State v. International Harvester Co. of America

• Decision Date: 14 November 1911
• Parties: STATE ex inf. MAJOR, Atty. Gen., v. INTERNATIONAL HARVESTER CO. OF AMERICA.
• Court: Missouri Supreme Court

141 S.W. 672

237 Mo. 369

STATE ex inf. MAJOR, Atty. Gen., v. INTERNATIONAL HARVESTER CO. OF AMERICA.

Supreme Court of Missouri.

November 14, 1911.

On Rehearing, November 27, 1911.

1. MONOPOLIES (§ 12)—"COMBINATION IN RESTRAINT OF TRADE."

The International Harvester Company, a foreign corporation, which absorbs the property and business of six separate, independent, competing corporations, manufacturing from 80 to 90 per cent. of the agricutural implements of the country, and which thereafter conducts the business of manufacturing agricultural implements under the respective names of such corporations, and which thereby obtains power to suppress competition, is an unlawful combination to suppress competition within the anti-trust laws, though it has used its power only in a moderate degree, since, where persons deliberately acquire power that will enable them to control the market if they choose to exercise such power, they cannot show to escape liability under the anti-trust laws that they did not intend to control trade or limit competition; the laws forbidding the acquisition of power to influence the market by combinations of interests that otherwise would compete in the market.

2. MONOPOLIES (§ 12)—FOREIGN CORPORATIONS —RIGHT TO DO BUSINESS.

Where a foreign manufacturing corporation could not do business within the state because it was an unlawful combination under the anti-trust laws, a foreign corporation wholly owned by the manufacturing corporation and constituting a mere sales department of the manufacturing corporation could not obtain a license in its own name to do business in the state.

3. CORPORATIONS (§ 690) — FOREIGN CORPORATIONS —LICENSE TO DO BUSINESS.

A Wisconsin corporation with a capital of $750,000, and engaged in the business of manufacturing and selling agricultural implements, procured a license to do business in Missouri. Thereafter a New Jersey corporation with a capital of $120,000,000 and engaged in a similar business acquired all of the stock and property of the Wisconsin corporation, and made the Wisconsin corporation its sales agent. Held, that the New Jersey corporation, though entitled to a license, could not lawfully use the license issued to the Wisconsin corporation based on its capital stock.

4. MONOPOLIES (§ 26)—UNLAWFUL COMBINATIONS —PUNISHMENT.

The court in determining the penalty for a violation by a corporation of the anti-trust laws may consider the past conduct of the corporation in the exercise of its power to suppress competition and regulate prices, and may also consider the consequences following the imposition of a penalty.

5. MONOPOLIES (§ 26)—COMBINATIONS—FORFEITURE —SUSPENSION OF JUDGMENT.

The court finding a foreign corporation guilty of violating the anti-trust laws prohibiting combinations in restraint of trade, and providing for the forfeiture by a foreign corporation of its right to do business for a violation of the laws, must pronounce a judgment of ouster, but it may suspend the execution of the judgment on terms fair to the corporation and to the welfare of the people of the state.

6. MONOPOLIES (§ 26)—COMBINATIONS—OUSTER OF CORPORATION—SUSPENSION OF JUDGMENT.

The court on information of the Attorney General charging a foreign corporation with violating the anti-trust laws may determine the character of the relations which such corporation bears to another foreign corporation not a party to the action, but the court may not pronounce any judgment against the latter corporation, but the judgment must be against the former corporation over which the court has jurisdiction.

On Rehearing.

7. MONOPOLIES (§ 26)—COMBINATIONS—OUSTER OF CORPORATION—SUSPENSION OF JUDGMENT.

The International Harvester Company, a New Jersey corporation, constituted a combination in violation of the anti-trust laws. It owned the stock and property of a Wisconsin corporation formerly engaged as an independent corporation in the manufacture and sale of farm implements, and it made the Wisconsin corporation its exclusive sales agent. The Wisconsin corporation had previously procured a license to do business in Missouri, and it continued to act under such license, though it violated the law in so doing. Held, that the court in proceedings on information of the Attorney General against the Wisconsin corporation must render judgment of ouster, but will suspend the judgment on payment of a fine of $25,000, and on condition that it will make a true statement of the amount of its capital used in the transaction of its business in the state, and that it will sever its unlawful connection with the New Jersey corporation.

In Banc. Information in the nature of quo warranto by the State, on the information of E. W. Major, Attorney General, against the International Harvester Company of America for violating the anti-trust laws. Judgment of ouster.

Elliott W. Major, Atty. Gen., Charles G. Revelle, Asst. Atty. Gen., and James T. Blair, Asst. Atty. Gen., for the State. Selden P. Spencer and W. M. Williams (E. A. Bancroft, of counsel), for respondent.

VALLIANT, C. J.

This is an original proceeding in this court on the information of the Attorney General, charging the respondent with violating the anti-trust laws of this state. There is not much dispute about the essential facts in the case; the difference between the parties consisting mainly in the contention on the part of the state that the acts that were done by the respondent and its associates were done for the purpose of suppressing competition and regulating prices, and the contention, on the other hand, that the acts were done for the purpose of bringing about a more rational and conservative method of conducting the business of manufacturing and selling agricultural implements within the legitimate bounds of the law, and with no purpose of creating a monopoly or suppressing competition, or regulating prices, in the sense that those terms are used in the statutes.

The respondent is a Wisconsin corporation, chartered in 1881, under the name Parker Dennet Harvesting Machine Company, to engage in the business of manufacturing and selling harvesting machines; that is, binders, mowers, etc., and other agricultural implements. It was located at Milwaukee, Wis., and conducted its manufacturing business there. Its name was afterwards changed to Milwaukee Harvesting Company and under that name was licensed to do business in this state in 1892. It established itself here and conducted its business of selling its own manufactured articles until the occurrence of the events herein complained of by the state, since which time it has conducted a business of selling only the products of the International Harvester Company, a New Jersey corporation, which corporation will be hereinafter more particularly referred to and discussed. After the organization of the last-named corporation, it acquired all the stock of respondent and respondent's name was again changed, the last name being the International Harvester Company of America; the words "of America" alone distinguishing its name from that of the New Jersey corporation. Respondent is frequently referred to in the evidence as the "Milwaukee," and for convenience and ready distinction we will sometimes refer to it by that name.

Besides the Milwaukee Company, there were other foreign corporations, manufacturers and sellers of farm implements of the same or similar character, licensed to do business in this state, among them, the McCormick Harvester Company, an Illinois corporation, the Plano-Manufacturing Company, also an Illinois corporation, the Warder-Bushnell & Glessner Company, an Ohio corporation, and D. M. Osborne & Co., a New York corporation. In addition to the above corporations the Deering Company, which was an Illinois copartnership, was also a manufacturer and seller of harvesting machines and doing business in this state. The manufacturing plants of all these concerns were located in their respective state domiciles. The business they conducted here was that of selling their manufactured products. There were other concerns engaged in like business, but the six companies above named, including respondent, were the chief concerns, and in 1902 (which was the date of the alleged unlawful combination) and for several years prior thereto they did from 80 to 90 per cent. of all harvesting machine business in the United States and in the state of Missouri. The commissioner has listed these companies in the rank of the relative volume of business done by each as follows: (1) The McCormick; (2) the Deering; (3) the Warder-Bushnell & Glessner; (4) the Plano; (5) the Osborne; (6) the Milwaukee. The machines of each company bore the company's trade-mark for a name, "McCormick," "Deering," "Champion" (the Warder-Bushnell & Glessner), "Plano," "Osborne," and "Milwaukee," and well known to the trade by their respective trade-marks.

In 1902 and for several years prior thereto a very active, an unusually active, competition was practiced by these companies between themselves and others engaged in like business. The commissioner describes the competition as "active, persistent, strenuous, and fierce." Respondent describes it as "a bitter wasteful warfare, of a sort never known in any other business in the world." It also says: "Competition was not fair and businesslike, such as the law encourages, but a fierce conflict, causing the ruthless ruin of competitors," and no fair advantage to the farmer. To avoid the disasters with which that condition of the market seemed to threaten the companies engaged in the harvester machine business, the International Harvester Company, the New Jersey corporation, was on August 12, 1902, created, and into it was merged all the properties and business of five of the companies above named, to wit, the McCormick, the Deering, the Warder-Bushnell & Glessner, the Plano, and the Milwaukee, and in January, 1903, the New Jersey corporation purchased all...