Sidebilder
PDF
ePub

The evidence in the case renders it

gamated Company, when it was organized in 1899, entertained schemes or dreams of controlling the supply and price of copper in the interstate markets of this country and in the markets of the world, and that they did what they could to make that company rich and powerful.

provided by the Anti-trust Act of July 2, corporations, the union of which in this 1890 [26 Stat. at L. 209, chap. 647, Comp. manner in the Amalgamated and AnaStat. § 8820, 9 Fed. Stat. Anno. 2d ed. conda Companies constituted the alleged p. 644], for enforcing the rights created unlawful combination in restraint of interby it, are exclusive; and therefore, look-state trade or commerce. ing only to that act, a suit, such as we have here, would not now be entertained. probable that the promoters of the AmalD. R. Wilder Mfg. Co. v. Corn Products Ref. Co. 236 U. S. 165, 174, 59 L. ed. 520, 525, 35 Sup. Ct. Rep. 398, Ann. Cas. 1916A, 118; Paine Lumber Co. v. Neal, 244 U. S. 459, 471, 61 L. ed. 1256, 1264, 37 Sup. Ct. Rep. 718; United States v. Babcock, 250 U. S. 328, 331, 63 L. ed. 1011, 1012, 39 Sup. Ct. Rep. 464. But the law has become thus settled since this suit was commenced in 1911, and the lower courts, upon the allegations in the bill, properly assumed jurisdiction and disposed of the case. Busch v. Jones, 184 U. S. 598, 599, 46 L. ed. 707, 708, 22 Sup. Ct. Rep. 511; Clark v. Wooster, 119 U. S. 322, 326, 30 L. ed. 392, 393, 7 Sup. Ct. Rep. 217.

It is, however, argued that § 16 of the Clayton Act (38 Stat. at L. 730, 737, chap. 323, Comp. Stat. §§ 8835a, 88350, 9 Fed. Stat. Anno. 2d ed. pp. 730, 745), passed in 1914, was intended to, and does, modify the prior law, as declared by this court, and, since our decision will result in remanding the cause to the lower court, we shall consider its bearing upon the case. The applicable provision of the Clayton Act is as follows:

"Sec. 16. That any person shall be entitled to sue for and have injunctive relief, in any court of the United States having jurisdiction over the parties, against threatened loss or damage by a violation of the Anti-trust Laws . when and under the same conditions and principles as injunctive relief against threatened conduct that will cause loss or damage is granted by courts of equity, under the rules governing such proceedings..."

The contention of the appellants is that they will suffer irreparable loss by the sale of the Alice properties to the [594] Anaconda Company, and that the sale should therefore be enjoined because that company and the Amalgamated Copper Company constitute a combination in restraint of interstate commerce, within the prohibitions of the Sherman Anti-trust Act.

But we are dealing with the Anaconda Company as it was in 1911, and with the extent to which its control of production and of prices appears in the record before us.

There is evidence that the total production of copper in the United States and Alaska in 1899 was 581,000,000 pounds, and of the Anaconda Company 1,000,000 pounds (probably an error, 100,000,000 pounds being intended); but the total production of the world at that time is nowhere stated. The production in the United States in 1910, the year before the suit was brought, was 1,086,000,000 pounds, and of this the Butte camp, in which there were several mines other than those of defendants, produced 238,000,000 pounds, or approximately 22 per cent. Here again there is no statement as to the total production of the world for that year.

[595] Whatever the fact may have been, it is obvious that from such evidence as this it is not possible to determine to what, if to any substantial, extent, the defendants restrained or monopolized the production of copper in the United States, much less in the world.

The evidence with respect to price control, although meager, is more definite. The average price of copper in 1899, the year before the Amalgamated Copper Company was organized, was 17.6 per pound; in 1900 it was 16.1; in 1902, 11.6; in 1904, 12.8; in 1907, 20; in 1908, 13; in 1909, 12.98; 1912, 16; and in 1913, the last year for which the price is given,

15 cents.

It is obviously impossible to say that these fluctuating prices prove monopolistic control of the price of copper by the defendants.

The Amalgamated Copper Company, organized in 1899, is a holding company, and in 1911, when this case was comNo claim is made that the Anaconda menced, it controlled by capital stock Company restrained or restricted the proownership the Anaconda Company, which, duction of copper, but, so far as there in turn, held the title to the physical is any evidence at all upon the subject, property which had been owned by other it is to the effect that it maintained and

perhaps increased the production in the Butte camp.

Upon the case here made by the evidence it is impossible to conclude that the defendants constituted in 1911 such a combination, within the terms of the Antitrust Act, as would justify the granting of an injunction to the plaintiffs, even under the provisions of § 16 of the Clayton Act, which we have quoted.

The decree of the lower courts as to this first claim must be affirmed.

The second contention is that the owners of less than all of the capital stock of the Alice Company could not authorize the sale of all of the property of the corporation over the protest of owners of a minority of the stock.

rights as well as the minority, and that it should not require the former to remain powerless until the creeping paralysis of inactivity shall have destroyed the investment of both.

The case before us is a typical one for the application of this exception to the general rule. The Alice Company was organized in 1880, under the general incorporation laws of the then territory of Utah, with authority [597] to buy, sell, lease, hold, own, and operate mines, mining claims, etc., with many enumerated incidental powers. It acquired the mining properties in controversy in this case and conducted prosperously the mining chiefly of silver ores, until 1893, when its business ceased to be profitable, and was susIt is, of course, a general rule of law pended. Extensive shafts and underthat, in the absence of special authority ground workings were permitted to fill so to do, the owners of a majority of the with water, and for seventeen years before stock of a corporation have not the power the sale the only business done by the to authorize the directors to sell all of company was leasing the upper workings the property of the company, and [596] of the old mines and limited parts of the thereby abandon the enterprise for surface for shallow workings, to "tribwhich it was organized. But to this utors," who operated in such a small way rule there is an exception, as well es- that, although the expenses of the comtablished as the rule itself; viz.; that pany, chiefly for caretakers, were very when, from any cause, the business of small, its income was less, so that when a corporation, not charged with du- the sale was made an indebtedness of ties to the public, has proved so un- about $35,000 had accumulated. The profitable that there is no reasonable stock of the company was nonassessable, prospect of conducting the business in the it had no resources but the real estate future without loss, or when the corpora- which was sold to the Anaconda Comtion has not, and cannot obtain, the money pany, and the evidence is clear that to necessary to pay its debts and to continue reopen and operate the mines on its propthe business for which it was organized, erty, or to open new mines, would have even though it may not be insolvent in been very expensive and the prospect of the commercial sense, the owners of a profitable operation of them wholly probmajority of the capital stock, in their lematical. Although its properties had a judgment and discretion, exercised in good large speculative value, and therefore the faith, may authorize the sale of all of the company cannot be said to have been inproperty of the company for an adequate solvent, yet it must be accepted as estabconsideration, and distribute among the lished by the evidence that there was no stockholders what remains of the proceeds reasonable prospect of the company being after the payment of its debts, even over able to profitably resume the mining busithe objection of the owners of the minor-ness for which it was incorporated, and ity of such stock. Thomp. Corp. 2d ed. that the only way in which the stock§§ 2424-2429; Noyes, Intercorporate Re-holders could realize anything from their lations, § 111; Cook, Corp. 7th ed. § 670, p. 217, note.

The rule that owners of a majority of the stock may not authorize the sale of all of the property of a going and not unprofitable company rests upon the principle that exercise of such power would defeat the implied contract among the stockholders to pursue the purpose for which it was chartered. But this principle fails of application when a business, unsuccessful from whatever cause, is suspended without prospect of revival, and the law recognizes that under such conditions the majority stockholders have

investment was by sale of its property. Under such circumstances as these the sale of all of the property of the company, if authorized, in good faith and for an adequate consideration, by the owners of a majority of the stock, would be a valid sale, which could not be defeated or set aside by the minority stockholders.

It is next argued that the sale here in controversy is void for the reason that the Alice Company could [598] not lawfully acquire and hold title to the stock in the Anaconda Company in which the consideration for the sale was paid. Here again the general rule is that

provided by the Anti-trust Act of July 2, 1890 [26 Stat. at L. 209, chap. 647, Comp. Stat. § 8820, 9 Fed. Stat. Anno. 2d ed. p. 644], for enforcing the rights created by it, are exclusive; and therefore, looking only to that act, a suit, such as we have here, would not now be entertained. D. R. Wilder Mfg. Co. v. Corn Products Ref. Co. 236 U. S. 165, 174, 59 L. ed. 520, 525, 35 Sup. Ct. Rep. 398, Ann. Cas. 1916A, 118; Paine Lumber Co. v. Neal, 244 U. S. 459, 471, 61 L. ed. 1256, 1264, 37 Sup. Ct. Rep. 718; United States v. Babcock, 250 U. S. 328, 331, 63 L. ed. 1011, 1012, 39 Sup. Ct. Rep. 464. But the law has become thus settled since this suit was commenced in 1911, and the lower courts, upon the allegations in the bill, properly assumed jurisdiction and disposed of the case. Busch v. Jones, 184 U. S. 598, 599, 46 L. ed. 707, 708, 22 Sup. Ct. Rep. 511; Clark v. Wooster, 119 U. S. 322, 326, 30 L. ed. 392, 393, 7 Sup. Ct. Rep. 217.

It is, however, argued that § 16 of the Clayton Act (38 Stat. at L. 730, 737, chap. 323, Comp. Stat. §§ 8835a, 88350, 9 Fed. Stat. Anno. 2d ed. pp. 730, 745), passed in 1914, was intended to, and does, modify the prior law, as declared by this court, and, since our decision will result in remanding the cause to the lower court, we shall consider its bearing upon the case. The applicable provision of the Clayton Act is as follows:

"Sec. 16. That any person shall be entitled to sue for and have injunctive relief, in any court of the United States having jurisdiction over the parties, against threatened loss or damage by a violation of the Anti-trust Laws when and under the same conditions and principles as injunctive relief against threatened conduct that will cause loss or damage is granted by courts of equity, under the rules governing such proceedings..."

The contention of the appellants is that they will suffer irreparable loss by the sale of the Alice properties to the [594] Anaconda Company, and that the sale should therefore be enjoined because that company and the Amalgamated Copper Company constitute a combination in restraint of interstate commerce, within the prohibitions of the Sherman Anti-trust Act.

corporations, the union of which in this manner in the Amalgamated and Anaconda Companies constituted the alleged unlawful combination in restraint of interstate trade or commerce.

The evidence in the case renders it probable that the promoters of the Amalgamated Company, when it was organized in 1899, entertained schemes or dreams of controlling the supply and price of copper in the interstate markets of this country and in the markets of the world, and that they did what they could to make that company rich and powerful.

But we are dealing with the Anaconda Company as it was in 1911, and with the extent to which its control of production and of prices appears in the record before us.

There is evidence that the total production of copper in the United States and Alaska in 1899 was 581,000,000 pounds, and of the Anaconda Company 1,000,000 pounds (probably an error, 100,000,000 pounds being intended); but the total production of the world at that time is nowhere stated. The production in the United States in 1910, the year before the suit was brought, was 1,086,000,000 pounds, and of this the Butte camp, in which there were several mines other than those of defendants, produced 238,000,000 pounds, or approximately 22 per cent. Here again there is no statement as to the total production of the world for that year.

[595] Whatever the fact may have been, it is obvious that from such evidence as this it is not possible to determine to what, if to any substantial, extent, the defendants restrained or monopolized the production of copper in the United States, much less in the world.

The evidence with respect to price control, although meager, is more definite. The average price of copper in 1899, the year before the Amalgamated Copper Company was organized, was 17.6 per pound; in 1900 it was 16.1; in 1902, 11.6; in 1904, 12.8; in 1907, 20; in 1908, 13; in 1909, 12.98; 1912, 16; and in 1913, the last year for which the price is given,

15 cents.

It is obviously impossible to say that these fluctuating prices prove monopolistic control of the price of copper by the defendants.

The Amalgamated Copper Company, organized in 1899, is a holding company, and in 1911, when this case was comNo claim is made that the Anaconda menced, it controlled by capital stock Company restrained or restricted the proownership the Anaconda Company, which, duction of copper, but, so far as there in turn, held the title to the physical is any evidence at all upon the subject, property which had been owned by other it is to the effect that it maintained and

perhaps increased the production in the, rights as well as the minority, and that Butte camp. it should not require the former to remain powerless until the creeping paralysis of inactivity shall have destroyed the investment of both.

Upon the case here made by the evidence it is impossible to conclude that the defendants constituted in 1911 such a combination, within the terms of the Antitrust Act, as would justify the granting of an injunction to the plaintiffs, even under the provisions of § 16 of the Clayton Act, which we have quoted.

The decree of the lower courts as to this first claim must be affirmed.

The second contention is that the owners of less than all of the capital stock of the Alice Company could not authorize the sale of all of the property of the corporation over the protest of owners of a minority of the stock.

The case before us is a typical one for the application of this exception to the general rule. The Alice Company was organized in 1880, under the general incorporation laws of the then territory of Utah, with authority [597] to buy, sell, lease, hold, own, and operate mines, mining claims, etc., with many enumerated incidental powers. It acquired the mining properties in controversy in this case and conducted prosperously the mining chiefly of silver ores, until 1893, when its business ceased to be profitable, and was susIt is, of course, a general rule of law pended. Extensive shafts and underthat, in the absence of special authority ground workings were permitted to fill so to do, the owners of a majority of the with water, and for seventeen years before stock of a corporation have not the power the sale the only business done by the to authorize the directors to sell all of company was leasing the upper workings the property of the company, and [596] of the old mines and limited parts of the thereby abandon the enterprise for surface for shallow workings, to "tribwhich it was organized. But to this utors," who operated in such a small way rule there is an exception, as well es- that, although the expenses of the comtablished as the rule itself; viz.; that pany, chiefly for caretakers, were very when, from any cause, the business of small, its income was less, so that when a corporation, not charged with du- the sale was made an indebtedness of ties to the public, has proved so un- about $35,000 had accumulated. The profitable that there is no reasonable stock of the company was nonassessable, prospect of conducting the business in the it had no resources but the real estate future without loss, or when the corpora- which was sold to the Anaconda Comtion has not, and cannot obtain, the money pany, and the evidence is clear that to necessary to pay its debts and to continue reopen and operate the mines on its propthe business for which it was organized, erty, or to open new mines, would have even though it may not be insolvent in been very expensive and the prospect of the commercial sense, the owners of a profitable operation of them wholly probmajority of the capital stock, in their lematical. Although its properties had a judgment and discretion, exercised in good large speculative value, and therefore the faith, may authorize the sale of all of the company cannot be said to have been inproperty of the company for an adequate solvent, yet it must be accepted as estabconsideration, and distribute among the lished by the evidence that there was no stockholders what remains of the proceeds reasonable prospect of the company being after the payment of its debts, even over able to profitably resume the mining busithe objection of the owners of the minor-ness for which it was incorporated, and ity of such stock. Thomp. Corp. 2d ed. that the only way in which the stock$8 2424-2429; Noyes, Intercorporate Re-holders could realize anything from their lations, § 111; Cook, Corp. 7th ed. § 670, p. 217, note.

investment was by sale of its property. Under such circumstances as these the sale of all of the property of the company, if authorized, in good faith and for an adequate consideration, by the owners of a majority of the stock, would be a valid sale, which could not be defeated or set aside by the minority stockholders.

The rule that owners of a majority of the stock may not authorize the sale of all of the property of a going and not unprofitable company rests upon the principle that exercise of such power would defeat the implied contract among the stockholders to pursue the purpose for It is next argued that the sale here in which it was chartered. But this principle controversy is void for the reason that the fails of application when a business, un- Alice Company could [598] not lawfulsuccessful from whatever cause, is sus-ly acquire and hold title to the stock in pended without prospect of revival, and the Anaconda Company in which the the law recognizes that under such con- consideration for the sale was paid. ditions the majority stockholders have Here again the general rule is that

while, under the circumstances of this case, a sale of all of the property of a corporation could be authorized by the owners of less than all of the stock, for an adequate consideration, it must be for money only, for the reason that the minority stockholders may not lawfully be compelled to accept a change of investment made for them by others, or to elect between losing their interests or entering a new company.

But it has been suggested that this rule, also, should be subject to the exception that when stock which has an established market value is taken in exchange for corporation property, it should be treated as the equivalent of money, and that a sale otherwise valid should be sustained. Noyes, Intercorporate Relations, § 120, and cases cited. We approve the soundness of such an exception. It would be a reproach to the law to invalidate a sale otherwise valid because not made for money, when it is made for stock which a stockholder, receiving it, may at once, in the New York or other general market, convert into an adequate cash consideration for what his holdings were in the corporate property.

In this case the trial judge determined without difficulty the market value of the stock received in payment for the Alice properties, and it is, of course, public knowledge that there was a wide and general market for Anaconda stock. This third contention of appellant must be denied.

Finally, it is argued that the sale of the Alice properties is void because negotiated and made by two boards of directors having a member in common, and for an inadequate consideration.

|

conduct of the practical administration of the affairs of the Amalgamated and Anaconda Companies, and that he very certainly was in control of the boards of directors of the companies which were parties to the sale of the Alice properties.

The relation of directors to corporations is of such a fiduciary nature that transactions between boards having common members are regarded as jealously by the law as are personal dealings between a director and his corporation; and where the fairness of such transactions is challenged, the burden is upon those who would maintain them to show their entire fairness; and where a sale is involved, the full adequacy of the consideration. Especially is this true where a common director is dominating in influence or in character. This court has been consistently emphatic in the application of this rule, which, it has declared, is founded in soundest morality, and we now add, in the soundest business policy. Twin-Lick Oil Co. v. Marbury, 91 U. S. 587, 588, 23 L. ed. 329, 330, 3 Mor. Min. Rep. 688; Thomas v. Brownville, Ft. K. & P. R. Co. 109 U. S. 522, 27 L. ed. 1018, 3 Sup. Ct. Rep. 315; Wardell v. Union P. R. Co. 103 U. S. 651, 658, 26 L. ed. 509, 511, 7 Mor. Min. Rep. 144; Corsicana Nat. Bank v. Johnson, 251 U. S. 68, 90, 64 L. ed. 141, 155, 40 Sup. Ct. Rep. 82.

[600] The district court found that the price agreed to be paid by the Anaconda Company was not an adequate one, and the circuit court of appeals refused to disturb that finding. With this conclusion we agree, applying the settled rule of this court that, in suits in equity, a concurrent finding by two courts on a question of fact will be accepted unless it be clear that their conclusion is erroneous. Baker v. Schofield, 243 U. S. 114, 118, 61 L. ed. 626, 630, 37 Sup. Ct. Rep. 333, and cases cited.

John D. Ryan, at the time of the sale, was president and a director of the Alice Company; he was also a director [599] and general manager of the Anaconda Company, and had been its president from 1903 to 1909; he was elected But the district court, notwithstanding a director and president of the Amal- this finding of inadequacy of price, did gamated Copper Company in 1909, and not set the sale aside, but ordered that had been a director of each of the the Alice properties should be offered at subsidiary companies of the combina- public auction by a master, and that if tion prior to that year. In 1905 he no bid should be received for an amount obtained an option on the majority of greater than that which the Anaconda the Alice stock for $600,000, and carried Company had agreed to pay, the sale it until it was purchased by the Butte should be confirmed. The offer at public Coalition Company, an Amalgamated sub- sale was made, no bid was received, and sidiary, of which he was a director, and the private sale to the Anaconda Comthat company voted a majority of the pany was thereupon confirmed. The cirAlice stock in favor of the disputed sale.cuit court of appeals, by a divided court, The record shows beyond controversy affirmed that decree. that Ryan was the representative of the Both courts relied upon Mason v. chief investors in the enterprise involved Pewabic Min. Co. 133 U. S. 50, 33 L. ed. in this litigation, that he dominated the 1524, 10 Sup. Ct. Rep. 224, as authority

« ForrigeFortsett »