CHICAGO, July 22, 1908 (UP) - The $29,240,000 fine assessed against the Standard Oil Co. has been set aside. The case will be tried all over again.
By unanimous decision the United States circuit court of appeals, Judges Peter S. Grosscup, Francis E. Baker and W.H. Seaman sitting, Wednesday reversed the decision of Federal Judge Kenesaw M. Landis, and in an opinion by Judge Grosscup scathingly arraigned the lower court for virtually convicting a corporation that had never been indicted or tried.
The Standard was charged with accepting freight rebates from the Chicago & Alton railway.
In brief, the circuit court of appeals decided that the lower court erred as to the number of offenses, and erred in assessing an excessive fine and one which reached persons not defendants of record in the case.
The decision is not only a victory for the Standard Oil Co., but attorneys here declare it is also a victory for corporations which hold that no criminal liability will be incurred in cases of this sort unless it is shown that the shipper had specific knowledge of the fact that the acceptance of a rebate is a violation of law.
"The effect of the decision," said United States Dist. Atty. Sims, "is that, if this case is retried and fines are imposed, the fines must be materially less than the $29,240,000 imposed by Judge Landis.
"If the fines should be assessed according to the number of shipments involved, the maximim penalty would be about $10,000; if according to the number of settlements involved, the maximum fine would be $730,000.
"The minimum fines in both instances would be one-fifth of the amounts mentioned. Including this case there are 6,000 counts against the Standard still waiting trial in this federal district alone and about 1,500 outside of this district.
"The decision leaves the case as if it had never been tried and opens the doors to a mass of evidence favorable to the defense. I could bring the case to trial next week, if I wished."
There is a movement on foot already to get a trial next week, but this will probably not go through. Special Counsel Jus. Wilkerson, in charge of the Standard cases, is undecided whether to ask for an early hearing or to wait until fall. Nothing will be done until the attorney general at Washington is consulted.
The opinion contains nearly 8,000 words. As read by Judge Grosscup, it follows in part:
"Briefly stated, the reason of the trial court for imposing this sentence was because, after conviction and before sentence, it was brought out on an examination of some of the officers and stockholders of the Standard Oil Co. of New Jersey that the capital stock of the Standard Oil Co. of Indiana, the defendant before the court, was principally owned by the Standard Oil Co. of New Jersey, a corporation not before the court - the trial court adding (upon no evidence however to be found in the record, and upon no information specifically referred to) that in concessions of the character for which the defendant before the court had been indicted, tried and convicted, the New Jersey corporation was not a 'virgin' offender.
"Is a sentence such as this, based on reasoning such as that, sound?
"Passing over the fact that no word of evidence or other information supporting the trial court's comment is to be found in the record, would be the comment, if duly proven, justify a sentence such as this - one that otherwise would not have been imposed?
"Can a court, without abuse of judicial discretion, wipe out all the property of the defendant before the court and all the assets which its creditors look to in an effort to reach and punish a party that is not before the court - a party that has not been convicted, has not been tried, has not been indicted even?
"That, to our mind, is strange doctrine in anglo-Saxon jurisprudence. No monarch, no parliament, no tribunal of western Europe, for centuries, has pretended to have the right to punish except after due trial under all the forms of law. Can that rightfully be done here, on no other basis than the judge's personal belief that the party marked by him for punishment deserves punishment? If so, it is because the man who happens to be the judge is above the law."
The trial of the Standard Oil Co. of Indiana for acceptance of rebates from the Chicago & Alton and other railroads was the most notable of the trust prosecutions inaugurated by the government. The fine was the greatest ever imposed in the history of English law.
The indictments were returned in August, 1906, the oil company being charged with obtaining concessions in shipments between its plant at Whiting, Ind., and western and southern points. After several indictments had been quashed by Judge Landis the trial began March 4, 1907.
The court learned that the Standard Oil Co. of New Jersey owned the Standard Oil Co. of Indiana, that total earnings of the parent body in three years preceding the investigation had been more than $200,000,000, that dividends of 40 per cent had been paid its stockholders.
Judge Landis then assessed the maximum penalty of $20,000 on each of the 1,462 counts against the oil company.
The attorneys of the oil corporation contended that the tangible property of the Indiana company, if sold on execution, would not exceed $2,500,000 or $3,000,000, and that the value of the Whiting plant was less than $5,000,000.
More than 4,000 pages of typewritten manuscript, or more than 1,000,000 words, were in evidence in the case.
