182 Wis. 571 | Wis. | 1924
Lead Opinion
The following opinion was filed November 13, 1923:
The question which first should be considered is whether the plaintiff is entitled to equitable relief pre
The trial court specifically found that the defendants had deliberately solicited persons known by them to be signers of the contracts with the plaintiff to bréale said contracts, and agreed to indemnify and protect such growers against damage to the plaintiff for or on account of such breach; that they represented to such growers, for the purpose of inducing them to breach their, contracts, that the contracts were inoperative, and that they endeavored to create dissatisfaction by telling said growers that the price they were to receive for -their tobacco from the plaintiff was too low and that their tobacco was worth more than the plaintiff would pay, and offered and agreed to pay them more for
We consider the law well settled that one who maliciously induces another to breach a contract with a third person is liable to such third person for the damages resulting from such breach. Martens v. Reilly, 109 Wis. 464, 84 N. W. 840; Knickerbocker Ice Co. v. Gardiner Dairy Co. 107 Md. 556, 69 Atl. 405, 16 L. R. A. n. s. 746, and note; Wheeler-Stenzel Co. v. American W. G. Co. 202 Mass. 471, 89 N. E. 28, L. R. A. 1915F, 1076, and note; Swain v. Johnson, 151 N. C. 93, 65 S. E. 619, 28 L. R. A. n. s. 615, and note; 36 Harvard Law Rev. 663.
Appellants concede the doctrine that where one knowingly induces the servant or employee of another to breach his contract of employment, or where the interference of a third person is. from malicious motives, or by the employment of methods not regarded by the law as proper, the party so offending must respond in damages. But they claim that this case falls within the principle that, in the interest o'f free trade and competition, it is permissible for any one to purchase in the open market products offered to him although the person offering such products for sale may be under contract to deliver all or some of the products to someone else, to which principle they cite Citizens' L., H. & P. Co. v. Montgomery L. & W. P. Co. 171 Fed. 553; Sweeney v. Smith, 171 Fed. 645, and other cases. It is not to be denied that numerous cases hold that one acting in good faith may advise another to breach a contract existing between such other and a third person without incurring liability, and no. doubt that is sound law. Where the interference is malicious, however, the great weight of authority upholds the liability of the intermeddler. There is some confusion in the authorities as to what constitutes a malicious interference; but, without undertaking to. review the authorities or to define or fix the limits of conduct amounting to a malicious interference, we do not hesitate to say
The defendants knew of the existence of the plaintiff and were cognizant of the fact that the growers of tobacco' had very generally become members of the corporation and had agreed to sell and deliver their crops thereto. By reason of this very situation the- Bekkedals had been unable to purchase the amount of tobacco which they desired. They saw that their business was threatened by the existence of this corporation. They organized a campaign to scatter seeds of dissatisfaction and discontent among plaintiff’s members, offered more than the market price to induce them to- breach their contracts with the plaintiff, and offered to indemnify them from any costs or damages which might result from breaches of their contracts.
Co-operative associations among the farmers are favored by our laws. Our statutes provide for their organization. Such associations cannot live when discontent and dissatis-, faction is rife among the members. Defendants’ plan of campaign was well calculated to ruin the plaintiff and bring about its. dissolution, thereby relieving- the defendants from undesirable competition. These facts supply the malice necessary to render them liable in damages for their attempts to bring about breaches of the contracts, under the great weight of authority, and even if authority were lacking we should be impelled to the 'same conclusion.
Liability on the part of the defendants for causing breaches of plaintiff’s contracts having been established, the question arises whether it is entitled to the relief of a court of equity in restraining the defendants from' further efforts along this line.
The plaintiff has contracts with upwards of 6,500 members. While it may prosecute actions at law to recover damages for breaches of these contracts, it would require a multiplicity of stilts, and the damages which it would
The contract existing between the plaintiff corporation and its members provided as follows •.
“The parties agree that the contract shall be in effect from the time that growers of seventy-five per cent, of the tobacco produced in Wisconsin in 1920 sign similar contracts until June 1, 1927, and that it shall continue thereafter from year to year; subject to the right of either party to terminate liability'- on June 1st of any year following 1926 by giving notice to the other party at least thirty days before the expiration of such year.
“The association agrees that it will notify the grower as soon as growers of the required acreage, as above stipulated, have signed similar contracts.
“The parties further agree, however, that this contract s'hall not affect the 1922 crop unless by June 30, 1922, growers of the required acreage, as stipulated above, have signed similar contracts.”
The court found that on or before June 30, 1922, a sufficient number of growers of tobacco had signed similar contracts to make all of said contracts operative upon the 1922 crop of tobacco; that notice thereof was given by the plaintiff corporation to its various contracting members, and that the terms and conditions of said contracts had been fully met and complied with so as to make said contracts operative upon the 1922 crop.
Whether or not a sufficient number of growers had signed contracts with the plaintiff to make said- contracts operative upon the 1922 crop' was the subject of exhaustive inquiry
It is also contended that the contract between the plaintiff corporation and its grower members was ultra vires. This is another question which the defendants should not be permitted to raise, especially in view of the rule that the question of whether the contracts are ultra vires can be raised only by the state or some member of the corporation. John V. Farwell Co. v. Wolf, 96 Wis. 10, 70 N. W. 289, 71 N. W. 109.
The appellants next contend that the plaintiff is a mo
“The great weight of modern authority is to the effect that one who has been or will be injured thereby is ordinarily entitled to the equitable remedy of injunction to prevent the carrying out of a contract or combination, to which he is not a party, formed for the purpose of creating a monopoly, maintaining prices, restraining trade or competition, or injuring others in their business contrary to common law or statute, if the damages which he would otherwise suffer are unascertainable, or the resulting injury would be irreparable, and legal remedies are inadequate or a resort thereto would cause a multiplicity of suits.”
In Hawarden v. Youghiogheny & L. Coal Co. 111 Wis. 545, 87 N. W. 472, it was held that a retail coal dealer who-was injured by an unlawful combination between other coal dealers to drive out of business all not members of the combination might maintain an action to restrain the continuation of the operations of the conspiracy.
Sec. 1747e, Stats., provides that any corporation or association who shall either as principal or agent become a party to any contract, combination, conspiracy, trust, pool, or agreement in the nature of a trust or conspiracy in restraint of trade or commerce, shall be liable to any person- transacting or doing business in this state for all damages he may sustain by reason of the doing of anything forbidden by this section. While this does not in terms give the injured person a right to equitable relief, in view of the fact that it
The plaintiff corporation is organized without capital stock pursuant to secs. 1786<? — 1 to 1786e — 17® of the Statutes, providing for incorporation of co-operative associations. Sec. 1786<? — 2 provides that any number of adult persons, not less than five, who are residents of this state, may organize as a co-operative association for the purpose of conducting any agricultural, dairy, mercantile, mining, manufacturing, or mechanical business on the co-operative plan, or of acting as a selling or buying agent for its members or patrons. Sub. 2, sec. 1786c — 7, provides:
“Contracts between, any association organized under sections 1786c — 1 to 1786c — -17, inclusive, and its members, whereby such members agree to sell all or a specified part of their products to or through, or to' buy all or a specified part of goods from or through the association or any facilities created by the association, shall, if otherwise lawful, be valid; provided that the term of such contracts does'not exceed five years; provided, however, that this requirement shall not prevent such contracts from being made self-renewing for periods not exceeding five years each. A provision in any such contract determining a specific sum to be paid by the member as liquidated damages for breach of said contract shall be valid; provided, that the amount of said liquidated damages does not exceed one fifth of the value of the products which are the subject of the breach.”
By virtue of the contract entered into between plaintiff and its members the member agreed to sell to' the associa
Appellants’ contention that plaintiff constitutes a monopoly and an unlawful combination in restraint of trade condemned by sec. 1747c is based on the following considerations : (1) The contract is not to- take effect until seventy-five per cent, of the growers of tobacco in Wisconsin signed similar contracts; (2) the provision in the contract that the member will pay to the association the sum of five cents per pound for each pound of tobacco produced but not delivered by him according to the provisions of the contract; (3) that the admitted purpose and conduct of the plaintiff was to combine at once one hundred per cent, of the growers in Wisconsin, and obtain a complete monopoly; (4) that the Wisconsin tobacco crop is peculiarly subject to monopolization because of its distinctive quality; (5) that the plaintiff pool established a price upon its crop- which was- a monopoly price, as appears by the fact that the price once fixed by the pool was to continue for the whole season, and the prices fixed by-the pool were regarded by it, due to its- control over the market, as the market price, and anything beyond was classed by it as in excess of the true market price so fixed; (6) that the plaintiff acquired such monopolistic control over the tobacco crop' of Wisconsin as to be able to dis
A number of the propositions thus laid down by the appellants are not without dispute in the evidence. But, for the present at least, we shall assume these several propositions as verities. From the premises so laid down, appellants proceed with the discussion on the assumption that the situation is governed entirely by the provisions of sec. \7\7e, which is our statutory condemnation of contracts or combinations in the nature of a trust or conspiracy in restraint of trade or commerce. It is- to be conceded that for a long time the public policy of this state was in accordance with this statutory declaration, and probably such would have been the public policy of the state in the absence of such statutory declaration, as the statute in question adds very little to the condemnation visited upon such agreements at common law. It is not to be denied, however, that the public policy of the state with reference to such combinations and agreements is within the control of the legislature, and that such public policy is subject to legislative control and modification. Thus, in Pulp Wood Co. v. Green Bay P. & F. Co. 168 Wis. 400, 412 (170 N. W. 230), it was said:
“It may be well that the time is approaching, if not already here, when monopolies or business combinations controlling the market (subject, however, to efficient government control) will be found more desirable than unrestrained competition; but that is a question for the lawmaking power to decide, not for the courts.”
Such combinations and agreements have been condemned by the law because their existence was regarded as prejudicial to the public interest. If in the course' of time chang
Since the enactment of sec. 1747^, condemning every contract or combination in unreasonable restraint of trade, legislation has been enacted providing for the incorporation of co-operative corporations, or associations, as they are called. The plaintiff is organized under such statutory provisions, secs. 1786<? — 1 to 1786e — 17», Stats. 1921, inclusive'. Such legislation specifically provides (sub. 1, sec. 1786e — 2) :
"Any number of adult persons, not less than five, who are residents of this state, may organize as a co-operative association, for the purpose of conducting any agricultural, dairy, mercantile, mining, manufacturing or mechanical business on the co-operative plan, or of acting as a selling or buying agent for its members or patrons.”
Sub. 2 of sec. 1786e — 7, already quoted herein, would seem to authorize every provision of the contract here in question. Under contracts so authorized, members may agree to sell all or a specified part of their products to or through, or to buy all or a specified part of goods from or through, the association or any facilities created by the association, and such contracts, if otherwise lawful, shall be valid. Such contracts shall not exceed five years, but they may be made self-renewing for periods not exceeding
The reasons for promoting such legislation are generally understood. It sprang from a general, if not well-nigh universal, belief that the present system of marketing is expensive and wasteful and results in an unconscionable spread between what is paid the producer and that charged the consumer. It was for the purpose of encouraging efforts to bring about more direct marketing methods, thus benefiting both producer and consumer and thereby promoting the general interest and the public welfare, that the legislation was enacted.
We therefore hold that the validity of the plaintiff organization and its operations must be tested not by the former public policy of this state with reference to combinations and. agreements in restraint of trade, as declared b3<- sec. 1747c, but by the provisions of the co-operative association statutes. So far as the contract is concerned, it seems to be
We are not called upon to consider questions of classification, as the statute authorizes the formation of co-operative associations not for the purpose of conducting a particular or a limited class of businesses, but, by its terms, it applies to agricultural, daily, mercantile, mining, manufacturing, or mechanical business. This provides a very
Whether the plaintiff association constitutes a monopoly or an unreasonable restraint of trade tested by public policy existing prior to the enactment of our co-operative association legislation would present a most interesting question. But in view of the conclusion we have reached, a discussion of that question would be to no point and would constitute a mere superfluous effort.
It may be that some matters of minor importance have been raised in the briefs to which reference has not been made in this opinion. We desire to' give assurance, howr ever, that all questions raised by appellants have been considered, and if they have not been treated here it is because they seemed to be immaterial in our view of the case.
By the Court. — Judgment affirmed.
Rehearing
The following opinion was filed February 12, 1924:
Upon the motion for rehearing it is earnestly argued that the Co-operative law is unconstitutional because it denies the equal protection of the laws, contrary to the provisions of the Fourteenth amendment of the federal constitution. While this was obliquefy suggested upon the argument, the contention was not stressed, and did not seem to be put forth with a great measure of assurance. The earnestness, however, with which it is advanced upon the motion for rehearing merits a response from the court.
The argument, in brief, seems to be that the law is discriminatory in that it authorizes certain classes to enter into agreements in the nature of trusts, combinations, and monopolies in restraint of trade, if they do S0‘ under and by virtue of the Co-operative law, while those who are not in
In order to vindicate the Co-operative law it is not necessary to justify the exemption of farmers from the general anti-trust statute, which was condemned as vicious classification in Connolly v. Union S. P. Co. 184 U. S. 540, 22 Sup. Ct. 431. It may be remarked, however, that the decision in that case was made more than twenty years ago, since which time there is abundant evidence of a wide-spread conviction throughout our nation that the farmer is subject to economic conditions which put him in a class justifying special legislative consideration in many respects. It may be doubted whether at the present time the holding in Connolly v. Union S. P. Co., in this respect, would be followed. But we 'will not pursue this thought except as it may incidentally appear in our following discussion.
Co-operative associations are neither new nor novel to civilization. They are old institutions in many ■ foreign countries, notably in Denmark. It is well known that the United States Department of Agriculture has been active for some years in the encouragement and development of co-operative marketing associations. The War Finance Corporation, another government agency, has encouraged these associations throughout the country. Many acts of
That there is an inherent difference with reference to the resulting effect to society between a combination of a strong and powerful few who are able to get together and exercise a complete control over a particular industry or commodity essential to social existence, and a combination of farmers, each weak in his individual strength and power, numbering into the millions and scattered far and wide, is reasonably apparent. The former combination is small, compact, powerful. The inevitable tendency, and too often the plain result, is oppression to society. Any combination of the latter is necessarily weak and impotent, so far as securing a unity of control and action sufficient to result in oppression is concerned. The most that is hoped for from cooperative organizations on the part of the latter is slight improvement in the condition of the agricultural classes, a stimulus to more intelligent effort and encouragement to carry on in a line of endeavor that is essential to human
A perusal of the Co-operative Marketing Law dissipates any thought that it has for its fundamental purpose the accomplishment or promotion of monopoly. Its dominant purpose is to promote the welfare of its members by stimulating co-operative effort. The law is rather carefully drawn, and many of its provisions may be cited disclosing a legislative effort to restrain the results of the law to the purposes sought to be accomplished. It is not a law to be availed of by those harboring monopolistic purposes. For instance, each member has one vote, and only one vote. Proxy voting is prohibited, except that territorial delegate voting is provided for. This contemplates that the association will be made up of numerous and scattered members. The rate of dividends upon stock is limited to eight per cent. The proceeds from the business of such corporation, after payment of all necessary expenses, are distributed to the patrons (not the members) in proportion to the volume of business transacted by said patrons with the association. The nature of the contracts' between the association and its members is clearly defined. The term of such contracts is limited to five years. The number of shares which any person may hold may be limited. The corporation may prescribe that its common stock may be sold only to persons designated and described in the by-laws, and that the stockholder shall lose the power to vote if he ceases to belong to the class of persons designated or described in the bylaws. It is obvious that great and oppressive combinations of capital, constituting the real evil which has caused the enactment of stringent anti-trust legislation, would not find
Granting that it is possible for a monopoly to' result from this law, it is clear that such a result is neither contemplated nor encouraged by the law. Rather there is an apparent attempt to confer benefits upon those who find the law suitable for their purposes, which benefits are to stop short of monopoly. Now granting, also, that in isolated cases the practical operation of the law results in monopoly, or something in the nature of monopoly, can it be said that for that reason the law is unconstitutional, as denying the equal protection of the law? If monopoly results it is lawful monopoly, and the legislature has a right to legalize monopoly. This it has done with reference to all of the public utilities of the state. If in the course of time operation under the law gives rise to oppressive monopolies, the legislature may either repeal the law or fence it with further restrictions, as in its opinion public interest may require. If the law should promote evil rather than wholesome results, it is not necessary that it should permanently endure.
It may be that the law does not apply to every conceivable business. It is available, however, to all persons conducting agricultural, dairy, mercantile, mining, manufacturing, or mechanical business, and, as amended by ch. 433, sec. 1, Laws 1923, now sec. 185.02, Stats. 1923, all businesses that may be conducted in corporate form under ch. 180, sec. 180.01, Stats. 1923. As was said in Missouri, K. & T. R. Co. v. Cade, 233 U. S. 642, at p. 649 (34 Sup. Ct. 678):
“These cover a wide range, and do not appear to have been grouped together for the purpose of bearing against any class or classes of citizens or corporations. Unless something of this sort did appear, we should not be justified in holding the act to be repugnant to the Fourteenth amendment.”
It is a well recognized principle that in order to enable one to attack a statute as unconstitutional he must show that the alleged unconstitutional feature of the law injures him and so operates as to deprive him of rights protected by the constitution. Southern R. Co. v. King, 217 U. S. 524, 30 Sup. Ct. 594; Standard S. F. Co. v. Wright, 225 U. S. 540, 550, 32 Sup. Ct. 784; Plymouth C. Co. v. Pennsylvania, 232 U. S. 531, 544, 34 Sup. Ct. 359. If the Bekkedals are engaged in the numerous pursuits to' which the Co-operative law is applicable, they have a perfect right to avail themselves of the provisions of the law, and if their only complaint is that they would like to create a monopoly but cannot, they are upon a precarious footing in a court of law.
The contention, of the appellants in support of their motion for rehearing cannot be sustained.
There is one respect, however, in which it is considered the order should be modified. If a member should voluntarily sever his relations with the pool by breaching his contract and withdrawing his membership therein and placing his tobacco for sale upon the market, no reason is perceived why appellants should be denied the privilege of buying his crop. To that extent and for that purpose the injunctional order or judgment is amended by inserting after the words above quoted the following:
“Providing, that these restraints shall not prohibit the defendants from purchasing tobacco from those who shall have voluntarily breached their contract with respondent,*599 severed their relations therewith, and withdrawn their membership therein.”
As so modified the judgment is affirmed. It is considered that this modification shall not affect the question of costs. Costs will be taxed in favor of respondent.
By the Court. — Motion for rehearing denied, with $25 costs.