New Jersey. It sends it to warerooms in New York City and in Worcester, Mass., and there sells it. Its trade extends over several states. It alleges that it had no part in any of the negotiations leading up to the formation of the scheme, that it did not execute a license agreement until some three weeks after the other corporate defendants, and that, then, it refused to bind itself to charge the resale prices. It was consulted through its president some time before any of the agreements were actually entered into or before their precise terms were definitely settled. He then gave a general approval of the plan. Neither he nor it appear to have done anything further until after the others had signed up.

Some months before the Standard Sanitary Manufacturing Company, which until May 4, 1910, owned the basic automatic patent, had given the Colwell company a revocable license to use the dredger. The latter wanted Wayman to renew the license. It apparently did not want it badly enough to be willing to bind itself to charge the uniform resale prices of the New York City plumbers to whom it sold a large part of the ware. Wayman finally agreed in writing that, if it would take a license, he would try to get from the commission of the corporate defendants leave to cut these prices whenever it found that maintaining them would seriously handicap it. If the commission would not let the Colwell Lead Company do so, the latter on 10 days' notice could terminate the agreement. It would appear that it became a party to the combination to an extent sufficient to entitle the government to injunctive relief against it.

[7] The evidence shows that two of the individual defendants, namely, Bert O. Tilden and George W. Franzheim, secretaries of the Colwell Lead and the Wheeling Enameled Iron companies, respectively, had no part in forming the combination. They did not do anything in connection with it, except to attest in their official characters papers executed by their corporations. As to them the petition should be dismissed. Against the other defendants, corporate and individual, the government is entitled to injunctive relief substantially as prayed for. In view of the pendency of the criminal case, all characterization

of what the defendants have done not necessary to the effectiveness of the decree should be omitted from it.

Goff, Circuit Judge (dissenting).

I cannot assent to the conclusion reached by the court in this opinion. The facts established by the testimony, considered in the light of the law applicable thereto, compel me to conclude that the allegations of the petition have not been sustained.

THE INTERNATIONAL HARVESTER CASE 1

A WELL-BEHAVED COMBINATION

"This case is one of fact, not of controverted questions of law."

On June 24, 1902, P. D. Middlekauff secured, in his own name, an option on the stock and plant of the Milwaukee Harvester Company for $3,123,691.90. He did this in fact as agent, though it does not clearly and certainly appear who his principal was, whether J. P. Morgan & Co., George W. Perkins, or the McCormick Harvesting Machine Company. He did it, however, at the direct instance of the McCormick Harvesting Machine Company, but whether it was acting as principal or agent is left in some slight doubt.

On June 25, 1902, Mr. Middlekauff went to New York with a letter from an officer of the McCormick company, authorizing him to assign this option to J. P. Morgan & Co., of which George W. Perkins was a member, or to any one they might designate, and reciting that the option had been obtained "for us." Mr. Middlekauff remained in New York until July 30, 1902, aside from being absent a small portion of the time in Philadelphia and Washington on busines for Mr. Perkins.

On August 11, 1902, a new contract was made for the purchase of the Milwaukee Harvester plant by Mr. Middlekauff, and on the same day he assigned his contract to Mr. William C. Lane, a New York banker and then president of the Standard Trust Company. Int. Harv. Co.; District Court; 214 Fed. Rep. 987; decided August 12, 1914. Economic details in chapter IX, supra. Many omissions not

1 U. S. v.

indicated.

In July, 1902, the representatives of the McCormick, the Deering, the Warder, Bushnell & Glessner, and the Plano were all in New York, but stopping at different hotels and not seeing one another. They were all seeing, however, Mr. George W. Perkins. On July 28, 1902, they met and gave separate contracts to William C. Lane, heretofore referred to, and his assigns, to sell all their tangible property and specified portions of their bills receivable. These agreements all contained a recital that the purchaser, upon his acquisition of the property, intended to transfer the same to a corporation to be organized under the laws of Illinois, or some other state, called the "purchasing company." It was in each case, except that of the Warder, Bushnell & Glessner Company, stipulated that the entire purchase price should be paid in fully paid non-assessable stock of the purchasing company.

On August II, 1902, the companies all signed an agreement for the immediate delivery of their plants and property, without waiting for any appraisement theretofore stipulated for in each instance.

On August 12, 1902, the very day of the organization of the International Harvester Company with a total capital of $120,000,000, Mr. Lane appeared before the board of directors and offered to sell the Milwaukee Harvester Company plant as a going concern, including its bills receivable and the plants of the McCormick Harvesting Machine Company, the Deering Harvester Company, the Plano Manufacturing Company, and the Warder, Bushnell & Glessner Company, and to furnish $60,000,000 of working capital, to be represented by accounts and bills receivable of the McCormick Harvesting Machine Company, the Deering Harvester Company and the Plano Manufacturing Company, or in cash, for the $120,000,000 of the capital stock of the company, and on August 13, 1902, this proposition was accepted. The property turned in was of greater value than the stock issued for it. This case, therefore, involves no question of overcapitalization.

In pursuance of this agreement there was turned over to the company $40,000,000 of the bills receivable of the McCormick Harvesting Machine Company, the Deering Harvester Com

pany, and the Plano Manufacturing Company, guaranteed by them, respectively. In all Mr. Lane did in this matter he was acting upon the suggestion of his counsel, Messrs. Guthrie, Cravath & Henderson. He was compensated, but there never was any idea upon his part that he owned any of the properties. He was a mere conduit or instrumentality in the transaction.

The International company shortly acquired all the stock of the Milwaukee Harvester Company, as it had already acquired the plant. It reduced the capital of the Milwaukee Harvester Company to $1,000,000, and changed the name to the International Harvester Company of America, hereafter called the America company. It was for a considerable time officered by the same men who held the offices in the International company. A contract was entered into between the International company and the America company by which the former contracted to sell to the latter its entire output and the latter undertook the responsibilities of reselling the same. The America company, in addition to buying the manufactured products of the International, bought from outside parties some threshers, wagons, plows, etc., and resold them; but the dealing in all property not the product of the International company only amounts to about 21 per cent of its business. All the stock of the America company is still the property of the International company.

The two defendant railroads are switching roads to the factories of the International company; one acquired in the consolidation mentioned, and one constructed by the new company. The International Flax Twine Company, the Wisconsin Steel Company, and the Wisconsin Lumber Company are auxiliary companies of the International company, and the personal defendants are officers and directors of the last-named company.

It is alleged in the petition that these five companies produced over 85 per cent of all harvesting machinery sold in the United States, and it is admitted in the answer that the said companies produced approximately 80 to 85 per cent of the binders, mowers, reapers, and rakes.

In January following the consolidation of the five companies, the International company acquired the D. M. Osborne & Co.

stock, and the companies thus combined manufactured a still greater percentage of the harvesting machinery used in the United States and nearly the whole of that exported from the United States. The five companies except the Milwaukee company all took stock in the new company, and with the exception of the Warder, Bushnell & Glessner Company took stock for the entire amount of property turned over by them, and this amounted to $93,400,000 of the $120,000,000 capital of the new company. $6,600,000 of the capital of the new company was paid to J. P. Morgan & Co., of which $3,148,196.66 was for the Milwaukee Harvester Company's property and business, and $3,451,803.34 was for services and expenses in connection with the organization of the International company. Thus $1,000,000 of the capital of the new company was clearly covered, without any new or additional working capital. By agreement among all the parties who were to receive shares of stock in the International, all the stock except enough to qualify directors was vested in voting trustees, namely, George W. Perkins, Cyrus H. McCormick, president of the McCormick Harvesting Machine Company, and Charles Deering, of the Deering Harvester Company. These voting trustees were maintained for ten years. The day of the transfer to the International Harvester Company of the five plants, Cyrus H. McCormick, Harold F. McCormick, Stanley McCormick, all of the McCormick Harvesting Machine Company, and Cyrus Bentley, the Chicago attorney of the company, Charles Deering, William Deering, James Deering, and Richard F. Howe, all of the Deering Harvester Company, and John J. Glessner, of the Warder, Bushnell & Glessner Company, and William H. Jones, of the Plano Manufacturing Company, were all chosen directors of the International Harvester Company and constituted the majority of the board.

When the D. M. Osborne & Co. purchase was made, while the International bought all the stock, it permitted the Osborne company to continue to appear to be independent. It is claimed. that this was done to enable the Osborne to collect its bills receivable, which were not acquired by the International. There was commercial advantage in claiming not to be associated with