104'

FEDER4L ,REPORTER,

vol. 52.

binding, upon the defendant. .11 When it appears that the bill or note was :acquired by the holder as collateral security fora debt, and he is deemed entitled to recover upon it. he is still limited to the amount of the debt which it secures if there be a valid defense against his transferrer, being regarded as, at events, a bonafide holder, and entitled to upon a better footing only pro tanto. Thus the holder could redover,againSlt an accommodation party no more than the consideration actually advanced; but. in the absence of proof. he will be deemed to have advanced the full amount of the paper." Daniel, Neg. Inst. § 832. To the same effect see Stoddard v. Kimball, 6 Cush. 469; President, etc., v. Ohapin, 8 Mete. (Mass.}4Q; F'i8her v.F'i8her. 98 Mass. 303'; Bank v. Roberts, 46 Wis. 373; Bank v. Werst, 52 Iowa, 684, 3 N. W. Rep. 711; v.BanJc, 79 Ga.M7jo S; E. Rep. 111, and cases there cited. The ohargeof the court, based on the theory that the plaintiffwas not a bona fidehqlder, limiting .pla;intiff's right to recover to the amounts due by the defendant to Smith & Vaile Company, was probably correct, if the theory Upon which it was based had been the correct theory of the case; but, ll.swe have shown in considering the seventh assignment of error, that theory was wrong, and it follows that the charge of the court limiting the plaintiff's right to recover an amount less than the indebtedness of Tompkins to plaintiff was erroneous. A consideration of the other assignments, of error is unnecessary. The judgment of the circuit court is reversed. with c.osts, and the cause is remanded, with instructions to order a new trial.

all

In re

1.

GREENE.

(Circuit Court, 8. D. Ohio,

W. D. August 4, 1892.)

HABEAS CORPUS-PRISONER HELD 1I0R REMOVAL TO ANOTHER DISTRICT.,...INDICTMENT.

9.

On habeas corpus to release a person held under a warrl'\-nt of a United States commissioner to li-wait an order of the district judge for his removal to another district to answer' an indictment, it is the right and duty of the circuit court to examine the indictment to ascertain whether it charges any offense against the United States, or whether the offense comes within the jurisdiction of the court in which the is pending. There are no common-law offenses against the United Htates. and the offenses cognizable in the federal courts are only such as the federal statutes define, provide a punishment for, and confer jurisdiction to try; but when congress adopts or creates a common-law offense the courts may properly look to the common law for the true meaning and definition theFeof, 'in the absence of a clear definition in the act creating.·it.

CRIMINAL LAW-OFFl!:NBES AGAINST UNITED STA'!'ES-COMMON-LAW DEFINITIONS.

8.

SAME-MoNOPOLIES-INDICTMENT.

Under the act of ;ruly 2, 1890, "to protect trade and commerce against unlawful Testraintsand IlIonop6lies," an indictment simply following the language of the statute would be wholly insufficient, for the words of the act do not themselves fully, directly, and clearly set forth all the eLements necessary to constitute the o1fense'j and the indictment must, therefore, be tested by the specific facts alleged ·to have been done or committed.

4.

CONSTITUTIQNAL LAW-INTERSTATE COMMERCE-MoNOPOLIES.

Congress has no authority, under the commerce clause 01' any other provision of thE! constitution·. to Umit the rignt of a corporation cre.ated by. a. state in the acqui-

IN RE GREENE.

10.5

sition, control, and disposition of property in the several states, and it is immaterial that such property, or the products thereof, may become the sUbjects of interstate commerce; and it is apparent that by the act of July 2, 1890, in relation to monopolies, congress did not intend to declare that the acquisition by a state corporation of so large a part of any species of property as to enable the owners to control the traffic therein among the several states, constituted a criminal offense,

II.

MONOPOLIES-RESTRAINT OF TRADE,

To constitute the offense of "monopolizing, or attempting to monopolize," trade or commerce among the states, within the meaning of section 2 of said act, it is necessary to acquire, or attempt to acquire, an exclusive right in such commerce by means which will prevent others from engaging therein.

6.

SAXE-INDIOTMENT.

In an indictment under section 1 of the act of July 2, 1890, to protect trade and commerce against monopolies, one count alleged, in substance, that on a specified date defendants, under the guise of the Distilling & Cattle Feeding-Company, sold to certain persons in Boston a quantity of alcohol, then in Illinois, and that, by reason of the fact that said company controlled the manufacture and sale of 75 per cent. of all distillery products in the United States, defendants fixed the price at which the purchasers should and did sell such alcohol, and "did compel" said purchasers "to sell, said alcohol at no less price than that fixed" by them, but there were no allegations as to the means of compulsion. Held, that it could not be assumed froni these allegations that the means used was a contract with the purchasers, and, the count was bad, as being too vague to charge 'any contractor restraint of trade between the states. An arrangement whereby the said company promised persons who purchased from its Ilistributing agents that if, for the ensuing six months, they would their prodUCts exc!usivelyfrom such agents, and would not resell the same at prices less tbanthose fixed by the company, then, on being furnished,'with a certificate of compliance therewith, it would pay a certain rebate on the alllonnt of such purchases, did not constitute a contract in restraint of trade, within the meaning of section 1 of said act, since the purchaser was not in any way bound ito the performance of the conditions namell; nor did such arrangement operate to "monopolize," or "as an attempt to monopolize," trade and commerce, within the meaning of section 2 of said act.

'1.

SAXE-RESTRAINT OF TRADE-WHAT CONSTITUTES.

8.

SAMR.

Nor was there any offense under the statute, even after the purchaser complied with the conditions of the promise, aod thereby became entitled to rebate, for such compliance had no retroactive effect to create a valid contract between the parties prior thereto. . Even if the promise could be considered as a binding contract between the parties, the restraint thereby imposed was only partial and reasonable in the protection of defendant's business, and was not of the character necessary to constitute an unlawful contract in restraint of trade. Mogul S. S. 00. v.McGregor, [1892] App. Cas. pt. 1, p. 25, approved.

9.

10.

SAME-INDICTMENT OP STOCKHOLDERS FOR ACTS OF CORPORATION.

In indictments of inClividuals under the said statute, where all the acts alleged to constitute the offense are charged to have been done by a corporation. an omission to state what relation defendants bore to the corporation, other than that of stock. holders, is fatal, since mere stockholders cannot be held criminally responsible for the acts of the corporation.

At Law. Petition by Louis H. Greene for a writ of habeas corpus to release him from the custody of the United States marshal, by whom he is held under a warrant of a United States commissioner, awaiting an order for his removal to the district of Massachusetts to answer an indictment for an alleg;ed violation of the act of July 2, 1890, relating to monopolies. Prisoner discharged. John W: Herron, for the United States. Ramsey, Maxwell« Rarnsey, for Greene. JACKSON, Circuit Judge. The petitioner, a citizen and resident of Ohio, having beim arrested and taken into the custody of the United

106

,

vol. 52.

States mair5halQr,this distritltupon a,warrant of ill United States ,com4¢i:e '.to await of the Jl)dge of the,district court, under section 1014'of;tlheRevised Statutes, tor his removal to the district of indi6tment found and pending therein against him and others for alleged violations of the act of congress ap1890, act to protect trade and commerce againiltQ:nlawfl)l restraint and monopolies," has applied to this court to be discharged from such custody, claiming that he is illegally restrained o,f j said against him in the district court of 'Massach\'lsetts, on which his arrest and confinement is solely based, with no ofl'ensEfag!J,inst the United States under said act of J uly 1890j and that said distriot court bas no jurisdiction over either onwhicb it is sought to remove him , there Cor tria!' ' of 'no, it iSb,dth the right and duty of this court, upon this application, to cOl1siderand determine whether the inof Massachusetts dictment pending against the petitioner in the charges. either a criminalptrense or one comes "',ithin the jurisdiction It is well settled that UPOll application for an order of of removalJuAdersectioll.l014, Rev. St.,tbe district court or judge may propetix the indictment to ascertain whether an offense against ,the is cllarged, anel the cQu),'t to which the accused is Ilought tt)'beremoved of the same. In such cases the ju.dge exerCises something more than Ii mere rpinisterial function. involving nojudiqial discretion., The liberty of the citizen,and his general dghtto in forum of his domicile, imposes \lpon the judge the duty"of considering and passing upon those questions. Such has been the uniform practice of the federal courts. In re Buell, 3 Dill. 116; In reDoig, 4 Fed. Rep. 193jU. S. v. Fed. Rep: 86; U. S. v. 658j U. S. v. Fowkes. 49'Fed. Rep. 50; Horner,v.,U. U.S. 207,12 Sup. Ot. Rep. 407. These cases have recently been followed and approved by Judge RICKS in the case of In re Corning, Cp'.,§;v.. Greenhv-t,) 51 Fed. Rep; 205, and by Judge LACOMBE in Re TerreUi,(lJ:B. Rep. 213, upon removal prosame,ql'substantially tbe same, indictment as that pendingagaibst petitioner. In the Terrell Case, Judge LACOMBE properly states that the same right and duty of looking into the indictment arises upon hab6tJ.8 \wnpua, whether the petitioner is held under the warrant ofremoval.issued by the district jUdge, whose decision is thus reviewed, or under the wa.rra.nt of the commissioner, to await the action of the distriqt judge., It is.insistedbythe:district attorney,on behalf oftha United States, that if the indictment is insufficient it must be met by a motion to quash, or some other appropriate proceeding in the court in which it is pending, and whose action would be subject to reviewj aud the case of In re Lancaster, 137 U. S. 393, 11 Sup. Ct. Rep. 117, is relied on to support his under the, sufficiency of the conteution not be inq\1ired jnto. We do n,ot understand that indictment

IN REGREENE.

107

decision as laying down any such general proposition as claimed for it in cases like the present. In that case the petitioners, being in the custody of the United States marshal under an indictment pending against them in the circuit court for the southern district of Georgia, applied to the supreme court for leave to file in said court their petition for a writ of habeas corpus, upon the grounds that the matters and things set forth and charged against them in the indictment did not constitute any offense under the laws of the United States, or cognizable in the circuit court. "In this posture of the case," say the supreme court, "we must decline to interfere." In this case it appears that the circuit court in which the indictment was pending had taken jurisdiction, and had the petitioners by its direction in the custody of its marshal, and no reason was shown for not invoking the judgment of said court upon the sufficiency of -the indictment. The supreme court, in declining to interfere, acted in accordance with its well-settled rule not to issue or grant a writ of habeas corpus in the exercise of its original jurisdiction, except when the inferior court is acting without jurisdiction, or' is exceeding its power to the prejudice of the party seeking relief. In re Lane, 135 U. S. 446, 10 Sup. Ct. Rep. 760; Ex parte Mirzan, 119 U. S. 584-586, 7 Sup. Ct. Rep. 341. It certainly did not intend to lay down the proposition that no other court than that in which an indictment was pending could look into the sufficiency of such indictment, or pass upon the question whether it charged an offense, or was within the proper jurisdiction of such court; for in the more recent case of Horner v. U. S., 143 U. S. 214, 12 Sup. et. Rep. 410, it is said: I "The district judge. in exercising his jurisdiction under section 1014. Rev. ' St., to issue a warrant for the removal of Horner to the southern district of Illinois, had a right to determine whether or not the offense was within the jurisdiction of the district court of the United States for that district, and that determination was reViewable by habeas corpus." In the second case of lIorner v. U. S., 143 U. S. 570, 12 Sup. Ct. Rep. 522, no question of removal to another district was involved, nor had any indictment been foundj but the petitioner was simply held to await the action of the grand jury. and prematurely sought to raise, by habeas corpus proceedings, the question under examination, whether any offense had been committed. The present proceeding is essentially dil:' ferent, and comes within the rule stated above by Judge LACOMBE. If the indictment shows no offense committed against the United States in Massachusetts, the petitioner is unlawfully and illegally restrained of his liberty in being held in custody to await an order for his removal to that district for trial, and is entitled to the same measure of relief as though the removal had been ordered by the district judge. The right of the government to have the petitioner tried in the district of Massachusetts where the indictment is pending is not questioned if the case against him comes under section 731 of the Revised Statutes, providing that, " when any offense against the United States is begun in one judicial circuit, and completed in another, it shall be deemed to have been committed in either, and maybe dealt with, inquired of, tried, deter-

L08

FEDERAL REPORTER,

vol. 52.

mined. and, punished in either district in the same manner as if it had been actually and wholly committed therein." There is, however, nothing in this provision of the law which deprives the court of the right and duty to look into the indictment to determine whether any offense against the United States is charged, and. if so, whether it was either begun or completed in the district of Massachusetts. so as to give the federal court there jurisdiction of the case. If, in cases like the present, the mere pendency of an indictment against a party in a state other than that of his domicile should be held to preclude all inquiry into the question whether he is charged with any offense against the United States, or whether the court wherein such indictment is pending has jurisdiction to try the accused, the rights of the citizen would be open to serious abuse. We .areciearly of the opinion that the authorities establish a different rule, ltlldwe therefore proceed to the consideration of the indictment against the petitioner, to ascertain if any offense is charged against him,and, if so, whether the district court of Massachusettshas anyjutisdictionin the premises. The indictment is based upon alleged violations of sections 1 and 2 of the act of July 2,1890, which read as follows: "Section 1. Every contract, combination in the form of 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. Every person who shall mal,re such contr11-ct, or engage in any such combination or conspiracy, shall be deemed guilty/of a and, on. conviction ther!'of.shall be punished by fine not exceeding five'thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the conrt. Sec. 2. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons to monopolize, any part of the trade or commerce among the several states, or with foreign nations, shall he deemed 8uilty of a misdemeanor, and on conviction thereof shall be punished by fine not exceeding five thousand dollars. or by imprisonment not exceedi ng one year, or by both punishments, in the discretion of the court. " Thtl indictment contains four counts. The 1st, 3d, and 4th allege violation of section 1, and the 2d C0U11tcharges a violation of section 2. The 1st, 2d,and 3d counts recite, in the same general way, that on the 11th day of February, 1890, the petitioner and other associates, in the; states of Ohio, Illinois, and New York, engaged with each other in a combination, in restraint of trade and commerce, in distillery products; that, for the purpose of restraining trade and commerce in said nroducts among the several states of the United States, they, in the form guise of a corporation known and designated as the Distilling & Cattle Feeding Company, which was on said 11th day of February, 1890, organized under the lawsof Illinois, thereafter, and prior to August 1, 1890, obtained control, by purchase, renting, and leasing, 70 other distilleries within the United States used for the manufacture of said distilling products, which products were, on February 11, 1898, and continuously thereafter, up to the finding of the indictment, "a subject of trade and commerce ambng the several states of the said United States;" that each of said distilleries were, at the ,respective dates of their pur·

· IN RE GREENE.

109

chase, renting, or leasing and running under said control, separate and distinct, and competing in the manufacture and sale of distilling products among the several states; that, in pursuance of said combination, they used, managed, and controlled all said distilleries, and by means thereof did, during the period last mentioned, manufacture and sell, and control the manufacture and sale, within the United States, of 77,000,000 gallons of said distillery products, said quantity being 75 per cent. of all the distillery products made and sold within and among the United States during said period; that the condition of trade and commerce in said products among the several states during said period was such that, by controlling the manufacture and sale of 75 per cent. of said distillery products,they were able to control and fix the price at which they would sell such products to dealers therein in the several states, and to control and fix the price at which such dealers should sell the same to citizens of the several states during said period; that by said means they intended to control the amount of said distillery products manufactured and sold among the sev,eral states, ,and to control and fix ihe price at which said distillery products should be sold by all dealers therein among the several states, and in the state of Massachusetts, and to prevent and counteract the effect of free competition. in the usual price at which said products were sold am.ong and within the several states, and to increase and augment the usual price thereof, and thereby .exact and procure great sums of money from the citizens of Massachudistillery products, and to secure to setts and other states themselves exc1usiv.ely the trade and commerce in saiel distillery products, and by all the means aforesaid unlawfully to restrain the trade and -commerce in such products among the several states of the United States. The first count then alleges that, in pursuance of said purpose and intent, they, .under the form and guise of said Distilling & Cattle Feeding Company, on October 3, 1890, did at Boston, within the district of Massachusetts, "negotiate a sale, and did sell," to the firm of D. T. Mills -& Co.· 5,642.82 proof gallons of alcohol, which was then in the state of Illiuois; that by rfason of said combination, and of their control of the large number of distilleries and the manufacture of 75 per cent. of an such products in the United Stotes, they did fix the price at which said D. T. Mills & Co., who were dealers therein at Boston, should and did "Sell said alcohol within said district of Massachusetts, or for transportation into any other state, "and did compel said Mills & Co. to sell said alcohol within said district of Massachusetts for use in said district, or for transportation to other states of the United States, at no less price than that fixed" by the accused; that by this means they controlled the amouut of distilled products sold within the state of Ma.qsachusetts, and did fix the price at which said products were sold by dealers in said state; that they thereby prevented and counteracted the effect of free competition on the usual price at which said products were sold within the state, and did increase and augment the usual price at which said distillery products were Bold in the state ofMassachusetts for use therein or trl\nsportation >therefrom, and that they thereby, and by the m.eans aJoresaid, did" re-

FEDERAL .REPORTER"vol. 52.

.StItt of MllisSachusetts and the 'states of the said United States other than

commerceinsnid distilling products between the

to,the form of the statutes in ,such 0ll$e1wa41eand provided;; i (1iTfie:second count, based upon the second section of the act, after the general recital, charges an unlawful attempt to monopolize the and, commerce in distillery. products under the form: andguiae of said, Distilling & Cattle Feeding Company; and the speoific acts therein alleged are tha.t on September 18, 1890" C. 1. Hood, of Lowell, Mass., pUfchaSfj(} from Webb & Harrison, as distributing agents of the accused, 526.52 proof gallons of alcohol; that the defendant, in the form and guise of the aforesaid company, promised said Hood a ,rebate of five cents pei-' gllillon on the purchase price of said alcohol, upon condition that. f()J($ix morHhs from rths date of the promise he should havebought his supply or supplies of distillery products exclusively from said company's sgents, and should: not have sold any of the produots so pur, chased'at less than the company's distributing agentsUist prices, and shm:tild ifurnish evidence of cotnpliancewith those conditions in the form of a cer.ti6cMe. This cOuntl alleges a similar arrangement with Kelly 'iand Durkee on the sale to them, September 23, 1890, by the company's distributing, agents) of proof gallons of alcohol. Halso sets out a list ot",theidistribufing agen:ts!from whom purchases could be made, and . the agretment nUhe company as to the five cents per gallon rebate, and the condition,:onwhich would be made.1 It is alleged that, by means of said 'prerilises 'and telllnS :of: rebate to said purchasers, the accused, under tht form and guis:aia;foresaid, did 'attempt to monopolize to them,selves the trade and commerce in' said distillery products among the "several states, in violation of' law. The third count is based upon the first 'section of the act. It alleges an agreement made by the aforesaid company withe.I. 'Hood, at Lowell, 'Mass., on the sale to him gallons of saidcompal1Y's products, 'made October 2, 1890, fora rebate upon the same terms and conditions set forth in 'the second count, by and promise it is charged that the attempt to execute and carry out the purpose and intent aforesaid wrestrain the' trade and commerce in said dis,:tillery proQuctsamong the 'several states of the said United States, and . 'especially 'ibetweenthestste ·of Massachusettsan&other states of the i United States,agaitist the pel:\ee," etc. i' ,The fourtbcount is also founded upon section 1 of the act. It sets out a contract or agreenient,of the Distilling & Cattle Feeding Company with KeHy:arld Durkec,'bea.t1ing date at Peoria,Ill., SepteQ1ber 23,1891, : promising to pay,the latter' $4.27 as a rebate of .5 centaper gallon on Qm.54'proofga;l.Jol1sof th'6cozhpanyprodu'cts,purchased that day, upon alleged! in the secondandthirdcountsj j iflfltHhen set's)f{)'rththe certificnte of said l{eHy and Durkee thatthey had :- 'sinctl'the' tbeagteementpnroh;as6dalHheirl(lu pply of goods ,. as 8re'produc!Jd by the Distilling & Oatitl&FeedingCo'mpany, exclusively from one'or:molle:of the dealers or dis#tbaiing agents 'of the company,
i

'dawi-ot

IN RIl: GREENE.'

111

of which a list is attached. This' certifidate bears date May 7,1892, and it is charged that the pnrchaser'scompliance with the terms and conditions ohwhich the company promised to make or pay the 5 cents per gallon on rebate was a contract in restraint of trade and commerce, within the provisions of the statute. In the consideration of this indictment it should be borne in mind that there are no common-law offenses against the United Statesj that the federal courts cannot resorL to the common law as a source of criminal jurisdiction; that crimes and offenses, cognizable under the authority designated of the United States; are such, and only such, as are by law; and that congress must define these crimes, fix ment, and confer the jU'risdiction to try them. U. S. v. Hudson, 7 Cranch, 32; U. S. v. Coolidge, 1 Wheat. 415; U. S. v. Britton, 108 U. S. 199-206, 2 Sup. Ct. Rep. 531. When congress, under and in the exercise of powers conferred by the constitution, adopts or creates common-law offenses, . the courts may properly look to that body of jurisprudence for the true meaning and definition of such crimes, if' they are not clearly defined in the a.ct creating them. U. S. v. Armstrong, 2 Curt. 446; U. S. v. (Joppertrfh,ith, 4 Fed. Rep. 198. The act of July 2,1890, on which the present indictment is based,in declaring that contracts, combinations,and conspiracies in restraint of trade and commerce between the states and foreign countries were not only illegal, but should constitute criminal offenses against the United'States, goes a step beyond the common law, in this: that contracts in restraint of trade, while unlawful, Were not misdemeanors or indictable at common law. It adopts the common law in making combinations and conspiracies in restraint of the designated trade and commerce criminal offenses, and creates a new crime, in making contracts in restraint of trade misdemeanors, and indictable as such. But the act does not undertake to define what constitutes a contract, combination, or conspiracy in restraint of trade, and recourse must therefore be had to the common law for the proper definition of these general terms, and to ascertaIn whether the acts charged come within the statute. We regard it as well settled by the authorities that an indictment, following simply the language of the act, would be wholly insufficient. for the reason that the words of the statute do not of themselves fully, directly, and clearly set forth all the elements necessary to constitute the offense intended to be punished. U. S. v.Cruik8hank, 92 U. S. 542jU. S. v. Simmonds, 96 U. S. 360; U.8.v.Carll, 105 U.S. 611;U. S. v. Britton, 107U. S. 655, 2 Sup. Ct. Rep. 512; U. S. v. Trumbull, 46 Fed. Rep. 755. Under the principle established by those cases, the several counts of the present indictment must be tested, not by the general recitals and averments :thereof, although in the words of the statutes, but by the speoific aots or particular facts,which are alleged to have been'actually done and committed by the accused. If the particula.r acts or facts charged do not, as a matter of law, constitute contracts, combinations, or conspiracies in restraint of trade and .commerce among the several

112

FEDERAr. REJ>QRTER,

vol. 52.

state$,or a monopoly or attempt to. monopolize any part of sucb trade Ilr. Qommerce, no amount of averments and allegations that the accused "engaged in a combination," or "made contracts in restraint" of such trade or commerce, or "monopolized" or "attempted to monopolize" the same, will avail to sustain the indictment. Whether the accused is with an offense is to be detelimined by particular acts or facts set: {orth, and not by the conclusions of the pleader, although asserted the words of the offense QOnsists of certain acts under certain circp,mstanCl=ls, and in the iniliotment for the offlmse itisnQt sufficjent to charge the accused generally with havingQOzpmitted the offense, but aU the circumstances constituting the offense Jilt;rst besPedaIly set forth." U.S. v.Oruikshank, 92 U. S.542, 563.!. ., .. Do the particularfacts set forth iO""1;he indictment constitute violation of the: statute? I.n construin.g and the provisions of the act to thesPElcmc offenses charged., it must ,be assumed that congress did not intl'lnq.tQ make the enactment or give it an ex P08t facto operatiO;Q., lUldeffect. No .criminalitycan therefore be ascribed to the on February acts on4e accused in rel3pe,ct to their recited com in restraint pf bade and commerce in distillery products by meanS of tile Distilling & Cllttle Feedjng Company, a corporation organized by them on that day under thelaws of Illinois, and its acquisition al,ld control prior to the,pass!\ge of the act of July 2, 1890, of 70 other distilleries, wllich. enabled said company to manufacture and sell 70,000,000 gaJ.lonsQf said .distillery pro<ip,cts, said quantity being 75 per cent. of thE! distillery prQ¢ucts manufactured and sold in the United States between the date Qr dates of.llcquiring said distilleries and finding Qf the indictment.. It is nQt.alleged that this acquisition and control of the 70. othElr 4istilleries by the accused or by the Distilling & CattlelfeElding CompanY" by means or which this large production unlawful; nor is it alleged, or even rewas secured, ",as in any cited; that. the parties from whom said 70 other distilleries were acquired, were by contract restrained from thereafter engaging in the distillery b;usiness, either generally or partially. From anything averred or recited to the cQntrary, it must be presumed, in this proceeding, that the defendants, or the Distilling & Cattle Feeding Company, in whose form and gUise the accused is sa,id to have acted, were in the rightful poseessioll and control of the numerous distilleries employed by in the manu.facture. of distilled ,products; Rlldthe quantity of such products, whether large or sml:\ll, can in no way affeot the right of disposition incident to lawful ownership·. Congress may place restriction and limitations upon the right of corporations created, and organized ul1der. its P,\lthority. to acquire, use, and dispose of property. It may II-Isoimpose restrictiopsand limitations upon the citizen in respect to thee4ercise'ofi1- public privilege Of franchise conferred by the United States. ButcoJ.1gress has. not the power or authority Undl:lf the commercec!,ause, or any other provision of the consti,tutiQ11, to limit and restrict the right of corporations created by the. states, or the citi-

IN RE GREENE.

113

zens of the states, in the acquisition, control, and disposition of property. Neither can congre8s regulate or prescribe the price or prices at which such property, or the products thereof, shall be sold by the owner or owners, whether corporations or individuals. It. is equally clear that congress has no jurisdiction over, and cannot make criminal, the aims, purposes, and intentions of persons in the acquisition and control of property, which the states of their residence or creation sanction and permit. It is not material that such property, or the products thereof, may become the subject of trade or commerce among the several states or with foreign nations. Commerce among the states, within the exclusive regulatipg power of congress, "consists of intercourse and traffic between their citizens, and includes the transportation of persons and prop.erty, as well as the purchase, sale, and exchange of commodities." Cov,nty of Mobilev. Kimball,102 U. S. 691-702; Glou.ceste:r Ferry Co. v. Pen1l$ylvamia, 114 U. S. 203, 5 Sup. Ct. Rep. 826. In the application of this comprehensive definition, it is settled by the decisions of the supreme court that such commerce includes, not only the actual transportation of commodities and persons between the states, but also the instrumentalities and processes of sUch transportation. That it includes ali the negotiations and contracts which have for their object, or involve as an element thereof, such transmission or passage from one state to another. That such COmmerce begins, and the regulating power of congress attaches; when the commodity or thing traded in commences its transportation from the state of its production or situs to some other state or foreign country, and terminates when the transportation is completed, and the property has become a part of the general mass of the property .in the state of its destination. When the commerce begins is determined, not by the character of the commodity, nor by the intention of the owner to transfer it to another state for sale, nor by his preparation of it for transportation, .but by its actual delivery to a common carrier for transportation, or the actual commencement of its transfer to another state. At that time the power and regulating authority of the states ceases, and that of congress attaches and continues, until it has reached another state, and become mingled with the general mass of property in the latter state. That neither the production or manufacture ofarticles or commodities which constitute subjects of commerce, and which are intended for trade and traffic with citizens of other states, nor the preparation for their, transportation from the state where produced or manUfactured, pdort 0 the commencement of the actual transfer, or transmission thereof to another state, constitutes that interstate commerce which comes within the regulating power of congress; and, further, that after the terminatiQn of the transportation of commodities or articles of traffic from one state to another, and the mingling or merging thereof in the general mass of property in the state of destination, the sale; distribution, and consumption thereof in the latter state forms I1U part of 'interstate commerce. Pensacola Tel. Co. v. Western Union Tel. Co., 96 U. S. 1; Brown v. Houston, 114 U. S. 622,5 Sup. Ct. Rep. 1091; Coe v. mol, 116 U. S. 517-520, 6 Sup. Ct. Rep. 475; Robbim v.52F.no.1-8

r;'1!t.UtittgWt:', 120 U. 1S;!497, 7 Sup. Ct., Rep. 592; and Kiddv. 8ott;' 128 U('S'. ;1; 9Su}>. 6. In the latter 'case the supreme court' 'POinted 'out commerce"&nd the subjects therebf;land held: that ithe'manufactrtre of distilled spirits, even though theywere#ltended fotefp6rtto other states, wasndt commerce, falling ;Within the regulating powers of congress. the indictment of its verbiage,- its general recitals n.nd conclusiohSOf law,-does either'count thereof charge any real offense against theUniiEld States over which the district court dfMassachusetts has jurisdictidri?The specific' dffense'charged in the first count is that the deunder the form 'and guise of the Distilling & Cattle Feeding on October 3, 1890, to Mills and' Gaffield, copartners unquantity of distilled prodder the namedf n. T. MUls & Co., uctsthen in the' state of IUinoisj that,'by reason of said Distilling & CatCompany's cobtrolling the manufacture and sale of 75 per ceht.ot'all suSh J>roducts!in':the UnitellStates, theyfilted the price at purchasers,lshould and did sell '>aid alcohol for, use in, Mas. or any othe: state, did Gaffield, 'as copartners, to seUsald alcohol at no less pnce than tffa:t fiiX,ed" by them. 1 t'is not alleged how said Boston purchasers were ,"'C'offipelled II to sell 'at the prices' fixed by the defendants,nor'how, ot arrangement; the defendants fixed the pIliceat which the be 'sold in for transportation iherefrom. Was, it one' of the. provisions of thec?ntract of' sale and, purchase, or was ol:'i conspiracy between the defendant$ 'and the Bos'tob:;ptjrchllsers 'tThemeans described by which the', defendants were enable<!. to' fix ,the price I1t which the purchasers should sell the alcohol was (Icollti'lict, coinbination, or conspiracy in restraint of amohg the states." ,If they; by force or duress, pllrchRsei'stosellat'a 'price thed by them, such compulsion:wot11'd not cotistitute either a 'contract, 'combination, or conspiracy in restrain' of ttade. ,It cann6tbe assumed, under the language employed #ithisi:count, thattherewa!l 'any "contract" between the defendants find' Mills and Ga'tnelcl whichby its terms and "provisions restrained the latter in+eS'pectto to the price at which they should or did sell the alcohol. "Tlfe 'count ci:Jrtilinly chargesllO "combination. or conspiracy," within the meaning of >the act, between the defe:ndan:tsand the Boston putchasei's.'! '1'he dharge isloo vague and: general to show a "contract" in restraint (\fitrade; 'sueh' as the ,first section, (jf the act c(mtamplates and declares illegal. r If ca.nnot>be aided by presumption or' intendments. ,It is bad upon: its face, and charges no offense committed in the state of Massachusetts of''l'ihiehthe United( States courts in that state could take jurisdictioh.' " "j ',: The second cOllUt Charges an attempt on the part of ,defendants to 'monopolize"o themselves; urtael'the, fOrin and guise 6haid Distilling & Cattle Feeding Company, the trade and commerce in distillery products arl1l:>9¢"tbe'several ,and betweell. the state of Massachusetts and :othei" 'states; the special aots oDwhich,this charge is based being that,
· !,

BE GREl!1NE.

115

on the purchase of certain quantities of. alcohol. by C. I. Hood, and Kelly & Durkee, (citizens and residents of Massachusetts,) in September, 1890, from certain distributing agents of the Distilling & Cattle Feeding Company, the defendants, under the form and guise of said company, agreed and promised that if said purchasers would, for a certain designated period, (six months,) buy all their supply or supplies of distillery products exclusively from said company's distributing agents, (two of whom, as appears in the count, were located at Boston, Mass. ,) and would not sell the alcohol or other distillery products so purchased at any lower prices than the list prices of such distributing agents, and would make a proper certificate of such facts, then the said Distilling & Cattle Feeding Company would make and pay to said purchasers a rebate of five cents per gallon on each gallon purchased by them. The third and fourth counts setout substantially the same arrangement and agreement as to the payment of a rebate of five cents per gallon upon the purchasers' compliance, during' the period stated, with the aforesaid terms and conditions, and charge th.e llame to have been contracts in restraint of trade and commerce among the states, within the purview of the statute. We may therefore consider those three counts together. Do the facts therein set forth constitute either an Uattempt to monopolize" trade and commerce in distillery products among the states, or contracts in restraint of such trade? It is not very clear what congress meant by the second section of the act of July 2, 1890, in declaring it a misdemeanor to umonopolize," or Uattempt to monopolize," any part of the trade or commerce among the sta.tesor with foreign nations. It is very certain that congress could not, and did. not, by this enactment, attempt to prescribe limits to the acquisition, either by the private citizen or state corporation, of property which might become the subject of interstate commerce, or declare that, when the accumulation or control of property by legitimate means and lllwful methods reached such magnitude or proportions as enabled the owner or to control the traffic therein, or any part thereof, among the states, a criminal offense was committed by such owner or owners. All persons, individually or in corporate organizations, carrying on business avocationl'l and enterprises involving the purchase, sale; or exchange of articles, or the production and manufacture of commodities, which form the subjects of commerce, will, in a popular sense, monopolize both state and interstate traffic in such articles or commodities just in proportion as the owner's business is increased, enlarged,and developed. But the magnitude of a party's business, production, or manufacture, with the incidental and indirect powers thereby acquired, and with the purpose of regulating prices.and controlling intel'State traffic in the articles or commodities forming the subject of. such business, production".or manufacture, is not the monopoly, or attempt tOnionopolize, 'wbich the statute condemns. 'fl.!' monopoly," in the prohibited sense, involves the element of an exclusive privilege ot,gtant. which restrained others from the exercise of a right or libertY' which.they;hlJ.d before the monopoly was In commercial.law,iUs the,ab\1se of free commerce, by which one or mora

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FEDERAL REPORTER,

vol. 52.

indi"'iaiU8ils ihave pro<lul'ed. the advantage of selHngaloneor exclusively all of li'pa'l'ticulnrkind of merehandi'Se,or commodity to the detriment of the public. As defined by Blackstone, (4 Bl. Comm. 159,) and by Lord Coke, (3 Co. lnst.181,) it is a grant from the sovereign power of the statehy commission, letters patent, or otherwise, to any person or corporation, by which the exclusive right of buying, selling, making, working, or using anything is given. When this section of the act was under consideration in the senate, distinguished members of its judiciary cOinmittee and. lawyers of great ability explained what they understood the term "monopoly" to mean; one of them saying: "It is the sole engrossing to)ll.man's seH by means which prevent other men from iengaging in fair competition with him." Another senator defined theterm'in: the language of Webster's Dictionary: "To engross or obtain, by :ahymeans, the exclusive right of, especially the right of trading, toany'place or with any country ,or district; as to monopolize the India tlrLevant trade."· It will be noticed thnt, in altthe foregoing definitions>6f"monopoly,"<there is embraced two leading elem nts, viz., an right or privilege, on the one side, and a restriction or restraint on the"other;'-which will operate to prevent the exercise of aright or liberty open th the pUhl1c"before the monopoly was secured. This being, nswe think, the gen:imtl meaning of the term, as employed in the second section;of the sta.tute, an "attempt;to monopolize" any partofthe trade or commerce among the states must be an attempt to secure or aequire an exclusive riglitin such trade or commerce by means which pretherein.: It was certainly not a \'ent or:restrain othersiftom "monopoly;" in the: legal sense of the term, for the accused or the tilling & Cattle FeElding Oompany to own 70 distilleries, and the products thereof, whether such producti'; amouhted to the whole or a large part of what was prodUced in:the country. Their ownership and control of such products, as ell.1bjects of trade and commerce, is not what the statute condemns, but the monopoly' or attempt to monopolize the interstate trade or comTnerce therein. In this acquisition and operation of the 70 distilleries,'which enabled the liceused or said Distilling & Cattle Feeding Company to manufacture and control the sale of 75 per cent. of the distillery products oftl1ecountry, it does not appear, nor is it alleged, that tbepersOlls frornvvhom said distilleries were acquired were placed under any restraint, :1)y contract or otherwl,:;e, which prevented them from continuing orre-:engaging in such business. All other persons who chose to engage there111 were at liberty to do so. The effort to control the production and nianufacture of distillery products, by'theenlargement and .extensionofbusiness, was not an attempt to monopolize trade and cOmmerce insuehprbducts within the meaning ofthestatllte, and may: .left: out of fl1rtherconsideration. ' them Was the arrangement with the Boston purchasers, as to a rebate Utyonthe':condiHons stated,an attempt to monopolize any 'part .of the trade IUid Mrrimerce among the states in distillery products? It is notalleged,rtorisitto be inferredfrdmanything that is set forth, that said purchasel'$ bound themselves, or entered into any contractual

IN RE GREENE.

117

obligations or understanding, to buy their distillery supplies exclusively from the distributing agents of said Distilling & Cattle Feeding Company. They were left at perfect liberty to purchase when, where, or from whom they pleased. No contractual or other restraint was placed upon them. Upon certain conditions, which it was entirely optional with them to comply with or disregard, a rebate was promised by the seller. Such an arrangement does not amount to a contract to purchase exclusively Ji'om said distilling company or its distributing agents. But, suppose it did, there was nothing in such an agreement unlawful or in contravention of the statute. The promise of a rebate, as an inducement for exclusive trading, certainly does not constitute an "attempt to monopolize," when the purchaser is left at liberty to buy where he pleases, and when all other sellers of the article are Jeft unrestrained in offering the same, or .greater, inducements. As to the remaining cORdition upon which the rebate was to be payable, the same observation may be made. The purchasers were placed under no contractual or other restraint in respect to the price at which they should sell. They were .simply offered· a rebate, as an inducement not to undersell the vendor's distributing agents, two of whom were located at Boston, Mass.: The arrangement relied on, considered either in detail or as a whole, involved no "attempt to monopolize any part of the trade or commerce among the states." The rebate promised, upon condition of exclusive purchases and not underselling the vendor's distributing agents, was a legitimate method of inducing trade; but the means thus employed in no way operated to prevent or restrain others from offering the same, or greater, inducements. The condition' as to not selling at lower prices than those of the distributing agents may have had a tendency to maintain prices, but that wquld Rot have been an attempt to monopolize trade. The inducements offered for the exclusive trade, and to sell at no lower prices than the price list of the distributing agents, was not prejudicialto the public. It was in no way contrary to public policy, or an unlawful restraint of trade, as will be seen from the authorities hereinafter referred to. But, aside from this, it is not shown that said arrangement necessarily involved or related to interstate traffic. It is not alleged that Webb & Harrison, the distributing agents, from whom Hood and Kelly and Durkee made their purchases of alcohol, were located or made such sales in some other state than Massachusetts;. nor that the alcohol itself was beyond the limits of that state when purchased. Neither is it shown that the exclusive purchases thereafter to be made, as' one of the cORditions on which the rebate was to be paid, could not have been made in the state of Massachusetts, it appearing from the face of the count that two of such distributing agents were located at Boston, in said state. Without dwelling further upon its consideration, we are clearly of the opinion that this second count fails to charge any offense against the petitioner. What has been already said applies largely. to the third and fourth .counts. The matter of the promised rebate upon the same conditions .as set forth in the second count,which is charged to .have been a COIl..

118.t

FEDERAL1REPORTEB,

vol. 52.

tract-in restrairitoftradeandoolnmerce among'tMstateB; a,nd between the statl;!'ofc1l1assachusetts and other states, does not constitute auy offense against the United States, or in any way contravene the first section of the act ofJuly 2, 1890; because there wasactpally no contract which bound" .·or attempted to bind, the Massachusetts purchasers of alcohol, as· to where or' from who,th they would make further purchases during the period stated, nor as to the price or prices at which they should selL They were simply offered an inducement in respect to those matters,which they were: at perfect liberty to comply with or decline. They'were not restrained by any contractual obligation during the stipulated period. The agreement was wholly unilateral during that period. Upon: compliance with the conditions as alleged in the fourth count, they were entitled to the rebate; but such compliance had no retroactive operation to create a valid and subsisting contract between the parties prior thereto, or during the period intervening between the date of the promise and the fullconipliance with the conditions on which the rebate was lobe paid. During that period there was between the parties noc()ntract in restraint of trade. But suppose the arrangement could by any possibility be construed into a contract between the parties from the date of. the or during the stipulated period, it could not be held to be a contract in restraint of trade. It is not deemed necessary to review the authorities upon the subject of contracts in restraint of trade, nor would ,it beat all profitable. It is well settled that contracts in general restraint;or;trade are contrary to public policy, and therefore unlawful. The arrangement under consideration cannot possibly be considered 8S one ingeneraI. restraint of trade. Where the restraint is partial, either as to time, or place, its validity is to be determined by its reasonableness and the existence of a to support it. Xh:e question of its reasonableness depends on the donsideration whetherit is more injl!lriousto the public than is required to afford a fair protectioD to the party in whose favor it is secured. No precise boundaryoon be laid down as to when, and under what circumstances, be reasonable,and when it would be excessive. Navthe restraint igation Co. V.Wi'MDr, 20 Wall. 64-68; Beal v. Ohase, 31 Mich. 490; Wardv. Byrne,S Mees. & W.549; Horne;r v. Grave8,7 Bing. 735; MalZan v. Ma.y, 11 Mees.& W. 667;,Whittake;r v. H(YIJ)e, 3 Beav. 383; Hodge v.Sloan,107 N.'Y. 244, l'lN. E.Rep. 335. In the present case, the arrangement treated as a contract was founded upon a valid consideration, aDd only. secured to the vendbrs a reasonable protection in their business.' .Rwasnot an unlawful· contract in restraint of trade. The authorities fully support this ,conclusion. In addition to those referred to,above,we,oite:the following: <,'B'rO'UJ'n v. Rounsavell, 78 Ill. 589; F(Y/J)le V.: Park, 181 :lJ.8. 88, .9,Sup.Ct:rRep.658; Ohicago, etc. i R. Co. :v.Pullman Soufh. Oaf1,GJ., 139U. S.· 79,.1l·Sup. Ct. Rep. 490; MogulS.S. 00. v· .McGrego'l", [1892] App. Cas. pi:: 1. p. 25, (decided by the honseof lords in i Decemili>er,189l!.) In this Jatter case there was a combination or association of ship owners who, being engaged in the trade with China, with a view ofobtainingamonopoly>of the homeward tea trade and exI

INRE GREENE.

119

duding the plaintiffs from competing with them for the same, and thereby keep up freight, offered to rebate or repay every sixth month, to such merchants and shippers in China as should have shipped their tea exclusively in vessels of the assoCiation, 5 per cent. on all freight paid by them. The plaintiffs, as rival and competing ship owners, were thereby xc1uded from this business, and sued for damages, and the question (almost identical with that under consideration) was presented whether the combination and arrangement adopted by the association to secure the exclusive transportation of tea trade was in any way unlawful. It was first passed upon, and held to be free from objection, by Lord COLERIDGE. 21 Q. B. Div. 554, 4 Ry. & Corp. Law J. 611. His decision was sustained on appeal, (23 Q. B. Div. 598, 7 Ry. & Corp. Law J. 223,) and was finally affirmed by the house oflords. It would be highly instructive to quote at length from the opinions delivered in the house of lords, if the limits of this opinion permitted. The reasoning and conclusions there reached fully sustain our conclusions in the present case. But there is another and fatal objection to all the counts of this indictment. Allthe·ttets and matters charged as criminal offenses were, as shown upon the face of the indictment, the acts of the Distilling & Cattle Feeding Company, a corporation organized under the laws of illinois. It is not alleged what relation the accused bore to said corporation; nor does it appear whether their connection therewith was other than that of mere stockholders, except RSto the defendant Greenhut. By the eighth section of tbe statute, it is provided "that the word' person' or 'persons' wherever used in that act, shall be deemed to include corporations and associations existing under or authorized by the laws of either the United States, the laws of any of the territories, the laws of any state, or the laws ofany foreign country." lithe acts charged constitute criminal offenses, the Distilling & Cattle Feeding Company is the "person" who has committed the same. It would be unheard of in criminal jurisprudence to make its stockholders criminally responsible for the corporation's violation of the statute. . That corporation can readily be reached and prosecuted by the government, either civilly or criminally, for what it may have done in contravention of the law. without requiring the courts, by strained construction'of the statute, to extend its provisions and make them embrace all parties merely interested in Buch corporation. ' Except in conspiracy offenses, there is no criminality by representation. We have not deemed it necessary or proper to attempt the difficult task of defining the cases to which the statute will apply. The enactment wasmaniiestly aimed at the trust combinations and associations formed. by individuals and corporations, which the sta.te courts have in most instances declared illegat The conclusion· of .the court is that the petitioner, Lewis H. Greene, should be discharged, and it is accordingly 80 ordered and adjudged.

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J'EDERAL REPORTER,

vol. 52.

UNx:rED STATES 'lJ. STEVENS.

(D£8fJrlct OOUrt, W. D. Viralnia.

April 16,1891.)

1.

COUN'l'EJl.ll'EITING-NOTBS IN THE SIMILITUDE OIl' TREASURY OR NATIONAL BANK NOTES. .

.

e.

The, fact, that a note was originally issued by a dulv-authorlzed state bank, and 'that ItW8.S a legal note at the time of its Issuance, does not, after It has become, utterly wOl'thless by the insolvency of the bank, exempt the holder of it fr0In' pr4?secutlon, under section of, the Revised Statutes, If he has it In possession with Intent to selI or otherwise use it. and pass It as a genuine note or ObligMlon of the United States. , The que$t.tqtt as to the slIIillitudeof'Such note to the treasury notes or otherobligations'ofthe United States is a:questlon to be decided by the jury. as are also the facts as til whether the,.defenllant had tlle question in hIS possession with Intent to sell or otherwise use tfle same, and whether he knew at the time that said note was worthies&. '
OIl' THE COURT AND JUQY.

AtLaw.. Harrison Stevens had been indicted under the provisions of section 5430 of the Revised Statutes of the United States for having in his possession' or custody, without authority from the secretary of the treasury or othei'properofficer, an:obligation or othersecurity engraved and printed after the similitude of 8.l1oblig;ationor other security, issued under the authorityofthe United States, with intent to sell or otherwise use the same. In the progress of tbe trial the evidence disclosed that the obligation 01' security in question was a genuine!notiloLtheBank of Mecklenburg, N. C' j a state bank which, during its existence, had issued its obligations as lawful currency,but which had become utterly insolvent, leaving its circulating notes unprovided for and worthless; upon which disclosure counsel for defendant moved tpe court to arrest the trial, and instrubtthe jury that the having of such ,a noteClr obligation as described by the evidence in this case in possession, without authority from the seoretary of the treasury or other proper officer, as alleged in the indictment, with .the intent alleged in the indictment, was not a violation of the section of the Revised Statutes of the United States cited in the indictment. Motion denied. W. E. (Jraig.U.S. Atty. E. Bo' Wither8, for defendant.

PAuL,DistrictJudge. The indictment in this case is under the following pro.visioI:l of seotion5430 oLthe Revised Statutes of the United States: "Everyper.son II< ... · . who .·las in his possession or custody, except under autbority f.om the secretary of tbe treasury or other proper ollicer, any .ab,ligation securi.t,rengraved and printed the ,similitude of any opligation or under the authori,tyof the United States, with intent . Of use the, same, '" ... ... shall be punished (in the manner prescribed in the:statute.]" .' The evidence before the court, at present, shows that the note or obligation which the defendant is charged with having had in his pos-