Page:The New International Encyclopædia 1st ed. v. 19.djvu/584

* TRUSTS. 506 TRUSTS. for effecting its purposes are unlawful or against public policy. The grounds upon which combinations have been lield to be unlawful at common law may be somewhat roughly classified as follows: (1) That the contract (when the combination has been effected by contract) is illegal and void at common law because in restraint of trade. (2) That the combination is an unlawful conspiracy, either civil or criminal. (See Cokspir.cy. ) Technically the second class includes the iirst, since there can be no combination without two or more parties to it who are technically guilty of conspiracy where the purpose is to enter into an illegal contract. Since, however, eacli is recognized as a distinct ground for declaring combinations illegal, the classification may be adopted as both convenient and practical. For a full discussion of the legal doctrines relating to restraint of trade and conspiracy, reference should be made to those topics. (See also MoNOPOLV. Engrossing, Forestaxling, Eegrat- ING.) With reference to conspiracy, it may be said that combinations are conspiracies, and therefore unlawful, when the purpose of the agreement or combination is either to do some- thing unlawful or to do something lawful iif an unlawful manner. In general, combinations are held to be illegal because of their pur]ioses and methods when they restrain fair competition or create oppressive monopolies. Owing to the diflScultj' of applying this test to any particular case, it may be extremely difficult to draw a clear line of distinction between those combina- tions which are lawful and those which are unlawful. At conmion law the remedies of individuals against acts of illegal combination are limited to the recovery of any damage suffered because of the unlawful conspiracy involved in the com- bination or to the securing of an injunction re- straining those joined in the combination from doing some threatened injury to the plaintiff. In either case it is necessary for the plaintiff to sliow actual damage suffered by him or that the defendant threatened to do some act caus- ing such damage. When the combination is in the corporate form and is acting outside its corporate powers, or its constituent corporations have ceased to act as separate corporations so as to amount to an abandonment of their char- ters, the Stale may proceed against the cor- porate combination or any of the constituent corporations to compel a forfeiture of its char- ter by quo icarraiito. There is, however, no other method at conunon law' by which either the State or a private individual could proceed against a combination on the ground that it is illegal and is working a jniblic injury. As a result of agitation ujion the subject of Trusts, almost all of the X'nited States have adopted statutes or clauses in their State constitutions restraining or prohibiting all contracts, agreements, under- takings, or combinations in restraint of trade or tending to create monopolies, whether such restraint would have been unlawful at common law or not. In general the courts have held that these statutes are constitutional imder both State and Federal constitutions, and not in violation of the constitutional provisions jigainst abridging the freedom of contract, depriving citizens of liberty or property without due pro- cess of law, or denying them equal protection of the laws. In the interpretation of these statutes, however, the courts have justly regarded them as an innovation upon the common law to be interpreted with strictness and caution. More- over, the difficulty of giving such legislation its proper effect without making it subversive of established rights of property has to some extent prevented all these restraining acts from having the elTect intended. It may be said that the prin- cipal test to be applied in determining wlietlier statutes of this class are violated is whether the act or agreement complained of was done with intent to control prices or whether such would be a natural result of the act or agreement. They usually provide that contracts made in con- nection with such an act or agreement shall be void, and attach criminal or quasi-criminal pen- alties for their violation. In some States parties injured by such violations of anti-monopoly statutes are given rights of action to recover danuiges for the injury suffered. A far more effective agency for restricting the growth of monopoly is the exercise of the power of the several States to control all corporate en- terprises within their respective territories. A State may grant to a corporation its charter and power to do business upon such terms as the Legislature may choose, and it is also witliin the constitutional power of a State to impose any terms, however exacting, as a condition to . which corporations created under the laws of other States must conform if doing business witliin its limits, provided such conditions do not interfere M'ith interstate commerce, the |>owcr of regulation and control of which is by the I'nited States Constittition lodged with the Fed- eral Government. A State may thus limit the amount of capital of a corporation organized under its laws ; and it may by its charter or general laws existing at the time of its creation limit or regulate its busi- ness. In the same manner a State may impose similar or even additional conditions upon all foreign corporations wishing to do business that is not interstate commerce within the State. In this connection, however, it should be remem- bered that the charter or other legislative au- thority to a corporation to do business once granted is deemed to be a contract, and that the State is forbidden by the United States Con- stitution to impair the obligation of contract. See Corporation ; Charter ; Dartmouth Col- lege Case. It will be seen that the powers of restriction just referred to are limited to corporations and have no application to natural persons or part- nerships. The important above-mentioned limi- tations upon the power of the States to control corporations, coupled with the fact that it has been the policy of many of the States to grant to corporations organized under their laws prac- tically unlimited power, have in effect seriously interfered with any effective statutory restriction of monopolies by the several States. The Federal Government may to some extent restrain monopoly under cover of its constitu- tional power to regulate interstate and inter- national commerce. Its power in this respect has been deemed to be practically absolute. It can- not, however, be said at this time (1903) that the power of Congress to control or restrain the busi-