ILLEGAL COMBINATIONS 1. History of the CO111111011 law of monopolies.—It is unnecessary to treat at length the legal history of monopolies. But it must not be supposed that they are an American product of the nineteenth century. They were as virile and as strongly condemned in the seventeenth century as they are in the twentieth.
"If any asks what things these monsters be, 'Tis a Projector and a Patentee." These lines stood as the title of a picture that visual ized the "octopus" of those early days.' Monopolies have been the subject not only of individual invective, but also of political and judicial condemnation. In a long series of decisions, beginning in 1602 with the famous case brought against Darcy, the favorite of Queen Elizabeth, from whom Darcy had received a patent conferring on him the exclusive privilege to manufacture playing cards, down to the sugar and oil cases of the last decade of the nineteenth century, we find monopolies condemned because the principle on which they are based is contrary to public policy and because the monopolies themselves are injurious to the public welfare.
2. What is the common law of monopolies?—These decisions holding monopolies to be illegal are the basis of the common law of monopolies, which has been commented on as follows by Noyes in his "Intercor porate Relations": .Any combination of corporations or individuals the object of which is, or the necessary or natural consequence of the operation of which will be, the control of the market for a useful commodity, is against public policy and unlawful.
Any combination of quasi-public corporations the object of which is, or the necessary or natural consequence of the operation of which will be, the increase of charges beyond reasonable rates, or the curtailment of facilities afforded the public, is against public policy and unlawful.' It appears, then, that even if there had never been entered on the statute books a single anti-trust act, the Standard Oil Company, the American Tobacco Company and the many other companies that have been successfully prosecuted under the Sherman Act would have been condemned as violations of the com mon law.
3. Violations of the common late) of corporations.— It has been shown that corporations, being creatures of the state, are strictly limited in regard to the powers that they can exercise. The state jealously guards its creatures from assuming any rights or performing any acts that would tend to make the creature greater than the creator. Therefore, the common law has al ways said that certain acts could not legally be com mitted by corporations; and it has been held that the prohibitions thus defined have frequently been violated by companies forming intercorporate re lations. These prohibitions may be enumerated as follows: (a) Corporations may not become members of a partnership unles's specially authorized by their char ter or otherwise. In the following words, the Cot ton-Seed Oil Trust WaS condemned by a Tennessee court, in 1888, two years before the passage of the Sherman Anti-Trust Act.
A careful examination of this agreement discloses every material element of the contract of partnership. The abso lute ownership of the corporate property', the mills, ma chinery, etc., is not conveyed to the partnership, nor is this necessary-. The beneficial use of all such property is sur rendered to the common purpose. The provisions for the Complete possession, control and use of the properties of the several corporations by the partnership or syndicate is per fect. Nothing is left to the several corporations but the right to receive a share of the profits and participate in the management and control of the consolidated interests as members of the new association. The contract is, both tech nically and in its essential character, a partnership, in so far as it is possible for corporations to form such an asso ciation.' (b) Corporations may not delegate their powers, but must exercise them themselves thru their own stockholders and directors. It was largely on account of the violation of this principle of common law that the old Standard Oil Trust 1 was compelled by a court of the State of Ohio to disband in 1892.