United States v. Lake Shore & M.S. Ry. Co.

• Decision Date: 28 December 1912
• Docket Number: 1,584.
• Citation: 203 F. 295
• Parties: UNITED STATES v. LAKE SHORE & M.S. RY. CO. et al.
• Court: U.S. District Court — Southern District of Ohio

203 F. 295

UNITED STATES v. LAKE SHORE & M.S. RY. CO. et al.

No. 1,584.

United States District Court, S.D. Ohio, Eastern Division.

December 28, 1912

Sherman T. McPherson, U.S. Atty., of Cincinnati, Ohio, and O. E Harrison, of Columbus, Ohio, and John L. Lott, of Tiffin Ohio, Special Assts. to the Atty. Gen., for the United States.

Clyde Brown, Chas. T. Lewis, John H. Doyle, and Frank S. Lewis, all of Toledo, Ohio, for defendants Lake Shore & M. S. Ry. Co. Toledo & O. Cent. Ry. Co., and Zanesville & W. Ry. Co.

Lawrence Maxwell, of Cincinnati, Ohio, H. T. Wickham, of Richmond Va., and A. C. Rearick, of New York City, for defendant Chesapeake & O. Ry. Co.

Talfourd P. Linn, of Columbus, Ohio, for defendant Kanawha & M. Ry. Co.

Lawrence Maxwell, of Cincinnati, Ohio, James H. Hoyt, of Cleveland, Ohio, and John F. Wilson, of Columbus, Ohio, for defendant Hocking Valley Ry. Co.

William O. Henderson, of Columbus, Ohio, for defendant Sunday Creek Co.

Sherman T. McPherson, U.S. Atty., of Cincinnati, Ohio, and O. E. Harrison, of Columbus, Ohio, and John L. Lott, of Tiffin, Ohio, Special Assts. to the Atty. Gen., for the United States.

Clyde Brown, Chas. T. Lewis, John H. Doyle, and Frank S. Lewis, all of Toledo, Ohio, for defendants Lake Shore & M.S. Ry. Co., Toledo & O. Cent. Ry. Co., and Zanesville & W. Ry. Co.

Lawrence Maxwell, of Cincinnati, Ohio, H. T. Wickham, of Richmond, Va., and A. C. Rearick, of New York City, for defendant Chesapeake & O. Ry. Co.

Talfourd P. Linn, of Columbus, Ohio, for defendant Kanawha & M. Ry. Co.

Lawrence Maxwell, of Cincinnati, Ohio, James H. Hoyt, of Cleveland, Ohio, and John F. Wilson, of Columbus, Ohio, for defendant Hocking Valley Ry. Co.

William O. Henderson, of Columbus, Ohio, for defendant Sunday Creek Co.

Before WARRINGTON, KNAPPEN, and DENISON, Circuit Judges.

WARRINGTON Circuit Judge.

This suit was brought to enjoin further performance of certain agreements alleged to have been made in pursuance of combinations and conspiracies formed and carried out in restraint of trade among the several states, particularly trade in bituminous coal, in violation of Act Cong. July 2, 1890, commonly known as the Sherman Anti-Trust Act (July 2, 1890, c. 647, 26 Stat. 209 (U.S. Comp. St. 1901, p. 3200)); many of the acts alleged having been committed in whole and others in part within the Eastern Division of the Southern Judicial District of Ohio.

The defendants consist of six railroad companies and three coal companies, named in the margin. ^[1] The railroad companies are all Ohio corporations, except the Chesapeake & Ohio, which was organized in Virginia and all are engaged in transporting interstate commerce.

The Railroads. It is important to understand the geographical relations of the railroads, and similarly their relations to the coal fields involved. The Lake Shore extends from Buffalo to Chicago, passing through Ohio near the southerly shore of Lake Erie to Toledo, and thence across the northerly portion of the state, and has a number of intermediate branches. A large majority of its capital stock is owned by the New York Central. The Chesapeake & Ohio extends from Old Point Comfort to Cincinnati, running generally along the south side of the Ohio River from a point east of Huntington, W. Va., to and through Kentucky to Cincinnati, and also has a number of intermediate branch lines. It owns a great majority of the stock of the Chesapeake & Ohio Railway of Indiana, and so reaches Chicago. Thus one of these east and west trunk lines passes through Ohio near its northerly boundary, and the other along the south shore of the Ohio river near the south boundary of Ohio. Two of the remaining defendant railroads are wholly within Ohio, running generally in a north and south direction, viz., the Hocking Valley from Toledo by way of Columbus, Lancaster, Logan, and Gallipolis to Pomeroy on the Ohio river (passing through Kanauga on the Ohio river opposite Point Pleasant, W. Va.), with a branch line running from Logan to Athens; and the Toledo & Ohio Central has two divisions running from Toledo, one by way of Fostoria, Bucyrus, and Thurston to Corning in Perry county, and the other by way of Findlay, Kenton, and Columbus to Thurston on the first division. The Kanawha & Michigan runs south from Corning to the Ohio river, crossing the river from Kanauga, Ohio, to Point Pleasant, W. Va., and continuing thence through Mason, Putnam, Kanawha, and Fayette counties by way of Charleston to Gauley Bridge, in that state, using the tracks of the Hocking Valley between Hobson and Gallipolis, by way of Kanauga; and the Zanesville & Western runs east and west from Thurston through the counties of Fairfield, Perry, and Muskingum to Zanesville, Ohio, although it seems to be part of an old road which formerly continued westwardly from Thurston to Columbus, parallel with the Hocking Valley.

The Coal Fields. The Ohio coal fields directly in question are situated in Athens, Perry, Hocking, and Muskingum counties, and known as the Hocking Valley coal fields; and those in West Virginia are situated in the Kanawha coal district. The four railroads last named are connected with portions of these coal fields of Ohio, and the Kanawha & Michigan with the Kanawha coal fields. The principal coal mines along the Hocking Valley are located in Athens, Perry, and Hocking counties, those along the Toledo & Ohio Central are in Fairfield, Perry, Hocking, Athens, and Muskingum, those along the Zanesville & Western are in Muskingum and Perry counties, and those along the Kanawha & Michigan are in Putnam, Kanawha, and Fayette counties, W. Va., besides some that are located in Perry and Athens counties, Ohio; and the principal part of the freight traffic of all the defendant railroad companies, except the Lake Shore, is bituminous coal in car load shipments, the principal mines along the Chesapeake & Ohio being in Kanawha, New River, and Big Sandy districts of West Virginia and Kentucky. A large part of the freight traffic of the Lake Shore is bituminous coal in car load shipments derived from branch roads tapping the Appalachian coal fields. The coal of the various fields mentioned is shipped on these roads from the portions of coal fields with which they are severally connected as before pointed out, to lake ports and to points in the North and Northwest.

Competitive Conditions. The Hocking Valley and the Toledo & Ohio Central, when the latter and the Kanawha & Michigan are operated as they were for a long time as a through line, are naturally competing roads. However, evidence was offered to show that the river division of the Hocking Valley, running from Logan to Kanauga (and thence to Pomeroy, as stated), cannot be treated as a competitor of the Kanawha & Michigan, because of difficult grades on such river division. The Hocking Valley, as far south as Athens, and the Toledo & Ohio Central, are naturally competing roads. It is to be noted, however, that claim is made that competing relations cannot be ascribed to roads connected as these all seem to be with different sets of coal mines, even where such mines are located in the same coal field. As it seems to us, a broader view than this must be taken. The destinations of the coal shipped from these coal fields and the effect on the prices to be exacted of the coal purchasing and consuming public located at points beyond the lake ports and the boundaries of Ohio must be taken into consideration; and not merely the producers of coal and the carriers transporting it. Manifestly it can make no difference to the coal purchaser or consumer whether coals of the same quality be derived from one particular mine or another of the same field, no matter how close together or how far removed from one another such mines may be, so long as the prices of the coals and the freight charges to be paid are influenced by natural competitive conditions both at the mines and in transportation; and the right to have such conditions maintained cannot be validly abridged through arbitrary or unusual methods. This is equally plain respecting coals of different qualities originating in different fields and requiring varying distances of transportation over lines naturally competing in material parts; for the purchaser or consumer will obviously select the coal according to his particular needs or ability to sell or to pay.

It must follow that mere differences in locations of coal mines within the same general field, as well as differences in quality owing to differences in fields, cannot rightfully be made, the basis for eliminating effective competition as between railroads traversing substantially the same territory along parallel lines from neighboring mines of the same coal field, or even of different coal fields, to the same general destinations; and the evil effects upon competition concerning rail roads and coal mines so related are accentuated wherever a union of interests is created and maintained between such producers and carriers of coal, particularly where producers and carriers through artificial methods become practically one and the same. If these views are at all applicable to a case such as this, the Kanawha & Michigan, when employed as a carrier exclusively in connection with either the Toledo & Ohio Central or the Hocking Valley, may, we think, be safely treated as a natural competitor of the one or the other of such roads, according as the connection may exist; because the destinations of its coal in either event are, in any rational competitive sense, the same as those of the other road respecting the coal originating on its line. It results (1) that traffic originating on either the Hocking Valley or the Toledo & Ohio Central should be accorded the benefits of free...