Source: https://www.legalcrystal.com/case/95144/frost-vs-corporate-commission-oklahoma
Timestamp: 2018-05-24 06:15:59
Document Index: 374568232

Matched Legal Cases: ['§ 5637', '§ 5637', '§ 266', '§ 3714', '§ 5637', '§ 3714', '§ 266', '§ 3712', '§ 3714', '§ 3714', '§ 3714', '§ 3714', '§ 6', '§ 1']

Frost Vs Corporate Commission of Oklahoma - Citation 95144 - Court Judgment | LegalCrystal
Frost Vs. Corporate Commission of Oklahoma - Court Judgment
LegalCrystal Citation legalcrystal.com/95144
Case Number 278 U.S. 515
Appellant Frost
Respondent Corporate Commission of Oklahoma
frost v. corporate commission of oklahoma - 278 u.s. 515 (1929) u.s. supreme court frost v. corporate commission of oklahoma, 278 u.s. 515 (1929) frost v. corporate commission of oklahoma no. 60 argued november 26, 1928 decided february 18, 1929 278 u.s. 515 appeal from the district court of the united states for the western district of oklahoma syllabus 1. by the statutes of oklahoma, cotton gins operated for the ginning of seed cotton for the public for profit are declared to be public utilities in a public business, and no one may engage in the business without first securing a permit from a public commission, which is empowered to regulate the business and its rates and charges, as in the case of transportation.....
Frost v. Corporate Commission of Oklahoma - 278 U.S. 515 (1929)
U.S. Supreme Court Frost v. Corporate Commission of Oklahoma, 278 U.S. 515 (1929)
1. By the statutes of Oklahoma, cotton gins operated for the ginning of seed cotton for the public for profit are declared to be public utilities in a public business, and no one may engage in the business without first securing a permit from a public commission, which is empowered to regulate the business and its rates and charges, as in the case of transportation and transmission companies. Held: that the right of one who has complied with the statutes and secured his permit is not a mere license, but a franchise granted by the state in consideration of the performance of a public service, and, as such it constitutes a property right within the protection of the Fourteenth Amendment. P. 278 U. S. 519 .
2. While the franchise thus acquired does not preclude the state from making similar valid grants to others, it is exclusive against attempts to operate a competing gin without a permit or under a void permit, in either of which events the owner may resort to a court of equity to restrain the illegal operation as an invasion of his property rights if it threaten an impairment of his business. P. 278 U. S. 521 .
. 4. A state statute regulating the business of ginning cotton for the general public for profit which permits an individual to engage in such business only upon his first showing a public necessity therefor, but allows a corporation to engage in the same business, in the same locality, without such showing, discriminates against the individual in violation of the equal protection clause. The classification attempted is essentially arbitrary because based upon no real or substantial differences reasonably related to the subject of the legislation. P. 278 U. S. 521 .
5. A cooperative ginning corporation formed under Oklahoma Comp.Stats.1921, § 5637, et seq., having a capital stock which, up to a certain amount, may be subscribed for by anyone; which is allowed to do business for others than its members, and to make profits and declare dividends not exceeding 8% per annum, and to apportion the remainder of its earnings among its members ratably upon the amount of products sold by them to the corporation is not a mutual association. P. 278 U. S. 523 .
6. A proviso added to an existing statutory provision by a subsequent legislature, and the effect of which if it were part of the original enactment would be to render the whole unconstitutional, may be treated as a separate nullity, allowing the original to stand. P. 278 U. S. 525 .
7. In such case, one who sought and obtained property rights under the original and valid part of the statute is not estopped from attacking the proviso. P. 278 U. S. 527 .
horticultural associations not having capital stock or being conducted for profit may be formed for the purpose of mutual help by persons engaged in agriculture or horticulture. Under a statute passed in 1919 (Comp.Stats.1921, § 5637 et seq. ), 10 or more persons may form a corporation for the purpose of conducting, among others, an agricultural or horticultural business upon a cooperative plan. A corporation thus formed is authorized to issue capital stock to be sold at not less than its par value. The number of shares which may be held by one person, firm, or corporation is limited. Dividends may be declared by the directors at a rate not to exceed 8 percent per annum. Provision is made for setting aside a surplus or reserve fund, and 5 percent may be set aside for educational purposes. The remainder of the profits of the corporation must be apportioned and paid to its members ratably upon the amounts of the products sold to the corporation by its members and the amounts of the purchases of members from the corporation, but the corporation may adopt bylaws providing for the apportionment of such profits in part to nonmembers upon the amounts of their purchases and sales from or to the corporation.
appellant brought this suit to enjoin the commission from issuing the permit prayed for and to enjoin the Durant company from the establishment of a cotton gin at Durant, upon the ground that the proviso, as construed and applied by the commission ( see Mont. Bank v. Yellowstone County, 276 U. S. 499 , 276 U. S. 504 ), was invalid as contravening the due process and equal protection of the law clauses of the Fourteenth Amendment. The court below, consisting of three judges under § 266, Judicial Code, denied the prayer for an injunction and entered a final decree dismissing the bill. 26 F.2d 508.
a mere license, but a franchise, granted by the state in consideration of the performance of a public service, and as such it constitutes a property right within the protection of the Fourteenth Amendment. See Walla Walla v. Walla Walla Water Co., 172 U. S. 1 , 172 U. S. 9 ; California v. Pacific Railroad Co., 127 U. S. 1 , 127 U. S. 40 -41; Monongahela Navigation Co. v. United States, 148 U. S. 312 , 148 U. S. 328 -329; Owensboro v. Cumberland Telephone Co., 230 U. S. 58 , 230 U. S. 64 -66; Boise Water Co. v. Boise City, 230 U. S. 84 , 230 U. S. 90 -91; McPhee & McGinnity Co. v. Union Pac. R. Co., 158 F. 5, 10-11.
In California v. Pacific Railroad Co., supra, pp. 127 U. S. 40 -41, a franchise is defined as
and applied by the commission and by the court below, its effect is to relieve all corporations organized under the act of 1919 from an onerous restriction upon the right to engage in a public business which is imposed by the statute upon appellant and other individuals, as well as corporations organized under general law, engaging in such business. That a greater burden thereby is laid upon the latter than upon the former is clear. Immunity to one from a burden imposed upon another is a form of classification, and necessarily results in inequality, but not necessarily that inequality forbidden by the Constitution. The inequality thus prohibited is only such as is actually and palpably unreasonable and arbitrary. Arkansas Gas Co. v. Railroad Comm'n, 261 U. S. 379 , 261 U. S. 384 , and cases cited.
The purpose of the clause in respect of equal protection of the laws is to rest the rights of all persons upon the same rule under similar circumstances. Louisville Gas Co. v. Coleman, 277 U. S. 32 , 277 U. S. 37 . This Court has several times decided that a corporation is as much entitled to the equal protection of the laws as an individual. Quaker City Cab Co. v. Pennsylvania, 277 U. S. 389 , 277 U. S. 400 ; Kentucky Finance Corp. v. Paramount Exch., 262 U. S. 544 , 262 U. S. 550 ; Gulf, Colorado & Santa Fe Ry. v. Ellis, 165 U. S. 150 , 165 U. S. 154 . The converse, of course, is equally true. A classification which is bad because it arbitrarily favors the individual as against the corporation certainly cannot be good when it favors the corporation as against the individual. In either case, the classification, in order to be valid,
" Royster Guano Co. v. Virginia, 253 U. S. 412 , 253 U. S. 415 ; Air-way Corp. v. Day, 266 U. S. 71 , 266 U. S. 85 ; Schlesinger v. Wisconsin, 270 U. S. 230 , 270 U. S. 240 . That is to say, mere difference is not enough; the attempted classification"
" Gulf, Colorado & Santa Fe Ry. v. Ellis, 165 U. S. 150 , 165 U. S. 155 ."
Louisville Gas Co. v. Coleman, supra, p. 277 U. S. 37 .
classification created by the proviso might properly be upheld. American Sugar Refining Co. v. Louisiana, 179 U. S. 89 ; Warehouse Co. v. Tobacco Growers, 276 U. S. 71 . A corporation organized under the act of 1919, however, has capital stock, which, up to a certain amount, may be subscribed for by any person, firm or corporation; is allowed to do business for others; to make profits and declare dividends, not exceeding eight percent per annum, and to apportion the remainder of its earnings among it members ratably upon the amount of products sold by them to the corporation. Such a corporation is in no sense a mutual association. Like its individual competitor, it does business with the general public for the sole purpose of making money. Its members need not even be cotton growers. They may be -- all or any of them -- bankers or merchants or capitalists having no interest in the business differing in any respect from that of the members of an ordinary corporation. The differences relied upon to justify the classification are, for that purpose, without substance. The provision for paying a portion of the profits to members, or, if so determined, to nonmembers, based upon the amounts of their sales to or purchases from the corporation, is a device which, without special statutory authority, may be and often is resorted to by ordinary corporations for the purpose of securing business. As a basis for the classification attempted, it lacks both relevancy and substance. Stripped of immaterial distinctions and reduced to its ultimate effect, the proviso, as here construed and applied, baldly creates one rule for a natural person and a different and contrary rule for an artificial person, notwithstanding the fact that both are doing the same business with the general public and to the same end -- namely, that of reaping profits. That is to say, it produces a classification which subjects one to the burden of showing a public necessity for his business, from which it relieves the other, and is essentially arbitrary
because based upon no real or substantial differences having reasonable relation to the subject dealt with by the legislation. Power Co. v. Saunders, 274 U. S. 490 , 274 U. S. 493 ; Louisville Gas Co. v. Coleman, supra, p. 277 U. S. 39 ; Quaker City Cab. Co. v. Pennsylvania, supra, p. 277 U. S. 402 .
If § 3714 as originally passed had contained the proviso, the effect would be to render the entire section invalid, because then the result of upholding the substantive part of the section notwithstanding the invalidity of the proviso would have been to make applicable to the Durant company and others similarly organized, the requirement in respect of a showing of public necessity, although the legislative will contemporaneously expressed as part of the same act was to the contrary. In this state of the matter, to hold otherwise would be to extend the scope of the law in that regard so as to embrace corporations which the legislature passing the statute had, by its very terms, expressly excluded, and thus to go in the face of the rule that, where the excepting proviso is found unconstitutional, the substantive provisions which it qualifies cannot stand. Davis v. Wallace, 257 U. S. 478 , 257 U. S. 484 .
But the proviso here in question was not in the original section. It was added by way of amendment many years after the original section was enacted. If valid, its practical effect would be to repeal by implication the requirement of the existing statute in respect of public necessity insofar as the Durant and similar corporations are concerned. But since the amendment is void for unconstitutionality, it cannot be given that effect, "because an existing statute cannot be recalled or restricted by anything short of a constitutional enactment." Davis v. Wallace, supra, p. 257 U. S. 485 .
To this effect also is Truax v. Corrigan, 257 U. S. 312 , 257 U. S. 341 -342. In that case, there had been in force in Arizona, both as a state and a territory, for many years a general statute granting authority to judges of the courts of first instance to issue writs of injunction. The statute was amended so as to except from its operation certain cases between employers and employees. The amendment was declared invalid as denying the equal protection of the laws, but the general provision of the statute as it originally stood was upheld upon the ground that it had been in force for many years, and that an exception in the form of an unconstitutional amendment could not be given the effect of repealing it. And see Waters-Pierce Oil Co. v. Texas, 177 U. S. 28 , 177 U. S. 47 .
v. Commission of Fisheries, 257 U. S. 223 , 257 U. S. 225 . But here, the proviso under attack, having been adopted by a subsequent act and being invalid, had no effect, as we have already said, upon the provisions of the statute. As applied to this case, it began and ended as a futile attempt by the legislature to bring about a change in the law which a previous legislature had enacted. For this purpose, and as construed and applied below, it was a nullity, wholly "without force or vitality," leaving the provisions of the existing statute unchanged. It necessarily results that appellant's rights came into being and owed their continued existence wholly to that statute, disconnected from the ineffective proviso, and it is that statute, so disconnected, which measures the extent to which he may enjoy and defend such rights. In seeking and obtaining the benefits of the statute, appellant proceeded without regard to the proviso, neither affirming nor denying nor in contemplation of law acquiescing in its validity, and his action cannot be made a basis upon which to rest a successful claim of an estoppel in pais or of a waiver of the right to maintain the constitutional challenge here made.
from the Corporation Commission a license to operate a cotton gin in the City of Durant. [ Footnote 1 ] Later, the Durant Cooperative Gin Company applied to the Commission under that statute for a license to operate a gin in the same city. In support of its application, it presented a certificate of organization under Chapter 147 of the Laws of 1919, entitled "An act providing for the organization and regulation of cooperative corporations" (Oklahoma Compiled Statutes 1921, §§ 5637-5652), and a petition signed by one hundred citizens and taxpayers of that community requesting that the license be issued. Frost objected to the granting of a license on the ground that there was no necessity for an additional gin in that city. The Commission ruled that, upon the showing made, it was obliged by § 3714, as so amended, to issue a license without hearing evidence as to necessity, and indicated its purpose to issue the license. Thereupon, Frost brought this suit under § 266 of the Judicial Code against the Commission, the Attorney General, and the Durant Company to enjoin granting the license. A restraining order issued upon the filing of the bill.
by the Durant Company would be illegal, and that to issue a license which authorized such competition would take Frost's property without due process of law and deny to him the equal protection of the law. The district court denied both the injunction and the motion to dismiss, and it dissolved the restraining order. Upon direct appeal by Frost, this Court affirmed the interlocutory decree per curiam in Frost v. Corporation Commission, 274 U.S. 719, on the authority of Chicago Great Western Ry. Co. v. Kendall, 266 U. S. 94 , 266 U. S. 100 . Thereupon, the facts being stipulated, the case was submitted in the district court on final hearing to the same judges, and a decree was entered dismissing the bill. 26 F.2d 508. This appeal presents the same questions which were argued on the appeal from the interlocutory decree.
Under the Oklahoma Act of 1907, cotton gins were held subject to regulation by the Corporation Commission. [ Footnote 2 ] In 1915, the legislature declared them public utilities, and restriction of competition was introduced by prohibiting operation of a gin without a license from the Commission. That statute required that a license issue for proper gins already established, but directed that none should issue for a new gin in any community already adequately supplied, except upon "the presentation of a petition signed by not less than fifty farmer petitioners of the immediate vicinity." Session Laws 1915, c. 176 (Oklahoma Compiled Statutes 1921, §§ 3712-3718). Chapter 191 of the Session Laws of 1923 struck out of § 3714 the provision referring to farmers. But in 1925 there was inserted in lieu thereof the proviso,
First. The bill alleges, and the parties have stipulated, that Frost was licensed under § 3714 of the Compiled Statutes as amended by the Act of 1925. The stipulation does not show that, prior to the amendment he held any license. His alleged property right to conditional immunity from competition rests wholly on the statute now challenged. It is settled that one cannot in the same proceeding both rely upon a statute and assail it. Hurley v. Commission of Fisheries, 257 U. S. 223 , 257 U. S. 225 . Compare Great Falls Mfg. Co. v. Atty. General, 124 U. S. 581 , 124 U. S. 598 -599; Wall v. Parrot Silver & Copper Co., 244 U. S. 407 , 244 U. S. 411 -412; St. Louis Malleable Casting Co. v. Prendergast Co., 260 U. S. 469 , 260 U. S. 472 -473; Buck v. Kuykendall, 267 U. S. 307 , 267 U. S. 316 ; Booth Fisheries Co. v. Industrial Commission, 271 U. S. 208 , 271 U. S. 211 ; United Fuel Gas Co. v. Railroad Commission, ante, p. 278 U. S. 300 . This established rule requires affirmance of the judgment below.
Second. Frost claims that to grant a license to the Durant Company without a showing of public necessity would involve taking his property without due process. The only property which he asserts would be so taken is the alleged right to be immune from the competition of persons operating without a valid license. But for the statute, he would obviously be subject to competition from anyone. Whether the license issued to him under § 3714 conferred upon him the property right claimed is a question of statutory construction, and thus, ordinarily, a question of state law. "Whether state statutes shall be construed one way or another is a state question, the final decision of which rests with the courts of the state." Hebert v. Louisiana, 272 U. S. 312 , 272 U. S. 316 . In the absence of a decision of the question by the highest court of the state, this Court would be obliged to construe the statute, and in doing so it might be aided by consideration of the decisions of courts of other states dealing with like statutes. But the Supreme Court of Oklahoma has decided the precise question in Choctaw Cotton Oil Co. v. Corporation Commission, 121 Okl. 51, 52. It held that a license under § 3714 does not confer the property right claimed, saying:
violate the quality clause. Whether the license was issued to Frost upon a showing of necessity does not appear. The mere granting of a license to the Durant Company later on different, and perhaps easier, terms would not violate Frost's constitutional right to equality, since he has already secured his license under the statute as written. The fact that someone else similarly situated may hereafter be refused a license, and would be thereby discriminated against, is obviously not of legal significance here. Southern Railway Co. v. King, 217 U. S. 524 ; Standard Stock Food Co. v. Wright, 225 U. S. 540 ; Jeffrey Mfg. Co. v. Blagg, 235 U. S. 571 ; Arkadelphia Co. v. St. Louis S.W. Ry. Co., 249 U. S. 134 , 249 U. S. 149 ; Liberty Warehouse Co. v. Tobacco Growers, 276 U. S. 71 .
Fourth. Frost claims on another ground that his constitutional rights have been violated. He says that what the statute and the Supreme Court of Oklahoma call a license is in law a franchise; that a franchise is a contract; that, where a constitutional question is raised, this Court must determine for itself what the terms of a contract are, and that this franchise should be construed as conferring the right to the conditional immunity from competition which he claims. None of the cases cited lend support to the contention that the license here issued is a franchise. [ Footnote 3 ] They hold merely that subordinate political
bodies, as well as a legislature, may grant franchises, and that violations of franchise rights are remediable, whoever the transgressor. Moreover, the limited immunity from competition claimed as an incident of the license was obviously terminable at any moment. Compare Louisville Bridge Co. v. United States, 242 U. S. 409 . It was within the power of the legislature at any time after the granting of Frost's license to abrogate the requirement of a certificate of necessity, thus opening the business to the competition of all comers. It is difficult to see how the lesser enlargement of the possibilities of competition by a license granted under the 1925 proviso could operate as a denial of constitutional rights.
It must also be borne in mind that a franchise to operate a public utility is not like the general right to engage in a lawful business, part of the liberty of the citizen; that it is a special privilege which does not belong to citizens generally; that the state may, in the exercise of its police power, make that a franchise or special privilege which at common law was a business open to all; [ Footnote 4 ] that a special privilege is conferred by the state upon selected persons; that it is of the essence of a special privilege that the franchise may be granted or withheld at the pleasure of the state; that it may be granted to corporations only, thus excluding all individuals, [ Footnote 5 ] and that the Federal Constitution imposes no limits upon the state's discretion in this respect. [ Footnote 6 ] In New Orleans Gas Co. v. Louisiana Light Co., 115 U. S. 650 , the plaintiff,
claiming an exclusive franchise, sought to enjoin the competition of the defendant. The Court said (p. 115 U. S. 659 ):
The demurrer to the bill was dismissed. In New Orleans Waterworks Co. v. Rivers, 115 U. S. 674 , on similar facts, in deciding for the plaintiff, the Court said (p. 115 U. S. 682 ),
One who would strike down a statute must show not only that he is affected by it, but that, as applied to him, the statute exceeds the power of the state. This rule, acted upon as early as Austin v. The Aldermen, 7 Wall. 694, and definitely stated in Supervisors v. Stanley, 105 U. S. 305 , 105 U. S. 314 , has been consistently followed since that time.
Fifth. Frost's claim that the Act of 1925 discriminates unjustifiably is not sound. The claim rests wholly on the fact that individuals and ordinary corporations must show inadequacy of existing facilities, while cooperatives organized under the Act of 1919 may secure a license without making such a showing if the application is supported by a petition of one hundred persons who are citizens and taxpayers in the community. It is settled that to provide specifically for peculiar needs of farmers or producers is a reasonable basis of classification. American Sugar Refining Co. v. Louisiana, 179 U. S. 89 ; Liberty Warehouse Co. v. Tobacco Growers, 276 U. S. 71 . And it is conceded that the classification made by the Act of
In the nonstock type, the capital is obtained partly from membership fees, partly through dues or assessments, and partly through loans from members or others. And for fixed capital, it substitutes in part personal liability of members for the corporation's obligations. [ Footnote 7 ] In the stock type, there are eo nomine dividends on capital and patronage dividends. In the nonstock type, the financial benefit is distributed by way of interest on loans and refunds of fees, dues, and assessments. And all funds acquired through the cooperative's operations which are in excess of the amount desirable for a "working fund" are to be distributed as refunds of fees, dues, and assessments. Both acts allow business to be done for nonmembers, and though the nonstock association may, it is not required, to impose obligations on the nonmember for the liability of the association. Thus, for the purposes here relevant, there is no essential difference between the two types of cooperatives.
of a single share shall constitute the holder a member of the association; that only 8 percent "interest" shall be paid on the capital; that the balance of the profits shall go "either to increase the capital or business of the association or for any educational or provident purposes authorized by the association," or be distributed as patronage dividends, and that the patronage dividends be distributed among customers, except that nonmembers should receive only one-half the proportion of members. [ Footnote 8 ]
The need of laws framed specifically for incorporating farmers' cooperatives being recognized, Massachusetts enacted in 1866 the necessary legislation by a general law which differed materially from that under which commercial organizations were formed. The statute provided for cooperatives having capital stock. [ Footnote 9 ] Before 1900, ten other states had enacted laws of like character. [ Footnote 10 ] After
1900, many such statutes were passed. Now, only two states lack laws making specific provision for the incorporation of farmers' cooperatives. [ Footnote 11 ] Thirty-three states, at least, have enacted laws providing for the formation of cooperative associations of the stock type. All of them permit a fixed dividend on capital stock, the doing of business for nonmembers, and the distribution of patronage dividends. [ Footnote 12 ] Some of them, recognizing the need for elasticity, impose the single requirement that earnings be apportioned in part on a patronage basis, and leave all other provisions for organization and distribution of profits to the bylaws. [ Footnote 13 ]
in number. [ Footnote 14 ] The earliest law of this character was the crude measure enacted in California in 1895. [ Footnote 15 ] Statutes of that type have been passed in about sixteen states, [ Footnote 16 ] but ten of these have also laws of the stock type. [ Footnote 17 ] The enactment of state laws for the incorporation of nonstock cooperatives, and their extensive use in the cooperative marketing of commodities, are due largely to the fact that, prior to 1922, the Clayton Act, October 15, 1914, c. 232, § 6 (38 Stat. 731), limited to nonstock cooperatives the right to make a class of agreements with members which prior thereto would have been void as in restraint of
trade. [ Footnote 18 ] See Liberty Warehouse Co. v. Tobacco Growers, 276 U. S. 71 . Nearly one-half of the existing laws of the nonstock type were enacted between 1914 and 1922. [ Footnote 19 ] This limitation in the Clayton Act proved to be unwise. By the Capper-Volstead Act of February 18, 1922, c. 57, § 1 (42 Stat. 388), Congress recognizing the substantial identity of the two classes of cooperatives, extended the same right to stock cooperatives. The terms of this legislation are significant:
More than two-thirds of all farmers' cooperatives in the United States are organized under the stock-type laws. In 1925, there were 10,147 reporting organizations. Of these, 68.7 percent were stock associations. In leading states the percentage was larger. In Wisconsin, the percentage was 80; in North Dakota, 87; in Nebraska, 91.3, and in Kansas, 92. Of the farmers' cooperatives existing in Oklahoma in 1925, 87.6 percent were stock associations. [ Footnote 20 ] The great cooperative systems of England,
Scotland, and Canada were developed and are now operated by organizations of the stock type. [ Footnote 21 ] The nonstock type of cooperative is not adapted to enterprises, which, like gins, require large investment in plant, and hence considerable fixed capital. [ Footnote 22 ] For this reason, it was a common practice for marketing cooperatives, which had been organized as nonstock cooperatives in order to comply with the requirements of the Clayton Act above described, to form a subsidiary cooperative corporation with capital stock to carry on the incidental business of warehousing or processing which requires a large investment in plant. [ Footnote 23 ] And the fact that even the marketing of some products may be better served by the stock type of cooperative organizations is so widely recognized that most of the marketing acts provide that associations formed thereunder may organize either with or without capital stock. [ Footnote 24 ]
Experience has demonstrated also that doing business for nonmembers is usually deemed essential to the success of a cooperative. [ Footnote 25 ] More than five-sixths of all the farmers' cooperative associations in the United States do business for nonmembers. In 1925, 86.3 percent of the reporting organizations did so. In leading states, the percentage was even larger. In Wisconsin, the percentage was 89; in Missouri, 93.2; in Minnesota, 94.1; in Nebraska, 95.8; in Kansas, 96.5; in North Dakota, 97. In Oklahoma, 92 percent of all cooperatives did business for nonmembers. [ Footnote 26 ] Of the cotton cooperatives in the United States, 93.9 percent did business for nonmembers. In Texas, where cooperative ginning has received successful trial, [ Footnote 27 ] all the cotton cooperatives perform service for nonmembers.
In Oklahoma also, all of the cotton cooperatives reporting do business for nonmembers. [ Footnote 28 ]
That no one plan of organization is to be labeled as truly cooperative to the exclusion of others was recognized by Congress in connection with cooperative banks and building and loan associations. See United States v. Cambridge Loan & Building Company, 278 U. S. 55 . With the expansion of agricultural cooperation, it has been recognized repeatedly. Congress gave its sanction to the stock type of cooperative by the Capper-Volstead Act, and also by specifically exempting stock as well as nonstock cooperatives from income taxes. State legislatures recognized the fundamental similarity of the two types of cooperation by unifying their laws so as to have a single statute under which either type of cooperative might organize. [ Footnote 29 ] And experts in the Department of Agriculture charged with disseminating information to farmers and legislatures have warned against any crystallization of the cooperative plan, so as to exclude any type of cooperation. [ Footnote 30 ]
That in Oklahoma a law authorizing incorporation on the stock plan was essential to the development of cooperation among farmers has been demonstrated by the history of the movement in that state. Prior to 1917, there was no statute which specifically authorized the incorporation of cooperatives. In that year, the nonstock law above referred to was enacted. [ Footnote 31 ] Two years passed, and only three cooperatives availed themselves of the provisions of that Act. Then persons familiar with the farmers' problems in Oklahoma secured the passage of the law of 1919, providing for the incorporation of cooperatives with capital stock. [ Footnote 32 ] Within the next five years,
202 cooperatives were formed under it, and, since then, 139 more. In the 12 years since 1917, only 60 nonstock cooperatives have been organized, most of them since 1923, when, through an amendatory statute, this type was made to offer special advantages for cooperative marketing. [ Footnote 33 ] Thus, over 82 percent of all cooperatives in Oklahoma are organized under the 1919 stock act. One hundred and one Oklahoma cooperative cotton gins have been organized under the 1919 stock law; not a single one under the 1917 nonstock law. [ Footnote 34 ] To deny the cooperative character of the 1919 Act is to deny the cooperative character not only of the gins in Oklahoma, which farmers have organized and operated for their mutual benefit, but also that of most other cooperatives within the state, which have been organized under its statutes in harmony with legislation of Congress and pursuant to instructions from the United States Department of Agriculture. A denial of cooperative character to the stock cooperatives is inconsistent also with the history of the movement in other states and countries. For the stock type of cooperative is not only the older form, but is the type more widely used among English-speaking peoples.
There remain to be considered other circumstances leading to the passage of the statute here challenged. As was said in Lindsley v. Natural Carbonic Gas Co., 220 U. S. 61 , 220 U. S. 78 :
has recently been recognized by this Court. Crescent Oil Co. v. Mississippi, 257 U. S. 129 . The specific evils existing in Oklahoma which the statute here assailed was enacted to correct was the charging of extortionate prices to the farmer for inferior ginning service and the control secured of the cotton seed. [ Footnote 35 ] These conditions are partly attributable to the fact that a large percentage of the ordinary commercial gins in Oklahoma are controlled by cotton seed oil mills, which make their service as ginners incidental to that as crushers of seed, and are thereby enabled to secure the seed at less than its value. [ Footnote 36 ] That
Walla Walla v. Walla Walla Water Co., 172 U. S. 1 , 172 U. S. 9 ; California v. Pacific Railroad Co., 127 U. S. 1 , 127 U. S. 40 -41; Monogahela Navigation Co. v. United States, 148 U. S. 312 , 148 U. S. 328 -329; Owensboro v. Cumberland Telephone Co., 230 U. S. 58 , 230 U. S. 64 -66; Boise Water Co. v. Boise City, 230 U. S. 84 , 230 U. S. 90 -91; McPhee & McGinnity Co. v. Union P. R. Co., 158 F. 5, 10-11. California v. Pacific Railroad Co., 127 U. S. 1 , 127 U. S. 40 -41, merely describes the types of enterprises which may be made the subject of a franchise. The enterprises mentioned are all of the type which require the use of public property, so that the permission of the state is required to condone what would otherwise be a trespass. Further, it is not maintained that the state is restricted to the issuance of franchises for the carrying on of such callings.
Noble state Bank v. Haskell, 219 U. S. 104 , 219 U. S. 112 -113.
Shallenberger v. First state Bank, 219 U. S. 114 ; Dillingham v. McLaughlin, 264 U. S. 370 . Compare Assaria State Bank v. Dolley, 219 U. S. 121 ; German Alliance Ins. Co. v. Kansas, 233 U. S. 389 , 233 U. S. 416 .
Bank of August v. Earle, 13 Pet. 519, 38 U. S. 595 ; People's Railroad v. Memphis Railroad, 10 Wall. 38, 77 U. S. 51 ; California v. Pacific Railroad Co., 127 U. S. 1 , 127 U. S. 40 -41; Denver v. New York Trust Co., 229 U. S. 123 , 229 U. S. 141 -142.
under the present alleged discriminatory statute would seem likewise to afford appellant no legal cause for complaint, for, a license not having been withheld from him, his position is precisely the same as though the statute authorized the grant of a license to him and to appellee on equal terms. He is suffering not from any application of the discriminatory feature of the statute, with which alone the Constitution is concerned, see Jeffrey Mfg. Co. v. Blagg, 235 U. S. 571 , 235 U. S. 576 ; Arkadelphia Co. v. St. Louis Southwestern Ry. Co., 249 U. S. 134 , 249 U. S. 149 , but merely from the increase in the number of his competitors -- an injury which would similarly have resulted from a nondiscriminatory statute granting the privilege to all on terms more lenient than those formerly accorded appellant. Of such a statute, appellant could not complain, and I can find no more basis for saying that constitutional rights are impaired where the discrimination which the statute authorizes has no effect than where the statute itself does not discriminate.
Nor would appellant seem to be placed in any better position to challenge the constitutionality of the statute by recourse to the rule that the possessor of a nonexclusive franchise may enjoin competition unauthorized by the state. Appellee's business is not unauthorized. It is carried on under the sanction of a statute to which appellant himself can offer no constitutional objection, for even unconstitutional statutes may not be treated as though they had never been written. They are not void for all purposes and as to all persons. See Hatch v. Reardon, 204 U. S. 152 , 204 U. S. 160 . For appellant to say that appellee's permit is void, and that its business may be enjoined, because conceivably someone else may challenge the constitutionality of the Act would seem to be a departure from the salutary rule consistently applied that only those who suffer from the unconstitutional application of a statute may challenge its validity. See Roberts & Schaefer Co. v. Emmerson, 271 U. S. 50 , 271 U. S. 55 ;
Plymouth Coal Co. v. Pennsylvania, 232 U. S. 531 , 232 U. S. 544 ; Tyler v. Judges of Court of Registration, 179 U. S. 405 , 179 U. S. 410 ; Cusack Co. v. Chicago, 242 U. S. 526 , 242 U. S. 530 ; Standard Stock Food Co. v. Wright, 225 U. S. 540 , 225 U. S. 550 ; Mallinckrodt Chemical Works v. Missouri, 238 U. S. 41 , 238 U. S. 54 ; Darnell v. Indiana, 226 U. S. 390 , 226 U. S. 398 .