440
FEDERAL REPORTER,
vol. 53.
of its being filed for record. Nor do we find any evidence or anything to raise the presumption that it was through the connivance or suggestion of the. grantors that it was kept from record, or that there was any fact calculated to put her on inquiry, and which, if followed up, would have led to the discovery that the vendor's intent was fraudulent. We also fail to find satisfactory evidence that the nonrecording of this deed of conveyance affected injuriously the interests of the bank's creditors, or that on that account it was enabled to obtain greater credit, or that the withholding of it from record in the least affected the business of the bank, or that appellants gave credit upon the faith of the ownership of this property. Several witnesses have testified generally that, had they known that this property had been sold to Mrs. Klein, they would have had their confidence in the bank shaken to some extent; there is no evidence that any of them searched the records for the purpose of ascertaining whether or not any of the property had been conveyed away, or that they woul9 have known it if the deed had been placed on record at the time of its execution, or that they kept informed upon the purchases and sales of property by the bank. When we consider that these lots were but a small part of the real estate that was, held by the Kleins, whiehwas estimated at something over $4:00,000, and that their liabilities exceeded $1,000,000, and that a very large business was done, large payments made, and deposits received, the very day .preceding the failure, we cannot believe the evidence that the sale of these pieces of property for a full cash value would have affected the standing of the bank or the action of the complainants in making deposits, had it been known at the time of tlte ,execution of the deed. In the entire case we fail to find evidence ,of bad faith on the part of appellee herein, or any pre· sumption arising from her conduct which would render void the title by which she holds the property in question, and the judgment of the court is affirmed, with costs. It
UNITED STATES v. TRANS-MISSOURI FREIGHT ASS'N et al. (Circuit Court, D. Kansas. November 28, No. 6,799. 1. CARRIERS-COMI3lNATIONS TO MAINTAIN RATES.
An agreement between several competing railway companies, and the formation of an association thereunder, for the purpose of maintaining just and reasonable rates, 'preventing unjust discriminations by furnishing adequate and equal facilities for the interchange of traffic between the several lines, without preventing or illegally limiting competition, is not an agreement, combination, or conspiracy in restraint of trade in violation of the act of July 2, 1890, § L
2.
SAME-MONOPOLIES.
Nor is such an agreement in violation of section 2 of such act, as tending to the monopolization of. trade and commerce.
8.
SAME-PUBLIC POLICy-TRANSFER OF FRANCHISE.
Where each company, by such agreement, maintains its own organization as before, elects its own officers, delegates no powers to the 3Jlsociation to govern in any respect the operations or methods of transacting the routine.
UNITED STATES V. TRANS-MISSOURI FREIGHT ASS'N.
441
business of the several competing lines. but simply requires thateaeh company shall charge just and reasonable rates. and provides for certain regulations in regard' to changes in such rates, such contract or agreement is not forbidden by public policy as amounting to a transfer of the franchises and corporate powers of such companies. 4, SAME-MONOPOLIES-INTERSTATE COMMERCE ACT.
It 'was not the inteniion of congress to include common carriers subject to the act of February 4, 1887, within the provisions of the act of July 2, 1890, which is a special statute, relating to combinations in the form of trusts and conspiracies in restraint of trade.
In EqllitJ'. Bill by the United States against thE:' Trans·1Iissouri Freight Association, the Atchison, Topeka & Santa Fe Railroafl Compa,ny, and others, for the dissolution of an association or combination alleged to be in restraint of trade in violation of the act of July 2, 1890, and for an injunction restraining the several com· panies from carrying into effect the agreement under which the association was formed Bill dismissed. J. W. Adyand 8. R. Peters, for complainant. (.1eorge R. Peck, B. P. Waggener, Wolcott & Vaile, Wallace Pratt, J. P. Dana, Spencer, Burnes & Mosman, J. D. Strong, W. F. Guthrie. J. M. Thurston, A. L. Williams, N. H. Loomis, R. W. Blair, John R. Hawley, W. F. Evans, M. A, Low, James Hagerman, and T. N. Sedgwick, for defendants. RINER, District Judge. This is a bill in equity, brought by the United States attorney for the district of Kansas, by direction of the attorney general, in the name of the United States against the Trans-Missouri Freight Association and 18 railway companies, which, it is alleged in the bill, constitute the association. The object and purpose of the bill is to obtain a decree declaring said freight association dissolved, and enjoining defendants, and each of them, from carrying out the terms of a certain memorandum of agreement entered into by and between the 18 railway com· panies forming this association, which agreement, it is alleged, is un· lawful, because maintained by said railway companies in violation of an act of congress, entitled "An act to protect trade and commerce against unlawful restraints and monopolies," approved July 2, 1890. It is alleged in the bill that the defendants (the 18 railway companies) are common carriers incorporated under public statutes of several states and of the United States, and are engaged in moving, cal'rying, and transporting freight and commodities in the commerce, trade, and traffic which is continuously carried on among and between the several states of the United States, and among and between the several states and territories of the United States, and between the states and territories of the United States and foreign countries; and that prior to March 15, 1889, each of the defendant :oailway companies owned, operated, and controlled separate lines of railroad. and furnished to persons engaged in trade and others, among the states and territories of the United States, separate, distinct, and competing lines of transportation between the states and territories of the United States IJing west of the Mig-
442
ftDERAI, REPORTER,
souri of the Pacific ocean, and that to encourage and secure ofthlj competing lines of transportation throughout that region thegove.rnment of the United States and the states and territories within,the region .mentioned had granted to. the defendallUl' public ·frl:j,nchises, land grants, securities, and subsidies of !!Teat value. That on the 15th day of March, 1889. the defenda:ntrailway not being content· with the rates of fr-eight they could receive with ..free competition among themselves, but contriving and intending unjustly and oppressively to estabJishand maintam arbitrary rates of freight and transportation in theihterstate commerce throughout said region, did combine. conspire, confederate, and unlawfully agree together, and did enter into a written agreement and contract, known as the "Memorandum of Agreement of the Trans'Missouri Freight Association," by the terinB'of:which said agreement the associatiQn has control of all competitive traffic between points i:n that regi()nof country lying west of a line commencing at the ninety-fifth meridian, on the Gulf of Mexico,. and running north to the Red river, and thence to the ea.sternboundary of the Indian Territory; thehce along the eastern line of Said teriitory and' of the state of Kansas to Kansas City, Mo.; thence, by the Missouri river, to the point of intersection of tliat river with the eastern boundary line of Montana; thence by said eastern boundary line to the international line between this country and the British possessions. That the said association, by a board created by each company appointing one person to represent it in the association, and that the several railway companies, members of the association, gave to the association the power to establish and maintain rules, regulations, and rates on all competitive traffic, through and local, within the region of country described in the agreement; and that said' association, by the terms of the agreement, is given the power to punish by fine any member that reduces the rate fixed by the association. It is further alleged in the bill that the said agreement took effect on the 1st day of April, 1889, and that ever since that time the said railway companies, by reason of said agreement and combination, and under duress of the fines and penalties prescribed in the articles of agreement, have put in force and maintained, and now maintain, ta.riffs and rates of freight fixed by said association; and that the officers and agents of said railway companies have, ever since said agreement took effect, refused to put in force reasonable rates of freight, based upon the cost of construction and operation of theil' several lines of railroad and other proper elements to be considered in the making of freight rates; and that the people engaged in trade and commerce within the region of country mentioned in said articles of agreement are, by reason of said combination and association, deprived of rates of freight, benefits, and facilities which might reasonably be expected to flow from free competition between said several lines of transportation. It is further alleged in the bill that, notwithstanding said association is in violation of the act of congress of July 2, 1890, said defendants, since the date of said act, have, and still continue to maintain, the arbitrary rates of freight fixed by the
UNITED STATES V. TRANS-MISSOURI FREIGHT ASS'ZW-.
443
said Trims-Missouri Freight Association, to the great injury and prejudice of the public and to the people of the United States. Then follows the prayer that the defendants, and each of them, be en· joined from further agreeing, combining, conspiring, and acting to· gether to maintain rules and regulations for carrying freight upon their several lines of railroad, to hinder trade and commerce between the states and territories of the United States; and that they be enjoined from continuing in a combination, association, or conspiracy to deprive the people engaged in trade and commerce among the states and territories of the United States of such facilities, rates, and charges of freight and transportation as will be attained by free and uID'estrained competition between said several lines of railroad; and that said defendants be enjoined from agreeing, combining, conspiring, and acting together to monopolize or attempting to monopolize freight traffic in the states and territories of the United States and that all and each of them be enjoined from agreeing, combin· ing, conspiring, and acting together to prevent each or any of their associates in said agreement from carrying fl'eight and commodities in the trade and commerce between the states and territories of the United States, except at such rates as shall be voluntarily fixed by the officers and agents of each of said roads acting independently and separately in its own behalf. 'The defendants the l\Iissouri, Kansas & Texas Railway Company, the Chicago, Kansas & Nebraska Railway Company, and the Den· vel', Texas & Ft. Worth Railroad Company have filed answel'f'l, denying that they were members of the Trans-Missouri Freight Association. The other 15 companies have each fIled a separate answer, bnt, as they are substantially the same as to the facts, it will not be necessary to refer to them separately. They each admit that they are common carriers engaged in transporting persons and propertr among the several states and territories of the United States, and allege that, as such common carriers, they are subject to the provisions of the act of congress approved February 4, 1887, entitled "An act to regulate commerce," with the various amendments thereof and additions thereto, and that said act and the amend· ments constitute the system of regulation which has been established by congress for the common carriers subject to said act; and they deny that they are subject to the provisions of the act of congress entitled "An act to protect trade and commerce against unlawful restraints and monopolies," approved July 2, 1890. Further answering, the defendants admit that they severally own, control, and operate separate and distinct lines of railroad fitted up for carrying on business as common carriers of freight, independently and dis· connectedly with each other, except that common interest exists between certain of the companies named in the answer. It is further adlnitted by the defendants that the lines of road mentioned in the bill are lines of transportation and communication engaged in freight traffic between and among the states and teITitories of the Cnited States, and are through lines for freight traffic in that region of country lying west of the Mississippi and Missouri rivers and east of the Par.ific ocean, but deny that they are the only such lines, and
444
FJilDJilRAL REPORTER,
allege that there are several others, naming them. It is further adthat prior to the organization' of the freight association the defendants furnished to the public, and persons engaged in trade, traffic, and commerce between the several states and territories of tlle United States and countries named in the bill, separate, distinct, and competitive lines of transportation arnd communication, and allege that they still continne to do so. It is further admitted that some of the roads mentioned in the bill received aid by land grants from the United States, and others received aid from the states and territoriea by loans of credits, donations of depot sites and right of way, and in a few cases by investments of money, and the people of the said states and territories to a limited extent made investments in the stocks and bonds in some of said railroads, while other of the lines mentioned in the bill were almost entirely constructed by capital furnished by nonresidents of said region. It is further admitted that the purpose of said land grants, loans, donations, and investments was to obtain the construction of competitive lines of transportation and communication, to the end that the public, and people engaged in trade and commerce throughout said region of country, might have the facilities afforded by railways in communicatingwith each other, and with other portions of the United States, and with the world. and denied that they were granted for any other purpose. Defendants flU'ther admit the formation, on or March 15,1889, of the voluntary association described in the bill 83 the Trans-Missouri Freight A:$Sociation. Further answering,defendants deny that they were not content with rates prevailillgat the· date of agreement; they deny any in· tent to :unjnstly increase rates, and deny that said agreement destroyed, prevented, or illegally limited or influenced competition; they deny that arbitrary rates have been fixed or charged; they deny that rateshuve been increased, or that the effect of free competition has been counteracted; they deny any purpose in the formation o[ f;aid association to monopolize the freight traffic or commerce between the states and territories within the region mentioned in the bill, and deny that the said agreement is in any respect the unlawful result of any confederation or conspiracy. Further answering, defendants allege that they are subject to the provisions of ,the act of congress approved February 4, 1887, entitled "An act to regulato commerce," in the matter of adjusting rates on their several roads, so as to prevent unjust discrimination against persons and localities, which involves an adjustment between different companies interested in joint rates, and doing business in said region of country, requiring preconcerted action between defendant companies, and that this service is the greater part of the work of the association. The defendants admit tbat the chairman of the association is aut,horized to investigate rate cutting, and that the articles of agreement provide that he may assess fines for violations thereof, but allege that no attempt has been made to enforce the collection of fines since 1890. Further answering, the defendants allege that the principal object of the association is to establish reasonable rates, rules, and regulations on all freight traffic, and the maintenance of
UNITED STATES
v.
TRANS-MISSOURI FREIGHT ASS'N.
445
such rates until changed in the manner provided by law. It is further alleged that the agreement was filed with the interstate com· merce commission, as required by section 6 of the act of February 4, 1887. Defendants further allege that it is not the purpose of the association to prevent members from reducing rates or changing the rules or regulations fixed by the association, and that by the terms of the agreement each member may do so; the preliminary requirement being that the proposed change shall be voted upon at the meeting of the association, after which, if the proposal is not agreed to, the line making the proposalean make such reduced rate notwithstand· ing the objection of the other lines. That the purpose of this provision is to afford opportunity for the consideration of the reasonableness of any proposed rate, rule, or regulation by all lines interested, and an interchange of views on the effect· of such reduction; and that reductions of rates have been made in many instances, through said process, by said association. It is admitted by the answer that this agreement took effect April 1, 1889, and that it has since remained operative, and that the rates, rules, and regulations properly fixed and established from time to time, under said agreement, have been put into effect and maintained in conformity to law; but it is denied that by reason of said agreement, or under duress of fines and penalties or otherwise, the defendants have refused to establish and maintain just and reasonable rates, and it is alleged that the object of the association at all times has been and is to establish all rates, rules, and regulations upon a just and reasonable basis, and to avoid unjust discrimination and undue preference. The answer further denies that shippers or the public are in any way oppressed or injured by reason of the rates fixed by the association, but, on the contrary, it is alleged that the agreement, and the association established under it, have been beneficial to the patrons of the defendant railway lines, composing the association, and the public at large. A copy of the agreement is set out at length, and attached to the answer of the Atchison, Topeka & Santa Fe Railway Company.l The case was set down for hearing on bill and answer, and tlte pleadings only are to be considered. The answer, therefore, is admitted to be true in all its allegations of fact, even when not stated positively; and the defendants only aver that they believe, and hope to be able to prove, such facts, but the complainant does not thereby admit conclusions of law, nor matters concerning which the court takes judicial notice. The act of congress of July 2, 1890, which it is alleged in the bill is violated by the agreement to form and the formation of the freight association, in the first section declares every contract, combination in the form of a trust or otherwise, or conspiracy in restraint of trade or commerce among the several states, to be Ulegal, and provides for the punishment by fine or imprisonment of every person who shall make any such contract, or engage in any such combination or conspiracy. Section 2 declares that every person who shall monopolize 'See note at end of case.
446
FEDERA:LREPORTER,
attempt to monopolize 01' combine or conspire with.any other pel'tomon6p6lize ;tny part of the trade or coIIinierceamong the states or With foreign nationl! shall be deemed guilty of a mls'd'eineanor. and. on conviction thereof, shall be punished by. fine or PJlvriSonment. 3 makes the provisions of the first section applica;ble within the territories, and between one territory and an· other;!itid between a territory and a state, and between the District of. Ooltunbia and a terriWry or state. Section 4 confers jurisdiction upon thes.E(veral circuit'courts of. the United States to prevent and reo straiIl vjblations of the. act, and makes it the duty of· the district torrieysin the respective districts, under th.e direction of the at,torney general,: to institute in equity to prevent and restrain such Section 5 provides for bringing in other necessary parties. Section. 6.· provides fol' the seizure and condemnation of property owned. under any contract or combination prohibited by the act, and being in the course of transportation from one state to another or to a foreign countI'Y.Section 7 gives a right of action to any person injured by violations of the ltCt, and authorizes a recovery of threefold damages. The. eighth and last section provides that the word "per. son" or "persons." whenever used in the act, shall be construed to in· elude corporations. or associations existing under or authorized by the laws either of the United States or of the territories or of any state or of any foreign country. It will be seen from an .examination of this statute that ita purpose was to reach two evils: First, contracts, combinations, or cOlli!piraciesin of trade; and, secqnd, monopolies. It was urged at the argument that the contfJtCt mentioned in the bill, and the asso· ciation formed thereunder. came within the provisions of this act of July 2,1890, for the reason that !tis a contrlWt or agreement in restraint of trade, in that it prevented free competition in the matter of transportation of freight among the several states within the l'l>gion specified in the bill; counsel for the government insist,ing that "trade and commerce among the several states of the Union is free, except as regulated and restrained by acts of congress, and that no state, municipality, corporation, individual, or combination of individuals can by any act or device legally restrain, hinder, and retard it." On the other hand, it is insisted the defendants that there is no fixed rule of law by which to determine whether any given contract is in restraint of trade. but that in determining the question the cou.rt8 must look to the particular circumstances of each case. In disposing of this branch of the case, I will first briefly refer to some of the decided cases cited by counsel in their briefs. The case of Com. v. Carlisle, Brightly, N. P. 36, was a case where certain master shoemakers had entered into an agreement not to em· ploy any journe;-men shoemakers who would not consent to work at reduced wages; the purpose being to re-establish wages for this class of labor which had prevailed before that time, but which the defendants had been compelled to advance by reason of a combination among the workmen. The court, in deciding the case, said: "'Vhere an act is lawful for an individual it can be the subject of conspiracy when done in concert only where there is a direct intention that in.
UNITED STATES V. TRA:ri'S-MISSOURI FREIGHT ASS'N.
447
jury shall result from it,or where the object is to benefit the conspirators to the prejudice of the public or the oppression of individuals, and where SIlch prejudice or oppression is the natural and necessary consequence fiowing from the act." '
The case of People v. Fisher, 14 Wend. 9, was an indictment against journeyman shoemakers for conspiring together to fix the price of making boots, and establishing a penalty against any journeyman shoe:Qlakers who should make boots for a rate than that fixed by the parties to the agreement, and also agreeing to refuse to work for any master shoemaker who should hire a man who reduced the rates for making boots; and it was held in that case that this was a conspiracy against trade and commerce, and, as such, prohibited un· der a statute providing: "If one or more perSolUl"shali conspire to commit any act injurious ,to'trade or commerce, . they shall be gUilty of a misdemeanor." In passing upon the case, Savage, C. J., said: "The man who owns an article of trade or commerce is not obliged to sell it for any particular price, nor is the mechanic obliged by law to labor for any particular price. He may say that he will not make' coarse boots for less than $1.00 per pair, but he has no right to say that no other mechanic shall make them for less. If one individual does not possess such aright over the conduct of another, no number of individuals cau possess SIlch a right. Allcom· binations, therefore. to effect such an object, are injurious, not only to the in· dividual particularly oppressed, but to the public at large."
Hooker V". Vandewater, 4 Denio, 349, was an action to compel a division of net earnings between several lines of boats engaged in tralUlporting persons and freight on the Erie and Oswego canals. The agreement was that each party should run his line of boats' upon these canals during the period of canal navigation in 1842, at rates of freight fixed by themselves, from which neither should deviate; and to indicate the interest of each the respective lines were converted into stock, amounting in all to 69 shares. All were to share equally in the net earnings of all the lines in proportion to the number of shares of such stock, and to enforce performance of the contract a common agent was appointed, to whom each party to the agreement was to advance and keep good $35 on each share of such stock, and who was from time to time to receive returns of the done by each line, and adjust the proportions from the earnings due to each, and out of this common fund to pay and liquidate all such sums as should appear from time to time to be due from one to the other. It was held in this case that the transaction amounted to a conspiracy to commit an act injurious to trade, and was therefore illegal and void. The case of Stanton v. Allen, 5 Denio, 434, ,was a suit upon a promissW'Y note, given, as stated upon the face of the note, for per· centage on tolls for the season of 1843. In this case an agreement had been entered inw by the proprietors of boats on the Erie and Oswego canals, to regulate the price of freight and passage by a uniform scale to be fixed by a committee chosen by themselves, and to divide the profits of their business according to the number of boats employed by each, with a provision in the contract prohibiting the members from in similar business out of the association, and it was held that the tendency of such an agreement was to pre-
448
;,,' ,
was therefore against public pol· lCy, :and .y,old. , The case of Association v. Kock, 14 La. Ann. 168, was a contract several persons engaged in selling bagging, to the effect that nonatif :them should seUany bagging' without the consent of a majorlty,land prdviding a penalty of $10 for each bale of bagging sold in violation of the agreement, and the action was to recover penalties under the agreement. amounting to $7,400. The court in that case decided that the contract .was a combination in restraint of trade, for the :reason that ,its purpose was, to enhance the 1l!-arketprice of an article of prinie necessity to cotton planters, and was' therefore con· trary to public policy, and could not be enforced. The Morris Run Coal Co. v. Barclay'Coal Co., 68 Pa. St. 173, was an agreement between five coal companies to divide t.wo coal regions of which they had control, and to appoint a committee to take charge of their inte:rests, which committee was to decide all questions, and appoint a geI1-eral agent ll,t Watkins, N. Y.; the coal mined to be :lelivered through him. Each C9rporation was to deliver its proportion, at its own cost. in the different markets, at such time, and to such persons, as the committee might direct, and the committee to adjust the prices and rates of freight. By the terms of the agreement the companies migoht sell their coal themselves, however, to the extent only of their proportion; the agent to have the power to suspend ship· ments of either beyond their proportion. Prices were to be avp.raged, and payments made to those in arrear by thosem excess. Xeither party to the contract was to sell coal otherwise than specified in the agreement. The action was to recover on a bill of exchange drawn for balances uhder this contract. It was held that there could be no recovery, for the reason ,that the contract under which the balances were claimed was void as against public policy. The case of Craft v. McConoughy, 79 TIl. 346, was an action for a division of profits under a contract between grain dealers at the town of Rochelle, in TIlinois, in which it was provided: "Each separate firm shall conduct their own business as heretofore, as though there were no partnersw.p in appearance, keep their accounts, pay their own: expfDSes, ship their own grain. lind furnil;lh their own funds to do business with; prices and grades to be fixed from time to time as convenient, and ea('h one to abide by them. All grain taken in store shall be charged 1% c.-nts per bushel monthly. No grain to be shipped by any party at a less rate than 2 cents per bushel"
The court held the agoreement void, as in restraint of trade, for the reason that, while the agreement upon its face seemed to indicate that the parties had formed a partnership for the purpose of control· ling the trade in grain, yet, from the terms of the contract and other proof in the record, it. was apparent that the object was to form a secret combinll,tion, which would stifle all competition, and enable the parties by· secret and fraudulent means to control the price of grain, cost of storage, and expense of shipment; adopting the Ian· guage of the court: "In other words, the four firms, by shrewd, deep-laid, secret combination, attempted to control and monopolize the entirc grain trade of a town and sur· rounding country."
449
In the case of Salt Co. v. Guthrie, 35 Ohio St. 666, the contract was for the purposes of regulating the prices and grade of salt. By the terms of the, agreement each member of the association was prohib· ited from any salt during the continuance of the association, except at retail. and then only to actual consumers at the place of manufacture, and at the prices fixed by the directors from time to time. The action was to recover the possession of 1,000 bushels of salt manufactured under the contract. The court' denied the plain. tiff's right to recover, stating: "The clear tendency of such an agreement was to establish a monopoly, and to destroy competition in trade," and for that reason, on grounds of public policy, courts will not aid in its enforcement., The case of Texas &,P. Ry. Co. v. Southern Pac. Ry. Co., 41 La. Ann. 970, 6 South. Rep. 888, was a suit for specific performance of a con· tract to divide net earnings between competitive points. The court declined to specifically enforce the contract, saying,uThat all contracts whlch have a tendency to stifle competition or to create or foster monopolies ",1th the view of unreasonably increasing the market value of commodities are against public interest, and contrary to public policy."
The case of Anderson v. Jett, (Ky.) 12 S. W. Rep. 670, was another case of a contract to divide net earnings, and it was there held that, where the object. or tendency of the agreement was to prevent or inIpede free and fair competition in the trade, and where the agreement might in fact have that tendency, it was void, as being against public policy. The case of Gibbs v. Gas Co., 130 U. S. 396, 9 Sup. Ct. Rep. 553, was a contract for a settlement between certain gas companies, which the plaintiff procured. and for his services in procuring the agreement he sought to recover. The object and purpose of the contract was to regulate the price of gas in the city of Baltimore, and provided, among other things, that the rate should not be changed except by mutual agreement of the parties, and that the entire receipt"l from the sale of gas should be proportioned and divided between the companies in fixed ratios, without regard to the gas actually supplied by either; and' also prohibited one of the companies from laying any more pipes lor the purpose of supplying the city with gas, and pro· vided that in the future all pipes or mains should become the prop· ertyof the other company; and also provided that either party violat· ing the terms of the contract should pay to the other company the sum of $250,000 as liquidated damages. The court in this case, speaking by Chief Justice Fuller, said: "Courts decline to enforce contracts whlch,lmpose a restraint, though only partial, upon business of character that restraint to any extent will prejudicial to the public interst; but where the public welfare is not in· Y(.lved, and the restraint upon one party is not greater than protection to the other party requires, a contract in restraint of trade may be sustained."
Thus it will be seen that the question whether or not the contract is prejudicial to public interest is in this case made the test. If it is prejudicial to public interest, then it cannot be sustained, even where the restraint is only partial, because in contravention of public polv.53F.no.4-29
450
PJl:l>J!:R.!\.L REPORTER,
v8i1id"E!ven where they prevented the party from engaging in the busi· neslJ, -which was the,subje<lt-matter: of the contract" within the entire state.wheoo the contl'act was made; the test being whether the con· tract was reaoonablej'andwhetheror not it was prejudicial to the public interest. Roller Co. v. Cushman, 143 Mass.. 353, 9 N. Eo Rep. 629; Davis v. Mason,' 5 Term R. 120. In· this case Lord Kenyon, in sustaining an agreement restraining a surgeon from practicing his profession within five· miles from a certain town, said...,.. "Thl!-t 11l1blic were to be by the agreement, since every other person was at libertY to'pl'actice as a surgeon in the town." . . '
i.ey; where it is not, it may be sustained. It has been decided. in a gr,ewtanany cases that contracts in ,restraint of trade were perfectly
'
;
To. the.saIIle. effect .U!l Homer v. Alilhford,·3 Bing.. 322. In the case of Cloth Co. v. R. 9 Eq. 345, the 00111'"4 in passing upon the validity ·ofa COntract in general restraint, which extended throughout the whole kingdom, said:
".All: cases, when they come to be examined, seem to establish this pIe: that all restraints upon trade are bad, as being in violation of public policy, and not unreasonable; for the protectiQn of the partiesindea1iJ:lg legally with SOme subject-matter of contract.. 'the principle is this: Public policy requires that· every man shall be at liberty to work for himael't,li.nd shall not be at liberty to deprive himself or the state of his labor, skill, ·ortalent by an.Y' contract tha.t he enters into. On the other hand, publia when a man has by sWll or by any other mellDS obtained policy something which he wauts to sell, he should be at liberty to sell it in the most him to sell it ad· advantageous way in the market; and, in order to vantageously in the market, it is necessary that he should be able to preclude himself fromentel'ing into competition with the purchaser. In such a case the, same publiopolicy that enables him to do that does not restrain him from alienating that which he wants to alienate, and therefore enables him to enter into any stipulation, however restrictive it is, provided that restriction, in the judgment of the court, is not unreasonable, having regard to the subject-mat. ter of the c.ontra,ct." See, also, Hubbard ,v. Mlller, 27 Mich. 15; Thermometer Co. v. Pool, 51 Hun, 157,4 N. Y. Supp. 861; Gloucester Isinglass & Glue Co. v. Russia Cement Co.· 154 Mass. 92, 27 N. E. Rep. 1005; Beal v. Chase, 31 Mich. 490; MatchQc;>. v.. Roeber, 106 N. Y. 473,13 N. ..E. Rep. 419; Navigli.tion Co. v. Wins9r, 20 Wall. 64. The case last referred to was a contract in which. a party engaged in navigating the waters of California alone sold a steamer to other parties, who were engaged in navigating the Columbia river, in Oregonand Washington territories; and it was agreed between t.he parties that the purchaser!3 of the should not employ it or suffer it to be employed for 10 years from the date of sale in any waters of California. Three years afterwards, the purchasers, under this contract, sold the steamer to a part.y engaged in navigating Puget sound, subject to the stipulation that she should not be run or employed on any routes of travel on the rivers, bays, or waters of the state of Cali· fornia or the Columbia river and its tributaries for the period of 10 years. The supreme court held the contract valid. Mr. Justice Brad· ley, speaking for the court, said:
UNITED STATES 'V. TRANS-MISSOURI FREIGHT ASS'N.
451
"It is a well-settled rule of law that an agreement in general restraint of trade is illegal and· void, but an agreement which operates merely in partial restraint of trade is good, provided it be not unreasonable."
Again, in the same case, the learned justice takes occasion to say that"Cases must be adjudged according to their circumstances, and can only be rightly judged when the reason and gt'()unds for the rule are carefully considered. There are two principal grounds on which the doctrine is founded that a contract in restraint of trade is void as against public policy: One is the injury to the. public by being deprived of the restricted .party's industry; the other is the fnju:ey to the party hiIDself· by being precluded frOID pursuipg his occupation, and thus being prevented from supporting himself and his family. It is evident that both these evils occUr when the contract is general not to pursue one's trade at all, or not to pursue it in the entire realm or country. The country suffers the loss in both cases; and the party is deprived of his occupation, or is obliged to expatriate 'limself in order to follow it. A {'ontract that is open to such grave objections is clearly against public policy. But if neither of these evils ensue, and if the contract is founded on a valid consideration and a reasonable ground of benefit to the other party, it is free frOID objection, and may be enforced."
I think the cases are uniform to the effect that, where the contract is publicly oppressive, and the restrictions are broader than are necessary for the legitimate protection of the other party to be benefited by the contract, then the contract is unreasonable,-a contract in restraint of trade,-and therefore void; otherwise not. Undoubt· edly all contracts which have a direct tendency to prevent healthy competition are detrimlmtal to the public, and, therefore, to be condemned; but when contracm go to the extent only of preventing unhealthy competition, and yet at the same time furnish the public with adequate facilities at fixed and reasonable prices, and are made only for the purpose of averting personal ruin, the contract is lawful. The rule of law which recognizes the rights of the public to have the benefit of fair and healthy competition, and to require that equal facilities and reasonable rates shall be secured to all, does not condemn a cont,ract between railway companies operating competing lines, which is made for the sole purpose of preventing strife, and preventing financial ruin to one or the other, so long as the purpose and effect of such an agreement is not to deprive the public of its right to have adequate facilities and fixed and reasonable prices. On the contrary, such agreements, instead of being obnoxious to the law, because detrimental to the public interest, are to be upheld, for the reason that they benefit the public by preventmg unjust discrimination among shippers, and providing equal facilities for the interchange of traffic, and thus avoiding many of the unfair and unjust results which often follow the unrestricted competition of rival companies. Applying this rule to the contract complained of in the case at bar, can it be said that the contract is unlawful? I think not. The allegation of fact in the answer (which is to be taken as true) is that the object and purpose of the agreement and the formation of the association thereunder was to maintain just and reasonable rates, and to prevent unjust discriminations, in compliance with the terms of the act regulating commerce, by furnishing equal facilities for the interchange of traffic between the several lines. How, then, can it be said that the
452
I'EDERALREPORTER.
pllblIc is injuriously alffected by this agreement? The rates or charges are uniform and reasonable, and unjust discriminations are prohibited. Equal facilities for the interchange of traffic are provided foi'; no right to which 1;hepublic is entitled is violated. The term "competition" must not be construed to apply solely to the question, of rates. There are many other considerations included within the term. There may be very, active competition between these railway lines outside of the question of rates, viz. by offering to the public' advantages in the matter of equipment, facilities at feeding stations for the proper care of live stock, shortening the time, and in many other ways the most active competition may prevail, all of which the public receives the benefit of; and so long as the rate charged is fair and reasonable, a.s stated in the answer, which must be construed to mean no more than a fair compensation to the carrier 'Qr ,the services performed, the public cannot complain. . AI;! stated by Chrisnancy, J., in the case of Beal v. Chase, reported in 31 Mich. 521: "The public is qnite as much Interested in the prosperity of its citizens in their, ,various avocations as it can possibly be in their competition. The latter may bring low prices to purchasers, but may also bring them so low that cap· ital' becomes unprofitable, and business men fail, to the general injury of the community."
I think that.it cannot be said that the public is benefited by competition when that competition is, carried beyond the bounds of rea· to t)le parties engagedjn it, for surely the citizen investillg his,capital, whether in railways or ,is entitled to the benefit ofa contract, which affords to him only a, fair protection for his ip.vestment, arid which does not interfere ,with the rights of the public by imposing unjust and and unreasonable charges for the serVice performed. Such contracts, as was stated· in the case of HQlUer v., Ashford. "are, not injurious restraints of trade, but securities necessary for those engaged in trade. The effect of such a contract is to encourage, rather than cramp, the employment of capital in trade, and to promote industry." Applying this rule to the. agreement consideration, my own view is that it is not an agreement, combination, Qr conspiracy in restraint of trade, in violation ofthe first section of the act of J uly2, 1890. It is further urged by counsel for the government that this association unavoidably tends to a monopolization of trade and commerce, and for that reason is in violation of the second section of the act of July 2, 1890. A "monopoly" is defined by Justice Story to be "an exclusive right, granted to a few, of something which was hefore of common right;" and by Lord Coke to be "an institution by the king, by his grant, commission, or otherwise, to any persons or corporations, of or for the sole buying, selling, making, working, or using of everything whereby any persons or corporations are sought to be restrained of any freedom or liberty they had before, or hindered in their lawful trade." While it is undoubtedly true that these railroad companies perform quasi public functions, and for that reason owe certain duties to the public, yet, after a careful examination of thjs contract, I must confess that I have been unable to discover in
UNITED STATEB !1. TRAKS-MISSOURI FREIGHT ABS'N.
453
it a single element of a monopoly, especially as defined at common law. While it is true that the public are entitled to adequate facili· ties and to just and reasonable rates at the hands of these corporations, they are entitled to just that, and no more; and the allegation of the answer is that this was the very purpose of the contract. In view of this is to be taken as true in this case,-I do not see how it can be said that the contract tends to create a monopoly when, by its very terms, everything to which the public is entitled is provided for, and the public interest fully protected. But it is urged by counsel for the government that this should be held be a contract tending to monopolize trade and commerce, for the reason that its tendency is to prevent free and unrestricted competition. What I have said in reference to competition in discussing contracts in restraint of trade is equally applicable here. My own view is that the contention of counsel is altogether too broad. The public is not entitled to free and unrestricted competition, but what it is entitled to is fair and healthy competition; and I see nothing in this contract which necessarily tends to interfere with that right. Again, it is that this contract amounts to the transfer of the franchises and corporate powers of these railway companies, and that the contract, therefore, is forbidden by public. policy. There is no doubt but what it is beyond the power of a corporation to disable itself by contract so that it cannot perform every public duty which it has undertaken. Mr. Justice Miller, in delivering the opinion of the court in the case of Thomas v. Railway Co., 101 U. S. 71, says: "Where a corporation, like a railroad company. has granted to it, by charter, a franchise intended in a large measure to be e.x:ercised tor the public good, the due performance of those functions being the consideration of the publio grant, any contract which disables the corporation from performing those functions, which undertakes, without the consent of the state, to transfer to others the rights [',nd powers conferred by the charter, and to relieve thE' grantees of the burden which It Imposes, is a vIolation ot the contract with the state, and Is void, as against public policy."
But wherein the principle announced in this case can be applied to the contract under consideration, I am wholly unable to perceive. In what manner are the franchises or corporate powers of any of these railway companies transferred to this association? Each company maintains its as before, elects its officers and OperatL"S its line in exactly the same manner now as it did before the organiza· tion of the association. No powers whatever are given to the association to govern in any respect the operations or methods of transacting the business of any of the lines. Each line is left perfectly free to transact all of the business it can secure, and in its own way. 'Irue, the contract requires that each company shall charge just and reasonable rates, and also contains provision for regulating changes in rates; but wherein is this a surrender of any corporate franchise into the hands of an irresponsible power? The contract provides that this association shall consist of a representative of each of the lines. This representative mayor may not be an officer of the company. Suppose we concede that he is not, but is a person appointed by the officers of the company authorized to make such appointment. he
n:DUAL R:EPORTltR.
tiheabecomes the ap;ent'o£, the company for that purpose, and he may lawfdllyacton its behaJf. and hence his act would be the act of the oomplmy through its duly,latlthorized agent, and the rate, rule, or r.eguIatibnniade by the' association -and put into effect by any com· pany,'paJlltyto the wtnlld. not be merely the rate, rule, or regulationiWthe association, but a'rate, rule, or regulation of the com· pany itself, acting its· proper officers or agents, and hence no or transfer of,a,ny corporate power conferred upon it by its charter; 'nor would it be thereby relieved, of any burden imposed. .' ,question remains in case: ,Does the provision of theaot' of 'July 2, 1890, relate to the businesS' of common carriers, or, in otheJ."Wl)rds, does it include, and was it intended to include, com· bimtti6ns or companies? It is by the defendants thatthey are not included within that act; that the provisionSbf the act opetate, and were intended to 'operate, (upon combinations, and that they have no application to agreements or comtiinations between railway companies, for the reason that conp;ress lIad already provided by the act of February 4, 1887, entitled "Ali act to regulate commerce," a full and compl'& ,pf.ra:ilwaYregulation, modeled on the most effective systenuJ of "the 'different and of England. This'last-mentioned act may: be 'sutwnarized ,as, follows:, ,That the provisions of the a,ct shall applY' to any eoilinlQu carrier. OJ.' carriers engaged in the transportation of Passengers.orpropertywholly by railroad or partly by railroad and partly by water. It provides that all charges for services and just; that unjust discriminations and undue shall be or unrewilonaiblepreferences shall not be made; that reasonable, proper, 'and' equal facUities, for theb;tterchange of traffic between lines, and. for the receiving, forwarding, and delivering of passengers and property between connecting lines shall be provided; that there shall be no discrimination in the rates and charges as between clm· necting lines; that it shall be unlaWful to charge a greater compen· sation for a short haul tllan for a long haul over the same line, in the same direction,' under substantially similar circumstanOO"!; that there shall be no pooling 9f earnings. The. act provides for the filA ing and.publicati,on of tariffs, including joint tariffs of connecting roads, and also provides for 10 days' notiee of any advance in rates. The act further provid(ls that any combination, contract, or agreement, express or implied, to prevent, by change of time schedules, carriage i# 'Q.j.fferent cars, or by other means or devices, the carriage of freightS, from being coIJ-tinuous from the place of shipment to the place of shall be unlawful. The act provides penalties for viola.tio,ns of its provisions, establishes a commission of five members to exercise a supervisory control over the common carriers subject to i;he' act, and to enforce the provisions of the act. It will be seen frOlll,an examination that this act is in the nature of a special act, being confined in its application to common carriers, while the of July 2d is clearly, by its terms, a general statute. It includes everyoon.:tract or combination in the form of a trust or otherwise, 01' oollspiraey in restraint of trade, and every person ,who shall monopolize or attempt to monopolize any part of the trade and commerce
455
among the states. I think no rule is better settled than, where. a general statute has been enacted, which might include, in the absence of other provisions, a subject-matter which has already received consideration at the hands of the legislature by a special act, that the general act will not be construed to embrace the subject contained in the special act, unless it clearly appears from the language employed that it was the intention of the legislature that it should be included. The intention of the legislature should, of course, be followed, and that is to be ascertained from the words used in the statute, and from the subject to which the statute relates, with a view of meeting the mischief sought to be remedied; and in doing this it is the duty of the court to restrict the meaning of general words whenever it is satisfied that the literal meaning would extend the statute to cases which the legislature never designed to include. As stated by Mr. Justice Davis in the case of Reiche v. Smythe, 13 Wall.
"If it be tree that it is the duty of the court to ascertain the meaning of the legisL'ltllre from the words used in the statute, and the subject-matter to which it relates, there is an equal dUty to restrict the meaning of general words whenever it Is found necessary to do so in order to carry out the legislative intention."
It is equally the duty of the court to give to these statutes such a construction that both may stand, if that can be done. Applying these rules, can it be said that it was the intention of congress to in· clude common carriers subject to the act of February 4, 1887, within the provisions of the act of July 2d? I think it very clearly appears from an examination of these statutes, and considering the evil sought to be remedied, that such was not the intention of congress. The whole subject relating to common carriers had already been carefully provided for by the act of February 4, 1887, and a commission appointed, whose duty it was to see to it that the carriers subject to that act complied with its requirements, with power to the courts, when necessary, to enforce its provisions; hence it is but reasonable to presume that if congress had considered anything in addition necessary for the proper regulations and control of these carriers, it would have provided for it by an amendment of that act, instead of including it in a statute, some of the provisions of which would necessarily conflict with the legislation then in force upon a subject which had already received the special consideration of congress. I think it was the purpose of congress to remedy a very different evil then existing. A number of combinations in the form of trusts and conspiracies in restraint of trade had sprung up in the country which were dangerous to its commercial interests; for example, the steel· rail trust, cordage trust, the whisky trust, the Standard oil trust, dressed-beef trust, the school-book trust, the gas trust, and numerous other trusts and combinations, which threatened to destroy the commercial and industrial prosperity of the country. These trusts assumedthe absolute control of the various corporations entering into them, which of the constituent members of the trust should continue operations and which should cease doing business; how much business should be transacted by each, what prices should be
45e
charged for their product,and in fact had the power to direct every demil ottb.ebusiness of every corporation'forming the trust. It was to' and cOD.l!lpiracies of this sort that the act of July 2, I conclude, therefore, that the bill should be dismissed,ahd itis so ordered, but not at the cost of the complainant. , NOTE ,M:e!porl};ndum of agreement:" "Memoraudum of agreement made and entered int(), this fifteenth day of MarCh, 1889, by and between the following railroad c01I)pani('s, viz.: & Santa I!'e R R., Chicago, Rock Island & Pacific: Ry., Chicago, St. Paul,'Minneapolis & Omaha By., Burlington & MissoUri R R in Nebraska, Denver & Rio Grande RR, Denver & Rio Grande Ry., Frell).ont, El1\hQr;n & Missouri Valley, R. R., Kansas City, Ft. Scott &; Memphis R.R., Ka1:lsas City, St. Joseph & Council Bluffs R. R, Missouri Pacific Ry., Sioux City & Pacific R. R, St.Joseph & Grand Island oR. R, St, Louis &; San Francisco Ry., Union Pacifio Ry., Utah Central Ry., and 'such ,othe':." companies,!lsmay hereafter be('A)me parties hereto,-witnesseth, for the purpose of mutual protection, by establishing and maintaiIiing reasonable rates, rules, and regulations on all freight traffic, both through and local, the subscribers do hereby form an associatioD., to be known as the 'l'rans-Missouri lJ'reight Assooiation, and agree to be governed by the following provisions: u.A:rt1cle 1. The traffio to be in the Trans·l\Hssouri Freight Association shall be as follows: (1) All traffic oompetitive between any two or more members hereof, passing t>etween points in the following described territory: 00II!<tuencing at the Gulf ,of MeJ'ico, on the 95th meridian, thence north to the ,ia that river to the eastern boundary line of the Indian Teititory; t)J.ence north' by said boundary line and the eastern line of the state of Kansas to the '¥1ssouri river at Kansas City': thenoe via the said 1\1isllo1lri river to the point· of intersection of that river with the eastern bQullM-ry of Montana; thpnce via the said eastern boundary line to the interline,-the foregoing to be known .as the ':r.llssouri River line;' thence via'sma. international line. to the Pacifio coast; thenoe via the Pacific coast to Welhternation:t1 line between the United States and Mexico; thenoe via 'said international line to the Gulf of Mexico; and thence via said Gulf to the point of beginning, inclUding business between points on the boundary line flS. described. (2) All traffic originating within the territory as defined In the first section wllen destined to points east of the aforesaid Missouri river line. Exceptions: (a) The & R. G. and the D. & R. G. W., exoept their business to and· from points in Colorado west of the D. & R G. line between Denver and Trinidad; also business via their lines between points in Colorado and poj.nts in Utah, Alllooal business between Denver and Trinidad and intermClliate points; all looal business of the A., T. & S. F. between Pueblo and Canon City, Colo.; all stone traffic having both origin and destination within the state of Colorado. The jurisdiction of this association, in so far as the business of the Denver & Rio 'Grande Railroad and the Denver & Rio Grande Western Railway Companies is concerned, oovers the following traffic, llamely:.4.).l freight traffic to, from, 01' through all common or junction points in the states of Nebraska and Kansas and the Indian Territory. originating at 01' destined to Denver, Cdorado Springs, Pueblo, or Trinidad. All freight traffic between Ogden, Spanish Fort, and intermediate points on the one hand, and to, from, or through points in K,ansas or Nebraska upon or east of the 103d meridian, (n the other hand. Traffic which may be excluded under the applioation of the above is only such as may be delivered to or received from the Denver & Rio Grande Railroad and Denver & Rio Grande Westem Railway. (bFTraffic included in the Trans-Continental and International Association. (c) Traffic passing. between points in Kansas or Nebraska and Mississippi river points, Carondelet and south; also traffic passing between points in Kansas or Nebraska and points in the southern states east of the Mississippi river and south of the south line of Kentucky and Virginia, regardless of the route by which the business crosses the Mississippi or Ohio rivers. (d) Traffic passing between Missouri river points and pOints in thll
UNITED STATES V. TRAl'\'S-MISSOURI FHEIGHT ASS'N.
457
territory east of Poaid river (e) All traffic to points on th':l Northem Pacific and Manitoba Railways. (f) Traffic to points in Arkansas. (g) Coal, stone, and gravel from Colorada, 'Vyoming, and Dakota, to points in Kansas and Nebraska, and to Sioux City, Council Bluffs, or Pacific Junction, Iowa, St. Joseph, Kansas City, or Boswell, l\'Iissouri. (h) The intel'change of traffic with the Colorado Midland and South Park Companies, to or from Aspen, Colorado, Glenwood Springs, Colorado, and intermediate points, including coal and Buena Vista, Colorado, and Leadville, Colorado. (i) Business to and from Jj11orence, Colorado, by all lines. "Art. 2. Section 1. The association shall, by unanimous vote, elect a chairman of the organization. The chairman may be ['emoved by a two-thirds 'Iote of the members. Sec. 2. There shall be regular meetings of the association at Kansas City, unless notice shall be given by the chairman that the business to be transacted does not warrant calling the members together, which notice shall be given not less th.9n four du.,ys before the day set for the meeting. When a meeting-regular or speciat-is convened it shall be incumbent upon each party hereto to be represented by some officer authorized to definitely upon any and all· questions to be considered. Each road shall designate to the chairman one persen, who shall be held personally responsible for rates on that road. Such persoll shall be present at all regular meetings, when possible, and shall represent his road, unless a superior officer is present. If nnable to attend, he shall send a substitute, with written authority to act upon all questionS which may arise, and the vote of such substitute shall be bindin.!; upon the compan3' he represents. Sec. 3. A committee shall be appointed to ('stablish rates, rnles, and regulations on the traffic subject to this association, and to consider changes therein, and make rules for meeting the competition of outside lines. Their conclusions, when unanimous, shall be made effectivo when they so order, but if they differ, the question at issue shall be referred to the managers of the lines parties hereto, and if they disagree, it shall be arbitrated in the manner provided in article 7. Sec. 4. At least five days' writtf'n notice prior to each monthly meeting shall be given the chairman of any proposed rflduction in rates or change in any rule or regulation governing freight traffic,-eight days in so far as· applicable to the traffic of Colorado or Utah. Sec. 5. At each monthly meeting the association shall consider and vote upon ail chang-es proposed, of which due notice has been given, Rnd all parties shall be bound by the decision of the association, so unless then and there the parties shall give the association definite written notice that in 10 days thereafter they shall make SUGh modification, notwithstanding the vote of tho association: provided that, if the member giving notice of change shall fail to be represented at the meetlng,no action shall be taken on its notice, and the same shall be considered withdrawn. Should auy member Insist upon a reduction of rate against the views of the majority, or if the majority favor the same, and if, in the judgment of such majority, the rate so made affects seriously the rates upon other traffic, then the association may, by a majority vote, upon such other traffic put into effect corresponding rates, to take effect on the same day. By unanimous consent, any rate, rule, or regulation relating to freight traffic may be modified at any meeting of the association without previous notice. Sec. 6. Notwithstanding anything in this article contained, eanh member may, at its peril, make at any time, wlthont previous notiee, such rate, rule, or regulation as may be necessary to meet the competition of lines not members of the association, giving at the sallle time notice to the chairman of its action in the premises. If the chairman, upon investigation, shall decide that such rate is not necessary to meet the direct competition of lines not -nemne!'s of the association, and shall so notify the road making the rate, it lSllall immediately withdraw such rate. At the next meeting of the association held after the making of such rate, it shall be reported to the association; and if the association shall decide by a two-thirds vote that such rate was not u'ade In goon. faith to meet such competition, the member offending shall be sllbject to the penalty provided in st'ction 8 of this article. If the association shall decide by a two-thirds vote that such rate was made In good faith to meet such competition, it shall be considered 3S authority for the rate so made. Sec. 7. All arrangements with connecting lines for the division of through rates relating to traffic covered by this agreement shall be made by authority of the
FJCPERAL REPORTER.
provided, that when one road has a proprietary interest divisiollilbetween such roads shall be what they may elect, and shall uot bl:l the property of the. assoclation:provided, further, that, as regards tJ:l\fiic at this date actually existing between lines not having common proppetary interests, the same shall be reported, so. far as divisions are concerned"to the association, to the end that divisions with competing lines may, if thougptadvisable by them, be made on equally favorable terms. Sec. 8. Its1llMlbe the dUty of .t1J.echairman tQinvestigate all apparent violatiollil of the agreement, and to report his findings to the managers, who shall determine by a majority vote (the member agailliltwhom complaint is made to have no vote) what, if any, penalty shall be assessed, the amount of each fine, not to exceed one hundred dOllars, to be paid to the association. If any line part:r hel'etoagrees with a shipper or any one else to secure a reduction or change in raws or change in the rules and regulations; and it is.shown upon investigation by thecba,irman that such an al'rangement was effected, and traffic thereby secured, such action shall be reported to the managers, who shall determine, as above prOYided, What, If anY, penalty shall be assessed. Sec. 9. When a pen alty shallh.ave been declaredagaillilt any member of this association, the chairman shall notifY the managing ofiicer of said company that such fine has been arNll'ssed, and that within ten days thereafter he will draw for the amount of the tinl'; andthl:l draft, when presented, shall be honored by the company thus ussessed. ,.$00. lO.,All fines c('llected to .be used to defray the expenses of the BSSOCfatioD,ltb, otrendiUg not to be;benefited bY the amounts it may pay ll."l . .Any member not present or fully represented at roll call 'Jf meetings of the freight.association, of which due and proper general or given, shall be fined one 4QUar, to be assessed against his comnotice pany, unleM·,h,eshall have previously filed with the chairman notice of inabilIty to be or "Art. 8. ,T).le dllties and powers of the Chairman Shall be aN follows: Section 1. He sh.ull,pfe3ide at all meetings of the aSllocL'ltion, and make and keep record thereof, and promulgate such otsaid proceedings as may be necessary to inform the parties hereto of the action taken by the :lSsociation. Sec. 2. He sluIU at aU times keep ,and publish for the use .of ,the mf'mbers a full recordof the .ratt'!s, rules, and· regulations. prevailing, on'. all lines parties hereto on business covered by tWs agreement; and each of the parties hereto agrees to furnif!h 'such number of copies of the rates, rules, and regulatiolls issued by It as the cnairman may require. Sec.. 8. He shall construe this agreement, and all resolutions adopted. thereunder; his construction to be binding until of the association. Sec. 4. He shall publish in changed by a joInt form aU rate!'. rules, and regulatiollil which are general in their charact..r. and apply throughout the territory of the association, and shall also publish. In the manner above, such rates,. rules, or regulations applying on traffic COlllmon to two or more lines as may be agreed upon by the lines in interest. Sec. 5. He shall be furnished with copies of all way-bills for freight carried under this agreement'i. when called for, llllld shall furnish such statistics as be necessary· to give members general iuformation as to the traffic moved, subject to the provisions of .thttolnterstate COlI'merce Railway Association agreement as to lines members,.thereof. Sec. 6. He shall render to each member of tile IU5lW('illilvIJ monthly statements of the expenses of the showing tho 'Pl'(')loltJOns; due from each, and shall make drafts on the members for the different amounts thus shown to be due. Sec. 7. He shall hear amI determine all charges of viOlatiOllil of tWs· agreement, and as<"oUcet, llnd dispose of the fines for such violations, as )ll'ovidp(l fot' herein. flec, 8. The chairman shall be empowered to authorize lines in the association to meet the rates of another line or other lines in the association when in his judgment such action Is justified by the circumstances; this, however, not to act in any "ay as ll,D indorsement of an unauthorized rate made by any member. Sec.. 9.. Only the parties interested shall vl)te upon questions arising under the agreeDilent, and iu case of doubt the chairman shall decide as to wbether any party Iii! so interested or not, subject to appeal, as provided u.'1 section 3, al1i<:1,) n, oJ the agreement. "Art. 4. Any willtul1Ul,derbilling in weights, or bllllng of freight at wrong classification, shall be consideJ.'ed a violation of this agr*ment; and the rules
ILLINOIS CENT.B. CO.V. FOLEY.
459
and regulations of any weighing association or inspectlori.bureau, as established by it, or as enforced by its omcers and agents, shall be OOBsidered bind· ing under the provblions of thb;, agreement, and any willful violation of them shall be subject to the penalties provided herein. "Art. 5. The expenses of the, association shall be borne by the several parties in such proportion as roay be fixed by the chairman. Any member not satisfied with the allotment so made may appeal to the asgoclation, which shall, at it'l first regular meeting thereafter, determine the matter, which may be done by a two· thirds vote of the members. "Art. 6. There shall be an executive committee of three members, to be elected by unanimous vote. The committee shall approve the appointment and salaries of necessary employes, except that of the chairman, and authorize all disbursements. All action of this committee shall be unanimous. "Art. 7. In case the managers of the lines parties hereto fail to agree upon anJ question arising lmder this agreement that shall be brought before the 3Ssociation, it shall be referred to an arbitration board, which shall consist of three members of the excuth'e board of the Interstate Commerce Railway Association: provided, however, that in case of arbitration in which the members of this association only are interested, they may, by, unanimous vote, substitute a special board. "Art. 8. This agreement shall take effect April 1, 1889, subject thereafter to 30 days' notice of a desire on the part of any line to withdraw from or amend the same."
ILLINOIS CENT. R. CO.
'1.
FOLEY et aJ.
(Circuit Court of Appeals, Eiglith Circuit. December 6, 1892.) RAILROAD COMI'ANIES-NEGLIGENCE-DEFECTIVE PREMISES.
A shipper of cattle by rail, accompanied by a helper, went with them on the train to look after their needs while in transit, Ilccording to the custom and requirement of the railroad company. Learning that an animal was down in one of the forwai'd cars, the two men went forward at a station where the train stopped to water, (the ,lOnductor having told them t1.tat there would be time to 100R after the cattle if they hurried up;) and on reaching the cal' the shipper told the helper to go around in front of thn engine to the 'other side of the train, and hold up the lantern, while he himself got the animal up with his prod. 'l'he station was near a creek spanned by a bridge, and, when to water, the en",etine was some distance upon the bridge. The bridge carried the main track and a switch, ann was planked between the two tracks and between the rails, but on the outer side of the main track there was only a narrow footpath or shelf for the use of the employes in oiling engine. The night was very dark, mid the helper, after passing the front of the engine, stepped over the edge of tlle rail, and fell to the creek below. Shortly afterwards his employer was found beside him, dead. The depot platform extended nearly to the water tank, and all the buildings and facilities for busine'ss at the station were between the depot and the bridge; and, when trains going westward stopped to water, passengers were frequently required to get off on the opposite bide of the bridge, as the train would not stop again at the station. Held, in an a:3tion to recover for the death of the shipper, that on these facts the court properly refused to direct a verdict for the company, and submitted the case to the jury, with instructions that it was mainly a question whether the bridge was such a part of the depot grounds as that the shipper was entitled to use it for the purpose of looking after his cattle, and that the company was bound to see that proper planking and guard rails were maintained.
In Error to the Circuit Court of the United States for the Northern District of Iowa. Affirmed. Statement by OALDWELL, Oircuit Judge: