use and dispose of such property, and to create restrictions upon the use thereof. So of a contract for exclusive dealing, (§ 21) that here the court improp erly applied the test of space limit. In Smith v. Scott, 4 Paton (Scotland), 17 (1798), a combination among those engaged in the business of chaise hirers or post-masters in Edinburgh, to raise the price of service, was declared illegal by the House of Lords, on appeal from Scotland. The court say: "The case is very different whether an individual might or might not ask what rate for posting he thought fit; but he must not make a party business of it." But this decision seems to have been generally overlooked; and notwithstanding that in this country restrictions upon competition created merely by the acts of private parties have, as a rule, been so unhesitatingly condemned, they seem thus far to have, as a rule, escaped condemnation in England, where restrictions that would now at least be held illegal in most of our States have been sustained, as appears from the following instances: In Hearn v. Griffin, 2 Chitty, 407 (1815), an agreement between two rival coach proprietors not to run In Mollyneaux v. Wittenberg, 39 Neb. 547; s. C., 58 N. W. Rep. 205 (1894), the prohibition of the Nebraska statute against "pools" and "trusts" was held not to apply to an agreement in a deed that the vendee should not use the property described for "hotel purposes for two years." So in United States Chemical Co. v. Provident Chemical Co., 64 Fed. Rep. 946 (Cir. Ct. in opposition to each other, and to charge the same prices, was sustained by the King's Bench against the objection that it was void as "in restraint of that competition in trade which is so conducive to the interest of the public." It was said by Lord Ellenborough: "This is merely a convenient mode of arranging two concerns which might otherwise ruin each other." In Wickens v. Evans, 3 Younge & J. 318 (1829), an agreement among three persons, rivals in the business of selling trunks and boxes in different parts of England, entered into in view of the inconvenience and loss resulting from rivalry, and whereby each should have the right to do business in certain districts to the exclusion of the others, was held not illegal as "in restraint of trade." It is clearly shown in United States v. Addyston Pipe & Steel Co., 54 U. S. App. 723, 750; s. c., 85 Fed. Rep. 271, 284 (1898), that this decision is opposed to later ones, in this country at least. In Shrewsbury & Birmingham Ry. Co. v. London & Northwestern Ry. Co., 16 Jurist, 311 (1851), an agreement between two Mo., 1894), a covenant in a lease not to engage in the business covered by the lease, was held valid as a restraint of trade, but to contain "none of the elements of a trust or combination." Compare decisions as to right of carrier to select instrumentalities for service of the public, and as to grants by railroads of exclusive privileges to telegraph companies, § 18, above. service or agency. So in smaller communities, where the exercise of a given trade or profession is confined to a single individual, be he butcher, grocer, tailor or builder, there exists a monopoly. And in such a case the monopoly is railway companies tending to prevent competition, was held not unlawful, the operation of the agreement being, however, limited to one particular line of road. So in Hare v. London & Northwestern Ry. Co., 2 Johnson & Hemming, 80, 103 (Eng. Ch., 1861), an agreement among competing railroad companies for a division of profits in certain fixed proportions, was held not illegal, as preventing competition, in the absence of statutory provis ions. The court say: "It is a mistaken notion that the public is benefited by pitting two railway companies against each other till one is ruined, the result being at last to raise the fares to the highest possible standard." So far as such restrictions are held illegal in England, it would seem to be according to the test of reasonableness. See Collins v. Locke, § 22, below. On the other hand, as is pointed out in United States v. Addyston Pipe & Steel Co., above (54 U. S. App. 753), the decision in Mogul S. S. Co. v. McGregor, L. R. App. Cas. (1892), 25, is not in point on this branch of our subject. 1 In Ellerman v. Chicago Junction Railways, etc. Co., 49 N. J. Eq. 217, 252; s. c., 23 Atl. Rep. 287 (1891), an agreement between proprietors of stockyards and their principal patrons, whereby the latter were to deal with the former exclusively, and not engage in the same business, was sustained. The court say: "The non-competition was but an incident subsequent to the affirmative agreement to remain the customers and patrons of the transit company; but if the purpose of the agreement had been the prevention of competition, such a purpose would have been lawful." In Matthews v. Associated Press of N. Y., 136 N. Y. 333; s. c., 32 N. E. Rep. 981 (1893), was sustained a by-law of an association of members of the press forbidding any member to "receive or publish the regular news dispatches of any other news association covering a like territory and organized for a like purpose.” So in Woods v. Hart, 50 Neb. 497, 504; s. c., 70 N. W. Rep. 53 (1897), of an agreement for an exclusive agency for the sale of real estate, the appointment as agent not being for a fixed or definite period. So in Welch v. Phelps & Bigelow Windmill Co., 89 Tex. 653; s. c., 36 S. W. Rep. 71 (1896), the Texas anti-trust act of 1889 was held not to apply to a mere arrangement between principal and agent, though giving the exclusive right to sell in certain territory and fixing prices, but not investing the agent with title to the goods sold. But in Texas Brewing Co. v. Anderson, 40 S. W. Rep. 737 (Tex. Civ. App., 1897), the contract was held to be one of sale and not of agency, notwithstanding the use of the word "agents," and to be in contravention of such act. Agreements for exclusive trade were sustained in Catt v. Tourle, frequently the direct result of efforts to drive all other competitors from the field. Nor is the monopoly necessarily illegal because exercised by a combination of individuals. A partnership of butchers, grocers, tailors or builders in a small community is not necessarily regarded as illegal, though having a monopoly of its line of business in that community, and though having secured such monopoly as a result of efforts to drive all other competitors from the field.' It has been declared that the very existence of a monopoly involves a presumption that the monopoly is illegal, but it 38 L. J. Ch. 665 (1869); Clark v. Crosby, 37 Vt. 188 (1864); Keith v. Herschberg Optical Co., 48 Ark. 138; s. C., 2 S. W. Rep. 777 (1887); Livestock Assoc. of N. Y. v. Levy, 54 N. Y. Super. Ct. 32 (1886); George v. East Tennessee Coal Co., 15 Lea (Tenn.), 455 (1885); Schwalm v. Holmes, 49 Cal. 665 (1875); Brown v. Rounsavell, 78 Ill. 589 (1875); Bald Eagle Valley R. R. Co. v. Nittany Valley R. R. Co., 171 Pa. St. 284; s. c., 33 Atl. Rep. 239 (1895); Palmer v. Stebbins, 3 Pick. (Mass.) 188 (1825). Agreements for exclusive employment were sustained in Pilkington v. Scott, 15 M. & W. 657 (1846); Hartley v. Cummings, 5 C. B. 247 (1847); Carnig v. Carr, 167 Mass. 544; s. c., 46 N. E. Rep. 117 (1897). Compare Morris v. Colman, 18 Vesey, 437 (1812; sustaining agreement with theater proprietors not to write dramatic pieces for any other theater). So even of an agreement to serve for life. Wallis v. Day, 2 M. & W. 273 (1837). But an agreement for exclusive trade, though legal considered by itself, may yet be illegal as a part of a scheme illegal as in restriction upon competition. This principle seems to have been overlooked in the cases involving the legality of the methods of the "Distilling & Cattle Feeding Company;" but see on this point, § 30. 1 The difficulty of establishing a sharp line of distinction in such cases, was seen in Marsh v. Russell, 66 N. Y. 288 (1876), where a distinction is taken between a partnership formed for the honest purpose of carrying on a joint business, with the incidental effect of preventing competition, and a partnership the primary object of which is to prevent competition. But this introduces the uncertain test of intent, as to which see § 2. In Ontario Salt Co. v. Merchants' Salt Co., 18 Grant (Ontario), 540, 544 (1877), the court answer the objection that an agreement among manufacturers of salt for sale of their stock through a common agency, tended to create a monopoly, by saying: "If the effect was to constitute a partnership, there can be nothing objectionable in the stipulation that all the salt produced — which is to form the partnership stockshould be sold through the agency of the trustees." Compare as to "pools," § 26. 2 "The presumption is always seems doubtful whether such presumption is of substantial service. Certainly it would be difficult to apply it to the monopolies we have instanced as existing in smaller communities, and, in case of the more extensive monopolies, the evidence of illegality is commonly sufficient without the aid of any such presumption. But while here contenting ourselves with the assumption that the doctrine condemning monopolies, originally confined to those created by the crown, now extends to some but not all monopolies, or other restrictions upon competition created by the acts of private parties, we reserve for consideration elsewhere the question of the test to be applied in determining what restrictions upon competition are legal, and what not. It may be added that this against the validity of such agreements," i. e., in prevention of competition. Hoffman v. Brooks, 23 Am. Law Reg. (N.S.) 648 (Super. Ct. Cinn., 1884). So in Morris Run Coal Co. v. Barclay Coal Co., 68 Pa. St. 173, 185 (1871), such presumption was applied, but under the mistaken supposition, elsewhere considered, that the doctrine against restrictions upon competition, is based on that against contracts in restraint of trade. In Cleveland, Columbus, Cincinnati, etc. Ry. Co. v. Closser, 126 Ind. 348, 360, 363; s. c., 26 N. E. Rep. 159 (1890), the presumption was applied to a combination among competing carriers. But the existence of such a presumption was denied in United States v. Trans-Missouri Freight Assoc., 19 U. S. App. 36, 68; s. c., 58 Fed. Rep. 58, 78 (8th Cir., 1893); and see Leslie v. Lorillard, 110 N. Y. 519, 533; s. c., 18 N. E. Rep. 363 (1888); Herriman v. Menzies, 115 Cal. 16, 21; S. C., 46 Pac. Rep. 730 (1896). So in Ives v. Smith, 3 N. Y. Suppl. 645, 653, affirmed in 8 Id. 46 (Supm. Ct., sus Gen. T., 1889), where were tained traffic contracts between railroad companies, the court say: "A court should not stamp with invalidity contracts which have existed for years, and under which rights have been created and obligations assumed, without the clearest conviction that they come within the condemned or illegal class. The avoidance of contracts on the ground that they are against public policy, is reluctantly ordered by the courts." Compare the frequently quoted remarks of Jessel, M. R., in Printing & Numerical Registering Co. v. Sampson, 19 L. R. Eq. Cas. 462 (1875), that "if there is one thing which, more than another, public policy requires, it is that men of full age and competent understanding shall have the utmost liberty of contracting, and that their contracts, when entered into freely and voluntarily, shall be held sacred, and shall be enforced by courts of justice." extension of the doctrine seems to have made it an academic question of little practical importance, whether what are known as forestalling, regrating and ingrossing are illegal at common law or by statute;1 such cases are clearly covered by the doctrine against monopolies as extended.2 § 20. Legislation against restriction upon competition Scope of Federal and State legislation respectively.- Legislation against restrictions upon competition, commonly called "anti-trust legislation," is a growth of the last ten years, but already exists in a majority of the States of the Union, and, indeed, most of the questions presented In 3 Stephen's History of the Criminal Law of England, ch. 30, p. 199, it is said: "Forestalling, ingrossing and regrating was the offense of buying up large quantities of any article of commerce for the purpose of raising the price. The forestaller intercepted goods on their way to market and bought them up, so as to be able to command what price he chose when he got to the market. The ingrosser or regrator - for the two words had much the same meaning was a person who, having bought goods wholesale, sold them again wholesale. This was regarded as a crime." These offenses are said, in 2 Wharton's Criminal Law (10th ed.), § 1849, to have been taken from the Roman law. It will be noted that these offenses could be committed by a single individual. In Pettamberdass v. Thackoorseydass, 7 Moore P. C. C. 239, 262 (1850), it is said that "ingrossing can be committed only with respect to the necessaries of life;" and see article by W. F. Dana in 7 Harv. Law Rev. 338, 344 (1894). See as to such statutes, Queen Ins. Co. v. State, 86 Tex. 250, 269; s. C., 24 S. W. Rep. 397 (1893). In Oliver v. Gilmore, 52 Fed. Rep. 562, 565 (Cir. Ct. Mass., 1892), a case of an agreement to close manufacturing works, it is said that "the contract would seem to be in violation of the old rules of the common law (i. e., against forestalling and ingrossing), intended to prevent the gathering up of the control of commodities into few hands." But query in the absence of evidence tending to show monopoly? See, on the general question whether such acts were illegal at common law, article by Prof. T. W. Dwight in 3 Pol. Sci. Quart. 592, 609 (1888). 2 Though in Queen Ins. Co. v. State, note 1, above, the view was expressed that the doctrine of the illegality of such monopolies has its origin in these rules. 3 See Appendix. See such legislation epitomized and criticised by S. C. T. Dodd, in 7 Harv. Law Rev. 157, 164 (1893). For a reference to some ancient legislation against monopolies, see article by C. C. Allen in 28 Am. Law. Rev. 828, 831 (1894). |