Case Name: The State of Kansas v. E. J. Smiley
Court: Kansas Supreme Court
Jurisdiction: Kansas
Decision Date: 1902-06-07
Citations: 65 Kan. 240
Docket Number: No. 12,887
Parties: The State of Kansas v. E. J. Smiley.
Judges: -Johnston, Smith, Cunningham, Gbeene, Ellis, JJ., concurring.
Reporter: Kansas Reports
Volume: 65
Pages: 240–291

Head Matter:
The State of Kansas v. E. J. Smiley.
No. 12,887.
(69 Pac. 199.)
SYLLABUS -BY THE COURT.
1. Statutes — Construction—Presumption of Intention of Legislature. The general language of statutes will be limited to such persons and subjects as it is reasonable to presume the legislature intended it should apply.
2. - Constitutional Validity — Persons Capable of Making Objection. Objections to the constitutional validity of statutes can be made only by those to whom the enactment applies and against whom attempts to enforce it are made.
3. Public Policy— Anti-competitive Trade Agreements — Valid Statute. The making of anti-competitive trade agreements, as to products and merchandise bought or sold on the general market, is contrary to public policy, and it is competent for the legislature to enact penal measures to prevent the making and carrying out of such agreements.
1, - Anti-trust Law Valid — No Conflict with Federal Constitution. Chapter 265, Laws of 1897 (Gen. Stat. 1901, §§7861-7871), known as the “anti-trust law,” does not conflict with the guaranty of right to acquire property by lawful contract secured by the federal constitution, and is a valid exercise of legislative power.
5. -Agreement in Restraint of Trade. An agreement entered into by all the- dealers on a certain market, limiting their right, severally, under stipulated forfeitures or penalties, to buy all the grain they otherwise might on such market, is an agreement in restraint of trade, and falls within the penal terms of the anti-trust act of 1897.
6. Instructions — Harmless Error. An instruction to the jury, possibly erroneous, but, if so, harmless, discussed, and the lack of error in giving it pointed out.
Appeal from Rush district court; J. E. Andrews, judge.
Opinion filed June 7, 1902.
In banc.
Affirmed.
A. A. Godard, attorney-general, J. W. McGormich, county attorney, Keeler & Hite, and Allen & Allen, for The State.
H. Whiteside, for appellant.

Opinion:
The opinion of the court was delivered by
Doster, O. J.:
This is an appeal from a judgment of conviction of a violation of the anti-trust law. The information on which the conviction was based reads as follows:
. 'I, the undersigned county attorney of said county, in the name and by authority and on behalf of the state of Kansas, give information that on the 20th day of November, a. d. 1900, in said county of Rush and state of Kansas, one E. J. Smiley, secretary and representative of the Kansas State Grain Dealers' Association, did then and there unlawfully enter into an agreement, contract, and combination, in the county of Rush and the state of Kansas, with divers and sundry persons, partners, companies, and corporations, or grain dealers and grain buyers, in the town of Bison, in said county and state aforesaid, to wit: Humburg & Ahrens, the La Crosse Lumber and Grain Company, the Bison Milling Company, and George E. Weicken, who were at the same time and place competitive grain dealers and buyers, to pool and fix the price the said grain dealers and buyers should pay at the said place and to divide between them the net earn ings of said grain, dealers and buyers, and to prevent competition in the purchase and sale of grain among the said dealers and buyers, contrary to the form of statute in such case made'and provided and against the peace and dignity of the state."
The proceeding was instituted and conviction had under chapter 265, Laws of 1897 (Gen. Stat. 1901, § 7864-7874). A question is raised as to whether the charge was made and judgment pronounced under that or certain other statutes. This will be noticed hereafter. The parts of the act of 1897 which apply to the case read as follows :
"Section 1. A trust is a combination of capital, skill, or acts, by two or more persons,- firms, corporations, or associations of persons, or either two or more of them, for either, any or all of the following purposes :
"First. To create or carry out restrictions in trade or commerce, or aids to commerce, or to carry out restrictions in the full and free pursuit of any business authorized or permitted by the laws of this state..
"Second. To increase or reduce the price of merchandise, produce, or commodities', or to control the cost or rates of insurance.
" Third. To prevent competition in the manufacture, making, transportation, sale or purchase of merchandise, produce, or commodities, or to prevent competition in aids to commerce.
"Fourth. To fix any standard or figure, whereby its price to the public shall be, in any manner, controlled or established, any article or commodity of merchandise, produce or commerce intended for sale, use or consumption in this state.
"Fifth. To make or enter into, or execute or carry out, any contract, obligation or agreement of any kind or description by which they shall bind or have to bind themselves not to sell, manufacture, dispose of or transport any article or commodity, or. article of trade, use, merchandise, commerce, or consumption, below a common standard figure; or by which they shall -$gree in any manner to keep the' price of such article, commodity or transportation at a fixed or graded figure ; or by which they shall in any manner establish or settle the price of any article or commodity or transportation between them or themselves and others, to preclude a free and unrestricted compe-, tition among themselves or others in transportation, sale or manufacture of any such article or commodity ; or by which they shall agree to pool, combine or unite any interest they may have in connection with the manufacture, sale or transportation of any such article or commodityj that it? price may in any manner be affected. And any such combinations are hereby declared to be against public policy, unlawful, and void.
"Sec. 2. All persons, companies or corporations within this state are hereby denied the right to form or to be in any manner interested, either directly or indirectly, as principal, agent, representative, consignee, or otherwise, in any trust as defined in section 1 of this act."
Subsequent sections of the act contain penal provisions under which appellant was fined and ordered committed to jail. The above statute is assailed with great vehemence by counsel for appellant. Their contention is that it imposes such limitations upon freedom of contract as to constitute a deprivation of the right of property, contrary to the guaranty of the fourteenth amendment to the federal constitution. They say that, instead of being what it purports, an act to prevent unreasonable restrictions upon trade, it is itself such restriction, and is therefore violative of the fundamental right to acquire property by lawful contract. To enforce these contentions, many generalities of language, culled out of the reported decisions and the writings of the commentators, have been quoted, but no concrete instances of holdings by .courts of last resort adverse to enactments of the character' of the one in question have been cited. Two recent decisions by subordinate federal judges ruling against the validity of statutes of a similar kind have been called to our attention. (In re Grice, 79 Fed. 627; Niagara Fire Ins. Co. v. Cornell, 110 id. 816.) The opinions in' both these case's, so far as they discuss the subject of the repugnancy of the acts under consideration to the constitutional guaranty of freedom of contract, are open to the criticism of being without the bounds of the meritorious question at issue. This is perceivable at once. The first-mentioned case involved the "anti-trust " statute of Texas. That statute exempted from its terms the original producer or raiser of agricultural products or live stock. The other case involved the."anti-trust" statute of Nebraska. That statute exempted from its provisions assemblies or associations of laboring men. The making of these exceptions was class legislation, and constituted a denial of the equal protection of the law — , so the judges ruled. That ruling was all-sufficient for the purpose of the cases. Not only that, it was on) the only necessary question in the cases. Hence/ the disposition made of them on the one special feature forbade an opinion on the abstract general question, and rendered all that was said upon it dictum of the baldest kind. The supreme court of the United States recently had a like occasion to declare the law in advance of the presentation of a necessary issue concerning it. It was in the case of Connolly et al. v. The Union Sewer Pipe Co., just decided. (22 Sup. Ct. 431.) That case involved the validity of the "antitrust" law of Illinois, an enactment similar to the statutes of Texas and Nebraska, and like them containing an exception in favor of a certain class. The' court held the statute invalid because, of the exception, but very properly refrained from making pro nouncement of. what the law would be if it had not contained the exception.
The opinions of the judges in the cases of In re Grice, supra, and Niagara Fire Ins. Co. v. Cornell, supra, are not regarded by us as authority. They are, however, adopted as arguments by counsel for appellant, and as such are entitled to consideration. Nevertheless, as arguments, they are barren of reference to adjudged cases, except in the form of quotations of abstract and general statement. The burden of their reasoning is that the statutes under consideration were so broad and comprehensive in their terms as to be inclusive of classes of persons and kinds of business that it would be unreasonable and tyrannical to regulate in the mode attempted. In the case first cited it was said, among other things of like kind :
"Two village grocers doing business at a loss to both could not form a partnership in order to save themselves from bankruptcy. Neither could they form a partnership in order to lessen their expenses, and thus reduce the price of their commodities to the public. Still more, if A. and B., each owning half a car-load of potatoes, should agree to ship together, in order to obtain car-load rates, thus enabling them to sell lower in the markets, they would violate this act."
In the other case the assumed unreasonableness and tyranny of the statute is illustrated by the following, among others, as typical instances :
"If this law is valid, two or more farmers cannot agree that they will not sell their wheat to a neighboring mill for less than so much per bushel. Two or more farmers cannot agree that the live-stock feeder shall not have their corn except at a certain price. Nothing can be agreed to by the manufacturer, the farmer, the gardener, the contractor, consumer or laborer to prevent the reduction of price."
If the statutes of Texas and Nebraska were really to be enforced against tbe classes of persons mentioned, and to the utter length stated by the judges in the two cases cited, they well deserved the condemnation they received ; and if our statute is to be held to apply in the like way we should not hesitate to declare it to be violative of the most fundamental principles of constitútional right — that is, we should not hesitate to do so when the question of its invalidity should be presented by some one entitled to complain, to wit, one of the proscribed and oppressed classes; nor shall we hesitate to do so in behalf of appellant in this case, if, upon examination, we find him to belong to one of such classes. However, it was not charged against him, or claimed by him, that he belonged in any such category. It was neither charged nor claimed that his confederacy with the other, persons named in the information was for purposes of a business partnership, or . that he was one of two shippers of produce seeking to lighten freight charges by joining with the other, or that he was a farmer agreeing with his neighbors to hold his grain for an advance in the market;. nor was it charged or claimed that the' acts .performed by him were, as to the examples enumerated, of a like limited scope and a like presumptively harmless and reasonable nature. It was charged and proved against him that he was a buyer of grain on the general open market; that he was an intermediary between the public who produced and sold and the public who bought and consumed, and as such that he conspired with others of like business to prevent competition among themselves, and to pool and fix the price of grain' bought and sold on such market.
Now, whether this fact takes him out of the list of those innocent instances cited in the cases we are dis cussing we will presently inquire. Suffice it to say for the moment that unless he does belong in such list he cannot be heard to complain. He, cannot be heard to object to the statute merely because it operates oppressively upon others. The hurt must be to himself. The case, under appellant's contention as to this point, is not a case of favoritism in the law. It is not a case of exclusion of classes who ought to have been included, the leaving out of which constitutes' a denial of the equal protection of the law, but it is the opposite of that. It is a case of the inclusion of those who ought to have been excluded. Hence, unless appellant can show that he himself has been wrongly included in the terms of the law, he can have no just ground of complaint. This is fundamental and decisively settled. (City of Kansas City v. Railway Co., 59 Kan. 427, 53 Pac. 468, 52 L. R. A. 321, affirmed under the title Clark v. Kansas City, 176 U. S. 114, 20 Sup. Ct. 284, 44 L. Ed. 392; Supervisors v. Stanley, 105 U. S. 305, 311, 26 L. Ed. 1044; Pittsburg &c. R. Co. v. Montgomery, 152 Ind. 1, 49 N. E. 582, 71 Am. St. Rep. 302, 311.)
In immediate connection with the subject just discussed, the question arises whether, assuming the general phraseology of the statute to be comprehensive of classes of persons who cannot be rightfully included-therein, the whole enactment becomes nullified thereby. The general doctrine is that only the invalid parts of a statute are without legal efficacy. This is qualified by the further rule that if the void and valid parts of the statute are so connected with each other in the general scheme of the act that they cannot 'be separated without violence to the evident intent of the legislature, the whole must fall. These rules are of every-day enforcement in the courts. The latest case in which they were adverted to by us is Hardy v. Kingman County, ante, p. 111, 68 Pac. 1078. The instances in which the application of the rule first mentioned most usually occurs are those where separable words, clauses, sentences or sections of the statute are stricken out, as it were, because constitutionally objectionable. However, the rule is not limited to such instances. It applies as well to exclude from the operation of the statute subjects and classes of things lying without the legislative intent, although comprehended within the general terms of the act, as it does to exclude parts of the verbal phraseology.
Two cases strikingly illustrative of this rule are Supervisors v. Stanley, 105 U. S. 305, 26 L. Ed. 1044, and Commonwealth v. Gagne, 153 Mass. 205, 26 N. E. 449, 10 L. R. A. 442. See, also, to the same effect McKee v. United States, 164 U. S. 287, 293, 17 Sup. Ct. 92, 41 L. Ed. 437; Packet Co. v. Keokuk, 95 U. S. 80, 24 L. Ed. 377. In the first-mentioned case it was held that a state taxing statute, general in its terms, applying alike to all taxpayers, which did not recognize a certain exception allowed by act of congress in favor of stockholders in national banks, was not for that reason void as a whole, but, limited by the controlling federal law, was valid as to all the persons embraced within the general language employed. In the other case it was held that a state prohibitory liquor law which'did not except from its operation liquors in original packages, but by the generality of its terms included them, which under the commerce clause of the federal constitution, as construed in Leisy v. Hardin, 135 U. S. 100, 10 Sup. Ct. 681, 34 L. Ed., 128, could not be done, was not for that reason void as to liquors in broken packages, but as to Uf>m was valid and enforceable. This ruling, in nec essary effect, was approved by tbe supreme court of the United States in the case of In re Rahrer, 140 U. S. 545, 11 Sup. Ct. 865, 35 L. Ed. 572. In that case Rahrer contended that after the decision of Leisy v. Hardin, supra, there was no law in Kansas prohibiting the sale of .liquor in original packages ; that the effect of the subsequent act of congress, popularly called the "Wilson bill," being an act to subject interstate importations of liquor in original packages to the operation of the local law, could not have the effect to'give vitality to that which as a statute had existence in form only, and not in fact, but that a new state enactment was required. The soundness of this contention was denied, and in denying it the court, after restating the ground of the decision in Leisy v. Hardin, said :
"This was far from holding that the statutes in question were absolutely void, in whole or in part, as if they had never been enacted. On the contrary, the decision did not annul the law, but limited its operation to property strictly within the jurisdiction of the state."
When the court did that, it,only did what courts are in the daily habit of doing — limited the language of the statute to the subjects in respect of which it was competent and proper for the legislature to dispense. Throughout the entire history of English and American law the courts have been ruling that the general words of statutes were to be restrained in import and application whenever the taking of them in literal sense would lead to absurd or hurtful consequences, and the same is true under the American system of written constitutions, whenever the taking of general words in their full signification would expose them to conflict with the organic law. It is but an affectation of sensitiveness of regard for the constitution -which often leads courts to beat down the whole of a legislative enactment because of its opposition to the fundamental ordinance in some minor particular, instead of adjusting it to harmonize with the controlling provision. It is not a matter of concern to us that the general language of the statute under consideration may apply to classes of persons who should not have been comprehended therein, and who may have a standing in court to claim exception therefrom. Their cases can be attended to when presented in due form. It is not they but the appellant who is before us. Does he state a case entitling him to exemption from the operative scope of the statute ? One of the oases most strikingly illustrative of the rule of interpretation in question is In re Opinion of the Justices, 41 N. H. 553. It was claimed that certain sections of the statutes of New Hampshire were so broad and general as to be in opposition to what w.as called the "fugitive-slave law" of congress, and the constitutional provision in pursuance of which it was enacted. Replying to this claim, the justices said:
"But if these sections could not be applied in the cases supposed, they are not, therefore, necessarily void. If the intention of any part of the act, determined upon settled principles of legal interpretation, were to obstruct or impede the exercise or enjoyment of any right secured by the constitution of the United States, or by any constitutional law of the United States, that part would be unconstitutional. But if the intention thus determined were merely to establish, regulate, or guarantee rights or privileges consistent with the constitution and laws of the United States, in a mode not in conflict with either, and if the act would constitutionally apply to a large class of cases that do and will exist, it would not be rendered unconstitutional by the fact that, literally construed, its language might be broad enough to extend to a few exceptional cases where it .could not constitutionally apply; since, upon settled principles of construction, the latter are as fully and effectually excepted by necessary implication, as if the statute had contained an express proviso that it should not extend or apply to such cases. The rule of construction universally adopted is, that when a statute may constitutionally operate upon.certain persons, or in certain cases, and was not evidently intended to conflict with the constitution, it is not to be held unconstitutional merely because there may be persons to whom or cases in which it cannot constitutionally apply ; but it is to be deemed constitutional, and to be construed not to apply to the latter persons or cases, on the ground that courts are bound to presume that the legislature did not intend to violate the constitution."
There are some decisions of the supreme court of the United,States said to be-in opposition to the above-stated theory of construction of statutes. In óur judgment they are not, although the language of some of the opinions confuses' the subject. They were cases in which the court, while admitting the existence of the rule, held it inapplicable to the particular statutes under consideration. The principal ones are : United States v. Reese et al., 92 U. S. 214, 23 L. Ed. 563 ; Trade-mark Cases, 100 id. 82, 25 L. Ed. 550 ; United States v. Harris, 106 id. 629, 1 Sup. Ct. 601, 27 L. Ed. 290 ; and Baldwin v. Franks, 120 id. 678, 7 Sup. Ct. 656. All of these cases raised questions as to the validity of legislation enacted under the special and limited powers of congress. The one first cited involved certain of the provisions of what is known as the "enforcement act" of May 31, 1870, which act sought to give effect to the fifteenth amendment of the constitution, prohibiting discriminations in the matter of suffrage between citizens on account of race, color, etc. The act, however, was directed in general terms against discriminations for any and all reasons, not for the particular reason of race or color.
Inasmuch as the sole power conferred on congress by the fifteenth amendment was one to effectuate by appropriate legislation the prohibition against discriminations between citizens on account of the specific characteristics named, it was held that an act which undertook to prohibit discriminations generally could not be narrowed by construction into a prohibition of discriminations practiced because of race or color. In the Trade-mark Cases the statute under consideration was one which made punishable those who sold or had in their possession counterfeits or colorable imitations of the trade-marks of other persons. Inasmuch as trade-marks are not the subjects of congressional legislation, except as they may be used on articles of interstate commerce, or commerce with foreign nations and the Indian tribes, it was decided that a statute relating, to their use on articles of commerce generally could not be upheld as applicable to the one specific subject in respect to which congress might legislate, there being no hint or intimation in the act of a purpose to have it so confined. The cases of United States v. Harris and Baldwin v. Franks involved the question of the validity of section 5519, Revised Statutes of the United States. That section in general terms sought to make punishable those who conspired to deprive other persons of the equal protection of the laws, or of' equal privileges and immunities under the laws. Inasmuch as congress can interfere to secure equality of legal protection and equality of privileges and immunities only as specifically authorized, as, for instance, under the fifteenth amendment, to prevent discriminations in suffrage on account of race, color, etc., or in execution of the treaty power to prevent the deprivation of treaty rights accorded to citizens or subjects of foreign nations, it was held that the section of the statute cited was too general in its terms to be narrowed by construction into one in execution of any of the specific powers.
The decisions we have thus distinguished from the one we make are philosophic and reasonable. They are bottomed upon the fact of the special and limited powers of congress, and this fact, though not commented on at length as the basis of the judgments rendered, is nevertheless adverted to in all of them, and obviously constitutes the ratio decidendi of the cases. It was plainly expressed by Mr. Justice Woods in United States v. Harris, who said in one part of the opinion: "It must, nevertheless, be stated that the government of the United States is one of delegated, limited and enumerated powers," and who then in another part tersely remarked : ' Those provisions of the law, which are broader than is warranted by the article of the constitution by which they are supposed to be authorized, cannot be sustained." If we might be allowed to undertake the statement of a rule of interpretation applicable to the class of federal statutes considered in the above-cited cases, it would be that a power which is specifically limited cannot be allowed to express itself in general terms, and a limitation of the general language to the specific power will not be implied. On the other hand, however, a power which is unlimited, except as specifically prohibited, may express itself in general terms, and the specific instances of limitation will be implied as provisos. This furnishes a rational basis of discrimination between rules of interpretation applicable in the respect under con sideration to federal and state legislation. Congress cannot legislate on all subjects, as can a state legislature. Therefore its enactments must show on their face their application to that to which as matter of constitutional limitation they should be confined. For example, a state legislature is empowered to legislate generally in respect to all trusts and conspiracies in restraint of trade, except as limited by the commerce clause of the federal constitution; but, on the other hand, congress is not empowered to legislate generally with respect to trusts and trade conspiracies. It can legislate against, them only under the commerce clause of the constitution. Therefore, & state enactment, though broad enough in terms to apply to trusts engaged in interstate commerce, or conspiracies in restraint of interstate trade, will be limited by construction to that to which it can alone legally apply; but a congressional act, being of necessity limited to the one particular class of trusts or trade conspiracies, viz., those engaged in interstate or international trade, must express that limitation on its face. Nevertheless, we do not doubt that if a congressional enactment, general in terms, could be given specific application to subjects lying within its rightful sphere, without the aid of other and qualifying or explanatory words, but which general terms were also inclusive, of subjects lying without such sphere, it would be restrained by construction to those matters in respect of which congress is qualified to dispense, and not be nullified as a whole.
In considering the possible view of the supreme court of the United States of the rule of interpretation of the general language of statutes, it is important to observe that that court does not apply the rule of the Trade-mark and other like cases to state legis lation supposed to be in conflict with the federal constitution or laws, but, on the contrary, applies the one we invoke in this case. It did so in Supervisors v. Stanley, supra, Packet Co. v. Keokuk, supra, and In re Rahrer, supra; and lately did so in Waters-Pierce Oil Company v. Texas, 177 U. S. 28, 42, 20 Sup. Ct. 518, 44 L. Ed. 657. In that case the contention was made that a statute'of Texas was so broad in its terms as to prohibit foreign corporations from engaging in interstate, as well as domestic, commerce, and hence was unconstitutional. This claim and the disposition made of it were stated as follows :
"The claim is, if we understand it, that the statute prohibits all business of foreign corporations, and hence is unconstitutional, as including interstate business, and cannot be limited by judicial construction to local business, and the unconstitutional taint thereby removed. To sustain the contention, United, States v. Reese, 92 U. S. 214, 221, 23 L. Ed. 563 ; Trade-mark Cases, 100 U. S. 82, 25 L. Ed. 550 ; United States v. Harris, 106 U. S. 629, 1 Sup. Ct. 601, 27 L. Ed. 290 ; Baldwin v. Franks, 120 U. S. 678, 7 Sup. Ct. 656, 763, 32 L. Ed. 766, and some other cases are cited. They do not sustain the contention. The interpretation of certain statutes of the United States was involved, and the court, finding the meaning of the statutes plain, decided that it could not be changed by construction, even to save the statutes from unconstitutionality . ' '
It may be said that the judgment from which the above quotation is made, so far as concerned the point noticed, was rested upon the rule that the federal courts will adopt the. construction which the state tribunals place on their own statutes. Be it so, if that is a sufficient reason. We construe the general words of our statute to be comprehensive only of those cases which are the rightful subjects of legislation of the kind in question. However, we disavow doing so merely in order to shelter the statute under the rule mentioned, but because the ancient, established and wise canon of interpretation requires it to be done. Sporadic and anomalous cases indicating to the contrary may be found, as they may be found to the contrary of every settled, accepted doctrine of the law, but the rule that the general words of statutes will be restricted in application to cases presumptively within the legislative intent has been so long accepted as a cardinal principle that its occasional denial, even by the most learned of courts, fails utterly of adverse impression.
"It happens in two sorts of cases, that it is necessary to interpret the laws. One is when we find in a law some obscurity, ambiguity, or other defect of expression ; for in this case it is necessary to interpret the law in order to discover its true meaning. And this kind of interpretation is limited to the expression, that it may be known what the law says. The other is, when it happens that the sense of a law, however clear it may appear in the words, would lead us to false consequences, and to decisions that would be unjust if the laws were indifferently applied to everything that is contained within the expression. For in this case the palpable injustice that would follow from this apparent sense, obliges us to discover by some kind of interpretation, not what the law says, but what it means; and to judge by its meaning, how far it ought to be extended, and what are the bounds that ought to be set to its sense." (Dwarris, Stat. 138. [Domat's Rules.] )
It must not be understood from anything we have said that we assume that any of the cases instanced by the judges in In re Grice and Niagara Fire Ins. Co. v. Cornell, supra, were really within the legislative thought when our statute of 1897 was enacted, and therefore that the general words of the act must be restrained to less than the intent they outwardly manifest. Such legislation must be viewed in the light of the fact that the industrial and commercial classes of the country are menaced, or are supposed to be menaced, as never before, by gigantic combinations of capitalistic interests, having for their object the suppression of competition, the control of prices and the monopolization of markets; that this fact more than any other topic constitutes the theme of public discussion and the occasion of public alarm ; that legislators in both state and national assemblies are earnestly besought by their constituents to devise measures to avert what, either rightly or unduly, is conjectured to portend a direful subversion of our entire economic system, and that the enactments of the kind in question are the responses of the lawmaking bodies to the demands of the immediate time. These are the facts of the current period, known and read of all men, and discovering to the courts as well as to everybody else the intent of the legislature. How vain, then, to affect to find the small personal affairs of obscure and irresponsible individuals, totally lackingall the elements of public concern, embraced within the legislative cognizance and made the subjects of hostile legislative fiat.
From very early times it was the policy of the common law to encourage competitive trade, and to discourage contract restraints upon it. The courts refused to enforce stipulations between parties looking to the imposition of such restraints. That rule of policy remains to this day, and to this day the courts continue their refusal to countenance contracts of the character mentioned. To this there has beén and is but one exception or class of exceptions, and it is more seeming than real. It is the case of the sale of a merchandise, mechanical or other like business, or the sale of property for a specific use, or the contract of an apprentice, agent, clerk, or servant. In these and kindred cases it'has been held lawful to insert a stipulation that the seller shall not engage in competitive business with the buyer of his property; or that the apprentice, agent, clerk, or servant, after learning the master's or employer's business, shall not set up in opposition to him. The reason for these exceptions is that in such cases the buyer bargains for more than physical property. He bargains for the good-will of his vendor's business, or otherlike valuable advantage, and the master or employer parts with something more than the wages he pays. He parts with instruction in the business learned — parts not only with the secrets of the general trade or calling, but with the secrets of his own particular business, and parts with the favorable acquaintance of • his own customers or clients. The fact that these and the like constitute the only exceptions to the general rule, and the grounds upon which the exceptions rest, are elaborately set forth in the opinion of Judge Taft in the case of United States v. Addyston Pipe & Steel Co. 54 U. S. App. 705, 29 C. C. A. 141, 85 Fed. 271. In that case the validity of legislation of the character now in question was upheld in an opinion of great strength and cogency, and with citations to a great list of supporting authorities. The case was appealed to the supreme court, which affirmed the decree rendered so far as it sought to enforce the provisions of the act of congress of' July 2, 1890, known as the " Sherman anti-trust act," modifying it only to the extent of excluding from its terms the operations of the appellant company in matters of domestic commerce over which the federal law could not be extended. (Addyston Pipe & Steel Co. v. United States, 175 U. S. 211, 248, 20 Sup. Ct. 96, 44 L. Ed. 136.)
A great array of decisions, English and American, will be found cited in the first-mentioned case, all tending to the establishment of the proposition that combinations having for their object the restraint of trade by the prevention of competition are inimical to public policy, their contracts in furtherance of their object non-enforceable, and their agreements of confederacy, followed by acts in prosecution of their purpose, rightful subjects of restrictive and penal legislation. Two of these decisions were made in United States v. Freight Association, 166 U. S. 290, 17 Sup. Ct. 540, 41 L. Ed. 1007, and United States v. Joint, Traffic Association, 171 U. S. 505, 19 Sup. Ct. 25, 43 L. Ed. 259. In those cases it was held that agreements between competing railroad companies to fix and maintain non-competitive traffic rates were in violation of the "anti-trust act" of congress, and were subject to be annulled, and the associations formed thereby dissolved at the suit of the government. Counsel for appellant denies the applicability of these cases and that'of the Addyston Pipe & Steel Company, supra, on the grounds : First, that the statute which the decisions enforced was enacted under the authority of congress to regulate commerce between the states; second, that such statute is not directed against agreements or combinations restrictive of competitive trade, but has for its object the suppression of monopolies. The first of these distinctions is founded on
the dictum of the judge in Niagara Fire Ins. Co. v. Cornell, supra. He said :
"The Railroad Traffic Association Case, 166 U. S. 290, 17 Supt. Ct. 540, 41 L. Ed. 1007, has been strongly urged by the attorney-general as upholding the doctrine of this statute. But it does-not, for the reason that the statute under consideration in that case was upheld by reason of the commerce clause of the constitution ; and to that extent the commerce clause controlled the other clauses of the constitution ; and I repeat, that the statute with which I am dealing is a state statute." \
There is one plainly expressed and one possible thought in this excerpt; First (the possible one), the authority can be exercised in pursuance only of express constitutional grant. That is not true of a state enactment, because the legislature of a state possesses all power not expressly withheld. It is true of a congressional enactment, because congress possesses only such power as is expressly conferred. The express grant of power to congress conferred by the commerce clause of the constitution only put that body on thej' footing as to interstate commerce that the local legis-| lature has as to domestic commerce without an express;' grant and in virtue of its general authority. Thel grant to congress was' not of anything different in na-jj ture from what the states possessed. It was a- grant of the same thing — no more, only to be exercised in a different sphere. As to the other thought — the one plainly expressed by the judge in the above quotation, to wit, that the commerce clause of the constitution controlled, the other clauses of that instrument — we trust we will not be taken to mean disrespect or to impugn motives when we say it is a thought which can' be entertained only by one fatally bent on finding pre-! texts to justify his own mischievous rulings. The' plain import of the language used is that the com-' merce clause is stronger than the other clauses — 'j stronger than the guaranties, of liberty, property, and process of law, contained in the fourteenth amend ment. In other words, the claim is that the commerce clause gives congress the authority to override and set at naught the guaranties of popular right contained in the constitution whenever and wherever necessary to effectuate the power to regulate interstate and international trade. This is the very madness of unreason. The proposition needs but to be stated in the ultimate terms to which we have reduced it, and they are the terms to which of necessity it must be finally' reduced, to show its utter unsoundness.
The second distinction which counsel for appellant seek to draw between the federal cases cited and this case, to wit, the difference between legislation restrictive of non-competitive agreements and restrictive of monopolies, has no more basis upon which to rest than has the first one. The power to regulate is the same in both cases and may be exercised to the same extent. However, the. statute enforced in the Freight Association Cases and the Addyston Pipe & Steel Company case was a statute in prohibition of contracts restrictive of competitive trade as well as in prohibition of monopolies. That statute differs in verbal phraseology, but not in essential particular or effect from ours. It reads :
"Section 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is hereby declared to be illegal," etc.
"Sec. 2. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons to monopolize, any part of the trade or commerce among the several states or with foreign nations, shall be deemed guilty of a misdemeanor," etc.
The federal court decisions cited were more particularly in assertion of the authority of congress to enact measures in suppression of anti-competitive trade combinations than they were in assertion of its right to prohibit trade monopolies. In the case of United States v. Joint Traffic Association, one of the head-notes reads:
"Congress, with regard to interstate commerce, and in the course of regulating it, in the case of railroad corporations, has the power to say that no contract or combination shall be legal which shall restrain trade and commerce by shutting out the operation of the general law of competition."
If counsel mean to say that agreements restrictive of trade competition may not be prohibited until they eventuate in monopolies, we reply, without pausing to reason the contrary of the proposition, that the rationale of all the cases, and particularly those of the federal courts commented on above, is opposed to the claim, and in United States v. Addyston Pipe & Steel Co., supra, it was expressly ruled that, "in order to vitiate a contract or combination, it is not essential that its result should be a complete.monopoly; it is sufficient if it really tends to that end and to deprive the public of the advantages which flow from free competition." That ruling was on a substantiative issue involved in the case, and as made is a quotation from the opinion arguendo of Chief Justice Fuller in United States v. E. C. Knight Company, 156 U. S. 1, 15 Sup. Ct. 249, 39 L. Ed. 325. If counsel mean to say that acts prohibitive of anti-competitive combinations must express on their face a limitation to combinations constituting or tending to monopoly, a sufficient reply is that .the anti-trust act of congress, above partially quoted, and which has been repeatedly upheld as a valid exercise of legislative authority, does not express any such limitation. Whether an agreement restrictive of trade combinations tends to monopoly is probably a question determinable by the courts as well as by the legislature, but, primarily at least, it is a question in' economic science addressed to 'the business judgment and experience of the members of the lawmaking body. However, if the legislature should condemn a particular engagement between men on the .score of its tendency to monopoly which the general sense of mankind perceived could not have that •effect, we doubt not-the courts would be competent so to declare, and, so declaring, disapprove the act on the constitutional ground of its interference with the freedom of the citizen ; but beyond such instances we apprehend the judicial tribunals are not authorized to go. The courts may determine without previous legislative declaration that a particular agreement is contrary to public policy, and therefore non-enforceable ; but they cannot adjudge, in opposition to a legislative declaration that a general class of agreements is opposed to the rules of public policy, that such is not the case.
One other topic included in the general subject remains to be discussed. It will be done briefly. It will be observed by an examination of the cases, both those on the subject of anti-competitive trade agreements, and those on the subject of monopolies, that most of them relate to the acts or agreements of vendors — sellers bn the market — and not to. the ac-ts or agreements of vendees — buyers on the market. This has not been because different principles of law apply to the two classes of persons in their trade relations and dealings, but because the oldest and favorite form of forestalling 'and engrossing markets has been to monopolize the supply of trade products and hold them for extortionate prices. The rules of nub- lie policy forbid the making of agreements not to buy on the market as well as agreements not to sell. This is well illustrated by two cases. In Craft v. McConoughy, 79 Ill. 846, 22 Am. Rep. 171, it appeared that the grain dealers of a town had made a compact not to compete with one another in the purchase of grain, but collectively to control the market at fixed prices. One of them sued in execution of the agreement, but the. court denied relief, on the ground that it was a contract in restraint of trade and contrary to public policy. In Chapin v. Brown, 83 Iowa, 156, 48 N. W. 1074, it appeared that the grocerymen of a town, in order to throw the trade in butter entirely into the hands of one of their number., entered into an agreement with one another not to buy butter or take it in exchange for other goods. Suit was brought on the agreement against one of the grocerymen to enjoin him from dealing in butter. The court refused the injunction, because the contract entered into was restrictive of trade competition and tended to monopoly, and was therefore opposed to public policy. See, also, Hilton v. Eckersley, 6 Ell. & Bl. 47.
Now, the agreement entered into by appellant and others named in the information in this case did not differ in any essential particular from the agreements condemned in the cases above cited. In this case it was shown that the parties named embraced all of the grain buyers at the town of Bison ; that they agreed among themselves to divide the grain trade at that place ; that, although the agreement was that any one was at liberty to buy as much grain as he chose and to pay for it such price as he chose, nevertheless, if he purchased more than his allotted share he should pay to the others three cents per bushel for the excess bought; that this agreement was entered into for the express purpose of preventing competition among the buyers, and that it had that effect; that it was entered into for the purpose of pooling the profits of the grain trade and the formation of a grain trust among the buyers, and that it had those effects. Such an agreement would have been void and non-enforceable at common law. It would have been void and nonenforceable because restrictive of trade competition and because of its tendency to monopoly, and for these reasons it would have been declared opposed to the rules of public policy. It is certainly competent for the legislature to make penal the doing of that which the courts themselves recognize as hurtful to the body politic and for that reason refuse to countenance. The legislature of 1897 did that; nor did it do anything more. It is no argument to launch the platitudes of personal liberty and freedom of contract and due process of law, etc., against this statute. What specific prohibition does it contain that the common law has not contained for ages past? Absolutely none.
We-come now to a final question. The first statute for the suppression of unlawful trade combinations enacted in this state was chapter 175 of the Laws of 1887 (Gen. Stat. 1901, § 2427-2429). That statute was directed against grain dealers alone. Section 1 reads as follows :
"That it shall be unlawful for any grain dealer or grain dealers, partnership, company, corporation, or association of grain dealers, or any other person or persons, partnership, company, corporation, or association, to enter into any agreement, contract or combination with any other grain dealer or grain dealers, partnership, company, corporation, or association of grain dealers, or any other person or persons, partnership, company, corporation, or association, for the pooling of prices of different and competing dealers and buyers, or to divide between them the aggregate or net proceeds of the earnings of such dealers and buyers, or any portion thereof, or for fixing the price which any grain dealer or grain dealers, partnerships, company, corporation, or association of grain dealers, or any other person or persons, partnership, company, corporation, or association, shall pay for grain, hogs, cattle, or stock of any kind or nature whatever; and in case of any agreement, contract or combination for such pooling of prices of different and competing dealers and buyers, or to divide between them the aggregate or net proceeds of the earnings of such dealers and buyers, or any portion thereof, or for fixing the price which any grain dealer or grain dealers, partnership, company, corporation, or association of grain dealers, or any other person or persons, partnership, company, corporation, or association, shall pay for grain, hogs, cattle, or stock of any kind or nature whatever, each day of its continuance shall be deemed a separate offense."
The above-quoted section was followed by another, prescribing a penalty. The court, in the instructions to the jury in this case, quoted the act of 1887, and likewise quoted the one of 1897, above discussed. The jury were not told which of the acts was applicable to defendant's case. The claim is made that the act of 1887 was repealed by the later one, and hence that the defendant may have been convicted under a statT ute which had ceased of existence. It will be observed, that the act of 1897 covers an entire field of which the one of 1887 covered only a part; but the one of 1897 covers, though in general terms, the specific matter embraced in the earlier act. The character of punishment and maximum penalty are the same in the case of both acts, and the appellant's sentence of conviction was within the terms of either one. Assuming that the act of 1887 was repealed by implication-by that of 1897, what, if any, effect to produce the appellant's conviction is to be attributed to the court's reference to the earlier enactment? We think none whatever. The statute of 1887 did not define the offense charged in any other terms than does the later act, nor did it define it in any other terms than the court was required to define it and did define it in the charge to the jury. The facts to be proved under the statute of 1887 were no different from the facts, which, by the act of 1897, were required to be proved against the defendant, and it is impossible to see in what way he could have been prejudiced by the mistake of the court, if mistake it was.
However, it is said that if the statute of 1887 was not repealed by that of 1897, but is still to be classed among the existing enactments, it is unconstitutional, because it is class legislation. It is said that it singles out grain dealers from among all the different classes of persons engaged in domestic commerce and subjects them to penalties for doing that which the other classes are allowed to do without let or hindrance. Grant it (which, however, we do not, except hypothetically and for reply to the proposition ), an unconstitutional statute is no different from a repealed statute. Like a statute repealed, it is no statute at all. Hence, if the appellant could not be harmed by the court's quotation of a repealed statute, he could not be harmed by the- quotation of an unconstitutional statute. The general rule in criminal as in civil cases is that errors harmless in their nature— nominal errors, but not errors in fact — shall not be ground of reversal. It is expressed in the criminal code, section 298 (Gen. Stat. 1901, §5731): "On an appeal, the court must give judgment without regard to technical errors or defects, or to exceptions which do not affect the substantial rights of the parties." The above provision of the code has been often interposed against technical and unsubstantial claims of error in criminal cases, and especially in cases where immaterial, but unprejudicial, evidence has been admitted and mistaken, but harmless, instructions have been given.. ( The State v. Hilton, 35 Kan. 338, 349, 11 Pac. 164; The State v. Baldwin, 36 id. 1, 14, 12 Pac. 318.)
Some minor claims of error are made. They do not involve anything fundamental, but relate to unimportant matters of practice. However, we have examined them, and perceive that none of them is well founded. The judgment of the court below is affirmed.
-Johnston, Smith, Cunningham, Gbeene, Ellis, JJ., concurring.