Court Opinion

ID: 6965206
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:52:37.321031+00
Date Added: 2024-06-11T16:08:35.050413
License: Public Domain

Mr. Chief Justice Bailey delivered the opinion of the Court: This case, so far as it relates to defendant Rogers, having been disposed of in the complainant’s favor by a decree from which no appeal has been taken and of which no complaint is made, the only questions now presented are those which relate to the equities which the complainant is seeking to enforce as against the Chicago Live Stock Exchange. Said Live Stock Exchange is a corporation, not for pecuniary profit, organized March 13, 1884, under the laws of this State, the objects for which it was organized, as declared by its articles of incorporation, being: “To establish and maintain a commercial exchange; to promote uniformity in the customs and usages of our merchants; to provide for the speedy adjustment of all disputes between its members; to facilitate the receiving of live-stock, as well as provide for good management and the inspection thereof, thereby guarding against the sale or use of unsound or unhealthy meats; to secure to members a corporation in furtherance of their legitimate purposes.” Said corporation has no capital stock, and is itself engaged in no commercial business, but limits its corporate enterprise to furnishing to its members facilities for carrying on, each for himself, the business of buying, selling and dealing in livestock, meats and other like commodities, and to adopting and enforcing by-laws, rules and regulations by which the business of its members shall be conducted and governed. The location of the Exchange, and the place where its members carry on their business of dealing in live-stock under and in subordination to its rules, is the Union Stock Yards, Chicago. The Union Stock Yards and Transit Company, to which the stock-yards belong, is also a private corporation, not itself engaged in the business of buying, selling or dealing in livestock, but merely owning and furnishing very extensive stockyards, to which live-stock is shipped in great quantities from all parts of the West for sale, and where buyers and sellers of live-stock, acting either for themselves or as the representatives of others, resort for the purpose of carrying on their business. The Union Stock Yards have thus become the place to which nearly all the live-stock shipped to Chicage for sale is consigned, and where, as it is said, more live-stock is annually bought and sold than in any other market in the world. No corporate relation exists between the Stock Yards and Transit Company and the Chicago Live Stock Exchange, the latter corporation being formed merely by an association of commission merchants engaged in selling live-stock for others on commission, and parties engaged in the business of buying live-stock for themselves, in said market. The evidence shows that the commission merchants and buyers representing much the largest portion of the business done at said market are members of the Exchange, though many parties, both sellers and buyers, are not members. The case sought to be made by the complainant is presented under two aspects: Eirst, it is claimed that, either by itself or through its general manager, the complainant is, or is entitled to be, admitted a member of the Exchange, and it accordingly prays for an injunction restraining the Exchange from taking any steps to try the complainant for a violation of its rules, or to impose upon the complainant’s privileges as a member any illegal or unreasonable restraints, and it also prays that the certificate of membership in Roger’s hands be issued to the complainant. Secondly, it claims that, if it is not a member and entitled to the privileges of membership, the Exchange should be restrained from putting in force certain rules it has adopted for the government of its own members, and particularly its amendments to rules 8 and 9. We are unable to see upon what principle it can be justly claimed that the complainant is a member of the Exchange or entitled to the privileges of membership, or that it is in a position where it can insist upon being admitted to membership as a matter of right. Whatever may have been its rights while Rogers, its manager, was a member, those rights no longer exist, as, by its own admission, Rogers is no longer its manager, and is.no longer a member of the Exchange. Nor can there be any just pretense that the complainant itself is a member or has ever applied for membership. The Exchange is a corporation having rules or by-laws determining the qualifications for membership, and prescribing the mode in which members may be admitted, and there is no pretense that the complainant has ever brought itself within the terms of said rules or by-laws, so as to be entitled to membership. Rule 8 of the Exchange provides as follows: “On and after May 1, 1884, any person of good character and credit, and of legal age, whose interests are centered at the Union Stock Yards, on presenting a written application, indorsed by two members, and stating the name and business avocation of the applicant, after ten days’ notice of such application shall have been posted on the bulletin of the Exchange, may be admitted to membership in the association, upon approval by at least seven affirmative ballot-votes of the board of directors, and upon payment of an initiation fee of $500, or on presentation of a certificate of unimpaired or unforfeited membership, duly transferred, and by signing an agreement to abide by the rules, regulations and by-laws of the association, and all amendments that may, in due form, be made thereto.” Said association had an undoubted right to adopt this rule, and as it prescribes the mode and the only mode in which membership in the Exchange can be obtained, no one can justly claim to be a member who has not been admitted in the mode thus prescribed. It may well be questioned whether, under this rule, a corporation, in its corporate character, can be admitted to membership in the Exchange, as said rule seems to contemplate only the admission of natural persons. But even if that were otherwise, there is no pretense that the complainant itself has ever made application for membership, or that any of the subsequent steps necessary to vest an applicant with the character and rights of membership have been taken, or that they have resulted favorably to the complainant. Nor is it pretended that since Rogers ceased to be the complainant’s manager and thereby ceased to be its representative on the Exchange, any formal application for membership has been made by Titus, its general manager, or by any other person in its behalf, but the evidence, on the other hand, is clear and undisputed that no such application has been made. The fact alleged in the bill, if it be a fact, that the complainant has requested the Exchange to issue the certificate of membership formerly held by Rogers to Titus avails the complainant nothing, as the Exchange is under no obligation to admit a member upon such request, but can, in conformity with its rules, admit to membership only upon formal application duly presented and approved in the manner in said rules prescribed. The equitable or even legal ownership of the unimpaired or unforfeited certificate of membership formerly issued to Rogers and duly transferred to it, does not constitute it a member, or entitle it to any rights as such. The only way in which the complainant can avail itself of such certificate is, by tendering it in lieu of the prescribed initiation fee in case the complainant or its representative, on proper application, shall be admitted to membership, or, in case such application should not be granted, then by selling it for a consideration to some other person who may desire to become a member. It may also be noticed, in immediate connection with the point now under consideration, that a court of chancery has no power to order the Exchange to issue the certificate of membership formerly held by Rogers to the complainant or its general manager, so as to constitute it or him a member. Before an applicant can become a member, his application must, among other things, be indorsed by two members, and must receive the approval of at least seven members of the board of directors, voting by ballot. Members and directors of such corporations, in acting upon applications for membership, are necessarily entitled to a freedom which is not subject to judicial compulsion. No two members can be compelled to indorse an application, nor can any seven members of the board of directors be compelled to vote in its favor, but-both are entitled to act upon their own judgment and according to their own choice. In other words, a court of chancery will not undertake to force upon a corporation of this character, a member, against the will of those whose duty it is to pass upon applications for membership. The complainant then not being a member of said Exchange, nor entitled, either directly or indirectly, to any of. the rights arising from membership therein, the question is presented whether it can complain of any of the rules adopted by the Exchange for the government of the conduct of its own members, or invoke the aid of a court of equity to restrain their enforcement. The complainant is a joint-stock corporation, organized May 3,1889, under the laws of this State, with a capital stock of $100,000, divided into shares of $100 each, the sharehold-. ers consisting principally if not exclusively of persons and firms engaged in the business of shipping live-stock to the Union Stock Yards at Chicago for sale. The principal office of said corporation is located at the stock-yards, and the objects for which said corporation was formed, as declared by its articles of incorporation, are as follows: “To engage in'the business of buying, selling and handling live-stock upon commission at the Union Stock Yards, State of Illinois, and at such other points throughout the United States as may be deemed advisable, and also to encourage the stockholders of said corporation to raise, improve, feed and ship to market, live-stock; and in order to-better effectuate said latter object, it is hereby expressly stipulated and agreed by and between the parties hereto, that the net earnings of said corporation shall be distributed among the stockholders thereof annually in the following manner, to-wit: Sixty-five per cent of said net earnings shall be distributed to said stockholders in the ratio of the number of stock shipped by each stockholder to the said corporation for sale during the current year for which said dividend shall be declared, and the remaining thirty-five per cent of said net earnings shall be distributed to the shareholders in said corporation in the ratio of the amount owned by each shareholder in said corporation. It is hereby further expressly agreed and stipulated that no one person shall have the right to subscribe for or own more than twenty-five shares of stock in said corporation at any time during the existence of said proposed corporation.” Said corporation, on being organized, appointed Rogers as its manager, and he applied for admission as a member of the Exchange and was admitted a member thereof, his initiation fee being paid by the presentation of an outstanding certificate of membership which had been purchased with the money of the complainant. The evidence shows, and upon this point there seems to be no dispute, that when Rogers applied for membership, no disclosure was made by him as to the plan upon which the complainant corporation was organized, and particularly the obligation which it assumed by its articles of incorporation, to distribute annually among its shareholders sixty-five per cent of its net earnings, in the proportion of the number of live-stock shipped ,by each to said corporation for sale. Rogers was admitted to membership upon investigation by the Exchange of his own personal character and credit, and in ignorance of this peculiar feature of the scheme upon which the corporation represented by him was organized. The complainant thereupon embarked in the business of receiving consignments of live-stock, both from its shareholders and others, and in selling the same on commission at the stock-yards, the rates of commission charged by it in all cases being in conformity to the schedule of rates established by the Exchange. Said business was managed by Rogers, who, being a member of the Exchange, was enabled to avail himself, in the management of said business, of all the privileges which such membership afforded. In November, 1889, the complainant having realized a considerable sum of money as the net profits of its business up to that time, distributed such net profits to its shareholders as required by its articles of incorporation, and the Exchange being informed of such distribution, and regarding it as a virtual evasion of its rules establishing minimum rates of commissions, instituted proceedings against the complainant and its manager for a violation of its rules! Eogers set up, in defense of these charges, in substance, that the complainant was not a member of the Exchange nor subject to its jurisdiction; that so far as his action as a member of the Exchange was concerned, he had strictly conformed to said rules by charging .and collecting the rates of commissions thereby established, and having collected them, he had accounted for and paid the same over to his principal, the complainant, as it was his legal duty to do, and that he had no responsibility for the disposition which the complainant had subsequently seen fit to make of the same. These suggestions seem to have been acquiesced in by the Exchange, as the proceedings against’both the complainant and its manager appear to have been thereupon abandoned. The Exchange, however, for the purpose, as may well be presumed, of protecting itself against similar evasions of its rules in the future, amended its eighth rule so as to provide, in substance, that no person should be received for membership in the Exchange, who, in any manner acts for or represents any other live-stock corporation whose charter, regulations, rules or by-laws provide for discrimination in rates or charges for commissions between stockholders and other patrons or customers, whether under the guise of dividends, drawbacks or any other scheme or device whatever, and that no member of the Exchange should act, as agent or otherwise, for any live-stock corporation, whose charter, regulations, rules or by-laws provide for such discrimination, and subjecting a member thus offending to suspension or expulsion. At the same time rule 9 was so amended as to prohibit all members of the Exchange from buying any live-stock, or causing the same to be bought, at the stock-yards from any corporation or live-stock company which is or may be regularly selling live-stock for non-residents on commission, unless some one or more of the stockholders of such company are members of the Exchange in good standing. It must be admitted that these amended rules, if enforced by the Exchange and obeyed by its members, will have the effect of debarring the complainant, so long as it adheres to its present policy of distributing its net earnings among its shareholders, from becoming, either by itself or its officer or agent, a member of the Exchange, or entitled to the privileges of membership, and also that the members of the Exchange will refuse to purchase of it or its agents any of the live-stock consigned to it for sale at said stock-yards. The question then is, whether these facts are sufficient to entitle the complainant to a decree declaring the invalidity or illegality of these rules, and to an injunction restraining their enforcement. A voluntary association, whether incorporated or not, has, within certain well defined limits, power to make and enforce, by-laws for the government of its members. Such by-laws are ordinarily matters between the association and its members alone, and with which strangers have no concern. If the association, or a majority of its members, pass by-laws which are unreasonable, or contrary to law or public policy, and attempt to enforce them as against a dissenting or unwilling minority, such 'minority may undoubtedly, in proper cases, appeal to the courts for relief against their enforcement. But mere strangers have ordinarily no right to interfere. As to them, such by-laws are matters of no concern. They do not apply to and are not binding upon them. In the present case, no member of the Exchange is making any complaint of these by-laws, nor is there any suggestion, either in the pleadings or proofs, that these by-laws have been passed, or are likely to be enforced, against the objection of a minority of the members, or against the objection of any one member, of the Exchange. So far then as this proceeding is concerned, it must be assumed that they were adopted with the assent and concurrence of all the members, and are therefore satisfactory to all alike. They are therefore to be regarded as analogous to or in the nature of a unaimous compact or agreement among the members of the Exchange, not to buy live-stock of corporations engaged in selling the same on commission, unless one or more of the shareholders thereof are members of the Exchange, and excluding from membership the representatives of the complainant, so long as it persists in its present policy of practically cutting rates of commissions by distributing back a portion of its net earnings to shippers. Or, more specifically stated, said by-laws may be viewed as in the nature of a unanimous compact among the members of the Exchange not to deal with the complainant or its agents, so long as it persists in its said policy. Two questions arise, 1, whether such compact or agreement is illegal or contrary to public policy, and, 2, if it is so, whether a court of equity will interpose in behalf of the complainant and set it aside and enjoin its performance. Admitting the right of the complainant to embark in and prosecute the business for which it was organized freely and without improper obstruction, it does not follow that it has a right to deal with parties who are unwilling to so deal, or to compel those who do not choose to do so to purchase its property. Absolute freedom of commercial intercourse to which a party may be entitled is not interfered with by the refusal of another to deal with such party on any terms. The refusal of any or all of the members of the Exchange to purchase livestock of the complainant is merely an exercise of their clear legal prerogative, and if they have a right to so refuse, it is difficult to see how an agreement, as between themselves, to abstain from dealing yfith the complainant, is a matter in respect to which the complainant is entitled to any species of equitable relief. If it be admitted that said by-laws are so far in restraint of trade as to be invalid for that reason, we are unable to see that the position of the complainant is in any respect improved. By-laws or contracts in restraint of trade are illegal only in the sense that the law will not enforce them. They are simply void. The law does not prohibit the making of contracts in restraint of trade; it merely declines, after they have been made, to recognize their validity. Mogul Steamboat Co. v. McGregor, L. R. 23 Queen’s Bench, Div. 598, 619. A party to such contract is not bound to perform it, but he may - perform it if he sees ñt, and his doing so exposes him to no legal animadversion. If the by-laws in question are invalid because of being in improper restraint of trade, they are merely void, and the members of the Exchange, being under no obligation to obey them, may, perhaps, be entitled, at their own instance, to protection against such disciplinary consequences as the Exchange may see fit to impose in ease of disobedience. But such protection can not be invoked in their behalf by a stranger, nor can they be required to disobey such rules except at their own volition. There is no suggestion in the record that they are seeking to disobey said rules or desire to. do so. The evidence fails to show that the Exchange has taken or contemplates taking any steps for the enforcement of said rules, or that it will have any occasion so to do. These rules having been adopted, presumably, with the approval of the members of the Exchange, there is no reason to suppose that they will not he voluntarily obeyed, and such voluntary obedience is a matter which the courts have no power to restrain. But the position is taken on behalf of the complainant and most strenuously insisted upon, that the live-stock market at the Union Stock Yards, by reason of its magnitude and its far-reaching influence upon the commerce of the country, has become a public market and therefore impressed with a public use, and that not only sard market, but all those doing business therein, are brought within the influence of those rules of public policy which apply to and govern public employments, and which it is the business of the courts to administer and. enforce. After giving this contention our patient consideration, we are unable to yield to it our assent. The market itself is established and owned by the Union Stock Yards and Transit Company, a private corporation, not itself engaged in the business of buying and selling live-stock, but which provides the ground, and has established very extensive stockyards, to which live-stock shipped to Chicago for sale may be consigned, and where buyers and sellers may meet, either in person or by their agents, and transact the business of buying and selling such live-stock. The bill alleges, and the truth of the allegation is not questioned, that the amount of business annually transacted at said stock-yards is such as to constitute the market thus established, the largest live-stock market in the world. If it be admitted that the magnitude of the business transacted at said market and its influence upon the general commerce of the country are of themselves sufficient to constitute the stock-yards a public market, so as to impress upon it a public use, it would probably follow that certain public duties and obligations would thereby be imposed upon the Stock Yards Company. It would doubtless be held bound to keep its market open alike to all who might desire to do business therein, and perhaps, to make no discrimination between individuals. But it does not follow that dealers resorting to said market for purposes of trade would be subjected to similar rules of public policy. They would deal with each other merely upon the footing of private parties, owing each other no duties except those which the rules of honesty and fair dealings impose. Each would be at liberty to deal or decline to deal with others precisely as he might see fit. The rules of trade would be no different from'what they are in other markets, whether public or private. Nor can it be seen how combinations between merchants doing business in such public market, either with a view of inweasing or diminishing competition, or of enhancing or diminishing prices, would he subjected to any rules different from those which apply to such combinations wherever made. As individual merchants, they would be subjected, in their dealings with each other, to no peculiar rules of public policy growing out of the fact that such dealings were in a public market, and an agreement among any number of them not to deal with a particular person or class of persons would not of itself subject them to such rules, but they would be amenable only to those general rules of law applicable to that sort of agreements. But we are not prepared to hold that the mere fact that the business of a particular market has become very large, gives to the courts any power to declare such markets public and impressed with a public use, or to apply to them any rules of public policy peculiar to that class of markets. It may well be doubted whether the term, “public market,” in the sense in which it is sought to be used here, is one which is known to our law. Markets overt, such as exist in England, are unknown here, nor is it usual in this country to grant to private parties the franchise or liberty of keeping or holding a fair or market, as is done in England. 2 Black. Com. 37. Our statute in relation to the incorporation of cities and villages authorizes the legislative authorities of such municipal corporations to establish markets and market-houses, and to provide for the regulation and use thereof. 1 Starr & Curtis’ Stat. 469. And it has been held that the power given to a municipal corporation to establish and regulate markets, includes power to purchase a site, erect buildings, and provide rules for governing the same. Caldwell v. City of Alton, 33 Ill. 416. But we are not aware that any class of markets in this country, not established by municipal authority, or by virtue of a market franchise granted by the State, has been held, merely because of the magnitude of the business carried on therein, to be impressed with a public use, so as to be held by the courts to be public markets in that sense. It is not claimed that the keeping or doing business in a market of this character is one of the employments which the common law declares to be public, nor is it pretended that it has been made so by statute. Ordinarily the adoption of new rules of public policy, or the application of existing rules to new subjects, is for the Legislature and not for the courts. Accordingly it may be held to be a general, though perhaps not an invariable rule, that the question whether a particular business which has hitherto been deemed to be private, is public and impressed with a public use, is for the Legislature. The doctrine on this subject is stated in Ladd v. Southern Cotton Press Manufacturing Co. 53 Texas, 172, where a question very similar to the one under discussion was before the court, as follows: “We know of no authority, and none has been shown us, for saying that a business strictly yarn privati will become juris publici, merely by reason of its extent. If the magnitude of a particular business is such, and the persons affected by it are so numerous, that the interests of society-demand that the rules and principles applicable to public employments should be applied to it, this would have to be done by the Legislature, (if not restrained from doing so by the Constitution), before a demand for such use could be enforced by the courts.” The view thus expressed would seem to be precisely applicable to the present case, and we are inclined to adopt it as a correct statement of the law as it should be applied to the facts before us. We do not say that there may not be exceptions to the rule thus stated, but if there are they are not of such character as to be material here. Apart from the consideration that the extension' and application of even existing rules of law to subjects not heretofore within their purview is legislative in its nature, the determination by the courts as to the precise point at which a mere private business reaches that stage of growth and expansion which is sufficient to render it juris publici, would be surrounded with very great difficulties, and would present ques- . tions for which the courts, unaided by legislation, would be able to find no just or satisfactory criterion or test. But when the Legislature, acting upon a competent state of facts, has interposed and declared the business to be juris publici, all difficulty is removed. The views here expressed do not conflict with what was decided in Munn v. Illinois, 94 U. S. 113. The question raised and decided in that case was as to the constitutionality of the act of the Legislature of this State, declaring certain grain elevators to be public warehouses, and prescribing rules for their management, and fixing maximum charges for the storage and handling of grain. There the legislative department had interposed and declared the public use,, and the court, in holding the act constitutional, held merely that the legislative power had been properly exercised. This was the only question, having any relevancy here, presented in that case or which the court undertook to decide, and the discussion of the evidence showing that the business carried on in said grain elevators was of such character that it had in fact become imjiressed with a public use, was only for the purpose of showing that a condition of things existed which justified the legislature in passing the statute then under consideration. The case of Stock Exchange v. Board of Trade, 127 Ill. 153, is clearly distinguishable from the one now before us. There the Board of Trade had for a series of years, voluntarily engaged in the business of compiling market quotations, showing the fluctuations of the prices of commodities bought and sold on the Board, and of furnishing the same, for a consideration, by telegraph, to all members of the public who desired to obtain them. By this means, the business of buying and selling agricultural products throughout the entire country had been brought under the control of the market prices fixed and determined on said Board. It was held that these quotations were property, and that the Board, by its own act, had so far impressed upon them a public interest, that it should be required, so long as it compiled and furnished them to any one, to furnish them to all without discrimination. This conclusion was reached upon the theory that the Board had, for a series of years, voluntarily and intentionally, devoted its property to a use in which the public had an interest, and had, in effect, granted to the public an interest in that use, and that it must therefore, so far as it- dealt in that species of property at all, submit to be controlled by the public for the common good, to the extent of the interest it had thus created. The determining elements present in that case are wanting here. The business which is here sought to be subjected to a public use was, at its commencement, confessedly private and private only, and the public use is sought to be impressed upon it, not by virtue of any voluntary grant to the public, but simply because, by mere process of growth and expansion, the business has reached such magnitude as to affect public interests because of its magnitude alone. These facts would .doubtless be sufficient to warrant the Legislature, in the exercise of its legislative discretion, in declaring a public use, and placing said business under legal control and supervision, but such power, in our opinion, does not rest with the courts. The point is made that it was error for the court on sustaining the defendant’s motion to dissolve the injunction, to also enter a decree dismissing the bill for want of equity, the contention being, that the bill should have been retained for final hearing on pleadings and proofs, according to the usual practice in chancery. We are of the opinion that the bill was properly dismissed. It was, in substance, at least as against the Exchange, a bill for an injunction only. Its prayer, as against Rogers, having been granted by a prior decree, that portion of the relief sought is not to be considered, and as against the Exchange, nothing is prayed for but an injunction, except that the Exchange be required to issue the certificate of membership formerly held by Rogers to the complainant. Under no possible view of the case, even if the bill had been retained for a further hearing, could this latter relief have been granted. The dissolution of the injunction was, in effect, a disposition of the entire ease. Besides the bill, upon its face, as we think sufficiently appears from what has been said, is without merit, and when that is the case, a motion to dissolve an injunction, the bill being in effect for an injunction only, has the same effect as a demurrer to the bill, and the court, on sustaining such motion, may properly dismiss the bill. Titus v. Mabee, 25 Ill. 257; Weaver v. Poyer, 70 id. 567; Prout v. Lomer, 79 id. 331. What we have said renders it unnecessary for us to consider the effect upon the status of the complainant of the fact, about which there seems to be no dispute, of its failure to record its certificate of incorporation, until after the commencement of the present suit. It is contended that the decree in favor of the defendant corporation awarding damages on dissolution of the injunction is not sustained by the evidence, and is therefore erroneous. We have duly considered the evidence applicable to that question, and are of the opinion that it supports the decree. The only damages proved are for solicitors’ and counsel fees incurred in obtaining a dissolution of the injunction. It appears to us to be a fair conclusion from all the evidence that the sum awarded,' viz., $1250, is no more than is fairly chargeable for the services rendered by solicitors and counsel in the mere matter of obtaining a dissolution of the injunction. We find no material error in the record, and the judgment of the Appellate Court will be affirmed. Judgment affirmed. Mr. Justice Magruder : I do not concur in this decision.