sufficiently large number of manufacturers into the combination to practically accomplish their purpose. We can not doubt that such a combination, for such purposes, was opposed to public policy, and therefore unlawful.

Section 18. Agreements to apportion output.

Agreements to apportion output differ from agreements to limit output in that the former specifically allot the quantities to be produced or sold by the several members of the combination. In the second case cited (see p. 110)-that of the Window Glass Jobbersthere was not only an allotment of the manufacturers' output but also of the quantities which the several jobbers could buy.

UNITED STATES v. CHESAPEAKE & OHIO FUEL Co. (115 FED., 610), CIRCUIT COURT OF APPEALS, 1902.-By a contract between the Chesapeake & Ohio Fuel Co. and an association composed of 14 persons, firms, and corporations independently engaged in producing coal and coke in a certain district, the company was to handle for a term of years the entire output of the members of the association. intended for the western market, and bound itself not to sell the product of any competitors. The association had an executive committee which from time to time fixed the minimum price at which the coal and coke should be sold, and the company agreed to pay such price, to obtain as large a profit as possible, and to account to the association for the proceeds, deducting its compensation, which was not to exceed 10 cents per ton. The amount of product to be furnished by each member of this association was also to be fixed by the executive committee and each was to receive payment at the same rate, to be based upon the average price realized for the particular grade furnished during the current month. It was stipulated that other producers of coal might become parties to the contract by a majority vote of the members of the association. This was a suit in equity by the Government to annul the contract, to enjoin its performance and to dissolve the combination as illegal under the Sherman Act. The court held that the contract and the combination of the defendants thereunder were in restraint of trade and commerce among the several States, and that such trade had in fact been restrained, in the performance of the contract. A decree was entered enjoining the defendants and each of them from selling or shipping, under the contract coal or coke, into any State other than the State in which they reside, and dissolving the combination of the defendants under the contract.

The court said in part (p. 621):

A consideration of these provisions, assuming that the contract relates to interstate commerce, would seem to make plain the violation of the statute of 1890. Here are 14 dealers who have neither formed a corporation nor a partnership, but have limited to the terms of this agreement their rights for five years in the mining and shipping of coal upon one of their main outlets to the market. They have restricted their right

to produce coal for such shipment to the amount designated by the committee. They have restricted sales to this purchaser to a price to be fixed by the committee. They have eliminated competition in the market among themselves. They have restricted the purchaser so that he may not buy from others in competition with themselves. If we correctly interpret the decisions of the supreme court, these provisions clearly restrain the freedom of interstate commerce, which it is the purpose of this statute to maintain unfettered by such contracts and combinations.

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WHEELER-STENZEL Co. v. NATIONAL WINDOW GLASS JOBBERS' ASSOCIATION (152 FED., 864), CIRCUIT COURT OF APPEALS, 1907.The Wheeler-Stenzel Co., a wholesale dealer and jobber in window glass in Boston, doing an interstate business in that product, commenced an action at law for treble damages under the Sherman Act against the National Window Glass Jobbers' Association, and in its declaration alleged in substance that the National Window Glass Jobbers' Association was a corporation controlled by certain wholesale dealers in window glass doing more than 75 per cent of the total window-glass business in the United States; that its business during the time complained of was purchasing or obtaining contracts for the purchase of window glass from manufacturers in certain specified States for the benefit of certain jobbers and wholesale dealers doing business in other States and specified in a list set forth; that such wholesale dealers owned a large majority of the stock in the association; that the American Window Glass Co. owned and operated glass factories in several States and delivered its product to wholesale dealers in the several States and produced more than 70 per cent of the window glass manufactured in the United States; that prior to the acts complained of the wholesale dealers were uncombined; that the association entered into a contract with the American Window Glass Co. and such wholesale dealers agreeing among other things to restrict the sale of all glass manufactured by the said company to the wholesale dealers in the combination, except at prices higher than those charged wholesalers in the combination, to restrict the quantity to be purchased by each such wholesaler, to refuse to purchase any window glass from any manufacturer other than the American Window Glass Co. except at prices below the price charged by it to such wholesalers, to arbitrarily fix prices to retailers, to authorize the American Window Glass Co. to arbitrarily determine the quantity of glass to be purchased by each such wholesaler, to refuse to purchase at any price from any manufacturer who did not close his factory and restrict his output as he might be arbitrarily directed by the American Window Glass Co.; that rules and regulations were established forbidding wholesalers in the combination from selling to other wholesalers at prices lower than the price fixed; that the territory for each wholesaler in the combination was fixed; that since the combination was effected the American Window Glass Co. had continually refused to sell any window glass to the Wheeler-Stenzel Co. except at unreas

onable prices largely in excess of the prices charged to the wholesalers in the combination; that prior to the combination the WheelerStenzel Co.'s profit was $100,000 annually; that by reason of the combination the said company lost a very large part of its trade. The defendant demurred. The circuit court sustained the demurrer. The case was then taken to the Circuit Court of Appeals by writ of error. The judgment of the circuit court was reversed. The court held that the declaration charged a contract or combination in restraint of interstate commerce in violation of the Sherman Act.

The court said in part (pp. 870-871):

We think, in the language quoted, there is sufficiently averred the existence of a contract or combination, to which the defendant was a party, which, by its necessary operation, was in restraint of interstate trade and commerce in window glass. It was obviously designed to destroy or minimize competition between certain wholesalers and jobbers in window glass, alleged to be 75 per cent of the whole number so engaged in the United States, and, in the language of the Supreme Court, "to destroy or restrict free competition in interstate commerce is to restrain such commerce."

There is something more, however, set forth in the declaration affecting the character and operation of this contract. Prices to retail dealers were to be arbitrarily fixed by those wholesale dealers, to which prices they were all required to conform. The quantity of glass to be purchased by each of said wholesale dealers was to be arbitrarily determined by the American Window Glass Company, and they were to be prohibited from purchasing from any manufacturer who should not close his factories and restrict the output of glass when and as required so to do by the American Window Glass Company. These stipulations clearly tended toward the creation of a monopoly, and if adhered to and carried out, manifestly restricted the scope of competition in the commodity referred to. It may be quite true, that such an agreement would have been valid at common law, or if invalid as to the parties, would not have been illegal, but the act of Congress has affected it with illegality, so far as the trade or commerce restrained by it is interstate in its character. We conclude, therefore, that the contract or combination set out in the declaration is one in violation of the first section of the Antitrust Act, and that an action properly accrues under the seventh section to any one who has been injured in his business or property by reason thereof.

UNITED STATES TOBACCO Co. v. AMERICAN TOBACCO Co. (163 Fed., 701), CIRCUIT COURT, 1908.-This was an action for treble damages by the United States Tobacco Co., a manufacturer of plug tobacco engaged in interstate commerce. It alleged in its complaint in substance as follows: Two subsidiary companies of the American Tobacco Co., namely, MacAndrews & Forbes Co. and J. S. Young Co., were manufacturers of licorice paste and controlled more than 85 per cent of the trade therein. These manufacturers of licorice paste entered into a combination eliminating competition, fixing arbitrary and noncompetitive prices for paste, and induced certain competitors to fix arbitrary prices in excess of the normal and reasonable prices, and apportioned their interstate trade and arbitrarily fixed the amount of business they should do, and also agreed with another manufacturer, John D. Lewis, that the latter should

restrict his output to a fixed quantity under a penalty. Demurrer to the complaint was overruled. The court held that the agreement constituted an interference with interstate commerce prohibited by the Sherman Act, and said in part (p. 707):

As I look at this complaint, the most material allegation is the one wherein it is charged that John D. Lewis contracted and agreed with the J. S. Young Company that he would not sell more than 1,000,000 pounds of such licorice paste during the year 1904, nor more than 50,000 pounds additional during each year for five years from December 31, 1903, so that the total production of Lewis should not be more than 1,200,000 pounds during the year 1908.

Section 19. Agreements to divide territory.

ADDYSTON PIPE & STEEL Co. v. UNITED STATES (175 U. S., 211), SUPREME COURT, 1899.-The defendants, manufacturers of cast-iron pipe, had made an agreement, one of the provisions of which was that certain cities were reserved to certain members of the combination. (For statement of facts, see also p. 76). For instance, the Chattanooga Foundry & Pipe Works were to "handle Chattanooga, Tenn., and New Orleans, La., furnishing all gas and water pipe in abovenamed cities." When there was a call for bids from one of these cities the price was agreed on by the members of the combine; the member to whom the city was reserved bid the agreed price; to preserve the appearance of competition, the other members bid higher prices; the member to whom the town was reserved got the contract. The Supreme Court said in its opinion (p. 241):

If dealers in any commodity agreed among themselves that any particular territory bounded by state lines should be furnished with such commodity by certain members only of the combination, and the others would abstain from business in that territory, would not such agreement be regarded as one in restraint of interstate trade? If the price of the commodity were thereby enhanced, (as it naturally would be,) the character of the agreement would be still more clearly one in restraint of trade. Is there any substantial difference where, by agreement among themselves, the parties choose one of their number to make a bid for the supply of the pipe for delivery in another State, and agree that all the other bids shall be for a larger sum, thus practically restricting all but the member agreed upon from any attempt to supply the demand for the pipe or to enter into competition for the business? Does not an agreement or combination of that kind restrain interstate trade, and when Congress has acted by the passage of a statute like the one under consideration, does not such a contract clearly violate that statute?

UNITED STATES v. STANDARD OIL CO. OF NEW JERSEY (221 U. S., 1), SUPREME COURT, 1911.-For statement of facts in this case, see page 86. The Supreme Court noted among the facts showing the intent to monopolize the trade in oil (p. 77)—

The system of marketing which was adopted by which the country was divided into districts and the trade in each district in oil was turned over to a designated cor poration within the combination and all others were excluded.

WHEELER-STENZEL Co. v. NATIONAL WINDOW GLASS JOBBERS' ASSOCIATION (152 FED., 864), CIRCUIT COURT OF APPEALS, 1907.— The facts in this case are stated above (pp. 110, 111). Division of territory was one of the features of the illegal contract, though it is not one that the court called special attention to in its opinion.

UNITED STATES TOBACCO Co. v. AMERICAN TOBACCO Co. (163 FED., 701), CIRCUIT COURT, 1908.-The facts in this case are stated above (pp. 111-112). Apportionment of customers, not territorially but individually, was one of the factors of the agreement which in its entirety was found to be illegal.

Section 20. Agreements to divide earnings or profits.

ADDYSTON PIPE & STEEL Co. v. UNITED STATES (175 U. S., 211), SUPREME COURT, 1899.-As is explained in the preceding seetion (p. 112), this case dealt with a combination of cast-iron pipe manufacturers. Certain cities were reserved for certain members of the combine; the combine, however, fixed the price on every contract, and also fixed a bonus to be paid into a pool by the member to whom the contract was assigned, which bonus was afterwards divided. In territory covered by the combination, but outside of the reserved cities, when the price on a contract had been fixed by the combination, the contract was assigned to the member who would pay the highest bonus for the privilege of filling it at the price. This bonus also went into the pool for subsequent division. The Supreme Court quoted with approval the following passage from the opinion of the Circuit Court of Appeals (p. 237):

The defendants were by their combination therefore able to deprive the public in a large territory of the advantages otherwise accruing to them from the proximity of defendants' pipe factories and, by keeping prices just low enough to prevent competition by Eastern manufacturers, to compel the public to pay an increase over what the price would have been if fixed by competition between defendants, nearly equal to the advantage in freight rates enjoyed by defendants over Eastern competitors. The defendants acquired this power by voluntarily agreeing to sell only at prices fixed by their committee and by allowing the highest bidder at the secret "auction pool" to become the lowest bidder of them at the public letting. Now, the restraint thus imposed on themselves was only partial. It did not cover the United States. There was not a complete monopoly. It was tempered by the fear of competition and it affected only a part of the price. But this certainly does not take the contract of association out of the annulling effect of the rule against monopolies.1

CONTINENTAL WALL PAPER Co. v. LOUIS VOIGHT & SONS Co. (212 U. S., 227), SUPREME COURT, 1909.-In this case (see p. 91) there was a division of profits through the device of a central company whose shares were distributed among the members of the combine in proportion to their production during the preceding year. The whole output. of the members was sold actually or nominally to the central com

185 Fed., 292–293.

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