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Northern Securities Co. v. United States

193 U.S. 197


No. 277. Argued December 14, 15, 1903 -- Decided March 14, 1904

Stockholders of the Great Northern and Northern Pacific Railway companies -- corporations having competing and substantially parallel lines from the Great Lakes and the Mississippi River to the Pacific Ocean at Puget Sound -- combined and conceived the scheme of organizing a corporation, under the laws of New Jersey which should hold the shares of the stock of the constituent companies, such shareholders, in lieu of their shares in those companies, to receive, upon an agreed basis of value, shares in the holding corporation. Pursuant to such combination, the Northern Securities Company was organized as the holding corporation through which that scheme should be executed, and, under that scheme, such holding corporation became the holder -- more properly speaking, the custodian -- of more than nine-tenths of the stock of the Northern Pacific, and more than three-fourths of the stock of the Great Northern, the stockholders of the companies, who delivered their stock, receiving, upon the agreed basis, shares of stock in the holding corporation.

Held, that, necessarily, the constituent companies ceased, under this arrangement, to be in active competition for trade and commerce along their respective lines, and became, practically, one powerful consolidated corporation, by the name of a holding corporation, the principal, if not the sole, object for the formation of which was to carry out the purpose of the original combination under which competition between the constituent companies would cease.

Held, that the arrangement was an illegal combination in restraint of interstate commerce, and fell within the prohibitions and provisions of the act of July 2, 1890, and it was within the power of the Circuit Court, in an action brought by the Attorney General of the United States after the completion of the transfer of such stock to it, to enjoin the holding company from voting such stock and from exercising any control whatever over the acts and doings of the railroad companies, and also to enjoin the railroad companies from paying any dividends to the holding corporation on any of their stock held by it.

Held, that, although cases should not be brought within a statute containing criminal provisions that are not clearly embraced by it, the court should not, by narrow, technical, or forced construction of words, exclude cases from it that are obviously within its provisions, and, while the act of July 2, 1890, contains criminal provisions, the Federal court has power under 4 of the act in a suit in equity to prevent and restrain violations of the act, and may mould its decree so as to accomplish practical results such as law and justice demand.

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