144 F. 871 | U.S. Circuit Court for the District of Western Wisconsin | 1906
Cross-bill of the Great Northern Railway Company was brought against the complainant and all the other defendants.
In the city of Superior, Wis., lying in the extreme northwest corner of the state, and separated from the city of Duluth, in Minnesota, only by a navigable waterway, there are 15 large elevators and 6 flouring mills. The flouring mills have a capacity of about 75,000 bushels of wheat per day, or about 20,000,000 bushels per year. Part of the product of these mills is marketed in Wisconsin, and the balance.is shipped to other states east of Wisconsin. The Great Northern Railroad extends from Minnesota into Wisconsin a few miles south of Superior, and runs northeasterly through the city of Superior, and thence to Duluth. The Northern Pacific Railway has a terminus at Duluth, and extends thence into Superior and east to Ashland, Wis. The St. Paul & Duluth Railroad, controlled by the Northern Pacific Railway Company, branches at West Duluth,, about due west from the center of the city of Superior; one branch extending to Duluth, and the other across the St. Louis river to Superior. The Omaha Railway Company also extends from Minnesota into Wisconsin to Superior and Duluth, branching at Spooner, about 60 miles .southeast of Superior. All of these railroads carry grain; a large part of it being carried by the Great Northern Company. The latter company has very large yards at Superior. The grain trade carried on all these roads amounts to about 40,000,000 of bushels a year.
Prior to the enactment of chapter 19, p. 37, of the laws of Wisconsin for 1905, and for a period of about 10 years, inspectors and weighmen, acting under the authority of the railroad and warehouse commission of the state of Minnesota, had inspected and weighed all grain received in Superior; many, of these men coming from the city of Duluth daily for the purpose of doing this work. Being outside of the jurisdiction of their appointment and the jurisdiction of the laws under which they were appointed, they were not subject to any official oath; nor were they amenable to any law prescribing their duties or punishing the failure to perform them properly. Under this system, as might well be expected, grave abuses in the grain trade had grown up, and under such circumstances the Legislature of the state of Wisconsin passed the law in question.
It further appears that the Great Northern Railway has for many years transported large quantities of grain, exceeding in value $1,000,-000 a year, from its railroad terminus in Superior to steamboats plying on the Great Lakes for the purpose of further transportation to eastern markets and foreign countries. In order to facilitate such commerce, it built large terminal railway yards and transfer and storage appliances and equipments, as well as two large elevators. It is, and for many years has been, engaged in transporting wheat, flax, oats, barley, rye, and corn received from shippers along its line in Montana, North Dakota, South Dakota, Iowa, Nebraska, and Minnesota; considerable of which grain being delivered by it into elevators in Superior. Prior to the enactment of chapter IS), p. 37, Laws 1905, cars arriving over the Great Northern usually came early in the morning. They -were stopped in the .yard, which is from two to eight miles from the elevators and mills to which considerable grain is finally delivered by the railway company, and the grain was there inspected by persons acting for the railroad and warehouse commission of Minnesota, under the Minnesota act of 1885. Grades were made called “Minnesota Grades/’ which rvere exhibited on the Board of Trade at Duluth, a body of about 300 members, and the grain was there bought and sold for delivery either in Superior at some elevator or mill or to some extent for delivery in Duluth. The cars remained in the yard during the day awaiting disposition pursuant to such sales, and the disposition of the day’s shipments was not made until about
Substantially all the grain coming to Superior is produced in states other than Wisconsin, and its mill product is shipped to states east of Wisconsin, although a considerable amount of flour is marketed in Wisconsin by the mills. After the passage of chapter 19, p. 37 Laws 1905, objection was made to the inspection of the grain in Superior by agents of the Minnesota Warehouse Commission, and the mill and elevator owners and members of the Duluth Board of Trade, co-operating with the railroads, procured the stopping of the Great Northern cars at points on its line in Minnesota called Sandstone and Cass Lake, and the inspection which formerly was made at Superior took place at those points. After such inspection the transit was continued until the cars were stopped in the Great Northern yards at Superior, as already stated. The Northern Pacific cars containing grain were stopped in Duluth, and the inspection there made under the supervision'of the Minnesota Commission.
It is charged in the answer that, after the passage of chapter 19, complainant conspired and combined with the owners, managers, and operators of the other elevators in Superior and of the mills, and the Board of Trade of Duluth and members thereof, not to buy or sell or manufacture any grain under the inspection, grading, or weighing of the Superior Warehouse Commission created by chapter 19, but to buy and sell all grain under Minnesota inspection and subject to weights to be made by designated agents of the Duluth Board of Trade. To this end the Duluth Board of Trade, in the summer of 1905,- promulgated rules forbidding any of its members, under- penalty of expulsion, from buying, selling, or handling any grain under Wisconsin inspection or weighing, from .belonging to any other board of trade or like organization located within 100 miles of Duluth, and from maintaining or becoming interested, directly or indirectly, in any office or place of business outside of Duluth for the dealing in grain, and from becoming a stockholder in a corporation or member of a firm dealing in any grain dealt-in or quoted upon the Duluth Board of Trade at any point within 100 miles of Duluth; and further requiring all persons applying for membership tp the Duluth Board to sign an application containing an agreement that the applicant would resign his membership in said board within five days, if at any time he should violate such rules; and further requiring the applicant to use his influence towards the protection and upbuilding of the business of said board and its members in every way to the limit of his power and the best of his ability. It is further alleged in the answer that the Duluth Board of Trade, for the purpose of restraining trade and ■commerce among the several states, endeavored and attempted to
The testimony shows that the railroads hauling grain have acquiesced in the action of the Duluth Board and the mill and elevator owners, and thus the market for grain in Superior has been destroyed and forced into the Board of Trade of Duluth and Minneapolis, anti that the Great Northern has stopped its trains at Sandstone and Cass Lake for the purpose of Minnesota inspection accordingly.
It is alleged by the Great Northern Railway .Company, in its cross-bill, that it receives an average of 500 cars of grain per day in its yard at Superior during the grain shipping season, about 365 cars of which are ordered in Superior elevators. It denies that it has ever been in concert or collusion with any grain interest or system of inspection or weighing, or with any of the defendants, but it responds to the express orders of its shippers and complies as best, it can with federal law and authority governing the transit of such grain among the states. In respect to the Minnesota grain inspection law, the Great Northern Company in its cross-bill states that said law has been administered and in operation for many years, and that the owners, shippers, and receivers of grain generally in the northwest have for a long time made use of the instrumentalities of inspection, weighing, and grading afforded by the Minnesota law, and have by consent, choice, and agreement subjected practically all of their grain to such inspection, weighing, and grading, and such grades and certified weights for grain have been a medium between buyer and seller of establishing by mutual agreement of the parties all grades and weights-upon which the grain could be handled. It further states that, without such mutual consent and agreement, the Minnesota inspection law is invalid and an unlawful exercise of state power as applied to interstate commerce, and would be an unwarranted, unlawful, and unconstitutional interference with such commerce.
The bill alleges that complainant for more than 10 years has owned, controlled, and operated three grain elevators in Superior known as the Globe elevators, worth exceeding -SI 50,000, and having an aggregate capacity of 5,000,000 bushels, and for four years has controlled, managed, and operated under lease two others elevators called the Belt Line elevators, having a capacity of 2,500,000 bushels, and of the value of over $150,000; all of said elevators being situated on the Superior harbor accessible to steamboats ah<l other craft plying upon the Great Lakes, and also connected with all the railroad terminals. That its business for 10 years has been buying, selling, handling, and shipping grain bought by it upon the Minneapolis Chamber of Commerce and Duluth Board of Trade, being the largest -and only prin
Chapter 19, p. 37, Laws 1905, creates a corporation known as the Superior Grain & Warehouse Commission, and provides for the regulation of public warehouses. Its chief purpose is to create a system of Wisconsin inspection, and fully enforce the same through strict penal provisions, and incidentally prevent the sale of grain by the fraudulent Minnesota system. This purpose is sought to be accomplished: First, by carefully drawn provisions governing the inspection and weighing of grain milled, bought, or sold in Superior, or stored or shipped from Superior elevators or warehouses; second, by exhaustive and thorough regulation of the. grain warehouse business in Superior; and, third, by provisions making, the sale, purchase, or delivery of grain under the Minnesota inspection system difficult, if not impossible. The intent of the law seems to be to destroy the Minnesota system, because it is fraudulent, and to substitute therefor the Wisconsin system.
Provisions as to inspection and weighing: The commission is given power to superintend the inspection, weighing, and grading of all grain milled, bought or sold, or stored and shipped in Superior, to appoint inspectors and weighmasters, make regulations for inspection, weighing, and grading, and make and collect charges therefor. Sections 5, 22, 28. It may pass on inspection on appeal from inspectors, and its decision is made final. Section 25. May establish grades of grain to be known as “Superior Grades.” Section 38. It may seize and sell grain for inspection fees, ,and may sue to collect them. Section 65. When the grain is in transit, the fees are to be treated as advance charges payable by the carrier.- Section 33. Carriers and elevators must furnish free access and use of their scales to the weighmaster. Section 24. The chief inspector shall open the cars on their arrival in Superior, examine them, inspect the grain, and close and reseal the doors with the Wisconsin seal. Section 48. Assuming to act as an inspector without appointment under the statute is made punishable by fine. Section 31. Section 2, c. 317, p. 488, Laws 1905. ISfeg-ligent inspection and bribery of inspectors are made misdemeanors. Section 32. Samples of grain are' to be furnished by the commission to warehouses, at their request. Section 39. Shall keep records. Section 47.
Regulation of elevators and warehouses: All elevators and warehouses in Superior doing business for a compensation, or in which the grain of different owners is stored in bulk or mixed together, or so stored that the identity of different lots and parcels cannot be
Chapter 12, p. 19, Sp. Sess. 1905: This act amends chapter 19 by adding sections 58-80. Sectons 58, 59, 66, and 67 provide that all contracts of sale upon Minnesota inspection shall be void; that in all sales for deliver}? in Superior, or where the amount of the purchase price is to be determined by weighing the grain in Superior, or where such delivery or weighing is contemplated or afterwards takes place, such grain sh'all be deemed to have been bought and sold in Superior, and all such grain shall be weighed and inspected under this act; no sale "of grain shall be made anywhere until it is inspected under the act, nor delivery be made; and no delivery to a carrier outside of Superior shall be deemed a delivery to the purchaser, unless the exact amount of the purchase price has been ascertained and paid; no person shall offer for sale or sell or deliver any grain in Superior, or deliver it to or from any elevator or warehouse in Superior, under the Minnesota grading, or upon any other grading than provided in the act; violation is made a misdemeanor, punishable as in section 53.
. Provisions as to warehouses and elevators: No grain shall be stored or delivered from a warehouse or elevator under Minnesota inspection.' Section 67. All. grain delivered from elevators to cars or boats shall be presumed to. have been delivered upon, in whole or in part, a contract of sale, and shall subject the grain to Wisconsin inspection and weighing. Section 60. Warehouse receipts issued for grain not under Wisconsin inspection shall be void. Section 62. No carrier -shall deliver grain to any warehouse, elevator, or mill until the Wisconsin inspection fees are paid, under penalty of treble damages. Section 63. Railroad elevators or warehouses in Superior are declared public warehouses, so far as to require the road to receive and store, without. discrimination, all grain carried on its line, whether by it directly or other company operating its line. Section 68. Such road is relieved from giving bond as warehouseman, but must file with the commission a written declaration in compliance with the act. Section 69. Lessees of railroad elevators are declared public ware-housemen. Section- 70. No person shall deliver grain from any elevator or warehouse until inspection and weighing, and payment of fees,-under penalty of fine or imprisonment, or both. Section 72.
Provisions as to inspection: Inspection fees are a lien on the grain, and it may’,-be sold or the lien foreclosed. Sections 64, 65. Every carrier bringing grain into Superior shall, before delivery, or setting the same' off upon any track leading to any elevator, warehouse, or mill, and before delivery to any terminal company or other carrier, set out all such grain upon some one or more of the tracks in its yard convenient for the inspectors to inspect it, and shall set out and separate the cars of grain destined to be delivered in Superior from any passing through in transit, and furnish a list with initials and numbers of cars, names of consignor and the consignee, from where shipped, and where and to whom to be delivered, and furnish full and sufficient opportunity for inspection of any and all- grain delivered in Superior before such delivery, whether to be delivered upon the original con
The Wisconsin statutes in question, in my opinion, give equal protection of the laws. The peculiar situation of the city of Superior in respect to the commerce carried on therein, and the peculiar conditions of that commerce pul it in a class by itself, entirely distinct from other cities of the state with elevators, warehouses, and transportation facilities for handling interstate commerce. Consolidated Coal Co. v. Illinois, 185 U. S. 207, 22 Sup. Ct. 616, 46 L. Ed. 872; Missouri v. Lewis, 101 U. S. 31, 25 L. Ed. 989; Hayes v. Missouri, 120 U. S. 68, 7 Sup. Ct. 350, 30 L. Ed. 578. The statutes in question are special acts, and make the commission a corporation; and is argued that such acts are void under the Constitution of Wisconsin prohibiting the granting of corporate power by special act. These statutes are within the letter, but not the spirit, of the Constitution, as declared in State v. Stewart, 74 Wis. 620, 43 N. W. 947, 6 L. R. A. 394, and a federal court should follow such construction. The acts in question are not, therefore, invalid on that ground.
The important and vital question is whether these statutes are invalid as a regulation of interstate commerce. No doubt, the states are invested with large authority to pass inspection laws, indirectly affecting, and to some extent interfering with, commerce among the states. Many of such laws are not obstructive to commerce, but operate as an aid or encouragement to it. Such are acts compelling carriers to promptly and safely carry and deliver interstate freight committed to their charge, securing safety in railroads and appliances, regulating bridges, improvement of navigable waters, regulating pilots, state quarantine, etc. Mobile Co. v. Kimball, 102 U. S. 691, 26 L. Ed. 238. These laws mostly operate as local aids and instrumentalities of commerce, making it better and safer, and until Congress acts the states have ample power in all such matters, except where the subject admits only of one uniform plan or system, like the regulation of tolls on an interstate bridge, in which case the power of Congress is exclusive. Covington Bridge Co. v. Kentucky, 154 U. S. 204, 14 Sup. Ct. 1087, 38 L. Ed. 962; State Freight Tax, 15 Wall. 243, 21 L. Ed. 146.
Thus the states may regulate charges for local facilities of interstate commerce (Munn v. Illinois, 94 U. S. 113, 24 L. Ed. 77; Budd v. New York, 143 U. S. 517, 12 Sup. Ct. 468, 36 L. Ed. 247), but cannot regulate railway transportation rates thereon, because, among other reasons, this admits of a uniform system (Wabash Case, 118 U. S. 557, 7 Sup. Ct. 4, 30 L. Ed. 244). Agreements relating to such local facilities, possibly enhancing the cost of transportation, but touching national commerce only in an indirect way, or agreements operating in its aid or furtherance by providing facilities for it, cannot he prosecuted as agreements in restraint of interstate commerce. Hopkins v. United States, 171 U. S. 592, 19 Sup. Ct. 40, 43 L. Ed.
Under these precedents it seems clear that the Wisconsin Regisla-ture might lawfully prevent fraudulent changes of grades.. arbitrary or fraudulent “dockage” practiced by warehousemen, and shipping out at a higher grade than that on which the grain was taken in. Such regulations Avould be in aid and furtherance of commerce by protecting the rights of both buyer and seller. Thus many objections to the Minnesota system, and frauds practiced under it, might be cured.
These considerations and citations of authority do not, however, reach the precise question presented in this case. That question may he thus stated: Given a system or standard of inspection by which all sales and purchases of grain in interstate commerce have for many years been made, by persons in other states, which sales and purchases contemplate transportation and delivery in this state, is it within the power of this state, by reason of the fact that delivery, storage, manufacture into flour, and reshipment are here made, to cripple, supersede, and destroy such foreign system or standard, and compel the vendors, purchasers, carriers, warehousemen, and millers to substitute one of its own? Is this a matter admitting or requiring one uniform system, exclusively within congressional control? And would diverse and conflicting regulations in the different states interested tend to make commercial conflict between such states, and thus require a single system? An examination of the statutes of Wisconsin will show, as f think, that their purpose is to annihilate the Minnesota inspection, and force the exclusive use of the one by them prescribed.
In the original act such change of standard is sought to be brought about, not. by express prohibition of sales under Minnesota grades, but by obstructing or preventing delivery, storage, and reshipment except by the Wisconsin system. By this statute it is made a misdemeanor, punishable by fine and treble damages, for a carrier to deliver cars of grain to a warehouseman until inspected under the Wisconsin system, and the charges paid. Warehousemen must store all suitable grain offered to be in all cases so inspected, must store it with grain of similar grade, without mixing. No warehouse receipt must be issued except under Wisconsin grades and weights. Not only must warehouse-men give bonds for $10,000, to observe the Wisconsin law, but disobedience of that law is made punishable as a misdemeanor. And the commission was authorized, to recognize the Minnesota grades by giving permisión to warehousemen to mix grades for a period of six months at any one time. The last provision was repealed by the amendment. The purpose of these provisions cannot be mistaken. It is to make it impossible to buy and sell grain by the Minnesota grades. The purchaser cannot store a bushel of the grain he has bought without having the standard of his purchase destroyed, nor obtain a warehouse receipt under that standard. Grain of different grades as determined by Wisconsin inspection must not be mixed, which is the same thing as saying that the Minnesota grades must be mixed, and the standard of purchase thus confused and destroyed. Delivery, storage, and shipment from warehouses are to be regulated entirely by the Wisconsin grades and weights, and thus the Minnesota
However justified or necessary these emphatic provisions may have seemed to the Wisconsin Legislature, in order to destroy what appears from the evidence to be a fraudulent system, upheld by the combination of great interests, including buyer, seller, warehouseman, and carrier, they undoubtedly not only operate as a serious obstruction to commerce, as now carried on, under what should be one uniform system, but there is also disclosed a commercial conflict of considerable proportions between two states. Wisconsin is attempting to build up her trade at the expense of Minnesota, and the people most interested have taken, and are now employing, radical, if not unlawful, measures' to thwart this attempt and keep this commerce in its accustomed channels. With the view of preventing fraud and protecting the public the Wisconsin Legislature' has enacted that all sales of this large product shall be made only in Superior, and delivery, storage, and resale only under her inspection laws. A sale of property in one state for delivery in another is a transaction of interstate commerce. The national commerce includes not only carriage, but the purchase, sale, and exchange of commodities. Gloucester Ferry Co. v. Pennsylvania, 114 U. S. 196, 5 Sup. Ct. 826, 29 L. Ed. 158; Kidd v. Pearson, 128 U. S. 1, 20, 9 Sup. Ct. 6, 32 L. Ed. 346. A sale for delivery beyond the state constitutes interstate commerce. Addyston Pipe & Steel Co. v. U. S., 175 U. S. 211, 239, 20 Sup. Ct. 96, 44 L. Ed. 136. A transaction reaching into two or more states is interstate commerce. U. S. v. Swift (C. C.) 122 Fed. 529; Swift v. U. S., 196 U. S. 375, 25 Sup. Ct. 276, 49 L. Ed. 518; Welton v. Missouri, 91 U. S. 275, 23 L. Ed. 347. A regulation which imposes burdensome conditions on those engaged in commerce among the ..states must of necessity be national in its character. Hall v. De Cuir, 95 U. S. 297, 24 L. Ed. 547. Interstate commerce comprehends intercourse for the purposes of trade, including' transportation, purchase, sale, and exchange of commodities between citizens of different states, and the power to regulate it embraces all the instruments by which such commerce may be conducted. Hopkins v. U. S., 171 U. S. 597, 19 Sup. Ct. 40, 43 L. Ed. 290; Robbins v. Taxing District, 120 U. S. 497, 7 Sup. Ct. 592, 30 L. Ed. 694. Any agreement which directly operates upon the sale, transportation, and delivery of an article of interstate commerce, by preventing or restraining its sale, thereby regulates such commerce to that extent, and to the same extent trenches upon the power of the national Legislature. Addyston Pipe Case, supra. The sale
The attempt of the Wisconsin statute to prescribe the standard of sale thus appears to be a regulation of commerce. It interferes with and attempts to destroy the grades on \Vhich the purchaser depends in making his purchase and succeeding sale. Anything which directly obstructs commerce among the states should be subject to the power of Congress in the * regulation of that commerce. Addyston Pipe & Steel Co. v. U. S., supra. State legislation which seeks to interfere directly with the freedom of interstate commerce encroaches upon the exclusive power of Congress. Plall v. De Cuir, supra. Legislation tending to limit or prohibit the transportation of property from without the state to a point within it affects interstate commerce, and may to a certain extent thereby regulate it. Louisville R. Co. v. Eubank, 184 U. S. 36, 22 Sup. Ct. 277, 46 L. Ed. 416. The acts in question "prescribe conditions in accordance with which commerce * * * is required to be conducted.” Pittsburg Coal Co. v. Louisiana, 156 U. S. 590, 15 Sup. Ct. 459, 39 L. Ed. 544. The effect of this legislation upon the right and power to make the sales in question is not reflex or remote, but directly obstructive. The grain so sold cannot be freely delivered, stored, or reshipped, because the standard of purchase is seriously impaired, if not destroyed, by the original act, and practically annihilated by the amendment. Freedom of commerce would seem to include the power to buy when and where and how the purchaser may choose. This power is burdened and obstructed by the legislation in question, directly conflicting and hostile to that of Minnesota. It interferes with that equality of rights between the states as to such commerce which was the design of the Constitution, not indirectly or remotely, but palpably and in an important and thorough manner. Veazie v Moor, 14 How. 574, 14 L. Ed. 545.
It is also clear to me that so important a matter as fixing the grades by which grain in interstate transportation can be sold, and without which it cannot be sold on any large scale, admits of one uniform system or plan of regulation, and only one, and therefore falls within the exclusive power of Congress'. Certainly it cannot readily be bought and sold according to two systems of inspection. It cannot be bought by one and sold by another. Conflicting state systems would only obstruct. State Freight Tax, 15 Wall. 243, 27 L. Ed. 146, Welton v. Missouri, 91 U. S. 280, 23 L. Ed. 317; Henderson v. Mayor, 92 U. S. 273, 23 L. Ed. 543. Like the regulation of tolls on an interstate bridge, the fixing of a standard of sale for grain moving in interstate commerce admits of only one uniform system. Covington Bridge Co. v Kentucky, 154 U. S. 201, 14 Sup. Ct. 1087, 38 L. Ed. 962. Because also the control of this great grain trade has become a matter of rivalry and commercial conflict between two states, and agencies acting under their respective laws, leads me to think that the subject is one of national and not state regulation. “The power vested in Congress to regulate commerce among the states was designed to prevent
Wisconsin, it is .said, may lawfully take control of the inspection and weighing of grain held for sale, delivery, and storage within her territory, and may prohibit any other system. Assuming this to be so, and that Minnesota cannot rightfully stop and inspect grain in transit, yet the Legislature of Minnesota, in a spirit of rivalry, or desirous of vindicating its inspection systém, might resort to retaliation. Wisconsin having made sales of grain void when made in Minnesota, that state might enact that it should be a crime for any person within her borders to sell any grain under the Wisconsin system. Wisconsin, not to be outdone, follows with other drastic and ingenious reprisals. While such a condition has not yet been reached, commercial warfare already exists, attended by conspiracies, combinations in restraint of trade, and other enormities, as charged in some of the affidavits submitted on these motions. How is it possible to market or sell grain under more than one standard or system of grading? It would seem to be most inconvenient, if not almost impossible, to make use of more than one standard', not only for sale, but storage, and the convenient transfer of warehouse receipts. One system being thus required, sales in interstate commerce can 'only be regulated by Congress, except by mutual acquiescence of those taking part in the transactions. State Freight Tax, 15 Wall. 232, 21 L. Ed. 146. Large
The purpose to destroy the Minnesota inspection for the purpose of selling grain, and substituting the Wisconsin system, was, as T think, the dominant purpose of the statutes in question, without which (hey would never have been passed. Believing that such statutes constitute a regulation of commerce between the states, they must be held invalid.
Temporary injunctions, as prayed for in the bill and in the cross-bill of the Great Northern Railway Company will issue, pending suit, and until further order of the court.
What has been said in this opinion respecting changes of weight, dockage, and arbitrary changes of grades is borne out by the record as presented on these motions, nor was there upon the argument any substantial denial of the facts charged. It should be stated, however,