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panies, the aim, or at least the effect of which was to prevent or render possible the prevention of competition between the two roads by transferring their stock to a single holding company, organized under the laws of a State, which holding company thereby became possessed of a controlling interest in the stock of each of the railway companies.

In this case it was strenuously urged that the combination or agreement represented by the holding company was one which, in itself, had no direct relation to interstate commerce, the company being an investment company and not itself a carrier company; and that the question thus reduced itself to whether the United States had, under its commercial power, the constitutional authority to regulate the transference and holding of the shares of stock of state corporations.**

To this argument the court replied that the real question at issue was not as to the power of the United States to regulate the holding of stock of state corporations, but as to the power of state corporations to restrain or monopolize interstate commerce. It was admitted that contracts or combinations relating to the holding of stock of interstate carrier companies have not, generally speaking, a direct relation to interstate commerce, and therefore, that, as to them, the doctrine of the Knight case would apply. But in the present case the court found that the Merger Company was not a bona fide investment company, but was, in its very inception and sole design, a scheme for controlling interstate commerce. Its relation to interstate commerce was thus a direct one. The court say: "The government government . . . does not contend that Congress may control the mere acquisition or the mere ownership of stock in a state corporation engaged in interstate commerce. Nor does it contend that Congress can control the organization of state corporations authorized by their charters to engage in interstate and international commerce. But it does contend that Congress may protect the freedom of interstate commerce by any means that are appropriate and that are lawful, and not prohibited by the Constitution. It does contend that no state

44 Other objections were urged which it is not necessary here to consider.

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corporation can stand in the way of the enforcement of the national will, legally expressed. The federal court may not have the power to forfeit the charter of the Securities Company, it may not declare how its shares of stock may be transferred on its books, nor prohibit it from acquiring real estate, nor diminish nor increase its capital stock. All these and like matters are to be regulated by the State which created the company. But to the end that effect be given to the national will, lawfully expressed, Congress may prevent that company, in its capacity as a holding corporation and trustee, from carrying out the purposes of a combination formed in restraint of interstate commerce."

By its decree the court thereupon enjoined the company from acquiring aditional stock, from voting that which it had already acquired, and from exercising any control over the roads, the stock of which it held.45

In result, the chief significance of the Merger case would seem to be the authority assumed by the court to look beneath the surface of acts, and, irrespective of their formal character, to hold them subject to the provisions of the Anti-Trust Act, if, thus viewed, they disclose a plan to restrain, or a capability of restraining, interstate trade.

§ 365. Beef Trust Case.

The so-called Beef Trust Case - Swift & Co. v. United States46 -decided in 1905, added no new principle to the law of inter

45 Justice Brewer, while concurring in the judgment, dissented from some of the language of the majority justices. In his opinion the prohibition of the act of 1890 should be restricted to contracts in unreasonable restraint of trade.

Justice White in a dissenting opinion argued that, despite the disclaimer of the majority, the court was upholding the power of the United States to regulate the acquisition and holding of the property of state corporations. Justice Holmes in a dissenting opinion argued that the act was a criminal statute and should, therefore, receive a strict construction, and, so construed, that its prohibitions should be restricted to contracts and combinations in restraint of trade which are illegal by the common law, namely, those contracts with a stranger whereby the contractor restrains his own freedom of trading, and those combinations formed with the purpose of excluding strangers to the combination from engaging in the business.

46 196 U. S. 375; 25 Sup. Ct. Rep. 276; 49 L. ed. 518.

state commerce. The act of 1890 was held to have been violated by a combination of independent meat dealers in an attempt to monopolize commerce in fresh meat among the States, and to restrict the competition of their respective buyers when purchasing stock for them in the stock yards. It is significant, however, that the court emphasized that the unlawfulness of the general scheme was sufficient to render unlawful the constituent acts, which in themselves, and apart from their place in the general scheme, might not have been in violation of the Anti-Trust Act. "The plan may make the parts unlawful." 47

In Cincinnati, etc., Co. v. Bays the court, applying the principle de minimis non curat lex, held that where the restraint complained of is insignificant, even though direct, a contract will not be held void as in violation of the Anti-Trust Act.

§ 366. Danbury Hatters' Case.

In Loewe v. Lawler19 the court took a very advanced ground as to what will be construed to be an interference with interstate commerce. In this case the act of 1890 was held to have been violated by a combination of members of a labor organization, in the nature of a boycott, to prevent the manufacture of hats intended for transportation beyond the State, and to prevent their vendees in other States from reselling the hats, and from further negotiating with the manufacturers for further purchases. 47 As regards the bearing of the combination upon interstate commerce, the court say: Commerce among the States is not a technical legal conception, but a practical one, drawn from the course of business. When cattle are sent for sale from a place in one State, with the expectation that they will end their transit, after purchase, in another, and when in effect they do so, with only the interruption necessary to find a purchaser at the stock yards, and when this is a typical, constantly recurring course, the current thus existing is a current of commerce among the States, and the purchase of the cattle is a part and incident of such commerce. What we say

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is true at least of such a purchase by residents in another State from that of the seller and of the cattle. And we need not trouble ourselves at this time as to whether the statute could be escaped by any arrangement as to the place where the sale in point of law is consummated.”

48 200 U. S. 179; 26 Sup. Ct. Rep. 208; 50 L. ed. 428. 49 208 U. S. 274; 28 Sup. Ct. Rep. 301; 52 L. ed. 488.

In order to bring this combination within the terms of the federal statute the court again emphasize that where the general purpose and effect of the plan is to restrain interstate trade, the separate acts, though in themselves acts within a State and beyond federal cognizance, become illegal as tested by the federal law.50

A case partially supporting this Danbury Hatters case is In re Debs.1 In that case the circuit court had held a combination of workmen to boycott the cars of the Pullman Car Company, and the trains carrying them to be a violation of the act of 1890.52 In the Supreme Court the case was rested upon the broader ground that the Federal Government in the exercise of its full power over interstate commerce and the transmission of the mails, has the authority to remove every obstruction thereto. With reference to the act of 1890, the court, however, say: "We enter into no examination of the act of July 2, 1890, c. 647, 26 Stat. 209, upon which the circuit court relied mainly to sustain its jurisdiction.

50" The averments here are that there was an existing interstate traffic between plaintiffs and citizens of other States, and that for the direct purpose of destroying such interstate traffic defendants combined not merely to prevent plaintiffs from manufacturing articles then and there intended for transportation beyond the State, but also to prevent the vendees from reselling the hats which they had imported from Connecticut, or from further negotiating with plaintiffs for the purchase and inter-transportation of such hats from Connecticut to the various places of destination. So that, although some of the means whereby the interstate traffic was to be destroyed were acts within a State, and some of them were in themselves as a part of their obvious purpose and effect beyond the scope of federal authority, still, as we have seen, the acts must be considered as a whole, and the plan is open to condemnation, notwithstanding a negligible amount of intrastate business might be affected in carrying it out. If the purposes of the combination were, as alleged, to prevent any interstate transportation at all, the fact that the means operated at one end before physical transportation commenced and at the other end after the physical transportation ended was immaterial. Nor can the act in question be held inapplicable because defendants were not themselves engaged in interstate commerce. The act made no distinction between classes. It provided that every' contract, combination or conspiracy in restraint of trade was illegal. The records of Congress show that several efforts were made to exempt, by legislation, organizations of farmers and laborers from the operation of the act and that all these efforts failed, so that the act remained as we have it before us."

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51 158 U. S. 564; 15 Sup. Ct. Rep. 900; 39 L. ed. 1092.

52 64 Fed. Rep. 724.

It must not be understood from this that we dissent from the conclusions of that court in reference to the scope of the act, but simply that we prefer to rest our judgment on the broader ground which has been discussed in this opinion, believing it of importance that the principles underlying it should be fully stated and affirmed."

§ 367. Other Cases.

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In Shawnee Compress Co. v. Anderson it was held that while a company may, in connection with the sale of its business and good-will, covenant not to re-enter the business for a time or within a territory sufficiently broad to protect the vendee, a covenant so made is in violation of the act of 1890 if it be executed in pursuance of a plan to assemble under one management or ownership a business extending over two or more States.

In Connolly v. Union Sewer Pipe Co.54 the plaintiff in error defended a suit upon certain promissory notes upon the ground that the company to which they were given was at the time in combination with other companies in violation of the Anti-Trust Act. The defense was overruled by the Supreme Court on the ground that the suit was not an action on the part of the company to enforce obligations directly growing out of an illegal combination. "The purchases by the defendants [plaintiffs in error] had no necessary or direct connection with the alleged illegal combination, for the contracts between the defendants and the plaintiff could have been proven without any reference to the arrangement whereby the latter became an illegal combination."

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In Continental Wall Paper Co. v. Voight the case was distinguished from the Connolly case, the court holding that a recovery upon an account for goods sold and delivered by a corporation created as a means for bringing about a combination of wall paper manufacturers in violation of the act of 1890, could not be had, where, to the knowledge of both parties, the account had a direct reference to and was in execution of the agreements constituting the illegal combination.

53 209 U. S. 423; 28 Sup. Ct. Rep. 572; 52 L. ed. 865. 54 184 U. S. 540; 22 Sup. Ct. Rep. 431; 46 L. ed. 679. 55 212 U. S. 515; 29 Sup. Ct. Rep. 280; 53 L. ed. 486.

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