183 F. 427 (E.D.Pa. 1910), 27, United States v. Reading, Co.

Docket Nº:27.
Citation:183 F. 427
Party Name:UNITED STATES v. READING CO. et al.
Case Date:December 08, 1910
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit
 
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Page 427

183 F. 427 (E.D.Pa. 1910)

UNITED STATES

v.

READING CO. et al.

No. 27.

United States Circuit Court, E.D. Pennsylvania.

December 8, 1910

Page 428

[Copyrighted Material Omitted]

Page 429

J. C. McReynolds and G. Carroll Todd, Special Assistants to the Attorney General, for the United States.

Robert W. De Forest, Samuel Dickson, and Jackson E. Reynolds, for Central R.R. of New Jersey and Lehigh & Wilkes-Barre Coal Co.

Alexander & Green, for Mercantile Trust Co.

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Charles Heebner, J. D. Campbell, and John G. Johnson, for Philadelphia & R. Ry. Co., Philadelphia & R. Coal & Iron Co., and Reading Co.

Willard, Warren & Knapp, for Temple Iron Co.

J. Claude Bedford, for St. Clair Coal Co.

James H. Torrey and William S. Opdyke, for Delaware & Hudson Co.

Welles & Torrey, for Enterprise Coal Co., North End Coal Co., and Green Ridge Coal Co.

R. H. Patterson, for People's Coal Co.

Thomas F. Wells, for Pine Hill Coal Co. and Nay Aug Coal Co.

W. W. Watson, for Austin Coal Co.

Henry W. Palmer, for Parrish Coal Co.

Frank H. Platt, J. F. Schaperkotter, and George W. Field, for Lehigh Valley R. Co. and Lehigh Valley Coal Co.

Adelbert Moot, George F. Brownell, and Herbert A. Taylor, for Erie R. Co., New York, S. & W.R. Co., New York, S. & W. Coal Co., Pennsylvania Coal Co., Hillside Coal & Iron Co., and Clarence Coal Co.

Before GRAY, BUFFINGTON, and LANNING, Circuit Judges.

GRAY, Circuit Judge.

The proceedings in this case were begun by a petition in the nature of a bill in equity, filed June 12, 1907, on behalf of the United States, under section 4 of the act of Congress of July 2, 1890, commonly known as the 'anti-trust act,' against the defendants named above. Act July 2, 1890, c. 647, 26 Stat. 209 (U.S. Comp. St. 1901, p. 3201). The petition invokes the jurisdiction of this court to prevent and restrain the alleged violation by the defendants of sections 1 and 2 of said act of Congress. The defendants are all alleged to be corporations duly created under the laws of the states of Pennsylvania, New York and New Jersey, respectively.

In its first paragraph, the petition alleges that the defendants, the Philadelphia & Reading Railway Company, the Lehigh Valley Railroad Company, the Delaware, Lackawanna & Western Railroad Company, the Central Railroad Company of New Jersey, the Erie Railroad Company, and the New York, Susquehanna & Western Railroad Company (called the defendant carriers when referred to collectively), are common carriers engaged in interstate transportation, particularly in the transportation of anthracite coal from the mines of Pennsylvania to the markets of that and other states. It alleges that the defendants, the Philadelphia & Reading Coal & Iron Company, the Lehigh Valley Coal Company, the Lehigh & Wilkes-Barre Coal Company, the Pennsylvania Coal Company, the Hillside Coal & Iron Company, and the New York, Susquehanna & Western Coal Company (called the defendant coal companies), own and operate anthracite coal mines in the state of Pennsylvania, and 'buy, sell and otherwise deal in anthracite coal in the markets of the several states'; that the defendant, the Temple Iron Company, also owns and operates anthracite mines in the state of Pennsylvania; that the defendant, the Reading Company, is the holding corporation of the Reading System,

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and holds the entire capital stock of the Philadelphia & Reading Railway Company and of the Philadelphia & Reading Coal & Iron Company, and a majority in interest of the capital stock of the Central Railroad Company of New Jersey.

In its second paragraph, it is alleged that, save the Pennsylvania Railroad Company and the New York, Ontario & Western Railroad Company, and the line of the Delaware & Hudson Company, the defendant carriers operate the only lines of railroad that penetrate the anthracite coal regions, and, with the exception stated, furnish and control the only means of transporting anthracite coal from the mines in Pennsylvania to the markets and distributing points in that and other states, particularly the great markets and distributing points at tide water in the vicinity of New York.

The third paragraph of the petition alleges that the Reading Company, the holding corporation of the Reading System, which holds the entire capital stock of the Philadelphia & Reading Railway Company, also holds the entire capital stock of the Philadelphia & Reading Coal & Iron Company; the Lehigh Valley Railroad Company owns all the capital stock of the Lehigh Valley Coal Company; the Central Railroad Company of New Jersey owns nine-tenths of the capital stock of the Lehigh & Wilkes-Barre Coal Company; the Erie Railroad Company owns all the capital stock of the Pennsylvania Coal Company and a large majority of the capital stock of the Hillside Coal & Iron Company; and the New York, Susquehanna & Western Railroad Company owns nearly all of the capital stock of the New York, Susquehanna & Western Coal Company; and that these so-called 'subsidiary' coal mining companies (the defendant coal companies herein) are controlled by or in the interest of the defendant carriers, or some of them, through the ownership of controlling stock interests.

The fourth paragraph of the petition, after stating that anthracite coal is an article of prime necessity and universally used for domestic purposes throughout New England and the Middle Atlantic States, and that the source of the entire supply, save a few small deposits of inferior quality, is located in the state of Pennsylvania, in an area of about 484 square miles, divided for trade purposes into three regions, viz., the northern or Wyoming (sometimes called the Lackawanna) region, the middle or Lehigh region, and the southern or Schuykill region, alleges that the defendant carriers and the Reading Company, either directly or through the said defendant coal companies, own or control 90 per cent., approximately, of the entire unmined area of anthracite, distributed substantially in the following proportions, to wit:

Per Cent.
Reading Company .................................. 44.00
Lehigh Valley Railroad Company ................... 16.87
Delaware, Lackawanna & Western Railroad Co ........ 6.55
Central Railroad Company of New Jersey ........... 19.00
Erie Railroad Company ............................. 2.59
New York, Susquehanna & Western Railroad Co ........ . 54

89.55
89.55 Page 432 -- and that they produce, either directly or through the agency of these coal companies, from 70 to 75 per cent., approximately, of the annual supply of anthracite. There are, however, it is alleged, a large number of independent individual firms and corporations who mine anthracite, either from their own properties or from properties leased by them, and who would be free from the control of the defendant carriers, were it not for the unlawful contracts hereinafter referred to; that these independent operators produce, approximately, from 20 to 25 per cent. of the annual supply of anthracite (the residue being produced by the anthracite carriers not parties hereto), which would come in competition in the great distributing centers with the anthracite produced by the defendant carriers, or their so-called agencies, the defendant coal companies, were it not for the unlawful contracts, combinations and conspiracies hereinafter charged and set forth, which stifle competition between the several defendant carriers, or their so-called agencies, in the sale of anthracite coal throughout the several states, and between such defendant carriers, or their so-called agencies, and the aforesaid independent operators. Paragraph 5 alleges that that part of the anthracite output not consumed in the state of Pennsylvania, is carried chiefly to tide water at New York Harbor, and is thence distributed by water and by railroad to points in the New England and Middle Atlantic States; that New York Harbor is the principal distributing point for anthracite coal, and that the price in that market fixes or regulates its price in the markets of the several states which get their supply through New York Harbor points. Paragraph 6 sets forth the attempted lease, in January, 1892, by the Lehigh Valley Railroad Company and by the Central Railroad Company of New Jersey, as lessors, of their respective railroads and coal properties, to the Philadelphia & Reading Railroad Company, predecessor of the present defendant, as lessee, for the period of 999 years; and that by the decree of the chancellor of the state of New Jersey, said lease of the properties of the Central Railroad Company was adjudged to be null and void, and that, in consequence thereof, the lease between the Philadelphia & Reading Railroad Company and the Lehigh Valley Railroad Company was rescinded. The gist of the petition and its charging part are set forth in the seventh paragraph thereof. Its general charge of combination and conspiracy is thus set forth:

'The average price of anthracite coal at tide water, taking for illustration the stove size, which rose from $3.71 and $3.85 a ton in 1890 and 1891, respectively, prior to the leases just described, to $4.15 and $4.19 a ton in 1892 and 1893 respectively, the years during which the said leases were in force, again declined, under the influence of competition, in the years immediately following the cancellation of the leases, falling to $3.60 a ton in 1894 and $3.12 a ton in 1895. Whereupon, in violation of the provisions of sections 1 and 2, respectively, of an act of Congress, approved July 2, 1890, entitled 'An act to protect trade and commerce against unlawful restraints...

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