United States v. Lehigh Valley R. Co., 254 U.S. 255 (1920)

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United States v. Lehigh Valley Railroad Company

No. 1

Argued October 12, 13, 1916
Restored to docket for reargument May 21, 1917
Reargued November 7, 1917
Restored to docket for reargument June 10, 1918
Submitted October 7, 1919
Restored to docket for oral argument May 17, 1920
Reargued October 5, 1920
Decided December , 1920
254 U.S. 255

APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES

FOR THE SOUTHERN DISTRICT OF NEW YORK

Syllabus

Prior to the enactment of the Anti-Trust Law, the Lehigh Valley Railroad Company, in combination with the Lehigh Valley Coal Company, a subsidiary created and operated as a mere agency or instrumentality of the Railroad Company, deliberately entered upon the policy of purchasing and leasing the anthracite coal lands in Pennsylvania tributary to its extensive railroad system, and of buying up the stocks of corporations owning such lands, for the purpose of controlling the mining, transportation, and sale of the coal to be obtained therefrom and of preventing and suppressing competition, especially in the transportation and sale of such coal in interstate commerce. This policy was continued after the enactment of the Anti-Trust Act, with the result that a practical monopoly was attained of the transportation and sale of the anthracite derived from the lands tributary to the railroad, the amount so transported coming to exceed one-fifth of the entire annual anthracite production of the country. Considering this result, the methods employed in achieving it, and the great volume of production and trade involved, as compared with the restricted area of the whole anthracite territory, held that the combination effected a restraint of trade or commerce among the states and constituted an attempt to monopolize and an actual monopolization of a part of such trade or commerce in anthracite coal within the meaning of the first and second sections of the Anti-Trust Act. P. 269.

For the purpose of divesting itself in appearance of interest in the coal transported, the Railroad Company, with the Coal Company, brought about the creation and organization of a Sales Company, whose stock was subscribed for by stockholders of the Railroad Company only, with the aid of a dividend declared by that company for the purpose, and whose management was largely made up of former agents and officials of the Railroad and Coal Companies; the Sales Company thereupon, in pursuance of the plan, made, in form, an agreement with the Coal Company, for a term of ten years but subject to termination by either party on six months’ notice, by which the Coal Company agreed to sell and the Sales Company to buy all coal mined or produced by the Coal Company at prices mostly fixed at a specified percentage of New York prices, and by which the Coal Company agreed to lease all of its facilities, structures, and trestles to the Sales Company, and the Sales Company was inhibited from buying any coal except from the Coal Company, and from selling any not so purchased. Held that the Sales Company was neither an independent buyer nor a free agent, and that the contract, being a mere device to evade the commodities clause of the Interstate Commerce Act, and obnoxious also to the Anti-Trust Act, was void. United States v. Delaware, Lackawanna & Western R. Co., 238 U.S. 516. P.264.

225 F. 399 reversed.

The case is stated in the opinion. A motion to modify the decree was made and denied at this term. Post, 617.