166 U.S. 290 (1897), 67, United States v. Trans-Missouri Freight Association

Docket Nº:No. 67
Citation:166 U.S. 290, 17 S.Ct. 540, 41 L.Ed. 1007
Party Name:United States v. Trans-Missouri Freight Association
Case Date:March 22, 1897
Court:United States Supreme Court

Page 290

166 U.S. 290 (1897)

17 S.Ct. 540, 41 L.Ed. 1007

United States


Trans-Missouri Freight Association

No. 67

United States Supreme Court

March 22, 1897

Argued December 8, 9, 1896




The dissolution of the freight association does not prevent this Court from taking cognizance of the appeal and deciding the case on its merits, as, where parties have entered into an illegal agreement and are acting under it, and there is no adequate remedy at law, and the jurisdiction of the court has attached by the filing of a bill to restrain such or like action under a similar agreement, and a trial has been had and judgment entered, the appellate jurisdiction of this Court is not ousted by a simple dissolution of the association, effected subsequently to the entry of judgment in the suit.

While the statutory amount must, as a matter of fact, be in controversy, yet the fact that it is so need not appear in the bill, but may be shown to the satisfaction of the court.

The provisions respecting contracts, combinations, and conspiracies in restraint of trade or commerce among the several States or with foreign countries, contained in the Act of July 2, 1890, c. 647, "to protect trade and commerce against unlawful restraints and monopolies," apply to and cover common carriers by railroad, and a contract between them in restraint of such trade or commerce is prohibited even though the contract is entered into between competing railroads only for the purpose of thereby affecting traffic rates for the transportation of persons and property.

The Act of February 4, 1887, "to regulate commerce," is not inconsistent

Page 291

with the Act of July 2, 1890, as it does not confer upon competing railroad companies power to enter into a contract in restraint of trade and commerce like the one which forms the subject of this suit.

Debates in Congress are not appropriate sources of information from which to discover the meaning of the language of a statute passed by that body.

The prohibitory provisions of the said Act of July 2, 1890, apply to all contracts in restraint of interstate or foreign trade or commerce without exception or limitation, and are not confined to those in which the restraint is unreasonable.

In order to maintain this suit, the Government is not obliged to show that the agreement in question was entered into for the purpose of restraining trade or commerce if such restraint is its necessary effect.

This agreement, though legal when made, became illegal on the passage of the Act of July 2, 1890, and acts done under it after that statute became operative were done in violation of it.

The fourth section of the act invests the Government with full power and authority to bring such a suit as this, and, if the facts alleged are proved, an injunction should issue.

[17 S.Ct. 541] On the 2d of July, 1890, an act was passed by the Congress of the United States, entitled "An act to protect trade and commerce against unlawful restraints and monopolies." 26 Stat. 209, c. 647; Supp. Rev. St. p. 726. The act is given in full in the margin. *

Page 292

On the 15th day of March, 1889, all but three of the defendants, the railway companies named in the bill, made and entered into an agreement by which they formed themselves into an association to be known at the "Trans-Missouri Freight Association," and they agreed to be governed by the provisions contained in the articles of agreement.

The memorandum of agreement entered into between the railway companies named therein stated, among other things, as follows:

For the purpose of mutual protection by establishing and maintaining reasonable rates, rules, and regulations on all freight traffic, both through and local, the subscribers do hereby form an association to be known as the "Trans-Missouri Freight Association," and agree to be governed by the following provisions:

Article I

The traffic to be included in the Trans-Missouri Freight Association shall be as follows:

Page 293

1. All traffic competitive between any two or more members hereof, passing between points in the following described territory: Commencing at the Gulf of Mexico, on the 95th meridian; thence north, to the Red river; thence, via that river, to the eastern boundary line of the Indian Territory; thence north, by said boundary line and the eastern line of the state of Kansas, to the Missouri river at Kansas City; thence, via the said Missouri river, to the point of intersection of that river with the eastern boundary of Montana; thence, via the said eastern boundary line, to the international line -- the foregoing to be known as the "Missouri River Line"; thence, via said international line, to the Pacific coast; thence, via the Pacific coast, to the international line between the United States and Mexico; thence, 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 as described.

Page 294

2. All freight traffic originating within the territory as defined in the first section when destined to points east of the aforesaid Missouri River Line.

Certain exceptions to the above article are then stated as to the particular business of several railway companies, which was to be regarded as outside and beyond the provisions of the agreement.

Article II provided for the election of a chairman of the organization, and for meetings at Kansas City, or otherwise, as might be provided for. By section 2 of that article, each road was to

designate to the chairman one person who shall be held personally responsible for rates on that road. Such person shall be present at all regular meetings, when possible, and shall represent his road, unless a superior officer is present. If unable 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 binding upon the company he represents.

Section 3 provides that

A committee shall be appointed to establish rates, rules, and regulations on the traffic subject to this association, and to consider changes therein, and makes rules for meeting the competition of outside lines. Their conclusions, when unanimous, shall be made effective 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 VII.

By section 4, it was provided that

at least five days' written notice prior to each monthly meeting shall be given the chairman of any proposed reduction in rates or change in any rule or regulation governing freight traffic, eight days insofar as applicable to the traffic of Colorado or Utah.

Sections 5, 6, 7, 8, 9, 10, and 11 of article II read as follows:

Sec. 5. At each monthly meeting, the association shall consider and vote upon all changes proposed, of which due notice has been given, and all parties shall be bound by the decision of the association, as expressed, unless then and there

Page 295

the parties shall give the association definite written notice that, in ten days thereafter, they shall make such modification, notwithstanding the vote of the association: Provided, that, if the member giving notice of change shall fail to be represented at the meeting, no action shall be taken on its notice, and the same shall be considered withdrawn. Should any 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, each member may at its peril, make at any time, without previous notice, such rate, rule, or regulations as may be necessary to meet the competition of lines not members of the association, giving at the same 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 members of the association, and shall so notify the road making the rate, it shall 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 made in good faith to meet such competition, the member offending shall be subject to the penalty provided in section 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 as authority for the rate so made.

[17 S.Ct. 542]

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 association: Provided, however, that, when one road has a proprietary interest in another, the divisions between such roads shall be

Page 296

what they may elect, and shall not be the property of the association: Provided, further, that, as regards traffic contracts at this date actually existing between lines not having common proprietary 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 thought advisable by them, be made on equally favorable terms.

Sec. 8. It shall be the duty of the chairman to...

To continue reading