« ForrigeFortsett »
of the nature above described is now before Congress, in the exercise of its right to regu.
we might say that the formation of cor- or combination between competing railroad porations for business or manufacturing pur corporations entered into and formed for the poses has never, to our knowledge, been re- purpose of establishing and maintaining ingarded in the nature of a contract in re-terstate rates and fares for the transportastraint of trade or commerce. The same may tion of freight and passengers on any of the be said of the contract of partnership. It railroads parties to the contract or combinamight also be difficult to show that the ap- tion, even though the rates and fares thus espointment by two or more producers of the tablished are reasonable. Such an agreesame person to sell their goods on commis ment directly affects and of course is intend. sion was a matter in any degree in restrainted to affect the cost of transportation of comof trade.
modities, and commerce consists, among other We are not aware that it has ever been things, of the transportation of commodities, claimed that a lease or purchase by a farm- and if such transportation be between states er, manufacturer, or merchant of an addi- it is interstate commerce. The agreement tional farm, manufactory, or shop, or the affects interstate commerce by destroying withdrawal from business of any farmer, competition and by maintaining rates above merchant, or manufacturer, restrained com: what competition might produce.
merce or trade within any legal definition of If it did not do that, its existence would be (668]that term; "and the sale of a goodwill of a useless, and it would soon be rescinded or
business with an accompanying agreement abandoned. Its acknowledged purpose is to
Has not Congress with regard to interstate
The building and operation of a railroad to have, indirectly or remotely, some bear, thus required å public franchise. The state ing upon interstate commerce, and possibly would have had no power to grant the right to restrain it.”. To suppose, as is assumed of appropriation unless the use to which the by counsel, that the effect of the decision in land was to be put was a public one. Taking the Trans-Missouri case is to render illegal land for railroad purposes is a taking for a most business contracts or combinations, public purpose, and the fact that it is taken however indispensable and necessary they for a public purpose is the sole justification may be, because, as they assert, they all re- for taking it at all. The business of a rail. strain trade in some remote and indirect de road carrier is of a public nature, and in gree, is to make a most violent assumption, performing it the carrier is also performing and one not called for or justified by the de- to a certain extent a function of government cision mentioned, or by any other decision of which, as counsel observed, requires them to this court.
perform the service upon equal terms to all. The question really before us is whether. This public service, that of transportation 171 U. S.
of passengers and freight, is a part of trade tion or in any of the amendments to that in-
Among those limitations and guaranties Where the grantees of this public franchise counsel refer to those which provide that no are competing railroad companies for inter-person shall be deprived of life, liberty, or state commerce, we think Congress is compe- property without due process of law, and tent to forbid any agreement or combination that private property shall not be taken for among them by means of which competition public use without just compensation. The is to be smothered.
latter limitation is, we think, plainly irrele Although the franchise when granted by vant. the state becomes by the grant the property *As to the former, it is claimed that the  of the grantee, yet there are some regulations citizen is deprived of his liberty without due respecting the exercise of such grants which process of law when, by a general statute, he Congress may make under its power to regu- is arbitrarily deprived of the right to make late commerce among the several states. a contract of the nature herein involved. This will be conceded by all, the only ques- The case of Allgeyer v. Louisiana, 165 U. tion being as to the extent of the power. 8. 578 : 832], is cited as authority for the
We think it extends at least to the prohi- statement concerning the right to contract bition of contracts relating to interstate com. In speaking of the meaning of the word “lib merce, which would extinguish all conipeti- erty," as used in the Fourteenth Amendment tion between otherwise competing railroad to the Constitution, it was said in that case corporations, and which would in that way to include, among other things, the liberty restrain interstate trade or commerce. We of the citizen to pursue any livelihood or vodo not think that when the grantees of this cation, and for that purpose to enter into all public franchise are competing railroads contracts which might be proper, necessary, seeking the business of transportation of men and essential to his carrying out those ob and goods from one state to another, that jects to a successful conclusion. ordinary freedom of contract in the use and We do not impugn the correctness of that
management of their property requires the statement. The citizen may have the right (571]right to combine *as one consolidatd and i to make a proper (that is, a lawful) con
powerful association for the purpose of sti: tract, one which is also essential and necesAing competition among themselves, and of sary for carrying out his lawful purposes. thus keeping their rates and charges higher The question which arises here is, whether than they might otherwise be under the laws the contract is a proper or lawful one, and of competition. And this is so, even though we have not advanced a step towards its sothe rates provided for in the agreement may lution by saying that the citizen is protected for the time be not more than are reasonable. by the Fifth, or any other amendment, in his They may easily and at any time be in- right to make proper contracts to enable creased. It is the combination of these large him to carry out his lawful purposes. We and powerful corporations, covering vast sec- presume it will not be contended that the tions of territory and influencing trade court meant, in stating the right of the citi. throughout the whole extent thereof, and act. zen,” to pursue any livelihood or vocation," ing as one body in all the matters over which to include every means of obtaining a livelithe combination extends, that constitutes the hood, whether it was lawful or otherwise. Pre alleged evil, and in regard to which, so far cisely how far a legislature can go in declar. as the combination operates upon and re-ing a certain means of obtaining a livelihood strains interstate commerce, Congress has unlawful, it is unnecessary here to speak of. power to legislate and to prohibit.
It will be conceded it has power to make some The prohibition of such contracts may in kinds of vocations and some methods of obthe judgment of Congress be one of the rea- taining a livelihood unlawful, and in regard sonable necessities for the proper regulation to those the citizen would have no right to of commerce, and Congress is the judge of contract to carry them on. such necessity and propriety, unless, in case Congress may restrain individuals from of a possible gross perversion of the princi- making contracts under certain circumstanple, the courts might be applied to for re- ces and upon certain subjects. Frisbie v. lief.
United States, 157 U. S. 160 (39: 657). The cases cited by the respondents' coun. Notwithstanding the general liberty of sel in regard to the general constitutional contract which is possessed by the citizen right of the citizen to make contracts relat. under the Constitution, we find that there ing to his lawful business are not inconsist. are many kinds of contracts which, while ent with the existence of the power of Con- not in themselves immoral or mala in se. gress to prohibit contracts of the nature in- may yet be prohibited by the ‘legislation of (573) volved in this case. The power to regulate the states or, in certain cases, by Congress. commerce has no limitation other than those The question comes back whether the statute prescribed in the Constitution. The power, under review is a legitimate exercise of the however, does not carry with it the right to power of Congress over interstate commerce, destroy or impair those limitations and guar- and a valid regulation thereof. The quesanties which are also placed in the Constitu-' tion is, for us, one of power only, and not of
policy. We think the power exists in Con- the lower courts, led us to the most careful
Finally, we are asked to reconsider the ments advanced by both sides, and it was
for an opposite view, arrived at an erroneous
That opinion, it will be seen, gives with portant of all, the very grave nature of the
tion has been presented by counsel for the (574) *This court, with care and deliberation, respondents. That this agreement does in
and also with a full appreciation of their fact prevent competition, and that it must
tempted to show. Whether stilling compe-
a question upon which counsel have argued now for the third time the same arguments that this agreeinent purports to restrain are employed, and the court is again asked competition, although, they say, in a very to recant its former opinion, and to decide slight degree and on a single point. They the same question in direct opposition to the admit that if competition and commerce were conclusion arrived at in the Trans-Missouri identical, being but different names for the case.
same thing, then, in assuming to restrain The learned counsel while making the ap. competition even so far, it would be assumplication frankly confess that the argument ing in a corresponding degree to restrain in opposition to the decision in the case above
Counsel then add (and therein named has been so fully, so clearly, and so we entirely agree with them) that no such forcibly presented in the dissenting opinion identity can be pretended, because it is plain of Mr. Justice White, that it is hardly possi- that commerce can and does, take place on ble to add to it nor is it necessary to repeat it. a large scale and in numerous forms without
The fact that there was so close a division competition. The material considerations of opinion in this court when the matter was therefore turn upon the effects of competi. first under advisement, together with the dif- tion upon the business of railroads, whether ferent views taken by some of the judges of' they are favorable to the commerce in which 171 U. S. U. S., BOOK 43.
the roads are engaged, or unfavorable and are competing railroads and are not acting
question it is contended that agreements be their competitors upon the subject of rates. (676]tween railroad companies of the nature of It appears from the brief of counsel in this
that now before us are promotive instead of case that the agreement in question does not in restraint of trade.
embrace all of the lines or systems engaged This conclusion is reached by counsel after in the business of railroad transportation an examination of the peculiar nature of between Chicago and the Atlantic coast. railroad property and the alleged baneful It cannot be said that destructive competi. effects of competition upon it and also upon tion, or, in other words, war to the death, is the public. It is stated that the only re-bound to result unless an agreement or comsort open to railroads to save themselves bination to avoid it is entered into between from the effects of a ruinous competition otherwise competing roads. is that of agreements among themselves to It is not only possible, but probable, that check and control it. A ruinous competition good sense and integrity of purpose would is, as they say, apt to be carried on until prevail among the managers, and while makthe weakest of the combatants goes to de- ing no agreement and entering into no comstruction. After that the survivor, being bination by which the whole railroad intere relieved from competition, proceeds to raise est as herein represented should act as one its prices as high as the business will bear combined and consolidated body, the manaCommerce, it is said, thus finally becomes re- gers of each road might yet make such reastrained by the effects of competition, while sonable. charges for the business done by it at the same time otherwise valuable railroad as the facts might justify. An agreement property is thereby destroyed or greatly re- of the nature of this one, which directly and duced in value. There can be no doubt that effectually stifles competition, must be re the general tendency of competition among garded under the statute as one in restraint competing railroads is towards lower rates of trade, notwithstanding there are possibilfor transportation, and the result of lower ities that a restraint of trade may also fol. rates is generally a greater demand for the low competition that may be indulged in unarticles so transported, and this greater de- til the weaker roads are completely destroyed mand can only be gratified by a larger sup- and the survivor thereafter raises rates and ply, the furnishing of which increases com- maintains them.
This is the first and direct result of Coming to the conclusion we do, in regard competition among railroad carriers. to the various questions herein discussed, we
In the absence of any agreement restrain think it unnecessary to further allude to (578) ing competition, this result, it is argued, is the other reasons which have been advanced neutralized, and the opposite one finally for a reconsideration of the decision in the reached by reason of the peculiar nature of Trans-Missouri case. railroad property which must be operated The judgments of the Circuit Court of the and the capital invested in which cannot be United States for the Southern District of withdrawn, and the railroad managers are New York and of the Circuit Court of Apa therefore, as is claimed, compelled to, not peals for the Second Circuit are reversed and only compete among themselves for business, the case remanded to the Circuit Court with Out also to carry on the war of competition directions to take such further proceedings until it shall terminate in the utter destruc- therein as may be in conformity with this tion or the buying up of the weaker roads, opinion. after which the survivor will raise the rates as high as is possible. Thus, the indirect but Mr. Justice Gray, Mr. Justice Shiras final effect of competition is claimed to be and Mr. Justice White dissented. Mr. Jus. the raising of rates and the consequent re- tice McKenna took no part in the decision straint of trade, and it is urged that this of the case. result is only to be prevented by such an agreement as we have here. In that way alone it is said that competition is overcome, HENRY HOPKINS et al., Appts., and general uniformity and reasonableness of rates securely established.
(See S. C. Reporter's ed. 578-604.)
of a stock exchange is not interstate comdirect effect is to prevent this play of compe- merce--by-lavo as to commissions-stock tition restrains instead of promoting trade sent from annther state-by-law as to teleand commerce. Whether, in the absence of
grams--agents soliciting consignments an agreement as to rates, the consequences stock yards partly in one state and partly described by counsel will in fact follow as a in another-refusal to do business with result of competition, is matter of very great persons not members—when agrecment or uncertainty, depending upon many contin- comhiration is within the statute. gencies and in large degree upon the voluntary acti of the managers of the several 1. The business of buying and selling live stock roads. Railroad companies may and often
at stock yards in a city by members of a stock do continue in existence and engage in their
exchange as commission merchants Is not In.
terstate commerce, although most of the pur lawful traffic at some profit, although they chases and sales are of live stock snnt froin
other states, and the members of the stock | for decision. Reversed, and case remitted to
See same case below, 82 Fed. Rep. 529.
Statement by Mr. Justice Peckham: 2. A by-law of the Kar City Live-Stock Ex
*This suit was commenced by the United (579) change, which regulates the commissions to States attorney for the district of Kansas, be charged by members of that association acting under the direction and by the au: for selling live stock is not in restraint of in- thority of the Attorney General of the Unitterstate commerce, or a violation of the acted States, against Henry Hopkins and the of July 2, 1890, to protect commerce from un other defendants, residents of the state of lawful restraints.
Kansas and members of a voluntary unincor. 8. A commission agent who sells cattle at porated association known and designated as their place of destination, which are sent the Kansas City Live Stock Exchange. The from another state to be sold, is not engaged in interstate commerce ; nor is his agreement purpose of the action is to obtain the diswith others in the same business, as to the solution of the exchange and to perpetually commissions to be charged for such sales, enjoin the members from entering into or void as a contract in restraint of that com- from continuing in any combination of a
like character. 4. In order to come within the provisions of As a foundation for the relief sought it
the statute, the direct effect of an agreement was alleged in the bill that the members of of combination must be in restraint of trade this association, known as the Kansas City or commerce among the several states or with Live Stock Exchange, have adopted articles of foreign nations.
association, rules, and by-laws which they have 8. Restrictions on sending prepaid telegrams agreed to be bound by; that the business of or telephone messages, made by a bo-law.tina the exchange is carried on and conducted by
these restrictions are merely for the regulation of the business a board of directors at the Kansas City stock of the members, and do not affect the business yards, which are situated partly in Kansas of the telegraph company, are not void as City in the state of Missouri and partly in regulations of interstate commerce.
Kansas City in the state of Kansas, the 6. The business of agents in soliciting con- building owned by the stock-yards company
signments of cattle to commission merchants being located one half of it in the state of in another state for sale, is not interstate Missouri and the other half in the state of commerce; and a by-law of a stock exchange Kansas, and half of the defendants have of. restricting the number of solicitors to three fices and transact business in these stock does not restrain that commerce, or violate yards and in that part of the building which the act of Congress.
is within the state of Kansas and the other 7. The fact that a state line runs through half in that part of the building which is in stock yards, and that sales may be made of a lot of stock in the yards which may be part the state of Missouri; that the Kansas City ly in one state and partly in another, has no Stock Yards Company is a corporation owneffect to make the business of selling stock ing the stock yards, where the business is
done by the members of the exchange; that 8. A combination of commission merchants at substantially all the business transacted in
stock yards, by which they refuse to do busi. the matter of receiving, buying, selling and ness with those who are not members of their handling their live stock at Kansas City is association, even if it is illegal, is not subject carried on by the defendants herein and by to the act of Congress of July 2, 1890, to pro the other mernbers of the exchange as comtect trade and commerce, since their business mission merchants, and that large numbers is not interstate commerce.
of the live stock, consisting *of cattle and (580)
hogs and sheep bought and sold and handled (No. 210.)
at the stock yards by the defendants and their
fellow members in the exchange, are shipped Argued February 28, March 1, 1898. De from the states of Nebraska, Colorado, Texas, cided October 24, 1898.
Missouri, Iowa, and Kansas and the terri.
tories of Oklahoma, Arizona, and New Mexed States Circuit Court of Appeals for stock yards it is sold by the defendants, memthe Eighth Circuit to bring up the whole bers of the exchange, to the various packing case in which that court had certified cer- houses situated at Kansas City, Missouri, tain questions. The suit was brought by the and Kansas City, Kansas, and it is also sold United States against Henry Hopkins et al., for shipment to the various other markets, members of the Kansas City Live Stock Ex-particularly Chicago, St. Louis, and New change, to obtain the dissolution of the ex- York; thať vast numbers of cattle, hogs, and change and perpetually enjoin the members other live stock are received annually at from entering into or from continuing in any the stock yards and handled by the members coinbination of a like character. The Circuit of the exchange. Court of the United States for the District The bill also alleges that large numbers of of Kansas, First Division, granted the in the live stock sold at the stock yards by the junction, and from the order granting it an defendants are encumbered by mortgages appeal was taken by the defendants to said thereon, executed by their owners in ti:e vari. Circuit Court of Appeals, and upon a writ of ous states and territories, which mortgages certiorari the whole case was brought here have been given to various defendants as se