curity for money advanced by them to the Sections 2, 3, 4, 5, 6, and 7 relate to the
different owners to enable them to feed and amounts of such commissions, and it is al.
prepare the caitle for market, and that when leged that in some instances the commissions
the live stock so mortgaged are ready for are greater than had theretofore been paid.
shipment, they are sent to the defendants Section 8 permits the members to handle
who have advanced the money and received the business of *nonresident commission firms(582)
the mortgages, and on the sale of the stock when the stock is consigned directly to or
the amount of these advances and interest is from such firm, at half the rates fixed by the
deducted from the proceeds of the sale of the rule, provided the nonresident commission
eattle by the commission merchants owning firms are established at the markets named
the mortgages; that ninety per cent of the in the section.
members of the exchange make such ad. Section 10 prohibits the employment of
vances, and that the market is largely sus any agent, solicitor, or employee except upon
tained by means of the inoney thus advanced a stipulated salary not contingent upon the
to the cattle raisers by the defendants, and commissions earned, and it provides that not
that Kansas City is the only place for many more than three solicitors shall be employed
miles about which constitutes an available at one tinie by a commission firm or corpora.
market for the purchase and sale of live tion, resident or nonresident of Kansas City.
stock from the large territory located in the Section 11 forbids any member of the ex-
states and territories already named; that it change from sending or causing to be sent
is the custom of the owners of the cattle, a prepaid telegram or telephone message
many of them living in different states, and quoting the markets or giving information
who consign their stock to the Kansas City as to the condition of the same, under the
stock yards for sale, to draw drafts on the penalty of a fine as therein stated. The rule,
commission merchants to whom the live stock however, permits prepaid messages to be
is consigned, which the consignors attach to sent to shippers quoting actual sales of their
the bill of lading issued by the carrier, and stock on the date made; also to parties de
the money on these drafts is advanced by the siring to make purchases on the market.

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 an.1 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 (588)
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 de-
the 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 re1584]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 thac 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 associa

It 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 interfer. organization, 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 terriates 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 [586] 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
March 3, 1891, and thereupon a writ of cer- all, does so only in an indirect and incidental
tiorari was issued from this court, and the manner ?
whole case brought here for decision.

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.

That one

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



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


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

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