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organized under the laws of another state, tire controversy, and do complete justice, by with power to acquire and hold shares of adjusting all the rights involved in it. the capital stock of any other corporation, These persons are commonly termed necesfrom obtaining and exercising ownership sary parties; but if their interests are and control of two or more competing rail- separable from those of the parties before road companies of the complainant state, the court, so that the court can proceed to so as to evade and defeat its laws and policy a decree, and do complete and final justice, forbidding the consolidation of such rail- without affecting other persons not before roads when parallel and competing, presents the court, the latter are not indispensable the case of a controversy of a civil nature parties. 3. Persons who not only have an whereof this court has jurisdiction under interest in the controversy, but an interest the Constitution and laws of the United of such a nature that a final decree cannot States, and whether the bill in the present be made without either affecting that incase is of that description, or whether it is terest, or leaving the controversy in such a the case of a suit brought by a state to en- condition that its final determination may force its penal statutes, and hence within be wholly inconsistent with equity and good the principle of the decision in Wisconsin conscience. The court in respect to the act v. Pelican Ins. Co. 127 U. S. 265, 32 L. ed. of Congress of February 28, 1839, 5 Stat. at 239, 8 Sup. Ct. Rep. 1370, are questions L. 321, chap 36, and to the 47th rule in which have been ably discussed by counsel. equity practice, said: But it is not necessary for us to consider and answer those questions, for, in view of the nature of the facts presented and the remedies prayed for in the bill proposed to be filed, we think that the suit is defective for want of essential parties whose rights would be vitally affected by the relief sought

therein.

"The 1st section of that statute enacts 'that when in any suit, at law or in equity, commenced in any court of the United States, there shall be several defendants, any one or more of whom shall not be inhabitants of or found within the district where the suit is brought, or shall not voluntarily appear thereto, it shall be lawful for the court to entertain jurisdiction, and proceed to the trial and adjudication of such suit between the parties who may be properly before it; but the judgment or decree rendered therein shall not conclude or prejudice other parties not regularly served with process, or not voluntarily appearing to answer; and the nonjoinder of parties, who are not so inhabitants, or found within the district, shall constitute no matter of abatement or other objection to said suit.'

The general rule in equity is that all persons materially interested, either legally or beneficially, in the subject-matter of a suit, are to be made parties to it, so that there may be a complete decree, which shall bind them all. By this means the court is enabled to make a complete decree between the parties, to prevent future litigation, by taking away the necessity of a multiplicity of suits, and to make it perfectly certain that no injustice is done, either to the parties before it, or to others who are interested in the "This act relates solely to the nonjoinder subject-matter, by a decree which might of persons who are not within the reach of otherwise be granted upon a partial view the process of the court. It does not affect only of the real merits. When all the par- any case where persons, having an interest, ties are before the court, the whole case may are not joined because their citizenship is be seen; but it may not, where all the con- such that their joinder would defeat the juflicting interests are not brought out upon risdiction; and, so far as it touches suits in the pleadings by the original parties there-equity, we understand it to be no more than to. Story, Eq. Pl. § 72. a legislative affirmance of the rule previously The established practice of courts of established by the cases of Cameron v. M'Rob-r equity to dismiss the plaintiff's bill if it ap-erts, 3 Wheat. 591, 4 L. ed. 467; Osborn v. pears that to grant the relief prayed for would injuriously affect persons materially interested in the subject-matter who are not made parties to the suit is founded upon clear reasons, and may be enforced by the court, sua sponte, though not raised by the pleadings or suggested by the counsel. Shields v. Barrow, 17 How. 130, 15 L. ed. 158; Hipp v. Rabin, 19 How. 271, 278, 15 L. ed. 633, 635: Parker v. Winnipiseogee Lake Cotton & Woolen Co. 2 Black, 545, 17 L. ed. 333.

In the case of Shields v. Barrow, 17 How. 130, 15 L. ed. 158, the question was fully discussed, and it was shown, upon a review of the previous cases, that there are three classes of parties to a bill in equity. They are: 1. Formal parties. 2. Persons having an interest in the controversy, and who ought to be made parties, in order that the court may act on that rule which requires it to decide on and finally determine the en

Bank of United States,*9 Wheat. 738, 6 L. ed. 204, and Harding v. Handy, 11 Wheat. 132, 6 L. ed. 437. For this court had already there decided that the nonjoinder of a party who could not be served with process would not defeat the jurisdiction. The act says it shall be lawful for the court to entertain jurisdiction; but as is observed by this court, in Mallow v. Hinde, 12 Wheat. 198, 6 L. ed. 600, when speaking of a case where an indispensable party was not before the court, 'we do not put this case upon the ground of jurisdiction, but upon a much broader ground, which must equally apply to all courts of equity; whatever may be their structure as to jurisdiction; we put it on the ground that no court can adjudicate directly upon a person's right, without the party being either actually or constructive ly before the court.' So that, while this act removed any difficulty as to jurisdiction, be tween competent parties regularly served

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with process, it does not attempt to displace that principle of jurisprudence on which the court rested the case last mentioned. And the 47th rule is only a declaration, for the government of practitioners and courts, of the effect of this act of Congress, and of the previous decisions of the court, on the subject of that rule. Hogan v. Walker, 14 How. 36, 14 L. ed. 315.

pany might be made parties defendant, and the court thus enabled to proceed with the case, the court held that this could not be done, because this court could not exercise original jurisdiction in a suit between a state on the one hand and a citizen of another state and citizens of the complainant state on the other. Accordingly, the bill was dismissed for want of parties who should be joined, but could not be without ousting our jurisdiction.

We shall therefore proceed to examine the substance of the bill proposed to be filed, in order to see whether it discloses a case in which a decree could be granted whiche would do final and complete justice between the nominal parties without vitally affecting* other persons not before the court. As already stated, a conclusion reached that the suit cannot be entertained for want of necessary and essential parties will not imply any expression of opinion beyond that question.

As the bill is set forth in full in the preceding statement, it will not be necessary to here repeat its allegations. They may be summarized as follows:

The complainant is the state of Minnesota; the defendant is the Northern Securities Company, a corporation of the state of New Jersey.

"It remains true, notwithstanding the act of Congress and the 47th rule, that a circuit court can make no decree affecting the rights of an absent person, and can make no decree between the parties before it, which so far involves or depends upon the rights of an absent person that complete and final justice cannot be done between the parties to the suit without affecting those rights." California v. Southern P. Co. 157 U. S. 229, 39 L. ed. 683, 15 Sup. Ct. Rep. 591, was a case in several particulars like the present one. There a bill was filed in this court by the state of California against the Southern Pacific Company, a corporation of the state of Kentucky, claiming title and jurisdiction by the state over certain large tracts of land lying upon the shores of the bay of San Francisco and over the harbor waters of said bay, including San Antonio creek, and averring that the Southern Pacific Company claimed adversely to the state, and was engaged in placing structures It is part of the policy of the state of in and upon said tracts of land, thereby ob- Minnesota, as declared in its public statutes, structing navigation in the bay and adjoin- to prohibit therein the consolidation in any ing waters. The bill prayed for a decree manner of competing and parallel lines of quieting the title of the state and enjoining railway. The statutes specially recited in the defendant company from maintaining the the bill are the act of March 9, 1874, the 1st structures that it had placed upon said section whereof is in the following terms: tracts and the adjacent waters. The de- "No railroad corporation, or the lessees, fendant company answered the bill, denying purchaser, or managers of any railroad the ownership of the complainant in the company, shall consolidate the stock, proppremises in dispute, and setting forth its erty, or franchise of such corporation with, own title derived from the town of Oakland, or lease or purchase the works or franchise as to the whole of the water front of that of, or in any way control, any other railroad town, through one Carpentier, as grantee of corporation owning or having under its consaid town by ordinance and deed of convey-trol a parallel or competing line; nor shall ance, and claiming that by subsequent mesne conveyances the said title and property had become vested, as to a part thereof, in the Central Pacific Railroad Company, and, as to another part, in the South Pacific Coast Railway Company, and in the defendant company as lessee. It further was claimed that certain ordinances and deeds of the town of Oakland operated as a grant by the city of Oakland and the state of California of the land to the Oakland Water Front Company, as grantee or alienee of Carpentier. The case was duly put at issue, and a commissioner was appointed to take testimony therein and to return the same to the

court.

When the case came on for hearing it was held by this court that the city of Oakland and the Oakland Water Front Company were so situated in respect to the litigation that the court ought not to proceed in their absence. In reaching this conclusion the court reviewed the cases, including the cases above cited and others.

any officer of such railroad corporation act as an officer of any other railroad corpora tion owning or having the control of a parallel or competing line, and the question whether railroads are parallel or competing lines shall, when demanded by the party complainant, be decided by a jury as in other civil issues;" and the act of March 3, 1881, of which the 3d section is as follows: "No railroad company shall consolidate with, lease, or purchase, or in any way be come the owner of or control, any other railroad corporation or stock, franchises, rights or property thereof, which owns or controls a parallel or competing line."

The Great Northern Railway Company is a corporation organized and existing under an act duly passed by the territory of Minnesota and under various subsequent acts of the state of Minnesota, and owns and controls, as lessee, several important lines of railroad, some only within and others extending beyond the state of Minnesota, and which are maintained by the Great NorthUpon the contention that the city of Oak- ern Railway Company as one complete sysland and the Oakland Water Front Com-tem. The board of directors of the Great

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Northern Railway Company, at the time ofing the Pacific ocean by rail with points in the organization of the Northern Securities Minnesota.

Company, to wit, on or about November 13, That the Chicago, Burlington, & Quincy 1901, was and now is composed of the fol- Railway Company, a corporation of the state lowing-named persons, to wit: James J. of Illinois, has, for many years last past, Hill, James N. Hill, Samuel Hill, William owned, operated, and controlled an extenP. Clough, Edward Sawyer, Jacob H. Schiff, sive system of railway lines connecting the and Henry W. Cannon. That on said last city of Chicago with the city of Denver, in mentioned date the Great Northern Railway the state of Colorado, and with the city of Company had issued and there was then out- Billings, in the state of Montana, which standing a total of $125,000,000 par value last-named point is a junction and competiof the capital stock of said corporation, of tive point for freight and passenger traffic which, it is alleged, that said James J. Hill with said Northern Pacific Railway Comwas on said last-mentioned date the owner pany, etc. That during the year 1901 the of, or had subject to his direction and dis- said Great Northern Railway Company and position, more than a majority of said capi- said Northern Pacific Railway Company tal stock so outstanding. jointly purchased 98 per cent of the total capital stock of said Chicago, Burlington, & Quincy Railway Company, aggregating ap

The Northern Pacific Railway Company was organized under the laws of the state of Wisconsin of the year 1895, and after-proximately 107,000,000 of dollars, par wards, by filing a certified copy of its ar- value, and now own the same, and issued in ticles of incorporation, became a corporation payment therefor the joint bonds of said of the state of Minnesota and subject to the Great Northern and Northern Pacific Railway laws of that state relating to railroad cor- companies, payable in twenty years from the porations. In the year 1896 the Northern date thereof, and bearing interest at the Pacific Railway Company duly purchased rate of 4 per cent per annum, payable semiand became the owner of the entire railroad annually. That the said Great Northern and properties and lines formerly owned by the Northern Pacific Railway companies issued Northern Pacific Railroad Company, and at and delivered in exchange for each $100 in all times since has continuously owned and amount of said Chicago, Burlington, & operated each and all of said lines of rail- Quincy Railway Company stock $200 in way situated within the state of Minnesota, amount of the said bonds; and that under and which connect the cities of St. Paul and and by virtue of the purchase of the said Minneapolis and Duluth, and connect with stock the joint ownership and control of the the lines of railways outside the state of said Chicago, Burlington, & Quincy RailMinnesota. During the year 1899 the said way Company are vested in, and ever since* Northern Pacific Railway Company pur- have been exercised by, the said Great chased, and ever since has owned and Northern and Northern Pacific Railway operated a line of railway extending from companies. During April, 1901, and ever the cities of St. Paul and Minneapolis to since, the following-named persons consti Duluth, Minnesota. Said last-mentioned tuted and now are the members of the board line parallels and is a competing line of rail- of directors of the Northern Pacific Railway way for both freight and passenger traffic Company: James J. Hill, Robert Bacon, with the line of railway between said Min- George F. Baker, E. H. Harriman, H. McK. neapolis and St. Paul and Duluth, owned by Twombly, Brayton Ives, D. Willis James, the Eastern Railway Company of Minnesota, John S. Kennedy, Daniel S. Lamont, Charles but which is operated, controlled, and man- S. Mellen, Samuel Rea, William Rockefeller, aged by said Great Northern Railway Com- Charles Steele, James Stillman, and Eben B. pany, as a part of the system of that com- Thomas. On November 13, 1901, J. Pierpany. The lines of railway now owned and pont Morgan, with certain other unknown operated by said Great Northern Railway persons, but who were acting with said MorCompany within the state of Minnesota are gan, owned and had in their possession, or parallel and competing lines for freight and held and had subject to their control and passenger traffic with the lines of railway disposition, upwards of 85 per cent of the now owned, operated, and controlled by said total capital stock of said Northern Pacific Northern Pacific Railway Company within Railway Company. The Northern Securithe state of Minnesota; and also said lines ties Company was organized on November of railway owned, operated, and controlled 13, 1901, with its principal office at Hoboby said Great Northern Railway Company, ken, in the state of New Jersey, and the oband also the lines of railway owned, jects for which the corporation was formed, operated, and controlled by said Northern as stated in the articles of incorporation, Pacific Railway Company, which connect are to acquire and hold, as investments, the with the lines of railway owned, operated, bonds, securities, and capital stock of any and controlled by each of said companies re- other corporation or corporations of the spectively within the state of Minnesota, are state of New Jersey, or of any other state, parallel and competing lines through the territory, or country, and while owner of states of North Dakota, Montana, Idaho, said stock to exercise all the rights, powers, and Washington to Puget Sound on the Pa- and privileges of ownership, including the cific Coast, for passenger and freight traffic. right to vote thereon; and it is declared That said companies are the only railway com-that the corporation shall have power to panies owning or operating lines of railway conduct its business in other states and in crossing the state of Minnesota and connect- foreign countries, to have one or more of.

fices out of the state, and to purchase, hold, and convey real and personal property out of the state.

ants, including its board of directors, or any of its members as such, be enjoined and restrained from exercising any of the powers It is alleged that the Northern Securities or performing any of the duties, or in any Company was incorporated at the instiga- manner acting as a representative, officer, tion and request of James J. Hill, William member of the board of directors or emP. Clough, and certain unknown stockhold-ployee, of either said Great Northern or ers of said Great Northern Railway Com- Northern Pacific Railway Company, or in any pany, who, with said Hill and Clough, way exercising any management, direction, owned or controlled, or have the disposition or control over the same; and that said deand management of, a large majority of the fendant, its stockholders, directors, and capital stock of said Great Northern Rail- other officers, representatives, and agents, be way Company, and with the co-operation of enjoined and restrained from doing any and J. Pierpont Morgan and certain other un- all acts and making any arrangements or known stockholders of said Northern Pacific combinations, by contract or otherwise, havRailway Company, who, with said Morgan, ing for their object, effect, or result the conowned and controlled, or have the disposi-solidation or establishment of a joint mantion and management of, a large majority of agement or control in any manner whatsothe capital stock of said Northern Pacific ever of the said Great Northern and NorthRailway Company. ern Pacific Railway companies, their lines of railway or properties; and that said defendant be enjoined from either directly or indirectly holding, owning or controlling any of the stock of either of said companies at one and the same time for any of the purposes or objects alleged in the bill, or otherwise, and that in case it shall appear upon the hearing that the defendant owns or controls, or is acting in concert with the owners of, a majority of the capital stock of either of said railway companies, and owns or controls a minority of the stock of the other of said companies, then that the defendant, its officers, directors, agents, or representatives, be enjoined and restrained from receiving, acquiring, or controlling any additional capital stock of such other railway company; and further for leave to amend the bill of complaint, if amendment thereto shall become necessary, including the right to bring in other parties defendant for the purpose of giving force and effect to any decree that may be made by the court herein.

On November 14, 1901, James J. Hill, George F. Baker, Daniel S. Lamont, James Stillman, N. Terhune, Samuel Thorne, Charles L. Perkins, Jacob H. Schiff, William P. Clough, John S. Kennedy, Willis James, E. T. Nichols, Robert Bacon, and E. H. Har riman were elected directors of the Northern Securities Company, and said directors on November 15, 1901, elected James J. Hill to be president, and John S. Kennedy, George F. Baker, Willis James, and William P. Clough to be vice presidents, and E. T. Nichols to be secretary and treasurer, of said company. It is alleged that the holders of a large majority of the capital stock of both said Great Northern and Northern Pacific Railway companies had knowledge of and assisted in the formation of the said Northern Securities Company, and that such stockholders, so consenting and assisting, constitute all of the stockholders of said Northern Securities Company.

The bill charges that the purpose of the formation of the Northern Securities Company was to place the management and control of the Great Northern Railway Company and of the Northern Pacific Railway Company under one management, and to thus, in effect, establish a consolidation of said railway companies, and defeat and evade the statutes and policy of the state of Minnesota forbidding consolidation of parallel and competing lines of railway.

The relief prayed by the bill is that the defendant company be perpetually enjoined and restrained from voting, at any meeting of either said Great Northern or Northern Pacific Railway Company, any of the capital stock of either of said companies by any means or in any manner whatsoever, and from attending, by reason of such ownership, possession, or control of stock, either through its officers or by proxy, or in any other manner, any meeting of the stockholders of either of said companies, and from, in any way, aiding, advising, directing, interfering with or in any way taking part, directly or indirectly, in any manner whatsoever, in the management, control, or operation of any of the lines of railway of either of said companies; and that said defendant. its officers, attorneys, representatives, agents, or serv.

More briefly stated, the case presented by the charges and prayers of the bill is that the state of Minnesota is apprehensive that a majority of the stockholders respectively of the Great Northern Railway Company and of the Northern Pacific Railway Company have combined and made an arrangement, through the organization of a corpora tion of the state of New Jersey, whereby such a consolidation, or, what is alleged ton amount to the same thing, a joint control and management of the Great Northern and Northern Pacific Railway companies, shall be effected as will operate to defeat and overrule the policy of the state in prohibit ing the consolidation of parallel and competing lines of railway, and therefore appeals to a court of equity to prevent by injunction the operation and effect of such a combina tion and arrangement.

But at once, as we have seen, the court is put upon inquiry whether the parties and persons to be affected by such an injunction are before it.

The narrative of the bill unquestionably discloses that the parties to be affected by a decision of the controversy are, directly, the state of Minnesota, the Great Northern

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Railway Company, the Northern Pacific | conclusively deemed to represent the public Railway Company, corporations of that interests in such a controversy as that prestate, and the Northern Securities Company, sented by the bill. Even a state, when she & corporation of the state of New Jersey, voluntarily becomes a complainant in a and, indirectly, the stockholders and bond- court of equity, cannot claim to represent holders of those corporations and of the nu- both sides of the controversy. Not only merous railway companies whose lines are have the stockholders, be they few or many, alleged to be owned, managed, or controlled a right to be heard, through the officers and by the Great Northern and Northern Pacific directors whom they have legally selected Railway companies. to represent them, but the general interests of the public, which might be deeply affected by the decree of the court, are entitled to be heard; and that, when the state is the complainant and in a case like the present, can only be effected by the presence of the railroad companies as parties defendant.

Upon investigation it might turn out that the allegations of the bill are well founded, and that the state is entitled to relief; or it might turn out that there is no intention or design on the part of the railroad companies to form any combination in disregard of the policy of the state, but that what is proposed is consistent with that policy and advantageous to the communities affected. But, in making such investigation, a court of equity must insist that both sides of the controversy shall be adequately represented and fully heard.

Can such a controversy be determined, with due regard to the interests of all concerned, by a suit solely between the state of Minnesota and the Northern Securities Company? It is, indeed, alleged that all of the stockholders of the Northern Securities Company are stockholders in the two railroad companies, and therefore it may be said that the latter stockholders are sufficiently represented in the litigation by the Northern Securities Company; but it is not alleged that the stockholders of the Northern Securities Company constitute or are composed of all the stockholders of the two railroad companies, and, in fact, the contrary is conceded in the allegations of the bill that a majority only of the stock of one, or perhaps both, of the two railroad companies is owned, or at least controlled and managed, by the Northern Securities ComWhen it appears to a court of equity that pany. It is obvious, therefore, that the a case, otherwise presenting ground for its rights of the minority stockholders of the action, cannot be dealt with because of the bwo railroad companies are not represented absence of essential parties, it is usual for by the Northern Securities Company. They the court, while sustaining the objection, to have a right to be represented in the con- grant leave to the complainant to amend by troversy by the companies whose stock they bringing in such parties. But when it like hold, and their rights ought not to be af- wise appears that necessary and indispensa-ci fected without a hearing, even if it were con- ble parties are beyond the reach of the juris ceded that a majority of the stock in such diction of the court, or that, when made parcompanies, held by a few persons, had as- ties, the jurisdiction of the court will theresisted in forming some sort of an illegal ar- by be defeated, for the court to grant leave rangement. Moreover, it must not be over-to amend would be useless. Sec. 2 of Artilooked that it is not the private interests of cle 3 of the Constitution of the United stockholders that are to be alone considered. The directors of the Great Northern and As, then, the Great Northern and the Northern Pacific Railway companies are ap- Northern Pacific Railway companies are inpointed to represent and protect, not merely dispensable parties, without whose presence the private and pecuniary interests of the the court. acting as a court of equity, canstockholders, but the rights of the public at not proceed, and as our constitutional jularge, which is deeply concerned in the prop-risdiction would not extend to the case if er and advantageous management of these public highways. It is not sufficient to say that the attorney general, or the governor, or even the legislature of the state, can be

States.

those companies were made parties defendant, the motion for leave to file the proposed bill must be and is denied.