§ 172. The Pooling of Products.-A corporation or other business association, consisting of a number of independent companies or individuals, engaged in the same branch of business, and organized for the purpose of controlling the production and price of a commodity in general use, is in contravention of public policy and void. The claim of one of the parties to such an organization against another will not be enforced by the courts. In the recent to a designated party who acted as trustee or agent, but the courts held such proxies not irrevocable and that they might be revoked at any time. Cook on Stocks, § 610, 622; Woodruff v. Dubuque, 30 Fed. Rep. 91; Vanderbilt v. Bennett, 2 Ry. & Corp. L. J. 409. Another plan was to place the stock of the various parties in the hands of trustees, with power to transfer the stock to themselves and to hold and vote the same, trustees' certificates being issued to the various parties, specifying the amount of stock so deposited by them and their interest in the pool, but the courts held that any holder of a trustee's certificate might at any time demand back his part of the stock. Another device was that the parties contracted together not to sell their stock for a specified time or only to a purchaser acceptable to them all. It was held that, notwithstanding such contract any one of the parties might sell his stock to any one he pleased and at any time. Fisher v. Bush, 35 Hun, 642; Williams v. Montgomery, 68 Hun, 416. Another plan was to restrict by a by-law the right to transfer stock, but this was held illegal. Morgan v. Struthers, 131 U. S. 246. A provision that a purchaser of a certificate of stock who sold in violation of the agreement should be entitled to the dividends but should receive no right to vote, was likewise held invalid. Harper v. Raymond, 3 Bosw. (N. Y.) 29. Numerous decisions affirm the correctness of the above rulings, which are based upon the illegality, because against public policy, of permitting large blocks of stock to be irrevocably tied up for the purpose of being voted in solido for the interest of a clique or section of the stockholders, and not according to the judgment of each individual stockholder for the benefit of the entire corporation. There are some few decisions trenching more or less upon the principles above stated. but we deem them contrary to sound principle of public policy, and hence not authority. In short, all agreements and devices by which stockholders surrender their voting powers are invalid. 5 Thompson, Corporations, § 6604. The power to vote is inherently annexed to and inseparable from the real ownership of each share, and can only be delegated by proxy with power of revocation. The pooling' arrangement, admitted to have been entered into by the majority of stockholders in the present case is contrary to public policy and voidable." Harvey v. Improvement Co., 118 N. Car. 692, 698. case of Emery v. The Ohio Candle Company, the court said : "We are of the opinion that the suit cannot be maintained, for the reason that the objects of the association were contrary to public policy, and in no way to be aided by the courts. No recovery can be had except by giving effect to the terms of the agreement. The action is, in substance, a suit against the association to recover a a sum due the plaintiff under the terms on which the association was formed. The committee represents the association, and a judgment against them is a judgment against it. If, as claimed by the defendants, a member could not withdraw from the association until the six years had expired, then the committee, as representing the association, had a defense on which it might have relied, had the objects of the association been perfectly legitimate. But should a court be called on to consider any defense, so long as the claim itself is based upon an agreement to which it can give no countenance? It must be observed that the withdrawal of the plaintiff was not at a time nor under circumstances that could give to it the merit of repentance. It had passed beyond the point at which it might by withdrawal have secured the aid of a court in recovering what it had advanced in furtherance of an illegal object. Its suit is to recover its portion of the ill-gotten gains." In a still 1 Emery v. Ohio Candle Co., 47 Ohio St. 320 322; s. c., 24 N. E. Rep. 660, 661. An association of manufacturers of wire cloth, formed for the avowed purpose of regulating the price of the commodity, each of the members stipulating, under a heavy penalty, that he will not sell at less than a specified rate, is contrary to public policy and illegal; and one of the members of the association, who has paid the penalty for violation of the stipulation, cannot recover it back. De Witt Wire Cloth Co. v. New Jersey Wire Cloth Co., 14 N. Y. Supl. 277. A contract by which three of four companies engaged in the manu facture of oleomargarine, consolidate as a corporation for the purpose of stopping the sharp competition between them, and agree that none of them shall separately engage in the business for five years, is not invalid as constituting a monopoly. Oakdale Manfg. Co. v. Garst, 18 R. I. 484; S. C., 28 Atl. Rep. 973. Where a contract for the sale of grain bags provides that the vendee shall have the exclusive sale of the same to the amount of 187,500, and the vendor agreed not to sell, or offer the same for sale, to any other person, and if the vendee failed to sell the full amount, the vendor agreed to ac more recent case, where plaintiffs, representing four cotton seed mills, and defendants, representing a large number of like mills, all independent dealers in cotton seed and manufacturers or products therefrom, entered into a contract which provided that plaintiffs, in consideration of "covenants" therein, should deliver to defendants the entire yield of their mills, and defendants guaranteed plaintiffs a certain profit per ton. The prices to be paid for seed cotton were established, and were to be changed only "by mutual agreement of the parties.' Defendants were authorized to establish from time to time "the minimum prices at which all meal cake and lint produced at plaintiff's mill shall be sold," and that plaintiffs "shall not purchase any seed or ship any from" a certain place, and a specified portion of seed shipped from certain other places to be "subject to be bought by" defendants. In an action to recover the net profits, under the guaranty, it was held that the contract was void as being in restraint of trade, and that plaintiffs could not recover. cept the sale of a pro rata amount, and such contract is a part of a scheme to gain a monopoly, it is void as against public policy, and there can be no recovery for a breach thereof. Pacific Factor Co. v. Adler, 90 Cal. 110; s. c., 27 Pac. Rep. 36. For the sole purpose of forming a combination among all the manufacturers of lumber at a certain point, increasing the price, limiting the amount and giving plaintiff the control of the supply in four counties for a year, plaintiff, by contracts with the other manufacturers, either by lease of their mills or by purchase of their product for the year, secured control of the product, among which contracts, and similar to the others, was one of defendants to sell plaintiff during the year a specified amount of lumber at a given price; and, In the opinion in this further, to manufacture no lumber for sale in said counties during said year except under the contract, and to pay plaintiff $20 per M for any lumber sold to others in that period. Held, void as against public policy. Santa Clara Val. M. & L. Co. v. Hayes, 76 Cal. 387; s. c., 18 Pac. Rep. 391. Under Act of March 30, 1889, prohibiting combinations in restraint of trade, a combination of dealers in beer, which secured control, by lease, of "all the cooling room capacity for cooling beer" in a town, so that competition in beer would be kept out, is unlawful; the parties to it cannot recover for a breach of contract, the performance of which would have aided them to carry out their unlawful enterprise. Anheuser-Busch Brewing Assn. V. Houck, 27 S. W. Rep. 692; s. c., 30 S. W. Rep. 869. case, after referring to the agreement under which that association was organized, the court said: "It thus appears that the above artificial regulations of the value or prices of these staple articles of trade, as well as the arbitrary restrictions imposed by the contract upon the right to deal in them in the usual or customary course of legitimate business, were intended to apply to and control, as far as the contracting parties were able to do, the market in reference to these staples, and the agreement embraces within its operation the chief cities or commercial centers of the State, as well as the cotton producing regions thereof, as we may judicially know. There seems to us to be scarcely anything lacking to characterize the combination between the parties in this case, as evidenced by the language and purpose of their agreement, as a complete monopoly, except the proof that they were the only parties who were engaged at the specified localities in the manufacture referred to in the contract, at the time it was made. It is not improbable that every cotton oil mill in the State was represented in this combination, or was intended to be brought into it eventually; but as this is not alleged in the petition we cannot presume it. We must admit some limit even to judicial knowledge. But to render the contract void it is not necessary that it should create a pure monopoly. It would seem that the agreement may be illegal if the natural or necessary consequences of its operation are to prevent competition and create fictitious prices independently of the law of demand and supply, and to such an extent as injuriously to affect the interests of the public or the interests of any particular class of citizens who may be especially interested either as producers or consumers, in the articles or staples which are the subject of the restrictions imposed by the contract. Likewise the agreement may be in some instances void, because of unreasonable restrictions imposed upon even one of the parties to it. According to the authorities, the extent of the restraint, though sometimes difficult to measure, determines the character of the agreement, whether legal or not. them." The authorities are too numerous even to cite all of § 173. The Subject Continued.-The forming of an association or the entering into an agreement by a number of independent dealers in an article in common use, with a view to controlling the price by suppressing competition, if 1 Texas Standard Oil Co. v. Adoue, 83 Tex. 650; s. c., 19 S. W. Rep. 274. See also Callaghan v. Donnolly, 45 Cal. 152; Salt Co. v. Guthrie, 35 Ohio St. 666; Sampson v. Shaw, 101 Mass. 145; Wright v. Ryder, 36 Cal. 342, 361; Hooker v. Vandewater, 4 Denio (N. Y.), 349; s. C., 47 Am. Dec. 258; Craft v. McConoughy, 79 Ill. 346; Leonard v. Poole, 114 N. Y. 371; Angier v. Webber, 14 Allen, 211; s. C., 92 Am. Dec. 748. "It will be seen that the Howard Company was given almost an unrestricted field to obtain the raw material for its mills, and the exclusive right to control, free from the competition of the owners of the 'four mills' (who had no doubt up to that time been its rivals) not only the sales and ruling prices of the products of its own mills (which are not disturbed in this respect), but also the entire yield' of the mills of the other parties to the contract. It was thus enabled by the confederation of all of the parties to dictate at will the prices at which the public must buy (if at all) the oils or other products of any of the mills. If both of the parties had entered a market open to both under the contract, in order to purchase the raw materials they could not have competed, for no competition was contemplated, and all freedom of action in this particular was forestalled by arbitrary regulations of the price to be paid, which must be observed. In the markets assigned to each they are confronted by the same barrier, and the party cannot buy at all if the market price at that point happens to be greater than the contract price; or if the price prevailing there should even be below the contract price, still the party could not avail himself of this advantage without first obtaining, if he could, the consent of the other parties. In other words, neither the parties nor the producers of the raw material are to have the benefit of but one price, which has been definitely fixed in advance. These things, as it seems to us, are well calculated to affect the interests of the public detrimentally, and would doubtless have been deemed by the parties as injurious to their own interests had they been contemplating a lawful enterprise. These restrictions, however, were instituted in this instance, not for the purpose of a fair protection to all of the parties, but as suitable means for preventing all competition. If not, then it would have been clearly to the advantage of the Howard Oil Company, in view of its obligations to the four mills,' that the raw materials should be bought by all of the parties to the contract at the lowest figures. This company had bound itself to pay or bear the cost of the seed as well as the expense of 'working' the same by 'the four |