175 U.S. 211 (1899), 61, Addyston Pipe & Steel Company v. United States

Docket Nº:No. 61
Citation:175 U.S. 211, 20 S.Ct. 96, 44 L.Ed. 136
Party Name:Addyston Pipe & Steel Company v. United States
Case Date:December 04, 1899
Court:United States Supreme Court
 
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Page 211

175 U.S. 211 (1899)

20 S.Ct. 96, 44 L.Ed. 136

Addyston Pipe & Steel Company

v.

United States

No. 61

United States Supreme Court

December 4, 1899

Argued April 26-27, 1899

APPEAL FROM THE COURT OF

APPEALS FOR THE SIXTH CIRCUIT

Syllabus

Under the grant of power to Congress contained in Section 8 of Article I of the Constitution "to regulate commerce with foreign nations and among the several states and with Indian tribes," that body may enact such legislation as shall declare void and prohibit the performance of any contract between individuals or corporations where the natural and direct effect of such a contract shall be, when carried out, to directly, and not as a mere incident to other and innocent purposes, regulate to any extent interstate or foreign commerce.

The provision in the Constitution regarding the liberty of the citizen is to some extent limited by this commerce clause, and the power of to regulate interstate commerce comprises the right to enact a law prohibiting the citizen from entering into those private contracts which directly and substantially, and not merely indirectly, remotely, incidentally and collaterally regulate, to a greater or less degree, commerce among the states.

Interstate commerce consists of intercourse and traffic between the citizens or inhabitants of different states, and includes not only the transportation of persons and property and the navigation of public waters for that purpose, but also the purchase, sale and exchange of commodities.

The power to regulate interstate commerce and to prescribe the rules by which it shall be governed is vested in Congress, and when that body has enacted a statute such as the Act of July 2, 1890, c. 647, entitled "an act to protect trade and commerce against unlawful restraints and monopolies," any agreement or combination which directly operates not alone upon the manufacture, but upon the sale, transportation, and delivery of an article of interstate commerce by preventing or restricting its sale thereby regulates interstate commerce to that extent, and thus trenches upon the power of the national legislature, and violates the statute.

The contracts considered in this case, set forth in the statement of facts and in the opinion of the court, relate to the sale and transportation to other states of specific articles, not incidentally or collaterally, but as a direct and immediate result of the combination entered into by the defendants, and they restrain the manufacturing, purchase, sale, or exchange of the manufactured articles among the several states and enhance their value, and thus come within the provisions of the "act to protect trade and commerce against unlawful restraints and monopolies."

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When the direct, immediate and intended effect of a contract or combination among dealers in a commodity is the enhancement of its price, it amounts to a restraint of trade in the commodity, even though contracts to buy it at the enhanced price are being made.

The judgment of the court below, which perpetually enjoined the defendants in the court below from maintaining the combination in cast-iron pipe as described in the petition and from doing any business under such combination, is too broad, as it applies equally to commerce which is wholly within a state as well as to that which is interstate or international only.

Although the jurisdiction of Congress over commerce among the states is full and complete, it is not questioned that it has none over that which is wholly within a state, and therefore none over combinations or agreements so far as they relate to a restraint of such trade or commerce, nor does it acquire any jurisdiction over that part of a combination or agreement which relates to commerce wholly within a state by reason of the the fact that the combination also covers and regulates commerce which is interstate.

This proceeding was commenced in behalf of the United States, under the so-called antitrust act of Congress, passed July 2, 1890. 26 Stat. 209, c. 647. It was undertaken for the purpose of obtaining an injunction perpetually enjoining the six corporations who were made defendants, and who were engaged in the manufacture, sale, and transportation of iron pipe at their respective places of business in the states of their residence, from further acting under or carrying on the combination alleged in the petition to have been entered into between them, and which was stated to be an illegal and unlawful one under the act above mentioned because it was in restraint of trade and commerce among the states, etc.

The trial court dismissed the petition, 78 F. 712, but upon appeal to the circuit court of appeals, the judgment of the court below was reversed, with instructions to enter a decree for the United States perpetually enjoining defendants from maintaining the combination in cast-iron pipe as described in the petition, and from doing any business under such combination. 85 F. 271. The six defendants are the Addyston Pipe & Steel Company, of Cincinnati, Ohio; Dennis Long & Company, of Louisville, Kentucky; the Howard-Harrison Iron Company, of Bessemer, Alabama; the Anniston Pipe & Foundry Company, of Anniston,

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Alabama, the South Pittsburg Pipe Works, of South Pittsburg, Tennessee, and the Chattanooga Foundry & Pipe Works, of Chattanooga, Tennessee, one company being in the State of Ohio, one in Kentucky, two in Alabama, and two in Tennessee.

The following are in substance the facts upon which the judgment of the circuit court of appeals rested, as stated in the record:

It was charged in the petition that, on the 28th of December, 1894, the defendants entered into a combination and conspiracy among themselves by which they agreed that there should be no competition between them in any of the states or territories mentioned in the agreement (comprising some thirty-six in all) in regard to the manufacture and sale of cast-iron pipe, and that, in obedience to such agreement and combination and to carry out the same, the defendants had since that time operated their shops and had been selling and shipping the pipe manufactured by them into other states and territories under contracts for the manufacture and sale of such pipe with citizens of such other states and territories. There was to be a "bonus" charged against the manufacture of the pipe to the extent set forth in the agreements and to be paid as therein stated. The whole agreement was charged to have been entered into in order to enhance the price for the iron pipe dealt in by the defendants.

The petition prayed that all pipe sold and transported from one state to another under the combination and conspiracy described therein be forfeited to the petitioner and be seized and confiscated in the manner provided by law, and that a decree be entered dissolving the unlawful conspiracy of defendants and perpetually enjoining them from operating under the same and from selling said cast-iron pipe in accordance therewith to be transported from one state into another.

The defendants filed a joint and separate demurrer to the petition insofar as it prayed for the confiscation of goods in transit, on the ground that such proceedings under the antitrust act are not to be had in a court of equity, but in a court of law. In addition to the demurrer, the defendants filed a joint and separate answer in which they admitted the existence

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of an association between them for the purpose of avoiding [20 S.Ct. 98] the great losses they would otherwise sustain due to ruinous competition between defendants, but denied that their association was in restraint of trade, state or interstate, or that it was organized to create a monopoly, and denied it was a violation of the antitrust act of Congress.

Testimony in the form of affidavits was submitted by petitioner and defendants, and by stipulation it was agreed that the final hearing might be had thereon.

From the minutes of the association, a copy of which was put in evidence by the petitioner, it appeared that prior to December 28, 1894, the Anniston Company, the Howard-Harrison Company, the Chattanooga Company, and the South Pittsburg Company had been associated as the Southern Associated Pipe Works. Upon that date, the Addyston Company and Dennis Long & Co. were admitted to membership, and the following plan was then adopted:

First. The bonuses on the first 90,000 tons of pipe secured in any territory, 16" and smaller, shall be divided equally among six shops.

Second. The bonuses on the next 75,000 tons, 30" and smaller, sizes to be divided among five shops, South Pittsburgh not participating.

Third. The bonuses of the next 40,000 tons, 36" and smaller, sizes to be divided among four shops, Anniston and South Pittsburg not participating.

Fourth. The bonus on the next 15,000 tons, consisting of all sizes of pipe, shall be divided among three shops, Chattanooga, South Pittsburg, and Anniston not participating.

The above division is based on the following tonnage of capacity:

South Pittsburg . . . . 15,000 tons

Anniston. . . . . . . . 30,000 tons

Chattanooga . . . . . . 40,000 tons

Bessemer. . . . . . . . 45,000 tons

Louisville. . . . . . . 45,000 tons

Cincinnati. . . . . . . 45,000 tons

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When the 220,000 tons have been made and shipped and the bonuses divided as hereafter provided, the auditor shall set aside into a reserve fund all bonuses arising from the excess of shipments over 220,000 tons, and shall divide the same at the end of the year among the respective companies according to the percentage of the excess of tonnage they may have shipped (of the sizes made by them) either in pay or free territory. It is also the intention of this proposition that the bonuses on all pipe larger than 36 inches in diameter shall be divided equally between the Addyston Pipe & Steel Company, Dennis Long & Co., and the...

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