People v. Milk Exchange, Ltd.

This action was brought to have the defendant, a domestic corporation, dissolved, its charter vacated and its corporate existence annulled. This relief is sought upon two grounds: First, non-user; second, an unlawful and illegal combination and conspiracy made in restraint of trade to limit the supply of milk, and to fix and control the price thereof in the city of New York and elsewhere.

The defendant was organized on the 21st day of October, 1882, for the purpose, as stated in its certificate of incorporation, of “ buying and selling of milk at wholesale and retail; the purchase of dairies of milk when deemed advisable, and the sale of the same to milk dealers.” The complaint charges that the defendant was not engaged in this business. Upon the trial at the close of the evidence, it was conceded by both counsel for the plaintiff and for the defendant that the question whether the defendant had been engaged in buying or selling milk, under the evidence, was a question of law for the court and not for the jury. We-so understand the evidence. There is no conflict, and we have but to ascertain the meaning and intention of the witnesses. The plaintiff’s chief witness was Woodhull, the secretary and treasurer of the defendant. In his testimony he makes use of the expression that the exchange “has bought and sold milk ; ” but he then proceeds

We think, therefore, that there can be no question as to the meaning of the witness Woodhull as to the expression made use of by him above referred to, for he immediately proceeded to explain how the milk was purchased and sold, and this evidence establishes the fact that the milk was not purchased by the exchange, but that it was sold in the manner described for the commission stated. The transactions, therefore, constituted a commission business, and were not, strictly speaking, the “ buying and selling of milk at wholesale and retail.” Whether the engaging in a commission business, such as we have described, is authorized by the defendant’s charter, we do not deem it necessary now to determine. It may be that the commission business is so closely allied to that of buying and selling as to make the former legitimate and permissible under the defendant’s certificate of incorporation.

We are thus brought to a consideration of the charge of unlawful conspiracy in restraint of trade. We have only called attention to the charge of non-user for the purpose of showing the precise nature of the business conducted by the defendant, as bearing upon the latter question. If the defendant was the purchaser of milk, or of dairies of milk, it had the right to - fix the price from time to time that it would pay therefor. If, however, it was engaged only in the selling of milk upon commission, then its duty as a commission merchant, as ordinarily understood, was to get as high a price for the seller as could be reasonably obtained, and it was no part of its duty to otherwise fix the price of milk.

It appears that the Milk Exchange when organized, or shortly thereafter, had ninety odd stockholders, a large majority of whom were milk dealers in the city of Hew York or creamery or milk commission men doing business in that vicinity; that at the first meeting of the exchange after its incorporation, the following, among other by-laws, was adopted: “The board of directors shall have the power to make and fix the standard or market price at

These facts are significant, and we are unable to escape the conviction that there was a combination on the part of the milk dealers and creamery 'men in and about the city of New York to fix and control the price that they should pay for milk. Was this lawful ?

In Judd v. Harrington, 139 N. Y. 105 ; 54 St. Rep. 471 , certain-parties, who were dealers in sheep and lambs, entered into an agreément, by its terms organizing an association for the declared purpose of guarding and protecting their business interests from loss by unreasonable competition. The agreement was to pool their commissions, except such as should be agreed to be paid to a butchers’ association with which they had agreed only to sell to the butchers and the butchers to buy only of the dealers belonging to their respective associations. It was held that the real nature and purpose of the agreement was to suppress competition in an article of food, and to so control the market that they could enhance the price of the article.

In People v. Sheldon et al. 139 N. Y. 251 ; 54 St. Rep. 513 , certain coal dealers organized á company known as the “Lock-port Goal Exchange.” The object of the organization was to prevent competition in the price of coal among the retail dealers in that city by constituting the exchange the sole authority to fix the price which should be charged by the members for coal sold by them. Sheldon and others, members of the exchange, were indicted, charged with the offense of doing an act injurious to trade or commerce, The trial judge submitted the case to the jury upon the theory that if the defendants entered into the organization for the purpose of controlling the price of coal and managing the business of the sale thereof, so as to prevent competition in the price between the members of the exchange, the agreement was illegal. The jury found the defendants guilty. It

In Arnot v. Pittston & Elmira Coal Co., 68 N. Y. 558 , the Butler Colliery Company and the Pittsou & Elmira Coal Company "were corporations engaged in mining and selling coal. For the purpose of monopolizing the trade and maintaining a high price for coal, the two companies entered into a contract by which one agreed to take all of the coal which the other should desire to send north of the state line at the regular market price, and agreed not to sell coal to any other party to be shipped in the direction. It was held that the agreement was entered into for the purpose of enhancinthe price of coal north of the state line, and that it was against, public policy and void. Batallo, J., in the opinion, says: “That-a combination to effect such a purpose is inimical to the interests of the public, and that all contracts designed to effect such an end are contrary to public policy, and, therefore, illegal, is too well settled by adjudicated cases to be questioned at this day.” See People v. Fisher, 14 Wend. 9 ; Hooker and Woodward v. Vanderwaler, 14 Denio, 349 ; Stanton v. Alien, 5 id. 434 ; Sarrtoga County Bank v. King, 44 N. Y. 87 ; Leonard v. Poole, 114 id. 371; 23 St. Rep. 753 .

Applying the rule thus established to the evidence under consideration, it appears to us that a case is presented in which the jury might have found that the combination alluded to was inimical to trade and commerce, and, therefore, unlawful.

It may be claimed that the purpose of the combination was tb reduce the price of milk, and that it being an article of food such reduction not But the was fixed

It is asserted that this litigation was instituted upon, the petition of members of the “Milk Producers’ Union,” and that, the purpose of that association was to enhance the price of milk. This may be, but the action was brought by the attorney-general, and the influences that operated upon him to induce his prosecution of the defendant are now unimportant. The questions for our determination are presented by the pleadings, and the parties have the right to have them determined upon the merits. If the “Milk Producers’ Union” is engaged in an unlawful business, which is a restraint upon trade and commerce, it may be dealt with in another action.

The order appealed from should be affirmed and judgment absolute ordered in favor of the plaintiff upon the stipulation, with costs.

All concur (Andrews, Ch. J., and Bartlett, J., on the ground of non-user), except Peckham, J., who dissents upon the ground that there was proof sufficient of user, and that the action of the defendant did not fairly tend to enhance the price of milk to the consumer.

Order affirmed and judgment accordingly.