Kenesaw Mountain Landis


Kenesaw Mountain Landis : biography

November 20, 1866 – November 25, 1944

Landis had been a lawyer with a corporate practice; upon his elevation to the bench, corporate litigants expected him to favor them. According to a 1907 magazine article about Landis, "Corporations smiled pleasantly at the thought of a corporation lawyer being on the bench. They smile no more." In an early case, Landis fined the Allis-Chalmers Manufacturing Company the maximum $4,000 for illegally importing workers, even though Winifred Landis’s sister’s husband served on the corporate board. In another decision, Landis struck down a challenge to the Interstate Commerce Commission’s (ICC) jurisdiction over rebating, a practice banned by the Elkins Act of 1903 in which railroads and favored customers agreed that the customers would pay less than the posted tariff, which by law was to be the same for all shippers. Landis’s decision allowed the ICC to take action against railroads which gave rebates.

Standard Oil (1905–1909)

By the first decade of the 20th century, a number of business entities had formed themselves into trusts, which dominated their industries. Trusts often sought to purchase or otherwise neutralize their competitors, allowing the conglomerates to raise prices to high levels. In 1890, Congress had passed the Sherman Anti-Trust Act, but it was not until the Theodore Roosevelt administration (1901–1909) that serious efforts were made to break up or control the trusts. The dominant force in the oil industry was Standard Oil, controlled by John D. Rockefeller. Modern-day Exxon, Mobil, Atlantic Richfield, Chevron, Sohio, Amoco and Continental Oil all trace their ancestry to various parts of Standard Oil.

In March 1906, Commissioner of Corporations James Rudolph Garfield submitted a report to President Roosevelt, alleging large-scale rebating in Standard Oil shipments. Federal prosecutors in several states and territories sought indictments against components of the Standard Oil Trust. On June 28, 1906, Standard Oil of Indiana was indicted on 6,428 counts of violation of the Elkins Act for accepting rebates on shipments on the Chicago & Alton Railroad. The case was assigned to Landis.

Trial on the 1,903 counts that survived pretrial motions began on March 4, 1907. The fact that rebates had been given was not contested; what was at issue was whether Standard Oil knew the railroad’s posted rates, and if it had a duty to enquire if it did not. Landis charged the jury that it "was the duty of the defendant diligently in good faith to get from the Chicago & Alton … the lawful rate". The jury found Standard Oil guilty on all 1,903 counts.

The maximum fine that Landis could impose was $29,240,000. To aid the judge in determining the sentence, Landis issued a subpoena for Rockefeller to testify as to Standard Oil’s assets. The tycoon had often evaded subpoenas, not having testified in court since 1888. Deputy United States marshals visited Rockefeller’s several homes, as well as the estates of his friends, in the hope of finding him. After several days, Rockefeller was found at his lawyer’s estate, Taconic Farm in northwestern Massachusetts, and was served with the subpoena. The tycoon duly came to Landis’s Chicago courtroom, making his way through a mob anxious to see the proceedings. Rockefeller’s actual testimony, proffered after the judge made him wait through several cases and witnesses, proved to be anticlimactic, as he professed almost no knowledge of Standard Oil’s corporate structure or assets.

On August 3, 1907, Landis pronounced sentence. He fined Standard Oil the maximum penalty, $29,240,000, the largest fine imposed on a corporation to that point. The corporation quickly appealed; in the meantime, Landis was lionized as a hero. According to Pietrusza, "much of the nation could hardly believe a federal judge had finally cracked down on a trust—and cracked down hard ". President Roosevelt, when he heard the sentence, reportedly stated, "That’s bully." Rockefeller was playing golf in Cleveland when he was brought a telegram containing the news. Rockefeller calmly informed his golfing partners of the amount of the fine, and proceeded to shoot a personal record score, later stating, "Judge Landis will be dead a long time before this fine is paid." He proved correct; the verdict and sentence were reversed by the United States Court of Appeals for the Seventh Circuit on July 22, 1908. In January 1909, the Supreme Court refused to hear the case, and in a new trial before another judge (Landis recused himself), Standard Oil was acquitted.