The State ex inf. Major v. International Harvester Company of America

• Decision Date: 27 November 1911
• Parties: THE STATE ex inf. ELLIOTT W. MAJOR, Attorney-General, v. INTERNATIONAL HARVESTER COMPANY OF AMERICA
• Court: Missouri Supreme Court

141 S.W. 672

237 Mo. 369

THE STATE ex inf. ELLIOTT W. MAJOR, Attorney-General, v. INTERNATIONAL HARVESTER COMPANY OF AMERICA

Supreme Court of Missouri

November 27, 1911

Rehearing Denied 237 Mo. 369 at 420.

Writ of ouster awarded (and suspended conditionally).

Elliott W. Major, Attorney-General.

Charles G. Revelle and James T. Blair, Assistant Attorneys-General for informant.

(1) The commissioner, who heard the testimony and had the witnesses before him, reports that from the evidence adduced the International Harvester Company was organized for the express purpose of suppressing competition, and that respondent has been, and is, maintained by the International Harvester Company solely in furtherance of that unlawful purpose. Unless the findings of a commissioner appointed by the court to report on the law and facts are affirmatively and clearly shown to be wrong, the court will accept same as correct. State ex rel. v. Continental Tobacco Co., 177 Mo 38; State ex rel. v. Standard Oil Co., 194 Mo 164-5. (2) The organization of the International Harvester Company was brought about to restrain competition and was illegal. Secs. 10298, 10299, 10300, 10304, 10322, R. S. 1909; Harding v. American Glucose Co., 182 Ill. 551; Richardson v. Buhl, 77 Mich. 632; Distillery & Cattle Feed Co. v. People, 156 Ill. 448; State v. Nebraska Distilling Co., 29 Neb. 719; National Land Co. v. Grote Paint Store Co., 80 Mo.App. 266; Eustis v. Edgar, 207 Mo. 289; Finck v. Granite Co., 187 Mo. 244; United States v. American Tobacco Co., 164 F. 700; American Biscuit Co. v. Klotz, 44 F. 721; Strait v. National Harrow Co., 18 N.Y.S. 224; National Harrow Co. v. Hench, 76 F. 667; National Harrow Co. v. Hench, 83 F. 36; Continental Securities Co. v. Interborough Rapid Transit Co., 166 F. 945; Attorney-General v. A. Booth & Co., 143 Mich. 89; Merz Capsule Co. v. U.S. Capsule Co., 67 F. 414; Continental Wall Paper Co. v. Lewis Voight, Sons & Co., 148 F. 939; National Cotton Oil Co. v. Texas, 197 U.S. 129; Clancey v. Onondago Fine Salt Mfg. Co., 62 Barb. 395; United States v. Addyston Pipe & Steel Co., 85 F. 279; Pittsburg Co. v. McMillin, 119 N.Y. 46; Noyes on Corporate Relations (2 Ed.), secs. 307, 310; Beach on Monopolies and Industrial Trusts, sec. 159, pp. 505, 507, pr. 167, p. 543; pr. 165, p. 536; Eddy on Trusts and Monopolies, p. 550; pr. 617, 620, 621, 622; State ex rel. v. Standard Oil Co., 49 Oh. St. 137; People v. North River Sugar Refining Co., 54 Hun, 356; People v. North River Sugar Refining Co., 121 N.Y. 582; Bishop v. American Preserves Co., 157 Ill. 284; Dunbar v. Am. Tel. & Telegraph Co., 224 Ill. 9; Northern Securities Co. v. United States, 193 U.S. 197; United States v. Standard Oil Co., 173 F. 177; State ex rel. v. Standard Oil Co., 218 Mo. 1; 2 Cook on Corp. (6 Ed.), pr. 503a; State ex rel. v. Ins. Co., 152 Mo. 1; Railroad Co. v. Closser, 126 Ind. 348; State ex rel. v. Armour Packing Co., 173 Mo. 356; Froelich v. Musicians Mutual Benefit Assn., 93 Mo.App. 383; Heim Brewing Co. v. Belinder, 97 Mo.App. 64; State v. Duluth Board of Trade, 107 Minn. 506; State ex rel. v. National Harvester Co. (Kansas case not yet officially reported); Morris Run Coal Co. v. Barclay Coal Co., 68 Pa. St. 173; Joint Traffic Assn. v. United States, 171 U.S. 338; Clark v. Central Railroad, 50 F. 346; International Harvester Co. v. Commonwealth, 99 S.W. 637; International Harvester Co. v. State, 99 P. 603; Cohen v. Berlin & Jones Envelope Co., 166 N.Y. 298; Hooker v. Vandewater, 4 Denio, 349; Stanton v. Allen, 5 Denio 434; Railroad v. Railroad, 41 La. Ann. 970; United States v. Trans-Missouri Freight Assn., 166 U.S. 290. (3) The effect of this combination has been not only to restrain competition, but to create a monopoly. United States v. American Tobacco Co., 164 F. 700; United States v. Standard Oil Co., 173 F. 177; People v. Chicago Gas Trust Co., 130 Ill. 268; Con. Securities Co. v. Transit Co., 165 F. 945; Continental Wall Paper Co. v. Lewis Voight, Sons & Co., 148 F. 939; Morris Run Coal Co. v. Barclay Coal Co., 68 Pa. St. 173; Strait v. National Harrow Co., 18 N.Y.S. 224; American Biscuit Co. v. Klotz, 44 F. 721; National Lead Co. v. Grote Paint Store Co., 80 Mo.App. 266; Richardson v. Buhl, 77 Mich. 632; Froelich v. Musicians Mut. Benefit Assn., 93 Mo.App. 383; State ex rel. v. Standard Oil Co., 49 O. St. 137. (4) Respondent has been, and is, maintained by the International Harvester Company solely for the purpose of selling its products and in furtherance of the unlawful purpose for which it was organized and is violating the anti-trust laws of Missouri. Cases cited under Point 2, supra. (5) Respondent's license should also be revoked upon the additional ground that it has ceased to perform the functions for which it was licensed, and has permitted itself to be used in evasion of the Missouri law which precluded the International Harvester Company from doing business in this State. Secs. 3040, 3343, 3347, R. S. 1909; State ex rel. v. Delmar Jockey Club, 200 Mo. 32; Terrett v. Taylor, 9 Cranch, 51; Commonwealth v. Bank, 28 Pa. St. 389; People v. North River Sugar Refining Co., 54 Hun, 354. (6) When, in the exercise of its constitutional power, the Supreme Court refers a proceeding in quo warranto, which involves a charge of conspiracy, to a commissioner to report upon the law and the facts, his findings thereon will be accepted by the court as correct unless they are affirmatively and clearly shown to be wrong. State ex rel. v. Continental Tobacco Co., 177 Mo. 38; State ex rel. v. Standard Oil Co., 194 Mo. 164. (7) The organization of the International Harvester Company was brought about to restrain competition and was illegal. Whatever breaks down competition is destructive of public interest, and antagonistic to the public welfare. State ex rel. v. Firemen's Fund Ins. Co., 152 Mo. 1; United States v. Addyston Pipe &. Steel Co., 54 U.S. App. 747. The provisions of the common law, and its remedy of refusing to enforce these tainted contracts, were not entirely sufficient to guarantee the preservation of this sound policy, and, in order to make it more effective and to circumvent the artifices and various new forms to which monopolists resorted as the exigencies of the times required, sweeping legislation along this line was enacted by practically all of the States, as well as the National government. From time to time amendments to these statutes have been added until now it seems they are quite sufficient to suppress the evil in all its forms whenever they are applied by courts which probe beneath the thin surface and decide without favor. The Legislature of this State has performed its full duty in this respect, and if trusts and combinations are permitted to flourish here, the blame cannot be charged to that department. R. S. 1899, secs. 8965, 8966, 8967, 8971 and 8978. This statute is comprehensive enough to meet all cases, and cover all forms, however skillfully contrived. Noyes on Intercorporate Relations (2 Ed.), secs. 307, 310. Beach on Monopolies and Industrial Trusts, sec. 159.

Selden P. Spencer and W. M. Williams for respondent.

(1) The decision in this case becomes one of great practical importance to all persons and corporations doing business in Missouri. In an age "where modern industrial conditions are such that combination is not only necessary but inevitable," and when the uniting of properties and doing business on a large scale is an "economic necessity," it is of supreme importance that the commercial world should know precisely the line demarking the legitimate corporation from the illegal "trust." It presents the problem of construing the laws of Missouri in such a plain and practical manner that they may effectively and completely protect the people from the evils which these laws were designed to cure, without interfering with legitimate business development, or running counter to irresistible economic laws. But this court has already dealt with that problem, and its decisions in former cases give the rules for its rational and practical solution. As said in C. C. C. & I. R. Co. v. Closser, 126 Ind. 348 "The important thing to be secured is a sound and salutary general principle, and not merely cases with closely resembling facts." In the same case the court said: "We are not required to decide nor do we decide, that combinations fair to the public, untainted by any sinister design, and formed solely to prevent the destruction of business by unregulated competition, may not be valid." (2) These enactments were intended to be of practical benefit to the public by preventing the evils resulting from conspiracies to restrain trade or to acquire a monopoly, and from contracts whose primary purpose and direct effect are to suppress competition. They were not designed to interfere with any use that individuals or corporations may make of their property which does not injuriously affect the rights of others. The statute applies to individuals and corporations alike. Continental Tobacco Co. Case, 177 Mo. 32. It must also be remembered that the magnitude of the business is not the test by which a violation of the statute is to be determined. United States v. Standard Oil Co., 173 F. 195. What does the statute forbid? (a) Every contract, agreement or combination of any character or kind whereby individuals or corporations, pretending to be separate and independent, limit prices, divide territory, fix the output, or by any other means stifle competition between themselves or restrain trade; and this regardless of the amount of business or extent of territory in which the parties to such agreement operate. State v. Armour Packing Co., 173 Mo. 356. (b) A joint selling agent who fixes the prices for the products of separate and apparently competing...