The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1903-06-11
STILL POUNDS
The MERGER
M. D. Mum Takes Up Alleged Con-
aict Between State and
National Laws.
He Says the State May Prohibit Con-
solidation in Exercising Police
Power.
Arguments Were Expected to Be
Completed This Afternoon
Closing the Case.


Northern Securities case by line Of re-
buttal argument. He replied in detail sin
the strongest points made by counsel for
the defense, especially to their main re- 1
lance, the argument that the state has
no authority to regulate Interstate com
merce. To this Mr.. Mum answered that,
while congress controlled interstate COM
merce, states had authority over the in
struments of that commerce. Railroads |
were created by state charters and states |
had never given up their right to control |
them. The supreme court In the Pearsall
case and the Louisville & Nashville case. |
decided on the same day and by the same
judge. decided that the state has the right |
to prohibit consolidation in the exercise
of police power, even tho that right might |
to some extent affect interstate commerce.
Mr.. Mum also replied to contentious OF
the defense with respect to state laws.
They held that the 1874 law did not reach |
the acts of stockholders. He answered
that the law referred to purchasers of
railroad companies. and that, In the
phraseology of Mr.. Hill, the man who buys
a majority Of the stock Of a road Is its
purchaser. In reply to the argument that
the antitrust law did not apply to. rail-
roads, he urged its analogy with the Sher- !
man law
Mr.. Munn's argument is exhaustive and
well arrayed. He cited several authori-
ties to-day not in his printed brief They
were quoted in rebuttal of points made by
the defense. The argument will be con
tinued this afternoon, with a prospect that
it will be finished before adjournment. |
This speech will end the hearing in the
case.
Corporations Defined.
Speaking again of the act Of 1874, Mr..
Mum sa i'd that the manifest Intent OF the
legislature in passing the law was to pre-
serve competition and@to prohibit any
consolidation which would destroy 1t. So
A corporation is a. legal entity existing
by permission of state. Certain indi-
viduals are given the privilege TO do busi-
ness under certain name. This privi-
lege rests with the stockholders The
title remains in the name Of the company
which owns the property in trust for the
stockholders. The name of the Northern
Securities company is a. mere legal fiction.
It's acts are the acts Of the men who have
adopted st. When they cease to act the
corporation becomes dormant. The com
mentarys OF Judge Thompson says that the
formation of q compensation to oWn the
stock of two companies is only q device
to escape Individual responsibility. Courts
will not permit the use of this fiction Of
the law to defeat the ends and purposes
I of the law. as If
The contention Of the defense was that
the law only applied to railroad CORPORA
lions. It did not apply to- the stockholders
Of such corporations, or to another sort
Of corporation, such as the Northern Sc
curities company, a. legal fiction created to
advance their ends. But this aim could
not stand, said Mr.. Mum, against the
| policy Of the courts, to prevent legal f1c-
| lions from composing unlawful ends. In
support of this Mr. Mum quoted from
Judge Thayer In. a Kansas railroad case.
| The supreme court Of Minnesota was
quoted in the Powers Simpson case to
| show that corporation operating rail-
4 LII 1oxry tad Tor
railroad corporations, even tho 1t was not
incorporated for that purpose. In the
same way the Northern Securities COM
pany is liable to the law as railroad cor
| poration for Its interest in railroad cor
porations.
| The corporate action of the Northern
| Securities company in retiring the pre-
ferred stock was cited as an act in aid
| Of the plan. Judge Lochren asked what
difference the retirement Of the preferred
stock made, after it was owned by the
Northern Securities company. Mr.. Mum
replied that the Northern Securities deal
was not contaminated, was not entered
into by Mr.. Hartman until the action was
taken to retire the preferred stock. One
action was dependent on the other, and a
unanimous vote Of the Northern Pacific
81 directors retired the preferred stock. The
testimony of Mr.. Baker was quoted to
show that the plan was worked out by
n the officers and counsel of the Great
Northern.
While the law does not use the word
stockholders in it's prohibition, 1t uses
a. broader term, purchaser which is
used by Mr.. Hill himself to describe the
buyer Of majority Of the stock Of a road.
. Applying the rule of constituting the law
i by the manifest intent Of the legislature,
the court must hold that this law applies
to the Northern. Securities company.
The Law Of 1899.
Mr.. Mum then took up the antitrust
law. of 1899. He replied to Judge Young's
contention that this did not apply to rail
roads because there was already rail
road legislation on the statute books. This
same position was taken against the Sher-
man act, but was set aside. The supreme
court has held that an agreement or com
bination which has the power to restrict
I trade is in violation of the Sherman law
! The same rule applies to the construction
of the state law.
: That "conttict" Of Laws.
> Mr.. Mum then passed to the mair
. point of the defense. Their. counsel say
: that the state laws are in conflict with
2 the acts Of the federal government. Be
cause 1t may affect interstate commerce
it is not in the province Of the state. II
! reply to this. Mr.. Mum said that the
: states retained all the rights they heid
!, before the constitution was adopted ex.
cept those granted by that instrument tt
congress. State commerce is left to the
! jurisdiction of the states There may be
cases where both state and nation have
the right to regulate and punish. The
state has a right to maintain its integ
rity, and an offense. against the nation
may be an offense against the state. Boil
may punish the same offense The sl1.
preme court touched this in the case o
Cross vs.. North Carolina. Here the cour
t declared that the same act might be- a,
offense against both state and the nation
and punishable by either one. . In thu
louisville & Nashville case the court sal,
d that in the exercise Of its police powe
q a state might make regulations which
n would interfere with interstate commerce
e A statute declaratory of the public polio.
i Of state, even il both remedial an
o penal, may be enforced even tho 1t ha
d some interference with interstate com
% nlerce.
e After a. New TrIai, Maybe.s
= Mr.. Mum said that the criticisms &
= counsel on the decision in the st. Loui
q case indicated that they were contempiat
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