New-York tribune., 1903-04-10

securities company, in pursuance of a previous
understanding or agreement so TO do, had trans
ferred their stock in the two railroad companies
d third party parties, and had agreed 10
induce other shareholders to do likewise until
"a ma jority of the stock of both companies had
been vested in a single individual or associa-
tion of individuals. and had empowered the
holder or holders to vote the stock as their oWh'
receive all the dividends thereon, and pro-rate
or divide them among all the stockholders OF the
two companies, who had transferred their stock,
the result would have been combination in d.
il would have placed in the hands of small
coterie OF men the power TO suppress compet-
tion between two competing interstate carriers
whose lines are practically parallel
1t will not do to say that so long as each ran
road company has its own board of directors
they operate Independently and are not con-
trolled by the owner of. the majority OF their
stock. 1t is the common experience OF man
kind that the acts of corporations are dictated
and that their policy is controlled by those who
own the majority OF their stock. Indeed one
of the favorite methods in these days-and
n corporal tion--is to purchase the greater part
OF its stock II was the method pursued by the
Northern Pacific and Great Northern COM
panies TO obtain control of the Chicago, Bur
lington and Quincy Railroad. and so long as d.
rectors are chosen by stockholders the latter
will necessarily dominate the former. and IN
a real sense 1etermine all important corporate
acts.
The fact that the ownership of majority of
the capital stock of corporation gives one the
mastery and control Of the corporation was
distinctly recognized and declared in Pearsall
Great Northern Railway. Jol, 4. S-s ofp,
OIL. The same fact has been recognized and
declared by other courts. Pennsylvania Rail-
road Company agt. Commonwealth, 4, atl.
(Pennsylvana) Sos, 311; Farmers Loan and
Trust COMPANY agt. New-York and Northern
Railway Company. $50, n. Y. 41O, 425; People
eX rel agt Chicago Cast oo Trgst cnd Company $50
In opposition to this view counsel cite Pull
man Car Company agt Missouri Pacific Com
pany. 115 Mo. 5S7. 596 but in that case the
meaning of the word controlled" as used in
private contract. was the point under consider
alton. and what said on, the subject can
not be held applicable to cases arising under
the Antitrust act, when the point involved is
whether the ownership of all the stock or TWO
competing and parallel roads vests the owner
thereof with the power to suppress competition
between such roads We entertain no doubt
that it does .,
ton: that EsstEnin, of s",t conf
of such ownership.
AN ILLEGAL ACT ACCOMPLISHED.
What has been done through the organization
of the Securities Company accompishes the OBJ
ject, which Congress has denounced as illegal
more effectually. perhaps. than such COM
That Is say. by what ha. been done the
made for maintaining it, TO suppress com
ps,dtion % between & two nmpetins and nar
nuei lines of railroad CompetIti19In: we we
.trai ed thnn IT now ia under and by force ;,
Eoad companfes Were sonstructed under
II is manifest, therefore. that the New-Jer-
sey charter is about the only shield which the
defendants can fnterpose between themselves
and the law. The reasoning which led to the
acquisition of that charter would seem to have
been that. while individuals the promoters
could not by agreement between themselves,
place the majority Of the stock of the two COM
peting and parallel railroads in the hands of a
single person or a few persons, giving him OF
them the power TO operate the roads in haf-
mony and sti1e competition, yet that the same
persons might create q purely fictitious person
termed a corporation which could neither think
nor ao+ &C no directed. and
the same stock in the name OF Such artncldI
being accomplish the same purpose. The mani
fest unrea soma ableness of such proposition and
the grave consequences sure to follow IRON IT'S
approval compel to assume that 1t must De
unsound, especially when we reflect that me
law, as administered by courts OF equity, ioohS
always at the substance OF things, at the OBJECT
accomplished. whether II be lawful or unIa"tui.
rather than upon the particular devices or
means by which it has been accomplished
THE NEw-JERsEY CHARTER.
So far as the New-Jersey charter is con-
cerned the question broadly stated, which the
court has to determine is whether charter
granted by State can be used to defeat the
will of the national legislature as expressed III d
law relating to interstate trade and commerce
over which Congress has absolute control Pre-
s,1nptively at least charter granted by
state is Intended by the State to have that
effect or to be used for such purpose; ana III
the present instance III is clear that inc e.''e
Sb.rter oh SnfeE cover Of which n object de-
n n"Snnf edmbinnsion ny eSnferrins power re:
str int
formed and maintained, because the enabling
act. under which the Securities Company was
organized expressly declares that three or more
persons may avail themselves Of the provisions
of the act and become a corporation for any
lawful purpose" Laws of New-Jersey 1899, p.
473 This language is not merely perfunctory;
1t means obviously. that whatever powers the
fncorporators saw At to assume they must hoId
and exercise for the accomplishment or laWruL
objects The words in question operate, there
fore, as limitation upon all the powers emu
nerated in the articles Of association when
filed by the promoters Of the SECURITIES
Company. so that, however extensive anu
comprehensive these powers may seem to be-
the State of New-Jersey has said You shati
a6x aot starefs ImsfnIiy enacted by the Con
ss of ehacted ths aiSa bs any State Wherein
fit to exercise your powers
POWER OF CONGRESS SUPREME.
But aside from this view of the subject. If the
State of New-Jersey had undertaken TO invest
the corporators of the Securities Company WIN
the mower TO do acts in the corporate name
which would operate TO restrain interstate coin
rlerce. and. for that reason, could not be zone
L, them acting as an association of individuals,
then we have no doubt that such 4 grant would
have been void under the provisions of the anti
tri,st act or at least. that the charter could not
he permitted to stand in the way Of the en-
forcemelt of that act
The poyver of Congress over interstate
commerce is supreme. fnr reaching. ana
ucIzuowIedEc. Limitations other than
such prescribed i'm the consultation
itself.
Gibbons vs.. ogden. 9 Wheat /. 197. County
of Mobile VS. Kimball. 102 L. S. 691. 600, o3f'
Champion vs.. Ames. L 5. decided February
% 1868.
No legislation on the part of state can cur cur
tail or interfere with its exercise; ano III NIe
of repeated decisions no one can deny th&t u u
legitimate exercise of the power IN question:
for Congress 10 say that neither natural nor
artificial persons can combine or corsplre IN any
form whatever to place restraints on interstate
trade or commerce. United States VS.. ITaitS- LIS
Missouri Freight Association ioo =, -. III III
United States Joint Traffic AssocIat1ofl III.
L aistn