There is much more in the record to like effect, but sufficient has been stated to make it clear beyond controversy that the Coal Company was organized and conducted as a mere agency or instrumentality of the Railroad Company, for the purpose of avoiding the legal infirmity which it was thought might inhere in the owning of coal lands and in the conducting of coal mining, shipping, and selling operations by the Railroad Company, and that the policy of purchasing and leasing coal lands tributary to its lines for the purpose of controlling interstate trade and commerce in anthracite coal, and of preventing and suppressing competition therein, was deliberately entered upon by the Railroad Company, and, in combination with its agency, the Coal Company, was consistently pursued, with increasing [264] energy and scope after the passage of the Anti-trust Act, until the commencement of this suit, unless these purposes and results, in point of law, were modified and cured by the organization in 1912 of the Sales Company, and by the functions which it performed,-which remain to be considered.

nal capital of $650,000, which was lations between the two companies were
afterwards increased to $1,965,000, all so intimate and interlaced that in argu-
of which has been owned by the Rail- ment it is admitted that, "in the last
road Company from the beginning. analysis, the assets of the Coal Com-
Coal-producing lands and stocks in vari- pany are the assets of the Railroad Com-
ous coal companies were purchased from pany."
time to time by the Railroad Company
directly or through advances of money
to the new coal company for that pur-
pose, title thereto being taken in the
Coal Company, with the result: that
when this suit was commenced that
Company admitted itself to be the own-
er of 54,229 acres of land in the anthra-
cite-producing regions, of which 24,748
acres were located along the lines of the
Railroad Company; that the funded
debt of the company had become $20,-
000,000; and that the value of its assets
amounted to about $35,000,000. Eight
and one-half million tons of anthracite,
of the thirteen millions carried by the
Railroad Company in 1913, were pro-
duced by this Coal Company and by
Coxe Brothers & Company, Inc., owned,
as we have seen, by the Railroad Com
pany. The combined acreage of lands
owned by the Coal Company and by
Coxe Brothers & Company, Inc., is ad-
mitted to be 90,719 acres, of which 61,-
238 acres are located along the lines of
the Railroad Company. The annual re-
ports of the Coal Company show that in
1903 56.77 per cent of the coal trans-
ported over the railroad was produced by
the Coal Company and its affiliated com- On January 11, 1912, the board of di-
panies; that in 1906 the percentage pro-rectors of the Railroad Company re-
duced and purchased [263] was 85.25 quested the directors of the Coal Com-
per cent of that transported; and in 1907 pany "to consider the propriety of or-
it was 87.11 per cent. The Interstate ganizing a Sales Company" and of
Commerce Commission found that in entering into a contract with it when
1908 the company controlled 95 per cent formed "for a limited time" for the pur-
of the tonnage moving over its line to chase and sale by it "of the coal mined,
tidewater. Meeker v. Lehigh Valley R. purchased, and owned by the Coal Com-
Co. 21 Inters. Com. Rep. 129, 154.
pany." The board also requested that
the privilege of subscribing for the
stock of the new company be extended,
"not to the Railroad Company, but, pro
rata, to the common and preferred stock-
holders of the Railroad Company." As
if anticipating compliance with its re-
quest on the part of the Coal Company,
of which it owned all of the stock, the
officers of the Railroad Company were
authorized at the same meeting of the
board to take such action and make such
conveyances as might be deemed neces-
sary or advantageous in perfecting the
sales arrangement with the new com-
pany to be organized, and, in aid of the
enterprise, a dividend of 10 per cent on
the stock of the Railroad Company was
declared, payable on February 26, which
amounted in the aggregate to $6,060,800.

The Railroad Company and the Coal Company had usually the same president, secretary, treasurer, and auditor, and the latter company admits, as it must, that the Railroad Company, "as the owner of stock, controls and long since has been controlling, the election of its directors." The Railroad Company constantly advanced large sums of money to the Coal Company for the purchase of property and for operating capital. The total of these advances to the year 1892 exceeded $15,500,000 which amount, however, was reduced by operations of the Coal Company to $11, 500,000. The Coal Company never paid any dividends, its earnings being frankly treated as those of the Railroad Company, and the financial and other re


On the same day the board of direct-, ors of the Coal Company resolved: that the new Sales Company should be organized, as requested by the Railroad Company, with a capital stock of $10,000,000, but that only $6,060,800 of it should be issued; that when the new company was formed the Coal Company should, "if possible," contract with it for a "limited time" for the sale to it "of all coal which shall be mined, purchased, owned, or acquired" by the Coal Company during the term of the proposed contract, so that the title to such coal should vest in the Sales [265] Company "before the transportation

thereof shall be commenced."

The Sales Company was promptly organized, and the minutes of the company show that slightly less than 97 per cent of the stock was subscribed for by stockholders of the Railroad Company.

Rep. 873, that the judge who tried this case below, with [266] entire propriety, says that the differences between the two are "wholly unsubstantial" (225 Fed. 401). This court held that the contract in the Lackawanna Case was void because violative of the provisions of the the commodities Anti-trust Act and clause of the Act to Regulate Commerce. The discussion of the Lackawanna contract is so full and satisfactory in 238 U. S. 516, that it would not serve any useful purpose to comment in detail upon the contract which we have here. It will suffice to say that the provisions of the Lackawanna contract, which were clearly determinative of the The privilege of subscription to the former decision by this court, are plaincapital stock of the new company was re- ly the same in substance, and almost exthe actly the same in form, as those in the stricted to the stockholders of contract we are considering, viz.: The Railroad Company. agreement of the Coal Company (1) to sell and of the Sales Company to buy all of the coal mined by the Coal Company from lands owned or leased by it, together with all coal which it might purchase; (2) that the prices to be paid for the more important grades of coal shall be 65 per cent of the New York prices, the two contracts are in precisely the same words in this respect; (3) that, with negligible exceptions, the Sales Company is to sell no other coal, for itself or for any other, than that "purchased" from the Coal Company; (4) that the Coal Company shall lease all of its facilities, structures, and trestles to the Sales Company; (5) that either party shall have the right to abrogate and cancel the contract upon giving to the other six months' notice of its desire so to do; (6) that the Sales Company shall not buy coal except from the Coal Company,-a provision which excludes the Sales Company, potentially a strong competitor, from the market. The Coal Company purchased 2,960,000 tons of coal in 1911, in addition to that which it mined.


The Sales Company had seven directOne of these, J. W. Skeele, who was also elected president, had been general sales agent of the Coal Company; another, W. R. Evans, had been assistant to the general sales agent of the Coal Company; another, L. D. Smith, was a director of the Railroad Company, and a fourth, Paul Moore, was a son of a large stockholder in the Railroad Com pany. The vice president of the Company, G. N. Wilson, had been general auditor of the Railroad Company, and the treasurer, W. J. Burton, had been employed as assistant secretary of the Coal Company.

It is too plain for discussion that, with a company thus organized and of ficered, the making of a contract by the Coal Company for the sale of all of its coal to the Sales Company was, in substance and effect, making a contract with itself, the terms of which it could determine in its discretion.

Immediately after the organization of the Sales Company, the anticipated contract between that company and the Coal Company for the purchase of all the coal which the latter might mine or purchase was entered into and bears date March 1, 1912. This contract was to continue for ten years unless terminated in the manner which it provides for, and its terms are so nearly identical with the earlier Lackawanna contract, which is considered in United States v. Delaware, L. & W. R. Co. 238 U. S. 516, 59 L. ed. 1438, 35 Sup. Ct.

These are the contract provisions which led this court, in the former case, to hold that a corporation organized and circumstanced as is the Sales Company which we have [267] here-subject to be stripped at the will of another of all of its business and of all its facilities for carrying on the business for which it was incorporated-was neither an "independent buyer nor a free agent."

Being entirely satisfied with the reasoning upon which the Lackawanna Case proceeds to its conclusion, we hold now, as it was there in principle held: that the purchase in form by the Sales Com


pany did not so dissociate the Railroad, respective railways. The device this time Company from the transportation of resorted to was a contract to purchase coal in which it was interested as to all the coal produced by independent meet the requirements of the law; that mines, then opened or which might therethe contract, nominally of purchase, was after be opened by the vendors, and to so calculated to restrain interstate trade pay therefor 65 per cent of the market as to be obnoxious to the Anti-trust Act price prevailing at tidewater points at of Congress, and that for this reason it New York, to be computed from month is unlawful and void. to month by an arbitrator to be selected by agreement. These contracts were elaborately considered and unsparingly condemned by this court in the case which is cited, and the conclusion reached was that the defendants in that case had unlawfully combined, by and through the instrumentality of the 65 per cent contract, for the purpose of controlling the sale at tidewater of the independent output of anthracite coal. The contracts were declared to be unlawful and were ordered canceled. 226 U. S. 370, 371, 373.

It will be of service in determining the purposes of the defendant Railroad Company with its corporate subsidiaries in the activities thus discussed, to recall the history of the defendant Railroad Company, as it appears in the decisions of this and of other courts.

In 1892 the defendant Railroad Company and the Central Railroad Company of New Jersey leased their lines of railway for the term of 999 years to the Reading Railroad Company, a parallel competing carrier, extensively engaged in mining, marketing, and selling anthracite coal. This combination, had it become operative, would have gone far toward monopolizing the interstate transportation and trade in anthracite coal of our entire country; but all operations under the lease of the Central Railroad Company of New Jersey were enjoined by the New Jersey courts, for the reason that it was deemed to be in restraint of trade, against public policy, and calculated to partially destroy competition in the production and sale of anthracite coal, a staple commodity of the state. Stockton v. Central R. Co. 50 N. J. Eq. 52, 17 L.R.A. 97, 24 Atl. 964. There upon the lease of defendant's property was abandoned and surrendered.

[268] Six years later, in 1898, the defendant Railroad Company combined with the Reading and four other railway companies to contribute a large sum of money, which was successfully used to prevent the construction of a projected, competing line of railroad from the anthracite fields to tidewater. Of this enterprise this court said: "We are in entire accord with the view of the court below in holding

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that the transaction involved a concerted scheme to combine for the purpose of restraining commerce among the states, in plain violation of the Act of Congress of July 2, 1890. United States v. Reading Co. 226 U. S. 324, 355, 57 L. ed. 243, 253, 33 Sup. Ct. Rep. 90." Four years later, in 1902, the defendant Railroad Company united with the Reading and four other anthracite carriers in a combination to control the entire tonnage of coal produced by independent operators along the lines of their

In 1911, in Meeker & Co. v. Lehigh Valley R. Co. 21 Inters. Com. Rep. 129, 154, 163, the Interstate Commerce Commission held that the only line of demarcation between the Lehigh Valley Railroad Company and the Lehigh Valley Coal Company was one of bookkeeping; that the Railroad [269] Company "had monopolized the coal field served by it," and that it had been guilty of unjust discrimination and of charging unreasonable rates, for which reparation was awarded. 23 Inters. Com. Rep. 480. This decision was sustained by this court in Meeker & Co. v. Lehigh Valley R. Co. 236 U. S. 412, 59 L. ed. 644, P.U.R. 1915D, 1072, 35 Sup. Ct. Rep. 328, Ann. Cas. 1916B, 691.

And yet again, in 1915, the Interstate Commerce Commission, after an investigation extending over three years, in which the defendant Railroad Company and all other initial carriers of anthracite were parties, held that the rates charged by the defendant and other carriers to tidewater and to certain interior points were unreasonable; that by trackage and other arrangements they had extended advantages to their subsidiary coal companies, to the prejudice of other shippers; and that concessions as obnoxious as "direct cash rebates" had been made to such coal companies. Re Rates for Transportation of Anthracite Coal, 35 Inters. Com. Rep. 220.

This history of almost twenty-five years casts an illuminating light upon the intent and purpose with which the combination here assailed was formed Standard Oil Co. v. and continued. United States, 221 U. S. 1, 76, 55 L. ed.

619, 651, 34 L.R.A. (N.S.) 834, 31 Sup., Sales Company was a mere device to Ct. Rep. 502, Ann, Cas. 1912D, 734. evade the commodities clause of the InWithout further comment, this discus- terstate Commerce Act, and therefore sion of the record requires us to conclude void, it results that the decree of the Disthat it is clearly established that, prior trict Court must be reversed and the case to the enactment of the Anti-trust Act, remanded, with instructions to enter a the Railroad Company, in combination decree, in conformity with this opinion, with its Coal Company subsidiary, de- dissolving the combination effected liberately entered upon a policy of mak- through the intercorporate relations subing extensive purchases of anthracite sisting between the Lehigh Valley Railland tributary to the Railroad Company's road Company, the Lehigh Valley Coal lines, for the purpose of controlling the Company, Coxe Brothers & Company, mining, transportation, and sale of coal Inc., the Delaware, Susquehanna, & to be obtained therefrom, and of pre- Schuylkill Railroad Company, and the venting and suppressing competition, Lehigh Valley Sales Company, with such especially in the transportation and sale provisions for the disposition of all of such coal in interstate commerce, and shares of stock, bonds, or other evidences that this policy was continued after the of indebtedness, and of all property passage of the Anti-trust Act with in- [271] of any character, of any one of creasing energy and tenacity of purpose, said companies owned or in any manner with the result that a [270] practical controlled by any other of them, as monopoly was attained of the transpor- may be necessary to establish their entation and sale of anthracite coal de- tire independence of and from each rived from such lands. other. The contract of March 1, 1912, between the Coal Company and the Sales Company, must be decreed to be void, and all contract relations between the two companies enjoined which would serve in any manner to render the Sales Company not entirely free

ing coal where and from and to whom it chooses, with entire freedom and independence, so that it may in effect, as well as in form, become an independent dealer in coal, and free to act in competition, if it desires, with the defendant Coal Company or Railroad Company.

As to the New York & Middle Coal Field Railroad & Coal Company, the G. B. Markle Company, the Girard Trust Company, and the individual defendants, the bill must be dismissed.

The area of the anthracite territory is so restricted that to thus obtain control of the supply of such coal on a great system of railway (the amount transported exceeded one fifth of the entire production of the country for the year before this suit was commenced) by a combina- to extend its business of buying and selltion of corporations, such as we have here, and by such methods as we have seen were employed, effected a restraint of trade or commerce among the several states, and constituted an attempt to monopolize and an actual monopolization of a part of such trade or commerce in anthracite coal, clearly within the meaning of the first and second sections of the Anti-trust Act as they have frequently been interpreted by this court. 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; New York, N. H. & H. R. Co. v. Interstate Commerce Commission, 200 U. S. 361, 392, 393, 50 L. ed. 515, 521, 532, 26 Sup. Ct. Rep. 272; United States v. Union P. R. Co. 226 U. S. 61, 57 L. ed. 124, 33 Sup. Ct. Rep. 53; International Harvester Co. v. Missouri, 234 U. S. 199, 209, 58 L. ed. 1276, 1281, 52 L.R.A. (N.S.) 525, 34 Sup. Ct. Rep. 859; United States v. Delaware, L. & W. R. Co. 238 U. S. 516, 533, 59 L. ed. 1438, 1445, 35 Sup. Ct. Rep. 873; United States v. Read ing Co. 253 U. S. 26, 64 L. ed. 760, 40 Sup. Ct. Rep. 425.

Since we have also found that the contract between the Coal Company and the 65 L. ed.

Reversed and remanded with instructions to enter a decree in conformity with this opinion.

The CHIEF JUSTICE and Mr. Justice Holmes, while, if they exercised an independent judgment, would be for affirmance, nevertheless concur in the conclusion now announced by the court because they consider that they are so constrained to do in virtue of the controlling effect of the previous decisions in the Lackawanna and Reading Cases cited in the opinion of the court.

Mr. Justice McReynolds and Mr. Justice Brandeis did not take part in the consideration and decision of this case.


[272] LEWIS M. HAUPT, Appt.,



(See S. C. Reporter's ed. 272-279.)

United States implied contract - use of patented invention.

1. Appropriations by Congress for the construction or completion of a project for creating a navigable channel in accordance with the designs and specifications of a named corporation which had abandoned its own effort to obtain the desired channel clearly implies that Congress intended to give an experimental patented construction embodied in such designs and specifications a fair trial, and justifies the inference of a disposition, but not a contract, to pay for the use of the patented form of construction if it should prove to be valuable. [For other cases, see United States, VI. c; Claims, 122-127, in Digest Sup. Ct. 1908.] United States implied contract - use

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of patented invention. 2. The United States cannot be held liable as upon a quantum meruit to the owner of a patent for the use which he claims the government made of his invention in creating a navigable channel, where not only did the construction as ultimately completed, which produced the desired channel, not embody any of the devices of the patent, but there is nothing from which a promise by the government to pay for the use of such devices can reasonably be implied.

[For other cases, see United States, VI. c; Claims, 122-127, in Digest Sup. Ct. 1908.

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States of the identical compensation specified; or, if none is specified, for reasonable compensation.

United States v. Great Falls Mfg. Co. 112 U. S. 645, 656, 28 L. ed. 846, 850, 5 Sup. Ct. Rep. 306; United States v. Cress, 243 U. S. 316, 329, 61 L. ed. 746, 753, 37 Sup. Ct. Rep. 380; Davis v. Gray, 16 Wall. 203, 21 L. ed. 447; Glavey v. United States, 182 U. S. 595, 45 L. ed. 1247, 21 Sup. Ct. Rep. 891.

Whether the terms of a statute are explicit and clear or general and ambiguous, the court, if possible, must ascertain and give effect to the intention of the legislators, if necessary supplying words, or substituting words for others inadvertently used.

Stephens v. Cherokee Nation, 174 U. S. 445, 43 L. ed. 1041, 19 Sup. Ct. Rep. 722; Wisconsin C. R. Co. v. Forsythe, 159 U. S. 46, 56, 57, 40 L. ed. 71, 74, 75, 15 Sup. Ct. Rep. 1020; Chesapeake & P. Teleph. Co. v. Manning, 186 U. S. 238, 245, 248, 46 L. ed. 1144, 1147, 1148, 22 Sup. Ct. Rep. 881; Chicago, St. P. M. & O. R. Co. v. United States, 217 U. S. 180, 187, 188, 54 L. ed. 721, 724, 30 Sup. Ct. Rep. 470; Lau Ow Bew v. United States, 144 U. S. 47, 36 L. ed. 340, 12 Sup. Ct. Rep. 517; Brackett v. Chamberlain, 115 Me. 335, 98 Atl. 933; State v. Burnett, 173 N. C. 750, 91 S. E. 597; State ex rel. St. Louis v. Missouri P. R. Co. 262 Mo. 730, 174 S. W. 73; Lewis's Sutherland, Stat. Constr. $$ 363, 374, 381, 382.

If a statute is not clear on its face, the courts, in interpreting it, will search committee reports or other leg

APPEAL from the Court of Claims to islative proceedings for expressions or

review a judgment which dismissed the petition in a suit by the owner of a patent to recover from the United States for the use by the government of

his invention. Affirmed.

See same case below, 53 Ct. Cl. 591. The facts are stated in the opinion. Mr. Benjamin Carter argued the cause, and, with Mr. George Ramsey, filed a brief for appellant:

An act of Congress for taking or using private property, or for employing the services of an individual, when enforced or complied with, becomes a contract for the payment by the United

indications of the intentions of the legislative body.

237 U. S. 648, 59 L. ed. 1160, 35 Sup. St. Louis, I.. M. & S. R. Co. v. Craft, Ct. Rep. 704, 9 N. C. C. A. 754; Tap Line Cases (United States v. Louisiana & P. R. Co.) 234 U. S. 1, 27, 58 L. ed. 1185, 1195, 34 Sup. Ct. Rep. 741; Buttfield v. Stranahan, 192 U. S. 470, 495, 496, 48 L. ed. 525, 535, 24 Sup. Ct. Rep. 349.

When the United States adopts and puts to use a patented appliance, design, or process, and does not deny that it is using the same, or that the patentee is the true owner thereof, and does not disavow a purpose to pay him. for such use, it is bound to pay him reasonable compensation.

Note. As to implication from use of patented article, of promise to pay royalty-see note to May v. Western Lime Co. 44 L.R.A. (N.S.) 333. As to payment for private property United States v. Société Anonyme taken for public use-see note to des Anciens Etablissements Cail, 221 Withers v. Buckley, 15 L. ed. U. S. 816. U. S. 309, 320, 56 L. ed. 778, 784, 32

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