« ForrigeFortsett »
transportation which the Interstate Commerce Act contemplates and provides for are rates that are just ard reasonable to the carriers as well as to the carried cannot be open to doubt. The very words "just and reasonable," employed in that act, necessarily imply that meaning. They are words of comparison and relation, and unless the rights of both parties to a contract are considered there can be no comparison.
It would be preposterous to call a price just and reasonable, that was not so to one side as well as to the other. This is the construction which this court has given to the Interstate Commerce Act in this very particular.
Texas & P. R. Co. v. Interstate Commerce Commission, 162 U. S. 197, 40 L. ed. 940, 5 Inters. Com. Rep. 405.
In the same opinion some observations of Mr. Justice Jackson, in the case of Interstate Commerce Commission v. Baltimore & O. R. Co. 43 Fed. Rep. 37, 3 Inters. Com. Rep. 192, were cited with approbation.
This decision of Mr. Justice Jackson was affirmed in the United States Supreme Court.
Interstate Commerce Commission v. Baltimore & O. R. Co. 145 U. S. 263, 36 L. ed. 699, 4 Inters. Com. Rep. 92.
The validity of the agreement here in question must be determined, therefore, not merely upon the language of the Anti-Trust Act taken by itself, but by that language considered in connection with the other statute of the United States (which if this applies) is in pari materia, and which deals with the subject so much more exhaustively, and in words so plain that there can be no ambiguity raised in respect of them.
Granting that the Anti-Trust Act in terms makes all contracts unlawful that are in anywise "in restraint of trade," however reasonable and necessary they may be, is that to be understood to invalidate a railway contract made to secure that, and only that, which the Interstate Commerce Act as construed by this court recognizes as the right of railway companies to receive, and provides means to secure?
It will hardly be claimed that the elabo rate provisions of the Interstate Commerce Act on the subject of reasonable rates are repealed by the Anti-Trust Act. If both are to stand as applicable to this case, they must be read together, the same as if their provisions were contained (so far as they refer to the same subject) in separate sections of the same act.
Quite aside from the provisions of the Interstate Commerce Act giving to the companies the right to just and reasonable rates, and to use proper means to maintain them, the same result is reached under the principles of common law.
The term "restraint of trade" employed in the Anti-Trust Statute has a common-law definition. And as the act furnishes no other, that, upon the general rules of construction, must be taken to be intended. To make the agreement an infringement of this statute, it must therefore be one that would be void at common law.
In the construction of statutes the rule is absolutely without exception, that where word or phrase employed has a well-settled common-law definition distinct from its literal meaning, it is assumed to be the meaning intended, unless a different definition is prescribed in the statute.
Even the Constitution of the United States has been from the outset subjected by this court to this rule of construction. Cooley, Const. Lim. 75.
The definition at common law, of a contract "in restraint of trade," is settled by a long course of decisions, and is no longer open to discussion. It is a contract which restricts trade beyond what is reasonable and just under the circumstances of the particular case.
Foule v. Parke, 131 U. S. 88, 33 L. ed. 67; Oregon Steam Nav. Co. v. Winsor, 20 Wall. 64, 22 L. ed. 315; Mogul S. S. Co. v. McGregor, L. R. 21 Q. B. Div. 553, L. R. 23 Q. B. Div. 598  A. C. 25.
Even if it should be held that the AntiTrust Act forbids any contract in restraint of trade, however just, reasonable, and neeessary, the agreement here in question would not fall within the prohibition, because it does not tend to restrain trade or commerce, but rather to promote them.
A restraint upon excessive and unwholesome competition is not a restraint upon trade, but is necessary to its maintenance.
There is no ground whatever for asserting that the agreement infringes the provisions of the Anti-Trust Act against monopolies.
The definition of the word "monopoly," both in its legal and its ordinary signification, is the concentration of a business or employment in the hands of one, or, at most, of a few. That is the plain meaning of it as employed in the act. No feature of the agreement, in any view that can be taken of it, approaches this definition.
So far from tending toward the concentration of railroad transportation in fewer hands, it does not in any possible event withdraw it from a single road now in existence, nor throw the least obstacle in the way of the construction of others.
Its effect will be, if it is successful, not to diminish, but to increase transportation faeilities by preserving roads that otherwise might be driven from the field.
If the construction of the Anti-Trust Act, which was adopted by the court in the TransMissouri case is to stand, the act, so far as thus interpreted and applied, is in violation of the provisions of the Constitution of the United States, since it deprives the defendants in error of their liberty and their property without due process of law, and deprives them likewise of the equal protection of the laws.
This point was not made on the argument of the Trans-Missouri case because no such construction of the act was anticipated by counsel. Nor was it considered by the court, since it is an unvarying rule that no objec tion to the constitutionality of a law will be considered unless raised by the party affected.
These are elementary propositions in con stitutional law, and have often been asserted by this court.
The question thus presented is not whether | the act in general, or in its application to the many other cases to which it is obviously addressed, is unconstitutional, but whether the Pumpelly v. Green Bay & M. Canal Co. 13 agreement here under consideration is one Wall. 166, 20 L. ed. 557; Stone v. Farmers' that may be prohibited by legislation with-Loan & T. Co. 116 U. S. 307, 29 L. ed. 636; out infringing the freedom of contract and Chicago, M. & St. P. R. Co. v. Minnesota, 134 the right of property, which the Constitution U. S. 459, 33 L. ed. 982, 3 Inters. Com. Rep. declares and protects. 209; Reagan v. Farmers' Loan & T. Co. 154 U. S. 397, 38 L. ed. 1023, 4 Inters. Com. Rep. 360.
The record before the court conclusively establishes the fact that the agreement here in question was designed and intended and is necessary, as determined by long practical experience, to the maintenance of just and reasonable rates, and to the proper discharge of the business of the companies.
And in the Trans-Missouri Case, where the contract under consideration was similar to the one here in controversy, though far more open to the objections here urged, it was conceded, both in the majority and miLority opinions of the court, that its substantive character and purpose were such as the answers in the case aver and set forth.
It was for this reason believed by the minority of the judges that it could not have been the intention of Congress that such a contract should be made a penal offense. But it was held by the majority that the language of the act admitted of no other construction, though it was conceded in the opinion of the court that the arguments against that conclusion "bear with much force upon the policy of an act which should prevent a general agreement of rates among competing railroad companies, to the extent simply of maintaining those rates which were reasonable and fair."
And in the opinion of the minority of the court, by Mr. Justice White, he remarks, after stating the general features of the contract: "I content myself with giving this mere outline of the contract, and do not stop to demonstrate that its provisions are reasonable, since the opinion of the court rests upon that hypothesis."
The accuracy of the statement we have made above, of the legal effect upon this case of the Anti-Trust Act as so construed, is thus both established and conceded.
And the question distinctly arises whether legislation having such result is within the power of Congress.
The only authority of Congress over the agreement in controversy is such as may be deduced from its power "to regulate commerce," and is limited by the reasonable necessities of such regulation.
As contracts of this sort are not in themselves wrongful, have never before been held or deemed unlawful, and have been customary in all kinds of business in which they have been found useful, the right to prohibit them, if it exists at all, must arise under what is called the police power.
But the general power of police regulation is not vested in Congress. It is reserved to the states.
United States v. E. C. Knight Co. 156 U. S. 11, 39 L. ed. 329.
No exercise of the police power, whether the authority on which it rests is general or special, can be allowed to infringe rights secured by the Constitution of the United States.
No public good can be attained and no public necessity relieved by unconstitutional means.
New Orleans Gas Co. v. Louisiana Light & H. P. & Mfg. Co. 115 U. S. 661, 29 L. ed. 521; Walling v. Michigan, 116 U. S. 446, 29 L. ed. 691; Mugler v. Kansas, 123 U. S. 661, 31 L. ed. 210.
There is no case known to English or American law, in which any man can maintain a claim that the use of property should be furnished or services performed for him at less than a reasonable compensation, unless under a specific contract for a less sum.
Railway companies, though creations of the legislatures, from which they derive their powers and to whose enactments they are subject, are no exception to this rule. Though the legislatures may regulate and to a reasonable extent prescribe their rates, it The operation of the act as thus inter- has been repeatedly held by this court, and preted does in fact, by prohibiting the con- is now fully settled, that they cannot be retract here in question, deprive the defend-duced below a just and reasonable amount, ants, whether rightfully or not, of both lib- fixed in view of all the circumstances of the erty and property to a very grave and per- case. haps ruinous extent.
A just freedom of contract in lawful business is one of the most important rights reserved to the citizen under the general term of "liberty," for all human industry depends upon such freedom for its fair reward.
The use of property is an essential part of it, and when abridged the property itself is taken. Its use is abridged when the owner is precluded from any contract that is necessary or desirable in order to secure to him a just compensation for its employment.
And when any class in the community is so precluded it is to that extent "deprived of the equal protection of the laws." 171 U. S. U. S., Book 43.
Reagan v. Farmers' Loan & T. Co. 154 U. S. 362, 38 L. ed. 1014, 4 Inters. Com. Rep. 560; Chicago, M. & St. P. R. Co. v. Minnesota, 134 U. S. 459, 33 L. ed. 982, 3 Inters. Com. Rep. 209; Stone v. Farmers' Loan & 7. Co. 116 U. S. 307, 29 L. ed. 636.
The true test of the constitutionality of a law which abridges the freedom of contract must necessarily be found in the reasonableness and justice of the contract abridged.
The legislature cannot create restrictions upon the freedom of contract which the established rules of law and dictates of justice do not justify, and which result in tak
ing one man's property for the unjust benefit of another.
The legislature cannot prohibit all contracts it may desire or attempt to prohibit. Gibbs v. Consolidated Gas Co. 130 U. S. 409, 32 L. ed. 984; Austin v. Murray, 16 Pick. 121; Waters v. Wolf, 162 Pa. 153; State v. Goodwill, 33 W. Va. 179, 6 L. R. A. 621; Com. v. Perry, 155 Mass. 117, 14 L. R. A. 325; Allgeyer v. Louisiana, 165 U. S. 578, 41 L. ed. 832; Shaver v. Pennsylvania Co. 71 Fed. Rep. 931; Re Jacobs, 98 N. Y. 98, 50 Am. Rep. 636; People v. Marx, 99 N. Y. 377, 52 Am. Rep. 34; People v. Gillson, 109 N. Y. 389; Godcharles v. Wigeman, 113 Pa. 431; John Spry Lumber Co. v. Sault Sav. Bank Loan & T. Co. 77 Mich. 199, 6 L. R. A. 204; Kuhn v. Detroit, 70 Mich. 534; Millett v. People, 117 Ill. 294, 57 Am. Rep. 869; State v. Julow, 129 Mo. 163, 29 L. R. A. 257; Low v. Rees Printing Co. 41 Neb. 127, 24 L. R. A. 702; Ex parte Kuback, 85 Cal. 274, 9 L. R. A. 482; Loop v. St. Louis, I. M. & S. R. Co. 58 Ark. 407, 23 L. R. A. 264; Yick Wo v. Hopkins, 118 U. S. 356, 30 L. ed. 220.
These cases fully support the proposition that just, reasonable, and lawful contracts in relation to property or business cannot be made unlawful by legislative enactments.
The police power when invoked to prohibit any act which is otherwise lawful, while it may fall short of the demands of public necessity by reason of constitutional limitations upon its exercise, can never exceed that necessity.
Chy Lung v. Freeman, 92 U. S. 280, 23 L. ed. 552; People v. Jackson & M. Pl. Road Co. 9 Mich. 285.
The public is not entitled to the alleged benefit which is claimed to be the result of the prohibition of this agreement.
The alleged public interest which is sought to be made the basis of this extravagant measure is not the interest of the public, but of one class, which can only be secured at the expense and unjust loss of another. Interstate Commerce Commission, 7th Ann. Rep. 32.
Commission, 263; Judge Cooley in Railway
In recapitulation of the points above pre-
1. That the act deprives the defendant of both liberty and property by forbidding a contract just and reasonable in itself, essential to the use of their property and the prosecution of their business, and never before held or claimed to be unlawful or wrong, and by which they only agree to do what they have a right to do.
That no such contract can be prohibited by law without a violation of the constitutional provision, whatever advantage to the public in keeping down rates of transportation may be expected to result from it.
And that in attempting such a prohibition, the case contemplated by the Constitution is distinctly presented, in which the legislature deems that a public benefit is to be effected by depriving the citizen of his liberty or property without due process of law.
2. That even if such a deprivation could be justified in any case, the public good in this case does not in any sense require it, because
(a) Those intended to be benefited are not
(b) Even if such a class is held to con-
(c) The legislation in question is not necessary, even if it is admissible. The complete suppression of all the restriction upon Railroad companies have, for a long time competition to which the public has a right past, been entirely unable, in consequence of to object is already effectually provided for the number of roads and the excessive com-y full and careful congressional legislation, in which no defect or insufficiency can petition, to maintain rates that are fairly
Nor is it true that even the shippers themgelves are interested, in the long run, in obtaining the carriage of their goods at rates unreasonably low.
But such agreements between competing railway companies are in fact necessary as has been demonstrated by long and disastrous experience.
he pointed out; so that the further suppres
Re Southern R. & S. S. Asso. 1 Inters. (d) That if all restrictions upon compe Com. Rep. 288; Report of Interstate Com-tition were prohibited, the result, instead of merce Commission, 1 Inters. Com. Rep. 653- a public advantage, would be a public calam671; Re Chicago, St. P. & K. C. R. Co. 2 ity, and would injure rather than benefit the Inters. Com. Rep. 148; Second Annual Re- very class in whose behalf it is contended for. port of Interstate Commerce Commission, 2 Inters. Com. Rep. 249, 256; Third Annual Report of Interstate Commerce Commission, 23, 25, 41; Fourth Annual Report of Interstate Commerce Commission, 4, 19, 21, 33; Fifth Annual Report of Interstate Commerce
3. That if it were admitted that further legislation against restriction against competition was both constitutional and necessary, the provisions of this act in forbidding all such restrictions are not justly adapted to the only end that is admissible on the
score of the public good, the maintenance of just and reasonable rates, but must result in an infringement of the liberty and property of the defendants, to a degree far beyond what is necessary to that end, and in no way conducive to it.
Whatever the merits of the agreement in question may be, no case for an injunction is 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 else injustice to those interested in the roads, including the people along their lines, as well as through shippers.
To have changed any of them would have been against 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:
and charges, and the rules applicable there to, now in force and authorized by the companies parties hereto upon the traffic covered by this agreement (and filed with the Interstate Commerce Commission as to such of said traffic as is interstate), are hereby reaffirmed by the 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."
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 nuade, 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 trans- I take it to be plain that if these thirtyportation associations; (3) to establish one defendants had united in an engagement and maintain reasonable and just rates, to truly and faithfully adhere to and carry fares, rules, and regulations on state and in- out in their respective conduct all the reterstate traffic; (4) to prevent unjust dis- quirements of the commerce law, and had crimination, and to secure the reduction and agreed to the imposition of penalties for inconcentration of agencies; (5) and the intro-fraction, it would be manifest that they had duction 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 re spect 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,
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 mainthe powers and duties of the managers is tains that the language used in describing 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
section, it is sufficient to say that the very next section of the same article declares
"That the powers conferred upon the managers shall be so construed and exercised as not to permit violation of the Interstate Commerce Act, or of any other law applicable to the premises, or any provision of the charters or the law applicable to any of the companies parties hereto; and the managers shall co-operate with the Interstate Commerce Commission to secure stability and uniformity in the rates, fares, charges, and rules established hereunder." Here is, in words as clear and specific as the English language is capable of, à distinct jurisdictional limitation upon the powers of the managers as described in the preceding section, and in terms the clause provides that the powers conferred upon the managers shall be so construed and exercised as not to permit the violation of the Interstate Commerce Act, or any other law, and so forth; and it commands the managers to co-operate to these ends with the Interstate Commerce Commission.
When the managers, then, come to act under these powers, how do they start?
They start with rates established, not by the agreement, but before it was made, and confirmed by it, which were confessedly in conformity with and in promotion of the Commerce Act, and which were absolutely just and reasonable. The managers are to have authority to recommend such changes in those rates and fares as, by the very words of the 2d section, may be reasonable and just and necessary for governing the traffic and protecting the interests of the parties. Reasonableness and justice is the first and fundamental condition of their starting to act at all; and it is declared that they shall not act otherwise than in conformity with the requirements I have already mentioned, contained in the Commerce Act.
Can this be an authority to restrain trade, under any definition of the word "restraint?" The only restraint is a restraint against violation of law by the managers in agreeing upon unreasonable and unjust rates against the requirements of the Commerce Act. If we assume that the restraint of trade mentioned in the Trust Act may be a restraint of innocent and just proceeding, can anyone maintain that it makes illegal an agreement, not to violate law, but to obey it?
It was obvious when this agreement was made, that rates then existing and being in all particulars reasonable and equal might in the course of changes in production, trade, and other conditions over which the railways could have no control, become unjust and unreasonable and inapplicable to the new conditions, and that in such a case both public and private interests would require that readjustments should be made in order to bring the rates into conformity with what reason, justice, and law should require under such conditions. It was to provide for this that §§ 2 and 3 of the 7th article were inserted. They were inserted in such clear language that it would be impossible for the managers to agree upon any rates in lieu of the just one then existing, that were not, in
the same sense and to the same extent, just, reasonable, and for the public interest, as those then existing. The managers must act in that way and to that end, or else they were forbidden by the very terms of the agreement to act at all.
If the managers, contrary to their authority, should have agreed upon a new rate which any one of the independent roads thought to be wrong in itself as being unreasonable and not in conformity with the re quirements of the article and of law, that company or any number of companies affected could lawfully and justly (as would be its bounden duty) refuse to conform to the rate of the managers. But, it is asked, would not this road thus refusing be subjected to fines and forfeitures provided in another part of the agreement, and would not it be turned out of the association? answer emphatically, no. If any such thing were attempted under the circumstances named, the company could defend itself in a court of justice against any such wrongful exaction, and could compel the managers and its associate roads to obey the contract, and to give it its just equality of treatment that it was before entitled to. The Commerce Act itself requires in terms the same reasonable and just conduct by railways towards each other as it does in their treatment of their customers and the public. I most earnestly maintain, therefore, that the whole and every part of article 7 is perfectly valid under any possible construction of the language of the Trust Act, as well as in perfect conformity with and in aid of the Commerce Act.
I may as well here compare the provisions of article 7, which contains the great leading feature of the whole agreement, with the agreement in the Trans-Missouri case. The difference is broad and fundamental. In this case, as I have shown, the rates agreed to be adhered to in § 1 of article 7 had already been independently established, were in fact reasonable and just, were on file and inferentially approved by the Interstate Commerce Commission and they had been assailed by nobody, and the whole trade of the country affected was proceeding under them with advantage to the shippers, to the people along the lines of the roads, to the railways themselves, and to the general interest of the country. It was an engagement to stand by that state of things, and for the express purpose of continuing that happy state of things, exactly those that the law requires, that this engagement was made. Turn now to the TransMissouri agreement on the same part of the subject. That agreement did not propose or profess to stand by any then existing rates, it did not indicate that the rates then existing were just or reasonable, but it proposed to put into the hands of its managers the power to establish de novo reasonable rates, etc., and, in the very words of the agreement, for the purpose of mutual protection and nothing else.
The Trans-Missouri agreement imposed no restriction upon the discretion of its ratemaking board; it did not impose and evi