Referring to the control of prices the court said: Much has been said in favor of the objects of the Standard Oil Trust, and what it has accomplished. It may be true that it has improved the quality and cheapened the costs of petroleum and its products to the consumer. But such is not one of the usual or general results of a monopoly; and it is the policy of the law to regard, not what may, but what usually, happens. Experience shows that it is not wise to trust human cupidity where it has the opportunity to aggrandize itself at the expense of others. The claim of having cheapened the price to the consumer is the usual pretext on which monopolies of this kind are defended, and is well answered in Richardson v. Buhl, 77 Mich., 632. After commenting on the tendency of the combination known as the “Diamond Match Company," to prevent competition and to control prices, Champlin, J., said: “It is no answer to say that this monopoly has in fact reduced the price of friction matches. That policy may have been necessary to crush competition. The fact exists that it rests in the discretion of this company at any time to raise the price to an exorbitant degree." Monopolies have always been regarded as contrary to the spirit and policy of the common law. The objections are stated in the "Case on Monopolies," Darcy v. Allein, Coke's Reports, Part XI 84b. A society in which a few men are the employers and the great body are merely employees or servants, is not the most desirable in a Republic; and it should be as much the policy of the laws to multiply the numbers engaged in independent pursuits or in the profits of production, as to cheapen the price to the consumer. Such policy would tend to an equality of fortunes among its citizens, thought to be so desirable in a Republic, and lessen the amount of pauperism and crime. * By the invariable laws of human nature, competition will be excluded and prices controlled in the interest of those connected with the combination or trust. * * ** ** * In the meantime two other cases had been decided, one in Nebraska and one in New York, in which the courts found it necessary to pass upon a trust agreement by which the control of various companies was combined. In the Nebraska case, State v. Nebraska Distilling Co.,1 it appeared that the Distillers' & Cattle Feeders' Trust, an unincorporated association, had been formed in 1887 by owners of nine distilleries for the purpose of restricting output, regulating prices, and preventing competition. These objects were to be accomplished by securing control of as many distilleries as possible, the method being stated as follows: An arrangement or agreement is made by which the company is to transfer its capital stock to the trustees of the Distillers' and Cattle Feeders' Trust, for which said trustees are to issue certificates of the trust. The real estate upon which the distillery is situated is deeded to some one member of the company as trustee for the stockholders, and the trustee then leases said real estate to the company for the term of 25 years. The capital stock of the company is canceled and new stock issued to said nine trustees of the trust, for which the trustees give the agreed amount of certificates of the trust. The board of directors of the company resign and a new board is elected, a majority of which are taken from the nine trustees of the trust. * The trustees of the * trust have almost unlimited power and control over all distilleries that enter it. They can limit their production or suspend their operation altogether. 129 Nebr., 700 (1890). * * The trustees confine the production of the distilleries under their control to the large houses situated in favorable localities, which can be run at less expense than small houses located in unfavorable places. * * * The trustees can, and do, at will restrict and limit the production and supply of alcohol, spirits, and other liquors, and thereby enhance their value. The distillery of the defendant was brought into the trust in the manner described, and later, by order of the trustees, it was closed and ceased to do business. Finally, the directors were authorized to sell all the property, cancel and surrender all stock, dissolve the corporation, and notify the secretary of state of Nebraska to that effect. Quo warranto proceedings were instituted to obtain a forfeiture of the franchise. The court held that the corporation was without power to dispose of all its property, franchises, and powers necessary to carry on its business; that the object of the trust was illegal, as destroying competition and creating a monopoly; that the original conveyance by the defendant of its property with such purpose in view was void; and that as there had been an abuse of the corporate franchise it would be annulled. In the New York case mentioned, Pittsburg Carbon Co. (Ltd.) v. McMillin, receiver, the court held that competing corporations, for the purpose of furthering a combination in restraint of trade, can not lawfully transfer control of their affairs to a single individual trustee. In this case it appeared that in 1887 the plaintiff, together with eight other companies manufacturing electric-light carbons, entered into an agreement by which the business of the nine companies should be exclusively managed and directed by one Hawks as trustee. He was to designate the kind of goods to be manufactured, fix the prices at which and the persons to whom they should be sold, and, after paying expenses, divide the profits as provided by the agreement. The plaintiff assigned to the trustee all existing contracts, and he assumed their performance. Carbons manufactured in plaintiff's factory were billed in the name of the trustee and delivered to the Brush Electric Co. under an outstanding contract with plaintiff. The plaintiff withdrew from the combination, and an action was brought in Ohio by other members to wind up its affairs, the defendant being appointed receiver. Plaintiff claimed that the Brush Electric Co. should pay it for the carbons delivered, and not pay to the trustee. Payment not being made, this action was brought. The defendant, McMillin, receiver of the combination, also brought an action against the Brush Electric Co. The amount claimed was paid into court and the receiver was substituted for the Brush company as defendant. The court held that the agreement between the plaintiff and the trustee was illegal, for the reason that it was entered into in furtherance of a combination in restraint of trade; that to sustain 1 119 N. Y., 46 (1890). the action would permit the plaintiff to escape from the operation of the rule which denies affirmative relief to a party to an illegal contract; and that as between the plaintiff and the receiver the latter was entitled to the fund. Another important case where a trust agreement was involved is Bishop v. American Preservers' Co., in which the facts were as follows: The American Preservers' Co. was a voluntary association of the stockholders of seven corporations in different States engaged in preserving fruit. The agreement among them provided for the creation of a board of nine trustees, to whom the parties were to transfer their shares in exchange for trust certificates. The trustees were to hold such shares and receive the dividends for distribution as dividends upon the certificates. The trustees were authorized to purchase the stock of other corporations by the issue of trust certificates and to organize other corporations to carry on the business of the trust and to hold the stock of such corporations. The trust was to remain in force 25 years, unless sooner terminated with the consent of a certain number in excess of a majority of the certificate holders, and the trustees could not sell or surrender any stock held by them. without the consent of a majority in number and value of the holders of the certificates. The trustees incorporated the American Preservers' Co., which brought an action against Bishop to obtain possession of certain stock in trade, machinery, etc., which he had agreed to transfer to said corporation, and for which he had given a bill of sale, and received trust certificates. Bishop tendered the certificates back, retained the property, and defended on the ground that the corporation was an instrument of an unlawful trust and without standing in court. The court held that the illegal purpose of the trust agreement was apparent on its face, and it was void as being injurious to the public interest; that the bill of sale rested under the ban of the law, and that the court would not aid in the recovery of the property, but would leave the parties where they were when the suit was begun. CORPORATE COMBINATIONS.-The attitude of the courts in declining to uphold direct agreements limiting competition among competing concerns, as well as trust agreements having the same object, led to the formation of corporate combinations in the hope that the courts would look upon them with more tolerance. Some grounds for this hope may have been contained, to some extent at least, in a dictum of the court in People v. North River Sugar Refining Co., where it was said (121 N. Y., at p. 624): It is said, however, that a consolidation of manufacturing corporations is permitted by the law, and that the trust or combination or partnership, however 1 157 Ill., 284 (1895), 30035°-16- -5 it may be described, amounts only to a practical consolidation which public policy does not forbid because the statute permits it. (Laws of 1867, chap. 960; Laws of 1884, chap. 367.) The refineries did not avail themselves of that statute. They chose to disregard it, and to reach its practical results without subjection to the prudential restraints with which the State accompanied its permission. If there had been a consolidation under the statute, one single corporation would have taken the place of the others dissolved. They would have disappeared utterly, and not, as under the trust, remained in apparent existence to threaten and menace other organizations and occupy the ground which otherwise would be left free. Under the statute the resultant combination would itself be a corporation deriving its existence from the State, owing duties and obligations to the State, and subject to the control and supervision of the State, and not, as here, an unincorporated board, a colossal and gigantic partnership, having no corporate functions and owing no corporate allegiance. Under the statute the consolidated company taking the place of the separate corporations could have as capital stock only an amount equal to the fair aggregate value of the rights and franchises of the companies absorbed; and not as here a capital stock double that value at the outset and capable of an elastic and irresponsible increase. The difference is very great and serves further to indicate the inherent illegality of the trust combination. At the time that the above opinion was rendered, however, it had already been decided on common-law principles in Michigan, in the case of Richardson v. Buhl, that a corporate combination formed for monopolistic purposes was illegal. In that case it appeared that the Diamond Match Co., a Connecticut corporation, had been organized for the purpose of monopolizing and controlling the making of friction matches and establishing the price thereof by uniting in one corporation all match-manufacturing interests in the United States. To accomplish this object it became necessary to acquire many plants and to require the owners not to reenter the business for 10 years or more. The Richardson Match Co., a Michigan corporation located at Detroit, was one of the companies sold to the Diamond Match Co. The complainant owned or controlled all of the stock of the Richardson Match Co. In the transaction by which this stock was exchanged for that of the Diamond Match Co. the defendant made certain advances of money to the complainant and became surety for the latter and the Richardson Match Co. on various obligations. This advance was secured by the assignment of some 1,800 shares of the Richardson Match Co., with the right to vote same and to retain dividends, the stock to be returned when the obligations were satisfied. The defendants also became officers of the company. The loan by defendants to complainant was used to pay for preferred stock of the Diamond Match Co., the greater part of which was indorsed to Buhl to secure payment of the loan. Contracts were entered into with respect to the manner in which the dividends from the stock held as collateral should be divided and 177 Mich., 632 (1889). applied, and providing for a sale in case of default. A bill was brought to enjoin the sale of the security, and from a decree directing a retransfer of the stock to the complainant and finding a large sum due from the defendants, the latter appealed. No question as to the validity of the contract or combination on the ground of public policy, or otherwise, was raised by the parties, but the court, of its own motion, held that the objects sought to be attained in the formation and organization of the Diamond Match Co. were unlawful, as creating a monopoly in a necessity, and that the contract in question, being made to further its objects and purposes, was void as against public policy. A few years later substantially the same result was reached by the court in Distilling & Cattle Feeding Co. v. People.1 In that case a writ in the nature of quo warranto was filed, alleging that for the purpose of controlling and establishing a monopoly in the manufacture and sale of distilling products various corporations had formed. a trust and placed their stock in the hands of nine trustees; that the combination had absorbed 81 distilleries; that subsequently the Distilling & Cattle Feeding Co. was incorporated in Illinois, the nine trustees constituting the directors; that the property of the constituent corporations was conveyed to the new corporation, which eventually controlled and substantially monopolized the business of manufacturing high wines, spirits, and distillery products in the United States, and that it has been enabled to and did dictate prices to all consumers at pleasure. Defendant was ousted from its franchise and appealed. It was urged that the change in the form of organization from an unincorporated association to a corporation and the change in the mode of holding distillery properties by surrendering the stock of the constituent corporations and having the properties themselves conveyed to the defendant purged the combination of any illegality. In affirming the judgment of the court below, it was held that the Distillers & Cattle Feeders' Trust, which preceded the incorporation of the defendant, was an organization which con travened well-established principles of public policy and was therefore illegal; that as the corporation merely succeeded the trust, its operations being carried on in the same way and by the same agencies as before, and as the control exercised over the distillery business and the virtual monopoly formerly held by the trust were in no degree changed or released, it was as essentially opposed to public policy as when the trust was in existence. Corporate organization could not purge the trust scheme of its illegality. The charter authorizing the defendant to engage in a general distillery business in Illinois and elsewhere and to own property necessary for that pur |