Long v. Co-Operative League of America

• Decision Date: 14 September 1923
• Parties: LONG, Com'r of Corporations and Taxation, v. CO-OPERATIVE LEAGUE OF AMERICA.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

246 Mass. 235

140 N.E. 811

LONG, Com'r of Corporations and Taxation,

v.CO-OPERATIVE LEAGUE OF AMERICA.

Supreme Judicial Court of Massachusetts, Suffolk.

Sept. 14, 1923.

Report from Superior Court, Suffolk County; George A. Sanderson, Judge.

Suit by Henry F. Long, Commissioner of Corporations and Taxation, against the Cooperative League of America, to enjoin defendant from doing business in the commonwealth, and for appointment of a receiver to close up its business. Reported for determination by the full court, after overruling of demurrer to the bill of complaint, on the questions raised by the demurrer, and defendant's appeal from the order overruling it. Order affirmed, and permanent injunction issued.

Jay R. Benton, Atty. Gen., and Alexander Lincoln, Asst. Atty. Gen., for plaintiff.

Herbert Parker, of Boston, Richard J. Talbot, of Springfield, and Erastus Hewitt, of Boston, for defendant.

RUGG, C. J.

This is a proceeding in equity to restrain the defendant from continuing its business in this commonwealth. It is brought under G. L. c. 107, §§ 7 and 8, which are in these words:

‘Section 7. No person shall issue, negotiate or sell any bonds, certificates or obligations of any kind, which are by the terms thereof to be redeemed in numerical order or in any arbitrary order of precedence without reference to the amount previously paid thereon by the holder thereof, whether they are sold on the instalment plan or otherwise, nor shall any person redeem any bonds. certificates or obligations in such order, whether they are sold on the instalment plan or otherwise.

‘Section 8. Violations of the preceding section shall be punished by a fine of not more than two thousand dollars or by imprisonment for not more than one year. Any such violation, if by a domestic corporation, shall operate as a forfeiture of its franchise and, if by a foreign corporation, association or organization, as a discontinuance of its right to do business in the commonwealth; and the Supreme Judicial or superior court, upon the application of the commissioner of corporations and taxation, may enjoin such foreign corporation, association or organization from further continuing its business in the commonwealth.’

The defendant is alleged in the petition to be ‘a foreign association or organization operating under an agreement and deed of trust, filed in Alleghany county, Pennsylvania, having its home office in Pittsburgh, Pennsylvania. * * *’ This averment must be accepted as true upon demurrer.

The word ‘person’ in section 7 is broad enough to include the defendant. It is provided by G. L. c. 4, § 7, cl. 23, that in construing statutes, unless inconsistent with the manifest intent of the Legislature or repugnant to its context, the word ‘person’ shall include ‘corporations, societies, associations and partnerships.’ See Opinion of Justices. 196 Mass. 603, 626, 85 N. E. 545. The defendant therefore was as matter of statutory construction capable of offending against the provisions of section 7. In view of these specific descriptive allegations touching the nature of the defendant, it must be assumed in a case presented on demurrer to come within the sweep of section 8 and to be subject to the petition for injunction there authorized. Whether in truth the defendant is simply an unincorporated voluntary association of such nature as to constitute its members copartners (Ashley v. Dowling, 203 Mass. 311, 89 N. E. 434,133 Am. St. Rep. 296;Frost v. Thompson, 219 Mass. 360, 106 N. E. 1009;Edwards v. Warren Linoline & Gasoline Works, 168 Mass. 564, 47 N. E. 502,38 L. R. A. 791), or an organization of such character as to be rightly subject to our laws as a foreign corporation (Oliver v. Liverpool & London Life & Fire Ins. Co., 100 Mass. 531;Liverpool Ins. Co. v. Massachusetts, 10 Wall. 566, 19 L. Ed. 1029), or on other grounds within the scope of section 8, are issues not presented on this record. Those questions might arise upon a full report of relevant facts, from which it might be determined whether that portion of the decision of Attorney General v. Pitcher, 183 Mass. 513, 519, 67 N. E. 606, was applicable to the effect that the statute does not authorize suits in equity against individuals. It is enough to say that the allegations of the bill on the record as it is describe a defendant within the scope of sections 7 and 8, that there has been a general appearance, and that a demurrer has been filed admitting for the purposes of this decision the truth of the allegations. These factors require the overruling of the demurrer on this point.

Authority is conferred upon the plaintiff by the explicit words of section 8 to ask for an injunction against such an organization as the defendant is described to be from continuing its business in this commonwealth after violation of the prohibition of section 7. Whatever may be the limitations at common law as to suits by or against an association or organization in the name adopted as a designation of the group of people constituting the association (Pickett v. Walsh, 192 Mass. 572, 590, 78 N. E. 753,6 L. R. A. [N. S.] 1067, 116 Am. St. Rep. 272,7 Ann. Cas. 638), there can be no doubt about the power of the Legislature to authorize suits or actions at law against such associations or organizations (United Mine Workers v. Coronado Coal Co., 259 U. S. 344, 383-392, 42 Sup. Ct. 570, 66 L. Ed. 975;Camden, Gloucestor & Woodbury Railroad v. Guarantors of Pennsylvania, 59 N. J. Law, 328, 35 Atl. 796).

[4] There is provided in section 8 an additional procedure for enforcement of suspension of the business prohibited by section 7 with respect to a foreign corporation, association or organization to that provided with respect to a domestic corporation, association or organization, in that injunction is allowed against the former but not against the latter from further continuing its prohibited business in this commonwealth. It is contended that this violates the constitutional rights of the defendant to equal protection of the laws secured by the Constitution of the United States and that of this commonwealth. The statute seems to us not to be open to successful assault on this ground.

‘The Legislature is permitted to make a reasonable classification and before a court can interfere with the exercise of its judgment it must be able to say ‘that there is no fair reason for the law that would not require with equal force its extension’ to others whom it leaves untouched.' Barrett v. Indiana, 229 U. S. 26, 30, 33 Sup. Ct. 692, 693 (57 L. Ed. 1050);Commonwealth v. Libby, 216 Mass. 356, 103 N. E. 923,49 L. R. A. (N. S.) 879, Ann. Cas. 1915B, 659;Bogni v. Perotti, 224 Mass. 152, 157, 112 N. E. 853, L. R. A. 1916F, 831;Commonwealth v. Titcomb, 229 Mass. 14, 118 N. E. 328;Ashley v. Three Justices of the Superior Court, 228 Mass. 63, 78, 116 N. E. 961, 8 A. L. R. 1463.

[5] Discriminations established by statutory classification must be rational in scope and effect and bear some manifest relation to the main object sought to be accomplished by the statute. The present statute is designed to prevent the doing of the inhibited business by everybody within the limits of the commonwealth. It seems...