American Banana Co. v. United Fruit Co.

Facts

Defendant, United Fruit Co., is a New Jersey corporation that was organized in 1899 and engaged in the banana business. Plaintiff, American Banana Co., is an Alabama corporation that was organized in 1904 and attempted to enter into the banana business. Before American Banana was formed, United Fruit bought the property and business of several competitors in order to prevent competition and monopolize the banana trade. United Fruit also contracted with companies that it did not buy and included provisions regulating the quantity and price of the bananas those companies purchased. Additionally, United Fruit acquired a controlling amount of stock in banana companies, and organized a selling company that sold bananas at fixed prices to other banana companies.

In 1903, McConnell started a banana plantation in Panama and began to build a railway in accordance with the laws of the United States of Columbia. He was notified by United Fruit that he must combine or stop. Two months later, the governor of Panama recommended that Costa Rica be allowed to administer the territory that the railroad was supposed to run through even though this territory had been awarded to Columbia under a treaty. In November 1903, Panama revolted and became an independent republic. In June 1904, American Banana bought out McConnell and continued its work in accordance with the laws of Panama. In July 1904, Costa Rican soldiers and officials, instigated by United Fruit, seized part of the banana plantation and stopped operation of the plantation and construction of the railroad. In August 1904, a Costa Rican court declared the plantation to be owned by Astua. United Fruit’s agents then bought the land from Astua.

American Banana attempted to persuade the United States to interfere and the Costa Rican government to withdraw its soldiers. As a result of United Fruit’s acts, American Banana has been deprived of the use of the plantation and the railroad. American Banana brought suit against United Fruit to recover damages under the act to protect trade against monopolies. The circuit court dismissed the complaint for failure to set forth a cause of action. The appellate court affirmed the judgment, and the case was brought before the U.S. Supreme Court by writ of error.