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Timestamp: 2019-04-26 13:05:21+00:00

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STATE OF MINNESOTA v. NORTHERN SECURITIES CO.
[194 U.S. 48, 49] Messrs. W. B. Douglas, M. D. Munn, and George P. Wilson for appellant.
Messrs. George B. Young, John G. Johnson, M. D. Grover, C. W. Bunn, and W. P. Clough for appellees.
By a statute of Minnesota passed March 9th, 1874, it was pro- [194 U.S. 48, 57] vided that no railroad corporation or the lessees, purchasers, or managers thereof should consolidate the stock, property, or franchises of such corporation with, or lease or purchase the works or franchises of, or in any way control, any other railroad corporation owning or having under its control a parallel or competing line; nor should any officer of such corporation act as an officer of any other railroad corporation owning or having the control of a parallel or competing line; and the question whether railroads were parallel or competing lines should, when demanded by the party complainant, be decided by a jury as in other civil issues. Minn. Laws, 1874, p. 154.
A subsequent statute, passed March 3d, 1881, provided that any railroad corporation, either domestic or foreign, whether organized under a general law or by virtue of a special charter, might lease or purchase, or become owner of or control, or hold the stock of, any other railroad corporation, when the respective railroads could be lawfully connected and operated togther 'so as to constitute one continuous main line, with or without branches,' 1; and that any railroad corporation, whose lines of railroad within or without the state might be lawfully connected and operated together to constitute one continuous main line, so as to admit of the passage of trains over them without break or interruption, 'could consolidate their stock and franchises so as to become one corporation.' 2. But by the same statute it was provided that no railroad corporation should consolidate with, lease, or purchase, or in any way become owner of, or control, any other railroad corporation, or any stock, franchises, rights of property thereof, which owned or controlled 'a parallel or competing line.' 3. Minn. Laws, 1881, p. 109.
At a later date, 1899, the legislature of Minnesota passed another statute relating principally to such restraints upon trade and commerce as interfered with competition among those engaged therein. That statute contained these provisions: [194 U.S. 48, 58] ' 1. Any contract, agreement, arrangement, or conspiracy, or any combination in the form of a trust, or otherwise, hereafter entered into which is in restraint of trade or commerce within this state, or in restraint of trade or commerce between any of the people of this state and any of the people of any other state or country, or which limits or tends to limit or control the supply of any article, commodity, or utility, or the articles which enter into the manufacture of any article [of] utility, or which regulates, limits, or controls or raises or tends to regulate, limit, control, or raise the market price of any article, commodity, or utility, or tends to limit or regulate the production of any such article, commodity, or utility, or in any manner destroys, limits, or interferes with open and free competition in either the production, purchase, or sale of any commodity, article, or utility, is hereby prohibited and declared to be unlawful. 2. That when any corporation heretofore or hereafter created, organized, or existing under the laws of this state, whether general or special, hereafter unites in any manner with any other corporation wheresoever created, or with any individual, whereby such corporation surrenders or transfers, by sale or otherwise, in whole or in part, its franchise, rights, or privileges, or the control or management of its business to any other corporation or individual, or whereby the business, management, or control of the business of such corporation is limited, changed, or in any manner affected, and the purpose or effect of such union or combination is to limit, control, or destroy competition in the manufacture or sale of any article or commodity, or is to limit or control the production of any article or commodity, or is to control of fix the price or market value of any article or commodity, or the price or market value of the material entering into the production of any article or commodity, or in case the purpose or effect of such union or combination is to control or monopolize in any manner the trade or commerce, or any part thereof, of this state or of the several states, such union, combination, agreement,* arrange- [194 U.S. 48, 59] ment, or contract is hereby prohibited and declared to be unlawful. . . . 3. Any corporation heretofore or hereafter created, organized, or existing under the laws of this state, which shall hereafter, either directly or indirectly make any contract, agreement, or arrangement, or enter into any combination, conspiracy, or trust, as defined in 1 of this act, shall, in addition to the penalty prescribed in 2 of this act, forfeit its charter, rights, and franchises, and it shall thereafter be unlawful for such corporation to engage in business, either as a corporation or as a part of any combination, trust, or monopoly, except as to the final disposition of its property under the laws of this state. . . . 6. That for the purpose of carrying out the provisions of this act any citizen of this state may, and it is hereby declared to be the duty of the attorney general to, institute, in the name of the state, proceedings in any court of competent jurisdiction against any person, partnership, association, or corporation who may be guilty of violating any of the provisions of 1 of this act, for the purpose of imposing the penalties imposed by this act, or securing the enforcement of 3 hereof.' Minn. Gen. Laws, 1899, chap. 357.
These statutes being in force, the state of Minnesota instituted this suit in one of its own courts against the Northern Securities Company, a corporation of New Jersey; the Great Northern Railway Company, a corporation of Minnesota; the Northern Pacific Railway Company, a corporation of Wisconsin, which, having filed its articles of incorporation with the secretary of state of Minnesota, became subject to the laws of that state relating to railroad corporations; and James J. Hill, as president of the Northern Securities Company, and individually.
What is the nature of the case as disclosed by the complaint filed in the state court?
That the carrying out the above agreements and plan of consolidation and monopoly, and in every step taken to consummate it, the officers and directors of each of said railway companies were severally fully advised and consented thereto, and, unless restrained by this court, the Securities Company would continue to manage and control the business and affairs of Great Northern and Northern Pacific Railway Companies, and to suppress all competition between them for freight and passenger traffic, as well as to monopolize railway traffic in that state, to the irreparable damage of the state and the people thereof.
The substantial relief asked was a decree declaring, among other things, the alleged agreement and combination to be unlawful, and all acts done and to be done in pursuance thereof contrary to, and in violation of, the laws of Minnesota and of the United States; prohibiting the Securities Company, its agents and officers, from acquiring, receiving, holding, voting, or in any manner acting as the owner of any of the shares of the capital stock of either the Northern Pacific or the Great Northern Railway Company, or from exercising any management, direction, or control over the constituent companies; and enjoining those railway companies from recognizing or accepting the Northern Securities Company as the holder or owner of any shares of the capital stock of either of those companies, or from effecting any combination or agreement [194 U.S. 48, 62] that would disturb their independent integrity, management, and control, respectively, or that would, directly or indirectly, destroy free and unlimited competition between them by interchange of traffic, poolings of earnings, division of property, or otherwise.
The Securities Company, appearing specially for that purpose, filed its petition for the removal of the case into the circuit court of the United States upon the ground that the suit was of a civil nature, in equity, involved, exclusive of costs, the sum of $2,000, and was one arising under the Constitution and laws of the United States.
The state court approved the required statutory bond for removal, and made an order reciting that the case was removed to the Federal court.
The Northern Securities Company, appearing specially for that purpose, gave notice of a motion to have the service of summons upon it vacated. Notice was also given of a like motion as to the service of summons upon defendant Hill in his capacity as president of that company. Subsequently, the company, and defendant Hill as its president, gave notice that the above notices were withdrawn, and they accordingly entered their appearance in the cause.
At a later date the defendants severally answered, and the state filed its replication to each answer. Proofs were taken, and, the cause having been heard, the bill was dismissed upon the merits. 123 Fed. 692.
After the cause was argued here the parties were invited to submit briefs upon the question whether the circuit court of the United States could take cognizance of the case upon removal from the state court. From the briefs filed in response to that invitation it appeared that both sides deemed the case a removable one, and insist that this court should consider the merits as disclosed by the pleadings and evidence. But consent of parties can never confer jurisdiction upon a Federal court. If the record does not affirmatively show jurisdiction in the circuit court, we must, upon our own [194 U.S. 48, 63] motion, so declare, and make such order as will prevent that court from exercising an authority not conferred upon it by statute. Mansfield, C. & L. M. R. Co. v. Swan, 111 U.S. 379, 382 , 28 S. L. ed. 462, 464, 4 Sup. Ct. Rep. 510; Robertson v. Cease, 97 U.S. 646 , 24 L. ed. 1057; King Bridge Co. v. Otoe County, 120 U.S. 225 , 30 L. ed. 623, 7 Sup. Ct. Rep. 552; Parker v. Ormsby, 141 U.S. 83 , 35 L. ed. 655, 11 Sup. Ct. Rep. 912; Mattingly v. Northwestern Virginia R. Co. 158 U.S. 53, 57 , 39 S. L. ed. 894, 895, 15 Sup. Ct. Rep. 725; Great Southern Fire-Proof Hotel Co. v. Jones, 177 U.S. 449, 453 , 44 S. L. ed. 842, 844, 20 Sup. Ct. Rep. 690; Continental Nat. Bank v. Buford, 191 U.S. 120 , ante, p. 54, 24 Sup. Ct. Rep. 54; Defiance Water Co. v. Defiance, 191 U.S. 184 , 194, ante, p. 63, 24 Sup. Ct. Rep. 63.
We proceed, therefore, to inquire whether the circuit court could take cognizance of this case upon removal from the state court, and make a final decree upon the merits.
Of course, the circuit court could not take cognizance of the case as one presenting a controversy between citizens of different states, for the state of Minnesota is not a citizen within the meaning of the Constitution or the acts of Congress. Postal Teleg. Cable Co. v. Alabama, 155 U.S. 487 , 39 L. ed. 232, 15 Sup. Ct. Rep. 192.
In Tennessee v. Union & Planters' Bank, 152 U.S. 454, 461 , 38 S. L. ed. 511, 514, 14 Sup. Ct. Rep. 654, 657, which involved the scope and meaning of the acts of 1887-8, in respect of cases arising under the Constitution or laws of the United States, this court, after referring to 1 said: 'But the corresponding clause in 2 allows removals from a state court to be made only by defendants, and of suits 'of which the circuit courts of the United States are given [194 U.S. 48, 64] original jurisdiction by the preceding section,' thus limiting the jurisdiction of a circuit court of the United States on removal by the defendant under this section to such suits as might have been brought in that court by the plaintiff under the first section. 24 Stat. at L. 553, chap. 373; 25 Stat. at L. 434, chap. 866 (U. S. Comp. Stat. 1901, p. 508). The change is in accordance with the general policy of these acts, manifest upon their face, and often recognized by this court, to contract the jurisdiction of the circuit courts of the United States.' Mexican Nat. R. Co. v. Davidson, 157 U.S. 201, 208 , 39 S. L. ed. 672, 675, 15 Sup. Ct. Rep. 563; Metcalf v. Watertown, 128 U.S. 586 , 32 L. ed. 543, 9 Sup. Ct. Rep. 173. And in Chappell v. Waterworth, 155 U.S. 102, 107 , 39 S. L. ed. 85, 87, 15 Sup. Ct. Rep. 34, 36, the court, referring to Tennessee v. Union & Planters' Bank, said that it was there adjudged, upon full consideration, that, under the act of 1887-8, 'a case (not depending on the citizenship of the parties nor otherwise specially provided for) cannot be removed from a state court into the circuit court of the United States, as one arising under the Constitution, laws, or treaties of the United States, unless that appears by the plaintiff's statement of his own claim; and that, if it does not so appear, the want cannot be supplied by any statement in the petition for removal, or in the subsequent pleadings.' To the same effect are Postal Teleg. Cable Co. v. Alabama, 155 U.S. 487 , 39 L. ed. 232, 15 Sup. Ct. Rep. 192; United States v. American Bell. Teleph. Co. 159 U.S. 548, 553 , 40 S. L. ed. 255, 257, 16 Sup. Ct. Rep. 69; Oregon Short Line & U. N. R. Co. v. Skottowe, 162 U.S. 490, 494 , 40 S. L. ed. 1048, 1050, 16 Sup. Ct. Rep. 869; Texas & P. R. Co. v. Cody, 166 U.S. 606, 608 , 41 S. L. ed. 1132, 1134, 17 Sup. Ct. Rep. 703; Pratt v. Paris Gaslight & Coke Co. 168 U.S. 255, 258 , 42 S. L. ed. 458, 459, 18 Sup. Ct. Rep. 62; Walker v. Collins, 167 U.S. 57, 59 , 42 S. L. ed. 76, 77, 17 Sup. Ct. Rep. 738; Arkansas v. Kansas & T. Coal Co. 183 U.S. 185 , 46 L. ed. 144, 22 Sup. Ct. Rep. 47; Western U. Teleg. Co. v. Ann Arbor R. Co. 178 U.S. 239 , 44 L. ed. 1052, 20 Sup. Ct. Rep. 867. These cases establish, beyond further question in this court, the rule that, under existing statutes regulating the jurisdiction of the courts of the United States, a case cannot be removed from a state court as one arising under the Constitution or laws of the United States, unless the plaintiff's complaint, bill, or declaration shows it to be a case of that character. 'If it does not appear at the outset,' this court has quite recently said, 'that the suit is one of which the circuit court at the time its jurisdiction [194 U.S. 48, 65] is invoked could properly take cognizance, the suit must be dismissed.' Third Street & Suburban R. Co. v. Lewis, 173 U.S. 457, 460 , 43 S. L. ed. 766, 767, 19 Sup. Ct. Rep. 451.
We must then, inquire whether the complaint presents a case arising under the Constitution or laws of the United States, in respect of which the original jurisdiction of the circuit court could have been invoked by the state.
The real purpose of the suit was to annul the agreement and suppress the combination alleged to exist between the defendant corporations, upon the ground that such agreement and combination were in violation, first, of the laws of Minnesota, and, second, of the anti-trust act of Congress. If relief had been asked upon the ground alone that what the defendant corporations had done and would, unless restrained, continue to do, was forbidden by the statutes of Minnesota, the circuit court of the United States could not have taken cognizance of the case; for confessdly such a controversy would not have been one between citizens of different states, nor could such a suit have been deemed one arising under the Constitution or laws of the United States.
The contention, however, is that a case arising under the laws of the United States was presented by the allegation in the complaint that the combination and consolidation between the Great Northern and Northern Pacific Railway Companies and the control of their affairs and operations by the Northern Securities Company were also in violation of the anti- trust act of Congress of July 2d, 1890. An allegation in a complaint filed in a circuit court of the United States may, indeed, in a sense, confer jurisdiction to determine whether the case is of the class of which the court may properly take cognizance for purposes of a final decree on the merits. Newburyport Water Co. v. Newburyport, 193 U.S. 561 , ante 553, 24 Sup. Ct. Rep. 553, and Pacific E. R. Co. v. Los Angeles (decided at present term) 193 U. S. --, ante, 586, 24 Sup. Ct. Rep. 586. But if, notwithstanding such an allegation, the court finds, at any time, that the case does not really and substantially involve a dispute or controversy within its jurisdiction, then, by the [194 U.S. 48, 66] express command of the act of 1875, its duty is to proceed no further. That is manifest from the 5th section of that act, which provides: 'That if, in any suit commenced in a circuit court or removed from a state court to a circuit court of the United States, it shall appear, to the satisfaction of said circuit court, at any time after such suit has been brought or removed thereto, that such suit does not really and substantially involve a dispute or controversy properly within the jurisdiction of said circuit court, or that the parties to said suit have been improperly or collusively made or joined, either as plaintiffs or defendants, for the purpose of creating a case cognizable or removable under this act, the said circuit court shall proceed no further therein, but shall dismiss the suit or remand it to the court from which it was removed, as justice may require, and shall make such order as to costs as shall be just.' 18 Stat. at L. 470, chap. 137 (U. S. Comp. Stat. 1901, p. 508). That provision has not been superseded by any subsequent legislation.
Does the present suit really and substantially involve a dispute, or controversy properly within the jurisdiction of the circuit court? That is to say, could the suit, as disclosed by the complaint, have been brought by the state originally in that court? If it could not, then, under the act of 1887-8 and the adjudged cases, it should not have been removed from the state court, and should be remanded.
By the 1st section of the anti-trust act every contract, combination in the form of a trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, is declared to be illegal. The 2d section condemns the monopolizing or attempting to monopolize, or combining or conspiring to monopolize, any part of such trade or commerce. By the 3d section, every contract, combination in the form of trust or otherwise, or conspiracy in restraint of commerce in any territory of the United States or the District of Columbia, or in restraint of trade or commerce between any such territory and another, or between any such territory or territories and any state or states or the District of Columbia, or [194 U.S. 48, 67] with any foreign states, or between the District of Columbia and any state or states or foreign nations, is declared to be illegal. A violation of the provisions of each section is made a misdemeanor, punishable by a fine not exceeding $5,000 or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court. Of course, a criminal prosecution under the act must be in the name of the United States and in a court of the United States,-the district attorney who conducts the prosecution being subject to the direction of the Attorney General as to the manner in which his duties shall be discharged. Rev. Stat. 362 (U. S. Comp. Stat. 1901, p. 208).
' 6. Any property owned under any contract or by any combination or pursuant to any conspiracy (and being the subject thereof) mentioned in section one of this act, and being in the course of transportation from one state to another, or to a foreign country, shall be forfeited to the United States, and may be seized and condemned by like proceedings as those provided by law for the forfeiture, seizure, and condemnation of property imported into the United States contrary to law. [194 U.S. 48, 68] ' 7. Any person who shall be injured in his business or property by any other person or corporation by reason of anything forbidden or declared to be unlawful by this act may sue therefor in any circuit court of the United States in the district in which the defendant resides or is found, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the costs of suit, including a reasonable attorney's fee.
' 8. That the word 'person,' or 'persons,' wherever used in this act, shall be deemed to include corporations and associations existing under, or authorized by, the laws of either the United States, the laws of any of the territories, the laws of any state, or the laws of any foreign country.' 26 Stat. at L. 209, chap. 647 (U. S. Comp. Stat. 1901, p. 3200).
But it is said that as the act of Congress was for the benefit of all the states and all the people, this case is to be deemed one arising under the laws of the United States, and, therefore, cognizable by the circuit court, because one of the objects of the state of Minnesota by its suit is to protect certain of its proprietary interests, which, it is alleged, would be injured by violations, on the part of the defendants, of the act of Congress. Let us see what, in that view, is the case as presented by the complaint.
It was further alleged that the state is the owner of, and has maintained at large expense, a state university, hospitals for the insane, normal schools for teachers, a training school for boys and girls, schools for deaf, dumb, blind, and feeble-minded persons, a state school for indigent and homeless children, and a state penitentiary; that a great portion of the supplies of every kind for such institutions must, of necessity, be shipped [194 U.S. 48, 70] over the different lines of railway owned and operated by the Northern Pacific and Great Northern Railway Companies; that the amount of taxes which the state must collect, and the successful maintenance of its public institutions, as well as the performance of its governmental functions and affairs, depend largely upon the value of the real and personal property situated within the state, and the general prosperity and business success of its citizens; and that such prosperity and business depend very largely upon maintaining in the state free, open, and unrestricted competition between the railway lines of those two companies.
The injury on account of which the present suit was brought is at most only remote and indirect; such an injury as would come alike, although in different degrees, to every individual owner of property in a state by reason of the suppression, in violation of the act of Congress, of free competition between interstate carriers engaged in business in such state; not such a direct, actual injury as that provided for in the 7th section of the statute. If Minnesota may, by an original suit, in its name, invoke the jurisdiction of the circuit court, because, alone, of the alleged remote and indirect injury to its proprietary interests arising from the mere absence of free competition in trade and commerce as carried on by interstate carriers within its limits, then every state, upon like grounds, may maintain, in its name, in a circuit court of the United States, a suit against interstate carriers engaged in business within their respective limits. Further, under that view, every individual owner of property in a state may, upon like general grounds, by an original suit, irrespective of any direct or special injury to him, invoke the original jurisdiction of a circuit court of the United States, to restrain and prevent violations of the anti-trust act of Congress. We do not think that Congress contemplated any such methods for the enforcement of the anti- trust act. We cannot suppose it was intended that the enforcement of the act should depend in any degree upon original suits in equity instituted by the states or by [194 U.S. 48, 71] individuals to prevent violations of its provisions. On the contrary, taking all the sections of that act together, we think that its intention was to limit direct proceedings in equity to prevent and restrain such violations of the anti-trust act as cause injury to the general public, or to all alike, merely from the suppression of competition in trade and commerce among the several states and with foreign nations, to those instituted in the name of the United States, under the 4th section of the act, by district attorneys of the United States, acting under the direction of the Attorney General; thus securing the enforcement of the act, so far as direct proceedings in equity are concerned, according to some uniform plan, operative throughout the entire country. Possibly the thought of Congress was that by such a limitation upon suits in equity of a general nature to restrain violations of the act, irrespective of any direct injury sustained by particular persons or corporations, interstate and international trade and commerce, and those carrying on such trade and commerce, as well as the general business of the country, would not be needlessly disturbed by suits brought, on all sides and in every direction, to accomplish improper or speculative purposes. At any rate, the interpretation we have given of the act is a more reasonable one. It is a safe and conservative interpretation, in view as well of the broad and exclusive power of Congress over interstate and international commerce as of the fact that, so far as such commerce is concerned, Congress has prescribed a specific mode for preventing restraints upon it,-namely, suits in equity under the direction of the Attorney General. Of the present suit the Attorney General has no control, and is without any responsibility for the manner in which it is conducted, although, in its essential features, it is just such a suit as would be brought by his direction when proceeding under the 4th section of the anti-trust act.
The state presents still another view of the question of jurisdiction. Its complaint alleges that if the Securities Company be allowed to hold and control the stocks of the Great Northern [194 U.S. 48, 72] and Northern Pacific Railway Companies and to carry out the purpose and object of its incorporation, full faith and credit will not be given to the public acts of the state. This, it is contended, presents a case arising under article 4 of the Constitution, providing that 'full faith and credit shall be given in each state to the public acts, records, and judicial proceedings of every other state.' It is said by the state's counsel that the 'gravamen of the charge in appellant's complaint is that the defendants created a corporate device in New Jersey, and used it for the purpose and with the result that property rights in Minnesota were affected, in violation of its laws. Our contention is that article 4 must be so construed as to make the constitutional enactments of Minnesota effective throughout the United States, so far as they apply to and affect property rights within the state. Otherwise the policy and laws of any state may be easily evaded.' We do not think that the clause of the Constitution above quoted has any bearing whatever upon the question under consideration. It only prescribes a rule by which courts, Federal and state, are to be guided when a question arises in the progress of a pending suit as to the faith and credit to be given by the court to the public acts, records, and judicial proceedings of a state other than that in which the court is sitting. Even if it be assumed that the word 'acts' includes 'statutes,' the clause has nothing to do w with the conduct of individuals or corporations; and to invoke the rule which it prescribes does not make a case arising under the Constitution or laws of the United States.
What was the duty of the circuit court when it ascertained that the suit was not one of which it could take cognizance? The answer is indicated by the clause of the judiciary act of March 3d, 1875, to which we have adverted.
For the reasons stated, we are of opinion that the suit does not-to use the words of the act of 1875-really and substantially involve a dispute or controversy within the jurisdiction of the circuit court for the purposes of a final decree. Western Union Teley. Co. v. Ann Arbor R. Co. 178 U.S. 239, 243 , 44 S. L. ed. 1052, 1054, 20 Sup. Ct. Rep. 867. [194 U.S. 48, 73] That being the case, the circuit court, following the mandate of the statute, should not have proceeded therein, but shold have remanded the cause to the state court.
The decree of the Circuit Court is reversed, and the case is sent back with directions that it be remanded to the state court.

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