Milwaukee Masons' & Builders' Ass'n v. Niezerowski

• Decision Date: 02 February 1897
• Parties: MILWAUKEE MASONS' & BUILDERS' ASS'N v. NIEZEROWSKI.
• Court: Wisconsin Supreme Court

95 Wis. 129

70 N.W. 166

MILWAUKEE MASONS' & BUILDERS' ASS'N

v.NIEZEROWSKI.

Supreme Court of Wisconsin.

Feb. 2, 1897.

Appeal from superior court, Milwaukee county; J. C. Ludwig, Judge.

Action by the Milwaukee Masons' & Builders' Association against Frank Niezerowski on a promissory note. Judgment for defendant for costs. Affirmed on the merits, and reversed as to costs.

This action was brought to recover the sum of $2,289, claimed as a balance due upon a promissory note for $4,266, given by the defendant to the plaintiff corporation by the name and style of the Masons' & Builders' Association, payable one year and three months after date. The defense was that the note was without legal consideration, and void; that the pretended consideration was contrary to public policy and good morals, and that the note was given by and secured from the defendant, who was a member of the said association, pursuant to a secret combination and confederation of the plaintiff and its members to exact of and from citizens of Milwaukee, Wis., desiring to erect and construct buildings, a sum equal to 6 per cent. in excess of the actual cost and value of the work to be done, and by secret means to prevent and suppress competition in bidding for such work; that the note in question was given and received for the purpose and as a means of carrying into effect such alleged unlawful combination. There was practically no dispute as to the facts, and at the close of the evidence the court directed a verdict for the defendant. From a judgment thereon against the plaintiff for costs, plaintiff appealed. At the time the note was given, the membership of the corporation plaintiff comprised about 60 of the 70 or 75 mason contractors in Milwaukee. The masons and builders thinking that they were not receiving fair treatment in the matter of bids for and letting work from owners and their architects, the association devised and adopted certain rules and by-laws in relation to bids and contracts, as a protection against the practices of which they complained. The association had two sets of by-laws, one of which was for general distribution, and the other, under which they carried on their operations, was private. They had contracts with material men in the city by which members who complied with the private by-laws could and did, notably in purchases of brick of the Brickmakers' Association, receive rebates of 33 1/3 per cent. upon all material necessary for their contracts, and they were thus enabled to underbid nonmembers for doing such work. By reason of city ordinances, all buildings within fire limits were required to be constructed of brick, stone, or other fireproof material, and by the plaintiff's private by-laws, if brick was purchased in Chicago, or outside of Milwaukee, where it could be procuredmuch cheaper than of the Brickmakers' Association, the members of the plaintiff's association were required to charge $2 more per 1,000 for laying them, $1.25 of which went to the Brickmakers' Association of Milwaukee, and 75 cents to the plaintiff's association; which it was contended enabled the Brickmakers' Association to maintain general high prices, and to make such discount to members of the plaintiff association. By the private by-laws of the plaintiff it was required of all its members who wished to compete for any contract or job, public or private, to bring their bids to the rooms of the association the day preceding the one on which bids were to be submitted to the person desiring to build, or his architect or agent, when a committee of such bidders was appointed by a chairman, one of their number, who was to inspect the bids, and determine who was the lowest bidder. Such lowest bidder was then required to add 6 per cent. to the amount of his bid, before he could submit it to the person for whose work he was competing, or to his architect or agent. In case his bid was 8 per cent. or more lower than the next lowest bid, the bidders present were to determine how much should be added, over said 6 per cent., to his bid. All bids made by members were to be made at the rooms of the association, and at no other place; and after bids had been submitted to the owner or architect no member was allowed to change his bid, or do the work except at the figures given in such bid. Members who did not comply with the rules in submitting their bids to the association were “under no circumstances to submit a bid for the work.” Another private rule was that “no member shall give a bid to any owner or architect for changes or additions to work under contract. The original contractor shall have the right to bid on such changes or additions without competition, unless the amount is larger than the contract; but other bidders shall go in for the accommodation of the owner, after arranging the same with the original contractor, who will pay only six per cent. of such work; the other bidders having no voice in making such bid.” The successful bidder, upon signing a contract, was required to report to the association certain particulars thereof, and file the contract with the secretary within three days thereafter. Another of said rules required him to pay 6 per cent. of each estimate to the secretary; and when the roof was on the building he was to pay his percentage in full, whether he had received payment in full or not. Members were subject to certain fines for noncompliance with by-laws. In the summer of 1892, and while a member of the association plaintiff, the defendant became the successful bidder for building the Gesu Church in Milwaukee, for the sum of $71,000, but he submitted his bid for doing the work directly to the congregation, and did not submit it to the association plaintiff, and there was no addition of 6 per cent. made to his bid for its benefit. The association claimed that the defendant should give his note for the usual percentage of 6 per cent., and, after he had been visited by a committee, he was notified to attend a special meeting to consider the subject, when, after some discussion, he finally gave the note in question for the required amount, it being understood that he would remain a member. He testified, in substance, that he had other contracts, and he apprehended that if he did not give the note the association might cut him off, and he would have trouble in relation to his work; that he understood, if he did give it, he would have the benefit of the association in rebates. He also testified that he had rebates on material for the church work, but that he got them by reason of prompt payment, and not through the association. The ordinary method of getting rebates was by obtaining a slip for that purpose from the secretary, but the evidence showed also that they were frequently arranged between the material men and members. The evidence showed that the only consideration for the note was the benefits and advantages received by the defendant, or expected to be, such as were provided and secured by said by-laws, and the methods of transacting business under them.

A. J. Eimermann and Hoyt, Ogden & Olwell, for appellant.

Austin & Feler, for respondent.

PINNEY, J. (after stating the facts).

The question to be determined is whether the benefits and advantages which the defendant was entitled to receive, as a member of the association, in consequence of conducting its business under and in pursuance of the by-laws already noticed, constitute a lawful consideration for the note. The manifest purpose of the private by-laws was, by means of the combination thus effected, to suppress fair and free competition in bidding for building contracts in Milwaukee, and by such combination and method of bidding, upon its face apparently fair and free from objection, but in fact unfair and delusive, to compel owners to pay for the erection of buildings the sum of 6 per cent. in excess of what they would be otherwise obliged to pay for them if fairly let to the lowest bidder, uninfluenced by such combination. It seems to us that the restraint put upon the rights of proprietors by the provisions of these by-laws or rules, as well as the entire scheme thus disclosed, is contrary to public policy, and therefore void. Agreements in restraint of trade are against public policy and void, unless founded upon a valuable consideration, and limited as regards time, space, and the extent of the trade, to what is reasonable under the circumstances of the case. All such arrangements tend to deprive the public of the services of parties in the employments and capacities...