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partly in Missouri, we there held was a fact without any weight, and one which did not [613] make business interstate commerce which otherwise would not partake of that character.

There remain in the bill of the complainants the allegations that the cattle come from various states and are placed on sale at these stock yards which form the only available market for many miles around, and that they are sold by the commission merchants and are bought in large numbers by the defendants who have entered into what the complainants allege to be a contract, combination, and conspiracy in restraint of trade and commerce among the several states, which contract, etc., it is alleged is carried out by defendants unlawfully and oppressively refusing to purchase cattle from a commission merchant who sells or purchases cattle from any speculator (yard trader) who is not a member of the exchange; and it is further alleged that by these means the traffic in cattle at the Kansas City stock yards is interfered with, hindered, and restrained, and extra expense and loss to the owner incurred, and that thereby the defendants have placed an obstruction and embargo on the marketing of cattle shipped from other states. All these results are alleged to flow from the agreement among the defendants as contained in the by-laws of their association, particularly those numbered ten, eleven, twelve, and thirteen, copies of which are set forth in the statement of facts herein.

There is no evidence that these defendants have in any manner other than by the rules above mentioned hindered or impeded others in shipping, trading, or selling their stock, or that they have in any way interfered with the freedom of access to the stock yards of any and all other traders and purchasers, or hindered their obtaining the same facilities which were therein afforded by the stock-yards company to the defendants as members of the exchange, and we think the evidence does not tend to show that the above results have flowed from the adoption and enforcement of the rules and regulations referred to.

In regard to rule 10, the question is whether, without a violation of the act of Congress, persons who are engaged in the common business as yard traders of buying [614] cattle at the Kansas City stock yards, which come from different states, may agree among themselves that they will form an association for the better conduct of their business, and that they will not transact business with other yard traders who are not members, nor will they buy cattle from those who also sell to yard traders who are r t members of the association.

with its conditions of membership, and may remain such as long as he comports himself in accordance with its laws. A lessening of the amount of the trade is neither the necessary nor direct effect of its formation, and in truth the amount of that trade has greatly increased since the association was formed, and there is not the slightest evidence that the market prices of cattle have been lowered by reason of its existence. There is no feature of monopoly in the whole transaction. The defendants are engaged in buying what are called "stockers and feeders;" being cattle not intended for any other market, and the demand for which is purely local. They have arrived at their final destination when offered for sale, and there is free and full competition for their purchase between all the members of the exchange, as well as between them and all buyers not members thereof, who are not also yard traders. With the latter the defendants will not compete, nor will they buy of the commission men if the latter continue to sell cattle to such yard traders.

Have the defendants the right to agree to conduct their own private business in this way?

Whether there is any violation of the act of Congress by the adoption and enforcement of the other rules of the association, above referred to, will be considered hereafter.

It is first contended on the part of the appellants that they are not engaged in inter-[615] state commerce or trade, and that therefore their agreement is not a violation of the act. They urge that the cattle, by being taken from the cars in which they were transported and placed in the various pens hired by commission merchants at the cattle yards of Kansas City, and there set up for sale, have thereby been commingled with the general mass of other property in the state, and that their interstate commercial character has ceased within the decisions of this court in Brown v. Houston, 114 U. S. 622 [29: 257], and Pittsburg & S. Coal Company ▼. Bates, 156 U. S. 577 [39: 538].

On the other hand, it is answered that the cases cited involved nothing but the general power of the state to tax all property found within its limits, by virtue of general laws providing for such taxation, where no tax is levied upon the article or discrimination made against it by reason of the fact that it has come from another state, and it is maintained that the agreement in question acts directly upon the subject of interstate commerce and adds a restraint to it which is unlawful under the provisions of the statute.

In the view we take of this case we are not called upon to decide whether the deIt will be remembered that the association fendants are or are not engaged in interstate does no business itself. Those who are mem- commerce, because if it be conceded they bers thereof compete among themselves and are so engaged, the agreement as evidenced with others who are not members, for the by the by-laws is not one in restraint of that purchase of the cattle, while the association trade, nor is there any combination to moitself has nothing whatever to do with trans-nopolize or attempt to monopolize such trade portation nor with fixing the prices for within the meaning of the act. which the cattle may be purchased or thereafter sold. Any yard trader can become a member of the association upon complying 171 U. S. U. S., Book 43.

It has already been stated in the Hopkins Case, above mentioned, that in order to come within the provisions of the statute the di20

305

rect effect of an agreement or combination | was not formed for pecuniary profits, and a must be in restraint of that trade or com- careful perusal of the whole agreement fails, merce which is among the several states, or as we think, to show that its purpose was with foreign nations. Where the subject- other than as stated in the preamble. In matter of the agreement does not directly re- other words, we think that the rules adopted late to and act upon and embrace interstate do not contradict the expressed purpose of commerce, and where the undisputed facts the preamble, and that the result naturally clearly show that the purpose of the agree to be expected from an enforcement of the ment was not to regulate, obstruct, or re- rules would not directly, if at all, affect instrain that commerce, but that it was en- terstate trade or commerce. The agreement tered into with the object of properly and now under discussion differs radically from fairly regulating the transaction of the busi- those of United States v. Jellico Mountain ness in which the parties to the agreement Coal & Coke Company, 46 Fed. Rep. 432 [3 were engaged, such agreement will be upheld Inters. Com. Rep. 626, 12 L. R. A. 753]; [616]as not within the statute, where it can be United States v. Coal Dealers' Association, seen that the character and terms of the 85 Fed. Rep. 252, and United States v. Adagreement are well calculated to attain the dyston Pipe & Steel Company [54 U. S. App. purpose for which it was formed, and where 723], 85 Fed. Rep. 271. The agreement in the effect of its formation and enforcement all of these cases provided for fixing the upon interstate trade or commerce is in any prices of the articles dealt in by the different event but indirect and incidental, and not its companies, being in one case iron pipe for purpose or object. As is said in Smith v. gas, water, sewer, and other purposes, and Alabama, 124 U. S. 465, 473 [31; 508, 510, coal in the other two cases. If it were con1 Inters. Com. Rep. 804]: "There are many ceded that these cases were well decided, cases, however, where the acknowledged they differ so materially and radically in powers of a state may be exerted and applied their nature and purpose from une case under in such a manner as to affect foreign or inter- consideration that they form no basis for its state commerce without being intended to decision. This association does not meddle operate as commercial regulations." The with prices and itself does no business. In same is true as to certain kinds of agree refusing to recognize any yard trader who is ments entered into between persons engaged in the same business for the direct and bona not a member of the exchange, we see no purfide purpose of properly and reasonably regu- restraining interstate commerce, which, if pose of thereby affecting or in any manner lating the conduct of their business among affected at all, can only be in a very indirect themselves and with the public. If an agree- and remote manner. The rule has no direct ment of that nature, while apt and proper tendency to diminish or in any way impede for the purpose thus intended, should pos- or restrain interstate commerce in the cat sibly, though only indirectly and uninten- tle dealt in by defendants. There is no tendtionally, affect interstate trade or commerce, in that event we think the agreement would ency as a result of the rule, directly or inbe good. Otherwise, there is scarcely any directly, to restrict the competition among agreement among men which has interstate defendants for the class of cattle dealt in by or foreign commerce for its subject that may the market composed of defendants, and also them. Those who are selling the cattle have not remotely be said to, in some obscure way, affect that commerce and to be therefore composed of the representative buyers of all void. We think, within the plain and ob- the packing houses at Kansas City, and also vious construction to be placed upon the of the various commission merchants who are act, and following the rules in this regard constantly buying on orders and of those already laid down in the cases heretofore who are buying on their own account. This decided in this court, we must hold the agree- makes a large competition wholly outside of ment under consideration in this suit to be the defendants. The owner of cattle for sale [618)

valid.

is therefore furnished with a market at
which the competition of buyers has a broad

of.

From very early times it has been the custom for men engaged in the occupation of effect. All yard traders have the opportu buying and selling articles of a similar na-nity of becoming members of the exchange, ture at any particular place to associate and to thus obtain all the advantages there themselves together. The object of the association has in many cases been to provide for the ready transaction of the business of the associates by obtaining a general headquarters for its conduct, and thus to insure a quick and certain market for the sale or purchase of the article dealt in. Another purpose has been to provide a standard of business integrity among the members by adopting rules for just and fair dealing among them and enforcing the same by penalties for their violation. The agreements [617]have been voluntary, and the *penalties have been enforced under the supervision and by members of the association. The preamble adopted by the association in this case shows the ostensible purpose of its formation. It

The design of the defendants evidently is to bring all the yard traders into the association as members, so that they may become subject to its jurisdiction and be compelled by its rules and regulations to transact business in the honest and straightforward manner provided for by them. If, while enforcing the rules, those members who use improper methods or who fail to conduct their business transactions fairly and honestly are disciplined and expelled, and thereby the number of members is reduced, and to that extent the number of competitors limited, yet all this is done, not with the intent or purpose of affecting in the slightest degree interstate trade or commerce, and such trade

or commerce can be affected thereby only | that reason. A claim that such refusal may
most remotely and indirectly, and if, for the thereby lessen the number of active traders
purpose of compelling this membership, the on the market, and thus possibly reduce the
association refuse business relations with demand for and the prices of the cattle there
those commission merchants who insist upon set up for sale, and so affect interstate trade,
buying from or selling to yard traders who is entirely too remote and fanciful to be ac-
are not members of the association, we see cepted as valid.
nothing that can be said to affect the trade
or commerce in question other than in the
most roundabout and indirect manner. The
agreement relates to the action of the asso-
ciates themselves, and it places in effect no
tax upon any instrument or subject of com-
merce; it exacts no license from parties en-
gaged in the commercial pursuits, and pre-
scribes no condition in accordance with
which commerce in particular articles or be-
tween particular places is required to be con-
ducted. Sherlock v. Alling, 93 U. S. 99 [23:
819]; Smith v. Alabama, 124 U. S. 465, 473
[31: 508,510]; Pittsburg & S. Coal Company
v. Louisiana, 156 U. S. 590, 598 [39: 544,
548, 5 Inters. Com. Rep. 18].

This case is unlike that of Hopkins v. Oxley Stave Company [49 U. S. App. 709] 83 Fed. Rep. 912, to which our attention has been called. The case cited was decided without reference to the act of Congress *upon[620] which alone the case at bar is prosecuted, and the agreement was held void at common law as a conspiracy to wrongfully deprive the plaintiff of its right to manage its business according to the dictates of its own judgment. It was also said that the fact could not be overlooked that another object of the conspiracy was to deprive the public at large of the benefits to be derived from a labor-saving machine which seemed to the court to be one of great utility. No question as to interstate commerce arose and none was decided.

If for the purpose of enlarging the membership of the exchange, and of thus procuring the transaction of their business upon a proper and fair basis by all who are engaged therein, the defendants refuse to do business with those commission men who sell to or purchase from yard traders who are not members of the exchange, the possible [619]effect of such a course of conduct upon interstate commerce is quite remote, not intended, and too small to be taken into account. The agreement lacks, too, every ingredient of a monopoly. Everyone can become a member of the association, and the natural desire of each member to do as much business as he could would not be in the least diminished by reason of membership, while the business done would still be the individual and private business of each member, and each would be in direct and immediate competition with each and all of the other members. If all engaged in the business were to become members of the association, yet, as the association itself does no business, it can and does monopolize none. The amount and value of interstate trade is not at all directly affected by such membership; the competition among the members and with others who are seeking purchasers would be as large as it would otherwise have been, and the only result of the agreement would be that no yard traders would remain who were not members of the association. It has no tendency, so far as can be gathered from its object or from the language of its rules and regulations, to limit the extent of the demand for cattle or to limit the number of cattle marketed or to limit or reduce their price or to place any impediment or obstacle in the course of the commercial stream which flows into the Kansas City cattle market. While in case all the yard traders are not induced to become members of the association, and those who are such members refuse to recognize the others in business, we can see no such direct, necessary or natural connection between that fact and the restraint of interstate commerce as to render the agreement not to recognize them void for

2.

From what has already been said regarding rule 10, it would seem to follow that the other rules (11, 12, and 13) are of equal validity as rule 10, and for the same reasons. The rules are evidently of a character to enforce the purpose and object of the exchange as set forth in the preamble, and we think that for such purpose they are reasonable and fair. They can possibly affect interstate trade or commerce in but a remote way, and are not void as violations of the act of Congress.

We are of opinion, therefore, that the order in this case should be reversed and the case remanded to the Circuit Court of the United States for the Western Division of the Western District of Missouri with directions to dismiss the complainants' bill with costs.

Mr. Justice Harlan dissented.

Mr. Justice McKenna took no part in the decision of this case.

NORTHWESTERN

NATIONAL BANK, Riordan Mercantile Company, and Arizona Lumber & Timber Company, Appts.,

V.

B. N. FREEMAN, F. L. Kimball, and J. H. Hoskins, Copartners, as the Arizona Central Bank, and John Vories.

(See S. C. Reporter's ed. 620-631.) Chattel mortgage; when valid-notice to subsequent assignee—mortgage of domestic animals.

1.

A chattel mortgage of a given number of articles out of a larger number is valid as against those who know the facts.

The record of a chattel mortgage to other mortgagees is not notice to an assignee of a subsequent mortgage; but he is chargeable with notice of the record of a prior mortgage on the same property by the same mortgagor to his assignor.

thereof, nor were any of said sheep or the in crease thereof ever by anyone identified, designated, or in any way segregated, apportioned or substituted to the or on account

Argued April 15, 18, 1898. Decided October of the said pretended mortgages, or of either thereof. From date of said mortgages (July 24, 1898. 10, 1890) to January 4, 1893, said Fulton from time to time sold of said sheep as folby said Fulton accounted for, and the prolows: 1,700 head, at $3 per head, that were ceeds of which he deposited with the apsaid appellees knew of these sales and conpellee Arizona Central Bank; that both of

sented to them.

3. A mortgage of domestic animals covers their increase, although it is silent as to such increase. [No. 18.]

A PPEAL from the Supreme Court of the Territory of Arizona to review a judg ment of that Court affirming a judgment of the District Court of that Territory in favor of the appellees, B. N. Freeman et al., deciding the priority of mortgages, etc.

Statement by Mr. Justice McKenna:

[621] *The appellees recovered judgment in the district court, which was affirmed on appeal to the supreme court of the territory, from which an appeal has been taken to this

court.

The facts found by the territorial supreme

court are as follows:

"On July 10, 1890, Harry Fulton, one of the defendants in the court below, executed an alleged chattel mortgage for $7,500, pay able in one year, in favor of the Arizona Central Bank, one of the appellees herein and plaintiffs in the court below; that the description in said mortgage of the property purporting to be covered by it is as follows: 1,200 lambs, marked, ewes with hole in left ear and split in right, wethers, hole in right ear and split in left ear; 1,600 ewes marked hole in left ear and split in right ear; 2,200 wethers marked hole in right ear and split in left ear, making 5,000 sheep in all with

the Fulton brand."

"That on said day said Fulton executed another alleged mortgage for $4,000, payable in ninety days, in favor of John Vories, one of the appellees herein and one of the defendants in the court below; that the de

scription in said alleged mortgage is as follows: Wethers and dry ewes to the number of 1,000, the wethers marked with a split in the left ear and a hole in the right; ewes marked with a hole in the left ear and a split in the right.'

"That on said day said Fulton owned and possessed 6,200 sheep that were herded and run together, and this was all he owned, said sheep being marked as follows: 'Ewes and ewe lambs split in the right ear, hole in the left; wethers and wether lambs reverse;' and both of the said appellees had knowledge of this fact at the time they accepted their alleged mortgages, the one on 5,000 head and [622]the other on 1,000 head, 200 head *not being included in either of said mortgages, all of said sheep having the same mark and running in the same herd, and none of them being capable of identification save only by the ear mark put on them as aforesaid, and that therefore there was no way by which

any of said sheep could be distinguished

from any of the others.

"That said Fulton continued in the ownership and possession of all of said sheep, save only such as died, were sold by him, consumed, or lost, until the 18th December, 1893. At no time did appellees, or either of them, ever take or ever have possession of said sheep, or any of them, or of the increase

"On January 4, 1893, said Fulton executed Lumber & Timber Company, one of apa mortgage for $8,885 in favor of Arizona pellants herein and one of the defendants in the court below, covering, among other property, the following described sheep: lambs, same being all the sheep now owned About 3,000 ewes, 1.000 wethers, and 2,000 by mortgagor, and including all wool and sheep marked, ewes, split in right ear, hole increase which may be produced by said in left; wethers reverse.' At the instance of appellees said appellant, Arizona Lumber & Timber Company, permitted the following recital to be inserted in said last-mentioned mortgage, namely: This being subject to a Central Bank, and one on 1,000 head, and mortgage on 5,000 of above sheep to Arizona the residence property to John Vories, said number, as described in mortgages, to be kept good out of increase.' There was consideration for the foregoing recital in the mortgage of January 4, 1893, namely, that their mortgages, and should release their the appellees should forbear to foreclose [623] claim on the wool clip of 1893, the wool at that time not having been shorn.

"That to August 30, 1893, $3,000 of the amount claimed to be due on the mortgage

of January 4, 1893, was paid out of wool for the purpose of securing a $500 advance, proceeds, and that on said day said Fulton, and applying the remainder as a payment on said mortgage of January 4, 1893, exeable in ninety days, securing the same by a cuted his promissory negotiable note, paychattel mortgage for the sum of $6,000 to the Arizona Lumber & Timber Company.

"That said mortgage was a conveyance, as a security for the payment of said note, of scribed as follows, namely: 'About 3,200 sheep, the same being in said mortgage deewes, more or less; about 1,300 wethers, less, being all the sheep now owned by mortmore or less; about 1,400 lambs, more or gagor, including all the wool and increase which may be produced by said sheep,— marked, ewes and ewe lambs, split in right ear, hole in left; wethers and wether lambs,

reverse.'

"That in said last-mentioned mortgage no

recital or reference was made in any way, nor in any manner, to the existence of any other mortgage or mortgages whatsoever.

"That on the 29th day of September, 1893, and prior to the maturity of said last-mentioned note of $6,000, said appellant Arizona Lumber & Timber Company, representing that said mortgage was a first and prior lien

on said described sheep, and by means there
of, sold, assigned, indorsed, and delivered
said note and mortgage to the Northwestern
National Bank, one of the appellants herein
and one of the defendants in the court below,
said Northwestern National Bank becoming
an innocent purchaser for value.

"That said action was tried and judgment was rendered foreclosing said alleged mortgages of both of appellees herein and also the said mortgage dated January 4, 1893, of "That on December 18, 1893, said Fulton, said Arizona Lumber & Timber Company and being then indebted to Riordan Mercantile the mortgage owned by said Northwestern Company, one of the appellants herein and National Bank as aforesaid, in which said a defendant in the court below, in the sum of judgment said court adjudged that appellees $810.91, it brought its action in said district have a prior and first lien on said property, court against said Fulton whereby to collect viz., the Arizona Central Bank upon 5,000 the same, and at the same time caused to be sheep of the Fulton mark by reason of its issued out of the clerk's office of said court a said mortgage and the said Vories on 1,000 writ of attachment, which was then levied sheep of the Fulton mark by reason of his [624]on the property following, namely: 'All the said mortgage; and said court decreed and right, title, and interest of the defendant ordered that an order of sale issue for the Harry Fulton in and to the following-de-sale of all of said property to the sheriff of scribed sheep: 2,926 ewes, marked hole in said county, and that the proceeds arising left ear, split in right; 900 wether sheep, therefrom be divided by the sheriff and apmarked hole in right ear, split in left ear; plied as follows, namely, at the ratio of five 1,287 lambs, ewe lambs marked hole in left dollars to said Arizona Central Bank and one ear, split in right, wether lambs marked dollar to said Vories; that in case anything hole in right ear, split in left; 118 rams,' should be left after the payment of said two same being all of the sheep then owned by mortgages to said bank and Vories, the same said Fulton. should be applied to the payment of the judgments of said Northwestern National Bank and said Arizona Lumber & Timber Company and Riordan Mercantile Company in the order named."

asking for a foreclosure of its said alleged mortgage, the same being the above-entitled cause.

"That on 16th March, 1894, judgment was rendered in said suit in favor of said plaintiff company and against said Fulton, for said amount, and said attachment lien was foreclosed; that on the 31st day of March, 1894, the sheriff of said county of Coconino, by virtue of and pursuant to said judgment, sold said property and delivered the same to the appellant Riordan Mercantile Company, who then entered into the possession thereof, was so in the possession thereof when this cause was tried in the lower court, and are still in possession thereof.

"First. In the first assignment of error it is set forth that the trial court erred in adjudging, and the territorial supreme court erred in affirming said judgment, that the

therein.

"That by virtue of said writ of attach-mortgages of the appellees were prior liens ment the sheriff attached all the sheep then ton at the time of the execution of said morton all of the sheep owned by defendant Fulowned by said Fulton, and that on said day, to wit, on the 18th day of December, 1893, gages, even though said mortgages had been there were of said sheep only 1,000 head of good and prior liens on the sheep specified ewes remaining out of all the sheep that existed on July 10, 1890, the date of said al-eighth assignments of error it is set forth "Second. In the second, third, fifth, and leged mortgages to appellees; that the re- that the trial court, and the territorial sumainder of said ewes, all the male sheep and the lambs, had by that time died, been con- preme court in sustaining its holding, erred in admitting in evidence the mortgages from sumed, sold, or lost. defendant Fulton to the appellees, marked[626] Exhibit 'A' and 'B.' against the objections of the appellants, and in overruling motion of appellants to strike out of the evidence the said mortgages, and in holding that said mortgages were valid and subsisting liens on all of said property, and in holding and deciding that the description of said property in appellees' said mortgages was a sufficient description.

"That subsequent to the making of said alleged mortgages to said appellees, an oral agreement between them and the said Fulton was made that the securities of appellees were to be kept good out of the increase by substitution, the consideration therefor being that said Fulton might sell and dispose of the said sheep without interference from appellees.

"Third. In the fourth and seventh assignments it is set forth that the court erred in

"That Sisson, a witness for appellants in this case, is and was during all of said transactions the treasurer of both the Riordan Mercantile Company and the Arizona Lum-admitting, over the objection of the appelber & Timber Company, appellants herein, lants, testimony concerning a conversation and that these two corporations have prac- between J. H. Hoskins, John Vories, F. W. tically the same officers. Sisson, and Harry Fulton, and evidence relative to an alleged agreement, and evidence tending to prove a breach of contract between the appellees and appellant Arizona Lumber & Timber Company.

"Fourth. The trial court erred, as set forth in the fifteenth and sixteenth assignments,

"That in said district court said Arizona Central Bank brought its suit as plaintiff against said Fulton, Vories, Donahue as sheriff, the Arizona Lumber & Timber Company, [625]the Riordan Mercantile Company, and the Northwestern National Bank, as defendants,

There are seventeen assignments of errors, which are somewhat confused. They are grouped and presented by counsel under

seven heads as follows:

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