Schmidt v. Old Union Stockyards Co.

• Decision Date: 17 August 1961
• Docket Number: No. 35822,35822
• Citation: 364 P.2d 23,58 Wn.2d 478
• Court: Washington Supreme Court
• Parties: Arthur SCHMIDT, Earl Schmidt, and Reuben Schmidt, Partners, doing business as Spokane Livestock Commission Company, Appellants, v. OLD UNION STOCKYARDS COMPANY, a corporation, Respondent. NORTHWEST LIVESTOCK AUCTION COMPANY, Inc., a corporation, Appellant, v. OLD UNION STOCKYARDS COMPANY, a corporation, Respondent. Charlie KINN, an individual, doing business as Charlie Kinn Commission Company, Appellant, v. OLD UNION STOCKYARDS COMPANY, a corporation, Respondent. GRANGE INTERSTATE LIVESTOCK ASSOCIATION, Appellant, v. OLD UNION STOCKYARDS COMPANY, a corporation, Respondent.

Page 478

58 Wn.2d 478

364 P.2d 23

Arthur SCHMIDT, Earl Schmidt, and Reuben Schmidt, Partners,

doing business as Spokane Livestock Commission

Company, Appellants, v. OLD UNION STOCKYARDS COMPANY, a corporation, Respondent.

NORTHWEST LIVESTOCK AUCTION COMPANY, Inc., a corporation, Appellant, v. OLD UNION STOCKYARDS COMPANY, a corporation, Respondent.

Charlie KINN, an individual, doing business as Charlie Kinn

Commission Company, Appellant, v. OLD UNION STOCKYARDS COMPANY, a corporation, Respondent.

GRANGE INTERSTATE LIVESTOCK ASSOCIATION, Appellant, v. OLD UNION STOCKYARDS COMPANY, a corporation, Respondent.

No. 35822.

Supreme Court of Washington, En Banc.

Aug. 17, 1961.

Graves Kizer & Gaiser, (now Kizer, Gaiser, Stoever, Layman & Powell), Benjamin H. Kizer, Daniel W. Gaiser, Spokane, for appellants.

Keith, Winston & Repsold, Leo J. Driscoll, Spokane, Cummings, Sellers, Reeves & Conner, Washington, D. C., for respondent.

OTT, Judge.

The Oid Union Stockyards Company of Spokane is licensed by the Secretary of Agriculture to engage in the stockyard business, as provided by 7 U.S.C.A. §§ 181-231. By the rules and regulations for stockyards, the Secretary of Agriculture has recognized two methods of selling livestock, one known to the industry as 'private treaty,' and the other as 'auction.' For nearly thirty years prior to June 1, 1959, the Old Union Stockyards Company conducted its sales operation under the private treaty method through market agencies, with a public auction of livestock one day each week.

Market agencies are likewise required by the act (7 U.S.C.A. § 203) to qualify and be licensed by the Secretary of Agriculture to engage in the selling of livestock in a licensed stockyard. The market agencies, functioning as 'commission men,' negotiate with prospective buyers for a private sale of the producers' livestock. The stockyard function, under the private treaty method, is largely to furnish the facilities, feed, and care for the producers' livestock pending the negotiations for sale.

In 1959, the Old Union Stockyards Company conducted an analysis of livestock market conditions in the Spokane area and concluded that a more effective and economical method of operation for the producer, consumer, and the stockyard company would be to change its sales operation to the auction method. Under the auction method, livestock is consigned to the stockyard company for the purpose of sale, and prospective buyers bid at a regular public auction sale on the stock offered.

The Old Union Stockyards Company petitioned the Secretary of Agriculture for permission to change its method of sale and for approval of a new tariff incident to the auction sale method. The Secretary gave the required notice of hearing, granted the petition, and fixed the tariff for the auction sale method for the stockyard company's operations in Spokand. The tariff became effective June 1, 1959. The adoption of the 'auction' method of sale eliminated the need for the services of the market agencies.

Arthur Schmidt and his sons, who for many years had conducted a market agency within the Old Union Stockyards, and three other market agencies which were also doing business within the Old Union Stockyards, filed, in accordance with the provisions of the act, informal complaints with the Secretary of Agriculture as follows:

'Informal Complaint

'To the Administrator, Production and Marketing Administration of the Department of Agriculture:

'Arthur Schmidt, Reuben Schmidt and Earl Schmidt, doing business as Spokane Livestock Commission Company; C. N. Kinn, doing business as Charley Kinn Commission Co., and Grange Interstate Livestock Association; all of whose addresses are Spokane, Washington, and who will collectively hereinafter be referred to as the Complainants, hereby make informal complaint against Old Union Stockyards Co., a Washington corporation, whose address is East 3810 Boone Avenue, Spokane 24, Washington, and whose telephone number is Keystone 5-2444.

'The basis of this complaint is that the said Old Union Stockyards Co. had given notice that effective June 1, 1959, the entire operations at the Old Union Stockyards Co., Spokane, Washington, including the buying and selling of livestock (formerly done by commission companies on a private treaty basis with a Wednesday auction) will be changed from that basis to a stockyard operated exclusively by auction and such auction will be conducted solely by the stockyard company itself. A copy of the notices to effect such arrangements are attached hereto, being letters dated March 24, 1959, and April 7, 1959, both addressed to Reuben Schmidt, Spokane Livestock Commission Company.

'The complainants, Spokane Livestock Commission Company, and other commission merchants and market agencies duly registered and licensed under the Stockyards Act, have been in operation for many years using the facilities and services of the Old Union Stockyards Co. Spokane Livestock Commission Company has so operated continuously since about 1930, and the Charley Kinn Commission Co. has so operated for about ten years. Such operations have been under rules and regulations of the Old Union Stockyards Co. issued from time to time. On March 27, 1959, there was issued 'Tariff No. 1' purporting to eliminate all dealing in livestock at the Old Union Stockyards Co. premises, on a commission or private treaty basis, the Old Union Stockyards Co. assuming to act as the 'sole selling agency'.

'The effect of the said purported tariff revision, if it is permitted to go into and remain in effect is:

'(a) That the Old Union Stockyards Co. would pre-empt all of the livestock purchase and sale business which has been developed by Spokane Livestock Commission Company (and all other operators) over a long period of years. This intention is borne out by notices, widely circularized, and extensive advertising by Old Union Stockyards Co. to all shippers and prospective shippers urging and directing them to consign all livestock for handling by Old Union Stockyards Co.

'(b) Such action would completely deprive the livestock feeders, handlers and shippers from an extensive area in Montana, Idaho, North Dakota, South Dakota, Wyoming and Washington, who have used these facilities in reliance upon the private treaty method of selling (which many of them prefer) from selling by such method and would force them to rely solely upon the auction method of selling through one selling agency only, namely, Old Union Stockyards Co. The auction method has been tried at Old Union Stockyards Co. in the past and proved unsuccessful and unpopular with the feeders and shippers and producers.

'(c) Such action, if permitted, would have the effect of depriving these complainants and others of businesses which they have developed over a long period of years and of turning such businesses over to Old Union Stockyards Co.

'(d) Such action, if permitted, would be contrary to the letter and spirit of the Stockyards Act of 1921 in that it would be conducive to abuses, which were sought to be corrected by that legislation; namely a single control over substantially all of the livestock selling facilities in the entire area, which would lend itself to discrimination, monopoly and collusion among possible purchasers, particularly the packers, and would result in restrictions on the free movement of livestock from the ranges and feeding lots to the ultimate markets.

'(e) Such action would be contrary to the law and the regulations of the Department of Agriculture pursuant thereto requiring stockyard owers to furnish reasonable stockyard facilities and service without discrimination. Such practice would be monopolistic and discriminatory in that it would permit only one type of sale by one party and would constitute an unfair practice in this terminal market.

'(f) Such practice, if permitted, would inflict severe financial damage upon these complainants and others and would deprive them of their businesses without proper compensation and without giving them an opportunity under the circumstances to take their business with them, since there are no other suitable stockyard facilities in the entire area and since it has been and is impossible in the short interval of time allowed to provide any such other facilities.

'(g) Such action, if permitted, would deprive the owners, producers, shippers and feeders of livestock, of one of the services to which they are entitled from a stockyards company under the Stockyards Act, namely the right to have a proper selling service by properly qualified and licensed commissioned merchants and market agencies by the method such producers and shippers prefer and by such persons as they have become accustomed to deal with and with whom they desire to deal.

'These complainants, thereforce, request the proper authorities to prevent the Old Union Stockyards Co. from placing in effect the said Tariff No. 1 on June 1, 1959, or any other date; or in the alternative to delay the effective date of such proposed tariff a sufficient time to reasonably enable the complainants to obtain other facilities for the handling of livestock for farmers, producers, feeders and shippers; or in the alternative to award to these complainants all damages which have been and which may be sustained by reason of the action of the said Old Union Stockyards Co.

'Done at Spokane, Washington, May 15, 1959.

'Spokane Livestock Commission Company

'By [signed] Reuben Schmidt

'By [signed] Arthur Schmidt

'By [signed] Earl H. Schmidt

'Charley Kinn Commission Co.

'By [signed] C. N. Kinn

'Grange Interstate Livestock Association

'By [signed] F. G. Eldridge, Manager' (Italics ours.)

After investigating the condition of the Spokane market, pursuant to the allegations of the complaints, the Chief of the Packers and Stockyards Branch, acting for the Secretary of Agriculture, denied the relief requested for the reason that the facts alleged in the...