domain.62

In Central N. Y. Telephone, etc., Co. v. Averill, 105 N. Y. Suppl. 378 (Supm. Ct., Sp. T., 1907), was condemned a provision in a contract for telephone service in a hotel, that the corporation furnishing the service should have the exclusive right to place telephones in the hotel. It seems to us that this should have been sustained as merely a contract for exclusive service. See § 140. It was here said: "This is not because the corporation is a public one, or a common carrier, or because it possesses the rights of eminent domain, but because of the rule that, where a contract is alleged to be in restraint of trade, the public welfare is to be first considered, and if it be found involved, the contract is to be de

60 Neb. 583; 83 N. W. 842 (1900). But the business of the Associated Press, a corporation extensively engaged in the business of collecting news and furnishing it to daily newspapers held a public one, so that provisions in its by-laws and in a contract between it and a customer, prohibiting the latter from obtaining news from other sources, were held an unlawful restriction upon competition. Some stress was laid on the circumstance of such corporation having the power of eminent domain, which, however, it had not exercised. Inter-Ocean Publishing Co. V. Associated Press,

clared void. This rule does not apply to any one class of corporations or any one class of individuals. It applies to all. And while it may very well be that a semi-public corporation may be unable to make contracts that would be perfectly valid if made by an individual or by a private corporation, the reason is, not that certain powers are conferred upon the former, but because by the very nature of its operations public interests are more likely to be affected." Relief against such contract was, however, denied in subsequent decision in 129 App. D. 752, 762; 114 N. Y. Suppl. 99, 106 (1909), it being said: "So far as appears, only the parties to the agreement are affected by it."

184 Ill. 438; 56 N. E. 822; 48 L. R. A. 568; 75 Am. St. Rep. 184 (1900). See editorial note thereon in 34 Am. Law Rev. 284 (1900). As to what is "public business" under Oklahoma act, see § 228.

62 As, however, to whether the conception of business of a public character necessarily involves possession of the right of eminent domain, see Central N. Y. Telephone, etc., Co. v. Averill, note 60, supra.

63 As said in the dissenting opinion of White, J., in U. S. v. TransMissouri Freight Assoc., 166 U. S. 290, 373; 17 Supm. 540, 571; 41 L. Ed. 1007 (1897): "The fallacy

consists in overlooking the distinction between acts of a public corporation which are ultra vires and those which are not. If the contract of such a corporation which is assailed be ultra vires, of course the question of reasonableness becomes irrelevant, since the charter is the reason of the being of the corporation." And it was here pointed out that in Gibbs v. Consolidated Gas Co. of Baltimore, note 60, supra, and cases therein cited, ultra vires contracts were under consideration. Chicago, St. Louis, etc., R. R. Co. v. Pullman Southern Car Co., 139 U. S. 79; 11 Supm. 490; 35 L. Ed. 97 (1891), was cited as a case where such a restraint was upheld. This view (of White, J.) is sustained by the facts in the cases wherein the doctrine has been laid down. Thus, in Gibbs v. Consolidated Gas Co. of Baltimore, the restriction in question, created by a contract between two gas companies, was expressly prohibited by statute. So People ex rel. v. Chicago Gas Trust Co., 130 Ill. 268; 22 N. E. 798; 8 L. R. A. 497; 17 Am. St. Rep. 319 (1889), can be explained on the ground of the absence of power in the defend

ant corporation to hold the stock of other gas companies, in the absence of express statutory authority. In 36 Am. Law Reg. & Rev. 307, 319 (1897), the authorities are discussed by G. S. Patterson, and the conclusion reached that "there is no business, whatever be the public interest therein, that any restraint thereon is ipso facto void; but if the effect of the restraint be to form a monopoly of such business, or to prevent a public corporation from the performance of its chartered functions, then the agreement is void."

64 Gibbs v. Consolidated Gas Co. of Baltimore, 130 U. S. 396, 410; 9 Supm. 553, 558; 32 L. Ed. 979 (1889). The decision herein might well have rested on the ground that the contract provided for the abandonment by one of the companies of the discharge of its duties to the public, to say nothing of the general rules applicable to restrictions upon competition. See dissenting opinion of White, J., in U. S. v. Trans-Missouri Freight Assoc., 166 U. S. 290, 373; 17 Supm. 540, 571; 41 L. Ed. 1007 (1897).

65 See Gibbs v. Consolidated Gas Co. of Baltimore, note 64, supra.

99 67

66 Central N. Y. Telephone, etc., Co. v. Averill, 105 N. Y. Suppl. 378 (Supm. Ct., Sp. T., 1907), where it was said that just so long as the public is not injured "any fair and reasonable contract of such a character is perfectly valid." See note 60, supra. In this view, it seems to be the test of reasonableness hereafter considered (see § 133), that is applicable. InIdeed in the decision below in U. S. v. Trans-Missouri Freight Assoc., 58 Fed. 58, 74; 7 C. C. A. 15, 78; 24 L. R. A. 73, 85 (8th C., 1893), it was contended that restrictions upon competition among railroad corporations are subject to the test of reasonableness. See this decision as to the effect of the Interstate Commerce Act. In San Diego Water Co. v. San Diego Flume Co., 108 Cal. 549; 41 Pac. 495; 29 L. R. A. 839 (1895), the restriction in question created by an agreement between a "water company" and a "flume company" was held valid as reasonable. Compare cases sustaining agreements by railroad companies for the location of a route; as, for instance, Baltimore & Ohio R. R. Co. v. Ralston, 41 Ohio St. 573, 588 (1885); and compare McCowen v. Pew, 153 Cal. 735; 96 Pac. 893 (1908); or of a station;

as, for instance, Louisville, New Albany, etc., Ry. Co. v. Sumner, 106 Ind. 55, 59; 5 N. E. 404, 406; 55 Am. Rep. 719, 720 (1886); Texas & St. Louis R. R. Co. v. Robards, 60 Tex. 545; 48 Am. Rep. 268 (1883). See, however, Enid Right of Way, etc., Co. v. Lile, 15 Okla. 317; 82 Pac. 810 (1905); Farrington v. Stucky, 165 Fed. 325 (C. C. A., 8th C., 1908). And for instances of restrictions upon competition by carriers, sustained under the test of reasonableness, see § 133. As to application of doctrine forbidding monopolies, to case (here of gas and electricity) where the State retains and has exercised power "to fix a reasonable price upon the commodity, and to compel its delivery to any person desiring to purchase it," see Attorney-General v. Consolidated Gas Co., 124 App. D. 401; 108 N. Y. Suppl. 823 (1908).

67 Central N. Y. Telephone, etc., Co. v. Averill, supra. In Whitaker v. Kilby, 55 Misc. 337; 106 N. Y. Suppl. 511 (1907); affirmed in 122 App. D. 895; 106 N. Y. Suppl. 1149 (1907), was sustained an agreement by a telephone corporation to limit its activities within a certain district.

68 See § 159.

69 That this is the proper test was elaborately contended for in U. S. v. Trans-Missouri Freight Assoc., 58 Fed. 58; 7 C. C. A. 15; 24 L. R. A. 73 (8th C., 1893), where was involved the legality of an agreement entered into between fifteen independent and competing railroad companies, extensively engaged in interstate commerce in that part of the United States west of the Mississippi and Missouri rivers. The professed object of the agreement was "mutual protection, by establishing and maintaining reasonable rates, rules and regulations on all freight traffic, both through and local." Provision was made for the establishment of such rates, rules and regulations. It was found by the court that the rates maintained under the contract had not been unreasonable, and that many reductions had been made under its operation (58 Fed. 77; 7 C. C. A. 81; 24 L. R. A. 87). The whole discussion is confused by the introduction of the erroneous and needless assumption that the doctrine against restrictions upon competition is based on that against contracts in restraint of trade. It was said (58 Fed. 72; 7 C. C. A. 76; 24 L. R. A. 84): "It is not the existence of the restriction of competition, but the reasonableness of that restriction, that is the test of the validity of contracts that are claimed to be in restraint of trade." An attempt was made, though in our view unsuccessfully, to show that the authorities generally that con

demn restrictions upon competition, are in harmony with this test; it being said (58 Fed. 70; 7 C. C. A. 74; 24 L. R. A. 83): "These decisions rest on the ground that the main purpose of the obnoxious contracts was to suppress competition, and that they thus tended to effect an unreasonable and unlawful restraint of trade." So also (58 Fed. 69; 7 C. C. A. 73; 24 L. R. A. 83): "The main purpose of contracts of these classes that are thus held illegal is to suppress, not simply to regulate, competition, and, if suppression is not effected, it is because the contracts fail to accomplish their purpose. It is evident that there is a wide difference between such contracts and those the purpose of which is to so regulate competition that it may be fair, open and healthy, and whose restriction upon it is slight, and only that which is necessary to accomplish this purpose. It does not necessarily follow that contracts of the latter class constitute illegal restraints of trade, because those of the former classes do." This makes the authorities generally rest on the uncertain test of intent, as to which see § 9. This decision was reversed in 166 U. S. 290, 373; 17 Supm. 540, 571; 41 L. Ed. 1007 (1897; see §§ 194, 197), without necessarily affecting the soundness of the conclusions of the court below on this point, though the difficulties in the way of a judicial determination of what is a reasonable rate for railroad transportation,

were forcibly pointed out. The test of reasonableness seems to have been applied in Chicago, Milwaukee & St. Paul Ry. Co. v. Wabash, St. Louis & Pacific Ry. Co., 61 Fed. 993; 9 C. C. A. 659 (8th C., 1894), where an agreement among seven railroad companies, the Union Pacific, the Chicago, Rock Island & Pacific, the Chicago, Milwaukee & St. Paul, the Wabash, St. Louis & Pacific, the Chicago & Northwestern, the Chicago, St. Paul, Minneapolis & Omaha, and the Missouri Pacific, for a pooling and division of through traffic, was held void as designed to establish rates without reference to their reasonableness. There was no evidence of the rates fixed for the traffic involved. This test might perhaps have been applied in Central Trust Co. v. Ohio Central Ry. Co., 23 Fed. 306 (C. C. Ohio, 1885), where a pooling contract among three railroad companies, having reference to their coal business, in respect to which they were competitors, and providing for division of business and earnings in certain fixed proportions, and for fixing tne rates of transportation, was sustained as against a receiver of one of the companies. The decision was "without regard to the questions made as to the original validity of the contract." It appears, however, that the contract "afforded to shippers of coal along the lines of the railroads, rates of transportation as low, if not lower, than was charged by any other railroad companies in the State, quantities and distances being equal. The facili

ties afforded to shippers and the rates for transportation, were uniform and fixed for a definite period. They were not higher than had been charged the public under the sharpest competition existing before the contract was made."

The test was applied in U. S. v. Joint Traffic Assoc., 76 Fed. 895 (C. C. N. Y., 1896), sustaining an agreement among thirty-two railroad companies immensely engaged in competitive interstate commerce, fixing rates, fares and charges, providing for the division of competitive traffic and for the control of soliciting agents. The court said: "These provisions of the contract do not provide for lessening the number of carriers, nor their facilities; nor for raising their rates, except expressly by its terms not contrary to law, and therefore not beyond what are reasonable." So held notwithstanding the provisions of the Federal anti-trust act. But this was reversed in 171 U. S. 505; 19 Supm. 25; 43 L. Ed. 259 (1898; see §§ 194, 197). Compare Post v. Railroad, 103 Tenn. 184, 223; 52 S. W. 301, 310; 55 L. R. A. 481, 491 (1899). This test was also applied in San Diego Water Co. v. San Diego Flume Co., 108 Cal. 549; 41 Pac. 495; 29 L. R. A. 839 (1895), sustaining an agreement between a "water company" that owned a complete distributing plant for furnishing water to the city of San Diego, and a "flume company" owning no distributing plant in the city, but water rights, reservoirs and a supply of water outside the city, connected with the distributing