amendment is limited to a person wlio shall be compelled in Imv crinuiial cast^ to be a witness against himself, and, if he cannot set up the privilege of a third person, he certainly cannot set up the privilege of a cori>oration. As the combination or <'onspiracies nro- fided against by the Sherman anti-trust act can ordinarily be nroved only by the testimony of parties thereto, in the person of their agents or eniployes, the privilege claimed would practically nullifv the whole act of Congress. Of what use would it be for the Legislature to de- clare these combinations unlawful, if the judicial power may close the door of access to every available source of information upon the subject? * * « ' "" *• If, whenever an officer or employe (»f a coriM)ration were summoned lief ore a grand jury as a witness, he could refuse to produce the books and documents of such coiporatiou, upon the ground that they >yould incriminate the corporation itself, it would result in the failure of a large number of cases where the illegal combination was determinable only upon the examination of such papers. But, conceding that the witness was an oflleer of the corporation under investigation and that he was entitled to assert the rigiits of the corporation with respect UNITED STATES l\ ARMOUR & CO. 963 Charge to the iKjr. to the production of its books and papers, we are of the opinion that there is a clear distinction in this particular between an individual and a corporation, and that the latter has no right to refuse to sub- mit its books and i)ar>ers for an examination at the suit of the state The individual may stand upon his constitutional rights as a citizen He IS entitled to carry on his private business in his own way His power to contract is unlimited. He owes no duty to the state or to his neighbors to divulge his business [818] or to open his donrs to an investigation so far as it may tend to criminate him. He owes no such duty to the state, since he receives nothing therefrom beyond the protection of his life and prniierty. His rights are such as existed by the law of the land long antecedent to the organization of the state, and (an only be taken from him by due process of law and in accordance with the Constitution. Among his rights are a refusal to incriminate himself and the immunity of himselc and his propert^' trom arre>t .ind sei:mre except under a warrant of the law He owes nothing to the public so long as he does not tresiiass upon their rights. ' "Upon the other hand, the corporation is a creature of the state It is presumed to be incorporated for the benefit of the public It receives certain special privileges and franchises, and holds them sub- ject to the laws of the state and tlie limitations of its charter Its powers are limited by law. It can make no contract not authorized by its charter. Its rights to act as a corporation are only preserved to it so long as it obeys the laws of its creation. There is a reserved right in the Legislature to investigate its contracts and find out whether it has exceeded its powers. It would be a strange anomaly to hold that a state, having chartered a corporation to make use ot certain franchises, could not in the exercise of its sovereignty inquire how the.^e franchises had been employed and whether they had been abused, and demand the production of the corporate books 'and papers tor that i)urpose. The defense amounts to this: That an officer of a corporation, which is charged \\\W\ a criminal violation of the stat- ute, may i>!ead the criminality of such corporation as a refusal to produce its books. While an individual may lawfully refuse to answer incriminating questions unless protected by an immunity statute. It does not fallow that a corporation, vested with special privileges and franchises, may refuse to show its hand ^yhen charged with an abuse of such privileges. " It is true that the corporation in this case was chartced under the laws of New Jersey, and that it receives its franchises from the Legislature of that state: but such franchises, so far as they involve questions of interstate commerce, must also be exercised in subordina- tion to the power of Congress to regulate such commerce, and in respect to this the general government may also as.sert a sovereign authority to ascertain whether such franchises have been exercised in a lawful manner, with a due regard to its own laws. Being sub- ject to this dual sovereignty, the general government possesses the same right to see that its own laws are respected as the state would have with respect to the special franchises vested in it by the laws of the state. The powers of the general government in this particular in vindication of its own laws are the same as if the corporation had been created by an act of Congress. It is not intended to intimate how- ever, that It has a general visitatorial power over state corporations." I regard this as clearly distinguishing between the corpora- tion and the individual who is an officer of the corporation. I cannot understand the opinion in an}^ other way except as 9m 142 FEDERAL REPORTEK, 818. Charge to the Jury. holding that there can be no immunity for the corporation, but that the officer or agent of the corporation, if the facts bring him within the purview of the law, may plead such immunity. This disposes of the corporations. Now, as to the individual defendants : There is a provision in the commerce and labor act providing for immunity, and it refers for the immunity to the Cullom act and the act supplemental thereto. The commerce and labor act reads: "All the r^uirements, obligations, linbiiities, and imnuinlties im- posed or conferred by said 'Act to regulate coinineree,' and by 'An act in relation to testimony before the Interstate Commerce Com- mission, and so forth, approved Febniary eleventh, eighteen hundred and ninety-three, supplemental to said *Act to regulate commerce' shall also apply to all persons who may be subixenaed to testify as witnesses or to protluce documentary evidence in pursuance of* the ?? Qri*i>^'TTfT*l**y ^^^ section.- Act Feb. M. 1903, c. 552, § 6, 32 Stat. 827 [U. S. Comp. St. Supp. 19()5, p. «8]. [819] The act supplementary to the Cullom act has an im- munity clause in the following words : '* Biit no person shall be prosecuted or subjet-ted to anv itenalty or forfeiture for or on account of any transaction, matter or tiling concerning whicli lie may testify or produce evidence, docimientary or otherwise, before said commission, or in obedience to its subpoena 7J\^ K^'if^Z^^ ^o^^LP£ "'^"'' ""^ *" «"y »"^**^ «'^«e or proceeding." Act Feb. 11. 1893, c. 83, 27 Stat 443 (U. S. Comp. St. 1901, p. 3173]. Appropriation Act Feb. 25, 1908, c. 765, § 1, 32 Stat. 904 [U. S. Comp. St. Supp. 1905, p. 602], for the enforcement of the Cullom act, the Sherman act, and the Wilson act, exempts from prosecution persons giving testimony in the following language: ••Provided, that no person shall be prosecuted or be subjected to any penalty or forfeiture for, or on account of any transaction mat- ter or thing concerning which he may testify, or produce evidence unto taid^ct**" ***^*^'^'*^' *" ^y proceeding, suit or prosecution It is necessary to look into the purposes of Congress in passing the commerce and labor act in order that the court may determine what construction will best carry out the l^slative intent It is the duty of the court in constniing an act to give it such construction as will carry out the leg- islative 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 officers charged with the execution of that law, to pass such remedial legislation as might be found necessary. UNITED STATES V, ARMOUK & CO. Charge to the Jury. 965 I regard this as the primary purpose, the chief purpose, a legislative purpose. It is clear from the act itself that, if there be a secondary purpose, the primary purpose, the leg- islative purpose, was vastly more important in the mind of Congress than any other. Congress wanted to know how the laws with regard to corporations were operating, how they were being evaded, how to strengthen them, in case they needed 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 corpora- tion, 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 information as would enable Congress to do whatever might be necessary for the control of corporations. Perhaps a secondary pur- pose was the punishment of offenders. It is perfectly clear to my mind that this was not the main purpose, because 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 second- ary purpose of the commerce and labor act might have been the punishment of offenders. And I say this because it is not inconsistent with the act, or with the declared primary purpose, that this should be done so far as the corporation itself is concerned. This is made pretty clear by the late decision in the Hale Case. If the statute is to be so con- strued as to carry out the legislative purpose, viz., secure information for the use of Congress, how can that best be done ? The statute itself surrounds the Commissioner with no forms, puts no legislative limits upon his methods, gives him unusual latitude as [820] to methods. It does not require public hearings. I am of opinion that the act contemplated that he should proceed by private hearings, because it pro- vides in express terms that the President shall decide how much of his investigation shall become public. If the Com- missioner should have public hearings, the President would have no chance to perform that portion of the work which the act assigns to him. I therefore conclude that the legis- lative mind intended that the Commissioner should proceed 142 FEDEKAL KEPORXER, 820. Charge to the Jury, by private hearings. The powers of the Commissioner of Corporations are defined in section 6 of the act of February 14, 1903 (32 Stat. 827, c. 552 [U. S. Comp. St. Supp. 1906, p. 68] ) , and are as follows : "The said Coiuinissioner shall have iMiwer and authorifv fa ni«bo rt! ^*i« .^^'•^^t'*^" ''"'i eontrol of the Sec re ary of Co 1 Labor, diligent investigation into the organization conduct and nianagenierrt of the business of any corporation, jofnt' stock commnv or corporate combination engaged in commerce among tLsev^^^^^^^ States and with foreign nations excepting connnon can-ler^ sublect to 'An act to regulate commerce/ approved Februarv fourth eiirht^n hundred and eighty-seven, and to gather such iXmatl^n and d^ta as will enable the President of the United States to make recon^enda tions to Congress for legislation for the regulation of such mm- merce, and to rei>ort such data to the President from time to timTas It tt' Prl.1de^t'mav dhwf 'hTf^^" "*, "^^'-^'"^ ^ ^^^^^ ^^^^^^ as iiie I resident may direct shall be made public of thVs^[ioS ""ir^i'.hf.t^'^ ^*- '^^'*^' '^^^""'^ ^^ t^« foregoing part 01 ijiis section, the said Commissioner shall have and- exercise the sjime power and authority in respect to c.>riiorations, joinfstock com panies and combinations subject to the provisions her^f as is (SS ferred on the Interstate Commerce Commission in said 'Ac? to rSS- carHeTr?^ V"h "'^ amendments thereto in respect to common carrieis so far as tlie same may be applicable, including the right to tSeTodrtfnn'^Tl *^*^ ^tt^en^anee and testimony of witnessefand AH I?»*^*^"^t>pn of documentary evidence and to administer oaths or clnfer3"hT'"-T /f »i^?««»«' "«-^»>»'ties, and immunities inS or conferred by said 'Act to regulate commer( e ' and bv 'An act in relation to testimony before the Interstate Commerce Commission" and so forth, approved February eleventh, eighteen iSed and ninety-three, supplemental to said 'Act to regulatrc^mrrce' shall nZ^'^^J t '" ?"''*^'!f ^'^^ ^"'^ ^'^ ^ubp^eLed to tesmy as wi - nesses or to protluce documentai-j- evidence In pursuance of the authority conferred by this section. Fuisuauce oi tne " It shall also be the province and duty of said bereau, under the n fi^ir V^^ Sf retary of Commerce and Labor, to gather compile publish, and supply useful information concerning c-orwrations do rS busmess within the limits of the United States^nTs'l^aH engage "f interstate commerce or in commerce between the United States and any foreign countn-. includinir corporations en-aged in hi.i.n^^^^^^^^ and to attend to such other duties as may be hereafter provWed b^iaw^ It will be observed that this section by reference gives to the Commissioner of Corporations the same powers with respect to other interstate corporations as the Cullom act and its amendments give to the Interstate Commerce Com- mission over common carriers so far as the same shall be applicable. These additional powers are contained in sec- tion 12 of the amended Cullom act (Act Feb. 4, 1887 c 104 24^ Stat. 383 [U. S. Comp. St. 1901, p. 3162]), and are as follows: "Sec. 12. (As amended March 2, 1889 [25 Stat 858 c '^2 s qi and February 10, 181)1 [26 Stat 743, c. 128].) xLt the CoSmil^^^^^^^ UNITED STATES V. ARMOUR & CO. Charge to the Jury. 967 hereby created shall have authority to inquire into the management of the business of all common carriers subject to the provisions of this Act, and shall keep itself informed as to the manner and method in which the same is conducted, and shall have the right [821] to obtain from such common carriers full and complete information necessary to enable the Commission to perform the duties and carry out the objects for which it was created; and the Commission is hereby authorized and required to execute and enforce the provisions of this act ; and, upon the request of the Commission, it shall be the duty of any district attorney of the United States to whom the Com- mission may apply to institute in the proper court and to prosecute under the direction of the Attorney General of the United States all necessai-y proceedings for the enforcement of the provisions of this act and for the punishment of all violations thereof, and the costs and expenses of such prosecution shall be paid out of the appropria- tion for the expenses of the courts of the United States; and for the purposes of this act the Commission shall have power to require, by subpoena, the attendance and testimony of witnesses and the pro- duction of all books, papers, tariffs, contracts, agreements, and docu- ments relating to any matter under investigation. " Such attendance of witnesses, and the production of such docu- mentary evidence, may be required from any place in the United States, at any designated place of hearing. And in case of dis- obedience to a subpoena the Commission, or any party to a proceed- ing 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 provi- sions 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 con- tumacy or refusal to obey a subpoena issued to any 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 fo 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." Section 6 of the commerce and labor act also by its terms provides that persons testifying or producing evidence be- fore the Commissioner shall be entitled to the immunities conferred by the act in relation to testimony before the In- terstate Commerce Commission, of February 11, 1893, called the " Supplemental Act." This act contains the following provision : " But no iierson 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, or produce evidence documentary or otherwise before said Commission, or in obedience to its subptena. or the subpoena of either of them, or in any such case or proceeding.*' All of these immunity acts are relied upon by the individual defendants, and, -while expressed in slightly varying Ian- I 968 142 FEDERAL KEPORTEB, 821. Cliarige to the July, guage they aU mean the same thing, and each of them is a substitute for the privilege contained in that clause of the hfth amendment to the Constitution, reading: wiS ^Xr^iin^T" "" ^^^^"^ *" ^^^ "^^'^-^ ^^ to be a This fifth amendment deals with one of the most cherished rights of the American citizen, and has been construed by the courts to mean that the witness shaU have the right to remain silent when questioned upon any subject where the answer would tend to incriminate him. Congress by the immunity laws in question, and by each of them, has taken away the privilege contained in the amendment, and it is m2] conceded in argument that this cannot be done without giving to the citizen by way of immunity something as broad and valuable as the privilege thus destroved. We are not without authority on this question. By a previous act, Congress undertook to take away the constitutional privilege by giving the citizen an equivalent, and the Su- fl^T qT.I^*'^!^'' *^^ "^"^ ^^ Counselman v. Hitcheock, 142 U. S. 547, 12 Sup. Ct 195, 35 L. Ed. 1110, that the sub- stitute so given was not an equivalent. Then, at various times, the immumty acts in question were passed by Con- gress^with full knowledge that in furnishing a substitute for this great right of the citizen, it must give something as broad as the privilege taken away. It might be broader, but It could not be narrower. Now, in my judgment, the immunity law is broader than the privilege given by the fifth amendment, which the act was mtended to substitute. The privilege of the amend- ment permits a refusal to answer. The act wipes out the offense about which the witness might have refused to answer. Ihe privilege permits a refusal only as to incriminating evidence. The act gives immunity for evidence of or con- oerning the matter covered by the indictment, and the evi- dence need not be self -incriminating. The privilege must be personally claimed by the witness at the time. The im- munity flows to the witness by action of law and without any claim on his part. Brown v. Walker, 161 U S 591 16 Sup Ct. 644, 40 L. Ed. 819; Hah v. Eenkel (recentlv de- cided) 26 Sup. Ct. 370,50 L.Ed.-; State w. Qmrles.U -Ark. UNITED STATES V. ARMOUR & CO. Charge to the Jury. 969 307, quoted in 142 U. S. 567, 12 Sup. Ct. 199 (35 L. Ed. 1110) ; People v. Sharp, 107 N. Y. 427, 14 N. E. 319, 1 Am. St. Kep. 851; Brown v. Walker, approved in Lamson v. Boyden, 160 111. 613, 620, 621, 43 N. E. 781 ; People v. But- ler Street Foundry, 201 111. 236, 248, 66 N. E. 349. I am further of opinion that the inmiunity given by the act must be as broad as the liabilities imposed by the act. The act calls upon the citizen to answer any "lawful re- quirement " of the Commissioner. " Require " means to ask of right and by authority. Webster's Dictionarv. Tenn. Coal Co. V. Waller (C. C.) 37 Fed. 545, 547. Anything is a requirement by a public officer which brings home to the person called upon that officer is there officially and de- sires compliance. " Demand " and " require " are synonyms. Miller V. Davis, 88 Me. 454, 34 Atl. 265. The citizen may be punished for refusal to answer such lawful requirement. I am of opinion that when the Commissioner of Corporations, who has power to compel, makes his demand, it is the duty of the witness to obey. The contention has been made that in order to get immu- nity the citizen shall wait until the compulsion becomes irresistible. That is the effect of the government conten- tion. I am not able to bring my mind to accept that doc- trine. 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 arguments- then no act of any kind on his part which amounts to a claim of immunity, which amounts to setting up a claim of immu- nity, is demanded by the law. The law never puts a prem- ium on contumacy. A person does not become a favored citizen by resistance to a lawful [823] requirement. On the contrary, the policy of the law favors the willing giving of evidence whenever an officer entitled to make a demand makas it upon a citizen who has no 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 proposi- 970 142 FEDEBAL BEPOBTEB, 823. Charge to the Jury. tion 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. Is that the situation here? Was there compulsion in this case, or were the defendants volunteers? There is so little dispute here about the facts that perhaps it is not necessary to discuss them at all. I am of opinion that the conference between Mr. Garfield, Mr. Krauthoff, Mr. McRoberts, and Mr. Dawes is the important matter, the important event, which fixes the character of condition under which this evi- dence was given. There is some little dispute. It may be said that Mr. Garfield is an interested witness, as a repre- sentative of the government. It may be said that Mr. Mc- Roberts and Mr. Krauthoff, they being at the time in the employ of the Armour Company, and one of them being now a defendant, are interested witnesses. But there is little, if any, dispute, perhaps only on one subject, between Gar- field and Dawes, only as to the oath, as to the fact that the oath was discussed. They agree in substance on every other proposition. Garfield says there was no discussion of the oath. Mr. Dawes agrees with Krauthoff and McRobei-ts that there was. I am not able to look at the evidence which was furnished in this case as being the voluntary production of these defendants. The character of such parts of it as I deemed the most important is such that it absohitely dispels any thought of that kind from my mind. Reasoning natur- ally, reasoning upon the natural course which men in like con- dition would have taken, I am led to the conclusion that the defendants would have withheld that information if they could. It is contended that they were volunteers because they higgled with Garfield at times, debated, resisted, gave less than he first asked, withheld some. Tlie record does show this, but the fact remains that every approach Avas made by the government. In no instance did the defendants go to Garfield offering anything. Garfield made his de- mands, made them explicit, made them definite, and it does not to my mind destroy the character of compulsion under UNITED STATES l\ ABMOUB & CO. 971 Charge to the Jury. which they acted that the defendants, after having consid- ered the law, and after having made up their minds that they had n^o legal right to resist, still debated with the Com- missioner In the hope of inducing him to minimize his demands and take something less than he had originally demanded. This in some instances was done. Garfield came to them. They did not go to him. He demanded in writing, and through his accredited representatives; and I would not regard it as proper to hold him for any actions of his representatives, the result of which did not flow straight [824] to him, through them, from the defendants. But, so far as such results did flow straight to him in answer to his demands, they were negotiations between him and the de- fendants on his legal demands, which they had no right to dispute, or refuse to answer. He came to the defendants and presented them with the law. He held up before them his power as Commissioner. The defendants loiew the law. They had been fully advised. They took further time after his first interview, and were advised further. They saw that the Martin resolution, under the eighth section of the law, made Garfield^s duty imperative. After the passage of that resolution the defendants saw that Garfield was compelled to act, compelled to demand, and they were com- pelled to answer. I regard Garfield as having been under the strictest legal compulsion by the terms of the Martin resolution. It may be said that he could have gone somewhere else and got his information. The record shows that he himself said that he could not ; that he could not make the investigation imposed upon him as a legal duty by the Martin resolution and the eighth section of the law without getting it from these people. And the investigation itself disclosed that they are the authors of nearly one-half of all the business in their line in the whole country. So that I think he was compelled to demand from them, as well as they were com- pelled to answer, under this statute and resolution. Now, if the defendants volunteered nothing, but gave only what was demanded by an officer who had the right to make the demand, and gave it in good faith under a sense of legal 972 142 FEDEEAL KEPORTER, 824. Charge to the Jury. compulsion, I am of opinion that they are entitled to immu- nity under the act. But it is insisted by the government that they did not give under compulsion, because they did not ^ive under what is Imown in the law as testimonial compulsion; and it is argued that testimonial compulsion means compulsion furnished by the subpoena and oath. I can add nothing to what has been adduced by way of argument here on those subjects. The subpoena is not necessary where the person is present in court or within the verge of the court. Goodpas- ter V. Voris, 8 Iowa (8 Clarke) 334, 74 Am. Dec. 313; Leckie V. Sc'ott^ 10 La. 412. So the rule is the same as to the pro- duction of documents. Hunton v. H, €& H, Go, (Mich.) 76 N. W. 1041 ; Starr v. Mayer, 60 Ga. 546. The only object of the subpoena is to secure the attendance. It is superfluous when he is present without subpoena. U. S. v, Sanborn (C. C.) 28 Fed. 299, at page 302, per Mr. Justice Gray; Eastman v. Sherry (C. C.) 37 Fed. 844, 845, per Jenkins, J.; Farmer v. Storer, 11 Pick. (Mass.) 241. " Ijcx neminem cogit ad vana sen inutilia." Land Go. v. Peck^ 112 111. 408, 439. Under the judiciary act, providing for allowance " to the witnesses summoned in any court of the United States," it was held that the fees of a witness who attended at the request of the United States attorney without having been summoned, were taxable. TJ. S. v. Williams, 1 Cranch, C. C. 178, Fed. Gas. No. 16709; Prouty v. Draper, 2 Story, 199, Fed. Gas. No. 11447; Whipple v, Gttmherland Cotton Mfg. Go., 3 Story, 84, Fed. Gas. No. 17515 ; Hathaway v. Roach, 2 Woodb. & M. 63, 73, Fed. Gas. No. 6213, approved by Gray, Gircuit Justice, in U. S. v. Sanborn (C. G.) 28 Fed. 301. So a witness who attends without subpoena attends " pursu- [825] ant to law." U. S. v. Sanborn (G. G.) 28 Fed. 299, 302; Hanehett v. Humphrey {C. C) 93 Fed. 895-897; U. S, V. Bell (G. G.) 81 Fed. 830; St. Matthews Bank v. Fidelity Go. (G. G.) 105 Fed. 161. I am clearly of opinion that the best judgment to be had from all of the authorities is that the subpoena is a useless and superfluous thing after the tribunal and the witnesses are together. And I am also of opinion that under any of these acts in question, these im- munity laws, the production of books and papers would be legal evidence without the oath of any person, when they UNITED STATES V. ARMOUR & CO. 973 Charge to the Jury. are adduced as showing admissions against interest and against the party producing them. Upon the authority in the cases of Bram v. U. S., 168 U. S. 532, 18 Sup. Gt. 183, 42 L. Ed. 568, and Boyd v. U. S., 116 U. S. 616, 6 Sup. Gt. 524, 29 L. Ed. 746, legal compulsion does not depend upon subpoena or oath, and upon reason this must be so. Books and documents prove themselves, when produced for the purpose of showing admissions against interest. They are receivable as evidence in all courts against the party producing them. The oath is not always essential to testimony. Osborne v. Detroit (G. G.) 32 Fed. 36. No oath is essential to the compulsion to pro- duce documents in a witness' possession. A person who is required to produce documents in his possession, and pro- duces them, need not be sworn in order to get from him the documents. Perry v. Gibson, 1 Ad. & Ell. 48 ; Id., 3 Nev. & M. 462 (K. C. B.) ; Davis v. Dale, 1 M. & M. 514; Simp- son V. Smith, 1 Starkie on Ev. 161, note (n) ; Summers v. Mosely, 2 Gromp. & Mees. 477 ;. Wigmore, § 1894, note 1. Further, the oath may be waived, and is waived by failing to insist on it or raise the objection. Moore v. State, 96 • Tenn. 209, 33 S. W. 1046 ; Goldsmith v. State, 32 Tex. Gr. R. 112, 22 S. W. 405; Birch v. Somerville, 2 Ir. Law R. N. S. 243; Richards v. Hugh, 51 L. J. Q. B. 361; Gady v. Norton, 14 Pick. (Mass) 236; Slauter Y..Whitelock, 12 Ind. 338 ; State v. Hope, 100 Mo. 347, 13 S. W. 490, 8 L. R. A. 608; State v. Smith (Iowa) 100 N. W. 40, 42. Books and papers produced by these defendants as the books and records of their business, and called for as such, are evi- dence against them, without any oath. If I am right in the proposition that the immunities given by the act are as broad as the liabilities imposed by the act, then the subpoena and the oath were not essential. Garfield could make a legal requirement without using either the subpoena or the oath. I think this is clear from the language of the act. If the Gommissioner could make a legal demand without a subpoena, then immunity would follow to the witness answer- ing without a subpoena. It is true that section 6 of the com- merce and labor act of February 14, 1903 (32 Stat. 827, c. 552 [U. S. Gomp. St. Supp. 1905, p. 68] ) says that immuiity 974 142 FEDERAL. BEPORTER, 825. Cliarge to the Jurj-. shall apply to all persons " who may be subpoenaed," etc. Now it would be absurd to say that a person subpoenaed would have immunity if he produced no evidence, and, as the subpoena alone cannot give immunity, so the lack of that alone cannot take it away. The same argimient will apply to the oath. The purpose of the oath was to secure the truth. That is always tlie purpose of the oath. That is the only purpose of tlie oath; and, to be certain that we get the truth, the court always starts out by putting the witness imder oath. But the act under which Garfield was clothed with power did not re- [826] quire him to put anybody under oath. It required him to make investigation. He might make it according to legal forms or not. He might use any kind of evidence that he chose that was suitable to his purpose. The evi- dence procured from these defendants, so far as it consisted of books and pai)ers, was, however, legal evidence — would be considered legal evidence in a court of law; and under any one of these acts the production of the books and papers is a complete compliance with the law providing for the production of evidence, documentary or otherwise. It is not strange that Garfield was satisfied not to swear the defend- ants, although he started out with that intention. He dis- tinctly told them so, and his forms show that fact. He ex- pected to put them on oath if he regarded it as necessary, if he had any doubt about the truthfulness of the evidence. He had access to the books of original entry. He was satis- fied of that fact. His agents were satisfied of that fact. The record shows this over and over again by repeated answers, and there was not the slightest reason for putting anybody under oath, so far as the use of those books and documents was concerned. The oath of any one would have made that evidence no stronger or better that it is now without the oath. If it shall be said that the act of February 14, 1903 establishing the Department of Commerce and Labor, allows immunity to the witness only upon the conditions urged by the government, viz., that he shall have resisted until regu- larly subpoenaed and sworn, no such contention can fairly be made as to the immunity clause of the act of February UNITED STATES V. ARMOUR & CO. 975 Charge to the Jury. 25, 1<)03. The record shows, and it is not disputed, that material evidence was procured by Garfield from the de- fendants upon the subject of an unlawful combination. I have already held that it was given under legal compul- sion. The record further shows that this evidence was de- manded by the Department of Justice for the purposes of this prosecution, and that Garfield declined to give it, as he had promised the defendants it would not be so used ; that later, upon repeated demands of the Department of Justice, and upon the order of the President, he turned it over to that department. It is contended that as to all such evidence the defendants are entitled to immunity under the independ- ent and unconditional act of February 25, 1903, and I am of opinion that they are so entitled. It is contended on behalf of the government that the con- struction here given to the commerce and labor law would result in the failure to convict individuals for the prosecu- tion of whom the Commissioner of Corporations might be assisting, and thus the law would be nullified; that guilty persons would rush to the officer with their evidence and receive immunity. The answer to this contention is that the primary purpose of the ace is to correct defective legisla- tion, and, if an additional purpose be the prosecution of offenders, such additional purpose is clearly secondary. To effect the primary purpose, viz., secure information fur the use of the legislative body, the construction here given would be highly efficient, as the persons required to give evidence, being personally immune, would probably testify willingly, while those coming unbidden would be volunteers and not entitled to immunity. I am also presented with the argument that the questions are of great public interest. Therefore the defendants should be held [827] to trial, to the end that upon a final judgment, if adverse to the defend- ants, the questions arising on the pleas might be reviewed by the Supreme Court, which would not be possible if the decision be adverse to the government. I know that courts have sometimes yielded to this argument in cases of public importance, usually where property rights only were in volved; but I think it should not be the controlling motive for the decision here. The parties are entitled to the bes^ 976 142 FEDEKAL KEPOKTER, 1010. Syllabus. jedgiiient of the court upon the questions involved. I am of opinion that the record shows the individual defendants to have given under legal compulsion evidence of and con- cerning the matters contained in the indictment, and thsit they are therefore entitled to immunity. Gentlemen of the jury, under the law of this case, th<» immunity pleas filed by the defendants will be sustained ai> to the individual defendants, the natural persons, and denied as to the corporations, the artificial persons, and your ver- dict will be in favor of the defendants as to the individuals, and in favor of the government as to the corporations [1010] LODER V, JAYNE ET AL.« (Circuit Court, E. D. Pennsylvania. January 22, 1906. > [142 Fed., 1010. j Monopolies — Conspiracy — ^Restbaint of Trade — ^Burden of Proof. — The burden of proving a combination and conspiracy between man- ufacturers and wholesale and retail dealers of proprietary medicines and drugs in restraint of trade, in violation of Act Cong. July 2, 1800, c. 647, 26 Stat 209 [U. S. Comp. St. 1901, p. .3200], injurious to plaintiff, and that defendants were engaged and took part in such conspiracy, was on the plaintiff.^ Same — Combinations in Restraint op Interstate Commerce — FixiNa Prices. — Where three voluntary associations, composed of the man- ufacturers, wholesalers, and retailers, respectively, of di*ugs, pro- prietary medicines, etc., were organized to arbitrarily fix a minimum retail price for such articles, w^hich were of universal consumption and were of absolute and daily necessity, and then restricted the sale of such articles to such retailers only as conducted their retail busi!iess in accordance with the arbitrary standard of prices, such combination was in restraint of interstate commerce in the drug trade in so far as it excluded "aggressive cutters" of prices and those who dealt with them, and was in violation of Act Cong. July 2, 1890, c. 647, 26 Stat 209 [U. S. Comp. St 1901, p. 3200], prohibit- ing monopolies in restraint of interstate trade and commerce, etc « Judgment reversed and a new trial awarded by the Circuit Court of Appeals, Third Circuit, December S, 1906. The opinion of the court not yet reported in the Federal Reporter. The decision of the Circuit Court, herein reprinted, was, in the main, held to be correct, the error arising from the attempt of the court, by a resolution of the verdict to eliminate items of damage, with regard to which there was admittedly no sufficient evidence. » Syllabus copyrighted, 1906, by the West Publishing Co. LODER V. JAYNE. 977 Syllabus. Triai^-Admission op Evidence— Order of Proof.— In an action to re- cover damages for an alleged conspiracy in restraint of interstate commerce, it was within the discretion of the trial court [1011] to admit evidence of acts and declarations of various of the defendant associations, their officers, committees, members, and agents, made in the absence of many of the other defendants, before a pruna facie case of conspiracy had been established, and before privity of some of the defendants had been proven, on condition that such connect- ing evidence should be thereafter given. Monopolies— Evidence— Findings.— In an action for damages arising on an alleged conspiracy in restraint of interstate commerce, in violation of Act Cong. July 2, 1890, c. 647, 26 Stat 209 [U. S. Comp. St 1901, p. 3200], evidence held sufficient to establish the partici- pation of certain of the defendants in such conspiracy. Same— Combinations in Restraint of Trade— Damages— Burden of Proof.— In an action for damages for conspiracy in restraint of in- terstate commerce, in violation of Act Cong. July 2, 1890, c. 647, 26 Stat 209 [U. S. Comp. St 1901, p. 3200], the burden was on plaintiff to show some real actual damage to his business by reason of the alleged unlawful combination. Same— Damages— Evidence.— Where, in an action for damages to plaintiff's business because of an alleged conspiracy in restraint of interstate commerce, plaintiff claimed $5,000 compensation to him- self for extra work claimed to have been required by reason of such unlawful combination, but failed to prove how much additional time he was required to spend in his business after the combination went into effect, he was not entitled to recover for such alleged ex- tra services. Same— Additional Capital.— Where, in a suit for damages to plain- tiff's business because of an alleged unlawful combination in re- straint of interstate commerce, plaintiff claimed that because of such combination it was necessary to put $10,000 extra capi^l into his business from rents of his building, which were collected from time to time, but he testified on cross-examination that the pay- ments of interest and taxes on the building were in excess of the amount paid into the business, he was not entitled to recover inter- est on such alleged additional capital. Same— Increased Cost.— Where, by reason of an unlawful combina- tion in restraint of interstate commerce in violation of the Sherman act plaintiff was compelled to conduct his business at a greater cost though it was greater in volume, and by reason of the injury he received a less percentage of return, 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 hi^ personal services an amount equal to, or larger than, he drew from the business before the conspiracy bectime operative. 21220— vol 2—07 m 62 978 142 FEDEBAL BEPORTER, lOU. Opinion of the CJonrt. At Law. On motion for a new trial. IF. WUson CarlUe and Henry /. Scott^ for plaintiff, Morgan <& Lewis, O. E. Shannon, H, C, Haines, F, M. Cody, Hopper, Lessig S Smith, W. H. Hepburn,, Charles Biddle, Frank Savidge, Henry Z>. Paxson, J, C, Jones, Henry La Barre Jayne, Irving P. Wanger, N. Dubois Miller, Joseph C. Fraley, and John G. Johnson, for defendants. Holland, District Judge. The plaintiff, C. G. A. Loder, brought suit against the above-named defendants, in this district, to recover damages to his retail drug business, which he claims to have suffered by reason of an agreement, contract, combination, and con- spiracy into [1012] which the defendants entered and car- ried into effect, in connection with other parties throughout the United States, in restraint of interstate trade and com- merce, contrary to the provisions of Act Cong. July 2, 1890, c. 647, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200], entitled "An act to protect trade and commerce against unlawful re- straints and monopolies." The provisions of this act of importance in this case are the following: "Section 1, Every contract, combination In the fonn 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 such com- bination or conspiracy shall be deemed guilty of a misdemeanor and on conilction 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. ** Sec 2. Every person who shall monopolize or attempt to monop- olize 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 misde- meanor, 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" " Sec. 7. Any person who shall be injured in his business or prop- erty by any other person or corporation by reason of anything for- bidden 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 con- troversy and shall recover threefold the damages by him sustained and the costs of suit, including a reasonable attorney's fee." * Under sections 1 and 2 of this act every contract, combina- tion, or conspiracy in restraint of trade or commerce among LODEB V, JAYNE. 979 Opinion of the Court the several states, or with foreign nations, and every com- bination or conspiracy to monopolize any part of the trade or commerce among the several states, or with foreign na- tions, is declared to be illegal, and every person who makes such a contract, or engages in such combination or conspir- acy, or combines or conspires to thus monopolize, is declared to be engaged in an unlawful act; and the seventh section authorizes every person injured in his business or property to brmg suit against such other person or corporation, who may be engaged in any such unlawful act, in the Circuit Court of the United States in the district in which the defendants re- side or are found. The plaintiff, claiming that all these defendants were en- gaged in such a combination and conspiracy to monopolize and to restrain trade, forbidden by these sections, brought suit under the act, and filed his statement of claim. The case was put at issue, and tried at the October term, 1905, and a verdict rendered in favor of the plaintiff agaikst all the defendants, excepting Jayne & Son and Campion & Co., for the sum of $20,738. Motions and reasons for a new trial were filed on behalf of all the defendants, excepting the two above mentioned, and, in addition, there were filed mo- tions for judgments non obstante veredicto upon the whole record in favor of H. K. Mulford Company, Hance Bros. & White, and Warren H. Foley. In addition to the request for binding instructions at the trial in favor of all the defend- ants, H. K. Mulford Company, Hance Bros. & White, and Warren H. Foley, by their attorneys, requested binding in- structions in favor of [1013] these particular defendants, which request was refused by the court, and under the pro- visions of the act of the General Assembly of the common- wealth of Fennsylvania, approved the 22d day of April, 1905 (F. L. 286) , they are authorized to make this motion for judg. ment non obstante veredicto upon the whole record, in their favor. There are in all 33 reasons for a new trial, which can be considered under three different heads: First, those which raise the questions as to whether or not the plaintiff charged and proved a violation of the Sherman act, and as to the cor- 980 142 FEDEKAL REPORTER, 1013. OplBion of the Court rectness of the charge and rulings of the court in this connec- tion; second, the admissibility of certain evidence; third, the sufficiency of the proof of the different items of damage claimed. In his statement of claim Loder alleges, and offered evi- dence to prove, that for more than 20 years he has been en- gaged in the business of dealing in drugs at wholesale and retail in the city of Philadelphia, buying and selling his mer- chandise in various cities of the union without any hindrance to him by any one until November 1, 1900, when the injury to his business complained of began, and this he says was brought about by the defendants and others acting together in a combination and conspiracy, which he lays in his state- ment of claim in language following : "The Proprietary Association of America, the National Wholesale Druggists* Association and the National Association of Retail Drug- gists, their officers, delegates and members unlawfully entered into an agreement, combination and conspiracy in restraint of trade or commerce among the several states and with foreign countries in this, to wit: that they unlawfully agreed, contracted, combined and conspired to enhance and arbitrarily to fix, regulate and determine the wholesale and retail prices at which various commodities of the drug trade consisting of patent medicines, drugs and proprietary articles manufactured in the several states should be sold to the retail drug- gists and by the said retail druggists to the consumers, residents of the several states of the United States." The Proprietary Association of America is an unincorpo- rated association composed of over 90 per cent, of all the man- ufacturers and proprietors of patent medicines within the United States; the National Wholesale Druggists' Associa- tion is an unincorporated association composed approximately of 05 per cent, of all the wholesale druggists of America who are engaged in the business of selling at wholesale drugs and proprietary articles to retailers for the manufacturers and proprietors of these drugs throughout the United States, and all the defendant wholesalers are members of this association ; and the National Association of Retail Druggists is also an unincorporated association, with headquarters at Chicago, and has a membership composed of the local association of druggists, the members of these local associations comprising about 90 per cent, of the retail druggists in the cities, towns, and counties, or districts throughout the United States in which local organizations are formed, and these local associa- LODER V. JAYNE. Opinion of the Court. 981 I tions are represented in the National Association by dele- gates periodically chosen for that purpose. There is also an incorporated association, one of the defendants, the Philadel- phia Association of Eetail Druggists, composed of nearly all the retail druggists in the city of Philadelphia, and with which association all the defendants named [1014] in this suit who are engaged in the retail drug trade are connected either as members or officers. This local association is a mem- ber of the National Association of Eetail Druggists, and these defendants, who are members, have been acting in accordance with the rules and regulations of the National Association in the conduct of their business as retailers. The burden of proving the existence of this agreement, con- tract, combination, and conspiracy, and that the defendants were engaged and took part in it, was upon the plaintiff, and for that purpose evidence, which was uncontradicted, was offered to prove that the National Association of Retail Druggists had its central office in Chicago, and received financial support from all the other associations and many of the members belonging to them; that from this central point organizers were sent out for the purpose of bringing the local retail dealers into associations, and, as a result, Philadelphia retailers were organized into an incorporated association known as the Philadelphia Association of Retail Druggists. In accordance with the plans suggested by the organizers sent from Chicago, the Philadelphia retail drug- gists working with the organizers secured a consensus of opin- ion of the retailers here from which they fixed the minimum rate at which drugs should be sold at retail by the retail drug- gists in Philadelphia and vicinity. All the retail dealers were then notified of this minimum rate, and in case the re- tailer cut below the price so fixed his name, with this infor- mation, was sent to the National Association of Retail Drug- gists at Chicago, and the secretary, Mr. Wooten, then placed the name of this retail druggist upon what was known as an " aggressive cutter's " list, and this aggressive cutter's list, with his name thereon, was sent to all proprietors, members of the Proprietary Association of America, and all the whole- salers, members of the National T^Tiolesale Druggists' Asso- ciation, with the request that they cease selling any drugs 982 142 FEDERAL REPORTER, 1014. Opinion of the CJourt whatever to such aggressive cutter ; and it was further estab- lished, in case any proprietor or wholesaler, after receiving this notice from the secretary of the National Association of Retail Druggists, failed to obey and cease selling to such ag- gressive cutter, this information of his failure to obey also found its way to the secretary of the National Association of Retail Druggists, and such disobedient proprietor or whole- saler was disciplined by being put upon what was designated as a "pink slip," and his name was sent to all retailers throughout the United States with the information that he had been selling to aggressive cutters, and the request made to the retailers throughout the country to cease making any further purchases from such delinquent wholesaler or pro- prietor. It is very plain that this arbitrary fixing of a minimum retail price for drugs which are of universal consumption and of absolute and daily necessity and then restricting their sale to such retailers only who conduct their retail business in ac- cordance with this arbitrary standard of prices is a clear restraint of interstate commerce in the drug trade to the extent of excluding the aggressive cutters and those who deal with them, and is in violation of the act The plaintiff was reported to Secretary Wooten, and on November 1, 1900, his nam© was placed upon an aggressive cutter's list, from which date down [1015] until the 28th day of July, when suit was brought in this case, he was unable to buy drugs direct from Mie 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 usually requires. Thus embarrassed, he was compelled to secure these drugs at 1 much greater cost than he would have paid had he been able to purchase in the regular way. The evidence shows that all the defendants against whom the verdict was rendered were connected with one or the other of these associations; were cognizant of the method adopted to coerce the retailers to adopt the minimum rate, and participated in the scheme of punishment visited upon all who cut below the price fixed. Of course, there was no documentary evidence which the plaintiff could produce to LODEB V. JAYNE. 983 Opinion of ttie Court. show this alleged conspiracy, except copies of the kind of "aggressive cutter's" lists and "pink slips" sent out by Mr. Wooten, or, that one of the objects of these associations, and the members thereunto belonging acting together, was for this alleged purpose, but the court permitted him to show the close association of all these organizations engaged in the drug business, their acts and declarations appearing in their printed records of their joint and separate meetings, the publications and declarations made in their official organ in support of their rules and regulations jointly and separately enacted for the purpose of effecting the object of this associa- tion. It nowhere expressly appeared that one of the objects was to combine for the purpose alleged in the plaintiff's statement and to carry it out by the drastic, disciplinary methods proven at the trial. On the other hand, the evi- dence showed that their reports, speeches, declarations, and resolutions were usually couched in language which, upon its face, was not inconsistent with a lawful purpose, but taken in connection with what afterward occurred, and the implicit obedience with which the members, and particularly the defendants in this case, obeyed the command of the sec- retary of the National Association of Retail Druggists, it was for the jury to say whether or not the evidence as a whole did not justify the finding that an agreement, contract, combi- nation, and conspiracy such as charged existed, and whether the defendants were engaged in it. The jury were in- structed that if the combination and conspiracy set forth in the statement existed, it was in violation of the Sherman act, and it was for them to say whether or not the plaintiff had proven his case» The jury found in his favor. These instructions, upon a review, we are convinced were properly given, and that the findings of the jury were based upon competent evidence. Many acts and declarations of the various associations, their officers, committees, memliers, and agents made in the absence of many of the other de- fendants in the case for the purpose of proving the con- spiracy were admitted before a prima facie case of con- spiracy had been established and before the privity of some of the defendants had been proven. It is true that the rule e84. 142 FEDEKAL HIPOBTEB, 1015. Opinion of the CJonrt in tlie admission of evidence in conspiracy cases is to require first the proof of a prima facie case of conspiracy before the acts and declarations of co-conspirators made in the absence of defendants are admitted against them, although the [1016] court may, in its discretion, permit evidence of the declarations to be introduced out of its order, upon condi- tion that it be afterwards followed by evidence of the con- spiracy, and in some peculiar instances, in which it would be difficult to establish defendant's privity without first proving the existence of a conspiracy, a deviation has been made from the general rule, and evidence of acts and con- duct of others has been admitted to prove the existence of a conspiracy previous to the proof of the defendant's privity. Substantially the same rule applies in criminal as in civil cases as to the admissibility of the acts or declarations of one conspirator as original evidence against each member of the conspiracy. Elliott on Evidence, vol. 4, § 2939 ; Id. vol. 1, § 249; Kice on Evidence, vol. 8, p. 904, § 578d. All the evidence sought to be stricken out by the motion of de- fendants, which raised the question of the competency of this evidence, was of this character and clearly admissible. On the whole evidence, the combination and the privity of defendants were established by proof of facts personal to each connecting him therewith. The question of damage will be considered after disposing of the motions for judg- ments non obstante veredicto. It is contended that upon the whole record notwithstand- ing the verdict judgment should now be entered by the court in favor of Hance Bros. & White, H. K. Mulford Company, and Warren H. Foley. As we have already con- cluded that the combination and conspiracy alleged in the statement of claim, if proven, was in violation of the act of Congi-ess, and the verdict of the jury in favor of the plaintiff having established its existence, the only question to be determined as to these three defendants is whether or not there is any evidence to show that they or either of them were engaged in it. Hance Bros. & White and H. K. Mulford Company were members of the National Whole- sale Druggists' Association, and Warren H. Foley was a member of the Fhiladelphia Association of Ketail Druggists. LODEB V, JAYNE. Opinion of the Court. 985 It is not attempted to hold any of these defendants through the associations with which they are affiliated. The suit as to them is directly against the firm of Hance Bros. & White, the corporation of H. K. Mulford Company, and Warren H. Foley individually. Tlie combination and conspiracy in which it is alleged they were engaged and which caused the injury to the plaintiff was for the purpose of arbitrarily fixing, regulating, and determining the wholesale and re- tail prices at which drugs should be sold to retail druggists, and by them to the consumers throughout the United States, and to carry into effect this combination or conspiracy, it is claimed that these defendants, with others in the suit, took part in the proceedings of the various organizations with which they were affiliated in bringing about and formu- lating rules and regulations by which delinquents could be placed upon the aggressive cutter's list, and pressure brought to bear upon them for the purpose of compelling them to conform to the demands of those engaged in the combina- tion and conspiracy. Each of these defendants who took part in the meetings which brought about this central or- organization at Chicago, with power to carry into effect these disciplinary measures, acted upon the commands of the sec- retary of the National [1017] Association of Eetail Drug- gists with regard to the punishment administered to those who were blacklisted. The evidence shows that these three defendants were fully aware of the methods pursued by the associations to which they belonged by which their members strengthened and per- fected the system of coercion emanating from Chicago, and that they, to a more or less extent, participated and acqui- esced in the preliminary arrangements leading up to the consummation of the plan. The Philadelphia Association of Ketail Druggists, of which Mr. Foley is a member, is a cor- poration, and made a defendant in this case, yet whatever part he took as an individual in the preliminary and final steps taken to carry into effect the combination and con- spiracy as charged, he must answer for in his individual capacity. A\Tiat part, if any, did these defendants take? The Fhiladelphia Association of Ketail Druggists, on Janu- ary 31, 1901, sent out from the office of the executive com- f 986 142 FEDEBAL BEPOBTEB, 1017. Opinion of the Court mittee, No. 4154 Lancaster avenue, Philadelphia, a letter marked personal and confidential, as follows : "Being satisfied that the policy of your firm is one of fair and con- siderate dealing with the retail drug trade and that you are willing !L*J^t^T*®,K"i' t*ie/etail druggists along lines of mutual profi* lii^^i?*^ *'''^5*L*'^ inviting your attention to the present unproflt- able condition of the retail drug business in this city and of askln« ^*^«L?^P®'*^**^'* ^^*^ ^^ effoj'ts to better matters. ««. J^ situation is this: The retail druggists of Phila. have agreed upon a schedule of prices for proprietary articles about 10 to 20% above those now generally received, the only one positively refusing to be controlled by this scale being Mr. C. G. Loder. In 'justice to those druggists located near Loder's store, we have deferred putting this schedule into effect until all could be protected by a common selling price, and Mr. Loder alone by his refusal, is obstructing this movement and is now preventing the druggists of this city from obtain- ing between prices for proprietary goods. " ^®,^?^°?* ^ish to coerce Mr. Loder or to force him into difficul- ties, but it does seem unfair that one man alone should deprive all the other druggists of Phila. of the fruit of many months' labor. We are willing to make reasonable terms with Loder, and have so I? .V^"\.^^^ intention evidently is to block our plans that he may profit thereby and he refuses to agree with us. "Under these circumstances, we think that we have the right the right of self-protection, to ask you not to sell Mr. Loder any of Vour goods and proprietary articles until he agrees with us. We believe that when Mr. Loder finds that he is not greater than all the rest of Phila. druggists together nor entitled to more favor that he will listen to reason and be willing to co-operate with us along lines of mutual profits. We wish to bring him to this belief, and one of the means we are trying to use is to show him that dealers and manu- facturers will not supply him with goods when by so doing they will be injuring the business of every other retail druggist in this city We do not ask any one to refuse him goods for any other reason than this; that the Interests and wellfare of all are greater than those of one alone! " \Ye therefore invite your careful consideration of this question and we farther ask in reply a statement from you of the position you may decide to take ; for, by your action, you can either greatly help or materially retard the progress the retail druggists here have made towards the better realization of better trade conditions " Yours very truly, " The Executive Committee, Phila. Association of Retail Drugg." To which Hance Bros. & White replied : " The policy of our house is not to sell to department stores If the party you mention sells our goods, he does not get them from us as we don't sell him." »« « [1018] Subsequently, in June, 1903, a resolution C, which had been adopted by the wholesalers, as follows : "Resolved, That in accordance with the recommendation of Presi- dent Sealey, the Secretary is instructed to request all manufacturers of chemicals, pharmaceuticals, plaster, dressings and like productfl handled by the drug trade, to desist from selling aggressive cutters LODEB V, JAYNE. Opinion of the Court. 987 or supplies of cutters when solicited to do so by the respective local associations, and that the retail druggists shall be made acquainted with the response in such manner as the executive committee may deem best." — was sent out to the drug trade in connection with the fol- lowing query : "Will you, when specially requested by the officers of the local association of retail druggists throughout the country that are affili- ated with the N. A. R. D., refuse all sales to these price demoralizers whom the various manufacturers of proprietaries have designated as aggressive cutters?" To which Hance Bros. & 'WTiite, on June 24, 1903, re- sponded as follows: " Our answer to the National Secretary's question is ' Yes.' " The receipt of this circular letter, the response to the inquiry accompanying resolution C, together with other statements made by Anthony M. Hance as to the connection of his firm with the alleged combination and con- spiracy, show that they are equally responsible with the other defendants in the case. From the testimony of H. K. Mulford, the vice president of the H. K. Mulford Company, we find that his company is an associate member of the National Wholesale Druggists' Association. It was shown that this, with the other associa- tions, at various times acted together through committees appointed for that purpose, and worked in entire harmony with each other, and that he received information from the very headquarters of the combination, to wit, the secretary of the National Association of Retail Druggists at Chicago, and his company acted in strict compliance with the demands of the alleged wrongdoers for the reason that Loder was demoralizing business conditions and appeared upon the aggressive cutter's list. Mr. Mulford admitted that he re- ceived the information as to Ix)der cutting prices through the secretary of the National Association of Retail Druggists, and declared that his company would refuse to sell any wholesaler who was supplying Loder with goods, if his name appeared upon the aggressive cutter's list. The company's connection with the wholesalers' association, and its action in connection with the disciplinary rules administered to delinquents, was evidence to be submitted to the jury as to whether or not it was, through its officers, one of the parties Sloo 142 FEDEKAL BEPOKTEB, 1018. Opinion of tlie CSonrt. engaged in the alleged combination and conspiracy. It is not denied but that the Mulford Company, or any other defendant, would be privileged to buy from or sell to, or refuse to buy from or sell to, any other person for any reason that might suggest itself without being responsible in damages under the Sherman act, but if the defendant acted upon a policy in accord with those shown to be in a combination and conspiracy not to sell to aggressive cutters, and received its information from them, and acted upon it, and, at the same time, was an associate member of one of the associations, there is sufficient evidence to submit to the jury to say whethp- it was part of the combination, or acted independently, as claimed. The jury found against the com- pany, and in this I think they were right. [1019] Mr. Foley was an active member of the Philadel- phia Association of Retail Druggists, and took part in its proceedings at a meeting where a resolution was offered " advising the National Association of Retail Druggists to exhaust every means before taking final action disciplining the firm of Smith, Kline & French Company." It is very evident he knew the nature of these disciplinary measures, as it appeared in the evidence that the Smith, Klme & French Company were subsequently blacklisted and pun- ished for disobedience, and a " pink slip " sent out against it. Mr. Foley, prior to that time and some time before the latter part of the year 1903, offered a resolution, which was passed at a meeting of the local association, as follows : "That our delegates to the Convention of the N. A. R. D. be In- stFucted to use utmmt endeavors to have resolutions passed at the commg convention that the druggists of America refuse to handle any new proprietaries unless protected in price." The gist of this resolution was enacted at the Boston con- vention of wholesalers, and the punishment inflicted upon any one who demoralized these prices is through the very association to which his resolution appealed. Surely he can- not now be heard to say that he took no part in brmging about the creation of this system of coercion to sustain prices. The motions for judgments non obstante veredicto in favor of these three defendants, for the reasons stated are overruled. ' LODER V, JAYNE. 989 Opinion of the Court. The plaintiff's claim for damages submitted to the jury was made up of the following ilems : Compensation to the plaintiff for extra time and labor covering a period of four years $20,000.00 Eight per cent, increased cost on $96,000 of proprieta- ries purchased during period from November 1, 1900, to July 25, 1904 7,680.00 Extra clerk hire $1,000 per year 4 000 00 Interest on $10,000, extra capital, for 4i years 2, 700. 00 Loss of profits on sales lost from June 3, 1904, to July 25, 1904 36, 72 Making a total of $34, 416. 72 The jury rendered a verdict for $20,738, and the defend- ants contend that even if it be conceded that a combination and conspiracy prohibited by the act had been established, there was not sufficient evidence from which Hie jury could find damages to the extent of the verdict rendered, and it is specifically urged that there was no competent evidence submitted upon which the jury could find in favor of tho plaintiff for any part of the claim for extra labor of $20,000, increased cost on proprietaries $7,680, or interest on extra capital of $2,700, and, further, that, even if the plaintiff had proven the necessity for an extra clerk, his salary was only $18 a week, and the claim could only be made for 3j years. The burden of proof was upon the plaintiff to show som<> real and actual damage to his business by reason of this unlawful combination, and it is equally well settled that unless they prove this damage by a preponderance of comi)o- tent evidence, the verdict must be for the defendant. The items of damage claimed must be established by proof of facts from which they may be rationally inferred with rea- sonable certainty by the jury. Coal c& Coke Co. v. Hartman, 111 Fed. 96, 49 C. C. A. 244; Lowry v. Tile, etc, Ass'n (C. C.) 106 Fed. 46. [1020] The plaintiff claimed the sum of $5,000 for extra compensation for himself for extra work which he claimed he was required to bestow upon his business by reason of this unlawful combination. It was objected that this was not a proper item of claim, but the court permitted the plaintiff to offer such proofs of additional labor as he desired to submit, and the plaintiff, instead of showing facts and 990 142 FEDEKAL REPORTEK, 1020. Opinion of the Court. circumstances from which the jury could estimate the value 'of the extra services ; that is to say, instead of proving the amount of additional time given to his business by showing how much time he had devoted thereto prior to November 1, 1900, and then how much additional time was required of him each day, or each week, or each month, or each year, after the 1st day of November, 1900, and during the time he was on the aggressive cutter's list— he simply stated that prior to the injury complained of the business was conducted by him, giving it a supervision only, and he was able to go abroad upon two occasions, and to devote some time to rec- reation and pleasure, whereas, after the combination went into operation, he was compelled to devote his entire time to his business, " except in the afternoon he could take a little recreation." There was ample opportunity offered the witness to show what additional labor he was required to bestow upon the conduct of his business, but he offered no evidence whatever other than the mere, vague, indefinite assertion that he was compelled to devote his entire time to his business after he was blacklisted " except in the after- noons he could take a little recreation," and that this indefi- nite bestowal of additional labor was worth $5,000. There was no evidence in support of this claun to submit to a jury from which they could reasonably estimate what compen- sation he should have for any additional labor. From this they could only guess and speculate upon an amount as to this item of claim, and this a jury cannot be permitted to do. It was claimed that it was necessary to put extra capital, amounting to $10,000, into the business because of the exist- ence of the combination, necessitating his paying cash for many articles which theretofore he purchased on credit, and that this extra capital was placed in the business from rents collected, from time to time, from tenants in his build- ing at Sixteenth and Chestnut streets ; but upon cross- examination it was shown that as a matter of fact, instead of proving that $10,000 additional capital was added and used for ^ years as claimed, the payments of interest and taxes on the building were in excess of the amounts paid in, and the plaintiff erroneously assumed that he was entitled to interest on the rents paid in. A review of the evidence LODER V. JAYNE. 991 Opinion of the Court shows that in these two items the plaintiff failed to prove his claim. In support of the other three items of claim, the plaintiff submitted the best evidence he could produce under the circumstances. While the law puta the burden of proof upon the plaintiff and requires the proof of such facts as will enable the jury to arrive at the amount of damage with reasonable certainty, it will not permit the defendants who are, through their wrongful acts, responsible for the plain- tiff's injury, to carry this requirement beyond the measure of proof thus stated. He is required to prove his claim with reasonable certainty and no more. We think the plaintiff has complied with this require- [1021] ment as to these claims. The verdict as a whole, however, being far in excess of the total amount of these three claims, which were sus- tained by competent evidence, under the law it is the duty of the court to either require the plaintiff to remit this excess or grant a new trial. The claim for extra clerk hire at $16 per week to March 1, 1904, and at $18 per week thereafter during the existence of the combination would make a total of $3,164, and the damages claimed for extra cost of proprie- tary articles, amounting to $7,680, together with the $36.52 for loss of profits on sales lost, make a total of $10,880.52 which was proven by competent evidence with reasonable certainty. There is one other question raised which cannot properly be classed in any of the foregoing propositions, and which, it has been contended, has some bearing upon the question of whether or not plaintiff suffered any damage. The books of the plaintiff show that beginning with the year 1899 down to the time of bringing suit he drew out of the business the following amounts : lonn ^' 663. GO 1901 I 1 6,069.00 iQn9 7,376.00 IXXq - 7, 643. 00 Seven months in 1904 111111111" 3 OTl'oO It was strenuously argued to the jury by counsel for the defendants that, as Loder had been able to take as much out of the business for personal service during the time the 992 142 FEDEBAIi REPORTEB, 1021. Opinion of the CJourt alleged combination and conspiracy existed as before, he had suffered no injury; and, the court having failed to call the jury's attention to this fact in the general charge, defendants' counsel took an exception to that failure, and suggested to the court before the jury retired the propriety of calling their attention to this evidence for that purpose. It was shown by the books of the plaintiff that, beginning with 1897, to November 1, 1900, he had purchased merchandise to the amount of $223,645, which he sold at retail for $296,739, at a gross profit of 33 per cent, on the purchasing price, making $73,094, and during the time he was on the aggressive cutter's list he purchased merchandise at a cost of $265,821 which he sold at retail for $326,559, being a gross profit of 23 per cent. on the purchasing price, making a total of $60,738. It might be here remarked that in view of the fact that the evidence showed that retail prices were generally higher during the time Loder was on the blacklist, this loss of 10 per cent, on gross profits during that time, as shown by the books, is strongly corroborative of his claim that he was compelled to purchase his drugs at an increased cost of 8 per cent. But as to the amount the plaintiff drew out and its bearing upon the question of damage it will be remembered that he did not claim in this case any damage for a falling off of either gross or net income, because through the extra exertion and natural increase of his business, although at extra cost by reason of the combination, the gross and net in- come was kept up nearly to that which he made prior to the combination on much smaller purchases and sales. Progress- ive business men start in a small way and through their energy and busi- [1022] ness ability develop a small concern, in a short time, into one much larger and bringing far greater returns. If, by reason of a combination in violation of the Sherman act, he be made to conduct what business he does at a greater cost, though it be greater in volume, but by reason of the injury done him at a less percentage of return, and he can show this, he is entitled to collect it from those who have injured him. A calculation made from the books of the plaintiff in this case shows that although Loder through his industry and perseverance, notwithstanding the injury inflicted, did a greater volume of business, but was LODER V. JAYNE. Opinion of the Court. 993 compelled to do it at a 10 per cent, less profit, and he offered evidence to prove this loss was the result of this combination and conspiracy. So that, it would seem to me, the fact of his drawing out an amount for personal compensation, which did not diminish after the combination went into effect, was under the circumstances no evidence whatever of a failure to establish an injury to his business in the elements claimed. The natural increase of his business, which was done at a greater cost, made his gross and net income sufficient to enable him to take these amounts out for his personal use, but these amounts did not in any way show that either the net or gross income during the time he was on the blacklist was greater in amount than it was before, nor could it in any way throw light upon the question of the extra cost and losses which he sustained by reason of the combination, and for that reason the court did not deem it its duty to call the jury's attention to the evidence for the purpose indicated by the defendants. The court being satisfied that the verdict is excessive in amount and being able clearly to establish by computation the amount of this excess, it is the duty of thecourt to grant a new trail to the defendants, unless the plaintiff, within the time hereinafter specified, files a remittitur for the excess. Pepper & Lewis' Digest of Decisions, 23029; Pleasants v. Fant, 89 U. S. 116, 22 L. Ed. 780; Southern Pacific Co, v. Hamilton, 54 Fed. 468, C. C. A. 441. A decree will, therefore, be entered that the plaintiff file a remittitur in the amount of $9,857.48 on or before February 1, 1906, reducing the verdict to the sum of $10,880.52 or a new trial will be granted. In case a remittitur be filed re- ducing the verdict to $10,880.52, the clerk is directed to mul- tiply the said amount, to wit, $10,880.52, by three, and enter judgment in favor of C. G. A. Loder and against Frederick Aschenbach and Adolph William Miller, trading as Aschen- bach & Miller; C. F. Shoemaker and Miers Busch, trading as Shoemaker & Busch ; Richard M. Shoemaker, Thomas E. Shoemaker and Benjamin H. Shoemaker, trading as Robert Shoemaker & Co. ; Smith, Kline & French Company ; John Wyeth & Bro. (incorporated) ; Valentine H. Smith & Co.; Henry K. Wampole, Albert J. Koch, S. Ross Campbell, trad- 21220--VOL 2—07 m 63 994 Syllabus. ing as Henry K. Wampole & Co. ; Edward H. Hance, Joseph C. Hance, Anthony M. Hance, and Edward H. Hance, Jr., trading as Hance Bros. & White ; H. K. Mulf ord Company ; William K. Warner, trading as W. E. Warner & Co. ; Phila- delphia Association of Retail Druggists; and Thomas H. Potts, William L. Cliffe, William E. Lee, David J. Reese, George W. Fehr, Carl W. Shull, [1023] Nathan Cozens, Augustus T. Pollard, Henry C. Blair, William H. Gano, Alexander H. Frankeberger, Charles Leedom, Richard H. Lackey, Henry A. Kolte, Walter A. Rumsey, James C. Perry, E. C. Bottume, Warren H. Poley, Henry A. Borell and Charles A. Eckles, defendants, for the sum of $32,641.56 and im attorney's fee of $2,500 to be paid to the plaintiff's attorney. [U2\ HADLEY DEAN PLATE GLASS CO. v. HIGH- LAND GLASS CO. (Circuit Court of Appeals, Eighth Circuit January 19, 1906.) [143 Fed., 242.] Sale — Contract to Manufactube and Deliver Goods — "More or Less " as Qualifying Statement of Quantity. — Where, in a con- tract for the manufacture and delivery of goods, the statement of quantity is qualified by the words " more or less," these, unless sup- plemented by language giving them a broader scope, apply only to such accidental or immaterial variations in quantity as would natur- ally occur in connection with such a transaction. [Ed. Note. — ^For cases in point, see vol. 43, Cent. Dig. Sales, § 191. Contracts for sales of things to be produced or manufactured, see note to Star Brewery Co, v. Horst, 58 C. C. A. 363.] Damages — Contract — Breach by Veni»ee — Measure of Damages.-^ Where a contract for the manufacture and delivery of goods is re- pudiated by the vendee before the goods are manufactured, the measure of the vendor's damages is the difference between the cost of manufacture and delivery and the contract price. [Ed. Note. — ^For cases in point, see vol. 43, Cent Dig. Sales, § 1106. | Monopolies — Combination in Restraint of Trade — Missouri Stat- ute is Without Application to Tntetstate Commerce. — ^The anti- trust statute of Missouri (Rev. St Mo. 1899, §§ 8965-8970) can have no application to a contract for the sale of goods to be manufactured by the vendor in another state and delivered to the vendee in Mis- souri, because such a contract directly relates to Interstate Com- HADLEY DEAN P. G. CO. V. HIGHLAND G. CO. 995 Opinion of the Court. merce, the regulation of which is within the exclusive authority of Congress. • Same— Sherman Anti-Trust Act— Contract tor Sale of Goods by MEMBER OF Combination.— The Act of July 2, 1890, c. 647, § 1, 26 Stat 209 [U. S. Comp. St 1901, p. 3200], known as the "Sherman Anti-Trust Act" does not invalidate, or prevent a recovery for the breach of a collateral contract for the manufacture and sale of goods by a member of a combination formed for the purpose of re- straining interstate trade in such goods. (Syllabus by the Court) ^ In Error to the Circuit Court of the United States for the Eastern District of Missouri. Oharles Ctimmings Collins (TT. F. Carter^ WUliam T, Jones, and A, R. Taylor, on the brief), for plaintiff in error. James C, Jones (Lon O. Hocker, C, P, Ellerbe, C, P. El- Urbe, Jr., and Frank A. Thompson, on the brief) , for defend- ant in error. Before Van Devanter and Hook, Circuit Judges, and LocHREN, District Judge. Van Devanter, Circuit Judge. The Highland Glass Company, a Pennsylvania corpora- tion, engaged in manufacturing glass in that state, received and accepted the following order for the manufacture and delivery of glass from the Hadley-Dean Glass Company, a Missouri corporation, carrying on the business of a jobber and dealer in glass at St. Louis: •* Book us with 200,000 sq. ft. i ribbed more or less subject to sizes and delivery as required at price 5c. sq. ft cut to size St Louis de livery less 1% cash 10 days acct St L. World's Fair bldgs. Acc't Mr Torrence. Ack." [243] 23,056 square feet of glass was manufactured, de- livered, accepted, and paid for under the contract so made. The Hadley-Dean Company then refused to furnish specifi- cations for or to accept the remaining 176,944 feet, although the Highland Company offered and was ready and willing to manufacture and deliver the same as agreed. In an action in the Circuit Court to recover damages from the Hadley- Dean Company for its breach of the contract a verdict was directed in favor of the Highland Company for the difference 996 143 FEDERAL REPORTER, 243. Opinion of the Conrt. between the cost of manufacturing and delivering the re- maining glass and the contract price, and judgment was rendered on the verdict returned under that direction. The purpose in prosecuting the present writ of error is to secure a reversal of that judgment. It is assigned as error that the court held that the order was for 200,000 square feet of glass, more or less, the latter words having their usual signification, and rejected the de- fendant's contention that the order was for such an amount of glass as would be required by the defendant " to fulfill its contracts for glazing the St. Louis World's Fair Buildings." No reference to the existence of any such contracts or to the amount of glass required to fulfill them is made in the plead- ings or in the evidence, and it is conceded that the question presented by this assignment is to be determined by an exam- ination of the order alone. We think it was properly in- terpreted. The quantity of glass is expressed in the word* "200,000 sq. ft., i ribbed more or less." The succeeding phrase "subject to sizes and delivery as required," merely reserved to the defendant the right to thereafter designate the sizes to which the glass should be cut and the times when it shoidd be delivered. The still later phrase " acc't St. I^. World's Fair bldgs.," while explaining the use to which the glass was to be applied, is, in point of place and grammatical arrangement, so completely separated from the expression in respect to quantity that it could not well have been intended to qualify that expression. A more reasonable view of its purpose is that it was intended to give some indication of when the glass would be required and to apprise the plaintiff of the necessity for promptly conforming to such directions as should thereafter be given for its manufacture and delivery. It was common knowledge that the time for the completion of the World's Fair buildings was limited and that a failure to complete them within that time would result in serious inconvenience and loss. True the quantity specified is qualified by the words "more or less," but it is well settled that in a contract like this these words, unless supplemented by language giving them a broader scope, apply only to such accidental or immaterial variations in quantity as would Baturally occur in connection with such HADLEY DEAN P. G. 00. /;. HIGHLAND G. CO. 997 Opinion of the Court. a transaction. Bmwley v. United States, 96 U. S. 168, 172, 24 L. Ed. 622 ; Norrington v. WHght, 115 U. S. 188, 204, 6 Sup. Ct. 12, 29 L. Ed. 366 ; Pine River Logging Co, v. United States, 186 U. S. 279, 22 Sup. Ct. 920, 46 L. Ed. 1164; Id., 32 C. C. A. 406, 89 Fed. 907. There is no such broadening language in the order. It is assigned as error that the damages were not meas- ured by the difference between the market value of the glass and the con- [2441 tract price, but the point may be dis- missed with the statement that, under the established rule in this jurisdiction, and also in the state of Missouri where The controversy arose, where a contract for the manufacture and delivery of goods is repudiated by the vendee before thtj goods are manufactured, the measure of the vendor's dam- ages is the difference between the cost of manufacture and de- livery and contract price. Kingman v. Western Mfg. Co., 34 C. C. A. 489, 92 Fed. 486; Philadelphia, etc., Co. v. How^ ard, 13 How. 307, 344, 14 L. Ed. 157; United States v. Speed, 8 Wall. 77, 84, 19 L. Ed. 449 ; HincJcUy v. Pittshurg Steel Co., 121 U. S. 264, 7 Sup. Ct. 875, 30 L. Ed. 967 ; Roehm v. Horst. 178 U. S. 1, 21, 20 Sup. Ct. 780, 44 L. Ed. 953; BUck River Lumber Co. v. Warner, 93 Mo. 374, 388, 6 S. W. 210; Cres- cent Mfg. Co. V. Nelson Mfg. Co., 100 Mo, 325, 336, 13 S. W. • 503; Chapman v. Kamas City, etc., Ry. Co., 146 Mo. 481, 508, 48 S. W. 646. There was some evidence tending to show that at the time of making the contract the plaintiff and others, not includ- ing the defendant, were m an unlawful combination to stifle competition in the sale of glass and to arbitrarily increase it« price, and because of this it is contended that in directing a verdict for the plaintiff the court failed to give effect to the anti-trust statute of Missouri (Rev. St. Mo. 1899, §§ 8965-8970), and to the anti-trust legislation of Congress (Act July 2, 1890, c. 647, § 1, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200] ; Act August 27, 1894, c. 349, §§ 73-77, 28 Stat. 570 fU. S. Comp. St. 1901, pp. 3202, 3203]). Of the state stautute it is sufficient to say that it can have no application to the contract under consideration without impinging upon the exclusive authority of Congress to regu- late commerce among the several states. Railroad Co. v. 998 143 FEDERAL BEPORTER, 244. Opinion of tbe Court. Hmm, 95 U. S. 465, 469, 24 L. Ed. 527; Leisy v. Hardin, 135 U. S. 100, 10 Sup. Ct 681, 34 L. Ed. 128 ; Schollenberger v. Pmmylmihia, 171 U. S. 1, 18 Sup. Ct. 757, 43 L. Ed. 49; Addyston Pipe cC- Steel Co. v. United States, 175 U. S. 211, 229-233, 20 Sup. Ct. 96, 44 L. Ed. 136 ; Stockard v. Morgan^ 185 U. S. 27, 22 Sup. Ct. 576, 46 L. Ed. 785. The contract was for the sale of glass to be manufactured by the vendor in Pennsylvania and delivered to the vendee in Missouri, and therefore directly related to interstate commerce. Ad- dyston Pipe <£• Steel Co, v. United States, 175 U. S. 211, 246, 20 Sup. Ct. 96, 44 L. Ed. 136; Bement v. National Harrow Co., 186 U. S. 70, 92, 93, 22 Sup. Ct 747, 46 L. Ed. 1058; Montague v. Lowry, 193 U. S. 38, 47, 24 Sup. Ct. 307, 48 L. Ed. 608. The act of Congress of August 27, 1894, is also without application because it is confined to combinations " between two or more persons or corporations either of whom is en- gaged in importing any article from any foreign country into the United States." The act of July 2, 1890, is what is popularly known as the ** Shennan Anti-Trust Act," and declares illegal " every contract, combination in the form of trust or otherwise, or conspiracy, in i-estraint of trade or commerce amons: the seve^l states, or with foreign nations." That it do^ not render illegal or prevent a recovery upon this contract is shown by Connolly v. Union Sewer Pipe Co,, 184 U. S. 540, IM51 22 Sup. Ct 431, 46 L. Ed. 679. In that case the plaintiff sought to recover the purchase price of sewer pipe sold by it to the defendant and the latter sought to defend en the ground that at the time of the sale the plaintiff wa^ in an unlawful combination to restrain interstate trade in sewer pipe. The court, after holding that the principles of the common law did not justify the buyer in refusing to pay for what he had bought and received, on the ground that the seller was in an unlawful combination with others to restrain trade in the article sold, said (pages 549, 550, of 184 U. S., page 435 of 22 Sup. Ct. [46 L. Ed. 679] ) : "The special defense based upon the act of Congress of July 2, 1800, c. 647, § 1. 26 Stat 209 [TT. S. Comp. St 1001, p. 3200], was also properly rejected. ♦ ♦ ♦ Much of what has just been said in reference to the first special defense, based on the common law, is i t I: \l HAKTMAN V, JOHN D. PABK & SONS CO. Syllabus. 999 applicable to this part of the case. If the contract between the plaintiff corporation and other named corporations, persons, and com- panies, or the combination thereby formed, was illegal under the act of Congress, then all those, whether persons, corporations, or associ- ations, directly connected therewith, became subject to the penalties prescribed by Congress. But the act does not declare illegal or void any sale made by such combination, or by its agents, of property it acquired or which came into its possession for the purpose of being sold — such property not being at the time in course of transportation from one state to another or to a foreign country. The buyer could not refuse to comply with his contract of purchase upon the ground that the seller was an illegal combination which might be restrained or suppressed in the mode prescribed by the act of Congress ; for Con- gress did not declare 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 So that there is no nocossary legal connection here between the sale of pipe to the defendants by the plaintiff corporation and the alleged arrangement made by it with other corporations, companies and firms. The contracts under which the pipe in question was sold were, as already said, collateral to the arrangement for the combination referred to, and this is not an action to enforce the terms of such arrangement That combination may have been illegal, and yet the sale to the defendants was valid." The contract for the sale of the glass being valid, it fol- lows as a matter of course that an action lies for its breach. No error is disclosed by the record, and the judgment is affirmed. [358] HAETMAN v. JOHN D. PARK & SONS CO. (Circuit Court, E. D. Kentucky. February 14, 1906.) [145 Fed., 358.] Pbopebty — Secbet Pbocess — Incidents of Ownebship. — The patent and copyright statutes, in conferring upon an inventor or author the exclusive right to make, use, and sell articles embodying his invention or authorship, create in him a new right and do not extend or continue a previously existing right The owner of a secret process not patented, has no such exclusive right to make, use, and vend the article to which it relates, but he has the right to keep his knowledge to himself and to protection of the same as a property right against one who, in violation of contract or through a breach of trust or confidence, undertakes to apply the secret to his own use or to impart it to others. [Ed. Note. — For cases in point, see vol. 40, Cent Dig. Property, §2. Disclosure of trade secrets, see note to 8. Jarvis Adams Co. v. Knapp, 58 C. C. A. 8.] Sales — Right to Restbict Futube Sales — Effect of Patent. — The owner of a patent or copyright after an absolute sale of the article TOGO 145 FEDEKAL KEPORTEK, 358. Opinion of the Court. covered thereby may, by virtue of the exclusive right given him by statute, and his right to withhold or restrict licenses under his monopoly, retain control of future trade in the article sold, as to prices of resale, etc., irrespective of any condition in the contract of sale, but the right to reserve such future control by contract Is not derived from the statute, but exists if at all, by the common law, and may as lawfully be exercised by the-seller of an unpat- ented article. CONTBACTS— Restraint of Trade— Sale of Article Made by Secret Process.— Provisions in a contract for the sale of a secret process restraining its use or its communication to others are not invalid as in restraint of trade, because necessary to protect the property right in the subject-matter of the contract, but such considerations do not apply to contracts for the sale of the article produced by such process which are subject to the same rules as contracts for the sale of any other article of manufacture. Same.— A system of contracts made by the manufacturer of a pro- prietary medicine between him and wholesale dealers, to whom alone he sold his medicine, by which they were bound to sell only at a certain price and to retail dealers designated by him, and be- tween him and the retail dealers by which, in consideration of bemg so designated, they agreed to sell to consumers only at a cer- tain price, is not unlawful as in restraint of trade, but [359] is a reasonable provision for the protection of the manufacturer's tiade, and he is entitled to an injunction to restrain a defendant from inducing other parties to such contracts to violate the same. In Equity. On demurrer to bill. F. W. Hinkle, F. F, Reed, and E, S, Rodgers, for plaintiff. IF. /. Shroder, Alton B, Parker, Mmris (& Fay, for de- fendant. Cochran, District Judge. This case is before me on demurrer to the bill for want of equity. The bill alleges in substance that complainant is the manufacturer and seller amongst other medicmes of one known as " Peruna " ; that the formula by which it is made was discovered by him, and is known only to him and his trusted employes; that he puts it up in bottles, each of which is inclosed in a loose white wrapper bearing the words " Peruna the Great Tonic " and has pasted on it a label giving its history, the theory upon which it is based, the ailments for which it is reconmiended, and the directions for taking it, and is serially numbered, the number being stamped both on the wrapper and label in several places; HAKTMAN V. JOHN D. PARK & SONS CO. 1001 Opinion of the Court that he sells the medicine to wholesale druggists only, who in turn sell to retail druggists, who in turn sell to consumers; that the wholesalers to whom he sells contract with him not to resell except to retailers designated by him and at certain prices, and the retailers whom he designates contracts with him not to resell to consumers except at certain prices; that his prices to the wholesalers are uniform and so are the prices fixed by him of wholesalers to retailers and of retailers to consumers; that he alone advertises the medicine and creates the demand for it; that with each package of medicine is furnished a card containing the serial numbers of the bottles therein and the wholesalers are required to note thereon the retailers to whom same is sold, and to return it to complain- ant; that the defendant, a Kentucky corporation, is a whole- sale druggist; that it obtains said medicine from complain- ant's wholesalers and retailers by false and fraudulent representations, surreptitious, and dishonest methods and persuading them to break their contracts with him, and sells same to retailers operating " cut rate drug stores " at less than the wholesale prices fixed by him, who in turn sell to consumers at less than the retail prices so fixed ; that before the medicine is so sold to consumers the wrappers are re- moved and the labels are defaced so as to obliterate the serial numbers stamped thereon and the information thereby given ; and that defendant gives out and announces that he will continue so to obtain said medicine and so dispose of it. The relief sought is an injunction against him so doing.* * [373] This brings us to the other argument put forward by defendant's counsel in support of the contention that the sys- tem of contracts under which he sells his medicine outright and attempts at the same time to retain the control over the subsequent trade therein is unlawful. It is that said system of contracts in so far as it attempts to retain such control contravenes the common-law rule invalidating contracts in restraint of trade. The general principle upon which this rule is based, as stated by Pollock on Contracts, p. 309, is "that a man ought not to be allowed to restrain himself o The matter omitted relates to patents rather than to unlawful re- straint of trade. See first two paragraphs of syllabus. 1002 145 FEDERAL BEFORTER, 3T4. C^inion of tim Gourt from exercising any lawful craft or business at his own dis- cretion and in his own way." It is thus stated in the quota- tion made by him from the opinion in HUton v. Eskerley, 6 K&B. 66, 74,75: [874] " Prima facie, it is the privilege of a trader in a free country In all matters not contrary to law to reipilate his own mode of carry- ing it [his trade] on according to bis own disrretiou 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." The restraint, then, which the rule and the general prin- ciple upon which it is based have in view is a restraint which a man puts upon himself by contract with another, and not a restraint which another puts upon him. Another is with- out power to put any restaint upon himself except by force. He alone can otherwise put restraint upon himself, and that by contract. Such restraint in its initiation is put upon him by his own discretion and choice. The entering into the contract is voluntary on his part, and the law in relieving him from it relieves him from the consequences of his own free act. It is a restraint, not only as to whether he shall carry on any lawful craft or business, wholly or in part, but also as to the way or mode of carrying it on. The cases which have arisen under the rule have fallen into two well- defined classes. One class is where, as a rule at least, the contract is between two, and but one party thereto agrees to restrain himself in some particular for the benefit of the other party. Such contracts are usually termed contracts in restraint of trade. The most usual instance of cases be- longing to this class is where the owner of a business sells it to another and agrees with such other not to engage in the same business anywhere or only in certain territory. Mr. Justice Holmes in Northern Secnirities Co. v. United States, 193 U. S. 197-404, 24 Sup. Ct. 436, 48 L. Ed. 679, de- fines contracts of this class as " contracts with a stranger to the contractor's business [although in some cases carrying on a similar one] which wholly or partially restrict the freedom of the contractor in carrying on the business as he otherwise would." To the same effect, he says: ••Contracts In restraint of trade, I repeat, were contracts with strangers to the contractor's business and the trade restrained wa» the contractor's.** HARTMAN V. JOHN D. PARK & SONS CO. 1003 Opinion of the Court The objection to a contract of this class is its tendency to harm both the contractor and the public. The way in which it may harm the contractor is in depriving him of his liveli- hood in whole or in part. The way in which it may harm the public is in making him a public charge, in depriving it in whole or in part of the benefit of his activity, and in furthering an attempt at monopoly. Justice Holmes, in the opinion already quoted from, said that the objection to such contracts at common law was primarily on the contractor's own account. In earlv times the chance of such a contract doing harm was much greater than now. Under existing con- ditions, in view of the abundant opportunities for one to earn a living and the abundance of capital to go into any profita- ble business and its eagerness to do so, the chance of such a contract doing harm in either direction is much lessened. But all contracts of this class are not invalid, because of the restraint which they put upon one party thereto. Some are invalid, and some are not. Out of the cases that have arisen involving contracts of this kind a rule has been evolved by which it may be determined whether the contract is invalid or not. The rule is [376] if the restraint is reasonable the contract is valid ; if not, it is invalid. As said by Judge Simon ton in Hulse v. Bonsack Machine Co., 65 Fed. 8G9, 13 C. C. A. 180, the test is " as it is put in Ammunition Co. v. Nordenfelt (1893) 1 Ch. 630, and Match Co. V. Roehcr, 106 X. Y. 473, 13 N. E. 419, 60 Am. Rep. 464; * Is it, in view of all the circumstances of the case, reason- able? ' " In the most usual instance of such cases; that is, where the owner of a business sells it to another, and agrees with such other not to engage in the same business, what determines the reasonableness of the particular restraint in- volved is whether it is essential to protect the business from invasion by the contractor. If it is, it is reasonable; other- wise it is not. Pollock on Contracts, p. 310, says ; " Public policy requires, on the one hand, that a man shall not by contract deprive himself or the state of his labor, skill, or talent; and, on the other hand, that he shall be able to preclude himself from competing with particular persons so far as necessary to obtain the best price for his business or knowledge when he chooses to sell." 1004 145 FEDERAL REPOETER, 375. Opinion of tlie Ck)urt. Judge Severens, in Jarvw v. Knapp^ 121 Fed. 34, 58 C. C. A. 1, says: "The underlying principle upon which the modem cases upon this subject are grounded is that, although one cannot stifle competition by a bargain having that purpose only, yet when he purchases some- thing or acquires some right, the value of whiqh may be affected by the subsequent conduct of the seller, the purchaser may lawfully ob- tain the stipulation of the seller that he will refrain from such- conduct." The principle of absolute freedom of trade which in cer- tain instances requires that a contract imposing restraint shall give way, in sucli a case, enforced by the principle of absolute freedom of contract requires that it shall remain binding. But whilst this is the most usual instance of cases inTolving contracts where the restraint imposed is reason- able and the contract therefore valid, there are other in- stances of such cases which often arise Judge Taft, in United States v. Addyston Pipe <& Steel €a., 85 Fed. 271, 29 C. C. A. 141, 46 L. R. A. 122, undertakes to specify the instances of such cases. They are as follows : •t Agreements (1) by the seller of property or business not to com- pete with the buyer in such a way as to derogate from the value of the proi)erty or business sold; (2) by a retiring partner not to com- pete with the firm ; (3) by a partner pending the partnership not to do anything to interfere by competition or otherwise with the busi- ness 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 the master or employer after the expiration of his time of service." As to what is essential to the validity of such agreements, he says : ** Before such agreements are upheld, however, the court must find that the restraints attempted thereby are reasonably necessary (1 and 2) to the enjoyment by the buyer of the property, good will or interest in the partnership bought; or (3) to the legitimate ends of the exist- ing partnership; or (4) to the prevention of possible injury to the business of the seller from use by the buyer of the thing sold ; or (5) to protection from danger of lass to the employer's business caused by the unjust use on the part of the employ^ of the confidential knowl- edge acquired in such business." Then, as to whether his classification embraces all the pos- sible instances of such cases, he said : [376] " It 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 certainly would seem to follow from the tests laid down for determining the validity of such an agreement I HARTMAN V. JOHN D. PARK & SONS CO. Opinion of the Court. 1005 that no conventional restraint of trade can be enforced unless the covennnt embodying it is merely ancillary to the main purpose of a lawful contract, and necessary to protect the covenantee in the enjoy- ment 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." The other class of cases which has arisen involving the re- straint of trade rule is where the contract is between two or more persons engaged in the same business, sometimes includ- ing all the persons so engaged in a particular locality or everywhere; but each one engaged separately, and with no concern or interest in the business of any other one, and each one agrees to restrain himself in some particular for the mu- tual benefit of all. Such contracts are termed by Page, in his work oq Contracts, " monopoly contracts," and in Anti- Trust Act, June 10, 1890, c. 407, 26 Stat. [U. S. Comp. St. 1901, p. 1886] , " combinations or conspiracies in restraint of trade." Mr. Justice Holmes, in the opinion already quoted from, de- fined them as " combinations to keep strangers to the agree- ment out of the business." This would seem, however, not to be full enough. They include combinations to enhance prices in other ways, as by dividing territory, limiting out- put, fixing prices, or in any other way. Judge Taft defines them as " contracts having no purpose but to restrain com- petition and maintain prices." Judge Severens, in the quota- tion already made from his opinion in Jarvis v, Knapp, re- fers to them as bargains having the purpose only to stifle competition. The objection to contracts of this class, as stated by Mr. Justice Holmes, is " not an objection to their effect upon the parties making the contract, the members of the combination or firm, but an objection to their intended effect upon strangers to the firm, and their supposed conse- quent effect upon the public at large." Where, however, the purpose of the contract is to enhance prices otherwise than by keeping strangers out of the business the objection to it is for its direct effect upon the public at large. It is in con- tracts of this kind that the modern disposition to reduce competition and create monopolies has mostly manifested itself. Page, in his work on Contracts (section 373), says that such contracts are " always illegal." And such I under- ; 1006 145 FEDERAL REPORTEB, 376. Opinion of the CJonrt. stand to be the drift, at least, of Judge Taft's opinion in the Addyston Pipe & Steel Co. Case. In view, then, of this difference between these two classes of cases as to the validity of the contracts belonging to them, in the one class, the contract being valid if the restraint is reasonable; in the other class, the contract probably being invalid without any reference to the question of reason- ableness, it is important to determine to which class the sys- tem of contracts 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 restraint is reasonable, the system of contracts is certainly valid. In any event, it will add to clearness of thought to locate it. But before attempting to do this, a suggestion of complainant's counsel [377] should be considered and dis- posed of. It is that said system of contracts is not affected by the restraint of trade rule solely because complainant's medicine to which it is applied is an article made under a secret process. They would seem to contend that no contract by the purchaser of an article made under a secret process restraining himself as to what he should do with it is within the restraint of trade nde simply because it is made under such a process. That the nature of the property sold may of itself determine that a restraining contract in relation thereto is not affected by the rule, must be conceded. A patentee may assign his patent right and enter into a con- tract restraining himself with reference thereto. In the case of Central Transportation Go, v. Pullman Pal- am Car Co,, 139 U. S. 24-48, 11 Sup. Ct. 478, 85 L. Ed. 55, Mr. Justice Gray said : •*A coTcnant by the assignor of letters patent for an invention that lie will not himself make, nse, or sell the patented article is undoubt- edly valid, because the act of rongress which creates the monoix>ly expressly authorizes it to be assigned as a whole." The same is true as to a grant by a patentee of his patent right, which is an assignment for a particular territory, and for the same reason. So a patentee may grant a license and enter into such a contract with reference thereto. In the case of Vttlcan Powder Co, v. fferctdes Powder Co,. HABTMAN V, JOHN D. PABK & SONS CO. Opinion of the Court 11)07 } ^ 96 Cal. 510, 31 Pac. 581, 31 Am. St. Kep. 242, Judge McFar- land said: "As a patent is a sort of monopoly the owner may manufacture un- der it or not as he pleases, and may malie either a partial or entire assignment of it, and may protect his assignee, not only by an agree- ment not to use the patent (which would be unnecessary, l)ecause such use would be an infringement), but by a covenant not to interfere in any way with the profits to be derived from the assigned patent To the same effect are the following cases, to wit : Morse v. Morse, 103 Mass. 73, 4 Am. Rep. 513; Good v. Daland, 121 N. Y. 1, 24 N. E. 15; BonsacJc v. Machine Co, (C. C.) 70 Fed. 383. Likewise, in relation to the patented thing, as v\c have seen, the purchaser thereof may be restrained as to the use of it by him. This, however, is effected without any restraining contract on the part of the purchaser, simply by the seller, the owner of the patent, limiting the license as to what the purchaser may do therewith. Again, a restraining contract in relation to a secret process is valid simply because of the nature of the property to which it relates. The existence and value of a secret process as property depends upon the fact that its secrecy can be maintained by a restraining con- tract. Hence one to whom it is communicated by the owner may by contract restrain himself as to the use he is to make of it. In the case of Harrison v. Glucose Sugar Refining Co,, 116 Fed. 304, 53 C. C. A. 484, 58 L. E. A. 915, Judge Jenkins said : " In such a case it may well be doubted if the rule with respect to restraint of trade should apply, because these secrets of business are the property of the appellee, to which the public has no right, and may not justly insist that it shall receive the benefit of the appellant's services through breach of confidence. * * * In all such cases courts have uniformly enjoined the delin- [378] quent party from engaging in the business from which he has agreed to refrain and from disclosing the secrets of the business which he has thus acquired." It was on this principle that it was held by the Supreme Court in Board of Trade v. Christie Grain d& Stock Co,, 108 U. S. 236, 25 Sup. Ct. 637, 49 L. Ed. 1031, that contracts of telegraph companies with the Board of Trade of Chicago, by which said companies agreed not to conununicate quotations of prices for wheat, com, and provisions offered and accepted in its exchange which they received from it, to persons who 1008 145 FEDERAL BEPORTER, 378. Oprnion of the Court were not in contractual relations with it and approved by it, were valid. Mr. Justice Holmes said : "But 80 far as ttuMt 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 statutes or at common law." So, likewise, the owner of a secret process in selling it to another may, by contract, restrain himself not thereafter to use it or to divulge it to others. In the case of Central Tramportation Co. v. Pullman Palace Car Co,, mpra^ Mr. Justice Gray said : " Upon the sale of a secret process, a covenant, express or implied, that the seller will not use the process himself or communicate it to any other person, is lawful, because the process must be kept secret In order to be of any value, and the public has no interest in the question by whom it is used." In the case of Ammunition Co. v. Nordenfeldty 1 Ch. 630, L. J. Bowen said : •• Sales of secret processes are not within the principle or the mis- chief of restraint of trade at all. By the very transaction in such cases, the public gains n the one side what it lost on the other, and, unless such a bargain was treated as outside the doctrine of general restraint of trade, there could be no sale of secret processes of man- ufacture." To the same effect are the cases of Vickery v. Welch, 19 Pick. (Mass.) 523; Jarois v. Peck, 10 Paige (N. Y.) 125; ffard V. SeeJey, 47 Barb. (N. Y.) 428; Alcock v. Giberton, 5 Duer. (N. Y.) 76; Tode v. GrosSj 127 N. Y. 480, 28 N. E. 469, 13 L. E. A. 652, 24 Am. St Eep. 475 ; Simmons Medicine Co. V. Simmons (C. C.) 81 Fed. 163; Fowle v. Park, 131 U. S. 88, 9 Sup. Ct. 658, 33 L. Ed. 67. It is therefore true, as stated by Judge Scott, in Standard Fire Proofing Co, v. St, Louis Co., 177 Mo. §59, 76 S. W. 1008, that: " Patented inventions and secrets of art or trade not patentable are not within the purview of the rule against restraint of trade." But what we have to do with here is not the secret process by which complainant's medicine is made. It is the medi- cine itself, made under the process. The secret i.rocess and the medicine made under it are separate and distinct things, and each is a subject of ownership. One person may own one and another person the other. The question has been argued whether a sale of an article made under a se(;ret pro- HAETMAN V. JOHN D. PAKK & SONS CO. 1009 Opinion of the Court. cess is a publication of the process. It is and it is not. It is, if and when one can by his own ingenuity ascertain thei e- from the process by which it is made. Until he so ascertains it, there has been no [379] publication of the process; and in the meantime the ownership of the secret and the right to its protection is as full and complete as if no sale had ever been made of the article embodying the secret process. But still, as stated, such article is not the process and the rights with reference to each are different. AYhat is there, then, in tJie nature of the articles made under a secret process to occasion any difference between them and articles not so made or between them and articles which one may not have made at all, but simply owns, in the matter of the validity of restraining contracts entered into by purchasers thereof from the owner ? It is hard to conceive of any. It is true that the manufacturer and owner of the articles made under the secret process may refrain from making them and selling tliem to purchasers, and thus putting them upon the market. Equally so, the manufacturer and owner of any other articles may refrain from so doing. So, also, the owner of articles that he has not made, but has purchased or otherwise obtained from the manufacturer may refrain from selling them to purchasers and thus putting them upon the market. Sup- pose that the owner of a patent should sell all the articles made under it to another with license to use or resell them, thiis passing them outside of the monopoly of the patent in the hands of the purchaser, would the mere fact that they had been made under the patent lend any sanctioning force to a restraining contract entered into with reference thereto by a subpurchaser thereof? I must conclude, therefore, that the fact that complainant's medicine has been made under a secret process has no effect whatever on the validity of the system of contracts involved herein. He has no greater rights in relation thereto, as distinguished from the secret process under which it was made, than the owner of any other tangible personal property, whether made by him or not, would have in relation to such property. Nor can the fact that he sells it under a trade-mark and a certain dress, which no one else has the right to use, even if he did by his own ingenuity ascertain the secret process bv which it 21220— VOL 2—07 m 64 1010 145 FEDERAL REPORTER, 379. Opinion of the Court. is made and thus became enabled to make and sell it, make any difference. No reason occurs to me why the owner of goods trade-marked and peculiarly dressed should have the right to obtaining a restraining agreement from the pur- chaser of his goods, and the owner of goods not so marked or dressed should not have such right. All goods have some dress, and if not trade-marked are marked with the name of the seller. If, then, such a system of contracts is valid, a« applied to complainant's medicine, it would be equally valid as applied to any other article of tangible personal property owned by the one so applying it. The validity of that systeni dei>ends entirely, therefore, upon the question as to which of the two classes of contracts involving the re- straint of trade rule it belongs, and if it belongs to the first class, whether under all the circumstances it is reasonable. To which class, then, does it belong? The only ground for claiming that it belongs to the second class is that its purpose is to maintain the prices of complainant's medicine to the retailers and consumers. There is nothing in them, beyond the uniformity of price [380] provided for, to affect competition amongst different wholesalers and amongst dif- ferent retailers. The contracts are not between persons en- gaged in the same business. One set of them is between com- plainant, who is a manufacturer, and wholesale druggist; and the other set is between him and retail druggists. A sep- arate contract is entered into between complainant and each wholesaler and l>etween him and eacli retailer. In each con- tract between complainant and a wholesaler, there is a pur- chase of medicine by him and an agreement on his part to restrain himself as to the persons to whom and the price at which he resells. And in each contract between complainant and a retailer there is an agreement on his part that if he is designated as a purchaser from wholesalers to restrain him- self as to price at which he resells to consumers. It is true that these contracts cover the entire trade in complainant's medicine, which fact defendant's counsel emphasize, but there is here no combination between persons engaged in the same kind of business to regulate their respective businesses for their mutual benefit to the harm of strangers or the public at large. It would seem that each of the contracts in complain- ) HARTMAN V, JOHN D. PARK & SONS CO. 1011 Opinion of the Court. ant's system comes within the fourth of the five subclasses into which Judge Taft divides the first class of contracts. If complainant sold his medicine to consumers as well as manufactured it, and should make a single contract with a retailer in the market where he sold by which he sold to the retailer a lot of his medicine to resell to consumers, and the retailer agreed not to sell it at less than the price at which complainant Avas selling it, and thus undersell and compete with him for consumers, it would present a case clearly within said fourth subclass, and the validity of the restraint which such retailer thus put upon himself would depend upon its reasonableness, that in turn depending upon whether the restraint was reasonably necessary to the pre- vention of possible injury to complainant from use by the retailer of the medicine sold to him. The cases cited by Judge Taft in illustration of this fourth subclass each involved a single sale and agreement. Those cases are as follows, to wit: American Strawhoard Co. v. Haldeman Paper Co., 83 Fed. 619, 27 C. C. A. 634 ; Hitchcock v. An- thony, 83 Fed. 779, 28 C. C. A. 80; Oregon Navigation Co, V. Winsor, 20 Wall. (U. S.) 64, 22 L. Ed. 315; Dunlop v. Gregory, 10 N. Y. 241, 61 Am. Dec. 746; Hodge v. Sloan, 107 N. Y. 244, 17 N. E. 335, 1 Am. St. Kep. 81(5. In the American Strawhoard Co. Case, that company owned and operated a number of strawhoard mills. It con- veyed one of them to the Haldeman Paper Company, which agreed not to manufacture strawhoard at said mill for 20 years. In the Anthony Case, Anthony was lessee of a dock upon which he conducted the business of dealing in coal and fish and conveyed another dock near by to Hitchcock, a dealer in lumber, who agreed not to engage in the coal or fish business or do anything that would conflict with the grantor's business for seven years. In the Oregon Navigation Company Case, that company was engaged in navigating the Columbia river in Oregon and Washington. It had purchased the steamer New World from the California Navigation Company, which was engaged in navigating Cali-[381]fornia waters, and had agreed with it not to em- ploy said steamer in California waters. It sold the steamer 1012 14« FEDERAL EIPORTER, 381, Opinion of tlie Court to Winsor, who was engaged in navigating Puget's Sound. He agreed not to use it in California waters or Columbia river for 10 years. In the Gregory Case, Gregory, who was engaged in navigating Hudson river between New York, Albany, and Troy sold a two-thirds mterest in steamboat Robert L. Stevens to Dunlop, who agreed not to use it at any time thereafter as a passage boat on Hudson river above the village of Saugerties. In the Hodge Case, Hodge's testator, who was engaged in the business of selling sand from land he owned, conveyed a piece of the land to Sloan who agreed he would not sell any sand from it. In each case it was held that the restraining agieement was valid. Had there been in each case any number of similar sales of similar property with similar restraining agreements, each transaction would have belonged to the fourth subclass, and the restraining agreement in each would have been dependent upon its reasonableness for its validity. Their numerousness would not affect their nature. It may be said, however, that com- plainant does not sell save to wholesalers to resell to retail- ers and that therefore neither the wholesalers nor retailers are possible competitors of complainant and the restraining agreements entered into by the wholesalers and retailers are not to prevent or affect their using the medicine in compe- tition with him, and, hence, do not come within the letter of that fourth subclass, which covers agreements by the buyer of property not to use the same in competition with the business retained by the seller. This may be true. But the spirit of the subclass covei's restraining agreements by the buyers of property to prevent their using it in any other way than by competition so as to injure the business of the seller. The principle involved in this subclass is that, if one in business sells property to another and such property may be used by the purchaser in a way to injure the business of the seller or to render it less profitable than it would other- wise be, a restraining agreement on the part of the pur- chaser as to the use of it may be reasonable under the cir- cumstances of the case, and if so, valid. Judge Taft, in Addyson Pipe & Steel Co. Case, in leading HAETMAN V. JOHN D. PARK & SONS CO. 1013 Opinion of the Court up to the classification which he made of the cases coming within the first class, said : "When one in business sold property with which the buyer might set up a rival business it was certainly reasonable that the seller should be able to restrain the buyer from doing hun an injui-y which, but for the sale, the buyer would be unable to inflict." It would be equally reasonable that'the buyer should be able to restrain himself from using the property in any other way than setting up a rival business, so as to do the seller an injury which but for the sale he would be unable to inflict But whether or not the system of contracts involved here comes within said fourth subclass, they are certainly covered by the language used by Judge Taft to take in any possible omissions from the classification he made. In each contract the restraining agreement is ancillary or collateral to the main purpose of a lawful contract, to wit, a sale of the medi- cine, [382] and, according to complainant's claim, it is neces- sary to protect him from an unjust use of the legitimate fruits of the contract by the purchaser. I therefore conclude that the system of contracts involved herein belongs to the first class, and that its validity depends solely upon its rea- sonableness. Is it reasonable, then, that complainant should have the right to put in force the system of contracts in- volved herein and obtain from his vendees and subvendees restraining agreements from the vendees, as to whom and at prices at which they shall resell, and from the subvendees as to the prices at which they shall resell? A question arises here as to the party on whom lies the burden as to the rea- sonableness. Is it on complainant to show that the restraint in question is reasonable, or is it on defendant to show that it is unreasonable ? Judge Simonton, in Hulse v. Bonsack Machine Co., supra, says: " This is not literally an agreement in restraint of trade, tl is sim- ply a contract which by analogy can be likened to one, and the anal- ogy should not be pushed beyond the reason for it. There is no pre- sumption that such a contract is void. The presumption is in favor of the competency of the parties to make the contract and the burden is upon the party who alleges that it is unreasonable or against uubiic policy." 1014 145 FEDEBAL REPOBTEK, 382. Opinion of the Court On the other hand, Beach on Contracts, vol. 2, § 1562, says : " Many authorities declare in substance that all restraints are nre- sumed to be bad. but, if the circumstances are set forth, that presumD- JT,^^^\^ excluded and the court judges of these circumstances whether the contract be void or not," I do not find it essential in this case to locate the burden, as I hold that under the allegations of the bill, which are ad- mitted by the demurrer, said system of contracts as applied to complainant's medicine is reasonable. The circumstances which lead me to this conclusion are these: That complain- ant's vendees and subvendees should be so restrained is ad- vantageous to complainant's business. It would be an injury to it from them not to be so restrained. Exactly how it is so advantaged and how it would be injured by a removal of the restraint has not been developed in the argument ; and I do not feel sufficiently advised as to such matters to say as to this. It would seem that the existence of such a system of contracts in relation to complainant's medicine would tend to prevent demoralization in the trade therein through com- petition amongst his vendees and subvendees, and enable him to maintain the prices for his medicine. But, however this may be, it is alleged in the bill that before complainant established and put said system in force the " cut rate " or " cut price " system had resulted in much confusion, trouble, and damage to complainant's business, and had injuriously affected the reputation and depleted the sale of his medicine, and that it was established and put in force to protect his trade, custom, and business, and the manufacture and sale of his medicine; that it prevents cutting of prices and demoral- ization of trade both wholesale and retail, greatly benefits him by increasing the sales of and demand for his medicine, and is of great value to him in his business ; and that it has been of gi-eat benefit and advantage to him and his business, and has increased his [383] trade and business. It is fur- ther alleged that the prices which he and his vendees and subvendees get for his medicine are reasonable. These alle- gations must be accepted as true. The vendees and sub- vendees would not have the opportunity to sell his medicine HARTMAN V. JOHN D. PAEK & SONS CO. 1015 Opinion of the Court. if he did not make and sell it. ^e thus brings trade to them. By fixing a uniform price on his medicine on sales by him- self to the wholesalers, on sales by wholesalers to retailers, and by retailers to consumers, all purchasers, wholesalers, re- tailers, and consumers are treated alike, the large wholesalers have no advantage over the small ones, nor the large retailers over the small ones. All sellers and all consumers are treated alike. Complainant criBates the demand for the medicine, as he alone advertises it. And, finally, complainant could accom- plish the very same result by a different system, against which no legal complaint could be made. This would be by a sj^stem of agencies. Though the nature of complainant's medicine ; i. e., its being an article made under a secret process, may not, without more, determine the validity of the system of contracts in question, it cannot be said that it does not add to the reasonableness of said system as applied to it. Com- plainant not only owns it and makes it, but no one else can make it, and if they could they could not sell it under his trade-mark and dress. How, then, does the matter stand upon authority? The whole trend of authority is favorable to the validity of the system. The sweeping principle which has taken form in Judge Taft's five classes and in the general statement to cover any omissions therefrom upholds it. But there are a number of decisions more directly in point. They are as fol- lows, to wit: Elliman v. Carrington (1901), 2 Ch. 275, 84 L. T. (N.-S.) 853; Garst v. Harris, 177 Mass. 72, 58 N. E. 174; Walsh v. Dwight (Sup.) 58 N. Y. Supp 91; Park c& So7is Co. V. National Wholesale Druggists, 175 N. Y. 1, 67 N. E. 136, 62 L. R. A. 632, 96 Am. St. Rep. 578 : Whitwell V. Tobacco Co, 125 Fed. 454, 60 C. C. A. 290, 64 L. R. A. 689. In Elliman v. Carrington, the plaintiffs were manufactur- ers of Elliman's Royal Embrocation for horses and cattle and Elliman's Universal Embrocation for human beings. They sold it to the defendants, who bought wholesale to 'sell to others at retail. The latter agreed not to sell below certain prices and not to sell to others unless they agreed not to sell below certain prices. They broke the latter part of the agree- 1016 145 FBDEBAL BEPOBTEB, 383. Opinion of the Court ment whicli was the occasion of the suit. It was held that the agreement was valid. Mr. Justice Kekewich said : H Pill The [plaintiffs] are not l>ound to sell the embrocation at all ; they are not bound to manufacture it They are at liberty to do so as they please, and when they have manufactured it, they are at liberty to sell it at whatever price they choose to fix, it may be a prohibitive one or it may be such a small price that they cannot malve any profit out of it That is entirely for their consideration. There are no goods which the owner thereof may not lawfully retain or sell at such price as he pleases.'* Again he says: ** Why should nut Elliman's Sons & Co. be at liberty' to fix the price in that way? Nobody has argued and it could not possibly be argued that they are not at liberty to fix the price in the first sale to Carring- ton & Son. Why [384] should they not be at liberty to make the fur- ther bargain with Carrington & Son that they shall not sell it below a certain price? It is said that the contract is in restraint of trade. In one sense it is, but it is just as much and no more in restraint of trade for Elliman's Sons & Co. to say that they will not sell at all. It ^*eeul.s to me. to say the least, that what is restraint of trade as re- gards I'arrington & Sen is really the liberty of trade as regards Elli- man's Sous & Co. The cases which have been cited are well-known authorities expounding a great principle, and showing what exceptions there are to that principle. But this case seems to me not to fall within any principle or exception. I do not thhik that it is touched by the authorities at all. It is merely a question of whether a man is entitleil when he is selling his own goods to make a bargain as to the use to be made of them by the purchaser. It is said that the con- tract is against public iwlicy, but that phrase merely embodies for the present purpose the great principle of restraint of trade, and to say that it is to prevent Elliman's Sons & Co. from exercising their own discretion, seems to me to be applying a well-settled principle of law to facts to which it cannot have any possible application." It is to be noted that though the article which was sold in this case was probably made under a secret process, no em- phasis was laid upon the fact The reasoning applies equally w^ell to any article which one may own, whether he made it or not, and which he sells for purpose of resale. In Garsi v. Hairisy the plaintiff sold Phenyo-Caffein, a proprietary medicine, to defendant, who agreed not to sell it below a stipulated price, and a certain sum was agreed on as liquidated damages. The action was brought for a breach of this agreement to recover said sum. It was held that the agreement was valid. Holmes, C. J., said : •* It Is .said that the contract was unlawful as In restraint of trade. * * ♦ When, as here, there is a secret composition, which the defendant presumably would have no chance to sell at a profit at all but for the plaintiff's permission, a limit to the license, in the form of a restriction of the price at which he may sell, is proper enough." HARTMAN V. JOHN D. PARK & SONS CO. 1017 Opinion of the Court It is true that the fact that the article sold was a secret composition was emphasized. But the reasoning used was equally applicable to any other article; as to any other ar- ticle sold the purchaser would not have had any chance to sell that particular article, however it may have been as to other articles of the same kind, at a profit at all, but by the seller's permission. Point is made as to these two cases that in each but a single contract was involved, and not a system of contracts as here. That is true, but no doubt there was a system of contracts in each of those cases as here. A single contract; i. e., a contract with a single purchaser, would hardly have been of any value to the seller. It was only by a system of contracts ; i. e., a contract with every purchaser, that he could hope to ac- complish anything. This must have been had in view by the court, as no point was made of the fact that there was but a single contract involved, and the reasoning was applicable to a system. In Walsh v. Dwight^ the defendants were manufacturers and sellers of saleratus and soda, articles in common use and capable of being manufactured by any one, which was known on the market as" Dwight's Cow Brand Saleratus and Soda." They sold these articles to job- [385] berrf under contracts, whereby the latter, in consideration of a certain discount, agreed not to resell same or any other saleratus or soda at less than certain prices. The plaintiffs were rival manufac- turers of saleratus and soda, and the suit was to recover damages sustained by them because of defendant's system of contracts. It was assumed that plaintiffs had a right of action if the system of contracts was invalid and the dispo- sition of the case was made to turn on its validity. It was held to be valid. Judge Ingraham said : *' It is difficult to see upon what gi'ound it can be claimed that such a contract is illegal. That the defendants would have the right to establish agencies for the sale of their goods, or to employ others to sell them, at such prices as the defendants should designate, cannot be disputed. Nor can it be that a manufacturer of merchandise can- not agree to sell to others upon condition that the vendee, in selling at retail, should charge a specified price for the goods sold, or should sell only the manufactured product of the manufacturer. If a dealer in articles of this kind, for his own advantage, agrees to confine his business to a particular line of goods, or agrees with the manufacturer to charge a particular price for the articles which he sells in his busi- lUlo 14o FEDERAL REPORTEB, 3m. Opinion of the Court ness, such an agreement is not illegal, as in restraint of trade or as tending to create a monopoly, as there is nothing in the agreement to prevent othere from engaging in the business, or the manufacturers Of other articles from selling their products to anv one who is willing to buy. There is nothing to prevent any individual from selling any property that he has at any price he can get for it. Nor is there any reason why an individual should not agree that he will not sell property which he owns at the time of malting the agreement, or which he thereafter acquires, at less than at a fixed price ; and certainlv a contract of this Icind is not one which exposes the parties to it to any penalty, or subjects them to any action for damages bv those whose business such a contract has interfered with." The case of John I). Park dt Sons Co. v. National Whole^ sale Druggists Association was a suit by the defendant herein against an association of wholesale druggists to recover damages alleged to have been occasioned by said association causing niannfactiirers of medicines to refuse to sell to this defendant on the same terms as it sold to members of said association unless it would enter into a contract by which it agreed not to resell same at less than certain prices, a con- tract similar to that which each member of said association had entered into with said manufacturers. It was held that the system of contracts was valid, and this defendant was not entitled to recover. There was a dissent by three of the judges. One dissent was based upon the ground that, though the manufacturers had a right voluntarily to put in force such a system of contracts, it was illegal for the jobbers to drive them to put in force said system by refusing to deal with them unless they did. Another dissent was based upon the ground that jobbers required the manufacturers not only to sell at the same price to each jobber, but to compel each jobber to sell to the consumers at the same price. " It is in this respect " it is said " that the agreement is vicious and operates in restraint of trade for it destroys competition among the jobbers." The force of the decision is weakened somewhat by the consideration that it is not entirely clear that the court did not think that the medicine to which the system of contracts was held lawfully applicable had been patented. The reasoning of the opinions rendered on be- half of the majority of the court, how- [386] ever, is not based on the fact that they had been patented. It is equally pertinent to proprietary medicines. This case suggests that HAETMAN V. JOHN D. PARK & SONS CO. Opinion of the Court. 1019 possibly complainant was driven to adopt its system of con- tracts by the organization of wholesale druggists. In Whitwell v. Tohacco Co.^ the defendant was a manu- facturer of tobacco and the plaintiff a jobber therein. The defendant's method of doing business was to fix the prices of its goods so high to those who did not agree to refrain from dealing in the commodities of its competitors that their pur- chase was unprofitable, while it reduced the prices to those who did so agree so that the purchase of the goods was profitable to them. The plaintiff applied for a purchase, but refused to so agree, and, upon his so refusing, the de- fendant refused to sell to him. He then brought the action to recover damages for the refusal. It was held that he could not, that such an agreement on the part of a jobber was legal, and that the defendant had a right to refuse to sell to him unless he would enter into it. Judge Sanborn said: " The tobacco company and its employe sold its products to custom- ers who refrained from dealing in the goods of its competitors at prices which rendered their purchases profitable. But there was no restriction ui>on competition here, because this act left the rivals of the tobacco company free to sell their competing commodities to all other purchasers than those who bought of the defendants, and free to compete for sales to the customers of the tobacco company by offering them goods at lower prices or on l)etter terms than they secured from that company. The tobacco company and its employ^ were not required, like competitors engaged in public or quasi public service, to sell to all applicants who sought to buy, or sell to all in- tending purchasers at the same prices. They had the right to select their customers, to sell and to refuse to sell to whomever they chose, and to fix different prices for sales of the same commodities to dif- ferent persons. In the exercise of this right they selected those per- sons 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 selec- tion, or in the means employed to effect it, that was either illegal or immoral. It had no necessary effect to directly and substantially 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 respective wills." Besides these cases there is that of Dr. Miles Medical Co, V. Goldthwaite {C. C), 133 Fed. 794. The force of this decision, however, is weakened by the fact that there no argument was made on behalf of defendant. I have also been referred to certain unreported decisions upholding the 1020 145 FEDERAL BEPORTEB, 386. Opinion of the Court validity of complainant's system of contracts. There are decisions by Judge Lochren in ^ the case of Hartman v. Hughes, pending in the United States Circuit Court for the district of Minnesota, rendered July 14, 1905; by Judge Kohlsaat, in the case of Dr. Miles Medical Company v. Piatt, pending in the United States Circuit Court for the Northern District of Illinois, Eastern Division, rendered 19th day of January, 1906; and by Judge Tuley in the case of Piatt v. National Association of Retail Druggists, pending in the circuit court of Cook County, 111., rendered January 24, [387] 1905. But in none of these cases apparently did the judges have to reckon with the line of argument that is presented here, and though reaching the same conclusion, I have pro- ceeded along different lines. It is to be noted that this is not a case where the manufacturer undertakes to maintain retail prices for the sale of his goods by a direct restrictive agreement with the wholesaler, and by affixing labels to the goods charging all subsequent transferees with notice of the conditions under which they were originally sold. A case of that sort presents the interesting question whether in this way the manufacturer can maintain the retail prices of his goods, i. e., whether the doctrine laid down in Tulk v. Mokay, 2 Ph. 774, by which covenants restricting the use of land are enforced against purchasers with notice should be extended to chattels. The cases of New York Bank Note Co. v. Hamilton, etc, Co., 28 App. Div. 411, 50 N. Y. Supp. 1093; Murphy v. Christian Press, etc., Co., 38 App. Div. 426, 56 N. Y. Supp. 597, have been cited as holding that it should, and the cases of Taddy <& Co. v. Stevens d: Co., 20 T. L. R. 102, Eng. Ch. D. ; Garst v. Hall c§ Lyon Co., 179 Mass. 588, 61 N. E. 219, 55 L. R. A. 631 ; as holding that it should not. In the case of De Mattos v. Gihsmi, De Gex <& Jmies, 276, the doctrine was applied to a steamboat. Lord Justice Knight Bruce saici z 41 Reason and justice seem to preseribe that, at least as a general rule, where a man by gift or purchase acquires property from another with knowledge of a previous contract, lawfully, and for a valuable consideration made by him with a third person, to use and employ the property for a particular purpose, and in a specified manner, the ac- quirer shall not, to the material damage of the third person, in opposl- DELAWAKE, L. & W. E. CO. V. KUTTEE. Syllabus. 1021 tion to his contract, and inconsistent with it, use the property in a manner not allowable to the giver or seller. The rule applicable alike in general, as I conceive, to movable and immovable property, recog- nized and adopted, as I apprehend, by the English law, may, like other general rules, be liable to exceptions arising from special circum- stances; but I see at present no reason for any exception in the in- stance before us." Here, however, the retailers enter into a contract directly with the complainant upon a valuable consideration, to wit, their being designated as retailers to whom the wholesalers may sell, and the question is whether they are bound by such contract. I therefore conclude that the complainant's sys- tem of contracts is valid. The position is taken in brief on behalf of defendant that the system of contracts is invali- dated by the federal anti-trust act of 1890 ; but I understand that this position is not insisted on. I therefore make no further reference thereto. The general demurrer is overruled. There is a special de- murrer to so much of the bill as seeks an injunction restrain- ing defendant from removing the dress from complainant's bottle and mutilating the label. It is urged that if the system of contracts is upheld and enforced the complainant will have no occasion for such relief. This does not occur to me as sufficient reason for his not obtaining it. The special demurrer is also overruled. [51] DELAWAEE, L. & W. E. CO. v. KUTTER ET AL. (Circuit Court of Appeals, Second Circuit May 22, 1906.) [147 Fed. 51.] Appeal and Ebbor — Case Tried to Court — General Finding — Mat- ters Reviewable. — When, upon a trial without a jury in a federal court, the findings of fact and of law by the court are general, ex- ceptions to a ruling denying a motion for judgment for the defend- ant present for the consideration of an appellate court the question whether upon the whole evidence, with all the Inferences which a jury could justifiably draw from it, the plaintiff was entitled to recover; the general finding is to be accepted as equivalent to the verdict of a jury on all matters of fact, and the appellate court can- not review the weight of the evidence. Judgment — Matters Concluded — Second Action on Different De- mand. — When a judgment is offered in evidence in a subsequent 1022 147 FEDEBAL BEPOKTEB, 51. Syllabus. action between the same parties upon a different demand, it oper- ates as an estoppel only upon the matter actually at issue and de- - termined in the original action, and such matter, when not disclosed by the pleadings, must be shown by extrinsic evidence; but every matter necessary to the disposition of the case as made by the pleadings is included in the conclusive effect of the judgment. I Ed. Note.— For cases In point, see vol. 30, Cent Dig. Judgment. If 1248-1258.] Same.— An action to recover a sum of money alleged to be due from defendant to plaintiff under a contract, and a subsequent action for wrongful ter- [52] mination of the contract by defendant, although based upon the same contract, are upon different demands, and where the only defense pleaded in the first action was a 6reach of the contract by plaintiff, a Judgment in his favor therein is con- clusive only upon that question in the second action, unless it is shown that other matters were actually litigated and decided. [Ed. Note.— For cases in point, see vol. 30, Cent Dig. Judgment II 1248-1258.] Railroads— CoNTBACT to Secure Traffic— VALmiTY— Monopolies— Carbiebs— Undue I*beference.— Defendant railroad company en- tered into a contract with plaintiff for a term of years to build up, develop, and conduct the business of the transportation of milk on Its lines of road. Plaintiff was to have full charge of such business and was to receive as compensation a percentage of the freights earned therein. It was provided that he should charge rates not In excess of those charged by competitive roads, and should be granted the exclusive privilege of transporting milk over defend- ant's lines " so far as it was permitted to do so by law." In the execution of the contract all rates were made by defendant and plaintiff was not given a monopoly of the milk traffic. Held, that such contract was not ultra vires nor void as contrary to public policy, especially as practically construed by the parties in its exe- cution ; nor was it in violation of the anti-trust act of July 2, 1890, c. 647, 26 Stat. 209 [U. S. Comp. St 1901, p. 3200], or of section 3 of the interstate commerce act of Feb. 4, 1887, c. 104, 24 Stat 380 [U. S. Comp. St. 1901, p. 3155] as giving an undue and unreason- able preference to plaintiff. [Ed. Note.— For cases in point, see vol. 41. Cent Dig. Railroads, I 434; vol. 9, Cent Dig. Carriers, || 83-85; vol. 35. Cent Dig. Monopolies, || 10, 12.] Contracts- Rules of Construction- Legality.— The fundamental rule is that a contract will be construed, if possible, as having been made for a legal, rather than for an illegal, purpose and it should not be relaxed when a vicious construction is sought for by the party who made the contract [Ed. Note.— For cases in point, see vol. 11, Cent Dig. Contracts. I 734.] DELAWARE, L. & W. R. CO. V, KUTTER. 1023 Opinion of the Comrt In Error to the Circuit Court of the United Stotes for the Eastern District of New York. W. D, Guthrie and H. D. Hotchkiss^ for plaintiff in error. Augustus Vaidbyck, for defendants in error. Before Wallace, Lacombe and Townsend, Circuit Judges. Wallace, Circuit Judge. The plaintiff in error was the defendant in the court be- low, and by this writ of error seeks to review a judgment for the plaintiffs in an action tried by the court without a jury. The action was brought to recover damages for the breach by the railroad company of a contract dated JuW 9, 1886, made with Robert E. Westcott, which was to remain in force for the term of 10 years, and the duration of which was extended September 30, 1892, for the further term of 5 years. 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 the defendant's railroad; that he would be wholly responsible for the milk transported over said lines, and save the defendant harmless from all claims arising from or connected with the milk business, except those from acci- [63] dents and casualties to its trains or its own neg- ligence ; that he would save the defendant harmless from all liability for loss of life or injury to any person doing busi- ness over its lines on his account; that he would not charge for transportation of milk " rates in excess of those charged by competitive railroads 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 receive, 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 pro- I ill t* 1024 147 FEDERAL REPORTER, 5:1. Opiuiou of the CJourt. fill mote its business ; that it would not permit any of its agents or scrvanl)^ to do any act to prevent or interfere willi llio 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 per- mitted 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 Westcott accom- panying the milk trains as might be necessary for the prompt loading and unloading of such milk, and promptly retransport 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, provided for a submission to arbitration. By its answer the defendant admitted the execution of the contract and alleged as a justification for terminating it (1) that the contract was ultra vires, and contrary to public policy; (2) that it was made in violation of the acts of Con- gress Imown as the "Anti-Trust Act " and the " Interstate Commerce Act;" and (3) that Westcott had violated the contract by entering into other contracts with competitive railroads inconsistent with his duty to the defendant and the obligation of his contract." « -* ♦ * m ♦ « [621 The contention that the contract was void by the act of Congress (Act July 2, 1890, c. G47, 26 Stat. 209 [U. S. Comp. St. 1901, p. 3200]) to "protect trade and commerce against unlawful restraints and monopolies," may be briefly disposed of. The contract undoubtedly operated upon interstate com-, merce as well as upon int>erstate [63] traffic; but if the views which we have expressed are correct as to its meaning and effect, 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 Westcott to diarge such extortionate rates to milk shippers as would dis- courage shippers; and this it did not permit or contemplate. «The matter omitted does not relate to anti-trust law. See the first three paragraphs of the cnyllabus. DELAWARE, L. & w. B. CO. V. KUTTEB. 1025 Opinion of the Court si.mslnt?!M !Y "^' ""''■'"^* contravened the provi- a sposed of Ihe argument for the plaintiif in error is th«f ■ fimTfc^'^^TT *" "''"- ' °f «'«t act (Ac" Feb *, 1887, c. 104, 24 Stat. 380 [U. S. Comn St 1901 \^ qikkix Ss^v th th. J"r'*' "' transporting milk. That act mg hat U.e contract is void if the contentiSla't ifZ ,„ undue and unreasonable preference is sound, the c2ls "t hibited by the section ,s a discrimination between 81.10^^ It was designed to compel every carrier to give^ua riS L Ed 25« TU^ ^ «j ^«< u. &. 51b, 17 Sup. Ct. 822, 42 1^. iM. 2oH, Ihe mere circumstance that there 19 in n J within the meaning 6f t^cf ;r;i";,"~"« act'-l'^n'"'; '*"• 7? """« "^"^^" the'inhibitln S tVe by ir^gularity and partS'^^u^ng^durd'SS to one, or undue disadvantage to the othpr " ,1"''^^^ C^^nerce Com. v. B. cfi O. R. t , us U S 2^ 282 rf"" SnsTh T^t- ^i '''■ ^'"''^■^*'* *" the two X'prohS- ;»;due preference or disadvLtait" rti^s^ make special rates looking ^ hetctl "STi k"'- '^ "^ ' i... 7 1 I 1026 147 FEDEKAIi REFOBTBB, 63. Opinion of the Court. tent interests u|)on the same principles which are regarded as sound and adopted in other trades and piirsiiits." Interstate Commerce Com. v. Alabama Mid, R, R. Go,^ 74 Fed. 715, 21 C. C. A. 51, 41 U. S. App. 453; Id., 168 U. S. 144, 173, 18 Sup. Ct. 45,42 L. Ed. 414. The privileges accorded to Westcott were only those which were incident to the anomalous relations existing between him and the defendant created by the contract. It is quite inconceivable that [64] there were or could have been any shippers of milk who would have been willing or able to undertake his duties and responsibilities. In consideration of his assumption of peculiar obligations and hazards, the defendant gave him exceptional privileges appertaining to his relation as a manager of the traffic ; this was not an undue and unreasonable preference. The assignments of erroF which have been considered arc the only ones which have been argued at the bar or on the brief of counsel. The repudiation of the contract was with- out any justification, for even if the contracts with the New York Central Eailroad Company were theoretically competi- tive, they had been consented to by the officers of the defend- ant. The i*e[>udiatifMi, as has been snid, was aniioiinwd when the cont^^ct had nearly expired, and when the defendant would shortly have secured exclusively for itself all the profits of the valuable traffic built up by Westcott. It was repudiated for sordid motives, and with an arrogance bom of the scorn of conseo«W not go into effect until aflei the termination of the contract in suit, which a -e or ployees or thp rtirl^f ? ^ corporation, agent, officer or em- (Section 3 Imposes a fine upon the (x,rporation, Arm or association ^ Sec. 4. Any president, manager director „r «fhl, "^^'S"*^'*™"-) r«9nn^ «1^ + ^ ^* ^^^^ *^a^ two hundred dollars (^200), nor to exceed one thousand dollirs r«i (V)n\ i "^"*^™ by confinement In the county iTllnnf I ^^^'?^)' ^^ be punished lndIvM;.„?' '' P"<=h»«« Of any article or commodity from any ludlvidual. company or corporation transacting business contearv to a^y provision of the prece<.ing sections of this act shalfoX ,'abte for the price or payment of such article or commodity, and mat Zh this act as a defense to any suit for such price or payment 1030 147 FEDERAL RBPOBTER, 4ir2. Opinion of the Court ** Sec. 7. The fines hereinbefore provided for may be recovered In an action of debt in the name of the people of Illinois. If, upon the trial of any cause instituted under this act to recover the pen- laties as provided for in section 3, the jury shall find for the people, and that the defendant has been before convicted of the violations of the provisions of this act, they shall return such finding with their verdict, stating the number of times they find defendant so con- victed and shall assess and return with their verdict the amoimt of the fine to be imposed upon the defendant in accordance with- said section 3. Provided, that in all cases under this act, a preponderance of evidence in favor of the people shall be sufficient to authorize a verdict and judgment for the people. ** Sec. S. It shall be the duty of the prosecuting attorneys in their respective jurisdictions, and the Attorney General, to enforce the foregoing provisions of this act, and any prosecuting attorney of any count5% securing a conviction under the provisions of this act, shall be entitled to such fee or salary as by law he is allowed for such prosecution. When there Is a conviction under this act, the former shall be entitled to one-fifth of the fine recovered, which shall be paid to him when the same is collected. All fines recovered under the provisions of this act shall be paid into the county treas- ury of the county [498] in which the suit is tried, by the person col- lecting the same, In the manner now provided by law to he used for county purposes." Approved June 11, 1891. Laws 1891, pp. 20G-208. The rulings of the counrt below In sustaining the demurers to each of said 17 pleas, are assigned as errors. Ahmm W, BulMey^ for plaintiff in error. William Braces for defendant in error. Before Baker and Seaman, Circuit Judges, and Quakles, District Judge. QuABLES, District Judge (after stating the facts). We deem it unnecessary to consider the question of plead- ing with respect to the technical character of the seventeenth plea, whether it should be construed as a puis darrein con- tinuance, and whether, therefore, it supplants all defenses theretofore interposed, because the seventeenth plea substan- tially embodies all the material averments of the first 16 pleas, and is sufficient to raise the vital question of law upon which this case must turn. The material facts set out in the several pleas may be put in brief concrete form as follows : The plaintiff corporation is alleged to have been organized CHICAGO WALL PAPER MILLS V. GENL. PAPER CO. 1031 Opinion of the CJourt on the 26th day of May, 1900 in the state of Wisconsin, for the purpose, as stated in its charter, of acting as exclusive sales agent for the paper and paper products thereafter to be produced by 21 certain manufacturing corporations lo- cated in the states of Wisconsin and Michigan engaged in the paper industry ; that its board of directors consisted of representatives of the 21 paper mills, so that for trade pur- poses there was a practical amalgamation of the 21 producing companies; that thereupon, on the same day, pursuant to such confederation, the plaintiff corporation became the ex- clusive sales agent of all such paper mills, with exclusive power to determine the extent of the output, and to fix prices arbitrarily, and that by such confederation, competition be- tween the 21 producing corporations was stifled, and the plaintiff corporation as such sales agent, put in control of 90 per cent, of the paper and paper products manufactured west of the Alleghany Mountains; that immediately after such plamtiff corporation had been so organized and equipped, it came to the city of Chicago, complied with the requirements of the local law, secured a place of business, and has since that time continued to handle and sell such combined product of the 21 mills in Wisconsin, Michigan, Illinois, and other Western states, as contemplated by the agreement of con- federation; that the alleged combination is violative of the statute of Illinois, entitled "An act to provide for the punish- ment of persons, copartners or corporations forming pools, trusts and combines, and mode of procedure and rules of evidence in such cases," approved June 11, 1891, in force July 1, 1891 (Laws 1891, p. 206). It cannot be successfully contended that the contract in suit falls within the sanction of the fifth section. The con- tract thereby denounced as void is plainly one which directly contravenes the earlier sections; one in which the trust takes root, or by which the illicit scheme is organized. The defend- ant below purchased the paper in the ordi- [494] nary course of business. It was a stranger to the alleged unlawful com- bination. The sale of the merchandise had no direct relation to the prohibitions of sections 1 and 2. The same distinction has been drawn under the federal anti-trust act {Hopkim v. United States, 171 U. S. 578, 592, 19 Sup. Ct 40, 43 L. Ed. 1032 147 FEDERAL. REPOBTER, 494. Opinion of tlie CJourt 290; Anderson v. United States, 171 U. S. 6(M, 615, 19 Sup. Ct. 50, 43 L. Ed. 300), and this court has several times held that contracts founded upon a good consideration are col- lateral to the unlawful scheme or combination and not tainted thereby. Dennehy v. McNuUa, 80 Fed. 825, 30 C. C. A. 422, 41 L. K. A. 609 ; Star Brewery Co, v. United Brew- eries, 121 Fed. 713, 58 C. C. A. 133 ; Harris&n v. Glucose Co,, 116 Fed. 304, 53 C. C. A. 484, 58 L. K. A. 915. The real defense tendered by the several pleas is bottomed upon section 6, and it becomes material to analyze this part of the enactment It will be noted at the outset that the structure of sections 5 and 6, is almost identical. Both hinge upon '^ violation of any provisions of the preceding sections of this act." Section 4 metes out punislunent to officers of the offending corporation for any violation of section 1. So here there are three distinct consequences that flow from in- fringement of earlier sections : Under section 4, fine and im- prisonment; under section 5, the avoidance of contract; and under section 6, denial of civil remedy in the courts. They partake of the same nature. They are i>enal inflictions of different kinds, consequent upon a single transgression. The violation contemplated in either case must be such as will sustain the penalty imposed by either section. In other words, if the combination effected in Wisconsin constituted such a violation of section 1 as to warrant the exclusion of the plaintiff company from the courts of Illinois under sec- tion 6, then a direct proceeding might have been instituted under section 4 to punish the officers of such 6ffending corpo- ration. The penal character of section 6 sufficiently appears upon its face. To debar trading corporations from all redress in the courts is a drastic infliction. The same conclusion as to the nature of the section is reached by a legal inference. The title of the statute deals only with punishments and the man- ner of their infliction. If, therefore, section 6 were of a dif- ferent character, it would contravene section 13 of article 4 of the Constitution of Illinois and be of no effect. It is fundamental and elementary that the General Assembly of Illinois has no jurisdiction to provide any punishment for an act done outside the territorial limits of the state. It can- CHICAGO WALL PAPER MILLS V. GENL. PAPER CO. 1033 Opinion of the Court, not project its public policy into another sovereignty. The dereliction charged against the plaintiff below by the several pleas mheres in its contract relations with the 21 producing companies whereby, as claimed, it was intended to suppress competition, restrict the output, and arbitrarily ^x the price of paper. This illicit combination culminated in the organi- zation of the plaintiff corporation and the agreement by which It was to officiate as exclusive sales agent Thereby the combine became an accomplished fact which, for aught that appears, may not have infringed the public policy of Wis- consin. All these things happened five years before the con- tract in suit, and took place within the State of Wisconsin before [495] the plaintiff entered upon any business in Chi- cago. Since that time nothing has happened, certainly noth- ing within the stat« of Illinois, of which section 1 takes cogni- zance. It is argued that the Illinois statute is unconstitu- tional, and that a combination formed in one state to con- trol prices in another states affects interstate commerce and therefore is not subject to state regulation. We are not con- cerned with the constitutionality of this act, if it can, in no event, be applicable to the case at bar. The Supreme Court of Illinois has had occasion to interpret this statute, and the doctrine which it lays down is decisive of the issues here. In People v. Butler Street Foundry Co., 20i 111. 236, 66 N. E. 349, the court say : f^"rJnJ'' fundamental that the Legislature of this state is powerless to pass an enactment making an act committed in a foreign state punishable m that state, or the Legislature of a foreign state to pass able in this state. It is therefore evident that a violation of the offensP h^?f ' forth in this state cannot be punished as 7n original offense n a foreign state, and that the immunity afforded bv the ste L of' tTe'^In nrf ^"th ' ^ ^^'1'"'''' ""^^^ '^ ^^^ Of the other tSodal effPc^ Whii^^-. ^?*'*'*"'* ^^^^^^ ^^ l^^l ^^« no extra- territorial effect. While its terms may be broad enough to include trusts pools combines, etc., formed with parties residing outsWe of lw5^*^;/^^ '^"'*'' ^^ construing it, must necessari?y fonSne it ?o those matters upon which the General Assemblv has power to act niT« ^T\ ^^^' combinations, etc., formed within the stlte of im: nois. In the construction of the statute the courts wHl exclude from the operation thereof subjects or classes upon which the XteLe^^ gene7al^?lrm: oTthe tf''^'^''^^'''^''''''^^'^^^ general terms of the act, unless the d fferent parts of the Rtatnto ?hf f . «*""?'^t«e liable to all the pains and penalties of the act, without regard to the place of its origin. It is therefore apparent that a direct proceeding could not be sustained to subject the ofRcers of the General Paper Company to the penalties of section 4 for an alleged transgression occurring in Wisconsin. The same reasoning must be fatal to a defense based upon section 6. We adopt and foUow the conclusion of the Supreme Court of the state. It results, therefore, that the Illinois anti- trust act, so called, is not available as a defense to this action, and the judgment of the Circuit Court is affirmed. MINES V, SCRIBNER ET AL. 1035 Opinion of the Court MINES V. SCKIBNEE ET AL. (Circuit Court. S. D. New York. July 7. 190a) [147 Fed., 927.] 1. MoNOPOLiEs-AoBEEMENTS IN Reotbawt OP TBADE.-An agreement by the members of a publishers' association controlling 90 oer cent Of the book business of the comxtry, under which ^1 ^^ not to sell to anyone who would cut prices on copyrighted books, nor to anyone who should be known to have sold to others who cut prices, etc., was an agreement relating to interstate trade or ^ Stat, 209 [U. S. Oomp. St 1901, p. 3200] 110^13^'"^°' ^"^^ '" ^'"*' "^ """■ ^' *^''*- °'^- """"P^ 2. Samb^-Conspibacy-Restbaint op TBADE—Defendants became members of an association of book publishers controlling 90 per cent of the book business of the country, which asLiatlon adopted a rule that they would not sell to anyone who c7^^Z on copyrighted books, nor to anyone who should be known to haje sold to others at cut prices. A black list was kept contain- tag the names of such persons, and no one on the black list could rnCTce «'"^'Wey to restraint of interstate trade or com- M^tlzT"^"^ '"''' '" ^"'*' "^ ^'"- ^^' ^°*- ^'^- ^""""^ 8. C0PTKIGHT-EFPEC1--EXTENT OF RIGHTS AO. 7. Kay Maintain Action to Set Aside Fnlawful Transfer of Prop- erty. — A minority stockholder in a corporation may main- tain a suit in equity in behalf of himself and all other stock- holders similarly situated to set aside an alleged unlawful transfer of the property of the corporation in pursuance of a conspiracy between its officers and the transferee in restraint of trade and commerc#, where it is alleged that the corpora- tion, on demand, has refused to bring such suit. Metcalf v. Amer. School-Furniture Co., 108 F., 909. 2—75 8. Same — Multifariousness. — A bill for such relief which also seeks the recovery of treble damages under the Anti-Trust Act of July 2, 1890, is multifarious, since such damages are only recoverable in an action at law by the plaintiff as an indi- vidual, and not as a stockholder, while the equitable relief prayed for is in behalf of the corporation, and, if granted, w^ould inure to the benefit of all the stockholders. * /&. 9. Ho Right of Action Against Trust to Recover Damages. — Section 7 of the Anti-Trust Act (26 Stat, 209), giving to any person injured by any other person or corporation by reason of any- thing forbidden in the act the right to recover treble dam- ages, does not authorize an action against an alleged trust corporation, by one who was a party to Its organization and a stockholder therein, to recover damages resulting from the enforcement by defendant of rights given it by the alleged unlawful agreement. Bishop v. Amer. Preservers Co., 105 F., 845. 2—51 10. Member of a Combination in Violation of Anti-Trust Law may Maintain Suit to Enjoin Infringement of Patent Owned by Complainant. — That a complainant is a member of a com- bination in violation of the Anti-Trust Law of July 2, 1890 (26 Stat, 209), does not give third persons the right to in- fringe a patent of w^hich complainant is owner, nor preclude complainant from maintaining a suit in equity to enjoin such infringement. OencraJ Electric Co. v. Wise, 119 F., 922. 2—205 INDEX — DIGEST. 1039 ACTIONS AND DEFENSES— Continued. 11. Recovery on Collateral Contract.—The act of July 2, 1890, sec- tion 1 (26 Stat, 209), known as the " Sherman Anti-Trust Act," does not invalidate, or prevent a recovei-y for the breach of a collateral contract for the manufacture and sale of goods by a member of a combination formed for the pur- pose of restraining interstate trade in such goods. Hadley Dean Plate Glass Co. v. Highland Glass Co., 143 F., 242. 2—995 See also Jayne v. Loder, 149 F., 22. 3. By illegal combinations. 12. Can not Enforce Illegal Contract.— An illegal combination or trust can not resort to equity to enforce a contract or sale calculated to perpetuate the illegal features of the combi- nation. Amer. Biscuit & Mfg. Co. v. Klotz, 44 F., 721. 1—2 13. May Recover on Collateral Contracts the Price of Goods Sold.— A violation of the Sherman Anti-Trust Act of July 2, 1890 (26 Stat, 209), by the formation of a combination in restraint of trade, by which a penalty is incurred under the statute, does not preclude the company thus illegally formed from recovering on collateral contracts for the purchase price of goods. Connolly v. Union Sewer Pipe Co., 184 U. S., 540. !>. e 2—118 14. Same.— Nor does the illegality, at common law, of such a com- bination formed by corporations and persons in restraint of trade, preclude it from recovering the purchase price of goods sold In the course of business. 75^ m 4- By the United States. 15. The right to bring suits in equity for violations of the Anti- Trust Act of July 2, 1890, is vested in the district attorneys of the United States. Pidcock v. Harrington, 64 F., 821. \ 377 16. The right to bring suits for injunction under section 4 of the act of July 2, 1890 (26 Stat, 209), is limited to suits Insti- tuted on behalf of the Government. Greer, Mills & Co y Stoller, 11 F., 1. ^_^^ 17. Same.— The only party entitled to maintain a bill of injunction for an alleged breach of the Anti-Trust Act of 1890 is the United States, by its district attorney, on the authority of the Attorney-General. Gulf, C, d S. F. Ry. Co. v. Miami 8. S Co., 86 F., 407. i_^23 18. The intention of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), was to limit direct proceedings in equity to prevent and restrain such violations of the Anti-Trust Act as cause Injury to the general public, or to all alike, merely from the suppression of competition in trade and commerce among 1040 INDEX — ^DIGEST. ACTIONS ANB BEFENSES-Contiimed. the several States and with foreign nations, to those insti- tuted in the name of the United States, under section 4 of the act by district attorneys of the United States, acting nnder the direction of the Attorney-General; thus securing the enforcement of the act, so far as such direct proceedings in equity are concerned, according to some uniform plan, operative throughout the entire country. Minnesota v. Northern Securities Co., 194 U. S., 48. ^ 2 — 533 5. By States, 19. A State can not maintain an action in eqnity to restrain ft corporation from violating the provisions of the act of Jnly 2, 1890| on the ground that such violations by decreasing competition would depreciate the value of its public lands and enhance the cost of maintaining its public institutions, the damages resulting from such violations being remote and indirect and not such direct actual injury as is provided for in section 7 of the act. Minnesota v. Northern Securities Co,, 104 U. S.. 48. 2—533 80. Municipal Corporation may Maintain Action for Damages under Section 7, Act of 1890. — A municipal corporation en- gaged In operating water, lighting, or similar plants, from which a revenue is derived, is, in relation to such matters, a business corporation, and may maintain an action under section 7 of the Auti-Trust Act of July 2, 1890 (26 Stat, 210), for injury to its "business" by reason of a combina- tion or conspiracy in restraint of interstate trade or com- merce made unlawful by such act. dtp of Atlanta v. Chat- tanooffa Foimdru e unlawful in themselves, yet the purpose for which they were alleged to be made, namely, to compel plaintiff to join in the agreement for fix- ing arbitrary prices, and to injure and destroy its business if it refused to do so, was oppressive and unjust, and ren- dered the acts of defendants unlawful under both sections of the statute. 16. 81. The Only Bemedy to Party other than the United States is a Suit for Damages. — Under the act of July 8, 1890, entitled "An act to protect trade and commerce against unlawful re- straints and monopolies," the only remedy given to any other party than the Government of the United States, is a suit for threefold damages, costs, and attorney's fees. Oulf, C, & 8. F. Ry. Co. v. Miami 8, 8. Co., 86 F., 407. 1—823 38. The only remedy of a private individual to restrain acts for- bidden by the Anti-Trust Act of 1890 is an action at law for damages. Pidcock v. Harrington, 64 F., 821. 1 — 377 33. The remedy of a private party under the Anti-Trust Act of 1890 is an action at law for damages. Southern Ind. Exp. Co. ▼. 11. 8. Ewp. Co., 88 F., 659. 1—862 34. By Direct Action. — A recovery of the treble damages authorized by the Sherman Anti-Trust Act of July 2, 1890, section 7 (26 Stat. L., 209, chap. 647), in case of injury sustained by vio- lation of the act, can be had only by direct action, and not INDEX — ^DIGEST. 104a ACTIONS ANB DEFENSES— Continued. by way of set-off in an action brought for the price of goods by a company illegally formed in violation of the act— espe- cially when the State practice does not permit the set-off of unliquidated damages. Connolly v. Union 8etcer Pipe Co., 184 U. S., 540. 8—118 35. Municipal Corporation may Maintin Action for Damages under Section 7, Act of 1890. — A municipal corporation en- gaged in operatiDg water, lighting, or similar plants, from which a revenue is derived, is, in relation to such matters, a business corporation, and may maintain an action under section 7 of the Anti-Trust Act of July 2, 1890 (26 Stat, 210), for injury to its "business" by reason of a combina- tion OP conspiracy in restraint of interstate trade or com- merce made unlawful by such act. City of Atlanta v. Chat- tanooga Foundry cC- Pipeworks, 127 F., 23. 8 — ^299 38. Statutory Limitations Governed by the Laws of the State in which Action is brought. — An action under section 7 of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), providing 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, ♦ * ♦ and shall recover threefold the damages by him sustained," is not an action for a penalty or forfeiture, within section 1047, Bevised Statutes, prescribing a limita- tion of five years for a " suit or prosecution for any penalty or forfeiture, pecuniary or otherwise, accruing under the laws of the United States," but one for the enforcement of a civil remedy for a private injury, compensatory i^ its pur- pose and effect, the recovery permitted in excess of damages actually sustained being in the nature of exemplary damages, which does not change the nature of the action, and such action is governed as to limitation by the statutes of the State in which it is brought City of Atlanta v. Chattanooga Foundry and Pipe Co., 101 F,, 900. 8—11 Affirmed by Circuit Court of Appeals, 127 F., 23 (8—299). The judgment of the circuit court was, however, reversed, but upon other grounds — a construction of section 4470, Tennessee Code. Affirmed by Supreme Court (208 U. S., 390). 37. Same— Every Member of the Combination Liable for Damages.— Every member of an illegal combination in restraint of inter- state trade or commerce in violation of the Anti-Trust Act is liable for the damages resulting to the business or property of a plaintiff by reason of such combination, and it is imma- terial that there were no direct contract relations between plaintiff and defendant City of Atlanta v. Chattanooga Foundry and Pipe Works, 127 F., 23. 8-299 INDEX^ — ^DIGEST. ACTIONS AND DEFENSES— Continued. 38. Same — Measure of Recovery for Injury to Business.— If the ef- fect of an illegal combioation between manufacturers to prevent competition in tlie sale of a commodity which is a subject of interstate commerce l>e to enhance the price of such commodity to a purchaser, he is entitled to recover the difference between the price paid and the reasonable price under natural competitive conditions, as an injury to his business, whether such business is interstate or not, provided the transaction by which the purchase was made was in- terstate. 16. 39. Conspiring to Injure Another in Business — Mailing Printed Circulars. — The action of an aasociation of manufacturers in adopting 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 In printing such resolution in circulars, and mailing the same to other manufacturers and customers of the dealer, whereby his business was injured, constituted an illegal combination or conspiracy in resti-aint of interstate and foreign coumierce, and gives the person injured a right of action in a circuit court of the United States, under the Anti-Trust Law of 1890, to recover the damages sustained. Q-ihbs v. McNeeley, 102 F., 594. 2—23 Verdict for defendant directed. 107 F., 210 (2—71), but Reversed by Circuit Court of Appeals, 118 F., 120 (2—194). 40. Complaint Fatally Defective where it Fails to Show that Plain- tiff Suffered Bamage. — A complaint in a civil action, based on the Anti-Tnist Law of 1890, alleging an illegal combina- tion by defendants in restraint of trade, is fatally defective where it fails to show that plaintiff has suffered damage by reason of such combinatibn. lb. 41. Treble damages are recoverable under the Anti-Trust Act of 1890 only in an action at law by the plaintiff as an indi- vidual and not as a stockholder in a corporation violating that act. Metcalf v. Jmer. Bchoo! Furniture Co., 308 F., 900. a— 75 48. Where Manufacturer Refused to Sell because Complainant was not a Member of Trust Association. — ^A dealer in tiles, mantels, and grates in San Francisco, to whom a manufac- turer in another State refused to sell tiles on the sole ground that he was not a member of an association to which he belonged, which association sought to control the output and regulate the prices thereof in California and adjoining States, Held, entitled to damages under section 7 of the Anti-Trust Act of 1890. Montague v. Lowrp, 115 F., 27. 2—112 Affirmed, 193 U. S., 38 (2—327). See also Bishop v. Amer. Preservers Co., 105 F., 845. 2—51 INDEX ^DIGEST. 1045 ACTIONS AND DEFENSES— Continued. 7. Equity — Injunctions, etc. 43. Private Individuals no Remedy in Equity under the Statute. — The Anti-Trust Act of July 2, 1890, confers no right upon private individuals to sue in equity for the restraint of acts forbidden by that statute. PidcocJc v. Harrington, 64 F., 821. 1—377 44. Private Party no Remedy in Equity. — The Anti-Trust Act of July 2, 1890, does not authorize a court of equity to enter- tain a bill bj' a private party to enforce its provisions. Southern Ind. Exp. Co. v. JJ. S. Exp. Co., 88 F., 659. 1—802 45. The right to bring suits for injunction under section 4 of the act of July 2, 1890 (26 Stat, 209), is limited to suits instituted on behalf of the Government. Greer, Mills d Co. v. Stoller, . 77 F., 1. . 1—620 48. The only party entitled to maintain a bill of injunction for an alleged breach of the act of July 2, 1890 (26 Stat, 209), is the United States, by its district attorney, on the authority of the Attorney-General. Gulf C. d S. F. Ry. Co. v. Miami 8. 8. Co., 86 F., 407. 1—824 47. Suit Enjoining Infringement Maintainable by Owner of Patent though Member of Illegal Combination. — Complainant though a member of a combination in violation of the Anti- Trust Law of July 2, 1890, can maintain a suit in equity to enjoin an infringement of a patent owned by him. General Electric Co. v. Wise, 119 F., 922. 2—205 8. Purchases from, or services rendered hy, illegal corporations. 48. Can not Retain Goods and Recover Price Paid. — One purchas- ing liquors from an illegal combination of distillers, which controls the marliet and prices, though impelled thereto by business needs and policy, enters into the contract voluntar- ily, and can not retain the goods, and recover the price paid, or any part of it, either on the ground that the combination was illegal, or the price excessive. 77 Fed., 700, affirmed. Dennehy v. McNulta, 86 F., 825. 1 — 855 49. Rebate vouchers issued by a distilling company to customers, by which it promised to refund a certain sum per gallon on their purchases at the end of six months, on condition of their purchasing exclusively from the company during that time, can not be enforced, either at law or in equity, where the condition has not been performed, though such condition be illegal, as in restraint of trade ; there being no other con- sideration for the promise. 77 Fed., 700, affirmed. lb. 1046 INDEX — ^DIGEST. ACTIONS AHB DBFENSES-t'outinueii. m. Must Pmy Heatonable Value of Services— Towage— One who re- quests and accepts the services of a tug for towage purposes can not escape paying the reasonable value of the services rendered on the ground that the tug owners are members of an association which Is illegal under the act of July 2, 1890, relating to trusts and monopolies. The Charles E. Wise- wall, 74 F., 802. 1—608 Afflnned. 86 F.. 671 (1.-850). II. S8. 9. Patents — Actiont for infrlnffement. Third Party ean not Enjoin Combination from Bringing Suit for Infringement of its Patents.— The fact that a corporation owning letters patent upon a particular liind of machinery has entered into a combination with other manufacturers thereof to secure a mohopoly in its manufacture and sale, and to that end has acquired all the rights of other manu- facturers for the exclusive sale and manufacture of such inachines under patents, will not entitle a stranger to the combination to enjoin the corporation from bringing any suits for infringement against hhn or his customers. Strait V. yaltoiiai Harrow Co., 51 F., 819. 1—62 Bee also National Folding Box d Paper Co. v. Robertson, m W„ 985 (2 — 4) ; and Otis Elevator Co, v. Qeiger, 107 F., 131 (2—66). Owner of Patent, though Member of Illegal Combination, ean Maintain Action for Infringement.— That a complainant is a member of a combination In violation of the Anti-Trust Law of July 2, 1890, does not give third persons the right to in- fringe a- patent of which he, the complainant, is owner, nor preclude complainant from maintaining a suit in equity to enjoin such Infringement General Electric Co. v. Wise, 119 F., 922. 2—205 Combination Organized to Receive Assignments of Patents can not Maintain Action for Infringement against Assignor. — A combination among manufacturers of spring-tooth har- rows, whereby a coi-poration, organized for the purpose, be- comes the assignee of all patents owned by the various man- ufacturers, and executes licenses to them, so as to control the entire business and enhance prices, is void lx)th as to the assignments and licenses, so that the corporation can not maintain a suit against one of its assignors who violates the agreement, for infringement. National Harrmc Co. v. Hench., 84 F., 226. 1—746 ^ee also National Harrow Co. v. Quick,, 67 F., 130 (l— 443). INDEX — DIGEST. 1047 ACTIONS AND DEFENSES— Continued. 10. Oenerally. S4# What must be Shown.— To vitiate a combination, such as the Anti-Trust Act condemns, it need not be showU that the com- bination, in fact, results, or will result, in a total suppres- sion of trade or in a complete monopoly, but it is only essen- tial to show that by its necessary operation it tends to re- strain interstate or international trade or commerce, or tends to create a monopoly in such trade or commerce, and to de- prive the public of the advantages that flow from free compe- tition. Northern Securities Co. v. United States, 193 U. S., 197. (Harlan, Brown, McKenna, Day.) 2 — 340 55. Same. — In order to maintain this suit 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 restraint is its necessary effect. U. 8. v. Trans-Mo. Ft. Assn., 166 U. S., 290. 1—649 See also Pleading and Practice. 56. A suit brought by the Attorney-General of the United States to declare the Northern Securities Co. combination illegal under the act of July 2, 1890, is not an interference with the con- trol of the States under which the railroad companies and the holding company were, respectively, organized. Northern Securities Co. v. United States, 193 U. S., 197 (Brewer, concurring ) . 2 — 342 57. No Eight of Action Growing out of Suits against Plaintiif which have not been Decided.— The Anti-Trust Act of July 2, 1890 (26 Stat, 209), which gives a right of action to any person injured by acts in violation of its provisions, does not authorize suit where the only cause of action is the bringing of two suits which have not been decided. Bishop v. Amer. Preservers' Co., 51 F., 272. 1 49 See also Indictments. II. Defenses. 1. Indeflniteness, duplicity. 58. Indeflniteness. — In an action by a corporation for the infringe- ment of elevator patents, an answer alleging as a defense that the plaintiff is an unlawful combination in restraint of trade and in violation of the Sherman Anti-Trust Law (26 Stat, 209), but which fails to state who are in the combina- tion in the agreement characterized as unlawful, and does not disclose fully and in detail that the combination was en- tered into after the act took effect, and all the facts neces- sary to show its illegality, is insuflicient for indeflniteness. Otis Elevator Co. v. Geiger, 107 F., 131. 2—66 1048 INDEX — ^DIGEST. ACTIONS AND DEFENSES -Continued. II. Defenses— Continued. in. Duplicity. — A declaration in an action brought under section 7 of the Sherman Anti-Tnist Act (act July 2, 1890, c. 647, 26 Stat, 210) to recover damages for a violation of section 1 of the act, which alleges in a single count that defendant en- tered into a " contract, combination, and conspiracy " in re- straint of trade, is bad for duplicity. Rice v. Stwndard Oil Co,, 134 F., 464. 2—633 60. Same.— The Anti-Trust Act of 1890 makes a distinction between a contract and a combination or conspiracy in restraint of trade. /j. MULTIFABIOUSNESS. 8€€ PLEADING AND PRACTICE. 2. Contract in violation of Anti-Trust Act, or of an act of Congress. 81. The defense that a contract is in violation of the act of Con- gress of July 2, 1890 (26 Stat, 209), to protect trade and commerce against unlawful restraints and monopolies, which malies illegal every contract violative of its provisions, may be set up by a private individual when sued thereon, and, if proved, constitutes a good defense to the action. Bement v. Kational Harrow Co., 186 U. S., 70. 2 — 170 02. Same. — ^Anyone sued upon a contract may set up as a defense that it is a violation of an act of Congress. /&. (169) 3. Illegal cohihinaiion — Purchases from, services. «3. Payment for Services can not be Avoided because Performed by a Trust — ^Towage. — One who requests and accepts the serv- ices of a ing for towage pui^joses can not escape paying the reasonable value of the services rendered on the ground that the tug owners are members of an association which Is illegal under the act of July 2, 1890, relating to trusts and monopolies. The Charles E. Wiseicall, 74 F., 802. 1—608 Affirmed, 86 F., 671 (1—850). 64. Payment of Note for Goods Purchased can not be Avoided be- cause Bought from a Trust.— A note made for a balance due on goods bought from a corporation can not be avoided merely because the latter is a trust organized to create and carry out restrictions in trade contrary to the Anti-Trust Act of July 2, 1890, as that only covers contracts which are themselves in restraint of trade, and does not affect those which "merely indirectly, remotely, incidentally, or collat- erally regulate, to a greater or less degree, interstate com- merce between the States." Union Sewer-Pipe Co. v. Cofi- nellp, 99 F., 354. ^—l Affirmed, 184 U. S., 540 (2—118). iSfee also Dennehy v. McNulta, 86 F., 825 (1—885). INDEX — DIGEST. 1049 ACTIONS AND DEFENSES— Continued. II. Defenses —Continued. 65. A« contract for the sale of merchandise is not rendered illegal by the fact that the selling corporation is a trust or mo- nopoly organized in violation of law, either Federal or State ; the contract of sale being collateral and having no direct relation to the unlawful scheme or combination. Chicago Wall Paper Mills v. General Paper Co., 147 F., 491. 2—1027 See also Continental Wall Paper Co. v. Lewis Voight d So)i8 Co., 148 F., 940. 66. Recovery on Collateral Contract by Member of Combination in Restraint of Interstate Trade.— The act of July 2, 1890, sec- tion 1 (26 Stat, 209) does not invalidate or prevent a recov- ery for the breach of a collateral contract for the manufac- ture and sale of goods by a member of a combination formed for the purpose of restraining interstate trade in such goods. Hadley Dean Plate Glass Co. v. Highland Glass Co., 143 F., 242. 2—995 Patents — Illegal combination. 67. Infringement of Patent— No Defense that the Owner is an Illegal Corporation under Anti-Trust Law. — The fact that the owner of a patent is a corporation alleged to have been formed in violation of the Anti-Trust Law% and that the patent is alleged to have been assigned to it in furtherance of the illegal purpose to create a monopoly and control the price of an article of commerce, is not available to an in- friiiger of such patent to defeat a suit for the infringement. National Folding-Bow d. Paper Co. v. Robertson, 99 F., 985. 2—4 68. Same. — In an action by a corporation for the infringement of elevator patents, a private defendant was not entitled to urge as a defense that plaintiff was a corporation organized merely for the purpose of holding the legal title to various elevator patents alleging to have been infringed, for the pur- pose of controlling sales and enhancing prices of elevators and apparatus, without itself engaging in the manufacture and sale. of such appliances, in violation of the Sherman Anti-Trust Law (26 Stat., 209), since until the United States has acted and sought to prosecute the plaintiff for violation of such act an infringer of the plaintiff's patent will not be permitted to raise such issue as a defense thereto. Otis Elevator Co. v. Geiger, 107 F., 131. 2 — 66 69. Infringement Suit can not be Maintained by Combination of Patent Owners against Assignor. — ^A combination among manufacturers of spring-tooth harrows, whereby a corpora- tion, organized for the purpose, becomes the assignee of all patents owned by the various manufacturers, and executes licenses to them, so as to control the entire business and en- t ARA INDEX — DIGEST. ACTIONS AHB I>EFEirSB8~€ontiiiiientiniied. tracted to carry it on as the purchaser's ageot, for a salary. After operating under this arniugement for a time, he re- pudiated the sale, resumed possession under the old firm name, and refused to account to complainant. The bill was brought to enjoin him from asserting a hostile claim, for an accounting, and a receiver. Defendant, and his partner as intervenor, tiled a cross-bill for rescis-^iion of the sale for fraudulent representations, and tendereil back the stock. Complainant was practically a " trust," organized to mo- nopolize the business, and had already secured control of 35 leading bakeries in 12 different Statw. Held, that, while a case was made for a receiver, pending litigation between ordinary parties, the prayer would be denied, as equity would not encourage a combination in restraint of trade, and probably illegal, under act of Congress, July 2, 1890, " to protect trade and commerce against unlawful restraints and monopolies," and act of Ijouisiana, July 5, 1890, for the same purpose. Amer, Biscuit d Ufg, Co. v. Klotz, 44 F.. 721. 1—2 19. A railroad company, belonging to an illegal combination in violation of the Anti-Trust Law, can not invoke the aid of a Federal court of equity for the protection of its Tighti claimed under contracts which were the direct result and evidence of such unlawful combination. Delaware, L. — Continued . exorbitant i)riees. Held, that the combination charged con- stituted a Tiolation of the Federal Anti-Tmst Act, its effect being to direitly restrain interstate commerce, and that the complaint stated a cause of action thereunder for the re- covery of damages alleged to have resulted to plaintiffs. Ellis V. Itiman, PouUen d Co,, 131 F., 182. il— 577 Reversing, 124 F., 956 {8—208). II. Same.— In determliiiiig whether or not a oomhination fs in ¥iolation of the Federal Anti-Tmst Law, as in restraint *of interstate commerce. It is immaterial that such is not its uHiniate object, which is In most cases to increase the trade and profits of tlie parties to such combination; nor is It material to ascertain what proportion the resulting restraint of interstate commerce bears to other results. The true inquiry Is whether it tends directly to appreciably restrain interstate trade, and, if it does, it is within the statute, although such effect may not be so considerable as its other effects. /6. St. medCedaj SMngles.— An association of manufacturers of and dealers in red cedar shingles in the State of Washington formed for the purpose of controlling the production and the price of such shingles, which are made only in that State, but are principally sold and mied in other States, and which, by its acticn in closing the mills of Its memliers, has re- duced the production, and has also arbitrarily increased the prices at which the product is sold, is a combination in re- straint of interstate conmierce, and unlawful under the Anti- Trust Law of July 2, 1890. Oibhs v. McXeeleu, 118 F., 120. fl> HVi A I trt 3S. Tiles— Combinations to Raise Prices of Tiles, etc., and Control Output.— A complaint alleging that members of an associa- tion have conspired and combined to raise the prices of tiles, mantels, and grates, to control the output, and to regulate the prices thereof, with the intent to monopolize the trade and commerce between the other States and California in regard thereto, as well as to arbitrarily fix their prices in- dependently of their natural market value, brings the case within the Anti-Tmst Act of July 2, 1890 (26 Stat, 209). Loicrif V. Tile, Mantel d Qrate Asm. of Cal, 98 F., 817. 1—995 34. Same— Combination of Tile Manufacturers in California and Adjoining States Agreeing not to Sell to or Purchase from Dealers not Members.— The Tile, Mantel and Grate Associa- tion of California was organized by defendants, who were dealers in tiles and similar articles, for the declared purpose of uniting "all acceptable dealers" in tiles, fireplace fix- tures, and mantels in San Francisco and vicinity (within INDEX — ^DIGEST. 1061 COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.— Cont'd. II. Prohibited — Continued, a radius of 200 miles), and all American manufacturers of tiles and fireplace fixtures. The articles prescribed that other local dealers who had an established business and car- ried a stock of a stated Value, and who were " acceptable," might, on motion of a member, be permitted to join, and that all manufacturers of tiles in the United States might become members by signing the constitution and paying an entrance fee. The local members were bound by the articles not to buy goods from any manufacturer who was not a member nor to sell goods to other dealers not members at less than list price, which was about double the market price, and the manufacturing members were bound not to sell to any dealer within the prescribed territory who was not a member. Held, That such association was a combination in restraint of trade among the States, illegal under section 1 of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), and also an attempt to monopolize a part of the trade and commerce among the States, within the prohibition of section 2, by shutting out from such trade all local dealers who were not . member?, and that defendants were liable in damages, under section 7 of the act, to such a dealer to whom a manufac- turer in another State refused to sell tiles, as it had pre- viously done, on the sole ground that such dealer was not a member of the association. Motftague v. Loicry, 115 F., 27. 2—112 Affirming Lowry v. Tile, Mantel and Grate Assn. of CaL, 106 F., 38 (2—53). 35. Same — An Association of Dealers in Tiles Agreeing Not to Pur- chase from Nonmembers or to Sell to Them Except at an Advance of 50 per cent on Price to Members.— An association of wholesale dealers in tiles, mantels, anxl grates in Cali- fornia and vicinity, and manufacturers in other States, of tiles and fireplace fixtures, in which the dealers agree not to purchase from manufacturers not members of the associa- tion, and not to sell unset tile to nonmembers for less than list prices, which are more than 50 per cent higher than prices to members, while the manufacturers agree not to sell their products or wares to nonmembers at any price, under penalty of forfeiture of membership, is an agreement or combination in restraint of trade within the meaning of the Anti-Trust Act of July 2, 1890 (26 Stat, 209). Montague d Co. V. Lowry, 193 U. S., 38. 2—327 86. Same— Where the Sales were Made within the State.— Although the sales in question were within the State of California and although such sales constituted a very small portion of the trade involved, the agreement of manufacturers without the State not to sell to anyone but members was part of 1062 INDEX — DIGEST. COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.-Cont'd. II. Pbohibited — Continued. a scheme which included the enhancement of the price of unset tiles by the dealers within the State, and the whole thing was so bound together that the transactions within the State were inseparable and became a part of a purpose which when carried out amounted to, and was, a combination in restraint of interstate trade and commerce. AMyston Pipe & Steel Co. v. United States, 175 U. S., 211» followed; Hopkins v. United States, 171 U. S., 578 j Ander- son V. United States, 171 U. S., G04, distinguished. lb. 87. Same. — The parties aggrieved, being a firm of dealers in tiles, mantels, and grates, in San Francisco, whose members had never been aslvcd to join the association and who bad never applied for admission therein, and which did not always carry |3,0C0 worth of stock, as required by the rules of the association as one of the conditions of membership, are en- titled to recovery under section 7 of the act of July 2, 1890. [b. 38. Wooden Dishes. — A contract made in pursuance of a combina- tion of manufacturers, seelving to restrict the production and keep up the prices of wooden dishes throughout the .country, whereby a manufacturer was guaranteed a certain sum as dividends on his stock in the central company in consideration of the closing of his factory for a year, was contrary to public policy and therefore unlawful, and would not be enforced by the courts. Cravens v. Carter-Crume Co,, 92 F., 479. 1—983 Wall Papeb. See Continental Wall Papeb Co. v. Lewis VoiGHT & Sons Co., 148 F., 939. Licorice Paste. See U. S. u. MacAndrews & Forbes Co., 149 F., 824. 2. Combinations, contracts, etc., eliminating competition in bidding. 39. Combination of Manufacturers — Dividing Territory and Al- lotting Contracts by Pretended Bids. — The formation of a combination by a number of companies manufacturing iron pipe in different States, whereby the territory in which they operate (comprising a large part of the United States) is divided into " reserved " cities and " pay " territory, the re- served cities being allotted to particular members of the combination, free of competition from the others, though provision is made for pretended bids by the latter at prices previously arranged, and when all offers to purchase pipe in the pay territory are submitted to a committee, which determines the price, and then awards the contract to that member of the combination which agrees to pay the largest " bonus," to be divided among the others, is unlawful, both at common law and under the act of 1890, against trusts and INDEX — DIGEST. 1063 COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.— Cont'd. II. Prohibited — Continued. monopolies. U. S. v.' Addpston Pipe and Steel Co., 85 F., 271. 1—772 Reversing, 78 Fed., 712 (1— C31). 40. Combinations to Enter into Public Bidding for Contracts, but Where only One of the Combination Really Bids, the Others Being Required to Bid Above Him. — An agreement or com- bination between corporations engaged in the manufacture, sale, and transportation of iron pipe, under which they enter into public bidding for contracts, not in truth as competitors, but under an arrangement which eliminates all competition between them for the contract and permits one of their num- ber to malvc his own bid, while the others are required to bid over him, is in violation of the Anti-Trust Act of July 2, 1890, so far as it applies to sales for delivery beyond the State in which the sale is made. Addiston Pipe and Steel Co. V. U. S., 175 U. S., 211. 1—1000 Allirming 85 F., 271 (1—772). 41. Same. — A combination may Illegally restrain trade by prevent- ing competition for contracts and enhancing prices, although it does not prevent the letting of any particular contract. lb. 42. Same — Where Goods are to be Delivered in the State.-^A com- bination to restrain competition in proposals for contracts for the sale of certain articles which are to be delivered in the State in which some of the parties to the combination reside and carry on business is not, so far as those members are concerned, in violation of the Anti-Trust Law, although the contract may be awarded to some party outside the State as the lowest bidder. lb. 43. Same. — Any agreement or combination which directly operates, not alone upon the manufacture, but upon the sale, trans- portation, and delivery of an article of interstate commerce, by preventing or restricting its sale, thereby regulates inter- state commerce to that extent, and thus trenches upon the l)ower of the national legislature, and violates the statute. lb. 44. Same. — When the direct, immediate, and intended effect of a contract or combination among dealers in a commodity is the enhancement of its price, it amounts to a restraint of trade in the commodity, even though contracts to buy it at the enhanced price are being made. • /ft 45. Same. — The contracts considered in this case, set forth in the statement of facts and in the opinion of the court, relate to the sale and transportation toother States of specific articles, not incidentally or collaterally, but as a direct and imme- diate result of the combination entered into by the defend- ants; and they restrain the manufacturing, purchase, sale, or exchange of the manufactured articles among the several 1064 INDE^ — ^DIGEST. COMBINATIONS, CONSPIBACIES, CONTBACTS, ETC.— Cont'd. II. Prohibiteii — Continued. States, and enhance their value, and thus come within the provisions of the "act to protect trade and commerce against unlawful restraints and monopolies." lb, 46. Same.— The judgment of the court below, which perpetually enjoined the defendants In the court below from maintain- ing the combination in cast-iron pipe as described in the petition, and from doing any business under such combina- tion, is too broad, as it applies equally to commerce which is wholly within a State as well as to that which is interstate or international only. /ft. 47. Agreement Between live-Stock Buyers not to Bid Against Each Other, etc. — ^An agreement tetween corporations and indi- viduals, etc., engaged in buying live stock at divers points thronghont the TTnited States, to refrain from bidding against each other in the purchase of cattle is combination in re- straint of trade; so also their agreement to bid up prices to stimulate shipments, intending to cease from bidding when the shipments have arrived, and the same result fol- lows from the conibiuiition of defendants to fix prices upon and restrict the quantities of meat shipped to their agents • or their customers. Being restriction upon competition, such agreements are combination in restraint of trade. U. 8. v. Swift d Co., 122 F., 529. 2—237 48. Same.— Eestraint of trade is mot dependent upon any considera- tion of reasonableness or nnreasonableness in the combina- tion averred, nor is it to be tested by the prices that i-esult from the combination. The statute has no concern with prices, but looks solely to competition and to the giving of eomi)etition full play by making illegal any effort at re- striction upon competition^ /ft. 4S. Same. — A combination of a dominant proportion of the dealers in flresh meat thronghont tlie United States not to bid against, or only in conjunction with, each other in order to regulate prices in and Induce shipments to the live-stock markets in other States, to restrict shipments, establish uni- form rules of credit, make uniform and improi)er rules of cartage, and to get less than lawful rates from railroads to the exclusion of comi^etitors with Intent to monopolize commerce among the States, is an illegal combination within tlie meaning and prohibition of the act of July 2, 1890 (26 Stat, 209) , and can be restrained and enjoined in an action by the United States. Stvift d Co, v. United States, 196 U. S., 375. a— 041 iO. Same. — It does not matter that a combination of this nature embraces restraint and monopoly of trade within a single State if it also embraces and is directed against commerce among the States. /ft^ INDEX — DIGEST. 1065 COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.— Cont'd. II. Prohibited— Continued. 51. Same.— The effect of such a combination upon interstate com- merce is direct and not accidental, secondary, or remote as in Vmtcd States v. E. V. Knight Co., 156 U. S., 1. /ft. 52. Same.— Even if the separate elements of such a scheme are law- ful, when they are bound together by a common intent as parts of an unlawful scheme to monopolize intei-state com- merce the plan may make the parts unlawful. /ft. 53. Same.— When cattle are sent for sale from a place in one State, with the expectation they will end their transit, after pur- chase, in another State, 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 constantly recurring course, it constitutes interstate commerce, and the purchase of the cattle is an incident of such commerce. /ft. S, Contracts, etc., in restraint of interstate trade or commerce. 54. Contracts, Combinations, etc.. Against Public Policy and Void Under the Common Law.— The contracts, combinations in the form of trust or otherwise, and conspiracies in restraint of trade declared to be illegal in the Anti-Trust Act of July 2, 1890 (26 Stat, 209), are the contracts, combinations, and conspiracies in restraint of trade that had been declared by the courts to be against public policy and void under the common law before the passage of that act. V. S. v. Trans- Mo. Ft. Assn., 58 F., 58. 1—186 Case reversed, 1G6 U. S., 290 (1—648). 65. Same.— The test of the validity of such contracts or combina- tions is not the existence of restriction upon competition imposed thereby, but the reasonableness of that restriction under the facts and circumstances of each particular case. Public welfare is first considered, and, if the conti-act or combination appears to have been made for a just and hon- est purpose, and the restraint upon trade is not specially in- jurious to the public, and is not greater than the protection of the legitimate interests of the party in whose favor the restraint is imposed reasonably requires, the contract or combination is not illegal. Shiras, district judge, dissent- ing on the ground that this rule is not applicable to corpora- tions charged with public duties. /^ 56. Agreements Legal when Made which Violate Act of 1890.— The agreement of the Trans-Missouri Freight Association, in regard to establishing and maintaining railroad rates' though legal when made, became illegal on the passage of the act of July 2, 1890, and acts done under it after that statute became operative were done in violation of it U. S. V. Trans-Mo. Ft. Assn., 166 U. S., 290. 1—648 57. Contracts in Restraint of Trade— At Common Law.— Contracts that were in unreasonable restraint of trade at common law 1066 INDEX — DIGEST. COMBINATIONS, CONSPIBACIES, CONTRACTS, ETC.— Cont'd. II. Prohibited— Continued. were not unlawful in tke sense of Siting criminal, or as giv- ing rise to an action for damages to one prejudicially affected tliereby, but were simply Void and not enforceable. U. S. v. AMi/-^ion Pipe and Steel Co., 85 ¥., 271. 1—772 S8. Same. — ^The effect of the Anti-Trust Law of 1890 is to render such contracts, as applied to interstate connnerce, unlawful in an affirmative or positive sense, and punishable as a mis- demeanor, and also to create a right of civil action for dam- ages in favor of persons Injured thereby, and a remedy by injunction in favor both of private i)ersons and the public against the execution of such contracts and the maintenance ' of such trade restraints. /&. S0. Contracts or combinations which impose any restraints what- ever upon interstate commerce are unlawful under the Anti- Trust Law of July 2, 1800 ; and it is immaterial whether or not the restraint is a fair and reasonable one, or whether it has actually resulted in increasing the price of the commodity dealt in. V. IS. v. Coal Deulcrn' Ahsu. of CaL, 85 F., 252. 1—719 60. Contracts which operate as a restraint upon the soliciting of orders for, and the sale of, goods in one State, to be deliv- ered from another, are contracts in restraint of^iterstate commerce, within the meaning of the act of July 2, 1890. U. S. V. E. C. Kniffht Co., 15 Sup. Ct, 249 ; 15G U. S., 1, dis- tinguished. U. S. V. A4dyston Pipe d Steel Co., S5 F., 271. 1—772 61. To render a combination unlawful under the Anti-Trust Act of 1890 it need not be one which by its terms refers to inter- state commerce, but it is sufHcient if its purpose and effect are necessarily to restrain interstate trade. Oihbs v. Mc- Neeley, 118 F., 120. 2-194 6S. Every Contract, Combination, or Conspiracy, in Whatever Form, of Whatever Nature, and Whoever May be Parties to it, which Directly or of Necessity Operates in Restraint of In- terstate Trade or Commerce. — Although the act of Congress known as the Anti-Trust Act has no reference to the mere manufacture or production of articles or commodities within the limits of the several States, it embraces and declares to be illegal every contract, combination, or conspiracy, in whatever form, of whatever nature, and whoever may be parties to It which directly or necessarily operates in re- straint of trade or commerce among the several States or with foreign nations. Northern Securities Co. v. United States, 193 U. S., 197 (Harlan, Brown, McKenna, Day). 2—339 63. Same. — The act is not limited to restraints of interstate and international trade or commerce that are unreasonable in INDEX— DIGEST. 1067 COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.— Cont'd. II. Prohibited — Continued. their nature, but embraces all direct restraints, reasonable or unreasonable, imposed by any combination, conspiracy, or monopoly upon such trade or commerce. lb. 64. Railroad carriers engaged in interstate or international trade or commerce are embraced by the act. /&. 65. Combinations, even among private manufacturers or dealers, whereby interstate or international commerce is restrained, or commerce are embraced by the act. lb. 66. Every combination or conspiracy which would extinguish com- petition between otherwise 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. lb. 67. 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 com- merce, jif 68. The Northern Securities Company combination is a " trust " within the meaning of the act of Congress of July 2, 1890, known as the Anti-Trust Act ; 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 lb. 69. Every contract, combination, or conspiracy, the necessary effect of which is to stifle or to directly and substantially restrict competition in commerce among the States, is in restraint of interstate commerce and violates section 1 of the act of July 2, 1890 (26 Stat, 209). Whitwell v. Continental To- bacco Co., 125 F., 454. 2—271 70. Same.— Every 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 section 2 of the act of July 2, 1890 c 647 (26 Stat, 209). ' /^ For what acts and combinations do not violate the act, see same case, and CoMmNATioNs, etc., III. 71. Monopolies Prohibited are Those Engaged in Interstate Com- merce—Not Merely Because the Commodity is a Necessity of Life.— The monopoly and restraint denounced by the act of July 2, 1890 (26 Stat, 209) " to protect trade and com- merce against unlawful restraints and monopolies," are a monopoly in interstate and international trade or commerce, and not a monoiwly in the manufacture of a necessary of life. U. S. V. E. C. Knight, 156 U. S., 1. 1—379 78. Any Restraint of Interstate Trade or Commerce if Accom- plished by Conspiracy.— The act of July 2, 1890 (26 Stat, 209), section 1, declaring illegal "every contract, combina- 1068 INDEX — ^DIGEST. COMBINATIONS, CONSFIBACIES, CONTBACTS, ETC.— Cont'd. II. Pbohibited — Continued. tion in tlie form of trust, or otlienvise, or conspiracy " in restraint of trade or commerce among the States, or witli foreign nations, ia not aimed at capital merely and com- binations of a contractual nature, wbich by force of the title, "An act to protect trade and commerce against unlaw- ful restraints and monopolies," are limited to such as tlie courts have declared unlawful, the words '* in restraint of trade " having, in connection with the words " contract," and " combination," their common-law significance, but the term " ccmspiracy " is used in its well-settled legal meaning, so that any restraint of trade or commerce, if to be accom- plished by consipracy, is unlawful. U. 8. v. Dehs, 64 F., 724. 1—322 78. Same — Construction. — The construction of the statute is not aflfected by the use of the phrase "in restraint of trade," rather than one of the phrases "to injure trade" or "to restrain trade." II). 74. Same. — The word " commerce," in the statute, is not synony- mous with " trade," as used in the common-law phrase " re- straint of trade." but has the meaning of the word in that clause of the Constitution which grants to Congress power to regulate interstate and foreign commerce. /b. 75. Supreme Court does not Bissent from Above Conclusions. — The court enters into no examination of the act of July 2, 1890 26 Stat. 209), on which the Circuit Court mainly relied to sustain its jurisdiction ; but it must not be understood that it dissents from the conclusions of that court in reference to the scope of that act, but simply that it prefers to rest its judgment on the broader ground discussed In its opinion, be- lieving it imiwrtant that the principles underlying it should be fully stated and fully affirmed. In re Dehs, 158 U. S., 504. 1—505 ' 7i. A contract by wMcli a corporation agrees to take the entire product of a number of persons, firms, and corporations en- gaged in mining coal and making coke in a certain district, which is intended for " western shipment," to sell the same at not less than a minimum price, to be fixed by an executive committee appointed by the producers, and to account for and pay over to such producers the entire proceeds above a fixed sum per ton, to be retained as "compensation" — ^the stated purpose being "to enlarge the western market" — and under which the shipments are made into other States, it one affecting interstate commerce, and Is subject to the provision of the Anti-Trust Law. U, S, v. Chesapeake d O. Fmel Oo., 105 F., 93. %—M Afllrmed, 115 F., 610 (»— 151). 77. Effect of Illegal Provisions— Divisibility.— Stipulations in a INDEX — DIGEST. 1069 COMBINATIONS, CONSPIBACIES, CONTBACTS, ETC.— Cont'd. II. Prohibited— Continued, contract which are invalid as in restraint of trade, if capa- ble of being construed divisibly, do not affect the validity of other provisions. TJ. S. Consolidated Seeded Raisin Co. v. Orim d Skelley Co., 126 F., 364. 2—288 See also Contracts. 4. Live-stock associations, and exchanges, etc. 78. An Association of Commission Merchants.— An association of men engaged in receiving, buying, selling, and handling, as commission merchants. Jive stock received at the Kansas City stock yards from, and sold for shipment to, various States and Territories, which yards furnished the only avaU- able public market for that purpose for an exceedingly large area, and which by its rales fixed a minimum rate of com- missions to be charged by members of the association, and prohibited the employment by any commission firm or cor- poration of more than three persons to travel and solicit business, and prohibited the sending of prepaid telegram or telephone messages quoting the markets, and shut out all dealings and business intercourse between members and non- members, and boycotted ai\d blacklisted persons attempting to carry on business without joining the exchange, thus effectually preventing them from securing or transacting business, held to be an illegal combination to restrict, monop- olize, and control that class of trade and commerce. U. 8. v. Hopkins, 82 F., 529. 1—725 Reversed, 171 U. S., 578 (1—941). 79. Same — Reasonableness of Restraints. — The act of Congress is aimed against all restraints of interstate commerce, and its purpose is to permit comuierce between the States to flow in its natural channels, unrestricted by any combinations, con- tracts, conspiracies, or monopolies whatsoever. The reason- ableness of the restrictions in a given case is immaterial. /b. 80. Agreement Between live-Stock Buyers Not to Bid Against Each Other, etc.— An agreement between corporations and indi- viduals, etc., engaged in buying live stock at divers points throughout the United States, to refrain from bidding against each other in the purchase of cattle is combination in restraint of trade; so also their agreement to bid up prices to stimulate shipments, intending to cease from bidding when the shipments have arrived, and the same result fol- lows from the combination of defendants to fix prices upon and restrict the quantities of meat shipped to their agents or their customers. Being restriction upon competition, such agreements are combination in restraint of trade. V. S. v Swift d Co., 122 F., 529. 2—237 Affirmed, 196 U. S., 375 (2—641). 1180&— VOL 2—06 M 68 1070 INDEX — DIGEST. OOmilllATIOllS, OairSFI&ACIES, COHTBACTS, etc.— etition and to the giving of competition full play by making illegiil any effort at re- striction upon competition. lb. S8. A combination entered into by independent meat dealers to secure less tliam lawful freight rates, with the intent to monopoiize conmierce in fresh meat among the several States, is forbidden by the Anti-Trust Act of July 2, 1890 (26 Stat. 2«)9). Swift d Co, v. rnitcd States, 196 U. S.. 375. 2—643 5. Compiracif to iniure in brntincifH. 8S. Frinting and Mailing Circulars. — The action of an association of manufacturers in adopting a resolution denouncing a dealer in the product they manufactured (shingles), who bought and shipped such product to customers in other States and foreign countries, and in printing such resolution j in circulars and mailing the same to other manufacturers and customers of the dealer, whereby his business was in- jured, constituted an Illegal combination or conspiracy In restraint of interstate and foreign conmierce, and gives the person injured a right of action in a circuit court of the United States, under the Anti-Trust Law of 1890, to re- cover the damages sustained. Oihb» v. McXccley, 102 F., 594. 2—25 6. Stockholdinff mmpanies or corporationtt. 8C Holding Companies to Tote Stock In the Interests of a Bail- road Combine. — Where one company (The (Jeorgiu Company of North Carolina) acquired a majority of the stocli of the Central Railroad Company of Georgia, which it deposited with a trust company of New Yorli, and transfen-ed to the Terminal Company, a system conposed of several competing lines of railroads, which latter company and the Georgia Company relinquished to the trust company any right they might have to vote such stocls. Held, That the trust com- pany was a mere stakeholder and that the relinquishment did not entitle it to a vote. Clarke v. Central R. R. d Bank- ing Co. of Ga„ 50 F., 3.%. 1-17 85. Same — Disqualifying Interests. — ^The fact that the Terminal Company has no appreciable interest in the stock of the Central Railroad Company, because of a mortgage on the railroad executed by the Terminal Company, does not re- move the objection to its voting in person or by representa- tive in the election of the directors of that railroad com INDEX — ^DIGEST. 1071 OOMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.A>)ntU II. Prohibited— Continued, pany, in view of the fact that it has large pecuniary inter- ests in two directly competing lines of railroad. lb. 88. Same — Anti-Trust Law. — ^Transactions of this character are within the spirit, if not within tlie letter, of the " Sherman Anti-Trust Law," act of July 2, 1890 (26 Stat., 209). lb. 87. northern Securities Co. — Any contract or combination by which a majority of the stock of two railroad companies owning . and operating parallel and competing interstate lines of road is transferred to a corporation organized for the purpose of holding and voting the same and receiving the dividends thereon, to be divided pro rata among the stockholders of the two companies so transferring their stock, directly and substantially restricts interstate trade and commerce, and is in violation of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), since it destroys any motive for competition be- tween tbe two roads; and it is immaterial that each com- pany has its own board of directors, which nominally directs its operations and fixes its rates. V. 8. v. Northern Securi- ties Co., 120 F., 721. 2—215 88. Northern Securities Company — Corporation Organized to Hold Majority of Stock of two Competing and Parallel lines of Railroad for the Purpose of Preventing Competition. — Stock- holders of tbe Great Northern and Northern Pacific Railway companies — corporations having comi)eting and substantially parallel lines from the Great Lakes and the Mississippi River to the Pacific Ocean at Puget Sound— combined and conceived the schone of organizing a corporation, under the laws of New Jersey, which should hold the shares of the stock of the constituent companies, such shareholders, in lieu of their shares in those companies, to receive, upon an agreed basis of value, shares in the holding corporation. Pursuant to such combination the Northern Securities Com- pany was organized as the holding coriwration through which that scheme should be executed; and under that scheme such holding corporation became the holder— more properly speaking, the custodian — of more than nine-tenths of the stock of the Northern Pacific, and more than three- fourlhs of the stock of the Great Northern, the stockholders of the companies, who delivered their stock, receiving, upon the agi-eed basis, shares of stock in the holding corijoratiou. Held, That the arrangement was an illegal combination in restraint of interstate commerce and fell within the prohi- bitions and provisions of the act of July 2, 1890, and it was within the power of the Circuit Court, in an action, brought by the Attorney-General of the United States after the com- pletion of the transfer of such stock to it, to enjoin the holding company from voting such stock and from exercising 1072 INDEX — DIGEST. COMBINATIONS, CONSPIBACIES, CONTRACTS, ETC.—Confd. II. Phohibited — Continued. any control whatever over the acts and doings of the rail- road companies, and also to enjoin the railroad companies from paying any dividends to the holding corporation on any of their stock held by it Northern Securities Co, v. United States, 193 U. S., 197. 2—338 S». Same. — Necessarily, the constitnent companies ceased, under this arrangement, to be in active competition for trade and commerce along their respective lines, and became, practi- cally, one powerful consolidated corporation, by the name of a holding corporation, the principal, if not the sole, object for the formation of which was to cany out the purpose of the original combinatiou under which competition between the constituent companies would cease. lb, 90. Same. — A combination by stockholders in two competing inter- state railway companies to form a stockholding corporation which should acquire, in exchange for its own capital stock, a controlling interest in the capital stock of each of such railway companies, violates the Anti-Trust Act of July 2, 1890 (26 Stat., 209), which declares illegal every combina- tion or conspiracy in restraint of interstate commerce, and forbids attempts to monopolize such commerce or any part of it. (48 L. ed., 679.) 2—342 91. Same. — Where no Individual investment is involved, but there Is a combination by several Individuals separately owning stock in two competing railroad companies engaged in inter- state commerce, to place the control of both in a single cor- poration, which is organized for that purpose expressly and as a mere instrumentality by which the competing rail- roads can l»e combined, the resulting combination is a direct restraint of trade by destroying competition, and Is Illegal within the meaning of the act of July 2, 1890. (BreM-er, concurring.) 2 — 341 7. Patent im4 copyright monopolies — Illegal combinations and contracts. 92. A corporation organized for the purpose of securing 'assign- ments of all patents relating to "spring-tooth harrows," to grant licenses to the assignors to use the patents upon pay- ment of a royalty, to ilx and jregnlate the price at wlllch such harrows shall be sold, and to take charge of all litiga- tion and prosecute all infringements of such patents, is an illegal combination, whose purposes are contrary to public policy, and which a court of equity should not aid by en- tertaining infringement suits brought In pursuance thereof. National Harrow Go. v. Quick, 67 F., 130. 1—443 98. Corporation Organized to Receive Assignments of Patents. — A combination among manufacturers of spring-tooth har- rows, by which each manufacturer assigns to a corporation INDEX — ^DIGEST. 1073 COMBINATIONS, CONSPIBACIES, CONTRACTS, ETC.— Cont'd. II. Prohibited — Continued, organized for the purpose the patents 'under which he Is operating, and takes back an exclusive license to make and sell the same style of harrows previously made by him, and no other, all the parties being bound to sell at uniform prices, held to be an unlawful combination for the enhancement of prices and in restraint of trade. National Harrow Co. v. Hench, 76 F., 667. 1—610 Affirmed, 83 F., 36 (1—742). 94. Same. — Though the fact that several patentees are exposed to litigation justifies them in composing their differences, they can not make the occasion an excuse or cloak for the crea- tion of monopolies to the public disadvantage. lb. 1 — 743 95. A combination among manufacturers of spring-tooth harrows, whereby a corporation organized for the purpose becomes the assignee of all patents owned by the various manufacturers, and executes licenses to them, so as to control the entire business and enhance prices, is void both as to the assign- ments and licenses, so that the corporation can not maintain a suit against one of its assignors, who violates the agi-ee- ment, for infringement. National Harrow Co. v. Hench, 84 F., 220. i_746 96. An agreement by the members of a publishers' association controlling 90 per cent of tlie book business of the country, under which all agreed not to sell to anyone who would cut prices on copyrighted books, nor to anyone who should be known to have sold to others who cut prices, etc., was an agreement relating to interstate trade or commerce within the Anti-Trust Act of July 2, 1890 (26 Stat., 209. Mines v. Scribner, 147 F., 927. 2 1035 07. Same— Conspiracy— Restraint of Trade.— Defendants became members of an association of book publishers controlling 90 per cent of the book business of the country, which associa- tion adopted a rule that they would not sell to anyone who cut prices on copyrighted books, nor to anyone who should be known to have sold to others at cut prices. A blact list was kept containing the names of such persons, and no one on the black list could not buy any books of anybody in the scheme. Held, That such scheme constituted a conspiracy in restraint of interstate trade or commerce. /ft. 98. Same— Copyright— Effect— Extent of Rights Acquired.— The rights acquired by publishers of copyrighted books under the copyright law did not justify them in combining and agree- ing that their books should be subject to the rules laid down by the united owners, one of which was that no member of the association sliould sell any books to a blacklisted pur- chaser who was known to cut prices. /ft. 99. license Contracts by Patentee in District where Patent De- 1074 INDEX — DIGEST. COMBINATIONS, €X>NSPIBACIES, CONTRACTS, ETC.— Confd. II. Prohibited — Continued. t clared Illegal and in Creatinsr a Fnnd to Cmsli Competi- tion. — License contracts entered into by the owner of patent on a rubber tire, which patent had been adjudged invalid by the Circuit Court of Appeals for the Sixth Circuit, with all of the large manufacturers of such tires in the United States, all of whom were engaged in interstate commerce, to manufacture the same on a royalty and to sell at prices above the then market price, and providing for a system of rebates, and for the appointment of a board to receive one half of the royalties, to be used in purchasing said tires and selling them at prices deemed to be for the best interest of all. Held, that smeh oontraett went beyond the rights of com- plainant under its patent monopoly in raising and maintain- ing prices in the States composing the sixth Federal cir- cuit, in which the monopoly had no practical existence, and in creating a fnnd to be used to crush competition by outside manuf.icturer**, as well in the sixth circuit as elsewhere, and were illegal and ¥oid as creating a combination in restraint of interstate trade and commerce, in violation of the Anti- Tnist Act of July 2. 1S90 (26 Stat, 209). Rubber Tire Wheel Go. v. Milwaukee Rubber Works Go., 142 F., 681. Bee also Combinations, etc., 183-188. 11—866 a Railroads — Rates, etc 100. Anti-Tmtt Act Applicable to mallroads.— The provisions re- . specting contracts, combinations, and conspiracies in re- straint of trade or commerce among the several States or with foreign countries, contained in the act of July 2, 1890 (26 Stat, 209), "to protect trade and commerce against un- lawful restraints and monopolies," apply to and cover com- mon carriers by railroad. U, 8. v. Tram-Mo, Ft. Assn., 108 U. S.. 290. 1—648 101. Contracts Between Ballroads Affecting Kates.— A contract be- tween railroads in restraint of interstate trade or commerce is prohibited, even though the contract Is entered into be- tween competing railroads, only for the purpose of thereby aflfecting traffic rates for the transportation of persons and property. j^, 108. Same— No Authority Therefor Under Act to Bcgnhite Com- merce.— The act of February 4, 1887, " to regulate commerce," Is not Inconsistent with the of July 2, 1890, as it does not con- fer upon competing railroad companies power to enter into a contract in restraint of trade and commerce, like the one which forms the subject of this suit /ft. 108. Eight to Beviate from Bates Prescribed.— The right of a rail- road company in a joint traffic association to deviate from the rates prescribed, provided it acts on a resolution of its board of directors and serves a copy thereof on the managers INDEX — DIGEST. 1075 \ > COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.— Cont'd. IJ. Prohibited — Continued. of the association, who, upon its receipt, are required to " act promptly far the in-otection of the parties hereto,' does not relieve the association from condemnation as an illegal re- straint of competition, as the privilege of deviating from the rates would be exercised upon pain of a war of competi- tion against it by the whole association. U. S. v. Joint Traffic Assn., 171 U. S., 505. 1—869 Reversing 7G F.. 895 (1—615). 104. An agreement of railroad companies which directly and effec- tually prevents competition is, under the statute, in restraint of trade, notwithstanding the possibility that a restraint of trade might also follow unrestricted competition, which might destroy wealier roads and give the survivor power to raise rates. /^, 105. The statute applies only to contracts whose direct and imme- diate effect is a restraint upon interstate commerce, and not to contracts made to promote legitimate business, though they may indirectly or incidentally affect such commerce. lb. 106. Similar to Trans-Missouri Case. — So far as the establishment of rates and fares is concerned there is no substantial differ- ence between the agreement in this case and the one set forth in the Trans-Missouri case. lb. 107. Congress, with regard to the interstate commerce, and in the course of regulating it in the case of railroad corporations, has the power to say that no contract or combination shall be legal, which shall restrain trade and commerce, by shut- ting out the operation of the general law of competition. lb. 108. Any contract or combination between interstate carriers which directly and substantially restrict the right of such a car- rier to fix its own rates independently of its natural com- l^etitors places a direct restraint uiion Interstate commerce in that it tends to prevent competition and is in violation of the act, whether the rates actually fixed be reasonable or unreasonable. U. S. v. Noi'thern Securities Co., 120 F., 721. 2—215 109. Contract or Combination Prescribing Rates to be Maintained. Any contract or arrangement between railroad companies for the puipose and having the effect of preventing com- petition by fixing rates to be maintained by the parties is in violation of the provisions of the Minnesota anti-trust act of 1899, which is substantially the same language as the Sherman Anti-Trust Act of 1890. Minnesota v. Northern Securities Co., 123 F., 692. 2—246 110. Agreements Between Railroads to Raise Rates upon Certain Class of Shipments. — When a number of railroads, acting 1076 INDEX — ^DIGEST. COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.— CJont'd. II. Prohibitbi>— Continued, under articles of orgaoization, by concert of agreement and action advance the rates upon shipments of a particular class throughout all the territory to which their organiza- tion and influence with similar organizations extend, and when they actually advance such rates and exact the same of shippers, it is of no consequence that they have a stipulation in such articles that each and all members can at will and at any time withdraw from the agreement. Such a com- bination is in restraint of trade. Tift v. Southern Railway Co., 138 F., 753. 2—734, 746 See also Gabbiebs. 111. Combinations of Railroads to Prevent Competition, Pooling Pas- senger Receipts— No Relief in Equity Against Ticket Brokers. — In a suit by a railroad company to enjoin the de- fendants, who were ticket brokers, from dealing in special tickets issued by c-omplainant on account of the Pan-Ameri- can Exposition, which were by their terms nontransferable, it appeared from the showing made on a motion for a pre^ liminjiry injunction that complainant was a member of a combination known as the " Trunk Line Association." formed by a number of railroads operating in different States for the purpose of preventing competition; that the passenger receipts of all such roads were pooled and divided on an agi-eed basis; and that the special rates made on account of the exposition were fixed, and the terms of the ticliets which were the basis of the suit were prescribed, by such associa- tion through its passenger committee. Held, That such combination was illegal, as in violation of the Federal Anti- Trust Law (26 Stat, 209), and tliat complainant could not invoke the aid of a Federal court of equity for the protec- tion of rights claimed under contracts which were the direct result and evidence of such unlawful combination. Dela- ware, L. d W. R. Co. V. Frank, 110 F., 689. 2—82 lit. A combination to secure less than lawful freight rates, entered into by independent meat dealers with the intent to monopo- lize commerce in fresh meat among the several States, is for- bidden by the Anti-Trust Act of July 2, 1890 (26 Stat, 209). Sirift cC- Co. V. United States, 196 U. S., 375. 2—643 9. Labor eomhlnations. 118. Anti-Trust Act Applies to Combinations of laborers.— The act declaring illegal " 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," (26 Stat, 209) ar>plies to combinations of laborers as well as of capital- ists. I. S. V. Workingmen's Amalg. Council, 54 F., 994. Case affirmed, 57 F., 85 (1—184). 1— 11() INDEX — DIGEST. 1077 COMBINATIONS, CONSPIRACIES, CONTRACTS, ETC.— Cont'd. 11. Prohibited — Continued. 114. Same — lawful Combinations Turned to Unlawful Purposes. The fact that a combination of men is in its origin and gen- eral purposes innocent and lawful is no ground of defense when the combination is turned to the unlawful purpose of restraining interstate and foreign commerce. /ft. 115. Same — Labor Strikes. — A combination of men to secure or com- pel the employment of none but union men l)ecomes a combi- nation in restraint of interstate commerce, within the mean- ing of the statute, when, in order to gain its ends, it seeks to enforce, and does enforce, by violence and intimidation, a discontinuance of labor in all departments of business, in- cluding the transportation of goods from State to State, and to and from foreign nations. 75. 116. Same— Injunction— When Granted.— Where an injunction is asked against the interference with interstate commerce by combinations of striking workmen, the fact that the strilce 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 lawfulness of the invasion is* not dis- claimed, authorizes the injunction. 75. 117. Railroad Employees— Agreements not to Handle Property of Railroad Against which Action is Taken. — Rule 12 of an association of locomotive engineers, styled the "Brother- hood of Locomotive Engineers," which provides " that here- after, when an issue has been sustained by the grand chief, and carried into effect by the Brotherhood of Locomotive Engineers, it shall he recognized as a violation of obligations if a member of the Brotherhood of Locomotive Engineers who may be employed on a railroad run in connection with or adjacent to said road, to handle the property belonging to said railroad or sj^stem in any way that may benefit said company with which the Brject to the general opera- tion of this decision with reference to said rule. lb, ItO. A combination of labor organizations whose professed object is to arrest the operation of the railroads whose lines extend from a great city into adjoining States until such roads ac- cede to certain demands made upon them, whether such de- mands are in themselves reasonable or unreasonable, just or unjust ii an unlawful conspiracy in restraint of trade and commerce among the States, within the act of July 2, 1890, and acts threatened in pursuance thereof may be restrained by injunction, under section 4 of the act. U, 8, v. Elliott, 62 F., 801. 1—262 Demurrer overruled. tVi F., 27 (1— ,'511). 181. Same— Interference with Mails and Interstate Commerce.— A •combination by railroad employees to prevent all the rail- roads of a large city engaged in carrying the United States mails and in interstate commerce from carrying freight and passeugei-8, hauling cars, and securing the services of persons other than strikers, and to Induce persons to leave the service of such railroads, it within section 1 of the a«t of July 2, 1890, and is illegal. 17. 8, v. ElUoU, 64 F., 27. 1--311 ISS. Combination of Railroad Employees Interfering with OperatioB of Eailroad in Hands of a Keceiver— Instigating Strike- Maliciously inciting employees of a receiver, who is operat- ing a railroad under order of the court, to leave his employ, In pursuance of an unlawful combination to prevent the op- eration of the road, thereby inflicting Injuries on its business, for which damages would be recoverable if it were operated by a private corporation, is a contempt of the court. Thoma$ V. G4n., W. O. d T. P. Rp, Co., 62 F., 803. 1—266 183. Same — Combination to Compel Breach of Contract.— A combina- tion to inflict pecuniffense Adopted by Congrress— Presumption— In- terpretation.— Wbere Congress adopts or creates a common- law oflfense, and In doing so uses terms whicb have acquired a wen-understood meaning by judicial interpretation, tbe presumption is that tlie terms were used in that sense, and courts may pmperly look to prior decisions interpreting them for tlie meaning of the terms and the definition of the offense where there Is no other diflnition in the act U S v Trans-Mo. Ft. Assn., 58 F., 58. 1—im Case reversed. 166 V. S.. 290 (1—648). 1. Common-Law anlc.— The ground on which certain classes of contracts and combinations In restraint of trade were held Illegal at common law was that they were against public policy. j^ 4 Public Policy— How Determined.— The public policy of the na- tion must be determined from its Constitution, laws, and judicial decisions. t* 5. Bailroad Companies— Arrangementi for Through Billing.— There Is mo principle of common law which forbids a single railroad corporation, or two or more of such corporations, from select- ing, from two or more other coi-porat ions, one which they will employ as the agency by which they will send freight beyond their own lines, on through bills of lading, or as their agent to receive. freight, and transmit it on through bills to their own lines, and without breaking bulk; and the right to make gmeli selection li not taken away by the Interstate Commerce law. New York c§ N. Ry. Co, v. New York d N. E. R. Co., 50 F., 867, explained. Prescott d A.. €. B. Co. v Atchison, T. d 8. F. R. Co., 73 F., 438. 1—604 9, Prepayment of Preiglit.— A common carrier engaged In inter- state commerce may at common law, and under the Interstate Commerce Law, demand prepayment of freight charges, when deli¥ered to it by one connecting carrier, without exacting MCli prepayment when delivered by another connecting car- rier, and may advance freight charges to one connecting carrier without advancing such charges to another connect- ing carrier. &uin €. Ji 8, F, Rp. Co. v. Miami 8. 8. Co., 86 F., 407. 1_«23 1. Same.- The rales of the common law do not require a carrier to receive goods for carriage, either from a consignor or a connecting carrier, without prepayment of Its charges if demanded, nor to advance the charges of a connecting car- rier from which it receives goods In the course of transporta- tion ; nor can it be required to extend such credit or make such advances to one connecting carrier because it does so to another. 8outhem In4. Exp. Co. v. V. 8. Exp. Co., 88 F., ®^' 1--862 INDEX — ^DIGEST. 1099 COMMON LAW— Continue 20; Seabch, 2-4 ; Cobpobations, 14, 25 ; and Coubts, 22. It. Hfth Amendment. See Immunity, 1, 3, 7, 9, 16; and Wit- nesses, 1, 2, 4, 11-13, 15, 16, 20, 23. IS. Fourteenth Amendment.— It is not the purpose of the four- teenth amendment to prevent the States from classifying the subjects of legislation and making different regulations as to the property of diflfereut individuals differently situated. The provision of the Federal Constitution is satisfied if all persons similarly situated aife treated alike in privileges conferred or liabilities imposed. Field v. Barher Asphalt Paving Co., 194 U. S., 618. 2—555 14. Same.— A State statute which provides that certain improve- ments are not to be made If a majority of resident owners of property liable to taxation protest, is not unconstitutional because it gives the privilege of protesting to them and not to nonresident owners. , /ft. 15. Same.— Discrimination in favor of agricultural products. See Connolly v. Union Sewer Pipe Co., 184 U. S., 540. »— 119 CONTEMPT. 1. Interference with Receiver—Impeding Operation of Railroad.— Any willful attempt, with knowledge that a railroad is in the hands of the court, to prevent or impede the receiver thereof appointed by the court from complying with the order of the court in running the road, which is unlawful, and which, as between private individuals, would give a right of action for damages. Is a contempt of the order of the court. Thomas v. Cin., N. O. d T. P. R. Co., 62 F., 803. 1—266 S. Same— Instigating Strike— Unlawful Combination.— Maliciously Inciting employees of a receiver, who is operating a railroad under order of the court, to leave his employ, iu pursuance of an unlawful combination to prevent the operation of the road, thereby inflicting injuries on its business, for which . damages would be recoverable if it were operated by a pri- vate corporation, is a contempt of the court. • /6. 3. Same— Constitutional Guaranty of Right of Assembly and Free Speech.— Such Inciting to carry out an unlawful conspiracy is not protected by constitutional guaranties of the right of assembly and free speech, and Is not less a contempt because effected by words only, If the obstruction to the operation of the road by the receiver is unlawful and malicious. lb. 4. Contempt— Proceeding in Equity— Conclusiveness of Answer. In proceedings for contempt In equity, a sworn answer, how- ever full and unequivocal, is not conclusive, even In the case INDEX — ^DIGEST. 1109 CONTEMPT— Continued. of a stranger to the bill for the injunction which has been violated. U. 8. v. Dehs, 64 F., 724. 1—322 5. Same — Justification — ^Irregularities. — Where a court had juris- diction of an injunction suit, and did not exceed its powers therein, no irregularity or error in the procedure or in the order can justify disobedience of the writ. lb. 6. Same. — In a proceeding for contempt in disobeying an injunc- tion, the sufficiency of the petition for the injunction, in respect to matters of form and averment merely can not be questioned. /j. 7. Contempt— Trial by Court.— Though the same act constitute a contempt and a crime, the contempt may be tried and pun- ished by the court. /j. 8. Contempt — Violation of Injunction — Conspiracy. — Where de- fendants, directors, and general officers of the American Railway Union, in combination with members of the union, engaged in a conspiracy to lx)ycott Pullman cars, in use on railroads, and for that purpose entered into a conspiracy to restrain and hinder interstate commerce in general, and, in furtherance of their design, those actively engaged in the strike used threats, violence, and other unlawful means of interference with the operations of the roads, and, instead of respecting an injunction commanding them to desist, per- sisted in their purpose, without essential change of conduct, they were guilty of contempt. /ft. 9. Same — Interference with Receiver. — Any improper interference with the management of a railroad in the hands of receivers is a contempt of the court's authority in making the order appointing the receivers, and enjoining interference with their control. /ft. 10. The order of the Circuit Court finding the petitioners guilty of contempt, and sentencing them to imprisonment, was not a final judgment or decree. Ir re Dehs, 158 U. S., 564. 1—565 11. Violation of Injunction — Contempt. — ^An injunction having been issued and served upon the defendants, the Circuit Court had authority to inquire whether its orders had been disobeyed, and when it found that they had been disobeyed, to proceed under Revised Statutes, section 725, and to enter the order of punishment complained of. /ft. 12. Same — ^Habeas Corpus. — The Circuit Court having full juris- diction in the premises, its findings as to the act of disobe- dience are not open to review on habeas corpus in this or any other court. /ft^ 18. Witness— Incriminating Evidence.— Where a witness is com- mitted for contempt in refusing to answer all of a series of questions, for the reason that the answers would tend to criminate him, and some of the answers would have that tendency, he should not be denied relief on habeas corpus 1110 IKDBX — ^DIGEST. CONTEMPT— Continued. because some of the questions might be safely answered. Foot V. Buchanm, 113 F., 156. 2 104 14. Although the subpoena duces tecum may be too broad in its requisition, where the witness has refused to answer any question, or to produce any boolss or papers, this objection would not go to the validity of the order committing him for contempt. Hale v. Henkel, 201 U. S., 43. 2—874 VOWTRACTS, 1. Contract for Entire Product.— A contract with an independent manufacturer for the entire product of his plant is not in Itself a contract in illegal restraint of trade. Oarter-Crume Co. V. Perrung, 68 F., 439. 1-^845 2. Same.— If an independent manufacturer contracts to sell his entire product, without knowledge of similar contracts made by the buyer with other manufacturers, and without any knowledge of the fact that such contract was intended by the buyer as one step in a general scheme for monopolizing the trade in that article and controlling prices, such inde- pendent mannufacturer can not be held to have conspired against the freedom of commerce, or to have made a con- tract in illegal restraint of trade. /&. 3. Purchase of Business— Combination in Restraint of Trade.— A contract by which a person sells his property and business good will to another can not be repudiated on the ground that the purchaser acquired the property for the purpose of ob- taining a monopoly of the business and in pursuance of an Illegal combination in restraint of interstate trade and com- merce. CamorS'McConnell Co. v. McConnell, 140 F., 412. 2—817 4. Same.— In order to defeat a suit to enforce such a contract on the ground that its enforcement is sought to aid and facili- tate the carrying out of an illegal combination to monopolize interstate trade and commerce, it must appear that the con- tract is directly connected with such unlawful purpose, and not merely collateral thereto. / j, 5. Same.- Although the combination may be unlawful, an action for the performance of the contract can not be defeated upon the ground that plaintiff is carrying on its business in an unlawful manner as a monopoly. /j. S. Same.— An agreement, as incidental to the sale of property as a business, that the seller will not enter into a competing busi- ness, is valid and enforceable, notwithstanding it is in partial restraint of trade. j^^ 7. Same— Specific Performance— Sale of Business— Enjoining Vio- lation.— A court T»f equity will enjoin a defendant from vio- lating a contract, clearly shown, by which he deliberately obligated himself for a valuable consideration not to engage In a certain business. jj INDEX — ^DIGEST. nil CONTRACTS— Continued. 8. Purchaser of River Craft not Relieved from Obligation to Pay Purchase Price Because of His Agreement to Maintain Pres- ent Traffic Rates. — A purchaser of river craft can not in- invoke the Anti-Trust Act of July 2, 1890 (26 Stat, 209), to relieve him from his obligation to pay the purchase price, be- cause of his covenant to maintain the present traffic rates, which is not declared by the contract to enter into the con- sideration of the sale — especially where the rates referred to primarily, if not exclusively, relate to domestic, and not to interstate, business. Cincinnati, etc, Packet Co. v. Bay, 200 U. S., 179. 2—867 9. Same. — ^A contract is not to be assumed to contemplate unlawful results unless a fair construction requires it. 76. 10. Same. — ^Where a contract relates to commerce between points within a State, both on a boundary river, it will not be con- strued as falling within the prohibitions of the Sherman act because the vessels affected by the contract sail over soil belonging to the other State while passing between the intra- state points. 76. 11. Same. — Even if there is some interference with interstate com- merce, a contract is not necessarily void under the Sherman Act if such interference is insignificant and merely incidental and not the dominant purpose; the contract will be con- strued as a domestic contract and its validity determined by the local law. /&. 12. Same. — A contract for sale of vessels, even if they are engaged in interstate commerce, is not necessarily void because the vendors agree, as is ordinary in case of sale of a business and its good will, to withdraw from business for a specified period. /ft. 13. Any contract or combination which directly and substantially restricts the right of an interstate carrier to fix its own rates, independently of its natural competitors, places a direct re- - straiiit upon interstate commerce, in that it tends to prevent competition, and is in violation of the act, whether the rates actually fixed be reasonable or unreasonable. U. 8. v. Northern Securities Co., 120 F., 721. 2 215 14. Contracts — Proprietary Medicines. — A system of contracts made by the manufacturer of a proprietary medicine between him and wholesale dealers, to whom alone he sold his medicine, by which they were bound to sell only at a certain price and to retail dealers designated by him, and between him and the retail dealers by which, in consideration of being so desig- nated, they agreed t^, sell to consumers only at a certain price, is not unlawful as in restraint of trade, but is a rea- sonable provision for the protection of the manufacturer's trade, and he is entitled to an injunction to restrain a defend- 1112 INDEX — ^DIGEST. OOlfTBACTS— Continued. ant from inducing other parties to such contracts to violate the same. Hartmm v. John D. Parki d Sons Co., 145 F., 358. 8—1000 See also Dr. Miles MediciH €o, v. Javnes Drug Co., 149 F., 83a 11. A contniol for the sale of merchandise is not rendered Ulegal by the faet that the selling corporation is a trust or monopoly organized in Tiolation of law, either Federal or State, the contract of sale being collateral and having no direct relation to the unlawful scheme or combination. Chicago Wall Paper Mills V. General Paper Co., 147 F., 491. 2—1027 1«. Contracts Limiting Character of Material to be ITsed to that Controlled by a Single Corporation.— Where the contract for the paving of a street with asphalt limited the kind of asphalt to be use to Trinidad asphalt, such fact, and the further fact that such asphalt was controlled by a single corporation, was not violative of the commerce clause of the Constitution or of the Federal Anti-Trust Statutes, and did not aifect the validity of the contract Field v. Barjyer Asphalt Pav. Co., 117 F., 025. S— 193 Affirmed, 194 U. S., 618 («— 555). If. niegal.— Parties to a transaction adjudged to violate the Anti- Trust Act of July 2, 1890 (26 Stat, 209). ate not exempt from the doctrine in pari delicto on the theory that they acted in good faith and without intent to violate the law, where, witli knowledge of the facts and of the statute, they acted under the mistaken supposition that the statute would not be held applicable to the facts. HarHman v. Northern Securities Co., 197 U. S., 244. 2—669 Affirming, 134 F., 331 (2—618). Heversing, 132 F., 464 (2—587). 18. Same— Property delivered under an executed illegal contract can not be recovered back by any party in pari delicto, and the courts can not relax the rigor of this rule where the record discloses no special considerations of equity, justice, or public policy. /^. 1». Same.— Where a vendor after transferring shares of railway stock to a corporation in exchange for its shares becomes a director of the purchasing corporation and participates in acts consistent only with absolute ownership by it of the railway stocks, and does so after an action has been brought to declare the transaction illegal, hit right to rescind the contract and compel restitution of his original railway shares, if it ever existed, is- lost by acquiescence and laches. lb. INDEX — DIGEST. 1113 CONTRACTS— Continued. 20. Effect of Illegal Provisions — Bivisibility.— Stipulations in a contract which are invalid as in restraint of trade, If capable of being construed divisibly, do not affect the validity of other provisions. U. S. ConsoUdated Seeded Rasin Co. v. ariffin & Skelley Co., 126 F., 364. 2—288 81. Same — Validity — When Question for Jury. — Conceding that a contract legal in its terms and in its consideration may be rendered illegal as against public policy by reason of the intention of the parties to so use it as to commit civil injury to third persons, where the evidence as to such intention is conflicting, the contract can not be declared illegal by the court as matter of law. 76. 28. Effect of Anti-Trust Law upon Contracts in Restraint of Trade which at Common Law were Not Unlawful. — The effect of the Anti-Trust Law of 1890 is to render contracts in re- straint of trade, as applied to interstate commerce, unlaw- ful in an affirmative or positive sense, and punishable as a misdemeanor, and also to create a right of civil action for damages in favpr of persons injured thereby, and a remedy by injunction in favor Iwth, of private persons and the public against the execution of such contracts and the main- tenance of such trade restraints. V. S. v. Addyston Pipe d Steel Co., 85 F., 271. 1—772 See also Continental Wall Paper Co. v. Lewis Voight & Sons Co., 148 F., 939. 88. The statute is not limited to contracts or combinations which monopolize Interstate commerce in any given commodity, but seeks to reach those which directly restrain or impair the freedom of interstate trade. The law reaches contracts and combinations which may fall short of complete control of a trade or business, and does not await the consolidation of many small combinations into the huge "trust" which shall control the production and sale of a commodity. Chesa- peake d O. Fuel Co. V. United States, 115 F., 610, 624. 2—168 84. Applies to Common Carriers by Railroads — Contracts Affecting Rates. — The provisions respecting contracts, combinations, and conspiracies in restraint of trade or commerce among the several States or with foreign countries, contained in the act of July 2, 1890, apply to and cover common carriers by railroad; and a contract between them in restraint of such trade or commerce is prohibited, even though the con- tract is entered into between competing railroads, only for the purpose of thereby affecting traffic rates for the trans- portation of persons and property. U. S. v. Trans-Mo. Ft. Assn., 166 U. S., 290. 1—648 1114 INDEX — ^DIGEST. CONTBACTS— Continued. 85. Act Applies to All Contracts in Restraint of Interstate or For- eign Commerce— Not Confined to Unreasonable Restraints.— The prohibitory provisions of the said act of July 2, 1890, apply to all contracts in restraint of interstate or foreign trade or commerce without exception or limitation; and are not confined to those in which the restraint is unreason- able, t/. 8. V. Tram-Mo. Ft. Assn., 1G6 U. S., 290. 1—648 26. Test of Legality of a Contract or Combination.— The Anti- Trust Act of July 2, 1890 (26 Stat, 209). does not leave to the courts the consideration of the question whether the restraint is or is not unreasonable and such as would have rendered the contract invalid at common law. The only question in each case where the validity of a contract or combination under the law is involved is whether or not its necessary effect is to restrain interstate commerce. Ches- apeake d Ohio Fuel Co. v. V. S., 115 F.,- 610. 2—151 27. Same.— The test of the violation of the Anti-Trust Act of July 2, 1890 (26 Stat., 209), by a contract or combination, is its effect upon competition in commerce among the States. If its necessary effect is to stifle or to directly and sub- stantially restrict interstate commerce, it falls under the ban of the law, but if it promotes, or only incidentally or indirectly restricts, competition, while its main purpose and chief effect are to promote the .business and increase the trade of the makers, it is not denounced or avoided by that law. PhilUps v. lola Portland Cement Co., 125 F., 593. 2—284 28. The Sherman Act of July 2, 1890, is not intended to affect contracts which have only a remote and indirect bearing on commerce between the States. Field v. Earlier Asphalt Paving Co., 194 U. S., 618. 2—555 29. The Anti-Trust Act of July 2, 1890 (26 Stat., 209), does not apply to a contract or combination relating to the business of manufacturing within a State. Robinson v. 8uburha/n Brick Co., 127 F., 804. 2—312 SO. The act of July 2, 1890, commonly known as the "Anti-Trust Act," does not, and could not constitutionally, affect any monopoly or contract in restraint of trade, unless it inter- feres directly and substantially with interstate commerce, or commerce with foreign nations. V. 8. v. Addyston Pipe d Steel Co., 78 F., 712. 1—630 81. What Contracts, Combinations, or Conspiracies Violate Anti- Trust Act.— Every contract, combination, or conspiracy the necessary effect of which is to stifle or to directly and sub- stantially restrict competition in commerce among the States is in restraint of interstate commerce, and violates section 1 of the act of July 2, 1890 (26 Stat, 209). Whitwell v. Continental Tobacco Co., 125 F., 454. 2 ^271 INDEX — ^DIGEST. 1115 CONTBACTS— Continued. 32. What Acts, Contracts, and Combinations Do Not Violate Anti- Trust Act. — Acts, contracts, and combinations which promote, or only incidentally or indirectly restrict, competition in commerce among the States, while their main purpose and chief effect are to foster the trade and increase the business of those who make and operate them, are not in restraint of interstate commerce or violative of section 1 of the act of July 2, 1890 (26 Stat, 209). /». 88. Section 1 of the Sherman Anti-Trust Act of July 2, 1890 (26 Stat., 209), makes a distinction between a contract and a combination or conspiracy in restraint of trade. Rice v. 8ta/ndard Oil Co., 1.34 F., 464. 2—633 84. Contract for Sale of Goods by Member of Combination.— The act of July 2, 1890, section 1 (26 Stat., 209), known as the "Sherman Anti-Trust Act" does not invalidate or prevent a recovery for the breach of a collateral contract for the manufacture and sale of goods by a member of a combination formed for the purpose of restraining interstate trade in such goods. Hadley Dean Plate Glass Co. v. Highland Glass Co., 143 F., 242. 2—995 In Restraint of Tbade. See Combinations, etc., 54-77. Not Enforceable. See Combinations, etc., 16-20. Freedom of Contract— Right of Private Contract. See Constitution, 2-8 ; and Congress, 5-7, 11, 19. Contracts fob Entire Product. See Combinations, etc 149 150. Agreements not to Engage in Business or Compete. See Combinations, etc, 144-146, 148, 159, 208. Contracts in Violation of Anti-Tbust Act. See Actions AND Defenses, 61, 62. Defenses. See Actions and Defenses. COPYRIGHT. The rights acquired by publishers of copyrighted books under the copyright law did not justify them in combining and agreeing that their books should be subject to the rules laid down by the united owners, one of which was that no member of the association should sell any books to a black- listed purchaser who was known to cut prices. Mines v. Scribner, 147 F., 927. 2—1035 See also Combinations, etc, 28, 96-98. COVENANTS. See Combinations, etc, 152, 153, 155. CORPOBATIONS. 1. A corporation, while by fiction of law recognized for some pur- poses as a person and for purposes of jurisdiction as a citi- zen, is not endowed with the inalienable rights of a natural 1116 INDEX— DIGEST. COBFOBATIONS— Continued. person, but it is an artificial person, created and existing only for the convenient transaction of business. Northern Se- curUies Co, v. United States, 193 U. S.. 197 (Brewer con- curring). . 2—341 t. Stockholding— Corporations to Acquire Stock of Competing Eailroads— Legality.— The real control of a corporation is in its stockholders, who have the power to determine all im- portant corporate acts and policies, and any contract or combination by which a majority of the stock of two rail- road companies owning and operating parallel and competing interstate lines of road is transferred to a corporation or- ganized for the purpose of holding and voting the same, and receiving the dividends thereon, to be divided pro rata among the stockholders oT the two companies so transfer- ring their stock, directly and substantially, restricts inter- state trade and commerce, and is in violation of the Anti- Trust Act of July 2, 1890 (2G Stat., 209). since it destroys any motive for competition between the two roads ; and it is immaterial that each company has its own board of direct- ors, which nominally directs its operations and fixes its rates. V. S. v. Northern Securities Co., 120 F., 721. 2—215 8. Same. — The fact that the purjwse of an illegal combination be- tween stockholders of two railroad companies operating par- allel and competing interstate lines, to secure unity of inter- est and control of such companies, and to prevent competi- tion, has been accomplished by the formation of a corpora- tion which has acquired the ownership of a majority of the stock of each of the companies, can not be urged to defeat a suit by the ITnited States to restrain the exercise of the power so illegally acquired by the corporation through such combination, as imix)sing a restraint upon interstate com- merce In violation of the Anti-Trust I^aw ose," imposes a limitation upon the powers of any corpo- ration organized thereunder, however broad may be the terms of its articles of incorporation. /&. «. northern Securities Company— Bistribution of Stock— Purchase and Sale.— A contract by which defendant, the Northern Se- oirities Company, acquired from complainants certain shares of stock of the Northern Pacific Railway Company (193 U. S. 197), Held, under the evidence, to have been one of purchase and sale, by which defendant, on payment of the agreed price, became the absolute owner of the shares, free from * INDEX — DIGEST. 1117 CORPORATIONS— Continued. any trust in favor of the complainants, and free to distribute the same pro rata among all its stockholders upon the entry of a decree declaring it to be an illegal combination, and prohibiting it from voting oi* receiving dividends on such stock. Northern Securities Co. v. Hatriman, 134 F., 331. 2—618 Afllrmed, 197 U. S., 244 (2—669). 6. Same — Should not be Enjoined from Distributing Stock. — De- fendant corporation having been adjudged an illegal combi- nation in restraint of interstate commerce, and enjoined from voting or receiving dividends on certain railroad stock which It owned, but permitted to transfer the same to its stockholders, a plan adopted by its directors and stockholders to distribute the same pro rata among all its stockholders was equitable, and its execution should not be enjoined. 76. 7. Same. — The decree of the Circuit Court in the Northern Securi- ties case, affirmed by this court (193 U. S., 197), did not determine the quality of the transfer as between the defend- ants, and the provisions therein as to 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 shares. Harriman v. Northern Securities Co., 197 U. S., 244. 2—669 8. Same. — The judgment of the Supreme Court in the Northern Securities case went no further than the decree of the Circuit Court itself, and while it leaves thfrt court at liberty to proceed in the execution of its decree as circumstances may require, it does not operate to change the decree or import a power to do so not otherwise possessed. lb. 9. Same. — The judgment or opinion of the Supreme Court in this case did not enlarge 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 restitu- tion of the stocks transferred by them to the Securities Company, or that the Securities Company could not dis- tribute the shares of- railway stock held by it pro rata between its own shareholders. 76. 10. Same. — The transaction between complainants and the Northern Securities Company was one of purchase and sale of North- ern Pacific Railway Company stock for shares of stock of the Securities Company and cash and not a bailment or trust. lb, 11. Same — Duty of Securities Company to Distribute Stock. — It was the duty of the 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 distribu- tion in cash, or by distribution in kind, the company was 11808— VOL 2—06 M 71 1118 INDEX — ^DIGEST. COBPOBATIOirS-ContiniifH!. justified in adopting the latter method and avoiding the forced sale of several hundred million dollars of stock which would have involved disastrous results. /ft. IS. Unreasonable Search and Seizure of Contracts and Correspond- ence— Immnnity— Grand Jury.— A corporation charged with a violation of the Anti-Trust Act of July 2, 1890, is entitled to immunity under the fourth amendment of the Constitution from such an unreasonable search and seizure as the compul- sory production before a grand Jury, under a s>(bp(tna duces tecum, of all understandings, contracts, or correspondence between such coi-poration and six other companies, together with all reports and accounts rendered by such companies from the date of the organization of the coriwration, as well as all letters received by that corporation since its organiza- tion, from more than one dozen diflferent companies, situated in seven different States. Hale v. Henkel, 201 U. S., 43. 18. Same.— A corporation is but an association of individuals with a distinct name and legal entity, and in organizing itself as a collective body it waives no appropriate constitutional im- munities, and although it can not refuse to produce its books and iwpers it is entitled to immunity under tlie fourth amend- ment against unreasonable searches and seizures, and where an examination of its books is not authorized by an act of Congress a subpoena duces tecum requiring the production of practically all of its books and papers is as indefensible as a search warrant would be if couched in similar terms. lb. 14. Same.— The protection against unreasonable searches and seiz- ures afforded by the Fourth Amendment can not ordinarily be invoked to justify the refusal of an officer of a corpora- tion to produce its books and papers in obedience to a sub- pcma duces tecum, issued in aid of an investigation by o grand juiy of an alleged violation of the Anti-Trust Act of July 2, 1890, by such corporation. jj,^ 15. Same— Contempt.— Although the subpoena duces tecum may be too broad in its requisition, where the witness has refused to answer any question, or to produce any books or papers, this objection would not go to the validity of the order com- mitting him for contempt. jj, le. Same— Eeserve Eight to Investigate Contracts of a Corpo- ration.- A corporation is a creature of the State, and there is a reserved right in the legislature to investigate its contracts and find out whether it has exceeded its powers. ib. 17. Same.— There is a clear distinction between an individual and a corporation, and the latter, being a creature of the State, has not the constitutional right to refuse to submit its books and papers for an examination at the suit of the State. /ft. INDEX — ^DIGEST. 1119 CORPORATIONS— Continued. IS. Same. — An officer of a corporation which is charged with crimi- nal violation of a statute can not plead the criminality of the corporation as a refusal to produce its books. Ib. 19. Franchises of a corporation chartered by a State are, so far as they involve questions of Interstate commerce, exercised in subordination to the power of Congress to regulate such com- merce ; and while Congress may not have general visitatorial 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. Ib. 20. In an action against corporations for violations of the Anti-Trust Law, the books of the various defendants both before and after the alleged combination, and the contracts between them, as well as other papers, referred to in the opinion, arc all matters of material proof, but whether material or not the testimony must be taken and exceptions can be noted by the examiner and the materiality of the evidence passed on by the court. Nelsori v. United States, 201 U. S., 92. 2—920 21. Corporate Officers — ^Production of Documentary Evidence. — The refusal of corporate oflicers to obey orders of a Federal circuit court requiring them to produce certain documentary evidence, on their examination before a special examiner, can not be justified on the theory that such evidence was not in their possession or under their control, because their ix)s- session was not personal, but was that of the corporations. Ib. 22. Same. — Documentary evidence in the shape of books and papers of corporations are in the possession of the officers thereof. 76. 23. Same — Officers and Employees Can Not Refuse to Testify or Pro- duce Books, etc. — Hale v. Henkel (vol. 2, p. 874) followed, to the effect that officers and employees of corporations can not, under the fourth and fifth amendments, refuse to testify- or produce books of corjiorations in suits against the corpo- rations for violations of the Anti-Trust Law of July 2,^ 1890, in view of the immunity given by the act of February 25, 190.3. Ib. 24. Corporation can not Claim Immunity Because of Testimony or Evidence Furnished by its Officers. — A corporation, whether State or Federal, can not claim immunity from prosecution for violation of the interstate commerce or anti-trust laws of the United States because of testimony given or evidence pro- duced by its officers or agents before the Interstate Commerce Commission or the Commissioner of Corporations, or in any proceeding, suit, or prosecution under such laws ; the right to immunity on account of evidence so given in the several cases granted by act February 11, 1893 (27 Stat, 443), and acts February 14 and February 25, 1903 (32 Stat, 827, 904), 1120 INDEX — ^DIGEST. COBPOBATIONS-Continued. being limited to individuals who as witnesses give testimony or produce evidence. United States v. Armour d Co., 142 F., ^^ 8—951 M. Article IV of the Constitution of the United States has noth- ing to do with the conduct of individuals or corporations It only prescribes a rule by which courts. Federal and State are to be guided when a question arises in the progress of a pending suit as to the faith and credit to be given by the court to the public acts, records, and judicial proceedings of a State, other than that in which the court is sitting Minnesota v. Northern Securities Co., 194 U. S., 48. 2-53a m Indictment— Criminal Ecsponsibility-^oinder of Defendants- Corporation and its OlBcers. See V. 8, v. MacAndrews d Forbes Co., 149 F., 823, 836. COSTS. The discretion of the trial court under section 7 of the Anti- Trust Act of July 2. 1890 (26 Stat, 209), to allow a reason- able attorney's fee to the successful plaintiff in an action brought under that section to recover damages for a viola- tion of the provisions of that act against combinations in restraint of trade, is not abused by an allowance of ?750 although the verdict was but for f500, where the trial took five days, and from the proof offered it appeared that from f 150 to $1,000 would be a reasonable sum. Montague v Lmiry^ 193 U. S., 38. ^__3^ COVBTS. I. FeDEBAL CoUBTS in GENEaA]>-JUBISDICTION AND POWEB. 1. Jurisdiction over Nonresident Defendants in Private Suits — The authority given by section 5 of the act of July 2, 1890 (26 Stat, 209), to bring in nonresidents of the district can not be availed of in private suits, and the court can not acquire Jurisdiction over them. Greer, MiUs d Co. v. Stoller « ' ^' 1— 6*>() J^'J^^i/tion to Private Suit. Against a State for Violation of Anti-Trust Law— Necessary Parties— Where a person brings an action under section 7 of the Anti-Trust Law of July 2 1890, against the officials of a State, to recover damages for acts done under authority of a State statute, which gives the State an entire monopoly of the traffic in intoxicating liquors (act S. C. Jan. 2, 1895), the State itself is a necessary party thereto, and conseijuently the Federal courts would mZ °li"^*^^^"«° ^'^ *^« «<^«on. Loicenstein v. Evans, 69K, 90a ^ INDEX — DIGEST. 1121 COURTS— Continued. I. Federal Courts in General— Continued. 3. Court of Equity can not Entertain Bill of Private Party to Enforce Anti-Trust Law.— The Anti-Trust Law of July 2, 1890, does not authorize a court of equity to entertain a bill by a private party to enforce its provisions, his remedy be- ing by an action at law for damages. Southern Ind. Exp. Co. V. V. S. Exp. Co., 88 F., 659. 1—862 4. The United States can not maintain a bill in equity to restrain an association of railroads from carrying into effect an agree- ment alleged to be illegal under the Interstate Commerce Law, when it appears that it did not grant the charter of, and has no proprietary interest in, any of the roads. Its right is to prosecute for breaches of the law, not to provide remedies. U. S. v. Joint Traffic Assn., 76 F., 895. 1—615 Case reversed, 171 U. S., 505 (1—869). . 5. Jurisdiction After Admission of Territory as State. — In 1895 the plaintiff in error was indicted, with others, in a district court of the Territory of Utah, under section 3 of the act of July 2, 1890 (26 Stat, 209), which declares illegal "every ♦ * * combination * * * in restraint of trade or commerce in any Territory." In January, 1896, Utah was admitted as a State, and thereafter the case was transferred to the Federal court for the district of Utah, where, after hearing on demurrer to the indictment, the plaintiff in error was tried and convicted. Held, on writ of error, that neither under the act of Congress authorizing Utah to form a State government (28 Stat, 111, 112), nor the constitution of Utah (art 24, sec. 7), nor by other legislation, was juris- diction conferred upon the Federal court to proceed with the case. Moore v. U. S., 85 F., 465. 1—815 6. S&me.—Held, further, that the case did not come within the provisions of Revised Statutes, section 13, regulating the effect of the repeal of statutes, for the admission of Utah as a State did not operate to repeal the act of July 2, 1890, which still applies to the Territories of the United States. lb. 7. Court of Equity— Adjustment of Difficulties Between Receiver of Railroad and Employees.— Whel-e the property of a railway or other corporation is being administered by a receiver under the superintending power of a court of equity, it is competent for the court to adjust difficulties between the receiver and his employees, which, in the absence of such adjustment, would tend to injure the property and to defeat the purpose of the receivership. Waterhouse v. Coiner, 55 F.. 149. 1—119 8. Same.— It follows, then, that it is in the power of the court, in the interest of public order and for the protection of the property under its control, to direct a suitable arrangement with its employees or officers, to provide compensation and 1122 INDEX — DIGEST.- COUBTS— Continued. I. Federal Ccwets in Obneral— Continoeil. conditions of their employment, and to avoid, if possible, an interruption of their labor and duty, which will be disastrous to the trust and injurious to the public. /&. S. A Conrt of Equity Should Hot Aid by Entertaining Infringe- ment Suits Brought by an Illegal Corporation.— A corpora- tion organized for the purpose of securing assignments of all patents relating to "spring-tooth harrows," to grant licenses to the assignors to use the patents upon payment of a royalty, to fix and regulate the price at whfch such hai- rows shall be sold, and to take charge of all litigation, and prosecute all infringements of such patents as an illegal combination, whose purposes are contrary to public policy, and which a court of equity should not aid by entertaining infringement suits brought in pursuance thereof. National Harrow Co. v. Quick, 67 F., 130. 1 143 10, Jurisdiction of a Court of Equity can not be Invoked to Enforce a Contract Arising out of an Unlawful Combination of Bail- roads— Ticket Brokers. — In a suit by a railroad company to enjoin the defendants, who were tickQ^ brokers, from deal- ing in special tickets issued by complainant on account of the Pan-American Exposition, which were by their terms nontransferable, it appeared from the showing made on a motion for a preliminary injunction that complainant was a member of a combination known as the " Trunk Line Associ- ation," formed by a number of railroads operating in differ- ent States for the purpose of preventing comiM?tition ; that the passenger receipts of all such roads were pooled and divided on an agreed basis: and that the special rates made on account of the exposition were fixed, and the terms of the tickets which were the basis of the suit were pre- scribed by such association through its passenger com- mittee, HeM, That such combination was illegal, as in violation of the Federal Anti-Trust Law (26 Stat, 209), and that complainant could not invoke the aid of a Federal court of equity for the protection of rights claimed under contracts which were the direct result and evidence of such unlawful combination. Delaware, L. d W. R. Co. v. Frank, 110 F., (^.89. 2 82 11. A railroad company, belonging to an illegal combination in violation of the Anti-Trust Act of 1890, can not invoke the aid of a Federal court of equity for the protection of its rights claimed under contracts which were the direct result and evidence of such unlawful combination. /ft. IS. Will Enjoin a Combination Between Two Parallel and Competing lines of Railroad— Question of Public Policy.— Where the effect of a combination is to directly prevent competition between two parallel and naturally competing lines of rail- INDEX — DIGEST. 1123 COURTS— Continued. I. t^EDERAL CoiKTs ix Gexeral — Continued, road engaged in interstate business, it is in restraint of interstate commerce and a violation of the Anti-Trust Act of July 2, 1890 (26 Stat., 209), and the court, in a suit to enjoin it as such, can not consider the question whether the combination may not be of greater benefit to the public than competition would be; that being a question of public .ix)licy to be determined by Congress. U. *S'. v. Northern Securities Co., 120 F., 721. 2—216 13. May Restrain Violations of Anti-Trust Act and Frame its Decree to Accomplish Practical Results. — Although cases should not be brought within a statute containing criminal ])rovisious that are not clearly embraced by it, the court should not by narrow, technical, or forced construction of words exclude eases from it that are obviously within its provisions, and while the act of July 2, 1890, contains crim- inal provisions, the Federal court has power under section 4 of the act in a suit in equity to prevent and restrain violations of the act, and may mold its decree so as to accomplish practical results such as law and justice demand. Northcni SccKritics Co. v. United States, 193 U. S., 197. 2—^9 14. Consent of Parties can Never Confer Jurisdiction upon a Federal Court. If the record does not attirmatively show jurisdiction in the circuit court, this court must, upon its own motion, so declare, and make such order as will prevent the circuit court from exercising an authority not conferred upon it by statute. Minnesota v. 'Northern Securities Co., 194 U. S., 48. 2—533 15. A State is not a citizen within the meaning of the provisions of the Constitution or acts of Congress regulating the jurisdic- tion of the Federal courts. /O. 16. A case can not, under existing statutes regulating the jurisdic- tion of the courts of the United States, be removed from a State court, as one arising under the Constitution or laws of the United States unless the plaintiff's complaint, bill, or declaration shows it to be a case of that character. /&. 17. While an allegation in a complaint filed in a circuit court of the United States may confer jurisdiction to determine whether the case is of the class of which the court may prop- erly take cognizance for purposes of a final decree on the merits, if notwithstanding such allegation, the court finds, at any time, that the case does not really and substantially involve a dispute or controversy within its jurisdiction then, by the express command of the act of 1875, its duty is to proceed no further. And if the suit, as discussed by the complaint could not have been brought by plaintiff originally in the circuit court, then, under the act of 1887-88 it 1124 IHDEX — DIGEST. COUaTS— Continued. I. Federal Courts in General— Continued. should not have been removed from the State court and should be remanded. jj, IS. A State can not, by a suit in its own name, invoke the original jurisdiction of a Federal circuit court to restrain and pre- vent violations by competing interstate railway companies, of the Anti-Trust Act of July 2. 1890 (26 Stat, 269), because, alone, of the alleged remote and indirect injury to its pro- prietary interests arising from the mere absence of free com- petition in trade and commerce as carried on by such car- riers within its limits. /j^ 1». Article IV of the Constitution of the United States only pre- scribes a rule by which courts, Federal and State, are to be guided when a question arises in the progress of a pending suit as to the faith and credit to be given by the court to the public acts, records, and judicial proceedings of a State, other than that in which the court is sitting. It has nothing to do with the conduct of individuals or corporations. lb. 20. Allegation of Amount in Controversy.— It is not essential that a bill in a Federal court should state the amount or value in controversy, if it appears to be within the jurisdictional limit, from the allegations of the bill, or otherwise from the record,* or from evidence taken in the case before the hearing of objections to the jurisdiction. RoUmon v. Suburban Brick Co., 127 F., 804. 2-^12 21. Abatement— Pendency of Action in State Court.— The pendency of a suit in a State court is not a bar to one on the same cause of action in a Federal court /&. 22. Production of Bocuments.— The search and seizure clause of the fourth amendment was not intended to interfere with the power of courts to compel the production upon a trial of documentary evidence through a subpcena duces tecum. Hale V. Henlcel, 201 U. S., 4.3. 2—874 See also Search, and Witnesses. 28. Orders of a Federal circuit court directing witnesses to answer the questions put to them and produce written evidence In their possession on their examination before a special ex- aminer appointed in a suit brought by the United States to enjoin an alleged violation of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), is interlocutory in the principal suit, and therefore not appealable to the Supreme Court. An ap- peal does lie, however, from a Judgment of contempt, at- tempting to enforce the order. Alexander v. UnitPd States, 201 U. S., 117. 2—945 See also Nelson v. United States, 201 U. S., 92 (2—920). 24. Admission of Evidence — Order of Proof.— In an action to recover damages for an alleged conspiracy in restraint of interstate commerce, it was within the discretion of the trial court to INDEX — DIGEST. 1125 COURTS— Continued. I. Federal Coikts in General — Continued, admit evidence of acts and declarations of various of the defendant associations, their officers, committees, members, and agents, made in the absence of many of the other de- fendants, before a prima facie case of conspiracy had been established, and before privity of some of the defendants had been proven, on condition that such connecting evidence should be thereafter given. Loder v. Jayne, 142 F., 1010. 2—977 II. Circuit Courts. 25. Jurisdiction to Restrain and Punish Violations of Anti-Trust Act. — The circuit court have jurisdiction under the Anti- Trust Act of July 2. 1890, to issue injunctions to restrain and punish violations of that act U. S. v. Affler, 62 F., 824. 1—294 26. Jurisdiction — Habeas Corpus — Removal of Prisoner. — Where a prisoner, arrested under warrant based upon an indictment in a distant State and district is held pending an applica- tion to the district court for a warrant of removal for trial, the circuit court of the district in which he is held has authority on habeas corpus to examine such indictment and to release the prisoner, if in its judgment the indictment should be quashed on demurrer. In re Terrell, 51 F., 213. 1—46 27. Habeas Corpus — Removal of Prisoner — Examination of Indict- ment. — It is the right and duty of the circuit court on an application for habeas corpus for the purpose of releasing a person held under a warrant of a United States commis- sioner to await an order of the district judge for his re- moval to another district to answer an indictment, to ex- amine the indictment to ascertain whether it charges any offense against the United States, or whether the offense comes within the jurisdiction of the court in which the in- dictment is pending, /v? re Greene, 52 F., 104. 1—54 28. Jurisdiction— Obstruction of the Mails. — ^The circuit court had power to issue its process of injunction upon complaint which clearly showed an existing obstruction of artificial highways for the passage of interstate commerce and the transmission of the mails, not only temporarily existing, but threatening to continue. In re Debs, 158 U. S., 565. 1—565 29. Same — Violation of Injunction — Contempt. — Such an injunction having been issued and served uiwn the defendants, the cir- cuit court had authority to inquire whether its orders had been disobeyed, and when it found that they had been dis- obeyed, to proceed under Revised Statutes, section 725, and to enter the order of punishment complained of. lb. 30. Same— Habeas Corpus.— The circuit court having full jurisdic- tion in the premises, its findings as to the act of disobedi- INDEX — ^DIGEST. COUBTS— Continued. II. CiRcriT CorKTs— Continued. enee are not aimi to review on habeas wrpus In this or any other court. /6. 31. The circuit court has power, in an action brought by the At- torney-General, to enjoin the Northern Securities Company, a corporation organized to hold the majority of the stocli of two competing and parallel lines of railroad for the purpose of preventing conifietltlon, from voting such stock, and from exercising any control \^hatever over the acts and doings of the railroad companies in question, and also to enjoin them from paying any dividends to the holding corporation on any of the stock so held by it. yorthern Securities Co. v. Ifiited Slates, 193 U. S., 197. 2—338 32. The circuit court can have no jurisdiction of a suit instituted by a State, because of an allegation in the complaint that fnll faith and credit will not be given to its public acts if a Hew Jersey corporation organized for the purpose of acquiring the control of two competing interstate railway companies engaged in business within its limits is allowed to carry out the object of its incorporation. Minnesota v. Northern Se- curitieif Co., 194 U. 8., 48. 2 533 38. The Jurisdiction of the circuit court to entertain a suit to en- Join a combination of persons from interfering with and pre- venting shipowners from shipping a crew may be maintained on the ground of preventing a multiplicity of suits at law, and for the reason that damages at law for interrupting the business and intercepting the profits of pending enterprises and voyages must, in their nature, be conjectural and not susceptible of proof. ,54 Fed. Rep., 40. affirmed. BUndell v. HiiSfan. r.f> F., 09(». i 182 34. The jurisdiction of the circuit court over a bill in eear in the bill, but may be shown to the satisfaction of the court. lb. 40. Jurisdiction — Appeal — ^Refusal of Witness to Answer Questions in Anti-Trust Investigation — Fifth Amendment. — In a suit in the Circuit Court of the United States brought by the United States against corporations for violations of the Anti- Trust Law of July 2, 1890, a witness refused to answer ques- tions or submit books to inspection before an examiner ap- pointed by the court on the ground of immateriality, also pleading the Fifth Amendment ; after the court had overruled the objections and directed him to answer he again refused and judgment in contempt was entered against him. On ap- peal to the Supreme Court, Held, That questions under the Constitution of the United States were involved and the court has jurisdiction of an appeal direct from the circuit court. Nelson v. United Stales, 201 U. S., 92. 2 — ^920 41. Same. — In such an action the books of the various defendants, both before and after the alleged combination, and the con- tracts between them, as well as other papers referred to in the opinion, are all matters of material proof, but whether 1128 INDEX — ^DIGEST. COUBTS— Continued. IV. SupHEME Court — Continued. material or not the testimony must be taken and exoeptiam can be noted by the examiner and the materiality of the evidence passed on by the conrt. /j, 42. Jurisdiction— The Order of a Judge of the Circuit Court to a Witness to Answer or be Punished for Contempt is Interlocu- tory and Not Appealable to Supreme Court.— In a suit in a circuit court of the United States brought by the United States against corporations for violations of the Anti-Trust Law of July 2, 1890, a witness refused to answer questions or produce books before the examiner on the ground of im- materially, also pleading the privileges of the Fifth Amend- ment; the court overruled the objections and ordered the witness to answer the questions and produce the books ; an appeal was taken to this court. Held, That while such an order might leave the witness no alternatiye except to obey or be punished for contempt it is interlocutory in the prin- cipal suit and not a final order, nor does it constitute a prac- tically independent proceeding amounting to a final judg- ment, and an appeal will not lie therefrom to this court. Alexander v. United States, 201 U. S., 117. 8—945 4S. Same— But an Appeal from a Judgment of Contempt is Review- able.— If the witness refuses to obey and the court.goes fur- ther and punishes him for contempt there is a right of re- view, and this is adequate for his protection without unduly impeding the process of the case. [See al?o Nelson v. United males, 201 U. S., 92 (2—920).] /^ 44. The Jurisdiction of the Supreme Court of the United States on writ of error to a circuit court, under the Circuit Court of Appeals act, when the constitutionality of a State statute is in question, extends to all cases in which such a question is decided against the claim of either party, and therefore in- cludes a case in which the writ of error is taken by a de- fendant who set up in defense of the action a statute which the court held unconstitutional. Connolly v. Union Sewer Pipe Co., 184 U. S., 54. g— 118 45. Same.— If a claim is made in the circuit court that a State en- actment is invalid under the Constitution of the United States, and that claim is sustained or rejected, the Supreme Court may review the judgment at the instance of the unsuc- cessful party. .- 46. Consent of Parties can Never Confer Jurisdiction upon a Federal Court.— If the record does not aflirmativelv show jurisdic- . tlon in the circuit court, the Supreme Court must, upon its own motion, so declare, and make such order as will prevent the circuit court from exercising an authority not conferred upon it by statute. Minnesota v. Northern Securities Co 194 U. S., 48. 2_g3^ INDEX — ^DIGEST. 1129 COURTS -Continued. IV. SrpREME Court— Continued. 47. The findings of fact made in a State court in a suit in equity are conclusive upon the Supreme Court of the United States on writ of error to that court. Bement v. National Hmrow Co., 186 U. S., 70, 83. ^^^^^ ^gj 48. Certiorari.-Where the decree of the Circuit Court of Appeals in an action in equity only reverses an order of the Circuit Court granting an injunction, but the court, the record pre- sentmg the whole case, practically disposes of the entire con- troversy on the merits, certiorari may issue from the Su- preme Court and that court may finally dispose of it by its direction to the Circuit Court. Harriman v. Northern Se- cunties Co., 197 U. S., 244. 2—669 CREDIBILITY OP WITNESSES. See Jury, 2. DAMAGES. 1. Damages Recoverable—Only actual damages, established by the proof of facts from which they may be rationally inferred with reasonable certainty, are recoverable under the Sher- man Anti-Trust Law (26 Stat., 209). Speculative, remote or contingent damages can not form the basis of a lawful judgment. Central Coal & Coke Co. v. Hartman, 111 F., 96. 8. Same— Speculative Damages— Evidence— Sufficiency.— The ^ti- mates, speculations, or conjectures of witnesses unfounded m the knowledge of actual facts from which the amount of the damages could have been inferred with reasonable cer- tainty will no more sustain a judgment than the conjectures or a jui"y. ^ 3. Same-Anticipated Profits— When Recoverable.— The general rule is that the anticipated profits of a commercial business are too remote, speculative, and dependent upon changing circumstances to warrant a judgment for their loss There IS an exception to this rule that the loss of profits from the interruption of an established business may be recovered where the plaintiff makes it reasonably certain by compe- tent proof what the amount of his actual loss was ih 4. Same-Profits of Established Business-Evidence-Indispensable to Recovery.-Proof of the expenses and of the income of the busmess for a reasonable time antenor to and during the mterruption charged, or of facts of equivalent import, is indispensable to a lawful judgment for damages for the ioss of the anticipated profits of an established business. /ft Same-Loss of Profits.-The plaintiff testified that the acts of the defendants had greatly diminished his business ore- vented him from making contracts for future delive'ry of coal and diminished his sales from 15 to 20 carioads ner month, on which he would have made a profit of from ^2 to $20 per car : that he could not tell what the volmne of his 1130 INDEX — ^DIGEST. BAMA6ES— Continueci businefts was before or after the acts complained of, and that he had no books or papers which would show this fact. He produced no evidence of the exi)enses or income of his busi- ness before or after the acts complained of. Held, That the evidence was insufficient to sustain a verdict for damages for the loss of anticipated profits. 16. 6. Burden of Proof. — In an action for damages for conspiracy 111 restraint of interstate commerce la violation of act of Con- gress of July 2, 1890 (26 Stat, 209), the burden was on plaintiff to show some real actual damage to his business by reason of the alleged unlawful combination. Loder v. Joime, 142 F., 1010. 2—977 7. Same — Compensation for Extra Work— Evidence.— Where, in an action for damages to plaintiff's business because of an alleged conspiracy in restraint of interstate commerce, plain- " tiflf claimed $5,000 compensation to himself for extra work claimed to have been required by reason of such unlawful combination, but failed to prove how much additional time lie was required to spend in his business after the combina- tion went into effect, he was not entitled to recover for such alleged extra services. 16. 8. Same — ^Additional Capital. — Where, in a suit for damages to plaintiff's business because of an alleged unlawful combina- tion in restraint of interstate commerce, plaintiff claimed that because of such combination it was necessary to put $10,000 extra capital into his business from rents of his building, which were collected from time to time, but he testified on cross-examination that the payments of interest and taxes on the building were In excess of the amount paid Into the business, he was not entitled to recover interest on such alleged additional capital. 16. 9. Same — Increased Cost. — Where, by reason of an unlawful com- bination in restraint of interstate commerce in violation of the Sherman Act, plaintiff was compelled to conduct his business at a greater cost, though it was greater in volume, and by reason of the Injury he received a less percentage of return, he was entitled to recover such additional cost, though by reason of his increased efforts and the natural in- crease 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. 16. 10. The owner of goods may dictate the prices at which he will sell them, and the damages which are caused to an appli- cant to buy by the refusal of the owner to sell to him at prices which will enable him to resell them at a profit con- stitute no legal injury, and are not actionable, because they are not the result of any breach of duty or of contract by INDEX — DIGEST. 1131 DAMAGES— Con tin ued. the owner. Whitwell v. Continental ToMcco Co., 125 F., 454. 2_27j Actions fob Recovery. See Actions and Defenses, 21-42; Statutes 62-71. DECLARATIONS. 1. Averments. — A declaration in an action for damages under the Anti-Trust Act of 1890, which does not aver that the goods manufactured by plaintiff, and in respect of which be claims to be injured, are a subject of interstate commerce, or that the acts complained of have anything to do with any con- tract in restraint of trade, or that the parties are citizens of different States, is demurrable. Bishop v. American Pre- servers Co., 51 F., 272. 1 ^9 2. Duplicity.— A declaration in a suit based on section 7 of the Anti-Trust Act of July 2, 1890 (26 Stat, 210), to recover damages resulting to plaintiff from a violation of such pro- vision, which alleges in a single count that defendant en- tered into a "contract, combination, and conspiracy" in re- straint of trade, is bad for duplicity. Rice v. Standard Oil Co., 134 F., 464. 2—633 See also Pabties, 3. DEFENSES. See Actions and Defenses. DEFINITIONS. See Words and Phrases. DEMUBBEB. A bill in equity, and the demurrer thereto, are neither of them to be read and construed strictly as an indictment, but are to be taken to mean what they fairly convey to a dispas- sionate reader by a fairly exact use of English speech. Swift & Co. V. United States, 196 U. S., 375. 2—642 See Declarations, 1 ; Habeas Corpus, 1. DfBECT AND IMMEDIATE EFFECT. Direct. See Combinations, etc., 14, 19, 30, 43, 51, 63, 67, 91, 168, 175; Constitution, 9; Interstate Commerce, 32, 37; Statutes, 11, 19, 23. Direct and Immediate. See Combinations, etc, 14 44 45 105. ' » . Directly and Appreciably. See Combinations, otc, 8, 31; Statutes, 26. Directly and Effectually. See Combinations, etc., 104. Directly and Necessarily. See Combinations, etc, 9, 197: Statutes, 17. • ' Directly and Substantially. See Combinations, etc, 9, 11, 12, 69, 70, 87, 108; Congress, 7; Statutes, 10, 11, 14 15 lo' 43, 48. ' » • DIVISION OF TEBBITOBY. See Combinations, etc, 39, 136, 137. 1132 INDEX — ^DIGEST. BOCVMENTABY E VIBENCE. See Evidence, 8, 9 ; md Peoductiow OF Documents. BBIJGH3. See Combinations, etc., 29, 160. Elll'OBCEMENT. See Injunctions, 5, 8, 9, 13, 20, 21; Combina- tions, ETC., 16-20. EQUITY. 1. Equity will not encouragre a combination in restraint of trade and probably illegal under the Federal Anti-Trust Act of July 2, 1890. Amer. Biscuit Mfg. Co, v. Klotz, 44 F., 721. 1—3 2. liiri8diotion.-^Eqnity has jurisdiction to restrain public nui- sances on bill or information filed by the proper officer on behalf of the people. V. 8. v. Dehs, 64 F., 724. 1—322 S. Same — Mght to Jury. — ^The power given by act of July 2, 1890, to circuit courts " to prevent and restrain violations " of the act is not an invasion of the right of trial by Jury, as the jurisdiction so given to equity will be deemed to be limited to such cases only as are of equitable cognizance. lb. 4. A bill in equity and the demurrer thereto are neither of them to be read and construed strictly as an indictment, but are to be talien to mean what they fairly convey to a dispas- sionate reader by a fairly exact use of English speech. Swift d Co. V. United States, 196 U. S., 375. 2—642 See also Parties ; Courts ; Pleading and Practice, EVIDENCE. 1. Admissibility-r-Froclamations of Various Government Officers — Newspaper Reports. — In order to sustain the allegations of a bill praying an injunction against a combination in restraint of interstate commerce, the complainant may offer in evi- dence, as matter of history, the official proclamation of the various Government officers and also newspaper reports sup- ported by affidavits containing manifestoes and declarations of the respondents. U. 8. v. Workitigmen's Amalg. Council, Case affirmed, 57 F., 85 (1—184). 2. Admission of Evidence — Order of Proof. — In an action to re- cover damages for an alleged conspiracy in restraint of inter- state commerce it was within the discretion of the trial court to admit evidence of acts and declarations of various of the defendant associations, their officers, committees, members, and agents, made in the absence of many of the other defendants, before a prima facie case of conspiracy had been established, and before privity of some of the defend- ants had been proven, on condition that such connecting evi- dence should be thereafter given. Loder v. Jayne, 142 F., 1010. 2—977 8. Same — ^Burden of Proof. — The burden of proving a combination and conspiracy between manufacturers and wholesale and INDEX — DIGEST. 1188 EVIDENCE— Continued. retail dealers of proprietary medicines and drugs in re- straint of trade, in violation of act of Congress of July 2, 1890 (26 Stat, 209), injurious to plaintifif, an^ that defend- ants were engaged and took part in such conspiracy, was on the plaintiflF. * j^^ 4. Same— Damages— Burden of Proof.— In an action for damages for conspiracy in restraint of interstate commerce, in viola- tion of act of Congress of July 2, 1890 (2G Stat., 209), the burden was on plaintiff to show some real actual damage to his business by reason of the alleged unlawful combination. lb. 6. Same — Compensation for Extra Work — Evidence. — Where, in an action for damages to plaintiff's business because of an al- leged conspiracy in restraint of interstate commerce, plaintiff claimed ^5,000 compensation to himself for extra work claimed to have been required by reason of such unlawful combination, but failed to prove how much additional time he was required to spend in his business after the combina- tion went into effect, he was not entitled to recover for such alleged extra services. /&, 6. Sufficiency — Injunction Pendente Lite. — Evidence that, by rea- son of the action of a combination of persons, the crew left complainants' ship as she was about to sail, and that another crew could not be procured for nine days, and then only with the assistance of the police authorities and the protection of a restraining order, while other vessels in the vicinitj^ had no difficulty in getting crews, is sufficient to authorize the court to enjoin interference with the business of the com- plainants by such combination pendente lite. BlindcU v. Hagan, 56 F., GOG. 1—182 Affirming 54 F., 40 (1—106). 7. Acts of One Party. — Where several persons are proved to have combined together for the same illegal purpose, any act done by one of them, in pursuance of the original concerted plan, and with reference to the common object, is, in the con- templation of the law, the act of the whole party, and there- fore the proof of such act will be evidence against any of the others who were engaged in the conspiracy. U. 8. v. Ccs- sidy, 67 F., 698. l-^t4^ 8. Documentary or Oral— Materiality.— Evidence, whether docu- mentary or oral, sought to be elicited from witnesses sum- moned in an action brought by the United States to enjoin an alleged conspiracy by manufacturers of paper to suppress competition, in violation of the act of July 2, 1890 (26 Stat, 209), by creating a general selling and distributing agent, is material, where it would tend to establish the manner in which such agent executed its functions. Nelson v. United States, 201 U. S., 92. 2—920 11808— VOL 2—06 M 72 1134 INDEX — ^DIGEST. K VIBENCE— ( 'oiitinuetL 9. Same. — ^Documentary evidence in the shape of books and papers of corporations are in the possession of the officers thereof, who can not refuse to produce them on the ground that they are not in their possession or under their control. lb. 10. Same. — ^The immateriality of the evidence sought to be elicited can not justify the refusal of witnesses to obey the orders of the Federal circuit court, requiring them to answer the questions put to them and to produce written evidence In their possession, on their examination before a special ex- aminer, lb. 11. Same. — Objections to the materiality of the testimony are not open to consideration on a writ of error sued out by wit- nesses to review a judgment for contempt, entered against them for disobeying an order to testify. lb. OvEBT Acts — Cumulative Evidence, See V, 8. v. MacAndrewa S Forbes Co., 149 F., 836. See also Witnesses. EXPRESS COMPANIES. See Statutes, 83. FAIR AND REASONABLE RESTRAINTS. See Combinations, ETC., 59, 174, 191. FISH. See Combinations. 144, 147. FORFEITURE OF GOODS. See Seizure ; Statutes, 59. FRANCHISES. See Corporations, 19. 0RAND JURY. Powers — ^Witnesses — ^Refusal to Testify — Contempt. — Where, after a witness had refused to testify before a grand jury considering supposed infractions of the Anti-Trust Law, the grand jury made a presentment to the court charging the witness with contempt, and the court, after hearing, ordered the witness to answer the questions and to forthwith pro- duce the papers required, the court's action was equivalent to an express instruction to the grand jury to investigate the matter referred to in the presentment, and hence the fact that the grand jury had been previously acting beyond its power was harmless. In re Hale, 139 F., 496. 2 — 804 Order affirmed. Hale v. iare«fce^ 201 U. S., 43 (2^874). See also Immunity. •BTAU'liAg coRPirs. I. Removal of Prisoner — Jurisdietion of Circuit Courts. — Where a prisoner, arrested under warrant based upon an indictment in a distant State and district, is held pending an applica- tion to the district court for a warrant of removal for trial, the circuit court of the district in which he is held has authority on habeas corpus to examine such indictment and INDEX — DIGEST. 1185 HABEAS CORPUS— Continued. to release the prisoner, if in its judgment the indictment should be quashed on demurrer. In re Terrell, 51 F., 213. 1^46 2. Same.— On habeas corpus to release a person held under a warrant of a United States commissioner to await an order of the district judge for his removal to another district to answer an indictment, it is the right and duty of the circuit court to examine the indictment to ascertain whether it charges any oflfeuse against the United States, or whether the offense comes within the jurisdiction of the court in wliich the indictment is pending. In re Cheene, 52 F., 104. 1—54 3. Witness — Contempt — ^Incriminating Evidence. — Where a wit- ness is connuitted for contempt in refusing to answer all of a series of questions, for the reason that the answers would tend to criminate him, and some of the answers would have that tendency, he should not be denied relief on habeas corpus because sojue of tlie questions might be safely an- swered. Foot v. Buchanan, 113 F., 15G. 2—104 4. Witness Committed for Contempt by One Judge Would Not be Discharged by Habeas Corpus by Another Judge of Same Court. — Where a subpcena duces tecum was directed to be / issued by a circuit judge, and the witness was committed for contempt for failure to obey the same, he would not be discharge on habeas corpus by another judge of the same court, though the latter was of the opinion that the sub- poena authorized an unconstitutional search and seizure of private papers. In re Hale, 139 F., 496. 2—804 Order atfirnied in Hale v. Henkel, 201 U .S., 43 (2—874). 5. Jurisdiction of Circuit Courts in Contempt Proceedings. — Where the circuit court has full jurisdiction, its findings as to the act of disobedience of its orders are not open to review on habeas corpus in the Supreme Court or any other court. In re Debs, 15S U. S., 564. 1— .56G HOLDING COMPANIES. To Vote Stock. See Combinations, etc., 84-91, 181, 182. To Receive Assignments of Patents. See Combinations, etc, 92-95, 183. IMMUNITY. 1. Of Witnesses Before the Grand Jury.— Act of Congress, Febru- ary 11, 1893 (27 Stat, 443), providing that no person shall be excused from testifying in a proceeding growing out of an alleged violation of an act to regulate interstate commerce, approved February 4, 1887, on the ground that his testimony will tend to incriminate him, and that no person shall be prosecuted, etc., on account of anything concerning which he may testify in such proceeding, appUes only to proceed- ings connected with the act of February 4, 1887, and does UM IKDEX — ^DIGEST. nOOmiTY— Continued. aot apply to a prosecution for violation of the Anti-Trust Aot (26 Stat, 209), so as to abrogate In relation thereto the Fiftli Amendment to the Constitution, providing that no per- son shall be compelled in a criminal ease to be a witness against himself. Foot v. Buchanan, 113 F., 156. 2—104 S. Same — Question of Incrimination one for Judge. — Where a wit- ness claims that the answer to a question will tend to in- criminate him, it is not for the witness, but for the judge, to decide whether, under all the circumstances, such might be the effect, and the witness entitled to tlie privilege of silence. /t,^ S. Same.— Where a person has already been indicted for an offense about which he is to be examined as a witness, and the ques- tions asked him tend to connect him with such offense, the testimony sought is within the inhibition of the Fifth Amend- ment to the Constitution providing that no person shall be compelled in any criminal case to be a witness against him- self, /ft, i. Same — ^Witness not Compelled to act ¥pon an Assurance of Judge.— Where a witness before a grand jury declines to answer certain questions, and Is taken before the judge, who assures him that he can safely answer, as his testimony can not be used against him, he is not compelled by such assur- \ ance to relinqqish his constitutional privilege, where the answer may tend to criminate him. /ft. 0. Same.^ — An inquisition before a grand jury to determine the ex- istence of supposed violations of the Anti-Trust Act was a "proceeding" within the aot of February 19, 1903 (32 Stat, 848), providing that no person shall be prosecuted or sub- jected to any penalty for or on account of any transaction, matter, or thing concerning which he may testify or produce evidence in any "proceeding" under several statutes men- tloned, including such Anti-Trust Act. In re Hale, 139 F., 49a 2—804 i. Same.— The examination of witnesses before a grand jury con- cerning an alleged violation of the Anti-Trust Aot of July 2, 1890 (26 Stat. 209), is a "proceeding" within the mean- ing of the proviso to the act of February 25, 1908 (32 Stat, 854r^903), that no person shall be prosecuted or be subjected to any penalty or forfeiture for, or on account of, any trans- action, matter, or thing concerning which he may testify or produce evidence In any proceeding, suit, or prosecution under certain named statutes, of which the Anti-Trust Act is one. The word "proceeding" should receive as wide a construction as is necessary to protect the witness in his disclosures. Hale v. Henkel, 201 U. S., 43. 2—874 7. Same.— The interdiction of the Fifth Amendment operates only where a witness ii asked to incriminate himself, and does mrt apply If the criminality ii taken away. /». INDEX — ^DIGEST. 1137 IMMTJNITY-Continued. 8. Same. — 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. The law takes no account of the practical difficulty which a party may have in procuring his testimony. /j, 9. Same. — The difficulty, if any, of procuring such testimony does not render the immunity from prosecution or forfeiture, given by the proviso to the act of February 25, 1903, in- sufficient to satisfy the guaranty of the Fifth Amendment to the Constitution against self-incrimination. /6. 10. Same. — A witness can not refuse to testify before a Federal grand jury in face of a Federal statute granting immunity from prosecution as to matters sworn to, because the immu- nity 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. 75, 11. Same. — The privilege against self-incrimination afforded by the United States Constitution, Fifth Amendment is purely personal to the witness, and he can not claim the privilege of another person, or of the corporation of which he is an officer or employee. [To same effect, McAlister v. Henkel, 201 U. S., 90 (2—919).] /&. 12. Same.— Under the practice in this country the examination of witnesses by a Federal grand jury need not be preceded by a presentment or formal indictment, but the grand jury may proceed, either upon their own knowledge or upon examina- tion of witnesses, to inquire whether a crime cognizable by the court has been committed, and if so, they may indict upon such evidence. 75, 18. Same. — In summoning witnesses before a grand jury it is sufficient to apprise them of the names of the parties with respect to whom they will be called upon to testify, without indicating the nature of the charge against such persons. 76. 14. Same. — ^A corporation charged with a violation of the Anti- Trust Act of July 2, 1890, is entitled to immunity under the Fourth Amendment to the Constitution from such an un- reasonable search and seizure as the compulsory production before a grand jury under a subpoena duces tecum of all understandings, contracts, or correspondence between such corporation and six other companies, together with all re- ports and accounts rendered by such companies from the date of the organization of the corporation, as well as all letters received by that corporation since its organization, from more than one dozen different companies, situated in seven different States. /j. 1138 INDEX — ^DIGEST. IMMXmiTY— Continiiwi 15. Same.— The protection against unreasonable searches and seiz- ures afifonied by United States ConstitutioD, Fourth Amend- ment, can not ordinarily be invoked to justify the refusal of an officer of a corporation to produce its books and papers in obedience to a sultpcma duces tecum, issued in aid of an investigation by a grand jury of an alleged violation of the Anti-Trust Act of July 2. 1890, by such coiporation. lb, 16. Same. Hale v. Henkel (vol. 2, p. 874) followed as to the inquis- itorial powers of the Federal grand jury and the exteut of privilege and immunity of a witness under the B'ifth Amend- ment. McAUster v. Henkel, 201 U. S., 90. 2—019 17. Persons who furnished evidence in the " beef trust " investi- gation conducted by the Commissioner of Corporations pur- suant to a resolution of the House of Representatives of March 7, 1904, although they did so without being sub- poenaed or sworn, can not be prosecuted for violation of the Anti-Trust Law on account of the transactions, matters, or things to which such evidence relates. United States v. Armour d Co,, 142 F., 808. 2—951 18. Same— Scope of Immunity Provisions of Statutes.— The Im- munity provisions of the various statutes applicable to the investigation, to be valid, must be as broad as the privili'ge given by the Fifth Amendment to the Constitution. lb. 1». Same. — Section 6 of the act creating the Department of Com- merce and Labor (act Feb. 14, 1903, 32 Stat, 827), de- fining the powers and duties of the Commissioner of Cor- porations, requiring him to make investigation into the organization, conduct, and management of the business of all corporations or combinations engaged in interstate or foreign commerce, other than common carriers, and giving him the same powers in that respect as is conferred on the Interstate Commerce Commission with respect to carriers, including the power to subpoena and compel the attendance of witnesses, and to administer oaths and require the pro- duction of documentary evidence, contemplates that he shall proceed by private hearings. /ft. to. Same.— Section 6 (32 Stat, 827) provides that "all the re- quirements, obligations, liabilities, and immunities imposed or conferred by the * act to regulate commerce ' and by * an act in relation to testimony before the Interstate Commerce Commission ' shall also apply to all persons who may be sub- poenaed to testify as witnesses or to produce documentary evidence in pursuance of the authority conferred by this section." j^ SI. Same.— The act of February 11, 1893 (27 Stat., 443), which is supplementary to the Interstate Commerce Act, provides that "no person shall be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter, INDEX — DIGEST. 11^^9 IMMUNITY— Continued. or thing concerning which he may testify or produce evi- dence, documentary or othei*wise, before said commission or in obedience to its subpoena * * * or in any such case or proceeding. I^- 22. Same. — And the appropriation act of February 25, 1903 (32 Stat, 90i), making provision for the enforcement of the in- terstate commerce and Anti-Trust Laws, contains a similar immunity provision relating to persons giving testimony or producing evidence in any proceeding, suit, or prosecution under said acts. /&• 23. Corporations can not Claim Immunity because of Testimony Given or Evidence Furnished by its Officers or Agents. — ^A corporation, whether State or Federal, can not claim im- munity from prosecution for violation of the interstate com- merce or Anti-Trust Laws of the United States because of testimony given or evidence produced by its officers or agents before the Interstate Commerce Commission or the Commis- sioner of Corporations, or in any proceeding, suit, or prose- cution under such laws; the right to immunity on account of evidence so given in the several cases granted by act of February 11, 1893 (27 Stat, 443), and acts of February 14 and 25, 1903 (.32 Stat, 827, 904), being limited to indi- viduals who as witnesses give testimony or produce evi- dence. United States v. Armour d Co., 142 F., 808. 2—951 IN PARI DELICTO. See Sale, 6, 7. INCIDENTALLY, INDIRECTLY, OR REMOTELY. See Combxt NATioNS, ETC., 9, 105, 135, 136, 138, 139, 142, 151, 174, 176, 205 ; Congress, 7 ; Statutes, 7, 8, 14, 44, 49. INCITING STRIKES. See Combinations, etc, 119-125. INCRIMINATING EVIDENCE. See Witnesses; Immunity. INDICTMENTS. 1. Failure to Allege that Defendants Monopolized or Conspired to Monopolize Trade and Commerce Among the Several States, etc. — An indictment under section 2 of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), which fails to allege that de- fendants monopolized, or conspired to monopolize, trade and commerce among the several States, or with foreign nations, fails to state an offense, even though it does allege that they did certain acts with intent to monopolize the traffic in distilled spirits among the several States, and that they have destroyed free competition in such traffic in one of the States and increased the price of distilled spirits therein. U, S. V. Oreenhut, 50 F., 469. 1—30 1140 INDEX — DIGEST. INDICTMENTS-C'ontinueetwecn the States and monopolize the traffic therein, acquired by lease or purchase, prior to the passage of the act, some 70 distilleries, producing three-quarters of the distillery products of the United States, and that they continued to operate the same after the passage of the law, and by certain described means sold the product at increased prices. Held, That no crime was charged in respect to the purchase or continued operation of the distilleries, since there was mo averment that defendants obligated the vendors of tie distilleries not to build others, or to withhold their capital or experiemce from the business. In re Corn in ff, 51 P., 3a 1__33 ». Same.— The indictment further averred that defendants, in pur- suance of the combination, shipped certain of tlic products to Massachusetts, and sold them there through their distribut- ing agents to dealers, who were promised a rebate of 5 cents per gallon on their purchases, provided such dealers pur- chased their distillery products exclusively from the distrib- uting agents, and sold them no lower than the prescribed list prices, said rebate to be paid when such dealers should sign a certificate that they had so purchased and sold for six months; and that by this means defendants had controlled and increased the price of distillery products In Massachu- setts. Held, That no crime was charged with respect to such sales, since there was no averment of any contract whereby the purchasers bound themselves not to purchase from others, or mot to sell at less than list prices. /6. 1—34 i. Failure to Charge a Crime.— An indictment under the act of July 2, 1890, relating to monopolies, averred in the fourth count that defendants, in pursuance of a combination to restrain trade In distillery products between the States, shipped cer- tain whisky to Massachusetts and sold it there through their distributing agents to dealers under a contract whereby said dealers were promised a rebate of 5 cents per gallon on their purchases, providing such dealers purchased their distillery products exclusively from the distributing agents and sold them no lower than the prescribed list prices ; said rebate to be paid when such dealers should sign a certificate that tliey had so purchased and sold for six months ; and that by ihis means defendants had controlled and Increased the price of distillery products in Massachusetts. Held, That no crime was charged with respect to such sales, since there was no averment of amy contract whereby the dealers bound them- INDEX — DIGEST. 1141 INBICTMENTS— Continued. selves not to purchase from others, or not to sell at less than list prices. In re Corning, 51 F., 205, approved. In re Terrell, 51 F., 213. 1—46 5. Failure to Allege Contract or Means of Compulsion — Vague- ness. — In an indictment under section 1 of the act of July 2, 1890, to protect trade and commerce against monopolies, one count alleged, in substance, that on a specified date de- fendants, under the guise of the Distilling and Cattle Feed- ing Company, sold to certain persons in Boston a quantity of alcohol, then in Illinois, and that, by reason of the fact that said company controlled the manufacture and sale of 75 per cent of all distillery products in the United States, defend- ants fixed the pricf^ at which the purchasers should and did •sell such alcohol, and " did compel " said purchasers " to sell said alcohol at no less price than that fixed " by them, but there were no allegations as to the means of compulsion. Held, That it could not be assumed from these allegations that the means used was a contract with the purchasers, and the count was bad, as being too vague to charge any contract or restraint of trade between the States. Jn re Oreene, 52 F., 104. 1—55 6. Indictments which Simply Follow the Language of the Stat- ute — Tested by Specific Facts Alleged. — Under the act of July 2, 1890, " to protect trade and commerce against unlaw- ful restraints and monopolies," an indictment simply follow- ing the language of the statute would be wholly insufficient, for the words of the act do not themselves fully, directly, and clearly set forth all the elements necessai*y to constitute •the offense ; and the indictment must, therefore, be tested by the specific facts alleged to have been done or committed. 7&. 7. Indictment of Stockholders for Acts of Corporation — Omission to State Relation Defendants Bore to the Corporation. — In indictments of individuals under the said statute, where all the acts alleged to constitute the ofl'euse are charged to have been done by a corporation, an omission to state what rela- tion defendants bore to the corporation, other than that of stockholders, is fatal, since mere stockholders can not be held criminally responsible for the acts of the corporation. 76. 8. Must Contain Description of the Offense and a Statement of the Facts Constituting Same — ^Words of Statute. — An indict- ment under the act of Congress, " to protect trade and com- merce against unlawful restraint and monopolies " (26 Stat, 209), must contain a certain description of the offense, and a statement of facts constituting same, and it is not sufficient simply to follow the language of the statute. U, 8. v. Nelson, 52 F., 040. 1—77 ■1 X4:iS IKDEX — DIGEST. IWBICTMENTS— Continued. 9. An indictment under the anti-trust law should describe some- thing that amounts to a conspiracy under that act conform- ably to the rules of pleading at common law, as perhaps modified by general Federal statutes. V, 8. v. MacAndrews d Forbes Co., 149 F., 823, 831. 10. Must Show Means Whereby it Is Sought to Monopolize.— In an indictment under the Anti-Trust Act of 1890 it is not suffi- cient to declare In the words of the statute, but the means whereby it is sought to monopolize the market must be set out, so as to enable the court to see that they are illegal. U. S. V. Patterson, 55 F., 605. 1—133 Rehearing on general demurrer, 59 F., 280 (1—244). 11. Allegations of what was done in pursuance of an alleged con- spiracy are irrelevant in an indictment under this statute, and are of no avail either to enlarge or to take the place of the necessary allegations as to the elements of the oiTensc. lb. 18. Scope of the Statute.— The words " trade " and ** commerce," as used in the Anti-Trust Act of 1890, are synonymous. The use of botli terms in the first section does not enlarge the meaning of the statute beyond that employed in the common- law expression, " contract in restraint of trade," as they are' analogous to the word " monopoliie," used In the second sec- tion of the act. /j, 13. The word "monopolize" is the basis and limitation of the statute, and hence an indictment must show a conspiracy in restraint by engrossing or monopolizing or grasping the marliet. It is not sufficient simply to allege a purpose to drive certain competitors out of the field by violence, annoy- ance, intimidation, or otherwise. /ft. 14. Acts of Violence.— Where counts in such indietiiient allege a pui-pose of engrossing or monopolizing the entire trade in question, acts of violence and intimidation may be alleged as the means to accomplish the general puipose. lb. 15. Surplusage in an indictment can not be reached by demurrer of any character; but, if it be assumed that a special de- murrer will lie, it must point out the specific language ob- jected to, and not require counsel and the court to search through the indictment for what is claimed as demurrable. IL 8. V. Patterson, 59 F., 280. 1—244 l«. An indictment for conspiracy to monoiwlize interstate com- merce in cash registers need not negative the ownership of patents by defendants, or aver that the commerce proposed to be carried on is a lawful one. /ft. 17. Averments.— It is unnecessary to set out in detail the opera- tions supposed to constitute interstate commerce, and in this respect it is sufficient to use the language of the statute, /ft. INDEX — ^DIGEST. 1143 \f INDICTMENTS— Continued. 18. It is unnecessary to allege the existence of a commerce which . defendants conspire to monopolize, as the statute does not distinguish between strangling a commerce which has been born and preventing the birth of a commerce which does not exist. /ft. 19. The indictment need not show that the purpose of the con- spiracy was to grasp the commerce into the hands of one of the defendants, or that defendants were interested in behalf of the party for whose benefit they conspired, or what were their relations to such party. /ft. 20. Grand Jury — Finding — ^Indictment. — An indictment should only be found where the grand jury believe that the evidence be- fore them would warrant a conviction. In re Grand Jury, 62 F., 840. 1—310 See also U. S. v. MacAndrews <& Forbes Co., 149 F.. 823. INDIRECTLY. See Incidentally. INFRINGEMENT OF PATENTS. See Patents. INJUNCTIONS. 1. Must be Brought by the Government. — The act of July 2, 1890 (26 Scat, 209), does not authorize the bringing of injunc- tion suits or suits in equity by any parties except the Gov- ernment. Blindell v. Hagan, 54 F., 40. 1 — 106 Case affirmed, 56 F., 696 (1—182). 2. Same.— The intention of the Anti-Trust Act of July 2, 1890 (26 Stat., 209), was to limit direct proceedings in equity to pre- vent and restrain such violations of the Anti-Trust Act as cause injury to the general public, or to all alike, merely from the suppression of competition in trade and commerce among the several States and with foreign nations, to those instituted in the name of the United States, under section 4 of the act, by district attorneys of the United States, acting under the direction of the Attorney-General; thus securing the enforcement of the act, so far as such direct proceedings in equity are concerned, according to some uniform plan, operative throughout the entire country. Minnesota v. Northern Securities Co., 194 U. S., 48. 2 — .533 3. The right to bring suits for injunction under section 4 of the act of July 2, 1890 (26 Stat, 209), is limited to suits insti- tuted on behalf of the Government. Oreer, Mills d Co. v. StoUer, 77 F., 1. i — 620 4. The fourth section of the xinti-Trust Act (26 Stat, 209) in- vests the Government with full power and authority to bring a suit to set aside an agreement between competing railroads for the regulation of rates and to have an association founded for that purpose dissolved and its members en- joined from carrying out the terms of the agreement U. 8. y. Trans-Missouri Ft. Assn., 166 U. S., 290. 1 64S 1144 INDEX — DIGEST. INJUNCTIONS— Continued. 5. Jurisdiction of Circuit Courts.— The circuit courts have juris- diction under the Anti-Tnist Act of July 2, 1890, to issue iujuuctioas to restrain and punish violations of that act. U, 8. V. Agler, 62 F.. 824. 1—294 e. Same— Technical Befects in Bill.— That a bill for such iujunc- tion contains no prayer for process, this being a mere tech- nical defect, although it renders the bill demurrable, does not affect the jurisdiction of the court or render the injunc- tion issued thereon void. ^^ 7. Same— Befendants Not Named in Bill, nor Served with Sub- pcena.— An injunction for such purpose becomes binding, as against one not named in the bill, and not served with sub- IMKna, when the injunction order is served on him as one of the unknown defendants referred to in the bill. 2b. 8. Same— Proceedings to Punish Violation.— An information to punish violation of such an injunction oi-der which fails to allege that the order was a lawful one, in the language of the statute, or that the person charged, not named in the order, was one of the unknown parties referred to therein, or that, either by his words or his acts, he was engaged in aiding the wmmon object with other members of the al- leged combination, lacks the necessary certainty. lb. 9. Equity Jurisdiction— Power to Enjoin— Eight to Jury.— The power given by section 4 of the act July 2, 1890. to circuit courts " to prevent and restrain violations " of the act, is not an invasion of the right of trial by jury, as the jurisdic- tion so given to equity will be deemed to be limited to such cashes only as are of equitable cognizance. U. S. v. Debs m F. 724. i_323 See also U. 8. v. Elliott, 04 F., 27 (1-311), and V. S. v. Affter, t>2 F., 824 (1—294). 10. Obstruction of Mails— Jurisdiction of Circuit Court.— The cir- cuit court has iwwer to issue its process of injunction upon a complaint which clearly shows an existing obstruction of artificial highways for the passage of interstate commerce and the transmission of the mails, not only temporarily existing, but threatening to continue. In re Debs, 158 U S ""** 1 5Q5 11. Same— Violation of Injunction— Contempt.— Such an injunction having been issued and served upon the defendants, the circuit court had authority to inquire whether its orders had been disobeyed, and when It found that they had been disobeyed, to proceed under Revised Statutes, section 725, and to enter the order of punishment complained of. lb. It. Sane— Habeas Corpus.— The circuit court having full jurisdic- tion in the premises, its findings as to the act of disobedience are not open to review on habeas corpus In this or any other court. -. 10. INDEX ^DIGEST. 1145 INJUNCTIONS— Continued. 13. Enforcement— Contempt.— The proceeding by injunction is of a civil character, and may be enforced by proceedings in con- tempt. 76. 14. Such proceedings are not in execution of the criminal laws of the land. /ft. 15. Penalty for Contempt no Defense in Criminal Action.— The • penalty for a violation of an injunction is no substitute for, and no defense to, a prosecution for any criminal offense committed in the course of such violation. lb. 16. Obstruction of Railroads. — An injunction will lie under section 4 of the Anti-Trust Act of July 2, 1890, to restrain a com- bination w^hose professed object is to arrest the operation of the railroads whose lines extend from a great city into adjoining States until such roads accede to certain demands made upon them, whether such demands are in themselves reasonable or unreasonable, just or unjust. Such a combina- tion is an unlawful conspiracy in restraint of trade and com- merce among the States, within the meaning of section 4 of that act. U. 8. v. Elliott, 02 F., 801. 1— 2G2 Demurrer overruled, C4 F., 27 (1 — 311). 17. Same— Power of Congress to Authorize.— Act of July 2, 1890, section 4, which provides that the circuit courts of the United States have jurisdiction to restrain combinations and conspiracies to obstruct and destroy interstate commerce, before such objects are accomplished, is not void for want of pow er in Congi'ess to authorize such proceedings. U. 8. v. Elliott, G4 F., 27. 1—311 18. Injunction Order— Persons not Named in Bill.— Under act of July 2, 1890, section 5, an injunction order in an action to enjoin an illegal conspiracy against interstate commerce may provide that it shall be in force on defendants not named in the bill, but who are within the terms of the order, where it also provides that it is 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. /ft^ 19. Strike — ^Interference with Interstate Commerce. — Where an in- junction is asked against the interference with interstate commerce by combinations of striking workmen, 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 lawfulness of the invasion is not disclaimed, authorizes the injunction. V. 8. V. Workingmen's Amalg. Council, 54 F., 994. 1 HO Case affirmed, 57 F., 85 (1—184). 1146 INDEX — ^DIGEST. Hf JUNCTIONS-Cont i luieil 20. Injunction in Northern Securities Case no Invasion of States' Mights to Create Corporations.— The enforcement of the pro- visions of the Anti-Tnist Act of July 2, 1800 (2G Stat., 209). by a Federal court decree enjoining a coriwratiou organized In pursuance of a combination of stockholders in two com- Ijeting interstate railway companies for the pnnwse of ac- quiring a controlling interest in the capital stock of such companies*, from exercising the power acquired by such* cor- poration by virtue of its acquisition of such stock, does not amount to an invasion by the Federal Government of the reserved rights of the States creating the several corpora- tions. Northern Securities Co. v. United States, 193 U. S., 197 (48 L. ed., 679). Z—M2 ai. Same.—A Federal court, by its decree in a suit instituted under tlie authority of the Anti-Trust Act of July 2, 1890 (26 Stat., 209), section 4, to prevent and restrain violations of the act, may properly enjoin a corporation organized in pursuance of a combination of stockholders of two competing interstate railway companies for the purpose of acquiring a controlling interest in the capital stock of such companies, from acquir- ing any further stock therein, from voting such stock as it then holds or may subsequently acquire, and from exercis- ing any control over the railway companies by virtue of Its holdings, and may restrain the railway companies fi-om per- mitting or suffering any such action on the part of the stock- holding coiporation, and from paying any dividends on ac- count of the stock held by it. jj. 22. Allowance— Comparative Hardship or Inconvenience.— In an application for a preliminary injunction to prevent the Northern Securiti.es Company from parting with, disposing of, transfening, assigning, or distributing the stock of the Northern Pacific Railway Company, or any part thereof, by reason of the decision of the Supreme Court in the Northern Securities Company ease (193 U. S., 197), during the pend- ency of a suit to determine the rights of the Northern Pa- cific Company in regard to such return or distribution, Held, That tlie preliminary injunction should issue, regard being had to the comparative hardship or convenience to the respective parties resulting from the awarding or denial of the Injunction. Harriman v. Northern Securities Co., 132 F., 464. 2_5jj7 Reversed by Circuit Court of Appeals, 134 F., S.'^l (2—619). Action of Circuit Court of Appeals aflfirmed by Supreme Court, 197 U. S., 244 (2—669). 23. Same.— Where, in a doubtful case, the denial of a preliminary Injunction would, on the assumption that the complainant ultimately will prevail, result in greater detriment to him INDEX — DIGEST. 1147 U INJUNCTIONS— Continued. than would, on the contrary assumption, be sustained by the defendant, through its allowance, the injunction usually should be granted. lb. 24. Same. — The balance of convenience or hardship ordinarily is a factor of controlling imi)ortauce in cases of substantial doubt existing at the time of granting or refusing the preliminary injunction. /ft. 25. Same. — 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 complainant and of the defendant, without necessarily being determina- tive of the propriety of allowing or denying the injunction. lb. 26. Same. — Preservation of Fund. — Where the sole object for which an injunction is sought is the preservation of a fund in controversy, or the maintenance of the status quo, until the question of right between the parties can be decided on final hearing the injunction properly may be allowed, although there may be serious doubt of the ultimate success of the complainant lb. 27. Same. — While the consideration that an appeal does not lie from an interlocutory decree denying a preliminary injunc- tion is entitled to no weight where, on the application, it clearly appears that the complainant can not prevail on the final hearing, it is often of controlling importance where, on such application, there is room for reasonable doubt as to the ultimate result, /&. 28. Preliminary Injunctions— Where Material Allegations are De- nied.— Where the material allegations of a bill filed by the United States against various coal companies, under act of Congress, July 2, 1890, to enjoin their combination in re- straint of trade, are denied by defendants' affidavits, a preliminary injunction will not be granted, as plaintiff gives no indemnifying bond in case the injunction should be dissolved. U. 8. v. JelHco Mtn. Coke & Coal Co., 43 F., 898. 1—1 29. Injunction Pendente Lite— Evidence. — Evidence tliat, by reason of the action of a combination of persons, the crew left com- plainants' ship as she was about to sail, and that another crew could not be procured for nine days, and then only with the assistance of the police authorities and the protection of a restraining order, while other vessels in the vicinity had no difliculty in getting crews, is sufficient to authorize the court to enjoin interference with the business of the comr plainants by such combination pendente lite. 54 F., 40, affirmed. Blimdell v. Hagan, 56 F., 696. 1 183 / 1148 INDEX — DIGEST. IN JUNCTIONS-G .ntinued. 80. Bestraining: Orders—May Issue Without Notice.— Under section 4 of the Auti-Trust Law of July 2, 1890, a restraining order may be issued without notice, under the circumstances sanc- tioned by the established usages of equity practice in other cases. V. S. v. Coal Dealers' Asm, of Cal, 85 F., 252. 1—749 SI. Preliminary Injunctions— Beview.— Where the opinion of a circuit court in granting a preliminary injunction shows that the judge regarded as of controlling importance the fact that an order denying the injunction would not be re- viewable by appeal, the rule that the appellate court will not interfere with the exercise of the discretionary power of the court of first instance unless there is strong reason for it does not apply, and the question of the right to the injunc- tion will be determined on the merits. Northern Securities Co, V. Harriman, 134 F., 331. 2—618 Reversing 132 F., 4G4 (2—581). 3S. iame— Should Not be Enjoined from Distributing Assets.— De- fendant corporation having been adjudged an illegal com- bination in restraint of interstate commerce, -and enjoined from voting or receiving dividends on certain railroad stock • which It owned, but permitted to transfer the same to its stockholders, a plan adopted by its directors and stock- holders to distribute the same pro rata among all its stock- holders was equitable, and its execution should not be en- joined, j^, 38. Same— Bissent. — It is a proper exercise of discretion for a court to grant a preliminary injunction where the bill and evidence present a prima facie case and raise important and doubtful questions of law and fact, and, unless the injunction is granted to preserve the status quo until the hearing, the suit would be ineffective ; and an order for an injunction, granted - om such grounds after the court has given due consideration to the balance of inconvenience and injury which may result to one party or the other, should not be reversed by an ap- pellate court before the case has been finally heard and de- termined by the court below on full proofs. Per Gray, Cir- cuit Judge, dissenting. /(,, 84. Beview of Order Granting Temporary Injunction.— The Circuit Court of Appeals will not reverse an interlocutory order granting or continuing a temporary injunction unless It Is clearly shown that the same was improvldently granted and is hurtful to the appellant. Workingmen^s Amalg. Council V. U. 8., 57 F., 85. 1—184 See also Dr. Miles Medical Co. v. Jaynes Drug Co., 149 F., 838. INDEX — DIGEST. 1149 INTERSTATE COMMERCE. 1. Commerce Defined. — The word '* commerce," as used in the Anti-Trust Act of July 2, 1S90, and in the Constitution of the United States, has a broider meaning than the word " trade." Commerce among the States consists of intercourse and traffic between their citizens, and includes the trans- portation of persons and property, as well as the purchase, sale, and exchange of commodities. V. S. v. Cassidy, 67 F., 698. 1 — 452 2. Scope of Anti-Trust Act.— AVhile the primary object of the statute was doubtless to prevent the destruction of legiti- mate and healthy competition in interstate commerce, by the engrossing and monopolizing of the markets for commodi- ties, yet its provisions are broad enough to reach a combina- tion or conspiracy that will interrupt the transportation of such commodities and persons from one State to another. U. 8. V. Workmgmeii^ Amalgamated Councih 54 F., 995, cited. /(>. 8. Pullman cars in use upon railroads are instrumentalities of "commerce." I. 8. v. 7)e6s, \'A F.. 763, cited. Jh. 4. Commerce — Definition. — Commerce is the sale or exchange of commodities, but that which the law looks ui>on as the body of commerce is not restricted to specific acts of sale or ex- change. It includes the intercourse— all the initiatory and intervening acts, instrumentalities, and dealings — that di- rectly bring about the sale or exchange. U. 8. v. 8wift & Co., 122 F., .^i29. 2—237 5. Interstate Commerce Includes Purchase, Sale, and Exchange of Commodities. — Interstate commerce consists of intercourse and traffic between the citizens or inhabitants of different States, and includes not only the transportation of persons and property and the navigation of 'public waters for that purpose, but also the purchase, sale, and exchange of com- modities. Addyston Pipe and 8teel Co. v. United States, 175 U. S., 211. 1—1009 6. Same — What Constitutes a Violation of the Statute. — Any agree- ment or combination which directly operates, not alone upon the manufacture, but upon the sale, transportation, and de- livery of an article of interstate commerce, by preventing or restricting its sale, thereby regulates interstate commerce to that extent, and thus trenches upon the power of the na- tional legislature, and violates the Anti-Trust Act of 1890 (2(5 Stat, 209). /ft, 7. Commerce Between Two Points in Same State — ^Vessels Passing Over Soil of Adjoining States.— Where a contract relates to commerce between points within a State, both on a boundary river, it will not be construed as falling within the prohibi- 1 1 808— vo). 2—06 M 73 1150 INDEX — ^DIGEST. INTBJEtSTATE COMMERCE— Continued. tions of the Sherman Act because the vessels affected hy the contract sail over soil belonging to the other State while passing between the interstate points. Cincinnati, etc.. Packet Co. v. Bay, 200 U. S., 179. 2—867 8. Same. — Even if there is some interference with interstate com- merce, a contract is not necessarily void under the Sherman Act if such interference is insignificant and merely inci- dental and not the dominant purpose; the contract will be construed as a domestic contract and its validity determined by the local law. jft. 9. Same. — A contract for sale of vessels, even if they are engaged in interstate commerce, is not necessarily void because the ¥endors agree, as is ordinary In case of sale of a business and its good will, to withdraw from business for a specified period. /6. 10. Policy of Congress.— It is the declared policy of Congress, which accords with the principles of the conmion law, to promote individual competition in relation to interstate commerce, and to prevent combinations which restrain such competition between their members, or between such members as individ- uals and outside competitors. V, 8. v. Chesapeake d O. Fuel Co,, 105 F.. 93. s 34 Affirmed, 115 F.. 610 (8—151). 11. Policy of the Nation in Eegard to.— It has been the public policy of this nation, from the date of the passage of the Interstate Commerce Act of 1887, to regulate that part of interstate commerce which consists of transportation, and to so far re- strict competition in freight and passenger rates between railroad companies engaged therein as shall be necessary to make such rates open, public, reasonable, uniform, and steady, and to prevent discriminations and undue preferences. U. 8, V. TranS'MUsouH Freight A88*n., 58 F., 58. 1—186 Decision reversed, 166 U. S., 290 (1—648). 11. The Anti-Trust Act of July 2, 1800, embraces and declares to be illegal every'contract, combination, or conspiracy, in what- ever form, of whatever nature, and whoever may be parties to it. which directly or necessarily operates In restraint of trade or commerce among the several States or with foreign nations. Northern SecuHties Co, v. United States, 193 U. S„ 197. (Harlan, Brown, McKenna, Day.) 8 339 IS. Combinations, even among private manufacturers or dealers, whereby interstate or international commerce is restrained, are equally embraced by the act. /ft. 14^ Every combination or conspiracy which would extinguish com- petition between otherwise 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. jft^ INDEX — ^DIGEST. 1151 INTERSTATE COMMERCE— Continued. m 15. Congress may, in the exercise of the power conferred upon it by the commerce clause of the Constitution, prohibit private contracts which operate directly and substantially to restrain interstate commerce. U, 8. v. Northern Securities Co., 120 F., 721. 2—216 16. The power of Congress to regulate interstate commerce com- prises the right to enact a law prohibiting the citizen from entering Into those private contracts which directly and sub- stantially and not merely indirectly, remotely, incidentally, and collaterally, regulate to a greater or less degree com- merce among the States. Addyston Pipe A Steel Co. v. United States, 175 U. S., 211, 229. 1—1009 17. A State can not invest a corporation organized under its laws with the power to do acts in the corporate name which would operate to restrain interstate commerce. U. S. v. Northern Securities Co., 120 F., 721. 2—215 18. Powers of the United States — Transmission of the Mails. — While the United States is a Government of enumerated powers, it has full attributes of sovereignty within the limits of those powers, among which are the power over interstate commerce and the power over the transmission of the mails. In re Dchs, 1.58 U. S., 564. 1—565 19. Same. — The powers thus conferred are not dormant, but have been assumed and put into practical exercise by Congres- sional legislation, /^^ 20. Same — Removal of Obstructions. — In the exercise of those powers the United States may remove everything put upon high\^'ays, natural or artificial, to obstruct the passage of interstate commerce, or the carrying of the mails. 76. 81. Same— Executive Power May Appeal to Civil Courts.— While it may be competent for the Government, through the executive branch and in the use of the entire executive power of the nation, to forcibly remove all such obstructions, it is equally within its competency to appeal to the civil courts for an inquiry and determination as to the existence and the char- acter of any of them, and if such are found to exist or threaten to occur, to invoke the powers of those courts to remove or restrain them, the jurisdiction of courts to inter- fere in such matters by injunction being recognized from ancient times and by indubitable authority. /ft. 88. Same— Circuit Court had Power to Issue Injunction.— The com- plaint filed in this case clearly shows an existing obstruction of artificial highways for the passage of interstate commerce and the transmission of the mails, not only temporarily ex- isting, but threatening to continue, and under it the circuit court had power to issue its process of injunction. /ft. 1152 INDEX — ^DIGEST. UTTEBSTATE COHMEBCE— continued. 23. Carriers — Connecting Lines — Prepayment of Freight. — ^A com- mon carrier engaged in interstate commerce may at common law, and under the Interstate Commerce Law, demand i>re- payment of freight charges, when delivered to it by one con- necting carrier, without exacting such prepayment when delivered by another connecting carrier, and may advance freight charges to one connecting carrier without advancing such charges to another connecting carrier. Gulf, C. d S. F. Ry. Co. V. Miami S. 8. Co., 8G V., 407. 1—823 M. Railroad Companies — Arrangements for Through Billing. — There is no principle of common law which forbids a single railroad corporation, or two or more of such corporations, from selecting, from two or more other corporations, one which they will employ as the agency by which they will send freight beyond their own lines, on through bills of lading, or as their agent to receive freight, and transmit it on through bills to their own lines, and without breaking bulk ; and the right to make such selection is not taken away by the Interstate Commerce Law. (New York & N. Ry. Co. v. New York & N. E. R. Co., 50 Fed., 867, explained.) Prescott d A. C. B. Co, V. Atchison, T. d S. F. R. Co., 73 F., 438. 1—604 25. Kansas City Live Stock Association — Engaged in Interstate Commerce. — Where the shipments of live stock from growers, dealers, and traders in various States and Territories to the defendants, the Kansas City Live Stock Association, was solicited by the latter chiefly through personal solicita- tion of traveling agents, and through advertisements, the couree of business involving frequent loans to shippers In other States, secured by chattel mortgages on herds, and frefiueiit drafts drawn by shippev^ on the defendants, and discounted at their local banks in other States on the strength of bills of shipment attached thereto, shipments being made to Kansas City, and the loans or drafts paid from proceeds of sale, and the balance remitted to the shippers, and sales at Kansas City were made for shipment to markets in other States, as well as for slaughter at pack- ing houses near by, the traffic being of immense proportions, and defendants active promoters, and frequently interested parties, gathered in for sale and slaughter millions of cattle, . sheep, and hogs ; and their rules and regulations covered the entire business, and extended over the whole field of opera- tion, held, that defendants were engaged in commerce be- tween the States, and were subject to the provisions of the law of July 2, 1890, against trusts and monopolies. V, 8. v. Hopkins, 82 F., 529. 1—725 Reversed, 171 U. S., 578 (1—941). INDEX — ^DIGEST. 1153 INTERSTATE COMMERCE— Continued. 26. Same. — Live stock shipped from various States to the yards of a stock-yards association in another State, by the solicitation and procurement of the members thereof, to be there sold or to be reshipped to other States, if the market should be unsatisfactory, does not cease to be a subject of interstate commerce as soon as it reaches such yards and is there un- loaded, nor until it has been further acted upon so as to become mingled with the mass of property in the State. 76. 27. Same. — The fact that the place of business of an association is located upon both sides of the line dividing two States is in itself of no material importance in determining whether the business transacted by it is commerce between the States. /6. 28. Same.— The fact that a State line runs through stock yards, and that sales may be made of a lot of stock in the yards which may be partly in one State and partly in another, has no effect to make the business of selling stock interstate commerce. Hopkins v. Uiiited 8tates, 171 U. S., 578. 1—941 29. Same.— The business of buying and selling live stock at stock yards in a city by members of a stock exchange as commission merchants is not interstate commerce, although most of the purchases and sales are of live stock sent from other States, and the members of the stock exchange are employed to sell by letter from the owners of the stock in other States, and send agents to other States to solicit business, and advance money to the cattle owners, and pay their drafts, and aid them in making the cattle fit for market. Hopkins v. United States, 171 U. S., 578. 1—941 Reversing, 82 F., 578 (1—725). 30. Same.— A by-law of the Kansas City Live Stock Exchange, which regulates the commissions to be charged by members of that association for selling live stock is not in restraint of interstate commerce, or a violation of the act of July 2, 1890, to protect commerce from unlawful restraints. lb. 81. Same. — A commission agent who sells cattle at their place of des- tination, which are sent from another State to be sold, is not engaged in interstate commerce; nor is his agreement with others in the same business, as to the commissions to be charged for such sales, void as a contract in restraint of that commerce. /j^ 32. Same. — In order to come within the provisions of the statute, the direct effect of an agreement or combination must be in restraint of trade or commerce among the several States or with foreign nations. 75, 33. Same. — Restrictions on sending prepaid telegrams or telephone messages, made by a by-law of a live-stock exchange, when 1154 INDEX — ^DIGEST. INTEBSTATE COMMKBCB-Ck)ntiimed. these restrictions are merely for the regulation of the business of the members, and do not affect the business of the tele- graph company, are not void as regulations of interstate commerce. /5. 84. Same. — ^The business of agents in soliciting consignments of cattle to commisison merchants in another State for sale is not interstate commerce, and a by-law of a stock exchange re- stricting the number of solicitors to three does not restrain that commerce or violate the act of Congress. /ft. 55. Same. — A combination of commission merchants at stock yards, by which they refuse to do business with those who are not members of their assocfation, even if it is illegal, is not sub- ject to the act of Congress of July 2, 1890, to protect trade and commerce, since their business is not interstate com- merce, /j^ 56. Beef Trust— Combination to Monopolize Interstate Commerce in Iresh Meats. — Interstate commerce is unlawfully restrained, in violation of the act of July 2, 1890 (26 Stat, 209), by a combination of independent meat dealers, in aid of an at- tempt to monopolize commerce in fresh meat among the States, to bid up prices for live stock for a few days at a time, in order to induce cattle men in other States to make large shipments to the stock yards, or by a combination for the same purpose to fix the selling price of fresh meat, and to that end to restrict shipments, when necessary, to estab- lish a uniform rule of credit to dealers, and to keep a black list, or by a combination In aid of such purpose to make uniform and improper charges for cartage for the delivery of meat sold to be shipped to dealers and consumers in the several States. Swift d Co. v. United States, 196 U. S., 376. JJ~~o»5 if. The effect upon interstate commerce of a combination of a dominant portion of the dealers in fresh meat throughout the United States not to bid against, or only in conjunction with, each other in order to regulate prices in and induce shipments to the live-stock markets in other States, to restrict shipments, etc., with intent to monopolize commerce among the States, is direct and not accidental or secondary as in U. S. v. E. (7. Knight Co., 156 U. S., 1. Swift & Co, v. United States, 196 U. S., 375. »— 641 88. When cattle arc sent for sale from a place in one State, with the expectation they wiU end their transit, after purchase, in another State, 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 constantly recurring course, It constitutes interstate commerce and the purchase of the cattle is an incident of such commerce. /ft. INDEX — DIGEST. 1155 INTEBSTATE COMMERCE-Continued. 39. Although the jurisdiction of Congress 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 combinations or agreements so far as they relate to a restraint of such trade or commerce; nor does it acquire any jurisdiction over that part of a combina- tion or agreement which relates to commerce wholly within a State by reason of the fact that the combination also covers and regulates commerce which is interstate. Addy- ston Pipe and Steel Co. v. U. S., 175 U. S., 211. 1—1009 Power of Congress Over. See Congress. Prepayment of Freight. See Carriers. See also Corporations, 2, 3; Actions and Deii:nses, 72, 73; and Combinations, etc., generally, particularly paragraphs 54-76, 134^151. IRON PIPE. See Combinations ftc, 136. JOINT RATES AND BILLING. See Carriers. JOINT TRAFFIC ASSOCIATIONS. See Combinations, 103-104, 189-192. JUDGMENT. General expressions in an opinion which are not essential to dispose of a case are not permitted to control the judgment in subsequent suits. Harriman v. Northern Securities Co., 197 U. S., 244. 2—669 JURISDICTION. 1. In a suit instituted in the name of the United States, under the Anti-Trust Law, jurisdiction depends alone upon the act, and the court is concerned with no case between private persons or corporations, where jurisdiction depends on other condi- tions, and in which proceeding a common-law remedy might become available. U. S. v. Addyston Pipe d Steel Co., 78 F., 712. i_63l 2. Nonresidents.~The authority given by section 5 of the act of July 2, 1890 (26 Stat, 290), to bring in nonresidents of the district can not be availed of in private suits, and the court can acquire no jurisdiction over them. Greer, Mills elonging to different persons, with a view to common liabilities and profits. Amer, Biscuit d Mfg, €o. V. Klotz, 44 F., 721, 724. i_7 INDEX — ^DIGEST. 1159 '' u . MONOPOLY— Continued. 4. To constitute the offense of "monopolizing, or attempting to monopolize," trade or commerce among the States, within the meaning of section 2 of said act, it is necessary to ac- quire, or attempt to acquire, an exclusive right in such com- merce by means which will prevent others from engaging therein. In re Qreene, 52 F., 104. i— 54 5. A " monopoly," in the prohibited sense, involves the element of an exclusive privilege or grant which restrained others from the exercise of a right or liberty which they had before the monopoly was secured. In commercial law, it is the abuse of free commerce, by which one or more individuals have procured the advantage of selling alone or exclusively all of a particular kind of merchandise or commodity to the detri- ment of the public. /&. 1 71 6. The word " monopolize," used in section 2 of the act of 1890, is the basis and limitation of the statute, and hence an in- dictment must show a conspiracy in restraint by engrossing or monopolizing or grasping the market. It is, not sufficient simply to allege a purpose to drive certain competitors out of the field by violence, annoyance, intimidation, or other- wise. U. 8. V. Patterson, 55 F., 605. 1—133 7. The statute is not limited to contracts or combinations which monopolize interstate commerce in any given commodity, but seeks to reach those which directly restrain or impair the freedom of interstate trade. The law reaches combinations which may fall short of complete control of a trade or busi- ness, and does not await the consolidation of many small combinations into the huge "trust" which shall control the production and sale of a commodity. Chesapeake d O. Fuel Co. v. United States, 115 F., 610, 624. 2—168 8. Monopoly Not Necessary— Tendency Sufficient.— It is not re- quired, in order to violate this statute, that a monopoly be created. It is sufficient if that be the necessary tendency of the agreement. jj^ S. Every attempt to monopolize a part of interstate commerce, the necessary effect of which is to stifle or to directly and sub- stantially restrict competition in commerce among the States, violates section 2 of the act of July 2, 1890 (26 Stat, 209). Whitwell V. Continental Tobacco Co., 125 F., 454. 2—271 10. Attempts to monoi)olize a part of commerce among the States which promote, or only incidentally or indirectly restrict, competition in interstate commerce, while their main purpose and chief effect are to increase the trade and foster the busi- ness of those who make them, were not intended to be, and were not, made illegal or punishable by section 2 of the Anti- Trust Act of July 2, 1890 (26 Stat, 209), because such at- tempts are indispensable to the existence of any competition in commerce among the States. /j. 1160 IHDEX — DIGEST. MONOPOLY-^V.iitinued. 11. Statute Operates Oaly on Monopolies in Interstate Commerce, and Hot Because Commodity is a Necessary of Life. The monopoly and restraint denounced by the act of July 2, 1890 (26 Stat. 200), "to protect trade and commerce against un- lawful restraints and monopolies/' are a monopoly in Inter- state and international trade or commerce, and not a monop- oly in the manufacture of a necessary of life. IJ. 8, v, E. €, Knight Co., 156 U. S., 1. 1—379 It. Aebate to Exclusive Purcliasers.— An arrangement whereby a distillery company promised persons who purchased from its distributing agents that if, for the ensuing six months, they would purchase their distillery products exclusively from such agents and would not resell the same at prices less than those fixed by the company, then, on being furnished with a certiQcate of compliance therewith, it would pay a certain rebate on the amount of such purchases, did not operate to " monopolize," or " as an attempt to monopolize." trade and commerce, within the meaning of section 2 of said act. In re Greene, 52 F., 104. i__^ 18. A monopoly of trade embraces two essential elements: (1) The acquisition of an exclusive right to, or the exclusive control of. that trade; and (2) the exclusion of all others ft^m that right and control. U. 8. v. Trms-Mo. Ft Assn., 58 P., 58, 82. i_218 14. State Konopoly of liquor Traffic— The Anti-Trust Act is not applicable to the case of a State which by its laws assumes an entire monopoly in the traffic in intoxicating liquors (S. C. act of Jan. 2, 1895). Lowenstein v. Evans, 69 F., 908. 1 589 If. Talidity of Sale of Property where Object is Monopoly.— The sale and transfer by a corporation of its property and good will to another corporation, where such sale was within its powers, can not be repudiated on the ground that the pur- chaser acquired the property for the purpose of obtaining a monopoly of the business and in pursuance of an illegal combination in restraint of trade. Metcalf v. Amer. School Furniture Go,, 122 P., 115. %—2U See aim Combinations, etc., in Restraint of Tbade, II and MULTIFAKIOUSNESS. See Actions and Defenses, 8; Pleading AND Pbactice, 19, 20. MUNICIPAL CONTBACTS. See Combinations, etc., 214-216. MITNICIPAX OBDINANCE. The specification in an ordinance, not invalid under the laws of the State, that a particular kind of asphalt produced only In a foreign country shall be used for street improvements INDEX — DIGEST. 1161 MTJNICIPAL ORDINANCE— Continued. does not violate the Sherman Anti-Trust Law or any Fed- eral right. Field v. Barher Asphalt Paving Co., 194 U. S., 618. 2—555 NEW JERSEY. See Corporations, 4. NEW TRIAL. See Jayne v. Lodeb, 149 P., 21. NONRESIDENTS. See Statutes, 58. NOTE. See Actions and Defenses, 04. NOTICE. See Statutes, 55. OBSTRUCTION OF MAILS. 1. Obstructing the Mails — Section 3995 Revised Statutes. — Al- though the law (section 3995 Revised Statutes) which makes it an ofifense to obstruct and retard the passage of the United States mails was originally passed prior to the in- troduction into the United States of the method of trans- porting mail by railroads, and the phraseology of the law conforms to conditions prevailing at that time (March 3, 1825), yet it is equally applicable to the modern system of conveyance and protects alike the transportation of the mail by the "limited express" and by the old-fashioned stage- coach, v. S. V. Cassidy, 67 F., 698. 1 — i51 8. Same. — The statute applies to all persons who " knowingly and willfully " obstruct and retard the passage of the mails or the carrier carrying the same; that is, to those who know that the acts performed, however innocent they may other- wise be, will have the efifect of obstructing and retarding the mail, and who perform the acts with the intent that such shall be their operation. U. S. v. Kirhy, 7 Wall., 485, cited. /?,. 3. Same. — The statute also applies to persons who, having in view the accomplishment of other purposes, perform unlawful acts, which have the effect of obstructing and retarding the pas- sage of the mails. In such case, an intent to obstruct and retard the mails will be imputed to the authors of the un- lawful act, although the attiiinment of other ends may have been their primary object. V. S. v. Kirby, 7 Wall., 485, cited. /ft. 4. Same— Mail Trains.— A mail train is a train as usually and regularly made up, including not merely a mail car, but such other oars as are usually drawn in the train. If the train usually carries a Pullman car, then such train, as a mail train, would include the Pullman car as a part of its regular make-up. Therefore, if such a train is obstructed or retarded because it draws a Pullman car, it is no defense 1162 Iin>EX^ — ^DIGEST. OBSTRUCTION OF MAILS-Continued. that the parties so delaying it were willing that the mail should proceed if the Pullman car were left behind. U 8 y Clark, Fed. Cas. No. 14805, 23 Int. Rev. Rec., 306, followed! «. Same— Any train which is carrying mail, under the sanction of the postal authorities, is a mail train, in the eye of the law. 6. Same— Intent.— It is not necessary that defendants should be shown to have had knowledge that the mails were on board of a train which they have detained and disabled. On the contrary, they are chargeable with an Intent to do what- ever is the reasonable and natural consequence of their acts ; and as the laws make all railways postal routes of the United States, and it is within everyone's knowledge that a large portion of the passenger trains carry mail, it is to be presumed that any person obstructing one of those trains contemplates, among other intents, the obstruction of the mail. U. 8, V. Debs, 65 F., 211, followed. /&. See also Combinations, etc., 121, 127, 129. PABTIES. 1. Parties to Conspiracy.— Where an unlawful end is sought to be effected, and two or more persons, actuated by the com- mon purpose of accomplishing that end, work together in ■ any way in furtherance of the unlawful scheme, every one of said persons becomes a member of the conspiracy, although the part any one was to take therein was a subordinate one, or was to be executed at a remote distance fi-om the other conspirators. U. 8, v. Oassidp, 67 F., 698. 1-450 ». Same.— 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 con- spired. U. 8. V. Babcock, Fed. Cas. No. 14487, 3 Dill 586 cited. •' ^' S. Same.— Any declaration made fey one of the parties, during the pendency of the illegal enterprise, is not only evidence against himself, but against all the other conspirators, who when the combination is proved, are as much responsible for such declarations, and the acts to which they relate as if made and committed by themselves. This rule applies to the declaration of a coconspirator, although he may not himself be under prosecution. jj 4. Necessary Parties— Directors of ITnincorporated Associations.— All the directors of an unincorporated association are neces- sary parties to a suit against it arising out of contractual relations, even though a less number are authorized by the association to transact business. Qreer, Mills d Go v stol INDEX — ^DIGEST. 1163 PARTIES— Continued. 5. Parties in Equity — Unincorporated Association. — In a suit in equity to restrain an alleged unlawful combination acting as an unincorporated association, it is sufficient that the asso- ciation, together with a large number of its members, as individuals and officers of the association, are made parties defendant. U, 8. v. Coal Dealers' Assn. of Cal., 85 F., 252. 1—749 6. Indictment — Joinder of Defendants. — In an indictment under the Anti-Trust Law, the offenses thereunder being made misdemeanors, all who aid in their commission may be charged as principals, and a corporation and its officers, who personally participates in committing the same, may be joined as defendants, although their acts may have been separate. V. 8. v. MacAndrews d- Forbes Co., 149 F., 824. 7. Injunction — Government Only can Bring Suit for. — ^The Anti- Trust Act of 1890 (26 Stat, 209) does not authorize the bringing of injunction suits or suits in equity by any parties except the Government Blmdell v. Hagan, 54 F., 40. 1—106 Case affirmed, 56 F., 696 (1—182). 8. Injunctive Relief— TTnited States Attorney. — ^The only party en- titled to maintain a bill in equity for injunctive relief for violating the provisions of the Anti-Trust Act is the United States attorney, at the instance of the Attorney-General. Metcalf V. Amer. 8chool Furniture Co., 122 F., 115. 2 235 9. The State is a necessary party to an action under section 7 of the Anti-Trust Act of July 2, 1890, against the officials of a 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 (act of S. C. of Jan. 2, 3895). Lowenstein v. Evans, 69 F., 908. 1—598 10. Consent of parties can never confer jurisdiction upon a Federal court Minnesota v. Northern 8ecurities Co., 194 U. S., 48. 2—533 11. Monopolies— Suit by Private Individual.— The act "to protect trade and commerce against unlawful restraints and monopo- lies " (act Cong, July 2, 1890) confei-s no right upon a private individual to sue in equity for the restraint of the acts forbidden by such statute, an action at law for damages being the only remedy provided for private persons, and the right to bring suits in equity being vested in the district attorneys of the United States. Pidcock v. Harrington, 64 F., 821. 1—377 8ee also Actions and Defenses, 1-20. PATENTS. 1. A corporation organized for the* purpose of securing assign- ments of aU patents relating to "spring-tooth harrows," to grant licenses to the assignors to use the patents upon pay- 1164 INDEX — ^DIGEST. PATENTS— Cuntiimed. uieiit of a roj^Uty, to fix imc! regulate the price at which such harrows shall be sold, and to take charge of all litigation, and prosecute all infringements of such patents, is an illegal combination, whose purposes are contrary to public policy, and which a court of efiulty should not aid by entertaining infringement suits brought in pursuance thereof. National Harrow Co. v. Quick, 67 F., 130. 1-^43 8. Corporation Organized to Receive Assignments of Patents.— A combination among manufacturers of spring-tooth har- rows, by which each manufacturer assigns to a corporation organized for the purijose the patents under which he Is operating, and takes back an exclusive license to make and sell the same style of harrows previously made by him, and no other, all the parties being bound to sell at uniform prices, held to be an unlawful combination for the enhancement of prices, and in restraint of trade. National Harrow Co. v. HetKh, 70 F., 667. i qiq Affirmed, 83 F., 36 (1—742). 8e€ also Indiana Mfg. Co. v. J. L Cme Thra>olies" (act Cong. July 2, 1890) confers no right upon a private individual to sue in equity for the restraint of the acts forbidden by such statute, an action at law for damages being the only remedy provided for private persons, and the right to bring suits in equity being vested in the dis- trict attorneys of the United States. Pidcock v. Harrington, 64 F., 821 1-^77 INDEX — ^DIGEST. 1173 ' k REMEDIES— Con tin ued . 2. Voluntary Associations — Suspension of Members. — Where a member of a voluntary association 'has been suspended by the directors for nonpayment of a fine for violation of the by-laws, his action to be restored to the privileges of mem- bership is founded upon the contract between himself and the association, which he must either accept in its entirety or repudiate. He does not occupy the iwsition of a stranger injured by the acts of cotrespassers. Q-reer, Mills d Co, v. Stoller, 77 F., 1. 1—620 See also Actions and Defenses. REMOTELY. See Incidentally. Indirectly, and Remotely. REMOVAL FROM STATE COURT. See Coubts, 16. REMOVAL OF PRISONERS. 1. From One State to Another for Trial.— On an application to a Federal court for the removal of a resident of the district to a distant State and district for trial, it is the duty of the court to scrutinize the indictment, disregarding tech- nical defects, but to refuse the warrant if the crime alleged is not triable in the district to which a removal is sought, or if the indictment fails to charge any offense under the law. In re Corning, 51 F., 203. 1 — ^33 2. Habeas Corpus— Jurisdiction of Circuit Courts.— Where a pris- oner, arrested under warrant based upon an indictment in a distant State and district, is held pending an application to the district court for a warrant of removal for trial, the circuit court of the district in which he is held has authority on habeas corpus to examine such indictment, and to re- lease the prisoner, if, in his judgment, the indictment should be quashed on demurrer. In re Terrell, 51 F., 213. 1 — 46 3. Same. — On habeas corpus to release a person held under a war- rant of a United States commissioner to await an order of the district judge for his removal to another district to answer an indictment, it is the right and duty of the cir- cuit court to examine the indictment to ascertain whether it charges any offense against the United States or whether the offense comes within the jurisdiction of the court in which the indictment is pending. In re Greene, 52 F., 104. 1—54 RESTRAINING ORDERS. See Injunctions, 30. RESTRAINT OF TRADE. See Combinations, etc., in Restraint of Trade, particularly paragraphs 1, 3-5, 7-16, 18, 20, 22, 23, 43, 48, 54-77, 79. 81, 91. 107, 108. 133-150, etc. ; mid Statutes, 5-7, 10, 11, 13, 17. • 19. 21-24, 26, 28, 31, 35. 36, 43, 44, 48, 49. •■ 1174 mDEX — ^DIGEST. BIQHT OF ACTION. Sec Actions and Defenses, 9, 57. BXTBBEB TIBES. See Combinations, etc., 99. BUIiBS OF LABOR VHIONa See Combinations, etc., 117. 1. Validity of Sale— Tbe sale and transfer by a corporation of its property and good will to another corporation, where such sale was within its powers, can not be repudiated on the fronnd that the purchaser acquired the property for the purpose of obtaining a monopoly of the business and in pursuance of an illegal combination in restraint of trade. Metealf v. Amer. School Furniture Co,, 122 F., 115. 2—234 S. A contract for sale of vessels, even if they are engaged in inter- state commerce. Is not necessarily void because the vendors agree, as is ordinary in case of sale of a business and its good will, to withdraw from business for a specified period. Cineinnati, rfc. Packet Co. v. Bay, 200 U. S., 170. 2—867 8. Contract for Sale of Goods by Member of Combination.— The act of July 2, 1890, section 1 <26 Stat, 209), Icnown as the ** Sherman Anti-Tnist Act," does not invalidate or prevent a recovery for the breach of a collateral contract for the raanufactui-e and sale of goods by a member of a combination formed for the purpose of restraining interstate trade in such goods. Eadlep Dean Plate Glass Co. v. Highland Class Co., 143 F., 242. 2—995 4 The transaction between the complainants and the Worthem Securities Company by which the former parted with and delivered to the latter, as a holding corporation, certain shares of the stock of the Northern Pacific Railway Com- pany and received in exchange certain other shares of the Securities Company stock, held to be one of purchase and sale of the Northern Pacific stock, and not a bailment or trust. Harriman v. Northern Securities Co., 197 U. S., 244 Affirming 134 F., 331 (2—618). 2—669 5. Same.— When a vendor testifies that the transaction was an unconditional sale and that he attached to his negotiations no other conditions than that of price, he is estopped from afterwards denying that this is a statement of fact and claiming that he only swore to a conclusion of law. lb, e. Same.-^Property delivered under an executed illegal contract can not be recovered back by any party in pari delicto, and the courts can not relax the rigor of this nile where the record discloses no special considerations of equity, justice or public policy. ' jJ 7. Same.~The fact that the complainants in this case acted ia good faith and without intention to violate the law does not exempt them from the doctrine of in pari delicto. All INDEX — ^DIGEST. 1175 ^ ^ SALE— Continued. the parties having supposed the. statute would not be held applicable to the transaction neither can plead ignorance of the law as against the other and the defendant secured no unfair advantage in retaining the consideration volun- tarily delivered for the price agreed. lb. 8. Same. — ^Where a vendor after transferring shares of railway stock to a corporation in exchange for its shares becomes a director of the purchasing corporation and participates in acts consistent only with absolute ownership by it of tlie railway stocks, and does so after an action has been brought to declare the transaction illegal, his right to rescind the contract and compel restitution of his original railway shares, if it ever existed, is lost by acquiescence and laches. Ih. 9. Restriction of Sales of Goods. — A manufacturer, a corporation, and its employee restricted the sales of its products to those who refrained from dealing in the commodities* of its com- petitors by fixing the prices of its goods to those who did not thus refrain so high that their purchase was unprofit- able, while it reduced the prices to those who declined to deal in the wares of its competitors so that the purchase of the goods was profitable to them. The plaintiff applied to purchase, but refused to refrain from handling the goods of the corporation's competitors, and sued it for damages caused by the refusal of the defendants to sell their commod- ities to him at prices which would make it profitable for him to buy them and sell them again. Held, the restriction of their own trade by the defendants to those purchasers who declined to deal in the goods of their competitors was not violative of the Anti-Trust Act. Whitwell v. Continental Tobacco Co., 125 F., 454. 2—271 10. Same. — 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. /ft. See also Combinations, etc., 18. SEABCH AND SEIZURE. 1. Unreasonable Searches — Subpoena Duces Tecum — Bights of an Agent. — A subpcena duces tecum commanding the secretary and treasurer of a corporation supposed to have violated the Anti-Trust Act to testify and give evidence before the grand jury, and to bring with him and produce numerous agree- ments, letters, telegrams, reports, and other writings, de- 117H INDEX — DIGEST. SBARCH AND SEIZUBE-Continued. scribed generically, in effect including all the correspondence and documents of his corporation originating since the date of its organization, to which nineteen other named corpora- tions or persons were parties, for the purpose of enabling the district attorney to establish a violation of such act on the part of the witness* principal, constituted an unreasonable search and seizure of papers, prohibited by Fourth Amend- ment to the Constitution. In re Hale, 139 F., 496. 2—804 2. Same.— A corporation charged with a violation of the Anti-Trust Act of July 2, 1890, is entitled to immunity under the Fourth Amendment to the Constitution from such an unreasonable search and seizure as the compulsory production before a grand jury, under a subpcena duces tecum, of all under- standings, contracts, or correspondence between such cor- poration and six other companies, together with all reports and accounts rendered by such companies from the date of the organization of the corporation, as well as all letters received by that corporation since its organization, from more than one dozen different companies, situated in seven different States. Hale v. Henkel 201 U. S., 43. 2-^74 8. The search and seizure clause of the Fourth Amendment was not intended to interfere with the power of courts to compel the production upon a trial of documentary evidence through a subpoena duces tecum. /^^ 4. The protection against unreasonable searches and seizures af- forded by the Fourth Amendment tothe Constitution can not ordinarily he invoked to justify the refusal of an oificer of a corporation to produce its books and papers in obedience to a subpcena duces tecum, issued in aid of an investigation by a grand jury of an alleged violation of the Anti-Trust Act of July 2, 1890, by such corporation. /&. f. In a suit in equity brought by the United States to enjoin the carrying out of a contract or combination in restraint of interstate commerce, under the act of 1890, there can be no seizure of goods in course of transportation pursuant to the unlawful contract. Such seizure can only be made under the sixth section of the act. which authorizes seizures and condemnation by like proceedings to those provided in cases of property imported Into the United States contrary to law. U. 8, V. Addyston Pipe d Steel Co., 85 F., 271. 1—773 SHINGLES. See Combinations, etc., 32, 211, 212. SOUTH CAROLINA DISPENSABY LAWS. See Lowetistein v Evans, 60 F., 908 (1—598). SPECIFIC PEBFORMANCE. See Contracts, 7. INDEX — ^DIGEST. 1177 SPECULATIVE DAMAGES. See Damages, 2. STATES. 1. Bight to Create Corporations — Interstate Commerce. — ^A State can not invest a corporation organized under its laws with the power to do acts in the corporate name which wonld operate to restrain interstate commerce. U. S. v. Northern Securities Co., 120 F., 721. 2—216 2. Same. — No State can, by merely creating a corporation, or in any other mode, project its authority into other States, so as to prevent Congress from exerting the power it possesses under the Constitution over interstate 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 commerce ; nor can any State give a corporation created under its laws authority to restrain interstate or international commerce agaitust the will of the nation as lawfully expressed by Congress. Every corporation created by a State is necessarily subject to the supreme law of the land. Nortlieim Securities Co. v. United States, 193 U. S., 197 (Harlan, Brown, McKenna. Day). 2—341 3. Bight to Create Corporations — Injunction in Northern Securi- ties Case no Invasion. — ^The enforcement of the provisions of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), by a Federal court decree enjoining a corporation organized in pursuance of a combination of stoclvbolders in two com- peting interstate railway companies for the purpose of ac- quiring a controlling interest in the capital stock of such companies, from exercising the power acquired by such corporation by virtue of its acquisition of such stock, does not amount to an invasion by the Federal Government of the reserved rights of the States creating the several cor- I)orations. Northern Securities Co. v. United States, 193 U. S,, 197 (48 L. ed., 679). 2—342 4. Jurisdiction of Federal Courts. — A State is not a citizen within the meaning of the provisions of the Constitution or acts of Congress regulating the jurisdiction of the Federal courts. Minnesota v. Northern Securities Co., 194 U. S., 48. 2 — ^533 5. Same. — A State can not maintain an action in equity to re- strain a corporation from violating the provisions of the act of July 2, 1890, on the ground that such violations by decreasing competition would depreciate the value of its public lands and enhance the cost of maintaining its public institutions, the damages resulting from such violations being remote and indirect and not such direct actual injury as is provided for in section 7 of the act. lb. J 1 1 o INDEX — ^DIGEST. STATES— Continued. «. State Corporations— Power of Congress. — Congress has no au- thority, under the conmierce clause or any other provision of tile Constitution, to limit the right of a corporation cre- ated by a State in the acquisition, control, and disposition of property in the scTeral States, and it is immaterial that such property, or the products thereof, may heeonie the sub- jects of interstate commerce: and it is apparent that by the act of July 2, 1890, In relation to monopolies, Congress did not intend to declare that the acquisition by a State coriwrsition of so large a part of any species of property as to enable the owners to control the traffic therein among the several States constituted a criminal offense. In re Greene, 52 F., 104. i_55 7. State Corporations — Interstate Commerce — ^Power of Congress. Pranchises of a corporation chartered by a State are, so far as they involve questions of interstate commerce, exercised in subordination to the power of Congress to regulate such commerce. While Congress may not have general visita- torial power over State corporations, its powers in vindica- tion of its own laws are the same as if the corporation had been created by an act of Congress. Hale v. Henkel, 201 U. S., 43. * ji 8 74 a. State courts are without jurisdiction of a suit to recover dam- ages under section 7 of the Federal Anti-Trust Act of 1890. Loetce v. Lawlor, 130 F., 633. »— 563 a A State is neither a " person " nor a " corporation," within the meaning of the Anti-Trust Act of 1890, and the provisions of that act are not applicable to the case where the State by its laws assumes a monopoly of the traffic in intoxicating liquors. Lowenstein v. Evans, 69 F., 908. 1—598 10. Where an action Is brought against the officials of a State under section 7 of the Anti-Trust Law of July 2, 1890, to recover damages for acts done under authority of a State statute which gives the State an entire monopoly of the traffic in Intoxicating liquors (act S. C, Jan. 2, 1895), the State itself is a necessary party thereto, and consequently the Federal courts would have no jurisdiction of the action. /&. 11. Xanufactures within a State.— The Anti-Trust Act of 1890 has no reference to the mere manufacture or production of ar- tides or commodities within the limits of the several States. Northeni SecuHties Co, v. United States, 193 U. S.. 197. 2—339 ■TATE XOirOPOLIXS. See States, 9. . INDEX—DIGEST. 1179 STATUTES. I. Anti-Trust Act of July 2, 1890. 1, Construction and operation — In general. 1. Act Operates on Monopolies in Interstate Commerce, and Not Because Commodity is a Necessary of Life. — ^The monopoly and restraint denounced by the act of July 2, 1890 (c. (>47, 26 Stat, 209), "to protect trade and commerce against un- lawful restraints and monopolies," are a monopoly in inter- state and international trade or commerce, and not a monop- oly in the manufacture of a necessary of life. U. 8. v. E. C. Knight Co., 156 U. S., 1. 1—379 2. The statute is not limited to contracts or combinations which monopolize iiiterstate commerce in any given commodity, but seeks to reach those which directly restrain or impair the freedom of interstate trade. The law reaches combina- tions which may fall short of complete control of a trade or business, and does not await the consolidation of many small combinations into the huge " trust " which shall control the production and sale of a commodity. Chesapeake d O. Fuel Co. v. United States, 115 F., 610, 624. 2—168 8. Common Carriers Not Included Within the Statute. — It was not the intention of Congress to include common carriers sub- ject to the act of February 4, 1887, within the provisions of the act of July 2, 1890, which is a special statute, relating to combinations in the form of trusts and conspiracies in restraint of trade. U. 8. v. Trans-Mo. Ft. Assn., 53 F., 440. Case reversed, 166 U. S., 290 (1—648). 1—80 4. Applies to Common Carriers by Railroads — Contracts Affecting Bates. — ^The. provisions resjiecting contracts, combinations, and conspiracies in restraint of trade or commerce among the several States or with foreign countries, contained in the act of July 2, 1890, " to protect trade and commerce against unlawful restraints and monopolies," apply to and cover common carriers by railroad ; and a contract between them in restraint of such trade or commerce is prohibited, even though the contract is entered into between competing railroads, only for the purpose of thereby affecting traffic rates for the transportation of persons and property. U. 8. V. Trans-Mo. Ft. Assn., 166 U. S., 290. 1 — 648 5. Act Applies to All Contracts in Bestraint of Interstate or For- eign Commerce— Not Confined to Unreasonable Bestraints.— The prohibitory provisions of the said act of July 2, 1890, apply to all contracts in restraint of interstate or foreign trade or commerce without exception or limitation; and are not confined to those in which the restraint is unreason- able. /6. 1180 INDEX — ^DIGEST, BTATTITES— Contiiiueil. I. Act of 1890— ContinutHl. i. Aet Aimed at all Bestralnts — Eeasonableness of Restraints Im- material. — ^The act of Congress is aimed against all restraints of interstate commerce, and its purpose is to permit com- merce between the States to flow in its natural channelB, ' unrestricted by any combinations, contracts, conspiracies, or monopolies whatsoever. The reasonableness of the restric- tions in a given case is Immaterial. U, 8. v. Hopkins, 82 F., 529. 1—725 Reversed, 171 U. S., 579 (1—941). 7. Tett of Validity of Contract or Combination under Anti-Trust Act. — The test of the violation of the Anti-Trust Act of July 2, 1890 (26 Stat, 209, c. 647), by a contract or combina- tion, is its effect upon competition in commerce among the States. If its necessary effect is to stifle or to directly and substantially restrict interstate commerce, it falls under the ban of the law, but if it promotes, or only incidentally or indirectly restricts, competition, while its main purpose and chief effect are to promote the business and increase the trade of the makers, it is not denounced or avoided by that law. PhiUips v. lola Portland Cement Co., 125 F.. 593. 2—284 «. The Sherman Act of July 2, 1890, is not intended to affect contracts which have only a remote and indirect bearing on commerce between the States. Field v. Barber Asphalt Paving Co., 194 U. S., 618. 2—555 9. The Anti-Trust Act of July 2, 1890 (26 Stat, 209), does not apply to a contract or combination relating to the business. of manufacturing within a State. Rohinson v. Suburban Brick Co., 127 F., 804. 2—312 10. The act of July 2, 1890, commonly known as the "Anti-Trust Act," does not, and could not constitutionally, affect any monopoly or contract in restraint of trade, unless it inter- feres directly and substantially with Interstate commerce, or commerce with foreign nations. U. 8. v. Addyston Pipe d Steel Co., 78 F., 712. 1—630 11. Any agreement or combination which directly operates, not alone upon the manufacture, but upon the sale, transporta- tion, and delivery of an article of interstate commerce by preventing or restricting its sale thereby regulates interstate commerce to that extent, and thus trenches upon the power of the national legislature and violates the statute. Addys- ton Pipe d Steel Co. v. V. S., 175 U. S.. 211. 1—1009 18. Effect of Anti-Trust Law upon Contracts in Restraint of Trade which at Common Law were Kot Unlawful. — The effect of the Anti-Trust Law of 1890 is to render contracts in re- straint of trade, as applied to interstate commerce, unlaw- ful in an affirmative or positive sense, and punishable as a INDEX — ^DIGEST. 1181 ♦ k STATUTES— Continued. I. Act op 1890— Continued, misdemeanor, and also to create a right of civil action for damages in favor of persons injured thereby, and a remedy by injunction in favor both of private persons and the public against the execution of such contracts and the main- tenance of such trade restraints. U. 8. v. Addystcm Pipe d Steel Co., 85 F., 271. 1—772 18. Test of Legality.— The Anti-Trust Act of July 2, 1890 (26 Stat, 209), declaring all contracts and combinations illegal if in restraint of trade or commerce among the States, does not leave to the courts the consideration of the question whether the restraint is or is not unreasonable and such as would have rendered the contract invalid at common law. The only question in each case where the validity of a contract or combination under the law is involved is whether or not its necessary effect is to restrain interstate commerce. Ches- apeake d Ohio Fuel Co. v. U. S., 115 F., 610. 2—151 14. Same.— The test of the violation of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), by a contract or combination is its effect upon competition in commerce among the States. If its necessary effect is to stifle or to directly and substan- tially restrict interstate commerce, it falls under the ban of the law, but if it promotes, or 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 makers, it is not denounced or avoided by that law. Phillips v. lola Portland Cement Co., 125 F., 593. (See also Combinations, etc., 9-15.) 2 — 284 15. Construction — Act Includes Every Combination which Directly and Substantially Restricts Interstate Commerce. — The gen- erality of the language used in the Anti-Trust Act of 1890 (act July 2, 1890, 26 Stat, 209), declaring illegal "every contract, combination, or conspiracy in restraint of trade or commerce among the several States or with foreign nations," indicates the purpose of Congress to include in the prohibition every combination which directly and substan- tially restricts interstate commerce, whatever its form. U, 8. V. Northern Securities Co., 120 F., 721. 2 — ^215 16. Same.— The Anti-Trust Act (act July 2, 1890, 26 Stat., 209) ap- plies to interstate carriers of freight and passengers, and any contract or combination which directly and substantially restricts the right of such a carrier to fix its own rates, in- dependently of its natural competitors, places a direct re- straint upon interstate commerce, in that it tends to prevent competition, and is in violation of the act, whether the rates actually fixed be reasonable or unreasonable. 76. 17. Same.— The Anti-Trust Act of July 2, 1890, embraces and de- clares to be illegal every contract, combination, or con- 11808— VOL 2— 06 75 1182 STATUTES— Continuecl. INDEX — ^DIGEST. I. Act of 1890— Continued. splracy, in whatever form, of whatever nature, and whoever may be parties to it, which directly or necessarily operates in restraint of trade or commerce among the several States or with foreign nations. Northern Securities Co. v. United States, 193 U. S., 197. (Harlan, Brown, McKenna, Day.) 2—^39 18. That act has no reference to the mere mannfactnre or pro- dnction of articles or commodities within the limits of the several States. Ih. 10. The act is not limited to restraints of interstate and inter- national trade or commerce that are unreasonable in their nature, but embraces all direct restraints, reasonable or unreasonable, imposed by any combination, conspiracy, or monopoly upon such trade or commerce, Ih. 20. Railroad carriers engaged In interstate or international trade or commerce are embraced by the act. 11k fll. Combinations, even among private manufacturers or dealers, whereby interstate or international commerce is restrained, are equally embraced by the act. /© 22. Every combination or conspiracy which would extinguish com- petition between otherwise 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. JI>. 23. 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 com- merce. 16. 24. The act of July 2, 1890, was leveled, as appears by its title, at only unlawful restraints and monopolies. Congi-ess did not intend to reach and destroy those minor contracts in partial restraint of trade which the long course of decisions at common law had affirmed were reasonable and ought to be upheld. Northern Securities Co. v. United States, 193 TJ. S., 197. (Brewer, concurring.) 2—341 25. The general language of the act is limited by the power which each individual has to manage his own property and deter- mine the place and manner of its investment. Freedom of action In these respects is among the Inalienable rights of every citizen. /^. 28. In determining whether or not a combination is in violation of the Federal Anti-Trust law, as in restraint of interstate commerce, it is immaterial that such is not its ultimate ob- ject, which is in most cases to increase the trade and profits of the parties to such combination ; nor is it material to as- certain what proportion the resulting restraint of inter- \ INDEX — ^DIGEST. 1183 STATUTES— Continued. r I. Act of 1890— Continued. state commerce bears to other results. The true inquiry is whether it tends directly to appreciably restrain interstate trade, and, if it does, it is within the statute, although such effect may not be so considerable as its other effects. Ellis V. Inman, Poulsen d Co., 131 F., 182. 2—577 27. The statute under review (act of July 2, 1890) is a legitimate exercise of the power of Congress over interstate commerce, and a valid regulation thereof. U. S. v. Joint Traffic Assn., 171 U. S., 505. 1—869 28. Section 1 of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), makes a distinction between a contract and a combination or conspiracy in restraint of trade. Rice v. Standard Oil Co,, 134 F., 464. j^_633 29. The Interstate Commerce Act and the act known as the " Sher- man Anti-Trust Law" are separate and independent acts, not germane in character and purpose ; and therefore juris- diction in the circuit court of the United States over a bill in equity to enjoin a railroad company from granting re- bates to favored shippers can not be maintained upon the gi'ound that such act of the railroad company is a monopoly within the meaning of the second section of said Anti-Trust Act (act July 2, 1890, 26 Stat, 209). United States v. Atchison, T. & S. F. Ry. Co., 142 F., 176. 2—831 80. Acts done under an agreement legal when made, but which be- came illegal on the passage of the act of July 2, 1890, are done in violation of that act U. S. v. Trans-Mo. Ft. Assn., 166 U. S., 290. 1—669 81. 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 competition. Restraint of trade is not dependent upon any consideration of reasonableness or unreasonableness in the combination averred, nor is it to be tested by the prices that result from the combination. U. S. v. Sioift & Co., 122 F., 529. 2—237 82. The Anti-Trust Act should have a reasonable construction — one which tends to advance the remedy it provides and to abate the mischief at which it was leveled. Whitwell v. Continental Tobacco Co., 125 F., 454. 2 — ^271 33. Scope of the Statute. — The words " trade " and " commerce," as used in the Anti-Trust Act of 1890, are synonymous. The use of both terms in the first section does not enlarge the meaning of the statute beyond that employed in the con- mon-law expression " contract in restraint of trade," as they are analogous to the word " monopolize," used in the second section of the act U. 8. v. Patterson, 55 F., 605. 1 — 133 34. Same. — The word " monopolize " is the basis and limitation of the statute, and hence an indictment must show a conspiracy 1 1 84 STAinrrBS—Continued. IITDBX — ^DIGEST. vVki 87. I. Act of 1890— Continued. in restraint by engrossing or monopolizing or grasping tlie market It is not sufficient simply to allege a purpose to drive certain competitors out of tlie field by violence, annoy- ance, intimidation, or otherwise. /ft. Scope of the Statute— Contpiraoy.—The act of July 2, 1890 (26 Stat, 209), section 1, declaring illegal "every contract, com- bination in the form of trust or otherwise, or conspiracy " in restraint of trade or commerce among the States or with foreign nations, Is not aimed at capital merely and combina- tion* of a contractual nature, which by force of the title, "An act to protect trade and commerce against unlawful re- straints and monopolies," are limited to such as the courts have declared unlawful, the words " in restraint of trade " having, in connection with the words " contract " and " com- bination,*' their common-law significance, but the term " conspiracy " is used in its well-settled legal meaning, so that any restraint of trade or commerce, if to be accom- plished by conspiracy, is unlawful, t/. S. v. Debs, 64 F., 724. 1 — 322 Same — Construction. — The construction of the statute is not affected by the use of the phrase "in rettraint of trade," rather than one of the phrases "to injure trade" or "to restrain trade." /j. Same. — ^Thc word "commerce," in the statute, is not synony- mous with " trade," as used in the common-law phrase " re- straint of trade," but has the meaning of the word in that clause of the Constitution which grants to Congress power to regulate interstate and foreign commerce. 15. Supreme Court Boes Not Dissent from Conclusions in IT. S. ▼. Debs.— The court enters into no examination of the act of July 2, 1890 (26 Stat, 209), on which the circuit court mainly relied to sustain its jurisdiction; but it must not be understood that it dissents from the conclusions of that court in reference to the scope of that act, but simply that it prefers to rest its judgment on the broader ground discussed in its opinion, believing it important that the principles underlying it should be fully stated and fully aflirmed. In re Debs, 158 U. S., 564. 1—565 While the primary object of the Anti-Trust Act of 1890 was doubtless to prevent the destruction of legitimate and healthy competition in interstate commerce by the engross- ing and monopolizing of the markets for commodities, yet its provisions are broad enough to reach a combination or conspiracy that will interrupt the transportation of such commodities and persons from one State to another. U. 8. V. WorMngmen^B Amalgamated Council, 54 F., 995, cited. U, S. V. Casaidv, 67 F., 698. 1^ — 452 INDEX — DIGEST. 1186 f w STATUTES— Continued. I. Act of 1890— Continued. Section 1. 40. Conspiracy in Restraint of Interstate Commerce. — ^A combina- tion by railroad employees to prevent all the railroads of a large city engaged in carrying the United States mails and in interstate commerce from carrying freight and pas- sengers, hauling cars, and securing the services of persons other than strikers, and to induce persons to leave the service of such railroads, is within act of July 2, 1890, sec- tion 1, which provides that every contract, combination in the form of trust or otherwise, " or conspiracy in restraint of trade or commerce " among the States is illegal. U. S. v. Elliott, 64 F., 27. 1—311 41. Same.— Act of July 2, 1890 (26 Stat., 209), section 1, is not aimed at capital merely and combinations of a contractual nature, which by force of the title, "An act to protect trade and commerce against unlawful restraints and monopolies," are limited to such as the courts have declared unlawful. U. 8. V. Debs, 64 F., 724. 1-^^ 42. Same. — The term "conspiracy" in section 1 of the act of July 2, 1890 (26 Stat, 209), is used in its well-settled legal meaning, so that any restraint of interstate trade or com- merce, if accomplished by conspiracy, is unlawful. 76. 43. What Contracts, Combinations, or Conspiracies Violate Anti- Trust Act. — Every contract, combination or conspiracy the necessary effect of which is to stifle or to directly and sub- stantially restrict competition in commerce among the States is in restraint of interstate commerce, and violates section 1 of the act of July 2, 1890 (26 Stat, 209). Whitwell v. Continental Tobacco Co., 125 F., 454. 2—271 44. What Acts, Contracts, and Combinations Do Not Violate Anti- Trust Act. — Acts, contracts, and combinations which promote, or only incidentally or indirectly restrict, competition in commerce among the States, while their main purpose and chief effect are to foster the trade and increase the business of those who make and operate them, are not in restraint of interstate commerce or violative of section 1 of the act of July 2, 1890 (26 Stat, 209). lb. 45. Section 1 of the Sherman Anti-Trust Act of July 2, 1890 (26 Stat, 209), makes a distinction between a contract and a combination or conspiracy in restraint of trade. Rice v. Standard Oil Co., 134 F., 464. 2—633 46. Contract for Sale of Ooods by Member of Combination. — ^The act of July 2, 1890, section 1 (26 Stat, 209), known as the " Sherman Anti-Trust Act" does not invalidate or prevent a recovery for the breach of a collateral contract for the manufacture and sale of goods by a member of a combination 1186 INDEX — ^DIGEST. STATUTES— Continued. I. Act of 1890— Continued, fonned for the purpose of restraining Interstate trade in such goods. Hadley Dean Plate Glass Co. v. Highla/nd Glass Co., 143 F., 242. 2—995 See also Indictments, 5. Section 2, 47. Monopolies. — ^To constitute the offense of "monopolizing, or attempting to monopolize," trade or commerce among the States, within the meaning of section 2 of the Anti-Trust Act of 1890, it is necessary to acquire, or attempt to acquire, an exclusive right in such commerce by means which will prevent others from engaging therein. In re Greene, 52 F., 104. 1^55 48. Every attempt to monopolize a part of interstate commerce, the necessary effect of which is to stifle or to directly and snb- stantially restrict competition in commerce among the States, violates section 2 of the act of July 2, 1890 (26 Stat, 209). Whitwell V. Continental Tobacco Co., 125 F., 454. 8—271 4». Same. — ^Attempts to monopolize a part of commerce among the States which promote, or only incidentally or indirectly re- strict, competition in interstate commerce, while their main purpose and chief effect are to increase the trade and foster the business of those who make them, were not intended to be, and were not, made illegal or pnnishable by section 2 of the Anti-Trust Act of July 2, 1890 (c. 647, 26 Stat, 209), because such attempts are indispensable to the existence of any competition in commerce among the States. lb. See also Indictments, 1 ; Monopoly. Section 4. 50. Power of Congress to Authorize Injunction.— Act of July 2, 1890, section 4, which provides that the circuit courts of the United States have jurisdiction to restrain combinations and conspiracies to obstruct and destroy interstate com- merce, before such objects are accomplished, is not void for want of power in Congress to authorize such proceedings. U. 8. V. Elliott, 64 F., 27. 1^311 il. Government Has Power to Bring Suit.— The fourth section of the act of 1890 Invests the Government with full power and authority to bring suit against the Trans-Missouri Freight Association ; and, if the facts alleged are proved, an injunc- tion should issue. V. 8. v. Trans-Mo. Ft. Assn., 166 U. S„ 290. 1—649 58. Who May Sue to Eestrain.— The intention of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), was to limit direct pro- ceedings in equity to prevent and restrain such violations of the Anti-Trust Act as cause injury to the general publi'^. INDEX — DIGEST. 1187 STATUTES— Continued. 1 4 I. Act of 1890— Continued. or to all alilie, merely from the suppression of competitioa in trade and commerce among the several States and with foreign nations, to those instituted in the name of the United States, under section 4 of the act, by district attor- neys of the United States, acting under the direction of the Attorney-General; thus securing the enforcement of the act, so far as such direct proceedings in equity are con- cerned, according to some uniform plan, operative through- out the entire country. Minnesota v. Northern Securities Co., 194 U. S., 48. 8—533 53. The right to bring suits for injunction under section 4 of the act of July 2, 1890 (26 Stat., 290), is limited to suits insti- tuted on behalf of the Government. Greer, Mills & Co. v. Stoller, 11 F., 1. 1—620 54. Although the act of July 2, 1890, contains criminal provisions, the Federal court has power under section 4 of the act in a suit in equity to prevent and restrain violations of the act, and may mold its decree so as to accomplish practical re- sults such as law and justice demand. Northern Securities Co. V. Vnited States, 193 U. S., 197. 8—339 55. Restraining Order — Notice. — ^Under section 4 of the Anti-Trust Law of July 2, 1890, a restraining order may be issued without notice, under the circumstances sanctioned by the established usages of equity practice in other cases. U. S. V. Coal Dealers' Assn. of Cal., 85 F., 252. 1—749 56. Injunction. — A combination whose professed object is to ar- rest the operation of the railroads whose lines extend from a great city into adjoining States until such roads accede to certain demands made upon them, whether such demands are in themselves reasonabe or unreasonabe, just or unjust is an unlawful conspiracy in restraint of trade and com- merce among the States, within the act of July 2, 1890, and acts threatened in pursuance thereof may be restrained by injunction under section 4 of the act TJ. 8. v. Elliott, 62 F., 801. 1—262 See also Injunctions, 9, 16, 17, 21. Section 5. 57. Injunction Order — Persons Not Named in Bill. — Under act of July 2, 1890, section 5, an injunction order in an action to enjoin an Illegal conspiracy against interstate commerce may provide that it shall be in force on defendants not named in the bill, but who are within the terms of the order, where it also provides that it is operative on all persons acting in concert with the designated conspirators, though not named in the writ, after the commission of some act by 1^ - 1188 INBBX— DIGEST. STATUTES— Continued. L Act of 1800— Continued. 58. them In fnrtlierance of the consplraqy, and service of the writ on them. U. 8. v. Elliott, 64 F.. 27. 1—311 The authority given by section 5 of the act of July 2, 1890 (26 Stat, 290), to hrlng Im nonresidents of the district can not he availed of in private suits, and the court can acquire no jurisdiction over them. Greer, Mills d Go, v. Stoller, 77 F., 1. I g20 See also In junctions, 18. Section 6. Forfeiture of Property.— The provision of act of July 2, 1890, section 6, for forfeiture of " any property owned under any contract or by any combination, or pursuant to any con- spiracy (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," does not imply that only cases in which property shall be found subject to forfeiture shall be deemed within the scope of the act. V. S. V. Deb«, 64 F., 724. 1—322 Seizure of goods in course of transportation pursuant to the unlawful contract can only be made under the sixth section of the act of 1890, which authorizes seizures and condemna- tion by like proceedings to those provided in cases of prop- erty imported Into the United States contrary to law. V. 8, V. Addv9ton Pipe d Steel Co., 85 F., 271. 1—773 There can be no such seizure In a suit in equity brought by the United States under the act of 1890 to enjoin the carrying out of a contract or combination In restraint of interstate commerce. n,^ Section 7, necessary Parties— Jurisdiction of Federal Courts.— Where a person brings an action under section 7 of the Anti-Trust Law of July 2, 1890. against the offleials of a State to re- cover damages for acts done under authority of a State statute which gives the State an entire monopoly of the traffic In intoxicating liquors (act S. C, Jan. 2, 1895), the State itself is a necessary party thereto, and consequently the Federal courts would have no jurisdiction of the action. Lowenstein v. Evcms, 69 F., 908. 1—598 A municipal corporation engaged in operating water, lighting, or similar plants, from which a revenue is derived, Is, in re- lation to such matters, a business corporation, and may maintain an action under section 7 of the Anti-Trust Act of July 2, 1890 (26 Stat, 210), for injury to its business" by reason of a combination or conspiracy In restraint of inter- state trade or commerce made unlawful by such act. dtp of Atlanta v. Chattanooga Foundry d Pipeworks, 127 F., 23. Affirmed, 203 U. S., 390. 8—299 INDEX — ^DIGEST. 1189 »W I' STATUTES— Continued. 1. Act op 1890 — Continued. 64. Same — ^Who Liable. — Every member of such an illegal combina- tion is liable for the injury resulting to the business or property of a plaintiff by reason of such combination, re- gardless of any contract relation between the plaintiff and defendant. lb, 65. Does Not Authorize an Action for Damages by Party to the Trust.- Section 7 of the Anti-Trust Act (26 Stat, 209), giv- ing to any person injui'ed by any other person or corpora- tion by reason of anything forbidden in the act the right to recover treble damages, does not authorize an action against an alleged trust corporation by one who was a party to its organization and a stockholder therein to recover damages resulting from the enforcement by defendant of rights given It by the alleged unlawful agreement Bishop v. American Preservers Co., 105 F., 845. 2—51 Affirming 51 F., 272 (1—49). 66. For an action for recovery under this section brought under this section against an association of manufacturers of and dealers in tiles, mantels, and grates, where the party suing was not a member of the association, and the sales were made within the State, see Montague v. Loiory, 193 U. S., 38. a— 327 67. Attorneys' Fees. — ^The discretion of the trial court under the Anti-Trust Act of July 2, 1890 (26 Stat, 209), section 7, to allow a reasonable attorney's fee to the successful plaintiff In an action brought under that section to recover damages for a violation of the provisions of that act against combina- tions in restraint of trade, is not abused by an allowance of $750, although the verdict was for but $500, where the trial tool£ five days, and from the proof offered it appeared tliat from $750 to $1,000 would be a reasonable sum. Ih. 68. A recovery of the treble damages authorized by the Sherman Anti-Trust Act of July 2, 1890, section 7 (26 Stat., 209), in case of injury sustained by violation of the act, can be had only by direct action, and not by way of set-off in an action brought for the price of goods by a company illegally formed in violation of the act, especially when the State practice does not permit the set-off of unliquidated damages. Con- nolly V. Union Sewer Pipe Co., 184 U. S., 540. 2—118 69. A declaration in a suit based on section 7 of the Anti-Trust Act of 1890 (26 Stat, 210), to recover damages resulting to plaintiff from a violation of such provision, which alleges in a single count that defendant entered into a " contract, combination, and conspiracy" in restraint of trade, is bad for duplicity. Rice v. Standard Oil Co., 134 F., 464. 18—633 70. The pendency of a suit in a State court can not be pleaded in abatement of an action in a circuit court of the United 1190 IlfDEX — ^DIGEST. STATUTES— Coiitiuiied. I. Act of 1890— Continued. States to recover treble damages under section 7 of the Anti-Tnist Act of July 2, 1890 (26 Stat, 210), since the State court is without jurisdiction to enforce the remedy given by said section, and therefore the same case can not be depending in both courts. Loewe v. Lawlor, 130 F., 633. 2—56.^ 71. Limitation.— An action under section 7 of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), providing 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 chrcuit court of the United States, * * ♦ and shall recover threefold the damages by him sustained," is not an action for a penalty or forfeiture within Revised Statutes, section 1047, prescribing a limitation of five years for a " suit or prosecution for any penalty or forfeiture, pecuniary or otherwise, accruing under the laws of the United States," but one for the enforcement of a civil remedy for a private injury, compensatory in its purpose and effect the recovery permitted in excess of damages actually sustained being In the nature of exemplary damages, which does not change the nature of the action, and such action is governed as to limitation by the statutes of the State in which it is brought. City of Atlanta v. Chattanooga Foundry d Pipe Co., 101 F., 9^- 2 1^ Affirmed, 127 F., 23 (2—299). Affirmed, 203 U. S., 390. Fob Combinations, etc., PBOHiBrrED, see Combinations* Cow- spiBAciES, Contracts, etc., in Restbaint of Tbade, II. Fob Combinations, etc., not within the Statute, see Com- binations, CONSFIBACIES, CONTBACTS, ETC., IN RESTRAINT OF Trade, III. Fob Actions, Defenses, ob Parties, see Actions and De- fenses; AND Parties. For Jurisdiction of Federal Courts, see Courts. For Damages, see Actions and Defenses, 21-42; and Dam- ages. II. Immuntty Statutes. Act of February 11, 189$. 7S. Immunity of Witnesses.— Act of February 11, 1893 (27 Stit, 443), providing that no person shall be excused from tesU- fying in a proceeding growing out of an alleged violation of an act to regulate interstate commerce, approved Feb- ruary 4, 1887, on the ground that his testimony will tend to incriminate him, and that no person shall be prosecuted, etc., on account of anything concerning which he may tes- INDEX — ^DIGEST. 1191 > STATUTES— Continued. II. Immunity Statutes — Continued, tify in such proceeding, applies only to proceedings con- nected with the act of February 4, 1887, and does not apply to a prosecution for violation of the act of July 2, 1890 (2G Stat, 209), so as to abrogate in relation thereto the Fifth Amendment to the Constitution, providing that no person shall be compelled in a criminal case to be a witness against himself. Foot v. Buchanan, 113 F., 156. 2 — 104 78. The act of February 11, 1893 (27 Stat, 443), which is supple- mentary to the Interstate Commerce Act, provides that "no 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 or produce evidence, documentary or otherwise, before said Commission or in obedience to its subpoena * * * or in any such case or proceeding." V. 8. v. Armour & Co., 142 F., 808. , 2—951 Act of February 19, 1903. 74. Immunity of Witnesses — Anti-Trust Act — ^Inquisitions. — An in- quisition before a grand jury to determine the existence of supposed violations of the Anti-Trust Act was a "proceed- ing" within act of Congress, February 19, 1903 (ch. 708, 32 Stat, 848), providing that no person shall be prosecuted or subjected to any penalty for or on account of any transaction, matter, or thing concerning which he may tes- tify or produce evidence in any " proceeding " under several statutes mentioned, including such Anti-Trust Act. In re Hale, 139 F., 496. 2—804 Act of February 25, 1903. 75. The examination of witnesses before a grand jury concerning an alleged violation of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), is a " proceeding " within the meaning of the proviso to the act of February 25, 1903 (32 Stat, 854-903), 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 in any proceeding, suit, or prosecution under cer- tain named statutes, of which the Anti-Trust Act is one. Hale V. Henkel, 201 U. S., 43. 2—874 76. The right of a witness to claim his privilege against self-in- crimination, afforded by the Fifth Amendment to the Con- stitution, when examined concerning an alleged violation of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), is taken away by the proviso to the act of February 25, 1903 (32 Stat, 904), that no person shall be prosecuted or be sub- jected tp any penalty or forfeiture for or on account of any transaction, matter, or thing concerning which he may tes- 1192 STATUTES— Continued. INDEX — ^DIGEST. 7T. II. Immunity Statutes— Continued. tiiy or produce evidence in any proceeding, suit, or prosecu- tion under certain named statutes, of whicli the Anti-Trust Act Is one, which furnishes a sufficient immunity from prosecution to satisfy the constitutional guaranty, although it may not afford immunity from prosecution in the State courts for the offense disclosed. [See also Nelson v. United States, 201 U. S., 92 (a— »20).] if,, Immimity ProYision.— The appropriation act of February 25, 1903 (32 Stat, 904), making provision for the enforcement of the Interstate Commerce and Anti-Trust Laws, contains an Immunity provision relating to persons giving testimony or producing evidence in any proceeding, suit, or prosecution under said laws. U. 8. v. Armour d Co., 142 F., 808. 2—952 III. COMMEECE AND LABOB ACT. Act of February i^, 190S, 78. The primary purpose of Commerce and Labor Act of February 14, 1903 (32 Stat, 825), was legislative, to enable Congress. by information secured through the work of officers charged with the execution of that law to pass such remed'al legis lation as might be found necessary, and the act must be construed in view of such purpose. United States v. Ar- mour d Co., 142 F., 808. »— 951 79. Commissioner of Corporations— Investigation of Corporations or Combinations.— Section 6 of that act (32 Stat, 827), defining the powers and duties of the Commissioner of Corporations, requiring him to make investigation into the organization, conduct, and management of the business of all corporations or combinations engaged in interstate or foreign commerce other than common carriers, and giving him the same powers In that respect as is conferred on the Interstate Commerce Commission with respect to carriers, including the power to subpoena and compel the attendance of witnesses, and to administer oaths and require the production of documentary evidence, contemplates that he shall proceed by private hearings; and, having such powers, a person who appears before him on his demand or by his request, and gives testi- mony or produces documents, although not sworn, is entitled to the same privileges and immunities as though his attend- ance was compelled by subpoena and his testimony given under oath. ^^ 80. Same— Immunity.— Section 6 (32 Stat, 827) requires the Com- missioner of Corporations to investigate all corporations and combinations engaged in interstate or foreign commerce, except common carriers, and provides that " all the require- ments, obligations, liabilities, and immunities Imposed or INDEX — ^DIGEST. 1195 STATUTES— Continued. III. Commerce and Labob Act — CJontinued. conferred by said 'Act to regulate commerce ' and by 'An act in relation to testimony before the Interstate Commerce Commission » * * * shall also apply to all persons who may be subpcenaed to testify as witnesses or to produce documentary evidence in pursuance of the authority con- ferred by this section." /&. IV. INTEBSTATE COMMEBCE ACT. Act of February 4, 188t. 81. Public Policy.— The act of February 4, 1887, entitled "An act to regulate commerce," demonstrates the fact that from the date of the passage of that act it has been the public policy of this nation to regulate that part of interstate commerce which consists of transportation, and to so far restrict competition in freight and passenger rates between railroad companies engaged therein as shall be necessary to make such rates open, public, reasonable uniform, and steady and to prevent discriminations and undue prefer- ences. U. 8. V. Trans-Mo. Ft. Assn., 58 F., 58. 1 — 186 Case reversed, 166 U. S., 290 (1—648). 82. Hot Inconsistent with Anti-Trust Act. — The act of February 4, 1887 (24 Stat, 379), "to regulate commerce," is not incon- sistent with the act of July 2, 1890, as it does not confer upon competing railroad companies power to enter into a contract in restraint of trade and commerce, like the one which forms the subject of this suit U. 8. v. Trans-Mo. Ft. Assn., 166 U. S., 290. 1--648 83. Express Companies. — The Interstate Commerce Act does not apply to independent express companies not operating rail- way lines. Southern Ind. Exp. Co. v. U. 8. Exp. Co., 88 F., 659. 1—862 V. Revised Statutes. 84. Section 725. — ^Where an injunction had been issued and served upon the defendants, the circuit court had authority to in- quire whether its orders had been disobeyed, and when it found that they had been disol)eyed, to proceed under Re- vised Statutes, section 725, and to enter the order of pun- ishment complained of. In re Debs, 158 U. S., 564. 1 — ^566 85. Section 1047. — ^An action under section 7 of the Anti-Trust Act of July 2, 1900 (26 Stat, 209), to recover threefold the dam- ages, is not an action for a penalty or forfeiture, within Re- vised Statutes, section 1047, prescribing a limitation of five years for a "suit or prosecution for any penalty or for- feiture, pecuniary or otherwise, accruing under the laws of the United States," but one for the enforcement of a civil INDEX — ^DIGEST. STATUTES— Ck^ntinuecl. V. Revised Statutes— Contiiiiied. remedy for a private injury, compensatory in its purpose and eirect, the recovery permitted in excess of damages actually sustained being in the nature of exemplary damages, which does not change the nature of the action, and such action is governed as to limitation by the statutes of the State in which it is brought Atlamia v. Chattanooga Foundry d Pipe Co,, 101 F., 900. n—n Affirmed, 127 F., 23 (2—299). Affirmed, 203 U. S., 390. 86. ieetion 3995.— Obstructing the Mails.— Although the law, which now appears in Revised Statutes, section 3995, and which makes it an offense to obstruct and retard the passage of the United States mails, was originally passed prior to the in- troduction into the United States of the method of trans- porting mail by railroads, and the phraseology of the law conforms to conditions prevailing at that time (Mar. 3, 1825), yet it is equally applicable to the modern system of conveyance and protects alike the transportation of the mail by the "limitel express" and by the old-fashioned stage- coach. U. 8. V. Cassidy, 67 F., 698. 1 449 87. Same. — ^The statute applies to all persons who " knowingly and willfully " obstruct and retard the passage of the malls or the carrier carrying the same; that is, to those who know that the acts performed, however innocent they may other- wise be, will have the effect of obstructing and retarding the mall, and who perform the acts with the intent that such shall be their operation. U. 8. v. Kirby, 7 Wall., 485, cited. lb. 88. Same.— The statute also applies to persons who, having in view the -accomplishment of other purposes, perform unlawful acts, which have the effect of obstructing and retarding the passage of the mails. In such case, an intent to obstruct and retard the mails will be imputed to the authors of the un- lawful act, although the attainment of other ends may have been their primary object. U. 8. v. Kirby, 7 Wall., 485. cited. ijf 88. Section 5440— Conspiracy. — Construing several clauses of the interstate commerce law recited in the opinion with sec- tion 5440 of the Revised Statutes, it follows that a combina- tion of persons, without regard to their occupation, which will have the effect to defeat the provisions of the interstate commerce law, inhibiting discriminations in the transporta- tion of freight and passengers, and further to restrain the trade or commerce of the country, will be obnoxious to the penalties therein prescribed. Waterhouse v. Comer, 55 F., 149. 1_119 INDEX — DIGEST. 1195 ST ATUTES— CJonti nued. V. Revised Statutes — Continued. 90. Same. — The statute relating to conspiracies to commit offenses against the United States (Rev. Stat, sec. 5440) contains three elements which are necessary to constitute the offense. These are: (1) The act of two or more persons conspiring together; (2) to commit any offense against the United States ; (3) the overt act, or the element of one or more of such parties doing any act to effect the object of the con- spiracy. U. 8. V. Cassidy, 67 F., 698. 1 — 449 VI. 8tate Laws. 91. The anti-trust law of Minnesota (Laws 1899, p. 487, c. 359), making unlawful any contract or combination in restraint of trade or commerce within the State, is in substantially the same language as the Sherman Anti-Trust Law of July 2, 1890 (26 Stat, 209), and must receive a similar construc- tion. Minnesota v. Northerti Securities Co., 123 U. S., 692. a— 246 Decision reversed, 194 U. S., 38. Circuit court had no juris- diction (2—533). STATUTORY CONSTRUCTION. 1. When Congress adopts or creates a common-law offense, the courts may properly look to the common law for the true meaning and definition thereof, in the absence of a clear definition in the act creating it. In re Oreene, 52 F., 104. 1— d5 2. Where Congress adopts or creates a common-law offense, and in doing so uses terms which have acquired a well-imderstood meaning by judicial interpretation, the presumption is that the terms were used in that sense, and courts may properly look to prior decisions interpreting them for the meaning of the terms and the definition of the offense where there is no other definition in the act. U. 8. v. Trans-Mo. Ft. Assn., 58 F., 58. 1—186 3. Every statute must be read in the light of the general laws upon the same subject in force at the time of its enactment U. 8. V. Trans-Mo. Ft. Assn., 58 F., 58. 1—186 4. The Anti-Trust Act should have a reasonable construction — one which tends to advance the remedy it provides, and to abote the mischief at which it was leveled. Whitwell v. Conti- nental Tobacco Co., 125 F., 454. 2 — 271 5. Debates in Congress are not appropriate sources of information from which to discover the meaning of the language of a statute passed by that body. V. 8. v. Trans-Mo. Ft. Assn., 166 U. S., 290. 1—648 STOCK AND STOCKHOLDERS. 8ee Corporations, 2-11; Com- binations, 177-182. ?- INDEX — ^DIGEST. ST ATXJTE8— Continued . V. Revised Statutes — Continued. remedy for a pxivate injury, compensatory in its purpose and effect, tlie recovery permitted in excess of damages actually sustained being in tlie nature of exemplary damages, whicli does not change tlie nature of the action, and such action is governed as to limitation by the statutes of the State in which it is brought Atlanta v. Chattanooga Foundry d Pipe Co,, 101 F., 900. jt— 11 Affirmed, 127 F., 23 (2—299). Affirmed, 203 U. S., 390. Section 3995.— Obstructing the Mails.— Although the law, which now appears in Revised Statutes, section 3995, and which makes it an offense to obstruct and retard the passage of the United States mails, was originally passed prior to the in- troduction into the United States of the method of trans- porting mail by railroads, and the phraseology of the law conforms to conditions prevailing at that time (Mar. 3, 1825), yet it is equally applicable to the modern system of conveyance and protects alike the transportation of the mail by the "limitel express" and by the old-fashioned stage- coach. V. 8. V. Cassidy, 67 F., 698. 1 — 449 87. Same. — ^The statute applies to all persons who " knowingly and willfully" obstruct and retard the passage of the mails or the carrier carrying the same; that is, to those who know that the acts performed, however innocent they may other- wise be, will have the effect of obstructing and retarding the mall, and who perform the acts with the intent that such shall be their operation. U. 8. v. Kirby, 7 Wall., 485, cited. /&. 88. Same.— The statute also applies to persons who, having in view the -accomplishment of other purposes, perform unlawful acts, which have the effect of obstructing and retarding the passage of the mails. In such case, an intent to obstruct and retard the mails will be imputed to the authors of the un- lawful act, although the attainment of other ends may have been their primary object. C7. 8, v. Kirby, 7 Wall., 485, cited. /ft. L Section 5440 — Conspiracy. — Construing several clauses of the interstate commerce law recited in the opinion with sec- tion 5440 of the Revised Statutes, it follows that a combina- tion of persons, without regard to their occupation, which will hare the effect to defeat the provisions of the interstate commerce law, inhibiting discriminations in the transporta- tion of freight and passengers, and further to restrain the trade or commerce of the country, will be obnoxious to the penalties therein prescribed. Waterhouse v. Comer, 55 F., 149. 1—119 T < INDEX — ^DIGEST. 1195 STATUTES— Continued. V. Revised Statutes — Ontinued. 90. Same. — The statute relating to conspiracies to commit offenses against the United States (Rev. Stat, sec. 5440) contains three elements which are necessary to constitute the offense. These are: (1) The act of two or more persons conspiring together; (2) to commit any offense against the United States; (3) the overt act, or the element of one or more of such parties doing any act to effect the object of the con- spiracy. U. 8. V. Cassidy, 67 F., 698. 1—449 VI. State Laws. 91. The anti-trust law of Minnesota (Laws 1899, p. 487, c. 359), making unlawful any contract or combination in restraint of trade or commerce within the State, is in substantially the same language as the Sherman Anti-Trust Law of July 2, 1890 (26 Stat, 209), and must receive a similar construc- tion. Minnesota v. Northern Securities Co,, 123 U. S., 692. S^— 246 Decision reversed, 194 U. S., 38. Circuit court had no juris- diction (2—533). STATUTORY CONSTRUCTION. 1. When Congress adopts or creates a common-law offense, the courts may properly look to the common law for the true meaning and definition thereof, in the absence of a clear definition in the act creating it In re Qreene, 52 F., 104. 1—65 S. Where Congress adopts or creates a common-law offense, and in doing so uses terms which have acquired a well-understood meaning by judicial interpretation, the presumption is that the terms were used in that sense, and courts may properly look to prior decisions interpreting them for the meaning of the terms and the definition of the offense where there is no other definition in the act U. 8. v. Trans-Mo. Ft. Assn., 58 F., 58. 1—186 3. Every statute must be read in the light of the general laws upon the same subject in force at the time of its enactment U. 8. V. Trans-Mo. Ft. Assn., 58 F., 58. 1—186 4. The Anti-Trust Act should have a reasonable construction — one which tends to advance the remedy it provides, and to abate the mischief at which it was leveled. Whitwell v. Conti- nental Tobacco Co., 125 F., 454. 2—271 5. Debates in Congress are not appropriate sources of information from which to discover the meaning of the language of a statute passed by that body. U. 8. v. Trans-Mo. Ft. Assn., 166 U. S., 290. 1—648 STOCK AND STOCKHOLDERS. See Corporations, 2-11; Com- binations, 177-182. 1196 IKDEX^ — ^DIGEST. STOCK QirOTATIOlfS. See CoMfflNATiONS. 177-180. STBIKEa 8ee Gombinations^ etc., 115, 116, 121-127, 132, 133, 213. SUBPiEirA BXrCES TECUM. See Cobpobations, 12-15; Coubts. 22. SXraAB. See E, 0. Knight Co. case. Vol. I, pages 250, 258, 379. SXriT. See Actions ahb Defenses. TELEGRAMS AUTD TELEPHONE MESSAGES. See Intebstate COMMEBCE, 33. TESTIMONY. See Witnesses. THBOUGH TBANSFOBTATION. See Cabbiebs, TICKET BBOKEBS. See Combinations, etc., 111. TILES. See Combinations, 33-37. TOBACCO TBUST CASES. Whitwell V. Continental Tobacco Co., 125 F., 454 (2—271). In re Hale, 139 F., 496 (2--804). Hale V. Henkeh 201 U. S., 43 (2—874). McAlister y, Henkel, 201 U. S., 61 (8—918). TBAKSPOBTATION. See Cabbiebs; and Statutes, 81, TBEBLE BAMAOES. See Actions and Defenses 21-42 ; Statutes, 62-71. TBINIBAB ASPHALT. See Combinations, etc., 214-216. TEirSTS. flfee Wobds and Phbases. UNITED STATES. The (Sovernment of the United States has jurisdiction over every foot of soil within its territory, and acts directly upon each citizen. In re Dehs, 158 U. S., 564. 1—566 See also Actions and Defenses, 15-ia ♦ UNSEASONABLE SEABCHEa See Seabch and Seizube. WAGES, ETC., OF EMPLOYEES. See CCubts, 8. WALL PAPEB TBirST. See Continental Wall Papeb CJa v. Lewis Voight & Sons Co., 148 F., 989. WITNESSES. 1. Incriminating Evidence— Protection— Constitution— Statntc.— A witness before the grand jury can not be required, under the Fifth Amendment to the Constitution, to answer as to his participation in and knowledge of a combination to regulate and control the price of cotton seed and the product and price of oil throughout certain States, In violation of the act to protect trade and commerce against unlawful re- straints and monopolies (26 Stat, 209), notwithstanding INDEX — DIGEST. 1197 WITNESSES— C^ontiuued. section 8G0, Revised Statutes, providinj; that no evidence obtained from a witness by means of a judicial proceeding shall be given in evidence or in any manner used against bim in any court in any criminal proceeding, since such sec- tion does not exempt the witness from prosecution for tlie offense which may be disclosed by his testimony. Foot v. Buchanan, 113 F., 15C. 2—103 8. Same— Immunity of Witnesses.— Act of February 11, 1893 (27 Stat., 443), providing that no person shall be excused from testifying in a proceeding growing out of an alleged violation of an act to regulate interstate commerce, approved Febru- ary 4, 1887, on the ground that his testimony will tend to incriminate him, and that no person shall be prosecuted, etc.. on account of anything concerning which he may testify i»i such proceeding, applies only to proceedings connected with the act of February 4, 1887, and does not apply to a prosecu- tion for violation of the act of July 2, 1890 (26 Stat., 200). so as to abrogate in relation thereto the Fifth Amendment to the Constitution, providing that no person shall be compelled in a criminal case to be a witness against himself. Ih. 8. Same — Question of Incrimination for Judge to Decide. — Where a witness claims that the answer to a question will tend to incriminate him, it is not for the witness, 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. I^'- 4. Same. — ^Where a person has already been indicted for an offense about which he is to be examined as a witness, and the questions aslied him tend to connect him with such offense, the testimony sought is within the inhibition of the Fifth Amendment to the Constitution, providing that no person shall be compelled In any criminal case to be a witness against himself. 5. Same — Assurance of Safety— Relinquishment of Privilege — Can Not Be Compelled. — Where a witness before a grand jury declines to answer certain questions, and is taken before the judge, who assures him that he can safely answer, as his testimony can not be used against him, he is not com- pelled by such assurance to relinquish his constitutional privilege where the answer may tend to criminate him. 76. 6. Same — Contempt — Commitment — Habeas Corpus — Relief. — Where a witness is committed for contempt in refusing to answer all of a series of questions, for the reason that the answers would tend to criminate him, and some of the answers would have that tendency, he should not be denied relief on habeas corpus because some of the questions might be safely answered. /6. 11808— VOL 2--06 M- -76 1 INDEX — DIGEST. WITNESSES— Conti iiuw! . 7. Imnnmity of Witnesses— Anti-Trust Act— Inqnlsitions.— An in- quisition before a grand jury to determine the existence of supposed violations of the Anti-Trust Act was a "proceed- ing " within act of Congress of February 19, 1903 (32 Stat, 848), providing that no person shall be prosecuted or sub- jected to any penalty for or on account of any transaction, matter, or thing concerning which he may testify or produce evidence in any "proceeding" under several statutes men- tioned, including such Anti-Trust Act. In re Rale, 139 F., 49a 2—804 8. Same — Unreasonable Searches — Bights of an Agent — Subpoena Duces Tecum. — A subpcena duces tecum commanding the secretary and treasurer of a corporation supposed to have violated the Anti-Trust Act to testify and give evidence be- fore the grand jury, and to bring with him and produce numerous agreements, letters, telegrams, reports, and other writings, described generically, in effect including all the correspondence and documents of his corporation originating since the date of its organization, to which nineteen other named corporations or persons were parties, for the purpose of enabling the district attorney to establish a violation of such act on the part of the witness' principal, constituted an unreasonable search and seizure of papers, prohibited by the Fourth Amendment to the Constitution. Ih, 9. Same — Habeas Corpus. — Where a subpcena duces tecum was directed to be issued by a circuit judge, and the witness was committed for contempt for failure to obey the same, he would not be discharged on habeas corpus 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. Ih. 10. Protection of Witness — ^Aot of February 25, 1903 (32 Stat, 905). — The examination of witnesses before a grand jury conoeming an alleged violation of the Anti-Trust Act of July 2, 1890 (26 Stat, 209), is a "proceeding" within the mean- ing of the proviso to the act of February 25, 1903 (32 Stat, 903), that no person shall be prosecuted or be subjected to any penalty or forfeiture for, or on account of, any trans- action, matter, or thing concerning which he may testify or produce evidence in any proceeding, suit, or prosecution under certain named statutes, of which the Anti-Trust Act is one. The word "proceeding" should receive as wide a construction as is necessary to protect the witness in his dis- closures. Hale V. Hmkel, 201 U. S., 43. 2—874 11. The constitutional right of a witness to claim his privilege : against self-incrimination, afforded by the Fifth Amendment, INDEX — DIGEST. 1199 WITNESSES— Continued. when examined concerning an alleged violation of the Anti- Trust Act of July 2, 1890 (2G Stat, 209), is taken away by the proviso to the act of February 25, 1903 (32 Stat, 904), 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 in any proceeding, suit, or prosecution under certain named statutes, of which the Anti-Trust Act is one, which furnishes a sufficient immunity from prosecution to satisfy the constitutional guaranty, although it may not afford im- munity from prosecution in the State courts for the offense disclosed. [See also Nelson v. United States, 201 U. S., 92 (2—920).] '6- 12. The interdiction of the Fifth Amendment operates only where a witness is asked to incriminate himself, and does not apply if the criminality is taljen away. 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 sub- sequently indicted, to procure the evidence necessary to maintain his plea. The law takes no account of the practi- cal difficulty which a party may have in procuring his testimony. I^' IS. The difaculty, if any, of procuring the testimony which a person has given on his examination before a grand jury concern- ing an alleged violation of the Anti-Trust Act of July 2, 1890, does not render the immunity from prosecution, or forfeiture, given by the proviso to the act of February 25, 1903, insufficient to satisfy the guaranty of the Fifth Amendment against self-incrimination. . i&. 14. A witness can not refuse to testify before a Federal grand jury in face of a Federal statute granting inuuunity from prosecu- tion as to matters sworn to, because the immunity does not extend to prosecutions in a State court. In granting immu- nity, the only danger to be guarded against is one within the same jurisdiction and under the same sovereignty. /&. 15. The privilege against self-incrimination afforded by the Fifth Amendment is purely personal to the witness, and he can not claim the privilege of another person, or of the corporation of which he is an officer or employee. [To same effect McAUMer v. Henkel, 201 U. S., 90 (2—919).] Ih. 16. A witness who can not avail himself of the Fifth Amendment as to oral testimony, because of a statute granting him immu- nity from prosecution, can not 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. l^- INDEX — ^DIGEST. IS. 10. WITMBSSSS— (. Joii t i 1 1 UiM.1 . 17. OorporatioBt Can Not BefnM to Answer Unlets Protected by Immunity Statute. — Wlille an individual may lawfully re- fuse to aiis%¥€r lucrliniiintiug questions unless protected by 1111 iiiiuiunity statute, a corporation Is a creature of tbe State, end tbere Is a roRerved right in tbe legislature to investigate its eontraets and find out wbetber It bas exceeded its i)ower8. Under tbe iiracttce In tbls country tbe examination of witnesses by a federal graid Jury need not be preceded by a present- ment or formal indictment, but tbe grand Jury uiny proceed, either ution tbetr own knowledge or upon exauiination of wltne«Me», to liif]uire whether a crime cognlasable by tbe court bit beti. coinmlttal, and, If so, tbey may indict upon iucb eTidenfW. lb. In, summoning witnesses before a grand Jury it is sufficient to apprise them of tbe names of tbe parties with respect to whom tbey wiU be called to testify without indicnting tbe iMture of tlie charge atrnitiMt tlii>iii. or laying a basis by a fomial Indlctnient. ib. Bale V. Mmikei (vol. 2, page 874) followed to the effect that •Aecrt and employees of corporations oaa net, under the Fk)urtb and Fifth Auiendmeiits, refuse to testify or produce books of corporations iu suits against tbe coriK)rntions for violations of the Anti-Trust Ijaw of July 2. 1800. in view of tbe imumulty given by the act of February 25, 1903. NelgfM V. Vtiitcd 8iai€$, 201 U. 8., D2. J^-920 Witnesses can not by objections to materiality of CYldence be relieved from testifying. Tbe tendency or effect of the testi- mony on the issues between the parties is no concern of tlieln?. lb. Objections to the matexiality of tbe testimony are not open to consideration on a writ of error sued out by witnesses to review a Judgment for contempt entered against them for disobeying an order to testify. Ib, Befusal to Answer or Produce Books — Order of Circuit Court to Answer or be Held in Contempt Hot Reviewable by Supreme Cottrt.--In a suit In a circuit court of the United Stateii brought by the United States against cori>orations for violations of tbe AntlTrust Law of July 2. 1890, a wit- neas refused to answer ciuestions or produce books before the exaiiilner on the ground of immateriality, also pleading tlie privileges of the Fifth Amendment; the court ovenniled the objections and orderwi the witucKH to answer the ques- tions mid prothice the books; an apijeal was taken to this court. Held, that while such an order might leave tbe wlt- iiits no aiteriintlve except to obey or be punished for con- tempt It is interlocutory in the prIncliMil suit and not a SI. INDEX — DIGEST. 1201 WITNESSES— Continued. final order, nor does It constitute a practically independent proceeding amounting to a final judgment, and an appeal will not lie therefrom to this court. Alexander v. United States, 201 U. S., 117. 2— Oi5 24. Same — But an Appeal from a Judgment of Contempt is Review- able.— If the witness refuses to obey and the court goes further and punishes him for contempt there is a right of review, and this is adequate for his protection without un- duly impeding the process of the case. l^Sfee also Nchon V. United States, 201 U. S., 92 (8—920).] Ib. Credibility. See Jury, 2. Immunity. See Immunity. WOODEN WARE. See CJombinations, etc., 38, 149. WOSDS AND PHRASES. 1. " Boycott." — A combination by employees of railway companies to injure in his business the owner of cars operated by the companies, by compelling them to cease using his cars by threats of quitting and by actually quitting their service, thereby inflicting on them great injury, 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, is a boycott, and an unlawful conspiracy at common law. Thomas v. Cin., N. O. d T. P. Rih Co., G2 F., 803. 1— 2G7 %. "Commerce." — The word "commerce," in the statute, is not synonymous with " trade," as used in the common-law phrase "restraint of trade," but has the meaning of the word in that clause of the Constitution which grants to Congress power to regulate Interstate and foreign commerce. U. 8. V. Debs, 64 F., 724. 1—322 8. Same.— The word "commerce," as us'ed in the act of July 2, 1890, to protect trade and con^uerce against unlawful restraints and monopolies, and in the Constitution of the United States, has a broader meaning than the word " trade." Commerce among the States consists of intercourse and trnillc between their citizens, and includes the transportation of persons and property, as well as the purchase, sale, and exchange of commodities. U. S. v. Cassidy, 67 F., 698. 1—452 4. Same.— Commerce is the sale or exchange of commodities, but that which the law looks upon as the body of com- merce is not restricted to specific arts of sale or exchange. It includes the intercourse— all the Initiatory and inter- vening acts, instrumentalities, and dealings— that directly bring about the sale or exchange. U. S. v. Sioift d Co., 122 F.. 520. a— 237 i A juxJm IBDEX — ^DIGEST. WOBBS AND PHBASES— Continued. i. " Conspiracy." — ^The term " conspirncy," in section 1 of the act of July 2, 1890 (26 Stat. 209), Is used in its well-settled legal meaning, and any restraint of interstate trade or com- merce, if accomplished by conspiracy, is unlawful. 17. 8, t." Dehs, 64 F., 724. - 1—322 ' 6. Same. — A conspiracy 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 agreement between two or more to do, by concerted action, something criminal or unlawful, or, it may be, to do something lawful by criminal or unlawful means. A conspiracy, therefore, Is in itself unlawful, and, in so far as this statute is directed against conspiracies in restraint of trade among the several States, it is not necessary to look for the illegality of the oflfense in the kind of restraint proposed. Any proiwsed restraint of trade, though it be in itself Innocent, if it is to be ac- complished by conspiracy, Is unlawful. lb. (1—352) T. Mmmi — A conspiracy is a combination of two or more per- sons by concerted action to accomplish a criminal or un- lawful purpose, or some purpose not In itself criminal, by criminal or unlawful means. Peitibone v. V. «., 13 Sup. Ct, §431 i 148 V. 8., 208, cited, m S, T. Oamim. 67 F*, 098. 1—449 1. Sanit. — Unlike " coniMnjitlon," " conspiracy " is a term of art. In t*ie Anti trust Law it in to fm Interpreted Imleperidedtljr of the iirecedfripf words, and m UuiMmmii theretmder sltould ih^Mar^ dmi'tilm mmiiiiU^ ftmi nummt§ to ft oohsiilraey titider Urn act «ififor*fifttil.t to tlie Win af tiipnditif* ai ^otii- imii tmi m mtiinim tmiim&i hp mmmi Mi^m MtiUiim i; ''M iciifflii m ttnAt" flm wmtk *'ln fmmm nt mm/* in mllm i ttf ih¥ m^i nt Mi % im (m m^ '^m^ Mm lit mmmkm wHh ilm wmin *ummi-firir «Mrt "mubittik' 1.1m/* IM§ mmmm4m mmi'mut, um lim mm "#«*■ 0¥m.f '' if m»i III fi« wHi^-NititM lipl Mmiim ^ fliit am ¥mi¥n:m ai mm *w .il 111- IM' INI^X — DIGEST. 1203 WORDS AND PHRASES— Continued. the parties so delaying it were willing that the mail should proceed if the Pullman car were left behind. U. S. t. Clark, Fed. Cas. No. 14805, 23 Int. Rev. Rec, 306, followed. 17. S V. Cassidy, G7 F., G98. 1—44'.) 12. Same.— Any train which is carrying mail under the sanction of the postal authorities is a mail train in the eye of the law. ^ ^''• 18. « Monopolize."— The word " monopolize " can not be intended to be uSed with reference to the acquisition of exclusive rights under Government concession, but that the lawmaker has used the word to mean " to aggregate " or " concentrate " in the bauds of few, practically, and, as a matter of fact, and according to the known results of humsui action, to the ex- clusion of others ; to accomplish this end by what, in popular language, is expressed in the word " pooling," which may be defined to be an aggregation of property or capital belonging to different persons, with a view to com. ^n liabilities and profits. Amer. Biscuit d Mfg. Co. v. Klotz, 44 F., 724. 1—7 14. "Monopolizing, or Attempting to Monopolize."— To constitute the offense of " monopolizing, or attempting to monoi)olize," trade or commerce among the States, within the meaning of section 2 of said act, it is necessary to acquire, or attempt to acquire, as exclusive right In such commerce by means which will prevent others from engaging therein. In fc Oreen, 52 F., 104. 1—55 ill Hwiopoly of trade embraces two essential elements: (1) The acquisition of ah exclusive right to, or the exclusive eijutrul of, that trade; tttid (2) the exclusion of all others from that riifat tthd cohtl-ol; V. B. t. ttans-Moi Pt A««»f., 08 f^t B8, §4 i-*i^ III ** MKttl«lpi §«if §fili«i/'=A ih«hiei|irtl t«i-liOl'fttluh eiigai^ed ' tfevehtie is derivml, k, iu i*eltttioh to i^tit^li iiittitei*fi< a imwrnA tui'pdt'ttlioii^ wild i««i' ihttihtttih h« ttetlmi timlei' mi\\i\\ t «f iim Atiti THist Aet «f July 9, ifm (m stittu aio), i^ui' iujut«y ^ ittt " liUf^iii^M '' \i^ renf^oii ni » (M^iubiimKoii ur L)r li I'^fitl'ttlllt (ii lUl«l'6{tti^ tl'«d« Ul' tHUIIIII^lM'e lUiUl^ UlllHHfUl by m*\\ H(4< Viiif ot Aihmiik i. Vhaiimmn^ hmuUy A If. "Mofi «f toi.'^ Wttei% ifi ft sfiHtfiH hi' iUe Hittuurfteiui'i ftHd 4«Uviry 0f i9dii< ilie i^iHii'iiit'iii of iiiimiiIii^ m iiuullttml liy tl(^ vrmU "iiiui'§ ur leiiii/' Wmm uitlt^si^ ritiiiiilt^iiti^iiit^d iiy liiiiKiiMMi' giving ilit! |.i .V. !•! V INDEX — DIG|:ST. WORDS ANB PHRASES— Coiitmued. IS. "Trust." — What is commonly termed a "trust" is 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 were well Ituowu and fully understood when the Anti-Trust Act was approved. U. 8. V. Northern Securities Co., 120 F., 721, 724. 2—220 O ' < • • • '■> ■ • • •« • • •• • . • « I • I i I ■^-^i V *y <>$l i m COLUMBIA UNIVERSITY UBRARIES Thla book is due on the date Indicated below* or at the explitHon of a definite period after the date of borrowing, as provided by the library rules or by special arrangement with the Librarian in charge. • DATK eORflOWIO DATt DUB OATS SOfmOWKO DATE DUK « i ciaii«iiMse AU6 8 / ^ D226 Un3944 V.2 D225 U.S. Courts Un3944 V.2 Federal anti-trust decisions. NEH / H onsy APR 1 21994 D^C lit) lUtti A; END OF TITLE ICaI *"^ o a I— .m B X o CJl cnx 00 M o 3 DO o m (Jl 3 -^ N X M r.^i a? 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