224 U.S. 383 (1912), 386, United States v. Terminal Railroad Association of St. Louis

Docket Nº:No. 386
Citation:224 U.S. 383, 32 S.Ct. 507, 56 L.Ed. 810
Party Name:United States v. Terminal Railroad Association of St. Louis
Case Date:April 22, 1912
Court:United States Supreme Court
 
FREE EXCERPT

Page 383

224 U.S. 383 (1912)

32 S.Ct. 507, 56 L.Ed. 810

United States

v.

Terminal Railroad Association of St. Louis

No. 386

United States Supreme Court

April 22, 1912

Argued October 20, 23, 1911

APPEAL FROM THE CIRCUIT COURT OF THE UNITED STATES

FOR THE EASTERN DISTRICT OF MISSOURI

Syllabus

Whether the unification of terminals in a railroad center is a permissible facility in aid of interstate commerce, or an illegal combination in restraint thereof, depends upon the intent to be inferred from the extent of the control secured over the instrumentalities which such commerce is compelled to use, the method by which such control has been obtained, and the manner in which it is exercised.

The unification of substantially every terminal facility by which the traffic of St. Louis is served is a combination in restraint of interstate

Page 384

trade within the meaning and purposes of the Anti-Trust Act of July 2, 1890, as the same has been construed by this Court in Standard Oil Co. v. United States, 221 U.S. 1, and United States v. American Tobacco Co., 221 U.S. 106.

The history of the unification of the railroad terminal systems in St. Louis in the Terminal Railroad Association shows an intent to destroy the independent existence of the terminal systems previously existing, to close the door to competition, and to prevent the joint use or control of the terminals by any nonproprietary company.

A provision in an agreement for joint use of terminals by nonproprietary companies on equal terms does not render an illegal combination legal where there is no provision by which the nonproprietary companies can enforce their right to such use.

Although the proprietary companies of a combination unifying terminals may not use their full power to impede free competition by outside companies, the control may so result in methods inconsistent with freedom of competition as to render it an illegal restraint under the Sherman Act.

This Court bases its conclusion that the unification of the terminals in St. Louis is an illegal restraint on interstate traffic, and not an aid thereto, largely upon the extraordinary situation at St. Louis and upon the physical and topographical conditions of the locality.

A combination of terminal facilities, which is an illegal restraint of trade by reason of the exclusion of nonproprietary companies, may be modified by the court by permitting such nonproprietors to avail of the facilities on equal terms.

In this case, held that the practices of the Terminal Association in not only absorbing other railroad corporation but in doing a transportation business other than supplying terminal facilities operated to the disadvantage of interstate commerce.

One of the fundamental purposes of the Anti-Trust Act is to protect, and not to destroy, the rights of property, and, in applying the remedy, injury to the public by the prevention of the restraint is the foundation of the prohibitions of the statute. Standard Oil Co. v. United States, 221 U.S. 1, 78.

Where the illegality of the combination grows out of administrative conditions which may be eliminated, an inhibition of the obnoxious practices may vindicate the statute, and where public advantages of a unified system can be preserved, that method may be adopted by the Court.

In this case, the objects of the Anti-Trust Act are best attained by a decree directing the defendants to reorganize the contracts unifying

Page 385

the terminal facilities of St. Louis under their control so as to permit the proper and equal use thereof by nonproprietary companies, and abolishing the obnoxious practices in regard to transportation of merchandise. Unless defendants, whose combination has been declared illegal by reason of administrative abuse, mollify it to the satisfaction of the Court so as to eliminate such abuse in the future, the Court will direct a complete disjoinder of the element of the combination and enjoin the defendants from exercising any joint control thereover.

The facts, which involve the validity under the Sherman Anti-Trust Act of the Terminal Railroad Association of St. Louis, are stated in the opinion.

Page 390

LURTON, J., lead opinion

MR. JUSTICE LURTON delivered the opinion of the Court.

The United States filed this bill to enforce the provisions of the Sherman Act of July 2, 1890, c. 647, 26 Stat. 209, against thirty-eight corporate and individual defendants named in the margin, * as a combination in restraint

Page 391

of interstate commerce and as a monopoly forbidden by that law. The cause was heard by the four circuit judges, who, being equally divided in judgment, dismissed the bill without filing an opinion. From this decree the United States has appealed.

The principal defendant is the Terminal Railroad Association of St. Louis, hereinafter designated as the terminal company. It is a corporation of the State of Missouri, and was organized under an agreement made in 1889 between Mr. Jay Gould and a number of the defendant railroad companies for the express purpose of acquiring the properties of several independent terminal companies at St. Louis with a view to combining and operating them as a unitary system.

The terminal properties first acquired and combined into one system by the terminal company comprised the following: The Union Railway & Transit Company of St. Louis and East St. Louis; the Terminal Railroad of St. Louis and East St. Louis; the Union Depot Company of St. Louis; the St. Louis Bridge Company, and the Tunnel Railroad of St. Louis. These properties included the great union station, the only existing railroad bridge -- the Eads or St. Louis bridge -- and every connecting or terminal company by means of which that bridge could be used by railroads terminating on either side of the river. For a time, this combination was operated in competition

Page 392

with the terminal system of the Wiggins Ferry Company, and upon the completion of the Merchants' Bridge, in competition with it, and a system of terminals which were organized in connection with it. The Wiggins Ferry Company had for many years operated car transfer boats by means of which cars were transferred between St. Louis and East St. Louis.

Upon each side of the river, it owned extensive railway terminal facilities, with which connection was maintained with the many railroads terminating on the west and east sides of the rivers, which gave such roads connection with each other, as well as access to many of the industrial and business districts on each side. In 1890, a third terminal system was opened up by the completion of a second railroad [32 S.Ct. 509] bridge over the Mississippi River at St. Louis, known as the Merchants' Bridge. This was a railroad toll bridge, open to every railroad upon equal terms. That it might forever maintain the potentiality of competition as a railroad bridge, the Act of Congress authorizing its construction provided that no stockholders in any other railway bridge company should become a stockholder therein. But, as this was a mere bridge company, it was essential that railroad companies desiring to use it should have railway connections with it on each side of the river. For this purpose, two or more railway companies were organized and lines of railway were constructed connecting each end of the Merchants' Bridge with various railroad systems terminating on either side of the river. The Merchants' Bridge and its allied terminals were thereby able to afford many, if not all, of the railroads coming into St. Louis access to the business districts on both sides of the river and connection with each other.

Thus, for a time, there existed three independent methods by which connection was maintained between railroads terminating on either side of the river at St. Louis: first, the original Wiggins Ferry Company, and

Page 393

its railway terminal connections; second, the Eads Railroad Bridge and the several terminal companies by means of which railroads terminating at St. Louis were able to use that bridge and connect with one another, constituting the system controlled by the terminal company; and, third, the Merchants' Bridge and terminal facilities owned and operated by companies in connection therewith.

This resulted in some cases in an unnecessary duplication of facilities, but it at least gave to carriers and shippers some choice, a condition which, if it does not lead to competition in charges, does insure competition in service. Important as were the considerations mentioned, their independence of one another served to keep open the means for the entrance of new lines to the city, and was an obstacle to united opposition from existing lines. The importance of this will be more clearly seen when we come to consider the topographical conditions of the situation.

That the promoters of the terminal company designed to obtain the control of every feasible means of railroad access to St. Louis, or means of connecting the lines of railway entering on opposite sides of the river, is manifested by the declarations of the original agreement. as well as by the successive steps which followed. Thus, the proviso in the Act of Congress authorizing the construction of the Merchants' Bridge, which forbade the ownership of its stock by any other bridge company or stockholder in any such company, was eliminated by an act of Congress, and shortly thereafter the terminal company obtained stock control of the Merchants' Bridge Company, and of its related terminal companies, and likewise a lease.

The Wiggins Ferry Company owned the riverfront on the Illinois shore opposite St. Louis for a distance of several miles. It had on that side and on its own property switching yards and other terminal...

To continue reading

FREE SIGN UP