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provided by the Anti-trust Act of July 2, corporations, the union of which in this 1890 [26 Stat. at L. 209, chap. 647, Comp. manner in the Amalgamated and AnaStat. § 8820, 9 Fed. Stat. Anno. 2d ed. conda Companies constituted the alleged p. 644], for enforcing the rights created unlawful combination in restraint of interby it, are exclusive; and therefore, look- state trade or commerce. ing only to that act, a suit, such as we The evidence in the case renders it have here, would not now be entertained. probable that the promoters of the AmalD. R. Wilder Mfg. Co. v. Corn Products gamated Company, when it was organized Ref. Co. 236 U. S. 165, 174, 59 L. ed. in 1899, entertained schemes or dreams 520, 525, 35 Sup. Ct. Rep. 398, Ann. of controlling the supply and price of Cas. 1916A, 118; Paine Lumber Co. v. copper in the interstate markets of this Neal, 244 U. S. 459, 471, 61 L. ed. 1256, country and in the markets of the world, 1264, 37 Sup. Ct. Rep. 718; United States and that they did what they could to v. Babcock, 250 U. S. 328, 331, 63 L. ed. make that company rich and powerful. 1011, 1012, 39 Sup. Ct. Rep. 464. But But we are dealing with the Anaconda the law has become thus settled since this Company as it was in 1911, and with the suit was commenced in 1911, and the lower extent to which its control of production courts, upon the allegations in the bill, and of prices appears in the record beproperly assumed jurisdiction and dis- fore us, posed of the case. Busch v. Jones, 184 There is evidence that the total proU. S. 598, 599, 46 L. ed. 707, 708, 22 duction of copper in the United States Sup. Ct. Rep. 511; Clark v. Wooster, 119 and Alaska in 1899 was 581,000,000 U.S. 322, 326, 30 L. ed. 392, 393, 7 Sup. pounds, and of the Anaconda Company Ct. Rep. 217.

1,000,000 pounds (probably an error, It is, however, argued that $ 16 of the 100,000,000 pounds being intended); but Clayton Act (38 Stat. at L. 730, 737, chap. the total production of the world at that 323, Comp. Stat. 88 8835a, 88350, 9 Fed. time is nowhere stated. The production Stat. Anno. 2d ed. pp. 730, 745), passed in the United States in 1910, the year bein 1914, was intended to, and does, modify fore the suit was brought, was 1,086,the prior law, as declared by this court, 000,000 pounds, and of this the Butte and, since our decision will result in re-camp, in which there were several mines manding the cause to the lower court, we other than those of defendants, produced shall consider its bearing upon the case. 238,000,000 pounds, or approximately 22

The applicable provision of the Clayton per cent. Here again there is no stateAct is as follows:

ment as to the total production of tlie “Sec. 16. That any person

world for that year. shall be entitled to sue for and have in- [595] Whatever the fact may have junctive relief, in any court of the United been, it is obvious that from such eviStates having jurisdiction over the parties, dence as this it is not possible to deteragainst threatened loss or damage by a mine to what, if to any substantial, violation of the Anti-trust Laws

extent, the defendants restrained or when and under the same conditions and monopolized the production of copper in principles as injunctive relief against the United States, much less in the threateried conduct that will cause loss or world. damage is granted by courts of equity, The evidence with respect to price conunder the rules governing such proceed- trol, although meager, is more definite. ings..

The average price of copper in 1899, the The contention of the appellants is that year before the Amalgamated Copper they will suffer irreparable loss by the Company was organized, was 17.6 per sale of the Alice properties to the [594] pound; in 1900 it was 16.1; in 1902, 11.6; Anaconda Company, and that the sale in 1904, 12.8; in 1907, 20; in 1908, 13; should therefore be enjoined because in 1909, 12.98; 1912, 16; and in 1913, that company and the Amalgamated the last year for which the price is given, Copper Company constitute a combina- 15 cents. tion in restraint of interstate commerce, within the prohibitions of the Sherman these fluctuating prices prove monopolistic

It is obviously impossible to say that Anti-trust Act.

The Amalgamated Copper Company, control of the price of copper by the deorganized in 1899, is a holding company,

fendants. and in 1911, when this case was

No claim is made that the Anaconda menced, it controlled by capital stock Company restrained or restricted the proownership the Anaconda Company, which, duction of copper, but, so far as there in turn, held the title to the physical is any evidence at all upon the subject, property which had been owned by other it is to the effect that it maintained and

com

perhaps increased the production in the rights as well as the minority, and that Butte camp.

it should not require the former to reUpon the case here made by the evi- main powerless until the creeping padence it is impossible to conclude that the ralysis of inactivity shall have destroyed defendants constituted in 1911 such a the investment of both. combination, within the terms of the Anti- The case before us is a typical one for trust Act, as would justify the granting the application of this exception to the of an injunction to the plaintiffs, even general rule. The Alice Company was under the provisions of § 16 of the Clay- organized in 1880, under the general inton Act, which we have quoted.

corporation laws of the then' territory of The decree of the lower courts as to Utah, with authority (597] to buy, sell, this first claim must be affirmed.

lease, hold, own, and operate mines, minThe second contention is that the ing claims, etc., with many enumerated owners of less than all of the capital incidental powers. It acquired the mining stock of the Alice Company could not properties in controversy in this case and authorize the sale of all of the property conducted prosperously the mining chiefly of the corporation over the protest of of silver ores, until 1893, when its busiowners of a minority of the stock. ness ceased to be profitable, and was sus

It is, of course, a general rule of law pended. Extensive shafts and underthat, in the absence of special authority ground workings were permitted to fill so to do, the owners of a majority of the with water, and for seventeen years before stock of a corporation have not the power the sale the only business done by the to authorize the directors to sell all of company was leasing the upper workings the property of the company, and [596] of the old mines and limited parts of the thereby abandon the enterprise for surface for shallow workings, to “tribwhich it was organized. But to this utors," who operated in such a small way rule there is an exception, as well es- that, although the expenses of the comtablished as the rule itself; viz.; that pany, chiefly for caretakers, were very when, from any cause, the business of small, its income was less, so that when a corporation, not charged with du- the sale was made an indebtedness of ties to the public, has proved so un- about $35,000 had accumulated. The profitable that there is no reasonable stock of the company was nonassessable, prospect of conducting the business in the it had no resources but the real estate future without loss, or when the corpora- which was sold to the Anaconda Comtion has not, and cannot obtain, the money pany, and the evidence is clear that to necessary to pay its debts and to continue reopen and operate the mines on its propthe business for which it was organized, erty, or to open new mines, would have even though it may not be insolvent in been very expensive and the prospect of the commercial sense, the owners of a profitable operation of them wholly probmajority of the capital stock, in their lematical. Although its properties had a judgment and discretion, exercised in good | large speculative value, and therefore the faith, may authorize the sale of all of the company cannot be said to have been inproperty of the company for an adequate solvent, yet it must be accepted as estabconsideration, and distribute among the lished by the evidence that there was no stockholders what remains of the proceeds reasonable prospect of the company being after the payment of its debts, even over able to profitably resume the mining busithe objection of the owners of the minor- ness for which it was incorporated, and ity of such stock. Thomp. Corp. 2d ed. that the only way in which the stock$8 2424,2429; Noyes, Intercorporate Re- holders could realize anything from their lations, $ 111; Cook, Corp. 7th ed. $ 670, investment was by sale of its property. p. 217, note.

Under such circumstances as these the sale The rule that owners of a majority of of all of the property of the company, the stock may not authorize the sale of if authorized, in good faith and for an all of the property of a going and not adequate consideration, by the owners of unprofitable company rests upon the prin- a majority of the stock, would be a valid ciple that exercise of such power would sale, which could not be defeated or set defeat the implied contract among the aside by the minority stockholders. stockholders to pursue the purpose for It is next argued that the sale here in which it was chartered. But this principle controversy is void for the reason that the fails of application when a business, un- Alice Company could (598] not lawfulsuccessful from whatever cause, is sus-ly acquire and hold title to the stock in pended without prospect of revival, and the Anaconda Company in which the the law recognizes that under such con- consideration for the sale was paid. ditions the majority stockholders have Here again the general rule is that while, under the circumstances of this conduct of the practical administration of case, a sale of all of the property of a the affairs of the Amalgamated and Anacorporation could be authorized by the conda Companies, and that he very cerowners of less than all of the stock, for tainly was in control of the boards of an adequate consideration, it must be for directors of the companies which were money only, for the reason that the parties to the sale of the Alice properties. minority stockholders may not lawfully The relation of directors to corporations be compelled to accept a change of invest is of such a fiduciary nature that transment made for them by others, or to elect actions between boards having common between losing their interests or entering members are regarded as jealously by the a new company.

law as are personal dealings between a But it has been suggested that this rule, director and his corporation; and where also, should be subject to the exception the fairness of such transactions is chalthat when stock which has an established lenged, the burden is upon those who market value is taken in exchange for would maintain them to show their entire corporation property, it should be treated fairness; and where a sale is involved, the as the equivalent of money, and that a full adequacy of the consideration. Espesale otherwise valid should be sustained. cially is this true where a common director Noyes, Intercorporate Relations, $ 120, is dominating in influence or in character. and cases cited. We approve the sound. This court bas been consistently emphatic ness of such an exception. It would be in the application of this rule, which, it a reproach to the law to invalidate a sale has declared, is founded in soundest otherwise valid because not made for morality, and we now add, in the soundest money, when it is made for stock which business policy. Twin-Lick Oil Co. v. a stockholder, receiving it, may at once, Marbury, 91 V. S. 587, 588, 23 L. ed. in the New York or other general market, 329, 330, 3 Mor. Min. Rep. 688; Thomas convert into an adequate cash consider- v. Brownville, Ft. K. & P. R. Co. 109 ation for what his holdings were in the U. S. 522, 27 L. ed. 1018, 3 Sup. Ct. Rep. corporate property.

315; Wardell v. Union P. R. Co. 103 U. S. In this case the trial judge determined 651, 658, 26 L. ed. 509, 511, 7 Mor. Min. without difficulty the market value of the Rep. 144; Corsicana Nat. Bank v. Johnstock received in payment for the Alice son, 251 U. S. 68, 90, 64 L. ed. 141, 155, properties, and it is, of course, public 40 Sup. Ct. Rep. 82. knowledge that there was a wide and gen- [600] The district court found that eral market for Anaconda stock. This the price agreed to be paid by the third contention of appellant must be de- Anaconda Company was not an adenied.

quate one, and the circuit court of apFinally, it is argued that the sale of peals refused to disturb that finding. the Alice properties is void because nego- With this conclusion we agree, applytiated and made by two boards of directors ing the settled rule of this court that, having a member in common, and for an in suits in equity, a concurrent findinadequate consideration.

ing by two courts on a question of fact John D. Ryan, at the time of the sale, will be accepted unless it be clear that was president and a director of the their conclusion is erroneous. Baker Alice Company; he was also a director v. Schofield, 243 U. S. 114, 118, 61 L. ed. (599) and general manager of the Ana- 626, 630, 37 Sup. Ct. Rep. 333, and cases conda Company, and had been its presi- cited. dent from 1903 to 1909; he was elected But the district court, notwithstanding a director and president of the Amal- this finding of inadequacy of price, did gamated Copper Company in 1909, and not set the sale aside, but ordered that had been a director of each of the the Alice properties should be offered at subsidiary companies of the combina- public auction by a master, and that if tion prior to that year. In 1905 he no bid should be received for an amount obtained an option on the majority of greater than that which the Anaconda the Alice stock for $600,000, and carried Company had agreed to pay, the sale it until it was purchased by the Butte should be confirmed. The offer at public Coalition Company, an Amalgamated sub- sale was made, no bid was received, and sidiary, of which he was a director, and the private sale to the Anaconda Comthat company voted a majority of the pany was thereupon confirmed. The cirAlice stock in favor of the disputed sale. cuit court of appeals, by a divided court,

The record shows beyond controversy affirmed that decree. that Ryan was the representative of the Both courts relied upon Mason chief investors in the enterprise involved Pewabic Min. Co. 133 U. S. 50, 33 L. ed. in this litigation, that he dominated the 1524, 10 Sup. Ct. Rep. 224, as authority

V.

for approving the sale for a price which | sale was confirmed without any reference they found was inadequate, after a greater being made to the action ordered if the amount could not be obtained for the upset price should not be obtained, and property when offered at public sale, and we must conclude that that part of the in this we think they fell into error. decree was not considered by this court.

In the Pewabic Case the charter period As an original proposition, we cannot of the corporation having expired, a ma- think that the amount offered for propjority of the stockholders favored the erty at a public sale for cash is such a organization of a new company, with the measure of its value that the failure to same amount of capital stock as the old, obtain a bid at such sale for more should to take over the whole of its property, be accepted by courts as a sufficient reason and that there should be allotted to the for affirming a sale for a price which stockholders the same number of shares they (602] found, on other evidence, to which they held in the old company, or, be inadequate. In business life forced in the alternative, that those who did not sales for cash are such a last resort for desire the stock should receive the value obtaining money that a sale "under the of their shares, computed on a basis of bammer" is synonymous with a sale at a $50,000 for the entire property of the sacrifice, and prices obtained at such sales company. The minority stockholders have usually been rejected by courts when favored sale of the property and division tendered as evidence of value. of the proceeds. [601] On the bill In this case, from evidence as to the filed by the minority stockholders the character of the Alice properties, their circuit court enjoined the transfer to location and surroundings, and from the the new company, and ordered a public opinions of experts, the trial court consale of the property by a master, with cluded that the price paid for them was a proviso in the decree that if no bids inadequate, and we cannot doubt that were offered in excess of $50,000 above from like or other evidence a more trustthe debts of the company, then the worthy conclusion could be obtained as proposal of the majority should be car- to what their value was than would be ried into effect under the direction of derived from an offer at a public sale the master. Before the property was for cash. offered for sale each of the parties ap- To this it must be added that the resolupealed to this court from separate parts tions of the Alice Company to sell and of the decree. On that appeal, in addition of the Anaconda Company to purchase to a question of accounting, not material were for a price named, to be paid and here, this court considered and decided received in designated stock. Neither only the question whether, on such a wind- contemplated a public offering of the ing up of the affairs of a corporation, properties, and that a sale should be made the majority of the stockholders could at another price, greater than an amount lawfully compel the minority to either decreed by the court, if it should be take stock in a new company or accept offered. Under the pleadings the court for their stock a value to be fixed by the had power to confirm the sale if it was majority. No mention is made in the found to have been lawfully made, but opinion of the court of the alternative only upon the terms on which the parties character of the order of sale, and, al- had contracted to make it; and when the though it was subsequently shown that the price was found to be inadequate, a decree price proposed was an inadequate one, should have been entered, vacating and there had not been any finding by the setting it aside, as prayed for by the lower court that such was the fact when

appellants. the case was decided here. It is probable

It results that the decree of the Circuit that there was no objection to this feature of the decree. The minority stockholders,

Court of Appeals must be reversed and praying, as they were, for a public sale, the case remanded to the District Court for obvious reasons would not object to for further proceedings in conformity it, and the contention of the majority was with this opinion. that no sale at all should be ordered, but Reversed and remanded. that their reorganization plan should be adopted. The decree of the circuit court Mr. Justice McReynolds concurs in the that the property should be sold at public result. 65 L, ed.

28

433

(603) STATE OF OKLAHOMA, Com relief, is hereby denied, without prejuplainant,

dice.

The motion of C. J. Benson, William STATE OF TEXAS, Defendant; The Unit- Murdock, and James R. Armstrong, filed ed States of America, Intervener.

herein December 20, 1920, for an order (See S. C. Reporter's ed. 603-605.) requiring Frederic A. Delano, Esq., re

ceiver, to file an inventory of certain ma(No. 23, Original.]

terial and equipment purchased by him Motions submitted December 20, 1920, and and paid for out of the proceeds of the

January 3, 1921. Entered January 24, oil produced by him from certain premi1921.

ses in said motion described, and to acMr. W. A. Ledbetter for the Sinclair count for the value thereof; and requirOil & Gas Company, the Oklahoma ing said receiver to file forthwith an Petroleum & Gasolene Company, and for itemized statement of moneys charged C. J. Benson et al.

by him against certain wells, and a stateMr. Horace F. Baker for the South- ment of all sums of moneys realized by west Petroleum Company.

him from certain wells, and for other Mr. J. S. Flannery for the receiver.

relief, as in said motion specified, is here

by denied without prejudice. Orders announced by Mr. Justice Mc- Upon consideration of the motion of Kenna:

Southwest Petroleum Company, filed The Motion of the Sinclair Oil & Gas herein January 3, 1921, for an order diCompany, filed herein on December 20, recting Frederic A. Delano, Esq., receiver 1920, for an order to require Frederic A. herein, to return to said company, purDelano, Esq., receiver, to refund to it one suant to the order of June 7, 1920, a cersixteenth (1/16) of the proceeds of the tain well, known as receiver's well numoil produced from certain premises in said ber one hundred and eighty (180), togethmotion described, and heretofore deposit- er with the land appurtenant thereto and ed with said receiver pursuant to the the structures, equipment, and material order of this court, together with the in- pertaining to said well, and the reterest collected thereon by said receiver, sponse of the receiver to said motion, and to require said receiver to surrender filed January 5, 1921, and the reand pay to said Sinclair Oil & Gas Com- sponse of the United States, filed Janupany one sixteenth (1/16) of the oil or ary 22, 1921, it is ordered that said the proceeds thereof delivered to said re- receiver do return to said Southwest ceiver since the 15th day of October, Petroleum Company said well number 1920, is hereby denied, without preju- one hundred and eighty (180), which lies dice.

south of the south edge of the sand The petition of the Oklahoma Petro- bed of the Red river as it was on the 1st leum & Gasolene Company, filed herein day of April, 1920 (marked generally by on December 20, 1920, for an order the border line of vegetation along the requiring Frederic A.' Delano, Esq., edge of the flood plain), together with receiver, to file a statement of expenses the land appurtenant thereto, lying to incurred by him from May 16, 1920, the south of the south edge of the sand to July 1, 1920, in operating certain bed of said river, and the structures, wells designated' in said petition, and equipment, and material pertaining to requiring said receiver to pay to said said well, and the net proceeds of the company the proceeds of one-sixteenth production thereof that have (605] (1/16) of the oil produced from said come to the hands of said receiver, wells from April 1, 1920, to November less operating expenses and reservations, 15, 1920, and the interest collected by upon terms that said Southwest Petrosaid receiver upon said proceeds, and leum Company comply with the prorequiring said receiver to refund to said visions contained in the order of this company one third (3) of the three six- court, made June 7, 1920, respecting teenths (3/16) of the proceeds of the oil the return of certain lands lying south from said wells, paid to said receiver of the south edge of the sand bed of since November 15, 1920, and that said said river which were, on the 1st day company be not required hereafter to of April, 1920, in the possession of pay to said receiver more than two six-persons claiming under patents from the teenths (2/16) [604) of the oil and gas state of Texas, and not included in the produced from said wells, and for other river-bed lands as in said order defined.

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