Northern Securities challenged the statutes, insisting that the Trust merely held the stock of the railroads but did not directly engage in interstate commerce. In fact, the Northern Pacific and Great Northern Railroad companies purchased most of the stock of the Burlington Railroad. The first two companies ran parallel lines and the Burlington was a connecting line. The Northern Pacific and Great Northern the proceeded to form a stock holding company that would control 75% of the combined stock of all three railroads. The company, incorporated in New Jersey, was named the Northern Securities Company Limited.
By a 5 to 4 decision of the U.S. Supreme Court, the Northern Securities Company was deemed to have restrained trade among the several states and therefore violated the Sherman Antitrust Act.
The Court reasoned that this combination was, within the meaning of the act, a "trust". Nevertheless, the combination did lead to restraint of interstate and international commerce, and the power acquired by the holding company as its trustee constituted a menace to, and a restraint upon, that freedom of commerce which Congress is Constitutionally entitled to regulate.