Court Opinion

ID: 9304553
Source: CourtListenerOpinion
Date Created: 2022-12-02 17:15:37.657361+00
Date Added: 2024-06-11T17:13:50.565552
License: Public Domain

BUFFTNGTON, Circuit Judge
(concurring and dissenting). I concur in the court holding the Temple Iron Company an illegal combination.
I dissent from its action in dismissing the bill as to the 65 per cent, contracts.
I restrict my opinion to discussing those two subjects.
T concur in the court’s dismissal of the hill as to the othér matters.
This petition, in. the nature of a hill in equity, filed by the United States against certain railroads hereinafter named, and a number of other respondents, charges violations of section 1 of the act of July 2, 1890, entitled, “An act to protect trade and commerce against unlawful restraints and mouoplics,” which provides that:
“Every contract, combination in tlie form o£ trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is hereby declared to be illegal.”
And section 2, which provides that:
“Every person wbo shall monopolize, or attempt to monopolize, or combine or conspire with any other persons, to monopolize any part of the trade or commerce among the several states, or with foreign nations, shall be deemed guilty of a misdemeanor,” etc.
The petition is filed in pursuance of section 4, which enacts that:
“It shall be the duty of the several district attorneys of the United States, in their respective districts, under the direction of the Attorney General, to institute proceedings in equity to prevent and restrain such violations.”
The case is on final hearing, and its determination involves two questions, viz.: First, the meaning of the law; and, second, whether.the facts proven fall within its prohibitions.
In taking up the first question, it- is well to note that, the validitv of the law being conceded, the court’s duty is simply to declare its meaning and enforce its provisions, for whether the law itself is in the line of sound commercial policy and industrial progress is a legislative, not a judicial, question. It suffices to say Congress has passed it; the executive, in pursuance of its terms, seeks to enforce it; it remains for the court not to question the wisdom of the Legislature in enacting, or the executive in enforcing, but simply to declare its meaning and give effect to its provisions.
The first section uses broad, inclusive words. The object of the law is to prevent “restraint of. trade or commerce among the several states"; and this is accomplished by making illegal “every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states.” The *460words “contract,” “combination,” “conspiracy,” are clear, and “trade among the several states” is equally so. The coupling phrase “in restraint” would seem to be the onfy term open to question.
“Restraint” is a comprehensive word and covers the several individual kinds thereof described in — check; hinder; repress; curb; restrict. By the use of this broad phrase, “in restraint of trade -or commerce,” it would seem that one of the objects Congress had in view was the maintenance of that natural, free flow of commerce incident to its commercial, competitive character. We are therefore justified in holding that, although the word “competition” is not used therein, this act, as said in Chesapeake & Ohio Fuel Co. v. United States, 115 Fed. 610, 620, 53 C. C. A. 256, 266 (a case in which two of the present justices of the Supreme Court sat), was “aimed to maintain interstate commerce on the basis of free competition.” Such being the case, and the Supreme Court has likewise held, we have an aid both to its construction and enforcement, namely, the object for which the law was enacted.
Turning now to the decisions of the Supreme Court, it was decided in the Northern Securities Case, 193 U. S. 337, 24 Sup. Ct. 457 (48 L. Ed. 679) that:
“The means employed in respect of the combinations forbidden by the anti-trust act, and which Congress deemed germane to the end to be accomplished, was to prescribe as a rule for interstate and international commerce, (not for domestic commerce), that it should not be vexed by combinations, conspiracies or monopolies which restrain commerce by destroying or restricting competition. We-say that Congress has prescribed such a rule, because in all the prior cases in this court the antitrust act has been construed as forbidding any combination which by its necessary operation destroys or restricts free competition among those engaged in interstate commerce; in other words, that to destroy or restrict free competition in interstate commerce was to restrain such commerce. Now, can this court say that such a rule is prohibited by the Constitution or is not one that Congress could appropriately prescribe when exerting its power under the commerce clause of the Constitution? Whether the free operation of the normal laws of competition is a wise and wholesome rule for trade and commerce is an economic question which this court need not consider or determine. Undoubtedly, there are those who think that the general business interests and prosperity of the country will be best promoted if the rule of competition is not applied. But there are others who believe that such a rule is more necessary in these days of enormous wealth than it ever was in any former period of our history. Be all this as it may, Congress has, in effect, recognized the rule of free competition by declaring illegal every combination or conspiracy in restraint of interstate and international commerce. As in the judgment of Congress the public convenience and the general welfare will be best sub-served when the natural laws of competition are left undisturbed by those engaged in interstate commerce, and as Congress has embodied that rule in a. statute,' that must be, for all, the end of the matter, if this is to remain a government of laws, and not of men.”
As further emphasizing free competition as the object of the statute, the court stated its preceding decisions established the proposition “that Congress * * * has prescribed the rule of free competition among those engaged in such commerce,” and:
“We need only say that Congress has authority to declare, and by the language of its act, as interpreted in prior cases, has in effect declared, that the freedom of interstate and international commerce shall not be obstructed or' disturbed by any combination, conspiracy, or monopoly that will restrain *461such commerce, by preventing the free operation of competition among interstate carriers engaged in the transportation of passengers and freight.”
Since, then, the object of the act is to conserve free competition in interstate commerce, we are justified in holding that the phrase, “in restraint of trade or commerce among the several states,” forbids everything that restricts free competition in interstate commerce. This brings us to inquire whether any combination of that nature exists in this case.
The anthracite coal supply of the United States is practically limited to a small area of less than 500 square miles in northeastern Pennsylvania. Its consumption is general in other states; practically four-fifths of the entire output entering into interstate commerce in 1905. Six interstate railroads, hereinafter called the defendant carriers, to wit, Reading Company (owning the Philadelphia & Reading Railway Company); the Lehigh Valley Railroad Company; the Delaware, Lackawanna & Western Railroad Company; the Central Railroad of New Jersey; the Erie Railroad Company; and the New York, Susquehanna & Western Railroad Company — haul about 80 per -cent, of the output and control all means of transportation from the anthracite field to New York Harbor, the' principal market for anthracite coal, save relatively small territorial facilities of the Pennsylvania Railroad Company and the New York, Ontario & Western Railroad Company. These six defendant railroads are not only competitors with each other by virtue of the natural conditions incident to all common carriers, but being themselves, through their several subsidiary-coal companies, hereinafter called defendant coal companies, buyers of coal from operators, producers of coal themselves, and likewise sellers of such bought and produced coal, they are in keen competition with each other not only in transporting, but in buying coal to originate freights and in selling it to realize profits. It will be observed that since 1895 the defendant railroads have through their subsidiary coal companies increased their coal holdings by 30,000 acres and from producing, in 1900, 68 per cent, of the total output, they produced 78 per cent, in 1907. The substantial identity of the several defendant railroads and their respective subsidiary coal companies is shown in the proofs. ■ Take, for example, the Lehigh Valley Railroad Company and the Lehigh Valley Coal Company. The coal company’s stock is all owned by the railroad company. No dividend has ever been paid upon it. The funds to operate it are advanced by the railroad company. Its present indebtedness to the latter is about $11,000,000. On this no interest is paid. Loth companies have the same officers, and in its annual report the railroad company says:
“Tinder existing arrangements the Ijeliigli Valley Goal Company is compelled to depend upon the Railroad Company for working capital to carry on its operations.”
•In other words, the coal company is the subsidiary, corporate hand of the railroad company, and, while its corporate entity is separate, yet in work, profit, interest, and official personnel, it is hut an alter ego of the railroad company itself. And such is the view taken of this relation by the. courts. In Interstate Commerce Commission v. *462Baird, 194 U. S. 42, 24 Sup. Ct. 568 (48 L. Ed. 860), the Supreme Court say:'
“Here is a railroad company • engaged at once in the purchase of coal through a company which it practically owns.”
The anthracite field is divided into three regions, called the Le-high, the Schuylkill, and the Wyoming or Lackawanna. In 1907, some 67,000,000 tons of anthracite were mined in these regions, of which over 17,000,000 ivere carried to New York Harbor. From 70 to 75 per cent, was produced by the defendant railroads through their coal companies, and the balance by individual operators. Their respective coal tonnages in that year were:
Philadelphia & Reading Railway Co.......................... 20.89
Central Railroad of New Jersey............................. 12.99
Lehigh Valley Railroad Company............................ 17.18
Delaware, Lackawanna & Western R. R. Co.................... 15.25
Erie Railroad Company...................................... 10.06
- 76.97
Delaware & Hudson Company................................ 9.78
Pennsylvania Railroad Company............................. 9.24
New York, Ontario & Western...............;............... 4.01
- 23.03
100.
Referring, fpr convenience, to the summary for relief at the conclusion of the government’s brief, we may say that the first, second, and fifth grounds of relief refer to general acts in which all the defendant railroads tire alleged to have joined, while the third, fourth, sixth, seventh, and eighth concern acts in which some but not all of the defendant railroads participated. Objection to the joinder of such rights of action was first urged upon the court at final hearing. Without entering upon a discussion of the authorities bearing' on multifariousness, we content ourselves with saying the omission of the respondents to urge this ground until the final hearing was a waiver thereof, and while a court on such hearing may, of its own motion, dismiss a'bill, it will not’do so if that objection does not embarrass or prevent it decreeing relief. Without, therefore, holding this bill free from objection in that regard, we are of opinion, in view of all the circumstances attending the conduct of the case, that it should not be dismissed on that ground, and we accordingly address ourselves to the merits, and in doing so we confine ourselves to the Temple Iron Company transaction and the 65 per cent, contracts, taking up first the combination of-these six defendant railroads through the Temple Iron Compairy, for in our opinion that transaction involves the broad, underlying right of these railroads to combine in matters of interstate commerce and, in connection with the perpetual 65 per cent, contracts, is the real gist of the controversy.
The specific relief asked for in the government’s brief in that regard is:
“Fifth. That the Temple Iron Company is a combination of the defendants, Reading Company, the Central Railroad of New Jersey, Lehigh Valley Railroad Company, the Delaware, Lackawanna & Western Railroad Company, Erie Railroad Company, and the New York, Susquehanna & Western Rail*463road Company, in restraint of trade and commerce in anthracite, in violation of the said act, and every such defendant, and any subsidiary company or agent of either is enjoined from voting the stock of the Temple Iron Company, from receiving any dividends or other j>rofits arising therefrom, and from exercising any control over the same.”
This is based on subdivision “d” of paragraph 7, and is a condensed form of the fifth prayer of the bill, which, inter alia, is that the Simpson & Watkins collieries were acquired by the defendant railroads in pursuance generally of the combination charged in paragraph 7, “and specifically in pursuance of a combination or conspiracy between the defendants last named to defeat the construction of a competing railroad from the anthracite fields to tidewater, in violation of the aforesaid act of July 2, 1890.”
A brief preliminary account of anthracite mining and marketing methods is helpful to an understanding of the.case. We have seen that the sole means of transporting anthracite to market is by rail; that the defendant railroads, through the agency of their subsidiary coal companies, are themselves interested in mining coal, and in purchasing the coal produced by other mining companies and individuals, and in the sale of the sáme. The coal sold by the outside producer to the subsidiary coal companies is paid for on a percentage of the price coal commands at New York Harbor. Originally the coal producers’ percentage of this was 40 per cent., but from time to time it has been increased to 65 per cent. The remaining 35 per cent, is the defendant railroads’ share, which covers freight, selling expenses, and profit. The adjustment of these percentages has been a constant ground of contention between producers and railroads. An increase thereof has been urged by the former because of the greater cost of mining due to exhaustion, which compels a resort to deeper levels, and added expenses caused by pumping water therefrom; raising of miners’ wages; shorter hours of labor; expense incident to safety laws, prevention of fires, and explosions; and finally to the high grade of coal preparation demanded by the public. It is, of course, also contended by the producers that the percentage retained by the defendant railroads gave them an undue freight rate. Without entering into a discussion of the merits of these contentions, it is to be noted that the difficulty that confronts both railroads and producers in the proper adjustment of their relative rights, and wholly without fault on the part of either, is complicated by the public market demand that the coal be prepared for use in such form as will meet the somewhat exacting demands of the purchasing public. In buying coal the public does not base its requirements so much on the real worth in heat units of the coal as on size and appearance. For example, the first breakage of coal which results in grate size is necessary. But the public demands a second breakage into smaller sizes, which, is very expensive. Thus Mr. Sturges, a government witness, says:
“The expense of mining and preparing coal is very greatly added to by two requirements in our contract; the one compelling the breaking of our coal twice. There is a terrible loss on each breakage. The first breakage is necessary. * * “ You cannot take those immense chunks of coal that come out of the mine and sell them in that way. That breakage reduces them to grate. If they could remain of the sizes made by the first breaking, *464T think that coal could be sold at a profit 10 per cent, cheaper than it is today. The public will not take it, though; it has to he broken again. The dust, so far, is unsalable, although it is the purest of carbon.”
Jüst what this requirement practically amounts to in dollars and cents Mr. Puller shows:
“I could give you an approximate idea as to the less price received for coal by breaking it down. * * * One test we made was by taking 200 tons of grate coal, large coal, and breaking that down. The reason was that the market had got to a condition where it would not take grate coal. Figuring that coal on a basis of the price which was quoted at that time on that size, say $2 a ton, and breaking that coal down, which gave us the smaller sizes and culm, there was a loss of about $71 on the 200 tons.”
The operators who sold their coal at the breakers to the subsidiary coal companies received, as we have paid, for some years 50 per cent, and then 60 per cent, of tide-water price. This left the carriers 50 per cent, and then 40 per cent, for freight and selling expense. The operators claimed the carrier received an undue share for freight, etc., and contended for a 65' per cent. rate.
The proofs show that in the early part of 1899 from 8,000,000 to 9,000,000 of operator’s tonnage, which had been tied up on seven-3'-ear contracts with the subsidiary companies at 60 per cent., would expire. With a view to availing themselves of this fact, a number of operators in 1898 organized the New York, Wyoming & Western Railroad Company, which was empowered to build a line from the Susquehanna river near Pittston, the heart of the Wyoming region, to a point on the Delaware river opposite Belvidere, N. J. Its capital was subscribed for by independent operators, who pledged to it some 500,000 tons of output. Among its supporters was the partnership of Simpson & Watkins, which owned the controlling shares of eight collieries in the Wyoming region with a production of 1,300,000 tons, of which 500,000 tons were released by contract expiration. Mr. Sturges, the president of the road, testified that it was projected, “the •same as all other organizations and movements of the independent operators, in the hopes of bettering their conditions, securing lower rates and a better market for coal — in fact, better net results for their business.” Apart from the projected road’s competitive effect in depriving the defendant railroads of the tonnage it might take from some of them, its retention of 35 per cent, instead of 40 per cent., to cover its freight, etc., for it proposed increasing the operators’ price from 60 to 65 per cent, would have an unsettling effect on the tariffs of the other railroads. Its tendency would seem to be to cause competition among, as well as with, the defendant railroads themselves. We have seen that the northern division was served by eight railroads, whose tributary territory might be affected by the entrance of this ninth railroad. • Moreover, at its eastern end at the Delaware river, the new road might make three of these defendant railroads, namely, the Delaware, Lackawanna & Western Railroad Compairy, the Lehigh Valley, and the Central Railroad of New Jersey, as well as the Pennsylvania Railroad Company, • competitors for its freight to tide. It .is now contended this new road was a paper project and would never .have been built, and that, even if built, its charter would only carry *465it to the border of Pennsylvania. But it is evident not only from what the defendant railroads actually did to prevent its construction, but from what they themselves say, that it was a possibly strong competitive factor to tide water, the elimination of which was necessary to preserve a noncompetitive status among these defendant railroads, the lines of several of which might be used as a connecting line to tide water from the terminus of the projected road. Mr. Thomas, then president of the Erie and the New York, Susquehanna & Western, and now president of the Lehigh Valley, testified in that regard as follows:
“A. * * * Simpson & Watkins, who were shippers on the line of the Erie and Lehigh Yafley roads, as well as the Ontario & Western — ■ Q. The Lackawanna also? A. Yes, they were shippers on the Lackawanna. They were, as usual, dissatisfied with the rates, thought they should have lower ones. We declined to lower the rates; they wore reasonable. They got a lot of tonnage together, their own and that of other shippers, and threatened to build another road to the Delaware river opposite Easton. * * * Q. You understood at that time that the Simpson & Watkins’ properties and those that were associated with them were seeking a market? A. 1 did. Q. And that the tonnage that was then tributary to the Erie Railroad might get away from it to some other railroad? A. There was every prospect that it would. Q. To either an existing railroad or some new railroad?. A. Yes. Q. And it was the possibility of the loss of that tonnage that induced you to go in, as an officer of the Eric Railroad, to the Temple Iron Company transaction? A. It was. Q. And to protect' the Erie Company? A. Yes. sir. Q. As to the Lehigh Valley, what were the motives that caused the Lehigh Valley to go into it? A. T do not; know what their motives were, but I assume they were the same as mine. Part of the mines were; on their linos, and T assume that they wanted to retain the tonnage they had. Somebody would have bought those properties, and it was boh» / to buy them jointly and allow the tonnage to go to the roads that Lad formerly carried it, than otherwise.”
These and other proofs that might be cited make it clear that the New York, Wyoming & Western Railroad Company threatened competition in the anthracite interstate trade in buying, carrying, and selling coal, and that which follows shows that such competition was defeated by a combination of the defendant railroads, which combination used the Temple Iron Company, a Pennsylvania corporation, as its instrument to preclude competition. This was done by the defendant railroads through such holding company bujdng the Simpson & Watkins’ interests. The negotiations for such purchase were conducted by Mr. Simpson and by Mr. Bacon of the firm of Morgan & Co., Mr. Maxwell, then president of the Central Railroad of New Jersey, Mr. Thomas, then president of the Erie, and Mr. Twombly, then a director of the Philadelphia &- Reading Railwa)^ Company and who was also financially interested in the Simpson & Watkins’ interests; all being present. Mr. Simpson’s testimony is:
“Q. When (lid yon and Mr. Watkins sell out the interest in the collieries which you controlled to the Temple Iron Company? A. 1898 or 1899; I am not certain; nine or ten years ago. <j. Were you actively engaged, you personally. in the negotiations which led up to that sale? A. Yes, sir. Q. With whom did you negotiate? A. Robert Bacon. Esq. Q. Who is Robert; Bacon, Esq.? A. A member of the firm of J. P. Morgan & Co. Q. What did J. P. Morgan & Co. hare to do with the Temple Iron Company? A. Nothing that I know of. Q. What was Mr. Bacon's relationship to the Temple Iron Company? A. I was asked what I would take for the collieries, and we met one *466afternoon, and Mr. Robert Bacon was there. I did not know whom he represented. The Temple Iron Company charter was bought afterwards, and we paid for it. Q. You met Mr. Robert Bacon somewhere? A. Yes. Q. Where was this? A. In Mr. II. McIC Twombly’s office. Q. AVhere was that office? A. Mills Building here in New York City. Q. You met there Robert Bacon of the firm of J. P. Morgan & Co.? A. Yes, sir. Q. And he inquired what you would take for your collieries? A. Yes, sir. Q. Did you tell him? A. Yes, sir. Q. Follow the negotiations along. A. I told him. Q. Then what happened? A. He thought it was too'high, and we discussed it, and we said we would not take anything less. AA'e said, We have 40,000,000 tons of coal in the ground, and we have a capacity of 7,500 tons a day. AAre can mine it for so much a ton and we will have so much money for it. We have got so. much invested in improvements. If our figures about improvements are not right, we will take off half a million dollars.’ He said: Would you be willing to submit to a technical examination?’ AAre said: ‘No. we will not. AAre will get up our figures and show them to you, and if you do not like it you need not take it. If we haven’t got that much money invested, we -will take off half a million dollars.’ On that basis we showed our figures and they took it. The Temple Iron Company we did not know anything about. Q. When these negotiations were going on with Mr. Robert. Bacon, you knew nothing about the Temple Iron Company? A. No. Q. It was with Mr. Robert Bacon of this firm of bankers here in New'York City that you had the negotiations, and it was to him you showed these figures? A. Yes, sir. Q. Did he accept the proposition? A. I don’t know that I showed him the figures, 'but I furnished the figures and somebody showed them to him. The deal was consummated. Q. Did Mr. Bacon accept your proposition? A. Somebody gave us the money. Q. I want to know where you and Mr. Bacon came to an agreement, if such a thing happened? A. Really I never saw him afterwards. Q. Whom did you see after that in connection with this matter? A. Nobody, except we went to the Guaranty Trust Company and got our money. Q. You did not know who supplied it? A. No. Q. Did the Guaranty Company pay you in cash? A. Check, and I very gladly indorsed it. I am awfully sorry now I took it. Q. You do not know whom Mr. Bacon represented? A. No. Q. You had not heard of the Temple Iron Company up to that time? A. No, sir. Q. AArhat was your first information about the Temple Iron Company? A. I understood they had a charter that you could do almost anything under except commit murder, and they bought it for that purpose. Q. AArho bought it? A. This crowd that was to buy our collieries. I do not know who bought it. Q. Did you have anything to do with the purchase of the charter? A. AVe paid for it. Q. AATio is ‘we’? A. Simpson & Watkins and our other partners paid $150,000 for the Temple Iron Company charter. Q. Simpson & AA'atkins bought the Temple Iron Company charter? A. I mean the crowd. I am not saying .Simpson & Watkins did it, but we thought it was a good charter, and we bought it and used it. Q. AATho was it that wanted it? A. I do not know. Q. For whom were you acting when you bought the charter of the Temple Iron Company? A. That was part of the deal. Q. Understood between you and Mr. Bacon? A. No, we thought we had a good charter and we would finance the company and turn in the stock, and we paid in a hundred and fifty-one thousand dollars for the charter and gave them four hundred and odd thousand dollars working capital and we took stock and bonds. Q. AATho paid that hundred and fifty-one thousand dollars? A. I suppose it was paid out of what might be called a syndieate. Q. You do not know who the other members of the syndicate were? A. No. Q. Were you at any time president, of the Temple Iron Company? A. Never. Q. Was Mr. Watkins? A. Yes, sir. Q. AVhen? A. When it was formed and took over this property. He was president for one or two years. Q. What was the business of the Temple Ix-on Company ixrior to the time it was bought out by you gentlemen? A. It owned a little pig iron furnace. Q. Down in Reading? A. Near Reading. Q. AVhat was the object in buying up that charter? A. Because it had a broad charter. Q. The pxxrpose was to get the use of that charter? A. Yes. Q. Do you know what the capital stock of the Temple Ix*on Company was at that time? A. At that time? Q. Yes, sir. $240,000, do you remember? A. I do not know. Q. You paid *467$151,000 for it. A. Yes. Q. Was the stock then increased with your concurrence and active assistance? A. Surely. Q. To what point? A. I think $0,000,000. Q. Did yon take stock in it for your collieries, or were you paid cash for the collieries? A. We took stock and cash and bonds.”
Mr. Baer, president of the Reading, states he first heard of the purchase through Mr. Coster, a member of Morgan & Co., and his account is this:
“'Air. Coster, who was on the executive committee of the Reading Company, was exceedingly anxious that the Reading Company should join in the purchase of those properties. The purpose of it was to help the Brie: the situation was a financial one really. .1. P. Morgan & Co. had reorganized the Erie Railroad. They had just a year or two before taken hold of the Lehigh Valley. 1 had been their counsel and made the mortgages for the Lehigh Valley and fixed up that loan, called the general mortgage or consolidated mortgage, I have forgotten which. The Reading had just been taken out of the hands of the receivers, and when these collieries were offered for sale,in New York the Brie people became very much alarmed. They were afraid of losing that tonnage, and, although it seemed to be tied to them, they argued that they might lose the tonnage and the Lehigh Valley would lose the tonnage and that would seriously affect those properties and the general financial condition of the country, so that our stock would be affected and all other stocks would be affected for the time being; that it would be a disturbing factor, i protested personalty that I could not, see anything in the suggestion of building that railroad. I did not see that it would amount to anything. I did not believe in it at all. It did not go to the New York waters. and I did not see how they could get coal to New York Harbor or to any other terminals so that they could be a serious factor. To that the answer simply was that the mere threat of doing that would affect Erie securities and affect all the rest of us. * * * In the meantime the New York parties concluded that in some way they would take these collieries, whether we went in or not. and then T ivas called upon again to see in what way, if they did take them, a holding company could be created. The usual suggestion was made in New York that they become a Jersey corporation; but as a Pennsylvanian I had been adverse to New Jersey getting jurisdiction over Pennsylvania property, and 1 have always tried In my business and in my practice to have Pennsylvania corporations hold Pennsylvania properties. I think it is wiser and better u> have the governmental jurisdiction where the property is. I got thinking over it and just about that time my co-stockholders in the Temple Iron Company were very tired of the business and so was i. It just, occurred to me that that charter was the very one that would answer this purpose, and I sent, for the Messrs, ftmith and asked them whether they would sell their stock, and they said they would, at a figure that, tliey named; and there was Frank Smith and Rroden who had a few shares, a small interest in the company, and they all agreed. After finding we could do that, 1 told the Reading people that the advantage to the Reading Company would not only be in having an interest in these coal properties, which itere reported very valuable by this committee, but that it would insure the continuance of that Temple Furnace on the line of the Reading road, and that I was not sure that ive would continue it long, that I was too busy to be bothering with running an anthracite furnace. It was very important; how important it is you may understand when 1 say that, a furnace on a railroad is about the best freight producing plant that you can have. That iron furnace pays over on the average about $30,000 — probably higher than that— a month freight on the inward freight, alone. The consumption of coal, of limestone, and ore, that we call the raw materials that go into a furnace for the smelting of iron, creates a great many tons, and, whilst; the rates are not very high on those raw materials, the tonnage is very heavy. We finally agreed on the part, of the Reading Company that if the New York friends, Coster, insisted upon it. we would join them on one other, condition, namely, that we should go in the syndicate. I thought that probably there might be some money made in the syndicate, as there was, of course. 1 mean that the *468bonds were sold at a figure that was tempting. * * * Then we agreed siniply to take the Simpson & Watkins collieries, and the question came up of guaranty. These people that, were selling and the hankers who were to handle the bonds wanted what we called a joint guaranty. X did not want a joint guaranty with some of the companies that I did not think were quite as strong as we were, and the executive board of the Reading, Mr. I-Iarris, and Mr. Welsh and Mr. Dickson, sustained me in that. Then the question was how to fix up the guaranty. I suggested that we take the tonnage of each of the companies that had gone in for the preceding year and divide that up and make that the percentage that each was to guaranty.
“By Mr. Reynolds: Q. The anthracite tonnage? A. The anthracite tonnage, and divide it tip and that fixed the percentages. That was reported to the different presidents, and I suppose their boards took action; I do not know. They are all separate agreements. That is a matter of record.”
The transaction was then carried out as theretofore arranged as follows: On January 26, 1899, the capital stock of the Temple Iron Company having been purchased as noted, its stock was raised to two and a half millions and its bonds issued for three and a half millions. On February 27th, Simpson & Watkins conveyed to it the capital stock of the eight collieries, taking in payment $2,260,000 of its capital stock and $3,500,000 of the bonds. On the same day they transferred to the Guaranty Trust Company, as trustee, this $2,260,000 of stock and $2,100,000 of bonds, and received therefor $3,238,396.66 in cash and certificates of beneficial ownership in $1,000,000 of the stock; the trustee purchasing from Mr. Baer for $151,603.34 the remaining $240,000 of original shares of the Temple Iron Wmpany. On the same day, as part of the plan, the Reading Company, the Central Railroad of New Jersey, the Lehigh Valley Railroad Company, the Delaware, Lackawanna & Western Railroad Company, the Erie Railroad Company, and the New York, Susquehanna & Western Railroad Company, severally contracted with tire Guaranty Trust Company and the Temple Iron Company to buy at par 29.96 per cent., 17.12 per cent., 22.88 per cent., 19.52 per cent., 5.84 per cent., and 4.68 per cent., respectively, in all 100 per cent., of the capital stock of the Temple Iron Company, and to guaranty the same percentages of its funded debt, principal and interest. These percentages as testified to by Mr. Baer, were arrived at on the basis of the respective anthracite tonnage of the several roads as quoted above. At the same time it was covenanted that, if in any period of six months the earnings of the Temple Iron Company should be insufficient to provide for its sinking fund, 'the interest on the bonds, and its “stock reserve’' charge, the carrier-guarantors should pay the trust company up to 12y2 cents per ton on every ton of coal carried by them from the mines of the company, and, if there still remained a deficit, it should be paid by the carrier-guarantors in the proportions noted above. Subsequently, on April 12th, each carrier entered into a supplementary contract with the trust company, to enable the latter “to take such action as may be necessary to enforce the terms of guaranty and the other covenants of said agreement of 27th of February, 1899, so as to work out equitable results and protect and safeguard the rights and obligations of * * * the several guarantors in the event of the failure of * * * any one or more of the guarantors, to *469coinph' with the terms of any such guaranty and to keep and perform the covenants in any such agreement.”
The consummation oí this plan effectually defeated the project of the new railroad and led to its abandonment, and it is to this the witness Sturges refers in his testimony:
“A few mouths afterwards, I cannot give the exact dales, a number of these collieries pledged to our road, or ral her the stock in a number of these companies, and tlie collieries too, were sold. I only know to whom by hearsay, except in one case. That, of course, absolutely crippled our road.”
Does this combination of all of the defendant railroads for the avowed purpose and with the effect of preventing the threatened building of a competitive road for the transporting of coal in interstate commerce fall within the ban of the statute? That the Temple Iron Company is a mere holding company, the instrument for effecting the purpose of the combination, is apparent from the proof, and indeed, as we have seen in the testimony of Mr. Baer, is conceded. The ownership of its stock was and is now in the defendant railroads, the Temple Iron Company being a mere convenient, unitary holding agency for joint, combining railroad interests. If this combination, which the proofs show was made by all these defendant railroads, is not within the prohibition of the statute, what legal bar is there to these railroads, through the agency of the Temple Iron Company, jointly and in combination, absorbing the remaining anthracite coal not now owned by their subsidiary coal companies? There is none. The gist of the statute is combination; combination “in restraint of trade or commerce among the several states.” Indeed, there is a potency in the united members of a combination so far in excess of the aggregate of the separate disunited strength of its members that the law, apart from this statute, has not overlooked it. In Morris v. Barclay, 68 Pa. St. 173, 8 Am. Rep. 159, the Supreme Court of Pennsylvania, referring to a combination affecting á single region only of the bituminous field, which covers many thousand miles where the anthracite covers a, few hundred, said:
“The effects produced on the public interests lead to t lie consideration of another feature of great weight in determining the illegality of the contract, to wit, the combination resorted to by these five companies. Hingly each might have suspended deliveries and stiles of coal to suit their own interests, and might have raised the price, oven though this might have been detrimental to the public interest. There is a certain freedom which must be allowed every one in the management of his own affairs. When competition is left' free, individual error or folly will generally find a correction in the conduct of others. * * * Men can often do by the combination of many what severally no one could accomplish and even what, when done by one would be innocent. * * * There is a potency in numbers when combined which the law cannot overlook, where injury is the consequence.”
Aud it will be observed that it is the calling of this combination into existence the law strikes at, without awaiting the exercise of its powers. “It is no answer,” said the Supreme Court of Ohio, in Central Company v. Guthrie, 35 Ohio St. 666, “to say that competition in the salt trade was not in fact destroyed, or that the price of the commodity was not unreasonably advanced. Courts will not stop to inquire as to the degree of injury inflicted on the public; *470it is enough to know that the inevitable tendency of such contracts is injurious to the public.” The purpose and effect of the combination of these defendant interstate railroads and of the defendant subsidiary coal companies would seem; therefore, to bring this transaction within the doctrine of the Northern Securities Case, 193 U. S. 197, 331, 24 Sup. Ct. 436, 454 (48 L. Ed. 679), where it was said “that every combination or conspiracy which would extinguish competition between otherwise competing railroads engaged in interstate trade or commerce is made illegal by the act,” for the statute covers all combinations in restraint of interstate trade, whether by way of transportation or otherwise. It is no answer to this to say the Temple Iron Company has corporate power to hold the stock of mining companies. Concededly it has. The law forbids not the use, but the abuse, of the corporate powers of this Pennsjdvania corporation. , The question before us is not whether the Temple Iron Company had cprporate pwer to own mines and mining stocks, but whether these six railroad companies have made the lawful corporate power of the Temple Iron Company to hold mines and mining companies’ shares an instrument to enable them to jointly combine “in restraint of trade or commerce among the several states.” If so, the act makes the combination unlawful without reference to the particular means used to effect the unlawful end. Indeed, to the contention that the Temple Iron Company was simply exercising its legal corporate powers it may be replied, as it was in Aikens v. Wisconsin, 195 U. S. 194, 25 Sup. Ct. 3, 49 L. Ed. 154, and reiterated in Swift v. United States, 196 U. S. 396, 25 Sup. Ct. 279 (49 L. Ed. 518):
“It is suggested that the several acts charged are lawful and that intent can make no difference. But they are bound together as the parts of a single plan. The plan may make the parts unlawful.”
And of the office of this holding Temple Iron Company it may be here said, as'was of the combination using the Northern Securities Coriipany in that case, that it is one vfrhich “restrains interstate commerce through the agency of a common corporate trustee designated to act for both companies in repressing free competition between them.” So, also, in Harriman v. Northern Securities Company, 197 U. S. 291, 25 Sup. Ct. 503 (49 L. Ed. 739), the court in speaking of the Northern Securities Case and that company said:
“Some of our number thought that as the Securities Company owned the stock the relief sought could not be granted, hut the conclusion was that the possession of the power, which, if exercised, would prevent competition, brought the case within the statute, no matter what the tenure of the title was.”
But it is urged that, because these eight collieries sell their product at the breaker, the transaction is wholly an intrastate act, and under United States v. Knight, 156 U. S. 1, 15 Sup. Ct. 249, 39 L. Ed. 325, the act does not apply. Let us look at the kernel and not the shell of this transaction. The stock of the collieries which sell is owned by the Temple Iron Company, and the stock of the Temple Iron. Company is owned by the defendant railroads. The latter are therefore the real sellers. And who are the real purchasers at the breaker ? The *471defendant coal companies whose stock is owned by the defendant railroads. And for what purpose do these latter buy this coal from themselves but to transport and sell the major part in interstate commerce? That the major part was interstate commerce the proofs show. Mr. Simpson, of the firm of Simpson & Watkins, says, referring to such product:
“Q. Where did you sell it; vrlien you sold it yourselves? A. Ill the general market — New York, Oswego, Buffalo--wherever we could get a market for 3L * * * Q. What was your principal market while you were operating independently and selling in your own independent way? A. New York was the principal market. * * * Q. And with whom were you in competition in the markets in New York City and in other parts of New York state when you were selling coals on your own account? A. Everybody that was in the business. Q. Your principal competitors then were either the anthracite coal carrying roads, operating in their own name, or operating through coal companies which they controlled? A. The Delaware. Lackawanna & Western Itniiroad Company, the Lehigh Talley Itailroad Company, ami the Ontario & Western Hail road Company through Dickson & Eddy, their sales agent.”
To the same effect is the testimony of E. B. Thomas, president of one of the carrier roads:
“Q. Where was the coal from the Simpson & Watkins’ collieries moving at that time? A. Moved over all of those roads. Q. Where? To what point? A. All over, wherever thev could find a market for it. Q. Was it coming to tide water? A. Some of it came to tide water. Some of it went west to different j)oinis.”
And that railroad carriers are “instruments of commerce and their business is commerce itself” was held in United States v. Trans-Missouri Freight Ass'n, 166 U. S. 290, 17 Sup. Ct. 540, 41 L. Ed. 1007 So while in isolation this is a sale of the coal at the breaker by one corporation to another corporation — a local transaction — yet in combination it is but one of the elements in a chain whereby the six defendant railroads handle their joint produce in interstate trade — a product which might otherwise have gone to this projected road. The several acts which contribute to the final result must he judged not in isolation, but in combination. For, while it is said in the Addystou Pipe Case, 175 U. S. 244, 20 Sup. Ct. 96, 44 L. Ed. 136, that, "where the contract affects interstate commerce only inciden tally and not directly, the fact that it is not designed or intended to affect such commerce is simply an additional reason for holding the contract valid and not touched by the act of Congress,” it was also held that “any agreement or combination which directly operates, not alone upon the manufacture, but upon the sale, transportation, and delivery of an article of interstate commerce, by preventing or restricting its sale, etc., thereby regulates interstate commerce to that extent and to the same extent trenches upon the power of the national Legislature and violates its statute.”
It is manifest, therefore, that while in corporate forms there are sales, corporate holdings, etc., which in isolation may be intrastate, the fact is equally clear that when combined the transaction as a whole falls within the domain of interstate commerce. For, as was said in Loewe v. Lawlor, 208 U. S. 301, 28 Sup. Ct. 301 (52 L. Ed. 488):
*472“Although some of the means whereby the interstate traffic was to be destroyed were acts within a state and some of them were in themselves as a part of their obvious purpose and effect beyond (he scope of federal authority, still, as we have seen, the acts must be considered as a whole, and the 'plan is open to condemnation, notwithstanding a negligible amount of intrastate business might be affected in carrying it out.”
Singly and uncombined these six defendant railroads may continue their lawful operations with that natural, untrammeled competition incident to individual rivalry; for, as we have seen above, “when competition is left free, individual error or folly will generally find a correction in the conduct of others.” But it is when and because they unite — for the words “contract,” “combination,” “conspiracy,” imply a coupling with others — and when that coupling is “in restraint of trade or commerce among the several states,” that the federal statute becomes applicable.
It appears then by the proofs:
First. That the construction into the anthracite region of an additional competitive carrier of interstate commerce, the New York, Wyoming & Western Railroad, was threatened and feared.
Second. That the product of Simpson & Watkins’ eight collieries entered largely into interstate commerce, and the diversion of this product and other interstate commerce was promised to and threatened to be divided by such new road.
Third. That the six defendant railroads combined to prevent the building of the competitive road, and the possible diversion of interstate commerce by the reorganization of the Temple Iron Company and the joint ownership of its stock, by purchasing through such company the stock of the Simpson & Watkins collieries, detaching such collieries from the support of the proposed road, therelw causing its abandonment and later removing the interstate product of such collieries for all time from the field of interstate freight competition, as they did in some cases when the perpetual G5 per cent, contracts were later agreed upon.
To us it is therefore .clear that the combination of these six defendant railroads in the Temple Iron Company was a combination “in restraint of trade or commerce among the several states,” and falls within the prohibition of the statute.
We are next brought to consider whether certain contracts, known as the 05 per cent, contracts, entered into between these railroads, through their subsidiary coal companies, with mineowners who are parties to this bill, were also “in restraint of trade or commerce among the several states.” This part of the case is covered by the second ground of relief, set forth in the government’s brief which is as follows :
“That tbe G5 per cent, contracts, so called, made by the defendants, the Philadelphia & Reading Coal & Iron Company, the Lehigh & Wilkes-Barre Coal Company, the Lehigh Valley Coal Company, the Delaware, Lackawanna & Western Railroad Company, and Hillside Coal & Iron Company, with the various producers who are before the court, for the control of their output, are in violation of the said act, and that all parties thereto, respectively, are enjoined ffom further carrying them out.”
*473. — being charged in clause “a” of paragraph 7 of llie hill, and relief for which is asked in the petition’s second prayer for relief.
The'proofs before us show, and the Supreme Court in Interstate Commerce CoM. v. Baird, 194 U. S. 42, 21 Sup. Ct. 563, 48 L. Ed. 860, held, that these contracts involved interstate commerce. The length of this opinion will not permit reference to the testimony, blit it shows that the terms of these, contracts were agreed upon by the joint action of the six defendant railroads, their subsidiary coal companies and mineowners, and that all of said persons and companies were concerned in and were thereby affecting interstate commerce, '¡'he form of contracts being' thus agreed upon, they were thereafter entered into by individual mineowners and the subsidiary coal companies of the six defendant railroads on whose lines the mines were located. Under each of these contracts the entire product of a particular mine was sold until exhaustion to one of the subsidiary coal companies at the breaker, and shipments therefrom were only to he made as that company required. Not only had the owner no power to mine except as the buyer required, hut he had nothing to do with fixing the price which was determined by the general tidewater rale. Save in operation the mine was practically owned by the subsidiary coal company, the only guaranty of production the operator had was that the coal company agreed “it will not discriminate in favor of its own mines, or that of any persons, firms or companies with which it had contracts to buy coal, but that the quantity to be ordered monthly shall he a just proportion of the entire quantity of coal agreed to be purchased by the buyer, measured by the colliery capacity of the respective sellers.” It further appears that where similar contracts had been limited to seven years, as they usually had been up to that time, they had not precluded competition. Indeed, the expiration of such seven-year contracts had made possible the projection of two carrier roads, and the testimony shows that the perpetuity clause was insisted on and inserted in the contracts thereafter by the combined action of the defendant railroads and their coal companies in order to withdraw from competition for all time the freights of these producers. The result of the combination was the operators got a raise to 65 per cent., and the defendant railroads eliminated competition. It would therefore seem clear that the product of these mines, which had before entered into competitive interstate commerce, was withdrawn therefrom, and, such being the case, it follows that the instrument by which this was done, to wit, the contracts entered into in pursuance of joint action, was a combination, “in restraint of trade or commerce among the several states.” It is contended, however, the right of contract is a personal, absolute one, and if a mineowner and a carrier agree thereto the law cannot interfere. But the answer to this is, we are here dealing with a combination, a combination of interstate carriers and owners of a product entering into interstate commerce, and, when such is the case, even the right, to contract and combine must give way to a statute which declares that such contracts and combinations where “in restraint of trade and commerce among the several states” are illegal. It is but just to say that taking into consideration all the *474factors involved in ownership, mining, transporting, and sale of coal, these contracts may on the whole he as fair, reasonable, and satisfactory -a solution of the intricate economic questions involved as can be worked out. To quote from the testimony of an operator of long experience and broad-minded view:
“Q. Why did you think the railroads ought to purchase the individual operators’ coal? A. I thought that was the best way to handle the business. Understand that anthracite coal is a domestic fuel and it is used in the winter time, and to get the dealer and the consumer to buy it through the summer time you have to give them some inducement. I talked to the railroad people a good many years. I said: ‘The thing you ought to do is to buy the individual operators’ coal at the mines on some agreed system, or price, or something of that kind, because we cannot induce the consumer to take our coal in the summer time and give the men full work through the summer time. We cannot get the dealers to stock up and we cannot afford to have yards and agencies all over, as you can.’ ”
But conceding the fairness, as we have said, of these contracts, the fact still remains they are at yariance with the adjudged intent of the statute to maintain in interstate trade an untrammeled flow of commerce in obedience to free and unrestrained competition. That these contracts do restrain commerce is clear from their terms and effect, and if they do not fall within the ban of a statute “aimed,” as was said in Chesapeake & Ohio Fuel Co. v. United States, supra, to “maintain interstate commerce on the basis of free competition,” then that statute is made of no avail by contracts which shut out competition for all time, and which, if increased in number, may without absolute purchase and ownership end in the defendant railroads’ acquisition of the remaining coal area. We are therefore of opinion these contracts, as they now stand, are illegal.
Seeing, then, that these six defendant railroads did unlawfully combine together, through the Temple Iron Company, and that thereafter in further combination they brought about these illegal perpetual contracts, the duty of the court seems clear to forbid them further maintaining their unlawful combination in the Temple Iron Company and from continuing these unlawful contracts; for, if the Temple combination was illegitimate in birth, when did the taint of illegitimacy leave it? The anti-trust act, as it seems to me, is directed not only at the illegal acts an illegal combination does, but also at the existence and continuance of such illegal combination. Moreover, in this case .it is not only because the combination in the Temple Iron Company was originally illegal, but because it can be used in the future as it has been in the past, and because its existence to-day tends to forbid, prevent, and restrain competition, that this court should decree such illegal combination should end. And this case exemplifies the need of such a decree. * Following the absorption of the stock of the Simpson & Watkins collieries by the Temple Iron Company, the product of some of those-collieries was, when the 65 per cent, contracts were afterwards determined on, bound in perpetuity to certain of these carriers through such contracts. By such perpetual contracts in their joint holdings and by the perpetual contracts these defendant railroads through their subsidiary coal companies severally made with other collieries these combiners withdrew, and still continue to with*475draw, such product, for all time, from competition, either in interstate transportation or sale. To my mind there is no more subtle and effective agency for the gradual, unnoted absorption by interstate carriers of the remaining- interstate product than these perpetual contracts. Holding then that they are in the words of the statute “contracts * * * in restraint of trade or commerce among the states,’'" I record my dissent to the action of the court in refusing to enjoin them.
LANNTNG. Circuit Judge.
The government charges in its petition that the defendants have entered into a series of combinations or conspiracies iu violation of sections 1 and 2 of “An act to protect, trade and commerce against unlawful restraints and monopolies,” approved July 2, 1890, hereinafter called the “anti-trust act.” The allegations are that these combinations or conspiracies restrain interstate commerce and monopolize a part of such commerce in the sale and transportation of anthracite coal mined in the Wyoming region of Pennsylvania. The petition contains, in addition to the usual general prayer for relief, five specific prayers for the destruction of five of the combinations described. These combinations are: (1) The one by which, in 1898, the Erie Railroad Company, through an increase of its capital stock, acquired the capital stock of the New York, Susquehanna & Western Railroad Company: (2) the one by which the Temple Iron Company, in 1899, through an increase of its capital stock and an issue of bonds acquired the capital stocks, assets, and properties of what were known as the Simpson & Watkins Coal Companies, and by which the Reading Company, the Lehigh Valley Railroad Company, the Delaware, Lackawanna & Western Railroad Company, the Central Railroad Company of New Jersey, the Erie Railroad Company, and the New York, Susquehanna & Western Railroad Company simultaneously entered into contracts for the acquisition of tlic capital stock of the Temple Iron Company; (¿3) the one by which, in 1901, the Reading Company, through an increase of its capital stock and bonded indebtedness, acquired the capital stock of the Central Railroad Company of New Jersey : ( 1) the one by which, in 1900 and subsequent years, the defendant carriers and their subsidiary coal companies agreed, in a series of contracts known in the record as the do per cent, contracts, to purchase from certain other coal companies all the anthracite coal thereafter produced by the collieries of the latter companies; and (5) a combination or conspirar}-, alleged to have been formed iu 1895 by the defendant carriers and their subsidiary coal companies for the control of interstate commerce in anthracite coal, and iu the development of which it is further alleged the four preceding combinations and one other (the one by which, in 1899, the Erie Railroad Company acquired the capital stocks of the Pennsylvania Coal Company and the Delaware Valley & Kingston Railroad Company) were used as “steps.”
Two preliminary matters should be first disposed of; one a motion to dismiss the petition on the ground of multifariousness, and the other a motion to strike out certain parts of the proofs offered by the United Stales and objected to by the defendants.
*476Twenty of'the defendants have raised, either by way of objections embodied in their answers or by simple motions to dismiss, the defense of multifariousness. This defense was not brought to the attention of the court until after the United States had concluded its testimony in chief. The court then postponed its consideration until the final hearing. It is clear, however, that the defendants who insist upon this defense stand in no better position now than they did when they first brought the matter to the attention of the court. It is the general rule of practice in courts of equity that a defendant loses his right to insist upon an objection that a petition or bill is multifarious unless he raises that defense by demurrer or plea or answer filed Specially for that purpose.' He cannot, by answering -generally and omitting to plead or demur, require a complainant to take his testimony and then, after the expense of taking such testimony has been incurred, insist, as a matter of right, upon multifariousness as a defense, Such a defense is not to the merits of th.e case but to the form of the suit. It follows, therefore, that as a rule if it is possible for the court, where the defense of multifariousness is not regularly presented in one of the ways above stated, to make a decree which shall properly dispose of the issues involved, the petition or bill will not be dismissed. Veghte v. Raritan Water Power Company, 19 N. J. Eq. 142; Annin v. Annin, 24 N. J. Eq. 184; Bunnell et al. v. Stoddard et al., Fed. Cas. No. 2,135; Oliver v. Piatt, 3 How. 333, 411, 11 L. Ed. 622; Nelson v. Hill, 5 How. 127, 131, 12 L. Ed. 81; Hefner v. Northwestern Life Insurance Company, 123 U. S. 747, 751, 8 Sup. Ct. 337, 31 L. Ed. 309; Graves v. Ashburn, 215 U. S. 331, 30 Sup. Ct. 108, 54 L. Ed. 217. Assuming that the petition is multifarious and that the defense might have been sustained on a simple demurrer, there is no difficulty, except that of examining the evidence as to the several issues involved, in- disposing of the case and entering a decree consistent, as we think, with its equities.
• The motion to strike out proofs relates to certain exhibits and testimony, It is not necessary to pass upon this motion for the reason that, whether the proofs be in or out, the conclusions expressed in this opinion, at least, will remain the same.
Before _ entering upon a consideration of the nature and effect of the combinations here complained of, it may be well, also, to recall some of the expressions of the Supreme Court as to the kind of combinations that are condemned by the anti-trust act.
“The contract condemned by the statute is one whose direct and immediate effect is a restraint upon that kind of trade or commerce which is interstate.” Hopkins v. United States, 171 U. S. 578, 592, 19 Sup. Ct. 40, 45, 43 L. Ed. 290.
“Where the subject-matter of the agreement does not directly relate to and act upon and embrace interstate commerce, and where the undisputed facts clearly show that the purpose of the agreement was not to regulate, obstruct, or restrain that commerce, but that it was entered into with the object of properly and fairly regulating the transaction of the business in which -the parties to the agreement were engaged, such agreement will be upheld as not within the statute, where it can be seen that the character and terms of the agreement are well calculated to attain the purpose for which it was formed, and where the effect of its formation and enforcement upon interstate trade or commerce is in any event but indirect and incidental, and not its purpose *477or object.’' Anderson v United States. 171 U. S. (604, 615, 19 Sup. Ct. 50, 54, 43 L. Ed. 300.
‘•An agreement entered into for the purpose of promoting the legitimate business of an individual or corporation, wiili no purpose to thereby affect or restrain interstate commerce, and which does not directly restrain such commerce, is not-, as wo think, covered by the act. although the agreement may indirectly and remoiely affect that commerce.” United States v. Joint Traffic Association. 171 U. S. 505, 568, 19 Sup. Ct. 25. 31. 43 L. Ed. 259.
“The purpose of the act of July 2. .1890. was to prevent the stiffing and the substantial restriction of competition in interstate and international commerce. The test under that act of the legality of a combination or conspiracy is iis direct and necessary effect upon such competition. If its necessary effect is but incidentally or indirectly to restrict competition, while its chief result; is to foster the trade and increase the business of those who make and operate it. it is not violation of this law.” United States v. Standard Oil Company, 173 Fed. 177, 188.
•‘If the necessary, direct, and immediate effect of the contract be to violate an act of Congress, and also to restrain and regulate interstate commerce, it; is manifestly immaterial whether the design to so regulate was or was not in existence when the contract was entered into. In such case the design does not. constitute the material thing. The fact of a direct and substantial regulation is the important part of the contract, and, that regulation existing, it, is unimportant that it was not designed.” Addyston Pipe & Steel Company v. United States. 175 U. S. 211, 234, 20 Sup. Ct. 96, 105. 44 L. Ed. 136.
1. Coming lo the merits, the first question to he considered is: Was the acquisition, in 1898, by the Erie Railroad Company of the capital stock of the New York. Susquehanna & Western Railroad Company effected by a combination or conspiracy in restraint of trade or commerce among the several states, contrary to the provisions of section I of the anti-trust act, or promotive of a monopoly of any part of the trade or commerce among the several states contrary to the provisions of section 2 of that act?
On March 11, 1898, the Eric Railroad Company obtained from the New York, Susquehanna & Western Railroad Company a lease of the latter company’s railroads, dated February 21, 1898, for the term of one year from March 1, 1898. The lease set forth, amongst other things, the purpose of the Erie to increase its capital stock by adding thereto $13,000,000 of first preferred and $13,000,000 of common stock and exchanging it, at the rates therein mentioned, for stock of the Susquehanna. On April 2, 1898, the Legislature of New Jersey consented to this lease. Between March 18 and June 30, 1898, the Erie Railroad Company acquired substantially all of the capital stock of the New York, Susquehanna & Western Railroad Company by exchanging its $26,000,000 of stock for the stock of the Susquehanna.
It is alleged in the petition that the Erie and the Susquehanna operate substantially parallel, and. in the absence of a restraining agreement or combination, competitive lines of railroad between the anthracite coal regions in Pennsylvania and tidewater points at New York Harbor, and that the Erie, by issuing its additional stock to the amount of $26,000,000 and exchanging it for the stock of the Susquehanna, brought the two formerly competitive railroad companies and their subsidiary coal companies under a common head and source of control and thereby, in violation of the anti-trust act, removed all inducements for competition between them and established a monopoly in interstate transportation and sale of anthracite coal. The answer *478of the Erie denies that the two companies were ever in a true sense competitors, or that it has in any wise violated the anti-trust act, and avers that the Erie is one of the greatest carriers of western produce, that the Susquehanna, has no such traffic, that both of the companies are carriers of anthracite coal to New York but from different sources of supply, that the Erie has a great freight and passenger business, that its terminal facilities at New York Harbor are inadequate, that the Susquehanna has larger tunnel and yard facilities át New York Harbor than it needs, and that the acquisition of the Susquehanna by the Erie enabled the Erie to use the tunnel and yard facilities of the Susquehanna. The answer of the Susquehanna also denies that the two companies are competitors for the transportation of coal, or that any competition between the two companies has been prevented or interfered with, or that the price of coal has by any of its agreements been in any manner controlled, and avers that the purchase of the stock of the Susquehanna by the Erie was made within the state of New York, that it was not in restraint of interstate trade or in violation of the anti-trust act, that, at the time of the exchange of stocks, the lines of the Erie were many miles distant from any territory in the coal -regions served by the Susquehanna (though it is admitted that, since the purchase, by traffic arrangements with the Erie and Wyoming Valley Railroad Company, the Erie has reached some mines in the territory previously reached by the lines of the Susquehanna), and avers, further, that the two companies have continued to connect with and carry coal from different mines, except that the Susquehanna had received traffic previously carried over the lines of the Erie because of the greater convenience in delivering to purchasers.
In 1872 or 1873 the New Jersey Midland Railroad had been built from Jersey'City, N. J., to Middletown, N. Y., a distance of 88 miles, and previous to 1883 it had passed under the management of the Susquehanna. The Erie was also then operating a road between the same points; both roads passing through Paterson and Passaic, in the state of New Jersey. Some time previous to 1883 the Susquehanna had extended its road to Gravel Place, three miles northwest of Stroudsburg, Pa. It then began to transport coal delivered to it at Gravel Place by the Delaware, Lackawanna & Western Railroad Company to West End,'near New York Harbor, whence, in the absence at that time of a terminal of its own, it sent such'coal over the lines of the Delaware, Lackawanna & Western to the latter’s terminal at Hoboken, N. J. After the Susquehanna had acquired a terminal of its own at Edgewater, on New, York Harbor, and extended its line through its ownership of the capital stock of a subsidiary ■ company to Wilkes-Barre, Pa., both of which it did in 1893, its coal carrying business rapidly increased. The subsequent extension of its lines to Minooka in 1897, and its connection with the Delaware & Hudson Railroad, the Lehigh Valley Railroad, and the Central Railroad of New Jersey, in the Wyoming coal region, enabled it to declare in its annual report of June 30, 1897, that the completion of the road to Minooka placed the Susquehanna “in an independent position in respect to the transportation of coal.” It was then in a position to *479transport to its terminal at Edgewater coal from the mines tributary to fhe Delaware & Hudson Railroad in the valley between Wilkes-Barre and Carbondale, from the mines tributary to the Rehigh Valley Railroad in the same valley, and from the mines tributary to the New jersey Central Railroad, as well as from the mines tributary to its own line. Though the Erie and the Susquehanna were free to extend their lines and thereby increase their business as common carriers of anthracite coal, it is clear that the more the business was thus increased the greater were the opportunities for competition between them. Each of them did, in fact, transport to New York Harbor coal from the collieries of the Pennsylvania Coal Company and the Hillside Coal & Iron Company. After the Susquehanna had put itself “in an independent position with respect to the transportation of coal,” it and the Erie controlled lines which, without doubt, enabled them to compete in the procurement and the transportation of coal.
With such conditions existing prior to and at the time of the acquisition of the. Susquehanna by the Erie, it is contended on behalf of the United States that the principles applied in Northern Securities Company v. United States, 193 U. S. 197, 326, 24 Sup. Ct. 436, 48 L. Ed. 679, are applicable. There it was held that the principal, if not the sole, object of the combination was to carry out the purpose of destroying competition between the constitutent companies and thereby to put a restraint upon interstate commerce. Here, however, it is argued, on behalf of the defendants, that the proofs fail to show any purpose of destroying competition or of promoting a monopoly in interstate commerce. The principal object of the combination, the defendants say, was to promote public convenience and interests, and that, conceding that the combination does eliminate the competition that previously existed between the two railroads, it is but an incidental restraint of interstate commerce.
The tabulated statements in evidence do not show the gross earnings of the Erie and the Susquehanna systems for 1897 or 1898. They do show, however, that the gross earnings of the Erie for the fiscal year ending June 30, 1900, were something over $38,000,000, and that the gross earnings of the Susquehanna for the fiscal year ending June 30, 1897, were but a little over $2,000,000. Tn 1898 the two roads reached Paterson, NL J., and Middletown, N. Y.; but the competition between them at those places was certainly very inconsiderable. More than one-half of the gross earnings of the Susquehanna was from freight on coal alone; the remaining part being from freight on merchandise, and from passengers, mail, express, and miscellaneous sources. Whatever of competition between the two roads there was, it was almost exclusively in the coal carrying business from the Wyoming region. The Susquehanna has no through freight business except as a coal carrier. It appears, too, that in 1898 the Susquehanna had larger terminal facilities at Edgewater, jST. J., than it required at that point, that the terminal at Weehawkeu, about five miles south of Edgewater, was not an adequate one at that point for Erie’s great and growing business, that the terminal facilities of the Susquehanna's freight business, exclusive of coal, in Jersey City and *480New York, were restricted to small quarters in the terminals of .the Pennsylvania Railroad Company, that the acquisition of the Susquehanna by the Erie enabled the Susquehanna to take its general freight business from the Pennsylvania's terminals to those of the Erie in New York, and that by the acquisition the convenience of both the Erie and the Susquehanna was promoted and the interests of the public subserved. The total amount of anthracite coal transported to New'- York Harbor over'the Erie in 1907 was 1,346,414 tons. Since the Erie acquired the stock of the Susquehanna, the latter road has lost much of its tonnage of anthracite coal, not to the Erie but to the Delaware & Hudson Railroad, and Mr. Johns, the superintendent of the Susquehanna, says that the Susquehanna cannot now stand alone for the reason that,-if its relations with the Erie were now severed, it would have no coal business left to it except that of a few mines which for ten months in 1908 produced only 216,310 tons.
The argument that the primary object or effect of the acquisition of the stock of the Susquehanna by the' Erie was to suppress competition in interstate commerce between those two roads is not convincing. So many other roads reached into the anthracite fields of Pennsylvania and transported coal to New York Harbor that the elimination of competition between the Erie' and the Susquehanna in the anthracite coal business could have had no substantial effect upon the business, or upon the price of coal.at New York Harbor. That suppression of competition was not the principal purpose of the combination seems to be shown by the lease of the Susquehanna to the Erie of February 24, 1898, which declared that the closer connection between the two roads thereby proposed would be for the public benefit, as well as for their mutual advantage, and by the act of the Legislature of New Jersey of April 2, 1898, by which consent to the proposed combination was given on condition that. “neither of the said railroad companies shall increase the present rate or rates of the freight or passenger traffic of the said companies in this state.” I think the proofs show that, whatever competition between'them was eliminated by the combination, such elimination was so inconsiderable a thing that it did not enter into the objects which induced the Erie Railroad Company to increase its capital stock by $26,000,000, and that it was but an incidental, and not the designed or principal, result of the combination. I conclude, therefore, that this combination is not violative of the anti-trust act.
2. The second question is: Was the scheme by which the Reading Company, the Lehigh Valley Railroad Company, the Central Railroad Company of New Jersey, the Delaware, Lackawanna & Western Railroad Company, the Erie Railroad Company, and the New York, Susquehanna & Western Railroad Company acquired the capital stock of the Temple Irqn Company, and by which the Temple Iron Company acquired the capital stocks, assets, and properties of the Simpson & Watkins Companies, a combination or conspiracy violative of the anti-trust act ?
Previous to 1899 the Temple Iron Company had been engaged in the manufacture of iron at Temple, near Reading, Pa. It had, how*481ever, a liberal charter which enabled it to own and operate mines. Having authorized its .capital stock to be increased from $240,000 to $2,500,000, and its bonds to be issued to the amount of $3,500,000, or, perhaps, in anticipation of such authorization, it, on February 27, 1899, entered into a contract with Simpson & Watkins by which that firm agreed to sell all of the capital stocks, assets, and properties of the Forty Fort Coal Company, the Mount Lookout Coal Company, the Wyoming Land Company, the Wyoming Electric Light Company, the Babylon Coal Company, the Sterrick Creek Coal Company, the Edgerton Coal Company, the Hendrick Land Company, the Northwest Coal Company, and the Lackawanna Coal Company (the last a limited copartnership) to the Temple Iron Company, for $2,260,-000 of the capital stock of the Temple Iron Company and the $3,500,-000 of its bonds; the bonds to be secured by a mortgage or collateral trust deed. On the same day Simpson & Watkins agreed that simultaneously with their receipt from' the Temple Iron Company of its stock and bonds above mentioned they would transfer and deliver to the Guaranty Trust Company of New York, as trustee, the whole of their stock of the Temple Iron Company ($2,260,000) and $2,-100,000 of the $3,500,000 of its bonds, and the trustee agreed to pay to Simpson & Watkins $3,238,396.66 in cash and to issue to them certificates of beneficial interest in $1,000,000 of the stock. The trustee further agreed to purchase from Mr. Baer the remaining outstanding-stock of the Temple Iron Company ($2-40,000) at 60 per cent, of its par value. It was also agreed that the trustee should have the power to sell beneficial interests in the stock; such interests to be expressed in certificates issued by the trustee to the purchasers. On the same day the Guaranty Trust Company, of the first part, and J. P. Morgan, and others, composing the underwriting syndicate, of the second part, entered into an agreement by which the parties of the second part agreed to purchase, on demand of the trustee, the $2,100,000 of bonds at the rate of 90 per cent, of tlieir par value, and $1,500,000 of the certificates of beneficial interest in the stock (being the residue of such certificates after the delivery of $1,000,000 of them to Simpson & Watkins) at par. Also, on the same day, the Reading Company (holding all of the capital stock of the Philadelphia & Reading Railway Company), the Lehigh Valley Railroad Company, the Delaware, 1 .ackawanna & Western Railroad Company, the Central Railroad Company of New Jersey, the' Erie Railroad Company, and the New York, vSusquehanna & Western Railroad Company each entered into a tripartite agreement with the Temple Iron Company and the Guaranty Trust Company of New York, by which the Reading Company and the five railroad companies agreed to purchase from the trust company, not later than December 31, 1906, at par value with interest at 6 per centum per annum from the date of the last dividend thereon, all of the trust company’s shares of the stock of the Temple Iron Company, in the following proportions, to wit (the proportions being the same as the total tonnages of coal carried by them from all sources in the year 1898) : The Reading, 29.96 per cent.; the Lehigh Valley, 22.88 per cent.; the Delaware, Lackawanna & Western, 19.52 per *482cent.; the Central, 17.12 per cent.; the Erie, 5.84 per cent.; and the New York, Susquehanna & Western, 4.68 per cent. In these tripartite agreements the Reading Company and the five railroad companies also severally agreed, that, if the earnings of the Temple Iron Company for any period of six months ending June 30th or December 31st should not be sufficient for the sinking fund and interest payments in the agreements provided for, and 3 per cent, on the par value of the stock of the Temple Iron Company, then each of the six companies would pay to the trust compan}*-, for the purpose of making up such deficiency, 12% cents per ton for all coal carried by it from the Simpson & Watkins collieries for such period of six months, or so much of said sum as should be necessary to make up the deficiency, and, if there should still be a deficiency, then thaf each of the six companies would pay to the trust company such proportion of the remaining deficiency as should equal the proportion of stock agreed to be purchased by it. They also severally guaranteed, in the same proportions, the payment of the principal of the bonds at maturity, on January 1, 1925.
Thus was this combination effected. It went into operation, and, although the guarantor companies were compelled to pay to the trust company deficiencies in the earnings of the Temple Iron Company to the amount of $483,000 for the year 1899 and the strike years of 1900 and 1902, the business of the Temple Iron Company has been highly successful. On December 4, 1908, when Mr. Daw testified for the government, the Temple Iron Company had purchased out of its net earnings for its sinking fund $1,900,000 of the bonds, the total issue of which was $3,500,000, and had a surplus of a million dollars in its treasury; and-on June 30, 1909, when Mr. Thomas testified for the defendants, all of the bonds except $800,000 had been purchased by the Temple Iron Company and the $483,000 paid by the guarantor companies to the trust company had been refunded. In December, 1906, the certificates of beneficial interest in the stock of the Temple Iron Company, which the trust company had issued for the whole of the 25,000 shares, and which were widely scattered amongst about 200 holders in Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New York, and Pennsylvania, were called in by the trust company, and, pursuant to the provisions of the tripartite agreements, the whole of the capital stock of the Temple Iron Company, excepting 50 shares held by the directors, was acquired by the Reading Company and the five railroad companies who agreed to purchase it, except that the Reading Company’s proportion was divided between it and some of its subsidiary corporations.
It appears, then, that the Guaranty Trust'Company no longer holds any of the capital stock of the Temple Iron Company. It does hold, however, the trust mortgage by which the bonds of the Temple Iron Company are secured. What the terms of that mortgage are does not appear, nor is the trust company a party to this suit. The Erie Railroad Company, in its answer, avers that:
“The Guaranty Trust Company is still the trustee of the mortgage which secures the payment of the bonds which have been jmrchased by numerous *483bondholders, whose rights should not be impaired herein without bringing’ them, or their trustee, into this court as a party defendant.”
A similar averment is contained in the answer of the New York, Susquehanna & Western .Railroad Company. The issue of the $3,-500,000 of bonds is one of the acts by which the Temple Iron combination was'made possible. The destruction of the combination may impair the value of the bonds. The trustee of the bondholders would therefore seem to be a proper, if not an indispensable, party. Nevertheless, this point is not urged in the briefs, and I shall rest my decision on other features of this branch of the case.
A general act of the state of Pennsylvania, passed April 15, 1869 (P. L. 1869, p. 31), provides:
“That it shall and may be lawful for railroad and canal companies to aid cor]'orations authorized by law to develop the coni, iron, lumber and other material interests of this commonwealth, by the purchase of their capital stock and bonds, or either of them, or by the guarantee of or agreement to purchase the principal and interest, or either, of such bonds, provided that this act shall not apply to the stock and bonds of any corporation possessing mining or manufacturing privileges in the county of Schuylkill.”
There is no allegation in the petition raising the question whether a common carrier engaged in interstate commerce, by the mere act of purchasing, for the purpose of securing its transportation business, the capital stock of a coal mining corporation also engaged in interstate commerce, monopolizes a part of that commerce, or restrains it, contrary to the provisions of the anti-trust act. I f there were, then, since the contention of the government is that the defendant carriers by tlieir purchase of the capital stock of the Temple Iron Company became the virtual owners of the mines whose capital stocks were owned by the Temple Iron Company, this court would,-if it adopted that view, he required to consider one of the grave constitutional questions which the Supreme Court mentioned, hut found it unnecessary to decide, in United States v. Delaware & Hudson Co., 213 U. S. 366, 29 Sup. Ct. 527, 53 L. Ed. 836, namely:
“Did the adoption of the Constitution and the grant of power to Congress to regulate commerce have the effect of depriving the si ales of the authority to endow a carrier with the attribute of producing ns well as transporting particular commodities, a power which the states from the beginning have freely exercised, and by the exertion of which governmental power the resources of the several states have been developed, tlieir enterprises fostered, and vast; investments of capital have been made possible?”
Nor does the petition contain any allegation to the effect that the Reading Company, the Lehigh Valley Railroad Company, the Central Railroad Company of New Jersey, the Delaware, Uackawanna &' Western Railroad Company, the Erie Railroad Company, and tlfe New York, Susquehanna &■ Western Railroad Company, by purchasing the capital stock of the Temple Iron Company, which liad simultaneously purchased the Capital stocks of the Simpson & Watkins Companies, and by guaranteeing the payment of the obligations of the Temple Iron Company, created a combination in the nature of a copartnership for sharing the profits and losses of the Temple Iron Company, and that they thereby, in violation of the anti-trust act, monopolized a part of the interstate commerce in anthracite coal. *484Such a copartnership is suggested, it is true, in the brief of the government; but no issue of that kind is presented by the pleadings. As neither of these two important questions is in issue, they cannot properly be decided in this case.
The. only complaint in the petition concerning the Temple Iron transactions is that after Simpson & Watkins and certain other independent operators in the Wyoming and Lehigh coal regions had “determined and agreed to promote the construction of a new line of railroad from the regions where their mines were located to tide water,” and after, for that purpose, they had “caused the New York, Wyoming & Western Railroad Company to be organized under the laws of the state of Pennsylvania,” had secured “large subscriptiolis” to the capital stock of the company, had made surveys of its line, had purchased 7,000 tons of steel rails, and had secured pledges to it of “the tonnages of the aforesaid independent operators not already pledged by contract,” the Reading Company, the Lehigh Valley Railroad Company, the Central Railroad Company of New Jersey, the Delaware, Lackawanna & Western Railroad Compan}', the Erie Railroad Company, and the New York, Susquehanna & Western Railroad Company, entered into the series of contracts of February 27, 1899, hereinabove mentioned, and thereby, through their concerted action: (1) Caused the construction of the projected New York, Wyoming & Western Railroad to be abandoned; and (2) pooled and divided amongst themselves (excepting the Reading Company) the tonnages of the eight Simpson & Watkins collieries. And the only prayer of the petition which specifically relates to the Temple Iron transactions, besides a prayer for injunction, is that we shall adjudge them illegal because thereby: (1) The Reading Company, the Lehigh Valley Railroad Company, the Central Railroad Company of New Jersey, the Delaware, Lackawanna & Western Railroad Company, the Erie Railroad Company, and the New York, Susquehanna & Western Railroad Company, through the instrumentality of the Temple Iron Company, acquired the Simpson & Watkins collieries “in pursuance of a combination or conspiracy between the defendants last named to defeat the construction of a competing railroad from the anthracite fields to tide water”; and because- (2) “in so acquiring, through the purchase of agreed percentages of the capital stock of the Temple Iron Company, ownership in common of the aforesaid collieries formerly owned by Simpson & Watkins, the said Lehigh Valley Railroad Company, Central Railroad Company of New Jersey, Delaware, Lackawanna & Western Railroad Company, Erie Railroad Company, and New York, Susquehanna & Western Railroad Company pooled and divided among themselves the tonnages from those collieries, thereby shutting out competition in its transportation.” These two questions- — one concerning the alleged defeat and abandonment of the proposed new railroad, and the other concerning the alleged pooling and division of tonnages — are the only questions on this branch of the case presented by the pleadings, and the only ones this court is now at liberty to consider.
It appears that Simpson & Watkins and other independent operators of anthracite co‘al mines were promoting the new railroad with *485the declared intention of securing access to tide water at New York free from the domination of existing carriers whose transportation charges were complained of. But the charter of the new railroad authorized its construction “from a point in the Delaware river in Northampton county, Pa. (being also the boundary line between the states of New Jersey and Pennsylvania), opposite to or near Belvidere, N. J., and thence to a point on the Susquehanna river within or near Pittston, Luzerne comity, Pa., with the necessary branches or laterals.” It is not pretended that the new road was to extend to tide water or even across the Delaware river into New Jersey. It is said in the government’s brief that at the point opposite to Belvidere — that is, at the eastern terminus of the proposed new road in Pennsylvania — connection could have been made with the Delaware, Lackawanna & Western Railroad, the Central Railroad of New Jersey, the Lehigh Valley Railroad, and the Pennsylvania Railroad, all of which do reach tide water. It appears, however, that no arrangements of any kind had been made for any such connection. Mr. bid-ward B. Sturges, who was interested in the proposed road and subscribed for 500 shares of its stock, testified as follows:
“Q. The c-Jiarter, or the articles of incorporation, only authorized this road to build a line as far as a point opposite Belridere. N. J.,’ did they not?
“A. That is all.
“Q. I low was it contempla toil to get from there to tide water?
“A. We had not actually entered upon the construction of any road from there on. We Ihought we could get the transportation over some road. We knew that gel ting across New Jersey might he beyond our power.
“Q. What roads would you have connected with?
“A. We could not: tell. We never had made any arrangements at that time.
“Q. 1 do not mean what roads you («raid have actually eniered into contracts with, but which you would have physically connected with?
“A. The Delaware, Lackawanna & Western Railroad across the river, the New .Jersey Central and the Lehigh Valley and the Pennsylvania below the Bolvidere division. We never got that far because we felt (hat if we could get over to the New Jersey line we could get to New York or to tide water later. Later there was another arrangement made.”
This admission by Mr. Sturges, who was a witness called for the government, taken with the fact that it does not appear that there was any railroad whatever on the Pennsylvania side of the Delaware river at or near the point opposite to Belvidere with which any connection could have been made, shows that the allegation of the petition that the purpose was to construct a new road from the coal regions to tide water is not supported by the evidence. It is certain that the new road could not, under its charier, have reached tide water or extended beyond the confines of the state of Pennsylvania. It matters not that the independent coal operators had been threatening to build a new road from the coal regions to tide water, or what influence that threat had, if any, upon the formation of the combination which absorbed the collieries of Simpson & Watkins. The allegation is that the combination defeated the construction of a new railroad from the coal regions to tide water; the fact is that the construction of such a road was never authorized by law, or even contemplated, and, consequently, that it was not defeated. Furthermore, there is no proof in the case that the Temple Iron combination di*486rectly defeated the construction of any railroad whatever, either from the coal regions to tide water or from the coal regions to the Delaware river. It did not acquire the capital stock of the new railroad company-and does not in any manner control its charter.
It may be observed, further, that the allegation of the petition is that the construction of the proposed new railroad has already been defeated and abandoned. The fourth section of the anti-trust act confers on Circuit Courts “jurisdiction to prevent and restrain’' violations of the act. But this court cannot prevent or restrain a past violation of the act. There is no suggestion in the petition that the Temple Iron combination is still preventing the construction of the projected railroad: Nor does it appear that if the prayer for injunction should be granted the new railroad would be built. That prayer, in substance, is that the railroad companies shall be enjoined from voting on the stock of the Temple Iron Company which they own, and that the Temple Iron Company shall be enjoined from paying dividends to the railroad companies. It is not proposed to enjoin the Temple Iron Company from voting on the stocks of the Simpson & Watkins Companies, or to enjoin the Simpson & Watkins Companies from paying dividends to the Temple Iron Company. How would the present situation, in- respect of the alleged defeat of the construction of the proposed new railroad, be changed by enjoining the railroad' companies from voting on the stock of the Temple Iron Company and enjoining the Temple Iron Company from paying dividends to the railroad companies? The gravamen of the complaint is that the construction of the proposed new railroad has been defeated, and that thereby interstate commerce has been restrained. The injunction we are asked to issue cannot restore a condition under which the probability of a resumption of the efforts to build the new railroad will be in any wise increased. Neither can we frame an injunction that will restore such a condition under the general prayer for relief. The petition makes no case on which a more sweeping injunction than the one specifically prayed for can be allowed, for none of the seven Simpson & Watkins Companies is a party defendant, except the Mount Lookout Coal Company and the Lackawanna Coal Company, and each of those two companies is a party defendant only in respect of the 65 per cent, contracts hereinafter considered.
If, then, any relief can be granted, under the allegations of the petition, against the Temple Iron combination, it must be because there was a pooling and division of the transportation business of the Simpson & Watkins collieries amongst the Lehigh Valley Railroad Com-2>any; the Central Railroad Company of New Jersey, the Delaware, Lackawanna & Western Railroad Company, the Erie Railroad Com-2Dány, and the New York, Susquehanna & Western Railroad Company. It is not charged that the Philadelphia & Reading Railway Company (whose capital stock is held by the Reading Company) obtained any part of the tonnage of -those collieries. The fact is that none of the eight Simpson & Watkins collieries is tributary to the Philadelphia & Reading Railway Company. I understand, too, that none of them ig tributary to the Central Railroad Company of New Jersey. They are located at widely separated points in the Wyoming *487region. With one or two exceptions, each o£ them is tributary to a single railroad. The productions of the Northwest, Kdgerton, and Sterrick Creek collieries are carried by the Eric, of the Lackawanna colliery by the Erie, the Delaware, Lackawanna & Western, and the New York, Susquehanna & Western, of the Babylon and Mount Lookout collieries by the Lehigh Valley, or the Forty Fort and Harry K. collieries (both owned by the Forty Fort Coal Company) by the Lehigh Valley and the Delaware, Lackawanna & Western. The proportions in which the six carriers (considering the Reading Company, 1 lie holder of the capital stock of the Philadelphia & Reading Railway Company, as a carrier) agreed in the tripartite contracts to purchase the stock of the Temple Tron Company were not fixed by the tonnages of the eight collieries alone. Had they been, the Reading Company and the Central Railroad Company of New Jersey would have acquired none of the Temple Iron stock. Those proportions were based on the total shipments of anthracite, coal carried by the six carriers from all sources for the year 185)8 (according to Mr. Baer) or for the five years from 1894 to 1898 (according to the contention of the counsel for the government). Neither in the tripartite agreements, nor elsewhere, does it appear that the productions of the eight collieries were thereafter to he carried by the six carriers in the proportions in which they agreed to purchase the Temple Iron stock. The conditions were such as to forbid the making of such a contract. And the tripartite agreements themselves show that no attempt to make any such contract was in the minds of the parties, for they assumed that the tonnages from the eight collieries over the several roads would vary from time to time, and therefore provided that if the earnings of the Temple Iron Company should he insufficient to meet its sinking fund, interest, and other charges, the carriers should make up the deficiency, not primarily in the proportions of stock agreed to be purchased by them, but by the payment by each carrier of a sum not exceeding cents per ton on such amount of coal as it should actually carry from the eight collieries. By this arrangement the Reading Company and the Central Railroad Company of New Jersey were exempt from such payments. Nor is there anything in the tripartite agreements, or in any other proven agreements, that shows that these six carriers have entered' into an agreement not to compete with one another in the coal transportation business, or that forbids any of the carriers from extending its line to any or all of the eight collieries and transporting as much of the coal produced by them as it can get. Not only is any suppression of competition denied, in the answers and by.the defendants’ witnesses, but thev deny aii}- purpose of bringing about such a result. The burden is on the government, therefore, to show that, under the combination, there was in fact a pooling and division amongst the carriers of the tonnages of the eight collieries. This it lias failed to show.
3. The third question is: Was the acquisition, in 1901, of the capital stock of the Central Railroad Company of New- Jersey by the Reading Company, effected by a combination or conspiracy in restraint of trade or commerce among the several states?
The petition alleges that about January, 15)01, the Reading Com*488pany, which then held and still holds all of the capital stock of the Philadelphia & Reading Railway Company, issued additional shares of its capital stock to the amount of $3,017,650 of first preferred and $1,713,750 of second preferred, par value, and created an additional bonded indebtedness of $23,000,000, due in 1951, which it gave to the holders of the capital stock o’f the Central Railroad of New Jersey for 145,000, being a majority, of the shares of that stock, and thereby brought under one controlling power those two carrier companies, which, it is alleged, operated parallel and competitive lines. This, it is said, destroyed competition between them and their subsidiary coal companies and 'promoted monopoly. The answer of the Reading Company denies that the Philadelphia & Reading Railway and the Central are parallel or competitive lines, declares that they are connecting lines, admits that on or about January 7, 1901, it agreed to purchase 145,000 shares of the capital stock of the Central, and avers that, to secure the payment of the $23,000,000 of bonds which it issued to aid in financing the enterprise, it pledged the stock purchased from the Central, with other stock, as collateral, under an agreement dated April 1, 1901, which it executed and delivered, with the certificates for the stock, to the Pennsylvania Company for Insurances on Lives and Granting Annuities. The answer of the Central also denies that the two carriers operate parallel or competing roads, or that the scheme throttles competition or promotes monopoly.
In 1890 the Philadelphia & Reading Railroad Company, the predecessor of the defendant Philadelphia & Reading Railway Companj', the most easterly point of whose line was at Bound Brook, N. J., 20 miles west of New York Harbor, determined to promote the construction of the Port Reading Road from Bound Brook to Arthur Kill, on the tide waters of the New York Harbor, in order to secure on that harbor coal terminal facilities of its own. The road was completed in 1892. Substantially all of the capital stock of the Port Reading Road was owned by the Philadelphia & Reading Railroad Company and passed, upon the sale of the latter’s assets under the receiver’s proceedings in 1896, to the defendant the Reading Company. The Reading Company, from 1896 to the present time, has held, as ownei;, substantially all of the capital stocks of the Philadelphia & Reading Railway Company and the Port Reading Railroad Company. By this extension the Philadelphia & Reading Railroad Company secured an Outlet to New York Harbor for its coal. The terminal on Arthur Kill was not a convenient one for passenger or general freight traffic, and up to-1901, when a majority of the stock of the New Jersey Central was purchased by the Reading Company, nearly all of the traffic of the Philadelphia & Reading Railway Company going to and from New York, except its coal traffic, passed over the New Jersey Central between Bound Brook and New York-Prior to 1901 contracts between the Philadelphia & Reading Railway Company, the Central, and other roads, had been entered into for the establishment of joint through routes over their lines. These contracts largely benefited the Philadelphia & Reading Railway Company. In December, 1900, Mr. Baer, president of the Philadelphia & Reading Railway Company, was informed that a majority of the *489capital stock of the Central Railroad Company of New Jersey was on the market lor sale, and that the Baltimore & Ohio Railroad Company was a prospective purchaser of it. Rearing that, if the control, of the Central should pass into the hands of the Baltimore & Ohio, the Philadelphia 8: Reading would lose the benefit of its contracts for joint through routes and he disastrously hampered in, if not excluded from, the use of the Central’s New York terminals, lie quietly bought the stock for the Reading Company. Evidently, the predominating motive in the purchase was to preserve to the Philadelphia & Reading its traffic arrangements with the Central. The direct effect, of the purchase was to preserve them. The necessary effect of the combination was also to eliminate all possible competition between the Philadelphia & Reading and the Central in the anthracite coal carrying-business. In the circumstances, however, such elimination, though a necessary result of the combination, was incidental to its main purpose and not in contravention of the anti-trust act as it has heretofore been construed. The argument that the Philadelphia & Reading and the Central were not competing but were connecting roads is not sound. To a certain extent they did supplement each other, but as the Port Reading road gave to the Philadelphia & Reading an outlet to New York Harbor for its coal carrying business, without the use of the Central's road, the Philadelphia & Reading and the Central were, previous to the combination, in the position of competitive carriers of coal even though they did not reach the same mines or the same parts of the Wyoming region. Mr. Baer himself said:
“Q. What do you regard as competitors of tlie Philadelphia & Reading now m New York Harbor, as to anthracite coal?
“A. All of the companies.
“Q. Won't you be good enough to name them for us?
“A. All the companies that ship to New York. They would be the Pennsylvania Railroad, the Lehigh Valley, the Delaware & Lackawanna, the Delaware & Hudson, the Erie, Ontario & Western. I guess they are all the roads leading to New York directly or indirectly.
“Q. Those roads are all carrying anthracite coal to the New York Harbor?
“A. Yes, sir.
“Q. And you regard them as competitors who must be considered in fixing rates?
“A. Yes, sir; unquestionably.”
I prefer to base our opinion, not on the ground that the two roads were not competitors in the anthracite coal carrying business, but on the other, even though it be the narrower, ground that whatever suppression of competition resulted from the combination it was but an incidental effect of a scheme to save the business of the Philadelphia & Reading. Indeed, the elimination of competition between the Philadelphia & Reading and tlie Central, in the anthracite coal carrying business, was u-., small a thing to have been an important element in the object of the- combination. The proximity of the lines of the Delaware, Lackawanna & Western, the New York, Susquehanna & Western, the New York, Ontario & Western, the Erie, and the Delaware & Hudson, to the line of the Central, and of the Pennsylvania’s line to the line of the Philadelphia & Reading, left the competitive conditions in tlie coal carrying business very slightly affected by the elim*490nation of competition between the Central and the Philadelphia & Reading.
I conclude that this combination was not violative of the anti-trust act.
4. The fourth question is: Are the contracts, referred to in the'
record as the 65 per cent, contracts, contracts in restraint of interstate commerce ?
The charge is that they are, and the prayer is that they be delivered up to be canceled, and that further operations thereunder be enjoined.
Long prior to 1869 the Delaware, Lackawanna & Western Railroad Company had been specially authorized by the Legislature of Pennsylvania to acquire and hold coal lands, and to mine, purchase, and vend coal. By a general act of that state, approved April 15, 1869, railroad and canal companies, as already stated, were aitthorized to aid corporations engaged in developing coal mines by the purchase of their capital stocks and bonds, or either of them. Pursuant to the policy of the state of Pennsylvania thus established, it appears that, before 1900, the Delaware, Lackawanna & Western Railroad Company had acquired coal lands, and that the Reading Company had acquired the capital stock of the Philadelphia & Reading Coal & Iron Company, the Lehigh Valley Railroad'Company the capital stock of the Lehigh Valley Coal Company, the Central Railroad Company of New Jersey a majority of the capital stock of the Lehigh & Wilkes-Barre Coal Company, the Erie Railroad Company a majority of the capital stock of the Hillside Coal & Iron Company, and the New York, Susquehanna & Western Railroad Company a majority of the capital stock of the New York, Susquehanna & Western Coal Company. The Delaware, Lackawanna & Western Railroad Company and the above-mentioned subsidiary coal companies have each entered into one or more of the 65 per cent, contracts.
Eor many years previous to 1900, when the first of these contracts was entered into, many of the smaller coal producing companies sold the products of their mines to the larger coal companies, producing and shipping coal in their respective neighborhoods, for certain percentage's of tide-water prices. These percentages were increased from time to time until they reached 60 per cent. In the early fall of 1900 a general strike of the coal miners and laborers of the whole anthracite region took place, resulting in an entire cessation of the production of anthracite coal. Conferences were had, and a ten per cent, increase in wages was finally granted by the defendant carriers’ subsidiary coal companies to their employés. This increase, of course, affected the independent coal companies. On October 1, 1900, at a meeting of “individual operators,” in Wilkes-Barre, Pa., a committee was appointed “to confer with the presidents of the transportation companies and endeavor to learn if there is to be a reduction in the rates of freight to cover the advance in wages that they have offered to their employés.” On October 5, 1900, at another meeting, in Scranton, Pa., the committee reported a recommendation that the “individual operators,” post the “notice of advance of wages already made by the companies.” The minutes of this meeting then proceed as follows:
*491“After the reading of this report, Hr. Kenmieror [one of tlie members of the committee], in answer to the question as to what the presidents of the transportation companies had said regarding a reduction in the rates of freight to cover the proposed advance of ten per cent, in wages, said that the committee could not report a definite promise from them that there would be a reduction in the freight rates, but that they expressed their sympathy with the individual operators, and he intimated that they had said something would lie done for the individual operators to improve the present conditions of tin* coal business.”
The meeting resolved to post the notices, and then appointed a new committee of three persons “to confer with the various carrying companies relative to a new contract.” This committee had a number of meetings with other gentlemen, who were officers of the defendant carriers and also of their subsidiary coal companies, in which there were negotiations concerning the terms of the proposed new contracts. The independent operators were demanding 65 per cent. The demand upon them was that, instead of having the contracts extend for a period of years, as the previous percentage contracts had done, they should continue for the life of their collieries. Mr. Ciimming, vice, president of the Krie Railroad Company and an officer of its subsidiary, tlie Hillside Coal & Iron Company, says that his reason for desiring the new contracts to cover the entire life of the collieries was “to have the question settled once for all.” Other concessions were demanded of the operators. .Finally, the form of contract now under examination was agreed on. It provides, amongst other things, that “the seller hereby sells and agrees to deliver on-cars at the breaker to the buyer all the anthracite coal hereafter mined from any of its mine.now opened and operated, or which may hereafter open and operate on the premises intended to be covered by this contract”; that “shipments shall be made from time to time as called for by the buyer”; that tlie buyer will “arrange to take the coal in as nearly equal dail}! or weekly quantities as in its judgment the requirements of the market will permit”; that the buyer will “use its best efforts to find a market for the seller’s coal so as to enable the seller’s collieries to he worked as many days as practicable with due regard to the general market conditions”; and that the buyer “will not discriminate in favor of its owm mines, or any persons, firms or companies with which it has contracts to buy coal, but that the quantity to be ordered monthly shall be a just proportion of the entire quantity of coal agreed to be purchased by the buyer, measured by the colliery capacity of the respective sellers, it being understood that so far as practicable the quantity ordered shall not he less than a just proportion of all the anthracite coal which the requirements of the market may from time to time demand.”
This proves conclusively that the representatives of the subsidiary coal companies did agree upon the form of the contracts before anj of them were actually signed. They deny that in their negotiations with the committee of the “individual operators” they represented the defendant carriers. They say they represented only the subsidiary coal companies. Unquestionably, however, the carriers had an interest in the negotiations, and, as they were officers of both the carriers and their subsidiary coal companies, they must be considered as having-*492represented both. The form having been agreed on, the following contracts were entered into
Name of Seller. Name of Buyer. Date of Contract
Green Ridge Coal Co. Hillside Coal & Iron Co. Nov. 1, 1900.
(1) Robertson & Law
Jermyn et al. N. Y. Sus. & AA'est. Coal Co.
Nay Aug Coal Co. Hillside Coal & Iron Co. Feb. 1, 1901.
Austin Coal Co. L. V. Coal Co Mar. 20,
Parrish Coal Co. L. & W. Coal Co. May 3,
Red Ash Coal Co.
Melville Coal Co. June 1,
Midvalley Coal Co. L. V. Coal Co. 21,
Lentz & Co. tt a u U
Temple Iron Co. Hillside Coal & Iron Co. July 1,
Howe et al., Executors, St. Clair Coal Co. Enterprise Coal Co. L. V. Coal Co P. & R. Coal & Iron Co. “ 9, “ 12 “ 17,’
Pine Hill Coal Co. Aug. 17,
Lackawanna .Coal Co. D. L. & W. R. R. Co. “ 27,
Temple Iron Co. L. Y. Coal Co. Sept. 20,
Clear Spring Coal Co. D. L. & W. R. R. Co. “ 21,
Richard White et al. P. & R. Coal & Iron Co. Oct. in,
Buck Run Coal Co. Mar. 12. 1902.
Raub Coal Co. L. V. Coal Co. May 1,
(2) Delaware & Hudson Co. Hillside Coal & Iron Co. June 30.
Geo. F. Lee Coal Co. D. L. & AY. R. R. Co. Mar. 31, 3903.
Clarence Coal Co. Lackawanna Coal Co. Hillside Coal c Iron Co. •< 23, Oct. 21,'
Dolph Coal Co. Apr. 14, 3904.
Coxe Bros. & Co. L. V. Coal Co. Mar. 29, 1900.
North End Coal Co. D. L. & AY. R. R. Co. May 20,
(1) Canceled by mutual consent of parties on May 17, 1909.
(2) Expired April 1, 1908.
These facts seem to show that the custom of buying and selling coal on percentage contracts did not have its origin in any general agreement or concerted action on the part of the defendants. Rather does it seem that the contracts were the natural outgrowth of conditions attending the mining of coal. But the petition charges' that there are special features in the 65 per cent, contracts, and such action concerning their adoption that, as to them at least, there was and is an unlawful combination or conspiracy. The substantial part of the charge is in the following language:
“Upon tbe termination of these contracts [the contracts which.it is alleged were for terms expiring in 1900], the said defendant carriers, either directly or through the instrumentality of their said -subsidiary companies and agents, the defendant coal companies, in pursuance of a previous agreement between themselves, severally offered to make and did make and conclude-with nearly all the independent operators along their lines new contracts containing substantially uniform provisions agreed upon beforehand by the defendant carriers in concert, some of the operators contracting with one of the defendants and some with another, in which contracts the independent operators severally agreed to deliver, on cars at the breakers, to one or the other of the defendant carriers or its subsidiary coal company, as the case might be, all the anthracite coal thereafter mined from any of their mines now opened and operated or which they might thereafter open and operate, deliveries or shipments to be made from time to time as called for by the said carriers or their subsidiary coal companies; ip. consideration whereof *493tlie said carriers or their subsidiary coal companies severally agreed to pay the independent operators for prepared sizes of anthracite^ 65 per cent, of the general average free on board prices of like sizes prevailing at tide-water points at or near Xew York, as com]rated from month to month, and for pea coal and sizes below that proportionately smaller percentages, declining as the sizes decline; and the defendant carriers controlling, as aforesaid, all the lines of transportation between the anthracite regions and tide water, save those of the Pennsylvania Railroad Company and the New York, Ontario & "Western Railway Company, and therefore controlling the rates for the transporta lion pf anthracite to tide water except in respect to the output of the limited number of collieries reached by the lines of the said ^Pennsylvania. Railroad Company and the New York, Ontario & Western Railway Company, acting either directly or through the agency of their subsidiary coal companies, fixed the said percentages to be paid by them or their coal companies under said contract at a point that bore such a relation to the published rates of transportation that, taking for a basis the average tide-water prices of an-, thraeite when the contracts were made and during many years previous (barring strike periods), the independent operator who entered into one of these contracts realized upon his coal from 15 to 50 cents more a ton, approximately (depending upon the length of the haul and variations in the tide-water price), than was realized by the independent operator who shipped his coal 1o tide water on his own account, paying the published rates of transportation himself, and sold it there in competition with the coal of the defendant carriers and their coal companies, which difference or advantage represents the amount per ton that the defendant carriers or their coal companies paid for the privilege of controlling the sale and disposition of the independent output so as to prevent it from selling in competition with the output of their own mines, as aforesaid. The result of this arrangement, as was intended, was to draw, if not to force, the great majority of the independent operators into making the aforesaid contracts, thereby enabling the defendant carriers and their subsidiary companies, the defendant coal companies, to control absolutely and until the mines are exhausted the output of most of the independent anthracite mines, and to prevent it, as aforesaid, from being sold in competition with the output o-f their own mines in tlie markets of the several states, particularly in the great tide-water markets.”
In the brief of the government there are inserted tabulated statements intended to show that after deducting from the amounts received by the Lehigh Valley Coal Company for its coal shipped ,to New York Harbor between November, 1900, and December 1, 1901, and between January and December, 1907, the 65 per cent paid to the selling companies, the expense of selling, and the loss by wastage, the amounts remaining did not equal the published freight rates of theLehigh Valley Railroad Company, the owner of its capital stock and over whose road the shipments were made. Other tabulated statements are intended to show tlie same, condition as to coal purchased by the Philadelphia & Reading Coal & Iron Company and shipped over the Philadelphia & Reading Railway Company’s line between November, 1900, and December, 1901. Assuming these tabulated statements, prepared under the direction of counsel and not verified by any witness, to be free from error, we fail to find any evidence of concerted action designed to bring about that result. We are dealing here with concerted action, with a contract, combination, or conspiracy, and not with individual unlawful transactions. If it is a fact that the Lehigh Valley Railroad Company is carrying coal for the Lehigh Valley Coal Company at less than its published rates, its conduct is violative of the act to regulate commerce of February 4, 1887, and its amendments, and may be corrected by a proceeding instituted before the Interstate *494Commerce Commission or some court; but, to be violative of the antitrust act, the discrimination in favor of the Lehigh Valley Coal Company and against other coal companies shipping over the Lehigh Valley road must be the result of a contract, combination, or conspiracy in restraint of interstate commerce. It is not shown that the effect of these contracts was to require each of the defendant carriers to carry coal at less than its published rate. Nor are we satisfied that even in the case of the Lehigh Valley Railroad Company the tabulated statements in the government’s brief, above referred to, are free from error. They assume that all the coal shipped to New York Harbor by the Lehigh Valley Coal Company in any particular month was sold during that month. Other possible errors in the statements arc- pointed out in the brief for the Lehigh Valley Railroad Company.
Nor does it áppear that the conferees ever met after the form of the contracts was agreed on. The first three of the contracts, as we have seen, are dated November 1, 1900. No obligation was imposed upon any party to enter into one of them, but each independent operator was left free to do so or not as it might please. Consequently, it may be said, and in effect it is said, that there could have been no combination of carriers, or of their subsidiary coal companies, after November 1, 1900. But in 1907 the total production of anthracite coal in Pennsylvania was 76,836,082' tons. Of this amount 41,963,055 tons were produced by the Delaware, Lackawanna & Western Railroad Company, and the coal companies subsidiary to the Reading Company, the Lehigh Valley Railroad Compan)'-, the Central Railroad Company of New Jersey, the Erie Railroad Company, and the New York, Susquehanna & Western Railroad Company, and about 6,000,000 tons were produced by the selling coal companies that had entered into the 65 per cent, contracts. By these contracts the buyers (the subsidiary coal companies) were enabled in 1907, to add to the coal produced by themselves that produced and sold under the contracts. Not only have the buyers the right, under these contracts, to all the coal that the sellers’ collieries shall ever produce, but they alone are the judges of the requirements of the market, they alone determine when calls for deliveries by the sellers shall be made, and they alone determine what shall be the sellers’ “just proportion of all the anthracite coal which the requirements of the market may from time to time demand.’’ Here is something more than mere acquisition of property. It is a plan for future acquisition of property and future regulation of the supplies to be furnished by the subsidiary coal companies and the selling companies. It is accordingly contended that the contracts between one of tire buyers and its sellers are so related to the contracts between each of the other buyers and its sellers that all the contracts must be considered together as one series of contracts which were entered into and are maintained by a combination of buyers and sellers who thereby restrain interstate commerce and monopolize a part of it. We have seen that the form of the contracts had its origin in a conference of buyers and sellers in October, 1900. But all that the conference did was to agree upon the form, and when that agreement was reached its work was done. Nor is there any evidence showing that the con-' *495tracts are maintained by any combination whatever. On their faces, they are contracts between individual buyers and individual sellers. They are not contracts between or with any combination of buyers or sellers. Bach buyer has the power to regulate only the supply furnished by its particular sellers. There is no joint power to regulate the supplies furnished by all the sellers. To grant the injunction asked for, namely, “that the said contracts be delivered up to be canceled, and that the defendants, their agents and servants, and all persons acting or assuming to act under their authority, be forever enjoined from further executing or carrying into effect any of the provisions of the said contracts, and from making or entering into ami- contracts of like character or effect hereafter,” means, not that we shall enjoin acts which shall prevent an existing combination from continuing to restrain interstate commerce or to monopolize a part of it, but that we shall severally enjoin the parties who have entered into the 28 independent coiitracts hereinabove mentioned from operating thereunder. That would he to grant relief on a petition far more multifarious than any one has suggested the present petition to be. 3t presents no .such multifariousness. Its purpose is to secure an injunction against these contracts on the ground that they were devised and are maintained by an unlawful combination. We do not find this ground of complaint supported by the evidence.
Tliis conclusion renders it unnecessary to inquire whether the contracts, separately considered, are wholly intrastate contracts, as the defendants contend, or whether, separately considered, they are in restraint of interstate commerce, as the government’s counsel contend. In either case, no relief can be granted in this proceeding, for, while the anti-trust act condemns .all contracts as well as all combinations in restraint of interstate commerce, we are not here asked to award a series of injunctions against defendants who have entered into and are maintaining a series of separate and independent contracts which are in restraint of interstate commerce, but to enjoin an alleged combination from further maintaining a series of alleged unlawful contracts. As no such combination exists, no relief, in respect of the G5 per cent, contracts, can be granted.
5. The fi ftli question is: Do the facts show a general combination or conspiracy in restraint of interstate commerce?
The charge is that, under.the influence of competition, the average price of stove coal declined from $4.15 and $4.1!) a ton in 1892 and 189;> to $3.60' a ton in 1894 and $3.12 a ton in 1895. “Whereupon,” says the petition — that is, in 1895 — “the defendant the Reading Company and the defendant carriers and the defendant coal companies, owning or controlling 90 per cent., more or less, of all the anthracite deposits, and producing 75 per cent., more or less, of the annual anthracite supply, and controlling all the means of transportation between the anthracite mines and tide water, save the railroads operated by the Pennsylvania Railroad Company and the Mew York, Ontario & Western Railway Company, which, as aforesaid, reach only a limited number of collieries, entered into an agreement, scheme, combination, or conspiracy, by virtue whereof they acquired the power to con*496trol, regulate, restrain, and monopolize, and have controlled, regulated, restrained, and monopolized, not only the production of anthracite coal, but its transportation from the mines in Pennsylvania to market points^ in other states, with the result that competition in the transportation and sale of anthracite coal has been wholly suppressed and the price thereof to consumers greatly enhanced.” It is further charged that:
“As steps in the development of this illegal combination, and in furtherance of its illegal purposes, the defendants herein named, or some of them, engaged in and became parties to the following additional acts, schemes, and contracts, among others, in violation of the aforesaid act of July 2, 1800.”
_ The additional acts, schemes, and contracts described in the petition are the four combinations already considered and. one other, namely, that in the year 1899, after the abandonment of the projected New York, Wyoming & Western Railroad, and after the Pennsylvania Coal Company had caused to be organized, under the laws of the state of New York, the Delaware Valley & Kingston Railroad Company* the Erie Railroad Company, through the agency of the banking house of J. P. Morgan & Co., and in violation of the anti-trust act, acquired nearly all the capital stock of the Pennsylvania Coal Company and the Delaware Vallejo & Kingston Railroad Company, and thereby defeated the construction of the proposed railroad of the Delaware Valley & Kingston Railroad Company from the Wyoming region to tide water,
I have not separately considered the charge that the Erie Railroad Company’s acquisition of the capital stocks of the Pennsylvania Coal Company and the Delaware Valley & Kingston Railroad Company created an unlawful combination for the reason that there is no specific prayer in the petition for relief as to that particular transaction. It seems to have been embodied in the petition merely because it was supposed to have been one of the “steps” in aid of the alleged general combination or conspiracy. Nqr have I separately considered the acquisition, in 1905, of 'thé capital stock of Coxe Bros. & Co. by the Le-high Valley Railroad Company, concerning which much is said in the proofs and the briefs, for the reason that it is not mentioned in the petition, and must therefore be considered merely as a part of the proofs relating to the general charge.
What we are asked to do is to find that in 1895 the defendants “entered into an agreement, scheme, combination, or conspiracy” of the broad sweep above mentioned, and that in the development of it they used “as steps” the Erie and Susquehanna combination of 1898, the Temple Iron combination of 1899, the Erie and Pennsylvania Coal Company combination of 1899, the combination formed through the instrumentality of the 65 per cent, contracts in 1900, and the Reading and Central combination of 1901. We are also asked to consider the acquisition of the capital stock of Coxe Bros. & Co. by the Lehigh Valley Railroad Company, in 1905, as an element of proof to support the 'charge of a general combination or conspiracy. But there is no satisfactory proof- that these combinations were parts of or steps to a scheme, entered into by the defendants generally, for the control of the anthracite coal business. They were independent combinations, *497the first of them having been created three years, and the last ten years after it is alleged the general combination or conspiracy was formed. What “contract, combination in the form of trust or otherwise, or conspiracy,” for example, existed amongst the defendants generally for the purchase by the Reading Company of the capital stock of the Central? These combinations cannot be tied together in one gigantic trust or conspiracy without proof. They have no common hoard of control, no common scheme of managing their affairs, and no common business interests. Each of them is wholly separate from and independent of the others. I am satisfied that the proofs fail to show tlie existence of a general combination or conspiracy of the nature set forth in tlie petition.
Finding no ground, under the petition as it is framed, on which any part of the relief prayed for can be granted, I think a decree should be entered dismissing the petition on the merits as to the first, third, fourth, and fifth combinations above mentioned. As to the second combination, the one known as the Temple Iron combination, I think the petition should be dismissed without prejudice.
PER CURIAM.
The result of the foregoing opinions is that the court unanimously agree that the petition should be dismissed: (1) As to the charge in paragraph 7b of the petition concerning the acquisition by the Erie Railroad Company of the capital stock of the New York, Susquehanna & Western Railroad Company; (2) as to the charge in paragraph 7c concerning the acquisition by the Reading Company of the majority of the capital stock of the Central Railroad Company of New Jersey; and (3) as to the general charge of a combination or conspiracy in violation of the anti-trust act of July 2, Í890, in the development of which it is charged the other combinations set forth in the petition were used, as steps, set forth in paragraph 7 of tlie petition.
A majority of the court hold that the petition should be dismissed as to the charge in paragraph 7a of the petition concerning the so-called (¡5 per cent, contracts.
A majority of the court also hold that the charge of an illegal combination in respect of the matters relating to the Temple Iron Company set forth in paragraph 7d of the petition should be sustained, and that the injunction or restraining order specifically prayed for in the petition should be granted so far as it will serve to prevent and restrain a continuing violation of the act.
Counsel will be heard as to the form of a decree.