ported over its line is illegal or against, merce. It is enough that it be satisfied the public interests, notwithstanding that they are not normal means of incompetition in the markets of the coun- dustrial development. try with coal shipped over other railroads. Atty. Gen. v. Great Northern R. Co. 29 L. J. Ch. N. S. 799, 6 Jur. N. S. 1006, 8 Week. Rep. 556; New York, N. H. & H. R. Co. v. Interstate Commerce Commission, 200 U. S. 361, 50 L. ed. 515, 26 Sup. Ct. Rep. 272; United States v. Reading Co. 226 U. S. 324, 57 L. ed. 243, 33 Sup. Ct. Rep. 90; United States v. Union P. R. Co. 226 U. S. 61, 83, 57 L. ed. 124, 132, 33 Sup. Ct. Rep. 53; Northern Securities Co. v. United States, 193 U. S. 197, 363, 48 L. ed. 679, 711, 24 Sup. Ct. Rep. 436; United States v. Trans-Missouri Freight Asso. 166 U. S. 290, 335, 41 L. ed. 1007, 1026, 17 Sup. Ct. Rep. 540; Pearsall v. Great Northern R. Co. 161 U. S. 647, 676, 40 L. ed. 838, 848, 16 Sup. Ct. Rep. 705. While a bad intent may render illegal acts otherwise innocent, a good intent can never afford legal justification | for doing that which is prohibited. Swift & Co. v. United States, 196 U. S. 375, 402, 49 L. ed. 518, 527, 25 Sup. Ct. Rep. 276; United States v. Pacific & A. R. & Nav. Co. 228 U. S. 87, 105, 57 L. ed. 742, 748, 33 Sup. Ct. Rep. 443; Meeker v. Lehigh Valley R. Co. 106 C. C. A. 94, 183 Fed. 548. Where, as here, the transactions amount to a departure from the carrier's published rates, or involve discriminations on their fact, no prior administrative ruling by the Interstate Commerce Commission is necessary as a condition precedent to an attack upon them in the courts. Pennsylvania R. Co. v. International Coal Min. Co. 230 U. S. 184, 196, 197, 57 L. ed. 1446, 1451, 33 Sup. Ct. Rep. 893, Ann. Cas. 1915A, 315; Mitchell Coal & Coke Co. v. Pennsylvania R. Co. 230 U. S. 247, 255, 260, 57 L. ed. 1472, 1476, 1477, 33 Sup. Ct. Rep. 916; American Sugar Ref. Co. v. Delaware, L. & W. R. Co. 125 C. C. A. 251, 207 Fed. 733; Hocking Valley R. Co. v. United States, 127 C. C. A. 285, 210 Fed. 735, 234 U. S. 757, 58 L. ed. 1579, 34 Sup. Ct. Rep. 675; United States v. Union Stock Yard & Transit Co. 226 U. S. 286, 308, 57 L. ed. 226, 235, 33 Sup. Ct. Rep. 83; Vandalia R. Co. v. United States, 141 C. C. A. 469, 226 Fed. 713; Central R. Co. v. United States, 143 C. C. A. 569, United States v. Reading Co. 226 U. S. Railroads are not exempt from the Anti-trust Law because they are subject to the Act to Regulate Commerce. United States v. Trans-Missouri Asso. 166 U. S. 290, 312-326, 41 L. ed. 1007, 1018-1022, 17 Sup. Ct. Rep. 540; United States v. Joint Traffic Asso. 171 U. S. 505, 43 L. ed. 259, 19 Sup. Ct. Rep. 25; Northern Securities Co. v. United States, 193 U. S. 197, 48 L. ed. 679, 24 Sup. Ct. Rep. 436; United States v. Union P. R. Co. 226 U. S. 61, 57 L. ed. 124, 33 Sup. Ct. Rep. 53; Standard Oil Co. v. United States, 221 U. S. 1, 77, 78, 55 L. ed. 619, 652, 34 L.R.A. (N.S.) 834, 31 Sup. Ct. Rep. 502, Ann. Cas. 1912D, 734. The Lehigh Coal Company and Coxe Brothers & Company, Inc., are mere instrumentalities of the Lehigh Railroad. Therefore the Lehigh Railroad has an interest in coal owned by either of them, and coal mined by either of them is mined under its authority. United States v. Lehigh Valley R. Co. 220 U. S. 257, 55 L. ed. 458, 31 Sup. Ct. Rep. 387; United States v. Reading Co. 183 Fed. 461, 226 U. S. 342, 343, 57 L. ed. 249, 33 Sup. Ct. Rep. 90; Interstate Commerce Commission v. Baird, 194 U. S. 25, 48 L. ed. 860, 24 Sup. Ct. Rep. 563; Lehigh Valley R. Co. v. Rainey, 112 Fed. 487; United States v. Lehigh Valley R. Co. 220 U. S. 257, 273, 274, 55 L. ed. 458, 463, 464, 31 Sup. Ct. Rep. 387; United States v. Delaware, L. & W. R. Co. 238 U. S. 516, 529, 59 L. ed. 1438, 1443, 35 Sup. Ct. Rep. 873. The Lehigh Coal Sales Company likeIt is not essential for the purposes of wise is but a mere instrumentality of this proceeding under the Anti-trust Act the Lehigh Railroad. Therefore, the that the court decide specifically that the transfer to the Lehigh Coal Sales Comtransactions in question do constitute pany of the title to coal mined by the violations of the Act to Regulate Com-Lehigh Coal Company and Coxe Broth ers & Company, Inc., does not dissociate the Lehigh Railroad from such coal, and the transportation thereof by the Lehigh Railroad violates the commodity clause. United States v. Delaware, L. & W. R. Co. 213 Fed. 240, which has since been reversed by this court, 238 U. S. 516, 59 | L. ed. 1438, 35 Sup. Ct. Rep. 873; Anthracite Rate Case, 35 Inters. Com. Rep. 255. Attorney General Palmer and Solicitor General King also filed a brief for appellant. Messrs. Edgar H. Boles and John G. Johnson argued the cause and filed a brief for appellees on original argu ment: The present relationships have not resulted and cannot result in any power to restrain or monopolize. Re Greene, 52 Fed. 104; United States v. E. C. Knight Co. 156 U. S. 1, 39 L. ed. 325, 15 Sup. Ct. Rep. 249; Dueber Watchcase Mfg. Co. v. E. Howard Watch & Clock Co. 14 C. C. A. 14, 35 U. S. App. 16, 66 Fed. 637; United States v. Trans-Missouri Freight Asso. 166 U. S. 290, 41 L. ed. 1007, 17 Sup. Ct. Rep. 540; Hopkins v. United States, 171 U. S. 578, 43 L. ed. 290, 19 Sup. Ct. Rep. 40; United States v. Reading Co. 226 U. S. 367, 57 L. ed. 258, 33 Sup. Ct. Rep. 90; United States v. Winslow, 227 U. S. 202, 57 L. ed. 481, 33 Sup. Ct. Rep. 253; United States v. Patten, 226 U. S. 525, 57 L. ed. 333, 44 L.R.A.(N.S.) 325, 33 Sup. Ct. Rep. 141; Bigelow v. Calumet & H. Min. Co. 167 Fed. 704; W. W. Montague & Co. v. Lowry, 193 U. S. 38, 48 L. ed. 608, 24 Sup. Ct. Rep. 307; Northern Securities Co. v. United States, 193 U. S. 197, 48 L. ed. 679, 24 Sup. Ct. Rep. 436; Marian Coal Co. v. Delaware, L. & W. R. Co. 24 Inters. Com. Rep. 140, 25 Inters. Com. Rep. 14; Plymouth Coal Co. v. Lehigh Valley R. Co. 36 Inters. Com. Rep. 140; G. B. Markle Co. v. Lehigh Valley R. Co. 37 Inters. Com. Rep. 441; Peale v. Central R. Co. 18 Inters. Com. Rep. 25; Texas & P. R. Co. v. Abilene Cotton Oil Co. 204 U. S. 426, 51 L. ed. 553, 27 Sup. Ct. Rep. 350, 9 Ann. Cas. 1075; Robinson v. Baltimore & O. R. Co. 222 U. S. 506, 56 L. ed. 288, 32 Sup. Ct. Rep. 114; United States v. Delaware & H. Co. 164 Fed. 215; Bald Eagle Valley R. Co. v. Nittany Valley R. Co. 171 Pa. 284, 29 L.R.A. 423, 50 Am. St. Rep. 897, 33 Atl. 239; United States v. American Tobacco Co. 221 U. S. 117, 55 L. ed. 663, 31 Sup. Ct. Rep. 632; Standard Oil Co. v. United States, 221 U. S. 1, 61, 55 L. ed. 619, 645, 34 L.R.A. (N.S.) 834, 31 Sup. Ct. Rep. 502, Ann. Cas. 1912D, 734. The situation prior to March 1, 1912, did not involve any restraint or monopoly of a part of trade and commerce. United States v. Delaware & H. Co. 164 Fed. 215, 213 U. S. 366, 402, 53 L. ed. 836, 843, 29 Sup. Ct. Rep. 527; Hays v. Com. 82 Pa. 518; Hartwell v. Buffalo, R. & P. R. Co. 6 Pa. Dist. R. 212; Com. V. Monongahela Bridge Co. 216 Pa. 108, Oil Co. v. United States, 221 U. S. 1, 55 64 Atl. 909, 8 Ann. Cas. 1073; Standard L. ed. 619, 34 L.R.A. (N.S.) 834, 31 Sup. Ct. Rep. 502, Ann. Cas. 1912D, 734; United States v. Joint Traffic Asso. 171 U. S. 567, 43 L. ed. 286, 19 Sup. Ct. Rep. 25; Cincinnati, P. B. S. & P. Packet Co. v. Bay, 200 U. S. 179, 50 L. ed. 428, 26 Sup. Ct. Rep. 208; United States v. Union P. R. Co. 226 U. S. 61, 57 L. ed. 124, 33 Sup. Ct. Rep. 53. The course of the relations between the Lehigh Valley Railroad Company and the Lehigh Valley Coal Company has only been such as was fully authorized by the statutory powers of the companies, has not been against public interest, and has not involved any restraint or monopoly of any part of trade or commerce. National Bank v. National Herkimer County Bank, 225 U. S. 178, 56 L. ed. 1042, 32 Sup. Ct. Rep. 633; Re Alleged Unlawful Rates, 7 Inters. Com. Rep. 33; Haddock v. Delaware, L. & W. R. Co. 3 Inters. Com. Rep. 302; GambleRobinson Commission Co. v. Chicago & N. W. R. Co. 21 L.R.A. (N.S.) 982, 94 C. C. A. 217, 168 Fed. 161, 16 Ann. Cas. 613. Joint ownership of stock does not constitute an interest, direct or indirect, within the meaning of the commodities clause. First Commodities Clause Case (United States ex rel. Atty. Gen. v. Delaware & H. Co.) 213 U. S. 366, 53 L. ed. 836, 29 Sup. Ct. Rep. 527; United States v. Delaware, L. & W. R. Co. 238 U. S. 516, 526, 59 L. ed. 1438, 1442, 35 Sup. Ct. Rep. 873. Mr. F. W. Wheaton argued the cause on original argument, and, with Mr. Allan McCulloh, filed a brief for the Lehigh Valley Coal Company: So far as the acquisition of the capital stock of the Lehigh Coal Company by the Lehigh Railroad Company is concerned, it was a perfectly lawful transaction, expressly sanctioned and authorized by statute. Com. v. New York, L. E. & W. R. Co. | 132 Pa. 592, 7 L.R.A. 634, 19 Atl. 291; Hartwell v. Buffalo, R. & P. R. Co. 19 Pa. Co. Ct. 231; United States v. Delaware & H. Co. 164 Fed. 224. The acquisition of the capital stock of Coxe Brothers & Company, Incorporated, by the Lehigh Railroad stands equally upon a perfectly lawful basis. Both from the very nature of things, that is, the comparatively small control proportionately, and from the actual facts, that is, the proof of what has occurred and is occurring, none of the evils of monopoly or restraint of trade in interstate commerce exist in this case, nor can exist. Standard Oil Co. v. United States, 221 U. S. 53, 61, 55 L. ed. 642, 645, 34 L.R.A. (N.S.) 834, 31 Sup. Ct. Rep. 502, Ann. Cas. 1912D, 734; Herriman V. Menzies, 115 Cal. 16, 35 L.R.A. 318, 56 Am. St. Rep. 81, 44 Pac. 669, 46 Pac. 730; 1 Bouvier's Law Dict. p. 526. The Lehigh Coal Company is not gaged in interstate commerce. cause, and, with Mr. Everett Warren, filed a brief for the Lehigh Valley Coal Sales Company: The decisions of the lower courts upon questions of fact will be followed unless shown to be clearly erroneous. Brainard v. Buck, 184 U. S. 99, 46 L. ed. 449, 22 Sup. Ct. Rep. 458; United States v. Carter, 217 U. S. 236, 301, 54 L. ed. 769, 773, 30 Sup. Ct. Rep. 515, 19 Ann. Cas. 594; Dun v. Lumbermen's Credit Asso. 209 U. S. 29, 23, 52 L. ed. 663, 665, 28 Sup. Ct. Rep. 335, 14 Ann. Cas. 501; The Carib Prince, 170 U. S. 655, 42 L. ed. 1181, 18 Sup. Ct. Rep. 753. Those presumptions of good faith and integrity which have been recognized for ages as attending human action have not been overthrown by any legislation in respect to common carriers. Interstate Commerce Commission v. Chicago G. W. R. Co. 209 U. S. 108, 120, 52 L. ed. 705, 713, 28 Sup. Ct. Rep. 493. In a suit in equity the government is en-subjected to the same rules as an individual respecting the burden of proof, quantity and character of evidence, and presumptions of law and fact. United States v. Stinson, 197 U. S. 200, 49 L. ed. 724, 25 Sup. Ct. Rep. 426; Brent v. Bank of Washington, 10 Pet. 614, 9 L. ed. 554. United States v. Boyer, 85 Fed. 425; Re Greene, 52 Fed. 113; Pensacola Teleg. Co. v. Western U. Teleg. Co. 96 U. S. 1, 24 L. ed. 708; Brown v. Houston, 114 U. S. 622, 29 L. ed. 257, 5 Sup. Ct. Rep. 1091; Coe v. Errol, 116 U. S. 517520, 29 L. ed. 716, 717, 6 Sup. Ct. Rep. The essential idea of monopoly, all au475; Robbins v. Taxing Dist. 120 U. S.thorities agree, is the ability to control 497, 30 L. ed. 697, 1 Inters. Com. Rep. 45, 7 Sup. Ct. Rep. 592; Kidd v. Pearson, 128 U. S. 1, 32 L. ed. 346, 2 Inters. Com. Rep. 232, 9 Sup. Ct. Rep. 6; Arkansas v. Kansas & T. Coal Co. 96 Fed. 359. There is no legal identity between the Lehigh Railroad Company and the Lehigh Coal Company. United States ex rel. Atty. Gen. v. Delaware & H. Co. 213 U. S. 415, 53 L. ed. 851, 29 Sup. Ct. Rep. 527; Exchange Bank v. Macon Constr. Co. 97 Ga. 1, 33 L.R.A. 800, 25 S. E. 328; United States v. Lehigh Valley R. Co. 220 U. S. 266, 55 L. ed. 461, 31 Sup. Ct. Rep. 387; United States v. Delaware, L. & W. R. Co. 213 Fed. 253; Noyes, Intercorporate Relations, 2d ed. 295; Pullman's Palace Car Co. v. Missouri P. R. Co. 115 U. S. 587, 29 L. ed. 499, 6 Sup. Ct. Rep. 194; Shepp v. Schuylkill Valley Traction Co. 17 Montg. Co. L. Rep. 52; United States v. Stinson, 197 U. S. 200, 49 L. ed. 724, 25 Sup. Ct. Rep. 426. Messrs. F. W. Wheaton and Allan McCulloh filed a brief for Coxe Brothers & Company. prices. United States v. American Tobacco Co. 221 U. S. 106, 117, 55 L. ed. 663, 31 Sup. Ct. Rep. 632; Standard Oil Co. v. United States, 221 U. S. 1, 61, 55 L. ed. 619, 645, 34 L.R.A. (N.S.) 834, 31 Sup. Ct. Rep. 502, Ann. Cas. 1912D, 734; Noyes, Intercorporate Relations, 2d ed. 711. A contract is not to be assumed to contemplate unlawful results unless a fair construction requires it upon the established facts. Cincinnati P. B. S. & P. Packet Co. v. Bay, 200 U. S. 179, 184, 50 L. ed. 428, 432, 26 Sup. Ct. Rep. 208. Messrs. John Hampton Barnes and Elihu Root, Jr., filed a brief for appellee, the Girard Trust Company. Mr. E. V. B. Getty filed a brief for the G. B. Markle Company. Solicitor General Frierson argued the cause for appellant on final argument. Messrs. Nicholas W. Hacker, F. W. Wheaton, and Edgar H. Boles argued the cause for appellees on final argu Mr. Nicholas W. Hacker argued thement. Mr. Justice Clarke delivered the opinion of the court: This is an appeal from a decree en tered in a suit to dissolve the intercorporate relations existing at the time it was commenced in March, 1914, between the defendant corporations, other than Girard Trust Company, for the reason, it is averred, that they were so united that they constituted a combination in restraint of interstate trade and commerce in anthracite coal, and an attempt to monopolize and an actual monopolization of a part of such commerce, in violation of the Anti-trust Act of Congress of July 2, 1890 (26 Stat. at L. 209, chap. 647, Comp. Stat. § 8820, 9 Fed. Stat. Anno. 2d ed. p. 644); and also for the alleged reason that the Lehigh Valley Railroad Company was transporting over its lines of railway anthracite coal in which it had an interest, in violation of the commodities clause of the Act of June 29, 1906 (34 Stat. at L. 585, chap. 3591, Comp. Stat. §8563, 4 Fed. Stat. Anno. 2d ed. p. 359). [258] It will be necessary to consider only the relations and activities of the Lehigh Valley Railroad Company, hereinafter designated the Railroad Company, the Lehigh Valley Coal Company, designated the Coal Company, and the Lehigh Valley Coal Sales Company, designated the Sales Company. A condensed history, chiefly admitted, of the organization, stock ownership, and conduct of these three companies. and the application to the facts thus de veloped of fully established principles of law, will be decisive of the case. The limited area of anthracite-producing territory, its relation to the interstate transportation system and markets of our country, and the various attempts to monopolize and control the great railway tonnage originating therein, have all been so often described in reported cases, that they need not be repeated here in detail.1 It will suffice for our present pur1 United States v. Reading Co. 183 Fed. 427; United States v. Reading Co. 226 Fed. 229; United States v. Delaware & H. Co. 213 U. S. 366, 53 L. ed. 836, 29 Sup. Ct. Rep. 527; United States v. Lehigh Valley R. Co. 220 U. S. 257, 55 L. ed. 458, 31 Sup. Ct. Rep. 387; United States v. Delaware, L. & W. R. Co. 238 U. S. 516, 59 L. ed. 1438, 35 Sup. Ct. Rep. 873; United States v. Reading Co. 226 U. S. 324, 57 L. ed. 243. 33 Sup. Ct. Rep. 90; United States v. Read ing Co. 253 U. S. 26, 64 L. ed. 760, 40 Sup Ct. Rep. 425. pose to say that the anthracite-producing territory is very restricted in area, it all being within seven counties of eastern Pennsylvania, with the known deposits underlying only 309,760 acres of land. For trade purposes it is divided into three fields; the northerly is called the Wyoming field, the next southerly the Lehigh or Middle field, and the southerly the Schuylkill field. The lines of the Railroad Company extend into the Wyoming and Lehigh fields, but to only one colliery in the Schuylkill field. Much the greater part of its tonnage is derived from the Wyoming field, and four fifths of it moves in interstate commerce. The Railroad Company in 1913 owned 1,438 miles of main line and a total trackage of 3,354 miles, its capital [259] stock was $60,600,000, its funded debt was $85,800,000, its total assets had a book value of $182,700,000, but a much greater actual value, and it carried a larger tonnage of anthracite coal than any other railroad in the country,-over 13,000,000 tons in 1913, this being 18.84 per cent of the total 69,000,000 tons shipped over all railroads in that year. In 1864 the Railroad Company, by merger with a coal company, acquired small acreage of anthracite-containing land, and thereupon added the mining, shipping, and selling of coal to its duties. as a carrier. The annual reports of the Railroad Company show that, as early as 1868, it entered upon the policy of acquiring by purchase and lease the control of as much as possible of the anthracite-coalcontaining lands tributary to its lines of railroad, for the purpose of preventing, or, when it had become established, of suppressing, competition in the carrying of coal over its interstate lines to interstate markets. Thus the annual report of the Comdetermined that it was of "the utmost pany for 1868 shows that, it having been importance" to the future welfare of the company to secure "control of tonnage from regions having other outlets to markets," the Company, by merger of two coal companies, obtained coal lands which secured to it the whole trade of the Hazelton coal field, and "the withdrawal from competition" of a business SO large as to greatly strengthen the "future prospects of the road." In 1869 the policy of securing a proportion of the coal trade from each region by the purchase of interests in companies owning lands on or near the several branches of the Company was approved and "continued." In 1871 it is reported: "We have continued to acquire interests in coal lands situated in our various regions." In 1872, after detailing the purchase for $2,000,000 of 5,800 acres of land having upon it ten collieries, the report of the Company declares that, "should there be a corresponding [260] increase for a year or two more, the total consumption will so nearly equal the full capacity of the mines for production as to render unnecessary all attempts to requlate or control the trade." of coal land, on which were located eight collieries, but it was also owner of all of the capital stock of the Delaware, Susquehanna, & Schuylkill Railroad Company, which owned 50 miles of railway which served other large independent mines in addition to those of Coxe Brothers & Company, Inc. This railroad had connections with the Reading, Pennsylvania, and New Jersey Central lines, which were taken up or fell into disuse when the control of it passed to the defendant Lehigh Valley Railroad Company. The Railroad Company continued to own all the capital stock of After reciting that a contract had Coxe Brothers & Company, Inc., to the been entered into granting to the Dela- time the testimony was taken in this ware, Susquehanna, & Schuylkill Rail- suit, and it is admitted that that comroad Company trackage rights to tide- pany then held in fee or under long lease water, the report of the Railroad Com- 36,490 acres of land in the anthracite pany for 1894 continues, saying that field, 7,169 acres of which were known there is thereby assured to the Com- to contain anthracite coal. This purpany "an important traffic for chase was confessedly made to prevent which several outlets existed, and which the diversion of traffic to other lines, had been in contention for some time previous. It also removes an incentive to the construction of further new lines into the territory tributary to the Lehigh Valley system." Although in 1875 it caused the Coal Company (hereinafter discussed) to be organized for the purpose of taking title to coal lands then owned or which might thereafter be purchased, and although the Anti-trust Law was enacted in 1890, nevertheless, the Railroad Company continued its policy of purchasing for control, and from time to time it acquired and took in its own name the title to extensive tracts of coal lands and to stocks in coal companies. Thus, in 188 it acquired the entire capital stock o' the Wyoming Valley Coal Company, the owner of 1,657 acres of anthracite land: in 1900 it acquired the entire capita stock of the Westwood Coal Company, a considerable owner of anthracite land; in 1901 it acquired the entire capital stock of the Connell Coal Company; and in the same year the entire capital stock of the Seneca Coal Company, the owner of 1,308 acres of anthracite land. In the years prior to 1905 the Railroad Company made a number of other purchases of coal land, but in that year it made its largest single and most significant purchase, when it acquired, for the sum of $17,440,000, all of the capital stock of Coxe Brothers & Company, Inc. This company was the largest independent coal operator then [261] on the line of the Railroad Company, and its production for 1905 exceeded 1,100,000 tons. It not only owned extensive areas and, while the company was continued in form as a separate corporation, the officers and directors of the Coal Company were made its officers and directors, and in June following the year of the purchase its directors by resolution provided that the net earnings of the company should be paid to the Railroad Company without the formality of declaring a dividend, and this practice continued until 1911. Thus, this important coal company and its railroad became a mere coalproducing and transporting agency of the defendant Railroad Company. In 1874 the state of Pennsylvania adopted a constitution containing the provision that "No incorporated company doing the business of a common carrier shall, directly or indirectly, prosecute or engage in mining or manufacturing articles for transportation over its works." (Pa. Const. 1874, art. 17, § 5.) [262] Prior to this time the Railroad Company had been a large owner, miner, shipper, and seller, as well as carrier of anthracite coal, and, as if for the purpose of complying with the new constitution of the state from which it derived its franchise, it caused the Lehigh Valley Coal Company to be created in 1875 by the consolidation of two smaller companies. This company, which was organized for the purpose of taking title to coal lands and stocks in coal companies, then owned or thereafter to be acquired by the Railroad Company, and to conduct the business of mining, shipping, and selling coal, had an origi |
