Section 7. Limitation of output. Agreements or combinations for the purpose of limiting output are prohibited by the constitutions of 6 States (Arizona, Idaho, Montana, South Dakota, Washington, and Wyoming) and the statutes of 28 (Alabama, Arizona, Arkansas, California, Connecticut, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Texas, Utah, and Wisconsin). CONSTITUTIONAL PROHIBITIONS.-The constitutions of Idaho and Montana, in substance, prohibit persons, corporations, etc., from forming a trust, or making any contract for the purpose of regulating the production of any article of commerce, or of the produce of the soil, or of consumption by the people.' In Montana the words "of the product of the soil, for consumption by the people," are used. In substance, the constitutions of South Dakota and Washington prohibit corporations, associations, etc., from combining or making any contract with any other corporation or association to limit the production of any product or commodity so as to prevent competition in such production.2 The constitution of Arizona (Art. XIV, sec. 15) prohibits corporations, copartnerships, or associations of persons in the State from combining or making any contract with any incorporated company, copartnership, etc., or in any manner whatever to limit the production of any product or commodity. The constitution of Wyoming (Art. X, sec. 8) prohibits the consolidation or combination of corporations to control or influence productions or prices thereof. STATUTORY PROHIBITIONS. The laws of California and 9 other States (Alabama, Illinois, Iowa, Kansas, Michigan, Missouri, Ohio, Oklahoma, and Utah), broadly speaking, prohibit the issuance or ownership of trust certificates, and combinations, contracts, or agreements the purpose and/or effect of which shall be to place the management or control of such combination or the manufactured product thereof in the hands of any trustee with the intent to lessen the production and/or sale of any article of commerce, use, or consumption, or to prevent, restrict, or diminish the manufacture or output of any such article. The law of Alabama does not apply to trust certificates, and other variations from the above form appear in the laws of other States, 1 Idaho, Constitution, Art. XI, sec. 18; Montana, Constitution, Art. XV, sec. 20. California, Laws 1907, chap 530, sec. 10; Alabama, Stats., sec. 7580; Illinois, act of June 11, 1891, as amended to 1907, sec. 2; Iowa, Code, sec. 5061; Kansas, Laws 1889, chap. 257, sec. 2; Michigan, P. A. 1899, No. 255, sec. 10, Missouri, R. S., chap. 98, sec. 10306, as amended in 1913; Ohio, G. C., sec. 6392; Oklaboma, act of June 10, 1908, sec. 10; Utah, Stats., sec. 1754. especially Oklahoma. There is, however, considerable similarity in form and substance. The laws of Arkansas and other States (Alabama, Illinois, Iowa, Mississippi, Missouri, South Carolina, Utah, Wisconsin, and Louisiana), in substance, prohibit pools, agreements, combinations, etc., to fix or limit in the State or elsewhere the amount or quantity of any article of manufacture, mechanism, commodity, convenience, repair, any product of mining, or any article or thing whatsoever.1 In Alabama and Mississippi the words "or elsewhere" are omitted. In Missouri and South Carolina the words "in the State or elsewhere" are omitted. The laws of Illinois, Iowa, and Utah apply to "any article, commodity or merchandise to be manufactured, mined, produced or sold" in the State. The laws of Wisconsin apply to "any article or commodity in general use in this State or constituting a subject of trade or commerce therein" to be manufactured, mined, produced, or sold in the State. A statute of Louisiana prohibits every contract, combination in the form of trust, or conspiracy in restraint of trade or commerce or to fix or limit the amount or quantity of any article, commodity, or merchandise to be manufactured, mined, produced, or sold in the State.2 3 Although the form of the statutes varies, other States (Arizona, Louisiana, Michigan, Mississippi, New Jersey, North Dakota, Ohio, Nebraska, California, South Dakota, Indiana, and Texas) prohibit combinations to limit output. The following extracts show that there is a slight difference in the scope of these acts: Prohibit combinations to limit the production of commodities (South Dakota). To limit, increase or reduce the production or output of a commodity (Mississippi). To limit or reduce the production of merchandise or any commodity (Michigan, New Jersey, Ohio, California, and Nebraska). To limit or reduce the production of property, merchandise, or commodities (North Dakota). 1 Arkansas, act of 1905, as amended Mar. 12, 1913, sec. 1; Alabama, Code 1907, sec. 7579; Illinois, act of June 11, 1891, as amended to 1907, sec. 1; Iowa, Code, sec. 3060; Mississippi, Code 1906, sec. 5002, as amended by Laws 1908, chap. 119, sec. 1; Missouri, R. S., chap. 9×, sec. 10299, as amended in 1913; South Carolina, Laws 1902, No. 574, sec. 1; Utah, Stats., sec. 1753; Wisconsin, Stats. (1913), sec. 1791j; Louisiana, Acts 1890, No. 86. Louisiana, Acts 1890, No. 86. * Arizona, Laws 1912, chap. 73, sec. 1; Louisiana, Acts 1892, No. 90; Michigan, P. A. 1899, No. 255, sec.1; Mississippi, Code 1906, sec. 5002, as amended by Laws 1908, chap. 119, sec. 1; New Jersey, Laws 1913, chap. 13, sec. 1; North Dakota, Laws 1907, chap. 259, sec. 2; Ohio, G. C., sec. 6391; Nebraska, Stats., sec. 6281; California, Laws 1907, chap. 530, sec. 1; South Dakota, Laws, 1909, chap. 224, sec. 1; Indiana, R. S. 1908, c. 3×66; Texas, Laws, 1903, Chap. XCIV, sec. 1. To limit or reduce the production of merchandise, produce, or commodities (Louisiana). To limit the production of merchandise, products, or commodities (Arizona). To limit or reduce the production of merchandise or any commodity, natural or artificial (Indiana). To regulate, fix, or limit the output of any article or commodity which may be manufactured, mined, produced, or sold, or the amount of insurance which may be undertaken, or the amount of work that may be done in the preparation of any product for market or transportation (Texas). Idaho prohibits corporations, associations, etc., from combining or contracting with any corporation for the purpose of regulating the production of any article of commerce or of produce of the soil or of consumption by the people.1 Montana in a substantially similar act includes "persons," and includes in the phrase "articles of commerce" gas, water, water power, electric light, and electric power, for whatever purpose used or employed.' Minnesota prohibits combinations, understandings, etc., which limit or tend to limit the production of any article of trade, manufacture, or use, bought and sold within the State. New Mexico prohibits every contract or combination having for its object or which shall operate to control the quantity of any article of manufacture or product of the soil or mine.1 New York prohibits every contract, arrangement, combination, etc., whereby competition in the State in the supply of any article or commodity of common use is or may be restrained or prevented.5 - Connecticut prohibits conspiracies, combinations, or agreements for the purpose of limiting or restraining the production, manufacture, shipment, or sale of ice, coal, or any other necessity of life, for the purpose of increasing the price thereof." California prohibits the destruction of "animal, vegetable or other stuffs, products or articles, in restraint of trade which are customary food for human beings and are in fit sanitary condition to be used as such."7 Another California statute provides that no person, corporation, etc., appropriating water for power purposes shall enter into any agreement, combination, or trust in restraint of trade contrary to law, and if any works owned or operated by any licensee under this act shall be controlled in any manner whatsoever so that it or they form a part of or in any way effect any combination, or if it or they are in Idaho, Laws 1909, act of Mar. 11, 1909, sec. 1. New York, Cons. Laws, chap. 20, sec. 340. • Connecticut, P. A. 1911, chap. 185. 7 California, Laws 1913, chap. 233, sec. 1. any wise controlled by any combination or conspiracy to limit the output of electricity or electrical or other power, all rights to the appropriation of water shall be forfeited.' Wisconsin, by a very similar provision, prohibits combinations, contracts, and conspiracies to limit the output of hydraulic or hydroelectric power and provides that the State may take possession of the improvement as in cases of receivership and that the members of the Railroad Commission shall act as receivers during such period as the court may determine." In Washington, corporations not formed for profit are prohibited from entering into any agreement or combination to limit or regulate, or to attempt to limit or regulate, the production or distribution of any commodity.3 Section 8. Division of territory. North Carolina prohibits any person, corporation, etc., engaged in buying or selling anything of value in the State from having any agreement or understanding, express or implied, not to buy or sell within certain territorial limits within the State, with intention of preventing competition in selling, or to fix the price or prevent competition in buying said things within these limits. The act does not prohibit an agent from representing more than one principal, but does not authorize two or more principals to employ a common agent for the purpose of suppressing competition or lowering prices. It is provided further that nothing herein shall prevent a person, firm, or corporation from selling his or its business and good will to a competitor and agreeing not to compete with the purchaser in a limited territory, as is now allowed under the common law, provided that such agreement shall not violate the principles of the common law against trusts and shall not violate the provisions of this act.1 Nebraska and Oklahoma prohibit any bridge contractor or bridge builder, or any other person, corporation, etc., from entering an agreement, combination, etc., for the allotment of any territory which any bridge contractor, person or persons, or corporation or association shall have for his or its exclusive territory.5 Texas prohibits combinations of capital, skill, or acts to abstain from engaging in or continuing business or from the purchase or sale of merchandise, produce, or commodities partially or entirely within the State or any portion thereof." 1 California, Laws 1911, chap. 406, sec. 28. * Wisconsin, Stats. 1913, secs. 1596–1672, Washington, Remington & Ballinger's Code (1910), sec. 3762. North Carolina, Laws 1913, chap. 41, sec. 5 (D). * Nebraska, R. S. (1913), sec. 4037; Oklahoma, Comp. Laws 1909, sec. 8820. • Texas, Laws 1903, Chap. XCIV, sec. 1 (7). Section 9. Restraints on resales. Nebraska prohibits combinations of capital, skill, or acts to estallish any pretended agency for making the sale of any article of merchandise, produce, commodity, or manufacture appear to be for the original vendor for the purpose of enabling such vendor to control the wholesale or retail price after the title shall have passed from him. Another section of the Nebraska laws prohibits the sale of any article upon condition that it shall not be sold again by the purchaser or restraining such sale by the purchaser.2 New Jersey prohibits "any merchant, firm or corporation, for the purpose of attracting trade for other goods, to appropriate for his or their own ends a name, brand, trade-mark, reputation, or good will of any maker in whose product said merchant, firm or corporation deals, or to discriminate against the same, by depreciating the value of such products in the public mind, or by misrepresentation as to value or quality, or by price inducement, or by unfair discrimination between buyers, or in any other manner whatsoever, except in cases where said goods do not carry any notice prohibiting such practice and excepting in case of a receiver's sale, or a sale by a concern going out of business." Violation of this provision may be enjoined and renders the party liable to threefold damages.3 North Dakota prohibits any combination of capital, skill, or acts for the purpose of establishing any pretended agency to cover the sale of any property, article, or commodity of merchandise, produce, or manufacture intended for sale, use, or consumption in the State, or to make such sale appear to be for the original vendor. 1 Nebraska, R. S. (1913), sec. 4017. Idem, sec. 4050. New Jersey, Laws 1913, chap. 210. Ingersoll et al. v. Goldstein, 93 Atl. 193 (N. J. Ch., 1915).-Complainants, manufacturers of Ingersoll watches, brought a bill framed under chapter 210, Laws 1913, to restrain defendants from advertising for sale or from selling complainants' watches at a less price than that advertised by the latter as the price to the consumer. Ingersoll Dollar Watches carried notices reading as follows: "Mechanism in this watch is covered by United States patents and the watch is licensed and sold under and subject to the following conditions assented to by purchase and controlling all sales and uses thereof, any violation of which license conditions revokes and terminates all rights and licenses as to this and all other watches of makers in violator's possession and subjects the violator to suit for infringement of said letters patent: (1) Jobbers may sell only to retail dealers, may not sell to any one designated by makers as objectionable, may not detach or sell without this notice and may sell only at rates specified in schedules furnished by makers. (2) Retailers may advertise and sell only to buyers for use at one dollar. (3) No donation, discount, rebate, premium or bonus may be allowed or given in connection with any sale at wholesale or retail. (4) It will not be offered as a premium or bonus for or in connection with the sale of other goods; or included in any combined sale. (5) Guarantee with date of sale indorsed thereon to accompany each watch." The bill was dismissed, the court holding that at common law, where the vendor sells his whole interest or property in chattels, with conditions restricting the sale thereof, the title passes, but the conditions, being against public policy, are void; that the statute under consideration, being in derogation of the common law, must be strictly construed; that the watches did not "carry any notice prohibiting" the practice condemned by the statute, but on the contrary the notice was too broad and forbade under certain penalties the gale under all conditions at a price less than that fixed. While this report was in press this law was amended by the omission of the words "for the purpose of attracting trade for other goods," and the addition of the following sentence: "The notice prohibiting such practice shall contain a copy of this section and forbid the violation of any of its provisions." (New Jersey, Laws 1915, chap. 376, approved Apr. 21, 1915.) North Dakota, Laws 1907, chap. 259, sec. 2. |