Commonwealth v. Hatfield Coal Co.

• Decision Date: 19 December 1919
• Citation: 186 Ky. 411,217 S.W. 125
• Parties: COMMONWEALTH v. HATFIELD COAL CO.
• Court: Kentucky Court of Appeals

217 S.W. 125

186 Ky. 411

COMMONWEALTH v. HATFIELD COAL CO.

Court of Appeals of Kentucky.

December 19, 1919

Appeal from Circuit Court, Kenton County, Common Law and Equity Division.

Action by the Commonwealth against the Hatfield Coal Company. Judgment for defendant, and the Commonwealth appeals. Affirmed.

S. L Blakely, Com. Atty., of Covington, and Chas. H. Morris, Atty Gen., for the Commonwealth.

M. H McLean, of Covington, for appellee.

CARROLL C.J.

The lower court sustained a general demurrer to the following petition in a penal action, and the commonwealth appeals:

"The plaintiff states that the defendant, the Hatfield Coal Company, is a corporation organized under the laws of the commonwealth of Kentucky, and authorized by its charter, among other things, to produce, buy, and sell coal, and that it does, under its said charter, buy and sell coal in the commonwealth of Kentucky, and in Kenton county and elsewhere. Plaintiff states that hitherto, at a time unknown to this plaintiff or its officers, and in a manner unknown to the commonwealth of Kentucky or its officers, the defendant did enter into, become a member of, and participate in a pool, trust, agreement, combination, confederation, or understanding with divers and sundry persons and corporations in restraint of trade or competition in the importation, transportation, purchase, and sale of a certain article of merchandise, to wit, coal, and that said combination, agreement, confederation, or understanding was had and made for the purpose of regulating, controlling, and fixing the price of coal in Kenton county, Ky. and elsewhere in Kentucky, and to maintain such price when so regulated and fixed, and therefore said unlawful conspiracy, understanding, combination, confederation, and agreement was had and entered into with a view of increasing or attempting to increase the market price of coal.

Plaintiff further alleges that in furtherance of the unlawful conspiracy the defendant, the Hatfield Coal Company, or its officers or agents, has acquired interest in other corporations engaged in a similar line of business, for the purpose of placing the management and control of said corporations under its influence, and with the intention to limit and fix the price of said article, and to prevent, restrict, or diminish the production of said article.

Plaintiff further states: That by reason of the wrongful acts of the defendant in entering into such conspiracy and combination the price of coal in Kenton county has been fixed and maintained by all of the dealers in said county at a uniform rate. That at divers and sundry times the defendant the Hatfield Coal Company co-operating with its other confederates, in violation of the law, have without cause or reason simultaneously increased the price of coal in Kenton county. That said defendant and its confederates, by reason of their unlawful acts, have stifled and destroyed competition in said county, and have prevented the inhabitants of said county from purchasing coal, except at the unreasonable rates unlawfully fixed by the defendant, the Hatfield Coal Company, and its associates or confederates.

Wherefore the commonwealth of Kentucky prays that the defendant, the Hatfield Coal Company, be declared by this court to have forfeited its corporate rights and franchises, and that the same shall be by this court declared forfeited, void, and of none effect, and that the right of the defendant company to transact business in this commonwealth shall cease and determine, and that all of its property, including its real estate, vessels, mines, machinery, money, evidences of indebtedness, choses in action, and all personal property of every other kind and description, and wherever situated, be forfeited unto the state, or in lieu thereof that the court assess a fine against the defendant company of ten thousand ($10,000) dollars."

The penal action was instituted under an act passed by the Legislature in March, 1916 (Laws 1916, c. 17), and the demurrer was sustained upon the ground that the act was unconstitutional. The title reads:

"An act for the prevention of pools, trusts, conspiracies and combinations in restraint of trade, and to define same, and to prescribe penalties and provide methods for the infliction thereof."

The first section of the act reads:

"A trust or monopoly as used in this act, unless a contrary intention appears, is an association or combination of any number of persons established or organized prior, or subsequent, to the passage of this act, and either in the state of Kentucky or elsewhere, and whether incorporated or unincorporated, having as its object, or as one of its objects, that of fixing, influencing or regulating the supply, demand or price of any goods, product or commodity in the state of Kentucky, or elsewhere, or that of creating, or maintaining, a monopoly in Kentucky, or elsewhere, whether complete or partial, in the supply or demand of any goods, product or commodity."

The second section reads:

"The word 'person' or 'persons,' as used in this act, shall include natural persons, partnerships, associations of persons and corporations created, or organized, by, or under, the laws of this state, or under the laws of any other state or country."

The third section reads:

"Any person who shall create, enter into, become a member of, or participate in, any pool, trust, agreement, combination, confederation or understanding with any person or persons, in restraint of trade or competition in the importation, transportation, manufacture, purchase or sale of any goods, product or commodity in this state, shall be deemed guilty of a conspiracy in restraint of trade."

The fourth section reads:

"Any person who shall create, enter into, become a member of, or participate in, any pool, trust, agreement, combination, confederation or understanding with any other person or persons to regulate, control or fix the price of any article of manufacture, mechanism, or part thereof, merchandise or commodity, or to maintain such price when so regulated or fixed, or shall enter into, become a member of, or participate in, any pool, trust, agreement, contract, combination, confederation or understanding to fix or limit the amount of any article of manufacture, mechanism, or part thereof, merchandise, commodity, shall be deemed guilty of a conspiracy in restraint of trade."

The fifth section reads:

"Any two or more persons engaged in buying or selling any article of commerce, manufacture, mechanism, or part thereof or other commodity, or who shall create, enter into, become a member of, or participate in, any pool, trust, agreement, combination, confederacy, association or understanding to control or limit the trade in any such article or thing, or to limit competition in such trade by refusing to buy from, or sell to, any other person any such article or thing aforesaid, for the reason that such other person is not a member of, or a party to, such pool, trust, combination, confederacy, association or understanding, or who shall boycott, or threaten, any person for buying or selling any such article or thing to any other person who is not a member of, or a party to, such pool, trust, agreement, combination, confederacy, association or understanding, shall be deemed guilty of a conspiracy in restraint of trade."

The sixth section reads:

"All arrangements, understandings, agreements, contracts combinations or promises made, or entered into, between any two or more persons, designed, or made, with a view to lessen, or which tend to lessen, lawful trade, or full and free competition in the importation, transportation, manufacture or sale in this state of any goods, product, commodity or article, and all arrangements, contracts, agreements, combinations, promises, or understandings made, or entered into, between any two or more persons, which are designated, or made, with a view to increase, or which tend to increase, the market price of any product, commodity, goods, or article, are hereby declared to be against public policy, unlawful and void, and any person or persons creating, entering into, becoming a member of, or party to, any such arrangements, contracts, promises, agreements, combinations or understandings, shall be deemed guilty of a conspiracy in restraint of trade."

Section 7 provides that--

"Any corporation created, or organized, by, or under, the laws of this state, which shall be guilty of any violation of the provisions of this act, shall, upon proper proof being made thereof in any court of competent jurisdiction in this state be declared by the court to have forfeited its corporate rights and franchises, and the same shall be, by the court, declared forfeited, void and of noneffect, and its right to transact business in this state shall thereupon cease and determine, and such court shall, by such judgment and decree, also declare, all or any part, of the property of such corporation forfeited unto the state: Provided, however, that the courts may in lieu of the forfeiture of its corporate rights and franchises, or in lieu of the forfeiture of all, or any part of the property of such corporation, assess against it a fine in any sum not to exceed $10,000, and should a corporation continue to violate the law after having been adjudged guilty such continuance shall constitute a separate offense; and any corporation created, or organized, by, or under, the laws of any other state, or country, which shall violate any of the provisions of this article, shall, upon proper proof being made thereof in any court of competent jurisdiction of this state, be declared by the court to have forfeited its right and privilege thereafter to do any business in this state,...