While, under the Interstate Commerce Act, a carrier may select
its through route connections, agreements for such connections may
constitute violations of the Anti-Trust Act if made not from
natural trade reasons or on account of efficiency, but as a
combination and conspiracy in restraint of interstate trade and for
the purpose of obtaining a monopoly of traffic by refusing to
establish routes with independent connecting carriers.
In reviewing the decision of the lower court sustaining a
demurrer to an indictment charging a combination in violation of
the Anti-Trust Act, this Court is not called upon to consider what
the elements of the plan may be independently, or whether there is
or is not a standard of reasonableness which juries may apply. If a
criminal violation of the act is charged, the criminal courts have
cognizance of it with power of decision in regard thereto.
A combination made in the United States between carriers to
monopolize certain transportation partly within and partly without
the United States is within the prohibition of the Anti-Trust Act,
and
Page 228 U. S. 88
also within the jurisdiction of the criminal and civil law of
the United States even if one of the parties combining be a foreign
corporation. While the United States may not control foreign
citizens operating in foreign territory, it may control them when
operating in the United States in the same manner as it may control
citizens of this country. The purpose of the Interstate Commerce
Act is to establish a tribunal to determine the relation of
communities, shippers, and carriers and their respective rights and
obligations dependent upon the act, and the conduct of carriers is
not subject to judicial review in criminal or civil cases based on
alleged violations of the act until submitted to and passed on by
the Commission.
Quaere what the effect is of a finding by the
Interstate Commerce Commission in such a case.
Where the district court holds that the averments of the
indictment are not sufficient to connect certain defendants with
the offense charged, it construes the indictment, and not the
statute on which it is based, and this Court has no jurisdiction
under the Criminal Appeals Act to review the decision.
An objection to the demurrer made by certain defendants and
sustained as to one count, and not passed on as to other counts
which were struck down by the district court but sustained by this
Court, may be raied in the district court by such defendants in
regard to such counts when the case is again before that court.
Indictment for alleged violations of the Sherman Anti-Trust Act
and of the Interstate Commerce Act.
The indictment contains six counts. The first and second counts
charge violations of the antitrust law. The first, by the
defendants engaging in a combination and conspiracy in restraint of
trade and commerce with one another, to eliminate and destroy
competition in the business of transportation in freight and
passengers between various ports in the United States and British
Columbia in the south, and the various cities in the valleys of the
Yukon River and its tributaries, both in British and American
territory, in the north, upon a line of traffic described, for the
purpose and with the intention of monopolizing such trade and
commerce. The second count charges the monopolization of trade and
commerce in the
Page 228 U. S. 89
same business and between the same ports. The manner of
executing the alleged criminal purpose is charged to be the same in
both counts.
The places of the incorporation of the corporate defendants are
alleged, and the following facts: the Pacific Coast Steamship
Company and the Alaska Steamship Company operate, respectively,
lines of steamships as common carriers of freight and passengers
running in regular route between Seattle, State of Washington, and
Skagway, Alaska. The Canadian Pacific Railway Company is a like
carrier, and operates a line of steamships between Vancouver,
British Columbia, and Skagway. During the time mentioned in the
indictment, the Pacific & Arctic Railway & Navigation
Company owned and operated a railroad from tidewater at Skagway to
the summit of White Pass, a distance of about 20 miles to the
boundary line between Alaska and British Columbia at which latter
point it connected with a railroad owned and operated by the
British Columbia Yukon Railway Company. The latter road extended
from the summit of White Pass to the east shore of Lake Bennett and
the boundary line between British Columbia and Yukon district of
Canada, a distance of about 25 miles, at which point it connected
with another railroad, owned and operated by the British Yukon
Railway Company, which extends to White Horse on the headwaters of
the Yukon River, in Yukon district of Canada. During all the times
mentioned, there was a line of steamers plying upon the Yukon River
and the headwaters thereof between White Horse and Dawson, owned
and operated by the British Yukon Navigation Company. The four
corporations last above mentioned and their stocks and bonds were
owned and controlled by the same persons and individuals, and the
said three lines of railroads and their lines of steamers were
under one and the same management, and were operated as one
continuous line
Page 228 U. S. 90
of common carriers of freight and passengers between the towns
of Skagway and Dawson and waypoints, under the name and style of
the White Pass & Yukon Route, referred to as "the railroad,"
and had the sole and exclusive monopoly of the transportation
business between Lynn Canal and the navigable waters of the Yukon
River. A general trade and commerce was carried on between British
Columbia and Puget Sound ports and the Yukon Valley, both in
American and British territory, over the designated routes and to
the various places on the routes, and the shortest and most natural
route for such trade and commerce was, has been, and is by
watercraft from said southern ports to Skagway, and thence over
Moore's Wharf, so called, to the points of destination. Trade and
commerce from White Horse and Dawson to said southern ports would
naturally, when left untrammeled by unlawful interference, move up
the Yukon to the headwaters of that river, and thence, by the way
of said railroad, to Skagway, Alaska, thence over said Moore's
Wharf, and thence by steamship or other watercraft to the said
southern ports.
The North Pacific Wharves & Trading Company was the owner
and in exclusive possession and control of all of the wharves at
Skagway at which steamships or other water crafts could take and
discharge, or load cargo, that company having a complete and
absolute monopoly of the wharfage business at Skagway, and owning
and operating the Moore Wharf, which wharf, by agreement between
the Wharves Company and the railroad, had been made and was the
terminus of the railroad, over which all freight going to or coming
from or passing through Skagway had necessarily to pass. The wharf
was operated as a public wharf. Continuously during the three years
immediately preceding the finding of the indictment, the defendants
combined and conspired together to eliminate and destroy
competition in the transportation business between the said
southern ports and Skagway, for the purpose and
Page 228 U. S. 91
with the intention of giving to and creating for the Alaska
Steamship Company, the Pacific Coast Steamship Company, and the
Canadian Pacific Railroad Company, a monopoly of such business,
and, to that end, purpose, and intention, entered into and
continuously maintained a joint traffic arrangement between the
railroad and the steamship companies, by and through the individual
defendants as officers and agents of the corporate defendants,
pursuant to which arrangement either of the steamship companies
could and did bill freight and passengers through from either of
the said southern ports to any point on the said railway or on said
Yukon River or its tributaries along and over the route of travel
and transportation described, and the railroad could and did bill
freight and passengers through from Yukon and other northern points
to said southern ports only on ships from Skagway south, billing to
either of the steamship companies. The rates for freight and
passengers were fixed, and an apportionment between the said
respective carriers of the gross receipts was established and
agreed upon. With the like intent and purpose, it was agreed that
the railroad should, and it did, refuse to enter into any joint
through traffic arrangement with any other carrier or carriers, and
refused to receive any other through billing on shipments from the
said southern ports except such as arrived at Skagway by some ship
belonging to one of the steamship companies, or from said Yukon
points to the southern ports, except by the same ships. As part of
the same combination and with the same intent and purpose, it was
agreed that the Wharves Company should, and it did, during all the
times mentioned, charge wharfage at the rate of $2 per ton for all
freight handled over its wharf except when the same was shipped on
a vessel owned by either of the companies, or was consigned to
someone who had entered into or was about to enter into a contract
with either of said steamship companies to
Page 228 U. S. 92
bind himself to have all of his freight carried by such
steamship company and by no one else, in which latter case a
wharfage of $1 per ton only was charged, and any charge in excess
of $1 was unreasonably high, and was exacted for the unlawful
purpose aforesaid. With like intention and purpose, and as part of
the same combination and conspiracy, it was arranged and agreed by
and between the defendants that the said railroad should, and it
accordingly did, fix and establish local rates and transportation
charges for freight and passengers from 5% to 25% higher than the
through joint rates, differing according to classification of the
various commodities shipped. Pursuant to such arrangement, and the
purpose and intention aforesaid, the said railroad received for
through shipments, as its share of freight charges, from 15% to 30%
less than it charged for the same class of freight shipped between
Skagway and the same Yukon points. By reason of the facts alleged,
it became and was, during all of the time mentioned, unprofitable
for the public to employ any carrier in the trade, traffic, or
commerce save and except the said steamship companies, and
competition in the said water transportation between the steamship
companies and other carriers was in that manner and by the means of
said combination and conspiracy eliminated and destroyed, the
defendants being enabled to monopolize such trade, traffic,
transportation, and commerce, to the injury of the public.
The third count charged an unlawful and unjust discrimination in
the transportation of passengers and freight, in violation of the
Interstate Commerce Act. The discrimination is charged to have been
practiced against the Humboldt Steamship Company between January 1,
1909, and August 10, 1910, which company is alleged to be a
California corporation, and engaged as a common carrier of freight
and passengers, operating a line of steamers from the same ports
from which the defendant steamship
Page 228 U. S. 93
companies operate their respective lines to Skagway, Alaska. In
the conduct of its business, the Humboldt Steamship Company
operated a steamship called the
Humboldt on a regular
schedule and route between Seattle, Washington, and Skagway. "The
railroad," as we have seen the White Pass & Yukon Route is
called in all of the counts, had entered into and maintained during
the time aforesaid, with the defendant steamship companies, a joint
traffic arrangement whereby and under the terms of which freight
and passengers might be billed at a joint through rate from the
said southern ports over the route described to the various Yukon
points, but refused, without cause or excuse, to enter into a joint
traffic arrangement with the Humboldt Company, though requested to
do so, or to receive, carry, or handle any freight billed through
from Seattle to Yukon points on the railroad or the Yukon River,
and neither would nor did carry any freight whatever from Skagway
to any of said points in British or American territory at a less
rate or charge than from 5% to 30% more, according to
classification and character, than it received from the defendant
steamship companies as its proportion of joint through rates from
such southern points to the corresponding Yukon points. The
railroad company, it is charged, caused the North Pacific Wharves
& Trading Company to charge for all freight shipped on the
steamship "Humboldt" for transshipment on the railroad to points
along its line on the Yukon River a wharfage of $2 per ton, whereas
it included at the same time in its portion of the through rate on
through bills under its arrangement with defendant steamship
companies all wharfage charges. And it is alleged that the
defendants knowingly, willfully, and maliciously induced and
incited the railroad company to practice the discrimination
described, and each and all aided and abetted one another and the
railroad company in such practice.
Page 228 U. S. 94
The other facts as to routes, commerce, and carriers, their
relations and arrangements and the effect of them are the same as
in the first and second counts, the order of statement being
somewhat different.
Count 4 is the same, as to the facts alleged, as the third
count, except the discrimination is charged to have been practiced
against the Humboldt Steamship Company between August 18, 1910, and
January 1, 1912.
Count 5 brings the discrimination charged down to the finding
and presentation of the indictment. There is no allegation of
discrimination in wharfage charges.
Count 6 charges the crime of conspiracy to commit an offense
against the United States by destroying competition between the
defendant steamship companies and the Humboldt Steamship Company.
The same facts are alleged as in the other counts.
Motions to quash the indictment and each of its counts were made
and denied. Demurrers to the indictment were filed and sustained to
all counts but the 6th. To that, the demurrer of the individual
defendants was sustained.
Page 228 U. S. 100
MR. JUSTICE McKENNA, after stating the case as above, delivered
the opinion of the Court.
The district court said that it was "without jurisdiction to
entertain or determine the questions involved in the first five
counts of the indictment in either a criminal or civil proceeding"
until the matters of discrimination between carriers or shippers,
or the giving or refusing of joint traffic arrangements, "have been
submitted to
Page 228 U. S. 101
and passed on by the Interstate Commerce Commission." For this
conclusion the court relied on
Texas & Pacific Ry. Co. v.
Abilene Cotton Oil Co., 204 U. S. 427,
and
Baltimore & Ohio Railroad Co. v. United States,
215 U. S.
429.
It may be well, even at the expense of repetition, to give a
summary of the indictment before passing to the special contention
of the parties. The route described is between ports of the United
States (called southern ports) and places in northern Alaska and
Canada (called northern ports) (1) by steamship lines from the
United States and Vancouver (southern ports) to Skagway (the entire
wharfage facilities being owned by the North Pacific Wharves &
Trading Company); (2) thence by railroad to the headwaters of the
Yukon River; (3) thence by boat down the Yukon River to Dawson,
etc. (called the northern ports). The route is designated as the
White Pass & Yukon Route, and is constituted of (a) the Pacific
& Arctic Railway & Navigation Company, a West Virginia
corporation; (b) the British Columbia-Yukon Railway Company,
incorporated under the laws of British Columbia; (c) the
British-Yukon Railway Company, incorporated under the laws of the
Dominion of Canada, and (d) the British-Yukon Navigation Company,
Limited, incorporated under the laws of British Columbia. These
companies are referred to as "the railroad company," and own the
only line of transportation between the wharf at Skagway and the
Yukon River.
By mutual agreement between the defendant steamship companies,
the Wharves Company, and the railroad company, through routes and
joint rates were established, thus making one continuous line of
common carriers for freight and passengers between the United
States (southern ports) and northern Alaska (northern ports).
The Humboldt Steamship Company and other independent lines plied
between the United States and Skagway.
Page 228 U. S. 102
By agreement between the defendants, the railroad refused to
make any through route or joint rates with the Humboldt Company, or
with any of the independent steamship lines, and refused to bill
freight or passengers from the United States to Yukon River points,
or reversely, except by ships belonging to one of the defendant
companies.
By agreement between the defendants, the railroad fixed
so-called local rates between Skagway and the Yukon River points,
which rates were very much higher than the railroad's
pro
rata of the through rate.
The Wharves Company charged $2.00 a ton for freight if shipped
on a vessel not owned by one of the defendant companies. If so
shipped and consigned to one who had entered into, or was about to
enter into, a contract to have all of his shipments so carried, the
wharfage charge was only $1.00. Wharfage charges in excess of $1.00
are unreasonably high.
As a result of the agreement, shippers were compelled to use
only the ships of the defendant steamship companies, as in that way
alone could lower through rates be obtained. Competition in water
transportation was destroyed between the defendant steamship
companies and the independent lines, defendants obtained a monopoly
of the transportation business between the United States and
Alaska, and the Humboldt Company was discriminated against in the
matter of through rates. These agreements between the defendant
companies are alleged to be (count 1) for the purpose of
eliminating competition from the business of transportation between
the United States and Alaska; (second count) to monopolize such
business; (counts 3, 4, and 5) to discriminate against the Humboldt
Company. Count 6 we omit from consideration for the present.
The charges of the indictment may be even further concentrated
and attention directed to these elements: the
Page 228 U. S. 103
defendant steamship lines and the Humboldt and independent lines
from the United States to Skagway, the wharf at Skagway, and the
railroad from Skagway to the Yukon River points. The only
possibility of competition is in the water part of this route. This
controlled, the entire transportation is controlled, and to this
control the action of the defendants was directed, the means of
control being an agreement between the defendants to throw all the
trade into the hands of the defendant steamship companies by the
railroad company establishing through route and joint rates with
them, and refusing to do so with the Humboldt Company or any of the
independent companies. The Wharves Company gave its assent by its
wharfage charges, and all evasion was prevented by so fixing the
local rates that their combination was greater than the through
rate agreed on. It is manifest that the scheme was effective, and
cut out the Humboldt line and the independent lines as factors in
the routes of transportation between the United States and the
Yukon River points. Is the scheme illegal?
This is asserted by the government and denied by the defendants.
The court below, if we take some parts of its decisions, held that
the forum of that question was the Interstate Commerce Commission.
But, considering the decision of the court as a whole, we think it
construed the antitrust act, upon which counts 1 and 2 were based,
and to those counts we shall confine our discussion for the
present. This is admitted by defendants. They say that as the court
held that, in order to constitute restraint of trade or
monopolization of trade under the antitrust act, the acts charged
must be such as at common law constituted restraint of trade, and
were unlawful, to that extent the court construed the act. And,
setting forth the grounds of the ruling, counsel say that the court
decided that the entering into through-route agreements by a common
carrier with one or more connecting carriers,
Page 228 U. S. 104
and the refusal to make such agreements with other connecting
carriers, was not unlawful either at common law or by the
Interstate Commerce Act, and the court held therefore that such act
did not constitute restraint within the meaning of the antitrust
act. The right of a carrier to select its connections must be
admitted (we state the right as absolute, without regard to the
Interstate Commerce Act, for our present purposes), and if there
were nothing else in the case, the conclusion of the district court
would have to be affirmed. But there is another and important
element to be considered. The charge of the indictment is that the
agreements were entered into not from natural trade reasons, not
from a judgment of the greater efficiency or responsibility of the
defendant steamship lines as instruments in the transportation than
the independent lines, but as a combination and conspiracy in
restraint of trade by preventing and destroying competition in the
transportation of freight and passengers between the United States
and Alaska, and obtaining a monopoly of the traffic by engaging not
to enter into agreements with the independent lines. There is a
charge, therefore, of infringement of the antitrust law -- of
something more done than the exercise of the common law right of
selecting connections, and the scheme becomes illegal.
Swift
& Co. v. United States, 196 U. S. 375,
196 U. S. 396.
We do not pause to justify this conclusion either by the general
purpose of the act or by its adjudged applications. Its general
purpose has been elaborately set forth in very recent cases, and
particular instances of its application, pertinent to the case at
bar and illustrative of it, are exhibited by
Swift & Co. v.
United States, supra, and
Standard Sanitary Mfg. Co. v.
United States, 226 U. S. 20. In
those cases, as here, rights were brought forward to justify a
purpose which transcended the limits put upon their exercise by the
antitrust act. In those cases, as here, the purpose (the
Page 228 U. S. 105
means being different) was the prevention or destruction of
competition, and the agreements here are exactly adapted to the
purpose. Not the railroad only, but the Wharves Company as well, is
charged to be in the combination. It was intermediate the railroad
and the steamship lines, and discriminated in its wharfage charge,
it is alleged, to aid in the purpose of the combination; and, to
complete and make effective the purpose, the local rates from
Skagway to Yukon points were made greater than that part of the
through transportation.
Whether $2.00 per ton (the rate charged to independent lines, as
against $1.00 per ton, charged to the defendant steamship lines)
was reasonable or unreasonable, or whether a through rate may be
less than the sum of the local rates, we are not called upon to
consider, although the court below thought the inquiry important
and the defendants make it prominent in their contentions. The plan
makes the parts unlawful (
Swift & Co. v. United States,
supra), whatever they may be independently of it and whether
there is or is not a standard of reasonableness which juries may
apply is aside from the question. It is equally unimportant to
consider whether the Interstate Commerce Commission has power to
pass on the rates, as such, or through routing, as such. We are
dealing with an indictment which charges a criminal violation of
the antitrust act, and of that the criminal courts have cognizance,
with power of decision upon the principle which we have
expressed.
The next contention of defendants is that, as part of the
transportation route was outside of the United States, the
antitrust law does not apply. The consequences and, indeed, legal
impossibility, are set forth to such application, and, it is
said,
"make it obvious that our laws relating to interstate and
foreign commerce were not intended to have any effect upon the
carriage by foreign roads in foreign countries, and . . . it is
equally clear that
Page 228 U. S. 106
our laws cannot be extended so as to control or affect the
foreign carriage."
This is but saying that laws have no extraterritorial operation;
but to apply the proposition as defendants apply it would put the
transportation route described in the indictment out of the control
of either Canada or the United States. These consequences we cannot
accept. The indictment alleges that the four companies which
constitute the White Pass & Yukon Route (referred to as the
railroad) and owned and controlled by the same persons, entered
into the combination and conspiracy alleged, with the intention
alleged, with the Wharves Company and the defendant steamship
companies. In other words, it was a control to be exercised over
transportation in the United States, and, so far, is within the
jurisdiction of the laws of the United States, criminal and civil.
If we may not control foreign citizens or corporations operating in
foreign territory, we certainly may control such citizens and
corporations operating in our territory, as we undoubtedly may
control our own citizens and our own corporations.
The ruling of the district court sustaining the demurrer to the
first and second courts was therefore erroneous.
The decision of the district court upon counts 3, 4, and 5 must
be determined upon different principles than those which we have
just expressed in passing on counts 1 and 2. The district court, as
we have seen, decided that the conduct of the defendants was not
subject to judicial review in a criminal or civil case until it had
been submitted to and passed upon by the Interstate Commerce
Commission. The government attacks the conclusion with arguments of
great strength, and contends that it makes the Commission not only
the judges of the civil relief that private shippers may be given
against the carriers by the Interstate Commerce Act, but gives the
Commission the control and practical determination of
Page 228 U. S. 107
the criminal provisions of the law. The argument, in effect, is
that the conclusion of the district court confounds the civil and
criminal remedies of the law, the private injury and the public
injury, resulting from the violation of its provisions. And who, it
is asked, will initiate the criminal proceeding, and by what proof
will it be supported? What degree of proof is to be accorded to the
finding of the Commission -- presumptive or conclusive? If neither,
it is argued, "it would be a senseless thing to regard such a
finding as a condition precedent of the United States to indict."
If, it is asked further, the finding of the Commission is to have
either
prima facie or conclusive effect, against whom is
it to have such effect? If against a defendant, what becomes of the
Sixth Amendment of the Constitution? The argument of the government
is cast in a series of questions which end in the final answer, as
it is contended that, under the decision of the district court, the
Interstate Commerce Commission "becomes practically the court of
final criminal jurisdiction."
The contentions of the government would be formidable indeed if
the Interstate Commerce Act was entirely criminal. But it is more
regulatory and administrative than criminal. It has, it is true, a
criminal provision against violations of its requirements, but some
of its requirements may well depend upon the exercise of the
administrative power of the Commission. This view avoids the
consequences depicted by the government. It keeps separate the
civil and criminal remedies of the act, each to be exercised in its
proper circumstances. It makes the Interstate Commerce Act what it
was intended to be and defined to be in the cases cited by the
district court, to-wit:
Texas & Pacific Ry. Co. v. Abilene
Cotton Oil Co., 204 U. S. 427,
and
Baltimore & Ohio Railroad Co. v. United States,
215 U. S. 492.
And it would, in our judgment, be an erroneous view to take that
the great problems which
Page 228 U. S. 108
the act was intended to solve, and the great purposes it was
intended to effect, should be considered of less consequence than
the facility which should be given to some particular remedy, civil
or criminal. We need not extend the discussion. The purpose of the
Interstate Commerce Act to establish a tribunal to determine the
relation of communities, shippers, and carriers, and their
respective rights and obligations dependent upon the act has been
demonstrated by the cited cases and also the sufficiency of its
powers to deal with the circumstances set forth in the
indictment.
The district court sustained count 6 against the demurrer of the
corporate defendants, but held its averments were not sufficient to
connect the individual defendants with the offense charged. This is
a construction of the indictment, and not subject to review.
It is urged by the individual defendants that the objection is
applicable to the other counts of the indictment, and that the
court would have undoubtedly so ruled but for its construction of
the antitrust act, and it is also urged that, in case of reversal
of the court's decision upon the construction of the act, it be
permitted to pass upon such of the grounds of demurrer as were not
passed upon in the former ruling. We yield to the request, and the
more readily as the government does not express great confidence in
the sufficiency of the indictment. Its final contention is that the
judgment of the district court be reversed, with instructions "to
pass on the sufficiency of the indictment without regard to the
action or nonaction of the Interstate Commerce Commission."
The judgment is therefore reversed as to counts 1 and 2, and
the case remanded with instructions to proceed in accordance with
this opinion.
