New-York tribune., 1911-04-04
THE SUPREME COURT
KILLS COAL MONOPOLY
In UneuuivocaI Decision 1t Says
Railroad Business Must Be
Divorced from Mining.
OPINION BY CHIEF JUSTICE
Railroads May Hold Stock in
Coal Corporations, but They
Must Be Independent Of
Each Other in Good Faith.

Each Otner IN GOoO rdlCH
Washington. April the commodities
clsuse" cf the Hepburn rate Law. Inter
r-e,ed two wears ago by the Supreme Court
~ tho United States into what was com
monty supposed 10 10 an irpotent group OF
words. received new life to-day by sec
ond Interpretation from that tribunal 80
effective was the reconsideration of the
subject that government officials tonight
predict that the evils sought to he corrected
bv tho legislation will now he renedied and
railroad business henceforth divorced from
cosl business
chief Justice White announced the do
ris;on Of tho court The entire bench agreed
with his statement. although on the previ-
Gus consideration of the case Justice Har-
Ian dissented from tho Judgment of the
court
The chief Justice to-day took the position
that tho lower court had erred In refusing
g. allow tho government 70 amend its origt-
nel petition He referred TO the refusal as
an absolute abuse OF discretion" He said
however that tho abuse WAS obviously
o..casioned by misconceptton Of tho char
rctcr ~ the action 81 this court and the
,co?e OF the mandate
While that decision expressly held. said
Tho chief Justice I'm referring 20 the holding
o. .he supreme Court two years ago that
STOCK ownership by railroad company IN
8 bona 1de corporation. irrespective OF the
e1,en; of such ownership. did not preclude
railroad company from transporting the
commodity manufactured. mined. produced
o. owned hy such corporation. nothing in
ba Lob - ha
government 70 question the power Of the
railroad company 10 transport in interstate
,omrnerce q commodity nanufa ctured.
mined owned = prod iced by corporation
a. which ne railroad held stock and where
no rower - he railroad company as
s,ockho'der was used TO obliterate all dis
,nct.ons betveen the two corporations
That i- 20 say. where the power was eS-
erted IN such a manner a. 70 commingle
,re affairs - ooth. a. by necessary effect
o. make such affairs practically undistin-
guisHable and therefore TO cause both cor
porations to oe one for all purposes
Companies Mus. Be Distinct
The decision was summed up 10y the chief
Justice iu these words.
Il ust be held that while tie night Of
railroad company a. stoCkhoideT 10 use
rs stock ownership for the purpose %
bona fle separate administration OF the
affairs 90 a corporation in which ~ has
stock interest may not oe denied. the use
O. such stock ownership in substance for
the purpose OF destroying the entity OF
producing. etc. corporation and OF COM
minglinC its affairs in administration with
the aftalrs OF the railroad company 40
q make the two corporations virtually one,
brings the railroad company so voluntarily
acting az 70 such producing. etc corpora
ton within the prohibition OF the commod-
it'es clause. In other words. that by oper-
alton and effect Of the commodities clause.
there IS a |uty cast upon a railroad COM
0anv purposing 10 carry in interstate COM
uerCs a product Of the producing. etc. COZ
porstion in which II has a stock interesJ.
not J0 abuse such power 90 as virtually 20
90 by indirection that which the Comuod-
.iiies clause prohibits. a duty which plainly
would be violated bv the unnecessary COM
rirClinE of the affairs OF the producing
couusny with 'ts own 90 as % cause them
. 70 ore and inseparable
Must Be Really independent
"Tnis decision reopens the fundamental
questions involved in the original commodi-
ties clause case" said Wade H. Ellis. spe-
cs counsel for the government. IN discus
sing the courts action The court now
holds that a railroad company cannot Law
fIilv transport in interstate commerc. the
oos ~ a subsidiary company that belongs
% the railroad and which is managed 50
20 make il not in good faith an inde-
.rendenf corporation This will correot the
real evil ~ which the commodities clause
was aimed II viii divorce tho railroad
business from the coal business and COM
De- interstate carriers 10 attend strictly 10
functions for which they were organized"
As result OF the decision the lower
court wl. now allow the government 10
amend rs position IN the Lehigh Valley
Railroad case
IS different situation arises IN regard 70
the Erie. me central Of New Jersey and
N" Pennsr vauia Iu those cases the
government dia not ask for leave 70
amend, considering The Lehish Valley suit
test case The government did ask the
court 10 dismiss rae Erie the Centrai and
'ne fennsylvsnia cases without prejudice.
o"t this was refused. and the Circuit Court
dismissed the cases This dismissal was to-
GAY approved bv INC Supreme Court. Ordi-
har'y 'hi~ would preclude The eovern-
M-nj bringing new suits against ,hose rail-
roads
Government officials tonight exprossed
doubt as 90 whether further rrocso,,,,,s
could De taken against tile Fri. tho o.,
uai Of New jersey and the Penns,,v.r,,
or an investigation VIII be made u,,h -
"'" 90 renewing uc action asain., hon,
r possible
frank H ra't who represented mo
Lehis Valley Railroad Compan, m ,bo
argument of the anthracite coal cases nc
i'rt no Supreme court made the follow
ms statement yeste. day resardipr' tb.
"rhion just handed down.
The government brought suits to ,,..,,,,
~. - 'Ie alley and other authra.its
from TRANSPORTING coal N VIOLA
n3h ID the commodities clause a. I'.
rS-4H ar. which provided tDaf II
'Lo1In Oe unlawful FOR any railroad co,o
~hN Y" transport in interstate oorlrnerce
""N NJMmOdity mined or produced by n
mn "nicu n might nave any nterss,
inf coutenu0n of the soycrnmen, ma.
u'di tbs clause for0ids d railroad ON.
-shf to transport In interstate c0mmerce
a.. .'HhpNlt produced or owned b,
'l'N'aucN lH which Inc railroad cor,r..r,'
Owns stock interest
The contention of the railroad ror,-,,,,o
""' iutt Interest direct OF indirect' h.,
l.u"H Only c'mmoditics in which tbe rail
"" ''ihfaht has legal interest and
u'' exclude the right 10 carry p.ui-
5....1s produced or owned by separate
nlSuhct corporation. simply because In.
"tNe" 'onpant may be- lntere sted iu frs
80 'Ia. corporation as an owner az
80 4At supreme Court ia May 1904
d..Dna Dnat The word, interest direct or fr-
= -, are To- Do taken az embrac cling onIy
"a or equitable interest in fDe r.ro
.H'ulues 10 which thov refer and ca'nnn,
and "'u "'uto 20 mo ude commodities produced
r,.e-.f,D SN'u uf distinct cOrDoTat tiou
-si'rnsa a"scalse Of stock ownership by the
~ o@q company
Nr Justice V-,t.. .fl,..-.-,