27. MONOPOLIES (§ 24*)-PROCEEDINGS TO | PREVENT-SUFFICIENCY OF EVIDENCE.

In a proceeding against persons charged with effecting an unlawful combination to restrict competition. evidence held to support the trial court's findings that certain of the defendants had effected such an unlawful combination. [Ed. Note.-For other cases, see Monopolies, Cent. Dig. § 17; Dec. Dig. § 24.*]

Appeal from Circuit Court, Jackson County; Walter B. Powell, Judge.

Information in the nature of quo warranto by the State, on the relation of I. B. Kimbrell, Prosecuting Attorney, against the People's Ice, Storage & Fuel Company and others. From the judgment, the defendant named and others appeal. Affirmed.

Cowherd, Ingraham, Durham & Morse, of Kansas City, for Kansas City Breweries Co. Warner, Dean, McLeoud & Timmonds, of Kansas City, for People's Ice, Storage & Fuel Co., Vanderslice-Lynds Mercantile Co., and Central Coal Co. Clinton A. Welch, of Kansas City, for Central Ice Co. I. B. Kimbrell and Clyde Taylor, both of Kansas City, for respondent.

Company, a corporation with capital stock of $170,000, was organized under the laws of Missouri by stockholders of the other de fendants, the stock being held in trust for their respective corporations by the stockholders mentioned; that subsequently the other defendants, excepting the Central Ice Company, agreed with each other and the People's Ice, Storage & Fuel Company that for a period of three years each would sell to the latter for about cost the ice it manufactured, excepting such ice as it used in its own business, other than the ice business; that said contracts were in force and being complied with, together with further agreements that none of such defendants would sell to another than the People's Ice, Storage & Fuel Company, nor produce more ice in excess of its own needs than required by contract with the last-mentioned company, though the plants of the respective defendants had sufficient capacity to produce much more; that the Central Ice Company agreed with the other defendants to conform to a scale of prices to be agreed upon from time to time. It is further alleged that defendants were and had been complying with all these contracts and agreements; that the

Company have been, and hereafter will be, divided among the other defendants having the beneficial interest in the stock of the company named.

It is then alleged that defendants and other unknown persons, corporations, and copartnerships constitute an unlawful trust and combination, for the purpose and with the effect of lessening and destroying competition in the manufacture and sale of ice, and of creating a monopoly in the ice business in Kansas City and vicinity.

BLAIR, C. This is a proceeding by information in the nature of quo warranto instituted by the prosecuting attorney of Jack-profits of the People's Ice, Storage & Fuel son County, on his own relation and in his official capacity, against the People's Ice, Storage & Fuel Company, the Vanderslice Lynds Mercantile Company, the Central Ice Company, the Western Ice & Cold Storage Company, the Kansas City Breweries Company, the Dold Packing Company, John J. Ruddy, and Thomas P. Ruddy. The Ruddys are alleged to be partners, doing business under the firm name of Ruddy Bros., and also under the name of the Inter-State Ice & Cold Storage Company. Excepting the Jacob Dold Packing Company, the other corporate defendants are Missouri corporations. The Jacob Dold Packing Company is a corporation, but it is not alleged in what state it was organized. The circuit court found for the defendants Jacob Dold Packing Company, the Western Ice & Cold Storage Company, John J. Ruddy, and Thomas P. Ruddy, but entered judgment against the other defendants assessing a fine of $5,000 against the Central Ice Company, a fine of $4,500 against the Vanderslice-Lynds Mercantile Company, a fine of $5,000 against the Kansas City Breweries Company, a fine of $15,000 against the People's Ice, Storage & Fuel Company, and also entered judgment forfeiting the charter of the last-named company. From that judgment, all four convicted defendants appealed.

The information alleged, in substance, that prior to July 1, 1905, the defendants, excepting the People's Ice, Storage & Fuel Company, manufactured and sold 90 per cent. of the ice used in Kansas City, Mo., and vicinity; that the People's Ice, Storage & Fuel

The People's Ice, Storage & Fuel Company and the Vanderslice-Lynds Mercantile Company filed practically identical returns, denying specifically the several allegations of the information, except that each admitted the fact of its incorporation as charged, and the fact that it was engaged in the manufacture and sale of ice in Kansas City and vicinity. Each of these returns averred that there was full and free competition in the ice business in Kansas City, and each contained a paragraph challenging the authority of the prosecuting attorney to institute the proceeding.

The Kansas City Breweries Company, in its return, admitted its incorporation, but denied that it was incorporated prior to July 1, 1905, or engaged in the ice business prior to that time, and denied it was ever engaged in the ice business in Kansas City in competition with the other defendants named, or any of them; admitted its ownership of a portion of the capital stock of the People's Ice, Storage & Fuel Company, but denied it owned such stock July 1, 1905, or that it was directly interested or participated in the for

mation of the last-mentioned corporation, and specifically denied all other allegations of the petition.

The Central Ice Company filed what it termed a motion to dismiss as to it, wherein it denied the allegations of the information affecting it and set forth several pages of correspondence and other evidence of its efforts to furnish ice for the Kansas City market, coupling with this a protest that the pendency of this proceeding will injure its credit. To this were added the affidavits of several officers and employés of the Central Ice Company as to the truth of the facts set up in the motion, and as to the company's having manufactured all the ice it could. This conglomeration was treated by the trial court as a return, and, shorn of its objectionable features, it will be so treated here.

The returns of the other defendants do not appear in the abstract, and are not important in view of the judgment entered.

The cause was referred to a commissioner, who heard evidence for several weeks, and in his report recommended judgment for all the defendants. On exception filed by the prosecuting attorney, the court set aside the referee's findings, and, on the evidence reported by the referee, rendered judgment as before indicated, and also requiring the cancellation of certain contracts, to which reference will be made hereafter. Motions for new trial and in arrest of judgment were filed and overruled, and the four defendants found guilty appealed.

The findings of the referee were based on that part of the evidence which remained after the exclusion of all evidence relating to transactions occurring prior to July 1, 1905, the date of the organization of the People's Ice, Storage & Fuel Company. The trial court, in making its findings, took this excluded evidence into consideration.

and teams, or selling to peddlers (persons operating one or more ice wagons of their own), who were engaged solely in the distributing or retail branch of the business. There may have been other manufacturers of ice and dealers in natural ice in the city at that time; but, if so, their output was insignificant compared with the total output of the companies named. At the time mentioned (1898) the competition in Kansas City in the ice business was so great that the wholesale price to peddlers had been cut to $1 per ton-a sum scarcely sufficient to pay the expense of production of manufactured ice, which constituted the bulk of the supply on the Kansas City market. This, the evidence indicates, was due to competition among the packing and other companies, such as the brewing company and the Armour Packing Company, each of which consumed large quantities of ice in its own business, and ordinarily produced quantities much in excess of its daily needs by reason of the fact that its plant was equipped with ice-making machines of greater daily capac ity than the needs of the company made necessary, in order to guard against the loss which would follow in its principal business in case its ice plant became temporarily or partially disabled. For this reason these companies, or some of them, maintained double plants and operated both, since to allow either part of the plant to lie idle was more expensive, on account of deterioration and loss of interest, than to operate the two and put the excess ice, thus produced, on the market.

In 1898 the Standard Ice & Coal Company, which produced no ice, but had contracted for the output of a plant on Grand avenue, and owned some natural ice, was, as stated, in the business of selling ice solely, operating about 30 wagons. N. H. Trask, The evidence disclosed that the People's Thomas Manville, George Manville, Hugo Ice, Storage & Fuel Company, capital stock Clossen, or Claussen, and Kenneth Hudson $170,000, was organized about July 1, 1905, owned all the stock of the Standard Ice & and that it took over the assets and assumed Coal Company. This company, having no the liabilities of the People's Ice & Fuel other business during the warm months than Company. This last-named company was in- the sale of ice, was among the first to feel corporated in 1898. At that time (1898) the effects of the low prices which the comthe Armour Packing Company, the Ferd petitive conditions mentioned produced. The Heim Brewing Company, the Vanderslice- gentlemen named conceived the idea of reLynds Mercantile Company, the Kansas City lieving (from their point of view) these conIce & Cold Storage Company, the Grand ditions by the organization of a distributing Avenue Ice Company, the Woods Ice Com- company, the stock to be divided among the pany, the Yates Ice Company, the Fowler principal ice producing and selling compaPacking Company, the Jacob Dold Packing nies in the city in proportion to the sales Company, and the Standard Ice & Coal Com-made by the respective companies during the pany were in the ice business in Kansas preceding year. To accomplish this end, City. The Woods Ice Company and the Yates Ice Company stored and sold natural ice. These seem to have been merely names under which R. W. Woods and James Yates. respectively, carried on the ice business. The Standard Ice & Coal Company was in the ice-distributing business. The others were manufacturers of ice; some of them

Trask "interviewed different ice men." Kirk Armour, of the Armour Packing Company, was the first man approached. W. D. Miles, then the manager of the Armour plant, was also present at a conversation with Trask and Thomas Manville in Mr. Armour's private office, and the statistics of the ice business the previous year were put before him.

denied by Miles, the latter was "invited into | Packing Company, the Kansas City Ice & the room where we were and told to help Cold Storage Company, the Grand Avenue form the organization and do all he could." Ice Company, the Yates Ice Company, and Having proceeded thus far, the learned com- the Woods Ice Company united in the formamissioner excluded the details of the con- tion of the new company. Whether others versations with Armour and Miles, because participated is not quite clear. The stock Armour was dead and Miles (the commissioner held) not in a position to bind any defendant in this case. It may be noted here that the Armour Packing Company is not a party to this proceeding. Joseph J. Heim, then of the Ferd Heim Brewing Company, and at the time of trial president of the Kansas City Breweries Company, was the next man before whom the plan was laid, and he, while doubting the feasibility of the plan, agreed to “enter that kind of a deal if the rest would do it." Trask next talked about the matter with O. W. Butt and A. Menny of the Kansas City Ice & Cold Storage Company; the commissioner excluding the details of the conversation. Mr. Vanderslice, of Vanderslice-Lynds Mercantile Company, was next interviewed and the plan presented to him.

tion.

was not issued directly to the corporations entering into the arrangement, but to individuals, who held it for the several corporations. Joseph Heim, H. Vanderslice, A. Menny, O. W. Butt, W. D. Miles and J. S. Thayer, Mr. Rittick, or Reddick, Captain Woods, and James Yates were the principal stockholders and incorporators of the People's Ice & Fuel Company in 1898. Four or five of the companies participating in the organization distributed as well as manufactured and imported ice, and the wagons, teams, and other equipment used by these companies in distributing ice were turned over to the new company; about 75 per cent. of the stock being paid for in this fashion, according to Mr. Heim. By this means the companies engaged therein were taken out of the retail business, and the routes which had known them theretofore as competitors knew them no more. The company thus formed entered into contracts with the several companies which held its capital stock (owned the beneficial interest therein), whereby it agreed to take large quantities of ice from these companies. The price to be paid by the company to all was, after some discussion, fixed, by agreement of the representatives of the stockholders, at $2 per ton. The name decided upon for the company was the People's Ice & Fuel Company. Other contracts were made with other persons and outside companies for ice, as it seemed to be needed and was obtainable.

There were some changes in the stock holdings as time progressed. The first one of importance was the sale of some stock to J. C. Dold, immediately followed by a contract for the most of the output of the Dold Packing Company ice plant at $2 per ton, the price paid companies which originally took part in the organization. Yates sold part of his stock to A. Menny, then manager of the People's Company, a part, probably, to W. S. Pontius, connected with the same com

The plan was to organize a central distributing company which should contract to buy the ice of the companies entering into the scheme at a price to be determined by subsequent agreement, an amount of stock to be taken by each participating company equal to the proportion the ice sold by such company the preceding year bore to the whole amount sold during that year by all the companies participating in the organizaThe capital stock was to be $20,000. The purposes were to stop the cutting of prices and lessen the expense of delivering ice, and "to eliminate unreasonable competition." Mr. Vanderslice said that the purpose of his company was to "get out of the distribution of ice," because it had proved unprofitable. Several meetings were held. One was attended by R. W. Woods, of the Woods Ice Company, James Yates, of the Yates Ice Company, Mr. Butt, of the Kansas City Ice & Cold Storage Company, W. D. Miles, representing the Armours, and Trask, Clossen, and Thomas Manville, of the Standard Ice & Coal Company. The witness also thought Mr. Heim was present. At other meetings Mr. Rittick, or Reddick, represented the Grand Avenue Ice Company, Van-pany, and part to O. W. Butt, and the stock of the Kansas City Ice & Cold Storage Comderslice represented the Vanderslice-Lynds Mercantile Company, Yates, Woods, and Jo- pany passed subsequently into the hands seph Heim represented their respective companies, W. D. Miles represented Armours, and Mr. Butt and Mr. Menny represented the Kansas City Ice & Cold Storage Company. At the meetings mentioned there was a general discussion of the proposed plan and its purposes. It was finally agreed that a distributing company be organized for the purposes of putting an end to "unreasonable competition," stopping price cutting, and lessening the expense of distribution. The Vanderslice-Lynds Mercantile Company, the

of the National Bank of Commerce and

then to the Western Ice & Storage Company, organized by the bank mentioned to take over the Kansas City Ice & Cold Storage Company plant and its stock in the People's Ice & Fuel Company. The stock which had been held for the Armour Packing Company by J. S. Thayer was sold or transferred to W. D. Miles, who held, or had held, other shares for the same company.

In June, 1905, and for some time prior thereto, the stock of the People's Ice & Fuel

slice, of Vanderslice-Lynds Mercantile Com- | first party for all ice delivered or to be depany, J. J. Heim, of the Ferd Heim Brewing livered under this contract." These proviCompany, W. H. Winants, of the Western sions did not appear in the 1906 contracts Ice & Storage Company, R. W. Woods, of the hereafter mentioned. Woods Ice Company, W. D. Miles, and A. Menny, manager of the People's Ice & Fuel Company. Some time previously these same gentlemen had acquired what was known as the Grand avenue plant, having purchased this plant for about $30,000. Considerable improvements were made on that plant prior to July 1, 1905.

$70,000. Immediately after the incorporation | 1906, to deliver f. o. b. wagon or cars at its of the new company, Winants transferred plant in Kansas City, Kan., 5,520 tons of 240 shares to the National Bank of Com- ice at $3.25 per ton, 900 tons in the last half merce; A. Menny transferred all of his of June, 1,860 tons in July and a like amount shares, except 164; Vanderslice transferred in August, and 900 tons in the first half of 128 shares to J. H. Lynds, of the Vander- September, all to be delivered in 1906. The slice-Lynds Mercantile Company; 227 shares deliveries under this contract had not comwere transferred to J. C. Dold; H. L. Burk, menced July 15, 1906, the plant of the Inmanager of the company, some time prior terstate Company having been undergoing ento July, 1906, acquired 7 more shares. Dean largement which the contract contemplated, disappeared as a stockholder, and Wood and and which had not been completed. Miles retained their original holdings. In February, 1906, at the expiration of the several 1903 contracts of the People's Ice & Fuel Company (the old company), which had been assumed and carried out by the People's Ice, Storage & Fuel Company (the new company), new contracts were entered into.