Harding v. American Glucose Co. (182 Ill. 551, 1899)

Mr. Justice Magruder

delivered the opinion of the court:

The bill in this case is filed by a stockholder in the American Glucose Company, a corporation organized under the laws of New Jersey, but doing business and owning property at Peoria, in Illinois. The stockholder, who files the bill, is a citizen of Illinois. The American Glucose Company owned a plant, consisting of real estate together with the buildings and machinery located thereon, and also personal property, in the city of Peoria in Illinois. The land, upon which the plant is situated, is specifically described in the bill. The primary object of the bill, and the chief relief sought by it, are to prevent the officers and directors of the American Glucose Company from selling and disposing of its plant in Peoria, and from closing out the business, in which it is there engaged, of manufacturing glucose and grape sugar.

The bill charges, that the officers and directors of the corporation have been squandering its assets by diverting the profits made in its business to their own use; and that, in further consummation of their fraudulent disposition of the property of the company, they are about to make a sale of the manufacturing plant in Peoria to a new corporation organized under the laws of New Jersey, and to give up and abandon the business of the company as theretofore conducted in Peoria.

The bill.further charges, that not only is the American Glucose Company about to make a sale of its plant to the new corporation,, but that five other corporations, engaged in the same business of manufacturing glucose and grape sugar, are about to make sales of their respective plants to the same newly organized corporation; that all of said sales constitute one transaction, and that the sale of the American Glucose Company is merely a part of that transaction.

It is charged in the bill that the arrangement, by which the proposed new corporation is to take conveyances of all these plants, constitutes a giant pool, trust, or combine, formed for the purpose of regulating, fixing, and controlling the prices of glucose and grape sugar, oand of suppressing competition in the manufacture thereof, and of creating a monopoly therein.

First—Shortly after the filing of the bill on August 8, 1897, the American Glucose Company and William Hamlin, president thereof, and Cicero J. Hamlin and Harry Hamlin, directors and officers thereof, and all other directors and officers and stockholders thereof (except appellants), filed their answers to the bill. These answers were subsequently withdrawn, but not until June 22,1898, while the cause was on hearing before the circuit court. Replications were filed to these answérs, and an issue of fact was thus made up upon the allegations of the bill, which set up the formation of an illegal trust or combine. Upon the issue of fact as. to the purchases of the plants of other corporations than the American Glucose Company with a view of forming an.illegal trust and crushing out competition and creating a monopoly in the manufacture of glucose and grape sugar, testimony was taken on behalf of the complainants in the bill. We are unable to see why the consideration of the facts as developed by this testimony is not necessarily involved in the decision, of this case by this court, notwithstanding the insistence by one of the counsel for defendants in error in his brief, that “no discussion of any evidence, or pretended evidence, in relation thereto is proper in this court.”

It is true, that, upon the hearing of the cause, the American Glucose Company and its officers and directors and majority stockholders withdrew their answers, and permitted a default and decree pro confesso to be entered against them. This action on their part was a confession of the truth of all the allegations of the bill, which they had answered and put at issue. But the proof, taken in support of those allegations, was not thereby necessarily withdrawn from the consideration of the court in passing upon the issues involved in the case. . Section 18 of the Chancery act provides that, “where a bill is taken for confessed, the court, before a final decree is made, if deemed requisite, may require the complainant to produce documents and witnesses to prove the allegations of his bill, or may examine him on oath or affirmation, touching the facts therein alleged. Such decree shall be made in either case as the court shall consider equitable and proper.” (1 Starr & Curtis’ Stat. chap. 22, p. 401)1 Here, the court did not require the complainants below to introduce proof to sustain the allegations of their bill, but the complainants had the right, even before issue joined, to take depositions to substantiate the averments of their bill. (Doyle v. Wiley, 15 Ill. 576). Certainly, they had a right to do so, after issue was joined. It being a matter of discretion with the court, even after default, to require proofs of the averments of the bill, it may be, that, if the complainants, on being required by the court to do so, should fail to comply, their bill might be properly dismissed for want of such proofs. But the general rule is that, where a bill is sufficient on its face to sustain the contention of the complainants therein, and to entitle them to the relief prayed for, a decree dismissing the bill for want of equity should not be entered in favor of defendants, who, by their defaults, have confessed the bill. (Hoffman v. Schoyer, 143 Ill. 598). In the present case, the court below dismissed the bill as to the defaulted defendants, as well as to the other defendants. This action of the court was, in our opinion, erroneous, not only because the bill was sufficient to justify the relief prayed for, but because its material allegations were sustained by the proofs. This proof was clearly applicable to the actions, taken in the premises by the American Glucose Company and its officers and directors and majority stockholders, who answered the bill. Whether such proof is binding upon the Glucose Sugar Refining Company, holding from and under the American Glucose Company, will be considered hereafter.

As, therefore, the proof is before us in the record, and the case is one of great importance, we deem it our duty, before discussing the questions of law arising out of the demurrer or demurrers to the whole bill or to parts thereof, to examine the testimony upon the issue of fact made by the answers filed.

In the spring of 1897 six corporations were engaged in the manufacture of glucose, two of them in the State of Iowa, and four of them in the State of Illinois. They were the Chicago Sugar Refining Company, operating in the city of Chicago; the American Glucose Company, operating in the city of Peoria; the Peoria Grape Sugar Company, also operating in the city of Peoria; the Rockford Sugar Refining Company, operating in Rockford, Illinois; the American Preservers’ Company, otherwise spoken of as the Davenport Sugar Refining Company, operating at Davenport, Iowa; and the Firmenich Manufacturing Company, operating at Marshalltown, Iowa. There was another manufactory of glucose at St. Charles, Illinois, known as the St. Charles Glucose Company, operated by one Charles Pope, of St. Charles and Chicago. Pope refused to enter the combination hereinafter mentioned at the outset, and is spoken of by some of the witnesses as an “awkward” competitor. The Pope manufactory, however, was of small capacity compared with the others. All of these corporations, thus engaged in the manufacture of glucose and grape sugar, were competitors with each other in that business. The proof shows, that glucose cannot be successfully manufactured, except in what is known as the corn belt of the United States, including the States of Illinois, Iowa, Kansas, Missouri, and parts of Nebraska, South Dakota, Kentucky, and Indiana. The corn belt constitutes an ellipse of about 950 miles in length from east to west and about 700 miles in width, with Peoria as the geographical center, and all within a thousand miles of Chicago. The products of glucose are extensively used; and it is an important constituent in the matter of making table syrups, jellies, and jams, and is also used in the manufacture of beers and wines and cordials. The manufactories, as above named, consumed a little more than 100,000 bushels of corn daily in the manufacture of their products. The American Glucose Company consumed daily about 26,000 bushels of corn; the Chicago Sugar Refining Company consumed in said manufacture about 26,000 bushels of corn daily; the Peoria Grape Sugar Company, which was, however, slightly crippled by a fire consuming part of its plant, consumed therein about 15,000 bushels ‘of corn daily; the Rockford Sugar Refining Company consumed about 16,000 bushels of corn daily; the Davenport Sugar Refining Company, or the American Preservers’ Company, consumed about,9000 bushels of corn daily; and the Firmenich Manufacturing Company consumed about 9000 bushels of corn daily. The capacity of the Pope Manufacturing Company was about 6000 or 7000 bushels of corn daily.

Some time in May, 1897, as nearly as we can gather from the record, a scheme was formed for the purpose of uniting all these corporations in one ownership. The plants, including both real and personal property, so far as they were engaged in the manufacture of glucose and grape sugar, were to be transferred by these corporations respectively to a new corporation to be organized under the laws of New Jersey. Such corporation was not organized completely until August 2, 1897. Its charter, or certificate of organization, bears date August 2, 1897, though it would appear that it did not go into practical operation until August 3,1897, or shortly thereafter. The parties, who were engaged in forming, promoting, carrying out, and consummating the scheme for the consolidation of the property interests of all of said corporations,' were principally the officers, directors, attorneys, and majority stockholders in the old corporations respectively. Nearly all of them, if not all of them, were citizens of Illinois. The principal persons engaged in forming and consummating this consolidation, were Norman B. Beam, and John W. Doane, who were largely interested in the Bockford company above mentioned; William Hamlin, the president of the American Glucose Company; Conrad H. Matthieson of the Chicago Sugar Befining Company; two Chicago lawyers, named John P. Wilson and Levy Mayer, Wilson being also a stockholder in the Chicago Sugar Refining Company; William H. Henkel, secretary of the Illinois Trust and Savings Bank of Chicago; and one J. B. Greenhut. Norman B. Beam was a director in the Illinois Trust and Savings Bank of Chicago. Between the early part of May, 1897, and August 11 or 12,1897, all the plants above mentioned, except that of Pope, belonging to the six corporations hereinbefore described, were transferred to the Glucose Sugar Befining Company of New Jersey; and said plants since August 12, 1897, have been in the possession of and operated by the Glucose Sugar Befining Company of New Jersey. After August 7, 1897, they ceased to be operated by the respective corporations theretofore owning them. As we understand the evidence, these six corporations were, with the exception of the Pope manufactory át St. Charles, Illinois, the only manufactories engaged in the manufacture and sale of glucose and grape sugar within the limits of the corn belt already described. The negotiations and transactions, leading to the result thus accomplished,-were conducted secretly and with great caution. The organization of the new corporation, which was to be vested with the title to the plants, was deferred until the last .moment, and was not consummated until the day before, or the day on which, the present bill was filed.

The general method, adopted for the consolidation of these properties, was substantially as follows: Option contracts were drawn up, one for each of the corporations already mentioned. By the terms of these option contracts, which were made between each of said corporations on the one part, and the Illinois Trust and Savings Bank of Chicago on the other, the corporation agreed to sell all its real and personal property and plant and leaseholds, machinery, easements, buildings, fixtures, and utensils, located at the place at which it was engaged in the manufacture of glucose, together with its good will, trade rights, trade-marks, and the right to use its patents, to the bank upon the request of the bank, or its transferee, provided such request should be made before August 15, 1897. The option contract between the Firmenich Manufacturing Company of Iowa and the Illinois Trust and Savings Bank of Chicago was dated May 24,1897; the contract between the Rockford Sugar Refining Company, Limited, of Illinois and the bank was dated May 25, 1897; the contract between the Chicago Sugar Refining Company of Illinois and the bank, and that between the Peoria Grape Sugar Company, and the bank, were dated June 7, 1897; there are two contracts between the American Preservers’ Company of West Virginia and the bank,- one dated June 3,1897, and the other dated July 19, 1897, the latter recited to be a substitute for the former; the second contract between the American Glucose Company of New Jersey and the bank was dated June 9, 1897. Some of these contracts state, that a part of the purchase money for the plant and property to be sold is to be paid in the stock of a corporation with a capital stock of $40,000,000.00 of which $14,000,000.00 is to be preferred stock, and $26,000,000.00 common stock, which said corporation is about to be organized and to acquire said property, and also the properties specified in the contracts made between the five other corporations and the bank. Some of these contracts provide, that the bank may pay for the property at its option in the stock of the new corporation to be formed, instead of cash. The contracts also contain a provision, by the terms of which the vendor corporation and its officers agree not to buy or sell or manufacture giucose, or its kindred products or by-products, for a certain term of years within a thousand miles of Chicago, the said term of years being three years in some instances, and twenty-five years in at least one instance. The defendant in error, the Glucose Sugar Refining Company of New Jersey, a corporation which was to be organized according to the terms of these option contracts, and which was finally organized as above stated, is a corporation, whose certificate of organization provides, that it shall have power to conduct business throughout the United States and all foreign countries with the object of manufacturing and selling glucose, and buying and selling corn and all its products and by-products and similar articles of merchandise, and to transport the same, and to do all lawful business incidental thereto; and said certificate further provides, that the total amount of the stock shall be $40,000,000.00 of $100.00 per share, $14,000,000.00 to be preferred stock, and $26,000,000.00 common stock, etc.

The first option contract, made between the defendant in error, the American Glucose Company, and the Illinois Trust and Savings "Bank, was dated May 19,1897. Thereby, the American Glucose Company agreed to sell to the bank its plant, etc., for $1,750,000.00, one-third in cash, and the balance to be paid by notes secured by mortgage on the property; it further provides, that “it is the purpose of the bank, or of those for whom it acts, to organize a corporation under the laws of one of the States of the Union for the purpose of operating this plant." The contract of May 19 further provides, that an exhibit of the new corporation and its means shall be made to the president of the American Glucose Company, and then proceeds as follows: “If he (said president) be satisfied with the nature and extent of the property so owned, or if it be the property, which has been verbally stated to him will be acquired by such corporation, then $600,000.00 in amount at par of the preferred stock of such corporation, out of a total issue not exceeding $14,000,000.00, and $850,000.00 in amount at par in the common stock of such corporation, out of a total issue not exceeding $26,000,-000.00, shall be lodged with such president, and this stock shall be held as an additional collateral security for the payment of such notes and each thereof,” etc. This agreement of May 19 also provides, that the bank is to purchase all the supplies and material on hand belonging to the American Glucose Company, and is to assume all the bona fide contracts made by the company in due course of business. It also provides, that the company and its officers and directors, including the Hamlins, shall bind themselves to the corporation not to buy or sell glucose within a thousand miles of Chicago. An unsigned copy of this contract is in the record. The contract of May 19, 1897, was not signed by the bank, and it is claimed by William Hamlin, the president of the American Glucose Company, that it was not signed by that company. We think, however, that it was signed by the American Glucose Company, as it was originally drawn. A new option contract for the sale of its property to the bank, bearing date June 9, 1897, was executed by the American Glucose Company by William H. Hamlin, its president, as a substitute, as is alleged, for the contract of May 19, 1897; and it makes the following recital in the eleventh paragraph, to-wit: “This agreement is in lieu of and in substitution for a certain other option, bearing date the 19th day of May last, which was executed by the glucose company, running to the bank, and which was delivered to J. B. Greenhut,” etc.

The option agreement of June 9, 1897, fixes the price of the realty of the American Glucose Company at $1,-750,000.00, and its section 6 provides, that the American Glucose Company and the Hamlins are not to make or buy or sell glucose for five years within a thousand miles of Chicago.

The agreement of June 9, 1897, is claimed by plaintiffs in error to be a contract of sale to the bank of the property of the American Glucose Company for cash, and it is contended that all the provisions for- the taking of stock in the new corporation to be organized, either as purchase money, or as collateral to notes given as purchase money, were eliminated. The evidence certainly shows, that many of the officers and stockholders in the corporations, which sold their plants to the new corporation, held stock in the latter after the transfer of the plants to it. William Hamlin and Harry Hamlin both held stock in the Glucose Sugar Refining Company at a date subsequent to the delivery of the deed, which conveyed to that company the plant of the American Glucose Company. It is a fair conclusion from the testimony, that the purchases of many of the six plants were paid for, either in whole or in part, by the stock of the new company. An instance of testimony of this kind is furnished by the letter of June 21, 1897, written by Levy Mayer to William Hamlin, and Hamlin’s reply thereto, dated June 22, 1897; that letter and reply are as follows:

“First, you will underwrite $500,000.00, taking $500,-000.00 preferred stock and about 143 per cent additional common, and will make a contract with a responsible party by which, in effect, you are to have the right to ‘put’ the amount so underwritten within a year and the other parties to have the right to ‘call’ that amount within the same time, the purchase price to be the amount to pay for the underwriting and six per cent additional.

This arrangement to be embodied in a contract, which shall be legally enforcible. Second, you will underwrite an additional $500,000.00 upon a basis say of 50 per cent, you to get the $500,000.00 preferred stock and about 143 per cent additional common stock, and to make a contract by which the second party is to have the, right, within one year, to purchase of you this $500,000.00 so underwritten, and to receive from you the $500,000.00 preferred stock and 143 per cent common stock and to pay the price you paid therefor,—that is to say, 50 per cent, or $250,000.00, and six per cent interest thereon; you to have no right to ‘put’ but the other party to have the right to ‘call. ’ All this to be embodied in a contract legally enforcible.” The letter then adds, viz.: “Should what I state here be in any way different from your understanding of the facts, I shall be glad if you will send me a line putting me right.”

“Buffalo, N. Y., June 22,1897.

“Mr. Levy Mayer, 811-839 Unity Building, Chicago, Ill.:

“Dear Sir—Your favor of the 21st inst. is this morning received. Your understanding of my proposition to underwrite, as therein expressed, is correct in every particular. You will remember that you said on Saturday that a ‘put and call’ arrangement, such as I have suggested, would not be legal in Illinois, and that yon did not know whether it would be in New York State or not. At this writing I have had no legal advice upon the subject.

Yours very truly,

William Hamlin.”

The letters above quoted show that, after June 9, when the last option contract of the American Glucose Company with the bank was executed by that company, Hamlin proposed to underwrite more than $1,000,000.00 of stock in the new corporation to be formed; he says that the proposition to take this stock was made on behalf of the company, and would inure to the benefit of the stockholders. But whether the plant of the American Glucose Company was paid for in cash, or in stock of the Glucose Sugar Refining Company, makes no practical difference. The purchase of the plant of the American Glucose Company was a part of the single transaction, which involved the purchase, at one and the same time, of the plants of all the six corporations. This was well known to William Hamlin, president of the American Glucose Company. He knew, and was informed by letters from the promoters of the transaction, that they were trying to purchase or secure the property of the other five companies. He also knew that the purchase of the other properties and the organization of the new corporation would not be effected or accomplished, unless there was at the same time a transfer of the property of the American Glucose Company. The parties organizing the combination refused to consummate it, unless Hamlin would bring into the combination the property of the American Glucose Company. Money and subscriptions were secured upon the faith of the option contract executed by Hamlin for the American Glucose Company, and deposited with the Illinois Trust and Savings Bank, on account of the belief by the parties, paying such money and subscriptions, that the American Glucose Company was to be a party to the combination.

That all the corporations acted together in the matter is shown clearly by the correspondence, including the letters of the attorneys, and by the facts that the option contracts of all the companies were delivered at the same time to the same repository, to-wit, the bank, to be transferred by the bank as the promoters of the scheme should direct, and by the further fact that all the deeds, conveying the several properties to the new corporation, were executed about the same time, and delivered simultaneously.

On June 11, 1897, John P. Wilson, Levy Mayer, and J. B. Greenhut, over their own signatures, addressed and delivered to the Illinois Trust and Savings Bank of Chicago a written communication, by the terms of which they deposited with the bank the six option contracts, executed by the six corporations respectively, and by the terms of which it was agreed to sell their respective properties to the bank; and, in said written communication, after describing the contracts, the following statements were made, to-wit: “All of the said contracts áre deposited with you on the following conditions: First, you shall hold, transfer, assign, or otherwise dispose of all of the said contracts in such, way, and in such way only, as you shall be directed to do by the joint order in writing of the undersigned; second, unless you shall receive the joint order to the contrary thereof before August 16,1897, you are authorized upon the request of said parties to said contract to surrender and deliver to said respective first parties their respective contracts.” Below the signatures of Wilson, Mayer, and Greenhut, the Illinois Trust and Savings Bank, by William Henkel, its secretary, wrote the following, to-wit: “The undersigned hereby acknowledges the receipt of all the contracts mentioned in the foregoing instrument, and hereby agrees to hold said contracts subject to the conditions and provisions specified in said foregoing instrument;”

The option contracts, thus deposited with the Illinois Trust and Savings Bank, remained with that bank until about August 5, 1897, or a few days thereafter. Let us see what was done in the meantime. On July 15, 1897, Levy Mayer telegraphed to William Hamlin, president of the American Glucose Company, to send abstract of title, and in his telegram added the following words: “Deal closed. Keep strictly confidential.” About the same time Mayer wrote to Hamlin, acknowledging the receipt of a letter and telegram from him in regard to notice of a stockholders’ meeting thereafter to be held, in which letter Mayer says: “The Davenport company, I am satisfied, for legal reasons could not be legally shut down, owing to the fact that its plant is in possession of its lessee, the Davenport Syrup Refining Company, which latter has a number of substantial contracts yet to be filled. I succeeded, however, in making very satisfactory arrangement, by which it will be optional to the new company to take over outstanding contracts and to purchase undelivered produce on hand. May I trouble you to send me, as soon as possible, accurate memoranda of the improvements, and contracts for improvements, etc., which under your contract you will ask the new company to assume. ”

On July 17,1897, Mayer sent to William Hamlin, president of the American Glucose Company, at Buffalo, New York, the following telegram: “Letter received. Matter has reached a point where its consummation is a certainty. It has been financed successfully and most satisfactorily, as you will agree when you learn details. If your counsel thinks stockholders’ meeting necessary, please have same called to-day. A day or two is of the greatest service to me at this time. In your notice of meeting please state no more than is legally requisite. Am procuring the consent of different companies to shut down. Chicago, Peoria, Rockford, have agreed to do so at once. Pirmenich has agreed to do so not later than next Saturday. Am now negotiating with Davenport in that direction. Would like you to do as we have done.” To this telegram from Mayer, Hamlin sent the following telegram in reply: “We will do everything to facilitate you. Works stopped grinding Thursday on account of coal strike.”

Can there be any doubt, after reading these letters and telegrams, that these parties were engaged in a scheme to have all the six corporations shut down their manufactories, and abandon their business? Can there be any doubt that Hamlin, president of the American Glucose Company, knew that the other corporations were shutting down their plants with a view to conveying them to a new corporation, and that, in transferring the plant of his own company, he was aiding the consolidation of all the properties in one giant trust? It must be remembered in this connection, that preparations were all the time going on for the organization of the new corporation, and thát this new corporation was organized on August 2 or 3, 1897, and took possession of and commenced operating all the plants of the six corporations, which had suspended business, on and after August 12, 1897. But this is not all. On July 19,1897, the board of directors of the American Glucose Company-made and passed a resolution, which is set out in full in the statement preceding this opinion, wherein it was resolved that it was advisable to relinquish the business of manufacturing glucose and grape sugar, and such other business as it was engaged in at Peoria; and wherein it was resolved that the nature of its business should be changed, and that its plant and property in Peoria should be sold, and that its manufacturing should be thereafter confined to the manufacture of starch in Buffalo; and that a meeting of stockholders should be called to take place in Buffalo on August 8,1897; and to which resolution was attached a notice, signed by George W. Lamb, secretary, that the meeting would so be held at the office in Buffalo on August 3, 1897, for the purposes specified in the resolution. On July 23, 1897, John P. Wilson wrote the following letter to William Hamlin: “In the matter of the proposed sale of the plant of the American Glucose Company at Peoria, under the contract heretofore executed between said company and the Illinois Trust and Savings Bank, I beg leave to say that all the arrangements have been perfected by the proposed purchasers to complete the purchase and pay for the plant within the time limited by said contract. The uncertainty as to the date of closing the purchase lies in the fact that a number of properties are under contract, the purchase of all of which had to be completed simultaneously. We have not yet received the abstracts of title to some of these plants. These abstracts of title will have to be examined and the titles to all of the plants proposed to be purchased approved before the transaction can be closed, as it is a single transaction.” If this letter, written by the attorney who was most active in promoting and carrying out the scheme for the consolidation of these properties, does not show that the several purchases of all the plants were to be made simultaneously, and together constituted a single transaction, then we fail to understand the meaning of the English language.

On July 26, 1897, Mayer wrote to Hamlin as follows: “I thank you for your very kind letter of the 24th inst. I hope to be able to arrange matters so that the recent destruction by fire to one of the buildings of the Peoria Grape Sugar Company will not interfere with the pending arrangements for the purchase of.its property by the new glucose company. My address in New York will be Savoy Hotel, or American Spirits Manufacturing Company, Mills Building.” On the same day Mayer wrote to Hamlin in reference to the salaries to be paid by the new company to Henry-E. Grant, treasurer, and George W. Lamb, secretary of the American Glucose Company, as follows: “Under existing contracts the time has arrived to determine, as I am advised, what arrangements can be made with your Messrs. Grant and Lamb. As I am told, neither Mr. Grant nor Lamb seems to be satisfied with the amounts offered, Mr. Grant suggesting that he should receive $25,000.00 a year and Mr. Lamb $10,000.00 a year. It is, however, important that the new company should, if possible, secure the services of those gentlemen mentioned at salaries not exceeding those fixed by Mr. Matthieson. It is therefore now opportune for you to undertake the office of negotiating, if possible, with Messrs. Grant and Lamb, so that contracts as contemplated can be secured from them.”

On July 27, 1897, Mayer wrote to Franklin B. Locke, of Buffalo, an attorney and a director for many years of the American Glucose Company, the following letter: “You ask for the name of the grantee. That has not yet been positively determined, though it is very probable that the name will be ‘United States Glucose Company.’ This matter will be determined, in all probability, some time this week, when it is expected to apply for the charter.' The new company will be organized under the laws of New Jersey. It is our intention to have printed contracts uniform, as near as possible, for execution by the different officers of the vendor companies.” On the same day, Locke wrote to Mayer as follows: “I now hand you draft of the little agreement promised yesterday. If satisfactory, kindly'O. K. it and return it to me, so that I can have it executed upon being advised of the formation of the new corporation.”

The letters thus quoted not only show that the contracts of sale to be executed by the various corporations, selling their properties, were to be uniform in their terms, but also show that the new company was to silence opposition, as well as competition, by providing places for the officers of the old companies, and by taking from them contracts not thereafter to engage in the manufacture of glucose. The above letter from Locke to Mayer refers to an agreement, under which the Hamlins stipulated not to engage in the business of manufacturing glucose for a certain number of years. This transaction is thus brought within the scathing condemnation of the Supreme Court of the United States in United States v. Trans-Missouri Freight Ass. 166-U. S. 290, where it was held not to be “for the substantial interests of the country that any one commodity should be within the sole power and subject to the sole will of one powerful combination of capital;” and where it was held to be unfortunate for the country to deprive it “of the services of a large number of small but independent dealers;” and where it was held to be “not for the real prosperity of any country that such changes should occur, which result in transferring an independent business man, the head of his establishment small though it might be, into a mere servant or agent of a corporation for selling the commodities which he once manufactured or dealt in, having no voice in shaping the business policy of the company and bound to obey orders issued by others.”

About this time, or shortly before this time, Mayer wrote a letter to Hamlin as to the insurance policies upon the property, asking for information in regard to the same, “so that, when the transfers are made to the new company, no time may be lost.” He also wrote the following letter: “I want to say that I find on my return this afternoon that the matter is progressing to my entire satisfaction, and I have no doubt whatever that all the transactions can be completed unless some hitch should occur by reason of some defect in the titles, the abstracts of which are now being either brought down to date or examined. Some three have already been completed and delivered to us, and the others are being hastened forward to be completed. We are still waiting for your abstract.”

On July 28, 1897, Hamlin wrote to Mayer as follows: “Mr. Grant’s connection with us has given him perfect satisfaction in the past, is satisfactory to him now, and his contract insures him a comfortable living for five years to come. We are satisfied with the contract and intend to carry it out to the letter, unless, at his request, it be terminated before its natural expiration. We feel that some line of business not in competition with the new glucose company will soon be thought of by us in which Mr. Grant’s knowledge and abilities will not only enable us to secure satisfactory returns, but will provide him with agreeable occupation and assure him fair pecuniary returns. The price for his services that he named to Mr. Matthieson, while very much in excess of the contract price with us, is not so unreasonable as it might seem at the first blush. In my judgment Mr. Grant is more responsible than any other individual for the condition of affairs that rendered it possible for all parties to give favorable consideration to the consolidation plan. I will do that which I can fairly to promote his interests and those of the new company.”

On July 29, 1897, John P. Wilson wrote to Locke as follows: “Will you kindly leave the name of the grantee in the contract blank for the present, and I will wire you the name of the grantee in ample .time to be inserted before execution.” In one of his letters written at this time, William Hamlin says: “Under Mr. Grant’s management the capacity of the work was increased over fifty per cent, to 22,000 or 23,000 bushels. The increase of capacity, attended by a process that lessened the cost, enabled the American Glucose Company to produce its products and to sell them at a price that made the business, as a whole, unprofitable, in my opinion, to its competitors. We had lessened the cost of the labor and the cost of fuel, and increased the quantity and bettered the quality of the main and by-products.”

On August 2, 1897, Wilson wrote to Locke as follows: “Might it not be well to keep the meeting of board of di-. rectors and stockholders alive by adjournment, so that, if any question should arise requiring action, the same might be speedily taken?”

On August 3, 1897, Mayer wrote William Hamlin as follows: “I find that during my absence all the moneys necessary to complete the purchase of the properties by the new company have been paid to the Illinois Trust and Savings Bank, and are now awaiting distribution. While east, the charter of new company was prepared, and was yesterday filed for record at" Trenton, so that the new company, the Glucose Sugar Refining Company, is now in actual existence. The abstracts of title to the six properties have been furnished and have been examined. As you can well imagine, in a deal of this magnitude there are a large number of details to be looked after, as well as instruments of transfer and other contracts to be executed and delivered. These contracts must necessarily all be delivered contemporaneously. We shall be able to begin to close the transaction this coming Thursday morning at ten o’clock, and hope to be able to conclude the entire work during that day, if possible. It is therefore necessary that all of the parties in interest should be in this city at the hour indicated.” In reply to this letter, Mayer received the following telegram from Hamlin on August 4, 1897: “I will call on you at your office to-morrow morning.”

On August 3, 1897, the meeting of the stockholders, of the American Glucose Company was called pursuant to the notice already mentioned. At that meeting, George P. Harding, one of the plaintiffs in error and the stockholder who filed this bill, and who had theretofore written several letters to officers of the American Glucose Company, but had failed to obtain any definite or reliable information as to the proposed sale of the company’s plant, made a motion that the stockholders of the company should refuse to ratify the alleged contract for the sale of the Peoria plant of the company to the glucose trust, or corporation, or its representative, upon the grounds that the sale was unlawful, as being prohibited "by the statute against trusts of the State of Illinois; and that the creation of a trust in glucose by contract with the company for the purchase and sale of a necessary element in the unlawful combination by such sale was in violation of the powers of the company as given by its charter; and that the contract to relinquish the right to manufacture glucose was against both the right, interests, and powers of the company; and that the price named and made in the offer was grossly inadequate, and that it was not within the powers or duties of the president of the company to make the sale.

At this stage of the proceedings and upon this date, to-wit, August 3, 1897, the original bill in this case was filed, and an injunction was obtained. The new company, the Glucose Sugar Refining Company, had only come into existence on the day before the bill was filed. All the proceedings, which are now to be detailed, occurred after the filing of the bill in this case, and inasmuch as the American Glucose Company was served with summons August 3,1897, the transfers and other transactions hereinafter mentioned were made and took place pendente lite.

By an instrument in writing, dated August 5, 1897, signed by John P. Wilson, Levy Mayer, and J. B. Green-hut, and concurred in in writing on August 7, 1897, by Edwin L. Johnson, hereinafter named, and addressed to the Illinois Trust and Savings Bank of Chicago, the bank was designated as the party of the second part in the option contracts, heretofore referred to and made by the six corporations already named; and said communication to the bank recited, that all of said contracts had been deposited by Wilson, Mayer, and Greenhut with the bank to be held, transferred, and disposed of by it subject to their joint order; and that, in and by all said contracts, it was understood and agreed' that the same might be transferred and assigned by the' bank; and that, when so transferred and assigned, the said contracts'respectively, and all of their respective parts or provisions, should inure to the bank, and should run in favor of, and be obligatory upon, its transferee, and be of the same purport and effect, as though such transferee had originally been made second party to the said contracts respectively; and it was further therein recited, that it was in all said contracts further provided that, in case of said transfer and assignment by the bank, all of its rights, as well as said obligations under said contracts respectively, whatever the same might be, should forthwith cease and terminate; and after such recitals the said Wilson, Mayer, and Greenhut therein requested that, pursuant to the terms of all said contracts respectively, the bank should forthwith, by proper instruction, transfer and assign all said contracts respectively to Edwin L. Johnson, of Chicago, and all of said contracts, when so transferred and assigned by it to Johnson, should inure to his benefit, and run in favor of, and be obligatory upon him to the same purport and effect, as though he had originally been made the second party to said contracts respectively.

The Illinois Trust and Savings Bank of Chicago was a corporation, organized under the laws of Illinois for the purpose of doing a banking business, and had no power under its charter to purchase the plants and properties of corporations, engaged in, the manufacture of glucose and grape sugar. Therefore, the option contracts, providing for a sale of these properties to the bank, were absolutely void. It does not appear, that the contracts were signed by the bank, but, when signed by or for the respective corporations, they were accepted and held by the bank. The bank claims that these contracts were delivered to it to hold in escrow, and that it merely acted for the parties as the repository or custodian of these contracts, subject to be disposed of as the parties might order. The proof tends to sustain the contention of the bank that it was a mere repository of the papers. It went further, however, in its assistance of these parties to carry out their scheme, than merely to act as custodian of the papers.

Attached to each contract of sale was a written assignment thereof by the bank to Edwin L. Johnson, who therein accepts the assignment, and assumes all the obligations created by the contract in favor of the bank. These written assignments, signed by the bank and Johnson, appear to have been dated August 9, 1897, except the assignment on the contract of the American Glucose Company, which was dated August 11, 1897. At least two of the contracts thus signed provided, that the proposed corporation should be organized in such State, and in such manner as should be satisfactory to John P. Wilson and Levy Mayer.

A deed, dated August 7, 1897, was executed by the American Glucose Company, by William Hamlin, its president, conveying the plant of the company in Peoria to Edwin L. Johnson, of Chicago, for an expressed consideration of $1,750,000.00, which deed was recorded on August 12, 1897. A deed, dated August 9, 1897, was executed by Edwin L. Johnson, conveying the said plant in Peoria to the Glucose Sugar Refining Company of Hew Jersey for an expressed consideration of $10.00, and other good and valuable considerations, which deed was also recorded on August 12, 1897. A deed, dated August 7, 1897, was executed by the Chicago Sugar Refining Company, conveying to said Johnson its plant in Chicago and the real estate on which it was situated, for an expressed consideration of $6,250,000.00; which deed was recorded also on August 12, 1897. A deed, dated August 9, 1897, was executed by said Johnson, a bachelor of Chicago, to the Glucose Sugar Refining Company of Hew Jersey, conveying the same property in consideration of $10.00 and other good and valuable considerations. Other deeds were executed by the other corporations to Johnson, and by Johnson to the Glucose Sugar Refining Company. The witnesses testify, that these deeds were delivered to the Glucose Sugar Refining Company, or to C. H. Matthieson, its president, simultaneously. The deeds were delivered at the banking office of the Illinois Trust-and Savings Bank on the evening of August 11, 1897, at 5:30 o’clock,which was after the regular business hours.

The injunction writ was served upon the American Glucose Company on August 3, 1897; and the injunction was in force until August 11,1897, when it was dissolved. It will thus be observed, that the request of Wilson, Mayer, and Greenhut to the bank to assign the contracts, and the execution of the deeds by the corporations to Johnson, and by Johnson to the Glucose Sugar Refining Company, were all made and effected while the injunction was pending. The option contracts referred to, and the assignments attached thereto, were also delivered by the bank to Johnson on the evening of August 11, 1897, •but these and all other papers were at once handed back by Johnson to the bank, and placed in its vaults. Edwin L. Johnson above referred to was a clerk in the law office of John P. Wilson. He never paid a dollar for the purchase of the vast properties, which were conveyed to him, nor did he receive a dollar when he conveyed these properties to the Glucose Sugar Refining Company. When he signed the deeds, he did not know what he was doing; nor did he know that any deeds were executed to him by these various corporations; nor were any such deeds delivered to him. The testimony of Johnson is in the record, and he says: “I am a clerk in Mr. Wilson’s office; * * * never had any connection in any way with the defendants; * * * never received a deed from any of them that I know of, nor from the American Glucose Company, nor authorized any one to receive one for me; some papers I executed; I don’t know whether they were deeds or not; I did not read the papers there; * * * I was acting under instructions of Mr. Wilson; he did not tell me what they were; to my knowledge I never received any deeds.” At the taking of the testimony in this case, ■ Wilson made the following statement which was taken down by the commissioner, and is in the record: “As to Mr. Johnson’s testimony, Mr. Johnson was a clerk in my office, and I stated to him in connection with the transfer of the titles of the glucose property, that I should like to have the titles taken in his name, and have him make the conveyance to the new company; he consented, and he signed such papers as I presented to him on my statement that they were all right. His relation was merely acting at my request as the person through whom the title should be conveyed, and having no part in the negotiations whatever. He was present when the deeds were received and delivered, and received the documents.

I am not sure whether the deeds passed into his hands, but I think they did, and this was done in his name with his consent. Mr. Johnson would not be able to state the contents of the documents, not having read them.”

Henkel says, that all the papers in regard to this transaction, that came into the hands of the bank, were vouched for by Wilson and Mayer; and that, among the papers so handed to the bank and vouched for by Wilson and Mayer, was a written order, signed by Edwin L. Johnson, and endorsed as correct by Wilson and Mayer, dated Chicago, August 10, 1897, and which is in the following words: “I hand you herewith certificates for 34,500 shares of preferred stock, and 49,2851"- shares of common stock, of the Glucose Sugar Refining Company of New Jersey, with which to satisfy and cancel the receipts for money received by you under the underwriters’ agreement in regard to said company, and request you to turn over and pay out all money so deposited under the underwriters’ agreement as follows, namely: To the American Glucose Company of New Jersey $1,977,000.00; to the American Preservers’ Company of West Virginia $700,000.00; to the Glucose Sugar Refining Company of New Jersey $773,000.00; the above amounts include two subscriptions, aggregating $75,000.00, upon which you have as yet issued no certificates.” What the underwriters’ agreement referred to in this order was the record does not show, as Wilson refused to allow the witnesses to testify in regard to it, and refused to allow it to be produced in evidence. That underwriters’ agreement was the authority, under which the bank received the money, and gave the receipts mentioned in the order. The details in the matter were conducted and arranged with the bank by Wilson and Mayer, but, owing to the refusal of the witness to testify at the suggestion of counsel, it is impossible to state what those details were.

On the evening of August 11, 1897, the officials and representatives of the six corporations, entering into the consolidation scheme, were present at the Illinois Trust and Savings Bank; and there, upon that- occasion, a delivery took place to the parties of the deeds and other documents. Á check was there handed to H. E. Grant, treasurer of the American Glucose Company, for $377,-000.00, but not for $1,977,000.00. The amount named in the order of August 10, to-wit, $1,977,000.00, exceeded the consideration, to-wit, $1,750,000.00, named in the deed of the American Glucose Company to Johnson, by $227, - 000.00. Why the amount named in the deed was thus increased, or what became of the excess, does not appear.

It appears in the testimony of H. E. Grant and C. H. Matthieson, that in the bank on the evening of August 11, 1897, there were present Matthieson and Wilson, representing the Chicago Sugar Refining Company; Ream, representing the Rockford company; Best and Krause, representing the American Preservers’ Company; Edward Mayer, representing the Peoria Grape Sugar Company; George Firmenich, representing the Firmenich Manufacturing Company; and Grant, representing the American Glucose Company. Grant says: “The deeds were all delivered there at about the same time. I was paid first, delivered my papers, and took my check. I was called by Mr. Henkel, secretary of the bank. He stood in the middle of the room, and called the American Glucose Company. I delivered the papers, took my check, and went out; don’t know who was called next.”

An agreement, dated August 11, 1897, the same day on which the delivery of the deeds took place as above stated, was executed between the American Glucose Company", as party of the first part, and the Glucose Sugar Refining Company as party of the second part, which agreement is as follows:

“Whereas, the parties hereto are engaged in the business of manufacturing and selling glucose, grape sugar, starch and kindred products, and the various products of a glucose factory; and whereas, contemporaneously herewith, the second party has purchased all the real estate, leasehold, buildings, improvements, appurtenances, easements, plant, machinery, fixtures and utensils belonging to the first party, and situate in the city of Peoria, etc.; and whereas, a valuable and substantial part of the consideration paid by the second party, for the property so as aforesaid described was and is the agreement herein contained:

“How, therefore, in consideration of the premises and of the sum of one dollar ($1.00) and other good and valuable considerations, the first party hereby covenants and' agrees with the second party, its successors or assigns, that the first party shall not and will not, at any time during the period of twenty-five years from and after the date hereof, within a radius of fifteen hundred miles of the city of Chicago, Illinois, engage in the business of buying, manufacturing or selling glucose, grape sugar or any of the products now produced by any glucose factory, and the first party shall not, and will not at any time during said period of twenty-five years from and after the date hereof, use in its starch factory at Buffalo the process commonly known as the ‘acid’ process, which process is now in general use in glucose factories in this country."

On August 7, 1897, or about that date, the American Glucose Company assigned to Johnson its patents and policies of insurance, and its business and factories at Peoria, and all of its good will and its business, etc. On August 28, 1897, at a meeting of a majority of the stockholders of the American Glucose Company at Camden, Hew Jersey, that company reduced its authorized capital stock from $1,500,000.00 to $150,000.00, and its stock actually issued from $1,322,500.00 to $132,250.00, and ratified the action, taken at the other meeting on August 3, 1897, and ratified the action of the president and directors in selling the plant at Peoria to Edwin L. Johnson, of Chicago. The action, taken at Buffalo, Hew York, on August 3, 1897, was taken ip New York by the stockholders of a Hew Jersey corporation. It has been recognized as a general rule by this court, that the power of a corporation to perform corporate acts outside of the State of its creation, and where the laws of its corporate existence have no force, does not exist. (Bastian v. Modern Woodmen, 166 Ill. 595). As to the attempted ratification of the alleged sale to Edwin L. Johnson, it has already been shown that there was no sale to Johnson.

Second—A question of law, which arises in the case, is whether the facts, set up in the bill, constitute an illegal trust. The pleadings in the case are in a somewhat singular condition. Some of the defendants answered the bill. One of the defendants to the amended bill filed a paper, which was in part an answer, and in part a demurrer. Others of the defendants demurred to the whole bill. All the demurrers, both in whole and in part, were sustained by the trial court. We are of the opinion that they should have been overruled.

A trust has usually appeared in the form of an agreement between stockholders in many corporations to place all their stock in the hands of trustees, and to receive trust certificates therefor from the trustees. But the question in the present case is, whether a trust is created where a majority of stockholders consolidate their interests by conveying all their property to a corporation, organized for the purpose of taking their property. Any combination of competing corporations for the purpose of controlling prices, or limiting production, or suppressing competition, is contrary to public policy, and is void. (2 Cook on Corporations,—4th ed.—sec. 503a). It makes no difference, whether the combination is effected through the instrumentality of trustees and trust certificates, or whether it is effected by creating a new corporation and conveying to it all the property of the competing corporations. The test is, whether the necessary consequence of the combination is the controlling of prices, or limiting of production, or suppressing of competition, in such a way as thereby to create a monopoly. The demurrers confess the truth of the allegations in the bill; and those allegations are, that a trust was created, or proposed to be created, by the organization of a new corporation and the conveyance thereto of all the property owned by the six competing corporations, and the execution of agreements by the corporations, thus parting with their property, not any longer to engage in the manufacture of the industrial products in which they had been previously engaged. Six corporations were engaged in the manufacture of glucose, which can only be manufactured in a certain district or extent of country, and, with the exception of one small plant, were the only corporations engaged in such business. The allegations of the bill show, that the ability to prosecute such business was rare, and that it is difficult for new parties, not familiar with it, to engag'e in it. Necessarily, when corporations thus situated unite together all their properties in one new organization, and permit the latter to operate their properties, competition will be suppressed, and the new corporation will possess the power to limit production and control prices. All the competing corporations have been put out of the business by disposing of the plants, with which they conducted their business. The grantee of said corporations has no competitor in the market..

The public policy of a State is to be found in its statutes, and, when they have not directly spoken, then in the decisions of the courts, and in the constant practice of government officials. When the legislature speaks upon a subject, upon which it has the constitutional power to legislate, public policy is what the statute, passed by it, indicates. (United States v. Freight Ass. 166 U. S. 290). The public policy of the State of Illinois has always been against trusts and combinations, organized for the purpose of suppressing competition and creating monopoly.

In Craft v. McConoughy, 79 Ill. 346, we held it to be a well settled rule of law, that an agreement in general restraint of trade is contrary to public policy, and is illegal and void.

In People ex rel. v. Chicago Gas Trust Co. 130 Ill. 268, we forfeited the charter of a company, on the ground that it was formed to bring about an illegal combination; and held that an agreement, tending to prevent competition and create a monopoly, is void by the principles of the common law, because it is against public policy; and that public policy favors competition in trade, and is opposed to monopoly, as tending to advance market prices to the injury of the general public.

In More v. Bennett, 140 Ill. 69, we held again, that contracts, restraining the freedom of trade, diminishing competition, or regulating the prices of commodities, are prohibited by law; and that all combinations of capitalists and of workmen in their especial favor, by raising or reducing the prices, are so far illegal, and that agreements to combine for such purposes will not be enforced by the courts.

Again, in Bishop v. American Preservers' Co. 157 Ill. 284, we held that an agreement providing for the welding together of all the interests, engaged in a certain business, in one giant combination under the absolute dominion and control of a board of trustees, was void as contrary to public policy.

It makes no difference that the agreement for the illegal combination is not a formal written agreement. It may be a verbal agreement or understanding, or a scheme not embodied in writing, but evidenced by the action of the parties. In the present case each of six corporations, engaged in the manufacture of glucose, made a contract to sell its plant to a new corporation to be organized, and agreed not to engage in such manufacture for a term of years, and then conveyed all its property to the new corporation organized to conduct the same kind of business; and it did all this with the knowledge and understanding, that each of five other competing corporations was making the same kind of contract, and executing the same kind of conveyance in respect to their own respective properties, all to be consummated and delivered at the same time, and under the direction and management of agents or promoters employed by all the corporations. If the tra