184 U.S. 199 (1902), 10, Minnesota v. Northern Securities Company

Docket Nº:No. 10, Original
Citation:184 U.S. 199, 22 S.Ct. 308, 46 L.Ed. 499
Party Name:Minnesota v. Northern Securities Company
Case Date:February 24, 1902
Court:United States Supreme Court
 
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Page 199

184 U.S. 199 (1902)

22 S.Ct. 308, 46 L.Ed. 499

Minnesota

v.

Northern Securities Company

No. 10, Original

United States Supreme Court

February 24, 1902

Argued January 27, 1902

ORIGINAL

Syllabus

Whether a bill in equity, filed in the name of a state, seeking to prevent by injunction a corporation organized under the laws of another state, with power to acquire and hold shares of the capital stock of any other corporation, from obtaining and exercising ownership and control of two or more competing railroad companies of the state so as to evade and defeat its laws and policy forbidding the consolidation of such railroads when parallel and competing, is a controversy of which this Court has jurisdiction.

The general rule in equity is that all persons materially interested, either legally or beneficially, in the subject matter of a suit are to be made parties to it, and the established practice of courts of equity to dismiss the plaintiffs' bill if it appears that to grant the relief prayed for would injuriously affect persons materially interested in the subject matter who are not made parties to the suit, is founded upon clear reasons, and may be enforced by the court sua sponte, though not raised by the pleadings, or suggested by counsel.

The bill discloses that the parties to be affected by the decision of this controversy are -- directly, the Minnesota, the Great Northern Railway Company, and the Northern Pacific Railway Company, corporations of that state, and the Northern Securities Company, a corporation of the New Jersey -- and, indirectly, the stockholders and bondholders of those corporations, and of the numerous railway companies whose lines are alleged to be owned, managed or controlled by the Great Northern and Northern Pacific Railway Companies, and it is obvious that the rights of the minority stockholders of the two railroad companies are not represented by the Northern Securities Company.

When it appears to a court of equity that a case otherwise presenting ground for its action cannot be dealt with because of the absence of essential parties, and it further appears that necessary and indispensable parties are beyond the reach of the jurisdiction of the court, or that, as in this case, when made parties, the jurisdiction of the court will thereby be defeated, it would be useless for the court to grant leave to amend.

On the 7th day of January, 1902, came the State of Minnesota, by Wallace B. Douglas, its Attorney General, and moved the Court for leave to file a bill of complaint against the Northern Securities Company, a corporation of the State of New

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Jersey. Thereupon the Court directed that notice of such application should be given to the defendant, and set the motion for argument on January 27, 1902, when it was duly heard.

The bill proposed to be filed was in the following terms:

To the Judges of the Supreme Court of the United States of America:

Your oratrix, the Minnesota, complainant, by Wallace B. Douglas, Attorney [22 S.Ct. 309] General thereof, brings this its bill of complaint against the Northern Securities Company, a corporation organized under and by virtue of the laws of the State of New Jersey, and alleges:

I

That, by an Act of Congress entitled "An Act for the Admission of Minnesota into the Union," approved May 11, A.D. 1858, the said State of Minnesota was admitted into the Union upon an equal footing with the original states.

II

That said Northern Securities Company is a corporation organized as hereinafter alleged, under and by virtue of the laws of the State of New Jersey, and is a citizen of the State of New Jersey.

III

A.

That by an Act of the Congress of the United States, of March 12, 1860, extending to the State of Minnesota the swamp lands grant theretofore made to the State of Arkansas, and by various subsequent acts, the Congress of the United States donated to the State of Minnesota from the public domain large quantities of lands situated within the State of Minnesota, and of the value of several millions of dollars. That the State of Minnesota now has left and undisposed of more than 3,000,000 acres of said lands, of the value of more than $15,000,000, much of which said land is located in the territory traversed by the railroads of the Great Northern and Northern Pacific Railway companies, as hereinafter alleged. That the value of said land, and the salability thereof, depends

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in very large measure upon having free, uninterrupted, and open competition in passenger and freight rates over the lines of railway owned and operated by said Great Northern and Northern Pacific Railway Companies.

That many of said lands are vacant and unsettled and located in regions not at present reached by railway lines, and depend for settlement upon the construction of lines in the future; that it has heretofore been the practice of said Great Northern and Northern Pacific Railway companies, respectively, to extend spur lines into territory adjacent to each of said roads as well as into new territory for the purpose of developing such territory, as well as to obtain traffic therefrom; that such new lines have been built in the past very largely by reason of the rivalry heretofore existing between said companies, for existing as well as new business; that, under the consolidation and unity of control hereinafter set forth, such rivalry will cease, and many of the lands now owned by the State of Minnesota will not be reached by railroads for years to come, if at all, owing to such combination and consolidation removing all rivalry and competition between said companies; that the settlement and occupation of said lands will add very much to their value, and such occupation will depend entirely upon the accessibility of railway lines and transportation facilities for marketing the products raised thereon; that, if said lands are sold and become occupied, they will add very largely to the taxable value of the property of the state, and that said lands cannot be sold or the income of the state increased thereby without the construction of railroad lines to, or adjacent to, the same.

B.

That the State of Minnesota is now and for many years past has been the owner of and continuously maintained an educational institution for the benefit of its citizens known as the University of Minnesota, also a large number of hospitals for the insane, within its territorial limits; also five normal schools for the education of teachers within the state; also a state training school for boys and girls; also several state schools for the education, care, and maintenance of the deaf, dumb,

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blind, and feebleminded; also a state school for indigent and homeless children; also a state penitentiary and reformatory.

That for many years past, the State of Minnesota has continuously maintained and supported each of said institutions, and in the care, maintenance, and management thereof has been compelled to and in the future, of necessity, will annually purchase large quantities of supplies for said institutions, including provisions, clothing, and fuel, a great portion of which the State of Minnesota is compelled to ship over the different lines of railway owned and operated by the Northern Pacific Railway Company and the Great Northern Railway Company.

That the State of Minnesota is compelled to expend annually more than $700,000 in the operation and maintenance of said public institutions, most of which sum is raised by general taxation upon the lands and other property of the citizens of the State of Minnesota and situated therein. That the amount of taxes which said State of Minnesota can collect, and the successful maintenance of its said public institutions, as well as the performance of its governmental functions and affairs, depend largely upon the value of the real and personal property situated within its territorial limits and the general prosperity and business success of its citizens. That the value of said real and personal property of the citizens of the State of Minnesota, as well as their business success and general prosperity, depend very largely upon maintaining in said state free, open, and unrestricted competition between the railway lines of said Great Northern and Northern Pacific Railway companies, respectively, within said state.

C.

That it has been the settled policy and practice of the State of Minnesota, since its organization as a territory, to develop the resources of the state by encouraging railroad building therein, and in furtherance of this policy, the Territory of Minnesota, by an act thereof under the date of May 22, 1857, granted to the Minnesota and Pacific Railroad Company a charter, and in consideration of the construction and maintenance of a line of railway in Minnesota by said company said territory donated

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to it out of its public domain about 700,000 acres of land. That said Minnesota and Pacific Railroad Company thereafter became insolvent, and all its property was placed in the hands of a receiver; that such proceedings were thereafter had that all the property of the last-named company, including said land, was duly sold and conveyed to the St. Paul, Minneapolis and Manitoba Railway Company, hereinafter mentioned.

That the State of Minnesota, by an act of its legislature and in consideration of the construction and maintenance of a line of railway by the Great Northern Railway Company, hereinafter referred to, between St. Cloud and Hinckley, a distance of eighty-four miles, donated and conveyed to said last-named company upwards of four hundred thousand acres of land then owned by and situated in the State of Minnesota, which said land was then worth more than one million dollars. That, in carrying out said...

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