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ficial to freighters. Whenever a monopoly was likely to arise with a couse. quent rise of rates, competition would naturally arise.

“I can not see why judges should be considered specially gifted with prescience of what may hamper or what may incre:ise trade, or of what is to be the test of adequate remuneration. In these days of instant communication with almost all parts of the world, competition is the life of trade, and I am not aware of any stage of competition called 'fair' intermediate between lawful and unlawful. The question of "fairness' would be relegated to the idiosyncrasies of individual judges. I can see no limit to competition, except that you shall not invade the rights of another.

“But suppose the combination in this case was such as might be held to be in restraint of trade, what follows? It could not be enforced. None of the parties to it could sue each other. It might be held void because its tendeucy might be held to be against the public interests. Does that make, per se, the combination illegal? What a fallacy would it be that what is void and not enforceable becomes a crime; and cases abound of agreements which the law would not enforce, but which are not illegal; which you may enter into, if you like, but which you will not get any assistance to enforce.

“My lords, I have merely summarized my views, because I adopt entirely the principles laid down by Lord Justice Bowen in his judgment with such felicitous illustrations, and I concur in the opinion already announced by your lordships, that the judgment of the court of appeal should be affirmed."

Lord Field: “My lords, I think that this appeal made be decided upon the principles laid down by Holt, C. J., as far back as the case of Keeble v. Hickeringill, cited for the appellants. In that case the plaintiff complained of the disturbance of his * decoy' by the defendant having discharged guns near to it and so driven away the wild fowl, with the intention and effect of the consequent injury to his trade. Upon the trial a verdict passed for the plaintiff, but in arrest of judgment it was alleged that the declaration did not disclose any cause for action. Holt, C. J., however, held that the action, although new in instance, was not new in reason or principle, and well lay, for he said that the use of a 'decoy' was a lawful trade, and that he who hinders another in his trade or livelihood is liable to an action if the injury is caused by a violent or malicious act'; sppose, ‘for instance,' he said, the defendant had shot in his own ground, if he had occasion to shoot it would have been one thing, but to shoot on purpose to damage the plaintiff is another thing and a wrong. But, he added, if the defendant, using the same employment as the plaintiff,' had set up another decoy so near as to spoil the plaintiff's custom, no action would lie, because the defendant had 'as much liberty to make and use a decoy' as the plaintiff In support of this view he referred to earlier authorities. In one of them it had been held that for the setting up of a new school to the damage of an ancient one by alluring the scholars no action would lie, although it would have been otherwise if the scholars had been driven away by violence or threats.

" It follows, therefore, from this authority, and is undoubted law, not only that it is not every act causing damage to another in his trade, nor even every intentional act of such damage, which is actionable, but also that acts done by a trader in the lawful way of his business, although by the necessary results of effective competition interfering injuriously with the trade of another, are not the subject of any action.

“Of course it is otherwise, as pointed out by Lord Holt, if the acts complained of, although done in the way and under the guise of competition or other law.. ful right, are in themselves violent or purely malicious, or have for their ultimate object injury to another froin ill will to liim and not the pursuit of lawful rights. No doubt, also, there have been cases in which agreements to do acts injurious to others have been held to be indictable as amounting to conspiracy, the ultimate object or the means being unlawful, although if done by an individual no such consequence would have followed, but I think that in all such cases it will be found that there existed either an alternate object of malice, or wrong, or wrongful means of execution, involving elements of injury to the public, or, at least, negativing the pursuit of a lawful object.

Now, applying these principles to the case before your lordships, it appears upon the evidence that the appellants and respondents are shipowners and


111 Mod., 74, 134, and note to Carrington v. Taylor, 11 East., 574.

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have for many years been engaged, sometimes in alliance and oiber times in competition, in the carrying trade of the eastern seas to and from Europe and elsewhere. A very important portion of this trade consists of a large amount of freight to be earned at the ports of Hankow and Shanghai during tbe season by carrying to Europe the teas brought there for shipment, and it was of the l'espondents' action in that business during the season of 1885 that the appellants complained. They do not allege that the respondents have been guilty of any act of fraud or violence or of any physical obstruction to the appellants' business, or have acted from any personal malice or ill will, but they say that the respondents acted with the calculated intention and purpose of driving the appellants out of the Hankow season carrying trade by a course of conduct which, although not amounting to violence, was equally effective, and so, being in fact productive of injury to them, was wrongful and presumably malicious.

" It appea red upon the evidence that both parties have been for some years trading in competition at Hankow for ten freights, which amoumted to a very considerable sum, and the earning of which was spread over a short annual season. The trade was carried on by a large number of independent shipowners, and the tonnage which was employed may be roughly divided into two classes: First, tonnage engaged in regular lines to and from ports in the (bina and Japan Seas all the year through, loading both outward and inward; and. secondly, tonnage loading generally outward to ports in Australia or elsewhere, and only seeking freights and taking up homeward' berths at Hankur during the short period when freights are abundant there and scarce elsewbere. The several respondents and the Messageries Maritimes of France represent substantially the first class of shipowners. The appellants and other ship. owners, who are not parties to this record; but some of whom were in alliance with the appellants in the same interest, forming a very influential class of traders, may be taken to represent the second.

“The two ports of Hankow and Shanghai are the centers of these competing interests, and it is hardly necessary add that the competition was very severe, and the accumulation of tonnage for ‘homeward' freight produced by the circulation of an excessive number of ships rendered rates so unremunerative that in each of the years 1879, 1883, and 1885, a combination of shipowners, known as a 'conference,' was formed, consisting, in the main, of the first class of owners, with the object of limiting the amount of tonnage to be sent up the river, and thus securing enhancement and regularity of rates.

“ That the parties to these agreements did not suppose that they were doing anything violent or malicious, or were parties to a conspiracy, rendering themselves liable to action or indictment, is clear from the fact that in 1879 Messrs. Gellatly & Co., who then owned the ships of which the appellants are now the owners, and in 1984 the appellants (whose managers Messrs. Gellatly were and are) were parties to them, and in 1885 desired to become so, and only brought their present action, because the other parties to the conference of that year refused to extend its provisions to them and others in the same commercial position.

“ The grounds upon which this refusal was based by the respondents were purely of a commercial and in no way of a personal character. They said that in forming what they considered as the regular China and Japan trade out and home they supplied the trade with tonnage in season and out of season, and that it was hard upon them that at times when cargo necessary for their requirements, in order to fill the space required for outward shipments and to make their adventure remunerative, was to be obtained, that cargo should be absorbed by vessels that only entered the trade when trade homewards was slack else. where.

" It is absolutely uwecessary to consider whether these grounds were morally or commercially justitiable. They were not unlawful, and they were of a nature legitimately, if not necessarily, to be taken into account in carrying on the respondents' business with profit. Indeed, the question between the parties at that time was not whether such combination should exist or not, but where the line should be drawn. It was in this state of things that the season of 1885 opened.

Under the conference agreement of 1884 it had been agreed between the conference owners and the appellants that the latter should load homewards from Hankow for that season two of their Australian outward-going ships upon conference terms and rates; and when in the latter part of 1884 negotiations were set on foot for the establishment of a conference in 1885, the appellants were desirous of at least retaining the same position in future. They therefore

requested Mr. Holt, one of the respondents, an influential member of the conference and personal friend of Mr. Gellathy, to bring the matter before them. In the meanwhile the effect of unrestricted competition had been such as to produce what was termed 'a collapse of freights, with the result that negotiations for a new conference ended in an agreement to that effect, bearing date the 7th of April, the terms of which were in most, if not in all, important respects similar to the agreement of 1884.

“ The first object of the parties to this agreement was to limit as between theniselves the number of ships, and it therefore provided that if no other ships than those of the conference owners went no more than six conference ships should go up the river to Hankow; but, then, in order to meet the present competition of the appellants and others, it was provided that, if · outsiders started, additional steamers should meet them, such conference steamers to be limited in number .as much as was consistent with effective opposition.' Principles were also laid down for rates of freight and distribution of cargo and freights among conference owners, and in order to induce shippers to ship with them exclusively it was provided that returns should be made upon the same terms as previously arranged by the agreement of 1884 (to which the appellants had been parties) to all exporters who should confine their shipments to conference ships.

“Whilst the negotiations for this agreement were pending, Mr. Gellatly, a large shareholder in the appellant company, in company with Mr. Thompson, a shipowner with large tonnage at command, who was also desirous of becoming a member of the conference, had both correspondence and interviews with several of the conference owners, in which they claimed to be admitted to the terms of it, but the latter persistently objected upon the ground that I have before stated, and in the result Mr. Gellatly and Mr. Thompson declared that their vessels should certainly go up to Hankow the ensuing season, as, no matter what the rates were, they thought (as, indeed, appears to have been the result) that the loss to the conference would be greater than to them.

No agreement could therefore be come to between the two parties, and in the result the appellants and Mr. Thompson placed ships of very considerable tonnage, which had made their outward voyage to Australian ports, upon the Hankow berth, and the respondents sent up the additional ships provided for by the conference agreement, not only to compete with the appellants' and Mr. Thompson's ships, but also to deter others from following.

“On the 11th of May the respondents also sent out a circular to shippers, referring to a similar circular issued under the conference agreement of 1884, by which they reminded those to whom it was sent that shipments from London by the steamships Pathan and Afghan (two of the appellants' ships) and the Aberdeen (Mr. Thompson's), or by other nonconference steamers, at any of the ports in China or at Hongkong would exclude those making such shipments from participation in the returns to shippers.

“ The competition thus created was persisted in during the whole first tea season, each party procuring, or endeavoring to procure, freights, and circulating their ships at reduced rates, with the result that the three opposing ships of the appellants and Mr. Thompson, the Pathan, the Afghan, and the Aberdeen, loaded full cargoes home at very low rates, and many of the conference ships had to go away empty.

“ It was under these circumstances that the appellants brought the present action, in which they in substance complain, first, of the return of per cent to the shippers who have not shipped with the appellants, and of the circular to that effect ; secondly, of the placing upon the berths of extra ships, in order to meet the appellants' and other ressus; and thirdly, the reduction of freights to an unremunerative extent with the object of securing cargo. 1 fail, however, to see that any of those things are sutticient to support this action. Everything that was done by the respondents Wils done in the exercise of their rights to carry on their own trade, and was bona fide so done. There was not only no malice or indirect object in fact, but the existence of the right to exercise a lawful employment, in the pursuance of which the respondents acted, negatives the presumption of malice which arises when the purposed infliction of loss and injury upon another can not be attributed to any legitimate cause, and is therefore presumably due to nothing but its obvious object of harm. All the acts complained of were in themselves lawful, and if they caused loss to the appellants, that was one of the necessary results of competition.

“ It remains to consider the further contention of the appellants that these acts of the respondents, even if lawful in themselves, if done by an individual, a re illegal and give rise to all action as having been done in the execution of the conference agreement, which is said to amount to a conspiracy, as being in restraint of trade, and so against public policy and illegal; but this contention, I think, also failed. I can not say upon the evidence that the agreement in question was calculated to have or had any such result, nor, even if it had, has any authority (except one, no doubt entitled to great weight but which has not met with general approval) been cited to show that such an agreement, even if roid, is illegal, nor any that, even if it be so, any action lies by an individual.

* For these and the other reasons given by the learned lords, Justices Bowen and Frey, and which I need not recapitulate, I think that the appeal fails and ought to be dismissed."

Lord Hannen : “My lords, it is not necessary that I should recapitulate the facts of this case; they have been fully stated in the opinions which have been already delivered. The charge against the defendants is that they conspired together to prevent the plaintiffs from obtaining cargoes for their ships by bribing, coercing, and inducing shippers to forbear from shipping cargoes by the plaintiffs' steamers and it is further conplained that the defendants, with intent to injure the plaintiffs, agreed to refuse and refused to accept cargoes, except upon the terms that the shippers should not ship any cargoes by the plaintiff's steamers.

* The means by which these alleged objects were sought to be attained were: (1) Offering to shippers and their agents a rebate of 5 per cent on the agreed freights, to be made to those who, during a fixed period, shipped only by the defendants' steamers; (2) sending steamers to Hankow to compete with the steamers of persons not members of the defendants' conference or combination, so as to drive them from the trade of that place: (3) removing from the agency of defendants' steamers those persons who acted in the interests of noncouference steamers.

" It was contended that the agreement between the defendants to act in combination, which was proved to exist, was illegal, as being in restraint of trade. I think that it was so, in the sense that it was void, and could not have been euforced a rainst any of the defendants who might have violated it. (Hilto 1). Eckersler.';. But it does follow that the entering into such an agree. ment would, as contended, subject the persons doing so to an indictment for conspiracy, and I think that the opinion to that effect, expressed by Crompton, J., in Kelton 1'. Eckersley'is erroneous.


“ The question, however, raised for our consideration in this case is whether a person who has suffered loss in his business by the joint action of those who bare entered into such an agreement call recover damages from them for the injury so sustained. In considering this question it is necessary to determine upon the evidence what was the object of the agreement between the defendants and what were the means by which they sought to attain their object. It appears to me that their object was to secure to themselves the benefits of the carrying trade from certain ports. It can not, I think, be reasonably suggested that this is unlawf" in any sense of the word. The object of every trader is to procure for himself as large a share of the trade he is engaged in as he can. If, then, the object of the defendants was legitimate, were the means adopted by them open to objection? I can not see that they were. They sought to induce shippers to employ them rather than the plaintiffs by offering to such shippers as should, during a fixed period, deal exclusively with them the advantage of a rebate upon the freights they had paid. This is, in effect nothing more than the ordinary form of competition between traders by offering goods or services at a cheaper rate than their rivals.

“ With regard to the sending of ships to Hankow to compete with the plaintiffs' ships, that appears to have been done in order that the defendants' customers might have the opportunity of sending their goods without forfeiting their right to a rebate. No obstruction was offered by these ships of nonconference owners, and by their presence at Hankow shippers were left simply to determine whether it was to their pecuniary interest to ship by the defendants' vessels or by others. The removing from the agency of the defendants' vessels those persons who acter in the interest of nonconference steamers appears to me a legitimate mode of securing agents whose exertions would be exclusively deroted to the furtherance of the defendants' trade.

16 E. & B., 47.

“ I arrive at the conclusion, therefore, that the objects sought and the means used by the defendants did not exceed the limits of allowable trade competition, and I know of no restriction imposed by law on competition by one trader with another, with the sole object of benefiting himself.

I consider that a different case would have arisen if the evidence had shown that the object of the defendants was a malicious one, namely, to injure the plaintiffs whether they, the defendants, should be benefited or not. This is a question on which it is unnecessary to express an opinion, as it appears to be clear that the defendants had no malicious or sinister intent as against the plaintiffs, and that the sole motive of their conduct was to secure certain advantages for themselves.

“ It only remains for me to refer to the argument that an act which might be lawful for one to do becomes criminal or the subject of civil action by any. one injured by it, if done by several combining together. On this point I think the law is accurately stated by Sir William Erle, in his treatise on the law relating to trades unions. The principle he lays down is equally applicable to combinations other than those of trades unions. He says (p. 23):

"As to combination, each person has a right to choose whether he will labor or not, and also to choose the terms on which he will consent to labor, if labor be his choice. The power of choice in respect of labor and terms which one person may exercise and declare singly, many, after consultation, may exercise jointly, and they may make a simultaneous declaration of their choice and may lawfully act thereon for the immediate purpose of obtaining the required terms, but they can not create any mutual obligation having the legal effect of binding each other not to work or not to employ unless upon terms allowed by the combination.'

“In considering the question, however, of what was the motive of the combination, whether it was for the purpose of injuring others, and merely in order to benefit those combining, the fact of several agreeing to a common course of action may be important. There are some forms of injuries which can only be effected by the combination of many. Thus, if several persons agree not to deal at all with a particular individual, as this could not, under ordinary circumstances, benefit the persons so agreeing, it migbt well lead to the conclusion that their real object was to injure the individual. But it appears to me that, in the present case, there is nothing indicating an intention to injure the plaintiffs, except in so far as such injury would be the result of the defendants cbtaining for themselves the benefits of the carrying trade by giving better terms to customers than their rivals, the plaintiffs, were willing to offer.

“For these reasons I think that the judgment of the court of appeals should be affirmed.”

Order of Lord Coleridge, C. J., and order of the court of appeals affirmed and appeal dismissed with costs. (Lords' journals, 18th December, 1891.)

Solicitors for appellants: Gellatly & Warton.
Solicitors for respondents: Freshfields & Williams.

The committee thereupon went into executive session, and after the consideration of matters in executive session, adjourned until Monday, February 12, 1912, at 10.30 o'clock a. m.

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