Source: https://openjurist.org/228/us/87
Timestamp: 2019-04-20 18:35:37+00:00

Document:
PACIFIC & ARCTIC RAILWAY & NAVIGATION COMPANY, Pacific Coast Steamship Company, Alaska Steamship Company, Canadian Pacific Railroad Company, et al.
Indictment for alleged violations of the Sherman anti-trust act and of the interstate commerce act.
The indictment contains six counts. The first and second couns charge violations of the anti-trust law. The first, by the defendants engaging in a combination and conspiracy in restraint of trade and commerce with one another, to eliminate and destroy competition in the business of transportation in freight and passengers between various ports in the United States and British Columbia in the south, and the various cities in the valleys of the Yukon river and its tributaries, both in British and American territory, in the north, upon a line of traffic described, for the purpose and with the intention of monopolizing such trade and commerce. The second count charges the monopolization of trade and commerce in the same business and between the same ports. The manner of executing the alleged criminal purpose is charged to be the same in both counts.
The places of the incorporation of the corporate defendants are alleged, and the following facts: The Pacific Coast Steamship Company and the Alaska Steamship Company operate respectively lines of steamships as common carriers of freight and passengers running in regular route between Seattle, state of Washington, and Skagway, Alaska. The Canadian Pacific Railway Company is a like carrier, and operates a line of steamships between Vancouver, British Columbia, and Skagway. During the time mentioned in the indictment, the Pacific & Arctic Railway & Navigation Company owned and operated a railroad from tidewater at Skagway to the summit of White Pass, a distance of about 20 miles to the boundary line between Alaska and British Columbia, at which latter point it connected with a railroad owned and operated by the British Columbia Yukon Railway Company. The latter road extended from the summit of White Pass to the east shore of Lake Bennett and the boundary line between British Columbia and Yukon district of Canada, a distance of about 25 miles, at which point it connected with another railroad, owned and operated by the British Yukon Railway Company, which extends to White Horse on the headwaters of the Yukon river, in Yukon district of Canada. During all the times mentioned there was a line of steamers plying upon the Yukon river and the headwaters thereof between White Horse and Dawson, owned and operated by the British Yukon Navigation Company. The four corporations last above mentioned and their stocks and bonds were owned and controlled by the same persons and individulas, and the said three lines of railroads and their lines of steamers were under one and the same management, and were operated as one continuous line of common carriers of freight and passengers between the towns of Skagway and Dawson and way points, under the name and style of the White Pass & Yukon Route, referred to as 'the railroad,' and had the sole and exclusive monopoly of the transportation business between Lynn canal and the navigable waters of the Uukon river. A General trade and commerce was carried on between British Columbia and Puget sound ports and the Yukon valley, both in American and British territory, over the designated routes and to the various places on the routes, and the shortest and most natural route for such trade and commerce was, has been, and is by water craft from said southern ports to Skagway, and thence over Moore's wharf, so called, to the points of destination. Trade and commerce from White Horse and Dawson to said southern ports would naturally, when left untrammeled by unlawful interference, move up the Yukon to the headwaters of that river, and thence, by the way of said railroad, to Skagway, Alaska, thence over said Moore's wharf, and thence by steamship or other water craft to the said southern ports.
The North Pacific Wharves & Trading Company was the owner and in exclusive possession and control of all of the wharves at Skagway at which steamships or other water crafts could take and discharge, or load cargo, that company having a complete and absolute monopoly of the wharfage business at Skagway, and owning and operating the Moore wharf, which wharf, by agreement between the Wharves Company and the railroad, had been made and was the terminus of the railroad, over which all freight going to or coming from or passing through Skagway had necessarily to pass. The wharf was operated as a public wharf. Continuously during the three years immediately preceding the finding of the indictment, the defendants combined and conspired together to eliminate and destroy competition in the transportation business between the said southern ports and Skagway, for the purpose and with the intention of giving to and creating for the Alaska Steamship Company, the Pacific Coast Steamship Company, and the Canadian Pacific Railroad Company, a monopoly of such business, and, to that end, purpose, and intention, entered into, and continuously maintained, a joint traffic arrangement between the railroad and the steamship companies, by and through the individual defendants as officers and agents of the corporate defendants, pursuant to which arrangement either of the steamship companies could and did bill freight and passengers through from either of the said southern ports to any point on the said railway or on said Yukon river or its tributaries along and over the route of travel and transportation described, and the railroad could and did bill freight and passengers through from Yukon and other northern points to said southern ports only on ships from Skagway south, billing to either of the steamship companies. The rates for freight and passengers were fixed, and an apportionment between the said respective carriers of the gross receipts was established and agreed upon. With the like intent and purpose it was agreed that the railroad should, and it did, refuse to enter into any joint through traffic arrangement with any other carrier or carriers, and refused to receive any other through billing on shipments from the said southern ports except such as arrived at Skagway by some ship belonging to one of the steamship companies, or from said Yukon points to the southern ports, except by the same ships. As part of the same combination and with the same intent and purpose it was agreed that the Wharves Company should, and it did, during all the times mentioned, charge wharfage at the rate of $2 per ton for all freight handled over its wharf except when the same was shipped on a vessel owned by either of the companies, or was consigned to someone who had entered into or was about to enter into a contract with either of said steamship companies to bind himself to have all of his freight carried by such steamship company and by no one else, in which latter case a wharfage of $1 per ton only was charged, and any charge in excess of $1 was unreasonably high, and was exacted for the unlawful purpose aforesaid. With like intention and purpose, and as part of the same combination and conspiracy, it was arranged and agreed by and between the defendants that the said railroad should, and it accordingly did, fix and establish local rates and transportation charges for freight and passengers from 5 per cent to 25 per cent higher than the through joint rates, differing according to classification of the various commodities shipped. Pursuant to such arrangement, and the purpose and intention aforesaid, the said railroad received for through shipments, as its share of freight charges, from 15 per cent to 30 per cent less than it charged for the same class of freight shipped between Skagway and the same Yukon points. By reason of the facts alleged it became and was, during all of the time mentioned, unprofitable for the public to employ any carrier in the trade, traffic, or commerce save and except the said steamship companies, and competition in the said water transportation between the steamship companies and other carriers was in that manner and by the means of said combination and conspiracy eliminated and destroyed, the defendants being enabled to monopolize such trade, traffic, transportation, and commerce, to the injury of the public.
The third count charged an unlawful and unjust discrimination in the transportation of passengers and freight, in violation of the interstate commerce act. The discrimination is charged to have been practised against the Humboldt Steamship Company between January 1, 1909, and August 10, 1910, which company is alleged to be a California corporation, and engaged as a common carrier of freight and passengers, operating a line of steamers from the same ports from which the defendant steamship companies operate their respective lines to Skagway, Alaska. In the conduct of its business the Humboldt Steamship Company operated a steamship called the 'Humboldt' on a regular schedule and route between Seattle, Washington, and Skagway. 'The railroad,' as we have seen the White Pass & Yukon Route is called in all of the counts, had entered into and maintained during the time aforesaid, with the defendant steamship companies, a joint traffic arrangement whereby and under the terms of which freight and passengers might be billed at a joint through rate from the said southern ports over the route described to the various Yukon points, but refused, without cause or excuse, to enter into a joint traffic arrangement with the Humboldt Company, though requested to do so, or to receive, carry, or handle any freight billed through from Seattle to Yukon points on the railroad or the Yukon river; and neither would nor did carry any freight whatever from Skagway to any of said points in British or American territory at a less rate or charge than from 5 per cent to 30 per cent more, according to classification and character, than it received from the defendant steamship companies as its proportion of joint through rates from such southern points to the corresponding Yukon points. The railroad company, it is charged, caused the North Pacific Wharves & Trading Company to charge for all freight shipped on the steamship 'Humboldt' for transhipment on the railroad to points along its line on the Yukon river, a wharfage of $2 per ton, whereas it included at the same time in its portion of the through rate on through bills under its arrangement with defendant steamship companies all wharfage charges. And it is alleged that the defendants knowingly, wilfully, and maliciously induced and incited the railroad company to practise the discrimination described, and each and all aided and abetted one another and the railroad company in such practice.
The other facts as to routes, commerce, and carriers, their relations and arrangements and the effect of them, are the same as in the first and second counts, the order of statement being somewhat different.
Count 4 is the same, as to the facts alleged, as the third count, except the discrimination is charged to have been practised against the Humboldt Steamship Company between August 18, 1910, and January 1, 1912.
Count 5 brings the discrimination charged down to the finding and presentation of the indictment. There is no allegation of discrimination in wharfage charges.
Count 6 charges the crime of conspiracy to commit an offense against the United States by destroying competition between the defendant steamship companies and the Humboldt Steamship Company. The same facts are alleged as in the other counts.
Motions to quash the indictment and each of its counts were made and denied. Demurrers to the indictment were filed and sustained to all counts but the 6th. To that, the demurrer of the individual defendants was sustained.
Messrs. W. H. Bogle, Carroll B. Graves, W. B. Stratton, Ira Bronson, Morven Thompson, and Bruce C. Shorts for defendants in error.
The district court said that it was 'without jurisdiction to entertain or determine the questions involved in the first five counts of the indictment in either a criminal or civil proceeding,' until the matters of discrimination between carriers or shippers, or the giving or refusing of joint traffic arrangements, 'have been submitted to and passed on by the Interstate Commerce Commission.' For this conclusion the court relied on Texas & P. R. Co. v. Abilene Cotton Oil Co. 204 U. S. 427, 51 L. ed. 553, 27 Sup. Ct. Rep. 350, 9 Ann. Cas. 1075, and Baltimore & O. R. Co. v. United States, 215 U. S. 429, 54 L. ed. 296, 30 Sup. Ct. Rep. 164.
It may be well, even at the expense of repetition, to give a summary of the indictment before passing to the special contention of the parties. The route described is between ports of the United States (called southern ports) and places in northern Alaska and Canada (called northern ports)—(1) by steamship lines from the United States and Vancouver, (southern ports) to Skagway (the entire wharfage facilities being owned by the North Pacific Wharves & Trading Company); (2) thence by railroad to the headwaters of the Yukon river; (3) thence by boat down the Yukon river to Dawson, etc. (called the northern ports). The route is designated as the White Pass & Yukon Route, and is constituted of (a) the Pacific & Arctic Railway & Navigation Company, a West Virginia corporation; (b) the British Columbia-Yukon Railway Company, incorporated under the laws of British Columbia; (c) the British-Yukon Railway Company, incorporated under the laws of the Dominion of Canada; and (d) the British-Yukon Navigation Company, Limited, incorporated under the laws of British Columbia. These companies are referred to as 'the railroad company,' and own the only line of transportation between the wharf at Skagway and the Yukon river.
By mutual agreement between the defendant steamship companies, the Wharves Company, and the railroad company, through routes and joint rates were established, thus making one continuous line of common carriers for freight and passengers between the United States (southern ports) and northern Alaska (northern ports).
The Humboldt Steamship Company and other independent lines plied between the United States and Skagway.
By agreement between the defendants, the railroad refused to make any through route or joint rates with the Humboldt Company, or with any of the independent steamship lines, and refused to bill freight or passengers from the United States to Yukon river points, or reversely, except by ships belonging to one of the defendant companies.
By agreement between the defendants the railroad fixed so-called local rates between Skagway and the Yukon river points, which rates were very much higher than the railroad's pro rata of the through rate.
The Wharves Company charged $2 a ton for freight if shipped on a vessel not owned by one of the defendant companies. If shipped and consigned to one who had entered into, or was about to enter into, a contract to have all of his shipments so carried, the wharfage charge was only $1. Wharfage charges in excess of $1 are unreasonably high.
As a result of the agreement, shippers were compelled to use only the ships of the defendant steamship companies, as in that way alone could lower through rates be obtained. Competition in water transportation was destroyed between the defendant steamship companies and the independent lines, defendants obtained a monopoly of the transportation business between the United States and Alaska, and the Humboldt Company was discriminated against in the matter of through rates. These agreements between the defendant companies are alleged to be (count 1) for the purpose of eliminating competition from the business of transportation between the United States and Alaska; (second count) to monopolize such business; (counts 3, 4, and 5) to discriminate against the Humboldt Company. Count 6 we omit from consideration for the present.
The charges of the indictment may be even further concentrated and attention directed to these elements: The defendant steamship lines and the Humboldt and independent lines from the United States to Skagway, the wharf at Skagway, and the railroad from Skagway to the Yukon river points. The only possibility of competition is in the water part of this route. This controlled, the entire transportation is controlled; and to this control the action of the defendants was directed, the means of control being an agreement between the defendants to throw all the trade into the hands of the defendant steamship companies by the railroad company establishing through route and joint rates with them, and refusing to do so with the Humboldt Company or any of the independent companies. The Wharves Company gave its assent by its wharfage charges, and all evasion was prevented by so fixing the local rates that their combination was greater than the through rate agreed on. It is manifest that the scheme was effective, and cut out the Humboldt line and the independent lines as factors in the routes of transportation between the United States and the Yukon river points. Is the scheme illegal?
This is asserted by the government and denied by the defendants. The court below, if we take some parts of its decisions, held that the forum of that question was the Interstate Commerce Commission. But, considering the decision of the court as a whole, we think it construed the anti-trust act, upon which counts 1 and 2 were based, and to those counts we shall confine our discussion for the present. This is admitted by defendants. They say that as the court held that, in order to constitute restraint of trade or monopolization of trade under the anti-trust act, the acts charged must be such as at common law constituted restraint of trade, and were unlawful, to that extent the court construed the act. And, setting forth the grounds of the ruling, counsel say that the court decided that the entering into through-route agreements by a common carrier with one or more connecting carriers, and the refusal to make such agreements with other connecting carriers, was not unlawful either at common law or by the interstate commerce act; and the court held, therefore, that such act did not constitute restraint within the meaning of the anti-trust act. The right of a carrier to select its connections must be admitted (we state the right as absolute, without regard to the interstate commerce act, for our present purposes), and if there were nothing else in the case the conclusion of the district court would have to be affirmed. But there is another and important element to be considered. The charge of the indictment is that the agreements were entered into not from natural trade reasons, not from a judgment of the greater efficiency or responsibility of the defendant steamship lines as instruments in the transportation than the independent lines, but as a combination and conspiracy in restraint of trade by preventing and destroying competition in the transportation of freight and passengers between the United States and Alaska, and obtaining a monopoly of the traffic by engaging not to enter into agreements with the independent lines. There is a charge, therefore, of infringement of the anti-trust law,—of something more done than the exercise of the commonlaw right of selecting connections, and the scheme becomes illegal. Swift & Co. v. United States, 196 U. S. 375, 396, 49 L. ed. 518, 524, 25 Sup. Ct. Rep. 276. We do not pause to justify this conclusion, either by the general purpose of the act or by its adjudged applications. Its general purpose has been elaborately set forth in very recent cases; and particular instances of its application, pertinent to the case at bar and illustrative of it, are exhibited by Swift & Co. v. United States, supra, and Standard Sanitary Mfg. Co. v. United States, 226 U. S. 20, 57 L. ed. ——, 33 Sup. Ct. Rep. 9. In those cases, as here, rights were brought forward to justify a purpose which transcended the limits put upon their exercise by the anti-trust act. In those cases, as here, the purpose (the means being different) was the prevention or destruction of competition, and the agreements here are exactly adapted to the purpose. Not the railroad only, but the Wharves Company as well, is charged to be in the combination. It was intermediate the railroad and the steamship lines, and discriminated in its wharfage charge, it is alleged, to aid in the purpose of the combination; and, to complete and make effective the purpose, the local rates from Skagway to Yukon points were made greater than that part of the through transportation.
Whether $2 per ton (the rate charged to independent lines, as against $1 per ton, charged to the defendant steamship lines) was reasonable or unreasonable, or whether a through rate may be less than the sum of the local rates, we are not called upon to consider, although the court below thought the inquiry important, and the defendants make it prominent in their contentions. The plan makes the parts unlawful (Swift & Co. v. United States, supra), whatever they may be independently of it, and whether there is or is not a standard of reasonableness which juries may apply is aside from the question. It is equally unimportant to consider whether the Interstate Commerce Commission has power to pass on the rates, as such, or through routing, as such. We are dealing with an indictment which charges a criminal violation of the antitrust act, and of that the criminal courts have cognizance, with power of decision upon the principle which we have expressed.
The next contention of defendants is that, as part of the transportation route was outside of the United States, the anti-trust law does not apply. The consequences and, indeed, legal impossibility, are set forth to such application, and, it is said, 'make it obvious that our laws relating to interstate and foreign commerce were not intended to have any effect upon the carriage by foreign roads in foreign countries, and . . . it is equally clear that our laws cannot be extended so as to control or affect the foreign carriage.' This is but saying that laws have no extraterritorial operation; but to apply the proposition as defendants apply it would put the transportation route described in the indictment out of the control of either Canada or the United States. These consequences we cannot accept. The indictment alleges that the four companies which constitute the White Pass & Yukon Route (referred to as the railroad), and owned and controlled by the same persons, entered into the combination and conspiracy alleged, with the intention alleged, with the Wharves Company and the defendant steamship companies. In other words, it was a control to be exercised over transportation in the United States, and, so far, is within the jurisdiction of the laws of the United States, criminal and civil. If we may not control foreign citizens or corporations operating in foreign territory, we certainly may control such citizens and corporations operating in our territory, as we undoubtedly may control our own citizens and our own corporations.
The ruling of the district court, sustaining the demurrer to the first and second courts, was therefore erroneous.
The contentions of the government would be formidable indeed if the interstate commerce act was entirely criminal. But it is more regulatory and administrative than criminal. It has, it is true, a criminal provision against violations of its requirements, but some of its requirements may well depend upon the exercise of the administrative power of the Commission. This view avoids the consequences depicted by the government. It keeps separate the civil and criminal remedies of the act, each to be exercised in its proper circumstances. It makes the interstate commerce act what it was intended to be and defined to be in the cases cited by the district court, to wit: Texas & P. R. Co. v. Abilene Cotton Oil Co. 204 U. S. 427, 51 L. ed. 553, 27 Sup. Ct. Rep. 350, 9 Ann. Cas. 1075, and Baltimore & O. R. Co. v. United States, 215 U. S. 492, 54 L. ed. 296, 30 Sup. Ct. Rep. 164. And it would, in our judgment, be an erroneous view to take that the great problems which the act was intended to solve, and the great purposes it was intended to effect, should be considered of less consequence than the facility which should be given to some particular remedy, civil or criminal. We need not extend the discussion. The purpose of the interstate commerce act to establish a tribunal to determine the relation of communities, shippers, and carriers, and their respective rights and obligations dependent upon the act, has been demonstrated by the cited cases, and also the sufficiency of its powers to deal with the circumstances set forth in the indictment.
The district court sustained count 6 against the demurrer of the corporate defendants, but held its averments were not sufficient to connect the individual defendants with the offense charged. This is a construction of the indictment, and not subject to review.
The judgment is therefore reversed as to counts 1 and 2, and the case remanded with instructions to proceed in accordance with this opinion.

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