People ex rel. McIlhany v. Chicago Live-Stock Exch.

• Decision Date: 22 December 1897
• Citation: 170 Ill. 556,48 N.E. 1062
• Parties: PEOPLE ex rel. McILHANY v. CHICAGO LIVE-STOCK EXCHANGE.
• Court: Illinois Supreme Court

170 Ill. 556

48 N.E. 1062

PEOPLE ex rel. McILHANY

v.CHICAGO LIVE-STOCK EXCHANGE.

Supreme Court of Illinois.

Dec. 22, 1897.

Appeal from circuit court, Cook county; R. W. Clifford, Judge.

Information in the nature of quo warranto on the relation of William McIlhany against the Chicago Live-Stock Exchange. From a judgment for defendant, relator appeals. Reversed.Jacob J. Kern, State Atty. (Moran, Kraus & Mayer, of counsel), for appellant.

Peck, Miller & Starr, for appellee.

On January 24, 1894, Jacob J. Kern, as state's attorney of Cook county, filed in the circuit court of that county a petition upon the relation of William McIlhany for leave to file an information in the nature of quo warranto against the Chicago Live-Stock Exchange. From a judgment denying the prayer of and dismissing that petition, an appeal was prayed and allowed to this court.

The material facts shown by the petition are as follows: ‘Appellee here (respondent below) is a corporation incorporated under the laws of the state of Illinois. The charter states that the object for which the corporation is formed is to establish and maintain a commercial exchange; to promote uniformity in the customs and usages of merchants; to provide for the speedy adjustment of all business disputes between its members; to facilitate the receiving and distributing of live stock, as well as to provide for and maintain a rigid inspection thereof, thereby guarding against the sale or use of unsound or unhealthy meats; and generally to secure to its members the benefits of co-operation in the furtherance of their legitimate pursuits.’ The petition charges that all of the live-stock commission merchants who do business at the stock yards in the city of Chicago are members of said corporation, and that through such members said corporation has and exercises entire and absolute control over all the live-stock commission business transacted at said stock yards; that because of the control which said corporation has acquired over the live-stock commission business it is impossible for any one who is not a member of said corporation to transact a live-stock commission business at said stock yards; that relator is engaged in the live-stock commission business at said stock yards, and is a member of said corporation; that he paid for said membership, and the same is worth, the sum of $500; that said corporation, without any power, right, or authority, has assumed to enact the following rule or by-law: ‘Sec. 7. There shall be no solicitor employed who is not a member of this exchange. There shall be no solicitor employed except on a stipulated salary, which shall not be contingent on commission earned. Members of the exchange shall file with the secretary thereof, within five days of the time of employment, the name and post-office address of their traveling solicitors. Members shall not employ to exceed three traveling solicitors for each firm in the states of Indiana, Michigan, Wisconsin, Illinois, Missouri, Iowa, and Minnesota. Members of a commission firm may solicit in the aforesaid states, provided they be counted as the solicitors allowed therein, and provided further, that they comply in all respects with the restrictions governing such solicitors. It shall be a violation of this rule for any solicitor representing or claiming to represent a commission firm located in another market to solicit for any Chicago firm in the states before named, and members shall be held responsible for any violation of this section by their partners or employés at other market centers, and shall be held accountable for the acts of any solicitor who, under the guise of soliciting for a branch house, invades the territory above described, and solicits for a Chicago firm. Members may employ an unlimited number of solicitors to solicit outside of the foregoing prescribed territory, provided they comply in all respects with the restrictions governing solicitors. It shall be a violation of this rule for any nonresident member or stockholder of any commission firm to solicit for any commission firm in which he may be interested, unless he be duly registered and employed as a solicitor under the rules and regulations provided. It is provided further that members representing commission firms or incorporated companies shall be held responsible for any violation of this rule by the nonresident partners or stockholders of said firms or corporations.’ The petition further charges that the above rule operates in restraint of trade, and interferes with the just rights of relator and other members of said corporation in the management and conduct of their business; that for the enforcement thereof said corporation has enacted that ‘any member of this exchange, or firm in which he may be a partner, violating any of the provisions of this rule, shall be fined not less than $250 nor more than $1,000 for the first offense; for a second offense, not less than $500 nor more than $1,000; and, if either of such fines is not paid within three days, said firm shall be suspended from membership until same is paid. For a third offense they shall be expelled from membership in the exchange.’ The petition further charges that the business of relator, as well as the business of a large number of other members of said corporation, extends into the territory comprising the states mentioned in the above rule; and that relator and the other members of said corporations have, and by law ought to have, the right to conduct and extend their business in said territory, and for that purpose to employ such and so many solicitors as they may see fit; that relator and a large minority of the other members of said corporation desire to conduct their business in said territory in open competition; that relator and others of the members of said corporation have engaged solicitors who are not members of said corporation; that said corporation threatens to enforce the provisions of the above rule against relator and said other members, and to expel them from said corporation; that such action will ruin the business of the members against whom it is taken. The prayer is for leave to file information in the nature of quo warranto against said Chicago Live-Stock Exchange, requiring it to appear, and show by what right it assumes to exercise the privilege and franchise of enacting said rule or by-law.

On the filing of this petition the court entered a rule directing the respondent exchange to show cause why the petition should not be granted. The exchange filed its answer to the rule, verified by the affidavit of its secretary. The facts disclosed by the answer show that the exchange does no business of any kind itself, but is an organization for the mutual benefit of its members in the field indicated by the objects stated in its certificate of incorporation; that it has a membership of about 700 persons, mainly livestock commission merchants; that each of its members voluntarily sought such membership, and agreed, in joining it, to abide by such by-laws and rules as it might make; that the exchange has no market, and conducts no market; that the Union Stock Yards are the separate and exclusive property of another and different corporation, viz. the Union Stock-Yard & Transit Company, a corporation for pecuniary profit, organized by a special act passed February 13, 1865; that upward of 30,000 persons are employed in the yards, of whom only a small number are members of the exchange; that the exchange has no property at the stock yards except a leasehold of one room for a term of one year; that its rules are adopted in order to carry out the objects of its creation above set forth; that its rules are operative upon and apply to such persons only as have voluntarily sought and obtained membership; that the powers of the exchange to make rules, and the validity of its rules establishing uniform rates of commission to be charged by its members, and determining that they may deal as livestock commission merchants only with members of the exchange, have already been inquired into in this court, and sustained, both in proceedings by...