Meeker v. Lehigh Valley R. Co.

• Decision Date: 06 June 1908
• Citation: 162 F. 354
• Parties: MEEKER et al. v. LEHIGH VALLEY R. CO.
• Court: U.S. District Court — Southern District of New York

162 F. 354

MEEKER et al. v. LEHIGH VALLEY R. CO.

United States Circuit Court, S.D. New York.

June 6, 1908

Demurrer to complaint in action to recover damages alleged to have been sustained by plaintiffs by reason of an alleged conspiracy and combination to raise the charges for the transportation of anthracite coal between the mines in Pennsylvania and tide water in New York and New Jersey, and to monopolize the trade and commerce in anthracite coal between said states, and obtain control of all the coal in Pennsylvania, and to raise the market price therefor and to compel independent shippers (of whom plaintiffs are one) who should continue to compete to pay such excessive rates for the transportation of anthracite coal as to prevent such independent shippers from competing with such conspirators at any profit.

Shearman & Sterling, for plaintiffs.

Alexander & Green (Frank H. Platt, of counsel), for defendant.

RAY District Judge.

The bill of complaint alleges a conspiracy and combination between certain parties to do certain acts, and charges that it was a combination and conspiracy in restraint of trade and commerce among the several states which is illegal and in violation of Act Cong. July 2, 1890, c. 647, 26 Stat. 209 (U.S. comp. St. 1901, p. 3200), entitled 'An act to protect trade and commerce against unlawful restraints and monopolies,' and known as the 'Sherman Anti-Trust Act,' and that, 'by reason of the said conspiracy and combination, the plaintiffs have been injured in their business and property by the defendant to their damage in the sum of $250,000,' and demand judgment for three times that sum, viz., $750,000.

The complaint is more specific than above stated in its allegation of the damage sustained by reason of the conspiracy and combination and its execution, and says:

'(12) Pursuant to the said conspiracy and combination to obtain absolute control of the market for anthracite coal, and to that end to make the rates of transportation prohibitory to independent operators and shippers, the anthracite companies had previously increased the percentages of the tide water price which they paid to the owners of coal mining properties for their coal, and as a condition for so doing, they had also exacted from all such owners perpetual contracts for the delivery to the anthracite companies or companies controlled by them of all their coal. In this manner the anthracite companies acquired the control of nearly all the anthracite coal mined, and substantially increased the market prices therefor at the mines, but they did not obtain exclusive control.

'(13) As a result of the foregoing unlawful acts, in which the defendant participated, the independent dealers and shippers were obliged to pay for the larger sizes of coal, at the mines, a price representing 65 per cent. of the tide water market prices for the larger sizes and a price correspondingly larger for the smaller sizes, and they were required by the anthracite companies to pay on the larger sizes of coal more than 35 per cent. of the tide water price for the transportation of such coal to New York tide water for the first few years, and correspondingly higher rates on the smaller sizes, and they are required to pay about that percentage under the present prices of coal; so that, after allowing for wastage incidental to handling and the expenses connected with the sale and delivery of the coal to the consumers, the independent shippers have been unable to ship coal to the New York market at the said rates, except at a loss, and substantially all of them have been forced out of business at Perth Amboy except the plaintiffs, and the plaintiffs have been obliged to pay excessive and unlawful rates upon all coal shipped by them to tide water over the lines of the defendant. While the tariff rates thus prescribed also made it impossible for the coal companies controlled by the anthracite companies to make any profit, it has made no difference in the general result to the anthracite companies, as what their coal companies thus lost the anthracite companies gained, and it is a mere matter of bookkeeping between the respective parent and puppet companies.'

The plaintiffs do business under the firm name of 'Meeker & Co.,' and are engaged in the business of buying, shipping, and selling anthracite coal, and since 1898 have been shipping large quantities thereof over the lines operated by the defendant from mines in Pennsylvania to tide water at Perth Amboy, N.J., and thence to the New York market. The Lehigh Valley Coal Company, a Pennsylvania corporation, is engaged in the same business at the same places. The defendant company owns and controls its entire capital stock, and the greater part of the coal transported by it since 1899 was owned by the coal company. Eight different railroads transport coal from the anthracite region to New York Harbor. These companies, directly or indirectly, own coal lands and largely control the market for anthracite coal in the Eastern market. These, except the Pennsylvania Railroad Company, the complaint designates as the 'Anthracite Companies.' Subdivision 6 of the complaint alleges the conspiracy as follows:

'(6) In or about the year 1899 the anthracite companies, including the defendant, conspired and combined together to raise the charges for the transportation of anthracite coal between the mines in Pennsylvania and tide water in New Jersey and New York, and to monopolize the trade and commerce in anthracite coal between the said states and thereby to obtain control of substantially all the anthracite coal in Pennsylvania and to raise the market price therefor, especially in the New York market, and to compel such independent shippers as should continue to compete with them, to pay such excessive rates for the transportation of anthracite coal as to prevent such shippers from competing with them at any profit; and they have ever since maintained such conspiracy and combination.' Subdivision 8 reads as follows:

'(8) Any charge made by the defendant for transporting anthracite coal from the breakers, at the said mines or collieries, to tide water, in excess of the difference between the market price at tide water and a sum representing the price prevailing at the breakers, together with the expenses of selling the coal and a reasonable allowance for interest and profits is an unreasonable and excessive and unlawful charge, because it does not permit independent shippers, including the plaintiff, to sell coal except at a loss, and has resulted in enabling the anthracite companies, owning, as they do, the capital stock of their subsidiary coal companies, to drive nearly all independent shippers out of the market; for the excessive rates paid by the subsidiary coal companies are received by the anthracite companies, respectively, and the apparent losses to the coal companies are consequently only nominal as to the anthracite companies.'

Subdivision 11 reads as follows:

'(11) The said anthracite companies adopted the said recommendations made by the said committee, and in further execution of the said conspiracy and combination, and for the purpose of raising the rates for the transportation of coal and making it impossible for all independent shippers or middlemen, including the plaintiffs, to continue in business and of thus insuring their absolute control of the anthracite coal market from August, 1901, the anthracite companies, including the defendant, which prior to 1901, as hereinbefore alleged, had not charged more than the difference between the market price of the coal at the breakers and the price at tide water for transporting coal, although they had been publishing nominal tariff rates, began to exact from all independent shippers a fixed charge per ton for carrying coal to tide water in excess of such difference in prices, amounting to $1.55 per ton for prepared coal, $1.40 per ton for pea coal, $1.25 per ton for buckwheat coal, and $1.10 for coal smaller than buckwheat coal; but during the said period any charge made by the defendant for transporting anthracite coal between the said points in excess of $1 per ton constituted an unreasonable and excessive charge, and the said charges to the plaintiffs were not only far in excess of the value of the services rendered and far more than the companies had previously received for such service, but they were in excess of the difference between the prices realized for the coal at New York tide water, after allowing for the expenses of selling and the prices paid for it at the mines, and constituted an excessive, unreasonable, and unlawful charge for the said services.'

I find in this complaint no suggestion that plaintiffs have purchased any coal at an increased price because of the conspiracy or alleged illegal combination. The damages charged are the payment of an unreasonable and excessive charge or rate by the defendant for transporting coal made so by the conspiracy and combination aforesaid; that is:

'And the plaintiffs have been obliged to pay excessive and unlawful rates upon coal shipped by them to tide water over the lines of the defendant.'

This is an action at law, and the parties are entitled to a jury trial. Concede the combination and the conspiracy, the 'purpose of raising the rate for the transportation of coal,' and 'to raise the charges for the transportation of anthracite coal,' and that it has been done, and that plaintiffs have paid such increased rates, is a cause of action alleged? There is no allegation that the Interstate Commerce Commission has examined into the matter and found, declared, or adjudged the rates of transportation complained of and charged by defendant company and paid by plaintiffs to be either...