United States v. Lehigh Valley Co 12 13, 1916, No. 1

CourtUnited States Supreme Court
Writing for the CourtCLARKE
Citation254 U.S. 255,65 L.Ed. 253,41 S.Ct. 104
Decision Date21 May 1917
Docket NumberNo. 1
PartiesUNITED STATES v. LEHIGH VALLEY R. CO. et al. Argued Oct. 12 and 13, 1916. Restored to Docket for Reargument

254 U.S. 255
41 S.Ct. 104
65 L.Ed. 253
UNITED STATES

v.

LEHIGH VALLEY R. CO. et al.

No. 1.
Argued Oct. 12 and 13, 1916.

Restored to Docket for Reargument May 21, 1917.

Reargued Nov. 7, 1917.

Restored to Docket for Reargument June 10, 1918.

Submitted Oct. 17, 1919.

Restored to Docket for Oral Argument May 17, 1920.

Reargued Oct. 5, 1920.
Decided Dec. 6, 1920.

[Syllabus from pages 255-256 intentionally omitted]

Page 257

Messrs. Solicitors General Frierson and Davis and G. Carroll Todd, Asst. Atty. Gen., all of Washington, D. C., for appellant.

Messrs. N. W. Hacker, of New York City, F. W. Wheaton, of Wilkes-Barre, Pa., E. H. Boles, of New York City, John G. Johnson, of Oneonta, N. Y., Everett Warren, of Scranton, Pa., John Hampton Barnes, of Philadelphia, Pa., and Allen McCulloh and Elihu Root, Jr., both of New York City, for appellees.

Mr. Justice CLARKE delivered the opinion of the Court.

This is an appeal from a decree entered in a suit to dissolve the intercorporate relations existing at the time it was commenced in March, 1914, between the defendant corporations, other than Girard Trust Company, for the reason, it is averred, that they were so united that they constituted a combination in restraint of interstate trade and commerce in anthracite coal and an attempt to monopolize and an actual monopolization of a part of such commerce, in violation of the Anti-Trust Act of Congress of July 2, 1890 (26 Stat. 209 [Comp. St. §§ 8820-8823, 8827-8830]); and also for the alleged reason that the Lehigh Valley Railroad Company was transporting over its lines of railway anthracite coal in which it had an interest, in violation of the commodities clause of the Act of June 29, 1906 (34 Stat. 585).

Page 258

It will be necessary to consider only the relations and activities of the Lehigh Valley Railroad Company, hereinafter designated the Railroad Company, the Lehigh Valley Coal Company, designated the Coal Company, and the Lehigh Valley Coal Sales Company, designated the Sales Company.

A condensed history, chiefly admitted, of the organization, stock ownership and conduct of these three companies, and the application to the facts thus developed of fully established principles of law, will be decisive of the case.

The limited area of anthracite producing territory, its relation to the interstate transportation system and markets of our country and the various attempts to monopolize and control the great railway tonnage originating therein have all been so often described in reported cases, that they need not be repeated here in detail.1

It will suffice for our present purpose to say that the anthracite producing territory is very restricted in area, it all being within seven counties of Eastern Pennsylvania with the known deposits underlying only 309,760 acres of land. For trade purposes it is divided into three fields; the northerly is called the Wyoming field, the next southerly the Lehigh or middle field, and the southerly the Schuylkill field. The lines of the Railroad Company extend into the Wyoming and Lehigh fields, but to only one colliery in the Schuylkill field. Much the greater part of its tonnage is derived from the Wyoming field, and four-fifths of it moves in interstate commerce.

The Railroad Company in 1913 owned 1,438 miles of main line and a total trackage of 3,354 miles, its capital

Page 259

stock was $60,600,000, its funded debt was $85,800,000, its total assets had a book value of $182,700,000, but a much greater actual value, and it carried a larger tonnage of anthracite coal than any other railroad in the country—over 13,000,000 tons in 1913, this being 18.84 per cent. of the total 69,000,000 tons shipped over all railroads in that year.

In 1864 the Railroad Company by merger with a coal company acquired a small acreage of anthracite containing land and thereupon added the mining, shipping, and selling of coal to its duties as a carrier.

The annual reports of the Railroad Company show that, as early as 1868, it entered upon the policy of acquiring by purchase and lease the control of as much as possible of the anthracite coal containing lands tributary to its lines of railroad for the purpose of preventing, or, when it had become established of suppressing, competition in the carrying of coal over its interstate lines to interstate markets.

Thus the annual report of the company for 1868 shows that, it having been determined that it was of 'the utmost importance' to the future welfare of the company to secure 'control of tonnage from regions having other outlets to markets,' the company, by merger of two coal companies, obtained coal lands which secured to it the whole trade of the Hazelton coal field and 'the withdrawal from competition' of a business so large as to greatly strengthen the 'future prospects of the road.'

In 1869 the policy of securing a proportion of the coal trade from each region by the purchase of interests in companies owning lands on or near the several branches of the company was approved and 'continued.'

In 1871 it is reported:

'We have continued to acquire interests in coal lands situated in our various regions.'

In 1872, after detailing the purchase for $2,000,000 of 5,800 acres of land having upon it 10 collieries, the report of the company declares that:

'Should there be a corre

Page 260

sponding increase for a year or two more the total consumption will so nearly equal the full capacity of the mines for production as to render unnecessary all attempts to regulate or control the trade.'

After reciting that a contract had been entered into granting to the Delaware, Susquehanna & Schuylkill Railroad Company trackage rights to tidewater, the report of the Railroad Company for 1894 continues, saying that there is thereby assured to the company——

'an important traffic * * * for which several outlets existed and which had been in contention for some time previous. It also removes an incentive to the construction of further new lines into the territory tributary to the Lehigh Valley system.'

Although in 1875 it caused the Coal Company (hereinafter discussed) to be organized for the purpose of taking title to coal lands then owned or which might thereafter be purchased, and although the Anti-Trust Law was enacted in 1890, nevertheless, the Railroad Company continued its policy of purchasing for control and from time to time it acquired and took in its own name the title to extensive tracts of coal lands and to stocks in coal companies. Thus in 1885 it acquired the entire capital stock of the Wyoming Valley Coal Company, the owner of 1,657 acres of anthracite land, in 1900 it acquired the entire capital stock of the Westwood Coal Company, a considerable owner of anthracite land, in 1901 it acquired the entire capital stock of the Connell Coal Company, and in the same year the entire capital stock of the Seneca Coal Company, the owner of 1,308 acres of anthracite land.

In the years prior to 1905 the Railroad Company made a number of other purchases of coal land, but in that year it made its largest single and most significant purchase, when it acquired, for the sum of $17,440,000 all of the capital stock of Coxe Bros. & Co., Incorporated. This company was the largest independent coal operator then

Page 261

on the line of the Railroad Company, and its production for 1905 exceeded 1,100,000 tons. It not only owned extensive areas of coal land, on which were located 8 collieries, but it was also owner of all of the capital stock of the Delaware, Susquehanna & Schuylkill Railroad Company, which owned 50 miles of railway which served other large independent mines in addition to those of Coxe Bros. & Co., Incorporated. This railroad had connections with the Reading, Pennsylrania, and New Jersey Central lines, which were taken up or fell into disuse when the control of it passed to the defendant Lehigh Valley Railroad Company. The Railroad Company continued to own all the capital stock of Coxe Bros. & Co., Incorporated, to the time the testimony was taken in this suit, and it is admitted that that company then held in fee or under long lease 36,490 acres of land in the anthracite field, 7,169 acres of which were known to contain anthracite coal. This purchase was confessedly made to prevent the diversion of traffic to other lines, and, while the company was continued in form as a separate corporation, the officers and directors of the coal company were made its officers and directors, and in June following the year of the purchase its directors by resolution provided that the net earnings of the company should be paid to the Railroad Company without the formality of declaring a dividend, and this practice continued until 1911.

Thus, this important coal company and its railroad became a mere coal producing and transporting agency of the defendant Railroad Company.

In 1874 the state of Pennsylvania adopted a constitution containing the provision that——

'No incorporated company, doing the business of a common carrier, shall, directly or indirectly, prosecute or engage in mining or manufacturing articles, for transportation over its works.' Constitution of Pennsylvania, 1874, art. 17, § 5.

Page 262

Prior to this time the Railroad Company had been a large owner, miner, shipper, and seller, as well as carrier, of anthracite coal, and, as if for the purpose of complying with the new constitution of the state from which it derived its franchise, it caused the Lehigh Valley Coal Company to be created in 1875 by the consolidation of two smaller companies. This company which was organized for the purpose of taking title to coal lands and stocks in coal companies, then owned or thereafter to be acquired by the Railroad Company, and to conduct the business of mining, shipping, and selling...

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32 practice notes
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    ...S.Ct. 553, 62 L.Ed. 1229; Gulf Oil Corp. v. Lewellyn, 248 U.S. 71 39 S.Ct. 35, 63 L.Ed. 133, and United States v. Lehigh Valley R.R. Co., 254 U.S. 255 41 S.Ct. 104, 65 L.Ed. 253, have no The plaintiff contends, on a further ground, that the defendant was present in North Carolina. The argum......
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    ...35 S.Ct. 873, 59 L.Ed. 1438; United States v. Reading Co., 253 U.S. 26, 40 S.Ct. 425, 64 L.Ed. 760; United States v. Lehigh Valley R. Co., 254 U.S. 255, 41 S.Ct. 104, 65 L.Ed. 253; United States v. Elgin, Joliet & Eastern R. Co., 298 U.S. 492, 56 S.Ct. 841, 80 L.Ed. 1300. There was in all t......
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    ...remand Continental Ins. Co. v. United States, 1922, 259 U.S. 156, 42 S.Ct. 540, 66 L.Ed. 871; United States v. Lehigh Valley R. Co., 1920, 254 U.S. 255, 41 S.Ct. 104, 65 L.Ed. 253; United States v. Southern Pacific Co., 1922, 259 U.S. 214, 42 S.Ct. 496, 66 L.Ed. 907; United States v. Cresce......
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31 cases
  • United States v. General Electric Co., Civ. A. No. 1364.
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    ...Potteries Co., 1927, 273 U.S. 392, 47 S.Ct. 377, 71 L.Ed. 700, 50 A.L.R. 989; United States v. Lehigh Valley Railroad Company, 1920, 254 U.S. 255, 41 S.Ct. 104, 65 L.Ed. 253; United States v. United States Steel Corporation, 1920, 251 U.S. 417, 40 S.Ct. 293, 64 L.Ed. 343, 8 A.L.R. 1121; Uni......
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1 books & journal articles
  • The Development of the Anthracite Combination
    • United States
    • ANNALS of the American Academy of Political and Social Science, The Nbr. 111-1, January 1924
    • January 1, 1924
    ...Coal; Bond Record, 1896, as p. 501. 54 U. S . 57 v. Lehigh Valley Railroad Company , Cf. Competition in the Anthracite Industry. 254 U. S. 255. Submitted to the United States Coal U. S . v. Lehigh Valley Railroad Company , sion on Behalf of the General Policies Committee Final Decree of the......

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