« ForrigeFortsett »
straint upon interstate trade and commerce. The prohibition of the Anti-Trust Act, as construed by this court, applies to all contracts in restraint of trade or commerce, and is not confined to those in unreasonable restraint.
ment under consideration operates as a re-admit that it is necessary for me by argument to fortify the positions taken by this court in that case. The anti-trust law as there construed is the law of the land.
The wisdom of Congress in prohibiting all agreements in restraint of trade among interstate railway systems is even more maniBut as a contract in restraint of com- fest now than when the Trans-Missouri case merce, the Trans-Missouri agreement is was decided. At the time of the argument crude and ineffective when compared with cf the Trans-Missouri case it was still to the Joint Traffic agreement. The Trans- some extent a mooted question whether the Missouri provides a penalty for competition. | Interstate Commerce Commission was emThe Joint Traffic goes further, and contains powered to determine what are fair and reaprovisions designed to deprive companies of sonable rates, and to enforce such rates. the means of competing, while removing the This question is no longer open. inducement to compete. Control of the soliciting and contracting freight and passenger agencies is placed in the managers, who are authorized to organize joint agencies. This done, the supervision of the sources of securing business being thereby given to the man- It will probably be urged that any illegalagers, they are charged with the duty of ap-ity in the agreement is cured by § 3 of artiportioning the competitive traffic equitably cle 7, which reads; among the members of the association.
Of course the purpose is to remove the inducement to compete. An agreement to apportion traffic operates the same as one to divide earnings. Railroads which pool their earnings have no inducement to compete. All the individual company earns goes into the pool, and it only gets its share after all. So where the traffic business is pooled, if a company by competing gets more than its share, it must yield the excess by permitting a diversion of the traffic from its line to lines which are short. A strict account is kept of the traffic carried by each trunk line. If the traffic of a particular line exceeds its percentage, the line is deemed "over," and
"Sec. 3. The powers conferred upon the managers shall be so construed and exercised as not to permit violation of the Interstate Commerce Act, or any other law applicable to the premises, or any provision of the charters or the laws applicable to any of the companies parties hereto; and the managers shall co-operate with the Interstate Commerce Commission to secure stability and uniformity in the rates, fares, charges, and the rules established hereunder."
must account for the excess to the lines which are "short."
In prohibiting pooling, Congress did not make it a condition that the rates established and maintained under a pooling agreement should be unreasonable. It sufficed they would be arbitrary, uninfluenced by competition. The public would be placed at the mercy of the traffic managers.
So, too, in the case of a contract in restraint of trade prohibited by the anti-trust law; it is enough if the agreement interferes with those natural laws which ordinarily determine rates; it is enough if it restricts competition; it is enough if it puts it in the power of the combined railroads arbitrarily to fix rates. We do not have to inquire whether the rates fixed are reasonable or unreasonable. It is the power through combination to fix rates arbitrarily, which is prohibited.
The Trans-Missouri case was elaborately argued and carefully considered. A petition for a rehearing was presented and denied. The decision has been accepted and acted upon by the departments of the government, and by the courts, both state and Federal, as definitively settling the meaning and scope of the Anti-Trust Act when applied to traffic associations among competing interstate railway systems. The decision was not only a just, but an eminently salutary one. I shall not concede that the principles it laid down remain questionable. I shall not
Interstate Commerce Commission v. Cincinnati, N. O. & T. P. R. Co. 167 U. S. 479, 42 L. ed. 243; Interstate Commerce Commission v. Alabama Midland R. Co. 168 U. S. 144, 42 L. ed. 414.
An injunction to construe and exercise powers conferred so as to permit no violation of law is an admission that the powers may be so construed and exercised as to violate law. If the anti-trust law prohibited only those
contracts in unreasonable restraint of trade or commerce there might be saving force in this section. But the anti-trust law prohibits all contracts in restraint of trade or commerce. Whether the rates be reasonable or unreasonable, an agreement providing for their establishment and maintenance by an association of interstate railways is prohibited. The managers can exercise none of the essential powers conferred by the agreement without violating the law. In the matter of the essential powers it is not a question of method or degree; the powers cannot be exercised because they are in themselves illegal. The association is itself illegal. It is formed for the purpose of controlling certain competitive traffic. The central authority, the managers, is given the power to establish and maintain rates on that traffic. Take away from the association the power to establish and maintain rates, and it immediately falls to pieces. It ceases to have a raison d'etre.
It will be observed that the managers are not instructed to co-operate in securing reasonable rates. The latter part of this section is inserted to support, not the real, but ostensible purpose of the association, namely of aiding the Interstate Commerce Commission to enforce the law. Assuming the Commission powerless to enforce the law, the railroads ignored both the Commission and the law, and proceeded to form an association outside of the law and in violation of
the law, to aid in enforcing the law. The that end it required all railroads engaged in railroads shatter the law, and then combine interstate transportation to file with the to support the fragments. Commission and publish schedules of their respective rates, and forbade the carriage of goods for any greater or less compensation than that specified in the published rates.
Even before the passage of the law the rival lines engaged in an effort to agree upon the schedules which each should file, and had reached such agreement in time to file and publish them in compliance with the provi sions of the law.
It was contended below that the bill was multifarious. There is but one cause of action in the bill,-namely, the agreement. Upon that the bill is based. It seeks to enjoin the execution of an illegal contract. The averments of intent in the bill are unnecessary and immaterial. At the most they are conclusions of law. The court will examine the agreement and determine the question of law with respect to its meaning and effect; will determine whether the agreement restrains trade or commerce in any way so as to violate the law. If the agreement is prohibited by the anti-trust law the court will enjoin its execution; and the court will do this irrespective of whether the agreement does or does not also violate the Interstate Commerce Act, or those general principles of law which prevent any interference with interstate commerce.
It is not necessary for the government to Unfortunately, large corporations are insist that the agreement violates more than viewed with a jealousy which does not conone law. It is clearly illegal as a contract in fine itself at all times within the bounds of restraint of trade or commerce under the reason, and this sentiment creates hostilities anti-trust law. The fact that it also violates to which it is but natural, at least, that some other law, if it does, assuredly will not public officials should yield. Transactions cure its illegality under this law, or prevent which, in the absence of political prejudice the court from enjoining its execution. A and passion, would pass unnoticed by those thing which is doubly bad does not, there- not immediately affected by them, are subfore, become good. The rule of double nega-ject to hostile scrutiny; and it was not untives does not apply. Nor is the government natural that such an agreement should raise deprived of the power to restrain the execu- a clamor that it was designed to raise rates. tion of a contract in restraint of trade or There never was a pretense, however, that commerce under the anti-trust law because under the agreement there was the slightest the contract contains a provision under exaction of unreasonable charges. On the which individuals have committed, or may contrary the schedules of rates agreed upon commit, offenses punishable under the Inter- and filed with the Interstate Commerce Comstate Commerce Act. If a man threatens my mission had never been objected to by that life I am not to be deprived of the right to body, and were notoriously lower than those put him under bond to keep the peace be imposed for similar services in any other cause he has also stolen my property. part of the world.
The authority of the government to maintain this suit is sustained in United States v. Trans-Missouri Freight Asso. 166 U. S. 290, 343, 41 L. ed. 1007, 1028; citing Re Debs, 158 U. S. 564, 39 L. ed. 1092; Cincinnati, N. O. & T. P. R. Co. v. Interstate Commerce Commission, 162 U. S. 184, 40 L. ed. 935, 5 Inters. Com. Rep. 391; Texas & P. R. Co. v. Interstate Commerce Commission, 162 U. S. 197, 40 L. ed. 940, 5 Inters. Com. Rep. 405.
Messrs. James C. Carter and Lewis Cass Ledyard, for the Joint Traffic Association, appellee:
The object of the bill is to procure an ad. judication that a certain agreement entered into between a large number of railroad companies forming most, but not all, of the lines or systems engaged in the business of railroad transportation between Chicago and the Atlantic coast, for the purpose of forming an association for the better regulation of a certain part of the traffic of those lines and systems, is illegal and void, and enjoining its execution.
The agreement in question was believed to promise great benefits and to make it in the interest of all to comply with the Interstate Commerce Act, and to detect, expose, and punish any who, from a mistaken view of interest, should violate it.
It made no effort to prevent competition: but sought to devise a scheme which would compel any competition to be fair, lawful, and open, and enable any rival to meet it without violating any law.
Congress in 1887 enacted the Interstate Commerce Law, the main design of which was to abolish discrimination in rates and secure a greater degree of uniformity, and to
The answer denies every allegation of unlawful act or of unlawful intent, unless the making of the agreement itself was an unlawful act.
It may seem at first that we are aiming to persuade the court to reconsider its reasoning and determinations in the recent case of United States v. Trans-Missouri Freight Association.
It may be that one of the questions now sought to be presented might have been made in that case and a decision of it obtained; but it is quite certain that the question was not raised.
The precise question which was considered and determined in the case above referred to was this: Assuming that the agreement was one in restraint of trade, would the circumstance that the restraint actually imposed by it was reasonable relieve it from the condemnation of the statute? Or, in other words, does the statute by a true construc tion condemn all agreements in restraint of interstate trade and commerce, or such only as were at common law unlawful?
Prior to, and at the time of, the passage of this law there were, as there still are, certain tendencies in the industrial world which drew widespread attention and excited in
some minds much alarm. Many industries | tions of capital in any form. The general
It cannot be said that Congress has done an unwise or imprudent thing, and that if calamity occurs the fault lies at its door. It has prohibited nothing but contracts and combinations to create restraints of trade and monopolies. These, when properly defined are, beyond question, public mischiefs and ought to be prohibited. If any useful thing becomes stricken down by the law, it must be the result of some erroneous interpretation.
The first question we design to consider is whether the agreement violates any of the provisions of the act referred to. To this end it is of much importance to have in mind the particular nature of the subject with which Under such circumstances it was quite this act deals, and how that subject has been natural that schemes of legislation aimed heretofore treated in law and legislation. against these supposed public enemies should It is obvious that Congress conceived itself be started, and any opposition to them would to be dealing with acts supposed to be pronaturally draw upon the authors of it the reductive of injury to the public, and of injury proach that they were the friends, and per- to such an extent as to justify repressive leghaps the paid defenders, of these powerful islation. interests.
Undoubtedly it may be possible for a large aggregated capital to wield greater power in many ways than would be possible for the same amount distributed among many separate owners or managers, and the suspicion was entertained that such power was employed in controlling markets, and perhaps in controlling legislation, and it was also thought to be an instrumentality by which the unequal distribution of wealth was fos tered and increased. The disfavor thus excited was, as was natural, turned to polit!cal account. Those opposed to a protective tariff charged upon its advocates that they were favoring and stimulating trusts, and the latter felt the need of repelling the charge by doing something to show that they were the declared enemies of trusts.
While, therefore, all, or nearly all, professed themselves in favor of repressive legislation, the question what legislation could be contrived was a difficult one and suggested some difficult questions. How was a trust to be legally defined so that a prohibition of it should not include a prohibition of the exercise of the clearest constitutional rights? Congress surely could not prevent the creation of corporations under state laws, or limit the capacity of forming partnerships, or in any manner interfere with the internal business of states. And was it certain that these so-called trusts were in every instance necessarily mischievous? Indeed, sensible legislators for the most part understood very clearly that the things complained of were but the necessary incidents and consequences of the progress of industry and civilization, and could not be arrested without checking the advance of the nation and crippling it in the fierce competitions with other nations, and that any useful effort to remedy the supposed evils must be directed against the abuses of the power of aggregated capital, and not at the aggregations themselves. Under these circumstances Congress proceeded very cautiously, and enacted the only measure which seemed possible without passing the plainest constitutional limits. It did not attempt to define "trusts" or limit aggrega
It is not contracts only of a certain character which are condemned, but they are coupled together with certain other acts, presumably of a similar nature or tendency,namely, combinations or conspiracies in restraint of trade, and monopolies, or combinations or conspiracies to monopolize. Contracts therefore are dealt with, not so much as contracts, but as one form of acts relat ing to trade and commerce, assumed to be injurious in their tendency and effect.
That contracts of a certain class may be opposed to sound public policy has been recognized in the law from a very early period. The grounds or reasons of policy on which they are held void or illegal are very numerous and varied, but a class embracing numerous instances is formed of such as are supposed to have an injurious effect upon trade or commerce; between these, however, there is quite a marked distinction observable in the way they are treated in the law. One description embraces simply ordinary business transactions, where the parties make agreements with each other for supposed mutual profit and advantage, a breach of which would result in pecuniary loss or damage to the one or the other, and a demand for redress. In such cases the parties expect and intend to enforce the contract, and look to the ordinary legal remedies as the means of enforcing it. Contracts whereby a business
is sold and the seller covenants that he will not thereafter carry it on, or where a man takes an apprentice with an agreement that he will not set himself up in opposition to his master in trade, supply familiar examples of this character.
Inasmuch as such contracts would not be entered into unless it was believed that the law would afford redress in case of a breach of them, the repressive purposes of the law, where they are supposed to be opposed to public policy, are, in general, fully satisfied by declaring them void and denying redress, and this is usually the extent of the notice which the law takes of them. There is no occasion for criminal legislation, both for the reason that there is not present, ordinarily, any criminal purpose, and, if there were, repression is sufficiently accomplished without a resort to it. The doctrine respecting contracts of this character belongs, therefore, to the law of contracts.
But there is another and much smaller description of contracts supposed to be injurious to trade, of quite a different character. They are not, properly speaking, business transactions. They do not involve the sale, leasing, or exchange of property, or the hire of services; nor does a breach of them usually result in distinct and ascertainable pecuniary loss. They are not, indeed, entered into by parties in different interests, as in the case of buyer and seller, one of which expects to gain something from the other, but by parties in the same interest having in view an object for the common good of all; nor do the parties to them generally look to, or rely upon, any legal remedies to secure obedience to them. They spring out of circumstances which impress the parties to them with the belief that they have a common interest, or that it is expedient to create a common interest among them, and seek to control or regulate the conduct of each other in relation to business. Instances of this description of agreement are found where laborers or employers unite, in the form of agreement, to regulate hours of labor or prices, or where merchants or tradesmen combine to transact their business in certain prescribed ways, or to establish uniform prices for their goods, or to suppress or regulate competition among themselves: or where a class of producers or dealers combine together to control a product or a business, with a view of imposing upon others their own terms as to prices, or other incidents of the business.
The marked distinction between these cases and the ordinary business transactions first spoken of is that in the latter there is a difference of interest, sometimes regarded as a hostility of interest, between the parties, each seeking to gain the utmost from the other; whereas in the former the parties are in the same interest, each seeking the same end. The term "contract" does not well express this sort of agreement. It is a uniting together for a common purpose,-a combination, or, when thought to be of an objectionable character, a conspiracy. Such unions always suppose agreement, but it need not be in writing; where it is in writing it is
often called an agreement, or contract; but in giving it this name we should not lose sight of its real character. In reality it is simply an act, and innocent or guilty according as the law may be inclined to regard it. It is manifest that where the law does regard it as mischievous, and to such a degree as to call for repression, it is not enough to simply declare it illegal. The practice may nevertheless be persisted in, and as it does not rely for its efficacy upon legal remedies, the mere withholding of such remedies may be ineffectual. The action, therefore, which the law usually takes in respect to such socalled contracts, is in the form of prohibition and penalty; and the subject belongs, not to the law of contracts, but to the criminal law, where it is usually dealt with under the head of conspiracy.
We do not mean by the above observations that there may not be instances which partake to a greater or less degree of the qualities of both the classes above mentioned; but the distinction between them is so constant and pervading that it will be at once recognized."
As a conclusion to what is said we desire to point out that the legal doctrine and policy to which this Anti-Trust Act belongs is manifestly the one last described. The circumstance that contracts are grouped together with combinations and conspiracies, and made the subject of criminal treatment, shows this very plainly.
The inaptitude of some of the language of this legislation is quite apparent. Undoubtedly the object of Congress was to reach that class of supposed mischiefs which flow from combinations. But the great bulk of the cases in which the courts have felt called upon to say anything about contracts in restraint of trade has been the business transactions first alluded to, in which an agree ment has been entered into not to exercise a particular calling,-as, where the keeper of a well-patronized tavern sells out his establishment and goodwill, and covenants not to further carry on the business. Such agreements at the common law have been held valid or void according to the supposed reasonableness of the covenant; but surely even when void, there was nothing about them calling for the intervention of the criminal law. And yet this statute bunches the valid and void all together, and makes them all criminal, when probably there was not the remotest intention to make any of them criminal.
These observations, of course, fully admit that the particular agreement or combination against which this action is aimed would be, assuming that the act covers the contracts between railroad companies, obnoxious to the penalty imposed by the act, provided it were in fact in restraint of trade or commerce between the states. That it is in fact in restraint of trade or commerce must be shown before this action can be maintained, and this is the proper subject for discussion in this action. This question is broadly open and unaffected by any decision of this court, and we expect to show that the agreement is, not only not in restraint of
was not intended. clusio alterius.
Expressio unius est ex
A clear understanding should be had at the outset with the meaning of the terms with which we are dealing. The contracts condemned by the Anti-Trust Act are such, and such only, as have the effect of restraining trade or commerce. The actual effect which the contracts have upon trade or commerce is the material consideration which determines whether or not they are included within the class.
trade and commerce, but highly beneficial to both; that Congress has never declared or intended to declare it criminal, and that it is deserving, not of judicial condemnation, but of judicial encouragement and approval. Unless the act is subject to the interpretation hereinafter maintained, it is open to grave objections on constitutional grounds, which will be dealt with by other counsel.
The court has no jurisdiction to entertain this suit unless it can be found in the provision of some statute.
The bill sets forth simply the commission of a misdemeanor, and an intention on the part of the defendants to repeat the offense. No principle of the public remedial law of America or England is more fundamental than that the ordinary administration of criminal justice by the ordinary courts of common law, is sufficient for the repression of crime, and exclusive adhesion to it necessary for the protection of the citizen.
Courts of equity have no jurisdiction to restrain the commission of crime, or to enforce moral obligations and the performance of moral duties; nor will they interfere for the prevention of an illegal act merely because it is illegal.
High, Injunc. § 20; Atty. Gen. v. Utica Ins. Co. 2 Johns. Ch. 371; Re Debs, 158 U. S. 564, 593, 39 L. ed. 1092, 1106.
In the case at bar nothing whatever is alleged except the mere violation of the law and the intent to continue it. It is not alleged that such violation does, or will in fact, lead to the imposition of any unjust or unreason able charge for the carriage of merchandise, or any unjust discrimination, or in any way diminish or impair any facilities for carrying on interstate commerce. Indeed, the avowed and apparent purpose of the agree ment is to secure justice, equality, and improvement in interstate transportation; and this purpose stands admitted. All that is averred in the bill is that the method chosen to accomplish the purpose is prohibited by penal law.
The Anti-Trust Act contained provisions purporting to create a jurisdiction in equity to give relief by way of injunction; and perhaps the decision made by this court in the suit of United States v. Trans-Missouri Freight Asso. should be regarded as a determination that the Attorney General was at liberty, in case of any violation of the provisions of the act, to file a bill for an injunction, although it would seem necessary, upon familiar principles, to make out a case for equitable interposition in order to justify an appeal to the equitable jurisdiction thus created. But so far as it is sought to maintain the present action on the basis of an alleged violation of the provisions of the Interstate Commerce Act, no support can be derived from the decision above referred to. No such jurisdiction in equity is given by that act. And by implication at least it is withheld for in certain cases specially mentioned in §§ 6 and 13 jurisdiction is expressly given to courts of equity to grant injunetions. If it is not given in other cases it must be taken to be for the reason that it
This is self-evident. But the possible suggestion may be made that there is a class of contracts called or named "contracts in restraint of trade," and that the statute relates to these irrespective of their real and true effect.
There is no foundation for such a suggestion. There is no class of contracts known to the law by the name of contracts in restraint of trade irrespective of their actual effect upon trade. Whenever heretofore the point has been made in the case of a particu lar contract whether it was in restraint of trade, it has been determined by an inquiry into its actual effect upon trade. No suggestion would have been indulged that it was valid or void according as it might or might not be called a contract in restraint of trade.
Moreover, we are dealing with the criminal law, which never classes acts and makes them punishable under arbitrary names without regard to their supposed effects, as being actually mischievous or otherwise. This would be putting innocence on a par with guilt.
Doubtless there are certain contracts which readily come to mind where contracts in restraint of trade are spoken of, and which may therefore be taken as good examples of the class. They are such as directly purport and assume to restrain trade, and which consequently do, in some sense and degree at least, necessarily restrain it.
Mitchel v. Reynolds, 1 P. Wms. 181; Davis v. Mason, 5 T. R. 118.
Agreements for combinations among persons engaged in the same employment, to promote their supposed interests,-as, of laborers and employers, or merchants, or tradespeople, have rarely, if ever, been styled agreements in restraint of trade.
There seems to be no room for doubt concerning the meaning of the term "in restraint of trade or commerce." To restrain is to hold back, to check, to prevent, and thus to diminish. It is the injury to trade or commerce which the act is aimed to prevent. Unless, therefore, a contract injures trade or commerce, it cannot be deemed as and thus diminishes, or tends to diminish, in restraint of trade or commerce.
Traffic Association The agreement under which the Joint was formed, and the carrying out of which is sought to be enjoined, is not a contract in restraint of trade or commerce within the meaning of the act of July 2. 1890.
It does not in terms purport or assume to restrain or limit trade or commerce. No one of the parties to it undertakes in any