per cent. of the equipment trust notes of the Interstate Company not already held by or in the interest of the American Company, and 93 per cent. of the bonds of the Northwestern Company, were deposited with the Northern Trust Company for delivery by the committee to the Atlantic & Pacific Company upon the terms stated in the offer made by that company. Edwin Romberg, the owner of 14 bonds of the Interstate Company and the holder in trust of two other bonds of that company, each bond being of the par value of $1,000, refused to accept the offer for the purchase of the bonds owned and controlled by him. The Atlantic & Pacific Company thereafter waived the requirement that at least 90 per cent. of each class of securities must be tendered, and offered to accept such shares of stock and securities as were on deposit with the Northern Trust Company on May 27, 1915. Various telephone companies filed intervening petitions, setting up contracts for telephone connections with the Interstate Company and praying that their rights under such contracts be protected by the Commission in case the prayer of the petition should be granted. Romberg filed objections to the petition, based upon the ground that the ultimate object of the proposed purchase is the creation and perpetuation of a monopoly in the telephone business in the territory in which the Interstate Company and the Bell system are now both operating. stock of the Interstate Company and a major- | approximately 85 per cent. of the bonds, ity of the bonds and equipment trust notes 86 per cent. of the shares of stock, and 98 of that company. The Interstate Company is engaged in the business of operating telephone lines and exchanges in many cities and towns in the northern half of Illinois in competition with the Bell system. For a number of years it has been operating at a loss, and has been unable to meet its obligations as they have matured, or to furnish adequate service to the public. A bill having been filed in one of the United States district courts on behalf of the holders of equipment trust notes issued by the Interstate Company, charging that the Interstate Company was insolvent and praying for the appointment of a receiver, certain of the stockholders of the Interstate Company organized themselves into a committee and opened negotiations with the American Company with a view to ascertaining whether the American Company would purchase for itself, or on behalf of some of its subsidiary companies, the shares of stock and the bonds and equipment trust notes not then held by or for it. After several months of negotiations the Atlantic & Pacific Company, a subsidiary of the American Company, submitted a written offer to said committee for the consideration of the holders of the stock and securities of the Interstate Company, proposing to purchase: (1) All or not less than 90 per cent. of the outstanding bonds of the Interstate Company not owned by the American Company or its subsidiary companies at 46 per cent. of their par value; (2) all or not less than 90 per cent. of the outstanding capital stock of the Interstate Company not owned by the American Company or its subsidiary companies at 4 per cent. of the par value thereof; (3) all or not less than 90 per cent. of the outstanding equipment notes issued by the Interstate Company not owned by the American Company or its subsidiary companies at 70 per cent. of the par value; and (4) all or not less than 90 per cent. of the outstanding bonds of the Northwestern Telephone Company not owned by the American Company or its subsidiary companies at 46 per cent. of the par value; provided, how-pany and the bonds of the Northwestern ever, that the proposed purchase should re- Telephone Company at the price stated in ceive the approval of all federal, state, and the offer made by it, and authorized the Atmunicipal authorities whose consent to the lantic & Pacific Company to sell and transtransaction should, in the opinion of the pur- fer the same to the American Company, and chaser, be desirable; and provided, further, authorized the latter company to hold, own, that said securities, upon delivery to the pur- and control such bonds, stock, and notes; chaser, should be accompanied by resigna- provided, however, that until the further ortions of the directors and other officers of the der of the Commission the Interstate ComInterstate Company, to take effect upon their pany shall continue as a separte corporate acceptance. entity, and shall be operated as such and The committee submitted the proposal to shall keep up its equipment so as to provide the holders of the bonds, stocks, and equip-adequate service; and provided, further, that ment trust notes, and advised the acceptance all existing contracts between the Interstate of the offer and the deposit of the shares of stock and securities with the Northern Trust Company for delivery by the committee to the Atlantic & Pacific Company. Thereafter 114 N.E.-13 The respective parties offered evidence before the Commission, after considering which the Commission entered an order, finding the facts as above set forth, and that it is to the best interests of the Interstate Company, and the telephone-using public and of the people of the state of Illinois that the prayer of the original and supplemental petitions be granted on the terms and conditions specified in the order. The order granted leave to the Atlantic & Pacific Company to purchase the outstanding stock, bonds, and equipment trust notes of the Interstate Com Company and other companies shall be fully kept and performed, together with the division of business, rates, tolls, and charges and the routing of messages as provided in such contracts or by existing methods of state depends upon whether the public policy handling business, all of which shall con- upon the particular subject has been estab tinue as they now exist; provided, however, lished by statute, or is a part of the comthat if any portion of the lines or plant of mon law, or has been declared by some prosaid Interstate Company (toll lines exclud- vision of the state Constitution. If it exists ed) shall become so impaired that adequate merely by virtue of some statute or the comservice thereover shall be impossible, the mon law, it may be changed by the LegislaAtlantic & Pacific Company may provide sub-ture at will. If the Constitution has declarstitutes therefor, similar in quality and ed the public policy of the state with referquantity, which will permit such service to ence to the particular subject the Legislature be furnished the same as it would be fur- is powerless to change it. The fact that the nished under existing contracts or methods common law or some former statute prohibitof doing business if the lines of the Inter-ed one public utility from obtaining control state Company were used. The order stat-over another competing public utility through ed that it was entered upon the further con- the purchase of its stocks, bonds, and other dition that the money expended by the At- evidences of indebtedness is therefore not a lantic & Pacific Company and the American sufficient ground for holding that the proviCompany in purchasing the stocks and se- sion of said section 27 above quoted is void curities above described should not be con- because it contravenes the public policy of sidered as an expenditure of capital funds, the state. and that neither of said companies, its successors, lessees, or assigns, shall at any time issue stocks, bonds, or other evidences of indebtedness for the purpose of reimbursing its treasury for the money expended in the purchase of said stocks and securities. It was further provided that the order should not become effective unless the Atlantic & Pacific Company and the American Com-the state is opposed to monopolies, and that pany should, within ten days, notify the Commission, in writing, of their acceptance of all the terms and conditions of the order. The Commission retained jurisdiction of the subject-matter and of the parties to enter hereafter such order with reference to the control or disposition of the Interstate Company as may be within the jurisdiction of the Commission and as circumstances may require. Romberg alone prosecuted an appeal to the circuit court of Sangamon county, where the order of the Commission was affirmed, and he has prosecuted a further appeal to this court. [2] Appellant contends, however, that section 22, art. 4, of the state Constitution, which provides that the General Assembly shall not pass local or special laws "granting to any corporation, association or individual any special or exclusive privilege, immunity or franchise whatever," constitutes a clear declaration that the public policy of an act of the Legislature, attempting to authorize and legalize the elimination of competition, is therefore unconstitutional and void. In support of this contention the appellant relies upon certain language used in People v. Chicago Gas Trust Co., 130 Ill. 268, 22 N. E. 798, 8 L. R. A. 497, 17 Am. St. Rep. 319, and Dunbar v. American Telephone & Telegraph Co., 238 Ill. 456, 87 N. E. 521. In the first of these cases it appeared that the Chicago Gas Trust Company had been organized under the General Incorporation Act of this state for the express purpose, among others, as stated in its articles of association, Section 27 of the State Public Utilities Act of purchasing and holding the capital stock provides in part: "With the consent and approval of the Commission, a public utility may purchase, acquire, take, or hold stock, stock certificates, bonds, notes or other evidences of indebtedness of another public utility." Hurd's Stat. 1916, p. 2027. of any gas or electric company or companies in the city of Chicago or elsewhere in the state of Illinois, and that after its organization it proceeded to acquire the shares of stock of each of the gas companies then furnishing gas to the city of Chicago and its inIt is by virtue of this provision of the stat-habitants. We held that this action on the utes that the Atlantic & Pacific Company or part of the Chicago Gas Trust Company was the American Company has acquired the right, with the consent and approval of the State Public Utilities Commission, to purchase the stock, bonds, or other evidences of indebtedness of a competing public utility, if such right exists. [1] Appellant contends that said section 27, in so far as it purports to confer upon one public utility the right to obtain control of another competing public utility through the purchase of its stock, bonds, and other evidence of indebtedness, contravenes the public policy of this state, and is therefore void. Whether an act of the Legislature is void because it contravenes the public policy of the illegal on two grounds: First, because the Legislature had not conferred upon corporations organized under the General Incorporation Act for some purpose specified in that act the power to purchase and hold shares of stock of other corporations; and, second, because, by the common law, contracts having a tendency to create monopolies were void, and the General Incorporation Act, which provides that corporations may be formed in the manner provided by the act for any lawful purpose, except certain specified purposes, did not authorize the organization of a corporation for the purpose of purchasing and holding the capital stock of all other corporations engaged in the same kind of business in the city of Chicago or elsewhere in the state of Illinois, as that was not a lawful purpose. That part of the opinion upon which appellant relies is as follows: Afterwards, in 1897, the Legislature passed an act authorizing the consolidation and merger into one corporation of all gas companies organized in this state doing business in the same city, town or village. Hurd's Stat. 1915-16, p. 687. A merger, under the provisions of this act, of the gas companies doing business in Chicago was attacked, but was held valid in People v. People's Gaslight Co., 205 Ill. 482, 68 N. E. 950, 98 Am. St. Rep. 244, it being there held that the act of 1897 under which the gas companies were merged into one corporation is not in violation of section 22, art. 4, of the Constitution, and that as section 11 of the act (Hurd's Rev. St. 1915-16, c. 32, § 167) provides that the corporation into which any companies are merged shall not increase the price charged for gas of the quality furnished to consumers during any part of the year immediately preceding such consolidation and merger, and shall furnish gas to consumers as good in quality as that furnished previous to the consolidation and merger, and as section 12 provides for the infliction of penalties for the violation of the provisions of section 11 and the recovery of damages by any person injured thereby, the act neither promotes nor creates a monopoly. The Dunbar Case, supra, presented the question whether one corporation organized for a lawful purpose could legally purchase a majority of the shares of stock of a competing company, and in holding that it could not, the rules of law applied in People v. Chicago Gas Trust Co., supra, were followed. That part of the opinion upon which appellant relies is as follows: “We have been referred to more than 50 special charters granted by the Legislature of this state, in the years 1853, 1854, 1855, 1857, 1859, 1861, 1865, 1867, and 1869, to gas companies in various cities and towns in the state, each one of which confers the exclusive privilege of laying gas pipes in the streets for a number of years. But when the Constitution of 1870 was adopted, it provided, in section 22, art. 4, that the General Assembly should pass no local or special law for 'granting to any corporation, association or individual any special or exclusive privilege, immunity or franchise whatever,' and, in section 1, art. 11, that 'no corporation shall be created by special laws, * but the General Assembly shall provide, by general laws, for the organization of all corporations hereafter to be created.' Manifestly the Constitution of 1870 reversed the old policy of granting exclusive privileges to gas companies. After 1870 the public policy of the state was against the granting of exclusive privileges to corporations of any kind. The General Incorporation Act of 1872 was passed in pursuance of section 1, art. 11. The prohibition of special charter granting exclusive privileges, and the authorization of incorporations under a general law, followed by the passage of such a law, put the people of this state on record as being opposed to the creation of monopolies of all kinds. But of what avail is it that any number of gas companies may be formed under the general incorporation law if a giant trust company can be clothed with the power of buying up and holding the stock and property of such companies, and, through the control thereby attained, can direct all their operations and weld them into one huge combination? The several privileges or franchises intended to be exercised by a number of companies are thus vested exclusively in a single corporation. To create one corporation for the express purpose of enabling it to control all the corporations engaged in a certain kind of business, and particularly a business of a public character, is not only opposed to the public policy of the state, but is in contravention of the spirit, if not the letter of the Constitution. That the exercise of the power attempted to be conferred upon the appellee company must result in the creation of a monopoly results from the very nature of the power itself. Suppose that after appellee had purchased and become the holder of the majority of shares of stock of the four companies in Chicago, another corporation had been organized with the same obThat it was not the intention of this court ject in view; that is to say, for the purpose of in either of the cases relied upon by appellant purchasing and holding a majority of the shares to announce the doctrine that section 22, of stock of the gas companies in Chicago. art. 4, of the Constitution had declared as There being only four of such companies, what would there be for the corporation last formed the public policy of the state that no law to do? It could not carry out the object of should be passed by the Legislature or conits creation, because the stock it was formed tract made between individuals the effect of to buy was already owned by an existing corpo- which would be to suppress or eliminate comration. Hence to grant to the appellee the privilege of purchasing and holding the capital petition is evident from the decision rendered stock of any gas company in Chicago is to in People v. People's Gaslight Co., supra, grant to it a privilege which is exclusive in its and other cases in which the question was character. It is making use of the general in- directly involved and expressly decided. In corporation law to secure a special privilege, Venner v. Chicago City Railway Co., 258 Ill. immunity or franchise.' It is obtaining a special charter, under the cover and through 523, 101 N. E. 949, we upheld an agreement the machinery of that law, for a purpose forbid- made under and by virtue of an ordinance of den by the Constitution. To create one corpo- the city of Chicago, the effect of which was ration that it may destroy the energies of all to place the joint operation of all the surother corporations of a given kind and suck their life blood out of them is not a lawful face lines of street railway in the city of purpose."" Chicago under a single management, notwith "The public policy of the state on any ques tion is to be sought for in the Constitution and legislation as interpreted and expounded by the courts. Section 22, art. 4, of the Constitution of 1870 provides that the General Assembly shall pass no local or special law for 'granting to any corporation, association or individual any special or exclusive privilege, immunity or franchise whatever.' This is a clear declaration that the public policy of this state is opposed to all exclusive and monopolistic franchises and powers, of whatsoever kind or character." standing the fact that one of the results of unified operation would be to eliminate competition. We there held that the city council has the right to declare whether the operation of street railways in the streets of a city shall be competitive or monopolistic, and this holding was approved and followed in People v. City of Chicago, 270 Ill. 188, 110 N. E. 366. Again, in Union Trust & Savings Bank v. Telephone Co., 258 Ill. 202, 101 N. E. 535, 45 L. R. A. (N. S.) 465, Ann. Cas. 1914B, 258, we said: The interests of the public are best served by competition in the telephone business, but by the consolidation and merger of competing lines and regulation as to rates and service by the state or some agency thereof. In our opinion one of the purposes of the provision of section 27 of the State Public Utilities Act above quoted was to afford relief to the public where such a state of facts exists as was disclosed to the Commission in this case; that the provision applies to competing as well as noncompeting public "The courts have declared the public policy utilities, and that in so far as it purports to of the state, in accordance with the common confer upon one public utility the right to law, to be opposed to such contracts which obtain control of another competing public tend to put the power to render public service in the hands of one corporation and to take it utility through the purchase of stock, bonds, away from all others. The Legislature has the and other evidences of indebtedness, it is not power to change this policy. It is a legisla-in violation of the public policy of this state tive question whether the public interest will be promoted by monopolistic rather than comas declared by section 22, art. 4, of the state petitive service." Constitution. 3 The public policy of the state, as declared [3] It is also urged that the purchase by section 22, art. 4, of the Constitution, is of the stocks, bonds, and securities of not opposed to the elimination of competi- the Interstate Company by a competing tion in all cases, but only applies where a company violates the federal anti-trust "monopoly," in the sense in which that word law. Appellant is in no position to inwas used in the common law, would be there- voke the federal Anti-Trust Act in this by created, viz. where competition is eliminat-case. The enforcement of the provisions of ed by conferring upon a specified person or that act is, by the terms of the act itself, comcorporation the right to exclude all others mitted to the Attorney General of the United from engaging in the same business, in the States, except in cases where an individual same field of operation, or by upholding the can show some special damage resulting validity of contracts and agreements which to him from a violation of the provisions of place it within the power of certain individu- the act. Minnesota v. Northern Securities als or corporations to control production and Co., 194 U. S. 48, 24 Sup. Ct. 598, 48 L. Ed. fix prices, thereby resulting in injury to the 870; Wilder Manf. Co. v. Corn Products Co., public. No such consequences can follow the 236 U. S. 165, 35 Sup. Ct. 398, 59 L. Ed. 520, purchase by the American Company of a Ann. Cas. 1916A, 118. Appellant has shown controlling interest in the Interstate Com- no special damage resulting to him from the pany under the authority conferred upon it purchase by the American Company of stock by the State Public Utilities Act. The Ameri- and bonds of the Interstate Company from can Company will not, by this purchase, ac- persons other than appellant, and the quesquire the right to exclude any other person tion whether the transaction violates the fedor corporation from engaging in the tele- eral Anti-Trust Act cannot be determined phone business in the same field of operation, in this suit. nor will it be within its power to arbitrarily limit the service to be furnished to the public, or fix the rates to be charged for the service rendered. The state possesses the right to exercise supervision over public utilities with reference to such matters, and has made provision for the exercise of such right through the State Public Utitities Commission. Instead of resulting in injury to the public, the tendency of the elimination of the Interstate Company as a competitor of the Bell system would be to benefit the public. As we said in Union Trust & Savings Bank v. Telephone Co., supra: "It is the possibility of connection with a large number of instruments that gives usefulness to the system. The use of the telephone has come to be quite generally regarded, not as a luxury or convenience, but a necessity, and it is essential to the greatest public convenience that all users of telephones should be able to secure, as nearly as possible, direct connection with all other users.' To the same effect is State Public Utilities Commission v. Noble (No. 10511) 113 N. E. 910. [4] It is finally contended that section 28 of the state Public Utilities Act prohibits the Atlantic & Pacific Company and the American Company, both of which are foreign corporations, from purchasing a majority of the stock and securities of the Interstate Company and thereby obtaining control of that company. That section is as follows: "No franchise, license, permit or right to own, operate, manage or control any public utility, except common carriers engaged in interstate commerce, shall be hereafter granted or transferred to any grantee or transferee other than a corporation duly incorporated under the laws of this state. "No public utility shall be in any manner exempt from the provisions of this act because or by virtue of the fact that it may be or may have been incorporated or organized under the laws of another state, or of the United States, or of a foreign country." Notwithstanding the fact that by section 10 of the act the term "public utility," when used in the act, is declared to mean "every corporation, company, association, joint-stock company or association, firm, partnership or discretion of the court, and their denial manifest- [Ed. Note.-For other cases, see Appeal and Appeal from Superior Court, Suffolk Action by Alice V. Hannaberry and others against George W. Green. Decree for defendant, and plaintiffs appeal. Affirmed. A. D. Radley, of Boston, for appellants. Chas. Toye, of Boston, for appellee. individual" engaged in certain lines of busi- | master for further hearing were addressed to the ness, it is evident that the term as used in the first paragraph of said section 28 cannot be given such meaning. If the term as there used be given the meaning declared by section 10, the section would, in effect, provide that no franchise, license, permit, or right to own, operate, manage, or control any corporation, etc., or individual engaged in the lines of business specified, should be granted or transferred to any other than a corporation organized under the laws of this state. The term "public utility," as used in the first paragraph of section 28, evidently means the plant operated by a public utility, RUGG, C. J. [1] This is a suit in equity and the section requires that the franchise alleging in substance that the female plainto own, operate, manage, or control the plant tiff, hereafter referred to as the plaintiff, shall be vested in a corporation organized was an heir at law and a distributee of the under the laws of this state. The purchase estates of her deceased father and mother, by the American Company of a majority of and as such entitled to an interest in real the shares of stock and securities of the In- estate and personal property; that the deterstate Company has not divested, and can- fendant conspired with two other persons to not divest, the Interstate Company of its procure fraudulently the conveyance to him franchise to own, operate, manage, or control of her interest in this real estate and the its plant. The order of the Commission ex-assignment of her share as distributee in the pressly preserves the integrity of the Inter-personal property, which together were of state Company and its franchise rights. the value of $2,500, for the grossly inadeThere is therefore nothing in this transaction quate consideration of $500 in cash and a which violates the provisions of section 28 time note for $300. The case was referred of the state Public Utilities Act. The judgment of the circuit court is af- owner of the interest in the estates of to a master, who found that the plaintiff was firmed. Judgment affirmed. (225 Mass. 201) HANNABERRY et al. v. GREEN. (Supreme Judicial Court of Massachusetts. Suffolk. Nov. 28, 1916.) 1. FRAUD 30-MISCONDUCT OF ATTORNEYLIABILITY OF THIRD PERSON. If plaintiff's counsel betrayed her interests in advising her to convey to defendant her interests in the estate of her father and mother, defendant, who was not a participant in any fraud or conspiracy and was innocent of any wrong to plaintiff, is not responsible therefor. [Ed. Note.-For other cases, see Fraud, Cent. Dig. 35; Dec. Dig. 30.] 2. APPEAL AND ERROR 907(2) — REVIEW FINDINGS OF FACT. Where there is no report of the evidence, findings of fact by a master must be accepted as final. [Ed. Note.-For other cases, see Appeal and Error, Cent. Dig. §§ 2911, 2916; Dec. Dig. 907(2).] 3. APPEAL AND ERROR INSTRUCTIONS. 842(10)-REVIEW her father and mother of the value alleged, and that she made conveyance and transfer to the defendant for the price averred. He further found that the defendant did not conspire with the persons alleged to procure the deed and assignment from the plaintiff, but that both were executed for a valuable consideration and were obtained by the defendant without fraud or conspiracy. This finding rendered immaterial all the other allegations of the plaintiff's bill. If those acting as counsel for the plaintiff were faithless or betrayed her interests, she cannot hold the defendant responsible therefor, who was not a participant in any fraud or conspiracy and was innocent of any wrong to the plaintiff. [2] The whole issue presented by the record was one of fact. The master found the essential facts in favor of the defendant. That finding must be accepted as final, because there is no report of the evidence. [3] The plaintiff presented eleven "requests for rulings." These are all requests for findings of fact. No one of them relates to a principle of law. find in accordance with these requests was The master's refusals to only another way of saying that the evidence did not convince him that they were in ac[Ed. Note.-For other cases, see Appeal and cordance with the facts. Error, Cent. Dig. § 33292; Dec. Dig. law thereby is involved. No question of 842(10).] The refusal by a master of requests for findings of fact, being only another way of saying that the evidence did not convince him that they were in accordance with the facts, presents no question of law for review. 4. APPEAL AND ERROR 959(1) — REVIEW DISCRETION OF COURT. Where the denial of motions of plaintiff to amend her bill and to recommit the case to the [4] The plaintiff filed a motion to be allowed to amend her bill and to recommit the case to the master for further hearing. Both these motions were addressed under the cir For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexe |