Contracts of monopolistic tendency are illegal by the principles of the common law and by statute.
A contract whose purpose or effect is to create monopoly is condemned by the common and by statutory law as opposed to public policy.
A monopoly signifies an attempt to control the market by destroying or preventing competition and controlling the sources of supply.95 It consists in a wide diversity of practices from agreements between competitors to maintain prices and restrict output, to practices of powerful concerns to use unfair means to force other concerns out of business.
A corporation is not monopolistic merely because it is large.90
There is no monopoly where a concern controls the market through enterprises in manufacturing a better product, selling policies and the like.
Corporation Trusts. The word "trust" in its general legal sense indicates a legal ownership of property by one person for the benefit of another, and is an approved legal concept. The word "trust" as applied popularly to indicate an arrangement among corporations to regulate prices and stifle competition, describes an illegal cooperation monopolistic in character. The original scheme was to have a trusteeship of the stock of competing corporations, trust certificates being issued therefor, the board of trustees holding the stock in trust, and voting it, and thus controlling the directorate of all the corporations. Such a scheme has always been denounced by the courts.97
95. "An attempt to monopolize means an attempt to get control of the industry * * * by means which prevent other men from engaging in fair competition with him." U. S. v. Whiting, 212 Fed. 460.
96. U. S. v. Naval Stores Co., 172 Fed. 455.
The word "trust" also has come to describe popularly a monopolistic corporation, though no technical trust is involved. A corporation is not illegal merely because large, but the question is whether it is in fact monopolistic in character.
Common carriers and public service corporations can by contract with the patron limit their liability for loss occurring from any cause except their own negligence, unless a statute forbids such limitation; employers cannot limit their liability for injury by negligence; but persons otherwise acting in a private capacity can contract against their own negligence.
(a) Common carriers and other public service corporations.
A common carrier of goods at common law is liable for loss arising from any cause, negligence or not, except act of God or Public Enemy, but the Courts have held that this liability may be limited by special contract, except that the carrier cannot limit liability arising from the negligence of its employees. The Federal Government has by legislation restored the full common law rule as to interstate shipments, by declaring such agreements void. Carriers of passengers may limit liability, except for act of negligence, but cannot limit as to acts of negligence.
The rule applies to public service corporations generally that they can limit liability except in case of loss by negligence.
97. Distilling & Cattle Feeding Co. v. People, 156 111. 448.
(b) Employers and employees.
Employers cannot limit liability for injuries arising from their own negligence.
Example 52. Plaintiff, a cook on the outfit cars of a railroad company, in his contract of employment, released the company from liability in case of future injury. Held, in a suit for damages for personal injury, such provision was invalid and no bar to the suit.98
(c) Other cases.
It is competent as a general rule for one contracting with another to limit his liability for negligence.
Example 53. A railroad company having a warehouse leased it to C with a provision in the lease that the railroad should not be liable for loss by fire originated from its engines. A fire occurred and C sued the company, claiming that the provision was invalid to cover a case of negligence. Held, valid and a good defense even against the company's negligence, as the company was not acting in its capacity of common carrier in leasing the warehouse."
The law of most jurisdictions prescribes the rate of interest which a creditor can charge the debtor for the use of money, and attaches a penalty or risk for charging a greater rate.
98. Kansas R. Co. v. Peavey, 29 Kan. 122.
99. Checkley v. I. C. R. Co., 257 111. 491.
Interest is compensation for the use of money owing to another. It is allowed in some cases where not agreed upon. For instance, judgments bear interest. But generally interest bearing debts are those which are agreed upon. The law now regards it as entirely proper that one who loans another money should have compensation from the other.100 Inasmuch, however, as those who are borrowers are frequently the easy victims of oppressive provisions the enforcement of which might throw them or certain of them upon the community it has become a commonly accepted policy of the law to limit the rate of interest which it is proper to charge. Above that is "usury." Charging usurious rates of interest is not criminal in the sense that it is punishable in any criminal proceeding. The penalty prescribed is a civil penalty, as for instance, loss of all interest. It is generally held that the defense of usury is one that a party must make for himself when sued upon the loan, and that if he pays the interest he cannot recover it back again upon the ground that it was usurious.101 The penalties prescribed in case of usury differ in different states. In some it is loss of the excess interest, in some loss of all interest, in some loss of a portion of the principal.
Corporations by some laws are excepted from the operation of the usury statute. Any amount agreed to be paid by them is enforceable.
Certain classes of lenders are allowed a greater rate of interest because of the nature of their business, as for instance, pawn brokers and lenders who loan in small amounts as a business. To lend at such rates such lenders must comply with the law permitting that class of business, as, for instance, the pawn broker statute.
100. By the early English law, "Christians" were not allowed to charge interest, and all interest, whether lawful (by those not Christian) or unlawful was called "usury."
101. In re Fishel, 192 Fed. 412.
Any device is usurious if it amounts to a greater charge than is permissible under the statute, no matter by what name called. Thus a "commission" on one's own money, a charge for services, if merely evasive, make the contract usurious if all the charges aggregate more than the rate allowed by law.102