8 24. Legality of restriction upon competition, as determined by character of commodity. It is obvious that there is an infinite variety in the subjects capable of being monopolized. Some are the products of regions small in extent and, it may be, difficult of access. Others are manufactured articles capable of being produced to an unlimited extent, according to the demand. As to such, the task of obtaining a monopoly in the manufacture and sale may be extremely difficult, and perhaps in some cases practically impossible. Yet no different rule applies here, the difference being one of degree rather than of kind. But the view has been frequently expressed that the doctrine against restrictions upon competition is confined to articles of necessity, void, notwithstanding the claim that "its true object was to lessen expenses, to advance the quality of the coal, and to deliver it in the markets it was to supply, in the best order, to the consumer." So, in Hooker v. Vandewater, 4 Denio (N. Y.), 349 (1847), of an agreement professedly "for the purpose of establishing and maintaining fair and uniform rates of freight and equalizing the business among themselves, and to avoid all unnecessary expense.' So, in United State v. Trans-Missouri Freight Assoc., 166 U. S. 290; s. c., 17 Supm. Ct. Rep. 540 (1897), of an agreement professedly "for the purpose of mutual protection by establishing and maintaining reasonable rates, rules and regulations on all freight traffic, both through and local." See also Nester v. Continental Brewing Co., 161 Pa. St. 473; s. C., 29 Atl. Rep. 102 (1894); Judd v. Harrington, 139 N. Y. 105; s. c., 34 N. E. Rep. 790 (1893). A fortiori, in case of a mere absence of expression of intention to create a restriction upon competition. People v. North River Sugar Refining Co., 54 Hun (N. Y.), 354, 374, 376; S. C., 7 N. Y. Suppl. 406 (1889). 1 See remarks of Lacombe, J., in Dueber Watch-case Manuf. Co. v. Howard Watch & Clock Co., 35 U. S. App. 16, 28; s. c., 66 Fed. Rep. 637, 644 (2d Cir., 1895), as to a combination among makers of watchcases, distinguishing Arnot v. Pittston & Elmira Coal Co., 68 N. Y. 558 (1877), as a case where the region of the production of the commodity in question (anthracite coal) was known to be limited. 2 Thus, in People v. North River Sugar Refining Co., 54 Hun (N. Y.), 354, 377; s. c., 7 N. Y. Suppl. 406 (1889), it is said that the definition of monopoly is "applicable to every monopoly, whether the supply be restricted by nature or susceptible of indefinite production. The difficulty of effecting the unlawful purpose may be greater in one case than in the other, but it is never impossible." as distinguished from what may be termed articles of luxury. If such a distinction exists, its application would seem to be somewhat difficult and to depend on varying conditions, such, for instance, as those of climate. But the distinction seems never to have been very firmly established in our jurisprudence, and the present tendency seems to be in favor of repudiating it as inapplicable to any lawful business.2 1 The limitation seems to have crept in without much observation, and to be based on the view expressed in Pettamberdas V. Thackoorseydass, 7 Moore P. C. C. 239, 262 (1850), that "ingrossing can be committed only with respect to the necessaries of life." Applying this limitation, a restriction upon competition in the production of curtain fixtures known as "wood balance shade rollers," was sustained in Central Shade Roller Co. v. Cushman, 143 Mass. 353; s. c., 9 N. E. Rep. 629 (1887). So of fish glue, in Gloucester Isinglass & Glue Co. v. Russia Cement Co., 154 Mass. 92, 94; s. C., 27 N. E. Rep. 1005 (1891). So of washing-machines. Dolph v. Troy Laundry Machinery Co., 28 Fed. Rep. 553 (Cir. Ct. N. Y., 1886). See remarks of Lacombe, J., in Dueber Watch-case Manuf. Co. v. Howard Watch & Clock Co., note 1, p. 141, above; also Queen Ins. Co. v. State, 86 Tex. 250, 271; S. C., 24 S. W. Rep. 397 (1893), holding the limitation inapplicable to a combination among insurance companies to fix rates of insurance and agents' commissions. In Meredith v. N. J. Zinc & Iron Co., 55 N. J. Eq. 211, 221; s. c., 37 Atl. Rep. 539 (1897), it was held applicable to zinc ore, characterized as "property which in its natural state is of no use to mankind, and which, after it has been manufactured and made fit for use, can hardly be classed as a necessity." The following are cases where restrictions have been held invalid as relating to articles of necessity: Morris Run Coal Co. v. Barclay Coal Co., 68 Pa. St. 173, 184 (1871; coal); Richardson v. Buhl, 77 Mich. 632, 657; s. c., 43 N. W. Rep. 1102, (1889; friction matches); State v. Nebraska Distilling Co., 29 Neb. 700, 718; s. c., 46 N. W. Rep. 155 (1890; alcohol); Drake v. Siebold, 81 Hun, 178; s. c., 30 N. Y. Suppl. 697 (1894; coal); National Harrow Co. v. Bement, 21 N. Y. App. Div. 290, 296; S. C., 47 N. Y. Suppl. 462 (1897; harrows); Samuels v. Oliver, 130 Ill. 73; s. c., 22 N. E. Rep. 499 (1889; wheat); Raymond v. Leavitt, 46 Mich. 447 (1881; wheat); Cummings v. Foss, 40 Ill. App. 523 (1891); confirmed in subsequent decision in Foss v. Cummings, 149 Ill. 353; s. c., 36 N. E. Rep. 553 (1894; corn); Trenton Potteries Co. v. Oliphant, -N. J. Eq. ——; s. C., 39 Atl. Rep. 923, 945 (1898; sanitary pottery ware). See Herriman v. Menzies, 115 Cal. 16, 21; S. C., 46 Pac. Rep. 730 (1896). 2 It was repudiated in Hoffman v. Brooks, 23 Am. Law Reg. (N. S.) § 25. Legality of restriction upon competition, as determined by character of business as public or private.Recently the view has obtained considerable recognition that there exists a test of the legality of restrictions upon competition, based on the difference between a business of a "public character" and other kinds of business.1 Just 648 (Super. Ct. Cinn., 1884), where an agreement for fixing rates for services by tobacco warehousemen, was held void, and the court say: "Although courts may be inclined to apply this rule more strictly in cases involving the necessaries of life or services of a quasi-public nature, there is no authority for excepting from its operations any legitimate trade or business." It was also repudiated in De Witt Wire-Cloth Co. v. N. J. Wire-Cloth Co., 16 Daly, 529; s. C., 14 N. Y. Suppl. 277; affirmed, it seems, in 38 N. Y. State Reporter, 1023 (1891; wire cloth); People v. Duke, 19 Misc. 292 (N. Y. Co. Gen. Sessions, 1897; cigarettes); Nester v. Continental Brewing Co., 161 Pa. St. 473; s. c., 29 Atl. Rep. 102 (1894; beer); Chippewa Lumber Co. v. Tremper, 75 Mich. 36; s. c., 42 N. W. Rep. 532 (1889; intoxicating liquors); United States v. Addyston Pipe & Steel Co., 54 U. S. App. 723, 754; s. C., 85 Fed. Rep. 271, 286 (6th Cir., 1898; where, however, it was regarded as unnecessary to decide the question, the articles under consideration, viz., water, gas and sewer pipes, being regarded as articles of necessity). But in Anheuser-Busch Brewing Assoc. v. Houck, 27 S. W. Rep. 692 (Tex. Civ. App., 1894); affirmed as Houck v. AnheuserBusch Brewing Assoc., in 88 Tex. 184; s. c., 30 S. W. Rep. 869 (1895), where a restriction as to beer was held unlawful under the statute, it is said that it would not have been invalid at common law, the policy of the laws of the State not being toward the unrestricted or general sale of beer. Compare Nester v. Continental Brewing Co., above. In Cummings v. Union Blue Stone Co., 15 N. Y. App. Div. 602; s. c., 44 N. Y. Suppl. 787 (1897), a combination to control the bluestone trade was held void, though there is no such general need or demand for bluestone, as to bring it within the category of articles of necessity, in the ordinary sense. The court say: "Nevertheless, a production the sales of which in this State in a single year amount to $1,500,000, is sufficiently useful and important to the community to bring it within the operation of that rule of law which invalidates agreements to prevent competition in trade." In Texas & Pacific Coal Co. v. Lawson, 89 Tex. 394, 400; s. C., 34 S. W. Rep. 919 (1896), reversing 10 Civ. App. 491; s. c., 31 S. W. Rep. 843 (1895), the broad language of the Texas anti-trust act was declared to ignore the distinction. 1 People ex rel. v. Chicago Gas Trust Co., 130 Ill. 268, 293; s. c., 22 N. E. Rep. 798 (1889). Here the decision might well have rested on what a business of a "public character" is, has perhaps not been very clearly defined, but it seems to involve the conception of a business the right to exercise which de the ground that the acts complained of were ultra vires (see note 2, p. 146, below); or on the ground that the restriction was an unreasonable one. In any view it was unnecessary to apply the test thus indicated:"Whatever tends to prevent competition between those engaged in a public employment, or business impressed with a public character, is opposed to public policy and therefore unlawful." In many cases where the doctrine is recognized as applying to "contracts in restraint of trade," we are to understand the statement as intended to apply to restrictions upon competition, in view of the frequent confounding of these two classes of cases; or if this be not the case, the courts applying it to contracts in restraint of trade would doubtless apply it to restrictions upon competition pure and simple. In Gibbs v. Consolidated Gas Co. of Baltimore, 130 U. S. 396, 408; s. c., 9 Supm. Ct. Rep. 553 (1889), the rule is thus stated: "In the instance of business of such character that it presumably cannot be restrained to any extent whatever, without prejudice to the public interest, courts decline to enforce or sustain contracts imposing such restraint, however partial, because in contravention of public policy." To similar effect, West Virginia Transp. Co. v. Ohio River Pipe Line Co., 22 W. Va. 600, 625 (1883). And the same doctrine was recognized or applied in Queen Ins. Co. v. State, 86 Tex. 250, 269, 274; s. C., 24 S. W. Rep. 397 (1893); Texas & Pacific Ry. Co. v. Southern Pacific Ry. Co., 41 La. Ann. 970; s. C., 6 So. Rep. 888 (1889); Cowan v. Fairbrother, 118 N. C. 406; s. c., 24 S. E. Rep. 212 (1896); South Chicago City Ry. Co. v. Calumet Electric Street Ry. Co., 171 Ill. 391, 397; s. C., 49 N. E. Rep. 576 (1898). It seems to be recognized in United States v. Trans-Missouri Freight Assoc., 166 U. S. 290, 335; s. c., 17 Supm. Ct. Rep. 540, 556 (1897), though there the restriction under consideration was held illegal by virtue of statute. Here, where the question was as to the legality of an agreement among railroad companies for the establishment of rates, the court say: "The general reasons for holding agreements of this nature to be invalid, even at common law, on the part of railroad companies, are quite strong, if not conclusive." Compare Dueber Watch-case Manuf. Co. v. Howard Watch & Clock Co., 35 U. S. App. 16, 28; S. C., 66 Fed. Rep. 637, 644 (2d Cir., 1895). In Cleveland, Columbus, Cincinnati, etc. Ry. Co. v. Closser, 126 Ind. 348, 360; s. c., 26 N. E. Rep. 159 (1890), the court, while inclined to take the same view, content themselves with the presumption that the restriction in that case (upon competition by common carriers) was illegal. See dissenting opinion of Shiras, J., below, in United States v. Trans-Missouri Freight Assoc., 19 U. S. App. 36, 75; pends on a legislative grant. In this view a restriction upon competition by one engaged in such business is necessarily illegal, not upon the general grounds of the illegality of such restrictions, but upon the distinct ground that the business is one of a public character. But in our view this distinction has no existence. A business of a public character, as we have defined it, is universally (though not in the nature of things necessarily) carried on under the authority of a corporate character, that is, by a corporation. The validity of an act of a corporation is, generally speaking, determined by whether it is within the authority conferred by the charter. If, for instance, such act is one imposing a restriction upon competition, and is legal according to the tests applicable to such restrictions generally, the further test, in our view, is whether it is within the authority conferred by the charter, without reference to the character of the business as public. The existing principles s. C., 58 Fed. Rep. 58,84 (8th Cir., 1893). See also National Benefit Co. v. Union Hospital Co., 45 Minn. 272; s. C., 47 N. W. Rep. 806 (1891); Meredith v. N. J. Zinc & Iron Co., 55 N. J. Eq. 211, 221; s. C., 37 Atl. Rep. 539 (1897). 1 Thus, supplying illuminating gas by means of pipes laid in the streets of a city. People ex rel. v. Chicago Gas Trust Co., note 2, p. 143, above (p. 293); Gibbs v. Consolidated Gas Co. of Baltimore, note 2, p. 144, above (p. 411). In the case last cited it is said: "These gas companies entered the streets of Baltimore, under their charters, in the exercise of the equivalent of the power of eminent domain, and are to be held as having assumed an obligation to fulfill the public purposes to subserve which they were incorporated." So, transportation of oil in tubes. West Virginia Transp. Co. v. Ohio River Pipe Line Co., 22 W. Va. 600 (1883). So, transportation by railroad. Texas & Pacific Ry. Co. v. Southern Pacific Ry. Co., 41 La. Ann. 970; s. C., 6 So. Rep. 888 (1889); United States v. Trans-Missouri Freight Assoc., note 2, below. 2 As was said in the dissenting opinion of White, J., in United States v. Trans-Missouri Freight Assoc., 166 U. S. 290, 373; s. C., 17 Supm. Ct. Rep. 540 (1897): "The fallacy consists in overlooking the distinction between acts of a public corporation which are ultra vires and those which are not. If the contract of such a corporation which is assailed be ultra vires, of course the question of reasonableness becomes irrelevant, since the charter is the reason of the being of the corporation." And it is here pointed out that in Gibbs v. Consolidated Gas Co. of Baltimore, above, |