Gladish v. Kansas City Live Stock Exchange

• Decision Date: 26 June 1905
• Parties: JOHN J. GLADISH, Respondent, v. KANSAS CITY LIVE STOCK EXCHANGE, Appellants
• Court: Kansas Court of Appeals

89 S.W. 77

113 Mo.App. 726

JOHN J. GLADISH, Respondent, v. KANSAS CITY LIVE STOCK EXCHANGE, Appellants

Court of Appeals of Missouri, Kansas City

June 26, 1905

Appeal from Jackson Circuit Court.--Hon. W. B. Teasdale, Judge.

REVERSED.

Cause reversed and petition dismissed.

Frank Hagerman, A. F. Smith and Boyle & Guthrie for appellants.

(1) Since the organization of the Interstate Commerce Commission commercial exchanges have received its constant recognition as suitors in its court. First Annual Report, pp. 46, 54, 55 102, 103; Second Annual Report, pp. 108, 127, 129, 149, 153 154, 156, 162; Third Annual Report, pp. 132, 143, 144, 145 146, 155, 166, 169, 171, 174, 179; Fourth Annual Report, pp. 88, 100, 133, 146, 147, 149, 150, 154, 161, 169, 178, 180, 181, 184, 189, 206. (2) The lawfulness of commercial bodies of this character has been recognized by the courts in an unlimited number of cases, arising in every variety and form of litigation. Speight v. Gaunt, L. R. 9 App. Cas. 1, 10, 12, 21; 22 Ch. Div. 727; Stewart v. Canty, 8 M. & W. 160; Fletcher v. Marshall, 15 M. & W. 755; Bayliffe v. Butterworth, 1 Exch. 425; McEwen v. Woods, 11 Q. B. 13; Bowlby v. Bell, 3 C. B. 428; Pollock v. Staples, 12 C. B. 765; Hanson v. Boyd, 161 U.S. 397; Bibb v. Allen, 149 U.S. 481; Railroad v. Int. Com. Comm., 162 U.S. 197, 215, 241; Railroad v. Int. Com. Comm., 100 U.S. 423, 427, 429; Railroad v. Int. Com. Comm., 105 U.S. 559, 563; Dilloway v. Alden, 88 Me. 230, 236; Prant v. Chisholm, 81 N.Y. 376, 379; Jackson v. Live Stock Ex., 68 N.W. 1051, 1053; White v. Brownell, 2 Daly 329, 336, 355, 356; Leach v. Harris, Brewst. 571, 575, 576; Irwin v. Thompson, 27 Ks. 643; Stock Yards Co. v. Mallory, 157 Ill. 554; Burke v. Fry, 44 Neb. 223; Lafond v. Diems, 81 N.Y. 507, 514. (3) The rules of commercial exchanges have been the constant subject of judicial enforcement. State v. Chamber of Commerce, 47 Wis. 670, 683, 685; Board of Trade v. Nelson, 162 Ill. 431, 438; People v. N. Y. Coml. Assn., 18 Abb. Pr. 271; People v. Produce Exch., 149 N.Y. 401; Ex parte Haebler, 149 N.Y. 414, 425, 428; Lewis v. Wilson, 121 N.Y. 284; Dickenson v. Chamber of Commerce, 29 Wis. 45, 50, 51; Conner v. Robertson, 37 La. Ann. 814, 818; Lehman v. Feld, 37 F. 852; Kingsbury v. Kirwin, 9 Jones & S. 415, 454, 77 N.Y. 612; Powell v. Waldron, 97 N.Y. 328, 331; Sexton v. Coml. Exch., 10 Pa. Co. Ct. 607, 610; Blumenthal v. Chambers of Commerce, 7 Cin. Law. Bul. 327; Kershaw v. Wright, 115 Mass. 361, 365; Habbenicht v. Lissak, 78 Cal. 351, 352; Meherin v. Exchange, 117 Cal. 215; Chamber of Commerce v. Greene, 47 P. 140; People v. Board of Trade, 45 Ill. 112, 115; 116; Fisher v. Board of Trade, 80 Ill. 85; Baxter v. Board of Trade, 83 Ill. 146; Sturges v. Board of Trade, 86 Ill. 441; Pitcher v. Board of Trade, 121 Ill. 412, 419, 420. (4) The courts recognize the rights of exchanges to limit their membership in any reasonable manner they see fit. Metropolitan Grain Exchange v. Board of Trade, 15 F. 847, 849, 850, 851; Bryant v. Tel Co., 17 F. 825, 826; Grain Exchange v. Tel. Co., 22 F. 23; Railroad v. Stock Yards Co., 45 N.J.Eq. 50; affirmed 46 N.J.Eq. 280; Horton v. Morgan, 19 N.Y. 170, 172; Walls v. Bailey, 49 N.Y. 464, 473; Wilson v. Tel. Co., 3 N.Y.S. 633, 636, 637; Belton v. Hatch, 109 N.Y. 593; Hyde v. Woods, 94 U.S. 523; Board of Trade v. Nelson, 162 Ill. 431, 438. (5) Commercial exchanges before the courts of Missouri. Goddard v. Merchants' Exchange, 9 Mo.App. 296; Elliott v. Merchants' Exchange, 14 Mo.App. 234; Albers v. Merchants' Exchange, 39 Mo.App. 583; Albers v. Merchants' Exchange, 138 Mo. 140; Warren v. Merchants' Exchange, 52 Mo.App. 157; Farmer v. Board of Trade, 78 Mo.App. 557; State ex rel. v. Smith, 114 Mo. 180; Sec. 1156, Gen. Stats. Kansas 1889; Session Acts Missouri 1863, p. 122; Session Acts Missouri 1865, p. 260; Session Acts Missouri 1875, p. 348. By these acts the Merchants' Exchange of St. Louis (a grain brokers' Exchange) was incorporated with all the rules and by-laws of the former unincorporated association and unlimited power to amend them. R. S. 1899, sec. 1319.

Lathrop, Morrow, Fox & Moore and Gilmore & Brown for respondent.

(1) The plaintiff is without remedy because he has been expelled from the exchange. Ertz v. Produce Exchange, 79 Minn. 140. (2) The acts complained of constitute a legal wrong. (3) The enforcement of the rule against trading with nonmembers will be enjoined, notwithstanding defendant's claim that if the rule is illegal the presumption is that it will not be enforced. (4) The Kansas City Live Stock Exchange is an illegal combination. This is perfectly apparent from an examination of the cases in Missouri, which we have heretofore cited, to-wit: Heim v. Belinder, supra; Walsh v. Master Plumbers' Assn., supra; State ex rel. v. Packing Co., 73 S.W. 645; State ex rel. v. Packing Co., 73 S.W. 1133.

OPINION

BROADDUS, P. J.

This is a proceeding by injunction against the defendants who represent the Kansas City Live Stock Exchange, a voluntary organization located and doing business at Kansas City, Missouri. The plaintiff, who was a member of the said exchange while engaged in the live stock commission business was entrusted with money by a customer to purchase a carload of calves. Plaintiff bought the calves and gave his check to the seller for the purchase price, which the drawee refused to honor for want of funds. The vendor of the cattle, not having received the purchase price, sued in replevin and recovered back the cattle, and the customer lost his money. Plaintiff at the time was insolvent and his affairs were thrown into bankruptcy. Some time after his failure charges were preferred against plaintiff for his conduct with his said customer, upon which charges he was tried before the board of directors of the exchange for uncommercial conduct. He was found guilty and expelled from the organization. Upon his expulsion the secretary of the exchange issued a notice which was posted upon the public blackboard used for notices to members of the exchange. This notice read as follows:

"Your attention is respectfully called to the agreement signed by you that you will have no business dealings or relations with a person who has been expelled from this association because of a violation of any of the provisions of the constitution, rules or by-laws of the exchange, after notice of such expulsion has been received by you. Section 2 of Rule X."

The rule reads as follows: "Section 2. No member of this exchange shall have any business dealings or relations with a person who is under suspension from membership, or who has been expelled therefrom, because of a violation of any of the provisions of the constitution, rules or by-laws of the association, after notice of such suspension or expulsion shall have been issued by the secretary."

It was in evidence after service of said notice the members of the exchange refused to do business with the plaintiff as a live stock commission dealer. Since the service of the injunction some of the members have resumed business relations with plaintiff. After the restraining order was dissolved and said members learned of the fact, they again ceased to do business with him. Upon final hearing the court granted plaintiff's prayer for relief and gave judgment for injunction.

The object of the proceeding is to restrain defendants, representing said association, forever from enforcing the order made by defendant requiring members of the exchange to have no further dealings with plaintiff and restraining them from inflicting any penalties of any kind or nature whatsoever upon said exchange members who may disobey said order.

The plaintiff primarily contends that the said exchange is an unlawful combination. If this is true, it necessarily follows that the judgment of the court was proper because its effect is to restrain defendants from doing an unlawful and wrongful act to the prejudice of the plaintiff. The effect of such a holding would be to put the brand of outlawry upon the exchange and to destroy it as a business organization. In order to determine this question it becomes necessary to enquire into the nature of its organization and its purposes. We quote from the constitution and by-laws of the association, viz.:

"The objects of this association are: To establish and maintain a commercial exchange, not for pecuniary gain or profit, but to promote and protect all interests concerned in the purchase and sale of live stock at the Kansas City Stock Yards; to promote uniformity in custom and usage at said market; to inculcate and enforce correct and high moral principles in the transaction of business; to inspire confidence in the methods and integrity of its members; to provide facilities for the orderly and proper conduct of business; to facilitate the speedy and equitable adjustment of disputes, and, generally, to promote the welfare of the Kansas City market." Section 1, among other things, provides that persons admitted to the privileges of the association "shall, promptly and faithfully, comply with and fulfill all business obligations into which he may enter, either with fellow members, or with other parties . . . " Section 2 provides for "trial, suspension or expulsion of any member who has been found guilty of any act of bad faith or of attempted extortion; or of any conduct whatever which, in the opinion of the board, is dishonorable or uncommercial." And it is further provided that no member of the exchange shall do business with a suspended or expelled member under the penalty of forfeiting his membership in the association. Other provisions are made for the trial of members for violations of the rules of the exchange which are to be tried on written charges, etc.

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