Elephant Butte Alfalfa Ass'n v. Rouault.

• Decision Date: 30 March 1926
• Docket Number: No. 2906.,2906.
• Citation: 262 P. 185,33 N.M. 136
• Parties: ELEPHANT BUTTE ALFALFA ASS'Nv.ROUAULT.
• Court: New Mexico Supreme Court

33 N.M. 136

262 P. 185

ELEPHANT BUTTE ALFALFA ASS'N

v.ROUAULT.

No. 2906.

Supreme Court of New Mexico.

March 30, 1926.Rehearing Denied Jan. 5, 1928.

Syllabus by the Court.

The principal attack upon the contract in this case being that it is void on the ground of public policy of this state as expressed in the provisions of sections 1685, 1686, and 1687, Code 1915, having reference to combinations in the nature of trusts or combinations in restraint of trade, it is held that such declared policy is within the control of the Legislature, and subject to modification by it.

The Co-operative Marketing Act (chapter 64, Laws of 1915), being later than the general antimonopoly statutes, must be considered as modifying such general statutes, and legalizes practices which might have been questioned prior to the enactment of such later laws authorizing the organization, management, and co-operation of agricultural, nonprofit co-operative associations, in the light of the trend of recent legislation and judicial construction in other states and the enactment of section 67, chapter 25, and chapter 37, Laws of 1923, by the New Mexico Legislature.

A co-operative marketing association without capital stock, and operated for a mutually beneficial purpose, may enforce performance of a grower's contract to sell his alfalfa to it exclusively, in a suit for specific performance or for an injunction against its breach; the rule that a contract for the delivery of an ordinary article of commerce will not be compelled by specific performance not being applicable to the circumstances of this case, it appearing that an action for damages would not afford an adequate remedy.

The right of a co-operative marketing association to compel specific performance of a member's contract to sell his alfalfa to it exclusively will not be denied as requiring constant supervision of the court for a long period of time over a series of acts, and possibly compelling the court to pursue the member from place to place, etc., the rule being one of decision, and not a limitation of the jurisdiction of a court of equity.

Appeal from District Court, Dona Ana County; Ed Mechem, Judge.

Suit by the Elephant Butte Alfalfa Association against T. Rouault for an injunction and for damages. From a judgment dismissing the cause, plaintiff appeals. Reversed, with instructions.

The right of a co-operative marketing association to compel specific performance of a member's contract to sell his alfalfa to it exclusively will not be denied as requiring constant supervision of the court for a long period of time over a series of acts, and possibly compelling the court to pursue the member from place to place, etc., the rule being one of decision, and not a limitation of the jurisdiction of a court of equity.

J. H. Paxton, of Las Cruces, for appellant.

H. B. Holt, of Las Cruces, for appellee.

BICKLEY, J.

The plaintiff, Elephant Butte Alfalfa Association, is a corporation organized under the laws of Texas known as the Co-operative Marketing Act, and, by compliance with the laws of New Mexico, authorized to do business therein.

Plaintiff brought suit against the defendant, T. Rouault, for the specific performance of a contract entered into between the plaintiff and defendant, in May, 1921, and for an injunction enjoining him from selling any of the alfalfa mentioned and described in the contract to any one other than the plaintiff, and for $300 damages for the alleged breach of said contract, and for expenses, attorneys' fees, and costs. The plaintiff is a co-operative marketing association, formed for the purpose of engaging in any activity in connection with the marketing and selling of alfalfa, including alfalfa nurse crops, alfalfa products, and alfalfa by-products of its members, and for the purpose of engaging in any activity in connection with the harvesting, preserving, drying, processing, packing, storing, handling, shipping, and utilization of the alfalfa, alfalfa products, and alfalfa by-products, and the manufacturing of alfalfa by-products, of its members, and for the purpose of engaging in any activity in connection with the manufacturing, selling, or supplying, to its members, of machinery, equipment, and supplies, and for the purposes of engaging in any activity in connection with the financing of the above-enumerated activities, and, so far as is authorized by said Co-operative Marketing Act, for the purpose of promoting, fostering, and encouraging the business of producing and marketing alfalfa, alfalfa products, and alfalfa by-products of its members, co-operatively, and for reducing speculation in, and for stabilizing, alfalfa markets, and for co-operatively and collectively handling the problems of alfalfa growers, and for all purposes pertinent and incident thereto, and for the purpose of having and exercising all the rights, privileges, and powers granted to corporations organized under said Co-operative Marketing Act.

The Texas Co-operative Marketing Act was passed by the Legislature of the state of Texas in 1921, and is chapter 22 of the General Laws of Texas passed by the Thirty-Seventh Legislature. It is also compiled in Vernon's Ann. Civ. St. Supp. 1922, arts. 14 1/2 k - 14 1/2 yy The declaration of policy of the act is as follows:

“Section 1. Declaration of Policy. In order to promote, foster and encourage the intelligent and orderly marketing of agricultural products through co-operation and to eliminate speculation and waste; and to make the distribution of agricultural products as direct as can be efficiently done between producer and consumer; and to stabilize the marketing problems of agricultural products, this act is passed.” Vernon's Ann. Civ. St. Supp. 1922, art. 14 1/2 k.

It is alleged that the association is composed of persons who are actual and individual farmers producing alfalfa, operating individual small farms, and actually and principally engaged in the production of alfalfa thereon, in large part by their own labors, untrained in the methods of commercial business, and without ability, means, or facilities for getting or keeping in touch with general market or production conditions, or for obtaining the full market value of their product, and thus, in their divided and unassociated condition at the mercy of speculative dealers in such products; and said individual farmers producing alfalfa have organized, and are operating, the said plaintiff association as a nonprofit co-operative association without capital stock, for the purpose of promoting, fostering, and encouraging the business of producing and marketing alfalfa, alfalfa products, and alfalfa by-products of its members, co-operatively, and for reducing speculation in, and for stablizing, alfalfa markets, and for co-operatively and collectively handling the problems of alfalfa growers, and for all purposes pertinent and incident thereto, such as procuring facilities for co-operative storage of their alfalfa at reasonable expense, and obtaining advances on their several crops co-operatively, cheaply, and safely, and that said individual farmers producing alfalfa have organized, and are operating, the said plaintiff association for no other purpose, and that all the members of said plaintiff association are such individual small farmers so producing alfalfa, and no corporation or other combination is a member thereof.

The contract itself purports to be an agency contract, and appoints plaintiff as agent of the defendant to market his product for his benefit, and without profit to the association. The periods covered by the contract include 1921 to 1925. The subject-matter of the contract is the sale and disposal of the alfalfa grown by and for the defendant. The complaint alleges that the defendant is a grower of alfalfa, and is a member of the association; that he entered into a contract with the plaintiff that he would consign or deliver to plaintiff or to plaintiff's order all of the alfalfa produced by or for defendant during the term of the contract for the co-operative marketing and handling thereof by plaintiff and the return to defendant of all his proportionate share of the proceeds of such co-operative marketing and handling, less his proportionate share of the actual expenses of such co-operative marketing and handling, and whereby the defendant also agreed to and with plaintiff to pay to plaintiff for all such alfalfa delivered, consigned, withheld, or marketed by or for defendant otherwise than to or through plaintiff the sum of $5 per ton as liquidated damages for such breach of said written agreement, the plaintiff and defendant agreeing that the said written agreement is one of a series dependent for its true value upon the adherence of defendant to said agreement. It is alleged that defendant has failed and refused to perform said contract, and that said defendant threatens to continue to disregard the obligation of his said agreement, and to deliver, sell, and consign alfalfa produced by him and for him to persons other than plaintiff, and otherwise than by marketing same through plaintiff, to plaintiff's great and irreparable injury and damage, by reason of the fact that the obligation of all similar contracts between plaintiff association and its members will thereby be relaxed, and the business of co-operative marketing involved in the organization and operation of said plaintiff will be totally destroyed, and by reason of the fact that the damages resulting therefrom to the plaintiff association and its several members will be practically undeterminable in money value, and that plaintiff has no adequate remedy at law in the premises.

The complaint sets forth in verbatim a copy of the contract, which is essentially the same as co-operative marketing contracts usually employed.

The defendant demurred to the complaint upon the grounds “that same does not set forth allegations sufficient to constitute a cause of action.”...