J. C. ANDERSON et al., Appts.,

v.

UNITED STATES.

(See S. C. Reporter’s ed. 604-620.)

Agreement among yard traders as to buy~ ing cattle — rule of a live-stodk exchange— when not void.

common business, as yard traders, of buying at a city stock-yard cattle which came from different states, that they will form an asso¬ ciation for the better conduct of their busi¬ ness, and that they will not transact business with other yard traders who are not members, or buy cattie from those who also sell to yard traders who are not members of the associa¬ tion, is not a violation of the act of July 2, 1800, to protect trade and commerce against unlawful restraints and monopolies.

members shall not recognize any yard trader who is not also a member of the exchange, is not in restraint of, or an attempt to monop¬ olize, trade, where the exchange does not it¬ self do any business, and there is nothing to prevent all yard traders from being members of the exchange, and no one is hindered from having access to the yards or having all their facilities, except that of selling to members of the exchange.

such exchange, If reasonable and fair, cannot, except remotely, affect interstate trade and commerce, and are not void as violations of the act of July 2, 1890.

[No. 181.]

Argued February 25, 28, 1898. Decided Oo tober 2>t, 1898.

ON A CERTIFICATE from and writ of certiorari to the United States Cir¬ cuit Court of Appeals for the Eighth Cir¬ cuit to review an order of the Circuit Court of the United States for the Western Divi¬ sion of the Western District of Missouri in an action brought by the United States against J. C. Anderson and other members of the Traders’ Live-Stock Exchange, that the defendants be enjoined as associates of the Traders’ Live-Stock Exchange from hindering others in selling at the stock yards at Kansas City, Missouri, live stock shipped there from other states and terri¬ tories, and from interfering with freedom of access of others and equal facilities to and

171 U. S.

Anderson v. United States.

604-608

in said stock yards, and from enforcing cer¬ tain rules, etc. The order was taken by appeal to said Circuit Court of Appeals and the entire record removed therefrom to this crurt for final disposal. Order reversed, aud case remanded to said Circuit Court of the United States for the Western Division of the Western District of Missouri, with directions to dismiss the action, with costs.

Statement by Mr. Justice Feckham:

*This suit is somewhat similar to the Hop¬ kins suit, just decided, and was brought by the United States against the defendants named, who were citizens and residents of the western division of the western district of Missouri, and members of a voluntary un¬ incorporated association known and desig¬ nated as the Traders’ Live Stock Exchange, the suit being brought for the purpose of ob¬ taining a decree dissolving the exchange and enjoining the members thereof from entering into or continuing any sort of combination to deprive any people engaged in shipping,

selling, buying, and handling *live stock (re¬ ceived from other states and from the ter¬ ritories, intended to be sold at the Kansas City market), of free access to the markets at Kansas City, and to the same facilities afforded by the Kansas City stock yards, to defendants and their associate members of the Traders’ Live Stock Exchange.

The bill was filed under the direction of the Attorney General of the United States by the United States district attorney for the western district of Missouri. Tt alleged in substance that the exchange was governed by a board of eight directors, who carried on the business thereof with the consent and approbation of the defendants, they person¬ ally being members of the exchange. It then made the same allegations in relation to the stock yards being partly in Kansas City, Kansas, and partly in Kansas City, Missouri, that are contained in the bill in the Hop¬ kins Case, reported ante, 290, and also as to the sales of herds or droves of cattle which were at the time of the sale partly in one state and partly in another. It is further alleged that the Kansas City stock yards is a public market, and, next to the market at Chicago in the state of Illinois, is the largest live-stock market in the world, and vast num¬ bers of cattle, hogs, and other live stock are received annually at the market, shipped from various states and from the territories, and are sold at the market to buyers who re¬ side in other states and territories, and who reship the stock; that the stock is shipped to the market under contracts by which the shipper is permitted to unload the stock at the Kansas City stock yards, rest, water, and feed the same, and is accorded the privi¬ lege of selling the stock on the Kansas City market if the prices prevailing at the time justify the sale, and many head of such stock are so sold; that prior to the month of March, 1897, as alleged, the defendants here¬ in were engaged as speculators at the Kansas City stock yards, and were buying upon the market and reselling upon the same market and reshipping to other markets in other 171 TJ. S.

states the cattle so received at the Kansas City stock yards; that all the live stock shipped to and received at these stock yards is consigned to commission merchants, who take charge of the stock when it is received, and who sell the same *to packing houses lo-

cated at Kansas City, Missouri, and Kansas City in the state of Kansas, and they sell large numbers of cattle to the defendants herein.

The bill then alleges that the defendants “have unlawfully entered into a contract, combination, and conspiracy in restraint of trade and commerce among the several states and with foreign nations, in this, to wit, that they have unlawfully agreed, contracted, combined, and conspired to prevent all other persons than members of the Traders’ Live Stock Exchange, as aforesaid, from buying and selling cattle upon the Kansas City mar¬ ket at the Kansas City stock yards as afore¬ said ; that the commission firm, person, part¬ nership, or corporation to whom said cattle are consigned at Kansas City, as aforesaid, is not permitted to and cannot sell or dis¬ pose of said cattle at the Kansas City mar¬ ket as aforesaid to any buyer or speculator at the Kansas City stock yards unless said buyer or speculator is a member of the Traders’ Live Stock Exchange, and these de¬ fendants, and each of them, unlawfully and oppressively refuse to purchase cattle, or in any manner negotiate or deal with or buy from any commission merchant who shall sell or purchase cattle from any speculator at the said Kansas City stock yards who is not a member of the said Traders’ Live Stock Exchange; that by and through the unlaw¬ ful agreement, combination, and conspiracy of these defendants the business and traffic in cattle at the said Kansas City stock yards is interfered with, hindered, and restrained, thus entailing extra expense and loss to the owner, and placing an obstruction and em¬ bargo on the marketing of cattle shipped from the states and territories aforesaid to the Kansas City stock yards.”

It is further alleged that, acting in pur¬ suance of the unlawful combination above described, the board of directors of the ex¬ change have imposed fines upon certain members of the exchange “who had traded with persons, speculators upon the mar¬ kets, who were not members of the said live-stock exchange, and within three months last past have imposed fines upon members of said live-stock exchange who have traded with commission firms at said Kansas City stock yards * which said

commission firms had bought from, and sold cattle to, speculators upon said market who were not members of the said live-stock ex¬ change.”

It was further stated in the bill that in carrying out the purposes and aims of this exchange and by the conduct of its members engaged in this alleged combination, con¬ spiracy, and confederation, they were acting in violation of the laws of the United States, and particularly in violation of section 1 of the act of Congress, approved July 2, 1890, entitled “An Act to Protect Trade and Com¬ merce against Unlawful Restraints and Mo-

301

608-611

Supreme Court op the United States.

Oct. Term,

nopolies,” and in the prosecution of this un¬ lawful combination they had agreed to hin¬ der and delay the business of buying and selling cattle at the market named, and had confederated together in restraint of trade and commerce between the states, and that the object of the defendants in organizing the exchange was to prevent the sale by any commission merchant at the Kansas City stock yards of any cattle to any person who might be a buyer and spec¬ ulator upon the market who is not a member of the exchange.

Accompanying this bill were several affi¬ davits of indivicluals not members of the ex¬ change, but who were traders or speculators at the stock yards, and those persons said that they were acquainted with the associa¬ tion in question and with the officers and members, and that they did everything in their power to prevent other persons who were not members from trading at the stock yards, and a number of instances were given in which the affiants who were not members of the exchange were endeavoring to do busi¬ ness with commission merchants and others at the exchange in question, when the affiants were notified that they could not continue in business unless they became members of the association, and where partnerships were engaged in business where one partner was a member of the association, the partner who was a member was notified that he could not continue in the partnership business with the other unless such other also became a member; that they had attempted to buy cattle from a great many commission firms and from their salesmen at these stock yards,

*but as soon as they went into the yards where the cattle were that were consigned 10 com¬ mission firms, and attempted to purchase them, some of the defendants would appear, call the salesman aside, and, after having a conversation with such salesman, the latter would invariably return to affiant and say that he could not price cattle to the affiant or sell the same to him, as he had been warned by members of the exchange not to do so ; that the Traders’ Live Stock Exchange would not permit other traders and specu¬ lators upon the market, and that the ex¬ change does not permit commission firms at the stock yards to sell cattle consigned to them to any trader or speculator upon the market who is not a member of the exchange, and that commission firms had been notified by the officers of the stock exchange not to sell to speculators on the market who were not members of the Live Stock Exchange, and where commission firms sold cattle to traders and speculators upon the market who were not members of the exchange, the asso¬ ciation and members thereof would boycott the commission firm making such sales, and refuse to purchase any cattle from them, and refuse to go into the lots and look at cattle which had been consigned to them.

Upon the bill and affidavits application was made to the circuit court for the west¬ ern division of the western district of Mis¬ souri for an injunction as prayed for in the bill, in opposition to which application vari¬ ous affidavits were read on the part of the 302

defendants, and copies of the articles of as¬ sociation and by-laws of the exchange were attached to the affidavit of the president of the exchange and read on the motion.

Among other affidavits was that of the gen¬ eral superintendent of the stock-yards com¬ pany, who said that he had known the organ¬ ization, the Traders’ Live Stock Exchange, since its formation, and that it had been a benefit to the live-stock market at Kansas City by furnishing constant buyers for cattle shipped to the market, no matter how large the receipts for any one day or series of days might be, and also by raising the standard of business integrity among its members, be¬ cause it required every member to comply with his business promises *and verbal agree- [6 10) ments; that no embargo was placed upon anyone purchasing or desiring to purchase cattle at the yards, but a free and open mar¬ ket was offered to all buyers and sellers; that the members of the organization were en¬ gaged in the business of buying and selling cattle on the market, and were competitors among and against each other; that their organization did not restrain or interfere with interstate or local commerce, and the members did not monopolize or attempt to monopolize the business of buying and selling cattle at Kansas City, nor did the organization in any manner tend to limit or decrease the number of cattle marketed at Kansas City, but that it had the contrary effect ; that about eighty- five per cent of the total receipts for the years 1895, 1896, and 1897, at the Kansas City market of cattle had been billed to the Kansas City market alone for purposes of sale there.

Other affidavits were presented to the same effect. Also the affidavit of the president of the exchange. The president denied all alle¬ gations in relation to conspiracies to prevent other persons than members of the exchange from buying and selling cattle upon the Kan¬ sas City market, and on the contrary alleged that in buying cattle the defendants were in competition with each other, with the repre¬ sentative buyers of all the packing houses, with the representatives of the various com¬ mission merchants, who buy constantly on orders from a distance, and with others who buy on orders on their own account, none of whom are members of the exchange, and that with these various classes of buyers the de¬ fendants constantly deal, and that in sell¬ ing cattle they compete with each other and with shippers and commission merchants of¬ fering stock for sale on the market , that the business in which these defendants are en¬ gaged is that of buying and selling cattle known as “stockers and feeders;” that the business is purely local to that market; that the defendants do not deal in quarantine cattle subject to government inspection or cattle shipped through to other markets, with or without the privilege of the Kansas City market, nor in fat cattle sold on the local market shipped to other states or to foreign countries; that except in rare instances both purchases and sales made *by the defendants [611} are made from and to persons not members of the exchange, and that in the judgment of the president about ninety-nine per cent of

171 TJ. S.

Anderson y. United States.

611

the transactions by the defendants are with persons not members of the exchange.

A copy of the articles of association is an¬ nexed to the affidavit, which contains the fol¬ lowing preamble :

“We, the undersigned, for the purpose of organizing and maintaining a business ex¬ change, not for pecuniary profit or gain, but to promote and protect all interest connected with the buying and selling of live stock at the Kansas City Stock Yards, and to culti¬ vate courteous and manly conduct towards each other, and give dignity and responsibil¬ ity to yard traders, have associated ourselves together under the name of Traders’ Live Stock Exchange, and hereby agree, each with the other, that we will faithfully observe and be bound by the following rules and by-laws and such new rules, additions, or amend¬ ments as may from time to time be adopted in conformity with the provisions thereof from the date of organization.”

Rules 10, 11, 12, and 13 are as follows:

“Rule 10. This exchange will not recognize any yard trader unless he is a member of the Traders’ Live Stock Exchange.

“Rule 11. When there are two or more par¬ ties trading together as partners, they shall each and all of them be members of this ex¬ change.

“Rule 12. No member of this exchange shall employ any person to buy or sell cattle unless such person hold a certificate of membership in this exchange.

“Rule 13. No member of this exchange shall be allowed to pay any order buyer or salesman any sum of money as a fee for buy¬ ing cattle from or selling cattle to such party.”

These are the rules which are specially ob¬ noxious to the complainants, and are alleged to be in their effect in violation of the Fed¬ eral statute above mentioned.

Messrs. R. E. Ball, I. P. Ryland, and John L. Peak, for appellants:

Conceding all the facts charged in the bill, even those in which the bill contradicts it¬ self, the appellants are not engaged in, and their organization does not relate to, inter¬ state commerce.

Coe v. Errol, 116 U. S. 517, 29 L. ed. 715; Kidd v. Pearson, 128 U. S. 1, 32 L. ed. 346, 2 Inters. Com. Rep. 232 ; Brown v. Houston, 114 U. S. 622, 29 L. ed. 257 ; Hynes v. Briggs, 41 Fed. Rep. 468; United States v. E. C. Knight Co. 60 Fed. Rep. 306; Re Greene, 52 Fed. Rep. 104; Brown v. Maryland, 12 Wheat. 419, 6 L. ed. 678; Pittsburg & S. Coal Co. v. Bates, 156 U. S. 577, 39 L. ed. 539, 5 Inters. Com. Rep. 30.

No act or agreement of appellants, charged in the bill, and no act or agreement not so charged, but from the doing or enforcing of which they are enjoined, constitutes any vio¬ lation of the act of Congress, or is otherwise unlawful.

Prescott d A. C. R. Co. v. Atchison, T. d S. F. R. Co. 73 Fed. Rep. 438; Mogul S. S. Co. v. McGregor, L. R. 23 Q. B. Div. 544; Toledo, A. A. d N. M. R. Co. v. Pennsylvania Co. 54 Fed. Rep. 730, 19 L. R. A. 3S7; Amer¬ ican Live Stock Commission Co. v. Chicago 171 U. S.

Live Stock Exchange, 143 Ill. 210, 18 L. R. A. 190; Ducber Watch Case Mfg. Co. w E. Howard Watch d Clock Co. 35 U. S. App. 16, 66 Fed. Rep. 637, 14 C. C. A. 14; United States v. Adclyston Pipe d Steel Co. 78 Fed. Rep. 712.

The decree is violative of the rights secured by the Fifth Amendment to the Constitution of the United States, forbidding that any person be deprived of liberty or property without due process of law; and, if the act of July 2d, 1890, is correctly construed by the circuit court, it is itself violative of said amendment.

Munn v. Illinois, 94 U. S. 123, 24 L. ed. 83; Kuhn v. Detroit, 70 Mich. 534; State v. Goodwill, 33 W. Va. 179, 6 L. R. A. 621; Godcharles v. Wigeman, 113 Pa. 431; State v. Loomis, 115 Mo. 307, 21 L. R. A. 789; Ritchie v. People, 155 Ill. 108, 29 L. R. A. 79; Re Jacobs, 98 N. Y. 98, 50 Am. Rep. 636; People v. Gillson, 109 N. Y. 389; Cald¬ well v. Texas, 137 U. S. 697, 34 L. ed. 818; Allgeyer v. Louisiana, 165 U. S. 578, 41 L. ed. 832.

Messrs. John R. Walker and John K. Richards, Solicitor General, for appellee:

The transportation of persons from one state into another is interstate commerce.

Norfolk d IF. R. Co. v. Pennsylvania, 136 U. S. 114, 34 L. ed. 394, 3 Inters. Com. Rep. 178; Philadelphia <6 R. R. Co. v. Pennsylva¬ nia, 15 Wall. 232, 21 L. ed. 146; The Daniel Ball, 10 Wall. 557, 19 L. ed. 999; State, Wolf, v. Pullman Palace Car Co. 16 Fed. Rep. 193.

Telegraph messages passing over lines from one state to another constitute a por¬ tion of interstate commerce.

Western U. Teleg. Co. v. James, 162 U. S. 650, 40 L. ed. 1105; Postal Teleg. Cable Co. v. Charleston, 153 U. S. 692, 38 L. ed. 871, 4 Inters. Com. Rep. 637 ; Leloup v. Port of Mobile, 127 U. S. 640, 32 L. ed. 311, 2 In¬ ters. Com. Rep. 134; Western U. Teleg. Co. v. Ilatterman, 127 U. S. 411, 32 L. ed. 229, 2 Inters. Com. Rep. 59; Pensacola Teleg. Co. v. Western U. Teleg. Co. 96 U. S. 1, 24 L. ed. 708; Western U. Teleg. Co. v. Pendleton, 122 U. S. 347, 30 L. ed. 1187, 1 Inters. Com. Rep. 306; Western U. Teleg. Co. v. Texas, 105 U. S. 460, 26 L. ed. 1067 ; Western U. Teleg. Co. v. Norman, 77 Fed. Rep. 13; St. Louis v. Western U. Teleg. Co. 39 Fed. Rep.

The right to import from one state into another carries with it, by necessary impli¬ cation, the right of sale at the place where the importation terminates.

Lyng v. Michigan, 135 U. S. 161, 34 L. ed. 150, 3 Inters. Com. Rep. 143; Leisy v. Hardin, 135 U. S. 100, 34 L. ed. 128, 3 In¬ ters. Com. Rep. 36 ; Brennan v. Titusville, 153 U. S. 289, 38 L. ed. 719, 4 Inters. Com. Rep. 58; Bowman v. Chicago d N. W. R. Co. 125 U. S. 465, 31 L. ed. 700, 1 Inters. Com. Rep. 823 ; Cook v. Pennsylvania, 97 U. S. 566, 24 L. ed. 1015; Welton v. Missouri, 91 U. S. 275, 23 L. ed. 347.

Not until merchandise in the original pack¬ ages is once sold by the importer does it be¬ come subject to taxation by the state.

303

612

Supreme Court of tiie United States.

Oct. Term.

Waring v. Mobile, 8 Wall. 110, 19 L. ed.

The right to bring an article into a state carries with it the right to sell it.

Spellman v. New Orleans, 45 Fed. Rep. 3, 3 Inters. Com. Rep. 575; Re Harmon, 43 Fed. Rep. 372.

The buying, selling, and transportation in¬ cident thereto, constitute commerce.

United States v. E. G. Knight Go. 156 U. S. 1, 39 L. ed. 325; Lehigh Valley R. Co. v. Pennsylvania, 145 U. S. 192, 36 L. ed. 672,

4 Inters. Com. Rep. 87 ; Re Rahrer, 140 U. S. 545, 35 L. ed. 572; McCall v. California, 136 U. S. 104, 34 L. ed. 392; Bowman v. Chicago d N. W. R. Co. 125 U. S. 465, 31 L. ed. 700, 1 Inters. Com. Rep. 823; Welton v. Missouri, 91 U. S. 275, 23 L. ed. 347; W. A. Vander- coolc Co. v. Vance, 80 Fed. Rep. 786.

The statutes of the state intended to regu¬ late or tax, or to impose any other restric¬ tions upon, the transmission of persons or property, or telegraphic messages from one state to another, are void.

Wabash, St. L. & P. R. Co. v. Illinois, 118 U. S. 557, 30 L. ed. 244, 1 Inters. Com. Rep. 31 ; Pickard v. Pullman Southern Car Co. 117 U. S. 34, 29 L. ed. 785.

No state can impose a tax on persons en¬ gaged in the sale of goods in such state, which are introduced into the state from other st-3it6s

Walling v. Michigan, 116 U. S. 446, 29 L. ed. 691 ; Cook v. Pennsylvania, 97 U. S. 566, 24 L. ed. 1015; Hall v. DeCuir, 95 U. S. 485, 24 L. ed. 547 ; Hannibal & St. J. R. Co. v. Husen, 95 U. S. 465, 24 L. ed. 527 ; Welton x. Missouri, 91 U. S. 275, 23 L. ed. 347; Ward v. Maryland, 12 Wall. 418, 20 L. ed. 449; Re Lebolt, 77 Fed. Rep. 587.

No state can. under any pretense what¬ ever, interfere with the right of any person who engages in interstate commerce, whether in the sale of goods introduced into the state from other states, or in soliciting orders for goods to be so introduced.

Ex parte Loeb, 72 Fed. Rep. 657 ; Southern

R. Co. v. Asheville, 69 Fed. Rep. 359; Ex parte Hough, 69 Fed. Rep. 330, 5 Inters. Com. Rep. 327 ; Re Minor, 69 Fed. Rep. 233,

5 Inters. Com. Rep. 329; Aultman, M. d Co. x. Holder, 68 Fed. Rep. 467 ; Ex parte Scott, 66 Fed. Rep. 45; Rc Schechter, 63 Fed. Rep. 695, 4 Inters. Com. Rep. 849; Re Mitchell, 62 Fed. Rep. 576, 4 Inters. Com. Rep. 767; Re Worthen, 58 Fed. Rep. 467, 4 Inters. Com. Rep. 4S4; Re Rozelle, 57 Fed. Rep. 155; Re Ware, 53 Fed. Rep. 783; Re Sanders, 52 Fed. Rep. 802, 18 L. R. A. 549, 4 Inters. Com. Rep. 305; Re McAllister, 51 Fed. Rep. 282; Re Nichols, 48 Fed. Rep. 164; Re Tyerman, 48 Fed. Rep. 167; Re Houston, 47 Fed. Rep. 539, 14 L. R. A. 719; Re Kinimel, 41 Fed. Rep. 775, 3 Inters. Com. Rep. 114; Adams Exp. Co. x. Ohio State Auditor, 165 U. S. 194, 41 L. ed. 683; Osborne x. Florida, 164 U. S. 650, 41 L. ed. 586; Brennan x. Titus¬ ville, 153 U. S. 289, 38 L. ed. 719, 4 Inters. Com. Rep. 658; Harman x. Chicago, 147 U.

S. 396, 37 L. ed. 216; Crutcher x. Kentucky, 141 U. S. 47, 35 L. ed. 649; Pullman’s Pal¬ ace Car Co. x. Pennsylvania, 141 U. S. 18, 35 L. ed. 613, 3 Inters. Com. Rep. 595; Ash- 304

er x. Texas, 128 U. S. 129, 32 L. ed. 368, 2 Inters. Com. Rep. 241 ; Philadelphia d S. Mail S. S. Co. x. Pennsylvania, 122 U. S. 326, 30 L. ed. 1200, 1 Inters. Com. Rep. 308; Corson v. Maryland, 120 U. S. 502, 30 L. ed. 699, 1 Inters. Com. Rep. 50; Robbins v. Shelby County Taxing Dist. 120 U. S. 489, 30 L. ed. 694, 1 Inters. Com. Rep. 45; Moran x. Nett ; Orleans, 112 U. S. 69, 28 L. ed. 653; Leloup v. Port of Mobile, 127 U. S. 640, 32 L. ed. 311, 2 Inters. Com. Rep. 134; The Daniel Ball, 10 Wall. 557, 19 L. ed. 999; Sinnot v. Davenport, 22 How. 227, 16 L. ed. 243; Smith v. Turner, 7 How. 283, 12 L. ed. 702; Re Bell, 25 U. S. App. 379, 68 Fed. Rep. 183, 15 C. C. A. 360.

The conduct and method of doing business by the members of this Traders’ Live Stock Exchange is an interference with interstate commerce, and the association is illegal.

Allgeycr x. Louisiana. 165 U. S. 578, 41 L. ed. 832 ; United, States v. Trans-Missourt Freight Asso. 166 U. S. 290, 41 L- ed. 1007 ; Rc Rahrer, 140 U. S. 545, 35 L. ed. 572.

*Mr. Justice Feckham, after stating the

facts, delivered the opinion of the court:

There is really no dispute in regard to the facts in the case. Although the bill con¬ tains various allegations in regard to con¬ spiracies, agreements, and combinations in restraint of trade and in violation of the Federal statute, yet there is no evidence of any act on the part of the defendants pre¬ venting access to the yards or preventing purchases and sales of cattle by anyone, other than as such sales may be prevented by the mere refusal on the part of the defendants as “yard traders” to do business with those who are also yard traders, but are not mem¬ bers of the exchange, or with commission merchants where such commission merchants themselves do business with yard traders who are not members of the exchange. In other words, there is no evidence and really no charge against the defendants that they have done anything other than to form this ex¬ change and adopt and enforce the rules men¬ tioned above, and the question is whether by their adoption and by peacefully carrying them out without threats and without vio¬ lence, but by the mere refusal to do business with those who will not respect their rules, there is a violation of the Federal statute.

This case differs from that of Hopkins x. United States, ante, 290, in the fact that these defendants are themselves purchasers of cattle on the market, while the defendants in the Hopkins Case were only commission merchants who sold the cattle upon commis¬ sion as a compensation for their services.

Counsel for the government assert that any agreement or combination among buyers of cattle coming from other states, of the na¬ ture of the by-laws in question, is an agree¬ ment or combination in restraint of inter¬ state trade or commerce.

The facts first set forth in the complain¬ ants’ bill, upon which to base the claim that the business of defendants is interstate com¬ merce, we have already decided in the Hop¬ kins Case to be immaterial. The particular situation of the yards, partly in Kansas and

171 TJ. S.

Anderson y. United States.

612-615

partly in Missouri, we there held was a fact without any weight, and one which did not £613]make business interstate ‘commerce which otherwise would not partake of that charac¬ ter.

There remain in the bill of the complain¬ ants the allegations that the cattle come from various states and are placed on sale at these stock yards which form the only available market for many miles around, and that they are sold by the commission mer¬ chants and are bought in large numbers by the defendants who have entered into what the complainants allege to be a contract, combination, and conspiracy in restraint of trade and commerce among the several states, which contract, etc., it is alleged is carried out by defendants unlawfully and oppress¬ ively refusing to purchase cattle from a com¬ mission merchant who sells or purchases cat¬ tle from any speculator (yard trader) who is not a member of the exchange; and it is further alleged that by these means the traf¬ fic in cattle at the Kansas City stock yards is interfered with, hindered, and restrained, and extra expense and loss to the owner in¬ curred, and that thereby the defendants have placed an obstruction and embargo on the marketing of cattle shipped from other states. All these results are alleged to flow from the agreement among the defendants as contained in the by-laws of their association, particularly those numbered ten, eleven, twelve, and thirteen, copies of which are set forth in the statement of facts herein.

There is no evidence that these defendants have in any manner other than by the rules above mentioned hindered or impeded others in shipping, trading, or selling their stock, or that they have in any way interfered with the freedom of access to the stock yards of any and all other traders and purchasers, or hindered their obtaining the same facil¬ ities which were therein afforded by the stock-yards company to the defendants as members of the exchange, and we think tna evidence does not tend to show that the above results have flowed from the adoption and enforcement of the rules and regulations referred to.

In regard to rule 10, the question is ■whether, without a violation of the act of Congress, persons who are engaged in the common business as yard traders of buying [6 14] cattle at the ‘Kansas City stock yards, which come from different states, may agree among themselves that they will form an associa¬ tion for the better conduct of their busi¬ ness, and that they will not transact busi¬ ness with other yard traders who are not members, nor will they buy cattle from those who also sell to yard traders who are n t members of the association.

It will be remembered that the association does no business itself. Those who are mem¬ bers thereof compete among themselves and with others who are not members, for the purchase of the cattle, while the association itself has nothing whatever to do with trans¬ portation nor with fixing the prices for which the cattle may be purchased or there¬ after sold. Any yard trader can become a member of the 'association upon complying 171 U. S. U. S., Book 43. S

with its conditions of membership, and may remain such as long as he comports himself in accordance with its laws. A lessening of the amount of the trade is neither the neces¬ sary nor direct effect of its formation, and in truth the amount of that trade has greatly increased since the association was formed, and there is not the slightest evidence that the market prices of cattle have been lowered by reason of its existence. There is no fea¬ ture of monopoly in the whole transaction.

The defendants are engaged in buying what are called "‘stockers and feeders;” being cat¬ tle not intended for any other market, and the demand for which is purely local. They have arrived at their final destination wuen offered for sale, and there is free and full competition for their purchase between au the members or the exchange, as well as be¬ tween them and all buyers not members thereof, who are not also yard traders.

With the latter the defendants will not com¬ pete, nor will they buy of the commission men if the latter continue to sell cattle to such yard traders.

Have the defendants the right to agree to conduct their own private business in this way?

Whether there is any violation of the act of Congress by the adoption and enforcement of the other rules of the association, above referred to, will be considered herealter.

It is first contended on the part of the ap¬ pellants that they ‘are not engaged in inter-

state commerce or trade, and that therefore their agreement is not a violation of the act.

They urge that the cattle, by being taken from the cars in which they were trans¬ ported and placed in the various pens hired by commission merchants at the cattle yards of Kansas City, and there set up for sale, have thereby been commingled with the gen¬ eral mass of other property in the state, and that their interstate commercial character has ceased within the decisions of this court in Brown v. Houston, 114 U. S. 622 [29:

257], and Pittsburg & o'. Coal Company v.

Bates, 156 Q. S. 577 [39:538].

On the other hand, it is answered that the cases cited involved nothing but the general power of the state to tax all property found within its limits, by virtue of general laws providing for such taxation, where no tax is levied upon the article or discrimination made against it by reason of the fact that it has come from another state, and it is maintained that the agreement in question acts directly upon the subject of interstate commerce and adds a restraint to it which is unlawful under the provisions of the stat¬ ute.

In the view we take of this case we are not called upon to decide Avhether the de¬ fendants are or are not engaged in interstate commerce, because if it be conceded they are so engaged, the agreement as evidenced by the by-laws is not one in restraint of that trade, nor is there any combination to mo¬ nopolize or attempt to monopolize such trade within the meaning of the act.

It has already been stated in the Hopkins Case, above mentioned, that in order to come within the provisions of the statute the di- n 305

615-618

Supreme Court of the United States.

Oct. Term,

rect effect of an agreement or combination must be in restraint of that trade or com¬ merce which is among the several states, or with foreign nations. Where the subject- matter of the agreement does not directly re¬ late to and act upon and embrace interstate commerce, and where the undisputeu facts clearly show that the purpose of the agree¬ ment was not to regulate, obstruct, or re¬ strain that commerce, but that it wa3 en¬ tered into with the object of properly and fairly regulating the transaction of the busi¬ ness in which the parties to the agreement were engaged, such agreement will be upheld

as *not within the statute, where it can be seen that the character and terms of the agreement are well- calculated to attain the purpose for which it was formed, and where the effect of its formation and enforcement upon interstate trade or commerce is in any event but indirect and incidental, and not its purpose or object. As is said in Smith v. Alabama, 124 U. S. 465, 473 [31; 508, 510, 1 Inters. Com. Rep. 804] : “There are many cases, however, where the acknowledged powers of a state may be exerted and applied in such a manner as to affect foreign or inter¬ state commerce without being intended to operate as commercial regulations.” The same is true as to certain kinds of agree¬ ments entered into between persons engaged in the same business for the direct and bona fide purpose of properly and reasonably regu¬ lating the conduct of their business among themselves and with the public. If an agree¬ ment of that nature, while apt and proper for the purpose thus intended, should pos¬ sibly, though only indirectly and uninten¬ tionally, affect interstate trade or commerce, in that event we think the agreement would be good. Otherwise, there is scarcely any agreement among men which has interstate or foreign commerce for its subject that may not remotely be said to, in some obscure way, affect that commerce and to be therefore void. We think, within the plain and ob¬ vious construction to be placed upon the act, and following the rules in this regard already laid down in the cases heretofore decided in this court, we must hold the agree¬ ment under consideration in this suit to be valid.

From very early times it has been the cus¬ tom for men engaged in the occupation of buying and selling articles of a similar na¬ ture at any particular place to associate themselves together. The object of the asso¬ ciation has in many cases been to provide for the ready transaction of the business of the associates by obtaining a general head¬ quarters for its conduct, and thus to insure a quick and certain market for the sale or purchase of the article dealt in. Another purpose has been to provide a standard of business integrity among the members by adopting rules for just and fair dealing among them and enforcing the same by pen¬ alties for their violation. The agreements

have been voluntary, and the * pen allies have been enforced under the supervision and by members of the association. The preamble adopted by the association in this case shows the ostensible purpose of its formation. It 306

was not formed for pecuniary profits, and a. careful perusal of the whole agreement fails,, as we think, to show that its purpose was other than as stated in the preamble. In, other words, we think that the rules adopted do not contradict the expressed purpose of the preamble, and that the result naturally to be expected from an enforcement of the rules would not directly, if at all, affect in¬ terstate trade or commerce. The agreement now under discussion differs radically from those of United States v. Jellico Mountain Goal & Coke Company, 46 Fed. Rep. 432 [3 Inters. Com. Rep. 626, 12 L. R. A. 753] ;

United States v. Coal Dealers’ Association,

85 Fed. Rep. 252, and United States v. Ad- dyslon Pipe & Steel Company [54 U. S. App.

723], 85 Fed. Rep. 271. The agreement in all of these cases provided for fixing the prices of the articles dealt in by the different companies, being in one case iron pipe for gas, water, sewer, and other purposes, and coal in the other two cases. If it were con¬ ceded that these cases were well decided, they differ so materially and radically in their nature and purpose from the ease under consideration that they form no basis for its decision. This association does not meddle with prices and itself does no business. In refusing to recognize any yard trader who is not a member of the exchange, we see no pur¬ pose of thereby affecting or in any manner restraining interstate commerce, which, if affected at all, can only be in a very indirect and remote manner. Tne rule has no direct tendency to diminish or in any way impede or restrain interstate commerce in the cat¬ tle dealt in by defendants. There is no tend¬ ency as a result of the rule, directly or in¬ directly, to restrict the competition among defendants for the class of cattle dealt in by them. Those who are selling the cattle have the market composed of defendants, and also composed of the representative buyers of all the packing houses at Kansas City, and also of the various commission merchants who are constantly buying on orders and of those who are buying on their own account. This makes a large competition wholly outside of the defendants. The owner of *cattle for sale[6183 is therefore furnished with a market at which the competition of buyers has a broad effect. All yard traders have the opportu¬ nity of becoming members of the exchange, and to thus obtain all the advantages there¬ of.

The design of the defendants evidently is to bring all the yard traders into the associa¬ tion as members, so that they may become subject to its jurisdiction and be compelled by its rules and regulations to transact busi¬ ness in the honest and straightforward man¬ ner provided for by them. If, while enforc¬ ing the rules, those members who use im¬ proper methods or who fail to conduct their business transactions fairly and honestly are disciplined and expelled, and thereby the number of members is reduced, and to that extent the number of competitors limited, yet all this is done, not with the intent or purpose of affecting in the slightest degree interstate trade or commerce, and such trade

171 U. S.

Northwestern National Bank v. Freeman.

618-620

or commerce can be affected thereby only most remotely and indirectly, and if, for the purpose of compelling this membership, the association refuse business relations with those commission merchants who insist upon buying from or selling to yard traders who are not members of the association, we see nothing that can be said to affect the trade or commerce in question other than in the most roundabout and indirect manner. The agreement relates to the action of the asso¬ ciates themselves, and it places in effect no tax upon any instrument or subject of com¬ merce; it exacts no license from parties en¬ gaged in the commercial pursuits, and pre¬ scribes no condition in accordance with which commerce in particular articles or be¬ tween particular places is required to be con¬ ducted. Sherlock v. Ailing, 93 U. S. 99 [23: 819] ; Smith v. Alabama, 124 U. S. 465, 473 [31 : 508,510] ; Pittsburg & S. Goal Company v. Louisiana, 156 U. S. 590, 598 [39: 544, 548, 5 Inters. Com. Rep. 18].

If for the purpose of enlarging the mem¬ bership of the exchange, and of thus procur¬ ing the transaction of their business upon a proper and fair basis by all who are en¬ gaged therein, the defendants refuse to do business with those commission men who sell to or purchase from yard traders who are not members of the exchange, the possible

effect of such a course *of conduct upon in¬ terstate commerce is quite remote, not in¬ tended, and too small to be taken into account.

The agreement lacks, too, every ingredient of a monopoly. Everyone can become a member of the association, and the natural desire of each member to do as much busi¬ ness as he could would not be in the least diminished by reason of membership, while the business done would still be the individ¬ ual and private business of each member, and each would be in direct and immediate competition with each and all of the other members. If all engaged in the business were to become members of the association, yet, as the association itself does no business, it can and does monopolize none. The amount and value of interstate trade is not at all directly affected by such membership; the competition among the members and with others who are seeking purchasers would be as large as it would otherwise have been, and the only result of the agreement would be that no yard traders would remain who were not members of the association. It has no tendency, so far as can be gathered from its object or from the language of its rules and regulations, to limit the extent of the demand for cattle or to limit the number of cattle marketed or to limit or reduce their price or to place any impediment or obstacle in the course of the commercial stream which flows into the Kansas City cattle market. While in case all the yard traders are not induced to become members of the associa¬ tion, and those who are such members re¬ fuse to recognize the others in business, we can see no such direct, necessary or natural connection between that fact and the re¬ straint of interstate commerce as to render the agreement not to recognize them void for 171 U. S.

that reason. A claim that such refusal may thereby lessen the number of active traders on the market, and thus possibly reduce the demand for and the prices of the cattle there set up for sale, and so affect interstate trade, is entirely too remote and fanciful to be ac¬ cepted as valid.

This case is unlike that of Hopkins v. Ox¬ ley Stave Company [49 U. S. App. 709] 83 Fed. Rep. 912, to which our attention has been called. The case cited was decided with¬ out reference to the act of Congress *upon

which alone the case at bar is prosecuted, and the agreement was held void at common law as a conspiracy to wrongfully deprive the plaintiff of its right to manage its busi¬ ness according to the dictates of its own judgment.. It was also said that the fact could not be overlooked that another object of the conspiracy was to deprive the public at large of the benefits to be derived from a labor-saving machine which seemed to the court to be one of great utility. No question as to interstate commerce arose and none was decided.

From what has already been said regard¬ ing rule 10, it would seem to follow that the other rules (11, 12, and 13) are of equal va¬ lidity as rule 10. and for the same reasons.

The rules are evidently of a character to en¬ force the purpose and object of the exchange as set forth in the preamble, and we think that for such purpose they are reasonable and fair. They can possibly affect interstate trade or commerce in but a remote way, and are not void as violations of the act of Con¬ gress.

We are of opinion, therefore, that the order in this case should be reversed and the case remanded to the Circuit Court of the United States for the Western Division of the Western District of Missouri with direc¬ tions to dismiss the complainants’ bill with costs.

Mr. Justice Harlan dissented.

Mr. Justice McKenna took no part in the decision of this case.