Ottumwa tri-weekly courier. [volume] (Ottumwa, Iowa) 1903-1916, 1913-04-29
DECISION HITS
THE COOPERATIVE
eUPREME COURT IN FINDING RE.
GENTLY STRIKES FARMERS
ORGANIZATIONS.

Des Moines, April 2S-(SpeciaD-
Complete reorganization of many .of
the farmers cooperative societies OF
Iowa will follow the recent decision -
the supreme court holding that where
members are penalized for dealing
with competitor of the cooperative
the antitrust laws Of the state are
violated It was the most far reach
ing decision on that subject yet made
Of record in this state.
The case is one in which Henry
Reeves, hog buyer, secured an order
of court by Judge Hobson in which
the DEBORAH Farmers cooperative and
its officers and employees are "perpet-
ually restrained and enjoined from ex-
acting, collecting, receiving or in any
manner accepting any sum or amount
whatever from any bid made by any
competitor upon the general market at
DEBORAH and vicinity, as an induce
ment or condition upon which said sell
lers shall or may sell or dispose OF
live stock to plaintiff" Which injunc-
ton the supreme court says Is all
right.
The defendant society is an organ
ization of farmers with $4,000 of it's
100000 capital stock paid for in cash,
with $50 members or stockholders, and
after two years of business it had pur-
chased 24,62S hogs, paying therefore
t$433, $685. No dividends had been
declared and there were practically no
profits.
The company had a bylaw requiring
that where a member sold produce or
live stock to competitor on the mar
ket he shall pay over to the society
1--we cents for every hundred pounds
weight sold. Reeves was competitor.
The evidence. showed that members
who sold their hogs to Reeves did, In
fact. pay the society five cents hun
dred of what they got, that the agent
Of the society bought in competition
with Reeves, sometimes overriding
him on stuff from outsiders and come.
times Reeves getting stock from the
cooperatives. The supreme court, JUS
tice Deemer writing, said:
$50 long as competition is regarded
ls the life of trade all combinations,
contracts, arrangements or agreements
made to stifle it or which may have
that effect are regarded as unlawful,
save as heretofore stated, where cons
nected incidentally with some other
contract as Of purchase or sale or with
contracts of employment, ETC., SO long
as their restraints are reasonable and
just. But, where disconnected with
some other contract and made enforc.
ible by fine or penalty, we think they
come within the ban of the law. True
It Is that each of the members of this
association might have concluded not
to sell any Of his hogs to the plaintiff
and, perhaps, all might have agreed in
advance not to do 50. This would
have been freedom of trade. But here
there Is freedom OF trade in form, but
annexed to that freedom is fine or
penalty for exercising such freedom.
This Is restraint Of trade, or
rather, restraint Of competition.
That such fine or penalty made the So
ciety an illegal one is to our minds too
clear for argument. Plaintiff was plac-
ed at disadvantage and could not
compete with the society in purchas-
Ing hogs from it's members and the
members were not free to deal with
plaintiff. II they dealt with him, he
either forfeited his profits, by reason Of
having to pay too much for hogs or
they forfeited part of the purchase
price as a penalty for selling to an
other. To our minds this was undue
restraint of competition, or as the term
Is now understood, restraint Of trade.
It is said that most of cooperative
associations handling the grain of the
farmers are founded upon this same
theory and have the penalty clause in
their bylaws under which the mem
bers forfeit something in case they
deal with competitor.