The Kansas Wheat Growers Association v. Oden

• Decision Date: 09 July 1927
• Docket Number: 27,540
• Citation: 124 Kan. 179,257 P. 975
• Parties: THE KANSAS WHEAT GROWERS ASSOCIATION, Appellant, v. A. E. ODEN, Appellee
• Court: Kansas Supreme Court

257 P. 975

124 Kan. 179

THE KANSAS WHEAT GROWERS ASSOCIATION, Appellant, v. A. E. ODEN, Appellee

No. 27,540

Supreme Court of Kansas

July 9, 1927

Decided July, 1927.

Appeal from Rice district court; RAY H. BEALS, judge.

Judgment reversed.

SYLLABUS

SYLLABUS BY THE COURT.

AGRICULTURE--Marketing Association--Breach of Marketing Agreement -- Monopolies -- Renunciation of Associate Membership -- Waiver by Acceptance of Membership Privileges. In an action by a cooperative marketing association against one of its members for damages as provided in the marketing agreement, for failure of the member to deliver his wheat to the association, the record is examined, and it is held: (1) That the agreement is not void as having been made in violation of the antimonopoly statute; (2) that fraudulent representations which induced the execution of the agreement were waived by the member participating as a member in association meetings after he had discovered the fraud; and (3) that the agreement had not been breached by the association in (a) failing to provide a local elevator where members could deliver and ship their wheat, nor (b) in failing to classify wheat of a member "by quality, grade, variety or other commercial standards," as provided in the agreement.

T. A. Noftzger, George W. Cox, W. J. Masemore, R. L. NeSmith, all of Wichita, and L. E. Quinlan, of Lyons, for the appellant.

J. Graham Campbell, Ray Campbell, both of Wichita, W. W. Stahl and Ben S. Jones, both of Lyons, for the appellee.

OPINION

HARVEY, J.:

In this action the Kansas Wheat Growers Association seeks to recover from one of its members damages for his failure to deliver his wheat to the association as provided in the contract. The case was tried to the court, who made findings of fact and conclusions of law and rendered judgment for defendant. Plaintiff has appealed.

As supporting the judgment of the court below it is argued that the contract is void in that it violates our antitrust laws. (R. S. 50-101 et seq.) In previous cases this court has held that the contract in question and the statute (R. S. 17-1601 et seq.) authorizing it are not invalid for the reason that they tend to create a monopoly. (Wheat Growers' Association v. Schulte, 113 Kan. 672, 216 P. 311; Wheat Growers' Association v. Floyd, 116 Kan. 522, 227 P. 336; Wheat Growers' Ass'n v. Loehr, 118 Kan. 248, 234 P. 962; Wheat Growers' Ass'n v. Charlet, 118 Kan. 765, 236 P. 657; Wheat Growers' Ass'n v. Sedgwick County Comm'rs, 119 Kan. 877, 241 P. 466; Wheat Growers' Ass'n v. Rowan, 123 Kan. 169, 254 P. 326; Wheat Growers' Ass'n v. Massey, 123 Kan. 183, 253 P. 1093.)

These decisions have been repeatedly cited and followed by courts of last resort in other states construing similar contracts and statutes. (Louisiana Farm Bureau C. G. Coop. Ass'n v. Clark, 160 La. 294, 107 So. 115; Nebraska Wheat Growers Ass'n v. Norquest, 113 Neb. 731, 204 N.W. 798; Clear Lake Coop. L. S. S. Ass'n v. Weir, 200 Iowa 1293; Dark Tobacco Growers' Coop. Ass'n v. Robertson, 150 N.E. 106, 113 [Ind.]; Burley Tobacco Growers' Coop. Ass'n v. Rogers, 88 Ind.App. 469, 150 N.E. 384, 388 [Ind.]; List v. Cooperative Ass'n, 114 Ohio St. 361.)

Some of our cases, and many from other states, are cited in 41 C. J. 167, where it is said:

"Cooperative marketing associations organized under such statutes have uniformly been held lawful combinations and not in restraint of trade and not monopolies in the sale of the products handled by them, and therefore not within the condemnation of state constitutional provisions or of state antitrust acts, aimed at combinations in restraint of trade and monopolies. And the fact that a cooperative marketing association is large and powerful, and may sometimes be guilty of coercion or suppression of competitors, arbitrary fixing and maintenance of prices, or other acts making combination illegal, does not render it an unlawful combination or trust."

We are satisfied with the conclusions heretofore reached on this question and deem them not open to further argument. The only respect in which the question here differs, if it does at all, from those previously determined is this: It was contended, and the trial court found, that at the time the contract was made plaintiff's solicitor stated in effect that when, and if, the plaintiff increased its membership so as to include growers of fifty-one per cent of the wheat grown in the United States its plan then was to fix prices or to raise prices to the growers, and that this was one of the purposes defendant had in view when he signed the contract. It is contended this rendered the contract void. This contention lacks merit for two reasons: First, plaintiff's solicitor could not vary the terms of the contract nor the purpose for which plaintiff was organized by a statement of that character (Wheat Growers' Ass'n v. Charlet, 118 Kan. 765, 766,236, 236 P. 657 P. 657). Second, the time when or conditions under which such an effort would be made, as the parties talked it, was to be at some indefinite, perhaps never-to-be-realized future time or condition; it was not an agreement contemplating immediate action in restraint of trade, as in State v. Smiley, 65 Kan. 240, 69 P. 199. To this may be added a third, that the cooperative marketing act, the organization of plaintiff thereunder, the preparation and execution of contracts with members, and the conduct of its business, all have for their purpose or design to get better or more stable prices to the growers of wheat. It is a statute passed later than our antimonopoly statute. Both are the exercise of the same legislative power of our government, and if in this respect it conflicts with the earlier antimonopoly statute--a question which we deem it unnecessary here to decide--it may be regarded as superseding it to the extent and for the purpose of cooperative marketing associations of the character permitted by the statute. ( List v. Cooperative Assn. 114 Ohio St. 361; Nebraska Wheat Growers Ass'n v. Smith, 115 Neb. 177, 212 N.W. 39, 44 [Neb.].)

Defendant contended, and the court found, that he was induced to sign the marketing agreement and to become a member of plaintiff's association by reason, in part at least, of false and fraudulent representations of existing facts made to him by plaintiff's solicitor. Plaintiff complains of the finding of the court in this respect as not being supported by the evidence. This complaint is not well taken. There is evidence in the record to support this finding of the court, and that settles the fact on this appeal. The evidence disclosed, however, and the court found that, after having discovered the fraud in the representations which induced him to execute the contract with plaintiff, defendant on three different occasions, either in person or by proxy as a member of the association participated in general meetings of the membership for the purpose of electing officers and perhaps the transaction of other business. In Wheat Growers Ass'n v. Rowan and Wheat Growers Ass'n v. Massey, supra, it was held that participation as a member in such meetings amounts to a waiver of the right of the member to rescind his contract on the ground of fraud known to him at the time of such participation, and estopped him, when he was thereafter sued on his contract, from contending that he was not a member of the association nor bound by the contract. Defendant attempts to distinguish the holding in these cases from the case before us, and states the question of waiver is one of intent. In the court below defendant offered evidence tending to show, and the court found, that when participating in the general meetings of the association, after having discovered the fraud which induced him to become a member, defendant did so for the purpose of attempting to elect new officers and with the hope of effecting a change in the management, and that he did not thereby intend to waive the fraud which induced him to become a member or to estop himself from pleading such fraud in a later action. The difficulty with this position is that from the very nature of things defendant cannot occupy two diametrically opposed positions with reference to his membership at the same...