$10,000,000 until the same have been submitted to a judge of the supreme court, who shall not permit the organization or increase if in his opinion it is liable to create a monopoly (or result in restraining competition in trade).1

Idaho, Indiana, Louisiana, and Nebraska prohibit monopolies by adopting section 2 of the Sherman Law, but limiting its application to commerce within the State, and the substance of this section limiting it to intrastate commerce has been incorporated in the laws of Maine and Wisconsin.2

Porto Rico prohibits monopolizing or attempts to monopolize, and combinations or attempts to combine with any other person or persons to monopolize any part of the trade or commerce in any town of Porto Rico or between the towns thereof.3

Alabama and Mississippi prohibit monopolizing and attempts to monopolize the production, control, or sale of any commodity, or the prosecution, management, or control of any kind, class, or description of business."

195

Hawaii prohibits conspiracies "to establish, create, manage, or conduct a trust or monopoly in the purchase or sale of any commodity. Arizona prohibits the creation or maintenance of a monopoly. Oklahoma prohibits monopolies and "virtual monopolięs.' Arkansas, South Carolina, South Dakota, and Texas prohibit

monopolies as above defined. (See pp. 145–147.)

1 Vermont, Pub. Stats., 1906, sec. 4311, as amended by Laws 1910, No. 143, sec. 4.

Idaho, Laws 1911, chap. 215, sec. 2; Indiana, Laws 1907, chap. 243, sec. 2; Louisiana, Laws 1890, Act 86, sec. 3; Maine, Laws 1913, chap. 106, sec. 2; Nebraska, Laws 1905, chap. 162, sec. 2; Wisconsin, Stats. 1913, sec. 1747c.

Revised Statutes and Codes of Porto Rico, 1911, sec. 2374.

Alabama, Code 1907, sec. 7581; Mississippi, Code 1906, sec. 5002, as amended, Laws 1908, chap. 119, sec. 1. Hawaii, Revised Laws (1915), sec. 4085.

• Arizona, Laws 1912, chap. 73, sec. 7.

1 Oklahoma, Laws 1908, p. 750, secs. 2, 5, 13; see also New Jersey, Laws 1913, chap. 14.

State v. Coyle, 130 Pac., 316 (1913).—The antitrust law of 1908 (Comp. Laws 1909, secs. 8800-8819) is not void for uncertainty, and the definitions of "trust," "monopolies," and "unlawful combinations in restraint of trade and against public policy" therein contained are sufficient to define the offenses as being a virtual monopoly in restraint of trade.

• Arkansas, Laws 1905, Act I, as amended by act Mar. 12, 1913; South Carolina, Laws 1902, No. 574, sec. 2; South Dakota, Laws 1909, chap. 224, sec. 6; Texas, Laws 1903, Chap. XCIV, secs. 2, 4.

Sullivan v. Rime, 150 N. W., 556 (S. D., 1915).—-Action to recover the purchase price of certain patterns sold to defendant, as licensee and agent, under a contract by which defendant agreed not to offer for sale any other make of patterns. Defendant demurred on the ground that the contract was in violation of chapter 224, Laws of 1909, prohibiting monopolies and was therefore unenforceable. Held, whether the contract was one of agency or sale, it was not within the statute referred to, and this regardless of whether the patterns in question were patented or copyrighted. (Citing Wood Mowing Co. v. Greenwood Hardware Co., 75 8. C., 378.)

Houck & Dieter v. Anheuser-Busch Brewing Association, 88 Ter., 184 (1895).—Houck & Dieter, partners, and two others formed the El Paso Lager Beer Co. for the purpose of selling beer in El Paso and tributary markets, providing that the firm was to handle no beer except through the members, each of whom was to furnish a certain proportion of the whole at an agreed price. By contract with the Anheuser-Busch Brewing Association, Houck and Dieter were to have the exclusive privilege of selling at wholesale in El Paso the keg beer manufactured by said association. In a suit by the brewing association to recover for beer sold on account, Houck & Dieter by cross action set up the exclusive contract, alleged a breach, and recovered a sum over and above the plaintiff's demand. On appeal, held that the contract creating the Lager Beer Co. showed upon its face a combination prohibited by the antitrust law of 1889, that the law was constitutional, and that ITouck & Dieter could not recover on their cross action for a breach of contract the performance of which would have aided them in carrying out the unlawful enterprise. Held further, that if the brewing association's agent at the time the exclusive sale contract was renewed knew of the unlawful combination it should not recover, but if the agent had no authority to make such a contract, and if the association, with a knowledge of the facts, did not ratify the act of its agent it should recover. (Act of 1889 somewhat similar to that of 1903 above cited.)

Massachusetts prohibits every contract, agreement, etc., in violation of the common law in that thereby a monopoly in the manufacture, production, or sale of any article or commodity in common use may be created or maintained.1

In California the legislature declares that the purpose of the antidiscrimination law is "to safeguard the public against the creation or perpetuation of monopolies and to foster and encourage competition, by prohibiting unfair and discriminatory practices by which fair and honest competition is destroyed or prevented." 2

Section 3. Restraint of trade.

CONSTITUTIONAL PROHIBITIONS.-Three States have constitutional provisions regarding restraint of trade, viz, Louisiana, Oklahoma, and New Mexico. The constitution of Louisiana (art. 190, adopted Nov. 22, 1913) prohibits all combinations, trusts, or conspiracies in restraint of trade. The constitution of Oklahoma (Art. V, sec. 44) directs the legislature to define an unlawful combination, monopoly, trust, act, or agreement in restraint of trade, and to enact laws to punish persons engaged in any such combination, etc., in restraint of trade. The constitution of New Mexico (art. 4, sec. 38) directs the legislature to enact laws to prevent combinations in restraint of trade.

STATUTORY PROHIBITIONS.-North Dakota prohibits combinations of capital, skill, or acts, by two or more persons, corporations, etc., to create or carry out restrictions in trade.3 South Dakota has a similar prohibition, except that the words "or acts" are omitted. California and Ohio have in their statutes the same provisions found in the North Dakota law, with the addition of the words "or commerce," reading, "restrictions in trade or commerce." Michigan substitutes

1 Massachusetts, Laws 1908, chap. 454, sec. 1.

Merchants' Legal Stamp Co. v. Murphy et al., 107 N. E., 968 (Mass., 1915).-Plaintiff was engaged in the business of issuing trading stamps to merchants, and controlled nearly 90 per cent of the business conducted in this form by merchants of Boston and vicinity. Plaintiff retained title to stamp books and stamps, and merchants agreed not to part with them except in the course of trade and to return books with stamps attached when presented by purchasers; otherwise forfeiting all rights under the contract. Plaintiff also declined to supply stamps to merchants unless they stipulated not to use stamps issued by other companies or individuals. An action based on this contract was dismissed, the court holding that the direct and intended effect of the methods employed being to restrain or prevent the pursuit by the defendants or of others of a similar enterprise in a lawful manner, the plaintiff is within the prohibition of section 1, chapter 454, Laws of 1908. (See also Merchants' Legal Stamp Co. v. Scott, 107 N. E., 969.)

2 California, Laws 1913, chap. 276, sec. 7. See also local price discrimination (p. 187).

* North Dakota, Laws 1907, chap. 259, sec. 2.

♦ South Dakota, Laws 1909, chap. 224, sec. 1.

In the laws of California and Colorado it is provided that “no agreement or association shall be deemed to be unlawful or within the provisions of this act, the object and business of which are to conduct operations at a reasonable profit or to market at a reasonable profit those products which can not otherwise be so marketed; provided further, that it shall not be deemed to be unlawful, or within the provisions of this act, for persons, firms, or corporations engaged in the business of selling or manufacturing commodities of a similar or like character to employ, form, organize or own any interest in any association, firm or corporation having as its object or purpose the transportation, marketing or delivering of such commodities." (California, Laws 1907, chap. 530, sec. 1, as amended by Laws 1909, chap. 362, sec. 1; Colorado, Laws 1913, chap. 161, sec. 1.)

California, Laws 1907, chap. 530, sec. 1; Ohio, G. C., sec. 6391.

2

the word "arts" for "acts" and adds "or commerce" after "restrictions in trade." Arizona, Colorado, and Kansas have prohibitions similar to those in the California law, but adding after "restrictions in trade or commerce," the words, "or aids to commerce, or to carry out restrictions in the full and free pursuit of any business authorized or permitted by the laws of this State."

Texas further adds the words "or in the preparation of any product for market or transportation," reading, "restrictions in trade or commerce or aids to commerce or in the preparation of any product for market or transportation, or to create or carry out restrictions in the free pursuit of any business authorized or permitted by the laws of this State." 4

1 Michigan, P. A. 1899, No. 255, sec. 1.

* See note 5, p. 150.

& Arizona, Laws 1912, chap. 73, sec. 1; Colorado, Acts 1913, chap. 161, sec. 1; Kansas, Laws 1897, chap. 265, sec. 1, G. S., sec. 5142.

Texas, Laws 1903, Chap. XCIV, sec. 1.

S. 8. White Dental Mfg. Co. v. Hertzberg, 51 S. W., 355 (Texas Court of Civ. App., 1899).—Plaintiff made a contract with defendant by which the latter was to have the exclusive agency and right to sell any and all dental goods manufactured or kept in stock by plaintiff, and was not to sell any other line of dental goods. Plaintiff sued on account for balance due by defendant. A judgment for defendant, on the ground that the contract was in restraint of trade under the laws of Texas was affirmed, and a motion for rehearing overruled, the court holding that although the sale and delivery to defendant was an interstate transaction, it was nevertheless subject to the trust laws of the State.

Fort Worth & Denver City Ry. Co. v. State, 99 Tex., 34 (1905).—Held, that a contract between a railway and the Pullman Co. for the exclusive operation of the sleeping cars of the latter upon trains over the lines of the former was not a violation of section 1 of the antitrust law of 1903, where it did not fix the cost of transportation on such cars, leaving same to be fixed and changed by the sleeping-car company with the restriction only that it should not exceed the charges for such services on competing roads, and where there was no pooling or combination of rates. Such contract did not restrict the free pursuit of a business authorized or permitted by the laws of the State, as the railway could discharge its duties to the public by furnishing its own coaches or contracting with another to furnish them and could make such contract exclusive because no other corporation had a right to demand that its cars be attached to the trains of the railway company. Such exclusive contract did not constitute a monopoly under the law of 1903, as it neither brought the direction of the affairs of the two corporations under one management or control nor did one acquire thereby the shares, etc., or physical properties of the other.

Forrest Photographic Co. v. Hutchinson Grocery Co., 108 S. W., 768 (Teras Court of Civil Appeals, 1908).— The Forrest Photographic Co. contracted to furnish the Hutchinson Grocery Co. with trading tickets, each entitling its holder to an art calendar at the photographic company's studio when countersigned by the grocery company, and it was further agreed that from the date of the contract the photographic company should not, without the consent of the grocery company, or until the disposal of the tickets furnished, sell any other local grocery company any of such tickets. The photographic company sued to recover money due under terms of the contract. A judgment for defendant was reversed on appeal and the case remanded, the court holding that such a contract would not be void at common law as in restraint of trade nor was it within the act of 1903 prohibiting trusts, monopolies, and conspiracies in restraint of trade, because the contract was essentially one of services to the grocery company rather than for the sale of an article of merchandise, produce, or commodity.

Gust Feist Co. v. Albertype Co., 109 S. W., 1139 (Tex., 1908).—The Albertype Co. made a written contract with the Gust Feist Co. for the manufacture and sale of albums containing views of the city of Galveston, in which it was stipulated that the latter should have the exclusive control and resale of the albums. Suit was brought for the purchase price of albums sold under the agreement. On appeal a judgment for the plaintiff was reversed and the action dismissed, the court holding that the contract was within the Antitrust Law of 1903 prohibiting combinations in restraint of trade, that the parties were in pari delicto, and that neither could, therefore, invoke the aid of the courts.

Jerry-Creme Co. v. McDaniel Bros. Bottling Co., 152 S. W., 1187 (Ter., 1913).—A contract giving the bottling company the exclusive right to bottle "Jersey-Creme," a drink, in certain territory, by which said company agreed to use appellant's copyrighted labels and bottles and to buy the sirup for making such a drink from appellant, was a conspiracy in restraint of trade within the antitrust law of 1903 defining such conspiracy as an agreement between two or more engaged in selling or buying any article of merchandise, produce, or commodity to refuse to buy or sell to any other person; the bottles and labels being only incidentals, and "Jersey-Creme" being a "commodity" or "article of merchandise," and since it indirectly conferred upon appellee the exclusive right to purchase and resell the sirup.

Montana prohibits any combination or contract to create or carry out any restriction in trade.1

Minnesota prohibits pools, trust agreements, combinations, or understandings in restraint of trade within the State or between the people of this or of any other State or country."

Alabama prohibits any person or corporation, domestic or foreign, from restraining, or attempting to restrain, the freedom of trade or production.3

South Carolina prohibits persons or corporations engaged in buying or selling any article or thing from entering into "any

* *

or understanding to control or limit the trade

in any such article or thing." 4

In addition to the provisions noted above, Texas also prohibits as conspiracies in restraint of trade

1. An agreement or understanding between two or more persons, corporations, etc., engaged in buying or selling any article of merchandise, produce, or commodity to refuse to buy from, or sell to, any other person, corporation, etc.

2. An agreement between two or more persons, firms, etc., to boycott, or threaten to refuse to buy from, or sell to, any person, firm, etc., for buying from, or selling to, any other person, firm, etc.5

Mississippi prohibits combinations, contracts, or agreements, expressed or implied, in restraint of trade. The same section also prohibits any corporation, individual, etc., from restraining or attempting to restrain the freedom of trade or production.

Missouri prohibits any pool, trust, agreement, combination, or understanding in restraint of trade in the importation, transporta

1 Montana, Laws 1909, chap. 97, sec. 1.

2 Minnesota, Stats. 1913, sec. 8973.

3 Alabama, Code 1907, sec. 7581.

Doherty & Co. v. Rice et al., 186 Fed., 204 (1910).-Defendant, Rice, contracted with complainant, Doherty & Co., of New York, to sell and deliver to them 800 out of 1,000 outstanding shares of the capital stock of the Citizens' Light, Heat & Power Co., of Montgomery, Ala., which were controlled by him. He further agreed to endeavor to secure and deliver the remaining 200 shares. Doherty & Co. also owned the majority of the stock and controlled the operations of the Montgomery Light & Water Power Co., a competitor of the first-mentioned light company. On suit being brought for specific performance of the contract, defendants contended that it was contrary to public policy and void, as tending to create an unlawful monopoly and stifle competition, and was therefore forbidden by the laws of Alabama. Held, that the contract was not void under the State constitution or the Code of Alabama, 1907, sections 3451, 3640, 7579, 7580, and 7581 (affirmed in Circuit Court of Appeals, 184 Fed., 878 [1911]). 4 South Carolina, Laws 1902, No. 574, sec. 5.

Texas, Laws 1903, Chap. XCIV, sec. 3.

Mississippi, Code 1906, sec. 5002, as amended by Laws 1908, chap. 119, sec. 1.

Grenada Lumber Co. v. Mississippi, 217 U. S., 433 (1910).—A majority of the retail lumber dealers in Mississippi and Louisiana organized an association and pledged themselves to buy only from manufacturers and wholesalers who did not sell direct to consumers in communities where there were retail lumber dealers who carried stock commensurate with the demands of their communities, and not to buy from commission merchants, agents, and brokers, who sold to consumers but did not carry stocks, nor from a manufacturer who sold to such commission merchants, etc, and to inform each other of any sales made by manufacturers or wholesalers who sold to consumers. In a proceeding in equity under section 5002 Missis sippi Code, this was held a combination in restraint of trade and intended to hinder competition in the sale and purchase of a commodity. The association was dissolved and injunction granted against further operations. The decree was affirmed by the State supreme court. On appeal to the Supreme Court of the United States, it was held that the statute as applied in this case was constitutional, not being in conflict with the fourteenth amendment to the Constitution of the United States.

tion, manufacture, purchase, or sale, in the State, of any product, commodity, article, or thing whatsoever.1

1 Missouri, R. S., chap. 98, sec. 10298, as amended in 1913.

Heim Brewing Co. v. Belinder, 71 S. W., 691 (Mo., 1903).—Plaintiff and the other brewery corporations of Kansas City, Mo., agreed not to sell to any one who was in debt for beer to any of the others. Plaintiff sued the defendant for beer sold on account. Defendant urged that the agreement was in violation of the Antitrust Law. A judgment for plaintiff was reversed on appeal, the court holding that the agreement was in conflict with the Missouri statute relating to pools and trusts.

Finck et al., Trustees, Appellants, v. Schneider Granite Co., 187 Mo., 244 (1905).—Five concerns manufacturing practically all the crushed granite sold in St. Louis for concrete sidewalk uses, organized a corporation, with a nominal capital and with their officers as sole stockholders, to purchase and sell crushed granite at a time when there was an unusual demand. The five concerns entered into separate agreements with this corporation to sell to it at a stipulated price all their product with a fixed penalty per ton for any sold to outsiders. Thereafter all sales were made to the public in the name of the nominal company which kept a record of sales, received the money, and distributed the profits. The price of crushed granite was increased 80 cents per ton when these agreements went into effect and maintained until one of the parties refused to be bound longer, when the price fell to the old level. On suit being brought to recover the penalty from a company which violated the agreement, it was held that the agreements were void, being necessary links in a combination in restraint of trade, which was illegal under the statutes of 1889 and 1891; and that a corporation, ostensibly organized for a legal purpose, may be attacked collaterally to show that it is used to cover unlawful conspiracy.

State v. Kansas City Live Stock Exchange et al. and Traders' Live Stock Exchange et al., 109 S. W., 675 ( Mo., 1908).-Defendants were voluntary associations, the members of which were engaged in and practically controlled the live-stock trade at Kansas City, Mo. The members of the Kansas City Exchange were chiefly commission merchants, while those of the Traders' Exchange were buyers and speculators. The rules of the Traders' Exchange provided in effect that no one should deal in live stock in the Kansas City market unless a member of said exchange. It was alleged that in conformity with said rules the members of the Traders' Exchange refused to deal with persons or corporations not members, and by boycotts and threats of boycotts so intimidated members of the Kansas City Live Stock Exchange that they would not deal with those not members of the Traders' Exchange. Violations of sections 8978 and 8979, Revised Statutes, 1899, and the common law were charged and an injunction to restrain such practices prayed for. The lower court sustained a demurrer on the part of defendants. On appeal the State supreme court affirmed the judgment as to the Kansas City Exchange, but overruled it as to the Traders' Exchange. The court expressed the opinion that the conditions complained of would be corrected if an injunction issued against the members of the Traders' Exchange only, since the refusal of the members of the Kansas City Exchange to trade with others than members of the Traders' Exchange was due to fear of boycott by members of the latter.

State v. Standard Oil Co. et al., 116 S. W., 902 (Mo., 1909).—The respondents, the Standard Oil Co. of Indiana, Waters-Pierce Oil Co., and Republic Oil Co., which companies controlled more than 85 per cent of the oil business of Missouri, acquired a knowledge of all sales by independent oil dealers through a system of espionage. They then limited the independents' share of the aggregate business of the State to 10 or 15 per cent by offering rebates to customers of the independents and cutting prices. Prices were published by the Waters-Pierce Co. which were followed by all the respondents and also the independents generally. Two of the respondents, the Standard Oil Co. of Indiana and the Waters-Pierce Co., divided the State into two districts and agreed not to sell in each other's territory. The Standard Oil Co. of Indiana was both a dealer and a manufacturer, and in its capacity as a manufacturer it agreed not to sell to any dealer but the Waters-Pierce Co. in said Waters-Pierce territory; it agreeing in return not to purchase from any other refiner, and both agreeing not to sell to any other dealer except at retail prices. The Republic Oil Co. had no fixed territory, posed as an independent and sold anywhere. It was used largely as the instrument by which the fight was waged against the independents. The Republic Oil Co. was a subsidiary of the Standard Oil Co. of New Jersey, and was organized as a successor to the largest competitor of the other respondents, this competitor having been taken over by the New Jersey company. The New Jersey company also owned practically all the stock of the Standard Oil Co. of Indiana, and 60 per cent of the stock of the Waters-Pierce Co. In proceedings on information in the nature of quo warranto it was held that the respondents had violated the State statutes and a judgment of ouster was entered as to all three corporations, but this was later suspended as to the Waters-Pierce Co., a domestic corporation, upon proof of their compliance with certain requirements of the judgment.

Pope-Turnbo v. Bedford, 127 S. W., 426 ( Mo., St. Louis Court of Appeals, 1910).-The parties to this suit entered into a contract by which plaintiff was to teach defendant her method of treatment of the scalp and hair and the use of certain hair remedies, in consideration of which defendant agreed (1) not to use any hair remedies but plaintiff's in connection with said treatment, (2) not to mention having learned plaintiff's method of treatment except in connection with use of her remedies, (3) if defendant taught such method to any other party it was only to be after obligating said party to a similar contract. After making this contract, defendant used some of her own remedies instead of plaintiff's in connection with the treatment and advertised both verbally and in the press as a pupil of plaintiff after she had ceased to use plaintiff's remedies. It developed that the only part of the process of treatment not a common method was the use of plaintiff's remedies. Held, that the agreement not to use any but plaintiff's remedies was in restraint of trade and fostered monopoly, and that it was unreasonable at common law and in contravention of