Corey v. Independent Ice Co.

• Decision Date: 04 August 1913
• Docket Number: 324.
• Citation: 207 F. 459
• Parties: COREY et al. v. INDEPENDENT ICE CO. et al.
• Court: U.S. District Court — District of Massachusetts

207 F. 459

COREY et al. v. INDEPENDENT ICE CO. et al.

No. 324.

United States District Court, D. Massachusetts.

August 4, 1913

Whipple Sears & Ogden, of Boston, Mass., for complainants.

Stone &amp Stone and Boyd B. Jones, all of Boston, Mass., for defendants.

DODGE Circuit Judge.

The plaintiffs hold a minority of the voting stock of the Independent Ice Company, the first-named defendant in their bill. According to their allegations, this corporation has a claim for damages under section 7 of the Anti-Trust Act (Act July 2, 1890, c. 647, 26 States. 209 (U.S. Comp. St. 1901, p 3202)) against the other defendants named, who are Boston Ice Company, a Massachusetts corporation, Frank J. Bartlett, now its president, formerly its treasurer, American Ice Company a New Jersey corporation, Wesley H. Oler, its president, George A. Taylor, treasurer and director of the defendant Independent Ice Company, who holds in trust the majority of that company's voting stock.

After setting forth acts of the other defendants from which the above claim for damages is alleged to have arisen in the Independent Company's favor, the bill alleges a demand, made by the plaintiffs as stockholders in that company, upon its president and directors for the institution of a suit in its name, under section 7 of the Anti-Trust Act, against the Boston Ice Company for the damage claim alleged to exist and the failure or refusal of those directors to bring such suit. The relief prayed for is: (1) An account of the damages sustained by the Independent Company and a decree for three times the amount thereof, with costs and attorney's fee, to be paid either by the other defendants to said company or a part of said damages, in proportion to the stock owned by them, to be paid by the defendants to the plaintiffs; (2) in the alternative, the appointment of a receiver to sue for and collect such damages; (3) for other and further relief, etc.

According to the bill, the plaintiffs are Massachusetts citizens and so also are the defendants, the Boston Ice Company, George A. Taylor, the Independent Company's treasurer, and Frank J. Bartlett, the American Company's president. The bill discloses no matter in controversy, therefore, between citizens of different states and is maintainable in this court, if at all, only because it presents a matter in controversy arising under the federal statute referred to.

The bill does not ask for any preventive relief, such as it would be within the general equity jurisdiction of the court to afford, against injury resulting or to result from an unlawful combination. Of such a suit the court might have jurisdiction independently of diverse citizenship because a federal question was involved. Chalmers, etc., Co. v. Chadeloid & Co. (C.C.) 175 F. 995. On the contrary, as the plaintiffs expressly state in their brief, the suit is one 'to enforce a remedy provided by the act itself; that is, a judgment for threefold damages and costs. ' The defendants raise the objections that the court has no jurisdiction to entertain the bill or grant the relief for which it prays, and that it has no jurisdiction to entertain any suit in equity under the act wherein any person other than the United States, by its Attorney General, is the plaintiff. These objections are first to be considered.

As the plaintiffs concede, it is settled that a stockholder cannot maintain a suit at law authorized by section 7 of the act for injury to the business of his corporation whereby the value of his stock is impaired. The right of action created by this section is in the corporation alone, representing all its stockholders. Ames v. American, etc., Co., 166 F. 820 (C.C. Mass. 1909); Loeb v. Eastman, etc., Co., 183 F. 704, 106 C.C.A. 142 (C.C.A. 3d Circ. 1910). They are therefore obliged to contend that the act permits minority stockholders to accomplish through a bill in equity what they could not accomplish by a suit at law under section 7, jurisdiction whereof, as that section expressly provides, might be had in any district where the defendants could be found, irrespective of diverse citizenship or amount.

The Anti-Trust Act contains express provisions determining the remedies whereby and the courts wherein its provisions are to be enforced, instead of leaving them to be ascertained according to the general statutory provisions governing such matters. Section 7, regulating suits at law, has been referred to. Section 4 invests the federal courts with jurisdiction 'to prevent and restrain violations of this act,' but goes no further in expressly giving them jurisdiction in equity, and by the same section it is made the duty of the law officers of the government to institute the equity proceedings authorized.

In view of these express provisions, the Court of Appeals for the Fifth Circuit has held, in Gulf, etc., Co. v. Miami, etc., Co., 86 F. 407, 420, 421, 30 C.C.A. 142 (1898), that suits in equity or injunction suits by other than the government of the United States are not authorized by the act. And the Court of Appeals for the Second Circuit has later held, in National, etc., Co. v. Mason, Builders, etc., 169 F. 259, 263, 94 C.C.A. 535, 26 L.R.A. (N.S.) 148 (1909), that the injunctive remedy is available to the government only, and the individual can only sue for threefold damages. These are the only Court of Appeals decisions found regarding suits in equity under the act. The greater part of the decisions in the lower federal courts have been to the same effect. See Blindell v. Hagan (C.C.) 54 F. 40 (1893); Pidcock v. Harrington (C.C.) 64 F. 821 (1894); Greer v. Stoller (C.C.) 77 F. 2 (1896); Southern, etc., Co. v. United States, etc., Co. (C.C.) 88 F. 659, 663 (1898); Block v. Standard, etc., Co. (C.C.) 95 F. 978 (1899); Metcalf v. American, etc., Co. (C.C.) 108 F. 909 (1901), and (C.C.) 122 F. 115, 126 (1903). In the last-cited case, as in this, the bill was brought by a minority of stockholders and it sought not only to have a transfer of the corporation's property set aside as void under the act but also treble damages according to section 7. A view contrary to the above has been taken in Bigelow v. Calumet, etc., Co. (C.C.) 155 F. 869, 876 (1907), and Mannington v. Hocking, etc., Co. (C.C.) 155 F. 869, 876 140 (1910). In the first of these two cases, at least, there was diverse citizenship of the parties. I think the right construction of the act is that adopted by the two Court of Appeals decisions above cited. If, as there held, authority to sue for relief by injunction against violation of its provisions has been given by the act to the government alone, I am unable to believe that authority to sue in equity for other relief has been given by it to private parties. The plaintiffs urge that since they cannot get the damages they claim at law except through the corporation, they are without remedy unless a stockholder's bill can be maintained. But neither they nor their corporation could claim any right whatever to such damages except so far as the act has expressly given such a right, and the express provisions of the act are not of a character such as permits extending them by implication.

If the above conclusion is right, the bill cannot be maintained. If not, the objections next to be considered are that the allegations of the bill fail to show the defendants to have done anything which the Anti-Trust Act declares illegal or makes a misdemeanor.

The trade or commerce which the bill charges them with combining to restrain or monopolize is described in paragraph 2. The allegations are: As to the Independent Company, that it has been engaged since its organization in 1895--

'in the business of cutting and harvesting ice, principally in the state of New Hampshire, transporting the said ice to the city of Boston in the state of Massachusetts, and there selling the same; the larger part of said ice being delivered in said Boston, but some being shipped to places outside the state.

Said defendant Independent Ice Company has thus continuously since the date of its organization been engaged in interstate commerce in ice.'

As to the Boston Ice Company, the allegations are that since its organization (the date whereof is not alleged) it has been engaged--

'in the business of cutting and harvesting ice throughout the New England states, transporting the said ice to said Boston, and there selling the same. Said defendant Boston Ice Company has thus been continuously engaged in interstate commerce in ice.'

The last clause in each of the two above quotations is of no effect unless the preceding allegations have made it distinctly appear that the business described was 'trade or commerce among the several states. ' Nor, unless this is the case, do any of the later references in the bill to the business here described as interstate trade and commerce assist to bring it under that description. If the bill has charged any combination, monopoly, or attempt to monopolize obnoxious to the statute, it is only with regard to 'the trade and commerce in ice between the city of Boston and the various New England states' or 'the trade and commerce in ice in said territory. ' See paragraph 4. What is referred to by the language quoted must be taken as meaning nothing other than the trade or commerce in ice described as above in paragraph 2. The defendants contend that in paragraph 2 no trade and commerce in ice between Boston and the various...