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cific invention or the validity of any patent and not referable alone to any patent or groups of patents." Here was explained and distinguished Bement v. National Harrow Co., 186 U. S. 70; 22 Supm. 747; 46 L. Ed. 1058 (1902). But this was reversed in 154 Fed. 365; 83 C. C. A. 343 (7th C., 1907), where, in allowing relief to a licensor against invasion by a licensee of a “lawful patent monopoly," it was said with reference to an "attack upon (the licensor's) license system, based upon the number of licensees," that "this resulted, without any concert of action on the part of the licensees, solely from a policy pursued by (the licensor) through & course of years."

In Blount Manuf. Co. v. Yale & Towne Manuf. Co., 166 Fed. 555 (C. C. Mass., 1909), was held invalid under such act, an agreement among owners of patents by which each "agreed to restrain his own trade in the article of his own invention, not as an incident to a granting of rights, but for the purpose of enhancing his price by the removal of competitors."

In Rubber Tire Wheel Co. v. Milwaukee Rubber Works Co., 142 Fed. 531 (C. C. Wis., 1906), the patent in question (for a rubber tire), having been declared invalid by the Circuit Court of Appeals for the

Sixth Circuit, a license contract was held non-enforcible as an illegal restriction upon competition (within the view of the Federal anti-trust act), in the territory included in such circuit, also as "creating a fund for crushing competition in interstate commerce throughout the whole country, as well in the Sixth Circuit as elsewhere, and not only competition in the G. tires between outside manufacturers and those who are in the combination, but competition of all other rubber tires against the G. tires." It was said that in these two ways were secured "illegitimate results, in their very nature unlawful, neither contained within nor essential to the patent monopoly." But this was reversed in 154 Fed. 358; 83 C. C. A. 336 (7th C., 1907), holding the act not violated by a "requirement that the licensee join other licensees in a combination or pool to control the prices and output of an innocuous patented article," it being said: "Patented articles, unless or until they are released by the owner of the patent from the dominion of his monopoly, are not articles of trade or commerce among the several States." See Goshen Rubber Works v. Single Tube Automobile, etc., Tire Co., 166 Fed. 431 (C. C. A., 7th C., 1908).

CHAPTER XV

RESTRICTIONS UPON COMPETITION AS RESULTING FROM ACTS OF

CORPORATIONS

§ 149. Acts of corporation, in combination with individuals or other corporations.

150. Acts of single corporation.

151. Organization of corporation for purpose of creating restriction. 152. General powers of corporation as limited by doctrine against restrictions.

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§ 149. Acts of corporation, in combination with individuals or other corporations.-Under modern conditions of business, restrictions upon competition are increasingly the results of acts of corporations rather than of mere individuals. In some cases such a restriction is the result of acts of corporations in combination with mere individuals or with other corporations. Under such conditions, save as hereinafter specified, there seems to be no difference in legal effect between the acts of corporations and those of mere individuals.1

1 For instances of acts of corporations held illegal, just as, appar ently, would have been the same acts, if done by an individual or combination of individuals, see Clancey v. Onondaga Salt Manuf. Co., 62 Barb. (N. Y.) 395 (1862); Strait v. National Harrow Co., 18 N. Y. Suppl. 224 (Supm. Ct., Sp. T., 1891). See articles in 13 Harv. Law Rev. 198, 265 (1899-1900) by

E. Q. Keasbey; 16 Id. 79 (1902–3) by R. L. Raymond; 42 Am. Law Reg. N. S. (1903) by Norman Grey; 1 Columbia Law Rev. 235 (1901) by Albert Stickney; 3 Va. Law Reg. 163, 241, 254 (1897-8) by W. L. Royall. In Tribolet v. U. S., 95 Pac. 85; 16 L. R. A. N. S. 223 (Supm. Ct. Ariz., 1908), it was held no objection to holding an officer and stockholder guilty of vio

§ 150. Acts of single corporation.-Not only may a restriction upon competition result from the acts of a corporation in combination with mere individuals or with other corporations, but it may, and not infrequently does, result from the acts of a single corporation; thus where it acquires a monopoly, or approximately a monopoly, of the production and sale of a given commodity. There is here indeed an absence of the element of combination, save in so far as there exists a combination between the corporation and its stockholders or among the stockholders. But, in accordance with the view already expressed, such restriction is just as illegal as if it had been the result of a combination among individuals.2

lation of the Federal act, that in the same proceeding the corporation itself was held not liable.

As to liability of corporation for criminal conspiracy, see § 13. Many of the anti-trust acts contain provisions specially applicable to corporations. See c. XX. As to extent of power of Congress to restrain the action of a corporation created under State law, see § 178.

2 See § 129. Thus in Distilling & Cattle Feeding Co. v. People, 156 Ill. 448; 41 N. E. 188; 47 Am. St. Rep. 200 (1895), a corporation concededly illegal in its organization (the Distilling & Cattle Feeding Co.), was held illegal on the ground of it succeeding to what was held to be an illegal "trust" (the Distillers & Cattle Feeders' Trust). The court said (156 Ill. 490; 41 N. E. 202: "The same interests are controlled in substantially the same way and by the same agencies as before. The nine trustees of the trust, who, as the holders of the capital stock of the corporations, and as a majority of the directors of each, controlled such corporate property, became the sub

scribers for all the stock of the new corporation, and its board of directors. The conveyance and transfer of the properties of the constituent companies to the new corporation, was merely a transfer by the trus tees to themselves, though in a slightly different capacity; and the former stockholders in the constituent companies simply exchanged their trust certificates, share for share, for stock in the new corporation. That corporation thus succeeds to the trust, and its operations are to be carried on in the same way, for the same purposes, and by the same agencies as before. The trust then being repugnant to public policy, and illegal, it is impossible to see why the same is not true of the corporation which succeeds to it and takes its place. The control exercised over the distillery business of the country, over production and prices, and the virtual monopoly formerly held by the trust, are in no degree changed or relaxed, but the methods and purposes of the trust are perpetuated and carried out with the same persistence and vigor as before the or

§ 151. Organization of corporation for purpose of creating restriction. If a restriction upon competition resulting from the acts of a single corporation, concededly legal as to its organization, be illegal, a fortiori the organization of a corporation for

ganization of the corporation." To similar effect, National Lead Co. v. Grote Paint Store Co., 80 Mo. App. 247, 267 (1899). See also Finck v. Schneider Granite Co., 187 Mo. 244, 268; 86 S. W. 213, 220; 106 Am. St. Rep. 452 (1905).

But in Monongahela River Consolidated Coal & Coke Co. v. Jutte, 210 Pa. St. 288, 300; 59 Atl. 1088, 1092; 105 Am. St. Rep. 812 (1904), where there was held to be no illegal restriction upon competition, it was said: "The professed purpose in organizing these large corporations is not to kill competition, but to cheapen production in the interest of the public. Yet, whatever the real purpose, competition is stopped by an entirely lawful method.". It was said in Stockton v. American Tobacco Co., 55 N. J. Eq. 352, 364; 36 Atl. 971, 976 (1897); affirmed as Miller v. American Tobacco Co., 56 N. J. Eq. 847; 42 Atl. 1117 (1898): "The fact that a corporation is an entity, representing an aggregation of skill and capital, does not curtail its right to transact the business which the State's charter empowers it to conduct, with exactly the same freedom as a citizen. So long as by the policy of this State the formation of corporations is permitted, so long will the right of such artificial persons to act within the scope of their franchises, be in no sense different from the right of an individual. The control of a court of equity over the business conduct of either is exactly the same. The contracts of either will

be rectified, annulled or specifically enforced, and the duties of either as trustee, or its right as cestui que trust, will be enforced and protected. Any illegal conduct of either, leading to irreparable injury, will be enjoined. A nuisance created by either will be restrained. Indeed, whenever either an individual or corporation become related to any other individual or corporation, so that equitable jurisdiction arises to remedy some wrong or secure some right, it matters not whether both parties are individuals or both corporations, or that one is a natural and the other an artificial person." But although the views thus expressed seem substantially correct, they also seem to have been wrongly applied. Here relief was denied against the conduct by a corporation of its business in a certain manner, thus on the ground that it would have been lawful for an individual to conduct his business in the same manner. It disposed of its goods through "consignment agreements" with "jobbers." The court said (55 N. J. Eq. 363; 36 Atl. 975): "Assume that it ap pears that the company has so enforced its consignment agreement as to make it practically impossible for any jobber to handle its goods, and at the same time to deal in goods made by others, and assume that from such conduct the alleged consequences flow, the query remains, what power has this court to interfere at the instance of either the attorney-general or of any job

the purpose of creating an illegal restriction upon competition is illegal.3

§ 152. General powers of corporation as limited by doctrine against restrictions.-Certain powers, such as the power to hold

ber? If the conduct now the subject of complaint had been that of an individual manufacturer instead of a corporation, I do not imagine that any lawyer would think of pressing before any court the proposition that such conduct could be enjoined. An individual manufacturer can sell his manufactured stock to whom he pleases, on any terms he pleases, and can refuse to sell to any one with whom, for his own reasons, however capricious, he does not care to deal. He can select his agents to sell his goods, and fix any rate of commissions. He can accompany his consignment to such agent with such restrictions as to the price or the terms of sale, or in respect to the parties to whom he may sell, as he pleases. Within these limits the power of an owner of manufactured goods is absolute." But suppose such individual manufacturer, by the extent and variety of his operations, to be able to control the trade? The question might then well arise whether relief might not be granted against his acts. As it is, the case supposed by the court is not parallel with that before it. See under S. C. (§ 229), for elaborate effort to include under the definition of a monopoly such restrictions as are effected through the medium of a single corporation. As to effect of Federal act, see § 196.

See generally, articles in 20 Harv. Law Rev. 167 (1907) by Herbert Pope; 19 Pol. Sci. Quart. 173 (1904) by A. D. Adams.

3 Thus in Harding v. American Glucose Co., 182 Ill. 551, 616, 632; 55 N. E. 577, 599, 604; 64 L. R. A. 738, 764, 770; 74 Am. St. Rep. 189 (1899), was held illegal "the organization of a new corporation and the conveyance thereto of all the property owned by six competing corporations and the execution of agreements by the corporations thus parting with their property, not any longer to engage in the manufacture of the industrial products in which they had been previously engaged." Those controlling the new corporation were for the most part the same persons who were interested in and controlled one or more of the conveying corporations, and many of the stockholders in the old corporations were stockholders in the new. See also Evans v. American Strawboard Co., 114 Ill. App. 450 (1904); Brownsville Glass Co. v. Appert Glass Co., 136 Fed. 240 (C. C. Pa., 1905). So in Richardson v. Buhl, 77 Mich. 632, 657; 43 N. W. 1102, 1110; 6 L. R. A. 457, 465 (1889), the objects of a corporation (the Diamond Match Company) were held illegal under the conditions thus described: "The business in which it is engaged is making friction matches. Its articles provide for the aggregation of an enormous amount of capital, sufficient to buy up and absorb all of that kind of business done in the United States and Canada, to prevent any other person or corporation from engaging in or carrying on the same, thereby pre

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