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in all cases, bring his action in the county where the cause of action accrued."
Counsel for appellant substantially concedes that this statute applies only to domestic corporations, that is, corporations created by or organized under territorial enactments. But if it is to be assumed that these provisions could be made applicable to a corporation created by an act of Congress, and that for the purposes of suit such a corporation may be deemed a domestic corporation in any State or Territory which it might lawfully enter, still, it is evident that the above section cannot avail the plaintiff. The Santa Fé Railroad Company, when sued in the Territorial District Court, was not an inhabitant of the district within the meaning of the local statute; it had no principal or other office in the Territory; nor did it have an officer who could, in a legal sense, be "found" there; nor did it, in any just sense, carry on business in the Territory. The company simply owned lands there, and that fact was not sufficient by itself to bring the case within the provisions of the territorial statute. This state of the law may sometimes operate injuriously upon those who may wish to sue the railroad company in the territorial courts. But the situation cannot be changed by the courts. That can only be done by legislation.
For the reasons stated the judgment of the Supreme Court of the Territory must be
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Statement of the Case.
SMILEY v. KANSAS.
ERROR TO THE SUPREME COURT OF THE STATE OF KANSAS.
No. 13. Argued October 20, 21, 1904.-Decided February 20, 1905.
This court will not inquire whether the finding of the jury in the state court is against the evidence; it will take the facts as found and consider only whether the state statute involved is violative of the Federal Constitution. The power in the state court to determine the meaning of a state statute carries with it the power to prescribe its extent and limitations as well as the method by which they shall be determined.
Where the highest court of a State has held that the acts of a person convicted of violating a state statute defining and prohibiting trusts were clearly within both the statute and the police power of the State, and that the statute can be sustained as a prohibition of those acts irrespective of the question whether its language was broad enough to include acts beyond legislative control, this court will accept such construction although the state court may have ascertained the meaning, scope and validity of the statute by pursuing a rule of construction different from that recognized by this court.
While there is a certain freedom of contract which the States cannot destroy by legislative enactment, in pursuance whereof parties may seek to further their business interests, the police power of the States extends to, and may prohibit a secret arrangement by which, under penalties, and without any merging of interests through partnership or incorporation an apparently existing competition among all the dealers in a community in one of the necessaries of life is substantially destroyed. The act of the legislature of Kansas of March 8, 1897, defining and prohibiting trusts, is not in conflict with the Fourteenth Amendment to the Federal Constitution as to a person convicted thereunder of combining with others to pool and fix the price, divide the net earnings and prevent competition in the purchase and sale of grain.
ON March 8, 1897, the legislature of Kansas passed an act, the first section of which is as follows:
"SEC. 1. A trust is a combination of capital, skill, or acts, by two or more persons, firms, corporations, or associations of persons, or either two or more of them, for either, any or all of the following purposes: First.-To create or carry out restrictions in trade or commerce or aids to commerce, or to
carry out restrictions in the full and free pursuit of any business authorized or permitted by the laws of this State. Second. To increase or reduce the price of merchandise, produce or commodities, or to control the cost or rates of insurance. Third. To prevent competition in the manufacture, making, transportation, sale or purchase of merchandise, produce or commodities, or to prevent competition in aids to commerce. Fourth. To fix any standard or figure, whereby its price to the public shall be, in any manner, controlled or established, any article or commodity of merchandise, produce of commerce intended for sale, use or consumption in this State. Fifth. To make or enter into, or execute or carry out, any contract, obligation or agreement of any kind or description by which they shall bind or have to bind themselves not to sell, manufacture, dispose of or transport any article or commodity, or article of trade, use, merchandise, commerce or consumption below a common standard figure or by which they shall agree in any manner to keep the price of such article, commodity or transportation at a fixed or graded figure, or by which they shall in any manner establish or settle the price of any article or commodity or transportation between them or themselves and others, to preclude a free and unrestricted competition among themselves or others in transportation, sale or manufacture of any such article or commodity, or by which they shall agree to pool, combine or unite any interest they may have in connection with the manufacture, sale or transportation of any such article or commodity, that its price may in any manner be affected. And any such combinations are hereby declared to be against public policy, unlawful and void." Laws of Kansas, 1897, p. 481.
Subsequent sections prescribe penalties, and provide procedure for enforcing the act. On September 27, 1901, the county attorney filed in the District Court of Rush County, Kansas, an information charging that the defendant did, on November 20, 1900, "then and there unlawfully enter into an agreement, contract and combination, in the county of Rush
196 U. S.
Argument for Plaintiff in Error.
and the State of Kansas, with divers and sundry persons, partnerships, companies and corporations of grain dealers and grain buyers in the town of Bison, in the said county and State aforesaid, to wit, Humburg & Ahrens, the La Crosse Lumber & Grain Company, the Bison Milling Company and George Weicken, who were at the said time and place competitive grain dealers and buyers, to pool and fix the price the said grain dealers and buyers should pay for grain at the said place, and to divide between them the net earnings of the said grain dealers and buyers, and to prevent competition in the purchase and sale of grain among the said dealers and buyers." A trial was had, the defendant was found guilty and sentenced to pay a fine of $500, and to imprisonment in the county jail for three months. On appeal to the Supreme Court of the State the judgment was affirmed. 65 Kansas, 240. Whereupon this writ of error was sued out.
Mr. H. Whiteside for plaintiff in error:
The act of 1897 is unconstitutional and void.
Section one goes entirely too far and is an unwarranted attempt upon the part of the legislature to limit the rights of the individual in the matter of contracting and dealing with his fellow men. The liberty to contract is as much protected by the constitutional provisions above referred to as is the liberty of person, and any attempt to abridge or limit that right will be held void, unless such abridgement or limitation is necessary to preserve the peace and order of the community or the life, liberty and morals of individuals, in which cases it is held to be the proper exercise of the police power of the State. 2 Eddy on Combinations, §§ 679, 905; Niagara Fire Ins. Co. v. Cornell, 115 Fed. Rep. 816; Re Grice, 79 Fed. Rep. 627.
The United States Constitution confers upon Congress, in express terms, the power to regulate commerce with foreign nations and among the several States and with the Indian tribes. So that while Congress has that power it does not VOL. CXCVI-29
Argument for Plaintiff in Error.
196 U. S.
follow that a state legislature has the same power. Addyston Pipe & Steel Co. v. United States, 175 U. S. 211, 228.
One Congress for the nation is a very different proposition from 45 separate legislatures, each local in its power, and generally hasty in its action.
The only power which a state legislature has to make any law which would impair the right to make any contract upon any subject is such as it possesses under the general police power of the State, which can only be exercised in matters which affect the peace and order of the community or the life, health and morals of individuals. So that the fact that the Federal Anti Trust Law has been held constitutional is no argument in favor of the constitutionality of the Kansas statute. But the two statutes are very dissimilar. See the cases cited in dissenting opinion of Justice Pollock of the State Supreme Court in this case.
The unconstitutionality of the act in question should not be protected by a revolutionary mode of construction. It was contrary to the holdings of the Supreme Court of Kansas until this case was passed on, and is against the great weight of authority generally.
When a statute is partly invalid the rule is that the rest cannot be upheld if the parts are mutually connected with and dependent on each other. See opinion Brewer, J., in 28 Kansas 457; Warren v. Mayor, 2 Gray (Mass.), 84; Slauson v. Racine, 13 Wisconsin, 398; Meshmeier v. The State, 11 Indiana, 482; McCluskey v. Cromwell, 11 N. Y. 601.
The legislature passed an entire statute on the supposition that it is valid as a whole and it cannot be interpreted on any other theory.
Statutes and contracts should be read and understood according to the natural and most obvious import of the language, without resorting to subtle and forced construction for the purpose of either limiting or extending their operation. Courts cannot correct supposed errors, omissions or defects in legislation or vary by construction contracts of parties.