United States v. Terminal Railroad Ass’n, 224 U.S. 383 (1912)

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United States v. Terminal Railroad Association of St. Louis

No. 386

Argued October 20, 23, 1911
Decided April 22, 1912
224 U.S. 383

APPEAL FROM THE CIRCUIT COURT OF THE UNITED STATES

FOR THE EASTERN DISTRICT OF MISSOURI

Syllabus

Whether the unification of terminals in a railroad center is a permissible facility in aid of interstate commerce, or an illegal combination in restraint thereof, depends upon the intent to be inferred from the extent of the control secured over the instrumentalities which such commerce is compelled to use, the method by which such control has been obtained, and the manner in which it is exercised.

The unification of substantially every terminal facility by which the traffic of St. Louis is served is a combination in restraint of interstate trade within the meaning and purposes of the Anti-Trust Act of July 2, 1890, as the same has been construed by this Court in Standard Oil Co. v. United States, 221 U.S. 1, and United States v. American Tobacco Co., 221 U.S. 106.

The history of the unification of the railroad terminal systems in St. Louis in the Terminal Railroad Association shows an intent to destroy the independent existence of the terminal systems previously existing, to close the door to competition, and to prevent the joint use or control of the terminals by any nonproprietary company.

A provision in an agreement for joint use of terminals by nonproprietary companies on equal terms does not render an illegal combination legal where there is no provision by which the nonproprietary companies can enforce their right to such use.

Although the proprietary companies of a combination unifying terminals may not use their full power to impede free competition by outside companies, the control may so result in methods inconsistent with freedom of competition as to render it an illegal restraint under the Sherman Act.

This Court bases its conclusion that the unification of the terminals in St. Louis is an illegal restraint on interstate traffic, and not an aid thereto, largely upon the extraordinary situation at St. Louis and upon the physical and topographical conditions of the locality.

A combination of terminal facilities, which is an illegal restraint of trade by reason of the exclusion of nonproprietary companies, may be modified by the court by permitting such nonproprietors to avail of the facilities on equal terms.

In this case, held that the practices of the Terminal Association in not only absorbing other railroad corporation but in doing a transportation business other than supplying terminal facilities operated to the disadvantage of interstate commerce.

One of the fundamental purposes of the Anti-Trust Act is to protect, and not to destroy, the rights of property, and, in applying the remedy, injury to the public by the prevention of the restraint is the foundation of the prohibitions of the statute. Standard Oil Co. v. United States, 221 U.S. 1, 78.

Where the illegality of the combination grows out of administrative conditions which may be eliminated, an inhibition of the obnoxious practices may vindicate the statute, and where public advantages of a unified system can be preserved, that method may be adopted by the Court.

In this case, the objects of the Anti-Trust Act are best attained by a decree directing the defendants to reorganize the contracts unifying the terminal facilities of St. Louis under their control so as to permit the proper and equal use thereof by nonproprietary companies, and abolishing the obnoxious practices in regard to transportation of merchandise. Unless defendants, whose combination has been declared illegal by reason of administrative abuse, mollify it to the satisfaction of the Court so as to eliminate such abuse in the future, the Court will direct a complete disjoinder of the element of the combination and enjoin the defendants from exercising any joint control thereover.

The facts, which involve the validity under the Sherman Anti-Trust Act of the Terminal Railroad Association of St. Louis, are stated in the opinion.