Case Name: PEOPLE v. JAMES B. DUKE
Court: New York Court of General Sessions
Jurisdiction: New York
Decision Date: 1897-01
Citations: 11 N.Y. Crim. 472
Docket Number: 
Parties: PEOPLE v. JAMES B. DUKE.
Judges: 
Reporter: New York Criminal Reports
Volume: 11
Pages: 472–479

Head Matter:
Court of General Sessions—City and County of N. Y.
January, 1897.
PEOPLE v. JAMES B. DUKE.
1. Conspiracy—Corporate officers.
Individuals cannot shield themselves from the consequences of wrong doing by pleading that their wrongful acts were corporate-acts.
2. Same—Restraint of trade.
In ease of conspiracy in restraint of trade, the character of the trade is immaterial if unlawful.
3. Same—Sale of cigarettes to minors.
Section 90 of the Penal Code should not be construed so sweepingly as to hold that it takes the entire trade out of the prohibition against monopolies.
4. Same—Public welfare.
Where actual or possible public injury does not arise from the business methods of individuals or corporations, the natural law of supply and demand may be depended upon to protect the public welfare.
5. Same—Competition.
A trading corporation is entitled to all the advantag-es it can secure under fair and free competition, but its officers and agents may become criminally liable if they confederate to secure a monopoly by threats and menaces directed against competitors to force and coerce them to relinquish the rights to the fullest enjoyment of which all are entitled.
Conspiracy, Penal Code, see. 168, subdivision 6.
John R. Fellows, District Attorney, and John D. Lindsay, Assistant District Attorney, for the People.
Joseph H. Choate and W. W. Fuller, for defendants.

Opinion:
FITZGERALD, J.
This indictment charges the defendants with the crime of conspiracy. It alleges that, at the time specified, they were officers and agents of a corporation called The American Tobacco Company; that they controlled, managed and operated the said corporation; that the defendants and the corporation were engaged in the manufacture and sale of paper cigar- , ettes; that the greater portion of the cigarettes manufactured and vended in the United States were made and vended by them; that it was impossible for wholesale dealers and jobbers in such line of business to profitably carry on their business without dealing in the cigarettes manufactured and vended by the defendants* that 'they (the defendants) and others conspired unlawfully to commit an act injurious to trade and commerce—that is to say, to monopolize the entire business of making and vending cigarettes throughout the United States, and to exclude every other person from engaging in such business; to unlawfully raise the price of cigarettes ; to unlawfully and arbitrarily fix and maintain a standard price; to unlawfully prevent all wholesale dealers and jobbers in cigarettes from selling such cigarettes at a price less than such arbitrarily fixed standard; to unlawfully restrain and prevent competition in such business between and amongst themselves; also between and amongst themselves, on the one hand, and others; to limit, fix and control the production, manufacture and output of cigarettes, by conspiring to compel and force such dealers and job. bers to sell at arbitrarily fixed prices; to restrain them from selling below such prices; to coerce such jobbers and dealers to deal exclusively in defendants' cigarettes; to prevent them from dealing in the cigarettes of other manufacturers by means of refusing and threatening to refuse to sell such paper cigarettes to nil dealers and jobbers who sold such paper cigarettes so bought at price less than those arbitrarily fixed; to coerce, force .and compel such dealers and jobbers to deal exclusively in the cigarettes of The American Tobacco Company by refusing to sell to all who dealt in cigarettes of any other mannfacturer; to unlawfully fix and maintain by unlawful agreement the price of paper cigarettes made and vended by them, and so to limit and control the manufacture, production and output of cigarettes in the United States.
Two overt acts, in furtherance of this agreement, are then •specifically set forth.
The first point submitted in support of the demurrer to this indictment is that the defendants are alleged to be the oificers and .agents of a lawfully established corporation, and that as such, they must be considered as the fingers of one hand; that their acts are the acts of the corporation; that a corporation is but one person, and that as the inevitable consequence of such reasoning, an indictment for conspiracy cannot be maintained. I do not think that individuals can shield themselves from the consequences of wrongdoing by pleading that their wrongful acts were corporate acts. Civil liability is in many cases limited to the body corporate. ' The policy upon which corporate creation is founded rests largely upon the doctrine of limited liability. The vast advantages which have resulted to society from the magnificent achieve, ments which corporate effort alone rendered possible, are mainly attributable to this beneficent' and wise rule of limitation. It has operated undoubtedly as a great inducement to the capitalist to risk part of his surplus in ventures to which he would be unwilling to commit himself, if by so doing the entire of his accumulations were to be jeopardized. The fruits of its salutary operation abound upon all sides, and the preservation of our civilization may be truthfully claimed to largely depend upon its proper observance.
But in considering acts and agreements in the light of the fundamental principles of the criminal law, our reasoning must be guided by widely different considerations, and we must not be led into error by construing the word " person," when it appears in criminal statutes, to have absolutely the same meaning as when construed bv courts in determining issues which involved only questions affecting civil rights and remedies. The proposition is an obvious one, that each of the penalties of the criminal law is directed against persons presumed to have capacity to oommit the specific crime to which a prescribed penalty is attached.
"A conspiracy.consists in thevunlawful combination or agreement of two or more persons to do an act unlawful in itself, or to do a lawful act by unlawful means." Buffalo Lubricating Oil Co. v. Evenst, 30 Hun, 588. Section 168 of the Penal Code is but an embodiment of the common law. People v. Fisher, 14 Wend. 9. We are thus confronted, at the outset, with the question, could a corporation, in the contemplation of the common law, ever have been one of the two persons whose guilty agreement constituted at common law the offense of conspiracy?
It is true that a corporation has power to make contracts, but its power to do so is limited " to such contracts as were either expressly allowed in its charter or fairly to be implied from the language used." Dwight, Law Persons, p. 367. By various devices, changed from time to time by statute or by judicial declaration, the assent of the artificial person—which is one of the essential elements of a valid contract—is presumed, under certain cir cumstances, to have been given. Resort to legal device is necessary to uphold contracts to which a corporation is a party, otherwise corporations would be incapable of the slightest undertaking-But no such rule or reasoning can be invoked to supply the ele. ment of criminal intent, which is one of the material elements of conspiracy, and generally of all crimes. There are some acts for which indictments will lie against corporations. These acts have, I think, been so far limited to acts of misfeasance and of nonfeasance. But, in so far as crime generally is concerned, the artificial person, called the corporation, cannot be held to have capacity to commit it. If, then, a corporation has not the power to conspire, the corporate acts of a dozen corporations could not form the basis of an indictment for conspiracy.
Are, then, the individuals composing the corporation, its officers and agents, to have immunity for their unlawful acts? Such has never been the policy of our laws. People v. Cownley, 83 N. Y. 464. Of course, upon proof of unlawful acts, it could not be held that all the members composing the body corporate are criminally liable. On the contrary, their association being a lawful one, no presumption can arise against any of them from the fact of such association. But if two or more, or all of such persons enter into an unlawful agreement, they cannot be allowed to plead their lawful association for certain purposes, in bar of prosecution for unlawful combination.
To rule that the officers and agents of a corporation are relieved from individual criminal liability for all they may do under the color of corporate acts would amount, in many cases, to a practical suspension of the law. The equal protection of the laws is the mandate of the Constitution (Constitution of the United States, art. 14, sec. 1). This provision has been construed to mean the protection of equal laws (Yick Ho v. Hopkins, 118 U. S. 358). Assuredly, one of the tests by which the equality of the law must be measured is the equality of the punishment it prescribes against violators. The penalty within the discretion of the court to be imposed upon a conviction of the offense under consideration may be a fine or imprisonment, or both. A corporation may be fined; it can not be imprisoned. Suppose that the officers and agents of two corporations conspired to commit an act injurious to trade and commerce, and that defendants' contention was allowed—that the corporations, and not the individuals, were the persons liable. The extreme penalty incurred by each of the artificial persons would only be a fine. Thus the extent of the punishment to which the real conspirators (the individuals) would render themselves liable would be the inconsiderable sum charged proportionately among them as stockholders of an additional item of expense, to pay such fine as the court, under the circumstances might impose; not to exceed five hundred dollars.
How unequal, under such a view of the law, would the position be of individual conspirators, who were officers and agents of a corporation, to the position of other individual conspirators? As well might it be claimed that the law would authorize the formation of a corporation for unlawful purposes as to contend that the unlawful acts of incorporators are protected by the fact of incorporation. There are many cases where corporations and their agents, •directors and officers have been held to be concurrently liable; but the question before the courts on such occasions has been not .as to the liability of the individuals, but as to the liability of the corporation. Rex v. Medley, 6 C. & P. 292; Rex v. Birmingham & Gloucester R'y Co., 3 Q. B., 223; The Queen v. The Great North of England R'y Co., 9 Q. B. Adolphus & Ellis, N. S., 314; U. S. v. Morris & Essex R. Co., 23 N.J., 269.
The next point contended for is that the acts charged against defendants are not within the prohibition against restraint of trade upon the grounds of public policy, for the reason that the business of defendants does not relate to articles of prime necessity, or, in other words, the necessaries of life. The weight of recent .authority seems to support the proposition that the character of the trade sought to be monopolized is of no concern as long as it be a lawful one. Wire Cloth Case, 19 N. Y. Sup., 453; Hoffman v. Brooks, 11 Week. Law Bul. And, in so far as tobacco is concerned, the exhaustive opinion of Judge Earl in Re Jacobs(98 N. Y. 98) concludes discussion upon the subject. Neither do I think that section 90 of the Penal Code, which prohibits the sale of cigarettes to children under the age of sixteen years, should be construed so sweepingly as to hold that it takes the entire trade out of the prohibition against monopolies. It is merely a regula tion, under the police power of the State, upon a subject affecting-the health and morals of children, and does not excuse any attempted imposition by means of illegal combination. Nestor v. The Continental Brewing Co., 20 Atlantic Rep., 102.
It is further claimed that, because defendants are directors and agents of a private corporation, they had a perfect right to do all of the acts alleged against them. A very wide latitude must indeed be accorded to the managers of a vast private enterprise, lawfully organized, and it-is exceedingly difficult to fix the bounds beyond which they may not lawfully go. They are certainly entitled to reap all the advantages which skill, experience, large investment, enterprise and splendid facilities afford them over less favorably equipped competitors, and if by such means vast trade is attracted, to the detriment of mere business rivals, it would be difficult to see how injury to the public could arise. The principle established by the adjudged cases appears to be that, where actual or possible public injury does not arise from the business methods of individuals or corporations, the-natural law of supply and demand may be depended upon to protect the public welfare. Every person may have the right to do as he pleases with his own property, but he must exercise that right in such manner as not to injure the property of others. Kent (at p. 340, vol. II, of his Commentaries) says that "every person ought so to use his property as not to injure his neighbors, and that private interests must be made subservient to the general interests of the community."
A trading corporation is entitled to all the advantages if can secure under fair and free competition, but its officers and agents-may become criminally liable if they cbnfederate to-secure a monopoly by threats and menaces directed against competitors to-force and coerce them to relinquish the rights to the fullest enjoyment of which all are entitled.
The case of the Mogul S. S. Co. v. McGregor, 21 Q. B. Div. 544; 23 id. 598, and L. R. Appeal Cases, 25, so frequently referred to in defendants' brief, does not go any further than to say that inducements in the shape of profitable offers to customers to-secure their exclusive trade, are not unlawful, and the extent of the rule laid down in Lough et al. v. Outerbridge et al., 143 N. Y. 171, seems to be that, as long as common carriers charge reasonable rates to all, they are not prohibited from making special lower rates upon conditions in specific instances.
Mr. Justice Barrett, in People v. Wilzig, 4 N. Y. Crim. Rep. 414, says, substantially, that " it is error to suppose 'that threats must be actually uttered, but that men may be guilty of intimidation though they raise not a finger and say not a word. Their attitude may, nevertheless, be one of menace. They may intimidate by their methods, their devices."
If, then, the proof.in the case at bar should establish the allegations of the indictment, might not the refusal to sell to jobbers and dealers, except upon the required conditions, be properly found to constitute menace, coercion and intimidation ? And, if such methods or devices were resorted to by defendants to restrain lawful trade and commerce and create a monopoly, are they not guilty of conspiracy ?
Demurrer disallowed, with leave to defendants to plead over.
See note to People v. Sheldon, 9 N. Y. Cr. 312, on "Criminal Conspiracy."