Standard Oil Co. of Kentucky v. State ex rel. Attorney-General

• Court: Mississippi Supreme Court
• Writing for the Court: SMITH, J.
• Citation: Standard Oil Co. of Kentucky v. State ex rel. Attorney-General, 65 So. 468, 107 Miss. 377 (Miss. 1914)
• Decision Date: 15 June 1914
• Docket Number: 17301
• Parties: STANDARD OIL CO. OF KENTUCKY et al. v. STATE ex rel., ATTORNEY-GENERAL

65 So. 468

107 Miss. 377

STANDARD OIL CO. OF KENTUCKY et al. v. STATE ex rel., ATTORNEY-GENERAL

No. 17301

Supreme Court of Mississippi

June 15, 1914

APPEAL from the chancery court of Lauderdale county. HON. SAM WHITMAN, Chancellor.

Suit for penalties for the violation of the anti-trust laws of the state of Mississippi, on the relation of the attorney-general against the Standard Oil Company of Kentucky and others. From an order overruling their demurrer, defendants appeal.

The facts are fully stated in the opinion of the court.

Affirmed and remanded.

Hunter C. Leak, Humphrey, Middleton & Humphrey, and Mayes & Mayes for appellants.

Ross A Collins, Frank Johnston and Geo. H. Ethridge, for appellee.

OPINION

SMITH, J.

This is a suit instituted by the attorney-general to recover from appellants the penalties prescribed by our anti-trust statute for an alleged violation of the statute by them. This is its second appearance in this court. When here before, the only defendant to the bill was the Standard Oil Company of Kentucky, and we then held that the bill failed to state a cause of action, because of the failure to allege that the sales made on the same day in different localities at different prices were made for the purpose of destroying competition. On the return of the cause to the court below an amended bill was filed, bringing in new parties defendant, to wit, the Standard Oil Company of New Jersey and the Standard Oil Company of Louisiana, and alleging, with great wealth of detail, a conspiracy made for the purpose of monopolizing the trade in petroleum and its products. Afterwards a supplemental bill was filed making the Galena Signal Oil Company a party defendant. To these bills general and special demurrers were interposed by the Standard Oil Company of Kentucky, and the other defendants appeared specially and excepted to the jurisdiction of the court. These demurrers and exceptions were overruled, and an appeal granted by this court to settle the principles of the case.

The grounds of the general demurrer filed by the Standard Oil Company of Kentucky here relied on are: First, "the said amended bill shows no cause of action against this defendant which is cognizable by this court or by any state court of Mississippi;" second, "the said amended bill does not follow up and amend the original bill, but is a departure therefrom, and from the judgment and decree of the supreme court heretofore rendered in this cause, and is an attempt to state another and a wholly different cause of action from that attempted to be stated in the original bill;" and third, "the said amended bill is multifarious." These will be taken up and disposed of in the order here set forth.

Under the first ground of this demurrer the contention of counsel for appellants is that the amended bill presents a case of a conspiracy to destroy competition, and to monopolize interstate commerce, in petroleum products, and therefore a violation of the federal anti-trust law, cognizable only in the federal courts. The amended bill set forth at great length the formation of the original Standard Oil Trust of 1882 by a large number of persons and corporations engaged in the petroleum industry, followed later by the incorporation of the Standard Oil Company of New Jersey, the name of which corporation was afterwards changed to the Standard Oil Company, which company acquired all of the stock of the corporations then parties to the trust agreement, and thereby practically took the place of the trustees provided for therein, all of which was for the purpose of enabling the parties to the original agreement, and afterwards the Standard Oil Company and its subsidiary corporations, to destroy competition and monopolize the trade in petroleum and its products throughout the United States and its territories, including the state of Mississippi; that in furtherance of this conspiracy in which all of the parties defendant to the bill participated, the territory in which each of the subsidiary corporations was to do business was assigned to it, and no other corporation was permitted to do business therein; that the prices at which petroleum products were to be sold were, after its organization, fixed by the Standard Oil Company, which company controlled and directed all of the operations of the subsidiary companies; that, in furtherance of the design of this trust and combination to monopolize the trade in petroleum products, the state of Mississippi was set apart to the Standard Oil Company of Kentucky, which company was given the exclusive privilege of making sales and distribution of petroleum products therein; that this company has been continuously from the 1st day of January, 1906, engaged in the sale and distribution of petroleum products in this state, maintaining for that purpose depots in the various counties thereof, from which sales and distributions are made by means of tank wagons; that other persons, firms, and corporations are engaged in Mississippi in the sale and distribution of petroleum products who are not acting with appellants and have no connection with the combination and conspiracy complained of; that in furtherance of this conspiracy the Standard Oil Company of Kentucky on numerous occasions offered for sale petroleum products on the same day in different localities of the state at different prices, the difference of freight and other necessary expenses of sale and delivery considered, for the purpose of enabling the conspirators to monopolize the trade therein in Mississippi and throughout the United States and its territories. The bill further set forth that the combination here complained of was ordered to be dissolved into its several component parts by the supreme court of the United States in the case of Standard Oil Co. v. United States, 221 U.S. 1, 31 S.Ct. 502, 55 L.Ed. 619, 34 L. R. A. (N. S.) 834, Ann. Cas. 1912D, 734, but that notwithstanding the conspiracy had remained in effect, and that the conspirators had continued to act in concert as theretofore in the same manner and for the same purpose. The prayer was for the imposition of the penalties provided by our anti-trust law and for the exclusion of appellants from doing business in the state. From this general statement of the allegations of the bill it appears that the conspiracy here complained of is one that has for its object the monopolizing of both the inter and intrastate commerce in petroleum products, that portion of this commerce which is wholly within the state of Mississippi being monopolized, or attempted to be monopolized, by the exclusion therefrom of all of the corporations included in this conspiracy, and permitting the Standard Oil Company of Kentucky alone to deal in petroleum products therein, and by that company's selling such products, within the state at different places on the same day at different prices, whenever it becomes necessary so to do, in order to destroy competition at such places.

It is true that no petroleum is produced in the state of Mississippi, and all petroleum sold and distributed by the Standard Oil Company of Kentucky in this state must necessarily have been imported from another state. These sales and distributions, however, as we understand the bill, were made by this company after the petroleum products had been received by it in this state and had become incorporated into the general mass of property therein; they therefore constituted intrastate commerce, and are governed by the state's laws, for an article which is one of interstate commerce by reason of the fact that it is the subject of a sale by a citizen of one state to a citizen of another, and it being transported from one state to the other, loses its character as such when the transportation has been completed and it is mingled with and becomes a part of the general mass of property in the state of its destination. It then becomes, in so far as the power of the general and state governments to regulate commerce is concerned, subject exclusively to the operation of the state laws. Leisy v. Hardin, 135 U.S. 100, 10 S.Ct. 681, 34 L.Ed. 128. The bill, therefore, presents a case of the violation of the laws both of the general government and of the state of Mississippi. This seems not to be disputed by counsel for appellant, their contention being that under the allegations of the bill the principal object of this conspiracy was to enable the conspirators to monopolize interstate commerce, and that the intent there alleged to monopolize intrastate commerce is a mere incident to the principal object, and that the two intents are so inseparably connected that the jurisdiction of the federal courts to punish therefor must be exclusive. In this we think counsel are in error. The monopoly of intrastate commerce is one of the material objects of this conspiracy, and such a monopoly is not necessary, if such fact be material, to the maintenance of a monopoly of interstate commerce, the monopoly of the commerce of one character simply constituting a powerful factor in bringing about a monopoly of the other.

A conspiracy which has for its object the creation of a monopoly only in that part of the commerce in a commodity which is interstate is subject only to the laws of the general government, and one which has for its object the creation of a monopoly only in that part of the commerce in a commodity which is intrastate is subject only to the laws of the states affected thereby; but one having for its object the creation of a monopoly in both the inter and intrastate commerce in a commodity is necessarily subject to the laws both of the general government and of the states affected thereby.

It is true that under our form of government a conspiracy and acts done in...