Clear Lake Co-op. Live Stock Shippers' Ass'n v. Weir

• Decision Date: 15 December 1925
• Docket Number: 36627
• Citation: 206 N.W. 297,200 Iowa 1293
• Parties: CLEAR LAKE CO-OPERATIVE LIVE STOCK SHIPPERS' ASSOCIATION, Appellee, v. J. M. WEIR, Appellant
• Court: Iowa Supreme Court

206 N.W. 297

200 Iowa 1293

CLEAR LAKE CO-OPERATIVE LIVE STOCK SHIPPERS' ASSOCIATION, Appellee, v. J. M. WEIR, Appellant

No. 36627

Supreme Court of Iowa, Des Moines

December 15, 1925

Appeal from Cerro Gordo District Court.--JOSEPH J. CLARK, Judge.

Affirmed.

Ira W Jones, for appellant.

Bryant & Wolf, for appellee.

STEVENS J. FAVILLE, C. J., and DE GRAFF and VERMILION, JJ., concur.

OPINION

THE opinion states the case.--Affirmed.

STEVENS J.

The plaintiff, appellee herein, is a corporation organized in pursuance of Chapter 122, Acts of the Thirty-ninth General Assembly (Chapter 390, Code of 1924), having its principal place of business at Clear Lake, Iowa. It alleged in its petition, which is in two counts, that appellant, on or about October 16, 1922, signed a membership agreement with said corporation, Paragraph 6 of which is as follows:

"(6) It is further expressly agreed, in consideration of the undertakings of the association and other similar agreements entered by members thereof and in view of the difficulty of ascertainment of damages caused by breach of this agreement that in the event of the member failing to list and deliver his stock as provided herein, he shall pay to the association such sum or sums as may be provided by the by-laws for each hundred weight of live stock which he fails to list and deliver which shall be considered as liquidated damages, and the manager is hereby authorized to deduct such damages from any moneys then or thereafter in his hands belonging to the member."

It is further alleged that he has breached this provision of the contract by selling 4 veal calves of the aggregate weight of 600 pounds and 19 head of hogs of the aggregate weight of 6,810 pounds to persons unknown to the plaintiff, and damages are asked on the basis of 25 cents per hundred pounds of the stock sold, or a total of $ 18.52.

Section 2, Article 3, of the by-laws of the association, which are also incorporated in the petition, is as follows:

"In case of failure on the part of any member to fulfill the terms of his contract with the association and to list and deliver his stock as provided in his contract he shall pay as liquidated damages and in consideration of the difficulty of ascertainment of the precise damages suffered by the association, and the individual members thereof who shall have entered into similar undertakings, and of such like agreements, the sum of twenty-five cents (25c) per hundred pounds of live stock which he so fails to list and deliver, which amount may be deducted from any sum or sums in the possession of the association, belonging to such member."

Appellant demurred to the petition upon numerous grounds, among which is that Section 11 of Chapter 122, Acts of the Thirty-ninth General Assembly, violates Section 29 of Article III and Section 6 of Article I of the Constitution of the state of Iowa, and is therefore void. Section 11 of Chapter 122 is as follows:

"The association may require members to sell all or a stipulated part of their specifically enumerated products exclusively through the association or to buy specifically enumerated supplies exclusively through the association, but in such case, a reasonable period during each year shall be specified during which any member, by giving notice in prescribed form, may be released from such obligation thereafter. (Where it is desired to enter into the exclusive arrangement provided in this section, the association shall execute a contract with each such member setting forth what goods or wares are to be handled and upon what terms). In order to protect itself in the necessary outlay, which it may make for the maintenance of its services, the association may stipulate that some regular charge shall be paid by the member for each unit of goods covered by such contract whether actually handled by the association or not, and in order to reimburse the association for any loss or damage which it or its members may sustain through the member's failure to deliver his products to or to procure his supplies from the association. In case it is difficult or impracticable to determine the actual amount of damage suffered by the association or its members through such failure to comply with the terms of such a contract, the association and the member may agree upon a sum to be paid as liquidated damages for the breach of his contract, said amount to be stated in the contract."

The demurrer was overruled, and the defendant appeals. The amount involved being less than $ 100, the cause comes to this court on the certificate of the trial judge.

I. Section 29, Article III, of the Constitution requires that:

"Every act [of the legislature] shall embrace but one subject and matters properly connected therewith, which subject shall be expressed in the title."

The title of Chapter 122, Acts of the Thirty-ninth General Assembly, reads as follows:

"An act to provide for the organization of associations without capital stock and not for pecuniary profit."

Section 1 of the act defines its purpose, and is as follows:

"Any number of persons, not less than five (5), may associate themselves as a co-operative association, without capital stock, for the purpose of conducting any agricultural, live-stock, horticultural, dairy, mercantile, mining, manufacturing or mechanical business on the co-operative plan and of acting as a co-operative selling agency for its members."

The remainder of the act provides for the adoption of articles of incorporation and for the filing thereof with the secretary of state, fixes the fees to be paid, which are nominal, and provides for the election of a board of directors, a president, one or more vice presidents, a secretary and treasurer, and for membership, annual reports, etc.

The point raised by the demurrer is that the title is not broad enough to include the provisions of this section. It is conceded that the title is sufficient to include all of the other provisions of the act; or at least the constitutionality of the act as a whole is not challenged. Section 9 declares who may become members of non-profit-sharing co-operative associations organized under the act, which includes all "persons engaged in the production of the products, or in the use or consumption of the supplies, to be handled by or through the association, including the lessors and landlords of lands used for the production of such products, who receive as rent part of the crop raised on the leased premises."

Appellee association was organized for the sole purpose of marketing farm products. The membership contract excepts from its operation live stock butchered on the farm or sold to local butchers or other private customers, stocker or feeder animals sold locally, and pure-bred or other animals sold for breeding purposes. The purpose, therefore, of the association is to sell the products of its members upon foreign markets. The evident purpose of Section 11 of the act is to secure greater certainty and efficiency to the corporation as a selling agency. It is a part of the scheme or plan devised by the legislature for greater economy in the marketing of farm products. Whether Section 11 was necessary to the successful working out of the plan, or prudent, is of no consequence in determining its constitutionality. It is not necessary that the title shall contain a detailed recital of all of the provisions of the act, nor is it required to be an index or an epitome thereof. All of the provisions thereof must relate to the act as a whole, without incongruity or want of unity. The legislature may well have deemed the provisions of Section 11 vital to the integrity and security of selling agencies organized under this chapter. We think it clearly harmonizes with the other provisions of the act, and is in no sense foreign or extraneous thereto. It is a part of the scheme created for organizing co-operative selling agencies. Questions involving the sufficiency of titles to legislative enactments have frequently been before this court, and the rules for determining the sufficiency thereof are too familiar to require repetition or elaboration. The discussion in the following cases will be found ample, and fully sustains the validity of the statute in question: State v. Gibson, 189 Iowa 1212, 174 N.W. 34; Huston v. City of Des Moines, 176 Iowa 455, 156 N.W. 883; State v. Hill, 177 Iowa 270, 158 N.W. 518; Schultz v. Parker, 158 Iowa 42, 139 N.W. 173; State v. Hutchinson Ice Cream Co., 168 Iowa 1, 147 N.W. 195; Camaras v. City of Sioux City, 192 Iowa 372, 184 N.W. 821.

II. Section 6, Article I, of the Constitution of this state requires that:

"All laws of a general nature shall have a uniform operation; the general assembly shall not grant to any citizen, or class of citizens, privileges or immunities, which upon the same terms shall not equally belong to all citizens."

It is urged by counsel that Section 11, Chapter 122, Acts of the Thirty-ninth General Assembly, quoted above, also violates this provision of the Constitution. It is not clear, in the light of the repeated decisions of this court, just in what sense this can be true. This section of the Constitution does not prohibit the legislature from establishing classifications and legislation with particular reference thereto and for the benefit thereof. The limitation imposed by the Constitution is that the classification established must be based upon some natural reason or upon one suggested by necessity, determined by the difference in the situation and the circumstances of the subjects placed in different classes: that is, the distinction must be based upon something substantial, and must not be arbitrary unreasonable, or such as to produce unavoidable discrimination. Legislati...