Minnesota Wheat Growers Co-Operative Marketing Association v. Huggins

• Court: Minnesota Supreme Court
• Writing for the Court: WILSON, C.J.
• Citation: Minnesota Wheat Growers Co-Operative Marketing Association v. Huggins, 203 N.W. 420, 162 Minn. 471 (Minn. 1925)
• Decision Date: 09 April 1925
• Docket Number: 24,645
• Parties: MINNESOTA WHEAT GROWERS CO-OPERATIVE MARKETING ASSOCIATION v. WILLIAM HUGGINS, JR

203 N.W. 420

162 Minn. 471

MINNESOTA WHEAT GROWERS CO-OPERATIVE MARKETING ASSOCIATION v. WILLIAM HUGGINS, JR

No. 24,645

Supreme Court of Minnesota

April 9, 1925

Action in the district court for Polk county for specific performance of a contract and for other relief. Defendant's demurrer to the complaint was overruled and the questions raised certified, Watts, J. Defendant appealed. Affirmed.

SYLLABUS

Co-operative Marketing Act liberally construed.

1. Sections 6079-6113, G.S. 1923, known as the Co-operative Marketing Act, being an enabling act authorizing the formation of associations to carry out the purposes expressed in the statute, must be liberally construed.

Contract between association and member construed.

2. A contract between such association and a member construed as containing a mutual and valid consideration and not unilateral.

Act does not violate constitutional provision against monopolies.

3.The Co-operative Marketing Act does not contravene section 35 article 4, of the state Constitution.

Nor does it violate provision respecting dur process of law.

4. The Co-operative Marketing Act does not contravene the Fourteenth Amendment to the Constitution of the United States declaring that no state shall deprive any person of life, liberty or property without due process of law, nor deny to any person within its jurisdiction the equal protection of the laws.

When due process of law is secured.

Due process of law and the equal protection of the laws are secured if the laws operate on all alike and do not subject the individual to an arbitrary exercise of the powers of government.

Classification in act is authorized.

The classification in the Co-operative Marketing Act is within the power of the legislature.

Inapplicable sections of state Constitution.

5. Article 1, §§ 2, 5, and 8 of the state Constitution are without application.

Act does not restrict interstate commerce.

6. The Co-operative Marketing Act does not control or burden interstate commerce nor restrict the freedom of the market in interstate commerce.

Money payment liquidated damages.

7. Provision for the payment of money in consequence of a violation of a membership contract construed as liquidated damages rather than a penalty.

Injunction is remedy for breach of contract by members.

8. Liquidated damages for the breach of a membership contract with an association organized under the Co-operative Marketing Act do not give a full, complete and adequate remedy. The only adequate remedy is an injunction preventing the members from breaching their contracts and thus indirectly forcing the delivery of the product to the association.

* Headnote 1. See Agriculture, 2 C.J. p. 990, § 5.

Headnote 2. See Agriculture, 2 C.J. p. 992, § 9 (1926 Anno).

Headnote 3.See Monopolies, 27 Cyc. p. 910.

Headnote 4. See Agriculture, 2 C.J. p. 990. § 5; Constitutional Law, 12 C.J. p. 1137, § 860; p. 1145, § 878; p 1160, § 895 (1926 Anno); p. 1195, § 961; p. 1273, § 1074 (1926 Anno).

Headnote 5. See Constitutional Law, 12 C.J. p. 1124, § 841 (1926 Anno); p. 1220, § 997; Criminal Law, 16 C.J. p. 1358, § 3200.

Headnote 6. See Commerce, 12 C.J. p. 83, § 112.

Headnote 7. See Damages, 17 C.J. p. 945, § 238.

Headnote 8. See Injunction, 32 C.J. p. 191, § 289; p. 226, § 355 (1926 Anno).

T. J. Mangan, for appellant.

Arthur Le Sueur, for respondent.

OPINION

WILSON, C.J.

This action involves the Co-operative Marketing Law, §§ 6079-6113, G.S. 1923, and the right of the association to enforce a membership contract made in harmony with the statute. Defendant's demurrer to the complaint was overuled and the court having certified that the questions raised were important and doubtful, the defendant has appealed.

It is claimed by the appellant as follows: (a) That the contract between appellant and the association is void and unenforceable for want of mutuality; (b) that it is designed to create a monopoly and is a combination in restraint of trade; and that plaintiff is a combination of persons to monopolize the markets for food products contrary to section 34, article 4 of our state Constitution; (c) that plaintiff's organization is in contravention of the provisions of the Fourteenth Amendment to the Constitution of the United States in that it denies the equal protection of the laws to persons other than those named and therein referred to and deprives appellant of his property without due process of law; (d) that it contravenes the provisions of sections 2, 5, and 8 of article 1 of our Constitution; (e) that said statute is unconstitutional for the reason that it has the effect of controlling and burdening interstate commerce and regulates and restricts the freedom of the market in interstate commerce; (f) that said statute is unconstitutional wherein it provides for the infliction of penalties upon the appellant and that said contract is contrary to the established public policy of this state; (g) that plaintiff is not entitled to equitable relief and has an adequate remedy at law.

1. The statute is an enabling act authorizing the formation of associations to carry out the purposes expressed in the statute. Its language must be liberally construed for the purpose of promoting its object. Its provisions should not receive a strained and technical interpretation for the purpose of defeating its manifest purposes. Kansas W. G. Assn. v. Schulte, 113 Kan. 672, 216 P. 311; N. Wis. Coop. T.P. v. Bekkedal, 182 Wis. 571, 197 N.W. 936.

(a) 2. The assertion is made that this contract is lacking in mutuality of obligation and is unilateral in character. The statute authorizes the contract. The contract expresses mutual obligations. The consideration is obvious. A contract is not unilateral where it contains mutual obligations binding on both parties. It is also supported by the obligation of third persons. Texas Farm Bureau Cotton Assn. v. Stovall, 113 Tex. 273, 253 S.W. 1101; Hollingsworth v. Texas Hay Assn. (Tex. Civ. App.) 246 S.W. 1068; Potter v. Dark Tobacco Browers Co-op. Assn. 201 Ky. 441, 257 S.W. 33.

(b) 3. Defendant says the association is a monopoly and that its manner of doing business constitutes a restraint of trade. If this statute will permit the association to have control of the wheat market so that it may at pleasure raise the price of wheat above its real value or above what it would bring under competition, it would be a monopoly. If it may lower or raise prices at will, it is a monopoly. Pulp Wood Co. v. Green Bay Paper & Fiber Co. 168 Wis. 400, 170 N.W. 230. section 35, article 4, of our Constitution says:

"FREEDOM OF MARKETS -- MONOPOLIES -- Any combination of persons, either as individuals or as members or officers of any corporation, to monopolize the markets for food products in this state, or to interfere with, or restrict the freedom of such markets, is hereby declared to be a criminal conspiracy, and shall be punished in such manner as the legislature may provide."

This provision of the Constitution is restrictive only. It says that persons must not monopolize the markets for food products, or interfere with or restrict the freedom of such markets.

The association handles only the products of its own members. It does so without profit. There is no capital stock. The law authorizes the making of membership contracts and specifies remedies for breach thereof. One of the main features of this law is to minimize the expense of the middleman. It also tends to protect the farmer against alleged unscrupulous conduct of others in the market. The sole purpose of this law is, by an economical marketing of the crop owned by its members, to obtain to them a fair and reasonable price, without useless expense, and without necessarily increasing the cost to the consumer. The association advances money to the members for their immediate needs, protecting them from having to sell on an unsatisfactory market. No one can join the association but a producer. He is not forced to join. He does so voluntarily. It is entirely optional with every producer. Each member has but one vote. It is an organization of farmers, and farmers are characteristically meticulous. The citizendom of the state is not complaining. In fact, this law puts the association under the supervision of the public examiner who is authorized to take possession of its property, if he is of the opinion that its further operation is hazardous to the public interest. This gives assurance that the public will learn at all times how the business is being conducted and will know that it is not being conducted in a manner detrimental to the public welfare. Any of the officers are subject to removal by the Governor.

Subsequent to the World War the returns to the farmer were pitifully inadequate. His lands depreciated in value. The things he had to buy did not depreciate proportionately. His condition was critical. The state, and in fact the government, responded to a sympathetic cooperation in an economic rehabilitation of the stability of the agricultural interest. The policy of our nation is apparent in exempting agricultural organization instituted for the purpose of mutual help, and not having capital stock or conducted for profit, from the operation of the Sherman Anti-Trust Act. Section 8835 of U.S. Comp. St. vol. 8, p. 9686. Also by 42 U.S. St. at large, c. 57, adopted February 18, 1922, p. 388, which act, like the one under consideration, provides for government supervision. It is for the interest of our social, moral and financial welfare that the producers in our state be able to materially succeed so that they may enjoy and be inspired by reasonable success and achievements and thereby be the better enabled to properly carry on the duties of...