« ForrigeFortsett »
other states, and the members of the stock | for decision. Reversed, and case remitted to
See same case below, 82 Fed. Rep. 529.
Statement by Mr. Justice Peckham: 2. A by-law of the Kansas City Live-Stock Ex.
*This suit was commenced by the United (670) change, which regulates the commissions to States attorney for the district of Kansas, be charged by members of that association acting under the direction and by the aufor selling live stock is not in restraint of in. thority of the Attorney General of the Unitterstate commerce, or a violation of the acted States, against Henry Hopkins and the of July 2, 1890, to protect commerce from un other defendants, residents of the state of lawful restraints.
Kansas and members of a voluntary unincor. 8. A commission agent who sells cattle at porated association known and designated as
their place of destination, which are sent the Kansas City Live Stock Exchange. The
the statute, the direct effect of an agreement was alleged in the bill that the members of of combination must be in restraint of trade this association, known as the Kansas City or commerce among the several states or with Live Stock Exchange, have adopted articles of foreign nations.
association, rules, and by-laws which they have 8. Restrictions on sending prepaid telegrams agreed to be bound by; that the business of
or telephone messages, made by a by-law of a the exchange is carried on and conducted by
a board of directors at the Kansas City stock of the members, and do not affect the business yards, which are situated partly in Kansas of the telegraph company, are not void as City in the state of Missouri and partly in regulations of interstate commerce.
Kansas City in the state of Kansas, the 6. The business of agents in soliciting con building owned by the stock-yards company
signments of cattle to commission merchants being located one half of it in the state of in another state for sale, is not interstate Missouri and the other half in the state of commerce ; and a by-law of a stock exchange Kansas, and half of the defendants have of. restricting the number of solicitors to three fices and transact business in these stock does not restrain that commerce, or violate yards and in that part of the building which the act of Congress.
is within the state of Kansas and the other 7. The fact that a state line runs through half in that part of the building which is in
stock yards, and that sales may be made of
done by the members of the exchange; that 8. A combination of commission merchants at substantially all the business transacted in
yards, by which they refuse to do busi- the matter of receiving, buying, selling and ness with those who are not members of their handling their live stock at Kansas City is association, even if it is illegal, is not subject carried on by the defendants herein and by to the act of Congress of July 2, 1890, to pro the other menbers of the exchange as comtect trade and commerce, since their business mission merchants, and that large numbers is not interstate commerce.
of the live stock, consisting *of cattle and (580)
hogs and sheep bought and sold and handled [No. 210.)
at the stock yards by the defendants and their
fellow members in the exchange, are shipped Argued February 28, March 1, 1898. De from the states of Nebraska, Colorado, Texas, cided October 24, 1898.
Missouri, Iowa, and Kansas and the terri.
tories of Oklahoma, Arizona, and New MexN A WRIT OF CERTIORARI to the Unit-ico; that when this stock is received at the the Eighth Circuit to bring up the whole bers of the exchange, to the various packing case in which that court had certified cer- houses situated at Kansas City, Missouri, tain questions. The suit was brought by the and Kansas City, Kansas, and it is also sold United States against Henry Hopkins et al., for shipment to the various other markets, members of the Kansas City Live Stock Ex- particularly Chicago, St. Louis, anu New change, to obtain the dissolution of the ex. York; that vast numbers of cattle, hogs, and change and perpetually enjoin the members other live stock are received annually at from entering into or from continuing in any the stock yards and handled by the members combination of a like character. The Circuit of the exchange. Court of the United States for the District The bill also alleges that large numbers of of Kansas, First Division, granted the in the live stock sold at the stock yards by the junction, and from the order granting it an defendants are encumbered by mortgages appeal was taken by the defendants to said thereon, executed by their owners in tiše vari. Circuit Court of Appeals, and upon a writ of ous states and territories, which mortgages certiorari the whole case was brought here' have been given to various defendants as se
curity for money advanced by them to the Sections 2, 3, 4, 5, 6, and 7 relate to the
local banks throughout the western states Rule 16 provides, in section 1, "tbat bo (681)*and territories. These drafts are paid by member of the exchange shall transací basi
the consignees and the proceeds remitted to ness with any persons violating any of the the various owners through the banks. rules or regulations of the exchange, or with
The business thus conducted is alleged to an expelled or suspended member after nobe interstate commerce, and it is further al. tice of such violation, suspension, or expul. leged that if the person to whom the live sion shall have been issued by the secretary stock is consigned at Kansas City is not a or board of directors of the exchanțe.” member of the exchange, he is not permitted It is alleged that the defendants in adopt. to 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 cum. 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. eompany or to the defendants, or some of The answer of the defendants admitted them, members of the stock exchange. their forming the exchange and becoming
It is alleged that the defendants, as mem members thereof, and adopting, anong bers of the exchange, have adopted certain others, the rules specially mentioned in com. rules, among them being rules 9 and 16, plainant's bill. They denied that the ex. which are particularly alleged to be in re- change itself engaged in any business whatstraint of trade and commerce between the ever, and alleged that it existed simply in states, and intended to create a monopoly, in order to prescribe rules and provide facilities contravention of the laws of the United for the transaction of business by the memStates in that Lehalf.
bers thereof, and to govern them by such Rule 9 provides as follows:
rules and regulations as have been evolved "Section 1. Commissions charged by mem- and sanctioned by the developments of combers of this association for selling live merce, and which are universally recognized stock shall not be less than the following to be just and fair to all concerned. named rates."
It was further set up in the answer that
each member of the organization was in fact such rules and regulations are in all respecta 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 re- The complainants, in addition to their bill, spects the provisions which had been made used several affidavits, the tendency of which upon the same subject respectively by the was to show that by virtue of the adoption exchanges theretofore established at Chicago of rules 9 and 16, the members of the ex: and East St. Louis, Illinois, and which have change refused to deal with one who had been since established at St. Louis, Omaha, violated a rule and had been suspended by Indianapolis, Buffalo, Sioux City, and Fort reason thereof, and that by reason of this Worth. That the exchange at no time re refusal to do business, the member thus sus. fused to admit as a member any reputable pended was *substantially incapacitated from (586) person who was willing to comply with the carrying on his business as a commission conditions of membership and to abide by merchant, and that by this combination dethe rules of the organization.
fendants, in forming such rule and in adher. Various allegations in the bill as to the ef. ing to it, have greatly injured the business fect of the organization precluding any of such member. sales or purchases of cattle other than by its The defendants read counter-affidavits for members are denied.
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 retransact 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 interpoing to impose any fines or penalties upon sition of such nembers. It is also alleged in members for trading or offering to trade with their answer thać 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 husiness 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 structiun 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 associaIt is also set up that defendants cannot be tion, because they are not members of such compelled to deal with a nonmember of their association, or in any manner from interferorganization, or a person violating its rules, ing with the right and freedom of all and or with one who has been suspended for such any persons trading or desiring to trade in violation, or who has withdrawn therefrom, such live stock at the stock yards, the same or who has announced his intention to de- as if the exchange did not exist. The defendstroy said organization and to compete with ants were also enjoined from agreeing or atthe members thereof, and the defendants al- tempting to limit the right of any person lege that they cannot be compelled to deal in business at the Kansas City stock yards with any person whatsoever, and that they to employ labor or assistance in soliciting had a right to establish said exchange, and shipments of live stock from other states or now have the right to maintain the same, territories, and from enforcing any agreeand to require the observance of its rules ment not to send prepaid telegrams from and regulations on the part of their associ. the stock yards to any other state or terri. ates so long as they desire to retain the privi- tory. leges of membership in the body. They allege The district judge delivered an opinion that their rules are in harmony with the upon granting the *injunction, which will be  rules and regulations of coinmercial ex- found reported in 82 Fed. Rep. 529. From changes which have existed for more than a the order granting it an appeal was taken by hundred years, and which are now to be the defendants to the United States circuit found in every state almost in the United court of appeals for the eighth circuit, which States and throughout the world, and that court certified to this court certain questions
under the provisions of section 6 of the act of which, if it affect interstate commerce at
As set forth in the record, the main facts
are that the defendants have entered into a Messrs. L. C. Krauthoff, Gustavis A. voluntary association for the purpose of Koerner, and John 8. Miller, for appellants. thereby the better conducting their business,
Messrs. Samnel W. Moore, Special As- and that after they entered into such assosistant to the Attorney General, and John K. ciation they still continued their individ. Richards, Solicitor General, for appellees. ual business in full competition with each
other, and that the association itself, as an (686) *Mr. Justice Peckham, after stating the association, does no business whatever, but facts, delivered the opinion of the court:
is simply a means by and through which the The relief sought in this case is based ex: individual members who have become thus clusively on the act of Congress approved associated are the better enabled to transact July 2, 1890, chap. 647, entitled "An Act to their business; to maintain and uphold a Protect Trade and Commerce against Un- proper way of doing it; and to create the lawful Restraints and Monopolies," common
means for preserving business integrity in ly spoken of as the anti-trust act. 26 Stat. the transaction *of the business itself. The(588) At L. 209.
business of defendants is primarily and subThe act has reference only to that trade stantially the buying and selling, in their or commerce which exists, or may exist, character as commission merchants, at the among the several states or with foreign na stock yards in Kansas City, live stock which tions, and has no application whatever to any has been consigned to some of them for the other trade or commerce.
purpose of sale, and the rendering of an acThe question meeting us at the threshold, count of the proceeds arising therefrom. therefore, in this case is, What is the nature The sale or purchase of live stock as commisof the business of the defendants, and are the sion merchants at Kansas City is the busi: by-laws, or any subdivision of them above ness done, and its character is not altered referred to, in their direct effect in restraint because the larger proportion of the pur. of trade or commerce among the several chases and sales may be of live stock sent instates or with foreign nations; or does the to the state from other states or from the case made by the bill and answer show that territories. Where the stock came from or any one of the above defendants has monop where it may ultimately go after a sale or olized, or attempted to monopolize, or com- purchase, procured through the services of bined or conspired with other persons to mo- one of the defendants at the Kansas City nopolize, any part of the trade or commerce stock yards, is not the substantial factor in among the several states or with foreign na. the case. The character of the business of tions?
defendants must, in this case, be determined (687) *That part of the bill which alleges that no by the facts occurring at that city.
one is permitted to do business at the cat. If an owner of cattle in Nebraska accomtle market at Kansas City unless he is a panied them to Kansas City and there per. member of this exchange, does not mean that sonally employed one of these defendants to there is any regulation at the stock yards sell the catue at the stock yards for him on by which one who is not a member of the ex. commission, could it be properly said that change is prevented from doing business, al- such defendant in conducting the sale for his though ready to pay the established charges principal was engaged in interstate comof the stock-yards company for its services; merce? Or that an agreement between himbut it simply means that by reason of the self and others not to render such services members of the exchange refusing to do busi. for less than a certain sum was a contract in ness with those who are not members the restraint of interstate trade or commerce ! nonmember cannot obtain the facilities of a We think not. On the contrary, we regard market for his cattle such as the members of the services as collateral to such commerce the exchange enjoy. It is unnecessary at and in the nature of a local aid or facility present to discuss the question whether there provided for the cattle owner towards the Is any illegality in a combination of business accomplishment of his purpose to sell them; men who are members of an exchange not to and an agreement among those who render do business with those who are not members the services relating to the terms upon which thereof, even if the business done were in re- they will render them is not a contract in regard to interstate commerce. The first in. stråint of interstate trade or commerce. quiry to be made is as to the character of the
Is the true character of the transaction business in which defendants are engaged, altered when the owner, instead of coming and if it he not interstate commerce, the va- from Nebraska with his cattle, sends them lidity of this agreement not to transact their business with nonmembers does not come be by a common carrier consigned to one of the
defendants' at Kansas City with directions fore us for decision.
We come, therefore, to the inquiry as to to sell the cattle and render him an account the nature of the business or occupauion that of the proceeds? The services rendered are the defendants are engaged in. Is it inter the same in both instances, only in one case state commerce in the sense of that word as they are rendered under a verbal contract it has been used and understood in the deci- made at Kansas *City personally, while in (589) sions of this court? Or is it a business the other they are rendered under written which is an aid or facility to commerce, and instructions from the owner given in another
state. This difference in the manner of mak. I 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 busistated, 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 disat 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 themwritten 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 The by-laws of the exchange relate to the purchase the cattle themselves; they do not business of its members who are commission transport them. They receive them at Kan. merchants at Kansas City, and some of these sas City, and the complaint made is in reby-laws, it is claimed by the government, are gard to the agreements for charges for the in violation of the act of Congress because services at that point in selling the cattle they are in restraint of that business which for the owner. Thus everything at last cen. is in truth interstate commerce.
ters at the market at Kansas City, and tho of the by-laws which relates to the commis charges are for services there, and thero sions to be charged for selling the various only, performed. kinds of stock, is particularly cited as a The selling of an article at its destination, violation of the act. In connection with which has been sent from another state, that by-law it will be well to examine with while it may be regarded as an interstate some detail the nature of defendants' busi. sale and one which the importer was enti. ness.
tled 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 seiling 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 serv. tle 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 The facts stated do not, in our judgment, finding market; but the facilities 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
Objections are taken to other parts of the ties, rendered void as a contract in restraint by-laws which we will notice hereafter. of that commerce. Even all agreements
Notwithstanding these various matters among buyers of cattle from other states are undertaken by defendants, we must keep our not necessarily a violation of the act, alattention upon the real business transacted though such agreements may undoubtedly by them, and in regard to which the section affect that commerce. 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 dralls, and they aid him which is one of the forms of and which itto keep his cattle and make them fit for the self constitutes interstate trade or 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 efto give one of the defendants the business of fecting the sale of the cattle are not directselling the cattle for him when the owner ly connected with, as forming part of, intershall 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