The sun. [volume] (New York [N.Y.]) 1833-1916, 1903-08-02
SECURITIES MERGER UPHELD.
CORPORATION DECLARED no DE
A.. NOT 4 RAILROAD COMPANY.
Judge LOchren or tho Federal Court In
st. Paul Says That the Minnesota Laws
were Not Violated by the Formation
OF the COmpany--Also Says sherman
Antitrust Law In Not violai ed--Dfs.
agrees with the Circnit Court Decision.

that tina Northern Securities Company Ia
not railroad corporation, Judge Lochren
| Of the Federal Court knocked out the chief
| contention OF the argument OF the State In
| the suit against the merger, with the re-
| suit that the whole fabric OF the State s
case was swept away.
Having reached this conclusion, 1t was
| inevitable that the decision filed this MORN
| ing should 10 In favor OF the cont' ntion OF
| counsel for the merger, who reitei ated all
| through the trial that the Northern Securi-
! ties Company was merely holding COM
pany. - formed for the express purpose OF
protecting the interests of the owners OF
the Great Northern and Northern Pacific
from the raids Of interests opposed to the
development of these roads and their
seaboard terminals.
The question as % whether organizing
the Northern Securities Company was In
violation of the State law prohibiting the
formation Of trusts is exclusively dis
c,issed in the decision. and il ia held that
tho application of the State law must he
the same MS that of the Sherman anti
trust act in respect to railroads. The
proper construction OF the latter statute
and necessarily affecting transportation
or rates therefor, are not in restraint Of
trade or within the province of the statute.
though they may remotely appear to have
the same probable effect.
The decision distinctly holds that thing
that the Northern Securities Company has
done can directly or indirectly affect trade,
commerce, transportation or rates and that
therefore the corporation is clearly not
affected by either the Sherman act or the
State statute. II Ia pointed out also that II
the corporation did come within the pro-
hibtions of the Sherman act. the State
would have no authority to attempt TO en-
force a compliance with the terms of the act.
The question as to whether the corpora
ton is in restraint of trade and commerce
having been disposed of, the Judgment takes
up as To whether 1t Is in violation Gf the State
law prohibiting the consolidating Of COM
petiGg and par allel railroads, and II il held
that il il not.
The State law is discussed paragraph by
paragraph in its application to railroads,
and ii il held;
First That its reference to railroad corpo-
ra'ioAs cannot be applied because the defend
ant corporation is not railroad company.
Second That its references to lessees
Of railroads are similarly inapplicahle re-
cause there is none involved.
Thrd~The ~ on relating to purchasers
is eliminated from consideration because,
the decision holds. the Northern Securities
Company has not purchased either or both
Of the railroads affected.
Fourth-The section applying 10 the at-
fions OF managers Of railroads in promoting
combinations is held to be inapplicabe
because. although Mr.. Hill, the virtual
- -
did promote the formation of the holding
company, he did not effect a consolidation,
but merely sold to 1t stock in both railroads.
This decision affects the results Of the
Fedora Governments victory in the Circuit
Court in no way whatever. The Federal
suit involved the same defendants and
the same general state of facts, but was
based on a totally different contention of
law. The Federal suit, in which the Sc
curities company was beaten, Yves prose-
cution for violation OF the Sherman Anti
Trust law, passed by the Federal Congress
Judge Lochren simply decides that the
merger does not violate the State act
trede, nor the act prohibiting the con-
solidating OF parallel end competing rail-
roads, for the reason that II Is not railroad
company. The Northern Securities Com
pany il described as an investing company.
with no control over the operation Of the
rO2Oa whose StOCkS IL nOldS.
The Judgment says there is not a scintilla
of evidence TO show that me Northern
Securities Company has ever sought 10
control or interfere with either railroad
affected in respect TO operation or man
agement. The merger is held g,iitless
of any attempt or act iIr direct restraint
of trade. The stockholdings of the cor
poration, it is dec d,d, can have nothing
70 do. directly or indirectly. with trade,
commerce, or transportation or rates.
The contention that, because IL was to the
pecuniary interest Of the incorporators
of the merger to consolidate the Great
Northern and Northern Pacific systems,
such consolidation was actually made is
rejected on the ground that an act to ad-
vance pecuniary interest cannot I've held
to imply irtent to commit penal offence
The decision fatty controverts the con-
tentions of counsel for the State that the
merger can, in any sense, be considered
railroad company because it owns
majority In the stock of beth. The Judge
frankly confesses that he cannot concur
In the view Of the case taken by Judges
Thayer, Sanborn and Caldwell, in the suit
brought by the Federal Government against
the same corporation.
In the case brought by the Federal Govern
ment and decided against the Northern Sc
curties Company, the company Is held to be
First-ln effect e railroad company.
Second An illegal combination In re-
strsint of trade.
Third-Ilegal under terms Of Federal
ANTITRUST ret.
The decision given to-day by Judge
Loohren holds:
First--That the Northern Securities Com
pany ia not railrond company.
S,cond-That IL Is not a combination In
restreint of trade.
Third-Thrt II does not violate the State
act prohibiting trusts.
Gov. Vsn s mt, though disappointed, said.
This doesn't discourage me n little bit.
We will fight this case to finish in the
same vigorous manner in which we have
fought it thus far More thrn this cannot
sly until have he'd On opportunity TO read
the decision in full
The Minnesota case is one of several
suits pending against the Northern SEE
curtties Company OF the others the i'm
portant ones are, OF course. that Of the
United States under the Sherman act, which
was recently decided by the Circuit Court
at st. Paul adversely TO the company and
which comes up on appeal before the SUI
preme Court In December; and the suit Of
the State OF Washington. The latter suit
and the Minnesota case are on all fours.
The Government suit under the Sher-
nan law ls considered the vital one by
Northern Securities interests, IA the S,i-
preme Court Of the United States Is to pass
upon the validity of the company The
Minnesota decision ia taken in Wall Street
to mean that the courts OF Minnesota are
not convinced that either State or Federal
statutes are violated by the operations Of
the company. Northern Securities stock
on the curb gained az points yesterday on
Hhp newa Of the doCRion