Shawnee Compress Co. v. Anderson, 209 U.S. 423 (1908)

Shawnee Compress Company v. Anderson

No. 140

Argued March 2, 3, 1908
Decided April 13, 1908
209 U.S. 423

APPEAL FROM THE SUPREME COURT

OF THE TERRITORY OF OKLAHOMA

Syllabus

Where the Supreme Court of the Territory of Oklahoma reversed the judgment of the trial court, the reviewing power of this Court is limited to determining whether there was evidence supporting the findings and whether the facts found were adequate to sustain the legal conclusions.

In this case, the Supreme Court of the territory having found that a lease, being made to further an unlawful enterprise, was void as an unreasonable restraint of trade and as against public policy, this Court sustains the judgment, there being proof supporting the conclusions to the effect that the lessor company agreed to go out of the field of competition, not to enter that field again, and to render every assistance to prevent others from entering it, other acts in aid of a scheme of monopoly also being proved.

It is not necessary to determine whether the supreme court of the territory based its judgment holding such a lease void, on the common law, on the Sherman law, or on the statutes of the territory; the restraint placed upon the lessor was greater than the protection of the lessee required.

17 Okl. 231 affirmed.

This suit was brought in the District Court of the County of Pottawatomie, Territory of Oklahoma, by appellees as stockholders of the Shawnee Compress Company against appellants to cancel a lease made by the Shawnee Compress Company to the Gulf Compress Company.

The original petition alleged that the compress companies were, respectively, corporations of Oklahoma and the State of Alabama; that the plaintiffs, appellees here, were minority stockholders of the Shawnee Company; that certain of the stockholders of the Shawnee Company, claiming to be its officers,

conceived the idea of leasing the entire property and business of said company, together with its goodwill and the right to the business thereof to said defendant, Gulf Compress Company, a foreign corporation;

that subsequently the same stockholders, claiming to be the directors of the corporation, in certain meetings and by certain resolutions, executed the purpose. These meetings were alleged to be invalid as not being in conformity with the bylaws, and that the proceedings therein were "wholly illegal and beyond the powers and authority of the said stockholders and directors of said corporation;" that the corporation was organized to construct and operate a cotton compress in the City of Shawnee, and that its officers and stockholders were not authorized to execute a lease for a period of years, vesting in another and foreign corporation the rights, duties, and business of the company, and that the lease was void as against the rights of plaintiffs, being minority stockholders of the company. A copy of the lease was attached to the petition.

The petition was amended, making the allegations somewhat fuller, and alleged that appellants Stubbs and Beatty, who assumed to act, respectively, as president and secretary of the company, and certain other stockholders who joined with them in the negotiation of the lease, were induced thereto by certain advantages personal to themselves, and not by the interest of the company. It was also alleged that the "exigencies of the business" of the company did not demand or justify the lease, and that its revenues for the season 1904-1905, over and above taxes and insurance, notwithstanding negligent and incompetent management, were $7,485.89, and, plaintiffs expressed the belief, could be made greater for the years covered by the lease. It was alleged that the Gulf Compress Company was in the business of leasing and operating competing compresses for the purpose of monopolizing, as far as possible, the business of compressing cotton in a large portion, if not all, the cotton-raising districts of the United States, and that the lease was procured from the Shawnee Company in pursuance of said scheme, and other leases of other compresses were also secured for like purposes, and that the Gulf Company is, in its operation and method of conducting business, a trust, combine, and conspiracy, in restraint of trade and commerce, in violation of the federal antitrust law and the antitrust law of the Territory of Oklahoma, and that it is the design of the Gulf Compress Company to increase the charge of compressing cotton, and that it will be able to enforce such charges by reason of the fact that it will control all of the compresses in the territory.

There was a demurrer to the petition, which was overruled. An answer was then filed which in detail asserted the validity of the proceedings preceding the execution of the lease; that the company was indebted in the sum of $17,250 -- $6,000 to the Shawnee National Bank and $11,250 to the Webb Press Company, Limited, which was past due; that its creditors were pressing for payment, and that the lease was necessary in order to procure money by which to pay the Shawnee Bank and to secure the extension of time on the indebtedness due the Webb Press Company, and that, for these reasons, the negotiations for the lease were entered into and the lease finally made. And it is alleged that the consideration paid was fair and reasonable, and for the best interest of the stockholders of the Shawnee Company; that defendants could procure said second mortgage money in no other way, and that the property of the Shawnee Company would have been sold at a great sacrifice unless the lease had been made.

It is alleged that appellees are firms of cotton buyers, and, in order to obtain an unfair advantage over other buyers, have conspired together for the purpose of forming a monopoly of all the compresses in the territory and destroying competition in compressing, and, in order to carry out the conspiracy, have for more than six months endeavored to obtain a majority of the stock of the Shawnee Company, and, knowing that Beatty and Stubbs were involved and in need of money, have in all ways oppressed said Beatty and Stubbs to compel them to sell their stock to appellants for an inadequate consideration and conspired to compel the Shawnee Company, knowing it was involved and its demands pressing, to sell and convey its property to them for the inadequate consideration of $25,000. And it is alleged that the lease was made to defeat such conspiracy. Other plans of the appellees to harass the Shawnee Company are averred.

The case went to trial on the issues thus formed, and resulted in a judgment for defendants (appellants here). The judgment recited that

the court having heard all the evidence offered . . . , and, being fully advised in the premises, finds for the defendants and against the plaintiffs that the allegations of the petition of plaintiffs are not supported by the law and the evidence.

A motion for a new trial was denied, and the case was then taken to the supreme court of the territory, which court reversed the judgment of the court below, and the case was remanded to the district court with instructions to that court to render judgment for plaintiffs in the case (appellees here) in accordance with the opinion of the supreme court, and the prayer of the amended petition.