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of the values of the properties purchased, there- | fix prices and restrain the free flow of comby capitalizing the anticipated fruits of com- merce upon a scale heretofore unapproached bination. The control acquired over the branch- in the history of corporate organization in es of the industry to which the combinations this country. particularly related measured by the amount of production, extended in some instances from 80 per cent. to 95 per cent. of the entire output of the country, resulting in the immediate increase of prices, in some cases double and in others treble what they were before, yielding large dividends upon greatly inflated capital.

"The immediate, as well as the normal effect of such combinations, was in all instances a complete elimination of competition between the concerns absorbed, and a corresponding restraint of trade."

These facts established, as it seems to me they are by the record, it follows that if the Sherman Act is to be given efficacy, there must be a decree undoing so far as is possible that which has been achieved in open, notorious, and continued violation of its provisions.

It inevitably follows that the corporation violated the law in its formation and by its immediate practices. The power, thus obtained from the combination of resources almost unlimited in the aggregation of competing organizations, had within its control the domination of the trade, and the ability to

I agree that the act offers no objection to the mere size of a corporation, nor to the continued exertion of its lawful power, when that size and power have been obtained by lawful means and developed by natural growth, although its resources, capital and strength may give to such corporation a dominating place in the business and industry with which it is concerned. It is entitled to maintain its size and the power that legiti


The enormous overcapitalization of companies and the appropriation of $100,000,000 in stock to promotion expenses were represented in the stock issues of the new organizations thus formed, and were the basis upon which large dividends have been declared from the profits of the business. This record shows that the power obtained by the corpo- mately goes with it, pro*vided no law has ration brought under its control large com- been transgressed in obtaining it. But I unpeting companies which were of themselves derstand the reiterated decisions of this court illegal combinations, and succeeded to their construing the Sherman Act to hold that this power; that some of the organizers of the power may not legally be derived from conSteel Corporation were parties to the pre-spiracies, combinations, or contracts in receding combinations, participated in their il-straint of trade. To permit this would be legality, and by uniting them under a com- to practically annul the Sherman Law by mon direction intended to augment and per- judicial decree. This principle has been so petuate their power. It is the irresistible often declared by the decisions that it is only conclusion from these premises that great necessary to refer to some of them. It is the profits to be derived from unified control were scope of such combinations, and their power the object of these organizations. or tend to create monopolies, which, as we to suppress and stifle competition and create have declared so often as to make its reiteration monotonous, it was the purpose of the Sherman Act to condemn, including all combinations and conspiracies to restrain the free and natural flow of trade in the chan

The contention must be rejected that the combination was an inevitable evolution of industrial tendencies compelling union of endeavor. Nothing could add to the vivid accuracy with which Judge Woolley, speaking




for himself and Judge Hunt, has stated the illegality of the organization, and its pur-nels of interstate commerce. Pearsall pose to combine in one great corporation the Great Northern Ry. Co., 161 U. S. 646, 676, previous combinations by a direct violation 677, 16 Sup. Ct. 705, 40 L. Ed. 838; Transof the purposes and terms of the Sherman Missouri Freight Ass'n Case, 166 U. S. 290, 324, 17 Sup. Ct. 540, 41 L. Ed. 1007; NorthFor many years, as the record discloses, ern Securities Case, 193 U. S. 197, 24 Sup. this unlawful organization exerted its power Ct. 436, 48 L. Ed. 679; Addyston Pipe Co. v. to control and maintain prices by pools, as- United States, 175 U. S. 211, 238, 20 Sup. Ct. sociations, trade meetings, and as the result 96, 44 L. Ed. 136; Harriman v. Northern Seof discussion and agreements at the so-called curities Co., 197 U. S. 244, 291, 25 Sup. Ct. "Gary Dinners," where the assembled trade 493, 49 L. Ed. 739; Union Pacific Case, 226 opponents secured co-operation and joint ac- U. S. 61, 88, 33 Sup. Ct. 53, 57 L. Ed. 124. tion through the machinery of special com- While it was not the purpose of the act to mittees of competing concerns, and by pru- condemn normal and usual contracts to lawdent prevision took into account the possibil- fully expand business and further legitimate ity of defection, and the means of control- trade, it did intend to effectively reach and ling and perpetuating that industrial har- control all conspiracies and combinations or mony which arose from the control and main-contracts of whatever form which unduly retenance of prices. strain competition and unduly obstruct the natural course of trade, or which from their nature, or effect, have proved effectual to restrain interstate commerce. Standard Oil Co. v. United States, 221 U. S. 1, 31 Sup. Ct. 502, 55 L. Ed. 619, 34 L. R. A. (N. S.) 834, Ann. Cas. 1912D, 734; United States v. American Tobacco Co., 221 U. S. 106, 31 Sup. Ct. 632,

(40 Sup.Ct.)

55 L. Ed. 663; United States v. Reading | ful organizations as the only effective means Co., 226 U. S. 324, 33 Sup. Ct. 90, 57 L. Ed. of enforcing the purposes of the Sherman 243; Straus v. American Publishers' Ass'n, Anti-Trust Act. These cases have been fre231 U. S. 222, 34 Sup. Ct. 84, 58 L. Ed. 192, quently followed in this court, and in the L. R. A. 1915A, 1099, Ann. Cas. 1915A, 369; | lower federal courts, in determining the naEastern States Lumber Association v. United ture of the relief to be granted, and I see no States, 234 U. S. 600, 34 Sup. Ct. 951, 58 L. occasion to depart from them now. Ed. 1490, L. R. A. 1915A, 788.

This statute has been in force for nearly 30 years. It has been frequently before this court for consideration, and the nature and


character of the relief to be granted *against combinations found guilty of violations of it have been the subject of much consideration. Its interpretation has become a part of the law itself, and if changes are to be made now in its construction or operation, it seems to me that the exertion of such authority rests with Congress and not with the courts.

As I understand the conclusions of the court, affirming the decree directing dismissal of the bill, they amount to this: That these combinations, both the holding company and the subsidiaries which comprise it, although organized in plain violation and bold defiance of the provisions of the act, nevertheless are immune from a decree effectually ending the combinations and putting it out of their power to attain the unlawful purposes sought, because of some reasons of public policy requiring such conclusion. I know of no public policy which sanctions a The fourth section is intended to give to violation of the law, nor of any inconvenience courts of equity of the United States the pow- to trade, domestic or foreign, which should er to effectively control and restrain viola- have the effect of placing combinations, which tions of the act. In none of the cases which have been able to thus organize one of the have been before the courts was the charac- greatest industries of the country in defiter of the relief to be granted, where organi- ance of law, in an impregnable position zations were found to be within the condem-above the control of the law forbidding such nation of the act, more thoroughly considered combinations. Such a conclusion does viothan in the Standard Oil and Tobacco Com-lence to the policy which the law was intendpany Cases reported in 221 U. S. In the for-ed to enforce, runs counter to the decisions mer case, considering the measure of relief to of the court, and necessarily results in a pracbe granted in the case of a combination, cer- tical nullification of the act itself. tainly not more obnoxious to the Sherman Act than the court now finds the one under consideration to be, this court declared that it must be twofold in character (221 U. S. 78, 31 Sup. Ct. 523, 55 L. Ed. 619, 34 L. R. A. [N. S.] 834, Ann. Cas. 1912D, 734):


General, was given for the purpose of ena

“(1) To forbid the doing in the future of acts like those which we have found to have been done in the past which would be violative of the statute. (2) The exertion of such measure of relief as will effectually dissolve the combination found to exist in violation of the stat-bling the courts, as the statute states, to prohibit such conspiracies, combinations and contracts, and this court interpreting its provisions has held that the proper enforcement of the act requires decrees to end combinations by dissolving them and restoring as far as possible the competitive conditions which the combinations have destroyed. I am unable to see force in the suggestion that public policy, or the assumed disastrous effect upon foreign trade of dissolving the unlawful combination, is sufficient to entitle it to immunity from the enforcement of the statute.

Nor can I yield assent to the proposition that this combination has not acquired a dominant position in the trade which enables it to control prices and production when it sees fit to exert its power. Its total assets on December 31, 1913, were in excess of $1,800,000,000; its outstanding capital stock was $868,583,600; its surplus $151,798,428. Its cash on hand ordinarily was $75,000,000; this sum alone exceeded the total capitalization of any of its competitors, and with a single exception, the total capitalization and

ute, and thus neutralize the extension and continually operating force which the possession of the power unlawfully obtained has brought and will continue to bring about."

In the American Tobacco Company Case the nature of the relief to be granted was again given consideration, and it was there concluded that the only effectual remedy was to dissolve the combination and the companies comprising it, and for that purpose the cause was remanded to the District Court to hear the parties and determine a method of dissolution and of recreating from the elements composing it "a new condition which should be in honest harmony with and not

There is no mistaking the terms of the act as they have hitherto been interpreted by this court. It was not intended to merely suppress unfair practices, but, as its history and terms amply show, it was intended to make it criminal to form combinations or

engage in conspiracies or contracts in restraint of interstate trade. The remedy by injunction, at the instance of the Attorney


repugnant to the law." In that *case the corporations dissolved had long been in existence, and the offending companies were organized years before the suit was brought and before the decree of dissolution was finally made. Such facts were considered no valid objection to the dissolution of these power


ditions was elaborated and care*fully considered. In my judgment the principles there laid down, if followed now, would make a very material difference in the steel industry. Instead of one dominating corporation, with scattered competitors, there would be competitive conditions throughout the whole trade which would carry into effect the policy of the law.

surplus of any one of them. That such an
organization thus fortified and equipped could
if it saw fit dominate the trade and control
competition would seem to be a business
proposition too plain to require extended ar-
gument to support it. Its resources, strength
and comprehensive ownership of the means
of production enable it to adopt measures to
do again as it has done in the past, that is,
to effectually dominate and control the steel
business of the country. From the earliest
decisions of this court it has been declared
that it was the effective power of such organ-
izations to control and restrain competition
and the freedom of trade that Congress in-
tended to limit and control. That the exer-
cise of the power may be withheld, or exerted
with forbearing benevolence, does not place
such combinations beyond the authority of
the statute which was intended to prohibit
their formation, and when formed to deprive
them of the power unlawfully attained.

(251 U. S. 532)

It is said that a complete monopolization of the steel business was never attained by the offending combinations. To insist upon such result would be beyond the requirements FT. SMITH LUMBER CO. v. STATE OF of the statute and in most cases practicably impossible. As we said in dealing with the Packers' combination in Swift & Co. v. United States, 196 U. S. 396, 25 Sup. Ct. 279, 49 (Submitted Jan. 5, 1920. Decided March 1, L. Ed. 518:


No. 394.

"Where acts are not sufficient in themselves to produce a result which the law seeks to pre

vent for instance, the monopoly-but require 1. CONSTITUTIONAL LAW 283 - TAXATION


Const. U. S. Amend. 14, does not forbid double taxation, short of confiscation, or proceedings unconstitutional on other grounds.

further acts in addition to the mere forces of nature to bring that result to pass, an intent to bring it to pass is necessary in order to produce a dangerous probability that it will happen. Commonwealth v. Peachie, 177 Mass. 267, 272 [59 N. E. 55]. But when that intent and the consequent dangerous probability exist, this statute [Sherman Act] like many others and like the common law in some cases, directs itself against that dangerous probability as well as against the completed result."

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It seems to me that if this act is to be given effect, the bill, under the findings of fact made by the court, should not be dismissed, and the cause should be remanded to the District Court, where a plan of effective and final dissolution of the corporations should be enforced by a decree framed for that purpose.

Mr. Justice PITNEY and Mr. Justice CLARKE concur in this dissent.

Atty. Gen.

2. CONSTITUTIONAL LAW 229(1) — Taxa-

The state may, without violating Const. U. S. Amend. 14, tax its own corporations in respect to stock held by them in other domestic corporations, though individual stockholders are



It is affirmed that to grant the government's request for a remand to the District Court for a decree of dissolution would not result in a change in the conditions of the 3. CONSTITUTIONAL LAW 229(1)—TAXATION steel trade. Such is not the theory of, the Sherman Act. The act was framed in the belief that attempted or accomplished monopolization, or combinations which suppress free competition were hurtful to the public interest, and that a restoration of competitive conditions would benefit the public. We have here a combination in control of one-half of the steel business of the country. If the plan were followed, as in the American Tobacco Case, of remanding the case to the District Court, a decree might be framed restoring competitive conditions as far as practicable. See United States v. American Tobacco Co. (C. C.) 191 Fed. 371. In that case the subject of reconstruction so as to restore such con

Mr. Justice McKenna, Mr. Justice Day, Mr. Justice Van Devanter, and Mr. Justice MeReynolds, dissenting.

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

A state may without violating Const. U. S. Amend. 14, confine the recovery of back taxes to those due from corporations.


Supposed limitations on the power of the state Legislature in the Constitution of the state are not reviewable in the federal Supreme Court on writ of error to a state court.

(40 Sup.Ct.)

In Error to the Supreme Court of the State] 6 Sup. Ct. 645, 29 L. Ed. 830; St. Louis Southof Arkansas. western Ry. Co. v. Arkansas, 235 U. S. 350,

367, 368, 35 Sup. Ct. 99, 59 L. Ed. 265. We

are of opinion that it also is within the power


of a State, so far as the Constitution of the United States is concerned, to tax its own corporations in respect of the stock held by them in other domestic corporations, although unincorporated stockholders are exempt. A State may have a policy in taxation. Quong Wing v. Kirkendall, 223 U. S. 59, 63, 32 Sup. Ct. 192, 56 L. Ed. 350. If the State of Arkansas wished to discourage but not to foranother and sought to attain the result by this bid the holding of stock in one corporation by tax, or if it simply saw fit to make corporations pay for the privilege, there would be nothing in the Constitution to hinder. A discrimination between corporations and individuals with regard to a tax like this cannot be pronounced arbitrary, although we may not know the precise ground of policy that led the State to insert the distinction in the law.

This is a suit by the State of Arkansas against the plaintiff in error, a corporation of the State, to recover back taxes alleged to be due upon a proper valuation of its capi[3, 4] The same is true with regard to contal stock. The corporation owned stock in fining the recovery of back taxes to those due two other corporations of the State each of from corporations. It is to be presumed, unwhich paid full taxes and it contended that til the contrary appears, that there were reait was entitled to omit the value of such stock sons for more strenuous efforts to collect adfrom the valuation of its own. This omission mitted dues from corporations than in other is the matter in dispute. The corporation cases, and we cannot pronounce it an unlawdefends on the ground that individuals are ful policy on the part of the State. See New not taxed for such stock or subject to suit York ex rel. New York Clearing House Buildfor back taxes, and that the taxation is dou- ing Co. v. Barker, 179 U. S. 279, 283, 21 Sup. ble, setting up the Fourteenth Amendment. Ct. 121, 45 L. Ed. 190. We have nothing to do The case was heard on demurrer to the an- with the supposed limitations upon the powswer and agreed facts, and the statute levy-er of the State Legislature in the Constitution ing the tax was sustained by the Supreme Court of the State.

of the State. Those must be taken to be disposed of by the decisions of the State Court. As this case properly comes here by writ of error, an application for a writ of certiorari that was presented as a precaution will be denied.

Judgment affirmed.

Suit by the State of Arkansas, on relation of John D. Arbuckle, Attorney General, against the Ft. Smith Lumber Company. A judgment for plaintiff was affirmed by the Supreme Court of Arkansas (211 S. W. 662), and defendant brings error and petitions for certiorari. Judgment affirmed, and certiorari denied.


*Messrs. Joseph M. Hill and Henry L. Fitzhugh, both of Ft. Smith, Ark., for plaintiff in


Messrs. John D. Arbuckle and George Vaughan, both of Little Rock, Ark., for de

fendant in error.

Mr. Justice HOLMES delivered the opinion

of the Court.

[1, 2] The objection to the taxation as double may be laid on one side. That is a matter of State law alone. The Fourteenth Amendment no more forbids double taxation than it does doubling the amount of a tax; short of confiscation or proceedings unconstitutional on other grounds. Davidson v. New Orleans, 96 U. S. 97, 106, 24 L. Ed. 616; Tennessee v. Whitworth, 117 U. S. 129, 136, 137, 40 SUP.CT.-20

Mr. Justice MCKENNA, Mr. Justice DAY, Mr. Justice VAN DEVANTER, and Mr. Justice McREYNOLDS, dissent.

Court of Criminal Appeals. The case comes here under section 237 of the Judicial Code (Comp. St. § 1214); McCloskey having claimed

(Submitted Nov. 12, 1919. Decided March 1, below, as here, that the act under which he 1920.)

was arrested violates rights guaranteed him by the Fourteenth Amendment.

(252 U. S. 107)


No. 79.


Though, under the law of Texas, causes of action in tort as well as in contract are assignable, Pen. Code Tex. 1911, art. 421, as amended by Laws Tex. 1917, c. 133, § 1 (Vernon's Ann. Pen. Code Supp. Tex. 1918, art. 421), forbidding the personal solicitation of employment to prosecute, defend, present, or collect any claim, is a reasonable regulation of the business of obtaining adjustment of claims and does not violate rights of liberty and property, or deny the equal protection of the laws,

in violation of the Fourteenth Amendment.

In Error to the Court of Criminal Appeals the English law has long sought to protect the of the State of Texas. community through proceedings for barratry and champerty. Co. Litt. p. 368 (Day's Edition, 1812, vol. 2, § 701 [368, b]); 1 Hawkins, Pleas of the Crown (6th Ed.) 524; Peck v. Heurich, 167 U. S. 624, 630, 17 Sup. Ct. 927, 42 L. Ed. 302. Regulation which aims to bring the conduct of the business into harmony with ethical practice of the legal profes

Mr. R. H. Ward, of Wichita Falls, Tex., sion, to which it is necessarily related is obfor plaintiff in error. viously reasonable. Ford v. Munroe (Tex. Civ. App.) 144 S. W. 349. The statute is not open to the objections urged against it. Affirmed.

Messrs. Luther Nickels, of Eastland, Tex., and B. F. Looney, of Greenville, Tex., for defendant in error.

Habeas corpus by Frank P. McCloskey against John W. Tobin, Sheriff of Bexar County, Tex. The writ was denied by the county court and the Court of Criminal Appeals (199 S. W. 1101), and plaintiff brings error. Affirmed.

The contention is that, since the state had made causes of action in tort as well as in contract assignable (Railway v. Ginther, 96 Tex. 295, 72 S. W. 166), they had become an article of commerce; that the business of obtaining adjustment of claims is not inherently evil; and that therefore, while regulation was permissible, prohibition of the business violates rights of liberty and property and denies equal protection of the laws. The contention may be answered briefly. To prohibit solicitation is to regulate the business, not to prohibit it. Compare Brazee v. Michigan, 241 U. S. 340, 36 Sup. Ct. 561, 60 L. Ed. 1034, Ann. Cas. 1917C, 522. The evil against which the regulation is directed is one from which

Mr. Justice BRANDEIS delivered the opinion of the Court.


Article 421 of the Penal Code of Texas defined, with much detail, the offense of barratry. In McCloskey v. San Antonio Traction Co. (Tex. Civ. App.) 192 S. W. 1116, a decree for an injunction restraining the (Argued Nov. 10, 1919. Decided March 1, plaintiff in error from pursuing the practice of fomenting and adjusting claims was reversed on the ground that this section had superseded the common law offense of barratry and that by the Code "only an attorney at law is forbidden to solicit employment in any suit himself or by an agent." Article 421 was then amended (Act March 29, 1917, c. 133 [Vernon's Ann. Pen. Code Supp. Tex. 1918, art. 421]) so as to apply to any person


who "shall seek to obtain employment in any claim, to prosecute, defend, present or collect the same by means of personal solicitation of such employment. ***" Thereafter McCloskey was arrested on an information which charged him with soliciting employment to collect two claims, one for personal injuries, the other for painting a buggy. He applied for a writ of habeas corpus, which was denied both by the county court and the

(252 U. S. 100)


No. 55.


In deciding whether state legislation impairs the obligation of a contract, the federal Supreme Court must determine for itself whether there is a contract and what its obligation is, as well as whether the obligation has been impaired.



That without the decision of the state court, as to the construction of the contract said to

have been impaired, the Supreme Court might have hesitated to adopt such construction, is not enough to lead it to overrule such decision upon a fairly doubtful point.

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

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