156 U.S. 1 (1895), 675, United States v. E. C. Knight Company
|Docket Nº:||No. 675|
|Citation:||156 U.S. 1, 15 S.Ct. 249, 39 L.Ed. 325|
|Party Name:||United States v. E. C. Knight Company|
|Case Date:||January 21, 1895|
|Court:||United States Supreme Court|
Argued October 24, 1894
APPEAL FROM THE CIRCUIT COURT
OF APPEALS FOR THE THIRD CIRCUIT
The monopoly and restraint denounced by the Act of July 2, 1890, c. 647, 26 Stat. 209, "to protect trade and commerce against unlawful restraints and monopolies," are a monopoly in interstate and international trade or commerce, and not a monopoly in the manufacture of a necessary of life.
The American Sugar Refining Company, a corporation existing under the laws of the New Jersey, being in control of a large majority of the manufactories of refined sugar in the United States, acquired, through the purchase of stock in four Philadelphia refineries, such disposition over those manufactories throughout the United States as gave it a practical monopoly of the business. Held that the result of the transaction was the creation of a monopoly in the manufacture of a necessary of life, which could not be suppressed under the provisions of the Act of July 2, 1890, c. 647, 26 Stat. 209, "to protect trade and commerce against unlawful restraints and monopolies," in the mode attempted in this suit, and that the acquisition of Philadelphia refineries by a New Jersey corporation, and the business of sugar refining in Pennsylvania, bear no direct relation to commerce between the states or with foreign nations.
[15 S.Ct. 249] This was a bill filed by the United States against E. C. Knight Company and others, in the Circuit Court of the United States for the Eastern District of Pennsylvania, charging that the defendants had violated the provisions of an Act of Congress approved July 2, 1890, c. 647, entitled, "An act to protect trade and commerce against unlawful restraints and monopolies," 26 Stat. 209, providing that
[e]very contract, combination in the form of trust, or otherwise, or conspiracy in restraint of trade and commerce among the several states is illegal, and that persons who shall monopolize or shall attempt to monopolize, or combine or conspire with other persons to monopolize trade and commerce among the several states, shall be guilty of a misdemeanor.
The bill alleged that the defendant the American Sugar Refining Company [15 S.Ct. 250] was incorporated under and by virtue of the laws of New Jersey, whose certificate of incorporation named the places in New Jersey and New York at which its principal business was to be transacted, and several other states in which it proposed to carry on operations, and stated the objects for which said company was formed were "the purchase, manufacture, refining, and sale of sugar, molasses, and melads, and all lawful business incidental thereto;" that the defendant E. C. Knight Company was incorporated under the laws of Pennsylvania "for the purpose of importing, manufacturing, refining, and dealing in sugars and molasses" at the City of Philadelphia; that the defendant the Franklin Sugar Company was incorporated under the laws of Pennsylvania "for the purpose of the manufacture of sugar and the purchase of raw material for that purpose" at Philadelphia; that the defendant Spreckels Sugar Refining Company was incorporated under the laws of Pennsylvania
for the purpose of refining sugar, which will involve the buying of the raw material therefor, the selling the manufactured product, and of doing whatever else shall be incidental to the said business of refining
at the City of Philadelphia; that the defendant the Delaware Sugar House was incorporated under the laws of Pennsylvania
for the purpose of the manufacture of sugar and syrups, and preparing the same for
market, and the transaction of such work or business as may be necessary or proper for the proper management of the business of manufacture.
It was further averred that the four defendants last named were independently engaged in the manufacture and sale of sugar until or about March 4, 1892; that the product of their refineries amounted to thirty-three percent of the sugar refined in the United States; that they were competitors with the American Sugar Refining Company; that the products of their several refineries were distributed among the several states of the United States, and the all the companies were engaged in trade or commerce with the several states and with foreign nations; that the American Sugar Refining Company had, on or prior to March 4, 1892, obtained the control of all the sugar refineries of the United States with the exception of the Revere of Boston and the refineries of the four defendants above mentioned; that the Revere produced annually about two percent of the total amount of sugar refined.
The bill then alleged that in order that the American Sugar Refining Company might obtain complete control of the price of sugar in the United States, that company, and John E. Searles, Jr., acting for it, entered into an unlawful and fraudulent scheme to purchase the stock, machinery, and real estate of the other four corporations defendant, by which they attempted to control all the sugar refineries for the purpose of restraining the trade thereof with other states as theretofore carried on independently by said defendants; that in pursuance of this scheme, on or about March 4, 1892, Searles entered into a contract with the defendant Knight Company and individual stockholders named for the purchase of all the stock of that company, and subsequently delivered to the defendants therefor in exchange shares of the American Sugar Refining Company; that on or about the same date, Searles entered into a similar contract with the Spreckels Company and individual stockholders, and with the Franklin Company and stockholders, and with the Delaware Sugar House and stockholders. It was further averred that the American Sugar Refining Company monopolized the manufacture and
sale of refined sugar in the United States, and controlled the price of sugar; that in making the contracts, Searles and the American Sugar Refining Company combined and conspired with the other defendants to restrain trade and commerce in refined sugar among the several states and foreign nations, and that the said contracts were made with the intent to enable the American Sugar Refining Company to restrain the sale of refined sugar in Pennsylvania and among the several states, and to increase the regular price at which refined sugar was sold, and thereby to exact and secure large sums of money from the State of Pennsylvania, and from the other states of the United States, and from all other purchasers, and that the same was unlawful, and contrary to the said act.
The bill called for answers under oath, and prayed:
1. That all and each of the said unlawful agreements made and entered into by and between the said defendants on or about the 4th day of March, 1892, shall be delivered up, cancelled, and declared to be void, and that the said defendants the American Sugar Refining Company and John E. Searles, Jr., be ordered to deliver to the other said defendants respectively the shares of stock received by them in performance of the said contracts, and that the other said defendants be ordered to deliver to the said defendants the American Sugar Refining Company and John E. Searles, Jr., the shares of stock received by them respectively in performance of the said contracts.
2. That an injunction issue preliminary until the final determination of this cause, and perpetual thereafter, preventing and restraining the said defendants from the further performance of the terms and conditions of the said unlawful agreements.
3. That an injunction may issue preventing and restraining the said defendants from further and continued violations of the said act of Congress approved July 2, 1890.
4. Such other and further relief as equity and justice may require in the premises.
Answers were filed, and evidence taken, which was thus
sufficiently summarized by [15 S.Ct. 251] Judge Butler in his opinion in the circuit court:
The material facts proved are that the American Sugar Refining Company, one of the defendants, is incorporated under the laws of New Jersey, and has authority to purchase, refine, and sell sugar; that the Franklin Sugar Refinery, the E. C. Knight Company, the Spreckels Sugar Refinery, and the Delaware Sugar House were incorporated under the laws of Pennsylvania, and authorized to purchase, refine, and sell sugar; that the four latter Pennsylvania companies were located in Philadelphia, and, prior to March, 1892, produced about thirty-three percent of the total amount of sugar refined in the United States, and were in active competition with the American Sugar Refining Company, and with each other, selling their product wherever demand was found for it throughout the United States; that prior to March, 1892, the American Sugar Refining Company had obtained control of all refineries in the United States excepting the four located in Philadelphia and that of the Revere Company in Boston, the latter producing about two percent of the amount refined in this country; that in March, 1892, the American Sugar Refining Company entered into contracts (on different dates) with the stockholders of each of the Philadelphia corporations named whereby it purchased their stock, paying therefor by transfers of stock in its company; that the American Sugar Refining Company thus obtained possession of the Philadelphia refineries and their business; that each of the purchases was made subject to the American Sugar Refining Company's obtaining authority to increase its stock $25,000,000; that this assent was subsequently obtained, and the increase made; that there was no understanding or concert of action between the stockholders of the several Philadelphia companies respecting the sales, but that those of each...
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