Northern Cedar Co. v. French

• Decision Date: 21 November 1924
• Docket Number: 18269.,18268,18267
• Citation: 131 Wash. 394,230 P. 837
• Court: Washington Supreme Court
• Parties: NORTHERN CEDAR CO. v. FRENCH, State Director of Agriculture, et al. C. W. CHAMBERLAIN & CO. et al. v. SAME (AUDA et al., Interveners. YAKIMA COUNTY HORTICULTURAL UNION v. SAME.

230 P. 837

131 Wash. 394

NORTHERN CEDAR CO. v. FRENCH, State Director of Agriculture, et al.

C. W. CHAMBERLAIN & CO. et al. v. SAME (AUDA et al., Interveners.

YAKIMA COUNTY HORTICULTURAL UNION v. SAME.

Nos. 18268, 18267, 18269.

Supreme Court of Washington, En Banc.

November 21, 1924

Appeal from Superior Court, Thurston County; Wilson, Judge.

Consolidated suits, by the Northern Cedar Company, by C. W. Chamberlain &amp Co. and others, and by the Yakima County Horticultural Union against Edward L. French, as Director of Agriculture, and another, in which James G. Auda and the American Fruit Growers, Inc., intervened. From a judgment overruling their demurrers, defendants appeal. Reversed and remanded.

Pemberton J., dissenting in part.

John H. Dunbar and E. W. Anderson, both of Olympia, for appellants.

E. S. Giel and Guie & Halverstadt, all of Seattle, for respondents.

BRIDGES J.

The plaintiffs, including the interveners, in these various consolidated actions sought to enjoin the state director of agriculture from enforcing against them the Commission Merchants' Regulation Act (Lwas 1923, p. 366). They attack it as being wholly invalid and unconstitutional. Chamberlain & Co. and the interveners allege that they are ordinary commission merchants, and that in years gone by they have built up a large business, and that if the act in question is enforced against them they will be greatly injured. The allegations of the Northern Cedar Company are substantially the same as those mentioned, except it alleges that it is engaged in the business of handling timber products, such as lumber and shingles, and that a very considerable portion of its business is interstate, and that the legislative act is void because it seeks to regulate interstate traffic. The Yakima Horticultural Union alleges that it was organized for the purpose of protecting the interests of producers of fruit and fruit products, and that in its business it purchases all kinds of such property and warehouses it and disposes of it, and that a large portion of its business is done on the co-operative plan for its members, and that it also acts as a common commission merchant as to a part of its business. The demurrers of the defendants having been overruled, and they having refused to plead further, judgment was entered in each case, enjoining the defendants from enforcing the act in question. The trial court was of the opinion that the act was unconstitutional and void, because it excepts from its provisions nonprofit co-operative marketing associations, and for other reasons.

Section 1 of the act in question is as follows: 'The term 'agricultural product' whenever used in this act shall include any horticultural, viticultural, forestry, dairy, livestock, poultry, bee or farm product; the term 'commission merchant' whenever used in this act shall include every person, firm or corporation who receives any agricultural product to be sold on commission for the account of another, but shall not include non-profit co-operative marketing organizations; the term 'consignor' whenever used in this act shall mean any person, firm or corporation forwarding, delivering, consigning, or shipping any agricultural product to any commission merchant for sale on commission.'

Section 2 requires every commission merchant, as a condition precedent to engaging in his business, to make an application for a license, and to file the same, together with a surety company bond in the sum of $3,000, and to file one copy of the application with the director of agriculture and a duplicate with the state treasurer. Thereupon the state treasurer on the next succeeding business day transmits the application and bond, together with his duplicate receipt for the fee, to the department of licenses, and upon receipt of the same a license issues to the commission merchant as of course.

Section 3 fixes the fee of $10 and the expiration of the license as December 31, next following issue.

Section 4 requires every such licensee to keep an accurate and complete set of books, in which shall truly be recorded the amount, character of all agricultural products received on consignment from any resident of the state, with the date of receipt, the name of the consignor, and the condition of the shipment when received, the date when the same or any part of such consignment is sold, together with the price for which sold, and the name of the vendee; which books shall at all times be open and subject to inspection by the director of agriculture and the consignor.

Section 5 requires the commission merchant, on receipt of a shipment, immediately to send to the consignor a statement in writing showing what products were received and the date and condition thereof, and----

'* * * if any such agricultural products are received in a damaged condition and unfit for sale, or if the markets are overstocked, it shall be the duty of such commission merchant to notify the director of agriculture or his duly authorized agent and procure from such director or such agent a certificate in duplicate as to the condition of said agricultural products and the condition of the market; to pay such reasonable fee as may be required for inspection and such certificate; and to transmit a duplicate of said certificate to the consignor.'

Section 6 requires every commission merchant, on sale of all or any portion of any agricultural products received for sale on commission, within five days following such sale, to render a true statement to the consignor showing such sale, price received, the date of sale, all charges and expenses paid or incurred, and, if required by the consignor in writing, the names and addresses of the purchasers, and whether the market price was obtained.

Section 7 prohibits a charge in excess of 10 per cent. of the selling price, unless otherwise agreed to in writing, and----

'Every commission merchant shall, within ten (10) days following the date of the sale of any such agricultural products, pay to the consignor all sums due said consignor after deducting therefrom any reasonable amount paid for transportation and drayage and any commission or fee to which said commission merchant is entitled.'

Section 8 of the act is as follows:

'Whenever any consignor shall, after request, receive no remittance or report of sale, or if after receipt of any report or remittance be dissatisfied with such report or the amount of such remittance, he may make a verified complaint in writing to the director of agriculture who shall upon receipt of the same cause to be investigated the sale or sales complained of, and if upon such investigation it appears that the said commission merchant has failed or neglected to account for such consignment or any part thereof, or has failed or neglected to make a true and complete report thereof, it shall be the duty of the director of licenses, upon recommendation of the director of agriculture to revoke the license of such commission merchant; and thereafter such commission merchant shall not be entitled to any license until the director of agriculture shall approve of issuance of a license to such person.'

Section 9 provides for an action on the bond in the event of failure or neglect to pay the amount received from the sale.

Section 10 makes it unlawful for any commission merchant to enter into any combination, conspiracy, or pool, for the purpose of excluding from any market, or artificially raising or depressing the market price of any agricultural product of the state of Washington.

Section 11 makes a violation of the act a misdemeanor, and section 12 requires the director of licenses to revoke any license issued under the act whenever the licensee is convicted of any violation of the act.

The respondents attack the act on the general grounds that it is in violation of the equal protection and due process of law clauses of the state and federal Constitutions, and specifically for the following reasons: (a) Because the Legislature has no constitutional right to regulate the business of a commission merchant; (b) because the act excepts nonprofit co-operative marketing associations organized under chapter 115, Laws 1921, and the products included in the definition of 'agricultural products' are not of a natural selection, and are not such as can be grouped without including other articles similarly sold, and because there is an unlawful classification as to persons and businesses; (c) because there is no reason justifying the inclusion of lumber in the term 'agricultural products'; (d) because it is in violation of the state Constitution providing that there shall be no imprisonment for debt; (e) because it provides that under certain circumstances the director of agriculture may, upon his own investigation and without any notice, annul the license required to be obtained; (f) because the act violates the interstate commerce clause of the federal Constitution; (g) because the regulations are unreasonable.

We have been greatly assisted by the able arguments and briefs presented by the respective parties. Before proceeding to the more general objections we will dispose of a preliminary matter.

The Yakima Horticultural Union alleges that it does a large portion of its business as a co-operative association, and for that reason it comes within the exception to the act, which exception is that it shall not include 'non-profit co-operative marketing associations.' The complaint not only fails to allege that it is a 'nonprofit' co-operative association, but affirmatively alleges that it does some of its business as an ordinary commission merchant. Plainly, the act covers such portion of its business as is not strictly co-operative, and if it be constitutional it...