People v. North River Sugar Refining Co.

The questions to be decided in this case are, whether the acts complained of are corporate acts, and if so, whether such corporate acts are grounds of forfeiture within section 1798 of the Code of Civil Procedure. The people rest their case primarily upon the second and fifth subdivisions of this section, claiming under the second subdivision that the defendant has “ beconie liable to be dissolved by the abuse of its powers,” and under the fifth that it has exercised privileges or franchises not conferred upon it by law. The act complained of in this connection is the defendant’s participation in a combination between the owners of certain sugar refineries. Ths combination comprises all the sugar refineries in this state, and with a few exceptions in the United States. This vast combination is denounced by the people as a public menance, as preventive of competition, and as tending to control prices and create a monopoly. It is defended by the corporation as the mere individual act of its stockholders, in no wise binding upon it, and at all events as a harmless association constituting nothing more

The first question then to be considered is, whether the corporation as such has entered into this combination; for if it has not, clearly it cannot be deprived of its franchises because of independent and several acts, however illegal, of its stockholders. To a proper appreciation and solution of this question, the precise facts must be gleaned and the foundation of the transaction minutely analyzed. Such analysis will also and necessarily throw a clear light upon the purposes of the project, and thus aid in the solution of the second question—namely, whether the combination is the innocent association claimed by the defendant or the unlawful one charged by the plaintiff. Let us then consider the .foundation of the combination. It rests upon a written agreement which has been styled the “trust deed.” At the time this deed was prepared, sugar refineries in this state and country were variously organized. Some were simple partnerships; others corporations. Evidently the first step contemplated by the author of the scheme was harmony in the fundamental business basis of each refinery. The combination never could have been successfully created upon the basis of a special or quasi-partnership arrangement between partnerships and corporations. It was necessary, therefore, either to turn the corporations into partnerships or the partnerships into corporations. It did not require the astute mind that prepared this most original instrument to preceive that an aggregation of partnerships, with the dangers resulting from death and the exercise of individual power, would never effect safe and permanent cohesion. Accordingly we find, as one of-the first provisions in the deed and as the basis of the so-called trust structure, a condition in substance that the partnerships shall all be turned into corporations. This in fact was done; and thus several of these corporations were organized for the express purpose of creating the very shares of capital stock through which the combination was to be formed. Partners took on corporate garb, became shareholders, and as such fitted themselves to enter the combination within the terms of the deed.

Having thus provided for uniformity of corporate existence, the deed specifies what is to be done by each of the corporations—formed or to be formed. The corporations already formed agree for themselves, and the partnerships agree for those corporations which they are to form, that all the shares of the capital stock of all the corporations shall he transferred to a board consisting of eleven persons (named in the deed), as trustees, to be held by them and

1. To promote_ economy of administration and to reduce the cost of refining, thus enabling the price of sugar to be kept as low as is consistent with reasonable profit.

2. To give to each refinery the benefit of all appliances and processes known or used by the others, and useful to improve the quality and diminish the cost of refined sugar.

3. To furnish protection against unlawful combinations of labor.

4. To protect against inducements to lower the standard of refined sugars.

5. Generally to promote the interests of the parties hereto in all lawful and suitable ways.

The board is authorized to make by-laws, to appoint from its members a president, vice-president, treasurer and committee; and to prescribe their duties and powers. The board is thus clothed with a power co-extensive with the specific objects of the agreement, as applied to the business of each refinery; and it may confer the executive working-of that power upon a president or vice-president. Having thus formed the trust, named the trustees, and specified their powers, the deed proceeds to indicate the persons for whom the trust is created and the duties of the trustees with regard to such persons. The cestuis que trustent are, of course, the entire body of stockholders of the aggregated corporations. It will be observed that these stockholders do not sell a single share of their stock. Yet they transfer the entire block to eleven gentlemen, who aré thereafter to-stand in their shoes. They would, naturally, look for some acknowledgment from their trustees of the receipt of their •shares and of the obligations which the trust imposes. The deed proceeds to furnish this in the shape of what are termed trust certificates. These certificates are not to exceed #50,000,000, and are to be divided in 500,000 shares, each of #100. They are to be divided by the eleven trustees-among the several refineries, in due proportion to the value of their respective plants; and the refineries are then to subdivide the blocks of certificates, so assigned to them, among the cestuis que. trustent in proportion to the stock of the corporation which each cestui que trust held prior to' the transfer to the trust board.. The^forin of the trust certificate is precisely like the certificate of stock in a corporation. The eleven trustees are not named, but are styled: “ The sugar refineries’ company,” and each certificate specifies that it is issued under and subject to the provisions of the trust deed. The usual blank form of assignment and power of attorney is endorsed upon this certificate, with an addendum to the effect that the assignee, by accepting the transfer, assents to the terms of the trust deed.

Upon the acceptance of the trust certificate, the original corporate shareholder ceases to hold any further relations with his particular corporation, and thenceforward he is treated as a shareholder in the trust board. He can no longer receive a dividend from his particular corporation, noi indeed can the latter ever again declare a dividend. Each corporation is thereafter bound by a special provision in the deed to pay over the profits arising from its business to the trust board. N o discretion on that head is left in the directors'of the various corporations. They cannot use any part of such profits for betterments or improved machinery, or increased capacity—certainly not without the consent of the trust board—but must pay overall the profits directly to the trustees. Nor can even the latter declare a dividend upon the trust certificates allotted to the shareholders of any one corporation payable out of the profits received, from such corporation. On the contrary, their duty is to blend all the profits received from all the corporations into one grand mass, and from that aggregation of profits declare such dividends as they in their judgment deem appropriate, to be proportionately distributed to the holder of each trust certificate.

To emphasize these positions it may be well to quote the precise language of the deed.

“profits :

“The profits arising from the business of each corporation shall be paid over by it, to the board hereby created, and the aggregate of said profits, or such amounts as may be designated for dividends, shall be proportionately distributed by said board, at such time as it may determine, to the holders of the certificates issued by said board for capital stock, as hereinbefore provided.”

Thus it will be seen that these dividends are not to be declared or distributed upon the aggregate capital stock of the corporations, which is to be turned over to and held by the trustees, but upon what might not inaptly, in view of these peculiar facts, be termed the trust board’s capital stock, namely, the trust certificates.

Thus we have a series of corporations existing and transacting business under the forms of law, without real membership or genuinely qualified direction—mere abstract figments of statutory creation—without life in the concrete

Whatever dividends are to be declared by the trustees, must be so declared and paid from the aggregate fund; and whatever rights the holders of such trust certificates may have as against the trustees, can only be enforced by the-totality of certificate holder’s or a representative of that body. Again, the relation existing under the deed between the trustees of the trust and the directors of the corporations, is not,as we have seen, the usual relation of shareholders and directors, but a strict contract relation. Ordinarily, the directors of a corporation may use their honest judgment with regard to dividends, and also as to the judicious application of profits. Here, however, the deed treats the directors of the various corporations, as mere agents of the trust board, and in unqualified terms requires them to “pay over the profits.” The effect of this would be the same, even if individual members of the trust board were also shareholders in the corporations. As such individuals, they would transfer their shares to the board and accept from the board their due proportion of the trust certificates. The board, as a board, takes all the shares of the corporations, and the corporate shareholders, whether members of the trust board or not, by transferring their shares to these trustees, and accepting from the latter, trust .certificates, in effect, abandon their corporations, relinquish their powers as shareholders, resign their functions as corporators, and look solely to the trust board for future guidance, control and profit.

It is the first time in the history of corporations that we have heard of a double trust in their management and control—one set of trustees elected formally to manage the corporate. affairs, and a second set created to manage the first —the shareholders in seventeen corporations leaving their

Let us now look at .the situation of the directors of the various corporations as pointed out in the deed. The statuté requires that each director shall be a stockholder. Consequently each director must own at least one share. But the deed requires the transfer to the trustees of every share in every corporation. Now, these trustees certainly cannot under the terms of their trust, sell or pledge a single share of the stock thus held by them. This stock in their hands is substantially dead. It evidences no individual right. It measures no proportionate interest. In fact, it serves in the future no purpose whatever, except to furnish the trust board with formal voting power to control the direction of all the corporations. It would seem to be impossible, therefore, to qualify the boards of directors in the various corporations. The draughtsman, however, attempted to provide for this difficulty by the following provision:

“The said board may transfer, from time to time to such persons as it may be desired to constitute-trustees, or directors, or other officers of corporations, so many of the shares as may be necessary for that purpose, to be held by them subject to the provisions of this instrument. Such transfers may be executed by the president and treasurer of the board in behalf of, and as attorneys for, the board for that purpose, and to be retransferred when so requested by the board.”

Here there is no pretence of a sale. The “necessary” shares may be transferred to such persons as the board may desire to constitute directors, to be’held by such directors “ subject to the provisions ” of the trust deed, and to be “transferred” when so requested by the board. This clearly bears out my previous observation that these corporations exist as creatures of the law, and are conducting business under its authority without a single genuinely qualified director; in fact, without directors at all in the ordinary and legal sense. Every director in every one of the corporations is necessarily the mere creature and agent of the trust board. The share of stock put in his name is not his property, nor can a dividend ever be declared upon it to him or to any one else. Eor that very share a trust certificate has, in fact, already been issued to him or to some one else. Plainly, then, the holding of this lifeless share of stock by the director without beneficial interest and at the will of the board—“to be transferred when requested ”—is not a compliance with the statutory requirements that the directors shall “respectively be stockholders in such company.”

This covers, in a general way, the methods adopted by the. parties to produce cohesion as between themselves. But they did not stop there. Provision is made for the gathering in of every other existing refinery (“in every instance to be incorporated”), and, in fact, four others have joined the combination since the deed was signed by the original partnerships and corporations; and the evidence shows that in the entire country but five sugar refineries of the character in question remain outside of the combination.

The trust board is also provided with additional means for adding recruits to the combination, and to facilitate general adhesion thereto. It was with this view that the

We now come to the legal question—is this a combination of corporations, or merely a combination of stockholders? The defendant claims that unless authority to sign the trust deed, given by the directors of each corporation at a regular board meeting, is affirmatively proved, the acts complained of are not corporate acts. This contention ignores the fact, proved in the case, that the corporate acts provided for by the deed have actually been performed by the corporations, and that the deed has in fact been put in execution. The proof shows that the deed was actually signed by the firms whose names appear to be appended thereto; and as to the corporations by persons professing to represent them; that .the firms were turned into corporations, pursuant to the requirements of the deed; that the shares of capital stock of all the corporations (including the four that have since come in) were, with a single exception,, transferred to the trust board; that the trust board has. issued and distributed the trust certificates; and that a dividend of two and one-half per cent has actually been declared and paid upon such certificates.

Where did the trust board obtain the money with which to make that dividend? Necessarily from each corporation, under the provision that the profits arising from the business of each corporation shall be paid over by it to the board hereby created. Such certainly is the fair implication from the fact of the receipt by the trust board of the necessary funds from the various corporations in connection with a deed purporting to be signed by the officers and containing this provision. Thus the corporations acted upon the deed and performed one of the most vital duties imposed upon them thereby. Further, it appears that all the capital stock of all the corporations was actually transferred to the trust board not, as we have already seen, in severalty nor as tenants in common, but as joint tenants. That at once necessarily disqualified every director in every

Q. Whose money paid this $325,000. o A. * * * Three gentlemen who were trustees of certain funds paid for the stock.

Q. What funds? A. Funds received by them (these three gentleman trustees) for mortgages and other matters connected with the organization.

Q. What organization? A. The sugar refineries company.

Q. What we call the board, you mean? A. Yes.

Now, as the only mortgages connected with the organization were mortgages upon the property of the corporations, it would seem to follow that the defendants’s stock was, in effect, purchased under the provision of the deed authorizing the raising of funds “by mortgage to be made by the corporations, or either, any or all of them on their property.” It is apparent that this was corporate combination. It was a purchase for such corporate combination of corporate property by corporate means.

It, also, appears in connection with this particular defendant, that Mr. Searles, immediately after the purchase of the stock, became its president and treasurer, put in new directors, and, at once, for reasons satisfactory to himself, discontinued the business. From that hour to this the defendants’ refinery has been closed, and yet a dividend has

It really seems unnecessary to dwell further upon this subject. The accumulation of evidence points irresistibly to the complete practical identity of shareholders and corporations, and it is quite impossible to sever the acts of the persons solely interested in these corporations from that of the corporations themselves. The purpose to effect corporate combination cannot be disguised. The form of the contract veil was thin enough, but the. acts under it sweep away the guaze and leave the corporate body unclouded and in full view. Mr. Searles was indeed substantially right when he told us that after his purchase of the defendant’s entire stock he “ was the North River Sugar Refinery Company.”

The law on the subject is in harmony with the fact. According to the act of 1848, the signers of the original certificate of incorporation, and their successors “ are a body politic and corporate, in fact and in name, 'by the name stated in such certificate.” Who are the successors of these original signers? The shareholders, of course. The entire body of shareholders thus constitute the corporation. “A corporation or a body politic or a body incorporate,” says Mr. Kyd, “is a collection of many individuals united into one body under a special denomination, having perpetual succession under an artificial form and vested by the policy of the law with the capacity of acting: in several respects as an individual.” 1 Kyd on Corp,, 13. It is really an association of persons, and the word corporation is but a collective name for the corporators or members. 1 Morawetz, on Corp., §§ 1, 227 and 474; People v. Assessors, 1 Hill, 620 .

The shareholders, vested with the corporate powers, are the body corporate, corporation or company (Taylor on Corp., § 50). Chief Justice Marshall, in Providence Bank v. Billings, 4 Peters, 562, said that the great object of an incorporation is to bestow the character and properties of individuality on a collective and changing body of men. Mr. Morawetz puts it clearly when he says that “ while a corporation may, from one point of view, be considered as an entity, without regard to the corporators who compose it, the fact remains self-evident that a corporation is not in reality a person or thing distinct from its constituent parts.” (Sec. 1). And so the acts of the collective body are the acts of the corporation, and, if unlawful, will work a forfeiture.

In the People v. Kingston, 23 Wendell, 205, Chief Justice

And this is entirely reasonable. For what is the corporation apart from the whole body of the members or stockholders, clothed with the statutory franchises ? Merely a name. When the whole body of stockholders offend the law of the corporate being, the corporation offends. And who is punished by forfeiture or dissolution because of such offending? Not the mere corporate name, but the persons who have actually offended, and who have thereby forfeited the franchise which they possessed under that corporate name. The directors are but the agents of the corporation to manage its affairs and carry out the purpose and object of its formation, They are only authorized to do such things as are directly or impliedly directed or authorized by the charter. Abbott v. Amer. Hard Rubber Co., 33 Barb., 578 , citing Ang. and'Ames on Oorp., sec. 280. The directors of this defendant could not have bound the corporation by an assent to the deed in question. That deed involved momentous changes in the life and destiny of the corporation, and in the relations of its shareholders, which were entirely foreign to the general management of its business. Such changes are essentially for the consideration of the corporators themselves, and their united act in the premises (purporting both in the agreement itself and in all the surrounding circumstances to be corporate) is plainly the act of the artificial body composed in the concrete of themselves. Having thus concluded that the acts under consideration were corporate acts, the remaining question is, were they illegal? This question may be divided into two branches'. First, had the corporations authority to enter into any partnership arrangement, however innocent in itself? Such, for example, as would have been perfectly lawful bétween individuals? Second, was this combination of the latter character, or was it inherently unlawful? Such, for example again, as would have been unlawful between individuals.

The answer to the question as presented in the first branch must be in the negative. It cannot be doubted that the arrangement in question amounted to a partnership between these corporations or a substantial consolidation. Such was the effect of the massing of all the stock of all the corporations and the correlative massing of all the profits of all the corporations. The intention was clearly to share both profits and losses. Such, too, was the effect of uniting all the corporations under practically a single control.

It is well settled that corporations cannot consolidate their funds or form a partnership unless authorized by express grant or necessary implication; nor can they enter into any

In The Fulton Bank Case, Chief Justice Savage said that “general principles are against the power of corporations to do such acts. They have no powers but such as are granted and such as are necessarily incident to the grant made to them. Corporations at common law have certain powers, but not such as would authorize the forming of a partnership or the consolidation of two companies into one.”

It was doubtless because of the recognition of this principle that the acts of 1867 (chap. 960) and 18S4 (chap. 367) were passed authorizing consolidations in a certain specified manner and under fixed conditions. The corporations whose conduct we are considering have not taken advantage of these acts, doubtless because such acts are limited to corporations organized “under any general or special law of this state”—the promoters of the present combination evidently desiring to combine all the refinery corporations in the_ Union—and they have sought, by the scheme under review, to effect a far broader and deeper purpose than mere corporate consolidation under these acts. In doing so, they have plainly abused their powers and have exercised privileges not conferred upon them by law. As legal conclusions, forfeiture of the defendant’s franchise and dissolution justly follow.

Mr. Morawetz states the rule with precision (2 Mor. on Cor., § 1024): “A corporation may incur a forfeiture of its franchises by the doing of an illegal act. Any act of a corporation which is forbidden by its charter, or by a general rule of law, and strictly every act which the charter does not expressly or impliedly authorize, is unlawful; and if the doing of such act is an injui’y to the public, it may be sufficient ground of forfeiture.”

The same rule is laid down in Kent, Taylor, Waterman, Kyd, Angel & Ames and Green’s Brice. 2 Kent, 312; Taylor, §§ 289, 457, 459; 2 Waterman, § 427; Kyd, § 479, et seq.; Angel & Ames, § 774, 775, 776; Green’s Brice, 708, 709, 3 Edn., 787. Waterman says that “the state is not required to prove an actual injury; it is sufficient cause of forfeiture if the act be such as in the nature of things is calculated to produce injury.”

The cases ail hold the same doctrine, laying down the general rule that the corporate franchises are granted upon

We might rest upon the conclusion thus arrived at, for it is sufficient to entitle the people to a verdict. As, however, the second branch of the question was fully argued and is fairly up, it becomes my duty to consider it. At the,outset let me say, that the modification by modern jurists of some of the rules laid down in the old English cases, is fully recognized. The liberty of contracting is the most important factor of commercial life, and it should only be abridged when it is clear that the public must be injuriously affected by its unrestrained exercise in a particular case. Freedom of all kinds may be abused, and commercial freedom, as well as any other, may degenerate into license. ' The development of judicial thought in regard to contracts in restraint of trade, has been especially marked. The ancient doctrine upon that head has been weakened and modified to such a degree, that but little, if any, of it is left. In the Diamond Match Co. v. Roeber ( 106 N. Y., 473 ; 11 N. Y. State Rep., 47), it was held that “a party may legally purchase the trade and business of another for the very purpose of preventing competition, and thé validity of the contract, if supported by a consideration, will depend upon its reasonableness, as between the parties.” It was also held that a restraint of trade was not general, but partial, though covering the whole country with the exception of Nevada and

But all the cases, ancient and modern, agree that a combination, the tendency of which is to prevent general competition and to control prices, is detrimental to the public and consequently unlawful.

This seems to be conceded by one of the learned counsel for the defendant. Judge Daly sums up the result of his examination of the cases in these words: “That combinations are unlawful, the design and effect of which necessarily is to give the party combining a monopoly more or less, for any length of time, of the manufacture or sale of a commodity * * * or to regulate and control the price of a commodity * * * or to secure any pecuniary advantage in restraint of trade which would be injurious to the community.”

Now it seems to me to be entirely clear that the agreement which has been previously analyzed, brings this case conspicuously within the above rule. It is not a case where a few individuals in a limited locality have united for mutual protection against ruinous competition. It is the case of great capitalists uniting their enormous wealth in mighty corporations and utilizing the franchises granted to them by the people, to oppress the people First, they utilize the corporate franchises to guard themselves against the dangers incident to personal association; and, second, they centralize these franchises in a single, gigantic and irresponsible power furnished with every delegated facility for regulating and controlling at will, not only in the state but throughout the entire country, the production and price of a particular and necessary article of commerce. When I say an irresponsible power, I mean no reflection upon the gentlemen personally in whom the power is vested. I mean a body of individuáis, who in their trust capacity, are entirely outside of the corporate being, and are subject to no legislative authority.

Combinations that were pigmies in comparison with the present have been repeatedly denounced by the courts and pronounced to be unlawful, as tending to breed monopolies. Hooker v. Vandewater, 4 Denio, 349 ; Stanton v. Allen, 5 id., 434 ; Morris Run Coal Co. v. Barclay Coal Co., 68 Penn. State, 186; Salt Co. v. Guthrie, 35 Ohio State, 672; Craft v. McConoughy, 79 Ill., 346 ; Hoffman v. Brooks, 11 Weekly Law Bulletin, 258.

In Hooker v. Vandewater it was held that an agreement

Stanton v. Allen was a very similar case where the court, without considering the conspiracy statute, held that the agreement was void at common law as contravening public policy and injurious to the inter-est of the state.

In Morris Run v. Barclay Coal Company the combining mines were not the only ones in the region, much less in the country. It appeared that there was another mine in the region not within the combination, but that the product of that mine could only reach the market (sought to be controlled) by tidewater. It also appeared that there were other mines in two other counties of the state, though the quantities taken from them were small. Still the court held that the combination was not only illegal but a criminal offense. The common law origin of this doctrine was dwelt upon—that while an individual may do many things to oppress others, which though morally wrong are not the subject of legal discipline, he cannot lawfully combine with another to do the same things. The wrong which, when done by the individual, cannot be redressed, becomes a conspiracy the moment it is effected by two or more in combination. As the learned judge (Agnew) observed, “the combination has a power in its confederated form which no individual action can confer. The public interest must succumb to it, for it has left no competition free to correct its banefnl influences.”

In Salt Co., v. Guthrie, the agreement was between the producers of salt in a limited locality. The court held the agreement void, although the price of the commodity had not been unreasonably advanced. The tendency of the agreement was sufficient; the court remarked that it was “no answer to say that competition in the salt trade was not in fact destroyed, or that the price of the commodity was not unreasonably advanced. Courts will not stop to

In Croft v. McConoughy, the agreement was between all the grain producers in but a single town. It was held to be void, the court saying that “while the agreement upon it& face would seem to indicate that the parties had formed a copartnership for trading in grain, yet from the terms of the contract and the other proof in the record, it is apparent that the true object was to form a secret combination and enable the parties, by secret and fraudulent means, to control the price of grain.” There is no distinguishing significance, however, in the use of the word fraudulent in this connection, as the only fraud in the case was the general fraud upon the public involved in making purchases of land and property to aid the combination and render it invincible. This case, too, is directly opposed to the ingenious distinction sought to be made between a limited product and things capable of being produced in indefinite quantities.

Hoffman v Brooks, is also an instructive and well reasoned case. The combination there was between sellers of tobacco for the purpose of destroying competition among themselves. It was held to be unlawful, the court using this pointed language: “The presumption is always against the validity of such agreements. And they will not be inforced when they include all those engaged in any business in a large city or district, are unlimited in duration, and are manifestly intended, by the surrender of individual discretion, by the arbitrary fixing of prices, or by any of the methods to which the hope of gain makes human ingenuity so fruitful, to strangle competition outright and breed monopolies.”

The cases where anti-competitive agreements were upheld had none of the distinguishing characteristics of monopoly, but were plainly fair contracts entered into for mutual protection, and were not injurious to the public; such, for instance, as Ontario Salt Co. v. Merchants’ Salt Co. (18 Grant’s Chancery, U. C., 540), Wickens v. Evans (3 Y. & J., 318), Mogul S. S. Co v. McGregor (Eng. Law Rep., year 1885, 15 Queen’s Bench. 476), Skrainka v. Scharringhausen (8 Miss. App., 522).

In the Canadian case first cited the learned Vice-Chancellor declared that “ it was out of the question to say that the agreement had for its object the creation of a monopoly, as the parties were not the only persons engaged in the production of salt in the province,” and, after examining the particular facts of that case, he adds: “What is this more than two persons carrying on the same trade, binding themselves not to undersell each other?”

Wickens v. Evans was still freer from the element of

The Mogul S. S. Co. Case, though cited by the defendant, seems to be strongly against its contention. The action was in equity, and an injunction to restrain the wrong was refused. Lord Coleridge placed his judgment entirely upon the adequacy of the legal remedy and the consequent impropriety of equitable interference. But, assuming the allegations of the bill to be true (which question of fact was not then passed upon), he denounced the so-called “conference ” as a criminal and indictable conspiracy and therefore actionable. “It is clear,” he observed, “that supposing the allegations here could be established in point of fact, the damages in such a case might be extremely heavy. They might be what are called exemplary, or vindictive, damages, such, indeed, as it might severely tax the resources of the conference to pay. That, I think, cannot be denied.”

It seems that the plaintiffs acted on this suggestion of Lord Coleridge, and brought an action at law, in which, however, they were again unsuccessful. The judgment here was, also, pronounced by Lord Coleridge (57 Law Journal Rep., Q. B. D., 541), who ruled that as there was no evidence of malice or personal ill-will, the plaintiffs could not recover. The learned chief justice held that the “conference ” was not unlawful merely because it offered a rebate of .five per cent upon all freights paid by those shippers who shipped their cargoes on board conference vessels alone, to the exclusion of the plaintiff’s vessels. “ It seems to me,” said Lord Coleridge, “ that it was no more in restraint of trade, as that phrase is used for the purpose of avoiding-contracts, than if two tailors in a village agreed to give their customers five per cent off their bills at Christmas, on condition of their customers dealing with them, and with them alone.

Even there, however. Lord Coleridge said that if there had been personal malice or ill-will, he did not doubt that the action would lie.

In the Missouri case cited the agreement was upheld because the restraint was partial. “The partial nature of the restraint in the case before us,” said the court, “seems to be not colorable, but real. The agreement is amongst the quarry men of one district of one city and it does not appear that it embraces all of them. The contract is not of such a nature that it is apparent from its terms that it tends to deprive men of employment,unduly raise prices, cause a monopoly, or put an end to competition.” While the judgment in this case sus

The same danger is clearly pointed out by our own court of appeals in the late case of Leslie v. Lorillard, 110 N. Y., 519 ; 18 N Y. State Rep., 520, where Gray, J., speaking of agreements in restraint of trade, observed: “ In later times the danger in such agreements seems only really to exist when corporations are parties to them, for their means and strength would better enable them to buy off rivalry and create monopolies.” And again, speaking of corporations, “if allowed to engage, without supervision, in subjects of enterprise foreign to their charters, or if permitted unrestrainedly to monopolize the avenues to that industry in which they are engaged, they become a public menace; against which public policy and statutes design protection.”

The principles established by these cases seem to cover and fully meet the main position taken in support of the present agreement. There are, however, one or two minor considerations which should be noticed. The first is, that this agreement seems to avoid the pitfall of many of the cases, by carefully omitting any specific authority to fix prices. Such authority, however, is plainty covered by the enormous general power conferred upon the trust board. The greater includes the less, and any specification on this head would have been superfluous.

Even Mr. Carter finally yielded this point. “I agree,” he says, “In the broadest manner that the power exists there; to fix a price eventually, it is for the interests of the parties to fix the price.” The truth is, that under this agreement, the trust board can direct the business movements of these seventeen or eighteen corporations, as absolutely as the general of a great army can direct the movements of its various corps d’armee. But a director may rebel, say the learned counsel. Well, even in war there is a possibility that a corps commander may disobey the orders of his chief, but discipline and change of military agency speedily follow. There is still less liklihood of mutiny in boards of directors, who practically take office under the trust board (and subject to the provisions of the trust deed), who are appointed by the trust chiefs, and removed by a mere re-transfer of stock “upon request,” at any time, and above

The trust board is indeed clothed with power far in excess of the ordinary stockholders of a corporation. It is, in substance, both stockholders and directors, and this union of force embraces every share of stock and every director in every corporation. What need then for specific' detail in the general delegation of power ? The board under this executed deed, can close every refinery at will, close some and open others, limit the purchase of raw material (thus jeopardizing, and in a considerable degree, controlling its production), artificially limit the production of refined sugar, enhance the price to enrich themselves and their associates, at the public expense, and depress tlm price when necessary to crush out and impoverish a foolhardy rival; in brief, can come as near to creating an absolute monopoly as is possible under the social, political and economic conditions of to-day.

We are told that this cannot be accomplished with regard to an article like sugar, which can be indefinitely produced by the application of capital and labor, and that monopoly is possible only where the supply of the article is restricted by nature. This position has been maintained in an argument of exceeding brillancy, which I confess to have enjoyed as one always enjoys a persuasive manner of presentation. But while the argument was most ingenious, it was neither sound nor—I say it with respect—plausible. Of course a monopoly, in the strict, technical and absolute sense cannot be thus created, but a monopoly in a legal sense can. The monopoly with which the law deals is not limited to the strict equivalent of royal grants or people’s patents. Any combination, the tendency of which is to prevent competition in its broad and general sense, and to control, and thus at will enhance, prices to the detriment of the public, is a legal monopoly. And this rule is applicable to every monopoly, whether the supply be restricted by nature or susceptible of indefinite production. The difficulty of effecting the unlawful purpose may be greater in the one case than in the other, but it is never impossible. Nor need it be permanent or complete. It is enough that it may be even temporarily and partially successful. The question in the end is—does it inevitably tend to public injury.

Why, then, does not this trust board combine all of these unlawful purposes with ample power of accomplishment ? Theoretically, it cannot prevent other capitalists from coming forward and utilizing their means in combination with labor, but practically it can. The struggle would be an

The defendant’s whole argument on this head is based upon theory rather than fact, just as its earlier argument, with regard to the corporation, is based upon legal form rather than substance.

The doctrines of political economy which have been pressed upon us are based upon normal conditions, and have no bearing whatever upon combinations organized for the express purpose of surmounting and subverting those conditions.

Lastly, this appeal to the law is criticised as an interference with a natural state of things. The unnatural thing is said to be the law, when it attempts to check the natural order. Unfortunately for this argument, it is the combination which has resorted to what it calls the unnatural thing. It was not content with natural partnerships or associations of individuals, but resorted to the device of corporate artificiality to effect its ends. Having asked and accepted the favor of the law, it cannot complain that it is taken to task for grossly offending its letter and spirit.

Fortunately the law is able to protect itself against abuses of the privileges which it grants. And while further legislation, both preventive and disciplinary, may be suitable to check and punish exceptional wrongs, yet there is existing, to use the phrase of a distinguished "English judge in a noted case, “plain law and plain sense” enough to deal with corporate abuses like the present—abuses which, if. allowed to thrive and become general, must inevitably lead to the oppression of the people and ultimately to the subversion of their political rights.

Again, the legal results justly follow—forfeiture and dissolution.

The judgment should rest upon the broad and main issue. ' There it rests with a sense of fitting proportion; and there it should be left.

For these reasons, the defendants’ motion must be denied, and the plaintiff’s granted.