People v. North River Sugar Refining Co.

Daniels, J.

The judgment from which this appeal has been brought, dis-

solved the defendant as a corporation previously formed and existing under the laws of this state. It was organized under chapter 40 of the Laws of 1848 as a manufacturing corporation, and its business was generally that of refining and selling sugar, syrups, and molasses. It was incorporated for this object in February, 1865, and continued to carry on its business until the close of the year 1887. Before that time, but in that year, a plan was formed and adopted for the formation of what was called the “ Sugar Refineries Company, ” to go into effect on the 1st of October, 1887. Its general object was to bring together the parties and corporations engaged in the manufacture, refining, and sale of sugar, and to place their affairs under a board of 11 persons, subject to a further increase to the number of 13, having to a large extent the management and control of this business. The company in this manner provided for was not, neither was it intended to be, a corporation, but it was in the nature of a partnership or combination, designed to include, as far as that should prove to be practicable, the companies and persons engaged in this business in the United States. Its objects were generally stated, in the deed adopted for this purpose, to be (1) to promote economy of administration, and to reduce the cost of refining, thus enabling the price of sugar to be kept as low as is consistent with reasonable profit; (2) to give to each refinery the benefit of all appliances and processes known or used by the others, and useful to improve the quality and diminish the cost of refined sugar; (3) to furnish protection against unlawful combinations of labor; (4) to protect against inducements to lower the standard of refined sugars; (5) generally to promote the interests of the parties hereto in all lawful and suitable ways. And the manner in which they were to be promoted and attained was to bring the several companies and parties into an association, under the articles or deed adopted for that purpose. Where the business was carried on by individuals, it was declared that they should become corporations, and, as such, associates under this plan. And while the corporations becoming parties to the agreement were still to maintain their separate organizations, and carry on and conduct their own business, that wаs to be done under the control and management of the association, through the board selected to "exercise its authority. That the corporations becoming parties to the agreement were not designed or expected, through the intervention of their own stockholders, to maintain their organizations, and carry on their business, is quite evidently disclosed by other provisions of this deed or plan of association; for the stock of each of the corporations becoming in this manner associated was to be finally transferred to this board of 11 members, and in its place shares were to be issued by the association, and divided among the corporations, and distributed to their respecti ve stockholders in the proportions previously held by them in the corрorations themselves, and ultimately to the amount of the shares of the Sugar Refineries Company. The earnings or profits of the business of the associated corporations were required to be paid over to the board, and that board was empowered to designate the dividend which should be proportionately distributed to the holders of the certificates issued by the board for its shares; and the certificates of stock of the corporations were to be held by this board, and it was empowered by the deed or plan only to transfer so much of them, from time to time, to such persons as it might be desired to qualify as trustees or directors or other officers of the corporations, and which were to be held by them “subject to the provisions of this instrument.” ifo period of timе was declared during which this association should continue to exist, and manage the affairs of the corporations; but that it was intended to be of a durable character is evinced by the provisions made for the management of the business, and for the selection and continuance in office of members of ’the board. They were first selected and named in the agreement, one class of which were to hold office for seven years, the second class for five years, and the third for three years; and at the expiration of their respective terms of office their successors were to be elected for the term, in each case, of seven years. The association was plainly, therefore, intended to be one of a durable and continuing character. And from the members of the board it was empowered to appoint a president, vice-president, treasurer, and secretary, and to create other offices, and appoint persons to fill them; and also to designate the duties and prescribe the power of the several officers and committees of the association, and to “make by-laws; and nil arrangements for meetings, elections, and all details not herein spec "c.tlly provided for, shall be made by the board." The capital of the association was fixed at the sum of $50,000,000, a portion of which was to be letained to bring in other refining companies, but in every instance to be first incorporated, and make them parties to the agreement or plan. This instrument was subscribed on the 16th of August, 1887, by 12 different corporations and individual concerns, the defendant being made a party to it at that time only by the signature of its secretary, and the power to do that was afterwards revoked. Other corporations engaged in the business afterwards became parties to the arrangement, aggregating finally 17 different companies employed in this business; leaving in the United States certainly no more than 6 other companies or firms engaged in this business. The association, therefore, appears to have been intended to include all the companies and firms of individuals engaged in this business in the United States; and, so far as it should prove successful in associating them, it would completely extinguish all competition between the corporations becoming members of the assoсiation. Those who became parties to it were not only located in the slate of New York, but in the state of Massachusetts, and apparently, from the names of the companies, in the state of Ohio, in Missouri, in the state of Louisiana, and the city of San Francisco.

To maintain the action, it was alleged that the defendant did become a party to this association or combination, although it revoked and withdrew the authority of its secretary to subscribe its name to the agreement. This was denied on behalf of the defendant; it being insisted, in support of the denial, that what had taken place was done by the stockholders of the company, as distinguished from’its trustees and the company itself. And the further position has been taken that the action proved to have been had by the stockholders was inoperative in the way of bringing in the defendant as a party to this combination. It is undoubtedly true, as the law was stated to be in Car Co. v. Railu ay Co., 115 U. S. 587, 6 Sup. Ct. Rep. 194, that while the stockholders of corporations, in a general sense, own its property, they “are not the managers of its business, or in the immediate control of its affairs. Ordinarily, they elect the governing body of the corporation, and that body controls its property.” 115 U. S. 597, 6 Sup. Ct. Rep. 199. And that this was the scheme, generally, under which the defendant was incorporated, appears from the act of 1848, and its various amendments.. But it is far from following, from the existence of this general principle, that the defendant did not become a party to this association and agreement. That it intended to become such party apрears from the minutes of the meeting of its stockholders held on the 22d of April, 1887; for a resolution was then adopted empowering three persons, who were members of its board of trustees, as “a committee to make arrangements to perfect the said consolidation in behalf of the North River Sugar Refining Company, with full power to act, and to sign all contracts and agreements in the name of the said North River Sugar Refining Company, of whatever name or nature, concerning said consolidation;” and further authorizing the president and secretary of the company “to sign all contracts, agreements, and papers which the above-named committee may make in relation to the said consolidation . ” And it was under this authority that the secretary did subscribe the name of the corporation to the deed or agreement. On the 4th of November, 1887," another meeting of the stockholders of the defendant was held, in which the proceedings of the previous meeting were referred to, and revoking the powers thereby conferred upon the president and secretary, and discharging the committee from further consideration of the subject, and canceling and annulling the preceding resolutions. But that it was designed to decline in this manner to become a party to tlje deed and the association appears not to have been the fact; for a further meeting was held by the stockholders of the company on the 25th of November, 1887, at which it was finally resolved, through a committee of three selected for that purpose, to deliver the stock of the company “to John E. Searles, Jr., or, at his request, to John E. Parsons, John R. Dos Passes, and Franklin Bartlett, trustees, on receipt of the sum of three hundred and twenty-five thousand dollars, the proceeds to be divided among the stockholders of this date according to their respective shares.” This resolution was carried unanimously by the votes of the persons present, who included all the stockholders in the company with the exception of two, but who were stated in fact to have consented to the delivering up of their stock. The design did exist, therefore, to transfer the entire stock of the company to the person or persons named in the resolution. And it was proved by what afterwards took place that this transfer was intended to make the defendant a рarty to the association; for, pursuant to the resolution, the stock was so transferred to Mr. Searles, who was a member of the board of the Sugar Refineries Company, and it was transferred by him to that board. And certificates of shares in that company were issued to him in place of this stock, and divided and distributed among the stockholders of the defendant, meeting, acting, voting, and consenting in this manner to the consolidation of their company. What was delivered to the stockholders in the defendant by way of certificates in the Sugar Refineries Company was precisely what they were entitled to have under the plan or agreement made for the association of these manufacturing companies. The stipulations upon that subject were all fully observed and carried into effect. And from what transpired in this manner, and the fact that only corporations could enter the association, it is evident that the intention was to.make the defendant, in its corporate capacity, a party to this association or combination, as the deed or agreement provided that might be done, but without adding its formal signature to the instrument itself. And that it could be made a party to the association or combination in this manner results from the authority delegated by and vested in the persons who acted upon the subject; for they not only included all the stockholders who owned the legal entity known as the “corporation,” (Oil Co. v. Marbury, 91 U. S. 587, 589, 590,) with the two exceptions already mentioned, owning but 18 shares of the stock, but they also included every member of the board of trustees ‍​​​‌‌‌​​‌​‌​​‌​‌​‌​​​‌​‌‌​​‌‌​‌‌​​​‌‌‌‌​‌​​​​‌​​‍of the dеfendant. They all acted together in this manner,—trustees and shareholders; the former in both capacities, as they lawfully could, (Paulding v. Steel Co., 94 N. Y. 335, 341;) and, with the two exceptions already mentioned, voted to transfer the stock of the company in this manner to Mr. Searles, who was an officer of the board, in substantial, though not literal, compliance with the proposals contained in the deed or agreement which had been devised and adopted for this object. The effect of what they did through their committee, who were also a majority of the trustees, was to irrevocably place all the stock of the defendant in the hands, and subject to the control, of the Sugar Refineries Company, to receive through its board shares in that company in place of the stock in this way surrendered, and to permanently place the business and control of the defendant wholly under the dominion of the board, through its authority to designate the defendant’s future trustees and officers, and to transfer to the persons selected for those offices such shares of stock only as would be necessary to render them eligible under the law. These persons, acting together in this manner, as trustees and stockholders, not only had the authority, so far as that could be exercised, of making the defendant a party to the association, but they, as a matter of fact, by what transpired, did make it such a party, and subjected it as completely to the power and control of the board of the Sugar Refineries Company as though the deed or plan of the association had in the mоst formal manner been subscribed under the authority of the board of trustees of the defendant. There is no ground, therefore, to support the position that the defendant did not become a party to this combination. The persons entitled to exercise control over it and manage its affairs consented and resolved to malse it a party; and they did make it a party, and carried out all the arrangements required for that purpose, in conformity with the formal provisions of the agreement made for the association and combination of these corporations, with the solitary exception of subscribing it.

And by this proceeding they practically renounced and abandoned the control which, through its board of trustees, they were to exercise over the management and business of the corporation, and transferred it to the board of' the Sugar Refineries Company, and, with the other associates, thereby completely abolished all power of competition between these companies. That' was an abandonment of the authority vested in this corporation by the statute-for its management and government, and the delegation and transfer of that management and government to a body of men entirely distinct from that designated by the statute for the control and management of the corporation. By these circumstances it ceased to exercise the functions prescribed by law, and placed the corporation under the dominion of an authority unknown to-the statute; and it thereby offended against the provisions of the act by and under which it had been created, and for that reason it is asserted to have become liable to this action for its dissolution. Code Civil Proc. § 1798, subd. 1.

But it is not requisite to place the disposition of the case solely upon the effect to be attributed in this manner to what was shown to have taken place;, for it is to be inferred from the provisions inserted in and made a part of the deed or agreement, and accepted in this manner by the defendant, that this association or combination of the parties engaged in this business was intended to bring about and secure ulterior advantages in the way of advanced profits to the associates themselves, and the persons who had received their certificates of shares of the Sugar-Refineries Company. It has not, it is true, been in words asserted in the deed or agreement that the association was designed to control the sale of sugar, syrups, and molasses throughout the country; neither was it necessary that it should be so stated, as long as that may reasonably be inferred to have been a leading object or inducement to the-creation of the association itself. And the case was so tried as to allow that-inference to be followed. At the close of the evidence given upon the trial, each party applied to the court to dispose of the action by a direction for a. verdict. Neither suggested or claimed that any question of fact had been presented which should be submitted to the jury; and the court, acting upon these applications, direсted a verdict in favor of the plaintiff, holding, under the evidence, that an unlawful combination had been entered into by the defendant and these other companies to control the production and sale of sugar in the country. And if that conclusion may be supported, by way of inference, from the provisions contained in the agreement, and the evidence given upon the trial, the direction was right; for the court was at liberty, under these applications, to draw the same inferences from the proofs which the jury would have been justified in drawing if the case had been submitted as a matter of fact to them. Stratford v. Jones, 97 N. Y. 586; Provost v. McEncroe, 102 N. Y. 650, 5 N. E. Rep. 795. Whatever presumptions or inferences, therefore, may be deduced from the evidence were then, and are now, to be adopted, so far as that may be a necessity, for the support of the verdict and judgment. The law does not require that instruments of this description, before they may be declared to be illegal, shall in plain language affirm the intention to be to prevent competition, and control the market, or advance the prices of necessary commodities, as the •articles of sugar, syrups, and molasses clearly are. If it did, it would by that requirement supply a device for evading its wholesome restraints, and rendering its principles utterly nugatory. That has never been exacted. But the courts, as in other cases, are permitted to place themselves in the position of the parties entering into the agreement or arrangement to discover the objects or designs by which they, may have been actuatеd. Woodruff v. Woodruff, 52 N. Y. 53. It was there said: “We must consider the situation of the parties, the subject-matter of the contract, and the surrounding circumstances, with a view of ascertaining the purpose and intent of the parties.” Id. 57. And Knapp v. Warner, 57 N. Y. 668, supports this statement of the law. The language of the instrument, therefore, is not alone to be consulted, but it is to be considered in view of these circumstances, and of the conduct and probable motives of the individuals engaged in bringing it about; and all that maybe implied in this way from the agreement is to be considered as contained in it, for the purpose of discovering what was intended to be accomplished. Jones v. Kent, 80 N. Y. 585, 588. By the application of these rules to this case, the leading object is disclosed, with a reasonable degree of clearness, to be that the affairs and business of the сombination or association should be so managed and carried on as to promote the profit and gain of the associates. The board, indeed, was expressly authorized to promote the interests of the parties in all suitable as well as lawful ways, and to provide for all details not specifically mentioned. That clearly comprehends the power to prescribe and regulate the selling prices of the articles to be produced. And where the effect of the arrange ment is to permanently secure the control, or the substantial control, of this product, and of its sale, as that has been done, it is no more than just to infer that the control is to be used to avoid competition and enhance prices, and in that manner, as it is the ordinary expedient for that end, promote the interests, and add to the profits, of the associates. In this case it was a leading object to combine together the different corporations and individuals engaged in this business, not only in and about the city of Yew York, but throughout the country, and to secure that control by a substantial organization for an indefinite period of time. This was not to be done, and was not in fact done, for an idle purpose, or merely to furnish the means of protection against unlawful combinations, or for any other mere economical object; but it was manifestly to place this business within the control, and subject to the dictation, of this association, and of the board selected for the government of its affairs. And, after putting forth the efforts necessary to secure that end, it would not only be idle, but absurd, to indulge in the supposition that it was not intended to wield the authority in this manner secured ‍​​​‌‌‌​​‌​‌​​‌​‌​‌​​​‌​‌‌​​‌‌​‌‌​​​‌‌‌‌​‌​​​​‌​​‍for the pecuniary advantage of the associates; and the direct and usual way in which that is accomplished, following out the common impulses of practical business men, is by the advancement of the prices of the commodities manufactured and sold in the course of the business whose control may be in this way secured. When the opportunity to do that is provided, human selfishness is sure to turn it to a profitable account. A jury certainly would be fully justified in concluding, from the agreement and the other facts in evidence in the ease, that the governing object of the association was to promote its interests, and advance the prosperity of the аssociates, by limiting the supply, when that could properly be done, and advancing the prices of the products produced by the companies. To conclude otherwise would be to violate all the observations and experiences of practical life. This is a controlling feature in this controversy. And that it was intended to be secured by the organization provided for, and which actually took place, is reasonably free from doubt; and, where that appears to be the fact, the agreement, association, combination, or arrangement, or whatever else it may be called, having for its objects the removal of competition, and the advancement of prices of necessaries of life, is subject to the condemnation of thе law by which it is denounced as a criminal enterprise. The law at this time, as it has for many years, in this state, has made it a misdemeanor for two or more persons to conspire “to commit any act injurious to the public health, to public morals, or to trade or commence, or for the perversion or obstruction of justice, or of the due administration of the law.” Pen. Code, § 168, subd. 6. And combinations and associations of this form have been held, in this and other states, to violate these provisions of the statute, so far as they prohibit acts injurious to trade or commerce.

In Stanton v. Allen, 5 Denio, 434, this precise point was presented under the same statute, as it was then a part of the general laws of the state; and it was there held that an association of boat proprietors on the canals, though not including all of them, under an agreement to regulate the price of freight by uniform scales to be fixed by a committee chosen by themselves, and to divide the profits of their business according to the number of boats employed by each, was unlawful; for it was considered that the effect of the association or agreement was to increase prices and prevent competition in the business to which it related. A similar point came before the court in Hooker v. Vandewater, 4 Denio, 349, and the same ruling was made by the court. In Coal Co. v. Coal Co., 68 Pa. St. 173, five coal companies entered into an agreement in this state to divide two coal regions of which they had the control, to appoint a committee to take charge of their interests, which was to decide all questions, and appoint a general agent, through whom the coаl mined was to be delivered, each corporation to deliver its proportion at its own cost in the different markets at such time and to such persons as the committee might direct, which was to adjust the prices and rates of freight, and enter into agreements with other companies, and by which the five companies might sell their coal themselves only to the extent of their proportion, and at prices adjusted by the committee, and the agent to suspend shipments by either beyond their proportion, the prices to be averaged and payments made to those in arrear by those in excess, and neither to sell coal otherwise than as agreed upon. And this agreement was held by the court, under the statute already referred to, to be void, and incapablе of being carried into effect. It was held to contemplate a business arrangement injurious to the trade and commerce of the state, and for that reason incapable of being legally supported, This case, as well as the others, is direct authority against the legality of the association to which the defendant was made a party. The only substantial difference between the cases is that arising out of the fact that, in those referred to, the parties had expressed by their agreement, what in this case was left to be plainly inferred from it, and from the circumstances attending the consummation of the arrangement, that it was part of the object in view to regulate prices, and in that manner promote the interests of the associates in the sale of their productions. In Arnot v. Pittston, 68 N. Y. 558, a quite similar case was brought before the courts in this state; and the agreement there made, including no other essential attributes than those which by plain inference are attached to the present case, was held, for the reasons already mentioned, to be illegal and void. In the opinion which was then delivered it was said: “That a combination to effect such a purpose is inimical to the interests of the public, and that all contracts designed to effect such an end are contrary to public policy, and therefore illegal, is too well settled by adjudicated cases to be questioned at this day.” Id. 565. And in support of this conclusion the case just mentioned, decided in the state of Pennsylvania, is cited with approval. A like combination between producers and dealers in salt was in the same manner condemned in Salt Co. v. Guthrie, 35 Ohio St. 666. And so it was in Association v. Hock, 14 La. Ann. 168, where an agreement was made between several commercial firms for three months not to sell India cotton bagging without the consent of the majority. The court, in its decision, held that “the agreement between the parties was palpably and unequivocally a combination in restraint of trade, and to enhance the price in the market of an article of primary necessity to cotton planters. ” Id. 169. In Railroad Co. v. Railroad Co., 15 Fed.Rep. 650, the same rule was followed. And so it was in Hilton v. Eckersley, 6 El. & Bl. 47. The action was there' upon a bond to carry into effect a similar arrangement; and it was held by the court to be void, and that the suit could not be sustained. In Transportatian Co. v. Line Co., 22 W. Va. 600, it was held by the court that “the common law will not permit individuals to oblige themselves by a contract either to do, or not to do, a particular thing, when the thing to be done or omitted is in any degree clearly injurious to the public.” Id. 617. And that was further maintained in Telegraph Co. v. Telegraph Co., 65 Ga. 160. And it was again followed in Hazlehurst v. Railroad Co.,43 Ga. 13. And Craft v. MaConoughy, 79 I11. 346; Raymond v. Leavitt, 46 Mich. 447, 9 N. W. Rep. 525; Colles v. Directory Co., 11 Hun, 397; Watson v. Companies, 52 How. Pr. 348; Faulds v. Yates, 57 I11. 416; and Foll’s Appeal, 91 Pa. St. 434,—are pointedly to the same effect. ‍​​​‌‌‌​​‌​‌​​‌​‌​‌​​​‌​‌‌​​‌‌​‌‌​​​‌‌‌‌​‌​​​​‌​​‍And so is the theory maintained in Gibbs v. Gas Co., 130 U. S. 396, 9 Sup. Ct. Rep. 553; for there combinations and associations having in view the advancement of the prices of necessary commodities, for the benefit of the associates, were held to be illegal. And this also secured the approval of the court in Alger v. Thacher, 19 Pick. 51.' That case, it is true, differed materially from the facts here presented. But the court incidentally, and apparently with propriety, added that the principle proceeded upon was especially “applicable to wealthy companies and large corporations, who have the means, unless restrainеd by law, to exclude rivalry, monopolize business, and engross the market. Against evils like these, wise laws protect individuals and the public by declaring all such contracts void.” And this was expressly sanctioned in Stewart v. Transportation Co., 17 Minn. 372, (Gil. 348,) where it was concluded to be “against the general policy of the law to destroy or interfere with free competition, or to permit such destruction or interference. ” 17 Minn. 395, (Gil. 372.) And Wright v. Ryder, 36 Cal. 342, sustains the same principle; and so does Murray v. Vanderbilt, 39 Barb. 141. In Reene v. Kent, 4 N. Y. St. Rep. 431, the association was to advance the price of lard by in part withholding from the market that which was owned or controlled by the associates; and it was held by this court that the agreement was void, and incapable of being enforced in a court of justice. In all these cases the reservation of the power to control the prices of necessary products, whether by exprеss agreement or fair implication, has been condemned as unlawful.

A large class of cases has been cited and relied upon in support of the appeal permitting a limited division or mutual regulation of certain business interests; but they do not seem to be appl.cable to this controversy, for neither of them maintains the validity of a combination or association made between corporations or individuals engaged m the production and sale of necessary articles, through which competition is to be avoided, and the prices of such articles to the consumers are to be advanced. The ease of Match Co. v. Roeber, 35 Hun, 421, affirmed 106 N. Y. 473, 13 N. E. Rep. 419, and all other similar cases, are entirely distinguishable in principle from this controversy. And it was considered so in the decision madе in the last case by the court of appeals, where it was said that “combinations betweeen producers to limit production, and to enhance prices, are or may be unlawful, but they stand on a different footing.” 106 N. Y. 483, 13 N. E. Rep. 422. The facts of the case of Railroad Co. v. Railroad Co., 6 H. L. Cas. 113, where the agreement between the different railway companies was maintained, has been given prominence as sustaining the combination now under examination. But, while that case sustained the agreement which was there made for the limited management of different railways, it is not to be followed as an adjudication having controlling weight over this controversy; for it was not understood or intended to be held by the courts in which that case was examined that an association or combination of this description, extending, as it does, from the Atlantic to the Pаcific coast, and obviously designed to advance the price of • necessary commodities of life, could be maintained. In fact, the opposite principle was conceded when this case was decided by the court of queen’s bench, 21 Law J. Q. B. 89, for it was there added, in the course of the opinion, that if the parties, by their agreement, proposed to endeavor to prevent a competition generally, there might be weight ‍​​​‌‌‌​​‌​‌​​‌​‌​‌​​​‌​‌‌​​‌‌​‌‌​​​‌‌‌‌​‌​​​​‌​​‍in the objection that it was injurious to the public by giving the plaintiffs a monopoly. Id. 93. The leading eases of Collins v. Locke, L. R. 4 App. Cas. 674; Association v. Walsh, 2 Daly, 1; Wickens v. Evans, 3 Young & J. 318; Roller Co. v. Cushman, 143 Mass. 353, 9 N. E. Rep. 629; and Marsh v. Russell, 66 N. Y. 288,—are so far diversified in their facts from the leading and controlling circumstances in this case as to be inapplicable to it. And that may also, "with propriety, be said of Leslie v. Lorillard, 110 N. Y. 519, 18 N. E. Rep. 363, as well as the still later case of Fowle v. Park, 131 U. S. 88, 9 Sup. Ct. Rep. 658. This controversy is .within the authority and principles of the other adjudications which have been mentioned, so distinctly and entirely as to render it only necessary to depend upon and follow them for its disposition.

As the facts have been developed, the association or combination into which the defendant has in this manner entered was created for an unlawful object; and it has, by making itself a party to that association, renounced and abandoned its own duties for the transaction and management of its business, andz placed its interests and affairs under the dictation and control of a board which legally should háve no power over it, and rendered itself liable to the judgment which has been recovered in this action. And the possibilities that other business enterprises in the same pursuit may be set on foot to counteract thе effect of this combination will not relieve the defendant from this result. That, in view of the large capital and extended combination already secured, is a very remote probability; for other manufacturers, brought in competition with this combination, could easily be driven from the field of trade by it, and its paramount control still maintained and perpetuated. And the probability that its power would be used in this manner is so decidedly fortified by experience that capital would be reluctantly placed at the risk of loss by other persons, with so formidable a competitor to be encountered. But, if it should be otherwise, the law will not tolerate or excuse the combination.; for the interposition of third persons, in no way connected with it, to counteract its effects, is no excuse or justification for the wrong this combination has in this manner committed. A wrong-doer is never excused from the consequences of his wrong for the reason that other parties, not acting under his direction or authority, may interpose, and in a measure defeat the consequences of the wrong.

Evidence was given upon the trial tending to prove that the property previously used by the defendant in its business was intended to be taken as a public park by the authorities of the city, and thereby to excuse the cessation of its business, and that proceedings for that object had been instituted. But, while those may be the facts, it is still to be inferred from the other evidence upon the trial that its business was not discontinued by reason of the expectation that the property would be appropriated by the city for this object, but that it was done under the power of this combination to discontinue its productive use, and in that manner diminish the manufacture of refined sugar which it had previously carried on, to the extent of from 275,000 to 300,000 pounds of sugar a day. And this view is confirmed by the fact that it was allowed to participate in the 2J per cent, dividend declared for the five months preceding the April mentioned in his evidence by Mr. Searles. The company has been subordinated, and its own individual usefulness as a manufacturing competitor terminated, by the power of this combination; and, as it was voluntarily placed there, to this extent its own franchises have been subverted, and for the time being ended. And it became liable to the judgment which has been recovered against it in the action; for it is a condition on which a corporation is allowed to be created and maintained that it shall exercise and use its franchises for the benefit of the public; and when it voluntarily declines to do that, or places itself in a situation in which that may be prevented as a consequence of its voluntary action, then, under the statute, as well as the decisions or tile courts, it may be annulled at the suit of tile attorney general. Code Civil Proc. § 1798; People v. Insurance Co., 15 Johns. 358; People v. Trustees, 5 Wend. 211; Arms Co. v. Barlow, 63 N. Y. 63; Railroad Co. v. Railroad Co., 118 U. S. 290, 6 Sup. Ct. Rep. 1094. What was there said concerning the action of the railway company is equally as applicable to this controversy; and that is that “unless specially authorized by its charter, or aided by some other legislative action, a railroad company cannot, by lease or any other contract, turn over to another company, for a long period of time, its road and all its appurtenances, the use of its franchises, and the exercise of its powers; nor can any other railroad company, without similar authority, make a contract to receive and operate such road, franchises, and property of the first corporation; and that such a contract is not among the ordinary powers of a railroad company, and is not to be presumed from the usual grant of powers in a railroad charter. ” 118 U. S. 309, 6 Sup. Ct. Rep. 1102. To this effect, also, is People v. Turnpike Road, 23 Wend. 222, and People v. Turnpike Road, Id. 254. People v. Bank, 24 Wend. 431, and Bank v. Matthews, 98 U. S. 621, and Bank v. Whitney, 103 U.S.99, approve of the same principle. And it has been in no manner disaffirmed by Slee v. Bloom, 5 Johns. Ch. 366, which, however, was reversed in 19 Johns. 456. And to the like effect as the other authorities is State v. College, 32 Ohio St. 487, and State v. Association, 42 Ohio St. 584. It was substantially for these reasons that the verdict was recovered against the defendant upon the trial. The defendant had •disabled itself from exercising its functions and employing its franchisеs as it was intended it should, by the act under which it was incorporated, and had, by the action which was taken, placed itself in.complete subordination to another and different organization, to be used for an unlawful purpose, detrimental and injurious to the public. Instead of manufacturing its product, and disposing of it to the public on what might be fair competitive ‍​​​‌‌‌​​‌​‌​​‌​‌​‌​​​‌​‌‌​​‌‌​‌‌​​​‌‌‌‌​‌​​​​‌​​‍prices, it had become a party to a combination in part, at least, designed to create a monopoly, and exact from the public prices which could not otherwise be obtained. This was a subversion of the object for which the company was created, and it authorized the attorney general to maintain and prosecute this action to vacate and annul its charter. The action was well sustained by the farts which the evidence supported; and the j udgment, for the reasons already mentioned, as well as those assigned by the judge presiding at the trial, should be affirmed.

Van Brunt, P. J. For the reasons contained in the written opinion, and •also for those contained in the opinion of Mr. Justice Barrett, who presided at the trial, I am of the opinion that the judgment appealed from should be •affirmed.

Brady, J., concurs.

NOTE.

Monopolies—Contracts in Restraint of Trade. A contract for the purposes •of forming a combination between all the lumber manufacturers at a certain place, limiting the amount produced, and increasing the price, is void, and unenforceable in any part. Lumber Co. v. Hayes, (Cal.) 18 Pac. Rep. 391. See, also, note, Id. So is a contract between two gas companies, each of which is authorized to supply gas throughout the entire city of Chicago, whereby they mutually agree not to compete with each other in the sale of gas within certain districts of the city. Coke Co. v. Coke Co., (I11.) 13 N. E. Rep. 169. But a contract whereby two rival manufacturers agree on a scale of selling prices for their goods, and one discontinues his business and becomes a partner of the other, is not void, where the manufactured goods are not articles of necessity. Dolph v. Machinery Co., 28 Fed. Rep. 553. See, also, note, Id. An elaborate note by Francis Wharton on the question of the illegality of contracts in restraint of business will be found attached to the report of Sharp v. Whiteside, 19 Fed. Rep. 156. See, also, on the same general subject, Telegraph Co. v. Railway Co., 11 Fed. Rep. 1, and note; Carroll v. Giles, (S. C.) 9 S. E. Rep. 422, and cases cited; Fowle v. Park, 9 Sup. Ct. Rep. 658.

Case Details

Case Name: People v. North River Sugar Refining Co.

Court Name: New York Supreme Court

Date Published: Nov 7, 1889

Citation: 7 N.Y.S. 406

Court Abbreviation: N.Y. Sup. Ct.