Same-Unauthorized Lease-Combination of Coal Producers and Carriers-Monopoly.-A railroad company of this state leased its franchises and roads to a railway corporation of another state. The lease was not only unauthorized, but was expressly forbidden by law. Its effect was to combine coal producers and carriers, and to partially destroy competition in the production and sale of anthracite coal, a staple commodity of the state. Held to be a corporate excess of power, which tends to monopoly and the public injury.

APPLICATION by John P. Stockton, attorney general of New Jersey.

On order to show cause why injunction shall not issue. Heard upon information, exhibits, and affidavits, answers of the defendants, and limited proofs taken under order of the chancellor, in conformity with the provisions of rule 121. The object of the information is to have a certain indenture of lease made between the Central Railroad Company of New Jersey and the Port Reading Railroad Company, and also a certain tripartite agreement between the Central Railroad Company of New Jersey, the Port Reading Railroad Company, and the Philadelphia & Reading Railroad Company, decreed to be ultra vires, and therefore void; and void also upon the ground of public policy, in that they tend to create a monopoly of the anthracite coal trade within the state, by stifling competition between the contracting corporations, and thereby to increase the price of anthracite coal to the inhabitants of the state. And to effectually destroy the effect of such lease and agreement, under which the property and franchises of the Central Railroad Company of New Jersey have already been delivered to the Port Reading Railroad Company, it seeks a mandatory decree which shall enjoin the Port Reading Railroad Company to surrender and return to the Central Railroad Company the corporate franchises and property, and a restrictive decree which shall perpetually restrain the Port Reading Railroad Company from hereafter controlling and intermeddling with such franchises and property, and the three corporate defendants from all future combinations to do that which will arbitrarily increase or tend to increase the price of coal to the inhabitants of New Jersey. I am asked to now issue an injunction that will, temporarily at least, effect all these ends.

The Central Railroad Company of New Jersey was incorporated by special act of the legislature of this state, entitled "An act to incorporate the Somerville & Easton Railroad Company," approved February 26, 1847. Before then-on the 9th of February, 1831-the Elizabethtown & Somerville Railroad Company had been incorporated, with power to construct a railroad from Elizabethtown to Somerville. The Somerville & Easton Railroad effected a continuation of rail

road communication from Somerville to Phillipsburg, on the Delaware river, opposite Easton, Pa. By a supplement to the charter of the Somerville & Easton Railroad Company, approved February 22, 1849, that company was authorized to purchase the Elizabethtown & Somerville Railroad, and it was provided that the two railroads should be controlled by the charter of the Somerville & Easton Railroad Company, and that the controlling_company should thereafter be called the Central Railroad Company of New Jersey. The purchase was consummated on the 1st day of April, 1849. In 1860, by another legislative act, the Central Railroad Company was authorized to extend its road to the New York bay, at or south of Jersey City. From time to time, by legislative act, the capital of the company was increased, until now the stock outstanding amounts in round figures to about $22,500000 of an authorized capital of $30,000,000. Besides this large capital, the company has an indebtedness of upwards of $45,000,000. It owns, leases, or controls more than 40 tributary railroads. It has a large and prosperous business, and earns a respectable dividend upon its capital stock beyond the pay. ment of the interest upon its indebtedness and its other fixed charges. Its assets exceed in value its outstanding capital stock and its indebtedness, which together aggregate, as has been indicated, more than $67,000,000. In 1871 it leased the Lehigh & Susquehanna Railroad, running from Wilkesbarre to Easton, in Pennsylvania, from its owner, the Lehigh Coal & Navigation Company, a corporation of Pennsylvania, and. also purchased the rolling stock and other equipment of that road. This leased railroad extends through a valuable portion of the anthracite coal region in Pennsylvania. About the same time the Central Railroad Company also invested in coal lands, by organizing, or causing to be organized, the Lehigh & Wilkesbarre Coal Company, and becoming the owner of all, or substantially all, of its capital stock. This coal company issued bonds, which the Central Railroad Company guarantied. In virtue of its interests in the anthracite. coal region and the advantageous location of its roads the Central Railroad Company has become a considerable coal carrier, not only from the mines of the company in which it is interested, but also from the mines of other miners not having railroad facilities, in and through the states of New Jersey and Pennsylvania to the New York harbor, which is the greatest distributing point for anthracite coal in the United States. The Philadelphia & Reading Company, a corporation of the state of Pennsylvania, is also possessed of railroads running into the anthracite coal region of Pennsylvania, and is an extensive coal carrier. Save a few shares, used to qualify di

rectors, it is the owner. of the entire capital stock of the Reading Coal & Iron Company, which, in the year 1891, produced from its collieries 8,203,465 tons of coal, being one-fifth of the total produce of anthracite coal from Pennsylvania during that year. Along the lines of the Philadelphia & Reading Railroad there are also other coal miners, who find a market for their coal by the means of transportation it affords. The capital stock of the Philadelphia & Reading Company, at par, amounts to about $40,000,000, and its indebtedness to more than $160,000,000, all of which is balanced by assets alleged to be of equal value. The annual report of the directors of this company for the year ending November 30, 1891, referring to the coal lands controlled by that company, contains this statement: "The coal lands comprise in extent about thirty-two per cent. of the entire anthracite coal fields of the state, and, taking into account the aggregate thickness of the veins on the company's lands, and the greater proportionate depletion of the estate in the other regions, which has been going on for many years, it must be conceded that we have at least fifty per cent. of the entire deposit remaining unmined." Throughout this report, and reports similar, whenever the lands of the Reading Coal & Iron Company are alluded to, they are spoken of as the property of the Philadelphia & Reading Railroad Company, and that company itself as the property of the railroad.

It appears also that the Philadelphia & Reading Railroad Company has become the lessee of the Lehigh Valley Railroad Company, a corporation of the state of Pennsylvania, which, in turn, is the lessee of the Easton & Amboy Railroad Company, a corporation of this state, having a line of railroad from Easton, Pa., to Perth Amboy. The Lehigh Valley Railroad Company is a miner of coal to some extent, and possesses a railroad which runs through the anthracite coal region of Pennsylvania, and affords facilities for transporta tion of coal there mined to markets in this and adjoining states. For several months past competition between these three roads in the procuration and transportation of coal,. and between each of them and the Delaware, Lackawanna & Western Railroad Company, the Delaware & Hudson Canal Company, and the Pennsylvania Railroad Company, each of which is possessed of interests in the anthracite coal region,. and the means of transportation of coal therefrom, has mate-rially reduced the price of coal to consumers in this state and elsewhere, to the loss of considerable profit to each of the companies named, which would not have been suffered if competition between them had not existed. It further appears that anthracite coal is a necessity to the people of

New Jersey, being the fuel that is most abundantly and cheaply obtainable, and most universally used in their homes and manufactories. The Philadelphia & Reading Railroad Company operates in this state, among other railroads, the Delaware & Bound Brook Railroad, which extends from Bound Brook to the Delaware river at Yardleyville, a few miles above Trenton, connecting with railroads to the anthracite coal region. It possessed and operated this road prior to the year 1890. On the 3d of November, 1890, A. A. McLeod, I. A. Sweigard, William R. Taylor, D. Jones, Robert S. Davis, and John Walker, Jr., all of whom were officers and employes of the Philadelphia & Reading Railroad Company, with others, organized the Port Reading Railroad Company, under the general railroad law of this state, designating in the certificate of incorporation its capital at $2,000ooo, divided into 20,000 shares of the value of $100 each. The corporators named became six of its directors, with six other persons, who were also connected with or friendly to the Philadelphia & Reading Railroad Company. The real business office of the company was fixed at the office of the Philadelphia & Reading Railroad Company in the city of Philadelphia, and a nominal office, to comply with the law of this state, was maintained at Kaighn's Point ferry in the city of Camden, belonging to the Philadelphia & Reading Company. On the same day that this railroad company was organized, Albert Foster, James K. Landers, W. H. Blood, F. W. Stone, and Charles H. Quarles, under the general corporation law of this state, formed the Port Reading Construction Company, with a capital of $100,000, divided into 2.000 shares of the value of $50 each. The incorporators of the company were all officers or agents of the Philadelphia & Reading Railroad Company. Forty shares of the stock, in all of the value of $2,000, were subscribed for, and with that amount of money the company commenced business. The business office of this company was the office of the Philadelphia & Reading Railroad Company in the city of Philadelphia. Shortly after the organization of these two companies under the general laws of New Jersey the Port Reading Construction Company contracted with the Port Reading Railroad Company to build its railroad from a point on the Delaware &Bound Brook Railroad to a point on the Arthur Kill, opposite Staten Island, a distance of 20 miles, for $1,500,000 in mortgage bonds of the Port Reading Railroad Company, and all the capital stock of the latter company, save 400 shares, which had been subscribed for by its corporators, the proceeds of which subscription were paid to the state treasrer, in pursuance of the requirement of the statute that

$2,000 for each mile of road to be constructed shall be deposited with the treasurer of the state at the time of the organization of the company.

Previous to the formation of these companies, the Philadelphia & Reading Railroad Company had purchased 300 acres of land at the proposed terminal of the Port Reading Railroad upon the Arthur Kill, and after the organization of the two companies this land was transferred to the Port Reading Railroad Company. When the contract for the construction of the Port Reading Railroad was executed, a mortgage for $1,500,000 was made by the Port Reading Railroad Company upon its property and franchises, and the bonds secured thereby were transferred to the construction company, and that company thereafter immediately commenced to procure a right of way for the railroad company, and to construct its road. The moneys required in the prosecution of the work were had by loan to the construction company from the Philadelphia & Reading Railroad Company, and as well, when the bonds of the Port Reading Railroad Company could be negotiated, from the sale of them. In the official report by the president of the Philadelphia & Reading Railroad Company to the stockholders of that company for the year ending November 30, 1890, the president says: "In another place in this report the lack of means of placing the product of your mines upon the markets, and the consequent shrinkage of production in proportion to that of competing fields, is commented upon. A marked illustration of the necessity of providing additional facilities for the distributing of anthracite coal in New York harbor and all tide water points tributary thereto is found in the fact that at the time of writing this report there are more than one thousand cars loaded with coal standing on the side tracks in Jersey City because of the lack of dock facilities for transferring coal to vessels; and on account of the restriction which these limitations impose upon your traffic the management is now obliged to transport coal from Port Richmond through the Delaware river and around New York harbor, encountering all the perils of coast navigation at this season of the year, and at an expense largely in excess of all-rail freights. With the view to meeting these wants, and other disabilities under which your company has labored ever since the day it opened its mines, for want of unrestricted access to the waters of New York bay, the greatest distributing center in the country of anthracite coal, your board has determined to promote the construction of a line of road, to be under the control of your company, to extend from the vicinity of the terminus of the Bound Brook