188 F. 127 (D.Del. 1911), 280., United States v. E.I. Du Pont De Nemours & Co.

Docket Nº:280.
Citation:188 F. 127
Case Date:June 21, 1911
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

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188 F. 127 (D.Del. 1911)




No. 280.

United States Circuit Court, D. Delaware.

June 21, 1911

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John P. Nields, U.S. Atty., George W. Wickersham, Atty. Gen., William S. Kenyon, Asst. Atty. Gen., and James Scarlet and William A. Glasgow, Jr., Sp. Asst. Attys. Gen., for the United States.

Frederic Ullmann, for defendants American Powder Mills, Miami Powder Co., and AEtna Powder Co.

M. B. & H. H. Johnson, for defendant Austin Powder Co.

Frederick Seymour, for defendant Equitable Powder Mfg. Co.

David T. Marvel and David T. Watson, for defendant Henry A. du Pont.

Burton B. Tuttle, for defendant King Powder Co.

John C. Spooner, James M. Townsend, George S. Graham, William S. Hilles, and William H. Button, for remaining defendants.

Before GRAY, BUFFINGTON, and LANNING, Circuit Judges.

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LANNING, Circuit Judge.

This is a suit in equity instituted by the United States under the Sherman anti-trust act against 43 corporate and individual defendants for the purpose of obtaining a decree adjudging the defendants guilty of maintaining a combination or conspiracy in restraint of interstate commerce and of monopolizing or attempting to monopolize such commerce, or a part thereof, and awarding an injunction to prevent and restrain further violations of the act. Thirty-six answers have been filed by 41 of the defendants. Two of the defendants-- Austin Powder Company and Metropolitan Powder Company-- have filed no answers. The petition and answers fill a volume of over 500 pages. We do not deem it necessary to present a detailed statement of the facts alleged in the pleadings. The petition is so admirably framed and the answers meet the allegations of the petition so fairly that there is no difficulty in determining the issues of fact or of law. Then, too, while the proofs fill a dozen volumes, we have had such valuable aid from counsel in their briefs and their oral arguments that we have easily reached the conclusion that there is no serious controversy as to the essential facts.

The case, as we view it, is to be decided upon evidence about which there is practically no dispute. Our task is by a study of unimpeached documentary and other evidence to ascertain (1) what were the relations of the defendants when this suit was commenced; (2) whether those relations are inimical to the law; and, if so, (3) what the relief shall be. That task will be simplified if, in the first place, we determine which of the defendants are clearly shown to have had no connection at the time of the commencement of this suit with any combination or conspiracy of the nature described in the petition; for, as the only relief we can grant in this proceeding is injunctive, the petition must be dismissed as to any defendant who was not violating the law, or threatening to violate it, when the suit was commenced. One may be indicted for a former connection with a combination or conspiracy violative of the anti-trust act; but, after he has in good faith withdrawn from such a combination or conspiracy, he is no longer a subject of the injunctive power of a court of equity.

AEtna Powder Company of Indiana, Miami Powder Company of Ohio, and American Powder Mills of Massachusetts have filed a joint and several answer, in which they deny that they were parties to any of the agreements mentioned in the petition when this suit was commenced, and aver that, at the time of the commencement of the suit, none of them had any shares of capital stock or other interest in any of the other defendant companies; that, as between themselves, they were not competitors, since one of them was a manufacturer of gunpowder for sporting purposes only, another of black powder for blasting purposes only, and the remaining one of dynamite and fuses only; and that they have not sold and do not sell any of their commodities at prices fixed or dictated by any of the other defendants. The proofs amply support the averments of the answer, and establish the fact to be that, although all of these companies did in former years enter with others of the defendants into certain trade agreements to be more

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particularly referred to hereafter, they withdrew therefrom in 1906, and that for at least seven months before the commencement of this suit none of them had any connection, direct or indirect with any of the alleged unlawful combinations set forth in the petition.

It is charged that the Equitable Powder Manufacturing Company was incorporated in January, 1892; that E.I. du Pont de Nemours & Co., a partnership then existing in Delaware, acquired 49 per cent. of its capital stock; that the stock is now held by one of the defendants; that shortly after its incorporation the Equitable constructed a powder mill in Illinois, where it has ever since manufactured and sold in interstate trade gunpowder and other high explosives; that ever since its organization competition in the shipment and sale of gunpowder and other explosives between that company and others of the defendants has been suppressed and eliminated; that the prices for its commodities have been fixed by the parties to the alleged combination; that E. I. du Pont de Nemours & Co., the partnership referred to, and its successors, have ever since dominated and controlled the Equitable by virtue of the ownership of 49 per cent. of its capital stock; and that the Equitable has been and now is a party to the alleged combination. The answer of the Equitable admits that the partnership referred to purchased 49 per cent. of its capital stock, but says the purchase was made from certain of its stockholders four years after its incorporation, and denies that it was a party to the alleged or that competition between it and other parties had been suppressed or eliminated, or that its prices have been fixed by any other parties to this proceeding, or that its business has been dominated or controlled by the partnership referred to or its successors, or that it has been, or is, a party to any combination or conspiracy. It also avers that it has not been a member of any trade association since July 1, 1903, that it is not, and for a long time before the commencement of this proceeding had not been, a stockholder in any other powder company, and that its business has long been carried on in competition with that of the other defendants and other manufacturers and vendors of black gunpowder and black blasting powder. The evidence of Mr. F. W. Olin, the president of the Equitable, who was called as a witness for the government, establishes the truth of the averments of the answer. There is no doubt that the Equitable withdrew from the Gunpowder Trade Association four years before this suit was commenced, and that it now has no connection whatever with any combination of vendors of explosives. It is true that 490 of its 1,000 shares of capital stock are owned by one or more of the defendant companies; but the averment of the government's petition that the business of the Equitable is dominated and controlled by any combination is not shown to be the fact. A business is not necessarily controlled by the mere purchase of a minority interest in it; nor is there any proof that the Equitable has at any time since July 1, 1903, directly or indirectly aided any of the defendants in efforts to control the trade in explosives, or submitted or been subjected to external coercion of any kind. We are not at liberty, by the extraordinary writ of injunction, to interfere with the ownership of the 490 shares of the Equitable, in the

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absence of proof that that ownership is employed to aid the combination described in the government's petition.

Previous to 1897 Austin Powder Company, of Cleveland, Ohio, was a party to several contracts alleged by the United States to have been violative of the anti-trust act; but the only fact affecting that company, alleged in the petition or proved, that existed at the commencement of this suit, is the ownership by one of the other defendant corporations of 266 of the 800 shares of its capital stock. There is no proof that the ownership of this minority interest in the capital stock of the Austin has been used for any unlawful purpose. While the Austin has filed no answer, it appears that, by an agreement with counsel for the government, it reserved the right to move to dismiss the petition as to it.

King Powder Company, of Cincinnati, Ohio, Marcellus Powder Company, of Marcellus, N.Y., and Ohio Powder Company, of Youngstown, Ohio, were incorporated in 1878 and 1881. They erected mills in New York and Ohio, and it is charged that members of the Gunpowder Trade Association waged against them such a destructive warfare that between 1883 and 1886 the prices of explosives within their fields of competition were reduced below the cost of manufacture, that the owners of the capital stocks of the Marcellus and the Ohio companies were compelled to sell their stocks to certain members of the Gunpowder Trade Association, that those two companies were subsequently dissolved, and that King Powder Company was forced into an agreement by which its business was controlled by the Gunpowder Trade Association, which association was formed under an agreement dated April 29, 1872, and continued under other agreements dated August 23, 1886, December 19, 1889, and July 1, 1896. King Powder Company was a party to all these agreements, but we need not here consider their effect, since it conclusively appears that on September 5, 1898, it refused longer to adhere to any 'schedule on paper,' and declared it should thereafter be guided 'by the market price set by our competitors. ' It appears, also, that on January 29, 1901, King Powder Company entered into a contract by which it agreed...

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