Geddes v. Anaconda Copper Mining Co 25, 26 1919

• Decision Date: 08 December 1919
• Docket Number: No. 25,25
• Citation: 41 S.Ct. 209,65 L.Ed. 425,254 U.S. 590
• Parties: GEDDES et al. v. ANACONDA COPPER MINING CO. et al. Argued April 25, 26, 1919. Restored to Docket for Reargument
• Court: U.S. Supreme Court

254 U.S. 590

41 S.Ct. 209

65 L.Ed. 425

GEDDES et al.

v ANACONDA COPPER MINING CO. et al.

No. 25.

Argued April 25, 26, 1919.

Restored to Docket for Reargument. Dec. 8, 1919.

Reargued March 3, 4, 1920.

Decided Jan. 24, 1921.

Messrs. Thomas J. Walsh and C. B. Nolan, both of Helena, Mont., for appellants.

Messrs. W. B. Rodgers, of Butte, Mont., and L. O. Evans, of Butte, Mont., for appellees.

Mr. Justice CLARKE delivered the opinion of the Court.

With formalities, which are not assailed, a special meeting of the stockholders of the Alice Gold & Silver Mining Company, by resolution, ratified a contract in writing theretofore authorized by the board of directors and executed by the officers of the company for the sale to the Anaconda Copper Mining Company of all the property, of every kind, of the Alice Company. The officers were authorized and directed to execute such deeds and assignments as should be necessary to complete the sale, and a deed in form conveying all of the Alice property to the Anaconda Company was executed and delivered by them on May 31, 1910. The consideration, 30,000 shares of the capital stock of the Anaconda Company, was paid, and the purchaser took possession of the property.

Almost a year later, on April 15, 1911, at a special meeting of the stockholders of the Alice Company a resolution was adopted, by the vote of more than two-thirds of the issued capital stock, in favor of dissolving the corporation, and the board of directors was authorized to take the court action prescribed by the laws of Utah, under which the company was organized, to accomplish such dissolution. Suit for this purpose was instituted in the appropriate state court.

On November 6, 1911, five months after the resolution in favor of dissolution was adopted, the bill in this case was filed by minority stockholders, praying for a decree, that the deed of May 31, 1910, be declared void, that it be delivered up and canceled, that the consideration for it be returned to the Anaconda Company, and that all court proceedings to dissolve the Alice Company be stayed pending final decree in the case. The District Court approved and confirmed the sale, and its decree was affirmed by the Circuit Court of Appeals. The case is here on appeal.

The appellants claimed in the courts below and argue here that the sale was voidable for four reasons, viz.:

(1) Because the purchase was made in pursuit of the purpose of the Amalgamated Copper Company and the Anaconda Company to monopolize the production of copper in the Butte Camp and to restrain the sale of it in interstate commerce and in the markets of the world, in violation of the Sherman Anti-Trust Act;

(2) Because the owners of less than all of the capital stock of the Alice Company could not authorize the sale of all of the property of the corporation over the protest of owners of a minority of the stock (3) Because the Alice Company could not lawfully acquire stock in another corporation; and

(4) Because the sale was negotiated by two boards of directors, with a common membership, and for an inadequate consideration.

We shall consider these claims in the order stated.

With respect to the first contention. It is now the settled law that the remedies provided by the Anti-Trust Act of 1890 (Comp. St. §§ 8820-8823, 8827-8830) for enforcing the rights created by it are exclusive, and therefore, looking only to that act, a suit, such as we have here, would not now be entertained. Wilder v. Corn Products Refining Co., 236 U. S. 165, 174, 35 Sup. Ct. 398, 59 L. Ed. 520, Ann. Cas. 1916A, 118; Paine Lumber Co. v. Neal, 244 U. S. 459, 471, 37 Sup. Ct. 718, 61 L. Ed. 1256; United States v. Babcock, 250 U. S. 328, 331, 39 Sup. Ct. 464, 63 L. Ed. 1011. But the law has become thus settled since this suit was commenced in 1911, and the lower courts, upon the allegations in the bill, properly assumed jurisdiction and disposed of the case. Busch v. Jones, 184 U. S. 598, 599, 22 Sup. Ct. 511, 46 L. Ed. 707; Clark v. Wooster, 119 U. S. 322, 326, 7 Sup. Ct. 217, 30 L. Ed. 392.

It is, however, argued that section 16 of the Clayton Act (38 Stat. 730, 737 [Comp. St. § 88350]), passed in 1914, was intended to, and does, modify the prior law, as declared by this court, and, since our decision will result in remanding the cause to the lower court, we shall consider its bearing upon the case.

The applicable provision of the Clayton Act is as follows:

'Sec. 16. That any person * * * shall be entitled to sue for and have injunctive relief, in any court of the United States having jurisdiction over the parties, against threatened loss or damage by a violation of the anti-trust laws * * * when and under the same conditions and principles as injunctive relief against threatened conduct that will cause loss or damage is granted by courts of equity, under the rules governing such proceedings. * * *'

The contention of the appellants is that they will suffer irreparable loss by the sale of the Alice properties to the Anaconda Company, and that the sale should therefore be enjoined because that company and the Amalgamated Copper Company constitute a combination in restraint of interstate commerce within the prohibitions of the Sherman Anti-Trust Act.

The Amalgamated Copper Company, organized in 1899, is a holding company, and in 1911, when this case was commenced, it controlled by capital stock ownership the Anaconda Company which, in turn, held the title to the physical property which had been owned by other corporations, the union of which in this manner in the Amalgamated and Anaconda Companies constituted the alleged unlawful combination in restraint of interstate trade or commerce.

The evidence in the case renders it probable, that the promoters of the Amalgamated Company, when it was organized in 1899, entertained schemes or dreams of controlling the supply and price of copper in the interstate markets of this country and in the markets of the world, and that they did what they could to make that company rich and powerful.

But we are dealing with the Anaconda Company as it was in 1911 and with the extent to which its control of production and of prices appears in the record before us.

There is evidence that the total production of copper in the United States and Alaska in 1899, was 581 million pounds, and of the Anaconda Company 1 million pounds (probably an error, 100 million pounds being intended); but the total production of the world at that time is nowhere stated. The production in the United States in 1910, the year before the suit was brought, was 1,086 million pounds, and of this Butte Camp, in which there were several mines other than those of defendants, produced 238 million pounds, or approximately 22 per cent. Here again there is no statement as to the total production of the world for that year.

Whatever the fact may have been, it is obvious that from such evidence as this it is not possible to determine to what, if to any substantial extent, the defendants restrained or monopolized the production of copper in the United States, much less in the world.

The evidence with respect to price control, although meager, is more definite. The average price of copper in 1899, the year before the Amalgamated Copper Company was organized, was 17.6 per pound; in 1900 it was 16.1; in 1902, 11.6; in 1904, 12.8; in 1907, 20; in 1908, 13; in 1909, 12.98; 1912, 16; and in 1913, the last year for which the price is given, 15 cents.

It is obviously impossible to say that these fluctuating prices prove monopolistic control of the price of copper by the defendants.

No claim is made that the Anaconda Company restrained or restricted the production of copper, but so far as there is any evidence at all upon the subject it is to the effect that it maintained and perhaps increased the production in the Butte Camp.

Upon the case here made by the evidence it is impossible to conclude that the defendants constituted in 1911 such a combination, within the terms of the Anti-Trust Act, as would justify the granting of an injunction to the plaintiffs even the provisions of section 16 of the Clayton Act, which we have quoted.

The decree of the lower courts as to this first claim must be affirmed.

The second contention is that the owners of less than all of the capital stock of the Alice Company could not authorize the sale of all of the property of the corporation over the protest of owners of a minority of the stock.

It is, of course, a general rule of law that, in the absence of special authority so to do, the owners of a majority of the stock of a corporation have not the power to authorize the directors to sell all of the property of the company and thereby abandon the enterprise for which it was organized. But to this rule there is an exception, as well established as the rule itself, viz. that when, from any cause, the business of a corporation, not charged with duties to the public, has proved so unprofitable that there is no reasonable prospect of conducting the business in the future without loss, or when the corporation has not, and cannot obtain, the money necessary to pay its debts and to continue the business for which it was organized, even though it may not be insolvent in the commercial sense, the owners of a majority of the capital stock, in their judgment and discretion exercised in good faith, may authorize the sale of all the property of the company for an adequate consideration, and distribute among the stockholders what remains of the proceeds...