United States v. Standard Oil Co. of New Jersey

• Decision Date: 07 March 1907
• Docket Number: 5,371.
• Citation: 152 F. 290
• Parties: UNITED STATES v. STANDARD OIL CO. OF NEW JERSEY et al.
• Court: U.S. District Court — Eastern District of Missouri

152 F. 290

UNITED STATES v. STANDARD OIL CO. OF NEW JERSEY et al.

No. 5,371.

United States Circuit Court, E.D. Missouri, Eastern Division.

March 7, 1907

John G Johnson, John G. Milburn, W. I. Lewis, W. J. McKie, H. S Priest, George G. Greer, and Motter, MacKenzie & Weadock, for the motions.

Frank B. Kellogg (The Attorney General, The Assistant Attorney General, Milton D. Purdy, C. B. Morrison, and C. A Severance, on the brief), opposed.

Before SANBORN, VAN DEVANTER, HOOK, and ADAMS, Circuit Judges.

SANBORN Circuit Judge.

The United States exhibited its bill in this court under the act of July 2, 1890, 'to protect trade and commerce against unlawful restraints and monopolies ' (26 Stat. 209, c 647 (U.S. Comp. St. 1901, p. 3200)), in which it alleged the existence of this state of facts: The Standard Oil Company of New Jersey, a corporation, 7 individual defendants, and about 70 other defendants, called 'subsidiary corporations,' have formed and are engaged in executing a conspiracy to restrain and monopolize commerce in petroleum and its products among the states and territories and with foreign nations. Pursuant to, and in the execution of, the plan of this conspiracy, the individual defendants have caused the control of all the subsidiary corporations and the ownership of a majority of the stock of many of them to be vested in the Standard Oil Company of New Jersey, a holding corporation, while the subsidiary corporations are the producers, refiners, traders, and operators, by means of which the restraint and monopoly are intended to be and are effected, and the profits of the scheme are gathered. The individual defendants own a majority of the stock of and control the holding corporation, and, through it, the subsidiary corporations. Two of these subsidiary corporations, the Waters-Pierce Oil Company, a corporation of the state of Missouri, whose principal place of business is in this district, and the Galena Signal Oil Company, in combination with the other defendants, restrain commerce throughout the United States in the lubricating oil used by railroad companies, whose value aggregates about $4,300,000 per annum, so that they control more than 90 per cent. thereof, and thus practically monopolize it. The defendants have divided the territory of the United States into districts, so that certain defendants only are permitted to sell the products of petroleum in specified districts, and all other defendants are restrained by the control of the holding company or by understandings or agreements from effecting sales in these districts. Such an understanding and agreement has been made, and is being carried out, between the Waters-Pierce Oil Company and the defendant the Standard Oil Company of Indiana, whereby the territory in the state of Missouri and other southwestern territory is divided between them, and neither corporation is permitted to market the products of petroleum in the district of the other. The defendants have conspired for the purpose of, and are engaged in, restraining and monopolizing commerce in the products of petroleum throughout the United States by these and other similar means, and the complainant prayed in its bill that they might be enjoined from continuing this restraint, and from maintaining this monopoly, and for other equitable relief.

Section 4 of the act of July 2, 1890, confers upon the several Circuit Courts of the United States jurisdiction to restrain violations of its provisions, and section 5 reads in this way:

'Whenever it shall appear to the court before which any proceeding under section four of this act may be pending that the ends of justice require that other parties should be brought before the court, the court may cause them to be summoned, whether they reside in the district in which the court is held or not; and subpoenas to that end may be served in any district by the marshal thereof.'

The individual defendants, the Standard Oil Company of New Jersey, and nearly all the subsidiary corporations, except the Waters-Pierce Oil Company, were not inhabitants of, and could not be found in, this district. After the filing of the bill, and upon the presentation by the complainant of a petition which disclosed this fact, the court ordered that the nonresident defendants should be brought in, and that subpoenas should be served upon them in the districts in which they resided. Certain of these defendants have appeared specially, and moved the court to vacate this order and to quash the service of the subpoenas upon them, upon the grounds that the court was without jurisdiction to make the order, that it was prematurely and irregularly made, and that the ends of justice did not require that the nonresident defendants should be brought into this suit.

The judicial power of the United States is vested by the Constitution in the Supreme Court, 'and in such inferior courts as the Congress may from time to time ordain and establish. ' This power extends 'to all cases in law and equity arising under this Constitution and the laws of the United States,-- to controversies to which the United States shall be a party,' and to other cases not material to the issues here presented. Article 3, Secs. 1, 2. This is a case in equity arising under a law of the United States. The United States is a party to the controversy which it involves; and the Congress had ample authority, under these provisions of the Constitution, to confer upon this or upon any inferior court of the nation jurisdiction of this suit and power to summon the proper parties to it, wherever residing or found within the dominion of the nation, to a hearing and decree herein. U.S. v. Union Pac. R. Co., 98 U.S. 569, 604, 25 L.Ed. 143. As the Congress had the authority to enact that in this, and other cases of this class, any Circuit Court in which the United States might bring its suit might, by process served anywhere in the United States, lawfully bring into it all the parties necessary to the adjudication of the controversies it involved, they had authority to empower such a court to bring in these parties whenever in its opinion the ends of justice should require such action, because the whole is greater than any of its parts and includes them all.

The inhibition of section 1 of the judiciary acts of March 3, 1887, c. 373, 24 Stat. 552, and Aug. 13, 1888, c. 866, Sec. 1, 25 Stat. 433 (U.S. Comp. St. 1901, p. 508), that 'no civil suit shall be brought before either of said courts (the Circuit and District Courts) against any person by any original process or proceeding in any other district than that whereof he is an inhabitant,' does not restrict the jurisdiction of this court, nor its power to bring in parties without its district, in the case under consideration, because that provision is inapplicable to instances in which exclusive jurisdiction over particular cases, or classes of cases, is created and conferred upon the courts of the United States by special acts of Congress. U.S. v. Mooney, 116 U.S. 106, 6 Sup.Ct. 304, 29 L.Ed. 550; Van Patten v. Chicago, Milwaukee & St. Paul R. Co. (C.C.) 74 F. 981, 985-988; Atkins v. Disintegrating Co., 18 Wall. 272, 21 L.Ed. 841; In re Louisville Underwriters, 134 U.S. 488, 493, 10 Sup.Ct. 587, 33 L.Ed. 991; In re Hohorst, 150 U.S. 653, 662, 14 Sup.Ct. 221, 37 L.Ed. 1211. There can therefore be no doubt that Congress had the authority to confer jurisdiction of this case upon this court, nor that they have lawfully exercised that authority; and the only question is whether or not this court exceeded the power thus conferred upon it when it summoned the nonresident defendants.

Counsel call attention to the fact that the complainant alleges in its bill that the seven individual defendants conceived and put into operation the plan whereby the Standard Oil Company of New Jersey, with a capital of $113,000,000, became the holding company, and whereby, through it, they direct and control the acts of the subsidiary corporations, and they contend that, if a Circuit Court, within whose district one of these eight principal defendants is a resident, would have the power in a suit of this nature to bring in nonresident parties necessary to a complete adjudication of the case, nevertheless, the subsidiary corporations are mere tools of the principal defendants, and the act was not intended to grant, and does not give, to a court within whose district a subsidiary corporation only resides, the power to summon the other conspirators who are not residents of that district. They argue that it is only where there is a resident defendant who is a participant in the whole length and breadth of the conspiracy that nonresident conspirators may be lawfully subpoenaed; that the Waters-Pierce Oil Company, the resident defendant, has a capital of only $410,000, is but a puppet of the principal conspirators, is alleged to be effecting a mere local and limited restraint of trade, and is not made to appear to be taking any part in the main conspiracy. And they insist that, on account of its limited power and efficacy, this court is without jurisdiction to bring in the principal defendants or any defendants who would not be indispensable parties to a suit to enjoin the specific restraint which the resident defendant is engaged in effecting.

Repeated readings of the act under which this bill is brought disclose no such limitation or condition of the authority granted to the Circuit Courts to...