Court Opinion

ID: 6966139
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:54:17.127779+00
Date Added: 2024-06-11T16:08:36.978772
License: Public Domain

Mr. Justice Phillips delivered the opinion of the court: Stockholders in an association may enter into contracts with it, and deal with.it in reference to contracts and agreements, acquiring the same rights and incurring like liabilities as strangers. (Merrick v. Peru Coal Co. 61 Ill. 472.) The right to enter into contracts and agreements thus existing, their effect and construction are the same as if made with other corporations or with strangers, and where void, by reason of a statutory provision, in the one case, would be so in another. As a general rule, no recovery can be had upon a contract made in violation of the express provisions of a public statute. Where an act is forbidden by a statute, no right arises under any agreement made in carrying out such forbidden act, as no legal right exists to do that which is declared illegal, and in the absence of a legal right there can be no legal remedy. (Penn v. Bornman, 102 Ill. 523, and cases cited.) The constitution and by-laws of this association furnish the evidence of the object and purpose of the organization of the corporate body, and the contract between it and its members is to be determined by that instrument. From the facts found by the Appellate Court there are reciprocal relations between this association and its fifteen hundred members, which may be summarized as follows: Appellee receives milk from members and accounts to them, for the same; guarantees to members payment for milk sold by it; fixes and determines the price of milk; retains five cents upon each can of milk sold, for each year; has authority over all milk consigned by any of its members to any stand within the corporate limits of the city of Chicago; a member can. not sell his stock except to a shipper and producer of milk, and must own as many shares as he ships cans of milk per day, but not to own more than fifty shares of stock. That the object of the association is to control the price of and the purchase and sale of milk to retail dealers within the limits of the city of Chicago is clearly apparent, and this object is carried out by the concurrent action of the members and association,-—by the action of the association on the one part, aided by the agreement of its members, who, assenting to the constitution and by-laws, carry out a scheme which is a combination, agreement or trust, by which they fix the price of an article of merchandise and limit the quantity to be sold within the corporate limits of the city of Chicago. By the act approved June 11, 1891, in force July 1, 1891, entitled “An act to provide for the punishment of persons, co-partnerships and corporations forming pools, trusts and combines, and mode of procedure and rules of evidence in such cases,” it is provided that any corporation, partnership, individual or association of persons who shall create, enter into, become a member of or a party to any pool, trust, agreement, combination or confederation, with another corporation, partnership, association or individual, to regulate or fix the price of any article of merchandise or commodity, or to limit or fix the'amount or quantity to be produced or sold, shall be guilty of a misdemeanor and punished as provided in the act. By the sixth section of that act any purchaser of any article or commodity from any individual or corporation transacting business contrary to the provisions of the act, shall not be liable for the price or payment of such article or commodity, and may plead the act as a defense to any suit for the price. These provisions were by the special pleas invoked as a defense to the suit. The statute, by its terms, makes a combination, trust or agreement between corporations, partnerships, associations or individuals to fix the price of-any article of merchandise, or to limit the amount to be sold, an ofíense, which is sought to be prohibited ; and it further provides that a purchaser of any article or commodity from any individual, company or corporation transacting business contrary to the preceding sections of the act shall not be liable for the price or payment of such article or commodity. The purpose of the arrangement between this corporation and the stockholders thereof was to fix the price and control and limit the quantity of milk shipped. The purposes attempted to be accomplished through the corporation were illegal. To carry out such purposes it stands as the active business agent of the members, who are stockholders, contracting with it to carry out the purposes of the organization. It is a combination in violation of the statute and in restraint of trade. Any purchaser of any commodity thus sold by such organization is not liable for the price thereof. It is urged that the corporation can not alone enter into a trust or combination that would be a violation of this statute. Whilst it is true, as a general proposition, that a corporation may be created and constituted a legal entity, existing separate and apart from the natural persons composing it, yet it can not act independently, or against the will, or abstain from complying with the direction, ofr the natural persons who constitute the corporate body. A corporation is, in fact, an association of persons united in one body, having perpetual succession, vested with political rights conferred upon it by the authority creating it. (Morawetz on Corp. sec. 227; 1 Kyd on Corp. 13.) Such being the nature of the corporate body, acts done by it are the acts of the associated persons, as corporators or as individuals, and in which capacity the act is done must be determined from the nature and character of the act and the purpose for which the corporation was organized. (State ex rel. v. Standard Oil Co. 149 Ohio, 137.) And when the acts of the corporate body are violative of the statutes of the State, and would be a misdemeanor that would subject to punishment in accordance with law, such acts are wholly without the lawful power of the corporation, as the State will create no body with authority to violate it laws. And where, in the organization of the corporate body or the control exercised by the stockholders in determining the agencies selected for managing its business, the business as thus conducted, managed and controlled is against public policy or in contravention of a statute of the State, such acts of the corporate body and of the individual shareholders are the combined acts of all, and courts are not so powerless that they may not prevent the success of ingenious schemes to evade or violate the law. There can be no immunity for evasion of the policy of the State by its own creations. The corporation, as an entity, may not be able to create a trust or combination with itself, but its individual shareholders may, in controlling it, together with it, create such trust or combination that will constitute it, with them, alike guilty. This corporation was organized February 24,1891, and engaged in business, and the statute invoked by the pleas as a defense became a law July 1, 1891, and the appellee urges, that even if it be admitted that a combination between a corporation and its stockholders exists, such combination occurring before the passage of the act can not be held contrary to its provisions, and that the circuit court erred in refusing to hold propositions submitted by appellee which presented this question. The rule is settled that corporations created within this State are amenable to the police power, and such bodies are not beyond legislative control, and are amenable to the same extent as natural persons. (Ruggles v. People, 91 Ill. 256.) The corporation is subject to the statute, and although the contract of guaranty was entered into before the passage of the act, yet by its terms the furnishing of the commodity named, from month to month, was contemplated, and by the facts as found by the Appellate Court that for which the price is sought to be recovered in this case was furnished after the passage of the act. The acts of the corporation and its stockholders with reference to this sale were within the meaning of the act. Whilst the corporation and appellants entered into the contract before the passage of the law, the contract, at the time of its execution, was unilateral, and under no circumstances could a recovery be had thereon until the defendants had the benefit of the consideration for which they bargained, (Richardson v. Hardwick, 106 U. S. 252,) which did not occur until after the passage of the act. With reference to this guaranty the act was not in contravention of section 14, article 2, of the constitution of this State. There was no error in the trial court refusing to hold as law the propositions submitted by the appellee, nor in holding as law the propositions submitted by appellants-and finding for the defendants, and entering judgment against the plaintiff for costs. There was error in the Appellate Court reversing the judgment of the circuit court. The judgment of the circuit court is affirmed and the judgment of the Appellate Court is reversed. Judgment reversed.