curity for money advanced by them to the different owners to enable them to feed and prepare the cattle for market, and that when the live stock so mortgaged are ready for shipment, they are sent to the defendants who have advanced the money and received the mortgages, and on the sale of the stock the amount of these advances and interest is deducted from the proceeds of the sale of the eattle by the commission merchants owning the mortgages; that ninety per cent of the members of the exchange make such advances, and that the market is largely sustained by means of the money thus advanced to the cattle raisers by the defendants, and that Kansas City is the only place for many miles about which constitutes an available market for the purchase and sale of live stock from the large territory located in the states and territories already named; that it is the custom of the owners of the cattle, many of them living in different states, and who consign their stock to the Kansas City stock yards for sale, to draw drafts on the commission merchants to whom the live stock is consigned, which the consignors attach to the bill of lading issued by the carrier, and the money on these drafts is advanced by the local banks throughout the western states [681]*and territories. These drafts are paid by the consignees and the proceeds remitted to the various owners through the banks.

Sections 2, 3, 4, 5, 6, and 7 relate to the amounts of such commissions, and it is alleged that in some instances the commissions are greater than had theretofore been paid.

Section 8 permits the members to handle the business of *nonresident commission firms [582] when the stock is consigned directly to or from such firm, at half the rates fixed by the rule, provided the nonresident commission firms are established at the markets named in the section.

It is alleged that the defendants, as members of the exchange, have adopted certain rules, among them being rules 9 and 16, which are particularly alleged to be in restraint of trade and commerce between the states, and intended to create a monopoly, in contravention of the laws of the United States in that behalf.

Rule 9 provides as follows:
"Section 1. Commissions charged by mem-
bers of this association for selling live
stock shall not be less than the following
named rates."

Section 10 prohibits the employment of any agent, solicitor, or employee except upon a stipulated salary not contingent upon the commissions earned, and it provides that not more than three solicitors shall be employed at one time by a commission firm or corporation, resident or nonresident of Kansas City.

The business thus conducted is alleged to be interstate commerce, and it is further alleged that if the person to whom the live stock is consigned at Kansas City is not a member of the exchange, he is not permitted It is alleged that the defendants in adoptto and cannot sell or dispose of the stock at ing these rules and in forming the exchange the Kansas City market, for the reason that and carrying out the same have violated and the defendants, and all the other commission are violating the statute of the United merchants, members of the exchange, refuse States, approved July 2, 1890, entitled "An to buy live stock or in any manner negotiate Act to Protect Trade and Commerce against or deal with or buy from a person or com- Unlawful Restraints and Monopolies," and mission merchant who is not a member of the it is charged that it was the purpose of the exchange, and thus the owner of live stock defendants, in organizing the exchange and shipped to the Kansas City market is com- in adopting the rules mentioned, to prevent pelled to reship the same to other markets, the shipment or consignment of any live and by reason of the unlawful combination stock to the Kansas City market unless it existing among the defendants and the other was shipped or consigned to the Kansas City members of the exchange the owner is pre- stock yards and to some one or other of the vented from delivering this stock at the Kan-defendants, members of the exchange, and to sas City stock yards, and the sale of stock is compel the shippers of live stock from other thereby hindered and delayed, entailing extra states and from the territories to pay to the expense and loss to the shipper, and placing defendants the commissions and charges an obstruction and embargo on the market- provided for in rule 9, and to prevent such ing of all live stock shipped from the states shippers *from placing their property on sale [583] and territories to the Kansas City market at the Kansas City market unless these comwhich is not consigned to the stock-yards missions were paid. company or to the defendants, or some of them, members of the stock exchange.

The answer of the defendants admitted their forming the exchange and becoming members thereof, and adopting, among others, the rules specially mentioned in complainant's bill. They denied that the exchange itself engaged in any business whatever, and alleged that it existed simply in order to prescribe rules and provide facilities for the transaction of business by the members thereof, and to govern them by such rules and regulations as have been evolved and sanctioned by the developments of commerce, and which are universally recognized to be just and fair to all concerned.

It was further set up in the answer that

Section 11 forbids any member of the exchange from sending or causing to be sent a prepaid telegram or telephone message quoting the markets or giving information as to the condition of the same, under the penalty of a fine as therein stated. The rule, however, permits prepaid messages to be sent to shippers quoting actual sales of their stock on the date made; also to parties desiring to make purchases on the market.

Rule 16 provides, in section 1, "that no member of the exchange shall transact business with any persons violating any of the rules or regulations of the exchange, or with an expelled or suspended member after notice of such violation, suspension, or expulsion shall have been issued by the secretary or board of directors of the exchange."

each member of the organization was in fact | such rules and regulations are in all respects left free to compete in every manner and by legal and binding. They deny all general all means recognized to be fair and just for and special allegations of illegal agreements, his share of the business which comes to the combinations, or conspiracies to violate any point at which the members of the organi- law of the United States or of the state of zation do business; that in adopting their Kansas. rules they followed in all substantial respects the provisions which had been made upon the same subject respectively by the exchanges theretofore established at Chicago and East St. Louis, Illinois, and which have been since established at St. Louis, Omaha, Indianapolis, Buffalo, Sioux City, and Fort Worth. That the exchange at no time refused to admit as a member any reputable person who was willing to comply with the conditions of membership and to abide by the rules of the organization.

Various allegations in the bill as to the effect of the organization in precluding any sales or purchases of cattle other than by its members are denied.

The defendants read counter-affidavits for the purpose of sustaining their answer, The defendants also deny that the exercise which were replied to by the complainants of their occupation as commission merchants, filing affidavits in rebuttal, and upon these doing business as members of the exchange, affidavits and the pleadings above described constitutes or amounts to interstate com- an application for an injunction was made merce within the meaning of the Constitu- to the circuit court of the United States for tion or laws of the United States. They al- the district of Kansas, first division. That lege that they have no part in or control over court, after argument, granted an injunction the disposition of the live stock sold by them restraining the defendants from combining to others, nor of live stock purchased by by contract, express or implied, so as by their them as commission merchants acting for acts, conduct, or words to interfere with, others. They allege that the stock-yards hinder, or impede others in shipping, trading, company permits any person whatsoever to selling, or buying live stock that is re[584]transact business at its yards who will pay ceived from the states and territories at the the established charges of that company for stock yards in Kansas City, Missouri, and its services, and that in point of fact a very Kansas City, Kansas; also enjoining them large part of the business done at said yards from acting under the rules of the exchange is transacted by persons who are not mem- known as rules 9 and 16, and from attemptbers of the exchange and without the interpo- ing to impose any fines or penalties upon sition of such members. It is also alleged in members for trading or offering to trade with their answer that they are under no obliga- any person respecting the purchase and sale tions to extend the privileges of the exchange of any live stock; and also from discriminatto a person who is not a member thereof, who ing in favor of any member of the exchange has violated its rules and been suspended because of such membership, and especially from membership, and who has voluntarily from discriminating against any person tradwithdrawn therefrom and announced his pur- ing at the stock yards, and from refusing, by pose to carry on his business as a competitor united or concerted action, or by word, perof the members of such exchange to the de-suasion, threat, or by other means, to deal or struction of said organization and its rules trade with persons with respect to such live and to the injury of his competitors. stock who are not members of the association, because they are not members of such association, or in any manner from interfering with the right and freedom of all and any persons trading or desiring to trade in such live stock at the stock yards, the same as if the exchange did not exist. The defendants were also enjoined from agreeing or attempting to limit the right of any person in business at the Kansas City stock yards to employ labor or assistance in soliciting shipments of live stock from other states or territories, and from enforcing any agreement not to send prepaid telegrams from the stock yards to any other state or territory.

It is also set up that defendants cannot be compelled to deal with a nonmember of their organization, or a person violating its rules, or with one who has been suspended for such violation, or who has withdrawn therefrom, or who has announced his intention to destroy said organization and to compete with the members thereof, and the defendants allege that they cannot be compelled to deal with any person whatsoever, and that they had a right to establish said exchange, and now have the right to maintain the same, and to require the observance of its rules and regulations on the part of their associates so long as they desire to retain the privileges of membership in the body. They allege that their rules are in harmony with the rules and regulations of commercial exchanges which have existed for more than a hundred years, and which are now to be found in every state almost in the United States and throughout the world, and that

The complainants, in addition to their bill, used several affidavits, the tendency of which was to show that by virtue of the adoption of rules 9 and 16, the members of the exchange refused to deal with one who had violated a rule and had been suspended by reason thereof, and that by reason of this refusal to do business, the member thus suspended was substantially incapacitated from (585) carrying on his business as a commission merchant, and that by this combination defendants, in forming such rule and in adhering to it, have greatly injured the business of such member.

The district judge delivered an opinion upon granting the *injunction, which will be[586] found reported in 82 Fed. Rep. 529. From the order granting it an appeal was taken by the defendants to the United States circuit court of appeals for the eighth circuit, which court certified to this court certain questions

which, if it affect interstate commerce at
all, does so only in an indirect and incidental
manner ?

As set forth in the record, the main facts
are that the defendants have entered into a
voluntary association for the purpose of
thereby the better conducting their business,
and that after they entered into such asso-
ciation they still continued their individ-
ual business in full competition with each
other, and that the association itself, as an
association, does no business whatever, but
is simply a means by and through which the
individual members who have become thus
associated are the better enabled to transact
their business; to maintain and uphold a
Un-proper way of doing it; and to create the
means for preserving business integrity in
the transaction of the business itself. The [588]
business of defendants is primarily and sub-
stantially the buying and selling, in their
character as commission merchants, at the
stock yards in Kansas City, live stock which
has been consigned to some of them for the
purpose of sale, and the rendering of an ac-
count of the proceeds arising therefrom.
The sale or purchase of live stock as commis-
sion merchants at Kansas City is the busi-
ness done, and its character is not altered
because the larger proportion of the pur-
chases and sales may be of live stock sent in-
to the state from other states or from the
territories. Where the stock came from or
where it may ultimately go after a sale or
purchase, procured through the services of
one of the defendants at the Kansas City
stock yards, is not the substantial factor in
the case. The character of the business of
defendants must, in this case, be determined
by the facts occurring at that city.

[587] *That part of the bill which alleges that no
one is permitted to do business at the cat-
tle market at Kansas City unless he is a
member of this exchange, does not mean that
there is any regulation at the stock yards
by which one who is not a member of the ex-
change is prevented from doing business, al-
though ready to pay the established charges
of the stock-yards company for its services;
but it simply means that by reason of the
members of the exchange refusing to do busi-
ness with those who are not members the
nonmember cannot obtain the facilities of a
market for his cattle such as the members of
the exchange enjoy. It is unnecessary at
present to discuss the question whether there
is any illegality in a combination of business
men who are members of an exchange not to
do business with those who are not members
thereof, even if the business done were in re-
gard to interstate commerce. The first in-straint of interstate trade or commerce.
quiry to be made is as to the character of the
business in which defendants are engaged,
and if it be not interstate commerce, the va-

If an owner of cattle in Nebraska accom-
panied them to Kansas City and there per-
sonally employed one of these defendants to
sell the catue at the stock yards for him on
commission, could it be properly said that
such defendant in conducting the sale for his
principal was engaged in interstate com-
merce? Or that an agreement between him-
self and others not to render such services
for less than a certain sum was a contract in
restraint of interstate trade or commerce?
We think not. On the contrary, we regard
the services as collateral to such commerce
and in the nature of a local aid or facility
provided for the cattle owner towards the
accomplishment of his purpose to sell them;
and an agreement among those who render
the services relating to the terms upon which
they will render them is not a contract in re-

lidity of this agreement not to transact their
business with nonmembers does not come be-
fore us for decision.

We come, therefore, to the inquiry as to
the nature of the business or occupation that
the defendants are engaged in. Is it inter-
state commerce in the sense of that word as
it has been used and understood in the deci-
sions of this court? Or is it a business
which is an aid or facility to commerce, and

under the provisions of section 6 of the act of
March 3, 1891, and thereupon a writ of cer-
tiorari was issued from this court, and the
whole case brought here for decision.

Messrs. L. C. Krauthoff, Gustavus A. Koerner, and John 8. Miller, for appellants. Messrs. Samuel W. Moore, Special Assistant to the Attorney General, and John K. Richards, Solicitor General, for appellees. [586] *Mr. Justice Peckham, after stating the facts, delivered the opinion of the court:

The relief sought in this case is based ex clusively on the act of Congress approved July 2, 1890, chap. 647, entitled "An Act to Protect Trade and Commerce against lawful Restraints and Monopolies," commonly spoken of as the anti-trust act. 26 Stat.

at L. 209.

The act has reference only to that trade or commerce which exists, or may exist, among the several states or with foreign nations, and has no application whatever to any other trade or commerce.

The question meeting us at the threshold, therefore, in this case is, What is the nature of the business of the defendants, and are the by-laws, or any subdivision of them above referred to, in their direct effect in restraint of trade or commerce among the several states or with foreign nations; or does the case made by the bill and answer show that any one of the above defendants has monopolized, or attempted to monopolize, or combined or conspired with other persons to monopolize, any part of the trade or commerce among the several states or with foreign nations?

Is the true character of the transaction

altered when the owner, instead of coming
from Nebraska with his cattle, sends them
by a common carrier consigned to one of the
defendants at Kansas City with directions
to sell the cattle and render him an account
of the proceeds? The services rendered are
the same in both instances, only in one case
they are rendered under a verbal contract
made at Kansas City personally, while in [589]
the other they are rendered under written
instructions from the owner given in another

state. This difference in the manner of mak- | of the various things done by defendants for
ing the contract for the services cannot alter the cattle owner in order to secure it. The
the nature of the services themselves. competition among the defendants and others
If the person, under the circumstances who may be engaged in it, to obtain the busi-
stated, who makes a sale of the cattle for the ness, results in their sending outside the
owner by virtue of a personal employment city, to cattle owners, to urge them by dis-
at Kansas City, is not engaged in interstate tinct and various inducements to send their
commerce when he makes such sale, we re- cattle to one of the defendants to sell for
gard it as clear that he is not so engaged, al- them. In this view it is immaterial over
though he has been employed by means of a how many states the defendants may them-
written communication from the owner of selves or by their agents travel in order to
the cattle in another state.
thereby secure the business. They do not
purchase the cattle themselves; they do not
transport them. They receive them at Kan-
sas City, and the complaint made is in re-
gard to the agreements for charges for the
services at that point in selling the cattle
for the owner. Thus everything at last cen-
ters at the market at Kansas City, and the
charges are for services there, and there
only, performed.

The by-laws of the exchange relate to the business of its members who are commission merchants at Kansas City, and some of these by-laws, it is claimed by the government, are in violation of the act of Congress because they are in restraint of that business which is in truth interstate commerce. That one of the by-laws which relates to the commissions to be charged for selling the various kinds of stock, is particularly cited as a violation of the act. In connection with that by-law it will be well to examine with some detail the nature of defendants' busi

ness.

The selling of an article at its destination, which has been sent from another state, while it may be regarded as an interstate sale and one which the importer was entitled to make, yet the services of the individIt is urged that they are active promoters ual employed at the place where the article of the business of selling cattle upon con- is sold are not so connected with the subject signment from their owners in other states, sold as to make them a portion of interstate and that in order to secure the business the commerce, and a combination in regard to [591] defendants send their agents into other the amount to be charged for such service states to the owners of the cattle to solicit is not, therefore, a combination in restraint the business from them; that the defendants of that trade or commerce. Granting that also lend money to the cattle owners and the cattle themselves, because coming from take back mortgages upon the cattle as se- another state, are articles of interstate comcurity for the loan; that they make advances merce, yet it does not therefore follow that of a portion of the purchase price of the cat-before their sale all persons performing servtle to be sold, by means of the payment of ices in any way connected with them are drafts drawn upon them by the shippers of themselves engaged in that commerce, or the cattle in another state at the time of the that their agreements among each other shipment. All these things, it is said, con- relative to the compensation to be charged stitute intercourse and traffic between the for their services are void as agreements citizens of different states, and hence the by-made in restraint of interstate trade. The law in question operates upon and affects commission agent in selling the cattle commerce between the states. for their owner simply aids him in finding a market; but the facilities

The facts stated do not, in our judgment,
in any degree alter the nature of the services thus afforded the owner by the agent are
performed by the defendants, nor do they not of such a nature as to thereby make that
render that particular by-law void as in re-agent an individual engaged in interstate
[590]straint of interstate trade or commerce be- commerce, nor is his agreement with others
cause it provides for a minimum amount of engaged in the same business, as to the terms
commissions for the sale of the cattle.
upon which they would provide these facili-
ties, rendered void as a contract in restraint
of that commerce. Even all agreements
among buyers of cattle from other states are
not necessarily a violation of the act, al-
though such agreements may undoubtedly
affect that commerce.

Objections are taken to other parts of the
by-laws which we will notice hereafter.
Notwithstanding these various matters
undertaken by defendants, we must keep our
attention upon the real business transacted
by them, and in regard to which the section
of the by-law complained of is made. The The charges of the agent on account of
section amounts to an agreement, and it re- his services are nothing more than charges
lates to charges made for services per- for aids or facilities furnished the owner
formed in selling cattle upon commission at whereby his object may be the more easily
Kansas City. The charges relate to that and readily accomplished. Charges for the
business alone. In order to obtain it the transportation of cattle between different
defendants advance money to the cattle own-states are charges for doing something
er; they pay his drafts, and they aid him which is one of the forms of and which it
to keep his cattle and make them fit for the self constitutes interstate trade or com-
market. All this is done as a means towards merce, while charges or commissions based
an end; as an inducement to the cattle owner upon services performed for the owner in ef-
to give one of the defendants the business of fecting the sale of the cattle are not direct-
selling the cattle for him when the owner ly connected with, as forming part of, inter-
shall finally determine to sell them. That state commerce, although the cattle may
business is not altered in character because have come from another state. Charges for

services of this nature do not immediately | them in pens or other places for their safe touch or act upon, nor do they directly af- reception. Would an agreement among the fect, the subject of the transportation. In- landowners along the line not to lease their directly and as an incident, they may en- lands for less than a certain sum be a conhance the cost to the owner of the cattle in tract within the statute as being in restraint finding a market, or they may add to the of interstate trade or commerce? Would it price paid by a purchaser, but they are not be such a contract even if the lands, or some charges which are directly laid upon the ar- of them, were necessary for use in furnishticle in the course of transportation, and ing the cattle with suitable accommodations? which are charges upon the commerce itself; Would an agreement between the dealers in MD]they are charges for the facilities given or corn at some station along the line of the provided the owner in the course of the road not to sell it below a certain price be movement from the home situs of the ar- covered by the act, because the cattle must ticle to the place and point where it is sold. have corn for food? Or would an agreement The contract condemned by the statute among the men not to perform the service is one whose direct and immediate effect is of watering the cattle for less than a cera restraint upon that kind of trade or com- tain compensation come within the restricmerce which is interstate. Charges for such tion of the statute? Suppose the railroad facilities as we have already mentioned are company which transports the cattle itself not a restraint upon that trade, although furnishes the facilities, and that its charges the total cost of marketing a subject thereof for transportation are enhanced because of may be thereby increased. Charges for fa- an agreement among the landowners along cilities furnished have been held not a regu- the line not to lease their lands to the comlation of commerce, even when made for pany for such purposes for less than a services rendered or as compensation for ben-named sum, could it be successfully conefits conferred. Sands v. Manistee River tended that the agreement of the landowners Improvement Company, 123 U. S. 288 [31: among themselves would be a violation of the 149]; Monongahela Navigation Company v. act as being in restraint of interstate trade United States, 148 U. S. 312, 329, 330 [37: or commerce? 463,469]; Kentucky & I. Bridge Company builders of cattle cars not to build them unWould an agreement between ▼. Louisville & N. Railroad Company, 37 Fed. der a certain price be void because the effect Rep. 567 [2 L. R. A. 289, 2 Inters. Com. might be to increase the price of transportaRep. 351]. tion of cattle between the states? Would ets not to sell them for less than a certain an agreement among dealers in horse blankprice be open to the charge of a violation of the act because horse blankets are necessary to put on horses to be sent long journeys by rail, and by reason of the agreement the ex

To treat as condemned by the act all agreements under which, as a result, the cost of conducting an interstate commercial business may be increased would enlarge the application of the act far beyond the fair meaning of the language used. There

must be some direct and immediate effect

V.

upon interstate commerce in order to come to another for a market might be thereby pense of sending the horses from one state within the act. The state may levy a tax enhanced? Would an agreement among catupon the earnings of a commission merchant tle drivers not to drive the cattle after their which were realized out of the sales of prop-arrival at the railroad depot at their place erty belonging to nonresidents, and such a of destination, to the cattle yards where sold, tax is not one upon interstate commerce be- for less than a minimum sum, come within cause it affects it only incidentally and rethe statute? motely, although certainly. Ficklen Would an agreement among Bhelby County Taxing Dist. 145 U. S. 1 themselves by locomotive engineers, firemen, [594] [36:601, 4 Inters. Com. Rep. 79]. Many or trainmen engaged in the service of an inagreements suggest themselves which relate terstate railroad not to work for less than a only to facilities furnished commerce, or else certain named compensation be illegal betouch it only in an indirect way, while pos- cause the cost of transporting interstate sibly enhancing the cost of transacting the freight would be thereby enhanced? Agreebusiness, and which at the same time we nents similar to these might be indefinitely would not think of as agreements in re- suggested. straint of interstate trade or commerce. They are agreements which in their effect operate in furtherance and in aid of commerce by providing for it facilities, conveniences, privileges, or services, but which do not directly relate to charges for its transportacion, nor to any other form of interstate commerce. To hold all such agreements void would in our judgment improperly extend the act to matters which are not of an interstate commercial nature. [698] *It is not difficult to imagine agreements of the character above indicated. For example, cattle, when transported long distances by rail, require rest, food, and water. To give them these accommodations it is necessary to take them from the car and put

In our opinion all these queries should be answered in the negative. The indirect effect of the agreements mentioned might be to enhance the cost of marketing the cattle, but the agreements themselves would not necessarily for that reason be in restraint of interstate trade or commerce. As their effect is either indirect or else they relate to charges for the use of facilities furnished, the agreements instanced would be valid provided the charges agreed upon were reasonable. The effect upon the commerce spoken of must be direct and proximate. New York, Lake Erie & W. Railroad Company v. Pennsylvania, 158 U. S. 431, at 439 [39: 1043, 1045].

An agreement may in a variety of ways