score of the public good,-the maintenance and charges, and the rules applicable thereof just and reasonable rates, but must result to, now in force and authorized by the comin an infringement of the liberty and prop-panies parties hereto upon the traffic covered erty of the defendants, to a degree far be- by this agreement (and filed with the Interyond what is necessary to that end, and in state Commerce Commission as to such of no way conducive to it. said traffic as is interstate), are hereby reaffirmed by the companies 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." Whatever the merits of the agreement in question may be, no case for an injunction ís presented. Even though the authority to make the decree sought exists, the bill is insufficient to invoke it. Story, Eq. Pl. § 271, note; Id., § 27a, note; Campbell v. Mackay, 1 Myl. & C. 618. 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 fairly established by itself, and duly filed with the Interstate Commerce Commission; and these rates were in truth just, reasonable, and in conformity with law in every respect, and were in full operation. This is admitted by the pleadings. This being true, these rates could not have been either raised or lowered, under the existing conditions, without injustice to patrons or eise 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 justice and reason, disobeying the first commandment of the commerce law. In this state of things the agreement was made. The preamble contains five distinct declarations as follows: This section is the immediate and affirmative act of the association. Its essence is that all parties agree to abide by 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 association agreement had stopped there, the agreement would have been simply one to stand by just and reasonable rates independently fixed, on file with the Interstate Commerce Commission, which would be agreeing to do the very thing that the plain 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; and the competition that produces departure from the reason and justice and equality that the act requires violates the essential principle upon which it is (1) To aid in fulfilling the purposes of the Interstate Commerce Act; (2) to co-founded. operate with each other and adjacent transportation associations; (3) to establish and maintain reasonable and just rates, fares, rules, and regulations on state and interstate traffic; (4) to prevent unjust discrimination, and to secure the reduction 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 purpose, and no secret or covert design in respect to 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 organization and administration, in respect of which no criticism has been sug gested except as to 5 of article 5 in connection with the Solicitor General's contention in regard to article 7. Article 7 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, 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 partial sense, or in any sense whatever. In 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. Section 2, of article 7 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 any other unjust purpose, in any part of the arrangement. It is therefore not just to maintain what the record admits to be untrue. But whatever construction or implication may exist in respect of the language of this of freight and passengers on any of the rail- lished are reasonable. fic, to prevent unjust discrimination, and to Congress has the power to forbid any agree peting railroad companies for interstate com vented. 4. The constitutional freedom of contract in the use and management of property does not Include the right of railroad companies to combine as one consolidated and powerful as sociation for the purpose of stifling competitlon among themselves, and of thus keeping their rates and charges higher than they might otherwise be under the laws of competition, even if their rates and charges are 5. The statute under review is a legitimate exercise of the power of Congress over inter state commerce, and a valid regulation there. reasonable. of. of the association should be administered by several different boards, and that it should have jurisdiction over all competitive traffic (with certain exceptions therein noted) which passed through the western termini of the trunk lines (naming them), and such other points as might be thereafter designat ed by the managers. The duly published schedules of rates, fares, and charges, and the rules applicable thereto, which were in force at the time of the execution of the agreement and authorized by the different companies and filed with the Interstate Commerce Commission, were reaffirmed by the companies composing the association. From time to time the managers were to recommend such changes in the rates, fares, charges, and rules as might be reasonable and just and necessary for governing the traffic covered by the agreement and for protecting the interests of the parties to the agreement, and a failure to observe such recommendations by any of the parties to the agreement Decided was to be deemed a violation of the agree ment. No company which was a party to it was permitted in any way to deviate from or 6. An agreement of railroad companies which directly and effectually prevents competition Is, under the statute, in restraint of trade, notwithstanding the possibility that a re straint of trade might also follow unrestricted competition, which might destroy weaker roads and give the survivor power to raise rates. [No. 84.] Argued February 24, 25, 1898. APPEAL from a decree of the United change the rates, fares, charges, or rules set States Circuit court of Appeals for the forth in the agreement or recommended by Second Circuit affirming the decree of the the managers except by a resolution of the Circuit Court of the United States for the board of directors of the company, and its Southern District of New York, dismissing action was not to affect the rates, etc., disa suit in equity brought by the United States, approved, except to the extent of its interest [507] plaintiff, against the Joint-Traffic Associa- therein over its own road. A copy of such tion et al., for the purpose of obtaining an resolution of the board of any company auadjudication that an agreement entered into thorizing a change of rates or fares, etc., was between some thirty-one different railroad to be immediately forwarded by the company companies was illegal, and enjoining its fur-making the same to the managers of the asther execution. Judgments of the Circuit sociation, and the change was not to become Court and of the Circuit Court of Appeals of such resolution by the managers. Upon effective until thirty days after the receipt reversed, and the case remanded to the Circuit Court with directions to take further the receipt of such resolution the managers proceedings in conformity with the opinion protection of the parties hereto." It was were "to act promptly upon the same for the further stated in the agreement that "the powers conferred upon the managers shall be so construed and exercised as not to permit violation of the Interstate Commerce of this court. See same case below, 76 Fed. Rep. 895. Statement by Mr. Justice Peckham: The bill was filed in this case in the cir- Act, or any other law applicable to the premcuit court of the United States for the south-ises or any provision of the charters or the ern district of New York for the purpose of laws applicable to any of the companies parobtaining an adjudication that an agreement ties hereto, and the managers shall co-ope1506] entered into between some thirty-one differ-rate with the Interstate Commerce Commisent railroad companies was illegal, and en- sion to secure stability and uniformity in the joining its further execution. rates, fares, charges, and rules established hereunder." These railroad companies formed most (but not all) of the lines engaged in the One provision of the agreement was to the business of railroad transportation between Chicago and the Atlantic coast, and the ob-effect that the managers were charged with ject of the agreement, as expressed in its the duty of securing to each company which preamble, was to form an association of rail- was a party to the agreement equitable proroad companies "to aid in fulfilling the pur- portions of the competitive traffic covered by pose of the Interstate Commerce Act, to co- the agreement, so far as it could be legally operate with each other and adjacent trans- done. The managers were given power to portation associations to establish and main- decide and enforce the course which should tain reasonable and just rates, fares, rules, be pursued with connecting companies, not and regulations on state and interstate traf- parties to the agreement, which might de cline or fail to observe the rates, etc., estab- | prevent competition among the railroads lished under it, and the interests of parties named, in respect to all their interstate com-[509] injuriously affected by such action of the merce, entered into the agreement referred managers were to be accorded reasonable to above, and it charged that the agreement protection in so far as the managers could was an unlawful one, and a combination and reasonably do so. When in the judgment of conspiracy, and that it was entered into in the managers it was necessary to the pur- order to terminate all competition among the poses of the agreement, they might deter-parties to it for freight and passenger traffic, mine the divisions of rates and fares between and that the agreement unlawfully reconnecting companies who were parties to strained trade and commerce among the sev the agreement and connections not parties erai states and territories of the United thereto, keeping in view uniformity and the States, and unlawfully attempted to monopoequities involved. lize a part of such interstate trade and comJoint freight and passenger agencies merce. The bill ended with the allegation might be organized by the managers, and, if that the companies were preparing to put established, were to be so arranged as to into full operation all the provisions of the give proper representation to cach company agreement, and the relief sought was a judgparty to the agreement. Soliciting or con-ment declaring the agreement void and entracting passenger or freight agencies were joining the parties from operating their not to be maintained by the companies, ex-roads under the same. The defendant, the [508]cept *with the approval of the managers, and Joint Traffic Association, filed an answer no one that the managers decided to be ob- (the other defendants substantially adopting jectionable was to be employed or continued it), which admitted the making of the conin an agency. The officials and employees tract, but denied its invalidity or that it is of any of the companies could be examined, or was intended to be an unlawful contract, and an investigation made when, in the judg- combination, or conspiracy to restrain trade ment of the managers, their information or or commerce, or that it was an attempt to any complaint might so warrant. Any vio- monopolize the same, or that it was intended lation of the agreement was to be followed to restrain or prevent legitimate competiby a forfeiture of the offending company in tion among the railroads which were parties a sum to be determined by the managers, to the agreement. The answer, in brief, denied which should not exceed five thousand dol-all allegations of unlawful acts or of an unlars, or if the gross receipts of the transac- lawful intent, unless the making of the agreetion which violated the agreement should ment itself was an unlawful act. The anexceed five thousand dollars, the offending party should, in the discretion of the managers, forfeit a sum not exceeding such gross receipts. The sums thus collected were to go to the payment of the expenses of the association, except the offending company should not participate in the application of its own forfeiture. swer then set forth in quite lengthy terms decree was affirmed by the circuit court of ap- The agreement also provided for assess ments upon the companies in order to pay The case came on for hearing on bill and the expenses of the association, and also for answer, and the circuit court, after a hearthe appointment of commissioners and arbi-ing, dismissed the bill, and upon appeal its trators who were to decide matters coming before them. No one retiring from the agreement before the time fixed for its final completion, except by the unanimous consent of the parties, should be entiled to any reMr. John K. Richards, Solicitor Generfund from the residue of the deposits remain-al, for the appellant, the United States: ing at the close of the agreement. It was to take effect January 1, 1896, and to continue in existence five years, after which any company could retire upon giving ninety days' written notice of its desire to do 80. The agreement violates the anti-trust law or commerce In the Trans-Missouri case this court held The bill filed by the government contained allegations showing that all the defendant railroad companies were common carriers duly incorporated by the several states through which they passed, and that they were engaged as such carriers in the transportation of freight and passengers, separately or in connection with each other, in (1) that the anti-trust law applies to comtrade and commerce continuously carried on mon carriers by railroad; (2) that it prohibamong the several states of the Union and its and renders illegal all agreements in rebetween the several states and territor-straint of interstate trade and commerce, ies thereof. The bill also charged that the whether the restraint be reasonable or undefendants, unlawfully intending to restrain reasonable. commerce among the several states, and to The question, then, is whether the agree some minds inuch alarm. Many industries | tions of capital in any form. The general Undoubtedly it may be possible for a large aggregated capital to wield greater power in many ways than would be possible for the same amount distributed among many separate 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 fos tered and increased. The disfavor thus excited 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 latter felt the need of repelling the charge by doing something to show that they were the declared enemies of trusts. It cannot be said that Congress has done an unwise or imprudent thing, and that if calamity occurs the fault lies at its door. It has prohibited nothing but contracts and combinations to create restraints of trade and monopolies. These, when properly defined are, beyond question, public mischiefs and ought to be prohibited. If any useful thing becomes stricken down by the law, it must be the result of some erroneous interpretation. The first question we design to consider is whether the agreement violates any of the provisions of the act referred to. To this end it is of much importance to have in mind the particular nature of the subject with which Under such circumstances it was quite this act deals, and how that subject has been natural that schemes of legislation aimed heretofore treated in law and legislation. against these supposed public enemies should It is obvious that Congress conceived itself be started, and any opposition to them would to be dealing with acts supposed to be pronaturally draw upon the authors of it the reductive of injury to the public, and of injury proach that they were the friends, and per- to such an extent as to justify repressive leghaps the paid defenders, of these powerful islation. interests. While, therefore, all, or nearly all, professed themselves in favor of repressive legislation, the question what legislation 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 prohibition of the exercise of the clearest constitutional 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 mischievous? Indeed, sensible legislators for the most part understood very clearly that the things complained of were but the necessary incidents and consequences of the progress of industry 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 Congress 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 aggrega It is not contracts only of a certain character which are condemned, but they are coupled together with certain other acts, presumably of a similar nature or tendency,namely, combinations or conspiracies in re straint of trade, and monopolies, or combinations or conspiracies to monopolize. Contracts therefore are dealt with, not so much as contracts, but as one form of acts relating to trade and commerce, assumed to be injurious in their tendency and effect. That contracts of a certain class may be opposed to sound public policy has been reeognized in the law from a very early period. The grounds or reasons of policy on 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 they are treated in the law. One description embraces simply ordinary business transactions, where the 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 enforcing it. Contracts whereby a business the law, to aid in enforcing the law. The that end it required all railroads engaged in railroads shatter the law, and then combine to support the fragments. It was contended below that the bill was multifarious. There is but one cause of action in the bill,-namely, the agreement. Upon that the bill is based. It seeks to enjoin the execution of an illegal contract. The averments of intent in the bill are unnecessary and immaterial. At the most they are conclusions of law. The court will examine the agreement and determine the question of law with respect to its meaning and effect; will determine whether the agreement restrains trade or commerce in any way so as to violate the law. If the agreement is prohibited by the anti-trust law the court will enjoin its execution; and the court will do this irrespective of whether the agreement does or does not also violate the Interstate Commerce Act, or those general principles of law which prevent any interference with interstate commerce. interstate transportation to file with the Commission and publish schedules of their respective rates, and forbade the carriage of goods for any greater or less compensation than that specified in the published rates. Even before the passage of the law the rival lines engaged in an effort to agree upon the schedules which each should file, and had reached such agreement in time to file and publish them in compliance with the provi sions of the law. The agreement in question was believed to promise great benefits and to make it in the interest of all to comply with the Interstate Commerce Act, and to detect, expose, and punish any who, from a mistaken view of interest, should violate it. It made no effort to prevent competition: but sought to devise a scheme which would compel any competition to be fair, lawful, and open, and enable any rival to meet it without violating any law. It is not necessary for the government to Unfortunately, large corporations are insist that the agreement violates more than viewed with a jealousy which does not conone law. It is clearly illegal as a contract in fine itself at all times within the bounds of restraint of trade or commerce under the reason, and this sentiment creates hostilities anti-trust law. The fact that it also violates to which it is but natural, at least, that some other law, if it does, assuredly will not public officials should yield. Transactions cure its illegality under this law, or prevent which, in the absence of political prejudice the court from enjoining its execution. A and passion, would pass unnoticed by those thing which is doubly bad does not, there- not immediately affected by them, are subfore, become good. The rule of double nega-ject to hostile scrutiny; and it was not untives does not apply. Nor is the government deprived of the power to restrain the execution of a contract in restraint of trade or commerce under the anti-trust law because the contract contains a provision under which individuals have committed, or may commit, offenses punishable under the Interstate Commerce Act. If a man threatens my life I am not to be deprived of the right to put him under bond to keep the peace be cause he has also stolen my property. The authority of the government to maintain this suit is sustained in United States v. Trans-Missouri Freight Asso. 166 U. S. 290, 343, 41 L. ed. 1007, 1028; citing Re Debs, 158 U. S. 564, 39 L. ed. 1092; Cincinnati, N. O. & T. P. R. Co. v. Interstate Commerce Commission, 162 U. S. 184, 40 L. ed. 935, 5 Inters. Com. Rep. 391; Texas & P. R. Co. v. Interstate Commerce Commission, 162 U. S. 197, 40 L. ed. 940, 5 Inters. Com. Rep. 405. Messrs. James C. Carter and Lewis Cass Ledyard, for the Joint Traffic Association, appellee: The object of the bill is to procure an adjudication that a certain agreement entered into between a large number of railroad companies forming most, but not all, of the lines or systems engaged in the business of railroad transportation between Chicago and the Atlantic coast, for the purpose of forming an association for the better regulation of a certain part of the traffic of those lines and systems, is illegal and void, and enjoining its execution. Congress in 1887 enacted the Interstate Commerce Law, the main design of which was to abolish discrimination in rates and secure a greater degree of uniformity, and to natural that such an agreement should raise a clamor that it was designed to raise rates. There never was a pretense, however, that under the agreement there was the slightest exaction of unreasonable charges. On the contrary the schedules of rates agreed upon and filed with the Interstate Commerce Commission had never been objected to by that body, and were notoriously lower than those imposed for similar services in any other part of the world. The answer denies every allegation of unlawful act or of unlawful intent, unless the making of the agreement itself was an unlawful act. It may seem at first that we are aiming to persuade the court to reconsider its reasoning and determinations in the recent case of United States v. Trans-Missouri Freight Association. It may be that one of the questions now sought to be presented might have been made in that case and a decision of it obtained; but it is quite certain that the question was not raised. The precise question which was considered and determined in the case above referred to was this: Assuming that the agreement was one in restraint of trade, would the circumstance that the restraint actually imposed by it was reasonable relieve it from the condemnation of the statute? Or, in other words, does the statute by a true construction condemn all agreements in restraint of interstate trade and commerce, or such only as were at common law unlawful? Prior to, and at the time of, the passage of this law there were, as there still are, certain tendencies in the industrial world which drew widespread attention and excited in |