People v. Richards & Kelly Manufacturing Co.

1 Ill. Cir. Ct. 171
Illinois Circuit Court·Decided December 12, 1900·No. Gen. No. 200,636·Published

Opinion

Per Curiam:

The demurrer to the declaration in this case raises the-question of the constitutionality of the trust act of 1891, as amended by the acts of 1893 and of 1897, respectively, and whether the trust act of 1893 does not repeal the trust act of 1891.

It is contended that an act passed in 1893 defining “trusts and conspiracies against trade,” etc., which it is alleged is a revision of the entire subject matter of trusts and conspiracies against trade, operates as a repeal of the act of 1891.

That the legislature did not intend such an effect is manifested by the fact that at the same session, on the same day, the act of 1891 was amended by adding two sections, to-wit r section 7a and section Tb, and that the legislature again in 1897 amended the act of 1891, treating in both amendments the act of 1891 as being in full force and effect.

It will be observed as a singular fact that while the act of 1893 defines trusts and conspiracies, etc., it does not in express terms prohibit the entering into or forming of such trusts and conspiracies. Sections 2, 3, 4 and 5 of this act prescribe certain penalties for violations of the act. As nothing is either commanded or prohibited therein, there can be no violation thereof. Except as an act defining a trust, it is an unique specimen of legislative abortion.*

We see no difficulty in construing the act of 1891, as amended, and the act of 1893, defining trusts and conspiracies, so that they can both stand, and are of opinion that there is not any fatal repugnance between the two.

Section 1 of the act of 1891, as amended in 1897, is unconstitutional and void for the following reasons:

First. Because, in its legal effect, it is an amendment of the general incorporation law authorizing the formation of corporations (chap. 32 of the Rev. Stat., entitled “an act concerning corporations”), and operates as an amendment to the charters of some, but not all, of the corporations incorporated under said general law, and, therefore, is a special law, prohibited by sec. 2, art. 2, of the constitution of 1870, which prohibits the creation, change, or amendment, by special law, of the charter of any corporation, excepting those for charitable, educational, penal or reformatory purposes.

By the same section (1), it is provided that “the general assembly shall provide by general laws for the organization of all corporations hereafter created.”

In the general law passed in pursuance of that requirement of the constitution, there was in section 9 of the act a reservation as follows:

“The general assembly shall have at all times power to prescribe such regulations and provisions as it may deem advisable, which regulations and provisions shall be binding upon any and all corporations formed under this act.”

Our supreme court has held that this general power must be exercised by general law, and cannot be exercised by a special law. Braceville Coal Co. v. People, 147 Ill. 66.

It is, however, urged on behalf of the plaintiff that the general assembly has the power to classify corporations for the exercise of the reserved power; to prescribe “such regulations and provisions as it may deem advisable,” and also: for the exercise of the police power of the state, and that section 1 of the act of 1891, as amended, is a proper classification: of corporations for either of such purposes.

The power of the general assembly to classify corporations must be admitted, but is the classification contained in section 1 a proper or legal classification for either of such purposes ?

The amendatory act of 1897 re-enacts, word for word, seetion 1 of the act of 1891, and adds thereto the following proviso :

“Provided, however, that in mining, manufacture or production of articles of merchandise, the cost of which is mainly-made up of wages, it shall not be unlawful for persons, firms or corporations doing business in this state to enter into joint arrangements of my sort, the principal object or effect of which is to maintain or increase wages.”

While the general assembly has the power to classify corporations for the exercise of the reserved power contained in section 9 of the corporation act, or for the exercise of the police power of the state, and to determine what is a proper classification for such purposes, yet its determination is subject to review by the courts. Frorer v. People, 141 Ill. 171.

The power of the general assembly to classify corporations for either of the purposes aforesaid is subject to the limitation that such classification must not arbitrarily discriminate between corporations in substantially the same situation, and such determination must rest upon reasonable grounds. Arbitrary selection cannot be justified by calling it classification. Gulf C. & S. F. R. R. v. Ellis, 165 U. S. 150.

Section 1 of the trust act, as amended by the act of 1897, makes the attempt to separate certain mining and manufacturing corporations from all other corporations and to withdraw them from the operation of an act to which the latter are subject.

It is clearly an arbitrary discrimination between corporations, substantially of like character, objects and purposes, and no reason can be perceived why mercantile or transportation of other corporations organized for pecuniary profit should be prohibited from entering into any pool, trust or combination in restraint of trade, or to regulate prices of commodities, while mining and manufacturing corporations producing merchandise, the cost of which is mainly made up of wages, should be permitted to enter into joint arrangements of any sort, the effect of which should be to increase or maintain wages. Such a combination by either class would be equally injurious to the public.

Section 1, as amended, discriminates, not only between" mining and manufacturing corporations, and all others, but also discriminates .between mining and manufacturing corporations engaged in the same business. It divides them into two classes, those the cost of whose output or merchandise is mainly made up of wages; and those the cost of whose output is not mainly made up of wages.

The cost of the output of one manufacturing corporation may be made up of fifty-one per cent, wages, while that of another may contain only forty-nine per cent, df wages. This law permits the former (fifty-one per cent.) to enter into any sort of combination and denies the right of the latter (forty-nine per cent.) to do so. The fluctuations in the price of the raw material might change them from time to time from one class to the other, and thus their rights be determined by the fluctuations of the market for the raw material used by them, respectively.

The classification is one of degree, of the cost of raw material and labor, respectively, and is not based upon any reason or principle.

Second. Section 1, as amended, is unconstitutional for the further reason, that it is unequal and partial legislation which was forbidden at common law and cannot be sustained upon any principle of right or justice.

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People v. Richards & Kelly Manufacturing Co., 1 Ill. Cir. Ct. 171 (Ill. Super. Ct. 1900).

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