cotton had been grown on the share-lease plan and the tenants were not parties to the suit. From the record, it did not appear that the "tenants had any knowledge of the marketing agreement of their landlord with said association." The court declared that the legislature had “made an indirect but clear attempt to deprive tenants of their property in cotton raised under the share system of contract, without notice of such marketing contract, and without due process of law of any kind." A Mississippi court has also expressed doubt concerning the constitutionality of the conclusive-presumption provision and held that it had no application to a marketing contract entered into prior to the passage of the cooperative statute containing the provision.4 Although all persons are charged with knowledge of the law, persons are not charged with knowledge of the membership of cooperatives or with knowledge of the persons that have entered into marketing contracts with an association, in the absence of a statute providing for recordation of such contracts for the purpose of giving constructive notice.5 The Kentucky conclusive-presumption provision was repealed when the State's Agricultural Cooperative Associations Act was enacted in 1966.6 In its place, Kentucky adopted the following provision: A landowner, or lessee, of land on which any 4Staple Cotton Co-op Association v. Hemphill, 142 Miss. 298, 107 So. 24 (1926). "See discussion under "Marketing Contracts," supra, at footnotes 121-125, inclusive. "KRS 272.101 et. seq. (Ky. Acts 1966 ch. 208). litigation that arises between that association and the Antitrust Laws To understand clearly the attitude of the courts toward early cooperative efforts in this country, it is important to have in mind the legal background with respect to monopolies and restraint of trade. Common Law Traditions For centuries the common law looked askance at anything that appeared to restrain trade or to reduce competition. One could hardly overemphasize the attitude of the early English courts with respect to these matters. Bona fide partnerships were apparently always held to be lawful, although the formation of a partnership might mean a reduction of one or more in the number of traders or dealers. The common law attitude toward restraint of trade is illustrated by a Washington case' involving an association of milk dealers of the city of Seattle, which fixed the price of milk and through which the dealers agreed not to sell to each other's customers. The milk dealers were prosecuted and found guilty of conspiracy under common law principles. It was early held at common law that if a man sold his business and entered into an agreement with the purchaser that he would not engage in the same business either at that place or any other place, or within a given area for a given period of time, or at any time, the agreement was illegal on the theory that it reduced the seller's opportunities for making a living.2 Gradually the attitude of the courts toward contracts of this kind relaxed, and today they are upheld generally, if the restric KRS 272.221(4). 'State v. Erickson, 54 Wash. 472, 103 P. 796. See also People v. Milk Exchange, 145 N.Y. 267, 45 Am. St. Rep. 609, 39 N.E. 1062, 27 L.R.A. 437 affirming 29 N.Y.S. 259, 77 Hun. 436. 2Anson on Contracts, Am. Ed., sec. 255 (1907). cotton had been grown on the share-lease plan and the tenants were not parties to the suit. From the record, it did not appear that the "tenants had any knowledge of the marketing agreement of their landlord with said association." The court declared that the legislature had "made an indirect but clear attempt to deprive tenants of their property in cotton raised under the share system of contract, without notice of such marketing contract, and without due process of law of any kind." A Mississippi court has also expressed doubt concerning the constitutionality of the conclusive-presumption provision and held that it had no application to a marketing contract entered into prior to the passage of the cooperative statute containing the provision.4 Although all persons are charged with knowledge of the law, persons are not charged with knowledge of the membership of cooperatives or with knowledge of the persons that have entered into marketing contracts with an association, in the absence of a statute providing for recordation of such contracts for the purpose of giving constructive notice.5 The Kentucky conclusive-presumption provision was repealed when the State's Agricultural Cooperative Associations Act was enacted in 1966.6 In its place, Kentucky adopted the following provision: A landowner, or lessee, of land on which any 4Staple Cotton Co-op Association v. Hemphill, 142 Miss. 298, 107 So. 24 (1926). "See discussion under "Marketing Contracts," supra, at footnotes 121-125, inclusive. "KRS 272.101 et. seq. (Ky. Acts 1966 ch. 208). litigation that arises between that association and the Antitrust Laws To understand clearly the attitude of the courts toward early cooperative efforts in this country, it is important to have in mind the legal background with respect to monopolies and restraint of trade. Common Law Traditions For centuries the common law looked askance at anything that appeared to restrain trade or to reduce competition. One could hardly overemphasize the attitude of the early English courts with respect to these matters. Bona fide partnerships were apparently always held to be lawful, although the formation of a partnership might mean a reduction of one or more in the number of traders or dealers. The common law attitude toward restraint of trade is illustrated by a Washington case' involving an association of milk dealers of the city of Seattle, which fixed the price of milk and through which the dealers agreed not to sell to each other's customers. The milk dealers were prosecuted and found guilty of conspiracy under common law principles. It was early held at common law that if a man sold his business and entered into an agreement with the purchaser that he would not engage in the same business either at that place or any other place, or within a given area for a given period of time, or at any time, the agreement was illegal on the theory that it reduced the seller's opportunities for making a living.2 Gradually the attitude of the courts toward contracts of this kind relaxed, and today they are upheld generally, if the restric 7KRS 272.221(4). 'State v. Erickson, 54 Wash. 472, 103 P. 796. See also People v. Milk Exchange, 145 N.Y. 267, 45 Am. St. Rep. 609, 39 N.E. 1062, 27 L.R.A. 437 affirming 29 N.Y.S. 259, 77 Hun. 436. 2Anson on Contracts, Am. Ed., sec. 255 (1907). tions on the right of the seller to engage in business are no greater than is reasonably necessary for the protection of the buyer.3 Further light is thrown on the state of the law toward acts deemed to be in restraint of trade by the statute passed by the English Parliament in the reign of Edward VI prohibiting forestalling, engrossing, and regrating.4 Forestalling consists of buying victuals on their way to market and before they reach it, with intent to sell again at a higher price." Engrossing was the buying at any place of certain necessities of life from producers with a view to resale at a higher price. Regrating was the purchase of provisions at a fair or public market for the purpose of resale at a higher price in the same market or in any market within 4 miles thereof. The early English statute restricting trading in victuals and provisions evidences the intention that such products should pass from the original producer to the consumer. In other words, the object of the statute was undoubtedly to keep the bridge short between the producer and the consumer. This statute against forestalling, engrossing, and regrating, as well as the other principles with reference to restraint of trade referred to, all became a part of the common law of this country to a large degree. This should be kept in mind when considering the attitude of American courts toward early cooperative efforts. Perhaps because of a change in economic and social conditions and perhaps because of the demonstrated inefficiency of such a statute, part of it was repealed in 1772 and the entire act in 1844.7 The statute enacted in 1844 by the English Parliament, which included the repeal of the statute against forestalling, engrossing, and regrating, stated that it was being repealed because the prohibited acts had come to be considered as favorable to the development of trade and not as restraining trade. From the foregoing it is clear that common law principles and traditions against restraint of trade have been inherited. 3 Lumbermen's Trust Co. v. Title Ins. & Inv. Co. of Tacoma, 248 F. 212. 4Statutes at Large, 7 Edw. VI vol. 5, ch. 14. "Dutton v. Knoxville, 121 Tenn. 25, 113 S. W. 381, 383, 130 Am. St. Rep. 748, 16 Ann. Cas. 1028. "State v. Eastern Coal Co., 29 R.I. 254, 70 A. 1, 132 Am. St. Rep. 817, 17 Ann. Cas. 96. 'Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 55, 31 S. Ct. 502, 55 L. Ed. 619, 34 L.R.A. (N.S.) 834, Ann. Cas. 1912D 734. |