Moloney v. American Tobacco Co.

72 F. 801 | U.S. Circuit Court for the Northern District of Illnois | 1896

SHOWALTEIt, Circuit Judge.

This proceeding is, in form, an information in equity by the attorney general of Illinois. It was commenced in the circuit court of Cook county, and thence removed to this court on petition of defendants, wherein they insist that a federal question is involved. The proceeding is grounded on section 4 of the act of 1893 of the Illinois legislature entitled:

“An act to define trusts and conspiracies against trade, declaring contracts in violation of the provisions of this act void, and making' certain acts in violation thereof misdemeanors, and prescribing the punishment therefor and matters connected therewith.”

Said section 4 is in words following:

“Every foreign corporation violating any of the provisions of this act is hereby denied the right and prohibited from doing any business within this state, and it shall he the duty of the attorney general to enforce this provision by injunction or other proper proceedings, in any county in which such foreign corporation does business, in the name of the state on his relation.”

Section 1 defines what a trust is. Section 2 provides that any domestic corporation violating any of the provisions of the act shall forfeit its charter and cease to exist. And section 3 directs the attorney general to institute suit or quo warranto proceedings against any domestic corporation so violating the act. Section 5 declares any violation of any of the provisions of section 1 to be a conspiracy and a misdemeanor, and Axes a Ane of not more than $5,000 nor less than $2,000 against “any person who may be or may become engaged in any such conspiracy or take part therein or aid or advise in its commission, or who shall, as principal, manager, director, agent, servant, or employé, or in any other capacity knowingly carry out any of the stipulations, purposes, prices, rates, orders thereunder or in pursuance thereof.” And section (5 concerns the form of the “indictment or information for any offense named in this act.” But no consequence, as against a domestic corporation, seems to follow the offense, other than the forfeiture of its charter, or, as against a foreign corporation, other than an inhibition from business in this state.

The American Tobacco Company, the principal defendant, is a corporation organized under the laws of New Jersey. It is said, in tbe information, that this corporation was created by a combination of separate and previously competing concerns for tbe purpose of a monopoly in products made from tobacco, and, particularly, in cigarettes; that said combination practically controls tbe trade in tbe last-named commodity in tbe United States and in Illinois; that it candes on its trading operations in Illinois by tbe aid of divers persons and corporations domiciled here, each being under a contract of agency for tbe sale and handling of said product, and each having engaged with tbe company not to handle tbe goods of any other manufacturer. These agents are made co-defendants with said American Tobacco Company, and tbe prayer is that said company and said co-defendants be enjoined from conducting tbe cigarette business of said company in this state.

Tbe right of a litigant to avail himself of tbe judicial power of tbe United States through tbe instrumentality of the circuit court of tbe United States is limited by federal legislation. Any suit “of a civil nature, at common law or in equity, where tbe matter in dispute exceeds, exclusive of interest and. costs, tbe sum or value of $2,000, and arising under tbe constitution or laws of tbe United States,” may, within tbe limitations now current, be originally commenced in, or be removed from a state court and thenceforward be prosecuted in, tbe circuit court of the United States. A question here is whether or not the present proceeding is a suit of a civil nature. This court does not adjudicate upon penal or criminal statutes of a state. Tbe purpose of this information is to enforce against tbe American Tobacco Company tbe prohibition from doing business in Illinois, and tbe cause of action alleged is conduct which, within tbe meaning of tbe act, if it have any meaning, is an offense or misdemeanor. The information does not show, as tbe ground of action, any contract right in tbe state, or any property right or easement vested in tbe state, as trustee, representing tbe public or otherwise. Tbe action is based on a statute or rule of conduct which the state, as a govern-' ing agent, has prescribed, and the violation of which, on tbe theory of tbe information, is an offense or misdemeanor. This is not, in its nature, a suit to recover for, or stop tbe continuance of, an injury. It is tbe prosecution of an offender against a criminal statute. This defendant corporation is not bound to refrain from carrying on a monopoly in cigarettes because tbe state, as a sovereign, or in any other capacity, is damaged thereby, but because tbe state, as a sovereign, has made a rule to tbe contrary. Tbe damage, whatever it may be, would be precisely tbe same if no such rule or statute bad been enacted. . Yet, in tbe latter case, there would be no action. Tbe information, therefore, as already said, has no other purpose than the enforcement of a penal statute. The supreme court of tbe United States in Wisconsin v. Pelican Ins. Co., 127 U. S. 205, 8 Sup. Ct. 1370, ruled that an action of debt by a state to recover on a judgment for a fine was not a suit of a civil nature. So, here, tbe circumstance that an injunction is the instrument, and apparently tbe only instrument, of tbe state’s displeasure, does not change tbe essential nature of tbe conduct complained of, or of tbe legal sanction to which said conduct must be referred.

On the one band, the state statute does not extend the equitable jurisdiction of the circuit court of the United States, nor does it create or vest in the state a new cause of action in equity, such as can be entertained in this court, or in the circuit court of the United States in New Jersey, for instance, pr in any court of general jurisdiction in a state other than Illinois. On the other hand, the suit is not one of a civil nature. The first section of the act gives definitions of a trust; but said section does not, in terms, prohibit any person or corporation from entering into any one of the combinations so defined. The remaining sections are worded to meet “violations” of the first. If, for this reason, no offense is, in fact, made by the statute, then this information, since it avowedly rests on the statute, necessarily fails. In that event, no further question of any kind arises. If I should here hold that the statute, by reason of the omission referred to, is left meaningless and ineffectual, and thus retain the case here as a civil suit, then, by the selfsame ruling, there would be nothing left but to dismiss the information for want of equity. The cause is remanded to the state court.