State v. Duluth Board of Trade

• Court: Supreme Court of Minnesota (US)
• Citation: 107 Minn. 506
• Decision Date: 07 May 1909
• Docket Number: Nos. 15,580-(32).<SMALL><SUP>2</SUP></SMALL>,s. 15,580-(32).<SMALL><SUP>2</SUP></SMALL&gt
• Parties: STATE v. DULUTH BOARD OF TRADE and Others.<SMALL><SUP>1</SUP></SMALL>

Page 506

107 Minn. 506

STATE v. DULUTH BOARD OF TRADE and Others.¹

Nos. 15,580-(32).²

Supreme Court of Minnesota.

May 7, 1909.

Proceeding in the district court for St. Louis county to forfeit the corporate franchise of the Duluth Board of Trade, and to restrain it and its officers from further transacting business under its rules, on the ground that they violate the anti-trust statute (Laws 1899, p. 487, c. 359.) The case was tried before Dibell, J., who made findings and ordered judgment in favor of the defendants. From the judgment entered pursuant to the order, plaintiff appealed. Affirmed.

In this proceeding the state seeks to forfeit the corporate franchise of the Duluth Board of Trade, and to restrain it and its officers from further transacting business under the present rules on the ground that they violate the anti-trust statute of the state. The appeal is by the state from a judgment in favor of the defendants, and the record presents the question whether the conclusions of law are justified by the findings of fact. The facts stand conceded. It appears that the Duluth Board of Trade was incorporated January 31, 1881, under chapter 20, p. 35, Laws 1868, and now has and exercises the powers conferred by G. S. 1894, §§ 2982-2984, inclusive. The Minnesota Farmers' Exchange is a corporation organized under the laws of the state of Minnesota, having its office and principal place of business at Minneapolis, with power to own and operate mills for the manufacture of flour and other mill products, and to deal in grain, farm and dairy products,

live stock, meats, agricultural implements and machinery, coal, lumber, and other articles.

The city of Duluth is one of the important terminal grain markets in the Northwest, and in the immediate vicinity thereof are found elevators, flour mills, and proper equipment for handling and marketing grain and other farm products. The board of trade does not buy, sell, or in any way deal in grain. Not more than twenty per cent. of those holding membership in the board are engaged in the grain or milling business at Duluth. Some are engaged in banking, marine insurance, and vessel agency business at Duluth, while others are engaged in the grain and other business outside of Duluth. The board merely furnishes facilities and conveniences for the transaction of the grain business, and to that end procures for its members information as to crop conditions and the grain markets of the world. It owns a building, of the value of $500,000, in which there is an exchange room, where actual trades are made and posted, and where grain is bought and sold. Persons engaged in the grain commission business, and others connected with vessel agencies and marine insurance, have their offices in this building. Two classes of commission men — those who sell for the owner grain coming into Duluth, and those who buy for the consumer at Duluth or Superior, or for transportation to lower lake ports or for foreign exchange — transact business on the floor of the board of trade. Practically all the grain bought and sold at Duluth is bought and sold on the board of trade, although some little grain, used for local consumption, is handled elsewhere.

The memberships in the board of trade, which originally cost $1,000 each, have all been disposed of, and are now held by various individuals. They are subject to sale, and the owners may become members of the board of trade upon certain terms and conditions prescribed by the board. The Minnesota Farmers' Exchange never applied for membership in the Duluth Board of Trade, and neither the board nor its officers or members in any manner conspired or combined to prevent the Minnesota Farmers' Exchange from having its grain handled or dealt in on the board, by threatening to boycott any member who might venture to handle its grain, or otherwise. Rule 27 of the board of trade provides that regular sessions shall be held from 9:30 a. m. to 1:15 p. m. daily, except Saturday, when trading shall cease at 12 o'clock

noon, and that no firm, member, or corporation shall buy or offer to buy, sell or offer to sell, any grain or seed on track, by sample or to arrive, except during such trading hours and on the floor of the exchange.

The state charges that the board and its officers have violated the anti-trust statute by adopting and enforcing what is known as Rule 26, which is as follows:

"The following rates of commission are deemed to be just and reasonable:

"GRAIN, ETC.

"Section 1. Receiving and selling on arrival, to arrive, or for some future month's delivery: Wheat, barley, rye, and flax, 1 cent per bushel; Durnum wheat, 1 cent per bushel; corn and oats, ½ cent per bushel; mill stuffs, 50 cents per ton; ground feed, 50 cents per ton; hay, 50 cents per ton, except that the minimum charge on hay shall be $5 per car. On sales to arrive, where delivery is not made, one-half of the above commission shall be charged.

"Sec. 2. Buying and shipping in cars in lots of less than 5,000 bushels: wheat, barley, rye, and flax, 1 cent per bushel; corn and oats, ½ cent per bushel. In lots of 5,000 bushels or more, not less than ½ cent per bushel.

"WAREHOUSE RECEIPTS.

"Sec. 3. Buying lots of not less than 5,000 bushels, ¼ cent per bushel; no charge for selling same receipts. Selling warehouse receipts, lots not less than 5,000 bushels, ¼ cent per bushel; lots less than 5,000 bushels, ½ cent per bushel.

"FOR FUTURE DELIVERY.

"Sec. 4. Buying and selling, 1/8 cent per bushel on lots of 5,000 bushels or more, and ¼ cent per bushel on lots of less than 5,000 bushels. Where delivery of warehouse receipts is made on such contracts, ¼ cent per bushel.

"Sec. 5. Between members of the Duluth Board of Trade, the rates of commission may be arranged without restriction.

"Sec. 6. In addition to the above there shall be charged such legitimate

expenses as are necessarily incurred in caring for the property and guarding the interests of both consignor and consignee, including interest on advances. Interest shall be charged on all advances made to country shippers or members of other exchanges.

"The minimum rate to be fixed each year during August, for one year, by a committee of three, appointed by the president. Nothing in this rule shall be so construed as to prevent any special arrangement between consignor and consignee, by which a higher rate of commission, or interest, may be charged in special cases.

"Sec. 7. Every member of the association, and every person, firm and corporation, admitted to trade, or to do business therein, who shall charge less than the regular rates of commission, and interest, established by the rules of the association; or shall assume, or rebate any portion of the same, or shall, with intent to evade in any way, directly or indirectly, the regular rate of commission, established by the rules of the association; or shall with intent to cut, or to evade in any way, directly or indirectly, the regular rates of commission established by the rules of the association, purchase, or offer to purchase, any grain, or seed on track, at any railway station outside of and for delivery at the city of Duluth, or Superior, or who shall purchase, directly or indirectly, for his own account or otherwise, from any person not a member of the association, any grain, seed, or other commodity, dealt in upon the board, without charging and deducting from the purchase price the regular rates of commission and interest, if any, established by the rules of the association; or shall make or report any false or fictitious sales or purchases; or shall resort to any method of accounting, directly or indirectly, in violation of or contrary in purpose and effect to a strict adherence to the regular established rates of commission of the association, or shall, with intent to evade the regular rates of commission established by the rules of the association, directly or indirectly pay or give, or offer so to do, any money, or other consideration of whatsoever nature, to any person, to procure or influence shipments or consignments of grain or seed in any form, or shall with intent to cut or evade in any way, directly or indirectly, the regular rates of commission established by the rules of the association, make use of any shift or device whatsoever, shall be deemed guilty of violation of the rules of the association establishing rates of commission, and, on

conviction thereof, shall be fined by the association not less than $1,000 nor more than $2,000, as the board of directors may determine, such sum to be paid into the general fund of the association.

"Sec. 8. Any member of the Duluth Board of Trade, who shall become the agent of, or who shall handle grain on commission, or otherwise, for any person, firm, or corporation, when such person, firm, or corporation is known to be buying or handling, or has attempted to buy or handle, grain for less rates of commission than provided in this rule, such member shall be considered as having violated this rule, and be held subject to the penalties prescribed.

"Sec. 9. Any charge of the violation of the foregoing provisions, or any part thereof, shall be by complaint in writing, filed with the secretary of the association. The party charged shall be summoned by written notice from the secretary, and shall appear before the board of directors of the association, who shall investigate and try the charge.

"Sec. 10. The board of directors shall offer a reward, not exceeding $1,000, to any person who shall furnish evidence that does convict any member of the Duluth Board of Trade, or any firm, corporation, or party admitted to trade or to do business in the Duluth Board of Trade, of a violation of the established rates of commission; the object of this rule being to prevent the demoralization resulting from the giving, either directly or indirectly, of compensation to station agents, elevator agents, bankers, brokers, merchants, or any other pa...