*1 1910. Syllabus. 221 ü. S. policy the merits of the embod- stop to discuss I do not 1890; for, Act of as has been often ad- Anti-trust in the ied system, our constitutional have courts, under judged, legisla- of policy concern with wisdom rightful no of Government which by that branch tion enacted (cid:127) make can laws. alone concurring general stated, .while the reasons For I Court, of the Circuit dissent of decree affirmance directs the court which the judgment part this Court, as as the Circuit well decree modification which, effect, assert opinion parts from those in the Anti-trust to insert words court, in this authority, which, being . there, not Congress put did Act which part public declare, is Congress made inserted, it has chosen declare. country, what policy AMERICA STATES OF AMERICAN UNITED COMPANY. TOBACCO COMPANY v. TOBACCO UNITED AMERICAN OF STATES AMERICA. THE THE OF FROM CIRCUIT COURT UNITED STATES
APPEALS DISTRICT OF THE SOUTHERN NEW YORK. FOR Argued 3, 4, 6, January 5, 1910; 118, restored to docket for re- Nos. 119. reargued January 11, 1910; 9,10,11,12,1911. argument April Decided 29, May States, ante, p. 1, followed and v. United reaffirmed Oil Co. Standard July given Act to be Anti-trust the construction as to 209; held that the combination in this 1890, 647, 26 Stat. ana case c. attempt monopolize and an the busi- in restraint of trade one prohibitions commerce interstate within ness of tobacco in' the act. v. AMERICAN
UNITED STATES TOBACCO CO. 107 Syllabus. 22Í U. S. presented by situation as is the record in
In to meet such a' this order overcome, to be the relief for the evils Anti- case and to afford comprehensive application *2 given be a more trust Act of 1890 must n previous it in decision. than affixedto any States, ante, p. 1, “restraint Oil v. United the words of In Standard Co. properly the Act construed as in 1 of Anti-trust were trade” used § in case in by reason; the doctrine stated that accord the resort to contrary despite .court, at previous of this the view all with decisions expressions in States United v. erroneously to the times attributed 290, S. and United Freight Association, 166 U. Trans-Missouri States Association, 605. Joint Traffic as there can have reasonable construction Anti-trust must a Act The among men scarcely business agreement any be. or contract indirectly possibly commerce. and restrain directly affect does not or Association, 171 S. U. States United v. Joint Traffic law, the this and in law of trade” at common of words “restraint The country adoption Act, at the the only the time of of Anti-trust em- acts, contracts, agreements operated braced or combinations which prejudice public by to unduly restricting interests of com- petition by unduly obstructing trade, Congress or due course and intended words as used in that that those act should have a like ruling significance; in Oil States, and the Standard Co. v. United n ante, p. 1, reéxpressed is to this effect and reaffirmed. public policy by expressed The manifested Act in Anti-trust is general language every that it such embraces act conceivable which possibly spirit prohibitions, can within the- of its come and that policy disguise subterfuge frustrated cannot be resort to any kind. part in record this casé discloses a combination on the of the de- purpose acquiring
fendants with the dominion and control of clearly methods manners interstate commerce in. tobacco and (cid:127) subject- prohibition Act; Anti-trust and the within the itself are matters of the combination and the combination not ex- scope being of the matters intrastate cluded from the act as com- and'subject state merce to control. aspects case the combination all its both as to stock this owner-
In corporations including ship, independently, foreign as and to they .corporations cooperators to extent that became .the combination, prohibition of within the the first and second come sections of Anti-trust Act. against relief an the Anti-trust giving
In unlawful'combination under give and effecf complete court should efficacious to Act TERM, 1910. . OCTOBER 108' Argument States. 221 U. United in- accomplish this result with as little prohibitions the.statute; public; general and have a jury possible the niterest to innocently acquired. property' proper regard for-the interests vested itself, cón- and also all of its In this case the combination and of ' illegal, elements, ate decreed and the court below stituent to be - parties plan or and directed to hear the and ascertain determine harmony recreating method of dissolution a condition (in period to law, out within-a reasonable this case not carried (cid:127) eight' months), and, necessary, if exceed effectuate .this result' injunction either.by receivership.
Pending parties all com- the achievement result decreed to the enjoined case en-
bination in this should be restrained larging by any power of the continuation means or device whatever. (cid:127) as this is, Where case is one to the lower'court with directions remanded, grant by it, the relief a different from that manner decreed proper modify affirm, but course is not to reverse remand .. conformity enter opinion with directions to with the a.decree *3 . carry out the of this costs to directions court with defendants. Rep. Fed. reversed and remanded with directions. facts, involve the construction of the Anti- which
The trust Act July 2,- 1890, question and the whether acts of the defendants amounted to combination in rér straint of in tobacco, interstate commerce are stated opinion..
The General .Attorney and Mr. James C. McBeynolds for the United States: ,or
What constitutes
materially
affects
interstate
foreign
a practical
-to,
commerce
question
be decided
is.
a;
upon
facts presented'
in each case. Rearick
view
v.
203 U. S.
Pennsylvania,
507, 512; Western
Tel.
Union
Co. v.
Kansas,
1;
U. S.
International.
Book.
Text
Co. v.
U.
v.
Pigg,
91; Dozier
Alabama,
S.
218 U.
In the constantly
course
recurring
of affairs com
merce amdng the States passes through
stages:
three
soliciting orders; manufacturing
the goods; transporting
them
And
to.
is
purchaser.
an essential
each
Soliciting
entire movement.
orders undoubtedly is inter-
v.
UNITED
AMERICAN
STATES
TOBACCO CO. 109
Argument
for the United States.
cpmmerce,
Shelby County,
state
The clause commerce indicate conformity its will in to which interstate commerce shall supreme be carried on. This is and admittedly extends to interstate commerce, is itself and all instru- whatever. persons engaged Legislation mentalities and therein. any which of these directly regulates comes things clearly grant. within the constitutional Delaware & Hudson States, 213 And, R. Co. v. United U. S. 366. conse- R. manufacture can be regarded whenever as a quently, Congress may commerce inhibit a part monopoly such doing as in so would be thereof, directly regulating commerce. be granted power may made effective all means therefor.
reasonably necessary
Experience demonstrates
Congress concerning
the indicated will of
interstate
may
directly hindered,
trade
commerce
obstructed
some
are
things
part
nullified
no
thereof.
these, therefore,
as an efficient
will
Whatever
cause,
probably eccasion as a natural and reasonable conse
quence material obstruction or hindrance to the effica
operation
will, Congress
cious
of its lawful
may prohibit.
A
monopoly
production,
cause, may
as the efficient
oc
casion material hindrance
opera
or obstruction to such
*4
iii
tion of the indicated will of
that event
Congress,
although
be
because of this effect
manu
may
prohibited
as no
of commerce. Gibbons v.
regarded
part
facture be
1, 195, 208,
Coombes,
9
United
v.
Ogden,
209;
Wheat.
States
Ball,
Pet.
The Daniel
Contracts, conspiracies %nd in- oí obstructed materially hindered directly and to the foreign prior commerce were terstate unlawful n July 2, act applicable common are' law The principles Tele Western Union transactions. commerce interstate con v. Call. 181 U. S. 102. Without graph every contract, combination, con enactment, gressional law, monopoly, unlawful at common would spiracy or although relating solely by Federal-courts regarded so no af certainly foreign commerce; to interstate given purposes any firmative aid would be them. Commerce with
Congress power Regulate has “To States, and with .Foreign Nations, Among Several provi- Except as other the-Indian limited Tribes.” abridged by sions, pdwer this and cannot be supreme is State, corporation. individual or its interstate by Congress
Inaction
indicates
will
shall be
and therefore
free;
and international commerce
substantially
interferes
or ham
obstructs,
with
whatever
Congress
such
conflicts
pers
the will
with
commerce
S.
Leisy Hardin,
100;
135 U.
Federal Constitution.
v.
Iowa,
412;
Rhodes
S.
Rahrer,
545;
U. S.
v.
170 U.
Re
Kentucky,
129, 135;
At
Express
Adams
Co. v.
206 U.
Adams
Wharton,
328, 334;
lantic Coast Line v.
Co.
Congress reasonably implied Chicago &c. R. R. to of commerce. Bowman v. subject 482. Co., 125 U. S. monopolies
Contracts, combinations, conspiracies prevent often do of commerce —sub may and the free flow obstruct, hamper same. stantially interfere with Lawlor, Loewe Addyston 175 U. Pipe Case, 208 S. 211; U. S. 274. legislation substantially
If hinders or state ob- which structs conflict with invalid, commerce is because in implied from reasonably intention of contrary Congress cor- silence, any arrangements is this true of fortiori results. porations bring about like which any contract, In com of express legislation absence by corporations or. other bination, arrangement . obstructs directly restrains or materially hinders, un be foreign free of interstate or commerce would flow 599; Bridge Union 564, 577, Re 158 U. S. Debs, lawful. 364; Galveston R. R. v. States, Co. v. United 204 U. Carolina, 187 U. S. Texas, 217; U. S. Caldwell v. North 210 a statute, far the absence of courts, 622. How could ápch prevent obstructions, par and restrain whether criminally, ties it is not nec might piosecuted thereto Anti-trust Act essary discuss, clearly since the now applies to them. anti-trust Tariff Act provisions
The the Wilson (1894) apply any agreement combination or intended parties free is en- competition restrain one of when in importing. gaged this provisions
These have not been construed court. They every combination, party denounce one which is to restrain engaged .importing, when intended lawful competition language commerce or therein. dif free Act, fers from the improbably somewhat Sherman opinions Re prior because the lower Federal courts. Rep. 104; United States v. Trans-Missouri 52 Fed. Greene,
(cid:127)Argument States. for the United Rep. 58; United Assn., Rep. 440; Fed. Fed. Freight *6 Knight Co., Rep. 60 Fed. 934. E. C. States v. competi- of free prescribes Act rule Sherman
The general sense and denounces con- and in its broad tion form conspiracies and whatever tracts, combinations directly ma- necessary tendency in effect The interstate or commerce. foreign terially obstruct of, commerce; is to competition increase effect natural the free is to play competition or prevent extinguish it. hinder not in- of an individual are rights acting
The alone controversy. (Concurring opinion the present volved Case.) in Northern Securities of Justice' Brewer gross violations of the anti-trust record reveals The any construction re- within consistent with statutes this if court; limited unreasonable peated decisions clearly case would be within them. present restraints duress, essential, and unfair methods are if wicked And .. appear. all they is large a term of very significance.
Interstate commerce
for the
of trade
purposes
It
intercourse
comprehends
sale
forms, including transportation, purchase,
all
any and
exchange
commodities between citizens
different
practical
con-
Regulation
both
States.
commerce.are
limits
by practical
must be fixed
lines.
their
ceptions,
States,
211;
v. United
U. S.
Caldwell
Addyston Pipe Co.
175
622,
Montague
U.
& Co. v.
Carolina,
632;
v.
187
S.
North
& Co. v. United
196 U. S.
Lowry,
38;
States,
193 U. S.
Swift
Pennsylvania,
507,
U.
Galveston
375;
512;
Rearick v.
203
S.
.
217,
R.
U. S.
225
Texas,
R.
v.
210
reasonably
laws must be
construed
The anti-trust
enforcement, and
so as to
defeat the
practical
view
their
"Nothing
enactment.
is better
purposes leading
statutes should
a sensible con-
than that
receive
.settled
legislative intention,
as will effectuate the
struction, such
so
avoid an unjust
if
as to
or.an absurd
and,
possible,
UNITED STATES v.
TOBACCO.CO.
AMERICAN-
U.,S.
Argument
for the United States.
conclusion.” Lau Ow
States,
Bew United
144 U.
47,
59; United States v. Joint
Assn., 171 U. S. 505,
Traffic
567; Hopkins v. United States,
578, 600;
171 U. S.
Ander
S;
son v.
States,
United
&
604, 616;
U.
Swift
v. United States,
The principles in reference to adopted state legislation affecting interstate commerce aré applicable determining corporations whether combinations of materially individuals affect flow such com free merce. validity such turns legislation upon state ii,s whether direct effect or necessary tendency the ma terial or substantial restraint, hindrance or obstruction of *7 commerce. If so, it is unconstitutional irrespectivé of intent. But if the effect is only immaterial and incidental this does not Kansas, invalidate.. Asbell v. 251, 209 S.U. 256; Galveston &c. R. R. v. U. S. Texas, 217, 227; 210 Minnesota Barber, U. 313, 319; 136 S. Richmond &c. v. R. R. Co. v. Patterson, 311, 314; 169 U. S. Chicago &c. R. R. v. Solan, 169 U. 133; S. Missouri &c. R. R. v. Haber. U. 613, 169 S. 626; Bowman v. Chicago &c. R. R. Co., 125 U. S. 465, 482; Smith v. 124 Alabama, U. S. 465, 473.
The Sherman applies Act when the direct result or nec essary tendency of prohibited thing contract, com — bination, etc.—is material obstruction, hindrance or re straint foreign commerce. This thing need of/interstate any not be part of nor commerce, by be done parties en gaged therein. obstruction, And such whether hindrance, restraint or tendency exists must be determined court upon the facts of each case. That which did not re strain commerce fifty years may to-day. do so ago Loewe v. Lawlor, S. 274, 293; Bridge 208 U. Union Company v. United States, U. S. 364, 400; Pennsylvania 204 v. Wheeling Bridge Co., 13 How. 421. 18 How. rule, 'thpse
The settled constantly and one invoked engaged is commerce, interstate that any state statute VOL. CCX3CI —8
Argument for the United States. 221 U. S. necessary tendency which in effect or directly and ma terially obstructs or hinders the free flow interstate com merce conflicts the Federal Constitution. Certainly one purpose prevent the Sherman Act was to such any through with commerce contracts, interference combina tions, (Loewe conspiracies monopolies. Lawlor), if state in congressional statutes are cut down because of tent inferred from can no silence, question there power Congress by positive enactment to destroy arrangements obnoxious amongst individuals or corpora tions. The interpx’etation expounded the Sherman Act opinion unanimous Loewe v. Lawlor this supports suggestion;
The natural competition legiti effect its broad and mate sense to increase To such suppress trade. com petition restrains, hinders and obstructs trade within the meaning óf Anti-trust Act. United States v. Trans- Missouri Freight Assn., 166 U. S. United 290; States v. Joint 171 U. S. Assn., 505; Addyston Pipe Co. v. Traffic United 175 U. States, 211; Northern Securities Co. v. United United States, 197; States v. Standard Oil Co., 173 Fed. 177. This rule is Rep. especially rigid in re spect corporations. service Gibbs public v. Consolidated United Co., 396; Gas U. S. States v. Trans-Missouri Freight U. S. but it is 290; applicable to all Assn. commerce.
Persons of sound mind are presumed to intend the nec *8 essary ordinary or consequences their acts, Clarion 325, 337; Bank v. 21 Jones, and, Wall. in general, or consciously intent entertained dominant in the minds of to á is not parties combination not certainly material — legality. attempts decisive of its Where monopolize are charged, or essential to a plan where show not necessarily circumstances, inferred from or where the effect estab lished may acts be doubtful, the actual purpose may mat¿rial perhaps essential. United States v. Trans-Mo. — v. UNITED STATES TOBACCO CO. 115 AMERICAN. .Argument for the 221 U. S. United-States. Addyston 290, 341, 342; U. S. Co. v. Assn., Pipe
Ft. 166 & Co. 211, 234; United 175 S. v. United States, U. Swift States, 196 U. S. 396. 375, legislation design
The the anti-trust fundamental immorality, but o'f punishment prevention not mischief control destruction of consequent upon unification is chiefly practi concerned about competition. public The The cal results —not mental attitudes. lawfulness aOf by the pur combination cannot be determined conscious necessary Of the are pose parties; consequences presumed v. Trans-Mo. to have been intended. United States Ft. Assn., U. United States v. Joint Assn., 290; 166 S. Traffic United Pipe States, U. S. Co. v. 175 562; Addyston 171 211, U. S. be read into the first “unreasonable” cannot word not Act; but this does render
section Sherman commerce is in merely because applicable prohibitions always way affected, enforceable, transactions some any regarded standpoint. never objectionable ordinary those This court has never declared unlawful at always common laW arrangements business sanctioned prevented. to be wholly mischief intended outside the innocent when stand Any act, entirely however, although if an part plan. alone criminal ing may be unlawful U. 505, 567, 171 Assn., United States v. Joint Traffic States, Aikens Hopkins 600; United 568; v. & 194, 205; U. S. v. Wisconsin, Swift States, U. S. Cincinnati Packet 375, 396; United Co. v. Bay, U. S. 179 . restraint,
The Government does not maintain that ob- or hindrance of’commerce is denounced struction tendency effect; direct and material either in act unless not, every do insist that contract or ar- and, course, merely competitor eliminates a inter- rangement which trade is for that sole reason unlawful. The state statute foster, destroy,. operations intended business
116 Argument for the United States. 221 U. S. universally regarded promotive as of public welfare. The the statute denounces as criminal \suggestion every party any to sort of contract which any eliminates inde- pendent dealer in interstate commerce insignifi- however cant is when, present untenable. But case, the consequence restraint is direct of or that to which the challenged contract or combination necessarily tends, and a material also of or substantial character it is clearly prohibition. within The Government does not avouch and will not attempt support this extreme con- adopted struction which was presiding judge be- low.
Contracts, combinations or conspiracies
give
power
materially
restrain commerce and indicate a
dangerous probability of
exercise and those which
its.
,
tend
necessarily
monopoly
are unlawful without more.
United
E.
Knight
States v.
C.
Co.,
1;
156 U. S.
United
States v.
Assri.,
Trans-Missouri Ft.
290;
Northern
Securities Company v. United States,
The “contract, combination and conspiracy” in the statute are used in their ordinary sense, and there sales, is no exception favor of conveyances or other ex- arrangements. ecuted v. United States, Pettibone 148 S. 197, 203; Noyes on Intercorporate N. Relations, §§ et seq.
The decision in United States v. E. C. Knight Company upon the turned conclusion that under peculiar cir- cumstances of that case what alleged proved did a direct or sho^v necessary obstruction to interstate commerce; may £tnd upon relied only where evi- requires dence a like finding point. on that The facts of present case such conclusion impossible. render direct, things done had reference interstate and foreign CO. TOBACCO UNITED STATES AMERICAN Argument States. for the United U. S. *10 effectively has been de therein commerce; competition support In of the fore stroyed secured. monopoly E. Com Knight States v. C. going doctrines, see United Great R. R. S. Pearsall v. Northern pany (1895), 1; 156 U. Trans-Missouri United States v. (1896), 646; Co. U. S. 161 v. Joint 290; S. United States Freight (1897), Assn. 166 U. United (1898), Hopkins Assn. 171 S. v. 505; U. Traffic Anderson v. States 578; States 171 S. (1898), U. United v. Company 171 & 604; Addyston Pipe U. S. Steel (1898), 211; Company United U. & (1899), Montague States 175 S. Company Lowry (1903), 38; v. 193 U. S. Northern Securities v. S. Harriman v. North- (1904), 197; United States 193 U. & Com Company 244; ern 197 S. (1905), U. Securities Swift . 375; United 196 S. Cincinnati pany (1905), v States U. etc., Bay (1908), Packet v. 200 v. 179; Co. U. S. Loewe National Cotton (1908), Lawlor S. 274. See also 208 U. Compress v. Shawnee Co. v. Texas, 115; Oil Co. 197 U. Anderson, 423; Paper U. S. Continental Wall Co. v. Pennsylvania Sugar Refining 212 U. S. Com Voight, 227; Rep. Fed. Sugar Refining Co., 254; v. American pany Mining Company, Hecla 167 Fed. Bigelow Calumet & v. Mason Rep. 721; Fireproofing National v. Stand 259; United States Assn., Rep. Builders 169 Fed. Co., Rep. ard Oil 173 Fed. 177. practical cessation of is the outcome
Monopoly This the Anti- competition. effective business word grant special privileges to a of Trust Act has no reference any in a Trade and commerce but is used broad sense. as result commodity monopolized are whenever occurring businesses —not competing concentration of of one and development an incident to orderly growth (or acting corporations persons) of them —one or a few to control practically acquire power prices concert competition. smother in- are not acting of an individual alone rights
(cid:127)The acts far his unnecessary inquire how volved and it is Argument for the United States. all do not have the con- Corporations
may be limited. and are themselves of an individual rights stitutional acts, applicable to the rules law subject combinations in concert. done no to a govern has reference “monopolize”
The word striking existing at an evil— Congress grant.-1 mental com consequent destruction control unification organizations. essential through, powerful petition to deprive control ability prices monopoly idea advantages flowing competition. from free "public- actually exercised, or-prices has been the power Whether is-im trade increased total volume diminished or the *11 by practi be its existence must determined material; and weight conditions, giving due existing consideration cal. It cer of the commerce involved. peculiarities to the is. deliberately pursued course, a parties have that -where tain necessary tendency of is ordinary or which result deny to an in they cannot be heard unlawful monopoly, through contract, monopoly a acquired combina ; tent directly essentially conspiracy destroys tion or* United States v. clearly unlawful. competition Trans- 290; Addyston Co. v. Pipe U. S. United Assn., Mo. Ft. 166 211; & Co. v. United States, 175 S. 196 States, U. Swift U. S. 375 . to long “monopoly” have the out
The courts referred distinguished from govern action as come of individual every arrange and have declared unlawful grant, mental Sherman thereto. The Act has tending ment word significance opinions, in the well-known the same Williams, 1 Reynolds, 181, Mitchell v. P. Continental 212 U. S. United Voight, 227; v. States v. Paper Wall Co. Rep. 85 Fed. United Addyston Co., 271; States v. Pipe Knight 1, 16; E. C. U. Pearsall v. Co., 156 S. Great Northern 644; S. United v. Railway Co., Freight 161 U. States National Association, 323; U. S. 290 Cotton Oil 166 Co. v. Compress 197 Shawnee Co. v. 115; Anderson, Texas U. S. i/. AMERICAN TOBACCO CÓ. lid STATES UNITED n the United States. Argument for 221 U. Sugar Refining River v. North 423, People 433; U. S.
209 44 Klotz, Biscuit Co. v. Fed. 354; Hun, Co., 54 632; 77 Po Buhl, 724; Richardson Rep. 721, Michigan, Co., & C. Va. 508; C. 60 W. Coke Co. v. cahontas Powhatan Co., Illinois, 619, 620; American Glucose Harding v. Rels., et An Intercorporate seq., 389; Noyes on §§ 329 I, (2d Éd.), Vol. Law drews, Amer. combinations, monopolies against legislation a by causing corporation acquire defeated
cannot corpora- of competing and business property or shares any other scheme device. tions; nor.Uy bring combinations which about results Corporate They are unlawful. statute are denounced than the old forms of injurious public more fact concerns agreement among separate well- simple Combinations, on Vol. I, Eddy trust forms. known §§ .; Relations, Dis Intercorporate 307; et on seq Noyes § People, Illinois, 448. tillery Co. v. corporate beyond form of combination is If .the
.' regulate Congress, supreme power lacks com- state, reach-of creature of Certainly corporation, mere merce. to obstruct power cannot be endowed with commerce
law, Deb’s 158 U. S. Case, the State itself. possessed States, 211; United Addyston Pipe Co. v. 564; U. S. 197. Case, 193 Northern Securities *12 supe and transfer is not right buy; property The to sell all contracts; other are sub right to the to make rior regulate power Congress to commerce. to the ordinate S. United 175 U. North States, 211; Co. v. Addyston Pipe 197; States, 193 U. S. & ern Co. v. United Securities Swift Compress Co. 396; 196 U. S. Shawnee States, Co. v. United Packing Armour Co. v. United 423; U. S. Anderson, v. 209 Del. & Hud. United States v. R. R. States, 56; U. S. 209 212 366; U. S. Natl. Harrow Co. Case), Clause (Commodities 36; Rep. 84 Fed Rep. C., Fed. 226. Hench, v. 83 to as an incident which, orderly corporation A 120
Argument
States.
221
for United
U.S.
competitors by purchasing
control of
their
growth, secures
and business and
property
thereby acquires
shares or
competition
to
is no less inimical
suppress
public
power
“Trust,”
than a technical
and indeed is
interests
often
thereof;
direct,
modification
The
necessary
mere
result
arrangement
an
is to hinder and
of such
obstruct com
The Pearsall
Case,
644;
merce.
Northern Secu
U. S.
Case,
rities
193
Shawnee
344;
Compress Case, 209
Distillery Co.
People,
U. S. 42
v.
156
3;
Illinois, 448, 491.
52 Fed.
E.
Greene,
Rep. 104,
In re
C. Knight Case,
contrary,
must be considered disapproved.
if
is no foundation for
claim
There
that the Sherman
only
directed
contracts
against
Act was
and combinations
executory nature,
an
and is
application
without
where
of property
actually
transfers
have been
executed.
It
to, and does, prohibit
was intended
obstructions to com
merce
or
resulting
executory
whether
executed ar
Northern
rangements.
Securities
193
Case,
U. S. 197;
Compress
Shawnee
Co. v. Anderson,
U. S. 423; People
Chicago
Trust,
Gas
Illinois, 268;
Distillers & Cattle
Feeding Co. v.
People,
Illinois, 448;
Pocahontas
Co. v. Powhatan
Co.,
Coke
Coal & Coke
A foreign doing business within the United right States has no to violate An its laws. policy agreement or combination in purpose or effect con- flicts therewith, although actually made in a foreign coun- try unlawful, where not no gives immunity parties act- ing in pursuance here of it.
If Congress powerless is prevent wrongs in its own jurisdiction, when actors are foreigners, when done in pursuance of agreements made its abroad, sovereignty is myth.
A crime committed jurisdiction within the where act parties actually takes effect, in- although the *13 v. UNITED STATES AMEEICAN TOBACCO CO. 121 Argument
221 U. S.
for the United States.
may
strumentalities
have been set in
motion
another
jurisdiction.
Palliser,
Re
The courts should enforce the legislation anti-trust all appropriate processes known their usages; and de- crees should so be moulded as to suppress effectually the
mischief consequent upon arrangements. unlawful has
Congress forbidden monopolies and combinations. When one exists everything done furtherance its n purpose is unlawful; especially every act constituting a part foreign interstate or commerce. Therefore the ,of engaging may therein power denied. The privilege to regulate prohibition extends to anything directly conflicting Congress with the will lawfully expressed. Northern Securities Co. v. 193 U. S. States, 197; United v. Ames Champion (Lottery Case), 188 U. S. United 321; H. Co., States v. D. & 213 U. S. Loewev. 366; Lawlor, 208 U. restrain, The statute requires the court “to prevent and merely violations” —not to determine the legality past public transactions. The interest thing to be sub- served, and existing it demands the destruction of mischief and prevention of impending wrongs removal of —the existing obstruction or threatened. an corporate
Where unlawful combination exists identity of constituents has destroyed, been one where corporation has acquired a forbidden there monopoly, -are possible two effective enjoin remedies.' The first is to corporation from doing foreign interstate business until (if ever) it can its affairs affirmatively show that have been readjusted so as to render future operations lawful. The second is to appoint possession a receiver to take concern by proper opportunities action restore competition. free Deb’s Case, 564; Chicago, TERM, 1910. *14 S. U.
Argument for the United States. 221 v. Fed. Ry. Ry., 15, &c. Union 47 Rep. Island Rock Pacific R. R. N. Stockton, Atty.-Genl., Co., Eq. v. Central 50 J. 26; Taylor Simon, Mylne Craig, v. & 489; 141; Pomeroy 52, Ed., 111, 2d 170 . Eq. Juris., on §§ established violations of the The Sherman Government first, existence of contracts, combina- by proving Act and conspiracies monopolies; and, second, that the tions, necessary tendency of these is materially result direct and burden the free obstruct, hinder of interstate .to flow commerce. foreign and Case, controlling; is not 'Knight
The combinations directly materially here and not only' established affect manufacture, every production department but of in and the tobacco; trade and commerce results have been in such competition commerce and the crea- destruction by monopolies tion of defendants. legislation anti-trust cannot be frus- purposes
The by nor means through corporation, operating by trated property. The Northern sales and transfers executed Harriman v. States, 197; 193 U. v. United Co. Securities Co., U. S. seem decisive on Securities Northern point. this clearly if evidence establishes important,
Moreover, have, by characterized actions been the defendants’ and that fol- methods; oppressive and unfair duress, sought suppress competi- plan they have lowing a fixed monopolies. tion and secure as it acts right enjoined so far below was
The decree control of enjoined the combination; in furtherance Éy through stock corporations others certain defendant prohibited so it the American far as and also ownership; to be adjudged defendants other Company Tobacco in restraint of trade combinations and of themselves foreign commerce. engaging interstate .in , necessary did no more than was The below decree prevent combinations and violations destroy the unlawful v. TOBACCO CO. AMERICAN STATES UNITED Argument the United 221 U. States. S'. it did far Prohibition of go enough. fact the act —in and also control
acts combination furtherance abundantly corporation one another supported States; Co. v. United & Northern Securities Swift D. & Co. v. H. R. R. United States, and United States the American adjudges That of the decree which part others unlawful combinations enjoins engaging ap- i$ them from commerce novel — a direct but harmonizes parently precedent; without & duty with the to enforce the act. Co. v. United Swift States, supra.
The should as to the petition not have been dismissed individual defendants.
In to intelli- effectually destroy order combinations the must gent manipulators agencies be reached. corporate every done in pursuance Observance and act English unlawful; States are contracts within the United the Im- as to petition wrongfully and the was dismissed Com- Company, British-American Tobacco perial Tobacco latter. controlled corporations and domestic pany into, England, agreements entered The effect Imperial and the the American combination betwéen competition between suppress was to Company Tobacco and both without great concerns within those two n Company The British-American United States. for instrumentality as the brought into existence was The result of whole agreements effective. making competition, inevitably and destroy arrangement was arrangements of these Observance monopoly. tends to The British-American To- prohibited. should have been been enjoined doing should have Company bacco pro- the same the United States; business within Imperial To- applied hibition have been should of the unlawful during continuation bacco Company contracts. dismissed as to the have been should not petition
The TERM, 1910. S. U. Argument Tobacco Co. for concern one This Cigar Company. United Stores To- the hands of the American instrumentalities its purposes, unlawful carrying bacco out have been between them should connection severed. final The should defendants adjudged have decree attempting were to monopolize, monopolized, and had part of interstate and foreign commerce. is a Monopoly practical conception, its existence must be determined in view business conditions. The abundantly evidence establishes that the defendants have acquired power prices control competition. smother final decree should corporations have enjoined holding shares from collecting others dividends thereon. This granted relief in the Northern Case, Securities and is an appropriate way destroy relationship where corporation one improperly controls another ownership. stock
Mr. John' Johnson, DeLancey G. Mr. Nicoll and Mr. Junius Parker, with Mr. whom William J. Wallace and Mr. W.W. Fuller on brief, were Mr. William M. Ivins also filing a brief, for the American Tobacco Company and all the other except defendants the Imperial Tobacco Company (of Great Britain Ireland), Limited, United *16 Cigar Stores P. Jr., R. Richardson, Co.,& Inc.:
The transactions principally complained byof the Gov- ernment in bill this involve the of one validity or the other of the two following transactions, (a) to-wit: Consolidation of manufacturing through interests the formation of thé corporation and the transfer properties in such industries for manufacturing exchange stock of the vendee corporation or for cash; (b) purchase aby cor- poration engaged in manufacturing of the property a competitor, or through purchase by such corporation of whole or part of the stock corporation of such v. AMERICAN TOBACCO CO. 125 STATES UNITED Co. Argument for the American Tobacco 221 U. S. for cash. These trans- generally corporation,
competing of the Sherman operation Law, not within actions are com- manufacturing not affect they primarily because £p.d County Mobile 568; 14 v. Moor, How. v. Veazie nierce. S.,517; Errol, Turpin 116 U. Coev. 691; 102 S. Kimball, U. 1; In Pearson, Kidd 128 U. S. 504; v. 117 U. S. Burgess, v. v. 156 104; Knight, United States Rep. Greene, re 52 Fed. 1. U. S. decision of this sporadic Knight Case pre cases that outcome of the logical was the
court, but cited, and it has not been just it that have been ceded decision, any but subsequent or modified overruled Addy wherever mentioned. expressly recognized has been 211; 175 U. S. States, Co. v. United & Steel Pipe ston Co. U. S. & v. United 38; Montague Lowry, v. 193 Swift Anderson, Co. v. 375; Compress Shawnee States, 196 U. S. 274; U. S. Northern Lawlor, Loewe v. 423; 209 U. S. States, 197, 406; Conti v. U. Co. United Securities v. 227; 212 U. S. Ware Voight, Co. Paper nental Wall Bigelow Co., v. Calumet County, 405; 209 U. S. Mobile as-, and it has been has arisen 721. Confusion Rep. Fed. has overruled or modified Knight been sumed that the Case distinguish persons between of the failure because is the basis of and the transaction which complained of this case and de The defendants complaint. Knight Case in interstate engaged in the. were fendants is not defendant question whether the commerce, but not in interstate commerce, but whether engaged is complained of is an direct in its ef of, act transaction in interstate commerce; engaging fect interstate one on, himself and his whole thereby subject commerce does not Howard v. Railroad Congress. business the control Company,
Any distinguish Knight this attempt case upon pleading part Case based unskillful on Knight Case, Government defeated consider- *17 TERM, 1910. 126 221 U. Argument for the Tobacco Co. in this record of that case on file court. The ation as been Knight Case here contended has as scope Government department the law sumed Annual Reports Attorney to 1907. 1895 General 21 1895, 1896, p. xxvii; 1899, for et for p. 13; pp. seq.; 1906, p. 687, Session, Senate Document No. 2d 60th 7; Upon Knight 27. the decision Congress, p. Case, these defendants are only among the defendants —and one respect proceeded; this this many adjudication —have court has become property, this a rule over rule would make wrecks of these a case enterprises; analogy presented close to ex laws post such that the facto maxim of stare decisis as if embodied becomes almost the Constitution itself. It is as important law that, it permanently be settled should be should settled correctly. 713, 724; Gilbert 3 Wall. Philadelphia, Vale v. U. S. Arizona, v. reference to whether
Without
the trade is interstate,
transactions
record
shown
do
constitute con
.this
tracts,
conspiracies
combinations or
in restraint
trade,
and are not against
public
which
court
policy
this
has
(Northern Securities Case,supra) declared to be the purpose
and effect of the Sherman Law. The intent of Congress
not to
unsettle legitimate business
but
enterprises,
place
rather to
statutory prohibition, with prescribed
penalties and remedies, upon those
were
contracts
in direct restraint of trade,
against
unreasonable, and
public
(Mr-.
policy.
Justice Brewer in Northern Securities
Case). The transfer of property by
sale, or
purchase,
con-.
solidation, whether by the
formation
partnerships, or
ganization of
corporations,
consolidation of preexisting
corporations,
is not violative of the common law. See
Fairbanks
Leary,
v.
Wisconsin, 637; People North
Sugar
River
Refining
Co.,
N. Y. 583; Trenton Potteries
Co. v. Oliphant, 58 N. J. Eq. 507; Cameron v. Water Co.
(N. Y.),
58; v. Co. v. R. I. Garst, Oakdale 18 111; Metc. Hunt, 4 wealth v. 225; I. Co. R. v. North Tierney, 19 484; McCauley v. Bohn v. Monongahela Jutte, Co. Minnesota, 223; 54 western Assn., and consolidation is transfer 300. Such 210 Pa. St. is authorized expressly but policy, the public opposed many States, merger statutes by the facilitated Many of none. the statutes by forbidden and is have merger corporations authorize which States n anti-trust statutes as the Sher import general of the same Anti tó the Federal give and to Law, man Anti-Trust the Govern contended meaning statute the Trust state meaning into the various that import ment incongruity assum work anti-trust statutes would the formation cor had facilitated the States ing formation would become very their which porations, commerce. outlaws of Securities Case decision of this court Northern this made; here court in conflict with the contention
not in or modify overrule Securities did not the Northern Case and in deci made, subsequent declarations theretofore Securities Case as recognized has not the Northern sions made. Trans-Missouri with the contention here conflict States v. Joint 290; United Case, Assn. U. S. Freight 166 U. S. Kansas, v. 196 Smiley Assn., 505; 171 S.U. Traffic 115; 197 Texas, U. S. Co. v. Cotton Oil 447; National 179; Chesapeake 200 U. S. Packing Bay, Co. v. Cincinnati Rep. 610, 620; Fed. Davis United Ohio Co. v. 115 States, & Co., v. Brick 127 Robinson Rep. 31, 37; 131 Booth, Fed. v. McConnell, Co. v. Rep. 804; Connor-McConnell Fed. Lennen, 116 Fisheries Co. v. aff., 987; Rep. 412; idem,
Fed. 304; Co., Rep. Fed. Harrison v. Glucose Rep. 217; Fed. Bigelow 120 Fed. Haberman, Rep. 415; Co. v. National 721; Rep. The combinations 167 Fed. Co., Calumet Law, passage in existence at the Sherman contracts enactment, in its Congress in the contemplation Argument for the Tobacco Co. capital combinations of distinct from those entirely
were joint- form of had existed ability long and it corporations partnerships, stock associations an the Sherman Law as of the court duty is the apply a revolutionary assume statute, and not evolutionary mind of in its enactment. Congress purpose in have not violated Sherman Law These defendants commerce, although they trade or by monopolizing proportions of the large; varying, but aggregate enjoy *19 under products Monopolizing business in the of tobacco. being, an and not state of activity the Sherman Law is size, is inherent in whether size, power and and the that pro in investment or to the size be considered relation to is not monopoliz at the time portion enjoyed, business or an at common ing monopolizing. Monopoly element sole and sell buying law was or for the privilege license whatsoever, or ing, working, using anything making, whereby general is restrained from that subject manufacturing trading or which he had before. liberty under carries Blackstone, Monopolizing 159. statute it the idea of and whatever the exclusion, magnitude with of a concern it is or at may be, guilty monopolizing not tempting doing something by it' is monopolize to unless attempted which to- result, there is either attained or this that is from that wit, subject general “the restrained liberty of trading dissenting. had before.” he See opinion Case, Mr. Justice Northern Securities Ipblmes Greene, In re Fed. Chemical Co. Rep. 115; 193 U. 409; 946, v. Fed. v. Co., Rep. 949; Providence Whitwell Co., Rep. 462; Continental Tob. 125 Fed. United States v. Reading This is only 183 Fed. 427. true not Co., Rep. respect this is at com recognized but it so statute, economic mon law Mc among Mogul writers. Co. v. Gregor, Q. L. B. Oakdale v. 18 R. I. 618; Garst, R. 23 484; “Monopolies Trusts,” 34; Prof. Clark’s Elv’s Trusts,
Controlof AMERICAN UNITED TOBACCO CO. 129 STATES Argument for Co. singly either or in not, defendants have combina- These anyone to exclude from trade tion, attempted or excluded commerce, have not cornered (a) They attempted nor it is a material; of raw matter of supply to corner the se- attempting corner or to corner such rious doubt whether of the Sherman Law, the inhibition or fall within would power Congress, being an the constitutional within effect interstate on, commerce, or direct in its even act of, as to disclosed it. But decisions those ques- if the record case, of this adjudication to an necessary tions are not or other enjoyed prefer- have rebates Defendants not (b) enjoyed have not ex- (c). they transportation; ence in machinery advantage in the. use of facilities clusive not excluded nor at- .(d) they have manufacturing; the avenues of dis- competitors tempted exclude impossible marketing products. their It tribution — competitors éxclude attempt conceive of exclusion or the does involve one other from trade have The defendants met methods avenues. foregoing it have meeting adopted competition, active a construction competition. give methods of To ordinary *20 competition, to foster as is Law, intended to Sherman competition, of methods would forbid the usual thát would Competition, it is often statute make the self-destructive. all competition of object the life of but said, trade, is To that a man say is competitors. other to drive out is act is stop any to short trade but that freely, to he is de- and which to harm other tradesmen calculated shop Ids own would be a to to signed attract business The rights impossible perfection. counsel strange rights strangers competitors are different from on the part trade, justified to the and conduct is to his own seeks build business corporation who person only him whose if adopted be unlawful that would Lawlor, supra; of another. Loewev. the.injury motive was 388; Smith, Rep. 383, Fed. Machine Co. v. 70 Bonsack vol. ccxxx—9 1910.
130 221 U. S. Co. Argument the American Tobáceo for Berry B.Q. 598, 618; v. L. R. 23 McGregor, v. Mogul Co. Typographical Barnes v. Massachusetts, 353; Donovan, 188 Council, Trades 53 Barr v. Essex Illinois, 424; 232 Union, Hennessey, Illinois, 608; 176 Doremus v. 101, 124; Eq. J.N. rights The Co., supra. Tob. Continental v. Whitwell include the at common law recognized- competitors v. Hunt Commonwealth competitors; to undersell right Outerbridge, 143 N. Y. Lough v. 111, 134; 4 Metc. (Mass.), Lindley 1 on Part. partners; secret. to have 271, 283; * Peters, 529, Bank, 562; 5 Winship v. Ed.) 16; Am. (2d in de only can result of business adopt policy though part of it is even competitors, of weak struction Outerbridge, 143 Lough v. cost; below the sale of goods Massachusetts, 255; 185 White, Martel v. 271, 283; N. Y. Karges Co. v. Louisiana, 658; 121 Co., Lumber Lewis v. make Indiana, 421; provision Union, 165 Amalgamated 3 (Mass.), Pick. Palmer v. Stebbins handling; for exclusive v. Greene, supra; In re Whitwell Continental 188, 192; Mississippi, 71 Co., Wright, Houch v. supra; Tob. not constitute competing, businesses do
Purchasers do not ex- monopolize, purchases attempts such field this is open; leave the the.trade, clude others from but a, is to rid of purchase get true, although inducement ap- and protection law of self-defense competitor. United person. as to his to one’s business as well plies v. Massachusetts, 351; Co. Wood Kimball, Shoe v. 193 Co. Y. United States Co., 551; Bros. N. Whitehead 165 Ebel, Butt v. Rep. 946, 950; Provident 64 Fed. Co., v. City Co., Garden Sand 256, 259; Lanyon Y. Div. App. N. City Co., Cream 86 Wis- Illinois, National Co. v. 616; a, to en- not taken from vendor consin, 352. Covenants are not that sold in a business in gage competition valid and enforceable. criminal, altogether but are only Park, 179; Fowle v. Bay, Cincinnati Co. v. *21 Winsor, 64; 20 Wall. Electric Navigation U. Co. v. 88; S. Hawks; Massachusetts, Co. v. v. AMERICAN TOBACCO
UNITED STATES CO. 131 Argument the Tobacco Co. 221 U. applied and properly
The Sherman Law is a construed statute, evolutionary purpose and whose and beneficent one and preserve every effect is to to liberty opportunity preserves this in interstate engage liberty to commerce —it against the unreasonable covenants opportunity himself, against as well as party of the the contracts others seek in others, tortious conduct of whether those to stranger combination, to exclude the or combination exclude, In other this words, seek him. statute singly to trade doctrines of the common law applies interstate commerce, respect without applicable to trade and the words used it are not, whether or interstate law, must, the in- known at common well words their common law law, given terpretation of this mean- to make ing. The chief of the statute was certain purpose Federal.jurisdiction principles application definite law, provide common certain remedies for the enforcement thereof. mentioned, heretofore addition to the considerations
In gives alone, and this construction mean- construction, this (a) of the statute: every and effect to first ing word condemns, every contract, étc., statute section for by contended restraint trade —the construction in this eliminate word the Government case would dependent test makes the “every” the statute and from or its magnitude result; but upon act, the nature is the nature the act defendants contend that these prohibited every test and that transaction its or magnitude, result, is forbidden, whatever nature monopolizing forbids the (b) intent; the second section any of interstate trade attempt monopolize part as to Government’s contention or commerce —the (cid:127) these meaning of this section eliminatés words second “in for them words statute substitutes construction con- dominating part”; or “a large part,” to the mean- gives defendants full forcé tended for these *22 132 1910.
Argument for the American
Co.
221 U. S.
ing "any part”
is a violation of the statute to exclude
—it
attempt
to'
tortious means a
by
exclude
trader
from
part
even
trade or
interstate
commerce.
the/smallest
An additional
in favor
argument
of the construction of
the statute here contended for is seen when the
is
remedy
considered. The court below, construing the. statute as
for by
contended
Government, said that
condemned
incidental elimination of competition which comes
ordinary
from
consolidation, sale, and
in
purchase;
order
give vitality
to such construction there are involved
grave
questions:
two
constitutional
First: Is there a con
stitutional
in
power Congress to forbid the
trans
ordinary
actions that have
all commercial peoples,
characterized
and that are unquestionably valid at common law? Sec
ond: Has Congress the
power
prevent
constitutional
corporation
state
from
engaging
commerce
interstate
products?
in wholesome
These defendants believe that
questions
these two
should
nega
be each answered
Congress has no
tive;
right
authority
under its
to regulate
commerce, great
paramount
as that
is, to
power
rights
violate the fundamental
provisions
secured
other
.
of the Constitution Monongahela Co. v.
States,
United
312,
148 U. S.
Adair v.
336;
United
208 U. S.
States,
161,
180; Allgeyer
U.
Case,
578,
165
S.
589,
Congress
has
right
not a
to forbid corporations or natural
from
persons
engaging
interstate
products—
commerce wholesome
right
of intercourse between State and State derives
its
source
those laws whose authority
acknowledged
is
by civilized man throughout
the world —the Constitution
found it an existing right and gave
Congress
only the
power
regulate it. Gibbons v.
Ogden,
1,
Wheat.
211;
Paul v. Virginia, 8
Corporations
Wall. 168.
have this
right
certainly
and as
persons.
as natural
thoroughly
Santa
County
Clara
v. R. R.,
394, 396;
118 U. S.
Justice
Field at Circuit
in Railroad
Cases,
Rep. 722,
Fed.
Tax
746; Hale v. Henkel,
Mr. B. John Hornblower, William with whom Mr. Mr. William Mr. M. rell, Morgan Mann, W. Miller, on were the brief for the Tobacco Com- appellee, Imperial pany: testimony far taken in this
By
greater part
the
Argument
Imperial
for the
Tobacco Co.
221.U. S.
alleged
the
combinations
has to do with
entered-
cause
Company
Tobacco
and its
the American
allied
by
into
Imperial
country,
in
with which
Com-
this
companies
Qompany
have no
con-
British-American.
pany
the Government
claimed, however, by
It
that
cer-
cern.
by
Imperial
into
Company
entered
contracts
tain
Company
were
violation of
1902 with
Imperial
that
the transactions of the
Act, and
Sherman
that date have been
violation of the act.
since
Company
England
into in'
entered
the sum-
contracts were
These
purpose
putting an end to
for the
of 1902
mer
being carried on in England
competition which
ruinous
Limited
the American Company.
owned
Ogdens
right
dismissing
below was
bill as to
The‘court
and as to the
British-American
Imperial
ground
on the
those companies
Company,,
that the contracts to
companies,
they
British
were
made
Britain and
valid
parties were
were
in.Great
were
Britain, and that
laws of Great
Sherman
under
no
Act has
extraterritorial effect. American
Anti-Trust
Co.,
v. United Fruit
The there at restraint of trade which would not be invalid common law, prohibition do come within by recognized Act, has been this Sherman court v. AMERICAN UNITED STATES TOBACCO CO. 135 (cid:127) (cid:127) Argument Imperial 221 U. S. for the Tobacco Co. cases
very;
which are cited
the Government as holding
all
of trade
restraint
contracts
whether reasonable
unreasonable,
are
violation of the Sherman Act.
See United
Freight
States v. Trans-Missouri
Association.
166 U. S.
The same
290,
principle
329.
is recognized in
United States v. Joint
Association,
. held that Traffic the statute tois have a “reasonable construction.” When he states that contracts in restraint of trade are invalid under the statute, whether reasonable or unreasonable, he refers not to contracts between mercantile or manufactur- ing concerns, but to contracts or combinations between competing corporations, railroad all of which contracts or combinations under the illegal are statute even though the rates and fares are reasonable. established See 568, 570.
The distinction between contracts affecting public serv corporations, ice and contracts private between individuals stated in corporations, well Gibbs v. Gas Baltimore Co., U. S. where was held that a corporation cannot disable itself contract from the performance of public duties which it has undertaken, thereby make public accommodation nr convenience subservient to its but private interests, public where welfare is not in volved, WAele tlie restraint df one party greater is not protection than party requires, the contract ^other - oftrade be sustained. may restraint , of "covenants validity vendee, between vendor protecting of. purpose covenantee in the en . fruits joyment legitimate of the contract, have *25 upheld been under the Sherman Act iírthe Addyston Pipe Case, Rep. 85 Fed. modified and affirmed without in approval below Brett opinion 211; v. TERM, 1910. 136 221 Co. U. S. Argument Imperial Tobacco for the City Sand Lanyon v. Garden 256; Y. Div. App. 29 N. Ebel, Tobacco Co., v. Continental 616; Whitwell Illinois, 223 Co., Embossing U. & Rich v. S. Rep. 454; 125 Fed. Bancroft Co. v. Harbison-Walker 402; H. 72 N. Co., Refractories Pa. 55. Stanton, 227 St. in his Mr. Brewer statement of Justice
In
view
Case, 193
Northern Securities
opinion
concurring
de
“Congress did not intend to reach
361, that
TJ. S.
trade,”
restraint of
partial
Contracts
stroy those minor
upon the
of the limitations
effect
view
placed
Trans-
Peckham’s
opinion
in Mr. Justice'
the statute
made
Case, may fairly assume
statement
Missouri
we
of this
views
represent
Mr. Justice Brewer
especially as
contracts
a mercantile character
court,
instruments of
affecting railroads or other direct
not
subject of
not in restraint of
commerce. The
contracts
prior
trade at common law
to the act
1890
discussed
Oregon
Navigation
Winsor,
this court in
Steam
Co. v.
64;.
Co.,
88-96.
Gibbs v. Consolidated Gas
The lower Federal decided numerous cases Act, upholding both before and since the Sherman con object competi avowed off tracts, buy which was rival. Carter Alling, Rep. tion of a business v. 43 Fed. 208; Co., U. Chemical Co. v. Provident Chemical 64 Fed. 946; Refining Co., Harrison v. Glucose 116 Fed. Rep. Suffer Haberman, & Enameling Co. v. Rep. 304; Stamping National Praine v. Rep. 415; Ferrell, Rep. 20 Fed. Fed. 1 177 Fed. Lawrence, Rep. 702; Walkér parties object which have for Contracts between their competitor rival in a removal business are regarded as contracts restraint of trade. Con- if although partial restraint of trade, tracts valid at if law, common not a cover a combination or con- for. prices, prevent general to raise or to spiracy competition, under the Sherman Act. This are not invalid proposition *26 UNITED STATES v. AMERICAN TOBACCO CO. 137 Argument 221 Imperial U. S. for the Tobacco Co.
is clearly held authorities by above cited from the reports. Federal
As to illegal what contracts would at common in law as restraint see Rousillon v. 14 trade, Rousillon, Ch. L. Lorsent, Div. Leather Cloth Co. v. R. 9 351; Eq. 345; approved by Co., this court in Gibbs v. Consolidated Gas U. S. 130
In v. Guns and Ammuni- Maxim, Nordenfelt Nordenfelt tion Co., L. 1894, R. the House of Lords App. Cases, 535, at in great length opinions reviewed elaborate subject whole trade, covenants restraint of and held unanimously covenant, though a unrestricted as to was not no space, invalid where it was shown be wider than was necessary protection of the company, nor injurious to public interests.
The case of Diamond Match Co. v. Y. Roeber, 106 N. establishes the proposition that in connection with the sale of a factory good and the thereof, covenant, will practically engage unrestricted time or not to space, articles, manufacture or sale of is not competing is laid principle restraint trade. The same covenant down in the cases of Leslie Hodge 244; v. N. Y. Sloane, 107 v. Lorillard, 110 N. Y. Tode Y. 519; Gross, 480; v. 127 N. Matthews v. Associated Y. Oakes v. Press, 333; 136 N. Cataragus Water Y. Co., 430; 143 N. Wood v. Whitehead Brothers Co., 165 N. York Bank Co. 545; Y. New Note v. Hamilton Bank Note Y. Co., 280; 180 N. Anchor Electric Co. v. Hawkes, Massachusetts, 171 United Shoe 101; Machinery Co. v. Kimball, 193 Massachusetts, 351; Rake straw v. Lanier, 104 188; Bullock v. Georgia, Johnson, 110 Georgia, 486.
The most recent decisions in the state courts which covenants to refrain competition held have been reasonable and lawful, are, Freudenthal v. 102 Espey (Cal.), Pac. Rep. 280; Louisville Board Underwriters Johnson v. (Ky.), 119 S. W. v. Rep. 152; Duluth Board Trade Wolf TERM, 1910.
138 (cid:127) Imperial Argument for the Tobacco Co. U. S. 221 Rep. Seigal Marcus, v. 395; (No. 121 N. W. (Minn.), Rep. 358; Buckhout v. (Mich.), W. Witler 119 N. Dak.), 184; Agency Blume v. Home Ins. Rep. (Ark.), N. W. 293; (No. Car.), Wooten v. Harris Rep. E. W. 121 S. Co. Telephone v. North Manchester 989; Home Tele Rep. Rep. E. 558; N. Artistic Porcelain Co. (Ind.), Co. phone J.), Rep. 680; 74 Atl. (N. Harbison-Walker Re Boch *27 Co., (Pa.), Atl. Rep. Stanton v. fractories agreement British-American there is absolutely As tothe agreement which prevents, in that or nothing tends to or prevent, any1 company companies other from manufac turing exporting and than Great tobacco to other countries States, agreement There is no to the United Britain free, way any to interfere in with com prices restrict n has been no shows that The evidence there petition. either exporting leaf in the business diminution actual from the United tobacco States or manufactured tobacco reason of British-American foreign. countries to agreement. heretofore made this court un- decisions
None applicable agreements Act are here the Sherman der Traffic, Joint Trans-Missouri Northern The involved. agreements dealt between with railroad cases Securities stocks, holders of railroad the effect in- companies competition held to restrict of which were between tent corporations. They service public carriers common manufacturers, between agreements no application have obligations of common upon peculiar are based but corporations. Addyston The service public carriers and agreement S. involved an between 211, 175 U. Pipe Case, manufacturers there competing should.be rival no or Terri- between .them in certain competition States intended tories, direct, immediate and effect of price. the enhancement of was agreement 38, U. S. was an Montague Lowry, agreement, v. prices raise in the California was to market. effect which UNITED v. STATES AMERICAN TOBACCO CO. 139 Argument Imperial
221 U. S. for the Tobacco Co. (cid:127) & v. The case Co. United a States com- involved Swift meat independent bination of dealers agreed not to who each against', bid other in the livestock to fix markets, shipments and to selling prices restrict meat when nec- essary. of Chattanooga Foundry case Atlanta, 203 U. S. Addyston a
390, sequel was Case. Pipe Compress The case of Shawnee Anderson, Co.v. a
423; was case where the lessor had company agreed company only lessee to go of com- out field and not to petition, enter that field but further again, had , agreed to render assistance every others from prevent entering it.
The case Continental Wall Co. v. Paper Voight Sons, case, 212 U. agreement was of an between num- ber of organized manufacturers who a selling company through which-their entire output persons sold such only as agreement would enter into a purchasing by which their sales were restricted. The agreement provided *28 at selling by jobbers particular specified prices. The com- pany a selling was to company organized control the all selling business of the corpora- wall manufacturing paper tions, partnerships and persons who owned the of stock the Wall separate Continental and Paper made Company, that contracts with it corporation giving entire control of the selling business of the manufacturers.
.None of the cases in this court to the apply agreements between the American Imperial Companies, and are this had They necessary involved suit. no effect to directly competition any restrict free substantially of and did products tobacco, the not restrain unlawfully commerce. Whitwell v. Continental Tobacco interstate Co., Rep. 461. Fed. not testimony agreements
The oral that did shows the not, operate existing circumstances., and could under the could monopoly, restrain or create and therefore trade , OCTOBER 221 TJ. S'.
Argument Imperial Tobacco Co. for not.operate the Sherman did not, violation ' appears testimony It that Act. at Anti-trust practically there was no ex- agreements, time of the products of manufactured be- importation portation and the States, owing Great Britain United tween im- country in this the differentials duties protective goods in Great Britain. It imported was upon posed this imported manufactured tobacco into possible sell articles of man- competition domestic country export to possible England and sell nor was ufacture, with domestic mánufacture. competition complaint avers, bill herein that there far as the So competition purchase of leaf restraint any was overwhelmingly disproves any such the evidence tobacco, no or under- agreement, arrangement There claim. American Tobacco Company standing between to refrain from representatives, or its active the Imperial purchase of leaf tobacco. testi- competition that has mony any without contradiction there shows competition Imperial all times active between the been ^t and the the American agents agents of Com- Company’s independent "Rigi” and of the concerns, and of the pany, of leaf and the.testi- purchase tobacco, countries in the leaf increased tobacco has mony price shows Imperial the agreements since between The amount made, increasing. and is were still paid prices of leaf tobacco and the consumption time. up present since 1902 to the it have both increased Im- against the No can made in this suit as decree just and equitable. will be perial Company which evils aimed at the Sherman possible There are three the com- raising First, price Act. Anti-trust *29 price of of lowering the the consumers; second; modity of crushing out the producers; third, material raw at that in the case bar is no evidence competitors. There Imperial the and the Company between agreements UNITED STATES AMERICAN TOBACCO CO. 141 S., Argument, Cigar for 221 U. United Stores Co. Company are attacked in this suit, have one of three any these evils.
resulted no price products There is evidence of tobacco has forms, of their been raised to the any consumer. So price has remained the same. appears, far as that the price producers There is no evidence to the of been On contrary, tobacco has reduced. leaf the evi- is uncontradicted that has price dence in- steadily creased. has
There is. evidence that-any competitor no been in interfered with of any way agreements reason be- Company the American Imperial Company. tween manufacturer the United has been at Every States n liberty export goods to manufacture and his without of or the part hindrance on the either the Amer- Imperial of any the British-American or the other ican or Company, in this agreements in this case. The .suit do defendants profits, or to eliminate prices pool not to fix or to undertake with, way, any ordinary or to interfere competition of and demand. supply laws Stores Cigar for the United' Com- Sol M. Stroock
Mr. pany: provisions has not violated company any (cid:127) It has not made Anti-trust Sherman Act. § or con- engaged any nor combination contract,
any of the other restraining the interstate commerce spiracy restraining its own inter- them; or- or any defendants the interstate commerce commerce; restraining state or competitor defendants, any other any any the interstate commerce them; restraining with it. competitor not violated Stores has Cigar
The United of 2 of the Anti-trust provisions Sherman any § mo- secure a attempted has secured nor Act.- It nor combined of the other defendants nopoly any *30 191^. Opinion of the Court.
with, from' others exclude of the other any defendants with competition field of them. monopoly nor attempted secured to secure
It has a trade,for 'either alone or attempted, nor itself, retail or, defendants, conspiracy with the other in combination it. of competition field others from to exclude an inci- not, has as Cigar Stores The United any of combina- obtaining monopoly, part as dent of engag- trade, prevented of vendors from tion in restraint in tobacco handling dealing ing in the business products. McDermott, Mr. Mr. Charles J. Carruih,
Mr. Charles R. A. and. Mr. J. Mr. T. Morehead James Watson, B.C. Inc., ap- Company, P. & Richardson, Jr., Burton R. n submitted. pellee, court, sub- Cochran, by leave Mr. Bourke W. ' amicus curice. a brief as mitted and Mr. Parker leave Kirlin, Thacher J. Mr. Thomas court, brief as amici curice on certain submitted causes. pending common to this case other questions opinion White delivered the Mr, Chief Justice court. on July 19, 1907, by suit commenced
This alleged vio- States, prevent United the continuance Anti-trust and second sections of the lations the first twenty-nine defendants Act of 1890. The were July margin,1 named in individuals, sixty-five Duke, C.'Dula, S.,HilI, George Arents, B. Caleb Pereival James B, Dula, George Brown, A..Helme, Lewis, D. Robert Robert Paul Payne, Maloney, Ryan, Oliver H. F. Robert K. J. Thomas Thomas W; George Cobb, George Watts, Allen, G. John B. William R. Smith, Benjamin McAlister, Anthony Duke, Brady, H. N. N. Harris, William UNITED AMERICAN TOBACCO STATES CO. 143 Opinion 221 U.S. Court. of.the corporations, them created the State of naost New English Jersey, corporations. and two For convenience , classify statement corporate defendants, of. we ex- hereafter, ones, of the two which we shall foreign elusive separately to, follows: The American refer *31 of Jersey a New because its domi- Company, corporation, nant subject-matter controversy relation the of the as primary the defendant; corporations five Jersey New other (viz., American Company, Cigar Snuff American Com- pany, Stogie American Company, & MacAndrews Forbes Company, and-Conley Foil because of their Company), relation to the the controversy fifty- the and accessory, nine, other subsidiary American as the de- corporations fendants.
The of ground complaint against the American Tobacco Company the upon rested alone nature and character of corporation power and the which it exerted di rectly over accessory five and of corporations the some the subsidiary corporations by ownership stock such cor porations, but also upon the which it control exercised over subsidiary by of companies virtue stock held in companies by said accessory by companies stock own ership which American Tobacco Company exerted the; its of power companies control. accessory were im pleaded nature and either because of their character or stock, power through because them exertéd over ownership by Company American Tobacco and also power because turn exerted they by which stock ownership subsidiary corporations, over the and finally the subsidiary corporations impleaded were either because of their nature the control to because of which they viere subjected of the by virtue stock ownership above' . append stated. We margin in the a statement showing Hanna, H. M. Kingsbury, Herbert D. Pierre Lorillard, Rufus L. Pat- terson, Ray, Frank H. Grant Schley, B. Strotz, Charles N. A. Peter B. (now Widener, C. deceased), Welford Reed and Williamson W. Fuller.
Opinion U. bf Court. defendant, principal by exercised stock control cor-, accessory the five Company, over Tobacco American directly exercised authority also porations and a list show subsidiary corporations, certain over corporations subsidiary exercised over the control ing accessory cor-" ownership stock as á result said have Controlled as wé being turn they porations, Comp American defendant,.the principal Ihe by any^__1 acces Company over the control of American Tobacco Extent
sory corporations:- Company preferred stock 120,000 shares of owns cAmerican —of Snuff directly 11,274 con- shares reason stock 12,517 shares shares; 110,017 23,764 shares Go., in all P. trol of Lorillard directly 34,594 reason of stock 41,214 owns stock common 75,808 Co., in all shares. o'f P. Lorillard control preferred 100,000 stock owns Cig.ar shares —of directly through of Ameri- 5,000 shares control 89,700 shares 100,000 of feommon 94,700 shares; of shares Co., in can Snuff a}} *32 77,451 directly shares. stock owns Company 108,790 stock controls Stogie shares of common America^, —of through in American Snuff stockdnterest Com- 73,072% shares Stogie Company all of the stock— owns pany. The American Cigar Company cigars and American 12,500 Union — —of stogies. preferred of 37,585-shares stock MacAndrews & Forbes —of (ño 7,500 shares; 30,000 of common of shares voting p$wer) owns directly through 2i,129 and 983 shares stock shares stock owns Reynolds Co., 22,112 shares. R. in all J. control of the directly Conley stock, Compariy(cid:127) 8,250 shares of owns The Foil —of 4,950 shares. ownership Company by stock is the The American Tobacco owner — outright companies: following of the defendant Anargyros Anargyros Company capital S. owns all the [The (10 shares) Cigarette Co.]; F. F. stock of the London Adams To- Co.; Co.; Cigar bacco Durham Tobacco Crescent and Blackwell’s Day Night Co.; Co.; Tobacco Luhrman & Wilbern Tobacco &Nall Williams Tobacoc n Co.; Co.; Nashville Tobacco Tobacco Co.; Works; Monopol Works; A. Patterson Tobacco Tobacco R. & Merrick. Spalding
UNITED STATES v. AMERICAN CO. TOBACCO 145 Opinion 221 S.U. of the Court. foreign corporations two were impleaded éither be-
The. of their nature and character the operation cause or-agreements of contracts with the effect American To- The American Tobacco Co. also has stock interest indicated in following corporations: defendant 1,200,000 1,500,000 Tobacco Co.—owns shares of British-American preferred-stock 2,280,012 shares of of 3,720,021.shares shares stock. of common Imperial Co., 721,457 pounds sterling
The Tobacco &c.—owns of
18,000,000 pounds sterling of stock. 2,000 1,020 Bollman John Co.—of shares of shares. stock owns 1,503 F. R. Penn Tobacco 1,002 Co.—Of shares of stock owns shares (through Co.). Blackwell’s Durham Tobacco Richardson, Jr., Co., P. 1,000 R. & Inc.—owns 600-out shares of $120,000 $200,000 stock and issue-of bonds. Reynolds 75,250 50,000
R. J. Tobacco Co.—owns out of shares of stock. 1,000 Pinkerton Tobacco Co.—owns 775 out shares of stock.
Reynolds (of Tenn.) 1,449 Bristol, Tobacco Co. shares out of —owns 2,500 shares. 2,000 3,000 J. W. Carroll Tobacco out of shares. Co.—owns 20,000 preferred 15,813 P. Lorillard Co.—owns out of shares of and all shares). (30,000 the common stock
Kentucky 1,900 preferred Product Co.—owns shares directly 5,264, through and, Cigar owns Co., 8,100 Kentucky out of shares of common stock. To-' [The (100 capital shares) bacco Product Co. owns all the stock
Kentucky Tobacco Extract Co.] directly 6,578, and, Porto Rican-Ameriean Tobacco Co.—owns through Cigar 6,576 Co., 19,984 the American shares of stock. Porto Rican-American Tobacco Co. owns 190 of the 380 [The preferred shares of shares and 300 of the common stock Rico; 2,150 5,000 Ind. Co. of Porto also owns shares of capital stock of Porto Leaf Tobacco Rico Co.] *33 Company interested, as indicated, The American Tobacco is also machinery companies: following defendants, supply . (cotton bags) 6,521 7,000 Manufacturing Golden Belt Co. —owns shares. (wood.enboxes) Mengel Box Co. Tobacco owns Co.- —British-American 3,637 5,000 shares of stock. . Mengel Company capital all of owns stock the Columbia [The CCXXI —10 .VOL.
146 221 Opinion of the Court. U. S. their power which it over Company, or the exerted bacco ownership. stock affairs mat- referring have hereafter shall
As we occasion 1,500 Tyler Company, respectively Company Box and of the Box (cid:127) and shares.] supplies) (agency purchase ma- Supply Amsterdam —owns Co.— large part through sub- jority and controls of stock remainder companies. sidiary (bill 1,000 1,500 posting) out of shares.
Thomas Cusack Co.— —owns stock, 3,500 Pipe Co.—owns all of shares. Briar Manhattan Machinery 100,000 33,637 shares Cigar Co.—of owns International through Cigar directly 29,902 Am. Co.—in shares all shares 63,539 shares. Company following in the also interested American Tobacco
The named as defendants: companies, not directly Foundry 510 shares and re- & Co.—owns Machine American (490) Cigar through Am. Co. mainder directly Jersey 510 shares Machine Co.—owns remainder New (490) Cigar through Am. Co. . 16,895 17,300 shares owns shares. Tobacco Stemmer Co.—of Standard Vending shares. Machine Co.—of shares owns 250 Garson stock, etc., in addition interests in Snuff The American Cigar Company, and Co., American American Tobacco Amr following Company, has stock interests in the de- Supply sterdam fendants: 1,350 shares; stock, all H. Bolander —owns De stock, 500 shares. Voe Snuff Co.—owns all of [The
De Voe stock, capital shares of Co. owns all the Skinner.& Snuff Co., snuff.] stock, 2,816 Co.—owns all of shares.
Standard Snuff Cigar to stock interests in Amster- American Co. addition Co., Co., Stogie Rican-Ameriean Supply Porto Tobacco dam Cigar Kentucky and International Machin- Co., Co. Product following Co., defendants: ery has the stock interest indicated shares; out Í50 Cigar Co.—owns 77 D. Burnett R. 1,875 2,500 pref. 1,875 out of Blaskower Co.—owns M. shares (cid:127) (cid:127) 2,500 shares of common. out of *34 v, UNITED STATES AMERICAN TOBACCO CO. 147 Opinion S.
221 U.. of the Court. disputé beyond ters to set forth the main facts relied upon by the giving United States as rise to the cause of action alleged. against all of the defendants at suffices this stock, 1,000 Cuban Land & Leaf Tobacco Co.—owns all of shares. &c., Land, 1,320 1,890 Cuban Co. owns of [The shares of Abajo stock of the Vuelta S. S. Co.] Cigar Weil Co.—owns 255 out of-500 shares.- Cliff Dusel, Goodloe & Co.—owns 510 out of 750 shares. shares., Cigar
Federal Real stock; 6,000 Estate all Co.—owns J. J. Goodrum Tobacco Co.—owns out of 477 600 shares. stock, 2,500
Havana-Ameriean all Co.—owns shares. Havana Tobacco Co.—owns 700 shares out 47,038 preferred, of 166,800 297,912 stock, out of $3,500,000 $7,500,000 common and of
bonds. Co., preferred Jordan Gibson & Baum all Inc.—owns and common stock, 250' shares each. Co., Louisiana Tobacco Limited —owns 375 out shares. Company B. stock, 2,000 The J. Moos all of shares. —owns stock, 1,000
J. & B. Moos—owns all of common shares. 2,500 óf"5-,6QQ Rican Leaf Porto Tobacco Co.—owns shares. out Corporation (250 The Smokers’ Paradise all of common stock —owns shares) preferred. and 349 of 500 shares following corporations: Havana Tobacco Co. has a stock interest y Carbajal 15,000 H. stock, de Cabanis shares. —all'of Clay Hy. 9,749 Co., 16,950 & pre- Bock Lim.—owns out of shares 14,687 15,990 ferred and out of shares common. Hy. Clay, &c., 16,667 ordinary Co. is owner of shares of the [The capital Limited; Cigar Factories, stock of the Havana & Tobacco capital 1.890 also-owns shares shares stock of the -t.he Abajo
Vuelta S. S. Co.] stock, Cuban Tobacco Co.—owns all of 50 shares. 55,562
Havana Commercial 60,000 preferred Co.—owns out of shares 124,71S 125,000 and' out of shares common. Havana capital Commercial owns all Co. stock —100 shares [The v M„Válle y cigars.] —of the . Co.— Cigar Factories, 6,774 25,000
Havana & Tobacco Lim.—owns out of ordinary shares stock. y 7,500 J. S. Murias Co.—owns all shares. stock — Co.—in Blackwell’s Durham Tobacco addition to a stock interest TERM, 1910. 221 U.
Opinion the Court. origin averred the nature bill say that the moment n origin corporations, whether defendant the other of all nature of the indi- and the connection subsidiary, accessory *35 In corporations. such effect with defendants vidual and the de- individual defendants charged bill in conspiracy in a re- engaged were corporations fendant trade tobacco and foreign and interstate straint a combination and constituted of tobacco products in violation of the first section such trade in restraint monopolize and attempting and also were act, of such trade violation actually monopolization were charges general In of these support section. of the second wrongful pur- bill as to the made were averments which it acts committed were with which and intent pose alleged wrongfül result. about the brought alleged was bill as follows: prayer petitioner prays: “Wherefore interest, indicated, Supply Co., has the stock Amsterdam corporations: following defendant 1,002 1,503 out Co:—owns shares. Penn Tobacco F. P. $10,000 $500,000 out of of stock. Co.—owns Scottcn-Dillon stock, 1,500 all of Tobacco Co.—owns shares. Wells-Whitehead capital shares) (3,000 Company all of the stock Conley Foil —owns Metal Co. Tin Foil and Johnson . Company stock interest in the American Snuff Lorillard P. —has Supply Co. the Amsterdam and a stock Reynolds Tobacco Co.:—in addition to interest R. J. Supply Company MacAndrews & Forbes Amsterdam 5,000 shares of stock of the Company, owns two-thirds Liipfert Scales Co. TobaccoCo.—in addition to a small interest in
The British-American Supply Company, following has the stock the Amsterdam interest in certain defendants: Dunlop plug—owns 3,000 4,500 shares. David — smoking—owns 3,637 5,000 &
W. S. Mathews out of Sons— shares of stock. T. 4,000 Company plug—owns stock, all of C. Williams shares. — UNITED STATES AMERICAN TOBACCO CO. 149 Opinion 221U. S. of the Court.
“1. That the contracts, combinations, conspiracies in restraint of trade and commerce among the States and foreign nations, together with the attempts monop- and monopolies olize of the same hereinbefore described illegal be declared and in violation of the act of Congress , July passed 2, 1890, and and that subsequent acts, they prevented be and restrained by proper orders of the court.
“2. That the agreements, contracts, combinations, and conspiracies entered into on or about defendants September 27,1902, and thereafter, among and-evidenced things other by the agreements two written of that date, Exhibits hereto, and that in- illegal, declared junctions issue restraining prohibiting defendants from doing anything in pursuance of of in furtherance of the same jurisdiction within the of the United States. That Imperial
“3. Tobacco Company, officers,- its agents, be enjoined servants engaging inter- .from *36 foreign state or trade and within jurisdiction commerce of-the United States until it shall cease to observe or act' pursuance agreements, contracts, combinations,, said and conspiracies by into it and ehtered other defendants September on or about 27, 1902, and thereafter, and evi- denced among things by other the contracts of date, Exhibits and hereto.
"4. That the British-American Tobacco Company be adjudged an unlawful instrumentality solely created said, into carrying objects effect the and purposes of con- tract, combination, and conspiracy entered into on or September about 27, 1902, and and thereafter, that it be enjoined from engaging in foreign interstate or trade and commerce jurisdiction within the United States.
“5. That the court adjudge the American Tobacco Company, -the American Snuff Company, the American Cigar Company, the Stogie Mac- Company, the & Company, Andrews Forbes and the Conley Com Foil pany is each a combination in restraint of interstate and TERM, 221 S.U.
Opinionof the Court. attempted and that each has commerce; and foreign trade and is-in combination monopolize, attempting and monop and corporations persons other with conspiracy, trade and commerce monopolized part has olize, and nations; foreign and and States with several among the from one of them be restrained that éach decree order and if the court or, foreign commerce, in interstate engaging be better will public that the interests opinion be of should be!)appointed that receivers thereby, to.take subserved and affairs busiriéss, property, assets, of all the possession and otherwise same, and up wind of said defendants about con bring regard will such course thereto take and the States among and commerce in trade ditions with harmony with law. nations foreign . defendant of stock holding That the one “6. shown the circumstances in another under corporations from enjoined that each of them be illegal, and be declared and from hold or such shares another continuing to own in; right connection exercising any therewith.' con- defendants, all, enjoinedfrom . “7. That each out carry purposes thé above-described tinuing combinations, conspiracies, attempts contracts, means herein described, by any other, monopolize to desist and withdraw from all connection be.required the same. with from enjoined pur- That each of the defendant's be
‘‘8. .selling distributing leaf tobacco or from its chasing output part foreign as a of interstate and manufactured in conjunction.or and commerce combination trade in- defendant, taking part-or being othér any *37 any agreement combination intended tó terested. among to such destroy competition pur- reference them or sales. chases n petitioner other, “9. .That have such further gen- ^nd may proper/’ relief,as eral ' ¡Suffices to the answers, say As that all the individual UNITED STATES AMERICAN TOBACCO CO. 151 Court, Opinion 221 U.
and corporate defendants other than foreign corpo- charges rations denied the and wrongdoing illegal com- bination and the defendants in corporate particular addition right averred their state charters under virtue possess which existed to and they own property held they and further averred that they were en- gaged in and manufacturing any that combination amongst them related to that and only subject, therefore was not within the Anti-trust Act. The foreign corporations two asserted validity corporate organization of their of the assailed agreements, any denied participation in the alleged wrongful combination.
After of much taking special téstimony before examiner, the -case was heard consisting before a court four judges, constituted under the act of expediting Feb- ruary In 11,1903. deciding the case in favor of the Gov- ernment each of four judges delivered an opinion (164 A 700). Fed. final entered on decree was De- Rep. cember The 1908;. petition was dismissed as to the English corporations, subsidiary three of the corporations, individual, the United Cigar Company Stores and all the defendants. It that was decreed defendants other thaif those against petition dismissed, had whom'the into and parties theretofore entered were combinations in restraint of in violation of the Anti-trust trade, etc., Act and defendants and each of their them, officers, said agents, etc., enjoined directly were restrained “from indirectly doing any thing act further- whatsoever objects purposes ance of said combinations and It continuing partiés specifically thereto.” found defendants, each of the “The American Tobacco Company, American Snuff Company, Cigar American Company, Stogie Company, and Mac Andrews & Forbes constitutes is itself a combination Congress.” corpo- violation of said Act of rations named, thus their were next restrained officers, etc., *38 221 ü. S.
Opinion of the Court. engaging directly indirectly or enjoined “from further and tobacco commerce leaf dr trade and foreign in interstate neces- therefrom or manufactured articles products or But if óf said any or therewith. sary useful connection affirmatively show can hereafter defendants last-named conditions, competitive such reasonably the restoration modification, sus- to this court for a may apply defendant injunction granted herein or dissolution pension decree, enumerated the various it.” The then against held or found claimed own which was corporations corporations other and capital stock of some or all corporations, and then specified such other particularly provisions: following restraining made the defendants, and all of The-American “Wherefore each Company, Snuff Company, Tobacco American R. Lorillard J. Cigar Company, Company, P. Durham To- Blackwell’s Reynolds Company, their Company, officers, bacco and Foil Conley hereby re- servants and are directors, agents, employés or enjoined acquiring by conveyance strained and from otherwise, plant any corporation or such business stock; one of them holds or owns and any wherein now holding and all of defendant so corporations each said officers, stock in their corporations specified, other as above further agents, employés, servants are en- directors, any or said stock at joined voting attempting from vote issuing corporation stockholders meeting exercising attempting any same and from or exercise or over control, direction, supervision influence whatsoever doings corporation. the acts and of such And it is further ordered and of the defendant every decreed each corporations held other de- any stock which corporation shown, fendant hereinbefore their officers, agents, they hereby be and re- directors, servants are collectively spectively enjoined restrained so to be voted permitting by any the stock held other de- v. AMERICAN UNITED STATES TOBACCO CO. 153 Opinion of the Court. the same claiming or own or its at- holding fendant corporate election for torneys agents any at directors or suffering any and from other defend- permitting officers *39 to own or hold stock corporation claiming therein, or ant any its or to exercise control agents, officers whatsoever acts.” corporate over its in favor of given petitioner for costs was thé
Judgment as to whom the against petition the defendants had except not the R. P. dismissed, Richardson, Jr., been & which had Company, corporation to the consented a provision decree. The decree contained that also them should not be any prevented defendants or “from or prosecution any suit, defense of action institution, or infringement to restrain the of a proceeding prevent or commerce or trade-mark used interstate otherwise assert In the any rights.” évent property defend claim.to court, provided an to this the decree taking of a appeal be suspended it directed “shall injunction that the such during appeal.” pendency as did also the de- appealed, The United States «various entered. For against fendants whom decree was petition That the should Government it is contendéd: 1. individual not have as to the been dismissed defendants. 2. That it been dismissed as to the two should not have Imperial Company Tobacco foreign corporations —the Company and the British-American Tobacco and the latter, that, domestic controlled corporations contrary, on the should have commanded the the decree foreign Act corpora- observance the Anti-trust so far as their the United States were con- dealings tions restrained those cerned, companies have should States in violation of the Anti- doing any act in United right not the do said acts as- Act, trust whether or was pursuant to the contracts made out- serted have arisen petition of or United States. 3. The should side within the (cid:127) Cigar as to "the United Stores have been dismissed not 221 U. Opinion of the Court. de- adjudged decree should have 4. The final Company. conspiracies. contracts and to unlawful parties fendants that defendants adjudged should have final decree 5. The monopolized parts and had attempting monopolize were commerce, it is urged, should particularly, More Tobacco Company, American adjudged have Cigar Company, American Company, Snuff American & Forbes Company, MacAndrews Com- Stogie and the British-American Company Foil Conley pany, severally monopo- attempting were commerce, and that monopolized parts had lize and applied. been should have 6. The remedies appropriate since it sufficiently specific, should have decree methods particularity more which the described the. forming carrying out their had followed defendants prohibited should have the resort purpose, unlawful *40 specified The decree should have methods. 7. to similar by disclosed the corporations shares in evidence the and parties conspiracy, the the should have owned any from parties exercising those control over the enjoinéd held, latter, in such stock was and the corporations which permitting control, if made from such and defendant, enjoined collecting any have also dividends should improperly provided stock. 8. The upon the decree prose- defendants from nothing prevent therein should defending suits; suspended also cuting improperly appeal. injunction pending by their defendants, assignments error, complain petition all, dismissed as to and more
because (a) they adjudged because were to a specifically, parties in foreign combination restraint interstate and com- (b) merce, accordingly; and enjoined because certain de- holding shares in corporations fendant en- others were exercising from them or joined voting control over from the latter and issuing company, permitting this; and Tobacco Company, because the American (c) American v. AMERICAN UNITED STATES TOBACCO CO. 155 Opinion 221 U. of the Court. Company, Cigar
Snuff Company, American Stogie Company and the Mac Andrews & Forbes Com- adjudged unlawful combinations pany were restrained and and.foreign in interstate engaging commerce. ' arguments made both sides at bar pre- The elaborate many sent forms statement con- conflicting resulting from and tentions the nature character of the thereto, suit the defense the decree of the lower court propositions assigned and the as error to which we have In just so far as all or any'of contentions, these referred. as of them in fact many do, involve conflict as to the application and effect of of the Anti-trust §§ Act, their consideration has been greatly simplified by analysis review that act and the construction af- question fixed to the sections the case of Standard Oil v. United States, quite decided, ante, récently In so far as the p. contentions relate disputed to the propositions, fact, we think from the view which we take need not they to, be referred since our opinion case can be disposed by considering only case those facts inferences, indisputable which are by applying properly deducible from such facts the meaning effect as expounded previous law accordance with the decisions of this court. divide our investigation
We shall of the case into three First, subjects: undisputed facts; second, meaning of the Anti-trust Act and its application correctly con- to the conclusions of strued ultimate fact deducible from proof; third, the remedies to be applied. *41 Undisputed First. facts.
The matters to be considered under heading we this think can by stating best made clear the merest out- line of the condition of to industry prior the tobacco what to is asserted been the initial in the com- have movement in light bination which the suit assails and the so afforded to recite of assailed acts con- briefly the the and history
Opinion the Court. U. subject periods, shall divide two tracts. We the into of the first organization one the time (a) organ- in old American Tobacco (6) from Company, ization of the Continental Tobacco this bill in organization filing to the date such case. way in the broadest the conditions which
Summarizing as prior obtained to the manufacture production, facts tobacco, general distribution following adequate portray are situation.' in many country sections grown Tobacco was having diversity of soil and climate therefore was resulting places to various vicissitudes from the subject varied The consequently quality. in production applied tobacco of use was great diversity there a demand caused to be was manufacturing qualities demand for all qualities. for all the various extending but to domes- local, widespread, well trade, and, therefore, as to foreign products tic were all competitive marketed peculiarly under conditions of a advantageous nature. The- manufacture the product country various forms was carried successfully this many on individuals- or throughout Concerns scattered larger number of the manufacturers country, perhaps vicinage production being ad- being others situated in or markets vantageously near principal of distribution. January, 1890,
Before & five distinct concerns —Allen Ginter, factory Richmond, at Sons & Va.; Duke, with W. Durham, at and New Co., Carolina, with factories North City; Kinney factory York at Company, with City; factory York W. S. Kimball & Company, New with York; at & Rochester, Company, New Goodwin Brooklyn, manufactured, at dis- factory New York — per tributed and sold the United States and abroad 95 cigarette all domestic and less than 8 cent per cent of *42 v. AMERICAN TOBACCO CO. 157 UNITED STATES Opinion of the Court. 221 S.U. in the United States. smoking produced tobacco competitors these factories were doubt that
There no product manu- which in raw purchase ^hey and sale of the manu- distribution and factured it that prior is shown to 1890 Indeed products. factured ordinary competition existed and had normal onlj? competition but that the question, the factories between January, 1890, having In abnormal. fierce and had been all be divided $25,000,000, stock agreed upon capital should be concerns them, and who amongst directors,othe American Tobacco organized referred broad manufacturing,” “for and with Jersey, trading New in- assets and businesses, powers, conveyed old to use the names good right will cluding this carried on the corporation concerns; and thereafter Tobacco $25,000,000 all. The stock business of as follows: to the members allotted charter Company was preferred, $4,500,000 commop; Ginter, $3,000,000 &Allen Co., preferred, $4,500,000 Sons & Duke, $3,000,000 W. Kinney $2,000,000 preferred, common; Company, Co.,& $1,000,000 pre-. common; W. S. Kimball $3,000,000 & Co., $1,000,000 ferred, $1,500,000 common; Goodwin common. preferred, $1,500,000 which, at the re- is a that valuation charge
There corporation capitalized new spective were properties We, actual value. their how- enormously in excess was only we to deal aside, propose since ever, put subject that controversy. facts are not .Shortly corporation after the formation of new -the factory closed, and the directors or- & Co. Goodwin “that all tobacco cigarettes dered manufacture of at concentrated The new' corporation Richmond.” year operation, first of its manufactured about is, cigarettes, two one half billion about cent per output, of the total domestic about five smoking pounds and- one-half million tobacco out Opinion of the Court. of nearly
of a total domestic product seventy million pounds.
In a year organization little over a after the of the com- it its pany capital increased stock ten million dollars. purpose of this increase inferable from the con- siderations which we now state. firm
There was a known as Pfingst, Doerhoefer & Co., consisting a number partners, who had long been and successfully carrying on the of manufacturing business in plug Kentucky, tobacco and Louisville, distributing the channels of interstate through commerce. In January, this firm was into a corporation converted known as having capital the National Tobacco Works, stock of $400,000 all of which partners. issued to the was Almost immediately thereafter, in the month February, Company purchaser Tobacco became the of all stock of capital corporation, the new paying $600,000 $1,200,000 cash and in stock of the American Tobacco Company. The members of the previously firm existing themselves contract bound with American Tobacco Company enter its service and manage the business and property sold, each agreed tether that for ten years he not engage would in carrying on, directly or in- directly, permit or suffer the use of his in name connection carrying on of any the tobacco business form. April following,
In Company the American Ti^bacco Whitlock, bought Philip out business of Richmond, Virginia, engaged who was manufacture cheroots and with the exclusive cigars, right to use name of Whitlock. The consideration for this purchase was $300,000, and agreed Whitlock employé become an American Tobacco for a of years number and not to engage years twenty the tobacco business.
In the month of April the American Tobacco Company also acquired of Marburg the business Brothers, well- firm known located at Baltimore, Maryland, and engaged UNITED STATES TOBACCO CO. AMERICAN Opinion of the Court. U. S. and distribution of tobacco, princi- manufacture in' the and snuff. The consideration was a cash smoking pally $164,637.65 stock to the amount of payment of the firm also conveyed The members $3,075,000. firm and agreed name not to engage to the use
right lengthy period. for a in the tobacco business month, same the American Again, tobacco firm of old standing, out a also Company bought as G. W. Gail & Ax, engaged Baltimore, located known manufacturing selling smoking tobacco, principally, right the business’ the exclusive to use buying with partners, firm or the members of the name of the in the tobacco engage not to business for a agreed firm for this purchase The consideration specified period. *44 in and stock to the amount of $1,760,000. cash
$77,582.66 after; .. abandoned soon plant The was wa;s purchases of these manifested at once result The year for the company 1891, as will in the product It margin.1 in the will be from a note seen that appear fine cut smoking tobacco, snuff cheroots, tobacco, as to had become a company the factor in all plug-tobacco, industry. the tobacco of branches of year 1891, to the occurrences as in all
Referring 1 American Tobacco for 1891 output of the was— The
Number.' Pounds. ...... Cigarettes.........................2,788,778,000 40,009,000 cigars.....:...... and little ...... Cheroots 13,813,355 Smoking................................ 560,633 cut............ Fine ' 383,162 ...... Snuff.............................. , - 4,442,774 ...... Plug................ States, output 1891— for the United Total ...... Cigarettes.................(cid:127)........3,137,318,596 76,708,300 Smoking.............. ’ 16,968,870 ...... Fine cut........................... 166,177,915 . ...... Plug and twist..................... 10,674,241 ...... Snuff..........,.................. . Opinion of the Court. U. S. in all place which of occurrences took typical respects years that is period, during of the first years the other content 1896, 1898, 1897 and we 1894, 1895, 1892, 1893, undisputed is that between saying that ourselves pur- October, 1898, including 1891, .February, to, have referred specifically we chases which going fifteen tobacco concerns Company acquired Kentucky, Louisiana, of States doing business ‘ North Caro- Missouri, York, New Michigan, Maryland, all plants For an cash con- Virginia. ten lina and paid, payments was while the $6,410,235.26 sideration in five cash remaining aggregated $1,115,100.95 for the last noting It $4,123,000. in worth stock Drummond To- October, 1898, purchase, dealing princi- corporation a Missouri Company, bacco paid for which cash consideration was plug, pally $3,457,500. purpose combined corporations were n Company produced American Tobacco forming the plug tobacco. That an increase very portion small contemplated is manifested this direction was of the stock and its for the immediate increase use almost we have acquiring, indicated, purpose manufacturing and control of concerns ownership consequent tobacco and the increase that branch plug no dispute There is that as as 1893 early production. president Company, of the American Tobacco *45 corporation, approached leading manu- authority and sought tobacco about plug bring facturers tobacco plug interests, upon combination of the and accomplish this, competition, by ruinous lower- faihire its As a result of ing price cost, below ensued. plug warfare, continued American this until sustained severe Company aggregating losses Tobacco produced four millions of dollars. than The warfare more result, only company acquired its natural because AMERICAN TOBACCO CO. 161 UNITED STATES Opinion of Court. as we campaign, have years last two during the concerns, tobacco but plug of important control stated, say came to terms. We industry in that engaged others leading several connection with 1898,, this because or- Company American Tobacco manufacturers, plug the Continental corporation styled Jersey a New ganized manufacturing,” and "trading Company, Tobacco increased to afterwards capital $75,000,000, its stoók took issued company Thé new $100,000,000. large five assets and businesses transfers to the plants, manufacturers.1 plug competing and successful conveyed also American Tobacco brands, the assets, corporation, large this at valuations, its tobacco plug pertaining will good real estate Tobacco' Works, the National including business, Drummond Com- Tobacco Co., G. Butler James Tobacco receiving as consideration Co., Tobacco and Brown pany, one-half common (one-half of stock $30,274,200 sum for losses and an additional $300,000 cash, preferred), Mr. $840,035. during 1898, business plug sustained Company, Duke, the president Tobacco Company. president of also became Continental “the. made agreement which preliminary
Under was. of the Continental to the formation looking factory Middletown, who received Sorg Co.', having at 1 P. J. Oh(o, ' n $4,525,000, and cash common stock $4,350,000, stock preferred ’ $224,375. having factory Louisville, Kentucky, at Brothers, John-Finzer $3,050,000, common stock preferred $2,250,000, stock received who $550,000. cash Michigan, factory Detroit, at who having Có., Scotten & Daniel $3,01-2,500. stock and common $1,911,100, preferred stock received Richmond, .Va., re- factory at who Mayo having Bros., H. & P. and cash $1,925,000, stock common $1,250,000, preferred stock ceived - n $66,125. factory Va., received Richmond, at who having Wright Co., John $495,000, $4,116.67. stock and cash $495,000, common preferred stock VOL. CCXXI—11 *46 of
Opinion the Court. U. S. holders all from the the acquired that Company, company of P. Lorillard Com- stock the of common the $3,000,000 $1,581,300 of stock, its exchange $6,000,000 for pany aggregat- exchange *47 had all the their essence characteristics of the occurrences period. of the ‘first year
In thereafter either the American or stock, cash or Continental for at an company, aggre- cost of gate fifty ($50,000,000), millions of dollars bought and closed up thirty competing corporations some in partnerships engaged theretofore interstate and foreign commerce as manufacturers, and distributors of to- sellers, bacco and commodities, related the interested parties covenanting engage the business. Likewise the1 for. corporations acquired cash, issuing two by stock, and otherwise, many control'of competing corporations, now concerns, plants with various Cuba going States, Rico, bought, Porto sold and manufactured, dis- products'or tobacco throughout tributed related articles States and foreign countries', the United took the. in interest covenants parties not to engage the tobacco business. plants
The thus acquired were until operated the merger 1904, which we shall refer, part hereafter as a general system of the American and Continental com- panies. power resulting purpose from and the con- templated making these acquisitions by companies referred just to, however, may not be measured con- sidering alone the business company of- the directly ac- quired, since some of those companies were made the as representing vehicles the American or Continental com- pany acquiring and holding the stock of other and competing companies, thus amplifying the power result- ing from acquisitions directly made by the American or Continental company, without' ostensibly doing so. It is besides undisputed in many instances the ac-' quired corporations-with the subsidiary companies over which they had coátrol through stock ownership were ostensibly carried on as independent concerns disconnected
Opinion 221 ü. S. the Court. company, Continental or the from either controlled and owned one they were although going into details on companies. Without of these other brevity, append we for the sake of subjects, these corporations acquired, thus a margin statement such concerns which competing the mention acquired.1 corporations (New York, Y.) Capital Monopol $40,000— Works N. Tobacco — smoking tobacco. In 1899 the American Co.
cigarettes and Tobacco selling agency. $250,000, shares for and it now acquired all the Ohio)— Company (Middletown, Luhrman & Wilbern formerly $900;000 scrap This Capital tobacco. business carried — by partnership. on Ky.) Capital $2,000,000— Mengel Company (Louisville, Box — *48 company acquired has packing the stock This boxes tobacco. Tyler Company Company of Box ($150,000) Columbia Bdx and of ($25,000), at St. Louis. both (Porto Rico) Capi- Company The Porto Rican-American. Tobacco — organiza- Company the $1,799,600. In 1899 the caused tal- America^ Company, over which took of Porto Rican-American Tobacco tion y of partnership business of Rucabado Pórtela —manufacturer compete. cigars cigarettes The American and covenants not to —with Cigar Company $585,300 Company and American each hold Tobacco stock; is in hands the balance of individuals. of Kentucky Company (Louisville, Ky.)- Capital Product Tobacco — Company acquired $1,000,000. In 1899 Continental control of the Spirit-Cured Co.,’engaged .curing'and treating Louisville Tobacco utilizing By agreement, the .stems tobacco and for fertilizers. Kentucky Company organized Jersey, Tobacco Product was in New capital, $450,000 stockholders, $1,000,000 issued to the old with and Company $550,000 agreement Continental consideration for' supply stems. (North Manufacturing Company Carolina) Capital, Golden Belt —
$700,000 bags and In 1899 containers. American Tobacco —cotton Company corporation, acquired the business' of this formed was going to take over business. York) Conley Company (New The Foil Combination— —Tinfoil
Capital, 1899, In The $825,000. December, American Tobacco Com- (Partner- pany Conley secured control of the business John & Son of Y., ship),New York, tinfoil, N. an pack- manufacturers essential for CO. AMERICAN TOBACCO UNITED STATES Opinion Court. 221 Ü. S. that the ac- to observe importance
It is of the utmost in some subsidiary corporations quisitions made above, stated the remarkable fact cases likewise show money amounts is, the disbursement enormous Conley Company By agreement Foil was ing products. tobacco etc., manufacturing,” Jersey trading incorporated in “for’ New .and (afterwards $825,000) took $250,000capital $375,000and —which assets, etc., The American Tobacco the firm’s and over business Conley majority Foil Company shares. The became owner of the Tinfoil & Metal Company acquired stock of the Johnson has all the they competitor, Company Louis, leading defendant —of St. —a supply contracts, used defendants. under fixed the tinfoil Company (Winston-Salem, Reynolds North Caro- J.R. Tobacco acquired lina). Company control In 1899 the Tobacco Continental Reynolds largest one of the manufactur- the R. J. Tobacco Company, By pounds. agreement, a new plug output 1898, 6,000,000 ers of — name) Jersey corporation (with organized in New same (afterwards capitalized $7,525,000), $5,000,000 at which took over the Company old one. The Continental immedi- business assets of the ately acquired'the Company majority shares The now separate organization pre- $5,000,000 holds has been stock. served. Reynolds acquired Company,
There was in the name of the new against competition, following plants: with covenants Winston, C.; 1900, Vaughn Company, partnership, In N. T. L. & consideration, Company; a North Carolina $90,506; Brown Brothers corporation, Winston, C.; consideration, and P. H. Hanes N. $67,615\; Company, Winstoii, C., partner- F. & & and B. Hanes N. ship; consideration, $67.1,950. Va.; Company, Martinsville,
In & Rucker Witten *49 i $512,898. consideration, Martinsville, Va.; Spencer Company, In considera- D. H. & tion, $314,255. (All of as foregoing plants the closed as soon were purchased.) majority Liipfert-Scales
A capital stock the Com- $400,000 of the pany, largely engaged Winston, corporation in the manu- C., N. foreign plug facture commerce in leaf tobacco and interstate Reynolds Company. products, acquired tobacco and its was separate Liipfert-Scales Company preserved organization The is corporate name. and the on under its business carried $98,300 Company Reynolds The also holds of stock of R. Tobacco J. TERM, 1910. S. 221 U. Court.
Orúnion utilized were being purchased on which acquire plants, remarked, It is also closed. immediately but were margin in the in the memorandum the facts stated con- between the identity singular face a on their show latter of this governed which transactions ceptions very evidently at those existed which period with Tobacco the American original organization of birth first exemplified by the transactions as Company, particulár transactions outside A statement period. during having to as occurred referred previously of those additionally thé serve to make will question period purpose shall, this accomplish we clear. And situation clarity, separately may be consistent with as briefly concerning organization during facts to the .refer Company $9,600 of. & Forbes the Amsterdam Andrews the'Mac Company. Supply Company (Durham,N. C.) Capital Tobacco Durham Blackwell’s — Company .procured The Tobacco
$1,000,000. In 1899 Company stock of Blackwell’s Durham $4,000,000 all the Tobacco at C., products. manufacturer and distributer of Durham, N. tobacco Thereupon Company, New-Jersey, Durham Tobacco the Blackwell’s American, organized $1,000,000,all owned capital, and took company, receivership. of the old then under sepa- over assets Its organization preserved. has rate been Company acquired
The Durham has control of the following com- petitors Reynold’s Company; F. R. Penn Tobacco Tobacco Com- — pany; Company. and W Tobacco ells-^Whitehead followingcompanies The came the control of also under the American Company through acquired stock ownership. cigarettes. Anargyros capital $650,000 In — —Turkish Company procured organization corporation American Tobacco Anargyros, going of S. over that took individual's business and Through company since controlled it. has this the business in Turkish cigarettes largely conducted. (San Francisco) Capital The John Bollman $200,000— —
cigarettes. In 1900 The Company procured American Tobacco organization of Company, The John Bollman which took over the business former exchange concern in Its.separate for stock. organization preserved. has been *50 CO. v. AMERICAN TOBACCO 167
UNITED STATES Opinion the Court. U. S. which were named period corporations second five and bill, in the as heretofore stated which as defendants designation we have hitherto classified purpose for the being defendants, corporations such accessory Company, Cigar Company, American American Snuff & Fórbes Com- Company, MacAndrews Stogie Conley Foil (licorice), Company. pany Company. The (1). American Snuff the American Tobacco at seen, Company As we have period produced very of the first a the commencement in that quantity capacity, however, small snuff. Its augmented owing particularly to the formation regard was Company acquisition and the of the Continental Tobacco a Company, by of the Lorillard came to be serious producer. shortly factor as a snuff There ensued an business between the aggressive competition snuff Company, acquired American Tobacco with the force vantage ground resulting dominancy from the of its in the trade expanded organization, oper- others of that The result ating independently organization. arisen from previously
identical that which had like with past. conditions
In March, 1900, organized Jersey there was New corporation Company, known as The Ameriéan Snuff one-half capital $25,000,000, preferred one-half cpmmon, which took over the snuff business of the P. Company, Company Lorillard Continental Tobacco large The American Tobacco that of a Company, with viz: The competitor, The Atlantic Snuff Co. stock company apportioned: the new was thus Atlantic Snuff Company, preferred, $7,500,000, common, $25,000,000-; P. Lorillard common, Company, preferred, $1,124,700, $3,459,400; Compány, preferred, The American Tobacco $1,177,800, Continental Tobacco common, $3,227,500; $813,100. Company, preferred, $197,500, common, stock issued Continental Tobacco TERM, 1910. S.U. Opinion the Court. *51 the American Company and P. Lorillard defendants, have latter, they and by still the held Company, Tobacco in Snuff Com- interest the controlling all had a at times officers their together with companies, All the pany. thereafter they that would directors, covenanted and Orthe manu- in tobacco business competitors the engage as of snuff. sale, or distribution facture, Snuff the Atlantic transferred Among the assets the shares Company all Snuff were Company American and Inc., & then now Sons, of E. Garrett ($600,000) W. for of largest producers snuff, of and very the oldest one in inter- Yorkland, Del., at engaged and still long a time products, tobacco and its foreign commerce state and the South- ownership stock through and which controlled Tenn.; Dental Snuff Com- Company, Memphis, ern Snuff Stewart-Ralph Snuff Company, and Lynchburg, pany, Va., E. The existence of W. Gar- Clarksville, separate Tenn. and its business con- Sons, preserved & has been Inc., rett In March, 1900, name. the corporate ducted under the acquired all the Company American Snuff shares one and George Company, Helme of the oldest largest W. actively Helmetta, of snuff and at producers engaged J.,N. foreign and in competition interstate commerce with by issuing defendants, exchange $2,000,000 therefor preferred $1,000,000 common; stock and thereafter all conveyance acquired took a assets the company under operates plant its own name. now just As transactions to pass a result stated it came had Company, the American Tobacco which at first very percentage end a period only small manufacturing business, virtually snuff came to have dominant control as a of that product. manufacturer an Conley Company tinfoil, Foil —manufacturers of packing products. essential tobacco Company In American Tobacco December, & Conley Sons, control of the business John secured UNITED STATES AMERICAN TOBACCO CO. 169 Opinion S.U. of the Court. partnership City. New York By agreement Conley Foil Company incorporated York "for New trad- ing manufacturing,” etc., ul- $250,000 capital, timately to $825,000. corporation increased The took over the business and assets of firm, the American Company became of a majority owner shares of stock. Conley acquired Foil has shares, all the of stock of Tinfoil the Johnson & Metal Company, of St. Louis, leading competitor, they supply under fixed contracts at prices remunerative tinfoil used constitutes the defendants, major part production of the total United States.
3. American Cigar Company.
Prior to 1901 the American and Continental tobacco companies' and manufactured, sold, cigars, distributed and In stogies, year companies cheroots. stated the engage upon larger determined the business a scale. agreement Under Smith & Powell, Company, large with they manufacturers and dealers caused the in- cigars, corporation Cigar New of the American Com- Jersey pany trading "for and all manufactúring,” etc., which conveyed three their said it business, and has since carried on companies the same. The and Continental each acquired per Powell, cent of the and shares, 46*4 Company Smith & 7 per cent; original capitalization (afterwards $10,000,000 was and more than $20,000,000), three-fourths is Cigar owned the former. The Com- pany acquired many competitors and (partnerships cor- porations) engaged in foreign commerce, interstate and from taking parties against engaging covenants in the tobacco and business; procured it has also organiza- tion of corporations controlled which have com- acquired peting manufacturers, jobbers and. in the distributors States) manufactures, United Cuba and Porto Rico. It sells and per distributes considerable centage of domestic dominating is the factor in cigars; business, the tobacco OCTOBER'TERM, 1910.
Opinion the Court. Bico, and in Cuba and Porto domestic, and foreign cor- It also controls planting. in tobacco engaged there Pennsyl- California, Alabama, Virginia, porate jobbers Jersey Louisiana, Tennessee. New vania, Georgia, and & Forbes The MacAndrews —manufacturers' licorice. is an paste that licorice essential is no question There tobacco, plug manufacture ingredient- there- obtaining paste from such would is debarred one who carry in or on the manufacture engage unable fore be The control over this article product. thus of such was Continental-Company se- May, 1902, In secured: MacAndrews & Forbes of Newark,' control.of Co. cured organized trading “for New manufactur-r Jersey, corporation known the MacAndrews ing” a & Forbes capital preferred' Co., $7,000,000, $4,000,000 - n common, which took over $3,000,000 the business & Forbes and another large competitor. MacAndrews Company acquired The Continental two-thirds to' by agreeing purchase supply of pasté common stock its company. The American Tobacco'Com- the new filing bill, at the pany, owner time .$750,000 preferred. of the common stock and $2,112,900 agreements the MacAndrews .purchases various By Company acquired, & Forbes business substantially, purchased Thus, competitors. June, of. all *53 Con- Mfgl Co., Stamford, of the Stamford of the business National Com- incorporated the Licorice necticut, -Smylie of & Young business acquired.the pany, which Scudder, P. and the National Company and F. B. V.& licorice, & Forbes not produce to agreed with MacAndrews In all the stock for tobacco manufacturers. had ($1,800,000), J. which Young Company S. been.or- Young Co. to over the business the J. ganized take & acquired by the MacAndrews Md., of Baltimore, & Forbes in Co. The MacAndrews Co. use excess Forbes CO, UNITED STATES AMERICAN. TOBACCO Opinion of the Court. cent of ninety-five per the licorice root in consumed States. United 5. American Stogie Company.
In May, 1903, Cigar Company American American and Companies' Continental Tobacco caused .the American Stogie New incorporated Jersey, $11,979,000 capital, immediately which took named, stogie over the and tobie companies business in exchange for $8,206,275 stock and then the usual ways acquired the business of others in the manufacture, and distribution of sale, such products, with covenants compete. It for acqúired exchange $3,647,725 stock all shares of United Cigar Company (which States had previously acquired and owned the business of im- portant competitors) and subsequently took the convey- plant ance of the The majority al- shares assets. ways have by defendant, been' held Cigar American Company. legitimate
As think we inferences deducible from the undisputed facts which we have thus will be stated suffi- dispose cient to of the controversy, we do not deem it neces- sary expand this as it to statement so to cause embracé. a recital of the undisputed concerning entry facts the. American Tobacco Company into the retail tobacco trade through acquisition of a controlling interest the stock Cigar what known as’ the Company, United Stores as well some other for the subjects sake .which , pass brevity we likewise order to come at over, once to a concerning foreign statement companies, English Companies.
In September, 1901, Co. pur- chased $5,347,000 Liverpool (Eng.) corporation, known as Ogden’s engaged there in manufactur- Limited, conflict, ing and distributing tobacco A trade products. many English at once manu- ensued caused facturers to combine into an as the incorporation known
n Opinion 221U. S. of Court. Ireland, Britain and Company Great Tobacco Imperial to 18,000,000, increased afterwards capital 15,000,000, The continued between trade war was sterling. pounds Company, arid Tobacco the American this corporation identical with that which had a substantially result with a from such situation. seen, have arisen as we hitherto, the American Imperial and In September, (executed England) companies entered into contracts limit its business should stipulating that the former leaf the United except purchasing Kingdom, United that buys pounds 54,000,000 annually); (it States limit their to the should business companies American dependencies Cuba; and and States, its United Company, capital Tobacco British-American sterling, apportioned them, between pounds 6,000,000 export both, over business organized, take should be operate and in other etc. This countries, arrangement, observed. put effect, into and has been immediately Ameri- Company The holds one-third Imperial capital stock the British- Company can two-thirds Limited. The com- Company, Tobacco latter and,the a branch office in New York City maintains pany is vice-president of American Tobacco Company This company large officer. uses principal quantities partly exported to various abroad leaf, plants of domestic and about half manufactured here and then exported. agreement, all this is the American By purchased through In addition to Company. plants abroad many in various States plants it has at Peters- warehouses burg, N. where tobacco is manu- Va., Durham, C., exported. factured then necessary leaf purchase tobacco the United through is made Imperial
States now agent exported part foreign resident as a general commerce. continuity of the narrative facts
Not break the we CO. 173 TOBACCO STATES UNITED AMERICAN Opinion of the Court. 221 U. *55 chronological order to proper in the state omitted
have known as the Consolidated relative what was facts refer to that Company. particularly We now Tobacco subject. Tobacco Co.
The Consolidated in largely interested the American 1901, parties In June, companies incorporation in caused Continental capi- Consolidated Tobacco Jersey Company, New (afterwards pow- broad $40,000,000), with $30,000,000 tal existence; throughout to do business perpetual' ers guarantee and to securities of other world, companies, of shares majority by A was taken individuals few etc. old concerns: A. N. B. Brady, Duke, with the J. connected Ryan, Thomas W. C. and P. A. B. Payne, Whitney, .A. H. B. Duke, president J. both the old com- Widener. president Largely of the Consolidated. became panies, sub- company acquired for bonds the new exchange shares of common stock of the old ones. stantially all the until holding financing, was continued business, Its the American and Continental com- when, with. 1904, American present into the Tobacco merged it was panies, Company. (old) Jersey, October, in New
By proceedings Continental Tobacco Com- Company, Tobacco merged Tobacco were and Consolidated pany of The American under the name corporation, into one defendant here. The Company, principal n merged existence, capitalized was perpetual company, ordinarily preferred, with- ($80,000,000 $180,000,000 at vote). power out n stated charter are by conferred powers The margin.1 and the in tobacco manufacture, and otherwise deal buy, sell To guarantee any. forms; ... and all
products of tobacco any corporation capital stock of any shares of on dividends . . stockholder; . interest as merged corporation has an which said
17á
Opinion the Court. Prior, Tobacco Com- merger the Consolidated to the $40,000,000 capital share of whose majority pany, Whitney, F. Duke, Ryan, B. Thomas William C. held J. H. A. B. Widener and Oliver Brady, Peter Anthony N. stated, all common already nearly had Payne, acquired, companies, American and Continental old shares of both however, shares, preferred thereby control. method of Through the many individuals. were held company, exchange the stock of the new distribution old American and in the Continental shares that the same six men in it resulted control Company, through the Tobacco Com- the combination Consolidated - *56 by. that control ownership of stock in the continued pany Tobacco Company. assets, The merged or new the old companies passed the American property, et.c., (merged), which has since on Company Tobacco carried the business. indisputably record discloses that after this merger from
the same methods which were used the beginning employed. Thus, beyond dispute: continued to be organization that since the of the First, new American Company company acquired Tobacco has large four restrictive, concerns, that against tobacco covenants en- in the tobacco business gaging were taken the sellers, plants operation and that were continued but any operations carry by business merged corpora- on such deemed necessary any objects or advisable in tion to be connection with of the incorporation any thereof, of its or furtherance of tending or to in- property of its stock; crease the value or ... to conduct business possessions States, territories, in all dependencies other America, foreign countries; United States of and in all ... purchase acquire hold, sell, or otherwise assign, transfer, mort- gage, pledge, dispose or otherwise capital shares of the stock or any bonds, securities, or by other evidences of indebtedness created any corporation corporations any other of this or other State or government, obligations payment and to issue its exchange own . therefor. . .
UNITED STATES v. AMERICAN CO. 175 TOBACCO Opinion S.U. the Court. at Second, were once abandoned. that the company new acquired has control of eight concerns, besides additional the business of such concerns on being now carried four separate corporations, all absolutely controlled Company, American Tobacco although connection companies to two these that corporation was long persistently denied. reaching
Thus the end of period the second and coming to the time of the bringing of the suit, brevity prevents stopping us from portray difference between the con- dition in 1890 (old) American Tobacco Com- when organized pany by the consolidation of competing five cigarette concerns and that which existed at the com- mencement of the suit. That- situation and vast power corporate which the principal accessory de- fendants and the small number of individuals who own a majority the common stock of the new American exert marketing over the tobacco product, as a raw its manufacture, its marketing when manufactured, and its consequent movement in the chan- nels of interstate commerce indeed relatively over foreign commerce, the commerce of the whole world, raw and products manufactured stand out in such bold relief from the undisputed facts which have been stated *57 as to lead us to pass at once to the second fundamental proposition which we are required to consider. is, That the construction of the Anti-trust Act application and the of the act as rightly proven construed to the as situation consequence having determined the ultimate and finah faej& inferences properly deducible from undisputed the which we have stated. The construction and application the Anti-trust Act.
If the Anti-trust Act is applicable to the entire situation presented here and is to adequate afford relief complete the evils which the United States insists that situation can presents it be only because that will be given law IT. Court.
Oninion of the affixed has been than application comprehensive more be This will be the case decision. any previous it in in them stated facts as we have undisputed the cause Act of the Anti-trust operation to the as questions volve if Thus, even any case. presented hitherto the American stock ownership of the owner subsidiary companies accessory and in the themselves companies among any of those ship of stock Oil States Standard decided United held, as was were result of the act all relations violation Co., be a aside, set ownership were therefore ing from stock such de yet principal remain whether question would Company, and the five American Tobacco fendant, of their stock defendants, divested accessory even when power corporations, by virtue in other ownership thus, although continue to even they possess, which would first to a violation of both the amount stripped, would that "of if it were held Again, sections the act. and second to á com corporations, existence whereof was due/ companies such and other companies bination between act, remain question a violation of the would was as their companies did not owe exist whether such combinatipns alone power ence and but whose power acquire and own arose from the exercise the right of the act. property would be amenable to the prohibitions if this held proposition Yet further: Even was affirmative the question would remain whether princi defendant, pal American Tobacco Company, when stripped of its stock ownership, and of itself would the prohibitions within act although company organized was took being before the Anti-trust Act passed. Still further, question yet would remain bereft, particular whether corporations which, when they the power possessed resulting from stock ownership, although they were possessed not inherently of a of power, sufficient residuum to cause them to be in *58 UNITED STATES AMERICAN TOBACCO CO. 177 Opinion of Court. of and of either a restraint trade or a themselves monopo- to monopolize; lization or an should attempt nevertheless of their intimate be restrained because connection and as- other, corporations sociation with found be within the The necessity of the act. of relief as prohibitions to all think, we aspects, these seemed to the Government so es- difficulty and the of sential, giving the act such a com- and coherent prehensive construction as woflld be adequate it to meet the situation, to enable entire led appears tówhat us to be in their essence resort to methods of a construc- tion one compatible with the other. And the same ap- is parent presented by conflict of the views the act taken , by the defendants when their contentions are accurately tested. Thus the Government, for purpose of fixing the illegal character of the original combination which organ- ized old American Tobacco Company, asserts that illegal character of the is combination plainly shown be- brought cause the combination was about to stay the prog- flagrant ress of a and ruinous war. In trade other words, is that as the contention forbids act every contract, combination, it prohibits hence just reasonable and trade, agreement made for the purpose of ending war. construing But as thus the act the rule of the letter kills, necessarily would operate take out of the reach one act some accessory and many sub- sidiary corporations, existence which depend not at all upon combination or agreement contract, but upon purchases mere property, many it insisted forms argument the rule of construction to be applied must be the spirit and intent the act and its therefore prohibitions must be held to to acts if not extend even within the literal terms of the if arc they statute within spirit its because done with an to bring intent about the harmful results which was the the statute purpose to prohibit. argued So to the defendants. While itis hand that properties on one the forms which various ccxxi —12
VOL.
Opinion of the Court. 221 U. S. of the letter of act manjf were view the exclude acquired from condemnation, yet of the assailed transactions it is to act the broad giving that the construction which urged the, receive,, whatever rightfully may form, it should be at follow, because, looking should no condemnation the. haye act is whole, every assailed shown to been casé as a result of and lawful of the honest but a exertion legitimate into: of brought play purpose for the methods business the obstructing trade instead of with of advancing object the the same. difficulties which restraining But complexity dealings of the particular thé arise, from which they produce, and the situation which are here involved plain out of misconception think of both the. grows we say Act. spirit Anti-trust letter and We by a of letter seeking narrow rule the letter, because while it which is things deemed would otherwise be to include really destroys great purpose excluded, contention impossible it renders it act, (cid:127)apply since law wrongful acts, come a multitude which would within to a of its remedial resort reasonable scope purposes not construction, although they would be within its reach strict narrow unreasonable adherence a'too it possible must be the case unless be This letter. . purpose, including for the one class say reason be a literal not otherwise embraced would of acts which in conflict reason must although be construction' acts which purpose including and for other applied embraced a construction reasonable not otherwise would say to. is to rules conflicting That two must be resorted at and the same be applied must one time construction adhered to. obscurity resulting uncertainty however, has removed by abstraction because it been but an now given quite recently have which we to. consideration the Anti-trust Act in the Oil Standard construction was held, it without departing case In that Case. CO, UNITED STATES'®. AMERICAN TOBACCO (cid:127) Opinion 221U. S. of the Court. had,
any previous decision of the court" that as the statute the words restraint of trade, defined became neces- could, sary to words, 'construe those duty only be discharged aby resort to reason. sayWe thé doctrine thus stated in accord with all the previous was. decisions . of this court, despite the fact that contrary view was sople erroneously sometimes attributed to expres- sions used in two prior (the decisions Trans-Missouri Freight Association and Joint cases, Traffic and 171 S. 505). U. That such view was a mistaken one fully pointed out in the Standard Oil Case and is ad- *60 ditionally by shown a passage opinion in the Joint 568): Case as (171 follows “The act of Con- U. Traffic gress must have a reasonable construction, else there (cid:127) scarcely would agreement be an or contract among that could have, not be said indirectly to business.men or remotely, bearing some on commerce, interstate possibly to restrain it.” Applying the rule of reason to the construction of statute, the was held in the Standard that Oil Case as the “restraint of trade” at common words and in the law law of this at country the time of adop- the tion of the Anti-trust only Act embraced acts or contracts or agreements or combinations which operated , to the prejudice public by interests unduly restricting com- petition unduly obstructing the due course of trade or which, either because of their inherent nature .or effect or because of the evident purpose acts, the etc., in- juriously trade, restrained that the words as used the designed statute were to- and did have but á like have It significance. was pointed therefore out that the stat- did forbid ute not or restrain power the to make normal resorting and usual contracts' to further trade -to all methods, normal whether by agreement or to otherwise) accomplish, purpose. such In other words, held, it was not that acts which the prohibited statute could be re- moved from the control its prohibitions by a finding
Opinion of U. S. the Court. that reasonable, duty interpret but the to were they that the general from the character of inevitably arose which the restraint required of trade that words term restraint de- meaning given should be which would of trade to and render individual contract difficult stroy right the the channels any movement trade in impossible if not of which it free movement commerce —the interstate to soundness protect. of the statute purpose the statute should receive a reasonable rule see construction, deliberation, after further mature we de- necessity to-doubt. for not Indeed, no reason this case the standard of the rule of reason parting application plainly required its is so is uñiversal which give purposes effect to remedial which -in to order tha,t and to contemplates, prevent consideration act under and all sub- liberty of contract destroying all act from act to at right causing and thus trade, stantial by annihilating right fundamental war itself very act, on the face of the it was which, freedom to trade preserve, illustrated the record before us. enacted which this truth, plain gives In demonstration record promotion arise from and injury which would which the statute was wrongs guard intended would result from statute a against giviifg *61 narrow, unreasoning construction, and unheard of by' us, possible illustrated the before if serves to record as to the of the rule strengthen our conviction correctness construction, reason, applied the rule of which was rule the application the Standard Oil of which to Case,.the reéxpress in the most now, unequivocal terms, statute we and re-affirm. to the then to the case before us act as
Coming apply previous the Standard Oil and all cases, "interpreted by the form in suggested mere which the the difficulties are clothed become óf no moment. assailed transactions it was held in the Standard although This because follows v. AMERICAN CO. 181 STATES TOBACCO UNITED Opinion of the Court. S.U. that, a reasonable giving Oil Case to the statute construc- of' trade” did not embrace all tion, the words “restraint to normal and usual contracts essential individual those right necessary freedom arid the to make which were might trade as a result free, yet, order that the course of to construction which was affixed the of the reasonable generic out that statute, pointed it was designation.; law, of the first and second sections of the when taken act could together, every embraced conceivable which possibly purpose pro- come within the spirit law, regard garb hibitions of the without to the which such acts That is it that' say, were clothed. to was held general language pub- in view of the of the statute and no policy manifested, possibility lic which it there was frustrating policy by resorting any disguise it subterfuge form, since resort to reason rendered by any escape prohibitions impossible indirection of the statute.
Considering undisputed then the facts which we have only it remains to determine previously stated, whether contracts, establish that the com- they acts, agreements, binations, which assailed were of such un- etc., were an wrongful bring usual and as to them within the character , they That prohibitions were, the law. our opinion, overwhelmingly undisputed so results from the facts that facts only necessary it to refer as we have seems them to demonstrate the correctness of this stated con- Indeed, history of the combination is' clusion. so replete doing of acts which was obvious forbid, of the statute to so demonstrative of the purpose beginning purpose acquire existence trade, tobacco dominion and control mere to contract and to ordinary right trade, exertion monopolize in order to the trade but methods devised business, ruth- by driving competitors out were assumption that to upon carried out work lessly upon *62 Opinion of the Court. S.U. play upon cupidity of competitors the fears would say possible. make success We these conclusions in- are vast evitable,, property not because amount of aggre- gated by combination, many not because alone of the corporations proof which the by shows were united resort one,device Again, another. alone because of dominion and control over thé tobacco which actu- trade exists, ally but because wrongful we the conclusion of think purpose illegal combination is overwhelmingly es- by tablished the following By considerations: a. the fact very- organization that first' or combination im- was pelled by a previously existing fierce war, evidently trade inspired by one or more of the brought minds which about ’ combination, parties became that Because, b. immediately after combination and the increase of capital followed, the acts which justify ensued inference that the intention existed to power use the the combination as a vantage ground to further mono- polize the trade by tobacco means of trade conflicts designed injure others, either by driving competitors out of the business or compelling them to parties become to a combination —a purpose whose execution Il- by plug lustrated war which ensued and its results, by the snuff war .which followed and its results, the conflict which immediately entry followed the and the division of the world’s England fn combination foreign contracts which ensued. by the two business is exhibited ever-present manifestation which By c. form in wrongdoing by the which the various of a conscious from the ever beginning, embodied transactions were the same. Now the or- changing but ever in substance company, of a now the control exerted new ganization as to several, one or another or in so taking of stock in attained, uniform, actually nevertheless obscure the result to restrain others purpose manifestations in their in thAhands of the power and retain monopolize and to UNITED AMERICAN STATES CO. TOBACCO *63 Opinion of the Court. who, seem, it from the beginning few would contemplated mastery the of the trade practically which followed. the By gradual absorption d. of control all over the ele- ments essential to the successful of manufacture tobacco . such of products, placing control in the hands seem- ingly independent corporations serving perpetual as bar- to entry the of others into e. riers the tobacco tradé. By expenditure upon of millions persistent millions dollars buying plants, out not for purpose utilizing the them, up but in order to close them and render bhem useless for purposes the By the constantly recurring trade. /. stipulations, isolatedly legality, whose we are not viewed, considering, by of persons, which whether manu- numbers facturers, stockholders or to employés, were bind required themselves, generally for long periods, compete not to the future. Indeed, when result's of undisputed the the proof which have stated fully apprehended, we are wrongful the they considered, acts which exhibit are there was, to inevitably .comes the mind conviction that the the danger which it was deemed would arise to individual liberty and public the from acts those well-being like which this record mind to exhibits, legislative which led the con- Act, ceive and to enact the considerations Anti-trust clearly also serve to that the demonstrate combination here assailed is as no that it is within law to leave doubt plain duty apply prohibitions. our its stating In summarily, done, as we have conclusions which,' in our are opinion, plainly deducible from the un- disputed facts, paused givé we have not the reasons why consider, great we after that the elab- consideration, arguments orate complexion advanced to affix different wholly to the case devoid merit. do not, are /We brevity, moreover, stop sake of to examine and dis- propositions urged argument cuss the various at demonstrating subject- bar for the purpose that combination, matter which we find to exist 1&10. 221U. S.
Opinion of Court. Anti- scope of the itself are not within combination they merely are rightly considered trust because when Act alone subject therefore commerce and matters of intrastate want have done this because the to state control. We subjects on such arguments all the advanced of merit this prior established decisions completely is so in the Standard Oil Case, as not court, pointed out restatement. require this assailed
Leading as does to the conclusion in all aspects say, its whether combination —that *64 ownership point at from the of view stock (cid:127)it be looked standpoint principal corporation the from the or inde- accessory subsidiary corporations or viewed the far foreign corporations so including the pendently, by they cooperat- them by the made became as contracts prohibitions the ors the combination —conies within Act, the and second sections of the Anti-trust first , only, finally remedy to consider the it it remains which duty apply is our to thus to exist. the situation found remedy. The
Our that the being whole, conclusion combination as a all its or involving cooperating parts, associated in what- clothed, tr,ade form ever constitutes restraint within section, attempt monopolize the first an monopolization within the of the Anti- second section it Act, trust follows that the we are to afford relief which 'must than that by court, be wider awarded lower merely since that court decided cor- that certain of the constituted porate defendants combinations in violation act, they first section of the because of the that fact previously union of con- competing were formed cerns that the other defendants not from dismissed the action parties promoted were such combinations or determining their relief purposes. hence, We proper given, may to be our action upon model granted by the but in order to us to below, court enable UNITED AMERICAN STATES TOBACCO CO. 185 Qpi 221 S. U. Court. nion relief coterminous award ultimate redress of the find to wrongs exist, which we we must the sub- approach relief, original from an ject point of view.. Such sub- necessarily takes a two-fold ject aspect character —the permanent required relief and the nature of the tem- porary applied relief essential to be pending the working permanent out of relief event that it be found that impossible under the as it now exists to situation at once rectify existing wrongful such condition. In con- sidering subject both of aspects these three dominant influences must guide our action: duty .1. (cid:127) of giving complete and efficacious effect to the prohi- bitions of statute; accomplishing of this result with aslittle injury possible as to the interest of the general public; and, a3, proper regard for vast interests of private property may have become vested in many persons a result of acquisition way either of stock ownership, otherwise interests the stock or secu- rities. of the combination any without guilty knowledge any or intent in way to become actors or participants in wrongs which we find to inspired have and dominated. the combination from the beginning. Mindful of these considerations the way clear application their *65 say at stopping we the outset without to amplify rea-- the sons which us conclusion, lead to that think we that the court in clearly below erred dismissing the individual defendants, the Cigar United Stores Company, and the foreign corporations and subsidiary corporations. their
Looking at the situation as have pointed we hitherto (cid:127) it it out, involves application difficulties the of remedies greater than presented any have been by case involving the Anti-trust Act which has been hitherto considered by this court: First. Because in this case it is obvious that a mere forbidding decree ownership stock one by of part the combination in part another or entity thereof, no afford adequate measure of relief, since different would TÉRM, g.
Opinion of the 221 Ü. .Court. unaffected, of remain ingredients the combinafion would of their organi the nature and character by very situation, the wrongful zation would be able to continue is Second. duty destroy. it our to the Because which of ownership by methods the apparent wrongful which was, intent out and the part, carried subtle devices we have resorted to which, seen, purpose were of wrong by accomplishing contemplated, way a ownership , are of such character it otherwise, formulate, if impossible remedy difficult to entirety prior could their lawful conditions. restore by Third. Because the methods devised which the various . operation to essential elements the successful to from any particular aspect bacco business have so been separated, under various subordinate combinations, yet so unified the control out way worked the scheme here are any specific so involved that condemned, form might relief which we order now and effect substance operate really to injure public and, be, may might to perpetuate wrong. Doubtless it presence was the of these difficulties which caused the United States, in its prayer for relief to tentatively suggest rather than spe to cifically demand precise definite and might remedies. We at once resort one or the other of general two reme a, of a permanent injunction allowance restrain dies— ing the combination as a aH the universality individu als corporations which' form part á of or cooperate in it any manner or form from continuing engage in interstate commerce until illegal cured, situation be measure relief which would accord in substantial effect with that awarded below to the extent that court illegal found exist; combinations or, b, to direct thé ap pointment of a charge receiver take of the assets and' property in country this in all its combination purpose ramifications for the of preventing a continued law, violation and thus working out by a sale of the *66 UNITED STATES v. AMERICAN TOBACCO CO. 187 Opinion U. Court. or property otherwise, a condition of combination things repugnant which would not be to prohibitions the. But, having regard the act. to the which principles said action, we have must control our we do not think we application can now of either direct these immediate of. as remedies. We so consider to the first in view because of the extent of the the vast field combination, which it character of its covers, all-embracing activities con- cerning products, tobacco and its to at stay once the move- in interstate ment commerce of the products which the combination or its cooperating produce forces or control' inflict might injury upon public by infinite to a leading a stoppage supply great of prices., enhancement The second because the power would result extensive at once a resorting receivership might only do grievous injury public^ but also cause widespread irreparable loss to many people. innocent perhaps circumstances, Under these into mind taking the com- plexity aspects of the situation all of its and giving weight many-sided to the considerations which müst as judgment, think,.so control our we far the permanent, relief to be we should concerned, awarded decree as fol- lows: That the combination in and 1st. as well itself, each and all of the elements composing it, whether corporate individual, collectively considered whether separately, be decreed to be restraint of trade and an attempt monopolize monopolization within the first and second sections of the 'Anti-trust Act. 2d. That below, give court in order to effective force to 'our regard, decree in this be directed to hear the parties, by as it may evidence or be deemed otherwise, proper, ascertaining purpose determining upon some plan dissolving or metbiod of combination and of re- the elements creating, composing it, out of now new honestly harmony shall be condition which not- 3d. That for repugnant law. the accomplish- *67 TFPM.
Opinion the Court. of into purposes, táking difficulty these view the of ment a of six months is allowed the situation, period from of the mandate, leave, however, event, with in the of our receipt below, of the court the necessities the judgment in the a period to extend such to further time require, situation That days. event, 4th. in the before sixty to exceed period fixed, thus condition of expiration the the brought in with law is not disintegration harmony as the of the action the about, consequence either court subject in an issue on the or determining accepting duty it shall the either upon, court, plan-agreed restraining the the injunction an movement of way of by in the of the combination channels products interstate appointment receiver, of a foreign commerce or the or of the statute. requirements effect give to bringing just stated, about of result Pending the defendants, all individuals as well as and cor- each doing any porations, should be restrained act which or enlarge power further extend the com- might means device In bination, by any whatsoever. view we stated leave the considerations have we matter compliance court to work out a with the law to the below public rights to the unnecessary injury without private property. conclusion is many respects substantial our While and with that reached court while accord 4below, think in some relief we should be awarded also the granted, is coincident with that which court respects any complication clearly define prevent and to order modifying, think instead of affirming the situation we decree, conclusions, in view of the broad our our nature of one directions remanding should be of reversal with court to enter a decree in conformity below the^ maybe further neces- opinion steps this and to take such fully given. out the directions which we have sary carry it is so ordered.
And (cid:127)UNITED STATES v. AMERICAN TOBACCO CO. 189 221 U. Harlan, concurring J., dissenting.
Mr. concurring part Harlan and dissenting Justice in párt. said things opinion just I de- many concur with
; but it contains some observations court, livered for. my I to withhold assent. compelled am from which with the court in thoroughly holding I most agree defendant, principal subsidiary corporations and com- accessory its *68 including English corporations, the defendant con- panies, “ in of which, itself, combination and as well as stitute a composing it, corpo- and all of the elements whether each individual, collectively considered or whether or rate the Anti-trust of illegal under Act and separately,” in to be restraint of interstate trade be decreed should mpnopolize part to and a of monopolization of attempt an trade. such I is, think, in the record abundant to
The evidence a containing to render all necessary court decree the enable of of suppression the the evils the combination details fur-, back, the case is with directions But sent question. by or “for parties, otherwise, to .hear evidence the ther the determining plan upon of some ascertaining purpose and' combination, of the of recreat- dissolving method or composing it, wow a new condition” the elements ing out of court, be law. The its repugnant which shall that its combination, illegal says present of opinion, by many established overwhelmingly facts, are purposes “ ever-present manifestation which others, by the among form in wrong-doing of conscious which' is exhibited from the beginning, transactions were embodied the various in substance the same. Now the but ever changing, ever company, the control exerted of now organization new several, so another, taking of stock one by the actually attained, nevertheless' to obscure result as purpose of to restrain in their manifestations uniform Harlan, J., concurring dissenting. S.U. ¿nd monopolize arid tó retain in the hands of others, power it few, seem, beginning would from the contem- who, plated the of the trade which mastery practically followed. all By gradual absorption control over the elements essential to products manufacture of tobacco successful placing seemingly such control hands inde- pendent corporations serving perpetual barriers to the entry others tobacco trade.” court fur- into says of this ther combination monopoly: “The his- tory the combination is so replete doing with the of acts it was the obvious purpose to forbid, the statute existence, so demonstrative of beginning, aof purpose acquire dominion and control the tobacco not' trade, by the right mere exertion the ordinary trade, contract and to but by methods devised to monopo- lize the trade, driving competitors out of business, which were ruthlessly out, carried the- upon assumption work upon the fears or play upon the cupidity of competitors possible.”'' would make success I
But- seems suggested that the course have is not to pursued. The case is to back go to the Circuit Court in order that out of the elements of the old combination *69 may new condition be “re-created” that will not inbe I my inability violation the law. find, confess to in the history combination, this to anything justify the wish that a new should condition be out “re-created” present mischievous that elements combina- compose tion, which, component its together parts, have, with with- out ceasing, pursued the pointed vicious out by methods the court. proof If the before it us—as undoubtedly does—warrants the characterization which the court has made of combination, this monster why cannot all necessary as given directions be now to .the terms of the decree? In'my judgment, there is enough in the record to enable this court to specific formulate directions as to what the decree should contain. Such directions would UNITED STATES v. AMERICAN TOBACCO CO. 191 J., U. S. Harlan, concurring dissenting. only but litigation, end this would serve to protect public against conscious any more wrong-doing by those who have persistently use “ruthlessly,” this court’s methods language, pursued illegal to defeat act Congress.
I say my will not in what, should be opinion, the. form decree, of the speculate nor as to ought what details enough be. It to speak will time on that subject when we us. I will, say have the decree before however, now opinion that in my the decree below should be affirmed as to company accessory its and subsid- t&e iary on cross companies, appeal reversed Government. objections
But have my parts also reference to those opinion recently the court’s it said reaffirming what in the Standard Oil Case about decisions of the former this touching again court the Anti-trust Act. are reminded, We as Oil we were the Standard Case, necessity ap- “rule of plying the reason” the construction of this act think, act I Congress expressed, language as so —an clear and simple that is no room whatever there for con- struction. with
Congress, full and over power exclusive the whole 'subject, signified has purpose every its to forbid restraint of interstate trade, in ex- form, whatever whatever tent, but the court assumed act, by has to insert construction which make merely, Congress say words ” only prohibit means “undue trade. restraint of
If I misapprehend opinion delivered, do not just the court insists was opinion that what said in the Case, Standard Oil previous accordance our cases, decisions in the Trans-Missouri Joint Traffic This 505, 171 U. if to reason. we resort state quite statement me as much would a surprises ' *70 ment that black It is was white white was black. to for in two cases the scarcely just the those majority concurring dissenting.
Harimn, 22117. S. J., they inter- or to intimate that day say late to this at court to the “rule regard of Congress without act preted the does, that the act assume, to as the court now reason,” Case, Oil inter- time the Standard the first in was, certain, is thing One “light of reason.” preted not refers, justify does to the court reason,” which “rule of de- order to of an act plain of the in words perversion the of Congress. will the feat every expression, majority, form of conceivable
By cases, adjudged and Joint Trans-Missouri in Traffic inter-, not restraint of Congress act did allow that any form, in times any extent or three to state trade had theory, persist- been which rejected expressly it as if the act should be construed it advanced, that ently or “undue.” But now in “unreasonable” had it word in what it denominates the accordance with court, in inserts the act the word reason,” effect “rule of same as “unreasonable,” means the “undue,” which it not as say say, what, what did thereby Congress makes say what, plainly it did not intend since the think, I act, explicitly say. it has refused to It has passage so steadily to amend the act as tolerate re- refused commerce even where such restraint straint interstate short, “due.” In said to be “reasonable”.or could be legislation, in effect amends an act now, judicial court over subject depart- Congress relating has cognizance. I ment of Government exclusive say my judgment, majority, beg that, cases, reason;” for, the “rule guided former were quite as may they assumed that knew well others as. when a court seeks to as- require what rules reason in a statute. It Congress expressed the will certain cases, opinions from the the former that the ma- obvious but in grope darkness, discharging about jority did on stood out in the full duty put they glare them solemn the. of reason” and felt and said time and “light again *71 UNITED STATES AMERICAN TOBACCO CO. 193 Hablan, concurring dissenting. J., S.U. not, consistently court could with the that Constitu- the functions of not, usurp Congress by in- tion, would They express said in j legislation. in udicial dulging words, cases, in to the earnest response the former contentions in to insert construction the Word “.un- counsel, that in act of Congress “undue” would reasonable” that as legislation. say, also, Let me we all judicial in question illegal the combination was under agree of the Anti-trust there was not the any Act, construction argument necessity upon enter an extended slightest act of to be as if it Congress to show that the- was read the word “unreasonable” or “undue.” All contained in opinion support is, that is said the court’s that view obiter say respect, dicta, pure simple. I with fully dissenting opinion These views are discussed I by me in the Standard Oil Case. will not re- delivered stated, may is therein but it be well cite an peat what In the Trade-Mark authority. Cases, additional constitutionality the court was asked to sustain the 82, there could not the statute involved. But the statute have put sustained in it words not there except inserting been by Congress. delivering Mr. Justice the unani- Miller, mous “If judgment court, should, said: we construc- us, by judicial case before undertake to make probable tion a did not it Congress make, quite law which do should if the matter how before that what, we weré body, unwilling language would be to do.” This 207 U. approval Employers’ Liability Cases, cited with I Standard 463, dissenting opinion refer to my a full Case, ante, p. containing my Oil statement of ¿TQestion. particular views this
For stated,! part the reasons concur in the court’s opinion and in part. dissent
vol. ccxxi —13 notes $2,000,0'00preferred Lorillard Company, considerably larger. suma ing under, the passed practically it thus however, although by virtue of Company Tobacco of the American control Company, in the was ownership of Continental stock its to be its business continued conducted but liquidated, goods being put its marked corporation, a distinct as they if were the market manufacture just upon (cid:127) concern. independent an Tobacco Following Continental organization its Company the American increased to seventy of dollars thirty-five stock from (cid:127)capital millions and declared a stock dividend one of dollars, millions stock, is, its common that a stock per cent on hundred $21,060,000. dividend facts us just As the stated to the end of first bring at purpose the outset we stated it our which was period , wgU review, briefly point it is" increase in out the the American Tobacco power control .of Com-: of its all and the extension activities to forms to- pany had been products accomplished just prior bacco of the Continental Tobacco organization Company. to the clearly it more than Nothing following: could show company manufacturing At the end the time thereabouts per cigarettes cent or' of all the eighty-six States, per above cent produced twenty-six United all more than smoking tobacco, twenty-two per cent plug fifty-one per of all cent of all little tobacco, cigars, fine per cent cut tobacco, six each of all snuff over cent of per cigars all and cheroots. two period, A brief to the occurrences of the reference second is, organization that of the Continental after and. Tpbacco Company up to time of the of this bringing UNITED v. AMERICAN TOBACCO CO. STATES Opinion of the Court. serve to make evident suit, will transactions