Greer, Mills & Co. v. Stoller

• Decision Date: 06 November 1896
• Citation: 77 F. 1
• Court: U.S. District Court — Western District of Missouri
• Parties: GREET, MILLS & CO. v. STOLLER, et al.

77 F. 1

GREET, MILLS & CO. v. STOLLER, et al.

United States Circuit Court, W.D. Missouri, Western Division.

November 6, 1896

The general objects of this association, as declared in its articles of association, are 'for the purpose of organizing and maintaining a business exchange, not for pecuniary profit or gain, nor for the transaction of business, but to promote and protect all interests connected with the buying and selling of live stock at the Kansas City Stock Yards, and to promulgate and enforce amongst the members correct and high moral principles in the transaction of business. ' By subscribing thereto, the members agreed with each other to faithfully observe and be bound by the rules and by-laws of the association. The complainant became a member thereof, and participated in the proceedings and business of the association for a long time prior to the institution of this suit. For an alleged violation of the by-laws of the association it was in accordance with the provisions of such by-laws tried by the governing board of the association, and, being by them found guilty, was sentenced to pay a fine of $1,000, and suspended until the said fine should be paid. Refusing to comply therewith, the board of directors, as authorized by the by-laws of the association, sought, by giving public notice thereof on the billboards of the association and otherwise, to induce the members of the association to cease to do business with the complainant as a member of the association, and to obstruct its business operation as a member of the association by denying it the privilege of members in selling stock on commission through the exchange. Thereupon it brought this bill in equity, setting out in detail its grievances, alleging that the by-laws thus sought to be enforced against it are illegal, being in restraint of trade and commerce, and tending to create a monopoly by the said board in the live-stock business at said stock yards and charging the defendants with attempting to enforce against it what is termed a 'boycott.' The bill alleges that the complainant gave notice to the board of the withdrawal of its assent hitherto given to the by-laws complained of; and it asks to have the respondents enjoined from further attempting to enforce said by-laws and said penalty and order of suspension against it, and from further interfering with its business as a member of the said association or otherwise, and from publishing such notices or otherwise of the fact of said suspension, and from requiring other members of the association to cease to do business as such with the complainant, and for general relief. The bill discloses that the association is composed of about 300 members, the price of membership at this time being $1,000 and that the defendants constitute the board of directors of the association; all of which board are resident citizens of this district, except the respondent Hanna, who is a citizen of the state of Kansas. Hanna has filed a motion to be discharged herefrom for want of jurisdiction over him, while the other defendants move to dissolve the temporary injunction granted heretofore herein, for the reason, inter alia, that because of the want of jurisdiction over said Hanna all the necessary parties are not before the court to authorize it to proceed to final decree. Other essential facts appear in the following opinion.

Mills, Smith & Hobbs, Lathrop, Morrow, Fox & Moore, and Albert H. Horton, for complainant.

Hutchings & Keplinger, McGrew, Watson & Watson, and Karnes, Holmes & Krauthoff, for defendants.

PHILIPS District Judge (after stating the facts).

The defendant Hanna being a nonresident of the state, this court can acquire no jurisdiction over him against his consent, unless it can be maintained that this action is predicable of the act of congress of July 2, 1890, entitled 'An act to protect trade and commerce against unlawful restraints and monopolies. ' 26 Stat. 209. By the fifth section of this act, the court, whenever the ends of justice require it, may bring before it other parties by summons, 'whether they reside in the district in which the court is held or not. ' Can a private citizen, for a redress of a private grievance, maintain a bill in equity for an injunction under this act? The things forbidden by the act are declared to be criminal offenses against the government of the United States. By the fourth section, the jurisdiction is conferred upon the circuit courts of the United States to prevent and restrain the violations of this act, 'and it shall be the duty of the several district attorneys of the United States in their respective districts, under the direction of the attorney general, to institute proceedings in equity to prevent and restrain such violations; such proceedings may be by way of petition setting forth the case and praying that such violations shall be enjoined or otherwise prohibited. ' Section 7 gives to the private person 'injured in his business or property by any other person or corporation by reason of anything forbidden, or declared to be unlawful by this act,' a right to sue in a circuit court of the United States in the district in which the defendant resides or is found for threefold damages by him sustained. The statue, being highly penal in its character, must be strictly construed; and, having created a new offense, and imposed new liabilities, and having provided the modes of redress to the public and the private citizen, by established rules of construction, these remedies are exclusive of all others. South. St. Const. §§ 392-394, 399; Riddick v. Governor, 1 Mo. 147; Stafford v. Ingersol, 3 Hill, 38; Chandler v. Hanna, 73 Ala. 390. While there has been some contrariety of opinion among judges as to whether or not the right of injunction to a private citizen is accorded by this statute, my conclusion is that the right is limited by the fourth section to injunction at the relation of the district attorney, and that the seventh section gives to the private citizen his only remedy. Blindell v. Hagan, 54 F. 40, 41; Id., 6 C.C.A. 86, 56, Fed. 696; Pidcock v. Harrington, 64 F. 821. Therefore Hanna has a right to insist that he cannot be sued in this jurisdiction. In re Keasbey & Mattison Co., 16 Sup.Ct. 273-275. The motion to dismiss on behalf of the defendant Hanna is therefore sustained on the ground of his nonresidence.

The question, then, occurs, can this suit proceed without his presence as a party? In other words, is he a necessary party? The Kansas City Live-Stock Exchange is an unincorporated voluntary association composed of about 300 members. Such associations of individuals, in respect of their rights and liabilities, are generally regarded as mere partnerships. Dicey, in his work on Parties, says:

'An unincorporated company is fundamentally a large partnership, from which it differs mainly in the following particulars, viz.: that it is not bound by the acts of the individual partners, but only by those of its directors or managers; that shares in it are transferable; and that it is not dissolved by the retirement, death, bankruptcy, etc., of its individual members. ' Page 149.

As said in Phipps v. Jones, 59 Am.Dec. 711:

'Suits by and against such associations cannot at common law be brought and maintained in the name of the association, or in the name of its agents or trustees. Curd v. Wallace, 32 Am.Dec. 85; Schuetzen Bund v. Agitations Verein, 44 Mich. 313, 6 N.W. 675. But actions must be brought and maintained in the names of all the members. * * * On the ground that they have a common interest, members of a voluntary unincorporated association are entitled to join in a suit in regard to matters pertaining to or affecting such interest. Mears v. Moulton, 30 Md. 142.'

The individual members of such associations retain all their original autonomy, except in so far as they may, be consent to the articles of association, have surrendered such right. In the absence of such assent, not even a majority of the associates could bind the individual members. His judgment would remain independent. A proceeding, therefore, to control the action of and bind the associates, must be directed against the whole membership. But where, as in this instance, the executive administration of the business affairs of the association is by articles of agreement committed to a designated board of less number than the whole, it may be conceded that a judicial proceeding against the association may be maintained by summons against such board.

Rule 1 of the association, referred to in the bill of complaint, vests the government of the exchange in a board of 11 directors, composed of the president and vice president of the association 7 members of which shall constitute a quorum for the transaction of business. Unquestionably, but for the provision clothing the number 7 with the functions of government, it would require the presence and co-operation of the whole 11 to transact any business. But this 7 must not only be present, assembled as a board, to perform any official act (Hay-Press Co. v. Devol, 72 Fed.loc.cit. 721, 722), but they are clothed with the functions of acting for and representing the board only for the transaction of business of the association, and not for any other purpose. It does not authorize affirmative action against the association by notice to seven of the directors. As to third persons moving against the association to bind the constituent members, notice must be given to all. As said in People V. Batchelor, 22 N.Y. 134:

'It is not only a plain dictate of reason, but a general rule of law, that no power or function intrusted to a body consisting of a number of persons can be legal without notice to all the members composing such body.'

...