People v. Milk Exch, Ltd.

• Decision Date: 12 March 1895
• Citation: 145 N.Y. 267,39 N.E. 1062
• Parties: PEOPLE v. MILK EXCHANGE, Limited.
• Court: New York Court of Appeals Court of Appeals

145 N.Y. 267

39 N.E. 1062

PEOPLE

v.MILK EXCHANGE, Limited.

Court of Appeals of New York.

March 12, 1895.

Appeal from supreme court, general term, Fourth department.

Action by the people of the state of New York against the Milk Exchange, Limited, to annul the defendant's charter. From an order of the general term (29 N. Y. Supp 259) reversing a judgment entered upon a nonsuit and ordering a new trial, defendant appeals. Affirmed.

Alfred Ely, for appellant.

T. E. Hancock, Atty. Gen., for the People.

HAIGHT, J.

This action was brought to have the defendant, a domestic corporation, dissolved, its charter vacated, and its corporate existence annulled. This relief is sought upon two grounds: First, nonuser; second, an unlawful and illegal combination and conspiracy, made in restraint of trade, to limit the supply of milk, and to fix and control the price thereof in the city of New York and elsewhere. The defendant was organized on the 21st day of October, 1882, for the purpose, as stated in its certificate of incorporation, of ‘buying and selling of milk at wholesale and retail, the purchase of dairies of milk when deemed advisable, and the sale of the same to milk dealers.’ The complaint charges that the defendant was not engaged in this business. Upon the trial, at the close of the evidence, it was conceded by both counsel for the plaintiff and for the defendant that the question whether the defendant had been engaged in buying or selling milk, under the evidence, was a question of law for the court, and not for the jury. We so understand the evidence. There is no conflict, and we have but to ascertain the meaning and intention of the witnesses. The plaintiff's chief witness was Woodhull, the secretary and treasurer of the defendant. In his testimony he makes use of the expression that the exchange ‘has bought and sold milk’; but he then proceeds to state that he is familiar with the operations of the Milk Exchange in buying milk of the farmers, and selling it to dealers, and then states the nammer in which the business was conducted. He says: ‘It is this: A farmer brings his dairy into the exchange to be sold. I go out and find him a dealer who can use the milk, and write the farmer how to mark his milk. I make the collection of the dealer, and pay it to the farmer, and we guaranty him the collection.’ He further testified that their commission was 3 per cent.; that the milk was never shipped to the exchange, but was shipped directly to the dealer; that they sold the milk for the farmer at the exchange price, which they guarantied to collect, and turn over to the farmer, less their commissions. Numerous witnesses speak of their arrangement made, or attempted to be made, with the exchange for the sale of milk; and in each case it was distinctly stated that the exchange did not buy milk; that they merely looked up a dealer, who would purchase it at the exchange price; and that they guarantied the collection for 3 per cent. commission. We think, therefore, that there can be no question as to the meaning of the witness Woodhull as to the expression made use of by him above referred to, for he immediately proceeded to explain how the milk was purchased and sold; and this evidence establishes the fact that the milk was not purchased by the exchange, but that it was sold in the manner described for the commission stated. The transactions, therefore, constituted a commission business, and were not, strictly speaking, the ‘buying and selling of milk at wholesale and retail.’ Whether the engaging in a commission business, such as we have described, is authorized by the defendant's charter, we do not deem it necessary now to determine. It may be that the commission business is so closely allied to that of buying and selling as to make the former legitimate and permissible under the defendant's certificate of incorporation.

We are thus brought to a consideration of the charge of unlawful conspiracy in restraint of trade. We have only called attention to the charge of nonuser for the purpose of showing the precise nature of the business conducted by the defendant as bearing upon the latter question. If the defendant was the purchaser of milk, or of dairies of milk, it had the right to fix the price from time to time that it would pay therefor. If, however, it was engaged only in the selling of milk upon commission, then its duty as a commission merchant, as ordinarily understood, was to get as high a price for the seller as could be reasonably obtained, and it was no part of its duty to otherwise fix the price of milk. It appears that the Milk Exchange, when organized, or shortly thereafter, had 90-odd stockholders, a large majority of whom were milk dealers in the city of New York, or creamery or milk commission men doing business in that vicinity; that at the first meeting of the exchange after its incorporation the following, among other by-laws, was adopted: ‘The board of directors shall have the power to make and fix the standard or market price at which milk shall be purchased by the stockholders of this company, and to declare the stock of any and every stockholder herein who purchases milk at any other than the price so named by the board forfeited, subject to the conditions set forth in article 3, sections 4 and 5, of these by-laws. All stock so forfeited by said board of directors shall be subject to the order of the board of directors, and shall be disposed of as they direct.’ This by-law remained in force for a number of years, and until after there was an investigation as to the character and nature of the defendant's business, and a report made by a committee of the senate. The by-law was then amended by...