The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1906-04-07
Paper" by Kansas City
Stock Exchange Invalid.
Supreme Court Holds That Or
ganization Is a Trust.
EFFECT A REACHING
Nearly All Stock Chattel MOrtg-
ages Are Affected.
Reversal of Previous Decision of
the Court.

II was decided Dy the Kansas SUE
preme court today that the Kansas
City live stock exchange is a trust
and that all cattle mortgages made
through members of that exchange are
invalid.
The far reaching enects OF this de-
cision are beyond estimation. Nearly
all the chattel mortgages issued
through the member of the exchange
contain the provision that a commits
sion Of at least 50 cents a head shall
be charged. Under the holding Of the
court, this is sufficient to constitute q
trust, and all the notes and mortgages
are absolutely void and can not be en-
forced.
The decision of the court was unani-
nous. It absolutely reverses the for
mer decision of the supreme court. in
the same case. The present judgment
is on a rehearing. The former decis-
ion Of the court was based on a statute
which the supreme court now holds
does not prevail.
Millions Of dollars worth of cattle
paper will possibly be affected by the
decision. Naturally most of the secur-
tiles are in the hands Of banks and cap
i~talists who would be innocent holders
and consequently protected were the
notes negotiable, but in most instances
they are so Worded as to destroy their
~negotability. The case has been pend
ing so long and the result has been so
uncertain AldL IL Is QUITE likely that
many of the commission merchants
have so changed their contracts n
practices that the securities taken by
them VIII not be affected by this con-
struction of the law. It is safe to say
that If they have not already done so
/ they will soon.
The case was tried in the Shawnee
county district court and is entitled
State VS.. Wilson. Wilson has been con-
victed of obtaining money under false
pretenses, and sentenced to five years
in the p~enitentiary.
Story of the Case.
In October, 1898, Charles L. Wilson
and George Maris purchased of the a.
J. Gillespie Commission company ~
steers, and in payment therefor ex-
ecuted two notes to the company for
the aggregate sum Of S13,366-S0, Sc
curing the notes by a mortgage on the
cattle. Two months later they sold
397 of these steers to the Elk Grove
1 Lane and Cattle company for $11,047
cash and represented to the purchaser
that the cattle were clear of all in
.c~umbrance. The cattle were taken
away from the purchaser by virtue of
the mortgage given to the commission
company in October. Wilson and
Maris were arrested for obtaining
money under false pretenses and both
were convicted in 1900 The verdict
was set aside blythe lower court and
they were again tried in 1903, when
the jury disagreed. Afterward, in
1903. Wilson was tried separately.
found guilty, and sentenced to five
years in the penitentiary. From that
conviction he appealed and the opin-
ion handed down today is the final de-
termination of the supreme court. A
former opinion was handed down in
April, 1905, affirming the judgment Of
the lower court. A ~refearing was
granted and some new points of law
We're presented in numerous briefs and
the oral On account of the
/ inn nnTf1nca nfE fan# uTacffnnz fnunIu15
several distinguished attorneys filed
briefs.
Many propositions Of law were pre-
scented but the decision turned on
question of the validity Of the mort
gage given to the Gillespie Commission
company. At the trial III the court be-
low Wilson offered to prove that the
commission company was a member
of the Kansas City Live Stock Ex-
change, that the exchange is a trust,
and therefore the mortgage was in
valid. The lower court refused this
offer of proof and the decision today
holds that It was error.
The opinion, which is very long. was.
delivered by Mr.. Justice Mason, all the
justices concurring. In assigning the
case for further argument upon certain
questions the court assumed the fol-
lowing state of facts:
AN association exists of persons and
corporations engaged in buying and
selling live stock for themselves and
OLACASs alAO4l6 IL DuL DOoEc DEttE ne
prevention of competition in such bust
ness and the maintenance Of a mini
mum commission for services in buy
ing OF selling live stock for others. The
association has a rule requiring a
minimum charge@hfty cents per head
-as commission for all cattle bought
or sold for others by its members. &
member of the association bought a
number of cattle for & purchaser. fur
nishing the money for the and
taking from him a note and mortgage
upon the cattle for the purchase price
and for his services, the charge for the
latter being exacted in Of
the rule stated and being included in
the amount of the note without sepa-
rate statement"
The first point decided IS that the
law of 1891, prohibiting combinations
to prevent competition among persons
engaged in buying and selling live
stock. is superseded by the general
antitrust law of 1897. ard IS no longer
in force. The second point is tina an
association which has a bylaw forbid
ding its members to buy or sell live
stock for others without charging a
commission therefor of at least fifty
cents a head is q trust. The third point
Is that the charging of sue q commits
sion by a member of such a trust is a
m~isdeneanor. and a contract to pay it
IS void because made in violation of the
law.
The court then proceeds to hold that
d note and mortgage given for q con
-sideratiQn, part of which is unlawful
because based upon q transaction
made criminal by the statutes are
wholly void; that where two notes Sc
cured by a mortgage are given for a
consideration in part unlawful. al
though the unlawful portion Of the
consideration is less than either of the
notes. both notes and the mortgage are