Case ID: ad_61/html/0035-01.html
Source: Caselaw Access Project
Author: {"author": ".Spring, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Spencer Kellogg and Spencer Kellogg, Jr., Respondents, v. Lehigh Valley Railroad Company, Appellant, Impleaded with Others.
    
      Conspiracy by an association of elevator owner's —sufficiency of a complaint alleging an injury resulting therefrom to an elevator business—allegation as to damages.
    
    The complaint in an action alleged that the plaintiffs operated a grain elevator in the city oí Buffalo; that the defendant Sowerby was president of the Western Elevating Association, which was a joint stock association composed of twenty members; that “as a part of an unlawful combination and conspiracy to injure these plaintiffs and prevent them from doing business as above set out,” the' elevating association entered into an agreement, which was set out in full, with the defendant, the Lehigh Valley Railroad Company, and into identical agreements with the other defendant railroad companies relative to the conduct of the business of elevating and transporting grain; that in pursuance of such unlawful combination the railroad companies refused to carry grain for shippers who sent it through the plaintiffs’ elevator except on the payment by said shipper to said railroad companies of an additional charge of one-half cent per bushel; “ that such agreements and refusals were unlawful and made for the purpose of injuring these plaintiffs and preventing them from doing business at their said elevator, and for the purpose of advancing the interests of said Western Elevating Association and the interests of said defendant railroads who either own or are interested in certain elevators in said association.”
    The complaint stated the customary charges for storing grain in elevators, and gave the names of two shippers of grain who had been prevented from using the plaintiffs’ elevator “by such unlawful combination and conspiracy,” and alleged that many other shippers of grain “were hindered and prevented from sending their grain through the Kellogg Elevator by reason of said unlawful combination and conspiracy, and these plaintiffs have been prevented and will be prevented from elevating many million bushels of grain and from receiving the elevation charge, and the shovel and storage charge as above set . forth to their damage of one hundred thousand dollars (§100,000).”
    
      
      Held, that, the complaint was sufficient to enable the plaintiffs to give proof in support of the charge that the agreement was entered into, to accomplish an unlawful combination against them;
    That the complaint contained a sufficient allegation of damage. ■
    Appeal by the defendant, the Lehigh Valley Railroad Company, from an interlocutory judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the county of Erie on the 4th day of December, 1900, upon the decision of the court, rendered after a trial at the Erie Special Term, overruling said defendant’s demurrer to the plaintiffs’ complaint.
    
      James McO. Mitchell and Martin Oarey for the appellant.
    
      George L. Lewis, for the respondents.
   .Spring, J.:

'This action was brought July 9, 1900, and charges a conspiracy on the part of the defendants to prevent the plaintiffs from operating an elevator owned by them in the city of Buffalo. The complaint is demurred to- on the ground that it does not state facts sufficient to constitute a cause of action.

An analysis of the complaint show the following allegations:

That the plaintiffs are copartners operating the Kellogg Elevator in the city of Buffalo; that grain is received from vessels, stored - in the elevator and trans-shipped to cars or canal boats, and that the plaintiffs receive a compensation therefor.

• That the defendant Sowerby is president of the Western Elevating Association, which is a joint-stock association composed of twenty members. The incorporation and organization of the defendant railroad companies, which are common carriers, carrying grain from the elevators for hire, is set out in detail.

That the legal rate for elevating and trans-shipping grain in Buffalo is five-eighths of one cent per bushel including ten days’ storage, but the prevailing rate which has been charged and which was in vogue at the time the action.was brought- was one-half cent per bushel; that the established rate of the defendant railroad companies for transporting grain from Buffalo to New York, Philadelphia and Boston is two and one-fourth cents per bushel for. corn, and two and one-half cents per bushel for wheat.

That the Kellogg Elevator is well located, with a capacity for receiving and trans-shipping 20,000,000 bushels of grain each season; that in addition to the one-half cent per bushel for trans-shipment each elevator receives one dollar and twenty cents per 1,000 bushels for .the use of the steam shovels and the Kellogg Elevator is equipped with these.

That the customary charge for storage after ten days is one-fourth cent per bushel for each ten days until the close of navigation, until two cents per bushel has been earned therefor ; then the storage is free of charge until the opening of navigation the following year. The agreement between the Lehigh Valley Railroad Company and the Western Elevating Association is set out in full and is identical with one which is claimed to have been made with each of the other defendant railroad companies. The agreement provides that its object is to secure the prompt unloading of lake vessels at Buffalo, the securing of uniform rates, the avoidance of “ demurrage to vessels and costly blockades of cars with resulting delays to grain in transit.” That the elevating association is “to promptly elevate all grain cargoes to be forwarded by the Rail Company;” to store said grain for not exceeding ten days; to load it “utilizing for these purposes * * * any or all of the elevators. comprising what are known as the c facilities of the port ’ that have rail connection with the Rail Company; and first selecting, so far as the Elevator Association may find reasonably possible, the elevators designated by the Rail Company as those it prefers.”

The 2d subdivision of this agreement is as follows: “ The Rail Company agrees to pay to the Elevator Association, and the Elevator Association agrees to accept, for services rendered hereunder, -|c. per bushel upon all lake grain arriving at Buffalo in the lake season of 1900, and carried from Buffalo by the Rail Company, payment to (be) made on all of said grain actually elevated and handled by or under the direction of said Elevator Association or otherwise. It is understood and agreed that the Elevator Association is only willing to undertake the prompt discharge of vessels herein called for and to assume the consequent obligation to make the elevator facilities of the Port of Buffalo available for that service upon being assured that said Elevator Association will receive compensation based upon the total lake grain carried by the Rail Company as aforesaid.”

The complaint charges that such agreement and the kindred agreements, with the other companies “ were entered into as a .part of an unlawful combination and conspiracy to injure these plaintiffs and prevent them from doing business as above set out.”

That in pursuance of such unlawful combination the railroads refused to carry grain for shippers who sent it through the plaintiffs’ elevator except on the condition that an additional charge of one-half, cent per bushel was paid by said shipper to said railroad companies.

“ That such agreements and refusals were unlawful and made for the purpose of injuring these plaintiffs and preventing them from doing business at their said elevator, and for the purpose of advancing the interests of said. Western Elevating Association and the interests of said defendant railroads who either own or are interested in certain elevators in said association.”

The names of two firms are given who had arranged to use the elevator of the plaintiffs and were, prevented from so doing by such unlawful combination and.conspiracy,” and the general statement is made that many shippers of grain were hindered and prevented from sending their grain through the Kellogg Elevator by reason of said unlawful combination and conspiracy, and these plaintiffs have been prevented, and will be prevented: from elevating many million bushels of grain and from receiving the elevation charge and the shovel and storage charge as above set forth to their damage of one hundred thousand dollars ($100,000).”

The counsel for the defendant urges that no fact is alleged to give ■support to the sweeping generalization of an unlawful combination, and hence no issuable fact is stated, relying upon Talcott v. City of Buffalo (125 N. Y. 280) and Kittinger v. Buffalo Traction Co. (160 id. 377). If there was nothing to sustain the charge of conspiracy except the bare allegation that it was an unlawful combination, it would be a conclusion and within the counsel’s criticism. But here the preference provided for in the agreement and the construction which, under certain circumstances, may possibly be given to it, aid in some degree to support the charge. It is also further averred in the complaint that the combination worked an unlawful discrimination against the plaintiffs, because the railroad companies refused to carry grain received through their elevator except upon the condition that the shippers should pay one-half cent per bushel as an additional charge, and that this discrimination was in pursuance of an unlawful combination and conspiracy, and was one of the inducements to the agreement; that the effect of this extra compensation was an embargo on the use of the plaintiffs’ elevator; that shippers naturally would not pay plaintiffs one-half cent per bushel for the privilege of using them elevator. There is, accordingly, the general charge sustained in a measure, as above stated, and its performance, which it is claimed was contemplated at its inception and which was injurious to plaintiffs.

The respective counsel have given much consideration to the real import of this agreement. Its construction, whether legal or void, may be vital to the final determination of the rights of the parties to this action, but that may be controlled largely by outside circumstances and extrinsic proof (Lough v. Cuterbridge, 143 N. Y. 271), and we do not deem it wise at this time to discuss the meaning or effect to be given to this agreement, and this is especially true as the charges of conspiracy in the complaint are not deduced solely from what appears upon the face of the contract, but embrace extraneous matters flowing from its operation. We, therefore, simply decide that the complaint, with its inferences and charges, contains sufficient to enable the plaintiffs to give proof in support of the charge that the agreement was entered into to accomplish -an unlawful combination against the plaintiffs.

The defendants contend that no damages are alleged. The complaint does allege the prevailing or customary rate for storing or shipping grain in elevators, and that the plaintiffs lost customers by reason of the agreement, and except for it it would have handled a large amount of the grain, giving in the two instances named about 10,000,000 bushels.

The interlocutory judgment is affirmed, with costs to the respondents, with leave to the defendant to withdraw its demurrer and answer upon payment of the costs.

All concurred. •

Interlocutory judgment affirmed, with costs, with leave to the defendant to withdraw its demurrer and answer upon payment of the costs.